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Exhibit 10.4  

 
 

PROS Strategic Solutions, Inc.    
    

 
 

STOCK PURCHASE
  AND STOCKHOLDERS AGREEMENT    
    

As
of June 8, 1998 

EXHIBITS

	A.	 	Investors
	B.	 	Certificate of Incorporation; Certificate of Designation
	C.	 	Selling Stockholders
	D.	 	Repurchase Agreement
	E.	 	Disclosure Exceptions
	F.	 	Indemnification Agreement
	G.	 	Opinion of Counsel (Company)
	H.	 	Release and Settlement Agreement

SCHEDULES

	4.4
	Agreements
Regarding Repurchase of Shares 

 

	SECTION 1. PURCHASE AND SALE OF SHARES; REDEMPTION	 	1
	 	1.1	 	Description of Securities	 	1
	 	1.2	 	Sale and Purchase; Redemption	 	1
	 	1.3	 	Closing	 	2
	

SECTION 2. REPRESENTATIONS AND WARRANTIES	
 	

2
	 	2.1	 	Organization and Corporate Power	 	2
	 	2.2	 	Authorization and Non-Contravention	 	2
	 	2.3	 	Capitalization	 	3
	 	2.4	 	Subsidiaries; Investments	 	4
	 	2.5	 	Financial Statements and Matters	 	4
	 	2.6	 	Absence of Undisclosed Liabilities	 	5
	 	2.7	 	Absence of Certain Developments	 	5
	 	2.8	 	Ordinary Course	 	5
	 	2.9	 	Receivables	 	5
	 	2.10	 	Title to Properties	 	5
	 	2.11	 	Tax Matters	 	6
	 	2.12	 	Certain Contracts and Arrangements	 	6
	 	2.13	 	Intellectual Property Rights; Employee Restrictions	 	7
	 	2.14	 	Litigation	 	8
	 	2.15	 	Employee Benefit Plans	 	8
	 	2.16	 	Labor Laws	 	9
	 	2.17	 	Key Employees	 	9
	 	2.18	 	Hazardous Waste, Etc	 	9
	 	2.19	 	Business; Compliance with Laws	 	9
	 	2.20	 	Investment Banking; Brokerage	 	9
	 	2.21	 	Insurance	 	9
	 	2.22	 	Transactions with Affiliates	 	10
	 	2.23	 	Customers and Distributors	 	10
	 	2.24	 	Disclosure	 	10
	 	2.25	 	Qualified Small Business Stock	 	10
	 	2.26	 	Consolidation and Reincorporation Effective.	 	10
	

SECTION 2A. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS	
 	

11
	

SECTION 3. CONDITIONS OF PURCHASE	
 	

12
	 	3.1	 	Satisfaction of Conditions	 	12
	 	3.2	 	Director Election and Indemnification	 	12
	 	3.3	 	Opinions of Counsel	 	12
	 	3.4	 	Reincorporation	 	12
	 	3.5	 	Authorization	 	12
	 	3.6	 	Investors' Fees	 	12
	 	3.7	 	No Violation or Injunction	 	12
	 	3.8	 	Consents and Waivers	 	12
	 	3.9	 	Repurchase Agreement	 	13
	 	3.10	 	Repayment of Company Loans	 	13
	 	3.12	 	Securities Compliance	 	13
	

SECTION 4. COVENANTS	
 	

13
	 	4.1	 	Financial Statements and Budget Information; Inspections	 	13
	 	4.2	 	Indemnification; Insurance	 	13
	 	4.3	 	Board of Directors	 	14
	 	4.4	 	Restrictive Covenants	 	14
	 	 	 	 	 

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	 	4.5	 	Repurchase; Use of Proceeds	 	15
	 	4.6	 	Key Person Insurance	 	15
	 	4.7	 	Stock Awards	 	15
	 	4.8	 	Assignment	 	15
	

SECTION 5. RIGHTS TO PURCHASE	
 	

15
	 	5.1	 	Right to Participate in Certain Sales of Additional Securities	 	16
	 	5.2	 	Assignment of Rights	 	16
	

SECTION 6. REGISTRATION RIGHTS	
 	

16
	 	6.1	 	Optional Registrations	 	16
	 	6.2	 	Required Registrations	 	17
	 	6.3	 	Registrable Securities	 	19
	 	6.4	 	Further Obligations of the Company	 	19
	 	6.5	 	Indemnification: Contribution	 	21
	 	6.6	 	Rule 144 and Rule 144A Requirements	 	24
	 	6.7	 	Transfer of Registration Rights	 	24
	 	6.8	 	"Market Stand-off" Agreement	 	24
	 	6.9	 	Termination of Registration Rights Provisions	 	24
	

SECTION 7. GENERAL	
 	

24
	 	7.1	 	Amendments, Waivers and Consents	 	24
	 	7.2	 	Survival of Representations, Warranties and Covenants; Assignability	 	25
	 	7.3	 	Legend on Securities	 	25
	 	7.4	 	Governing Law	 	25
	 	7.5	 	Section Headings and Gender	 	25
	 	7.6	 	Counterparts	 	25
	 	7.7	 	Notices and Demands	 	26
	 	7.8	 	Dispute Resolution	 	26
	 	7.9	 	Remedies; Severability	 	26
	 	7.10	 	Integration	 	27

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STOCK PURCHASE
  AND STOCKHOLDERS AGREEMENT    
    

        STOCK PURCHASE AND STOCKHOLDERS AGREEMENT ("Agreement") made as of this 8th day of June, 1998, by and among PROS Strategic Solutions, Inc., a Delaware
corporation (together with any predecessors or successors thereto and, subject to Section 2, the "Company"), Ronald F. Woestmeyer, Mariette M.
Woestmeyer and Robert Salter (collectively the "Stockholders" and individually a "Stockholder"), and the investment partnerships and other investors
named in Exhibit A hereto (together with their successors and assigns, collectively the
"Investors," and each individually an "Investor"). 

        WHEREAS,
the majority of the outstanding shares of the Company's capital stock prior to the date hereof are owned by the Stockholders; and 

        WHEREAS,
the Company has authorized the issuance and sale to the Investors of a total of 3,921,312 shares of Series A Convertible Redeemable Preferred Stock, par value $0.001 per
share ("Convertible Preferred Stock"), having the rights and preferences set forth in Exhibit B
for an aggregate purchase price of $25 million; 

        WHEREAS,
the Company has agreed to repurchase and certain Stockholders named in Exhibit C hereto (the
"Selling Stockholders") have agreed to sell to the Company, an aggregate of 784,262 shares of the Company's Common Stock, par value $0.001 per share
("Common Stock"), for an aggregate purchase price of $5 million; and 

        WHEREAS,
the parties hereto desire to set forth the terms of their ongoing relationship in connection with the Company. 

        NOW
THEREFORE, in consideration of the foregoing and the mutual covenants and agreements hereinafter set forth, the parties hereto agree as follows: 

SECTION
1. PURCHASE AND SALE OF SHARES; REDEMPTION 

        1.1    Description of Securities.    The Company's authorized capital stock consists of Common Stock, Convertible
Preferred Stock and Redeemable Preferred Stock, par value $.001 per share (the "Redeemable Preferred Stock"). The Convertible Preferred Stock and the
Redeemable Preferred Stock have the rights, preferences and other terms set forth in Exhibit B. For purposes of this Agreement, the shares of
Convertible Preferred Stock to be acquired by the Investors from the Company hereunder are referred to as the "Convertible Preferred Shares," the shares
of Redeemable Preferred Stock and Common Stock issuable upon conversion of the Convertible Preferred Shares are referred to as the "Conversion Shares,"
and the Convertible Preferred Shares and the Conversion Shares are sometimes referred to herein as the "Securities." 

        1.2    Sale and Purchase; Redemption.    Upon the terms and subject to the conditions herein, and in reliance on the
representations and warranties set forth in Section 2, (a) at the Closing (as defined in Section 1.3) the Investors shall purchase from the Company, and the Company shall issue
and sell to each of the Investors, at the Closing (as defined in Section 1.3), the number of shares of Convertible Preferred Stock set forth opposite the name of such Investor in  Exhibit A for
the purchase price of $6.3754 per share, and the Company shall without further action grant the Investors the rights set forth
herein. Concurrently therewith, the Company shall acquire from the Selling Stockholders, and each Selling Stockholder shall sell to the Company that number of shares of Common Stock set forth opposite
the name of such Selling Stockholder in Exhibit C for the purchase price of $6.3754 per share, (the "Redemption
Shares") for an aggregate repurchase price of $5 million, pursuant to the Repurchase Agreement in the form attached hereto as  Exhibit D (the "Repurchase Agreement"). All purchase and redemption payments hereunder shall be
made by wire transfer of next day available funds. 

 

        1.3    Closing.    The closing of the purchases and sales of the Convertible Preferred Stock and the repurchase of
Common Stock from the Selling Stockholders of the Company contemplated by Section 1.2 (the "Closing") shall take place at 1:00 p.m.
Central Time on June 8, 1998 or such later date as each of the conditions set forth in Section 3 hereof shall have been satisfied or waived by the Investors (the
"Closing Date"); provided, however, that the Investors shall have the right, exercisable in their sole discretion, to terminate this Agreement if the
conditions set forth in Section 3 hereof shall not have been satisfied by June 8, 1998, and this Agreement shall automatically terminate if the conditions set forth in Section 3
hereof shall not have been satisfied by June 8, 1998 and the Investors have not waived such conditions by June 8, 1998. 

SECTION
2. REPRESENTATIONS AND WARRANTIES 

        In
order to induce the Investors to enter into this Agreement, the Company and each Stockholder jointly and severally represents and warrants to each of the Investors the following,
except as set forth in the schedule of exceptions attached hereto as Exhibit E (the "Disclosure
Schedule"). For purposes of this Section 2, references to the "Company" shall mean and refer to PROS Strategic
Solutions, Inc., a Delaware corporation, and its subsidiaries (including, without limitation, with respect to Section 2.12 hereof) and predecessors, as the context requires. 

        2.1    Organization and Corporate Power.    The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, and is qualified to do business as a foreign corporation in each jurisdiction in which the failure to be so qualified could have a material adverse
effect on its assets, liabilities, condition (financial or other), business, results of operations or prospects (a "Material Adverse Effect"). The
Company has all required corporate power and authority to carry on its business as presently conducted, to enter into and perform this Agreement and the agreements contemplated hereby to which it is a
party and to carry out the transactions contemplated hereby and thereby, including the issuance of the Securities and the repurchase of the Redemption Shares. The copies of the Company's Certificate
of Incorporation together with the Company's Certificate of Designations, Preferences and Rights of Series A Convertible Redeemable Preferred Stock and Redeemable Preferred Stock as each is set
forth in Exhibit B (and as further amended to date, referred to collectively as the "Certificate of
Incorporation") and Bylaws of the Company, as amended to date (the "Bylaws"), all of which have been furnished to the Investors
by the Company, are correct and complete at the date hereof. The Company has complied with all terms of its Certificate of Incorporation and Bylaws. 

        2.2    Authorization and Non-Contravention.    

        (a)   The
execution, delivery and performance by the Company of this Agreement and all other agreements, documents and instruments to be executed and delivered by the Company
as contemplated hereby (including, without limitation, the Repurchase Agreement) and the issuance and delivery of (i) the Convertible Preferred Shares, and (ii) upon the conversion of
the Convertible Preferred Shares, the Conversion Shares, have been duly authorized by all necessary corporate and other action of the Company. This Agreement and all documents executed by the Company
pursuant hereto (including, without limitation, the Repurchase Agreement) are valid and binding obligations of the Company, enforceable in accordance with their terms. The execution, delivery and
performance by the Company of this Agreement and all other agreements, documents and instruments to be executed and delivered by the Company as contemplated hereby (including, without limitation, the
Repurchase Agreement) and the issuance and delivery of (i) the Convertible Preferred Shares and (ii) upon the conversion of the Convertible Preferred Shares, the Conversion Shares, do
not and will not: (A) except as disclosed in the Disclosure Schedule, violate, conflict with or result in a default (whether after the giving of notice, lapse of time or both) under any
contract or obligation to which the Company is a party or by which it or its assets are bound, or 

2

 

any
provision of the Certificate of Incorporation or Bylaws of the Company, or cause the creation of any encumbrance upon any of the assets of the Company except as contemplated herein or in the
Certificate of Incorporation; (B) violate or result in a violation of, or constitute a default under, any provision of any law, regulation or rule, or any order of, or any restriction imposed
by, any court or governmental agency applicable to the Company; (C) except as disclosed in the Disclosure Schedule, require from the Company any notice to, declaration or filing with, or
consent or approval of any governmental authority or third party; or (D) except as disclosed in the Disclosure Schedule, accelerate any obligation under, or give rise to a right of termination
of, any agreement, permit, license or authorization to which the Company is a party or by which the Company is bound. 

        (b)   Each
Stockholder has all right, authority, power and (if applicable) capacity to enter into this Agreement and each agreement, document and instrument to be executed and
delivered by or on behalf of such Stockholder pursuant to or as contemplated by this Agreement (including, without limitation, the Repurchase Agreement) and to carry out the transactions contemplated
hereby and thereby. This Agreement and each agreement, document and instrument executed and delivered by each Stockholder pursuant to or as contemplated by this Agreement (including, without
limitation, the Repurchase Agreement) constitute, or when executed and delivered will constitute, valid and binding obligations of such Stockholder enforceable in accordance with its respective terms.
The execution, delivery and performance by each Stockholder of this Agreement and each such other agreement, document and instrument (including, without limitation, the Repurchase Agreement), and the
performance by such Stockholder of the transactions contemplated hereby and thereby do not and will not: (A) violate, conflict with or result in a default (whether after the giving of notice,
lapse of time or both) under any contract or obligation to which such Stockholder or the Company is a party or by which he or its assets are bound, or any provision of the Certificate of Incorporation
or Bylaws of the Company, or cause the creation of any encumbrance upon any of the assets of such Stockholder or the Company; (B) violate or result in a violation of, or constitute a default
under, any provision of any law, regulation or rule, or any order of, or any restriction imposed by, any court or other governmental agency applicable to the Company or such Stockholder;
(C) require from such Stockholder or the Company any notice to, declaration or filing with, or consent or approval of any governmental authority or other third party; or (D) accelerate
any obligation under, or give rise to a right of termination of, any agreement, permit, license or authorization to which such Stockholder or the Company is a party or by which such Stockholder or the
Company is bound. 

        2.3    Capitalization.    As of the Closing and after giving effect to the transactions contemplated hereby, the
authorized capital stock of the Company will consist of 20,000,000 shares of Common Stock, of which 8,492,868 shares will be issued and outstanding, 3,921,312 shares of Convertible Preferred Stock, of
which 3,921,312 shares will be issued and outstanding, and 3,921,312 shares of Redeemable Preferred Stock, of which no shares will be issued and outstanding. The Company has authorized and reserved
for issuance upon conversion of the Convertible Preferred Shares up to 5,008,809 shares of Common Stock and 3,921,312 shares of Redeemable Preferred Stock (subject to adjustment for stock splits,
stock dividends and the like), has authorized and reserved for issuance upon exercise of options under the Company's 1997 Stock Option Plan (the "Option
Plan") 1,231,985 shares of Common Stock (subject to adjustments for stock splits, stock dividends and the like). Except for the 549,677 shares of Common Stock issuable upon
exercise of outstanding options under the Option Plan and the Conversion Shares, the Company has not issued or agreed to issue and is not obligated to issue any outstanding warrants, options or other
rights to purchase or acquire any shares of its capital stock, nor any outstanding securities convertible into such shares or any warrants, options or other rights to acquire any such convertible
securities. As of the Closing, and after giving effect to the transactions contemplated hereby, all of the outstanding shares of capital stock of the Company (including, without limitation, the
Convertible Preferred Shares) will have been duly and validly authorized and issued and 

3

 

will
be fully paid and nonassessable and, assuming the accuracy of the Investors' representations herein, will have been offered, issued, sold and delivered in compliance with applicable federal and
state securities laws and not subject to any preemptive rights. The Conversion Shares issuable upon conversion of the Convertible Preferred Shares will upon issuance be duly and validly authorized and
issued, fully paid and nonassessable and not subject to any preemptive rights and, assuming the accuracy of the Investors' representations herein, will be issued in compliance with federal and state
securities laws. The relative rights, preferences and other provisions relating to the Convertible Preferred Shares and the Redeemable Preferred Stock are as set forth in  Exhibit B attached hereto.
Except as set forth in Section 2.3 of the Disclosure Schedule, there are no preemptive rights, rights of first
refusal, put or call rights or obligations or anti-dilution rights with respect to the issuance, sale or redemption of the Company's capital stock, other than rights to which the Investors
and Stockholders are entitled as set forth in this Agreement and the Certificate of Incorporation, and except as described in the Repurchase Agreement. Except as set forth herein, there are no rights
to have the Company's capital stock registered for sale to the public under the laws of any jurisdiction, no agreements relating to the voting of the Company's voting securities, and no restrictions
on the transfer of the Company's capital stock, except as set forth in Section 2.3 of the Disclosure Schedule. After giving effect to the transactions contemplated hereby, the outstanding
shares of the Company's capital stock are held beneficially and of record by the persons identified in Section 2.3 of the Disclosure Schedule in the amounts indicated thereon. 

        2.4    Subsidiaries; Investments.    The Company has no subsidiaries or interests in any corporation, joint venture,
partnership or other entity. The Company is not controlled by or under common control with any third party except as disclosed in Section 2.4 of the Disclosure Schedule. 

        2.5    Financial Statements and Matters.    

        (a)   The
Company has previously furnished to the Investors copies of its audited financial statements for the fiscal years ended December 31, 1995, 1996 and 1997
together with copies of its unaudited financial statements for the three-month period ended March 31, 1998 (the "Financial Statements"). Such
financial statements referred to in this Section 2.5(a) were prepared in conformity with generally accepted accounting principles applied on a consistent basis, are complete, correct and
consistent in all material respects with the books and records of the Company and fairly and accurately present the financial position of the Company as of the dates thereof and the results of
operations and cash flows of the Company for the periods shown therein (subject to the absence of footnotes and normal year-end adjustments in the case of the unaudited statements). 

        (b)   Without
limiting the generality of the foregoing, the Company's recognition of revenue in each period reflected in the Financial Statements has complied in all material
respects with American Institute of Certified Public Accountants ("AICPA") Statement of Position ("SOP")
91-1, Software Revenue Recognition, or AICPA SOP 97-2, Software Revenue
Recognition, as applicable. The Company does not believe, after investigation, that AICPA SOP 97-2 will have a significant impact on the Company's Financial
Statements or operating results. 

        (c)   The
projections which have been separately disclosed in writing to the Investors in the Company's Private Placement Memorandum dated as of February 1998 as
revised, updated and provided to the Investors (the "PPM"), represent reasonable objectives for the Company's performance for 1998 based upon reasonable
assumptions, which the Company believes continue to be reasonable as of the date hereof. 

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        2.6    Absence of Undisclosed Liabilities.    Except as set forth in the Disclosure Schedule and except as and to the
extent reflected or reserved against in the unaudited balance sheet of the Company at March 31, 1998 contained in the financial statements referred to in Section 2.5(a) (the
"Base Balance Sheet"), the Company does not have and is not subject to any material liability or obligation of any nature, whether accrued, absolute,
contingent or otherwise. 

        2.7    Absence of Certain Developments.    Except as set forth in the Disclosure Schedule, since the date of the Base
Balance Sheet, there has not been any: (i) material adverse change in the financial condition of the Company or in the assets, liabilities, condition (financial or other), business, results of
operations or prospects of the Company (a "Material Adverse Change"), (ii) declaration, setting aside or payment of any dividend or other
distribution with respect to, or any direct or indirect redemption or acquisition of, any of the capital stock of the Company, (iii) waiver of any valuable right of the Company or cancellation
of any debt or claim held by the Company, (iv) loss, destruction or damage to any property which is material to the assets, liabilities, condition (financial or other), properties, business,
results of operations or prospects of the Company, whether or not insured, (v) acquisition or disposition of any assets or other transaction by the Company other than in the ordinary course of
business, (vi) material
transaction or agreement involving the Company and any officer, director, employee or stockholder of the Company, (vii) material increase, direct or indirect, in the compensation paid or
payable to any officer, key employee or director of the Company or any establishment or creation of any employment or severance agreement or employee benefit plan with respect to such persons,
(viii) material loss of personnel of the Company, material change in the terms and conditions of the employment of the Company's key personnel or any labor disputes involving the Company,
(ix) arrangements relating to any royalty, dividend or similar payment based on the sales volume of the Company, whether as part of the terms of the Company's capital stock or by any separate
agreement, (x) agreement with respect to the endorsement of the Company's products, (xi) loss or any development that is reasonably likely to result in a loss of any significant
customer, account or employee of the Company, (xii) incurrence of indebtedness or any lien, (xiii) transaction not occurring in the ordinary course of business, or (xiv) any
agreement with respect to any of the foregoing actions. 

        2.8    Ordinary Course.    Since the date of the Base Balance Sheet, the Company has conducted its business only in
the ordinary course and consistent with its prior practices. 

        2.9    Receivables.    All of the accounts and other amounts receivable by the Company, however styled and whether
shown or reflected on the Base Balance Sheet or otherwise, represent bona fide completed sales made in the ordinary course of business, are valid and enforceable claims, are subject to no known
set-offs or counterclaims, and are, in the best judgment of the Company, fully collectible in the normal course of business after deducting the reserve set forth in the Base Balance Sheet
and adjusted since that date, which reserve is a reasonable estimate of the Company's uncollectible accounts. 

        2.10    Title to Properties.    Section 2.10 of the Disclosure Schedule sets forth the addresses and uses of
all real property that the Company owns, leases or subleases. The Company has good, valid and marketable title to or other valid and enforceable rights to use all assets material to its business
including without limitation all rights to the Company's facility located in Houston, Texas and to those assets reflected on the Base Balance Sheet or acquired by it after the date thereof (except for
properties disposed of since that date in the ordinary course of business), free and clear of all liens, claims or encumbrances of any nature, other than liens for taxes not yet due and payable, minor
liens and encumbrances that do not materially detract from the value of the property subject thereto or materially impair the operations of the Company, and liens that have otherwise arisen in the
ordinary course of business. All equipment included in such properties which is necessary to the business of the Company is in good condition and repair (ordinary wear and tear excepted) and all
leases of real or 

5

 

personal
property to which the Company is a party are fully effective and afford the Company peaceful and undisturbed possession of the subject matter of the lease. The property and assets of the
Company are sufficient for the conduct of its business as presently conducted. The Company is not in violation of any zoning, building or safety ordinance, regulation or requirement or other law or
regulation applicable to the operation of its owned or leased properties, which violation would have a Material Adverse Effect, nor has it received any notice of any such violation. There are no
defaults by the Company or to the best knowledge of the Company, by any other party, which might curtail in any material respect the present use of the Company's property. The performance by the
Company of this Agreement will not result in the termination of, or in any increase of any amounts payable under, any of its leases. 

        2.11    Tax Matters.    The Company has filed all federal, state, local and foreign income, excise and franchise tax
returns, real estate and personal property tax returns, sales and use tax returns and other tax returns required to be filed by it, such returns have been prepared and filed in the manner required by
applicable law, and the Company has paid all taxes owing by it, except taxes which have not yet accrued or otherwise become due and for which adequate provision has been made in the Financial
Statements. The provision for taxes on the Base Balance Sheet is sufficient as of its date for the payment of all accrued and unpaid federal, state, county and local taxes of any nature of the
Company, and any applicable taxes owing to any foreign jurisdiction, whether or not assessed or disputed. With regard to the federal income tax returns of the Company, the Company has never received
notice of any audit or of any proposed deficiencies from the Internal Revenue Service. There are in effect no waivers of applicable statutes of limitations with respect to any taxes owed by the
Company for any year. Neither the Internal Revenue Service nor any other taxing authority is now asserting or, to the best knowledge of the Company, threatening to assert against the Company any
deficiency or claim for additional taxes or interest thereon or penalties in connection therewith. All taxes and other assessments which the Company is required to collect or withhold have been duly
withheld or collected and have been paid to the proper domestic or foreign taxing authority, as applicable. The Company is not a party to any tax-sharing agreement or similar arrangement
with any other party. Except as set forth in Sections 2.10 and 2.12 of the Disclosure Schedule with respect to leases of real and personal property, the Company is not currently under any contractual
or legal obligation to pay any tax obligations of, or with respect to, any transaction relating to any other person or to indemnify any other person with respect to any tax. The Company has made a
valid election under Section 1362 of the Internal Revenue Code and under any corresponding provision of applicable state law to be an S Corporation, and has been an S Corporation since
July 1, 1989. Such election has been terminated effective January 1, 1998. 

        2.12    Certain Contracts and Arrangements.    Except as set forth in Section 2.12 of the Disclosure Schedule
(with true and correct copies delivered to the Investors), the Company is not a party or subject to or bound by: 

        (a)   any
plan or contract providing for collective bargaining or the like, or any contract or agreement with any labor union; 

        (b)   any
contract, lease or agreement creating any obligation of the Company to pay to any third party $100,000 or more with respect to any single such contract or agreement; 

        (c)   any
contract or agreement for the sale, license, lease or disposition of products in excess of $100,000; 

        (d)   any
contract containing covenants directly or explicitly limiting the freedom of the Company to compete in any line of business or with any person or entity; 

        (e)   any
license agreement (as licensor or licensee) material to the Company's business or projected business; 

6

 

        (f)    any
contract or agreement for the purchase of any leasehold improvements, equipment or fixed assets for a price in excess of $100,000; 

        (g)   any
indenture, mortgage, promissory note, loan agreement, guaranty or other agreement or commitment for borrowing in excess of $100,000 or any pledge or security
arrangement; 

        (h)   any
material joint venture, partnership, manufacturing, development or supply agreement; 

        (i)    any
endorsement or any other advertising, promotional or marketing agreement; 

        (j)    any
employment contracts, or agreements with officers, key employees, directors or stockholders of the Company or persons or organizations related to or affiliated with
any such persons; 

        (k)   except
as contemplated by this Agreement, any stock redemption or purchase agreements or other agreements affecting or relating to the capital stock of the Company,
including without limitation any agreement with any stockholder of the Company which includes without limitation, anti-dilution rights, registration rights, voting arrangements, operating
covenants or similar provisions; 

        (l)    any
pension, profit sharing, retirement or stock options plans; 

        (m)  any
material royalty, dividend or similar arrangement based on the sales volume of the Company; 

        (n)   any
acquisition, merger or similar agreement; 

        (o)   any
contract with a governmental body under which the Company may have an obligation for renegotiation; 

        (p)   any
agreement with any stockholder of the Company or any affiliate of any such stockholder; or 

        (q)   any
other contract not executed in the ordinary course of business. 

        All
of the Company's contracts and commitments are in full force and effect and neither the Company, nor, to the best knowledge of the Company, any other party is in default thereunder
(nor, to the best knowledge of the Company, has any event occurred which with notice, lapse of time or both would constitute a default thereunder), and the Company has not received notice of any
alleged default under any such contract, agreement, understanding or commitment. 

        2.13    Intellectual Property Rights; Employee Restrictions.    Except as set forth in Section 2.13 of the
Disclosure Schedule: 

        (a)   The
Company has exclusive ownership of, with the exclusive right to use, sell, license, dispose of, and bring actions for infringement of, all Intellectual Property
Rights (as hereinafter defined) material to the conduct of its business as presently conducted, including without limitation all rights to the Company name "PROS Strategic Solutions, Inc." and
to the trademarks and product names listed on Section 2.13 of the Disclosure Schedule hereof (the "Company Rights"). 

        (b)   The
business of the Company as presently conducted and the manufacturing and marketing of the products of the Company do not violate any agreements which the Company has
with any third party or infringe any patent, trademark, copyright or trade secret or, to the best knowledge of the Company, any other Intellectual Property Rights of any third party. 

7

 

        (c)   No
claim is pending or, to the best knowledge of the Company, threatened against the Company nor has the Company received any notice or claim from any person asserting
that any of the Company's present or contemplated activities infringe or may infringe any Intellectual Property Rights of such person, and the Company is not aware of any infringement by any other
person of any rights of the Company under any Intellectual Property Rights. 

        (d)   The
Company has taken all steps required to establish and preserve its ownership of all of the Company Rights; each current and former employee of the Company, and each
of the Company's consultants and independent contractors involved in development of any of the Company Rights, has executed an agreement regarding confidentiality, proprietary information and
assignment of inventions and copyrights to the Company, and, to the best knowledge of the Company, none of such employees, consultants or independent contractors is in violation of any agreement or in
breach of any agreement or arrangement with former or present employers relating to proprietary information or assignment of inventions. 

        As
used herein, the term "Intellectual Property Rights" shall mean all intellectual property rights, including, without limitation, all of
the registered rights set forth on Section 2.13 of the Disclosure Schedule and all patents, patent applications, patent rights, trademarks, trademark applications, trade names, service marks,
service mark applications, copyrights, copyright applications, computer programs and other computer software, inventions, designs, samples, specifications, schematics, know-how, trade
secrets, proprietary processes and formulae, including production technology and processes, all source and object code, algorithms, promotional materials, customer lists, supplier and dealer lists and
marketing research, and all documentation and media constituting, describing or relating to the foregoing, including without rotation, manuals, memoranda and records. Section 2.14 of the
Disclosure Schedule contains a list and brief description of all Intellectual Property Rights owned by, or registered in the name of, the Company or of which the Company is the licensor or a licensee
of a material right or in which the Company has any material right and, in each case, a brief description of the nature of the right 

        2.14    Litigation.    Except as set forth in the Disclosure Schedule, there is no litigation or governmental
proceeding or investigation pending or, to the best knowledge of the Company, threatened against the Company or affecting any of its properties or assets or against any officer, director or key
employee of the Company in his or her capacity as an officer, director or employee of the Company, which litigation, proceeding or investigation is reasonably expected to have a Material Adverse
Effect, or which may call into question the validity or hinder the enforceability of this Agreement or any other agreements or transactions contemplated hereby; nor to the best knowledge of the
Company has there occurred any event nor does there exist any condition on the basis of which any such litigation, proceeding or investigation might be properly instituted or commenced. 

        2.15    Employee Benefit Plans.    The Company does not maintain or contribute to any employee benefit plan, stock
option, bonus or incentive plan, severance pay policy or agreement, deferred compensation agreement, or any similar plan or agreement (an "Employee Benefit
Plan") other than the Employee Benefit Plans identified and described in Section 2.15 of the Disclosure Schedule. The terms and operation of each Employee Benefit Plan
comply in all material respects with all applicable laws and regulations relating to such Employee Benefit Plans. There are no unfunded obligations of the Company under any retirement, pension,
profit-sharing, deferred compensation plan or similar program. The Company is not required to make any payments or contributions to any Employee Benefit Plan pursuant to any collective bargaining
agreement or, to the knowledge of the Company, any applicable labor relations law, and all Employee Benefit Plans are terminable at the discretion of 

8

 

the
Company without liability to the Company upon or following such termination. The Company has never maintained or contributed to any Employee Benefit Plan providing or promising any health or other
nonpension benefits to terminated employees. With respect to any Employee Benefit Plan, there has occurred no "prohibited transaction," as defined in Section 406 of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") or Section 4975 of the Code, or breach of any duty under ERISA or other applicable law which
could result, directly or indirectly, in any taxes, penalties or other liability to the Company. No litigation, arbitration or governmental administrative proceeding (or investigation) or other
proceeding (other than those relating to routine claims for benefits) is pending or, to the best knowledge of the Company, threatened with respect to any such Employee Benefit Plan. 

        2.16    Labor Laws.    The Company employs approximately 155 employees and generally enjoys good employer-employee
relationships. The Company is not delinquent in payments to any of its employees for any wages, salaries, commissions, bonuses or other direct compensation for any services performed for it as of the
date hereof or amounts required to be reimbursed to such employees. The Company is in compliance in all material respects with all applicable laws and regulations respecting labor, employment, fair
employment practices, terms and conditions of employment, and wages and hours. There are no charges of employment discrimination or unfair labor practices or strikes, slowdowns, stoppages of work or
any other concerted interference with normal operations existing, pending or, to the best knowledge of the Company, threatened against or involving the Company. 

        2.17    Key Employees.    Except as set forth in Section 2.17 of the Disclosure Schedule, to the knowledge of
the Company, no key employee of the Company has any plan or intention to terminate his employment with the Company and no supplier has any plan or intention to terminate or reduce its business with
the Company or to materially and adversely modify its relationship with the Company. 

        2.18    Hazardous Waste, Etc.    No hazardous wastes, substances or materials, or oil or petroleum products have been
generated, transported, used, disposed, stored or treated by the Company and no hazardous wastes, substances or materials, or oil or petroleum products have been released, discharged, disposed,
transported, placed or otherwise caused to enter the soil or water in, under or upon any real property owned, leased or operated by the Company. 

        2.19    Business; Compliance with Laws.    The Company has all necessary franchises, permits, licenses and other
rights and privileges necessary to permit it to own its property and so conduct its business as it is presently or contemplated to be conducted, except for those which the failure of the Company to
obtain would not have a Material Adverse Effect. The Company is currently and has heretofore been in compliance in all material respects with all federal, state, local and foreign laws and
regulations, including without limitation all laws and regulations administered by or promulgated by the Federal Trade Commission and/or the Food and Drug Administration. 

        2.20    Investment Banking; Brokerage.    Except as set forth in Section 2.20 of the Disclosure Schedule, there
are no claims for investment banking fees, brokerage commissions, finder's fees or similar compensation (exclusive of professional fees to lawyers and accountants) in connection with the transactions
contemplated by this Agreement payable by the Company or based on any arrangement or agreement made by or on behalf of the Company or any of the Stockholders. 

        2.21    Insurance.    The Company has fire, casualty and business interruption and other insurance policies, with
extended coverage, sufficient in amount to allow it to replace any of its material properties which might be damaged or destroyed, and such types and amounts of other insurance with respect to its
business and properties, on both a per occurrence and an aggregate basis, as are customarily carried by persons engaged in the same or similar business as the Company. There is no default or event
which could give rise to a default under any such policy. 

9

 

        2.22    Transactions with Affiliates.    There are no loans, leases, contracts or other transactions between the
Company and any officer, director or five percent (5%) stockholder of the Company or any family member or affiliate of the foregoing persons and there have been no such transactions within the past
five (5) years, except as set forth in Section 2.22 of the Disclosure Schedule. 

        2.23    Customers and Distributors.    Section 2.23 of the Disclosure Schedule sets forth each representative
and distributor of the Company at the date hereof (whether pursuant to a commission, royalty or other arrangement), and each customer, distributor and/or broker of the Company who accounted for more
than 5% of the sales of the Company for the twelve (12) months ended March 31, 1998 (collectively, the "Customers, Distributors and
Brokers"). The relationships of the Company with its Customers, Distributors, and Brokers are good commercial working relationships. No Customer, Distributor or Broker of the
Company has canceled or otherwise terminated its relationship with the Company, or has during the last twelve (12) months decreased materially its services, supplies or materials to the Company
or its usage or purchases of the services or products of the Company. No Customer, Distributor or Broker has, to the best knowledge of the Company, any plan or intention to terminate, to cancel or
otherwise materially and adversely modify its relationship with the Company or to decrease materially or limit its services, supplies or materials to the Company or its usage, purchase or distribution
of the services or products of the Company. 

        2.24    Disclosure.    The representations, warranties and disclosures made or contained in this Agreement, the
schedules and exhibits hereto, the certificates and statements executed or delivered in connection herewith and the PPM, when taken together, do not and shall not contain any untrue statement of a
material fact and do not and shall not omit to state a material fact required to be stated therein or necessary in order to make such representations, warranties or other material not misleading in
light of the circumstances in which they were made or delivered. There have been no events or transactions, or information which has come to the attention of the management of the Company, having a
direct impact on the Company or its assets, liabilities, financial condition, business, results of operations or prospects which, in the reasonable judgment of such management, could be expected to
have a Material Adverse Effect. 

        2.25    Qualified Small Business Stock.    As of the Closing, (i) the Company will be a domestic C Corporation,
(ii) the Company will not have, during the one-year period preceding the Closing, made any purchases of its own stock (other than stock issued to employees pursuant to the Option
Plan (as defined in Section 4.7 hereof) and in connection with termination of employment), (iii) the Company's (and any predecessor's) aggregate gross assets, as defined by
Section 1202(d)(2) of the Internal Revenue Code of 1986, as amended (the "Code"), at no time between the date of incorporation of the Company and
through the Closing have exceeded or will exceed $50,000,000, taking into account the assets of any corporations required to be aggregated with the Company in accordance with Section 1202(d)(3)
of the Code, and (iv) the Company will be an eligible corporation, as defined by Section 1202(e)(4) of the Code. 

        2.26    Consolidation and Reincorporation Effective.    As of the Closing, the Company together with its
predecessors-in-interest, as applicable, will have taken all requisite corporate governance and other actions and made all requisite filings with applicable governmental
authorities to authorize, ratify and make effective the merger of all subsidiaries of PROS Strategic Solutions, Inc., a Texas corporation and predecessor-in-interest to
the Company ("PROS-Texas"), with and into PROS-Texas and the issuance and cancellation of the shares of the Company to PROS-Texas, and the merger of
PROS-Texas with and into the Company. 

10

 

SECTION
2A. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS

        (i)    Each
Investor represents to the Company that it has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks
of the investment contemplated by this Agreement and making an informed investment decision with respect thereto. Each Investor represents that it is an "accredited investor" as such term is defined
in Rule 501 under the Securities Act of 1933, as amended (the "Securities Act"). Each Investor represents to the Company that it is purchasing
the Convertible Preferred Shares for its own account, for investment only and not with a view to, or any present intention of, effecting a distribution of such securities or any part thereof except
pursuant to a registration or an available exemption under applicable law. Such Investor acknowledges that its respective Convertible Preferred Shares have not been registered under the Securities Act
or the securities laws of any state or other jurisdiction and cannot be disposed of unless they are subsequently registered under the Securities Act and any applicable state laws or exemption from
such registration is available. 

        (ii)   Each
Investor has full right, authority and power as an individual or under a governing partnership, governing agreement, or otherwise, to enter into this Agreement and
each agreement, document and instrument to be executed and delivered by or on behalf of such Investor pursuant to or as contemplated by this Agreement and to carry out the transactions contemplated
hereby and thereby, and the execution, delivery and performance by such Investor of this Agreement and each such other agreement, document and instrument have been duly authorized by all necessary
action under such Investor's governing partnership or other governing agreement, if any. This Agreement and each agreement, document and instrument executed and delivered by each Investor pursuant to
or as contemplated by this Agreement constitute, or when executed and delivered will constitute, valid and binding obligations of each of the Investors enforceable in accordance with their respective
terms. The execution, delivery and performance by each Investor of this Agreement and each such other
agreement, document and instrument, and the performance of the transactions contemplated hereby and thereby do not and will not: (A) violate, conflict with or result in a default (whether after
the giving of notice, lapse of time or both) under any contract or obligation to which any Investor is a party or by which it or its assets are bound, or cause the creation of any encumbrance upon any
of the assets of any Investor; (B) violate or result in a violation of, or constitute a default under, any provision of any law, regulation or rule, or any order of, or any restriction imposed
by, any court or other governmental agency applicable to such Investor; (C) require from such Investor any notice to, declaration or filing with, or consent or approval of any governmental
authority or other third party; or (D) accelerate any obligation under, or give rise to a right of termination of, any agreement, permit, license or authorization to which any Investor is a
party or by which such Investor is bound. 

Each
Investor represents that there are no claims for investment banking fees, brokerage commissions, finder's fees or similar compensation (exclusive of professional fees to lawyers and accountants)
in connection with the transactions contemplated by this Agreement based on any arrangement or agreement made by or on behalf of such Investor. 

11

 

SECTION
3. CONDITIONS OF PURCHASE 

        Each
Investor's obligation to purchase and pay for the Convertible Preferred Shares to be purchased by it shall be subject to compliance by the Company and the Stockholders with their
agreements herein contained and to the fulfillment to the Investors' satisfaction, or the waiver by the Investors, on or before and at the Closing Date of the following conditions: 

        3.1    Satisfaction of Conditions.    The representations and warranties of the Company and the Stockholders contained
in this Agreement shall be true and correct on and as of the Closing Date; each of the conditions specified in this Section 3 shall have been satisfied or waived in writing by the Investors;
there shall have been no Material Adverse Change since March 31, 1998; and, on the Closing Date, certificates to such effect executed by the President and Chairman of the Board of the Company
shall have been delivered to the Investors. 

        3.2    Director Election and Indemnification.    Kurt R. Jaggers, as the nominee of the TA Funds, shall have been
elected as a director of the Company (together with any subsequent nominee of TA Funds or JMI, the "TA Nominee") and Harry S. Gruner, as the nominee of
JMI Equity Fund, L.P., ("JMI") shall have been elected as a Director of the Company (together with any subsequent nominee, the
"JMI Nominee" and together with the TA Nominee, the "Investors' Nominees") and the Company shall have
entered into an Indemnification Agreement with the Investors' Nominees and the Investors in the form attached hereto as Exhibit F. 

        3.3    Opinions of Counsel.    The Investors shall have received from Fulbright & Jaworski LLP an opinion dated
as of the Closing Date substantially in the form attached hereto as Exhibit G. 

        3.4    Reincorporation.    The Company's predecessor, PROS Strategic Solutions, Inc., a Texas corporation,
shall have been reincorporated under the laws of Delaware pursuant to a Certificate of Incorporation in the form included in Exhibit B and
otherwise on terms and conditions satisfactory to the Investors. 

        3.5    Authorization.    The Board of Directors of the Company shall have duly adopted resolutions in the form
reasonably satisfactory to the Investors and shall have taken all action necessary for the purpose of authorizing the Company to consummate the transactions contemplated hereby in accordance with the
terms hereof and to cause the Certificate of Incorporation and the rights, preferences, and designations of the Convertible Preferred Stock and the Redeemable Preferred Stock as set forth in  Exhibit B to become effective; and the Investors shall have received a certificate of the Secretary of the Company setting forth a copy of the
resolution and the Certificate of Incorporation and Bylaws of the Company and such other matters as may be reasonably requested by the Investors. 

        3.6    Investors' Fees.    The Company shall have paid on behalf of the Investors all reasonable legal fees and
related expenses incurred by the Investors in connection with the transactions contemplated by this Agreement. 

        3.7    No Violation or Injunction.    The consummation of the actions contemplated by this Agreement shall not be in
violation of any law or regulation, and shall not be subject to any injunction, stay or restraining order. 

        3.8    Consents and Waivers.    The Company and the Stockholders shall have obtained all consents or waivers necessary
to execute this Agreement and the other agreements and documents contemplated herein, to issue and sell the Securities to be sold to the Investors hereunder, to repurchase the shares of Common Stock
as contemplated by the Repurchase Agreement and to carry out the transactions contemplated hereby and thereby and shall have delivered evidence thereof to the Investors. All corporate and other action
and governmental filings necessary to effectuate the terms of this Agreement and other agreements and instruments executed and delivered by the Company in connection herewith shall have been made or
taken. 

12

 

        3.9    Repurchase Agreement.    The Repurchase Agreement shall be executed by the Selling Stockholders who agree in
the aggregate to the sale of 784,262 shares of their Common Stock to the Company on the Closing Date (adjusted appropriately for stock splits, stock dividends, recapitalizations and the like). 

        3.10    Repayment of Company Loans.    From the proceeds of the redemptions of their Common Stock contemplated by the
Repurchase Agreement, the Selling Stockholders shall repay in full any and all Promissory Notes issued by the Selling Stockholders to the Company. 

        3.11    Securities Compliance.    The offer, sale and issuance of the Securities to the Investors shall have been
qualified or registered in compliance with applicable Blue Sky and Federal Securities laws, or exemptions from such qualification or registration requirements shall have been obtained. 

SECTION
4. COVENANTS 

        The
Company agrees for the benefit of the Investors that it shall comply with the following covenants, provided that the covenants set forth in Sections 4.1, 4.3 (except to the extent
provided therein), 4.4 and 4.7 shall terminate as of the closing of the Company's first Qualified Public Offering, unless earlier terminated as may be agreed to in writing by two-thirds in
interest of the Investors. A "Qualified Public Offering" shall have the meaning provided in the Certificate of Incorporation attached hereto as  Exhibit B. 

        4.1    Financial Statements and Budget Information; Inspections.    So long as the Investors hold at least 390,000
Convertible Preferred Shares or shares of Common Stock (subject to adjustments for stock splits, stock dividends and the like), the Investors shall have the rights, and the Company shall have the
obligations, set forth in this Section 4.1. The Company will deliver to TA Associates, Inc. as representative of the Investors, internally prepared unaudited monthly and quarterly
financial statements and audited annual financial statements, as well as annual budgets and operating plans. The monthly and quarterly financial information will be provided within 45 days
after the end of each month and quarter. Notwithstanding the foregoing sentence, the Company agrees that it will make commercially reasonable efforts to reduce the number of days required to generate
monthly and quarterly financial information. The annual budget and operating plan will be presented at a Board of Directors meeting at least one month prior to the end of the fiscal year of the
Company preceding the year covered. An annual audit by an accounting firm of national recognition selected by the Board of Directors will be provided within 90 days after each fiscal
year-end of the Company. 

        The
Company will, upon reasonable prior notice to the Company and for corporate purposes, permit authorized representatives of TA Associates, Inc. as representative of the
investors to visit and inspect any of the properties of the Company, including its books of account (and to make copies thereof and take extracts therefrom), and to discuss its affairs, finances and
accounts with its officers, administrative employees and independent accountants, all at such reasonable times and as often as may be reasonably requested. 

        4.2    Indemnification; Insurance.    For so long as any of the Securities remains outstanding, the Certificate of
Incorporation or Bylaws of the Company will at all times during which any nominee of any of the Investors serves as director of the Company provide for indemnification of the directors and limitations
on the liability of the directors to the fullest extent permitted under applicable state law. Prior to any initial public offering, the Company will purchase a directors and officers insurance policy
on terms reasonably acceptable to the Investors' Nominees (who shall be third party beneficiaries of this Agreement) covering directors and officers of the Company in the amount of at least
$5 million, covering, among other things, violations of federal or state securities laws. 

13

   
        4.3    Board of Directors.    The Board of Directors of the Company shall consist of no more than eight
(8) members including the Investors' Nominees. The Company shall cause meetings of its Board of Directors to be held at least four (4) times each year at intervals of not more than four
(4) months and shall pay all reasonable out-of-pocket expenses incurred by the Investors' Nominees in connection with attending meetings or other functions of the
Company's Board of Directors or any committees thereof and shall pay the Investors' Nominees fees in an amount equal to any fees that are paid to the other non-management directors of the
Company; provided, however, that prior to the Company's initial public offering the Company shall not be obligated to issue options or related awards to the Investors' Nominees that it issues to the
other non-management directors of the Company, but upon the closing of such offering the Investors' Nominees shall, for purposes of compensation, be considered new members of the Board of
Directors and receive compensation (including options and related awards) consistent with the Company's policies for new non-management directors of the Company and thereafter shall be
compensated in the same manner as each of the other non-management directors of the Company. Compensation (including option and related awards) for members of management will be determined
by a Compensation Committee of the Board of Directors comprised of one member of management who is also a director, an Investors' Nominee and one independent director (the
"Compensation Committee"). 

        4.4    Restrictive Covenants.    The Company will not, without the consent of two
thirds-in-interest of the Investors: 

        (a)   sell,
lease or otherwise dispose of (whether in one transaction or a series of related transactions) all or substantially all of its assets or business, except in a
transaction constituting a "Extraordinary Transaction" (as such term is defined in the Certificate of Incorporation in the form attached as  Exhibit B),
 

        (b)   merge
with or into or consolidate with another entity or enter into or engage in any other transaction or series of related transactions, in any such case in connection
with or as a result of which the Company is not the surviving entity or the owners of the Company's outstanding equity securities prior to the transaction or series of related transactions do not own
at least a majority of the outstanding equity securities of the surviving, resulting or consolidated entity, 

        (c)   dissolve,
liquidate or wind up its operations, 

        (d)   directly
or indirectly redeem, purchase, or otherwise acquire for consideration any shares of its Common Stock or any other class of its capital stock except
(i) for redemption of Convertible Preferred Shares or Redeemable Preferred Stock pursuant to and as provided in the Certificate of Incorporation, (ii) as contemplated by Sections 1.2 and
4.5, or (iii) repurchase of shares of Common Stock from stockholders pursuant to the agreements described in Schedule 4.4
hereto,

        (e)   propose
or adopt any amendment to Article IV of its Certificate of Incorporation, or any other amendment to its Certificate of Incorporation or Bylaws that
eliminates, amends or restricts or otherwise adversely affects the rights and preferences of the Convertible Preferred Stock or the Redeemable Preferred Stock, or increase the authorized shares of
Preferred Stock, Convertible Preferred Stock or Redeemable Preferred Stock, 

        (f)    except
for a one-time distribution of $2,750,000 paid within two (2) business days of the Closing (the "One-Time Distribution"), declare
or make any distribution or dividend payments on any shares of its Common Stock or any other class of its capital stock, 

        (g)   create,
or obligate itself to create, any class or series of shares having preference over or being on a parity with the Convertible Preferred Stock or the Redeemable
Preferred Stock, 

        (h)   increase
the size of the Board of Directors to more than eight (8) members, 

14

 

        (i)    enter
into any agreement or arrangement or take any other action that eliminates, amends, restricts or otherwise adversely affects the rights of the Investors hereunder
or as holders of securities of the relevant class or its ability to perform its obligations hereunder; without limitation of the foregoing, the Company shall take all commercially reasonable action
necessary or appropriate to remove promptly any impediment to the redemption of the Securities as contemplated by the Certificate of Incorporation, or 

        (j)    pay
any bonuses to the Company's executive officers or unless any such bonus shall have been unanimously approved by the Compensation Committee. 

        4.5    Repurchase; Use of Proceeds.    Immediately upon the sale of the Convertible Preferred Shares, the Company
shall complete the repurchase of 784,262 shares of Common Stock from the Selling Stockholders of the Company for aggregate cash payments of $5 million pursuant to this Agreement, in each case
on terms reasonably satisfactory to the Investors and in accordance with Exhibit D hereto. The Company shall use the remaining net proceeds from
the sale of the Convertible Preferred Stock for working capital, the One-Time Distribution, acquisitions, debt repayment purposes and payments to James V. O'Donnel in accordance with the
terms of that certain Release and Settlement Agreement attached as Exhibit H hereto. 

        4.6    Key Person Insurance.    Within 120 days after the date hereof, the Company will purchase and maintain
"key person" term life insurance policies of $3 million each on the lives of Ronald F. Woestmeyer and Mariette M. Woestmeyer with the Company named as beneficiary. The Company hereby agrees
that such policy shall not be assigned, borrowed against or pledged. 

        4.7    Stock Awards.    Except for the issuance of up to an aggregate 1,231,985 shares of Common Stock pursuant to
option and stock awards under the Option Plan as in effect as of the date hereof, the Company will not grant or award options, stock or other equity-based or quasi-equity rights (collectively,
"Equity") to officers, employees, advisers, consultants, or directors without the consent of the Investors' Nominee, and the Company will in no event
grant Equity to the Stockholders without the consent of the Investors' Nominees. The Option Plan and grant awards thereunder may not be amended, revised or waived after the date hereof without the
consent of the Investors' Nominees. 

        4.8    Assignment.    Each Investor shall have the right to assign its rights under this Section 4 in
connection with any transaction or series of related transactions involving the direct or indirect offer, transfer, donation, sale assignment, pledge, hypothecation or other disposition (the
"Transfer") to one or more transferees of at least 390,000 shares of capital stock of the Company (subject to adjustments for stock splits, stock
dividends and the like and aggregating all contemporaneous Transfers by two or more Investors), or to any fund managed by or associated with TA Associates, Inc. (collectively,
"TA Funds") or JMI Equity Fund ("JMI Funds"). Upon any such Transfer, such transferee or TA Fund or JMI
Fund, as applicable, thereupon shall be deemed an "Investor" for purposes of this Section 4. 

SECTION
5. RIGHTS TO PURCHASE 

        Notwithstanding
anything herein to the contrary, the following provisions of this Section 5 shall terminate immediately prior to the closing of a Qualified Public Offering and
shall not apply with respect to any Qualified Public Offering. 

15

 

        5.1    Right to Participate in Certain Sales of Additional Securities.    The Company agrees that it will not sell or
issue any shares of capital stock of the Company, or other securities convertible into or exchangeable for capital stock of the Company, or options, warrants or rights carrying any rights to purchase
capital stock of the Company unless the Company first submits a written offer to the Investors identifying the terms of the proposed sale (including price, number or aggregate principal amount of
securities and all other material terms), and offers to each Investor the opportunity to purchase its Pro Rata Share (as hereinafter defined) of the securities (subject to increase for
over-allotment if some Investors do not fully exercise their rights) on terms and conditions, including price, not less favorable to the Investors than those on which the Company proposes
to sell such securities to a third party or parties. Each Investor's "Pro Rata Share" of such securities shall be based on the ratio which the shares of
Common Stock held by it bears to all the issued and outstanding shares of Common Stock calculated on a fully-diluted basis giving effect to the conversion of convertible securities as of the date of
such written offer. The Company's offer to the Investors shall remain open and irrevocable for a period of 30 days, and Investors who elect to purchase shall have the first right to take up and
purchase any shares or other securities which other Investors do not elect to purchase, based on the relative holdings of the electing purchasers. Any securities so offered which are not purchased
pursuant to such offer may be sold by the Company but only on the terms and conditions set forth in the initial offer to the Investors, at any time within 90 days following the termination of
the above-referenced 30-day period but may not be sold to any other person or on terms and conditions, including price, that are more favorable to the purchaser than those set forth in
such offer or after such 90-day period without renewed compliance with this Section 5.1. 

        Notwithstanding
the foregoing, the Company may (i) issue shares of its Common Stock to its officers, employees, advisors, consultants, and directors with respect to options to
purchase up to an aggregate 1,231,985 shares pursuant to the Option Plan as in effect as of the date hereof, and (ii) issue Conversion Shares upon the conversion of the Convertible Preferred
Shares, and this Section 5 shall not apply with respect to such issuances. 

        5.2    Assignment of Rights.    Each Investor may assign its rights under this Section 5 in connection with any
transaction or series of related transactions involving the transfer to one or more transferees of at least 390,000 shares of capital stock of the Company (subject to adjustments for stock splits,
stock dividends and the like and aggregating all contemporaneous transfers by Investors), or to any TA Fund or JMI Fund Upon any such transfer such transferee or TA Fund or JMI Fund shall be deemed an
"Investor" or "Stockholder," as the case may be, for purposes of Sections 5.1 and 5.2 with the rights
set forth in such Sections. 

SECTION
6. REGISTRATION RIGHTS 

        6.1    Optional Registrations.    If at any time or times after the date hereof, the Company shall seek to register
any shares of its capital stock or securities convertible into capital stock under the Securities Act (whether in connection with a public offering of securities by the Company (a
"primary offering"), a public offering of securities by stockholders of the Company (a "secondary
offering"), or both), the Company will promptly give written notice thereof to each Investor (including any permitted transferee thereof) (the
"Holders," subject to Section 6.7) holding Registrable Securities as hereinafter defined in Section 6.3 below. If within 20 days
after their receipt of such notice one or more Holders request the inclusion of some or all of the Registrable Securities owned by them in such registration, the Company will use its best efforts to
effect the registration under the Securities Act of all Registrable Securities which such Holders may request in a writing delivered to the Company within 20 days after their receipt of the
notice given by the Company. In the case of the registration of shares of capital stock by the Company in connection with any underwritten public offering, if the underwriter(s) determines that
marketing factors require a limitation on the number of Registrable Securities to be offered, the Company shall not be required to register Registrable Securities of the Holders in excess of the
amount, if any, of shares of the capital stock which the principal underwriter of such underwritten 

16

 

offering
shall reasonably and in good faith agree to include in such offering in excess of any amount to be registered for the Company; provided, however, that the number of shares of Registrable
Securities of the Holders included in any such offering subsequent to the Company's first Qualified Public Offering shall in no event be less than thirty percent (30%) of the aggregate number of
shares of capital stock to be registered, unless the aggregate number of shares of Registrable Securities the Holders requested in writing to be in such offering is less than thirty percent (30%) of
the aggregate number of shares of capital stock to be registered; and provided further that shares of capital stock held by any Holder may not be excluded from any offering in reliance upon this
Section if any shares of capital stock other than those offered by the Company are included in such offering. If any limitation of the number of shares of Registrable Securities to be registered by
the Holders is required pursuant to this Section 6.1, the number of shares that may be included in the registration on behalf of the Holders shall be allocated among the Holders or the holders
of any other registration rights in proportion, as nearly as practicable, to the respective holdings of Registrable Securities of all Holders requesting registration. The provisions of this Section
will not apply to a registration effected solely to implement (i) an employee benefit plan, or (ii) a transaction to which Rule 145 or any other similar rule of the Securities and
Exchange Commission (the "SEC" or the "Commission") under the Securities Act is applicable. 

        6.2    Required Registrations.    

        (a)   Demand Registration.    On one or more occasions at any time after the earlier of December 8, 1999 or
twelve (12) months following the effective date of the Company's first registration statement under the Securities Act, an Investor or Investors holding at least 40% of the Registrable
Securities held by the Investors may request that the Company register under the Securities Act all or a portion of the Registrable Securities held by such requesting Investors. 

        (b)   Form S-3.    After the first public offering of its securities registered under the
Securities Act, the Company shall use its best efforts to qualify and remain qualified to register securities on Form S-3 (or any successor form) under the Securities Act. Any
Investor or Investors shall have the right to request any number (not exceeding one registration annually) of registrations on Form S-3 (or any successor form) for the Registrable
Securities held by such requesting Investor, including registrations for the sale of such Registrable Securities on a delayed or continuous basis pursuant to Rule 415 under the Securities Act.
Such requests shall be in writing and shall state the number of shares of Registrable Securities to be disposed of and the intended method of disposition of such shares by such Investor or Investors. 

        (c)   Registration Requirements.    Following a request pursuant to Section 6.2(a) or (b) above, the
Company will notify all of the Holders who would be entitled to notice of a proposed registration under Section 6.1 above and any other holder of piggyback registration rights of its receipt of
such notification from such Investor or Investors. Upon the written request of any such Holder or other holder of the Company's securities delivered to the Company within 20 days after receipt
from the Company of such notification, the Company will either (i) elect to make a primary offering, in which case the rights of such Holders shall be as set forth in Section 6.1 above
(in which case the registration shall not count as one of the Investors' permitted demand registrations hereunder), or (ii) use its best efforts to cause such of the Registrable Securities as
may be requested by any Holders and any other holders of piggyback registration rights to be registered under the Securities Act in accordance with the terms of this Section 6.2; provided,
however, that the number of shares of Registrable Securities of the Holders included in any such offering shall in no event be less than thirty percent (30%) of the aggregate number of shares of
capital stock to be registered, unless the aggregate number of shares of Registrable Securities the Holders requested in writing to be in such offering is less than thirty percent (30%) of the
aggregate number of shares of capital stock to be registered. 

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        (d)   Limitations on Registration Obligations.    The Company will not be obligated pursuant to this
Section 6.2 to effect more than two (2) registration statements pursuant to Section 6.2(a), but shall be obligated to file an unlimited number of registration statements on
Form S-3. The Company shall not be obligated to effect any registration on Form S-3 pursuant to Section 6.2(b): (i) if Form S-3
is not available for such offering by the holders (in which case the Company shall be obligated to effect such registration on either Form S-1 or S-2 and such
registration shall not be counted as a registration pursuant to Section 6.2(a) hereof for purposes of the limitations set forth in the first sentence of this Section 6.2(d)), or
(ii) if the Company has, within the twelve (12) month period preceding the date of such request, already effected one (1) registration of its securities either pursuant to
Section 6.2(a) or pursuant to which the Holders had rights (which they exercised) to include their shares in such registration pursuant to Section 6.1. 

        (e)   Postponement.    The Company may postpone the filing of any registration statement required hereunder for a
reasonable period of time, not to exceed 90 days in the aggregate during any twelve-month period, if the Company has been advised by legal counsel that such filing would require a special audit
or the disclosure of a material impending transaction or other matter or the Company's Board of Directors determines reasonably and in good faith that such disclosure would have a Material Adverse
Effect. The Company shall not be required to cause a registration statement requested pursuant to this Section 6.2 to become effective prior to 90 days following the effective date of a
registration statement initiated by the Company, if the request for registration has been received by the Company subsequent to the giving of written notice by the Company, made in good faith, to the
Investors that the Company is commencing to prepare a Company-initiated registration statement (other than a registration effected solely to implement an employee benefit plan or a transaction to
which Rule 145 or any other similar rule of the SEC under the Securities Act is applicable); provided, however, that the Company shall use its best efforts to achieve such effectiveness
promptly. 

        (f)    Suspension.    In the case of a registration for the sale of Registrable Securities, upon receipt of any notice
(a "Suspension Notice") from the Company of the happening of any event which makes any statement made in the registration statement or related
prospectus untrue or which requires the making of any changes in such registration statement or prospectus so that they will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements therein in light of the circumstances under which they were made not misleading, each holder of Registrable Securities
registered under such registration statement shall forthwith discontinue disposition of such Registrable Securities pursuant to such registration statement until such holder's receipt of the copies of
the supplemented or amended prospectus or until it is advised in writing (the "Advice") by the Company that the use of the prospectus may be resumed,
and has received copies of any additional or supplemental filings which are incorporated by reference in the prospectus; provided,  however, that the
Company shall not give a Suspension Notice until after the registration statement has been declared effective and shall not give more
than one Suspension Notice to the Holders in respect to all Registrable Securities and pursuant to this Section 6 during any period of twelve (12) consecutive months and in no event
shall the period from the date on which any Holder receives a Suspension Notice to the date on which any Holder receives either the Advice or copies of the supplemented or amended prospectus (the
"Suspension Period") exceed 90 days. In the event that the Company shall give any Suspension Notice, the Company shall use its best efforts and
take such actions as are reasonably necessary to render the Advice and end the Suspension Period as promptly as practicable. 

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        6.3    Registrable Securities.    For the purposes of this Section 6, the term
"Registrable Securities" shall mean any shares of Common Stock held by a Holder or subject to acquisition by a Holder upon conversion of Convertible
Preferred Shares, as applicable, including any shares issued by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other
reorganization; provided, however, that if an Investor owns Convertible Preferred Shares, the Investor may exercise its registration rights hereunder by
converting the shares to be sold publicly into Common Stock as of the closing of the relevant offering and shall not be required to cause such Convertible Preferred Shares to be converted to Common
Stock until and unless such Closing occurs, it being understood that the Company shall at the request of the relevant Investor effect the reconversion of Common Stock and any Redeemable Preferred
Stock to Convertible Preferred Stock if such a conversion occurs notwithstanding the foregoing and a public offering does not close; and provided,
further, that any Common Stock that is sold in a registered sale pursuant to an effective registration statement under the Securities Act or pursuant to Rule 144
thereunder, or that may be sold without restriction as to volume or otherwise pursuant to Rule 144 under the Securities Act (as confirmed by an unqualified opinion of counsel to the Company),
shall not be deemed Registrable Securities. 

        6.4    Further Obligations of the Company.    Whenever the Company is required hereunder to register any Registrable
Securities, it agrees that it shall also do the following: 

        (a)   Pay
all expenses of such registrations and offerings (exclusive of underwriting discounts and commissions) and the reasonable fees and expenses of not more than one
independent counsel for the Holders satisfactory to the Investors in connection with any registrations pursuant to Section 6. Notwithstanding the foregoing, the Company shall not be required to
pay for expenses of any registration proceeding begun pursuant to Section 6.2, the request for which has been subsequently withdrawn by the initiating Holders, in which case, such expenses
shall be borne by the Holders requesting such withdrawal and the registration initiated shall not be counted for purposes of the limitation set forth in Section 6.2(d). The preceding sentence
shall not apply, and the Company shall bear the expenses of such registration if, at the time of such withdrawal, (i) the Holder has learned of a Material Adverse Change in the condition,
business or prospects of the Company from that known to the Holder at the time of its request, and (ii) the Company knew or had reason to know of the likelihood of such Material Adverse Change
at the time of its request and did not inform the Holder thereof; 

        (b)   Use
its best efforts (with due regard to management of the ongoing business of the Company and the allocation of managerial resources) diligently to prepare and file
with the SEC a registration statement and such amendments and supplements to said registration statement and the prospectus used in connection therewith as may be necessary to keep said registration
statement effective for at least 180 days or until the Holder or Holders have completed the distribution described in the registration statement relating thereto, whichever first occurs, and to
comply with the provisions of the Securities Act with respect to the sale of securities covered by said registration statement for the period necessary to complete the proposed public offering; 

        (c)   Furnish
to each selling Holder such copies of each preliminary and final prospectus and such other documents as such Holder may reasonably request to facilitate the
public offering of its Registrable Securities; 

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        (d)   Enter
into any reasonable underwriting agreement required by the proposed underwriter (which underwriter shall be selected by the selling Investors in connection with
any registration requested pursuant to Section 6.2), if any, in such form and containing such terms as are customary; provided, however, that no
Holder shall be required to make any representations or warranties other than with respect to its title to the Registrable Securities and any written information provided by the Holder to the Company,
and if the underwriter requires that representations or warranties be made and that indemnification be provided, the Company shall make all such representations and warranties and provide all such
indemnities, including, without limitation, in respect of the Company's business, operations and financial information and the disclosures relating thereto in the prospectus; 

        (e)   Use
its best efforts (with due regard to management of the ongoing business of the Company and the allocation of managerial resources) to register or qualify the
securities covered by said registration statement under the securities or "blue sky" laws of such jurisdictions as any selling Holder may reasonably request, provided that the Company shall not be
required to register or qualify the securities in any jurisdictions which require it to qualify to do business therein; 

        (f)    Immediately
notify each selling Holder, at any time when a prospectus relating to its Registrable Securities is required to be delivered under the Securities Act, of the
happening of any event as a result of which such prospectus contains an untrue statement of a material fact or omits any material fact necessary to make the statements therein not misleading, and,
subject to Section 6.2(f) hereof, at the request of any such selling Holder, prepare a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus will not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading; 

        (g)   Cause
all such Registrable Securities to be listed on each securities exchange or quotation system on which similar securities issued by the Company are then listed or
quoted; 

        (h)   Otherwise
use its best efforts to comply with the securities laws of the United States and other applicable jurisdictions and all applicable rules and regulations of the
SEC and comparable governmental agencies in other applicable jurisdictions and make generally available to its holders, in each case as soon as practicable, but not later than 45 days after the
close of the period covered thereby, an earnings statement of the Company which will satisfy the provisions of Section 11 (a) of the Securities Act; 

        (i)    Obtain
and furnish to each selling Holder, immediately prior to the effectiveness of the registration statement (and, in the case of an underwritten offering, at the
time of delivery of any Registrable Securities sold pursuant thereto), a cold comfort letter from the Company's independent public accountants in customary form and covering such matters of the type
customarily covered by cold comfort letters as the Holders of a majority of the Registrable Securities being sold may reasonably request; and 

        (j)    Otherwise
cooperate with the underwriter or underwriters, the Commission and other regulatory agencies and take all actions and execute and deliver or cause to be
executed and delivered all documents necessary to effect the registration of any Registrable Securities under this Section 6. 

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        6.5    Indemnification: Contribution.    

        (a)   Incident
to any registration statement referred to in this Section 6, the Company will indemnify and hold harmless each underwriter, each Holder who offers or
sells any such Registrable Securities in connection with such registration statement (including its partners (including partners of partners and stockholders of any such partners), and directors,
officers, employees and agents of any of them (a "Selling Holder"), and each person who controls any of them within the meaning of Section 15 of
the Securities Act or Section 20 of the Securities Exchange Act of 1934 (the "Exchange Act") (a "Controlling
Person"), from and against any and all losses, claims, damages, expenses and liabilities, joint or several (including any investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action, suit or proceeding or any claim asserted, as the same are incurred), to which they, or any of them, may become subject under the
Securities Act, the Exchange Act or other federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities arise out of or are based on
(i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement (including any related preliminary or definitive prospectus, or any amendment or
supplement to such registration statement or prospectus), (ii) any omission or alleged omission to state in such document a material fact required to be stated in it or necessary to make the
statements in it not misleading, or (iii) any violation by the Company of the Securities Act, any state securities or "blue sky" laws or any rule or regulation thereunder in connection with
such registration; provided, however, that the Company will not be liable to the extent that such loss, claim, damage, expense or liability arises from
and is based on an untrue statement or omission or alleged untrue statement or omission made in reliance on and in conformity with information furnished in writing to the Company by such underwriter,
Selling Holder or Controlling Person expressly for use in such registration statement. With respect to such untrue statement or omission or alleged untrue statement or omission in the information
furnished in writing to the Company by such Selling Holder expressly for use in such registration statement, such Selling Holder will indemnify and hold harmless each underwriter, the Company
(including its directors, officers, employees and agents), each other Holder (including its partners (including partners of partners and stockholders of such partners) and directors, officers,
employees and agents of any of them, and each person who controls any of them within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act), from and against
any and all losses, claims, damages, expenses and liabilities, joint or several, to which they, or any of them, may become subject under the Securities Act, the Exchange Act or other federal or state
statutory law or regulation, at common law or otherwise, to the same extent provided in the immediately preceding sentence. The Company shall not be obligated hereunder to indemnify any Holder for any
amount paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld). In
no event, however, shall the liability of a Selling Holder for indemnification under this Section 6.5(a) exceed the lesser of (i) that proportion of the total of such losses, claims,
damages or liabilities indemnified against equal to the proportion of the total securities sold under such registration statement which is being sold by such Selling Holder or (ii) the proceeds
received by such Selling Holder from its sale of Registrable Securities under such registration statement. 

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        (b)   If
the indemnification provided for in Section 6.5(a) above for any reason is held by a court of competent jurisdiction to be unavailable to an indemnified party
in respect of any losses, claims, damages, expenses or liabilities referred to therein, then each indemnifying party under this Section 6.5, in lieu of indemnifying such indemnified party
thereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, expenses or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company, the other Selling Holders and the underwriters from the offering of the Registrable Securities, or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Company, the other Selling Holders and the underwriters in connection with the statements or omissions which resulted in such losses, claims, damages, expenses or
liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company, the Selling Holders and the underwriters shall be deemed to be in the same
respective proportions that the net proceeds from the offering (before deducting expenses) received by the Company and the Selling Holders and the underwriting discount received by the underwriters,
in each case as set forth in the table on the cover page of the applicable prospectus, bear to the aggregate public offering price of the Registrable Securities. The relative fault of the Company, the
Selling Holders and the underwriters shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company, the Selling Holders or the underwriters and the parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. 

        The
Company, the Selling Holders, and the underwriters agree that it would not be just and equitable if contribution pursuant to this Section 6.5(b) were determined by pro rata or
per capita allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. In no event, however, shall a
Selling Holder be required to contribute any amount under this Section 6.5(b) in excess of the lesser of (i) that proportion of the total of such losses, claims, damages or liabilities
indemnified against equal to the proportion of the total Registrable Securities sold under such registration statement which are being sold by such Selling Holder or (ii) the proceeds received
by such Selling Holder from its sale of Registrable Securities under such registration statement. No person found guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was not found guilty of such fraudulent misrepresentation. 

        (c)   The
amount paid by an indemnifying party or payable to an indemnified party as a result of the losses, claims, damages and liabilities referred to in this
Section 6.5 shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or
defending any such action or claim, payable as the same are incur-red. The indemnification and contribution provided for in this Section 6.5 will remain in full force and effect
regardless of any investigation made by or on behalf of the indemnified parties or any officer, director, employee, agent or controlling person of the indemnified parties. 

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        (d)    Notice: Defense of Claim.    Promptly after receipt by an indemnified party of notice of any claim, liability
or expense to which the indemnification obligations set forth in this Section 6.5 would apply, the indemnified party shall give notice thereof in writing to the indemnifying party, but the
omission to so notify the indemnifying party promptly will not relieve the indemnifying party from any liability except to the extent that the indemnifying party shall have been prejudiced as a result
of the failure or delay in giving such notice. Such notice shall state the information then available regarding the amount and nature of such claim, liability or expense and shall specify the
provision or provisions of this Agreement under which the liability or obligation is asserted. If within twenty (20) days after receiving such notice the indemnifying party gives written notice
to the indemnified party stating that (a) it would be liable under the provisions hereof for indemnity in the amount of such claim if such claim were successful and (b) that it disputes
and intends to defend against such claim, liability or expense at its own cost and expense, then counsel for the defense shall be selected by the indemnifying party (subject to the consent of the
indemnified party, which consent shall not be unreasonably withheld) and the indemnified party shall not be required to make any payment with respect to such claim, liability or expense as long as the
indemnifying party is conducting a good faith and diligent defense at its own expense; provided, however, that the assumption of defense of any such
matters by the indemnifying party shall relate solely to the claim, liability or expense that is subject or potentially subject to indemnification. The indemnifying party shall have the right, with
the consent of the indemnified party, which consent shall not be unreasonably withheld, to settle all indemnifiable matters related to claims by third parties which are susceptible to being settled
provided its obligation to indemnify the indemnifying party therefor will be fully satisfied. The indemnifying party shall keep the indemnified party apprised of the status of the claim, liability or
expense and any resulting suit, proceeding or enforcement action, shall furnish the indemnified party with all documents and information that the indemnified party shall reasonably request and shall
consult with the indemnified party prior to acting on major matters, including settlement discussions. Notwithstanding anything herein stated to the contrary, the indemnified party shall at all times
have the right to fully participate in such defense at its own expense directly or through counsel; provided, however, if the named parties to the
action or proceeding include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate under applicable standards of
professional conduct, the expense of separate counsel for the indemnified party shall be paid by the indemnifying party. If no such notice of intent to dispute and defend is given by the indemnifying
party, or if such diligent good faith defense is not being or ceases to be conducted, the indemnified party shall, at the expense of the indemnifying party, undertake the defense of (with counsel
selected by the indemnified party), and shall have the right to compromise or settle (exercising reasonable business judgment), such claim, liability or expense. If such claim, liability or expense is
one that by its nature cannot be defended solely by the indemnifying party, then the indemnified party shall make available all information and assistance that the indemnifying party may reasonably
request and shall cooperate with the indemnifying party in such defense. 

        (e)    Prospectus Delivery.    The foregoing indemnity agreements of the Company and Selling Holders are subject to
the condition that, insofar as they relate to any misstatement or omission in a preliminary prospectus that was eliminated or remedied in the amended prospectus on file with the SEC at the time the
registration statement in question becomes effective or the amended prospectus filed with the SEC pursuant to Rule 424(b) (the "Final
Prospectus"), such indemnity agreement shall not inure to the benefit of any person if a copy of the Final Prospectus was furnished to the indemnified party and was not
furnished to the person asserting the loss, liability, claim or damage at or prior to the time such action is required by the Securities Act. 

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        6.6    Rule 144 and Rule 144A Requirements.    In the event that the Company becomes subject to
Section 13 or Section 15(d) of the Exchange Act, the Company shall use its best efforts to take all action as may be required as a condition to the availability of Rule 144 or
Rule 144A under the Securities Act (or any successor or similar exemptive rules hereafter in effect). The Company shall furnish to any Holder, within 15 days of a written request, a
written statement executed by the Company as to the steps it has taken to comply with the current public information requirement of Rule 144 or Rule 144A or such successor rules. 

        6.7    Transfer of Registration Rights.    The registration rights and related obligations under this Section 6
of the Holders with respect to their Registrable Securities may be assigned in connection with any transaction or series of related transactions involving the Transfer to one or more transferees of at
least 390,000 shares of capital stock of the Company, other than pursuant to an effective registration statement under the Securities Act or pursuant to Rule 144 thereunder (subject to
adjustments for stock splits, stock dividends and the like and aggregating all contemporaneous transfers by Holders), or to any TA Funds or JMI Funds or permitted transferee, and upon any such
transfer such transferee or TA Fund or JMI Fund shall be deemed to be included within the definition of a "Holder" for purposes of this Section 6 with the rights set forth herein. The relevant
Holder as the case may be, shall notify the Company at the time of such transfer. 

        6.8    "Market Stand-off" Agreement.    In connection with any underwritten public offering by the
Company, the Holders, if requested in good faith by the Company and the managing underwriter of the Company's securities, shall agree not to sell or otherwise transfer or dispose of any securities of
the Company held by them (except for any securities sold pursuant to such registration statement) for a period following the effective date of the applicable registration statement;  provided, however
that in no event shall such period exceed 180 days; and provided further that
such agreement shall not be required unless all officers and directors and one percent (1%) or greater stockholders (other than institutional investors in the case of follow-on or
secondary offerings) of the Company and all other persons with registration rights enter into similar agreements. In order to enforce the foregoing, the Company may impose stop-transfer
instructions with respect to the Registrable Securities of each Holder (and the shares of securities of every other person subject to the foregoing restriction) until the end of such period. 

        6.9    Termination of Registration Rights Provisions.    The provisions of this Section 6 shall terminate and
have no further force and effect upon the earlier to occur of (i) five (5) years following the effectiveness of the Company's First Qualified Public Offering; and (ii) such time
as each Investor can sell all remaining Registrable Securities held by it within a ninety (90) day period pursuant to Rules 144 or 145 under the Securities Act. 

SECTION
7. GENERAL 

        7.1    Amendments, Waivers and Consents.    For the purposes of this Agreement and all agreements executed pursuant
hereto, no course of dealing between or among any of the parties hereto and no delay on the part of any party hereto in exercising any rights hereunder or thereunder shall operate as a waiver of the
rights hereof and thereof. No provision hereof may be waived otherwise than by a written instrument signed by the party or parties so waiving such covenant or other provision. No amendment to this
Agreement may be made without the written consent of the Company and the Investors; provided that the written consent of the Stockholders shall be required for any amendment of Sections 5, 6 or 7
hereof. Any actions required to be taken or consents, approvals, votes or waivers required or contemplated to be given by the Investors or the Stockholders shall require a vote of a
two-thirds in interest of the Investors or two-thirds in interest of the Stockholders, as applicable, based on the relative holdings of capital stock of the Company of the
Investors as a group or of the Stockholders as a group, as applicable, at the relevant time, and any such action by such Investors or Stockholders, as applicable, shall bind all of the Investors, or
Stockholders, as applicable. 

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        7.2    Survival of Representations, Warranties and Covenants; Assignability.    All covenants, agreements,
representations and warranties of the Company, the Stockholders and the Investors made herein and in the certificates, lists, exhibits, schedules or other written information delivered or furnished to
any Investor in connection herewith (a) are material, shall be deemed to have been relied upon by the party or parties to whom they are made and shall survive the Closing until the applicable
statutes of limitation related to the matters expire regardless of any investigation or knowledge on the part of such party or its representatives, and (b) shall bind the parties' successors
and assigns (including without limitation any successor to the Company by way of acquisition, merger or otherwise), whether so expressed or not, and, except as otherwise provided in this Agreement,
all such covenants, agreements, representations and warranties shall inure to the benefit of the Investors' successors and assigns and to their transferees of Securities, whether so expressed or not,
subject to the provisions of Sections 4.8, 5.2 and 6.7, and any such transferee shall be deemed an "Investor" for purposes hereof. Notwithstanding the foregoing, the aggregate liability of Ronald F.
Woestemeyer and Mariette M. Woestemeyer pursuant to the representations and warranties provided under Section 2 of this Agreement shall be limited to $6,900,000, and the aggregate liability of
Robert Salter pursuant to the representations and warranties provided under Section 2 of this Agreement shall be limited to $1,000,000; provided,  however, that nothing herein shall limit any potential remedies and liabilities of the Company and/or the Investors, as applicable, arising under state
and federal laws with respect to any fraudulent act committed by any Stockholder, the Company, or director and/or officer thereof. To the extent permitted by law, the Company and/or the Investors, as
applicable, shall have a right of offset against any amount to be received by the Stockholders under this Agreement. 

        7.3    Legend on Securities.    The Company, the Investors and the Stockholders acknowledge and agree that the
following legend shall be typed on each certificate evidencing any of the securities issued hereunder held at any time by an Investor (together with any other legends required by applicable federal or
state laws): 

        THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
SECURITIES OR BLUE SKY LAWS AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE ASSIGNED EXCEPT (1) PURSUANT TO A REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES WHICH
IS EFFECTIVE UNDER THE ACT OR (2) PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE ACT RELATING TO THE DISPOSITION OF SECURITIES AND (3) IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES AND BLUE SKY LAWS; 

        7.4    Governing Law.    This Agreement shall be deemed to be a contract made under, and shall be construed in
accordance with, the laws of the State of Delaware, without giving effect to conflict of laws principles thereof. 

        7.5    Section Headings and Gender.    The descriptive headings in this Agreement have been inserted for convenience
only and shall not be deemed to limit or otherwise affect the construction of any provision thereof or hereof. The use in this Agreement of the masculine pronoun in reference to a party hereto shall
be deemed to include the feminine or neuter, and vice versa, as the context may require. 

        7.6    Counterparts.    This Agreement may be executed simultaneously in any number of counterparts, each of which
when so executed and delivered shall be taken to be an original; but such counterparts shall together constitute but one and the same document. 

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        7.7    Notices and Demands.    Any notice or demand which is required or provided to be given under this Agreement
shall be deemed to have been sufficiently given and received for all purposes when delivered by hand, telecopy, telex or other method of facsimile, or five days after being sent by certified or
registered mail, postage and charges prepaid, return receipt requested, or two days after being sent by overnight delivery providing receipt of delivery, to the following addresses: if to the Company
or the Stockholders, PROS Strategic Solutions, Inc., 3223 Smith Street, Suite 100, Houston, Texas 77006, or at any other address designated by the Company or the Stockholders, respectively, to
the Investors and the other parties hereto in writing; if to an Investor, one (1) copy c/o TA Associates, Inc. and (1) copy c/o JMI Equity Fund, L.P., in each case at its mailing
address as shown on Exhibit A hereto, or at any other address designated by TA Associates, Inc. or JMI to the Company and the Stockholders
in writing. 

        7.8    Dispute Resolution.    Except with respect to matters as to which injunctive relief is being sought, any
dispute arising out of or relating to this Agreement that has not been settled within thirty (30) days (the "Negotiation Period") by good faith
negotiation between the parties to this Agreement shall be submitted to an arbitrator mutually agreeable to the parties for final and binding arbitration pursuant to arbitration rules to be determined
by the chosen arbitrator within the limits set forth below. In the event the parties are unable to agree upon an arbitrator within ten (10) days of expiration of the Negotiation Period, the
Company and the Investors shall, within five (5) days of the expiration of such ten day period each select one arbitrator and such arbitrators shall select a third arbitrator within five
(5) days who shall be the arbitrator designated hereunder. Any such arbitration shall be conducted in San Francisco, California. Such proceedings shall be guided by the following agreed upon
procedures: 

	(1)
	mandatory
exchange of all relevant documents, to be accomplished within forty-five (45) days of the initiation of the procedure;

	(2)
	no
other discovery;

	(3)
	hearings
before the neutral advisor which shall consist of a summary presentation by each side of not more than three hours; such hearings to take place on one or two days at a
maximum; and

	(4)
	decision
to be rendered not more than ten (10) days following such hearings. 

        7.9    Remedies; Severability.    Notwithstanding Section 7.9, it is specifically understood and agreed that
any breach of the provisions of this Agreement by any person subject hereto will result in irreparable injury to the other parties hereto, that the remedy at law alone will be an inadequate remedy for
such breach, and that, in addition to any other remedies which they may have, such other parties may enforce their respective rights by actions for specific performance (to the extent permitted by
law). The Company may refuse to recognize any unauthorized transferee as one of its stockholders for any purpose, including, without limitation, for purposes of dividend and voting rights, until the
relevant party or parties have complied with all applicable provisions of this Agreement. Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective
and valid under applicable law, but if any provision of this Agreement shall be deemed prohibited or invalid under such applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, and such prohibition or invalidity shall not invalidate the remainder of such provision or the other provisions of this Agreement. 

26

 

        7.10    Integration.    This Agreement, including the exhibits, documents and instruments referred to herein or
therein, constitutes the entire agreement, and supersedes all other prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof, including,
without limitation, the letter of intent between the parties hereto in respect of the transactions contemplated herein, which letter of intent shall be completely superseded by the representations,
warranties and covenants of the Company contained herein. 

        IN
WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written. 

	 	 	COMPANY:
	

 	
 	
PROS STRATEGIC SOLUTIONS, INC.
	

 	
 	

By:	

/s/  DAVID SAMUEL COATS        
 David Samuel Coats

President and Chief Executive Officer
	

 	
 	

STOCKHOLDERS:
	

 	
 	

/s/  RONALD F. WOESTEMEYER        
 Ronald F. Woestemeyer
	

 	
 	

/s/  MARIETTE M. WOESTEMEYER        
 Mariette M. Woestemeyer
	

 	
 	

/s/  ROBERT SALTER        
 Robert Salter
	

 	
 	

INVESTORS:
	

 	
 	
TA/ADVENT VIII L.P.
	

 	
 	

By:	

TA Associates VIII LLC, its General Partner
	 	 	By:	TA Associates, Inc., its Manager
	

 	
 	

By:	

/s/  KURT R. JAGGERS        
 Kurt R. Jaggers

Attorney-in-Fact
	

 	
 	
ADVENT ATLANTIC AND PACIFIC III, L.P.
	

 	
 	

By:	

TA Associates AAP III Partners, its General Partner
	 	 	By:	TA Associates, Inc.
	

 	
 	

By:	

/s/  KURT R. JAGGERS        
 Kurt R. Jaggers

Attorney-in-Fact
	 	 	 	 

27

 

	

 	
 	
TA VENTURE INVESTORS L.P.
	

 	
 	

By:	

/s/  KURT R. JAGGERS        
 Kurt R. Jaggers

Attorney-in-Fact
	

 	
 	
TA EXECUTIVES FUND LLC
	

 	
 	

By:	

TA Associates VIII LLC, its General Partner
	 	 	By:	TA Associates, Inc., its Manager
	

 	
 	

By:	

/s/  KURT R. JAGGERS        
 Kurt R. Jaggers

Attorney-in-Fact
	

 	
 	
JMI EQUITY FUND III, L.P.
	

 	
 	

By:	

JMI Associates III, LLC, its General Partner
	

 	
 	

By:	

/s/  CHARLES E. NOELL        
 Charles E. Noell

Managing Member
	

 	
 	
GLENYS A. WOLF and WILLIAM H. WOLF, as Husband and Wife
	

 	
 	

/s/  GLENYS A. WOLF        
 Glenys A. Wolf
	

 	
 	

/s/  WILLIAM H. WOLF        
 William H. Wolf

28

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PROS Strategic Solutions, Inc.

STOCK PURCHASE AND STOCKHOLDERS AGREEMENT

STOCK PURCHASE AND STOCKHOLDERS AGREEMENTQuickLinks
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Exhibit 10.4.1  

 
 

AMENDMENT TO
  STOCK PURCHASE AND STOCKHOLDERS AGREEMENT    
    

        This Amendment to Stock Purchase And Stockholder Agreement (this "Amendment") is entered into as of
March 26, 2007, by and among PROS Holdings, Inc., a Delaware corporation (the "Company"), and the holders of at least a
two-third-in-interest of the Investors (as defined in the Purchase Agreement described below), who have consented to this Amendment in writing (collectively the
"Requisite Investors" and each individually, an "Investor"), pursuant to that certain Stock Purchase and
Stockholders Agreement, dated as of June 8, 1998, by and among the Company and the Investors identified on Exhibit A thereto (the "Purchase
Agreement"), and amends the Purchase Agreement as set forth herein. All capitalized terms not otherwise defined herein shall have the respective meanings ascribed to such terms
in the Purchase Agreement. Each reference to a section number below shall, unless otherwise expressly provided herein, refer to such enumerated section of the Purchase Agreement. 

RECITALS

        WHEREAS,
the Company and the Requisite Investors desire to amend one of the restrictive covenants contained in the Purchase Agreement; 

        WHEREAS,
Section 7.1 of the Purchase Agreement provides that the Purchase Agreement may be amended with the written consent of the Company and the holders of at least a
two-thirds in interest of the Investors; 

        WHEREAS,
any amendment effected in accordance with Section 7.1 of the Purchase Agreement shall be binding upon (i) each holder of any securities purchased under the
Purchase Agreement at the time outstanding (including securities into which such securities are convertible), (ii) each future holder of all such securities and (iii) the Company; 

        WHEREAS,
the Requisite Investors represent those Investors necessary to amend the Purchase Agreement with the consent of the Company; and 

        WHEREAS,
the Requisite Investors and the Company now desire to amend the Purchase Agreement as set forth herein to provide for the Additional Funding and certain other changes; 

AGREEMENT

        NOW,
THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows: 

        1.     Section 4.4(a). Section 4.4(a) of the Purchase Agreement is hereby amended and restated in its entirety to
read as follows: 

        "(a) sell,
lease or otherwise dispose of (whether in one transaction or a series of related transactions) all or substantially all of its assets or business," 

        2.     Miscellaneous. 

        (a)   Except
as expressly amended hereby, the Purchase Agreement (including all previous adopted amendments thereto) remains unmodified and in full force and effect and is
hereby renewed, ratified and affirmed by the Company and the Investors. 

        (b)   This
Amendment shall be binding upon each of the parties to the Purchase Agreement, whether or not all of such parties have executed a counterpart of this Amendment. 

        (c)   This
Amendment may be executed in one or more counterparts, each of which shall be deemed an original. Any party may execute this Amendment by facsimile signature, which
shall be deemed to constitute an original for all purposes. 

Signature page follows.  

        IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date and year first above written. 

	

 	
 	

 	
 	
PROS HOLDINGS, INC.
	

 	
 	

 	
 	

By:	
 	

/s/ Albert E. Winemiller
 Albert E. Winemiller

President and Chief Executive Officer
	

 	
 	

 	
 	

 	
 	
TA/ADVENT VIII L.P.
	

 	
 	

 	
 	

 	
 	

By:	

TA Associates VIII LLC, its General Partner
	 	 	 	 	 	 	By:	TA Associates, Inc., its Manager
	

 	
 	

 	
 	

 	
 	

By:	

*

	

 	
 	

 	
 	

 	
 	
ADVENT ATLANTIC AND PACIFIC III L.P.
	

 	
 	

 	
 	

 	
 	

By:	

TA Associates AAP III Partners, its General Partner
	 	 	 	 	 	 	By:	TA Associates, Inc.
	

 	
 	

 	
 	

 	
 	

By:	

*

	*	 	/s/ Kurt R. Jaggers
 Kurt R. Jaggers, Attorney-in-Fact	 	 	 	
TA VENTURE INVESTORS L.P.
	

 	
 	

 	
 	

 	
 	

By:	

*

	

 	
 	

 	
 	

 	
 	
TA EXECUTIVES FUND LLC
	

 	
 	

 	
 	

 	
 	

By:	

TA Associates, Inc., its Manager
	

 	
 	

 	
 	

 	
 	

By:	

*

	

 	
 	

 	
 	

 	
 	
JMI EQUITY FUND III, L.P.
	

 	
 	

 	
 	

 	
 	

By:	

JMI Associates III LLC, its General Partner
	

 	
 	

 	
 	

 	
 	

By:	

/s/  HARRY S. GRUNER      

	

 	
 	

 	
 	

 	
 	

 	
 	

Name:	

Harry S. Gruner

	

 	
 	

 	
 	

 	
 	

 	
 	

Title:	

Managing Member

Signature Page to Amendment to Stock Purchase and Stockholder Agreement

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AMENDMENT TO STOCK PURCHASE AND STOCKHOLDERS AGREEMENT

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