Document:

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                                                                    EXHIBIT 10.4

                           PRIME RESPONSE GROUP, INC.

                             STOCK OPTION AGREEMENT
                             ----------------------

          RECITALS
          --------

          A. The Board has adopted the Plan for the purpose of retaining the
services of selected Employees, non-employee members of the Board or the board
of directors of any Parent or Subsidiary and consultants and other independent
advisors in the service of the Corporation (or any Parent or Subsidiary).

          B. Optionee is to render valuable services to the Corporation (or a
Parent or Subsidiary), and this Agreement is executed pursuant to, and is
intended to carry out the purposes of, the Plan in connection with the
Corporation's grant of an option to Optionee.

          C. All capitalized terms in this Agreement shall have the meaning
assigned to them in the attached Appendix.

          NOW, THEREFORE, it is hereby agreed as follows:

          1.  GRANT OF OPTION.   The Corporation hereby grants to Optionee, as
              ---------------
of the Grant Date, an option to purchase up to the number of Option Shares
specified in the Grant Notice. The Option Shares shall be purchasable from time
to time during the option term specified in Paragraph 2 at the Exercise Price.

          2.  OPTION TERM.  This option shall have a term of ten (10) years
              -----------
measured from the Grant Date and shall accordingly expire at the close of
business on the Expiration Date, unless sooner terminated in accordance with
Paragraph 5 or 6.

          3.  LIMITED TRANSFERABILITY.  During Optionee's lifetime, this option
              -----------------------
shall be exercisable only by Optionee and shall not be assignable or
transferable other than by will or by the laws of descent and distribution
following Optionee's death .

          4.  DATES OF EXERCISE.  This option shall become exercisable for the
              -----------------
Option Shares in one or more installments as specified in the Grant Notice. As
the option becomes exercisable for such installments, those installments shall
accumulate, and the option shall remain exercisable for the accumulated
installments until the Expiration Date or sooner termination of the option term
under Paragraph 5 or 6.

          5.  CESSATION OF SERVICE.  The option term specified in Paragraph 2
              --------------------
shall terminate (and this option shall cease to be outstanding) prior to the
Expiration Date should any of the following provisions become applicable:

              (a) Should Optionee cease to remain in Service for any reason
(other than death, Disability or Misconduct) while this option is outstanding,
then Optionee shall have a period of three (3) months (commencing with the date
of such cessation of Service) during which
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to exercise this option, but in no event shall this option be exercisable at any
time after the Expiration Date.

              (b)  Should Optionee die while this option is outstanding, then
the personal representative of Optionee's estate or the person or persons to
whom the option is transferred pursuant to Optionee's will or in accordance with
the laws of inheritance shall have the right to exercise this option. Such right
shall lapse, and this option shall cease to be outstanding, upon the earlier of
                                                                     -------
(i) the expiration of the twelve (12)-month period measured from the date of
Optionee's death or (ii) the Expiration Date.

              (c)  Should Optionee cease Service by reason of Disability while
this option is outstanding, then Optionee shall have a period of twelve (12)
months (commencing with the date of such cessation of Service) during which to
exercise this option. In no event shall this option be exercisable at any time
after the Expiration Date.

          Note:  Exercise of this option on a date later than three (3) months
          ----
          following cessation of Service due to Disability will result in loss
          of favorable Incentive Option treatment, unless such Disability
          constitutes Permanent Disability.  In the event that Incentive Option
          treatment is not available, this option will be taxed as a Non-
          Statutory Option upon exercise.

              (d)  During the limited period of post-Service exercisability,
this option may not be exercised in the aggregate for more than the number of
Option Shares in which Optionee is, at the time of Optionee's cessation of
Service, vested pursuant to the Vesting Schedule specified in the Grant Notice
or the special vesting acceleration provisions of Paragraph 6. Upon the
expiration of such limited exercise period or (if earlier) upon the Expiration
Date, this option shall terminate and cease to be outstanding for any vested
Option Shares for which the option has not been exercised. To the extent
Optionee is not vested in the Option Shares at the time of Optionee's cessation
of Service, this option shall immediately terminate and cease to be outstanding
with respect to those shares.

              (e) Should Optionee's Service be terminated for Misconduct, then
this option shall terminate immediately and cease to remain outstanding.

          6.  ACCELERATED VESTING.
              -------------------

              (a)  In the event of any Corporate Transaction, the Option Shares
at the time subject to this option but not otherwise vested shall automatically
vest in full so that this option shall, immediately prior to the effective date
of the Corporate Transaction, become fully exercisable for all of the Option
Shares as fully-vested shares and may be exercised for any or all of those
vested shares. However, the Option Shares shall NOT vest on such an accelerated
basis if and to the extent: (i) this option is assumed by the successor
corporation (or parent thereof) in the Corporate Transaction and the
Corporation's repurchase rights with respect to the unvested Option Shares are
assigned to such successor corporation (or parent thereof) or (ii) this option
is to be replaced with a cash incentive program of the successor corporation
which preserves the spread existing on the unvested Option Shares at the time of
the Corporate Transaction (the

                                       2
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excess of the Fair Market Value of those Option Shares over the Exercise Price
payable for such shares) and provides for subsequent payout in accordance with
the same Vesting Schedule applicable to those unvested Option Shares as set
forth in the Grant Notice.

              (b)  Immediately following the Corporate Transaction, this option
shall terminate and cease to be outstanding, except to the extent assumed by the
successor corporation (or parent thereof) in connection with the Corporate
Transaction.

              (c)  If this option is assumed in connection with a Corporate
Transaction, then this option shall be appropriately adjusted, immediately after
such Corporate Transaction, to apply to the number and class of securities which
would have been issuable to Optionee in consummation of such Corporate
Transaction had the option been exercised immediately prior to such Corporate
Transaction, and appropriate adjustments shall also be made to the Exercise
Price, provided the aggregate Exercise Price shall remain the same.
       --------

              (d)  The Option Shares may also vest upon an accelerated basis in
accordance with the terms and conditions of any special addendum attached to
this Agreement.

              (e)  This Agreement shall not in any way affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise change its capital or
business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.

              7.  ADJUSTMENT IN OPTION SHARES.  Should any change be made to the
                  ---------------------------
Common Stock by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration, appropriate adjustments shall be made to (i) the total number
and/or class of securities subject to this option and (ii) the Exercise Price in
order to reflect such change and thereby preclude a dilution or enlargement of
benefits hereunder.

              8.  STOCKHOLDER RIGHTS.  The holder of this option shall not have
                  ------------------
any stockholder rights with respect to the Option Shares until such person shall
have exercised the option, paid the Exercise Price and become the record holder
of the purchased shares.

              9.  MANNER OF EXERCISING OPTION.
                  ---------------------------

              (a)  In order to exercise this option with respect to all or any
part of the Option Shares for which this option is at the time exercisable,
Optionee (or any other person or persons exercising the option) must take the
following actions:

                   (i) Execute and deliver to the Corporation a Purchase
        Agreement for the Option Shares for which the option is exercised.

                   (ii) Pay the aggregate Exercise Price for the purchased
        shares in one or more of the following forms:

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                        (A)  cash or check made payable to the Corporation; or

                        (B)  a promissory note payable to the Corporation, but
              only to the extent authorized by the Plan Administrator in
              accordance with Paragraph 14.

              Should the Common Stock be registered under Section 12 of the 1934
              Act at the time the option is exercised, then the Exercise Price
              may also be paid as follows:

                        (C)  in shares of Common Stock held by Optionee (or any
              other person or persons exercising the option) for the requisite
              period necessary to avoid a charge to the Corporation's earnings
              for financial reporting purposes and valued at Fair Market Value
              on the Exercise Date; or

                        (D)  to the extent the option is exercised for vested
              Option Shares, through a special sale and remittance procedure
              pursuant to which Optionee (or any other person or persons
              exercising the option) shall concurrently provide irrevocable
              instructions (a) to a Corporation-designated brokerage firm to
              effect the immediate sale of the purchased shares and remit to the
              Corporation, out of the sale proceeds available on the settlement
              date, sufficient funds to cover the aggregate Exercise Price
              payable for the purchased shares plus all applicable Federal,
              state and local income and employment taxes required to be
              withheld by the Corporation by reason of such exercise and (b) to
              the Corporation to deliver the certificates for the purchased
              shares directly to such brokerage firm in order to complete the
              sale.

              Except to the extent the sale and remittance procedure is
utilized in connection with the option exercise, payment of the Exercise Price
must accompany the Purchase Agreement delivered to the Corporation in connection
with the option exercise.

              (iii)  Furnish to the Corporation appropriate documentation that
the person or persons exercising the option (if other than Optionee) have the
right to exercise this option.

              (iv) Execute and deliver to the Corporation such written
representations as may be requested by the Corporation in order for it to comply
with the applicable requirements of Federal and state securities laws.

              (v)  Make appropriate arrangements with the Corporation (or Parent
or Subsidiary employing or retaining Optionee) for the satisfaction of all
Federal, state and local income and employment tax withholding requirements
applicable to the option exercise.

                                       4
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              (b)  As soon as practical after the Exercise Date, the Corporation
shall issue to or on behalf of Optionee (or any other person or persons
exercising this option) a certificate for the purchased Option Shares, with the
appropriate legends affixed thereto.

              (c)  In no event may this option be exercised for any fractional
shares.

        10.  REPURCHASE RIGHTS.  ALL OPTION SHARES ACQUIRED UPON THE EXERCISE OF
             -----------------
THIS OPTION SHALL BE SUBJECT TO CERTAIN RIGHTS OF THE CORPORATION AND ITS
ASSIGNS TO REPURCHASE THOSE SHARES IN ACCORDANCE WITH THE TERMS SPECIFIED IN THE
PURCHASE AGREEMENT.

        11.  COMPLIANCE WITH LAWS AND REGULATIONS.
             ------------------------------------
              (a)  The exercise of this option and the issuance of the Option
Shares upon such exercise shall be subject to compliance by the Corporation and
Optionee with all applicable requirements of law relating thereto and with all
applicable regulations of any stock exchange (or the Nasdaq National Market, if
applicable) on which the Common Stock may be listed for trading at the time of
such exercise and issuance.

              (b)  The inability of the Corporation to obtain approval from any
regulatory body having authority deemed by the Corporation to be necessary to
the lawful issuance and sale of any Common Stock pursuant to this option shall
relieve the Corporation of any liability with respect to the non-issuance or
sale of the Common Stock as to which such approval shall not have been obtained.
The Corporation, however, shall use its best efforts to obtain all such
approvals.

        12.  SUCCESSORS AND ASSIGNS.  Except to the extent otherwise provided in
             ----------------------
Paragraphs 3 and 6, the provisions of this Agreement shall inure to the benefit
of, and be binding upon, the Corporation and its successors and assigns and
Optionee, Optionee's assigns and the legal representatives, heirs and legatees
of Optionee's estate.

        13.  NOTICES.  Any notice required to be given or delivered to the
             -------
Corporation under the terms of this Agreement shall be in writing and addressed
to the Corporation at its principal corporate offices. Any notice required to be
given or delivered to Optionee shall be in writing and addressed to Optionee at
the address indicated below Optionee's signature line on the Grant Notice. All
notices shall be deemed effective upon personal delivery or upon deposit in the
U.S. mail, postage prepaid and properly addressed to the party to be notified.

        14.  FINANCING.  The Plan Administrator may, in its absolute discretion
             ---------
and without any obligation to do so, permit Optionee to pay the Exercise Price
for the purchased Option Shares by delivering a full-recourse, interest-bearing
promissory note secured by those Option Shares. The payment schedule in effect
for any such promissory note shall be established by the Plan Administrator in
its sole discretion.

        15.  CONSTRUCTION.  This Agreement and the option evidenced hereby are
             ------------
made and granted pursuant to the Plan and are in all respects limited by and
subject to the terms of the Plan. All decisions of the Plan Administrator with
respect to any question or issue arising under

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the Plan or this Agreement shall be conclusive and binding on all persons having
an interest in this option.

        16.  GOVERNING LAW.  The interpretation, performance and enforcement of
             -------------
this Agreement shall be governed by the laws of the State of California without
resort to that State's conflict-of-laws rules.

        17.  STOCKHOLDER APPROVAL.  If the Option Shares covered by this
             --------------------
Agreement exceed, as of the Grant Date, the number of shares of Common Stock
which may be issued under the Plan as last approved by the stockholders, then
this option shall be void with respect to such excess shares, unless stockholder
approval of an amendment sufficiently increasing the number of shares of Common
Stock issuable under the Plan is obtained in accordance with the provisions of
the Plan.

        18.  ADDITIONAL TERMS APPLICABLE TO AN INCENTIVE OPTION.  In the event
             --------------------------------------------------
this option is designated an Incentive Option in the Grant Notice, the following
terms and conditions shall also apply to the grant:

              (a) This option shall cease to qualify for favorable tax treatment
as an Incentive Option if (and to the extent) this option is exercised for one
or more Option Shares: (i) more than three (3) months after the date Optionee
ceases to be an Employee for any reason other than death or Permanent Disability
or (ii) more than twelve (12) months after the date Optionee ceases to be an
Employee by reason of Permanent Disability.

              (b)  This option shall not become exercisable in the calendar year
in which granted if (and to the extent) the aggregate Fair Market Value
(determined at the Grant Date) of the Common Stock for which this option would
otherwise first become exercisable in such calendar year would, when added to
the aggregate value (determined as of the respective date or dates of grant) of
the Common Stock and any other securities for which one or more other Incentive
Options granted to Optionee prior to the Grant Date (whether under the Plan or
any other option plan of the Corporation or any Parent or Subsidiary) first
become exercisable during the same calendar year, exceed One Hundred Thousand
Dollars ($100,000) in the aggregate. To the extent the exercisability of this
option is deferred by reason of the foregoing limitation, the deferred portion
shall become exercisable in the first calendar year or years thereafter in which
the One Hundred Thousand Dollar ($100,000) limitation of this Paragraph 18(b)
would not be contravened, but such deferral shall in all events end immediately
prior to the effective date of a Corporate Transaction in which this option is
not to be assumed, whereupon the option shall become immediately exercisable as
a Non-Statutory Option for the deferred portion of the Option Shares.

              (c)  Should Optionee hold, in addition to this option, one or more
other options to purchase Common Stock which become exercisable for the first
time in the same calendar year as this option, then the foregoing limitations on
the exercisability of such options as Incentive Options shall be applied on the
basis of the order in which such options are granted.

                                       6
<PAGE>

                                    APPENDIX
                                    --------

          The following definitions shall be in effect under the Agreement:

          A.  AGREEMENT shall mean this Stock Option Agreement.
              ---------

          B.  BOARD shall mean the Corporation's Board of Directors.
              -----

          C.  CODE shall mean the Internal Revenue Code of 1986, as amended.
              ----

          D.  COMMON STOCK shall mean the Corporation's common stock.
              ------------

          E.  CORPORATE TRANSACTION shall mean either of the following
              ---------------------
stockholder-approved transactions to which the Corporation is a party:

              (i) a merger or consolidation in which securities possessing more
     than fifty percent (50%) of the total combined voting power of the
     Corporation's outstanding securities are transferred to a person or persons
     different from the persons holding those securities immediately prior to
     such transaction, or

             (ii) the sale, transfer or other disposition of all or
     substantially all of the Corporation's assets in complete liquidation or
     dissolution of the Corporation.

          F.  CORPORATION shall mean Prime Response Group, Inc., a Delaware
              -----------
corporation.

          G.  DISABILITY shall mean the inability of Optionee to engage in any
              ----------
substantial gainful activity by reason of any medically determinable physical or
mental impairment and shall be determined by the Plan Administrator on the basis
of such medical evidence as the Plan Administrator deems warranted under the
circumstances. Disability shall be deemed to constitute PERMANENT DISABILITY in
the event that such Disability is expected to result in death or has lasted or
can be expected to last for a continuous period of twelve (12) months or more.

          H.  EMPLOYEE shall mean an individual who is in the employ of the
              --------
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.

          I.  EXERCISE DATE shall mean the date on which the option shall have
              -------------
been exercised in accordance with Paragraph 9 of the Agreement.

          J.  EXERCISE PRICE shall mean the exercise price payable per Option
              --------------
Share as specified in the Grant Notice.

                                      A-1
<PAGE>

          K.  EXPIRATION DATE shall mean the date on which the option expires as
              ---------------
specified in the Grant Notice.

          L.  FAIR MARKET VALUE per share of Common Stock on any relevant date
              -----------------
shall be determined in accordance with the following provisions:

                    (i)  If the Common Stock is at the time traded on the Nasdaq
          National Market, then the Fair Market Value shall be the closing
          selling price per share of Common Stock on the date in question, as
          the price is reported by the National Association of Securities
          Dealers on the Nasdaq National Market. If there is no closing selling
          price for the Common Stock on the date in question, then the Fair
          Market Value shall be the closing selling price on the last preceding
          date for which such quotation exists.

                    (ii) If the Common Stock is at the time listed on any Stock
          Exchange, then the Fair Market Value shall be the closing selling
          price per share of Common Stock on the date in question on the Stock
          Exchange determined by the Plan Administrator to be the primary market
          for the Common Stock, as such price is officially quoted in the
          composite tape of transactions on such exchange. If there is no
          closing selling price for the Common Stock on the date in question,
          then the Fair Market Value shall be the closing selling price on the
          last preceding date for which such quotation exists.

                    (iii) If the Common Stock is at the time neither listed on
          any Stock Exchange nor traded on the Nasdaq National Market, then the
          Fair Market Value shall be determined by the Plan Administrator after
          taking into account such factors as the Plan Administrator shall deem
          appropriate.

          M.  GRANT DATE shall mean the date of grant of the option as specified
              ----------
in the Grant Notice.

          N.  GRANT NOTICE shall mean the Notice of Grant of Stock Option
              ------------
accompanying the Agreement, pursuant to which Optionee has been informed of the
basic terms of the option evidenced hereby.

          O.  INCENTIVE OPTION shall mean an option which satisfies the
              ----------------
requirements of Code Section 422.

          P.  MISCONDUCT shall mean the commission of any act of fraud,
              ----------
embezzlement or dishonesty by Optionee, any unauthorized use or disclosure by
Optionee of confidential information or trade secrets of the Corporation (or any
Parent or Subsidiary), or any other intentional misconduct by Optionee adversely
affecting the business or affairs of the Corporation (or any Parent or
Subsidiary) in a material manner. The foregoing definition shall not be deemed
to be inclusive of all the acts or omissions which the Corporation (or any
Parent or Subsidiary) may consider as grounds for the dismissal or discharge of
Optionee or any other individual in the Service of the Corporation (or any
Parent or Subsidiary).

                                      A-2
<PAGE>

          Q.  1934 ACT shall mean the Securities Exchange Act of 1934, as
              --------
amended.

          R.  NON-STATUTORY OPTION shall mean an option not intended to satisfy
              --------------------
the requirements of Code Section 422.

          S.  OPTION SHARES shall mean the number of shares of Common Stock
              -------------
subject to the option.

          T.  OPTIONEE shall mean the person to whom the option is granted as
              --------
specified in the Grant Notice.

          U.  PARENT shall mean any corporation (other than the Corporation) in
              ------
an unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.

          V.  PLAN shall mean the Corporation's 1998 Stock Option/Stock Issuance
              ----
Plan.

          W.  PLAN ADMINISTRATOR shall mean either the Board or a committee of
              ------------------
the Board acting in its capacity as administrator of the Plan.

          X.  PURCHASE AGREEMENT shall mean the stock purchase agreement in
              ------------------
substantially the form of Exhibit B to the Grant Notice.

          Y.  SERVICE shall mean the Optionee's performance of services for the
              -------
Corporation (or any Parent or Subsidiary) in the capacity of an Employee, a non-
employee member of the board of directors or an independent consultant.

          Z.  STOCK EXCHANGE shall mean the American Stock Exchange or the New
              --------------
York Stock Exchange.

         AA.  SUBSIDIARY shall mean any corporation (other than the Corporation)
              ----------
in an unbroken chain of corporations beginning with the Corporation, provided
each corporation (other than the last corporation) in the unbroken chain owns,
at the time of the determination, stock possessing fifty percent (50%) or more
of the total combined voting power of all classes of stock in one of the other
corporations in such chain.

         BB.  VESTING SCHEDULE shall mean the vesting schedule specified in the
              ----------------
Grant Notice pursuant to which the Optionee is to vest in the Option Shares in a
series of installments over his or her period of Service.

                                      A-3
<PAGE>

                                    ADDENDUM
                                       TO
                             STOCK OPTION AGREEMENT

     The following provisions are hereby incorporated into, and are hereby made
a part of, that certain Stock Option Agreement dated                      199
(the "Option Agreement") by and between Prime Response Group, Inc.  (the
"Corporation") and
("Optionee") evidencing the stock option (the "Option") granted on such date to
Optionee under the terms of the Corporation's 1998 Stock Option/Stock Issuance
Plan, and such provisions shall be effective immediately.  All capitalized terms
in this Addendum, to the extent not otherwise defined herein, shall have the
meanings assigned to them in the Option Agreement.

                       INVOLUNTARY TERMINATION FOLLOWING
                             CORPORATE TRANSACTION

     1.  To the extent the Option is, in connection with a Corporate
Transaction, to be assumed in accordance with Paragraph 6 of the Option
Agreement, none of the Option Shares shall vest on an accelerated basis upon the
occurrence of that Corporate Transaction, and Optionee shall accordingly
continue, over his or her period of Service following the Corporate Transaction,
to vest in the Option Shares in one or more installments in accordance with the
provisions of the Option Agreement. However, upon an Involuntary Termination of
Optionee's Service within eighteen (18) months following such Corporate
Transaction, all the Option Shares at the time subject to the Option shall
automatically vest in full on an accelerated basis so that the Option shall
immediately become exercisable for all the Option Shares as fully-vested shares
and may be exercised for any or all of those Option Shares as vested shares.
The Option shall remain so exercisable until the earlier of (i) the Expiration
Date or (ii) the expiration of the one (1)-year period measured from the date of
the Involuntary Termination.

     2.  For purposes of this Addendum, an Involuntary Termination shall mean
the termination of Optionee's Service by reason of:

         (i)   Optionee's involuntary dismissal or discharge by the Corporation
     for reasons other than for Misconduct, or

         (ii)  Optionee's voluntary resignation following (A) a change in
     Optionee's position with the Corporation (or Parent or Subsidiary employing
     Optionee) which materially reduces Optionee's duties and responsibilities
     or the level of management to which he or she reports, (B) a reduction in
     Optionee's level of compensation (including base salary, fringe benefits
     and target bonuses under any corporate-performance based incentive
     programs) by more than fifteen percent (15%) or (C) a relocation of
     Optionee's place of employment by more than fifty (50) miles, provided and
     only if such change, reduction or relocation is effected by the Corporation
     without Optionee's consent.

<PAGE>

     3.  The provisions of Paragraph 1 of this Addendum shall govern the period
for which the Option is to remain exercisable following the Involuntary
Termination of Optionee's Service within eighteen (18) months after the
Corporate Transaction and shall supersede any provisions to the contrary in
Paragraph 5 of the Option Agreement.  The provisions of this Addendum shall also
supersede any provisions to the contrary in Paragraph 18 of the Option Agreement
concerning the deferred exercisability of the Option.

     IN WITNESS WHEREOF, Prime Response Group, Inc.  has caused this Addendum to
be executed by its duly-authorized officer as of the Effective Date specified
below.

                              PRIME RESPONSE GROUP, INC.

                              By:
                                 -------------------------------------

                              Title:
                                    ----------------------------------

EFFECTIVE DATE:           , 199
               -----------     --

                                       2<PAGE>

                                                                    Exhibit 10.9

                           PRIME RESPONSE GROUP, INC.

                            STOCK PURCHASE AGREEMENT

          AGREEMENT made this _______ day of ___________________ 199__, by and
between Prime Response Group, Inc., a Delaware corporation, and
___________________________, Optionee under the Corporation's 1998 Stock
Option/Stock Issuance Plan.

          All capitalized terms in this Agreement shall have the meaning
assigned to them in this Agreement or in the attached Appendix.

      A.  EXERCISE OF OPTION
          ------------------

          1.  EXERCISE.  Optionee hereby purchases _________________ shares of
              --------
Common Stock (the "Purchased Shares") pursuant to that certain option (the
"Option") granted Optionee on __________________, 199__ (the "Grant Date") to
purchase up to ___________________ shares of Common Stock (the "Option Shares")
under the Plan at the exercise price of $__________________ per share (the
"Exercise Price").

          2.  PAYMENT.  Concurrently with the delivery of this Agreement to the
              -------
Corporation, Optionee shall pay the Exercise Price for the Purchased Shares in
accordance with the provisions of the Option Agreement and shall deliver
whatever additional documents may be required by the Option Agreement as a
condition for exercise, together with a duly-executed blank Assignment Separate
from Certificate (in the form attached hereto as Exhibit I) with respect to the
Purchased Shares.

          3.  STOCKHOLDER RIGHTS.  Until such time as the Corporation exercises
              ------------------
the Repurchase Right or the First Refusal Right, Optionee (or any successor in
interest) shall have all the rights of a stockholder (including voting, dividend
and liquidation rights) with respect to the Purchased Shares, subject, however,
to the transfer restrictions of Articles B and C.

      B.  SECURITIES LAW COMPLIANCE
          -------------------------

          1.  RESTRICTED SECURITIES.  The Purchased Shares have not been
              ---------------------
registered under the 1933 Act and are being issued to Optionee in reliance upon
the exemption from such registration provided by SEC Rule 701 for stock
issuances under compensatory benefit plans such as the Plan. Optionee hereby
confirms that Optionee has been informed that the Purchased Shares are
restricted securities under the 1933 Act and may not be resold or transferred
unless the Purchased Shares are first registered under the Federal securities
laws or unless an exemption from such registration is available. Accordingly,
Optionee hereby acknowledges that Optionee is prepared to hold the Purchased
Shares for an indefinite period and that Optionee is aware that SEC Rule 144
issued under the 1933 Act which exempts certain resales of unrestricted
securities is not presently available to exempt the resale of the Purchased
Shares from the registration requirements of the 1933 Act.
<PAGE>

     2.  RESTRICTIONS ON DISPOSITION OF PURCHASED SHARES.  Optionee shall
         -----------------------------------------------
make no disposition of the Purchased Shares (other than a Permitted Transfer)
unless and until there is compliance with all of the following requirements:

          (i) Optionee shall have provided the Corporation with a written
     summary of the terms and conditions of the proposed disposition.

          (ii) Optionee shall have complied with all requirements of this
     Agreement applicable to the disposition of the Purchased Shares.

          (iii) Optionee shall have provided the Corporation with written
     assurances, in form and substance satisfactory to the Corporation, that (a)
     the proposed disposition does not require registration of the Purchased
     Shares under the 1933 Act or (b) all appropriate action necessary for
     compliance with the registration requirements of the 1933 Act or any
     exemption from registration available under the 1933 Act (including Rule
     144) has been taken.

          The Corporation shall not be required (i) to transfer on its books any
Purchased Shares which have been sold or transferred in violation of the
provisions of this Agreement or (ii) to treat as the owner of the Purchased
Shares, or otherwise to accord voting, dividend or liquidation rights to, any
transferee to whom the Purchased Shares have been transferred in contravention
of this Agreement.

     3. RESTRICTIVE LEGENDS. The stock certificates for the Purchased Shares
        -------------------
shall be endorsed with one or more of the following restrictive legends:

               "The shares represented by this certificate have not been
     registered under the Securities Act of 1933.  The shares may not be sold or
     offered for sale in the absence of (a) an effective registration statement
     for the shares under such Act, (b) a "no action" letter of the Securities
     and Exchange Commission with respect to such sale or offer or (c)
     satisfactory assurances to the Corporation that registration under such Act
     is not required with respect to such sale or offer."

               "The shares represented by this certificate are subject to
     certain repurchase rights and rights of first refusal granted to the
     Corporation and accordingly may not be sold, assigned, transferred,
     encumbered, or in any manner disposed of except in conformity with the
     terms of a written agreement dated ____________, 199__ between the
     Corporation and the registered holder of the shares (or the predecessor in
     interest to the shares).  A copy of such agreement is maintained at the
     Corporation's principal corporate offices."

C.  TRANSFER RESTRICTIONS
    ---------------------

     1. RESTRICTION ON TRANSFER. Except for any Permitted Transfer, Optionee
        -----------------------
shall not transfer, assign, encumber or otherwise dispose of any of the
Purchased Shares which are subject to the Repurchase Right. In addition,
Purchased Shares which are released from the Repurchase Right shall not be
transferred, assigned, encumbered or otherwise disposed of in contravention of
the First Refusal Right or the Market Stand-Off.

                                       2
<PAGE>

     2. TRANSFEREE OBLIGATIONS. Each person (other than the Corporation) to whom
        ----------------------
the Purchased Shares are transferred by means of a Permitted Transfer must, as a
condition precedent to the validity of such transfer, acknowledge in writing to
the Corporation that such person is bound by the provisions of this Agreement
and that the transferred shares are subject to (i) the Repurchase Right, (ii)
the First Refusal Right and (iii) the Market Stand-Off, to the same extent such
shares would be so subject if retained by Optionee.

     3. MARKET STAND-OFF.
        ----------------

     (a) In connection with any underwritten public offering by the Corporation
of its equity securities pursuant to an effective registration statement filed
under the 1933 Act, including the Corporation's initial public offering, Owner
shall not sell, make any short sale of, loan, hypothecate, pledge, grant any
option for the purchase of, or otherwise dispose or transfer for value or
otherwise agree to engage in any of the foregoing transactions with respect to,
any Purchased Shares without the prior written consent of the Corporation or its
underwriters. Such restriction (the "Market Stand- Off") shall be in effect for
such period of time from and after the effective date of the final prospectus
for the offering as may be requested by the Corporation or such underwriters. In
no event, however, shall such period exceed one hundred eighty (180) days and
the Market Stand-Off shall in all events terminate two (2) years after the
effective date of the Corporation's initial public offering.

     (b) Owner shall be subject to the Market Stand-Off provided and only if the
officers and directors of the Corporation are also subject to similar
restrictions.

     (c) Any new, substituted or additional securities which are by reason of
any Recapitalization or Reorganization distributed with respect to the Purchased
Shares shall be immediately subject to the Market Stand-Off, to the same extent
the Purchased Shares are at such time covered by such provisions.

     (d) In order to enforce the Market Stand-Off, the Corporation may impose
stop- transfer instructions with respect to the Purchased Shares until the end
of the applicable stand-off period.

D.  REPURCHASE RIGHT
    ----------------

     1. GRANT. The Corporation is hereby granted the right (the "Repurchase
        -----
Right"), exercisable at any time during the sixty (60)-day period following the
date Optionee ceases for any reason to remain in Service or (if later) during
the sixty (60)-day period following the execution date of this Agreement, to
repurchase at the Exercise Price any or all of the Purchased Shares in which
Optionee is not, at the time of his or her cessation of Service, vested in
accordance with the Vesting Schedule applicable to those shares or the special
vesting acceleration provisions of Paragraph D.6 of this Agreement (such shares
to be hereinafter referred to as the "Unvested Shares").

     2. EXERCISE OF THE REPURCHASE RIGHT. The Repurchase Right shall be
        --------------------------------
exercisable by written notice delivered to each Owner of the Unvested Shares
prior to the expiration of the sixty (60)- day exercise period. The notice shall
indicate the number of Unvested Shares to be repurchased and the date on which
the repurchase is to be effected, such

                                       3
<PAGE>

date to be not more than thirty (30) days after the date of such notice. The
certificates representing the Unvested Shares to be repurchased shall be
delivered to the Corporation on or before the close of business on the date
specified for the repurchase. Concurrently with the receipt of such stock
certificates, the Corporation shall pay to Owner, in cash or cash equivalents
(including the cancellation of any purchase-money indebtedness), an amount equal
to the Exercise Price previously paid for the Unvested Shares which are to be
repurchased from Owner.

     3. TERMINATION OF THE REPURCHASE RIGHT. The Repurchase Right shall
        --------------------------------
terminate with respect to any Unvested Shares for which it is not timely
exercised under Paragraph D.2. In addition, the Repurchase Right shall terminate
and cease to be exercisable with respect to any and all Purchased Shares in
which Optionee vests in accordance with the Vesting Schedule. All Purchased
Shares as to which the Repurchase Right lapses shall, however, remain subject to
(i) the First Refusal Right and (ii) the Market Stand-Off.

     4. AGGREGATE VESTING LIMITATION. If the Option is exercised in more than
        ----------------------------
one increment so that Optionee is a party to one or more other Stock Purchase
Agreements (the "Prior Purchase Agreements") which are executed prior to the
date of this Agreement, then the total number of Purchased Shares as to which
Optionee shall be deemed to have a fully-vested interest under this Agreement
and all Prior Purchase Agreements shall not exceed in the aggregate the number
of Purchased Shares in which Optionee would otherwise at the time be vested, in
accordance with the Vesting Schedule, had all the Purchased Shares (including
those acquired under the Prior Purchase Agreements) been acquired exclusively
under this Agreement.

     5. RECAPITALIZATION. Any new, substituted or additional securities or other
        ----------------
property (including cash paid other than as a regular cash dividend) which is by
reason of any Recapitalization distributed with respect to the Purchased Shares
shall be immediately subject to the Repurchase Right and any escrow requirements
hereunder, but only to the extent the Purchased Shares are at the time covered
by such right or escrow requirements. Appropriate adjustments to reflect such
distribution shall be made to the number and/or class of Purchased Shares
subject to this Agreement and to the price per share to be paid upon the
exercise of the Repurchase Right in order to reflect the effect of any such
Recapitalization upon the Corporation's capital structure; provided, however,
that the aggregate purchase price shall remain the same.

     6.  CORPORATE TRANSACTION.
         ---------------------

         (a) The Repurchase Right shall automatically terminate in its entirety,
and all the Purchased Shares shall vest in full, immediately prior to the
consummation of any Corporate Transaction, except to the extent the Repurchase
Right is to be assigned to the successor entity in such Corporate Transaction.

         (b) To the extent the Repurchase Right remains in effect following a
Corporate Transaction, such right shall apply to any new securities or other
property (including any cash payments) received in exchange for the Purchased
Shares in consummation of the Corporate Transaction, but only to the extent the
Purchased Shares are at the time covered by such right. Appropriate adjustments
shall be made to the price per share payable upon exercise of the Repurchase
Right to reflect the effect of the Corporate Transaction upon the Corporation's

                                       4
<PAGE>

capital structure; provided, however, that the aggregate purchase price shall
remain the same. The new securities or other property (including any cash
payments) issued or distributed with respect to the Purchased Shares in
consummation of the Corporate Transaction shall be immediately deposited in
escrow with the Corporation (or the successor entity) and shall not be released
from escrow until Optionee vests in such securities or other property in
accordance with the same Vesting Schedule in effect for the Purchased Shares.

     (c) The Repurchase Right may also terminate on an accelerated basis, and
the Purchased Shares shall immediately vest in full, in accordance with the
terms and conditions of any special addendum attached to this Agreement.

E.  RIGHT OF FIRST REFUSAL
    ----------------------

     1. GRANT. The Corporation is hereby granted the right of first refusal (the
        -----
"First Refusal Right"), exercisable in connection with any proposed transfer of
the Purchased Shares in which Optionee has vested in accordance with the
provisions of Article D. For purposes of this Article E, the term "transfer"
shall include any sale, assignment, pledge, encumbrance or other disposition of
the Purchased Shares intended to be made by Owner, but shall not include any
Permitted Transfer.

     2. NOTICE OF INTENDED DISPOSITION. In the event any Owner of Purchased
        ------------------------------
Shares in which Optionee has vested desires to accept a bona fide third-party
offer for the transfer of any or all of such shares (the Purchased Shares
subject to such offer to be hereinafter referred to as the "Target Shares"),
Owner shall promptly (i) deliver to the Corporation written notice (the
"Disposition Notice") of the terms of the offer, including the purchase price
and the identity of the third- party offeror, and (ii) provide satisfactory
proof that the disposition of the Target Shares to such third-party offeror
would not be in contravention of the provisions set forth in Articles B and C.

     3. EXERCISE OF THE FIRST REFUSAL RIGHT. The Corporation shall, for a period
        -----------------------------------
of twenty-five (25) days following receipt of the Disposition Notice, have the
right to repurchase any or all of the Target Shares subject to the Disposition
Notice upon the same terms as those specified therein or upon such other terms
(not materially different from those specified in the Disposition Notice) to
which Owner consents. Such right shall be exercisable by delivery of written
notice (the "Exercise Notice") to Owner prior to the expiration of the
twenty-five (25)-day exercise period. If such right is exercised with respect to
all the Target Shares, then the Corporation shall effect the repurchase of such
shares, including payment of the purchase price, not more than five (5) business
days after delivery of the Exercise Notice; and at such time the certificates
representing the Target Shares shall be delivered to the Corporation.

          Should the purchase price specified in the Disposition Notice be
payable in property other than cash or evidences of indebtedness, the
Corporation shall have the right to pay the purchase price in the form of cash
equal in amount to the value of such property.  If Owner and the Corporation
cannot agree on such cash value within ten (10) days after the Corporation's
receipt of the Disposition Notice, the valuation shall be made by an appraiser
of recognized standing selected by Owner and the Corporation or, if they cannot
agree on an appraiser within twenty (20) days after the Corporation's receipt of
the Disposition Notice, each shall select an

                                       5
<PAGE>

appraiser of recognized standing and the two (2) appraisers shall designate a
third appraiser of recognized standing, whose appraisal shall be determinative
of such value. The cost of such appraisal shall be shared equally by Owner and
the Corporation. The closing shall then be held on the later of (i) the fifth
(5th) business day following delivery of the Exercise Notice or (ii) the fifth
(5th) business day after such valuation shall have been made.

     4. NON-EXERCISE OF THE FIRST REFUSAL RIGHT. In the event the Exercise
        ---------------------------------------
Notice is not given to Owner prior to the expiration of the twenty-five (25)-day
exercise period, Owner shall have a period of thirty (30) days thereafter in
which to sell or otherwise dispose of the Target Shares to the third-party
offeror identified in the Disposition Notice upon terms (including the purchase
price) no more favorable to such third-party offeror than those specified in the
Disposition Notice; provided, however, that any such sale or disposition must
not be effected in contravention of the provisions of Articles B and C. The
third-party offeror shall acquire the Target Shares free and clear of the First
Refusal Right, but the acquired shares shall remain subject to the provisions of
Article B and Paragraph C.3. In the event Owner does not effect such sale or
disposition of the Target Shares within the specified thirty (30)-day period,
the First Refusal Right shall continue to be applicable to any subsequent
disposition of the Target Shares by Owner until such right lapses.

     5. PARTIAL EXERCISE OF THE FIRST REFUSAL RIGHT. In the event the
        -------------------------------------------
Corporation makes a timely exercise of the First Refusal Right with respect to a
portion, but not all, of the Target Shares specified in the Disposition Notice,
Owner shall have the option, exercisable by written notice to the Corporation
delivered within five (5) business days after Owner's receipt of the Exercise
Notice, to effect the sale of the Target Shares pursuant to either of the
following alternatives:

          (i) sale or other disposition of all the Target Shares to the
     third-party offeror identified in the Disposition Notice, but in full
     compliance with the requirements of Paragraph E.4, as if the Corporation
     did not exercise the First Refusal Right; or

          (ii) sale to the Corporation of the portion of the Target Shares which
     the Corporation has elected to purchase, such sale to be effected in
     substantial conformity with the provisions of Paragraph E.3. The First
     Refusal Right shall continue to be applicable to any subsequent disposition
     of the remaining Target Shares until such right lapses.

          Owner's failure to deliver timely notification to the Corporation
shall be deemed to be an election by Owner to sell the Target Shares pursuant to
alternative (i) above.

     6.  RECAPITALIZATION/REORGANIZATION.
         -------------------------------

         (a) Any new, substituted or additional securities or other property
which is by reason of any Recapitalization distributed with respect to the
Purchased Shares shall be immediately subject to the First Refusal Right, but
only to the extent the Purchased Shares are at the time covered by such right.

         (b) In the event of a Reorganization, the First Refusal Right shall
remain in full force and effect and shall apply to the new capital stock or
other property received

                                       6
<PAGE>

in exchange for the Purchased Shares in consummation of the Reorganization, but
only to the extent the Purchased Shares are at the time covered by such right.

     7. LAPSE. The First Refusal Right shall lapse upon the earliest to occur of
        -----
(i) the first date on which shares of the Common Stock are held of record by
more than five hundred (500) persons, (ii) a determination is made by the Board
that a public market exists for the outstanding shares of Common Stock or (iii)
a firm commitment underwritten public offering, pursuant to an effective
registration statement under the 1933 Act, covering the offer and sale of the
Common Stock in the aggregate amount of at least ten million dollars
($10,000,000). However, the Market Stand-Off shall continue to remain in full
force and effect following the lapse of the First Refusal Right.

  F. SPECIAL TAX ELECTION
     --------------------

     The acquisition of the Purchased Shares may result in adverse tax
consequences which may be avoided or mitigated by filing an election under Code
Section 83(b). Such election must be filed within thirty (30) days after the
date of this Agreement. A description of the tax consequences applicable to the
acquisition of the Purchased Shares and the form for making the Code Section
83(b) election are set forth in Exhibit II. OPTIONEE SHOULD CONSULT WITH HIS OR
HER TAX ADVISOR TO DETERMINE THE TAX CONSEQUENCES OF ACQUIRING THE PURCHASED
SHARES AND THE ADVANTAGES AND DISADVANTAGES OF FILING THE CODE SECTION 83(B)
ELECTION. OPTIONEE ACKNOWLEDGES THAT IT IS OPTIONEE'S SOLE RESPONSIBILITY, AND
NOT THE CORPORATION'S, TO FILE A TIMELY ELECTION UNDER CODE SECTION 83(B), EVEN
IF OPTIONEE REQUESTS THE CORPORATION OR ITS REPRESENTATIVES TO MAKE THIS FILING
ON HIS OR HER BEHALF.

G.  GENERAL PROVISIONS
    ------------------

     1. ASSIGNMENT. The Corporation may assign the Repurchase Right and/or the
        ----------
First Refusal Right to any person or entity selected by the Board, including
(without limitation) one or more stockholders of the Corporation.

     2. NO EMPLOYMENT OR SERVICE CONTRACT. Nothing in this Agreement or in the
        ---------------------------------
Plan shall confer upon Optionee any right to continue in Service for any period
of specific duration or interfere with or otherwise restrict in any way the
rights of the Corporation (or any Parent or Subsidiary employing or retaining
Optionee) or of Optionee, which rights are hereby expressly reserved by each, to
terminate Optionee's Service at any time for any reason, with or without cause.

     3. NOTICES. Any notice required to be given under this Agreement shall be
        -------
in writing and shall be deemed effective upon personal delivery or upon deposit
in the U.S. mail, registered or certified, postage prepaid and properly
addressed to the party entitled to such notice at the address indicated below
such party's signature line on this Agreement or at such other address as such
party may designate by ten (10) days advance written notice under this paragraph
to all other parties to this Agreement.

                                       7
<PAGE>

     4. NO WAIVER. The failure of the Corporation in any instance to exercise
        -------
the Repurchase Right or the First Refusal Right shall not constitute a waiver of
any other repurchase rights and/or rights of first refusal that may subsequently
arise under the provisions of this Agreement or any other agreement between the
Corporation and Optionee. No waiver of any breach or condition of this Agreement
shall be deemed to be a waiver of any other or subsequent breach or condition,
whether of like or different nature.

     5. CANCELLATION OF SHARES. If the Corporation shall make available, at the
        ----------------------
time and place and in the amount and form provided in this Agreement, the
consideration for the Purchased Shares to be repurchased in accordance with the
provisions of this Agreement, then from and after such time, the person from
whom such shares are to be repurchased shall no longer have any rights as a
holder of such shares (other than the right to receive payment of such
consideration in accordance with this Agreement). Such shares shall be deemed
purchased in accordance with the applicable provisions hereof, and the
Corporation shall be deemed the owner and holder of such shares, whether or not
the certificates therefor have been delivered as required by this Agreement.

H.  MISCELLANEOUS PROVISIONS
    ------------------------

     1. OPTIONEE UNDERTAKING. Optionee hereby agrees to take whatever additional
        --------------------
action and execute whatever additional documents the Corporation may deem
necessary or advisable in order to carry out or effect one or more of the
obligations or restrictions imposed on either Optionee or the Purchased Shares
pursuant to the provisions of this Agreement.

     2. AGREEMENT IS ENTIRE CONTRACT. This Agreement constitutes the entire
        ----------------------------
contract between the parties hereto with regard to the subject matter hereof.
This Agreement is made pursuant to the provisions of the Plan and shall in all
respects be construed in conformity with the terms of the Plan.

     3. GOVERNING LAW. This Agreement shall be governed by, and construed in
        -------------
accordance with, the laws of the State of California without resort to that
State's conflict-of- laws rules.

     4. COUNTERPARTS. This Agreement may be executed in counterparts, each of
        ------------
which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.

     5. SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall inure to
        ----------------------
the benefit of, and be binding upon, the Corporation and its successors and
assigns and upon Optionee, Optionee's permitted assigns and the legal
representatives, heirs and legatees of Optionee's estate, whether or not any
such person shall have become a party to this Agreement and have agreed in
writing to join herein and be bound by the terms hereof.

                                       8
<PAGE>

          IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and year first indicated above.

                              PRIME RESPONSE GROUP, INC.

                              By:
                                 --------------------------------

                              Title:
                                    -----------------------------

                              Address:
                                      ---------------------------
                                      ---------------------------

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

                              OPTIONEE

                              Address:
                                      ---------------------------
                                      ---------------------------

                                       9
<PAGE>

                             SPOUSAL ACKNOWLEDGMENT

          The undersigned spouse of Optionee has read and hereby approves the
foregoing Stock Purchase Agreement.  In consideration of the Corporation's
granting Optionee the right to acquire the Purchased Shares in accordance with
the terms of such Agreement, the undersigned hereby agrees to be irrevocably
bound by all the terms of such Agreement, including (without limitation) the
right of the Corporation (or its assigns) to purchase any Purchased Shares in
which Optionee is not vested at time of his or her cessation of Service.

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

                              OPTIONEE'S SPOUSE

                              Address:
                                      ---------------------------
                                      ---------------------------

                                       10
<PAGE>

                                    EXHIBIT I

                      ASSIGNMENT SEPARATE FROM CERTIFICATE

          FOR VALUE RECEIVED ____________________________ hereby sell(s),
assign(s) and transfer(s) unto Prime Response Group, Inc. (the "Corporation"),
_____________________ (____________) shares of the Common Stock of the
Corporation standing in his or her name on the books of the Corporation
represented by Certificate No. __________________________ herewith and do(es)
hereby irrevocably constitute and appoint ____________________________ Attorney
to transfer the said stock on the books of the Corporation with full power of
substitution in the premises.

Dated:  ________________________

                              Signature_____________________________

INSTRUCTION:  Please do not fill in any blanks other than the signature line.
Please sign exactly as you would like your name to appear on the issued stock
certificate.  The purpose of this assignment is to enable the Corporation to
exercise the Repurchase Right without requiring additional signatures on the
part of Optionee.
<PAGE>

                                   EXHIBIT II

                       FEDERAL INCOME TAX CONSEQUENCES AND
                           SECTION 83(B) TAX ELECTION

I.  FEDERAL INCOME TAX CONSEQUENCES AND SECTION 83(b) ELECTION FOR EXERCISE OF
    --------------------------------------------------------------------------
NON-STATUTORY OPTION. If the Purchased Shares are acquired pursuant to the
--------------------
exercise of a Non-Statutory Option, as specified in the Grant Notice, then under
Code Section 83, the excess of the Fair Market Value of the Purchased Shares on
the date any forfeiture restrictions applicable to such shares lapse over the
Exercise Price paid for such shares will be reportable as ordinary income on the
lapse date. For this purpose, the term "forfeiture restrictions" includes the
right of the Corporation to repurchase the Purchased Shares pursuant to the
Repurchase Right. However, Optionee may elect under Code Section 83(b) to be
taxed at the time the Purchased Shares are acquired, rather than when and as
such Purchased Shares cease to be subject to such forfeiture restrictions. Such
election must be filed with the Internal Revenue Service within thirty (30) days
after the date of the Agreement. Even if the Fair Market Value of the Purchased
Shares on the date of the Agreement equals the Exercise Price paid (and thus no
tax is payable), the election must be made to avoid adverse tax consequences in
the future. The form for making this election is attached as part of this
exhibit. FAILURE TO MAKE THIS FILING WITHIN THE APPLICABLE THIRTY (30)-DAY
PERIOD WILL RESULT IN THE RECOGNITION OF ORDINARY INCOME BY OPTIONEE AS THE
FORFEITURE RESTRICTIONS LAPSE.

II.  FEDERAL INCOME TAX CONSEQUENCES AND CONDITIONAL SECTION 83(B) ELECTION FOR
     --------------------------------------------------------------------------
EXERCISE OF INCENTIVE OPTION. If the Purchased Shares are acquired pursuant to
----------------------------
the exercise of an Incentive Option, as specified in the Grant Notice, then the
following tax principles shall be applicable to the Purchased Shares:

          (i) For regular tax purposes, no taxable income will be recognized at
     the time the Option is exercised.

          (ii) The excess of (a) the Fair Market Value of the Purchased Shares
     on the date the Option is exercised or (if later) on the date any
     forfeiture restrictions applicable to the Purchased Shares lapse over (b)
     the Exercise Price paid for the Purchased Shares will be includible in
     Optionee's taxable income for alternative minimum tax purposes.

          (iii) If Optionee makes a disqualifying disposition of the Purchased
     Shares, then Optionee will recognize ordinary income in the year of such
     disposition equal in amount to the excess of (a) the Fair Market Value of
     the Purchased Shares on the date the Option is exercised or (if later) on
     the date any forfeiture restrictions applicable to the Purchased Shares
     lapse over (b) the Exercise Price paid for the Purchased Shares. Any
     additional gain recognized upon the disqualifying disposition will be
     either short-term or long-term capital gain depending upon the period for
     which the Purchased Shares are held prior to the disposition.
                                       1
<PAGE>

          (iv) For purposes of the foregoing, the term "forfeiture restrictions"
     will include the right of the Corporation to repurchase the Purchased
     Shares pursuant to the Repurchase Right. The term "disqualifying
     disposition" means any sale or other disposition of the Purchased Shares
     within two (2) years after the Grant Date or within one (1) year after the
     exercise date of the Option.

          (v) In the absence of final Treasury Regulations relating to Incentive
     Options, it is not certain whether Optionee may, in connection with the
     exercise of the Option for any Purchased Shares at the time subject to
     forfeiture restrictions, file a protective election under Code Section
     83(b) which would limit (a) Optionee's alternative minimum taxable income
     upon exercise and (b) Optionee's ordinary income upon a disqualifying
     disposition to the excess of the Fair Market Value of the Purchased Shares
     on the date the Option is exercised over the Exercise Price paid for the
     Purchased Shares. Accordingly, such election if properly filed will only be
     allowed to the extent the final Treasury Regulations permit such a
     protective election. Page 2 of the attached form for making the election
     should be filed with any election made in connection with the exercise of
     an Incentive Option.

                                       2
<PAGE>

                             SECTION 83(b) ELECTION

          This statement is being made under Section 83(b) of the Internal
Revenue Code, pursuant to Treas. Reg. Section 1.83-2.

(1)  The taxpayer who performed the services is:

     Name:
     Address:
     Taxpayer Ident. No.:

(2)  The property with respect to which the election is being made is
     ___________ shares of the common stock of Prime Response Group, Inc.

(3)  The property was issued on __________, 199__.

(4)  The taxable year in which the election is being made is the calendar year
     199__.

(5)  The property is subject to a repurchase right pursuant to which the issuer
     has the right to acquire the property at the original purchase price if for
     any reason taxpayer's service with the issuer terminates.  The issuer's
     repurchase right lapses in a series of annual and monthly installments over
     a four (4)-year period ending on __________, 200__.

(6)  The fair market value at the time of transfer (determined without regard to
     any restriction other than a restriction which by its terms will never
     lapse) is $________ per share.

(7)  The amount paid for such property is $_______ per share.

(8)  A copy of this statement was furnished to Prime Response Group, Inc. for
     whom taxpayer rendered the services underlying the transfer of property.

(9)  This statement is executed on ____________, 199__.

________________________________        _______________________________
Spouse (if any)                         Taxpayer

This election must be filed with the Internal Revenue Service Center with which
taxpayer files his or her Federal income tax returns and must be made within
thirty (30) days after the execution date of the Stock Purchase Agreement.  This
filing should be made by registered or certified mail, return receipt requested.
Optionee must retain two (2) copies of the completed form for filing with his or
her Federal and state tax returns for the current tax year and an additional
copy for his or her records.
<PAGE>

          The property described in the above Section 83(b) election is
comprised of shares of common stock acquired pursuant to the exercise of an
incentive stock option under Section 422 of the Internal Revenue Code (the
"Code").  Accordingly, it is the intent of the Taxpayer to utilize this election
to achieve the following tax results:

     1. The purpose of this election is to have the alternative minimum taxable
income attributable to the purchased shares measured by the amount by which the
fair market value of such shares at the time of their transfer to the Taxpayer
exceeds the purchase price paid for the shares. In the absence of this election,
such alternative minimum taxable income would be measured by the spread between
the fair market value of the purchased shares and the purchase price which
exists on the various lapse dates in effect for the forfeiture restrictions
applicable to such shares. The election is to be effective to the full extent
permitted under the Code.

     2. Section 421(a)(1) of the Code expressly excludes from income any excess
of the fair market value of the purchased shares over the amount paid for such
shares. Accordingly, this election is also intended to be effective in the event
there is a "disqualifying disposition" of the shares, within the meaning of
Section 421(b) of the Code, which would otherwise render the provisions of
Section 83(a) of the Code applicable at that time. Consequently, the Taxpayer
hereby elects to have the amount of disqualifying disposition income measured by
the excess of the fair market value of the purchased shares on the date of
transfer to the Taxpayer over the amount paid for such shares. Since Section
421(a) presently applies to the shares which are the subject of this Section
83(b) election, no taxable income is actually recognized for regular tax
purposes at this time, and no income taxes are payable, by the Taxpayer as a
result of this election.

THIS PAGE 2 IS TO BE ATTACHED TO ANY SECTION 83(B) ELECTION FILED IN CONNECTION
WITH THE EXERCISE OF AN INCENTIVE STOCK OPTION UNDER THE FEDERAL TAX LAWS.
                                       2
<PAGE>

                                    APPENDIX
                                    --------

The following definitions shall be in effect under the Agreement:

     A. AGREEMENT shall mean this Stock Purchase Agreement.
        ---------

     B. BOARD shall mean the Corporation's Board of Directors.
        -----

     C. CODE shall mean the Internal Revenue Code of 1986, as amended.
        ----

     D. COMMON STOCK shall mean the Corporation's common stock.
        ------------

     E. CORPORATE TRANSACTION shall mean either of the following
        ---------
     stockholder-approved transactions:

                   (i) a merger or consolidation in which securities possessing
        more than fifty percent (50%) of the total combined voting power of the
        Corporation's outstanding securities are transferred to a person or
        persons different from the persons holding those securities immediately
        prior to such transaction, or

                   (ii) the sale, transfer or other disposition of all or
        substantially all of the Corporation's assets in complete liquidation or
        dissolution of the Corporation.

     F. CORPORATION shall mean Prime Response Group, Inc., a Delaware
        -----------
     corporation.

     G. DISPOSITION NOTICE shall have the meaning assigned to such term in
        ------------------
     Paragraph E.2.

     H. EXERCISE NOTICE shall have the meaning assigned to such term in
        ---------------
     Paragraph E.3.

     I. EXERCISE PRICE shall have the meaning assigned to such term in Paragraph
        ---------------
     A.1.

     J. FAIR MARKET VALUE of a share of Common Stock on any relevant date, prior
        -----------------
     to the initial public offering of the Common Stock, shall be determined by
     the Plan Administrator after taking into account such factors as it shall
     deem appropriate.

     K. FIRST REFUSAL RIGHT shall mean the right granted to the Corporation in
        -------------------
     accordance with Article E.

     L. GRANT DATE shall have the meaning assigned to such term in Paragraph
        ----------
     A.1.

     M. GRANT NOTICE shall mean the Notice of Grant of Stock Option pursuant to
        ------------
     which Optionee has been informed of the basic terms of the Option.

     N. INCENTIVE OPTION mean an option which satisfies the requirements of Code
        ----------------
     Section 422.

                                      A-1
<PAGE>

     O. MARKET STAND-OFF shall mean the market stand-off restriction specified
        ----------------
     in Paragraph C.3.

     P. 1933 ACT shall mean the Securities Act of 1933, as amended.
        --------

     Q. 1934 ACT shall mean the Securities Exchange Act of 1934, as amended.
        --------

     R. NON-STATUTORY OPTION shall mean an option not intended to satisfy the
        --------------------
     requirements of Code Section 422.

     S. OPTION shall have the meaning assigned to such term in Paragraph A.1.
        ------

     T. OPTION AGREEMENT shall mean all agreements and other documents
        ----------------
     evidencing the Option.

     U. OPTIONEE shall mean the person to whom the Option is granted under the
        --------
     Plan.

     V. OWNER shall mean Optionee and all subsequent holders of the Purchased
        -----
     Shares who derive their chain of ownership through a Permitted Transfer
     from Optionee.

     W. PARENT shall mean any corporation (other than the Corporation) in an
        ------
     unbroken chain of corporations ending with the Corporation, provided each
     corporation in the unbroken chain (other than the Corporation) owns, at the
     time of the determination, stock possessing fifty percent (50%) or more of
     the total combined voting power of all classes of stock in one of the other
     corporations in such chain.

     X. PERMITTED TRANSFER shall mean (i) a gratuitous transfer of the Purchased
        --------- --------
     Shares, provided and only if Optionee obtains the Corporation's prior
     written consent to such transfer, (ii) a transfer of title to the Purchased
     Shares effected pursuant to Optionee's will or the laws of intestate
     succession following Optionee's death or (iii) a transfer to the
     Corporation in pledge as security for any purchase-money indebtedness
     incurred by Optionee in connection with the acquisition of the Purchased
     Shares.

     Y. PLAN shall mean the Corporation's 1998 Stock Option/Stock Issuance Plan.
        ----

     Z. PLAN ADMINISTRATOR shall mean either the Board or a committee of the
        ---- -------------
     Board acting in its capacity as administrator of the Plan.

     AA. PRIOR PURCHASE AGREEMENT shall have the meaning assigned to such term
         -------------------------
     in Paragraph D.4.

     BB. PURCHASED SHARES shall have the meaning assigned to such term in
         ----------------
     Paragraph A.1.

     CC. RECAPITALIZATION shall mean any stock split, stock dividend,
         ----------------
     recapitalization, combination of shares, exchange of shares or other change
     affecting the Corporation's outstanding Common Stock as a class without the
     Corporation's receipt of consideration.

                                      A-2
<PAGE>

     DD.  REORGANIZATION shall mean any of the following transactions:
          --------------

               (i) a merger or consolidation in which the Corporation is not the
          surviving entity,

               (ii) a sale, transfer or other disposition of all or
          substantially all of the Corporation's assets,

               (iii) a reverse merger in which the Corporation is the surviving
          entity but in which the Corporation's outstanding voting securities
          are transferred in whole or in part to a person or persons different
          from the persons holding those securities immediately prior to the
          merger, or

               (iv) any transaction effected primarily to change the state in
          which the Corporation is incorporated or to create a holding company
          structure.

     EE. REPURCHASE RIGHT shall mean the right granted to the Corporation in
         -----------------
     accordance with Article D.

     FF. SEC shall mean the Securities and Exchange Commission.
         ---

     GG. SERVICE shall mean the Optionee's performance of services for the
         -------
     Corporation (or any Parent or Subsidiary) in the capacity of an employee,
     subject to the control and direction of the employer entity as to both the
     work to be performed and the manner and method of performance, a
     non-employee member of the board of directors or an independent consultant.

     HH. SUBSIDIARY shall mean any corporation (other than the Corporation) in
         ----------
     an unbroken chain of corporations beginning with the Corporation, provided
     each corporation (other than the last corporation) in the unbroken chain
     owns, at the time of the determination, stock possessing fifty percent
     (50%) or more of the total combined voting power of all classes of stock in
     one of the other corporations in such chain.

     II. TARGET SHARES shall have the meaning assigned to such term in Paragraph
         -------------
     E.2.

     JJ. VESTING SCHEDULE shall mean the vesting schedule specified in the Grant
         ----------------
     Notice pursuant to which the Optionee is to vest in the Option Shares in a
     series of installments over his or her period of Service.

     KK. UNVESTED SHARES shall have the meaning assigned to such term in
         ---------------
     Paragraph D.1.

                                      A-3
<PAGE>

                                   ADDENDUM

                                      TO

                           STOCK PURCHASE AGREEMENT

          The following provisions are hereby incorporated into, and are hereby
made a part of, that certain Stock Purchase Agreement dated_________________
(the "Purchase Agreement") by and between Prime Response Group, Inc. (the
"Corporation") and ___________________________ ("Optionee") evidencing the
shares of Common Stock purchased on such date by Optionee pursuant to the option
granted to him or her under the Corporation's 1998 Stock Option/Stock Issuance
Plan, and such provisions shall be effective immediately. All capitalized terms
in this Addendum, to the extent not otherwise defined herein, shall have the
meanings assigned to such terms in the Purchase Agreement.

                       INVOLUNTARY TERMINATION FOLLOWING

                             CORPORATE TRANSACTION

         1. To the extent the Repurchase Right is assigned to the successor
corporation (or parent thereof) in connection with a Corporate Transaction, no
accelerated vesting of the Purchased Shares shall occur upon such Corporate
Transaction, and the Repurchase Right shall continue to remain in full force and
effect in accordance with the provisions of the Purchase Agreement. Optionee
shall, over his or her period of Service following the Corporate Transaction,
continue to vest in the Purchased Shares in one or more installments in
accordance with the provisions of the Purchase Agreement. However, upon an
Involuntary Termination of Optionee's Service within eighteen (18) months
following the Corporate Transaction, the Repurchase Right shall terminate
automatically, and all the Purchased Shares shall immediately vest in full at
that time.

         2. For purposes of this Addendum, the following definitions shall be in
effect:

         An INVOLUNTARY TERMINATION shall mean the termination of Optionee's
Service by reason of:

            (i) Optionee's involuntary dismissal or discharge by the Corporation
for reasons other than for Misconduct, or

            (ii) Optionee's voluntary resignation following (A) a change in his
or her position with the Corporation (or Parent or Subsidiary employing
Optionee) which materially reduces his or her duties and responsibilities or the
level of management to which he or she reports, (B) a reduction in Optionee's
level of compensation (including base salary, fringe benefits and target bonuses
under any corporate-performance based incentive programs) by more than fifteen
percent (15%) or (C) a relocation of Optionee's place of employment by more than
fifty (50) miles, provided and only if such change, reduction or relocation is
effected by the Corporation without Optionee's consent.

<PAGE>

         MISCONDUCT shall mean the termination of Optionee's Service by reason
of Optionee's commission of any act of fraud, embezzlement or dishonesty, any
unauthorized use or disclosure by Optionee of confidential information or trade
secrets of the Corporation (or any Parent or Subsidiary), or any other
intentional misconduct by Optionee adversely affecting the business or affairs
of the Corporation (or any Parent or Subsidiary) in a material manner.  The
foregoing definition shall not be deemed to be inclusive of all the acts or
omissions which the Corporation (or any Parent or Subsidiary) may consider as
grounds for the dismissal or discharge of Optionee or any other individual in
the Service of the Corporation (or any Parent or Subsidiary).

         IN WITNESS WHEREOF, Prime Response Group, Inc. has caused this
Addendum to be executed by its duly-authorized officer as of the Effective Date
specified below.

                                   PRIME RESPONSE GROUP, INC.

                                   By:

                                   Title:

EFFECTIVE DATE:  _________________________, 199__

                                      2.

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