QuickLinks -- Click here to rapidly navigate through this document

Exhibit 10.32

SECURITIES PURCHASE AGREEMENT

        This Securities Purchase Agreement (this "Agreement") is dated as of
March 11, 2003, among Dot Hill Systems Corp., a Delaware corporation (the
"Company"), and the purchasers identified on the signature pages hereto (each,
including its successors and assigns, a "Purchaser" and collectively the
"Purchasers").

        WHEREAS, subject to the terms and conditions set forth in this Agreement
and pursuant to Section 4(2) of the Securities Act of 1933, as amended (the
"Securities Act"), and Rule 506 promulgated thereunder, the Company desires to
issue and sell to the Purchasers, and the Purchasers, severally and not jointly,
desire to purchase from the Company, securities of the Company as more fully
described in this Agreement.

        NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and the Purchasers agree
as follows:

ARTICLE I
DEFINITIONS

        1.1    Definitions.    In addition to the terms defined elsewhere in
this Agreement, the following terms have the meanings indicated in this
Section 1.1:

        "Affiliate" means any Person that, directly or indirectly through one or
more intermediaries, controls or is controlled by or is under common control
with a Person, as such terms are used in and construed under Rule 144 under the
Securities Act. With respect to a Purchaser, any investment fund or managed
account that is managed on a discretionary basis by the same investment manager
as such Purchaser will be deemed to be an Affiliate of such Purchaser.

        "Closing" means the Closing of the purchase and sale of the Shares
pursuant to Section 2.1.

        "Closing Date" means the date of the Closing which shall occur within 10
Trading Days of the date hereof.

        "Commission" means the Securities and Exchange Commission.

        "Common Stock" means the common stock of the Company, par value $0.001
per share, and any securities into which such common stock shall hereinafter
been reclassified into.

        "Company Counsel" means Cooley Godward LLP, outside counsel to the
Company, with offices at 4401 Eastgate Mall, San Diego, California 92121.

        "Disclosure Schedules" shall have the meaning ascribed to such term in
Section 3.1.

        "Effective Date" means the date that the Registration Statement is first
declared effective by the Commission.

        "Escrow Agent" means Feldman Weinstein LLP with offices at 420 Lexington
Avenue, Suite 2620, New York, New York 10170.

        "Escrow Agreement" shall mean the Escrow Agreement in substantially the
form of Exhibit A hereto executed and delivered contemporaneously with this
Agreement.

        "Exchange Act" means the Securities Exchange Act of 1934, as amended.

        "GAAP" shall have the meaning ascribed to such term in Section 3.1(h).

        "Liens" shall have the meaning ascribed to such term in Section 3.1(a).

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

        "Losses" means any and all losses, claims, damages, liabilities,
settlement costs and expenses, including without limitation costs of preparation
and reasonable attorneys' fees.

        "Material Adverse Effect" shall have the meaning assigned to such term
in Section 3.1(b).

        "Per Share Purchase Price" equals $3.75, subject to adjustment for
reverse and forward stock splits, stock dividends, stock combinations and other
similar transactions of the Common Stock that occur after the date of this
Agreement and prior to the Closing.

        "Person" means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof)
or other entity of any kind.

        "Principal Market" shall initially mean the American Stock Exchange and
shall also include the NASDAQ Small-Cap Market, the New York Stock Exchange or
the NASDAQ National Market, whichever is at the time the principal trading
exchange or market for the Common Stock, based upon share volume.

        "Proceeding" means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.

        "Registration Rights Agreement" means the Registration Rights Agreement,
dated the date hereof, among the Company and the Purchasers, in the form of
Exhibit B.

        "Registration Statement" means a registration statement meeting the
requirements set forth in the Registration Rights Agreement and covering the
resale of the Shares by the Purchasers as provided for in the Registration
Rights Agreement.

        "Required Approvals" shall have the meaning ascribed to such term in
Section 3.1(e).

        "ROFR Waiver" shall mean a waiver of the right of first refusal of those
certain purchasers party to the Securities Purchase Agreement, dated
December 18, 2002, by and among such purchasers and the Company.

        "Rule 144" means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

        "SEC Reports" shall have the meaning ascribed to such term in
Section 3.1(h).

        "Securities Act" means the Securities Act of 1933, as amended.

        "Shares" means the shares of Common Stock purchased pursuant to this
Agreement.

        "Subscription Amount" means, as to each Purchaser, the amount set forth
below such Purchaser's signature block on the signature pages hereto and next to
the heading "Subscription Amount", in United States dollars and in immediately
available funds.

        "Subsidiary" means any subsidiary of the Company that is required to be
listed in Schedule 3.1(a).

        "Trading Day" shall mean any day during which the Principal Market shall
be open for business.

        "Transaction Documents" means this Agreement, the Escrow Agreement, the
Registration Rights Agreement and any other documents or agreements executed in
connection with the transactions contemplated hereunder.

2

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

ARTICLE II
PURCHASE AND SALE

        2.1    Purchase of Shares.    

        (a)  Upon the terms and subject to the conditions set forth herein,
concurrent with the execution and delivery of this Agreement by the parties
hereto or such other time as shall be agreed to by the Parties hereto, the
Purchasers shall purchase, severally and not jointly, in the aggregate, up to
4,975,000 shares of Common Stock.

        (b)  Upon satisfaction of the conditions set forth in Section 2.2, the
Closing shall occur at the offices of the Escrow Agent, or such other location
as the parties shall mutually agree.

        2.2    Conditions to Closing.    The Closing is subject to the
satisfaction or waiver by the party to be benefited thereby of the following
conditions:

        (a)  The Company shall have delivered or caused to be delivered to the
Escrow Agent for the benefit of each Purchaser the following:

        (i)    this Agreement duly executed by the Company;

        (ii)  the Escrow Agreement duly executed by the Company;

        (iii)  a certificate evidencing a number of Shares equal to such
Purchaser's Subscription Amount divided by the Per Share Purchase Price;

        (iv)  a legal opinion of Company Counsel, in the form of Exhibit D
attached hereto, addressed to the Purchasers;

        (v)  the ROFR Waiver, if required, and any other third party waivers or
consents that the Company deems necessary or appropriate; and

        (vi)  the Registration Rights Agreement duly executed by the Company.

        (b)  At the Closing, each Purchaser shall have delivered or caused to be
delivered to the Escrow Agent for the benefit of the Company the following:

        (i)    this Agreement duly executed by such Purchaser;

        (ii)  the Escrow Agreement duly executed by such Purchaser;

        (iii)  such Purchaser's Subscription Amount by certified check payable
to the order of the Company or wire transfer of immediately available funds to
the account set forth in the Escrow Agreement; and

        (iv)  the Registration Rights Agreement duly executed by such Purchaser.

        (c)  All representations and warranties of the other party contained
herein shall remain true and correct as of the Closing Date.

        (d)  There shall have been no Material Adverse Effect (as defined in
Section 3.1(b)) with respect to the Company since the date hereof.

        (e)  From the date hereof to the Closing Date, trading in the Common
Stock shall not have been suspended by the Commission (except for any suspension
of trading of limited duration agreed to by the Company, which suspension shall
be terminated prior to the Closing), and, at any time prior to the Closing Date,
trading in securities generally as reported by Bloomberg Financial Markets shall
not have been suspended or limited, or minimum prices shall not have been
established on securities whose trades are reported by such service, or on the
Principal Market, nor shall a banking moratorium have been declared either by
the United States or New York State

3

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

authorities, nor shall there have occurred any material outbreak or escalation
of hostilities or other national or international calamity of such magnitude in
its effect on, or any material adverse change in, any financial market which, in
each case, in the reasonable judgment of the Purchasers, makes it impracticable
or inadvisable to purchase the Shares at the Closing.

        (f)    The aggregate Subscription Amounts received by the Escrow Agent
on the Closing Date shall be at least $5,625,000.

ARTICLE III
REPRESENTATIONS AND WARRANTIES

        3.1    Representations and Warranties of the Company.    Except as set
forth under the corresponding section of the disclosure schedules delivered to
the Purchasers concurrently herewith (the "Disclosure Schedules") or as
disclosed in the SEC Reports, the Company hereby makes the following
representations and warranties to the Purchasers:

        (a)    Subsidiaries.    The Company has no direct or indirect
subsidiaries. The Company owns, directly or indirectly, all of the capital stock
or other equity interests of each Subsidiary free and clear of any lien, charge,
security interest, encumbrance, right of first refusal or other restriction
(collectively, "Liens"), and all the issued and outstanding shares of capital
stock of each Subsidiary are validly issued and are fully paid, non-assessable
and free of preemptive and similar rights.

        (b)    Organization and Qualification.    Each of the Company and the
Subsidiaries is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization (as applicable), with the requisite power and
authority to own and use its properties and assets and to carry on its business
as currently conducted. Neither the Company nor any Subsidiary is in violation
of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents. Each of the
Company and the Subsidiaries is duly qualified to do business and is in good
standing as a foreign corporation or other entity in each jurisdiction in which
the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not, individually or in the aggregate:
(i) adversely affect the legality, validity or enforceability of any Transaction
Document, (ii) have or result in or be reasonably likely to have or result in a
material adverse effect on the results of operations, assets, prospects,
business or condition (financial or otherwise) of the Company and the
Subsidiaries, taken as a whole, or (iii) adversely impair the Company's ability
to perform fully on a timely basis its obligations under any of the Transaction
Documents (any of (i), (ii) or (iii), a "Material Adverse Effect").

        (c)    Authorization; Enforcement.    The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to carry out its
obligations hereunder or thereunder. The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby or thereby have been duly authorized by all
necessary action on the part of the Company and no further consent or action is
required by the Company, other than the Required Approvals. Each of the
Transaction Documents has been (or upon delivery will be) duly executed by the
Company and, when delivered in accordance with the terms hereof, will constitute
the valid and binding obligation of the Company enforceable against the Company
in accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and general principles of equity.
Neither the Company nor any Subsidiary is in violation of any of the provisions
of its respective certificate or articles of incorporation, by-laws or other
organizational or charter documents.

4

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

        (d)    No Conflicts.    The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated thereby do not and will not: (i) conflict with or
violate any provision of the Company's or any Subsidiary's certificate or
articles of incorporation, bylaws or other organizational or charter documents,
or (ii) subject to obtaining the Required Approvals (as defined below), the ROFR
Waiver and any other third party waivers or consents that the Company deems
necessary or appropriate to obtain prior to the Closing, conflict with, or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time
or both) of, any agreement, credit facility, debt or other instrument
(evidencing a Company or Subsidiary debt or otherwise) or other understanding to
which the Company or any Subsidiary is a party or by which any property or asset
of the Company or any Subsidiary is bound or affected, or (iii) result in a
violation of any law, rule, regulation, order, judgment, injunction, decree or
other restriction of any court or governmental authority as currently in effect
to which the Company or a Subsidiary is subject (including federal and state
securities laws and regulations), or by which any property or asset of the
Company or a Subsidiary is bound or affected; except in the case of each of
clauses (ii) and (iii), such as could not, individually or in the aggregate,
have or result in a Material Adverse Effect.

        (e)    Filings, Consents and Approvals.    Neither the Company nor any
Subsidiary is required to obtain any consent, waiver, authorization or order of,
give any notice to, or make any filing or registration with, any court or other
federal, state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by the Company of the
Transaction Documents, other than (i) the filings required under Section 4.5,
(ii) the filing with the Commission of the Registration Statement, (iii) the
application(s) to each applicable Principal Market for the listing of the Shares
for trading thereon in the time and manner required thereby, (iv) the filing
with the Commission of a Form D pursuant to Commission Regulation D,
(v) applicable Blue Sky filings and (vi) a waiver of the right of first refusal
of those certain purchasers party to the Securities Purchase Agreement, dated
December 18, 2002, by and among such purchasers and the Company (collectively,
the "Required Approvals").

        (f)    Issuance of the Shares    The Shares are duly authorized and,
when issued and paid for in accordance with the applicable Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free
and clear of all Liens.

        (g)    Capitalization    The number of shares and type of all
authorized, issued and outstanding capital stock of the Company is set forth in
the Disclosure Schedules. No securities of the Company are entitled to
preemptive or similar rights, and no Person has any right of first refusal,
preemptive right, right of participation, or any similar right to participate in
the transactions contemplated by the Transaction Documents, except for those
that have been waived. The issuance and sale of the Shares will not obligate the
Company to issue shares of Common Stock or other securities to any Person (other
than the Purchasers) and will not result in a right of any holder of Company
securities to adjust the exercise, conversion, exchange or reset price under
such securities.

        (h)    SEC Reports; Financial Statements    The Company has filed all
reports required to be filed by it under the Securities Act and the Exchange
Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years
preceding the date hereof (or such shorter period as the Company was required by
law to file such material) (the foregoing materials being collectively referred
to herein as the "SEC Reports") on a timely basis or has received a valid
extension of such time of filing and has filed any such SEC Reports prior to the
expiration of any such extension. The Company has made available to the
Purchasers a copy of all SEC Reports filed within the 10 days preceding the date
hereof. As of their respective dates, the SEC Reports complied in all material

5

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

respects with the requirements of the Securities Act and the Exchange Act and
the rules and regulations of the Commission promulgated thereunder, and none of
the SEC Reports, when filed, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. Such financial statements have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis during the periods involved ("GAAP"), except as may be
otherwise specified in such financial statements or the notes thereto, and
fairly present in all material respects the financial position of the Company
and its consolidated subsidiaries as of and for the dates thereof and the
results of operations and cash flows for the periods then ended, subject, in the
case of unaudited statements, to normal, immaterial, year-end audit adjustments.

        (i)    Material Changes    Since the date of the latest audited
financial statements included within the SEC Reports, except as specifically
disclosed in the SEC Reports: (i) there has been no event, occurrence or
development that has had or that could result in a Material Adverse Effect,
(ii) the Company has not incurred any liabilities (contingent or otherwise)
other than (A) trade payables and accrued expenses incurred in the ordinary
course of business consistent with past practice and (B) liabilities not
required to be reflected in the Company's financial statements pursuant to GAAP
or required to be disclosed in filings made with the Commission, (iii) the
Company has not altered its method of accounting or the identity of its
auditors, (iv) the Company has not declared or made any dividend or distribution
of cash or other property to its stockholders or purchased, redeemed or made any
agreements to purchase or redeem any shares of its capital stock, and (v) the
Company has not issued any equity securities to any officer, director or
Affiliate, except pursuant to existing Company stock option or similar plans.

        (j)    Litigation    There is no action, suit, inquiry, notice of
violation, proceeding or investigation pending or, to the knowledge of the
Company, threatened against or affecting the Company, any Subsidiary or any of
their respective properties before or by any court, arbitrator, governmental or
administrative agency or regulatory authority (federal, state, county, local or
foreign) (collectively, an "Action") which: (i) adversely affects or challenges
the legality, validity or enforceability of any of the Transaction Documents or
the Shares or (ii) could, if there were an unfavorable decision, individually or
in the aggregate, have or reasonably be expected to result in a Material Adverse
Effect. Neither the Company nor any Subsidiary, nor any director or officer
thereof, is or has been the subject of any Action involving a claim of violation
of or liability under federal or state securities laws or a claim of breach of
fiduciary duty. The Company does not have pending before the Commission any
request for confidential treatment of information. There has not been, and to
the knowledge of the Company, there is not pending or contemplated, any
investigation by the Commission involving the Company or any current or former
director or officer of the Company. The Commission has not issued any stop order
or other order suspending the effectiveness of any registration statement filed
by the Company or any Subsidiary under the Exchange Act or the Securities Act.

        (k)    Compliance    Neither the Company nor any Subsidiary: (i) is in
default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by
the Company or any Subsidiary under), nor has the Company or any Subsidiary
received notice of a claim that it is in default under or that it is in
violation of, any indenture, loan or credit agreement or any other agreement or
instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is in
violation of any order of any court, arbitrator or governmental body, or
(iii) is or has been in violation of any statute, rule or regulation of any
governmental authority, except in each case as could not, individually or in the
aggregate, have or result in a Material Adverse Effect.

6

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

        (l)    Labor Relations    No material labor dispute exists or, to the
knowledge of the Company, is imminent with respect to any of the employees of
the Company.

        (m)    Regulatory Permits    The Company and the Subsidiaries possess
all certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses as described in the SEC Reports, except where the failure
to possess such permits could not, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse Effect ("Material
Permits"), and neither the Company nor any Subsidiary has received any notice of
proceedings relating to the revocation or modification of any Material Permit.

        (n)    Title to Assets    The Company and the Subsidiaries have good and
marketable title in fee simple to all real property owned by them that is
material to the business of the Company and the Subsidiaries and good and
marketable title in all personal property owned by them that is material to the
business of the Company and the Subsidiaries, in each case free and clear of all
Liens, except for Liens as do not materially affect the value of such property
and do not materially interfere with the use made and proposed to be made of
such property by the Company and the Subsidiaries. Any real property and
facilities held under lease by the Company and the Subsidiaries are held by them
under valid, subsisting and enforceable leases of which the Company and the
Subsidiaries are in compliance.

        (o)    Patents and Trademarks    To the knowledge of the Company, the
Company and the Subsidiaries have, or have rights to use, all patents, patent
applications, trademarks, trademark applications, service marks, trade names,
copyrights, licenses and other similar rights that are necessary or material for
use in connection with their respective businesses as described in the SEC
Reports and which the failure to so have could have a Material Adverse Effect
(collectively, the "Intellectual Property Rights"). Neither the Company nor any
Subsidiary has received a written notice that the Intellectual Property Rights
used by the Company or any Subsidiary violates or infringes upon the rights of
any Person. To the knowledge of the Company, all such Intellectual Property
Rights are enforceable and there is no existing infringement by another Person
of any of the Intellectual Property Rights.

        (p)    Insurance    The Company and the Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which the
Company and the Subsidiaries are engaged. Neither the Company nor any Subsidiary
has any knowledge that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business without a
significant increase in cost.

        (q)    Transactions With Affiliates and Employees    None of the
executive officers or directors of the Company and, to the knowledge of the
Company, none of the employees of the Company is presently a party to any
transaction with the Company or any Subsidiary (other than for services as
employees, officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge of the
Company, any entity in which any officer, director, or any such employee has a
substantial interest or is an officer, director, trustee or partner.

        (r)    Internal Accounting Controls    The Company and the Subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management's general
or specific authorization, and (iv) the

7

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

recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.

        (s)    Solvency/Indebtedness    Based on the financial condition of the
Company as of the Closing Date: (i) the fair market value of the Company's
assets exceeds the amount that will be required to be paid on or in respect of
the Company's existing debts and other liabilities (including known contingent
liabilities) as they mature; (ii) the Company's assets do not constitute
unreasonably small capital to carry on its business for the current fiscal year
as now conducted and as proposed to be conducted including its capital needs
taking into account the particular capital requirements of the business
conducted by the Company, and projected capital requirements and capital
availability thereof; and (iii) the current cash flow of the Company, together
with the proceeds the Company would receive, were it to liquidate all of its
assets, after taking into account all anticipated uses of the cash, would be
sufficient to pay all amounts on or in respect of its debt when such amounts are
required to be paid. The Company does not intend to incur debts beyond its
ability to pay such debts as they mature (taking into account the timing and
amounts of cash to be payable on or in respect of its debt).

        (t)    Private Placement    Assuming the accuracy of the representations
and warranties of the Purchasers set forth in Sections 3.2, the offer, issuance
and sale of the Shares to the Purchasers as contemplated hereby are exempt from
the registration requirements of the Securities Act. The issuance and sale of
the Shares hereunder does not contravene the rules and regulations of the
Principal Market and no shareholder approval is required for the Company to
fulfill its obligations under the Transaction Documents.

        (u)    Listing and Maintenance Requirements    The Company has not, in
the 12 months preceding the date hereof, received notice from any Principal
Market on which the Common Stock is or has been listed or quoted to the effect
that the Company is not in compliance with the listing or maintenance
requirements of such Principal Market. The Company is, and has no reason to
believe that it will not in the foreseeable future continue to be, in compliance
with all such listing and maintenance requirements.

        (v)    Application of Takeover Protections    The Company and its Board
of Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company's Certificate of Incorporation (or
similar charter documents) or the laws of its state of incorporation that is or
could become applicable to the Purchasers as a result of the Purchasers and the
Company fulfilling their obligations or exercising their rights under the
Transaction Documents, including without limitation as a result of the Company's
issuance of the Shares and the Purchasers' ownership of the Shares.

        (w)    Disclosure    The Company confirms that neither it nor any other
Person acting on its behalf has provided any of the Purchasers or their agents
or counsel with any information that constitutes or might constitute material,
nonpublic information, except with respect to the knowledge of this pending
transaction. The Company understands and confirms that the Purchasers will rely
on the foregoing representations in effecting transactions in securities of the
Company. All disclosure provided to the Purchasers regarding the Company, its
business and the transactions contemplated hereby, including the Schedules to
this Agreement, furnished by or on behalf of the Company with respect to the
representations and warranties made herein are true and correct with respect to
such representations and warranties and do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. The Company acknowledges and agrees that no Purchaser
makes or has made any

8

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

representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in Section 3.2.

        (x)    Form S-3 Eligibility    The Company is eligible to register the
resale of the Shares for resale by the Purchaser under Form S-3 promulgated
under the Securities Act.

        (y)    Tax Status    The Company and each of its Subsidiaries has made
or filed all federal, state and foreign income and all other tax returns,
reports and declarations required by any jurisdiction to which it is subject
(unless and only to the extent that the Company and each of its Subsidiaries has
set aside on its books provisions reasonably adequate for the payment of all
unpaid and unreported taxes) and has paid all taxes and other governmental
assessments and charges that are material in amount, shown or determined to be
due on such returns, reports and declarations, except those being contested in
good faith and has set aside on its books provisions reasonably adequate for the
payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any jurisdiction,
and the officers of the Company know of no basis for any such claim. The Company
has not executed a waiver with respect to the statute of limitations relating to
the assessment or collection of any foreign, federal, statue or local tax. None
of the Company's tax returns is presently being audited by any taxing authority.

        3.2    Representations and Warranties of the Purchasers    Each
Purchaser hereby, for itself and for no other Purchaser, represents and warrants
to the Company as follows:

        (a)    Organization; Authority.    Such Purchaser is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite corporate or partnership
power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry out its
obligations thereunder. The purchase by such Purchaser of the Shares hereunder
has been duly authorized by all necessary action on the part of such Purchaser.
Each of this Agreement, and the Registration Rights Agreement has been duly
executed by such Purchaser, and when delivered by such Purchaser in accordance
with the terms hereof, will constitute the valid and legally binding obligation
of such Purchaser, enforceable against it in accordance with its terms.

        (b)    Investment Intent.    Such Purchaser is acquiring the Shares as
principal for its own account for investment purposes only and not with a view
to or for distributing or reselling such Shares or any part thereof, without
prejudice, however, to such Purchaser's right, subject to the provisions of this
Agreement, at all times to sell or otherwise dispose of all or any part of such
Shares pursuant to an effective registration statement under the Securities Act
or under an exemption from such registration and in compliance with applicable
federal and state securities laws. Nothing contained herein shall be deemed a
representation or warranty by such Purchaser to hold Shares for any period of
time. Such Purchaser is acquiring the Shares hereunder in the ordinary course of
its business. Such Purchaser does not have any agreement or understanding,
directly or indirectly, with any Person to distribute any of the Shares.

        (c)    Purchaser Status.    At the time such Purchaser was offered the
Shares, it was, and at the date hereof it is, an "accredited investor" as
defined in Rule 501(a) under the Securities Act. Such Purchaser has not been
formed solely for the purpose of acquiring the Shares. Such Purchaser is not a
broker-dealer requiring registration under Section 15 of the Exchange Act.

9

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

        (d)    Experience of such Purchaser.    Such Purchaser, either alone or
together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Shares, and has so
evaluated the merits and risks of such investment. Such Purchaser is able to
bear the economic risk of an investment in the Shares and, at the present time,
is able to afford a complete loss of such investment.

        (e)    General Solicitation.    Such Purchaser is not purchasing the
Shares as a result of any advertisement, article, notice or other communication
regarding the Shares published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or any other
general solicitation or general advertisement.

        (f)    Company Information.    Such Purchaser has read the SEC Reports
and has had an opportunity to discuss the Company's business, management and
financial affairs with directors, officers and management of the Company and has
had the opportunity to review the Company's operations and facilities. Such
Purchaser has also had the opportunity to ask questions of and receive answers
from, the Company and its management regarding the terms and conditions of this
investment. Such Purchaser has verbally agreed with Roth Capital Partners, LLC
not to disclose any information relating to this transaction to any third party
and hereby confirms that it has complied with such verbal agreement.

        (g)    Residence.    If such Purchaser is an individual, then such
Purchaser resides in the state or province identified in the address of such
Purchaser set forth on the signature page hereto; if such Purchaser is a
partnership, corporation, limited liability company or other entity, then the
office or offices of such Purchaser in which its investment decision was made is
located at the address or addresses of such Purchaser set forth on the signature
page hereto.

        (h)    Rule 144.    Such Purchaser acknowledges and agrees that the
Shares are "restricted securities" as defined in Rule 144 promulgated under the
Securities Act as in effect from time to time and must be held indefinitely
unless they are subsequently registered under the Securities Act or an exemption
from such registration is available. Such Purchaser has been advised or is aware
of the provisions of Rule 144, which permits limited resale of shares purchased
in a private placement subject to the satisfaction of certain conditions,
including, among other things: the availability of certain current public
information about the Company, the resale occurring following the required
holding period under Rule 144 and the number of shares being sold during any
three-month period not exceeding specified limitations.

        (i)    Compliance with the Securities Laws.    Such Purchaser agrees to
comply with the requirements of Regulation M, if applicable, with respect to the
sale of the Shares by the Purchaser. Such Purchaser hereby confirms its
understanding that it may not cover short sales made prior to the Effective Date
with Shares registered for resale on the Registration Statement. The Purchaser
acknowledges that it does not intend to cover short positions made by it before
the Effective Date with Shares held by it and registered on the Registration
Statement.

        (j)    Prior Rights.    Such Purchaser, if a party to that certain
Securities Purchase Agreement (the "Purchase Agreement"), dated December 18,
2002, among the Company and the purchasers identified on the signature pages
thereto, hereby expressly waives any right of first refusal, preemptive right or
right to receive notice that it may otherwise have pursuant Section 4.8 of the
Purchase Agreement relating to the sale and issuance of the Shares pursuant to
this Agreement.

10

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

ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES

        4.1    Transfer Restrictions.    

        (a)  The Shares may only be disposed of in compliance with state and
federal securities laws. In connection with any transfer of Shares other than
pursuant to an effective registration statement, to the Company or to an
Affiliate of a Purchaser, the Company may require the transferor thereof to
provide to the Company an opinion of counsel selected by the transferor, the
form and substance of which opinion shall be reasonably satisfactory to the
Company, to the effect that such transfer does not require registration of such
transferred Shares under the Securities Act. As a condition of transfer, any
such transferee shall agree in writing to be bound by the terms of this
Agreement and shall have the rights of a Purchaser under this Agreement and the
Registration Rights Agreement.

        (b)  The Purchasers agree to the imprinting, so long as is required by
this Section 4.1(b), of the following legend on any certificate evidencing
Shares:

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY.

        The Company acknowledges and agrees that a Purchaser may from time to
time pledge pursuant to a bona fide margin agreement or grant a security
interest in some or all of the Shares and, if required under the terms of such
arrangement, such Purchaser may transfer pledged or secured Shares to the
pledgees or secured parties subject to the limitations set forth in this
Section 4.1. Such a pledge or transfer would not be subject to approval of the
Company and no legal opinion of the pledgee, secured party or pledgor shall be
required in connection therewith. Further, no notice shall be required of such
pledge. At the appropriate Purchaser's expense, the Company will execute and
deliver such reasonable documentation as a pledgee or secured party of Shares
may reasonably request in connection with a pledge or transfer of the Shares,
including the preparation and filing of any required prospectus supplement under
Rule 424(b)(3) of the Securities Act or other applicable provision of the
Securities Act to appropriately amend the list of Selling Stockholders
thereunder.

        (c)  Certificates evidencing Shares shall not contain any legend
(including the legend set forth in Section 4.1(b)): (i) while a registration
statement (including the Shares Registration Statement) covering the resale of
such Shares is effective under the Securities Act, or (ii) following any sale of
such Shares pursuant to Rule 144, or (iii) if such Shares are eligible for sale
under Rule 144(k), or (iv) if such legend is not required under applicable
requirements of the Securities Act (including judicial interpretations and
pronouncements issued by the Staff of the Commission). The Company agrees that
following the Effective Date or at such time as such legend is no longer
required under this Section 4.1(c), it will, no later than five Trading Days
following the delivery by a Purchaser to the Company or the Company's transfer
agent of a certificate representing Shares issued with a

11

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

restrictive legend, deliver or cause to be delivered to such Purchaser a
certificate representing such Shares that are free from all restrictive and
other legends.

        4.2    Furnishing of Information.    As long as any Purchaser owns
Shares, the Company covenants to timely file (or obtain extensions in respect
thereof and file within the applicable grace period) all reports required to be
filed by the Company after the date hereof pursuant to the Exchange Act. As long
as any Purchaser owns Shares, if the Company is not required to file reports
pursuant to such laws, it will prepare and furnish to the Purchasers and make
publicly available in accordance with Rule 144(c) such information as is
required for the Purchasers to sell the Shares under Rule 144.

        4.3    Integration.    The Company shall not, and shall use commercially
reasonable efforts to ensure that no Affiliate of the Company shall, sell, offer
for sale or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in Section 2 of the Securities Act) that would be
integrated with the offer or sale of the Shares in a manner that would require
the registration under the Securities Act of the sale of the Shares to the
Purchasers, or that would be integrated with the offer or sale of the Shares for
purposes of the rules and regulations of any Principal Market.

        4.4    Reservation and Listing of Shares.    

        (a)  The Company shall maintain a reserve from its duly authorized
shares of Common Stock for issuance pursuant to the Transaction Documents in
such amount as may be required to fulfill its obligations in full under the
Transaction Documents.

        (b)  The Company shall: (i) in the time and manner required by the
Principal Market, prepare and file with such Principal Market an additional
shares listing application covering the Shares, (ii) take all steps necessary to
cause such shares of Common Stock to be approved for listing on the Principal
Market as soon as possible thereafter, (iii) provide to the Purchasers evidence
of such listing, and (iv) use reasonable efforts to maintain the listing of such
Common Stock on such Principal Market or another Principal Market.

        4.5    Securities Laws Disclosure; Publicity.    The Company shall,
within one Trading Day after the Closing Date, issue a press release or file a
Current Report on Form 8-K reasonably acceptable to the Purchasers disclosing
all material terms of the transactions contemplated hereby. The Company and the
Purchasers shall consult with each other in issuing any press releases with
respect to the transactions contemplated hereby. Notwithstanding the foregoing,
other than in any registration statement filed pursuant to the Registration
Rights Agreement and filings related thereto, the Company shall not publicly
disclose the name of any Purchaser or the terms hereof, or include the name of
any Purchaser or the terms hereof in any filing with the Commission or any
regulatory agency or Principal Market, without the prior written consent of such
Purchaser, except to the extent such disclosure is required by law or Principal
Market regulations, in which case the Company shall provide the Purchasers with
prior notice of such disclosure.

        4.6    Non-Public Information.    Except with respect to the pendency of
this transaction, the Company covenants and agrees that neither it nor any other
Person acting on its behalf will provide any Purchaser or its agents or counsel
with any information that the Company believes constitutes material non-public
information, unless prior thereto such Purchaser shall have executed a written
agreement regarding the confidentiality and use of such information. The Company
understands and confirms that each Purchaser shall be relying on the foregoing
representations in effecting transactions in securities of the Company.

        4.7    Shareholders Rights Plan.    In the event that a shareholders
rights plan is adopted by the Company, no claim will be made or enforced by the
Company or any other Person that any Purchaser is an "Acquiring Person" under
the plan or in any way could be deemed to trigger the provisions of such plan by
virtue of receiving Shares under the Transaction Documents.

12

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

ARTICLE V
MISCELLANEOUS

        5.1    Termination.    This Agreement may be terminated by the Company
or any Purchaser, by written notice to the other parties, if the Closing has not
been consummated by the tenth Trading Day following the date of this Agreement;
provided that no such termination will affect the right of any party to sue for
any breach by the other party (or parties).

        5.2    Fees and Expenses.    The Company agrees to pay $5,000, in the
aggregate, to the Purchasers as reimbursement for the Purchasers' legal and
other fees and expenses incurred in connection with the investigation and
negotiation of the transaction and the preparation and negotiation of the
Transaction Documents. Accordingly, in lieu of the foregoing payments, on the
Closing Date, the aggregate amount that the Purchasers are to pay for the
Securities at the Closing will be reduced by $5,000. Each party shall pay the
fees and expenses of its advisers, counsel, accountants and other experts, if
any, and all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement. The Company
shall pay all transfer agent fees, stamp taxes and other taxes and duties levied
in connection with the issuance of any Shares.

        5.3    Entire Agreement.    The Transaction Documents, together with the
exhibits and schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.

        5.4    Notices.    Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of (a) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified on the signature pages hereto prior to 5:30 p.m. (New
York City time) on a Trading Day, (b) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section on a day that is not a Trading Day or
later than 5:30 p.m. (New York City time) on any Trading Day, or (c) the Trading
Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service. The addresses for such notices and communications are
those set forth on the signature pages hereof, or such other address as may be
designated in writing hereafter, in the same manner, by such Person.

        5.5    Amendments; Waivers.    No provision of this Agreement may be
waived or amended except in a written instrument signed, in the case of an
amendment, by the Company and the Purchasers holding, or obligated hereunder to
purchase, at least a majority of the Shares or, in the case of a waiver, by the
party against whom enforcement of any such waiver is sought. No waiver of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of either party to exercise
any right hereunder in any manner impair the exercise of any such right.

        5.6    Construction.    The headings herein are for convenience only, do
not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party.

        5.7    Successors and Assigns.    This Agreement shall be binding upon
and inure to the benefit of the parties and their successors and permitted
assigns. The Company may not assign this Agreement or any rights or obligations
hereunder without the prior written consent of the Purchasers. Any Purchaser may
assign its rights under this Agreement and the Registration Rights Agreement to
any Person to whom such Purchaser assigns or transfers any Shares.

13

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

        5.8    No Third-Party Beneficiaries.    This Agreement is intended for
the benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.

        5.9    Governing Law; Venue; Waiver of Jury Trial.    All questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by and construed and enforced in accordance with the
internal laws of the State of New York, without regard to the principles of
conflicts of law thereof. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of New York,
borough of Manhattan, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein (including with respect to the enforcement of any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is improper
or inconvenient venue for such proceeding. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. The parties hereby waive all
rights to a trial by jury. If either party shall commence an action or
proceeding to enforce any provisions of this Agreement, then the prevailing
party in such action or proceeding shall be reimbursed by the other party for
its attorneys' fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or proceeding.

        5.10    Survival.    The representations, warranties, agreements and
covenants contained herein shall survive the Closing and the delivery, exercise
and/or conversion of the Shares, as applicable.

        5.11    Execution.    This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.

        5.12    Severability.    If any provision of this Agreement is held to
be invalid or unenforceable in any respect, the validity and enforceability of
the remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.

        5.13    Replacement of Shares.    If any certificate or instrument
evidencing any Shares is mutilated, lost, stolen or destroyed, the Company shall
issue or cause to be issued in exchange and substitution for and upon
cancellation thereof, or in lieu of and substitution therefor, a new certificate
or instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested. The applicants for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement Shares.

        5.14    Independent Nature of Purchasers' Obligations and Rights.    The
obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the

14

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

Purchasers as a partnership, an association, a joint venture or any other kind
of entity, or create a presumption that the Purchasers are in any way acting in
concert or as a group with respect to such obligations or the transactions
contemplated by the Transaction Document. Each Purchaser shall be entitled to
independently protect and enforce its rights, including without limitation the
rights arising out of this Agreement or out of the other Transaction Documents,
and it shall not be necessary for any other Purchaser to be joined as an
additional party in any proceeding for such purpose.

15

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

        IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.

 
 
DOT HILL SYSTEMS CORP.
 
 
By:
/s/  JAMES L. LAMBERT      

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

    Name: James L. Lambert     Title: Chief Executive Officer and President
 
 
Address for Notice:
6305 El Camino Real
Carlsbad, California 92009     Attn: Preston Romm     Tel: (760) 931-5500    
Fax: (760) 931-5527
With a copy to:
 
Cooley Godward LLP
4401 Eastgate Mall
San Diego, California 92121     Attn: Thomas A. Coll, Esq.     Tel:
(858) 550-6013     Fax: (858) 550-6420

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOR PURCHASERS TO FOLLOW]

16

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

[PURCHASERS' SIGNATURE PAGE]

        IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

TRUSCO CAPITAL MANAGEMENT, INC.*
 
Address for Notice:
Trusco Capital Management
50 Hurt Plaza By: /s/  PATRICK PAPARELLI      

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

Patrick Paparelli, Managing Director   Suite 1400       Address for Delivery:
Number of Shares: 200,000
Aggregate Purchase Price of Shares: $750,000
Security Titling Instructions: TRUSTMAN
Taxpayer ID Number, if any: 58-6078728   Depository Trust Company
55 Water Street
New York Window
Ground Floor
South Street Entrance
F/b/o: SunTrust, #2971
F/f/c: STI Classic Small Cap
Growth Fund and account
#11099001125328

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

*See security titling instructions for title designee.

[PURCHASERS' SIGNATURE PAGES FOLLOW]

17

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

[PURCHASER'S SIGNATURE PAGE]

OMICRON MASTER TRUST
By: Omicron Capital L.P., as subadvisor
By: Omicron Capital Inc., its general partner
 
Address for Notice:
c/o Omicron Capital L.P.
153 E. 53rd Street
48th Floor
New York, New York 10022 By: /s/  BRUCE BERNSTEIN      

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

Bruce Bernstein, President   Attn: Brian Daly
Number of Shares: 500,000
Aggregate Purchase Price of Shares: $1,875,000
Taxpayer ID Number, if any: 98-6053436
 
 

[PURCHASERS' SIGNATURE PAGES FOLLOW]

18

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

[PURCHASER'S SIGNATURE PAGE]

MIDSUMMER INVESTMENT, LTD.
 
Address for Notice:
C/o Midsummer Capital, LLC
485 Madison Avenue, 23rd Floor
New York, New York 10022 By: /s/  MICHAEL A. AMSALEM      

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

Michel A. Amsalem, Director   Tel: (212) 584-2140
Fax: (212) 584-2142
Attn: Michel A. Amsalem
Number of Shares: 274,000
Aggregate Purchase Price of Shares: $1,027,500
Taxpayer ID Number, if any: 58-0370103
 
 

[PURCHASERS' SIGNATURE PAGES FOLLOW]

19

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

[PURCHASER'S SIGNATURE PAGE]

ISLANDIA, L.P.
 
Address for Notice: By: John Lang, Inc., its general partner   C/o John
Lang, Inc.
485 Madison Avenue, 23rd Floor
New York, New York 10022 By: /s/  RICHARD BERNER      

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

Richard Berner, President of the general partner   Tel: (212) 584-2100
Fax: (212) 584-2199
Attn: Fund Manager
Number of Shares: 63,000
Aggregate Purchase Price of Shares: $236,250
Taxpayer ID Number, if any:
 
 

[PURCHASERS' SIGNATURE PAGES FOLLOW]

20

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

[PURCHASER'S SIGNATURE PAGE]

WESTPARK CAPITAL, L.P.
 
Address for Notice:
4965 Preston Park Blvd.
Suite 220
Plano, Texas 75093 By: /s/  PATRICK J. BROSNAHAN      

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

Name:  Patrick J. Brosnahan
Title:    General Partner   Tel: (972) 985-2127
Fax: (972) 985-2161
Number of Shares: 100,000
Aggregate Purchase Price of Shares: $375,000
Taxpayer ID Number, if any: 75-2945750
 
 

[PURCHASERS' SIGNATURE PAGES FOLLOW]

21

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

[PURCHASER'S SIGNATURE PAGE]

THE PINNACLE FUND, L.P.
 
Address for Notice:
The Pinnacle Fund, L.P.
Suite 240
4965 Preston Park Blvd. By: /s/  BARRY M. KITT      

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

Name:  Barry M. Kitt
Title:    Partner   Plano, Texas 75093
Tel: (972) 985-2121
Fax: (972) 985-2122
Number of Shares: 1,000,000
Aggregate Purchase Price of Shares: $3,750,000
Taxpayer ID Number, if any: 75-2512784
 
 

[PURCHASERS' SIGNATURE PAGES FOLLOW]

22

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

[PURCHASER'S SIGNATURE PAGE]

CRANSHIRE CAPITAL, L.P.
 
Address for Notice:
666 Dundee Road
Suite 1901
Northbrook, IL 60062 By: /s/  MITCHELL P. KOPIN      

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

Name:  Mitchell P. Kopin
Title:    President of Downsview Capital, Inc.
            Its general partner   Attn: Mitchell Kopin
Tel: (847) 562-9030
Number of Shares: 250,000
Aggregate Purchase Price of Shares: $937,500
Taxpayer ID Number, if any: 36-4055954
 
 

[PURCHASERS' SIGNATURE PAGES FOLLOW]

23

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

[PURCHASER'S SIGNATURE PAGE]

SOUTHWELL PARTNERS LP
 
Address for Notice:
1901 N. Akard Street
Dallas, Texas 75201 By: /s/  WILSON JAEGGLI      

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

Name:  Wilson Jaeggki
Title:    General Partner   Attn: Wilson Jaeggli, GP
Fax: (214) 922-9699
Tel: (214) 922-9696
Number of Shares: 500,000
Aggregate Purchase Price of Shares: $1,875,000
Taxpayer ID Number, if any: 75-2345339
 
 

[PURCHASERS' SIGNATURE PAGES FOLLOW]

24

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

[PURCHASER'S SIGNATURE PAGE]

ATLAS CAPITAL MASTER FUND, L.P.
By: Atlas Capital L.P. & Atlas Capital Offshore Fund Ltd.,
Its General Partners
 
Address for Notice:
100 Crescent Court #880
Dallas, Texas 75201
Attn: Caryn
Tel: (214) 999-6082 By: /s/  ROBERT H. ALPERT      

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

Name:  Robert H. Alpert
Title:    President   Fax: (214) 999-6095
Number of Shares: 755,100
Aggregate Purchase Price of Shares: $2,831,625
Taxpayer ID Number, if any: 93-0344937
 
 

[PURCHASERS' SIGNATURE PAGES FOLLOW]

25

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

[PURCHASER'S SIGNATURE PAGE]

ATLAS CAPITAL(Q.P.) L.P.
By: Atlas Capital Management L.P., its GP
By: RHA, Inc., its GP
 
Address for Notice:
100 Crescent Court #880
Dallas, Texas 75201
Attn: Caryn
Tel: (214) 999-6082 By: /s/  ROBERT H. ALPERT      

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

Name:  Robert H. Alpert
Title:    President   Fax: (214) 999-6095
Number of Shares: 244,900
Aggregate Purchase Price of Shares: $918,375
Taxpayer ID Number, if any: 33-1025414
 
 

[PURCHASERS' SIGNATURE PAGES FOLLOW]

26

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

[PURCHASER'S SIGNATURE PAGE]

WALKER SMITH CAPITAL MASTER FUND
 
Address for Notice:
C/o WS Capital Management, L.P.
300 Crescent Court, Suite 880 By: /s/  REID WALER      

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

Name:  Reid Walker
Title:    Member   Dallas, Texas 75201
Attn: Joseph Worsham
Fax: (214) 756-6079
Tel: (214) 756-6073
Number of Shares: 332,000
Aggregate Purchase Price of Shares: $1,245,000
Taxpayer ID Number, if any: 75-2956878
 
 

[PURCHASERS' SIGNATURE PAGES FOLLOW]

27

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

[PURCHASER'S SIGNATURE PAGE]

WS OPPORTUNITY MASTER FUND
 
Address for Notice:
C/o WS Capital Management, L.P.
300 Crescent Court, Suite 880 By: /s/  PATRICK WALKER      

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

Name:  Patrick Walker
Title:    Member   Dallas, Texas 75201
Attn: Joseph Worsham
Fax: (214) 756-6079
Tel: (214) 756-6073
Number of Shares: 129,700
Aggregate Purchase Price of Shares: $486,375
Taxpayer ID Number, if any: 75-2956880
 
 

[PURCHASERS' SIGNATURE PAGES FOLLOW]

28

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

[PURCHASER'S SIGNATURE PAGE]

WALKER SMITH INTERNATIONAL FUND, LTD.
 
Address for Notice:
C/o WS Capital Management, L.P.
300 Crescent Court, Suite 880 By: /s/  REID WALKER      

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

Name:  Reid Walker
Title:    Member   Dallas, Texas 75201
Attn: Joseph Worsham
Fax: (214) 756-6079
Tel: (214) 756-6073
Number of Shares: 339,600
Aggregate Purchase Price of Shares: $1,273,500
Taxpayer ID Number, if any: N/A—offshore
 
 

[PURCHASERS' SIGNATURE PAGES FOLLOW]

29

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

[PURCHASER'S SIGNATURE PAGE]

WS OPPORTUNITY FUND INTERNATIONAL, L.P.
 
Address for Notice:
C/o WS Capital Management, L.P.
300 Crescent Court, Suite 880 By: /s/  PATRICK WALKER      

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

Name:  Patrick Walker
Title:    Member   Dallas, Texas 75201
Attn: Joseph Worsham
Fax: (214) 756-6079
Tel: (214) 756-6073
Number of Shares: 61,700
Aggregate Purchase Price of Shares: $231,375
Taxpayer ID Number, if any: N/A—offshore
 
 

30

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

QuickLinks

Exhibit 10.32

SECURITIES PURCHASE AGREEMENT
ARTICLE I DEFINITIONS
ARTICLE II PURCHASE AND SALE
ARTICLE III REPRESENTATIONS AND WARRANTIES
ARTICLE IV OTHER AGREEMENTS OF THE PARTIES
ARTICLE V MISCELLANEOUS
[PURCHASERS' SIGNATURE PAGE]