PROS Holdings, Inc. (Form: 10-Q, Received: 05/02/2013 16:58:45)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

______________________________________________________

FORM 10-Q

______________________________________________________



ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2013



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number: 001-33554

______________________________________________________

PROS HOLDINGS, INC.

(Exact name of registrant as specified in its charter) ___________________________________________________



Delaware		76-0168604
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)



3100 Main Street, Suite 900 Houston TX		77002
(Address of Principal Executive Offices)		(Zip Code)

(713) 335-5151
Registrant's telephone number, including area code

____________________________________________________

(Former Name, Former Address and Former Fiscal Year, if changed Since Last Report)

Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

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Large Accelerated Filer	o	Accelerated Filer	x
Non-Accelerated Filer	o (do not check if a smaller reporting company)	Smaller Reporting Company	o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

The number of shares outstanding of the Registrant’s Common Stock, $0.001 par value, was 27,918,133 as of April 30, 2013 .

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PROS Holdings, Inc.

Form 10-Q

For the Quarterly Period Ended March 31, 2013

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	Page
PART I. FINANCIAL INFORMATION
Item 1. Interim Condensed Consolidated Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets	4
Condensed Consolidated Statements of Comprehensive Income	5
Condensed Consolidated Statements of Cash Flows	6
Notes to Condensed Consolidated Financial Statements	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3. Quantitative and Qualitative Disclosures about Market Risk	17
Item 4. Controls and Procedures	18

PART II. OTHER INFORMATION
Item 1. Legal Proceedings	18
Item 1A. Risk Factors	18
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	18
Item 3. Defaults Upon Senior Securities	18
Item 4. Mine Safety Disclosure	18
Item 5. Other Information	18
Item 6. Exhibits	18
Signatures	20

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements relate to future events or our future financial performance. These forward-looking statements regarding future events and our future results are based on current expectations, estimates, forecasts and projections, and the beliefs and assumptions of our management including, without limitation, our expectations regarding the following: the sales of our software products and services; the impact of our revenue recognition policies; our belief that our current assets, including cash, cash equivalents, and expected cash flows from operating activities, will be sufficient to fund our operations; our anticipated additions to property, plant and equipment; our belief that our facilities are suitable and adequate to meet our current operating needs; and our belief that we do not have any material exposure to changes in the fair value of our investment portfolio as a result of changes in interest rates . Words such as “we expect,” “anticipate,” “target,” “project,” “believe,” “goals,” “estimate,” “potential,” “predict,” “may,” “might,” “could,” “intend,” and variations of these types of words and similar expressions are intended to identify these forward-looking statements.

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PART I. Financial Information

ITEM 1. INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

PROS Holdings, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share amounts)

(Unaudited)



	March 31, 2013			December 31, 2012
Assets:
Current assets:
Cash and cash equivalents	$	82,462		$	83,558
Accounts and unbilled receivables, net of allowance of $700 and $760, respectively	42,742			38,801
Prepaid and other current assets	6,199			5,067
Total current assets	131,403			127,426
Restricted cash	329			329
Property and equipment, net	14,709			12,788
Other long term assets, net	5,955			5,936
Total assets	$	152,396		$	146,479
Liabilities and Stockholders’ Equity:
Current liabilities:
Accounts payable	$	5,743		$	3,775
Accrued liabilities	4,418			3,258
Accrued payroll and other employee benefits	3,123			7,669
Deferred revenue	42,097			39,774
Total current liabilities	55,381			54,476
Long-term deferred revenue	2,432			2,007
Other long-term liabilities	1,327			1,327
Total liabilities	59,140			57,810
Commitments and contingencies (Note 5)
Stockholders' equity:
Preferred stock, $0.001 par value, 5,000,000 shares authorized none issued	—			—
Common stock, $0.001 par value, 75,000,000 shares authorized; 32,332,136 and 31,966,432 shares issued, respectively; 27,914,551 and 27,548,847 shares outstanding, respectively	32			32
Additional paid-in capital	90,544			87,693
Treasury stock, 4,417,585 common shares, at cost	(13,938		)	(13,938		)
Retained earnings	16,618			14,882
Total stockholders’ equity	93,256			88,669
Total liabilities and stockholders’ equity	$	152,396		$	146,479

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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PROS Holdings, Inc.

Condensed Consolidated Statements of Comprehensive Income

(In thousands, except share and per share data)

(Unaudited)



	For the three months ended March 31,
	2013			2012
Revenue:
License and implementation	$	22,592		$	17,796
Maintenance and support	11,034			9,225
Total revenue	33,626			27,021
Cost of revenue:
License and implementation	8,471			6,003
Maintenance and support	2,082			1,935
Total cost of revenue	10,553			7,938
Gross profit	23,073			19,083
Operating expenses:
Selling, marketing, general and administrative	14,288			10,256
Research and development	8,096			6,697
Income from operations	689			2,130
Other (expense) income, net	(103		)	22
Income before income tax provision	586			2,152
Income tax (benefit) provision	(1,148		)	961
Net income	$	1,734		$	1,191
Net earnings per share:
Basic	$	0.06		$	0.04
Diluted	$	0.06		$	0.04
Weighted average number of shares:
Basic	27,757,397			27,166,973
Diluted	29,365,342			28,284,044
Other comprehensive income, net of tax:
Other comprehensive income	—			—
Comprehensive income	$	1,734		$	1,191

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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PROS Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)



	For the three months ended March 31,
	2013			2012
Operating activities:
Net income	$	1,734		$	1,191
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	967			427
Share-based compensation	3,420			2,032
Excess tax benefit on share-based compensation	—			(1,395		)
Tax benefit from share-based compensation	(10		)	1,358
Provision for doubtful accounts	(60		)	(220		)
Changes in operating assets and liabilities:
Accounts and unbilled receivables	(3,877		)	6,219
Prepaid expenses and other assets	(1,162		)	(318		)
Accounts payable	1,070			(183		)
Accrued liabilities	980			(226		)
Accrued payroll and other employee benefits	(4,549		)	(3,059		)
Deferred revenue	2,748			(2,402		)
Net cash provided by operating activities	1,261			3,424
Investing activities:
Purchases of property and equipment	(948		)	(684		)
Capitalized internal-use software development costs	(796		)	(347		)
Net cash used in investing activities	(1,744		)	(1,031		)
Financing activities:
Exercise of stock options	1,409			488
Excess tax benefits on share-based compensation	—			1,395
Tax withholding related to net share settlement of restricted stock units	(2,022		)	(1,820		)
Net cash (used in) provided by financing activities	(613		)	63
Net (decrease) increase in cash and cash equivalents	(1,096		)	2,456
Cash and cash equivalents:
Beginning of period	83,558			68,457
End of period	$	82,462		$	70,913

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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PROS Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Organization and Nature of Operations

PROS Holdings, Inc., a Delaware corporation, through its operating subsidiaries (the “Company”), provides big data software applications designed to help companies outperform in their markets by using big data to sell more effectively. The Company applies data science to unlock buying patterns and preferences within transaction data to reveal which opportunities are most likely to close, which offers are most likely to sell and which prices are most likely to win. The Company offers big data software applications to analyze, execute, and optimize sales, pricing, quoting, rebates and revenue management. The Company also provides professional services to implement its software applications as well as business consulting. In addition, the Company provides product maintenance and support to its customers to receive unspecified upgrades, maintenance releases and bug fixes during the term of the support period on a when-and-if-available basis. The Company provides its big data software applications to enterprises across a range of industries, including manufacturing, distribution, services and travel.

2. Summary of Significant Accounting Policies

The accompanying unaudited condensed consolidated financial statements reflect the application of significant accounting policies as described below and elsewhere in these notes to the condensed consolidated financial statements.

Basis of presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting and applicable quarterly reporting regulations of the Securities and Exchange Commission (“SEC”). In management’s opinion, the accompanying interim unaudited condensed consolidated financial statements include all adjustments necessary for a fair statement of the financial position of the Company as of March 31, 2013 , the results of operations for the three months ended March 31, 2013 and cash flows for the three months ended March 31, 2013 . Certain information and disclosures normally included in the notes to the annual financial statements prepared in accordance with GAAP have been omitted from these interim unaudited condensed consolidated financial statements pursuant to the rules and regulations of the SEC. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012 (“Annual Report”) filed with the SEC. The condensed consolidated balance sheet as of December 31, 2012 was derived from the Company’s audited consolidated financial statements, but does not include all disclosures required by GAAP.

Basis of consolidation

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

Dollar amounts

The dollar amounts presented in the tabular data within these footnote disclosures are stated in thousands of dollars, except per unit amounts, or as noted within the context of each footnote disclosure.

Use of estimates

The Company’s management prepares the unaudited condensed consolidated financial statements in accordance with GAAP. The Company makes estimates and assumptions in the preparation of its unaudited condensed consolidated financial statements, and its estimates and assumptions may affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. The complexity and judgment required in the Company’s estimation process and issues related to the assumptions, risks and uncertainties inherent in the application of the percentage-of-completion method of accounting affect the amounts of revenue, expenses, unbilled receivables and deferred revenue. Estimates are also used for, but not limited to, receivables, allowance for doubtful accounts, useful lives of assets, depreciation, income taxes and deferred tax asset valuation, valuation of stock options, other current liabilities and accrued liabilities. Numerous internal and external factors can affect estimates. The critical accounting policies related to the estimates and judgments are discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 under

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management’s discussion and analysis of financial condition and results of operations. There have been no significant changes to the Company’s critical accounting policies as described in the Company’s Annual Report.

Revenue recognition

The Company derives its revenue from the licensing and implementation of software solutions and associated software maintenance and support. To a lesser extent, the Company's revenue includes nonsoftware related hosting services. The Company's arrangements with customers typically include: (a) license fees paid for the use of our solutions either in perpetuity or over a specified term and implementation fees for configuration, implementation and training services and (b) maintenance and support fees related to technical support and software updates. If there is significant uncertainty about contract completion or collectability is not reasonably assured, revenue is deferred until the uncertainty is sufficiently resolved or collectability is reasonably assured. In addition, revenue is recognized when persuasive evidence of an arrangement exists and fees are fixed or determinable. For certain arrangements, we engage independent contractors to assist in the implementation of our software solutions. These arrangements are analyzed based on numerous factors to determine the amount of revenue to be recognized.

In determining whether implementation services revenue should be accounted for separately from license revenue, the Company evaluates whether the professional services are considered essential to the functionality of the software using factors such as: the nature of its software products; whether they are ready for use by the customer upon receipt; the nature of its implementation services; the availability of services from other vendors; whether the timing of payments for license revenue is coincident with performance of services; and whether milestones or acceptance criteria exist that affect the realizability of the software license fee.

The Company's software license arrangements typically include implementation services that can be considered essential to the customer's usability of the licensed software solutions and accordingly do not qualify for separate accounting treatment. The license and implementation services revenues and software license revenues are generally recognized together with the implementation services using the percentage-of-completion method or completed contract method. The completed contract method is used for contracts where there is a risk over final acceptance by the customer or for contracts that are short term in nature.

The percentage-of-completion computation is measured by the percentage of man-days incurred during the reporting period as compared to the estimated total man-days necessary for each contract for implementation of the software solutions. The Company measures performance under the percentage-of-completion method using total man-day method based on current estimates of man-days to complete the project. The Company believes that for each such project, man-days expended in proportion to total estimated man-days at completion represents the most reliable and meaningful measure for determining a project's progress toward completion. Under our fixed-fee arrangements, should a loss be anticipated on a contract, the full amount is recorded when the loss is determinable.

The Company also licenses software solutions under term license agreements that typically include maintenance during the license term. When maintenance is included for the entire term of the license, there is no renewal rate and the Company has not established vendor specific objective evidence (“VSOE”) of fair value for the maintenance on term licenses. For term license agreements, revenue and the associated costs are deferred until the delivery of the solution and recognized ratably over the remaining license term.

For arrangements that include hosting services we allocate the arrangement consideration between the hosting service and other elements and recognize the hosting fee ratably beginning on the date the customer commences use of our services and continuing through the end of the customer term.

The Company's customer arrangements typically contain multiple elements that include software license, implementation services and post-implementation maintenance and support. In October 2009, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2009-13, Multiple-Deliverable Revenue Arrangements, (amendments to FASB Accounting Standards Codification (“ASC”)) Topic 605, Revenue Recognition), which amended the accounting standards for certain multiple deliverable revenue arrangements that contain nonsoftware related elements to:


•	provide updated guidance on whether multiple deliverables exist, how the deliverables in an arrangement should be separated, and how the consideration should be allocated;


•	require an entity to allocate revenue in an arrangement using best estimated selling price, (“BESP”) of deliverables if a vendor does not have VSOE of selling price; and


•	eliminate the use of the residual method and require an entity to allocate revenue using the relative selling price method.

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For multiple element arrangements containing our nonsoftware services, the Company must (1) determine whether and when each element has been delivered; (2) determine fair value of each element using the selling price hierarchy of VSOE of fair value, third party evidence (“TPE”), or BESP, as applicable, and (3) allocate the total price among the various elements based on the relative selling price method.

For multiple-element arrangements that contain software and nonsoftware elements such as the Company's hosting service offerings, we allocate revenue between the software and software related elements as a group and any nonsoftware elements based on a relative fair value allocation. We determine fair value for each deliverable using this hierarchy and utilize VSOE of fair value if it exists.

In certain instances, the Company may not be able to establish VSOE for all deliverables in an arrangement with multiple elements. This may be due to infrequently selling each element separately, not pricing solutions or services within a narrow range, or only having a limited sales history. In addition, TPE may not be available. When the Company is unable to establish selling prices using VSOE or TPE, it uses BESP in the allocation of arrangement consideration. The objective of BESP is to determine the price at which the Company would transact a sale if the product or service were sold on a stand-alone basis. For transactions that only include software and software-related elements, the Company continues to account for such arrangements under the software revenue recognition standards which require it to establish VSOE of fair value to allocate arrangement consideration to multiple deliverables.

Maintenance and support revenue includes post-implementation customer support and the right to unspecified software updates and enhancements on a when and if available basis. The Company generally invoices for maintenance and support services on a monthly, quarterly or on an annual basis through the maintenance and support period. The Company recognizes revenue from maintenance arrangements ratably over the period in which the services are provided.

Software license and implementation revenue that has been recognized, but for which the Company has not invoiced the customer, is recorded as unbilled receivables. Invoices that have been issued before software license, implementation and maintenance and support revenue has been recognized are recorded as deferred revenue in the accompanying unaudited condensed consolidated balance sheets.

Internal-use software

Costs incurred to develop internal-use software during the application development stage are capitalized, stated at cost, and depreciated using the straight-line method over the estimated useful lives of the assets. Application development stage costs generally include salaries and personnel costs and third party contractor expenses associated with internal-use software configuration, coding, installation and testing. During the three months ended March 31, 2013 and 2012 , the Company capitalized internal-use software development costs of $0.9 million and $0.3 million , respectively, related to its cloud-based offerings. Capitalized software for internal use is included in property and equipment, net in the unaudited condensed consolidated balance sheets.

Noncash share-based compensation

The Company measures all share-based payments to its employees based on the grant date fair value of the awards and recognizes expense in the Company’s unaudited consolidated statement of comprehensive income on a straight-line basis over the period during which the recipient is required to perform service (generally over the vesting period of the awards). To date, the Company has granted Stock Options, Stock Appreciation Rights (“SARs”), Restricted Stock Units (“RSUs”) and Market Stock Units (“MSUs”). The MSUs are performance-based awards that vest based upon the Company’s relative shareholder return.

The following table presents the number of shares or units outstanding for each award type as of March 31, 2013 and December 31, 2012 , respectively.



Award type	March 31, 2013	December 31, 2012
Stock options	1,343,710	1,474,828
Restricted stock units	1,662,751	1,182,726
Stock appreciation rights	746,225	789,637
Market share units	456,000	205,000

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Stock options, SARs and RSUs vest ratably between three and four years. The actual number of MSUs that will be eligible to vest is based on the total shareholder return of the Company relative to the total shareholder return of the Russell 2000 Index (“Index”) over the Performance Period, as defined by each awards plan documents.

The fair value of the RSUs is based on the closing price of the Company’s stock on the date of grant.

The Company estimates the fair value of MSUs on the date of grant using a Monte Carlo simulation model. The determination of fair value of the MSUs is affected by the Company’s stock price and a number of assumptions including the expected volatilities of the Company’s stock and the Index, its risk-free interest rate and expected dividends. The Company’s expected volatility at the date of grant was based on the historical volatilities of the Company and the Index over the Performance Period. The Company did not estimate a forfeiture rate for the MSUs due to the limited size, the vesting period, nature of the grantee population and the lack of history of granting this type of award.

The assumptions used to value the MSUs granted during the three months ended March 31, 2013 were as follows:



		For the three months ended March 31, 2013
Volatility		57%
Risk-free interest rate		0.35%
Expected option life in years		2.84
Dividend yield		—

Earnings per share

The Company computes basic earnings per share by dividing net income by the weighted average number of common shares outstanding. Diluted earnings per share is computed by dividing net income by the weighted average number of common shares and dilutive potential common shares then outstanding. Potential common shares consist of shares issuable upon the exercise of stock options and SARs or the vesting of share-based awards. Diluted earnings per share reflect the assumed conversion of all dilutive share-based awards using the treasury stock method.

Fair value measurement

The Company’s financial assets that are measured at fair value on a recurring basis consisted of $58.0 million invested in treasury money market funds at both March 31, 2013 and December 31, 2012 , respectively. The fair value of these accounts is determined based on quoted market prices, which represents level 1 in the fair value hierarchy as defined by ASC 820, “ Fair Value Measurement and Disclosure .”

Deferred revenue and unbilled receivables

Software license and implementation services that have been performed, but for which the Company has not invoiced the customer, are recorded as unbilled receivables, and invoices that have been issued before the software license and implementation services have been performed are recorded as deferred revenue in the accompanying unaudited condensed consolidated balance sheets. The Company generally invoices for maintenance and support services on a monthly, a quarterly or an annual basis through the maintenance and support period.

Credit Facility

As of March 31, 2013, $0.2 million of unamortized debt issuance costs related to the revolving credit facility ("Revolver") is included in other long term assets in the unaudited condensed consolidated balance sheets. For the three months ended March 31, 2013, $13,000 of debt issuance cost amortization is included in interest expense in the unaudited condensed consolidated statements of comprehensive income.

As of March 31, 2013 , the Company had no outstanding borrowings under the Revolver.

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Income taxes

At the end of each interim reporting period, the Company estimates its annual effective tax rate to calculate its income tax provision. The estimated effective tax rate includes U.S. federal, state and foreign income taxes and is based on the application of an estimated annual income tax rate applied to the current quarter’s year-to-date pre-tax income. This estimated effective tax rate is used in providing for income taxes on a year-to-date basis and may change in subsequent interim reporting periods.

The effective tax rate (benefit) for the three months ended March 31, 2013 and 2012 was (196)% and 45% , respectively. The difference between the effective tax rate and the federal statutory rate of 34% for the three months ended March 31, 2013 was due primarily to a $1.4 million discrete benefit attributed to the 2012 Research and Experimentations ("R&E") tax credit that was retroactively reinstated in the first quarter of 2013, partially offset by a rate increase attributable to nondeductible share-based compensation expense.

3. Earnings per Share

The following table sets forth the computation of basic and diluted earnings per share for the three months ended March 31, 2013 and 2012 :



	For the three months ended March 31,
	2013		2012
Numerator:
Net income	$	1,734	$	1,191
Denominator:
Weighted average shares (basic)	27,757		27,167
Dilutive effect of potential common shares	1,608		1,117
Weighted average shares (diluted)	29,365		28,284
Basic earnings per share	$	0.06	$	0.04
Diluted earnings per share	$	0.06	$	0.04

Dilutive potential common shares consist of shares issuable upon the exercise of stock options, settlement of SARs, vesting of RSUs and MSUs. Potential common shares determined to be antidilutive and excluded from diluted weighted average shares outstanding were approximately 10,000 and 413,000 for the three months ended March 31, 2013 and 2012 .

4. Noncash Share-based Compensation

During the three months ended March 31, 2013 , the Company granted 779,850 shares of RSUs with a weighted average grant-date fair value of $19.60 per share. The Company granted 251,000 MSUs with a weighted average grant-date fair value of $40.58 to certain executive officers and non-executive employees during the three months ended March 31, 2013 . These MSU's vest on January 1, 2016 and the actual number of MSUs that will be eligible to vest is based on the total shareholder return of the Company relative to the total shareholder return of the Index over the Performance Period, as defined by each award's plan documents. The Company did not grant any stock options or SARs during the three months ended March 31, 2013 .

Share-based compensation expense is allocated to expense categories on the unaudited condensed consolidated statements of comprehensive income. The following table summarizes share-based compensation expense included in the Company’s unaudited condensed consolidated statements of comprehensive income for the three months ended March 31, 2013 and 2012 :

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	For the three months ended March 31,
	2013		2012
Share-based compensation:
Cost of revenue:
License and implementation	$	462	$	329
Total included in cost of revenue	462		329
Operating expenses:
Selling, marketing, general and administrative	2,222		1,268
Research and development	736		435
Total included in operating expenses	2,958		1,703
Total share-based compensation expense	$	3,420	$	2,032

In February 2013, the Company increased the number of shares available for issuance by 900,000 to 7,268,000 under an evergreen provision in our 2007 Equity Incentive Plan ("2007 Stock Plan"). As of March 31, 2013 , 433,888 shares remained available for issuance under the 2007 Stock Plan. At March 31, 2013 , there was an estimated $40.7 million of total unrecognized compensation costs related to share-based compensation arrangements. These costs will be recognized over a weighted average period of 2.9 years.

5. Commitments and Contingencies

Litigation:

In the ordinary course of the Company’s business, the Company regularly becomes involved in contract and other negotiations and, in more limited circumstances, becomes involved in legal proceedings, claims and litigation. The outcomes of these matters are inherently unpredictable. The Company is not currently involved in any outstanding litigation that it believes, individually or in the aggregate, will have a material adverse effect on its business, financial condition, results of operations or cash flows.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The terms “we,” “us,” “PROS“ and “our” refer to PROS Holdings, Inc. and all of its subsidiaries that are consolidated in conformity with accounting principles generally accepted in the United States of America.

This management’s discussion and analysis of financial condition and results of operations should be read along with the unaudited condensed consolidated financial statements and unaudited notes to condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q, as well as the audited consolidated financial statements and notes to consolidated financial statements and management’s discussion and analysis of financial condition and results of operations set forth in our Annual Report on Form 10-K for the year ended December 31, 2012.

Overview

PROS provides big data software applications designed to help companies outperform in their markets by using big data to sell more effectively. We apply 27 years of data science experience to unlock buying patterns and preferences within transaction data to reveal which opportunities are most likely to close, which offers are most likely to sell and which prices are most likely to win. PROS offers big data software applications to analyze, execute and optimize sales, pricing, quoting, rebates and revenue management. We also provide professional services to implement our software applications, as well as business consulting. Since inception, PROS has completed over 600 implementations of our solutions across more than 30 industries in more than 50 countries.

Opportunities, Trends and Uncertainties

We have noted opportunities, trends and uncertainties that we believe are particularly significant to understand our financial results and condition.

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Growth opportunities. We believe the market for our big data software applications is underpenetrated. Market interest for our software has increased over the past several years, providing us with growth opportunities. We have and will continue to invest in our business to more effectively address these opportunities through significant investment in professional services, research and development, sales, marketing and back office. In addition to organic growth, we may acquire companies or technologies that can contribute to the strategic, operational and financial growth of our business. We expect to continue to explore both organic and other strategic growth opportunities.

•

Uncertain global economic conditions. Global economic conditions have been challenging in recent years, and continue to be somewhat uncertain. The uncertain economic conditions have had and may have a negative impact on the adoption of big data software and may increase the volatility in our business. Due to the uncertain economic conditions, we continue to experience long sales cycles, increased scrutiny on purchasing decisions and overall cautiousness taken by customers. In addition, certain foreign countries are still facing significant economic and political crises and it is possible that these crises could result in economic deterioration in the markets in which we operate. We believe our solutions provide value to our customers during periods of economic growth as well as in recessions, but the extent to which the current economic conditions will further affect our business is uncertain.

•

Variability in revenue. Our revenue recognition policy provides visibility into a significant portion of our revenue in the near-term quarters, although the actual timing of revenue recognition varies based on the nature and requirements of our contracts. For the majority of our arrangements, we have not historically recognized license revenue upon customer contract signature and software delivery. We evaluate our contract terms and conditions as well as our implementation performance obligations in making our revenue recognition determination for each contract. Our contractual performance obligations in the future may differ from historical periods, impacting the timing of the recognition of revenue. For example, growth in our term license and SaaS service offerings may result in the deferral of revenue over the contractual term, whereas growth in perpetual license arrangements that meet the criteria for separation may result in the recognition of license revenue on delivery, provided revenue recognition criteria are met. Our revenue could also vary based on our customer mix and customer geographic location. We sell our software solutions to customers in the manufacturing, distribution, services and travel industries. From a geographical standpoint, approximately 53% and 60% of our consolidated revenues were derived from customers outside the United States for the three months ended March 31, 2013 and 2012 , respectively. Our contracts with customers outside the United States are predominately denominated in U.S. dollars. The economic and political environments around the world could change our concentration of revenue within industries and across geographies.

•

Income taxes . For the three months ended March 31, 2013 , our effective income tax rate (benefit) was (196)% as compared to the federal rate of 34%. In January 2013, Congress passed the American Taxpayer Relief Act of 2012 which included, among other legislation, the retroactive extension of the Research and Experimentations ("R&E") tax credit. The passage of this legislation made the R&E tax credit retroactive to January 1, 2012 and extended the R&E tax credit until December 31, 2013. As a result of the retroactive reinstatement of the R&E tax credit, we recognized a discrete tax benefit of $1.4 million for the three months ended March 31, 2013. Excluding the impact of discrete tax items, our 2013 estimated effective tax rate is expected to approximate 48%.

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Results of Operations

Comparison of three months ended March 31, 2013 with three months ended March 31, 2012

Revenue:



	For the three months ended March 31,
	2013				2012
(Dollars in thousands)	Amount		As a Percentage of Total Revenue		Amount		As a Percentage of Total Revenue		Variance $		Variance %
License and implementation	$	22,592	67	%	$	17,796	66	%	$	4,796	27	%
Maintenance and support	11,034		33	%	9,225		34	%	1,809		20	%
Total	$	33,626	100	%	$	27,021	100	%	$	6,605	24	%

License and implementation. License and implementation revenue increased $4.8 million to $22.6 million for the three months ended March 31, 2013 from $17.8 million for the three months ended March 31, 2012 , representing a 27% increase. The increase in license and implementation revenue was principally the result of a 13% increase in the number of implementations from 84 to 95, which increased the number of man-days expended by 35%, partially offset by a 6% decrease in the average revenue recognized per man-day as compared to the corresponding period in 2012.

License and implementation revenue includes revenue from both term licenses and hosting services. Revenue from term licenses represented approximately 3% and 5% of total revenue for the three months ended March 31, 2013 and 2012 , respectively. Revenue from hosting services represented approximately 3% and 2% of total revenue for the three months ended March 31, 2013 and 2012 , respectively.

Maintenance and support. Maintenance and support revenue increased $1.8 million to $11.0 million for the three months ended March 31, 2013 from $9.2 million for the three months ended March 31, 2012 , representing a 20% increase. The increase in maintenance and support revenue is principally a result of an increase in the number of customers for which we are providing maintenance and support services.

Cost of revenue and gross profit:



	For the three months ended March 31,
	2013				2012
(Dollars in thousands)	Amount		As a Percentage of Related Revenue		Amount		As a Percentage of Related Revenue		Variance $		Variance %
Cost of license and implementation	$	8,471	37	%	$	6,003	34	%	$	2,468	41	%
Cost of maintenance and support	2,082		19	%	1,935		21	%	147		8	%
Total cost of revenue	$	10,553	31	%	$	7,938	29	%	$	2,615	33	%
Gross profit	$	23,073	69	%	$	19,083	71	%	$	3,990	21	%

Cost of license and implementation. Cost of license and implementation increased $2.5 million to $8.5 million for the three months ended March 31, 2013 from $6.0 million for the three months ended March 31, 2012 , representing a 41% increase. The increase in cost of license and implementation revenue was principally attributable to an increase of $1.7 million of personnel costs. Personnel costs, which include our employees and third party contractors, increased primarily as a result of an increase in headcount needed to support the increased number of active and anticipated implementations. Included in the increase in personnel costs is an increase of $0.1 million of noncash share based compensation expense. In addition, there was an increase of $0.4 million of travel expenses due to the increase in the number of implementations and an increase of $0.3 million related to hosting and our cloud-based service offerings.

License and implementation gross profit percentages were 63% for the three months ended March 31, 2013 as compared to 66% for the three months ended March 31, 2012 . The decrease in the license and implementation gross profit percentage was principally the result of a 41% increase in license and implementation costs due primarily to an increase in headcount needed to

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support the increased number of active and anticipated implementations. License and implementation gross margins may vary from period to period depending on different factors, including the amount of implementation services required to deploy our solutions relative to the total contract price and additional headcount needed to support anticipated future implementations.

Cost of maintenance and support. Cost of maintenance and support increased $0.1 million to $2.1 million for the three months ended March 31, 2013 from $1.9 million for the three months ended March 31, 2012 , representing an 8% increase. The cost of providing maintenance and support services consists largely of personnel related expenses. The increase in cost of maintenance was principally attributable to an increase of $0.1 million of personnel costs associated with the continued growth in our customer maintenance and support function commensurate with maintenance and support revenue growth.

Maintenance and support gross profit percentages were 81% for the three months ended March 31, 2013 as compared to 79% for the three months ended March 31, 2012 . The increase in maintenance and support gross profit percentages was principally the result of an increase of 20% in maintenance and support revenue.

Gross profit. Gross profit increased $4.0 million to $23.1 million for the three months ended March 31, 2013 from $19.1 million for the three months ended March 31, 2012 , representing a 21% increase. The increase in overall gross profit was principally attributable to a 24% increase in total revenue.

Operating expenses:



	For the three months ended March 31,
	2013				2012
(Dollars in thousands)	Amount		As a Percentage of Total Revenue		Amount		As a Percentage of Total Revenue		Variance $		Variance %
Selling, marketing, general and administrative	$	14,288	42	%	$	10,256	38	%	$	4,032	39	%
Research and development	8,096		24	%	6,697		25	%	1,399		21	%
Total operating expenses	$	22,384	66	%	$	16,953	63	%	$	5,431	32	%

Selling, marketing, general and administrative expenses. Selling, marketing, general and administrative expenses increased $4.0 million to $14.3 million for the three months ended March 31, 2013 from $10.3 million for the three months ended March 31, 2012 , representing a 39% increase . The increase was principally attributable to an increase of $3.7 million in sales, marketing, general and administrative personnel costs as a result of an increase in headcount to support our current and future growth objectives and higher commission expenses resulting from higher revenue levels. Included in the increase in personnel costs is an increase of $1.0 million of noncash share based compensation. In addition, there was an increase of $0.4 million of overhead and other expenses, an increase of $0.2 million in travel expense primarily as a result of increase in sales activity and an increase of $0.2 million of third party professional fees. These increases were offset by a decrease of $0.3 million of marketing expenses and a decrease of $0.1 million of consultants fees related to the implementation of a new enterprise resource planning system in 2012.

Research and development expenses. Research and development expenses increased $1.4 million to $8.1 million for the three months ended March 31, 2013 from $6.7 million for the three months ended March 31, 2012 , representing a 21% increase. The increase in research and development expenses was principally attributable to an increase of $2.1 million in personnel costs as a result of increased headcount to support work on new projects and initiatives, offset by $0.6 million of personnel costs that were capitalized related to the development of our cloud-based service offerings. Included in the increase in personnel costs is an increase of $0.4 million of noncash share-based compensation.

Other (expense) income, net:



	For the three months ended March 31,
	2013					2012
(Dollars in thousands)	Amount			As a Percentage of Total Revenue		Amount		As a Percentage of Total Revenue		Variance $			Variance %
Other (expense) income, net	$	(103	)	—	%	$	22	—	%	$	(125	)	(568	)%

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Other (expense) income, net. Other (expense) income, net consists of interest income on our cash and cash equivalents, interest expense which includes debt issuance cost amortization on the revolving credit facility ("Revolver") and foreign currency exchange gains and losses on transactions denominated in currencies other than the functional currency. Other expense for the period was primarily attributed to net increases in foreign currency losses and an increase in interest expense from the Revolver.

Income tax (benefit) provision :



	For the three months ended March 31,
(Dollars in thousands)	2013			2012			Variance $			Variance %
Effective tax rate	(196		)%	45		%	n/a			(241	)%
Income tax (benefit) provision	$	(1,148	)	$	961		$	(2,109	)	(219	)%

Income tax (benefit) provision . Our income tax provision decreased $2.1 million to a benefit of $1.1 million for the three months ended March 31, 2013 from a provision of $1.0 million for the three months ended March 31, 2012 . Our effective tax rate was (196)% and 45% for the three months ended March 31, 2013 and 2012 , respectively. The decrease in the effective tax rate was due primarily to a $1.4 million discrete benefit attributed to the 2012 Research and Experimentations ("R&E") tax credit that was retroactively reinstated in the first quarter of 2013, partially offset by a rate increase attributable to nondeductible share-based compensation expense.

Liquidity and Capital Resources

Liquidity

At March 31, 2013 , we had $82.5 million of cash and cash equivalents and $76.0 million of working capital as compared to $83.6 million of cash and cash equivalents and $73.0 million of working capital at December 31, 2012 . The majority of our cash and cash equivalents are denominated in the U.S. dollar and are held in financial institutions located in the U.S. Our principal sources of liquidity are our cash and cash equivalents, cash flows generated from operations and potential borrowings under our Revolver. Our material drivers or variants of operating cash flow are net income, noncash expenses (principally share-based compensation) and the timing of periodic billings and collections related to the sale of our software and related services. The primary source of operating cash flows is the collection of accounts receivable from our customers. Our operating cash flows are also impacted by the timing of payments to our vendors for accounts payable and other liabilities. We generally pay our vendors and service providers in accordance with the invoice terms and conditions.

Based on existing cash and cash equivalents balances, availability under our Revolver and our current estimates of revenues and expenses, we believe that we will have adequate liquidity and capital resources to meet our operational requirements and anticipated capital expenditures for the next twelve months. Our future working capital requirements will depend on many factors, including the operations of our existing business, our potential strategic expansion, future acquisitions we might undertake, and the expansion into complementary businesses. If such need arises, we may raise additional funds through equity or debt financings. At March 31, 2013 , we had restricted cash of $0.3 million related to letters of credit.

The following table presents key components of our unaudited condensed consolidated statements of cash flows for the three months ended March 31, 2013 and 2012 .



	For the three months ended March 31,
(Dollars in thousands)	2013			2012
Net cash provided by operating activities	$	1,261		$	3,424
Net cash used in investing activities	(1,744		)	(1,031		)
Net cash (used in) provided by financing activities	(613		)	63
Cash and cash equivalents (beginning of period)	83,558			68,457
Cash and cash equivalents (end of period)	$	82,462		$	70,913

Net cash provided by operating activities . Net cash provided by operating activities for the three months ended March 31, 2013 was $1.3 million , which represents a decrease of $2.2 million when compared to the corresponding period in 2012. For the three months ended March 31, 2013 , our cash flows from operations were derived principally from our earnings from on-going operations prior to non-cash expenses such as depreciation and amortization, share-based compensation and related tax benefits, provision for doubtful accounts and changes in our working capital. The $2.2 million decrease was due to a decrease of $4.8 million attributed to changes in operating assets and liabilities, which are comprised of accounts receivable, unbilled receivables, prepaid and other assets, accounts payable, accrued liabilities, accrued payroll and other em

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ployee benefits and deferred revenue. Included in our changes in operating assets and liabilities in 2013 was $5.7 million of incentive payments paid to our employees that were earned in 2012. This decrease was partially offset by an increase of $2.1 million of noncash expenses principally as the result of the increase in share-based compensation and an increase of $0.5 million in net income.

Net cash used in investing activities . Net cash used in investing activities was $1.7 million for the three months ended March 31, 2013 compared to $1.0 million for the three months ended March 31, 2012 . The increase in net cash used in investing activities for the three months ended March 31, 2013 as compared to the corresponding period in 2012 is primarily the result of purchases of property and equipment as a result of infrastructure investment and capitalized internal-use software development costs related to our cloud-based service offerings.

Net cash (used in) provided by financing activities . Net cash used in financing activities was $0.6 million for the three months ended March 31, 2013 compared to net cash provided by financing activities of $0.1 million for the three months ended March 31, 2012 . The increase for the three months ended March 31, 2013 as compared to the corresponding period in 2012 is primarily the result of an increase in net cash provided by the exercise of stock options and stock appreciation rights of $0.9 million, offset by a $1.4 million decrease in excess tax benefits as a result of the vesting of restricted stock units and a $0.2 million increase in net cash used in tax withholdings related to the net share settlement of restricted stock units.

Off-Balance Sheet Arrangements

We do not have any relationships with unconsolidated entities or financial partnerships, such as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Contractual Obligations and Commitments

There have been no material changes to our contractual obligations and commitments as disclosed in our Annual Report on SEC Form 10-K for the year ended December 31, 2012.

Credit facility

As of March 31, 2013, there were $0.2 million of unamortized debt issuance costs related to the Revolver included in other long term assets in the condensed consolidated balance sheets. For the three months ended March 31, 2013, $13,000 of debt issue cost amortization is included in interest expense in the condensed consolidated statements of comprehensive income.

There were no outstanding borrowings under the Revolver as of March 31, 2013 .

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Currency Exchange Risk

Our contracts are predominately denominated in U.S. dollars; however, we have contracts denominated in foreign currencies and therefore a portion of our revenue is subject to foreign currency risks. The primary market risk we face is from foreign currency exchange rate fluctuations. Our cash flows are subject to fluctuations due to changes in foreign currency exchange rates. The effect of an immediate 10% adverse change in exchange rates on foreign denominated receivables as of March 31, 2013 would have resulted in a $0.3 million loss. In addition, the Company has operating subsidiaries in the United Kingdom, Canada and Germany. However, due to the relatively low volume of payments made by the Company through these foreign subsidiaries, the Company does not believe that it has significant exposure to foreign currency exchange risks. Fluctuations in currency exchange rates could harm our results of operations in the future.

We currently do not use derivative financial instruments to mitigate foreign currency exchange risks. We continue to review this issue and may consider hedging certain foreign exchange risks through the use of currency futures or options in future years.

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Exposure to Interest Rates

The Company is exposed to market risk for changes in interest rates related to the variable interest rate on borrowings under the Company’s Revolver. As of March 31, 2013 , the Company had no borrowings under the Revolver.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act of 1934, as amended (the "Exchange Act") as of March 31, 2013 . Based on our evaluation of our disclosure controls and procedures as of March 31, 2013 , our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during the three months ended March 31, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we are a party to legal proceedings and claims arising in the ordinary course of business. We are not currently aware of any such proceedings or claims that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition, results of operations or cash flows.

ITEM 1A. RISK FACTORS

There have been no material changes from the risk factors previously described under Item 1A of each of our Annual Report on Form 10-K for the year ended December 31, 2012.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

We have an ongoing authorization from our Board of Directors to repurchase up to $15.0 million in shares of our common stock in the open market or through privately negotiated transactions. As of March 31, 2013 , $10.0 million remained available for repurchase under the existing repurchase authorization.

We did not make any purchases of our common stock under this program for the three months ended March 31, 2013 .

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURE

None.

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS.

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Number		Description

10.13(1)		Credit Agreement between PROS, Inc. and Wells Fargo Bank, National Association dated July 2, 2012.

10.15		Form of Market Stock Unit Agreement (2013) under the 2007 Stock Plan.

10.16**		Amended and Restated Employment Agreement, dated May 2, 2013, by and between PROS, Inc., Registrant and Andres Reiner - President and Chief Executive Officer.

10.17**		Amended and Restated Employment Agreement, dated May 2, 2013, by and between PROS, Inc., Registrant and Charles H. Murphy - Chief Financial Officer.

31.1		Certification of Chief Executive Officer Pursuant to Exchange Act Rule 13a-14(a)/15d-14(a).

31.2		Certification of Chief Financial Officer Pursuant to Exchange Act Rule 13a-14(a)/ 15d-14(a).

32.1*		Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.

101.INS		XBRL Instance Document.

101.SCH		XBRL Taxonomy Extension Schema Document.

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB		XBRL Taxonomy Extension Label Linkbase Document.

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document.



*	This certification shall not be deemed “filed” for purposes of Section 18 of the Securities Act of 1934, or otherwise subject to the liability of that Section, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934
**	Constitutes management contracts or compensatory arrangements.
(1)	Incorporated by reference to our Current Report on Form 8-K dated July 9, 2012

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



		PROS HOLDINGS, INC.

Date: May 2, 2013	By:	/s/ Andres Reiner
		Andres Reiner
		President and Chief Executive Officer (Principal Executive Officer)

Date: May 2, 2013	By:	/s/ Charles H. Murphy
		Charles H. Murphy
		Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

Exhibit 10.15

PROS HOLDINGS, INC.

NOTICE OF AWARD OF MARKET STOCK UNITS

PROS Holdings, Inc., a Delaware corporation (the “ Company ”), pursuant to its 2007 Equity Incentive Plan (the “ Plan ”), hereby grants to the holder listed below (the “ Participant ”), an award (the “ Award ”) of Market Stock Units (the “ Units ”), each of which is a right to receive the value of one (1) share of Stock, on the terms and conditions set forth herein and in the Market Stock Units Award Agreement attached hereto (the “ Award Agreement ”) and the Plan, which are incorporated herein by reference. Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Grant Notice and the Award Agreement.



Participant:
Grant Date:	February 25, 2013
Target Number of Units:	, subject to adjustment as provided by the Award Agreement.
Maximum Number of Units:	, which is 200 % of the Target Number of Units, subject to adjustment as provided by the Award Agreement.
Performance Period:	The Company fiscal years beginning January 1, 2013 and ending December 31, 2015, subject to Sections 9.1 and 9.2 of the Award Agreement.
Performance Measure:	The difference, measured in percentage points, for the Performance Period between the Company Total Stockholder Return and the Benchmark Index Total Return, both determined in accordance with Section 2 of the Award Agreement.
Benchmark Index:	The Russell 2000 Index (Bloomberg Symbol RTY)
Earned Units:	The number of Earned Units, if any (not to exceed the Maximum Number of Units), shall equal the product of (i) the Target Number of Units and (ii) the Relative Return Factor, as illustrated by Appendix A .
Relative Return Factor:	A percentage (rounded to the nearest 1/10th of 1% and not greater than 200 % or less than 0%) equal to the sum of 100% plus the product of 4 multiplied by the difference (whether positive or negative) equal to (i) the Company Total Stockholder Return minus (ii) the Benchmark Index Total Return, as illustrated by Appendix A .
Vesting Date:	January 1, 2016 , except as otherwise provided by the Award Agreement.
Vested Units:	Provided that the Participant’s Service has not terminated prior to the Vesting Date (except as otherwise provided by the Award Agreement), the Earned Units, if any, shall become Vested Units on the Vesting Date.
Settlement Date:	For each Vested Unit, except as otherwise provided by the Award Agreement, a date occurring no later than the 30th day following the Vesting Date.

By his or her signature below or by electronic acceptance or authentication in a form authorized by the Company, the Participant agrees to be bound by the terms and conditions of the Plan, the Award Agreement and this Grant Notice. The Participant has reviewed the Award Agreement, the Plan and this Grant Notice in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Grant Notice and fully understands all provisions of this Grant Notice, the Award Agreement and the Plan. The Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions arising under the Plan or relating to the Units.



PROS HOLDINGS, INC.		PARTICIPANT
By:		By:
Name:		Print Name:
Title:
Address:	3100 Main Street, Ste 900	Address:
	Houston, TX 77002


ATTACHMENTS:	PROS Holdings, Inc. 2007 Equity Incentive Plan, as amended to the Date of the Award; Market Stock Units Agreement.

APPENDIX A

ILLUSTRATION OF RELATIVE RETURN FACTOR AND RESULTING NUMBER OF EARNED UNITS



Percentage Point Difference of Company TSR Over/Under Benchmark Index Total Return	Relative Return Factor	Earned Units (Per 1,000 Target Units)
100	200.0%	2,000
95	200.0%	2,000
90	200.0%	2,000
85	200.0%	2,000
80	200.0%	2,000
75	200.0%	2,000
70	200.0%	2,000
65	200.0%	2,000
60	200.0%	2,000
55	200.0%	2,000
50	200.0%	2,000
45	200.0%	2,000
40	200.0%	2,000
35	200%	2,000
30	200%	2,000
25	200%	2,000
20	180%	1,800
15	160%	1,600
10	140%	1,400
5	120%	1,200
4	116%	1,160
3	112%	1,120
2	108%	1,080
1	104%	1,040
0	100.0%	1,000
-1	96%	960
-2	92%	920
-3	88%	880
-4	84%	840
-5	80%	800
-10	60%	600
-15	40%	400
-20	20%	200
-25	0%	0
-30	0%	0
-35	0%	0
-40	0.0%	0
-45	0.0%	0
-50	0.0%	0
-55	0.0%	0
-60	0.0%	0
-65	0.0%	0
-70	0.0%	0
-75	0.0%	0
-80	0.0%	0
-85	0.0%	0
-90	0.0%	0
-95	0.0%	0
-100	0.0%	0

APPENDIX A (CONTINUED)

ILLUSTRATIONS OF CALCULATION OF EARNED UNITS

PER 1,000 TARGET UNITS

Company Total Stockholder Return Exceeds Benchmark Index Total Return




Assumptions:

PRO:
Average Per Share Closing Price (beginning)			$15.50
Average Per Share Closing Price (ending)			$20.50

Russell 2000 Index:
Average Closing Index Value (beginning)		718.26
Average Closing Index Value (ending)		900.00

Computations:

Company Total Stockholder Return	((20.50 / 15.50) - 1) x 100	32.26		%

Benchmark Index Total Return	((900.00 / 718.26) - 1) x 100	25.30		%

Relative Return Factor	100 + (4.0 x (32.26 – 25.30))	127.8		%

Earned Units	1,000 x 127.8%	1,278

Company Total Stockholder Return Is Less Than Benchmark Index Total Return




Assumptions:

PRO:
Average Per Share Closing Price (beginning)			$15.50
Average Per Share Closing Price (ending)			$18.76

Russell 2000 Index:
Average Closing Index Value (beginning)		718.26
Average Closing Index Value (ending)		900.00

Computations:

Company Total Stockholder Return	((18.76 / 15.50) - 1) x 100	21.03		%

Benchmark Index Total Return	((900.00 / 718.26) - 1) x 100	25.30		%

Relative Return Factor	100 + (4.0 x (21.03 – 25.30)	82.9		%

Earned Units	1,000 x 82.9%	829

APPENDIX B

ILLUSTRATION OF ADJUSTMENT TO AVERAGE PER SHARE CLOSING PRICE
TO REFLECT ASSUMED REINVESTMENT OF CASH DIVIDENDS AND DISTRIBUTIONS


1.	Assumptions:


•	For the purposes of this illustration only, the averaging periods for determination of the Average Per Share Closing Price and the Average Closing Index Value are assumed to be the 10-day periods ending on the first day of the Performance Period and the last day of the Performance Period.


•	The Company declares and pays a quarterly cash dividend of $0.20 per share throughout all periods relevant to this illustration, with ex-dividend dates occurring each year on or about March 28, June 28, September 28 and December 28.


•	On the ex-dividend date, the dividend paid is reinvested to purchase an additional fractional share.


•	The Performance Period begins on January 1, 2XX1 and ends on December 31, 2XX2.


2.	Calculate Average Per Share Closing Price at the beginning of the Performance Period.

On the ex-dividend date occurring on December 28, 2XX0, assume that the dividend of $0.20 paid on one share is reinvested. Compute an adjusted Average Per Share Closing Price for the five trading days during the 10-day period ending 01/01/2XX1.



Trading Day	Closing Price	Dividend Paid	Shares Purchased	Accumulated Shares	Total Accumulated Value
12/23/2XX0	$15.34			1.000	$15.34
12/27/2XX0	$15.41			1.000	$15.41
12/28/2XX0	$14.80	$0.20	0.0135	1.0135	$15.00
12/29/2XX0	$15.13			1.0135	$15.33
12/30/2XX0	$14.88			1.0135	$15.08
Average Per Share Closing Price with Dividends Reinvested					$15.23

3. Calculate Accumulated Shares During the Performance Period.

On each ex-dividend date during the Performance Period, assume that the dividend of $0.20 paid on one share is reinvested, and the fractional share is added to the 1.0135 accumulated shares determined during the initial averaging period.



Ex-Dividend Date	Closing Price	Dividend Paid	Shares Purchased	Accumulated Shares
03/28/2XX1	$15.97	$0.20	0.0125	1.0260
06/28/2XX1	$16.13	$0.20	0.0124	1.0384
09/28/2XX1	$16.69	$0.20	0.0120	1.0504
12/28/2XX1	$16.36	$0.20	0.0122	1.0626
03/28/2XX2	$17.20	$0.20	0.0116	1.0742
06/28/2XX2	$19.43	$0.20	0.0103	1.0845
09/27/2XX2	$18.85	$0.20	0.0106	1.0951
12/27/2XX2	$19.20	$0.20	0.0104	1.1055


4.	Calculate Average Per Share Closing Price at the end of the Performance Period.

On the ex-dividend date occurring on December 28, 2XX2, assume that the dividend of $0.20 paid on one share is reinvested, and the fractional share is added to the 1.0951 accumulated shares determined through the last ex-dividend date prior to the final averaging period. Compute an adjusted Average Per Share Closing Price for the six trading days during the 10-day period ending 12/31/2XX2.



Trading Day	Closing Price	Dividend Paid	Shares Purchased	Accumulated Shares	Total Accumulated Value
12/23/2XX2	$19.01			1.0951	$20.82
12/24/2XX2	$18.94			1.0951	$20.74
12/26/2XX2	$19.12			1.0951	$20.94
12/27/2XX2	$19.20	$0.20	0.0104	1.1055	$21.23
12/30//2XX2	$19.17			1.1055	$21.19
12/31/2XX2	$19.22			1.1055	$21.25
Average Per Share Closing Price with Dividends Reinvested					$21.03

PROS HOLDINGS, INC.

MARKET STOCK UNITS AWARD AGREEMENT

(U.S. PARTICIPANTS)

PROS Holdings, Inc. (the “ Company ”) has granted to the Participant named in the Market Stock Units Grant Notice (the “ Grant Notice ” ) to which this Market Stock Units Award Agreement (this “ Award Agreement ” ) is attached an Award consisting of Market Stock Units (the “ Units ”) subject to the terms and conditions set forth in the Grant Notice and this Award Agreement. The Award has been granted pursuant to the PROS Holdings, Inc. 2007 Equity Incentive Plan (the “ Plan ” ), as amended to the Grant Date, the provisions of which are incorporated herein by reference.

Unless otherwise defined herein or in the Grant Notice, capitalized terms shall have the meanings assigned under the Plan.

1. THE AWARD .

The Company hereby awards to the Participant the Target Number of Units set forth in the Grant Notice, which, depending on the extent to which a Performance Goal (as described by Plan) is attained during the Performance Period, may result in the Participant earning as little as zero (0) Units or as many as the Maximum Number of Units. Subject to the terms of this Award Agreement and the Plan, each Unit, to the extent it is earned and becomes a Vested Unit, represents a right to receive on the Settlement Date one (1) share of Stock or, at the discretion of the Committee, the Fair Market Value thereof in cash. Unless and until a Unit has been determined to be an Earned Unit and has vested and become a Vested Unit as set forth in the Grant Notice, the Participant will have no right to settlement of such Units. Prior to settlement of any earned and vested Units, such Units will represent an unfunded and unsecured obligation of the Company.

2. MEASUREMENT OF PERFORMANCE MEASURE .

The components of Performance Measure shall be determined for the Performance Period in accordance with the following:

2.1 “ Company Total Stockholder Return ” means the percentage point increase or decrease in (a) the Average Per Share Closing Price for the 90 calendar day period ending on the last day of the Performance Period over (b) the Average Per Share Closing Price for the 90 calendar day period ending on the first day of the Performance Period.

2.2 “ Average Per Share Closing Price ” means the average of the daily closing prices per share of Stock as reported on the New York Stock Exchange for all trading days falling within an applicable 90 calendar day periods described in Section 2.1. The Average Per Share Closing Price shall be adjusted in each case to reflect an assumed reinvestment, as of the of applicable ex-dividend date, of all cash dividends and other cash distributions (excluding cash distributions resulting from share repurchases or redemptions by the Company) paid to stockholders, as applicable, during the 90 calendar day period ending on the first day of the Performance Period and during the Performance Period. The method of adjustment of the Average Per Share Closing Price to reflect the assumed reinvestment of cash dividends and other cash distributions to stockholders is illustrated in Appendix B to the Grant Notice.

2.3 “ Benchmark Index Total Return ” means the percentage point increase or decrease in (a) the Average Closing Index Value for the 90 calendar day period ending on the last day of the Performance Period over (b) the Average Closing Index Value for the 90 calendar day period ending on the first day of the Performance Period.

2.4 “ Average Closing Index Value ” means the average of the daily closing index values of the Benchmark Index for all trading days falling within an applicable 90 calendar day period described in Section 2.3.

3. COMMITTEE CERTIFICATION OF EARNED UNITS .

3.1 Level of Performance Measure Attained. As soon as practicable following completion of the Performance Period, but in any event no later than the Settlement Date, the Committee shall certify in writing the level of attainment of the Performance Measure during the Performance Period, the resulting Relative Return Factor and the number of Units which have become Earned Units.

3.2 Adjustment for Leave of Absence or Part-Time Work. Unless otherwise required by law or Company policy, if the Participant takes one or more unpaid leaves of absence in excess of thirty (30) days in the aggregate during the Performance Period, the number of Units which would otherwise become Earned Units shall be prorated on the basis of the number of days of the Participant’s Service during the Performance Period during which the Participant was not on an unpaid leave of absence. Unless otherwise required by law or Company policy, if the Participant commences working on a part-time basis during the Performance Period, the Committee may, in its discretion, reduce on a pro rata basis (reflecting the portion of the Performance Period worked by the Participant on a full-time equivalent basis) the number of Units which would otherwise become Earned Units, or provide that the number of Units which would otherwise become Earned Units shall be reduced as provided by the terms of an agreement between the Participant and the Company pertaining to the Participant’s part-time schedule.

4. VESTING OF EARNED UNITS .

4.1 Normal Vesting. Except as otherwise provided by this Award Agreement, Earned Units shall vest and become Vested Units as provided in the Grant Notice.

4.2 Vesting Upon a Change in Control. In the event of a Change in Control, the vesting of Earned Units shall be determined in accordance with Section 9.1.

4.3 Vesting Upon Involuntary Termination in Anticipation of a Change in Control . In the event that Participant’s Service is terminated by the Company other than for Cause, excluding as a result of the Participant’s death or Disability (an “ Involuntary Termination ”), and such Involuntary termination either (a) occurred within the one hundred twenty (120) day period prior to the effective date of a Change in Control or (b) is demonstrated by the Participant to the reasonable satisfaction of the Committee to have been at the request of a third party who is a party to such Change in Control (in either case, an “ Involuntary Termination in Anticipation of a Change in Control ”), then the vesting of Earned Units shall be determined in accordance with Section 9.2.

4.4 Vesting Upon Involuntary Termination Following a Change in Control. In the event that upon or within twelve (12) months following the effective date of a Change in Control, the Participant’s Service terminates due to Involuntary Termination, then the vesting of Earned Units shall be determined in accordance with Section 9.3.

5. TERMINATION OF SERVICE .

Unless otherwise specified in an employment agreement or other written agreement between the Company and the Participant which is applicable to this Award, in the event that the Participant’s Service terminates for any reason, with or without cause, other than as described in Section 4.3 or 4.4, the Participant shall forfeit and the Company shall automatically reacquire all Units which are not, as of the time of such termination, Vested Units, and the Participant shall not be entitled to any payment therefor.

6. SETTLEMENT OF THE AWARD .

6.1 Issuance of Shares of Common Stock or Cash Equivalent . Subject to the provisions of Section 6.3 and Section 7 below, the Company shall issue to the Participant on the Settlement Date with respect to each Vested Unit to be settled on such date one (1) share of Stock. Shares issued in settlement of Vested Units shall not be subject to any restriction on transfer other than any such restriction as may be required pursuant to Section 6.3. At the discretion of the Committee, payment with respect to all or any portion of the Vested Units may be made in a lump sum cash payment in an amount equal to the Fair Market Value, determined as of the Settlement Date, of the shares of Stock or other securities or property otherwise issuable in settlement of such Vested Units.

6.2 Beneficial Ownership of Shares; Certificate Registration . The Participant hereby authorizes the Company, in its sole discretion, to deposit for the benefit of the Participant with a Company-designated brokerage firm or, at the Company’s discretion, any other broker with which the Participant has an account relationship of which the Company has notice any or all shares acquired by the Participant pursuant to the settlement of the Award. Except as provided by the preceding sentence, a certificate for the shares as to which the Award is settled shall be registered in the name of the Participant, or, if applicable, in the names of the Participant’s Heirs.

6.3 Restrictions on Grant of the Award and Issuance of Shares . The grant of the Award and issuance of shares of Stock upon settlement of the Award shall be subject to compliance with all applicable requirements of U.S. federal, state or foreign law with respect to such securities. No shares may be issued hereunder if the issuance of such shares would constitute a violation of any applicable U.S. federal, state or foreign securities laws or other laws or regulations or the requirements of any stock exchange or market system upon which the Stock may then be listed. The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the lawful issuance of any shares subject to the Award shall relieve the Company of any liability in respect of the failure to issue such shares as to which such requisite authority shall not have been obtained. As a condition to the settlement of the Award, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company. Further, regardless of whether the transfer or issuance of the shares to be issued pursuant to the Units has been registered under the Securities Act or has been registered or qualified under the securities laws of any State, the Company may impose additional restrictions upon the sale, pledge, or other transfer of the shares (including the placement of appropriate legends on stock certificates and the issuance of stop-transfer instructions to the Company’s transfer agent) if, in the judgment of the Company and the Company’s counsel, such restrictions are necessary in order to achieve compliance with the provisions of the Securities Act, the securities laws of any State, or any other law.

6.4 Fractional Shares . The Company shall not be required to issue fractional shares upon the settlement of the Award.

7. TAX WITHHOLDING AND ADVICE .

7.1 In General. Subject to Section 7.2, at the time the Grant Notice is executed, or at any time thereafter as requested by the Company, the Participant hereby authorizes withholding from payroll and any other amounts payable to the Participant, and otherwise agrees to make adequate provision for, any sums required to satisfy the U.S. federal, state, and local taxes and (if applicable) taxes imposed by jurisdictions outside of the United States (including income tax, social insurance contributions, payment on account and any other taxes) and required by law to be withheld with respect to any taxable event arising as a result of the Participant’s participation in the Plan (referred to herein as “ Tax-Related Items ”).

7.2 Withholding of Taxes. The Company or any other Participating Company, as appropriate, shall have the authority and the right to deduct or withhold, or require the Participant to remit to the applicable Participating Company, an amount sufficient to satisfy applicable Tax-Related Items or to take such other action as may be necessary in the opinion of the applicable Participating Company to satisfy such Tax-Related Items (including hypothetical withholding tax amounts if the Participant is covered under a Company tax equalization policy). In this regard, the Participant authorizes the applicable Participating Company or their respective agents, at their discretion, to satisfy the obligations with regard to all Tax-Related Items by one or a combination of the following:

(a) withholding from the Participant’s wages or other cash compensation paid to the Participant by the applicable Participating Company; or

(b) withholding from proceeds of the sale of shares acquired upon vesting and settlement of the Units, either through a voluntary sale or through a mandatory sale arranged by the Company (on the Participant’s behalf pursuant to this authorization); or

(d) direct payment from the Participant.

To avoid negative accounting treatment, the Company may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding amounts or other applicable withholding rates. If the Participant is covered by a Company tax equalization policy, the Participant agrees to pay to the Company any additional hypothetical tax obligation calculated and paid under the terms and conditions of such tax equalization policy. Finally, the Participant shall pay to the applicable Participating Company any amount of Tax-Related Items that the Participating Company may be required to withhold as a result of his or her participation in the Plan that cannot be satisfied by the means previously described. The Company may refuse to issue or deliver the shares that may be issued in connection with the settlement of the Units if the Participant fails to comply with his or her Tax-Related Items obligations.

7.3 Tax Advice . The Participant represents, warrants and acknowledges that the Company has made no warranties or representations to the Participant with respect to the income tax consequences of the transactions contemplated by this Award Agreement, and the Participant is in no manner relying on the Company or the Company’s representatives for an assessment of such tax consequences. THE PARTICIPANT UNDERSTANDS THAT THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE PARTICIPANT SHOULD CONSULT HIS OR HER OWN TAX ADVISOR REGARDING THE UNITS. NOTHING STATED HEREIN IS INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, FOR THE PURPOSE OF AVOIDING TAXPAYER PENALTIES.

8. AUTHORIZATION TO RELEASE NECESSARY PERSONAL INFORMATION .

The Participant hereby authorizes and directs the Participant’s employer to collect, use and transfer in electronic or other form, any personal information (the “ Data ”) regarding the Participant’s Service, the nature and amount of the Participant’s compensation and the fact and conditions of the Participant’s participation in the Plan (including, but not limited to, the Participant’s name, home address, telephone number, date of birth, social security number (or any other social or national identification number), salary, nationality, job title, number of shares held and the details of all Units or any other entitlement to shares awarded, cancelled, exercised, vested, unvested or outstanding) for the purpose of implementing, administering and managing the Participant’s participation in the Plan. The Participant understands that the Data may be transferred to the Company or any other Participating Company, or to any third parties assisting in the implementation, administration and management of the Plan, including any requisite transfer to a brokerage firm or other third party assisting with administration of the Award or with whom shares acquired upon settlement of this Award or cash from the sale of such shares may be deposited. The Participant acknowledges that recipients of the Data may be located in different countries, and those countries may have data privacy laws and protections different from those in the country of the Participant’s residence. Furthermore, the Participant acknowledges and understands that the transfer of the Data to the Company or any of other Participating Company, or to any third parties is necessary for Participant’s participation in the Plan. The Participant may at any time withdraw the consents herein, by contacting the Company’s stock administration department in writing. The Participant further acknowledges that withdrawal of consent may affect the Participant’s ability to realize benefits from the Award, and the Participant’s ability to participate in the Plan.

9. CHANGE IN CONTROL .

In the event of a Change in Control, this Section 9 shall determine the treatment of the Units which have not otherwise become Vested Units, except as otherwise determined in accordance with an employment agreement or other agreement between the Company and the Participant which is applicable to this Award.

9.1 Effect of Change in Control on Award. In the event of a Change in Control, the Performance Period shall end on the day immediately preceding the Change in Control (the “ Adjusted Performance Period ”). The number of Earned Units and the vesting of those Units shall be determined for the Adjusted Performance Period in accordance with the following:

(a) Earned Units. In the Committee’s determination of the number of Earned Units for the Adjusted Performance Period, the following modifications shall be made to the components of the Relative Return Factor:

(i) The Company Total Stockholder Return shall be determined as provided by Section 2.1, except that the Average Per Share Closing Price for the 90 calendar day period ending on the last day of the Adjusted Performance Period shall be replaced with the price per share of Stock to be paid to the holder thereof in accordance with the definitive agreement governing the transaction constituting the Change in Control (or, in the absence of such agreement, the closing price per share of Stock as reported on the New York Stock Exchange for the last trading day of the Adjusted Performance Period), adjusted to reflect an assumed reinvestment, as of the applicable ex-dividend date, of all cash dividends and other cash distributions (excluding cash distributions resulting from share repurchases or redemptions by the Company) paid to stockholders during the Adjusted Performance Period, as illustrated in Section 2.2.

(ii) The Benchmark Index Total Return shall be determined as provided by Section 2.3, except that for the purposes of clause (a) thereof, the Average Closing Index Value shall be determined for the 90 calendar day period ending on the last day of the Adjusted Performance Period.

(b) Vested Units. Except as provided in Section 9.2, as of the last day of the Adjusted Performance Period and provided that the Participant’s Service has not terminated prior to such date, a portion of the Earned Units determined in accordance with Section 9.1(a) shall become Vested Units (the “ Accelerated Units ”), with such portion determined by multiplying the total number of Earned Units by a fraction, the numerator of which equals the number of days contained in the Adjusted Performance Period and the denominator of which equals the number of days contained in the original Performance Period determined without regard to this Section. The Accelerated Units shall be settled in accordance Section 6 immediately prior to the consummation of the Change in Control. Except as otherwise provided by Section 9.3, that portion of the Earned Units determined in accordance with Section 9.1(a) in excess of the number of Accelerated Units shall become Vested Units on the Vesting Date of the original Performance Period determined without regard to this Section, provided that the Participant’s Service has not terminated prior to such Vesting Date. Such Vested Units shall be settled on the Settlement Date in accordance with Section 6, provided that payment for each Vested Unit shall be made in the amount and in the form of the consideration (whether stock, cash, other securities or property or a combination thereof) to which a holder of a share of Stock on the effective date of the Change in Control was entitled (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares of Stock).

9.2 Involuntary Termination in Anticipation of a Change in Control. In the event that Participant’s Service terminates due to Involuntary Termination in Anticipation of a Change in Control, the number of Earned Units shall be determined in the manner specified by Section 9.1 as of the day immediately preceding the Change in Control, with respect to an Adjusted Performance Period ending on such day. The number of Earned Units so determined shall vest in full and become Vested Units, and such Vested Units shall be settled in accordance Section 6 immediately prior to the consummation of the Change in Control.

9.3 Involuntary Termination Following Change in Control. In the event that upon or within twelve (12) months following the effective date of the Change in Control, the Participant’s Service terminates due to Involuntary Termination, the vesting of the Earned Units determined in accordance with Section 9.1(a) in excess of the number of Accelerated Units shall be deemed Vested Units effective as of the date of the Participant’s Involuntary Termination and shall be settled in accordance with Section 6, treating the date of the Participant’s termination of Service as the Vesting Date, and provided that payment for each Vested Unit shall be made in the amount and in the form of the consideration (whether stock, cash, other securities or property or a combination thereof) to which a holder of a share of Stock on the effective date of the Change in Control was entitled (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares of Stock).

10. ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE .

The number of Units awarded pursuant to this Award Agreement is subject to adjustment as provided in Section 4.4 of the Plan. Upon the occurrence of an event described in Section 4.4 of the Plan, any and all new, substituted or additional securities or other property to which a holder of a share issuable in settlement of the Award would be entitled shall be immediately subject to the Award Agreement and included within the meaning of the terms “shares” and “Stock” for all purposes of the Award. The Participant shall be notified of such adjustments and such adjustments shall be binding upon the Company and the Participant.

11. NO ENTITLEMENT OR CLAIMS FOR COMPENSATION .

11.1 The Participant’s rights, if any, in respect of or in connection with the Units are derived solely from the discretionary decision of the Company to permit the Participant to participate in the Plan and to benefit from a discretionary Award. By accepting the Units, the Participant expressly acknowledges that there is no obligation on the part of the Company to continue the Plan and/or grant any additional Units or other Awards to the Participant. The Units are not intended to be compensation of a continuing or recurring nature, or part of the Participant’s normal or expected compensation, and in no way represents any portion of the Participant’s salary, compensation, or other remuneration for purposes of pension benefits, severance, redundancy, resignation or any other purpose.

11.2 Neither the Plan nor the Units shall be deemed to give the Participant a right to remain an Employee, Director or Consultant of the Company or any other Participating Company. The Participating Company Group reserves the right to terminate the Service of the Participant at any time, with or without cause, and for any reason, subject to applicable laws, the Company’s Certificate of Incorporation and Bylaws and a written employment agreement (if any), and the Participant shall be deemed irrevocably to have waived any claim to damages or specific performance for breach of contract or dismissal, compensation for loss of office, tort or otherwise with respect to the Plan, the Units or any other outstanding Award that is forfeited and/or is terminated by its terms or to any future Award.

12. RIGHTS AS A STOCKHOLDER .

The Participant shall have no rights as a stockholder with respect to any shares which may be issued in settlement of this Award until the date of the issuance of a certificate for such shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). No adjustment shall be made for dividends, dividend equivalents, distributions or other rights for which the record date is prior to the date such certificate is issued, except as provided in Section 10.

13. MISCELLANEOUS PROVISIONS .

13.1 Amendment. The Committee may amend this Award Agreement at any time; provided, however, that no such amendment may adversely affect the Participant’s rights under this Award Agreement without the consent of the Participant, except to the extent such amendment is necessary to comply with applicable law, including, but not limited to, Code Section 409A. No amendment or addition to this Award Agreement shall be effective unless in writing.

13.2 Nontransferability of the Award. Prior to the issuance of shares on the applicable Settlement Date, no right or interest of the Participant in the Award nor any shares issuable on settlement of the Award shall be in any manner pledged, encumbered, or hypothecated to or in favor of any party other than the Company or shall become subject to any lien, obligation, or liability of such Participant to any other party other than the Company. Except as otherwise provided by the Committee, no Award shall be assigned, transferred or otherwise disposed of other than by will or the laws of descent and distribution. All rights with respect to the Award shall be exercisable during the Participant’s lifetime only by the Participant or the Participant’s guardian or legal representative.

13.3 Further Instruments. The parties hereto agree to execute such further instruments and to take such further action as may reasonably be necessary to carry out the intent of this Award Agreement.

13.4 Binding Effect. This Award Agreement shall inure to the benefit of the successors and assigns of the Company and, subject to the restrictions on transfer set forth herein, be binding upon the Participant and the Participant’s heirs, executors, administrators, successors and assigns.

13.5 Notices. Any notice required to be given or delivered to the Company under the terms of this Award Agreement shall be in writing and addressed to the Company at its principal corporate offices. Any notice required to be given or delivered to the Participant shall be in writing and addressed to the Participant at the address maintained for the Participant in the Company’s records or at the address of the local office of the Company or of any other Participating Company at which the Participant works.

13.6 Construction of Award Agreement. The Grant Notice, this Award Agreement, and the Units evidenced hereby (i) are made and granted pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan, and (ii) constitute the entire agreement between the Participant and the Company on the subject matter hereof and supersede all proposals, written or oral, and all other communications between the parties related to the subject matter. All decisions of the Committee with respect to any question or issue arising under the Grant Notice, this Award Agreement or the Plan shall be conclusive and binding on all persons having an interest in the Units.

13.7 Governing Law. The interpretation, performance and enforcement of this Award Agreement shall be governed by the laws of the State of Texas, U.S.A. without regard to the conflict-of-laws rules thereof or of any other jurisdiction.

13.8 Section 409A.

(a) Compliance with Code Section 409A. Notwithstanding any other provision of the Plan, this Award Agreement or the Grant Notice, the Plan, this Agreement and the Grant Notice shall be interpreted in accordance with, and incorporate the terms and conditions required by, Code Section 409A (together with any Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the date hereof). The vesting and settlement of Units awarded pursuant to this Award Agreement are intended to qualify for the “short-term deferral” exemption from Code Section 409A. The Company reserves the right, to the extent the Company deems necessary or advisable in its sole discretion, to unilaterally amend or modify the Plan and/or this Award Agreement to ensure that the Units qualify for exemption from or comply with Code Section 409A; provided , however , that the Company makes no representations that the Units will be exempt from Code Section 409A and makes no undertaking to preclude Code Section 409A from applying to the Units.

(b) Separation from Service; Required Delay in Payment to Specified Employee. Notwithstanding anything set forth herein to the contrary, no amount payable pursuant to this Agreement on account of the Participant’s termination of Service which constitutes a “deferral of compensation” within the meaning of Code Section 409A shall be paid unless and until the Participant has incurred a “separation from service” within the meaning of Code Section 409A. Furthermore, to the extent that the Participant is a “specified employee” within the meaning of Code Section 409A as of the date of the Participant’s separation from service, no amount that constitutes a deferral of compensation which is payable on account of the Participant’s separation from service shall paid to the Participant before the date (the “ Delayed Payment Date ” ) which is the first day of the seventh month after the date of the Participant’s separation from service or, if earlier, the date of the Participant’s death following such separation from service. All such amounts that would, but for this Section, become payable prior to the Delayed Payment Date will be accumulated and paid on the Delayed Payment Date.

13.9 Administration. The Committee shall have the power to interpret the Plan and this Award Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret, amend or revoke any such rules. All actions taken and all interpretations and determinations made by the Committee in good faith shall be final and binding upon the Participant, the Company and all other interested persons. No member of the Committee or the Board shall be personally liable for any action, determination or interpretation made in good faith with respect to the Plan, this Award Agreement or the Units.

13.10 Counterparts. The Grant Notice may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

13.11 Severability. If any provision of this Award Agreement is held to be unenforceable for any reason, it shall be adjusted rather than voided, if possible, in order to achieve the intent of the parties to the extent possible. In any event, all other provisions of this Award Agreement shall be deemed valid and enforceable to the full extent possible.

13.12 Relocation Outside the United States. If the Participant relocates to a country outside the United States, the Company reserves the right to impose other requirements on the Participant’s participation in the Plan, on the Units and on any shares acquired under the Plan, to the extent the Company determines necessary or advisable in order to comply with local law or facilitate the administration of the Plan, and to require the Participant to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.

Exhibit 10.16

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “ Agreement ”) is made and entered into as of May 2, 2013 (the “ Effective Date ”) by and between PROS, Inc., a Delaware corporation (the “ Company ”), PROS Holdings, Inc., a Delaware corporation (“ PROS Holdings ”), and Andres Reiner (the “ Employee ”), and amends and restates in its entirety that certain Employment Agreement dated as of February 28, 2011 between the Employee and the Company, as successor-in-interest to PROS Revenue Management, L.P. The Company and the Employee are sometimes collectively referred to herein as the “ Parties ” and individually referred to herein as a “ Party .”

RECITALS

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

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

AGREEMENT

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

1. Position and Duties . Employee shall be employed by the Company as Chief Executive Officer and President and will have such corresponding duties and responsibilities as are intrinsic to Employee’s position and such other duties and responsibilities on behalf of the Company and its affiliates as may reasonably be designated from time to time by the Employee’s supervisor. In addition, and without further compensation, the Employee shall serve as a director and/or officer of one or more of the Company’s affiliates if so elected or appointed from time to time. Employee agrees to devote Employee’s full time, energy and skill to Employee’s responsibilities and duties to the Company and its affiliates. Employee agrees to resign as a director and/or officer of the Company and any of its affiliates immediately upon the termination of Employee’s employment for any reason.

2. Term of Agreement . The term of this Agreement (the “ Term ”) shall be for an initial period of three (3) years following the Effective Date (the “ Initial Term ”), and will be automatically renewed for additional terms of three (3) years unless the Company decides, in its sole discretion, not to so extend and provides notice thereof to Employee (each such extension being a “ Renewal Term ”).

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

(a) Salary . Employee shall be paid a salary of $39,583.33 per month, less applicable withholdings and deductions, in accordance with the Company’s normal payroll procedures, as such salary may be increased from time to time by the Company (the “ Salary ”).

(b) Bonus . Employee shall be entitled to participate in the Company’s employee bonus plans as authorized by the Board of Directors of PROS Holdings (the “ Board ”), or the Compensation Committee thereof (the “ Compensation Committee ”), from time to time (any bonus amounts payable pursuant to such plans being a “ Bonus ”). Any Bonus shall be less statutory and other authorized deductions and withholdings and payable in accordance with the terms of the bonus plan. Pursuant to the Company’s Corporate Governance Guidelines, the Board will consider and make a decision in its sole discretion to recoup, under applicable law, any Bonus awarded to the Employee, if Employee’s fraud or intentional misconduct significantly contributed to a restatement of financial results that led to the awarding of Employee’s Bonus(es).

(c) Benefits . Employee shall be eligible, on the same basis as other employees of the Company, to participate in and to receive the benefits of the Company’s employee benefit plans and vacation, holiday and business expense reimbursement policies, each as in effect from time to time. Such participation shall be subject to (i) the terms of the applicable plan documents, (ii) generally applicable Company policies and (iii) the discretion of the Board or any administrative or other committee provided for in or contemplated by such plan.

PROS Andres Reiner Amended and Restated Employment Agreement Page 1 of 1

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

4. Termination . Company and Employee may terminate Employee’s employment prior to the expiration of the Term, pursuant to the provisions set forth below. Upon the termination (voluntarily or otherwise) of Employee’s employment with the Company, neither Party shall have any continuing obligations or liabilities with respect to compensation, benefits, or severance except as set forth in this Section 4 .

(a) Voluntary Termination; Termination for Cause . If Employee’s employment is voluntarily terminated by Employee other than for Good Reason (a “ Voluntary Termination ”) or is terminated by the Company for Cause (as defined below), Employee shall be entitled to no compensation or benefits from the Company other than accrued and unpaid compensation and benefits through the date of termination (“ Termination Date ”). For purposes of this Section 4 , a termination of Employee’s employment as a result of Employee’s death or Disability (as defined below) shall constitute a Voluntary Termination. In the case of Employee’s allegation of Good Reason, (A) Employee shall provide written notice to Company of the event alleged to constitute Good Reason within 60 days of the occurrence of such event, and (B) Company shall have the opportunity to remedy the alleged Good Reason event within 30 days from receipt of notice of such allegation. In order to resign for Good Reason, Employee must effectuate such resignation within 60 days after notifying Company of the event alleged to constitute Good Reason, provided Company has not cured such condition within 30 days from receipt of the notification.

(b) Termination Without Cause or for Good Reason . In the event Employee’s employment is terminated (or this Agreement is not renewed for any additional Renewal Term) by the Company without Cause or by Employee for Good Reason, Employee shall be entitled to accrued and unpaid compensation through the Termination Date. In addition, provided Employee signs, delivers to Company, and does not revoke, within thirty (30) days following the Termination Date, a general release and waiver in a form acceptable to the Company (the general form of which is attached hereto as Exhibit A) (the “ Severance Conditions ”), Employee shall receive the following severance package:

(i) severance equivalent to one hundred percent (100%) of the Employee’s then current annual Salary, less applicable withholding and deductions, paid in equal installments over a twelve (12) month period on Company’s regular paydays, with the first such installment payment made on the first payday following the 30th day after Employee’s Termination Date; and

(ii) to the extent Employee participates in any medical, prescription drug, dental, vision and any other “group health plan” of the Company immediately prior to Employee’s Termination Date, the Company shall pay to Employee in a lump sum a fully taxable cash payment in an amount equal to twelve (12) times the monthly premium cost to Employee of continued coverage for Employee that would be incurred for continuation coverage under such plans in accordance with Section 4980B of the Internal Revenue Code of 1986, as amended, and Part 6 of Title 1 of the Employee Retirement Income Security Act of 1986, as amended, less applicable tax withholding, payable on the first payday following the 30th day after Employee’s Termination Date. Employee may, but is not obligated to, use such payment toward the cost of continuation coverage premiums; and

(iii) (A) any unpaid Bonus (including full discretionary components thereof) relating to completed bonus periods preceding the Termination Date (for example, (i) if Employee’s employment is terminated in January, prior to the payment of bonuses related to the preceding fiscal year, Employee shall be entitled to the payment of the Bonus related to such preceding year and (ii) if Employee’s employment is terminated in July, prior to the payment of bonuses related to the preceding fiscal quarters, Employee shall be entitled to the payment of the Bonus related to such preceding quarters), if any (the “ Unpaid Bonus ”), and (B) the Bonus within the Applicable Bonus Plan that Employee would have received at one hundred percent (100%) of performance targets (including full discretionary components thereof) as if the Employee had continued working for the Company throughout the twelve (12) month period following the Termination Date (the “ Forward Bonus ”). The Unpaid Bonus shall be payable on the first payday following the 30th day after Employee’s Termination Date, and the Forward Bonus shall be payable in equal installments over a twelve (12) month period on Company’s regular paydays, with the first such installment payment made on the first payday following the 30th day after Employee’s Termination Date; and

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(c) Termination without Cause or for Good Reason within the Six Month Period Before or Anytime Following a Change of Control. In the event Employee’s employment is terminated (or this Agreement is not renewed for any additional Renewal Term) by the Company or its successor without Cause or by Employee for Good Reason, Employee shall be entitled to accrued and unpaid compensation through the Termination Date. In addition, provided that such termination of the Employee’s employment occurs within six (6) months prior to, or anytime following, a Change of Control, and provided that the Severance Conditions are met, then in lieu of the severance package available under Section 4(b), the Employee shall receive the following severance package:

(i) a lump sum severance payment equivalent to one hundred fifty percent (150%) of the Employee’s then current annual Salary, less applicable withholding and deductions, payable on the first payday following the 30th day after Employee’s Termination Date; and

(ii) to the extent Employee participates in any medical, prescription drug, dental, vision and any other “group health plan” of the Company immediately prior to Employee’s Termination Date, the Company shall pay to Employee in a lump sum a fully taxable cash payment in an amount equal to eighteen (18) times the monthly premium cost to Employee of continued coverage for Employee that would be incurred for continuation coverage under such plans in accordance with Section 4980B of the Internal Revenue Code of 1986, as amended, and Part 6 of Title 1 of the Employee Retirement Income Security Act of 1986, as amended, less applicable tax withholding, payable on the first payday following the 30th day after Employee’s Termination Date. Employee may, but is not obligated to, use such payment toward the cost of continuation coverage premiums; and

(iii) (A) any unpaid Bonus (including full discretionary components thereof) relating to completed bonus periods preceding the Termination Date (for example, (i) if Employee’s employment is terminated in January, prior to the payment of bonuses related to the preceding fiscal year, Employee shall be entitled to the payment of the Bonus related to such preceding year and (ii) if Employee’s employment is terminated in July, prior to the payment of bonuses related to the preceding fiscal quarters, Employee shall be entitled to the payment of the Bonus related to such preceding quarters), if any(the “ CIC Unpaid Bonus ”), and (B) the Bonus within the Applicable Bonus Plan that Employee would have received at one hundred percent (100%) of performance targets (including full discretionary components thereof) as if the Employee had continued working for the Company throughout the eighteen (18) month period following the Termination Date (the “ CIC Forward Bonus ”). The CIC Unpaid Bonus and the CIC Forward Bonus shall be payable on the first payday following the 30th day after Employee’s Termination Date; and

(iv) the acceleration of vesting all equity awards (including, without limitation, any awards of stock options, restricted stock, restricted stock units, and/or performance shares or units) issued to the Employee by PROS Holdings with respect to such shares that would have vested following the Termination Date. For the sake of clarity, any equity award with a performance-based component, which is accelerated pursuant to this Section 4(c)(iv) as a result of a termination occurring during either the (a) six month period before a Change of Control or (b) eighteen month period following a Change of Control, such acceleration shall be treated as occurring (x) in anticipation of a Change of Control (as defined in the equity award agreement governing such performance-based award) or (y) following a Change of Control, respectively, and otherwise in accordance with the terms and conditions of the equity award agreement governing such performance-based award.

(d) Definitions.

(i) “ Applicable Bonus Plan ” shall be the Company’s bonus plan then in effect if such plan contemplates the Employee or, if no bonus plan is then in effect that contemplates the Employee, the bonus plan for the immediately preceding bonus period.

(ii) “ Cause ” shall mean (a) the unauthorized use or disclosure of the confidential information or trade secrets of the Company by the Employee, which use or disclosure causes material harm to the Company; (b) conviction of or a plea of “guilty” or “no contest” to a felony, or any other crime involving dishonesty or moral turpitude under the laws of the United States; (c) any intentional wrongdoing by Employee, whether by omission or commission, which adversely affects the business or affairs of the Company (or any parent or subsidiary); (d) continued failure to perform assigned duties (other than by reason of Disability) or comply with any Company policy after receiving written notification and following a reasonable cure period; (e) any material breach by the Employee of this Agreement or any other agreement between the Employee and the Company or any of its affiliates after receiving written notification and following a

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reasonable cure period, if such breach is curable; (f) any failure to cooperate in good faith with the Company in any governmental investigation or formal proceeding, if the Company has requested the Employee’s cooperation.

(iii) “ Change of Control ” shall mean any transaction including, without limitation, a merger, consolidation, sale of stock or sale of assets, but excluding any assignment as security for indebtedness, after which (a) any Person(s) other than the current stockholders shall own in excess of fifty percent (50%) of the voting stock of PROS Holdings (or the Person into which PROS Holdings shall have been merged or consolidated), have acquired all or substantially all of the consolidated assets of the Company or PROS Holdings; or (b) the persons entitled to elect a majority of the members of Board immediately before the transaction are not entitled to elect a majority of the members of the Board of the surviving entity following the transaction; provided that, in each case, the Change of Control is also a “change in control event” as defined in Section 409A. For purposes of this definition, “ Person ” means any individual, entity or group within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended, other than employee benefit plans sponsored or maintained by PROS Holdings and by entities controlled by PROS Holdings.

(iv) “ Disability ” shall mean the good-faith determination by the Board after consultation with medical personnel that the Employee has ceased to be able to materially perform Employee’s duties and obligations, with or without reasonable accommodation, due to a mental or physical illness or incapacity that is reasonably expected to materially prevent Employee from performing Employee’s duties and obligations for a period of not less than ninety (90) days for any period of three hundred and sixty-five (365) consecutive calendar days.

(v) “ Good Reason ” shall mean, without the express written consent of Employee, the occurrence of any one or more of the following:

(A) a material diminution in Employee’s authority, duties or responsibilities or the assignment of duties to Employee that are not materially commensurate with Employee’s position with Company. For purposes of clarification, should the Company be acquired and made part of a larger entity, whether as a subsidiary, business unit or otherwise and the Employee, by virtue of such event, experiences a material diminution in Employee’s authority, duties, or responsibilities (for example, but not by way of limitation, if the Employee remains the Chief Executive Officer of the Company following a Change in Control where the Company becomes a wholly owned subsidiary of the acquirer, but the Employee is not made the Chief Executive Officer of the acquiring corporation), such material diminution will constitute “Good Reason”;

(B) a material reduction by the Company of the Employee’s Salary other than a reduction which is part of a general reduction affecting all employees;

(C) the relocation of the principal place of the Employee’s service to a location that is more than twenty-five (25) miles from the Employee’s principal place of service as of the Effective Date;

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

(E) any material breach by the Company of any provision of this Agreement; or

(F) any failure by any successor corporation to assume the Company’s obligations under this Agreement.

5. Confidential Information . Employee acknowledges and agrees that the Company considers to be confidential the information and data obtained by him while employed by the Company concerning the actual or anticipated business or affairs of the Company, its subsidiaries or affiliates (collectively, “ Confidential Information ”) and that such Confidential Information is the property of the Company and/or the respective subsidiary or affiliate. Therefore, Employee agrees that Employee shall not disclose to any unauthorized person or use for Employee’s own purposes any Confidential Information without the prior written consent of the Board, unless and to the extent that the aforementioned matters become generally known to and available for use by the public or persons knowledgeable in the Company’s industry other than as a result of Employee’s acts or omissions which constitute a breach hereof. Employee shall deliver to the Company at the termination (whether voluntary or otherwise) of Employee’s employment, or at any other time the Company may request, all memoranda, notes, plans, records, reports, computer

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tapes, printouts and software and other documents and data (and copies thereof) relating to the Confidential Information, Work Product (as defined below) or the business or business anticipated to be conducted by the Company within one year of termination, its subsidiaries or affiliates (including, without limitation, trade secrets, business or marketing plans, reports, projections, diskettes, intangible information stored on diskettes, software programs and data compiled with the use of those programs, tangible copies of trade secrets and confidential information, memoranda, credit cards, telephone charge cards, manuals, building keys and passes, cell phones, computers, names and addresses of the Company’s or its subsidiaries’ or affiliates’ customers and potential customers, customer lists, customer contracts, sales information and any and all other similar information or property) which Employee may then possess or have under Employee’s control. Employee further agrees that in the event Employee discovers any other materials of the Company, its subsidiaries or affiliates in Employee’s possession or control after the Termination Date, Employee will immediately return such property to the Company.

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

7. Non-Compete, Non-Solicitation .

(a) In further consideration of the confidential, proprietary information Company shall provide to Employee during Employee’s employment, which Employee promises not to disclose, as well as the compensation to be paid to Employee hereunder, including the severance payments, if any, Employee agrees to the restrictions set forth in this paragraph. Employee acknowledges that Employee’s services shall be of special, unique, and extraordinary value to the Company. Therefore, Employee agrees that, during Employee’s employment and for one (1) year following the termination of Employee’s employment with the Company for any reason (collectively, the “ Noncompete Period ”), Employee shall not, directly or indirectly, own any interest in, manage, control, or in any manner engage in any business competing with the actual businesses of the Company as of the Termination Date (“ Competitor ”), within any geographical area in which the Company engages in such businesses (“ Restricted Territory ”). Employee further agrees that during the Noncompete Period, Employee will not perform the same or similar services for a Competitor in the Restricted Territory. Nothing herein shall prohibit Employee from being a passive owner of not more than two percent (2%) of the outstanding capital stock of any class of a corporation which is publicly traded, so long as Employee has no active participation in the business of such corporation.

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

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

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(d) Employee acknowledges and agrees that the restrictions contained in this Section 7 are enforceable and reasonable. Accordingly, should Employee assert in any context that the restrictions contained in this Section 7 are unenforceable or unreasonable, Employee agrees that as of the date of such assertion the Company shall have no further obligation to provide him with the severance packages described in Section 4 above.

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

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

10. Waiver of Jury Trial . Employee and the Company knowingly and conclusively waive all rights to trial by jury , in any action or proceeding relating any dispute, controversy or claim, of any and every kind or type, whether based on contract, tort, statute, regulations, or otherwise, arising out of, connected with, or relating in any way to this Agreement, the obligations of the parties hereunder, including without limitation, any dispute as to the existence, validity, construction, interpretation, negotiation, performance, non-performance, breach, termination or enforceability of this Agreement, or Employee’s employment relationship with the Company or the termination thereof (in each case, a “ Dispute ”). The parties shall attempt in good faith to settle any Dispute by mutual discussions within fifteen (15) days after the date that one party gives notice to the other parties of such a Dispute. THE PARTIES HEREBY EXPRESSLY WAIVE THE RIGHT TO A JURY TRIAL ON ALL MATTERS.

11. Section 409A Compliance.

(a) The parties intend for this Agreement either to satisfy the requirements of Section 409A of the Internal Revenue Code of 1986, as amended, and all applicable guidance promulgated thereunder (“ Section 409A ”) or to be exempt from the application of Section 409A, and this Agreement shall be construed and interpreted accordingly. Any amount payable pursuant to this Agreement due to a termination of employment which constitutes a “deferral of compensation” within the meaning of Section 409A shall not be paid unless and until such termination constitutes a “separation from service” within the meaning of Section 409A. Further, to the extent an amount payable under this Agreement is intended to be exempt from Section 409A, and such exemption is conditioned upon the payment being made upon a “separation from service,” then such payment shall not be paid unless and until Employee has incurred a “separation from service.” If this Agreement either fails to satisfy the requirements of Section 409A or is not exempt from the application of Section 409A, then the parties hereby agree to amend or to clarify this Agreement in a timely manner so that this Agreement either satisfies the requirements of Section 409A or is exempt from the application of Section 409A.

(b) Notwithstanding any provision in this Agreement to the contrary, in the event Employee is a “specified employee” as defined in Section 409A, any severance payments or packages, severance benefits, or other amounts payable under this Agreement, that would be subject to the special rule regarding payments to “specified employees” under Section 409A(a)(2)(B) shall be delayed by six months such that the payment is made no earlier than the first date of the seventh month following the Termination Date (or the date of Employee’s death, if earlier).

(c) To ensure satisfaction of the requirements of Section 409A(b)(3), assets shall not be set aside, reserved in a trust or other arrangement, or otherwise restricted for purposes of the payment of amounts payable under this Agreement.

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Employee hereby acknowledges that Company has advised him that Employee should consult with Employee’s own personal tax or financial advisor in connection with this Agreement and its tax consequences. Employee understands and agrees that Company has no obligation and no responsibility to provide Employee with any tax or other legal advice in connection with this Agreement. Employee agrees that Employee shall bear sole and exclusive responsibility for any and all adverse federal, state, local, and/or foreign tax consequences (including without limitation those tax consequences implicated by Section 409A) of this Agreement, and fully indemnifies and holds Company harmless therefor.

(e) For purposes of Section 409A, any right to receive a series of installments under this Agreement shall be treated as a right to a series of separate payments.

(f) Notwithstanding anything herein to the contrary, the reimbursement of expenses or in-kind benefits provided pursuant to this Agreement shall be subject to the following conditions: (1) the expenses eligible for reimbursement or in-kind benefits in one taxable year shall not affect the expenses eligible for reimbursement or in-kind benefits in any other taxable year; (2) the reimbursement of eligible expenses or in-kind benefits shall be made promptly, subject to Company’s applicable policies, but in no event later than the end of the year after the year in which such expense was incurred; and (3) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.

12. Limitation on Parachute Payments .

(a) In the event that the payments or other benefits provided for in this Agreement or otherwise payable to Employee (i) constitute “parachute payments” within the meaning of Section 280G(b)(2) of the Code, and (ii) would be subject to the excise tax imposed by Section 4999 of the Code (the “ Excise Tax ”), then Employee’s benefits under this Agreement shall be either (a) delivered in full, or (b) delivered to such lesser extent which would result in no portion of such benefits being subject to the Excise Tax, whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the Excise Tax, results in the receipt by Employee on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under Section 4999 of the Code. If a reduction in payments or benefits constituting “parachute payments” is necessary pursuant to the foregoing provision, reduction shall occur in the following order: reduction of cash payments; cancellation of accelerated vesting of stock awards; and reduction of employee benefits. If acceleration of vesting of stock award compensation is to be reduced, such acceleration of vesting shall be cancelled in the reverse order of the date of grant of Employee’s stock awards.

(b) Unless the Company and Employee otherwise agree in writing, any determination required under this Section 12 shall be made in writing by the Company’s independent public accountants (the “ Accountants ”), whose determination shall be conclusive and binding upon Employee and the Company for all purposes and may be relied upon by the Company. For purposes of making the calculations required by this Section 12, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Section 280G and 4999 of the Code. The Employee shall provide to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 12. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 12.

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

14. Interpretation; Venue . The Company and Employee agree that this Agreement shall be interpreted in accordance with and governed by the laws of the State of Texas, without giving effect to conflicts of law principles. The trial courts of the County of Harris, State of Texas, and the United States District Court for the Southern District of Texas are courts of competent jurisdiction, and the parties agree to submit to the jurisdiction of those courts, as applicable

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

16. Third-Party Beneficiary . The Parties expressly acknowledge and agree that the PROS Holdings, Inc. shall be deemed to be a third-party beneficiary with respect to the terms and provisions of this Agreement and shall be entitled to enforce the terms and provisions hereof.

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17. Entire Agreement . This Agreement constitutes the entire employment agreement between the Company and Employee regarding the terms and conditions of Employee’s employment. This Agreement supersedes all prior negotiations, representations or agreements between the Company and Employee, whether written or oral, regarding Employee’s employment by the Company.

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

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

20. Notices . All notices requests, reports and other communications pursuant hereto shall be in writing, either by letter (delivered by hand or commercial delivery service or sent by certified mail, return receipt requested) or facsimile, and addressed to the Employee at Employee’s last known address on the books of the Company or, in the case of the Company, at its principal place of business, attention of the CEO, or to such other address as either Party may specify by notice to the other actually received. Any notice, request or communication hereunder shall be deemed to have been given on the day on which it is delivered by hand to such Party at its address specified above, or, if sent by certified mail, return receipt requested, postage prepaid, on the third business day following the date it was deposited in the mail, or in the case of facsimile notice, when transmitted addressed as aforesaid, confirmation received, if the notice is also delivered by hand or mail in the manner described above. Any Party may change the person or address to whom or which notices are to be given hereunder, by notice duly given hereunder; provided, however, that any such notice shall be deemed to have been given hereunder only when actually received by the Party to which it is addressed.

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

22. Amendments . This Agreement may be modified or amended only by a supplemental written agreement signed by both the Employee and the Company following approval by the Compensation Committee.

[Signature Page Immediately Follows]

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

COMPANY :

PROS, INC.

a Delaware corporation

By: /s/Charles H. Murphy

Name: Charles H. Murphy

Title: Executive VP and CFO

Date: May 2, 2013

PROS HOLDINGS :

PROS HOLDINGS, INC.

a Delaware corporation

By: /s/Charles H. Murphy

Name: Charles H. Murphy

Title: Executive VP and CFO

Date: May 2, 2013

EMPLOYEE :

/s/ Andres Reiner

Andres Reiner

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EXHIBIT A

FORM OF GENERAL RELEASE

In consideration for the mutual promises described in that certain Employment Agreement ( “ Employment Agreement ”) executed between PROS, Inc., a Delaware corporation (the “ Company ” ) and Andres Reiner (the “ Employee ” ), the parties enter into the following General Release (“ General Release ” ) and agree as follows:

1. Payment of Severance Package. Notwiths tanding anything herein to the contrary, Company agrees to pay Employee the severance package (the “ Severance Packag e ” ), as described in the Employment Agreement, in the manner set forth in Sections 4(b) or 4(c) of the Emp loyment Agreement, as applicable, and continue to abide by the other surviving provisions of the Employment Agreement.

2. Continued Compliance. Employee agrees to continue to abide by the surviving provisions of the Employment Agreement, which is incorporated herein by reference.

3. General Release.

3.1 Subject to Section 1 above, Employee unconditionally, irrevocably and absolutely releases and discharges Company, and any parent and subsidiary corporations, divisions and affiliated corporations, partnerships or other affiliated entities of Company, past and present, as well as their respective employees, officers, directors, members, managers, stockholders, partners, agents, successors and assigns (collectively, “ Released Parties ” ), from all claims related in any way to the transactions or occurrences between them to date, to the fullest extent permitted by law, including, but not limited to, Employee’s employment with Company, the termination of Employee’s employment, and all other losses, liabilities, claims, charges, demands and causes of action, known or unknown, suspected or unsuspected, arising directly or indirectly out of or in any way connected with Employee’s employment with Company. This release is intended to have the broadest possible application and includes, but is not limited to, any tort, contract, common law, constitutional or other statutory claims, including, but not limited to alleged violations of the Texas Labor Code (including but not limited to the Texas Civil Rights Act, the Texas Payday Act, and the Texas Minimum Wage Law), the federal Fair Labor Standards Act, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Age Discrimination in Employment Act of 1967, as amended, and all claims for attorneys’ fees, costs and expenses. Employee expressly waives Employee’s right to recovery of any type, including damages or reinstatement, in any administrative or court action, whether state or federal, and whether brought by Employee or on Employee’s behalf, related in any way to the matters released herein. However, this general release is not intended to bar any claims that, by statute, may not be waived, such as claims for any challenge to the validity of Employee’s release of claims under the Age Discrimination in Employment Act of 1967, as amended, as set forth in this General Release.

3.2 Employee acknowledges that Employee may discover facts or law different from, or in addition to, the facts or law that Employee knows or believes to be true with respect to the claims released in this General Release and agrees, nonetheless, that this General Release and the release contained in it shall be and remain effective in all respects notwithstanding such different or additional facts or the discovery of them.

3.3 Employee declares and represents that Employee intends this General Release to be complete and not subject to any claim of mistake, and that the release herein expresses a full and complete release and Employee intends the release herein to be final and complete. Employee executes this release with the full knowledge that this release covers all possible claims against the Released Parties, to the fullest extent permitted by law.

4. Indemnification. The Company and Employee agree that Employee is not releasing any claims Employee may have for indemnification under state or other law or any indemnification agreement in effect between Employee and Company as of the Separation Date (as defined below) or the charter, articles or by-laws of the Company, or under any insurance policy providing directors’ and officers’ coverage for any lawsuit or claim relating to the period when Employee was a director, officer or employee of the Company (if any); provided, however, that (i) Employee’s execution of this General Release is not a concession or guaranty that Employee has any such rights to indemnification, (ii) this General Release does not create any additional rights to indemnification and (ii) the Company retains any defenses it may have to such indemnification or coverage.

5. Representation Concerning Filing of Legal Actions. Employee represents that, as of the date of this General Release, Employee has not filed any lawsuits, charges, complaints, petitions, claims or other accusatory pleadings against Company or any of the other Released Parties in any court or with any governmental agency.

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6. Nondisparagement. Each Party agrees that such Party will not make any voluntary statements, written or oral, or cause or encourage others to make any such statements that defame, disparage or in any way criticize the personal and/or business reputations, practices or conduct of such Party or any of the other Released Parties.

7. Confidentiality and Return of Company Property. Employee understands and agrees that as a condition of receiving the Severance Package in Paragraph 1, all Company property must be returned to Company on or before the last day of Employee’s employment at Company (“ Separation Date ”) . By signing this General Release, Employee represents and warrants that Employee will have returned to Company on or before the Separation Date, all Company property, data and information belonging to Company and agrees that Employee will not use or disclose to others (other than his attorney under an obligation of confidentiality and to the extent necessary to provide legal advice to Employee regarding any termination his employment for Good Reason) any confidential or proprietary information of Company or the Released Parties. In addition, Employee agrees to keep the terms of this General Release confidential between Employee and Company, except that Employee may tell Employee’s immediate family and attorney or accountant, if any, as needed, but in no event should Employee discuss this General Release or its terms with any current or prospective employee of Company.

8. No Admissions. By entering into this General Release, the Released Parties make no admission that they have engaged, or are now engaging, in any unlawful conduct. The parties understand and acknowledge that this General Release is not an admission of liability and shall not be used or construed as such in any legal or administrative proceeding.

9. Older Workers’ Benefit Protection Act. This General Release is intended to satisfy the requirements of the Older Workers’ Benefit Protection Act, 29 U.S.C. 626(f). Employee is advised to consult with an attorney before executing this General Release.

9.1 Acknowledgments/Time to Consider. Employee acknowledges and agrees that (a) Employee has read and understands the terms of this General Release; (b) Employee has been advised in writing to consult with an attorney before executing this General Release; (c) Employee has obtained and considered such legal counsel as Employee deems necessary; (d) Employee has been given twenty-one (21) days to consider whether or not to enter into this General Release (although Employee may elect not to use the full 21-day period at Employee’s option); and (e) by signing this General Release, Employee acknowledges that Employee does so freely, knowingly, and voluntarily.

9.2 Revocation/Effective Date. This General Release shall not become effective or enforceable until the eighth day after Employee signs this General Release. In other words, Employee may revoke Employee’s acceptance of this General Release within seven (7) days after the date Employee signs it. Employee’s revocation must be in writing and received by PROS, Inc., 3100 Main Street, Suite 900, Houston, Texas 77002, by 5:00 p.m. Central Time on the seventh day in order to be effective. If Employee does not revoke acceptance within the seven (7) day period, Employee’s acceptance of this General Release shall become binding and enforceable on the eighth day (the “ Effective Date ” ).

9.3 Preserved Rights of Employee. This General Release does not waive or release any rights or claims that Employee may have under the Age Discrimination in Employment Act that arise after the execution of this General Release. In addition, this General Release does not prohibit Employee from challenging the validity of this General Release’s waiver and release of claims under the Age Discrimination in Employment Act of 1967.

10. Severability. In the event any provision of this General Release shall be found unenforceable, the unenforceable provision shall be deemed deleted and the validity and enforceability of the remaining provisions shall not be affected thereby.

11. Full Defense. This General Release may be pled as a full and complete defense to, and may be used as a basis for an injunction against, any action, suit or other proceeding that may be prosecuted, instituted or attempted by Employee in breach hereof.

12. Governing Law; Forum. The validity, interpretation and performance of this General Release shall be construed and interpreted according to the laws of the United States of America and the State of Texas without giving effect to conflicts of law principles. Employee agrees that any disputes or litigation that may arise with respect to the General Release shall be brought and prosecuted in Harris County, Texas and waives any and all objections to the location of such litigation, including but not limited to objections based on forum non conveniens. In addition, Employee irrevocably consents to the exclusive personal jurisdiction of the federal and state courts located in Harris County, Texas, as applicable, for any matter arising out of or relating to this General Release.

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13. Entire Agreement. This General Release, including the Employment Agreement incorporated herein by reference, constitutes the entire agreement between the parties relating to this subject matter and supersedes all prior or simultaneous representations, discussions, negotiations, and agre e ments, whether written or oral. This General Release may be amended or modified only with the written consent of Employee and the Board of Directors of Company. No oral waiver, amendment or modification will be effective under any circumstances whatsoever.

THE PARTIES TO THIS GENERAL RELEASE HAVE READ THE FOREGOING AGREEMENT AND FULLY UNDERSTAND EACH AND EVERY PROVISION CONTAINED HEREIN . WHEREFORE, THE PARTIES HAVE EXECUTED THIS GENERAL RELEASE ON THE DATES SHOWN BELOW .

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Exhibit 10.17

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “ Agreement ”) is made and entered into as of May 2, 2013 (the “ Effective Date ”) by and between PROS, Inc., a Delaware corporation (the “ Company ”), PROS Holdings, Inc., a Delaware corporation (“ PROS Holdings ”), and Charles Murphy (the “ Employee ”), and amends and restates in its entirety that certain Employment Agreement dated as of September 30, 2005 between the Employee and the Company, as successor-in-interest to PROS Revenue Management, L.P., as amended on April 2, 2007 and as further amended on March 24, 2009. The Company and the Employee are sometimes collectively referred to herein as the “ Parties ” and individually referred to herein as a “ Party .”

RECITALS

WHEREAS, the Employee and the Company desire to enter into an employment agreement that amends and restates the Employee’s existing employment agreement and contains the material terms and conditions set forth herein;

WHEREAS, the Parties desire to continue to provide for severance benefits in connection with (a) the Company’s termination of Employee’s employment or the Company’s election not to renew the Agreement for any Renewal Term without Cause, or the Employee’s resignation for Good Reason, and (b) the Company’s termination of the Employee’s employment or the Company’s election not to renew the Agreement for any Renewal Term without Cause, or the Employee’s resignation for Good Reason in connection with a Change in Control; and

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

AGREEMENT

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

1. Position and Duties . Employee shall be employed by the Company as Executive Vice President and Chief Financial Officer and will have such corresponding duties and responsibilities as are intrinsic to Employee’s position and such other duties and responsibilities on behalf of the Company and its affiliates as may reasonably be designated from time to time by the Employee’s supervisor. In addition, and without further compensation, the Employee shall serve as a director and/or officer of one or more of the Company’s affiliates if so elected or appointed from time to time. Employee agrees to devote Employee’s full time, energy and skill to Employee’s responsibilities and duties to the Company and its affiliates. Employee agrees to resign as a director and/or officer of the Company and any of its affiliates immediately upon the termination of Employee’s employment for any reason.

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

(a) Salary . Employee shall be paid a salary of $28,750.00 per month, less applicable withholdings and deductions, in accordance with the Company’s normal payroll procedures, as such salary may be increased from time to time by the Company (the “ Salary ”).

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period on Company’s regular paydays, with the first such installment payment made on the first payday following the 30th day after Employee’s Termination Date; and

(ii) to the extent Employee participates in any medical, prescription drug, dental, vision and any other “group health plan” of the Company immediately prior to Employee’s Termination Date, the Company shall pay to Employee in a lump sum a fully taxable cash payment in an amount equal to eighteen (18) times the monthly premium cost to Employee of continued coverage for Employee that would be incurred for continuation coverage under such plans in accordance with Section 4980B of the Internal Revenue Code of 1986, as amended, and Part 6 of Title 1 of the Employee Retirement Income Security Act of 1986, as amended, less applicable tax withholding, payable on the first payday following the 30th day after Employee’s Termination Date. Employee may, but is not obligated to, use such payment toward the cost of continuation coverage premiums; and

(iii) (A) any unpaid Bonus (including full discretionary components thereof) relating to completed bonus periods preceding the Termination Date (for example, (i) if Employee’s employment is terminated in January, prior to the payment of bonuses related to the preceding fiscal year, Employee shall be entitled to the payment of the Bonus related to such preceding year and (ii) if Employee’s employment is terminated in July, prior to the payment of bonuses related to the preceding fiscal quarters, Employee shall be entitled to the payment of the Bonus related to such preceding quarters), if any(the “ CIC Unpaid Bonus ”), and (B) the Bonus within the Applicable Bonus Plan that Employee would have received at one hundred percent (100%) of performance targets (including full discretionary components thereof) as if the Employee had continued working for the Company throughout the eighteen (18) month period following the Termination Date (the “ CIC Forward Bonus ”). The CIC Unpaid Bonus and CIC Forward Bonus shall be payable on the first payday following the 30th day after Employee’s Termination Date; and

(iv) the acceleration of vesting all equity awards (including, without limitation, any awards of stock options, restricted stock, restricted stock units, and/or performance shares or units) issued to the Employee by PROS Holdings with respect to such shares that would have vested following the Termination Date. For the sake of clarity, any equity award with a performance-based component, which is accelerated pursuant to this Section 4(c)(iv) as a result of a termination occurring during either the (a) six month period before a Change of Control or (b) anytime following a Change of Control, such acceleration shall be treated as occurring (x) in anticipation of a Change of Control (as defined in the equity award agreement governing such performance-based award) or (y) following a Change of Control, respectively, and otherwise in accordance with the terms and conditions of the equity award agreement governing such performance-based award.

(d) Acceleration of Equity Awards Following a Change of Control. Notwithstanding the foregoing, in event of a Change of Control during the term of Employee’s employment with the Company, regardless of whether the Employee’s employment is terminated or not, Employee shall be entitled to the acceleration of vesting all equity awards (including, without limitation, any awards of stock options, restricted stock, restricted stock units, and/or performance shares or units) issued to the Employee by PROS Holdings.

(e) Definitions.

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(v) “ Good Reason ” shall mean, without the express written consent of Employee, the occurrence of any one or more of the following:

(A) a material diminution in Employee’s authority, duties or responsibilities or the assignment of duties to Employee that are not materially commensurate with Employee’s position with Company, other than where Employee is asked to assume substantially similar duties and responsibilities in a larger entity after any Change of Control;

(B) a material reduction by the Company of the Employee’s Salary other than a reduction which is part of a general reduction affecting all employees;

(C) the relocation of the principal place of the Employee’s service to a location that is more than twenty-five (25) miles from the Employee’s principal place of service as of the Effective Date;

(E) any material breach by the Company of any provision of this Agreement; or

(F) any failure by any successor corporation to assume the Company’s obligations under this Agreement.

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

7. Non-Compete, Non-Solicitation .

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and the Company (including, without limitation, making any negative statements or communications about the Company, its subsidiaries, or affiliates).

10. Waiver of Jury Trial . Employee and the Company knowingly and conclusively waive all rights to trial by jury , in any action or proceeding relating any dispute, controversy or claim, of any and every kind or type, whether based on contract, tort, statute, regulations, or otherwise, arising out of, connected with, or relating in any way to this Agreement, the obligations of the Parties hereunder, including without limitation, any dispute as to the existence, validity, construction, interpretation, negotiation, performance, non-performance, breach, termination or enforceability of this Agreement, or Employee’s employment relationship with the Company or the termination thereof (in each case, a “ Dispute ”). The Parties shall attempt in good faith to settle any Dispute by mutual discussions within fifteen (15) days after the date that one Party gives notice to the other Parties of such a Dispute. THE PARTIES HEREBY EXPRESSLY WAIVE THE RIGHT TO A JURY TRIAL ON ALL MATTERS.

11. Section 409A Compliance.

(a) The Parties intend for this Agreement either to satisfy the requirements of Section 409A of the Internal Revenue Code of 1986, as amended, and all applicable guidance promulgated thereunder (“ Section 409A ”) or to be exempt from the application of Section 409A, and this Agreement shall be construed and interpreted accordingly. Any amount payable pursuant to this Agreement due to a termination of employment which constitutes a “deferral of compensation” within the meaning of Section 409A shall not be paid unless and until such termination constitutes a “separation from service” within the meaning of Section 409A. Further, to the extent an amount payable under this Agreement is intended to be exempt from Section 409A, and such exemption is conditioned upon the payment being made upon a “separation from service,” then such payment shall not be paid unless and until Employee has incurred a “separation from service.” If this Agreement either fails to satisfy the requirements of Section 409A or is not exempt from the application of Section 409A, then the Parties hereby agree to amend or to clarify this Agreement in a timely manner so that this Agreement either satisfies the requirements of Section 409A or is exempt from the application of Section 409A.

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shall be delayed by six months such that the payment is made no earlier than the first date of the seventh month following the Termination Date (or the date of Employee’s death, if earlier).

(d) Company hereby informs Employee that the federal, state, local and/or foreign tax consequences (including without limitation those tax consequences implicated by Section 409A) of this Agreement are complex and subject to change. Employee hereby acknowledges that Company has advised him that Employee should consult with Employee’s own personal tax or financial advisor in connection with this Agreement and its tax consequences. Employee understands and agrees that Company has no obligation and no responsibility to provide Employee with any tax or other legal advice in connection with this Agreement. Employee agrees that Employee shall bear sole and exclusive responsibility for any and all adverse federal, state, local, and/or foreign tax consequences (including without limitation those tax consequences implicated by Section 409A) of this Agreement, and fully indemnifies and holds Company harmless therefor.

(e) For purposes of Section 409A, any right to receive a series of installments under this Agreement shall be treated as a right to a series of separate payments.

12. Limitation on Parachute Payments .

14. Interpretation; Venue . The Company and Employee agree that this Agreement shall be interpreted in accordance with and governed by the laws of the State of Texas, without giving effect to conflicts of law principles. The trial courts of the County of Harris, State of Texas, and the United States District Court for the Southern District of Texas are courts of competent jurisdiction, and the Parties agree to submit to the jurisdiction of those courts, as applicable

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

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

22. Amendments . This Agreement may be modified or amended only by a supplemental written agreement signed by both the Employee and the Company following approval by the Compensation Committee.

[Signature Page Immediately Follows]

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

COMPANY :

PROS, INC.

a Delaware corporation

By: /s/ Andres Reiner

Name: Andres Reiner

Title: President and CEO

Date: May 2, 2013

PROS HOLDINGS :

PROS HOLDINGS, INC.

a Delaware corporation

By: /s/ Andres Reiner

Name: Andres Reiner

Title: President and CEO

Date: May 2, 2013

EMPLOYEE :

/s/ Charles Murphy

Charles Murphy

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EXHIBIT A

FORM OF GENERAL RELEASE

In consideration for the mutual promises described in that certain Employment Agreement ( “ Employment Agreement ”) executed between PROS, Inc., a Delaware corporation (the “ Company ” ) and Charles Murphy (the “ Employee ” ), the parties enter into the following General Release (“ General Release ” ) and agree as follows:

2. Continued Compliance. Employee agrees to continue to abide by the surviving provisions of the Employment Agreement, which is incorporated herein by reference.

3. General Release.

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6. Nondisparagement. Each party agrees that such party will not make any voluntary statements, written or oral, or cause or encourage others to make any such statements that defame, disparage or in any way criticize the personal and/or business reputations, practices or conduct of such party or any of the other Released Parties.

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Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Andres Reiner, certify that:


1.	I have reviewed this quarterly report on Form 10-Q of PROS Holdings, Inc.;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date: May 2, 2013		/s/ Andres Reiner
		Andres Reiner
		President and Chief Executive Officer

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Charles H. Murphy, certify that:


1.	I have reviewed this quarterly report on Form 10-Q of PROS Holdings, Inc.;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date: May 2, 2013		/s/ Charles H. Murphy
		Charles H. Murphy
		Executive Vice President and
		Chief Financial Officer

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Andres Reiner, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the quarterly report of PROS Holdings, Inc., on Form 10-Q for the period ended March 31, 2013 fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and the information contained in such Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of PROS Holdings, Inc.



Date: May 2, 2013		/s/ Andres Reiner
		Andres Reiner
		President and Chief Executive Officer

I, Charles H. Murphy, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the quarterly report of PROS Holdings, Inc., on Form 10-Q for the period ended March 31, 2013 fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and the information contained in such Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of PROS Holdings, Inc.



Date: May 2, 2013		/s/ Charles H. Murphy
		Charles H. Murphy
		Executive Vice President and Chief Financial Officer

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to PROS Holdings, Inc. and will be retained by PROS Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. This certification “accompanies” the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.