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                                                                    EXHIBIT 10.6



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                           COSINE COMMUNICATIONS, INC.

                           THIRD AMENDED AND RESTATED

                           INVESTORS' RIGHTS AGREEMENT

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                                TABLE OF CONTENTS


<TABLE>
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                                                                                 PAGE
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<S>                                                                              <C>
SECTION 1 - GENERAL; DEFINITIONS...................................................1

        1.1    Amendment; Waiver of Prior Rights...................................1
        1.2    Definitions.........................................................2
        1.3    Other Definitions...................................................5

SECTION 2 - REGISTRATION RIGHTS....................................................5

        2.1    Request for Registration............................................5
        2.2    Company Registration................................................8
        2.3    Form S-3 Registration..............................................10
        2.4    Obligations of the Company.........................................11
        2.5    Furnish Information................................................12
        2.6    Delay of Registration..............................................12
        2.7    Indemnification....................................................12
        2.8    Reports Under Securities Exchange Act of 1934......................15
        2.9    Limitations on Subsequent Registration Rights......................16
        2.10   "Market Stand-Off" Agreement.......................................16

SECTION 3 - COVENANTS OF THE COMPANY..............................................17

        3.1    Basic Financial Information........................................17
        3.2    Additional Information.............................................17
        3.3    Venture Capital Operating Company..................................17
        3.4    Board of Directors.................................................18
        3.5    Notice.............................................................18
        3.6    Confidential Information...........................................18
        3.7    Observer Rights....................................................19
        3.8    Liquidation Event Notice...........................................
        3.9    Termination of Covenants...........................................20
        3.10   Waiver.............................................................20

SECTION 4 - RIGHT OF FIRST REFUSAL................................................20

        4.1    First Refusal Notice...............................................20
        4.2    Company's Option...................................................20
        4.3    Investors' and Founders' Option....................................21
        4.4    Transfer of Sale Shares............................................21
        4.5    Transfers Void.....................................................21
        4.6    Exempt Transfers...................................................22
        4.7    Termination of Restrictions........................................22
        4.8    Waiver.............................................................22

SECTION 5 - RIGHT OF FIRST REFUSAL TO SUBSCRIBE FOR NEW ISSUANCES.................22

        5.1    Grant of Right of First Refusal....................................22
        5.2    First Offer Notice.................................................22
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<TABLE>
<S>                                                                               <C>
        5.3    Investor/Founder Election..........................................23
        5.4    Company Sale to Third Parties......................................23
        5.5    Definition of New Securities.......................................23
        5.6    Limitation and Apportionment.......................................24
        5.7    Termination of Right of First Offer................................24
        5.8    Waiver.............................................................24

SECTION 6  - CO-SALE..............................................................24

        6.1    Co-Sale Notice.....................................................24
        6.2    Investors' Exercise of Co-Sale Right...............................24
        6.3    Mechanics of Co-Sale...............................................25
        6.4    Sale of Co-Sale Shares to Third Party..............................25
        6.5    Exempt Transfers...................................................26
        6.6    Prohibited Transfers...............................................26
        6.7    Termination of Co-Sale Rights......................................27
        6.8    Waiver.............................................................27

SECTION 7  - TRANSFER RESTRICTIONS................................................27

        7.1    Restrictions on Transferability....................................27
        7.2    Restrictive Legend.................................................27
        7.3    Notice of Proposed Transfers.......................................28
        7.4    Public Sale........................................................28

SECTION 8 - VOTING AGREEMENT......................................................29

        8.1    Definition.........................................................29
        8.2    Agreement to Vote..................................................29
        8.3    Board of Directors.................................................29
        8.4    No Revocation......................................................29
        8.5    Stock Splits, Stock Dividends, etc.................................29
        8.6    Waivers............................................................29
        8.7    Termination........................................................30

SECTION 9 - MISCELLANEOUS.........................................................30

        9.1    Successors and Assigns.............................................30
        9.2    Governing Law......................................................30
        9.3    Counterparts.......................................................30
        9.4    Titles and Subtitles...............................................30
        9.5    Notices............................................................30
        9.6    Expenses...........................................................30
        9.7    Amendments and Waivers.............................................30
        9.8    Severability.......................................................31
        9.9    Aggregation of Stock...............................................31
        9.10   Entire Agreement...................................................31
        9.11   Assignment of Rights...............................................32
</TABLE>



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                           THIRD AMENDED AND RESTATED
                           INVESTORS' RIGHTS AGREEMENT

        THIS AGREEMENT (this "AGREEMENT") made as of April __, 2000, by and
among CoSine Communications, Inc. (the "COMPANY"), the holders of Series E
Preferred Stock listed on SCHEDULE A attached hereto (the "SERIES E INVESTORS"),
the holders of Series D Preferred Stock listed on SCHEDULE A attached hereto
(the "SERIES D INVESTORS"), the holders of Series C Preferred Stock listed on
SCHEDULE A attached hereto (the "SERIES C INVESTORS") the holders of Series B
Preferred Stock listed on SCHEDULE A attached hereto (the "SERIES B INVESTORS"),
and the holders of Series A Preferred Stock listed on SCHEDULE A attached hereto
(the "SERIES A INVESTORS") (Series E Investors, Series D Investors, Series C
Investors, Series B Investors and Series A Investors are each individually
referred to as an "INVESTOR" and they are collectively referred to as, the
"INVESTORS"), and Dean Hamilton, Lianghwa Jou, and Larry Plummer (who are each
individually referred to herein as a "FOUNDER" and collectively as the
"FOUNDERS"), and the holders of other securities of the Company, who have
registration or other rights with respect to such securities, or the securities
of the Company issuable upon exercise or conversion thereof (the "ADDITIONAL
RIGHTS HOLDERS"), listed on SCHEDULE A attached hereto.

                                   BACKGROUND

        Each of the Investors, the Founders, and the Additional Rights Holders
owns (i) that number of outstanding shares of the Company's Common Stock, Series
A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock and/or Series E Preferred Stock (collectively, the "EQUITY
SECURITIES") and (ii) such warrants and/or options with respect to the Equity
Securities, in each case, as is set forth opposite his, her, or its name on
SCHEDULE A hereto. The Company, the Investors, the Founders, and the Additional
Rights Holders have reached an understanding concerning various aspects of their
business relationship with each other and the organization and operation of the
Company and its business. This Agreement sets forth the parties' understanding
and amends and restates in its entirety that certain Second Amended and Restated
Investors' Rights Agreement, dated September 17, 1999, by and among the Company
and the parties thereto (the "Second Amended and Restated Investors' Rights
Agreement").

                                          AGREEMENT

        In consideration of the mutual promises and covenants set forth herein
the parties hereto agree as follows:

                        SECTION 1 - GENERAL; DEFINITIONS

       1.1 Amendment; Waiver of Prior Rights.

               (a) Upon execution of this Agreement by the Company and Founders
and Investors (as such terms are defined in the Second Amended and Restated
Investors' Rights Agreement) holding a majority of the outstanding shares of
Common Stock held by the Founders and of


<PAGE>   5
Preferred Stock (on an as-converted basis), the Second Amended and Restated
Investors' Rights Agreement shall be amended and restated as set forth herein.
If a Series E Investor shall also be a Series A Investor, Series B Investor,
Series C Investor or Series D Investor, or an Affiliate of either, the execution
by such Series E Investor of the Purchase Agreement (as defined in Section 5.5
hereof) shall constitute execution of this Agreement in its capacity as a Series
A Investor, Series B Investor, Series C Investor or Series D Investor, or an
Affiliate of either, as the case may be, and the number of shares of Common
Stock and Preferred Stock (voting on an as-if-converted basis) held by such
Investor shall be counted toward the aforementioned majority.

               (b) All rights relating to the registration or qualification of
the Company's securities, under the Securities Act of 1933, as amended (the
"1933 ACT"), or other applicable state and federal securities laws that certain
Additional Rights Holders previously had under any existing warrant, stock
option, or other security or agreement (other than this Agreement) were
terminated upon the execution of the Amended and Restated Investors' Rights
Agreement by the Company and such Additional Rights Holders.

               (c) Upon execution of this Agreement by a party to the Second
Amended and Restated Investors' Rights Agreement, such party hereby waives the
Right of First Refusal pursuant to Section 5 of the Second Amended and Restated
Investors' Rights Agreement with regard to the issuance by the Company of its
Series E Preferred Stock. Upon execution of this Agreement by a majority of the
outstanding shares of Common Stock and Preferred Stock (voting on an
as-if-converted basis) held by the Founders and Investors, as such terms were
defined in the Second Amended and Restated Investors' Rights Agreement, entitled
to the Right of First Refusal pursuant to Section 5 of the Second Amended and
Restated Investors' Rights Agreement, such Right of First Refusal with regard to
the issuance by the Company of its Series E Preferred Stock shall be deemed
waived as to all Investors and Founders.

               (d) Each party hereto acknowledges that each of Dean Hamilton,
Lianghwa Jou and Donald Green has transferred as permitted by Section 4.6 of the
Second Amended and Restated Investors' Rights Agreement certain shares of Common
Stock held by him. Each party hereto hereby waives the prior notice of such
transfers provided for in such Section. Each party hereto acknowledges that C.J.
Overseas, Ltd. has transferred shares of Series A Preferred Stock to Falcon
Capital, LLC. Each party hereto hereby waives any right of prior notice of such
transfer afforded such party.


       1.2 Definitions. For purposes of this Agreement:

        "ADDITIONAL REGISTRABLE SECURITIES" means (i) the Common Stock issuable
or issued upon conversion or exercise of any warrant, option, right or other
security of the Company and owned of record by the Additional Rights Holders on
the date hereof, and (ii) any Common Stock or other common stock issued (or
issuable upon the conversion or exercise of any warrant, option, right or other
security which is issued) with respect to the securities referred to in clause
(i) by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization, and (iii) any other shares of Common Stock held by or issuable
upon conversion or exercise of other securities held by persons holding
securities described in clauses (i) or (ii) above; provided, however, that
Additional Registrable Securities shall not include any (a) shares of Common
Stock which have previously been registered, (b) shares of Common Stock which
have previously been sold to the public, (c) shares of Common Stock which



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would otherwise be Additional Registrable Securities held by a Holder who is
then permitted to sell all of such securities within any three (3) month period
following the Company's initial public offering pursuant to Rule 144 if such
securities then held by such Holder constitute less than one percent of the
Company's outstanding equity securities, or (d) shares of Common Stock which
would otherwise be Additional Registrable Securities that have been sold in a
private transaction in which the transferor's rights under this Agreement are
not assigned pursuant to Section 9.11 hereof.

        "AFFILIATE" means, with respect to any person, any other person that
directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with such person. James Stableford,
Anthony Ciulla, Ralph H. Cechettini 1995 Trust, Pivotal Partners, L.P., William
Slattery, Marc Weiss, Dan Chapey, Matthew O. Fitzmaurice, Vertex Capital II LLC
and ATGF II, and their respective Permitted Transferees, shall be deemed to be
Affiliates of each other for the purposes of this Agreement.

        "BOARD" means the board of directors of the Company.

        "CHANGE OF CONTROL TRANSACTION" means any merger or consolidation of the
Company with or into another entity in which the Company's shareholders of
record, as constituted immediately prior to such transaction, hold fifty percent
(50%) or less of the voting power of the surviving entity.

        "COMMON STOCK" means shares of the Company's common stock.

        "CO-SALE SHARES" shall mean shares of the Common Stock now owned or
subsequently acquired by the Founders.

        "DESIGNATED SHAREHOLDER" means any officer, director, Founder or holder
of two percent (2%) or more of the Company's outstanding Common Stock and
Preferred Stock, on an as if converted basis, and who is a party to this
Agreement or has otherwise agreed in writing to be bound by and to comply with
all applicable provisions of Section 4 of this Agreement.

        "FORM S-3" means such form under the 1933 Act as is in effect on the
date hereof or any registration form under the 1933 Act subsequently adopted by
the SEC which permits inclusion or incorporation of substantial information by
reference to other documents filed by the Company with the SEC.

        "FOUNDER REGISTRABLE SECURITIES" means (i) shares of Common Stock owned
of record by the Founders on the date hereof, (ii) any shares of Common Stock or
other common stock issued or issuable with respect to the securities referred to
in clause (i) above by way of a stock dividend or stock split or in connection
with a combination of shares, recapitalization, merger, consolidation or other
reorganization and (iii) any other shares of Common Stock held by persons
holding securities described in clauses (i) or (ii) above; provided, however,
that Founder Registrable Securities shall not include any (a) shares of Common
Stock which have previously been registered, (b) shares of Common Stock which
have previously been sold to the public, or (c) securities which would otherwise
be Founder Registrable Securities held by a Holder who is then permitted to sell
all of such securities within any three (3) month period following the Company's
initial public offering



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pursuant to Rule 144 if such securities then held by such Holder constitute less
than one percent of the Company's outstanding equity securities, or (d) shares
of Common Stock which would otherwise be Founder Registrable Securities that
have been sold in a private transaction in which the transferor's rights under
this Agreement are not assigned pursuant to Section 9.11 hereof.

        "HOLDER" means any person owning or having the right to acquire
Registrable Securities.

        "INVESTOR REGISTRABLE SECURITIES" means (i) the Common Stock issuable or
issued upon conversion of the Preferred Stock owned of record by any Investor as
of the date such Investor executes this Agreement, and (ii) any Common Stock or
other common stock issued (or issuable upon the conversion or exercise of any
warrant, option, right or other security which is issued) with respect to the
securities referred to in clause (i) by way of a stock dividend or stock split
or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization, and (iii) any other shares of Common
Stock held by or issuable upon conversion or exercise of other securities held
by persons holding securities described in clauses (i) or (ii) above; provided,
however, that Investor Registrable Securities shall not include any (a) shares
of Common Stock which have previously been registered, (b) shares of Common
Stock which have previously been sold to the public, (c) shares of Common Stock
which would otherwise be Investor Registrable Securities held by a Holder who is
then permitted to sell all of such securities within any three (3) month period
following the Company's initial public offering pursuant to Rule 144 if such
securities then held by such Holder constitute less than one percent of the
Company's outstanding equity securities, or (d) shares of Common Stock which
would otherwise be Investor Registrable Securities that have been sold in a
private transaction in which the transferor's rights under this Agreement are
not assigned pursuant to Section 9.11 hereof.

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

        "PERMITTED TRANSFER" means any transfer of the Company's securities (i)
to an Affiliate company in the case of a transferor that is a corporation, (ii)
to any of its general or limited partners or any Affiliate thereof in the case
of a transferor that is a partnership, (iii) to its members or any Affiliates
thereof in the case of a transferor that is a limited liability company, and
(iv) in the case of a transferor that is an individual, to any spouse (or
ex-spouse), or to any parents, brothers, sisters, children (natural or adopted),
stepchildren or grandchildren of such individual or his or her spouse, or to a
trust for any of their benefit or for the benefit of the transferor, or any
transfer not involving a change in the beneficial ownership of the Company's
securities (each, a "PERMITTED TRANSFEREE"); provided, that, prior to such
transfer, such Permitted Transferee shall agree in writing to be bound by the
terms and conditions of this Agreement.

        "PREFERRED STOCK" means all shares of the Company's Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred
Stock and Series E Preferred Stock outstanding as of the date in question.

        "QUALIFIED PUBLIC OFFERING" means the first firmly underwritten public
offering of the Company's Common Stock


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pursuant to a registration statement (other than a registration statement
relating either to the sale of securities to employees or consultants of the
Company pursuant to a stock option, stock purchase or similar plan or a SEC Rule
145 transaction) under the 1933 Act in which the per share price is not less
than $7.00 (adjusted to reflect subsequent stock dividends, stock splits or
recapitalizations) and the aggregate offering price is $15,000,000 or more;
provided that immediately after such sale the Company's Common Stock will be
listed on the Nasdaq National Market System or a national exchange.

        "REGISTER," "REGISTERED," and "REGISTRATION" refer to a registration
effected by preparing and filing a registration statement or similar document in
compliance with the 1933 Act, and the declaration or ordering of effectiveness
of such registration statement or document.

        "REGISTRABLE SECURITIES" shall mean, collectively, the Investor
Registrable Securities, the Founder Registrable Securities, and the Additional
Registrable Securities.

        "SALE SHARES" means securities of the Company that a Designated
Shareholder desires to transfer and which have been identified in a First
Refusal Notice delivered under Section 4.1 hereof

        "SEC" shall mean the Securities and Exchange Commission.

        "VENTURE INVESTOR" means any of Lucent Venture Partners Inc., Worldview
Technology Partners I, L.P., Worldview Technology International I, L.P.,
Worldview Strategic Partners I, L.P., TCV III (Q), L.P., Charter Growth Capital,
L.P. and Bell Canada.

       1.3 Other Definitions. Other terms not defined in Section 1.2 above shall
have the meanings assigned to them elsewhere in this Agreement.

                         SECTION 2 - REGISTRATION RIGHTS

       2.1 Request for Registration.

               (a) If the Company shall receive, at any time after the earlier
of (A) the third anniversary of the date hereof, or (B) 180 days after the
completion of any Qualified Public Offering, written request from the Holders of
at least 50% of the Investor Registrable Securities (the "INVESTOR INITIATING
HOLDERS") that the Company file a registration statement under the 1933 Act, the
Company shall, provided that in the case of clause (A) above such registration
statement shall contain a per share offering price of not less than $5.00
(adjusted to reflect subsequent stock



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dividends, stock splits or recapitalizations) and shall cover at least that
number of Registrable Securities that would result in an aggregate offering of
at least $15,000,000:

                          (i) promptly give written notice of such request to
all other Holders; and

                          (ii) as soon as practicable, use all commercially
reasonable efforts to prepare and file a registration statement with the SEC and
applicable state regulatory authorities, providing, subject to the limitations
of subsection 2.1(b), for the registration under the 1933 Act of (x) all
Registrable Securities that the Holders request to be registered within fifteen
(15) days of the date the notice required by Section 2.1(a)(i) was given to the
Holders and (y) such additional securities as the Company may desire to
register, including, but not limited to, securities of the Company which are
held by officers or directors of the Company or which are held by persons who,
by virtue of agreements with the Company, are entitled to include their
securities in any such registration.

               (b) If the Investor Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
subsection 2.1(a) and the Company shall include such information in the written
notice referred to in subsection 2.1(a)(i). The underwriter will be selected by
the Company and shall be reasonably acceptable to a majority in interest of the
Investor Initiating Holders. In such event, the right of any Holder to include
his Registrable Securities in such registration shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. If
officers or directors of the Company shall request inclusion of securities of
the Company other than Registrable Securities in any registration pursuant to
this Section 2.1, or if holders of securities of the Company who are entitled by
contract with the Company to have securities included in such a registration
(such officers, directors, and other shareholders being collectively referred to
as the "OTHER SHAREHOLDERS") request such inclusion, such securities of the
Other Shareholders may be included in the underwriting, provided that such Other
Shareholders accept the further applicable provisions of this Agreement. All
Holders proposing to distribute their Registrable Securities through such
underwriting shall (together with the Company as provided in subsection 2.4(e))
enter into an underwriting agreement in customary form with the underwriter
selected for such underwriting. Notwithstanding any other provision of this
Section 2.1, if the underwriter advises the Company in writing (with a copy to
the Investor Initiating Holders) that marketing factors require a limitation of
the number of shares to be underwritten, then the Company shall so advise all
Holders of Registrable Securities which would otherwise be underwritten pursuant
hereto, and the number of shares of securities that are entitled to be included
in the registration and underwriting shall be allocated in the following
priority:

                          (i) first, the Investor Registrable Securities and
Additional Registrable Securities requested to be included in such registration
(pro rata among the Holders of such Investor Registrable Securities and
Additional Registrable Securities on the basis of the number of Investor
Registrable Securities and Additional Registrable Securities then held by each
such Holder);


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                          (ii) second, Founder Registrable Securities requested
to be included in such registration, (pro rata among the Holders on the basis of
the number of Founder Registrable Securities then held by each such Holder); and

                          (iii) third, among all Other Shareholders in
proportion, as nearly as practicable, to the amounts of securities which they
had requested to be included in such registration at the time of filing the
registration statement.

        If any Holder of Registrable Securities or Other Shareholder disapproves
of the terms of any such underwriting, such person may elect to withdraw
therefrom by written notice to the Company and the underwriter. Any Investor
Registrable Securities excluded or withdrawn from such underwriting shall be
withdrawn from such registration. If the underwriter has not limited the number
of Investor Registrable Securities or other securities to be underwritten, the
Company may include its securities for its own account in such registration if
the underwriter so agrees and if the number of Investor Registrable Securities
and other securities which would otherwise have been included in such
registration and underwriting will not thereby be limited. To facilitate the
allocation of shares in accordance with the above provisions, the Company or the
Underwriter may round the number of shares allocated to any holder to the
nearest one hundred (100) shares.

               (c) Notwithstanding the foregoing, if the Company shall furnish
to the Investor Initiating Holders a certificate signed by the Chief Executive
Officer of the Company stating that in the good faith judgment of the Board of
Directors of the Company, it would be seriously detrimental to the Company and
its shareholders for such registration to be filed on or before the time filing
would be required or to become effective, the Company shall have the right to
defer taking action with respect to such registration for a period of not more
than one hundred twenty (120) days after receipt of the request of the Investor
Initiating Holders; provided, however, that the Company may not utilize this
right more than once in any twelve-month period.

               (d) In addition, the Company shall not be obligated to file or
effect, or to take any action to file or effect, any registration pursuant to
this Section 2.1:

                          (i) In any particular jurisdiction in which the
Company would be required to execute a general consent to service of process in
effecting such registration, qualification or compliance, unless the Company is
already subject to service in such jurisdiction and except as may be required by
the 1933 Act;

                          (ii) After the Company has effected two (2)
registrations pursuant to this Section 2.1 and such registrations have been
declared or ordered effective;

                          (iii) During the period starting with the date sixty
(60) days prior to the Company's good faith estimate of the date of filing of,
and ending on a date one hundred eighty (180) days after the effective date of,
a registration subject to this Section 2; or




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                          (iv) If the Investor Initiating Holders propose to
dispose of shares of Registrable Securities that may be immediately registered
on Form S-3 pursuant to Section 2.3 below.

               (e) The Company shall bear and pay all expenses incident to the
Company's performance of or compliance with its obligations under this Agreement
in connection with registrations, filings or qualifications of Registrable
Securities pursuant to Section 2.1, including (without limitation) all
registration, filing and qualification fees, printers' and accounting fees, fees
and disbursements of counsel for the Company (including fees and disbursements
of counsel for the Company in its capacity as counsel to the selling Holders
hereunder; if Company counsel does not make itself available for this purpose,
the Company will pay the reasonable fees and disbursements of one counsel for
all of the selling Holders); provided, however, that the Company shall not be
required to pay for any expenses of any registration proceeding begun pursuant
to Section 2.1 if the registration request is subsequently withdrawn at the
request of the Holders of a majority of the Registrable Securities to be
registered (in which case all participating Holders shall bear such expenses pro
rata in proportion to the number of Registrable Securities proposed to be sold
by each Holder), unless (i) the Holders of a majority of the Investor
Registrable Securities agree to forfeit their right to one demand registration
pursuant to this Section 2.1, or (ii) at the time of such withdrawal, the
Holders have learned of a material adverse change in the condition, business, or
prospects of the Company from that known to the Holders at the time of their
request and have withdrawn the request with reasonable promptness following
disclosure by the Company of such material adverse change, then the Holders
shall not be required to pay any of such expenses and shall retain their rights
pursuant to Section 2.1. The Holders including Registrable Securities in such
registration statements shall bear all underwriting discounts and commissions,
if any, in respect of the Registrable Securities, pro rata in proportion to the
number of Registrable Securities being sold by each Holder.

               (f) The right for Investors to cause the Company to register
Registrable Securities under this Section 2.1 shall terminate upon the earlier
of eight (8) years from the date hereof or three (3) years after a Qualified
Public Offering.

        2.2 Company Registration.

               (a) If after the completion of any Qualified Public Offering the
Company proposes to register (including for this purpose a registration effected
by the Company for shareholders other than the Holders) any of its stock or
other securities under the 1933 Act in connection with the public offering of
such securities solely for cash (other than a registration relating solely to
the sale of securities to participants in a Company stock or other employee
benefit plan, a registration relating solely to a Rule 145 transaction, or a
registration on any form which does not permit secondary sales or does not
include substantially the same information as would be required to be included
in a registration statement covering the sale of the Registrable Securities),
the Company shall, at such time, promptly give each Holder written notice of
such registration. Upon the written request of each Holder given within fifteen
(15) days after the Company gives such notice, the Company shall, subject to the
provisions of Subsections 2.2(b) and (c), include in the registration



                                      -8-
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statement to be filed all of the Registrable Securities that each such Holder
has requested to be registered.

               (b) The Company shall not be required under Section 2.2(a) to
include any of a Holder's Registrable Securities in a registered public offering
involving an underwriting unless such Holder accepts the terms of the
underwriting as agreed upon between the Company and the underwriter selected by
the Company.

               (c) If the total amount of securities, including Registrable
Securities, requested to be included in such offering exceeds the amount of
securities that the underwriters determine in their sole discretion is
compatible with the success of the offering, then the Company shall be required
to include in the offering only that number of such securities, including
Registrable Securities, that the underwriters determine in their sole discretion
will not jeopardize the success of the offering. If the underwriters determine
that the number of shares to be included in the registration must be limited,
the Company shall so advise all holders of securities requesting registration,
and the number of shares of securities that are entitled to be included in the
registration and underwriting shall be allocated according to the following
priority:

                          (i) first, the securities the Company proposes to
sell;

                          (ii) second, the Investor Registrable Securities and
Additional Registrable Securities requested to be included in such registration,
pro rata among the Holders of such Investor Registrable Securities and
Additional Registrable Securities on the basis of the number of Investor
Registrable Securities and Additional Registrable Securities then held by each
such Holder;

                          (iii) third, the Founder Registrable Securities
requested to be included in such registration, pro rata among the Holders of
such Founder Registrable Securities on the basis of the number of Founder
Registrable Securities then held by each such Holder;

                          (iv) fourth, other securities requested to be included
in such registration.

        To facilitate the allocation of shares in accordance with the above
provision, the Company may round the number of shares allocated to any holder to
the nearest one hundred (100) shares. If any holder disapproves of the terms of
any such underwriting, he may elect to withdraw therefrom by written notice to
the Company and the underwriters. Any Registrable Securities or other securities
excluded or withdrawn from such underwriting shall be withdrawn from such
registration.

               (d) The Company shall bear and pay all expenses, incident to the
Company's performance of, or compliance with, its obligations under this
Agreement in connection with any registration, filing or qualification of
Registrable Securities with respect to the registrations pursuant to this
Section 2.2, including (without limitation) all registration, filing, and
qualification fees, printers and accounting fees relating or apportionable
thereto and the fees and disbursements of counsel for the Company in its
capacity as counsel to the selling Holders hereunder (if Company



                                      -9-
<PAGE>   13

counsel does not make itself available for this purpose, the Company will pay
the reasonable fees and disbursements of one counsel for the selling Holders).
The Holders including Registrable Securities in such registration statements
shall bear all underwriting discounts and commissions, if any, in respect of the
Registrable Securities, pro rata in proportion to the number of Registrable
Securities being sold by each Holder.

        2.3 Form S-3 Registration. If the Company receives from any Holder or
Holders of the lesser of (i) at least 20% of the outstanding Registrable
Securities or (ii) outstanding Registrable Securities having a market value at
the time of such request of at least $40,000,000 (market value being the average
of the closing stock price of Company Common Stock during the ten trading days
prior to such request) in either case a written request that the Company effect
a registration on Form S-3 with respect to all or a part of the Registrable
Securities owned by such Holder or Holders, the Company will:

               (a) promptly give written notice of the proposed registration to
all other Holders of the receipt of a request for registration pursuant to this
Section 2.3 and shall provide a reasonable opportunity for all such other
Holders to participate in the registration; and

               (b) prepare and file a registration statement covering such
Registrable Securities and all or such portion of the Registrable Securities of
any other Holder(s) joining in such request as are specified in a written
request given within fifteen (15) days after the date the Company gave such
written notice; provided, however, that the Company shall not be obligated to
file or effect any such registration pursuant to this Section 2.3 (i) if Form
S-3 is not available for such offering by the Holders; (ii) if the Holders,
together with the holders of any other securities of the Company entitled to
inclusion in such registration, propose to sell Registrable Securities and such
other securities (if any) at an aggregate price to the public of less than
$1,000,000; (iii) within one hundred eighty (180) days following the effective
date of a registration statement filed by the Company pursuant to a request by
any of the Holders under this Agreement, (iv) prior to one hundred eighty (180)
days following the effective date of a Company-initiated registration (other
than a registration effected solely to qualify an employee benefit plan or to
effect a business combination pursuant to Rule 145), or (v) if the Company shall
furnish to the Holders a certificate signed by the chief executive officer of
the Company stating that in the good faith judgment of the Board of Directors of
the Company, it would be seriously detrimental to the Company and its
shareholders for such Form S-3 registration to be filed or effected at such
time, in which event the Company shall have the right to defer the filing of the
Form S-3 registration statement for a period of not more than 90 days after the
Holders' request was given under this Section 2.3; provided, however, that the
Company shall not utilize this right more than once in any twelve (12) month
period. In the event the underwriters determine that market factors require a
limitation on the number of shares to be underwritten pursuant to a registration
effected under this Section 2.3, then shares shall be excluded from such
registration and underwriting pursuant to the method described in Section
2.1(b).

               (c) bear and pay all expenses, incident to the Company's
performance of or compliance with its obligation under this Agreement in
connection with any registration requested pursuant to this Section 2.3,
including (without limitation) all registration, filing, qualification,




                                      -10-
<PAGE>   14

printer's and accounting fees relating or apportionable thereto and the fees and
disbursements of one counsel for the selling Holders them). The Holders
including Registrable Securities in such registration statement shall bear all
underwriters' discounts and commissions, if any, in respect of the Registrable
Securities pro rata in proportion to the number of Registrable Securities being
sold by each Holder. Registrations effected pursuant to this Section 2.3 shall
not be counted as demands for registration or registrations effected pursuant to
Section 2.1.

        2.4 Obligations of the Company. Whenever required under this Section 2
to effect the registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible:

               (a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective, and, upon the request of the Holders
of a majority of the Registrable Securities registered thereunder, keep such
registration statement effective until the earlier of the expiration of the
90-day period following effectiveness of such registration statement or the
completion of the distribution contemplated in such registration statement.

               (b) Prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
1933 Act with respect to the disposition of all Registrable Securities covered
by such registration statement.

               (c) Furnish to the Holders such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
1933 Act, and such other documents as they may reasonably request in order to
facilitate the disposition of Registrable Securities owned by them.

               (d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities laws of such
jurisdictions as shall be reasonably requested by the Holders; provided that the
Company shall not be required in connection therewith or as a condition thereto
to qualify to do business or to file a general consent to service of process in
any such states or jurisdictions, unless the Company is already subject to
service in such jurisdiction and except as may be required by the 1933 Act.

               (e) In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.

               (f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the 1933 Act of the happening of any event as a
result of which the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact regarding the Company
or omits to state a material fact regarding the Company required to be stated
therein or necessary to



                                      -11-
<PAGE>   15

make the statements therein regarding the Company not misleading in the light of
the circumstances then existing.

               (g) Cause all such Registrable Securities registered hereunder to
be listed on each securities exchange, Nasdaq National Market, Nasdaq SmallCap
Market or over-the-counter market on which similar securities issued by the
Company are then listed, or, if no such securities are then listed, on an
exchange or market whose listing requirements the Company and the Registrable
Securities satisfy, if any.

               (h) Provide a transfer agent and registrar for all Registrable
Securities registered hereunder and a CUSIP number for all such Registrable
Securities, in each case not later than the effective date of such registration.

               (i) Furnish, at the request of any Holder requesting registration
of Registrable Securities pursuant to this Section 2, on the date that such
Registrable Securities are delivered to the underwriters for sale in connection
with a registration pursuant to this Section 2, if such securities are being
sold through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective, (i) an opinion, dated such date, of the counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities and (ii) a letter dated such date, from
the independent certified public accountants of the Company, in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities.

        2.5 Furnish Information. Each selling Holder shall, as a condition to
including Registrable Securities in such registration statement, furnish to the
Company and to the underwriter, if any, such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as the Company and any such underwriter may from time to time
reasonably request in writing in connection with such registration statement. At
any time during the effectiveness of any registration statement covering
Registrable Securities offered by a Holder, if such Holder becomes aware of any
change materially affecting the accuracy of the information contained in such
registration statement or the prospectus (as then amended or supplemented)
relating to such Holder, it shall immediately notify the Company of such change.

        2.6 Delay of Registration. No Holder shall have any right to obtain or
seek an injunction restraining or otherwise delaying any registration as the
result of any controversy that might arise with respect to the interpretation or
implementation of this Section 2.

        2.7 Indemnification. In the event any Registrable Securities are
included in a registration statement under this Section 2:

               (a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, any underwriter (as defined in the 1933 Act) for
such Holder and each person, if any,



                                      -12-
<PAGE>   16

who controls such Holder or underwriter within the meaning of the 1933 Act or
the 1934 Act, against any losses, claims, damages, or liabilities (joint or
several) to which they may become subject under the 1933 Act, the 1934 Act or
other federal or state securities laws, insofar as such losses, claims, damages,
or liabilities (or actions in respect thereof) arise out of or are based upon
any of the following statements, omissions or violations (collectively a
"Violation"): (i) any untrue statement or alleged untrue statement of a material
fact contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading, or (iii) any violation by the Company of the 1933 Act,
the 1934 Act, any state securities law or any rule or regulation promulgated
under the 1933 Act, the 1934 Act, or any state securities law applicable to the
Company and relating to action or inaction required of the Company in connection
with any registration or qualification that has been effected pursuant to this
Section 2; and the Company will pay to each such Holder, underwriter or
controlling person, as incurred, any legal or other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
damage, liability, or action; provided, however, that the indemnity agreement
contained in this subsection 2.7(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable in any such case
for any such loss, claim, damage, liability, or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by any such Holder, underwriter or controlling person;
and provided, further, that the Company shall not be liable with respect to any
loss, claim, damage or liability with respect to any person who purchased
Registrable Securities and to whom there was not sent or who was not given a
copy of any amended or final prospectus with respect to such Registrable
Securities, if (x) such loss, claim, damage or liability results from an untrue
statement or an omission or alleged untrue statement or omission contained in
any preliminary or other prospectus that was corrected in such amended or final
prospectus and (y) the Company had previously furnished copies of such amended
or final prospectus to such Holder or the underwriters for such Holder.

               (b) To the extent permitted by law, each selling Holder
(severally and not jointly) will indemnify and hold harmless the Company, each
of its directors, each of its officers who has signed the registration
statement, each person, if any, who controls the Company within the meaning of
the 1933 Act, any underwriter, any other Holder selling securities in such
registration statement and any controlling person of any such underwriter or
other Holder, against any losses, claims, damages, or liabilities (joint or
several) to which any of the foregoing persons may become subject, under the
1933 Act, the 1934 Act or other federal or state securities laws, insofar as
such losses, claims, damages, or liabilities (or actions in respect thereto)
arise out of or are based upon any Violation, in each case to the extent (and
only to the extent) that such Violation occurs in reliance upon and in
conformity with written information furnished by such Holder expressly for use
in connection with such registration or to the extent that such loss, claim,
damage or liability is with respect to any person who purchased Registrable
Securities and to whom there was not sent or who was not given a copy of any
amended or final prospectus with respect to such Registrable Securities, if (x)
such loss,



                                      -13-
<PAGE>   17

claim, damage or liability results from an untrue statement or an omission or
alleged untrue statement or omission contained in any preliminary or other
prospectus that was corrected in such amended or final prospectus and (y) the
Company had previously furnished copies of such amended or final prospectus to
such Holder or the underwriters for such Holder; and each such Holder will pay
any legal or other expenses reasonably incurred by any person intended to be
indemnified pursuant to this subsection 2.7(b), in connection with investigating
or defending any such loss, claim, damage, liability, or action as such expenses
are incurred; provided, however, that the indemnity agreement contained in this
subsection 2.7(b) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Holder, (which consent shall not be unreasonably withheld);
provided further, that, in no event shall any indemnity under this subsection
2.7(b) exceed the net proceeds from the offering received by such Holder.

               (c) Promptly after receipt by an indemnified party under this
Section 2.7 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 2.7, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties that may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
2.7, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 2.7. Each Indemnified Party shall furnish such
information regarding itself or the claim in question as an Indemnifying Party
may reasonably request in writing and as shall be reasonably required in
connection with defense of such claim and litigation resulting therefrom. No
indemnifying party in the defense of any such claim or litigation shall, except
with the consent of each indemnified party, consent to entry of any judgment or
enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect to such claim or litigation.

               (d) If the indemnification provided for in this Section 2.7 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage, or expense referred to
herein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage, or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the



                                      -14-
<PAGE>   18

indemnified party on the other in connection with the Violations that resulted
in such loss, liability, claim, damage, or expense as well as any other relevant
equitable considerations. The relative fault of the indemnifying party and of
the indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission; provided that in the event that any contribution under
this Section 2.7(d) shall be made by any Investor Indemnifying Party, the amount
thereof shall not exceed the net proceeds from the offering received by such
Investor Indemnifying Party.

               (e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in an underwriting
agreement entered into by both the indemnified party and the indemnifying party
in connection with the underwritten public offering are in conflict with the
foregoing provisions, the provisions in the underwriting agreement shall
control.

               (f) The obligations of the Company and Holders under this Section
2.7 shall survive the completion of any offering of Registrable Securities in a
registration statement under this Section 2, and otherwise.

        2.8 Reports Under Securities Exchange Act of 1934. With a view to making
available to the Holders the benefits of Rule 144 promulgated under the 1933 Act
and any other rule or regulation of the SEC that may at any time permit a Holder
to sell securities of the Company to the public without registration or pursuant
to a registration on Form S-3, the Company agrees that, following the completion
of any Qualified Public Offering, the Company shall:

               (a) make and keep public information available, as those terms
are understood and defined in SEC Rule 144, at all times after ninety (90) days
after the effective date of such Qualified Public Offering to the extent
required under the 1933 Act;

               (b) take such action, including the voluntary registration of its
Common Stock under Section 12 of the 1934 Act, as is necessary to enable the
Holders to utilize Form S-3 for the sale of their Registrable Securities, such
action to be taken as soon as practicable after the end of the fiscal year in
which the registration statement relating to such Qualified Public Offering is
declared effective;

               (c) prepare and file with the SEC in a timely manner all reports
and other documents required of the Company under the 1933 Act and the 1934 Act
at any time after it has become subject to such reporting requirements; and

               (d) furnish to any Holder forthwith upon written request (i) a
written statement by the Company that it has complied with the reporting
requirements of SEC Rule 144 (at any time after ninety (90) days after the
effective date of the registration statement relating to such Qualified Public
Offering), the 1933 Act and the 1934 Act (at any time after it has become
subject to such reporting requirements), or that it qualifies as a registrant
whose securities may be resold pursuant to Form S-3 (at any time after it so
qualifies), and (ii) a copy of the most recent annual or quarterly report of the




                                      -15-
<PAGE>   19

Company and such other reports and documents so filed by the Company with the
SEC on a non-confidential basis that such Holder may reasonably request in
availing itself of any rule or regulation of the SEC which permits the selling
of any such securities without registration or pursuant to such form at any time
after the Company has become subject to the reporting requirements of the 1934
Act.

        2.9 Limitations on Subsequent Registration Rights. From and after the
date of this Agreement, the Company shall not, without the prior written consent
of the Holders of at least a majority of the then outstanding Investor
Registrable Securities enter into any agreement with any holder or prospective
holder of any securities of the Company that would allow such holder or
prospective holder (a) to include such securities in any registration filed
under Section 2.1, Section 2.2, or Section 2.3 unless under the terms of such
agreement, such holder or prospective holder may include such securities in any
such registration only to the extent that the inclusion of his securities will
not reduce the amount of the Investor Registrable Securities of the Holders (or
shares of any other class or series of capital stock issued on conversion
thereof) which is included or (b) to make a demand registration which could
result in such registration statement being declared effective prior to the
earlier of either of the dates set forth in subsection 2.1(a) or within one
hundred eighty (180) days of the effective date of any registration effected
pursuant to Section 2.1.

        2.10 "Market Stand-Off" Agreement. Each of the parties hereto agrees:

               (a) during a period of time determined by the Company and the
underwriter (not to exceed 180 days in the event of the Company's initial public
offering and 90 days in the event of any other public offering) following the
effective date of a registration statement of the Company filed under the 1933
Act, not to, directly or indirectly, sell, offer to sell, make any short sale
of, loan, grant any option for the purchase of, or otherwise transfer or dispose
of any securities of the Company held by such party that were purchased or
acquired before the effective date of such registration statement filed in
connection with the Company's initial public offering; and

               (b) if so requested by the Company or its underwriters, to enter
into a lockup agreement to the effect set forth in Subsection 2.10(a) above, and
in a form satisfactory to the Company and such underwriter, provided that all
Founders, executive officers, and directors of the Company who then hold Common
Stock (or other securities) of the Company, enter into similar agreements.

        The Company may impose stop-transfer instructions with respect to those
securities subject to the foregoing restrictions until the end of said period.
The foregoing restrictions shall expire two years after the date of the
Company's initial public offering.

        Notwithstanding anything in this Section 2.10 to the contrary, the
foregoing shall not restrict Goldman, Sachs & Co. and its Affiliates from
engaging in any brokerage, investment advisory, financial advisory, anti-raid
advisory, merger advisory, financing, asset management, trading, market making,
arbitrage and other similar activities conducted in the ordinary course of its
or its Affiliates' business, so long as such activities are not conducted in
respect of the shares of Common Stock (or by virtue of a short position
undertaken to benefit from the cover of such shares of Common Stock,



                                      -16-
<PAGE>   20

or the issuance of a derivative security designed to benefit from the value of
such shares of Common Stock) of the Company issuable upon the conversion of the
Series D Preferred Stock purchased by The Goldman Sachs Group, Inc. or Stone
Street Fund 1999, L.P. pursuant to the Purchase Agreement (as hereafter
defined).

                      SECTION 3 - COVENANTS OF THE COMPANY

        The Company hereby covenants and agrees that:

        3.1 Basic Financial Information. For so long as any Holder owns,
separately, or together with any of its Affiliates, 798,000 (500,000 in the case
of Series E Investors) or more shares of Common Stock and Preferred Stock, on an
as if converted basis (adjusted for stock splits, combinations, and the like),
the Company will furnish the following reports to such Holder:

               (a) As soon as practicable after the end of each fiscal year of
the Company, and in any event within ninety (90) days thereafter, a consolidated
balance sheet of the Company and its subsidiaries, if any, as at the end of such
fiscal year, and consolidated statements of income and cash flows of the Company
and its subsidiaries, if any, for such year, prepared in accordance with
generally accepted accounting principles ("GAAP") consistently applied, all in
reasonable detail and certified by an independent public accountant of
recognized national standing selected by the Company; and

               (b) As soon as practicable after the end of the first, second and
third quarterly accounting periods in each fiscal year of the Company, and in
any event within forty-five (45) days thereafter, a consolidated balance sheet
of the Company and its subsidiaries, if any, as of the end of each such
quarterly period, and consolidated statements of income and cash flows of the
Company and its subsidiaries for such period, prepared in accordance with GAAP
consistently applied, subject to changes resulting from year-end audit
adjustments and the absence of notes, all in reasonable detail and certified by
the principal financial or accounting officer of the Company.

        3.2 Additional Information. The Company will permit any Holder, so long
as such Holder owns, separately, or together with any of its Affiliates, 798,000
(500,000 in the case of Series E Investors) or more shares of Common Stock and
Preferred Stock, on an as if converted basis (adjusted for stock splits,
combinations, and the like), to visit, at such person's expense, and inspect any
of the properties of the Company, including its books of account and to discuss
its affairs, finances and accounts with the Company's officers and its
independent public accountants, all at such reasonable times and as often as any
such Holder may reasonably request. In addition, the Company will deliver to
each such Holder who so requests in writing, as soon as available (but in any
event within ninety (90) days after the commencement of its fiscal year) a
summary of the financial plan or annual budget of the Company for the fiscal
year as contained in its operating plan approved by the Company's Board of
Directors.

        3.3 Venture Capital Operating Company. For so long as an Investor's
organizational documents require that the Investor have and maintain the status
of a "venture capital operating company" (a "VCOC") as defined in the Department
of Labor Regulations, Section 25101.3-101(d),



                                      -17-
<PAGE>   21
such Investor shall, in addition to any rights such Investor may have under
Sections 3.1 and 3.2 above, have the following rights:

               (a) Such Investor shall be entitled to consult with and advise
management of the Company on significant business issues, including management's
proposed annual and quarterly operating plans, and management will meet with the
Investor, upon the Investor's written request, within thirty days after the end
of each fiscal quarter at the Company's facilities at mutually agreeable times
for such consultation and advice and to review progress in achieving said plans;

               (b) Such Investor may examine the books and records of the
Company and inspect its facilities, and may request information at reasonable
times and intervals concerning the general status of the Company's financial
condition and operations, provided that access to highly confidential
proprietary information and facilities need not be provided except to the extent
provided to all Investors;

               (c) If such Investor is not represented on the Company's Board of
Directors, such Investor shall be deemed to be a Venture Investor for purposes
of Section 3.7 hereof and shall be entitled to the rights, and subject to the
obligations, of a Venture Investor under such Section; provided, however, that
such Venture Investor need not satisfy any of the share ownership thresholds set
forth in Section 3.7.

        3.4 Board of Directors. Meetings of the Board will be held monthly,
unless the directors agree otherwise. The Company will not incur any costs for
outside directors unless approved by the Board.

        3.5 Notice. The Company shall give each Holder of record of Preferred
Stock written notice of any impending merger or consolidation of the Company
with or into any other corporation or corporations, or a sale or other transfer
in a single transaction or a series of related transactions of all or
substantially all of the assets of the Company not later than twenty (20) days
prior to the shareholders' meeting called to approve such transaction, or twenty
(20) days prior to the closing of the transaction, whichever is earlier, and
will also notify these holders in writing of the final approval of the
transaction. The notice will describe the material terms and conditions of the
impending transaction. The corporation will give the holders prompt notice of
any material changes in the terms and conditions of the impending transaction.

        3.6 Confidential Information. Anything in this Section 3 to the contrary
notwithstanding, no Holder, by reason of this Agreement shall have access to any
trade secrets or classified information of the Company. Each Holder hereby
agrees to hold in confidence and trust and not to misuse or disclose any
confidential or proprietary information provided to such Holder pursuant to this
Section 3. Each Holder further acknowledges and understands that any information
so obtained which may be considered "inside" non-public information will not be
utilized by such Holder in connection with purchases and/or sales of the
Company's securities except in compliance with applicable state and federal
anti-fraud statutes. The Company shall not be required to comply with this
Section 3 in respect of any Holder whom the Company reasonably determines to be
a competitor



                                      -18-
<PAGE>   22
of the Company or an officer, employee, director or greater than ten percent
(10%) stockholder of such competitor.

        3.7 Observer Rights. For so long as a Venture Investor owns at least
1,000,000 shares of Common Stock, on an as if converted basis (adjusted for
stock splits, combinations and the like), and any Series C Investor without
regard to share ownership, such Venture Investor or Series C Investor shall be
entitled to designate, upon written notice to the Company, one (1) individual
reasonably acceptable to the Company (such designee, the "OBSERVER") who shall
be entitled to notice of, to attend, and to any documentation distributed to the
directors before, during or after, all meetings (including any action to be
taken by written consent) of the Board and all committees thereof; provided,
however, that the Company reserves the right to withhold any information and to
exclude such Observer from any meeting or portion thereof if access to such
information or attendance at such meeting could

        (i)    in the judgment of the Company's outside counsel, adversely
               affect the attorney-client privilege between the Company and its
               counsel or cause the Board to breach its fiduciary duties, or

        (ii)   in the good faith determination of a majority of the Board,
               result in a conflict between the interests of the Company and
               those of such Observer, such Venture Investor, such Series C
               Investor or any of their affiliates.

        The Company will use its best efforts to ensure that any withholding of
information or any restriction on attendance is strictly limited only to the
extent necessary set forth in the preceding sentence. Such Observer shall not be
permitted to vote at any meeting of the Board or be counted for purposes of
determining whether there is sufficient quorum for the Board to conduct its
business. Each Venture Investor, Series C Investor and Observer shall maintain
the confidentiality of all financial, confidential and proprietary information
of the Company obtained by them as a result of the rights granted pursuant to
this Section 3.7. By designating an Observer, a Venture Investor or Series C
Investor agrees to cause such Observer upon the Company's request to execute an
agreement providing for nondisclosure of the Company's proprietary information
consistent with such agreements signed by the Company's employees. The parties
hereto hereby acknowledge and agree that, except as set forth in this Section
3.7, an Observer shall not owe any fiduciary or other duties to the shareholders
of the Company or otherwise have any directorial or other duties or liabilities
to the Company or its shareholders as a result of the Observer's exercise of his
rights hereunder. A Venture Investor or Series C Investor shall designate, and
may replace, its Observer with or without cause in its sole discretion by
providing written notice to the Company at least five (5) business days prior to
any such action taking effect. In addition to the limitations set forth in
Section 3.8, any rights granted to an Observer under this Section 3.7 shall
immediately terminate if the Venture Investor who appointed such Observer (x) in
the case of a Venture Investor who is entitled to appoint an observer solely
because of his stock ownership, no longer owns at least 1,000,000 shares of
Common Stock, on an as if converted basis (adjusted for stock splits,
combinations and the like) or (y) in the case of a Venture Investor who is
deemed to be a Venture Investor solely because of his status as a VCOC, no
longer is a VCOC. Exercise of the observer



                                      -19-
<PAGE>   23

rights granted in this Section 3.7 by a transferee or assignee of shares of the
Company's capital stock shall be subject to the Board of Directors prior
resolution that the conditions set forth in Section 9.11 shall all have been
satisfied. Notwithstanding anything contained herein to the contrary, the
Company's failure to comply with any provision of this Section 3.7 shall not
affect the validity of any action taken (whether at a meeting or by written
consent) by the Board, or any committee thereof, or by any or all of the
Company's stockholders.

        3.8 Liquidation Event Notice. The Company shall give each Series E
Investor no less than ten days advance notice of any Liquidation Event (as
defined in the Restated Articles).

        3.9 Termination of Covenants. The covenants set forth in this Section 3
shall terminate and be of no further force or effect upon the earliest to occur
of (a) the closing of any Qualified Public Offering, (b) the date on which this
Agreement is terminated by a writing executed by the parties hereto, (c) the
dissolution of the Company, (d) a Change of Control Transaction or (e)
consummation of the sale of all or substantially all of the assets of the
Company; provided, however, that the confidentiality provisions of this Section
3 will survive any such termination.

        3.10 Waiver. Any right granted to a Holder or Subsequent Investor
pursuant to this section 3 may be waived as to all Holders or Subsequent
Investors entitled to such right by a majority of the sum of (a) number of the
outstanding shares of Common Stock held by the Holders or Subsequent Investors,
as the case may be, who are entitled to such right, plus (b) the number of
shares of Common Stock issuable upon conversion in full of all shares of
outstanding Preferred Stock then held by such Holders or Subsequent Investors.

                       SECTION 4 - RIGHT OF FIRST REFUSAL

        4.1 First Refusal Notice. If a Designated Shareholder desires to
transfer any securities of the Company owned by it, then at least 60 days prior
to such transfer, other than a Permitted Transfer, such Designated Shareholder
must give notice (the "FIRST REFUSAL NOTICE") to the Company, the Founders, and
the Investors, of its intention to effect such transfer. The First Refusal
Notice must set forth (a) the number and class of Sale Shares to be sold by the
Designated Shareholder, (b) the date or proposed date of such transfer and the
name and address of the transferee (the "DISCRETIONARY TRANSFEREE"), (c) the
principal terms of such transfer, including the cash or other property or
consideration to be received upon such transfer, and (d) the percentage which
the number of Sale Shares constitutes with respect to the aggregate number of
securities of the Company then held by the transferring Designated Shareholder.
The Company, the Founders, and the Investors agree to keep the information
contained in the First Refusal Notice confidential if so requested by the
Designated Shareholder.

        4.2 Company's Option. The Company shall have the option, but not the
obligation, to purchase all, but not less than all of the Sale Shares on the
same terms as specified in the First Refusal Notice. Within 20 days after the
date the First Refusal Notice is given, the Company shall give written notice to
the transferring Designated Shareholder and the Investors stating its intention
to exercise such option, and a date and time for consummation of the purchase
not less than 60 days nor more than 90 days after the date the First Refusal
Notice was given. Failure by the Company to give such notice within such time
period shall be deemed an election by it not to exercise its option.



                                      -20-
<PAGE>   24

        4.3 Investors' and Founders' Option.

               (a) If the Company fails to exercise the option with respect to
all of the Sale Shares, each of the Investors and Founders (or any combination
thereof) shall have the option, but not the obligation, to purchase all but not
less than all of the Sale Shares on the same terms as specified in the First
Refusal Notice. After the expiration of the 20 day period in Section 4.2 hereof,
but within 30 days after the First Refusal Notice is given, any electing
Investor or Founder shall give written notice to the transferring Designated
Shareholder and the Company stating that it elects to exercise its option and a
date and time for consummation of the purchase not more than 90 days after the
date the First Refusal Notice is given. Failure by an Investor or Founder to
give such notice within such time period shall be deemed an election by it not
to exercise its option. If more than one Investor and/or Founder exercises this
option, the number of Sale Shares that each such Investor and/or Founder shall
be entitled to purchase shall be equal to such Investor's or Founder's Pro Rata
Share.

               (b) "PRO RATA SHARE" of the Investor or Founder for purposes of
this Section 4 shall be calculated as of the date of the First Refusal Notice
and shall be determined by dividing:

                          (i) the sum of (A) the number of outstanding shares of
Common Stock then held by such Investor or Founder, plus (B) the number of
shares of Common Stock issuable upon conversion in full of all shares of
outstanding Preferred Stock then held by such Investor or Founder; by

                          (ii) the sum of (A) the number of outstanding shares
of Common Stock then held by all Investors and Founders exercising their option
under this Section 4.3 with respect to the securities to be sold pursuant to
such First Refusal Notice (the "PURCHASING SHAREHOLDERS"), plus (B) the number
of shares of Common Stock issuable upon conversion in full of all outstanding
shares of Preferred Stock then held by all Purchasing Shareholders.

        4.4 Transfer of Sale Shares. Subject to Section 6 of this Agreement
regarding co-sale rights of Investors and Founders, if none of the Company, the
Founders, or the Investors elect to exercise their rights to purchase the Sale
Shares pursuant to this Section 4, the Designated Shareholder may, within 60
days of the expiration of the Investors' and Founders' option pursuant to
Section 4.3, transfer the Sale Shares to the Discretionary Transferee on the
terms and condition set forth in the First Refusal Notice; provided that, if
such transferee will, after such transfer, be an officer, director, or holder of
2% or more of the Company's outstanding Common Stock and Preferred Stock, on an
as if converted basis, then prior to such transfer the Discretionary Transferee
shall agree in writing to be bound by the terms and conditions of this
Agreement.

        4.5 Transfers Void. Any attempted transfer in violation of the terms of
this Section 4 shall be ineffective to vest in any Discretionary Transferee any
interest held by the transferring Designated Shareholder in the shares. Without
limiting the foregoing, any purported transfer in violation hereof shall be
ineffective as against the Company, and the Company, the Investors, and the
Founders shall have a continuing right and option (but not an obligation), until
the restrictions contained in this Section 4 terminate, to purchase the
securities purported to be transferred by the Designated



                                      -21-
<PAGE>   25

Shareholder in violation of this Section 4 for a price and on terms the same as
those at which the purported transfer was effected.

        4.6 Exempt Transfers. Notwithstanding the foregoing, the provisions of
Sections 4.1 through 4.5 shall not apply to (i) any Permitted Transfer; (ii) any
repurchase of a Designated Shareholders' unvested shares pursuant to a stock
restriction agreement; or (iii) any bona fide gift or pledge; provided that (A)
the transferring Designated Shareholder shall inform the Company of such pledge,
transfer or gift prior to effecting it and (B) the pledgee, Permitted Transferee
or donee shall furnish the Company with a written agreement executed by such
pledgee, Permitted Transferee, or donee, whereby such pledgee, Permitted
Transferee, or donee agrees to be bound by and comply with all provisions of
this Agreement as well as any and all other stock restrictions that the Company
may reasonably request. Such transferred Sale Shares shall remain "Sale Shares"
hereunder, and such pledgee, Permitted Transferee or donee shall be treated as a
"DESIGNATED SHAREHOLDER" for purposes of this Agreement.

        4.7 Termination of Restrictions. The provisions of this Section 4 shall
terminate upon the earliest to occur of (a) the closing of any Qualified Public
Offering, (b) the date on which this Agreement is terminated by a writing
executed by the parties hereto, (c) the dissolution of the Company, (d) the
effective date of a Change of Control Transaction, or (e) consummation of the
sale of all or substantially all of the assets of the Company.

        4.8 Waiver. The option granted to the Investors and Founders in Section
4.3 as to any proposed transfer pursuant to a First Refusal Notice may be waived
as to all Investors and Founders in advance of or after such transfer by a
majority of the sum of (a) number of the outstanding shares of Common Stock held
by the Investors and Founders as of the date of the First Refusal Notice, plus
(b) the number of shares of Common Stock issuable upon conversion in full of all
shares of outstanding Preferred Stock then held by the Investors and Founders.

        SECTION 5 - RIGHT OF FIRST REFUSAL TO SUBSCRIBE FOR NEW ISSUANCES

        5.1 Grant of Right of First Refusal. For so long as an Investor or
Founder owns, separately, or together with any of its Affiliates, 798,000
(500,000 in the case of Series E Investors) or more shares of Common Stock and
Preferred Stock, on an as if converted basis (adjusted for stock splits,
combinations, and the like), such Investor or Founder shall have the right of
first refusal (the "RIGHT OF FIRST REFUSAL") with respect to future sales by the
Company of New Securities (as defined in Section 5.5 below) in accordance with
the provisions of this Section 5.

        5.2 First Offer Notice. Each time the Company proposes to offer any New
Securities for sale, the Company shall give a notice ("FIRST OFFER NOTICE") to
each such Investor and each such Founder stating (i) its bona fide intention to
offer such securities, (ii) the total number of such securities to be offered,
(iii) the number of securities to be offered to such Investor or Founder
pursuant to this Section 5 (i.e., such Investor's or Founder's Pro Rata Share of
such securities), and (iv) the price and terms, if any, upon which it proposes
to offer such securities.




                                      -22-
<PAGE>   26

        5.3 Investor/Founder Election. Within ten (10) days after the First
Offer Notice is given, each Investor and each Founder may elect to purchase or
obtain, at the price and on the terms specified in the First Offer Notice, up to
its Pro Rata Share of such securities.

               (a) "PRO RATA SHARE" of an Investor or Founder for purposes of
this Section 5 shall be calculated as of the date of the relevant First Offer
Notice and shall be determined by dividing:

                          (i) the sum of (A) the number of outstanding shares of
Common Stock then held by such Investor or Founder plus (B) the number of shares
of Common Stock issuable upon conversion in full of all shares of outstanding
Preferred Stock then held by such Investor or Founder; by

                          (ii) the sum of (A) the total number of shares of
Common Stock then outstanding, plus (B) the total number of shares of Common
Stock issuable upon conversion in full of all Preferred Stock then outstanding.

        5.4 Company Sale to Third Parties. If all such securities referred to in
the First Offer Notice which the Investors and Founders are entitled to purchase
are not elected to be purchased as provided in Section 5.3 hereof, the Company
may, during the 90-day period following the expiration of the period provided in
Section 5.3 hereof, sell the remaining unsubscribed portion of such securities
to any person or persons at a price not less than, and upon terms no more
favorable to the purchaser than those specified in the First Offer Notice. If
the Company does not sell such securities within such 90-day period, the right
provided hereunder shall be deemed to be revived and such securities shall not
be offered unless first reoffered to the Investors and the Founders in
accordance herewith.

        5.5 Definition of New Securities. "NEW SECURITIES" means any of the
Company's equity securities (as defined in Section 3(a)(11) of the 1934 Act)
except those: (i) issued to the Company's employees, officers, directors or
consultants pursuant to any stock option or other employee benefit plan,
arrangement or agreement approved by the Board of Directors, (ii) issued upon
the conversion of the Company's currently outstanding Preferred Stock (including
the Series E Preferred Stock), (iii) issued pursuant to the exercise or
conversion of options and warrants, (iv) issued in connection with a bona fide
business acquisition of or by the Company, whether by merger, consolidation,
sale of assets, sale or exchange of stock or otherwise, or a joint venture
approved by the Board of Directors, (v) issued in connection with any stock
split, subdivision, stock dividend, distribution, reverse stock split,
combination or reclassification of the Company's securities, (vi) issued to
vendors, customers, lenders or equipment lessors pursuant to any agreement the
terms of which were approved by the Board of Directors, (vii) offered to the
public pursuant to a registration statement filed under the 1933 Act, (viii)
purchased pursuant to that certain Series E Preferred Stock Purchase Agreement
entered into by certain of the parties hereto in conjunction with this Agreement
(the "PURCHASE AGREEMENT"); or (ix) currently authorized and approved for
issuance by the Board of Directors.



                                      -23-
<PAGE>   27

        5.6 Limitation and Apportionment. Subject to the provisions of Section
9.7 hereof, the number of the securities that will be subject to the Investors'
Right of First Refusal under this Section 5 may be limited by agreement among
the Company and the holders of a majority of the shares of Preferred Stock
(voting on an as-if-converted basis) and Common Stock issued upon conversion of
the Preferred Stock. This Right of First Refusal is nonassignable except as
provided in Section 9.11 of this Agreement.

        5.7 Termination of Right of First Offer. The provisions of this Section
5 shall terminate upon the earliest to occur of (a) the closing of any Qualified
Public Offering, (b) the date on which this Agreement is terminated by a writing
executed by the parties hereto, (c) the dissolution of the Company, (d) the
effective date of a Change of Control Transaction, or (e) consummation of the
sale of all or substantially all of the assets of the Company.

        5.8 Waiver. The Right of First Refusal may be waived as to all Investors
and Founders with respect to an issuance of New Securities by a majority of the
outstanding shares of Common Stock and Preferred Stock (voting on an
as-if-converted basis) held by the Founders and Investors entitled to the Right
of First Refusal as of the date of the First Offer Notice.

                               SECTION 6 - CO-SALE

        6.1 Co-Sale Notice. If a Founder proposes to sell or transfer (other
than transfers that are exempt under Section 6.5 below) any Co-Sale Shares in
one or more related transactions which will result in (i) the transfer of
100,000 or more shares of Co-Sale Shares by such Founder or (ii) the transferee
of such shares holding securities representing more than 50% of the voting power
of the Company, the Founder shall promptly give written notice (the "CO-SALE
NOTICE") to the Company, each of the Investors, and to each of the other
Founders ("NON-TRANSFERRING FOUNDERS") at least 30 days prior to the closing of
such sale or transfer. The Co-Sale Notice shall describe in reasonable detail
the terms of the proposed sale or transfer including, without limitation, the
number of Co-Sale Shares to be sold or transferred, the nature of such sale or
transfer, the consideration to be paid, and the name and address of each
prospective purchaser or transferee (the "ACQUIROR"). In the event that the sale
or transfer is being made pursuant to the provisions of Section 6.5 hereof, the
Co-Sale Notice shall state under which subsection thereof the sale or transfer
is being made.

        6.2 Investors' Exercise of Co-Sale Right.

               (a) Each Investor and Non-Transferring Founder shall have the
right, exercisable upon written notice given to such Founder within 10 days
after the date the Co-Sale Notice was given to the Investor or Non-Transferring
Founder, as the case may be, to participate in such sale on the same terms and
conditions specified in the Co-Sale Notice. Each Investor and Non-Transferring
Founder shall have the right to sell all or any part of its Pro Rata Share. To
the extent that one or more of the Investors and/or Non-Transferring Founders
exercise such right of participation, the number of Co-Sale Shares that the
Founder may sell in the transaction shall be correspondingly reduced.



                                      -24-
<PAGE>   28

               (b) "PRO RATA SHARE" of an Investor or Non-Transferring Founder
for the purposes of this Section 6 shall be calculated as of the date of the
Co-Sale Notice and shall be determined by dividing:

                          (i) the sum of (A) the number of outstanding shares of
Common Stock then held by such Investor or Non-Transferring Founder plus (B) the
number of shares of Common Stock issuable upon conversion in full of all shares
of outstanding Preferred Stock then held by such Investor of Non-Transferring
Founder; by

                          (ii) the sum of (A) the number of outstanding shares
of Common Stock then held by all Investors and Founders, plus (B) the number of
shares of Common Stock issuable upon conversion in full of all outstanding
shares of Preferred Stock then held by all Investors and Founders.

        6.3 Mechanics of Co-Sale. Each Investor and Non-Transferring Founder
electing to participate (the "PARTICIPANTS") will effect its participation in
the sale by promptly delivering to the Founder for transfer to the Acquiror one
or more certificates, properly endorsed for transfer, which represent:

               (a) the type and number of shares of Common Stock which such
Participant elects to sell; or

               (b) that number of shares of Preferred Stock which is at such
time convertible into the number of shares of Common Stock which such
Participant elects to sell; provided, however, that if the Acquiror objects to
the delivery of Preferred Stock in lieu of Common Stock, such Participant shall
convert such Preferred Stock into Common Stock and deliver Common Stock as
provided in clause (i) above. The Company agrees to make any such conversion
that is otherwise permitted concurrent with the actual transfer of such shares
to the Acquiror.

        The stock certificate or certificates that the Participant delivers to
the Founder shall be transferred to the Acquiror in consummation of the sale of
Co-Sale Shares pursuant to the terms and conditions specified in the Co-Sale
Notice, and the Founder shall concurrently therewith remit to such Participant
that portion of the sale proceeds to which such Participant is entitled by
reason of its participation in such sale. To the extent that any Acquiror
prohibits such assignment or otherwise refuses to purchase shares or other
securities from a Participant exercising its rights of co-sale hereunder, the
Founder shall not sell to such Acquiror any Co-Sale Shares unless and until,
simultaneously with such sale, the Founder shall purchase such Participant's Pro
Rata Share from such Participant at the price and on the terms specified in the
Co-Sale Notice. The exercise or non-exercise of the rights of Participant
hereunder to participate in one or more sales of Co-Sale Shares made by the
Founder shall not adversely affect their rights to participate in subsequent
sales of Co-Sale Shares subject to Section 6.

        6.4 Sale of Co-Sale Shares to Third Party. If none of the Investors or
Non-Transferring Founders elects to participate in the sale of the Co-Sale
Shares subject to the Co-Sale Notice, the Founder may, not later than 40 days
following the date the Co-Sale Notice is given to the Company



                                      -25-
<PAGE>   29

and each of the Investors and the Non-Transferring Founders of the Co-Sale
Notice, enter into an agreement providing for the closing of the transfer of the
Co-Sale Shares covered by the Co-Sale Notice within 60 days of such agreement on
terms and conditions no more favorable to the transferee than those described in
the Co-Sale Notice. Any proposed transfer on terms and conditions more favorable
than those described in the Co-Sale Notice, as well as any subsequent proposed
transfer of any of the Co-Sale Shares by the Founder, shall again be subject to
the co-sale rights of the Investors and shall require compliance by the Founder
with the procedures described in this Section 6.

        6.5 Exempt Transfers.

               (a) Notwithstanding the foregoing, the provisions of this Section
6 shall not apply to (i) any Permitted Transfer; (ii) any repurchase of a
Founder's unvested shares pursuant to a stock restriction agreement; or (iii)
any bona fide gift or pledge; provided that (A) the Founder shall inform the
Investors and other Founders of such pledge, transfer or gift prior to effecting
it, and (B) the pledgee, Permitted Transferee or donee shall agree in writing to
be bound by and comply with all provisions of this Agreement and any and all
other stock restrictions that the Company may reasonably request. Such
transferred Co-Sale Shares shall remain "Co-Sale Shares" hereunder, and such
pledgee, Permitted Transferee or donee shall be treated as a "Founder" for
purposes of this Agreement.

               (b) Notwithstanding the foregoing, the provisions of this Section
6 shall not apply to the sale of any Co-Sale shares (i) to the public pursuant
to a registration statement filed with, and declared effective by, the SEC under
the 1933 Act or (ii) to the Company.

        6.6 Prohibited Transfers. If a Founder sells any Co-Sale Shares in
contravention of this Section 6 (a "PROHIBITED TRANSFER"), each Investor and
Non-Transferring Founder, in addition to such other remedies as may be available
at law, in equity or hereunder, shall have the option to sell to the Founder
such Investors' Pro Rata Share and the Founder shall be obligated to purchase
such Investor's Pro Rata Share at the price per share equal to the price per
share paid by the Acquiror to the Founder in the Prohibited Transfer. The
Founder shall also reimburse each Investor for any and all reasonable fees and
expenses, including legal fees and expenses, incurred pursuant to the exercise
or the attempted exercise of the Investor's rights under Section 6. Within 90
days after the later of the dates on which the Investors and Non-Transferring
Founders (A) received notice of the Prohibited Transfer or (B) otherwise became
aware of the Prohibited Transfer, each Investor and Non-Transferring Founder
shall, if exercising the option created hereby, deliver to the Founder the
certificate or certificates representing shares to be sold, each certificate to
be properly endorsed for transfer. The Founder shall, upon receipt of the
certificate or certificates for the shares to be sold by an Investor or a
Non-Transferring Founder, pursuant to this Section 6.6, pay the aggregate
purchase price therefor and the amount of reimbursable fees and expenses, as
specified in cash or by other means acceptable to the Investor or
Non-Transferring Founder. Notwithstanding the foregoing, any attempt by a
Founder to transfer Co-Sale Shares in violation of Section 6 hereof shall be
voidable and the Company agrees it will not effect such a transfer nor will it
treat any alleged transferee as the holder of such shares without the written
consent of the holders of a majority of the Shares.




                                      -26-
<PAGE>   30

        6.7 Termination of Co-Sale Rights. The provisions of this Section 6
shall terminate upon the earliest to occur of (a) the closing of any Qualified
Public Offering, (b) the date on which this Agreement is terminated by a writing
executed by the parties hereto, (c) the dissolution of the Company, (d) the
effective date of a Change of Control Transaction or (e) consummation of the
sale of all or substantially all of the assets of the Company.

        6.8 Waiver. The right granted to the Investors and Non-Transferring
Founders in Section 6.2 as to any proposed transfer pursuant to a Co-Sale Notice
may be waived as to all Investors and Non-Transferring Founders in advance or
after such transfer by a majority of the sum of (a) the number of outstanding
shares of Common Stock held by the Investors and Non-Transferring Founders as of
the date of the Co-Sale Notice plus (b) the number of shares of Common Stock
issuable upon conversion in full of all shares of outstanding Preferred Stock
then held by the Investors and Non-Transferring Founders.

                        SECTION 7 - TRANSFER RESTRICTIONS

        7.1 Restrictions on Transferability. The securities of the Company held
by the parties hereto shall not be transferred except upon the conditions
specified in this Agreement, which conditions are intended to insure compliance
with the provisions of the 1933 Act or, in the case of Section 2.10 hereof, to
assist in an orderly distribution. Each party hereto will cause any proposed
transferee of such securities held by such party hereto to agree to take and
hold those securities subject to the provisions and upon the conditions
specified in this Agreement.

        7.2 Restrictive Legend. All certificates representing any securities of
the Company that are subject to this Agreement shall be stamped or otherwise
imprinted with a legend substantially in the following form:

        THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
        CONDITIONS SPECIFIED IN THE THIRD AMENDED AND RESTATED INVESTORS' RIGHTS
        AGREEMENT, DATED AS OF APRIL __, 2000, AND ANY AMENDMENT THERETO OR
        RESTATEMENTS THEREOF (SUCH AGREEMENT INCLUDING ANY SUCH AMENDMENT OR
        RESTATEMENTS, THE "AGREEMENT") AMONG COSINE COMMUNICATIONS, INC. AND
        CERTAIN OTHER SIGNATORIES THERETO, AND NO TRANSFER OF THESE SECURITIES
        SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED.
        THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A VOTING
        AGREEMENT CONTAINED IN THE AGREEMENT AND BY ACCEPTING ANY INTEREST IN
        SUCH SECURITIES, THE PERSON ACCEPTING SUCH INTEREST SHALL BE DEEMED TO
        AGREE TO AND SHALL BECOME BOUND BY ALL THE PROVISIONS OF THE AGREEMENT.
        UPON THE



                                      -27-
<PAGE>   31

        FULFILLMENT OF CERTAIN OF SUCH CONDITIONS COSINE COMMUNICATIONS, INC.
        HAS AGREED TO DELIVER TO THE HOLDER HEREOF A NEW CERTIFICATE NOT BEARING
        THIS LEGEND FOR THE SECURITIES REPRESENTED HEREBY REGISTERED IN THE NAME
        OF THE HOLDER HEREOF. A COPY OF THE AGREEMENT MAY BE OBTAINED AT NO COST
        BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO
        THE SECRETARY OF COSINE COMMUNICATIONS, INC.

        The foregoing legend shall be removed with respect to such securities
upon request of the holder of such securities at such time as this Agreement is
terminated.

        7.3 Notice of Proposed Transfers. The holder of each certificate
representing securities of the Company by acceptance thereof agrees to comply in
all respects with the provisions of this Section 7.3. Prior to any proposed
transfer of any such securities (other than under circumstances described in
Sections 2.1, 2.2, and 2.3 hereof), the holder thereof shall give written notice
to the Company of such holder's intention to effect such transfer. Each such
notice shall describe the manner and circumstances of the proposed transfer in
sufficient detail, and shall be accompanied (except for a Permitted Transfer) by
either:

               (a) a written opinion of legal counsel to the holder who shall be
reasonably satisfactory to the Company, addressed to the Company and reasonably
satisfactory in form and substance to the Company's counsel, to the effect that
the proposed transfer of such securities may be effected without registration
under the 1933 Act or

               (b) a "no-action" letter from the SEC to the effect that the
distribution of such securities without registration will not result in a
recommendation by the staff of the SEC that action be taken with respect
thereto, whereupon the Holder of such securities shall be entitled to transfer
them in accordance with the terms of the notice delivered by such holder to the
Company.

        Each certificate evidencing such securities transferred as above
provided shall bear the restrictive legend set forth in Section 7.2 above,
except that such certificate shall not bear such restrictive legend after the
date of any Qualified Public Offering under the 1933 Act if the opinion of
counsel or "no-action" letter referred to above expressly indicates that such
legend is not required in order to establish compliance with the 1933 Act or if
such legend is no longer required pursuant to Rule 144(k).

        7.4 Public Sale. Each party hereto agrees not to make, without the prior
written consent of the Company, any public offering or sale of the Company's
securities although permitted to do so pursuant to Rule 144(k) promulgated under
the 1933 Act, until the earlier of (i) the date on which the Company effects its
initial registered public offering pursuant to the 1933 Act or (ii) the date on




                                      -28-
<PAGE>   32

which it becomes a registered company pursuant to Section 12(g) of the 1934 Act,
or (iii) five years after the date hereof.

                          SECTION 8 - VOTING AGREEMENT

        8.1 Definition. As used in this Section 8, the term "VOTE" shall have
the meaning set forth in Section 194 of the California Corporations Code (the
"CODE").

        8.2 Agreement to Vote. Subject to Section 8.7 below, the Series A
Investors, the Series B Investors, Series C Investors, Series D Investors,
Series E Investors and the Founders (collectively, the "VOTING HOLDERS") agree
to vote the shares of the Company's Common Stock, Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and
Series E Preferred Stock (collectively, the "SHARES") then held by them at any
regular or special meeting of shareholders of the Company, or, in lieu of any
such meeting, to give their written consent, as provided in Section 8.3 below.

        8.3 Board of Directors. With respect to any proposal concerning the
election of one or more directors who are to be elected by the holders of a
majority of the outstanding shares of the Series A Preferred Stock, the Series B
Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock, the
Series E Preferred Stock and the Common Stock, voting together as a class, the
Voting Holders hereby covenant and agree that each Voting Holder shall vote its
Shares to elect those nominees approved by a majority of the outstanding shares
of each of the Common Stock, Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock and Series E Preferred Stock
voting together as a class. Any vacancy on the Board occurring because of the
death, resignation or removal of a director elected by the holders of a majority
of the outstanding shares of Common Stock, Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series E
Preferred Stock voting together as a class, shall be filled in accordance with
the provisions set forth hereinabove.

        8.4 No Revocation. The voting agreements contained herein are coupled
with an interest and may not be revoked during the term of this Section 8.

        8.5 Stock Splits, Stock Dividends, etc. In the event of any stock split,
stock dividend, recapitalization, reorganization, or the like, any securities
issued as a result thereof with respect to the Voting Holders' Shares shall
become Voting Holders' Shares for purposes of this Section 8 and shall be
endorsed with the legend set forth in Section 7.2 hereof.

        8.6 Waivers. Any term of this Section 8 may be amended and the
observance of any term of this Section 8 may be waived either generally or in a
particular instance and either retroactively or prospectively only with the
written consent of the Company and the holders of a majority of the outstanding
shares of the Common Stock held by the Founders, the Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and
Series E Preferred Stock voting together as a class.



                                      -29-
<PAGE>   33

        8.7 Termination. All parties' rights under this Section 8 will terminate
upon the earliest to occur of (i) any Qualified Public Offering , (ii) the date
on which this Agreement is terminated by a writing executed by the parties
hereto, (iii) the dissolution of the Company, (iv) the effective date of a
Change of Control Transaction, or (v) consummation of the sale of all or
substantially all of the assets of the Company.

                            SECTION 9 - MISCELLANEOUS

        9.1 Successors and Assigns. Subject to the provisions of Section 9.11,
the terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties. Nothing in
this Agreement, express or implied, is intended to confer upon any party other
than the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.

        9.2 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California.

        9.3 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Executed signature pages
in the form of facsimile transmission are deemed acceptable as originals.

        9.4 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.

        9.5 Notices. Unless otherwise provided, any notice required or permitted
under this Agreement shall be given in writing and shall be deemed effectively
given upon personal delivery to the party to be notified or 3 business days
after deposit with the United States Post Office, by registered or certified
mail, postage prepaid and addressed to the party to be notified at the address
indicated for such party on the signature page hereof, or at such other address
as such party may designate by ten (10) days' advance written notice to the
other parties.

        9.6 Expenses. If any action at law or in equity is necessary to enforce
or interpret the terms of this Agreement, the prevailing party shall be entitled
to reasonable attorneys' fees, costs and necessary disbursements in addition to
any other relief to which such party may be entitled.

        9.7 Amendments and Waivers. Unless otherwise provided herein, any term
of this Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of each of the
Company and the holders of a majority of the shares of Preferred Stock (voting
on an as-if-converted basis) and/or Common Stock issued upon conversion of the
Preferred Stock. Any amendment or waiver effected in accordance with this
paragraph shall be binding upon each party hereto; provided, however, that no
such amendment or waiver shall reduce



                                      -30-
<PAGE>   34

the percentage of shares necessary to amend this Agreement without the consent
of the holders of all shares of Preferred Stock (voting on an as-if-converted
basis) and Common Stock issued upon conversion of the Preferred Stock then
outstanding, and provided, further, that (i) any amendment that would adversely
affect the holders of a specific class or series of the Company's capital stock
in manner different than the holders of other shares of capital stock shall also
require the consent of the holders of a majority of the shares of such class or
series of so affected, and (ii) any amendment that would adversely affect any of
the Investors, the Founders, or the Additional Rights Holders in a manner
different than the holders of other shares of capital stock shall also require
the consent of, if the Investors are so affected, the Investors (or their
assignees to whom Investors have expressly assigned their rights in compliance
with Section 9.11 hereof) who then hold at least fifty percent (50%) of the
Investor Registrable Securities then held by persons entitled to registration
rights hereunder and, if the Founders are so affected, the Founders (or their
assignees to whom they have expressly assigned their rights in compliance with
Section 9.11 hereof) who then hold at least fifty percent (50%) of the Founder
Registrable Securities then held by persons entitled to registration rights
hereunder and, if the Additional Rights Holders are so affected, the Additional
Rights Holders (or their assignees to whom Additional Rights Holders have
expressly assigned their rights in compliance with Section 9.11 hereof) who then
hold at least fifty percent (50%) of the Additional Registrable Securities then
held by persons entitled to registration rights hereunder; provided further, any
such amendment, waiver or modification applies by its terms to each applicable
Investor, Founder, or Additional Rights Holders, and each such assignee and,
provided further, that any Investor, Founder, or Additional Rights Holder, or
any such assignee thereof may waive hereunder any of such holder's rights or the
Company's obligations hereunder without obtaining the consent of any other
Investor, Founder, or Additional Rights Holder, or assignee.

        Notwithstanding anything herein to the contrary, in the event of a
subsequent closing with a Series E Investor as provided for in Section 1.2 of
the Purchase Agreement, such Series E Investor shall become a party to this
Agreement as a "Series E Investor" without the need for any consent, approval or
signature of any other Investor upon (i) receipt from such Series E Investor of
a fully executed signature page hereto with the Company's consent and (ii)
payment of all consideration for the purchase by such Series E Investor of
shares of Series E Preferred Stock pursuant to the terms of the Purchase
Agreement.

        9.8 Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provisions were so excluded and shall be enforceable in accordance with its
terms.

        9.9 Aggregation of Stock. All shares of the Company's capital stock held
or acquired by a party hereto and its Affiliates shall be aggregated together
for the purpose of determining the availability of any rights under this
Agreement.

        9.10 Entire Agreement. This Agreement and the other agreements
referenced herein constitute the full and entire understanding and agreement
between the parties with regard to the subject matter hereof and thereof.



                                      -31-
<PAGE>   35
        9.11 Assignment of Rights. The rights pursuant to Sections 2, 3, 4, 5
and 6 of this Agreement may only be assigned by a party hereto to a transferee
or assignee of shares of the Company's capital stock, if: (a) the Company is,
within a reasonable time after such transfer, furnished with written notice of
the name and address of such transferee or assignee and the securities with
respect to which such rights are being assigned; (b) such transferee or assignee
agrees in writing to be bound by and subject to the terms and conditions of this
Agreement, including, but not limited to, those obligations of the transferor
related to its status as an Investor, Founder or Additional Rights Holder
hereunder; (c) such transferee or assignee is not deemed by the Board of
Directors of the Company, in its reasonable judgment, to be a competitor of the
Company and (d) in the case of the transfer of rights pursuant to Section 2, the
transferee acquires at least 250,000 (adjusted for stock splits, combinations
and the like) shares of Registrable Securities and, in the case of a transfer of
the rights pursuant to Sections 3, 4, 5, and 6, the transferee acquires at least
1,000,000 (or 500,000 in the case of Series E Investors) (as adjusted in each
case for stock splits, combinations and the like) shares of Common Stock or such
number of shares of Preferred Stock as are then Convertible into at least
1,000,000 (or 500,000 in the case of Series E Investors) shares of Common Stock,
except that, with respect to clause (d) above, if a party hereto transfers any
securities of the Company to any of its Affiliates or any liquidating trust for
such party, such party may assign to such Affiliates or such liquidating trust
any of its rights under Sections 2, 3, 4, 5, and 6 of this Agreement (subject to
the provisions thereof) without satisfying the thresholds established in clause
(d) above but otherwise complying with this Section 9.11; and such Affiliates or
such liquidating trust shall be entitled to further assign such rights in a
transfer complying with this Section 9.11 as excepted.




                [Remainder of this Page Intentionally Left Blank]


                          A SEPARATE SIGNATURE PAGE FOR

                 EACH OF THE PARTIES TO THIS AGREEMENT FOLLOWS.




                                      -32-
<PAGE>   36
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE




        COSINE COMMUNICATIONS, INC.



        By:
           -----------------------
           (Signature)


        Name:  Dean Hamilton
             ---------------------
             (Print or Type)


        Title: President
               --------------------


Address:

3200 Bridge Parkway
     Redwood City, CA  94065

Phone: (650) 637-4771
Fax:   (650) 637-4779

<PAGE>   37
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        HAMILTON



        By:
           -----------------------
           Dean Hamilton



<PAGE>   38
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        LIANGHWA JOU`



        By:
           --------------------
           Lianghwa Jou





<PAGE>   39
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        LARRY V. PLUMMER



        By:
           --------------------
           Larry V. Plummer





<PAGE>   40
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        DONNA M. CHESS AND JOHN J. CHESS, JR., JOINTLY



        By:
           --------------------
           Donna M. Chess



        By:
            -------------------
            John J. Chess, Jr.





<PAGE>   41
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        C.J. OVERSEAS, LTD.



        By:
           --------------------
        Name:
        Title:



<PAGE>   42
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        BRUNO ANDRIGHETTO



        By:
            -------------------
            Bruno Andrighetto





<PAGE>   43
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        JOHN J. CHESS, JR.



        By:
           --------------------
           John J. Chess, Jr.





<PAGE>   44
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        COSINUS INVESTMENT FUND, LLC

        By:  Synapse Fund II, LLC



        By:
           --------------------
        Name:  Henri Tchen
        Title:  Manager





<PAGE>   45
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




         NORWEST VENTURE PARTNERS VII, LP

        By its General Partner
        Itasca VC Partners VII, LLP



        By:
           --------------------
        Name:  Promod Haque
        Title:  General Partner





<PAGE>   46
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        KPCB HOLDINGS, INC. AS NOMINEE



        By:
           --------------------
        Name:
        Title:





<PAGE>   47
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        WS INVESTMENT COMPANY 99A



        By:
           --------------------
        Name:
        Title:





<PAGE>   48
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        JOHN A. FORE



        By:
           --------------------
           John A. Fore





<PAGE>   49
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        EDWARD F. VERMEER AND ANGELA L. VERMEER, JOINTLY



        By:
           --------------------
           Edward F. Vermeer



        By:
           --------------------
           Angela L. Vermeer





<PAGE>   50
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        PAUL D. ANAWALT AND VALERIA A. ANAWALT, JOINTLY



        By:
           --------------------
           Paul D. Anawalt



        By:
            -------------------
            Valeria A. Anawalt




<PAGE>   51
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        CRESCENDO III, L.P.
        by its General Partner, Crescendo Ventures III, LLC



        By:
           --------------------
        Name:
        Title:



        CRESCENDO III EXECUTIVE FUND, L.P.
        by its General Partner, Crescendo Ventures III, LLC



        By:
           --------------------
        Name:
        Title:



        CRESCENDO III, GBR
        By its Managing Members, Crescendo Ventures III, LLC and
        Verbier Ventures, LLC



        By:                            By:
           --------------------           -----------------------
        Name:                          Name:
        Title:                         Title:



<PAGE>   52
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        CRESCENDO WORLD FUND, LLC
by its Managing Member, Crescendo Ventures WF, LLC



        By:
           --------------------
        Name:
        Title:



        EAGLE VENTURES WF, LLC



        By:
           --------------------
        Name:
        Title:





<PAGE>   53
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        COMMUNICATIONS VENTURES II, L.P.

        By its General Partner
        ComVen II, LLC



        By:
           --------------------
        Name:  David Helfrich
        Title:  Member


        COMMUNICATIONS VENTURES III, L.P.

        By its General Partner
        ComVen III, LLC



        By:
           --------------------
        Name:  David Helfrich
        Title:  Member


        COMMUNICATIONS VENTURES
        AFFILIATES FUND II, L.P.

        By its General Partner
        ComVen II, LLC



        By:
           --------------------
        Name:  David Helfrich
        Title:  Member

<PAGE>   54
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        COMMUNICATIONS VENTURES III
        CEO & ENTREPRENEURS' FUND, L.P.

        By its General Partner
        ComVen III, LLC



        By:
           --------------------
        Name:  David Helfrich
        Title:  Member





<PAGE>   55
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        WORLDVIEW TECHNOLOGY PARTNERS I, L.P.

        By: Worldview Capital I, L.P., its General Partner
        By: Worldview Equity I, L.L.C., its General Partner



        By:
           --------------------
        Name:  Michael Orsak
        Title:  Member


        WORLDVIEW TECHNOLOGY INTERNATIONAL I, L.P.

        By: Worldview Capital I, L.P., its General Partner
        By: Worldview Equity I, L.L.C., its General Partner



        By:
           --------------------
        Name:  Michael Orsak
        Title:  Member
<PAGE>   56
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        WORLDVIEW STRATEGIC PARTNERS I, L.P.

        By: Worldview Capital I, L.P., its General Partner
        By: Worldview Equity I, L.L.C., its General Partner



        By:
           --------------------
        Name:  Michael Orsak
        Title:  Member
<PAGE>   57
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        FALCON CAPITAL, L.L.C.



        By:
           --------------------
        Name:
        Title:





<PAGE>   58
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        SILICON VALLEY BANK



        By:
           --------------------
        Name:
        Title:





<PAGE>   59
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        U.S. TELESOURCE, INC.



        By:
           --------------------
        Name:
        Title:




<PAGE>   60
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        WESTPORT JOINT VENTURE



        By:
           --------------------
        Name:
        Title:



<PAGE>   61
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        VENTURE LENDING & LEASING II, INC.



        By:
           --------------------
        Name:
        Title:





<PAGE>   62
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        BIGGERSTAFF FAMILY TRUST



        By:
           --------------------
        Name:
        Title:  Trustee



        By:
           --------------------
        Name:
        Title:  Co-Trustee



<PAGE>   63
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        TOM & JERRY HOLDINGS, LLC.



        By:
           --------------------
        Name:
        Title:





<PAGE>   64
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        BELL CANADA



        By:
           --------------------
        Name:
        Title:





<PAGE>   65
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        LUCENT VENTURE PARTNERS INC.



        By:
           --------------------
        Name:
        Title:




<PAGE>   66
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        CHARTER GROWTH CAPITAL, L.P.

        By: CGC Partners, L.P.
        Its: General Partner



        By:
           --------------------
        Name:  Steven P. Bird
        Title:  General Partner


        CHARTER GROWTH CAPITAL CO-INVESTMENT FUND, L.P.

        By: CGC Partners, L.P.
        Its: General Partner



        By:
           --------------------
        Name:  Steven P. Bird
        Title:  General Partner


<PAGE>   67
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        CGC INVESTORS, L.P.

        By: CGC Partners, L.P.
        Its: General Partner



        By:
           --------------------
        Name:  Steven P. Bird
        Title:  General Partner

<PAGE>   68
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        TCV III (GP)
        a Delaware General Partnership
        By: Technology Crossover Management III, L.L.C.
        Its: General Partner



        By:
           --------------------
        Name:  Robert C. Bensky
        Title:  Chief Financial Officer


        TCV III, L.P.
        a Delaware Limited Partnership
        By: Technology Crossover Management III, L.L.C.
        Its: General Partner



        By:
            -------------------
        Name:  Robert C. Bensky
        Title:  Chief Financial Officer


        TCV III (Q), L.P.
        a Delaware Limited Partnership
        By: Technology Crossover Management III, L.L.C.
        Its: General Partner



        By:
           --------------------
        Name:  Robert C. Bensky
        Title:  Chief Financial Officer



<PAGE>   69
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        TCV III STRATEGIC PARTNERS, L.P.
        a Delaware Limited Partnership
        By: Technology Crossover Management III, L.L.C.
        Its: General Partner



        By:
           --------------------
        Name:  Robert C. Bensky
        Title:  Chief Financial Officer





<PAGE>   70
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        CLIPPERBAY & CO.
        (NAME ON STOCK CERTIFICATE)



        CAPITAL RESEARCH & MANAGEMENT, on behalf of SMALLCAP World Fund, Inc.



        By:
           --------------------
        Name:
        Title:





<PAGE>   71
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        RADER REINFRANK HOLDINGS NO. 6

        By: Rader Reinfrank Investors, LP
        Its: Managing Partner

        By: Rader Reinfrank & Co., LLC
        Its: General Partner



        By:
           --------------------
        Name:  R. Rudolph Reinfrank
        Its:  Managing Member





<PAGE>   72
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        TELESOFT PARTNERS IA, L.P.

        By: TeleSoft IA-GP, Inc.
        Its: General Partner



        By:
           --------------------
        Name:  Arjun Gupta
        Title:  President








<PAGE>   73
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        ANTHONY CIULLA



        By:
           --------------------
           Anthony Ciulla







<PAGE>   74
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        DAN CHAPEY



        By:
           --------------------
           Dan Chapey






<PAGE>   75
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        MATTHEW O. FITZMAURICE



        By:
           --------------------
             Matthew O. Fitzmaurice





<PAGE>   76
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        VERTEX CAPITAL II L.L.C.



        By:
            -------------------
        Name:  Matthew O. Fitzmaurice
        Title:  Managing Member





<PAGE>   77
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        ATGF II



        By:
           --------------------
        Name:  Gary Tanaka
        Title:  Director





<PAGE>   78
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        JAMES STABLEFORD



        By:
           --------------------
           James Stableford






<PAGE>   79
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        MARC WEISS



        By:
           --------------------
           Marc Weiss





<PAGE>   80
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        WILLIAM SLATTERY



        By:
           --------------------
           William Slattery






<PAGE>   81
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        RALPH H. CECHETTINI 1995 TRUST





        By:
           --------------------
           Ralph H. Cechettini, Trustee








<PAGE>   82
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        PIVOTAL PARTNERS, L.P.



        By:
           --------------------
           Ralph H. Cechettini, General Partner





<PAGE>   83
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        HAMBRECHT & QUIST CALIFORNIA

        By:
           --------------------
        Its:
            -------------------


        By:
           --------------------
        Name:
        Title:


        HAMBRECHT & QUIST CALIFORNIA

        By:
           --------------------
        Its:
            -------------------



        By:
           --------------------
        Name:
        Title:

        HAMBRECHT & QUIST EMPLOYEE VENTURE FUND, L.P. II

        By: H&Q VENTURE MANAGEMENT, L.L.C.
        Its: General Partner



        By:
           --------------------
        Name:
        Title:



<PAGE>   84
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        H&Q EMPLOYEE VENTURE FUND 2000, L.P.

        By: H&Q VENTURE MANAGEMENT, L.L.C.
        Its: General Partner



        By:
           --------------------
        Name:
        Title:





        ACCESS TECHNOLOGY PARTNERS, L.P.

        By: ACCESS TECHNOLOGY MANAGEMENT, L.L.C.
        Its: General Partner

        By: H&Q VENTURE MANAGEMENT, L.L.C.
        Its: Managing Member



        By:
           --------------------
        Name:
        Title:



<PAGE>   85
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        ACCESS TECHNOLOGY PARTNERS BROKERS FUND, L.P.

        By: H&Q VENTURE MANAGEMENT, L.L.C.
        Its: General Partner



        By:
           --------------------
        Name:
        Title:


<PAGE>   86
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        H&Q COSINE COMMUNICATIONS INVESTORS, LP



        By:
           --------------------
        Name:
        Title:





Address:

One Bush Street
San Francisco, CA  94104

Phone:     (415) 439-3000
Fax:       (415) 439-3818



<PAGE>   87
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        THE GOLDMAN SACHS GROUP, INC.



        By:
           --------------------
        Name:
        Title:



        STONE STREET FUND 1999, L.P.

        By: Stone Street 1999 Corp.,
        Its: General Partner



        By:
           --------------------
        Name:
        Title:





<PAGE>   88
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        TUDOR BVI FUTURES, LTD

        Tudor Investment Corporation as Investment Advisor



        By:
           --------------------
        Name:  James J. Pallotta
        Title:  Managing Director



        RAPTOR GLOBAL FUND, L.P.

        Tudor Investment Corporation as General Partner



        By:
           --------------------
           Name:  James J. Pallotta
           Title:  Managing Director



<PAGE>   89
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        RAPTOR GLOBAL FUND, LTD.



        By:
           --------------------
        Name:  James J. Pallotta
        Title:  Managing Director

<PAGE>   90
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        AT&T VENTURE FUND II, LP

        By: Venture Management, LLC
        Its: General Partner



        By:
           --------------------
           Neal M. Douglas, Manager





<PAGE>   91
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        SPECIAL PARTNERS FUND, LP

        By: Venture Management III, LLC
        Its: General Partner



        By:
            -------------------
            Neal M. Douglas, Manager





<PAGE>   92
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        SPECIAL PARTNERS FUND INTERNATIONAL, LP

        By: Venture Management III, LLC
        Its: Investment General Partner



        By:
           --------------------
           Neal M. Douglas, Manager








<PAGE>   93
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        GREEN VENTURE CAPITAL II, L.P.



        By:
           --------------------
        Name:
        Title:



The following signature is exclusively to confirm termination of all rights of
the signatory under the Second Amended and Restated Investors' Rights Agreement,
dated as of September 17, 1999.



        DONALD GREEN



        By:
           --------------------
           Donald Green





<PAGE>   94
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        PAUL JOHNSON



        By:
           --------------------
            (Signature)





<PAGE>   95
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        TW CAPITAL I INC.



        By:
           --------------------
        Name:  Robert Boucai
        Title:  Secretary





<PAGE>   96
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        SINGTEL VENTURES (SINGAPORE) PTE LTD



        By:
           --------------------
           Name:  Andrew Buay
           Title:  Director





<PAGE>   97
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        COSINE COMMUNICATIONS, INC.



        By:
           --------------------
        Name:  Dean Hamilton
        Title:  President





<PAGE>   98
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        ANSCHUTZ FAMILY INVESTMENT COMPANY LLC



        By:
           --------------------
        Name:
        Title:



        A.C.E. INVESTMENT PARTNERSHIP



        By:
           --------------------
        Name:
        Title:





<PAGE>   99
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        ATGF II



        By:
           --------------------
        Name:
        Title:





<PAGE>   100
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        CLIPPERBAY & CO.
        (NAME ON STOCK CERTIFICATE)

        CAPITAL RESEARCH AND MANAGEMENT COMPANY, ON BEHALF OF SMALLCAP WORLD
        FUND, INC.



        By:
           --------------------
        Name:
        Title:





<PAGE>   101
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        COSINUS INVESTMENT FUND II, LLC



        By:
           --------------------
        Name:
        Title:





<PAGE>   102
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        CRESCENDO III, L.P.
        By its General Partner, Crescendo Ventures III, LLC



        By:
           --------------------
        Name:
        Title:



        CRESCENDO III, GBR
        By its Managing Members, Crescendo Ventures III, LLC and
        Verbier Ventures, LLC



        By:
           --------------------
        Name:
        Title:


        By:
           --------------------
        Name:
        Title:


<PAGE>   103
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



CRESCENDO III EXECUTIVE FUND, L.P.
By its General Partner, Crescendo Ventures III, LLC



        By:
           --------------------
        Name:
        Title:




<PAGE>   104
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        JEANNETTE SCHIRTZINGER



        By:
           --------------------
             Jeannette Schirtzinger



        DAVID L. SCHIRTZINGER



        By:
           --------------------
             David L. Schirtzinger





<PAGE>   105
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        TELESOFT PARTNERS IA, L.P.
        By: TeleSoft IA-GP, Inc.
        Its: General Partner



        By:
           --------------------
        Name:  Arjun Gupta
        Title:  President



        TELESOFT STRATEGIC SIDE FUND I, L.L.C.
        By: TeleSoft Management, L.L.C.
        Its: Manager



        By:
           --------------------
        Name:  Arjun Gupta
        Title:  Executive Manager






<PAGE>   106
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        JOHN ARRILLAGA, TRUSTEE OR SUCCESSOR TRUSTEE
        OF THE RICHARD T, PEERY 1976 CHILDREN TRUSTS
        UNDER TRUST AGREEMENT DATED 12/27/76



        By:
           --------------------
        Name:
        Title:





<PAGE>   107
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        JOHN ARRILLAGA, JR., TRUSTEE OR SUCCESSOR TRUSTEE
        OF THE JOHN ARRILLAGA 1976 CHILDREN TRUSTS
        UNDER TRUST AGREEMENT DATED 12/27/76
        FBO LAURA K. ARRILLAGA



        By:
           --------------------
        Name:
        Title:





<PAGE>   108
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        LAURA K. ARRILLAGA, TRUSTEE OR SUCCESSOR TRUSTEE OF THE JOHN ARRILLAGA
        1976 CHILDREN TRUSTS UNDER TRUST AGREEMENT DATED 12/27/76 FBO JOHN
        ARRILLAGA, JR.



        By:
           --------------------
        Name:
        Title:





<PAGE>   109
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        NETWORK ASSOCIATES, INC.



        By:
           --------------------
        Name:
        Title:





<PAGE>   110
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        NISSHO ELECTRONICS CORPORATION



        By:
           --------------------
        Name:
        Title:





<PAGE>   111
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        GLOBE LINQ INTERNATIONAL FUND I, LLC



        By:
           --------------------
        Name:
        Title:





<PAGE>   112
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        FUSION COMMUNICATIONS CORPORATION



        By:
           --------------------
        Name:
        Title:





<PAGE>   113
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        INTERNET INITIATIVE JAPAN



        By:
           --------------------
        Name:
        Title:





<PAGE>   114
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        DAVE ROBISON



        By:
           --------------------
           Dave Robison



<PAGE>   115
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        MARTY HAHNFELD



        By:
           --------------------
           Marty Hahnfeld





<PAGE>   116
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        STEVE DANIELS



        By:
           --------------------
           Steve Daniels





<PAGE>   117
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        SCOTT SPRAGUE



        By:
           --------------------
           Scott Sprague





<PAGE>   118
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        DAN JACKSON



        By:
           --------------------
           Dan Jackson





<PAGE>   119
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        JEFF SPERBECK



        By:
           --------------------
           Jeff Sperbeck





<PAGE>   120
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        REYNIE ORTIZ



        By:
           --------------------
           Reynie Ortiz





<PAGE>   121
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        DAN O'CALLAGHNAN



        By:
           --------------------
           Dan O'Callaghnan





<PAGE>   122
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        BRIAN LEVY



        By:
           --------------------
           Brian Levy





<PAGE>   123
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        JEFF DONAHUE



        By:
           --------------------
           Jeff Donahue





<PAGE>   124
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        JEFFREY LEWIS



        By:
           --------------------
           Jeffrey Lewis





<PAGE>   125
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        DONALD CRUME



        By:
           --------------------
           Donald Crume





<PAGE>   126
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        CATHERINE HAPKA



        By:
           --------------------
           Catherine Hapka





<PAGE>   127
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        CHRIS DEMARCHE



        By:
           --------------------
           Chris DeMarche





<PAGE>   128
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        GERARD M. VAZQUEZ



        By:
           --------------------
           Gerard M. Vazquez





<PAGE>   129
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        BARKLAY KNAPP



        By:
           --------------------
           Barklay Knapp





<PAGE>   130
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        PETE WILLS



        By:
           --------------------
           Pete Wills





<PAGE>   131
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        JIM BLUMSOM



        By:
           --------------------
           Jim Blumsom





<PAGE>   132
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        MIKE HENRY



        By:
           --------------------
           Mike Henry





<PAGE>   133
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        TERRY LEE



        By:
           --------------------
           Terry Lee





<PAGE>   134
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        CROSBY HAFNER



        By:
           --------------------
           Crosby Hafner





<PAGE>   135
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        DANA ZITEK & ROXANN ZITEK



        By:
           --------------------
           Dana Zitek & Roxann Zitek





<PAGE>   136
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.



        GLOBE LINQ INTERNATIONAL FUND I, LLC



        By:
           --------------------
        Name:
        Title:





<PAGE>   137
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        INTERNET INITIATIVE JAPAN



        By:
           --------------------
        Name:
        Title:





<PAGE>   138
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        SYBAT PARTNERS



        By:
           --------------------
        Name:
        Title:





<PAGE>   139
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        CHAMPION ANGELS



        By:
           --------------------
        Name:
        Title:





<PAGE>   140
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        JOHN ELWAY



        By:
           --------------------
           John Elway





<PAGE>   141
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        CHRISTOS COTSAKOS



        By:
           --------------------
           Christos Cotsakos





<PAGE>   142
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        FREDERICK W. WEIDINGER



        By:
           --------------------
           Frederick W. Weidinger





<PAGE>   143
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        THOMSEN LIVING TRUST DATED 5/27/99



        By:
           --------------------
        Name:
        Title:





<PAGE>   144
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        WILLIAM L SCHRADER



        By:
           --------------------
           William L Schrader





<PAGE>   145
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        RUANN F. ERNST & WILLIAM C. RIFFLE



        By:
           --------------------
           Ruann F. Ernst & William C. Riffle





<PAGE>   146
                           COSINE COMMUNICATIONS, INC.

              THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

                                 SIGNATURE PAGE

The undersigned has duly executed this Third Amended and Restated Investors'
Rights Agreement as of the date indicated in the preamble to this Agreement.




        OCTANE CAPITAL



        By:
            -------------------
        Name:
        Title:





<PAGE>   147
                                   SCHEDULE A

                                       TO

                           COSINE COMMUNICATIONS, INC.

                           INVESTORS' RIGHTS AGREEMENT


<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
                                       COMMON    SERIES         SERIES        SERIES       SERIES     SERIES
INVESTOR                               STOCK       A               B            C             D          E
--------------------------------------------------------------------------------------------------------------
<S>                                    <C>       <C>            <C>           <C>          <C>        <C>
DEAN HAMILTON                        4,000,000

LIANGHWA JOU                         1,833,332

LARRY V. PLUMMER                       833,332

C.J. OVERSEAS, LTD.                              1,171,875

Lornehouse Castletown
Isle of Mann
British Isles

DONNA M. CHESS AND JOHN J. CHESS,                  234,375
JR., JOINTLY

JOHN J. CHESS, JR.                                 156,250

BRUNO ANDRIGHETTO                                  312,500
--------------------------------------------------------------------------------------------------------------
</TABLE>


<PAGE>   148
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
                                       COMMON    SERIES         SERIES        SERIES       SERIES     SERIES
INVESTOR                               STOCK       A               B            C             D          E
--------------------------------------------------------------------------------------------------------------
<S>                                    <C>       <C>            <C>           <C>          <C>        <C>

COSINUS INVESTMENT FUND, LLC                                                                613,526

CRESCENDO III, GBR                                                                           17,444      3,926

CRESCENDO III EXECUTIVE FUND, L.P.                                                           25,187      5,655

CRESCENDO III, L.P.                                             3,048,780    2,954,292      847,359    190,419

CRESCENDO WORLD FUND, LLC                                         648,386      638,328      190,663
--------------------------------------------------------------------------------------------------------------
</TABLE>


<PAGE>   149
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
                                       COMMON    SERIES         SERIES        SERIES       SERIES     SERIES
INVESTOR                               STOCK       A               B            C             D          E
--------------------------------------------------------------------------------------------------------------
<S>                                    <C>       <C>            <C>           <C>          <C>        <C>

EAGLE VENTURES WF, LLC                                             31,050       30,569        9,130

COMMUNICATIONS VENTURES II, L.P.                                1,379,339      842,410      329,197

COMMUNICATIONS VENTURES III, L.P.                               2,129,306    1,302,127      508,845

COMMUNICATIONS VENTURES AFFILIATES
FUND II, L.P.                                                     113,105       69,078       26,994

COMMUNICATIONS VENTURES III CEO
AND ENTREPRENEURS' FUND, L.P.                                     106,465       65,106       25,442
--------------------------------------------------------------------------------------------------------------
</TABLE>


<PAGE>   150
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
                                       COMMON    SERIES         SERIES        SERIES       SERIES     SERIES
INVESTOR                               STOCK       A               B            C             D          E
--------------------------------------------------------------------------------------------------------------
<S>                                    <C>       <C>            <C>           <C>          <C>        <C>
FALCON CAPITAL, L.L.C.                                            681,367

BIGGERSTAFF FAMILY TRUST                                          136,273

TOM & JERRY HOLDINGS, LLC.                                        545,094
c/o Paul Landsman

BELL CANADA                                                     1,355,013      828,197      323,642

LUCENT VENTURE PARTNERS INC.                                    1,355,013      828,197      323,642

WORLDVIEW TECHNOLOGY PARTNERS I, L.P.                             918,099    3,399,114      483,279

WORLDVIEW TECHNOLOGY INTERNATIONAL
I, L.P.                                                           357,834    1,324,822      188,360

WORLDVIEW STRATEGIC PARTNERS I, L.P.                               79,081      292,786       41,628
--------------------------------------------------------------------------------------------------------------
</TABLE>


<PAGE>   151
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
                                       COMMON    SERIES         SERIES        SERIES       SERIES     SERIES
INVESTOR                               STOCK       A               B            C             D          E
--------------------------------------------------------------------------------------------------------------
<S>                                    <C>       <C>            <C>           <C>          <C>        <C>

NORWEST VENTURE PARTNERS VII, L.P.                                           5,016,722      743,686

KPCB HOLDINGS, INC., AS NOMINEE                                              5,685,618      842,845

ANSCHUTZ FAMILY INVESTMENT CO. LLC                                           1,059,085      157,001     75,100

A.C.E. INVESTMENT PARTNERSHIP                                                   55,741       27,013      4,900

WS INVESTMENT COMPANY 99A                                                       83,612

JOHN A. FORE                                                                    16,723

EDWARD F. VERMEER AND ANGELA L.
VERMEER                                                                          5,575

PAUL D. ANAWALT AND VALERIA A.
ANAWALT                                                                          5,575

SILICON VALLEY BANK
                                                                  (1)
--------------------------------------------------------------------------------------------------------------
</TABLE>


<PAGE>   152

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
                                       COMMON    SERIES         SERIES        SERIES       SERIES     SERIES
INVESTOR                               STOCK       A               B            C             D          E
--------------------------------------------------------------------------------------------------------------
<S>                                    <C>       <C>            <C>           <C>          <C>        <C>
VENTURE LENDING AND LEASING II,
INC.
                                                                      (2)

U.S. TELESOURCE, INC.                                                              (4)


WESTPORT JOINT VENTURE

                                                       (3)

CHARTER GROWTH CAPITAL, L.P.                                                              1,141,227     34,423


With a copy to:

Tara Farnsworth, Fund Administrator
Charter Growth Capital, L.P.
--------------------------------------------------------------------------------------------------------------
</TABLE>


<PAGE>   153
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
                                       COMMON    SERIES         SERIES        SERIES       SERIES     SERIES
INVESTOR                               STOCK       A               B            C             D          E
--------------------------------------------------------------------------------------------------------------
<S>                                    <C>       <C>            <C>           <C>          <C>        <C>

CHARTER GROWTH CAPITAL                                                                      213,980      6,454
    CO-INVESTMENT FUND, L.P.

Attn:   Jim Boettcher

With a copy to:

Tara Farnsworth, Fund Administrator
Charter Growth Capital, L.P.

CGC INVESTORS, L.P.                                                                          71,327      2,151

Attn:   Jim Boettcher

With a copy to:

Tara Farnsworth, Fund Administrator
Charter Growth Capital, L.P.
--------------------------------------------------------------------------------------------------------------
</TABLE>


<PAGE>   154
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
                                       COMMON    SERIES         SERIES        SERIES       SERIES     SERIES
INVESTOR                               STOCK       A               B            C             D          E
--------------------------------------------------------------------------------------------------------------
<S>                                    <C>       <C>            <C>           <C>          <C>        <C>
TCV III (GP)                                                                                 15,020

Mailing Address:

Technology Crossover Ventures

Attn:  Robert C. Bensky

With a copy to:

Technology Crossover Ventures

Attn:  Richard Kimball

TCV III, L.P.                                                                                71,344

Mailing Address:

Technology Crossover Ventures

Attn:  Robert C. Bensky

With a copy to:

Technology Crossover Ventures

Attn:  Richard Kimball
--------------------------------------------------------------------------------------------------------------
</TABLE>


<PAGE>   155
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
                                       COMMON    SERIES         SERIES        SERIES       SERIES     SERIES
INVESTOR                               STOCK       A               B            C             D          E
--------------------------------------------------------------------------------------------------------------
<S>                                    <C>       <C>            <C>           <C>          <C>        <C>
TCV III (Q), L.P.                                                                         1,896,239

Mailing Address:

Technology Crossover Ventures

Attn:  Robert C. Bensky

With a copy to:

Technology Crossover Ventures

Attn:  Richard Kimball

TCV III STRATEGIC PARTNERS, L.P.                                                             85,871

Mailing Address:

Technology Crossover Ventures

Attn:  Robert C. Bensky

With a copy to:

Technology Crossover Ventures

Attn:  Richard Kimball
--------------------------------------------------------------------------------------------------------------
</TABLE>


<PAGE>   156
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
                                       COMMON    SERIES         SERIES        SERIES       SERIES     SERIES
INVESTOR                               STOCK       A               B            C             D          E
--------------------------------------------------------------------------------------------------------------
<S>                                    <C>       <C>            <C>           <C>          <C>        <C>
CLIPPERBAY & CO.                                                                          1,925,820    608,098

Notice Address:

Capital Research and Management
Company

Attn:  Walter Burkley

RADER REINFRANK HOLDINGS NO. 6                                                              285,308

C/o Rader Reinfrank & Co., LLC

TELESOFT PARTNERS IA, L.P.                                                                  912,981     26,161

Attn:   Arjun Gupta

With a copy to:

Attn:  Tom Dennedy
--------------------------------------------------------------------------------------------------------------
</TABLE>


<PAGE>   157
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
                                       COMMON    SERIES         SERIES        SERIES       SERIES     SERIES
INVESTOR                               STOCK       A               B            C             D          E
--------------------------------------------------------------------------------------------------------------
<S>                                    <C>       <C>            <C>           <C>          <C>        <C>
TELESOFT STRATEGIC SIDE
FUND I, L.L.C.                                                                                           1,377

C/o TeleSoft Management, L.L.C.


Attn:   Arjun Gupta


With a copy to:

Attn:   Tom Dennedy


Fax:    650-358-2501

ANTHONY CIULLA                                                                               10,000

C/o Amerindo Investment Advisors
Inc.


DAN CHAPEY                                                                                      600

C/o Amerindo Investment Advisors
Inc.
--------------------------------------------------------------------------------------------------------------
</TABLE>


<PAGE>   158
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
                                       COMMON    SERIES         SERIES        SERIES       SERIES     SERIES
INVESTOR                               STOCK       A               B            C             D          E
--------------------------------------------------------------------------------------------------------------
<S>                                    <C>       <C>            <C>           <C>          <C>        <C>
ATGF II                                                                                     560,880     26,667

C/o Amerindo Investments Advisors
Inc.

Attn:   Gary Tanaka
        Marc Weiss

Attorney Contact
Attn:   David Mainzer
Buchalter Nemer Fields & Younger


JAMES STABLEFORD                                                                              7,250

C/o Amerindo Investment Advisors
Inc.


MARC WEISS                                                                                    4,500

C/o Amerindo Investment Advisors
Inc.
--------------------------------------------------------------------------------------------------------------
</TABLE>


<PAGE>   159
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
                                       COMMON    SERIES         SERIES        SERIES       SERIES     SERIES
INVESTOR                               STOCK       A               B            C             D          E
--------------------------------------------------------------------------------------------------------------
<S>                                    <C>       <C>            <C>           <C>          <C>        <C>
WILLIAM SLATTERY                                                                              1,500

C/o Amerindo Investment Advisors
Inc.


RALPH H. CECHETTINI 1995 TRUST                                                               57,654


C/o Pivotal Asset Management


PIVOTAL PARTNERS, L.P.                                                                       85,000

C/o Pivotal Asset Management


Attn:  Ralph Cechettini


MATTHEW O. FITZMAURICE                                                                       14,265



VERTEX CAPITAL II L.L.C.                                                                     57,062

--------------------------------------------------------------------------------------------------------------
</TABLE>


<PAGE>   160
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
                                       COMMON    SERIES         SERIES        SERIES       SERIES     SERIES
INVESTOR                               STOCK       A               B            C             D          E
--------------------------------------------------------------------------------------------------------------
<S>                                    <C>       <C>            <C>           <C>          <C>        <C>
HAMBRECHT & QUIST CALIFORNIA                                                                 39,943      3,920

Attn:  Shannon Horton

HAMBRECHT & QUIST CALIFORNIA                                                                             2,333

Attn:  Shannon Horton

HAMBRECHT & QUIST EMPLOYEE VENTURE
FUND, L.P. II                                                                                39,943

Attn:  Shannon Horton

H&Q EMPLOYEE VENTURE FUND
2000, L.P.                                                                                               2,333

Attn:  Shannon Horton

ACCESS TECHNOLOGY PARTNERS, L.P.                                                            639,087     37,333

Attn:  Shannon Horton
--------------------------------------------------------------------------------------------------------------
</TABLE>


<PAGE>   161
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
                                       COMMON    SERIES         SERIES        SERIES       SERIES     SERIES
INVESTOR                               STOCK       A               B            C             D          E
--------------------------------------------------------------------------------------------------------------
<S>                                    <C>       <C>            <C>           <C>          <C>        <C>
ACCESS TECHNOLOGY PARTNERS BROKERS
FUND, L.P.                                                                                   12,782        747

Attn:  Shannon Horton

H&Q COSINE COMMUNICATIONS
INVESTORS, LLC                                                                               67,104

THE GOLDMAN SACHS GROUP, INC.                                                               718,973     59,260

ATTN:  Joe di Sabato

STONE STREET FUND 1999, L.P.                                                                 79,886      7,407

ATTN:  Joe di Sabato

TUDOR BVI FUTURES, LTD.                                                                     154,750
--------------------------------------------------------------------------------------------------------------
</TABLE>


<PAGE>   162
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
                                       COMMON    SERIES         SERIES        SERIES       SERIES     SERIES
INVESTOR                               STOCK       A               B            C             D          E
--------------------------------------------------------------------------------------------------------------
<S>                                    <C>       <C>            <C>           <C>          <C>        <C>
RAPTOR GLOBAL FUND, L.P.                                                                     70,556

RAPTOR GLOBAL FUND, LTD.                                                                    345,307

AT&T VENTURE FUND II, LP                                                                    314,408

SPECIAL PARTNERS FUND, LP                                                                   117,137

SPECIAL  PARTNERS FUND
INTERNATIONAL, LP                                                                           652,620

GREEN VENTURE CAPITAL II, L.P.                                                              142,653

Attn:  Donald Green
--------------------------------------------------------------------------------------------------------------
</TABLE>


<PAGE>   163
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
                                       COMMON    SERIES         SERIES        SERIES       SERIES     SERIES
INVESTOR                               STOCK       A               B            C             D          E
--------------------------------------------------------------------------------------------------------------
<S>                                    <C>       <C>            <C>           <C>          <C>        <C>
PAUL JOHNSON                                                                                 14,265

TW CAPITAL I INC.                                                                            14,265

SINGTEL VENTURES (SINGAPORE)
LTD PTE                                                                                     570,613

COSINUS INVESTMENT FUND II, LLC                                                                      1,333,334

c/o Synapse Capital, LLC

Attn:   Henri Tchen

OCTANE CAPITAL                                                                                        666,667

ATTN:  Emeric Macdonald
--------------------------------------------------------------------------------------------------------------
</TABLE>


<PAGE>   164
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
                                       COMMON    SERIES         SERIES        SERIES       SERIES     SERIES
INVESTOR                               STOCK       A               B            C             D          E
--------------------------------------------------------------------------------------------------------------
<S>                                    <C>       <C>            <C>           <C>          <C>        <C>
EMERIC MCDONALD                                                                                        133,333

JEANNETTE AND DAVID L. SCHIRTZINGER                                                                      2,667

Attn:   Jeannette Schirtzinger

JOHN ARRILLAGA, TRUSTEE OR                                                                              33,333
SUCCESSOR TRUSTEE OF THE RICHARD
T, PEERY 1976 CHILDREN TRUSTS
UNDER TRUST AGREEMENT DATED
12/27/76.

Attn:   Jeannette Schirtzinger

JOHN ARRILLAGA, JR., TRUSTEE OR                                                                         16,667
SUCCESSOR TRUSTEE OF THE JOHN
ARRILLAGA 1976 CHILDREN TRUSTS
UNDER TRUST AGREEMENT DATED
12/27/76 FBO LAURA K. ARRILLAGA

Attn:   Jeannette Schirtzinger
--------------------------------------------------------------------------------------------------------------
</TABLE>


<PAGE>   165
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
                                       COMMON    SERIES         SERIES        SERIES       SERIES     SERIES
INVESTOR                               STOCK       A               B            C             D          E
--------------------------------------------------------------------------------------------------------------
<S>                                    <C>       <C>            <C>           <C>          <C>        <C>
LAURA K. ARRILLAGA, TRUSTEE OR                                                                          16,667
SUCCESSOR TRUSTEE OF THE JOHN
ARRILLAGA 1976 CHILDREN TRUSTS
UNDER TRUST AGREEMENT DATED
12/27/76 FBO JOHN ARRILLAGA, JR.

Attn:   Jeannette Schirtzinger

NETWORK ASSOCIATES, INC.                                                                               666,667

Attn:   Prabhat K. Goyal

Attn:   Kent Roberts

NISSHO ELECTRONICS CORP                                                                                100,000

ATTN:  Fumio Ohashi

FUSION COMMUNICATIONS CORPORATION                                                                       33,333

ATTN:  Tak Tsuji
--------------------------------------------------------------------------------------------------------------
</TABLE>


<PAGE>   166
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
                                       COMMON    SERIES         SERIES        SERIES       SERIES     SERIES
INVESTOR                               STOCK       A               B            C             D          E
--------------------------------------------------------------------------------------------------------------
<S>                                    <C>       <C>            <C>           <C>          <C>        <C>
GLOBE LINQ INTERNATIONAL FUND I,
LLC                                                                                                     66,667

Attn:   Ken Yasunaga

INTERNET INITIATIVE JAPAN                                                                               44,667

Attn:   Toshiya Asaba

SYBAT
PARTNERS                                                                                                33,333

Attn:   Mory Ejabat

DAVE ROBISON                                                                                            16,667

MARTY HAHNFELD                                                                                          13,333

--------------------------------------------------------------------------------------------------------------
</TABLE>


<PAGE>   167
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
                                       COMMON    SERIES         SERIES        SERIES       SERIES     SERIES
INVESTOR                               STOCK       A               B            C             D          E
--------------------------------------------------------------------------------------------------------------
<S>                                    <C>       <C>            <C>           <C>          <C>        <C>
STEVE DANIELS                                                                                            3,333

SCOTT SPRAGUE                                                                                           10,000

DAN JACKSON                                                                                             10,000

CHAMPION ANGELS                                                                                         50,000

Attn:   Ronnie Lott
--------------------------------------------------------------------------------------------------------------
</TABLE>


<PAGE>   168
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
                                       COMMON    SERIES         SERIES        SERIES       SERIES     SERIES
INVESTOR                               STOCK       A               B            C             D          E
--------------------------------------------------------------------------------------------------------------
<S>                                    <C>       <C>            <C>           <C>          <C>        <C>
JOHN ELWAY                                                                                               8,000

Attn:   Jeff Sperbeck

JEFF SPERBECK                                                                                            2,000

REYNIE ORTIZ                                                                                            20,000

DAN O'CALLAGHNAN                                                                                        13,333

--------------------------------------------------------------------------------------------------------------
</TABLE>


<PAGE>   169
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
                                       COMMON    SERIES         SERIES        SERIES       SERIES     SERIES
INVESTOR                               STOCK       A               B            C             D          E
--------------------------------------------------------------------------------------------------------------
<S>                                    <C>       <C>            <C>           <C>          <C>        <C>
BRIAN LEVY                                                                                               6,667

JEFF DONAHUE                                                                                            20,000

CHRISTOS COTSAKOS                                                                                       13,333

Attn:   Tom Bevilacqua
--------------------------------------------------------------------------------------------------------------
</TABLE>


<PAGE>   170
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
                                       COMMON    SERIES         SERIES        SERIES       SERIES     SERIES
INVESTOR                               STOCK       A               B            C             D          E
--------------------------------------------------------------------------------------------------------------
<S>                                    <C>       <C>            <C>           <C>          <C>        <C>
DONALD CRUME                                                                                            10,000

RUANN F. ERNST & WILLIAM C. RIFFLE                                                                       3,333

Attn: Bill Riffle

CATHERINE HAPKA                                                                                          6,667

FREDERICK W. WEIDINGER                                                                                   6,667

Attn:   Rick Weidinger

CHRIS DEMARCHE                                                                                           6,667
--------------------------------------------------------------------------------------------------------------
</TABLE>


<PAGE>   171
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
                                       COMMON    SERIES         SERIES        SERIES       SERIES     SERIES
INVESTOR                               STOCK       A               B            C             D          E
--------------------------------------------------------------------------------------------------------------
<S>                                    <C>       <C>            <C>           <C>          <C>        <C>
GERARD M. VAZQUEZ                                                                                        6,667

THOMSEN LIVING TRUST DATED 5/27/99                                                                       6,667

Attn:   Marcia Thomsen

BARKLAY KNAPP                                                                                           13,333

Log Cabin LLC                                                                                            6,667

Attn:   William L. Schrader
--------------------------------------------------------------------------------------------------------------
</TABLE>


<PAGE>   172
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
                                       COMMON    SERIES         SERIES        SERIES       SERIES     SERIES
INVESTOR                               STOCK       A               B            C             D          E
--------------------------------------------------------------------------------------------------------------
<S>                                    <C>       <C>            <C>           <C>          <C>        <C>
PETE WILLS                                                                                               6,667

MIKE HENRY                                                                                              10,000

TERRY LEE                                                                                                6,667
--------------------------------------------------------------------------------------------------------------
</TABLE>


<PAGE>   173
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
                                       COMMON    SERIES         SERIES        SERIES       SERIES     SERIES
INVESTOR                               STOCK       A               B            C             D          E
--------------------------------------------------------------------------------------------------------------
<S>                                    <C>       <C>            <C>           <C>          <C>        <C>
CROSBY HAFNER                                                                                            6,667

DANA ZITEK & ROXANN ZITEK                                                                               10,000

Attn:   Dana Zitek
--------------------------------------------------------------------------------------------------------------
    TOTAL:                           6,666,664   1,875,000     12,884,205   24,503,677   17,118,253  4,666,668
--------------------------------------------------------------------------------------------------------------
</TABLE>


Footnotes:

(1)     Holder of this warrant is entitled to purchase 84,688 shares of Series B
        Preferred Stock.

(2)     Holder of this warrant is entitled to purchase up to a maximum of
        304,878 shares of Series B Preferred Stock, subject to certain
        contingencies.

(3)     Holder of this warrant is entitled to purchase 157,915 shares of Series
        A Preferred Stock.

(4)     Holder of this warrant is entitled to purchase 1,875,403 shares of
        Series C Preferred Stock.