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Exhibit 10.12  

 
 

EMPLOYMENT AGREEMENT    
    

        THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of
September 30, 2005 (the "Effective Date") by and between PROS Revenue Management, L.P., a Delaware limited partnership (the
"Company"), and Charles Murphy (the "Employee"). The Company and the Employee are sometimes collectively
referred to herein as the "Parties" and individually referred to herein as a "Party." 

 
 

RECITALS    
    

        WHEREAS, the Employee and the Company desire to enter into an employment agreement containing the material terms and conditions set forth herein. 

        WHEREAS,
the Parties intend that this Agreement memorialize all of the rights, duties and obligations of the Parties with respect to the employment of Employee with the Company. 

 
 

AGREEMENT    
    

        NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and adequacy of which is acknowledged, the Parties
hereby agree as follows: 

1.    Position and Duties.    Employee shall be employed by the Company as Executive Vice President and Chief Financial Officer and
will have such corresponding duties and responsibilities as determined by
the Chief Executive Officer of the Company (the "CEO"), or, during any period(s) when a CEO is not appointed, as determined by the Board of Directors of
the Company (the "Board"). Employee agrees to devote his full time, energy and skill to his responsibilities and duties to the Company. 

2.    Term of Agreement.    The term of Employee's employment shall commence on the Effective Date and shall continue for a period
of twenty-four (24) months thereafter (the "Employment Term"), unless earlier terminated as provided in this Agreement. The
Employment Term will be automatically extended unless the Company decides, in its sole discretion, not to so extend and provides notice thereof to Employee (each such extension being a
"Renewal Term"); provided, however, that no single Renewal Term may be less than twelve (12) months unless consented to in writing by each Party
or earlier terminated as provided in this Agreement. 

3.    Compensation.    Employee shall be compensated by the Company for the performance of his duties and obligations hereunder as
follows: 

        (a)    Salary.    Employee shall be paid a salary of $20,416.68 per month, less applicable withholdings and
deductions, in accordance with the Company's normal payroll procedures (the "Salary"). 

        (b)    Benefits.    Employee shall be eligible, on the same basis as other employees of the Company, to participate in
and to receive the benefits of the Company's employee benefit plans and vacation, holiday and business expense reimbursement policies, each as in effect from time to time. 

        (c)    Review.    The Compensation Committee will review the Salary of Employee provided hereunder on a periodic basis
consistent with its review of other management generally and may adjust upward in its discretion such Salary. 

4.    Termination.    Employee agrees that his employment is on an at-will basis and may be terminated at any time by
the Company or the Employee, with or without cause. Upon the termination (voluntarily or otherwise) of Employee's employment with the Company, neither Party shall have any continuing obligations or
liabilities with respect to compensation, benefits, or severance except as set forth in this Section 4. 

        (a)    Voluntary Termination; Termination for Cause.    If Employee's employment is voluntarily terminated by Employee
other than for Good Reason (a "Voluntary Termination") or is terminated by 

the
Company for Cause (as defined below), Employee shall be entitled to no compensation or benefits from the Company other than accrued and unpaid compensation and benefits through the date of
termination. For purposes of this Section 4, a termination of Employee's employment as a result of his death or Disability (as defined below)
shall constitute a Voluntary Termination. 

        (i)    "Cause" shall mean (a) the unauthorized use or disclosure of the confidential information or trade secrets of the
Company, which use or disclosure causes material harm to the Company; (b) conviction of, or a plea of "guilty" or "no contest" to, a felony under the laws of the United States or any thereof;
(c) any intentional wrongdoing by Employee, whether by omission or commission, which adversely affects the business or affairs of the Company (or any parent or subsidiary); or
(d) continued failure to perform assigned duties after receiving written notification from the CEO or the Board and following a reasonable cure period. 

        (ii)   "Disability" shall mean the good-faith determination by the Board after consultation with medical personnel
that the Employee has ceased to be able to materially perform his duties and obligations, with or without reasonable accommodation, due to a mental or physical illness or incapacity that is reasonably
expected to materially prevent Employee from performing his duties and obligations for a period of not less than ninety (90) days. 

        (iii)  "Good Reason" shall mean any one or more of the following: 

        (A)  the
assignment to the Employee of any duties, or any material limitation of the Employee's responsibilities, substantially inconsistent with the Employee's duties and
status with the Company as contemplated on the date of this Agreement; 

        (B)  the
relocation of the principal place of the Employee's service to a location that is more than fifty (50) miles from the Employee's principal place of service as
of the date of this Agreement; 

        (C)  any
material reduction by the Company of the Employee's Salary (unless reductions comparable in amount and duration are concurrently made for all other senior executives
of the Company with responsibilities and organizational level comparable to the Employee's); or 

        (D)  any
failure by the Company to continue to provide the Employee with the opportunity to participate, on terms no less favorable than those in effect for the benefit of
any employee holding a comparable position within the Company, in any benefit or compensation plans and programs. 

        (b)    Termination Without Cause or for Good Reason; Non-Renewal.    In the event Employee's employment is
terminated by the Company without Cause or by voluntarily by Employee for Good Reason or the Company elects not to renew the Employment Term or any Renewal Term, Employee shall be entitled only to the
following: 

        (i)    accrued
and unpaid compensation through the date of termination; 

        (ii)   continued
health benefits as made generally available to employees for twelve (12) months following the date of such termination; 

        (iii)  the
then-monthly base salary of Employee, less applicable withholdings and deductions, for twelve (12) months following the date of such
termination, payable on normal payroll cycles; and 

        (iv)  the
acceleration of vesting of stock options and other equity awards with respect to shares that would have vested in the twelve (12) months following such date
of termination (collectively, the "Severance"). 

5.    Confidential Information.    Employee acknowledges and agrees that the Company considers to be confidential the information,
observations and data obtained by him while employed by the Company concerning the actual or anticipated business or affairs of the Company, its subsidiaries or affiliates (collectively,
"Confidential Information") and that such Confidential Information is the property of the 

Company
and/or the respective subsidiary or affiliate. Therefore, Employee agrees that he shall not disclose to any unauthorized person or use for his own purposes any Confidential Information without
the prior written consent of the Board, unless and to the extent that the aforementioned matters become generally known to and available for use by the public or persons knowledgeable in the Company's
industry other than as a result of Employee's acts or omissions which constitute a breach hereof. Employee shall deliver to the Company at the termination (whether voluntary or otherwise) of
Employee's employment, or at any other time the Company may request, all memoranda, notes, plans, records, reports, computer tapes, printouts and software and other documents and data (and copies
thereof) relating to the Confidential Information, Work Product (as defined below) or the business or anticipated business of the Company, its subsidiaries or affiliates (including, without
limitation, trade secrets, business or marketing plans, reports, projections, diskettes, intangible information stored on diskettes, software programs and data compiled with the use of those programs,
tangible copies of trade secrets and confidential information, memoranda, credit cards, telephone charge cards, manuals, building keys and passes, cell phones, computers, names and addresses of the
Company's or its subsidiaries' or affiliates' customers and potential customers, customer lists, customer contracts, sales information and any and all other similar information or property) which he
may then possess or have under his control. Employee further agrees that in the event he discovers any other materials of the Company, its subsidiaries or affiliates in his possession or control after
the date of termination, he will immediately return such property to the Company. 

6.    Inventions and Patents.    Employee acknowledges that all inventions, innovations, improvements, developments, methods,
designs, analyses, drawings, reports and all similar or related information (whether or not patentable) which (i) relate to the Company's or its subsidiaries' actual or anticipated business,
research and development or existing or future products or services or (ii) result from any work performed by Employee for the Company or its subsidiaries, and which are conceived, developed or
made by the Employee during the Noncompete Period ("Work Product") belong to the Company or such subsidiary; provided, however, that this  Section 6 does not apply to any invention for which no equipment, supplies, materials, facilities, trade secrets, or other proprietary
information of the Company or its subsidiaries was used and which was developed entirely on Employee's own time, unless (i) the invention relates to the actual or anticipated business of the
Company or its subsidiaries or to the Company's or any of its subsidiaries' actual or anticipated research or development, or existing or future products or services or (ii) the invention
results from any work performed by Employee for the Company or its subsidiaries. Employee shall promptly disclose such Work Product to the Board and perform all actions requested by the Board (whether
during or after the Employment Period) to establish and confirm such ownership (including, without limitation, assignments, consents, powers of attorney and other instruments). The Parties acknowledge
and agree that Work Product is subject to this Section 6 and is Confidential Information unless and to the extent that such Work Product
(i) becomes generally known to and available for use by the public or persons knowledgeable in the Company's industry other than as a result of Employee's acts or omissions which constitute a
breach of this Agreement or (ii) the Employee discloses such Work Product to the Board and the Board by vote or written consent waives its rights under this Agreement with respect thereto. 

7.    Non-Compete, Non-Solicitation. 

        (a)   In
further consideration of the compensation to be paid to Employee hereunder, including the Severance, if any, the Company shall, upon execution of this Agreement,
disclose to Employee the Company's trade secrets and other Confidential Information concerning the Company, its subsidiaries and affiliates. Employee acknowledges that his services have been and shall
be of special, unique, and extraordinary value to the Company. Therefore, Employee agrees that, during the Employment Term, each Renewal Term, if any, and for one (1) year following the
termination of his employment with the Company for any reason (collectively, the "Noncompete Period"), he shall not, directly or indirectly, own any
interest in, manage, control, participate in, consult with, render services for, or in any manner engage in any business competing with the actual or anticipated businesses of the Company, its
subsidiaries or affiliates, on the date of the termination of Employee's employment, within any geographical area in which the Company, its subsidiaries or affiliates engage or plan to engage in such 

businesses.
A termination of this Agreement pursuant to Section 4 or otherwise shall constitute a termination of the Employment Term or Renewal
Term, as applicable. Nothing herein shall prohibit Employee from being a passive owner of not more than two percent (2%) of the outstanding capital stock of any class of a corporation which is
publicly traded, so long as Employee has no active participation in the business of such corporation. 

        (b)   During
the Noncompete Period, Employee shall not directly himself or indirectly through another person or entity (i) induce or attempt to induce any employee of
the Company, its subsidiaries or affiliates to leave the employ thereof, or in any way interfere with the relationship between the Company, its subsidiaries and affiliates and any employee thereof,
(ii) hire any person who was an employee or contractor of the Company, its subsidiaries or affiliates or (iii) induce or attempt to induce any customer, supplier, licensee, licensor,
franchisee, contractor or other business relation of the Company, its subsidiaries or affiliates, or in any way interfere with the relationship between any such customer, supplier, licensee,
franchisee, contractor or other business relation and the Company, its subsidiaries or affiliates (including, without limitation, making any negative statements or communications about the Company,
its subsidiaries, or affiliates). 

        (c)   If,
at the time of enforcement of this Section 7, a court shall hold that the duration, scope or area restrictions
stated herein are unreasonable under circumstances then existing, the Parties agree that the maximum duration, scope or area reasonable under such circumstances shall be substituted for the stated
duration, scope or area and that the court shall be allowed to revise the restrictions contained herein to cover the maximum duration, scope and area permitted by law. 

        (d)   Employee
acknowledges and agrees that the restrictions contained in this Section 7 are enforceable and reasonable.
Accordingly, should Employee assert in any context that the restrictions contained in this Section 7 are unenforceable or unreasonable, Employee
agrees that as of the date of such assertion the Company shall have no further obligation to provide him with Severance. 

8.    Non-Disparagement.    Each of the Parties represents and agrees that such Party will not, directly or indirectly,
engage during the Noncompete Period in any defamatory, disparaging or critical communication with any other person or entity concerning the business, operations, services, marketing strategies,
pricing policies, management, business practices, officers, directors, employees, attorneys, representatives, affiliates, agents affairs and/or financial condition of the other Party, its subsidiaries
or affiliates. 

9.    Injunctive Relief and Additional Remedy.    Employee acknowledges and agrees that any breach or threatened breach by Employee
of any of the provisions of Sections 5, 6, 7, or  8 would
result in irreparable injury and damage to the Company and/or its subsidiaries and affiliates for which the Company and/or its subsidiaries and
affiliates would have no adequate remedy at law. The Employee therefore also acknowledges and agrees that in the event of such breach or threatened breach the Company, in addition and supplementary to
other rights and remedies existing in its favor, may apply to any court of competent jurisdiction for specific performance and/or injunctive or other relief in order to enforce or prevent any
violations of the provisions thereof (without posting a bond or other security). The terms of this Section 9 shall not prevent the Company from
pursuing any other available remedies for any breach or threatened breach thereof including, without limitation, the recovery of damages from Employee. In addition, in the event of an alleged breach
or violation by Employee of any of the provisions of Sections 5, 6,  7, or 8, the Noncompete Period shall be tolled with respect to such provision until such breach or
violation has been duly cured. 

10.    Dispute Resolution.    In the event of any dispute or claim relating to or arising out of this Agreement (including, without
limitation, any claims of breach of contract, wrongful termination or age, sex, race or other discrimination), Employee and the Company agree that all such disputes shall be fully and finally resolved
by binding arbitration conducted by the American Arbitration Association in Austin, Texas in accordance with its National Employment Dispute Resolution rules, as those rules are currently in effect
(and not as they may be modified in the future). Employee acknowledges that by accepting this arbitration provision he is waiving any right to a jury trial in the event of such dispute; provided,
however, that this arbitration provision shall not apply to any disputes or claims relating to or 

arising
out of Sections 5, 6,,7, or  8 or any misuse or
misappropriation of Confidential Information, Work Product or other trade secrets or proprietary information of the Company, its
subsidiaries or affiliates. 

11.    Attorneys' Fees.    The prevailing Party in any dispute or claim relating to or arising out of this Agreement shall be
entitled to recover from the losing Party all fees and expenses of any nature or kind (including, without limitation, attorney's fees and expenses) incurred in any such dispute or claim. 

12.    Interpretation.    The Company and Employee agree that this Agreement shall be interpreted in accordance with and governed by
the laws of the State of Texas, without giving effect to conflicts of law principles. 

13.    Successors and Assigns.    This Agreement shall inure to the benefit of and be binding upon Employee and its successors and
assigns. In view of the personal nature of the services to be performed under this Agreement by Employee, Employee shall not have the right to sell, assign, pledge, hypothecate, donate or otherwise
transfer any of his rights, obligations or benefits hereunder. 

14.    Entire Agreement.    This Agreement constitutes the entire employment agreement between the Company and Employee regarding
the terms and conditions of his employment, with the exception of that certain Stock Option Agreements (the "Option Agreement") previously entered into
between Employee and the Company and that certain Employee Inventions and Proprietary Rights Assignment Agreement, dated January 11, 1999, between the Company and Employee (the
"Assignment Agreement"); provided, however, that the provisions of this Agreement shall control if there exists any conflicting provisions in the Option
Agreement or the Assignment Agreement. This Agreement, together with the Option Agreement and the Assignment Agreement, supersede all prior negotiations, representations or agreements between the
Company and Employee, whether written or oral, regarding Employee's employment by the Company. 

15.    Severability.    If any one or more of the provisions (or any part thereof) of this Agreement shall be held invalid, illegal
or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions (or any part thereof) shall not in any way be affected or impaired thereby. 

16.    No Representations.    Employee acknowledges that he is not relying, and has not relied, on any promise, representation or
statement made by or on behalf of the Company which is not set forth in this Agreement. 

17.    Notices.    All notices requests, reports and other communications pursuant hereto shall be in writing, either by letter
(delivered by hand or commercial delivery service or sent by certified mail, return receipt requested) or facsimile, addressed as follows: 

If
to the Company: 

PROS
Holdings, Inc.

3100 Main Street, Suite 900

Houston, Texas 77006

Attention: Chief Executive Officer

Facsimile: (713) 529-7037 

with
a copy to (which shall not constitute notice): 

DLA
Piper Rudnick Gray Cary US LLP

1221 S. Mopac Expressway, Suite 400

Austin, Texas 78746

Attention: John J. Gilluly

Facsimile: (512) 457-7001 

If
to the Employee: 

Charles
Murphy

1000 South Point Drive, #507

Miami Beach, Florida 33139

Facsimile: (305) 672-3138 

Any
notice, request or communication hereunder shall be deemed to have been given on the day on which it is delivered by hand to such party at its address specified above, or, if sent by certified
mail, return receipt requested, postage prepaid, on the third business day following the date it was deposited in the mail, or in the case of facsimile notice, when transmitted addressed as aforesaid,
confirmation received, if the notice is also delivered by hand or mail in the manner described above. Any party may change the person or address to whom or which notices are to be given hereunder, by
notice duly given hereunder; provided, however, that any such notice shall be deemed to have been given hereunder only when actually received by the party to which it is addressed. 

18.    Counterparts.    This Agreement may be executed in any number of counterparts, provided, however, that each of such
counterparts when taken together shall constitute one and the same agreement. 

19.    Amendments.    This Agreement may be modified or amended only by a supplemental written agreement signed by both the Employee
and the Company and approved by unanimous vote or written consent of the Compensation Committee. 

 
 

Signature Page Follows.    
    

        IN
WITNESS WHEREOF, the Parties hereto have entered into this Agreement as of the Effective Date. 

	 	 	COMPANY:
	

 	
 	
PROS REVENUE MANAGEMENT, L.P.,
	

 	
 	

By:	

/s/ Kurt R. Jaggers

	 	 	Name:	Kurt R. Jaggers
	 	 	Title:	 
	

 	
 	
EMPLOYEE:
	

 	
 	

/s/ Charles Murphy
CHARLES MURPHY

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RECITALS

AGREEMENT

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Exhibit 10.12.1  

 
 

PROS HOLDINGS, INC.
  1999 EQUITY INCENTIVE PLAN
  IMMEDIATELY EXERCISABLE INCENTIVE STOCK OPTION GRANT    
    

Charles
Murphy, Optionee: 

        Pros
Holdings, Inc., a Delaware corporation (the "Company"), pursuant to its 1999 Equity Incentive Plan (the
"Plan"), has granted to you, the Optionee named above, an immediately exercisable option to purchase shares of the common stock of the Company
("Common Stock"). This option is intended to qualify as an "incentive stock option" within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"). 

        The
grant hereunder is in connection with and in furtherance of the Company's compensatory benefit plan for participation of the Company's employees (including officers) directors or
consultants and is intended to comply with the provisions of Rule 701 promulgated by the Securities and Exchange Commission under the Securities Act of 1933, as amended (the
"Act"). Defined terms not explicitly defined in this agreement but defined in the Plan shall have the same definitions as in the Plan. 

        The
details of your option are as follows: 

        1.     Total Number of Shares Subject to this Option.    The total number of shares of Common Stock subject to this
option is one hundred thousand (100,000) shares. 

        2.     Vesting.

        (a)   Standard Vesting.    Subject to the limitations contained herein and except as described below,
twenty-five percent (25%) of the shares will vest December 31, 2005, and 2.0833% of the shares will then vest each month thereafter until either (i) the termination of
Optionee's Continuous Status as an Employee, Director or Consultant with the Company or an Affiliate of the Company for any reason, or (ii) this option becomes fully vested. 

        (b)   Termination After Change in Control.    In the event of a termination of Optionee's Continuous Status as an
Employee, Director or Consultant as a result of a Termination After Change in Control (as defined below), the Option, to the extent unvested on the date such termination, shall become immediately
vested in full. "Termination After Change in Control" shall mean either of the following events occurring within twelve (12) months after a
Change in Control: 

        (i)    termination by the surviving company of the Optionee's Continuous Status as an Employee, Director or Consultant for any
reason other than for Cause (as defined in that certain Employment Agreement, dated September 30, 2005 between the Company and Optionee (the "Employment
Agreement"); or 

        (ii)   the Optionee's resignation for Good Reason (as defined in the Employment Agreement) from all capacities in which the
Optionee is then rendering to the surviving company within a reasonable period of time following the event constituting Good Reason. 

Notwithstanding
any provision herein to the contrary, Termination After Change in Control shall not include any termination of the Optionee's Continuous Status as an Employee, Director or Consultant
with the surviving company which (1) is for Cause (as defined below); (2) is a result of the Optionee's death or disability; (3) is a result of the Optionee's voluntary
resignation other than for Good Reason; or (4) occurs prior to the effectiveness of a Change in Control. 

        (c)   Termination Without Cause or for Good Reason.    Notwithstanding anything in this Agreement to the contrary,
upon the involuntary termination without Cause (as defined in the 

1

 

Employment
Agreement) or Optionee's voluntary termination for Good Reason (within a reasonable period following the event constituting Good Reason) of Optionee's Continuous Status as an Employee,
Director or Consultant, the Option, to the extent unvested on the date on such termination, shall become immediately vested with respect to shares that would have vested in the twelve
(12) months following such date of termination. 

        (d)   Termination For Cause.    Notwithstanding anything in this Agreement to the contrary, upon the termination for
Cause (as defined in the Employment Agreement) of the Optionee's Continuous Status as an Employee, Director or Consultant, the Option shall terminate and cease to be exercisable on the date of such
termination. 

        3.     Exercise Price And Method Of Payment.

        (a)   Exercise Price.    The exercise price of this option is Forty-Three Cents ($0.43) per share, being not less
than the fair market value of the Common Stock on the date of grant of this option. 

        (b)   Method of Payment.    Payment of the exercise price per share is due and payable upon exercise of the Option.
You may elect, to the extent permitted by applicable statutes and regulations, to make payment of the exercise price under one of the following alternatives: 

        (i)    Payment of the exercise price per share in cash (including check) at the time of exercise; 

        (ii)   Payment pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board which,
prior to the issuance of Common Stock, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to the Company
from the sales proceeds; 

        (iii) Provided that at the time of exercise the Company's Common Stock is publicly traded and quoted regularly in the Wall
Street Journal, payment by delivery of already-owned shares of Common Stock, held for the period required to avoid a charge to the Company's reported earnings, and owned free and clear of any liens,
claims, encumbrances or security interests, which Common Stock shall be valued at its fair market value on the date of exercise; or 

        (iv)  Payment by a combination of the methods of payment permitted by subparagraph 3(b)(i) through
3(b)(iii) above. 

        4.     Whole Shares.    This option may not be exercised for any number of shares which would require the issuance of
anything other than whole shares. 

        5.     Securities Law Compliance.    Notwithstanding anything to the contrary contained herein, this option may not be
exercised unless the shares issuable upon exercise of this option are then registered under the Act or, if such shares are not then so registered, the Company has determined that such exercise and
issuance would be exempt from the registration requirements of the Act. 

        6.     Term.    The term of this option commences on September 30, 2005, the date of grant, and expires on
September 29, 2015 (the "Expiration Date," which date shall be no more than ten (10) years from the date this option is granted), unless
this option expires sooner as set forth below or in the Plan. In no event may this option be exercised on or after the Expiration Date. This option shall terminate prior to the Expiration Date as
follows: three (3) months after the termination of your Continuous Status as an Employee, Director or Consultant with the Company or an Affiliate of the Company unless one of the following
circumstances exists: 

        (a)   Your termination of Continuous Status as an Employee, Director or Consultant is due to your disability (within the
meaning of Section 422(c)(6) of the Code. This option will then expire 

2

 

on
the earlier of the Expiration Date set forth above or twelve (12) months following such termination of Continuous Status as an Employee, Director or Consultant. 

        (b)   Your termination of Continuous Status as an Employee, Director or Consultant is due to your death or your death occurs
within three (3) months following your termination of Continuous Status as an Employee, Director or Consultant for any other reason. This option will then expire on the earlier of the
Expiration Date set forth above or six (6) months after your death. 

        (c)   If during any part of such three (3) months period you may not exercise your option solely because of the
condition set forth in paragraph 5 above, then your option will not expire until the earlier of the Expiration Date set forth above or until this option shall have been exercisable for an
aggregate period of three (3) months after your termination of the Continuous Status as an Employee, Director or Consultant. 

        (d)   If your exercise of the option within three (3) months after termination of your Continuous Status as an Employee,
Director or Consultant with the Company or with an Affiliate of the Company would result in liability under section 16(b) of the Securities Exchange Act of 1934, then your option will expire on
the earlier of (i) the Expiration Date set forth above, (ii) the tenth (10th) day after the last date upon which exercise would result in such liability or (iii) six
(6) months and ten (10) days after the termination of your Continuous Status as an Employee, Director or Consultant with the Company or an Affiliate of the Company. 

        (e)   Your termination of Continuous Status as an Employee, Director or Consultant is for Cause. This option will then expire
on the date of such termination. 

        To
the extent this Option may be exercised following termination of Continuous Status as an Employee, Director or Consultant, this Option may only be exercisable as to that number of
shares as to which it was vested on the date of termination of Continuous Status as an Employee, Director or Consultant under the provisions of paragraph 2 of this option. 

        In
order to obtain the federal income tax advantages associated with an "incentive stock option," the Code requires that at all times beginning on the date of grant of the option and
ending on the day three (3) months before the date of the option's exercise, you must be an employee of the Company or an Affiliate of the Company, except in the event of your death or
permanent and total disability. The Company has provided for continued vesting or extended exercisability of your option under certain circumstances for your benefit, but cannot guarantee that your
option will necessarily be treated as an "incentive stock option" if you provide services to the Company or an Affiliate of the Company as a consultant or exercise your option more than three
(3) months after the date your Continuous Status as an Employee with the Company and all Affiliates of the Company terminates. 

        7.     Exercise.

        (a)   This option may be exercised by delivering a notice of exercise (in a form designated by the Company) together with the
exercise price to the Secretary of the Company, or to such other person as the Company may designate, during regular business hours, together with such additional documents as the Company may then
require pursuant to subsection 12(e) of the Plan. 

        (b)   If the Optionee exercises this option to purchase shares that are both nontransferable and subject to a substantial risk
of forfeiture, the Optionee understands that the Optionee should consult with the Optionee's tax advisor regarding the advisability of filing with the Internal Revenue Service an election under
Section 83(b) of the Code, which must be filed no later than thirty (30) days after the date on which the Optionee exercises the option. Shares acquired upon exercise of the Option are
nontransferable and subject to a substantial risk of forfeiture if, for example, (a) they are unvested and are subject to a right of the Company to repurchase such shares at the Optionee's
original purchase price if the Optionee's Continuous Status as an 

3

 

Employee,
Director or Consultant with the Company or an Affiliate of the Company terminates, or (b) the Optionee is an Insider and, under certain circumstances, exercises the Option within six
(6) months of the date of option grant (if a class of equity security of the Company is registered under Section 12 of the Exchange Act).
Failure to file an election under Section 83(b), if appropriate, may result in adverse tax consequences to the Optionee. The Optionee acknowledges that the Optionee has been advised to consult
with a tax advisor prior to the exercise of the Option regarding the tax consequences to the Optionee of the exercise of the Option. 

AN ELECTION UNDER SECTION 83(b) MUST BE FILED WITHIN 30 DAYS AFTER THE DATE ON WHICH THE OPTIONEE PURCHASES SHARES. THIS TIME PERIOD CANNOT BE EXTENDED. THE OPTIONEE
ACKNOWLEDGES THAT TIMELY FILING OF A SECTION 83(b) ELECTION IS THE OPTIONEE'S SOLE RESPONSIBILITY, EVEN IF THE OPTIONEE REQUESTS THE COMPANY OR ITS REPRESENTATIVE TO FILE SUCH ELECTION ON HIS OR HER
BEHALF.

        (c)   Notwithstanding anything in this agreement or the Plan to the contrary, and except as provided in  Section 4.1(c), the aggregate fair market
value of the shares with respect to which the Optionee may exercise this option for the first time
during any calendar year, when added to the aggregate fair market value of the shares subject to any other options designated as incentive stock options granted to the Optionee under all stock option
plans of the Company prior to the date of option grant with respect to which such options are exercisable for the first time during the same calendar year, shall not exceed One Hundred Thousand
Dollars ($100,000. For purposes of the preceding sentence, options designated as Incentive Stock Options shall be taken into account in the order in which they were granted, and the fair market value
of shares shall be determined as of the time the option with respect to such shares is granted. Such limitation on exercise shall be referred to in this Option Agreement as the
"ISO Exercise Limitation." If Section 422 of the Code is amended to provide for a different limitation from that set forth in this section, the
ISO Exercise Limitation shall be deemed amended effective as of the date required or permitted by such amendment to the Code. The ISO Exercise Limitation shall terminate upon the earlier of
(i) the termination of Optionee's Continuous Status as an Employee, Director or Consultant with the Company or an Affiliate of the Company, (ii) the day immediately prior to the
effective date of a Change in Control in which the Option is not assumed or substituted for by the acquiring corporation, or (iii) the day ten (10) days prior to the option Expiration
Date. Upon such termination of the ISO Exercise Limitation, the Option shall be deemed a nonstatutory stock option to the extent of the number of shares subject to the Option which would otherwise
exceed the ISO Exercise Limitation. 

        (d)   Notwithstanding any other provision of this option agreement, if compliance with the ISO Exercise Limitation will result
in the exercisability of any vested shares being delayed more than thirty (30) days beyond the date such shares become vested shares (the "Vesting
Date"), the Option shall be deemed to be two (2) options. The first option shall be for the maximum portion of the number of shares that can comply with the ISO Exercise
Limitation without causing the Option to be unexercisable in the aggregate as to vested shares on the Vesting Date for such shares. The second option, which shall not be treated as an Incentive Stock
Option as described in Section 422(b) of the Code, shall be for the balance of the number of Option Shares; that is, those such shares which, on the respective Vesting Date for such shares,
would be unexercisable if included in the first option and thereby made subject to the ISO Exercise Limitation. Shares treated as subject to the second option shall be exercisable on the same terms
and at the same time as set forth in this Option Agreement; provided, however, that (i) subsection (c) shall not apply to the second option and (ii) each such share shall become a
vested share on the Vesting Date such share must first be allocated to the second option pursuant to the preceding sentence. Unless the Optionee specifically elects to the contrary in the Optionee's
written notice of exercise, 

4

 

the
first option shall be deemed to be exercised first to the maximum possible extent and then the second option shall be deemed to be exercised. 

        (e)   By exercising this option you agree that 

        (i)    as a precondition to the completion of any exercise of this option, the Company may require you to enter an arrangement
providing for the payment by you to the Company of any tax withholding obligation of the Company arising by reason of (1) the exercise of this option; (2) the lapse of any substantial
risk of forfeiture to which the shares are subject at the time of exercise; or (3) the disposition of shares acquired upon such exercise; 

        (ii)   you will notify the Company in writing within fifteen (15) days after the date of any disposition of any of the
shares of the Common Stock issued upon exercise of this option that occurs within two (2) years after the date of this option grant or within one (1) year after such shares of Common
Stock are transferred upon exercise of this option; and 

        (iii) the Company (or a representative of the underwriters) may, in connection with the first underwritten registration of
the offering of any securities of the Company under the Act, require that you not sell or otherwise transfer or dispose of any shares of Common Stock or other securities of the Company during such
period (not to exceed one hundred eighty (180) days) following the effective date (the "Effective Date") of the registration statement of the
Company filed under the Act as may be requested by the Company or the representative of the underwriters. You further agree that the Company may impose stop-transfer instructions with
respect to securities subject to the foregoing restrictions until the end of such period. 

        8.     Right of Repurchase; Right of First Refusal.

        (a)   The Company may elect, prior to the Listing Date, to repurchase all or any part of the vested shares exercised pursuant
to the Option; provided, however, that (i) such repurchase right shall be exercisable only within (A) the one hundred and twenty
(120) day period following the termination Optionee's Continuous Status as an Employee, Director or Consultant with the Company or an Affiliate of the Company or (B) such longer period
as may be agreed to by the Company and the Optionee (for example, for purposes of satisfying the requirements of Section 1202(c)(3) of the Code (regarding "qualified small business stock")),
(ii) such repurchase right shall be exercisable for less than all of the vested shares only with the Optionee's consent, and (iii) such right shall be exercisable only for cash or
cancellation of purchase money indebtedness for the shares at a repurchase price equal to the greater of (A) the stock's Fair Market Value at the time of such termination or (B) the
original purchase price paid for such shares by the Optionee. Such right of repurchase may be assigned by the Company. 

        (b)   If the Company does not elect to exercise its right of repurchase under Section 8(a) above, and at any time
thereafter but prior to the Listing Date the Optionee (including any permitted transferee of the Optionee's shares under Section 8(c)) receives a bona fide offer to purchase all or any of the
vested shares exercised pursuant to the Option (the "Offer") from a third party other than a permitted transferee of his shares under
Section 8(c) (the "Offeror") which the Optionee wishes to accept, the Optionee may transfer such shares pursuant to and in accordance with the
following provisions 

        (i)    the Optionee shall cause the Offer to be reduced to writing and shall notify the Company in writing of his or her desire
to accept the Offer and otherwise comply with the provisions of this Section 8(b). The Optionee's notice shall constitute an irrevocable offer to sell such shares to the Company at a price
equal to the price contained in, and on the same terms and conditions of, the Offer. The notice shall be accompanied by a true copy of the Offer (which shall identify the Offeror). 

5

 

        (ii)   the Company shall have the right to offer to purchase all, but not less than all, of the shares covered by the Offer. To
exercise such right, the Company shall, within fifteen (15) days of receipt of such written notice, communicate in writing such election to the Optionee. Such written election to purchase shall
constitute a valid, legally binding and enforceable agreement for the sale and purchase of all of the shares covered by the Offer. 

        (c)   Permitted transfers by an Optionee are (i) transfers to the Optionee's spouse or children, to a trust of which the
Optionee is the settlor or a trustee for the benefit of his spouse or children, and (ii) transfers upon an Optionee's death to his heirs, executors or administrators or to a trust under his or
her will or to his or her guardian or conservator, provided that in any such case the transferee shall have entered into an enforceable written agreement providing that all shares so transferred shall
continue to be subject to the provisions of Section 8(b) and (c) as if such shares were still held by the Optionee, and provided further that such permitted transferee shall not be
permitted to make any further transfers without complying with the provisions of Section 8(b) and (c). Anything to the contrary herein notwithstanding, transferees permitted by this
Section 8(c) shall take any shares so transferred subject to all obligations under Section 8(b) and (c) as if such shares were still held by the Optionee whether or not such
transferees so expressly agree. 

        9.     Unvested Share Repurchase Option.

        (a)   In the event the Optionee's Continuous Status as an Employee, Director or Consultant with the Company or an Affiliate of
the Company is terminated for any reason or no reason, with or without cause, or if the Optionee or the Optionee's legal representative attempts to sell, exchange, transfer, pledge or otherwise
dispose of ("Transfer") any Unvested Shares (as defined below) other than to a Permitted Transferee (as defined below), the Company shall have the right
to reacquire the Unvested Shares under the terms and subject to the conditions set forth in this Section 9 (the "Unvested
Share Repurchase Option") 

        (b)   "Unvested Shares" shall mean, on any given date, the number of shares of
stock acquired upon exercise of the Option which exceed the number of vested shares determined as of such date. 

        (c)   The Company must notify in writing the Optionee or the Optionee's legal representative the Company's election to
repurchase the Unvested Shares within sixty (60) days after termination of Optionee's Continuous Status as an Employee, Director or Consultant with the Company or an Affiliate of the Company or
after the Company has received notice of the attempted Transfer. Payment by the Company to the Optionee or the Optionee's legal representative shall be made in cash within sixty (60) days after
the date of the mailing of the written notice of exercise of the Unvested Share Repurchase Option. For purposes of the foregoing, cancellation of any indebtedness of the Optionee to the Company shall
be treated as payment to the Optionee in cash to the extent of the unpaid principal and any accrued interest canceled. The purchase price per share for the shares being repurchased by the Company
shall be an amount equal to the exercise price paid for such shares. Contemporaneous with receipt of such payment by the Company, the Optionee or the Optionee's legal representative shall give the
shares which the Company has purchased to the Company. 

        (d)   The Optionee may not Transfer any Unvested Shares still subject to the Unvested Share Repurchase Option except to the
Optionee's spouse, siblings, ancestors, descendants or to a trustee for their benefit or the benefit of the Optionee (a "Permitted Transferee"),
provided that such Permitted Transferee shall agree in writing (in a form satisfactory to the Company) to receive and hold the shares subject to all the terms, conditions and restrictions contained in
this Agreement and, provided further that such Transfer does not cause the option to not be treated as an "incentive stock option" within the meaning of Section 422 of the Code or otherwise
violate applicable law. 

6

 

        (e)   The Company shall have the right to assign the Unvested Share Repurchase Option at any time, whether or not such option
is then exercisable, to one or more persons as may be selected by the Company. 

        (f)    Upon the occurrence of a Change in Control, any and all new, substituted or additional securities or other property to
which the Optionee is entitled by reason of the Optionee's ownership of Unvested Shares shall be immediately subject to the Unvested Share Repurchase Option and included in the term
"Unvested Shares" for all purposes of the Unvested Share Repurchase Option with the same force and effect as the Unvested Shares immediately prior to
the Change in Control. While the aggregate repurchase price shall remain the same after such Change in Control, the repurchase price per Unvested Share upon exercise of the Unvested Share Repurchase
Option following such Change in Control shall be adjusted as appropriate. 

        (g)   All certificates representing any shares subject to the Unvested Share Repurchase Option shall have endorsed thereon the
following legends (together with any legend required by applicable law): 

"THE
SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A REPURCHASE OPTION, A RIGHT OF FIRST REFUSAL IN FAVOR OF THE COMPANY OR ITS ASSIGNEE, AND OTHER RESTRICTIONS ON TRANSFER SET FORTH IN AN
AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER, OR HIS OR HER PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THIS COMPANY." 

        10.   Transferability.    This option is not transferable, except by will or by the laws of descent and distribution,
and is exercisable during your life only by you. Notwithstanding the foregoing, by delivering written notice to the Company, in a form satisfactory to the Company, you may designate a third party who,
in the event of your death, shall thereafter be entitled to exercise this option. 

        11.   Option Not a Service Contract.    This option is not an employment contract and nothing in this option shall be
deemed to create in any way whatsoever any obligation on your part to continue in the employ of the Company, or of the Company to continue your employment with the Company. In addition, nothing in
this option shall obligate the Company or any Affiliate of the Company, or their respective stockholders, Board of Directors, officers or employees to continue any relationship which you might have as
a Director or Consultant for the Company or Affiliate of the Company. 

        12.   Notices.    Any notices provided for in this option or the Plan shall be given in writing and shall be deemed
effectively given upon receipt or, in the case of notices delivered by the Company to you, five (5) days after deposit in the United States mail, postage prepaid, addressed to you at the
address specified below or at such other address as you hereafter designate by written notice to the Company. 

        13.   Independent Counsel.    Each of the parties hereto acknowledges and agrees that DLA Piper Rudnick Gray Cary US,
LLP is counsel to the Company and not to the Optinoee individually, and Optionee has had reasonable opportunity to consult with separate counsel with respect to the matters contained herein and is not
relying on any representations of any party with respect to the terms of this Agreement not otherwise contained herein. 

        14.   Governing Plan Document.    This option is subject to all the provisions of the Plan, a copy of which is
attached hereto and its provisions are hereby made a part of this option, including without limitation the provisions of Section 6 of the Plan relating to option provisions, and is further
subject to all interpretations, amendments, rules and regulations which may from time to time be promulgated and adopted pursuant to the Plan. In the event of any conflict between the provisions of
this option and those of the Plan, the provisions of the Plan shall control. 

7

 

        Dated
the 30th day of September, 2005. 

	 	 	Very truly yours,
	

 	
 	

By:	

/s/  KURT R. JAGGERS      

	

 	
 	

Duly authorized on behalf of the Board of Directors

Attachments:  

Pros
Holdings, Inc. 1999 Equity Incentive Plan

Notice of Exercise 

The
undersigned: 

        (a)   Acknowledges receipt of the foregoing option and the attachments referenced therein and understands that all rights and
liabilities with respect to this option are set forth in the option and the Plan; and 

        (b)   Acknowledges that as of the date of grant of this option, it sets forth the entire understanding between the undersigned
Optionee and the Company and its Affiliates regarding the acquisition of stock in the Company and supersedes all prior oral and written agreements on that subject with the exception of (i) the
options previously granted and delivered to the undersigned under stock option plans of the Company, and (ii) the following agreements only: 

                NONE

	 	/s/ CHM
 (Initial)	 	 	 

                OTHER

	 	    
	 
	

 	

 	
 	

Signature:	

/s/  CHARLES H. MURPHY      

	 	 	 	Printed Name:	/s/  CHARLES H. MURPHY      

	

 	

 	
 	

Address:	

1000 S. Point Dr. #507

	 	 	 	 	Miami Beach, FL 33139

8

 
 
 

NOTICE OF EXERCISE    
    

	PROS HOLDING, INC.	 	 
	3100 Main Street, Suite 900	 	 
	Houston, Texas 77002	 	Date of Exercise:  _______________________________

Ladies
and Gentlemen: 

        This
constitutes notice under my stock option that I elect to purchase the number of shares for the price set forth below. 

	Type of option (check one):	 	Incentive o	 	Nonstatutory o
	

Stock option dated:	
 	

  ________________________	
 	

 
	

Number of shares as to which option is exercised:	
 	

  ________________________	
 	

 
	

Certificates to be issued in name of:	
 	

  ________________________	
 	

 
	

Total exercise price:	
 	

$ ________________________	
 	

 
	

Cash payment delivered here with:	
 	

$ ________________________	
 	

 
	

Value of             shares of PROS HOLDINGS, INC.:	
 	

$ ________________________	
 	

 

        By
this exercise, I agree (i) to provide such additional documents as you may require pursuant to the terms of the 1999 Equity Incentive Plan, (ii) to provide for the
payment by me to you (in the manner designated by you) of your withholding obligation, if any, relating to the exercise of this option, and (iii) if this exercise relates to an incentive stock
option, to notify you in writing within fifteen (15) days after the date of any disposition of any of the shares of Common Stock issued upon exercise of this option that occurs within two
(2) years after the date of grant of this option or within one (1) year after such shares of Common Stock are issued upon exercise of this option. 

        I
hereby make the following certifications and representations with respect to the number of shares of Common Stock of the Company listed above (the "Shares"), which are being acquired
by me for my own account upon exercise of the Option as set forth above: 

        I
acknowledge that the Shares have not been registered under the Securities Act of 1933, as amended (the "Act"), and are deemed to constitute "restricted securities" under
Rule 701 and "control securities" under Rule 144 promulgated under the Act. I warrant and represent to the Company that I have no present intention of distributing or selling said
Shares, except as permitted under the Act and any applicable state securities laws. 

        I
further acknowledge that I will not be able to resell the Shares for at least ninety days after the stock of the Company becomes publicly traded (i.e., subject to the reporting
requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934) under Rule 701 and that more restrictive conditions apply to affiliates of the Company under Rule 144. 

        I
further acknowledge and agree that under the provisions of the Option, the Company may elect, prior to the first date upon which any security of the Company is listed (or approved for
listing) upon notice of issuance on any securities exchange, or designated (or approved for designation) upon notice of issuance as a national market security on an interdealer quotation system (the
"Listing Date"), to repurchase all or any part of the Shares on the terms and conditions provided in the Option and that 

9

 

such
right of repurchase may be assigned by the Company. I further acknowledge and agree that if the Company does not elect to exercise such right of repurchase, and at any time thereafter but prior
to the Listing Date, I (including any permitted transferee of the Shares under the provisions of the Option) receive a bona fide offer to purchase all or any of the Shares from a third party (other
than such a permitted transferee) which I wish to accept, I may only transfer such Shares pursuant to and in accordance with the provisions of the Option which provide the Company with a right of
first refusal. 

        I
further acknowledge that all certificates representing any of the Shares subject to the provisions of the Option shall have endorsed thereon appropriate legends reflecting the
foregoing limitations, as well as any legends reflecting restrictions pursuant to the Company's Articles of Incorporation, Bylaws and/or applicable securities laws. 

        I
further agree that, if required by the Company (or a representative of the underwriters) in connection with the first underwritten registration of the offering of any securities of the
Company under the Act, I will not sell or otherwise transfer or dispose of any shares of Common Stock or other securities of the Company during such period (not to exceed one hundred eighty
(180) days) following the effective date of the registration statement of the Company filed under the Act (the "Effective Date") as may be requested by the Company or the representative of the
underwriters. I further agree that the Company may impose stop-transfer instructions with respect to securities subject to the foregoing restrictions until the end of such period. 

	 	 	Very truly yours,
	

 	
 	

    
    
 Printed Name

10

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PROS HOLDINGS, INC. 1999 EQUITY INCENTIVE PLAN IMMEDIATELY EXERCISABLE INCENTIVE STOCK OPTION GRANT

NOTICE OF EXERCISE

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