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ROBERT C. SCHUBERT (STATE BAR NO. 62684)JUDEN JUSTICE REED (STATE BAR NO. 153748)WILLEM F. JONCKHEER (STATE BAR NO. 178748)AARON H. DARSKY (STATE BAR NO. 212229)SCHUBERT & REED LLPThree Embarcadero Center, Suite 1650San Francisco, CA 94111Telephone: (415) 788-4220BRIAN J. ROBBINS (STATE BAR NO. 190264)MARC M. UMEDA (STATE BAR NO. 197847)ROBBINS UMEDA & FINK, LLP610 West Ash Street, Suite 1800San Diego, CA 92101Telephone:
    
    (619) 525-3990Facsimile:
    
    (619) 525-3991Attorneys for Plaintiff Henry Ramseur, Derivativelyon behalf of Callidus Software Inc.WILLIAM F. ALDERMAN (STATE BAR NO. 47381)JAMES N. KRAMER (STATE BAR NO. 154709)M. TODD SCOTT (STATE BAR NO. 226885)ORRICK, HERRINGTON & SUTCLIFFE LLPThe Orrick Building405 Howard StreetSan Francisco, CA 94105-2669Telephone:
    
    415-773-5700Facsimile:
    
    415-773-5759Attorneys for DefendantsUNITED STATES DISTRICT COURTNORTHERN DISTRICT OF CALIFORNIASAN FRANCISCO DIVISION
 HENRY RAMSEUR, Derivatively on behalf
    
    
    Case No.   C 04-4419 SI (JCS)of CALLIDUS SOFTWARE INC., aDELAWARE CORPORATION,
    
    
    STIPULATION OF SETTLEMENTPlaintiff,v.GEORGE JAMES, R. DAVID SPRENG,TERRY L. OPDENDYK, MICHAEL A.BRAUN, JOHN R. EICKHOFF,CHRISTOPHER W. CABRERA and REEDD. TAUSSIG,Defendants. and CALLIDUS SOFTWARE INC., aDELAWARE CORPORATION,Nominal Defendant.
 Stipulation Of Settlement
C 04-4419 SI (JCS)




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Dated: August 10, 2006
    
    SCHUBERT & REED LLP/s/ Robert C. SchubertRobert C. SchubertAttorneys for Plaintiff Henry RamseurDated: August 10, 2006
    
    ROBBINS UMEDA & FINK LLP/s/ Marc UmedaMarc UmedaAttorneys for Plaintiff Henry Ramseur, and forPlaintiff Brett Cashman in the Cashman ActionDated: August 11, 2006
    
    ORRICK, HERRINGTON & SUTCLIFFE LLP/s/ William F. AldermanWilliam F. AldermanAttorneys for Defendants andCashman DefendantsDated: August 11, 2006
    
    GENESIS INSURANCE COMPANY/s/ Michelle LaffertyMichelle LaffertyTitle:
    
    Attorney
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Dated: August 11, 2006
    
    CALLIDUS SOFTWARE INC.By:
    
    /s/ Paul F. KatawiczTitle:
    
    Sr. Corp. Counsel and Assistant Secretary
 Stipulation Of Settlement
C 04-4419 SI (JCS)
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Board of Directors
 
    
    The Board shall adopt a Pfizer style policy providing that director nominees receiving a
greater number of withheld votes than votes for in an uncontested election must tender their
resignation. The Nominating and Governance Committee, or the full board, shall then decide
within a specified time period whether to accept the resignation.
    
    The Corporate Governance Guidelines shall be amended to include a provision that management
will keep the board informed of all relevant information for purposes of the Board carrying
out its duties.
    
    The Board shall continue to elect its Chairman from the independent directors.
 Executive Compensation
 
    
    The Company shall put all performance reviews for executive officers in writing. To the
extent that the Compensation Committee determines that performance based compensation outside
of established written plans for executive officers is appropriate, the Committee shall submit
recommendations for such compensation to the full Board for approval. Such recommendations
shall contain a statement of the reasons the Committee believes a departure from the Companys
established performance objectives is desirable.
    
    The Company shall formalize its policies that prevent the back-dating of stock options and
require regular review of stock option exercises to prevent irregularities in timing of
exercises.
 Insider Trading
 
    
    The Company shall add consideration of the imposition of a Trading Freeze under the
Companys Corporate Policy and Procedure on Insider Trading as a formal agenda item for all
regularly scheduled meetings of the Board.
 Code of Conduct
 
    
    The job description of the general counsel shall be amended to provide that, in addition to
existing duties, the general counsel shall (i) oversee and administer the Companys Code of
Conduct and Ethics; (ii) foster a culture that integrates compliance and ethics into business
processes and practices through awareness and training; and (iii) maintain and monitor a
system for reporting and investigating potential violations of the Code of Conduct and other
potential compliance and ethics concerns. In addition, the general counsel shall report
directly to the Audit Committee as appropriate regarding the Companys Code of Business
Conduct and corporate compliance matters.




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Audit Committee
 
    
    The Audit Committee charter shall be revised to provide that the Audit Committee (or the
full Board) shall review all revenue and earnings guidance proposed to be provided by the
Company to analysts, ratings agencies, and/or the public market, including any such guidance
to be provided in earnings or press releases. Such review shall include the participation of
the Companys Chief Executive Officer, Chief Financial Officer, and any other executive or
employee of the Company as the Audit Committee (or the full Board) deems appropriate. No
revenue or earnings guidance shall be released in any form without prior review by the Audit
Committee (or the Full Board).
    
    The Audit Committee (or the full Board) shall receive from management such information as
it deems necessary to support any proposed revenue or earnings guidance to be provided by the
Company.
    
    At each meeting at which the Audit Committee is requested to approved revenue or earnings
guidance, it shall receive from management a detailed report regarding the Companys history
in meeting prior guidance. Such report shall describe the reasons for any discrepancies
between guidance provided and results achieved by the Company.
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HENRY RAMSEUR, Derivatively on behalf
    
    
    Case No.   C 04-4419 SI (JCS)of CALLIDUS SOFTWARE INC., aDELAWARE CORPORATION,
    
    
    ORDER GRANTING PRELIMINARY
APPROVAL OF DERIVATIVEPlaintiff,
    
    
    ACTION SETTLEMENT AND
DIRECTING MAILING OF NOTICEv.GEORGE JAMES, R. DAVID SPRENG,TERRY L. OPDENDYK, MICHAEL A.BRAUN, JOHN R. EICKHOFF,CHRISTOPHER W. CABRERA and REEDD. TAUSSIG,Defendants. and CALLIDUS SOFTWARE INC., aDELAWARE CORPORATION,Nominal Defendant.
 ORDER GRANTING PRELIMINARY APPROVAL OF  DERIVATIVE ACTION SETTLEMENT AND DIRECTING




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ORDER GRANTING PRELIMINARY APPROVAL OF  DERIVATIVE ACTION SETTLEMENT AND DIRECTING
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Dated: August 11, 2006
    /s/ Susan IllstonUnited States District Judge 
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HENRY RAMSEUR, Derivatively on behalf of CALLIDUSSOFTWARE INC., a DELAWARE CORPORATION,
    
    
    Case No. C 04-4419 SI (JCS)Plaintiff,
    
    
    NOTICE OF SETTLEMENTv.GEORGE JAMES, ET AL.,Defendants. and CALLIDUS SOFTWARE INC., a DELAWARE CORPORATION,Nominal Defendant.
 TO:
    
    ALL SHAREHOLDERS OF CALLIDUS SOFTWARE INC.:
    THIS NOTICE IS PURELY INFORMATIONAL. YOU ARE RECEIVING IT BECAUSE THE LAW REQUIRES THAT
CALLIDUS SHAREHOLDERS RECEIVE NOTICE WHEN CALLIDUS PROPOSES TO ENTER INTO A SETTLEMENT OF THIS
KIND OF CASE. YOU ARE NOT REQUIRED TO TAKE ANY ACTION. THERE IS NO CLAIM PROCEDURE AND YOU
WILL NOT RECEIVE ANY FUNDS PURSUANT TO THIS SETTLEMENT. IT IS NOT NECESSARY FOR ANY CALLIDUS
SHAREHOLDER TO APPEAR AT THE HEARING.
 PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY. THE RIGHTS OF CALLIDUS AND OF ANY
SHAREHOLDER SEEKING TO ACT DERIVATIVELY ON ITS BEHALF WILL BE AFFECTED BY THE SETTLEMENT
DESCRIBED BELOW.
 IF YOU ARE RECEIVING THIS NOTICE AS NOMINEE OR OTHER REPRESENTATIVE OF A BENEFICIAL OWNER OF
CALLIDUS COMMON STOCK, PLEASE FORWARD THIS NOTICE TO THE BENEFICIAL OWNER (ADDITIONAL COPIES MAY
BE OBTAINED FROM THE ADDRESS GIVEN BELOW).
 THE COURT HAS NOT DECIDED THE MERIT OF ANY CLAIM OR DEFENSE ASSERTED BY THE PARTIES IN THIS
CASE. NO INFERENCE REGARDING THE MERITS OF THE CASE SHOULD BE DRAWN FROM SETTLEMENT OF THE CASE
OR THE SENDING OF THIS NOTICE.
 THE DERIVATIVE ACTIONS




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THE SETTLEMENT
  
    
    Callidus will adopt or reconfirm a series of corporate governance policies that counsel
for the plaintiffs believe will advance shareholder democracy at Callidus and strengthen
the companys controls in a number of respects, and will keep them in effect for at least
three years. These include:
 
    
    adoption of a Pfizer style policy for election of directors requiring any
nominee who receives more withhold than for votes in an uncontested election to
tender a resignation, which the Nominating and Governance Committee, or full board, can
accept or reject;
    
    continuing to elect its Chairman from among its independent directors;
    
    amending its Corporate Governance Guidelines to require that management keep the
board informed of all information relevant to the boards performance of its duties;
    
    putting performance reviews of executive officers in writing and requiring board
approval of any performance-based compensation outside of established written plans;
    
    formalizing its policies that prevent the backdating of stock option grants and
requiring regular review of option exercises;
    
    including consideration of imposing a trading freeze as a formal agenda item for
all regularly scheduled board meetings;
    
    amending the general counsels job description to include formal oversight and
administration of the companys Code of Conduct and to require direct reporting to the
Audit Committee regarding the Code of Conduct and compliance issues;
    
    requiring the Audit Committee to review all revenue and earnings guidance
proposed to be given by the company, including participation by the CEO, CFO and any
other executive or employee the Committee deems appropriate;
    
    requiring management to provide to the Audit Committee all information the
Committee deems necessary to support any proposed guidance, and to provide a detailed
history of the companys prior guidance and actual results, including the reasons for
any discrepancy between prior guidance and actual results.
 
    
    Genesis will pay $397,000 to plaintiffs counsel as attorneys fees and expenses and
$1,500 to each of the named plaintiffs as an incentive award, resulting in total payments
by Genesis of $400,000.
    
    Both derivative actions will be dismissed with prejudice, and all claims against the
defendants in either case, or other Callidus directors or officers, that were raised or
could have been raised in either of the actions by Callidus or by any shareholder
derivatively on its behalf will be released, including without limitation any matter
insured under the Genesis insurance policy and any claims that are currently unknown or
unsuspected (other than claims relating to any backdating of Callidus stock option grants
that may hereafter be discovered).
    THE SETTLEMENT APPROVAL HEARING
   INQUIRIES
   Dated: August 21, 2006
    
    By Order of the United States District Court for the Northern District of California
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HENRY RAMSEUR, Derivatively on behalf
    
    
    (PROPOSED) ORDER AND FINALof CALLIDUS SOFTWARE INC., a
    
    
    JUDGMENT APPROVINGDELAWARE CORPORATION,
    
    
    SETTLEMENTPlaintiff,v.GEORGE JAMES, R. DAVID SPRENG,TERRY L. OPDENDYK, MICHAEL A.BRAUN, JOHN R. EICKHOFF,CHRISTOPHER W. CABRERA and REEDD. TAUSSIG,Defendants. and CALLIDUS SOFTWARE INC., aDELAWARE CORPORATION,Nominal Defendant.




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United States District Judge
  
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