10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark one)

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

For the fiscal year ended January 31, 2012

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: 000-25285

SERENA SOFTWARE, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	94-2669809
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
1900 Seaport Boulevard Redwood City, California 94063-5587	(650) 481-3400 (Registrant’s telephone number, including area code)
(Address of Principal Executive Offices)

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ¨    No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  x    No  ¨

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  ¨    No  x

Indicate by checkmark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    x

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	¨
Non-accelerated filer	x (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

The aggregate market value of common stock held by non-affiliates of the registrant was zero as of July 31, 2011, the last business day of the registrant’s most recently completed second fiscal quarter. The registrant is a privately-held company, and there is no public trading market for its common stock.

As of April 30, 2012, the number of shares of the registrant’s common stock outstanding was 98,446,007

DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by reference and the Part of the Form 10-K into which the document is incorporated: (1) any annual report to security holders; (2) any proxy or information statement; and (3) any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933. None.

SERENA SOFTWARE, INC.

ANNUAL REPORT ON FORM 10-K

For the Fiscal Year Ended January 31, 2012

TABLE OF CONTENTS

		Page
PART I			3
Item 1.	Business		3
Item 1A.	Risk Factors		15
Item 1B.	Unresolved Staff Comments		25
Item 2.	Properties		25
Item 3.	Legal Proceedings		25
Item 4.	Mine Safety Disclosures		25
PART II			26
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		26
Item 6.	Selected Financial Data		27
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		29
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk		51
Item 8.	Financial Statements and Supplementary Data		52
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure		53
Item 9A.	Controls and Procedures		53
Item 9B.	Other Information		54
PART III			55
Item 10.	Directors, Executive Officers and Corporate Governance		55
Item 11.	Executive Compensation		59
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		76
Item 13.	Certain Relationships and Related Transactions, and Director Independence		78
Item 14.	Principal Accountant Fees and Services		80
PART IV			81
Item 15.	Exhibits and Financial Statement Schedules		81
SIGNATURES			85

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PART I

ITEM 1. BUSINESS

Our fiscal year ends on January 31 and, except as otherwise provided, references to a particular fiscal year in this Annual Report on Form 10-K mean the fiscal year ended on January 31 of such year. For example, fiscal year 2012 refers to the fiscal year ended January 31, 2012.

Our Company

We are the largest global independent software company in terms of revenue solely focused on managing change and processes across information technology, or IT, environments. Our products and services address the complexity of application lifecycle management, or ALM, and are used by our customers to manage the development of, and control change in, mission critical applications within both mainframe and distributed systems environments. In addition, we provide products and services to enable customers to rapidly address IT service management, or ITSM, and business process challenges through the use of visually designed process workflows. Our products and services allow customers to orchestrate and manage their application development, IT and business processes by automating and integrating disparate ALM and ITSM products and processes, improving process visibility and consistency, enhancing software integrity, mitigating application development risks, supporting auditability and regulatory compliance, and boosting productivity. Our revenue is generated by software licenses, maintenance contracts and professional services. Our software products are typically installed within customer IT environments and generally accompanied by renewable annual maintenance contracts.

Our software and services are of critical importance to our customers, who make significant investments in developing applications and automating IT processes around our software solutions. We have a diversified, global customer base with a history of more than 15,000 installations of our products at customer sites worldwide. Our customers include industry leaders in the finance, telecommunications, automotive and transportation, healthcare, energy and power, equipment and machinery and technology industries, with no single customer accounting for 10% or more of our total revenue for the fiscal year ended January 31, 2012. During the same period, we generated 65%, 30%, 4% and 1% of our total revenue in North America, Europe, the Asia Pacific region and South America, respectively.

Revenue generated from software licenses, maintenance contracts and professional services accounted for 25%, 65% and 10%, respectively, of our total revenue for the fiscal year ended January 31, 2012. Software license revenue is generated by the sale of perpetual software licenses to existing and new customers, and includes both upfront licenses as well as follow-on license purchases as customers expand capacity, add additional applications or users and require additional products to satisfy a broader set of requirements. Software licenses are generally accompanied by annual maintenance contracts, which are typically priced between 17% and 21% of the price of the software license. The annual maintenance contracts provide customers the right to obtain updates, bug fixes and telephone support for our applications. We typically collect maintenance fees at the time the maintenance contract is entered into and ratably recognize these fees over the term of the contract, generally one year. Professional services revenue is generated through best practices implementations to facilitate the optimal installation and usage of our software, and technical consulting and educational services.

Serena Software, Inc. was incorporated under the laws of California in 1980 and re-incorporated under the laws of Delaware in 1998. On March 10, 2006, Spyglass Merger Corp., an affiliate of Silver Lake, a private equity firm, merged with and into us, a transaction we refer to in this annual report as the merger. As a result of the merger, our common stock ceased to be traded on the NASDAQ National Market and we became a privately-held company, with a majority of our common stock at the time of the merger on a fully diluted basis owned by investment funds affiliated with Silver Lake. Silver Lake and its affiliates, by virtue of their ownership of our common stock and their voting rights under a stockholders agreement, control the vote, in connection with substantially all matters subject to stockholder approval, of more than 99% of our outstanding common stock.

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Our Industry

Companies increasingly depend on IT tools and applications for mission critical business processes. Many of the largest commercial businesses and government entities house essential information and applications in mainframe computers located in centralized datacenters or distributed systems networks. Organizations have also increasingly opened their IT systems to customers and suppliers through their Internet and extranet sites to enhance supplier and vendor transparency, decrease data inefficiencies and reduce time to market for their products and services.

Our customers’ applications, systems and IT infrastructure are constantly evolving to meet changing customer, supplier and employee requirements. In addition, government and industry regulations have increased the need for governance of these applications and monitoring changes to IT environments. Changes to IT environments are increasingly becoming complicated by the tendency towards moving internal software development offshore, requiring IT managers to oversee multiple development processes across various geographies. As a result, specific functionality allowing organizations to audit, track and monitor changes, and revert back to previous versions, has become critical to managing IT processes and change. Organizations have an ongoing and growing need for solutions that efficiently and effectively manage change across increasingly complex IT environments.

Our products address a number of industry segments within the broader ALM market, including software change and configuration management, or SCCM, release management, IT service management, or ITSM, and business process management, or BPM, markets.

We believe that several factors will continue to drive growth in the markets we serve, including:

Accelerating Software Complexity. As organizations become more dependent on complex, cross-platform IT applications, the importance of managing IT change effectively is increasingly critical. ALM tools are necessary to understand how a change in one part of the IT environment will impact the other IT systems and processes related to such change.

Regulatory Compliance. Organizations across a range of industries are increasingly required to comply with changing and new regulations that require organizations to audit, track and manage changes to their IT systems. We believe these regulatory changes and the overall regulatory environment are forcing many companies to audit their IT practices and confront change management issues with a high degree of attention directed at the potentially severe consequences of change management failures.

Business Pressures for Productivity, Quality and Faster Time to Market. Ongoing pressures on IT departments to reduce spending and improve service will continue to focus attention on process improvement in the software development life cycle. Customers will look to vendors to provide well-integrated solutions that assure the delivery of high quality applications to the market faster.

Need for Rapid and Cost Effective Process Management. As organizations grow, the requirement for managing and documenting processes across multiple departments and geographies becomes mandatory. These processes often change rapidly, frequently requiring a cost effective solution to manage vital business processes.

Outsourcing. Companies continue to outsource critical IT functions by shifting software development to new geographic locations, creating the need to coordinate and communicate changes among developers in often widely dispersed locations. The outsourcing trend increases companies’ reliance on change management processes to allow all relevant personnel to view, approve and control changes to software applications.

Significant Opportunity to Replace Internally Developed and Legacy Solutions. A significant number of companies and government agencies currently use manual processes and internally developed software solutions to monitor their IT environments. Due to accelerating software complexity, increasing regulatory requirements and outsourcing, a growing number of organizations have begun purchasing third-party software solutions

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instead of relying on manual processes and internally developed software solutions. Due to the high cost of operating and maintaining legacy ITSM systems, an increasing number of organizations are replacing their first generation ITSM systems with more cost effective solutions.

Opportunity to Address Application Release Bottlenecks. Modern N-tier web applications are difficult, time consuming and expensive to release into virtualized data centers. The resulting bottlenecks can be resolved either with considerable labor and tolerance for defects, or through the automation of the application release process.

Our Strengths

We believe our strengths in addressing the above-mentioned industry opportunities include the following:

Global Software Vendor with Leading Market Position. We are the largest global independent software company in terms of revenue focused solely on managing change across IT environments. Our products offer solutions for both distributed systems and mainframe platforms. We attribute our leading position to the breadth and quality of our product offerings and to our established customer relationships.

Stable, Recurring Revenue Base with Significant Visibility. We have developed a stable, recurring revenue base comprised of license, maintenance and professional services revenues due primarily to the mission critical nature of our products and our large installed customer base. For the fiscal year ended January 31, 2012, maintenance revenue comprised 65% of our total revenue. Our maintenance revenue is generally recurring, providing us with significant visibility into our future revenue and profitability. For the fiscal year ended January 31, 2012, our maintenance contract renewal rate was approximately 90%, which we believe is higher than the industry average. We have a resilient revenue model where customers continue to enter into and renew maintenance contracts, even during significant downturns within the software industry.

Margins and Strong Cash Flow Generation. Our current business model generates positive working capital and requires minimal capital expenditure, providing us with significant free cash flow due primarily to our broad portfolio of products, large installed customer base and leading market presence. For the fiscal year ended January 31, 2012, we had cash flows from operating activities of $32.2 million, an Adjusted EBITDA margin of 39.1% and $3.8 million in capital expenditures. A description of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to comparable GAAP financial measures is included under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Covenant Compliance.”

32 Year History with Diversified, Global Customer Base. We have a diversified, global customer base with a history of more than 15,000 installations of our products at customer sites worldwide. We have minimal customer concentration, with no one customer accounting for 10% or more of our total revenue for the fiscal year ended January 31, 2012. We are also continuing to expand our revenue base internationally. For the fiscal year ended January 31, 2012, we derived 35% of our total revenue from international customers.

High Switching Costs. Our software products help our customers define complex and ever-changing software environments. As such, our solutions generally become a key part of our customers’ application development infrastructure and are embedded deep within multiple parts of a customer’s mission-critical IT environment. In addition, it typically takes our customers six to twelve months to implement our products into their systems and requires a significant investment in effort and cost. This makes it difficult for other vendors to sell competing solutions to our customer base, as there are high switching costs in terms of time, effort and expense, and the process of switching products carries the potential for significant business disruption.

Significant Equity Investments from our Founder and Silver Lake. In connection with the merger, a trust and a foundation affiliated with Douglas D. Troxel, our founder and one of our directors, exchanged equity interests in Serena, valued for purposes of the exchange at approximately $154.1 million, for equity interests in the surviving corporation. This significant equity investment by our founder, together with the investment of $335.5 million by investment funds affiliated with or designated by Silver Lake, represented over 52% of our capitalization as of January 31, 2012.

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Our Strategy

We are focused on continuing to be a leading provider of solutions that enable organizations to manage change throughout their IT environments, and becoming a broad scale IT management vendor with emphasis on workflow automation and integration with existing tools. To pursue our objectives we have implemented the following strategies:

Develop Orchestrated ALM Solutions. We have a strategic vision to automate end-to-end application development processes from application demand through deployment. Our Orchestrated ALM strategy is to offer a suite of products that provides a unified and integrated framework for connecting people, tools and processes throughout the application lifecycle, delivering automated change processes, managing workflows and enforcing business rules within IT environments. Serena ALM products, together with Serena Business Manager, allow customers to quickly prioritize and deliver more of the features and applications required by their businesses, communicate changes to demand across their organizations and provide greater visibility and responsiveness by IT organizations. Serena Orchestrated ALM provides integrated capabilities for demand management, requirements management, portfolio analysis, project management, agile software development, software prototyping, and software change and configuration management. Serena Orchestrated ALM helps distributed development teams manage and track changes to requirements, software configurations and timelines.

Develop Orchestrated IT Operations Solutions. Serena Service Manager, a process-based IT service management solution, leverages the flexibility of Serena Business Manager to automate the service delivery process, provide a simple yet powerful role-based experience to service desk users, deliver visibility into the status of issues across the service lifecycle and assist with Information Technology Infrastructure Library (ITIL) compliance. We have developed complementary ITSM solutions based on Serena Service Manager, including Serena Request Center, which serves as a store front or front office for IT organizations, and Serena Demand Manager, which allows IT organizations to prioritize and fulfill IT demand. We expect to continue our development of Serena Service Manager, including additional complimentary and content-based solutions, such as resource and capacity management, federated service catalog and asset management solutions.

Bridge IT Operations and Application Development to Orchestrate IT. IT operations and application development must work closely together to deliver the application services that businesses demand. Serena Service Manager and Serena Release Manager help organizations streamline and automate the process of capturing, routing and fulfilling requests for applications changes and IT services. We expect to continue to develop and integrate our solutions to allow application development and IT operations to work together more effectively.

Continued Focus on Release Management. The objective of application release management is to deploy application changes into production without disrupting the business. This process is often performed manually and is inefficiently connected to the rest of the application lifecycle, leaving a critical gap between application development and operations. Serena Release Management helps IT organizations automate the release process across platforms, environments, and application tiers. IT organizations can increase release frequency and reduce risks with Serena Release Control, Serena Release Vault and Serena Release Automation.

Cross-Sell and Increase Penetration into Our Large, Global Installed Customer Base. We have a large, global installed base that primarily uses our SCCM products for specific platforms. We have a significant opportunity to sell these existing customers SCCM products on additional platforms, expand their use of our products outside of SCCM (for example, ITSM and BPM) and enable them to purchase and utilize our broader solution set for managing the entire application lifecycle. Moreover, we have the opportunity to sell additional licenses as customers expand capacity, add additional applications and users and develop a need for additional products to satisfy a broader set of requirements.

Maintain and Strengthen Technological Leadership of Our Products. We have assembled a global team of research and development personnel with strong industry and technical expertise in ALM, BPM and ITSM. We

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continue to focus on improving and upgrading our existing product portfolio and developing innovative technologies to enhance our software products. We believe such products will increase the value that we are able to deliver to our customers, enabling us to increase our revenue.

Continue to Capitalize on Regulatory Compliance Spending. Organizations across a range of industries are increasingly required to comply with regulations, from industry-specific legislation such as the Health Insurance Portability and Accountability Act and the Gramm-Leach-Bliley Act, to broader legislation such as the Sarbanes-Oxley Act. We believe that the need to comply with these regulatory standards will drive additional license sales of our products, as some customers may prefer not to depend on manual or internally developed systems to satisfy these regulatory requirements. Our products support regulatory compliance by, for example, providing automatic audit trails with an audit and feedback loop that is essential for compliance with requirements imposed by the Sarbanes-Oxley Act. Our products enable easier demonstration of regulatory compliance, and also allow businesses to achieve benefits such as more reliable IT service, faster time to market and demonstrable return on investment for development initiatives.

Use Our Consulting and Services Offerings to Increase Sales of Our Software Products. We plan to use our consulting and services offerings to help drive growth in our software licenses. We provide professional services on a global basis to our customers to deploy best practices implementations to facilitate the optimal installation and usage of our software. In addition to technical consulting, education and customer support, our professional services also include process reengineering and the development of interfaces with customers’ databases, third party proprietary software repositories and programming languages. As customers recognize the costs and time required to meet increasing regulatory requirements, we believe our professional services organization will benefit. In addition, we believe that our consulting and service offerings will lead to greater customer satisfaction with our products, and in turn will promote increased license and maintenance revenue.

Pursue Strategic Acquisition Opportunities. We have completed a number of strategic transactions in our history, which have enabled us to broaden our product portfolio and expand into new geographies. To supplement our internal development efforts and capitalize on growth opportunities, we intend to continue to employ a disciplined and focused acquisition strategy. We seek to opportunistically acquire businesses, products and technologies in our existing or complementary vertical markets at attractive valuations.

Our Products

We develop, market and support an integrated suite of software products focused on orchestrating and managing application development and IT operations and managing change across both distributed systems and mainframe platforms. A distributed system platform allows applications to share resources over a distributed network using operating systems such as UNIX, Linux and Windows. A mainframe platform uses a centralized system with high processing power to support high-volume applications. Our solutions improve process consistency and enhance the integrity of software that our customers create or modify. This helps protect our customers’ valuable application assets and improve software developer productivity, operational efficiency, application availability and return on IT investments, all of which ultimately reduce the costs of managing their IT environment. Our products and solutions serve a variety of market and customer needs and are grouped as follows:

Application Development:

• Serena Development Manager: A comprehensive solution that helps global development organizations orchestrate application development across disparate platforms, departmental processes and development tools. Serena Development Manager helps IT organizations create a unified, flexible, and auditable development process that works with all tools, platforms, and processes throughout the entire application development lifecycle.

• Serena Release Manager: A comprehensive solution that manages the implementation of software changes into the production environment. Serena Release Manager enables organizations to improve

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visibility into project timelines and progress, increase release flow by implementing critical changes into production sooner with existing resources, improve release quality and reduce downtime, and enforce consistency and traceability of changes.

• Serena Requirements Manager: A comprehensive solution that orchestrates the entire requirements management process by providing comprehensive requirements capabilities, quick process coordination and reusable requirements across the application lifecycle. Serena Requirements Manager helps IT organizations shorten release times, increase customer satisfaction and reduce overall development costs.

• Dimensions^®: End-to-end cross-platform, highly scalable solution for distributed development. Our Dimensions product family integrates application development across global sites, stakeholders, and platforms. Using Dimensions allows organizations to model and automatically enforce software development processes. Dimensions features tight integration between requirements management and change/configuration management through a common process model and a unified data store that enables IT organizations to trace, validate and implement change requests without disruption during development. The Dimensions product line includes Dimensions CM for managing the application development, change and configuration process. Customers can also purchase Dimensions RM for gathering, tracking and managing application requirements throughout a project’s lifecycle. Prototype Composer, which allows customers to graphically define and model application software requirements, is fully integrated with Dimensions.

• PVCS^®: PVCS Professional: Integrated suite of issue, version and build management tools for team-based environments. PVCS Professional includes Serena Business Manager and PVCS Version Manager, a version control product.

• ChangeMan^®: Software configuration management solution for mainframe systems, in particular z/OS environments. Our ChangeMan product family addresses the complexity of developing, deploying and maintaining mainframe software applications by providing software infrastructure to manage changes to mainframe applications in parallel, regardless of development methodology, geographic location or computing platform. The ChangeMan product family enables users to automate, control and synchronize those changes throughout their IT environments from a single point of control.

• StarTool^® and Comparex^®: Application testing, data comparison, implementation and problem analysis for mainframe systems. These solutions improve mainframe application availability through file and data management, data comparison, fault analysis, application performance management, input/output optimization and application test debugging.

IT Operations:

• Serena Service Manager: Flexible process-based IT service management. Serena Service Manager leverages Serena Business Manager (SBM) to automate the service delivery process, provide a simple yet powerful role-based experience to service desk users, deliver visibility into the status of issues across the service lifecycle and assist with Information Technology Infrastructure Library (ITIL) compliance. Serena Service Manager helps IT organizations deliver IT process improvements and efficiency in accordance with ITIL best practices. The Serena Service Manager product line includes Serena Request Center, which serves as a front end interface for corporate users to discover and request IT services, and Serena Demand Manager, which allows IT organizations to prioritize and fulfill IT demand.

Business Process Management:

• Serena Business Manager, or SBM (formerly known as TeamTrack): An enterprise process management solution to map, track, and enforce any business process, such as IT requests. Serena Business Manager allows customers to build and deploy integrated business processes that extend to all

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participants in a project, including departmental users, customers, suppliers and business partners. This Web-based, secure and highly configurable process and issue management solution creates repeatable, enforceable, auditable and predictable processes, giving our customers control, insight and predictability in their management of the application lifecycle and their business processes. The Serena Business Manager product line includes SBM Composer for graphically designing composite applications that include workflow processes, orchestrated connections to other enterprise systems, and interactive web forms.

The following are our principal products:

Product/Solution Name	Brief Description
Serena Development Manager	An integrated suite that helps global development organizations orchestrate application development across disparate platforms, departmental processes and development tools. Includes Dimensions CM and Serena Business Manager.
Serena Release Manager	An integrated suite that manages the implementation of software changes into the production environment. Includes Serena Release Control, Serena Release Vault and Serena Release Automation.
Serena Release Control	Provides an automated, process-centric approach for software release management from requirements to deployment using Serena Business Manager.
Serena Release Vault	Provides a common and secure path to production for all new applications and changes, regardless of development platform. Serena Release Vault is based on Dimensions CM, with use restricted to version management, build management, deployment, request management and administrative features.
Serena Release Automation: Powered by Nolio	Automates deployment of multi-tier, distributed applications and their configuration settings and centrally manages application releases.
Serena Requirements Manager	An integrated suite that orchestrates the entire requirements management process by providing comprehensive requirements capabilities, quick process coordination and reusable requirements across the application lifecycle. Includes Dimension RM, Prototype Composer and Serena Business Manager.
Serena Service Manager
Serena Service Manager	Flexible process-based IT service management that leverages Serena Business Manager (SBM) to automate the service delivery process, provide a simple yet powerful role-based experience to service desk users, deliver visibility into the status of issues across the service lifecycle and assist with ITIL compliance.
Serena Demand Manager	Prioritizes and fulfills IT demand by managing business requests from Serena Request Center and routing them for review and approval across the enterprise. Serena Demand Manager includes collaborative scoring, voting and resource estimation and provides what-if portfolio analysis to model scenarios and optimize use of resources and delivery of initiatives.
Serena Request Center	Provides a one-stop interface for corporate users to discover and request IT services, submit incidents, and review knowledge base articles. An enterprise service catalog allows for services to be composed, organized and published into convenient categories.
Serena Dashboard	Provides IT organizations insight into their end-to-end IT processes through the use of adaptable dashboards and Key Performance Indicators (KPIs) that are specifically designed for ALM and ITSM processes.

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Product/Solution Name	Brief Description
Serena Business Manager (SBM)
Serena Business Manager	Create and deploy process-centric applications that may include orchestrated connections to other enterprise systems. Maps, tracks and enforces business processes. Formerly known as TeamTrack.
SBM Composer	Visual modeling tool for creating workflows, orchestrating connections to other enterprise systems, and designing user interfaces.
Dimensions®
Dimensions CM	Process-driven change management for heterogeneous systems.
Dimensions RM	Tracks and manages requirements through the application development lifecycle.
Prototype Composer	Graphically define and model customer application software requirements.
PVCS®
PVCS Professional	An integrated suite of issue and version management tools for team-based environments. Includes PVCS Version Manager and Serena Business Manager.
PVCS Version Manager	Version control across all platforms and standard IDEs.
ChangeMan® :
ChangeMan ZMF	Application change management and development for mainframe systems.
StarTool® and Comparex®:
StarTool FDM	Facilitates complex mainframe file and data management tasks.
StarTool DA	Automates mainframe dump and abend analysis and speeds application problem solving activities.
Comparex	Performs data comparison for mainframe application testing and software quality.
Serena PPM
Serena PPM	Tracks and manages portfolio, project, resource, demand and financial management. Formerly known as Mariner™PPM.

Products Under Development

In the coming year, we plan to continue to execute on our mission to give enterprises control, predictability and insight over change from business planning to operations by enhancing existing products and releasing new solutions based on market needs and requirements. While each development project will be defined and scoped based on market analysis, taking into consideration the needs of our existing and prospective customers, trends in the market, competitive moves and technological advancements, there are a number of overarching corporate goals that will be considered as well.

As part of our strategy focused on release management, we plan to continue to enhance the integrations between various products within our Serena Release Manager product portfolio, such as Serena Release Control, Serena Release Vault and Serena Release Automation, and with third-party vendor solutions, and management reporting tools (i.e., dashboards) within our products, to ensure that our customers have the ability to track, manage and control change in a closed loop, heterogeneous environment—ensuring the effective management, traceability and auditability of application release management.

Our Orchestrated IT strategy is focused on using Serena Business Manager and Serena Service Manager to integrate all aspects of application development and IT operations across the enterprise. The objective is to create an integrated suite of not only Serena products, but other third party and open source application lifecycle management products. In addition to Serena Release Manager, we plan to continue to develop and enhance the

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integrations within Serena Requirements Manager and Serena Development Manager. We also plan to develop and introduce Serena Quality Manager, an integrated, customizable and process-centric test control and automation solution. We are also developing new dashboards to provide visibility and control across the entire application lifecycle. We plan to continue to develop and enhance the capabilities of the core Serena Business Manager platform, including enhancing the rules based workflow engine and expanding the capability to rapidly change and modify existing process maps and workflows. As part of our strategy focused on the ITSM market, we plan to continue to enhance Serena Service Manager to address the needs of our customers and the ITSM market, and develop additional solutions based on Serena Business Manager, including resource and capacity management, federated service catalog and asset management solutions.

Our large and diverse customer base provides us with feedback on ways we can evolve our products to meet the needs of markets outside of the core SCCM market. Examples of markets in which our products already address identified customer needs include BPM (Serena Business Manager), release management (Serena Release Manager), and ITSM (Serena Service Manager). We will continue to develop our solutions to meet the needs of applicable markets, and our current and prospective customers.

Professional Services and Customer Support

In connection with the licensing of our software products, we typically enter into annual maintenance contracts that provide customers the right to obtain available updates, bug fixes and telephone support for our applications. In addition, we provide professional services on a global basis to our customers to help them deploy best practices implementations and to facilitate the optimal installation and usage of our software. Our professional services offerings also include technical consulting and educational services.

Consulting. We provide a comprehensive range of consulting services to our customers. Our consultants review customers’ existing IT systems and applications and make recommendations for changing those systems and applications and implementing our ALM products so that customers can fully realize their benefits. In addition to helping customers install and deploy our software products, our consulting services may also include process reengineering and developing interfaces with customers’ databases, third party proprietary software repositories or programming languages.

We also offer our customers more specialized consulting services. These specialized consulting services include our best practices consulting services, which provide customers with expertise and assistance in defining and developing a best practice change and configuration management architecture and in identifying corresponding products, methods and procedures. Our consulting services are typically billed on a time and materials basis.

Education. We offer hands-on and on-line training courses for the implementation and administration of our products. Product training is provided on a periodic basis at our headquarters in Redwood City, California, and also at customer sites throughout the United States, Europe, and Asia. We also offer training courseware licenses for certain of our products, which allows our customers the ability to electronically access and download course materials and instructor guides to facilitate their own internal training programs. We bill our educational services on a per class basis.

Customer Support and Product Maintenance. We have a global staff of customer support personnel who provide technical support to customers. Our support centers are located in North America, the United Kingdom and Australia. We offer technical support services 24 hours a day, seven days a week via our Internet site, toll free telephone lines and electronic mail. Customers are notified about the availability of regular maintenance and enhancement releases via the Internet site or electronic mail. Customers can gain access to online services by registering on our SOS Internet web site. Customers are entitled to receive software updates, maintenance releases and technical support for an annual maintenance fee, which is typically priced between 17% and 21% of the software license price.

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Technology

Some of the key technological components of our products are summarized below:

Robust and flexible technology for managing processes across multiple sites. Our products contain workflow technology that facilitates the management and monitoring of software development activity and improves the efficiency of the development process. A project to create a new software application may involve hundreds of developers working around the world on tens of thousands of software components, or pieces of code. Several developers may need to develop one component at the same time, or one developer may need to make a change to a single component that also requires changes to many other components. In these situations, it is critical to coordinate and control all changes made by developers to the software applications.

With our workflow technology:

• workflows can be tailored to fit customers’ specific business processes, whereas competing products often impose a “one-size-fits-all” process on all customers;

• developers are authenticated before they can make changes to components, and a detailed audit trail is maintained, which is useful for regulatory compliance;

• managers can assign tasks to developers and track their progress; and

• managers and developers can communicate and coordinate with one another using our products.

Technologies for managing and manipulating software components. Our technology also streamlines the software development process by indexing and tracking software components across multiple servers. Specifically, our technology can:

• lock access to a file to prevent two developers from making competing changes to the same file;

• compare two versions of the same file and detect differences, using a comparison engine;

• process changes made to a single file by different developers, using a merge engine, which enables parallel development teams to apply changes concurrently; and

• allow developers to determine which changes have led to errors, using a fingerprinting technology that gives each file a unique token or “fingerprint” that changes if any bit is altered, which facilitates problem detection and resolution.

Research and Development

We plan to continue making substantial investments in research and development to maintain our leadership position. We believe that our success will continue to depend on our ability to enhance our current products and to develop new products and services that meet the needs of our customers and the market. Our commitment to research and development is reflected in our investments in this area, which were $32.7 million, $31.6 million and $26.9 million for fiscal years 2010, 2011 and 2012, respectively, representing 15%, 15% and 12% of our total revenue in those years.

We are committed to delivering products and services that consistently provide value to our customers. As part of our strategy for delivering on this commitment, we use our own products internally to automate much of our research and development operations. Our research and development staff also works very closely with our product marketing and support staff to ensure that everything we develop is mapped closely to customer and market requirements.

In the United States, research and development is primarily performed at our facilities in Redwood City, California, Hillsboro, Oregon, Colorado Springs, Colorado, and Woodland Hills, California. We also perform product development internationally in the United Kingdom, India and Ukraine.

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Sales and Marketing

We market our software primarily through our direct sales organization in the United States, Canada, Brazil, France, Germany, Italy, the United Kingdom, Spain, the Benelux and Nordic regions, Australia, India, Japan and Korea.

In addition to our direct sales efforts, we have established relationships with distributors, resellers and original equipment manufacturers, or OEMs, located in North America, Latin America, Belgium, Italy, Spain, Hong Kong, Israel, Japan, Korea and South Africa. These distributors, resellers and OEMs market and sell our software as well as provide technical support, educational and consulting services.

We market our products through seminars, industry conferences, trade shows, advertising, direct marketing efforts, and third-party and our own Internet sites. In addition, we have developed programs that promote an active exchange of information between our existing customers and us. These programs include customer meetings with our senior management and focus group meetings with customers to evaluate product positioning.

Because our software license revenue in any quarter depends on orders booked and shipped in the last month, weeks or days of that quarter, at the end of each quarter, we typically have either minimal or no backlog of orders for the subsequent quarter.

Competition

The market for our products and services is highly competitive and diverse. New products are frequently introduced and existing products are continually enhanced. Competitors vary in size and in the scope and breadth of the products and services that they offer. We are focused on enhancing the features of our products and developing additional product integrations to allow our products to better operate with each other as well as with products offered by other software vendors and open source software for purposes of differentiating ourselves from the competition. We are also focused on improving our sales and marketing efforts. We believe that the principal competitive factors necessary to be successful in our industry include product functionality, interoperability and reliability, the breadth of product offerings and solutions, effective sales and marketing efforts, reputation, financial stability and customer support.

Competition. We currently face competition from a number of sources, including:

• customers’ internal IT departments;

• providers of products that compete directly with the Serena ChangeMan ZMF and Comparex products, such as CA, Inc., IBM and smaller privately-held companies;

• providers of application development programmer productivity and system management products, such as Compuware Corporation, IBM and smaller privately-held companies;

• providers of mainframe application availability products that compete directly with Serena Comparex and the Serena StarTool product family, such as Compuware, IBM, CA, Inc. and smaller privately-held companies;

• providers of BPM solutions that compete directly with Serena Business Manager, such as IBM, Microsoft, Pegasystems Inc., and smaller privately-held companies; and

• providers of on-premise and software-as-a-service, or SaaS, based ITSM solutions that compete directly with Serena Service Manager, such as BMC Software, Inc., ServiceNow, Inc. and smaller privately-held companies.

Competition in the Software Change and Configuration Management Distributed Systems Market. We face significant competition as we develop, market and sell our distributed systems products, including Serena PVCS Professional, PVCS Version Manager and Dimensions CM products. Competitors in the distributed systems

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market include IBM, CA, Inc., Microsoft and other smaller companies. An increasing portion of the market also uses open source or freeware tools to address their basic needs for issue/defect tracking and source code control, such as Jira and Subversion.

Future Competition. We may face competition in the future from established companies who have not previously entered the SCCM, BPM and ITSM markets and from emerging software and SaaS-based companies. Barriers to entry in the distributed systems software market are relatively low.

Intellectual Property

Our continued success depends upon proprietary technology. We rely primarily on a combination of patent, copyright and trademark laws, trade secrets, confidentiality procedures and contractual provisions to protect our proprietary rights. Such laws, procedures and contracts provide only limited protection. The duration of our trademark registrations vary from country to country. In the United States, we generally are able to maintain our trademark rights and renew trademark registrations for as long as the trademarks are in use. The duration of our patents issued in the United States is typically 17 years from the date of issuance of the patent or 20 years from the date of filing of the patent application. While we believe that our ability to maintain and protect our intellectual property rights is important to our success, we also believe that our business as a whole is not materially dependent on any particular patent, trademark, license or other intellectual property right of our company.

Seasonality

We have experienced and expect to continue to experience seasonality in sales of our software products. These seasonal trends materially affect our operating results. Revenue and operating results in our quarter ended January 31 are typically higher relative to other quarters because many customers make purchase decisions based on their calendar year-end budgeting requirements. In addition, our January quarter tends to reflect the effect of the incentive compensation structure for our sales organization, which is based on satisfaction of fiscal year-end quotas. As a result, we have historically experienced a substantial decline in revenue in the first quarter of each fiscal year relative to the preceding quarter.

Employees

As of January 31, 2012, we had 560 full-time employees, 125 of whom were engaged in research and development, 191 in sales and marketing, 150 in consulting, education and customer and document support, and 94 in finance, administration and operations. In addition, we had 168 full-time contractors, 87 of whom are engaged in research and development in our Kiev development center and 81 in other functional areas. Our future performance depends in significant part upon the continued service of our key technical, sales and senior management personnel. The loss of the services of one or more of our key employees could materially adversely affect our business, operating results and financial condition. Our future success also depends on our continuing ability to attract, train and retain highly qualified technical, sales and managerial personnel. Competition for such personnel is intense, and we may not be able to retain our key personnel in the future. None of our employees is represented by a labor union. We have not experienced any work stoppages and consider our relations with our employees to be good.

Financial Information

See Note 1(p) of notes to our consolidated financial statements for information regarding segment reporting and financial information about geographic areas.

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ITEM 1A. RISK FACTORS

Risks Related to Our Indebtedness

Our substantial leverage could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry, expose us to interest rate risk to the extent of our variable rate debt and prevent us from meeting our obligations under the senior subordinated notes.

As of January 31, 2012, our total indebtedness was $442.8 million. We are highly leveraged and our debt service costs are significant. Following the amendment of our senior secured credit agreement in March 2011 and our termination of the 2012 non-extended portion of the revolving credit commitment in September 2011, we have a $20.0 million committed source of credit available to us under the revolving credit facility of our senior secured credit agreement, of which the entire $20.0 million was unused and available to us as of January 31, 2012.

Our high degree of leverage could have important consequences, including:

• making it more difficult for us to make payments on the senior subordinated notes;

• increasing our vulnerability to general economic and industry conditions;

• requiring a substantial portion of cash flows from operating activities to be dedicated to the payment of principal and interest on our indebtedness, therefore reducing our ability to use our cash flow to fund operations, capital expenditures and future business opportunities;

• exposing us to the risk of increased interest rates as certain of our borrowings, including borrowings under our senior secured credit agreement, are at variable rates of interest;

• restricting us from making strategic acquisitions or causing us to make non-strategic divestitures;

• limiting our ability to obtain additional financing for working capital, capital expenditures, product development, debt service requirements, acquisitions and general corporate or other purposes; and

• limiting our ability to adjust to changing market conditions and placing us at a competitive disadvantage compared to our competitors who are less highly leveraged.

We and our subsidiaries may be able to incur substantial additional indebtedness in the future, subject to the restrictions contained in our senior secured credit agreement and the indenture governing the senior subordinated notes. If new indebtedness is added to our current debt levels, the related risks that we now face could intensify.

Our senior secured credit agreement contains specified financial ratios and other financial condition tests that we must satisfy in order to avoid an event of default under our debt agreements.

Under our senior secured credit agreement, we are required to satisfy and maintain specified financial ratios and to satisfy other financial condition tests. Our ability to meet those financial ratios and tests is dependent upon our financial performance, which can be affected by events beyond our control. We have experienced declines in license and maintenance revenue in the recent past, which have been offset in part by decreases in costs. If our license or maintenance revenue continues to decline, and we are unable to grow our maintenance revenue or reduce our operating expenses, we may be unable to satisfy these ratios and tests. This would force us to seek a waiver or amendment with the lenders under our senior secured credit agreement, and no assurance can be given that we will be able to obtain any necessary waivers or amendments on satisfactory terms, if at all. The lenders would likely condition any waiver or amendment, if given, on additional consideration from us, such as a consent fee, a higher interest rate, principal repayment or more restrictive covenants and limitations on our business.

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A breach of any of these covenants, if not waived by the lenders, would result in a default under our senior secured credit agreement. Upon the occurrence of an event of default under our senior secured credit agreement, all amounts outstanding under our senior secured credit agreement could be declared to be (or could automatically become) immediately due and payable and all commitments to extend further credit could be terminated. In addition, a default under our senior secured credit agreement would result in a default under the indenture governing our senior subordinated notes, and all amounts outstanding under these notes could be declared immediately due and payable. If we were unable to repay those amounts, the lenders under our senior secured credit agreement could proceed against the collateral granted to them to secure that indebtedness. We have pledged a significant portion of our assets as collateral under our senior secured credit agreement. If the repayment of borrowings under our senior secured credit agreement is accelerated, we cannot assure you that we will have sufficient assets to repay our indebtedness under our senior secured credit agreement, as well as our unsecured indebtedness, including the senior subordinated notes.

We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.

Our ability to make scheduled payments on or to refinance our debt obligations depends on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control. We cannot assure you that we will maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness.

If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay investments and capital expenditures, or to sell assets, seek additional capital or restructure or refinance our indebtedness. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations. In the absence of such operating results and resources, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations. Our senior secured credit agreement and the indenture governing our senior subordinated notes restrict our ability to dispose of assets and use the proceeds from the disposition. We may not be able to consummate those dispositions or to obtain the proceeds that we could realize from them, and these proceeds may not be adequate to meet any debt service obligations then due.

Our debt agreements contain restrictions that limit our flexibility in operating our business.

Our senior secured credit agreement and the indenture governing our senior subordinated notes contain various covenants that limit our ability to engage in specified types of transactions. These covenants limit our and our restricted subsidiaries’ ability to, among other things:

• incur additional indebtedness or issue certain preferred shares;

• pay dividends on, redeem or repurchase our capital stock or make other restricted payments;

• make investments;

• make capital expenditures;

• create certain liens;

• sell certain assets;

• enter into agreements that restrict the ability of our subsidiaries to make dividend or other payments to us;

• guarantee indebtedness;

• engage in transactions with affiliates;

• prepay, repurchase or redeem the senior subordinated notes;

• create or designate unrestricted subsidiaries; and

• consolidate, merge or transfer all or substantially all of our assets and the assets of our subsidiaries on a consolidated basis.

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Risks Related to Our Business

A decline or the continued uncertainty in global economic conditions could negatively affect our business, results of operations and financial condition.

Economic conditions, both domestically and abroad, directly affect our operating results. Current and future economic conditions, including such factors as consumer demand, unemployment and inflation levels, the availability of credit, and our customers’ financial condition, operating results and growth prospects may adversely affect our business and the results of our operations. A weakening or the continued uncertainty in global economic conditions presents a variety of risks and uncertainties that could negatively affect our business, results of operations and financial condition, including the following:

• the demand for our products and services, and IT spending generally, may decline as businesses postpone, reduce or cancel IT and other spending in response to tighter credit, negative financial news, declines in income or asset values or economic uncertainty;

• our customers, distributors and resellers may choose to defer payments or fail to pay amounts owed to us, even though they may have no contractual right to do so;

• prolonged economic uncertainty may increase the pricing pressure on our maintenance contract renewal business and could negatively affect our maintenance revenue in the future;

• adverse economic conditions may promote consolidation in our customers’ industries as has occurred in the financial services industry in which many of our customers operate. Customer consolidation may lead to such adverse effects as reduced demand for our products and services by particular customers and within their industry more generally, greater pricing pressure and pressure to renegotiate existing contracts, replacement of our products in our installed base with competing products, and cancellations and reductions of previously planned customer purchases;

• we may experience increased pricing competition for our products and services;

• significant currency fluctuations and uncertainty about the future of the Euro could negatively affect our revenues, specifically those derived internationally; and

• the length of time that existing economic and financial market conditions may persist is unknown.

In addition, although we do not anticipate needing additional capital in the near term due to our current financial position, financial market disruption may make it difficult for us to raise additional capital upon acceptable terms or at all. As of January 31, 2012, the committed source of credit available to us under our senior secured credit agreement was $20.0 million.

If adverse global economic conditions persist, the foregoing risks could result in our failure to meet the financial covenants under our senior secured credit agreement. A breach of any of these financial covenants would result in a default under our senior secured credit agreement, in which event all outstanding amounts could be declared immediately due and payable. Any such acceleration would also result in a default under the indenture governing our senior subordinated notes. If repayment under our senior secured credit agreement is accelerated, we cannot assure you that we would have sufficient assets or access to credit to repay our indebtedness or, if credit were available, that it would be upon acceptable terms.

If management is unable to effectively forecast revenues and budget operating expenses, our business could be harmed.

Management personnel regularly identify, track and forecast future revenue and trends in our business. Our sales personnel monitor the status of all qualified opportunities and proposals, such as the estimated date when a transaction will close and the potential dollar amount of the transaction. We aggregate these estimates in order to generate a sales pipeline and then evaluate the pipeline at various times to look for trends in our business. While this pipeline analysis provides visibility to our potential customers and the associated revenue for budgeting and

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planning purposes, these pipeline estimates may not correlate to revenue in a particular quarter or ever. A slowdown in the economy, domestically and internationally, has caused in the past and may cause in the future customer purchasing decisions to be delayed, reduced in amount or cancelled, all of which have reduced and could reduce the rate of conversion of the pipeline into contracts. A variation in the pipeline or in the conversion of the pipeline into contracts could cause us to plan or budget improperly and thereby could adversely affect our business, operating results and financial condition. In addition, primarily due to a substantial portion of our software licenses revenue contracts closing in the latter part of a quarter, management may not be able to adjust our cost structure in response to a variation in the conversion of the pipeline into contracts in a timely manner, and thereby adversely affect our business, operating results and financial condition.

Our future revenue is substantially dependent upon our installed customer base renewing maintenance agreements for our products and licensing or upgrading additional Serena products; our future professional service and maintenance revenue is dependent on future sales of our software products and could decline.

We depend on our installed customer base for future revenue from maintenance renewal fees and licenses or upgrades of additional products. Our maintenance revenue has declined in each of the past three years. If our customers do not purchase additional products, do not upgrade existing products or cancel or fail to renew their maintenance agreements, this could materially adversely affect our business, operating results and financial condition. The terms of our standard license arrangements provide for a one-time license fee and a prepayment of one year of software maintenance and support fees. The maintenance agreements are renewable annually at the option of the customer, and there are no minimum payment obligations or obligations to license additional software. In addition, prolonged economic uncertainty has increased the pressure our customers are placing on our maintenance renewal business. Therefore, our current customers may not necessarily generate significant maintenance revenue in future periods. In addition, our customers may not necessarily purchase additional products, upgrades or professional services. Our professional service and maintenance revenue are also dependent upon the continued use of these services by our installed customer base. Any downturn in our software license sales would have a negative impact on the growth of our professional service revenue and maintenance revenue in future periods.

If our target markets do not evolve as we anticipate, our business will be adversely affected.

If we fail to properly assess and address our target markets or if our products and services fail to achieve market acceptance for any reason, our business, operating results and financial condition would be materially adversely affected. With regard to the SCCM market, IT organizations have historically addressed their SCCM requirements with solutions developed internally. As SCCM requirements have become more complex, IT organizations have begun to migrate to more sophisticated third-party SCCM products. Our future financial performance will depend in large part on the continued growth in the number of businesses adopting third-party SCCM products and the expansion of their use on a company-wide basis. In addition, we only recently began to offer products in the BPM and ITSM markets and have significantly less experience with these markets than the SCCM market. Since the markets for our products are still evolving, it is difficult to assess the competitive environment or the size of the market that may develop. Moreover, these markets may grow more slowly than we anticipate. In addition, technologies, customer requirements and industry standards may change rapidly. If we cannot improve or augment our products as rapidly as existing technologies, customer requirements and industry standards evolve, our products or services could become obsolete. The introduction of new or technologically superior products by competitors could also make our products less competitive or obsolete. As a result of any of these factors, our position in existing markets or potential markets could be eroded.

If the market for IBM and IBM-compatible mainframes decreases, it could adversely affect our business.

Our mainframe revenue is dependent upon the continued use and acceptance of IBM mainframes, , IBM-compatible mainframes and the growth of this market. If the role of the mainframe does not increase as we anticipate, or if it in any way decreases, this may materially adversely affect our business, operating results and

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financial condition. Additionally, if there is a wide acceptance of other platforms or if new platforms emerge that provide enhanced enterprise server capabilities, our business, operating results and financial condition may be materially adversely affected. We expect that, for the foreseeable future, a significant portion of our software license revenue will continue to come from the sales of our mainframe products. As a result, future sales of our existing products and associated maintenance revenue and professional service revenue will depend on continued use of mainframes.

If we fail to effectively manage our sales and marketing organizations, it could adversely affect our business.

The loss of key sales or marketing employees could result in disruptions to our business and materially adversely affect our license revenue, operating results and financial condition. If we are required to hire new sales and marketing employees in the future, a substantial amount of time and training is generally required before these personnel become productive. The hiring, training and integration of additional and replacement personnel is time consuming, is expected to increase our operating expenses and may cause disruptions to our business, potentially materially adversely affecting our revenue, operating results and financial condition. If we fail to manage our sales and marketing organizations effectively, these organizations may fail to perform as we anticipate, which could materially adversely affect our license revenue and weaken our competitive position.

Any delays in our normally lengthy sales cycles could result in significant fluctuations in our operating results.

Our sales cycle typically takes three to eighteen months to complete and varies from product to product. Any delay in the sales cycle of a large license or a number of smaller licenses could result in significant fluctuations in our operating results. The length of the sales cycle may vary depending on a number of factors over which we may have little or no control, including the size and complexity of a potential transaction and the level of competition that we encounter in our selling activities. We have experienced an overall lengthening of sales cycles in the current economic environment as customers have more rigorously scrutinized potential IT purchases. Additionally, the emerging market for our products and services contributes to the lengthy sales process in that during the sales cycle we often have to educate potential customers on the use and the benefits of our products. In certain circumstances, we license our software to customers on a trial basis to assist customers in their evaluation of our products. Our sales cycle can also be further extended for product sales made through third party distributors.

Our industry changes rapidly due to evolving technology standards, and our future success will depend on our ability to continue to meet the sophisticated needs of our customers.

Our future success will depend on our ability to address the increasingly sophisticated needs of our customers by supporting existing and emerging hardware, software, database and networking platforms particularly for our distributed systems products. We must develop and introduce enhancements to our existing products and new products on a timely basis to keep pace with technological developments, evolving industry standards and changing customer requirements. We expect that we will have to respond quickly to rapid technological change, changing customer needs, frequent new product introductions and evolving industry standards that may render existing products and services obsolete. As a result, our position in existing markets or potential markets could be eroded rapidly by product advances. Our growth and future financial performance will depend in part upon our ability to enhance existing applications, develop and introduce new applications that keep pace with technological advances, meet changing customer requirements and respond to competitive products. We expect that our product development efforts will continue to require substantial investments, and we may not have sufficient resources to make the necessary investments. If we are unable to successfully and timely develop our products due to development constraints, such as high employee turnover, lack of management ability or lack of development resources, our products may fail to address these evolving customer requirements and become less competitive in our target markets. Any of these events could have a material adverse effect on our business, operating results and financial condition.

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We are subject to intense competition in our target markets, and we expect to face increased competition in the future, which could have an adverse effect on us.

We may not be able to compete successfully against current or future competitors, and such inability would materially adversely affect our business, operating results and financial condition. The market for our products is highly competitive and diverse. Moreover, the technology for products in our target markets may change rapidly. New products are frequently introduced, and existing products are continually enhanced. Competition may also result in changes in pricing policies by us or our competitors, potentially materially adversely affecting our business, operating results and financial condition. Competitors vary in size and in the scope and breadth of the products and services that they offer. Many of our current and potential competitors have greater financial, technical, marketing and other resources than we do. As a result, they may be able to respond more quickly to new or emerging technologies and changes in customer requirements. They may also be able to devote greater resources to the development, promotion and sale of their products than we can.

Competition in the Software Change and Configuration Management Distributed Systems Market. We face significant competition as we develop, market and sell our distributed systems products, including PVCS Professional, PVCS Version Manager and Dimensions CM products. Competitors in the distributed systems market include IBM, CA, Inc., Microsoft, and other smaller companies. A growing portion of the market is also using free open source tools to address their basic needs for issue/defect tracking and source code control, such as Jira and Subversion, resulting in an increased source of competition for our distributed system products, particularly PVCS Professional, PVCS Version Manager, Serena Business Manager and, to a lesser extent, Dimensions CM .

Competition in the Mainframe market. We currently face competition from a number of sources, including:

• customers’ internal IT departments;

• providers of products that compete directly with ChangeMan ZMF and Comparex, such as CA, Inc., IBM and smaller privately-held companies;

• providers of application development programmer productivity and system management products, such as Compuware, IBM and smaller privately-held companies; and

• providers of mainframe application availability products that compete directly with Serena Comparex and the Serena StarTool product family, such as Compuware, IBM, CA, Inc. and smaller privately-held companies.

Competition in Other Markets. We currently face competition from a number of sources, including:

• providers of BPM solutions that compete directly with Serena Business Manager, such as IBM, Microsoft, PegaSystems, and smaller privately-held companies; and

• providers of on-premise and SaaS-based ITSM solutions that compete with Serena Service Manager, such as BMC, ServiceNow and smaller privately-held companies.

Future Competition. We may face competition in the future from established companies who have not previously entered the mainframe or distributed systems market or from emerging software companies. Increased competition may materially adversely affect our business, operating results and financial condition due to price reductions, reduced gross margins and reduction in market share. Established companies may not only develop their own mainframe or distributed systems solutions, but they may also acquire or establish cooperative relationships with our competitors, including cooperative relationships between large, established companies and smaller privately-held companies. Because larger companies have significant financial and organizational resources available, they may be able to quickly penetrate the mainframe or distributed systems market through acquisitions or strategic relationships and may be able to leverage the technology and expertise of smaller companies and develop successful SCCM products. We expect that the software industry in general, and providers of SCCM solutions in particular, will continue to consolidate. It is possible that new competitors or alliances among competitors may emerge and rapidly acquire significant market share.

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Bundling or Compatibility Risks. Our ability to sell our products also depends, in part, on the compatibility of our products with other third party products, particularly those provided by IBM. Developers of these third party products may change their products so that they will no longer be compatible with our products. These third party developers may also decide to bundle their products with other SCCM products for promotional purposes. If that were to happen, our business, operating results and financial condition may be materially adversely affected as we may be priced out of the market or no longer be able to offer commercially viable products.

We may encounter problems conducting our international operations, and factors associated with international operations could adversely affect our business.

International Operations. We have sales subsidiaries in the United Kingdom, Germany, Sweden, France, Belgium, Spain, the Netherlands, Australia, Japan and Singapore. We have limited experience in marketing, selling and supporting our products in many countries, and may not be able to successfully market, sell, deliver and support our products internationally.

Risks of International Operations. International sales were 32%, 33%, and 35%, of our total revenue in the fiscal years ended January 31, 2010, 2011 and 2012, respectively. Our international revenue is attributable principally to our European operations. Our international operations are subject to a variety of risks associated with conducting business internationally that could materially adversely affect our business, operating results and financial condition, including the following:

• difficulties in staffing and managing international operations;

• problems in collecting accounts receivable;

• longer payment cycles;

• fluctuations in currency exchange rates and uncertainty about the future of the Euro;

• inability to control or predict the levels of revenue produced by our international distributors;

• seasonal reductions in business activity during the summer months in Europe and certain other parts of the world;

• limitations on repatriation of earnings;

• difficulties in enforcing the terms of our agreements with customers, distributors and resellers;

• reduced protection of intellectual property rights in some countries;

• increased austerity measures by several European governments;

• political and economic instability;

• recessionary environments in foreign economies; and

• increases in tariffs, duties, price controls or other restrictions on foreign currencies or trade barriers imposed by foreign countries.

Growing market acceptance of open source software could cause a decline in our revenue and operating margins.

Growing market acceptance of open source software has presented both benefits and challenges to the commercial software industry in recent years. Open Source software is made widely available by its authors and is licensed “as is” for a nominal fee or, in some cases, at no charge. As the use of open source software becomes more widespread, certain open source technology, such as Subversion, have become competitive with our products offering software version control capabilities, such as PVCS Version Manager and, to a lesser extent, Dimensions CM, which has caused the sale of these products to decline. In addition, Jira, an open source bug tracking tool, has become competitive with the use of Serena Business Manager as an issue and defect tracking tool. Further adoption of open source software within the markets that we sell could cause further declines in the sale of our products or force us to reduce the fees we charge for our products, which could have a material adverse impact on our revenue and operating margins.

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We may experience delays in developing our products which could adversely affect our business.

If we are unable, for technological or other reasons, to develop and introduce new and improved products and services in a timely manner, this could materially adversely affect our business, operating results and financial condition. We have experienced product development delays in new version and update releases in the past and may experience similar or more significant product delays in the future. Difficulties in product development could delay or prevent the successful introduction or marketing of new or improved products or the delivery of new versions of our products to our customers. Any delay in releasing our new distributed systems products, for whatever reason, could have a material adverse effect on our business, operating results and financial condition.

Acquisitions may be difficult to integrate, disrupt our business or divert the attention of our management.

Historically, we have expanded our product offerings by acquiring other companies and by acquiring specific products from third parties. We may acquire or make investments in other companies and technologies. In the event of any acquisitions or investments, we could:

• incur debt;

• assume liabilities;

• incur charges for the impairment of the value of investments or acquired assets; or

• incur amortization expense related to intangible assets.

If we fail to achieve the financial and strategic benefits of past and future acquisitions or investments, our operating results will suffer. Acquisitions and investments involve numerous other risks, including:

• difficulties integrating the acquired operations, technologies or products with ours;

• failure to achieve targeted synergies;

• unanticipated costs and liabilities;

• diversion of management’s attention from our core business;

• adverse effects on our existing business relationships with suppliers and customers or those of the acquired organization;

• difficulties entering markets in which we have no or limited prior experience; and

• potential loss of key employees, particularly those of the acquired organizations.

Fluctuations in the value of foreign currencies could result in currency transaction losses.

A majority of our international business is conducted in foreign currencies, principally the British pound and the euro. Fluctuations in the value of foreign currencies relative to the U.S. dollar will continue to cause currency transaction gains and losses. We cannot predict the effect of exchange rate fluctuations upon future operating results. We may experience currency losses in the future. To date, we have not adopted a hedging program to protect us from risks associated with foreign currency fluctuations.

Our goodwill became impaired in fiscal year 2009 and certain amortizable intangible assets became impaired in fiscal year 2010. If our goodwill or amortizable intangible assets again becomes impaired in the future, we may be required to record a significant charge to earnings.

Under generally accepted accounting principles, we review our amortizable intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Goodwill is required to be tested for impairment at least annually. Factors that may be considered a change in circumstances indicating that the carrying value of our goodwill or amortizable intangible assets may not be recoverable include

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a decline in expected future cash flows and slower growth rates in our industry. We impaired $6.8 million of capitalized software development costs in fiscal year 2010 and recorded a goodwill impairment charge of $326.7 million in fiscal year 2009, and may be required to record significant charges in any future period for which impairment of our goodwill or amortizable intangible assets is determined.

Third parties in the future could assert that our products infringe their intellectual property rights, possibly adversely affecting our business.

Third parties may claim that our current or future products and services infringe their proprietary rights. Any claims of this type could affect our relationships with existing customers and may prevent future customers from licensing our products or using our services. Because we are dependent upon a limited number of products and services, any such claims, with or without merit, could be time consuming to defend, result in costly litigation, cause product shipment or service deployment delays or require us to enter into royalty or licensing agreements. Royalty or license agreements may not be available on acceptable terms or at all. We expect that software product developers will increasingly be subject to infringement claims as the number of products, services and competition in the software industry segments increase and the functionality of products and services in different industry segments overlap. In addition, we use open source software in our solutions and will use open source software in the future. From time to time we may face claims against companies that incorporate open source software into their products, claiming ownership of, or demanding release of, the source code, the open source software and/or derivative works that were developed using such software, or otherwise seeking to enforce the terms of the applicable open source license. Infringement claims could result in litigation, require us to purchase costly licenses or require us to devote additional research and development resources to change our products, any of which would have a negative effect on our business and operating results.

Errors in our products or the failure of our products to conform to specifications could result in our customers demanding refunds from us or asserting claims for damages against us.

Because our software products and services are complex, they often contain errors or “bugs” that can be detected at any point in a product’s life cycle. While we continually test our products for errors and work with customers through our customer support services to identify and correct bugs in our software, we expect that errors in our products and services will continue to be found in the future. Although many of these errors may prove to be immaterial, certain of these errors could be significant. Detection of any significant errors may result in, among other things, loss of, or delay in, market acceptance and sales of our products and services, diversion of development resources, injury to our reputation, or increased service and warranty costs. These problems could materially adversely affect our business, operating results and financial condition. In the past we have discovered errors in certain of our products and have experienced delays in the shipment of our products during the period required to correct these errors. These delays have principally related to new version and product update releases. To date, none of these delays have materially affected our business. However, product and services errors or delays in the future, including any product and services errors or delays associated with the introduction of our distributed systems products and solutions, could be material. In addition, in certain cases we have warranted that our products will operate in accordance with specified customer requirements. If our products or services fail to conform to such specifications, customers could demand a refund for the software license fees or service fees paid to us or assert claims for damages.

Product liability claims asserted against us in the future could adversely affect our business.

We may be subject to claims for damages related to product errors in the future. A material product liability claim could materially adversely affect our business. Our license agreements with our customers typically contain provisions designed to limit exposure to potential product liability claims. Our standard software licenses provide that if our products fail to perform, we will correct or replace such products. If these corrective measures fail, we may be required to refund the license fee for the non-performing products. Our standard license agreement limits our liability for non-performing products to the amount of license fee paid. Our standard license also provides that we will not be liable for indirect or consequential damages caused by the failure of our

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products. Such limitation of liability provisions may, however, not be effective under the laws of certain jurisdictions to the extent local laws treat certain warranty exclusions as unenforceable. Although we have not experienced any product liability claims to date, the sale and support of our products entail the risk of such claims.

Changes in accounting regulations and related interpretations and policies regarding revenue recognition could cause us to defer recognition of revenue or recognize lower revenue and profits.

Although we use standardized license agreements designed to meet current revenue recognition criteria under generally accepted accounting principles, we must often negotiate and revise terms and conditions of these standardized agreements, particularly in multi-product or multi-year transactions. As our transactions increase in complexity with the sale of larger, multi-product, multi-year licenses, negotiation of mutually acceptable terms and conditions can extend the sales cycle and, in certain situations, may require us to defer recognition of revenue on such licenses. We believe that we are in compliance with revenue recognition guidance applicable to software transactions, however, these future, more complex, multi-product, multi-year license transactions may require additional accounting analysis to account for them accurately, could lead to unanticipated changes in our current revenue accounting practices and may contain terms affecting the timing of revenue recognition.

If we do not adequately manage and evolve our financial reporting and managerial systems and processes, our ability to manage and grow our business may be harmed.

Our ability to successfully implement our business plan and comply with regulations, including the Sarbanes-Oxley Act, requires an effective planning and management process. We expect that we will need to continue to improve existing, and implement new, operational and financial systems, procedures and controls to manage our business effectively in the future. Any delay in the implementation of, or disruption in the transition to, new or enhanced systems, procedures and controls, could harm our ability to accurately forecast sales demand, manage our supply chain and record and report financial and management information on a timely and accurate basis.

Our executive officers and certain key personnel are critical to our business, and such officers and key personnel may not remain with us in the future.

Our success will depend to a significant extent on the continued service of our senior executives and certain other key employees, including certain sales, consulting, technical and marketing personnel. If we lost the services of one or more of our executives or key employees, including if one or more of our executives or key employees decided to join a competitor or otherwise compete directly or indirectly with us, our business could be materially adversely affected. During fiscal year 2012, our Senior Vice President and Chief Financial Officer, Senior Vice President, Products and Worldwide Customer Service, and Senior Vice President, SBM Solutions resigned from their executive officer positions at our company. Certain of our executive officers are not parties to employment agreements with us. In addition, we do not maintain key man life insurance on our employees and have no plans to do so. If we are unable to successfully reorganize our business around the departures of executive officers or key personnel or identify, hire and integrate new executive officers or other key personnel into our business, if any new executive officers are unable to successfully perform in their positions, establish and implement our business strategy or manage our business, or if any key management personnel are unable to successfully perform in their positions or manage their functional areas, our business and operating results could be materially adversely affected.

The interests of our controlling stockholder may differ from the interests of the holders of our securities.

Silver Lake and its affiliates own, in the aggregate, approximately 67.2% of our outstanding common stock as of January 31, 2012 and beneficially own the only authorized share of our series A preferred stock. In addition, Silver Lake and its affiliates, by virtue of their ownership of our common stock and their voting rights under a stockholders agreement, control the vote, in connection with substantially all matters subject to

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stockholder approval, of more than 99% of our outstanding common stock. As a result of this ownership and the terms of a stockholders agreement, Silver Lake is entitled to elect directors with majority voting power in our Board of Directors, to appoint new management and to approve actions requiring the approval of the holders of our outstanding voting shares as a single class, including adopting most amendments to our certificate of incorporation and approving mergers or sales of all or substantially all of our assets.

The interests of Silver Lake and its affiliates may differ from other holders of our securities in material respects. For example, if we encounter financial difficulties or are unable to pay our debts as they mature, the interests of Silver Lake and its affiliates, as equity holders, might conflict with the interests of our other holders of our securities. Silver Lake and its affiliates may also have an interest in pursuing acquisitions, divestitures, financings or other transactions that, in its judgment, could enhance its equity investments, even though such transactions might involve risks to other holders of our securities, including the incurrence of additional indebtedness. Additionally, the indenture governing our senior subordinated notes permits us to pay advisory fees, dividends or make other restricted payments under certain circumstances, and Silver Lake may have an interest in our doing so. We are party to a management advisory agreement with Silver Lake that provides for us to pay advisory and other fees to Silver Lake.

Silver Lake and its affiliates are in the business of making investments in companies and may, from time to time in the future, acquire interests in businesses that directly or indirectly compete with certain portions of our business or are suppliers or customers of ours. You should consider that the interests of Silver Lake and its affiliates may differ from other holders of our securities in material respects.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 2. PROPERTIES

Our principal administrative, sales, marketing, consulting, education, customer support and research and development facilities are located at our headquarters in Redwood City, California and in Hillsboro, Oregon. We currently occupy an aggregate of approximately 30,000 square feet of office space in our Redwood City facility, 33,000 square feet of office space in our Hillsboro facility, 16,000 square feet of research and development space in our Kiev facility in Ukraine, 13,000 square feet of office space in our St. Albans facility in the United Kingdom, 5,600 square feet of office space in our Woodland Hills facility in California, 5,500 square feet of office space in our Paris facility in France, 4,000 square feet of office space in the Colorado Springs facility in Colorado and 2,800 square feet of office space in our Munich facility in Germany, under leases with terms running through July 2012, November 2018, January 2015, March 2021, October 2017, March 2014, April 2014 and December 2016, respectively. The lease for our headquarters facility in Redwood City, California will expire on July 31, 2012. We entered into a new lease for a headquarters facility consisting of 21,000 square feet of office space located in San Mateo, California that will commence on August 1, 2012. Management believes its current facilities will be adequate to meet our needs for at least the next twelve months. We believe that suitable additional facilities will be available in the future as needed on commercially reasonable terms.

We also lease office space for sales and marketing in various locations throughout North America and in Brazil, Belgium, Spain, Germany, Italy, Netherlands, Sweden, Switzerland, Australia, Korea, Japan, Singapore and India.

ITEM 3. LEGAL PROCEEDINGS

In the ordinary course of our business, we are subject to periodic legal proceedings and claims. Although we cannot predict with certainty the ultimate outcome of these matters, we do not believe that any currently pending legal proceeding to which we are a party is likely to have a material adverse effect on our business, results of operations, cash flows or financial condition.

ITEM 4. Mine Safety Disclosures

Not Applicable.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our outstanding common stock is privately held, and there is no established public trading market for our common stock. As of the date of this filing, there were 25 holders of record of our common stock.

See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” for a description of restrictions on our ability to pay dividends.

See Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters—Equity Compensation Plan Information.”

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ITEM 6. SELECTED FINANCIAL DATA

The selected historical data presented below are derived from the consolidated financial statements of Serena Software, Inc. The selected consolidated financial data set forth below is qualified in its entirety by, and should be read in conjunction with, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the Consolidated Financial Statements of Serena and notes thereto included elsewhere in this report.

	Fiscal Year Ended January 31,
	2008			2009 (1)			2010 (1)			2011 (1)			2012
	(in thousands)
Consolidated Statement of Operations Data (1):
Revenue:
Software licenses	$	78,405		$	64,578		$	49,397		$	51,382		$	54,913
Maintenance		155,465			161,626			152,464			143,974			141,669
Professional services		36,325			34,033			22,153			19,030			22,959
Total revenue		270,195			260,237			224,014			214,386			219,541
Cost of revenue:
Software licenses		1,861			1,935			3,253			1,380			2,632
Maintenance		15,551			15,626			12,585			11,545			11,452
Professional services		33,083			31,824			21,164			18,151			21,643
Amortization of acquired technology and impairment of intangibles		35,217			35,370			41,415			33,695			3,672
Total cost of revenue		85,712			84,755			78,417			64,771			39,399
Gross profit		184,483			175,482			145,597			149,615			180,142
Operating expenses:
Sales and marketing		78,318			76,651			57,488			55,602			61,247
Research and development		40,384			33,900			32,737			31,584			26,925
General and administrative		20,129			15,847			16,600			15,939			14,033
Amortization of intangible assets		36,813			36,812			36,813			36,813			36,796
Restructuring, acquisition and other charges		2,789			6,077			7,796			5,332			2,974
Goodwill impairment and adjustments		—			322,781			—			1,433			—
Total operating expenses		178,433			492,068			151,434			146,703			141,975
Operating income (loss)		6,050			(316,586	)		(5,837	)		2,912			38,167
Other income (expense):
Interest income		1,928			1,498			437			212			168
Gain (loss) on early extinguishment of debt		—			8,707			4,602			(243	)		—
Interest expense		(47,535	)		(41,222	)		(33,048	)		(24,633	)		(25,625	)
Change in fair value of derivative instrument		(7,378	)		2,639			4,277			1,616			—
Amortization and write-off of debt issuance costs		(1,111	)		(2,070	)		(2,158	)		(1,857	)		(1,361	)
Amend and extend transaction fees		—			—			—			—			(1,487	)
Total other income (expense)		(54,096	)		(30,448	)		(25,890	)		(24,905	)		(28,305	)
(Loss) income before income taxes		(48,046	)		(347,034	)		(31,727	)		(21,993	)		9,862
Income tax (benefit) expense		(20,936	)		(11,424	)		(18,705	)		(12,437	)		918
Net (loss) income	$	(27,110	)	$	(335,610	)	$	(13,022	)	$	(9,556	)	$	8,944
Consolidated Balance Sheet Data As of January 31:
Cash and cash equivalents	$	48,304		$	115,044		$	124,996		$	126,374		$	109,688
Working (deficit) capital (1)		(17,038	)		38,175			50.902			48,074			47,455
Total assets		1,243,545			901,532			823,222			748,037			694,372
Convertible subordinated debentures		5			—			—			—			—
Term loan		320,000			320,000			318,000			316,000			308,500
Revolving term credit facility		—			65,000			65,000			35,000			—
Senior subordinated notes		200,000			167,383			142,952			134,265			134,265
Total other long-term liabilities		141,102			105,475			74,635			50,996			35,701
Total stockholders’ equity (1)		463,510			127,556			114,966			107,465			117,132

(1) In fiscal 2012, we identified certain errors related to overstated income tax accruals of approximately $3.9 million that originated in fiscal 2009. Management concluded that the effect of correcting these errors is not material to fiscal 2009 but would have been material if corrected in fiscal 2012. Accordingly, the above selected financial data for the fiscal years ended January 31, 2009, 2010 and 2011 have been revised to reflect the correction of these errors, with the “as reported” and “as revised” amounts as follows (in thousands):

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	Fiscal Years Ended January 31,
	2009			2010			2011
Consolidated Balance Sheet Data As of January 31:
Income taxes payable, as reported	$	12,173		$	5,972		$	6,284
Income taxes payable, as revised	$	8,284		$	2,083		$	2,395
Total current liabilities, as reported	$	122,014		$	113,558		$	115,700
Total current liabilities, as revised	$	118,125		$	109,669		$	111,811
Working capital, as reported	$	34,279		$	47,013		$	44,185
Working capital, as revised	$	38,175		$	50,902		$	48,074
Total liabilities, as reported	$	777,872		$	712,145		$	644,461
Total liabilities, as revised	$	773,983		$	708,256		$	640,572
Accumulated deficit, as reported	$	(389,112	)	$	(402,134	)	$	(411,690	)
Accumulated deficit, as revised	$	(385,223	)	$	(398,245	)	$	(407,801	)
Total stockholders’ equity, as reported	$	123,660		$	111,077		$	103,576
Total stockholders’ equity, as revised	$	127,556		$	114,966		$	107,465
Consolidated Statement of Operations Data:
Goodwill impairment, as reported	$	326,677
Goodwill impairment, as revised	$	322,781
Total operating expenses, as reported	$	495,964
Total operating expenses, as revised	$	492,068
Operating loss, as reported	$	(320,482	)
Operating loss, as revised	$	(316,586	)
Loss before income taxes, as reported	$	(350,930	)
Loss before income taxes, as revised	$	(347,034	)
Net loss, as reported	$	(339,506	)
Net loss, as revised	$	(335,610	)

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Consolidated Financial Statements of Serena and the notes thereto included elsewhere in this report. Our discussion contains forward-looking statements under the Private Securities Reform Act of 1995 which include, but are not limited to, statements about our plans, objectives, expectations and intentions and other statements contained in this report that are not historical facts. When used in this report, the words “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” and similar expressions are generally intended to identify forward-looking statements. Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements, including those factors set forth under “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business,” and elsewhere in, or incorporated by reference into, this report. We assume no obligation to update the forward-looking information contained in this report.

Overview

We are the largest global independent software company in terms of revenue solely focused on managing change and processes across information technology, or IT, environments. Our products and services address the complexity of application lifecycle management, or ALM, and are used by our customers to manage the development of, and control change in, mission critical applications within both mainframe and distributed systems environments. In addition, we provide products and services to enable customers to rapidly address IT service management, or ITSM, and business process challenges through the use of visually designed process workflows. Our products and services allow customers to orchestrate and manage their application development, IT and business processes by automating and integrating disparate ALM and ITSM products and processes, improving process visibility and consistency, enhancing software integrity, mitigating application development risks, supporting auditability and regulatory compliance, and boosting productivity. Our revenue is generated by software licenses, maintenance contracts and professional services. Our software products are typically installed within customer IT environments and generally accompanied by renewable annual maintenance contracts.

In connection with our merger with Spyglass Merger Corp., an affiliate of Silver Lake, in March 2006, we entered into a senior secured credit agreement, issued senior subordinated notes, and entered into other related transactions, which we refer to collectively as the acquisition transactions. After consummation of the acquisition transactions, we became and continue to be highly leveraged. As of January 31, 2012, we had outstanding $442.8 million in aggregate indebtedness. Our liquidity requirements are significant, primarily due to debt service requirements.

The maturity dates of our term loans and revolving credit facilities under our senior secured credit agreement were originally March 10, 2013 and March 10, 2012, respectively. In order to improve our liquidity and mitigate risks associated with our ability to refinance our indebtedness in the future, and prompted by recent improvements in the credit markets, we took various actions to extend the maturity dates of our term loans and revolving credit commitments under our senior secured credit agreement.

On March 2, 2011 we entered into an amendment to our senior secured credit agreement to extend the final maturity date for the repayment of a portion of outstanding term loans, extend the commitment termination date of the commitments for a portion of the revolving credit facility and provide for additional flexibility in the financial covenants under the senior secured credit agreement. As a result of the amendment, $191.1 million of the existing term loans were extended and will mature on March 10, 2016, and $20.0 million of the existing revolving credit commitments were extended and will terminate on March 10, 2015. As a result of the amendment, the interest rate margins increased by 200 basis points for the extended facilities. The $124.9 million of existing term loans and the $55.0 million of existing revolving credit commitments that were not extended

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continued to have maturity dates of March 10, 2013 and March 10, 2012, respectively. In February 2011, we paid down $7.5 million of the existing terms loans. In September 2011, we paid off and cancelled the non-extended portion of the revolving credit facility, thereby leaving an extended revolving credit facility of $20.0 million maturing on March 10, 2015. As of January 31, 2012, the outstanding balance of the extended term loans and non-extended term loans was $191.1 million and $117.4 million, respectively, and there was no outstanding balance on the extended revolving credit facility.

On April 12, 2012 we entered into an Extension Agreement and Amendment No. 1 (the “Extension Agreement and Amendment”) to our senior secured credit agreement to extend the final maturity date of our non-extended term loans due March 10, 2013. In addition, we borrowed $15.9 million of incremental term loans under the senior secured credit agreement. Because of amendments to our senior secured credit agreement effected by the Extension Agreement and Amendment, this borrowing of incremental term loans is not deemed to reduce our overall incremental borrowing limit. As a result of the Extension Agreement and Amendment, $101.5 million of the non-extended term loans due March 10, 2013 were extended through the establishment of a new series of extended term loans, and we used the proceeds of the incremental term loans to repay in full $15.9 million of non-extended term loans due March 10, 2013 that were not extended as part of the Extension Agreement and Amendment. We refer to the incremental term loans and the newly extended term loans as the “2016 Tranche B Term Loans.” The 2016 Tranche B Term Loans have an applicable margin for London Interbank Offered Rate, or LIBOR, -based loans of 4.0% (or, if we exceed a specified leverage ratio, 4.25%) (which is 200 basis points higher than the interest rate under the non-extended term loans) and a LIBOR floor of 1.0%. The 2016 Tranche B Term Loans are subject to a prepayment premium of 1.00% if repaid or refinanced on or before April 12, 2013. The other terms and conditions of the 2016 Tranche B Term Loans are the same as those for the extended term loans due March 10, 2016. After giving effect to the Extension Agreement and Amendment and the repayment of the remaining non-extended term loans due March 10, 2013, all of our outstanding term loans under the senior secured credit agreement have a final maturity date of March 10, 2016 and the aggregate principal amount of the term loans outstanding under the senior secured credit agreement did not change.

For additional information regarding the our indebtedness under the senior secured credit agreement, see “Liquidity and Capital Resources—Senior Secured Credit Agreement” below.

We derive our revenue from software licenses, maintenance and professional services. Our distributed systems products are licensed on a per user seat basis. Customers typically purchase mainframe products under million instructions per second, or MIPS-based, perpetual licenses. Mainframe software products and applications are generally priced based on hardware computing capacity – the higher the mainframe computer’s MIPS capacity, the higher the cost of the software license.

We also provide ongoing maintenance, which includes technical support, version upgrades and enhancements, for an annual fee of approximately 21% of the software license fee for our distributed systems products and approximately 17% to 18% of the software license fee for our mainframe products. We recognize maintenance revenue over the term of the maintenance contract on a straight-line basis.

Professional services revenue is derived from technical consulting and educational services. Our professional services are typically billed on a time and materials basis and revenue is recognized as the related services are performed. Maintenance revenue and professional services revenue have lower gross profit margins than software license revenue as a result of the costs inherent in operating our customer support and professional services organizations.

Our total revenue was $224.0 million, $214.4 million and $219.5 million in the fiscal years ended January 31, 2010, 2011 and 2012, respectively, representing a decrease of 4% from fiscal year 2010 to 2011 and an increase of 2% from fiscal 2011 to 2012. The decrease in total revenues in the fiscal year ended January 31, 2011, when compared to the same period a year before, was primarily the result of pricing pressures on maintenance renewals as a result of the continued weak economy, foreign currency exchange rate fluctuations negatively impacting translated foreign revenues, and certain maintenance contract cancellations, and declines in our consulting business fueled in part by slower software purchasing activity. The increase in total revenues in the fiscal year ended January 31, 2012, when compared to the same period a year ago, was primarily the result of

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increases in software license revenues coming predominantly from our Serena Release Management and Serena Service Management new product offerings and increases in our consulting business fueled in part by higher software purchasing activity, all partially offset by pricing pressures on maintenance renewals as a result of the continued weak economy and certain maintenance contract cancellations.

In each of the fiscal years ended January 31, 2010, 2011 and 2012, 58% of our total software license revenue came from our distributed systems products and 42% came from our mainframe products.

Historically, our revenue has been generally attributable to sales in North America, Europe and to a lesser extent Asia Pacific and South America. Revenue attributable to sales in North America accounted for approximately 68%, 67% and 65% of our total revenue in the fiscal years ended January 31, 2010, 2011 and 2012, respectively. Our international revenue is attributable principally to our European operations and to a lesser extent Asia Pacific and South America. International revenue accounted for approximately 32%, 33% and 35% of our total revenue in the fiscal years ended January 31, 2010, 2011 and 2012, respectively.

Critical Accounting Policies and Estimates

This discussion is based upon our consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosures of contingent assets and liabilities. In many instances, we could have reasonably used different accounting estimates, and in other instances changes in the accounting estimates are reasonably likely to occur from period to period. Accordingly, actual results could differ significantly from the estimates made by us. To the extent that there are material differences between these estimates and actual results, our future financial statement presentation of our financial condition or results of operations could be affected.

On an ongoing basis, management evaluates its estimates and judgments, including those related to revenue recognition, trade accounts receivable and allowance for doubtful accounts, impairment or disposal of long-lived assets, accounting for income taxes, impairment of goodwill, valuation of our common stock, and assumptions around valuation of our options and restricted stock, among other things. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We refer to accounting estimates of this type as critical accounting policies and these are discussed further below.

In addition to these estimates and assumptions utilized in the preparation of historical financial statements, the inability to properly estimate the timing and amount of future revenue could significantly affect our future operations. We must make assumptions and estimates as to the timing and amount of future revenue. Specifically, our sales personnel monitor the status of all proposals, including the estimated closing date and potential dollar amount of such transactions. We aggregate these estimates to generate a sales pipeline and then evaluate the pipeline to identify trends in our business. This pipeline analysis and related estimates of revenue may differ significantly from actual revenue in a particular reporting period as the estimates and assumptions were made using the best available data at the time, which is subject to change. Specifically, slowdowns in the global economy and information technology spending has caused and may continue to cause customer purchasing decisions to be delayed, reduced in amount or cancelled, all of which have reduced and could continue to reduce the rate of conversion of the pipeline into contracts. A variation in the pipeline or the conversion rate of the pipeline into contracts could cause us to plan or budget inaccurately and thereby could adversely affect our business, financial condition or results of operations. In addition, because a substantial portion of our software license contracts close in the latter part of a quarter, we may not be able to adjust our cost structure to respond to a variation in the conversion of the pipeline in a timely manner, and thereby the delays may adversely and materially affect our business, financial condition or results of operations.

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We believe the following are critical accounting policies and estimates used in the preparation of our consolidated financial statements.

Revenue Recognition. We recognize revenue in accordance with guidance applicable to software transactions and recognize revenue when all of the following criteria are met as set forth in the guidance: (1) persuasive evidence of an arrangement exists, (2) delivery has occurred, (3) the fee is fixed or determinable and (4) collectibility is probable.

For multiple element arrangements (e.g., license and maintenance), revenue is allocated to each component of the contract based on vendor specific objective evidence, or VSOE, of its fair value represented by the price charged when the elements are sold separately. VSOE must exist for the undelivered elements to allocate the total fee among all delivered and non-essential undelivered elements of the arrangement. Since VSOE of fair value has been established for maintenance but not for software licenses, the residual method is used to allocate revenue to the license portion of multiple-element arrangements.

Our VSOE for certain elements of an arrangement is based upon the pricing in comparable transactions when the element is sold separately. VSOE for maintenance is primarily based upon customer renewal history when the services are sold separately. VSOE for professional services is also based upon the price charged when the services are sold separately.

If the undelivered elements of the arrangement are essential to the functionality of the software product(s), revenue is deferred until the essential elements are delivered. If VSOE does not exist for one or more non-essential undelivered elements, revenue is deferred until such evidence does exist for the undelivered elements, or until all elements are delivered, whichever is earlier. If VSOE of all non-essential undelivered elements exists but VSOE does not exist for one or more delivered elements, revenue is recognized using the residual method. Under the residual method, the revenue for the undelivered elements is deferred based upon VSOE and the remaining portion of the arrangement fee is recognized as revenue for the delivered elements, assuming all other criteria for revenue recognition have been met. If we could no longer establish VSOE for non-essential undelivered elements of multiple element arrangements, revenue would be deferred until all elements are delivered or VSOE is established for the undelivered elements, whichever is earlier.

We sell products to our end users and distributors under license agreements or purchase orders. Software license revenue from license agreements or purchase orders is recognized upon receipt and acceptance of a signed contract or purchase order and delivery of the software, provided the related fee is fixed or determinable and collection of the fee is probable. If an acceptance period is required, revenue is recognized upon the earlier of customer acceptance or the expiration of the acceptance period, as defined in the applicable software license agreement. Each new license includes maintenance, including the right to receive telephone support, “bug fixes” and unspecified upgrades and enhancements, for a specified duration of time, usually one year. The fee associated with such agreements is allocated between software license revenue and maintenance revenue based on the residual method.

We recognize maintenance revenue ratably over the life of the related maintenance contract. Maintenance contracts on perpetual licenses generally renew annually. We typically invoice and collect maintenance fees on an annual basis at the anniversary date of the license. Deferred revenue represents amounts received by us in advance of performance of the maintenance obligation. Professional services revenue includes fees derived from the delivery of training, installation, and consulting services. Revenue from training, installation, and consulting services is recognized on a time and materials basis as the related services are performed. These services have not historically involved significant production, modification or customization of the software and the services have not been essential to the functionality of the software.

Stock-based Compensation. We currently use the Black-Scholes option pricing model to determine the fair value of stock options. The determination of the fair value of stock-based awards on the date of grant using an

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option-pricing model is affected by our estimate of fair value for our common stock as well as assumptions regarding a number of complex and subjective variables. These variables include our expected stock price volatility over the term of the awards, actual and projected employee stock option exercise behaviors, risk-free interest rate and expected dividends.

Our common stock is privately held and therefore there is no public market for our common stock. To assist management in determining the estimated fair value of our common stock, we engage an external valuation specialist to perform valuations as of July 31 and January 31 of each fiscal year. We also engaged an external valuation specialist to perform a valuation to assist management in determining the estimated fair value of our common stock in connection with our tender offer completed in the third quarter of fiscal 2010. In estimating the fair value of our common stock as of January 31, 2011 and 2012, the external valuation firm employed a two-step approach that first estimated the fair value of our company as a whole, and then allocated the enterprise value to our common stock. These estimates were also used to assist management in measuring our expected stock price volatility over time.

We estimate the expected term of options granted based on observed and expected time to post-vesting exercise or cancellations. Expected volatility is based on the combination of historical volatility of our common stock and our peer group’s common stock over the period commensurate with the expected life of the options. We base the risk-free interest rate that we use in the option pricing model on U.S. Treasury zero-coupon issues with remaining terms similar to the expected term on the options. We do not anticipate paying any cash dividends in the foreseeable future and therefore use an expected dividend yield of zero in the option pricing model. We are required to estimate forfeitures at the time of grant and revise those estimates in subsequent periods if actual forfeitures differ from those estimates. We use forecasted projections to estimate pre-vesting option forfeitures and record stock-based compensation expense only for those awards that are expected to vest. If factors change and we employ different assumptions for estimating stock-based compensation expense in future periods or if we decide to use a different valuation model, the future periods may differ significantly from what we have recorded in the current period and could materially affect our operating results.

The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable, characteristics not present in our option grants. Existing valuation models, including the Black-Scholes and lattice binomial models, may not provide reliable measures of the ultimately realized fair values of our stock-based awards. Consequently, there is a risk that our estimates of the fair values of our stock-based compensation awards on the grant dates may bear little resemblance to the actual values realized upon the exercise, expiration, early termination or forfeiture of those stock-based payments in the future. Certain stock-based payments, such as employee stock options, may expire worthless or otherwise result in zero intrinsic value as compared to the fair values originally estimated on the grant date and reported in our financial statements. Alternatively, value may be realized from these instruments that are significantly higher than the fair values originally estimated on the grant date and reported in our financial statements. There currently is no market-based mechanism or other practical application to verify the reliability and accuracy of the estimates stemming from these valuation models, nor is there a means to compare and adjust the estimates to actual values.

Stock-based compensation expense is associated with employee stock options, restricted stock awards and restricted stock units. In the fiscal years ended January 31, 2010, 2011 and 2012, stock-based compensation expense totaled $2.9 million, $3.6 million and $1.4 million, respectively.

See Notes 1(o) and 5 of notes to our consolidated financial statements for further information regarding stock-based compensation.

Valuation of Long-Lived Assets, Including Goodwill. Assets such as property, plant and equipment, and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Such events or changes in

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circumstances include, but are not limited to, a significant decrease in the fair value of the underlying business or asset, a significant decrease in the benefits realized from the acquired business or asset, difficulties or delays in integrating the business, or a significant change in the operations of the acquired business or use of an asset. Recoverability of long-lived assets other than goodwill is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Significant management judgment is required in identifying a triggering event that arises from a change in circumstances; forecasting future operating results; and estimating the proceeds from the disposition of long-lived or intangible assets. Material impairment charges could be necessary should different conditions prevail or different judgments be made. Assets to be disposed of would be separately presented in the consolidated balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and would be no longer depreciated. The assets and liabilities of a disposed group classified as held for sale would be presented separately in the appropriate asset and liability sections of the consolidated balance sheet.

Goodwill is tested annually for impairment in the fourth quarter of each fiscal year, and is tested for impairment more frequently if events and circumstances indicate that the asset might be impaired. Factors we consider important that could trigger an impairment review include, but are not limited to, significant under-performance relative to expected, historical or projected future operating results, significant changes in the manner of our use of acquired assets or the strategy for our overall business, or significant negative economic trends. An impairment loss is recognized to the extent that the carrying amount exceeds the asset’s fair value. This determination is made at the reporting unit level and consists of two steps. First, we determine the fair value of a reporting unit and compare it to its carrying amount. Second, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized for any excess of the carrying amount of the reporting unit’s goodwill over the implied fair value of that goodwill.

We completed this test during the fourth quarters of fiscal years 2010, 2011, and 2012, respectively, and did not record an impairment loss on goodwill in any of those fiscal years.

Significant assumptions and estimates are made when determining if our goodwill has been impaired or if there are indicators of impairment. We base our estimates on assumptions that we believe to be reasonable, but actual future results may differ from those estimates as the assumptions used by us are inherently unpredictable and uncertain. These estimates include estimates of future market growth and trends, forecasted revenue and costs, expected periods of asset utilization, appropriate discount rates and other variables.

Accounting for Income Taxes. Income taxes are recorded using the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. We assess the likelihood that deferred tax assets will be recoverable from future taxable income and a valuation allowance is provided if it is determined more likely than not that some portion of the deferred tax assets will not be realized.

Recent Accounting Pronouncements

Refer to Note 1(r) of notes to our consolidated financial statements for a full description of recent accounting pronouncements including the expected dates of adoption and potential effects on our financial position, results of operations and cash flows.

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Historical Results of Operations

The following table sets forth our historical results of operations expressed as a percentage of total revenue and is not necessarily indicative of the results for any future period.

The following table sets forth our results of operations expressed as a percentage of total revenue. These operating results for the periods presented are not necessarily indicative of the results to be expected for any future period.

	Fiscal Years Ended January 31,
	2010			2011			2012
Revenue:
Software licenses		22	%		24	%		25	%
Maintenance		68	%		67	%		65	%
Professional services		10	%		9	%		10	%
Total revenue		100	%		100	%		100	%
Cost of revenue:
Software licenses		1	%		1	%		1	%
Maintenance		6	%		5	%		5	%
Professional services		10	%		8	%		10	%
Amortization of acquired technology and impairment of intangibles		18	%		16	%		2	%
Total cost of revenue		35	%		30	%		18	%
Gross profit		65	%		70	%		82	%
Operating expenses:
Sales and marketing		26	%		26	%		28	%
Research and development		15	%		15	%		12	%
General and administrative		7	%		7	%		7	%
Amortization of intangible assets		16	%		17	%		17	%
Restructuring, acquisition and other charges		3	%		3	%		1	%
Goodwill adjustments		—			1	%		—
Total operating expenses		67	%		69	%		65	%
Operating (loss) income		(2	)%		1	%		17	%
Other income (expense):
Interest income		—			—			—
Gain (loss) on early extinguishment of debt		2	%		—			—
Interest expense		(15	)%		(11	)%		(11	)%
Change in fair value of derivative instrument		2	%		1	%		—
Amortization and write-off of debt issuance costs		(1	)%		(1	)%		(1	)%
Amend and extend transaction fees		—			—			(1	)%
Total other income (expense)		(12	)%		(11	)%		(13	)%
(Loss) income before income taxes		(14	)%		(10	)%		4	%
Income tax (benefit) expense		(8	)%		(6	)%		—
Net (loss) income		(6	)%		(4	)%		4	%

Comparison of Fiscal Years Ended January 31, 2010, 2011 and 2012

Revenue

Our total revenue was $224.0 million, $214.4 million and $219.5 million in fiscal years 2010, 2011 and 2012, respectively, representing a decrease of 4% from fiscal year 2010 to 2011 and an increase of 2% from fiscal year 2011 to 2012.

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The following table summarizes software licenses, maintenance and professional services revenues for the periods indicated:

	Fiscal Years Ended January 31,						Fiscal Year 2011 vs. 2010 Increase (Decrease)						Fiscal Year 2012 vs. 2011 Increase (Decrease)
	2010		2011		2012		In Dollars			In %			In Dollars			In %
	(dollars in thousands)
Revenue:
Software licenses	$	49,397	$	51,382	$	54,913	$	1,985			4	%	$	3,531			7	%
Maintenance		152,464		143,974		141,669		(8,490	)		(6	)%		(2,305	)		(2	)%
Professional services		22,153		19,030		22,959		(3,123	)		(14	)%		3,929			21	%
Total revenue	$	224,014	$	214,386	$	219,541	$	(9,628	)		(4	)%	$	5,155			2	%

Software Licenses. Software licenses revenue was $49.4 million, $51.4 million and $54.9 million in fiscal year 2010, 2011 and 2012, respectively, representing 22%, 24% and 25% of total revenue, respectively. Software licenses revenue increased $2.0 million, or 4%, from fiscal year 2010 to 2011 and $3.5 million, or 7%, from fiscal year 2011 to 2012. The increase in fiscal year 2011, when compared to fiscal year 2010, in both absolute dollars and as a percentage of total revenue was primarily due to our hiring of additional sales representatives and additional marketing programs during the fiscal year. The increase in fiscal year 2012, when compared to fiscal year 2011, in both absolute dollars and as a percentage of total revenue was primarily the result of increases in software license revenues coming from our Serena Release Manager and Serena Service Manager new product offerings. Our core ALM products continue to make up a significant portion of our total software license revenue. Combined, our core ALM products accounted for $44.7 million, $46.0 million and $49.1 million in fiscal year 2010, 2011 and 2012, respectively, representing 91%, 90% and 89% of total software license revenue, respectively. In each of the years in the three year period ended January 31, 2012, distributed systems products accounted for 58% of total software licenses revenue. Distributed systems products were $28.5 million, $29.8 million and $31.7 million of total software licenses revenue in fiscal year 2010, 2011 and 2012, respectively. We expect that our Serena Release Manager and Serena Service Manager offerings will account for a substantial portion of software license revenue in the future along with our Dimensions, Professional and Serena Business Manager family of products. We expect software license revenue for the fiscal quarter ending April 30, 2012 to decline sequentially when compared to the fiscal quarter ending January 31, 2012 due to seasonally stronger sales in our fiscal quarter ending January 31.

Maintenance. Maintenance revenue was $152.5 million, $144.0 million and $141.7 million in fiscal year 2010, 2011 and 2012, respectively, representing 68%, 67% and 65% of total revenue, respectively. Maintenance revenue decreased $8.5 million, or 6%, from fiscal year 2010 to 2011 and $2.3 million, or 2%, from fiscal year 2011 to 2012. The decrease in fiscal year 2011, when compared to fiscal year 2010 was primarily due to pricing pressures on maintenance renewals as a result of the weak global economy, foreign currency exchange rate fluctuations negatively impacting translated foreign revenues, and certain maintenance contract cancellations. The decrease in fiscal year 2012, when compared to fiscal year 2011 was primarily due to continued pricing pressures on maintenance renewals and maintenance contract cancellations. We expect maintenance revenue to remain generally flat in the near term as maintenance contracts continue to renew at consistent rates and we continue to sell software licenses.

Professional Services. Professional services revenue was $22.2 million, $19.0 million and $23.0 million in fiscal year 2010, 2011 and 2012, respectively, representing 10%, 9% and 10% of total revenue, respectively. Professional services revenue decreased $3.2 million, or 14%, from fiscal year 2010 to 2011 and increased $4.0 million, or 21%, from fiscal year 2011 to fiscal year 2012. The decrease in fiscal year 2011, when compared to fiscal year 2010, in both absolute dollars and as a percentage of total revenue was primarily due to a decline in the number of consulting engagements primarily as a result of the continuing general weakening of the worldwide economy. The increase in fiscal year 2012, when compared to fiscal year 2011, in both absolute

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dollars and as a percentage of total revenue was primarily due to an increase in the number of consulting engagements primarily as a result of higher software license revenue and our focus on solution-oriented sales, and an expanded professional services organization. In general, professional services revenue is attributable to consulting opportunities in our installed customer base and expanding our consulting service capabilities. We expect professional services revenue to remain generally flat or slightly increase in the near term as we maintain our focus on selling solution-oriented offerings based on our ALM products and Serena Business Manager and Serena Service Manager family of products.

Cost of Revenue

Cost of revenue, consisting of cost of software licenses, cost of maintenance, cost of professional services and amortization of acquired technology and impairment of intangibles was $78.4 million, $64.8 million and $39.4 million in fiscal year 2010, 2011 and 2012, respectively, representing 35%, 30% and 18% of total revenue, respectively. Cost of revenue decreased $13.6 million, or 17%, from fiscal year 2010 to fiscal year 2011 and $25.4 million, or 39%, from fiscal year 2011 to fiscal year 2012. Cost of revenue decreased from fiscal year 2010 to fiscal year 2011 primarily due to the absence in 2011 of the impairment charge taken in fiscal year 2010 on capitalized software costs related to our on-demand application services totaling $6.8 million and a decrease in cost of professional services resulting from a decline in professional services revenue. Cost of revenue decreased from fiscal year 2011 to fiscal year 2012 primarily due to certain acquired technology assets from the merger in 2006 being fully amortized in the first quarter of fiscal 2012, offset in part by an increase in cost of professional services resulting from an increase in professional services revenue.

The following table summarizes cost of revenue for the periods indicated:

	Fiscal Years Ended January 31,									Fiscal Year 2011 vs. 2010 Increase (Decrease)						Fiscal Year 2012 vs. 2011 Increase (Decrease)
	2010			2011			2012			In Dollars			In %			In Dollars			In %
	(dollars in thousands)
Cost of revenue:
Software licenses	$	3,253		$	1,380		$	2,632		$	(1,873	)		(58	)%	$	1,252			91	%
Maintenance		12,585			11,545			11,452			(1,040	)		(8	)%		(93	)		(1	)%
Professional services		21,164			18,151			21,643			(3,013	)		(14	)%		3,492			19	%
Amortization of acquired technology and impairment of intangibles		41,415			33,695			3,672			(7,720	)		(19	)%		(30,023	)		(89	)%
Total cost of revenue	$	78,417		$	64,771		$	39,399		$	(13,646	)		(17	)%	$	(25,372	)		(39	)%
Percentage of total revenue		35	%		30	%		18	%

Software Licenses. Cost of software licenses consists principally of fees associated with integrating third party technology into our Serena Release Automation, PVCS and Dimensions distributed systems products and, to a lesser extent, salaries, bonuses and other costs associated with our product release organization. In fiscal 2010 only, cost of software licenses also included amortization of capitalized software costs associated with our on-demand application services. Beginning in fiscal 2011, we ceased amortizing capitalized software costs because the capitalized software costs were fully impaired in the fourth quarter of fiscal 2010. Cost of software licenses was $3.3 million, $1.4 million and $2.6 million in fiscal year 2010, 2011 and 2012, respectively, representing 7%, 3% and 5% of total software licenses revenue, respectively. Cost of software licenses decreased $1.9 million, or 58%, from fiscal year 2010 to fiscal year 2011 and increased $1.2 million, or 91%, from fiscal year 2011 to fiscal year 2012. The decrease in both absolute dollars and as a percentage of total software licenses revenue in fiscal year 2011, when compared to fiscal year 2010, was primarily due to the absence of amortization of certain capitalized software costs associated with our on-demand application services in fiscal 2011. The increase in both absolute dollars and as a percentage of total software licenses revenue in fiscal year 2012, when compared to fiscal year 2011, was primarily due to increases in certain distributed systems products sales that have fees associated with distributing third party product and integrating third party technology into our products.

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Maintenance. Cost of maintenance consists primarily of salaries, bonuses and other costs associated with our customer support organizations. Cost of maintenance was $12.6 million, $11.5 million and $11.4 million in fiscal year 2010, 2011 and 2012, respectively, representing 8% of total maintenance revenue in each of the three fiscal periods. Cost of maintenance decreased $1.1 million, or 8%, from fiscal year 2010 to 2011 and $0.1 million, or 1%, from fiscal year 2011 to 2012. The decrease in absolute dollars in fiscal year 2011, when compared to fiscal year 2010, was primarily attributable to decreases in expenses associated with our customer support organization resulting from restructuring and other cost cutting initiatives. The decrease in absolute dollars in fiscal year 2012, when compared to fiscal year 2011, was primarily attributable to decreases in expenses associated with our customer support organization resulting from prior restructuring and other cost cutting initiatives, offset in part by general cost increases associated with our customer support organization.

Professional Services. Cost of professional services consists of salaries, bonuses and other costs associated with supporting our professional services organization. Cost of professional services was $21.2 million, $18.2 million and $21.6 million in fiscal year 2010, 2011 and 2012, respectively, representing 95%, 95% and 94% of total professional services revenue, respectively. Cost of professional services decreased $3.0 million, or 14%, from fiscal year 2010 to 2011 and increased $3.4 million, or 19%, from fiscal year 2011 to fiscal year 2012. The absolute dollar decrease in fiscal year 2011, when compared to fiscal year 2010, was predominantly due to decreases in expenses as a result of lower professional services revenue and, to a lesser extent, restructuring and other cost cutting initiatives, all partially offset by increases in stock-based compensation expenses. The absolute dollar increase in fiscal year 2012, when compared to fiscal year 2011, was predominantly due to increases in headcount to support higher professional services revenue.

Amortization of Acquired Technology and Impairment of Intangibles. In connection with our merger in March 2006, and to a lesser extent, small technology acquisitions in March 2006, October 2006 and September 2008, we recorded $178.7 million in acquired technology, offset by amortization totaling $178.7 million as of January 31, 2012. Amortization of acquired technology was $41.4 million, $33.7 million and $3.7 million in fiscal year 2010, fiscal year 2011 and fiscal year 2012, respectively. Amortization of acquired technology in fiscal year 2010 also included an impairment charge totaling $6.8 million on certain capitalized software intangibles related to our on-demand application services. The acquired technology associated with our merger in March 2006 became fully amortized in the first quarter of fiscal 2012. Amortization expense was predominantly due to the acquired technology recorded in connection with the merger.

Operating Expenses

The following table summarizes operating expenses for the periods indicated:

	Fiscal Years Ended January 31,									Fiscal Year 2011 vs. 2010 Increase (Decrease)						Fiscal Year 2012 vs. 2011 Increase (Decrease)
	2010			2011			2012			In Dollars			In %			In Dollars			In %
	(dollars in thousands)
Operating expenses:
Sales & marketing	$	57,488		$	55,602		$	61,247		$	(1,886	)		(3	)%	$	5,645			10	%
Research & development		32,737			31,584			26,925			(1,153	)		(4	)%		(4,659	)		(15	)%
General & administrative		16,600			15,939			14,033			(661	)		(4	)%		(1,906	)		(12	)%
Amortization of intangible assets		36,813			36,813			36,796			—			—			(17	)		—
Restructuring, acquisition and other charges		7,796			5,332			2,974			(2,464	)		(32	)%		(2,358	)		(44	)%
Goodwill adjustments		—			1,433			—			1,433			—			(1,433	)		(100	)%
Total operating expenses	$	151,434		$	146,703		$	141,975		$	(4,731	)		(3	)%	$	(4,728	)		(3	)%
Percentage of total revenue		67	%		69	%		65	%

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Sales and Marketing. Sales and marketing expenses consist primarily of salaries, commissions and bonuses, payroll taxes and employee benefits as well as travel, entertainment and marketing expenses. Sales and marketing expenses were $57.5 million, $55.6 million and $61.2 million in fiscal year 2010, 2011 and 2012, respectively, representing 26%, 26% and 28% of total revenue, respectively. Sales and marketing expenses decreased $1.9 million, or 3%, from fiscal year 2010 to 2011 and increased $5.6 million, or 10%, from fiscal year 2011 to 2012. In absolute dollars, the decrease in fiscal year 2011, when compared to fiscal year 2010, was the result of restructuring and other cost cutting initiatives put in place in the second half of fiscal 2010, partially offset by higher direct costs, such as travel expenses and sales commissions, associated with higher software licenses revenue. In both absolute dollars and as a percentage of total revenue, the increase in fiscal year 2012, when compared to fiscal year 2011, was primarily the result of growing our sales and marketing organizations to support future software licenses sales and marketing programs, and higher direct costs, such as sales commissions and cash incentive compensation, associated with higher software licenses revenue. In absolute dollar terms, we expect sales and marketing expenses to increase in the near term.

Research and Development. Research and development expenses consist primarily of salaries, bonuses, payroll taxes and employee benefits and costs attributable to research and development activities. Research and development expenses were $32.7 million, $31.6 million and $26.9 million in fiscal year 2010, 2011 and 2012, respectively, representing 15%, 15% and 12% of total revenue, respectively. Research and development expenses decreased $1.1 million, or 4%, from fiscal year 2010 to 2011 and $4.7 million, or 15%, from fiscal year 2011 to 2012. In absolute dollars, the decrease in fiscal year 2011, when compared to fiscal year 2010, was primarily attributable to restructuring and other cost cutting initiatives put in place in the second half of fiscal year 2010 and first quarter of fiscal 2011. In both absolute dollars and as a percentage of total revenue, the decrease in fiscal year 2012, when compared to fiscal year 2011, was primarily attributable to restructuring and other cost cutting initiatives, including moving some of our research and development activities to lower cost offshore locations, put in place in fiscal 2011 and the first quarter of fiscal 2012, and a decrease in stock-based compensation expense totaling $0.9 million. In absolute dollar terms, we expect research and development expenses to remain generally flat or slightly increase in the near term.

General and Administrative. General and administrative expenses consist primarily of salaries, bonuses, payroll taxes and benefits and certain non-allocable administrative costs, including legal and accounting fees and bad debts. General and administrative expenses were $16.6 million, $15.9 million and $14.0 million in fiscal year 2010, 2011 and 2012, respectively, representing 7% of total revenues in each of the fiscal years ending in 2010, 2011 and 2012. General and administrative expenses decreased $0.7 million, or 4%, from fiscal year 2010 to 2011 and $1.9 million, or 12%, from fiscal year 2011 to 2012. In absolute dollars, the decrease in general and administrative expenses in fiscal year 2011, when compared to fiscal year 2010, was primarily attributable to restructuring and other cost cutting initiatives put in place in the second half of fiscal year 2010 and first quarter of fiscal 2011 and a decrease in bad debt expenses, all partially offset by an increase in stock-based compensation expense and fluctuations in foreign currency exchange rates. In absolute dollars, the decrease in general and administrative expenses in fiscal year 2012, when compared to fiscal year 2011, was primarily attributable to restructuring and other cost cutting initiatives put in place in fiscal 2011 and the first quarter of fiscal 2012, and a decrease in stock-based compensation expense totaling $1.3 million. We expect general and administrative expenses to remain generally flat or slightly increase in the near term.

Amortization of Intangible Assets. In connection with our merger in March 2006, and to a lesser extent a small technology acquisition in October 2006, we have recorded $299.9 million in identifiable intangible assets, reduced by amortization totaling $222.6 million as of January 31, 2012. For each of the fiscal years ended January 31, 2010, 2011 and 2012, amortization expense was predominantly due to the identifiable intangible assets recorded in connection with the merger. Assuming there are no impairments and no acquisitions, we expect to record $9.2 million in amortization expense in the next fiscal quarter, $9.1 million in amortization expense in each of the seven fiscal quarters following thereafter and finally, $3.9 million in amortization expense in the first quarter of fiscal 2015.

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Restructuring, Acquisition and Other Charges. In connection with our restructuring plans put in place in April 2009, September 2009, December 2009, January 2010, March 2010 and February 2011, and to a lesser extent, severance and other employee related costs, sponsor fees and other charges which are not part of ongoing operations, we recorded $7.8 million, $5.3 million and $3.0 million in restructuring, acquisition and other charges in the fiscal years ended January 31, 2010, 2011 and 2012, respectively. Restructuring, acquisition and other charges for the fiscal years ended January 31, 2010, 2011 and 2012 are categorized as follows (in thousands):

	Fiscal Years Ended January 31,
	2010		2011		2012
Sponsor fees, administration fees and other costs related to the Merger and the issuance of debt	$	1,226	$	1,238	$	1,240
Restructuring charges consisting principally of severance, payroll taxes and other employee benefits, facilities closures and legal and other miscellaneous costs (1)		5,579		2,272		163
Other redundancy costs not related to our restructuring plans including severance and other employee related costs, costs to establish or liquidate entities, and other miscellaneous costs not part of ongoing operations		991		1,822		1,571
Total restructuring, acquisition and other charges	$	7,796	$	5,332	$	2,974

(1) See Note 4(b) of notes to our consolidated financial statements for additional information related to our restructuring plans.

Goodwill Adjustments. In the second quarter of fiscal 2011, we corrected certain immaterial errors related to acquisition purchase accounting allocations and tax reserves that resulted in recording adjustments to goodwill totaling $1.4 million.

Other Income (Expense)

The following table summarizes total other income (expense) for the periods indicated:

	Fiscal Years Ended January 31,									Fiscal Year 2011 vs. 2010 Increase (Decrease)						Fiscal Year 2012 vs. 2011 Increase (Decrease)
	2010			2011			2012			In Dollars			In %			In Dollars			In %
	(dollars in thousands)
Other income (expense):
Interest income	$	437		$	212		$	168		$	(225	)		(51	)%	$	(44	)		(21	)%
Gain (loss) on early extinguishment of debt		4,602			(243	)		—			(4,845	)		(105	)%		243			(100	)%
Interest expense		(33,048	)		(24,633	)		(25,625	)		8,415			(25	)%		(992	)		4	%
Change in fair value of derivative instrument		4,277			1,616			—			(2,661	)		(62	)%		(1,616	)		(100	)%
Amortization and write-off of debt issuance cost		(2,158	)		(1,857	)		(1,361	)		301			(14	)%		496			(27	)%
Amend and extend transaction fees		—			—			(1,487	)		—			—			(1,487	)		—
Total other income (expense)	$	(25,890	)	$	(24,905	)	$	(28,305	)	$	985			(4	)%	$	(3,400	)		14	%
Percentage of total revenue		(12	)%		(11	)%		(13	)%

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Interest Income. Interest income was $0.4 million, $0.2 million and $0.2 million in fiscal year 2010, 2011 and 2012, respectively, representing decreases of $0.2 million, or 51%, in fiscal year 2011, when compared to fiscal year 2010, and $44 thousand, or 21%, in fiscal year 2012, when compared to fiscal year 2011. The decreases in fiscal year 2011, when compared to fiscal year 2010, and in fiscal year 2012, when compared to fiscal year 2011, were principally due to decreases in balances in interest bearing accounts, such as cash and cash equivalents, resulting from servicing and paying down principal on our debt and, to a lesser extent, lower yields, all partially offset by increases in cash balances resulting from the accumulation of free cash flows from operations.

Gain (Loss) On Early Extinguishment of Debt. In the fiscal year ended January 31, 2010, we recorded a gain on the early extinguishment of debt totaling $4.6 million. In the fiscal year ended January 31, 2011, we recorded a loss on the early extinguishment of debt totaling $0.2 million. All early extinguishments of debt for all periods followed authorization of our Board of Directors to repurchase our senior subordinated notes. See Note 8 of notes to our consolidated financial statements for additional information related to our debt.

Interest Expense. We recorded interest expense totaling $33.0 million, $24.6 million and $25.6 million in the fiscal years ended January 31, 2010, 2011 and 2012, respectively, in connection with the merger in the first fiscal quarter of 2007 and our borrowings of $400.0 million in a senior secured credit facility and an additional $200.0 million in senior subordinated notes, and an additional $65.0 million in borrowings under the revolving credit facility obtained late in the third quarter of fiscal year 2009, all partially offset by principal payments on the senior secured term credit facility of $2.0 million, $2.0 million and $7.5 million, respectively, principal payments on the senior subordinated notes of $24.4 million, $8.7 million and $0.0 million, respectively, and principal payments on the revolving credit facility of $0.0 million, $30.0 million and $35.0 million, respectively. Assuming we do not pay down any principal on the 2016 Tranche B Term Loans, we expect to incur incremental interest expense of approximately $0.7 million per quarter as a result of the higher interest rate under the 2016 Tranche B Term Loans that were used to refinance the non-extended terms loans due March 10, 2013. See “Liquidity and Capital Resources—Senior Secured Credit Agreement” below and Note 8 of notes to our consolidated financial statements for additional information related to our debt.

Change in Fair Value of Derivative Instrument. We used an interest rate swap as part of our interest rate risk management strategy and to comply with certain requirements of our senior secured credit agreement. In the second fiscal quarter ended July 31, 2006, we entered into an interest rate swap transaction to effectively convert the variable interest rate on a portion of the $400.0 million senior secured term loan to a fixed rate. The swap, which expired on April 10, 2010, was recorded on the balance sheet at fair value. The swap was not designated as an accounting hedge, and accordingly, changes in the fair value of the derivative were recognized in the statement of operations. The notional amount of the swap was $250.0 million initially declining over time to $126.0 million at the time the swap transaction expired on April 10, 2010. Under the terms of the swap, we made interest payments based on a fixed rate equal to 5.38% and received interest payments based on the LIBOR setting rate, set in arrears. In fiscal year 2010 and 2011, we recorded $4.3 million and $1.6 million, respectively, in income related to the changes in the fair value of the derivative. We did not enter into a similar interest rate swap during fiscal year 2011 and do not expect to enter into a similar interest rate swap in the future.

Amortization and Write-Off of Debt Issuance Costs. In connection with the merger in March 2006 and the amend and extend transaction in March 2011, we capitalized $16.1 million and $0.5 million in debt issuance costs, respectively, reduced by accumulated amortization totaling $12.0 million as of January 31, 2012. In fiscal year 2010, 2011 and 2012, we recorded amortization and write-off of debt issuance costs totaling $2.2 million, $1.9 million and $1.4 million, respectively. The write-offs of unamortized debt issuance costs in fiscal year 2010 and 2011 associated with the early extinguishment of the senior subordinated notes totaled $0.4 million and $0.1 million, respectively. The write-offs were recorded as an addition to amortization of debt issuance costs. See Note 8 of notes to our consolidated financial statements for additional information related to our debt.

Amend and Extend Transaction Fees. In connection with the amended and restated senior secured credit agreement entered into in March 2011, we incurred $1.5 million of fees which were immediately expensed in the

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quarter ended April 30, 2011. In connection with the Extension Agreement and Amendment entered into in April 2012, we incurred $3.8 million of fees in our first fiscal quarter ending April 30, 2012. For additional information regarding the amended and restated senior secured credit agreement, see “Liquidity and Capital Resources—Senior Secured Credit Agreement” below and Note 8 of notes to our consolidated financial statements “Senior Secured Credit Agreement.”

Income Tax (Benefit) Expense

The following table summarizes total income tax benefit for the periods indicated:

	Fiscal Years Ended January 31,								Fiscal Year 2011 vs. 2010 Increase (Decrease)					Fiscal Year 2012 vs. 2011 Increase (Decrease)
	2010			2011			2012		In Dollars		In %			In Dollars		In %
	(dollars in thousands)
Income tax (benefit) expense:
Total income tax (benefit) expense	$	(18,705	)	$	(12,437	)	$	918	$	6,268		(34	)%	$	13,355		(107	)%
Percentage of total revenue		(8	)%		(6	)%		—

Income Taxes. Income tax benefits of $18.7 million and $12.4 million were recorded in fiscal year 2010 and 2011, respectively, representing effective income tax benefit rates of 59% and 57%, respectively. An income tax expense of $0.9 million was recorded in fiscal year 2012 representing an effective income tax rate of 9%. The effective income tax benefit rate decreased to 57% in fiscal year 2011 from 59% in fiscal year 2010 primarily due to the goodwill impairment charge in fiscal 2011 (2%) as well as the impact of permanently reinvested foreign earnings (10%) offset by benefits including U.S. research and experimentation tax credits (1%), state taxes (1%), the reversal of a reserve for uncertain tax positions (3%), the domestic manufacturing deduction (3%) and other individual immaterial items (2%). The effective income tax rate decreased to 9% in fiscal year 2012 from a benefit of 57% in fiscal year 2011 primarily due to benefits including the impact of permanently reinvested foreign earnings (11%), U.S. research and experimentation tax credits (6%), state taxes (9%), the change in reserve for uncertain tax positions (9%), and the domestic manufacturing deduction (18%) offset by an increase in the valuation allowance due to changes in California income tax law (3%) as well as other individual immaterial items (3%). During periods where we experience losses, the benefits described above will generally increase the effective income tax rate above the statutory rate, whereas, they will reduce the effective income tax rate below the statutory rate during periods where we have income. See Note 6 of notes to our consolidated financial statements for further information regarding income taxes and its impact on our results of operations and financial position.

Liquidity and Capital Resources

Cash and, Cash Equivalents. Since our inception, we have financed our operations and met our capital expenditure requirements through cash flows from operations. As of January 31, 2012, we had $109.7 million in cash and cash equivalents. Approximately 18% of our cash and cash equivalents were held by foreign subsidiaries as of January 31, 2012. Our intent is to permanently reinvest our earnings from certain foreign operations. We do not anticipate a need to repatriate dividends from foreign operations that are permanently reinvested in order to fund operations.

Net Cash Provided by Operating Activities. Cash flows provided by operating activities were $38.8 million, $46.0 million and $32.2 million in fiscal year 2010, 2011 and 2012, respectively. In fiscal year 2010, our cash flows provided by operating activities exceeded net loss principally due to the inclusion of non-cash expenses in net loss, a decrease in trade accounts receivable and an increase in accrued expenses, all partially offset by interest payments on the term credit facility and senior subordinated notes totaling $33.5 million, income tax

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payments net of refunds totaling $11.3 million and cash collections in advance of revenue recognition for maintenance contracts. In fiscal year 2011, our cash flows provided by operating activities exceeded net loss principally due to the inclusion of non-cash expenses in net loss and a decrease in trade accounts receivable, all partially offset by interest payments on the term credit facility and senior subordinated notes totaling $25.2 million and income tax payments net of refunds totaling $11.0 million. In fiscal year 2012, our cash flows provided by operating activities exceeded net income principally due to the inclusion of non-cash expenses in net income, partially offset by interest payments made on the term credit facility and senior subordinated notes totaling $25.0 million, corporate income tax payments net of refunds totaling $18.3 million, decreases in accrued expenses and other liabilities, increases in prepaid expenses and other assets, cash collections in advance of revenue recognition for maintenance contracts, an increase in accounts receivable, and a decrease in accounts payable. Non-cash expenses and income included in the net loss and net income consisted of amortization of intangible assets, amortization of deferred stock-based compensation, net deferred income taxes and depreciation expense for all periods, gains and losses on the early extinguishment of debt and fair market value adjustments on the interest rate swap in fiscal years 2010 and 2011 only, goodwill impairment in fiscal year 2011 only, and impairment of other intangibles in fiscal year 2010 only.

Net Cash Used in Investing Activities. Net cash used in investing activities was $4.7 million, $2.8 million and $3.8 million in fiscal year 2010, 2011 and 2012, respectively. In fiscal year 2010, cash used in investing activities related principally to capitalized software totaling $3.6 million, the purchase of computer equipment and office furniture and equipment totaling $0.8 million and acquisition related costs paid totaling $0.4 million related to our acquisition of Projity, Incorporated. In fiscal year 2011 and 2012, cash used in investing activities related principally to the purchase of computer equipment and office furniture and equipment totaling $2.4 million and $3.5 million, respectively, and capitalized software totaling $0.4 million and $0.3 million, respectively.

Net Cash Used In Financing Activities. Net cash used in financing activities was $22.7 million, $41.3 million and $44.5 million in fiscal year 2010, 2011 and 2012, respectively. In fiscal year 2010, net cash used in financing activities principally related to the repurchase of our senior subordinated notes totaling $19.8 million, the payment of principal on the senior secured term loan totaling $2.0 million, and to a lesser extent, the repurchase of option rights under our employee stock option plan totaling $0.7 million and the repurchase of common stock under stock repurchase plans totaling $0.2 million. In fiscal year 2011, net cash used in financing activities principally related to the payment of principal on our revolving term credit facility totaling $30.0 million, the repurchase of our senior subordinated notes totaling $8.9 million, the payment of principal on the senior secured term loan totaling $2.0 million, and to a lesser extent, the repurchase of common stock totaling $0.3 million. In fiscal year 2012, net cash used in financing activities principally related to principal payments made on the non-extended 2012 revolving credit facility, extended 2015 revolving credit facility and non-extended 2012 term loan totaling $25.7 million, $9.3 million and $7.5 million, respectively, and debt issue costs paid associated with the amend and extend transaction totaling $2.0 million.

Contractual Obligations and Commitments

After consummation of the acquisition transactions, we became and continue to be highly leveraged. As of January 31, 2012, we had outstanding $442.8 million in aggregate indebtedness. Our liquidity requirements are significant, primarily due to debt service requirements. Our cash interest paid for the fiscal year ended January 31, 2012 was $25.0 million.

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The following is a summary of our various contractual commitments as of January 31, 2012, after giving effect to the March 16, 2012 new headquarters facilities office lease and the April 12, 2012 Extension Agreement and Amendment (as described in Note 8 “Debt” of notes to our consolidated financial statements), including non-cancelable operating lease agreements for office space that expire between calendar years 2012 and 2018. All periods start from February 1, 2012.

	Payments Due by Period (2)
	Total		Less than 1 year		1-3 years		3-5 years		Thereafter
	(in thousands)
Operating lease obligations	$	13,662	$	2,024	$	4,851	$	3,307	$	3,480
Credit Facility:
2016 extended term loans due March 10, 2016		191,101		—		—		191,101		—
2016 Tranche B Term Loans due March 10, 2016		117,399		—		—		117,399		—
Senior subordinated notes due March 15, 2016		134,265		—		—		134,265		—
Scheduled interest on debt (1)		117,182		28,426		56,852		31,904		—
	$	573,609	$	30,450	$	61,703	$	477,976	$	3,480

(1) Scheduled interest on debt is calculated through the instruments due date and assumes no principal paydowns or borrowings. Scheduled interest on debt includes the 2016 extended term loans due March 10, 2016 at an annual rate of 4.47455%, which is the rate in effect as of April 30, 2012, the 2016 Tranche B Term Loans due March 10, 2016 at an annual rate of 5.00000%, which is the rate in effect as of April 30, 2012, the commitment fee on the unutilized amount of the 2015 extended revolving term credit facility due March 10, 2015 at the annual rate of 0.375%, which is the rate in effect as of April 30, 2012, and the ten year senior subordinated notes due March 15, 2016 at the stated annual rate of 10.375%.

(2) This table excludes our unrecognized tax benefits totaling $4.6 million as of January 31, 2012 since we have determined that the timing of payments with respect to these liabilities cannot be reasonably estimated.

Acquisitions. The aggregate amount of cash paid relating to acquisitions during the fiscal year ended January 31, 2010 was $0.4 million in connection with our acquisition of Projity, Incorporated in September 2008. There were no cash payments relating to acquisitions during the fiscal years ended January 31, 2011 and 2012.

Off-Balance Sheet Arrangements. As part of our ongoing operations, we do not participate in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, or SPEs, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As of January 31, 2012, we are not involved in any unconsolidated SPE transactions.

Senior Secured Credit Agreement

In connection with the consummation of the merger, we entered into a senior secured credit agreement pursuant to a debt commitment we obtained from affiliates of the initial purchasers of our senior subordinated notes.

General. The borrower under the senior secured credit agreement initially was Spyglass Merger Corp. and immediately following completion of the merger became Serena. The senior secured credit agreement originally provided for (1) a seven-year term loan in the amount of $400.0 million, amortizing at a rate of 1.00% per year on a quarterly basis for the first six and three-quarter years after the closing date of the acquisition transactions, with the balance payable at maturity, and (2) a six-year revolving credit facility that permits loans in an aggregate amount of up to $75.0 million, which includes a letter of credit facility and a swing line facility. In addition, subject to certain terms and conditions, the senior secured credit agreement provides for one or more uncommitted incremental term loan or revolving credit facilities in an aggregate amount not to exceed $150.0 million. Proceeds of the term loan on the initial borrowing date were used to partially finance the merger, to

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refinance certain indebtedness of Serena and to pay fees and expenses incurred in connection with the merger. Proceeds of the revolving credit facility have been, and any incremental facilities will be, used for working capital and general corporate purposes of the borrower and its restricted subsidiaries.

Amended and Restated Senior Secured Credit Agreement. On March 2, 2011 we entered into an amendment to our senior secured credit agreement to extend the final maturity date for the repayment of a portion of outstanding term loans, extend the commitment termination date of the commitments for a portion of the revolving credit facility and provide for additional flexibility in the financial covenants under the senior secured credit agreement. As a result of the amendment, $191.1 million of the existing term loans were extended and will mature on March 10, 2016 (the “extended term loans”), and $20.0 million of the existing revolving credit commitments were extended and will terminate on March 10, 2015 (the “extended revolving credit commitments”). The $124.9 million of the existing term loans that were not extended (the “non-extended term loans”), and the $55.0 million of the existing revolving credit commitments that were not extended (the “non-extended revolving credit commitments”) were to continue to mature on March 10, 2013 and March 10, 2012, respectively. We refer to the extended term loans and extended revolving credit commitments collectively as the “extended facilities,” and the non-extended term loans and non-extended credit commitments collectively as the “non-extended facilities.” As a result of the amendment, the interest rate margins were increased by 200 basis points for the extended facilities. In addition, the maximum total leverage ratio will step up to 5.50x through the test periods ending on July 31, 2012 and will step down to 5.00x thereafter for both the extended facilities and non-extended facilities. After giving effect to the amendment, the aggregate principal amount outstanding under the senior secured credit agreement did not change. In connection with the amendment, Lehman Commercial Paper Inc. resigned as administrative agent, collateral agent, swingline lender and letter of credit issuer under the senior secured credit agreement and was replaced by Barclays Bank PLC.

On April 12, 2012 we entered into an Extension Agreement and Amendment No. 1 (the “Extension Agreement and Amendment”) to our senior secured credit agreement to extend the final maturity date of our non-extended term loans due March 10, 2013. In addition, we borrowed $15.9 million of incremental term loans under the senior secured credit agreement and entered into a joinder agreement with the incremental term loan lenders. As a result of the Extension Agreement and Amendment, $101.5 million of the non-extended term loans due March 10, 2013 were extended through the establishment of a new series of extended term loans. We used the proceeds of the incremental term loans to repay in full $15.9 million of non-extended term loans due March 10, 2013 that were not extended as part of the Extension Agreement and Amendment. The incremental term loans and the newly extended term loans have identical terms and will be deemed for all purposes under the senior secured credit agreement to be the same class of loans (collectively, the “2016 Tranche B Term Loans”). The 2016 Tranche B Term Loans have an applicable margin for London Interbank Offered Rate, or LIBOR, -based loans of 4.0% (or, if we exceed a specified leverage ratio, 4.25%), have a LIBOR floor of 1.0% and are subject to a prepayment premium of 1.0% if repaid or refinanced on or prior to April 12, 2013. The other terms and conditions of the 2016 Tranche B Term Loans are the same as those for the existing term loans due March 10, 2016. After giving effect to the Extension Agreement and Amendment and the repayment of the remaining non-extended term loans due March 10, 2013, all outstanding term loans under the senior secured credit agreement have a final maturity date of March 10, 2016, the principal amount of all term loans will continue to amortize at a rate of 1.00% per year on a quarterly basis and the aggregate principal amount of the term loans outstanding under the senior secured credit agreement did not change. We paid each lender holding 2016 Tranche B Term Loans an original issuer discount equal to 1.5% of the principal amount of 2016 Tranche B Term Loans held by such lender.

The Extension Agreement and Amendment amended the senior secured credit agreement to provide us the ability to refinance outstanding loans with incremental loans borrowed under the senior secured credit agreement without reducing the overall incremental borrowing capacity of $150 million. The Extension Agreement and Amendment also amended the senior secured credit agreement to provide “most favorable nations” pricing protection to the lenders of the original extended term loans and to the lenders of the 2016 Tranche B Term Loans if we enter into other new term loans under the senior secured credit agreement having an effective yield greater than .25% per annum over the effective yield of the 2016 Tranche B Term Loans or the original extended term loans.

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Interest Rates and Fees. As of January 31, 2012, the aggregate principal amount outstanding under the secured credit agreement was $308.5 million, which consisted of $191.1 million of the extended term loans due March 10, 2016 and $117.4 million of non-extended term loans due March 10, 2013. The extended term loans bear interest at a rate equal to three-month LIBOR plus 4.00%. That rate was 4.47455% as of April 30, 2012. The 2016 Tranche B Term Loans, which we used to refinance the non-extended term loans due March 10, 2013, bear interest at a rate equal to three-month LIBOR plus 4.00% with a 1.00% LIBOR floor. That rate was 5.00000% as of April 30, 2012. The 2015 extended revolving term credit facility, of which $0.0 million was outstanding as of January 31, 2012, bears interest at a rate equal to three-month LIBOR plus 3.75%. That rate was 4.47455% as of April 30, 2012. In general, and after giving effect to the Extension Agreement and Amendment and the repayment in full of the non-extended term loans due March 10, 2013, the loans under the senior secured credit agreement bear interest, at the option of the borrower, at the following rates:

Extended Term Loans due March 10, 2016:

• a rate equal to the LIBOR, plus an applicable margin of 4.00% (or, if we exceed a specified leverage ratio, 4.25%) or

• the alternate base rate, which is the higher of (1) the corporate base rate of interest announced by the administrative agent and (2) the Federal Funds rate plus 0.50%, plus, in each case, an applicable margin of 3.00% (or, if we exceed a specified leverage ratio, 3.25%).

2016 Tranche B Term Loans due March 10, 2016 and 2015 Extended Revolving Term Credit Facility:

• a rate equal to the London Interbank Offered Rate, or LIBOR, plus an applicable margin of (1) 4.00% (or, if we exceed a specified leverage ratio, 4.25%) (subject to a LIBOR floor of 1.00%) with respect to the 2016 Tranche B Term Loan and (2) 3.75% with respect to the revolving credit facility (or, if we exceed certain specified leverage ratios, 4.00%, 4.25% or 4.50%, depending on the actual ratio) or

• the alternate base rate, which is the higher of (1) the corporate base rate of interest announced by the administrative agent and (2) the Federal Funds rate plus 0.50%, plus, in each case, an applicable margin of (a) 3.00% (subject to an alternative base rate floor of 2.00%) with respect to the 2016 Tranche B Term Loan and (b) 2.75% with respect to the revolving credit facility (or, if we exceed certain specified leverage ratios, 3.00%, 3.25% or 3.50%, depending on the actual ratio).

Before our amendment of our senior secured credit agreement in March 2011, the revolving credit facility had an annual commitment fee on the undrawn portion of that facility commencing on the date of execution and delivery of the senior secured credit agreement. As a result of our borrowing $65.0 million under the revolving credit facility in the fiscal quarter ended October 31, 2008 and Lehman Commercial Paper, Inc., or LCPI, becoming a defaulting lender due to its failure to fund its portion of the loan commitment, the then annual commitment fee of 0.50% was not payable pursuant to the terms of the senior secured credit agreement until April 2010, when we repaid $30 million under the revolving credit facility. In connection with the amendment of our senior secured credit agreement in March 2011, Barclays Bank PLC assumed LCPI’s revolving credit commitment of $10.0 million, which revived the applicable revolving credit commitment and resulted in total non-extended and extended revolving credit commitments of $75.0 million.

During the quarter ended October 31, 2011, we cancelled the non-extended 2012 revolving credit commitment totaling $55.0 million under the senior secured credit agreement. As a result of the cancellation, our annual commitment fee is limited to the extended 2015 revolving credit commitment totaling $20.0 million under the senior secured credit agreement. Effective February 1, 2011, the annual commitment fee was 0.375% per annum.

After our delivery of financial statements and a computation of the maximum ratio of total debt (defined in the senior secured credit agreement) to trailing four quarters of EBITDA (defined in the senior secured credit agreement), or total leverage ratio, for the first full quarter ending after the closing date of the merger, the applicable margins and the commitment fee became subject to a grid based on the most recent total leverage ratio.

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Prepayments. At our option, (1) amounts outstanding under the term loan may be voluntarily prepaid and (2) the unutilized portion of the commitments under the revolving credit facility may be permanently reduced and the loans under such facility may be voluntarily repaid, in each case subject to requirements as to minimum amounts and multiples, at any time in whole or in part without premium or penalty, except that (i) any prepayment of LIBOR rate advances other than at the end of the applicable interest periods will be made with reimbursement for any funding losses or redeployment costs of the lenders resulting from the prepayment and (ii) our 2016 Tranche B Term Loans are subject to a prepayment premium of 1.0% if prepaid on or before April 12, 2013, and our existing term loans due March 10, 2016 are subject to a prepayment premium of 2.0% if prepaid on or before March 2, 2012 and a prepayment premium of 1.0% if prepaid on or before March 2, 2013 but after March 2, 2012. Loans under the term loan and under any incremental term loan facility are subject to mandatory prepayment with (a) 50% of annual excess cash flow with certain step downs to be based on the most recent total leverage ratio and agreed upon by the issuer and the lenders, (b) 100% of net cash proceeds of asset sales and other asset dispositions by the borrower or any of its restricted subsidiaries, subject to various reinvestment rights of the company and other exceptions, and (c) 100% of the net cash proceeds of the issuance or incurrence of debt by the company or any of its restricted subsidiaries, subject to various baskets and exceptions.

We have made principal payments totaling $25 million and $55 million in each of the fiscal years ended January 31, 2007 and January 31, 2008, respectively, and $2 million in the fiscal year ended January 31, 2010 on the $400 million senior secured term loan.

In the fiscal year ended January 31, 2011, we made a mandatory principal payment totaling $2 million on the senior secured term loan and a voluntary principal payment totaling $30 million on the revolving term credit facility.

In the fiscal quarter ended April 30, 2011, we made a mandatory principal payment in the amount of $7.5 million under the term loan, which was applied against the outstanding principal balance of the non-extended term loans on a pro rata basis. In the fiscal quarter ended October 31, 2011, we made voluntary principal payments on the non-extended 2012 revolving credit facility and the extended 2015 revolving credit facility totaling $25.7 million and $9.3 million, respectively.

Guarantors. All obligations under the senior secured credit agreement are to be guaranteed by each future direct and indirect restricted subsidiary of the company, other than foreign subsidiaries. We do not have any domestic subsidiaries and, accordingly, there are no guarantors.

Security. All obligations of the company and each guarantor (if any) under the senior secured credit agreement are secured by the following:

• a perfected lien on and pledge of (1) the capital stock and intercompany notes of each existing and future direct and indirect domestic subsidiary of the company, (2) all the intercompany notes of the company and (3) 65% of the capital stock of each existing and future direct and indirect first-tier foreign subsidiary of the company, and

• a perfected first priority lien, subject to agreed upon exceptions, on, and security interest in, substantially all of the tangible and intangible properties and assets of the company and each guarantor.

Covenants, Representations and Warranties. The senior secured credit agreement contains customary representations and warranties and customary affirmative and negative covenants, including, among other things, restrictions on indebtedness, investments, capital expenditures, sales of assets, mergers and acquisitions, liens and dividends and other distributions. There are no financial covenants included in the senior secured credit agreement, other than a minimum interest coverage ratio and a maximum total leverage ratio as discussed below under “Covenant Compliance.”

Events of Default. Events of default under the senior secured credit agreement include, among others, nonpayment of principal or interest, covenant defaults, a material inaccuracy of representations or warranties, bankruptcy and insolvency events, cross defaults and a change of control.

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Senior Subordinated Notes

As of January 31, 2012, we have outstanding $134.3 million principal amount of senior subordinated notes, bearing interest at a rate of 10.375%, payable semi-annually on March 15 and September 15, and maturing on March 15, 2016. Each of our domestic subsidiaries that guarantees the obligations under our senior secured credit agreement will jointly, severally and unconditionally guarantee the notes on an unsecured senior subordinated basis. As of the date of this report, we do not have any domestic subsidiaries and, accordingly, there are no guarantors on such date. The notes are our unsecured, senior subordinated obligations, and the guarantees, if any, will be unsecured, senior subordinated obligations of the guarantors. The notes are subject to redemption at our option under terms and conditions specified in the indenture related to the notes, and may be redeemed at the option of the holders at 101% of their face amount, plus accrued and unpaid interest, upon certain change of control events.

In the fiscal year ended January 31, 2010, we repurchased, in six separate privately negotiated transactions, an aggregate of $24.4 million of principal amount of our original outstanding $200.0 million senior subordinated notes. In the fiscal year ended January 31, 2011, we repurchased, in two separate privately negotiated transactions, an aggregate of $8.7 million of principal amount of our original outstanding $200.0 million senior subordinated notes. These repurchases resulted in a gain of $4.6 million from the extinguishment of debt in the fiscal year ended January 31, 2010 and a loss of $0.2 million from the extinguishment of debt in the fiscal year ended January 31, 2011. We may from time to time repurchase our senior subordinated notes in open market or privately negotiated purchases or otherwise or redeem our senior subordinated notes pursuant to the terms of the indenture related to the notes.

Covenant Compliance

Our senior secured credit agreement and the indenture governing the senior subordinated notes contain various covenants that limit our ability to engage in specified types of transactions. These covenants limit our and our restricted subsidiaries’ ability to, among other things:

• incur additional indebtedness or issue certain preferred shares;

• pay dividends on, redeem or repurchase our capital stock or make other restricted payments;

• make investments;

• make capital expenditures;

• create certain liens;

• sell certain assets;

• enter into agreements that restrict the ability of our subsidiaries to make dividend or other payments to us;

• guarantee indebtedness;

• engage in transactions with affiliates;

• prepay, repurchase or redeem the notes;

• create or designate unrestricted subsidiaries; and

• consolidate, merge or transfer all or substantially all of our assets and the assets of our subsidiaries on a consolidated basis.

In addition, under our senior secured credit agreement, we are required to satisfy and maintain specified financial ratios and other financial condition tests, including minimum interest coverage ratio and a maximum total leverage ratio. We were in compliance with all of the covenants under the secured credit agreement and indenture as of January 31, 2012. Our ability to meet those financial ratios and tests can be affected by events beyond our control, and we cannot assure you that we will meet those ratios and tests in the future. A breach of any of these covenants would result in a default (which, if not cured, could mature into an event of default) and in

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certain cases an immediate event of default under our senior secured credit agreement. Upon the occurrence of an event of default under our senior secured credit agreement, all amounts outstanding under our senior secured credit agreement could be declared to be (or could automatically become) immediately due and payable and all commitments to extend further credit could be terminated.

Earnings before interest, taxes, depreciation and amortization, or EBITDA, is a non-GAAP financial measure used to determine our compliance with certain covenants contained in our senior secured credit agreement. Adjusted EBITDA represents EBITDA further adjusted to exclude certain defined unusual items and other adjustments permitted in calculating covenant compliance under our senior secured credit agreement. We believe that the presentation of Adjusted EBITDA is appropriate to provide additional information to investors regarding our compliance with the financial covenants under our senior secured credit agreement.

The breach of financial covenants in our senior secured credit agreement (i.e., those that require the maintenance of ratios based on Adjusted EBITDA) would force us to seek a waiver or amendment with the lenders under our senior secured credit agreement, and no assurance can be given that we will be able to obtain any necessary waivers or amendments on satisfactory terms, if at all. The lenders would likely condition any waiver or amendment, if given, on additional consideration from us, such as a consent fee, a higher interest rate, principal repayment or more restrictive covenants and limitations on our business. Any such breach, if not waived by the lenders, would result in an event of default under that agreement, in which case the lenders could elect to declare all amounts borrowed due and payable. Any such acceleration would also result in a default under the indenture governing the senior subordinated notes. Additionally, under our debt agreements, our ability to engage in activities such as incurring additional indebtedness, making investments and paying dividends is also tied to ratios based on Adjusted EBITDA.

Adjusted EBITDA does not represent net income (loss) or cash flow from operations as those terms are defined by GAAP and does not necessarily indicate whether cash flows will be sufficient to fund cash needs. While Adjusted EBITDA and similar measures are frequently used as measures of operations and the ability to meet debt service requirements, these terms are not necessarily comparable to other similarly titled captions of other companies due to the potential inconsistencies in the method of calculation. Adjusted EBITDA does not reflect the impact of earnings or charges resulting from matters that we may consider not to be indicative of our ongoing operations. In particular, the definition of Adjusted EBITDA in the senior secured credit agreement allows us to add back certain defined non-cash, extraordinary, unusual or non-recurring charges that are deducted in calculating GAAP net income (loss). Our senior secured credit agreement requires that Adjusted EBITDA be calculated for the most recent four fiscal quarters. As a result, Adjusted EBITDA can be disproportionately affected by a particularly strong or weak quarter and may not be comparable to Adjusted EBITDA for any subsequent four-quarter period or any complete fiscal year.

The following is a reconciliation of net (loss) income, a GAAP measure of our operating results, to Adjusted EBITDA as defined in our debt agreements (in thousands):

	Fiscal Years Ended January 31,
	2010			2011			2012
Net (loss) income (1)	$	(13,022	)	$	(9,556	)	$	8,944
Interest expense (income), net (2)		25,890			24,905			28,305
Income tax (benefit) expense		(18,705	)		(12,437	)		918
Depreciation and amortization expense (3)		86,392			77,120			44,668
Goodwill adjustments		—			1,433			—
EBITDA		80,555			81,465			82,835
Deferred maintenance writedown (1)		136			92			—
Restructuring, acquisition and other charges (4)		7,796			5,332			2,974
Adjusted EBITDA (1)	$	88,487		$	86,889		$	85,809

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(1) Net (loss) income for fiscal 2010 and 2011 only includes the deferred maintenance step-down associated with the merger in the first quarter of fiscal year 2007. This unrecognized maintenance revenue is added back in calculating Adjusted EBITDA for purposes of the indenture governing the senior subordinated notes and the senior secured credit agreement.

(2) Interest expense (income), net includes interest income, interest expense, the change in the fair value of derivative instruments, amortization and write-off of debt issuance costs and gains and losses on early extinguishment of debt.

(3) Depreciation and amortization expense includes depreciation of fixed assets, amortization of leasehold improvements, amortization of acquired technologies, amortization and impairment of other intangible assets, and amortization of stock-based compensation. In the fiscal year ended January 31, 2010, stock-based compensation includes unusual and non-recurring charges associated with the repurchase of stock options in connection with the tender offer that we completed during the quarter ended October 31, 2009. See Note 5 of notes to our consolidated financial statements for additional information related to stock-based compensation.

(4) Restructuring, acquisition and other charges include employee payroll, severance and other employee related costs associated with transitional activities that are not expected to be part of our ongoing operations, and travel and other direct costs associated with our merger in March 2006. See Note 4(b) of notes to our consolidated financial statements for additional information related to acquisition-related and restructuring charges.

Our covenant requirements and ratios for the fiscal year ended January 31, 2012 are as follows. (Note that this table is given as of January 31, 2012 and so does not reflect the April 2012 amendment and restatement of our senior secured credit agreement.)

	Covenant requirement		Serena ratio
Senior secured credit agreement (1)
Minimum Adjusted EBITDA to consolidated interest expense ratio		2.00x		3.46x
Maximum consolidated total debt to Adjusted EBITDA ratio		5.50x		3.94x
Senior subordinated notes (2)
Minimum Adjusted EBITDA to fixed charges ratio required to incur additional debt pursuant to ratio provisions		2.00x		3.02x

(1) Our senior secured credit agreement requires us to maintain a rolling four fiscal quarters consolidated Adjusted EBITDA to consolidated interest expense ratio of a minimum of 2.00x. Consolidated interest expense is defined in the senior secured credit agreement as consolidated cash interest expense less cash interest income and is further adjusted for certain non-cash interest expenses and other items. We are also required to maintain a rolling four fiscal quarters consolidated total debt to consolidated Adjusted EBITDA ratio of a maximum of 5.00x. Under the terms of the amended and restated senior secured credit agreement, the maximum total leverage ratio has stepped up to 5.50x through the test period ending on July 31, 2012 and will step down to 5.00x thereafter. Consolidated total debt is defined in the senior secured credit agreement as total debt other than certain indebtedness and is reduced by the amount of cash and cash equivalents on our consolidated balance sheet in excess of $5.0 million. As of January 31, 2012, our consolidated total debt as defined was $338.1 million, consisting of total debt other than certain indebtedness totaling $442.8 million, net of cash and cash equivalents in excess of $5.0 million totaling $104.7 million. Failure to satisfy these ratio requirements would constitute a default under the senior secured credit agreement. If our lenders failed to waive any such default, our repayment obligations under the senior secured credit agreement could be accelerated, which would also constitute a default under the indenture governing the senior subordinated notes.

(2) Our ability to incur additional debt and make certain restricted payments under the indenture governing the senior subordinated notes, subject to specified exceptions, is tied to an Adjusted EBITDA to fixed charges ratio of at least 2.0x, except that we may incur certain debt and make certain restricted payments and certain

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permitted investments without regard to the ratio, such as our ability to incur up to an aggregate principal amount of $533.5 million under our senior secured credit agreement (which amount represents the total amount of borrowings originally committed or available under our senior secured credit agreement less $91.5 million of principal prepayments), to acquire persons engaged in a similar business that become restricted subsidiaries and to make other investments equal to the greater of $25.0 million or 2% of our consolidated assets. Fixed charges is defined in the indenture governing the senior subordinated notes as consolidated interest expense less interest income, adjusted for acquisitions, and further adjusted for non-cash interest expense.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

We do not use derivative financial instruments in our investment portfolio and have no foreign exchange contracts. Our financial instruments consist of cash and cash equivalents, trade accounts receivable, accounts payable, term loan and secured indebtedness. We consider investments in highly liquid instruments purchased with an original maturity of 90 days or less to be cash equivalents. All of our cash equivalents principally consist of money market funds, and are classified as available-for-sale as of January 31, 2012. We are subject to interest rate risk on the variable interest rate of the unhedged portion of the secured term loan. Effective with the expiration of our interest rate swap contract on April 10, 2010, no portion of our variable interest rate secured term loan is hedged and management currently does not intend to enter into any swap contract to hedge any portion of the variable interest rate secured term loan. We do not believe that a hypothetical 25% fluctuation in the variable interest rate would have a material impact on our consolidated financial position or results of operations.

Interest Rate Risk. Historically, our exposure to market risk for changes in interest rates relates primarily to our short and long-term investments and short and long-term debt obligations.

As of January 31, 2012, we had $308.5 million of debt under our senior secured credit agreement. A 1% increase in these floating rates would increase annual interest expense by $3.1 million.

Under our senior secured credit agreement, we were required, within 90 days after the closing date, to fix the interest rate of at least 50% of the aggregate principal amount of indebtedness under our term loan through swaps, caps, collars, future or option contracts or similar agreements. We were also required to maintain this interest rate protection for a minimum of two years.

Consequently, in the second fiscal quarter ended July 31, 2006, we entered into an interest rate swap transaction to effectively convert the variable interest rate on a portion of the $400.0 million senior secured term loan to a fixed rate. The swap, which expired on April 10, 2010, was recorded on the balance sheet at fair value. The swap was not designated as an accounting hedge and, accordingly, changes in the fair value of the derivative were recognized in the consolidated statement of operations. The notional amount of the swap was $250.0 million initially and amortized down over time to $126.0 million at the time the swap transaction expired on April 10, 2010. Under the terms of the swap, we made interest payments based on a fixed rate equal to 5.38% and received interest payments based on the LIBOR setting rate, set in arrears. In the fiscal year ended January 31, 2010, we recorded income totaling $4.3 million related to the changes in the fair value of the derivative. We did not enter into a similar interest rate swap in fiscal year 2011 and do not expect to enter into a similar interest rate swap in the future.

Foreign Exchange Risk. Sales to foreign countries accounted for approximately 32%, 33% and 35% of the total sales in the fiscal years ended January 31, 2010, 2011 and 2012, respectively. Because we invoice certain foreign sales in currencies other than the United States dollar, predominantly the British pound sterling and euro, and do not hedge these transactions, fluctuations in exchange rates could adversely affect the translated results of operations of our foreign subsidiaries. Therefore, foreign exchange fluctuations could create a risk of significant balance sheet gains or losses on our consolidated financial statements. If the U.S. dollar strengthens against foreign currencies, our future net revenues could be adversely affected. However, given our foreign subsidiaries’

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net book values as of January 31, 2012 and net cash flows for the most recent fiscal year ended January 31, 2012, we do not believe that a hypothetical 25% fluctuation in foreign currency exchange rates would have a material impact on our consolidated financial position or results of operations.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

FINANCIAL STATEMENTS

Our financial statements required by this item are submitted as a separate section of this Form 10-K. See Item 15(a)1 for a listing of financial statements provided in the section titled, “Index to Consolidated Financial Statements.”

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SUPPLEMENTARY DATA

Selected Quarterly Financial Data

The following tables set forth quarterly unaudited supplementary data for each of the years in the two-year period ended January 31, 2012. The tables should be read in conjunction with the Consolidated Financial Statements and Notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in this annual report on Form 10-K.

	Fiscal 2012
	Quarter Ended									Year Ended Jan. 31,
	Apr. 30,			Jul. 31,		Oct. 31,		Jan. 31,
	(in thousands)
Revenue	$	49,192		$	57,159	$	55,658	$	57,532	$	219,541
Cost of revenue		12,122			9,201		9,239		8,837		39,399
Gross profit		37,070			47,958		46,419		48,695		180,142
Operating expenses		34,478			36,498		35,469		35,530		141,975
Operating income		2,592			11,460		10,950		13,165		38,167
(Loss) income before income taxes		(5,412	)		4,656		4,154		6,464		9,862
Income tax (benefit) expense		(517	)		57		952		426		918
Net (loss) income		(4,895	)		4,599		3,202		6,036		8,944

	Fiscal 2011
	Quarter Ended												Year Ended Jan. 31, (1)
	Apr. 30,			Jul. 31, (1)			Oct. 31,			Jan. 31, (2)
	(in thousands)
Revenue	$	51,625		$	50,264		$	52,892		$	59,605		$	214,386
Cost of revenue		16,055			15,537			16,432			16,747			64,771
Gross profit		35,570			34,727			36,460			42,858			149,615
Operating expenses		37,993			34,832			35,241			38,637			146,703
Operating (loss) income		(2,423	)		(105	)		1,219			4,221			2,912
Loss before income taxes		(8,380	)		(6,504	)		(5,342	)		(1,767	)		(21,993	)
Income tax benefit		(4,219	)		(3,008	)		(4,628	)		(582	)		(12,437	)
Net loss		(4,161	)		(3,496	)		(714	)		(1,184	)		(9,556	)

(1) Included in operating expenses is a goodwill impairment charge in the second fiscal quarter ended July 31, 2010 totaling $1.4 million.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer and Interim Chief Financial Officer, with the assistance of senior management personnel, have conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 15d-15(e) of the Securities Exchange Act of 1934, as amended (“Exchange Act”)) as of January 31, 2012. We perform this evaluation on a quarterly basis so that the conclusions concerning the effectiveness of our disclosure controls and procedures can be reported in our annual and quarterly reports filed under the Exchange Act. Based on this evaluation, and subject to the limitations described below, our Chief Executive Officer and our Interim Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of January 31, 2012.

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Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 15d-15(f) of the Exchange Act) for our company. Management, with the participation of our Chief Executive Officer and Interim Chief Financial Officer, has conducted an evaluation of the effectiveness of our internal control over financial reporting as of January 31, 2012, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation, and subject to the limitations described below, management has concluded that our internal control over financial reporting was effective as of January 31, 2012.

This annual report does not include an attestation report of the company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the company’s registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the company to provide only management’s report in this annual report.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended January 31, 2012 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls

Our management, including our Chief Executive Officer and the Interim Chief Financial Officer, does not expect that our disclosure controls and procedures or internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can only provide reasonable, not absolute, assurance that the objectives of the control system are met. The design of a control system reflects resource constraints, and the benefits of controls must be considered relative to their costs. Because there are inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of error or fraud, if any, have been or will be detected.

ITEM 9B. OTHER INFORMATION

Not applicable.

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Our executive officers and directors are as follows:

Name	Age		Position	Director Since
Executive Officers:
John Nugent		55	President, Chief Executive Officer and Director		2009
John J. Alves.		51	Vice President, Finance, and Interim Chief Financial Officer
David Hurwitz		51	Senior Vice President, Worldwide Marketing
Edward Malysz		52	Senior Vice President, General Counsel and Secretary
Non-Executive Directors:
George Kadifa		53	Chairman of the Board of Directors		2010
L. Dale Crandall		70	Director		2007
Timothy Davenport		56	Director		2008
Elizabeth Hackenson		51	Director		2006
Greg Hughes		49	Director		2012
Todd Morgenfeld		40	Director		2009
Douglas D. Troxel		67	Director		1980

Executive Officers

John Nugent has served as a director and our President and Chief Executive Officer since November 2009. From March 2003 to August 2008, Mr. Nugent held various executive management positions at SAP AG, a business and database software company, including Executive Vice President, Worldwide Operations of SAP Business Objects, Chief Operating Officer, Americas, Asia and Japan, and Executive Vice President of Sales and Operations, United States. From April 1986 to March 2003, Mr. Nugent held senior sales management positions with Oracle Corporation, a business and database software company, including Senior Vice President, East Sales, Senior Vice President, General Business and Vice President, Sales.

John J. Alves has served as our Vice President, Finance, and Interim Chief Financial Officer since July 2011. From April 2004 to July 2011, Mr. Alves served as our Vice President, Finance. From July 1998 to March 2004, Mr. Alves served as our Corporate Controller, Finance.

David Hurwitz has served as our Senior Vice President, Worldwide Marketing since February 2010. From August 2005 until January 2010, Mr. Hurwitz served in a variety of senior marketing roles at CA, Inc., an information technology management software company, most recently as Vice President of Corporate Messaging and Solutions Marketing. From February 2003 until August 2005, Mr. Hurwitz served as Chief Marketing Officer of Niku Corporation, a project and portfolio management software company. From February 2001 until December 2002, Mr. Hurwitz served as Vice President, Marketing and Strategy at Perfect Commerce, Inc., an enterprise application software company. From March 2000 until February 2001, Mr. Hurwitz served as Interim Vice President of Marketing at Global Factory, Inc., a manufacturing operations management software company. Mr. Hurwitz previously founded ConsenSys Software Corporation, a product lifecycle management company, and served as a software development engineer at ASK Computer Systems, a manufacturing management software company.

Edward Malysz has served as our Senior Vice President and General Counsel since April 2006. Mr. Malysz served as Vice President, Legal of Symantec Corporation, a security and storage software company, from July 2005 to April 2006. From April 2002 to July 2005, Mr. Malysz served in various legal roles at VERITAS Software Corporation, a storage software company, including Vice President, Corporate Legal Services. From

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June 1999 through October 2001, Mr. Malysz served in a variety of roles with E-Stamp Corporation, an Internet postage provider, including Vice President, General Counsel, Secretary and Acting Chief Financial Officer. From July 1993 to June 1999, Mr. Malysz held various legal positions with Silicon Graphics, Inc., a computer manufacturer. Prior to July 1993, Mr. Malysz was a transactional lawyer and a certified public accountant.

Non-Executive Directors

George Kadifa is a Director of Silver Lake, a private equity firm, which he joined in June 2007. From March 2005 to June 2007, Mr. Kadifa held various senior management positions at IBM, most recently as Vice President of Global Delivery at IBM Global Technology Services. From August 1999 to March 2005, Mr. Kadifa held senior management positions with Corio, Inc., including Chairman and Chief Executive Officer, prior to its acquisition by IBM. From August 1992 to August 1999, Mr. Kadifa served as Senior Vice President of the Industrial Sector at Oracle Corporation. Prior to August 1992, Mr. Kadifa served as a management consultant with Booz-Allen & Hamilton and a development manager with Xerox Corporation.

L. Dale Crandall is the founder and president of Piedmont Corporate Advisors, Inc., a private financial consulting firm. Mr. Crandall retired from Kaiser Health Plan and Hospitals in 2002 after serving as the President and Chief Operating Officer from 2000 to 2002 and Senior Vice President and Chief Financial Officer from 1998 to 2000, and served as a member of the board of directors from 1998 until his retirement in 2002. From 1995 to 1998, Mr. Crandall was employed by APL Limited, a global ocean transportation company, where he held the positions of Executive Vice President, Chief Financial Officer and Treasurer. From 1963 to 1995, Mr. Crandall was employed by Price Waterhouse, LLP, most recently as Southern California Group Managing Partner. Mr. Crandall is also a member of the boards of directors of Ansell Ltd., Bridgepoint Education, Coventry Health Care, Inc. and UnionBanCal Corporation, and is a trustee for Dodge & Cox Mutual Funds. During the past five years, Mr. Crandall also served as a member of the boards of directors of BEA Systems, Inc., Covad Communications, Inc. and Metavante Technologies, Inc.

Timothy Davenport is the Chief Executive Officer of Sermo, Inc., and online community exclusive to physicians, which he joined in February 2012. From October 2009 to May 2011, Mr. Davenport served as President and Chief Executive Officer of Parature, Inc., an on-demand customer service software provider. From August 2007 through October 2008, Mr. Davenport served as president of Revolution Health Networks, an online provider of consumer-centric health care services. Prior to joining Revolution Health Networks, Mr. Davenport served as Chief Executive Officer of Vastera Inc., a provider of international trade logistics software, from November 2003 to June 2005, and Chief Executive Officer of Best Software Inc., a provider of corporate resource management software solutions, from June 1995 to February 2000.

Elizabeth Hackenson is the Senior Vice President and Chief Information Officer for AES Corporation, a global power company. Prior to joining AES in October 2008, Ms. Hackenson held the position of Senior Vice President and Chief Information Officer for Alcatel Lucent, a telecommunications company. Prior to joining Alcatel Lucent in December 2006, Ms. Hackenson served as Senior Vice President and Chief Information Officer for Lucent Technologies, a telecommunications company, since April 2006. From 2001 to 2006, Ms. Hackenson served in various management positions at MCI, a telecommunications company, including Executive Vice President and Chief Information Officer. From 1997 to 2001, Ms. Hackenson served in various management positions with UUNET Technologies, an Internet service and technology provider. Prior to 1997, Ms. Hackenson served in various management positions with Concert Communications, EDS, Computech, TRW and Grumman & Sperry.

Greg Hughes is a Director of Silver Lake, a private equity firm, which he joined in 2011. Prior to joining Silver Lake, Mr. Hughes was a senior executive at Symantec Corporation, most recently serving as Group President, Enterprise Products. Mr. Hughes is currently a board member of LogMeIn, Inc.

Todd Morgenfeld is a Director of Silver Lake, a private equity firm. Prior to joining Silver Lake in May 2004, Mr. Morgenfeld was an investment banker in the Technology, Media and Telecommunications Group at Goldman, Sachs & Co. From May 1994 to May 1999, Mr. Morgenfeld served as an armor officer in the U.S. Army.

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Douglas D. Troxel is the founder of Serena and has served on our board of directors since April 1980. He has also served as our Chief Technology Officer from April 1997 until the completion of the merger in March 2006. From June 1980 to April 1997, Mr. Troxel served as our President and Chief Executive Officer. Mr. Troxel served as chairman of our board of directors from April 1980 until the completion of the merger in March 2006. Mr. Troxel continues to serve as an employee of the company for purposes of providing technical services related to the support of our mainframe software products.

Board Composition and Governance

The composition of our board of directors is established by the terms of a stockholders agreement entered into by Spyglass Merger Corp., Silver Lake and certain investors affiliated with Silver Lake, referred to as the Silver Lake investors, and Mr. Troxel and certain investors affiliated with Mr. Troxel, referred to as the Troxel investors. Among other things, the stockholders agreement provides that, prior to any change of control event or initial public offering, our board of directors will be composed of the following persons:

• our Chief Executive Officer,

• Douglas D. Troxel and one other board member designated by the Troxel investors, who is currently Ms. Hackenson, and

• the remaining board members designated by affiliates of Silver Lake, who are currently Messrs. Kadifa, Crandall, Davenport, Hughes, and Morgenfeld.

Mr. Kadifa serves as chairman of the board and presides over each meeting of the board of directors. We believe that the separation of the roles of chairman of the board and principal executive officer are appropriate for our company because of our ownership structure. We have established four committees of the board of directors, consisting of an audit committee, a compensation committee, a nominating committee and a strategic and operations committee. Our audit committee is comprised of Messrs. Crandall (chairperson), Davenport and Morgenfeld. Our compensation committee is comprised of Messrs. Kadifa (chairperson), Morgenfeld and Troxel. Our nominating committee is comprised of Messrs. Troxel (chairperson) and Kadifa and Ms. Hackenson. Our strategic and operations committee is comprised of Ms. Hackenson (chairperson) and Messrs. Davenport and Hughes.

Our board of directors has determined that Messrs. Crandall and Davenport and Ms. Hackenson qualify as independent directors within the meaning of Nasdaq Marketplace Rule 5605(a).

Our board of directors has determined that Mr. Crandall qualifies as an audit committee financial expert within the meaning of Item 407(d)(5) of Regulation S-K. For information regarding the relevant experience of Mr. Crandall, see “Non-Executive Directors” above. Our board of directors has also determined that Messrs. Crandall and Davenport qualify as independent audit committee members within the meaning of Rule 10A-3 of the Securities Exchange Act of 1934 and Nasdaq Marketplace Rule 5605(c). Mr. Morgenfeld is not an independent audit committee member because of his affiliation with the Silver Lake investors, which hold a 67.2% equity interest in our company. Since we do not have a class of securities listed on any national securities exchange, we are not required to maintain an audit committee composed entirely of “independent” directors within the meaning of such rules.

In accordance with the charter of our nominating committee, to the extent consistent with the stockholders agreement, our nominating committee will identify, recommend and recruit qualified candidates to fill new positions on the board of directors and will conduct the appropriate and necessary inquiries into the backgrounds and qualifications of possible candidates. In February 2012, Mr. Hughes was elected to serve as a director in accordance with the terms of the stockholders agreement.

Our directors possess high ethical standards, act with integrity and honesty and exercise sound business judgment, and each of our directors is committed to employing his or her skills and abilities in the best interests of our stockholders. The directors designated by the Silver Lake investors possess significant experience in owning and overseeing companies similar to our company and are familiar with corporate finance, strategic and operational business planning and matters consistent with the long-term interests of our stockholders.

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Our board of directors is responsible for overseeing material risks associated with our company, and exercises these responsibilities periodically as part of its meetings and through its committees. In addition, the consideration of risk is inherent in the board of directors’ review of our long-term strategies and other matters presented to the board of directors, including acquisitions and financial matters. The role of the board of directors in risk oversight is consistent with our leadership structure, with our President and Chief Executive Officer and other senior management personnel having responsibility for assessing and managing risks on a day-to-day basis, and the board of directors and its committees providing general oversight in connection with these efforts.

We have adopted a Financial Code of Ethics that is applicable to our chief executive officer, chief financial officer, principal accounting officer (who is currently also our chief financial officer) and other senior officers of our finance department. We have filed a copy of our Financial Code of Ethics as Exhibit 14.1 to this Annual Report on Form 10-K. A free copy of our Financial Code of Ethics may be obtained from our Investor Relations website located at www.serena.com or by directing a written request to Serena Software, Inc., 1900 Seaport Boulevard, Redwood City CA 94063 Attn: General Counsel and Secretary.

Director Compensation

In November 2011, our board of directors amended our cash and equity compensation program for directors who qualify as independent directors within the meaning of Nasdaq Marketplace Rule 5605(a). The cash compensation component of the current program consists of an annual retainer of $45,000, annual retainers of $10,000 for the chairperson of the audit committee and $5,000 for each chairperson of the other committees of the board of directors, and annual retainers of $5,000 for each other member of the audit committee and $2,500 for each other member of the other committees of the board of directors, payable in equal installments on a quarterly basis. The equity compensation component of the program consists of an initial stock option grant to acquire 40,000 shares of our common stock under our 2006 Stock Incentive Plan, with an exercise price equal to the fair market value of the common stock on the date of grant and vesting over a three year period, and an initial award of 25,000 restricted stock units under our 2006 Stock Incentive Plan, with vesting in full on the third anniversary of the date of grant and formulaic vesting upon a change of control or an initial public offering. In addition, the equity compensation component of the program consists of an annual stock option grant to acquire 15,000 shares of common stock under the 2006 Stock Incentive Plan, with an exercise price equal to the fair market value of the common stock on the date of grant and vesting on the first anniversary of the date of grant. The program existing prior to November 2011 was the same as the program described above, except that our cash and equity compensation program for independent directors included an annual retainer of $40,000 payable in equal installments on a quarterly basis.

In November 2011, the board of directors awarded a one-time award of 15,000 restricted stock units to each independent director under the 2006 Stock Incentive Plan, with vesting in full on the third anniversary of the date of grant. The award was made to better align the total direct compensation of independent directors with market survey data derived from the 2010-2011 Director Compensation Report published by the National Association of Corporate Directors. For a discussion regarding the 2006 Stock Incentive Plan and the type and terms of the equity awards under the plan, see Item 11, “Executive Compensation—Compensation Discussion and Analysis—Employment Agreements and Severance and Change of Control Benefits—2006 Stock Incentive Plan” below.

We compensate Mr. Troxel for technical services that he occasionally provides to us in connection with the development and support of our mainframe software products. Mr. Troxel is paid $25,000 per year for these services. Mr. Troxel also receives certain employee benefits, such as health care coverage and participation in our 401(k) plan, and reimbursement of premiums associated with a separate life insurance policy.

The compensation for our directors for fiscal year 2012 is shown in the table in Item 11, “Executive Compensation—Director Compensation.”

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ITEM 11. EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

This section discusses the principles underlying our executive compensation policies and decisions. It provides qualitative information regarding the manner in which compensation is earned by our executive officers and places in context the data presented in the tables below. In addition, we discuss the compensation paid or awarded during fiscal year 2012 to our chief executive officer (principal executive officer), our interim chief financial officer (principal financial officer), our former chief financial officer and two other executive officers who were our most highly compensated executive officers in fiscal year 2012. We refer to these executive officers as our “Named Executive Officers.”

Our executive compensation program is overseen and administered by the compensation committee of our board of directors. The compensation committee operates under a written charter adopted by our board of directors and has the responsibility for discharging the responsibilities of the board of directors relating to the review of the compensation of our executive officers, making recommendations regarding the compensation of our chief executive officer to our non-executive directors for approval and approving the compensation of our other executive officers. Our compensation committee and the non-executive directors exercise their discretion in accepting, modifying or rejecting management’s recommendations regarding executive compensation.

Objectives of Our Compensation Program

Our executive compensation program is intended to meet three principal objectives:

• to provide competitive compensation packages to attract and retain superior executive talent;

• to reward successful performance by executives and the company by linking a significant portion of compensation to our financial results; and

• to align the interests of executive officers with those of our stockholders by providing long-term equity compensation and meaningful equity ownership.

To meet these objectives, our compensation program balances short-term and long-term goals and mixes fixed and at-risk compensation related to the overall financial performance of the company.

Our compensation program for executive officers, including the Named Executive Officers, is generally designed to reward the achievement of targeted financial goals. The compensation program is intended to reinforce the importance of performance and accountability at various operational levels, and a significant portion of total compensation is in both cash and stock-based compensation incentives that reward performance as measured against established corporate financial goals, such as net license revenue and EBITA in our annual operating plan. EBITA represents earnings before interest, taxes and amortization. Each element of our compensation program is reviewed individually and considered collectively with the other elements of our compensation program to ensure that it is consistent with the goals and objectives of both that particular element of compensation and our overall compensation program.

Elements of Our Executive Compensation Program

Overview

For fiscal year 2012, the principal elements of compensation for our executive officers included:

• annual cash compensation consisting of base salary and performance-based incentive bonuses

• long-term equity incentive compensation

• health and welfare benefits

• severance or change of control benefits

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Annual Cash Compensation

At the beginning of fiscal year 2012, our General Counsel developed recommendations regarding executive compensation based on the compensation survey data and proxy analysis described below and then reviewed the recommendations with our Chief Executive Officer. Our Chief Executive Officer, former Chief Financial Officer and General Counsel presented and discussed the recommendations with our compensation committee. None of these executive officers had input into determining their own level of compensation. Our compensation committee then met in executive session to discuss management’s recommendations outside of the presence of management, and communicated its recommendations to our non-executive directors for their review, discussion and approval.

In assessing compensation for our executive officers, we used compensation survey data for a broad set of companies having a comparable business, size and complexity, and then compared the survey data to publicly available compensation data for a group of companies that we consider to be our peer group. We believe that the compensation practices of these companies provide us with appropriate benchmarks because these companies provide technology products and services and compete with us for executives and other employees. The survey data was derived from the Radford Executive Compensation Survey, and included data relative to the overall software industry and certain industry segments defined by the survey company, including software companies with revenue from $200 million to $1 billion, software companies with revenue from $200 million to $500 million and software companies comprising our peer group. Our peer group was initially selected by management based on a review of companies that (i) compete with us in the same markets in which we sell our products, (ii) are within the software industry and of comparable size and complexity, or (iii) compete with us in recruiting executives and employees. Our compensation committee reviewed and provided input to management regarding the companies comprising the peer group. The proxy analysis was based on companies comprising our peer group, excluding those companies for which public information is not available. Because the proxy analysis was limited to publicly available information and did not provide precise comparisons by position as offered by the more comprehensive survey data from Radford, we used the proxy analysis as a general benchmark to validate the results of the survey data. We then compared base salary and total cash compensation to survey data relative to the overall software industry and our peer group.

The following companies comprised our peer group for fiscal year 2012:

Actuate Corporation	Epicor Software	QAD Inc.
Advent Software	Equinix, Inc.	Progress Software Corporation
Akamai Technologies	F5 Networks, Inc.	Rovi Corporation
Ariba, Inc.	Informatica Corporation	Tibco Software
Aspect Software	JDA Software	Trend Micro Inc.
Blackbaud Inc.	MicroStrategy, Inc.	Websense, Inc.
Blue Coat Systems	Openwave Systems, Inc.	Wind River Systems
Digital River

Our annual cash compensation for executive officers includes base salary and performance-based cash compensation. For fiscal year 2012, our objective was to establish annual base salaries for our Named Executive Officers, other than our Vice President, Finance and Interim Chief Financial Officer, at approximately the 50^th percentile of market compensation based on our survey data, and target total cash compensation (assuming 100% of the target performance-based incentive bonus is earned) at approximately the 60^th percentile of market compensation based on this survey data. To attract our President and Chief Executive Officer to join our company in November 2009, we agreed to pay him an annual base compensation and target total cash compensation that were in excess of the 50^th percentile and 60^th percentile, respectively, of market compensation for chief executive officers within our peer group. For fiscal year 2012, the annual base compensation and target total cash compensation of our President and Chief Executive Officer was approximately 10% and 4% above the

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50^th percentile and 60^th percentile, respectively, of market compensation for chief executive officers based on our survey data. The base compensation and target total cash compensation for our other Named Executive Officers, other than our Vice President, Finance and Interim Chief Financial Officer, were generally at or near the 50^th percentile for annual base compensation and the 60^th percentile for total cash compensation for similar executive roles based on our survey data. In establishing the base salary and target total cash compensation for each individual, we also considered the individual’s performance, achievement of management objectives and contributions to our overall business. From a market compensation perspective, we weight cash compensation more heavily toward performance-based compensation and less toward base salary because we wish to pay for performance.

Our FY2012 Executive Annual Incentive Plan was designed to reward our senior executive officers for the achievement of annual financial targets and management objectives. For fiscal year 2012, our Named Executive Officers, other than our Vice President, Finance and Interim Chief Financial Officer, were eligible to receive performance-based incentive bonuses based on a percentage of the participant’s annual base salary, as follows: (i) with regard to our President and Chief Executive Officer, 100% of his annual base salary; (ii) with regard to our former Senior Vice President, Finance and Chief Financial Officer, 75% of his annual base salary; (iii) with regard to our Senior Vice President, Worldwide Marketing and Senior Vice President, General Counsel, 50% of their respective annual base salaries. The actual bonus amounts were subject to achievement of the following performance metrics: (i) with regard to our President and Chief Executive Officer and our former Senior Vice President, Finance and Chief Financial Officer, achievement of our annual net license revenue and EBITA targets for fiscal year 2012, weighted equally; (ii) with regard to our Senior Vice President, Worldwide Marketing and Senior Vice President, General Counsel, achievement of our semi-annual net license revenue and EBITA targets for fiscal year 2012 and management objectives, weighted at 30%, 50% and 20%, respectively. Our FY2012 Executive Annual Incentive Plan is more highly leveraged than our other management annual incentive plans because we believe these executive officers have a greater impact upon the achievement of our corporate-level financial targets and objectives.

Our FY2012 Management Annual Incentive Plan was designed to reward our vice presidents and other senior managers to focus on specific, measurable corporate and functional area goals and provide performance-based compensation based on the achievement of these goals. For fiscal year 2012, our Vice President, Finance and Interim Chief Financial Officer was eligible to receive a performance-based incentive bonus based on 40% of his annual base salary. The actual bonus amounts were subject to achievement of our semi-annual net license revenue and EBITA targets for fiscal year 2012 and management objectives, weighted at 30%, 50% and 20%, respectively. In July 2011, we designated our Vice President, Finance as our Interim Chief Financial Officer following the resignation of our Senior Vice President, Finance and Chief Financial Officer, but chose not to adjust his annual base salary and target bonus due to the interim nature of his role.

The primary financial metrics under each of the individual executive annual incentive plans consisted of annual net license revenue and EBITA. These financial metrics were selected as the most appropriate measures upon which to base the annual incentive because they represent important overall performance metrics that our board of directors, management, investors and lenders use to evaluate the performance and value of our company. At the beginning of the fiscal year 2012, our board of directors established annual financial targets consisting of net license revenue of $59.7 million and EBITA of $86.3 million for fiscal year 2012. These metrics were used to align the performance of each executive officer with objectives related to the company and their respective functional areas.

For bonus amounts based on the achievement of net license revenue and payable to our Named Executive Officers, other than our Vice President, Finance and Interim Chief Financial Officer, achievement of less than 85% of the metric would result in no payout of the applicable target bonus, achievement of 85% of the metric would result in a 25% payout of the applicable target bonus, achievement of 100% of the metric would result in a 100% payout of the applicable target bonus and achievement of 115% of the metric would result in a 200% payout of the applicable target bonus. For bonus amounts based on the achievement of EBITA and payable to these Named Executive Officers, achievement of less than 90% of EBITA would result in no payout of the

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applicable target bonus, achievement of 90% of EBITA would result in a 50% payout of the applicable target bonus, achievement of 100% of EBITA would result in a 100% payout of the applicable target bonus and achievement of 107.5% of EBITA would result in a 200% payout of the applicable target bonus. For bonus amounts based on the achievement of management objectives and payable to our Senior Vice President, Worldwide Marketing and Senior Vice President, General Counsel, achievement of less than 85% of the management objectives would result in no payout of the applicable target bonus, achievement of 85% of the management objectives would result in a 25% payout of the applicable target bonus, achievement of 115% of the management objectives would result in a 125% payout of the applicable target bonus. Annual payouts based on the achievement of net license revenue and EBITA were capped at 200% of the applicable target bonus, and annual payouts based on the achievement of management objectives were capped at 115% of the applicable target bonus. The incentive bonuses were payable on an annual basis for our President and Chief Executive Officer and former Senior Vice President, Chief Financial Officer, and on a semi-annual basis for our Senior Vice President, Worldwide Marketing and Senior Vice President, General Counsel.

For bonus amounts based on the achievement of net license revenue and EBITA and payable to our Vice President, Finance and Interim Chief Financial Officer, achievement of less than 85% of the metric would result in no payout of the applicable target bonus, achievement of 85% of the metric would result in a 70% payout of the applicable target bonus, achievement of 100% of the metric would result in a 100% payout of the applicable target bonus and achievement of 120% of the metric would result in a 140% payout of the applicable target bonus. For bonus amounts based on the achievement of management objectives and payable to our Vice President, Finance and Interim Chief Financial Officer, achievement of less than 85% of the management objectives would result in no payout of the applicable target bonus, achievement of 85% of the management objectives would result in a 70% payout of the applicable target bonus, achievement of 100% of the management objectives would result in a 100% payout of the applicable target bonus. Annual payouts based on the achievement of net license revenue and EBITA were capped at 140% of the applicable target bonus, and annual payouts based on the achievement of management objectives were capped at 100% of the applicable target bonus. The incentive bonuses were payable on a semi-annual basis for our Vice President, Finance and Interim Chief Financial Officer.

For fiscal year 2012, we achieved 92% of our annual net license revenue target, which resulted in a payout of 68% of net license revenue-based target bonuses for our Named Executive Officers, other than Vice President, Finance and Interim Chief Financial Officer, and a payout of 84% of the net license revenue-based target bonus for our Vice President, Finance and Interim Chief Financial Officer, based on the payout scales described above. For fiscal year 2012, we achieved 96% of our annual EBITA target, which resulted in a payout of 80% of EBITA-based target bonuses for our Named Executive Officers, other than Vice President, Finance and Interim Chief Financial Officer, and a payout of 92% of the EBITA-based target bonus for our Vice President, Finance and Interim Chief Financial Officer, based on the payout scales described above. For fiscal year 2012, we paid our President and Chief Executive Officer, Senior Vice President, Worldwide Marketing, Senior Vice President, General Counsel and Vice President, Finance and Interim Chief Financial Officer incentive bonuses equal to 74%, 84%, 80%, and 91%, respectively, of their annual target bonuses based on the achievement of net license revenue, EBITA and applicable management objectives during the fiscal year. Our former Senior Vice President, Finance and Chief Financial Officer retired from Serena as of July 31, 2011 and, as a result, did not receive any portion of his annual incentive bonus pursuant to the terms of the FY 2012 Executive Annual Incentive Plan.

Base salaries and performance-based incentive bonuses for the Named Executive Officers for fiscal years 2012, 2011 and 2010 are shown in the Summary Compensation Table below.

Long-Term Equity Compensation

We intend for our equity compensation program to be the primary vehicle for offering long-term incentives and rewarding our executive officers, managers and key employees. Because of the direct relationship between the value of an option and the value of our stock, we believe that granting options and awarding restricted stock

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units are methods to motivate our executive officers to manage our company in a manner that is consistent with the interests of our company and our stockholders. We also regard our equity compensation program as a key retention tool. Retention is an important factor in our determination of the number of underlying shares to grant.

Following the completion of the merger, we established a new stock incentive plan, the 2006 Stock Incentive Plan, which governed, among other things, the grant of options, restricted stock units and other equity-based awards. Stock options granted under the plan included “time-based options” that would vest and become exercisable over a four-year period and “performance-based options” that would vest and become exercisable based on the achievement of annual EBITA targets over a five-year period. We generally weight stock option grants to executive officers more heavily toward performance-based options and less toward time-based options because we wish to pay for performance.

For executive officers who joined the company after the merger, we granted stock options to these executive officers shortly after the commencement of their employment with the company. The type and amount of these options were approved by the compensation committee or, in the case of our President and Chief Executive Officer, by the non-executive directors of our board of directors. The total number of shares under these options were determined based on a number of factors, including the existing equity compensation arrangements of the executive officer with his then current employer, the amount of stock options previously granted to other executive officers of the company, the compensation practices within the industry based on recommendations of professional recruiters, the knowledge and experiences of the members of our compensation committee and non-executive directors, and our negotiations with the executive officer. We do not generally grant stock options to executive officers on an annual basis.

On October 16, 2009, we completed a tender offer permitting all eligible employees (including our executive officers) and independent directors of the company to exchange, on a one-for-one basis, stock options granted under the 2006 Stock Incentive Plan for new stock options granted under Serena’s Amended and Restated 2006 Stock Incentive Plan (as amended and restated, the “2006 Stock Incentive Plan”) having a lower exercise price and different vesting terms. We refer to this tender offer as our “October 2009 option exchange.” Recent developments in the global economy and the global software industry in which we operated had adversely affected our business and resulted in our existing stock options having a per-share exercise price significantly in excess of the then current per-share fair market value of our common stock or certain vesting terms that would be difficult to achieve. As part of a review of our executive compensation and employee benefit arrangements on behalf of and under the supervision of our board of directors, and in light of the economic conditions in which we operate, our board of directors determined that new options with different vesting terms and a lower per-share exercise price would be better suited to retain and motivate employees and better align the interests of our employees and stockholders to meet our strategic and operational objectives and maximize stockholder value. For similar reasons, our board of directors also determined to award restricted stock units to certain senior management personnel (including our executive officers). We decided to award restricted stock units to our senior management personnel because, in contrast to stock options, restricted stock units maintain economic value even if the fair market value of our common stock were to decline. As a result, restricted stock units generally have significant retention value throughout their vesting period. Restricted stock units also align senior management personnel with our stockholders and balance our compensation program design, as restricted stock units take into account both upside and downside risk in the fair market value of our common stock. We awarded fewer restricted stock units than the number of shares under stock options because the grant date fair value of each restricted stock unit was greater than the grant date fair value of each stock option on a per share basis.

Pursuant to our October 2009 option exchange, eligible employees (including our executive officers) and independent directors were entitled to exchange their existing time-based options, and eligible employees (excluding officers) were entitled to exchange their performance-based options, on a one-for-one basis for new time-based options with a vesting period of generally three years and an exercise price of $3.00 per share, which was the fair market value of our common stock after the closing of the tender offer. Officers (including our executive officers) of the company were entitled to exchange their performance-based options on a one-for-one

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basis for new performance-based options having a vesting period of three years and six months, with vesting based on the achievement of EBITA targets established by our board of directors and an exercise price of $3.00 per share, which was the fair market value of our common stock after the closing of the tender offer. For a discussion regarding the terms of the new time-based and performance-based options, see “Employment Agreements and Severance and Change of Control Benefits—2006 Stock Incentive Plan.”

In September 2009, we awarded restricted stock units under our 2006 Stock Incentive Plan to certain senior management personnel (including our executive officers) and key employees. In November 2009, we awarded restricted stock units under our 2006 Stock Incentive Plan to our President and Chief Executive Officer as part of his employment agreement with us and to our independent directors as part of our independent director compensation program. Pursuant to the terms of the restricted stock unit agreements, these individuals will be entitled to receive an equivalent number of shares of our common stock upon the expiration of a three year restricted period, provided that their employment or period of service with us continues throughout the restricted period. For a discussion regarding the terms of the new time-based and performance-based options, see “Employment Agreements and Severance and Change of Control Benefits—2006 Stock Incentive Plan.”

No Named Executive Officer was granted an equity award for fiscal year 2011 or 2012.

Benefits

We offer a variety of health and welfare programs to all eligible employees, including our executive officers. Our executive officers, including our Named Executive Officers, are generally eligible for the same benefit programs on the same basis as the rest of our employees, including medical and dental care coverage, life insurance coverage, short- and long-term disability and a 401(k) plan. We discontinued our 401(k) matching contribution program for all of our employees, including our executive officers, in May 2009. We do not provide perquisites as part of our executive compensation program.

Employment Agreements and Severance and Change of Control Benefits

Employment Agreement with our Chief Executive Officer

We entered into an employment agreement with Mr. Nugent dated October 28, 2009 for Mr. Nugent to serve as our President and Chief Executive Officer. The employment agreement is for an indefinite term, and either Mr. Nugent or the company may terminate his employment for any reason and at any time with or without cause or notice. The employment agreement provides for an annual base salary of $550,000. Mr. Nugent was also eligible to receive an annual cash incentive bonus equal to 100% of his base salary pursuant to our Executive Annual Incentive Plan, subject to proration based on his term of service during the fiscal year. As part of his relocation to the area of our corporate headquarters in Redwood City, California, Mr. Nugent was entitled to receive reimbursement of up to $65,000 of eligible moving and relocation-related expenses. The employment agreement also provided for certain severance benefits if Mr. Nugent’s employment is terminated by us without cause or by Mr. Nugent for good reason within the first twelve months of his employment with the company, which arrangement has since expired pursuant to its terms. In addition, Mr. Nugent entered into a change of control agreement with us, the terms of which are discussed under “Change of Control Agreements” below.

Employment Agreements with our other Executive Officers

Messrs. Hurwitz and Malysz each entered into change of control agreements with us, the terms of which are discussed under the section entitled “Change of Control Agreements” below.

Severance Agreement with our Former Senior Vice President, Finance and Chief Financial Officer

Mr. Robert Pender retired from Serena as of July 31, 2011. In connection with the termination of Mr. Pender’s employment, we entered into a separation agreement providing for the payment of severance and the provision of certain benefits to him in exchange for a general release of claims against us and our affiliates and compliance with restrictive covenants, described below. The separation agreement provides for severance

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benefits consisting of (i) the continuation of twenty percent ($65,000) of Mr. Pender’s base salary for a period of twelve months following the termination of his employment, payable in equal installments over such period in accordance with our customary payroll practices; (ii) COBRA continuation of Mr. Pender’s existing health coverage for a period of twelve months, at no cost to Mr. Pender; and (iii) the amendment of stock options previously granted to Mr. Pender under our Amended and Restated 1997 Stock Option and Incentive Plan for purposes of extending the post-employment exercise period to the earlier of three years following the termination of his employment or the expiration date of the applicable stock options, and allowing for the payment of the aggregate exercise price through the net exercise of the stock options (excluding tax withholdings, which Mr. Pender will be required to pay to Serena at the time of exercise). The separation agreement also provides for restrictive covenant payments that are conditioned upon Mr. Pender’s compliance with no-hire and non-competition covenants. The restrictive covenant payments consist of the continuation of eighty percent ($260,000) of Mr. Pender’s base salary for a period of twelve months following the termination of his employment, payable in equal installments over such period in accordance with our customary payroll practices. Mr. Pender executed a general release of all claims in favor of Serena and our affiliates and agreed to comply with certain restrictive covenants, including confidentiality and non-disparagement covenants of unlimited duration, and no-hire and non-competition covenants limited to the duration of the restrictive covenant payments. Mr. Pender’s vested stock options under the 2006 Stock Incentive Plan remained exercisable for a period of three months following the termination of his employment. Mr. Pender also agreed to serve, without additional compensation, as a non-employee consultant for Serena for up to ten hours per month during the sixty day period following the termination of his employment.

2006 Stock Incentive Plan

Following the completion of the merger, we established the 2006 Stock Incentive Plan, which governs, among other things, the grant of options, restricted stock units and other equity-based awards covering shares of the company’s common stock to our employees (including officers), directors and consultants. Common stock of the company representing 12% of outstanding common stock on a fully diluted basis as of the date of the merger (13,515,536 shares) was reserved for issuance under the plan. Each award under the plan specifies the applicable exercise or vesting period, the applicable exercise or purchase price, and such other terms and conditions as deemed appropriate. Stock options granted under the plan were either “time-based options” that would vest and become exercisable over a four-year period or “performance-based options” that would vest based on the achievement of EBITA targets over a period of five fiscal years. Performance-based options would vest based on the achievement of minimum and maximum EBITA targets during each fiscal year over a period of five fiscal years, with 10% vesting for the achievement of the minimum EBITA target and up to 20% vesting for the achievement of the maximum EBITA target for each such fiscal year. All options granted under the plan will expire not later than ten years from the date of grant, but generally will terminate earlier upon termination of employment. In the event of a sale of substantially all of the assets of the company, or a merger or acquisition of the company, the board of directors may provide that awards granted under the plan will be cashed out, continued, replaced with new awards that substantially preserve the terms of the original awards, or terminated, with acceleration of vesting of the original awards determined at the discretion of the board of directors.

On October 16, 2009, we completed a tender offer permitting all eligible employees (including our executive officers) and independent directors of the company to exchange, on a one-for-one basis, stock options granted under the 2006 Stock Incentive Plan for new stock options granted under the 2006 Stock Incentive Plan having a lower exercise price and different vesting terms. Pursuant to the October 2009 option exchange, eligible employees (including our executive officers) and independent directors were entitled to exchange their existing time-based options on a one-for-one basis for new time-based options with a vesting period of generally three years and an exercise price of $3.00 per share, which was the fair market value of our common stock after the closing of the tender offer. Existing time-based options held by our independent directors that had a vesting period of one year were exchanged for new time-based options having a vesting period of one year. All new time-vesting options will vest in full upon a change in control. Officers (including our executive officers) of the

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company were entitled to exchange their performance-based options on a one-for-one basis for new performance-based options having a vesting period of three years and six months, with vesting based on the achievement of EBITA targets established by our board of directors and an exercise price of $3.00 per share, which was the fair market value of our common stock after the closing of the tender offer. These new performance-based options vest as follows: one-seventh upon achievement of the EBITA target for the second half of fiscal year 2010, and the remainder in equal annual installments upon the achievement of EBITA targets for each of fiscal years 2011, 2012 and 2013. New performance-based options issued during fiscal year 2011 will vest as follows: equal annual installments upon the achievement of EBITA targets for each of fiscal years 2011, 2012 and 2013. The EBITA target for the second half of fiscal year 2010 was $47.4 million and the EBITA targets for each of fiscal years 2011, 2012 and 2013 are $97.3 million, $107.0 million and $113.2 million, respectively. New performance-based options are subject to catch-up vesting for previously unachieved performance criteria in the event of a change in control or an initial public offering in which the company is valued at no less than $5.00 per share of common stock (as adjusted for stock splits, reverse stock splits, reorganizations, reclassifications or similar transactions, in accordance with the 2006 Stock Incentive Plan), as if the options had vested in equal monthly installments on a time-vesting basis from the date of grant. New performance-based options will also vest in full if a change in control occurs and the optionholder’s employment is terminated by us without cause, or the optionholder resigns for good reason, within twelve months after the change in control. As a result of achieving our EBITA target for the second half of fiscal year 2010, one-seventh of the shares under applicable performance-based options vested. We did not achieve our EBITA target for fiscal years 2011 and 2012 and, as a result, no portion of the shares under performance-based options vested for these periods.

In September and November 2009, we awarded restricted stock units to certain employees (including our executive officers) and independent directors under our 2006 Stock Incentive Plan. We have also issued restricted stock units to new officers (including new executive officers) who joined us during fiscal year 2011. Pursuant to the terms of the restricted stock unit agreements, these individuals will be entitled to receive an equivalent number of shares of our common stock upon the expiration of a three year restricted period, provided that their employment or period of service with us continues throughout the restricted period. If a change in control or initial public offering occurs during the restricted period, and the price per share of our common stock at the time of such event (as adjusted for stock splits, reverse stock splits, reorganizations, reclassifications or similar transactions, in accordance with the 2006 Stock Incentive Plan): (i) is greater than or equal to $4.00 but less than $4.50, then 25% of the restricted stock units will vest; (ii) is greater than or equal to $4.50 but less than $5.00, then 50% of the restricted stock units will vest, or (iii) is greater than or equal to $5.00, then 100% of the restricted stock units will vest. In addition, if the average of the closing sales prices of our common stock during any consecutive 90 calendar day period following an initial public offering satisfies a higher vesting threshold, then the restricted stock units will vest based on the achievement of the higher vesting threshold.

Rollover Options

In connection with the merger, various management participants were permitted to elect to continue some or all of their stock options that were held immediately prior to the merger and had an exercise price of less than $24.00 per share. The number of shares subject to these “rollover” options was adjusted to be the number of shares equal to the product of (i) the difference between $24.00 and the exercise price of the option and (ii) the quotient of the total number of shares of the company’s common stock subject to such option, divided by $3.75. The exercise price of these rollover options was adjusted to $1.25 per share. The rollover options are subject to the terms of the original option agreements with the company, except that in the event of a change of control of the company, the treatment of the rollover options upon such transaction will be determined in accordance with the terms of the 2006 Stock Incentive Plan.

Change of Control Agreements

We have entered into change of control arrangements with our senior executive officers to provide them with economic protection to allow them to remain focused on our business without undue personal concern in the event that a senior executive officer’s position is eliminated or significantly altered following a change of control.

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Messrs. Nugent, Hurwitz and Malysz each entered into a change of control agreement with us. Under the terms of these agreements, in the event of a change of control of the company, if the executive officer’s employment is involuntarily terminated without cause or if the executive officer resigns for good reason within twelve months after consummation of a change of control of the company, the executive officer will be entitled to receive the following severance benefits: (i) continuation of base salary for one year following termination, payable over the one-year period in accordance with the company’s normal payroll practices; (ii) 100% of the executive officer’s target bonus, payable within forty-five days following the applicable fiscal year; (iii) a pro-rated amount of the executive officer’s target bonus based upon the number of days that have elapsed in the fiscal year as of the termination date, payable within thirty days following the executive officer’s termination date; and (iv) payment of health coverage premiums for the one-year salary continuation period. To receive these change of control benefits, the executive must execute a general release of claims in favor of the surviving company and its affiliates and comply with various restrictive covenants during the applicable severance period, including non-disparagement, non-compete and non-solicitation covenants. The non-competition, non-solicitation and non-disparagement covenants continue for the one-year salary continuation period. The confidentiality covenant is not limited in duration.

For change of control arrangements related to stock options and restricted stock units awarded to our Named Executive Officers, see “2006 Stock Incentive Plan” above.

Accounting and Tax Implications

The accounting and tax treatment of particular forms of compensation do not materially affect our compensation committee’s decisions. However, we evaluate the effect of such accounting and tax treatment on an ongoing basis and will make appropriate modifications to compensation policies where appropriate.

Stock Ownership

We do not have a formal policy requiring stock ownership by management.

Equity Grant Practices

All grants of stock options under the 2006 Stock Incentive Plan have had exercise prices equal to the fair market value of our common stock on the date of grant. Because the company is a privately-held company and there is no market for our common stock, the fair market value of our common stock is determined by our compensation committee based on available information that is material to the value of our common stock. We obtain an external valuation specialist of our common stock on an annual basis and update the independent valuation on a semi-annual basis.

Our compensation committee approves stock option grants and any restricted stock unit awards at either a regularly scheduled compensation committee meeting or by a unanimous written consent signed or electronically approved by all of the members of our compensation committee. All stock options are granted as of the date of the meeting or upon execution of the unanimous written consent. We generally will grant stock options and award restricted stock units on a quarterly basis.

Compensation Committee Report

We have reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on our review and discussion with management, we have recommended to our board of directors that the Compensation Discussion and Analysis be included in this Annual Report on Form 10-K.

George Kadifa, Chairperson*

Todd Morgenfeld

Douglas D. Troxel

* Mr. Kadifa became a member of the Compensation Committee on February 23, 2012.

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Summary Compensation Table

Name and Principal Position	Fiscal Year		Salary ($)		Stock Awards (1) ($)		Option Awards (2) ($)		Non-Equity Incentive Plan Compen- sation (3) ($)		All Other Compen- sation (4) ($)			Total ($)
Executive Officers:
John Nugent		2012	$	550,000		—		—	$	407,000	$	3,196		$	960,196
President and Chief Executive Officer		2011	$	550,000		—		—	$	385,000	$	52,136		$	987,136
		2010	$	137,500	$	1,200,000	$	1,901,604	$	130,625	$	10,971		$	3,380,700
John J. Alves (5)		2012	$	192,500		—		—	$	95,224	$	4,994		$	292,718
Vice President, Finance and Interim Chief Financial Officer
David Hurwitz		2012	$	275,000		—		—	$	116,141	$	1,903		$	393,044
Senior Vice President, Worldwide Marketing		2011	$	267,772	$	308,000	$	180,185	$	107,883	$	880		$	864,720
Edward Malysz		2012	$	260,000		—		—	$	104,520	$	2,298		$	366,818
Senior Vice President, General Counsel and Secretary		2011	$	260,000		—	$	—	$	110,500	$	1,190		$	371,690
		2010	$	260,000	$	600,000	$	232,248	$	126,750	$	4,318		$	1,223,316
Former Executive Officer:
Robert Pender (6)		2012	$	193,749		—		—		—	$	172,472	(7)	$	366,221
Senior Vice President, Finance and Administration, and Chief Financial Officer		2011	$	325,000		—		—	$	170,625	$	1,190		$	496,815
		2010	$	325,000	$	1,050,000	$	1,263,762	$	231,563	$	6,258		$	2,876,583

(1) Amounts reflect the aggregate grant date fair value of restricted stock units computed in accordance with FASB ASC Topic 718. Assumptions used in the calculation of these amounts are included in Note 5 to our Consolidated Financial Statements for the year ended January 31, 2012.

(2) Amounts reflect the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. Assumptions used in the calculation of these amounts are included in Note 5 to our Consolidated Financial Statements for the year ended January 31, 2012.

(3) Amounts reflect cash awards earned under our annual executive incentive plans for fiscal years 2012, 2011 and 2010.

(4) Amounts include supplemental life insurance premiums for each executive officer, matching 401(k) plan contributions for Messrs. Malysz and Pender in fiscal year 2010, and reimbursement of relocation expenses incurred by Mr. Nugent of $10,867 and $50,997 in fiscal years 2010 and 2011, respectively. We discontinued our matching 401(k) plan contribution benefit program in May 2009.

(5) Mr. Alves became an executive officer of the company on July 31, 2011.

(6) Mr. Pender’s employment terminated with us on July 31, 2011.

(7) This amount includes, in addition to supplemental life insurance premiums and COBRA continuation coverage, severance of $162,500 paid to Mr. Pender through January 31, 2012. Mr. Pender is entitled to receive severance in the aggregate amount of $325,000, payable in installments on customary payroll dates, and COBRA continuation coverage, over a twelve month period following the termination of his employment. For additional information regarding our severance and release agreement with Mr. Pender, see “Employment Agreements and Severance and Change of Control Benefits—Severance Agreement with our Former Senior Vice President, Finance and Chief Financial Officer.”

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Grants of Plan-Based Awards in Fiscal Year 2012

Name	Grant Date		Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1)						Estimated Future Payouts Under Equity Incentive Plan Awards						All Other Stock Awards: Number of Shares of Stock or Units (#)		All Other Option Awards: Number of Securities Underlying Options (#)		Exercise or Base Price of Option Awards ($/Sh)		Grant Date Fair Value of Stock and Option Awards
			Threshold ($)		Target ($)		Maximum ($)		Threshold (#)		Target (#)		Maximum (#)
Executive Officers:
John Nugent		6/01/11	$	68,750	$	550,000	$	1,100,000		—		—		—		—		—		—		—
John J. Alves		2/01/11	$	53,900	$	77,000	$	107,800		—		—		—		—		—		—		—
David Hurwitz		6/01/11	$	17,188	$	137,500	$	254,375		—		—		—		—		—		—		—
Edward Malysz		6/01/11	$	16,250	$	130,000	$	240,500		—		—		—		—		—		—		—
Former Executive Officer:
Robert Pender (2)		6/01/11	$	30,469	$	243,750	$	487,500		—		—		—		—		—		—		—

(1) The amounts in these columns represent potential payouts under the FY2012 Executive Annual Incentive Plan. For all executive officers other than Mr. Alves, the Threshold column assumes 85% achievement of performance metrics, the Target column assumes 100% achievement of all performance metrics and the Maximum column assumes 115% achievement of financial performance metrics and 115% achievement of management objectives. For Mr. Alves, the Threshold column assumes 85% achievement of performance metrics, the Target column assumes 100% achievement of all performance metrics and the Maximum column assumes 120% achievement of financial performance metrics and 100% achievement of management objectives. For a discussion of the FY2012 Executive Annual Incentive Plan and FY2012 Management Annual Incentive Plan, see “Elements of Our Executive Compensation Program—Annual Cash Compensation.”

(2) Mr. Pender’s employment terminated with the company on July 31, 2011. As a result of his termination, Mr. Pender was not eligible to receive payment of non-equity plan-based awards in fiscal year 2012.

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Outstanding Equity Awards at 2012 Fiscal Year-End

	Option Awards										Stock Awards
Name	Grant Date		Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable		Option Exercise Price ($)		Option Expiration Date		Number of Shares or Units of Stock That Have Not Vested (#)		Market Value of Shares or Units of Stock That Have Not Vested ($)		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
Executive Officers:
John Nugent		11/15/2009 (1)		232,131		1,392,869	$	3.00		11/15/2019		—		—		—		—
		11/15/2009 (2)		631,942		243,058	$	3.00		11/15/2019		—		—		—		—
		11/15/2009 (4)		—		—		—		—		—		—		400,000	$	1,488,000
John J. Alves		10/20/2009 (1)		21,427		128,573	$	3.00		10/20/2019		—		—		—		—
		10/20/2009 (2)		74,999		25,001	$	3.00		10/20/2019		—		—		—		—
		9/18/2009 (4)		—		—		—		—		—		—		25,000	$	93,000
		2/24/2005 (3)		2,773		—	$	1.25		2/24/2015		—		—		—		—
		5/19/2004 (3)		98,400		—	$	1.25		5/19/2014		—		—		—		—
		2/18/2004 (3)		2,305		—	$	1.25		2/18/2014		—		—		—		—
		2/19/2003 (3)		12,453		—	$	1.25		2/19/2013		—		—		—		—
		3/1/2002 (3)		12,672		—	$	1.25		3/1/2012		—		—		—		—
David Hurwitz		2/22/2010 (4)		—		—		—		—		—		—		100,000	$	372,000
		2/22/2010 (1)		—		150,000	$	3.08		2/22/2020		—		—		—		—
		2/22/2010 (2)		63,888		36,112	$	3.08		2/22/2020		—		—		—		—
Edward Malysz		10/20/2009 (1)		21,427		128,573	$	3.00		10/20/2019		—		—		—		—
		10/20/2009 (2)		149,999		50,001	$	3.00		10/20/2019		—		—		—		—
		9/18/2009 (4)		—		—		—		—		—		—		200,000	$	744,000
Former Executive Officer:
Robert Pender (5)		2/24/2005 (3)		39,466		—	$	1.25		2/24/2015		—		—		—		—
		5/19/2004 (3)		147,600		—	$	1.25		5/19/2014		—		—		—		—
		2/24/2004 (3)		42,140		—	$	1.25		2/24/2014		—		—		—		—
		2/19/2003 (3)		97,278		—	$	1.25		2/19/2013		—		—		—		—
		8/14/2002 (3)		155,531		—	$	1.25		8/14/2012		—		—		—		—
		3/1/2002 (3)		233,742		—	$	1.25		3/1/2012		—		—		—		—

(1) Performance-based options vest upon the attainment of certain earnings targets of the company during applicable fiscal periods over three and one-half fiscal years for options granted in fiscal year 2010 and three fiscal years for options granted in fiscal year 2011 and fiscal year 2012. For a discussion regarding performance-based options, see “Employment Agreements and Severance and Change of Control Benefits—2006 Stock Incentive Plan.”

(2) Time-based options vest over three years with 1/6th vesting on the six-month anniversary of date of grant and 1/36^th vesting each month thereafter. For a discussion regarding time-based options, see “Employment Agreements and Severance and Change of Control Benefits—2006 Stock Incentive Plan.”

(3) Rollover options were fully vested as of March 10, 2006 in connection with the merger. Rollover options represent stock options of the company existing immediately prior to the merger which were converted into stock options to acquire common stock of the company immediately following the merger. For a discussion regarding rollover options, see “Employment Agreements and Severance and Change of Control Benefits—Rollover Options.”

(4) Restricted stock units fully vest on the 3^rd anniversary of the date of grant, subject to continued employment with the company. The market value of shares of restricted stock units is based on the fair market value of the company’s common stock of $3.72 per share as of January 31, 2012. For a discussion regarding restricted stock units, see “Employment Agreements and Severance and Change of Control Benefits—2006 Stock Incentive Plan.”

(5) Pursuant to the terms of Mr. Pender’s separation agreement with us, we amended certain stock options previously granted to Mr. Pender under the Amended and Restated 1997 Stock Option and Incentive Plan for purposes of extending the post-employment exercise period to the earlier of three years following the termination of his employment or the expiration date of the applicable stock options, and allowing for the payment of the aggregate exercise price through the net exercise of the stock options. Mr. Pender’s vested stock options under the 2006 Stock Incentive Plan remained exercisable for a period of three months following the termination of his employment.

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Option Exercises and Stock Vested

	Option Awards				Stock Awards
Name	Number of Shares Acquired on Exercise		Value Realized on Exercise		Number of Shares Acquired on Vesting	Value Realized on Vesting
Executive Officers:
John J. Alves (1)		1,374	$	3,201

(1) On February 14, 2011, Mr. Alves exercised a stock option to acquire 1,374 shares of our common stock for an aggregate exercise price of $1,717.50. The exercise of the stock option was effected through the net exercise of the stock option, with 480 shares applied to the payment of the aggregate exercise price, 377 shares applied to the payment of applicable taxes and withholdings and 517 shares issued to Mr. Alves.

Potential Payments Upon Termination or Change of Control

The tables below reflect the amount of potential payments to each of the Named Executive Officers, other than our former Senior Vice President, Finance and Chief Financial Officer, in the event of termination of employment of the Named Executive Officer assuming that the termination was effective as of January 31, 2012, and include estimates of the amounts which would be paid to each executive officer upon his termination. The amounts below exclude amounts related to stock options that have vested as of January 31, 2012. The actual amount of any severance or change of control benefits to be paid out to a Named Executive Officer can only be determined at the time of the termination of employment of the Named Executive Officer. For a discussion regarding these severance and change of control benefits, see “Employment Agreements and Severance and Change of Control Benefits—Change of Control Agreements.” For a discussion regarding termination benefits to our former Senior Vice President, Finance and Chief Financial Officer, see “Employment Agreements and Severance and Change of Control Benefits—Severance Agreement with our Former Senior Vice President, Finance and Chief Financial Officer.”

John Nugent—President and Chief Executive Officer

Executive Benefits and Payments Upon Termination	Termination Without Cause or Resignation for Good Reason (not in connection with a Change of Control or Sale of Business) (1)		Termination Without Cause or Resignation for Good Reason (in connection with a Change of Control or Sale of Business) (2)		Change of Control or Sale of Business (3)
Compensation:
Base Salary (4)	$	—	$	550,000	$	—
Target Incentive Bonus (5)		—		550,000		—
Equity Grants (6)		—		2,665,867		2,331,572
Benefits:
Health Benefits (7)		—		14,316		—
Total:	$	—	$	3,780,183	$	2,331,572

(1) Pursuant to Mr. Nugent’s employment agreement with us, our agreement to provide severance benefits (including base salary, target bonus and health coverage) upon termination without cause or resignation for good reason expired on November 2, 2010.

(2) Represents the benefits to which the executive officer may be entitled if the executive officer was terminated without cause or resigned for good reason within 12 months following a change of control.

(3) Represents the benefits to which the executive officer may be entitled upon a change of control or sale of business independent of termination of employment.

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(4) Represents the executive officer’s base salary for a period of 12 months.

(5) Represents the executive officer’s target bonus for a period of 12 months and assumes the change of control occurred on the first day of a fiscal year.

(6) For termination without cause or resignation for good reason in connection with a change of control, represents (i) for stock options, the excess, if any, of the fair market value of our common stock of $3.72 per share as of January 31, 2012 over the exercise price of unvested time-based and performance-based stock options existing as of January 31, 2012 and (ii) for restricted stock units, the fair market value of our common stock of $3.72 per share as of January 31, 2012. For a change of control independent of termination of employment, represents (i) for time-based stock options, the excess, if any, of the fair market value of our common stock of $3.72 per share as of January 31, 2012 over the exercise price of unvested time-based stock options existing as of January 31, 2012, (ii) for performance-based stock options, the excess, if any, of the fair market value of our common stock of $3.72 per share as of January 31, 2012 over the exercise price of unvested performance-based stock options existing as of January 31, 2012 that failed to vest in fiscal years 2011 and 2012, and (iii) for restricted stock units, the fair market value of our common stock of $3.72 per share as of January 31, 2012. For additional information regarding partial and full acceleration of vesting of stock options and restricted stock units upon a change of control, see “Employment Agreements and Severance and Change of Control Benefits—2006 Stock Incentive Plan.”

(7) Represents the estimated cost of COBRA continuation for the executive officer’s current health coverage benefits for a period of 12 months.

John J. Alves—Vice President, Finance and Interim Chief Financial Officer

Executive Benefits and Payments Upon Termination	Termination Without Cause or Resignation for Good Reason (not in connection with a Change of Control or Sale of Business)		Termination Without Cause or Resignation for Good Reason (in connection with a Change of Control or Sale of Business) (1)		Change of Control or Sale of Business (2)
Compensation:
Base Salary		—		—		—
Target Incentive Bonus		—		—		—
Equity Grants (3)		—		203,573	$	172,714
Benefits:
Health Benefits		—		—		—
Total:	$	—	$	203,573	$	172,714

(1) Represents the benefits to which the executive officer may be entitled if the executive officer was terminated without cause or resigned for good reason within 12 months following a change of control.

(2) Represents the benefits to which the executive officer may be entitled upon a change of control or sale of business independent of termination of employment.

(3) For termination without cause or resignation for good reason in connection with a change of control, represents (i) for stock options, the excess, if any, of the fair market value of our common stock of $3.72 per share as of January 31, 2012 over the exercise price of unvested time-based and performance-based stock options existing as of January 31, 2012 and (ii) for restricted stock units, the fair market value of our common stock of $3.72 per share as of January 31, 2012. For a change of control independent of termination of employment, represents (i) for time-based stock options, the excess, if any, of the fair market value of our common stock of $3.72 per share as of January 31, 2012 over the exercise price of unvested time-based stock options existing as of January 31, 2012, (ii) for performance-based stock options, the excess, if any, of the fair market value of our common stock of $3.72 per share as of January 31, 2012 over the exercise price of unvested performance-based stock options existing as of January 31, 2012 that failed to vest in fiscal years 2011 and 2012, and (iii) for restricted stock units, the fair market value of our common stock of $3.72

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per share as of January 31, 2012. For additional information regarding partial and full acceleration of vesting of stock options and restricted stock units upon a change of control, see “Employment Agreements and Severance and Change of Control Benefits—2006 Stock Incentive Plan.”

David Hurwitz—Senior Vice President, Worldwide Marketing

Executive Benefits and Payments Upon Termination	Termination Without Cause or Resignation for Good Reason (not in connection with a Change of Control or Sale of Business)		Termination Without Cause or Resignation for Good Reason (in connection with a Change of Control or Sale of Business) (1)		Change of Control or Sale of Business (2)
Compensation:
Base Salary (3)	$	—	$	275,000	$	—
Target Incentive Bonus (4)		—		137,500		—
Equity Grants (5)		—		491,112		459,111
Benefits:
Health Benefits (6)		—		17,863		—
Total:	$	—	$	921,475	$	459,111

(1) Represents the benefits to which the executive officer may be entitled if the executive officer was terminated without cause or resigned for good reason within 12 months following a change of control.

(2) Represents the benefits to which the executive officer may be entitled upon a change of control or sale of business independent of termination of employment.

(3) Represents the executive officer’s base salary for a period of 12 months.

(4) Represents the executive officer’s target bonus for a period of 12 months and assumes the change of control occurred on the first day of a fiscal year.

(5) For termination without cause or resignation for good reason in connection with a change of control, represents (i) for stock options, the excess, if any, of the fair market value of our common stock of $3.72 per share as of January 31, 2012 over the exercise price of unvested time-based and performance-based stock options existing as of January 31, 2012 and (ii) for restricted stock units, the fair market value of our common stock of $3.72 per share as of January 31, 2012. For a change of control independent of termination of employment, represents (i) for time-based stock options, the excess, if any, of the fair market value of our common stock of $3.72 per share as of January 31, 2012 over the exercise price of unvested time-based stock options existing as of January 31, 2012, (ii) for performance-based stock options, the excess, if any, of the fair market value of our common stock of $3.72 per share as of January 31, 2012 over the exercise price of unvested performance-based stock options existing as of January 31, 2012 that failed to vest in fiscal years 2011 and 2012, and (iii) for restricted stock units, the fair market value of our common stock of $3.72 per share as of January 31, 2012. For additional information regarding partial and full acceleration of vesting of stock options and restricted stock units upon a change of control, see “Employment Agreements and Severance and Change of Control Benefits—2006 Stock Incentive Plan.”

(6) Represents the estimated cost of COBRA continuation for the executive officer’s current health coverage benefits for a period of 12 months.

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Edward Malysz—Senior Vice President, General Counsel and Secretary

Executive Benefits and Payments Upon Termination	Termination Without Cause or Resignation for Good Reason (not in connection with a Change of Control or Sale of Business)		Termination Without Cause or Resignation for Good Reason (in connection with a Change of Control or Sale of Business) (1)		Change of Control or Sale of Business (2)
Compensation:
Base Salary (3)	$	—	$	285,000	$	—
Target Incentive Bonus (4)		—		142,500		—
Equity Grants (5)		—		872,573		841,714
Benefits:
Health Benefits (6)		—		21,685		—
Total:	$	—	$	1,321,758	$	841,714

(1) Represents the benefits to which the executive officer may be entitled if the executive officer was terminated without cause or resigned for good reason within 12 months following a change of control.

(2) Represents the benefits to which the executive officer may be entitled upon a change of control or sale of business independent of termination of employment.

(3) Represents the executive officer’s base salary for a period of 12 months.

(4) Represents the executive officer’s target bonus for a period of 12 months and assumes the change of control occurred on the first day of a fiscal year.

(5) For termination without cause or resignation for good reason in connection with a change of control, represents (i) for stock options, the excess, if any, of the fair market value of our common stock of $3.72 per share as of January 31, 2012 over the exercise price of unvested time-based and performance-based stock options existing as of January 31, 2012 and (ii) for restricted stock units, the fair market value of our common stock of $3.72 per share as of January 31, 2012. For a change of control independent of termination of employment, represents (i) for time-based stock options, the excess, if any, of the fair market value of our common stock of $3.72 per share as of January 31, 2012 over the exercise price of unvested time-based stock options existing as of January 31, 2012, (ii) for performance-based stock options, the excess, if any, of the fair market value of our common stock of $3.72 per share as of January 31, 2012 over the exercise price of unvested performance-based stock options existing as of January 31, 2012 that failed to vest in fiscal years 2011 and 2012, and (iii) for restricted stock units, the fair market value of our common stock of $3.72 per share as of January 31, 2012. For additional information regarding partial and full acceleration of vesting of stock options and restricted stock units upon a change of control, see “Employment Agreements and Severance and Change of Control Benefits—2006 Stock Incentive Plan.”

(6) Represents the estimated cost of COBRA continuation for the executive officer’s current health coverage benefits for a period of 12 months.

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Director Compensation

During fiscal year 2012, none of our non-executive directors other than Ms. Hackenson and Messrs. Crandall and Davenport received any compensation for services as a director. Mr. Troxel received compensation and benefits as an employee for occasionally providing technical services related to the support of our mainframe software products. The following table contains compensation earned by these directors during the fiscal year ended January 31, 2012. For a discussion regarding director compensation, see Item 10, “Directors, Executive Officers and Corporate Governance—Director Compensation.”

Name	Fees Earned or Paid in Cash ($)		Stock Awards) ($) (1)		Option Awards (2) ($)		Non-Equity Incentive Plan Compensation ($)		Change in Pension Value  and Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total ($)
Directors:
L. Dale Crandall	$	51,250	$	53,100	$	8,274		—		—		—	$	112,624
Timothy Davenport	$	48,750	$	53,100	$	10,106		—		—		—	$	111,956
Elizabeth Hackenson	$	48,750	$	53,100	$	10,106		—		—		—	$	111,956
Douglas Troxel (3)	$	25,000		—		—		—		—	$	20,085	$	45,085

(1) On November 30, 2011, Messrs. Crandall and Davenport, and Ms. Hackenson, were each awarded 15,000 restricted stock units pursuant to our Amended and Restated 2006 Stock Incentive Plan. The stock value listed in this column represents the fair market value of the Company’s stock at $3.54 per share on November 30, 2011, the date of the grant. The restricted stock units will vest in full on the third anniversary of the date of the award.

(2) On August 24, 2011, Mr. Davenport and Ms. Hackenson were each granted a time-based stock option for 15,000 shares at an exercise price of $3.54 per share, providing for the vesting of all shares on the first anniversary of the date of grant. On November 30, 2011, Mr. Crandall was granted a time-based stock option for 15,000 shares at an exercise price of $3.54 per share, providing for the vesting of all shares on the first anniversary of the date of grant. The stock options will expire ten years from the date of grant. These grants represent annual stock option grants pursuant to the company’s independent director compensation program. Amounts reflect the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. Assumptions used in the calculation of these amounts are included in Note 5 to the company’s Consolidated Financial Statements for the year ended January 31, 2012.

(3) Mr. Troxel received a base salary of $25,000 and reimbursement of life insurance premiums in the amount of $20,085, inclusive of an income tax gross up.

Compensation Committee Interlocks and Insider Participation

Our compensation committee is comprised of Messrs. Kadifa, Morgenfeld and Troxel, who were appointed to the compensation committee in February 2012, February 2009 and May 2006, respectively. Mr. Troxel served as our Chief Technology Officer until the completion of the merger in March 2006, and continues to provide technical services related to the support of our mainframe software products. No interlocking relationship exists between any member of our compensation committee and any member of any other company’s board of directors or compensation committee.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Equity Compensation Plan Information

The following table contains information as of January 31, 2012 with respect to equity compensation plans under which shares of the company’s common stock are authorized for issuance.

	(A)		(B)		(C)
Plan Category	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (1)		Weighted- Average Exercise Price of Outstanding Options, Warrants and Rights (1)		Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (A))
Equity compensation plans approved by security holders		8,582,511	$	2.79		3,970,302
Equity compensation plans not approved by security holders		—		—		—
Total		8,582,511				3,970,302

(1) At the time of the merger, certain management participants elected to rollover options to acquire 3,946,529 shares under equity compensation plans that were in effect immediately prior to the merger. The company will not make future grants or awards under these earlier plans. The number of shares to be issued upon the exercise of rollover options outstanding as of January 31, 2012 and the weighted average exercise price of these rollover options are included in Columns A and B. For additional information regarding rollover options, see Item 11, “Executive Compensation—Employment Agreements and Severance and Change of Control Benefits—Rollover Options.”

Beneficial Ownership

The table below sets forth information regarding the estimated beneficial ownership of the shares of common stock of our company as of April 15, 2012. The table sets forth the number of shares beneficially owned, and the percentage ownership, for:

• each person that beneficially owns 5% or more of our common stock;

• each of our directors;

• each of our Named Executive Officers; and

• all of the directors and executive officers of the company as a group.

Following the merger, all of our issued and outstanding capital stock is held by the Silver Lake investors, the Troxel investors and certain management participants. All members of our board of directors who are affiliated with Silver Lake may be deemed to beneficially own shares owned by the investment funds affiliated with Silver Lake. Each such individual disclaims beneficial ownership of any such shares in which such individual does not have a pecuniary interest.

Following the merger, the Silver Lake funds (as defined in footnote (2) to the table below) are able to control all actions by our board of directors by virtue of their being able to appoint a majority of our directors, their rights under the stockholders agreement and their beneficial ownership of the only authorized and outstanding share of series A preferred stock to be issued in connection with the merger. Silver Lake Partners II, L.P., one of the Silver Lake funds, holds the one share of series A preferred stock, which ranks senior to our common stock as to rights of payment upon liquidation. This is the only outstanding share of series A preferred stock of the surviving corporation following the completion of the merger. The share of series A preferred stock

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is not entitled to receive or participate in any dividends. The holder of the series A preferred stock, voting as a separate class, has the right to elect one director for each of Serena and the surviving corporation, and the director designated by the holder of the series A preferred stock is entitled at any meeting of the board of directors to exercise one vote more than all votes entitled to be cast by all other directors at such time.

Except as otherwise noted below, the address for each person listed on the table is c/o Serena Software, Inc., 1900 Seaport Boulevard, Redwood City, California 94063-5587. Unless otherwise indicated, the persons or entities identified in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them, subject to applicable community property laws.

Beneficial ownership is determined in accordance with the rules that generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares subject to options held by that person that were exercisable as of April 15, 2012 or will become exercisable within 60 days after such date are deemed outstanding, although the shares are not deemed outstanding for purposes of computing percentage ownership of any other person.

	Shares of Common Stock Beneficially Owned (1)
Name of Beneficial Owner	Number		Percent
Silver Lake funds (2)		66,100,000		67.2	%
Douglas D. Troxel (3) (director and former executive officer)		30,825,780		31.3	%
L. Dale Crandall (4) (director)		79,444		*
Timothy Davenport (5) (director)		64,444		*
Elizabeth Hackenson (6) (director)		89,444		*
Gregory Hughes (7) (director)		66,100,000		67.2	%
George Kadifa (8) (director)		66,100,000		67.2	%
Todd Morgenfeld (9) (director)		66,100,000		67.2	%
John Nugent (10) (director and executive officer)		961,296		1.0	%
John J. Alves (11) (executive officer)		223,469		*
David Hurwitz (12) (executive officer)		74,999		*
Edward Malysz (13) (executive officer)		193,649		*
Robert I. Pender, Jr. (14) (former executive officer)		676,534		*
All directors and executive officers as a group (twelve persons)		99,539,059		98.7	%

* less than 1.0%

(1) Percentage ownership is based on 98,441,944 shares of common stock outstanding as of April 15, 2012.

(2) Includes (i) 52,441,064 shares of common stock held by Silver Lake Partners II, L.P. (“SLP II”), (ii) 158,936 shares of common stock held by Silver Lake Technology Investors II, L.P. (“SLTI II”) and (iii) 13,500,000 shares of common stock held by Serena Co-Invest Partners, L.P. (“Serena Co-Invest” and, together with SLP II and SLTI II, the “Silver Lake funds”). SLP II is also the holder of the sole outstanding share of series A preferred stock, which has preferential voting and liquidation rights, as discussed above. Silver Lake Technology Associates II, L.L.C. (“SLTA II”) is the general partner of each of the Silver Lake funds. The address for each of the entities listed in this footnote is c/o Silver Lake Partners, 2775 Sand Hill Road, Suite 100, Menlo Park, California 94025.

(3) Includes (i) 30,005,780 shares of common stock held by Mr. Troxel as trustee of the Douglas D. Troxel Living Trust and (ii) 820,000 shares of common stock held by Mr. Troxel as trustee of the Change Happens Foundation. Mr. Troxel has the power to vote and dispose of the Change Happens Foundation shares. The address for each of the entities listed in this footnote is c/o Serena Software, Inc., 1900 Seaport Boulevard, Redwood City, California 94063-5587.

(4) Includes 79,444 shares of common stock issuable pursuant to options that are exercisable or that will become exercisable within 60 days after April 15, 2012.

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(5) Includes 64,444 shares of common stock issuable pursuant to options that are exercisable or that will become exercisable within 60 days after April 15, 2012.

(6) Includes 89,444 shares of common stock issuable pursuant to options that are exercisable or that will become exercisable within 60 days after April 15, 2012.

(7) Mr. Hughes is a director of SLTA II. Amounts disclosed for Mr. Hughes are also included above in the amounts disclosed in the table next to “Silver Lake funds.” Mr. Hughes disclaims beneficial ownership in any shares owned directly or indirectly by the Silver Lake funds, except to the extent of any indirect pecuniary interest therein.

(8) Mr. Kadifa is a director of SLTA II. Amounts disclosed for Mr. Kadifa are also included above in the amounts disclosed in the table next to “Silver Lake funds.” Mr. Kadifa disclaims beneficial ownership in any shares owned directly or indirectly by the Silver Lake funds, except to the extent of any indirect pecuniary interest therein.

(9) Mr. Morgenfeld is a director of SLTA II. Amounts disclosed for Mr. Morgenfeld are also included above in the amounts disclosed in the table next to “Silver Lake funds.” Mr. Morgenfeld disclaims beneficial ownership in any shares owned directly or indirectly by the Silver Lake funds, except to the extent of any indirect pecuniary interest therein.

(10) Includes 961,296 shares of common stock issuable pursuant to options that are exercisable or that will become exercisable within 60 days after April 15, 2012.

(11) Includes 223,469 shares of common stock issuable pursuant to options that are exercisable or that will become exercisable within 60 days after April 15, 2012.

(12) Includes 74,999 shares of common stock issuable pursuant to options that are exercisable or that will become exercisable within 60 days after April 15, 2012.

(13) Includes 193,649 shares of common stock issuable pursuant to options that are exercisable or that will become exercisable within 60 days after April 15, 2012.

(14) Includes 482,015 shares of common stock issuable pursuant to options that are exercisable or that will become exercisable within 60 days after April 15, 2012, and 194,519 shares of common stock.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Policies and Procedures for Review and Approval of Related Party Transactions

Our board of directors has adopted a written policy and related procedures for the review, approval and ratification of transactions with related persons. The policy requires our audit committee to review and approve or ratify any transaction with a related person, as such term is defined in the instructions to Regulation S-K, Item 404(a), where the company is a party or participant, the amount involved is greater than $120,000, and a related person has a direct or indirect material interest. Management is responsible for maintaining and communicating a list of related persons to key employees with responsibility over transactions, and these employees are required to report potential related party transactions to our General Counsel for preliminary review. If our General Counsel determines that the transaction is a related party transaction requiring review by our audit committee, the General Counsel will report the details of the transaction to our audit committee for review and approval. Our audit committee will also review at each regularly scheduled meeting a report prepared by management which identifies all transactions with related persons during the most recent fiscal quarter.

Certain Relationships and Related Transactions

Since February 1, 2011, there has not been, nor is there currently planned, any transaction or series of similar transactions to which we were or are a party in which the amount involved exceeds $120,000 and in which any director, executive officer or holder of more than 5% of our capital stock or any member of such persons’ immediate families had or will have a direct or indirect material interest, other than agreements and transactions described under Item 11, “Executive Compensation—Compensation Discussion and Analysis—Employment Agreements and Severance and Change of Control Benefits” and the agreement described under “Silver Lake Management Agreement” and “Letter Agreement Regarding Advancement and Indemnification Rights” below.

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Silver Lake Management Agreement

In connection with the signing of the merger agreement with Spyglass Merger Corp., Spyglass Merger Corp. and Silver Lake Management Company, LLC, or the manager, entered into a management agreement pursuant to which the manager will provide consulting and management advisory services to us. Silver Lake Management Company, LLC is an affiliate of the Silver Lake investors. Pursuant to this agreement, the manager received a transaction fee in the amount of $10.0 million payable at completion of the acquisition transaction and will receive an annual fee thereafter of $1.0 million, payable quarterly in advance, and fees as mutually agreed between the manager and the company in connection with future financing, acquisition, disposition and change of control transactions involving the company or its subsidiaries. The manager or its affiliates also received reimbursement for their out-of-pocket expenses incurred by them in connection with the acquisition transaction prior to the completion of the acquisition transaction and will receive reimbursements for their out-of-pocket expenses in connection with the provision of services pursuant to the management agreement. The management agreement also contains customary exculpation and indemnification provisions in favor of the manager and its affiliates. This agreement has a term of seven years, but may be terminated by either party earlier upon certain events, including an initial public offering of our common stock. In connection with any such early termination, we are required to pay certain fees to the manager.

Letter Agreement Regarding Advancement and Indemnification Rights

On September 14, 2011, we entered into a letter agreement with Silver Lake Group, L.L.C. for purposes of clarifying certain indemnification rights of Silver Lake and its affiliates and any person designated by Silver Lake to serve as a director, officer, board observer, employee, advisor or consultant of Serena. The letter agreement provides, in part, that we will be the indemnitor of first resort and on the primary basis with respect to any matters for which advancement and indemnification are provided by us, and any indemnitee may seek advancement or indemnification from other potential sources of advancement or indemnification or seek insurance coverage under policies maintained by Silver Lake only if and to the extent that we are legally and/or financially unable to pay advancement or indemnification to or on behalf of such indemnitee. The terms of the letter agreement were reviewed and approved by our audit committee in accordance with our policy regarding related party transactions.

Director Independence

Our board of directors has determined that Messrs. Crandall and Davenport and Ms. Hackenson qualify as independent directors within the meaning of Nasdaq Marketplace Rule 5605(a), which is the definition used by the board of directors for determining the independence of its directors. Messrs. Crandall and Davenport and Ms. Hackenson are our only independent directors. Mr. Morgenfeld, who is a member of our audit committee and our compensation committee, Mr. Troxel who is a member of our compensation committee and our nominating committee, Mr. Kadifa, who is the chair of our board and a member of our compensation committee and nominating committee, Mr. Hughes, who is a member of our strategic and operations committee, and Mr. Nugent, are not independent directors. Our board of directors is not comprised of a majority of independent directors, and its committees are not comprised solely of independent directors, because we are a privately held company and not subject to applicable listing standards. The terms of the stockholders agreement require that certain members of our board of directors be comprised of persons affiliated with our company, the Silver Lake investors and the Troxel investors. In addition, the single share of series A preferred stock held by Silver Lake Partners II, L.P. entitles the holder to designate one director with the power to cast one more vote than all votes entitled to be cast by all other directors. For a description of the terms of the stockholders agreement, see Item 10, “Directors, Executive Officers and Corporate Governance—Board Composition.”

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ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Auditors’ Fees

The following table shows the fees for professional audit services rendered by KPMG LLP for the audit of our annual financial statements and review of our interim financial statements for fiscal years 2011 and 2012 (in thousands).

	Fiscal Years Ended January 31,
Fees	2011		2012
Audit Fees (1)	$	1,062	$	1,013

(1) Fiscal year 2011 consists of services rendered in connection with the audit of our annual financial statements ($925,000) and statutory audits ($137,000). Fiscal year 2012 consists of services rendered in connection with the audit of our annual financial statements ($900,000) and statutory audits ($112,600).

Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm

Our audit committee pre-approves all audit and permissible non-audit services provided by our independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services. Our audit committee has adopted a policy and related procedures for the pre-approval of services provided by our independent registered public accounting firm. The policy requires that, before we engage the services of our independent registered accounting firm, our Interim Chief Financial Officer must confirm that the engagement has been pre-approved by our audit committee. Engagements for services with estimated fees of $100,000 or less may be pre-approved by the chairperson of the audit committee, and our audit committee will be informed of pre-approved engagements at its next regularly scheduled meeting. All of the services relating to the fees described in the table above were approved by our audit committee.

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PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

(a) The following documents are filed as a part of this annual report on Form 10-K:

1. Index to Consolidated Financial Statements:

	Page
Report of Independent Registered Public Accounting Firm		F-1
Consolidated Balance Sheets		F-2
Consolidated Statements of Operations		F-3
Consolidated Statements of Stockholders’ Equity and Comprehensive Income (Loss)		F-4
Consolidated Statements of Cash Flows		F-5
Notes to Consolidated Financial Statements		F-6

2. Index to Financial Statement Schedules:

Not applicable.

All schedules have been omitted because the required information is shown in the consolidated financial statements or the accompanying notes, or is not applicable or required.

3. Index of Exhibits:

Exhibit No.	Exhibit Description
3.1	Restated Certificate of Incorporation of Serena Software, Inc. (incorporated by reference to Exhibit 3.01 to the registrant’s current report on Form 8-K (File No. 000-25285), filed with the SEC on August 21, 2006)
3.2	Bylaws of Serena Software, Inc. (incorporated by reference to Exhibit 3.02 to the registrant’s current report on Form 8-K (File No. 000-25285), filed with the SEC on August 21, 2006)
4.1	Indenture between Serena Software, Inc., Spyglass Merger Corp. and The Bank of New York, as Trustee dated March 10, 2006 (incorporated by reference to Exhibit 99.B(2) to the registrant’s amended Schedule 13E-3 (File No. 005-58055), filed with the SEC on March 15, 2006)
4.2	Registration Rights Agreement among Serena Software, Inc., Spyglass Merger Corp., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Lehman Brothers Inc. dated March 10, 2006 (incorporated by reference to Exhibit 18 to the amended Schedule 13D (File No. 005-58055), filed by Silver Lake Partners II, L.P. with the SEC on March 16, 2006)
4.3	Form of 103/8% Senior Subordinated Note due 2016 (included in Exhibit 4.1)
10.1	Sublease dated December 5, 2007 between Nuance Communications, Inc. and Serena Software, Inc. (for current headquarter facilities located in Redwood City, California) (incorporated by reference to Exhibit 10.3 to the registrant’s annual report on Form 10-K (File No. 000-25285), filed with the SEC on April 21, 2008)
10.2	Consent to Sublease dated December 14, 2007 among VII Pac Shores Investors, LLC, Nuance Communications, Inc. and Serena Software, Inc. (for current headquarter facilities located in Redwood City, California) (incorporated by reference to Exhibit 10.4 to the registrant’s annual report on Form 10-K (File No. 000-25285), filed with the SEC on April 21, 2008)
10.3†	Office Lease dated March 16, 2012 between Legacy Partners II San Mateo Plaza, LLC and Serena Software, Inc. (for new headquarter facilities located in San Mateo, California)

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Exhibit No.	Exhibit Description
10.4	Amendment Agreement dated as of March 2, 2011 among Serena Software, Inc., the lending institutions party to the Credit Agreement dated as of March 10, 2006, and Barclays Bank PLC, as Administrative Agent, Collateral Agent, Swingline Lender and Letter of Credit Issuer to the Credit Agreement dated as of March 10, 2006
10.5	Amended and Restated Credit Agreement among Serena Software, Inc., Barclays Bank PLC, as Administrative Agent and Collateral Agent, Barclays Capital, as Lead Arranger, Bookrunner and Syndication Agent, and the lending institutions from time to time parties thereto, dated as of March 2, 2011
10.6	Amended and Restated Security Agreement among Serena Software, Inc. and Barclays Bank PLC, as Collateral Agent, dated as of March 2, 2011
10.7	Amended and Restated Pledge Agreement among Serena Software, Inc. and Barclays Bank PLC, as Collateral Agent, dated as of March 2, 2011
10.8†	Extension Agreement and Amendment No. 1 among Serena Software, Inc., Barclays Bank PLC, as Administrative Agent and Collateral Agent, and the lending institutions from time to time parties thereto, dated as of April 12, 2012
10.9	Stockholders Agreement among Spyglass Merger Corp., Silver Lake Partners II, L.P., Silver Lake Technology Investors II, L.P., Serena Co-Invest Partners, L.P., Integral Capital Partners VII, L.P., Douglas D. Troxel Living Trust, Change Happens Foundation and Douglas D. Troxel dated as of March 10, 2006 (incorporated by reference to Exhibit 22 to the amended Schedule 13D (File No. 005-58055), filed by Silver Lake Partners II, L.P. with the SEC on March 16, 2006)
10.10	Management Stockholders Agreement, dated as of March 7, 2006, among Spyglass Merger Corp., Silver Lake Partners II, L.P., Silver Lake Technology Investors II, L.P. and the Initial Management Investors named therein (incorporated by reference to Exhibit 23 to the amended Schedule 13D (File No. 005-58055), filed by Silver Lake Partners II, L.P. with the SEC on March 16, 2006)
10.11	Management Agreement between Spyglass Merger Corp. and Silver Lake Technology Management, L.L.C. dated as of November 11, 2005 (incorporated by reference to Exhibit 10.19 to the registrant’s registration statement on Form S-4 (File No. 333-133641), filed by the registrant with the SEC on April 28, 2006)
10.12	Letter Agreement re: Advancement and Indemnification Rights between Serena Software, Inc. and Silver Lake Group LLC dated September 14, 2011 (incorporated by reference to Exhibit 10.1 to the registrant’s quarterly report on Form 10-Q (File No. 000-25285), filed by the registrant with the SEC on September 14, 2011)
10.13*	Amended and Restated 1997 Stock Option Plan (incorporated by reference to Exhibit 10.2A to the registrant’s registration statement on Form S-1 (Registration No. 333-67761), filed with the SEC on February 11, 1999)
10.14*	Form of Option Agreement under the Amended and Restated 1997 Stock Option Plan (incorporated by reference to Exhibit 10.2B to the registrant’s registration statement on Form S-1 (Registration No. 333-67761), filed with the SEC on February 11, 1999)
10.15*	Form of Stock Option Buyout under the Amended and Restated 1997 Stock Option Plan (incorporated by reference to Exhibit 10.01 to the registrant’s quarterly report on Form 10-Q (File No. 000-25285), filed by the registrant with the SEC on September 12, 2008)
10.16*	Form of Notice of Exercise under the Amended and Restated 1997 Stock Option Plan (incorporated by reference to Exhibit 10.01 to the registrant’s quarterly report on Form 10-Q (File No. 000-25285), filed by the registrant with the SEC on December 12, 2008)

82

Exhibit No.	Exhibit Description
10.17*	2006 Stock Incentive Plan (incorporated by reference to Exhibit 10.24 to the registrant’s amended registration statement on Form S-4/A (File No. 333-133641), filed by the registrant with the SEC on July 28, 2006)
10.18*	Form of 2006 Stock Option Grant—Time Options (incorporated by reference to Exhibit 10.25 to the registrant’s registration statement on Form S-4 (File No. 333-133641), filed by the registrant with the SEC on April 28, 2006)
10.19*	Form of 2006 Stock Option Grant—Time/Performance Options (incorporated by reference to Exhibit 10.26 to the registrant’s registration statement on Form S-4 (File No. 333-133641), filed by the registrant with the SEC on April 28, 2006)
10.20*	Restricted Stock Agreement between Spyglass Merger Corp. and Robert I. Pender, Jr. dated as of March 10, 2006 (incorporated by reference to Exhibit 25 to the amended Schedule 13D (File No. 005-58055), filed by Silver Lake Partners II, L.P. with the SEC on March 16, 2006)
10.21*	Amended and Restated 2006 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the registrant’s current report on Form 8-K (File No. 000-25285) filed by registrant with the SEC on September 24, 2009)
10.22*	Form of Time and Performance Option Agreement under the Amended and Restated 2006 Stock Incentive Plan (incorporated by reference to Exhibit 10.4 to the registrant’s current report on Form 8-K (File No. 000-25285) filed by registrant with the SEC on November 5, 2009)
10.23*	Form of Time Option Agreement under the Amended and Restated 2006 Stock Incentive Plan (incorporated by reference to Exhibit 10.19 to the registrant’s annual report on Form 10-K (File No. 000-25285), filed by the registrant with the SEC on April 30, 2010)
10.24*	Form of Restricted Stock Unit Agreement under the Amended and Restated 2006 Stock Incentive Plan (incorporated by reference to Exhibit 10.2 to the registrant’s current report on Form 8-K (File No. 000-25285) filed by registrant with the SEC on September 24, 2009)
10.25*	Employment Agreement between Serena Software, Inc. and John Nugent dated October 28, 2009 (incorporated by reference to Exhibit 10.21 to the registrant’s annual report on Form 10-K (File No. 000-25285), filed by the registrant with the SEC on April 30, 2010)
10.26*	Employment Agreement between Serena Software, Inc. and Robert I. Pender, Jr. dated as of March 10, 2006 (incorporated by reference to Exhibit 10.21 to the registrant’s registration statement on Form S-4 (File No. 333-133641), filed by the registrant with the SEC on April 28, 2006)
10.27*	Amendment No. 1 to Employment Agreement between Serena Software, Inc. and Robert I. Pender, Jr. dated as of December 31, 2008 (incorporated by reference to Exhibit 10.20 to the registrant’s annual report on Form 10-K (File No. 000-25285) filed by the registrant with the SEC on May 1, 2009)
10.28*	Form of Change in Control Agreement (incorporated by reference to Exhibit 10.18 to the registrant’s annual report on Form 10-K (File No. 000-25285), filed by the registrant with the SEC on April 30, 2007)
10.29*	Form of Amendment No. 1 to Change in Control Agreement dated as of December 31, 2008 (incorporated by reference to Exhibit 10.23 to the registrant’s annual report on Form 10-K (File No. 000-25285) filed by the registrant with the SEC on May 1, 2009)
10.30*	Agreement and Release between Serena Software, Inc. and Robert I. Pender, Jr. dated July 31, 2011(incorporated by reference to Exhibit 10.2 to the registrant’s current report on Form 8-K (File No. 000-25285) filed by registrant with the SEC on August 4, 2011)

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Exhibit No.	Exhibit Description
10.31*	FY 2012 Executive Annual Incentive Plan (incorporated by reference to Exhibit 10.1 to the registrant’s current report on Form 8-K (File No. 000-25285) filed by registrant with the SEC on June 8, 2011)
10.32*	FY 2012 Management Annual Incentive Plan (incorporated by reference to Exhibit 10.1 to the registrant’s current report on Form 8-K (File No. 000-25285) filed by registrant with the SEC on August 4, 2011)
10.33*†	FY 2013 Executive Annual Incentive Plan
10.34*†	FY 2013 Management Annual Incentive Plan
12.1†	Statement of Computation of Ratio of Earnings to Fixed Charges
14.1	Financial Code of Ethics (incorporated by reference to Exhibit 14.1 to the registrant’s annual report on Form 10-K (File No. 000-25285), filed by the registrant with the SEC on April 30, 2007)
21.1†	List of Subsidiaries of Serena Software, Inc.
24.1†	Powers of Attorney (included on signature page)
31.1†	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2†	Certification of Interim Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1††	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2††	Certification of Interim Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS†††	XBRL Instance Document.
101.SCH†††	XBRL Taxonomy Extension Schema Document.
101.CAL†††	XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB†††	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE†††	XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF†††	XBRL Taxonomy Extension Definition Linkbase Document.

* Indicates a management contract or compensatory plan or arrangement.

† Exhibit is filed herewith.

†† Exhibit is furnished rather than filed, and will not be deemed incorporated by reference into any filing, in accordance with Item 601 of Regulation S-K.

††† In accordance with Rule 406T of Regulation S-T, the information in these exhibits is furnished and deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under such section.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on April 30, 2012.

SERENA SOFTWARE, INC.
By:	/s/    JOHN NUGENT
	John Nugent President and Chief Executive Officer

POWER OF ATTORNEY

Each person whose individual signature appears below hereby authorizes and appoints John Nugent, John J. Alves and Edward Malysz, and each of them, with full power of substitution and resubstitution and full power to act without the other, as his or her true and lawful attorney-in-fact and agent to act in his or her name, place and stead and to execute in the name and on behalf of each person, individually and in each capacity stated below, and to file, any and all amendments to this report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing, ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his or her substitute or substitutes may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the registrant and in the capacities indicated as of April 30, 2012.

Signature	Title
/s/    JOHN NUGENT       (John Nugent)	President, Chief Executive Officer and Director (Principal Executive Officer)
/s/    JOHN J. ALVES       (John J. Alves)	Vice President, Finance, Chief Accounting Officer and Interim Chief Financial Officer (Principal Financial and Accounting Officer)
/s/    GEORGE KADIFA       (George Kadifa)	Director and Chairman of the Board
/s/    L. DALE CRANDALL       (L. Dale Crandall)	Director
/s/    ELIZABETH HACKENSON       (Elizabeth Hackenson)	Director
(Greg Hughes)	Director
/s/    TODD MORGENFELD       (Todd Morgenfeld)	Director
/s/    TIMOTHY DAVENPORT       (Timothy Davenport)	Director
/s/    DOUGLAS D. TROXEL       (Douglas D. Troxel)	Director

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

SERENA Software, Inc.:

We have audited the accompanying consolidated balance sheets of Serena Software, Inc. and subsidiaries as of January 31, 2012 and 2011, and the related consolidated statements of operations, stockholders’ equity and comprehensive income (loss), and cash flows for each of the years in the three-year period ended January 31, 2012. These consolidated financial statements are the responsibility of Serena Software, Inc. and subsidiaries management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Serena Software, Inc. and subsidiaries as of January 31, 2012 and 2011, and the results of their operations and their cash flows for each of the years in the three-year period ended January 31, 2012, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

Santa Clara, California

April 30, 2012

F-1

SERENA SOFTWARE, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

	January 31, 2011			January 31, 2012
ASSETS
Current assets
Cash and cash equivalents	$	126,374		$	109,688
Accounts receivable, net of allowance of $1,095 and $963 at January 31, 2011 and 2012, respectively		22,903			23,747
Deferred taxes, net		4,456			5,015
Prepaid expenses and other current assets		6,152			7,779
Total current assets		159,885			146,229
Property and equipment, net		3,602			4,879
Goodwill		462,400			462,400
Other intangible assets, net		118,249			77,264
Other assets		3,901			3,600
Total assets	$	748,037		$	694,372
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term debt and current portion of long-term debt	$	7,500		$	—
Accounts payable		2,438			1,515
Income taxes payable		2,395			683
Accrued expenses		22,291			18,916
Accrued interest on term loan and subordinated notes		8,241			8,799
Deferred revenue		68,946			68,861
Total current liabilities		111,811			98,774
Deferred revenue, net of current portion		10,246			9,443
Long-term liabilities		4,036			5,423
Deferred taxes		36,714			20,835
Term loan		308,500			308,500
Revolving term credit facility		35,000			—
Senior subordinated notes		134,265			134,265
Total liabilities		640,572			577,240
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value, 10,000,000 shares authorized and no shares issued and outstanding at January 31, 2011 and 2012		—			—
Series A Preferred stock, $0.01 par value; 1 share authorized, issued and outstanding at January 31, 2011 and 2012		—			—
Common stock, $0.01 par value, 200,000,000 shares authorized, 98,389,625 and 98,392,478 shares issued and outstanding at January 31, 2011 and 2012, respectively		984			984
Additional paid-in capital		515,182			516,578
Accumulated other comprehensive loss		(900	)		(1,573	)
Accumulated deficit		(407,801	)		(398,857	)
Total stockholders’ equity		107,465			117,132
Total liabilities and stockholders’ equity	$	748,037		$	694,372

See accompanying notes to consolidated financial statements.

F-2

SERENA SOFTWARE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands)

	Fiscal Years Ended January 31,
	2010			2011			2012
Revenue:
Software licenses	$	49,397		$	51,382		$	54,913
Maintenance		152,464			143,974			141,669
Professional services		22,153			19,030			22,959
Total revenue		224,014			214,386			219,541
Cost of revenue:
Software licenses		3,253			1,380			2,632
Maintenance		12,585			11,545			11,452
Professional services		21,164			18,151			21,643
Amortization of acquired technology and impairment of intangibles		41,415			33,695			3,672
Total cost of revenue		78,417			64,771			39,399
Gross profit		145,597			149,615			180,142
Operating expenses:
Sales and marketing		57,488			55,602			61,247
Research and development		32,737			31,584			26,925
General and administrative		16,600			15,939			14,033
Amortization of intangible assets		36,813			36,813			36,796
Restructuring, acquisition and other charges		7,796			5,332			2,974
Goodwill adjustments		—			1,433			—
Total operating expenses		151,434			146,703			141,975
Operating (loss) income		(5,837	)		2,912			38,167
Other income (expense):
Interest income		437			212			168
Gain (loss) on early extinguishment of debt		4,602			(243	)		—
Interest expense		(33,048	)		(24,633	)		(25,625	)
Change in fair value of derivative instrument		4,277			1,616			—
Amortization and write-off of debt issuance costs		(2,158	)		(1,857	)		(1,361	)
Amend and extend transaction fees		—			—			(1,487	)
Total other income (expense)		(25,890	)		(24,905	)		(28,305	)
(Loss) income before income taxes		(31,727	)		(21,993	)		9,862
Income tax (benefit) expense		(18,705	)		(12,437	)		918
Net (loss) income	$	(13,022	)	$	(9,556	)	$	8,944

See accompanying notes to consolidated financial statements.

F-3

SERENA SOFTWARE, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

AND COMPREHENSIVE INCOME (LOSS)

(In thousands, except share data)

	Common Stock						Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Retained Earnings (Deficit)			Total Stockholders’ Equity
	Shares			Amount
Balance as of January 31, 2009		98,537,147			985			510,379			1,408			(385,223	)		127,549
Components of comprehensive (loss):
Net (loss)		—			—			—			—			(13,022	)		(13,022	)
Change in foreign currency translation		—			—			—			(1,390	)		—			(1,390	)
Total comprehensive (loss)		—			—			—			—			—			(14,412	)
Common stock options exercised		6,028			—			21			—			—			21
Repurchase of common stock		(61,534	)		—			(212	)		—			—			(212	)
Repurchases of option rights under employee stock option plan		—			—			(577	)		—			—			(577	)
Cash option exchange		—			—			(84	)		—			—			(84	)
Amortization of stock-based compensation		—			—			2,854			—			—			2,854
Tax shortfall from employee stock plans		—			—			(173	)		—			—			(173	)
Balance as of January 31, 2010		98,481,641			985			512,208			18			(398,245	)		114,966
Components of comprehensive (loss):
Net (loss)		—			—			—			—			(9,556	)		(9,556	)
Change in foreign currency translation		—			—			—			(537	)		—			(537	)
Currency translation gain from liquidation of foreign entities included in net loss		—			—			—			(381	)		—			(381	)
Total comprehensive (loss)		—			—			—			—			—			(10,474	)
Common stock options exercised		20,665			—			24			—			—			24
Repurchase of common stock		(112,681	)		(1	)		(346	)		—			—			(347	)
Repurchases of option rights under employee stock option plan		—			—			(61	)		—			—			(61	)
Amortization of stock-based compensation		—			—			3,585			—			—			3,585
Tax shortfall from employee stock plans		—			—			(228	)		—			—			(228	)
Balance as of January 31, 2011		98,389,625			984			515,182			(900	)		(407,801	)		107,465
Components of comprehensive income (loss):
Net income		—			—			—			—			8,944			8,944
Change in foreign currency translation		—			—			—			(673	)		—			(673	)
Total comprehensive income (loss)		—			—			—			—			—			8,271
Common stock options exercised		2,853			—			3			—			—			3
Repurchases of option rights under employee stock option plan		—			—			(2	)		—			—			(2	)
Amortization of stock-based compensation		—			—			1,395			—			—			1,395
Balance as of January 31, 2012		98,392,478		$	984		$	516,578		$	(1,573	)	$	(398,857	)	$	117,132

See accompanying notes to consolidated financial statements.

F-4

SERENA SOFTWARE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Fiscal Years Ended January 31,
	2010			2011			2012
Cash flows from operating activities:
Net (loss) income	$	(13,022	)	$	(9,556	)	$	8,944
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization of acquired technology and other intangibles, and impairment of other intangibles		83,538			73,535			43,273
Deferred income taxes		(26,165	)		(25,343	)		(16,123	)
Tax shortfall from employee stock plans		(173	)		(228	)		—
(Gain) loss on early extinguishment of debt		(4,602	)		243			—
Interest expense on term credit facility and subordinated notes, net of interest paid		(452	)		(521	)		634
Fair market value adjustment on the interest rate swap		(4,277	)		(1,616	)		—
Amortization and write-off of debt issuance costs		2,158			1,857			2,848
Stock-based compensation		2,854			3,585			1,395
Acquisition, restructure and other charges		—			(380	)		—
Goodwill adjustments		—			1,433			—
Changes in operating assets and liabilities:
Accounts receivable		5,662			1,896			(844	)
Prepaid expenses and other assets		289			(801	)		(2,215	)
Accounts payable		(717	)		778			(825	)
Income taxes payable		(4,104	)		1,116			(943	)
Accrued expenses		1,044			(429	)		(3,010	)
Deferred revenue		(3,283	)		450			(889	)
Net cash provided by operating activities		38,750			46,019			32,245
Cash flows used in investing activities:
Capital expenditures		(760	)		(2,385	)		(3,489	)
Capital expenditures for internal use software		(3,567	)		(403	)		(313	)
Cash paid in acquisitions, net of cash received		(400	)		—			—
Net cash used in investing activities		(4,727	)		(2,788	)		(3,802	)
Cash flows provided by (used in) financing activities:
Amend and extend transaction fees		—			—			(1,957	)
Common stock repurchased under stock repurchase plans		(212	)		(347	)		—
Repurchase of option rights under employee stock option plan		(661	)		(63	)		(2	)
Exercise of stock options under employee stock option plan		21			24			3
Principal payments and early extinguishments under the term credit facility and senior subordinated notes		(21,829	)		(40,930	)		(42,500	)
Net cash provided by (used in) financing activities		(22,681	)		(41,316	)		(44,456	)
Effect of exchange rate changes on cash and cash equivalents		(1,390	)		(537	)		(673	)
Net increase (decrease) in cash and cash equivalents		9,952			1,378			(16,686	)
Cash and cash equivalents at beginning of year		115,044			124,996			126,374
Cash and cash equivalents at end of year	$	124,996		$	126,374		$	109,688
Supplemental disclosures of cash flow information:
Income taxes paid, net of refunds	$	11,288		$	11,042		$	18,303
Interest expense paid	$	33,500		$	25,154		$	24,991

See accompanying notes to condensed consolidated financial statements.

F-5

SERENA SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fiscal Years Ended January 31, 2010, 2011 and 2012

(1)    Description of Business and Summary of Significant Accounting Policies

(a)    Description of Business

SERENA Software, Inc. (“SERENA” or the “Company”) is the largest global independent software company in terms of revenue solely focused on managing change and processes across information technology, or IT, environments. The Company’s products and services primarily address the complexity of application lifecycle management, or ALM, and are used by customers to manage the development of, and control change in, mission critical applications within both mainframe and distributed systems environments. In addition, the Company provides products and services to enable customers to rapidly address IT service management, or ITSM, and business process challenges through the use of visually designed process workflows. The Company’s products and services allow customers to orchestrate and manage their application development, IT and business processes by automating and integrating disparate ALM and ITSM products and processes, improving process visibility and consistency, enhancing software integrity, mitigating application development risks, supporting auditability and regulatory compliance, and boosting productivity. The Company’s revenue is generated by software licenses, maintenance contracts and professional services. The Company’s software products are typically installed within customer IT environments and generally accompanied by renewable annual maintenance contracts.

(b)    Spyglass Merger Corp.

On March 10, 2006, Spyglass Merger Corp., an affiliate of Silver Lake, a private equity firm, merged with and into us, a transaction we refer to in this report as the Merger. As a result of the Merger, our common stock ceased to be traded on the NASDAQ National Market and we became a privately-held company, with approximately 56.5% of our common stock at the time of the merger on a fully diluted basis owned by investment funds affiliated with Silver Lake.

(c)    Correction of Immaterial Errors

In fiscal 2012, the Company identified certain errors related to overstated income tax accruals of approximately $3.9 million that originated in fiscal 2009. Management concluded that the effect of correcting these errors is not material to fiscal 2009 but would have been material if corrected in fiscal 2012. Accordingly, financial data as of and for the fiscal years ended January 31, 2009, 2010 and 2011 have been revised to reflect the correction of these errors.

(d)    Basis of Presentation

The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Serena has prepared the accompanying consolidated financial statements in conformity with accounting principles generally accepted in the United States of America.

(e)    Foreign Currency Translation

The functional currencies of the Company’s foreign subsidiaries are primarily the British Pound in the United Kingdom and the Euro in Europe, and to a lesser extent, other currencies including the Swiss Franc, Swedish Krona and Danish Krone in Europe, the Singapore Dollar, Australian Dollar, Japanese Yen, Indian Rupee and South-Korean Won in Asia and the Pacific Rim, and the Brazilian Real in Latin America. These foreign subsidiaries’ financial statements are translated using current exchange rates for balance sheet accounts and average rates during the period for income statement accounts. Translation adjustments are recorded as components of other comprehensive income (loss) in the consolidated statements of stockholders’ equity. Foreign currency transaction gains and losses are included in operating expenses, and have not been material to date.

F-6

SERENA SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Fiscal Years Ended January 31, 2010, 2011 and 2012

(1)    Description of Business and Summary of Significant Accounting Policies—(Continued)

(f)    Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. As of January 31, 2011 and 2012, cash equivalents consisted of money market funds.

The Company has classified its investments as “available-for-sale.” These investments are carried at fair value, based on quoted market prices, and unrealized gains and losses are recorded as components of other comprehensive income (loss) in the consolidated statements of stockholders’ equity. Investments deemed to be other-than-temporarily impaired would be recorded as other losses in the consolidated statements of operations. Historically, unrealized losses have been insignificant and the Company has not characterized any of its investments as other-than-temporarily impaired. Realized gains and losses upon sale or maturity of these investments are determined using the specific identification method and are recorded as other income or loss in the consolidated statements of operations.

Interest income consists principally of earnings generated from interest-bearing accounts held by the Company.

Cash and cash equivalents consisted of the following as of January 31, 2011 and 2012 (in thousands):

	As of January 31, 2011						As of January 31, 2012
	Cost		Unrealized Losses		Fair Market Value		Cost		Unrealized Losses		Fair Market Value
Cash and Cash Equivalents:
Cash	$	23,571	$	—	$	23,571	$	31,019	$	—	$	31,019
Money Market Funds		102,803		—		102,803		78,669		—		78,669
	$	126,374	$	—	$	126,374	$	109,688	$	—	$	109,688

(g)    Allowance for doubtful accounts

We maintain an allowance for doubtful accounts to reserve for potentially uncollectible trade receivables. We review our trade receivables by aging category to identify significant customers with known disputes or collection issues. For accounts not specifically identified, we provide reserves based on the age of the receivable. In determining the reserve, we make judgments about the creditworthiness of significant customers based on ongoing credit evaluations. We also consider our historical level of credit losses and current economic trends that might impact the level of future credit losses.

	Balance at Beginning of Period		Additions- Charges to Expenses		(a) Deductions & Write- offs			Balance at End of Period
	(in thousands)
Year Ended January 31, 2010:
Allowance for doubtful accounts	$	649	$	898	$	(67	)	$	1,480
Year Ended January 31, 2011:
Allowance for doubtful accounts	$	1,480	$	50	$	(435	)	$	1,095
Year Ended January 31, 2012:
Allowance for doubtful accounts	$	1,095	$	4	$	(136	)	$	963

(a) Deductions related to the allowance for doubtful accounts represent amounts written off against the allowance.

F-7

SERENA SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Fiscal Years Ended January 31, 2010, 2011 and 2012

(1)    Description of Business and Summary of Significant Accounting Policies—(Continued)

(h)    Property and Equipment

Property and equipment are stated at cost and are depreciated using the straight-line method over the estimated useful lives of the assets, generally three to five years.

(i)    Goodwill and Other Intangible Assets

Goodwill represents the excess of cost over the fair value of net assets of businesses acquired. Goodwill and intangible assets acquired in a purchase business combination that are determined to have an indefinite useful life are not amortized, but instead tested for impairment at least annually. Intangible assets with estimable useful lives are amortized over their respective estimated useful lives and are reviewed for impairment.

Acquired technologies are being amortized over periods ranging from 1.5 years to 5 years and the amortization expense associated with acquired technologies is reflected in cost of revenue in the consolidated statements of operations.

Other intangible assets are being amortized over periods ranging from 3 years to 8 years and the amortization expense associated with other intangible assets is reflected in operating expenses in the consolidated statements of operations. Other intangible assets also include certain capitalized internal use software costs.

For website development costs and the development costs related to the Company’s on-demand application services, the Company capitalized qualifying computer software costs, incurred during the application development stage. Costs related to preliminary project activities and post-implementation activities are expensed as incurred. The Company capitalized $3.6 million of such costs in the fiscal year ended January 31, 2010. No such costs were capitalized in the fiscal years ended January 31, 2011 and 2012. The Company has also capitalized certain other costs totaling $0.0 million, $0.4 million and $0.3 million in fiscal 2010, 2011 and 2012, respectively, associated with computer software it has acquired for internal use. These capitalized costs will be amortized on a straight line basis over the expected useful life of the software, ranging from three to five years, beginning on the date the application becomes available for its intended use.

(j)    Impairment or Disposal of Long-lived Assets

Long-lived assets, such as property, plant and equipment, and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of would be separately presented in the consolidated balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposed group classified as held for sale would be presented separately in the appropriate asset and liability sections of the consolidated balance sheet.

F-8

SERENA SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Fiscal Years Ended January 31, 2010, 2011 and 2012

(1)    Description of Business and Summary of Significant Accounting Policies—(Continued)

In the fourth quarter of the fiscal year ended January 31, 2010, the Company discontinued marketing one of its on-demand application services and identified a triggering event for its other on-demand application services due to sales falling below expectations. As a result, the Company tested its capitalized software costs related to its on-demand application services for impairment and concluded that the carrying amount for these long-lived assets were not recoverable and were fully impaired. Accordingly, the Company recorded an impairment charge in the fourth quarter of fiscal year 2010 totaling $6.8 million.

Goodwill is tested annually for impairment in the fourth quarter of each fiscal year, and is tested for impairment more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount exceeds the asset’s fair value. This determination is made at the reporting unit level and consists of two steps. First, the Company determines the fair value of a reporting unit and compares it to its carrying amount. Second, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized for any excess of the carrying amount of the reporting unit’s goodwill over the implied fair value of that goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation. The residual fair value after this allocation is the implied fair value of the reporting unit goodwill.

The Company completed this test during the fourth quarters of fiscal year 2010, 2011 and 2012 and did not record an impairment loss on goodwill in any of those fiscal years.

(k)    Software Development Costs

Development costs related to software products to be sold are expensed as incurred until technological feasibility of the product has been established. Based on the Company’s product development process, technological feasibility is established upon completion of a working model. Costs incurred by the Company between completion of the working model and the point at which the product is ready for general release have not been significant. Accordingly, no costs have been capitalized to date.

(l)    Income Taxes

The Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets are recognized for deductible temporary differences, along with net operating loss carryforwards, if it is more likely than not that the tax benefits will be realized. To the extent a deferred tax asset cannot be recognized under the preceding criteria, allowances are established. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The Company includes interest and penalties related to uncertain income taxes in the provision for income taxes.

(m)    Use of Estimates

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

F-9

SERENA SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Fiscal Years Ended January 31, 2010, 2011 and 2012

(1)    Description of Business and Summary of Significant Accounting Policies—(Continued)

(n)    Revenue Recognition

The Company recognizes revenue when all of the following criteria are met: (1) persuasive evidence of an arrangement exists, (2) delivery has occurred, (3) the fee is fixed or determinable and (4) collectibility is probable. Serena defines each of these four criteria as follows:

Persuasive evidence of an arrangement exists. It is Serena’s customary practice to have a written contract signed by both the customer and Serena, or a purchase order or purchase authorization from those customers whose standard practice is to employ such instruments.

Delivery has occurred. Serena’s software is physically or electronically delivered to the customer. If an arrangement includes undelivered products or services that are essential to the functionality of the delivered product, or includes acceptance criteria, delivery is not considered to have occurred until these essential products or services are delivered and acceptance criteria are met.

The fee is fixed or determinable. Serena’s policy is to not provide customers the right to a refund of any portion of their license fees paid. The Company’s customary payment terms require customers to pay at least 80% of the license fee within one year or less. With respect to these arrangements where 20% or less of the arrangement fee is due beyond one year, the Company considers these arrangements to be fixed and determinable since such arrangements are standard business practice and the Company has a history of successful collections without making concessions. Arrangements with payment terms extending beyond these customary payment terms are considered not to be fixed or determinable, and revenues from such arrangements are recognized as payments become due and payable.

Collectibility is probable. Collectibility is assessed on a customer-by-customer basis. Serena typically sells to customers for whom there is a history of successful collection. If it is determined from the outset of an arrangement that collectibility is not probable, revenues are recognized as cash is collected.

For multiple element arrangements (e.g., license and maintenance), revenue is allocated to each component of the contract based on vendor specific objective evidence (“VSOE”) of its fair value, which is the price charged when the elements are sold separately. VSOE must exist for the undelivered elements to allocate the total fee among all delivered and non-essential undelivered elements of the arrangement. Since VSOE of fair value has been established for maintenance but not for software licenses, the residual method is used to allocate revenue to the license portion of multiple-element arrangements.

Our VSOE for certain elements of an arrangement is based upon the pricing in comparable transactions when the element is sold separately or through the existence of stated renewal rates. VSOE for post contract support services are primarily based upon customer renewal history where the services are sold separately. VSOE for professional services is also based upon the price charged when the services are sold separately.

For multiple element arrangements, VSOE must exist for the undelivered elements to allocate the total fee among all delivered and non-essential undelivered elements of the arrangement. If the undelivered elements of the arrangement are essential to the functionality of the product, revenue is deferred until the essential elements are delivered. If VSOE does not exist for one or more non-essential undelivered elements, revenue is deferred until such evidence does exist for the undelivered elements, or until all elements are delivered, whichever is earlier. If VSOE of all non-essential undelivered elements exists but VSOE does not exist for one or more delivered elements, revenue is recognized using the residual method. Under the residual method, the revenue for the undelivered

F-10

SERENA SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Fiscal Years Ended January 31, 2010, 2011 and 2012

(1)    Description of Business and Summary of Significant Accounting Policies—(Continued)

elements is deferred based upon VSOE and the remaining portion of the arrangement fee is recognized as revenue for the delivered elements, assuming all other criteria for revenue recognition have been met.

The Company sells products to its end users and distributors under license agreements or purchase orders. Each new license includes maintenance, which includes the right to receive telephone support, “bug fixes” and unspecified upgrades and enhancements, for a specified duration of time, usually one year. The fee associated with such agreements is allocated between software license revenue and maintenance revenue based on the residual method. Software license revenue from these agreements or purchase orders is recognized upon receipt and acceptance of a signed contract or purchase order and delivery of the software, provided the related fee is fixed or determinable and collectibility of the revenue is probable. If an acceptance period is required, revenue is recognized upon the earlier of customer acceptance or the expiration of the acceptance period, as defined in the applicable software license agreement.

The Company recognizes maintenance revenue ratably over the life of the related maintenance contract. Maintenance contracts on perpetual licenses generally renew annually, although the Company does on occasion enter into multi-year maintenance agreements. The Company typically invoices and collects maintenance fees on an annual basis at the anniversary date of the license. Deferred revenue represents amounts received by the Company in advance of performance of the maintenance obligation. Professional services revenue includes fees derived from the delivery of training, installation, and consulting services. Revenue from training, installation, and consulting services is recognized on a time and materials basis as the related services are performed. These services have not historically involved significant production, modification or customization of the software and the services have not been essential to the functionality of the software.

(o)    Stock-Based Compensation

Stock-based compensation cost is measured at the grant date based on the fair value of the award. The Company has elected the graded-vesting attribution method for recognizing stock-based compensation expense over the requisite service period for each separately vesting tranche of awards as though the awards were, in substance, multiple awards.

(p)    Segment Reporting

The Company’s chief operating decision-maker is considered to be the Company’s chief executive officer (“CEO”). The CEO reviews financial information presented on an entity level basis accompanied by disaggregated information about revenues by product type and certain information about geographic regions for purposes of making operating decisions and assessing financial performance. The entity level financial information is identical to the information presented in the accompanying consolidated statements of operations. The Company has determined that it operates in a single operating and reportable segment: enterprise change management software.

F-11

SERENA SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Fiscal Years Ended January 31, 2010, 2011 and 2012

(1)    Description of Business and Summary of Significant Accounting Policies—(Continued)

Geographic information

	Fiscal Years Ended January 31,
	2010		2011		2012
	(in thousands)
Revenues:
United States of America:
Software licenses	$	32,008	$	31,075	$	32,817
Maintenance and professional services		120,848		111,679		110,218
Total United States of America		152,856		142,754		143,035
Europe, Asia and South America:
Software licenses		17,389		20,307		22,096
Maintenance and professional services		53,769		51,325		54,410
Total Europe, Asia and South America		71,158		71,632		76,506
Total	$	224,014	$	214,386	$	219,541

The Company operates in the United States of America, Europe, the Asia Pacific region and Latin America. In general, revenues are attributed to the country in which the contract originates.

	As of January 31,
	2011		2012
	(In thousands)
Property and equipment:
United States of America	$	1,964	$	2,909
Europe, Asia and South America		1,638		1,970
Total	$	3,602	$	4,879

Other information

In each of the fiscal years ended January 31, 2010, 2011 and 2012, 58% of the Company’s total software license revenue came from the Company’s distributed systems products and 42% came from the Company’s mainframe products.

Major customers

No customer accounted for 10% or more of consolidated revenues in fiscal 2010, 2011 or 2012.

(q)    Advertising

Advertising costs are expensed as incurred. Advertising expense is included in sales and marketing expense and amounted to $3.8 million, $3.1 million and $3.5 million in the fiscal years ended January 31, 2010, 2011 and 2012, respectively.

F-12

SERENA SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Fiscal Years Ended January 31, 2010, 2011 and 2012

(1)    Description of Business and Summary of Significant Accounting Policies—(Continued)

(r)    Recently Issued Accounting Standards

In September 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2011-08, Intangibles—Goodwill and Other (Topic 350)—Testing Goodwill for Impairment (ASU 2011-08), to allow an entity to use a qualitative approach to test goodwill for impairment. ASU 2011-08 permits an entity to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If it is concluded that this is the case, it is necessary to perform the currently prescribed two-step goodwill impairment test. Otherwise, the two-step goodwill impairment test is not required. ASU 2011-08 is effective for fiscal years beginning after December 15, 2011, and early adoption is permitted. The implementation of this accounting guidance is not expected to have a material impact on the Company’s consolidated financial position or results of operations.

In June 2011, the FASB issued Accounting Standards Update No. 2011-05, Comprehensive Income (Topic 220)—Presentation of Comprehensive Income (ASU 2011-05), to require an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. ASU 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of equity. ASU 2011-05 is effective for interim and annual periods beginning on or after December 15, 2011. The implementation of this accounting guidance is not expected to have a material impact on the Company’s consolidated financial position or results of operations.

In January 2010, the FASB issued an amendment regarding improving disclosures about fair value measurements. This new guidance requires some new disclosures and clarifies some existing disclosure requirements about fair value measurement. The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years. The Company’s adoption of this guidance did not have any material impact on its consolidated financial position or results of operations.

In October 2009, the FASB issued Accounting Standards Updated (“ASU”) No. 2009–13, Multiple–Deliverable Revenue Arrangements, (“ASU 2009–13”). ASU 2009–13 amends existing revenue recognition accounting pronouncements that are currently within the scope of FASB ASC Subtopic 605-25. The new standard provides accounting principles and application guidance on whether certain non-software multiple deliverables exist, how the arrangement should be separated, and the consideration allocated. This guidance eliminates the requirement to establish the fair value of undelivered products and services and also eliminates the residual method of allocating arrangement consideration. The new guidance provides for separate revenue recognition based upon management’s estimate of the selling price for an undelivered item when there is no other means to determine the fair value of that undelivered item. Under the previous guidance, if the fair value of all of the undelivered elements in the arrangement was not determinable, then revenue was generally deferred until all of the items were delivered or fair value was determined. This new approach is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. This guidance will not be effective for the Company until the first quarter of fiscal 2012. The Company’s adoption of this guidance on February 1, 2011 did not have any material impact on its consolidated financial position or results of operations.

F-13

SERENA SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Fiscal Years Ended January 31, 2010, 2011 and 2012

(2)    Property and Equipment

Property and equipment, with economic useful lives ranging from three years to five years, consisted of the following (in thousands):

	As of January 31,
	2011		2012
Computers and equipment	$	10,047	$	10,273
Furniture and fixtures		7,117		7,691
		17,164		17,964
Less: accumulated depreciation		13,562		13,085
	$	3,602	$	4,879

Depreciation expense was $5.3 million, $3.0 million and $2.8 million in fiscal year 2010, 2011 and 2012, respectively.

(3)    Goodwill and Other Intangible Assets

(a)    Goodwill:

The change in the carrying amount of goodwill for the fiscal years ended January 31, 2011 and 2012 is as follows (in thousands):

Balance as of January 31, 2010	$	464,331
Correction of immaterial error—purchase accounting allocation for the Projity acquisition		(1,931	)
Balance as of January 31, 2011		462,400
No adjustments to carrying amount		—
Balance as of January 31, 2012	$	462,400

(b)    Other Intangible Assets:

Other intangible assets are comprised of the following (in thousands):

	As of January 31, 2011
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Amortizing intangible assets:
Acquired technology	$	178,699	$	(175,027	)	$	3,672
Customer relationships		278,900		(171,014	)		107,886
Trademark/Trade name portfolio		14,300		(8,779	)		5,521
Capitalized software		6,346		(5,176	)		1,170
Total	$	478,245	$	(359,996	)	$	118,249

F-14

SERENA SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Fiscal Years Ended January 31, 2010, 2011 and 2012

(3)    Goodwill and Other Intangible Assets—(Continued)

	As of January 31, 2012
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Amortizing intangible assets:
Acquired technology	$	178,699	$	(178,699	)	$	—
Customer relationships		278,900		(206,030	)		72,870
Trademark/Trade name portfolio		14,300		(10,559	)		3,741
Capitalized software		6,649		(5,996	)		653
Total	$	478,548	$	(401,284	)	$	77,264

Estimated amortization expense:
For year ending January 31, 2013	$	36,625
For year ending January 31, 2014		36,518
For year ending January 31, 2015		4,121
Thereafter		—
Total	$	77,264

As of January 31, 2012, the weighted average remaining amortization period for customer relationships is 25 months; trademark/trade name portfolio is 25 months; and capitalized software is 18 months. The total weighted average remaining amortization period for all identifiable intangible assets is 15 months. Aggregate amortization expense of acquired technology was $41.4 million, $33.7 million and $3.7 million in the fiscal years ended January 31, 2010, 2011 and 2012, respectively. Aggregate amortization expense of other intangible assets was $36.8 million in each of the fiscal years in the three year period ended January 31, 2012. Aggregate amortization expense of acquired technology in fiscal year 2010 included a charge for impairment of intangibles totaling $6.8 million. There were no impairment charges in fiscal year 2011 or 2012.

(4)    Accrued Expenses

(a)    Total Accrued Expenses

Total accrued expenses consisted of the following (in thousands):

	As of January 31,
	2011		2012
Management incentive bonuses and commissions	$	6,054	$	5,056
Payroll-related items		4,771		4,911
Royalties		405		52
Restructuring charges and accruals (Note 4(b))		1,810		230
Other		9,251		8,667
	$	22,291	$	18,916

(b)    Restructuring Charges and Accruals:

In March 2010 and again in February 2011, in response to the general weakening of the worldwide economy, an expected continued slowdown in IT spending and a decline in the Company’s license revenue, the Company announced and began to execute plans to reduce its workforce by approximately 5%, or 33 positions,

F-15

SERENA SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Fiscal Years Ended January 31, 2010, 2011 and 2012

(4)    Accrued Expenses—(Continued)

and 5%, or 28 positions, respectively, affecting all parts of the organization. The Company has realized and expects to continue to realize cost savings going forward as a result of these restructurings and other cost saving initiatives. These restructurings are substantially complete, and in connection with these actions, the Company recorded restructuring charges in the fiscal years ended January 31, 2011 and 2012 consisting principally of severance, payroll taxes and other employee benefits totaling $2.0 million and $0.0 million, respectively, and facilities closures, legal and other miscellaneous costs totaling $0.6 million and $0.2 million, respectively. The nature of the restructuring charges and the amounts paid and accrued as of January 31, 2011 and 2012 are summarized as follows (in thousands):

	Severance, payroll taxes and other employee benefits (1)			Facilities closures, legal and other miscellaneous (2)			Total restructuring charges and accruals
Balances as of January 31, 2010	$	84		$	1,682		$	1,766
Accrued		1,998			600			2,598
Paid		(735	)		(1,493	)		(2,228	)
Adjustments (3)		—			(326	)		(326	)
Balances as of January 31, 2011		1,347			463			1,810
Accrued		—			163			163
Paid		(1,347	)		(565	)		(1,912	)
Balances as of January 31, 2012	$	—		$	61		$	61

(1) The February 2011 reduction in workforce plan was substantially in place and committed to by management prior to the beginning of the first fiscal quarter ended April 30, 2011. Accordingly, severance, payroll taxes and other employee benefits associated with this plan totaling $1.3 million were accrued in the fourth fiscal quarter ended January 31, 2011.

(2) For the fiscal years ended January 31, 2011 and 2012, contract termination costs accrued related to abandoned facility leases totaled $0.4 million and $0.2 million, respectively, and legal and other miscellaneous costs accrued totaled $0.2 million and $0.0 million, respectively. As of January 31, 2012, contract termination costs accrued related to abandoned facility leases will be paid out over the remaining lease terms ranging from 1 month to 6 months.

(3) The adjustment in fiscal year 2011 was the result of actual sub-lease income on an abandoned facility being higher than originally estimated.

Restructuring accruals at January 31, 2011 and 2012 totaling $1.8 million and $0.1 million, respectively, are reflected in accrued expenses in the Company’s consolidated balance sheets.

F-16

SERENA SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Fiscal Years Ended January 31, 2010, 2011 and 2012

(4)    Accrued Expenses—(Continued)

The agreements underlying the Company’s senior subordinated notes and the Credit Facility include financial covenants based on Adjusted EBITDA and restructuring, acquisition and other charges are a component of that computation. These charges have been included as a separate line within operating expenses in the Company’s consolidated statements of operations and are categorized as follows for the fiscal years ended January 31, 2010, 2011 and 2012 (in thousands):

	Fiscal Years Ended January 31,
	2010		2011		2012
Sponsor fees, administration fees and other costs related to the Merger and the issuance of debt	$	1,226	$	1,238	$	1,240
Restructuring charges consisting principally of severance, payroll taxes and other employee benefits, facilities closures and legal and other miscellaneous costs		5,579		2,272		163
Other redundancy costs not related to our restructuring plans including severance and other employee related costs, costs to establish or liquidate entities, and other miscellaneous costs not part of ongoing operations		991		1,822		1,571
Total restructuring, acquisition and other charges	$	7,796	$	5,332	$	2,974

(5)    Stock-Based Compensation

2006 Stock Incentive Plan

Following the completion of the Merger on March 10, 2006, the Company established a new stock incentive plan, the 2006 Stock Incentive Plan (the “2006 Plan”), governing, among other things, the grant of options, restricted stock units, and other forms of share-based payments covering shares of the Company’s common stock to our employees (including officers), directors and consultants. The Company’s common stock representing 12% of outstanding common stock on a fully diluted basis as of the date of the Merger was reserved for issuance under the 2006 Plan. Stock options granted under the 2006 Plan are either “time options” that vest and become exercisable over a four-year period or “time and performance options” that vest based on the achievement of certain performance targets over a five-year period following the date of grant. All options granted under the 2006 Plan will expire not later than ten years from the date of grant, but generally will terminate earlier upon termination of employment. In the event of a sale of substantially all of the assets of the Company, or a merger or acquisition of the Company, the Board of Directors may provide that awards granted under the 2006 Plan will be cashed out, continued, replaced with new awards that substantially preserve the terms of the original awards, or terminated, with acceleration of vesting of the original awards determined at the discretion of the Board of Directors.

In the quarter ended October 31, 2009, the Company completed a tender offer permitting all eligible employees and its independent directors to exchange, on a one-for-one basis, stock options granted under the 2006 Plan for new stock options granted under Serena’s Amended and Restated 2006 Stock Incentive Plan (the “Amended 2006 Plan”) having a lower exercise price and different vesting terms. Eligible optionholders exchanged part or all of their time-based options for new time-based options having a vesting period, generally, of three years and an exercise price of $3.00 per share, the fair market value of Serena’s common stock after the closing of the tender offer. Eligible employees who were not executive officers or officers of the Company exchanged part or all of their performance-based options for new time-based options having a vesting period of three years. Executive officers and officers of the Company exchanged part or all of their performance-based options for new performance-based options having a vesting period of three years and six months, with vesting based on the achievement of EBITA targets established by Serena’s board of directors.

F-17

SERENA SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Fiscal Years Ended January 31, 2010, 2011 and 2012

(5)    Stock-Based Compensation—(Continued)

“Roll Over” Options

In connection with the Merger, the management participants were permitted to elect to have the surviving company in the merger assume some or all of the Serena stock options that they held immediately prior to the merger and that had an exercise price of less than $24.00 per share. The number of shares subject to these “roll over” options was adjusted to be the number of shares equal to the product of (1) the difference between $24.00 and the exercise price of the option and (2) the quotient of the total number of shares of Serena’s common stock subject to such option, divided by $3.75. The exercise price of these “roll over” options was adjusted to $1.25 per share. The “roll over” options are subject to terms of the original option agreements with Serena, except that in the event of a “change in control” of Serena (as defined in the 2006 Plan), the treatment of the “roll over” options upon such transaction will be determined in accordance with the terms of the 2006 Plan.

The Amended 2006 Plan does not include an evergreen provision to provide for automatic increases in the number of shares available for grant. Any increase in the number of shares available for grant under the Amended 2006 Plan would require approval from the Company’s Board of Directors.

As of January 31, 2012, a total of 12,552,813 shares of common stock were reserved for issuance upon the exercise of stock options and for the future grant of stock options or awards under the Amended 2006 Plan.

The fair value of each stock option grant under the stock option plans is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used just prior to the completion of the tender offer for grants in the abbreviated period from February 1, 2009 through October 16, 2009, in the tender offer of October 2009 and post the tender offer for the abbreviated period from October 17, 2009 through January 31, 2010, and the fiscal years ended January 31, 2011 and 2012.

	Fiscal Year Ended January 31, 2010
	Abbreviated Period Post Tender Offer from October 17, 2009 through January 31, 2010	Tender Offer (1)	Abbreviated Period from February 1, 2009 through October 16, 2009 Just Prior to the Tender Offer (2)	Fiscal Year Ended January 31, 2011	Fiscal Year Ended January 31, 2012
Expected life (in years)	3.0 to 4.0	3.3	3.0 to 4.0	2.2 to 3.0	3.0
Risk-free interest rate	0.2% to 1.3%	1.49%	1.6% to 2.5%	0.2% to 1.5%	0.1% to 1.2%
Volatility	31% to 38%	41.5%	31% to 35%	16% to 38%	19% to 384%

(1) The fair value of each stock option grant under the tender offer was estimated on the date of grant, or option exchange, using the Black-Scholes option-pricing model for the new options net of the fair value of the old options being exchanged just immediately before the option exchange also using the Black-Scholes option-pricing model.

(2) All options granted during the first six months of the fiscal year ended January 31, 2010 were tendered for new options or exchanged for cash in the October 2009 tender offer and none of the options granted just prior to the tender offer in the abbreviated period from August 1, 2009 through October 16, 2009 were eligible for exchange of new options or cash in the October 2009 tender offer.

The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. In addition, option-pricing models require the input of highly subjective assumptions including the expected stock price volatility.

F-18

SERENA SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Fiscal Years Ended January 31, 2010, 2011 and 2012

(5)    Stock-Based Compensation—(Continued)

With respect to the amounts set forth above, the Company’s expected volatility is based on the combination of historical volatility of the Company’s common stock and the Company’s peer group’s common stock over the period commensurate with the expected life of the options. To assist management in determining the estimated fair value of the Company’s common stock, the Company engages a third-party valuation specialist to perform a valuation on a semi-annual basis as of January 31 and July 31. In estimating the fair value of the Company’s common stock, the external valuation firm employs a two-step approach that first estimates the fair value of the Company as a whole, and then allocates the enterprise value to the Company’s common stock. The risk-free interest rates are derived from the average U.S. Treasury constant maturity rates during the period and approximate the rate in effect at the time of grant for the respective expected term. The expected terms are based on the observed and expected time to post-vesting exercise or cancellation of options. The Company does not anticipate paying any cash dividends in the foreseeable future and therefore uses an expected dividend yield of zero. The Company estimates forfeitures at the time of grant and revises those estimates in subsequent periods if actual forfeitures differ from those estimates. The Company uses forecasted projections to estimate pre-vesting option forfeitures and records stock-based compensation expense only for those awards that are expected to vest.

F-19

SERENA SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Fiscal Years Ended January 31, 2010, 2011 and 2012

(5)    Stock-Based Compensation—(Continued)

General Stock Option Information

The following table sets forth the summary of option activity under our stock option programs for the fiscal years ended January 31, 2010, 2011 and 2012:

	Options Available for Grant			Number of Options Outstanding			Weighted Average Exercise Price
Balances as of January 31, 2009		2,106,014			12,777,404		$	4.58
Granted		(245,000	)		245,000		$	3.36
Exercised		—			(504,752	)	$	4.31
Cancelled		1,729,591			(1,729,591	)	$	5.04
Balances as of October 16, 2009 just prior to the October 2009 tender offer		3,590,605			10,788,061		$	4.49
Options exchanged as part of the tender offer		8,640,000			(8,640,000	)	$	5.07
New options granted as part of the tender offer		(8,640,000	)		8,640,000		$	3.00
Options repurchased in the cash tender offer		—			(300,500	)	$	5.01
Granted		(2,690,000	)		2,690,000		$	3.00
Exercised		—			(37,435	)	$	1.25
Cancelled(1)		—			(10,801	)	$	1.25
Cancelled		2,916,924			(2,916,924	)	$	3.07
Restricted stock units granted, net of cancellations(2)		(1,820,000	)		—			—
Balances as of January 31, 2010(3)		1,997,529			10,212,401		$	2.76
Granted		(1,680,000	)		1,680,000		$	3.12
Exercised		—			(62,337	)	$	1.25
Cancelled(1)		—			(18,770	)	$	1.25
Cancelled		764,642			(764,642	)	$	3.38
Restricted stock units granted, net of cancellations(2)		(200,000	)		—			—
Balances as of January 31, 2011(3)		882,171			11,046,652		$	2.79
Granted		(827,500	)		827,500		$	3.56
Exercised		—			(3,882	)	$	1.25
Cancelled(1)		—			(77,128	)	$	1.25
Cancelled		3,210,631			(3,210,631	)	$	3.02
Restricted stock units granted, net of cancellations(2)		705,000			—			—
Balances as of January 31, 2012(3)		3,970,302			8,582,511		$	2.79

(1) Represents cancelled “Roll Over” options which are not returned to the available-for-grant stock option pool.

(2) Restricted stock units are granted from the stock option pool. In fiscal 2010, a total of 2,300,000 units were issued net of 480,000 units that were subsequently cancelled. In fiscal 2011, a total of 300,000 units were issued net of 100,000 units that were subsequently cancelled. In fiscal 2012, a total of 45,000 units were issued net of 750,000 units that were subsequently cancelled. See “Restricted Stock Units” below for further details.

F-20

SERENA SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Fiscal Years Ended January 31, 2010, 2011 and 2012

(5)    Stock-Based Compensation—(Continued)

(3) The number of options vested and expected to vest as of January 31, 2010 was 9,956,582 and had an exercise price of $2.75. The number of options vested and expected to vest as of January 31, 2011 was 10,903,283 and had a weighted average exercise price of $2.78. The number of options vested and expected to vest as of January 31, 2012 is 5,581,226 and has a weighted average exercise price of $2.64.

Information regarding the stock options outstanding at January 31, 2012 is summarized as follows:

Exercise Price	Number Outstanding		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$1.25		1,389,456		1.41 years	$	1.25		1,389,456	$	1.25
$3.00		5,110,555		7.73 years	$	3.00		2,291,838	$	3.00
$3.08		780,000		8.22 years	$	3.08		209,644	$	3.08
$3.19		500,000		8.67 years	$	3.19		169,021	$	3.19
$3.54		512,500		9.54 years	$	3.54		2,915	$	3.54
$3.58		290,000		9.07 years	$	3.58		61,104	$	3.58
		8,582,511		6.96 years	$	2.79		4,123,978	$	2.43

(1) The table shows options without consideration of expected forfeitures. The Company estimates its forfeiture rate to be approximately 2%.

(2) Total stock options outstanding at January 31, 2012 consist of 3,944,055 time-based options, 3,249,000 performance-based options and 1,389,456 roll over options. The Company presently does not record compensation expense associated with performance-based options because management believes their vesting is not probable.

The aggregate intrinsic value for options outstanding and options exercisable as of January 31, 2012 was $8.0 million and $5.3 million, respectively.

Restricted Stock Awards

In connection with the consummation of the merger (the “Merger”) of Spyglass Merger Corp. with and into the Company on March 10, 2006, the Company entered into a restricted stock agreement, dated as of March 10, 2006 with Robert Pender, the Company’s Chief Financial Officer. Pursuant to this agreement, Mr. Pender was issued 307,200 shares of the Company’s common stock. The restricted stock award vested in full on June 16, 2010 pursuant to the terms of the restricted stock agreement. Mr. Pender transferred 112,681 shares of the Company’s common stock to the Company for purposes of paying applicable income tax withholdings resulting from the vesting of the restricted stock award pursuant to the terms of the restricted stock agreement.

F-21

SERENA SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Fiscal Years Ended January 31, 2010, 2011 and 2012

(5)    Stock-Based Compensation—(Continued)

The following table sets forth the summary of restricted stock award activity under our restricted stock agreement for the fiscal years ended January 31, 2010, 2011 and 2012:

	Non-Vested Shares			Weighted Average Grant Date Fair Value
Balances as of January 31, 2009		307,200		$	5.00
Granted		—		$	—
Cancelled		—		$	—
Balances as of January 31, 2010		307,200		$	5.00
Granted		—		$	—
Restricted stock awards released upon vesting		(307,200	)	$	5.00
Cancelled		—		$	—
Balances as of January 31, 2011 and 2012		—		$	—

Restricted Stock Units

The Company has entered into restricted stock unit agreements with certain of its employees. These units are unvested and subject to each employee’s continued employment with the Company for a period of three years from the date of issuance. In addition, if the Company is subject to a “change in control” or an “initial public offering” (as defined in these agreements) while the employee remains an employee of the Company, his or her remaining unvested restricted stock units will immediately vest in part or in full depending on the price per share at the time of such event.

The following table sets forth the summary of restricted stock units’ activity under our restricted stock purchase agreements for the fiscal years ended January 31, 2010, 2011 and 2012:

	Non-Vested Shares			Weighted Average Grant Date Fair Value
Balances as of January 31, 2009		—		$	—
Granted		2,300,000		$	3.00
Cancelled		(480,000	)	$	3.00
Balances as of January 31, 2010		1,820,000		$	3.00
Granted		300,000		$	3.10
Cancelled		(100,000	)	$	3.00
Balances as of January 31, 2011		2,020,000		$	3.01
Granted		45,000		$	3.54
Cancelled		(750,000	)	$	3.01
Balances as of January 31, 2012		1,315,000		$	3.04

The aggregate intrinsic value for restricted stock units outstanding as of January 31, 2012 was $4.9 million. There were no restricted stock units debted as of January 31, 2012.

F-22

SERENA SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Fiscal Years Ended January 31, 2010, 2011 and 2012

(5)    Stock-Based Compensation—(Continued)

As of January 31, 2012, total unrecognized compensation costs related to unvested stock options and restricted stock and units was $4.2 million. Costs related to unvested stock options are expected to be recognized over a period of 3 to 3.5 years and costs related to the restricted stock and units are expected to be recognized over a period of 3 to 4 years from grant date.

Stock-based compensation expense for the fiscal years ended January 31, 2010, 2011 and 2012 is categorized as follows (in thousands):

	Fiscal Years Ended January 31,
	2010			2011			2012
Cost of maintenance	$	86		$	94		$	63
Cost of professional services		52			63			66
Stock-based compensation expense in cost of revenue		138			157			129
Sales and marketing		554			541			557
Research and development		769			796			(110	)
General and administrative		1,393			2,091			819
Stock-based compensation expense in operating expense		2,716			3,428			1,266
Total stock-based compensation expense		2,854			3,585			1,395
Income tax benefit		(1,108	)		(1,393	)		(541	)
Total stock-based compensation expense, net of tax	$	1,746		$	2,192		$	854

(6)    Income Taxes

Income before income taxes related to foreign operations was $5.5 million, $9.3 million and $12.7 million in fiscal 2010, 2011 and 2012, respectively. The expense (benefit) for income taxes consisted of the following (in thousands):

	Fiscal Years Ended January 31,
	2010			2011			2012
Current:
Federal	$	6,472		$	10,102		$	12,488
State		1,262			923			1,777
Foreign		(274	)		1,881			2,776
		7,460			12,906			17,041
Deferred:
Federal		(21,229	)		(21,348	)		(14,916	)
State		(4,299	)		(3,890	)		(1,583	)
Foreign		(637	)		(105	)		376
		(26,165	)		(25,343	)		(16,123	)
Total income tax (benefit) expense	$	(18,705	)	$	(12,437	)	$	918

F-23

SERENA SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Fiscal Years Ended January 31, 2010, 2011 and 2012

(6)    Income Taxes—(Continued)

The Company’s effective tax rate differs from the statutory federal income tax rate of 35% for fiscal 2010, 2011 and 2012 primarily due to the following (in thousands):

	Fiscal Years Ended January 31,
	2010			2011			2012
Tax (benefit) expense at federal statutory rate	$	(11,105	)	$	(7,698	)	$	3,452
Research and experimentation credit		(479	)		(571	)		(316	)
State tax, net of federal effect		(1,861	)		(1,550	)		(251	)
Foreign rate differential		(2,288	)		706			(1,400	)
Change in reserves for uncertain tax positions		(2,496	)		(2,493	)		259
Impairment of goodwill and other intangibles		—			502			—
Domestic Manufacturing Deduction		(588	)		(1,083	)		(1,267	)
Other		112			(250	)		441
Total income tax benefit	$	(18,705	)	$	(12,437	)	$	918

The cumulative amount of unremitted foreign earnings that are considered to be permanently invested outside the United States and on which no U.S. taxes have been provided were approximately $26.1 million, $32.8 million and $39.5 million in fiscal 2010, 2011 and 2012, respectively. If the Company was to remit these earnings, foreign tax credits may become available under current law to reduce the resulting U.S. income tax liability. However, determination of the U.S. income tax liability if such amounts were remitted is not practicable.

The Company’s net deferred tax assets (liabilities) are summarized as follows (in thousands):

	As of January 31,
	2011			2012
Deferred tax assets:
Allowance for doubtful accounts	$	300		$	290
Accrued expenses		1,249			1,282
Deferred revenue		2,537			3,333
State taxes		1,252			675
Long-lived assets acquired in a business combination, net		189			1,041
NOL and tax credits carryforward		6,869			5,893
Other		3,366			4,000
Gross deferred tax assets		15,762			16,514
Valuation allowance		(339	)		(846	)
Net deferred tax assets		15,423			15,668
Deferred tax liabilities:
Long-lived assets acquired in a business combination, net		(44,278	)		(27,758	)
Property and equipment, net		(18	)		(176	)
Other		(3,385	)		(3,554	)
Total deferred tax liabilities		(47,681	)		(31,488	)
Net deferred tax liabilities	$	(32,258	)	$	(15,820	)

F-24

SERENA SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Fiscal Years Ended January 31, 2010, 2011 and 2012

(6)    Income Taxes—(Continued)

The Company recorded a valuation allowance of $0.3 million and $0.8 million at January 31, 2011 and January 31, 2012, respectively. The valuation allowance decreased $0.7 million for the year ended January 31, 2010. The valuation allowance increased $0.2 million and $0.5 million for the years ended January 31, 2011 and 2012, respectively.

Because the Company has future reversing taxable temporary differences sufficient to recover most deductible temporary differences, a valuation allowance has only been necessary for certain net operating loss carryforwards whose realizability is limited by change of ownership rules. At January 31, 2012, the Company had U.S. federal and state net operating loss carryforwards of approximately $11.2 million and $3.1 million, respectively. The U.S. federal and state losses will begin expiring in 2020 and 2014, respectively, if not utilized. The Company’s net operating losses are limited by the annual limitations described in Section 382 of the Internal Revenue Code. At January 31, 2012, the Company had no U.S. federal tax credit carryforwards and it had state tax credit carryforwards of approximately $1.6 million. The state research and development credit carryforwards will carryforward indefinitely.

The Company had total federal, state and foreign unrecognized tax benefits of $3.8 million and $4.6 million, including interest of $0.9 million and $1.0 million at January 31, 2011 and January 31, 2012, respectively. Of the total unrecognized tax benefits, $2.9 million and $3.6 million as of January 31, 2011 and 2012, respectively, if recognized, would reduce the Company’s effective tax rate in the period of recognition.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows (in thousands):

	Total Gross Unrecognized Tax Benefits, Excluding Interest
	Fiscal 2011			Fiscal 2012
Balance at beginning of year	$	6,035		$	2,883
Increases related to current year tax positions		145			107
Increases related to prior year tax positions		16			631
Decreases related to prior year tax positions		(1,289	)		(31	)
Decreases related to lapsing of statute of limitations		—			—
Decreases related to settlements with taxing authorities		(2,024	)		—
Balance at end of year	$	2,883		$	3,590

The Company files tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The statute of limitations on our federal and major state tax return filings remains open for the years ended January 31, 2006 through January 31, 2011. The statute of limitations on U.K. income tax filings remains open for the years ended January 31, 1999 through January 31, 2011. The Company does not believe that it is reasonably possible that our unrecognized tax benefits will materially change in the next twelve months.

F-25

SERENA SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Fiscal Years Ended January 31, 2010, 2011 and 2012

(7)    Commitments and Contingencies

(a)    Leases and debt

The Company has non-cancelable operating lease agreements for office space that expire between calendar 2012 and 2018. Minimum payments including operating leases and debt for the five succeeding years as of January 31, 2012, after giving effect to the March 16, 2012 new headquartes facilities office lease and the April 12, 2012 Extension Agreement and Amendment, are as follows (in thousands):

	Payment Due by Period (2)
	Total		Fiscal year ended January 31,										Thereafter
			2013		2014		2015		2016		2017
Operating lease obligations	$	13,662	$	2,024	$	2,645	$	2,206	$	1,692	$	1,615	$	3,480
Credit Facility:
2016 Extended Term Loans due March 10, 2016		191,101		—		—		—		—		191,101		—
2016 Tranche B Term Loans due March 10, 2016		117,399		—		—		—		—		117,399		—
Senior Subordinated Notes due March 15, 2016		134,265		—		—		—		—		134,265		—
Scheduled interest on debt (1)		117,182		28,426		28,426		28,426		28,360		3,544		—
	$	573,609	$	30,450	$	31,071	$	30,632	$	30,052	$	447,924	$	3,480

(1) Scheduled interest on debt is calculated through the instruments due date and assumes no principal paydowns or borrowings. Scheduled interest on debt includes the 2016 extended term loans due March 10, 2016 at an annual rate of 4.47455%, which is the rate in effect as of April 30, 2012, the 2016 Tranche B Term Loans due March 10, 2016 at an annual rate of 5.00000%, which is the rate in effect as of April 30, 2012, the commitment fee on the unutilized amount of the extended revolving term credit facility due March 10, 2015 at the annual rate of 0.375%, which is the rate in effect as of April 30, 2012, and the ten year senior subordinated notes due March 15, 2016 at the stated annual rate of 10.375%.

(2) This table excludes the Company’s unrecognized tax benefits totaling $4.6 million as of January 31, 2012 since the Company has determined that the timing of payments with respect to these liabilities cannot be reasonably estimated.

Rent expense was $5.5 million, $4.6 million and $4.3 million for the fiscal years ended January 31, 2010, 2011 and 2012, respectively.

(b)    Licensing and Other Agreements

The Company has commitments under licensing agreements that provide for payments based on revenues of certain products. For the fiscal years ended January 31, 2010, 2011 and 2012, the Company’s fees paid or accrued under these license agreements were $1.0 million, $1.0 million and $2.3 million, respectively.

(c)    Customer Indemnification

From time to time, the Company agrees to indemnify its customers against liability if the Company’s products infringe a third party’s intellectual property rights. As of January 31, 2012, the Company was not subject to any pending litigation alleging that the Company’s products infringe the intellectual property rights of any third parties.

F-26

SERENA SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Fiscal Years Ended January 31, 2010, 2011 and 2012

(8)    Debt

Debt as of January 31, 2011 and 2012 consists of the following (in thousands):

	As of January 31,
	2011		2012
Senior secured term loan, due March 10, 2013, three-month LIBOR plus 2.00%	$	316,000	$	117,399
Senior secured term loan, due March 10, 2016, three-month LIBOR plus 4.00%		—		191,101
Revolving term credit facility, due March 10, 2012, three-month LIBOR plus 2.00%		35,000		—
Senior subordinated notes, due March 15, 2016, 10.375%		134,265		134,265
Total long-term debt		485,265		442,765
Less current portion		7,500		—
Total long-term debt, less current portion	$	477,765	$	442,765

Senior Secured Credit Agreement

In connection with the consummation of the Merger, the Company entered into a senior secured credit agreement pursuant to a debt commitment that we obtained from affiliates of the initial purchasers of our senior subordinated notes (“the credit facility”).

General. The borrower under the credit facility initially was Spyglass Merger Corp. and immediately following completion of the Merger became Serena. The credit facility originally provided for (1) a seven-year term loan in the amount of $400.0 million amortizing at a rate of 1.00% per year on a quarterly basis for the first six and three-quarters years after the closing date of the Merger, with the balance paid at maturity, and (2) a six-year revolving credit facility that permits loans in an aggregate amount of up to $75.0 million, including a letter of credit facility and a swing line facility. In addition, subject to certain terms and conditions, the credit facility provides for one or more uncommitted incremental term loan or revolving credit facilities in an aggregate amount not to exceed $150.0 million. Proceeds of the term loan on the initial borrowing date were used to partially finance the Merger, to refinance certain indebtedness of Serena and to pay fees and expenses incurred in connection with the Merger. Proceeds of the revolving credit facility have been and any incremental facilities will be used for working capital and general corporate purposes of the Company and its restricted subsidiaries.

In the quarters ended July 31, 2006, April 30, 2007 and January 31, 2008, the Company made principal payments on the original $400 million term loan totaling $25 million, $30 million and $25 million, respectively.

In the quarters ended April 30, 2009, 2010 and 2011, the Company made mandatory principal payments totaling $2.0 million, $2.0 million and $7.5 million, respectively, on the original $400 million term loan.

In the quarter ended April 30, 2010, the Company made a voluntary principal payment totaling $30 million on the revolving credit facility.

In the quarter ended October 31, 2011, the Company made voluntary principal payments on the non-extended 2012 revolving credit facility and the extended 2015 revolving credit facility totaling $25.7 million and $9.3 million, respectively.

The revolving credit facility bears an annual commitment fee on the undrawn portion of that facility commencing on the date of execution and delivery of the senior secured credit agreement. As a result of the Company borrowing $65.0 million under the revolving credit facility in the fiscal quarter ended October 31, 2008 and Lehman Commercial Paper, Inc. (“LCPI”) becoming a defaulting lender due to its failure to fund its loan

F-27

SERENA SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Fiscal Years Ended January 31, 2010, 2011 and 2012

(8)    Debt—(Continued)

commitment, the then annual commitment fee of 0.5% was not payable pursuant to the terms of the senior secured credit agreement until April 2010, when a $30 million portion of the loans under the revolving Credit Facility was repaid. In connection with the amendment of the Company’s senior secured credit agreement in March 2011, Barclays Bank PLC assumed LCPI’s revolving credit commitment of $10.0 million, reviving the applicable revolving credit commitment and resulting in total non-extended and extended revolving credit commitments of $75.0 million. Effective February 1, 2011, the annual commitment fee was 0.375% per annum.

In the quarter ended October 31, 2011, the Company cancelled the non-extended 2012 revolving credit commitment totaling $55.0 million. Effective with the cancellation, the Company’s annual commitment fee is limited to the extended 2015 revolving credit commitment totaling $20.0 million.

Amended and Restated Senior Secured Credit Agreement. On March 2, 2011 the Company entered into an amendment to our senior secured credit agreement to extend the final maturity date for the repayment of a portion of outstanding term loans, extend the commitment termination date of the commitments for a portion of the revolving credit facility and provide for additional flexibility in the financial covenants under the senior secured credit agreement (the “amend and extend transaction”). As a result of the amendment, $191.1 million of the existing term loans were extended and will mature on March 10, 2016 (the “extended term loans”), and $20.0 million of the existing revolving credit commitments were extended and will terminate on March 10, 2015 (the “extended revolving credit commitments”). The $124.9 million of the existing term loans that were not extended (the “non-extended term loans”), and the $55.0 million of the existing revolving credit commitments that were not extended (the “non-extended revolving credit commitments”) will continue to mature on March 10, 2013 and March 10, 2012, respectively. The Company refers to the extended term loans and extended revolving credit commitments collectively as the “extended facilities,” and the non-extended term loans and non-extended revolving credit commitments collectively as the “non-extended facilities.” As a result of the amendment, the interest rate margins were increased by 200 basis points for the extended facilities. In addition, the maximum total leverage ratio stepped up to 5.50x beginning with the fiscal quarter ended April 30, 2011 and through the test periods ending on July 31, 2012 and will step down to 5.00x thereafter for both the extended facilities and non-extended facilities. After giving effect to the amendment, the aggregate principal amount outstanding under the senior secured credit agreement did not change, and the principal amount of the extended and non-extended term loans will continue to amortize at a rate of 1.00% per year on a quarterly basis. In connection with the amendment, Lehman Commercial Paper Inc. resigned as administrative agent, collateral agent, swingline lender and letter of credit issuer under the senior secured credit agreement and was replaced by Barclays Bank PLC.

On April 12, 2012 the Company entered into an Extension Agreement and Amendment No. 1 (the “Extension Agreement and Amendment”) to its senior secured credit agreement to extend the final maturity date of its non-extended term loans due March 10, 2013. In addition, the Company borrowed $15.9 million of incremental term loans under the senior secured credit agreement. As a result of the Extension Agreement and Amendment, $101.5 million of the non-extended term loans due March 10, 2013 were extended through the establishment of a new series of extended term loans, and the Company used the proceeds of the incremental term loans to repay in full $15.9 million of non-extended term loans due March 10, 2013 that were not extended as part of the Extension Agreement and Amendment. The Company refers to the incremental term loans and the newly extended term loans as the “2016 Tranche B Term Loans.” The 2016 Tranche B Term Loans have an applicable margin for London Interbank Offered Rate, or LIBOR, -based loans of 4.0% (which is 200 basis points higher than the interest rate under the non-extended term loans) and a LIBOR floor of 1.0%. The other terms and conditions of the 2016 Tranche B Term Loans are the same as those for the extended term loans due March 10, 2016. After giving effect to the Extension Agreement and Amendment and the repayment of the

F-28

SERENA SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Fiscal Years Ended January 31, 2010, 2011 and 2012

(8)    Debt—(Continued)

remaining non-extended term loans due March 10, 2013, all the Company’s outstanding term loans under the senior secured credit agreement have a final maturity date of March 10, 2016 and the aggregate principal amount of the term loans outstanding under the senior secured credit agreement did not change. The Company paid each lender holding 2016 Tranche B Term Loans an original issuer discount equal to 1.5% of the principal amount of 2016 Tranche B Term Loans held by such lender.

Senior Subordinated Notes

The Company has outstanding $134.3 million principal amount of senior subordinated notes, which bear interest at a rate of 10.375%, payable semi-annually on March 15 and September 15, and which mature on March 15, 2016. Each of our domestic subsidiaries that guarantees the obligations under the Company’s senior secured credit agreement will jointly, severally and unconditionally guarantee the notes on an unsecured senior subordinated basis. The Company does not have any domestic subsidiaries and, accordingly, there are no guarantors. The notes are the Company’s unsecured, senior subordinated obligations, and the guarantees, if any, will be unsecured, senior subordinated obligations of the guarantors. The notes are subject to redemption at the Company’s option under terms and conditions specified in the indenture related to the notes, and may be redeemed at the option of the holders at 101% of their face amount, plus accrued and unpaid interest, upon certain change of control events.

In the fiscal year ended January 31, 2009, the Company repurchased, in eight separate privately negotiated transactions, an aggregate of $32.6 million of principal amount of its original outstanding $200.0 million senior subordinated notes. The repurchases resulted in a gain of $8.7 million from the extinguishment of debt in the fiscal year ended January 31, 2009.

In the fiscal year ended January 31, 2010, the Company repurchased, in six separate privately negotiated transactions, an aggregate of $24.4 million of principal amount of its original outstanding $200.0 million senior subordinated notes. The repurchases resulted in a gain of $4.6 million from the extinguishment of debt in the fiscal year ended January 31, 2010.

In the fiscal year ended January 31, 2011, the Company repurchased, in two separate privately negotiated transactions, an aggregate of $8.7 million of principal amount of its original outstanding $200.0 million senior subordinated notes. The repurchases resulted in a loss of $0.2 million from the extinguishment of debt in the fiscal year ended January 31, 2011.

The Company may from time to time repurchase the senior subordinated notes in open market or privately negotiated purchases or otherwise, or redeem the senior subordinated notes pursuant to the terms of the indenture dated March 10, 2006.

Debt Covenants

The senior subordinated notes and the credit facility contain various covenants including limitations on additional indebtedness, capital expenditures, restricted payments, the incurrence of liens, transactions with affiliates and sales of assets. In addition, the credit facility requires the Company to comply with certain financial covenants, including leverage and interest coverage ratios and capital expenditure limitations. The Company was in compliance with all of the covenants of the credit facility as of January 31, 2012.

F-29

SERENA SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Fiscal Years Ended January 31, 2010, 2011 and 2012

(8)    Debt—(Continued)

The Company’s senior secured credit agreement requires the Company to maintain a rolling twelve-month consolidated Adjusted EBITDA to consolidated Interest Expense ratio of a minimum of 2.00x at the end of each quarter beginning with the fiscal year ending January 31, 2010. Consolidated Interest Expense is defined in the senior secured credit agreement as consolidated cash interest expense less cash interest income and is further adjusted for certain non-cash interest expenses and other items. The Company is also required to maintain a rolling twelve-month consolidated Total Debt to consolidated Adjusted EBITDA ratio of a maximum of 5.00x at the end of each quarter beginning with the fiscal year ending January 31, 2011. Under the terms of the Amended and Restated Senior Secured Credit Agreement, the maximum total leverage ratio stepped up to 5.50x beginning with the fiscal quarter ending April 30, 2011 and through the test period ending on July 31, 2012 and will step down to 5.00x thereafter. Consolidated Total Debt is defined in the senior secured credit agreement as total debt other than certain indebtedness and is reduced by the amount of cash and cash equivalents on our consolidated balance sheet in excess of $5.0 million. As of January 31, 2012, our consolidated Total Debt was $338.1 million, consisting of total debt other than certain indebtedness totaling $442.8 million, net of cash and cash equivalents in excess of $5.0 million totaling $104.7 million. Failure to satisfy these ratio requirements would constitute a default under the senior secured credit agreement. If the Company’s lenders failed to waive any such default, our repayment obligations under the senior secured credit agreement could be accelerated, which would also constitute a default under the indenture governing the senior subordinated notes.

The Company’s ability to incur additional debt and make certain restricted payments under the indenture governing the senior subordinated notes, subject to specified exceptions, is tied to an Adjusted EBITDA to fixed charges ratio of at least 2.0x, except that we may incur certain debt and make certain restricted payments and certain permitted investments without regard to the ratio, such as the Company’s ability to incur up to an aggregate principal amount of $625.0 million under our senior secured credit agreement (subject to reduction for mandatory prepayments under our senior secured credit agreement and inclusive of amounts outstanding under our senior secured credit agreement from time to time; as of January 31, 2012, we had $308.5 million outstanding under our term loan and $0.0 million under our revolving credit facility), to acquire persons engaged in a similar business that become restricted subsidiaries and to make other investments equal to the greater of $25.0 million or 2% of our consolidated assets. Fixed charges is defined in the indenture governing the senior subordinated notes as consolidated Interest Expense less interest income, adjusted for acquisitions, and further adjusted for non-cash interest expense.

(9)    Fair Value Measurement

Fair Value Hierarchy

The following hierarchy of valuation inputs is based upon whether the inputs to valuation techniques reflect assumptions other market participants would use based upon market data obtained from independent sources (observable inputs) or reflect the Company’s own assumptions of market participant valuation (unobservable inputs):

• Level 1—Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities;

• Level 2—Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly;

• Level 3—Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

F-30

SERENA SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Fiscal Years Ended January 31, 2010, 2011 and 2012

(9)    Fair Value Measurement—(Continued)

Observable market data should be used if such data is available without undue cost and effort.

Item Measured at Fair Value on a Recurring Basis

The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis at January 31, 2011 and 2012 (in thousands):

Description	Estimated Fair Value at January 31, 2011		Fair Value Measurement at Reporting Date Using
			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Money market funds	$	102,803	$	102,803	$	—	$	—
Total Assets	$	102,803	$	102,803	$	—	$	—
Total Liabilities	$	—	$	—	$	—	$	—

Description	Estimated Fair Value at January 31, 2012		Fair Value Measurement at Reporting Date Using
			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Money market funds	$	78,669	$	78,669	$	—	$	—
Total Assets	$	78,669	$	78,669	$	—	$	—
Total Liabilities	$	—	$	—	$	—	$	—

Fair Value of Financial Instruments

The carrying amount of the Company’s financial instruments including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their respective fair values because of the relatively short period of time between origination of the instruments and their expected realization. The fair value of the Company’s revolving term credit facility approximates its respective carrying amount because this instrument includes LIBOR-based interest rates that are variable and fluctuate based on market conditions.

The estimated fair values of certain of the Company’s long-term debt obligations based on quoted market prices in effect as of January 31, 2011 and January 31, 2012 are as follows (in thousands):

	Carrying Amount		Fair Value
As of January 31, 2011:
2.30344% Senior Secured Term Loan due 2013	$	316,000	$	306,520
10.375% Senior Subordinated Notes due 2016	$	134,265	$	137,796
As of January 31, 2012:
2.53775% Senior Secured Term Loan due 2013	$	117,399	$	115,932
4.53775% Senior Secured Term Loan due 2016	$	191,101	$	187,279
10.375% Senior Subordinated Notes due 2016	$	134,265	$	138,293

F-31

SERENA SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Fiscal Years Ended January 31, 2010, 2011 and 2012

(9)    Fair Value Measurement—(Continued)

Financial instruments that potentially subject us to credit risk consist of cash and cash equivalents, and trade accounts receivable. The Company maintains the majority of its cash and cash equivalents balances with recognized financial institutions which follow the Company’s investment policy. The Company has not experienced any significant losses on these investments to date. One of the most significant credit risks is the ultimate realization of accounts receivable. This risk is mitigated by (i) ongoing credit evaluation of our customers, and (ii) frequent contact with our customers, especially our most significant customers, thus enabling the Company to monitor current changes in business operations and to respond accordingly. The Company generally does not require collateral for sales on credit. The Company considers these concentrations of credit risks in establishing our allowance for doubtful accounts.

(10)    Litigation

The Company is involved in various legal proceedings that have arisen during the ordinary course of its business. The final resolution of these matters, individually or in the aggregate, is not expected to have a material adverse effect on the Company’s consolidated financial position or results of operations.

F-32

LIST OF EXHIBITS

Exhibit No.	Exhibit Description
3.1	Restated Certificate of Incorporation of Serena Software, Inc. (incorporated by reference to Exhibit 3.01 to the registrant’s current report on Form 8-K (File No. 000-25285), filed with the SEC on August 21, 2006)
3.2	Bylaws of Serena Software, Inc. (incorporated by reference to Exhibit 3.02 to the registrant’s current report on Form 8-K (File No. 000-25285), filed with the SEC on August 21, 2006)
4.1	Indenture between Serena Software, Inc., Spyglass Merger Corp. and The Bank of New York, as Trustee dated March 10, 2006 (incorporated by reference to Exhibit 99.B(2) to the registrant’s amended Schedule 13E-3 (File No. 005-58055), filed with the SEC on March 15, 2006)
4.2	Registration Rights Agreement among Serena Software, Inc., Spyglass Merger Corp., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Lehman Brothers Inc. dated March 10, 2006 (incorporated by reference to Exhibit 18 to the amended Schedule 13D (File No. 005-58055), filed by Silver Lake Partners II, L.P. with the SEC on March 16, 2006)
4.3	Form of 103/8% Senior Subordinated Note due 2016 (included in Exhibit 4.1)
10.1	Sublease dated December 5, 2007 between Nuance Communications, Inc. and Serena Software, Inc. (for current headquarter facilities located in Redwood City, California) (incorporated by reference to Exhibit 10.3 to the registrant’s annual report on Form 10-K (File No. 000-25285), filed with the SEC on April 21, 2008)
10.2	Consent to Sublease dated December 14, 2007 among VII Pac Shores Investors, LLC, Nuance Communications, Inc. and Serena Software, Inc. (for current headquarter facilities located in Redwood City, California) (incorporated by reference to Exhibit 10.4 to the registrant’s annual report on Form 10-K (File No. 000-25285), filed with the SEC on April 21, 2008)
10.3†	Office Lease dated March 16, 2012 between Legacy Partners II San Mateo Plaza, LLC and Serena Software, Inc. (for new headquarter facilities located in San Mateo, California)
10.4	Amendment Agreement dated as of March 2, 2011 among Serena Software, Inc., the lending institutions party to the Credit Agreement dated as of March 10, 2006, and Barclays Bank PLC, as Administrative Agent, Collateral Agent, Swingline Lender and Letter of Credit Issuer to the Credit Agreement dated as of March 10, 2006
10.5	Amended and Restated Credit Agreement among Serena Software, Inc., Barclays Bank PLC, as Administrative Agent and Collateral Agent, Barclays Capital, as Lead Arranger, Bookrunner and Syndication Agent, and the lending institutions from time to time parties thereto, dated as of March 2, 2011
10.6	Amended and Restated Security Agreement among Serena Software, Inc. and Barclays Bank PLC, as Collateral Agent, dated as of March 2, 2011
10.7	Amended and Restated Pledge Agreement among Serena Software, Inc. and Barclays Bank PLC, as Collateral Agent, dated as of March 2, 2011
10.8†	Extension Agreement and Amendment No. 1 among Serena Software, Inc., Barclays Bank PLC, as Administrative Agent and Collateral Agent, and the lending institutions from time to time parties thereto, dated as of April 12, 2012
10.9	Stockholders Agreement among Spyglass Merger Corp., Silver Lake Partners II, L.P., Silver Lake Technology Investors II, L.P., Serena Co-Invest Partners, L.P., Integral Capital Partners VII, L.P., Douglas D. Troxel Living Trust, Change Happens Foundation and Douglas D. Troxel dated as of March 10, 2006 (incorporated by reference to Exhibit 22 to the amended Schedule 13D (File No. 005-58055), filed by Silver Lake Partners II, L.P. with the SEC on March 16, 2006)

Exhibit No.	Exhibit Description
10.10	Management Stockholders Agreement, dated as of March 7, 2006, among Spyglass Merger Corp., Silver Lake Partners II, L.P., Silver Lake Technology Investors II, L.P. and the Initial Management Investors named therein (incorporated by reference to Exhibit 23 to the amended Schedule 13D (File No. 005-58055), filed by Silver Lake Partners II, L.P. with the SEC on March 16, 2006)
10.11	Management Agreement between Spyglass Merger Corp. and Silver Lake Technology Management, L.L.C. dated as of November 11, 2005 (incorporated by reference to Exhibit 10.19 to the registrant’s registration statement on Form S-4 (File No. 333-133641), filed by the registrant with the SEC on April 28, 2006)
10.12	Letter Agreement re: Advancement and Indemnification Rights between Serena Software, Inc. and Silver Lake Group LLC dated September 14, 2011 (incorporated by reference to Exhibit 10.1 to the registrant’s quarterly report on Form 10-Q (File No. 000-25285), filed by the registrant with the SEC on September 14, 2011)
10.13*	Amended and Restated 1997 Stock Option Plan (incorporated by reference to Exhibit 10.2A to the registrant’s registration statement on Form S-1 (Registration No. 333-67761), filed with the SEC on February 11, 1999)
10.14*	Form of Option Agreement under the Amended and Restated 1997 Stock Option Plan (incorporated by reference to Exhibit 10.2B to the registrant’s registration statement on Form S-1 (Registration No. 333-67761), filed with the SEC on February 11, 1999)
10.15*	Form of Stock Option Buyout under the Amended and Restated 1997 Stock Option Plan (incorporated by reference to Exhibit 10.01 to the registrant’s quarterly report on Form 10-Q (File No. 000-25285), filed by the registrant with the SEC on September 12, 2008)
10.16*	Form of Notice of Exercise under the Amended and Restated 1997 Stock Option Plan (incorporated by reference to Exhibit 10.01 to the registrant’s quarterly report on Form 10-Q (File No. 000-25285), filed by the registrant with the SEC on December 12, 2008)
10.17*	2006 Stock Incentive Plan (incorporated by reference to Exhibit 10.24 to the registrant’s amended registration statement on Form S-4/A (File No. 333-133641), filed by the registrant with the SEC on July 28, 2006)
10.18*	Form of 2006 Stock Option Grant—Time Options (incorporated by reference to Exhibit 10.25 to the registrant’s registration statement on Form S-4 (File No. 333-133641), filed by the registrant with the SEC on April 28, 2006)
10.19*	Form of 2006 Stock Option Grant—Time/Performance Options (incorporated by reference to Exhibit 10.26 to the registrant’s registration statement on Form S-4 (File No. 333-133641), filed by the registrant with the SEC on April 28, 2006)
10.20*	Restricted Stock Agreement between Spyglass Merger Corp. and Robert I. Pender, Jr. dated as of March 10, 2006 (incorporated by reference to Exhibit 25 to the amended Schedule 13D (File No. 005-58055), filed by Silver Lake Partners II, L.P. with the SEC on March 16, 2006)
10.21*	Amended and Restated 2006 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the registrant’s current report on Form 8-K (File No. 000-25285) filed by registrant with the SEC on September 24, 2009)
10.22*	Form of Time and Performance Option Agreement under the Amended and Restated 2006 Stock Incentive Plan (incorporated by reference to Exhibit 10.4 to the registrant’s current report on Form 8-K (File No. 000-25285) filed by registrant with the SEC on November 5, 2009)
10.23*	Form of Time Option Agreement under the Amended and Restated 2006 Stock Incentive Plan (incorporated by reference to Exhibit 10.19 to the registrant’s annual report on Form 10-K (File No. 000-25285), filed by the registrant with the SEC on April 30, 2010)

Exhibit No.	Exhibit Description
10.24*	Form of Restricted Stock Unit Agreement under the Amended and Restated 2006 Stock Incentive Plan (incorporated by reference to Exhibit 10.2 to the registrant’s current report on Form 8-K (File No. 000-25285) filed by registrant with the SEC on September 24, 2009)
10.25*	Employment Agreement between Serena Software, Inc. and John Nugent dated October 28, 2009 (incorporated by reference to Exhibit 10.21 to the registrant’s annual report on Form 10-K (File No. 000-25285), filed by the registrant with the SEC on April 30, 2010)
10.26*	Employment Agreement between Serena Software, Inc. and Robert I. Pender, Jr. dated as of March 10, 2006 (incorporated by reference to Exhibit 10.21 to the registrant’s registration statement on Form S-4 (File No. 333-133641), filed by the registrant with the SEC on April 28, 2006)
10.27*	Amendment No. 1 to Employment Agreement between Serena Software, Inc. and Robert I. Pender, Jr. dated as of December 31, 2008 (incorporated by reference to Exhibit 10.20 to the registrant’s annual report on Form 10-K (File No. 000-25285) filed by the registrant with the SEC on May 1, 2009)
10.28*	Form of Change in Control Agreement (incorporated by reference to Exhibit 10.18 to the registrant’s annual report on Form 10-K (File No. 000-25285), filed by the registrant with the SEC on April 30, 2007)
10.29*	Form of Amendment No. 1 to Change in Control Agreement dated as of December 31, 2008 (incorporated by reference to Exhibit 10.23 to the registrant’s annual report on Form 10-K (File No. 000-25285) filed by the registrant with the SEC on May 1, 2009)
10.30*	Agreement and Release between Serena Software, Inc. and Robert I. Pender, Jr. dated July 31, 2011(incorporated by reference to Exhibit 10.2 to the registrant’s current report on Form 8-K (File No. 000-25285) filed by registrant with the SEC on August 4, 2011)
10.31*	FY 2012 Executive Annual Incentive Plan (incorporated by reference to Exhibit 10.1 to the registrant’s current report on Form 8-K (File No. 000-25285) filed by registrant with the SEC on June 8, 2011)
10.32*	FY 2012 Management Annual Incentive Plan (incorporated by reference to Exhibit 10.1 to the registrant’s current report on Form 8-K (File No. 000-25285) filed by registrant with the SEC on August 4, 2011)
10.33*†	FY 2013 Executive Annual Incentive Plan
10.34*†	FY 2013 Management Annual Incentive Plan
12.1†	Statement of Computation of Ratio of Earnings to Fixed Charges
14.1	Financial Code of Ethics (incorporated by reference to Exhibit 14.1 to the registrant’s annual report on Form 10-K (File No. 000-25285), filed by the registrant with the SEC on April 30, 2007)
21.1†	List of Subsidiaries of Serena Software, Inc.
24.1†	Powers of Attorney (included on signature page)
31.1†	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2†	Certification of Interim Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1††	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Exhibit No.	Exhibit Description
32.2††	Certification of Interim Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS†††	XBRL Instance Document.
101.SCH†††	XBRL Taxonomy Extension Schema Document.
101.CAL†††	XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB†††	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE†††	XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF†††	XBRL Taxonomy Extension Definition Linkbase Document.

* Indicates a management contract or compensatory plan or arrangement.

† Exhibit is filed herewith.

†† Exhibit is furnished rather than filed, and will not be deemed incorporated by reference into any filing, in accordance with Item 601 of Regulation S-K.

††† In accordance with Rule 406T of Regulation S-T, the information in these exhibits is furnished and deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under such section.

EX-10.3

Exhibit 10.3

SAN MATEO PLAZA

1850 GATEWAY DRIVE

SAN MATEO, CALIFORNIA

OFFICE LEASE

LEGACY PARTNERS II SAN MATEO PLAZA, LLC,

a Delaware limited liability company

as Landlord,

and

SERENA SOFTWARE, INC.,

a Delaware corporation,

as Tenant

TABLE OF CONTENTS

	Page
ARTICLE 1 BUILDING, PREMISES AND PROJECT		1
ARTICLE 2 LEASE TERM		1
ARTICLE 3 BASE RENT		2
ARTICLE 4 ADDITIONAL RENT		2
ARTICLE 5 USE OF PREMISES		7
ARTICLE 6 SERVICES AND UTILITIES		7
ARTICLE 7 REPAIRS		8
ARTICLE 8 ADDITIONS AND ALTERATIONS		9
ARTICLE 9 COVENANT AGAINST LIENS		10
ARTICLE 10 INDEMNIFICATION AND INSURANCE		10
ARTICLE 11 DAMAGE AND DESTRUCTION		12
ARTICLE 12 CONDEMNATION		13
ARTICLE 13 COVENANT OF QUIET ENJOYMENT		13
ARTICLE 14 ASSIGNMENT AND SUBLETTING		13
ARTICLE 15 SURRENDER; OWNERSHIP AND REMOVAL OF TRADE FIXTURES		15
ARTICLE 16 HOLDING OVER		16
ARTICLE 17 ESTOPPEL CERTIFICATES		16
ARTICLE 18 SUBORDINATION		16
ARTICLE 19 TENANT’S DEFAULTS; LANDLORD’S REMEDIES		17
ARTICLE 20 SECURITY DEPOSIT		18
ARTICLE 21 COMPLIANCE WITH LAW		19
ARTICLE 22 ENTRY BY LANDLORD		19
ARTICLE 23 TENANT PARKING		19
ARTICLE 24 MISCELLANEOUS PROVISIONS		20

EXHIBITS

A	OUTLINE OF PREMISES
B	TENANT WORK LETTER
C	AMENDMENT TO LEASE
D	RULES AND REGULATIONS
E	FORM OF SNDA

EXTENSION OPTION RIDER

-i-

INDEX

	Page
Additional Rent		2
Alterations		8
Amendment		Exhibit C
Architect		Exhibit B
Base Rent		2
Base, Shell and Core		1
Brokers		22
Building		1
Cabling		15
Calendar Year		3
Common Areas		1
Construction Designs		Exhibit B
Construction Drawings		Exhibit B
Contractor		Exhibit B
Cost Pools		3
Cost Proposal		Exhibit B
Cost Proposal Delivery Date		3
Delivery Termination Date		2
Embargoed Person		23
Engineers		Exhibit B
Estimate		6
Estimate Statement		5
Estimated Excess		6
Excess		5
Expense Base Year		3
Expense Year		3
Extension Option		1
Extension Option Notice		1
Extension Term		1
Fair Market Rental Rate		1
Final Space Plan		Exhibit B
Final Working Drawings		Exhibit B
Force Majeure		21
Furnishings Credit		1
Hazardous Material		7
Holidays		7
Information		Exhibit B
Interest Rate		6
Landlord		1
Landlord Parties		10
Landlord Supervision Fee		Exhibit B
Landlord’s Damage Notice		12
Lease		1
Lease Commencement Date		1
Lease Expiration Date		1
Lease Term		1
Lease Year		1
List		23
Notices		22
OFAC		23
Operating Expenses		3
Outside Delivery Date		2
Parking Area		1
Partial Cost Proposal		Exhibit B
Permits		Exhibit B
Premises		1
Project		1
Proposition 13		4
Ready for Occupancy		3
Renovations		23
Rent		2
Rider		1
Security Deposit		18
Space Plan Design Problem		Exhibit B
Specifications		Exhibit B
Statement		5
Subject Space		13
Subleasing Costs		14
Substantial Completion		3
Summary		iv
Systems and Equipment		4
Tax Expense Base Year		4

-ii-

INDEX

	Page
Tax Expenses		4
Tenant		1
Tenant Delays		Exhibit B
Tenant Improvement Allowance		Exhibit B
Tenant Improvement Allowance Items		Exhibit B
Tenant Improvements		Exhibit B
Tenant Work Letter		1
Tenant’s Share		5
Transfer Notice		13
Transfer Premium		14
Transferee		13
Transfers		13
Utilities Base Year		5
Utilities Costs		5
Wi-Fi Network		9
Working Drawing Design Problem		Exhibit B

-iii-

SUMMARY OF BASIC LEASE INFORMATION

This Summary of Basic Lease Information (“Summary”) is hereby incorporated into and made a part of the attached Office Lease. Each reference in the Office Lease to any term of this Summary shall have the meaning as set forth in this Summary for such term. In the event of a conflict between the terms of this Summary and the Office Lease, the terms of the Office Lease shall prevail. Any capitalized terms used herein and not otherwise defined herein shall have the meaning as set forth in the Office Lease.

TERMS OF LEASE
(References are to the Office Lease)			DESCRIPTION
1.	Date:		March 16, 2012
2.	Landlord:		LEGACY PARTNERS II SAN MATEO PLAZA, LLC,
			a Delaware limited liability company
3.	Address of Landlord (Section 24.19):		LEGACY PARTNERS II SAN MATEO PLAZA, LLC
			c/o Legacy Partners Commercial, Inc. 4000 East Third Avenue, Suite 600 Foster City, California 94406 Attention: Executive Vice President, Property Management
4.	Tenant:		SERENA SOFTWARE, INC.,
			a Delaware corporation
5.	Address of Tenant (Section 24.19):		SERENA SOFTWARE, INC.
			2345 NW Amberbrook Drive, Suite 200 Hillsboro, Oregon 97006 Attention: Real Estate Director
			With a copy to:
			SERENA SOFTWARE, INC.
			1900 Seaport Boulevard, 2nd Floor Redwood City, California 94063 Attention: General Counsel (Prior to Lease Commencement Date)
			and
			SERENA SOFTWARE, INC.
			1850 Gateway Drive, Suite 400 San Mateo, California 94404 Attention: Office Manager (After Lease Commencement Date)
6.	Premises (Article 1):
	6.1	Premises:	20,790 rentable square feet of space located on the fourth (4th) floor of the Building (as defined below), as set forth in Exhibit A attached hereto.
	6.2	Building:	The Premises are located in that certain building whose address is 1850 Gateway Drive, San Mateo, California 94404.
7.	Term (Article 2):
	7.1	Lease Term:	Seventy-six (76) full calendar months.
	7.2	Lease Commencement Date:	The earlier of (i) the date Tenant commences business operations in the Premises, or (ii) the date the Premises are Ready for Occupancy (as defined in the Tenant Work Letter attached hereto as Exhibit B), which Lease Commencement Date is anticipated to be August 1, 2012.

-iv-

TERMS OF LEASE
(References are to the Office Lease)			DESCRIPTION
	7.3	Lease Expiration Date:	The last day of the seventy-sixth (76th) full calendar month following the Lease Commencement Date.
	7.4	Amendment to Lease:	Landlord and Tenant may confirm the Lease Commencement Date and Lease Expiration Date in an Amendment to Lease (Exhibit C) to be executed pursuant to Article 2 of the Office Lease.
8.	Base Rent (Article 3):

Months of Lease Term	Annual Base Rent			Monthly Installment of Base Rent			Monthly Rental Rate per Rentable Square Foot
1 – 12	$	729,254.99	*	$	60,771.25	*	$	2.9231
13 – 24	$	754,202.99		$	62,850.25		$	3.0231
25 – 36	$	779,150.99		$	64,929.25		$	3.1231
37 – 48	$	804,098.99		$	67,008.25		$	3.2231
49 – 60	$	829,046.99		$	69,087.25		$	3.3231
61 – 76	$	853,994.99		$	71,166.25		$	3.4231

* Tenant shall not be obligated to pay monthly Base Rent for the first (1^st) through fourth (4^th) months of the Lease Term so long as Tenant is not in monetary or other material default under the Lease, as more particularly described in the immediately following sentence. If, at any time, Tenant is in monetary or other material default of any term, condition or provision of this Lease beyond applicable notice and grace periods that results in a termination of the Lease as provided for in Section 19.2 below, then to the fullest extent permitted by law, any express or implicit waiver by Landlord of Tenant’s requirement to pay monthly Base Rent during any period of time from and after the date of this Lease shall be null and void and Tenant shall immediately pay to Landlord all Base Rent so expressly or implicitly waived by Landlord.

9.	Additional Rent (Article 4):
	9.1	Expense Base Year:	Calendar year 2012.
	9.2	Tax Expense Base Year:	Calendar year 2012.
	9.3	Utilities Base Year:	Calendar year 2012.
	9.4	Tenant’s Share of Operating Expenses, Tax Expenses and Utilities Costs:	14.55% (20,790 rentable square feet within the Premises/142,911 rentable square feet within the Building).
10.	Security Deposit (Article 20):		$71,166.25.
11.	Brokers (Section 24.25):		Colliers International and Hume Myers Tenant Counsel, LLC representing Tenant and CBRE, Inc. and Legacy Partners Commercial representing Landlord.
12.	Parking (Article 23):		3.3 unreserved parking spaces for every 1,000 rentable square feet of the Premises which is equivalent to 68 spaces.

-v-

OFFICE LEASE

This Office Lease, which includes the preceding Summary and the exhibits attached hereto and incorporated herein by this reference (the Office Lease, the Summary and the exhibits to be known sometimes collectively hereafter as the “Lease”), dated as of the date set forth in Section 1 of the Summary, is made by and between LEGACY PARTNERS II SAN MATEO PLAZA, LLC, a Delaware limited liability company (“Landlord”), and SERENA SOFTWARE, INC., a Delaware corporation (“Tenant”).

ARTICLE 1

BUILDING, PREMISES AND PROJECT

1.1 Building, Premises and Project. Upon and subject to the terms, covenants and conditions hereinafter set forth in this Lease, Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the premises set forth in Section 6.1 of the Summary (the “Premises”), which Premises are part of the building commonly known as San Mateo Plaza (the “Building”). The outline of the floor plan of the Premises is set forth in Exhibit A attached hereto. The Building, the Building’s parking area (the “Parking Area”), any outside plaza areas, land and other improvements surrounding the Building which are designated from time to time by Landlord as common areas appurtenant to or servicing the Building, and the land upon which any of the foregoing are situated, are herein collectively referred to as the “Project.” Tenant is hereby granted the right to the nonexclusive use of the common corridors and hallways, stairwells, elevators, restrooms and other public or common areas located within the Building, and the non-exclusive use of the areas located on the Project designated by Landlord from time to time as common areas for the Building (the “Common Areas”); provided, however, that (i) the manner in which such public and Common Areas are maintained and operated shall be at the sole discretion of Landlord, (ii) the use thereof shall be subject to (1) such rules, regulations and restrictions as Landlord may make from time to time and (2) the provisions of any covenants, conditions and restrictions regarding the use thereof, now or hereafter recorded against the Project, and (iii) Tenant may not go on the roof of the Building without Landlord’s prior consent (which may be withheld in Landlord’s sole and absolute discretion) and without otherwise being accompanied by a representative of Landlord. Landlord reserves the right from time to time to use any of the Common Areas, and the roof, risers and conduits of the Building for telecommunications and/or any other purposes, and to do any of the following: (1) make any changes, additions, improvements, repairs and/or replacements in or to the Project or any portion or elements thereof, including, without limitation, expanding or decreasing the size of any Common Areas and other elements thereof; (2) close temporarily any of the Common Areas while engaged in making repairs, improvements or alterations to the Project; (3) retain and/or form a common area association or associations under covenants, conditions and restrictions to own, manage, operate, maintain, repair and/or replace all or any portion of the landscaping, driveways, walkways, public and private streets, plazas, courtyards, transportation facilitation areas and/or other common areas located outside of the Building and, subject to Article 4 below, include the common area assessments, fees and taxes charged by the association(s) and the cost of maintaining, managing, administering and operating the association(s), in Operating Expenses or Tax Expenses; and (4) perform such other acts and make such other changes with respect to the Project as Landlord may, in the exercise of good faith business judgment, deem to be appropriate (provided in the case of clauses (1), (2) and (4) that Landlord shall minimize any material and adverse interference with Tenant’s business at the Premises or access thereto).

1.2 Condition of Premises. Except as expressly set forth in this Lease and Landlord’s obligation to deliver the Premises Ready for Occupancy as set forth in the Tenant Work Letter attached hereto as Exhibit B, Landlord shall not be obligated to provide or pay for any improvement, remodeling or refurbishment work or services related to the improvement, remodeling or refurbishment of the Premises, and Tenant shall accept the Premises in its “AS IS” condition on the Lease Commencement Date. Notwithstanding the foregoing, on the Lease Commencement Date, Landlord shall deliver the Premises with the existing Systems and Equipment in good working condition and Tenant shall have a review period of ninety (90) days from the Lease Commencement Date (the “Review Period”) to confirm such condition. In the event that Tenant notifies Landlord during the Review Period, in writing, of any of the foregoing items that are not in good working condition, Landlord shall use commercially reasonable efforts to cause such items to be promptly repaired to the extent that any deficiencies to such systems are not caused by the acts or omissions of Tenant or any of Tenant’s Representatives (as defined below), or any Alterations performed by or on behalf of Tenant. If Tenant fails to timely deliver to Landlord such written notice of Systems or Equipment not in good working condition within the Review Period, Landlord shall have no obligation to perform any such work thereafter, except as otherwise expressly provided in the Lease.

1.3 Rentable Square Feet. The parties hereby stipulate that the Premises contain the rentable square feet set forth in Section 6.1 of the Summary, and such square footage amount is not subject to adjustment or remeasurement by Landlord or Tenant. Accordingly, there shall be no adjustment in the Base Rent or other amounts set forth in this Lease which are determined based upon the rentable square feet of the Premises.

ARTICLE 2

LEASE TERM

The terms and provisions of this Lease shall be effective as of the date of this Lease except for the provisions of this Lease relating to the payment of Rent. The term of this Lease (the “Lease Term”) shall be as set forth in Section 7.1 of the Summary and shall commence on the date (the “Lease Commencement Date”) set forth in Section 7.2 of the Summary (subject, however, to the terms of the Tenant Work Letter), and shall terminate on the date (the “Lease Expiration Date”)

1

set forth in Section 7.3 of the Summary, unless this Lease is sooner terminated as hereinafter provided. For purposes of this Lease, the term “Lease Year” shall mean each consecutive twelve (12) month period during the Lease Term, provided that the last Lease Year shall end on the Lease Expiration Date. If Landlord does not deliver possession of the Premises to Tenant on or before the anticipated Lease Commencement Date (as set forth in Section 7.2(ii) of the Summary), Landlord shall not be subject to any liability nor shall the validity of this Lease nor the obligations of Tenant hereunder be affected. In the event that the Lease Commencement Date is a date which is other than the anticipated Lease Commencement Date set forth in Section 7.2(ii) of the Summary, within a reasonable period of time after the date Tenant takes possession of the Premises Landlord shall deliver to Tenant an amendment to lease in the form attached hereto as Exhibit C, attached hereto, setting forth the Lease Commencement Date and the Lease Expiration Date, which amendment Tenant shall execute and return to Landlord within thirty (30) days after Tenant’s receipt thereof. If Tenant fails to execute and return the amendment within such 30-day period, Tenant shall be deemed to have approved and confirmed the dates set forth therein, provided that such deemed approval shall not relieve Tenant of its obligation to execute and return the amendment. In the event that neither Tenant nor Landlord delivers such amendment to the other party, the Lease Commencement Date shall be deemed to be the anticipated Lease Commencement Date set forth in Section 7.2(ii) of the Summary. Notwithstanding anything to the contrary set forth herein, in the event that Landlord is unable to deliver the Premises to Tenant Ready for Occupancy on or before July 26, 2012 (which date shall be extended for the period of any Tenant Delays [as defined in the Work Letter] or any event of Force Majeure (the “Outside Delivery Date”), which delays Substantial Completion of the Premises), Tenant shall receive one (1) day free of Base Rent for each day beyond the Outside Delivery Date that Landlord fails to so deliver the Premises to Tenant (not to exceed six (6) month’s Base Rent), to be applied to Base Rent due hereunder after the expiration of any free rent periods, and as and when such obligation of Tenant commences. In addition, if Landlord is unable to tender possession of the Premises on or before November 1, 2012 (which date shall be extended for the period of any Tenant Delays or any event of Force Majeure which delays Substantial Completion of the Premises) (the “Delivery Termination Date”), then Tenant may terminate this Lease by delivering to Landlord a written termination notice thereof prior to the earlier of (i) the date which is seven (7) days following the Delivery Termination Date or (ii) the date upon which Landlord tenders possession of the Premises Ready for Occupancy. Tenant’s termination notice delivered pursuant to this Article 2 shall be effective seven (7) days after receipt thereof by Landlord; provided, however, Landlord may vitiate Tenant’s termination notice provided to Landlord pursuant to this Article 2 by Landlord tendering possession of the Premises to Tenant prior to the effective date of such termination notice, in which event Tenant’s termination notice shall be null and void and of no further force or effect. The rent abatement right and termination right afforded to Tenant under this Article 2 shall be Tenant’s sole remedies for Landlord’s failure to timely tender possession of the Premises. Time is of the essence for the delivery of Tenant’s termination notice under this Article 2; accordingly, if Tenant fails to timely deliver any such notice, Tenant’s right to terminate this Lease under this Article 2 shall expire and be of no further force or effect as of the date Tenant fails to timely deliver such termination notice.

ARTICLE 3

BASE RENT

Tenant shall pay, without notice or demand, to Landlord or Landlord’s agent at the management office of the Project, or at such other place as Landlord may from time to time designate in writing, in currency or a check for currency which, at the time of payment, is legal tender for private or public debts in the United States of America, base rent (“Base Rent”) as set forth in Section 8 of the Summary, payable in equal monthly installments as set forth in Section 8 of the Summary in advance on or before the first day of each and every month during the Lease Term, without any setoff or deduction whatsoever, except as otherwise expressly provided in this Lease. The Base Rent for the first full month of the Lease Term shall be paid at the time of Tenant’s execution of this Lease. If any rental payment date (including the Lease Commencement Date) falls on a day of the month other than the first day of such month or if any rental payment is for a period which is shorter than one month, then the rental for any such fractional month shall be a proportionate amount of a full calendar month’s rental based on the proportion that the number of days in such fractional month bears to the number of days in the calendar month during which such fractional month occurs. All other payments or adjustments required to be made under the terms of this Lease that require proration on a time basis shall be prorated on the same basis. If, at any time, Tenant is in default of any monetary or other material term, condition or provision of this Lease (beyond applicable notice and grace periods) that results in a termination of the Lease as provided in Section 19.2 below, then to the fullest extent permitted by law, any express or implicit waiver by Landlord of Tenant’s requirement to pay Base Rent during any period of time from and after the Lease Commencement Date shall be null and void and Tenant shall immediately pay to Landlord all Base Rent so expressly or implicitly waived by Landlord.

ARTICLE 4

ADDITIONAL RENT

4.1 Additional Rent. In addition to paying the Base Rent specified in Article 3 of this Lease, Tenant shall pay as additional rent the sum of the following: (i) Tenant’s Share (as such term is defined below) of the annual Operating Expenses which are in excess of the amount of Operating Expenses applicable to the Expense Base Year; plus (ii) Tenant’s Share of the annual Tax Expenses which are in excess of the amount of Tax Expenses applicable to the Tax Expense Base Year; plus (iii) Tenant’s Share of the annual Utilities Costs which are in excess of the amount of Utilities Costs applicable to the Utilities Base Year. Such additional rent, together with any and all other amounts payable by Tenant to Landlord pursuant to the terms of this Lease (including, without limitation, pursuant to Article 6), shall be hereinafter collectively referred to as the “Additional Rent.” The Base Rent and Additional Rent are herein collectively referred to as the “Rent.” All amounts due under this

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Article 4 as Additional Rent shall be payable for the same periods and in the same manner, time and place as the Base Rent. Without limitation on other obligations of Tenant which shall survive the expiration of the Lease Term, the obligations of Tenant to pay the Additional Rent provided for in this Article 4 shall survive the expiration of the Lease Term.

4.2 Definitions. As used in this Article 4, the following terms shall have the meanings hereinafter set forth:

4.2.1 “Calendar Year” shall mean each calendar year in which any portion of the Lease Term falls, through and including the calendar year in which the Lease Term expires.

4.2.2 “Expense Base Year” shall mean the year set forth in Section 9.1 of the Summary.

4.2.3 “Expense Year” shall mean each Calendar Year, provided that Landlord, upon notice to Tenant, may change the Expense Year from time to time to any other twelve (12) consecutive-month period, and, in the event of any such change, Tenant’s Share of Operating Expenses, Tax Expenses and Utilities Costs shall be equitably adjusted for any Expense Year involved in any such change.

4.2.4 “Operating Expenses” shall mean all expenses, costs and amounts of every kind and nature which Landlord shall pay during any Expense Year because of or in connection with the ownership, management, maintenance, repair, replacement, restoration or operation of the Project, including, without limitation, any amounts paid for: (i) the cost of operating, maintaining, repairing, renovating and managing the utility systems, mechanical systems, sanitary and storm drainage systems, any elevator systems and all other “Systems and Equipment” (as defined in Section 4.2.5 of this Lease), and the cost of supplies and equipment and maintenance and service contracts in connection therewith; (ii) the cost of licenses, certificates, permits and inspections, and the cost of contesting the validity or applicability of any governmental enactments which may affect Operating Expenses, and the costs incurred in connection with implementation and operation of a transportation system management program or similar program required by any applicable governmental authority; (iii) the cost of insurance carried by Landlord, in such amounts as Landlord may reasonably determine or as may be required by any mortgagees or the lessor of any underlying or ground lease affecting the Project; (iv) the cost of landscaping, relamping, supplies, tools, equipment and materials, and all fees, charges and other costs (including reasonable consulting fees, legal fees and accounting fees) incurred in connection with the management, operation, repair and maintenance of the Project provided Tenant’s Share of management fees shall not exceed five percent (5%) of aggregate gross Rent; (v) the cost of Parking Area repair, restoration, and maintenance; (vi) any equipment rental agreements or management agreements (including the cost of any management fee and the fair rental value of any office space provided thereunder); (vii) wages, salaries and other compensation and benefits of all persons (at or below the level of Senior Property Manager) engaged in the operation, management, maintenance or security of the Project, and employer’s Social Security taxes, unemployment taxes or insurance, and any other taxes which may be levied on such wages, salaries, compensation and benefits (provided, for persons who do not devote substantially all of their time to the Project, such wages, compensation and benefits shall be equitably prorated and only the portion allocable to the Project shall be included as a component of Operating Expenses); (viii) payments under any easement, license, operating agreement, declaration, restrictive covenant, underlying or ground lease (excluding rent), or instrument pertaining to the sharing of costs by the Project; (ix) the cost of janitorial service, alarm and security service, if any, window cleaning, trash removal, replacement of wall and floor coverings, ceiling tiles and fixtures in lobbies, corridors, restrooms and other common or public areas or facilities, maintenance and replacement of curbs and walkways, repair to roofs and re-roofing; (x) amortization (including interest on the unamortized cost) of the cost of acquiring or the rental expense of personal property used in the maintenance, operation and repair of the Project; (xi) costs for workers’ compensation insurance, wages, withholding taxes, personal property taxes, fees for required licenses and permits, supplies, charges for management of the Building and Common Areas, and the costs and expenses of complying with, or participating in, conservation, recycling, sustainability, energy efficiency, waste reduction or other programs or practices implemented or enacted from time to time at the Building, including without limitation, in connection with any LEED (Leadership in Energy and Environmental Design) rating or compliance system or program, including that currently coordinated through the U.S. Green Building Council or Energy Star rating and/or compliance system or program (collectively “Conservation Costs”); and (xii) the cost of any capital improvements or other costs (1) which are intended as a labor-saving device or to effect other economies in the operation or maintenance of the Project, (2) made to the Project or any portion thereof after the Lease Commencement Date that are required under any governmental law or regulation, or (3) replacements and modifications of Systems and Equipment, the roof (or any capital components thereof) and the Common Areas located on the Project that are required to keep the Project in good order and condition; provided, however, that if any such cost described in (1), (2) or (3) above, is a capital expenditure, such cost shall be amortized over the useful life of the improvement (including interest on the unamortized cost) as Landlord shall reasonably determine. If Landlord is not furnishing any particular work or service (the cost of which, if performed by Landlord, would be included in Operating Expenses) to a tenant who has undertaken to perform such work or service in lieu of the performance thereof by Landlord, Operating Expenses shall be deemed to be increased by an amount equal to the additional Operating Expenses which would reasonably have been incurred during such period by Landlord if it had at its own expense furnished such work or service to such tenant. If the Building is less than ninety-five percent (95%) occupied during all or a portion of any Expense Year (including the Expense Base Year), Landlord shall make an appropriate adjustment to the variable components of Operating Expenses for such year or applicable portion thereof, employing sound accounting and management principles, to determine the amount of Operating Expenses that would have been paid had the Building been ninety-five percent (95%) occupied; and the amount so determined shall be deemed to have been the amount of Operating Expenses for such year, or applicable portion thereof.

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Landlord shall have the right, from time to time, in its discretion, to equitably allocate some or all of the Operating Expenses (and/or Tax Expenses and Utilities Costs) among different tenants of the Project and/or among other buildings of the Project as and when such other buildings are constructed for purposes of determining Operating Expenses (and/or Tax Expenses and Utilities Costs) and/or the provision of various services and amenities thereto (the “Cost Pools”). Such Cost Pools may include, without limitation, the office space tenants and retail space tenants of the Building and/or any such additional buildings. Such Cost Pools may also include an allocation of certain Operating Expenses (and/or Tax Expenses and Utilities Costs) within or under covenants, conditions and restrictions affecting the Project.

Notwithstanding anything to the contrary set forth in this Article 4, when calculating Operating Expenses for the Expense Base Year, Operating Expenses shall exclude one-time Conservation Costs and other special charges, costs or fees incurred in the Expense Base Year only, including those attributable to market-wide labor-rate increases or other extraordinary circumstances, including, but not limited to, boycotts and strikes, and costs relating to capital improvements or expenditures.

Notwithstanding the foregoing, Operating Expenses shall not, however, include: (A) costs of leasing commissions, attorneys’ fees and other costs and expenses incurred in connection with negotiations or disputes with present or prospective tenants or other occupants of the Project; (B) costs (including permit, license and inspection costs) incurred in renovating or otherwise improving, decorating or redecorating rentable space for other tenants or vacant rentable space; (C) costs incurred due to the violation by Landlord of the terms and conditions of any lease of space in the Project; (D) costs of overhead or profit increment paid to Landlord or to subsidiaries or affiliates of Landlord for services in or in connection with the Project to the extent the same exceeds the costs of overhead and profit increment included in the costs of such services which could be obtained from third parties on a competitive basis; (E) except as otherwise specifically provided in this Section 4.2.4, costs of interest on debt or amortization on any mortgages, and rent payable under any ground lease affecting the Project; (F) Utilities Costs; (G) Tax Expenses; (H) costs directly necessitated by or directly resulting from the gross negligence of Landlord, its agents or employees; (I) costs associated with the investigation and/or remediation of Hazardous Materials (hereafter defined) present in, on or about the Building, unless such costs and expenses are the responsibility of Tenant as provided in this Lease, in which event all such costs and expenses shall be paid solely by Tenant; (J) except as otherwise provided in this Lease, the cost of any capital improvements; (K) costs of Landlord’s charitable and/or political contributions; (L) costs of advertising, marketing, or promotional expenses; (M) costs to the extent that Landlord receives reimbursement for such expenses from insurance, other tenants or third parties; (N) costs associated with operating the entity that constitutes Landlord, as the same are distinguished from the costs of operating the Project; (O) costs incurred in bringing the Building into compliance with laws (including the Americans with Disabilities Act) in effect as of the Lease Commencement Date and as interpreted by applicable governmental authorities as of such date; and (P) costs of repairs or other work necessitated by casualty (excluding any deductibles) and/or costs of repair or other work necessitated by the exercise of the right of eminent domain to the extent insurance proceeds or a condemnation award, as applicable, is actually received by Landlord for such purposes; provided, such costs of repairs or other work shall be paid by the parties in accordance with the provisions of Articles 11 and 12, below.

4.2.5 “Systems and Equipment” shall mean any plant, machinery, transformers, duct work, cable, wires, and other equipment, facilities, and systems designed to supply heat, ventilation, air conditioning and humidity or any other services or utilities, or comprising or serving as any component or portion of the electrical, gas, steam, plumbing, sprinkler, communications, alarm, security, or fire/life safety systems or equipment, or any other mechanical, electrical, electronic, computer or other systems or equipment which serve the Building and/or any other building in the Project in whole or in part.

4.2.6 “Tax Expense Base Year” shall mean the year set forth in Section 9.2 of the Summary.

4.2.7 “Tax Expenses” shall mean all federal, state, county, or local governmental or municipal taxes, fees, assessments, charges or other impositions of every kind and nature, whether general, special, ordinary or extraordinary, (including, without limitation, real estate taxes, general and special assessments, transit assessments, fees and taxes, child care subsidies, fees and/or assessments, job training subsidies, fees and/or assessments, open space fees and/or assessments, housing subsidies and/or housing fund fees or assessments, public art fees and/or assessments, leasehold taxes or taxes based upon the receipt of rent, including gross receipts or sales taxes applicable to the receipt of rent, personal property taxes imposed upon the fixtures, machinery, equipment, apparatus, systems and equipment, appurtenances, furniture and other personal property used in connection with the Project), which Landlord shall pay during any Expense Year because of or in connection with the ownership, leasing and operation of the Project or Landlord’s interest therein. For purposes of this Lease, Tax Expenses shall be calculated as if the tenant improvements in the Building were fully constructed and the Project, the Building and all tenant improvements in the Building were fully assessed for real estate tax purposes.

4.2.7.1 Tax Expenses shall include, without limitation:

(i) Any tax on Landlord’s rent, right to rent or other income from the Project or as against Landlord’s business of leasing any of the Project;

(ii) Any assessment, tax, fee, levy or charge in addition to, or in substitution, partially or totally, of any assessment, tax, fee, levy or charge previously included within the definition of real property tax, it being acknowledged by Tenant and Landlord that Proposition 13 was adopted by the voters of the State of California in the June 1978 election (“Proposition 13”) and that assessments, taxes, fees, levies and charges may be imposed by governmental agencies for such services as fire protection, street, sidewalk and road maintenance, refuse removal and for other governmental services formerly provided without

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charge to property owners or occupants. It is the intention of Tenant and Landlord that all such new and increased assessments, taxes, fees, levies, and charges and all similar assessments, taxes, fees, levies and charges be included within the definition of Tax Expenses for purposes of this Lease;

(iii) Any assessment, tax, fee, levy, or charge allocable to or measured by the area of the Premises or the rent payable hereunder, including, without limitation, any gross income tax upon or with respect to the possession, leasing, operating, management, maintenance, alteration, repair, use or occupancy by Tenant of the Premises, or any portion thereof;

(iv) Any assessment, tax, fee, levy or charge, upon this transaction or any document to which Tenant is a party, creating or transferring an interest or an estate in the Premises; and

(v) Any reasonable expenses incurred by Landlord in attempting to protest, reduce or minimize Tax Expenses.

4.2.7.2 In no event shall Tax Expenses for any Expense Year be less than the Tax Expenses for the Tax Expense Base Year.

4.2.7.3 Notwithstanding anything to the contrary contained in this Section 4.2.7, there shall be excluded from Tax Expenses (i) all excess profits taxes, franchise taxes, gift taxes, capital stock taxes, inheritance and succession taxes, estate taxes, federal and state net income taxes, and other taxes to the extent applicable to Landlord’s net income (as opposed to rents, receipts or income attributable to operations at the Project), (ii) any items included as Operating Expenses or Utilities Costs, and (iii) any taxes assessed against another tenant’s personal property or improvements for which such tenant is responsible, and (iv) any items paid by Tenant under Section 4.4 of this Lease.

4.2.8 “Tenant’s Share” shall mean the percentage set forth in Section 9.4 of the Summary. Tenant’s Share was calculated by dividing the number of rentable square feet of the Premises by the total rentable square feet in the Building (as set forth in Section 9.4 of the Summary), and stating such amount as a percentage.

4.2.9 “Utilities Base Year” shall mean the year set forth in Section 9.3 of the Summary.

4.2.10 “Utilities Costs” shall mean all actual charges for utilities for the Building and the Project which Landlord shall pay during any Expense Year, including, but not limited to, the costs of water, sewer and electricity, and the costs of HVAC (including, unless paid by Tenant pursuant to Section 6.2 below, the cost of electricity to operate the HVAC air handlers) and other utilities as well as related fees, assessments, measurement meters and devices and surcharges (but excluding those charges, such as the cost of providing HVAC during non-Business Hours for which a tenant directly reimburses Landlord, for which tenants directly reimburse Landlord or otherwise pay directly to the utility company). Utilities Costs shall be calculated assuming the Building is at least ninety-five percent (95%) occupied during all or any portion of an Expense Year (including the Utilities Base Year). If, during all or any part of any Expense Year, Landlord shall not provide any utilities (the cost of which, if provided by Landlord, would be included in Utilities Costs) to a tenant (including Tenant) who has undertaken to provide the same instead of Landlord, Utilities Costs shall be deemed to be increased by an amount equal to the additional Utilities Costs which would reasonably have been incurred during such period by Landlord if Landlord had at its own expense provided such utilities to such tenant. Utilities Costs shall include any costs of utilities which are allocated to the Project under any declaration, restrictive covenant, or other instrument pertaining to the sharing of costs by the Project or any portion thereof, including any covenants, conditions or restrictions now or hereafter recorded against or affecting the Project. For purposes of determining Utilities Costs incurred for the Utilities Base Year, Utilities Costs for the Utilities Base Year shall not include any one-time Conservation Costs or other special charges, costs or fees or extraordinary charges or costs incurred in the Utilities Base Year only, including those attributable to boycotts, embargoes, strikes or other shortages of services or fuel.

4.3 Calculation and Payment of Additional Rent.

4.3.1 Calculation of Excess. If for any Expense Year ending or commencing within the Lease Term, (i) Tenant’s Share of Operating Expenses for such Expense Year exceeds Tenant’s Share of Operating Expenses for the Expense Base Year and/or (ii) Tenant’s Share of Tax Expenses for such Expense Year exceeds Tenant’s Share of Tax Expenses for the Tax Expense Base Year, and/or (iii) Tenant’s Share of Utilities Costs for such Expense Year exceeds Tenant’s Share of Utilities Costs for the Utilities Base Year, then Tenant shall pay to Landlord, in the manner set forth in Section 4.3.2, below, and as Additional Rent, an amount equal to such excess (the “Excess”).

4.3.2 Statement of Actual Operating Expenses, Tax Expenses and Utilities Costs and Payment by Tenant. Landlord shall endeavor to give to Tenant on or before the thirtieth (30^th) day of June following the end of each Expense Year, a statement (the “Statement”) which shall state the Operating Expenses, Tax Expenses and Utilities Costs incurred or accrued for such preceding Expense Year, and which shall indicate the amount, if any, of any Excess. Upon receipt of the Statement for each Expense Year ending during the Lease Term, if an Excess is present, Tenant shall pay, with its next installment of Base Rent due, the full amount of the Excess for such Expense Year, less the amounts, if any, paid during such Expense Year as “Estimated Excess,” as that term is defined in Section 4.3.3 of this Lease. The failure of Landlord to timely furnish the Statement for any Expense Year shall not prejudice Landlord from enforcing its rights under this Article 4. Even though the Lease Term has

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expired and Tenant has vacated the Premises, when the final determination is made of Tenant’s Share of the Operating Expenses, Tax Expenses and Utilities Costs for the Expense Year in which this Lease terminates, if an Excess is present, Tenant shall immediately pay to Landlord an amount as calculated pursuant to the provisions of Section 4.3.1 of this Lease. The provisions of this Section 4.3.2 shall survive the expiration or earlier termination of the Lease Term for a period of two (2) years from the date of such expiration or termination.

4.3.3 Statement of Estimated Operating Expenses, Tax Expenses and Utilities Costs. In addition, Landlord shall endeavor to give Tenant, within ninety (90) days after the commencement of each Expense Year, a yearly expense estimate statement (the “Estimate Statement”) which shall set forth Landlord’s reasonable estimate (the “Estimate”) of what the total amount of Operating Expenses, Tax Expenses and Utilities Costs for the then-current Expense Year shall be and the estimated Excess (the “Estimated Excess”) as calculated by comparing (i) Tenant’s Share of Operating Expenses, which shall be based upon the Estimate, to Tenant’s Share of Operating Expenses for the Expense Base Year, (ii) Tenant’s Share of Tax Expenses, which shall be based upon the Estimate, to Tenant’s Share of Tax Expenses for the Tax Expense Base Year, and (iii) Tenant’s Share of Utilities Costs, which shall be based upon the Estimate, to Tenant’s Share of Utilities Costs for the Utilities Base Year. The failure of Landlord to timely furnish the Estimate Statement for any Expense Year shall not preclude Landlord from enforcing its rights to collect any Estimated Excess under this Article 4. If, pursuant to the Estimate Statement, an Estimated Excess is calculated for the then-current Expense Year, Tenant shall pay, with its next installment of Base Rent due, a fraction of the Estimated Excess for the then-current Expense Year (reduced by any amounts paid pursuant to the last sentence of this Section 4.3.3). Such fraction shall have as its numerator the number of months which have elapsed in such current Expense Year to the month of such payment, both months inclusive, and shall have twelve (12) as its denominator. Notwithstanding the foregoing, if Landlord determines that Tenant’s Share of Operating Expenses, Tax Expenses or Utilities Costs for the then current Expense Year is greater than that set forth in the Estimate Statement, then Landlord may deliver a revised Estimate Statement to Tenant not more than once during such Expense Year and Tenant shall pay to Landlord, within ten (10) days of the delivery of such revised Estimate Statement, the difference between such revised Estimate Statement and the original Estimate Statement for the portion of the then current Expense Year which has then expired, and Tenant shall pay during the balance of such then current Expense Year a fraction of the balance of such difference as would fully amortize such Excess over the remaining months of the then current Expense Year. Until a new Estimate Statement is furnished, Tenant shall pay monthly, with the monthly Base Rent installments, an amount equal to one-twelfth (1/12) of the total Estimated Excess set forth in the previous Estimate Statement delivered by Landlord to Tenant.

4.4 Taxes and Other Charges for Which Tenant Is Directly Responsible. Tenant shall reimburse Landlord upon demand for any and all taxes or assessments required to be paid by Landlord (except to the extent included in Tax Expenses by Landlord), excluding state, local and federal personal or corporate income taxes measured by the net income of Landlord from all sources and estate and inheritance taxes, whether or not now customary or within the contemplation of the parties hereto, when:

4.4.1 said taxes are measured by or reasonably attributable to the cost or value of Tenant’s equipment, furniture, fixtures and other personal property located in the Premises, or by the cost or value of any leasehold improvements made in or to the Premises by or for Tenant, to the extent the cost or value of such leasehold improvements exceeds the cost or value of a building standard build-out as determined by Landlord regardless of whether title to such improvements shall be vested in Tenant or Landlord;

4.4.2 said taxes are assessed upon or with respect to the possession, leasing, operation, management, maintenance, alteration, repair, use or occupancy by Tenant of the Premises or any portion of the Project (including the Parking Area); or

4.4.3 said taxes are assessed upon this transaction or any document to which Tenant is a party creating or transferring an interest or an estate in the Premises.

4.5 Late Charges. If any installment of Rent or any other sum due from Tenant shall not be received by Landlord or Landlord’s designee by the date that is five (5) days after the due date therefor, then Tenant shall pay to Landlord a late charge equal to five percent (5%) of the amount due plus any attorneys’ fees incurred by Landlord by reason of Tenant’s failure to pay Rent and/or other charges when due hereunder. The late charge shall be deemed Additional Rent and the right to require it shall be in addition to all of Landlord’s other rights and remedies hereunder, at law and/or in equity and shall not be construed as liquidated damages or as limiting Landlord’s remedies in any manner. In addition to the late charge described above, any Rent or other amounts owing hereunder which are not paid by the date that they are due shall thereafter bear interest until paid at a rate (the “Interest Rate”) equal to the lesser of (i) the “Prime Rate” or “Reference Rate” announced from time to time by the Bank of America (or such reasonable comparable national banking institution as selected by Landlord in the event Bank of America ceases to exist or publish a Prime Rate or Reference Rate), plus four percent (4%), or (ii) ten percent (10%) per annum.

4.6 Audit. After delivery to Landlord of at least thirty (30) days’ prior written notice delivered no later than one hundred twenty (120) days after receipt of a Statement, Tenant, at its sole cost and expense through any accountant designated by it, shall have the right to examine and/or audit the books and records evidencing such costs and expenses for the previous one (1) calendar year, during Landlord’s reasonable business hours but not more frequently than once during any calendar year. Any such accounting firm designated by Tenant may not be compensated on a contingency fee basis. The results of any such audit (and any negotiations between the parties related thereto) shall be maintained strictly confidential by Tenant and its accounting firm and shall not be disclosed, published or otherwise disseminated to any other party other than to Landlord and its authorized agents. Landlord and Tenant each shall use its best efforts to cooperate in such negotiations and to promptly resolve any discrepancies between Landlord and Tenant in the accounting of such costs and expenses.

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ARTICLE 5

USE OF PREMISES

Tenant shall use the Premises solely for general office purposes consistent with the character of the Building, and Tenant shall not use or permit the Premises to be used for any other purpose or purposes whatsoever. Tenant further covenants and agrees that it shall not use, or suffer or permit any person or persons to use, the Premises or any part thereof for any use or purpose contrary to the provisions of Exhibit D, attached hereto, or in violation of the laws of the United States of America, the state in which the Project is located, or the ordinances, regulations or requirements of the local municipal or county governing body or other lawful authorities having jurisdiction over the Project. Tenant shall comply with all recorded covenants, conditions, and restrictions, and the provisions of all ground or underlying leases, now or hereafter affecting the Project. Tenant shall not use or allow another person or entity to use any part of the Premises for the storage, use, treatment, manufacture or sale of “Hazardous Material,” as that term is defined below, except that Tenant may use and store at the Premises limited quantities of typical office supplies and cleaning products, containing limited amounts of Hazardous Materials, which are required in connection with the routine use, operation and maintenance of the Premises, provided such office supplies and cleaning products are used and disposed of in compliance with applicable law. As used herein, the term “Hazardous Material” means any hazardous or toxic substance, material or waste which is or becomes regulated by any local governmental authority, the state in which the Project is located or the United States Government.

ARTICLE 6

SERVICES AND UTILITIES

6.1 Standard Tenant Services. Landlord shall provide the following services on all days during the Lease Term, unless otherwise stated below.

6.1.1 Subject to reasonable changes implemented by Landlord and to all governmental rules, regulations and guidelines applicable thereto, Landlord shall provide heating and air conditioning when necessary for normal comfort for normal office use in the Premises, from Monday through Friday, during the period from 8:00 a.m. to 6:00 p.m., except for the date of observation of New Year’s Day, Presidents’ Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, Christmas Day and other locally or nationally recognized holidays as designated by Landlord (collectively, the “Holidays”).

6.1.2 Landlord shall provide adequate electrical wiring, lighting and electricity plug load and facilities and power for normal general office use for Building standard lighting as determined by Landlord. Landlord shall designate the electricity utility provider from time to time.

6.1.3 As part of Operating Expenses or Utilities Costs (as determined by Landlord), Landlord shall replace lamps, starters and ballasts for Building standard lighting fixtures within the Premises. Tenant shall bear the cost of replacement of lamps, starters and ballasts for non-Building standard lighting fixtures within the Premises.

6.1.4 Landlord shall provide city water from the regular Building outlets for drinking, lavatory and toilet purposes.

6.1.5 Landlord shall provide janitorial services five (5) days per week, except the date of observation of the Holidays, in and about the Premises and window washing services in a manner consistent with other comparable buildings in the vicinity of the Project.

6.1.6 Landlord shall provide nonexclusive automatic passenger elevator service at all times.

6.1.7 Landlord shall provide nonexclusive freight elevator service subject to scheduling by Landlord.

6.2 Overstandard Tenant Use. Tenant shall not, without Landlord’s prior written consent, use heat-generating machines, machines other than normal fractional horsepower office machines, or equipment or lighting other than Building standard lights in the Premises, which may affect the temperature otherwise maintained by the air conditioning system or increase the water normally furnished for the Premises by Landlord pursuant to the terms of Section 6.1 of this Lease. If such consent is given, Landlord shall have the right to install supplementary air conditioning units or other facilities in the Premises, including supplementary or additional metering devices, and the cost thereof, including the cost of installation, operation and maintenance, increased wear and tear on existing equipment and other similar charges, shall be paid by Tenant to Landlord upon billing by Landlord. If Tenant uses water or heat or air conditioning in excess of that supplied by Landlord pursuant to Section 6.1 of this Lease, or if Tenant’s consumption of electricity shall exceed two (2) watts connected load per square foot of rentable area of the Premises, calculated on a monthly basis for the hours described in Section 6.1.1 above, Tenant shall pay to Landlord, within thirty (30) days after billing and as Additional Rent, the cost of such excess consumption, the cost of the installation, operation, and maintenance of equipment which is installed in order to supply such excess consumption, and the cost of the increased wear and tear on existing equipment caused by such excess consumption; and Landlord may install devices to separately meter any increased use, and in such event Tenant shall pay, as

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Additional Rent, the increased cost directly to Landlord, within thirty (30) days after demand, including the cost of such additional metering devices. If Tenant desires to use heat, ventilation or air conditioning during hours other than those for which Landlord is obligated to supply such utilities pursuant to the terms of Section 6.1 of this Lease, (i) Tenant shall give Landlord such prior notice, as Landlord shall from time to time establish as appropriate, of Tenant’s desired use, (ii) Landlord shall supply such heat, ventilation or air conditioning to Tenant at such hourly cost to Tenant as Landlord shall from time to time establish, and (iii) Tenant shall pay such cost within thirty (30) days after billing, as Additional Rent.

6.3 Interruption of Use. Tenant agrees that Landlord shall not be liable for damages, by abatement of Rent or otherwise, for failure to furnish or delay in furnishing any service (including telephone and telecommunication services), or for any diminution in the quality or quantity thereof, when such failure or delay or diminution is occasioned, in whole or in part, by repairs, replacements, or improvements, by any strike, lockout or other labor trouble, by inability to secure electricity, gas, water, or other fuel at the Building or Project after reasonable effort to do so, by any accident or casualty whatsoever, by act or default of Tenant or other parties, or by any other cause beyond Landlord’s reasonable control; and such failures or delays or diminution shall never be deemed to constitute an eviction or disturbance of Tenant’s use and possession of the Premises or relieve Tenant from paying Rent or performing any of its obligations under this Lease. Furthermore, Landlord shall not be liable under any circumstances for a loss of, or injury to, property or for injury to, or interference with, Tenant’s business, including, without limitation, loss of profits, however occurring, through or in connection with or incidental to a failure to furnish any of the services or utilities as set forth in this Article 6. Notwithstanding any provision contained herein to the contrary, Tenant’s Base Rent shall be abated to the extent that utility services are interrupted for a period of five (5) or more consecutive business days as a result of Landlord’s sole fault or neglect and not due to (i) the fault of the utility supplier or failure of the utility supplier to provide the applicable service, (ii) Force Majeure (as defined in Section 24.17), (iii) a casualty, or (iv) the act or omission of Tenant, its employees, contractors or agents or the failure of any equipment or non-Building standard improvements installed by Tenant in the Premises; provided Tenant is prevented from using the Premises as a result thereof.

6.4 Additional Services. Landlord shall also have the exclusive right, but not the obligation, to provide any additional services which may be required by Tenant, including, without limitation, locksmithing, lamp replacement, additional janitorial service, and additional repairs and maintenance, provided that Tenant shall pay to Landlord upon billing, the sum of all costs to Landlord of such additional services plus an administration fee not to exceed five percent (5%). Notwithstanding the foregoing, Tenant shall have the right to provide its own catering services and vending machine contractor without using Landlord’s vendors for such services. Charges for any utilities or services for which Tenant is required to pay from time to time hereunder, shall be deemed Additional Rent hereunder and shall be billed on a monthly basis.

ARTICLE 7

REPAIRS

7.1 Tenant’s Repairs. Subject to Landlord’s repair obligations in Sections 7.2 and 11.1 below, and except for damage resulting from casualty which shall be governed by the terms of Article 11, Tenant shall, at Tenant’s own expense, keep the Premises, including all improvements, fixtures and furnishings therein and all Systems and Equipment that exclusively serve the Premises, in good order, repair and condition at all times during the Lease Term, which repair obligations shall include, without limitation, the obligation to promptly and adequately repair all damage to the Premises and replace or repair all damaged or broken fixtures and appurtenances; provided however, that, at Landlord’s option, or if Tenant fails to make such repairs, Landlord may, but need not, make such repairs and replacements, and Tenant shall pay Landlord the cost thereof, including a percentage of the cost thereof (to be uniformly established for the Building) sufficient to reimburse Landlord for all overhead, general conditions, fees and other costs or expenses arising from Landlord’s involvement with such repairs and replacements forthwith upon being billed for same.

7.2 Landlord’s Repairs. Anything contained in Section 7.1 above to the contrary notwithstanding, and subject to Articles 11 and 12 of this Lease, Landlord shall repair and maintain the (i) structural portions of the Building, including the Systems and Equipment serving the Building, the roof, windows, window frames and all exterior and common area glass, (ii) the Common Areas, (iii) the Parking Area, (iv) the restrooms located within the Premises, (v) all fire-exit stairways, (vi) janitorial, telephone and electrical closets located in the Premises, and (vii) latent defects in the Building; provided, however, if such maintenance and repairs are caused in part or in whole by the act, neglect, fault of or omission of any duty by Tenant, its agents, servants, employees or invitees, Tenant shall pay to Landlord, as Additional Rent, the reasonable cost of such maintenance and repairs within thirty (30) days after Landlord’s invoice therefore. Landlord shall not be liable for any failure to make any such repairs, or to perform any maintenance. There shall be no abatement of Rent (except as otherwise expressly provided in Section 6.3) and no liability of Landlord by reason of any injury to or interference with Tenant’s business arising from the making of any repairs, alterations or improvements in or to any portion of the Project, Building or the Premises or in or to fixtures, appurtenances and equipment therein. Tenant hereby waives and releases its right to make repairs at Landlord’s expense under Sections 1941 and 1942 of the California Civil Code; or under any similar law, statute, or ordinance now or hereafter in effect. Except for maintenance or repairs made necessary by act, neglect, fault of or omission of any duty by Tenant, its agents, servants, employees or invitees, all costs incurred by Landlord pursuant to this Section 7.2 shall, except to the extent the same are excluded by Section 4.2.4, be included in Operating Expenses.

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ARTICLE 8

ADDITIONS AND ALTERATIONS

8.1 Landlord’s Consent to Alterations. Tenant may not make any improvements, alterations, additions or changes to the Premises (collectively, the “Alterations”) without first procuring the prior written consent of Landlord to such Alterations, which consent shall be requested by Tenant not less than fifteen (15) days prior to the commencement thereof, and which consent shall not be unreasonably withheld or delayed by Landlord; provided, however, Landlord may withhold its consent in its sole and absolute discretion with respect to any Alterations which may affect the structural components of the Building or the Systems and Equipment or which can be seen from outside the Premises. Notwithstanding the foregoing, the installation by Tenant of a Wi-Fi Network shall be governed by the terms of Section 8.3 below. Notwithstanding the foregoing, Tenant shall have the right to make Alterations to the Premises which are (i) nonstructural, (ii) do not affect the Systems and Equipment, (iii) are not visible from the exterior of the Premises or the Building, (iv) do not require permits or roof penetrations, and (v) which do not exceed in the aggregate Twenty-five Thousand Dollars ($25,000) in any one calendar year without the prior written approval of Landlord, provided that Tenant shall give Landlord at last ten (10) business days’ prior written notice of the Alteration, including fully detailed and dimensioned plans and specifications therefore (to the extent applicable), and subject to all of the other terms and conditions of this Article 8. Tenant shall pay for all overhead, general conditions, fees and other costs and expenses of the Alterations, and shall pay to Landlord a Landlord supervision fee of five percent (5%) of the cost of the Alterations. The construction of the initial improvements to the Premises shall be governed by the terms of the Tenant Work Letter and not the terms of this Article 8.

8.2 Manner of Construction. Landlord may impose, as a condition of its consent to all Alterations or repairs of the Premises or about the Premises, such requirements as Landlord in its reasonable discretion may deem desirable, including, but not limited to, the requirement that Tenant utilize for such purposes only contractors, materials, mechanics and materialmen reasonably approved by Landlord; provided, however, Landlord may impose such requirements as Landlord may determine, in its sole and absolute discretion, with respect to any work affecting the structural components of the Building or Systems and Equipment (including designating specific contractors to perform such work). Tenant shall construct such Alterations and perform such repairs in conformance with any and all applicable rules and regulations of any federal, state, county or municipal code or ordinance and pursuant to a valid building permit, issued by the city in which the Project is located, and in conformance with Landlord’s construction rules and regulations and all covenants, conditions and restrictions now or hereafter affecting the Project. Landlord’s approval of the plans, specifications and working drawings for Tenant’s Alterations shall create no responsibility or liability on the part of Landlord for their completeness, design sufficiency, or compliance with all laws, rules and regulations of governmental agencies or authorities. All work with respect to any Alterations must be done in a good and workmanlike manner and diligently prosecuted to completion to the end that the Premises shall at all times be a complete unit except during the period of work. In performing the work of any such Alterations, Tenant shall have the work performed in such manner as not to obstruct access to the Building or Project or the Common Areas for any other tenant of the Project, and as not to obstruct the business of Landlord or other tenants of the Project, or interfere with the labor force working at the Project. If Tenant makes any Alterations, Tenant agrees to carry “Builder’s All Risk” insurance in an amount approved by Landlord covering the construction of such Alterations, and such other insurance as Landlord may require, it being understood and agreed that all of such Alterations shall be insured by Tenant pursuant to Article 10 of this Lease immediately upon completion thereof. In addition, if Tenant makes any Alterations with a cost in excess of Fifty Thousand Dollars ($50,000), Landlord may, in its discretion, require Tenant to obtain a lien and completion bond or some alternate form of security satisfactory to Landlord in an amount sufficient to ensure the lien-free completion of such Alterations and naming Landlord as a co-obligee. Upon completion of any Alterations, Tenant shall (i) cause a Notice of Completion to be recorded in the office of the Recorder of the county in which the Project is located in accordance with Section 3093 of the Civil Code of the State of California or any successor statute, (ii) deliver to the management office of the Project a reproducible copy of the “as built” drawings of the Alterations, and (iii) deliver to Landlord evidence of payment, contractors’ affidavits and full and final waivers of all liens for labor, services or materials.

8.3 Wi-Fi Network. Without limiting the generality of the foregoing, in the event Tenant desires to install wireless intranet, Internet or any other wireless data or communications network (“Wi-Fi Network”) in the Premises for the use by Tenant and its employees, then Tenant shall be permitted to install such Wi-Fi Network and the same shall be subject to the provisions of this Section 8.3 (in addition to the other provisions of this Article 8). Tenant shall, in accordance with Section 8.4 below, remove the Wi-Fi Network from the Premises prior to the termination of the Lease. Tenant shall use the Wi-Fi Network so as not to cause any interference to other tenants in the Building or to other tenants at the Project or with any other tenant’s communication equipment, and not to damage the Building or Project or interfere with the normal operation of the Building or Project and Tenant hereby agrees to indemnify, defend and hold Landlord harmless from and against any and all claims, costs, damages, expenses and liabilities (including attorneys’ fees) arising out of Tenant’s failure to comply with the provisions of this Section 8.3, except to the extent same is caused by the gross negligence or willful misconduct of Landlord and which is not covered by the insurance carried by Tenant under this Lease (or which would not be covered by the insurance required to be carried by Tenant under this Lease). Should any interference occur, Tenant shall take all necessary steps as soon as reasonably possible and no later than three (3) calendar days following such occurrence to correct such interference. If such interference continues after such three (3) day period, Landlord and Tenant shall immediately use their diligent and good faith efforts to resolve such interference issues until such interference is corrected or remedied to Landlord’s satisfaction. Tenant acknowledges that Landlord has granted and/or may grant telecommunication rights to other tenants and occupants of the Building and to telecommunication service providers and in no event shall Landlord be liable to Tenant for any interference of the same with such Wi-Fi Network. Landlord makes no representation that the Wi-Fi Network will be able to receive or transmit communication signals without interference or disturbance. Tenant shall (i) be solely responsible for any damage caused as a result of the Wi-Fi Network, (ii) promptly pay any tax, license or permit fees charged pursuant to any laws or regulations in connection with the installation, maintenance or use of the Wi-Fi Network and comply with all precautions and safeguards recommended by all governmental authorities, (iii) pay for all necessary

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repairs, replacements to or maintenance of the Wi-Fi Network, and (iv) be responsible for any modifications, additions or repairs to Building systems or infrastructure which are required by reason of the installation or operation of Tenant’s Wi-Fi Network. Should Landlord be required to retain professionals to research any interference issues that may arise and to confirm Tenant’s compliance with the terms of this Section 8.3, Tenant shall reimburse Landlord for all costs incurred by Landlord in connection therewith within twenty (20) days following submission to Tenant of an invoice from Landlord, which costs shall not exceed $1,000 per year (except in the event of a default by Tenant hereunder). This reimbursement obligation is in addition to any other rights or remedies Landlord may have in the event of a breach or default by Tenant under this Lease.

8.4 Landlord’s Property. All Alterations, improvements, fixtures and/or equipment (other than Tenant’s personal property and trade fixtures) which may be installed or placed in or about the Premises, including any Cabling (as defined below) and wiring associated with the Wi-Fi Network, and all signs installed in, on or about the Premises and all furniture purchased with the Furnishings Credit (as defined in Exhibit B), shall be at the sole cost of Tenant and shall be and become the property of Landlord. Furthermore, Landlord may require that Tenant remove any improvement or Alteration (including any Cabling and wiring associated with the Wi-Fi Network, but excluding the initial Tenant Improvements constructed pursuant to Exhibit B) upon the expiration or early termination of the Lease Term, and repair any damage to the Premises and Building caused by such removal; provided, however, that, Landlord shall give Tenant written notice of such removal requirement not less than thirty (30) days prior to the expiration of the Lease, and provided, further, for Alterations made with Landlord’s consent, Landlord shall advise Tenant at the time of granting consent if Landlord requires such Alterations to be removed at the expiration or earlier termination of the Lease. If Tenant fails to complete such removal and/or to repair any damage caused to the Premises and Building by the removal of any Alterations (including any Cabling and wiring associated with the Wi-Fi Network), Landlord may do so and may charge the cost thereof to Tenant (together with a five percent (5%) supervision/administration fee), and Tenant shall pay such cost to Landlord within thirty (30) days of being billed for the same. The provisions of this Section 8.4 shall survive the expiration or earlier termination of the Lease.

ARTICLE 9

COVENANT AGAINST LIENS

Tenant has no authority or power to cause or permit any lien or encumbrance of any kind whatsoever, whether created by act of Tenant, operation of law or otherwise, to attach to or be placed upon the Project, Building or Premises, and any and all liens and encumbrances created by Tenant shall attach to Tenant’s interest only. Landlord shall have the right at all times to post and keep posted on the Premises any notice which it deems necessary for protection from such liens. Tenant covenants and agrees not to suffer or permit any lien of mechanics or materialmen or others to be placed against the Project, the Building or the Premises with respect to work or services claimed to have been performed for or materials claimed to have been furnished to Tenant or the Premises, and, in case of any such lien attaching or notice of any lien, Tenant covenants and agrees to cause it to be released and removed of record within ten (10) days after the date Tenant receives written notice of such lien. Notwithstanding anything to the contrary set forth in this Lease, if any such lien is not released and removed on or before the date specified in the preceding sentence, Landlord, at its sole option, may immediately take all action necessary to release and remove such lien, without any duty to investigate the validity thereof, and all sums, costs and expenses, including reasonable attorneys’ fees and costs, incurred by Landlord in connection with such lien shall be deemed Additional Rent under this Lease and shall be due and payable by Tenant within thirty (30) days after Landlord’s invoice.

ARTICLE 10

INDEMNIFICATION AND INSURANCE

10.1 Indemnification and Waiver. Tenant hereby assumes all risk of damage to property and injury to persons, in, on, or about the Premises and/or parking facilities from any cause whatsoever and agrees that Landlord, and its partners and subpartners, and their respective officers, agents, property managers, servants, employees, and independent contractors (collectively, “Landlord Parties”) shall not be liable for, and are hereby released from any responsibility for, any damage to property or injury to persons or resulting from the loss of use thereof, which damage or injury is sustained by Tenant, Tenant’s employees, agents, contractors, invitees or by other persons claiming through Tenant; provided, however, that the foregoing shall not be deemed to constitute Tenant’s waiver of claims with respect to the foregoing to the extent caused by the gross negligence or willful misconduct of Landlord or Landlord’s Parties. Tenant shall indemnify, defend, protect, and hold harmless the Landlord Parties from any and all loss, cost, damage, expense and liability (including, without limitation, court costs and reasonable attorneys’ fees) incurred in connection with or arising from any cause in, on or about the Premises (including, without limitation, Tenant’s installation, placement and removal of Alterations, improvements, fixtures and/or equipment in, on or about the Premises), and any acts, omissions or negligence of Tenant or of any person claiming by, through or under Tenant, or of the contractors, agents, servants, employees, licensees or invitees of Tenant or any such person, in, on or about the Premises, the Building and Project; provided, however, that the terms of the foregoing indemnity shall not apply to the gross negligence or willful misconduct of Landlord. The provisions of this Section 10.1 shall survive the expiration or earlier termination of this Lease.

10.2 Tenant’s Compliance with Landlord’s Fire and Casualty Insurance. Tenant shall, at Tenant’s expense, comply as to the Premises with all insurance company requirements pertaining to the use of the Premises. If Tenant’s conduct or use of the Premises causes any increase in the premium for such insurance policies, then Tenant shall reimburse Landlord for any such increase. Tenant, at Tenant’s expense, shall comply with all rules, orders, regulations or requirements of the American Insurance Association (formerly the National Board of Fire Underwriters) and with any similar body.

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10.3 Tenant’s Insurance. Tenant shall maintain the following coverages in the following amounts.

10.3.1 Commercial General Liability Insurance covering the insured against claims of bodily injury, personal injury and property damage arising out of Tenant’s operations, assumed liabilities or use of the Premises, including a Broad Form Commercial General Liability endorsement covering the insuring provisions of this Lease and the performance by Tenant of the indemnity agreements set forth in Section 10.1 of this Lease, (and with owned and non-owned automobile liability coverage, and liquor liability coverage in the event alcoholic beverages are served on the Premises) for limits of liability (which may be maintained through a combination of primary and excess coverage insurance) not less than:

Bodily Injury and	$5,000,000 each occurrence
Property Damage Liability	$5,000,000 annual aggregate
	$5,000,000 each occurrence
Personal Injury Liability	$5,000,000 annual aggregate

10.3.2 Physical Damage Insurance covering (i) all furniture, trade fixtures, equipment, merchandise and all other items of Tenant’s property on the Premises installed by, for, or at the expense of Tenant, (ii) the Tenant Improvements, including any Tenant Improvements which Landlord permits to be installed above the ceiling of the Premises or below the floor of the Premises, and (iii) all other improvements, alterations and additions to the Premises, including any improvements, alterations or additions installed at Tenant’s request above the ceiling of the Premises or below the floor of the Premises. Such insurance shall be written on a “physical loss or damage” basis under a “special form” policy, for the full replacement cost value new without deduction for depreciation of the covered items and in amounts that meet any co-insurance clauses of the policies of insurance and shall include a vandalism and malicious mischief endorsement, sprinkler leakage coverage and earthquake sprinkler leakage coverage.

10.3.3 Workers’ compensation insurance as required by law.

10.3.4 Loss-of-income, business interruption and extra-expense insurance in such amounts as will reimburse Tenant for direct and indirect loss of earnings attributable to all perils commonly insured against by prudent tenants or attributable to prevention of loss of access to the Premises or to the Building as a result of such perils.

10.3.5 Tenant shall carry comprehensive automobile liability insurance having a combined single limit of not less than Two Million Dollars ($2,000,000.00) per occurrence and insuring Tenant against liability for claims arising out of ownership, maintenance or use of any owned, hired or non-owned automobiles. Tenant may maintain such coverage through a combination of primary and excess coverage insurance.

10.3.6 The minimum limits of policies of insurance required of Tenant under this Lease shall in no event limit the liability of Tenant under this Lease. Such insurance shall: (i) name Landlord, and any other party it so specifies, as an additional insured; (ii) specifically cover the liability assumed by Tenant under this Lease, including, but not limited to, Tenant’s obligations under Section 10.1 of this Lease; (iii) be issued by an insurance company having a rating of not less than A-:X in Best’s Insurance Guide or which is otherwise acceptable to Landlord and licensed to do business in the state in which the Project is located; (iv) be primary insurance as to all claims thereunder and provide that any insurance carried by Landlord is excess and is non-contributing with any insurance requirement of Tenant; (v) provide that said insurance shall not be canceled or coverage changed unless thirty (30) days’ prior written notice (fifteen (15) days for non-payment of premium) shall have been given to Landlord by the Tenant; (vi) contain a cross-liability endorsement or severability of interest clause acceptable to Landlord; and (vii) with respect to the insurance required in Sections 10.3.1 and 10.3.2 above, have deductible amounts not exceeding Five Thousand Dollars ($5,000.00). Tenant shall deliver said policy or policies or certificates thereof to Landlord on or before the Lease Commencement Date and within ten (10) days before the expiration dates thereof. If Tenant shall fail to procure such insurance, or to deliver such policies or certificate, within such time periods, Landlord may, at its option, in addition to all of its other rights and remedies under this Lease, and without regard to any notice and cure periods set forth in Section 19.1, procure such policies for the account of Tenant, and the cost thereof shall be paid to Landlord as Additional Rent within ten (10) days after delivery of bills therefor.

10.4 Subrogation. Landlord and Tenant agree to have their respective insurance companies issuing property damage insurance waive any rights of subrogation that such companies may have against Landlord or Tenant, as the case may be. As long as such waivers of subrogation are contained in their respective insurance policies, Landlord and Tenant hereby waive any right that either may have against the other on account of any loss or damage to their respective property to the extent such loss or damage is insurable under policies of insurance for fire and all risk coverage, theft, public liability, or other similar insurance.

10.5 Additional Insurance Obligations. Tenant shall carry and maintain during the entire Lease Term, at Tenant’s sole cost and expense, increased amounts of the insurance required to be carried by Tenant pursuant to this Article 10, and such other types of insurance coverage and in such reasonable amounts covering the Premises and Tenant’s operations therein, as may be reasonably requested by Landlord provided such other reasonable coverages and amounts are required by Landlord’s lender or are required by landlords of other comparable buildings in the vicinity of the Building.

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ARTICLE 11

DAMAGE AND DESTRUCTION

11.1 Repair of Damage to Premises by Landlord. Tenant shall promptly notify Landlord of any damage to the Premises resulting from fire or any other casualty. If the Premises or any Common Areas serving or providing access to the Premises shall be damaged by fire or other casualty, Landlord shall promptly and diligently, subject to reasonable delays for insurance adjustment or other matters beyond Landlord’s reasonable control, and subject to all other terms of this Article 11, restore the base, shell, and core of the Premises and such Common Areas. Such restoration shall be to substantially the same condition of the base, shell, and core of the Premises and Common Areas prior to the casualty, except for modifications required by zoning and building codes and other laws, or any other modifications to the Common Areas deemed desirable by Landlord, provided access to the Premises and any common restrooms serving the Premises shall not be materially impaired. Notwithstanding any other provision of this Lease, upon the occurrence of any damage to the Premises, Tenant shall assign to Landlord (or to any party designated by Landlord) the portion of the insurance proceeds payable to Tenant under Tenant’s insurance required under Section 10.3.2 of this Lease allocable to the Tenant Improvements and any Alterations (and Tenant shall retain the portion of such proceeds allocable to Tenant’s furniture, fixtures and equipment, telephone system, Cabling (as defined below), supplemental utility system and Wi-Fi Network), and Landlord shall repair any injury or damage to the Tenant Improvements and Alterations installed in the Premises and shall return such Tenant Improvements and Alterations to their original condition; provided that if the cost of such repair by Landlord exceeds the amount of insurance proceeds received by Landlord from Tenant’s insurance carrier, as assigned by Tenant, the cost of such repairs shall be paid by Tenant to Landlord prior to Landlord’s repair of the damage. Notwithstanding anything to the contrary herein, in no event shall Landlord be obligated to repair or restore any specialized or dedicated equipment serving Tenant, such as any Cabling (as defined below), wiring, supplemental utility system, Tenant’s furniture, fixtures and equipment and the telephone system or wireless/Wi-Fi Network. In connection with such repairs and replacements, Tenant shall, prior to the commencement of construction, submit to Landlord, for Landlord’s review and approval, all plans, specifications and working drawings relating thereto. Landlord shall not be liable for any inconvenience or annoyance to Tenant or its visitors, or injury to Tenant’s business resulting in any way from such damage or the repair thereof; provided however, that if such fire or other casualty shall have damaged the Premises or Common Areas necessary to Tenant’s occupancy, and Landlord shall allow Tenant a proportionate abatement of Base Rent and Tenant’s Share of Operating Expenses, Tax Expenses and Utilities Costs, during the time and to the extent the Premises are unfit for occupancy for the purposes permitted under this Lease, and not occupied by Tenant as a result thereof.

11.2 Landlord’s Option to Repair. Notwithstanding the terms of Section 11.1 of this Lease, Landlord may elect not to rebuild and/or restore the Premises, the Building and/or any other portion of the Project and instead terminate this Lease by notifying Tenant in writing (“Landlord’s Damage Notice”) of such termination within sixty (60) days after the date of damage, such notice to include a termination date giving Tenant ninety (90) days to vacate the Premises, but Landlord may so elect only if the Building shall be damaged by fire or other casualty or cause, whether or not the Premises are affected, and one or more of the following conditions is present: (i) repairs cannot reasonably be completed within one hundred twenty (120) days of the date of damage (when such repairs are made without the payment of overtime or other premiums); (ii) the holder of any mortgage on the Project or ground or underlying lessor with respect to the Project and/or the Building shall require that the insurance proceeds or any portion thereof be used to retire the mortgage debt, or shall terminate the ground or underlying lease, as the case may be; or (iii) the damage is not fully covered, except for deductible amounts, by Landlord’s insurance policies. In addition, if the Premises or the Building is destroyed or damaged to any substantial extent during the last twelve (12) months of the Lease Term, then notwithstanding anything contained in this Article 11, Landlord shall have the option to terminate this Lease by giving written notice to Tenant of the exercise of such option within thirty (30) days after such damage or destruction, in which event this Lease shall cease and terminate as of the date of such notice. Upon any such termination of this Lease pursuant to this Section 11.2, Tenant shall pay the Base Rent and Additional Rent, properly apportioned up to such date of termination, and both parties hereto shall thereafter be freed and discharged of all further obligations hereunder, except as provided for in provisions of this Lease which by their terms survive the expiration or earlier termination of the Lease Term.

11.3 Waiver of Statutory Provisions. The provisions of this Lease, including this Article 11, constitute an express agreement between Landlord and Tenant with respect to any and all damage to, or destruction of, all or any part of the Premises, the Building or any other portion of the Project, and any statute or regulation of the state in which the Project is located, including, without limitation, Sections 1932(2) and 1933(4) of the California Civil Code, with respect to any rights or obligations concerning damage or destruction in the absence of an express agreement between the parties, and any other statute or regulation, now or hereafter in effect, shall have no application to this Lease or any damage or destruction to all or any part of the Premises, the Building or any other portion of the Project.

11.4 Tenant’s Termination Option. If (i) Landlord does not elect to terminate this Lease pursuant to Landlord’s termination right as provided in Section 11.2 above, (ii) the damage substantially interferes with Tenant’s access to or usage of the Premises and Tenant does not thereafter use the Premises, and (iii) Landlord’s restoration work cannot, in the reasonable opinion of Landlord’s licensed contractor, be substantially completed within one hundred eighty (180) days after the date of Landlord’s Damage Notice, then Tenant may elect to terminate this Lease by delivering written notice thereof to Landlord within thirty (30) days after Tenant’s receipt of Landlord’s Damage Notice, which termination shall be effective as of the date which is ninety (90) days after the date such termination notice is delivered to Landlord.

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ARTICLE 12

CONDEMNATION

12.1 Permanent Taking. If the whole or any material part of the Premises, Building or Project shall be taken by power of eminent domain or condemned by any competent authority for any public or quasi-public use or purpose, or if any adjacent property or street shall be so taken or condemned, or reconfigured or vacated by such authority in such manner as to require the use, reconstruction or remodeling of any part of the Premises, Building or Project, or if Landlord shall grant a deed or other instrument in lieu of such taking by eminent domain or condemnation, Landlord shall have the option to terminate this Lease upon ninety (90) days’ notice, provided such notice is given no later than one hundred eighty (180) days after the date of such taking, condemnation, reconfiguration, vacation, deed or other instrument. If a material portion of the Premises is taken, or if access to the Premises is substantially impaired, Tenant shall have the option to terminate this Lease upon ninety (90) days’ notice, provided such notice is given no later than one hundred eighty (180) days after the date of such taking. Landlord shall be entitled to receive the entire award or payment in connection therewith, except that Tenant shall have the right to file any separate claim available to Tenant for any taking of Tenant’s personal property and fixtures belonging to Tenant and removable by Tenant upon expiration of the Lease Term pursuant to the terms of this Lease, and for moving expenses, so long as such claim does not diminish the award available to Landlord, its ground lessor with respect to the Project or its mortgagee, and such claim is payable separately to Tenant. All Rent shall be apportioned as of the date of such termination, or the date of such taking, whichever shall first occur. If any part of the Premises shall be taken, and this Lease shall not be so terminated, the Base Rent and Tenant’s Share of Operating Expenses, Tax Expenses and Utilities Costs shall be proportionately abated. Tenant hereby waives any and all rights it might otherwise have pursuant to Section 1265.130 of the California Code of Civil Procedure.

12.2 Temporary Taking. Notwithstanding anything to the contrary contained in this Article 12, in the event of a temporary taking of all or any portion of the Premises for a period of one hundred and eighty (180) days or less, then this Lease shall not terminate but the Base Rent and Tenant’s Share of Operating Expenses, Tax Expenses and Utilities Costs shall be abated for the period of such taking in proportion to the ratio that the amount of rentable square feet of the Premises taken bears to the total rentable square feet of the Premises. Landlord shall be entitled to receive the entire award made in connection with any such temporary taking.

ARTICLE 13

COVENANT OF QUIET ENJOYMENT

Landlord covenants that Tenant, on paying the Rent, charges for services and other payments herein reserved and on keeping, observing and performing all the other terms, covenants, conditions, provisions and agreements herein contained on the part of Tenant to be kept, observed and performed, shall, during the Lease Term, peaceably and quietly have, hold and enjoy the Premises subject to the terms, covenants, conditions, provisions and agreements hereof without interference by any persons lawfully claiming by or through Landlord. The foregoing covenant is in lieu of any other covenant express or implied.

ARTICLE 14

ASSIGNMENT AND SUBLETTING

14.1 Transfers. Tenant shall not, without the prior written consent of Landlord, assign, mortgage, pledge, hypothecate, encumber, or permit any lien to attach to, or otherwise transfer, this Lease or any interest hereunder, permit any assignment or other such foregoing transfer of this Lease or any interest hereunder by operation of law, sublet the Premises or any part thereof, or permit the use of the Premises by any persons other than Tenant and its employees (all of the foregoing are hereinafter sometimes referred to collectively as “Transfers” and any person to whom any Transfer is made or sought to be made is hereinafter sometimes referred to as a “Transferee”). If Tenant shall desire Landlord’s consent to any Transfer, Tenant shall notify Landlord in writing, which notice (the “Transfer Notice”) shall include (i) the proposed effective date of the Transfer, which shall not be less than fifteen (15) business days nor more than one hundred eighty (180) days after the date of delivery of the Transfer Notice, (ii) a description of the portion of the Premises to be transferred (the “Subject Space”), (iii) the material terms of the proposed Transfer, the name and address of the proposed Transferee, and a copy of the operative documents to be executed to evidence such Transfer, (iv) the most recent audited annual financial statements of the proposed Transferee or, in the case of unaudited financial statements, the most recent annual financial statements of the proposed Transferee certified by an officer, partner or owner thereof, and (v) such other information as Landlord may reasonably require. Any Transfer made without Landlord’s prior written consent shall, at Landlord’s option, be null, void and of no effect, and shall, at Landlord’s option, constitute a default by Tenant under this Lease. Each time Tenant requests Landlord’s consent to a proposed Transfer, whether or not Landlord shall grant consent, within thirty (30) days after written request by Landlord, as Additional Rent hereunder, Tenant shall pay to Landlord One Thousand Five Hundred Dollars ($1,500) to reimburse Landlord for its review and processing fees, and Tenant shall also reimburse Landlord for any reasonable legal fees incurred by Landlord in connection with Tenant’s proposed Transfer (so long as Tenant utilizes Landlord’s standard form transfer and consent documents without material modification, Landlord legal fees shall not exceed $2,000). Notwithstanding anything to the contrary contained in this Article 14, so long as Tenant delivers to Landlord (i) written notice at least fifteen (15) days prior to the effective date of an assignment or subletting of the Premises to any Permitted Transferee, which notice shall set forth the name of the Permitted

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Transferee, (ii) a copy of the agreement pursuant to which such assignment or sublease shall be effectuated, and (iii) such other information concerning the Permitted Transferee as Landlord may reasonably require, including without limitation, information regarding any change in the proposed use of any portion of the Premises and any financial information with respect to such Permitted Transferee, and so long as (a) any change in the proposed use of the subject portion of the Premises is in conformance with the uses permitted to be made under this Lease and do not involve the use or storage of any Hazardous Materials (other than nominal amounts of ordinary household cleaners, office supplies and janitorial supplies which are not regulated by any environmental laws), and (b) the Permitted Transferee has a tangible net worth (defined as total assets, less goodwill and total liabilities) as of the date of the proposed Permitted Transfer, in the aggregate, computed in accordance with Generally Accepted Accounting Principles, which is equal to or greater than Tenant as of the date of the Lease, then Tenant may assign (whether by assignment document or by operation of law) this Lease or sublease any portion of the Premises (1) to any Related Entity, or (2) in connection with any merger, consolidation or sale of substantially all of the assets of Tenant, without having to obtain the prior written consent of Landlord thereto (each such transfer shall be referred to herein as a “Permitted Transfer” and each transferee pursuant to a Permitted Transfer shall be referred to herein as a “Permitted Transferee”). Notwithstanding anything to the contrary contained in this Article 14, a “Transfer” shall not include, and Landlord’s prior written consent shall not be required, in connection with any encumbrance of Tenant’s assets pursuant to a security or pledge agreement securing the performance of Tenant’s obligations under a credit or loan agreement (or any amendment, modification or extension thereof) with one or more third party lenders. The provisions of Section 14.3 and 14.4 below shall not be applicable in connection with a Permitted Transfer. Any Permitted Transfer shall in no way relieve Tenant of any liability Tenant may have under this Lease and such assignee or sublessee shall be jointly and severally liable with Tenant hereunder. For purposes of this Section 14.1, the term “Related Entity” shall mean any entity controlled by, under control with, or in control of Tenant. The term “control” as used in the immediately preceding sentence shall mean having direct ownership of fifty percent (50%) or more of the ownership interests of an entity and having the ability to direct the management and policies of such entity.

14.2 Landlord’s Consent. Landlord shall not unreasonably withhold its consent to any proposed Transfer of the Subject Space to the Transferee on the terms specified in the Transfer Notice. The parties hereby agree that it shall be reasonable under this Lease and under any applicable law for Landlord to withhold consent to any proposed Transfer where one or more of the following apply, without limitation as to other reasonable grounds for withholding consent:

14.2.1 The Transferee is of a character or reputation or engaged in a business which is not consistent with the quality of the Building or Project;

14.2.2 The Transferee intends to use the Subject Space for purposes which are not permitted under this Lease;

14.2.3 The Transferee is either a governmental agency or instrumentality thereof;

14.2.4 The Transfer will result in more than a reasonable and safe number of occupants per floor within the Subject Space;

14.2.5 The Transferee is not a party of reasonable financial worth and/or financial stability that has and will continue to have sufficient financial strength to perform all of the remaining obligations of Tenant under the Lease from and after the date of transfer, as reasonably determined by Landlord taking into account all relevant facts and circumstances;

14.2.6 The proposed Transfer would cause Landlord to be in violation of another lease or agreement to which Landlord is a party, or would give an occupant of the Project a right to cancel its lease; or

14.2.7 The terms of the proposed Transfer will allow the Transferee to exercise a right of renewal, right of expansion, right of first offer, or other similar right held by Tenant (or will allow the Transferee to occupy space leased by Tenant pursuant to any such right).

If Landlord consents to any Transfer pursuant to the terms of this Section 14.2 (and does not exercise any recapture rights Landlord may have under Section 14.4 of this Lease), Tenant may within six (6) months after Landlord’s consent, but not later than the expiration of said six-month period, enter into such Transfer of the Premises or portion thereof, upon substantially the same terms and conditions as are set forth in the Transfer Notice furnished by Tenant to Landlord pursuant to Section 14.1 of this Lease, provided that if there are any changes in the terms and conditions from those specified in the Transfer Notice (i) such that Landlord would initially have been entitled to refuse its consent to such Transfer under this Section 14.2, or (ii) which would cause the proposed Transfer to be more favorable to the Transferee than the terms set forth in Tenant’s original Transfer Notice, Tenant shall again submit the Transfer to Landlord for its approval and other action under this Article 14 (including Landlord’s right of recapture, if any, under Section 14.4 of this Lease).

14.3 Transfer Premium. If Landlord consents to a Transfer, as a condition thereto which the parties hereby agree is reasonable, Tenant shall pay to Landlord fifty percent (50%) of any “Transfer Premium,” as that term is defined in this Section 14.3, received by Tenant from such Transferee. “Transfer Premium” shall mean all rent, additional rent or other consideration payable by such Transferee in excess of the Rent and Additional Rent payable by Tenant under this Lease on a per rentable square foot basis if less than all of the Premises is transferred, after deducting the reasonable expenses incurred by Tenant for (i) any reasonable changes, alterations and improvements to the Premises in connection with the Transfer (but only to the extent approved by Landlord), and (ii) any reasonable brokerage commissions in connection with the Transfer.

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“Transfer Premium” shall also include, but not be limited to, key money and bonus money paid by Transferee to Tenant in connection with such Transfer, and any payment in excess of fair market value for services rendered by Tenant to Transferee in connection with such Transfer.

14.4 Landlord’s Option as to Subject Space. Notwithstanding anything to the contrary contained in this Article 14, in the event Tenant desires to assign the Lease or sublease more than twenty-five percent (25%) of the rentable square footage of the Premises, then Landlord shall have the option, by giving written notice to Tenant within fifteen (15) days after receipt of any Transfer Notice, to recapture the Subject Space. Such recapture notice shall cancel and terminate this Lease with respect to the Subject Space as of the effective termination date stated in the recapture notice. If this Lease shall be canceled with respect to less than the entire Premises, the Rent reserved herein shall be prorated on the basis of the number of rentable square feet retained by Tenant in proportion to the number of rentable square feet contained in the Premises, and this Lease as so amended shall continue thereafter in full force and effect, and upon request of either party, the parties shall execute written confirmation of the same. If Landlord declines, or fails to elect in a timely manner to recapture the Subject Space under this Section 14.4, then, provided Landlord has consented to the proposed Transfer, Tenant shall be entitled to proceed to transfer the Subject Space to the proposed Transferee, subject to provisions of the last paragraph of Section 14.2 of this Lease.

14.5 Effect of Transfer. If Landlord consents to a Transfer, (i) the terms and conditions of this Lease shall in no way be deemed to have been waived or modified, (ii) such consent shall not be deemed consent to any further Transfer by either Tenant or a Transferee, (iii) Tenant shall deliver to Landlord, promptly after execution, a fully-executed copy of the Transfer document, and (iv) no Transfer relating to this Lease or agreement entered into with respect thereto, whether with or without Landlord’s consent, shall relieve Tenant or any guarantor of the Lease from liability under this Lease. Landlord or its authorized representatives shall have the right at all reasonable times to audit the books, records and papers of Tenant relating to any Transfer, and shall have the right to make copies thereof. If the Transfer Premium respecting any Transfer shall be found understated, Tenant shall, within thirty (30) days after demand, pay the deficiency and Landlord’s costs of such audit.

14.6 Additional Transfers. For purposes of this Lease, the term “Transfer” shall also include (i) if Tenant is a partnership or limited liability company, the withdrawal or change, voluntary, involuntary or by operation of law, of fifty percent (50%) or more of the partners or members, as applicable, or transfer of twenty-five percent or more of partnership or membership interests, as applicable, within a twelve (12) month period, or the dissolution of the partnership or limited liability company without immediate reconstitution thereof, and (ii) if Tenant is a closely held corporation (i.e., whose stock is not publicly held and not traded through an exchange or over the counter), (1) the dissolution, merger, consolidation or other reorganization of Tenant, (2) the sale or other transfer of more than an aggregate of fifty percent (50%) of the voting shares of Tenant (other than to immediate family members by reason of gift or death), within a twelve (12)-month period, or (3) the sale, mortgage, hypothecation or pledge of more than an aggregate of fifty percent (50%) of the value of the unencumbered assets of Tenant within a twelve (12) month period. Notwithstanding the foregoing terms of this Section 14.6, the term “Transfer” shall not include, and Landlord shall have no right to consent to, the sale of the voting shares of Tenant by Silver Lake Partners II, LP, a Delaware limited partnership, Silver Lake Technology Investors II, LP, a Delaware limited partnership or Serena Co-invest Partners LP, a Delaware limited partnership, so long as (a) Tenant delivers at least ten (10) business days prior written notice of such sale to Landlord, (b) any such sale is not intended and does not serve as a subterfuge to avoid the requirements of this Article 14, and (c) the transferee is an entity with a character and reputation consistent with the quality of the Building.

ARTICLE 15

SURRENDER; OWNERSHIP AND REMOVAL OF TRADE FIXTURES

15.1 Surrender of Premises. No act or thing done by Landlord or any agent or employee of Landlord during the Lease Term shall be deemed to constitute an acceptance by Landlord of a surrender of the Premises unless such intent is specifically acknowledged in a writing signed by Landlord. The delivery of keys to the Premises to Landlord or any agent or employee of Landlord shall not constitute a surrender of the Premises or effect a termination of this Lease, whether or not the keys are thereafter retained by Landlord, and notwithstanding such delivery Tenant shall be entitled to the return of such keys at any reasonable time upon request until this Lease shall have been properly terminated. The voluntary or other surrender of this Lease by Tenant, whether accepted by Landlord or not, or a mutual termination hereof, shall not work a merger, and at the option of Landlord shall operate as an assignment to Landlord of all subleases or subtenancies affecting the Premises.

15.2 Removal of Tenant Property by Tenant. Upon the expiration of the Lease Term, or upon any earlier termination of this Lease, Tenant shall, subject to the provisions of this Article 15, quit and surrender possession of the Premises to Landlord in as good order and condition as when Tenant took possession and as thereafter improved by Landlord and/or Tenant, reasonable wear and tear and repairs which are specifically made the responsibility of Landlord hereunder excepted. Upon such expiration or termination, Tenant shall, without expense to Landlord, remove or cause to be removed from the Premises all debris and rubbish, and all items of furniture, equipment, free-standing cabinet work, and other articles of personal property owned by Tenant or installed or placed by Tenant at its expense in the Premises (other than furniture, equipment or fixtures attached to the Premises and purchased with the Furnishings Credit) and such similar articles of any other persons claiming under Tenant, as Landlord may, in its sole discretion, require to be removed. Landlord may require that Tenant remove any Cabling (as defined below), wiring or conduit (including any such Cabling or wiring associated with the Wi-Fi Network, if any) which may have been placed at the Project or within the Building by or on behalf of Tenant. Tenant shall repair at its own expense all damage to the Premises and Building resulting from removal of any of the foregoing items. In no event shall Tenant be required to remove any of the Tenant Improvements. In addition, if all or a portion of the corridor located on the fourth floor of the Building is removed as part of the Tenant

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Improvements, then Tenant shall not be required to restore such corridor upon the expiration or earlier termination of the Lease. Landlord and Tenant hereby agree that the additional Base Rent paid by Tenant under Article 3 of the Lease for the portion of the Premises where the corridor was removed shall be deemed to be full consideration for Landlord’s agreement that Tenant is not required to restore such corridor.

15.3 Cabling. Notwithstanding anything to the contrary herein, Tenant shall, prior to the expiration or earlier termination of this Lease, at Tenant’s expense and in compliance with the National Electric Code and other applicable laws, remove all electronic, fiber, phone and data cabling and related equipment that has been installed by or for the exclusive benefit of Tenant in or around the Premises (collectively, the “Cabling”); provided, however, Tenant shall not remove such Cabling if Tenant receives a written notice from Landlord at least thirty (30) days prior to the expiration of the Term of this Lease authorizing such Cabling to remain in place, in which event the Cabling shall be surrendered with the Premises upon the expiration or earlier termination of this Lease.

ARTICLE 16

HOLDING OVER

If Tenant holds over after the expiration of the Lease Term hereof, with or without the express or implied consent of Landlord, such tenancy shall be a tenancy at sufferance only, and shall not constitute a renewal hereof or an extension for any further term, and in such case Base Rent shall be payable at a monthly rate equal to one hundred fifty percent (150%) of the Base Rent applicable during the last rental period of the Lease Term under this Lease. Such tenancy shall be subject to every other term, covenant and agreement contained herein. Landlord hereby expressly reserves the right to require Tenant to surrender possession of the Premises to Landlord as provided in this Lease upon the expiration or other termination of this Lease. The provisions of this Article 16 shall not be deemed to limit or constitute a waiver of any other rights or remedies of Landlord provided herein or at law. If Tenant fails to surrender the Premises upon the termination or expiration of this Lease, in addition to any other liabilities to Landlord accruing therefrom, Tenant shall protect, defend, indemnify and hold Landlord harmless from all loss, costs (including reasonable attorneys’ fees) and liability resulting from such failure, including, without limiting the generality of the foregoing, any claims made by any succeeding tenant founded upon such failure to surrender, and any lost profits to Landlord resulting therefrom.

ARTICLE 17

ESTOPPEL CERTIFICATES

Within fifteen (15) days following a request in writing by Landlord, Tenant shall execute and deliver to Landlord an estoppel certificate, which, as submitted by Landlord, shall be in the form as may be reasonably required by any prospective mortgagee or purchaser of the Project (or any portion thereof), indicating therein any exceptions thereto that may exist at that time, and shall also contain any other information reasonably requested by Landlord or Landlord’s mortgagee or prospective mortgagee. Failure of Tenant to timely execute and deliver such estoppel certificate shall constitute an acceptance of the Premises and an acknowledgment by Tenant that statements included in the estoppel certificate are true and correct, without exception. Failure by Tenant to timely deliver such estoppel certificate shall be a material default of the provisions of this Lease. In addition, Tenant shall be liable to Landlord, and shall indemnify Landlord from and against any loss, cost, damage or expense, incidental, consequential, or otherwise, including attorneys’ fees, arising or accruing directly or indirectly, from any failure of Tenant to execute or deliver to Landlord any such estoppel certificate.

ARTICLE 18

SUBORDINATION

This Lease is subject and subordinate to all present and future ground or underlying leases of the Project and to the lien of any mortgages or trust deeds, now or hereafter in force against the Project, if any, and to all renewals, extensions, modifications, consolidations and replacements thereof, and to all advances made or hereafter to be made upon the security of such mortgages or trust deeds, unless the holders of such mortgages or trust deeds, or the lessors under such ground lease or underlying leases, require in writing that this Lease be superior thereto. Tenant covenants and agrees in the event any proceedings are brought for the foreclosure of any such mortgage, or if any ground or underlying lease is terminated, to attorn, without any deductions or set-offs whatsoever, to the purchaser upon any such foreclosure sale, or to the lessor of such ground or underlying lease, as the case may be, if so requested to do so by such purchaser or lessor and to recognize such purchaser or lessor as the lessor under this Lease. Tenant shall, within ten (10) days of written request by Landlord, execute such further instruments or assurances as Landlord may reasonably deem necessary to evidence or confirm the subordination or superiority of this Lease to any such mortgages, trust deeds, ground leases or underlying leases. Notwithstanding the foregoing, the subordination of this Lease to any future ground or underlying lease of the Project or to any future lien of any mortgage or deed of trust is conditioned upon the rights of Tenant under the Lease not being disturbed by any termination of such lease or foreclosure of such mortgage or deed of trust so long as Tenant is not in default hereunder beyond applicable notice and cure periods. Tenant waives the provisions of any current or future statute, rule or law which may give or purport to give Tenant any right or election to terminate or otherwise adversely affect this Lease and the obligations of the Tenant hereunder in the event of any foreclosure proceeding or sale. Tenant hereby acknowledges that as of the date of execution of this Lease, there is a deed of trust encumbering Landlord’s interest in the Property in favor of Societe General (the “Current Lender”). Tenant shall, concurrently with the execution of this Lease by Tenant, execute, notarize and deliver to Landlord a subordination, non-disturbance and attornment agreement in the form attached to this Lease as Exhibit E and incorporated herein by this reference (the

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“SNDA”). Landlord shall use commercially reasonable efforts to cause the Current Lender to execute, notarize and deliver to Tenant the SNDA within ninety (90) days of the later of: the mutual execution and delivery of this Lease or the date Landlord receives Tenant’s executed original SNDA, but Landlord shall not be in default under this Lease and shall have no liability to Tenant whatsoever if Landlord is unable to obtain and deliver to Tenant the SNDA executed by the Current Lender.

ARTICLE 19

TENANT’S DEFAULTS; LANDLORD’S REMEDIES

19.1 Events of Default by Tenant. All covenants and agreements to be kept or performed by Tenant under this Lease shall be performed by Tenant at Tenant’s sole cost and expense and without any reduction of Rent. The occurrence of any of the following shall constitute a default of this Lease by Tenant:

19.1.1 Any failure by Tenant to pay any Rent or any other charge required to be paid under this Lease, or any part thereof, within five (5) days of written notice that the same is past due; provided however, that any such notice shall be in lieu of, and not in addition to, any notice required under California Code of Civil Procedure Section 1161 or any similar or successor law; or

19.1.2 Any failure by Tenant to observe or perform any other provision, covenant or condition of this Lease to be observed or performed by Tenant where such failure continues for twenty (20) days after written notice thereof from Landlord to Tenant; provided however, that any such notice shall be in lieu of, and not in addition to, any notice required under California Code of Civil Procedure Section 1161 or any similar or successor law; and provided further that if the nature of such default is such that the same cannot reasonably be cured within a twenty (20) day period, Tenant shall not be deemed to be in default if it diligently commences such cure within such period and thereafter diligently proceeds to rectify and cure said default as soon as possible;

19.1.3 The abandonment or vacation of the Premises by Tenant. Abandonment is herein defined to include, but is not limited to, any absence by Tenant from the Premises for three (3) business days or longer while in default of any provision of this Lease; provided, however, that Tenant’s vacation of the Premises shall not constitute a default under this Lease so long as Tenant continues to pay the Base Rent, Additional Rent and all other sums hereunder when due, and perform all of Tenant’s other obligations under this Lease; or

19.1.4 The making of a general assignment by Tenant for the benefit of creditors, the filing of a voluntary petition by Tenant or the filing of an involuntary petition by any of Tenant’s creditors seeking the rehabilitation, liquidation, or reorganization of Tenant under any law relating to bankruptcy, insolvency or other relief of debtors and, in the case of an involuntary action, the failure to remove or discharge the same within sixty (60) days of such filing, the appointment of a receiver or other custodian to take possession of substantially all of Tenant’s assets or this leasehold, Tenant’s insolvency or inability to pay Tenant’s debts or failure generally to pay Tenant’s debts when due, any court entering a decree or order directing the winding up or liquidation of Tenant or of substantially all of Tenant’s assets, Tenant taking any action toward the dissolution or winding up of Tenant’s affairs, the cessation or suspension of Tenant’s use of the Premises, or the attachment, execution or other judicial seizure of substantially all of Tenant’s assets or this leasehold.

19.2 Landlord’s Remedies Upon Default. Upon the occurrence of any such default by Tenant, Landlord shall have, in addition to any other remedies available to Landlord at law or in equity, the option to pursue any one or more of the following remedies, each and all of which shall be cumulative and nonexclusive, without any notice or demand whatsoever.

19.2.1 Terminate this Lease, in which event Tenant shall immediately surrender the Premises to Landlord, and if Tenant fails to do so, Landlord may, without prejudice to any other remedy which it may have for possession or arrearages in Rent, enter upon and take possession of the Premises and expel or remove Tenant and any other person who may be occupying the Premises or any part thereof, without being liable for prosecution or any claim or damages therefor; and Landlord may recover from Tenant the following:

(i) The worth at the time of award of any unpaid Rent which has been earned at the time of such termination; plus

(ii) The worth at the time of award of the amount by which the unpaid Rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided; plus

(iii) The worth at the time of award of the amount by which the unpaid Rent for the balance of the Lease Term after the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided; plus

(iv) Any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant’s failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom, specifically including but not limited to, brokerage commissions and advertising expenses incurred, expenses of remodeling the Premises or any portion thereof for a new tenant, whether for the same or a different use, and any special concessions made to obtain a new tenant, including, without limitation, any rent abatement; and

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(v) At Landlord’s election, such other amounts in addition to or in lieu of the foregoing as may be permitted from time to time by applicable law.

As used in Sections 19.2.1(i) and (ii), above, the “worth at the time of award” shall be computed by allowing interest at the Interest Rate set forth in Section 4.5 of this Lease. As used in Section 19.2.1(iii) above, the “worth at the time of award” shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%).

19.2.2 Landlord shall have the remedy described in California Civil Code Section 1951.4 (lessor may continue lease in effect after lessee’s breach and abandonment and recover Rent as it becomes due, if lessee has the right to sublet or assign, subject only to reasonable limitations). Accordingly, if Landlord does not elect to terminate this Lease on account of any default by Tenant, Landlord may, from time to time, without terminating this Lease, enforce all of its rights and remedies under this Lease, including the right to recover all Rent as it becomes due.

19.2.3 Landlord shall have the immediate right of re-entry without terminating this Lease, and if this right of re-entry is exercised following abandonment of the Premises by Tenant, Landlord may consider any of Tenant’s equipment, trade fixtures, Cabling, furnishings, inventories, goods and personal property left on the Premises to also have been abandoned. No re-entry or taking possession of the Premises by Landlord pursuant to this Section 19.2 shall be construed as an election to terminate this Lease unless a written notice of such intention is given to Tenant.

19.2.4 Landlord may, but shall not be obligated to, make any such payment or perform or otherwise cure any such obligation, provision, covenant or condition on Tenant’s part to be observed or performed (and may enter the Premises for such purposes). In the event of Tenant’s failure to perform any of its obligations or covenants under this Lease, and such failure to perform poses a material risk of injury or harm to persons or damage to or loss of property, then Landlord shall have the right to cure or otherwise perform such covenant or obligation at any time after such failure to perform by Tenant, whether or not any such notice or cure period set forth in Section 19.1 above has expired. Any such actions undertaken by Landlord pursuant to the foregoing provisions of this Section 19.2.4 shall not be deemed a waiver of Landlord’s rights and remedies as a result of Tenant’s failure to perform and shall not release Tenant from any of its obligations under this Lease. Tenant waives redemption or relief from forfeiture under California Code of Civil Procedure Sections 1174 and 1179 (or any successor or substitute statute), or under any other present or future law, in the event Tenant is evicted or Landlord takes possession of the Premises by reason of any default of Tenant hereunder. Tenant hereby waives for Tenant and for all those claiming under Tenant all rights now or hereafter existing to redeem by order or judgment of any court or by any legal process or writ, Tenant’s right of occupancy of the Premises after any termination of this Lease.

19.3 Payment by Tenant. Tenant shall pay to Landlord, within fifteen (15) days after delivery by Landlord to Tenant of statements therefor: (i) sums equal to expenditures reasonably made and obligations incurred by Landlord in connection with Landlord’s performance or cure of any of Tenant’s obligations pursuant to the provisions of Section 19.2.4 above; and (ii) sums equal to all expenditures made and obligations incurred by Landlord in collecting or attempting to collect the Rent or in enforcing or attempting to enforce any rights of Landlord under this Lease or pursuant to law, including, without limitation, all legal fees and other amounts so expended. Tenant’s obligations under this Section 19.3 shall survive the expiration or earlier termination of the Lease Term.

19.4 Sublessees of Tenant. Whether or not Landlord elects to terminate this Lease on account of any default by Tenant, as set forth in this Article 19, Landlord shall have the right to terminate any and all subleases, licenses, concessions or other consensual arrangements for possession entered into by Tenant and affecting the Premises or may, in Landlord’s sole discretion, succeed to Tenant’s interest in such subleases, licenses, concessions or arrangements. In the event of Landlord’s election to succeed to Tenant’s interest in any such subleases, licenses, concessions or arrangements, Tenant shall, as of the date of notice by Landlord of such election, have no further right to or interest in the rent or other consideration receivable thereunder.

19.5 Waiver of Default. No waiver by Landlord of any violation or breach by Tenant of any of the terms, provisions and covenants herein contained shall be deemed or construed to constitute a waiver of any other or later violation or breach by Tenant of the same or any other of the terms, provisions, and covenants herein contained. Forbearance by Landlord in enforcement of one or more of the remedies herein provided upon a default by Tenant shall not be deemed or construed to constitute a waiver of such default. The acceptance of any Rent hereunder by Landlord following the occurrence of any default, whether or not known to Landlord, shall not be deemed a waiver of any such default, except only a default in the payment of the Rent so accepted.

19.6 Efforts to Relet. For the purposes of this Article 19, Tenant’s right to possession shall not be deemed to have been terminated by efforts of Landlord to relet the Premises, by its acts of maintenance or preservation with respect to the Premises, or by appointment of a receiver to protect Landlord’s interests hereunder. The foregoing enumeration is not exhaustive, but merely illustrative of acts which may be performed by Landlord without terminating Tenant’s right to possession.

ARTICLE 20

SECURITY DEPOSIT

Concurrent with Tenant’s execution of this Lease, Tenant shall deposit with Landlord a security deposit (the “Security Deposit”) in the amount set forth in Section 10 of the Summary. The Security

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Deposit shall be held by Landlord as security for the faithful performance by Tenant of all the terms, covenants, and conditions of this Lease to be kept and performed by Tenant during the Lease Term. If Tenant defaults with respect to any provisions of this Lease, including, but not limited to, the provisions relating to the payment of Rent, Landlord may, but shall not be required to, use, apply or retain all or any part of the Security Deposit for the payment of any Rent or any other sum in default, or for the payment of any amount that Landlord may spend or become obligated to spend by reason of Tenant’s default, or to compensate Landlord for any other loss or damage that Landlord may suffer by reason of Tenant’s default. If any portion of the Security Deposit is so used or applied, Tenant shall, within five (5) days after written demand therefor, deposit cash with Landlord in an amount sufficient to restore the Security Deposit to its original amount, and Tenant’s failure to do so shall be a default under this Lease. If Tenant shall fully and faithfully perform every provision of this Lease to be performed by it, the Security Deposit, or any balance thereof, shall be returned to Tenant, or, at Landlord’s option, to the last assignee of Tenant’s interest hereunder, within forty-five (45) days following the expiration of the Lease Term. Tenant shall not be entitled to any interest on the Security Deposit. Tenant hereby waives the provisions of Section 1950.7 of the California Civil Code, and all other provisions of law, now or hereafter in force, which provide that Landlord may claim from a security deposit only those sums reasonably necessary to remedy defaults in the payment of rent, to repair damage caused by Tenant or to clean the Premises, it being agreed that Landlord may, in addition, claim those sums reasonably necessary to compensate Landlord for any other loss or damage, foreseeable or unforeseeable, caused by the act or omission of Tenant or any officer, employee, agent or invitee of Tenant.

ARTICLE 21

COMPLIANCE WITH LAW

Tenant shall not do anything or suffer anything to be done in or about the Premises which will in any way conflict with any law, statute, ordinance or other governmental rule, regulation or requirement now in force or which may hereafter be enacted or promulgated. Tenant shall, at its sole cost and expense, make any and all alterations, improvements and structural changes that are required by laws, statutes, ordinances and governmental regulations or requirements as a result of Tenant’s particular use of the Premises or any alterations, additions or improvements made by Tenant. Any other alterations, improvements or structural changes to the Premises or the Project that are required by laws, statutes, ordinances and governmental regulations or requirements, and not due to Tenant’s particular use of the Premises or Tenant’s alterations, additions or improvements, shall be made by Landlord, and the cost thereof shall be an Operating Expense, subject to reimbursement pursuant to Section 4.2.4. In addition, Tenant shall fully comply with all present or future programs intended to manage parking, transportation or traffic in and around the Project, and in connection therewith, Tenant shall take responsible action for the transportation planning and management of all employees located at the Premises by working directly with Landlord, any governmental transportation management organization or any other transportation-related committees or entities. The judgment of any court of competent jurisdiction or the admission of Tenant in any judicial action, regardless of whether Landlord is a party thereto, that Tenant has violated any of said governmental measures, shall be conclusive of that fact as between Landlord and Tenant.

ARTICLE 22

ENTRY BY LANDLORD

Landlord reserves the right at all reasonable times and upon reasonable notice to Tenant (not less than twenty-four hours notice, except in an emergency) to enter the Premises to: (i) inspect them; (ii) show the Premises to prospective purchasers, mortgagees or, during the last twelve (12) months of the Lease Term, to tenants, or to the ground or underlying lessors; (iii) to post notices of nonresponsibility; or (iv) alter, improve or repair the Premises or the Building if necessary to comply with current building codes or other applicable laws, or for structural alterations, repairs or improvements to the Building, or as Landlord may otherwise reasonably desire or deem necessary. Except in the event of an emergency, Tenant shall have the right to have a representative accompany Landlord in connection with any entry into the Premises. If Tenant fails to make a representative available to accompany Landlord at the time of Landlord’s entry, then Tenant shall be deemed to have waived its right to accompany Landlord in connection with such entry. Notwithstanding anything to the contrary contained in this Article 22, Landlord may enter the Premises at any time, without notice to Tenant, in emergency situations and/or to perform janitorial or other services required of Landlord pursuant to this Lease. Any such entries shall be without the abatement of Rent and shall include the right to take such reasonable steps as required to accomplish the stated purposes; provided, however, Landlord shall use commercially reasonable efforts to minimize any interference with Tenant’s use of the Premises given the circumstances of Landlord’s entry. Tenant hereby waives any claims for damages or for any injuries or inconvenience to or interference with Tenant’s business, lost profits, any loss of occupancy or quiet enjoyment of the Premises, and any other loss occasioned thereby. For each of the above purposes, Landlord shall at all times have a key with which to unlock all the doors in the Premises, excluding Tenant’s vaults, safes and special security areas designated in advance by Tenant. In an emergency, Landlord shall have the right to enter without notice and use any means that Landlord may deem proper to open the doors in and to the Premises. Any entry into the Premises in the manner hereinbefore described shall not be deemed to be a forcible or unlawful entry into, or a detainer of, the Premises, or an actual or constructive eviction of Tenant from any portion of the Premises.

ARTICLE 23

TENANT PARKING

Subject to the terms of this Article 23, Tenant shall be entitled to use, on an unassigned, unreserved and first come, first served basis, the number of parking spaces set forth in Section 12 of the Summary, which parking

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spaces are located in the Parking Area. The Parking Area shall be for passenger vehicles only and shall be in parking areas designated by Landlord. Tenant’s parking in the Parking Area shall be free of charge by Landlord. Tenant’s continued right to use the Parking Area is conditioned upon (i) Tenant abiding by (1) all rules and regulations which are prescribed by Landlord from time to time for the orderly operation and use of the Parking Area, and (2) all recorded covenants, conditions and restrictions affecting the Project, and (ii) Tenant’s cooperation in seeing that Tenant’s employees and visitors also comply with such rules and regulations and covenants, conditions and restrictions. In addition, Landlord may assign any parking spaces and/or make all or a portion of such spaces reserved or institute an attendant-assisted tandem parking program and/or valet parking program if Landlord determines in its sole discretion that such is necessary or desirable for orderly and efficient parking. Landlord specifically reserves the right, from time to time, to change the size, configuration, design, layout, location and all other aspects of the Parking Area, and Tenant acknowledges and agrees that Landlord, from time to time, may, without incurring any liability to Tenant and without any abatement of Rent under this Lease temporarily close-off or restrict access to the Parking Area, or temporarily relocate parking to other parking structures and/or surface parking areas within a reasonable distance from the Parking Area, for purposes of permitting or facilitating any such construction, alteration or improvements or to accommodate or facilitate renovation, alteration, construction or other modification of other improvements or structures located on the Project. Landlord may delegate its responsibilities hereunder to a parking operator in which case such parking operator shall have all the rights of control attributed hereby to Landlord. Any parking rates charged by Landlord shall be exclusive of any parking tax or other charges imposed by governmental authorities in connection with the use of such parking, which taxes and/or charges shall be paid directly by Tenant or the parking users, or, if directly imposed against Landlord, Tenant shall reimburse Landlord for all such taxes and/or charges within ten (10) days after Tenant’s receipt of the invoice from Landlord. The rights of Tenant to park in the Parking Area may not be transferred, assigned, subleased or otherwise alienated by Tenant without Landlord’s prior written approval.

ARTICLE 24

MISCELLANEOUS PROVISIONS

24.1 Terms; Captions. The necessary grammatical changes required to make the provisions hereof apply either to corporations or partnerships or individuals, men or women, as the case may require, shall in all cases be assumed as though in each case fully expressed. The captions of Articles and Sections are for convenience only and shall not be deemed to limit, construe, affect or alter the meaning of such Articles and Sections.

24.2 Binding Effect. Each of the provisions of this Lease shall extend to and shall, as the case may require, bind or inure to the benefit not only of Landlord and of Tenant, but also of their respective successors or assigns, provided this clause shall not permit any assignment by Tenant contrary to the provisions of Article 14 of this Lease.

24.3 No Waiver. No waiver of any provision of this Lease shall be implied by any failure of a party to enforce any remedy on account of the violation of such provision, even if such violation shall continue or be repeated subsequently, any waiver by a party of any provision of this Lease may only be in writing, and no express waiver shall affect any provision other than the one specified in such waiver and that one only for the time and in the manner specifically stated. No receipt of monies by Landlord from Tenant after the termination of this Lease shall in any way alter the length of the Lease Term or of Tenant’s right of possession hereunder or after the giving of any notice shall reinstate, continue or extend the Lease Term or affect any notice given Tenant prior to the receipt of such monies, it being agreed that after the service of notice or the commencement of a suit or after final judgment for possession of the Premises, Landlord may receive and collect any Rent due, and the payment of said Rent shall not waive or affect said notice, suit or judgment.

24.4 Financials. Upon request from time to time, Tenant agrees to provide to Landlord, within ten (10) days of written request, current financial statements for Tenant, dated no earlier than one (1) year prior to such request, certified as accurate by Tenant or, if available, audited financial statements prepared by an independent certified public accountant with copies of the auditor’s statement. If any Guaranty is executed in connection with this Lease, Tenant also agrees to deliver to Landlord, within ten (10) days of written request, current financial statements of the Guarantor in a form consistent with the above criteria. All such financial statements will be delivered to Landlord and any such lender or purchaser in confidence and shall only be used for purposes of evaluating the financial strength of Tenant or of Guarantor, as applicable.

24.5 Transfer of Landlord’s Interest. Tenant acknowledges that Landlord has the right to transfer all or any portion of its interest in the Project, the Building and/or in this Lease, and Tenant agrees that in the event of any such transfer and subject to Landlord’s transferee assuming all of Landlord’s obligations under this Lease, Landlord shall automatically be released from all liability arising under this Lease after the date of such transfer and Tenant agrees to look solely to such transferee for the performance of Landlord’s obligations hereunder after the date of transfer. Without limiting the generality of the foregoing, it is acknowledged and agreed that the liability of Landlord under this Lease is limited to its actual period of ownership of title to the Building. The liability of any transferee of Landlord shall be limited to the interest of such transferee in the Project and such transferee shall be without personal liability under this Lease, and Tenant hereby expressly waives and releases such personal liability on behalf of itself and all persons claiming by, through or under Tenant. Tenant further acknowledges that Landlord may assign its interest in this Lease to a mortgage lender as additional security and agrees that such an assignment shall not release Landlord from its obligations hereunder and that Tenant shall continue to look to Landlord for the performance of its obligations hereunder.

24.6 Prohibition Against Recording. Except as provided in Section 24.4 of this Lease, neither this Lease, nor any memorandum, affidavit or other writing with respect thereto, shall be recorded by Tenant or by anyone acting through, under or on behalf of Tenant, and the recording thereof in violation of this provision shall make this Lease null and void at Landlord’s election.

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24.7 Landlord’s Title; Air Rights. Landlord’s title is and always shall be paramount to the title of Tenant. Nothing herein contained shall empower Tenant to do any act which can, shall or may encumber the title of Landlord. No rights to any view or to light or air over any property, whether belonging to Landlord or any other person, are granted to Tenant by this Lease.

24.8 Tenant’s Signs. Tenant shall be entitled to (i) one (1) identification sign on or near the entry doors of the Premises, and (ii) for multi-tenant floors, one (1) identification or directional sign, as designated by Landlord, in the elevator lobby on the floor on which the Premises are located. Landlord shall pay for the cost of the initial installation of such permitted signage, and Tenant shall pay for the cost of any changes thereto. Tenant acknowledges and agrees that there currently are no available spaces on the existing monument sign for the Building. If, during the Lease Term, space becomes available on such monument sign (as determined by Landlord), then Tenant shall have the right to install, at Tenant’s sole cost, a sign panel on such monument sign. Tenant’s right to any monument signage shall be subject and subordinate to monument signage rights currently set forth in any lease which has been executed as of the date of execution of this Lease (as such leases may be modified, amended or extended) and the rights of any tenant of the Project that leases more rentable square feet at the Project than Tenant. Such signs shall be installed by a signage contractor designated by Landlord. The location, quality, design, style, lighting and size of such signs shall be consistent with the Landlord’s Building standard signage program and shall be subject to Landlord’s prior written approval, in its reasonable discretion. Upon the expiration or earlier termination of this Lease, Tenant shall be responsible, at its sole cost and expense, for the removal of such signage and the repair of all damage to the Building caused by such removal. Tenant may not install any signs on the exterior or roof of the Building or the Common Areas. Any signs, window coverings, or blinds (even if the same are located behind the Landlord approved window coverings for the Building), or other items visible from the exterior of the Premises or Building are subject to the prior approval of Landlord, in its sole and absolute discretion.

24.9 Relationship of Parties. Nothing contained in this Lease shall be deemed or construed by the parties hereto or by any third party to create the relationship of principal and agent, partnership, joint venturer or any association between Landlord and Tenant, it being expressly understood and agreed that neither the method of computation of Rent nor any act of the parties hereto shall be deemed to create any relationship between Landlord and Tenant other than the relationship of landlord and tenant.

24.10 Application of Payments. Landlord shall have the right to apply payments received from Tenant pursuant to this Lease, regardless of Tenant’s designation of such payments, to satisfy any obligations of Tenant hereunder, in such order and amounts as Landlord, in its sole discretion, may elect.

24.11 Time of Essence. Time is of the essence of this Lease and each of its provisions.

24.12 Partial Invalidity. If any term, provision or condition contained in this Lease shall, to any extent, be invalid or unenforceable, the remainder of this Lease, or the application of such term, provision or condition to persons or circumstances other than those with respect to which it is invalid or unenforceable, shall not be affected thereby, and each and every other term, provision and condition of this Lease shall be valid and enforceable to the fullest extent possible permitted by law.

24.13 No Warranty. In executing and delivering this Lease, Tenant has not relied on any representation, including, but not limited to, any representation whatsoever as to the amount of any item comprising Additional Rent or the amount of the Additional Rent in the aggregate or that Landlord is furnishing the same services to other tenants, at all, on the same level or on the same basis, or any warranty or any statement of Landlord which is not set forth herein or in one or more of the Exhibits attached hereto.

24.14 Landlord Exculpation. It is expressly understood and agreed that notwithstanding anything in this Lease to the contrary, and notwithstanding any applicable law to the contrary, the liability of Landlord and the Landlord Parties hereunder (including any successor landlord) and any recourse by Tenant against Landlord or the Landlord Parties shall be limited solely and exclusively to an amount which is equal to the ownership interest of Landlord in the Project, and neither Landlord, nor any of the Landlord Parties shall have any personal liability therefor, and Tenant hereby expressly waives and releases such personal liability on behalf of itself and all persons claiming by, through or under Tenant.

24.15 Entire Agreement. It is understood and acknowledged that there are no oral agreements between the parties hereto affecting this Lease and this Lease supersedes and cancels any and all previous negotiations, arrangements, brochures, agreements and understandings, if any, between the parties hereto or displayed by Landlord to Tenant with respect to the subject matter thereof, and none thereof shall be used to interpret or construe this Lease. This Lease and any side letter or separate agreement executed by Landlord and Tenant in connection with this Lease and dated of even date herewith contain all of the terms, covenants, conditions, warranties and agreements of the parties relating in any manner to the rental, use and occupancy of the Premises, shall be considered to be the only agreement between the parties hereto and their representatives and agents, and none of the terms, covenants, conditions or provisions of this Lease can be modified, deleted or added to except in writing signed by the parties hereto. All negotiations and oral agreements acceptable to both parties have been merged into and are included herein. There are no other representations or warranties between the parties, and all reliance with respect to representations is based totally upon the representations and agreements contained in this Lease.

24.16 Right to Lease. Landlord reserves the absolute right to effect such other tenancies in the Building or other portions of the Project as Landlord in the exercise of its sole business judgment shall determine to best promote the interests of the Project. Tenant does not rely on the fact, nor does Landlord represent, that any specific tenant or type or number of tenants shall, during the Lease Term, occupy any space in the Building or Project.

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24.17 Force Majeure. Any prevention, delay or stoppage due to strikes, lockouts, labor disputes, acts of God, inability to obtain services, labor, or materials or reasonable substitutes therefor, governmental actions, civil commotions, fire or other casualty, and other causes beyond the reasonable control of the party obligated to perform, except with respect to the obligations imposed with regard to Rent and other charges to be paid by Tenant pursuant to this Lease and except with respect to Tenant’s obligations under the Tenant Work Letter (collectively, the “Force Majeure”), notwithstanding anything to the contrary contained in this Lease, shall excuse the performance of such party for a period equal to any such prevention, delay or stoppage and, therefore, if this Lease specifies a time period for performance of an obligation of either party, that time period shall be extended by the period of any delay in such party’s performance caused by a Force Majeure.

24.18 Waiver of Redemption by Tenant. Tenant hereby waives for Tenant and for all those claiming under Tenant all right now or hereafter existing to redeem by order or judgment of any court or by any legal process or writ, Tenant’s right of occupancy of the Premises after any termination of this Lease.

24.19 Notices. All notices, demands, statements or communications (collectively, “Notices”) given or required to be given by either party to the other hereunder shall be in writing, shall be sent by United States certified or registered mail, postage prepaid, return receipt requested, or delivered personally (i) to Tenant at the appropriate address set forth in Section 5 of the Summary, or to such other place as Tenant may from time to time designate in a Notice to Landlord; or (ii) to Landlord at the addresses set forth in Section 3 of the Summary, or to such other firm or to such other place as Landlord may from time to time designate in a Notice to Tenant. Any Notice will be deemed given on the date it is received or upon the date personal delivery is made. If Tenant is notified of the identity and address of Landlord’s mortgagee or ground or underlying lessor, Tenant shall give to such mortgagee or ground or underlying lessor written notice of any default by Landlord under the terms of this Lease by registered or certified mail, and such mortgagee or ground or underlying lessor shall be given a reasonable opportunity to cure such default prior to Tenant’s exercising any remedy available to Tenant.

24.20 Joint and Several. If there is more than one Tenant, the obligations imposed upon Tenant under this Lease shall be joint and several.

24.21 Authority. If Tenant is a corporation, partnership or limited liability company, each individual executing this Lease on behalf of Tenant hereby represents and warrants that Tenant is a duly formed and validly existing entity qualified to do business in the state in which the Project is located and that Tenant has full right and authority to execute and deliver this Lease and that each person signing on behalf of Tenant is authorized to do so.

24.22 Jury Trial; Attorneys’ Fees. IF EITHER PARTY COMMENCES LITIGATION AGAINST THE OTHER FOR THE SPECIFIC PERFORMANCE OF THIS LEASE, FOR DAMAGES FOR THE BREACH HEREOF OR OTHERWISE FOR ENFORCEMENT OF ANY REMEDY HEREUNDER, THE PARTIES HERETO AGREE TO AND HEREBY DO WAIVE ANY RIGHT TO A TRIAL BY JURY. In the event of any such commencement of litigation, the prevailing party shall be entitled to recover from the other party such costs and reasonable attorneys’ fees as may have been incurred, including any and all costs incurred in enforcing, perfecting and executing such judgment.

24.23 Governing Law. This Lease shall be construed and enforced in accordance with the laws of the State of California.

24.24 Submission of Lease. Submission of this instrument for examination or signature by Tenant does not constitute a reservation of or an option for lease, and it is not effective as a lease or otherwise until execution and delivery by both Landlord and Tenant.

24.25 Brokers. Landlord and Tenant hereby warrant to each other that they have had no dealings with any real estate broker or agent in connection with the negotiation of this Lease, excepting only the real estate brokers or agents specified in Section 11 of the Summary (the “Brokers”), and that they know of no other real estate broker or agent who is entitled to a commission in connection with this Lease. Each party agrees to indemnify and defend the other party against and hold the other party harmless from any and all claims, demands, losses, liabilities, lawsuits, judgments, and costs and expenses (including without limitation reasonable attorneys’ fees) with respect to any leasing commission or equivalent compensation alleged to be owing on account of the indemnifying party’s dealings with any real estate broker or agent other than the Brokers. Landlord shall pay commissions to the Brokers pursuant to separate agreements between Landlord and the Brokers.

24.26 Independent Covenants. This Lease shall be construed as though the covenants herein between Landlord and Tenant are independent and not dependent and Tenant hereby expressly waives the benefit of any statute to the contrary and agrees that if Landlord fails to perform its obligations set forth herein, Tenant shall not be entitled to make any repairs or perform any acts hereunder at Landlord’s expense or to any setoff of the Rent (except to the extent expressly provided in Section 6.3 above) or other amounts owing hereunder against Landlord; provided, however, that the foregoing shall in no way impair the right of Tenant to commence a separate action against Landlord for any violation by Landlord of the provisions hereof so long as notice is first given to Landlord and any holder of a mortgage or deed of trust covering the Building, Project or any portion thereof, of whose address Tenant has theretofore been notified, and an opportunity is granted to Landlord and such holder to correct such violations as provided above.

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24.27 Building Name and Signage. Landlord shall have the right at any time to change the name of the Building and Project and to install, affix and maintain any and all signs on the exterior and on the interior of the Building and any portion of the Project as Landlord may, in Landlord’s sole discretion, desire. Tenant shall not use the names of the Buildings or Project or use pictures or illustrations of the Building or Project in advertising or other publicity, without the prior written consent of Landlord.

24.28 Building Directory. At Landlord’s cost, Landlord shall include Tenant’s name and location in the Building on one (1) line on the Building directory.

24.29 Intentionally Deleted.

24.30 Landlord’s Construction. It is specifically understood and agreed that Landlord has no obligation and has made no promises to alter, remodel, improve, renovate, repair or decorate the Premises, Building, Project, or any part thereof and that no representations or warranties respecting the condition of the Premises, the Building or the Project have been made by Landlord to Tenant, except as specifically set forth in this Lease. However, Tenant acknowledges that Landlord may from time to time, at Landlord’s sole option, renovate, improve, alter, or modify (collectively, the “Renovations”) the Building, Premises, and/or Project, including without limitation the Building Parking Area, Common Areas, systems and equipment, roof, and structural portions of the same, which Renovations may include, without limitation, (i) modifying the Common Areas and tenant spaces to comply with applicable laws and regulations, including regulations relating to the physically disabled, seismic conditions, and building safety and security, and (ii) installing new carpeting, lighting, and wall coverings in the Building Common Areas, and in connection with such Renovations, Landlord may, among other things, erect scaffolding or other necessary structures in the Building, limit or eliminate access to portions of the Project, including portions of the Common Areas, or perform work in the Building and/or Project, which work may create noise, dust or leave debris in the Building and/or Project. Tenant hereby agrees that such Renovations and Landlord’s actions in connection with such Renovations shall in no way constitute a constructive eviction of Tenant nor entitle Tenant to any abatement of Rent; provided, however, that Landlord shall use commercially reasonable efforts to minimize interference with Tenant’s use of the Premises during such Renovations. Landlord shall have no responsibility or for any reason be liable to Tenant for any direct or indirect injury to or interference with Tenant’s business arising from the Renovations, nor shall Tenant be entitled to any compensation or damages from Landlord for loss of the use of the whole or any part of the Premises or of Tenant’s personal property or improvements resulting from the Renovations or Landlord’s actions in connection with such Renovations, or for any inconvenience or annoyance occasioned by such Renovations or Landlord’s actions in connection with such Renovations.

24.31 Intentionally Deleted.

24.32 OFAC Compliance.

24.32.1 Tenant represents and warrants that (i) Tenant and each person or entity owning an interest in Tenant is (1) not currently identified on the Specially Designated Nationals and Blocked Persons List maintained by the Office of Foreign Assets Control, Department of the Treasury (“OFAC”) and/or on any other similar list maintained by OFAC pursuant to any authorizing statute, executive order or regulation (collectively, the “List”), and (2) not a person or entity with whom a citizen of the United States is prohibited to engage in transactions by any trade embargo, economic sanction, or other prohibition of United States law, regulation, or Executive Order of the President of the United States, (ii) none of the funds or other assets of Tenant constitute property of, or are beneficially owned, directly or indirectly, by any Embargoed Person (as hereinafter defined), (iii) no Embargoed Person has any interest of any nature whatsoever in Tenant (whether directly or indirectly), (iv) none of the funds of Tenant have been derived from any unlawful activity with the result that the investment in Tenant is prohibited by law or that the Lease is in violation of law, and (v) Tenant has implemented procedures, and will consistently apply those procedures, to ensure the foregoing representations and warranties remain true and correct at all times. The term “Embargoed Person” means any person, entity or government subject to trade restrictions under U.S. law, including but not limited to, the International Emergency Economic Powers Act, 50 U.S.C. §1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Orders or regulations promulgated thereunder with the result that the investment in Tenant is prohibited by law or Tenant is in violation of law.

24.32.2 Tenant covenants and agrees (i) to comply with all requirements of law relating to money laundering, anti-terrorism, trade embargos and economic sanctions, now or hereafter in effect, (ii) to immediately notify Landlord in writing if any of the representations, warranties or covenants set forth in this paragraph or the preceding paragraph are no longer true or have been breached or if Tenant has a reasonable basis to believe that they may no longer be true or have been breached, (iii) not to use funds from any “Prohibited Person” (as such term is defined in the September 24, 2001 Executive Order Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism) to make any payment due to Landlord under the Lease and (iv) at the request of Landlord, to provide such information as may be requested by Landlord to determine Tenant’s compliance with the terms hereof.

24.32.3 Tenant hereby acknowledges and agrees that Tenant’s inclusion on the List at any time during the Lease Term shall be a default of the Lease. Notwithstanding anything herein to the contrary, Tenant shall not permit the Premises or any portion thereof to be used or occupied by any person or entity on the List or by any Embargoed Person (on a permanent, temporary or transient basis), and any such use or occupancy of the Premises by any such person or entity shall be a default of the Lease.

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Simultaneously with the execution of the Lease, Tenant will provide to Landlord the names of the persons holding an ownership interest in Tenant, for purposes of compliance with Presidential Executive Order 13224 (issued September 24, 2001).

24.33 Consent. Wherever a party’s consent is required in this Lease, except as otherwise expressly provided herein, such consent shall not be unreasonably withheld.

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IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be executed the day and date first above written.

“Landlord”:
LEGACY PARTNERS II SAN MATEO PLAZA, LLC, a Delaware limited liability company
By:	LEGACY PARTNERS COMMERCIAL, L.P., a California limited partnership, as Manager and Agent for Owner
	By:	LEGACY PARTNERS COMMERCIAL, INC., General Partner
		By:
			Debra Smith
		Its:	Chief Administrative Officer
			DRE #00975555
			BL DRE #01464134
“Tenant”:
SERENA SOFTWARE, INC., a Delaware corporation
By:
Name:
Its:
By:
Name:
Its:

*** If Tenant is a CORPORATION, the authorized officers must sign on behalf of the corporation and indicate the capacity in which they are signing. The Lease must be executed by the chairman of the board, president or vice president and the chief financial officer, secretary, assistant secretary or assistant treasurer, unless the bylaws or a resolution of the board of directors shall otherwise provide, in which event, the bylaws or a certified copy of the resolution, as the case may be, must be attached to this Lease.

S-1

EXHIBIT A

OUTLINE OF FLOOR PLAN OF PREMISES

1850 GATEWAY DRIVE

FOURTH FLOOR

TENANT INITIALS HERE:            

EXHIBIT A

Page 1

EHIBIT B

TENANT WORK LETTER

This Tenant Work Letter (“Tenant Work Letter”) sets forth the terms and conditions relating to the construction of improvements for the Premises. All references in this Tenant Work Letter to the “Lease” shall mean the relevant portions of the Lease to which this Tenant Work Letter is attached as Exhibit B.

SECTION 1

AS-IS CONDITION

Landlord has previously constructed the base, shell and core (i) of the Premises and (ii) of the floor(s) of the Building on which the Premises are located (collectively, the “Base, Shell and Core”), and Tenant shall accept the Base, Shell and Core in its current “AS-IS” condition existing as of the date of the Lease and the Lease Commencement Date. Except for the Tenant Improvement Allowance set forth below, Landlord shall not be obligated to pay for any alterations or improvements to the Premises, the Building or the Project. Except for the Tenant Improvements (as defined below), Landlord shall not be obligated to make any alterations or improvements to the Premises, the Building or the Project.

SECTION 2

TENANT IMPROVEMENTS

2.1 Tenant Improvement Allowance. Tenant shall be entitled to a one-time tenant improvement allowance (the “Tenant Improvement Allowance”) in the amount of up to, but not exceeding Thirty-Two Dollars ($32.00) per rentable square foot of the Premises (i.e., up to Six Hundred Sixty-Five Thousand Two Hundred Eighty Dollars ($665,280.00), based on 20,790 rentable square feet in the Premises), for the costs relating to (i) the initial design and construction of Tenant’s improvements which are permanently affixed to the Premises; (ii) renovation of the restrooms located within the Premises; (iii) removal of all or a portion of the corridor on the fourth floor of the Building in accordance with Article 3 of the Lease; and (iv) the Furnishings Credit (as defined in Section 2.2.8 below) (collectively, the “Tenant Improvements”). In no event shall Landlord be obligated to make disbursements pursuant to this Tenant Work Letter in a total amount which exceeds the Tenant Improvement Allowance. Tenant shall not be entitled to receive any cash payment or credit against Rent or otherwise for any portion of the Tenant Improvement Allowance which is not used to pay for the Tenant Improvement Allowance Items (as such term is defined below).

2.2 Disbursement of the Tenant Improvement Allowance. Except as otherwise set forth in this Tenant Work Letter, the Tenant Improvement Allowance shall be disbursed by Landlord (each of which disbursement shall be made pursuant to Landlord’s standard disbursement process), only for the following items and costs (collectively, the “Tenant Improvement Allowance Items”):

2.2.1 payment of the fees of the “Architect” and the “Engineers,” as those terms are defined in Section 3.1 of this Tenant Work Letter, and payment of the fees incurred by, and the cost of documents and materials supplied by, Landlord and Landlord’s consultants in connection with the preparation and review of the “Construction Drawings,” as that term is defined in Section 3.1 of this Tenant Work Letter;

2.2.2 the payment of plan check, permit and license fees relating to construction of the Tenant Improvements;

2.2.3 the cost of construction of the Tenant Improvements (including renovation of the restrooms in the Premises and/or removal of all or a portion of the corridor on the fourth floor of the Building, to the extent such work is included in the Construction Drawings), including, without limitation, contractors’ fees and general conditions, testing and inspection costs, costs of utilities, trash removal and hoists;

2.2.4 the cost of any changes in the Base, Shell and Core when such changes are required by the Construction Drawings (including if such changes are due to the fact that such work is prepared on an unoccupied basis), such cost to include all direct architectural and/or engineering fees and expenses incurred in connection therewith;

2.2.5 the cost of any changes to the Construction Drawings applicable to the interior of the Premises or Tenant Improvements applicable to the interior of the Premises required by applicable laws;

2.2.6 sales and use taxes and Title 24 fees;

2.2.7 the “Landlord Supervision Fee,” as that term is defined in Section 4.3.2 of this Tenant Work Letter;

2.2.8 provided the Tenant Improvement Allowance is not used in its entirety pursuant to the foregoing Tenant Improvement Allowance Items, then Tenant shall have the right to reimbursement of up to One Hundred Three Thousand Nine Hundred and Fifty Dollars ($103,950) (the “Furnishings Credit”) for Tenant’s furniture, fixtures and equipment; and

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2.2.9 all other costs to be reasonably expended by Landlord in connection with the construction of the Tenant Improvements.

2.3 Specifications for Building Standard Components. Landlord has established specifications (the “Specifications”) for the Building standard components to be used in the construction of the Tenant Improvements in the Premises, which Specifications have been received by Tenant. Unless otherwise agreed to by Landlord, the Tenant Improvements shall comply with the Specifications. The Specifications for the Building are attached hereto as Schedule B-1; provided, however, Landlord may make changes to the Specifications from time to time.

SECTION 3

CONSTRUCTION DRAWINGS

3.1 Selection of Architect/Construction Drawings. Landlord shall retain an architect/space planner (the “Architect”) to prepare the “Construction Drawings,” as that term is defined in this Section 3.1. Landlord shall retain Landlord’s engineering consultants (the “Engineers”) to prepare all plans and engineering working drawings relating to the structural, mechanical, electrical, plumbing, HVAC, life safety, and sprinkler work in the Premises. The plans and drawings to be prepared by Architect and the Engineers hereunder shall be known collectively as the “Construction Drawings.” Notwithstanding that any Construction Drawings are reviewed by Landlord or prepared by its Architect, Engineers and consultants, and notwithstanding any advice or assistance which may be rendered to Tenant by Landlord or Landlord’s Architect, Engineers, and consultants, Landlord shall have no liability whatsoever in connection therewith and shall not be responsible for any omissions or errors contained in the Construction Drawings and Tenant waives all claims against Landlord and any Landlord Parties (but excluding Landlord’s Architect) in connection therewith as provided in Article 10 of the Lease.

3.2 Final Space Plan. Within three (3) business days of the full execution and delivery of the Lease by Landlord and Tenant, Tenant shall meet with Landlord’s Architect and provide Landlord’s Architect with information regarding the preliminary layout and designation of all proposed offices, rooms and other partitioning, and their intended use and equipment to be contained therein (the “Information”). Landlord and Architect shall, based on such Information, prepare the final space plan for Tenant Improvements in the Premises (collectively, the “Final Space Plan”), which Final Space Plan shall include a layout and designation of all offices, rooms and other partitioning, their intended use, and equipment to be contained therein, and shall deliver the Final Space Plan to Tenant for Tenant’s approval. Tenant shall approve or reasonably disapprove the Final Space Plan or any revisions thereto within three (3) business days after Landlord delivers the Final Space Plan or such revisions to Tenant; provided, however, that Tenant may only disapprove the Final Space Plan to the extent the same is not (subject to changes reasonably required by Landlord) in substantial conformance with the Information provided by Tenant to Architect (“Space Plan Design Problem”). If Tenant reasonably disapproves the Final Space Plan, Tenant shall provide Landlord with written notice of such disapproval within said three (3) business day time period along with the reasons for such disapproval. Thereafter, the parties shall negotiate in good faith to revise the Final Space Plan to remove Tenant’s objections thereto. Tenant’s failure to disapprove the Final Space Plan for any Space Plan Design Problem or any revisions thereto by written notice to Landlord (which notice shall specify in detail the reasonable reasons for Tenant’s disapproval pertaining to any Space Plan Design Problem) within said three (3) business day period shall be deemed to constitute Tenant’s approval of the Final Space Plan or such revisions.

3.3 Final Working Drawings. Based on the Final Space Plan, Landlord shall cause the Architect and the Engineers to complete the architectural and engineering drawings for the Premises, and Architect shall compile a fully coordinated set of architectural, structural, mechanical, electrical and plumbing working drawings in a form which is complete to allow subcontractors to bid on the work and to obtain all applicable permits (collectively, the “Final Working Drawings”) and shall submit the same to Tenant for Tenant’s approval. The Final Working Drawings shall incorporate modifications to the Final Space Plan as necessary to comply with the floor load and other structural and system requirements of the Building. To the extent that the finishes and specifications are not completely set forth in the Final Space Plan for any portion of the Tenant Improvements depicted thereon, the actual specifications and finish work shall be in accordance with the Specifications. Tenant shall approve or reasonably disapprove the Final Working Drawings or any revisions thereto within three (3) business days after Landlord delivers the Final Working Drawings or any revisions thereto to Tenant; provided, however, that Tenant may only disapprove the Final Working Drawings to the extent the same are not (subject to changes reasonably required by Landlord) in substantial conformance with the Final Space Plan (“Working Drawing Design Problem”). If Tenant reasonably disapproves the Final Working Drawings, Tenant shall provide Landlord with written notice of such disapproval within said three (3) business day period along with the reasons for such disapproval. Thereafter, the parties shall negotiate in good faith to revise the Final Working Drawings to remove Tenant’s objections thereto. Tenant’s failure to reasonably disapprove the Final Working Drawings or any revisions thereto by written notice to Landlord (which notice shall specify in detail the reasonable reasons for Tenant’s disapproval pertaining to any Working Drawing Design Problem) within said three (3) business day period shall be deemed to constitute Tenant’s approval of the Final Working Drawings or such revisions.

3.4 Approved Working Drawings. The Final Working Drawings shall be approved or deemed approved by Tenant (the “Approved Working Drawings”) prior to the commencement of the construction of the Tenant Improvements. Landlord shall cause the Architect to submit the Approved Working Drawing to the applicable local governmental agency for all applicable building permits necessary to allow “Contractor,” as that term is defined in Section 4.1 of this Tenant Work Letter, to commence and fully complete the construction of the Tenant Improvements (the “Permits”). No changes, modifications or alterations in the Approved Working Drawings may be made without the prior written consent of Landlord and Tenant.

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3.5 Time Deadlines. Tenant shall use its best efforts to cooperate with Architect, the Engineers, and Landlord to complete all phases of the Construction Drawings and the permitting process and to receive the Permits, and with Contractor, for approval of the “Cost Proposal,” as that term is defined in Section 4.2 below as soon as possible after the execution of the Lease and, in this regard, to the extent Landlord considers such meeting(s) to be reasonably necessary, Tenant shall meet with Landlord on a weekly basis to discuss Tenant’s progress in connection with the same.

SECTION 4

CONSTRUCTION OF THE TENANT IMPROVEMENTS

4.1 Contractor. Landlord shall cause a contractor, under the supervision of and selected by Landlord, to construct the Tenant Improvements (the “Contractor”).

4.2 Cost Proposal. After the Approved Working Drawings are signed by Landlord and Tenant, Landlord shall provide Tenant with a cost proposal in accordance with the Approved Working Drawings, which cost proposal shall include, as nearly as possible, the cost of all Tenant Improvement Allowance Items to be incurred by Tenant in connection with the construction of the Tenant Improvements (the “Cost Proposal”). Notwithstanding the foregoing, portions of the cost of the Tenant Improvements may be delivered to Tenant as such portions of the Tenant Improvements are priced by Contractor (on an individual item-by-item or trade-by-trade basis), even before the Approved Working Drawings are completed (the “Partial Cost Proposal”). Tenant shall approve and deliver the Cost Proposal to Landlord or disapprove and deliver Tenant’s reasons for such disapproval within five (5) business days of the receipt of the same (or, as to a Partial Cost Proposal, within three (3) business days of receipt of the same). If Tenant disapproves the Cost Proposal or a Partial Cost Proposal, the parties shall thereafter negotiate in good faith to remove Tenant’s objections. The date by which Tenant must approve and deliver the Cost Proposal, or the last Partial Cost Proposal to Landlord, as the case may be, shall be known hereafter as the “Cost Proposal Delivery Date.” The total of all Partial Cost Proposals, if any, shall be known as the Cost Proposal.

4.3 Construction of Tenant Improvements by Landlord’s Contractor under the Supervision of Landlord.

4.3.1 Over-Allowance Amount. Tenant shall be responsible for payment of the amount (the “Over-Allowance Amount”) equal to the difference between (i) the amount of the Cost Proposal and (ii) the amount of the Tenant Improvement Allowance (less any portion thereof already disbursed by Landlord, or in the process of being disbursed by Landlord, on or before the Cost Proposal Delivery Date). The Over-Allowance Amount and the Tenant Improvement Allowance shall be disbursed on a prorata basis with the portion of each such disbursement attributable to the Over-Allowance Amount being equal to the percentage that the Over-Allowance Amount bears to the Cost Proposal. Within three (3) business days of notice from Landlord of the amount of each disbursement to be made by Landlord in connection with the Tenant Improvement Allowance, Tenant shall deliver funds to Landlord in the amount of the Over-Allowance Amount portion of such disbursement. In the event that, after the Cost Proposal Date, any revisions, changes, or substitutions shall be made to the Construction Drawings or the Tenant Improvements, any additional costs which arise in connection with such revisions, changes or substitutions shall be added to the Cost Proposal to the extent such additional costs increase any existing Over-Allowance Amount or result in an Over-Allowance Amount. Following completion of the Tenant Improvements, Landlord shall deliver to Tenant a final cost statement which shall indicate the final costs of the Tenant Improvement Allowance Items, and if such cost statement indicates that Tenant has underpaid or overpaid the Over-Allowance Amount, then within ten (10) business days after receipt of such statement, Tenant shall deliver to Landlord the amount of such underpayment or Landlord shall return to Tenant the amount of such overpayment, as the case may be.

4.3.2 Landlord Supervision. After Landlord selects the Contractor, Landlord shall independently retain Contractor to construct the Tenant Improvements in accordance with the Approved Working Drawings and the Cost Proposal and Landlord shall supervise the construction by Contractor, and Tenant shall pay a construction supervision and management fee (the “Landlord Supervision Fee”) to Landlord in an amount equal to the product of (i) four percent (4%) and (ii) an amount equal to the Tenant Improvement Allowance plus the Over-Allowance Amount (as such Over-Allowance Amount may increase pursuant to the terms of this Tenant Work Letter).

4.3.3 Contractor’s Warranties and Guarantees. Landlord hereby assigns to Tenant all warranties and guarantees by Contractor relating to the Tenant Improvements, which assignment shall be on a non-exclusive basis such that the warranties and guarantees may be enforced by Landlord and/or Tenant, and Tenant hereby waives all claims against Landlord relating to, or arising out of the construction of, the Tenant Improvements.

SECTION 5

SUBSTANTIAL COMPLETION; LEASE COMMENCEMENT DATE

5.1 Substantial Completion. For purposes of the Lease, including for purposes of determining the Lease Commencement Date (as set forth in Section 7.2 of the Summary), the Premises shall be “Ready for Occupancy” upon Substantial Completion of the Premises. For purposes of this

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Lease, “Substantial Completion” of the Premises shall occur upon (i) the completion of construction of the Tenant Improvements in the Premises pursuant to the Approved Working Drawings, with the exception of any minor punchlist items and any tenant fixtures, work-stations, built-in furniture, or equipment to be installed by Tenant or under the supervision of Contractor and (ii) the receipt of all applicable final permit card sign-offs necessary for Tenant to occupy the Premises.

5.2 Tenant Delays. If there shall be a delay or there are delays in the Substantial Completion of the Premises (as a direct, indirect, partial, or total result of any of the following (collectively, “Tenant Delays”):

5.2.1 Tenant’s failure to timely approve any matter requiring Tenant’s approval, including a Partial Cost Proposal or the Cost Proposal and/or Tenant’s failure to timely perform any other obligation or act required of Tenant hereunder;

5.2.2 a breach by Tenant of the terms of this Tenant Work Letter or the Lease;

5.2.3 Tenant’s request for changes in the Construction Drawings;

5.2.4 Tenant’s requirement for materials, components, finishes or improvements which are not available in a reasonable time (based upon the anticipated date of the Lease Commencement Date) or which are different from, or not included in, the Specifications;

5.2.5 any changes in the Construction Drawings and/or the Tenant Improvements and/or Base, Shell and Core required by applicable laws if such changes are directly attributable to Tenant’s use of the Premises or Tenant’s specialized tenant improvement(s); or

5.2.6 any other acts or omissions of Tenant, or its agents, or employees;

then, notwithstanding anything to the contrary set forth in the Lease and regardless of the actual date of the Substantial Completion of the Premises, the Lease Commencement Date (as set forth in Section 7.2 of the Summary) shall be deemed to be the date the Lease Commencement Date would have occurred if no Tenant Delay or Delays, as set forth above, had occurred.

SECTION 6

MISCELLANEOUS

6.1 Tenant’s Entry Into the Premises Prior to Substantial Completion. Subject to the terms hereof and provided that Tenant and its agents do not interfere with, or delay, Contractor’s work in the Building and the Premises, at Landlord’s reasonable discretion, Contractor shall allow Tenant access to the Premises thirty (30) days prior to the Substantial Completion of the Premises for the purpose of Tenant installing overstandard equipment or fixtures (including Tenant’s data and telephone equipment) in the Premises. Prior to Tenant’s entry into the Premises as permitted by the terms of this Section 6.1, Tenant shall submit a schedule to Landlord and Contractor, for their approval, which schedule shall detail the timing and purpose of Tenant’s entry. In connection with any such entry, Tenant acknowledges and agrees that Tenant’s employees, agents, contractors, consultants, workmen, mechanics, suppliers and invitees shall fully cooperate, work in harmony and not, in any manner, interfere with Landlord or Landlord’s Contractor, agents or representatives in performing work in the Building and the Premises, or interfere with the general operation of the Building and/or the Project. If at any time any such person representing Tenant shall not be cooperative or shall otherwise cause or threaten to cause any such disharmony or interference, including, without limitation, labor disharmony, and Tenant fails to immediately institute and maintain corrective actions as directed by Landlord, then Landlord may revoke Tenant’s entry rights upon twenty-four (24) hours’ prior written notice to Tenant, such entry right revocation to remain in effect only so long as necessary to prevent such interference or disharmony. Tenant acknowledges and agrees that any such entry into and occupancy of the Premises or any portion thereof by Tenant or any person or entity working for or on behalf of Tenant shall be deemed to be subject to all of the terms, covenants, conditions and provisions of the Lease, excluding only the covenant to pay Rent (until the occurrence of the Lease Commencement Date). Tenant further acknowledges and agrees that Landlord shall not be liable for any injury, loss or damage which may occur to any of Tenant’s work made in or about the Premises in connection with such entry or to any property placed therein prior to the Lease Commencement Date, the same being at Tenant’s sole risk and liability. Tenant shall be liable to Landlord for any damage to any portion of the Premises, including the Tenant Improvement work, caused by Tenant or any of Tenant’s employees, agents, contractors, consultants, workmen, mechanics, suppliers and invitees during any early entry to the Premises under this Section 6.1. In the event that the performance of Tenant’s work in connection with such entry causes extra costs to be incurred by Landlord or requires the use of any Building services, Tenant shall promptly reimburse Landlord for such extra costs and/or shall pay Landlord for such Building services at Landlord’s standard rates then in effect.

6.2 Tenant’s Representative. Tenant has designated Chris Anderson, Director of Real Estate, as its sole representative with respect to the matters set forth in this Tenant Work Letter, who shall have full authority and responsibility to act on behalf of the Tenant as required in this Tenant Work Letter.

6.3 Landlord’s Representative. Landlord has designated Alexandra Arsenlis as its sole representative with respect to the matters set forth in this Tenant Work Letter, who, until further notice to Tenant, shall have full authority and responsibility to act on behalf of the Landlord as required in this Tenant Work Letter.

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6.4 Time of the Essence in This Tenant Work Letter. Unless otherwise indicated, all references herein to a “number of days” shall mean and refer to calendar days. In all instances where Tenant is required to approve or deliver an item, if no written notice of approval is given or the item is not delivered within the stated time period, at Landlord’s sole option, at the end of said period the item shall automatically be deemed approved or delivered by Tenant and the next succeeding time period shall commence.

6.5 Tenant’s Lease Default. Notwithstanding any provision to the contrary contained in the Lease, if an event of default by Tenant beyond any applicable notice and cure period as described in Section 19.1 of the Lease or any default by Tenant under this Tenant Work Letter has occurred at any time on or before the Substantial Completion of the Premises, then (i) in addition to all other rights and remedies granted to Landlord pursuant to the Lease, at law and/or in equity, Landlord shall have the right to withhold payment of all or any portion of the Tenant Improvement Allowance and/or Landlord may cause Contractor to cease the construction of the Premises (in which case, Tenant shall be responsible for any delay in the Substantial Completion of the Premises caused by such work stoppage as set forth in Section 5.2 of this Tenant Work Letter), and (ii) all other obligations of Landlord under the terms of this Tenant Work Letter shall be forgiven until such time as such default is cured pursuant to the terms of the Lease (in which case, Tenant shall be responsible for any delay in the Substantial Completion of the Premises caused by such inaction by Landlord). In addition, if the Lease is terminated prior to the Lease Commencement Date, for any reason due to a default by Tenant as described in Section 19.1 of the Lease or under this Tenant Work Letter, in addition to any other remedies available to Landlord under the Lease, at law and/or in equity, Tenant shall pay to Landlord, as Additional Rent under the Lease, within five (5) days of receipt of a statement therefor, any and all costs incurred by Landlord (including any portion of the Tenant Improvement Allowance disbursed by Landlord) and not reimbursed or otherwise paid by Tenant through the date of such termination in connection with the Tenant Improvements to the extent planned, installed and/or constructed as of such date of termination, including, but not limited to, any costs related to the removal of all or any portion of the Tenant Improvements and restoration costs related thereto.

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EXHIBIT C

AMENDMENT TO LEASE

THIS AMENDMENT TO LEASE (“Amendment“) is made and entered into effective as of                     , 20    , by and between LEGACY PARTNERS II SAN MATEO PLAZA, LLC, a Delaware limited liability company (“Landlord”) and                                         , a                                          (“Tenant”).

R E C I T A L S :

A. Landlord and Tenant entered into that certain Office Lease dated as of                      (the “Lease”) pursuant to which Landlord leased to Tenant and Tenant leased from Landlord certain “Premises”, as described in the Lease, in that certain Building located at 1850 Gateway Drive, San Mateo, California.

B. Except as otherwise set forth herein, all capitalized terms used in this Amendment shall have the same meaning as such terms have in the Lease.

C. Landlord and Tenant desire to amend the Lease to confirm the commencement and expiration dates of the term, as hereinafter provided.

NOW, THEREFORE, in consideration of the foregoing Recitals and the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Confirmation of Dates. The parties hereby confirm that (a) the Premises are Ready for Occupancy, and (b) the term of the Lease commenced as of                      (the “Lease Commencement Date”) for a term of                      ending on                      (unless sooner terminated as provided in the Lease).

2. No Further Modification. Except as set forth in this Amendment, all of the terms and provisions of the Lease shall remain unmodified and in full force and effect.

IN WITNESS WHEREOF, this Amendment to Lease has been executed as of the day and year first above written.

“Landlord”:
LEGACY PARTNERS II SAN MATEO PLAZA, LLC, a Delaware limited liability company
By:	LEGACY PARTNERS COMMERCIAL, L.P.,
	a California limited partnership, as Manager and Agent for Owner
	By:	LEGACY PARTNERS COMMERCIAL, INC., General Partner
		By:
			Debra Smith
		Its:	Chief Administrative Officer
			DRE #00975555
			BL DRE #01464134
“Tenant”:
				,
a
By:
	Name:
	Its:
By:
	Name:
	Its:

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EXHIBIT D

RULES AND REGULATIONS

Tenant shall faithfully observe and comply with the following Rules and Regulations. Landlord shall not be responsible to Tenant for the nonperformance of any of said Rules and Regulations by or otherwise with respect to the acts or omissions of any other tenants or occupants of the Building or Project. In the event of any conflict between the terms of the Lease and the terms of these Rules and Regulations, the provisions of the Lease shall govern.

1. Other than the security system that will be installed by Tenant in the Premises (which system shall be subject to Landlord’s prior approval), Tenant shall not place any lock(s) on any door in the Premises or Building without Landlord’s prior written consent, which consent shall not be unreasonably withheld, and Landlord shall have the right to retain at all times and to use keys or other access codes or devices to all locks and/or security system within and into the Premises. A reasonable number of keys to the locks on the entry doors in the Premises shall be furnished by Landlord to Tenant at Tenant’s cost, and Tenant shall not make any duplicate keys. All keys shall be returned to Landlord at the expiration or early termination of this Lease. Further, if and to the extent Tenant re-keys, re-programs or otherwise changes any locks at the Project, Tenant shall be obligated to restore all such locks and key systems to be consistent with the master lock and key system at the Building, all at Tenant’s sole cost and expense.

2. All doors opening to public corridors shall be kept closed at all times except for normal ingress and egress to the Premises, unless electrical hold backs have been installed. Sidewalks, doorways, vestibules, halls, stairways and other similar areas shall not be obstructed by Tenant or used by Tenant for any purpose other than ingress and egress to and from the Premises.

3. Landlord reserves the right to close and keep locked all entrance and exit doors of the Building during such hours as are customary for comparable buildings in the vicinity of the Building. Tenant, its employees and agents must be sure that the doors to the Building are securely closed and locked when leaving the Premises if it is after the normal hours of business for the Building. Any tenant, its employees, agents or any other persons entering or leaving the Building at any time when it is so locked, or any time when it is considered to be after normal business hours for the Building, may be required to sign the Building register when so doing. After-hours access by Tenant’s authorized employees may be provided by hard-key, card-key access or other procedures adopted by Landlord from time to time; Landlord shall provide Tenant with up to one hundred (100) access cards for Tenant’s personnel prior to the Lease Commencement Date free of charge; thereafter, Tenant shall pay for the costs of all replacements thereof for lost, stolen or damaged cards and any other access cards requested by Tenant. Access to the Building and/or Project may be refused unless the person seeking access has proper identification or has a previously arranged pass for such access. Landlord and its agents shall in no case be liable for damages for any error with regard to the admission to or exclusion from the Building and/or Project of any person. In case of invasion, mob, riot, public excitement, or other commotion, Landlord reserves the right to prevent access to the Building and/or Project during the continuance of same by any means it deems appropriate for the safety and protection of life and property.

4. Landlord shall have the right to prescribe the weight, size and position of all safes and other heavy property brought into the Building. Safes and other heavy objects shall, if considered necessary by Landlord, stand on supports of such thickness as is necessary to properly distribute the weight. Landlord will not be responsible for loss of or damage to any such safe or property in any case. All damage done to any part of the Building, its contents, occupants or visitors by moving or maintaining any such safe or other property shall be the sole responsibility of Tenant and any expense of said damage or injury shall be borne by Tenant.

5. No furniture, freight, packages, supplies, equipment or merchandise will be brought into or removed from the Building or carried up or down in the elevators, except upon prior notice to Landlord, and in such manner, in such specific elevator, and between such hours as shall be designated by Landlord. Tenant shall provide Landlord with not less than 24 hours prior notice of the need to utilize an elevator for any such purpose, so as to provide Landlord with a reasonable period to schedule such use and to install such padding or take such other actions or prescribe such procedures as are appropriate to protect against damage to the elevators or other parts of the Building. Tenant shall assume all risk for damage to articles moved and injury to any persons resulting from the activity. If equipment, property, or personnel of Landlord or of any other party is damaged or injured as a result of or in connection with the activity, Tenant shall be solely liable for any resulting damage or loss.

6. Landlord shall have the right to control and operate the public portions of the Building and Project, the public facilities, the heating and air conditioning, and any other facilities furnished for the common use of tenants, in such manner as is customary for comparable buildings in the vicinity of the Building.

7. No signs, advertisements or notices shall be painted or affixed to windows, doors or other parts of the Building, except those of such color, size, style and in such places as are first approved in writing by Landlord. All tenant identification and suite numbers at the entrance to the Premises shall be installed by Landlord, at Tenant’s cost and expense, using the standard graphics for the Building. Landlord may provide and maintain in the first floor (main lobby) of the Building an alphabetical directory board or other directory device listing tenants, and no other directory shall be permitted unless previously consented to by Landlord in writing.

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8. The requirements of Tenant will be attended to only upon application at the management office of the Project or at such office location designated by Landlord.

9. Tenant shall not disturb, solicit, or canvass any occupant of the Building or Project and shall cooperate with Landlord or Landlord’s agents to prevent same.

10. The toilet rooms, urinals, wash bowls and other apparatus shall not be used for any purpose other than that for which they were constructed, and no foreign substance of any kind whatsoever shall be thrown therein. The expense of any breakage, stoppage or damage resulting from the violation of this rule shall be borne by the tenant who, or whose employees or agents, shall have caused it.

11. Tenant shall not overload the floor of the Premises. Tenant shall not mark, drive nails or screws, or drill into the partitions, woodwork or plaster or in any way deface the Premises or any part thereof without Landlord’s consent first had and obtained; provided, however, Landlord’s prior consent shall not be required with respect to Tenant’s placement of pictures and other normal office wall hangings on the interior walls of the Premises (but at the end of the Term, Tenant shall repair any holes and other damage to the Premises resulting therefrom).

12. Except for vending machines intended for the sole use of Tenant’s employees and invitees, no vending machine or machines of any description other than fractional horsepower office machines shall be installed, maintained or operated upon the Premises without the written consent of Landlord. Tenant shall not install, operate or maintain in the Premises or in any other area of the Building, electrical equipment that would overload the electrical system beyond its capacity for proper, efficient and safe operation as determined solely by Landlord.

13. Tenant shall not use any method of heating or air conditioning other than that which may be supplied by Landlord, without the prior written consent of Landlord. Tenant shall not furnish cooling or heating to the Premises, including, without limitation, the use of electronic or gas heating devices, portable coolers (such as “move n cools”) or space heaters, without Landlord’s prior written consent, and any such approval will be for devices that meet federal, state and local code.

14. No inflammable, explosive or dangerous fluids or substances shall be used or kept by Tenant in the Premises, Building or about the Property, except for those substances as are typically found in similar premises used for general office purposes and are being used by Tenant in a safe manner and in accordance with all applicable Laws, rules and regulations. Tenant shall not, without Landlord’s prior written consent, use, store, install, spill, remove, release or dispose of, within or about the Premises or any other portion of the Property, any asbestos-containing materials or any solid, liquid or gaseous material now or subsequently considered toxic or hazardous under the provisions of 42 U.S.C. Section 9601 et seq. or any other applicable environmental Laws which may now or later be in effect. Tenant shall comply with all Laws pertaining to and governing the use of these materials by Tenant, and shall remain solely liable for the costs of abatement and removal.

15. Tenant shall not use, keep or permit to be used or kept, any foul or noxious gas or substance in or on the Premises, or permit or allow the Premises to be occupied or used in a manner offensive or objectionable to Landlord or other occupants of the Building or Project by reason of noise, odors, or vibrations, or interfere in any way with other tenants or those having business therewith.

16. Tenant shall not bring into or keep within the Project, the Building or the Premises any animals (except those assisting handicapped persons), birds, fish tanks, bicycles or other vehicles.

17. Tenant shall not use or occupy the Premises in any manner or for any purpose which might injure the reputation or impair the present or future value of the Premises or the Building. Tenant shall not use, or permit any part of the Premises to be used, for lodging, sleeping or for any illegal purpose.

18. No cooking shall be done or permitted by Tenant on the Premises, nor shall the Premises be used for the storage of merchandise, for lodging or for any improper, objectionable or immoral purposes. Notwithstanding the foregoing, Underwriters’ laboratory-approved equipment and microwave ovens may be used in the Premises for heating food and brewing coffee, tea, hot chocolate and similar beverages, provided that such use is in accordance with all applicable federal, state and city laws, codes, ordinances, rules and regulations, and does not cause odors which are objectionable to Landlord and other tenants.

19. Landlord will approve where and how telephone and telegraph wires and other cabling are to be introduced to the Premises. No boring or cutting for wires shall be allowed without the consent of Landlord. The location of telephone, call boxes and other office equipment and/or systems affixed to the Premises shall be subject to the approval of Landlord. Tenant shall not use more than its proportionate share of telephone lines and other telecommunication facilities available to service the Building.

20. Landlord reserves the right to exclude or expel from the Building and/or Project any person who, in the judgment of Landlord, is intoxicated or under the influence of liquor or drugs, or who shall in any manner do any act in violation of any of these Rules and Regulations or cause harm to Building occupants and/or property.

21. All contractors, contractor’s representatives and installation technicians performing work in the Building shall be subject to Landlord’s prior approval, which approval shall not be unreasonably withheld, and shall be required to comply with Landlord’s standard rules, regulations, policies and procedures, which may be revised from time to time.

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22. Tenant, its employees and agents shall not loiter in the entrances or corridors, nor in any way obstruct the sidewalks, lobby, halls, stairways or elevators, and shall use the same only as a means of ingress and egress for the Premises.

23. Tenant at all times shall maintain the entire Premises in a neat and clean, first class condition, free of debris. Tenant shall not place items, including, without limitation, any boxes, files, trash receptacles or loose cabling or wiring, in or near any window to the Premises which would be visible anywhere from the exterior of the Premises.

24. Tenant shall not waste electricity, water or air conditioning and agrees to cooperate fully with Landlord to ensure the most effective operation of the Building’s heating and air conditioning system, including, without limitation, the use of window blinds to block solar heat load, and shall refrain from attempting to adjust any controls. Tenant shall comply with and participate in any program for metering or otherwise measuring the use of utilities and services, including, without limitation, programs requiring the disclosure or reporting of the use of any utilities or services. Tenant shall also cooperate and comply with, participate in, and assist in the implementation of (and take no action that is inconsistent with, or which would result in Landlord, the Building and/or the Project failing to comply with the requirements of) any conservation, sustainability, recycling, energy efficiency, and waste reduction programs, environmental protection efforts and/or other programs that are in place and/or implemented from time to time at the Building and/or the Project, including, without limitation, any required reporting, disclosure, rating or compliance system or program (including, but not limited to any LEED [Leadership in Energy and Environmental Design] rating or compliance system, including those currently coordinated through the U.S. Green Building Council).

25. Tenant shall store all its recyclables, trash and garbage within the interior of the Premises. No material shall be placed in the trash boxes or receptacles if such material is of such nature that it may not be disposed of in the ordinary and customary manner of removing and disposing of recyclables, trash and garbage in the city in which the Project is located without violation of any law or ordinance governing such disposal. All trash, garbage and refuse disposal shall be made only through entry-ways and elevators provided for such purposes at such times as Landlord shall designate.

26. Tenant shall comply with all safety, fire protection and evacuation procedures and regulations established by Landlord or any governmental agency.

27. Tenant shall assume any and all responsibility for protecting the Premises from theft, robbery and pilferage, which includes keeping doors locked and other means of entry to the Premises closed, when the Premises are not occupied, or when the Premises’ entry is not manned by Tenant on a regular basis.

28. No awnings or other projection shall be attached to the outside walls of the Building without the prior written consent of Landlord. No curtains, blinds, shades or screens shall be attached to or hung in, or used in connection with, any window or door of the Premises without the prior written consent of Landlord. The sashes, sash doors, skylights, windows, and doors that reflect or admit light and air into the halls, passageways or other public places in the Building shall not be covered or obstructed by Tenant, nor shall any bottles, parcels or other articles be placed on the windowsills. All electrical ceiling fixtures hung in offices or spaces along the perimeter of the Building must be fluorescent and/or of a quality, type, design and bulb color approved by Landlord.

29. The washing and/or detailing of or, the installation of windshields, radios, telephones in or general work on, automobiles shall not be allowed on the Project, except under specific arrangement with Landlord.

30. Food vendors shall be allowed in the Building upon receipt of a written request from the Tenant. The food vendor shall service only the tenants that have a written request on file in the management office of the Project. Under no circumstance shall the food vendor display their products in a public or Common Area including corridors and elevator lobbies. Any failure to comply with this rule shall result in immediate permanent withdrawal of the vendor from the Building. Tenants shall obtain ice, drinking water, linen, barbering, shoe polishing, floor polishing, cleaning, janitorial, plant care or other similar services only from vendors who have registered with the Building office and who have been approved by Landlord for provision of such services in the Premises.

31. Tenant must comply with requests by the Landlord concerning the informing of their employees of items of importance to the Landlord.

32. Tenant shall comply with any non-smoking ordinance adopted by any applicable governmental authority. Neither Tenant nor its agents, employees, contractors, guests or invitees shall smoke or permit smoking in the Common Areas, unless the Common Areas have been declared a designated smoking area by Landlord, nor shall the above parties allow smoke from the Premises to emanate into the Common Areas or any other part of the Building. Landlord shall have the right to designate the Building (including the Premises) as a non-smoking building.

33. Tenant shall not take any action which would violate Landlord’s labor contracts or which would cause a work stoppage, picketing, labor disruption or dispute, or interfere with Landlord’s or any other tenant’s or occupant’s business or with the rights and privileges of any person lawfully in the Building (“Labor Disruption”). Tenant shall take the actions necessary to resolve the Labor Disruption, and shall have pickets removed and, at the request of Landlord, immediately terminate any work in the Premises that gave rise to the Labor Disruption, until Landlord gives its written consent for the work to resume. Tenant shall have no claim for damages against Landlord or and its trustees, members, principals, beneficiaries, partners, officers, directors, employees, Mortgagees, or agents.

EXHIBIT D

Page 3

34. No tents, shacks, temporary or permanent structures of any kind shall be allowed on the Project. No personal belongings may be left unattended in any Common Areas.

35. Landlord shall have the right to prohibit the use of the name of the Building or any other publicity by Tenant that in Landlord’s sole opinion may impair the reputation of the Building or its desirability. Upon written notice from Landlord, Tenant shall refrain from and discontinue such publicity immediately.

36. Landlord shall have the right to designate and approve standard window coverings for the Premises and to establish rules to assure that the Building presents a uniform exterior appearance. Tenant shall ensure, to the extent reasonably practicable, that window coverings are closed on windows in the Premises while they are exposed to the direct rays of the sun.

37. The work of cleaning personnel shall not be hindered by Tenant after 5:30 P.M., and all cleaning work shall be performed after 5:30 P.M.. Tenant shall provide adequate waste and rubbish receptacles to prevent unreasonable hardship to the cleaning service.

PARKING RULES AND REGULATIONS

(i) Landlord reserves the right to establish and reasonably change the hours for the Parking Area, on a non-discriminatory basis, from time to time. Tenant shall not store or permit its employees to store any automobiles in the Parking Area without the prior written consent of the operator. Except for emergency repairs, Tenant and its employees shall not perform any work on any automobiles while located in the Parking Area, or on the Property. The Parking Area may not be used by Tenant or its agents for overnight parking of vehicles. If it is necessary for Tenant or its employees to leave an automobile in the Parking Area overnight, Tenant shall provide the operator with prior notice thereof designating the license plate number and model of such automobile.

(ii) Tenant (including Tenant’s agents) will use the parking spaces solely for the purpose of parking passenger model cars, small vans and small trucks and will comply in all respects with any rules and regulations that may be promulgated by Landlord from time to time with respect to the Parking Area.

(iii) Cars must be parked entirely within the stall lines painted on the floor, and only small cars may be parked in areas reserved for small cars.

(iv) All directional signs and arrows must be observed.

(v) The speed limit shall be 5 miles per hour.

(vi) Parking spaces reserved for handicapped persons must be used only by vehicles properly designated.

(vii) Parking is prohibited in all areas not expressly designated for parking, including without limitation:

(a) areas not striped for parking;

(b) aisles;

(c) where “no parking” signs are posted;

(d) ramps; and

(e) loading zones.

(viii) Parking stickers, key cards or any other devices or forms of identification or entry supplied by the operator shall remain the property of the operator. Such device must be displayed as requested and may not be mutilated in any manner. The serial number of the parking identification device may not be obliterated. Parking passes and devices are not transferable and any pass or device in the possession of an unauthorized holder will be void.

(ix) Parking managers or attendants are not authorized to make or allow any exceptions to these Rules.

(x) Every parker is required to park and lock his/her own car.

(xi) Loss or theft of parking pass, identification, key cards or other such devices must be reported to Landlord and to the parking manager immediately. Any parking devices reported lost or stolen found on any authorized car will be confiscated and the illegal holder will be subject to prosecution. Lost or stolen passes and devices found by Tenant or its employees must be reported to the office of the parking manager immediately.

(xii) Washing, waxing, cleaning or servicing of any vehicle by the customer and/or his agents is prohibited. Parking spaces may be used only for parking automobiles.

(xiii) Tenant agrees to acquaint all persons to whom Tenant assigns a parking space with these Rules.

(xiv) Neither Landlord nor any operator of the Parking Area within the Project, as the same are designated and modified by Landlord, in its sole discretion, from time to time will be liable for loss of or damage to any vehicle or any contents of such vehicle or accessories to any such vehicle, or any property left in the Parking Area, resulting from fire, theft, vandalism, accident, conduct of other users of the Parking Area and other persons, or any other casualty or cause. Further, Tenant understands and agrees that: (i) Landlord will not be obligated to provide any traffic control, security protection or operator for the Parking Area; (ii) Tenant uses the Parking Area at its own risk; and (iii) Landlord will not be liable for personal injury or death, or theft, loss of or damage to property. Tenant indemnifies and agrees to hold Landlord, any operator of the Parking Area and their respective agents harmless from and against any and all claims, demands, and actions arising out of the use of the Parking Area by Tenant and its agents, whether brought by any of such persons or any other person, except to the extent caused by the gross negligence or willful misconduct of Landlord.

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(xv) Tenant will ensure that any vehicle parked in any of the parking spaces will be kept in proper repair and will not leak excessive amounts of oil or grease or any amount of gasoline. If any of the parking spaces are at any time used: (i) for any purpose other than parking as provided above; (ii) in any way or manner reasonably objectionable to Landlord; or (iii) by Tenant after default by Tenant under the Lease, Landlord, in addition to any other rights otherwise available to Landlord, may consider such default an event of default under the Lease.

(xvi) Tenant’s right to use the Parking Area will be in common with other tenants of the Project and with other parties permitted by Landlord to use the Parking Area. Landlord reserves the right to assign and reassign, from time to time, particular parking spaces for use by persons selected by Landlord, provided that Tenant’s rights to use the number of parking spaces specified under the Lease are preserved. Landlord will not be liable to Tenant for any unavailability of Tenant’s designated spaces, if any, nor will any unavailability entitle Tenant to any refund, deduction, or allowance. Tenant will not park in any numbered space or any space designated as: RESERVED, HANDICAPPED, VISITORS ONLY, or LIMITED TIME PARKING (or similar designation).

(xvii) If the Parking Area is damaged or destroyed, or if the use of the Parking Area is limited or prohibited by any governmental authority, or the use or operation of the Parking Area is limited or prevented by strikes or other labor difficulties or other causes beyond Landlord’s control, Tenant’s inability to use the parking spaces will not subject Landlord or any operator of the Parking Area to any liability to Tenant and will not relieve Tenant of any of its obligations under the Lease and the Lease will remain in full force and effect. Tenant will pay to Landlord upon demand, and Tenant indemnifies Landlord against, any and all loss or damage to the Parking Area, or any equipment, fixtures, or signs used in connection with the Parking Area and any adjoining buildings or structures caused by Tenant or any of its agents.

(xviii) Tenant has no right to assign or sublicense any of its rights in the parking passes, except as part of a permitted assignment or sublease of the Lease; however, Tenant may allocate the parking passes among its employees.

(xix) Tenant shall be responsible for the observance of all of the foregoing rules by Tenant’s employees, agents, clients, customers, invitees or guests. Landlord may waive any one or more of these Rules and Regulations for the benefit of any particular tenant or tenants, but no such waiver by Landlord shall be construed as a waiver of such Rules and Regulations in favor of any other tenant or tenants, nor prevent Landlord from thereafter enforcing any such Rules or Regulations against any or all tenants of the Building and/or Project. Landlord reserves the right at any time to change or rescind any one or more of these Rules and Regulations, or to make such other and further reasonable Rules and Regulations as in Landlord’s judgment may from time to time be necessary for the management, safety, care and cleanliness of the Premises, Building and Project, and for the preservation of good order therein, as well as for the convenience of other occupants and tenants therein. Landlord shall not be responsible to Tenant or to any other person for the nonobservance of the Rules and Regulations by another tenant or other person. Tenant shall be deemed to have read these Rules and Regulations and to have agreed to abide by them as a condition of its occupancy of the Premises.

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EXHIBIT E

FORM OF SNDA

RECORDING REQUESTED BY

AND WHEN RECORDED MAIL TO:

MESA WEST REAL ESTATE INCOME

FUND II (CORE INV), LLC

11755 Wilshire Blvd., Suite 1670

Los Angeles, CA 90025

Attention: Loan Notices, Ryan Delaney

Phone: (310) 806-6300

Facsimile: (310) 806-6301

(SPACE ABOVE THIS LINE FOR RECORDER’S USE ONLY)

SUBORDINATION, NON-DISTURBANCE AND

ATTORNMENT AGREEMENT

NOTICE: THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT RESULTS IN YOUR LEASEHOLD ESTATE IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENT.

THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT (this “Agreement”) is entered into as of             , 20            by and among SERENA SOFTWARE, INC., a Delaware corporation (“Tenant”), LEGACY PARTNERS II SAN MATEO PLAZA, LLC, a Delaware limited liability company (“Borrower”), and MESA WEST REAL ESTATE INCOME FUND II (CORE INV), LLC, Delaware limited liability company (“Lender”).

RECITALS

A. Tenant is the lessee and Borrower is the lessor under that certain lease dated as of                    , as amended (the “Lease”).

B. Borrower has requested that Lender make a loan to Borrower, to be secured by a deed of trust from Borrower for the benefit of Lender (the “Deed of Trust”), covering the property wherein the premises (the “Premises”) covered by the Lease are located, which property is described more fully in Exhibit A attached hereto (the “Property”). The Deed of Trust and all other documents to be executed by Borrower in connection with the requested loan (the “Loan”) being herein collectively called the “Loan Documents”.

C. Lender is willing to make the Loan, provided that, as a condition precedent thereto, Borrower and Tenant execute this Agreement.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and to induce Lender to make the Loan, Tenant, Borrower and Lender hereby agree and covenant as follows:

1. Subordination. Notwithstanding anything to the contrary contained in the Lease, Tenant, Lender and Borrower hereby agree that the Lease (including (a) any option or options to purchase or rights of first refusal affecting the Property, or any portion thereof, contained therein, (b) any extension, renewal or modification of the Lease, (c) the leasehold estate in the Premises created by the Lease, and (d) all of Tenant’s rights under the Lease) is and shall at all times be completely and unconditionally subject and subordinate in all respects (i) to the Deed of Trust and other Loan Documents, the lien thereof and to all renewals, modifications, extensions, substitutions, rearrangements and replacements thereof, and all advances of any character made or to be made thereunder, and (ii) to any and all renewals, modifications, replacements, extensions, substitutions and rearrangements of any and all obligations and indebtedness secured by the Deed of Trust or the other Loan Documents.

2. Non-disturbance and Attornment. Provided that Tenant is not in default under any of the terms, covenants or conditions of the Lease, and Tenant is then in possession of the Premises, Tenant’s rights under the Lease and possession of the Premises thereunder shall not be affected or disturbed by Lender in the exercise of any of its rights and remedies under the Note (as that term is defined in the Deed of Trust) or the Loan Documents. Upon foreclosure of the Loan Documents, or any of them, Tenant shall continue in occupancy of the Premises upon the terms and conditions of the Lease, shall attorn to Lender to the same extent and with the same force as if Lender were the Landlord under the Lease, and shall be bound by and perform all of the obligations imposed upon Tenant by the Lease. Tenant’s attornment hereunder shall be effective and self-operative without the execution of any other instruments on the part of any party hereto, immediately upon Lender’s acquisition of title to the Property. Tenant shall, within ten (10) days after request by Lender, execute any instrument or take any action specified by Lender further to confirm attornment hereunder in accordance with the provisions of this Agreement.

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3. Rights of Lender. If Lender exercises its rights or remedies under the Loan Documents, or any of them, then Lender shall be entitled, but not obligated, to exercise any and all claims, rights, powers, privileges and remedies of Borrower under the Lease and shall be further entitled to the benefits of and to receive and enforce performance of all of the covenants, terms and conditions to be performed by Tenant under the Lease. Lender shall not, by execution of this Agreement, be or become subject to any liability or obligation to Tenant under the Lease or otherwise, unless and until Lender has obtained title to the Premises by foreclosure or otherwise, and then only to the extent of liabilities or obligations accruing subsequent to the date Lender acquires (and prior to the date it disposes of) title to the Premises; provided, however, that Lender shall not be:

(a) liable for any act or omission of any prior lessor (including Borrower) or subsequent lessor of which Lender did not receive written notice in accordance with Section 4(b) hereof;

(b) subject to any counterclaims, offsets, abatements, or defenses which Tenant might have against any prior lessor (including Borrower);

(c) bound by any rent or additional rent which Tenant might have paid in advance to any prior lessor (including Borrower) for any period beyond the month in which Lender succeeds to the interest of Borrower under the Lease;

(d) responsible for any security deposit, cleaning deposit or other prepaid charge which Tenant may have paid in advance to any prior lessor (including Borrower) which has not been delivered to Lender (Lender acknowledging that Lender will be responsible for any security deposit that is delivered or obtained by Lender);

(e) bound by any previous amendment or modification or termination of the Lease or by any waiver or forbearance by any prior landlord (including Borrower) unless the same was approved in writing by Lender;

(f) responsible for the performance of (or contribution toward) any work to be done by the landlord under the Lease to render the Premises ready or available for occupancy by Tenant, or required to remove any person occupying the Premises or any part thereof; or

(g) personally liable under or in connection with the Lease (Tenant’s recourse being limited to Lender’s interest in the Property).

4. Certain Acknowledgments and Agreements by Tenant.

(a) Loan Disbursements. Lender, in making any disbursements of the Loan to Borrower, shall be under no obligation or duty to oversee or direct the application of the proceeds of such disbursements, and such disbursements may be used by Borrower for purposes other than improvement of the Property.

(b) Notice and Cure. If Borrower commits any act or omission which constitutes a default under the Lease, or which would give Tenant the right, either immediately or after a lapse of time, to terminate the Lease, or to claim a partial or total eviction, Tenant shall not exercise any such right, or remedy with respect thereto: (i) until it has given notice of such act or omission to Lender; and (ii) until Lender is entitled under the Loan Documents to remedy Borrower’s default and Lender has thereafter been afforded a reasonable time, at Lender’s option, to cure Borrower’s default. As used herein, a “reasonable time” shall include, any time that may be necessary to enable Lender to invoke and perfect its remedies under the Loan Documents, or any of them, such as appointment of a receiver for the Property or foreclosure thereof, plus not less than sixty (60) days. Nothing contained herein shall obligate Lender to effect a cure of any act or omission of Borrower.

(c) Notices. Tenant shall send to Lender a copy of any notice or statement given by Tenant to Borrower under the Lease at the same time such notice or statement is sent to Borrower.

(d) Option Rights. Tenant warrants and represents that it has no right or option of any nature whatsoever, whether pursuant to the Lease or otherwise, to purchase the Premises or the Property, or any portion thereof, or any interest therein, but to the extent that Tenant has had or hereafter acquires any such right or option, Tenant hereby acknowledges that such right or option is made subject and subordinate to the Loan Documents pursuant to this Agreement and is hereby waived and released against Lender.

(e) New Lease. Upon Lender’s written request at or after any foreclosure under the Loan Documents, or any of them, Tenant shall execute a new lease of the Premises upon the same terms and conditions as the Lease between Borrower and Tenant, which new lease shall cover any unexpired term of the Lease existing prior to such foreclosure (but there shall be no requirement for an additional deposit).

(f) Rental Payments and Performance Under Lease. Tenant shall not pay any installment of rent, or any other amount or charge due under the Lease, more than thirty (30) days prior to the due date thereof, and Lender shall be entitled to recover from Tenant any such payments or charges made by Tenant in violation hereof. Tenant shall observe and perform, throughout the term of the Lease, all of the terms, covenants, conditions and obligations to be performed by Tenant thereunder.

(g) Modification and Cancellation of Lease. Tenant shall not enter into any termination, cancellation, surrender, amendment or modification of the Lease without Lender’s prior written consent.

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(h) Tenant Estoppel Statement. Tenant hereby confirms, acknowledges, warrants, represents and certifies as follows: (i) the Lease is in full force and effect and a valid and binding obligation of Borrower and Tenant enforceable in accordance with its terms; (ii) neither Borrower nor Tenant is in default under any of the terms, covenants or conditions of the Lease, and, as of the date hereof, there are no setoffs, counterclaims or credits against rentals or other amounts payable under the Lease, and no event or circumstance has occurred or pertains that, but for the giving of required notice or the lapse of an applicable grace period, would result in any of the foregoing; (iii) Tenant has no notice of any prior assignment, hypothecation or pledge of the Lease or any of the amounts payable thereunder; (iv) the Lease is a complete statement of the agreement of the parties thereto with respect to the leasing of the Premises, and no modifications, amendments, supplements, assignments or subleases (whether written or oral) have been made to the Lease; (v) any information contained in any prior estoppel certificate delivered by Tenant for the benefit of Borrower or Lender remains true and correct as of the date hereof as if remade as of the date hereof; (vi) Tenant has accepted the Premises, and Borrower has completed all construction and improvements required under the terms of the Lease to be completed by Borrower; and (vii) no rent, additional rent or reimbursement obligations of Tenant under the Lease have been paid more than one month in advance.

5. Certain Acknowledgments and Agreements by Borrower.

(a) Right of Lender to Receive Rental Payments. In the event of any Event of Default under the Loan Documents, Lender has the right to give notice to Tenant to pay all rent and all other sums due or payable under the Lease directly to Lender. Borrower hereby expressly authorizes and directs Tenant (and Tenant agrees) to make such payments to Lender upon receipt of such notice (regardless of any conflicting claims made by Borrower as to whether a default exists or otherwise) and Borrower hereby releases and discharges Tenant of and from any liability to Borrower on account of any such payments made by Tenant hereunder.

(b) Agreement Does Not Alter Loan Documents. Borrower acknowledges that the Note and the Loan Documents remain in full force and effect, enforceable in accordance with their terms, and that this Agreement does not constitute a waiver by Lender of any of its rights thereunder, or in any way release Borrower from its obligations to comply with any of the terms, provisions, conditions, covenants, agreements or obligations under the Note or the Loan Documents.

6. No Merger. Borrower, Tenant and Lender agree that unless Lender shall otherwise expressly consent in writing, fee title to the Property and the leasehold estate created by the Lease shall not merge but shall remain separate and distinct, notwithstanding the union of said estates either in Borrower or Tenant or any third party by purchase, assignment or otherwise.

7. Modifications; Lease Not Amended; Alterations to Loan. This Agreement may not be modified orally or in any other manner other than by an agreement in writing signed by the parties hereto or their respective successors in interest. This Agreement shall not be deemed to alter or modify any of the terms, covenants, conditions or obligations of the Lease, except to the extent specifically set forth herein. No renewal, extension, modification, consolidation or replacement of the Loan Documents, or any of them, or any other provision of the loan evidenced by the Note, or any waiver of any term thereof, shall in any manner affect the obligations of Tenant under the Lease or this Agreement, and Tenant hereby unconditionally relinquishes, waives and releases any and all claims or defenses based thereon.

8. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the parties hereto, and their respective heirs, successors and assigns; and provided, however, that the obligations and liabilities of Lender, and each of its successors and assigns, shall be binding upon Lender and each such successor only during such period as Lender or such successor retains an interest in the Loan Documents; provided, further, that the interest of Tenant under this Agreement may not be assigned or transferred without the prior written consent of Lender (which consent shall not be unreasonably withheld). As used herein, the term “Tenant” shall include the original Tenant designated herein and its heirs, successors and assigns; the term “Borrower” shall include the original Borrower designated herein and its heirs, successors and assigns; the term “Lender” shall include the original Lender designated herein and its heirs, successors and assigns, including anyone who shall have succeeded to Borrower’s interest in the Premises by, through or under foreclosure of the Loan Documents, or any of them; and the term “foreclosure” shall be deemed to include judicial foreclosure, foreclosure by any power of sale granted under the Loan Documents, or the acquisition of Borrower’s estate in the Property by voluntary deed or assignment in lieu of foreclosure.

9. Severability. If any term of this Agreement, or the application thereof to any person or circumstance, shall to any extent be invalid or unenforceable, the remainder of this Agreement, or the application of such term to persons or circumstances other than those to which it is invalid and unenforceable, shall, at Lender’s option, not be affected thereby, and in such event this Agreement shall be construed to the extent necessary as if such invalid or unenforceable provision had never been contained herein.

10. Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of California (without regard to conflicts of law).

11. Attorneys’ Fees. If any action or proceeding is brought by any party against any other party under this Agreement, the prevailing party shall be entitled to recover for the fees of its attorneys in such action or proceeding such amount as the court may adjudge reasonable.

12. Notices. Whenever a party shall desire to give or serve any notice, demand, request or other communication with respect to this Agreement (“Notice”), each such Notice shall be in writing and shall be

EXHIBIT E

Page 3

personally served or sent by a commercial overnight delivery service or by certified mail, return receipt requested, and shall be deemed to have been received on the date actually received if personally served or on the next business day after deposit with an overnight delivery service or on the date of receipt or refusal as shown on the return receipt if sent by certified mail or by the overnight carrier’s proof of delivery, as the case may be. The addresses of the parties to which Notices shall be sent (until notice of a change is served as provided in this paragraph) are as set forth below the signature of such party on the signature page of this Agreement.

13. Terminology. Whenever used in this Agreement (including any Exhibit hereto), the word “including”, “includes”, or “include” shall be read as though the phrase “, without limitation,” immediately followed the same.

14. Duplicate Originals, Counterparts. This Agreement may be executed in any number of duplicate originals and each duplicate original shall be deemed to be an original. This Agreement may be executed in several counterparts, each of which counterparts shall be deemed an original instrument and all of which together shall constitute a single Agreement. The failure of any party hereto to execute any counterpart of this Agreement shall not relieve the other signatories from their obligations hereunder.

THE PARTIES HERETO EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY CONTROVERSY OR CLAIM, WHETHER ARISING IN TORT OR CONTRACT OR BY STATUTE OR LAW, BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONJUNCTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS (INCLUDING, WITHOUT LIMITATION, THE VALIDITY, INTERPRETATION, COLLECTION OR ENFORCEMENT HEREOF OR THEREOF), OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY IN CONNECTION HEREWITH OR THEREWITH. EACH PARTY ACKNOWLEDGES AND AGREES THAT NO REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY PERSON TO INDUCE THIS WAIVER OF TRIAL BY JURY OR TO IN ANY WAY MODIFY OR NULLIFY ITS EFFECT. THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER’S, BORROWER’S, AND TENANT’S ENTERING INTO THIS AGREEMENT AND THE PARTIES WOULD NOT HAVE ENTERED INTO THIS AGREEMENT WITHOUT THIS WAIVER. LENDER, BORROWER AND TENANT ARE EACH HEREBY AUTHORIZED TO FILE A COPY OF THIS SECTION IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER OF JURY TRIAL.

[Signatures appear on following pages]

EXHIBIT E

Page 4

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

NOTICE: THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT CONTAINS PROVISIONS WHICH ALLOW THE LANDLORD OBLIGATED ON THE LEASE TO OBTAIN A LOAN, ALL OR A PORTION OF WHICH MAY BE EXPENDED FOR PURPOSES OTHER THAN IMPROVEMENT OF THE PROPERTY.

“TENANT”

SERENA SOFTWARE, INC.,

a Delaware corporation

By:

Name:

Title:

Tenant’s Address:

**

**

**

**

Attention:

Telephone:

Fax:

EXHIBIT E

Page 5

“BORROWER”
LEGACY PARTNERS II SAN MATEO PLAZA, LLC, a Delaware limited liability company
By:	LEGACY PARTNERS COMMERCIAL, L.P.,
	a California limited partnership, as Manager and Agent for Owner
	By:	LEGACY PARTNERS COMMERCIAL, INC., General Partner
		By:
			Debra Smith
		Its:	Chief Administrative Officer
			DRE #00975555
			BL DRE #01464134
Borrower’s Address:
LEGACY PARTNERS II SAN MATEO PLAZA, LLC c/o Legacy Partners Commercial, LLC 4000 East Third Avenue, Suite 600 Foster City, California 94404
Attention:

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Page 6

“LENDER”

MESA WEST REAL ESTATE INCOME FUND II (Core Inv), LLC, a Delaware limited liability company

By:

Name:

Title:

Lender’s Address:

c/o Mesa West Capital

11755 Wilshire Boulevard, Suite 1670

Los Angeles, California 90025

Attention: Loan Notices, Ryan Delaney

Facsimile No.: (310) 806-6301

With a copy to:

Allen Matkins Leck Gamble Mallory & Natsis LLP

515 South Figueroa Street, Ninth Floor

Los Angeles, California 90071-3398

Attention: Kevin M. Ehrhart

Phone number: 213-955-5599

Facsimile number: 213-620-8816

EXHIBIT E

Page 7

ACKNOWLEDGMENT

STATE OF CALIFORNIA	)
	)	ss.
COUNTY OF	)

On            ,    , 20    , before me,                                        , Notary Public, personally appeared                                        , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature (Seal)

EXHIBIT E

Page 8

ACKNOWLEDGMENT

STATE OF CALIFORNIA	)
	)	ss.
COUNTY OF	)

On            ,    , 20    , before me,                                        , Notary Public, personally appeared                                        , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature (Seal)

EXHIBIT E

Page 9

ACKNOWLEDGMENT

STATE OF CALIFORNIA	)
	)	ss.
COUNTY OF	)

On            ,    , 20    , before me,                                        , Notary Public, personally appeared                                        , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature (Seal)

EXHIBIT E

Page 10

EXHIBIT A TO SNDA

DESCRIPTION OF PROPERTY

EXHIBIT E

Page 11

RIDER

EXTENSION OPTION

This Rider (the “Rider”) is incorporated as a part of that certain Lease dated March 16, 2012 by and between LEGACY PARTNERS II SAN MATEO PLAZA, LLC, a Delaware limited liability company (“Landlord”), and SERENA SOFTWARE, INC., a Delaware corporation (“Tenant”), for the leasing of those certain premises located at 1850 Gateway Drive, Suite 400, San Mateo, California 94404, as more particularly described in the Lease (the “Premises”). Any capitalized terms used herein and not otherwise defined herein shall have the meaning ascribed to such terms as set forth in the Lease.

1. Grant of Extension Option. Subject to the provisions, limitations and conditions set forth in this Rider, Tenant shall have one (1) option (the “Extension Option”) to extend the initial Lease Term for five (5) years (the “Extension Term”).

2. Tenant’s Extension Option Notice. Tenant shall have the right to deliver written notice to Landlord of its intent to exercise this Extension Option (the “Extension Option Notice”) no earlier than twelve (12) months and no less than nine (9) months prior to the expiration of the initial Lease Term. If Landlord does not receive the Extension Option Notice from Tenant on a date which is no earlier than twelve (12) months and no less than nine (9) months prior to the expiration of the initial Lease Term, all rights under this Extension Option shall automatically terminate and shall be of no further force or effect. Upon the proper exercise of this Extension Option, subject to the provisions, limitations and conditions set forth in this Rider, the Lease Term shall be extended for the Extension Term.

3. Establishing the Initial Base Rent for the Extension Term. The initial Base Rent for the Extension Term shall be equal to the then Fair Market Rental Rate, as hereinafter defined. As used herein, the “Fair Market Rental Rate” payable by Tenant for the Extension Term shall mean the Base Rent for comparable Class A office space at which non-equity tenants, as of the commencement of the lease term for the Extension Term, will be leasing non-sublease, non-equity, space comparable in size, location and quality to the Premises for a comparable term, which comparable space is located in the Building and in other comparable first-class buildings in the San Mateo/Foster City market area, taking into consideration all out-of-pocket concessions generally being granted at such time for such comparable space, including the condition and value of existing tenant improvements in the Premises. The Fair Market Rental Rate shall include the periodic rental increases that would be included for space leased for the period of the Extension Term.

4. Determination of Brokers. If Landlord and Tenant are unable to agree on the Fair Market Rental Rate for the Extension Term within ten (10) days of receipt by Landlord of the Extension Option Notice for the Extension Term, Landlord and Tenant each, at its cost and by giving notice to the other party, shall appoint a competent and impartial commercial real estate broker (hereinafter “broker”) with at least ten (10) years’ full-time commercial real estate brokerage experience in the geographical area of the Premises to set the Fair Market Rental Rate for the space and term at issue. If either Landlord or Tenant does not appoint a broker within ten (10) days after the other party has given notice of the name of its broker, the single broker appointed shall be the sole broker and shall conclusively determine the Fair Market Rental Rate for the Extension Term. If two (2) brokers are appointed by Landlord and Tenant as stated in this paragraph, they shall meet promptly and attempt to set the Fair Market Rental Rate. In addition, if either of the first two (2) brokers fails to submit their opinion of the Fair Market Rental Rate within the time frames set forth below, then the single Fair Market Rental Rate submitted shall automatically be the initial monthly Base Rent for the Extension Term and shall be binding upon Landlord and Tenant. If the two (2) brokers are unable to agree within ten (10) days after the second broker has been appointed, they shall attempt to select a third broker, meeting the qualifications stated in this paragraph within ten (10) days after the last day the two (2) brokers are given to set the Fair Market Rental Rate. If the two (2) brokers are unable to agree on the third broker, either Landlord or Tenant by giving ten (10) days’ written notice to the other party, can apply to the Presiding Judge of the Superior Court of the county in which the Premises is located for the selection of a third broker who meets the qualifications stated in this paragraph. Landlord and Tenant each shall bear one-half ( ¹/2) of the cost of appointing the third broker and of paying the third broker’s fee. The third broker, however selected, shall be a person who has not previously acted in any capacity for either Landlord or Tenant. Within fifteen (15) days after the selection of the third broker, the third broker shall select one of the two Fair Market Rental Rates submitted by the first two brokers as the Fair Market Rental Rate for the space and term at issue. The determination of the Fair Market Rental Rate by the third broker shall be conclusive and binding upon Landlord and Tenant.

In no event shall the monthly Base Rent for any period of the Extension Term as determined pursuant to this Rider, be less than the highest monthly Base Rent charged during the initial term of the Lease. Upon determination of the initial monthly Base Rent for the Extension Term in accordance with the terms outlined above, Landlord and Tenant shall immediately execute an amendment to the Lease. Such amendment shall set forth the initial monthly Base Rent for the Extension Term and the actual commencement date and expiration date of the Extension Term. Tenant shall have no other right to extend the Lease Term under this Rider unless Landlord and Tenant otherwise agree in writing.

5. Condition of Premises for the Extension Term. If Tenant timely and properly exercises this Extension Option, in strict accordance with the terms contained herein, Tenant shall accept the Premises in its then “AS-IS” condition and, accordingly, Landlord shall not be required to perform any additional improvements to the Premises.

RIDER 1

Page 1

6. Limitations On, and Conditions To, Extension Option. This Extension Option is personal to Tenant (and any Permitted Transferee) and may not be assigned, voluntarily or involuntarily, separate from or as part of the Lease (except to a transferee in connection with a Permitted Transfer). At Landlord’s option, all rights of Tenant under this Extension Option shall terminate and be of no force or effect if any of the following individual events occur or any combination thereof occur: (1) Tenant has been in default beyond any applicable cure period at any time during the Lease Term, or is in default beyond any applicable cure period of any provision of the Lease on the date Landlord receives the Extension Option Notice; and/or (2) except for a Permitted Transfer, Tenant has assigned its rights and obligations under all or part of the Lease or Tenant has subleased all or part of the Premises in a transfer; and/or (3) Tenant has a tangible net worth and net income as of the date of the Extension Option Notice, in the aggregate, computed in accordance with Generally Accepted Accounting Principles (but excluding goodwill as an asset), which is less than Tenant’s tangible net worth and net income as of the date of this Lease; and/or (4) Tenant has failed to exercise properly this Extension Option in a timely manner in strict accordance with the provisions of this Rider; and/or (5) Tenant no longer has possession of the entire Premises pursuant to the Lease, or if the Lease has been terminated earlier, pursuant to the terms and provisions of the Lease.

7. Time is of the Essence. Time is of the essence with respect to each and every time period described in this Rider.

RIDER 1

Page 2

EX-10.8

Exhibit 10.8

Execution Version

EXTENSION AGREEMENT AND AMENDMENT No. 1, dated as of April 12, 2012 (this “Extension Agreement and Amendment”), to the Credit Agreement, dated as of March 10, 2006 (as amended and restated on March 2, 2011, the “Credit Agreement”), among Serena Software, Inc. (the “Borrower”), the lending institutions from time to time parties thereto (each, a “Lender” and, collectively, the “Lenders”), Barclays Bank PLC, as Administrative Agent (in such capacity, the “Administrative Agent”) and Collateral Agent, and the other parties thereto. Capitalized terms used but not defined herein have the meanings provided in the Credit Agreement.

WHEREAS, Section 2.15 of the Credit Agreement permits the Lenders of any Existing Term Loan Class, upon request of the Borrower, to extend the scheduled maturity date of any payment of principal with respect to all or a portion of such Term Loans by exchanging all or such portion, respectively, of such Term Loans into Extended Term Loans pursuant to the procedures described therein;

WHEREAS, in accordance with such procedures, the Borrower has requested that the 2013 Term Lenders extend the scheduled maturity of up to $117,398,985.80 in aggregate principal amount of 2013 Term Loans, such extension to be effected by exchanging up to such amount of 2013 Term Loans into 2016 Tranche B Term Loans (as defined below), in each case subject to the terms and conditions set forth herein;

WHEREAS, each 2013 Term Lender party hereto has agreed subject to the terms and conditions set forth herein, to exchange up to the principal amount of its 2013 Term Loans set forth on such 2013 Term Lender’s signature page hereto into 2016 Tranche B Term Loans;

WHEREAS, Section 2.15(c) of the Credit Agreement permits, subject to the limitations set forth therein, the Credit Parties, the Administrative Agent and the 2013 Term Lenders party hereto to enter into this Extension Agreement and Amendment without the consent of any other Lenders to establish such 2016 Tranche B Term Loans and effect certain amendments to the Credit Agreement and the other Credit Documents with respect to such 2016 Tranche B Term Loans as the Credit Parties, the Administrative Agent and the 2013 Term Lenders party hereto may agree;

WHEREAS, in accordance with Section 2.14 of the Credit Agreement, the Company has requested that New Term Loan Lenders collectively provide New Term Loan Commitments in respect of New Term Loans in an aggregate amount equal to $15,856,675.35 on the Extension Agreement No. 1 Effective Date, in accordance with the incremental facility Joinder Agreement attached hereto as Annex A (the “2016 Tranche B Incremental Joinder”), which New Term Loans shall be deemed for all purposes under the Credit Agreement 2016 Tranche B Term Loans (as defined below);

WHEREAS, Section 13.1 of the Credit Agreement provides that the relevant Credit Parties and the Required Lenders may amend the Credit Agreement and the other Loan Documents for certain purposes;

WHEREAS, the Credit Parties desire to amend the Credit Agreement to permit the incurrence of the New Term Loans without reducing the aggregate principal amount of indebtedness previously permitted to be incurred under Section 2.14 of the Credit Agreement so long as the proceeds of such incurrence are used to prepay Term Loans, as more particularly provided in clauses (r)-(y) of Section 2 hereof (the “Incremental Amendment”);

NOW, THEREFORE, in consideration of the premises and covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:

Section 1 Establishment of Extension Series.

(a) There is hereby established under the Credit Agreement an Extension Series of Extended Term Loans which shall be titled the “2016 Tranche B Term Loans” having the terms set forth herein and in the Credit Agreement, as amended hereby (such Term Loans, the “2016 Tranche B Term Loans” and each Lender holding such 2016 Tranche B Term Loans, a “2016 Tranche B Term Lender”) and references in the Credit Agreement to Term Loans and Extended Term Loans shall include, without limitation, the 2016 Tranche B Term Loans. The Existing Class with respect to the 2016 Tranche B Term Loans for purposes of the Credit Agreement shall be the 2013 Term Loans and all references in the Credit Agreement to “Existing Class” when used with respect to the 2016 Tranche B Term Loans shall refer to the 2013 Term Loans.

(b) Each 2013 Term Lender that delivers an executed signature page to this Extension Agreement and Amendment (a “Submitting Lender”) prior to the Extension Agreement and Amendment No. 1 Effective Date (as defined below) irrevocably offers for exchange into 2016 Tranche B Term Loans the aggregate principal amount of its 2013 Term Loans set forth on such Submitting Lender’s signature page. On the Extension Agreement and Amendment No. 1 Effective Date (as defined below), each Submitting Lender hereby agrees that (i) the aggregate principal amount of its 2013 Term Loans set forth on such Submitting Lender’s signature page hereto shall automatically (and without any further action on the part of any party to this Extension Agreement and Amendment or the Credit Agreement) be exchanged into and reclassified to become a 2016 Tranche B Term Loan to the Borrower of an equal principal amount and denominated in Dollars (but subject to the Borrower’s right, pursuant to Section 1(c) of this Extension Agreement and Amendment, to accept less than the full amount offered for exchange by each Submitting Lender, in which case such lesser amount shall be exchanged into 2016 Tranche B Term Loans), and (ii) the remainder (if any) of its 2013 Term Loans will, after giving effect to this Extension Agreement and Amendment, remain outstanding as 2013 Term Loans on the same terms as in existence prior to the Extension Agreement and Amendment No. 1 Effective Date. On the Extension Agreement and Amendment No. 1 Effective Date, after giving effect to this Extension Agreement and Amendment, the aggregate principal amount of 2016 Tranche B Term Loans and the aggregate principal amount of 2013 Term Loans shall be set forth on Schedule I hereto.

(c) At any time prior to the Extension Agreement and Amendment No. 1 Effective Date, the Borrower shall have the right (x) to withdraw and terminate its Extension Request

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with respect to this Extension Agreement and Amendment, (y) to reduce the aggregate principal amount of 2013 Term Loans that it seeks to exchange into 2016 Tranche B Term Loans hereunder or (z) to accept less than the full amount of 2013 Term Loans offered by each Submitting Lender for exchange into 2016 Tranche B Term Loans, in each case in its sole and absolute discretion and without penalty; provided that, the Administrative Agent shall notify each Submitting Lender prior to the Extension Agreement and Amendment No. 1 Effective Date of the amount of 2016 Tranche B Term Loans to be held by such Submitting Lender (which amount will not exceed the principal amount of 2013 Term Loans set forth on its signature page hereto).

(d) All accrued and unpaid amounts (including interest) owing by the Borrower under the Credit Agreement with respect to any 2013 Term Loan (or portion thereof, if applicable) exchanged to a 2016 Tranche B Term Loan to but not including the Extension Agreement and Amendment No. 1 Effective Date shall automatically convert to an equal amount of equivalent accrued and unpaid obligations owing with respect to the 2016 Tranche B Term Loan into which such 2013 Term Loan (or portion thereof, if applicable) was exchanged and shall be payable at the same times as such amounts would have been payable with respect to such exchanged 2013 Term Loan (or portion thereof, if applicable) if such conversion had not occurred; provided that, such accrued and unpaid amounts (including interest) shall not be capitalized into principal of the 2016 Tranche B Term Loans nor shall any interest accrue thereon.

(e) On and after the Extension Agreement and Amendment No. 1 Effective Date, interest shall accrue on the 2016 Tranche B Term Loans at the rate provided for in the Credit Agreement after giving effect to this Extension Agreement and Amendment. Each 2016 Tranche B Term Loan (or portion thereof, if applicable) that was exchanged from any 2013 Term Loan (or portion thereof, if applicable) that was a LIBOR Term Loan immediately prior to such conversion shall initially be deemed to be a Borrowing of a 2016 Tranche B Term Loan that is a LIBOR Term Loan with an initial Interest Period equal to the remaining duration (as of the Extension Agreement and Amendment No. 1 Effective Date) of the Interest Period applicable to such Borrowing of a 2013 Term Loan; provided, however, that it is understood and agreed that in no event shall any conversion or extension of any Loan, or any other transaction specifically contemplated by this Extension Agreement and Amendment, constitute a repayment, conversion or other event with respect to such Loan that would result in the application or operation of the provisions of Section 2.11 of the Credit Agreement.

(f) Except as expressly provided in this Extension Agreement and Amendment or in the Credit Agreement (after giving effect to this Extension Agreement and Amendment and to any subsequent amendment or other modification to the Credit Agreement in accordance with its terms), the terms of the 2016 Tranche B Term Loans shall be identical to those applicable to the 2013 Term Loans.

(g) Each 2016 Tranche B Term Lender party hereto agrees and acknowledges that the New Term Loan created pursuant to the 2016 Tranche B Incremental Joinder shall be deemed 2016 Tranche B Term Loans for all purposes under the Credit Agreement.

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Section 2 Amendments to the Credit Agreement.

(a) Section 1.1 of the Credit Agreement is hereby amended as of the Extension Agreement and Amendment No. 1 Effective Date by adding the following definitions in proper alphabetical order:

“2016 Tranche B Repayment Amount” shall have the meaning provided in Section 2.5(b)(ii).

“2016 Tranche B Repayment Date” shall have the meaning provided in Section 2.5(b)(ii).

“2016 Tranche B Term Loan” shall mean a 2016 Tranche B Term Loan created from either the exchange of one or more 2013 Term Loans on the Extension Agreement and Amendment No. 1 Effective Date pursuant to Section 1(b) of Extension Agreement and Amendment No. 1 and in accordance with Section 2.15 of this Agreement or from the New Term Loans provided pursuant to the 2016 Tranche B Incremental Joinder attached to, and as defined in, the Extension Agreement and Amendment No. 1.

“2016 Tranche B Term Loan Facility” shall mean the 2016 Tranche B Term Loans.

“2016 Tranche B Term Lender” shall mean a Lender with an outstanding 2016 Tranche B Term Loan.

“2016 Tranche B Term Loan Maturity Date” shall mean March 10, 2016, or, if such date is not a Business Day, the first Business Day thereafter; provided that if on the 2016 Term Loan Trigger Date (as defined in the definition of “2016 Term Loan Maturity Date”) any of the original principal amount of the Senior Subordinated Notes remain outstanding with a final maturity date that is not later than 91 days later than March 10, 2016, the 2016 Tranche B Term Loans outstanding shall be due and payable in full on, and the 2016 Tranche B Term Loan Maturity Date shall be, the 2016 Term Loan Trigger Date.

“Effective Yield” means, as to any Loans of any Class, the effective yield on such Loans as determined by the Administrative Agent, taking into account the applicable interest rate margins, any interest rate floors or similar devices and all fees, including upfront or similar fees or original issue discount (amortized over the shorter of (x) the life to maturity of such Loans and (y) the four years following the date of incurrence thereof) payable generally to Lenders making such Loans, but excluding any arrangement, structuring or other fees payable to arrangers, bookrunners, agents or entities operating in a similar capacity or receiving similar titles in connection therewith that are not generally shared with the relevant Lenders and customary consent fees paid generally to consenting Lenders.

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“Extension Agreement and Amendment No. 1” shall mean Extension Agreement and Amendment No. 1 to this Agreement dated as of April 12, 2012.

“Extension Agreement and Amendment No. 1 Effective Date” shall mean April 12, 2012, the first Business Day on which all conditions precedent set forth in Section 4 of Extension Agreement and Amendment No. 1 were satisfied.

(b) Section 1.1 of the Credit Agreement is hereby amended effective as of the Extension Agreement and Amendment No. 1 Effective Date by inserting at the end of the definition of “ABR” the following:

Notwithstanding anything to the contrary in this Agreement, ABR in respect of 2016 Tranche B Term Loans shall at no time be less than 2.00% per annum.

(c) Section 1.1 of the Credit Agreement is hereby amended as of the Extension Agreement and Amendment No. 1 Effective Date by deleting the word “and” at the beginning of clause (d) in the definition of “Applicable ABR Margin” and by inserting immediately following clause (d) thereof the following new clause:

and (e) each ABR Term Loan that is a 2016 Tranche B Term Loan, the applicable percentage per annum set forth below based upon the Status in effect on such date:

Status	Applicable ABR Margin for 2016 Tranche B Term Loans
Level A Status		3.25	%
Level B Status		3.00	%

(d) Section 1.1 of the Credit Agreement is hereby amended effective as of the Extension Agreement and Amendment No. 1 Effective Date by deleting the word “and” at the beginning of clause (d) in the definition of “Applicable LIBOR Margin” and by inserting immediately following clause (d) thereof the following new clause:

and (e) each LIBOR Term Loan that is a 2016 Tranche B Term Loan, the applicable percentage per annum set forth below based upon the Status in effect on such date:

Status	Applicable LIBOR Margin for 2016 Tranche B Term Loans
Level A Status		4.25	%
Level B Status		4.00	%

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(e) Section 1.1 of the Credit Agreement is hereby amended effective as of the Extension Agreement and Amendment No. 1 Effective Date by deleting the second sentence of the definition of “Existing Term Loan Class” and replacing it with the following:

The 2013 Term Loan Facility shall be deemed to be the Existing Term Loan Class from which the 2016 Term Loans and the 2016 Tranche B Term Loans were extended for all purposes of this Agreement.

(f) Section 1.1 of the Credit Agreement is hereby amended effective as of the Extension Agreement and Amendment No. 1 Effective Date by deleting the second sentence of the definition of “Extended Term Loan Facility” and replacing it with the following:

The 2016 Term Loan Facility and the 2016 Tranche B Term Loan Facility shall each be deemed to be an Extended Term Loan Facility for all purposes of this Agreement.

(g) Section 1.1 of the Credit Agreement is hereby amended effective as of the Extension Agreement and Amendment No. 1 Effective Date by deleting the second sentence of the definition of “Extended Term Loans” and replacing it with the following:

The 2016 Term Loans and the 2016 Tranche B Term Loans shall each be deemed to be Extended Term Loans for all purposes of this Agreement.

(h) Section 1.1 of the Credit Agreement is hereby amended effective as of the Extension Agreement and Amendment No. 1 Effective Date by deleting the second sentence of the definition of “Extending Lender” and replacing it with the following:

The 2015 Revolving Credit Lenders, the 2016 Term Lenders and the 2016 Tranche B Term Lenders shall each be deemed to be Extending Lenders for all purposes of this Agreement.

(i) Section 1.1 of the Credit Agreement is hereby amended effective as of the Extension Agreement and Amendment No. 1 Effective Date by inserting at the end of the definition of “LIBOR Rate” the following:

Notwithstanding anything to the contrary in this Agreement, the LIBOR Rate in respect of 2016 Tranche B Term Loans shall at no time be less than 1.00% per annum.

(j) Section 1.1 of the Credit Agreement is hereby amended effective as of the Extension Agreement and Amendment No. 1 Effective Date by deleting the definition of “Maturity Date” contained therein and replacing it with the following:

“Maturity Date” shall mean the 2013 Term Loan Maturity Date, the 2016 Term Loan Maturity Date, the 2012 Revolving Credit Maturity Date, the 2015 Revolving Credit Maturity Date, the 2016 Tranche B Term Loan Maturity Date, any New Term Loan Maturity Date, any maturity date related to any Extension Series of Extended Term Loans

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(other than the 2016 Term Loans and the 2016 Tranche B Term Loans) and any maturity date related to any Extension Series of Extended Revolving Credit Commitments (other than 2015 Revolving Credit Commitments).

(k) Section 1.1 of the Credit Agreement is hereby amended effective as of the Extension Agreement and Amendment No. 1 Effective Date by deleting the definition of “Repricing Transaction” contained therein and replacing it with the following:

“Repricing Transaction” means (i) with respect to the 2016 Term Loans, the prepayment or refinancing of all or a portion of the 2016 Term Loans with the incurrence by any Credit Party of any long-term bank debt financing incurred for the primary purpose of repaying, refinancing, substituting or replacing the 2016 Term Loans at an effective interest cost or weighted average yield (as determined by the Administrative Agent consistent with generally accepted financial practice and, in any event, excluding any arrangement or commitment fees in connection therewith) that is less than the interest rate for or weighted average yield (as determined by the Administrative Agent on the same basis) of the 2016 Term Loans, including without limitation, as may be effected through any amendment to this Agreement relating to the interest rate for, or weighted average yield of, the 2016 Term Loans and (ii) with respect to the 2016 Tranche B Term Loans, the prepayment or refinancing of all or a portion of the 2016 Tranche B Term Loans with the incurrence by any Credit Party of any long-term bank debt financing incurred for the primary purpose of repaying, refinancing, substituting or replacing the 2016 Tranche B Term Loans at an effective interest cost or weighted average yield (as determined by the Administrative Agent consistent with generally accepted financial practice and, in any event, excluding any arrangement or commitment fees in connection therewith) that is less than the interest rate for or weighted average yield (as determined by the Administrative Agent on the same basis) of the 2016 Tranche B Term Loans, including without limitation, as may be effected through any amendment to this Agreement relating to the interest rate for, or weighted average yield of, the 2016 Tranche B Term Loans.

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(l) Section 2.5(b)(ii) of the Credit Agreement is hereby amended effective as of the Extension Agreement and Amendment No. 1 Effective Date by inserting immediately after the last sentence thereof the following:

The Borrower shall repay to the Administrative Agent, for the benefit of the 2016 Tranche B Term Lenders, on each date set forth below (each, a “2016 Tranche B Repayment Date” (which for the avoidance of doubt, shall constitute an “Extended Repayment Date” under the Credit Agreement), a principal amount in respect of the 2016 Tranche B Term Loans equal to (x) the outstanding principal amount of 2016 Tranche B Term Loans on the Extension Agreement and Amendment No. 1 Effective Date (immediately after giving effect to the Extension Agreement and Amendment No. 1) multiplied by (y) the percentage set forth below opposite such 2016 Tranche B Repayment Date (each, a “2016 Tranche B Repayment Amount”):

Date	2016 Tranche B Repayment Amount
March 31, 2012		0.25	%
June 30, 2012		0.25	%
September 30, 2012		0.25	%
December 31, 2012		0.25	%
March 31, 2013		0.25	%
June 30, 2013		0.25	%
September 30, 2013		0.25	%
December 31, 2013		0.25	%
March 31, 2014		0.25	%
June 30, 2014		0.25	%
September 30, 2014		0.25	%
December 31, 2014		0.25	%
March 31, 2015		0.25	%
June 30, 2015		0.25	%
September 30, 2015		0.25	%
December 31, 2015		0.25	%
2016 Tranche B Term Loan Maturity Date		“Balance of outstanding 2016 Tranche B Term Loans”

It is understood and agreed that all such 2016 Tranche B Repayment Amounts (other than the balance of such Term Loans due on the 2016 Tranche B Term Loan Maturity Date) have been satisfied by the optional and mandatory prepayments of Term Loans made since the Closing Date in accordance with Sections 5.1 and 5.2(c) of the Credit Agreement.

(m) Section 2.14(d) of the Credit Agreement is hereby amended effective as of the Extension Agreement and Amendment No. 1 Effective Date by inserting immediately after the last sentence thereof the following:

Notwithstanding the foregoing, if the Effective Yield applicable to any New Term Loans (other than the New Term Loans that are 2016 Tranche B Term Loans incurred on the Extension Agreement and Amendment No. 1 Effective Date) is higher than the Effective Yield for the 2016 Term Loans and/or the 2016 Tranche B Term Loans by more than 0.25% per annum, then the interest rate margins for the 2016 Term Loans and/or 2016 Tranche B Term Loans, as applicable, shall be immediately increased to the extent necessary so that the applicable Effective Yield for the 2016 Term Loans and/or the 2016 Tranche B Term Loans, as the case may be, is equal to the Effective Yield for such New Term Loans minus 0.25% per annum; provided, further that, in determining the Effective Yield applicable to the 2016 Term Loans or the 2016 Tranche B Term Loans and such New Term Loans, if the New Term Loans include an interest rate floor greater than the interest rate floor applicable to the 2016 Term Loans or the 2016 Tranche B Term Loans, as applicable, such increased amount shall be equated to interest

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rate margin for purposes of determining whether an increase to the applicable interest rate margins for the 2016 Term Loans or 2016 Tranche B Term Loans shall be required under the terms set forth above. To the extent an increase in the interest rate floor in the 2016 Term Loans or 2016 Tranche B Term Loans would cause an increase in the interest rate then in effect, the interest rate floor (but not the interest rate margin) applicable to such 2016 Term Loans or 2016 Tranche B Term Loans, as applicable, shall be increased by such increased amount.

(n) Section 5.1 of the Credit Agreement is hereby amended effective as of the Extension Agreement and Amendment No. 1 Effective Date by inserting “with respect to the 2016 Term Loans” after the words “Repricing Transaction” in clauses (x) and (y) of the last sentence thereof.

(o) Section 5.1 of the Credit Agreement is hereby amended effective as of the Extension Agreement and Amendment No. 1 Effective Date by inserting the following at the end of the last sentence thereof:

In the event that, on or prior to the first anniversary of the Extension Agreement and Amendment No. 1 Effective Date, the Borrower (x) makes any prepayment of 2016 Tranche B Term Loans in connection with any Repricing Transaction with respect to the 2016 Tranche B Term Loans or (y) effects any amendment of this Agreement resulting in a Repricing Transaction with respect to the 2016 Tranche B Term Loans, the Borrower shall pay to the Administrative Agent, for the ratable account of each applicable 2016 Tranche B Term Lender, (I) in the case of clause (x), a prepayment premium of on or prior to the first anniversary of the Extension Agreement and Amendment No. 1 Effective Date, 1% of the aggregate principal amount of the 2016 Tranche B Term Loans being prepaid and (II) in the case of clause (y), a payment equal to on or prior to the first anniversary of the Extension Agreement and Amendment No. 1 Effective Date, 1% of the aggregate principal amount of the 2016 Tranche B Term Loans outstanding immediately prior to such amendment.

(p) Section 13.6(d) of the Credit Agreement is hereby amended by deleting the second sentence of such clause and replacing it with the following:

In order to facilitate such pledge or assignment, the Borrower hereby agrees that, upon request of any Lender at any time and from time to time after the Borrower has made its initial borrowing hereunder, Borrower shall provide to such Lender, at the Borrower’s own expense, a promissory note, substantially in the form of Exhibit I-1, I-2, I-3 , I-4, I-5 or I-6, as the case may be, evidencing the 2013 Term Loans, the 2016 Term Loans, 2012 Revolving Credit Loans, 2015 Revolving Credit Loans and Swingline Loans, New Term Loans and the 2016 Tranche B Term Loans, respectively, owing to such Lender (each, a “Note”).

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(q) The Credit Agreement is hereby amended by attaching thereto an Exhibit I-6 substantially in the form of Exhibit I-6 hereto.

(r) Subject to the receipt of executed counterparts to this Extension Agreement and Amendment on or prior to the Extension Agreement and Amendment No. 1 Effective Date from Lenders (including, for the avoidance of doubt, the Submitting Lenders) constituting the Required Lenders, Section 1.1 of the Credit Agreement is amended by adding the following new defined terms in proper alphabetical order:

“Incremental Limit” shall have the meaning provided in Section 2.14(a).

“New Debt Incurrence Prepayment Event” shall mean any issuance or incurrence by the Borrower or any of the Restricted Subsidiaries of (x) any New Term Loans incurred in reliance on the proviso in the first sentence of Section 2.14(a) hereof or (y) any Permitted Other Debt.

(s) Subject to the receipt of executed counterparts to this Extension Agreement and Amendment on or prior to the Extension Agreement and Amendment No. 1 Effective Date from Lenders (including, for the avoidance of doubt, the Submitting Lenders) constituting the Required Lenders, Section 1.1 of the Credit Agreement is amended by replacing “5.2(a)(i)” at the end of the definition of “Permitted Other Debt” with “5.2(f)”.

(t) Subject to the receipt of executed counterparts to this Extension Agreement and Amendment on or prior to the Extension Agreement and Amendment No. 1 Effective Date from Lenders (including, for the avoidance of doubt, the Submitting Lenders) constituting the Required Lenders, Section 1.1 of the Credit Agreement is amended by deleting the definition of “Debt Incurrence Prepayment Event” contained therein and replacing it with the following:

“Debt Incurrence Prepayment Event” shall mean any issuance or incurrence by the Borrower or any of the Restricted Subsidiaries of any Indebtedness (including any issuance by the Borrower of Permitted Additional Notes to the extent the Net Cash Proceeds are not used for a Permitted Acquisition, but excluding any Indebtedness permitted to be issued or incurred under Section 10.1(A), other than Section 10.1(A)(o)).

(u) Subject to the receipt of executed counterparts to this Extension Agreement and Amendment on or prior to the Extension Agreement and Amendment No. 1 Effective Date from Lenders (including, for the avoidance of doubt, the Submitting Lenders) constituting the Required Lenders, the definition of “Net Cash Proceeds” in Section 1.1 of the Credit Agreement is amended by inserting the words “or any New Debt Incurrence Prepayment Event” after each occurrence of the words “Prepayment Event” in the lead-in sentence and clause (v) of such definition.

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(v) Subject to the receipt of executed counterparts to this Extension Agreement and Amendment on or prior to the Extension Agreement and Amendment No. 1 Effective Date from Lenders (including, for the avoidance of doubt, the Submitting Lenders) constituting the Required Lenders, Section 2.14(a) of the Credit Agreement is amended by deleting the first sentence of such clause and replacing it with the following:

The Borrower may by written notice to the Administrative Agent elect to request the establishment of one or more (x) New Term Loan commitments (the “New Term Loan Commitments”) and/or (y) additional revolving credit commitments (the “New Revolving Credit Commitment” and, together with the New Loan Commitments, the “New Loan Commitments”), by an aggregate amount not in excess of $150,000,000 in the aggregate and not less than $25,000,000 individually (or such lesser amount which shall be approved by the Administrative Agent or such lesser amount that shall constitute the difference between $150,000,000 and all such New Loan Commitments obtained prior to such date), and integral multiples of $5,000,000 in excess of that amount (the “Incremental Limit”); provided that New Term Loans may be incurred without regard to the Incremental Limit, to the extent that the Net Cash Proceeds from such New Term Loans are used on the date of incurrence of such New Term Loans to prepay Term Loans in accordance with the procedures set forth in Section 5.2(f).

(w) Subject to the receipt of executed counterparts to this Extension Agreement and Amendment on or prior to the Extension Agreement and Amendment No. 1 Effective Date from Lenders (including, for the avoidance of doubt, the Submitting Lenders) constituting the Required Lenders, Section 5.2(f) of the Credit Agreement is amended by deleting the word “[Reserved]” therein and replacing it with the following:

(f) (i) On each occasion that a New Debt Incurrence Prepayment Event occurs, the Borrower shall, within one Business Day after the receipt of the Net Cash Proceeds from the occurrence of such New Debt Incurrence Prepayment Event, at the Borrower’s election as to the allocation of such Net Cash Proceeds as among any and all of the Classes, prepay Term Loans in accordance with clause (f)(ii) and clause (d) above.

(ii) Each prepayment of Term Loans required by Section 5.2(f)(i) shall be allocated to any Class or Classes of Term Loans in such manner as the Borrower may determine and be applied to reduce the scheduled Repayment Amounts in such order of maturity as the Borrower may determine. For the avoidance of doubt, the Borrower may prepay Term Loans of an Existing Term Loan Class pursuant to Section 5.2(f)(i) without any requirement to prepay Extended Term Loans that were exchanged from such Existing Term Loan Class or prepay Term Loans of any Class of Extended Term Loans pursuant to Section 5.2(f)(i) without any requirement to prepay Term Loans of the Existing Term Loan Class from which they were exchanged. In the event that the Borrower does not specify the order in which to apply prepayments to reduce Repayment Amounts, the Borrower shall be deemed to have elected that such proceeds be applied to reduce the Repayment Amounts in direct order of maturity. All prepayments under Section 5.2(f)(i) shall also be subject to the provisions of 5.2(d). At the Borrower’s election in connection with any prepayment pursuant to Section 5.2(f)(i), such prepayment shall not be applied to any Loan of a Defaulting Lender.

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(x) Subject to the receipt of executed counterparts to this Extension Agreement and Amendment on or prior to the Extension Agreement and Amendment No. 1 Effective Date from Lenders (including, for the avoidance of doubt, the Submitting Lenders) constituting the Required Lenders, Section 10.1(A) of the Credit Agreement is amended by replacing clause (o) with the following:

(o) Indebtedness in respect of Permitted Additional Notes to the extent that the Net Cash Proceeds therefrom are, immediately after the receipt thereof, applied to the prepayment of Term Loans in accordance with Section 5.2;

(y) Subject to the receipt of executed counterparts to this Extension Agreement and Amendment on or prior to the Extension Agreement and Amendment No. 1 Effective Date from Lenders (including, for the avoidance of doubt, the Submitting Lenders) constituting the Required Lenders, Section 10.1(A) of the Credit Agreement is amended by replacing the “.” at the end of clause (p) with “; and” and immediately thereafter adding the following new clause (q):

(q) Indebtedness in respect of (i) Permitted Other Debt issued or incurred in exchange for, or to the extent the Net Cash Proceeds therefrom are applied to the prepayment of, Term Loans in the manner set forth in Section 5.2, and (ii) any refinancing, refunding, renewal or extension of any Permitted Other Debt incurred pursuant to subclause (i) above; provided that, in the case of this clause (ii), except to the extent otherwise permitted hereunder, (A) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal, extension or prepayment (except for any original issue discount thereon and the amount of fees, accrued interest, expenses and premium in connection with such refinancing) and (B) such Indebtedness otherwise complies with the definition of Permitted Other Debt; and

Section 3 Representations and Warranties, No Default. Each Borrower represents and warrants to the Lenders as of the Extension Agreement and Amendment No. 1 Effective Date:

(a) Each Credit Party has the corporate or other organizational power and authority to execute, deliver and carry out the terms and provisions of this Extension Agreement and Amendment and has taken all necessary corporate or other organizational action to authorize the execution, delivery and performance of this Extension Agreement and Amendment. Each Credit Party has duly executed and delivered this Extension Agreement and Amendment and this Extension Agreement and Amendment constitutes the legal, valid and binding obligation of each Credit Party, enforceable in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency or similar laws affecting creditors’ rights generally and subject to general principles of equity.

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(b) Neither the execution, delivery or performance by any Credit Party of this Extension Agreement and Amendment nor compliance with the terms and provisions hereof will (a) contravene any applicable provision of any material law, statute, rule, regulation, order, writ, injunction or decree of any court or governmental instrumentality, (b) result in any breach of any of the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any Lien upon any of the property or assets of any Credit Party (other than Liens created under the Credit Documents or this Extension Agreement and Amendment) pursuant to, the terms of any material indenture (including the Senior Subordinated Notes Indenture), loan agreement, lease agreement, mortgage, deed of trust, agreement or other material instrument to which any Credit Party is a party or by which it or any of its property or assets is bound or (c) violate any provision of its certificate of incorporation, bylaws or other constitutional documents, except for violations, defaults or the creation of such rights that could not reasonably be expected to result in a Material Adverse Effect.

(c) The representations and warranties set forth in Section 8 of the Credit Agreement (other than Section 8.17 of the Credit Agreement) or in any Credit Document are true and correct in all material respects (except that any representation and warranty that is qualified as to “materiality” or “Material Adverse Effect” shall be true and correct in all respects as so qualified) as of the date hereof (except where such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects as of such earlier date).

(d) At the time of and after giving effect to this Extension Agreement and Amendment, no Default or Event of Default has occurred and is continuing.

Section 4 Conditions to Effectiveness of this Extension Agreement and Amendment. This Extension Agreement and Amendment will become effective on the date (such date, the “Extension Agreement and Amendment No. 1 Effective Date”) that the following conditions have been satisfied:

(a) receipt by the Administrative Agent of executed signature pages to this Extension Agreement and Amendment from the 2013 Term Lenders requesting to exchange all or any portion satisfactory to the Borrower (in its sole discretion) of the aggregate principal amount of 2013 Term Loans into 2016 Tranche B Term Loans and each Credit Party (which signature page shall also be deemed a consent to the Incremental Amendment);

(b) receipt by the Administrative Agent of executed signature pages to this Extension Agreement and Amendment from the Required Lenders consenting to the Incremental Amendment;

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(c) receipt by the Administrative Agent from the Borrower of an opinion of counsel from Simpson Thacher & Bartlett LLP reasonably acceptable to the Administrative Agent covering such matters as are required pursuant to Sections 2.15(c) and 2.14 of the Credit Agreement;

(d) receipt by the Administrative Agent of (x) a fee payable in U.S. Dollars for the account of each 2013 Term Lender (other than a Defaulting Lender) that has returned an executed signature page to the Extension Agreement to the Administrative Agent prior to the date hereof in an amount of 1.50% of the amount of 2013 Term Loans exchanged by such 2013 Term Lender into 2016 Tranche B Term Loans and (y) the fees payable to New Term Loan Lenders as set forth in the 2016 Tranche B Incremental Joinder;

(e) receipt by the Administrative Agent of executed signature pages to the 2016 Tranche B Incremental Joinder from the New Term Loan Lenders party thereto and the Borrower;

(f) the fees in the amounts previously agreed in writing by the Administrative Agent to be received on the Extension Agreement and Amendment No. 1 Effective Date and all reasonable out-of-pocket expenses (including the reasonable fees, disbursements and other charges of the Administrative Agent’s outside counsel) for which invoices have been presented on or prior to the Extension Agreement and Amendment No. 1 Effective Date shall have been paid; and

(g) each Credit Party shall have obtained all corporate authorizations and other consents necessary in connection with the transactions contemplated by this Agreement.

Section 5 Successors and Assigns; Third-Party Beneficiaries. This Extension Agreement and Amendment shall be binding upon the parties hereto and their respective successors and assigns and shall inure to the benefit of the parties hereto and the successors and assigns of (x) the 2016 Tranche B Term Lenders and (y) with respect to Section 2(m) only (including the definitions referenced therein), the 2016 Term Lenders (it being understood that rights of assignment of the parties hereto are subject to the further provisions of subsection 13.6 of the Credit Agreement). For the avoidance of doubt, the 2016 Term Lenders and their successors and assigns shall be third party beneficiaries of this Extension Agreement and Amendment solely with respect to Section 2(m) (including the definitions referenced therein).

Section 6 Counterparts. This Extension Agreement and Amendment may be executed in any number of counterparts and by different parties hereto on separate counterparts, each of which when so executed and delivered shall be deemed to be an original, but all of which when taken together shall constitute a single instrument. Delivery of an executed counterpart of a signature page of this Extension Agreement and Amendment by facsimile or other electronic transmission shall be effective as delivery of a manually executed counterpart hereof.

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Section 7 Applicable Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

Section 8 Headings. The headings of this Extension Agreement and Amendment are for purposes of reference only and shall not limit or otherwise affect the meaning hereof.

Section 9 Effect of Extension Agreement and Amendment. Except as expressly set forth herein, this Extension Agreement and Amendment shall not by implication or otherwise limit, impair, constitute a waiver of or otherwise affect the rights and remedies of the Lenders or the other Secured Parties under the Credit Agreement or any other Credit Document, and shall not alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement or any other provision of either such agreement or any other Credit Document. Each and every term, condition, obligation, covenant and agreement contained in the Credit Agreement or any other Credit Document is hereby ratified and re-affirmed in all respects and shall continue in full force and effect. Each Credit Party reaffirms its obligations under the Credit Documents to which it is party and the validity of the Liens granted by it pursuant to the Security Documents. From and after the Extension Agreement and Amendment No. 1 Effective Date, all references to the Credit Agreement in any Credit Document shall, unless expressly provided otherwise, refer to the Credit Agreement as amended by this Extension Agreement and Amendment.

Section 10 Waiver. To the extent the 2016 Tranche B Incremental Joinder becomes effective on less than five Business Days notice, each Lender party to this Extension Agreement and Amendment agrees to waive the requirement set forth in Section 2.14(a) of the Credit Agreement that the Borrower provide the Administrative Agent such five Business Day notice. In addition, each Lender party to this Extension Agreement and Amendment hereby waives the requirement set forth in Section 2.14(a) of the Credit Agreement that New Term Loan Commitments be in increments of $5,000,000.

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IN WITNESS WHEREOF, the parties hereto have caused this Extension Agreement and Amendment to be duly executed as of the date first above written.

SERENA SOFTWARE, INC.
By:
	Name:
	Title:

BARCLAYS BANK PLC, as Administrative Agent and Collateral Agent
By:
	Name:
	Title:

Extension Election and Signature Page to Extension Agreement and Amendment No. 1

The undersigned hereby consents to the terms of Extension Agreement and Amendment No. 1 and offers the amount indicated below of its outstanding 2013 Term Loans for conversion to 2016 Tranche B Term Loans on the Extension Agreement and Amendment No. 1 Effective Date.

[INSERT LENDER NAME], as a 2013 Term Lender,
By:
	Name:
	Title:
Maximum principal amount of existing 2013 Term Loans of the below-named Lender offered for conversion to 2016 Tranche B Term Loans:
$

Consenting Required Lender Signature Page to Extension Agreement and Amendment No. 1

The undersigned hereby consents to the amendments reflected in Extension Agreement and Amendment No. 1, including without limitation the Incremental Amendment.

[INSERT LENDER NAME]
		,
	as a Lender
By:
	Name:
	Title:

ANNEX A

JOINDER AGREEMENT

JOINDER AGREEMENT, dated as of April 12, 2012 (this “Agreement”), by and among BARCLAYS BANK PLC (the “New Loan Lender”), SERENA SOFTWARE, INC., (the “Borrower”), BARCLAYS BANK PLC, as Administrative Agent and as Collateral Agent.

RECITALS:

WHEREAS, reference is hereby made to the Amended and Restated Credit Agreement, dated as of March 2, 2011 (as amended by the Extension No. 1 Agreement to which this Agreement is attached as an Annex, and as the same may be further amended, amended and restated, supplemented or otherwise modified, refinanced or replaced from time to time, the “Credit Agreement”), among Borrower, the lending institutions from time to time party thereto (each a “Lender” and, collectively, the “Lenders”), BARCLAYS BANK PLC, as Administrative Agent and as Collateral Agent, BARCLAYS CAPITAL, as Lead Arranger and Bookrunner, and BARCLAYS CAPITAL, as Syndication Agent. (capitalized terms used but not defined herein having the meaning provided in the Credit Agreement); and

WHEREAS, subject to the terms and conditions of the Credit Agreement, the Borrower may establish New Term Loan Commitments by, among other things, entering into one or more Joinder Agreements with New Term Loan Lenders;

NOW, THEREFORE, in consideration of the premises and agreements, provisions and covenants herein contained, the parties hereto agree as follows:

The New Loan Lender party hereto hereby agrees to commit to provide its respective New Term Loan Commitment, as set forth on Schedule A annexed hereto, on the terms and subject to the conditions set forth below:

The New Loan Lender (i) confirms that it has received a copy of the Credit Agreement and the other Credit Documents, together with copies of the financial statements referred to therein and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Agreement; (ii) agrees that it will, independently and without reliance upon the Administrative Agent or any other New Loan Lender or any other Lender or Agent and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (iii) appoints and authorizes the Administrative Agent and the Collateral Agent to take such action as agent on its behalf and to exercise such powers under the Credit Agreement and the other Credit Documents as are delegated to the Administrative Agent and the Collateral Agent by the terms thereof, together with such powers as are reasonably incidental thereto; and (v) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement are required to be performed by it as a New Term Loan Lender.

The New Loan Lender hereby agrees to make its respective New Term Loan Commitment and to provide the New Term Loans on the Business Day of the proposed Borrowing set forth below, subject to and on the following terms and conditions:

Section 10 Applicable Margin. The Applicable LIBOR Margin and the Applicable ABR Margin for each New Term Loan provided pursuant to this Agreement shall be the Applicable LIBOR Margin and Applicable ABR Margin for the 2016 Tranche B Term Loans (as set forth in Extension Agreement No. 1).

Section 11 Principal Payments. The Borrower shall make principal payments on the New Term Loans provided pursuant to this Agreement in accordance with the provisions of Section 2.5(b)(ii) of the Credit Agreement as applicable to 2016 Tranche B Term Loans.

Section 12 Voluntary and Mandatory Prepayments. New Term Loans provided pursuant to this Agreement shall be subject to the provisions of Sections 5.1 and 5.2 of the Credit Agreement as applicable to the 2016 Tranche B Term Loans.

Section 13 Other Fees. Borrower agrees to pay a fee in an amount equal to 1.50% of the aggregate principal amount of New Term Loans actually funded, which will be distributed pro rata to the New Loan Lender in accordance with the amount of their New Term Loans provided pursuant to this Agreement.

Section 14 Proposed Borrowing. This Agreement represents Borrower’s request to borrow New Term Loans from the New Loan Lender as follows (the “Proposed Borrowing”):

(a) Business Day of Proposed Borrowing: April 12, 2012

(b) Amount of Proposed Borrowing: $15,856,675.35

(c) Interest rate option:

a. LIBOR Loans

with an initial Interest

Period of 2 month(s) expiring June 8, 2012

Section 15 New Loan Lenders. The New Loan Lender acknowledges and agrees that upon its execution of this Agreement and the making of New Term Loans in accordance with this Agreement that the New Loan Lender shall become a “Lender” under, and for all purposes of, the Credit Agreement and the other Credit Documents, and shall be subject to and bound by the terms thereof, and shall perform all the obligations of and shall have all rights of a Lender thereunder. The terms of the New Term Loans provided hereunder shall be identical to, and be deemed the same Class as, the 2016 Tranche B Term Loans extended as of the Extension Agreement No. 1 Effective Date pursuant to Extension No. 1 Agreement and the New Term Loans provided hereunder and the New Loan Lender party hereto shall be deemed 2016 Tranche B Term Loans and 2016 Tranche B Term Lenders, respectively, for all purposes under the Credit Agreement and the other Credit Documents.

Section 16 Credit Agreement Governs. Except as set forth in this Agreement, the New Term Loans provided pursuant to this Agreement shall otherwise be subject to the provisions of the Credit Agreement and the other Credit Documents.

Section 17 Borrower’s Certifications. By its execution of this Agreement, the undersigned officer, to the best of his or her knowledge, and the Borrower hereby certifies that:

(a) The representations and warranties contained in the Credit Agreement and the other Credit Documents are true and correct in all material respects on and as of the date hereof to the same extent as though made on and as of the date hereof, except to the extent such representations and warranties expressly relate to an earlier date, in which case such representations and warranties were true and correct in all material respects on and as of such earlier date;

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(b) No event has occurred and is continuing or would result from the consummation of the proposed Borrowing contemplated hereby that would constitute a Default or an Event of Default; and

(c) Borrower has performed in all material respects all agreements and satisfied all conditions which the Credit Agreement provides shall be performed or satisfied by it on or before the date hereof.

Section 18 Borrower Covenants. By its execution of this Agreement, the Borrower hereby covenants that:

(a) Borrower shall deliver or cause to be delivered the legal opinion and documents set forth in Section 4 of Extension Agreement No. 1; and

(b) Set forth on the attached Officers’ Certificate are the calculations (in reasonable detail) demonstrating compliance with the financial tests described in Section 10.9 and 10.10 of the Credit Agreement as of the last day of the most recently ended fiscal quarter after giving effect to such New Term Loans provided by this Agreement.

Section 19 Notice. For purposes of the Credit Agreement, the initial notice address of the New Loan Lender shall be as set forth below its signature below.

Section 20 Non-US Lenders. For each New Loan Lender that is a Non-US Lender, delivered herewith to the Administrative Agent are such forms, certificates or other evidence with respect to United States federal income tax withholding matters as such New Loan Lender may be required to deliver to the Administrative Agent pursuant to subsection 5.4(d) of the Credit Agreement.

Section 21 Recordation of the New Loans. Upon execution and delivery hereof, the Administrative Agent will record the New Term Loans made by the New Loan Lender in the Register as a 2016 Tranche B Term Loan.

Section 22 Amendment, Modification and Waiver. This Agreement may not be amended, modified or waived except by an instrument or instruments in writing signed and delivered on behalf of each of the parties hereto.

Section 23 Entire Agreement. This Agreement, the Credit Agreement and the other Credit Documents represent the entire agreement among the parties hereto with respect to the subject matter hereof, and there are no promises, undertakings, representations or warranties by the parties hereto relative to the subject matter hereof not expressly set forth or referred to herein or in the Credit Agreement or other Credit Documents.

Section 24 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

Section 25 Severability. Any term or provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

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Section 26 Counterparts. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by facsimile or other electronic transmission), and all of said counterparts taken together shall be deemed to constitute one and the same instrument.

Section 27 Amount Approval. In accordance with Section 2.14(a) of the Credit Agreement, the Administrative Agent hereby approves the making of New Term Loan Commitments in an amount less than $25,000,000, as contemplated hereby.

[signature pages follow]

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IN WITNESS WHEREOF, each of the undersigned has caused its duly authorized officer to execute and deliver this Agreement as of April 12, 2012.

BARCLAYS BANK PLC
By:
	Name:
	Title:
Notice Address:
Attention:
Telephone:
Facsimile:
SERENA SOFTWARE, INC.
By:
	Name:
	Title:

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Consented to by:
BARCLAYS BANK PLC, as Administrative Agent
By:
	Name:
	Title:

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SCHEDULE A

TO JOINDER AGREEMENT

Name of New Loan Lender	Type of Commitment	Amount
Barclays Bank PLC	New Term Loan Commitment	$	15,856,675.35
		Total: $	15,856,675.35

EX-10.33

Exhibit 10.33

FY 2013 Executive Annual Incentive Plan

Purpose:	The Executive Annual Incentive Plan is designed to motivate Executive Officers to focus on specific, measurable corporate goals and provide performance-based compensation to Executive Officers based on the achievement of these goals.
Eligibility:	The Plan Participants include Executive Officers of Serena. Executive Officers are officers of Serena at the level of Senior Vice President or above. A Plan Participant must be a regular, full-time employee of Serena at the end of the applicable fiscal period and remain actively employed through the date of the bonus payout to be eligible to receive the applicable bonus amount. A Plan Participant must be a regular, full-time employee of Serena at the end of the fiscal year and remain actively employed through the date of the bonus payout to be eligible to receive payment based on over-achievement of annual performance metrics.
Target Bonus:	The target incentive bonus is based on a percentage of the Plan Participant’s annual base salary as set forth in the Plan Summary. The Plan Participant’s annual base salary is based on the amount of base compensation actually earned by the Plan Participant during the applicable fiscal period or such portion of the fiscal period that the Plan Participant is eligible to participate under the Plan.
Bonus Payments:	The incentive bonus will be paid on either a semi-annual or annual basis as set forth in the Participant’s Plan Summary. Payment will be made within two and one-half months of the financial close of the applicable fiscal period. Payments will be subject to applicable payroll taxes and withholdings. Aggregate payments for the fiscal year will be capped at 200% for the portion of the target bonus applicable to the achievement of Consolidated Net License Revenue and EBITA (Earnings Before Interest, Taxes and Amortization) and 125% of the portion of the target bonus applicable to the achievement of management objectives, including applicable key performance indicators. No portion of the target bonus applicable to the achievement of Consolidated Net License Revenue and EBITA will be payable until achievement of at least 85% and 90%, respectively, of the applicable targets. Any semi-annual payment that is applicable to the achievement of a specific performance metric for the first half of the fiscal year may not exceed one-half of the Plan Participant’s annual target bonus for such performance metric (prorated based on period of eligibility), with the second semi-annual payment adjusted to reflect the achievement of performance metrics for the entire fiscal year. Bonus amounts for over-achievement of performance metrics will be determined on an annual basis and paid after the end of the fiscal year, subject to continued eligibility of the Plan Participant.
Performance Metrics:	The performance metrics and achievement schedule for each performance metric used to determine the amount of the incentive bonus to be paid to the Plan Participant are set forth in the Plan Summary. Total bonus payments for the fiscal year will be based on the achievement of annual performance metrics.
Proration:	The incentive bonus will be pro-rated based on the number of days that the Plan Participant is employed as a regular, full-time employee of Serena during the applicable fiscal period and eligible to participate under the Plan. If the Plan Participant’s employment terminates before the end of the applicable fiscal period or prior to the payment of an incentive bonus for such fiscal period, the Plan Participant will not be eligible to receive a prorated portion of the incentive bonus.

Adjustments:	In the event of an acquisition or disposition of a business by Serena, the Plan Administrator may adjust the applicable financial performance metrics to reflect the potential impact on Serena’s financial performance.
Recovery Policy:	The Compensation Committee of the Board of Directors will, to the extent permitted by law, have the sole and absolute authority to make retroactive adjustments to, and cause Serena to recover, any incentive bonus that is paid to a Plan Participant during the three-year period preceding the date that Serena is required to prepare a restatement of its financial statements (other than those resulting from a change in accounting policies or changes in accounting rules and regulations) if and to the extent the amount of the incentive bonus was predicated upon the achievement of financial results that were adjusted as a result of the restatement. The adjustment to the incentive bonus will be calculated as the excess amount paid on the basis of Serena’s restated results, and will be payable by the Plan Participant to Serena upon demand.
Plan Provisions:	This fiscal year under this Plan commences on February 1, 2012 and ends on January 31, 2013. This Plan supersedes the FY 2012 Executive Annual Incentive Plan, which is null and void as of the adoption of this Plan.
	The Plan does not represent an employment contract or agreement between Serena and any Plan Participant. Participation in the Plan does not guarantee participation in other or future incentive plans. Plan structure and participation will be determined on an annual basis.
	The Plan will be administered by the Compensation Committee of the Board of Directors. The Plan Administrator will have all powers and discretion necessary or appropriate to administer and interpret the Plan and Plan Summaries, except that actions related to the compensation of Serena’s Chief Executive Officer must be approved by a majority of the non-executive directors of the Board of Directors. The Plan Administrator reserves the right to modify or terminate the Plan and/or Plan Summaries for any reason at any time, and to exercise its own judgment and discretion with regard to determining the achievement of performance metrics and amount of bonus payments. Modifications to the Plan and any Plan Summary are valid only if approved by the Plan Administrator or, in the case of Serena’s Chief Executive Officer, a majority of the non-executive directors of the Board.

EX-10.34

Exhibit 10.34

FY 2013 Management Annual Incentive Plan

Purpose:	The Management Annual Incentive Plan is designed to motivate Vice Presidents and other senior managers of Serena to focus on specific, measurable corporate and functional area goals and provide performance-based compensation based on the achievement of these goals.
Eligibility:	The Plan Participants include Vice Presidents and other senior managers of Serena approved by Serena’s Chief Executive Officer and Chief Financial Officer. A Plan Participant must be a regular, full-time employee of Serena at the end of the applicable fiscal period and remain actively employed through the date of the bonus payout to be eligible to receive the incentive bonus. A Plan Participant must be a regular, full-time employee of Serena at the end of the fiscal year and remain actively employed through the date of the bonus payout to be eligible to receive any payment for over-achievement of performance metrics.
Target Bonus:	The target incentive bonus is based on a percentage of the Plan Participant’s annual base salary as set forth in the Plan Summary. The Plan Participant’s annual base salary is based on the amount of base compensation actually earned by the Plan Participant during the applicable fiscal period or such portion of the fiscal period that the Plan Participant is eligible to participate under the Plan. No other compensation or payments, such as commissions, allowances, benefits, reimbursements or stock gains, will be considered as base salary earnings for the purpose of calculating bonus payments.
Bonus Payments:	The incentive bonus will be paid on either a quarterly or semi-annual basis as set forth in the Plan Summary. Payment will be made as soon as reasonably practicable following the financial close of the applicable fiscal period. Payments will be subject to applicable payroll deductions, taxes and withholdings.
Performance Metrics:	The performance metrics and achievement schedule for each performance metric used to determine the amount of the incentive bonus are set forth in the Plan Summary. Except as expressly set forth in the Plan Summary, interim quarterly and semi-annual payments will be capped at 100% of the year-to-date target bonus for each element of the incentive bonus. Total bonus payments for the fiscal year will be based on the achievement of performance metrics on an annual basis. Any payment for overachievement of performance metrics will be calculated and paid as soon as reasonably practicable following the financial close of the fiscal year.
Proration:	Bonus amounts will be pro-rated based on the amount of the Plan Participant’s base salary earned during the portion of the applicable fiscal period that the Plan Participant was both a regular, full-time employee of Serena and eligible to participate under the Plan. If the Plan Participant’s employment terminates before the end of the applicable fiscal period or prior to the payment of the incentive bonus for the fiscal period, the Plan Participant will not be eligible to receive a bonus payment.
Adjustments:	In the event of an acquisition or disposition of a business by Serena, the Plan Administrator may adjust the applicable financial performance metrics to reflect the potential impact on Serena’s financial performance.

Plan Provisions:	The measurement period for this Plan is the fiscal year ending January 31, 2013. This Plan supersedes all prior incentive plans for Plan Participants, including the FY 2012 Vice President Annual Incentive Plan.
	The Plan does not represent an employment contract or agreement between Serena and any Plan Participant. Participation in the Plan does not guarantee participation in other or future incentive plans. Plan structure and participation will be determined on an annual basis.
	Any bonus amount paid to a Plan Participant based on the achievement of financial performance metrics is subject to adjustment based on year-to-date achievement and reversal of revenue/bookings pursuant to Serena’s accounting and order management policies and practices.
	Serena reserves the right to recover all advances against compensation that are not fully offset by earned wages, commissions and bonuses. Only the Chief Executive Officer and Chief Financial Officer of Serena are authorized to forgive advances against compensation.
	Serena reserves the right to modify or terminate the Plan and/or Plan Summary for any reason at any time. Notification of changes to the Plan and/or Plan Summary will be made in writing or by e-mail to applicable Plan Participants. Modifications to the Plan and/or Plan Summary are valid only if approved in writing by the Chief Executive Officer and Chief Financial Officer of Serena.

EX-12.1

Exhibit 12.1

RATIO OF EARNINGS TO FIXED CHARGES

Computation of Ratio of Earnings to Fixed Charges

(in thousands, except for ratios)

	Fiscal Year Ended January 31,
	2010			2011			2012
(Loss) income before income taxes	$	(31,727	)	$	(21,993	)	$	9,862
Interest expense		28,446			24,876			25,625
Amortization and write-off of debt issuance costs		2,158			1,857			1,361
Portion of rentals deemed to be interest		1,822			1,538			1,441
Income available for fixed charges	$	699		$	6,278		$	38,289
Fixed charges:
Interest expense	$	28,446		$	24,876		$	25,625
Amortization and write-off of debt issuance costs		2,158			1,857			1,361
Portion of rentals deemed to be interest		1,822			1,538			1,441
Total fixed charges	$	32,426		$	28,271		$	28,427
Ratio of earnings to fixed charges		0.0 x			0.2 x			1.3 x

For purposes of computing the ratio of earnings to fixed charges, earnings consist of (loss) income before income taxes plus fixed charges. Fixed charges consist of (i) interest expense including gains and losses on early extinguishment of debt, (ii) amortization and write-off of debt issuance costs, and (iii) that portion of rental expense we estimate to be representative of interest. Earnings would not have been sufficient to cover fixed charges by $31.7 million and $22.0 million for the fiscal years ended January 31, 2010 and 2011, respectively.

EX-21.1

Exhibit 21.1

SUBSIDIARIES

Legal Name	Jurisdiction of Incorporation or Organization
Serena Software Pty. Limited	Australia
Serena Software Benelux BV BA	Belgium
Serena Software do Brazil Ltda	Brazil
Serena Software Canada Limited	Canada
Serena Software SAS	France
Serena Software GmbH	Germany
Serena Software Japan KK	Japan
Merant Trustees Limited	Jersey
Serena Software Pte Limited	Singapore
Serena Software SA	Spain
Serena Software Nordic AB	Sweden
Serena Software Ukraine LLC	Ukraine
Merant Limited	United Kingdom
Merant Holdings	United Kingdom
Serena Holdings	United Kingdom
Serena Software Europe Limited	United Kingdom

EX-31.1

Exhibit 31.1

CERTIFICATION

I, John Nugent, certify that:

1. I have reviewed this annual report on Form 10-K of Serena Software, 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 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 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.

April 30, 2012

/S/    JOHN NUGENT        

John Nugent

President and Chief Executive

Officer And Director

EX-31.2

Exhibit 31.2

CERTIFICATION

I, John J. Alves, certify that:

1. I have reviewed this annual report on Form 10-K of Serena Software, 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 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 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.

April 30, 2012

/S/    JOHN J. ALVES        

John J. Alves

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

(Principal Financial and Accounting 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 Annual Report on Form 10-K of Serena Software, Inc. (the “Company”) for the period ending January 31, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John Nugent, 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:

(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 at the dates and for the periods presented.

April 30, 2012	/S/    JOHN NUGENT
	John Nugent
	President and Chief Executive
	Officer And Director

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

This Certification is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of this Form 10-K), irrespective of any general incorporation language contained in such filing.

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 Annual Report on Form 10-K of Serena Software, Inc. (the “Company”) for the period ending January 31, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John J. Alves, Interim Chief Financial 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:

(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 at the dates and for the periods presented.

April 30, 2012	/s/    JOHN J. ALVES
	John J. Alves
	Vice President, Finance, Chief Accounting Officer and Interim Chief Financial Officer (Principal Financial and Accounting Officer)

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

This Certification is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of this Form 10-K), irrespective of any general incorporation language contained in such filing.

XML

Goodwill And Other Intangible Assets

12 Months Ended

Jan. 31, 2012

Goodwill And Other Intangible Assets [Abstract]

Goodwill And Other Intangible Assets

(3)    Goodwill and Other Intangible Assets

(a)    Goodwill:

The change in the carrying amount of goodwill for the fiscal years ended January 31, 2011 and 2012 is as follows (in thousands):

Balance as of January 31, 2010	$	464,331
Correction of immaterial error—purchase accounting allocation for the Projity acquisition		(1,931	)
Balance as of January 31, 2011		462,400
No adjustments to carrying amount		—
Balance as of January 31, 2012	$	462,400

(b)    Other Intangible Assets:

Other intangible assets are comprised of the following (in thousands):

	As of January 31, 2011
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Amortizing intangible assets:
Acquired technology	$	178,699	$	(175,027	)	$	3,672
Customer relationships		278,900		(171,014	)		107,886
Trademark/Trade name portfolio		14,300		(8,779	)		5,521
Capitalized software		6,346		(5,176	)		1,170
Total	$	478,245	$	(359,996	)	$	118,249

	As of January 31, 2012
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Amortizing intangible assets:
Acquired technology	$	178,699	$	(178,699	)	$	—
Customer relationships		278,900		(206,030	)		72,870
Trademark/Trade name portfolio		14,300		(10,559	)		3,741
Capitalized software		6,649		(5,996	)		653
Total	$	478,548	$	(401,284	)	$	77,264

Estimated amortization expense:
For year ending January 31, 2013	$	36,625
For year ending January 31, 2014		36,518
For year ending January 31, 2015		4,121
Thereafter		—
Total	$	77,264

As of January 31, 2012, the weighted average remaining amortization period for customer relationships is 25 months; trademark/trade name portfolio is 25 months; and capitalized software is 18 months. The total weighted average remaining amortization period for all identifiable intangible assets is 15 months. Aggregate amortization expense of acquired technology was $41.4 million, $33.7 million and $3.7 million in the fiscal years ended January 31, 2010, 2011 and 2012, respectively. Aggregate amortization expense of other intangible assets was $36.8 million in each of the fiscal years in the three year period ended January 31, 2012. Aggregate amortization expense of acquired technology in fiscal year 2010 included a charge for impairment of intangibles totaling $6.8 million. There were no impairment charges in fiscal year 2011 or 2012.

XML

Property And Equipment

12 Months Ended

Jan. 31, 2012

Property And Equipment [Abstract]

Property And Equipment

(2)    Property and Equipment

Property and equipment, with economic useful lives ranging from three years to five years, consisted of the following (in thousands):

	As of January 31,
	2011		2012
Computers and equipment	$	10,047	$	10,273
Furniture and fixtures		7,117		7,691
		17,164		17,964
Less: accumulated depreciation		13,562		13,085
	$	3,602	$	4,879

Depreciation expense was $5.3 million, $3.0 million and $2.8 million in fiscal year 2010, 2011 and 2012, respectively.

XML

Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Jan. 31, 2012	Jan. 31, 2011
ASSETS
Cash and cash equivalents	$ 109,688	$ 126,374
Accounts receivable, net of allowance of $1,095 and $963 at January 31, 2011 and 2012, respectively	23,747	22,903
Deferred taxes, net	5,015	4,456
Prepaid expenses and other current assets	7,779	6,152
Total current assets	146,229	159,885
Property and equipment, net	4,879	3,602
Goodwill	462,400	462,400
Other intangible assets, net	77,264	118,249
Other assets	3,600	3,901
Total assets	694,372	748,037
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term debt and current portion of long-term debt		7,500
Accounts payable	1,515	2,438
Income taxes payable	683	2,395
Accrued expenses	18,916	22,291
Accrued interest on term loan and subordinated notes	8,799	8,241
Deferred revenue	68,861	68,946
Total current liabilities	98,774	111,811
Deferred revenue, net of current portion	9,443	10,246
Long-term liabilities	5,423	4,036
Deferred taxes	20,835	36,714
Term loan	308,500	308,500
Revolving term credit facility		35,000
Senior subordinated notes	134,265	134,265
Total liabilities	577,240	640,572
Commitments and contingencies
Stockholders' equity:
Preferred Stock
Common stock, $0.01 par value, 200,000,000 shares authorized, 98,389,625 and 98,392,478 shares issued and outstanding at January 31, 2011 and 2012, respectively	984	984
Additional paid-in capital	516,578	515,182
Accumulated other comprehensive loss	(1,573)	(900)
Accumulated deficit	(398,857)	(407,801)
Total stockholders' equity	117,132	107,465
Total liabilities and stockholders' equity	694,372	748,037
Series A Preferred Stock [Member]
Stockholders' equity:
Preferred Stock

XML

Consolidated Statements Of Cash Flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jan. 31, 2012	Jan. 31, 2011	Jan. 31, 2010
Cash flows from operating activities:
Net (loss) income	$ 8,944	$ (9,556)	$ (13,022)
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization of acquired technology and other intangibles, and impairment of other intangibles	43,273	73,535	83,538
Deferred income taxes	(16,123)	(25,343)	(26,165)
Tax shortfall from employee stock plans		(228)	(173)
(Gain) loss on early extinguishment of debt		243	(4,602)
Interest expense on term credit facility and subordinated notes, net of interest paid	634	(521)	(452)
Fair market value adjustment on the interest rate swap		(1,616)	(4,277)
Amortization and write-off of debt issuance costs	2,848	1,857	2,158
Stock-based compensation	1,395	3,585	2,854
Acquisition, restructure and other charges		(380)
Goodwill adjustments		1,433
Changes in operating assets and liabilities:
Accounts receivable	(844)	1,896	5,662
Prepaid expenses and other assets	(2,215)	(801)	289
Accounts payable	(825)	778	(717)
Income taxes payable	(943)	1,116	(4,104)
Accrued expenses	(3,010)	(429)	1,044
Deferred revenue	(889)	450	(3,283)
Net cash provided by operating activities	32,245	46,019	38,750
Cash flows used in investing activities:
Capital expenditures	(3,489)	(2,385)	(760)
Capital expenditures for internal use software	(313)	(403)	(3,567)
Cash paid in acquisitions, net of cash received			(400)
Net cash used in investing activities	(3,802)	(2,788)	(4,727)
Cash flows provided by (used in) financing activities:
Amend and extend transaction fees	(1,957)
Common stock repurchased under stock repurchase plans		(347)	(212)
Repurchase of option rights under employee stock option plan	(2)	(63)	(661)
Exercise of stock options under employee stock option plan	3	24	21
Principal payments and early extinguishments under the term credit facility and senior subordinated notes	(42,500)	(40,930)	(21,829)
Net cash provided by (used in) financing activities	(44,456)	(41,316)	(22,681)
Effect of exchange rate changes on cash and cash equivalents	(673)	(537)	(1,390)
Net increase (decrease) in cash and cash equivalents	(16,686)	1,378	9,952
Cash and cash equivalents at beginning of year	126,374	124,996	115,044
Cash and cash equivalents at end of year	109,688	126,374	124,996
Supplemental disclosures of cash flow information:
Income taxes paid, net of refunds	18,303	11,042	11,288
Interest expense paid	$ 24,991	$ 25,154	$ 33,500

XML

Description Of Business And Summary Of Significant Accounting Policies

12 Months Ended

Jan. 31, 2012

Description Of Business And Summary Of Significant Accounting Policies [Abstract]

Description Of Business And Summary Of Significant Accounting Policies

(1)    Description of Business and Summary of Significant Accounting Policies

(a)    Description of Business

SERENA Software, Inc. ("SERENA" or the "Company") is the largest global independent software company in terms of revenue solely focused on managing change and processes across information technology, or IT, environments. The Company's products and services primarily address the complexity of application lifecycle management, or ALM, and are used by customers to manage the development of, and control change in, mission critical applications within both mainframe and distributed systems environments. In addition, the Company provides products and services to enable customers to rapidly address IT service management, or ITSM, and business process challenges through the use of visually designed process workflows. The Company's products and services allow customers to orchestrate and manage their application development, IT and business processes by automating and integrating disparate ALM and ITSM products and processes, improving process visibility and consistency, enhancing software integrity, mitigating application development risks, supporting auditability and regulatory compliance, and boosting productivity. The Company's revenue is generated by software licenses, maintenance contracts and professional services. The Company's software products are typically installed within customer IT environments and generally accompanied by renewable annual maintenance contracts.

(b)    Spyglass Merger Corp.

On March 10, 2006, Spyglass Merger Corp., an affiliate of Silver Lake, a private equity firm, merged with and into us, a transaction we refer to in this report as the Merger. As a result of the Merger, our common stock ceased to be traded on the NASDAQ National Market and we became a privately-held company, with approximately 56.5% of our common stock at the time of the merger on a fully diluted basis owned by investment funds affiliated with Silver Lake.

(c)    Correction of Immaterial Errors

In fiscal 2012, the Company identified certain errors related to overstated income tax accruals of approximately $3.9 million that originated in fiscal 2009. Management concluded that the effect of correcting these errors is not material to fiscal 2009 but would have been material if corrected in fiscal 2012. Accordingly, financial data as of and for the fiscal years ended January 31, 2009, 2010 and 2011 have been revised to reflect the correction of these errors.

(d)    Basis of Presentation

The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Serena has prepared the accompanying consolidated financial statements in conformity with accounting principles generally accepted in the United States of America.

(e)    Foreign Currency Translation

The functional currencies of the Company's foreign subsidiaries are primarily the British Pound in the United Kingdom and the Euro in Europe, and to a lesser extent, other currencies including the Swiss Franc, Swedish Krona and Danish Krone in Europe, the Singapore Dollar, Australian Dollar, Japanese Yen, Indian Rupee and South-Korean Won in Asia and the Pacific Rim, and the Brazilian Real in Latin America. These foreign subsidiaries' financial statements are translated using current exchange rates for balance sheet accounts and average rates during the period for income statement accounts. Translation adjustments are recorded as components of other comprehensive income (loss) in the consolidated statements of stockholders' equity. Foreign currency transaction gains and losses are included in operating expenses, and have not been material to date.

(f)    Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. As of January 31, 2011 and 2012, cash equivalents consisted of money market funds.

The Company has classified its investments as "available-for-sale." These investments are carried at fair value, based on quoted market prices, and unrealized gains and losses are recorded as components of other comprehensive income (loss) in the consolidated statements of stockholders' equity. Investments deemed to be other-than-temporarily impaired would be recorded as other losses in the consolidated statements of operations. Historically, unrealized losses have been insignificant and the Company has not characterized any of its investments as other-than-temporarily impaired. Realized gains and losses upon sale or maturity of these investments are determined using the specific identification method and are recorded as other income or loss in the consolidated statements of operations.

Interest income consists principally of earnings generated from interest-bearing accounts held by the Company.

Cash and cash equivalents consisted of the following as of January 31, 2011 and 2012 (in thousands):

	As of January 31, 2011						As of January 31, 2012
	Cost		Unrealized Losses		Fair Market Value		Cost		Unrealized Losses		Fair Market Value
Cash and Cash Equivalents:
Cash	$	23,571	$	—	$	23,571	$	31,019	$	—	$	31,019
Money Market Funds		102,803		—		102,803		78,669		—		78,669
	$	126,374	$	—	$	126,374	$	109,688	$	—	$	109,688

(g)    Allowance for doubtful accounts

We maintain an allowance for doubtful accounts to reserve for potentially uncollectible trade receivables. We review our trade receivables by aging category to identify significant customers with known disputes or collection issues. For accounts not specifically identified, we provide reserves based on the age of the receivable. In determining the reserve, we make judgments about the creditworthiness of significant customers based on ongoing credit evaluations. We also consider our historical level of credit losses and current economic trends that might impact the level of future credit losses.

	Balance at Beginning of Period		Additions- Charges to Expenses		(a) Deductions & Write- offs			Balance at End of Period
	(in thousands)
Year Ended January 31, 2010:
Allowance for doubtful accounts	$	649	$	898	$	(67	)	$	1,480
Year Ended January 31, 2011:
Allowance for doubtful accounts	$	1,480	$	50	$	(435	)	$	1,095
Year Ended January 31, 2012:
Allowance for doubtful accounts	$	1,095	$	4	$	(136	)	$	963

(a) Deductions related to the allowance for doubtful accounts represent amounts written off against the allowance.

(h)    Property and Equipment

Property and equipment are stated at cost and are depreciated using the straight-line method over the estimated useful lives of the assets, generally three to five years.

(i)    Goodwill and Other Intangible Assets

Goodwill represents the excess of cost over the fair value of net assets of businesses acquired. Goodwill and intangible assets acquired in a purchase business combination that are determined to have an indefinite useful life are not amortized, but instead tested for impairment at least annually. Intangible assets with estimable useful lives are amortized over their respective estimated useful lives and are reviewed for impairment.

Acquired technologies are being amortized over periods ranging from 1.5 years to 5 years and the amortization expense associated with acquired technologies is reflected in cost of revenue in the consolidated statements of operations.

Other intangible assets are being amortized over periods ranging from 3 years to 8 years and the amortization expense associated with other intangible assets is reflected in operating expenses in the consolidated statements of operations. Other intangible assets also include certain capitalized internal use software costs.

For website development costs and the development costs related to the Company's on-demand application services, the Company capitalized qualifying computer software costs, incurred during the application development stage. Costs related to preliminary project activities and post-implementation activities are expensed as incurred. The Company capitalized $3.6 million of such costs in the fiscal year ended January 31, 2010. No such costs were capitalized in the fiscal years ended January 31, 2011 and 2012. The Company has also capitalized certain other costs totaling $0.0 million, $0.4 million and $0.3 million in fiscal 2010, 2011 and 2012, respectively, associated with computer software it has acquired for internal use. These capitalized costs will be amortized on a straight line basis over the expected useful life of the software, ranging from three to five years, beginning on the date the application becomes available for its intended use.

(j)    Impairment or Disposal of Long-lived Assets

Long-lived assets, such as property, plant and equipment, and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of would be separately presented in the consolidated balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposed group classified as held for sale would be presented separately in the appropriate asset and liability sections of the consolidated balance sheet.

In the fourth quarter of the fiscal year ended January 31, 2010, the Company discontinued marketing one of its on-demand application services and identified a triggering event for its other on-demand application services due to sales falling below expectations. As a result, the Company tested its capitalized software costs related to its on-demand application services for impairment and concluded that the carrying amount for these long-lived assets were not recoverable and were fully impaired. Accordingly, the Company recorded an impairment charge in the fourth quarter of fiscal year 2010 totaling $6.8 million.

Goodwill is tested annually for impairment in the fourth quarter of each fiscal year, and is tested for impairment more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount exceeds the asset's fair value. This determination is made at the reporting unit level and consists of two steps. First, the Company determines the fair value of a reporting unit and compares it to its carrying amount. Second, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized for any excess of the carrying amount of the reporting unit's goodwill over the implied fair value of that goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation. The residual fair value after this allocation is the implied fair value of the reporting unit goodwill.

The Company completed this test during the fourth quarters of fiscal year 2010, 2011 and 2012 and did not record an impairment loss on goodwill in any of those fiscal years.

(k)    Software Development Costs

Development costs related to software products to be sold are expensed as incurred until technological feasibility of the product has been established. Based on the Company's product development process, technological feasibility is established upon completion of a working model. Costs incurred by the Company between completion of the working model and the point at which the product is ready for general release have not been significant. Accordingly, no costs have been capitalized to date.

(l)    Income Taxes

The Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets are recognized for deductible temporary differences, along with net operating loss carryforwards, if it is more likely than not that the tax benefits will be realized. To the extent a deferred tax asset cannot be recognized under the preceding criteria, allowances are established. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The Company includes interest and penalties related to uncertain income taxes in the provision for income taxes.

(m)    Use of Estimates

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

(n)    Revenue Recognition

The Company recognizes revenue when all of the following criteria are met: (1) persuasive evidence of an arrangement exists, (2) delivery has occurred, (3) the fee is fixed or determinable and (4) collectibility is probable. Serena defines each of these four criteria as follows:

Persuasive evidence of an arrangement exists. It is Serena's customary practice to have a written contract signed by both the customer and Serena, or a purchase order or purchase authorization from those customers whose standard practice is to employ such instruments.

Delivery has occurred. Serena's software is physically or electronically delivered to the customer. If an arrangement includes undelivered products or services that are essential to the functionality of the delivered product, or includes acceptance criteria, delivery is not considered to have occurred until these essential products or services are delivered and acceptance criteria are met.

The fee is fixed or determinable. Serena's policy is to not provide customers the right to a refund of any portion of their license fees paid. The Company's customary payment terms require customers to pay at least 80% of the license fee within one year or less. With respect to these arrangements where 20% or less of the arrangement fee is due beyond one year, the Company considers these arrangements to be fixed and determinable since such arrangements are standard business practice and the Company has a history of successful collections without making concessions. Arrangements with payment terms extending beyond these customary payment terms are considered not to be fixed or determinable, and revenues from such arrangements are recognized as payments become due and payable.

Collectibility is probable. Collectibility is assessed on a customer-by-customer basis. Serena typically sells to customers for whom there is a history of successful collection. If it is determined from the outset of an arrangement that collectibility is not probable, revenues are recognized as cash is collected.

For multiple element arrangements (e.g., license and maintenance), revenue is allocated to each component of the contract based on vendor specific objective evidence ("VSOE") of its fair value, which is the price charged when the elements are sold separately. VSOE must exist for the undelivered elements to allocate the total fee among all delivered and non-essential undelivered elements of the arrangement. Since VSOE of fair value has been established for maintenance but not for software licenses, the residual method is used to allocate revenue to the license portion of multiple-element arrangements.

Our VSOE for certain elements of an arrangement is based upon the pricing in comparable transactions when the element is sold separately or through the existence of stated renewal rates. VSOE for post contract support services are primarily based upon customer renewal history where the services are sold separately. VSOE for professional services is also based upon the price charged when the services are sold separately.

For multiple element arrangements, VSOE must exist for the undelivered elements to allocate the total fee among all delivered and non-essential undelivered elements of the arrangement. If the undelivered elements of the arrangement are essential to the functionality of the product, revenue is deferred until the essential elements are delivered. If VSOE does not exist for one or more non-essential undelivered elements, revenue is deferred until such evidence does exist for the undelivered elements, or until all elements are delivered, whichever is earlier. If VSOE of all non-essential undelivered elements exists but VSOE does not exist for one or more delivered elements, revenue is recognized using the residual method. Under the residual method, the revenue for the undelivered elements is deferred based upon VSOE and the remaining portion of the arrangement fee is recognized as revenue for the delivered elements, assuming all other criteria for revenue recognition have been met.

The Company sells products to its end users and distributors under license agreements or purchase orders. Each new license includes maintenance, which includes the right to receive telephone support, "bug fixes" and unspecified upgrades and enhancements, for a specified duration of time, usually one year. The fee associated with such agreements is allocated between software license revenue and maintenance revenue based on the residual method. Software license revenue from these agreements or purchase orders is recognized upon receipt and acceptance of a signed contract or purchase order and delivery of the software, provided the related fee is fixed or determinable and collectibility of the revenue is probable. If an acceptance period is required, revenue is recognized upon the earlier of customer acceptance or the expiration of the acceptance period, as defined in the applicable software license agreement.

The Company recognizes maintenance revenue ratably over the life of the related maintenance contract. Maintenance contracts on perpetual licenses generally renew annually, although the Company does on occasion enter into multi-year maintenance agreements. The Company typically invoices and collects maintenance fees on an annual basis at the anniversary date of the license. Deferred revenue represents amounts received by the Company in advance of performance of the maintenance obligation. Professional services revenue includes fees derived from the delivery of training, installation, and consulting services. Revenue from training, installation, and consulting services is recognized on a time and materials basis as the related services are performed. These services have not historically involved significant production, modification or customization of the software and the services have not been essential to the functionality of the software.

(o)    Stock-Based Compensation

Stock-based compensation cost is measured at the grant date based on the fair value of the award. The Company has elected the graded-vesting attribution method for recognizing stock-based compensation expense over the requisite service period for each separately vesting tranche of awards as though the awards were, in substance, multiple awards.

(p)    Segment Reporting

The Company's chief operating decision-maker is considered to be the Company's chief executive officer ("CEO"). The CEO reviews financial information presented on an entity level basis accompanied by disaggregated information about revenues by product type and certain information about geographic regions for purposes of making operating decisions and assessing financial performance. The entity level financial information is identical to the information presented in the accompanying consolidated statements of operations. The Company has determined that it operates in a single operating and reportable segment: enterprise change management software.

Geographic information

	Fiscal Years Ended January 31,
	2010		2011		2012
	(in thousands)
Revenues:
United States of America:
Software licenses	$	32,008	$	31,075	$	32,817
Maintenance and professional services		120,848		111,679		110,218
Total United States of America		152,856		142,754		143,035
Europe, Asia and South America:
Software licenses		17,389		20,307		22,096
Maintenance and professional services		53,769		51,325		54,410
Total Europe, Asia and South America		71,158		71,632		76,506
Total	$	224,014	$	214,386	$	219,541

The Company operates in the United States of America, Europe, the Asia Pacific region and Latin America. In general, revenues are attributed to the country in which the contract originates.

	As of January 31,
	2011		2012
	(In thousands)
Property and equipment:
United States of America	$	1,964	$	2,909
Europe, Asia and South America		1,638		1,970
Total	$	3,602	$	4,879

Other information

In each of the fiscal years ended January 31, 2010, 2011 and 2012, 58% of the Company's total software license revenue came from the Company's distributed systems products and 42% came from the Company's mainframe products.

Major customers

No customer accounted for 10% or more of consolidated revenues in fiscal 2010, 2011 or 2012.

(q)    Advertising

Advertising costs are expensed as incurred. Advertising expense is included in sales and marketing expense and amounted to $3.8 million, $3.1 million and $3.5 million in the fiscal years ended January 31, 2010, 2011 and 2012, respectively.

(r)    Recently Issued Accounting Standards

In September 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2011-08, Intangibles—Goodwill and Other (Topic 350)—Testing Goodwill for Impairment (ASU 2011-08), to allow an entity to use a qualitative approach to test goodwill for impairment. ASU 2011-08 permits an entity to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If it is concluded that this is the case, it is necessary to perform the currently prescribed two-step goodwill impairment test. Otherwise, the two-step goodwill impairment test is not required. ASU 2011-08 is effective for fiscal years beginning after December 15, 2011, and early adoption is permitted. The implementation of this accounting guidance is not expected to have a material impact on the Company's consolidated financial position or results of operations.

In June 2011, the FASB issued Accounting Standards Update No. 2011-05, Comprehensive Income (Topic 220)—Presentation of Comprehensive Income (ASU 2011-05), to require an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. ASU 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of equity. ASU 2011-05 is effective for interim and annual periods beginning on or after December 15, 2011. The implementation of this accounting guidance is not expected to have a material impact on the Company's consolidated financial position or results of operations.

In January 2010, the FASB issued an amendment regarding improving disclosures about fair value measurements. This new guidance requires some new disclosures and clarifies some existing disclosure requirements about fair value measurement. The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years. The Company's adoption of this guidance did not have any material impact on its consolidated financial position or results of operations.

In October 2009, the FASB issued Accounting Standards Updated ("ASU") No. 2009–13, Multiple–Deliverable Revenue Arrangements, ("ASU 2009–13"). ASU 2009–13 amends existing revenue recognition accounting pronouncements that are currently within the scope of FASB ASC Subtopic 605-25. The new standard provides accounting principles and application guidance on whether certain non-software multiple deliverables exist, how the arrangement should be separated, and the consideration allocated. This guidance eliminates the requirement to establish the fair value of undelivered products and services and also eliminates the residual method of allocating arrangement consideration. The new guidance provides for separate revenue recognition based upon management's estimate of the selling price for an undelivered item when there is no other means to determine the fair value of that undelivered item. Under the previous guidance, if the fair value of all of the undelivered elements in the arrangement was not determinable, then revenue was generally deferred until all of the items were delivered or fair value was determined. This new approach is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. This guidance will not be effective for the Company until the first quarter of fiscal 2012. The Company's adoption of this guidance on February 1, 2011 did not have any material impact on its consolidated financial position or results of operations.

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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Jan. 31, 2012	Jan. 31, 2011
Allowance for doubtful accounts receivable, current	$ 963	$ 1,095
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares issued	98,392,478	98,389,625
Common stock, shares outstanding	98,392,478	98,389,625
Series A Preferred Stock [Member]
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	1	1
Preferred stock, shares issued	1	1
Preferred stock, shares outstanding	1	1

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Document And Entity Information (USD $)	12 Months Ended
	Jan. 31, 2012	Apr. 30, 2012	Jul. 31, 2011
Document And Entity Information [Abstract]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Jan. 31, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	FY
Entity Registrant Name	SERENA SOFTWARE INC
Entity Central Index Key	0001073967
Current Fiscal Year End Date	--01-31
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		98,446,007
Entity Well-known Seasoned Issuer	No
Entity Public Float			$ 0
Entity Current Reporting Status	No
Entity Voluntary Filers	Yes

XML

Consolidated Statements Of Operations (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jan. 31, 2012	Jan. 31, 2011	Jan. 31, 2010
Revenue:
Software licenses	$ 54,913	$ 51,382	$ 49,397
Maintenance	141,669	143,974	152,464
Professional services	22,959	19,030	22,153
Total revenue	219,541	214,386	224,014
Cost of revenue:
Software licenses	2,632	1,380	3,253
Maintenance	11,452	11,545	12,585
Professional services	21,643	18,151	21,164
Amortization of acquired technology and impairment of intangibles	3,672	33,695	41,415
Total cost of revenue	39,399	64,771	78,417
Gross profit	180,142	149,615	145,597
Operating expenses:
Sales and marketing	61,247	55,602	57,488
Research and development	26,925	31,584	32,737
General and administrative	14,033	15,939	16,600
Amortization of intangible assets	36,796	36,813	36,813
Restructuring, acquisition and other charges	2,974	5,332	7,796
Goodwill adjustments		1,433
Total operating expenses	141,975	146,703	151,434
Operating (loss) income	38,167	2,912	(5,837)
Other income (expense):
Interest income	168	212	437
Gain (loss) on early extinguishment of debt		(243)	4,602
Interest expense	(25,625)	(24,633)	(33,048)
Change in fair value of derivative instrument		1,616	4,277
Amortization and write-off of debt issuance costs	(1,361)	(1,857)	(2,158)
Amend and extend transaction fees	(1,487)
Total other income (expense)	(28,305)	(24,905)	(25,890)
(Loss) income before income taxes	9,862	(21,993)	(31,727)
Income tax (benefit) expense	918	(12,437)	(18,705)
Net (loss) income	$ 8,944	$ (9,556)	$ (13,022)

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Income Taxes

12 Months Ended

Jan. 31, 2012

Income Taxes [Abstract]

Income Taxes

(6)    Income Taxes

Income before income taxes related to foreign operations was $5.5 million, $9.3 million and $12.7 million in fiscal 2010, 2011 and 2012, respectively. The expense (benefit) for income taxes consisted of the following (in thousands):

	Fiscal Years Ended January 31,
	2010			2011			2012
Current:
Federal	$	6,472		$	10,102		$	12,488
State		1,262			923			1,777
Foreign		(274	)		1,881			2,776
		7,460			12,906			17,041
Deferred:
Federal		(21,229	)		(21,348	)		(14,916	)
State		(4,299	)		(3,890	)		(1,583	)
Foreign		(637	)		(105	)		376
		(26,165	)		(25,343	)		(16,123	)
Total income tax (benefit) expense	$	(18,705	)	$	(12,437	)	$	918

The Company's effective tax rate differs from the statutory federal income tax rate of 35% for fiscal 2010, 2011 and 2012 primarily due to the following (in thousands):

	Fiscal Years Ended January 31,
	2010			2011			2012
Tax (benefit) expense at federal statutory rate	$	(11,105	)	$	(7,698	)	$	3,452
Research and experimentation credit		(479	)		(571	)		(316	)
State tax, net of federal effect		(1,861	)		(1,550	)		(251	)
Foreign rate differential		(2,288	)		706			(1,400	)
Change in reserves for uncertain tax positions		(2,496	)		(2,493	)		259
Impairment of goodwill and other intangibles		—			502			—
Domestic Manufacturing Deduction		(588	)		(1,083	)		(1,267	)
Other		112			(250	)		441
Total income tax benefit	$	(18,705	)	$	(12,437	)	$	918

The cumulative amount of unremitted foreign earnings that are considered to be permanently invested outside the United States and on which no U.S. taxes have been provided were approximately $26.1 million, $32.8 million and $39.5 million in fiscal 2010, 2011 and 2012, respectively. If the Company was to remit these earnings, foreign tax credits may become available under current law to reduce the resulting U.S. income tax liability. However, determination of the U.S. income tax liability if such amounts were remitted is not practicable.

The Company's net deferred tax assets (liabilities) are summarized as follows (in thousands):

	As of January 31,
	2011			2012
Deferred tax assets:
Allowance for doubtful accounts	$	300		$	290
Accrued expenses		1,249			1,282
Deferred revenue		2,537			3,333
State taxes		1,252			675
Long-lived assets acquired in a business combination, net		189			1,041
NOL and tax credits carryforward		6,869			5,893
Other		3,366			4,000
Gross deferred tax assets		15,762			16,514
Valuation allowance		(339	)		(846	)
Net deferred tax assets		15,423			15,668
Deferred tax liabilities:
Long-lived assets acquired in a business combination, net		(44,278	)		(27,758	)
Property and equipment, net		(18	)		(176	)
Other		(3,385	)		(3,554	)
Total deferred tax liabilities		(47,681	)		(31,488	)
Net deferred tax liabilities	$	(32,258	)	$	(15,820	)

The Company recorded a valuation allowance of $0.3 million and $0.8 million at January 31, 2011 and January 31, 2012, respectively. The valuation allowance decreased $0.7 million for the year ended January 31, 2010. The valuation allowance increased $0.2 million and $0.5 million for the years ended January 31, 2011 and 2012, respectively.

Because the Company has future reversing taxable temporary differences sufficient to recover most deductible temporary differences, a valuation allowance has only been necessary for certain net operating loss carryforwards whose realizability is limited by change of ownership rules. At January 31, 2012, the Company had U.S. federal and state net operating loss carryforwards of approximately $11.2 million and $3.1 million, respectively. The U.S. federal and state losses will begin expiring in 2020 and 2014, respectively, if not utilized. The Company's net operating losses are limited by the annual limitations described in Section 382 of the Internal Revenue Code. At January 31, 2012, the Company had no U.S. federal tax credit carryforwards and it had state tax credit carryforwards of approximately $1.6 million. The state research and development credit carryforwards will carryforward indefinitely.

The Company had total federal, state and foreign unrecognized tax benefits of $3.8 million and $4.6 million, including interest of $0.9 million and $1.0 million at January 31, 2011 and January 31, 2012, respectively. Of the total unrecognized tax benefits, $2.9 million and $3.6 million as of January 31, 2011 and 2012, respectively, if recognized, would reduce the Company's effective tax rate in the period of recognition.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows (in thousands):

	Total Gross Unrecognized Tax Benefits, Excluding Interest
	Fiscal 2011			Fiscal 2012
Balance at beginning of year	$	6,035		$	2,883
Increases related to current year tax positions		145			107
Increases related to prior year tax positions		16			631
Decreases related to prior year tax positions		(1,289	)		(31	)
Decreases related to lapsing of statute of limitations		—			—
Decreases related to settlements with taxing authorities		(2,024	)		—
Balance at end of year	$	2,883		$	3,590

The Company files tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The statute of limitations on our federal and major state tax return filings remains open for the years ended January 31, 2006 through January 31, 2011. The statute of limitations on U.K. income tax filings remains open for the years ended January 31, 1999 through January 31, 2011. The Company does not believe that it is reasonably possible that our unrecognized tax benefits will materially change in the next twelve months.

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Stock-Based Compensation

12 Months Ended

Jan. 31, 2012

Stock-Based Compensation [Abstract]

Stock-Based Compensation

(5)    Stock-Based Compensation

2006 Stock Incentive Plan

Following the completion of the Merger on March 10, 2006, the Company established a new stock incentive plan, the 2006 Stock Incentive Plan (the "2006 Plan"), governing, among other things, the grant of options, restricted stock units, and other forms of share-based payments covering shares of the Company's common stock to our employees (including officers), directors and consultants. The Company's common stock representing 12% of outstanding common stock on a fully diluted basis as of the date of the Merger was reserved for issuance under the 2006 Plan. Stock options granted under the 2006 Plan are either "time options" that vest and become exercisable over a four-year period or "time and performance options" that vest based on the achievement of certain performance targets over a five-year period following the date of grant. All options granted under the 2006 Plan will expire not later than ten years from the date of grant, but generally will terminate earlier upon termination of employment. In the event of a sale of substantially all of the assets of the Company, or a merger or acquisition of the Company, the Board of Directors may provide that awards granted under the 2006 Plan will be cashed out, continued, replaced with new awards that substantially preserve the terms of the original awards, or terminated, with acceleration of vesting of the original awards determined at the discretion of the Board of Directors.

In the quarter ended October 31, 2009, the Company completed a tender offer permitting all eligible employees and its independent directors to exchange, on a one-for-one basis, stock options granted under the 2006 Plan for new stock options granted under Serena's Amended and Restated 2006 Stock Incentive Plan (the "Amended 2006 Plan") having a lower exercise price and different vesting terms. Eligible optionholders exchanged part or all of their time-based options for new time-based options having a vesting period, generally, of three years and an exercise price of $3.00 per share, the fair market value of Serena's common stock after the closing of the tender offer. Eligible employees who were not executive officers or officers of the Company exchanged part or all of their performance-based options for new time-based options having a vesting period of three years. Executive officers and officers of the Company exchanged part or all of their performance-based options for new performance-based options having a vesting period of three years and six months, with vesting based on the achievement of EBITA targets established by Serena's board of directors.

"Roll Over" Options

In connection with the Merger, the management participants were permitted to elect to have the surviving company in the merger assume some or all of the Serena stock options that they held immediately prior to the merger and that had an exercise price of less than $24.00 per share. The number of shares subject to these "roll over" options was adjusted to be the number of shares equal to the product of (1) the difference between $24.00 and the exercise price of the option and (2) the quotient of the total number of shares of Serena's common stock subject to such option, divided by $3.75. The exercise price of these "roll over" options was adjusted to $1.25 per share. The "roll over" options are subject to terms of the original option agreements with Serena, except that in the event of a "change in control" of Serena (as defined in the 2006 Plan), the treatment of the "roll over" options upon such transaction will be determined in accordance with the terms of the 2006 Plan.

The Amended 2006 Plan does not include an evergreen provision to provide for automatic increases in the number of shares available for grant. Any increase in the number of shares available for grant under the Amended 2006 Plan would require approval from the Company's Board of Directors.

As of January 31, 2012, a total of 12,552,813 shares of common stock were reserved for issuance upon the exercise of stock options and for the future grant of stock options or awards under the Amended 2006 Plan.

The fair value of each stock option grant under the stock option plans is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used just prior to the completion of the tender offer for grants in the abbreviated period from February 1, 2009 through October 16, 2009, in the tender offer of October 2009 and post the tender offer for the abbreviated period from October 17, 2009 through January 31, 2010, and the fiscal years ended January 31, 2011 and 2012.

	Fiscal Year Ended January 31, 2010
	Abbreviated Period Post Tender Offer from October 17, 2009 through January 31, 2010	Tender Offer (1)	Abbreviated Period from February 1, 2009 through October 16, 2009 Just Prior to the Tender Offer (2)	Fiscal Year Ended January 31, 2011	Fiscal Year Ended January 31, 2012
Expected life (in years)	3.0 to 4.0	3.3	3.0 to 4.0	2.2 to 3.0	3.0
Risk-free interest rate	0.2% to 1.3%	1.49%	1.6% to 2.5%	0.2% to 1.5%	0.1% to 1.2%
Volatility	31% to 38%	41.5%	31% to 35%	16% to 38%	19% to 384%

(1) The fair value of each stock option grant under the tender offer was estimated on the date of grant, or option exchange, using the Black-Scholes option-pricing model for the new options net of the fair value of the old options being exchanged just immediately before the option exchange also using the Black-Scholes option-pricing model.

(2) All options granted during the first six months of the fiscal year ended January 31, 2010 were tendered for new options or exchanged for cash in the October 2009 tender offer and none of the options granted just prior to the tender offer in the abbreviated period from August 1, 2009 through October 16, 2009 were eligible for exchange of new options or cash in the October 2009 tender offer.

The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. In addition, option-pricing models require the input of highly subjective assumptions including the expected stock price volatility.

With respect to the amounts set forth above, the Company's expected volatility is based on the combination of historical volatility of the Company's common stock and the Company's peer group's common stock over the period commensurate with the expected life of the options. To assist management in determining the estimated fair value of the Company's common stock, the Company engages a third-party valuation specialist to perform a valuation on a semi-annual basis as of January 31 and July 31. In estimating the fair value of the Company's common stock, the external valuation firm employs a two-step approach that first estimates the fair value of the Company as a whole, and then allocates the enterprise value to the Company's common stock. The risk-free interest rates are derived from the average U.S. Treasury constant maturity rates during the period and approximate the rate in effect at the time of grant for the respective expected term. The expected terms are based on the observed and expected time to post-vesting exercise or cancellation of options. The Company does not anticipate paying any cash dividends in the foreseeable future and therefore uses an expected dividend yield of zero. The Company estimates forfeitures at the time of grant and revises those estimates in subsequent periods if actual forfeitures differ from those estimates. The Company uses forecasted projections to estimate pre-vesting option forfeitures and records stock-based compensation expense only for those awards that are expected to vest.

General Stock Option Information

The following table sets forth the summary of option activity under our stock option programs for the fiscal years ended January 31, 2010, 2011 and 2012:

	Options Available for Grant			Number of Options Outstanding			Weighted Average Exercise Price
Balances as of January 31, 2009		2,106,014			12,777,404		$	4.58
Granted		(245,000	)		245,000		$	3.36
Exercised		—			(504,752	)	$	4.31
Cancelled		1,729,591			(1,729,591	)	$	5.04
Balances as of October 16, 2009 just prior to the October 2009 tender offer		3,590,605			10,788,061		$	4.49
Options exchanged as part of the tender offer		8,640,000			(8,640,000	)	$	5.07
New options granted as part of the tender offer		(8,640,000	)		8,640,000		$	3.00
Options repurchased in the cash tender offer		—			(300,500	)	$	5.01
Granted		(2,690,000	)		2,690,000		$	3.00
Exercised		—			(37,435	)	$	1.25
Cancelled(1)		—			(10,801	)	$	1.25
Cancelled		2,916,924			(2,916,924	)	$	3.07
Restricted stock units granted, net of cancellations(2)		(1,820,000	)		—			—
Balances as of January 31, 2010(3)		1,997,529			10,212,401		$	2.76
Granted		(1,680,000	)		1,680,000		$	3.12
Exercised		—			(62,337	)	$	1.25
Cancelled(1)		—			(18,770	)	$	1.25
Cancelled		764,642			(764,642	)	$	3.38
Restricted stock units granted, net of cancellations(2)		(200,000	)		—			—
Balances as of January 31, 2011(3)		882,171			11,046,652		$	2.79
Granted		(827,500	)		827,500		$	3.56
Exercised		—			(3,882	)	$	1.25
Cancelled(1)		—			(77,128	)	$	1.25
Cancelled		3,210,631			(3,210,631	)	$	3.02
Restricted stock units granted, net of cancellations(2)		705,000			—			—
Balances as of January 31, 2012(3)		3,970,302			8,582,511		$	2.79

(1) Represents cancelled "Roll Over" options which are not returned to the available-for-grant stock option pool.

(2) Restricted stock units are granted from the stock option pool. In fiscal 2010, a total of 2,300,000 units were issued net of 480,000 units that were subsequently cancelled. In fiscal 2011, a total of 300,000 units were issued net of 100,000 units that were subsequently cancelled. In fiscal 2012, a total of 45,000 units were issued net of 750,000 units that were subsequently cancelled. See "Restricted Stock Units" below for further details.

(3) The number of options vested and expected to vest as of January 31, 2010 was 9,956,582 and had an exercise price of $2.75. The number of options vested and expected to vest as of January 31, 2011 was 10,903,283 and had a weighted average exercise price of $2.78. The number of options vested and expected to vest as of January 31, 2012 is 5,581,226 and has a weighted average exercise price of $2.64.

Information regarding the stock options outstanding at January 31, 2012 is summarized as follows:

Exercise Price	Number Outstanding		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$1.25		1,389,456		1.41 years	$	1.25		1,389,456	$	1.25
$3.00		5,110,555		7.73 years	$	3.00		2,291,838	$	3.00
$3.08		780,000		8.22 years	$	3.08		209,644	$	3.08
$3.19		500,000		8.67 years	$	3.19		169,021	$	3.19
$3.54		512,500		9.54 years	$	3.54		2,915	$	3.54
$3.58		290,000		9.07 years	$	3.58		61,104	$	3.58
		8,582,511		6.96 years	$	2.79		4,123,978	$	2.43

(1) The table shows options without consideration of expected forfeitures. The Company estimates its forfeiture rate to be approximately 2%.

(2) Total stock options outstanding at January 31, 2012 consist of 3,944,055 time-based options, 3,249,000 performance-based options and 1,389,456 roll over options. The Company presently does not record compensation expense associated with performance-based options because management believes their vesting is not probable.

The aggregate intrinsic value for options outstanding and options exercisable as of January 31, 2012 was $8.0 million and $5.3 million, respectively.

Restricted Stock Awards

In connection with the consummation of the merger (the "Merger") of Spyglass Merger Corp. with and into the Company on March 10, 2006, the Company entered into a restricted stock agreement, dated as of March 10, 2006 with Robert Pender, the Company's Chief Financial Officer. Pursuant to this agreement, Mr. Pender was issued 307,200 shares of the Company's common stock. The restricted stock award vested in full on June 16, 2010 pursuant to the terms of the restricted stock agreement. Mr. Pender transferred 112,681 shares of the Company's common stock to the Company for purposes of paying applicable income tax withholdings resulting from the vesting of the restricted stock award pursuant to the terms of the restricted stock agreement.

The following table sets forth the summary of restricted stock award activity under our restricted stock agreement for the fiscal years ended January 31, 2010, 2011 and 2012:

	Non-Vested Shares			Weighted Average Grant Date Fair Value
Balances as of January 31, 2009		307,200		$	5.00
Granted		—		$	—
Cancelled		—		$	—
Balances as of January 31, 2010		307,200		$	5.00
Granted		—		$	—
Restricted stock awards released upon vesting		(307,200	)	$	5.00
Cancelled		—		$	—
Balances as of January 31, 2011 and 2012		—		$	—

Restricted Stock Units

The Company has entered into restricted stock unit agreements with certain of its employees. These units are unvested and subject to each employee's continued employment with the Company for a period of three years from the date of issuance. In addition, if the Company is subject to a "change in control" or an "initial public offering" (as defined in these agreements) while the employee remains an employee of the Company, his or her remaining unvested restricted stock units will immediately vest in part or in full depending on the price per share at the time of such event.

The following table sets forth the summary of restricted stock units' activity under our restricted stock purchase agreements for the fiscal years ended January 31, 2010, 2011 and 2012:

	Non-Vested Shares			Weighted Average Grant Date Fair Value
Balances as of January 31, 2009		—		$	—
Granted		2,300,000		$	3.00
Cancelled		(480,000	)	$	3.00
Balances as of January 31, 2010		1,820,000		$	3.00
Granted		300,000		$	3.10
Cancelled		(100,000	)	$	3.00
Balances as of January 31, 2011		2,020,000		$	3.01
Granted		45,000		$	3.54
Cancelled		(750,000	)	$	3.01
Balances as of January 31, 2012		1,315,000		$	3.04

The aggregate intrinsic value for restricted stock units outstanding as of January 31, 2012 was $4.9 million. There were no restricted stock units debted as of January 31, 2012.

As of January 31, 2012, total unrecognized compensation costs related to unvested stock options and restricted stock and units was $4.2 million. Costs related to unvested stock options are expected to be recognized over a period of 3 to 3.5 years and costs related to the restricted stock and units are expected to be recognized over a period of 3 to 4 years from grant date.

Stock-based compensation expense for the fiscal years ended January 31, 2010, 2011 and 2012 is categorized as follows (in thousands):

	Fiscal Years Ended January 31,
	2010			2011			2012
Cost of maintenance	$	86		$	94		$	63
Cost of professional services		52			63			66
Stock-based compensation expense in cost of revenue		138			157			129
Sales and marketing		554			541			557
Research and development		769			796			(110	)
General and administrative		1,393			2,091			819
Stock-based compensation expense in operating expense		2,716			3,428			1,266
Total stock-based compensation expense		2,854			3,585			1,395
Income tax benefit		(1,108	)		(1,393	)		(541	)
Total stock-based compensation expense, net of tax	$	1,746		$	2,192		$	854

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Fair Value Measurement

12 Months Ended

Jan. 31, 2012

Fair Value Measurement [Abstract]

Fair Value Measurement

(9)    Fair Value Measurement

Fair Value Hierarchy

The following hierarchy of valuation inputs is based upon whether the inputs to valuation techniques reflect assumptions other market participants would use based upon market data obtained from independent sources (observable inputs) or reflect the Company's own assumptions of market participant valuation (unobservable inputs):

• Level 1—Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities;

• Level 2—Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly;

• Level 3—Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

Observable market data should be used if such data is available without undue cost and effort.

Item Measured at Fair Value on a Recurring Basis

The following table presents the Company's assets and liabilities that are measured at fair value on a recurring basis at January 31, 2011 and 2012 (in thousands):

Description	Estimated Fair Value at January 31, 2011		Fair Value Measurement at Reporting Date Using
			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Money market funds	$	102,803	$	102,803	$	—	$	—
Total Assets	$	102,803	$	102,803	$	—	$	—
Total Liabilities	$	—	$	—	$	—	$	—

Description	Estimated Fair Value at January 31, 2012		Fair Value Measurement at Reporting Date Using
			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Money market funds	$	78,669	$	78,669	$	—	$	—
Total Assets	$	78,669	$	78,669	$	—	$	—
Total Liabilities	$	—	$	—	$	—	$	—

Fair Value of Financial Instruments

The carrying amount of the Company's financial instruments including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their respective fair values because of the relatively short period of time between origination of the instruments and their expected realization. The fair value of the Company's revolving term credit facility approximates its respective carrying amount because this instrument includes LIBOR-based interest rates that are variable and fluctuate based on market conditions.

The estimated fair values of certain of the Company's long-term debt obligations based on quoted market prices in effect as of January 31, 2011 and January 31, 2012 are as follows (in thousands):

	Carrying Amount		Fair Value
As of January 31, 2011:
2.30344% Senior Secured Term Loan due 2013	$	316,000	$	306,520
10.375% Senior Subordinated Notes due 2016	$	134,265	$	137,796
As of January 31, 2012:
2.53775% Senior Secured Term Loan due 2013	$	117,399	$	115,932
4.53775% Senior Secured Term Loan due 2016	$	191,101	$	187,279
10.375% Senior Subordinated Notes due 2016	$	134,265	$	138,293

Financial instruments that potentially subject us to credit risk consist of cash and cash equivalents, and trade accounts receivable. The Company maintains the majority of its cash and cash equivalents balances with recognized financial institutions which follow the Company's investment policy. The Company has not experienced any significant losses on these investments to date. One of the most significant credit risks is the ultimate realization of accounts receivable. This risk is mitigated by (i) ongoing credit evaluation of our customers, and (ii) frequent contact with our customers, especially our most significant customers, thus enabling the Company to monitor current changes in business operations and to respond accordingly. The Company generally does not require collateral for sales on credit. The Company considers these concentrations of credit risks in establishing our allowance for doubtful accounts.

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Commitments And Contingencies

12 Months Ended

Jan. 31, 2012

Commitments And Contingencies [Abstract]

Commitments And Contingencies

(7)    Commitments and Contingencies

(a)    Leases and debt

The Company has non-cancelable operating lease agreements for office space that expire between calendar 2012 and 2018. Minimum payments including operating leases and debt for the five succeeding years as of January 31, 2012, after giving effect to the March 16, 2012 new headquartes facilities office lease and the April 12, 2012 Extension Agreement and Amendment, are as follows (in thousands):

	Payment Due by Period (2)
	Total		Fiscal year ended January 31,										Thereafter
			2013		2014		2015		2016		2017
Operating lease obligations	$	13,662	$	2,024	$	2,645	$	2,206	$	1,692	$	1,615	$	3,480
Credit Facility:
2016 Extended Term Loans due March 10, 2016		191,101		—		—		—		—		191,101		—
2016 Tranche B Term Loans due March 10, 2016		117,399		—		—		—		—		117,399		—
Senior Subordinated Notes due March 15, 2016		134,265		—		—		—		—		134,265		—
Scheduled interest on debt (1)		117,182		28,426		28,426		28,426		28,360		3,544		—
	$	573,609	$	30,450	$	31,071	$	30,632	$	30,052	$	447,924	$	3,480

(1) Scheduled interest on debt is calculated through the instruments due date and assumes no principal paydowns or borrowings. Scheduled interest on debt includes the 2016 extended term loans due March 10, 2016 at an annual rate of 4.47455%, which is the rate in effect as of April 30, 2012, the 2016 Tranche B Term Loans due March 10, 2016 at an annual rate of 5.00000%, which is the rate in effect as of April 30, 2012, the commitment fee on the unutilized amount of the extended revolving term credit facility due March 10, 2015 at the annual rate of 0.375%, which is the rate in effect as of April 30, 2012, and the ten year senior subordinated notes due March 15, 2016 at the stated annual rate of 10.375%.

(2) This table excludes the Company's unrecognized tax benefits totaling $4.6 million as of January 31, 2012 since the Company has determined that the timing of payments with respect to these liabilities cannot be reasonably estimated.

Rent expense was $5.5 million, $4.6 million and $4.3 million for the fiscal years ended January 31, 2010, 2011 and 2012, respectively.

(b)    Licensing and Other Agreements

The Company has commitments under licensing agreements that provide for payments based on revenues of certain products. For the fiscal years ended January 31, 2010, 2011 and 2012, the Company's fees paid or accrued under these license agreements were $1.0 million, $1.0 million and $2.3 million, respectively.

(c)    Customer Indemnification

From time to time, the Company agrees to indemnify its customers against liability if the Company's products infringe a third party's intellectual property rights. As of January 31, 2012, the Company was not subject to any pending litigation alleging that the Company's products infringe the intellectual property rights of any third parties.

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Debt

12 Months Ended

Jan. 31, 2012

Debt [Abstract]

Debt

(8)    Debt

Debt as of January 31, 2011 and 2012 consists of the following (in thousands):

	As of January 31,
	2011		2012
Senior secured term loan, due March 10, 2013, three-month LIBOR plus 2.00%	$	316,000	$	117,399
Senior secured term loan, due March 10, 2016, three-month LIBOR plus 4.00%		—		191,101
Revolving term credit facility, due March 10, 2012, three-month LIBOR plus 2.00%		35,000		—
Senior subordinated notes, due March 15, 2016, 10.375%		134,265		134,265
Total long-term debt		485,265		442,765
Less current portion		7,500		—
Total long-term debt, less current portion	$	477,765	$	442,765

Senior Secured Credit Agreement

In connection with the consummation of the Merger, the Company entered into a senior secured credit agreement pursuant to a debt commitment that we obtained from affiliates of the initial purchasers of our senior subordinated notes ("the credit facility").

General. The borrower under the credit facility initially was Spyglass Merger Corp. and immediately following completion of the Merger became Serena. The credit facility originally provided for (1) a seven-year term loan in the amount of $400.0 million amortizing at a rate of 1.00% per year on a quarterly basis for the first six and three-quarters years after the closing date of the Merger, with the balance paid at maturity, and (2) a six-year revolving credit facility that permits loans in an aggregate amount of up to $75.0 million, including a letter of credit facility and a swing line facility. In addition, subject to certain terms and conditions, the credit facility provides for one or more uncommitted incremental term loan or revolving credit facilities in an aggregate amount not to exceed $150.0 million. Proceeds of the term loan on the initial borrowing date were used to partially finance the Merger, to refinance certain indebtedness of Serena and to pay fees and expenses incurred in connection with the Merger. Proceeds of the revolving credit facility have been and any incremental facilities will be used for working capital and general corporate purposes of the Company and its restricted subsidiaries.

In the quarters ended July 31, 2006, April 30, 2007 and January 31, 2008, the Company made principal payments on the original $400 million term loan totaling $25 million, $30 million and $25 million, respectively.

In the quarters ended April 30, 2009, 2010 and 2011, the Company made mandatory principal payments totaling $2.0 million, $2.0 million and $7.5 million, respectively, on the original $400 million term loan.

In the quarter ended April 30, 2010, the Company made a voluntary principal payment totaling $30 million on the revolving credit facility.

In the quarter ended October 31, 2011, the Company made voluntary principal payments on the non-extended 2012 revolving credit facility and the extended 2015 revolving credit facility totaling $25.7 million and $9.3 million, respectively.

The revolving credit facility bears an annual commitment fee on the undrawn portion of that facility commencing on the date of execution and delivery of the senior secured credit agreement. As a result of the Company borrowing $65.0 million under the revolving credit facility in the fiscal quarter ended October 31, 2008 and Lehman Commercial Paper, Inc. ("LCPI") becoming a defaulting lender due to its failure to fund its loan commitment, the then annual commitment fee of 0.5% was not payable pursuant to the terms of the senior secured credit agreement until April 2010, when a $30 million portion of the loans under the revolving Credit Facility was repaid. In connection with the amendment of the Company's senior secured credit agreement in March 2011, Barclays Bank PLC assumed LCPI's revolving credit commitment of $10.0 million, reviving the applicable revolving credit commitment and resulting in total non-extended and extended revolving credit commitments of $75.0 million. Effective February 1, 2011, the annual commitment fee was 0.375% per annum.

In the quarter ended October 31, 2011, the Company cancelled the non-extended 2012 revolving credit commitment totaling $55.0 million. Effective with the cancellation, the Company's annual commitment fee is limited to the extended 2015 revolving credit commitment totaling $20.0 million.

Amended and Restated Senior Secured Credit Agreement. On March 2, 2011 the Company entered into an amendment to our senior secured credit agreement to extend the final maturity date for the repayment of a portion of outstanding term loans, extend the commitment termination date of the commitments for a portion of the revolving credit facility and provide for additional flexibility in the financial covenants under the senior secured credit agreement (the "amend and extend transaction"). As a result of the amendment, $191.1 million of the existing term loans were extended and will mature on March 10, 2016 (the "extended term loans"), and $20.0 million of the existing revolving credit commitments were extended and will terminate on March 10, 2015 (the "extended revolving credit commitments"). The $124.9 million of the existing term loans that were not extended (the "non-extended term loans"), and the $55.0 million of the existing revolving credit commitments that were not extended (the "non-extended revolving credit commitments") will continue to mature on March 10, 2013 and March 10, 2012, respectively. The Company refers to the extended term loans and extended revolving credit commitments collectively as the "extended facilities," and the non-extended term loans and non-extended revolving credit commitments collectively as the "non-extended facilities." As a result of the amendment, the interest rate margins were increased by 200 basis points for the extended facilities. In addition, the maximum total leverage ratio stepped up to 5.50x beginning with the fiscal quarter ended April 30, 2011 and through the test periods ending on July 31, 2012 and will step down to 5.00x thereafter for both the extended facilities and non-extended facilities. After giving effect to the amendment, the aggregate principal amount outstanding under the senior secured credit agreement did not change, and the principal amount of the extended and non-extended term loans will continue to amortize at a rate of 1.00% per year on a quarterly basis. In connection with the amendment, Lehman Commercial Paper Inc. resigned as administrative agent, collateral agent, swingline lender and letter of credit issuer under the senior secured credit agreement and was replaced by Barclays Bank PLC.

On April 12, 2012 the Company entered into an Extension Agreement and Amendment No. 1 (the "Extension Agreement and Amendment") to its senior secured credit agreement to extend the final maturity date of its non-extended term loans due March 10, 2013. In addition, the Company borrowed $15.9 million of incremental term loans under the senior secured credit agreement. As a result of the Extension Agreement and Amendment, $101.5 million of the non-extended term loans due March 10, 2013 were extended through the establishment of a new series of extended term loans, and the Company used the proceeds of the incremental term loans to repay in full $15.9 million of non-extended term loans due March 10, 2013 that were not extended as part of the Extension Agreement and Amendment. The Company refers to the incremental term loans and the newly extended term loans as the "2016 Tranche B Term Loans." The 2016 Tranche B Term Loans have an applicable margin for London Interbank Offered Rate, or LIBOR, -based loans of 4.0% (which is 200 basis points higher than the interest rate under the non-extended term loans) and a LIBOR floor of 1.0%. The other terms and conditions of the 2016 Tranche B Term Loans are the same as those for the extended term loans due March 10, 2016. After giving effect to the Extension Agreement and Amendment and the repayment of the

remaining non-extended term loans due March 10, 2013, all the Company's outstanding term loans under the senior secured credit agreement have a final maturity date of March 10, 2016 and the aggregate principal amount of the term loans outstanding under the senior secured credit agreement did not change. The Company paid each lender holding 2016 Tranche B Term Loans an original issuer discount equal to 1.5% of the principal amount of 2016 Tranche B Term Loans held by such lender.

Senior Subordinated Notes

The Company has outstanding $134.3 million principal amount of senior subordinated notes, which bear interest at a rate of 10.375%, payable semi-annually on March 15 and September 15, and which mature on March 15, 2016. Each of our domestic subsidiaries that guarantees the obligations under the Company's senior secured credit agreement will jointly, severally and unconditionally guarantee the notes on an unsecured senior subordinated basis. The Company does not have any domestic subsidiaries and, accordingly, there are no guarantors. The notes are the Company's unsecured, senior subordinated obligations, and the guarantees, if any, will be unsecured, senior subordinated obligations of the guarantors. The notes are subject to redemption at the Company's option under terms and conditions specified in the indenture related to the notes, and may be redeemed at the option of the holders at 101% of their face amount, plus accrued and unpaid interest, upon certain change of control events.

In the fiscal year ended January 31, 2009, the Company repurchased, in eight separate privately negotiated transactions, an aggregate of $32.6 million of principal amount of its original outstanding $200.0 million senior subordinated notes. The repurchases resulted in a gain of $8.7 million from the extinguishment of debt in the fiscal year ended January 31, 2009.

In the fiscal year ended January 31, 2010, the Company repurchased, in six separate privately negotiated transactions, an aggregate of $24.4 million of principal amount of its original outstanding $200.0 million senior subordinated notes. The repurchases resulted in a gain of $4.6 million from the extinguishment of debt in the fiscal year ended January 31, 2010.

In the fiscal year ended January 31, 2011, the Company repurchased, in two separate privately negotiated transactions, an aggregate of $8.7 million of principal amount of its original outstanding $200.0 million senior subordinated notes. The repurchases resulted in a loss of $0.2 million from the extinguishment of debt in the fiscal year ended January 31, 2011.

The Company may from time to time repurchase the senior subordinated notes in open market or privately negotiated purchases or otherwise, or redeem the senior subordinated notes pursuant to the terms of the indenture dated March 10, 2006.

Debt Covenants

The senior subordinated notes and the credit facility contain various covenants including limitations on additional indebtedness, capital expenditures, restricted payments, the incurrence of liens, transactions with affiliates and sales of assets. In addition, the credit facility requires the Company to comply with certain financial covenants, including leverage and interest coverage ratios and capital expenditure limitations. The Company was in compliance with all of the covenants of the credit facility as of January 31, 2012.

The Company's senior secured credit agreement requires the Company to maintain a rolling twelve-month consolidated Adjusted EBITDA to consolidated Interest Expense ratio of a minimum of 2.00x at the end of each quarter beginning with the fiscal year ending January 31, 2010. Consolidated Interest Expense is defined in the senior secured credit agreement as consolidated cash interest expense less cash interest income and is further adjusted for certain non-cash interest expenses and other items. The Company is also required to maintain a rolling twelve-month consolidated Total Debt to consolidated Adjusted EBITDA ratio of a maximum of 5.00x at the end of each quarter beginning with the fiscal year ending January 31, 2011. Under the terms of the Amended and Restated Senior Secured Credit Agreement, the maximum total leverage ratio stepped up to 5.50x beginning with the fiscal quarter ending April 30, 2011 and through the test period ending on July 31, 2012 and will step down to 5.00x thereafter. Consolidated Total Debt is defined in the senior secured credit agreement as total debt other than certain indebtedness and is reduced by the amount of cash and cash equivalents on our consolidated balance sheet in excess of $5.0 million. As of January 31, 2012, our consolidated Total Debt was $338.1 million, consisting of total debt other than certain indebtedness totaling $442.8 million, net of cash and cash equivalents in excess of $5.0 million totaling $104.7 million. Failure to satisfy these ratio requirements would constitute a default under the senior secured credit agreement. If the Company's lenders failed to waive any such default, our repayment obligations under the senior secured credit agreement could be accelerated, which would also constitute a default under the indenture governing the senior subordinated notes.

The Company's ability to incur additional debt and make certain restricted payments under the indenture governing the senior subordinated notes, subject to specified exceptions, is tied to an Adjusted EBITDA to fixed charges ratio of at least 2.0x, except that we may incur certain debt and make certain restricted payments and certain permitted investments without regard to the ratio, such as the Company's ability to incur up to an aggregate principal amount of $625.0 million under our senior secured credit agreement (subject to reduction for mandatory prepayments under our senior secured credit agreement and inclusive of amounts outstanding under our senior secured credit agreement from time to time; as of January 31, 2012, we had $308.5 million outstanding under our term loan and $0.0 million under our revolving credit facility), to acquire persons engaged in a similar business that become restricted subsidiaries and to make other investments equal to the greater of $25.0 million or 2% of our consolidated assets. Fixed charges is defined in the indenture governing the senior subordinated notes as consolidated Interest Expense less interest income, adjusted for acquisitions, and further adjusted for non-cash interest expense.

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Litigation

12 Months Ended

Jan. 31, 2012

Litigation [Abstract]

Litigation

(10)    Litigation

The Company is involved in various legal proceedings that have arisen during the ordinary course of its business. The final resolution of these matters, individually or in the aggregate, is not expected to have a material adverse effect on the Company's consolidated financial position or results of operations.

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Consolidated Statements Of Stockholders' Equity And Comprehensive Income (Loss) (USD $) In Thousands, except Share data, unless otherwise specified	Common Stock [Member]	Additional Paid-In Capital [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Retained Earnings (Deficit) [Member]	Total
Balance at Jan. 31, 2009	$ 985	$ 510,379	$ 1,408	$ (385,223)	$ 127,549
Balance, shares at Jan. 31, 2009	98,537,147
Components of comprehensive income (loss):
Net (loss) income				(13,022)	(13,022)
Common stock options exercised		21			21
Common stock options exercised, shares	6,028
Change in foreign currency translation			(1,390)		(1,390)
Total comprehensive income (loss)					(14,412)
Repurchase of common stock		(212)			(212)
Repurchase of common stock, shares	(61,534)
Repurchases of option rights under employee stock option plan		(577)			(577)
Cash option exchange		(84)			(84)
Amortization of stock-based compensation		2,854			2,854
Tax shortfall from employee stock plans		(173)			(173)
Balance at Jan. 31, 2010	985	512,208	18	(398,245)	114,966
Balance, shares at Jan. 31, 2010	98,481,641
Components of comprehensive income (loss):
Net (loss) income				(9,556)	(9,556)
Common stock options exercised		24			24
Common stock options exercised, shares	20,665
Change in foreign currency translation			(537)		(537)
Currency translation gain from liquidation of foreign entities included in net loss			(381)		(381)
Total comprehensive income (loss)					(10,474)
Repurchase of common stock	(1)	(346)			(347)
Repurchase of common stock, shares	(112,681)
Repurchases of option rights under employee stock option plan		(61)			(61)
Amortization of stock-based compensation		3,585			3,585
Tax shortfall from employee stock plans		(228)			(228)
Balance at Jan. 31, 2011	984	515,182	(900)	(407,801)	107,465
Balance, shares at Jan. 31, 2011	98,389,625
Components of comprehensive income (loss):
Net (loss) income				8,944	8,944
Common stock options exercised		3			3
Common stock options exercised, shares	2,853
Change in foreign currency translation			(673)		(673)
Total comprehensive income (loss)					8,271
Repurchases of option rights under employee stock option plan		(2)			(2)
Amortization of stock-based compensation		1,395			1,395
Balance at Jan. 31, 2012	$ 984	$ 516,578	$ (1,573)	$ (398,857)	$ 117,132
Balance, shares at Jan. 31, 2012	98,392,478

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Accrued Expenses

12 Months Ended

Jan. 31, 2012

Accrued Expenses [Abstract]

Accrued Expenses

(4)    Accrued Expenses

(a)    Total Accrued Expenses

Total accrued expenses consisted of the following (in thousands):

	As of January 31,
	2011		2012
Management incentive bonuses and commissions	$	6,054	$	5,056
Payroll-related items		4,771		4,911
Royalties		405		52
Restructuring charges and accruals (Note 4(b))		1,810		230
Other		9,251		8,667
	$	22,291	$	18,916

(b)    Restructuring Charges and Accruals:

In March 2010 and again in February 2011, in response to the general weakening of the worldwide economy, an expected continued slowdown in IT spending and a decline in the Company's license revenue, the Company announced and began to execute plans to reduce its workforce by approximately 5%, or 33 positions, and 5%, or 28 positions, respectively, affecting all parts of the organization. The Company has realized and expects to continue to realize cost savings going forward as a result of these restructurings and other cost saving initiatives. These restructurings are substantially complete, and in connection with these actions, the Company recorded restructuring charges in the fiscal years ended January 31, 2011 and 2012 consisting principally of severance, payroll taxes and other employee benefits totaling $2.0 million and $0.0 million, respectively, and facilities closures, legal and other miscellaneous costs totaling $0.6 million and $0.2 million, respectively. The nature of the restructuring charges and the amounts paid and accrued as of January 31, 2011 and 2012 are summarized as follows (in thousands):

	Severance, payroll taxes and other employee benefits (1)			Facilities closures, legal and other miscellaneous (2)			Total restructuring charges and accruals
Balances as of January 31, 2010	$	84		$	1,682		$	1,766
Accrued		1,998			600			2,598
Paid		(735	)		(1,493	)		(2,228	)
Adjustments (3)		—			(326	)		(326	)
Balances as of January 31, 2011		1,347			463			1,810
Accrued		—			163			163
Paid		(1,347	)		(565	)		(1,912	)
Balances as of January 31, 2012	$	—		$	61		$	61

(1) The February 2011 reduction in workforce plan was substantially in place and committed to by management prior to the beginning of the first fiscal quarter ended April 30, 2011. Accordingly, severance, payroll taxes and other employee benefits associated with this plan totaling $1.3 million were accrued in the fourth fiscal quarter ended January 31, 2011.

(2) For the fiscal years ended January 31, 2011 and 2012, contract termination costs accrued related to abandoned facility leases totaled $0.4 million and $0.2 million, respectively, and legal and other miscellaneous costs accrued totaled $0.2 million and $0.0 million, respectively. As of January 31, 2012, contract termination costs accrued related to abandoned facility leases will be paid out over the remaining lease terms ranging from 1 month to 6 months.

(3) The adjustment in fiscal year 2011 was the result of actual sub-lease income on an abandoned facility being higher than originally estimated.

Restructuring accruals at January 31, 2011 and 2012 totaling $1.8 million and $0.1 million, respectively, are reflected in accrued expenses in the Company's consolidated balance sheets.

The agreements underlying the Company's senior subordinated notes and the Credit Facility include financial covenants based on Adjusted EBITDA and restructuring, acquisition and other charges are a component of that computation. These charges have been included as a separate line within operating expenses in the Company's consolidated statements of operations and are categorized as follows for the fiscal years ended January 31, 2010, 2011 and 2012 (in thousands):

	Fiscal Years Ended January 31,
	2010		2011		2012
Sponsor fees, administration fees and other costs related to the Merger and the issuance of debt	$	1,226	$	1,238	$	1,240
Restructuring charges consisting principally of severance, payroll taxes and other employee benefits, facilities closures and legal and other miscellaneous costs		5,579		2,272		163
Other redundancy costs not related to our restructuring plans including severance and other employee related costs, costs to establish or liquidate entities, and other miscellaneous costs not part of ongoing operations		991		1,822		1,571
Total restructuring, acquisition and other charges	$	7,796	$	5,332	$	2,974