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                                                                   Exhibit 10.29

                              EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT ("Agreement"), entered into as of this 25th day
of October, 2001, is made by and between BLUE MARTINI SOFTWARE, INC., a Delaware
corporation (the "Company"), and MICHAEL BORMAN ("Executive").

                                    ARTICLE 1

                               EFFECT OF AGREEMENT

     1.1  EFFECT OF AGREEMENT. This Agreement shall be effective as of October
25, 2001 (the "Effective Date") and shall remain in effect so long as Executive
is employed by the Company; provided, however, that the rights and obligations
of the parties hereto contained in Articles 5 and 6 of this Agreement, and as
otherwise explicitly provided in this Agreement, shall survive any termination
of this Agreement until such time as such duty or obligation is satisfied in
full.

     1.2  CONSIDERATION. The duties and obligations of the Company to Executive
under this Agreement shall be in consideration of Executive's promises herein
and services provided to the Company.

                                    ARTICLE 2

                                EMPLOYMENT DUTIES

     2.1  TITLE/RESPONSIBILITIES. Executive hereby accepts the terms of this
Agreement and agrees to serve as the President and Chief Operating Officer of
the Company, reporting to the Company's Chief Executive Officer. Executive shall
have all powers and duties commensurate with such position, and will perform
such other duties as the Company may from time to time require of Executive.

     2.2  FULL-TIME ATTENTION. Executive shall devote his best efforts and his
full business time and attention to the performance of the services customarily
incident to such office and to such other services as the Company may reasonably
request.

     2.3  LOCATION. Until such time as Executive relocates to a primary
residence in the San Francisco Bay Area ("Bay Area"), Executive's principal
place of business for performance of his duties shall be located in an office
within 30 miles of his primary residence in New York. Executive shall visit
customers and Company facilities whenever required and will be available to
travel to Company headquarters upon request.

     2.4  OTHER ACTIVITIES. Except upon the prior consent of the Company's Board
of Directors (the "Board"), Executive shall not during the period of this
Agreement engage, directly or indirectly, in any other business activity
(whether or not pursued for pecuniary advantage) that is or may be competitive
with, or that might place him in a competing position to that of the Company or
to any other corporation or entity that directly or indirectly controls, is
controlled by, or is under common control with the Company (an "Affiliated
Company"), provided that


                                        1.

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Executive may own less than five percent (5%) of the outstanding securities of
any such publicly traded competing corporation. The determination as to whether
a business activity is or may be competitive with the Company or an Affiliated
Company shall be made by the Board, and shall be final and binding on all
parties. Nothing in this Section 2.4 is intended to prevent Executive from
accepting employment with another company, or providing other services to
another business, after Executive's employment terminates with the Company.

     2.5  OTHER AGREEMENTS. Prior to the execution of this Agreement, Executive
shall disclose any and all agreements relating to current or prior employment or
other business activities that may affect Executive's ability to be employed
with the Company and Executive or the Company's ability to solicit or hire other
employees. To the extent disclosure of such agreements would violate obligations
of confidentiality Executive has toward any other entity, Executive will
disclose the nature of any restrictions in such agreements as they affect
Executive's ability to be employed with Company and/or to hire other employees.
Except as set forth in Section 3.5 below, Executive represents and warrants that
his employment by the Company will not conflict with and will not be constrained
by any prior agreement or relationship with any third party.

                                    ARTICLE 3

                                  COMPENSATION

     3.1  ANNUAL BASE PAY. The annual base pay of Executive will be three
hundred fifty thousand dollars ($350,000), less standard withholdings and
deductions, payable in accordance with the Company's standard payroll
procedures. Executive will be considered for changes in base salary in
accordance with Company policy and subject to review and approval by the Board.

     3.2  ANNUAL BONUS. Commencing in the 2002 calendar year, Executive shall be
eligible for an annual bonus (the "Annual Bonus") of up to five hundred
twenty-five thousand dollars ($525,000), less standard withholdings and
deductions, for each calendar year Executive is employed by the Company as
President and Chief Operating Officer. For the 2001 calendar year, Executive
will receive a guaranteed bonus of fifty thousand dollars ($50,000) for each
full month Executive is employed by the Company, with a pro rata amount for any
portion of a month Executive is employed by the Company (the "2001 Bonus"), less
standard withholdings and deductions. The amount of Executive's Annual Bonus
will be based upon the achievement of certain goals ("Performance Criteria"),
provided, however, that Executive's Annual Bonus for calendar 2002 shall be at
least two hundred fifty thousand dollars ($250,000) and his Annual Bonus for
calendar 2003 shall be at least two hundred thousand dollars ($200,000). The
Performance Criteria shall be established by mutual agreement between the
Company and Executive within 90 days of the commencement of each calendar year.
If the Chief Executive Officer and Executive cannot reach agreement within 90
days, reasonable Performance Criteria may be established by the Chief Executive
Officer. Executive's 2001 Bonus and his subsequent Annual Bonus will be paid out
within 90 days after calendar year-end, except as otherwise set forth in Section
6.5. To be eligible to receive his Annual Bonus for any given year, Executive
must be employed with the Company as President and Chief Operating Officer
throughout that entire calendar year, except as otherwise set forth in Sections
6.3 and 6.5. Executive will not be eligible to receive an Annual Bonus, or any
portion thereof, for any given calendar year in which


                                        2.

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he resigns or his employment with the Company terminates, except as otherwise
set forth in Section 6.5.

     3.3  Stock Options. The Company shall grant to the Executive stock options
or stock awards for a total of 1,415,000 shares of the Company's common stock,
allocated as follows:

          3.3.1   OPTION GRANT NO. 1. Upon action of the Board, on or before
November 15, 2001, the Company shall grant Executive a non-statutory option to
purchase 950,000 shares of Company common stock ("Option Grant No. 1"), subject
to the terms and conditions of the Company's 2000 Equity Incentive Plan (the
"Plan") and Executive's stock grant agreement. The exercise price of Option
Grant No. 1 shall be the fair market value of the Company's common stock on the
date of the grant as established in accordance with the Company's standard
procedures for granting stock options to employees. Option Grant No. 1 shall
vest in accordance with the Company's standard vesting schedule as follows: over
4 years with the initial 25% vesting after 12 months of continuous service, and
thereafter shall vest in equal monthly installments over the subsequent 36
months of continuous service. Pursuant to the terms of the Plan, should certain
changes of control occur, as described in Paragraph 11(c) of the Plan, then, as
provided in the Plan, Executive's unvested options under Option Grant No. 1
shall have their vesting accelerated such that 50% of the remaining unvested
shares immediately shall vest.

          3.3.2   OPTION GRANT NO. 2. Upon action of the Board, on or before
November 15, 2001, the Company shall grant Executive a non-statutory option to
purchase 465,000 shares of Company common stock ("Option Grant No. 2"), subject
to the terms and conditions of the Plan and Executive's stock grant agreement.
The exercise price of Option Grant No. 2 shall be the fair market value of the
Company's common stock on the date of the grant as established in accordance
with the Company's standard procedures for granting stock options to employees.
Option Grant No. 2 shall vest as follows: 100% shall vest only at the end of 5
years of continuous service. Notwithstanding the foregoing, vesting of Option
Grant No. 2 shall be accelerated upon the occurrence of the following during
Executive's continuous service with the Company: (i) 25% of the shares
immediately shall vest if the Company's stock closes at or above $5.00 per share
for at least 50 of 60 consecutive trading days, including the last 10 days of
such period; (ii) an additional 50% of the shares immediately shall vest if the
Company's stock closes at or above $15.00 per share for at least 50 of 60
consecutive trading days, including the last 10 days of such period; and (iii)
an additional 25% of the shares immediately shall vest if the Company's stock
closes at or above $30.00 per share for at least 50 of 60 consecutive trading
days, including the last 10 days of such period. The preceding per share trading
amounts shall be adjusted appropriately for any stock split, stock dilution,
combination or the like after the Effective Date. Pursuant to the terms of the
Plan, should certain changes of control occur, as described in Paragraph 11(c)
of the Plan, then, as provided in the Plan, Executive's unvested options under
Option Grant No. 2 shall have their vesting accelerated such that 50% of the
remaining unvested shares immediately shall vest.

     3.4  ADDITIONAL STOCK AWARD/CASH. Upon Executive's commencement of
employment with the Company, Executive shall become entitled to a payment by the
Company in the amount of $430,000 or, if lesser, an amount equal to the value of
the IBM restricted stock units awarded to Executive under the IBM 1994 and 1997
Long-Term Performance Plans, valued as of the last day of Executive's IBM
employment, and which pursuant to such plan cancel upon


                                        3.

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termination of IBM employment (the "RSU/PSU Payment"). Executive agrees to
provide to the Company satisfactory evidence of the value of such IBM restricted
stock units upon or prior to the Effective Date. The RSU/PSU Payment may be paid
at the Company's sole discretion in cash or Company common stock or a
combination thereof, with the number of shares replacing cash to be determined
based on the thirty (30) trading day average of closing prices prior to November
1, 2001. In the event the Company satisfies its obligation to pay the RSU/PSU
Payment by delivering Company shares, (i) such shares shall be freely tradable
by Executive upon grant (other than with respect to restrictions imposed by the
Company's insider trading policy, Section 16 or the volume limitations under
Rule 144), and (ii) the Company shall satisfy any withholding tax obligation by
withholding Company shares under the grant. The RSU/PSU Payment shall be paid in
two equal installments, 50% payable on November 1, 2001 and 50% payable on or
before February 15, 2002. In the event Executive resigns his employment without
Good Reason (as defined below in Section 6.4) or is terminated with Cause (as
defined below in Section 6.2) prior to the second anniversary of the
commencement date of employment, Executive shall repay, within 30 days of his
actual separation date, that portion of the RSU/PSU Payment (either in cash or
by returning the shares to the Company), equal to 1/24th of the RSU/PSU Payment
times the number of months remaining until the second anniversary of the
commencement date of Executive's employment with the Company. Should certain
changes of control occur, as described in Paragraph 11(c) of the Plan,
Executive's obligation to repay the RSU/PSU Payment shall lapse as of the date
of such change. No repayment obligation shall apply in the event Executive's
employment terminates on account of death or Disability (as defined below in
Section 6.3).

     3.5  IBM DISGORGEMENT. Executive represents and warrants that he is subject
to certain noncompetition restrictions under agreements with IBM, which
agreements require that he forfeit certain awards granted by IBM if he engages
in acts deemed by IBM to be competitive, that he agree not to challenge the
reasonableness of such restrictions and that he pay all costs and expenses
incurred by IBM in the event IBM prevails in an action to enforce such
agreements. These or other agreements or other policies of IBM may also restrict
Executive's ability to solicit or hire persons with relationships with IBM.
Specifically, pursuant to such agreements IBM may claim that Executive is
obligated to disgorge some or all of the following value or proceeds from IBM
stock options that he has exercised within 6 months prior to termination of his
employment with IBM if IBM deems the Company to be a "competitor" of IBM per
Executive's option or employment agreements with IBM: (i) four hundred
twenty-three thousand dollars ($423,000) from shares exercised and sold in May
2001; (ii) two hundred sixty-seven thousand dollars ($267,000) from shares
exercised in May 2001; and (iii) nine hundred sixteen thousand dollars
($916,000) from shares exercised and sold in October 2001 (collectively, the
"Clawback Shares"). Executive agrees to provide, on or prior to the Effective
Date, to the Company satisfactory evidence of the amount of the value of or
proceeds received from the Clawback Shares. Executive shall use his reasonable
best efforts to obtain from IBM confirmation that the Company is not a
competitor of IBM for these purposes and to reduce the amount of any payment to
IBM (including by returning granted but unexercised options), and shall,
consistent with his obligations under his agreements with IBM, cooperate fully
with the Company with respect to defending against any claim by IBM with respect
to the Clawback Shares. If at any time prior to December 31, 2002, Executive is
subject to a claim for disgorgement to IBM with respect to the Clawback Shares
on the basis that IBM deems the Company to be a "competitor," and so long as
Executive's representations to the Company hereunder regarding the IBM


                                        4.

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obligations are not materially false, and he has complied with the obligations
set forth in this Section 3.5, the Company shall assume the defense of such a
claim (including the attorneys fees and costs associated with such defense), and
in the event of a court judgment in which Executive is forced to, or a
settlement in which the Company and Executive agree that Executive shall,
disgorge the value of or proceeds from the Clawback Shares to IBM, the Company
shall compensate Executive for the amount of the repayment to IBM, in an amount
not to exceed one million six hundred twenty-five thousand dollars ($1,625,000)
(the "Disgorgement Amount") by providing to Executive a stock bonus of Company
common stock (the "Stock Bonus"). The number of shares in such Stock Bonus shall
be equal to the Disgorgement Amount, divided by the average closing price of the
Company's common stock during the ten (10) trading days immediately prior to the
date of grant. The Company shall have the option, in its sole discretion, to pay
some or all of the Disgorgement Amount in cash rather than Company common stock,
and shall pay the Disgorgement Amount in cash in the event the Company is unable
for any reason to pay in Company common stock that is freely tradable (other
than with respect to restrictions imposed by the Company's insider trading
policy, Section 16 or the volume limitations under Rule 144). Notwithstanding
the foregoing, the Company shall have no obligation to assume the defense of an
IBM claim or to pay the Disgorgement Amount after the date Executive resigns
without Good Reason or is terminated by the Company for Cause. In the event
Executive resigns his employment without Good Reason (as defined below in
Section 6.4) or is terminated by the Company for Cause (as defined below in
Section 6.2) prior to 12 months from the payment of the Disgorgement Amount or
the providing of the Stock Bonus, Executive shall refund, within 3 months of his
actual separation date, the full Disgorgement Amount (paid in cash or provided
as a Stock Bonus), less 1/12th of the Disgorgement Amount for each month of
employment following payment by the Company of the Disgorgement Amount, provided
that no such repayment obligation shall apply to Executive in the event
Executive's employment terminates on account of death or Disability (as defined
below in Section 6.3). Should certain changes of voting control occur, as
described in Paragraph 11(c) of the Plan, Executive's obligation to repay the
Disgorgement Amount shall lapse as of the date of such change. In the event
Executive is required to pay to IBM the value of or proceeds from the Clawback
Shares and is not allowed a tax deduction or income adjustment for the entire
amount of such payment, the Company shall pay to Executive, in addition to the
Disgorgement Amount, a gross up for any taxes due as a result of such
disallowance or unallowed income adjustment. Further, in the event Executive
owes any net additional taxes in connection with the exercise of the category
(ii) shares listed above (the shares exercised in May 2001 with a spread equal
to $267,000) as a result of IBM requiring the return to IBM of the actual such
category (ii) shares prior to May 31, 2002 and that he would not have owed had
the Executive's holding period in such shares on the date of the return been
more than one (1) year for the purposes of Section 422(a)(1) of the Internal
Revenue Code, then the Company shall pay him, in addition to the Disgorgement
Amount that relates to such shares, an amount necessary to cover such additional
net tax amount. In addition, to the extent that the Company determines any
portion of the defense costs is includible in Executive's income as
compensation, the Company will gross up such amount if the defense costs are not
deductible by the Executive. Each above reference to a gross up shall mean a
full gross up of all taxes, including not only payment of the taxes in question
but also the taxes on such payment. The payment of any amounts described in the
preceding four sentences, to the extent made directly to the Executive, shall be
made either in shares of stock or cash, in the same manner as described above
with respect to the Disgorgement Amount.


                                        5.

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                                    ARTICLE 4

                                    BENEFITS

     4.1  BENEFITS. During Executive's employment, the Company shall provide
Executive with the same benefits which it provides to its other executive-level
employees, including but not limited to pension, vacation, bonus, stock,
profit-sharing and savings plans and similar benefits as such plans and benefits
may be adopted by the Company from time to time.

     4.2  DIRECTORS AND OFFICERS INSURANCE. During Executive's employment, the
Company shall provide Executive with the same Director and Officer error and
omissions insurance and ERISA fiduciary insurance offered to its other
executive-level employees.

     4.3  LIFE INSURANCE. During Executive's employment, the Company will
provide Executive with life insurance in the amount of 2 times Executive's
annual base pay (without the maximum cap under the Company's policy generally
applicable).

     4.4  BUSINESS EXPENSE REIMBURSEMENT. The Company shall reimburse Executive
for all reasonable travel, entertainment and other expenses incurred by him in
performing services hereunder and which are in accordance with Company policy.
The Company shall reimburse Executive for such expenses in accordance with the
Company's reimbursement policy as in effect from time to time. Executive agrees
to furnish the Company adequate records and other documentary evidence of such
expenses for which Executive seeks reimbursement.

     4.5  SPECIAL EXPENSES. Until such time as Executive relocates from New York
to the Bay Area, the Company shall reimburse Executive for: (i) Bay Area lodging
and reasonable related expenses not to exceed three thousand dollars ($3,000)
per month; and (ii) Executive's reasonable expenses for his round-trip coach
travel between New York and the Bay Area for up to 2 trips per month. Executive
agrees to furnish the Company adequate records and other documentary evidence of
such expenses for which Executive seeks reimbursement. To the extent that the
Company determines that any portion of such reimbursement is includible in
Executive's income as compensation, the Company will gross up the amount of such
reimbursement. The gross up referred to in the preceding sentence shall mean a
full gross up of all taxes, including not only payment of the taxes in question
but also the taxes on such payment.

     4.6  RELOCATION EXPENSES. The Company shall provide Executive with
relocation expense benefits as follows: (i) reimbursement for all actual moving
and relocation expenses up to a maximum of $100,000, including but not limited
to cost of moving household goods and 2 vehicles (including packing, loading,
storage, unloading and unpacking cost), closing costs (exclusive of broker's
commission), and points paid in connection with the purchase of a residence in
the Bay Area, and the reasonable cost of travel for Executive and his family for
the purpose of finding and purchasing a residence in the Bay Area; (ii)
reimbursement of broker's commission with respect to the sale of Executive's
residence in New York; and (iii) a $20,000 cash relocation allowance for
miscellaneous expenses not reimbursed under (i), which cash allowance shall be
paid within 30 days following the move. Executive shall provide adequate records
satisfactory to the Company for substantiation of all relocation expenses. To
the extent the Company determines any portion of such reimbursement (including
the cash allowance) is


                                        6.

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includible in Executive's income as compensation, the Company will gross up the
amount of such reimbursement. The gross up referred to in the preceding sentence
shall mean a full gross up of all taxes, including not only payment of the taxes
in question but also the taxes on such payment.

                                    ARTICLE 5

                       PROPRIETARY INFORMATION OBLIGATIONS

     5.1  PROPRIETARY INFORMATION AGREEMENT. Executive agrees to execute and
abide by the Proprietary Information and Inventions Agreement, attached hereto
as Exhibit A.

     5.2  REMEDIES. Executive's duties under the Proprietary Information and
Inventions Agreement shall survive termination of Executive's employment with
the Company. Executive acknowledges that a remedy at law for any breach or
threatened breach by Executive of the provisions of the Proprietary Information
and Inventions Agreement would be inadequate and Executive therefore agrees that
the Company shall be entitled to injunctive relief in case of any such breach or
threatened breach.

                                    ARTICLE 6

                       TERM AND TERMINATION OF EMPLOYMENT

     6.1  AT-WILL EMPLOYMENT. Executive's relationship with the Company is
terminable at-will. Both Executive and the Company shall have the right to
terminate Executive's employment with the Company at any time with or without
Cause or Good Reason, and with or without advance notice, subject to the
obligations of the Company and Executive with respect to Severance as set forth
in Section 6.4, and with respect to the repayment of the RSU/PSU Payment and the
Disgorgement Amount as set forth in Sections 3.4 and 3.5. The at-will nature of
Executive's employment with the Company may only be changed in an express
written agreement signed by Executive and a duly authorized officer of the
Company.

     6.2  TERMINATION BY COMPANY FOR CAUSE. The Company may terminate
Executive's employment at any time for Cause. For purposes of this Agreement,
"Cause" shall mean the occurrence of one or more of the following: (i)
Executive's conviction of a felony or a crime involving moral turpitude, fraud,
or an act of dishonesty against the Company; (ii) gross misconduct or gross
negligence in the performance of Executive's responsibilities which, based upon
good faith and reasonable factual investigation of the Board, demonstrates
unfitness to serve; or (iii) material violation or breach of any Company policy
or statutory, fiduciary, or contractual duty of Executive to the Company. In the
event that any of the foregoing events described above is capable of being
cured, the Company shall provide notice to Executive describing the nature of
such event and Executive shall thereafter have 10 days to cure such event.

     6.3  TERMINATION FOR DEATH OR DISABILITY. Executive's employment with the
Company will be terminated in the event of Executive's death or any illness,
disability or other incapacity that renders Executive physically or mentally
unable regularly to perform his duties


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hereunder for a period in excess of 12 consecutive weeks or an aggregate of 90
days in any consecutive 12 month period ("Disability"). The determination
regarding whether Executive is physically or mentally unable regularly to
perform his duties shall be made by the Board. In the event of Executive's death
or Executive's termination of his employment on account of Disability, Executive
(or Executive's beneficiaries or estate) shall be entitled to payment of the
severance package described in Section 6.4(b) below, applicable at the time of
termination, provided that all severance pay shall be paid in a lump sum rather
than in monthly installments.

     6.4  RESIGNATION FOR GOOD REASON. Executive may resign his employment with
the Company at any time for Good Reason. For purposes of this Agreement, "Good
Reason" shall mean the occurrence of one or more of the following: (i) a
material reduction in Executive's position or duties (changes to the number of
Executive's direct reports will not constitute Good Reason so long as Executive
maintains his same title and reports to the CEO); or (ii) a reduction of 20% or
more in Executive's compensation or benefits (not including Annual Bonus) with
respect to an individual component or in the aggregate (other than in connection
with an across the board reduction applicable to the majority of Company's
executive-level employees).

     6.5  SEVERANCE.

          (a) RESIGNATION WITHOUT GOOD REASON OR TERMINATION FOR CAUSE. In the
event that Executive resigns his employment with the Company without Good Reason
or the Company terminates Executive's employment for Cause, the Executive will
be entitled to receive his annual base salary and benefits through the end of
the month during which such termination occurs, and the Company thereafter shall
have no further obligation under this Agreement to Executive.

          (b) RESIGNATION WITH GOOD REASON OR TERMINATION WITHOUT CAUSE. In the
event that Executive resigns his employment with the Company with Good Reason or
the Company terminates Executive's employment without Cause (or Executive's
employment terminates because of death or Disability), the Company shall provide
Executive with the following severance benefits, provided that Executive (or his
beneficiaries or estate) first executes the release agreement substantially in
the form attached hereto as Exhibit B in the form finally determined by the
Company:

               (i)    The Company shall continue to pay to Executive his then
current annual monthly base pay for a period of 12 months following Executive's
actual separation date, less standard withholdings and deductions, and in
accordance with the Company's standard payroll practices (except as set forth in
Section 6.3 above);

               (ii)   The Company shall pay Executive, on a pro-rata basis for a
period of 12 months following Executive's actual separation date (except as set
forth in Section 6.3 above), less standard withholdings and deductions, (a) the
amount of his guaranteed bonus for the year (as set forth in Section 3.2) if
Executive's termination without Cause occurs in 2002 or 2003, or (b) the average
of Executive's bonus payments for all prior years of employment with the
Company, if Executive's termination without Cause occurs after 2003 (except that
2001 shall not be included for purposes of determining such average).


                                        8.

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               (iii)  In the event that Executive's actual separation date
occurs prior to the first anniversary of Executive's commencement of employment
with the Company, the Company shall pay Executive an additional lump sum in the
amount of two hundred fifty thousand dollars ($250,000), less standard
withholdings and deductions, to be paid within 30 days of Executive's actual
separation date.

     6.6  MITIGATION. Except as otherwise specifically provided herein,
Executive shall not be required to mitigate damages or the amount of any payment
provided under this Agreement by seeking other employment or otherwise, nor
shall the amount of any payment provided for under this Agreement be reduced by
any compensation earned by Executive as a result of employment by another
Company or by retirement benefits after the date of his termination.

                                    ARTICLE 7

                               GENERAL PROVISIONS

     7.1  NOTICES. Any notices provided hereunder must be in writing and shall
be deemed effective upon the earlier of personal delivery (including, personal
delivery by facsimile transmission) or the third day after mailing by first
class mail, to the Company at its primary office location and to Executive at
his address as listed on the Company payroll (which address may be changed by
written notice).

     7.2  SEVERABILITY. Whenever possible, each provision of this Agreement will
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but such invalid, illegal or
unenforceable provision will be reformed, construed and enforced in such
jurisdiction so as to render it valid, legal, and enforceable consistent with
the intent of the parties insofar as possible.

     7.3  WAIVER. If either party should waive any breach of any provisions of
this Agreement, he or it shall not thereby be deemed to have waived any
preceding or succeeding breach of the same or any other provision of this
Agreement.

     7.4  ENTIRE AGREEMENT. This Agreement, together with the Proprietary
Information and Inventions Agreement, the Plan, and the stock grant agreements,
constitutes the entire agreement between Executive and the Company and it
supersedes any prior agreement, promise, representation, or statement written or
otherwise between Executive and the Company with regard to this subject matter.
It is entered into without reliance on any promise, representation, statement or
agreement other than those expressly contained or incorporated herein, and it
cannot be modified or amended except in a writing signed by Executive and a duly
authorized member of the Board. Executive and Company agree to cooperate fully
to amend and restate this Agreement, as needed.

     7.5  COUNTERPARTS. This Agreement may be executed in separate counterparts,
any one of which need not contain signatures of more than one party, but all of
which taken together will constitute one and the same Agreement.


                                        9.

<PAGE>

     7.6  HEADINGS. The headings of the sections hereof are inserted for
convenience only and shall not be deemed to constitute a part hereof nor to
affect the meaning thereof.

     7.7  SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and inure
to the benefit of and be enforceable by Executive, the Company and their
respective successors, assigns, heirs, executors and administrators, except that
Executive may not assign any of his duties hereunder and he may not assign any
of his rights hereunder without the written consent of the Company, which shall
not be withheld unreasonably.

     7.8  LEGAL AND TAX EXPENSES. The Company shall reimburse Executive for
legal and tax advice expenses incurred by him in connection with negotiation of
the terms of his employment and the documentation thereof up to a maximum of
eight thousand five dollars ($8,500).

     7.9  ARBITRATION. To ensure the rapid and economical resolution of disputes
that may arise in connection with Executive's employment with the Company,
Executive and the Company agree that any and all disputes, claims, or causes of
action, in law or equity, arising from or relating to the enforcement, breach,
performance, or interpretation of this Agreement, Executive's employment, or the
termination of Executive's employment, shall be resolved, to the fullest extent
permitted by law, by final, binding and confidential arbitration in San
Francisco, California conducted by the Judicial Arbitration and Mediation
Services, Inc. ("JAMS") or its successor, under the then applicable rules of
JAMS. EXECUTIVE ACKNOWLEDGES THAT BY AGREEING TO THIS ARBITRATION PROCEDURE,
BOTH EXECUTIVE AND THE COMPANY WAIVE THE RIGHT TO RESOLVE ANY SUCH DISPUTE
THROUGH A TRIAL BY JURY OR JUDGE OR BY ADMINISTRATIVE PROCEEDING. The arbitrator
shall: (a) have the authority to compel adequate discovery for the resolution of
the dispute and to award such relief as would otherwise be permitted by law; and
(b) issue a written arbitration decision including the arbitrator's essential
findings and conclusions and a statement of the award. The arbitrator shall be
authorized to award any or all remedies that Executive or the Company would be
entitled to seek in a court of law. The Company shall pay all JAMS' arbitration
fees in excess of those which would be required if the dispute were decided in a
court of law. Nothing in this Agreement is intended to prevent either Executive
or the Company from obtaining injunctive relief in court to prevent irreparable
harm pending the conclusion of any arbitration. Notwithstanding the foregoing,
Executive and the Company each have the right to resolve any issue or dispute
arising under the Proprietary Information and Inventions Agreement by Court
action instead of arbitration.

     7.10 GOVERNING LAW. All questions concerning the construction, validity and
interpretation of this Agreement will be governed by the law of the State of
California as applied to contracts made and to be performed entirely within
California.

     IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the Effective Date above written.


                                       10.

<PAGE>

                                                 BLUE MARTINI SOFTWARE, INC.


                                                 By:  /s/ MONTE ZWEBEN
                                                    ----------------------------


                                                 Its: Chairman and CEO
                                                     ---------------------------


                                                 EXECUTIVE:


                                                 /s/ MICHAEL J. BORMAN
                                                 ---------------------------
                                                 Michael Borman


                                       11.

<PAGE>

                                    EXHIBIT A

            EMPLOYEE PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT


                                        1.

<PAGE>

                                    EXHIBIT B

                                RELEASE AGREEMENT

     Executive and the Company each acknowledge that (i) Executive and the
Company are party to an Employment Agreement dated October __, 2001 (the
"Employment Agreement"), pursuant to Article 1.1 of which certain provisions
thereof expressly survive the cessation of Executive's employment thereunder,
(ii) Executive is party to a Proprietary Information and Inventions Agreement,
certain provisions of which expressly survive the cessation of Executive's
employment with the Company; and (iii) Executive and the Company are party to a
Stock Option Agreement(s) dated [__________], 2001 and related Grant Notice(s).
The parties further acknowledge that nothing in this Release Agreement shall:
(i) release Executive or the Company from violations occurring after the
cessation of Executive's employment with the Company of any of their respective
obligations under any of the provisions of the Employment Agreement (including
Company's obligation to provide severance or benefits to Executive) or the
Proprietary Information and Inventions Agreement which survive the cessation of
Executive's employment with the Company; (ii) eliminate Executive's rights under
any of the provisions of the Employment Agreement which survive the cessation of
Executive's employment with the Company; and (iii) effect Executive's or the
Company's rights or obligations with respect to the Stock Option Agreement(s) or
related Grant Notice(s).

     In consideration for the severance benefits provided to Executive pursuant
to the Employment Agreement, Executive hereby releases, acquits and forever
discharges the Company, its parents and subsidiaries, and its and their
respective officers, directors, agents, servants, employees, shareholders,
successors, assigns and affiliates, of and from any and all claims, liabilities,
demands, causes of action, costs, expenses, attorneys fees, damages, indemnities
and obligations of every kind and nature, in law, equity, or otherwise, known
and unknown, suspected and unsuspected, disclosed and undisclosed (other than
any claim for indemnification Executive may have as a result of any action
against him based on his employment with the Company, or as otherwise provided
in applicable insurance policies or other agreements) arising out of or in any
way related to events, acts or conduct occurring on or prior to the date
Executive executes this Release Agreement, including any claims arising out of
or in any way connected with the Employment Agreement, Executive's employment
with the Company or the termination of that employment, claims or demands
related to salary, bonuses, commissions, stock, stock options, or any other
ownership interests in the Company, vacation pay, fringe benefits, expense
reimbursements, severance pay, or any other form of compensation; claims
pursuant to any federal, state or local law, statute, or cause of action
including, but not limited to, the federal Civil Rights Act of 1964, as amended;
the federal Americans with Disabilities Act of 1990; the federal Age
Discrimination in Employment Act of 1967, as amended ("ADEA"); the California
Fair Employment and Housing Act, as amended; tort law; contract law; wrongful
discharge; discrimination; harassment; fraud; defamation; emotional distress;
and breach of the implied covenant of good faith and fair dealing.

     The Executive acknowledges that he is knowingly and voluntarily waiving and
releasing any rights he may have under ADEA. He also acknowledges that the
consideration given for the waiver and release in the preceding paragraph hereof
is in addition to anything of value to which


                                        1.

<PAGE>

he was already entitled. He further acknowledges that he has been advised by
this writing, as required by the ADEA, that: (A) his waiver and release do not
apply to any rights or claims that may arise after he executes this Release
Agreement; (B) he has the right to consult with an attorney prior to executing
this Release Agreement; (C) he has twenty-one (21) days to consider this
Agreement (although he may choose to voluntarily execute this Release Agreement
earlier); (D) he has seven (7) days following the execution of this Release
Agreement by the parties to revoke the Release Agreement; and (E) this Release
Agreement shall not be effective until the date upon which the revocation period
has expired, which shall be the eighth day after this Release Agreement is
executed by the Executive, provided that the Company has also executed this
Release Agreement by that date ("Effective Date").

     Executive acknowledges that he has read and understands Section 1542 of the
California Civil Code which reads as follows: "A GENERAL RELEASE DOES NOT EXTEND
TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT
THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR." Executive hereby expressly waives and
relinquishes all rights and benefits under that section and any law of any
jurisdiction of similar effect with respect to his release of any claims that he
may have against the Company.



BLUE MARTINI SOFTWARE, INC.


By:                                   By:
------------------------------------  ------------------------------------
   [Name]                                  Michael Borman
   [Title]



Date:                                 Date:
------------------------------------  ------------------------------------


                                       2.