Document:

<PAGE>

                                                                   EXHIBIT 10.22
================================================================================

                             AMENDED AND RESTATED
                         REGISTRATION RIGHTS AGREEMENT

                                     among

                             PRIME RESPONSE, INC.

                                      and

                        THE OTHER PARTIES NAMED HEREIN

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

                         Dated as of December 6, 1999

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

================================================================================
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                    Page No.
                                                                                    --------
<S>         <C>                                                                          <C>
1.  Definitions..........................................................................  1

2.  General; Securities Subject to this Agreement........................................  5
    (a)      Grant of Rights.............................................................  5
    (b)      Registrable Securities......................................................  5
    (c)      Holders of Registrable Securities...........................................  6

3.  Demand Registration..................................................................  6
    (a)      Request for Demand Registration.............................................  6
    (b)      Incidental or "Piggy-Back" Rights with Respect to a Demand Registration.....  6
    (c)      Effective Demand Registration..............................................   7
    (d)      Expenses...................................................................   7
    (e)      Underwriting Procedures....................................................   7
    (f)      Selection of Underwriters..................................................   8

4.  Incidental or "Piggy-Back" Registration.............................................   8
    (a)      Request for Incidental Registration........................................   8
    (b)      Expenses...................................................................   9

5.  Form S-3 Registration...............................................................   9
    (a)      Request for a Form S-3 Registration........................................   9
    (b)      Form S-3 Underwriting Procedures...........................................   9
    (c)      Limitations on Form S-3 Registrations......................................  10
    (d)      Expenses...................................................................  10
    (e)      No Demand Registration.....................................................  10

6.  Holdback Agreements.................................................................  11
    (a)      Restrictions on Public Sale by Designated Holders..........................  11
    (b)      Restrictions on Public Sale by the Company.................................  11

7.  Registration Procedures.............................................................  11
    (a)      Obligations of the Company.................................................  11
    (b)      Seller Information.........................................................  14
    (c)      Notice to Discontinue......................................................  14
    (d)      Registration Expenses......................................................  14

8.  Indemnification; Contribution.......................................................  15
    (a)      Indemnification by the Company.............................................  15
    (b)      Indemnification by Designated Holders......................................  15
    (c)      Conduct of Indemnification Proceedings.....................................  16
    (d)      Contribution...............................................................  16
</TABLE>

                                      -i-
<PAGE>

<TABLE>

<S>      <C>                                                                              <C>
9.  Rule 144............................................................................  17

10. Miscellaneous.......................................................................  17
    (a)      Recapitalizations, Exchanges, etc..........................................  17
    (b)      No Inconsistent Agreements.................................................  17
    (c)      Remedies...................................................................  18
    (d)      Amendments and Waivers.....................................................  18
    (e)      Notices....................................................................  18
    (f)      Successors and Assigns; Third Party Beneficiaries..........................  19
    (g)      Counterparts...............................................................  20
    (h)      Headings...................................................................  20
    (i)      GOVERNING LAW..............................................................  20
    (j)      Severability...............................................................  20
    (k)      Entire Agreement...........................................................  20
    (l)      Further Assurances.........................................................  20

</TABLE>

                                      -ii-
<PAGE>

                              AMENDED AND RESTATED
                          REGISTRATION RIGHTS AGREEMENT

          AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT, dated as of
December 6, 1999 (this "Agreement"), among Prime Response, Inc. (previously
named "Prime Response Group, Inc."), a Delaware corporation (the "Company"),
General Atlantic Partners 42, L.P., a Delaware limited partnership ("GAP LP"),
GAP Coinvestment Partners, L.P., a New York limited partnership ("GAP
Coinvestment"), General Atlantic Partners 48, L.P., a Delaware limited
partnership ("GAP 48"), General Atlantic Partners 52, L.P., a Delaware limited
partnership ("GAP 52"), GAP Coinvestment Partners II, L.P., a Delaware limited
partnership ("GAP Coinvestment II"), General Atlantic Partners 57, L.P., a
Delaware limited partnership ("GAP 57"), Andersen Consulting LLP, an Illinois
limited liability partnership ("Andersen"), AC Ventures B.V., a Netherlands
limited liability corporation ("AC Ventures"), KITE LIMITED ("KITE") and James
Carling ("Carling").

          WHEREAS, the parties hereto (other than Andersen) are parties to a
Registration Rights Agreement dated as of October 24, 1997, as amended as of
September 21, 1998, February 28, 1999 and July 15, 1999 (as amended, the
"Original Agreement"); and

          WHEREAS, GAP 57 is a Permitted Transferee (as defined in the
Stockholders Agreement) of one or more General Atlantic Stockholders and KITE is
a Permitted Transferee of Nevin Prakash and, accordingly, are parties to the
Original Agreement; and

          WHEREAS, the parties hereto desire to grant Andersen certain
registration rights with respect to securities of the Company as set forth in
this Agreement and to otherwise restate the provisions of the Original
Agreement;

          NOW, THEREFORE, the parties hereto agree as follows:

          1.   Definitions.  As used in this Agreement 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. The
following shall be deemed to be Affiliates of GAP LP: (a) GAP LLC, the members
of GAP LLC and the limited partners of GAP LP, GAP 48, GAP 52 or GAP 57; (b) any
Affiliate of GAP LLC, the members of GAP LLC and the limited partners of GAP LP,
GAP 48, GAP 52 or GAP 57; and (c) any limited liability company or partnership a
majority of whose members or partners, as the case may be, are members of GAP
LLC. GAP LP, GAP 48, GAP 52, GAP 57, GAP Coinvestment and GAP Coinvestment II
shall be deemed to be Affiliates of one another.

          "Andersen Stockholders" means Andersen Consulting LLP, an Illinois
           ---------------------
limited liability partnership, AC Ventures B.V., a Netherlands limited liability
corporation, and all Affiliates of the foregoing.

          "Andersen Warrants" means (i) that certain warrant to purchase Common
           -----------------
Stock dated as of December 6, 1999, issued by the Company pursuant to that
certain Common Stock and Warrant Purchase Agreement, of the same date, among the
Company, Andersen and AC
<PAGE>

Ventures, and (ii) those certain warrants to purchase Common Stock, dated as of
December 6, 1999, issued by the Company pursuant to that certain Warrant
Purchase Agreement, of the same date, between the Company and Andersen.

          "Approved Underwriter" has the meaning set forth in Section 3(f) of
           --------------------
this Agreement.

          "Business Day" means any day other than a Saturday, Sunday or other
           ------------
day on which commercial banks in the State of New York are authorized or
required by law or executive order to close.

          "Carling" has the meaning set forth in the recitals to this Agreement.
           -------

          "Closing Price" means, with respect to the Registrable Securities, as
           -------------
of the date of determination, (a) the closing price per share of a Registrable
Security on such date published in the Wall Street Journal or, if no such
closing price on such date is published in the Wall Street Journal, the average
of the closing bid and asked prices on such date, as officially reported on the
principal national securities exchange (including, without limitation, The
Nasdaq Stock Market, Inc.) on which the Registrable Securities are then listed
or admitted to trading; or (b) if the Registrable Securities are not then listed
or admitted to trading on any national securities exchange but are designated as
national market system securities by the NASD, the last trading price per share
of a Registrable Security on such date; or (c) if there shall have been no
trading on such date or if the Registrable Securities are not so designated, the
average of the reported closing bid and asked prices of the Registrable
Securities on such date as shown by The Nasdaq Stock Market, Inc. (or its
successor) and reported by any member firm of the New York Stock Exchange, Inc.
selected by the Company; or (d) if none of (a), (b) or (c) is applicable, a
market price per share reasonably determined in good faith by the Company's
Board of Directors or, if such determination is not reasonably satisfactory to
the Designated Holder for whom such determination is being made, by a nationally
recognized investment banking firm selected by the Company and such Designated
Holder, the expenses for which shall be borne equally by the Company and such
Designated Holder.

          "Common Stock" means the Common Stock, par value $.01 per share, of
           ------------
the Company or any other equity securities of the Company into which such
securities are converted, reclassified, reconstituted or exchanged or any other
common stock of the Company.

          "Company" has the meaning set forth in the recitals to this Agreement.
           -------

          "Company Underwriter" has the meaning set forth in Section 4(a) of
           -------------------
this Agreement.

          "Demand Registration" has the meaning set forth in Section 3(a) of
           -------------------
this Agreement.

          "Designated Holder" means (i) each of the Major Stockholders, the
           -----------------
General Atlantic Stockholders and any transferee of any of them to whom
Registrable Securities have been transferred in accordance with the provisions
of the Stockholders Agreement and Section 10(f) of this Agreement, other than a
transferee to whom Registrable Securities have been
<PAGE>

transferred pursuant to a Registration Statement under the Securities Act or
Rule 144 or Regulation S under the Securities Act, and (ii) Andersen, AC
Ventures and any transferee of Andersen or AC Ventures to whom Registrable
Securities have been transferred in accordance with the provisions of Section
10(f) of this Agreement, other than a transferee to whom Registrable Securities
have been transferred pursuant to a Registration Statement under the Securities
Act or Rule 144 or Regulation S under the Securities Act.

          "Exchange Act" means the Securities Exchange Act of 1934, as amended,
           ------------
and the rules and regulations promulgated thereunder.

          "GAP 48" has the meaning set forth in the recitals to this Agreement.
           ------

          "GAP 52" has the meaning set forth in the recitals to this Agreement.
           ------

          "GAP 57" has the meaning set forth in the recitals to this Agreement.
           ------

          "GAP Coinvestment" has the meaning set forth in the recitals to this
           ----------------
Agreement.

          "GAP Coinvestment II" has the meaning set forth in the recitals to
           -------------------
this Agreement.

          "GAP LP Warrant" has the meaning set forth in the Stock and Warrant
           --------------
Purchase Agreement, dated February 28, 1999, among the Company, GAP 52 and GAP
Coinvestment II.

          "GAPCO Warrant" has the meaning set forth in the Stock and Warrant
           -------------
Purchase Agreement, dated February 28, 1999, among the Company, GAP 52 and GAP
Coinvestment II.

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

          "GAP LP" has the meaning set forth in the recitals to this Agreement.
           ------

          "General Atlantic Stockholders" means GAP LP, GAP 48, GAP 52, GAP 57,
           -----------------------------
GAP Coinvestment, GAP Coinvestment II and any Permitted Transferee (as defined
in the Stockholders Agreement) of any of them to which Registrable Securities
are transferred in accordance with Section 2.2 of the Stockholders Agreement.

          "Holders' Counsel" has the meaning set forth in Section 7(a)(i) of
           ----------------
this Agreement.

          "Incidental Registration" has the meaning set forth in Section 4(a) of
           -----------------------
this Agreement.

          "Indemnified Party" has the meaning set forth in Section 8(c) of this
           -----------------
Agreement.

          "Indemnifying Party" has the meaning set forth in Section 8(c) of this
           ------------------
Agreement.

          "Initial Public Offering" means an underwritten initial public
           -----------------------
offering pursuant to an effective Registration Statement filed under the
Securities Act.
<PAGE>

          "Initiating Holders" has the meaning set forth in Section 3(a) of this
           ------------------
Agreement.

          "Inspector" has the meaning set forth in Section 7(a)(vii) of this
           ---------
Agreement.

          "IPO Effectiveness Date" means the date upon which the Company
           ----------------------
commences its Initial Public Offering.

          "KITE" has the meaning set forth in the recitals to this Agreement.
           ----

          "Major Stockholders" means KITE, Carling and any Permitted Transferee
           ------------------
of any of them to which Registrable Securities are transferred in accordance
with Section 2.2 of the Stockholders Agreement.

          "Market Price" means, on any date of determination, the average of the
           ------------
daily Closing Price of the Registrable Securities for the immediately preceding
thirty (30) days on which the national securities exchanges are open for
trading.

          "NASD" has the meaning set forth in Section 7(a)(xiii) of this
           ----
Agreement.

          "Person" means any individual, firm, corporation, partnership, limited
           ------
liability company, trust, incorporated or unincorporated association, joint
venture, joint stock company, limited liability company, government (or an
agency or political subdivision thereof) or other entity of any kind, and shall
include any successor (by merger or otherwise) of such entity.

          "Preferred Stock" means (a) the Series A Convertible Participating
           ---------------
Preferred Stock, par value $.01 per share, of the Company, (b) the Series B
Convertible Participating Preferred Stock, par value $.01 per share, of the
Company, (c) the Series C Convertible Participating Preferred Stock, par value
$0.1 per share, of the Company, and (d) any other series of preferred stock of
the Company issued to GAP LP, GAP 48, GAP 52, GAP 57, GAP Coinvestment, GAP
Coinvestment II or any other Affiliate of GAP LLC.

          "Records" has the meaning set forth in Section 7(a)(vii) of this
           -------
Agreement.

          "Registrable Securities" means each of the following: (a) any and all
           ----------------------
shares of Common Stock owned by the Designated Holders or issued or issuable
upon conversion of shares of Preferred Stock or exercise of the Warrants or any
other warrants, including, without limitation, any shares of Common Stock issued
or issuable upon conversion of any shares of preferred stock or exercise of any
warrants owned by any of the Designated Holders on the date hereof or acquired
by any of the Designated Holders after the date hereof, (b) any other shares of
Common Stock acquired or owned by any of the Designated Holders prior to the IPO
Effectiveness Date, or acquired or owned by any of the Designated Holders after
the IPO Effectiveness Date if such Designated Holder is an Affiliate of the
Company and (c) any shares of Common Stock or voting common stock issued or
issuable to any of the Designated Holders with respect to the Registrable
Securities, shares of Preferred Stock, preferred stock, the Warrants or other
warrants by way of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization or otherwise and any shares of Common Stock or voting common
stock issuable upon conversion, exercise or exchange thereof; provided, however,
that any shares of Common Stock owned by
<PAGE>

KITE that are subject to the Option Agreement, dated October 23, 1997, between
the Company and KITE shall not be Registrable Securities.

          "Registration Expenses" has the meaning set forth in Section 7(d) of
           ---------------------
this Agreement.

          "Registration Statement" means a Registration Statement filed pursuant
           ----------------------
to the Securities Act.

          "S-3 Initiating Holders" has the meaning set forth in Section 5(a) of
           ----------------------
this Agreement.

          "S-3 Registration" has the meaning set forth in Section 5(a) of this
           ----------------
Agreement.

          "SEC" means the Securities and Exchange Commission or any similar
           ---
agency then having jurisdiction to enforce the Securities Act.

          "Securities Act" means the Securities Act of 1933, as amended, and the
           --------------
rules and regulations promulgated thereunder.

          "Stockholders Agreement" means the Stockholders Agreement, dated as of
           ----------------------
October 24, 1997, among the Company, GAP LP, GAP Coinvestment, Carling and KITE
(as successor-in-interest to Prakash), as amended by Amendment No. 1 thereto,
dated as of September 21, 1998, among the Company, GAP LP, GAP 48, GAP
Coinvestment, Carling, KITE, Richard S. Braddock ("Braddock") and Allen Swann
("Swann"), as amended by Amendment No. 2 thereto, dated as of March 3, 1999,
among the Company, GAP LP, GAP 48, GAP 52, GAP Coinvestment, GAP Coinvestment
II, Carling, Prakash, Braddock and Swann, and as amended by Amendment No. 3
thereto, dated as of July 15, 1999, among the Company, GAP LP, GAP 48, GAP 52,
GAP Coinvestment, GAP Coinvestment II, Carling, Prakash, Braddock and Swann.

          "Stock Purchase Agreement" means the Stock Purchase Agreement dated as
           ------------------------
of October 1, 1997 among the Company, GAP LP and GAP Coinvestment, as amended.

          "Warrants" means the GAP LP Warrant, the GAPCO Warrant and the
           --------
Andersen Warrants.

          2. General; Securities Subject to this Agreement.
             ---------------------------------------------

     (a) Grant of Rights. The Company hereby grants registration rights to the
         ---------------
Major Stockholders, the General Atlantic Stockholders and the Andersen
Stockholders upon the terms and conditions set forth in this Agreement.

     (b) Registrable Securities. For the purposes of this Agreement, Registrable
         ----------------------
Securities will cease to be Registrable Securities when (i) a Registration
Statement covering such Registrable Securities has been declared effective under
the Securities Act by the SEC and such Registrable Securities have been disposed
of pursuant to such effective Registration Statement, (ii) the entire amount of
Registrable Securities proposed to be sold in a
<PAGE>

single sale, in the opinion of counsel satisfactory to the Company and the
Designated Holder, each in their reasonable judgment, may be distributed to the
public without any limitation as to volume pursuant to Rule 144 (or any
successor provision then in effect) under the Securities Act or (iii) the
Registrable Securities are proposed to be sold or distributed by a Person not
entitled to the registration rights granted by this Agreement.

     (c) Holders of Registrable Securities. A Person is deemed to be a holder of
         ---------------------------------
Registrable Securities whenever such Person owns of record Registrable
Securities, or holds an option to purchase, or a security convertible into or
exercisable or exchangeable for, Registrable Securities whether or not such
acquisition or conversion has actually been effected. If the Company receives
conflicting instructions, notices or elections from two or more Persons with
respect to the same Registrable Securities, the Company may act upon the basis
of the instructions, notice or election received from the registered owner of
such Registrable Securities. Registrable Securities issuable upon exercise of an
option or upon conversion of another security shall be deemed outstanding for
the purposes of this Agreement.

          3.   Demand Registration.
               -------------------

     (a) Request for Demand Registration. At any time after the IPO
         -------------------------------
Effectiveness Date and prior to the time the Company is eligible to file a
Registration Statement on Form S-3 or any successor thereto, each of (i) one or
more of the General Atlantic Stockholders as a group, acting through GAP LLC or
its written designee, and (ii) one or more of the Major Stockholders (the
"Initiating Holders") may make a written request to the Company to register,
under the Securities Act (other than pursuant to a Registration Statement on
Form S-4 or S-8 or any successor thereto) (a "Demand Registration"), the number
of Registrable Securities stated in such request; provided, however, that the
Company shall not be obligated to effect more than one Demand Registration for
the General Atlantic Stockholders and one Demand Registration for the Major
Stockholders pursuant to this Section 3. For purposes of the preceding sentence,
two or more Registration Statements filed in response to one demand shall be
counted as one Registration Statement. If at the time of any request to register
Registrable Securities pursuant to this Section 3(a), the Company is engaged in,
or has fixed plans to engage in within sixty (60) days of the time of such
request, a registered public offering or is engaged in any other activity which,
in the good faith determination of the Board of Directors of the Company, would
be adversely affected by the requested registration to the material detriment of
the Company, then the Company may at its option direct that such request be
delayed for a reasonable period not in excess of three (3) months from the
effective date of such offering or the date of completion of such other material
activity, as the case may be, such right to delay a request to be exercised by
the Company not more than once in any one-year period. In addition, the Company
shall not be required to effect any registration within sixty (60) days after
the effective date of any other Registration Statement of the Company. Each
request for a Demand Registration by the Initiating Holders shall state the
amount of the Registrable Securities proposed to be sold and the intended method
of disposition thereof. Upon a request for a Demand Registration, the Company
shall promptly take such steps as are necessary or appropriate to prepare for
the registration of the Registrable Securities to be registered.

     (b) Incidental or "Piggy-Back" Rights with Respect to a Demand
         ----------------------------------------------------------
Registration. Each of the Designated Holders (other than Initiating Holders
------------
which have

<PAGE>

requested a registration under Section 3(a)) may offer its or his Registrable
Securities under any Demand Registration pursuant to this Section 3. Within ten
(10) days after the receipt of a request for a Demand Registration from an
Initiating Holder, the Company shall (i) give written notice thereof to all of
the Designated Holders (other than Initiating Holders which have requested a
registration under Section 3(a)) and (ii) subject to Section 3(e), include in
such registration all of the Registrable Securities held by such Designated
Holders from whom the Company has received a written request for inclusion
therein within ten (10) days of the receipt by such Designated Holders of such
written notice referred to in clause (i) above. Each such request by such
Designated Holders shall specify the number of Registrable Securities proposed
to be registered and the intended method of disposition thereof. The failure of
any Designated Holder to respond within such 10-day period referred to in clause
(ii) above shall be deemed to be a waiver of such Designated Holder's rights
under this Section 3 with respect to such Demand Registration, provided that any
Designated Holder may waive its rights under this Section 3 prior to the
expiration of such 10-day period by giving written notice to the Company, with a
copy to the Initiating Holders. If a Designated Holder sends the Company a
written request for inclusion of part or all of such Designated Holder's
Registrable Securities in a registration, such Designated Holder shall not be
entitled to withdraw or revoke such request without the prior written consent of
the Company in its sole discretion unless, as a result of facts or circumstances
arising after the date on which such request was made relating to the Company or
to market conditions, such Designated Holder reasonably determines that
participation in such registration would have a material adverse effect on such
Designated Holder.

     (c) Effective Demand Registration. The Company shall use all reasonable
         -----------------------------
commercial efforts to cause any such Demand Registration to become and remain
effective not later than ninety (90) days after it receives a request under
Section 3(a) hereof. A registration shall not constitute a Demand Registration
until it has become effective and remains continuously effective for the lesser
of (i) the period during which all Registrable Securities registered in the
Demand Registration are sold and (ii) ninety (90) days; provided, however that a
registration shall not constitute a Demand Registration if (x) after such Demand
Registration has become effective, such registration or the related offer, sale
or distribution of Registrable Securities thereunder is interfered with by any
stop order, injunction or other order or requirement of the SEC or other
governmental agency or court for any reason not attributable to the Initiating
Holders and such interference is not thereafter eliminated or (y) the conditions
specified in the underwriting agreement, if any, entered into in connection with
such Demand Registration are not satisfied or waived, other than by reason of a
failure by the Initiating Holders.

     (d) Expenses. In any registration initiated as a Demand Registration, the
         --------
Company shall pay all Registration Expenses (other than broker's commissions and
underwriter's discounts and commissions) in connection therewith, whether or not
such Demand Registration becomes effective.

     (e) Underwriting Procedures. If the Company or the Initiating Holders
         -----------------------
holding a majority of the Registrable Securities held by all of the Initiating
Holders to which the requested Demand Registration relates so elect, the Company
shall use its reasonable efforts to cause such Demand Registration to be in the
form of a firm commitment underwritten offering and the managing underwriter or
underwriters selected for such offering shall be the Approved
<PAGE>

Underwriter selected in accordance with Section 3(f). In connection with any
Demand Registration under this Section 3 involving an underwritten offering,
none of the Registrable Securities held by any Designated Holder making a
request for inclusion of such Registrable Securities pursuant to Section 3(b)
hereof shall be included in such underwritten offering unless such Designated
Holder accepts the terms of the offering as agreed upon by the Company, the
Initiating Holders and the Approved Underwriter, and then only in such quantity
as will not, in the opinion of the Approved Underwriter, jeopardize the success
of such offering by the Initiating Holders. If the Approved Underwriter advises
the Company in writing that in its opinion the aggregate amount of such
Registrable Securities requested to be included in such offering is sufficiently
large to have a material adverse effect on the success of such offering, then
the Company shall include in such registration only the aggregate amount of
Registrable Securities that in the opinion of the Approved Underwriter may be
sold without any such material adverse effect and shall reduce the amount of
Registrable Securities to be included in such registration, first as to the
Company, second as to the Designated Holders (who are not Initiating Holders and
who requested to participate in such registration pursuant to Section 3(b)
hereof) as a group, if any, and third as to the Initiating Holders as a group,
pro rata within each group based on the number of Registrable Securities owned
by each such Designated Holder or Initiating Holder, as the case may be.

     (f) Selection of Underwriters. If any Demand Registration or S-3
         -------------------------
Registration, as the case may be, of Registrable Securities is in the form of an
underwritten offering, the Company shall select and obtain an investment banking
firm of national reputation to act as the managing underwriter of the offering
(the "Approved Underwriter"); provided, however, that the Approved Underwriter
shall, in any case, also be approved by the Initiating Holders or S-3 Initiating
Holders, as the case may be, such approval not to be unreasonably withheld.

          4.   Incidental or "Piggy-Back" Registration.
               ---------------------------------------

     (a) Request for Incidental Registration. At any time, if the Company
         -----------------------------------
proposes to file a Registration Statement under the Securities Act with respect
to an offering (including an Initial Public Offering) by the Company for its own
account (other than a Registration Statement on Form S-4 or S-8 or any successor
thereto), then the Company shall give written notice of such proposed filing to
each of the Designated Holders at least thirty (30) days before the anticipated
filing date, and such notice shall describe the proposed registration and
distribution and offer such Designated Holders the opportunity to register the
number of Registrable Securities as each such holder may request (an "Incidental
Registration"). The Company shall, and shall use all reasonable commercial
efforts (within ten (10) days of the notice provided for in the preceding
sentence) to cause the managing underwriter or underwriters of a proposed
underwritten offering (the "Company Underwriter") to permit each of the
Designated Holders who have requested in writing to participate in the
Incidental Registration to include its or his Registrable Securities in such
offering on the same terms and conditions as the securities of the Company
included therein. In connection with any Incidental Registration under this
Section 4(a) involving an underwritten offering, the Company shall not be
required to include any Registrable Securities in such underwritten offering
unless the holders thereof accept the terms of the underwritten offering as
agreed upon between the Company and the Company Underwriter, and then only in
such quantity as will not, in the opinion of the Company
<PAGE>

Underwriter, jeopardize the success of the offering by the Company. If in the
written opinion of the Company Underwriter the registration of all or part of
the Registrable Securities which the Designated Holders have requested to be
included would materially adversely affect the success of such offering, then
the Company shall be required to include in such Incidental Registration, to the
extent of the amount that the Company Underwriter believes may be sold without
causing such adverse effect, first, all of the securities to be offered for the
account of the Company; second, the Registrable Securities to be offered for the
account of the Designated Holders pursuant to this Section 4, pro rata based on
the number of Registrable Securities owned by each such Designated Holder; and
third, any other securities requested to be included in such underwritten
offering.

     (b) Expenses. The Company shall bear all Registration Expenses (other than
         --------
broker's commissions and underwriter's discounts and commissions with respect to
the sale of any Registrable Securities) in connection with any Incidental
Registration pursuant to this Section 4, whether or not such Incidental
Registration becomes effective.

          5.   Form S-3 Registration.
               ---------------------

     (a) Request for a Form S-3 Registration. Upon the Company becoming
         -----------------------------------
eligible, in the event that the Company shall receive from (i) one or more of
the General Atlantic Stockholders as a group, acting through GAP LLC or its
written designee, or (ii) one or more of the Major Stockholders (the "S-3
Initiating Holders") a written request that the Company register, under the
Securities Act, on Form S-3 (or any successor form then in effect) (an "S-3
Registration"), all or a portion of the Registrable Securities owned by such S-3
Initiating Holders, the Company shall give written notice of such request to all
of the Designated Holders (other than S-3 Initiating Holders which have
requested an S-3 Registration under this Section 5(a)) at least thirty (30) days
before the anticipated filing date of such Form S-3, and such notice shall
describe the proposed registration and offer such Designated Holders the
opportunity to register the number of Registrable Securities as each such
Designated Holder may request in writing to the Company, given within fifteen
(15) days after their receipt from the Company of the written notice of such
registration. The Company shall (i) take such steps as are necessary or
appropriate to prepare for the registration of the Registrable Securities to be
registered and (ii) subject to Section 5(b), use all reasonable commercial
efforts to (x) cause such registration pursuant to this Section 5(a) to become
and remain effective as soon as practicable, but in any event not later than
ninety (90) days after it receives a request therefor and (y) include in such
offering the Registered Securities of the Designated Holders (other than S- 3
Initiating Holders which have requested an S-3 Registration under this Section
5(a)) who have requested in writing to participate in such registration on the
same terms and conditions as the Registrable Securities of the S-3 Initiating
Holders included therein.

     (b) Form S-3 Underwriting Procedures. If the Company or the S-3 Initiating
         --------------------------------
Holders holding a majority of the Registrable Securities held by all of the S-3
Initiating Holders to which the requested S-3 Registration relates so elect, the
Company shall use its reasonable efforts to cause such S-3 Registration pursuant
to this Section 5 to be in the form of a firm commitment underwritten offering
and the managing underwriter or underwriters selected for such offering shall be
the Approved Underwriter selected in accordance with Section 3(f). In connection
with any S-3 Registration under Section 5(a) involving an underwritten offering,
the
<PAGE>

Company shall not be required to include any Registrable Securities in such
underwritten offering unless the Designated Holders thereof accept the terms of
the underwritten offering as agreed upon between the Company, the Approved
Underwriter and the S-3 Initiating Holders, and then only in such quantity as
will not, in the opinion of such underwriter, jeopardize the success of such
offering by the S-3 Initiating Holders. If in the written opinion of the
Approved Underwriter the registration of all or part of the Registrable
Securities which the S-3 Initiating Holders and the other Designated Holders
have requested to be included would materially adversely affect the success of
such public offering, then the Company shall be required to include in the
underwritten offering, to the extent of the amount that the Approved Underwriter
believes may be sold without causing such adverse effect, first, all of the
Registrable Securities to be offered for the account of the S-3 Initiating
Holders pro rata based on the number of Registrable Securities owned by such S-3
Initiating Holders; second, the Registrable Securities to be offered for the
account of the other Designated Holders who requested inclusion of their
Registrable Securities pursuant to Section 5(a), pro rata based on the number of
Registrable Securities owned by such Designated Holders, and third, any other
securities requested to be included in such underwritten offering.

     (c) Limitations on Form S-3 Registrations. If at the time of any request to
         -------------------------------------
register Registrable Securities pursuant to Section 5(a), the Company is engaged
in, or has fixed plans to engage in within sixty (60) days of the time of such
request, a registered public offering or is engaged in any other activity which,
in the good faith determination of the Board of Directors of the Company, would
be adversely affected by the requested S-3 Registration to the material
detriment of the Company, then the Company may at its option direct that such
request be delayed for a reasonable period not in excess of three (3) months
from the effective date of such offering or the date of completion of such other
material activity, as the case may be, such right to delay a request to be
exercised by the Company not more than once in any one-year period. In addition,
the Company shall not be required to effect any registration pursuant to Section
5(a)(i) within three (3) months after the effective date of any other
Registration Statement of the Company, (ii) if within the 12-month period
preceding the date of such request, the Company has effected two registrations
on Form S- 3 pursuant to Section 5(a) and all of the Registrable Securities
registered therein have been sold, (iii) if Form S-3 is not available for such
offering by the S-3 Initiating Holders or (iv) if the S-3 Initiating Holders,
together with the Designated Holders (other than S-3 Initiating Holders which
have requested an S-3 Registration under Section 5(a)) registering Registrable
Securities in such registration, propose to sell their Registrable Securities at
an aggregate price (calculated based upon the Market Price of the Registrable
Securities on the date of filing of the Form S-3 with respect to such
Registrable Securities) to the public of less than $5,000,000.

     (d) Expenses. In connection with any registration pursuant to this Section
         --------
5, the Company shall pay all Registration Expenses (other than broker's
commissions and underwriter's discounts and commissions), whether or not such
registration becomes effective.

     (e) No Demand Registration. No registration requested by any Designated
         ----------------------
Holder pursuant to this Section 5 shall be deemed a Demand Registration pursuant
to Section 3.
<PAGE>

          6.   Holdback Agreements.
               -------------------

     (a) Restrictions on Public Sale by Designated Holders. If and to the extent
         -------------------------------------------------
requested by the Company, the Initiating Holders or the S-3 Initiating Holders,
as the case may be, in the case of a non-underwritten public offering or if and
to the extent requested by the Approved Underwriter or the Company Underwriter,
as the case may be, in the case of an underwritten public offering, each
Designated Holder of Registrable Securities agrees (i) not to effect any public
sale or distribution of any Registrable Securities or of any securities
convertible into or exchangeable or exercisable for such Registrable Securities,
including a sale pursuant to Rule 144 under the Securities Act, and (ii) not to
make any request for a Demand Registration or S-3 Registration under this
Agreement, during the 90-day period or such shorter period agreed upon by such
Designated Holder and the requesting party beginning on the effective date of
such Registration Statement (except as part of such registration).

     (b) Restrictions on Public Sale by the Company. The Company agrees not to
         ------------------------------------------
effect any public sale or distribution of any of its securities, or any
securities convertible into or exchangeable or exercisable for such securities
(except pursuant to registrations on Form S-4 or S-8 or any successor thereto),
during the period beginning on the effective date of any Registration Statement
in which the Designated Holders of Registrable Securities are participating and
ending on the earlier of (i) the date on which all Registrable Securities
registered on such Registration Statement are sold and (ii) 90 days after the
effective date of such Registration Statement (except as part of such
registration).

          7.   Registration Procedures.
               -----------------------

     (a) Obligations of the Company. Whenever registration of Registrable
         --------------------------
Securities has been requested pursuant to Section 3, Section 4 or Section 5 of
this Agreement, the Company shall use all reasonable commercial efforts to
effect the registration and sale of such Registrable Securities in accordance
with the intended method of distribution thereof as quickly as practicable, and
in connection with any such request, the Company shall, as expeditiously as
possible:

     (i) prepare and file with the SEC a Registration Statement on any form for
which the Company then qualifies or which counsel for the Company shall deem
appropriate and which form shall be available for the sale of such Registrable
Securities in accordance with the intended method of distribution thereof, and
use all reasonable commercial efforts to cause such Registration Statement to
become effective; provided, however, that (x) before filing a Registration
Statement or prospectus or any amendments or supplements thereto, the Company
shall provide counsel selected by the Designated Holders holding a majority of
the Registrable Securities being registered in such registration ("Holders'
Counsel") and any other Inspector with an adequate and appropriate opportunity
to review and comment on of such Registration Statement and each prospectus
included therein (and each amendment or supplement thereto) to be filed with the
SEC, subject to such documents being under the Company's control, and (y) the
Company shall notify the Holders' Counsel and each seller of Registrable
Securities of any stop order issued or threatened by the SEC and take all
reasonable action required to prevent the entry of such stop order or to remove
it if entered;
<PAGE>

     (ii) prepare and file with the SEC such amendments and supplements to such
Registration Statement and the prospectus used in connection therewith as may be
necessary to keep such Registration Statement effective for the lesser of (x) 90
days and (y) such shorter period which will terminate when all Registrable
Securities covered by such Registration Statement have been sold, and comply
with the provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement during such period in
accordance with the intended methods of disposition by the sellers thereof set
forth in such Registration Statement;

     (iii) as soon as reasonably possible, furnish to each seller of Registrable
Securities, prior to filing a Registration Statement, at least one copy of such
Registration Statement as is proposed to be filed, and thereafter such number of
copies of such Registration Statement, each amendment and supplement thereto (in
each case including all exhibits thereto), and the prospectus included in such
Registration Statement (including each preliminary prospectus) as each such
seller may reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such seller;

     (iv) register or qualify such Registrable Securities under such other
securities or "blue sky" laws of such jurisdictions as any seller of Registrable
Securities may request, and to continue such qualification in effect in such
jurisdiction for as long as permissible pursuant to the laws of such
jurisdiction, or for as long as any such seller requests or until all of such
Registrable Securities are sold, whichever is shortest, and do any and all other
acts and things which may be reasonably necessary or advisable to enable any
such seller to consummate the disposition in such jurisdictions of the
Registrable Securities owned by such seller; provided, however, that the Company
shall not be required to (x) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 7(a)(iv) (y) subject itself to taxation in any such jurisdiction or (z)
consent to general service of process in any such jurisdiction;

     (v) notify each seller of Registrable Securities at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, upon discovery that, or upon the happening of any event as a result of
which, the prospectus included in such Registration Statement contains an untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances under which they were made, and the Company shall
promptly prepare a supplement or amendment to such prospectus and furnish to
each seller a reasonable number of copies of such supplement to or an amendment
of such prospectus as may be necessary so that, after delivery to the purchasers
of such Registrable Securities, such prospectus shall not contain an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances under which they were made;

     (vi) enter into and perform customary agreements (including an underwriting
agreement in customary form with the Approved Underwriter or Company
Underwriter, if any, selected as provided in Section 3, Section 4 or Section 5,
as the case may be) and take such other actions as are prudent and reasonably
required in order to expedite or facilitate the disposition of such Registrable
Securities;
<PAGE>

     (vii) make available at reasonable times for inspection by any seller of
Registrable Securities, any managing underwriter participating in any
disposition of such Registrable Securities pursuant to a Registration Statement,
Holders' Counsel and any attorney, accountant or other agent retained by any
such seller or any managing underwriter (each, an "Inspector" and collectively,
the "Inspectors"), all financial and other records, pertinent corporate
documents and properties of the Company and its subsidiaries (collectively, the
"Records") as shall be reasonably necessary to enable them to exercise their due
diligence responsibility, and cause the Company's and its subsidiaries'
officers, directors and employees, and the independent public accountants of the
Company, to supply all information reasonably requested by any such Inspector in
connection with such Registration Statement. Records that the Company
determines, in good faith, to be confidential and which it notifies the
Inspectors are confidential shall not be disclosed by the Inspectors (and the
Inspectors shall confirm their agreement in writing in advance to the Company if
the Company shall so request) unless (x) the disclosure of such Records is
necessary, in the Company's judgment, to avoid or correct a misstatement or
omission in the Registration Statement, (y) the release of such Records is
ordered pursuant to a subpoena or other order from a court of competent
jurisdiction after exhaustion of all appeals therefrom or (z) the information in
such Records was known to the Inspectors on a non-confidential basis prior to
its disclosure by the Company or has been made generally available to the
public. Each seller of Registrable Securities agrees that it shall, upon
learning that disclosure of such Records is sought in a court of competent
jurisdiction, give notice to the Company and allow the Company, at the Company's
expense, to undertake appropriate action to prevent disclosure of the Records
deemed confidential;

     (viii) if such sale is pursuant to an underwritten offering, use all
reasonable commercial efforts to obtain a "cold comfort" letter from the
Company's independent public accountants in customary form and covering such
matters of the type customarily covered by "cold comfort" letters as Holders'
Counsel or the managing underwriter reasonably request;

     (ix) use all reasonable commercial efforts to furnish, at the request of
any seller of Registrable Securities on the date such securities are delivered
to the underwriters for sale pursuant to such registration or, if such
securities are not being sold through underwriters, on the date the Registration
Statement with respect to such securities becomes effective, an opinion, dated
such date, of counsel representing the Company for the purposes of such
registration, addressed to the underwriters, if any, and to the seller making
such request, covering such legal matters with respect to the registration in
respect of which such opinion is being given as such seller may reasonably
request and are customarily included in such opinions;

     (x) otherwise use all reasonable commercial efforts to comply with all
applicable rules and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable but no later than fifteen (15) months
after the effective date of the Registration Statement, an earnings statement
covering a period of twelve (12) months beginning after the effective date of
the Registration Statement, in a manner which satisfies the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder;

     (xi) cause all such Registrable Securities to be listed on each securities
exchange on which similar securities issued by the Company are then listed,
provided that the applicable listing requirements are satisfied;
<PAGE>

     (xii) keep Holders' Counsel advised in writing as to the initiation and
progress of any registration under Section 3, Section 4 or Section 5 hereunder;

     (xiii) cooperate with each seller of Registrable Securities and each
underwriter participating in the disposition of such Registrable Securities and
their respective counsel in connection with any filings required to be made with
the National Association of Securities Dealers, Inc. (the "NASD"); and

     (xiv) take all other steps reasonably necessary to effect the registration
of the Registrable Securities contemplated hereby.

     (b) Seller Information. The Company may require each seller of Registrable
         ------------------
Securities as to which any registration is being effected to furnish to the
Company such information regarding the distribution of such securities as the
Company may from time to time reasonably request in writing.

     (c) Notice to Discontinue. Each Designated Holder of Registrable Securities
         ---------------------
agrees that, upon receipt of any notice from the Company of the happening of any
event of the kind described in Section 7(a)(v), such Designated Holder shall
forthwith discontinue disposition of Registrable Securities pursuant to the
Registration Statement covering such Registrable Securities until such
Designated Holder's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 7(a)(v) and, if so directed by the Company,
such Designated Holder shall deliver to the Company (at the Company's expense)
all copies, other than permanent file copies then in such Designated Holder's
possession, of the prospectus covering such Registrable Securities which is
current at the time of receipt of such notice. If the Company shall give any
such notice, the Company shall extend the period during which such Registration
Statement shall be maintained effective pursuant to this Agreement (including,
without limitation, the period referred to in Section 7(a)(ii)) by the number of
days during the period from and including the date of the giving of such notice
pursuant to Section 7(a)(v) to and including the date when sellers of such
Registrable Securities under such Registration Statement shall have received the
copies of the supplemented or amended prospectus contemplated by and meeting the
requirements of Section 7(a)(v).

     (d) Registration Expenses. The Company shall pay all expenses arising from
         ---------------------
or incident to the performance of, or compliance with, this Agreement,
including, without limitation, (i) SEC, stock exchange and NASD registration and
filing fees, (ii) all fees and expenses incurred in complying with securities or
"blue sky" laws (including reasonable fees, charges and disbursements of counsel
in connection with "blue sky" qualifications of the Registrable Securities),
(iii) all printing, messenger and delivery expenses, (iv) the fees, charges and
disbursements of counsel to the Company and of its independent public
accountants and any other accounting fees, charges and expenses incurred by the
Company (including, without limitation, any expenses arising from any "cold
comfort" letters or any special audits incident to or required by any
registration or qualification) and any legal fees, charges and expenses incurred
by the Company and, in the case of a Demand Registration, the Initiating Holders
and (v) any liability insurance or other premiums for insurance obtained in
connection with any Demand Registration or piggy-back registration thereon,
Incidental Registration or S-3 Registration pursuant to the terms of this
Agreement, regardless of whether such Registration
<PAGE>

Statement is declared effective. All of the expenses described in the preceding
sentence of this Section 7(d) are referred to herein as "Registration Expenses."
The Designated Holders of Registrable Securities sold pursuant to a Registration
Statement shall bear the expense of any broker's commission or underwriter's
discount or commission relating to such registration and sale of such Holders'
Registrable Securities.

          8.   Indemnification; Contribution.

     (a) Indemnification by the Company. The Company agrees to indemnify and
         ------------------------------
hold harmless, to the fullest extent permitted by law, each Designated Holder,
its officers, directors, trustees, partners, employees, advisors and agents and
each Person who controls (within the meaning of the Securities Act or the
Exchange Act) such Designated Holder from and against any and all losses,
claims, damages, liabilities and expenses (including reasonable costs of
investigation) arising out of or based upon any untrue, or allegedly untrue,
statement of a material fact contained in any Registration Statement, prospectus
or preliminary prospectus or notification or offering circular (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) or arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, except insofar as the same are caused by
or contained in any information concerning such Designated Holder furnished in
writing to the Company by such Designated Holder expressly for use therein,
including, without limitation, the information furnished to the Company pursuant
to Section 8(b). The Company shall also provide customary indemnities to any
underwriters of the Registrable Securities, their officers, directors and
employees and each Person who controls such underwriters (within the meaning of
the Securities Act and the Exchange Act) to the same extent as provided above
with respect to the indemnification of the Designated Holders of Registrable
Securities.

     (b) Indemnification by Designated Holders. In connection with any
         -------------------------------------
Registration Statement in which a Designated Holder is participating pursuant to
Section 3, Section 4 or Section 5 hereof, each such Designated Holder shall
promptly furnish to the Company in writing such information with respect to such
Designated Holder as the Company may reasonably request or as may be required by
law for use in connection with any such Registration Statement or prospectus and
all information required to be disclosed in order to make the information
previously furnished to the Company by such Designated Holder not materially
misleading or necessary to cause such Registration Statement not to omit a
material fact with respect to such Designated Holder necessary in order to make
the statements therein not misleading. Each Designated Holder agrees to
indemnify and hold harmless, to the fullest extent permitted by law, the
Company, any underwriter retained by the Company and their respective directors,
trustees, partners, officers, employees, advisors and agents and each Person who
controls the Company or such underwriter (within the meaning of the Securities
Act and the Exchange Act) to the same extent as the foregoing indemnity from the
Company to the Designated Holders, but only with respect to any such information
with respect to such Designated Holder furnished in writing to the Company by
such Designated Holder expressly for use therein, including, without limitation,
the information furnished to the Company pursuant to this Section 8(b);
provided, however, that the total amount to be indemnified by such Designated
Holder pursuant to this Section 8(b) shall be limited to the net proceeds
received by such Designated Holder in the offering to which the Registration
Statement or prospectus relates.
<PAGE>

     (c) Conduct of Indemnification Proceedings. Any Person entitled to
         --------------------------------------
indemnification hereunder (the "Indemnified Party") agrees to give prompt
written notice to the indemnifying party (the "Indemnifying Party") after the
receipt by the Indemnified Party of any written notice of the commencement of
any action, suit, proceeding or investigation or threat thereof made in writing
for which the Indemnified Party intends to claim indemnification or contribution
pursuant to this Agreement; provided, however, that the failure so to notify the
Indemnifying Party shall not relieve the Indemnifying Party of any liability
that it may have to the Indemnified Party hereunder; except to the extent that
the Indemnifying Party is materially prejudiced or otherwise forfeits
substantive rights or defenses by reason of such failure. If notice of
commencement of any such action is given to the Indemnifying Party as above
provided, the Indemnifying Party shall be entitled to participate in and, to the
extent it may wish, jointly with any other Indemnifying Party similarly
notified, to assume the defense of such action at its own expense, with counsel
chosen by it and reasonably satisfactory to such Indemnified Party. The
Indemnified Party shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of such
counsel (other than reasonable costs of investigation) shall be paid by the
Indemnified Party unless (i) the Indemnifying Party agrees to pay the same, (ii)
the Indemnifying Party fails to assume the defense of such action with counsel
satisfactory to the Indemnified Party in its reasonable judgment or (iii) the
named parties to any such action (including any impleaded parties) include both
the Indemnifying Party and the Indemnified Party), and such parties have been
advised by such counsel that either (x) representation of such Indemnified Party
and the Indemnifying Party by the same counsel would be inappropriate under
applicable standards of professional conduct or (y) there may be one or more
legal defenses available to the Indemnified Party which are different from or
additional to those available to the Indemnifying Party. In any of such cases,
the Indemnifying Party shall not have the right to assume the defense of such
action on behalf of such Indemnified Party, it being understood, however, that
the Indemnifying Party shall not be liable for the fees and expenses of more
than one separate firm of attorneys (in addition to any local counsel) for all
Indemnified Parties. No Indemnifying Party shall be liable for any settlement
entered into without its written consent, which consent shall not be
unreasonably withheld. No Indemnifying Party shall, without the consent of such
Indemnified Party, effect any settlement of any pending or threatened proceeding
in respect of which such Indemnified Party is or could have been a party and
indemnity could have been sought hereunder by such Indemnified Party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability for claims that are the subject matter of such proceeding.

     (d) 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, claims, damages, liabilities or expenses referred to
therein, 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, claims, damages, liabilities or expenses 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, claims, damages, liabilities or expenses, 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
<PAGE>

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, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set forth in
Sections 8(a), 8(b) and 8(c), any legal or other fees, charges or expenses
reasonably incurred by such party in connection with any investigation or
proceeding; provided that the total amount to be indemnified by such Designated
Holder shall be limited to the net proceeds received by such Designated Holder
in the offering.

     The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 8(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
No Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.

     9. Rule 144. The Company covenants that from and after the IPO
        --------
Effectiveness Date it shall (a) file any reports required to be filed by it
under the Exchange Act and (b) take such further action as each Designated
Holder of Registrable Securities may reasonably request (including providing any
information necessary to comply with Rule 144 under the Securities Act), all to
the extent required from time to time to enable such Designated Holder to sell
Registrable Securities without registration under the Securities Act within the
limitation of the exemptions provided by (i) Rule 144 under the Securities Act,
as such rule may be amended from time to time, or (ii) any similar rules or
regulations hereafter adopted by the SEC. The Company shall, upon the request of
any Designated Holder of Registrable Securities, deliver to such Designated
Holder a written statement as to whether it has complied with such requirements.

     10. Miscellaneous.
         -------------

     (a) Recapitalizations, Exchanges, etc. The provisions of this Agreement
         ---------------------------------
shall apply, to the full extent set forth herein with respect to (i) the shares
of Common Stock, (ii) any and all shares of voting common stock of the Company
into which the shares of Common Stock are converted, exchanged or substituted in
any recapitalization or other capital reorganization by the Company and (iii)
any and all equity securities of the Company or any successor or assign of the
Company (whether by merger, consolidation, sale of assets or otherwise) which
may be issued in respect of, in conversion of, in exchange for or in
substitution of, the shares of Common Stock and shall be appropriately adjusted
for any stock dividends, splits, reverse splits, combinations, recapitalizations
and the like occurring after October 24, 1997. The Company shall cause any
successor or assign (whether by sale, merger or otherwise) to enter into a new
registration rights agreement with the Designated Holders on terms substantially
the same as this Agreement as a condition of any such transaction.

     (b) No Inconsistent Agreements. The Company represents and warrants that it
         --------------------------
has not granted to any Person the right to request or require the Company to
register any securities issued by the Company, other than the rights granted to
the Designated Holders herein. The Company shall not enter into any agreement
with respect to its securities that is inconsistent with the rights granted to
the Designated Holders in this Agreement or grant
<PAGE>

any additional registration rights to any Person or with respect to any
securities which are not Registrable Securities which are prior in right to or
inconsistent with the rights granted in this Agreement.

     (c) Remedies. The Designated Holders, in addition to being entitled to
         --------
exercise all rights granted by law, including recovery of damages, shall be
entitled to specific performance of their rights under this Agreement. The
Company agrees that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of the provisions of this Agreement
and hereby agrees to waive in any action for specific performance the defense
that a remedy at law would be adequate.

     (d) Amendments and Waivers. Except as otherwise provided herein, the
         ----------------------
provisions of this Agreement may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given
unless consented to in writing by (i) the Company, (ii) the Major Stockholders
holding Registrable Securities representing (after giving effect to any
adjustments) at least a majority of the aggregate number of Registrable
Securities owned by all of the Major Stockholders, (iii) the General Atlantic
Stockholders holding Registrable Securities representing (after giving effect to
any adjustments) at least a majority of the aggregate number of Registrable
Securities owned by all of the General Atlantic Stockholders and (iv) the
Andersen Stockholders holding Registrable Securities representing (after giving
effect to any adjustments) at least a majority of the aggregate number of
Registrable Securities owned by all of the Andersen Stockholders. Any such
written consent shall be binding upon the Company and all of the Designated
Holders.

     (e) Notices. All notices, demands and other communications provided for or
         -------
permitted hereunder shall be made in writing and shall be made by registered or
certified first-class mail, return receipt requested, telecopier, courier
service, overnight mail or personal delivery:

                    (i)  if to the Company or the Major Stockholders:

                         Prime Response, Inc.
                         150 Cambridge Park Drive
                         Cambridge, Massachusetts 02140
                         Telecopy: (617) 876-8383
                         Attention: President

                         with a copy to:

                         Hale and Dorr LLP
                         60 State Street
                         Boston, Massachusetts 02109
                         Telecopy: (617) 526-5000
                         Attention: John A. Burgess, Esq.

                    (ii) if to a General Atlantic Stockholder:
<PAGE>

                         c/o General Atlantic Service Corporation
                         3 Pickwick Plaza
                         Greenwich, Connecticut 06830
                         Telecopy: (203) 622-8818
                         Attention: Mr. William E. Ford

                         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: Matthew Nimetz, Esq.

                  (iii)  if to an Andersen Stockholder: Andersen Consulting LLP
                         333 South Seventh Street Minneapolis, MN 55402
                         Telecopy: (612) 277-0000 Attention: J. Patrick
                         O'Halloran

                   (iv)  if to any other Designated Holder, at its address as it
                         appears on the record books of the Company.

     All such notices and communications shall be deemed to have been duly given
when delivered by hand, if personally delivered; when delivered by courier or
overnight mail, if delivered by commercial courier service or overnight mail;
five (5) Business Days after being deposited in the mail, postage prepaid, if
mailed; and when receipt is mechanically acknowledged, if properly telecopied.

     (f) Successors and Assigns; Third Party Beneficiaries. This Agreement shall
         -------------------------------------------------
inure to the benefit of and be binding upon the heirs, legatees, legal
representatives, successors and permitted assigns of each of the parties hereto
as hereinafter provided. The Demand Registration rights of the General Atlantic
Stockholders and the Major Stockholders contained in Section 3 hereof and the
other rights of each of the General Atlantic Stockholders and the Major
Stockholders with respect thereto shall be, with respect to any Registrable
Security, (i) automatically transferred, in the case of such rights of the
General Atlantic Stockholders, among the General Atlantic Stockholders and, in
the case of such rights of the Major Stockholders, among the Major Stockholders
and (ii) in all other cases, transferred only with the consent of the Company.
The incidental or "piggy-back" registration rights of the Designated Holders
contained in Sections 3(b) and 4 hereof, the S-3 Registration rights contained
in Section 5 hereof and the other rights of each of the Designated Holders with
respect thereto shall be, with respect to any Registrable Security,
automatically transferred by such Designated Holder to any Person who is the
transferee of such Registrable Security; provided that (x) the Company receives
notice of such transfer and (y) prior to such transfer, such assignee shall
assume all of the applicable assignor's obligations hereunder. All of the
obligations of the
<PAGE>

Company hereunder shall survive any such transfer. No Person other than the
parties hereto and their heirs, legatees, legal representatives, successors and
permitted assigns is intended to be a beneficiary of any of the rights granted
hereunder.

     (g) Counterparts. This Agreement may be executed in any number of
         ------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

     (h) Headings. The headings in this Agreement are for convenience of
         --------
reference only and shall not limit or otherwise affect the meaning hereof.

     (i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
         -------------
ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS, WITHOUT REGARD TO
THE PRINCIPLES OF CONFLICTS OF LAW OF ANY JURISDICTION.

     (j) Severability. If any one or more of the provisions contained herein, or
         ------------
the application thereof in any circumstance, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, it being intended that all
of the rights and privileges of the Designated Holders shall be enforceable to
the fullest extent permitted by law.

     (k) Entire Agreement. This Agreement is intended by the parties as a final
         ----------------
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein and
in the Stock Purchase Agreement and Stockholders Agreement. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter, including, without limitation, the Original
Agreement.

     (l) Further Assurances. Each of the parties shall execute such documents
         ------------------
and perform such further acts as may be reasonably required or necessary to
carry out or to perform the provisions of this Agreement.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>

     IN WITNESS WHEREOF, the undersigned have executed, or have caused to be
executed, this Amended and Restated Registration Rights Agreement on the date
first written above.

                    PRIME RESPONSE, INC.

                    By: /s/ Peter J. Boni
                       ----------------------------------
                       Name:  Peter J. Boni
                       Title: Chief Executive Officer and President

                    GENERAL ATLANTIC PARTNERS 42, L.P.

                    By:  GENERAL ATLANTIC PARTNERS, LLC,
                         its General Partner

                    By: /s/ William E. Ford
                       ----------------------------------
                       Name:  William E. Ford
                       Title: A Managing Member

                    GAP COINVESTMENT PARTNERS, L.P.

                    By: /s/ William E. Ford
                       ----------------------------------
                       Name:  William E. Ford
                       Title: A General Partner

                    GENERAL ATLANTIC PARTNERS 48, L.P.

                    By: General Atalntic Partners, LLC, its general partner

                    By: /s/ William E. Ford
                       ----------------------------------
                       Name:  William E. Ford
                       Title: A Managing Member

                    GENERAL ATLANTIC PARTNERS 52, L.P.

                    By: General Atalntic Partners, LLC, its general partner

                    By: /s/ William E. Ford
                       ----------------------------------
                       Name:  William E. Ford
                       Title: A Managing Member
<PAGE>

                    GAP COINVESTMENT PARTNERS II, L.P.

                    By: /s/ William E. Ford
                       -------------------------------------
                       Name:  William E. Ford
                       Title: A General Partner

                    GENERAL ATLANTIC PARTNERS 57, L.P.

                    By: General Atlantic Partners, LLC, is general partner

                    By: /s/ William E. Ford
                       -------------------------------------
                       Name:  William E. Ford
                       Title: A Managing Member

                    KITE LIMITED

                    By: /s/ Mark Gill for Anson Limited
                       -------------------------------------
                       Name:  Mark Gill
                       Title: Director

                        /s/ James Carling
                       -------------------------------------
                       James Carling

                    ANDERSEN CONSULTING LLP

                    By: /s/ J. Patrick O'Halloran
                       -------------------------------------
                       Name: J. Patrick O'Halloran
                       Title: Partner
<PAGE>

                    AC VENTURES B.V.

                    By: /s/ M.G. McGrath
                       ---------------------------------
                       Name: M.G. McGrath
                       Title: Chief Financial Officer<PAGE>

                                                                   EXHIBIT 10.23

                              PRIME RESPONSE, INC.

                            COMMON STOCK AND WARRANT
                               PURCHASE AGREEMENT

                                DECEMBER 6, 1999
<PAGE>

                            COMMON STOCK AND WARRANT
                            ------------------------

                               PURCHASE AGREEMENT
                               ------------------

     THIS COMMON STOCK AND WARRANT PURCHASE AGREEMENT (the "Agreement") is made
                                                            ---------
as of the 6th day of December, 1999, by and between (i) Prime Response, Inc.
(f/k/a Prime Response Group, Inc.), a Delaware corporation (the "Company") and
                                                                 -------
(ii) Andersen Consulting LLP, an Illinois limited liability partnership
("Andersen Consulting"), and AC Ventures B.V., a limited liability corporation
  -------------------
formed in the Netherlands ("AC Ventures", hereinafter referred to, together with
                            -----------
Andersen Consulting, as "AC").
                         --

     WHEREAS, the Company and Andersen Consulting desire to enter into certain
marketing alliance and consulting arrangements with each other and, in
connection therewith, are entering into a Marketing Agreement of even date
herewith (the "Marketing Agreement");  and
               -------------------

     WHEREAS, as a condition precedent to entering into the Marketing Agreement,
and vice versa, the Company and AC have agreed, among other things, to enter
into the transactions contemplated by this Agreement.

     NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the Company and AC hereby agree as
follows:

     1.  PURCHASE AND SALE OF PURCHASED SECURITIES.
         -----------------------------------------

          1.1  Sale and Issuance of Common Stock and Warrants.  Subject to the
               ----------------------------------------------
terms and conditions of this Agreement, at the Closing (as defined below), (a)
AC Ventures agrees to purchase, and the Company agrees to sell and issue to AC
Ventures, an aggregate of 570,409 shares (the "Purchased Shares") of the
                                               ----------------
Company's common stock, $0.01 par value per share (the "Common Stock"), at an
                                                        ------------
aggregate price of $4,000,000, and (b) Andersen Consulting agrees to purchase,
and the Company agrees to sell and issue to Andersen Consulting, warrants to
purchase an aggregate of 909,709 shares of Common Stock (the "Warrants"), at an
                                                              --------
initial exercise price per share equal to $7.01 and substantially in the form
attached hereto as Exhibit A, and at the purchase price of $0.01.  The Purchased
                   ---------
Shares and the Warrants shall hereinafter be referred to, collectively, as the
"Purchased Securities".
 --------------------

          1.2  Closing.  Subject to the fulfillment of the conditions set forth
               -------
in Sections 5 and 6 below (or the waiver thereof by the appropriate party), the
purchase and sale of the Purchased Securities and the consummation of the
transactions set forth herein (the "Closing") shall take place at the offices of
                                    -------
Bingham Dana LLP, 150 Federal Street, Boston, Massachusetts 02110, at 10:00
A.M., on or before December 8, 1999 (the "Closing Date"), (the "Closing"),
                                          ------------          -------
provided, that if the Company fails to deliver the Final Audited Financial
--------
Statements (as defined in Section 5.10) on or before the Closing Date,
<PAGE>

                                      -3-

the Closing Date may be unilaterally extended at the sole option and discretion
of AC. At the Closing, the Company shall deliver to AC Ventures a certificate
representing the Purchased Shares and to Andersen the Warrants against payment
therefor by AC Ventures and Andersen by check or wire transfer to an account
specified in writing by the Company (or, in the case of the Warrants, in cash).

     2.  Representations, Warranties and Covenants of the Company.  The Company
         --------------------------------------------------------
hereby represents, warrants and covenants to AC that:

          2.1  Organization and Authority.  The Company is a corporation duly
               ---------------------------
organized, validly existing, and in good standing under the laws of the State of
Delaware.  The Company has all requisite corporate power and authority to own or
lease and operate its properties and to carry on its business as now conducted
and as proposed to be conducted.  The minute books of the Company have been made
available to AC for inspection and accurately record therein all corporate
actions taken by the Board of Directors and stockholders of the Company.

          2.2  Corporate Power; Binding Effect.  The Company has all requisite
               --------------------------------
power and full legal right to execute and deliver this Agreement, and to perform
all of its obligations hereunder in accordance with the terms set forth herein.
This Agreement and the transactions contemplated hereby have been duly approved
and authorized by all requisite corporate action on the part of the Company and
its stockholders, and this Agreement has been duly executed and delivered by the
Company and constitutes a legal, valid, and binding obligation of the Company,
enforceable against it in accordance with the terms set forth herein.  The
execution, delivery, and performance by the Company of this Agreement in
accordance with the terms set forth herein, and the consummation by the Company
of the transactions contemplated hereby, will not result (with or without the
giving of notice or the lapse of time or both) in any conflict, violation,
breach, or default, or the creation of any lien , security interest, option or
other charge or encumbrance, or the termination, acceleration, vesting, or
modification of any right or obligation, under or in respect of (x) the
Certificate of Incorporation (as amended and in effect as of the date hereof) or
by-laws of the Company, (y) any judgment, decree, order, statute, rule, or
regulation binding on or applicable to the Company, or (z) any agreement or
instrument to which the Company is a party or by which it or any of its assets
is or are bound.

          2.3  Foreign Qualification.  The Company is duly qualified to do
               ----------------------
business and is in good standing as a foreign corporation in the Commonwealth of
Massachusetts and, except as set forth in Schedule 2.3, in each jurisdiction in
which the character of the properties owned or leased by the Company or the
nature of its activities makes such qualification necessary, other than any
jurisdictions in which the failure so to qualify or be in good standing would
not, either in any case or in the aggregate, have a material adverse effect on
the business, current prospects, results of operations or financial condition of
the Company (a "Material Adverse Effect").
                -----------------------

          2.4  Subsidiaries.  Schedule 2.4 sets forth a list of all of the
               ------------   ------------
Subsidiaries

<PAGE>

                                      -4-

of the Company and, with respect to each Subsidiary, (a) the name of each
stockholder or other holder of record or beneficial owner of capital stock,
securities or other equity interests, (b) the number of shares of capital stock,
securities or other equity interests authorized, issued and outstanding, (c) the
class, series or type of capital stock, securities or other equity interests
authorized, issued and/or outstanding, and (d) the jurisdiction of incorporation
and/or formation and the type and/or form of entity (e.g., partnership,
corporation, limited liability company, etc.). Each of the Subsidiaries set
forth on Schedule 2.4 is duly organized, validly existing, and in good
         ------------
standing (to the extent applicable) under the laws of its jurisdiction of
incorporation or formation.  Each of the Subsidiaries has all requisite
corporate or other power and authority to own or lease and operate its
properties and to carry on its business as now conducted and as proposed to be
conducted.  The minute books of each of the Subsidiaries have been made
available to AC for inspection and accurately record therein all actions taken
by the Board of Directors (or other similar governing committee or body) and
stockholders (or other equity holders) of such Subsidiary.  For purposes of this
Agreement, the term "Subsidiary" means, with respect to a party, any corporation
                     ----------
or other organization, whether incorporated or unincorporated, of which (i) such
party or any other Subsidiary of such party is a general partner or a managing
member, (ii) at least a majority of the securities or other interests having by
their terms ordinary voting power to elect a majority of the Board of Directors
or others performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such party or by
any one or more of its Subsidiaries, or by such party and one or more of its
Subsidiaries.  For purposes of Section 2 of this Agreement, all references to
the Company shall be deemed to include the Subsidiaries set forth on
Schedule 2.4.
------------

          2.5  Capitalization.
               --------------

          (a) Immediately after the Closing, giving effect to the sale and
purchase of the Purchased Securities provided for in this Agreement, the
authorized and the outstanding capital stock of the Company will be as set forth
in Schedule 2.5(a), and all such outstanding shares of capital stock will be
   ---------------
owned (of record and beneficially) by the Persons and in the amounts there
indicated.  All such outstanding shares of capital stock will be duly
authorized, validly issued, fully paid, and non-assessable, and, to the
Company's knowledge, free and clear of any liens, security interests, options or
other charges or encumbrances.  Except as set forth on Schedule 2.5(a), no
                                                       ---------------
adjustment has previously been made (or should have been made) nor will any
adjustment be required to be made as a result of the Company's issuance of the
Purchased Securities (and the issuance of Common Stock upon the exercise of the
Warrants) to the rate at which shares of the Series A Convertible Participating
Preferred Stock, $.01 par value per share (the "Series A Preferred Stock"), the
                                                ------------------------
Series B Convertible Participating Preferred Stock, $.01 par value per share
(the "Series B Preferred Stock"), and the Series C Convertible Preferred Stock,
      ------------------------
$.01 par value per share (the "Series C Preferred Stock"), and any other capital
                               ------------------------
stock or other security of the Company are convertible into or exercisable for
shares of Common Stock or Preferred Stock (as defined in the next sentence) (by
reason of any "anti-dilution" provisions or agreements or otherwise).  The term
"Preferred
 ---------

<PAGE>

                                      -5-

Stock" shall refer, collectively, to the Series A Preferred Stock, the Series B
-----
Preferred Stock and the Series C Preferred Stock.

          (b) Except as set forth in Schedule 2.5(b), the Company does not have,
is not bound by, and has no obligation to grant or enter into, any (i)
outstanding subscriptions, options, warrants, calls, commitments, or agreements
of any character calling for it to issue, deliver, or sell, or cause to be
issued, delivered, or sold, any shares of its capital stock, any membership
interests or any other equity security, or any securities described in the
following clause, or (ii) securities convertible into, exchangeable for, or
representing the right to subscribe for, purchase, or otherwise acquire any
shares of its capital stock, any membership interests or any other equity
security.  Except as set forth in Schedule 2.5(b), no adjustment has previously
                                  ---------------
been made (or should have been made) nor will any adjustment be required to be
made as a result of the Company's issuance of the Purchased Securities (or the
issuance of Common Stock upon the exercise of the Warrants) to the number of
shares of capital stock or security of the Company into which any subscriptions,
options, warrants, calls, commitments or agreements are convertible (by reason
of any "anti-dilution" provisions or agreements or otherwise).

          (c) Except as set forth in Schedule 2.5(c), the Company (i) has no
                                     ---------------
outstanding obligations, contractual or otherwise, to repurchase, redeem, or
otherwise acquire any shares of capital stock or other equity securities of the
Company, (ii) is not a party to or bound by, and has no knowledge of, any
agreement or instrument relating to the voting of any of its securities, and
(iii) is not a party to or bound by any agreement or instrument under which any
person has the right to require it to effect, or to include any securities held
by such person in, any registration under the Securities Act of 1933, as amended
(the "Securities Act").  There are no other agreements, contracts, instruments
      --------------
or documents to which the Company is a party or of which the Company is aware,
except as set forth in Schedule 2.5(c), which govern or affect in any way the
                       ---------------
rights of the holders of securities, including any class of capital stock, of
the Company.

          (d) The Company has reserved, solely for the purpose of issuance upon
exercise of the Warrants, a number of shares of Common Stock sufficient to cover
the exercise of all such Warrants.

          2.6  Lawful Issuance.  All of the outstanding shares of capital stock
               ---------------
and other securities of the Company were offered, issued, and sold, and the
Purchased Securities have been offered and at the Closing will be issued and
sold, in compliance with (i) all applicable preemptive, participation, rights of
first refusal or similar rights of all persons, and (ii) assuming the
truthfulness and accuracy of the representations made by AC in Section 3 hereof,
all applicable provisions of the Securities Act, and the rules and regulations
thereunder, and all applicable state securities laws and the rules and
regulations thereunder.  No person has any valid right to rescind any purchase
of any shares of capital stock or other securities of the Company.
<PAGE>

                                      -6-

          2.7  Valid Issuance of Purchased Securities.  The Purchased Securities
               --------------------------------------
shall, upon issuance pursuant to the terms hereof, be duly authorized and
validly issued, fully paid and non-assessable and free and clear of any lien,
security interest, option or other charge or encumbrance.  In addition, the
shares of Common Stock issuable upon the exercise of the Warrants shall, upon
issuance pursuant to the terms thereof, be duly authorized and validly issued,
fully paid and non-assessable and free and clear of any lien, security interest,
option or other charge or encumbrance.  The issuance of the Purchased Securities
and the Common Stock upon the exercise of the Warrants are not and will not be
subject to any pre-emptive rights, first refusal rights, right to purchase or
similar rights with respect to such Purchased Securities and the Common Stock
issuable upon the exercise of the Warrants.

          2.8  Financial Statements.  The Company has delivered to AC a draft
               ---------------------
(the "Draft Audited Financial Statements") of the audited consolidated balance
sheet of the Company as of December 31, 1996, 1997 and 1998, and September 30,
1999 (the "Most Recent Balance Sheet"), and the related consolidated statements
           -------------------------
of income, changes in stockholders' equity, and cash flows for the years ended
December 31, 1996, 1997 and 1998 and for the nine month period ended September
30, 1999, a copy of which is attached hereto as Exhibit D.  Each of such
                                                ---------
financial statements was prepared in accordance with generally accepted
accounting principles (GAAP) applied on a basis consistent with prior periods.
Each of such balance sheets is true and correct and accurately presents the
financial condition of the Company as of its date; and each of such statements
of income, changes in stockholders' equity, and cash flows accurately presents
the results of operations, changes in stockholders' equity, or cash flows, as
the case may be, of the Company for the period covered thereby.  The Final
Audited Financial Statements (as defined in Section 5.10) shall be the same in
all material respects to the Draft Audited Financial Statements.

          2.9  Absence of Certain Changes.  Since the date of the Most Recent
               --------------------------
Balance Sheet, there has not been:

          (a) any (i) acquisition (by purchase, lease as lessee, license as
licensee, or otherwise) or disposition (by sale, lease as lessor, license as
licensor, or otherwise) by the Company of any material properties or assets, or
(ii) other transaction by, or any agreement or commitment on the part of, the
Company, other than those in the ordinary course of business, that have not
caused and will not cause, either in any case or in the aggregate, a Material
Adverse Effect;

          (b) except as set forth in Schedule 2.9(b), any material change in the
                                     ---------------
condition (financial or otherwise), properties, assets, liabilities,
investments, revenues, expenses, income, operations, business, or current
prospects of the Company, or in any of its relationships with any clients,
suppliers, customers, or other third parties with whom it has financial,
commercial, or other business relationships, other than changes in the ordinary
course of business that have not caused and cannot reasonably be expected to
cause, either in any case or in the aggregate, a Material Adverse Effect;
<PAGE>

                                      -7-

          (c) any transaction or change in compensation by the Company with any
of its stockholders, directors or officers other than the payment of
compensation and reimbursement of reasonable employee travel and other business
expenses in accordance with existing employment arrangements and usual past
practices;

          (d) any damage, destruction, or loss, whether or not covered by
insurance, that, either in any case or in the aggregate, has caused, or could
reasonably be expected to cause, a Material Adverse Effect;

          (e) any declaration, setting aside, or payment of any dividend or any
other distribution (in cash, stock, and/or property or otherwise) in respect of
any shares of the capital stock, equity interests or other securities of the
Company;

          (f) except as set forth in Schedule 2.9(f), any issuance of any shares
                                     -------- ------
of the capital stock, equity interests or other securities of the Company, or
any direct or indirect redemption, purchase, or other acquisition by the Company
of any shares of capital stock, equity interests or other securities;

          (g) except as set forth in Schedule 2.9(g), any change in the
                                     -------- ------
officers, directors or strategic partners of the Company;

          (h) any labor or employee trouble or claim of unfair labor or
employment practices involving the Company, any increase in any single case in
excess of $50,000 in the compensation or other benefits payable or to become
payable by the Company to any of its officers, employees, or independent
contractors, or any bonus payments or arrangements made to or with any of such
officers, employees, or independent contractors;

          (i) any forgiveness or cancellation of any debt or claim by the
Company or any waiver by the Company of any right of material value, other than
compromises of accounts receivable in the ordinary course of business of less
than $50,000;

          (j) any incurrence or any payment, discharge, or satisfaction by the
Company of any material indebtedness or any material obligations or material
liabilities, whether absolute, accrued, contingent, or otherwise (including
without limitation liabilities, as guarantor or otherwise, with respect to
obligations of others);

          (k) any incurrence, discharge, or satisfaction of any material lien,
charge or other encumbrance (i) by the Company, or (ii) on any of the capital
stock, other securities or equity interests, properties, or assets owned, held
or leased by the Company;

          (l) any change in the financial or tax accounting principles,
<PAGE>

                                      -8-

practices, or methods of the Company; or

          (m) any agreement, understanding, or commitment by or on behalf of the
Company, whether in writing or otherwise, to do or permit any of the things
referred to in this Section 2.9.

          2.10  Properties, Leases, Etc.
                -----------------------

          (a) Title to Properties; Condition of Personal Properties.  The
              -----------------------------------------------------
Company has (i) good and marketable title to all of the assets and properties
owned by it, including without limitation all assets and properties reflected in
the Most Recent Balance Sheet, free and clear of all Liens, (ii) valid title to
the lessee interest in all assets and properties leased by them as lessee, free
and clear of all liens, charges and other encumbrances, and (iii) full right to
hold and use all of the assets and properties used in or necessary to their
respective businesses and operations, in each case all free and clear of all
liens, charges and other encumbrances, and in each case subject to applicable
laws and the terms of any lease under which the Company leases such assets or
properties as lessee.  All such assets and properties are in good condition and
repair, reasonable wear and tear excepted, and are adequate and sufficient to
carry on the businesses of the Company as presently conducted and as currently
proposed to be conducted.

          (b) No Owned Real Properties.  The Company does not own any real
              ------------------------
property or any interest (other than a leasehold interest) in any real property.

          (c) Leased Properties.  Schedule 2.10(c) sets forth a complete and
              -----------------   -------- -------
correct description of all leases of real or personal property under which the
Company is lessor or lessee.  Complete and correct copies of all such leases and
all amendments, supplements, and modifications thereto, other than any personal
property lease with an annual rent of less than $20,000 and total remaining
rental payments of less than $10,000, have been delivered to AC.  Each such
lease is valid and subsisting and no event or condition exists that constitutes,
or after notice or lapse of time or both would constitute, a default thereunder
by the Company or, to the Company's knowledge, any other party thereto.  The
Company's leasehold interests are subject to no liens, charges or other
encumbrances, and the Company is in quiet possession of the properties covered
by such leases.

          2.11  Indebtedness.  Except  to the extent reflected or reserved in
                -------------
the Most Recent Balance Sheet, incurred in the ordinary course of business since
the date of the Most Recent Balance Sheet, or as set forth on Schedule 2.11, the
                                                              -------------
Company has no Indebtedness outstanding.  The Company is not in default with
respect to any outstanding Indebtedness or any instrument or agreement relating
thereto, and no such Indebtedness or any instrument or agreement relating
thereto purports to limit the issuance of any securities by the Company or the
operation of the business of the Company.  Complete and correct copies of all
instruments and agreements (including all amendments, supplements, waivers, and
consents) relating to any Indebtedness of the Company have
<PAGE>

                                      -9-

been furnished to AC. As used in this Agreement, the term "Indebtedness" means
                                                           ------------
(a) all indebtedness for borrowed money, whether current or long-term, or
secured or unsecured, (b) all indebtedness for the deferred purchase price of
property or services represented by a note or security agreement, (c) all
indebtedness created or arising under any conditional sale or other title
retention agreement (even though the rights and remedies of the seller or lender
under such agreement in the event of default may be limited to repossession or
sale of such property), (d) all indebtedness secured by a purchase money
mortgage or other lien to secure all or part of the purchase price of property
subject to such mortgage or lien, (e) all obligations under leases that have
been or must be, in accordance with generally accepted accounting principles
(GAAP), recorded as capital leases in respect of which it is liable as lessee,
(f) any liability in respect of banker's acceptances or letters of credit, and
(g) all indebtedness of any person that is directly or indirectly guaranteed by
the Company or that it has agreed (contingently or otherwise) to purchase or
otherwise acquire or in respect of which it has otherwise assured a creditor
against loss.

          2.12  Absence of Undisclosed Liabilities.  Except to the extent
                -----------------------------------
reflected or reserved in the Most Recent Balance Sheet, or incurred after the
date of such balance sheet in the ordinary course of business, or incurred in
connection with the transactions contemplated by this Agreement, the Company has
no material liabilities or obligations of any nature, whether accrued, absolute,
contingent, or otherwise (including without limitation liabilities as guarantor
or otherwise with respect to obligations of others) and whether due or to become
due.

          2.13  Tax Matters.
                -----------

          (a) Filing of Tax Returns and Payment of Taxes.  Except as set forth
              ------------------------------------------
on Schedule 2.13(a), the Company has timely filed all Tax Returns required to be
   -------- -------
filed by the Company, each such Tax Return has been prepared in compliance with
all applicable laws and regulations, and all such Tax Returns are true and
accurate in all respects.  All Taxes due and payable by the Company have been
paid, and the Company will not be liable for any additional Taxes in respect of
any taxable period ending on or before the Closing Date in an amount that
exceeds the corresponding reserve therefor, if any, reflected in the accounting
records of the Company as of the Closing Date.  No claim has ever been made by a
taxing authority in a jurisdiction where the Company does not pay Tax or file
Tax Returns that the Company is or may be subject to Taxes assessed by such
jurisdiction.  There are no liens for Taxes (other than current Taxes not yet
due and payable) on the assets of the Company.

          (b) Audit History, Extensions, Etc.  There is no action, suit, taxing
              -------------------------------
authority proceeding, or audit with respect to any Tax now in progress, pending,
or to the best of the Company's knowledge, threatened, against or with respect
to the Company.  No deficiency or proposed adjustment in respect of Taxes that
has not been settled or otherwise resolved has been asserted or assessed by any
taxing authority against the Company.  The Company has not consented to extend
the time in which any Tax may be assessed or collected by any taxing authority.
The Company has not requested or been
<PAGE>

                                      -10-

granted an extension of the time for filing any Tax Return to a date on or after
the Closing Date.

          (c) Membership in Affiliated Groups, Etc.  The Company has never been
              ------------------------------------
a member of any Affiliated Group, nor has ever filed or been included in a
combined, consolidated, or unitary Tax Return.  The Company is not a party to or
bound by any tax sharing or allocation agreement nor has any current or
potential contractual obligation to indemnify any other person with respect to
Taxes.  As used in herein, the term "Affiliated Group" has the meaning given to
it in Section 1504 of the Code, and in addition includes any analogous combined,
consolidated or unitary group, as defined under any applicable state, local or
foreign income Tax law.

          (d) Withholding Taxes.  The Company has withheld and paid all Taxes
              -----------------
required to have been withheld and paid by it in connection with amounts paid or
owing to any employee, creditor, independent contractor, or other Person.

          (e) Certain Defined Terms.  As used herein, the term "Tax" or "Taxes"
              ---------------------                             ---      -----
means any federal, state, local, or foreign income, gross receipts, franchise,
estimated, alternative minimum, add-on minimum, sales, use, transfer,
registration, value added, excise, severance, stamp, occupation, premium,
windfall profit, customs, duties, real property, personal property, capital
stock, intangibles, social security, unemployment, disability, payroll, license,
employee, or other tax or levy, of any kind whatsoever, including any interest,
penalties, or additions to tax in respect of the foregoing.  In addition, the
term "Tax Return" means any return, declaration, report, claim for refund,
      ----------
information return, or other document (including any related or supporting
estimates, elections, schedules, statements, or information) filed or required
to be filed in connection with the determination, assessment, or collection of
any Tax or the administration of any laws, regulations, or administrative
requirements relating to any Tax.

          2.14  Litigation, Etc.  Except as set forth on Schedule 2.14, no
                ---------------                          -------------
litigation, arbitration, action, suit, claim, demand, proceeding or
investigation (whether conducted by or before any judicial or regulatory body,
arbitrator, commission) is pending or, to the Company's knowledge, threatened,
against the Company, its property or assets, nor is there any basis therefor
known to the Company.

          2.15  Safety, Zoning, and Environmental Matters.
                -----------------------------------------

          (a) The Company is not nor has ever been in violation in any material
respect of any applicable statute, law, or regulation relating to occupational
health or safety, and no charge, complaint, action, suit, proceeding, hearing,
investigation, claim, demand, or notice has been filed or commenced against or
received by it alleging any failure by it to comply with any such statute, law,
or regulation, nor is there any basis therefor known to the Company.
<PAGE>

                                      -11-

          (b) To the best of the Company's knowledge, none of the real
properties presently leased, or operated by the Company, nor any leasehold
improvements thereto, nor any business conducted by the Company thereon, are in
violation in any material respect of any applicable land use or zoning
requirements, including without limitation any building line or use or occupancy
restriction, any public utility or other easement, any limitation, condition, or
covenant of record, or any zoning or building law, code, or ordinance.

          (c) The Company is not presently, and has never been, in violation of
any judgment, decree, order, statute, law, permit, license, rule, or regulation
pertaining to environmental matters, including without limitation those arising
under any Environmental Laws, nor has any of them received any written notice
alleging any such violation.  As used herein, the term "Environmental Laws"
                                                        ------------------
means, collectively, the Resource Conservation and Recovery Act, CERCLA, the
Superfund Amendments and Reauthorization Act of 1986, the Federal Clean Water
Act, the Federal Clean Air Act, the Toxic Substances Control Act, and any and
all state or local statutes, regulations, ordinances, orders, and decrees
relating to health, safety, or the environment, each, as the case may be, as
amended.  The term "CERCLA" means the Comprehensive Environmental Response,
                    ------
Compensation and Liability Act of 1980, as amended.

          (d) None of the Company and its Subsidiaries has received any notice
or request for information from any third party, including without limitation
any federal, state, or local governmental authority, (i) that any of them has
been identified by the EPA or any state environmental regulatory authority as a
potentially responsible party under CERCLA with respect to a site listed on the
National Priorities List, 40 C.F.R. Part 300 Appendix B, or under any equivalent
state law; (ii) that any Hazardous Substances that any of them has generated,
transported, or disposed of have been found at any site at which a federal,
state, or local agency or other third party has conducted or has ordered it to
conduct a remedial investigation, removal or other response action pursuant to
any Environmental Law; or (iii) that any of them is or will or may be a named
party to any claim, action, cause of action, complaint, or legal or
administrative proceeding arising out of any third party's incurrence of Damages
in connection with the release (within the meaning of CERCLA) of any Hazardous
Substances or any other environmental matters.  No circumstances exist that
could reasonably be expected to give rise to any such notice or request for
information or to any Damages.  As used herein, the term "Hazardous Substances"
                                                          --------------------
means, collectively, any hazardous waste, as defined by 42 U.S.C. (S) 6903(5),
any hazardous substances as defined by 42 U.S.C. (S) 9601(14), any pollutant or
contaminant as defined by 42 U.S.C. (S) 9601(33), or any toxic substance,
methane gas, oil, or hazardous materials or other chemicals or substances
regulated by any Environmental Laws.  In addition, as used herein, the term
"Damages" means all damages, losses, claims, demands, actions, causes of action,
 -------
suits, litigations, arbitrations, liabilities, costs, and expenses, including
without limitation court costs and the fees and expenses of counsel and experts.

          2.16  Labor Relations.  The Company is in compliance in all material
                ---------------
<PAGE>

                                      -12-

respects with all applicable federal and state laws respecting employment and
employment practices, terms and conditions of employment, wages and hours, and
nondiscrimination in employment, and is not engaged in any unfair labor
practice.  There is no charge pending or, to the best of the Company's
knowledge, threatened, against or with respect to the Company before any court
or agency and alleging unlawful discrimination in employment practices, and
there is no charge of or proceeding with regard to any unfair labor practice
against the Company pending before the National Labor Relations Board.  There is
no labor strike, dispute, slow-down, or work stoppage pending or, to the
Company's knowledge, threatened against or involving the Company.  None of the
employees of the Company is covered by any collective bargaining agreement, and
no such collective bargaining agreement is currently being negotiated.  No one
has petitioned and, to the Company's knowledge, no one is now petitioning, for
union representation of any employees of the Company. The Company has not
experienced any work stoppage or other material labor difficulty.

          2.17  Material Contracts.  Except for the contracts, agreements and
                ------------------
other arrangements listed in Schedule 2.17 and contracts, agreements, or other
                             -------- ----
arrangements that have been fully performed and with respect to which the
Company has no further obligations or liabilities, the Company is not a party to
or otherwise bound by (i) any agreement, instrument, or commitment that may
affect its ability to consummate the transactions contemplated hereby, or (ii)
any other material agreement, instrument, or commitment; including without
limitation any:

          (a) agreement for the purchase, sale, lease, or license by or from it
of services, products, or assets, requiring total payments by or to it in excess
of $50,000 in any instance, or entered into other than in the ordinary course of
business;

          (b) agreement requiring it to purchase all or substantially all of its
requirements for a particular product or service from a particular supplier or
suppliers, or requiring it to supply all of a particular customer's or
customers' requirements for a certain service or product;

          (c) agreement or other commitment pursuant to which it has agreed
to indemnify or hold harmless any other person;

          (d) (i) employment agreement, (ii) consulting agreement, or (iii)
agreement providing for severance payments or other additional rights or
benefits (whether or not optional) in the event of the sale or other change in
control of it;

          (e) agreement with any current or former affiliate, stockholder,
officer, director, or strategic partner of the Company, or with any person in
which any such affiliate is known by the Company to have an interest;

          (f) joint venture, partnership or teaming agreement;
<PAGE>

                                      -13-

          (g) agreement with any domestic or foreign government or agency or
executive office thereof or any subcontract between it and any third party
relating to a contract between such third party and any domestic or foreign
government or agency or executive office thereof;

          (h) agreement imposing non-competition or exclusive dealing
obligations on it;

          (i) agreement with respect to the confidentiality of the Company's
Proprietary Information (as described in Section 2.20 hereof), and the
                                         ------------
assignment to the Company of any and all rights employees of the Company might
have to acquire with respect to technology, inventions, developments, etc.,
developed in connection with this employment with the Company; and

          (j) agreement the performance of which is reasonably likely to
result in a loss to it.

          The Company has delivered or caused to be delivered to AC correct and
complete copies of each agreement, instrument, and commitment listed in Schedule
                                                                        --------
2.17, each as amended to date.  Each such agreement, instrument, and commitment
----
is a valid, binding and enforceable obligation of the Company and, to the
Company's knowledge, of the other party or parties thereto, and is in full force
and effect.  The Company is not nor, to the Company's knowledge, is any other
party thereto, (nor to the Company's knowledge is the Company considered by any
other party thereto to be) in breach of or noncompliance with any term of any
such agreement, instrument, or commitment (nor is there any basis for any of the
foregoing), except for any breach or non-compliance that singly or in the
aggregate would not have a Material Adverse Effect.  No claim, change order,
request for equitable adjustment, or request for contract price or schedule
adjustment, between the Company and any client, supplier or customer, relating
to any agreement, instrument, or commitment listed in Schedule 2.17 is pending
                                                      -------------
or, to the Company's knowledge, threatened, nor to the Company's knowledge is
there any basis for any of the foregoing.  No agreement, instrument, or
commitment listed in Schedule 2.17 includes or incorporates any provision, the
                     -------------
effect of which may be to enlarge or accelerate any of the obligations of the
Company or to give additional rights to any other party thereto, or will
terminate, lapse, or in any other material way be affected, by reason of the
transactions contemplated by this Agreement.

          2.18  Employee Benefit Plans.
                ----------------------

          (a) Identification of Plans.  Except for the arrangements set forth in
              -----------------------
Schedule 2.18, the Company does not now maintain or contribute to any pension,
-------- ----
profit-sharing, deferred compensation, bonus, stock option, share appreciation
right, severance, group or individual health, medical, life insurance, survivor
benefit, or similar plan, policy or arrangement, whether formal or informal, for
the benefit of any director, officer, consultant, or employee of any of them,
whether active or terminated; nor has it
<PAGE>

                                      -14-

ever maintained or contributed to any such plan, policy, or arrangement that was
subject to ERISA. Each of the arrangements set forth in Schedule 2.18 is herein
                                                        -------------
referred to as an "Employee Benefit Plan." As used herein, the term "ERISA"
                   ---------------------                             -----
means the Employee Retirement Income Security Act of 1974, as amended.

          (b) Compliance with Terms and Law.  Each Employee Benefit Plan is and
              -----------------------------
has been maintained and operated in compliance in all material respects with the
terms of such plan and with the requirements prescribed (whether as a matter of
substantive law or as necessary to secure favorable tax treatment) by any and
all statutes, governmental, or court orders, or governmental rules or
regulations in effect from time to time, including but not limited to ERISA and
the Internal Revenue Code of 1986, as amended (the "Code"), and applicable to
                                                    ----
such plan.  Each Employee Benefit Plan that is intended to qualify under Section
401(a) of the Code is so qualified.

               (c) Absence of Certain Events and Arrangements.
                   ------------------------------------------

          (1) There is no pending or, to the Company's knowledge, threatened,
legal action, proceeding, or investigation, other than routine claims for
benefits, concerning any Employee Benefit Plan, or any fiduciary or service
provider thereof and there is no basis for any such legal action or proceeding.

          (2) No Employee Benefit Plan, nor any party in interest in respect
thereof has engaged in a prohibited transaction that could subject the Company,
directly or indirectly, to liability under Section 409 or 502(i) of ERISA or
Section 4975 of the Code.

          (3) No communication, report, or disclosure has been made that, at the
time made, did not accurately reflect the terms and operations of any Employee
Benefit Plan.

          (4) No Employee Benefit Plan provides welfare benefits subsequent to
termination of employment to employees or their beneficiaries (except to the
extent required by applicable state insurance laws and Title I, Part 6 of
ERISA).

          (5) The Company has not undertaken to maintain any Employee Benefit
Plan for any specific period of time and each such plan is terminable at the
sole discretion of the Company, subject only to such constraints as may imposed
by applicable law.

          (6) No Employee Benefit Plan is maintained pursuant to a collective
bargaining agreement or is or has been subject to the minimum funding
requirements of Section 302 of ERISA or Section 412 of the Code.

          (d) Funding of Certain Plans.  With respect to each Employee Benefit
              ------------------------
Plan for which a separate fund of assets is or is required to be maintained,
full
<PAGE>

                                      -15-

payment has been made of all amounts that, under the terms of each such plan, it
is required to have paid as contributions to that plan as of the end of such
plan's most recently ended year.

          2.19  Potential Conflicts of Interest.  Except as set forth on
                -------------------------------
Schedule 2.19, neither the Company nor any of its officers, directors, partners,
-------------
members or employees, (i) owns, directly or indirectly, any interest (excepting
passive holdings for investment purposes of not more than 1% of the securities
of any publicly held and traded company) in, or is an officer, director,
employee, or consultant of, any person that is a competitor, lessor, lessee,
customer, or supplier of the Company; (ii) owns, directly or indirectly, any
interest in any tangible or intangible property used in or necessary to the
business of the Company; (iii) has any cause of action or other claim whatsoever
against the Company, or owes any amount to the Company, except for claims in the
ordinary course of business, such as for accrued vacation pay, accrued benefits
under employee benefit plans, and similar matters and agreements.

          2.20  Proprietary Information.
                -----------------------

          (a) Schedule 2.20 lists all patents, patent applications, trademarks,
              -------------
trade names, service marks, logos, copyrights, and licenses used in or necessary
to the Company's business as now being conducted or as proposed to be conducted
(other than commercially available off-the-shelf software, so long as such
software is not packaged with, imbedded in, or sold in connection with any of
the Company's products) (collectively, and together with any technology, know-
how, trade secrets, processes, formulas, and techniques used in or necessary to
the Company's business, "Proprietary Information").  The Company owns, or is
                         -----------------------
licensed or otherwise has the full and unrestricted exclusive right to use,
without the payment of royalties or other further consideration, all Proprietary
Information, and no other intellectual property rights, privileges, licenses,
contracts, or other agreements, instruments, or evidences of interests (other
than commercially available off-the-shelf software) are necessary to or used in
the conduct of its business.

          (b) In any instance where the Company's rights to Proprietary
Information arise under a license or similar agreement (other than for software
programs that have not been customized for its use), this is indicated in
Schedule 2.20 and such rights are licensed exclusively to it except as indicated
-------------
in Schedule 2.20.  No other person has an interest in or right or license to use
   -------------
any of the Proprietary Information.  To the best of the Company's knowledge,
none of the Proprietary Information is being infringed by others, or is subject
to any outstanding order, decree, judgment, or stipulation.  No litigation (or
other proceedings in or before any court or other governmental, adjudicatory,
arbitral, or administrative body) relating to the Proprietary Information is
pending or, to the Company's knowledge, threatened, nor, to the best of the
Company's knowledge, is there any basis for any such litigation or proceeding.
The Company maintains adequate and sufficient security measures for the
preservation of the secrecy and proprietary nature of the Proprietary
Information.
<PAGE>

                                      -16-

          (c) (i) Neither the Company nor, to the Company's knowledge, any of
its employees has infringed or made unlawful use of, or is infringing or making
unlawful use of, any proprietary or confidential information of any Person,
including without limitation any former employer of any past or present employee
or consultant of the Company; and (ii) to the Company's knowledge, the
activities of the Company's employees in connection with their employment do not
violate any agreements or arrangements that any such employees or consultants
have with any former employer or any other Person.  No litigation (or other
proceedings in or before any court or other governmental, adjudicatory,
arbitral, or administrative body) charging the Company with infringement or
unlawful use of any patent, trademark, copyright, or other proprietary right is
pending or, to the Company's knowledge, threatened, nor is there any basis for
any such litigation or proceeding.

          (d) No officer, director, employee, partner, member or consultant of
the Company, to the Company's knowledge, is presently obligated under or bound
by any agreement or instrument, or any judgment, decree, or order of any court
of administrative agency, that (i) conflicts or may conflict with his or her
agreements and obligations to use his or her reasonable best efforts to promote
the interests of the Company, (ii) conflicts or may conflict with the business
or operations of the Company as presently conducted or as proposed to be
conducted, or (iii) restricts or may restrict the use or disclosure of any
information that may be useful to the Company.

          2.21  Insurance.  Schedule 2.21 lists the policies of theft, fire,
                ---------   -------- ----
liability, worker's compensation, life, property and casualty, directors' and
officers', and other insurance owned or held by the Company and the basis on
which such policies provide coverage.  Such policies of insurance are maintained
with financially sound and reputable insurance companies, funds, or
underwriters, are of the kinds and cover such risks, and are in such amounts and
with such deductibles and exclusions, as are consistent with prudent business
practice.  All such policies are, and at all times since the respective dates
set forth in Schedule 2.21, have been, in full force and effect, are sufficient
             -------------
for compliance in all respects by the Company with all requirements of law and
of all agreements to which it is a party, and provide that they will remain in
full force and effect through the respective dates set forth in Schedule 2.21,
                                                                -------------
and will not terminate or lapse or otherwise be affected in any way by reason of
the transactions contemplated hereby.

          2.22  Governmental and Other Third-Party Consents.  Except as set
                -------------------------------------------
forth on Schedule 2.22, no consent, approval, or authorization of, or
         -------- ----
registration, designation, declaration, or filing with, any governmental
authority, federal or other, or any other person is required on the part of the
Company in connection with its execution, delivery, or performance of this
Agreement and its consummation of the transactions contemplated hereby, other
than pursuant to any applicable federal or state securities laws, or the
continued conduct of the present business of the Company after the Closing Date.

          2.23  Brokers.  No finder, broker, agent, or other intermediary has
                -------
acted
<PAGE>

                                      -17-

for or on behalf of the Company in connection with the negotiation or
consummation of the transactions contemplated hereby, and no fee will be payable
by the Company to any such person in connection with such transactions.

          2.24  Compliance with Other Instruments, Laws, Etc.  The Company has
                --------------------------------------------
complied with, and is in compliance with, (i) all laws, statutes, governmental
regulations, judicial or administrative tribunal orders, judgments, writs,
injunctions, decrees, and similar commands applicable to it and its business,
and all unwaived terms and provisions of all agreements, instruments, and
commitments to which it is a party or to which it or any of its assets or
properties is subject, except for any non-compliances that, either individually
and in the aggregate, have not had and could not reasonably be expected to have
a Material Adverse Effect, and (ii) its charter documents and by-laws, each as
amended to date.  The Company has not committed, been charged with, or, to the
Company's knowledge, been under investigation with respect to, nor does there
exist, any violation by the Company of any provision of any federal, state, or
local law or administrative regulation, except for any violations that, both
singly or in the aggregate, have not had and could not reasonably be expected to
have a material adverse effect on the business, prospects, results of operations
or financial condition of the Company.  The Company has and maintains all
licenses, permits, and other authorizations from all such governmental
authorities that are legally required for the conduct of its business or in
connection with the ownership or use of its properties, except for any licenses,
permits, and other authorizations, the failure to obtain or maintain which in
effect, both singly or in the aggregate, has not had and could not reasonably be
expected to have a material adverse effect on the business, prospects, results
of operations or financial condition, and all of which are in full force and
effect in all material respects, and true and complete copies of all of which
have been delivered to AC.

          2.25  Compliance with Securities Laws.  Assuming the accuracy of the
                -------------------------------
representations of AC contained in Section 3 hereof, the offer, issuance, and
delivery of the Purchased Securities as contemplated by this Agreement are
exempt from the registration requirements of the Securities Act, and are exempt
from registration or qualification under applicable states' securities laws.
Neither the Company nor anyone acting on its behalf will hereafter offer to
sell, solicit offers to buy, or sell any securities of the Company so as to
subject the offer, issuance, and sale of the Purchased Securities to the
registration requirements of the Securities Act.

          2.26  Real Property Holding Corporation.  The Company hereby
                ---------------------------------
represents that it is not a "United States real property holding corporation"
within the meaning of Section 897 of the Code, as amended, and Treasury
Regulation (S)1.897-2.

          2.27  Foreign Corrupt Practices Act.  The Company has not taken any
                -----------------------------
action which would cause it to be in violation of the Foreign Corrupt Practices
Act of 1977, as amended, or any rules or regulations thereunder.  To the
Company's knowledge, there is not now, and there has never been, any employment
by the Company of, or beneficial ownership in the Company by, any governmental
or political official in any
<PAGE>

                                      -18-

country in the world.

          2.28 Year 2000.  Except as to functions where the failure to
               ---- ----
accomplish the following will not have a Material Adverse Effect, all computer
software programs, source code, object code, data and documentation used by the
Company will (a) accurately process date information before, during and after
January 1, 2000, including, but not limited to, accepting date input, providing
date output and performing calculations on dates or portions of dates; (b)
function accurately and without interruption before, during and after January 1,
2000 without any change in operations associated with the advent of the new
century; and (c) store and provide output of date information in ways that are
unambiguous as to century.

          2.29  Disclosure.  No representation or warranty by the Company in
                ----------
this Agreement, in any schedule to this Agreement or in the draft of the Form
S-1 dated November 16, 1999 (the "Form S-1") provided by the Company to AC,
                                  --------
contains any untrue statement of a material fact or omits to state a material
fact required to be stated herein or necessary to make the statements contained
herein not false or misleading, provided, however, that all financial
information in such draft registration statement is superceded by the financial
statements referred in Section 2.8. There is no fact or circumstance relating
specifically to the business or condition of the Company that could reasonably
be expected to result in a Material Adverse Effect that is not disclosed in a
Schedule attached hereto or in the Form S-1.

          2A.  Covenant Pending Closing.  The Company shall use its best efforts
               ------------------------
to deliver to AC the Final Audited Financial Statements (as defined in Section
5.10 below) on or before December 8, 1999.

     3.  Representations and Warranties of AC. AC hereby represents and warrants
         ------------------------------------
that:

          3.1  Authorization.  AC has full power and authority to enter into
               -------------
this Agreement and such agreement constitutes its valid and legally binding
obligation, enforceable against AC in accordance with its terms.

          3.2  Purchase Entirely for Own Account.  AC is acquiring the Purchased
               ----------------------------------
Securities for investment for AC's own account, not as a nominee or agent
(provided that loans from affiliates for the purchase price of the Purchased
Securities shall not constitute action as a nominee or agent), and not with a
view to the resale or distribution of any part thereof.  AC has no present
intention of selling, granting any participation in or otherwise distributing
the same.  By executing this Agreement, AC further represents that AC 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 Purchased Securities.
<PAGE>

                                      -19-

          3.3  Investment Experience.  AC is an investor in securities of
               ---------------------
companies in the development stage and acknowledges that it is able to fend for
itself, can bear the economic risk of its investment, and has such knowledge and
experience in financial or business matters that it is capable of evaluating the
merits and risks of the investment in the Common Stock.  AC also represents it
has not been organized for the purpose of acquiring the Purchased Securities.

          3.4  Accredited Investor. AC is an "accredited investor" within the
               -------------------
meaning of Rule 501 of Regulation D, as promulgated by the Securities and
Exchange Commission, as presently in effect.

          3.5  Restricted Securities.  AC understands that the Purchased
               ---------------------
Securities are "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Securities Act only
in certain limited circumstances.

          3.6  Legends.  It is understood that the certificates or other
               -------
instruments evidencing the Purchased Securities may bear one or all of the
legends in substantially the form specified below:

          "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
          1933, AS AMENDED.  THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
          HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH
          RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN EXEMPTION THEREFROM."

     4.   REPURCHASE OF SECURITIES.
          ---------- -- ----------

          4.1  Right to Put Securities.  At any time and from time to time, on
               ----- -- --- ----------
or after January 1, 2001 (the "Put Exercise Date"), in the event that the
                               -----------------
Company has not consummated an underwritten public offering of its capital stock
registered pursuant to the Securities Act on or before the Put Exercise Date, AC
may, by written notice to the Company (the "Put Notice"), elect to sell to the
                                            ----------
Company (and the Company hereby agrees to repurchase from such holders) (the
"Put Right"), at the Repurchase Price specified in Section 4.4 hereof, all (but
 ---------
not less than all) of the Purchased Shares then held by AC (the "Put Shares").
                                                                 ----------

          4.2  Put Closing.  The closing (the "Put Closing") shall take place at
               --- -------
the offices of the Company at 10:00 a.m. (Boston time) on a date, to be
specified in the Put Notice, which date shall be not less than fourteen (14)
days after the date of the Put Notice (the "Put Closing Date"), or at such other
                                            ----------------
place or on such other date as the Company and AC shall agree.  At the closing,
the holders of the Put Shares will deliver to the Company, free and clear of all
liens and encumbrances, a certificate or certificates evidencing the Put Shares
then to be purchased by the Company (properly endorsed or
<PAGE>

                                      -20-

accompanied by stock powers or similar appropriate documentation or authority to
transfer) against payment of the Repurchase Price to such holders in the manner
specified in Section 4.3 hereof. Except to the extent prohibited by applicable
law, prior to the Put Closing Date, the Company will provide AC with all
available information that may be material to the exercise of AC's rights under
this Section 4, including any plans or proposals for any mergers, sales of
assets, acquisitions and substantial sales of stock (either by its stockholders
or through new issuances).

          4.3. Payment.  The Company shall pay the Repurchase Price at any
               -------
closing under Section 4.2 hereof out of funds legally available therefor in cash
or immediately available funds in three installments as follows:  (a) one-half
at the Put Closing; (b) one-fourth on or before the later to occur of March 31,
2001 and the date which is three months after the Put Closing Date; and (c)
one-fourth on or before the later to occur of June 30, 2001 and the date which
is six months after the Put Closing Date.  If the funds of the Company legally
available for the purchase of the Put Shares are insufficient to pay the
Repurchase Price when due in accordance with the foregoing sentence, those funds
which are legally available will be used to purchase the maximum possible number
of Put Shares ratably on the basis of the number of Put Shares that would be
purchased on such date if the funds of the Company legally available therefor
had been sufficient to purchase all Put Shares required to be purchased on such
date.  At any time thereafter when additional funds of the Company become
legally available for the purchase of the remaining Put Shares, such funds will
be used, as soon as practicable, to purchase the balance of the Put Shares that
the Company was theretofore obligated to purchase, ratably on the basis and on
the dates set forth in the first sentence.  In the event that any portion of the
Repurchase Price is not paid as a result of any insufficiency of legally
available funds or otherwise, until such time as the unpaid portion of the
Repurchase Price and any interest thereon is paid to the holders of the Put
Shares in full, (a) the holders of the Put Shares shall retain all rights
hereunder and in connection with the Put Shares (including all rights under this
Agreement and the Registration Rights Agreement), and (b) AC shall, by delivery
of a rescission notice to the Company, at any time or from time to time, be
entitled to rescind the put of the Put Shares by giving written notice of such
rescission (the "Rescission Notice") whereupon the Company shall immediately
                 -----------------
return to AC the uncancelled original stock certificate(s) representing the Put
Shares, provided that AC shall immediately repay to the Company any portion of
the Repurchase Price theretofor paid.  Unless and until the Company receives
such Rescission Notice, the unpaid portion of the Repurchase Price shall remain
an obligation of the Company and shall become due and payable, in cash or
immediately available funds, as soon as there are funds legally available
therefor.

          4.4. Repurchase Price for Put Shares;  Additional Interest Rate.  The
               ----------------------------------------------------------
repurchase price (the "Repurchase Price") of the Put Shares shall be equal to
                       ---------- -----
$4,000,000 plus interest, which interest shall accrue commencing on January 1,
2001 through the date on which the entire Repurchase Price has been paid at a
rate per annum equal to eight percent (8%) (compounded annually),
notwithstanding any partial payments of the Repurchase Price.  Such interest
shall become due and payable on the date when the
<PAGE>

                                      -21-

Repurchase Price is due and payable (in accordance with Section 4.3) or, if not
then paid, on such later date as the Repurchase Price (or any portion thereof)
is paid. In the event that the Company shall fail to make any payments of the
Repurchase Price when due (in accordance with Section 4.3), then an additional
interest rate of seven percent (7%) per annum (compounded annually) for an
aggregate interest rate of fifteen percent (15%) (or such lesser amount if
required by applicable usury laws) will accrue on such amounts commencing on the
date on which the Company failed to make such payment when due and through the
date on which the entire amount has been paid.

          4.5 Termination; Acceleration.  In the event that the Company
              -----------  ------------
consummates an underwritten public offering of its capital stock registered
pursuant to the Securities Act on or before January 1, 2001, then the Put Right
set forth in this Section 4 shall automatically terminate.  In addition, the
Company shall give AC written notice at least fourteen (14) days prior to the
consummation of any Liquidity Event, and in the event of such a Liquidity Event,
AC shall by written notice to the Company given at any time prior to the
consummation of such Liquidity Event, either (a) accelerate the put right under
this Section 4, whereupon the obligations of the Company under this Section 4
shall be fulfilled either immediately prior to or simultaneously with the
consummation of such Liquidity Event, or (b) waive the Put Right (or give a
Rescission Notice in the event that AC has already exercised such Put Right, in
which case AC shall immediately repay to the Company any portion of the
Repurchase Price theretofore paid and the Company shall immediately return to AC
the uncancelled original stock certificate(s) representing the Put Shares) under
this Section 4.  The term "Liquidity Event" shall mean (x) an underwritten
                           ---------------
initial public offering of the Company's capital stock which occurs after
January 1, 2001, (y) the sale of all or substantially all of the property and
assets of the Company in one transaction or a series of one or more related
transactions, or (z) the acquisition of the Company by another person or entity
by means of stock purchase (whether by transfer or outstanding shares or through
new issuances), merger, consolidation or otherwise which would result in the
exchange of shares of capital stock of the Company for cash, securities or other
consideration paid by the acquiring person or entity, or any similar
transaction.

     5.  Conditions of AC's Obligations at Closing.  The obligation of AC to
         -----------------------------------------
purchase the Purchased Securities from the Company is subject to the fulfillment
on or before the Closing of each of the following conditions:

          5.1  Representations and Warranties.  The representations and
               ------------------------------
warranties of the Company contained in Section 2 shall be true on and as of the
date hereof with the same effect as though such representations and warranties
had been made on and as of the Closing Date.

          5.2  Performance.  The Company shall have performed and complied with
               -----------
all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing.
<PAGE>

                                      -22-

          5.3  Compliance Certificate.  The President of the Company shall
               ----------------------
deliver to AC at the Closing a certificate stating that the conditions specified
in Sections 5.1 and 5.2 have been fulfilled.

          5.4  Qualifications.  All authorizations, approvals or permits, if
               --------------
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Purchased Securities pursuant to this Agreement shall be duly obtained and
effective as of the Closing.

          5.5  Marketing Agreement.  The Company shall have entered into,
               -------------------
executed and delivered the Marketing Agreement.

          5.6  Stockholder Approval.  The Company shall have obtained all
               --------------------
requisite stockholder approval in order to consummate the transactions
contemplated by this Agreement.

          5.7  Waivers.  The Company shall have obtained the consents of any
               -------
third parties required to consummate the transactions contemplated by this
Agreement and waivers from all persons who have pre-emptive rights, first
refusal rights, participation rights or other similar rights to purchase, with
respect to the Purchased Securities.

          5.8  Legal Opinion of Hale and Dorr LLP.  AC shall have received an
               ----------------------------------
executed legal opinion of Hale and Dorr LLP, counsel to the Company, in
substantially the form attached hereto as Exhibit B.
                                          ---------

          5.9  Registration Rights Agreement.  The Company shall have entered
               -----------------------------
into, executed and delivered the Amended and Restated Registration Rights
Agreement, in substantially the form attached hereto as Exhibit C (the
                                                        ---------
"Registration Rights Agreement").
 -----------------------------

          5.10  Financial Statements.  The Company shall have delivered to AC,
                ---------------------
and signed by Pricewaterhouse Coopers LLP, the final audited consolidated
balance sheet of the Company as of December 31, 1996, 1997 and 1998 and as of
September 30, 1999 and the related consolidated statements of income, changes in
stockholders' equity and cash flows for the years ended December 31, 1996, 1997
and 1998 and for the nine month period ended September 30, 1999 (the "Final
                                                                      -----
Audited Financial Statements"), which shall be the same in all material respects
----------------------------
to the financial statements attached hereto as Exhibit D and acceptable to AC in
                                               ---------
its sole discretion.

     6.  Conditions of the Company's Obligations at Closing.  The obligation of
         --------------------------------------------------
the Company to issue and sell the Purchased Securities to AC is subject to the
fulfillment on or before the Closing of each of the following conditions:

          6.1  Representations and Warranties.  The representations and
               ------------------------------
warranties of AC contained in Section 3 shall be true on and as of the date
hereof with the
<PAGE>

                                      -23-

same effect as though such representations and warranties had been made on and
as of the Closing Date.

          6.2  Qualifications.  All authorizations, approvals or permits, if
               ---------------
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Purchased Securities pursuant to this Agreement shall be duly obtained and
effective as of the Closing.

          6.3  Marketing Agreement.  Andersen shall have entered into, executed
               -------------------
and delivered the Marketing Agreement.

          6.4  Registration Rights Agreement.  AC shall have entered into,
               -----------------------------
executed and delivered the Registration Rights Agreement.

     7.  Purchaser Rights.
         ----------------

          7.1  Information Rights.  In the event that the Company does not
               ------------------
consummate an underwritten initial public offering of its common stock on or
before February 14, 2000, and so long as ac holds not less than 25% of the
Purchased Shares and the Company has not consummated an underwritten public
offering of its capital stock registered pursuant to the Securities Act, then AC
shall be entitled to the following:

          (a) Annual Statements.  As soon as available and in any event within
              -----------------
ninety (90) days after the close of each fiscal year, commencing with the fiscal
year ending on December 31, 1999, the Company will deliver a consolidated
balance sheet and statements of income, retained earnings, and cash flows,
audited by a "big five" independent public accounting firm selected by the
Company, showing the financial condition of the Company as of the close of such
fiscal year and the results of its operations during such fiscal year.  Each of
the financial statements delivered hereunder will be certified by such
accounting firm without material qualification to have been prepared in
accordance with GAAP consistently applied (except for changes in the application
of such principles that have been approved by the Company's Board of Directors).

          (b) Quarterly and Monthly Statements.
              --------------------------------

          (i) As soon as available, and in any event within forty-five (45) days
after the end of each of the first three fiscal quarters of each fiscal year,
commencing with the fiscal quarter ending March 31, 2000, the Company will
deliver an unaudited consolidated balance sheet and statements of income,
retained earnings, and cash flows of the Company and its Subsidiaries as of the
end of and for such fiscal quarter, certified by the chief financial officer (or
other officer acting in a similar capacity, including the Treasurer) of the
Company to be true and correct and to have been prepared in accordance with GAAP
consistently applied (except for changes in the application of such principles
that have been approved by the Company's Board of Directors), subject to the
absence of footnotes and to adjustments consisting of normal
<PAGE>

                                      -24-

year-end accruals, the effect of which, both individually and in the aggregate,
is not material.

          (ii) As soon as available and in any event within thirty (30) days
after the end of each month, commencing with the month ending January 31, 2000,
the Company will deliver unaudited consolidated balance sheets and statements of
income and cash flows of the Company and its Subsidiaries as of the end of each
such month, as well as summary information as to backlog and bookings as of such
month-end, certified by the treasurer or chief financial officer (or other
officer acting in a similar capacity) of the Company to be true and correct and
to have been prepared in accordance with GAAP consistently applied (except for
changes in the application of such principles that have been approved by the
Company's Board of Directors), subject to the absence of footnotes and to
adjustments consisting of normal year-end accruals, the effect of which, both
individually and in the aggregate, is not material.

          7.2  Pre-Emptive Rights.  So long as AC shall hold not less than 25%
               ------------------
of the Purchased Shares, AC shall be entitled to the rights, and the Company
shall be bound by the obligations, set forth in this Section 7.2.

          (a) Right to Purchase.  If at any time after the Closing the Company
              -----------------
authorizes the offer, issuance, or sale, or offers, issues or sells to any
Person (the "Offeree") any shares of capital stock or other securities (whether
             -------
convertible or not) of the Company (whether as newly issued shares or other
securities or from the Company's treasury) in an offering or issuance not
registered under the Securities Act, the Company will first offer to sell, by
written notice, to AC a portion (such holder's "Portion") of such capital stock
                                                -------
or other securities authorized to be offered, issued or sold, or proposed to be
offered, issued or sold equal to the product obtained by multiplying (i) the
number of such shares or securities authorized to be offered, issued or sold, or
proposed to be offered, issued or sold, by (ii) the quotient obtained by
dividing (A) the number of shares of Common Stock held by AC (for this purpose
assuming the conversion into Common Stock of all other securities held by AC at
such time, including without limitation the Warrants), by (B) the sum of (I) the
aggregate number of shares of Common Stock issued and outstanding as of such
date and (II) the aggregate number of shares of Preferred Stock issued and
outstanding as of such date (on an as-converted basis).

          (b) Procedure.  AC will be entitled (but not obligated) to purchase
              ---------
all or part of such holder's Portion at the same price and on the same terms as
such stock or securities are to be offered to the Offeree.  AC may exercise such
purchase rights within 20 days after receipt of written notice from the Company
describing in reasonable detail the stock or securities to be offered to the
Offeree, the purchase price thereof, the payment terms, and such holder's
percentage allotment.  If AC fails in whole or in part to exercise the purchase
rights hereunder within such 20-day period (other than by reason of the
Company's failure to comply with the provisions of this Section 7.2(b)), then
the Company may sell so much, and only so much, of any Portion as to which AC,
having been offered the right to purchase such Portion in accordance with all of
the provisions of
<PAGE>

                                      -25-

this Section 7.2, have exercised such purchase rights, to the Offeree at the
same price and on the same terms as those offered to such holder, provided, that
in the event that such shares or other securities are not sold to the Offeree
within 60 days following the lapse of the 20-day exercise period provided to AC,
such unsold shares or other securities will once again be subject to the
purchase rights of AC hereunder. In the event that shares of Common Stock, other
shares of capital stock or other securities are authorized to be issued and sold
by the Company for services, property, or other non-cash consideration, AC will
be allowed to participate in such issue and sale by substituting cash in the
amount of the fair market value, per share, of such non-cash consideration.

          (c) Excluded Transactions.  The prohibitions and rights provided in
              ---------------------
this Section 7 will not apply to (i) shares of Common Stock issued by the
Company pursuant to stock dividends, stock splits, recapitalizations, and
similar transactions; (ii) shares of Common Stock issued upon the conversion of
shares of the Series A Preferred Stock, the Series B Preferred Stock and the
Series C Preferred Stock outstanding as of the date of this Agreement; and (iii)
options or other rights to purchase or receive Common Stock, and any shares of
Common Stock issued upon the exercise thereof or upon such a purchase, in each
case to officers, directors, consultants, agents and employees of the Company
pursuant to the Company's 1998 Stock Option Plan (in effect as of the date
hereof and as amended from time to time (except for amendments which increase
the number of shares reserved under such 1998 Stock Option Plan)); (iv) shares
of Common Stock or other shares of capital stock issuable upon the exercise of
options and warrants specifically identified on Schedule 2.5(a) or 2.5(b)
                                                ---------------    ------
hereof; provided, that such issuance is otherwise permitted under the terms of
        --------
the Company's Certificate of Incorporation.

          (d) Termination.  The rights and obligations set forth in this Section
              -----------
7.2 shall automatically terminate upon the consummation by the Company of an
underwritten initial public offering of its common stock pursuant to the
Securities Act.

          7.3  Restriction on Transfer.  AC agrees that it shall not transfer to
               -----------------------
persons (other than its affiliates, who shall be bound by the provisions of this
Section) the shares of Common Stock issuable upon the exercise of the Warrant
and the warrants issuable pursuant to that certain Warrant Purchase Agreement,
dated the date hereof, between the Company and AC during the 360 days following
the consummation by the Company of an underwritten initial public offering of
its common stock pursuant to the Securities Act without the consent of the
Company.

     8.   Miscellaneous.
          -------------

          8.1  Survival of Obligations.  The terms and provisions of Sections 4
               -----------------------
and 7 hereof shall survive the execution and delivery of this Agreement and the
Closing for so long as by their respective terms they shall be in force and
effect.
<PAGE>

                                      -26-

          8.2  Successors and Assigns.  Except as otherwise provided herein, the
               ----------------------
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any Purchased Securities).

          8.3  Governing Law.  This Agreement shall be governed by and construed
               -------------
under the laws of the Commonwealth of Massachusetts.

          8.4  Counterparts.  This Agreement may be executed in two or more
               ------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

          8.5  Titles and Subtitles.  The titles and subtitles used in this
               --------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.

          8.6  Notices.  Unless otherwise provided, any notice required or
               -------
permitted under this Agreement shall be given in writing and shall be deemed
effective given upon personal delivery to the party to be notified, upon
confirmation of facsimile transmission or upon deposit with the United States
Post Office, by registered or certified mail, postage prepaid and addressed to
the party to be notified at the address indicated for such party on the
signature page hereof, or at such other address as such party may designate by
ten days' advance written notice to the other parties.

          8.7  Finder's Fee.  Each party represents that it neither is nor will
               ------------
be obligated for any finders' fee or commission in connection with this
transaction.  AC agrees to indemnify and to hold harmless the Company from any
liability for any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability or asserted
liability) for which AC or any of its officers, partners, employees or
representatives is responsible.  The Company agrees to indemnify and hold
harmless AC from any liability for any commission or compensation in the nature
of a finders' fee (and the costs and expenses of defending against such
liability or asserted liability) for which the Company or any of its officers,
employees or representatives is responsible.

          8.8  Expenses.  Each party shall bear its own costs and expenses
               --------
incurred in connection with the negotiation, execution, delivery and performance
of this Agreement, including the costs and expenses of legal counsel.

          8.9  Amendments and Waivers.  Any term of this Agreement may be
               ----------------------
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the parties hereto.  Any
amendment or waiver effected in accordance with this paragraph shall be binding
upon each holder of any securities purchased under this Agreement at the time
outstanding (including securities into which
<PAGE>

                                      -27-

such securities are convertible), each future holder of all such securities and
the Company.

          8.10 Severability.  If one or more provisions of this Agreement are
               ------------
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of this Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.

          8.11 Aggregation of Stock.  All shares of Common Stock and Preferred
               --------------------
Stock and any other securities held or acquired by affiliated entities or
persons shall be aggregated together for the purpose of determining the
availability of any rights under this Agreement.

          8.12 Entire Agreement.  This Agreement, the exhibits and schedules
               ----------------
hereto and the documents referred to herein constitute the entire agreement
among the parties 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.

          8.13 Disclosure.  AC hereby acknowledges and agrees that the Company
               ----------
shall be entitled to disclose the existence and terms of this Agreement, only to
the extent required by law, in any registration statement, prospectus, report or
other document filed by the Company pursuant to any state or federal securities
laws or other applicable laws.  The Company agrees to provide to AC a reasonable
opportunity to review and consent to such disclosure (which consent shall not be
unreasonably withheld or delayed) in advance of such filing.
<PAGE>

                                      -28-

     IN WITNESS WHEREOF, the parties have executed this Common Stock and Warrant
Purchase Agreement as of the date first above written.

                              PRIME RESPONSE, INC.

                              By: /s/ Peter J. Boni
                                 --------------------------------

                                  Name: Peter J. Boni
                                       --------------------------

                                  Title: Chief Executive Officer and
                                         President
                                        ----------------------------

                              Address:    150 Cambridge Park Drive
                                          Cambridge, MA 02140
                              Attention:  President and Chief Executive
                                          Officer

                              ANDERSEN CONSULTING LLP

                              By: /s/ J. Patrick O'Halloran

                                  Name: J. Patrick O'Halloran
                                       ---------------------------------
                                  Title: Partner
                                        --------------------------------
                              Address:    333 South Seventh Street
                                          Minneapolis, MN  55402
<PAGE>

                                      -29-

                              AC VENTURES B.V.

                              By: /s/ M.G. McGrath
                                 ---------------------------------
                                  Name: M.G. McGrath
                                       ---------------------------
                                  Title: Chief Financial Officer
                                        --------------------------

                              Address:  c/o Andersen Consulting LLP
                                        1661 Page Mill Road
                                        Palo Alto, CA  94304

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