EXHIBIT 10.18



LOGO



Versata, Inc.    300
Lakeside Drive, Suite 1300, Oakland, CA 94612-3537 ph 510.628.1000 fx 510.238.4101



February 2, 2004



Yasmin Zarabi



Dear Yasmin:



We are very pleased to offer you the position of Vice President and General Counsel, reporting directly to Alan Baratz. The terms of your
employment with Versata, Inc. are set forth below.



| |  |  | You will be paid an annualized salary of $140,000 USD paid on a semi monthly basis.
| | - |  | -----------------------------------------------------------------------------------



| |  |  | You will be designated as an officer of the company for purposes of Section 16 of the Securities Exchange Act of 1934, as amended;
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| |  |  | As an officer of the company you will be eligible to earn an annual performance bonus of 25% of your annual base salary to be paid quarterly, if the company meets two criteria
for net revenue and cash flow for each quarter as determined by the Board of Directors of the company. No bonus shall be earned for less than 100% of achievement of a company goal.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | You will be granted an incentive stock option to purchase fifty thousand (50,000) shares of common stock of the Corporation exercisable in accordance with the Corporations
2000 Stock Incentive Plan (the Plan), as amended, and standard stock purchase agreement with the change of control addendum to the Stock option agreement. The exercise price per share of the Option shall be equal to the closing price per
share of common stock on NASDAQ on the date of grant, January 27, 2004, as published in the Wall Street Journal. The Option shall vest on a monthly basis over a 50-month period in accordance with the Plan.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Pending approval by the Board of Directors, special acceleration provisions shall apply to the above stock options. Please refer to the attached Addendum to Stock Option Agreement.
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| |  |  | You will be entitled to participate in Versatas senior officer severance plan.
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| |  |  | You will be eligible to participate in Versatas benefit programs under the terms set forth in the documents governing the plan.
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---

Yasmin Zarabi

1/27/04

Pg. 2



| |  |  | You agree to abide by the policies and procedures outlined in the Human Resources Guidelines.
| | - |  | ---------------------------------------------------------------------------------------------



| |  |  | Versata is an at-will employer, and therefore allows either employees or the company the right to terminate employment whenever and for whatever reason is deemed suitable, with or
without notice. You can be promoted, demoted, or have your title changed with or without cause or notice at the will of the company. The at-will nature of your employment, as outlined above, cannot be changed except in writing signed by
the President of Versata.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



This offer letter, together with the
various documents referenced herein, represent the complete offer by the Company. No other agreements (verbal or otherwise) which are not specifically cited shall be in effect.



To show your acceptance of this offer please sign this letter in the space indicated and return it to Tina Estrada in the HR
Department.



Sincerely,



|                             
|-----------------------------
|                             
|/s/ Alan Baratz              
|Alan Baratz President and CEO



|                                   |  |  |  |        
|---------------------------------- |  |  |  | -------
|AGREED, ACKNOWLEDGED AND ACCEPTED: |  |  |  |        
|                                   |  | 
|Effective Date: January 27, 2004   |  |  |  |        
|                                   |  | 
|/s/ Yasmin Zarabi                  |  |  |  | 1/27/04
|Yasmin Zarabi (Signature)          |  |  |  | Date   



www.versata.com



---

EMPLOYEE STATUS CHANGE NOTICE



Please fill in any changes or corrections under the To column



|                         |  |  |  |                    |  |  |  |                        |  |           
|------------------------ |  |  |  | ------------------ |  |  |  | ---------------------- |  | ----------
|EMPLOYEE NAME:           |  |  |  | Yasmin Zarabi      |  |  |  | Change Effective Date: |  | 12/17/2004
|                         |  |  |  |                   
|                         |  |  |  | FROM               |  |  |  | TO                    
|Job Title:               |  |  |  |                    |  |  |  |                       
|Department Name/Number:  |  |  |  |                    |  |  |  |                       
|Manager:                 |  |  |  |                    |  |  |  |                       
|Status:                  |  |  |  |                    |  |  |  |                       
|                         |  |  |  |                    |  |  |  |                        |  |           
|COMPENSATION             |  |  |  |                    |  |  |  |                       
|Annual Salary:           |  |  |  | $140,000.00        |  |  |  | $160,000.00           
|Bonus:                   |  |  |  | 25% of base salary |  |  |  | 35% of base salary    
|Stock:                   |  |  |  |                    |  |  |  |                       
|Commission:              |  |  |  |                    |  |  |  |                       
|Next Salary Review Date: |  |  |  |                    |  |  |  |                       

|                  |  |                               |  |                          |  |                               |  | 
|----------------- |  | ----------------------------- |  | ------------------------ |  | ----------------------------- |  | 
|                  |  |                               |  |                         
|REASON FOR CHANGE |  | (attach supporting documents) |  |                         
|                  |  |                               | 
| ̈TRANSFER         |  | x       MERIT INCREASE        |  |  ̈VOLUNTARY TERMINATION   |  |  ̈BEGIN LEAVE OF ABSENCE      
|                  |  |                               | 
| ̈REORGANIZATION   |  |  ̈EQUITY INCREASE              |  |  ̈INVOLUNTARY TERMINATION |  |  ̈RETURN FROM LEAVE OF ABSENCE
|                  |  |                               | 
| ̈MANAGER CHANGE   |  |  ̈PROMOTION                    |  |  ̈LAYOFF                  |  |                              
|                  |  |                               | 
| ̈TITLE CHANGE     |  |  ̈BONUS                        |  |  ̈ELIMINATION OF POSITION |  |                              

|                               |  | 
|------------------------------ |  | 
|                               | 
|OTHER If other, please specify |  | 

|                                                                   |  | 
|------------------------------------------------------------------ |  | 
|If reason is leave or termination, please provide last day worked: |  | 



|                                                      |  |  |  |  |  |  |  | 
|----------------------------------------------------- |  |  |  |  |  |  |  | 
|COMMENTS / ADDITIONAL INFORMATION:  Salary adjustment
|APPROVALS                                             |  |  |  |  |  |  |  | 

|         |  |                 |  |              |  |                  |  |                      |  |                         
|-------- |  | --------------- |  | ------------ |  | ---------------- |  | -------------------- |  | ------------------------
|CEO:     |  | /s/ Alan Baratz |  | Date: 1/5/05 |  | Human Resources: |  | /s/ Deana Stanger    |  | DATE: 12.20.04          
|         |  |                 |  |             
|CFO/COO: |  | Date:           |  | Manager:     |  |                  |  | DATE:               
|         |  |                 |  |              |  |                  |  | DistributionOriginal |  |  ̈Employee Personnel File
|         |  |                 |  |              |  |                  |  | Copy                 |  |  ̈HRIS                   
|         |  |                 |  |              |  |                  |  |                      |  |  ̈Payroll