EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT (the "Agreement"), dated as of December 1, 2006 (the “Commencement Date”) between Net Perceptions, Inc., a Delaware corporation, (the “Company") and Jonathan LaBarre (the "Employee").

WHEREAS , the Company desires to employ the Employee and to be assured of his services on the terms and conditions hereinafter set forth; and

WHEREAS , the Employee is willing to accept such employment on such terms and conditions.

NOW THEREFORE , in consideration of the mutual covenants and agreements set forth in this Agreement, the Company and the Employee hereby agree as follows:

The term of this Agreement shall commence on the Commencement Date and shall expire on the third anniversary of Commencement Date (the “Term”), subject to earlier termination as provided herein.

(a)      During the Term of this Agreement, the Employee shall serve as the Chief Financial Officer and Principal Financial Officer of the Company and shall perform all duties commensurate with his position and as may be assigned to him by the Chairman of the Board of Directors of the Company or the Chief Executive Officer or such other person(s) as may be designated by the Board of Directors of the Company (the “Board”). The Employee shall devote his full business time and energies to the business and affairs of the Company and shall use his best efforts, skills and abilities to promote the interests of the Company, and to diligently and competently perform the duties of his position.

(b)      The Employee shall report to the Chairman of the Board or the Chief Executive Officer or such other person(s) as may be designated by the Board and shall at all times keep the Chairman of the Board (or such other officer as the Chairman of the Board or the Chief Executive Officer or the Board may designate from time to time) promptly and fully informed (in writing if so requested) of his conduct and of the business or affairs of the Company, and provide such explanations of his conduct as may be required.

3.       Compensation, Bonus, Stock Options, Benefits, etc.

(a)     Salary . During the Term of this Agreement, the Company shall pay to the Employee, and the Employee shall accept from the Company, as compensation for the performance of services under this Agreement and the Employee's observance and performance of all of the provisions hereof, an annual salary at the rate of $205,000 (the "Base Compensation"). The Base Compensation shall be payable in accordance with the normal payroll practices of the Company. The Employee’s performance and the Base Compensation shall be subject to annual review by the Company.

(b)     Bonus . In addition to the Base Compensation described above, the Employee shall, in the sole and absolute discretion of the Compensation Committee of the Board, be entitled to performance bonuses which may be based upon a variety of factors, including the Employee’s performance and the achievement of Company goals, all as determined in the sole and absolute discretion of the Board or Compensation Committee of the Board. The target performance bonus for 2007 is 40% of the Base Compensation, subject to the discretion of the Board, provided the Company achieves annual earnings before interest, taxes, depreciation and amortization (“EBITDA”), as computed by the Company on or prior to its filing of its annual report on Form 10-K for the year ended December 31, 2007, of at least $13,800,000 in the fiscal year ended December 31, 2007. Additionally, as consideration for the Employee accepting this position prior to the receipt of the 2006 bonus he would have otherwise been entitled to had he remained at his old employment, the Company hereby agrees to pay to the Employee a one-time buy-out bonus in the amount of $45,000 (the “Buy-out Bonus”) provided the employment of the Employee has not been terminated for any reason prior to filing of the Company’s annual report on Form 10-K for the year ended December 31, 2006. Any bonus paid to the Employee shall be subject to withholding for applicable taxes and other amounts. In addition, the Employee may be entitled to participate in such other bonus plans, whether during the term of this Agreement as the Compensation Committee of the Board may, in its sole and absolute discretion, determine.

(c)     Stock Options .  

Upon the Commencement Date, the Company shall issue and grant to Employee, under the Company’s 1999 Equity Incentive Plan (the “Plan”), options to purchase 250,000 shares of the Company’s common stock (the “Common Stock”), having an exercise price equal to the closing price of the Common Stock on the date of grant, which shall be the Commencement Date, of which (i) 125,000 shall vest in three equal annual installments commencing on the first anniversary of the date of grant; and (ii) 125,000 shall vest upon satisfaction of the performance targets set forth in and in accordance with Exhibit A , attached hereto. During the Term of this Agreement the Employee agrees not to sell, pledge, hypothecate or otherwise transfer the Common Stock issuable upon the exercise of each tranche of options identified above within a one year period after vesting of such tranche without the consent of the Board of Directors. The terms and provisions of such options shall be set forth in a stock option agreement in a form satisfactory to the Company and subject to the Company’s form of stock option agreement under the Plan. In addition, the Employee may be entitled, during the term of this Agreement, to receive such additional options, at such exercise prices and other terms as the Compensation Committee of the Board may, in its sole and absolute discretion, determine.

(d)     Benefits . During the Term of this Agreement, the Employee shall be entitled to participate in or benefit from, in accordance with the eligibility and other provisions thereof, the Company's medical insurance and other fringe benefit plans or policies as the Company may make available to, or have in effect for, its senior executive officers from time to time. The Company and its affiliates retain the right to terminate or alter any such plans or policies from time to time. The Employee shall also be entitled to four weeks paid vacation each year, sick leave and other similar benefits in accordance with policies of the Company from time to time in effect for its senior executive officers.

(e)       Reimbursement of Business Expenses . During the Term of this Agreement, upon submission of proper invoices, receipts or other supporting documentation reasonably satisfactory to the Company and in accordance with and subject to the Company’s expense reimbursement policies, the Employee shall be reimbursed by the Company for all reasonable business expenses actually and necessarily incurred by the Employee on behalf of the Company in connection with the performance of services under this Agreement.

(f)       Taxes . The Base Compensation and any other compensation paid to Employee shall be subject to withholding for applicable taxes and other amounts.

4.   Representations of Employee .  

(a)      The Employee represents and warrants that he is not party to, or bound by, any agreement or commitment, or subject to any restriction, including but not limited to agreements related to previous employment containing confidentiality or noncompetition covenants, which presently has or may in the future have a possibility of adversely affecting the business of the Company or the performance by the Employee of his duties under this Agreement.

(b)      During the Term and the Severance Period, if any, the Employee agrees that he will not offer for sale, sell, pledge, assign, hypothecate or otherwise create any interest in or dispose of (or enter into any transaction or device that is designed to, or could reasonably be expected to, result in any of the foregoing) any shares of Common Stock owned by him on the Commencement Date or any shares of Common Stock owned or acquired by him after the Commencement Date upon the conversion or exercise of options or any securities convertible into or exercisable or exchangeable for Common Stock, without first notifying the Board in writing to inquire as to whether there exists any facts or circumstances that would make it inadvisable for the Company if the Employee engaged in such transaction.

(c)      The representations, warranties and covenants of this Section 4 shall survive termination of the Employee’s employment hereunder and the expiration of the Term hereof.

5.       Confidentiality, Noncompetition, Nonsolicitation and Non-Disparagement.

For purposes of this Section 5, all references to the Company shall be deemed to include the Company’s affiliates and subsidiaries and their respective subsidiaries, whether now existing or hereafter established or acquired. In consideration for the compensation and benefits provided to the Employee pursuant to this Agreement, the Employee agrees with the provisions of this Section 5.

(a)  Confidential Information . (i) The Employee acknowledges that as a result of his retention by the Company, the Employee has and will continue to have knowledge of, and access to, proprietary and confidential information of the Company, including, without limitation, research and development plans and results, software, databases, technology, inventions, trade secrets, technical information, know-how, plans, specifications, methods of operations, product and service information, product and service availability, pricing information (including pricing strategies), financial, business and marketing information and plans, and the identity of customers, clients and suppliers (collectively, the “Confidential Information”), and that the Confidential Information, even though it may be contributed, developed or acquired by the Employee, constitutes valuable, special and unique assets of the Company developed at great expense which are the exclusive property of the Company. Accordingly, the Employee shall not, at any time, either during or subsequent to the Term of this Agreement, use, reveal, report, publish, transfer or otherwise disclose to any person, corporation or other entity, any of the Confidential Information without the prior written consent of the Company, except to responsible officers and employees of the Company and other responsible persons who are in a contractual or fiduciary relationship with the Company and who have a need for such Confidential Information for purposes in the best interests of the Company, and except for such Confidential Information which is or becomes of general public knowledge from authorized sources other than the Employee.

(ii)  The Employee acknowledges that the Company would not enter into this Agreement without the assurance that all the Confidential Information will be used for the exclusive benefit of the Company.

(b)  Return of Confidential Information . Upon the termination of this Agreement or upon the request of the Company, the Employee shall promptly return to the Company all Confidential Information in his possession or control, including but not limited to all drawings, manuals, computer printouts, computer databases, disks, data, files, lists, memoranda, letters, notes, notebooks, reports and other writings and copies thereof and all other materials relating to the Company’s business, including without limitation any materials incorporating Confidential Information.

(c)  Inventions, etc . During the Term and for a period of one year thereafter, the Employee will promptly disclose to the Company all designs, processes, inventions, improvements, developments, discoveries, processes, techniques, and other information related to the business of the Company conceived, developed, acquired, or reduced to practice by him alone or with others during the Term of this Agreement, whether or not conceived during regular working hours, through the use of Company time, material or facilities or otherwise (“Inventions”).

The Employee agrees that all copyrights created in conjunction with his service to the Company and other Inventions, are “works made for hire” (as that term is defined under the Copyright Act of 1976, as amended). All such copyrights, trademarks, and other Inventions shall be the sole and exclusive property of the Company, and the Company shall be the sole owner of all patents, copyrights, trademarks, trade secrets, and other rights and protection in connection therewith. To the extent any such copyright and other Inventions may not be works for hire, the Employee hereby assigns to the Corporation any and all rights he or she now has or may hereafter acquire in such copyrights and any other Inventions. Upon request the Employee shall deliver to the Company all drawings, models and other data and records relating to such copyrights, trademarks and Inventions. The Employee further agrees as to all such Inventions, to assist the Company in every proper way (but at the Company’s expense) to obtain, register, and from time to time enforce patents, copyrights, trademarks, trade secrets, and other rights and protection relating to said Inventions in and all countries, and to that end the Employee shall execute all documents for use in applying for and obtaining such patents, copyrights, trademarks, trade secrets and other rights and protection on and enforcing such Inventions, as the Company may desire, together with any assignments thereof to the Company or persons designated by it. Such obligation to assist the Company shall continue beyond the termination of the Employee’s service to the Company, but the Company shall compensate the Employee at a reasonable rate after termination of service for time actually spent by the Employee at the Company’s request for such assistance. In the event the Company is unable, after reasonable effort, to secure the Employee’s signature on any document or documents needed to apply for or prosecute any patent, copyright, trademark, trade secret, or other right or protection relating to an Invention, whether because of the Employee’s physical or mental incapacity or for any other reason whatsoever, the Employee hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as his agent coupled with an interest and attorney-in-fact, to act for and in his behalf and stead to execute and file an