EXHIBIT 2 to
                                                              AMENDMENT NO. 1 to
                                                                    Schedule 13D





                            ------------------------



                           PROBUSINESS SERVICES, INC.


                 CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT


                                 AUGUST 1, 2000


                            ------------------------





<PAGE>

                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----

SECTION 1 - Authorization and Sale of Preferred Stock.........................3

         1.1      Authorization...............................................3
         1.2      Sale of Convertible Preferred...............................3

SECTION 2 - Closing Date; Delivery............................................3

         2.1      Closing Date................................................3
         2.2      Delivery....................................................4

SECTION 3 - Representations and Warranties of the Company.....................4

         3.1      Organization and Standing...................................4
         3.2      Capitalization. ............................................4
         3.3      Corporate Power; Authorization..............................5
         3.4      Issuance and Delivery of the Shares.........................5
         3.5      SEC Documents; Financial Statements.........................6
         3.6      No Material Adverse Change..................................6
         3.7      Litigation..................................................6
         3.8      Governmental Authorization; Third Party Consents............6
         3.9      Compliance with Laws........................................6
         3.10     Liabilities.................................................7
         3.11     Private Offering............................................7
         3.12     Broker's, Finder's or Similar Fees..........................7
         3.13     Section 203.................................................7

SECTION 4 - Representations and Warranties of the Purchasers..................8

         4.1      Investment Representations and Covenants of the Purchasers..8
         4.2      Receipt of Information......................................9
         4.3      Authorization...............................................9
         4.4      Brokers or Finders..........................................9
         4.5      Tax Advisors................................................9
         4.6      Investor Counsel...........................................10
         4.7      HSR Compliance.............................................10

SECTION 5 - Conditions to Closing of the Purchasers..........................10

         5.1      Representations and Warranties Correct.....................10
         5.2      Covenants..................................................10
         5.3      Compliance Certificate.....................................10
         5.4      Blue Sky...................................................11
         5.5      Legal Matters..............................................11
         5.6      Opinion of Counsel.........................................11
         5.7      Registration Rights Agreement..............................11
         5.8      Secretary's Certificate....................................11
         5.9      Documents..................................................11
         5.10     Filing of the Certificate of Designations..................11
         5.11     Shares.....................................................11

                                       -i-

<PAGE>

                                TABLE OF CONTENTS
                                   (continued)

                                                                            PAGE
                                                                            ----

SECTION 6 - Conditions to Closing of Company.................................12

         6.1      Representations and Warranties.............................12
         6.2      Blue Sky...................................................12
         6.3      Legal Matters..............................................12
         6.4      Board and Stockholder Approval.............................12
         6.5      Registration Rights Agreements.............................12

SECTION 7 - Affirmative Covenants of the Company.............................12

         7.1      SEC Filings................................................12
         7.2      Reservation of Common Stock and Preferred Stock............13
         7.3      Registration and Listing...................................13
         7.4      Use of Proceeds............................................13

SECTION 8 - Indemnification..................................................13

         8.1      Indemnification............................................13
         8.2      Notification...............................................14
         8.3      Contribution...............................................15
         8.4      Limitation on Indemnification..............................15

SECTION 9 - Miscellaneous....................................................15

         9.1      Governing Law..............................................15
         9.2      Survival...................................................15
         9.3      Successors and Assigns.....................................15
         9.4      Entire Agreement; Amendment................................16
         9.5      Notices, etc...............................................16
         9.6      Delays or Omissions........................................16
         9.7      California Corporate Securities Law........................17
         9.8      Expenses...................................................17
         9.9      Counterparts...............................................17
         9.10     Severability...............................................17
         9.11     Further Assurances.........................................17
         9.12     Publicity..................................................17

EXHIBITS

         A.       Schedule of Purchasers
         B.       Certificate of Designations
         C.       Schedule of Exceptions
         D.       Compliance Certificate
         E.       Registration Rights Agreement
         F.       Opinion of Wilson Sonsini Goodrich & Rosati

                                      -ii-

<PAGE>

                           PROBUSINESS SERVICES, INC.

           6.9% SENIOR CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT


         This Convertible Preferred Stock Purchase Agreement (the "AGREEMENT")
is made as of the 1 day of August 2000 by and between ProBusiness Services,
Inc., a Delaware corporation (the "COMPANY"), with its principal office at 4125
Hopyard Road, Pleasanton, California 94588, and the persons listed on the
Schedule of Purchasers attached hereto as EXHIBIT A (the "PURCHASERS").

         In consideration of the mutual promises, covenants and conditions
hereinafter set forth, the parties hereto mutually agree as follows:

                                   DEFINITIONS

         As used in this Agreement, and unless the context requires a different
meaning, the following terms have the meanings indicated:

         "AFFILIATE" shall mean any Person who is an "affiliate" as defined in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act. In
addition, the following shall be deemed to be Affiliates of GAP Coinvestment,
GAP LP and GapStar: (a) GAP LLC, the members of GAP LLC, the limited partners of
GAP Coinvestment and the limited partners of GAP LP; (b) any Affiliate of GAP
LLC, the members of GAP LLC, the limited partners of GAP Coinvestment or the
limited partners of GAP LP; and (c) any limited liability company or partnership
a majority of whose members or partners, as the case may be, are members or
former members of GAP LLC or consultants or key employees of General Atlantic
Service Corporation, a Delaware corporation and an Affiliate of GAP LLC. In
addition, GAP LP, GAP Coinvestment and GapStar shall be deemed to be Affiliates
of one another.

         "AGREEMENT" shall have the meaning as defined above.

         "BOARD OF DIRECTORS" means the Board of Directors of the Company.

         "BYLAWS" means the bylaws of the Company as amended and as in effect as
of the Closing Date.

         "CERTIFICATE" shall have the meaning as defined in Section 1.1.

         "CERTIFICATE OF DESIGNATIONS" means the Certificate of Designations,
Rights and Preferences of the Convertible Preferred Stock of the Company.

         "CLAIMS" shall mean any actions, suits, proceedings, claims,
complaints, disputes, arbitrations or investigations.

<PAGE>

         "CERTIFICATE OF INCORPORATION" means the Amended and Restated
Certificate of Incorporation of the Company.

         "CLOSING" shall have the meaning as defined in Section 2.1.

         "CLOSING DATE" shall have the meaning as defined in Section 2.1.

         "COMMISSION" shall have the meaning as defined in Section 4.1(c).

         "COMMON STOCK" means Common Stock, par value $.001 per share, of the
Company, or any other capital stock of the Company into which such stock is
reclassified or reconstituted.

         "CONDITION OF THE COMPANY AND THE SUBSIDIARY" means the assets,
business, properties, operations or condition (financial or otherwise) of the
Company and the Subsidiary, taken as a whole.

         "CONVERTIBLE PREFERRED" shall have the meaning as defined in Section
1.1.

         "EXCHANGE ACT" shall have the meaning as defined in Section 3.4.

         "FINANCIAL STATEMENTS" shall have the meaning set forth in Section 3.5.

         "GAP LLC" means General Atlantic Partners, LLC, a Delaware limited
liability company and the general partner of GAP LP and the managing member of
GapStar, and any successor to such entity.

         "GAP COINVESTMENT" has the meaning set forth in the preamble to this
Agreement.

         "GAP LP" shall mean General Atlantic Partners 70, L.P., a Delaware
limited partnership.

         "GAPSTAR" shall mean GapStar, LLC, a Delaware limited liability
company.

         "GOVERNMENTAL AUTHORITY" means the government of any nation, state,
city, locality or other political subdivision thereof, any entity exercising,
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.

         "PERSON" means any individual, firm, corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
limited liability company, Governmental Authority or other entity of any kind,
and shall include any successor (by merger or otherwise) of such entity.

         "REGISTRATION RIGHTS AGREEMENT" shall mean the Amended and Restated
Registration Rights Agreement dated March 12, 1997 between the Company, the
Purchasers and the Original Holders (as defined therein), as amended by the
Amendment to the Amended and Restated Registration Rights Agreement dated the
date hereof between such parties.

                                       -2-

<PAGE>

         "REQUIREMENTS OF LAW" means, as to any Person, any law, statute,
treaty, rule, regulation, right, privilege, qualification, license or franchise
or determination or order of an arbitrator or a court or other Governmental
Authority or stock exchange, in each case applicable or binding upon such Person
or any of its property or to which such Person or any of its property is subject
or pertaining to any or all of the transactions contemplated or referred to
herein.

         "SECURITIES ACT" shall have the meaning as defined in Section 3.4.

         "STOCK EQUIVALENTS" means any security or obligation which is by its
terms convertible into or exchangeable for shares of common stock or other
capital stock or securities of the Company, and any option, warrant or other
subscription or purchase right with respect to common stock or such other
capital stock or securities.

         "STOCK OPTION PLAN" means the stock option plan of the Company pursuant
to which up to 5,963,571 shares of restricted stock and options to purchase
shares of Common Stock are reserved and available for grant to officers,
directors, employees and consultants of the Company.

         "SUBSIDIARIES" means those subsidiaries of the Company set out under
Schedule 3.2 to the Schedule of Exceptions.

         "TRANSACTION DOCUMENTS" means the Agreement and the Registration Rights
Agreement.

                                    SECTION 1

                    AUTHORIZATION AND SALE OF PREFERRED STOCK

         1.1 AUTHORIZATION. The Company has authorized the sale and issuance of
up to 1,132,075 shares (the "Shares") of its 6.9% Senior Convertible Preferred
Stock (the "CONVERTIBLE PREFERRED"), having rights, privileges and preferences
as set forth in the Certificate of Designations (the "CERTIFICATE") in the form
attached to this Agreement as EXHIBIT B. The Company's Certificate of
Incorporation authorizes the issuance of up to 1,800,000 shares of Convertible
Preferred.

         1.2 SALE OF CONVERTIBLE PREFERRED. Subject to the terms and conditions
hereof, the Company will issue and sell to the Purchasers and the Purchasers
will severally purchase from the Company, at the Closing, the respective number
of shares of Convertible Preferred indicated on the Schedule of Purchasers at a
purchase price of $26.50 per share, for the aggregate purchase price for each
Purchaser as indicated thereon.

                                    SECTION 2

                             CLOSING DATE; DELIVERY

         2.1 CLOSING DATE. The closing of the execution of this Agreement and
the sale and purchase of the Shares hereunder shall be held at the offices of
Wilson Sonsini Goodrich & Rosati, 975 Page Mill Road, Palo Alto, California
94304 at 5:00 p.m., local time, on Tuesday August 1,

                                       -3-

2000 (the "Closing") or at such other time and place upon which the Company and
the Purchasers shall agree (the date of the Closing is hereinafter referred to
as the "CLOSING DATE").

         2.2 DELIVERY. At the Closing, the Company will deliver to each
Purchaser an executed counterpart of this Agreement together with a certificate,
registered in such Purchaser's name, representing the number of Shares to be
issued on the Closing Date as set forth beside such Purchaser's name on the
Schedule of Purchasers, against delivery of an executed counterpart of this
Agreement, together with payment of the purchase price for the Shares by check
payable to the Company or wire transfer per the Company's instructions.

                                    SECTION 3

                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

         Except as set forth on the "Schedule of Exceptions" attached hereto as
EXHIBIT C, the Company hereby represents and warrants to the Purchasers as of
the Closing Date as follows:

         3.1 ORGANIZATION AND STANDING. The Company and each of the Subsidiaries
(a) is a corporation duly organized and validly existing under, and by virtue
of, the laws of the State of Delaware, (b) is in good standing as a domestic
corporation under the laws of said state, (c) is duly qualified as a foreign
corporation, licensed and in good standing under each jurisdiction in which its
ownership, lease or operation of property or the conduct of its business
requires such qualifications. No jurisdiction, other than those referred to in
clause, (c) above, has claimed, in writing or otherwise, that the Company or any
of the Subsidiaries is required to qualify as a foreign corporation or other
entity therein, and neither the Company nor any of the Subsidiaries files any
franchise, income or other tax returns in any other jurisdiction based upon the
ownership or use of property therein or the derivation of income therefrom.

         3.2 CAPITALIZATION.

                  (a) As of June 30, 2000, the authorized capital stock of the
Company consisted of (i) 60,000,000 shares of Common Stock, of which 23,584,000
shares were issued and outstanding, and (ii) 5,000,000 shares of Preferred
Stock, none of which shares were issued and outstanding, but of which as of
closing, 1,800,000 shall be designated as the Convertible Preferred. As of June
30, 2000, the aggregate number of shares subject to options to purchase shares
of Common Stock which may be issued under the Stock Option Plan is 5,963,571, of
which 4,344,606 have been granted. The Company has reserved an aggregate of
1,800,000 shares of Common Stock for issuance upon conversion of the Shares.
Except for the (i) conversion privileges of the Shares, (ii) shares of Common
Stock subject to outstanding options issued under the Company's Stock Option
Plan and (iii) shares of Common Stock reserved for future issuance pursuant to
the Company's Stock Option Plan, there are no options, warrants, conversion
privileges, subscription or purchase rights or other rights outstanding to
purchase or otherwise acquire (i) any authorized but unissued, unauthorized or
treasury shares of the Company's capital stock, (ii) any Stock Equivalents or
(iii) other securities of the Company and there are no commitments, contracts,
agreements, arrangements or understandings

                                       -4-

<PAGE>

by the Company to issue any shares of the Company's capital stock or any Stock
Equivalents or other securities of the Company.

                  (b) SCHEDULE 3.2(B) sets forth, as of June 30, 2000, a true
and complete list of (x) each of the Subsidiaries of the Company, (y) the
aggregate number of authorized shares of capital stock of such Subsidiary and
(z) the stockholders of such Subsidiary and, opposite the name of each
stockholder, the amount of all outstanding capital stock and Stock Equivalents
owned by such stockholder. The Company owns all of the issued and outstanding
capital stock of the Subsidiaries, free and clear of all liens or encumberances.
All of such shares of capital stock are duly authorized, validly issued, fully
paid and non-assessable, and were issued in compliance with the registration and
qualification requirements of all applicable federal, state and foreign
securities laws. There are no options, warrants, conversion privileges,
subscription or purchase rights or other rights presently outstanding to
purchase or otherwise acquire any authorized but unissued, unauthorized or
treasury shares of capital stock or other securities of, or any proprietary
interest in, any of the Subsidiaries, and there is no outstanding security of
any kind convertible into or exchangeable for such shares or proprietary
interest. Neither the Company nor any of its Subsidiaries, owns any interest, or
has a right to acquire any interest, in any Person that is not a Subsidiary.

         3.3 CORPORATE POWER; AUTHORIZATION. The Company has all requisite legal
and corporate power and has taken all requisite corporate action to execute and
deliver each of the Transaction Documents, to sell and issue the Shares and to
carry out and perform all of its obligations under each of the Transaction
Documents. Each of the Transaction Documents constitutes the legal, valid and
binding obligation of the Company, enforceable in accordance with its terms,
except (i) as limited by applicable bankruptcy, insolvency, reorganization or
similar laws relating to or affecting the enforcement of creditors' rights
generally and (ii) as limited by equitable principles generally. The execution
and delivery of each of the Transaction Documents does not, and the performance
of each of the Transaction Documents and the compliance with the provisions
thereof and the issuance, sale and delivery of the Shares by the Company will
not materially conflict with, or result in a material breach or violation of the
terms, conditions or provisions of, or constitute a material default under, or
result in the creation or imposition of any material lien pursuant to the terms
of, the Certificate of Incorporation, the Certificate of Designations or Bylaws
of the Company or any statute, law, rule or regulation or any state or federal
order, judgment or decree (collectively, "Orders") or any indenture, mortgage,
lease or other material agreement or instrument to which the Company or any of
its properties is subject.

         3.4 ISSUANCE AND DELIVERY OF THE SHARES. The Shares, when issued in
compliance with the provisions of this Agreement, will be validly issued, fully
paid and nonassessable. The shares of Common Stock issuable upon conversion of
the Shares have been duly reserved for issuance upon conversion of the Shares
and, when issued in compliance with the Certificate of Designation, will be
validly issued, fully paid and non-assessable. Neither the issuance and delivery
of the Shares nor the issuance of the shares of Common Stock issuable upon
conversion of the Shares will be subject to preemptive or any other similar
rights of the stockholders of the Company or any liens or encumbrances.

                                       -5-

<PAGE>

         3.5 SEC DOCUMENTS; FINANCIAL STATEMENTS. The Company has filed in a
timely manner all documents that the Company was required to file with the
Commission under Sections 13, 14(a) and 15(d) of the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"), during the twelve (12) months preceding
the date of this Agreement. As of their respective filing dates, all documents
filed by the Company with the Commission (the "SEC DOCUMENTS") complied in all
material respects with the requirements of the Exchange Act or the Securities
Act of 1933, as amended (the "SECURITIES ACT"), as applicable. The SEC Documents
did not contain any untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company and the notes thereto
included in the SEC Documents (the "FINANCIAL STATEMENTS") comply as to form in
all material respects with applicable accounting requirements and with the
published rules and regulations of the Commission with respect thereto. The
Financial Statements have been prepared in accordance with generally accepted
accounting principles consistently applied and fairly present the consolidated
financial position of the Company and any subsidiaries at the dates thereof and
the consolidated results of their operations and consolidated cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal,
recurring adjustments).

         3.6 NO MATERIAL ADVERSE CHANGE. Except as otherwise disclosed herein,
since March 31, 2000, there have not been any changes in the assets,
liabilities, financial condition or operations of the Company from that
reflected in the Financial Statements except changes in the ordinary course of
business which have not had, either individually or in the aggregate, a
materially adverse effect on the Condition of the Company or the Subsidiary.

         3.7 LITIGATION. There are no actions, suits, proceedings, claims,
complaints, disputes, arbitrations or investigations pending or, to the
knowledge of the Company, threatened, at law, in equity, in arbitration or
before any Governmental Authority against the Company or the Subsidiary which
would, if adversely determined, have a material adverse effect on (a) the
Condition of the Company and the Subsidiary or (b) the ability of the Company to
perform its obligations under any of the Transaction Documents. No Order has
been issued by any court or other Governmental Authority against the Company
purporting to enjoin or restrain the execution, delivery or performance of any
of the Transaction Documents.

         3.8 GOVERNMENTAL AUTHORIZATION; THIRD PARTY CONSENTS. No approval,
consent, compliance, exemption, authorization or other action by, or notice to,
or filing with any (i) Governmental Authority, (ii) NASD or (iii) other Person
(whether acting in an individual, fiduciary or other capacity), and no lapse of
a waiting period under a Requirement of Law, is necessary or is required to be
made or obtained by the Company or any of its Subsidiaries for the execution,
delivery and performance (including, without limitation, the sale, issuance and
delivery of the Shares) by, or enforcement against, the Company of the
Transaction Documents and the consummation of the transactions contemplated
hereby and thereby.

         3.9 COMPLIANCE WITH LAWS.

                  (a) The Company is in compliance with all Requirements of Law
issued by any court or Governmental Authority against the Company except for
those that would have no material adverse effect on the Company. To the
Company's knowledge, there is no existing or proposed Requirement of Law which
could reasonably be expected to prohibit or restrict the Company from, or
otherwise materially adversely effect the Company in, conducting its business in
any jurisdiction in which it now conducts or proposes, to conduct its business.

                  (b) (i) The Company has all licenses, permits and approvals of
any Governmental Authority (collectively, "Permits") that are necessary for the
conduct of the business of the Company; (ii) such Permits are in full force and
effect; and (iii) no violations are or have been recorded in respect of any
Permit.

                  (c) No material expenditure is presently required by the
Company to comply with any existing Requirement of Law.

         3.10 LIABILITIES. The Company does not have any material direct or
indirect obligation or liability ("LIABILITIES") other than (a) Liabilities
fully and adequately reflected or reserved against on the Financial Statements
and (b) Liabilities incurred since March 31, 2000 in the ordinary course of
business. The Company has no knowledge of any circumstance, condition, event or
arrangement that could reasonably be expected to give rise hereafter to any
Liabilities of the Company except in the ordinary course of business.

         3.11 PRIVATE OFFERING. No form of general solicitation or general
advertising was used by the Company or its representatives in connection with
the offer or sale of the Shares. No registration of the Shares, pursuant to the
provisions of the Securities Act or any state securities or "blue sky" laws,
will be required by the offer, sale or issuance of the Shares. The Company
agrees that neither it, nor anyone acting on its behalf, shall offer to sell the
Shares or any other securities of the Company so as to require the registration
of the Shares pursuant to the provisions of the Securities Act or any state
securities or "blue sky" laws, unless such Shares or other securities are so
registered.

         3.12 BROKER'S, FINDER'S OR SIMILAR FEES. There are no brokerage
commissions, finder's fees or similar fees or commissions payable by the Company
in connection with the transactions contemplated hereby based on any agreement,
arrangement or understanding with the Company or any action taken by any such
Person.

         3.13 SECTION 203. This Agreement and the transactions contemplated
hereby have been approved by all necessary action of the Board of Directors in
accordance with Section 203(a)(1) of the General Corporation Law of the State of
Delaware.

                                       -7-

<PAGE>

                                    SECTION 4

                REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

         Each Purchaser hereby represents and warrants (severally as to itself
and not jointly) to the Company with respect to its purchase of the Shares as
follows:

         4.1 INVESTMENT REPRESENTATIONS AND COVENANTS OF THE PURCHASERS.

                  (a) This Agreement is made by the Company with the Purchaser
in reliance upon such Purchaser's representations and covenants made in this
Section 4, which by its execution of this Agreement the Purchaser hereby
confirms. The Purchaser represents that the Convertible Preferred to be received
will be acquired for investment for its own account, not as a nominee or agent,
and not with a view to the sale or distribution of any part thereof, and that it
has no present intention of selling, granting any participation in or otherwise
distributing the same. The Purchaser further represents that it does not have
any contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participations to such person or to any third person, with
respect to any of the Convertible Preferred or any Common Stock acquired on
conversion thereof.

                  (b) The Purchaser understands and acknowledges that the
offering of the Convertible Preferred pursuant to this Agreement will not, and
any issuance of Common Stock on conversion thereof may not, be registered under
the Securities Act on the ground that the sale provided for in this Agreement
and the issuance of securities hereunder is exempt pursuant to Section 4(2) of
the Securities Act, and that the Company's reliance on such exemption is
predicated on the Purchasers' representations set forth herein.

                  (c) The Purchaser covenants that in no event will it make any
disposition of any of the Convertible Preferred, or any Common Stock acquired
upon the conversion thereof, except in accordance with the Registration Rights
Agreement and pursuant to Rule 144 promulgated under the Securities Act ("Rule
144") or otherwise in compliance with federal and state securities laws. The
Purchaser further covenants that it will not make any sale, transfer or other
disposition of the Convertible Preferred or the Common Stock issuable upon
conversion thereof in violation of the Securities Act, the Exchange Act, or the
rules of the Securities and Exchange Commission (the "COMMISSION") promulgated
thereunder.

                  (d) The Purchaser represents that it is experienced in
evaluating companies similar to the Company, is able to fend for itself in
transactions such as the one contemplated by this Agreement, has such knowledge
and experience in financial and business matters that it is capable of
evaluating the merits and risks of its prospective investment in the Company,
has the ability to bear the economic risks of the investment and is an
"accredited investor" as defined by Regulation D promulgated under the
Securities Act of 1933, as amended.

                  (e) The Purchaser acknowledges and understands that the
Convertible Preferred, and any Common Stock acquired upon the conversion
thereof, must be held indefinitely unless it is

                                       -8-

<PAGE>

subsequently registered under the Securities Act or an exemption from such
registration is available, and that, except as otherwise provided in the
Registration Rights Agreement, the Company is under no obligation to register
either the Convertible Preferred or Common Stock.

                  (f) The Purchaser acknowledges that it has reviewed a copy of
Rule 144, which permits limited public resales of securities acquired in a
nonpublic offering, subject to the satisfaction of certain conditions. The
Purchaser understands that before the Convertible Preferred, or any Common Stock
issued upon conversion thereof, may be sold under Rule 144, the following
conditions must be fulfilled: (i) certain public information about the Company
must be available, (ii) the sale must occur at least one year after the
Purchaser purchased and paid for the Convertible Preferred, (iii) the sale must
be made in a broker's transaction and (iv) the number of shares of Convertible
Preferred sold must not exceed certain volume limitations.

                  (g) The Purchaser acknowledges that in the event the
applicable requirements of Rule 144 are not met, registration under the
Securities Act, compliance with the Commission's Regulation A or another
exemption from registration will be required for any disposition of its stock.
The Purchaser understands that although Rule 144 is not exclusive, the
Commission has expressed its opinion that persons proposing to sell restricted
securities received in a private offering other than in a registered offering or
pursuant to Rule 144 will have a substantial burden of proof in establishing
that an exemption from registration is available for such offers or sales and
that such persons and the brokers who participate in the transactions do so at
their own risk.

         4.2 RECEIPT OF INFORMATION. The Purchaser has received and reviewed the
Transaction Documents and all exhibits thereto and the SEC Documents. The
Purchaser and its counsel have had access to and an opportunity to review all
documents and other materials requested of the Company; the Purchaser and its
counsel have been given an opportunity to ask any and all questions of, and
receive answers from, the Company concerning the terms and conditions of the
offering and to obtain all information it or they believe necessary or
appropriate to evaluate the suitability of an investment in the Convertible
Preferred; and, in evaluating the suitability of an investment in the
Convertible Preferred, it and they have not relied upon any representations or
other information (whether oral or written) other than as set forth in the
documents and answers referred to above.

         4.3 AUTHORIZATION. Each of the Transaction Documents when executed and
delivered by the Purchaser will constitute a valid and legally binding
obligation of the Purchaser, enforceable in accordance with its terms, except
(i) as limited by laws of general application relating to bankruptcy, insolvency
and the relief of debtors and rules of law governing specific performance,
injunctive relief or other equitable remedies and (ii) to the extent that the
enforceability of the indemnification provisions of the Registration Rights
Agreement may be limited by applicable law.

         4.4 BROKERS OR FINDERS. The Purchaser has not, and will not, incur,
directly or indirectly, as a result of any action taken by the Purchaser, any
liability for brokerage or finders' fees or agents' commissions or any similar
charges in connection with this Agreement.

         4.5 TAX ADVISORS. The Purchaser has reviewed with its own tax advisors
the federal, state, local and foreign tax consequences of this investment, where
applicable, and the transactions

                                       -9-

<PAGE>

contemplated by this Agreement. The Purchaser is relying solely on such advisors
and not on any statements or representations of the Company or any of its agents
and understands that it (and not the Company) shall be responsible for the
Purchaser's own tax liability that may arise as a result of this investment or
the transactions contemplated by this Agreement.

         4.6 INVESTOR COUNSEL. The Purchaser acknowledges that it has had the
opportunity to review the Transaction Documents, the exhibits and the schedules
attached hereto and thereto and the transactions contemplated by the Transaction
Documents with its own legal and investment counsel. The Purchaser is relying
solely on such counsel and not on any statements or representations of the
Company or any of its agents for legal or investment advice with respect to this
investment or the transactions contemplated by the Transaction Documents.

         4.7 HSR COMPLIANCE

                  (a) Each Purchaser is its own "ultimate parent entity" as
defined in the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
or the rules and regulations promulgated thereto (together, the "HSR Act".

                  (b) Each Purchaser, other than GAP LP, will hold less than
$15,000,000 in voting securities of the Company following execution of this
Agreement, as valued under the HSR Act.

                  (c) GAP LP has less than $10,000,000 in assets and less than
$10,000,000 in annual revenue, as defined under the HSR Act.

                                    SECTION 5

                     CONDITIONS TO CLOSING OF THE PURCHASERS

         The Purchasers' obligations to purchase the Shares at the Closing and
to perform any obligations hereunder are, at the option of the Purchasers,
subject to the fulfillment of the following conditions:

         5.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Company in Section 3 hereof shall be true and correct in
all material respects on the Closing Date as if made on such date.

         5.2 COVENANTS. All covenants, agreements and conditions contained in
this Agreement to be performed by the Company on or prior to the Closing Date
shall have been performed or complied with in all material respects.

         5.3 COMPLIANCE CERTIFICATE. The Company shall have delivered to the
Purchasers a certificate of the Company in the form of EXHIBIT D hereto,
executed by the President of the Company, dated the Closing Date, and
certifying, among other things, to the fulfillment of the conditions specified
in Sections 5.1 and 5.2 of this Agreement.

                                      -10-

<PAGE>

         5.4 BLUE SKY. The Company shall have obtained all necessary Blue Sky
law permits and qualifications, or have the availability of exemptions
therefrom, required by any state for the offer and sale of the Convertible
Preferred and the Common Stock issuable upon conversion of the Convertible
Preferred.

         5.5 LEGAL MATTERS. All material matters of a legal nature that pertain
to the Transaction Documents and the transactions contemplated hereby and
thereby, shall have been reasonably approved by special counsel to the
Purchasers.

         5.6 OPINION OF COUNSEL. The Purchasers shall have received an opinion
of Wilson Sonsini Goodrich & Rosati, dated the Closing Date, relating to the
transactions contemplated by or referred to herein, substantially in the form
attached hereto as EXHIBIT F.

         5.7 REGISTRATION RIGHTS AGREEMENT. The Company, each Purchaser and a
majority of the Original Holders (as defined therein) shall have entered into
the Registration Rights Agreement in substantially the form attached hereto as
EXHIBIT E.

         5.8 SECRETARY'S CERTIFICATE. The Purchasers shall have received a
certificate from the Company, in form and substance satisfactory to the
Purchasers, dated the Closing Date and signed by the Secretary or an Assistant
Secretary of the Company, certifying (a) that the attached copies of the
Certificate of Designations, the Bylaws and resolutions of the Board of
Directors of the Company approving each of the Transaction Documents to which
the Company is a party, are true, complete and correct and remain unamended and
in full force and effect and (b) as to the incumbency and specimen signature of
each officer of the Company executing each Transaction Document and any other
document delivered at the Closing on behalf of the Company.

         5.9 DOCUMENTS. The Purchasers shall have received true, complete and
correct copies of such documents as they may reasonably request in connection
with or relating to the sale of the Shares and the transactions contemplated
hereby, all in form and substance reasonably satisfactory to the Purchasers.

         5.10 FILING OF THE CERTIFICATE OF DESIGNATIONS. The Certificate of
Designations shall have been filed by the Company with the Secretary of State of
the State of Delaware in accordance with the General Corporation Law of the
State of Delaware.

         5.11 SHARES. The Company shall have delivered to the Purchasers
certificates in definitive form representing the number of Shares set forth
opposite such Purchaser's name on EXHIBIT A hereto, registered in the name of
such Purchaser.

                                      -11-

<PAGE>

                                    SECTION 6

                        CONDITIONS TO CLOSING OF COMPANY

         The Company's obligation to sell and issue the Shares pursuant to
Section 1.2 hereof and to perform any obligations hereunder, is, at the option
of the Company, subject to the fulfillment as of the Closing Date of the
following conditions:

         6.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
made by the Purchasers in Section 4 hereof shall be true and correct when made,
and shall be true and correct on the Closing Date.

         6.2 BLUE SKY. The Company shall have obtained all necessary Blue Sky
law permits and qualifications, or have the availability of exemptions
therefrom, required by any state for the offer and sale of the Shares and the
Common Stock issuable upon conversion of the Shares.

         6.3 LEGAL MATTERS. All material matters of a legal nature that pertain
to the Transaction Documents and the transactions contemplated hereby and
thereby, shall have been reasonably approved by counsel to the Company. At the
time of the Closing, the purchase of the Shares shall be legally permitted by
all laws and regulations to which each Purchaser and the Company are subject.

         6.4 BOARD AND STOCKHOLDER APPROVAL. All approvals of the Company's
Board of Directors and Stockholders necessary for performance of the
transactions contemplated by the Transaction Documents shall have been obtained.

         6.5 REGISTRATION RIGHTS AGREEMENTS. The Company, each Purchaser and a
majority of the Original Holders (as defined therein) shall have entered into
the Registration Rights Agreement in substantially the form attached hereto as
EXHIBIT E.

                                    SECTION 7

                      AFFIRMATIVE COVENANTS OF THE COMPANY

         The Company hereby covenants and agrees with the Purchasers with
respect to this Section 7 so long as any shares of Convertible Preferred or
shares of Common Stock issuable upon the conversion thereof are outstanding as
follows:

         7.1 SEC FILINGS. From and after the date of this Agreement, the Company
agrees that it will use commercially reasonable efforts to file with the
Commission, within the time periods specified in the Commission's rules and
regulations for as long as they are applicable to the Company, (i) all quarterly
and annual financial information required to be filed with SEC on Forms 10-Q and
10-K, (ii) all current reports required to be filed with the Commission on Form
8-K and (iii) any other information required to be filed with the Commission.

                                      -12-

<PAGE>

         7.2 RESERVATION OF COMMON STOCK AND PREFERRED STOCK. The Company hereby
covenants and agrees that it shall at all times reserve and keep available out
of its authorized shares of Common Stock, solely for the purpose of issue or
delivery upon conversion of the Shares, as provided in the Certificate of
Designations, the maximum number of shares of Common Stock that may be issuable
or deliverable upon such conversion. The Company shall issue such shares of
Common Stock in accordance with the terms of the Certificate of Designations and
otherwise comply with the terms thereof.

         7.3 REGISTRATION AND LISTING. If any shares of Common Stock required to
be reserved for purposes of conversion of the Shares, as provided in the
Certificate of Designations, require registration with or approval of any
Governmental Authority under any Federal or state or other applicable law before
such shares of Common Stock may be issued or delivered upon conversion or
exercise, the Company will in good faith and as expeditiously as possible cause
such shares of Common Stock to be duly registered or approved, as the case may
be. So long as the shares of Common Stock are quoted on the NASDAQ or listed on
any national securities exchange, the Company will, if permitted by the rules of
such system or exchange, quote or list and keep quoted or listed on such system
or exchange, upon official notice of issuance, all shares of Common Stock
issuable or deliverable upon conversion of the Shares.

         7.4 USE OF PROCEEDS. The Company shall use the proceeds from the sale
of the Shares to the Purchasers to fund the Company's working capital.

                                    SECTION 8

                                 INDEMNIFICATION

         8.1 INDEMNIFICATION. Except as otherwise provided in this Section 8,
the Company (the "INDEMNIFYING PARTY") agrees to indemnify, defend and hold
harmless each of the Purchasers and its Affiliates and their respective
officers, directors, agents, employees, subsidiaries, partners, members and
controlling persons (each, an "INDEMNIFIED PARTY") to the fullest extent
permitted by law from and against any and all losses, Claims, or written threats
thereof (including, without limitation, any Claim by a third party), damages,
expenses (including reasonable fees, disbursements and other charges of counsel
incurred by the Indemnified Party in any action between the Indemnifying Party
and the Indemnified Party or between the Indemnified Party and any third party
or otherwise) or other liabilities (collectively, "LOSSES") resulting from or
arising out any breach of any representation or warranty, covenant or agreement
by the Company in this Agreement or the other Transaction Documents; PROVIDED
HOWEVER, that if and to the extent that such indemnification is unenforceable
for any reason, the Indemnifying Party shall make the maximum contribution to
the payment and satisfaction of such Losses which shall be permissible under
applicable laws. In connection with the obligation of the Indemnifying Party to
indemnify for expenses as set forth above, the Indemnifying Party shall, upon
presentation of appropriate invoices containing reasonable detail, reimburse
each Indemnified Party for all such expenses (including reasonable fees,
disbursements and other charges of counsel incurred by the Indemnified Party in
any action between

                                      -13-

<PAGE>

the Indemnifying Party and the Indemnified Party or between the Indemnified
Party and any third party) as they are incurred by such Indemnified Party;
PROVIDED HOWEVER, that if an Indemnified Party is reimbursed under this Section
8 for any expenses, such reimbursement of expenses shall be refunded to the
extent it is finally judicially determined that the Losses in question resulted
primarily from the willful misconduct or gross negligence of such Indemnified
Party.

         8.2 NOTIFICATION. Each Indemnified Party under this Section 8 shall,
promptly after the receipt of notice of the commencement of any Claim against
such Indemnified Party in respect of which indemnity may be sought from the
Indemnifying Party under this Section 8, notify the Indemnifying Party in
writing of the commencement thereof. The omission of any Indemnified Party to so
notify the Indemnifying Party of any such action shall not relieve the
Indemnifying Party from any liability which it may have to such Indemnified
Party (a) other than pursuant to this Section 8 or (b) under this Section 8
unless, and only to the extent that, such omission results in the Indemnifying
Party's forfeiture of substantive rights or defenses. In case any such Claim
shall be brought against any Indemnified Party, and it shall notify the
Indemnifying Party of the commencement thereof, the Indemnifying Party shall be
entitled to assume the defense thereof at its own expense, with counsel
satisfactory to such Indemnified Party in its reasonable judgment; PROVIDED,
HOWEVER, that any Indemnified Party may, at its own expense, retain separate
counsel to participate in such defense at its own expense. Notwithstanding the
foregoing, in any Claim in which both the Indemnifying Party, on the one hand,
and an Indemnified Party, on the other hand, are, or are reasonably likely to
become, a party, such Indemnified Party shall have the right to employ separate
counsel and to control its own defense of such Claim if, in the reasonable
opinion of counsel to such Indemnified Party, either (x) one or more defenses
are available to the Indemnified Party that are not available to the
Indemnifying Party or (y) a conflict or potential conflict exists between the
Indemnifying Party, on the one hand, and such Indemnified Party, on the other
hand, that would make such separate representation advisable; PROVIDED, HOWEVER,
that the Indemnifying Party (i) shall not be liable for the fees and expenses of
more than one counsel to all Indemnified Parties and (ii) shall reimburse the
Indemnified Parties for all of such fees and expenses of such counsel incurred
in any action between the Indemnifying Party and the Indemnified Parties or
between the Indemnified Parties and any third party, as such expenses are
incurred. The Indemnifying Party agrees that it will not, without the prior
written consent of the Purchasers, settle, compromise or consent to the entry of
any judgment in any pending or threatened Claim relating to the matters
contemplated hereby (if any Indemnified Party is a party thereto or has been
actually threatened to be made a party thereto) unless such settlement,
compromise or consent includes an unconditional release of each Indemnified
Party from all liability arising or that may arise out of such Claim. The
Indemnifying Party shall not be liable for any settlement of any Claim effected
against an Indemnified Party without its written consent, which consent shall
not be unreasonably withheld. The rights accorded to an Indemnified Party
hereunder shall be in addition to any rights that any Indemnified Party may have
at common law, by separate agreement or otherwise; PROVIDED, HOWEVER, that
notwithstanding the foregoing or anything to the contrary contained in this
Agreement, nothing in this Section 8 shall restrict or limit any rights that any
Indemnified Party may have to seek equitable relief.

                                      -14-

<PAGE>

         8.3 CONTRIBUTION. If the indemnification provided for in this Section 8
from the Indemnifying Party is unavailable to an Indemnified Party hereunder in
respect of any Losses referred to herein, then the Indemnifying Party, in lieu
of indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Losses in such proportion
as is appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions which resulted in such Losses,
as well as any other relevant equitable considerations. The relative faults of
such Indemnifying Party and Indemnified Party shall be determined by reference
to, among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information supplied by,
such Indemnifying Party or Indemnified Party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action. The amount paid or payable by a party as a result of the Losses referred
to above shall be deemed to include, subject to the limitations set forth in
Sections 8.1 and 8.2, any legal or other fees, charges or expenses reasonably
incurred by such party in connection with any investigations or proceeding.

         8.4 LIMITATION ON INDEMNIFICATION. Anything in this Agreement to the
contrary notwithstanding, no indemnification payment shall be made to an
Indemnified Party pursuant to Section 8 of this Agreement until the amounts
which the Indemnified Party would otherwise be entitled to receive as
indemnification under this Agreement aggregate at least $1,000,000, at which
time the Indemnified Party shall be entitled to receive any such payments and
any subsequent payments in full. Anything in this Agreement to the contrary
notwithstanding, the Indemnifying Party's liability pursuant to this Section 8
shall in no event exceed $30,000,000.

                                    SECTION 9

                                  MISCELLANEOUS

         9.1 GOVERNING LAW. This Agreement shall be governed in all respects by
and in accordance with the laws of the State of Delaware, without regard to the
principles of conflicts of law thereof. The parties expressly stipulate that any
litigation under this Agreement shall be brought in the state courts of the
County of Alameda, California or the County of New York, New York and in the
United States District Court for the Northern District of California or the
Southern District of New York. The parties agree to submit to the jurisdiction
and venue of any of those courts.

         9.2 SURVIVAL. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by a Purchaser and the closing
of the transactions contemplated hereby.

         9.3 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto,
provided, however, that the rights of a Purchaser to purchase the Convertible
Preferred shall not be assignable without the consent of the Company, except
subject to applicable securities laws, the Purchasers may assign any of their
rights under any of the Transaction

                                      -15-

<PAGE>

Documents to any of their respective Affiliates; provided however, the Company
shall not be obligated to register transfers to more than 15 such transferees,
without prior written consent not to be unreasonably withheld.

         9.4 ENTIRE AGREEMENT; AMENDMENT. This Agreement and the other documents
delivered pursuant hereto at the Closing constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof, and no party shall be liable or bound to any other party in
any manner by any warranties, representations or covenants except as
specifically set forth herein or therein. Except as expressly provided herein,
neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the party against whom
enforcement of any such amendment, waiver, discharge or termination is sought;
provided, however, that any provisions hereof may be amended, waived, discharged
or terminated, on behalf of all holders, upon the written consent of the Company
and the holders of a majority of the Common Stock issued or issuable upon the
conversion of the Convertible Preferred.

         9.5 NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, or otherwise delivered by hand or by messenger,
addressed (a) if to a Purchaser, to such Purchaser's address set forth on the
Schedule of Purchasers, or at such other address as the Purchaser shall have
furnished to the Company in writing with a copy to: Paul, Weiss, Rifkind,
Wharton & Garrison, 1285 Avenue of the Americas, New York, New York 10019-6064,
Telecopy: (212) 757-3990, Attention: Douglas A. Cifu, or (b) if to any other
holder of any Shares, at such address as such holder shall have furnished the
Company in writing, or, until any such holder so furnishes an address to the
Company, then to and at the address of the last holder of such Shares who has so
furnished an address to the Company, or (c) if to the Company, one copy should
be sent to its address set forth at the beginning of this Agreement and
addressed to the attention of the President of the Company, or at such other
address as the Company shall have furnished to the Purchasers with a copy to
Wilson Sonsini Goodrich & Rosati, 650 Page Mill Road, Palo Alto, California
94304, Telecopy: (415) 493-6811, Attention: Brian Erb, Esq.

         Each such notice or other communication shall for all purposes of this
Agreement be treated as effective or having been given when delivered if
delivered personally, or, if sent by mail, at the earlier of its receipt or 72
hours after the same has been deposited in a regularly maintained receptacle for
the deposit of the United States mail, addressed and mailed as aforesaid.

         9.6 DELAYS OR OMISSIONS. Except as expressly provided herein, no delay
or omission to exercise any right, power or remedy accruing to any holder of any
Shares, upon any breach or default of the Company under this Agreement, shall
impair any such right, power or remedy of such holder nor shall it be construed
to be a waiver of any such breach or default, or an acquiescence therein, or of
or in any similar breach or default thereafter occurring; nor shall any waiver
of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. Any waiver, permit, consent or
approval of any kind or character on the part of any holder of any breach or
default under this Agreement or any waiver on the part of any holder of any

                                      -16-

<PAGE>

provisions or conditions of this Agreement, must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
holder, shall be cumulative and not alternative.

         9.7 CALIFORNIA CORPORATE SECURITIES LAW. THE SALE OF THE SECURITIES
WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE
COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH
SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR
PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS AN EXEMPTION FROM SUCH
QUALIFICATION IS AVAILABLE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE
EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, OR SUCH EXEMPTION
BEING AVAILABLE.

         9.8 EXPENSES. Each of the Company and the Purchasers shall bear its own
expenses and legal fees incurred with respect to this Agreement and the
transactions contemplated hereby.

         9.9 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be enforceable against the party actually
executing such counterpart, and all of which together shall constitute one
instrument.

         9.10 SEVERABILITY. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that no such severability shall be effective if
it materially changes the economic benefit of this Agreement to any party.

         9.11 FURTHER ASSURANCES. Each of the parties shall execute such
documents and perform such further acts (including, without limitation,
obtaining any consents, exemptions, authorizations or other actions by, or
giving any notices to, or making any filings with, any Governmental Authority or
any other Person) as may be reasonably required or desirable to carry out or to
perform the provisions of this Agreement.

         9.12 PUBLICITY. Except as may be required by applicable Requirement of
Law, none of the parties hereto shall issue a publicity release or public
announcement or otherwise make any disclosure concerning this Agreement, the
transactions contemplated hereby, the Purchases or the business, technology or
financial affairs of the Company, without prior approval by the other parties
hereto; PROVIDED, HOWEVER, that nothing in this Agreement shall restrict any of
the Purchasers from disclosing information (a) that is already publicly
available, (b) that was known to such Purchaser on a non-confidential basis
prior to its disclosure by the Company as shown by written records of the
Purchaser, (c) that may be required or appropriate in response to any summons or
subpoena or in connection with any litigation, PROVIDED that such Purchaser will
notify the Company in advance of such disclosure so as to permit the Company to
seek a protective order or otherwise contest such disclosure, and such Purchaser
will cooperate, at the expense of the Company, with the Company in pursuing any
such protective order, (d) to such Purchaser's or the Company's officers,
directors, shareholders, advisors, employees, members, partners, controlling
persons, auditors or counsel who have good reason to know such information or
(e) to Persons from whom releases, consents or

                                      -17-

<PAGE>

approvals are requires, or to whom notice is required to be provided, pursuant
to the transactions contemplated by the Transaction Documents; and PROVIDED
FURTHER, that GAP LLC may disclose on its worldwide web page WWW.GAPARTNERS.COM,
the name of the Company, the name of the Chief Executive Officer of the Company,
a brief description of the business of the Company and the aggregate amount of
the Purchasers' investment in the Company. If any announcement is required by
law to be made by any party hereto, prior to making such announcement such party
will deliver a draft of such announcement to the other parties and shall give
the other parties an opportunity to comment thereon.

         IN WITNESS WHEREOF, the foregoing Agreement is hereby executed as of
the date first above written.

                                        PROBUSINESS SERVICES, INC.


                                        By:  /s/ Thomas H. Sinton
                                             --------------------------------
                                               Thomas H. Sinton, President

                                      -18-

<PAGE>

                           PROBUSINESS SERVICES, INC.
           6.9% SENIOR CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT


         IN WITNESS WHEREOF, the foregoing Agreement is hereby executed as of
the date first above written.

                                   GENERAL ATLANTIC PARTNERS 70, L.P.

                                   By:  GENERAL ATLANTIC PARTNERS, LLC,
                                        its General Partner

                                        By:  /s/ Steven A. Denning
                                             -----------------------------------
                                             Name:  Steven A. Denning
                                             Title: A Managing Member


                                   GAP COINVESTMENT PARTNERS II, L.P.

                                   By:  /s/ Steven A. Denning
                                        ----------------------------------------
                                        Name:  Steven A. Denning
                                        Title: A General Partner


                                   GAPSTAR, LLC

                                   By:  GENERAL ATLANTIC PARTNERS, LLC
                                        its Managing Member

                                        By:  /s/ Steven A. Denning
                                             -----------------------------------
                                             Name:  Steven A. Denning
                                             Title: A Managing Member

                                      -19-

<PAGE>

                                    EXHIBIT A

                           PROBUSINESS SERVICES, INC.

                             SCHEDULE OF PURCHASERS

<TABLE>
<CAPTION>
     Name and Address                                  Number of Shares                   Total Purchase Price
-----------------------------------------    -----------------------------------     -----------------------------
<S>                                                             <C>                            <C>
General Atlantic Partners 70, L.P.                              915,515                        $24,261,147.50
General Atlantic Service Corporation
3 Pickwick Plaza
Greenwich, Connecticut 06830
Telecopy: (203) 622-8818
Attn: Mr. David Hodgson

GAP Coinvestment Partners II, L.P.                              145,805                        $3,863,832.50
c/o General Atlantic Service Corporation
3 Pickwick Plaza
Greenwich, Connecticut 06830
Telecopy: (203) 622-8818
Attn: Mr. David Hodgson

GapStar, LLC                                                     70,755                        $1,875,007.50
c/o General Atlantic Service Corporation
3 Pickwick Plaza
Greenwich, Connecticut 06830
Telecopy: (203) 622-8818
Attn: Mr. David Hodgson
                                                            -----------                        --------------
                                               Total          1,132,075                        $29,999,987.50

</TABLE>

                                      -20-