S2 TECHNOLOGIES, INC.


                   SERIES B PREFERRED STOCK PURCHASE AGREEMENT

                                OCTOBER 18, 2001


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<TABLE>
                                                 TABLE OF CONTENTS
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                                                                                                               PAGE
<S>                                                                                                              <C>
1.       AGREEMENT TO SELL AND PURCHASE...........................................................................2

         1.1      Authorization of Shares.........................................................................2

         1.2      Sale and Purchase...............................................................................2

2.       CLOSING, DELIVERY AND PAYMENT............................................................................2

         2.1      First Closing and Subsequent First Closing......................................................2

         2.2      Second Closing..................................................................................3

         2.3      Delivery........................................................................................3

3.       REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................................................3

         3.1      Organization, Good Standing and Qualification...................................................3

         3.2      Subsidiaries....................................................................................4

         3.3      Capitalization; Voting Rights...................................................................4

         3.4      Authorization; Binding Obligations..............................................................5

         3.5      Liabilities.....................................................................................5

         3.6      Agreements; Action..............................................................................5

         3.7      Obligations to Related Parties..................................................................6

         3.8      Title to Properties and Assets; Liens, Etc......................................................6

         3.9      Intellectual Property...........................................................................7

         3.10     Compliance with Other Instruments...............................................................8

         3.11     Litigation......................................................................................8

         3.12     Tax Returns and Payments........................................................................8

         3.13     Employees.......................................................................................8

         3.14     Obligations of Management.......................................................................9

         3.15     Registration Rights and Voting Rights...........................................................9

         3.16     Compliance with Laws; Permits...................................................................9

         3.17     Offering Valid..................................................................................9

         3.18     Full Disclosure................................................................................10

         3.19     Section 83(b) Elections........................................................................10

         3.20     Insurance......................................................................................10

         3.21     Qualified Small Business.......................................................................10

         3.22     U.S. Real Property Holding Corporation.........................................................10

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                                                 TABLE OF CONTENTS
                                                     (CONTINUED)
                                                                                                               PAGE

         3.23     Compliance with Environmental Laws.............................................................11

         3.24     Minute Books...................................................................................11

4.       REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS........................................................11

         4.1      Requisite Power and Authority..................................................................11

         4.2      Investment Representations.....................................................................11

         4.3      Transfer Restrictions..........................................................................13

5.       CONDITIONS TO CLOSING...................................................................................13

         5.1      Conditions to Purchasers' Obligations at the First Closing.....................................13

         5.2      Conditions to Purchasers' Obligations at the Subsequent First Closing and at the
                  Second Closing.................................................................................15

         5.3      Conditions to Obligations of the Company.......................................................15

6.       MISCELLANEOUS...........................................................................................16

         6.1      Governing Law..................................................................................16

         6.2      Survival.......................................................................................16

         6.3      Successors and Assigns.........................................................................16

         6.4      Entire Agreement...............................................................................16

         6.5      Severability...................................................................................16

         6.6      Amendment and Waiver...........................................................................17

         6.7      Delays or Omissions............................................................................17

         6.8      Notices........................................................................................17

         6.9      Expenses.......................................................................................17

         6.10     Attorneys' Fees................................................................................18

         6.11     Titles and Subtitles...........................................................................18

         6.12     Counterparts...................................................................................18

         6.13     Broker's Fees..................................................................................18

         6.14     Confidentiality................................................................................18

         6.15     Pronouns.......................................................................................18

         6.16     California Corporate Securities Law............................................................18
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                                                             ii


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                              S2 TECHNOLOGIES, INC.
                   SERIES B PREFERRED STOCK PURCHASE AGREEMENT


         THIS SERIES B PREFERRED STOCK PURCHASE  AGREEMENT (the  "Agreement") is
made and entered  into as of October  18,  2001,  by and among S2  TECHNOLOGIES,
INC., a California  corporation (the  "Company"),  and each of those persons and
entities,  severally and not jointly,  whose names are set forth on the Schedule
of  Purchasers  attached  hereto as Exhibit A (which  persons and  entities  are
hereinafter  collectively referred to as "Purchasers" and each individually as a
"Purchaser").  Together,  the  Company  and the  Purchasers  are  referred to as
"parties" and each as a "party."

                                    RECITALS

         WHEREAS,  the  Company  has  authorized  the  sale and  issuance  of an
aggregate  of  nine  million  nine  hundred  sixty-four   thousand  two  hundred
eighty-six (9,964,286) shares of its Series B Preferred Stock (the "Shares");

         WHEREAS,  certain  Purchasers have provided loans to the Company in the
aggregate principal amount of three hundred thousand dollars ($300,000) pursuant
to  Promissory  Notes (the  "Notes") on the terms set forth in that certain Note
Purchase  Agreement (the "Note Purchase  Agreement") dated as of June ___, 2001,
by and among the Company and the  Purchasers set forth on Exhibit A thereto (the
"Holders");

         WHEREAS,  pursuant to Section 1.4 of the Note Purchase  Agreement,  the
Company has agreed to issue to the Holders  warrants  for the purchase of shares
of the Company's capital stock under certain circumstances (the "Warrants");

         WHEREAS,  in  connection  with  the  transactions  contemplated  herein
certain of the Holders have agreed to waive their rights to such Warrants;

         WHEREAS, as partial consideration for their purchase of the Shares, the
Holders desire to convert all outstanding principal under the Notes into Shares;

         WHEREAS,  Purchasers  desire to  purchase  the  Shares on the terms and
conditions set forth herein; and

         WHEREAS, the Company desires to issue and sell the Shares to Purchasers
on the terms and conditions set forth herein.

                                    AGREEMENT

         NOW,  THEREFORE,  in  consideration  of the foregoing  recitals and the
mutual  promises,  representations,  warranties,  and covenants  hereinafter set
forth and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:


                                       1
<PAGE>

         1. AGREEMENT TO SELL AND PURCHASE.

                  1.1  Authorization  of Shares.  On or prior to the Closing (as
defined in Section 2 below),  the Company shall have authorized (a) the sale and
issuance  to  Purchasers  of the Shares and (b) the  issuance  of such shares of
Common  Stock to be  issued  upon  conversion  of the  Shares  (the  "Conversion
Shares").   The  Shares  and  the  Conversion  Shares  shall  have  the  rights,
preferences,  privileges and  restrictions set forth in the Amended and Restated
Articles of Incorporation of the Company, in the form attached hereto as Exhibit
B (the "Restated Charter").

                  1.2 Sale and  Purchase.  Subject  to the terms and  conditions
hereof,  (i) at the First  Closing (as  hereinafter  defined) the Company  shall
issue and sell to each Purchaser,  severally and not jointly, and each Purchaser
shall purchase from the Company, severally and not jointly, the number of Shares
set forth opposite such  Purchaser's  name on Exhibit A under the heading "First
Closing," at a purchase price of thirty-five  cents ($0.35) per share,  and (ii)
at the  Second  Closing  (as  herein  after  defined),  at the  option  of  each
Purchaser, the Company shall issue and sell to each Purchaser, severally and not
jointly,  and each  Purchaser may purchase  from the Company,  severally and not
jointly,  the  number of Shares  set forth  opposite  such  Purchaser's  name on
Exhibit A under the heading "Second Closing," at a purchase price of thirty-five
cents  ($0.35)  per  share.   The  Company  and  the  Holders   further   agree,
notwithstanding any provision in the Notes or the Note Purchase Agreement to the
contrary,  that (i) each Note shall automatically  convert as of the date of the
First  Closing,  without  requiring  any  further  action by the  Company or the
Holders,  into a number of Shares equal to the outstanding  principal  amount on
such Note divided by a price per Share of thirty-five  cents  ($0.35),  (ii) any
default by the Company  prior to the date of this  Agreement  for any failure by
the  Company to repay  amounts due under the Notes is hereby  waived,  including
without limitation any right to the Series A Conversion (as that term is defined
in the Note  Purchase  Agreement),  and (iii)  each Note is  hereby  amended  to
provide  that the date and time on which the Notes  become  due and  payable  is
extended  until the date and time of the First  Closing (as defined  below).  In
addition,  Oryx Technology Corp.  hereby waives any and all interest in or right
to  receive  any  and all  Warrants  due to it  pursuant  to the  Note  Purchase
Agreement.

         2. CLOSING, DELIVERY AND PAYMENT.

                  2.1 First Closing and Subsequent First Closing. The closing of
the sale and  purchase  of a minimum of  3,750,000  Shares  set forth  under the
heading "First  Closing" on Exhibit A (the "First  Closing") shall take place at
12:00 p.m. on the date hereof,  at the offices of Cooley  Godward LLP located at
4401 Eastgate  Mall,  San Diego,  CA 92121 or at such other time or place as the
Company and Purchasers may mutually agree (such date is hereinafter  referred to
as the "First Closing Date").  At any time after the First Closing but not later
than October 31, 2001, or at such other time as the Company and the holders of a
majority of the Shares  actually  purchased  at the First  Closing may  mutually
agree, the Company may sell up to the balance of the Shares approved for sale at
the First Closing as listed under the heading  "First  Closing" on Exhibit A, to
the  Purchasers  who  did  not  participate  in the  First  Closing  and who are
identified therein (referred to herein as the "Subsequent First Closing").


                                       2
<PAGE>

                  2.2 Second Closing. The closing of the sale and purchase of up
to the total  number of Shares set forth under the heading  "Second  Closing" on
Exhibit A (the "Second Closing," the First Closing, the Subsequent First Closing
and the Second  Closing are  sometimes  referred to herein  collectively  as the
"Closing")  shall take place at the offices of Cooley  Godward LLP (as set forth
above) not later than 120 days  following the First  Closing.  The specific time
and place of the Second Closing shall be agreed in writing among the Company and
a majority in interest of the Purchasers by not later than 90 days following the
First  Closing  (such date is  hereinafter  referred to as the  "Second  Closing
Date"),  but if no such agreement  occurs,  then such Second Closing shall occur
120 days after the First Closing (if such date is not a business day (defined as
any weekday other than a United  States of America or  California  holiday) then
such Second Closing shall be on the first immediately  following business day.).
In connection with each  Purchaser's  consent to the date of the Second Closing,
each such Purchaser  shall indicate the portion of the Shares set forth opposite
such  Purchaser's  name under the heading "Second  Closing" on Exhibit A that it
intends to  purchase at said Second  Closing  and shall  submit  payment for the
Shares  that it  intends  to  purchase  by not later  than 15 days  prior to the
scheduled date of the Second Closing (the "Second Closing Payment Deadline"). If
(a) a Purchaser indicates that it intends to purchase fewer than the full number
of Shares set forth  opposite such  Purchaser's  name under the heading  "Second
Closing" on Exhibit A, then it shall  forfeit  its right to  purchase  all other
Shares listed for its purchase at the Second Closing (the "Forfeited Shares") or
(b) a  Purchaser  fails to deliver  payment  for the  Shares  that it intends to
purchase at the Second Closing by the Second Closing Payment Deadline, then said
Purchaser shall be deemed to have forfeited its right to purchase all Shares for
which it has not paid (also the "Forfeited Shares"). Upon such forfeiture,  Oryx
may  itself  purchase,  or it may  select  one or more  third  parties  that are
reasonably acceptable to the Board of Directors of the Company to purchase,  any
or all of such  Forfeited  Shares at the Second  Closing.  All such sales of the
Forfeited  Shares  shall be made on the terms and  conditions  set forth in this
Agreement as they apply to the Second Closing.  Any third party participating in
such Second  Closing  shall become a party to this  Agreement  by executing  and
delivering a counterpart  signature page to this Agreement and shall  thereafter
be deemed a  "Purchaser"  and a party  hereunder  and such person  shall also be
required to execute all other documents required of Purchasers in a Closing.  At
the Second Closing,  the Company will undertake to update the attached Exhibit A
to reflect the actual  identities of each Purchaser and the  respective  amounts
purchased at each Closing.

                  2.3  Delivery.  At each  Closing,  subject  to the  terms  and
conditions  hereof,  the Company  will deliver to each  Purchaser a  certificate
representing  the number of Shares  purchased at the Closing by such  Purchaser,
against  payment of the purchase  price  therefor by check,  wire  transfer made
payable  to the  order  of the  Company,  cancellation  of  indebtedness  or any
combination of the foregoing.

         3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

                  Except as set forth on a Schedule of  Exceptions  delivered by
the Company to the Purchasers at the Closing,  the Company hereby represents and
warrants to each Purchaser as of the date of this Agreement as set forth below.

                  3.1 Organization, Good Standing and Qualification. The Company
is a corporation duly organized, validly existing and in good standing under the
laws of the State of


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<PAGE>

California.  The Company has all requisite  corporate power and authority to own
and operate its  properties and assets,  to execute and deliver this  Agreement,
the Amended and Restated  Investor Rights  Agreement in the form attached hereto
as Exhibit C (the "Investor Rights Agreement"), the Amended and Restated Co-Sale
Agreement in the form attached  hereto as Exhibit D (the  "Co-Sale  Agreement"),
and the Amended and Restated  Voting  Agreement in the form  attached  hereto as
Exhibit E (the "Voting Agreement") (collectively,  the "Related Agreements"), to
issue  and sell the  Shares  and the  Conversion  Shares,  and to carry  out the
provisions of this Agreement,  the Related  Agreements and the Restated  Charter
and to carry on its business as presently conducted and as presently proposed to
be conducted.

                  3.2  Subsidiaries.  The  Company  does not own or control  any
equity security or other interest of any other corporation,  limited partnership
or other business entity. The Company is not a participant in any joint venture,
partnership or similar arrangement.

                  3.3 Capitalization; Voting Rights.

                           (a) The  authorized  capital  stock  of the  Company,
immediately prior to the First Closing, consists of (i) ten million (10,000,000)
shares of Common Stock, five million four hundred thousand (5,400,000) shares of
which  are  issued  and  outstanding,  and  (ii)  twelve  million  five  hundred
ninety-two thousand five hundred  ninety-three  (12,592,593) shares of Preferred
Stock, two million five hundred  ninety-two  thousand five hundred  ninety-three
(2,592,593)  shares of which are  designated  Series A Preferred  Stock,  all of
which are issued and outstanding,  and ten million  (10,000,000) shares of which
are  designated   Series  B  Preferred  Stock,  none  of  which  is  issued  and
outstanding.

                           (b) Under the Company's  2000 Equity  Incentive  Plan
(the  "Plan"),  (i) three  hundred  thousand  (300,000)  shares have been issued
pursuant  to  restricted  stock  purchase  agreements  and/or  the  exercise  of
outstanding options,  (ii) options to purchase three hundred fifty-five thousand
(355,000)   shares  of  Common  Stock  have  been  granted  and  are   currently
outstanding,  and (iii) nine  hundred  fifty-two  thousand  four  hundred  seven
(952,407)  shares of Common  Stock  remain  available  for  future  issuance  to
officers, directors, employees and consultants of the Company.

                           (c) Other than (i) the shares  reserved  for issuance
under the Plan, (ii) warrants to purchase up to seven hundred thousand (700,000)
shares  of  Common  Stock  pursuant  to that  certain  Business  Consultant  and
Management  Agreement  dated  July  20,  2000,  between  the  Company  and  Oryx
Technologies,  Inc.,  and (iii)  warrants to purchase up to thirty five thousand
seven hundred fourteen (35,714) shares of the Company's Series B Preferred Stock
issuable  to VMR High Octane  Fund  pursuant  to the terms of the Note  Purchase
Agreement,  and  except as may be granted  pursuant  to this  Agreement  and the
Related  Agreements,   there  are  no  outstanding  options,   warrants,  rights
(including  conversion or preemptive rights and rights of first refusal),  proxy
or  shareholder  agreements,  or  agreements  of any  kind for the  purchase  or
acquisition from the Company of any of its securities.

                           (d)  All  issued  and   outstanding   shares  of  the
Company's  Common Stock (i) have been duly authorized and validly issued and are
fully paid and nonassessable, and


                                       4
<PAGE>

(ii) were  issued in  compliance  with all  applicable  state and  federal  laws
concerning the issuance of securities.

                           (e)   The   rights,   preferences,   privileges   and
restrictions of the Shares are as stated in the Restated Charter. Each series of
Preferred  Stock is convertible  into Common Stock on a one-for-one  basis as of
the date hereof.  The Conversion  Shares have been duly and validly reserved for
issuance.  When issued in compliance  with the  provisions of this Agreement and
the  Restated  Charter,  the Shares and the  Conversion  Shares  will be validly
issued,  fully  paid  and  nonassessable,  and  will  be free  of any  liens  or
encumbrances;  provided,  however, that the Shares and the Conversion Shares may
be subject to  restrictions  on transfer under state and/or  federal  securities
laws as set forth  herein or as  otherwise  required  by such laws at the time a
transfer is  proposed  and will be subject to the terms of the  Investor  Rights
Agreement, Co-Sale Agreement and the Company's Bylaws.

                           (f) No stock plan,  stock  purchase,  stock option or
other  agreement  or  understanding  between  the  Company and any holder of any
equity  securities  or  rights  to  purchase  equity  securities   provides  for
acceleration  or other changes in the vesting  provisions or other terms of such
agreement or understanding as the result of any merger,  consolidation,  sale of
stock or assets, change in control or any other transaction(s) by the Company.

                  3.4 Authorization;  Binding Obligations.  All corporate action
on the part of the Company, its officers,  directors and shareholders  necessary
for  the  authorization  of  this  Agreement  and the  Related  Agreements,  the
performance of all  obligations  of the Company  hereunder and thereunder at the
Closing  and the  authorization,  sale,  issuance  and  delivery  of the  Shares
pursuant hereto and the Conversion  Shares pursuant to the Restated  Charter has
been taken or will be taken prior to the First  Closing.  The  Agreement and the
Related  Agreements,  when  executed  and  delivered,  will be valid and binding
obligations of the Company  enforceable in accordance  with their terms,  except
(a) as limited by applicable bankruptcy, insolvency, reorganization,  moratorium
or other laws of general application affecting enforcement of creditors' rights,
(b) general  principles  of equity that restrict the  availability  of equitable
remedies,  and (c) to the extent that the enforceability of the  indemnification
provisions  in Section 2.9 of the Investor  Rights  Agreement  may be limited by
applicable  laws.  The sale of the Shares and the  subsequent  conversion of the
Shares into Conversion  Shares are not and will not be subject to any preemptive
rights or rights of first refusal that have not been properly waived or complied
with.

                  3.5 Liabilities.  The Company has no material  liabilities and
knows of no material contingent liabilities, except current liabilities incurred
in the ordinary course of business which have not been, either in any individual
case or in the aggregate, materially adverse.

                  3.6 Agreements; Action.

                           (a) Except  for  agreements  explicitly  contemplated
hereby and  agreements  between the Company and its  individual  employees  with
respect to the sale of the  Company's  Common  Stock,  there are no  agreements,
understandings  or  proposed  transactions  between  the  Company and any of its
officers, directors, affiliates or any affiliate thereof.


                                       5
<PAGE>

                           (b)   There   are  no   agreements,   understandings,
instruments,  contracts,  proposed  transactions,  judgments,  orders,  writs or
decrees  to which  the  Company  is a party or by  which it is bound  which  may
involve (i)  obligations  (contingent  or  otherwise)  of, or  payments  to, the
Company in excess of $25,000  (other than  obligations  of, or payments  to, the
Company  arising from purchase or sale  agreements  entered into in the ordinary
course of business),  or (ii) the transfer or license of any patent,  copyright,
trade  secret or other  proprietary  right to or from the  Company  (other  than
licenses  arising  from the  purchase  of "off  the  shelf"  or  other  standard
products), or (iii) indemnification by the Company with respect to infringements
of  proprietary  rights  (other than  indemnification  obligations  arising from
purchase  or sale or license  agreements  entered  into by the  Company  for the
benefit of its customers in the ordinary course of business).

                           (c) The  Company  has not (i)  declared  or paid  any
dividends,  or authorized or made any  distribution  upon or with respect to any
class or series of its capital stock,  (ii) incurred any  indebtedness for money
borrowed  or  any  other  liabilities  (other  than  with  respect  to  dividend
obligations,  distributions,  indebtedness and other obligations incurred in the
ordinary  course of business)  individually in excess of $25,000 or, in the case
of indebtedness and/or liabilities  individually less than $25,000, in excess of
$50,000 in the aggregate,  (iii) made any loans or advances to any person, other
than ordinary advances for travel expenses, or (iv) sold, exchanged or otherwise
disposed of any of its assets or rights, other than the sale of its inventory in
the ordinary course of business.

                           (d)  For  the  purposes  of  subsections  (b) and (c)
above, all indebtedness,  liabilities, agreements, understandings,  instruments,
contracts  and  proposed  transactions  involving  the  same  person  or  entity
(including  persons or entities the Company has reason to believe are affiliated
therewith) shall be aggregated for the purpose of meeting the individual minimum
dollar amounts of such subsections.

                  3.7 Obligations to Related  Parties.  There are no obligations
of the Company to officers, directors, shareholders, or employees of the Company
other than (a) for payment of salary for services  rendered,  (b)  reimbursement
for reasonable expenses incurred on behalf of the Company,  and/or (c) for other
standard employee benefits made generally available to all employees  (including
stock option agreements  outstanding under any stock option plan approved by the
Board  of  Directors  of the  Company).  None of the  officers,  directors,  key
employees  or  shareholders  of the Company,  or any members of their  immediate
families, is indebted to the Company. None of the officers, directors or, to the
best of the Company's knowledge, key employees or shareholders of the Company or
any members of their immediate  families,  has any direct or indirect  ownership
interest in any firm or corporation with which the Company is affiliated or with
which the Company has a business relationship,  or any firm or corporation which
competes with the Company,  other than passive  investments  in publicly  traded
companies (representing less than 1% of such company) which may compete with the
Company. The Company is not a guarantor or indemnitor of any indebtedness of any
other person, firm or corporation.

                  3.8 Title to Properties  and Assets;  Liens,  Etc. The Company
has good and  marketable  title to its  properties  and  assets,  including  the
properties and assets reflected in the Company's most recent balance sheet dated
August 31, 2001, a copy of which has been provided


                                       6
<PAGE>

to the Purchasers, and good title to its leasehold estates, in each case subject
to no mortgage, pledge, lien, lease, encumbrance or charge, other than (a) those
resulting from taxes which have not yet become  delinquent,  (b) minor liens and
encumbrances  which do not  materially  detract  from the value of the  property
subject  thereto or materially  impair the  operations  of the Company,  and (c)
those that have otherwise arisen in the ordinary course of business. The Company
is in compliance with all material terms of each lease to which it is a party or
is otherwise bound.

                  3.9 Intellectual Property.

                           (a) The Company  owns or possesses  sufficient  legal
rights to all patents, trademarks, service marks, trade names, copyrights, trade
secrets,  licenses,  information  and other  proprietary  rights  and  processes
necessary  for its business as now  conducted  and as  presently  proposed to be
conducted,  without any known infringement of the rights of others. There are no
outstanding  options,  licenses  or  agreements  of  any  kind  relating  to the
foregoing  proprietary  rights,  nor is the  Company  bound by or a party to any
options,  licenses  or  agreements  of any kind  with  respect  to the  patents,
trademarks,  service marks, trade names,  copyrights,  trade secrets,  licenses,
information  and other  proprietary  rights and processes of any other person or
entity other than such licenses or agreements  arising from the purchase of "off
the shelf" or standard products.

                           (b) The Company has not received  any  communications
alleging  that the  Company  has  violated  or, by  conducting  its  business as
presently  proposed in the Business  Plan (as defined in Section  3.18  hereof),
would  violate any of the  patents,  trademarks,  service  marks,  trade  names,
copyrights or trade secrets or other  proprietary  rights of any other person or
entity.

                           (c)  The  Company  is  not  aware  that  any  of  its
employees is  obligated  under any contract  (including  licenses,  covenants or
commitments  of any  nature) or other  agreement,  or  subject to any  judgment,
decree or order of any court or administrative agency, that would interfere with
their duties to the Company or that would  conflict with the Company's  business
as  presently  proposed to be conducted in the  Business  Plan.  Each  employee,
officer and consultant of the Company has executed a proprietary information and
inventions  agreement  in the form of Exhibit G attached  hereto.  No  employee,
officer or consultant of the Company has excluded works or inventions made prior
to his or  her  employment  with  the  Company  from  his or her  assignment  of
inventions  pursuant  to such  employee,  officer  or  consultant's  proprietary
information and inventions agreement. The Company does not believe it is or will
be necessary to utilize any inventions, trade secrets or proprietary information
of any of its employees  made prior to their  employment by the Company,  except
for inventions, trade secrets or proprietary information that have been assigned
to the Company.

                           (d)  Neither  the  execution  nor  delivery  of  this
Agreement  or the  Related  Agreements,  nor the  carrying  on of the  Company's
business by the  employees  of the  Company,  nor the  conduct of the  Company's
business [as  presently  proposed in the Business  Plan,] will, to the Company's
knowledge,  conflict  with or  result in a breach of the  terms,  conditions  or
provisions  of, or  constitute  a  default  under,  any  contract,  covenant  or
instrument under which any employee is now obligated.


                                       7
<PAGE>

                  3.10 Compliance with Other Instruments.  The Company is not in
violation  or default of any term of its Restated  Charter or Bylaws,  or of any
provision  of  any  mortgage,  indenture,  contract,  agreement,  instrument  or
contract  to which  it is  party  or by  which  it is bound or of any  judgment,
decree, order, writ. The execution,  delivery, and performance of and compliance
with this Agreement,  and the Related  Agreements,  and the issuance and sale of
the Shares pursuant hereto and of the Conversion Shares pursuant to the Restated
Charter,  will not,  with or  without  the  passage of time or giving of notice,
result in any such  material  violation,  or be in conflict with or constitute a
default under any such term, or result in the creation of any mortgage,  pledge,
lien,  encumbrance or charge upon any of the properties or assets of the Company
or the  suspension,  revocation,  impairment,  forfeiture  or  nonrenewal of any
permit,  license,  authorization  or approval  applicable  to the  Company,  its
business  or  operations  or any of its assets or  properties.  The  Company has
avoided every condition,  and has not performed any act, the occurrence of which
would  result in the  Company's  loss of any right  granted  under any  license,
distribution  agreement  or other  agreement  required  to be  disclosed  on the
Schedule of Exceptions.

                  3.11  Litigation.  There is no  action,  suit,  proceeding  or
investigation  pending  or, to the  Company's  knowledge,  currently  threatened
against the Company  that  questions  the  validity  of this  Agreement,  or the
Related  Agreements  or the  right  of the  Company  to  enter  into any of such
agreements, or to consummate the transactions contemplated hereby or thereby, or
which might result,  either  individually  or in the aggregate,  in any material
adverse  change in the assets,  condition,  affairs or prospects of the Company,
financially or otherwise,  or any change in the current equity  ownership of the
Company,  nor is the  Company  aware  that  there  is any  basis  for any of the
foregoing.  The foregoing includes,  without limitation,  actions pending or, to
the Company's  knowledge,  threatened or any basis therefor known by the Company
involving the prior employment of any of the Company's  employees,  their use in
connection  with  the  Company's  business  of  any  information  or  techniques
allegedly  proprietary to any of their former  employers,  or their  obligations
under any agreements with prior employers. The Company is not a party or subject
to the  provisions  of any order,  writ,  injunction,  judgment or decree of any
court  or  government  agency  or  instrumentality.  There is no  action,  suit,
proceeding  or  investigation  by the  Company  currently  pending  or which the
Company intends to initiate.

                  3.12 Tax Returns and  Payments.  The Company has filed all tax
returns  (federal,  state and local) required to be filed by it. All taxes shown
to be due and  payable on such  returns,  any  assessments  imposed,  and to the
Company's  knowledge all other taxes due and payable by the Company on or before
the First Closing,  have been paid or will be paid prior to the time they become
delinquent.  The  Company has no  knowledge  of any  liability  of any tax to be
imposed upon its  properties or assets as of the date of this  Agreement that is
not adequately provided for.

                  3.13  Employees.  The  Company  has no  collective  bargaining
agreements  with  any of its  employees.  There  is no  labor  union  organizing
activity pending or, to the Company's knowledge,  threatened with respect to the
Company.  The  Company  is not a party to or bound  by any  currently  effective
employment contract,  deferred compensation  arrangement,  bonus plan, incentive
plan, profit sharing plan,  retirement agreement or other employee  compensation
plan or agreement.  To the Company's knowledge,  no employee of the Company, nor
any consultant


                                       8
<PAGE>

with  whom  the  Company  has  contracted,  is in  violation  of any term of any
employment contract, proprietary information agreement or of any other agreement
relating to the right of any such  individual  to be employed by, or to contract
with,  the Company  because of the nature of the business to be conducted by the
Company;  and to the Company's knowledge the continued employment by the Company
of its present employees, and/or the performance of the Company's contracts with
its independent contractors,  will not result in any such violation. The Company
has not received any notice  alleging that any such  violation has occurred.  No
employee of the Company has been  granted the right to continued  employment  by
the Company or to any compensation  following termination of employment with the
Company. The Company has no knowledge that any officer, key employee or group of
employees  intends to terminate his, her or their  employment  with the Company,
nor does the Company have a present intention to terminate the employment of any
officer, key employee, group of employees, or contractor.

                  3.14 Obligations of Management.  Each officer and key employee
of the Company is currently  devoting  substantially  all of his or her business
time to the  conduct of the  business of the  Company.  The Company is not aware
that any  officer or key  employee  of the Company is planning to work less than
full time at the Company in the future.  No officer or key employee is currently
working  or,  to the  Company's  knowledge,  plans  to  work  for a  competitive
enterprise,  whether  or  not  such  officer  or  key  employee  is or  will  be
compensated by such enterprise.

                  3.15 Registration Rights and Voting Rights. Except as required
pursuant  to the  Investor  Rights  Agreement,  the  Company  is not  under  any
obligation,  and has not granted any rights,  to register (as defined in Section
1.1 of the Investor Rights Agreement) any of the Company's presently outstanding
securities  or any of its  securities  that  may  hereafter  be  issued.  To the
Company's  knowledge,  except  as  contemplated  in  the  Voting  Agreement,  no
shareholder  of the Company has entered into any  agreement  with respect to the
voting of equity securities of the Company.

                  3.16  Compliance  with Laws;  Permits.  The  Company is not in
violation of any applicable statute, rule,  regulation,  order or restriction of
any domestic or foreign  government or any  instrumentality or agency thereof in
respect of the conduct of its business or the ownership of its properties  which
violation  would   materially  and  adversely   affect  the  business,   assets,
liabilities,  financial  condition,  operations or prospects of the Company.  No
governmental  orders,  permissions,  consents,  approvals or authorizations  are
required to be obtained and no  registrations or declarations are required to be
filed in connection  with the  execution and delivery of this  Agreement and the
issuance of the Shares or the  Conversion  Shares,  except such as has been duly
and validly  obtained or filed, or with respect to any filings that must be made
after the Closing,  as will be filed in a timely manner. The Company (a) has all
franchises,  permits,  licenses  and any  similar  authority  necessary  for the
conduct of its  business as now being  conducted  by it, the lack of which could
materially and adversely affect the business, properties, prospects or financial
condition of the Company and (b) believes it can obtain, without undue burden or
expense,  any similar authority for the conduct of its business as planned to be
conducted in the Business Plan.

                  3.17   Offering   Valid.   Assuming   the   accuracy   of  the
representations  and  warranties  of the  Purchasers  contained  in Section  4.2
hereof,  the offer,  sale and issuance of the


                                       9
<PAGE>

Shares  and  the  Conversion   Shares  will  be  exempt  from  the  registration
requirements of the Securities Act of 1933, as amended (the  "Securities  Act"),
and will have been registered or qualified (or are exempt from  registration and
qualification) under the registration,  permit or qualification  requirements of
all applicable state  securities laws.  Neither the Company nor any agent on its
behalf has  solicited  or will solicit any offers to sell or has offered to sell
or will  offer to sell all or any part of the Shares to any person or persons so
as to bring  the sale of such  Shares by the  Company  within  the  registration
provisions of the Securities Act or any state securities laws.

                  3.18 Full Disclosure.  The Company has provided the Purchasers
with all  information  requested  by the  Purchasers  in  connection  with their
decision to purchase the Shares,  including all information the Company believes
is  reasonably  necessary  to  make  such  investment  decision.   Neither  this
Agreement,  the exhibits hereto,  the Related  Agreements nor any other document
delivered  by the  Company  to  Purchasers  or  their  attorneys  or  agents  in
connection herewith or therewith or with the transactions contemplated hereby or
thereby,  contain any untrue  statement of a material  fact nor, omit to state a
material  fact  necessary in order to make the  statements  contained  herein or
therein not misleading.  Notwithstanding  the foregoing,  the 2001 Business Plan
attached  hereto as  Exhibit I (the  "Business  Plan")  provided  to each of the
Purchasers  was prepared by the management of the Company in a good faith effort
to describe  the  Company's  presently  proposed  business  and products and the
markets  therefore.  The  assumptions  applied in preparing  the  Business  Plan
appeared  reasonable  to  management  as of the date  thereof and as of the date
hereof;  however,  there is no assurance that these assumptions will prove to be
valid or that the objectives set forth in the Business Plan will be achieved. To
the  Company's  knowledge,  there  are no facts  which  (individually  or in the
aggregate)  materially  adversely  affect  the  business,  assets,  liabilities,
financial  condition,  prospects or operations of the Company that have not been
set forth in the Agreement,  the exhibits hereto,  the Related  Agreements or in
other  documents  delivered  to  Purchasers  or their  attorneys  or  agents  in
connection herewith.

                  3.19 Section 83(b) Elections. To the Company's knowledge,  all
elections  and notices  permitted by Section 83(b) of the Code and any analogous
provisions of applicable  state tax laws have been timely filed by all employees
who have purchased  shares of the Company's  common stock under  agreements that
provide for the vesting of such shares.

                  3.20  Insurance.  The  Company  has or  will  obtain  promptly
following the Closing general commercial,  product liability,  fire and casualty
insurance policies with coverage  customary for companies  similarly situated to
the Company.

                  3.21  Qualified  Small  Business.  The Company  represents and
warrants to the Purchasers that, to the best of its knowledge,  the Company is a
"qualified small business" within the meaning of Section 1202(d) of the Internal
Revenue  Code of 1986,  as amended  (the  "Code") as of the date hereof and that
upon issuance the Shares should qualify as "qualified  small business  stock" as
defined in Section 1202(c) of the Code as of the date hereof.

                  3.22 U.S. Real Property  Holding  Corporation.  The Company is
not now and has never been a "United States real property  holding  corporation"
as  defined in  Section  897(c)(2)  of the Code and  Section  1.897-2(b)  of the
Regulations  promulgated by the


                                       10
<PAGE>

Internal  Revenue  Service,  and the Company has filed with the Internal Revenue
Service all statements,  if any, with its United States income tax returns which
are required under Section 1.897-2(h) of the such Regulations.

                  3.23 Compliance with  Environmental  Laws. The Company has not
caused or  allowed,  or  contracted  with any party for,  the  generation,  use,
transportation,  treatment,  storage or disposal of any Hazardous Substances (as
defined below) in connection with the operation of its business or otherwise. To
its knowledge, the Company, the operation of its business, and any real property
that the Company owns, leases or otherwise occupies or uses (the "Premises") are
in compliance  with all  applicable  Environmental  Laws (as defined  below) and
orders or directives of any governmental  authorities having  jurisdiction under
such Environmental  Laws. The Company has not received any citation,  directive,
letter or other communication, written or oral, or any notice of any proceeding,
claim or lawsuit,  from any person arising out of the ownership or occupation of
the Premises,  or the conduct of its operation,  and the Company is not aware of
any basis  therefor.  For purposes of this  Agreement,  the term  "Environmental
Laws" shall mean any  Federal,  state or local law or  ordinance  or  regulation
pertaining to the protection of human health or the environment. For purposes of
this  Agreement,  the term  "Hazardous  Substances"  shall include any materials
classified as hazardous or toxic under any Environmental Laws.

                  3.24  Minute  Books.  The  minute  books of the  Company  made
available  to the  Investors  contain a  complete  summary  of all  meetings  of
directors and shareholders of the Company since the time of incorporation of the
Company.

         4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.

                  Each Purchaser  hereby  represents and warrants to the Company
as follows  (such  representations  and  warranties do not lessen or obviate the
representations and warranties of the Company set forth in this Agreement):

                  4.1 Requisite Power and Authority. Purchaser has all necessary
power and  authority  under all  applicable  provisions  of law to  execute  and
deliver  this  Agreement  and the  Related  Agreements  and to carry  out  their
provisions. All action on Purchaser's part required for the lawful execution and
delivery  of this  Agreement  and the  Related  Agreements  have been or will be
effectively taken prior to the Closing. Upon their execution and delivery,  this
Agreement and the Related  Agreements  will be valid and binding  obligations of
Purchaser,  enforceable in accordance with their terms, except (a) as limited by
applicable bankruptcy, insolvency,  reorganization,  moratorium or other laws of
general application  affecting  enforcement of creditors' rights, (b) as limited
by general  principles  of equity that  restrict the  availability  of equitable
remedies,  and (c) to the extent that the enforceability of the  indemnification
provisions  of Section 2.9 of the Investor  Rights  Agreement  may be limited by
applicable laws.

                  4.2 Investment  Representations.  Purchaser  understands  that
neither  the Shares nor the  Conversion  Shares have been  registered  under the
Securities Act. Purchaser also understands that the Shares are being offered and
sold pursuant to an exemption from registration  contained in the Securities Act
based in part  upon  Purchaser's  representations  contained  in the  Agreement.
Purchaser hereby represents and warrants as follows:


                                       11
<PAGE>

                           (a)  Purchaser  Bears  Economic  Risk.  Purchaser has
substantial   experience  in  evaluating  and  investing  in  private  placement
transactions of securities in companies similar to the Company so that Purchaser
is capable of evaluating  the merits and risks of its  investment in the Company
and has the  capacity  to protect  its own  interests.  Purchaser  must bear the
economic  risk  of  this  investment  indefinitely  unless  the  Shares  (or the
Conversion  Shares)  are  registered  pursuant  to  the  Securities  Act,  or an
exemption from registration is available. Purchaser understands that the Company
has no present intention of registering the Shares, the Conversion Shares or any
shares  of its  Common  Stock.  Purchaser  also  understands  that  there  is no
assurance that any exemption from registration  under the Securities Act will be
available and that, even if available, such exemption may not allow Purchaser to
transfer  all or any portion of the Shares or the  Conversion  Shares  under the
circumstances, in the amounts or at the times Purchaser might propose.

                           (b)  Acquisition   for  Own  Account.   Purchaser  is
acquiring the Shares and the Conversion  Shares for  Purchaser's own account for
investment only, and not with a view towards their distribution.

                           (c)  Purchaser  Can Protect Its  Interest.  Purchaser
represents that by reason of its, or of its management's,  business or financial
experience,  Purchaser  has  the  capacity  to  protect  its  own  interests  in
connection with the transactions contemplated in this Agreement, and the Related
Agreements.  Further,  Purchaser is aware of no publication of any advertisement
in connection with the transactions contemplated in the Agreement.

                           (d) Accredited Investor. Purchaser represents that it
is an  accredited  investor  within  the  meaning  of  Regulation  D  under  the
Securities Act.

                           (e) Company  Information.  Purchaser has received and
read  the  Company's  financial  statements  and  Business  Plan  and has had an
opportunity to discuss the Company's business,  management and financial affairs
with  directors,  officers  and  management  of the  Company  and  has  had  the
opportunity  to review the Company's  operations and  facilities.  Purchaser has
also had the  opportunity  to ask  questions of and receive  answers  from,  the
Company  and  its  management   regarding  the  terms  and  conditions  of  this
investment.

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

                           (g)  Residence.  If the  Purchaser is an  individual,
then the Purchaser resides in the state or province identified in the address of
the  Purchaser  set  forth on  Exhibit  A; if the  Purchaser  is a  partnership,
corporation,  limited  liability  company  or other  entity,  then the


                                       12
<PAGE>

office or offices of the Purchaser in which its investment  decision was made is
located at the address or addresses of the Purchaser set forth on Exhibit A.

                  4.3 Transfer  Restrictions.  Each Purchaser  acknowledges  and
agrees that the Shares and, if issued,  the  Conversion  Shares,  are subject to
restrictions on transfer as set forth in the Investor  Rights  Agreement and are
subject to voting requirements as set forth in the Voting Agreement.

         5. CONDITIONS TO CLOSING.

                  5.1  Conditions  to  Purchasers'   Obligations  at  the  First
Closing. Purchasers' obligations to purchase the Shares at the First Closing are
subject  to the  satisfaction,  at or prior to the First  Closing  Date,  of the
following conditions:

                           (a) Representations and Warranties True;  Performance
of  Obligations.  The  representations  and  warranties  made by the  Company in
Section 3 hereof  shall be true and correct in all  material  respects as of the
First Closing Date with the same force and effect as if they had been made as of
the First Closing Date, and the Company shall have performed all obligations and
conditions  herein required to be performed or observed by it on or prior to the
First Closing.

                           (b) Legal Investment.  On the First Closing Date, the
sale and  issuance of the Shares and the  proposed  issuance  of the  Conversion
Shares  shall  be  legally  permitted  by all  laws  and  regulations  to  which
Purchasers and the Company are subject.

                           (c) Consents, Permits, and Waivers. The Company shall
have obtained any and all consents, permits and waivers necessary or appropriate
for  consummation  of the  transactions  contemplated  by the  Agreement and the
Related  Agreements  (except for such as may be properly obtained  subsequent to
the Closing).

                           (d) Filing of Restated Charter.  The Restated Charter
shall  have been  filed  with the  Secretary  of State of  California  and shall
continue to be in full force and effect as of the First Closing Date.

                           (e)  Corporate  Documents.  The  Company  shall  have
delivered to Purchasers or their counsel,  copies of all corporate  documents of
the Company as Purchasers shall reasonably request.

                           (f) Reservation of Conversion  Shares. The Conversion
Shares  issuable  upon  conversion  of the Shares  issuable at the First Closing
shall have been duly authorized and reserved for issuance upon such conversion.

                           (g)  Compliance  Certificate.  The Company shall have
delivered to Purchasers a Compliance  Certificate,  executed by the President of
the Company,  dated the First Closing  Date,  to the effect that the  conditions
specified  in  subsections  (a),  (c), (d) and (f) of this Section 5.1 have been
satisfied.


                                       13
<PAGE>

                           (h)  Secretary's  Certificate.  The Purchasers  shall
have received  from the  Company's  Secretary,  a  certificate  having  attached
thereto (i) the Company's  Articles of Incorporation as in effect at the time of
the First  Closing,  (ii) the  Company's  Bylaws as in effect at the time of the
First Closing,  (iii) resolutions approved by the Board of Directors authorizing
the transactions contemplated hereby, (iv) resolutions approved by the Company's
shareholders  authorizing  the  filing  of the  Restated  Charter,  and (v) good
standing certificates (including tax clearance) with respect to the Company from
the applicable  authority(ies) in California and any other jurisdiction in which
the Company is qualified to do business, dated a recent date before the Closing.

                           (i) Investor  Rights  Agreement.  The Investor Rights
Agreement shall have been executed and delivered by the parties thereto.

                           (j) Co-Sale  Agreement.  The Co-Sale  Agreement shall
have been executed and delivered by the parties thereto.  The stock certificates
representing  the  shares  subject  to the  Co-Sale  Agreement  shall  have been
delivered to the Secretary of the Company and shall have had appropriate legends
placed  upon them to  reflect  the  restrictions  on  transfer  set forth on the
Co-Sale Agreement.

                           (k) Voting Agreement. The Voting Agreement shall have
been executed and delivered by the parties thereto.

                           (l) Management  Services  Agreements.  The Management
Services  Agreements  substantially in the forms attached hereto as Exhibits F-1
and F-2 (the  "Management  Services  Agreements")  shall have been  executed and
delivered by the parties thereto.

                           (m)  Board  of  Directors.   Upon  the  Closing,  the
authorized  size of the  Board of  Directors  of the  Company  shall be five (5)
members and the Board  shall  consist of Phil  Micciche,  Mark  Underseth,  Phil
Wickham and two (2) other members, as further specified in the Voting Agreement.

                           (n) Legal Opinion. The Purchasers shall have received
from legal counsel to the Company an opinion  addressed to them, dated as of the
First Closing Date, in substantially the form attached hereto as Exhibit I.

                           (o)  Proceedings  and  Documents.  All  corporate and
other proceedings in connection with the transactions  contemplated at the First
Closing hereby and all documents and instruments  incident to such  transactions
shall be reasonably  satisfactory  in substance and form to the  Purchasers  and
their special  counsel,  and the Purchasers and their special counsel shall have
received  all such  counterpart  originals  or certified or other copies of such
documents as they may reasonably request.

                           (p) Proprietary Information and Inventions Agreement.
The Company  and each of its  officers,  employees  and  consultants  shall have
entered  into  the  Company's  standard  form  of  Proprietary  Information  and
Inventions Agreement,  in substantially the form attached hereto as Exhibit G or
in other form reasonably acceptable to the Purchasers.


                                       14
<PAGE>

                  5.2  Conditions to  Purchasers'  Obligations at the Subsequent
First Closing and at the Second Closing. Purchasers' obligations to purchase the
Shares at the Subsequent  First Closing and at the Second Closing are subject to
the  satisfaction,  at or prior to the date of the  Subsequent  First Closing or
Second Closing Date, as the case may be, of the following conditions:

                           (a) Legal  Investment.  The sale and  issuance of the
Shares and the  proposed  issuance  of the  Conversion  Shares  shall be legally
permitted by all laws and  regulations  to which  Purchasers and the Company are
subject.

                           (b) Filing of Restated Charter.  The Restated Charter
shall have been filed with the Secretary of State of the State of California and
shall continue to be in full force and effect.

                           (c) Reservation of Conversion  Shares. The Conversion
Shares  issuable upon  conversion of the Shares shall have been duly  authorized
and reserved for issuance upon such conversion.

                           (d)  Compliance  Certificate.  The Company shall have
delivered to Purchasers (i) a Compliance Certificate,  executed by the President
of the Company,  dated as of the date of the respective  Closing,  to the effect
that the  conditions  specified in  subsections  (b) and (c) of this Section 5.2
have been satisfied and (ii) a Certificate of the Chief  Executive  Officer that
there has been no material  changes to  representations  and  warranties  of the
Company  set forth in  Section 3 herein or, if they have so  changed,  then said
Certificate shall be accompanied by a revised Schedule of Exceptions dated as of
the date of the respective Closing.

                           (e)  Secretary's  Certificate.  The Purchasers  shall
have received  from the  Company's  Secretary,  a  certificate  having  attached
thereto (i) the Company's  Articles of Incorporation as in effect at the time of
the respective  Closing,  (ii) the Company's  Bylaws as in effect at the time of
the respective  Closing,  (iii)  resolutions  approved by the Board of Directors
authorizing the transactions  contemplated  hereby, (iv) resolutions approved by
the Company's  shareholders  authorizing the filing of the Restated Charter, and
(v) good standing  certificates  (including tax  clearance)  with respect to the
Company  from  the  applicable   authority(ies)  in  California  and  any  other
jurisdiction  in which the Company is qualified  to do business,  dated a recent
date before the Closing.

                  5.3 Conditions to  Obligations  of the Company.  The Company's
obligation  to issue  and sell the  Shares at each  Closing  is  subject  to the
satisfaction,  on or prior to such Closing, of the following  conditions by each
Purchaser participating in such respective Closing:

                           (a)   Representations   and   Warranties   True.  The
representations  and warranties in Section 4 made by those Purchasers  acquiring
Shares hereof shall be true and correct in all material  respects at the date of
the respective Closing,  with the same force and effect as if they had been made
on and as of said date.

                           (b) Performance of Obligations. Such Purchasers shall
have performed and complied with all agreements and conditions  herein  required
to be performed or complied with by such Purchasers on or before the Closing.


                                       15
<PAGE>

                           (c) Filing of Restated Charter.  The Restated Charter
shall have been filed with the Secretary of State of the State of California.

                           (d) Investor  Rights  Agreement.  The Investor Rights
Agreement shall have been executed and delivered by the Purchasers.

                           (e) Co-Sale  Agreement.  The Co-Sale  Agreement shall
have been executed and delivered by the parties thereto.

                           (f) Voting Agreement. The Voting Agreement shall have
been executed and delivered by the parties thereto.

                           (g)  Management  Services  Agreement.  The Management
Services  Agreements  shall have been  executed  and  delivered  by the  parties
thereto.

                           (h) Consents, Permits, and Waivers. The Company shall
have obtained any and all consents, permits and waivers necessary or appropriate
for  consummation  of the  transactions  contemplated  by the  Agreement and the
Related  Agreements  (except for such as may be properly obtained  subsequent to
the Closing).

         6. MISCELLANEOUS.

                  6.1  Governing  Law. This  Agreement  shall be governed in all
respects  by the laws of the State of  California  as such laws are  applied  to
agreements between  California  residents entered into and performed entirely in
California.

                  6.2 Survival. The representations,  warranties,  covenants and
agreements made herein shall survive any investigation made by any Purchaser and
the  closing of the  transactions  contemplated  hereby.  All  statements  as to
factual matters contained in any certificate or other instrument delivered by or
on behalf of the Company  pursuant  hereto in connection  with the  transactions
contemplated  hereby shall be deemed to be representations and warranties by the
Company hereunder solely as of the date of such certificate or instrument.

                  6.3  Successors  and Assigns.  Except as  otherwise  expressly
provided  herein,  the  provisions  hereof shall inure to the benefit of, and be
binding upon, the successors,  assigns,  heirs,  executors and administrators of
the parties  hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of the Shares from time to time.

                  6.4  Entire  Agreement.   This  Agreement,  the  exhibits  and
schedules  hereto,  the Related  Agreements  and the other  documents  delivered
pursuant hereto constitute the full and entire understanding and agreement among
the parties with regard to the  subjects  hereof and no party shall be liable or
bound to any other in any manner by any representations,  warranties,  covenants
and agreements except as specifically set forth herein and therein.

                  6.5  Severability.  In case any  provision  of this  Agreement
shall  be  invalid,  illegal  or  unenforceable,   the  validity,  legality  and
enforceability  of the remaining  provisions shall not in any way be affected or
impaired thereby.


                                       16
<PAGE>

                  6.6 Amendment and Waiver.

                           (a) This Agreement  shall be amended or modified only
upon the  written  consent of the  Company and holders of at least a majority of
the  outstanding  Shares  (treated as if converted and including any  Conversion
Shares into which the Shares have been  converted that have not been sold to the
public).

                           (b) The  obligations of the Company and the rights of
the holders of the Shares and the  Conversion  Shares under the Agreement may be
waived  only with the  written  consent of the holders of at least a majority of
the  outstanding  Shares  (treated as if converted and including any  Conversion
Shares into which the Shares have been  converted that have not been sold to the
public).

                  6.7 Delays or Omissions.  No delay or omission to exercise any
right,  power or remedy  accruing  to any  party,  upon any  breach,  default or
noncompliance by another party under this Agreement,  the Related  Agreements or
the Restated Charter, shall impair any such right, power or remedy, nor shall it
be construed to be a waiver of any such breach, default or noncompliance, or any
acquiescence  therein,  or of  any  similar  breach,  default  or  noncompliance
thereafter  occurring.  Any waiver,  permit,  consent or approval of any kind or
character on any Purchaser's part of any breach,  default or noncompliance under
this  Agreement,  the Related  Agreements  or under the Restated  Charter or any
waiver on such party's part of any  provisions or  conditions of the  Agreement,
the Related Agreements,  or the Restated Charter must be in writing and shall be
effective  only to the  extent  specifically  set  forth  in such  writing.  All
remedies,  either under this  Agreement,  the Related  Agreements,  the Restated
Charter, by law, or otherwise afforded to any party, shall be cumulative and not
alternative.

                  6.8 Notices. All notices required or permitted hereunder shall
be in writing and shall be deemed  effectively given: (a) upon personal delivery
to the party to be notified; (b) when sent by confirmed facsimile if sent during
normal  business hours of the recipient,  if not, then on the next business day,
provided that any facsimile transmission shall be followed immediately by notice
sent  registered or certified mail as provided  herein;  (c) five (5) days after
having been sent by  registered or certified  mail,  return  receipt  requested,
postage  prepaid;  or (d)  upon  delivery  to  recipient  after  deposit  with a
nationally  recognized  overnight  courier,  specifying next day delivery,  with
written verification of receipt. All communications shall be sent to the Company
at the address as set forth on the signature page hereof and to Purchaser at the
address set forth on Exhibit A attached  hereto or at such other  address as the
Company or Purchaser  may designate by ten (10) days advance  written  notice to
the other parties hereto.

                  6.9  Expenses.  The Company  shall pay all costs and  expenses
that  it  incurs  with  respect  to the  negotiation,  execution,  delivery  and
performance  of the  Agreement.  The Company  shall,  immediately  following the
respective  First and/or Second  Closing,  reimburse the reasonable  fees of and
expenses of Manatt,  Phelps &  Phillips,  LLP as counsel to Oryx  Ventures,  and
shall reimburse such counsel for reasonable expenses incurred in connection with
the  negotiation,   execution,  delivery  and  performance  of  this  Agreement;
provided,  however, that the cumulative amount of said fees and expenses to such
counsel shall not exceed $30,000.


                                       17
<PAGE>

                  6.10 Attorneys'  Fees. In the event that any suit or action is
instituted to enforce any provision in this Agreement,  the prevailing  party in
such dispute shall be entitled to recover from the losing party all fees,  costs
and  expenses  of  enforcing  any right of such  prevailing  party under or with
respect to this Agreement,  including,  without limitation, such reasonable fees
and  expenses  of  attorneys  and  accountants,  which  shall  include,  without
limitation, all fees, costs and expenses of appeals.

                  6.11  Titles and  Subtitles.  The titles of the  sections  and
subsections  of the Agreement are for  convenience of reference only and are not
to be considered in construing this Agreement.

                  6.12  Counterparts.  This  Agreement  may be  executed  in any
number of  counterparts,  each of which shall be an  original,  but all of which
together shall constitute one instrument.

                  6.13 Broker's Fees. Each party hereto  represents and warrants
that no agent, broker,  investment banker, person or firm acting on behalf of or
under the  authority of such party hereto is or will be entitled to any broker's
or finder's fee or any other  commission  directly or  indirectly  in connection
with the transactions  contemplated  herein. Each party hereto further agrees to
indemnify each other party for any claims,  losses or expenses  incurred by such
other party as a result of the representation in this Section 6.13 being untrue.

                  6.14  Confidentiality.  Each party hereto agrees that,  except
with the prior  written  consent of the other party,  it shall at all times keep
confidential  and  not  divulge,  furnish  or  make  accessible  to  anyone  any
confidential  information,  knowledge  or data  concerning  or  relating  to the
business or financial  affairs of the other parties to which such party has been
or shall  become privy by reason of this  Agreement  or the Related  Agreements,
discussions  or   negotiations   relating  to  this  Agreement  or  the  Related
Agreements, the performance of its obligations hereunder or the ownership of the
Shares  purchased  hereunder.  The  provisions  of this Section 6.14 shall be in
addition  to,  and not in  substitution  for,  the  provisions  of any  separate
nondisclosure agreement executed by the parties hereto.

                  6.15  Pronouns.   All  pronouns   contained  herein,  and  any
variations  thereof,  shall be deemed  to refer to the  masculine,  feminine  or
neutral,  singular  or plural,  as to the  identity  of the  parties  hereto may
require.

                  6.16  California  Corporate  Securities  Law.  THE SALE OF THE
SECURITIES  WHICH ARE THE SUBJECT OF THIS  AGREEMENT HAS NOT BEEN QUALIFIED WITH
THE  COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF
SUCH  SECURITIES  OR THE  PAYMENT OR  RECEIPT  OF ANY PART OF THE  CONSIDERATION
THEREFOR PRIOR TO SUCH QUALIFICATION OR IN THE ABSENCE OF AN EXEMPTION FROM SUCH
QUALIFICATION  IS UNLAWFUL.  PRIOR TO  ACCEPTANCE OF SUCH  CONSIDERATION  BY THE
COMPANY,  THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY  CONDITIONED
UPON SUCH  QUALIFICATION  BEING OBTAINED OR AN EXEMPTION FROM SUCH QUALIFICATION
BEING AVAILABLE.


                                       18
<PAGE>




              [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]






                                       19
<PAGE>

         IN WITNESS  WHEREOF,  the  parties  hereto have  executed  the SERIES B
PREFERRED  STOCK  PURCHASE  AGREEMENT  as of the  date set  forth  in the  first
paragraph hereof.


COMPANY:                                  PURCHASERS:

S2 TECHNOLOGIES, INC.                     ORYX VENTURES


Signature:  /s/Mark Underseth             Signature:  /s/ Philip Micciche
          ------------------------------            ----------------------------

Print Name:  Mark Underseth               Print Name:  Philip Micciche
           -----------------------------             ---------------------------

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

Address:   2031 San Elijo Avenue
           Cardiff, CA 92007
                                          PROFILE VENTURE PARTNERS FUND 1, L.P.


                                          Signature:  /s/ Phil Wickham
                                                    ----------------------------

                                          Print Name:  Phil Wickham
                                                     ---------------------------

                                          Title:  Managing Member
                                                --------------------------------


                                          STAR TRUST 1982


                                          Signature:  /s/Amr Mohsen
                                                    ----------------------------

                                          Print Name:  Amr Mohsen
                                                     ---------------------------

                                          Title:  Star Trust Trustee
                                                --------------------------------


                                          VMR HIGH OCTANE FUND


                                          Signature: /s/ R. Hubbard
                                                    ----------------------------

                                          Print Name:  R. Hubbard
                                                     ---------------------------

                                          Title:  Director
                                                --------------------------------

          [SERIES B PREFERRED STOCK PURCHASE AGREEMENT SIGNATURE PAGE]
<PAGE>

                                          CRENSHAW INVESTMENTS LIMITED

                                          Signature:  /s/ Peter Brigham
                                                    ----------------------------

                                          Print Name: Peter Brigham
                                                     ---------------------------

                                          Title:  Secretary
                                                --------------------------------


                                          DIABLO PARTNERS

                                          Signature:  /s/ Timothy Bacci
                                                    ----------------------------

                                          Print Name:  Timothy Bacci
                                                     ---------------------------

                                          Title:  Managing Director
                                                --------------------------------

          [SERIES B PREFERRED STOCK PURCHASE AGREEMENT SIGNATURE PAGE]
<PAGE>

                                LIST OF EXHIBITS


Schedule of Purchasers                                      Exhibit A

Amended and Restated Articles of Incorporation              Exhibit B

Amended and Restated Investor Rights Agreement              Exhibit C

Amended and Restated Co-Sale Agreement                      Exhibit D

Amended and Restated Voting Agreement                       Exhibit E

Management Services Agreements                              Exhibits F-1 and F-2

Proprietary Information and Inventions Agreement            Exhibit G

Form of Legal Opinion                                       Exhibit H

Business Plan                                               Exhibit I



<PAGE>

<TABLE>
                                                             EXHIBIT A

                                                      SCHEDULE OF PURCHASERS
<CAPTION>
                                                                      PURCHASE PRICE     PURCHASE PRICE PAYABLE
                                                                        PAYABLE BY           IN IMMEDIATELY
                                                                     CANCELLATION OF       AVAILABLE FUNDS AT     AGGREGATE PURCHASE
                   PURCHASER                          SHARES           INDEBTEDNESS              CLOSING                 PRICE
------------------------------------------  ---------------------- -------------------- ------------------------- ------------------
FIRST CLOSING
<S>                                                 <C>                  <C>                   <C>                    <C>
ORYX VENTURES                                       3,157,143            $250,000.00           $855,000.00            $1,105,000.00
4340 Almaden Expwy, Suite 220
San Jose, CA  95118

PROFILE VENTURE PARTNERS FUND 1, L.P.               1,428,572                  $0.00           $500,000.20              $500,000.20
500 Chesterfield Parkway
Malvern, PA  19355

STAR TRUST 1982                                             0                  $0.00                 $0.00                    $0.00
c/o Amr Mohsen
1338 Ridder Park
San Jose, CA  95131

VMR HIGH OCTANE FUND                                  528,571             $50,000.00           $135,000.00              $185,000.00
c/o Meespeirson Fund Services
19-20 North Quay
Douglas, Isle of Man 1M991M

CRENSHAW INVESTMENTS LIMITED                        1,142,858                  $0.00           $400,000.30              $400,000.30
c/o Moore Stephens Services SAM
L'Estoil, Bloc C, 31 Avenue Princes Grace
MC 98000, Monaco

DIABLO PARTNERS                                        28,571                  $0.00            $10,000.00               $10,000.00
                                            ---------------------- -------------------- ------------------------- ------------------
4111 Hartz Avenue, Suite 200
Danville, CA  94526

TOTAL FOR FIRST CLOSING:                            6,285,715            $300,000.00         $1,900,000.25            $2,200,000.25
                                            ---------------------- -------------------- ------------------------- ------------------
SECOND CLOSING

ORYX VENTURES                                       2,535,715                  $0.00           $887,500.25              $887,500.25
4340 Almaden Expwy, Suite 220
San Jose, CA  95118

PROFILE VENTURE PARTNERS FUND 1, L.P.                 571,428                  $0.00           $199,999.80              $199,999.80
500 Chesterfield Parkway
Malvern, PA  19355

STAR TRUST 1982                                       142,857                  $0.00            $50,000.00               $50,000.00
c/o Amr Mohsen
1338 Ridder Park
San Jose, CA  95131

VMR HIGH OCTANE FUND                                  428,571                  $0.00           $150,000.00              $150,000.00
                                            ---------------------- -------------------- ------------------------- ------------------
c/o Meespeirson Fund Services
19-20 North Quay
Douglas, Isle of Man  1M991M

TOTAL FOR SECOND CLOSING                            3,678,571                  $0.00         $1,287,499.80            $1,287,499.80
                                            ---------------------- -------------------- ------------------------- ------------------
TOTAL FOR FIRST AND SECOND CLOSINGS:                9,964,286            $300,000.00         $3,187,500.10            $3,487,500.10
                                            ====================== ==================== ========================= ==================
</TABLE>

<PAGE>


                                    EXHIBIT B


                 AMENDED AND RESTATED ARTICLES OF INCORPORATION


<PAGE>


                 AMENDED AND RESTATED ARTICLES OF INCORPORATION
                                       OF
                             S2 TECHNOLOGIES, INC.


<PAGE>

<TABLE>
<CAPTION>
                                                 TABLE OF CONTENTS

                                                                                                               PAGE
<S>                                                                                                              <C>
1.       DIVIDEND RIGHTS..........................................................................................2

2.       VOTING RIGHTS............................................................................................2

         (a)      General Rights..................................................................................2

         (b)      Separate Vote of Series Preferred...............................................................2

         (c)      Election of Board of Directors..................................................................4

3.       LIQUIDATION RIGHTS.......................................................................................4

4.       CONVERSION RIGHTS........................................................................................6

         (a)      Optional Conversion.............................................................................6

         (b)      Series Preferred Conversion Rate................................................................6

         (c)      Conversion Price................................................................................6

         (d)      Mechanics of Conversion.........................................................................6

         (e)      Adjustment for Stock Splits and Combinations....................................................7

         (f)      Adjustment for Common Stock Dividends and Distributions.........................................7

         (g)      Adjustment for Reclassification, Exchange and Substitution......................................7

         (h)      Reorganizations, Mergers or Consolidations......................................................8

         (i)      Sale of Shares Below Series Preferred Conversion Price..........................................8

         (j)      Certificate of Adjustment......................................................................11

         (k)      Notices of Record Date.........................................................................11

         (l)      Automatic Conversion...........................................................................12

         (m)      Fractional Shares..............................................................................12

         (n)      Reservation of Stock Issuable Upon Conversion..................................................13

         (o)      Notices........................................................................................13

         (p)      Payment of Taxes...............................................................................13

         (q)      No Dilution or Impairment......................................................................13

5.       REDEMPTION..............................................................................................14

6.       NO REISSUANCE OF SERIES PREFERRED.......................................................................15

</TABLE>

                                                           i


<PAGE>

                 AMENDED AND RESTATED ARTICLES OF INCORPORATION

                                       OF

                              S2 TECHNOLOGIES, INC.


         Mark Underseth hereby certifies that:

         ONE: He is the duly elected and acting  President  and  Secretary of S2
Technologies, Inc., a California corporation (the "Corporation").

         TWO:  The  Articles of  Incorporation  of this  Corporation  are hereby
amended and restated to read in full as follows:

                                       I.

         The  name  of  the   Corporation   is  S2   TECHNOLOGIES,   INC.   (the
"Corporation").

                                       II.

         The  purpose  of the  Corporation  is to  engage in any  lawful  act or
activity for which a corporation may be organized under the General  Corporation
Law of California other than the banking business, the trust company business or
the practice of a  profession  permitted to be  incorporated  by the  California
Corporations Code.

                                      III.

         A. This  Corporation  is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The total number
of shares which the Corporation is authorized to issue is forty-two million five
hundred  ninety-two  thousand  five hundred  ninety-three  (42,592,593)  shares,
thirty million  (30,000,000)  shares of which shall be Common Stock (the "Common
Stock")  and twelve  million  five  hundred  ninety-two  thousand  five  hundred
ninety-three  (12,592,593)  shares  of  which  shall  be  Preferred  Stock  (the
"Preferred Stock").

         B. Two million  five hundred  ninety-two  thousand  (2,592,593)  of the
authorized shares of Preferred Stock are hereby  designated  "Series A Preferred
Stock"  (the  "Series  A  Preferred"),  and  ten  million  (10,000,000)  of  the
authorized shares of Preferred Stock are hereby  designated  "Series B Preferred
Stock" (the "Series B Preferred") (the Series A Preferred and Series B Preferred
are referred to herein collectively as the "Series Preferred").

         C. The rights, preferences,  privileges, restrictions and other matters
relating to the Series Preferred are as follows:


                                       1
<PAGE>

         1.       DIVIDEND RIGHTS.

                  (a) Holders of Series Preferred,  in preference to the holders
of any other stock of the  Corporation  ("Junior  Stock"),  shall be entitled to
receive,  when,  as and if declared by the Board of  Directors,  but only out of
funds that are legally available  therefor,  cash dividends at the rate of eight
percent (8%) of the applicable Original Issue Price (as defined below) per annum
on each  outstanding  share of  Series  Preferred  (as  adjusted  for any  stock
dividends,  combinations,  splits recapitalizations and the like with respect to
such  shares).  The  "Original  Issue Price" of the Series A Preferred  shall be
twenty-seven  cents ($0.27) (the "Series A Original Issue Price").  The Original
Issue Price of the Series B Preferred  shall be  thirty-five  cents ($0.35) (the
"Series B Original Issue Price").  Such dividends shall be payable only when, as
and if declared by the Board of Directors and shall be non-cumulative.

                  (b) So  long  as any  shares  of  Series  Preferred  shall  be
outstanding,  no  dividend,  whether  in  cash  or  property,  shall  be paid or
declared,  nor shall any other  distribution  be made, on any Junior Stock,  nor
shall any shares of any Junior Stock of the Corporation be purchased,  redeemed,
or otherwise  acquired for value by the Corporation  (except for acquisitions of
Common  Stock  by the  Corporation  pursuant  to  agreements  which  permit  the
Corporation  to  repurchase  such  shares  upon  termination  of services to the
Corporation  or in exercise of the  Corporation's  right of first refusal upon a
proposed  transfer) until all dividends (set forth in Section 1(a) above) on the
Series  Preferred  shall have been paid or declared and set apart.  In the event
dividends are paid on any share of Common Stock, an additional dividend shall be
paid with  respect to all  outstanding  shares of Series  Preferred in an amount
equal per share (on an  as-if-converted  to Common  Stock basis) to the dividend
amount paid or set aside for each share of Common Stock.  The provisions of this
Section  1(b) shall  not,  however,  apply to (i) a  dividend  payable in Common
Stock, (ii) the acquisition of shares of any Junior Stock in exchange for shares
of any other Junior Stock, or (iii) any repurchase of any outstanding securities
of the Corporation that is unanimously  approved by the  Corporation's  Board of
Directors.  The holders of the Series Preferred expressly waive their rights, if
any, as described in Sections 502, 503 and 506 of the General Corporation Law of
California as they relate to repurchase of shares upon termination of employment
or service by any person as a consultant or director.

         2.       VOTING RIGHTS.

                  (a) General Rights.  Except as otherwise provided herein or as
required by law, the Series  Preferred shall be voted equally with the shares of
the Common Stock of the  Corporation  and not as a separate class, at any annual
or special meeting of shareholders  of the  Corporation,  and may act by written
consent  in the same  manner  as the  Common  Stock,  in  either  case  upon the
following basis:  each holder of shares of Series Preferred shall be entitled to
such  number of votes as shall be equal to the whole  number of shares of Common
Stock into which such holder's  aggregate  number of shares of Series  Preferred
are convertible  (pursuant to Section 4 hereof)  immediately  after the close of
business on the record date fixed for such meeting or the effective date of such
written consent.

                  (b)  Separate  Vote of Series  Preferred.  With respect to the
Series A Preferred, so long as at least one million (1,000,000) shares of Series
A Preferred remain outstanding,  and with respect to the Series B Preferred,  so
long as at least four million  (4,000,000)  shares of Series B Preferred  remain
outstanding  (in each case subject to  adjustment  for any stock split,  reverse
stock split or other similar event affecting the Series Preferred),  in addition
to any other  vote or  consent  required  herein or by law,  the vote or written
consent  of the  holders  of,  as the case may be,  at least a  majority  of the
outstanding  Series A Preferred and/or at least sixty-six and two-thirds percent
(66 2/3%) of the outstanding Series B Preferred shall be necessary for effecting
or validating the actions  described in all enumerated  clauses  (i)-(x) of this
clause (b) except for clause (ii), as to which the respective  Series  Preferred
affected  adversely  must vote in favor of such adverse  change by the described
percentage vote:

                           (i)  Any  amendment,  alteration,  or  repeal  of any
provision  of the  Articles of  Incorporation  or the Bylaws of the  Corporation
(including any filing of a Certificate of Determination);

                           (ii)  Any  adverse  change  to  the  powers,  rights,
preferences, privileges, or restrictions of the Series Preferred;

                           (iii) Any increase in the authorized number of shares
of Preferred Stock;


                                       2
<PAGE>

                           (iv) Any authorization or any designation, whether by
reclassification or otherwise,  of any new class or series of stock or any other
securities  convertible into equity  securities of the Corporation  ranking on a
parity  with  or  senior  to the  Series  Preferred  in  rights  of  redemption,
liquidation preference, voting or dividends or any increase in the authorized or
designated number of any such new class or series;

                           (v) Any  repurchase or redemption of Preferred  Stock
(except as expressly contemplated by the Articles of Incorporation);

                           (vi) Any redemption, repurchase, payment of dividends
or other  distributions with respect to Junior Stock (except for acquisitions of
Common  Stock  by the  Corporation  pursuant  to  agreements  which  permit  the
Corporation  to  repurchase  such  shares  upon  termination  of services to the
Corporation  or in exercise of the  Corporation's  right of first refusal upon a
proposed  transaction;  provided  that  excluding  circumstances  involving  the
Corporation's  right of first refusal,  the repurchase price is equal to or less
than the original purchase price for such shares);

                           (vii)  Any  agreement  by  the   Corporation  or  its
shareholders  regarding  an Asset  Transfer or  Acquisition  (each as defined in
Section 3(c));

                           (viii) Any  action  that  results  in the  payment or
declaration of a dividend on any shares of Common Stock or Preferred Stock;

                           (ix) Any voluntary  dissolution or liquidation of the
Corporation; or

                           (x) Any change in the authorized number of members of
the Corporation's Board of Directors.

                  (c) Election of Board of Directors.  The authorized  number of
members on the Company's Board of Directors shall be five (5). For so long as at
least one million  (1,000,000)  shares of Series A Preferred remain  outstanding
(subject to adjustment for any stock split, reverse stock split or similar event
affecting the Series A Preferred) the holders of Series A Preferred, voting as a
separate  class,  shall be  entitled  to elect two (2)  members  of the Board of
Directors  (also referred to as the "Board") at each meeting or pursuant to each
consent of the Corporation's  shareholders for the election of directors, and to
remove  from  office  such  directors  and to fill  any  vacancy  caused  by the
resignation, death or removal of such directors.  Notwithstanding the foregoing,
in the event of a change in control,  dissolution  or liquidation of either Oryx
Ventures  or Oryx  Technologies  Corp.  (collectively  referred to as "Oryx") or
both, thereafter the holders of Series A shall be entitled to elect only one (1)
member of the Board. For so long as at least one million  (1,000,000)  shares of
Series B  Preferred  remain  outstanding  (subject to  adjustment  for any stock
split,  reverse stock split or similar  event  affecting the Series B Preferred)
the holders of Series B Preferred, voting as a separate class, shall be entitled
to elect one (1) member of the Corporation's  Board of Directors at each meeting
or pursuant to each consent of the  Corporation's  shareholders for the election
of  directors,  and to remove from office such  director and to fill any vacancy
caused by the  resignation,  death or removal of such  director.  The holders of
Common  Stock,  voting  as a  separate  class,  shall be  entitled  to elect all
remaining  members of the Board of Directors at each meeting or pursuant to each
consent of the Corporation's  shareholders for the election of directors, and to
remove  from  office  such  directors  and to fill  any  vacancy  caused  by the
resignation,  death or  removal  of such  directors.  For the  purposes  of this
section 2(c) only, a change of control shall mean:

                           (i) any  consolidation  or merger of Oryx Ventures or
Oryx  Technologies  Corp. with or into any other  corporation or other entity or
person, or any other corporate reorganization, in which the shareholders of Oryx
Ventures or Oryx  Technologies  Corp., as the case may be,  immediately prior to
such  consolidation,  merger or  reorganization,  own less than 50% of the given
entity's  voting  power   immediately  after  such   consolidation,   merger  or
reorganization,  or any  transaction or series of related  transactions to which
Oryx Ventures or Oryx Technologies  Corp. is a party in which in excess of fifty
percent (50%) of the given entity's voting power is  transferred,  excluding any
consolidation  or merger  effected  exclusively  to change the  domicile of Oryx
Ventures or Oryx Technologies Corp.; or


                                       3
<PAGE>

                  (ii) a sale,  lease,  pledge,  license or other disposition of
all or  substantially  all  of the  assets  of  either  Oryx  Ventures  or  Oryx
Technologies Corp.

         3.       LIQUIDATION RIGHTS.

                  (a) Upon any  liquidation,  dissolution,  or winding up of the
Corporation,  whether  voluntary  or  involuntary,  before any  distribution  or
payment  shall be made to the  holders of any Junior  Stock,  the holders of the
respective  Series  Preferred  shall be entitled to be paid out of the assets of
the Corporation an amount per share of Series  Preferred equal to the applicable
Original Issue Price for the respective  Series  Preferred plus all declared and
unpaid  dividends on such shares of  Preferred  Stock (as adjusted for any stock
dividends,  combinations, splits, recapitalizations and the like with respect to
such shares) for each share of Series  Preferred held by them. If, upon any such
liquidation,  dissolution, or winding up, the assets of the Corporation shall be
insufficient  to make payment in full to all holders of Series  Preferred of the
liquidation preference set forth in this Section 3(a), then such assets shall be
distributed  among the holders of the  respective  Series  Preferred at the time
outstanding,  ratably  in  proportion  to the full  amounts  to which they would
otherwise be respectively entitled.

                  (b) After  payment of the full  liquidation  preference of the
Series Preferred as set forth in Section 3(a) above, any remaining assets of the
Corporation  legally  available for  distribution,  if any, shall be distributed
ratably to the holders of the Common Stock and the Series Preferred on the basis
of Common Stock equivalents.

                  (c) The  following  events shall be  considered a  liquidation
under this Section 3:

                           (i) any  consolidation  or merger of the  Corporation
with or into any  other  corporation  or other  entity or  person,  or any other
corporate   reorganization,   in  which  the  shareholders  of  the  Corporation
immediately prior to such consolidation, merger or reorganization, own less than
50% of the  Corporation's  voting power  immediately  after such  consolidation,
merger or reorganization,  or any transaction or series of related  transactions
to which the Corporation is a party in which in excess of fifty percent (50%) of
the Corporation's voting power is transferred (an "Acquisition"),  excluding any
consolidation  or merger  effected  exclusively  to change the  domicile  of the
Corporation;

                           (ii)  a  sale,  lease,   pledge,   license  or  other
disposition of all or  substantially  all of the assets of the  Corporation  (an
"Asset Transfer");

                           (iii)  in any of such  events,  if the  consideration
received by this  Corporation  is other than cash,  its value will be deemed its
fair market value as  determined  in good faith by the Board of  Directors.  Any
securities shall be valued as follows:

                                    (A)  Securities  not  subject to  investment
letter or other similar restrictions on free marketability covered by clause (B)
immediately below:

                                             (1)  If  traded  on  a   securities
exchange or through the Nasdaq National Market,  the value shall be deemed to be
the average of the closing  prices of the  securities on such  quotation  system
over the thirty (30) day period ending three (3) days prior to the closing;

                                             (2)     If     actively      traded
over-the-counter, the value shall be deemed to be the average of the closing bid
or sale prices  (whichever is applicable) over the thirty (30) day period ending
three (3) days prior to the closing; and

                                             (3) If  there is no  active  public
market,  the value shall be the fair market value thereof,  as determined by the
Board of Directors.

                                    (B) The method of  valuation  of  securities
subject to investment letter or other restrictions on free marketability  (other
than  restrictions  arising  solely by virtue  of a  shareholder's  status as an


                                       4
<PAGE>
affiliate or former affiliate) shall be to make an appropriate discount from the
market  value  determined  as  above  in  (A)(1),  (2)  or (3)  to  reflect  the
approximate fair market value thereof, as determined by the Board of Directors.

         4.       CONVERSION RIGHTS.

         The holders of the Series  Preferred  shall have the  following  rights
with respect to the  conversion  of the Series  Preferred  into shares of Common
Stock (the "Conversion Rights"):

                  (a) Optional Conversion. Subject to and in compliance with the
provisions of this Section 4, any shares of Series  Preferred may, at the option
of the holder, be converted at any time into fully-paid and nonassessable shares
of Common  Stock.  The  number  of  shares of Common  Stock to which a holder of
respective  Series  Preferred  shall be entitled  upon  conversion  shall be the
product  obtained  by  multiplying  the  then  in  effect  "Series  A  Preferred
Conversion  Rate" or  "Series  B  Preferred  Conversion  Rate,"  as  applicable,
(determined  as  provided  in Section  4(b)) by the number of shares of Series A
Preferred and Series B Preferred being converted.

                  (b) Series  Preferred  Conversion Rate. The conversion rate in
effect at any time for  conversion  of the  Series A  Preferred  (the  "Series A
Preferred  Conversion  Rate")  shall be the  quotient  obtained by dividing  the
Original  Issue  Price of the  Series A  Preferred  by the  "Series A  Preferred
Conversion  Price,"  calculated as provided in Section 4(c). The conversion rate
then in effect at any time for conversion of the Series B Preferred (the "Series
B Preferred  Conversion  Rate") shall be the  quotient  obtained by dividing the
Original  Issue  Price of the  Series B  Preferred  by the  "Series B  Preferred
Conversion Price," calculated as provided in Section 4(c).

                  (c) Conversion  Price.  The conversion  price for the Series A
Preferred  shall initially be the Original Issue Price of the Series A Preferred
(the "Series A Preferred Conversion Price"). The conversion price for the Series
B  Preferred  shall  initially  be the  Original  Issue  Price  of the  Series B
Preferred  (the  "Series B Preferred  Conversion  Price).  Such  initial  Series
Preferred  Conversion  Price shall be adjusted  from time to time in  accordance
with this Section 4. All references to the Series A Preferred  Conversion  Price
or the  Series B  Preferred  Conversion  Price  herein  shall  mean the Series A
Preferred  Conversion Price and/or the Series B Preferred  Conversion  Price, in
each case as adjusted.

                  (d) Mechanics of Conversion.  Each holder of Series  Preferred
who  desires to convert the same into  shares of Common  Stock  pursuant to this
Section  4 shall  surrender  the  certificate  or  certificates  therefor,  duly
endorsed,  at the office of the Corporation or any transfer agent for the Series
Preferred,  and shall give written notice to the Corporation at such office that
such holder  elects to convert the same.  Such notice  shall state the number of
shares of Series Preferred being  converted.  Thereupon,  the Corporation  shall
promptly  issue and  deliver  at such  office to such  holder a  certificate  or
certificates  for the number of shares of Common  Stock to which such  holder is
entitled and shall promptly pay (i) in cash or, to the extent  sufficient  funds
are not then legally available therefor,  in Common Stock (at the Common Stock's
fair market  value  determined  by the Board of Directors as of the date of such
conversion), any declared and unpaid dividends on the shares of Series Preferred
being  converted  and (ii) in cash (at the  Common  Stock's  fair  market  value
determined by the Board of Directors as of the date of conversion)  the value of
any fractional share of Common Stock otherwise  issuable to any holder of Series
Preferred.  Such  conversion  shall be  deemed to have been made at the close of
business on the date of such  surrender  of the  certificates  representing  the
shares of Series  Preferred to be converted,  and the person entitled to receive
the shares of Common Stock  issuable upon such  conversion  shall be treated for
all purposes as the record holder of such shares of Common Stock on such date.

                  (e)  Adjustment  for Stock  Splits  and  Combinations.  If the
Corporation shall at any time or from time to time after the date that the first
share of Series B  Preferred  is issued (the  "Original  Issue  Date")  effect a
subdivision of the outstanding Common Stock without a corresponding  subdivision
of the Preferred Stock, the Series A Preferred Conversion Price and the Series B
Preferred  Conversion Price in effect  immediately before that subdivision shall
be proportionately  decreased.  Conversely, if the Corporation shall at any time
or from time to time after the  Original  Issue  Date  combine  the  outstanding
shares of Common Stock into a smaller number of shares  without a  corresponding
combination of the Preferred Stock, the Series A Preferred  Conversion Price and
the  Series B  Preferred  Conversion  Price in  effect  immediately  before  the
combination  shall be  proportionately  increased.  Any  adjustment  under  this
Section  4(e) shall  become  effective  at the close of business on the date the
subdivision or combination becomes effective.

                                       5
<PAGE>

                  (f) Adjustment for Common Stock  Dividends and  Distributions.
If the  Corporation  at any time or from time to time after the  Original  Issue
Date makes,  or fixes a record date for the  determination  of holders of Common
Stock  entitled  to  receive,  a  dividend  or  other  distribution  payable  in
additional  shares of Common  Stock,  in each such event the Series A  Preferred
Conversion  Price and the Series B  Preferred  Conversion  Price that is then in
effect shall be decreased as of the time of such  issuance or, in the event such
record  date is fixed,  as of the close of  business  on such  record  date,  by
multiplying  the Series A Preferred  Conversion  Price or the Series B Preferred
Conversion  Price then in effect by a fraction (i) the numerator of which is the
total number of shares of Common Stock issued and outstanding  immediately prior
to the time of such  issuance or the close of business on such record date,  and
(ii) the  denominator  of which is the total  number  of shares of Common  Stock
issued and  outstanding  immediately  prior to the time of such  issuance or the
close of business on such record date plus the number of shares of Common  Stock
issuable in payment of such dividend or distribution; provided, however, that if
such  record  date is  fixed  and such  dividend  is not  fully  paid or if such
distribution  is not  fully  made on the  date  fixed  therefor,  the  Series  A
Preferred  Conversion Price and the Series B Preferred Conversion Price shall be
recomputed  accordingly  as of the close of  business  on such  record  date and
thereafter  the Series A Preferred  Conversion  Price and the Series B Preferred
Conversion Price shall be adjusted  pursuant to this Section 4(f) to reflect the
actual payment of such dividend or distribution.

                  (g)    Adjustment   for    Reclassification,    Exchange   and
Substitution. If at any time or from time to time after the Original Issue Date,
the Common Stock issuable upon the conversion of the Series Preferred is changed
into the same or a different  number of shares of any class or classes of stock,
whether  by  recapitalization,  reclassification  or  otherwise  (other  than an
Acquisition  or Asset  Transfer as defined in Section 3(c) or a  subdivision  or
combination   of  shares  or  stock  dividend  or  a   reorganization,   merger,
consolidation  or sale of assets provided for elsewhere in this Section 4), then
in any such  event  each  holder  of  Series  Preferred  shall  have  the  right
thereafter  to  convert  such  stock into the kind and amount of stock and other
securities and property receivable upon such recapitalization,  reclassification
or other change by holders of the maximum  number of shares of Common Stock into
which such  shares of Series  Preferred  could have been  converted  immediately
prior to such  recapitalization,  reclassification  or  change,  all  subject to
further  adjustment as provided herein or with respect to such other  securities
or property by the terms thereof.

                  (h) Reorganizations, Mergers or Consolidations. If at any time
or from  time to  time  after  the  Original  Issue  Date,  there  is a  capital
reorganization  of the  Common  Stock  or the  merger  or  consolidation  of the
Corporation with or into another  corporation or another entity or person (other
than  an  Acquisition  or  Asset  Transfer  as  defined  in  Section  3(c)  or a
recapitalization,   subdivision,  combination,  reclassification,   exchange  or
substitution  of shares  provided for elsewhere in this Section 4), as a part of
such capital reorganization,  provision shall be made so that the holders of the
Series  Preferred shall thereafter be entitled to receive upon conversion of the
Series  Preferred the number of shares of stock or other  securities or property
of the  Corporation  to which a holder of the  number of shares of Common  Stock
deliverable   upon   conversion   would  have  been  entitled  on  such  capital
reorganization,  subject to adjustment in respect of such stock or securities by
the terms thereof. In any such case, appropriate adjustment shall be made in the
application  of the  provisions  of this Section 4 with respect to the rights of
the holders of Series Preferred after the capital reorganization to the end that
the provisions of this Section 4 (including adjustment of the Series A Preferred
Conversion  Price and/or Series B Preferred  Conversion Price then in effect and
the  number  of  shares  issuable  upon  conversion  of  the  respective  Series
Preferred) shall be applicable  after that event and be as nearly  equivalent as
practicable.

                  (i) Sale of Shares Below Series Preferred Conversion Price.

                           (i) If at any  time or from  time to time  after  the
Original  Issue  Date,  the  Corporation  issues or  sells,  or is deemed by the
express  provisions of this  subsection  (i) to have issued or sold,  Additional
Shares of Common Stock (as defined in clause (iv) of this subsection (i) below),
other than as a dividend or other distribution on any class of stock as provided
in Section 4(f) above,  and other than a subdivision or combination of shares of
Common  Stock as provided  in Section  4(e) above,  for an  Effective  Price (as
defined  in  clause  (iv) of this  subsection  (i)  below)  less  than  the then
effective Series A Preferred  Conversion Price or Series B Preferred  Conversion
Price,  then and in each such case the  current  Series A  Preferred  Conversion
Price or  Series B  Preferred  Conversion  Price,  as the case may be,  shall be
reduced,  as of the opening of business on the date of such issue or sale,  to a
price  determined  by  multiplying  the Series A Preferred  Conversion  Price or
Series B Preferred  Conversion  Price, as the case may be, by a fraction (i) the
numerator of which shall be (A) the number of shares of Common


                                       6
<PAGE>

Stock deemed  outstanding (as defined below)  immediately prior to such issue or
sale,  plus (B) the  number  of  shares of  Common  Stock  which  the  aggregate
consideration  received (as defined below in clause (ii) of this subsection (i))
by the Corporation for the total number of Additional  Shares of Common Stock so
issued would purchase at such respective Series A Preferred  Conversion Price or
Series B Preferred  Conversion Price, and (ii) the denominator of which shall be
the number of shares of Common  Stock  deemed  outstanding  (as  defined  below)
immediately  prior to such  issue or sale  plus the total  number of  Additional
Shares of Common  Stock so issued or sold.  For the  purposes  of the  preceding
sentence,  the number of shares of Common Stock deemed to be outstanding as of a
given date shall be the sum of (A) the number of shares of Common Stock actually
outstanding,  (B) the  number  of shares of  Common  Stock  into  which the then
outstanding  shares of Series Preferred could be converted if fully converted on
the day  immediately  preceding the given date,  and (C) the number of shares of
Common Stock  issuable  upon the  exercise or  conversion  of all other  rights,
options and convertible  securities outstanding on the day immediately preceding
the given date. No adjustment shall be made to the Series A Preferred Conversion
Price or Series B Preferred  Conversion Price in an amount less than one-quarter
of one cent per share.  Any adjustment  otherwise  required by this Section 4(i)
that is not required to be made due to the immediately  preceding sentence shall
be included in any  subsequent  adjustment to the Series A Preferred  Conversion
Price or Series B Preferred Conversion Price.

                           (ii)  For  the  purpose  of  making  any   adjustment
required under this Section 4(i), the consideration  received by the Corporation
for any issue or sale of securities shall (A) to the extent it consists of cash,
be  computed  at the  net  amount  of cash  received  by the  Corporation  after
deduction  of  any   underwriting  or  similar   commissions,   compensation  or
concessions  paid or allowed by the Corporation in connection with such issue or
sale but without  deduction of any expenses payable by the  Corporation,  (B) to
the extent it  consists  of  property  other than cash,  be computed at the fair
value of that  property as  determined  in good faith by the Board of Directors,
and (C) if Additional Shares of Common Stock, Convertible Securities (as defined
in clause (iii) of this  subsection  (i) below) or rights or options to purchase
either Additional Shares of Common Stock or Convertible Securities are issued or
sold together with other stock or securities or other assets of the  Corporation
for a  consideration  which  covers  both,  be  computed  as the  portion of the
consideration so received that may be reasonably determined in good faith by the
Board of Directors to be allocable to such  Additional  Shares of Common  Stock,
Convertible Securities or rights or options.

                           (iii)  For the  purpose  of the  adjustment  required
under this Section 4(i), if (x) the Corporation issues or sells any (i) stock or
other  securities  convertible  into,  Additional  Shares of Common  Stock (such
convertible  stock  or  securities  being  herein  referred  to as  "Convertible
Securities") or (ii) rights or options for the purchase of Additional  Shares of
Common  Stock or  Convertible  Securities  and (y) the  Effective  Price of such
Additional Shares of Common Stock is less than the Series A Preferred Conversion
Price or Series B Preferred  Conversion Price, then in each case the Corporation
shall be deemed to have  issued at the time of the  issuance  of such  rights or
options or Convertible  Securities  the maximum  number of Additional  Shares of
Common Stock  issuable upon exercise or conversion  thereof and to have received
as  consideration  for the  issuance of such shares an amount equal to the total
amount  of the  consideration,  if  any,  received  by the  Corporation  for the
issuance of such rights or options or Convertible Securities,  plus, in the case
of such rights or options, the minimum amounts of consideration, if any, payable
to the  Corporation  upon the exercise of such rights or options,  plus,  in the
case of Convertible  Securities,  the minimum amounts of consideration,  if any,
payable  to the  Corporation  (other  than by  cancellation  of  liabilities  or
obligations  evidenced  by such  Convertible  Securities)  upon  the  conversion
thereof;  provided  that if in the case of  Convertible  Securities  the minimum
amounts of such  consideration  cannot be  ascertained,  but are a  function  of
antidilution or similar protective  clauses,  the Corporation shall be deemed to
have received the minimum  amounts of  consideration  without  reference to such
clauses; provided further that if the minimum amount of consideration payable to
the  Corporation  upon  the  exercise  or  conversion  of  rights,   options  or
Convertible   Securities   is  reduced  over  time  or  on  the   occurrence  or
non-occurrence  of  specified  events  other  than  by  reason  of  antidilution
adjustments, the Effective Price shall be recalculated using the figure to which
such minimum amount of  consideration  is reduced;  provided further that if the
minimum amount of consideration  payable to the Corporation upon the exercise or
conversion of such rights,  options or  Convertible  Securities is  subsequently
increased,  the Effective Price shall be again  recalculated using the increased
minimum amount of consideration  payable to the Corporation upon the exercise or
conversion  of such  rights,  options  or  Convertible  Securities.  No  further
adjustment  of the Series A  Preferred  Conversion  Price or Series B  Preferred
Conversion  Price,  as adjusted  upon the  issuance of such  rights,  options or
Convertible  Securities,  shall be made as a result of the  actual  issuance  of
Additional  Shares of Common Stock on the exercise of any such rights or options
or the  conversion  of any such


                                       7
<PAGE>

Convertible  Securities.  If any  such  rights  or  options  or  the  conversion
privilege  represented by any such  Convertible  Securities shall expire without
having  been  exercised,  the Series A  Preferred  Conversion  Price or Series B
Preferred Conversion Price as adjusted upon the issuance of such rights, options
or  Convertible  Securities  shall  be  readjusted  to the  Series  A  Preferred
Conversion Price or Series B Preferred Conversion Price which would have been in
effect had an adjustment been made on the basis that the only Additional  Shares
of Common Stock so issued were the  Additional  Shares of Common Stock,  if any,
actually  issued or sold on the  exercise of such rights or options or rights of
conversion of such Convertible Securities,  and such Additional Shares of Common
Stock, if any, were issued or sold for the  consideration  actually  received by
the Corporation upon such exercise,  plus the  consideration,  if any,  actually
received  by the  Corporation  for the  granting  of all such rights or options,
whether or not exercised, plus the consideration received for issuing or selling
the Convertible Securities actually converted,  plus the consideration,  if any,
actually received by the Corporation  (other than by cancellation of liabilities
or obligations  evidenced by such  Convertible  Securities) on the conversion of
such Convertible Securities;  provided that such readjustment shall not apply to
prior conversions of Series Preferred.

                           (iv)  "Additional  Shares of Common Stock" shall mean
all shares of Common Stock issued by the  Corporation or deemed issued  pursuant
to this Section 4(i),  whether or not subsequently  reacquired or retired by the
Corporation other than: (A) shares of Common Stock issued upon conversion of the
Series  Preferred;  (B) up to 2,343,121  shares of Common Stock and/or  options,
warrants or other  Common  Stock  purchase  rights and the Common  Stock  issued
pursuant to such  options,  warrants or other  rights (as adjusted for any stock
dividends,  combinations,  splits,  recapitalizations  and the  like)  after the
Original  Issue Date to employees,  officers or directors of, or  consultants or
advisors to the  Corporation  or any  subsidiary  pursuant to stock  purchase or
stock option  plans or other  arrangements  that are approved by the Board;  (C)
shares of Common Stock issued  pursuant to the exercise of options,  warrants or
convertible  securities outstanding as of the Original Issue Date; (D) shares of
Common  Stock issued  and/or  options,  warrants or other Common Stock  purchase
rights, and the Common Stock issued pursuant to such options,  warrants or other
rights for  consideration  other than cash pursuant to a merger,  consolidation,
acquisition or similar  business  combination  approved by the Board, (E) shares
issued in any bona fide strategic  transactions  approved by the Board;  and (F)
shares of Common Stock issued pursuant to any equipment leasing arrangement,  or
debt  financing  from a bank or similar  financial  institution  approved by the
Board.  References  to Common Stock in the  provisions of this clause (iv) above
shall mean all shares of Common Stock issued by the  Corporation or deemed to be
issued pursuant to this Section 4(i). The "Effective Price" of Additional Shares
of Common Stock shall mean the quotient  determined by dividing the total number
of  Additional  Shares of Common  Stock  issued or sold,  or deemed to have been
issued or sold by the  Corporation  under this Section 4(i),  into the aggregate
consideration  received,  or deemed to have been received by the Corporation for
such issue under this Section 4(i), for such Additional Shares of Common Stock.

                  (j)  Certificate of Adjustment.  In each case of an adjustment
or readjustment of the Series A Preferred Conversion Price or Series B Preferred
Conversion  Price for the number of shares of Common  Stock or other  securities
issuable upon conversion of the respective Series  Preferred,  if the respective
Series  Preferred  is  then   convertible   pursuant  to  this  Section  4,  the
Corporation,  at its expense,  shall compute such  adjustment or readjustment in
accordance  with the  provisions  hereof and prepare a certificate  showing such
adjustment  or  readjustment,  and shall mail such  certificate,  by first class
mail,  postage  prepaid,  to each registered  holder of Series  Preferred at the
holder's address as shown in the Corporation's  books. The certificate shall set
forth such  adjustment or  readjustment,  showing in detail the facts upon which
such  adjustment  or  readjustment  is based,  including a statement  of (i) the
consideration  received  or deemed to be  received  by the  Corporation  for any
Additional  Shares of Common  Stock issued or sold or deemed to have been issued
or sold,  (ii) the  Series A  Preferred  Conversion  Price  and/or  the Series B
Preferred Conversion Price, as the case may be, at the time in effect, (iii) the
number of  Additional  Shares of Common  Stock and (iv) the type and amount,  if
any, of other  property  which at the time would be received upon  conversion of
the Series Preferred.

                  (k)  Notices  of  Record  Date.  Upon  (i) any  taking  by the
Corporation  of a record  of the  holders  of any  class of  securities  for the
purpose of  determining  the  holders  thereof  who are  entitled to receive any
dividend or other  distribution,  or (ii) any Acquisition (as defined in Section
3(c) or other capital reorganization of the Corporation, any reclassification or
recapitalization  of  the  capital  stock  of the  Corporation,  any  merger  or
consolidation  of the  Corporation  with or into any other  corporation,  or any
Asset  Transfer (as defined in Section  (3c)),  or any voluntary or  involuntary
dissolution, liquidation or winding up of the Corporation, the Corporation shall
mail to each  holder of  Series  Preferred  at least ten (10) days  prior to the
record date specified  therein (or such


                                       8
<PAGE>
shorter period approved by a majority of each Series of the  outstanding  Series
Preferred  voting  separately  as a class) a notice  specifying  (A) the date on
which  any such  record  is to be taken  for the  purpose  of such  dividend  or
distribution and a description of such dividend or distribution, (B) the date on
which  any  such  Acquisition,   reorganization,   reclassification,   transfer,
consolidation, merger, Asset Transfer, dissolution, liquidation or winding up is
expected to become  effective,  and (C) the date, if any, that is to be fixed as
to when the  holders of record of Common  Stock (or other  securities)  shall be
entitled to exchange  their  shares of Common  Stock (or other  securities)  for
securities or other property deliverable upon such Acquisition,  reorganization,
reclassification,  transfer, consolidation, merger, Asset Transfer, dissolution,
liquidation or winding up.

                  (l) Automatic Conversion.

                           (i)      (A)  Each   respective   share   of   Series
Preferred shall automatically be converted into shares of Common Stock, based on
the  then-effective  Series A Preferred  Conversion  Price or Series B Preferred
Conversion  Price, as the case may be,  immediately upon the closing of a firmly
underwritten  public offering  pursuant to an effective  registration  statement
under the  Securities  Act of 1933,  as amended,  covering the offer and sale of
Common Stock for the account of the Corporation in which (i) the per share price
is  at  least  $5.00  per  share  (as  adjusted  for  stock  splits,  dividends,
recapitalizations  and the like),  and (ii) the cash proceeds to the Corporation
(before underwriting discounts, commissions and fees) are at least $20,000,000.

                                    (B) Each share of Series A  Preferred  shall
automatically   be  converted  into  shares  of  Common  Stock,   based  on  the
then-effective Series A Preferred Conversion Price upon the affirmative election
of the  holders of at least a  majority  of the  outstanding  shares of Series A
Preferred.  Each share of Series B Preferred  shall  automatically  be converted
into  shares of Common  Stock,  based on the  then-effective  Series B Preferred
Conversion  Price upon the  affirmative  election  of the  holders of at least a
majority of the  outstanding  shares of Series B Preferred.  Upon such automatic
conversion,  any declared and unpaid  dividends shall be paid in accordance with
the provisions of Section 4(d).

                           (ii) Upon the  occurrence of the events  specified in
Section 4(l)(i) (A) above,  the outstanding  shares of Series Preferred shall be
converted automatically without any further action by the holders of such shares
and whether or not the certificates  representing such shares are surrendered to
the Corporation or its transfer agent;  provided,  however, that the Corporation
shall not be obligated  to issue  certificates  evidencing  the shares of Common
Stock issuable upon such  conversion  unless the  certificates  evidencing  such
shares of Series  Preferred  are  either  delivered  to the  Corporation  or its
transfer agent as provided  below, or the holder notifies the Corporation or its
transfer agent that such  certificates  have been lost,  stolen or destroyed and
executes  an  agreement   satisfactory  to  the  Corporation  to  indemnify  the
Corporation  from any loss incurred by it in connection with such  certificates.
Upon the occurrence of such automatic  conversion of the Series  Preferred,  the
holders of Series Preferred shall surrender the certificates  representing  such
shares at the office of the  Corporation  or any  transfer  agent for the Series
Preferred.  Thereupon,  the  Corporation  shall issue and deliver to such holder
promptly at such office and in its name as shown on such surrendered certificate
or  certificates,  a  certificate  or  certificates  for the number of shares of
Common  Stock  into  which  the  shares  of Series  Preferred  surrendered  were
convertible on the date on which such  automatic  conversion  occurred,  and any
declared and unpaid dividends shall be paid in accordance with the provisions of
Section 4(d).

                  (m) Fractional  Shares.  No fractional  shares of Common Stock
shall be issued upon conversion of Series Preferred.  All shares of Common Stock
(including fractions thereof) issuable upon conversion of more than one share of
Series  Preferred  by a holder  thereof  shall be  aggregated  for  purposes  of
determining  whether  the  conversion  would  result  in  the  issuance  of  any
fractional share. If, after the aforementioned aggregation, the conversion would
result in the issuance of any fractional  share, the Corporation  shall, in lieu
of issuing any fractional  share, pay cash equal to the product of such fraction
multiplied by the Common  Stock's fair market value (as determined by the Board)
on the date of conversion.

                  (n)  Reservation  of  Stock  Issuable  Upon  Conversion.   The
Corporation  shall at all times reserve and keep available out of its authorized
but unissued  shares of Common  Stock,  solely for the purpose of effecting  the
conversion of the shares of the Series  Preferred,  such number of its shares of
Common Stock as shall from time to time be sufficient  to effect the  conversion
of all outstanding shares of the Series Preferred.  If at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion

                                       9
<PAGE>
of all then  outstanding  shares of the Series  Preferred,  the Corporation will
take such corporate  action as may, in the opinion of its counsel,  be necessary
to increase its authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purpose.

                  (o) Notices.  Any notice  required by the  provisions  of this
Section 4 shall be in writing and shall be deemed  effectively  given:  (i) upon
personal  delivery  to the party to be  notified,  (ii)  when sent by  confirmed
facsimile if sent during  normal  business  hours of the recipient and if not so
sent  within such  hours,  then on the next  business  day,  provided  that such
facsimile  notice  is  followed  upon  within  three (3) days by  registered  or
certified mail,  postage prepaid as set forth in this clause (o), (iii) five (5)
days after having been sent by  registered  or certified  mail,  return  receipt
requested,  postage prepaid, or (iv) one (1) day after deposit with a nationally
recognized  overnight  courier,  specifying  next  day  delivery,  with  written
verification of receipt. All notices shall be addressed to each holder of record
at the address of such holder appearing on the books of the Corporation.

                  (p)  Payment  of  Taxes.  The  Corporation  will pay all taxes
(other than taxes based upon income) and other governmental  charges that may be
imposed  with  respect to the issue or delivery  of shares of Common  Stock upon
conversion  of shares of Series  Preferred,  excluding  any tax or other  charge
imposed in  connection  with any transfer  involved in the issue and delivery of
shares of Common  Stock in a name  other than that in which the shares of Series
Preferred so converted were registered.

                  (q) No  Dilution  or  Impairment.  Without  the consent of the
holders of the then  outstanding  Series  Preferred,  as required  under Section
2(b),  the  Corporation  shall not amend its  Amended and  Restated  Articles of
Incorporation  or  participate  in  any  reorganization,   transfer  of  assets,
consolidation,  merger,  dissolution,  issue or sale of  securities  or take any
other  voluntary  action,  for the  purpose of  avoiding or seeking to avoid the
observance  or  performance  of any of the  terms to be  observed  or  performed
hereunder  by the  Corporation,  but shall at all times in good faith  assist in
carrying out all such action as may be reasonably  necessary or  appropriate  in
order to protect the  conversion  rights of the holders of the Series  Preferred
against dilution or other impairment.

         5.       REDEMPTION.

                  (a) The Corporation  shall be obligated to redeem the Series B
Preferred as follows:

                           (i) The holders of at least  sixty-six and two-thirds
percent (66 2/3%) of the then outstanding  shares of Series B Preferred,  voting
together as a separate class, may require the Corporation,  to the extent it may
lawfully  do so, to redeem  the  Series B  Preferred  in three (3) equal  annual
installments  beginning on the fifth anniversary of the Original Issue Date, and
ending  on the date two (2)  years  from  such  first  redemption  date  (each a
"Redemption  Date");  provided that the Corporation shall receive at least sixty
(60) days prior to such fifth anniversary  written notice of such request of the
Series B  Preferred.  The  Corporation  shall  effect  such  redemptions  on the
applicable  Redemption  Date by paying  in cash in  exchange  for the  shares of
Series B Preferred  to be redeemed a sum equal to the  Original  Issue Price per
share of Series B Preferred (as adjusted for any stock dividends,  combinations,
splits,  recapitalizations  and the like  after the  Original  Issue  Date) plus
declared and unpaid  dividends with respect to such shares.  The total amount to
be paid for the Series B Preferred is hereinafter referred to as the "Redemption
Price." The number of shares of Series B Preferred that the Corporation shall be
required  to  redeem on any one  Redemption  Date  shall be equal to the  amount
determined by dividing (A) the aggregate  number of shares of Series B Preferred
outstanding  immediately  prior  to the  Redemption  Date by (B) the  number  of
remaining  Redemption  Dates  (including  the  Redemption  Date  to  which  such
calculation applies). Shares subject to redemption pursuant to this Section 5(a)
shall be redeemed from each holder of Series B Preferred on a pro rata basis.

                           (ii) At least  thirty  (30)  days,  but no more  than
sixty (60) days prior to the first Redemption Date, the Corporation shall send a
notice (a  "Redemption  Notice")  to all  holders  of Series B  Preferred  to be
redeemed  setting forth (A) the Redemption  Price for the shares to be redeemed;
and (B) the place at which such  holders  may obtain  payment of the  Redemption
Price upon surrender of their share  certificates.  If the Corporation  does not
have sufficient  funds legally  available to redeem all shares to be redeemed at
the  Redemption  Date  (including,  if  applicable,  those to be redeemed at the
option of the Corporation),  then it shall redeem such shares pro rata (based on
the portion of the  aggregate  Redemption  Price  payable to them) to the extent
possible  and  shall  redeem  the  remaining  shares to be  redeemed  as soon as
sufficient funds are legally available.

                                       10
<PAGE>

                  (b) On or prior to the Redemption Date, the Corporation  shall
deposit the  Redemption  Price of all shares to be redeemed with a bank or trust
company having  aggregate  capital and surplus in excess of  $100,000,000,  as a
trust fund,  with  irrevocable  instructions  and authority to the bank or trust
company to pay, on and after such Redemption  Date, the Redemption  Price of the
shares  to  their   respective   holders  upon  the  surrender  of  their  share
certificates.  Any moneys deposited by the Corporation  pursuant to this Section
5(b) for the  redemption of shares  thereafter  converted  into shares of Common
Stock  pursuant to Section 4 hereof no later than the fifth (5th) day  preceding
the  Redemption  Date shall be returned to the  Corporation  forthwith upon such
conversion.  The balance of any funds deposited by the  Corporation  pursuant to
this  Section  5(b)  remaining  unclaimed  at the  expiration  of one  (1)  year
following such  Redemption  Date shall be returned to the  Corporation  promptly
upon its written request.

                  (c) On or after such Redemption Date, each holder of shares of
Series B Preferred to be redeemed  shall  surrender  such holder's  certificates
representing  such  shares to the  Corporation  in the  manner  and at the place
designated in the Redemption  Notice, and thereupon the Redemption Price of such
shares  shall be payable to the order of the person  whose name  appears on such
certificate  or  certificates   as  the  owner  thereof  and  each   surrendered
certificate shall be canceled. In the event less than all the shares represented
by  such   certificates  are  redeemed,   a  new  certificate  shall  be  issued
representing the unredeemed shares.  From and after such Redemption Date, unless
there  shall  have been a default  in  payment  of the  Redemption  Price or the
Corporation is unable to pay the Redemption  Price due to not having  sufficient
legally  available funds, all rights of the holder of such shares as a holder of
Series B Preferred  (except the right to receive the  Redemption  Price  without
interest upon surrender of their  certificates),  shall cease and terminate with
respect  to such  shares;  provided  that in the event  that  shares of Series B
Preferred  are not  redeemed due to a default in payment by the  Corporation  or
because the Corporation does not have sufficient  legally  available funds, such
shares of Series B Preferred  shall remain  outstanding and shall be entitled to
all of the rights and preferences provided herein.

                  (d) In the  event of a call for  redemption  of any  shares of
Series B  Preferred,  the  Conversion  Rights (as defined in Section 4) for such
Series B Preferred shall terminate as to the shares designated for redemption at
the close of business  on the fifth (5th) day  preceding  the  Redemption  Date,
unless default is made in payment of the Redemption Price.

         6.       NO REISSUANCE OF SERIES PREFERRED.

         No share or shares of Series  Preferred  acquired by the Corporation by
reason of purchase, conversion or otherwise shall be reissued.

                                       IV.

         A. The  liability  of the  directors  of the  Corporation  for monetary
damages shall be eliminated to the fullest extent  permissible  under California
law.

         B. The Corporation is authorized to provide  indemnification  of agents
(as defined in Section 317 of the General  Corporation  Law of  California)  for
breach of duty to the Corporation and its shareholders  through bylaw provisions
or through  agreements  with agents,  or both, in excess of the  indemnification
otherwise permitted by Section 317 of the General Corporation Law of California,
subject to the limits on such excess indemnification set forth in Section 204 of
the General Corporation Law of California.  If, after the effective date of this
Article IV, California law is amended in a manner which permits a corporation to
limit  the  monetary  or  other  liability  of  its  directors  or to  authorize
indemnification of, or advancement of such defense expenses to, its directors or
other  persons,  in any such case to a greater  extent than is permitted on such
effective date, the references in this Article to "California law" shall to that
extent be deemed to refer to California law as so amended.

         C.  Any  repeal  or  modification  of this  Article  IV  shall  only be
prospective  and shall not affect the rights under this Article in effect at the
time of the alleged  occurrence  of any action or omission to act giving rise to
liability."


                                       11
<PAGE>

         THREE:  The  foregoing  amendment  and  restatement  of the Articles of
Incorporation  have  been  duly  approved  by the  Board  of  Directors  of this
Corporation.

         FOUR:  The  foregoing  amendment  and  restatement  of the  Articles of
Incorporation  have been duly approved by the required vote of  shareholders  in
accordance with Section 902 of the General  Corporation  Law of California.  The
total number of outstanding  shares  entitled to vote or act by written  consent
was five million four hundred  thousand  (5,400,000)  shares of Common Stock and
two  million  five  hundred  ninety-two   thousand  five  hundred   ninety-three
(2,592,593)  shares of Series A Preferred.  A majority of the outstanding Common
Stock  voting as a single  class,  a majority of the  outstanding  shares of the
Series A Preferred  voting as a single  class and a majority of the  outstanding
shares of  Common  and  Preferred  Stock,  voting  together  as a single  class,
approved these Amended and Restated Articles of Incorporation by written consent
in accordance with Section 603 of the General Corporation Law of California.


                      [THIS SPACE INTENTIONALLY LEFT BLANK]


                                       12
<PAGE>

         The  undersigned,  Mark  Underseth,  the  President and Secretary of S2
TECHNOLOGIES,  INC.,  declares  under  penalty of perjury  under the laws of the
State of California that the matters set out in the foregoing  Articles are true
of his own knowledge.

         Executed at San Diego, California on October 5, 2001.




                              __________________________________________________
                              Mark Underseth, President and Secretary







                 AMENDED AND RESTATED ARTICLES OF INCORPORATION
                                 SIGNATURE PAGE


<PAGE>


                                    EXHIBIT C

                 AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT



<PAGE>

                              S2 TECHNOLOGIES, INC.


                              AMENDED AND RESTATED

                            INVESTOR RIGHTS AGREEMENT


<PAGE>

<TABLE>

                                                 TABLE OF CONTENTS

<CAPTION>
                                                                                                               PAGE


<S>     <C>                                                                                                      <C>
SECTION 1.        GENERAL.........................................................................................2

         1.1      Definitions.....................................................................................2

SECTION 2.        REGISTRATION; RESTRICTIONS ON TRANSFER..........................................................3

         2.1      Restrictions on Transfer........................................................................3

         2.2      Demand Registration.............................................................................4

         2.3      Piggyback Registrations.........................................................................6

         2.4      Form S-3 Registration...........................................................................7

         2.5      Expenses of Registration........................................................................8

         2.6      Obligations of the Company......................................................................8

         2.7      Termination of Registration Rights..............................................................9

         2.8      Delay of Registration; Furnishing Information..................................................10

         2.9      Indemnification................................................................................10

         2.10     Assignment of Registration Rights..............................................................12

         2.11     Amendment of Registration Rights...............................................................12

         2.12     Limitation on Subsequent Registration Rights...................................................12

         2.13     "Market Stand-Off" Agreement; Agreement to Furnish Information.................................13

         2.15     Rule 144 Reporting.............................................................................13

SECTION 3.        COVENANTS OF THE COMPANY.......................................................................14

         3.1      Basic Financial Information and Reporting......................................................14

         3.2      Inspection Rights..............................................................................15

         3.3      Confidentiality of Records.....................................................................15

         3.4      Reservation of Common Stock....................................................................15

         3.5      Stock Vesting..................................................................................15

         3.6      Proprietary Information and Inventions Agreement...............................................16

         3.7      Assignment of Right of First Refusal...........................................................16

         3.8      Approval.......................................................................................16

         3.9      Compensation Committee.........................................................................16

         3.10     Directors' Expenses............................................................................16

         3.11     Directors' Liability and Indemnification.......................................................16

         3.12     Key-Man Insurance..............................................................................16

                                                           i


<PAGE>

                                                   TABLE OF CONTENTS
                                                       (CONTINUED)

                                                                                                               PAGE

         3.13     Termination of Covenants.......................................................................16

SECTION 4.        RIGHTS OF FIRST REFUSAL........................................................................17

         4.1      Subsequent Offerings...........................................................................17

         4.2      Exercise of Rights.............................................................................17

         4.3      Issuance of Equity Securities to Other Persons.................................................17

         4.4      Termination and Waiver of Rights of First Refusal..............................................18

         4.5      Transfer of Rights of First Refusal............................................................18

         4.6      Excluded Securities............................................................................18

SECTION 5.        MISCELLANEOUS..................................................................................19

         5.1      Governing Law..................................................................................19

         5.2      Survival.......................................................................................19

         5.3      Successors and Assigns.........................................................................19

         5.4      Entire Agreement...............................................................................20

         5.5      Severability...................................................................................20

         5.6      Amendment and Waiver...........................................................................20

         5.7      Delays or Omissions............................................................................20

         5.8      Notices........................................................................................21

         5.9      Attorneys' Fees................................................................................21

         5.10     Titles and Subtitles...........................................................................21

         5.11     Additional Investors...........................................................................21

         5.12     Counterparts...................................................................................21

</TABLE>


                                                                  ii


<PAGE>


                              S2 TECHNOLOGIES, INC.


                              AMENDED AND RESTATED

                            INVESTOR RIGHTS AGREEMENT


         THIS AMENDED AND RESTATED  INVESTOR RIGHTS AGREEMENT (the  "Agreement")
is entered into as of the ____ day of October,  2001 (the "Effective  Date"), by
and among S2  TECHNOLOGIES,  INC., a California  corporation (the "Company") and
the  investors  listed on  Exhibit  A hereto,  referred  to  hereinafter  as the
"Investors" and each individually as an "Investor."


                                    RECITALS


         WHEREAS,  certain  of  the  Investors  are  purchasing  shares  of  the
Company's  Series B Preferred  Stock (also referred to as the "Series B Stock"),
pursuant  to that  certain  Series B Preferred  Stock  Purchase  Agreement  (the
"Purchase Agreement") of even date herewith (the "Financing");


         WHEREAS, the obligations in the Purchase Agreement are conditioned upon
the execution and delivery of this Agreement;


         WHEREAS,  certain of the Investors (the "Prior  Investors") are holders
of the  Company's  Series A Preferred  Stock (also  referred to as the "Series A
Stock"  which,  together  with the Series B Stock,  shall be  referred to as the
"Preferred Stock");


         WHEREAS, the Prior Investors and the Company are parties to an Investor
Rights Agreement dated July 20, 2000 (the "Prior Agreement");


         WHEREAS,  the parties to the Prior  Agreement  desire to terminate  the
Prior  Agreement  and accept the  rights and  covenants  hereof in lieu of their
rights and covenants under the Prior Agreement; and


         WHEREAS,  in connection  with the  consummation  of the Financing,  the
Company and the Investors have agreed to the  registration  rights,  information
rights, and other rights as set forth below.


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


                                        1
<PAGE>

SECTION 1.    GENERAL.

         1.1  Definitions.  As used in this Agreement the following  terms shall
mean:

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

                  "Form  S-3" means  such form  under the  Securities  Act as in
effect on the date hereof or any  successor or similar  registration  form under
the Securities 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.

                  "Holder"  means  any  person  owning  of  record   Registrable
Securities  that have not been sold to the public or any  assignee  of record of
such Registrable Securities in accordance with Section 2.10 hereof.

                  "Initial  Offering"  means the Company's first firm commitment
underwritten public offering of its Common Stock registered under the Securities
Act.

                  "Qualified   Offering"   means  the  Company's   first  firmly
underwritten  public  offering of shares of the Company's  Common Stock at a per
share price of at least five  dollars  ($5.00) per share and having an aggregate
offering  price to the public of at least twenty million  dollars  ($20,000,000)
(before deduction of Registration Expenses).

                  "Register,"   "registered,"  and  "registration"  refer  to  a
registration  effected  by  preparing  and filing a  registration  statement  in
compliance  with  the  Securities  Act,  and  the  declaration  or  ordering  of
effectiveness of such registration statement or document.

                  "Registrable Securities" means (a) Common Stock of the Company
issued or issuable upon conversion of the Shares, and/or (b) any Common Stock of
the  Company  issued as (or  issuable  upon the  conversion  or  exercise of any
warrant,  right or  other  security  which is  issued  as) a  dividend  or other
distribution  with  respect to, or in exchange  for or in  replacement  of, such
above-described   securities.   Notwithstanding   the   foregoing,   Registrable
Securities  shall not  include  any  securities  sold by a person to the  public
either (a) pursuant to a registration  statement or Rule 144 or (b) in a private
transaction in which the  transferor's  rights under Section 2 of this Agreement
are not assigned.

                  "Registrable  Securities then outstanding" shall be the number
of shares  determined by calculating the total number of shares of the Company's
Common Stock that are Registrable  Securities and either (a) are then issued and
outstanding  or (b) are issuable  pursuant to then  exercisable  or  convertible
securities.

                  "Registration  Expenses"  means all  expenses  incurred by the
Company in complying with Sections 2.2, 2.3 and 2.4 hereof,  including,  without
limitation,  all  registration  and filing  fees,  printing  expenses,  fees and
disbursements of counsel for the Company, reasonable fees and disbursements of a
single  special  counsel for the  Holders,  blue sky fees and  expenses  and the
expense of any special audits  incident to or required by any such  registration
(but excluding the compensation of regular  employees of the Company which shall
be paid in any event by the Company).


                                        2
<PAGE>

                  "SEC"  or  "Commission"  means  the  Securities  and  Exchange
Commission.

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

                  "Selling  Expenses"  means  all  underwriting   discounts  and
selling commissions applicable to the sale.

                  "Shares"  means  (i)  the  Company's  Series  A  Stock  issued
pursuant to the Series A Preferred Stock Purchase Agreement dated as of July 20,
2000 and (ii) the  Company's  Series B Stock  issued  pursuant  to the  Purchase
Agreement.

                  "Special   Registration   Statement"   means  a   registration
statement relating to any employee benefit plan or with respect to any corporate
reorganization or other transaction under Rule 145 (including any replacement or
successor Rule thereto) or any other Rule or Regulation of the Securities Act.

SECTION 2. REGISTRATION; RESTRICTIONS ON TRANSFER.

     2.1 Restrictions on Transfer.

          (a)  Each  Holder  agrees  not to make any  disposition  of all or any
portion of the Shares or Registrable Securities unless and until:

          (i)  There  is then in  effect  a  registration  statement  under  the
Securities Act covering such proposed  disposition and such  disposition is made
in accordance with such registration statement; or

          (ii) (A) The transferee has agreed in writing to be bound by the terms
of this  Agreement,  (B) such  Holder  shall have  notified  the  Company of the
proposed  disposition  and shall  have  furnished  the  Company  with a detailed
statement of the circumstances surrounding the proposed disposition,  and (C) if
reasonably  requested  by the  Company,  such Holder  shall have  furnished  the
Company with an opinion of counsel, reasonably satisfactory to the Company, that
such  disposition  will  not  require  registration  of such  shares  under  the
Securities  Act.  The  Company  agrees not to require  opinions  of counsel  for
transactions made pursuant to Rule 144 except in unusual circumstances.

          (iii) Notwithstanding the provisions of paragraphs (i) and (ii) above,
no such  registration  statement or opinion of counsel  shall be necessary for a
transfer  by a Holder  which is (A) a  partnership,  to its  partners  or former
partners in accordance with  partnership  interests,  (B) a corporation,  to its
shareholders in accordance with their interest in the corporation, (C) a limited
liability  company,  to its members or former  members in accordance  with their
interest in the limited liability company,  or (D) to the Holder's family member
or trust for the benefit of an individual Holder; provided that in each case the
transferee  will be subject to the terms of this Agreement to the same extent as
if he were an original Holder hereunder.

          (b) Each  certificate  representing  Shares or Registrable  Securities
shall (unless otherwise permitted by the provisions of the Agreement) be stamped
or otherwise imprinted with

                                        3
<PAGE>

a legend  substantially  similar to the  following  (in  addition  to any legend
required under applicable state securities laws):

                  THE  SECURITIES  REPRESENTED  HEREBY HAVE NOT BEEN  REGISTERED
                  UNDER THE  SECURITIES  ACT OF 1933 (THE  "ACT") AND MAY NOT BE
                  OFFERED, SOLD OR OTHERWISE TRANSFERRED,  ASSIGNED,  PLEDGED OR
                  HYPOTHECATED  UNLESS  AND  UNTIL  REGISTERED  UNDER THE ACT OR
                  UNLESS  THE  COMPANY  HAS   RECEIVED  AN  OPINION  OF  COUNSEL
                  SATISFACTORY   TO  THE  COMPANY  AND  ITS  COUNSEL  THAT  SUCH
                  REGISTRATION IS NOT REQUIRED.

                  (c) The  Company  shall be  obligated  to  reissue  unlegended
certificates  promptly at the request of any holder  thereof if the holder shall
have  obtained  an  opinion  of  counsel  (which  counsel  may be counsel to the
Company) reasonably  acceptable to the Company to the effect that the securities
proposed to be disposed of may lawfully be so disposed of without  registration,
qualification or legend.

                  (d)  Any  legend   endorsed  on  an  instrument   pursuant  to
applicable state securities laws and the stop-transfer instructions with respect
to such  securities  shall be removed upon receipt by the Company of an order of
the appropriate blue sky authority authorizing such removal.

         2.2 Demand Registration.

                  (a)  Subject to the  conditions  of this  Section  2.2, if the
Company shall receive a written request from the Holders of thirty percent (30%)
of the Registrable Securities (the "Initiating Holders") that the Company file a
registration  statement  under the Securities Act covering the  registration  of
Registrable  Securities having an aggregate offering price to the public, net of
Selling  Expenses,  in excess of seven  million  five hundred  thousand  dollars
($7,500,000),  then the Company  shall,  within  thirty (30) days of the receipt
thereof,  give written notice of such request to all Holders, and subject to the
limitations  of  this  Section  2.2,  effect,  as  expeditiously  as  reasonably
possible,   the  registration  under  the  Securities  Act  of  all  Registrable
Securities that the Holders request to be registered.

                  (b)  If  the  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
this  Section 2.2 or any request  pursuant to Section 2.4 and the Company  shall
include such  information in the written notice referred to in Section 2.2(a) or
Section 2.4(a), as applicable. In such event, the right of any Holder to include
its 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.  All
Holders proposing to distribute their securities through such underwriting shall
enter into an  underwriting  agreement in customary form with the underwriter or
underwriters selected for such underwriting by the Company (which underwriter or
underwriters  shall be  reasonably  acceptable  to a majority in interest of the
Holders).


                                       4
<PAGE>

Notwithstanding  any other  provision of this Section 2.2 or Section 2.4, if the
underwriter  advises the Company that marketing  factors require a limitation of
the number of securities to be underwritten  (including Registrable  Securities)
then the Company  shall so advise all Holders of  Registrable  Securities  which
would otherwise be underwritten  pursuant hereto,  and the number of shares that
may be included in the  underwriting  shall be  allocated to the Holders of such
Registrable  Securities  on a pro rata basis based on the number of  Registrable
Securities  held  by  all  such  Holders  (including  the  Initiating  Holders);
provided,  however,  that the number of shares of  Registrable  Securities to be
included  in such  underwriting  and  registration  shall  not be less  than 30%
(thirty percent) of the total shares in such registration; provided further that
in a Qualified  Offering the number of Registrable  Securities to be included in
such offering may be zero. Any Registrable Securities excluded or withdrawn from
such underwriting shall be withdrawn from the registration.

          (c) The  Company  shall  not be  required  to  effect  a  registration
pursuant to this Section 2.2:

                           (i)  prior to the  earlier  of three  years  from the
First  Closing  (as  defined in Section 2.2 of the  Purchase  Agreement)  or one
hundred  eighty (180) days  following  the  effective  date of the  registration
statement pertaining to the Qualified Offering;

                           (ii)  after  the   Company  has   effected   two  (2)
registrations  pursuant to this Section 2.2,  and such  registrations  have been
declared or ordered effective;

                           (iii)  during  the period  starting  with the date of
filing of, and ending on the date one hundred  eighty (180) days  following  the
effective date of the  registration  statement  pertaining to the earlier of (1)
the  Company's  Qualified  Offering  and (2) any other  public  offering  of the
Company's securities pursuant to which the Company's outstanding Preferred Stock
is converted into shares of Common Stock  pursuant to the Company's  Articles of
Incorporation;  provided that the Company makes reasonable good faith efforts to
cause such registration statement to become effective;

                           (iv)   within  12  months   of  a   previous   demand
registration pursuant to this Section 2.2;

                           (v) if  within  thirty  (30)  days  of  receipt  of a
written request from Initiating  Holders pursuant to Section 2.2(a), the Company
gives  notice  to the  Holders  of the  Company's  intention  to  make a  public
offering,  other  than  pursuant  to a  Special  Registration  Statement  within
forty-five (45) days;

                           (vi)  if  the  Company   shall   furnish  to  Holders
requesting a registration  statement pursuant to this Section 2.2, a certificate
signed by the  President,  Chief  Executive  Officer,  or  Chairman of the Board
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  statement to be effected at such time, in which event the
Company  shall have the right to defer such filing for a period of not more than
one hundred  twenty  (120) days after  receipt of the request of the  Initiating
Holders;  provided  that such right to delay a request shall be exercised by the
Company not more than once in any twelve (12) month period; or


                                       5
<PAGE>

                           (vii) if the Initiating Holders propose to dispose of
shares of Registrable  Securities that may be immediately registered on Form S-3
pursuant to a request made pursuant to Section 2.4 below.

         2.3  Piggyback  Registrations.  The Company shall notify all Holders of
Registrable Securities in writing at least fifteen (15) days prior to the filing
of any registration  statement under the Securities Act for purposes of a public
offering  of  securities  of  the  Company  (including,   but  not  limited  to,
registration  statements  relating to secondary  offerings of  securities of the
Company,  but excluding  Special  Registration  Statements) and will afford each
such Holder an opportunity to include in such registration statement all or part
of such  Registrable  Securities  held by such Holder.  Each Holder  desiring to
include in any such  registration  statement all or any part of the  Registrable
Securities held by it shall,  within fifteen (15) days after the above-described
notice from the  Company,  so notify the Company in writing.  Such notice  shall
state the intended method of disposition of the  Registrable  Securities by such
Holder. If a Holder decides not to include all of its Registrable  Securities in
any registration  statement  thereafter filed by the Company,  such Holder shall
nevertheless continue to have the right to include any Registrable Securities in
any subsequent registration statement or registration statements as may be filed
by the Company with respect to offerings of its  securities,  all upon the terms
and conditions set forth herein.

                  (a)  Underwriting.  If the registration  statement under which
the Company gives notice under this Section 2.3 is for an underwritten offering,
the  Company  shall so advise the  Holders of  Registrable  Securities.  In such
event, the right of any such Holder to be included in a registration pursuant to
this Section 2.3 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.  All Holders proposing to distribute
their  Registrable  Securities  through  such  underwriting  shall enter into an
underwriting  agreement in customary form with the  underwriter or  underwriters
selected  for  such  underwriting  by the  Company.  Notwithstanding  any  other
provision of the  Agreement,  if the  underwriter  determines in good faith that
marketing   factors  require  a  limitation  of  the  number  of  shares  to  be
underwritten,  the number of shares  that may be  included  in the  underwriting
shall be allocated,  first, to the Company; second, to the Holders on a pro rata
basis based on the total number of Registrable  Securities  held by the Holders.
No such reduction  shall reduce the amount of securities of the selling  Holders
included in the  registration  below thirty percent (30%) of the total amount of
securities included in such registration,  unless such offering is the Qualified
Offering, in which event any or all of the Registrable Securities of the Holders
may be excluded in accordance with the immediately  preceding  sentence.  If any
Holder disapproves of the terms of any such underwriting,  such Holder may elect
to withdraw  therefrom  by written  notice to the  Company and the  underwriter,
delivered at least ten (10)  business  days prior to the  effective  date of the
registration  statement.  Any Registrable  Securities excluded or withdrawn from
such underwriting shall be excluded and withdrawn from the registration. For any
Holder which is a partnership or corporation, the partners, retired partners and
shareholders  of such  Holder,  or the  estates  and family  members of any such
partners  and  retired  partners  and any trusts  for the  benefit of any of the
foregoing  person  shall be  deemed  to be a single  "Holder,"  and any pro rata
reduction with respect to such "Holder" shall be based upon the aggregate amount
of shares  carrying  registration  rights owned by all entities and  individuals
included in such "Holder," as defined in this sentence.


                                       6
<PAGE>

                  (b) Right to Terminate  Registration.  The Company  shall have
the right to terminate or withdraw any  registration  initiated by it under this
Section 2.3 prior to the effectiveness of such registration,  whether or not any
Holder has elected to include securities in such registration.  The Registration
Expenses  of such  withdrawn  registration  shall  be borne  by the  Company  in
accordance with Section 2.5 hereof.

         2.4 Form S-3  Registration.  In case the Company shall receive from any
Holder or Holders of Registrable  Securities a written  request or requests that
the Company effect a registration  on Form S-3 (or any successor to Form S-3) or
any similar short-form  registration  statement and any related qualification or
compliance 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,
and any related qualification or compliance, to all other Holders of Registrable
Securities; and

                  (b) as soon as practicable,  effect such  registration and all
such  qualifications  and compliances as may be so requested and as would permit
or facilitate the sale and  distribution of all or such portion of such Holder's
or Holders'  Registrable  Securities as are specified in such request,  together
with all or such portion of the  Registrable  Securities  of any other Holder or
Holders  joining in such  request as are  specified in a written  request  given
within  fifteen (15) days after receipt of such written notice from the Company;
provided,  however,  that the Company  shall not be obligated to effect any such
registration, qualification or compliance pursuant to this Section 2.4:

                           (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 seven hundred fifty thousand  dollars
($750,000);

                           (iii) if  within  thirty  (30) days of  receipt  of a
written  request  from any Holder or Holders  pursuant to this  Section 2.4, the
Company  gives  notice to such Holder or Holders of the  Company's  intention to
make a public offering within ninety (90) days, other than pursuant to a Special
Registration Statement;

                           (iv) if the  Company  shall  furnish to the Holders a
certificate signed by the President, Chief Executive Officer, or Chairman of the
Board of Directors 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 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 ninety (90)
days after  receipt of the request of the Holder or Holders  under this  Section
2.4;  provided,  that such right to delay a request  shall be  exercised  by the
Company not more than once in any twelve (12) month period;

                           (v) if the Company has,  within the twelve (12) month
period   preceding  the  date  of  such  request,   already   effected  two  (2)
registrations  on Form S-3 for any of the Holders  pursuant to this Section 2.4;
or


                                       7
<PAGE>

                           (vi) in any  particular  jurisdiction  in  which  the
Company  would be  required  to qualify to do  business  or to execute a general
consent to service of process in effecting such  registration,  qualification or
compliance.

                  (c) Subject to the  foregoing,  the Company  shall file a Form
S-3  registration  statement  covering  the  Registrable  Securities  and  other
securities so requested to be registered as soon as practicable after receipt of
the request or requests of the Holders.  Registrations effected pursuant to this
Section 2.4 shall not be counted as demands for  registration  or  registrations
effected  pursuant to Sections 2.2 or 2.3,  respectively.  All such Registration
Expenses incurred in connection with  registrations  requested  pursuant to this
Section 2.4 after the first two (2)  registrations  shall be paid by the selling
Holders pro rata in proportion to the number of shares sold by each.

         2.5 Expenses of Registration.  Except as specifically  provided herein,
all  Registration   Expenses  incurred  in  connection  with  any  registration,
qualification or compliance  pursuant to Section 2.2 or any  registration  under
Section 2.3 or Section  2.4 herein  shall be borne by the  Company.  All Selling
Expenses incurred in connection with any registrations hereunder, shall be borne
by the  holders of the  securities  so  registered  pro rata on the basis of the
number of shares so registered.  The Company shall not, however,  be required to
pay for expenses of any registration proceeding begun pursuant to Section 2.2 or
2.4,  the request of which has been  subsequently  withdrawn  by the  Initiating
Holders  unless (a) the  withdrawal is based upon material  adverse  information
concerning  the Company of which the  Initiating  Holders  were not aware at the
time of such request or (b) the Holders of a majority of Registrable  Securities
agree to forfeit their right to one requested  registration  pursuant to Section
2.2 or Section 2.4, as applicable,  in which event such right shall be forfeited
by all Holders.  If the Holders are required to pay the  Registration  Expenses,
such expenses shall be borne by the holders of securities (including Registrable
Securities)  requesting such  registration in proportion to the number of shares
for which  registration  was  requested.  If the  Company is required to pay the
Registration  Expenses  of a  withdrawn  offering  pursuant to clause (a) of the
third  sentence of this  Section 2.5 above,  then the Holders  shall not forfeit
their rights pursuant to Section 2.2 or Section 2.4 to a demand registration.

         2.6  Obligations  of the  Company.  Whenever  required  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 all reasonable  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  for up to thirty (30) days or, if
earlier,  until the Holder or Holders have  completed the  distribution  related
thereto. The Company shall not be required to file, cause to become effective or
maintain the  effectiveness  of any registration  statement that  contemplates a
distribution of securities on a delayed or continuous basis pursuant to Rule 415
under the Securities Act.

                  (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  Securities  Act  with  respect  to the


                                       8
<PAGE>

disposition of all  securities  covered by such  registration  statement for the
period set forth in paragraph 2.6 (a) above.

                  (c)  Furnish  to  the  Holders  such  number  of  copies  of a
prospectus,   including  a  preliminary  prospectus,   in  conformity  with  the
requirements  of the  Securities  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  reasonable  efforts to  register  and qualify the
securities covered by such registration statement under such other securities or
Blue Sky 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.

                  (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(s) 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 Securities 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 or omits to
state a material  fact  required to be stated  therein or  necessary to make the
statements  therein  not  misleading  in the  light  of the  circumstances  then
existing.  The Company will use reasonable  efforts to amend or supplement  such
prospectus in order to cause such prospectus not to include any untrue statement
of a  material  fact or omit to state a  material  fact  required  to be  stated
therein or necessary to make the statements  therein not misleading in the light
of the circumstances then existing.

                  (g) Use its  reasonable  efforts to furnish,  on the date that
such Registrable  Securities are delivered to the underwriters for sale, if such
securities are being sold through underwriters, (i) an opinion, dated as of 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 (ii)
a  letter  dated  as  of  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.

         2.7 Termination of Registration Rights. All registration rights granted
under this Section 2 shall  terminate and be of no further force and effect five
(5) years after the earlier of (a) the date of the Company's  Qualified Offering
and (b) the  date of any  other  public  offering  of the  Company's  securities
pursuant to which the Company's  outstanding  Preferred  Stock is converted into
shares  of  common  stock  in  accordance   with  the   Company's   Articles  of
Incorporation.  In addition, a Holder's  registration rights shall expire if all
Registrable Securities held by such Holder (including its affiliates,  partners,
former  partners,  members  and former


                                       9
<PAGE>

members  owning  Registrable  Securities  through such Holder) may be sold under
Rule 144 or other Securities Act exemption during any ninety (90) day period.

         2.8 Delay of Registration; Furnishing Information.

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

                  (b) It shall be a condition  precedent to the  obligations  of
the  Company to take any action  pursuant  to Section  2.2,  2.3 or 2.4 that the
selling  Holders  shall  furnish  to  the  Company  such  information  regarding
themselves,  the Registrable  Securities held by them and the intended method of
disposition of such  securities as shall be required to effect the  registration
of their Registrable Securities.

                  (c) The Company shall have no  obligation  with respect to any
registration  requested  pursuant  to Section  2.2 or Section 2.4 if, due to the
operation  of  subsection  2.2(b),  the  number  of  shares  or the  anticipated
aggregate  offering  price of the  Registrable  Securities to be included in the
registration  does not equal or exceed the  number of shares or the  anticipated
aggregate offering price required to originally trigger the Company's obligation
to initiate  such  registration  as  specified  in Section  2.2 or Section  2.4,
whichever is applicable.

         2.9  Indemnification.  In the  event  any  Registrable  Securities  are
included in a registration statement under Sections 2.2, 2.3 or 2.4:

                  (a) To the extent permitted by law, the Company will indemnify
and hold  harmless  each Holder,  the  partners,  officers and directors of each
Holder,  any  underwriter (as defined in the Securities Act) for such Holder and
each person, if any, who controls such Holder or underwriter  within the meaning
of the Securities Act or the Exchange Act, against any losses, claims,  damages,
or  liabilities  (joint or several) to which they may become  subject  under the
Securities Act, the Exchange Act or other federal or state law,  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") by the Company: (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 or alleged
violation by the Company of the  Securities  Act,  the  Exchange  Act, any state
securities law or any rule or regulation  promulgated  under the Securities Act,
the Exchange Act or any state  securities  law in  connection  with the offering
covered by such registration statement;  and the Company will pay as incurred to
each such Holder, partner, officer, director,  underwriter or controlling person
for 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 Section 2.9(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


                                       10
<PAGE>

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 such Holder, partner, officer,  director,  underwriter
or controlling person of such Holder.

                  (b) To the extent  permitted  by law,  each  Holder  will,  if
Registrable  Securities held by such Holder are included in the securities as to
which  such  registration   qualifications  or  compliance  is  being  effected,
indemnify and hold harmless the Company, each of its directors, its officers and
each  person,  if any,  who  controls  the  Company  within  the  meaning of the
Securities Act, any underwriter  and any other Holder selling  securities  under
such registration statement or any of such other Holder's partners, directors or
officers or any person who  controls  such Holder,  against any losses,  claims,
damages  or  liabilities  (joint or  several)  to which the  Company or any such
director,  officer,  controlling  person,  underwriter or other such Holder,  or
partner, director, officer or controlling person of such other Holder may become
subject  under the  Securities  Act, the Exchange Act or other  federal or state
law,  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 under an
instrument duly executed by such Holder and stated to be specifically for use in
connection with such registration; and each such Holder will pay as incurred any
legal or other expenses reasonably incurred by the Company or any such director,
officer,  controlling person,  underwriter or other Holder, or partner, officer,
director  or  controlling  person  of  such  other  Holder  in  connection  with
investigating or defending any such loss, claim, damage,  liability or action if
it is judicially determined that there was such a Violation;  provided, however,
that the indemnity agreement contained in this Section 2.9(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  Section  2.9 exceed the net  proceeds  from the  offering
received by such Holder.

                  (c) Promptly after receipt by an indemnified  party under this
Section  2.9  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 2.9, 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 shall
have the right to retain its own 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 materially  prejudicial  to its ability to
defend such action,  shall relieve such  indemnifying  party of any liability to
the  indemnified  party under this  Section  2.9, 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 2.9.


                                       11
<PAGE>

                  (d) If the indemnification provided for in this Section 2.9 is
held by a court of competent  jurisdiction  to be  unavailable to an indemnified
party with respect to any losses,  claims,  damages or  liabilities  referred to
herein,  the indemnifying  party, in lieu of indemnifying such indemnified party
thereunder,  shall to the extent  permitted by applicable  law contribute to the
amount  paid or  payable  by such  indemnified  party as a result of such  loss,
claim,  damage or liability in such  proportion as is appropriate to reflect the
relative fault of the indemnifying  party on the one hand and of the indemnified
party on the other in  connection  with the  Violation(s)  that resulted in such
loss,  claim,  damage  or  liability,  as well as any other  relevant  equitable
considerations.  The  relative  fault  of  the  indemnifying  party  and  of the
indemnified  party shall be  determined by a court of law 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 no event shall any  contribution by a
Holder  hereunder  exceed the net proceeds  from the  offering  received by such
Holder.

                  (e) The  obligations  of the Company  and  Holders  under this
Section 2.9 shall survive  completion of any offering of Registrable  Securities
in  a  registration  statement  and  the  termination  of  this  agreement.   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.

         2.10 Assignment of Registration Rights. The rights to cause the Company
to register Registrable Securities pursuant to this Section 2 may be assigned by
a Holder to a transferee or assignee of  Registrable  Securities  which (a) is a
subsidiary, parent, general partner, limited partner, retired partner, member or
retired  member of a Holder,  (b) is a Holder's  family  member or trust for the
benefit  of an  individual  Holder,  or (c)  acquires  at least  fifty  thousand
(50,000)  shares of  Registrable  Securities  (as  adjusted for stock splits and
combinations); provided, however, (i) the transferor shall, within ten (10) days
after such  transfer,  furnish  to the  Company  written  notice of the name and
address of such  transferee or assignee and the securities with respect to which
such registration rights are being assigned and (ii) such transferee shall agree
in writing to be subject to all provisions in this Agreement.

         2.11 Amendment of Registration  Rights. Any provision of this Section 2
may be amended and the observance  thereof 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 at least  sixty-six  and
two-thirds percent (66-2/3%) of the Registrable Securities then outstanding. Any
amendment  or waiver  effected in  accordance  with this  Section  2.11 shall be
binding upon each Holder and the Company.  By acceptance  of any benefits  under
this Section 2, Holders of  Registrable  Securities  hereby agree to be bound by
the provisions hereunder.

         2.12  Limitation  on  Subsequent  Registration  Rights.  Other  than as
provided in Section 5.11,  after the date of this  Agreement,  the Company shall
not,  without the prior written consent of the Holders of at least sixty-six and
two-thirds  percent (66- 2/3%) of the Registrable  Securities then  outstanding,
enter into any agreement with any holder or prospective holder of


                                       12
<PAGE>

any securities of the Company that would grant such holder  registration  rights
pari passu or senior to those granted to the Holders hereunder.

         2.13 "Market Stand-Off"  Agreement;  Agreement to Furnish  Information.
Each Holder  hereby agrees that such Holder shall not sell,  transfer,  make any
short sale of,  grant any option for the  purchase of, or enter into any hedging
or similar transaction with the same economic effect as a sale, any Common Stock
(or other  securities)  of the  Company  held by such  Holder  (other than those
included in the  registration)  for a period specified by the  representative of
the  underwriters  of Common Stock (or other  securities)  of the Company not to
exceed  one  hundred  eighty  (180)  days  following  the  effective  date  of a
registration  statement of the Company filed under the Securities Act;  provided
that:

                           (i) such agreement shall apply only to the earlier of
(a) the  Company's  Qualified  Offering  and (b) any other  public  offering  of
securities of the Company pursuant to which the Company's  outstanding Preferred
Stock is converted into shares of Common Stock in accordance  with the Company's
Articles of Incorporation; and

                           (ii)  all  officers,   directors,   founders  of  the
Company,  and  holders of at least five  percent  (5%) of the  Company's  voting
securities enter into similar agreements.

         2.14 Each Holder agrees to execute and deliver such other agreements as
may  be  reasonably  requested  by the  Company  or the  underwriter  which  are
consistent  with the  foregoing or which are  necessary  to give further  effect
thereto.  In addition,  if requested by the Company or the representative of the
underwriters of Common Stock (or other  securities) of the Company,  each Holder
shall provide,  within ten (10) days of such request, such information as may be
required by the Company or such representative in connection with the completion
of any public  offering of the Company's  securities  pursuant to a registration
statement  filed under the  Securities  Act. The  obligations  described in this
Section  2.14  shall not apply to a  registration  relating  solely to  employee
benefit plans on Form S-1 or Form S-8 or similar  forms that may be  promulgated
in the future,  or a registration  relating  solely to a Rule 145 transaction on
Form S-4 or similar forms that may be promulgated in the future. The Company may
impose stop-transfer instructions with respect to the shares of Common Stock (or
other securities) subject to the foregoing restriction until the end of said one
hundred  eighty (180) day period.  Each Holder agrees that any transferee of any
shares of  Registrable  Securities  shall be bound by Section 2.13 and 2.14. The
underwriters  of the Company's stock are intended third party  beneficiaries  of
Section 2.13 and 2.14 and shall have the right,  power and  authority to enforce
the provisions of Sections 2.13 and 2.14 as though they were a party hereto.

         2.15 Rule 144 Reporting. With a view to making available to the Holders
the benefits of certain  rules and  regulations  of the SEC which may permit the
sale of the  Registrable  Securities  to the public  without  registration,  the
Company agrees to use its best efforts to:

                  (a) Make and keep public information available, as those terms
are  understood  and  defined in SEC Rule 144 or any similar or  analogous  rule
promulgated  under the Securities  Act, at all times after the effective date of
the first registration filed by the Company for an offering of its securities to
the general public;


                                       13
<PAGE>

                  (b) File with the SEC,  in a timely  manner,  all  reports and
other documents required of the Company under the Exchange Act; and

                  (c) So long  as a  Holder  owns  any  Registrable  Securities,
furnish to such  Holder  forthwith  upon  request:  a written  statement  by the
Company as to its compliance with the reporting requirements of said Rule 144 of
the  Securities  Act,  and of the  Exchange Act (at any time after it has become
subject to such  reporting  requirements);  a copy of the most recent  annual or
quarterly  report of the  Company;  and such other  reports and  documents  as a
Holder may  reasonably  request in availing  itself of any rule or regulation of
the SEC allowing it to sell any such securities without registration.

SECTION 3. COVENANTS OF THE COMPANY.

         3.1 Basic Financial Information and Reporting.

                  (a) The Company will  maintain  accurate  books and records of
account  in which  full and  correct  entries  will be made of all its  business
transactions pursuant to a system of accounting  established and administered in
accordance with generally accepted accounting  principles  consistently applied,
and will set aside on its books all such proper  accruals  and reserves as shall
be required under generally accepted accounting principles consistently applied.

                  (b) As soon as  practicable  after the end of each fiscal year
of the  Company,  and  in  any  event  within  one  hundred  twenty  (120)  days
thereafter, to the extent requested by an Investor the Company will furnish each
Investor a balance sheet of the Company,  as at the end of such fiscal year, and
a statement  of income and a statement  of cash flows of the  Company,  for such
year, all prepared in accordance with generally accepted  accounting  principles
consistently  applied and  setting  forth in each case in  comparative  form the
figures for the previous fiscal year, all in reasonable  detail.  Such financial
statements  shall be accompanied by a report and opinion  thereon by independent
public  accountants  of national  standing  selected by the  Company's  Board of
Directors.

                  (c)  The  Company  will  furnish  each  Investor,  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,  to the extent requested by such Investor a balance sheet
of the Company as of the end of each such quarterly  period,  and a statement of
income and a statement  of cash flows of the Company for such period and for the
current  fiscal year to date,  prepared in accordance  with  generally  accepted
accounting principles,  but unaudited,  with the exception that no notes need be
attached to such  statements  and year-end audit  adjustments  may not have been
made.

                  (d) So long as an Investor (with its affiliates) shall own not
less than five hundred thousand  (500,000) shares of Registrable  Securities (as
adjusted for stock splits and  combinations) (a "Major  Investor"),  the Company
will furnish each such Major Investor (i) at least forty-five (45) days prior to
the beginning of each fiscal year an annual budget and operating  plans for such
fiscal year (and as soon as available,  any subsequent  revisions thereto);  and
(ii) as soon as practicable after the end of each month, and in any event within
twenty (20) days thereafter, upon request of such Major Investor a balance sheet
of the Company as of the


                                       14
<PAGE>

end of each such month,  and a statement of income and a statement of cash flows
of the Company for such month and for the current fiscal year to date, including
a  comparison  to plan  figures for such  period,  prepared in  accordance  with
generally  accepted  accounting   principles   consistently  applied,  with  the
exception  that no notes need be attached to such  statements and year-end audit
adjustments may not have been made.

         3.2  Inspection  Rights.  Each Major  Investor  shall have the right to
visit  and  inspect  any  of  the  properties  of  the  Company  or  any  of its
subsidiaries,  and to discuss the affairs,  finances and accounts of the Company
or any of its subsidiaries with its officers,  and to review such information as
is  reasonably  requested  all at such  reasonable  times and as often as may be
reasonably requested; provided, however, that the Company shall not be obligated
under this  Section  3.2 with  respect to a  competitor  of the  Company or with
respect to information which the Board of Directors  determines in good faith is
confidential and should not, therefore, be disclosed.

         3.3 Confidentiality of Records. Each Investor agrees to use, and to use
its best  efforts to ensure that its  authorized  representatives  use, the same
degree of care as such Investor uses to protect its own confidential information
to  keep  confidential  any  information  furnished  to it by  the  Company,  or
representatives  or agents of the Company,  and which the Company  identifies as
being  confidential  or proprietary  (so long as such  information is not in the
public  domain),  except that such  Investor may disclose  such  proprietary  or
confidential  information to any partner,  subsidiary or parent of such Investor
for the  purpose of  evaluating  its  investment  in the Company as long as such
partner,  subsidiary or parent is advised of the  confidentiality  provisions of
this Section 3.3. To the extent  requested  by the Company,  the Investor  shall
sign a confidentiality and non-disclosure  agreement prior to the release of any
such confidential or proprietary information.

         3.4 Reservation of Common Stock.  The Company will at all times reserve
and keep available,  solely for issuance and delivery upon the conversion of the
Preferred  Stock,  all  Common  Stock  issuable  from  time  to time  upon  such
conversion.

         3.5 Stock Vesting.  Unless otherwise approved by the Board of Directors
(including  a majority of the  directors  elected by the  Preferred  Stock) or a
Compensation  Committee  thereof,  all stock options and other stock equivalents
issued after the date of this Agreement to employees, directors, consultants and
other service providers shall be subject to vesting as follows:  (a) twenty-five
percent  (25%) of such stock  shall vest at the end of the first year  following
the earlier of the date of issuance or such person's services  commencement date
with the Company,  and (b)  seventy-five  percent (75%) of such stock shall vest
over the remaining three (3) years. The Company shall not permit the transfer of
unvested  stock by any such person prior to vesting.  With respect to any shares
of stock  purchased by any such person,  the Company's  repurchase  option shall
provide that upon such  person's  termination  of employment or service with the
Company,  with or without  cause,  the  Company or its  assignee  (to the extent
permissible  under  applicable  securities  laws and other  laws) shall have the
option to purchase at cost any unvested shares of stock held by such person. The
Company's  Board of  Directors  may only  change the  provisions  applicable  to
vesting of stock or options  described in this Section 3.5 by a unanimous  vote,
including those Directors representing (i) the Series A Preferred Stock and (ii)
the Series B Preferred Stock.


                                       15
<PAGE>

         3.6 Proprietary Information and Inventions Agreement. The Company shall
require  all  employees,  officers  and  consultants  to execute  and  deliver a
Proprietary  Information  and  Inventions  Agreement in the form attached to the
Purchase Agreement.

         3.7 Assignment of Right of First Refusal.  If the Company elects not to
exercise any right of first refusal or right of first offer the Company may have
on a proposed transfer of any of the Company's  outstanding common stock held by
employees, consultants, and others pursuant to the Company's bylaws, articles of
incorporation, contract or otherwise, the Company shall, to the extent it may do
so, assign such right of first refusal or right of first offer to each Investor.
In the event of such  assignment,  each Investor  shall have a right to purchase
its pro rata portion (as defined in Section 4.1) of the common stock proposed to
be transferred.

         3.8 Approval.  Excluding the Management  Services  Agreements which are
required to be entered into as a Closing condition under the Purchase Agreement,
the  Company  shall not  without  the  approval  of a  majority  of the Board of
Directors,  with all  non-interested  Directors voting and the approval at least
one of the  Directors  designated  by holders of the Series A  Preferred  Stock,
authorize  or  enter  into any  transactions  with any  director  or  management
employee, or such director's or employee's immediate family.

         3.9  Compensation  Committee.  The  Company  shall form a  Compensation
Committee that will be responsible for determining all compensation arrangements
relating to the Company's executive officers. One member of such Committee shall
be a Director  representing the Series A Preferred Stock and one member shall be
a Director representing the Series B Preferred Stock.

         3.10 Directors' Expenses. The Company shall not pay any compensation to
any  member  of  the  Company's  Board  of  Directors  in  connection  with  the
performance of their duties as a Director.

         3.11 Directors' Liability and  Indemnification.  The Company's Articles
of  Incorporation  and Bylaws shall provide (a) for elimination of the liability
of director to the maximum extent  permitted by law and (b) for  indemnification
of directors for acts on behalf of the Company to the maximum  extent  permitted
by law.

         3.12 Key-Man  Insurance . Within ninety days after the Effective  Date,
the  Company  shall  obtain a key man life  insurance  policy  from a  reputable
insurance  company,  proceeds  payable  to the  Company,  upon  the life of Mark
Underseth.

         3.13 Termination of Covenants.  All covenants of the Company  contained
in Section 3 of this  Agreement  shall expire and  terminate as to each Investor
upon  the  earlier  of (i)  the  effective  date of the  registration  statement
pertaining  to a Qualified  Offering or any other  public  offering of Company's
securities  in  which  all of  the  Company's  outstanding  Preferred  Stock  is
converted  into  Common  Stock in  accordance  with the  Company's  Articles  of
Incorporation  or (ii) upon (a) the sale,  lease or other  disposition of all or
substantially  all of the  assets of the  Company or (b) an  acquisition  of the
Company  by  another  corporation  or entity by  consolidation,  merger or other
reorganization  in which the holders of the Company's  outstanding  voting stock
immediately  prior to such transaction own,  immediately after such transaction,


                                       16
<PAGE>

securities representing less than fifty percent (50%) of the voting power of the
Company or other entity  surviving  such  transaction  (a "Change in  Control"),
provided  that this  Section  3.13(ii)(b)  shall not apply to a merger  effected
exclusively for the purpose of changing the domicile of the Company.

SECTION 4. RIGHTS OF FIRST REFUSAL.

         4.1  Subsequent  Offerings.  Each Investor  shall have a right of first
refusal to  purchase  its pro rata share of all  Equity  Securities,  as defined
below, that the Company may, from time to time,  propose to sell and issue after
the date of this Agreement, other than the Equity Securities excluded by Section
4.6 hereof.  Each Investor's pro rata share shall be the ratio of (a) the number
of shares of the Company's  Common Stock  (including  all shares of Common Stock
issued or  issuable  upon  conversion  of the  Preferred  Stock)  of which  such
Investor  is deemed to be a holder  immediately  prior to the  issuance  of such
Equity Securities to (b) the total number of shares of the Company's outstanding
Common  Stock  (including  all shares of Common  Stock  issued or issuable  upon
conversion  of the Shares or upon the  exercise of any  outstanding  warrants or
options)  immediately prior to the issuance of the Equity  Securities;  provided
however,  that with respect to Oryx  Technologies  Corp.,  which  includes  Oryx
Ventures  LLC  (collectively  referred to herein as "Oryx"),  the pro rata share
shall be the ratio of (c) the  number of shares of the  Company's  Common  Stock
(including all shares of Common Stock issued or issuable upon  conversion of the
Shares or exercise of that certain warrant for seven hundred thousand  (700,000)
shares of the Company's  Common Stock issued  pursuant to that certain  Business
and Consultant  Management  Agreement dated July 20, 2000,  between Oryx and the
Company) which Oryx is deemed to be a holder  immediately  prior to the issuance
of such Equity  Securities  to (d) the total  number of shares of the  Company's
outstanding  Common  Stock  (including  all  shares  of Common  Stock  issued or
issuable upon  conversion of the Shares or upon the exercise of any  outstanding
warrants or options) immediately prior to the issuance of the Equity Securities.
The term "Equity Securities" shall mean (i) any Common Stock, Preferred Stock or
other security of the Company,  (ii) any security  convertible,  with or without
consideration,  into  any  Common  Stock,  Preferred  Stock  or  other  security
(including  any  option to  purchase  such a  convertible  security),  (iii) any
security  carrying  any warrant or right to  subscribe to or purchase any Common
Stock, Preferred Stock or other security or (iv) any such warrant or right.

         4.2  Exercise of Rights.  If the  Company  proposes to issue any Equity
Securities,  it shall  give  each  Investor  written  notice  of its  intention,
describing the Equity  Securities,  the price and the terms and conditions  upon
which the Company  proposes to issue the same.  Each Investor shall have fifteen
(15) days from the giving of such notice to agree to purchase its pro rata share
of the  Equity  Securities  for the  price  and upon the  terms  and  conditions
specified  in the notice by giving  written  notice to the  Company  and stating
therein the quantity of Equity Securities to be purchased.  Notwithstanding  the
foregoing,  the  Company  shall not be  required  to offer or sell  such  Equity
Securities  to any  Investor  who would cause the Company to be in  violation of
applicable federal securities laws by virtue of such offer or sale.

         4.3 Issuance of Equity  Securities to Other Persons.  If not all of the
Investors elect to purchase their pro rata share of the Equity Securities,  then
the Company shall  promptly  notify in writing the Investors who do so elect and
shall offer such Investors the right to acquire such


                                       17
<PAGE>

unsubscribed  shares.  Each  respective  Investor  shall then have five (5) days
after its  receipt of such  notice to notify  the  Company  of its  election  to
purchase  all or a  portion  thereof  of the  unsubscribed  shares.  If all such
Investors  fail to  exercise  in full the rights of first  refusal,  the Company
shall  have  ninety  (90)  days  thereafter  to sell any such  remaining  Equity
Securities to persons selected in the Company's discretion,  at a price and upon
general  terms and  conditions  materially no more  favorable to the  purchasers
thereof than those specified in the Company's  notice to the Investors  pursuant
to Section  4.2 hereof.  If the Company has not sold all such Equity  Securities
within  ninety (90) days of the notice  provided  pursuant to Section  4.2,  the
Company shall not thereafter issue or such or other Equity  Securities,  without
first offering such securities to the Investors in the manner provided above.

         4.4  Termination  and Waiver of Rights of First Refusal.  The rights of
first  refusal  established  by this  Section 4 shall  not  apply to,  and shall
terminate  upon  the  earlier  of (i) the  effective  date  of the  registration
statement  pertaining to the Company's  Qualified  Offering,  (ii) the effective
date of the  registration  statement  pertaining to any other public offering of
the Company's  securities in which all of the  Company's  outstanding  Preferred
Stock is converted into Common Stock in accordance  with the Company's  Articles
of  Incorporation,  or (iii) a Change in  Control.  The rights of first  refusal
established by this Section 4 may be amended,  or any provision  waived with the
written consent of Investors  holding a majority of the  Registrable  Securities
held by all Investors, or as permitted by Section 5.6.

         4.5 Transfer of Rights of First Refusal. The rights of first refusal of
each  Investor  under  this  Section 4 may be  transferred,  subject to the same
restrictions as any transfer of registration rights pursuant to Section 2.10.

         4.6 Excluded  Securities.  The rights of first refusal  established  by
this Section 4 shall have no  application  to the sale or issuance of any of the
following Equity Securities:

                  (a)  up  to an  aggregate  amount  of  one  million  fifty-two
thousand four hundred seven  (1,052,407)  shares (provided,  however,  that such
amount  shall be  increased to reflect any shares of Common Stock (i) not issued
pursuant to the rights,  agreements,  option or warrants  outstanding  as of the
Original Issue Date  ("Outstanding  Options") as a result of the  termination of
such  Outstanding  Options or (ii)  reacquired  by the Company  from  employees,
directors or consultants at cost pursuant to agreements which permit the Company
to repurchase  such shares upon  termination of services to the Company)  and/or
options,  warrants or other Common Stock purchase rights issued pursuant to such
options,  warrants  or  other  rights  (as  adjusted  for any  stock  dividends,
combinations,  splits,  recapitalizations  and the like  after the filing of the
Company's Amended and Restated Articles of  Incorporation),  in each case issued
or to be issued to  employees,  officers  or  directors  of, or  consultants  or
advisors to the Company or any  subsidiary,  pursuant to stock purchase or stock
option plans or other arrangements that are approved by the Board of Directors;

                  (b) stock issued pursuant to any rights,  agreements,  options
or warrants outstanding as of the date of this Agreement;


                                       18
<PAGE>

                  (c) any Equity Securities issued for consideration  other than
cash  pursuant  to a merger,  consolidation,  acquisition  or  similar  business
combination approved by the Board of Directors;

                  (d) shares of Common Stock issued in connection with any stock
split, stock dividend or recapitalization by the Company;

                  (e)  shares of Common  Stock  issued  upon  conversion  of the
Shares;

                  (f) any Equity  Securities  issued  pursuant to any  equipment
leasing or loan arrangement,  or debt financing from a bank or similar financial
or lending institution approved by the Board of Directors;

                  (g) any  Equity  Securities  that are  issued  by the  Company
pursuant to a registration statement filed under the Securities Act;

                  (h) any Equity  Securities issued in connection with strategic
transactions  involving  the Company  and other  entities,  including  (i) joint
ventures,   manufacturing,   marketing  or  distribution  arrangements  or  (ii)
technology  transfer or development  arrangements;  provided that such strategic
transactions  and the  issuance  of shares  therein,  has been  approved  by the
Company's Board of Directors.

SECTION 5. MISCELLANEOUS.

         5.1 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.

         5.2  Survival.   The  representations,   warranties,   covenants,   and
agreements made herein shall survive any investigation  made by any Investor and
the  closing of the  transactions  contemplated  hereby.  All  statements  as to
factual matters contained in any certificate or other instrument delivered by or
on behalf of the Company  pursuant  hereto in connection  with the  transactions
contemplated  hereby shall be deemed to be representations and warranties by the
Company hereunder solely as of the date of such certificate or instrument.

         5.3  Successors  and Assigns.  Except as otherwise  expressly  provided
herein,  the  provisions  hereof  shall  inure to the benefit of, and be binding
upon, the successors,  assigns,  heirs,  executors,  and  administrators  of the
parties  hereto and shall  inure to the  benefit of and be  enforceable  by each
person  who  shall be a holder  of  Registrable  Securities  from  time to time;
provided,  however, that prior to the receipt by the Company of adequate written
notice of the transfer of any  Registrable  Securities  specifying the full name
and address of the transferee,  the Company may deem and treat the person listed
as the holder of such shares in its records as the absolute  owner and holder of
such  shares  for all  purposes,  including  the  payment  of  dividends  or any
redemption price.


                                       19
<PAGE>

         5.4 Entire Agreement.

                  (a) The Prior  Agreement is hereby amended in its entirety and
restated herein.  Such amendment and restatement is effective upon the execution
of the Agreement by the Company, the holders of sixty-six and two-thirds percent
in  interest  of the  Series A Stock  held by the  Investors  named in the Prior
Agreement and that remain  outstanding  as of the date of this  Agreement.  Upon
such  execution,  all  provisions  of, rights  granted and covenants made in the
Prior Agreement are hereby waived, released and terminated in their entirety and
shall have no further force and effect.

                  (b) This  Agreement,  the Exhibits and Schedules  hereto,  the
Purchase Agreement and the other documents delivered pursuant thereto constitute
the full and entire  understanding and agreement between the parties with regard
to the subjects hereof and no party shall be liable or bound to any other in any
manner by any  representations,  warranties,  covenants and agreements except as
specifically set forth herein and therein.

         5.5  Severability.  If one or more of the  provisions of this Agreement
is, for any reason, held to be invalid, illegal or unenforceable in any respect,
such  invalidity,  illegality,  or  unenforceability  shall not affect any other
provisions of this  Agreement,  and this Agreement shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein.

         5.6 Amendment and Waiver.

                  (a) Except as otherwise expressly provided, this Agreement may
be amended or  modified  only upon the  written  consent of the  Company and the
Investors  holding at least  sixty-six and  two-thirds  percent (66 2/3%) of the
Registrable Securities.

                  (b) Except as otherwise expressly provided, the obligations of
the Company and the rights of the Investors  under this  Agreement may be waived
only  with  the  written  consent  of the  holders  of at  least  sixty-six  and
two-thirds percent (66 2/3%) of the Registrable Securities.

                  (c) For the  purposes of  determining  the number of Investors
entitled to vote or exercise any rights hereunder, the Company shall be entitled
to rely solely on the list of record holders of its stock as maintained by or on
behalf of the Company.

         5.7 Delays or  Omissions.  No delay or omission to exercise  any right,
power,  or  remedy  accruing  to any  Investor,  upon  any  breach,  default  or
noncompliance  of the Company under this Agreement  shall impair any such right,
power,  or remedy,  nor shall it be construed to be a waiver of any such breach,
default or noncompliance, or any acquiescence therein, or of any similar breach,
default or noncompliance  thereafter occurring.  Any waiver, permit, consent, or
approval of any kind or character on any Investor's part of any breach,  default
or  noncompliance  under the Agreement or any waiver on such  Investor's part of
any  provisions or conditions of this  Agreement must be in writing and shall be
effective  only to the  extent  specifically  set  forth  in such  writing.  All
remedies,  either  under  this  Agreement,  by law,  or  otherwise  afforded  to
Investors, shall be cumulative and not alternative.


                                       20
<PAGE>

         5.8 Notices.  All notices  required or permitted  hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the
party to be notified; (b) when sent by confirmed facsimile if sent during normal
business hours of the recipient; if not, then on the next business day (provided
that to be effective  upon receipt,  any notice by facsimile must be followed up
immediately  by notice sent by registered or certified  mail as provided in this
Section  5.8);  (c)  five (5) days  after  having  been  sent by  registered  or
certified mail, return receipt requested,  postage prepaid;  or (d) upon receipt
after deposit with a nationally  recognized  overnight courier,  specifying next
day delivery,  with written verification of receipt. All communications shall be
sent to the party to be notified  at the  address as set forth on the  signature
pages  hereof or  Exhibit A hereto or at such  other  address  as such party may
designate by ten (10) days advance written notice to the other parties hereto.

         5.9 Attorneys' Fees. In the event that any suit or action is instituted
to enforce any provision in this Agreement, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees,  costs and expenses
of enforcing  any right of such  prevailing  party under or with respect to this
Agreement,  including  without  limitation,  reasonable  fees  and  expenses  of
attorneys,  which shall include, without limitation,  reasonable fees, costs and
expenses of appeals.

         5.10 Titles and Subtitles.  The titles of the sections and  subsections
of this  Agreement  are for  convenience  of  reference  only  and are not to be
considered in construing this Agreement.

         5.11  Additional  Investors.  Notwithstanding  anything to the contrary
contained herein, (a) if the Company shall issue additional shares of its Series
B Preferred Stock pursuant to the Purchase Agreement,  any additional  purchaser
of such shares of  Preferred  Stock shall  become a party to this  Agreement  by
executing  and  delivering  an  additional  counterpart  signature  page to this
Agreement  and shall be deemed an  "Investor"  hereunder  and (b) if the Company
shall issue Equity  Securities in accordance with Section 4.6 (c), (f) or (h) of
this  Agreement,  any purchaser of such Equity  Securities may become a party to
Section  2  of  this   Agreement  by  executing  and  delivering  an  additional
counterpart  signature page to this Agreement and in such case shall be deemed a
"Holder" hereunder;  provided further that (i) upon any such issuance covered by
Section  4.6(c),  (f), or (h), if agreed by the  Company and such  Holder,  such
Equity Securities so issued shall, without any further action on the part of the
Investors,  be considered  Registrable  Securities under this Agreement and (ii)
for  purposes  of such  Section 2, no further  action  shall be  required by any
Investor to make such purchaser a party to Section 2.

         5.12  Counterparts.  This  Agreement  may be  executed in any number of
counterparts,  each of which  shall be an  original,  but all of which  together
shall constitute one instrument.


                      [THIS SPACE INTENTIONALLY LEFT BLANK]


                                       21
<PAGE>

         IN WITNESS  WHEREOF,  the parties  hereto have  executed  this INVESTOR
RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.


COMPANY:                                INVESTORS:

S2 TECHNOLOGIES, INC.                   ORYX TECHNOLOGIES, INC.


By:____________________________________ By:_____________________________________

Title:_________________________________ Title:__________________________________



                                        ORYX VENTURES


                                        By:_____________________________________

                                        Title:__________________________________



                                        PROFILE VENTURE PARTNERS FUND 1, L.P.


                                        By:_____________________________________

                                        Title:__________________________________



                                        STAR TRUST 1982


                                        By:_____________________________________

                                        Title:__________________________________



                                        VMR HIGH OCTANE FUND


                                        By:_____________________________________

                                        Title:__________________________________



                                        CRENSHAW INVESTMENTS LIMITED


                                        By:_____________________________________

                                        Title:__________________________________





                              [AMENDED AND RESTATED
                    INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE]




<PAGE>



                                        DIABLO PARTNERS


                                        By:_____________________________________

                                        Title:__________________________________






                              [AMENDED AND RESTATED
                    INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE]


<PAGE>


                                    EXHIBIT A

                              SCHEDULE OF INVESTORS


INVESTOR                                                         SHARES
--------------------------------------------------------- ----------------------
Holders of Series A Preferred Stock:

ORYX TECHNOLOGIES, INC.                                         1,851,852
4340 Almaden Expwy
Suite 220
San Jose, CA  95118

STAR TRUST 1982                                                   370,371
c/o Amr Mohsen
1338 Ridder Park
San Jose, CA  95131

VMR HIGH OCTANE FUND                                              370,370
c/o Meespeirson Fund Services
19-20 North Quay
Douglas, Isle of Man  1M991M

Purchasers of Series B Preferred Stock:

ORYX VENTURES                                                   3,157,143
4340 Almaden Expwy
Suite 220
San Jose, CA  95118

PROFILE VENTURE PARTNERS FUND 1, L.P.                           1,428,571
500 Chesterfield Parkway
Malvern, PA  19355

STAR TRUST 1982                                                       -0-
c/o Amr Mohsen
1338 Ridder Park
San Jose, CA  95131

VMR HIGH OCTANE FUND                                              528,571
c/o Meespeirson Fund Services
19-20 North Quay
Douglas, Isle of Man  1M991M


<PAGE>

INVESTOR                                                         SHARES
--------------------------------------------------------- ----------------------
CRENSHAW INVESTMENTS LIMITED                                    1,142,858
c/o Moore Stephens Services SAM
L'Estoil, Bloc C, 31 Avenue Princess Grace
MC 98000, Monaco

DIABLO PARTNERS                                                    28,571
411 Hartz Avenue
Suite 200
Danville, CA  94526


<PAGE>


                                    EXHIBIT D

                     AMENDED AND RESTATED CO-SALE AGREEMENT


<PAGE>


                             S2 TECHNOLOGIES, INC.

                              AMENDED AND RESTATED

                               CO-SALE AGREEMENT

                                OCTOBER __, 2001


<PAGE>

<TABLE>
<CAPTION>
                                                 TABLE OF CONTENTS

                                                                                                               PAGE

<S>                                                                                                              <C>
1.       Definitions..............................................................................................1

2.       Transfers by a Shareholder...............................................................................2

3.       Exempt Transfers.........................................................................................4

4.       Prohibited Transfers.....................................................................................4

5.       Legend...................................................................................................5

6.       Miscellaneous............................................................................................6

</TABLE>



                                                       i


<PAGE>


                              S2 TECHNOLOGIES, INC.
                              AMENDED AND RESTATED
                                CO-SALE AGREEMENT


         THIS AMENDED AND RESTATED CO-SALE  AGREEMENT (the  "Agreement") is made
and entered into as of this _____ day of October,  2001 (the "Effective  Date"),
by and among S2  TECHNOLOGIES,  INC., a California  corporation (the "Company"),
the  holders  of the  Company's  Series A  Preferred  Stock  listed on Exhibit A
hereto,  the holders of the Company's Series B Preferred Stock listed on Exhibit
A hereto (collectively,  the "Investors"),  and certain holders of the Company's
Common Stock listed on Exhibit B hereto (the "Shareholders").  Collectively, the
Company, Shareholders and the Investors are referred to as the "Parties."

                                    RECITALS

         WHEREAS, certain of the Investors hold shares of the Company's Series A
Preferred  Stock (the "Series A Preferred  Stock") and possess  certain  co-sale
rights  pursuant to an existing  Co-Sale  Agreement dated as of July 20, 2000 by
and among the Company,  Mark Underseth  (the  "Founder") and such Investors (the
"Prior Agreement");

         WHEREAS,  the  undersigned  Investors  who hold the Series A  Preferred
Stock  hold more than a majority  in  interest  of the Common  Stock held by the
Investors (as defined in the Prior  Agreement) and such  Investors,  the Founder
and the Company desire to terminate the Prior Agreement and to accept the rights
created pursuant hereto in lieu of the rights granted under the Prior Agreement,
with the Prior  Agreement  being  superseded  hereby and of no further  force or
effect as of the Effective Date hereof;

         WHEREAS,  certain  of  the  Investors  are  purchasing  shares  of  the
Company's  Series B  Preferred  Stock  (the  "Series  B  Preferred  Stock"  and,
collectively with the Series A Preferred Stock, the "Preferred  Stock") pursuant
to that certain  Series B Preferred  Stock  Purchase  Agreement  (the  "Purchase
Agreement")  of even date  herewith  among such  Investors  and the Company (the
"Financing");

         WHEREAS, the obligations in the Purchase Agreement are conditioned upon
the execution and delivery of this Agreement; and

         WHEREAS,  in connection  with the  consummation  of the Financing,  the
Parties  desire to enter into this Agreement in order to grant rights of co-sale
to each Investor.

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

         1.       DEFINITIONS.

                  (a) "Co-Sale Stock" shall mean shares of the Company's  Common
Stock now owned or subsequently  acquired by the Shareholders by gift, purchase,
dividend,  option exercise


                                       1
<PAGE>

or  any  other  means  whether  or  not  such   securities   are  registered  in
Shareholder's  name or  beneficially  or legally owned by any such  Shareholder,
including  any  interest of a spouse in any of the Co-Sale  Stock,  whether that
interest is asserted pursuant to marital property laws or otherwise.  The number
of shares of Co-Sale  Stock owned by the  Shareholders  as of the date hereof is
set forth on Exhibit B, which  Exhibit  may be amended  from time to time by the
Company to reflect  changes in the number of shares  owned by the  Shareholders,
but the failure to so amend shall have no effect on such Co-Sale  Stock  subject
to this Agreement.

                  (b) "Common  Stock" shall mean the Company's  Common Stock and
shares of Common  Stock  issued or issuable  upon  conversion  of the  Company's
outstanding Preferred Stock or exercise of any option, warrant or other security
or right of any kind convertible into or exchangeable for Common Stock.

                  (c) For the  purpose of this  Agreement,  the term  "Transfer"
shall  include  any  sale,  assignment,  encumbrance,   hypothecation,   pledge,
conveyance  in trust,  gift,  transfer by request,  devise or descent,  or other
transfer or disposition of any kind, including, but not limited to, transfers to
receivers, levying creditors, trustees or receivers in bankruptcy proceedings or
general  assignees  for  the  benefit  of  creditors,  whether  voluntary  or by
operation of law, directly or indirectly, of any of the Co-Sale Stock.

         2.        TRANSFERS BY A SHAREHOLDER.

                  (a) If a  Shareholder  proposes  to  Transfer  any  shares  of
Co-Sale  Stock then the  Shareholder  shall  promptly  give written  notice (the
"Notice")  simultaneously  to the Company and to each of the  Investors at least
thirty  (30) days prior to the  proposed  closing of such  Transfer.  The Notice
shall describe in reasonable  detail the proposed  Transfer  including,  without
limitation, the number of shares of Co-Sale Stock to be transferred,  the nature
of such Transfer, the consideration to be paid, and the name and address of each
prospective  purchaser  or  transferee.  In the event that the Transfer is being
made pursuant to the  provisions  of Section 3(a),  the Notice shall state under
which section the Transfer is being made.

                  (b) Each  Investor  shall  have the  right,  exercisable  upon
written notice to such Shareholder within fifteen (15) days after the Notice, to
participate in such Transfer of Co-Sale Stock on the same terms and  conditions.
Such notice shall  indicate  the number of shares of Common Stock such  Investor
wishes to sell under his, her or its right to participate.  To the extent one or
more of the Investors  exercise such right of  participation  in accordance with
the terms and conditions set forth below,  the number of shares of Co-Sale Stock
that  such  Shareholder  may sell in the  transaction  shall be  correspondingly
reduced.

                  (c) Each  Investor  may sell all or any part of that number of
shares equal to the product  obtained by multiplying (i) the aggregate number of
shares of Co-Sale  Stock  covered by the Notice by (ii) a fraction the numerator
of which is the number of shares of Common  Stock owned by such  Investor at the
time of the Transfer and the  denominator of which is the total number of shares
of Common Stock owned by such  Shareholder  and the Investors at the time of the
Transfer.  If not all of the Investors  elect to sell their share of the Co-Sale
Stock proposed to be transferred  within said fifteen (15) day period,  then the
Shareholder  shall promptly  notify in writing the Investors who do so elect and
shall offer such Investors the additional right to


                                       2
<PAGE>

participate in the sale of such  additional  shares of Co-Sale Stock proposed to
be transferred on the same  percentage  basis as set forth above in this Section
2(c).  The  Investors  shall have five (5) days after  receipt of such notice to
notify the Shareholder of their election to sell all or a portion thereof of the
unsubscribed shares.

                  (d) Each  Investor who elects to  participate  in the Transfer
pursuant to this Section 2 (a  "Participant")  shall effect its participation in
the  Transfer by promptly  delivering  to such  Shareholder  for transfer to the
prospective purchaser one or more certificates,  properly endorsed for transfer,
which represent:

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

                           (ii) that number of shares of  Preferred  Stock which
is at that time  convertible  into the  number of  shares of Common  Stock  such
Participant elects to sell; provided, however, that if the prospective purchaser
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 Section  2(d)(i)  above.  The Company shall make any
such  conversion  concurrent  with the  actual  Transfer  of such  shares to the
proposed purchaser.

                  (e) The stock certificate or certificates that the Participant
delivers to such  Shareholder  pursuant to Section 2(d) shall be  transferred to
the  prospective  purchaser  in  consummation  of the sale of the  Common  Stock
pursuant  to  the  terms  and  conditions  specified  in  the  Notice,  and  the
Shareholder 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  prospective  purchaser  or
purchasers  prohibits such assignment or otherwise refuses to purchase shares or
other securities from a Participant  exercising its rights of co-sale hereunder,
such Shareholder shall not sell to such prospective  purchaser or purchasers any
Co-Sale Stock unless and until,  simultaneously with such sale, such Shareholder
shall purchase such shares or other securities from such Participant on the same
terms and conditions specified in the Notice.

                  (f)  The  exercise  or  non-exercise  of  the  rights  of  the
Investors  hereunder to  participate  in one or more  Transfers of Co-Sale Stock
made by such Shareholder  shall not adversely affect their rights to participate
in subsequent Transfers of Co-Sale Stock subject to Section 2(a).

                  (g) If none of the Investors elects to participate in the sale
of the Co-Sale Stock subject to the Notice, such Shareholder may, not later than
sixty (60) days following  delivery to the Company of the Notice,  enter into an
agreement providing for the closing of the Transfer of the Co-Sale Stock covered
by the Notice within thirty (30) days of such  agreement on terms and conditions
not more  materially  favorable to the  transferee  than those  described in the
Notice. Any proposed Transfer on terms and conditions  materially more favorable
than those described in the Notice, as well as any subsequent  proposed Transfer
of any of the  Co-Sale  Stock by a  Shareholder,  shall  again be subject to the
co-sale rights of the Investors and require compliance by a Shareholder with the
procedures described in this Section 2.


                                       3
<PAGE>

         3.       EXEMPT TRANSFERS.

                  (a) Notwithstanding  the foregoing,  the co-sale rights of the
Investors  shall not apply to (i) any  Transfer or  Transfers  by a  Shareholder
which in the aggregate, over the term of this Agreement, amount to less than 10%
(measured on a cumulative basis) of all outstanding Co-Sale Stock as of the date
hereof (as adjusted for stock splits, dividends and the like), (ii) any Transfer
to the  ancestors,  descendants  or spouse or to trusts for the  benefit of such
persons or the  Shareholder,  or (iii) any bona fide gift;  provided that in the
event of any Transfer made pursuant to one of the exemptions provided by clauses
(ii) or (iii),  (A) the  Shareholder  shall inform the Investors of such pledge,
Transfer or gift prior to effecting it and (B) the pledgee,  transferee or donee
shall furnish the Investors  with a written  agreement to be bound by and comply
with all  provisions  of  Section  2.  Except  with  respect  to  Co-Sale  Stock
transferred  under clause (i)  immediately  above (which  Co-Sale Stock shall no
longer be subject to the  co-sale  rights of the  Investors),  such  transferred
Co-Sale  Stock  shall  remain  "Co-Sale  Stock"  hereunder,  and  such  pledgee,
transferee or donee shall be treated as a "Shareholder" for all purposes of this
Agreement.

                  (b) Notwithstanding the foregoing, the provisions of Section 2
shall  not  apply  to  the  sale  of any  Co-Sale  Stock  as  part  of a  firmly
underwritten  public offering of the Company's Common Stock at a price per share
of at least five  dollars  ($5.00)  per share and having an  aggregate  offering
price to the public of at least  twenty  million  dollars  ($20,000,000)  before
deduction  of  underwriting  discounts  and selling  commissions  (a  "Qualified
Offering") or as part of any other public  offering of the Company's  securities
in which the  Company's  outstanding  Preferred  Stock is converted  into Common
Stock in accordance with the Company's Articles of Incorporation.

                  (c) This Agreement is subject to, and shall in no manner limit
the  right  which  the  Company  may  have to  repurchase  securities  from  the
Shareholders  pursuant to (i) a stock  restriction  agreement or other agreement
among the Company and the  Shareholders  and (ii) any right of first refusal set
forth in the Bylaws of the Company.

         4.       PROHIBITED TRANSFERS.

                  (a) In the event  that a  Shareholder  Transfers  any  Co-Sale
Stock  in  contravention  of the  co-sale  rights  of any  Investor  under  this
Agreement (a "Prohibited  Transfer"),  each Investor,  in addition to such other
remedies as may be available at law, in equity or hereunder,  shall have the put
option provided  below,  and such  Shareholder  shall be bound by the applicable
provisions of such option.

                  (b) In the event of a Prohibited Transfer, each Investor shall
have the  right to sell to such  Shareholder  the type and  number  of shares of
Common  Stock  equal to the  number  of shares  each  Investor  would  have been
entitled  to  Transfer  to the  purchaser  under  Section  2(c)  hereof  had the
Prohibited  Transfer been effected  pursuant to and in compliance with the terms
hereof. Such sale shall be made on the following terms and conditions:

                           (i) The price per share at which the shares are to be
sold to the  Shareholder  shall be  equal to the  price  per  share  paid by the
purchaser to such Shareholder in


                                       4
<PAGE>

such Prohibited Transfer. In such instance of a put option being exercised,  the
respective  Shareholders  shall also  reimburse  each  Investor  for any and all
reasonable  fees and  expenses,  including  reasonable  legal fees and expenses,
incurred  pursuant to the exercise or the attempted  exercise of the  Investor's
rights under Section 2.

                           (ii) Within  ninety (90) days after the date on which
an Investor received notice of the Prohibited Transfer or otherwise became aware
of the  Prohibited  Transfer,  such Investor  shall,  if  exercising  the option
created  hereby,  deliver to the  Shareholder  the  certificate or  certificates
representing  shares to be sold,  each  certificate to be properly  endorsed for
Transfer.  If the  Investor  does not  exercise its put option right within such
ninety  (90) days,  then such  Investor  shall lose all rights it has under this
Section 4 with respect to such Prohibited Transfer.

                           (iii) Such  Shareholder  shall,  upon  receipt of the
certificate or certificates  for the shares to be sold by an Investor,  pursuant
to this Section 4(b),  pay the aggregate  purchase price therefor and the amount
of reimbursable fees and expenses,  as specified in Section 4(b)(i),  in cash or
by other means acceptable to the Investor.

                           (iv) Notwithstanding the foregoing,  any attempt by a
Shareholder to Transfer  Co-Sale Stock in violation of Section 2 hereof shall be
voidable at the option of a majority in interest of the  Investors if a majority
in interest of the Investors does not elect to exercise the put option set forth
in this Section 4, 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 a majority in interest of the Investors;  provided,  however
that no such  Transfer  shall be voidable as provided in this clause (iv) unless
said  majority in interest  advises  the  Shareholder  of its intent to void (in
writing)  within  ninety  (90) days after the date any  Investor  learns of such
Transfer.

         5.       LEGEND.

                  (a) Each certificate  representing shares of Co-Sale Stock now
or hereafter owned by the Shareholder or issued to any person in connection with
a Transfer  pursuant to Section 3(a) hereof shall be endorsed with the following
legend:

                           THE SALE,  PLEDGE,  HYPOTHECATION  OR TRANSFER OF THE
                           SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT
                           TO THE TERMS AND CONDITIONS OF A CERTAIN  AMENDED AND
                           RESTATED   CO-SALE   AGREEMENT  BY  AND  BETWEEN  THE
                           SHAREHOLDER, THE COMPANY AND CERTAIN HOLDERS OF STOCK
                           OF THE  COMPANY.  COPIES  OF  SUCH  AGREEMENT  MAY BE
                           OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE
                           COMPANY.

                  (b) The  Shareholders  agree that the Company may instruct its
transfer  agent to impose  Transfer  restrictions  on the shares  represented by
certificates bearing the legend referred


                                       5
<PAGE>

to in Section 5(a) above to enforce the  provisions  of this  Agreement  and the
Company  agrees to promptly do so. The legend shall be removed upon  termination
of this Agreement.

         6.       MISCELLANEOUS.

                  (a)  Conditions  to  Exercise  of  Rights.   Exercise  of  the
Investors' rights under this Agreement shall be subject to and conditioned upon,
and the Shareholders and the Company shall use their best efforts to assist each
Investor in, compliance with applicable laws.

                  (b)  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.

                  (c) Amendment.  Any provision of this Agreement may be amended
and the observance  thereof may be waived  (either  generally or in a particular
instance and either retroactively or prospectively), only by the written consent
of (i) as to the Company,  only the Company,  (ii) as to the Investors,  persons
holding  more than a  majority  in  interest  of the  Common  Stock  held by the
Investors and their assignees,  pursuant to Section 6(d) hereof, and (iii) as to
the  Shareholders,  only those  persons  holding a majority  in  interest of the
Common Stock held by the  Shareholders and their  assignees;  provided,  that no
consent of Shareholders  shall be necessary for any amendment and/or restatement
which includes additional holders of Preferred Stock or other preferred stock of
the Company as "Investors" and Parties hereto.  Any amendment or waiver effected
in accordance  with clauses (i),  (ii),  and (iii) of this Section 6(c) shall be
binding upon each  Investor,  its  successors  and assigns,  the Company and the
Shareholders.

                  (d)  Assignment  of Rights.  This  Agreement  constitutes  the
entire  agreement  between the Parties  relative to the specific  subject matter
hereof.  Any  previous  agreement  among the Parties  relative  to the  specific
subject  matter hereof is superseded by this  Agreement.  This Agreement and the
rights and  obligations of the Parties  hereunder shall inure to the benefit of,
and  be  binding  upon,   their   respective   successors,   assigns  and  legal
representatives.

                  (e) Term.  This  Agreement  shall  continue  in full force and
effect from the date hereof  through the  earliest of the  following  dates,  on
which date it shall terminate in its entirety:

                           (i) the date of the closing of a Qualified Offering;

                           (ii)  the date of the  closing  of any  other  public
offering  of  the  Company's  securities  in  which  the  Company's  outstanding
Preferred  Stock is converted into Common Stock in accordance with the Company's
Articles of Incorporation;

                           (iii) the date of the  closing of a sale,  lease,  or
other  disposition of all or  substantially  all of the Company's  assets or the
Company's  merger  into or  consolidation  with any other  corporation  or other
entity,  or any other  corporate  reorganization,  in which the  holders  of the
Company's  outstanding  voting stock  immediately prior to such transaction own,
immediately  after such  transaction,  securities  representing  less than fifty
percent (50%) of the voting power of the  corporation or other entity  surviving
such  transaction,  provided  that this


                                       6
<PAGE>

Section  6(e)(iii)  shall not  apply to a merger  effected  exclusively  for the
purpose of changing the domicile of the Company; or

                           (iv)  the  date  as  of  which  the  Parties   hereto
terminate  this  Agreement  by written  consent of a majority in interest of the
Investors and by written consent of a majority in interest of the Shareholders.

                  (f) Ownership.  The  Shareholders  respectively  represent and
warrant  that they are the only legal and  beneficial  owners of those shares of
Co-Sale  Stock they  currently  hold subject to the  Agreement and that no other
person has any  interest  (other than a  community  property  interest)  in such
shares.

                  (g) Notices. All notices required or permitted hereunder shall
be in writing and shall be deemed  effectively given: (i) upon personal delivery
to the  Party to be  notified;  (ii) when sent by  confirmed  facsimile  if sent
during normal  business  hours of the recipient,  provided,  that such facsimile
transmission  shall be followed up by certified or  registered  mail as provided
herein;  (iii) five (5) days after having been sent by  registered  or certified
mail,  return receipt  requested,  postage  prepaid;  or (iv) upon receipt after
deposit with a nationally  recognized  overnight  courier,  specifying  next day
delivery, with written verification of receipt. All communications shall be sent
to the Party to be notified at the  address as set forth 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.

                  (h)  Severability.  If one or more of the  provisions  of this
Agreement is, for any reason,  held to be invalid,  illegal or  unenforceable in
any respect, such invalidity,  illegality,  or unenforceability shall not affect
any other provisions of this Agreement, and this Agreement shall be construed as
if such invalid,  illegal or  unenforceable  provision had never been  contained
herein.

                  (i)  Attorneys'  Fees.  If any suit or action is instituted to
enforce any provision in this  Agreement,  the prevailing  Party in such dispute
shall be entitled to recover from the losing  Party(ies)  all  reasonable  fees,
costs and expenses of enforcing any right of such prevailing Party under or with
respect to this Agreement,  including without  limitation,  such reasonable fees
and expenses of attorneys,  which shall include, without limitation,  reasonable
fees, costs and expenses of appeals.

                  (j)  Entire   Agreement.   This  Agreement  and  its  Exhibits
constitute  the full and entire  understanding  and agreement  among the Parties
with regard to the  subject  hereof and no Party shall be liable or bound to any
other in any manner by any representations, warranties, covenants and agreements
respecting such subject matter except as specifically set forth herein.

                  (k)  Additional  Investors.  Notwithstanding  anything  to the
contrary contained herein, if, after the Effective Date, the Company shall issue
additional  shares  of  Series  B  Preferred  Stock  pursuant  to  the  Purchase
Agreement, any purchaser of such shares of Series B Preferred Stock may become a
Party to this Agreement  after the Effective Date by executing and delivering an
additional  counterpart  signature  page to this Agreement and for all purposes,
such Purchaser shall be deemed an "Investor" hereunder.


                                       7
<PAGE>

                  (l)  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.

                  (m)  Termination  of Prior  Agreement.  Pursuant  to the Prior
Agreement,  upon execution of this Agreement by the Company, the Founder and the
holders  of at least a majority  in  interest  of the  Common  Stock held by the
Investors  named in the Prior  Agreement and that remain  outstanding  as of the
date of this Agreement, the Prior Agreement is hereby terminated in its entirety
and restated herein. Upon such execution,  all provisions of, rights granted and
covenants made in the Prior Agreement are hereby waived, released and terminated
in their entirety and shall have no further force to effect.



                      [THIS SPACE INTENTIONALLY LEFT BLANK]




                                       8
<PAGE>

         The foregoing CO-SALE AGREEMENT is hereby executed as of the date first
above written.


COMPANY:                                INVESTORS:

S2 TECHNOLOGIES, INC.                   ORYX TECHNOLOGIES, INC.


By:____________________________________ By:_____________________________________
         Mark Underseth
         President and CEO              Name:___________________________________

                                        Title:__________________________________


SHAREHOLDERS:                           ORYX VENTURES


_______________________________________ By:_____________________________________
MARK UNDERSETH
                                        Name:___________________________________

                                        Title:__________________________________


                                        PROFILE VENTURE PARTNERS FUND 1, L.P.


                                        By:_____________________________________

                                        Name:___________________________________

                                        Title:__________________________________


                                        STAR TRUST 1982


                                        By:_____________________________________

                                        Name:___________________________________

                                        Title:__________________________________



                     AMENDED AND RESTATED CO-SALE AGREEMENT
                                 SIGNATURE PAGE



<PAGE>


                                        VMR HIGH OCTANE FUND


                                        By:_____________________________________

                                        Name:___________________________________

                                        Title:__________________________________



                                        CRENSHAW INVESTMENTS LIMITED


                                        By:_____________________________________

                                        Name:___________________________________

                                        Title:__________________________________



                                        DIABLO PARTNERS


                                        By:_____________________________________

                                        Name:___________________________________

                                        Title:__________________________________



                     AMENDED AND RESTATED CO-SALE AGREEMENT
                                 SIGNATURE PAGE

<PAGE>


                                    EXHIBIT A

                                LIST OF INVESTORS


Oryx Technologies, Inc.

Oryx Ventures

Profile Venture Partners Fund 1, L.P.

Star Trust 1982

VMR High Octane Fund

Crenshaw Investments Limited

Diablo Partners




                     AMENDED AND RESTATED CO-SALE AGREEMENT

<PAGE>


                                    EXHIBIT B

                             CO-SALE STOCK OWNERSHIP


     Name of Shareholder                                 Co-Sale Stock

     Mark Underseth                                         5,100,000






                     AMENDED AND RESTATED CO-SALE AGREEMENT






<PAGE>


                                    EXHIBIT E

                      AMENDED AND RESTATED VOTING AGREEMENT


<PAGE>


                              S2 TECHNOLOGIES, INC.

                              AMENDED AND RESTATED
                                VOTING AGREEMENT

                                OCTOBER __, 2001


<PAGE>

                              S2 TECHNOLOGIES, INC.

                              AMENDED AND RESTATED
                                VOTING AGREEMENT


         THIS AMENDED AND RESTATED  VOTING  AGREEMENT (the  "Agreement") is made
and entered into as of this ______ day of October,  2001 ("Effective  Date"), by
and among S2 TECHNOLOGIES, INC., a California corporation (the "Company"), those
certain  holders of the  Company's  Common Stock listed on Exhibit A hereto (the
"Key Stockholders") and the persons and entities listed on Exhibit B hereto (the
"Investors").  Together, the Company, the Key Stockholders and the Investors are
referred to as the "parties," each a "party."

                                   WITNESSETH:

         WHEREAS, certain of the Investors hold shares of the Company's Series A
Preferred  Stock (the "Series A Preferred  Stock"),  and possess  certain voting
rights pursuant to an existing Voting Agreement dated as of July 20, 2001 by and
among the Company and such Investors (the "Prior Voting Agreement");

         WHEREAS,  the  undersigned  Investors who hold Series A Preferred Stock
hold a  majority  in  interest  of the  Series A  Preferred  Stock  held by such
Investors,  and such  Investors and the Company  desire to amend and restate the
Prior  Voting  Agreement  to add the holders of Series B Preferred  Stock of the
Company and the Key Stockholders as parties thereto;

         WHEREAS, the Key Stockholders are the beneficial owners of an aggregate
of five million one hundred thousand  (5,100,000)  shares of the Common Stock of
the Company (the "Key Stockholder Shares");

         WHEREAS,  the  Company  proposes  to sell  shares of Series B Preferred
Stock (the "Series B Preferred  Stock") to certain of the Investors  pursuant to
the Series B Preferred  Stock Purchase  Agreement (the "Purchase  Agreement") of
even date herewith (the "Financing");

         WHEREAS, the obligations in the Purchase Agreement are conditioned upon
the execution and delivery of this Agreement; and

         WHEREAS,  in connection  with the  consummation  of the Financing,  the
Company,  the Key  Stockholders  and  Investors  have  agreed to provide for the
future voting of their shares of the Company's capital stock as set forth below.

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


                                       1
<PAGE>

                                    AGREEMENT

1.       VOTING.

         1.1 Common Shares; Investor Shares.

                  (a) Each Key  Stockholder  agrees to hold all shares of voting
capital stock of the Company  registered in its respective  name or beneficially
owned  by it as of the date  hereof  (and any and all  other  securities  of the
Company legally or beneficially  acquired by each of the Key Stockholders  after
the date hereof) (hereinafter  collectively  referred to as the "Common Shares")
subject to, and to vote the Common Shares in accordance  with, the provisions of
this Agreement.

                  (b) Each Investor  agrees to hold all shares of voting capital
stock of the Company  (including  but not limited to all shares of Common  Stock
issued upon  conversion  of the Series A  Preferred  Stock or Series B Preferred
Stock)  registered in its respective name or beneficially  owned by it as of the
date  hereof  and  any  and all  other  securities  of the  Company  legally  or
beneficially  acquired  by each  Investor  after  the date  hereof  (hereinafter
collectively  referred to as the "Investor  Shares") subject to, and to vote the
Investor Shares in accordance with, the provisions of this Agreement.

         1.2  Election  of  Directors.  During the term of this  Agreement,  the
authorized  size of  Company's  Board of  Directors  shall be five  (5).  On all
matters  relating  to  the  election  of  Directors  of  the  Company,  the  Key
Stockholders  and the  Investors  agree to vote all Common  Shares and  Investor
Shares held by them (or the holders thereof shall consent  pursuant to an action
by written  consent of the  holders of capital  stock of the  Company)  so as to
elect members of the Company's Board of Directors as follows:

                  (a) So long as (i) the holders of the Series A Preferred Stock
have a right to  elect  at least  one (1)  Director  to the  Company's  Board of
Directors in  accordance  with the  Company's  Amended and Restated  Articles of
Incorporation  (the  "Restated  Charter"),  and (ii) Oryx  Ventures  and/or Oryx
Technologies  Corp.  (collectively  referred to as "Oryx")  continues to hold at
least five hundred thousand  (500,000) shares of Series A Preferred Stock,  then
the Investors holding shares of the Series A Preferred Stock shall vote for Phil
Micciche.  If (i) the holders of Series A Preferred  Stock have a right to elect
two (2)  Directors to the Company's  Board of Directors in  accordance  with the
Company's  Restated  Charter,  and (ii)  Oryx  continues  to hold at least  five
hundred  thousand  (500,000)  shares  of  Series  A  Preferred  Stock,  then the
Investors  holding  Series A  Preferred  Stock shall also vote for one (1) other
person  designated by Oryx. If Phil Micciche shall die or become disabled,  then
Oryx shall designate his  replacement  and Investors  holding shares of Series A
Preferred  Stock  shall  vote for such  designee.  Any vote  taken to remove any
Director  elected pursuant to this Section 1.2(a) or to fill any vacancy created
by the  resignation  or death of a Director  elected  pursuant  to this  Section
1.2(a) shall also be subject to the provisions of this Section 1.2(a).

                  (b) So long as (i) the holders of the Series B Preferred Stock
have a right to elect one (1)  Director to the  Company's  Board of Directors in
accordance  with  the  Company's  Restated  Charter,  and (ii)  Profile  Venture
Partners ("PVP")  continues to hold at least one million  (1,000,000)  shares of
Series B Preferred Stock, the Investors holding shares of the Series B


                                       2
<PAGE>

Preferred Stock shall vote for Phil Wickham or another representative designated
by PVP. Any vote taken to remove any Director  elected  pursuant to this Section
1.2(b), or to fill any vacancy created by the resignation or death of a Director
elected pursuant to this Section 1.2(b), shall also be subject to the provisions
of this Section 1.2(b).

                  (c) At each  election  of  Directors  in which the  holders of
Common Stock, voting as a separate class, are entitled to elect Directors of the
Company, the Key Stockholders shall vote all of their respective Key Stockholder
Shares so as to elect: (i) the person serving as Chief Executive  Officer of the
Company,  and (ii) one (1) individual  nominated by the holders of a majority in
interest of the Key  Stockholder  Shares.  Any vote taken to remove any Director
elected  pursuant to this Section 1.2(c),  or to fill any vacancy created by the
resignation,  removal or death of a Director  elected  pursuant to this  Section
1.2(c), shall also be subject to the provisions of this Section 1.2(c).

                  (d) Effective at the First Closing (as defined in the Purchase
Agreement),  (i) the Investors  holding  shares of the Series A Preferred  Stock
hereby elect Phil Micciche and Amr Mohsen to the Company's Board of Directors to
serve as the  representatives of the holders of the Company's Series A Preferred
Stock,  and (ii) the Investors  holding  shares of the Series B Preferred  Stock
hereby  elect Phil Wickham to the  Company's  Board of Directors to serve as the
representative of the holders of the Company's Series B Preferred Stock.

         1.3 Legend.

                  (a) Concurrently  with the execution of this Agreement,  there
shall be  imprinted  or  otherwise  placed,  on  certificates  representing  Key
Stockholder Shares and the Investor Shares the following restrictive legend (the
"Legend"):

                  "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
                  TERMS  AND  CONDITIONS  OF  AN  AMENDED  AND  RESTATED  VOTING
                  AGREEMENT  WHICH PLACES CERTAIN  RESTRICTIONS ON THE VOTING OF
                  THE  SHARES  REPRESENTED  HEREBY.  ANY  PERSON  ACCEPTING  ANY
                  INTEREST IN SUCH SHARES  SHALL BE DEEMED TO AGREE TO AND SHALL
                  BECOME BOUND BY ALL THE PROVISIONS OF SUCH  AGREEMENT.  A COPY
                  OF SUCH  VOTING  AGREEMENT  WILL BE  FURNISHED  TO THE  RECORD
                  HOLDER OF THIS CERTIFICATE WITHOUT CHARGE UPON WRITTEN REQUEST
                  TO THE COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS."

                  (b)  The  Company  agrees  that,   during  the  term  of  this
Agreement,  it will  not  remove,  and  will  not  permit  to be  removed  (upon
registration  of transfer,  reissuance or  otherwise),  the Legend from any such
certificate  and  will  place  or  cause  to be  placed  the  Legend  on any new
certificate  issued to  represent  Key  Stockholder  Shares or  Investor  Shares
theretofore represented by a certificate carrying the Legend.

         1.4 Successors.  The provisions of this Agreement shall be binding upon
the  successors  in  interest to any of the Key  Stockholder  Shares or Investor
Shares.  The Company


                                       3
<PAGE>

shall not permit the transfer of any of the Key  Stockholder  Shares or Investor
Shares  on its  books or  issue a new  certificate  representing  any of the Key
Stockholder  Shares or Investor  Shares unless and until the person to whom such
security  is  to  be  transferred  shall  have  executed  a  written  agreement,
substantially  in the form of this  Agreement,  pursuant  to which  such  person
agrees to be bound by all the  provisions  hereof as if such  person  were a Key
Stockholder or Investor, as applicable.

         1.5 Other  Rights.  Except as provided by this  Agreement  or any other
agreement  entered into in connection  with the Financing,  each Key Stockholder
and Investor  shall exercise the full rights of a holder of capital stock of the
Company  with  respect  to the  Key  Stockholder  Shares  and  Investor  Shares,
respectively.

2.       TERMINATION.

         2.1 This  Agreement  shall  continue  in full force and effect from the
date hereof through the earliest of the following  dates, on which date it shall
terminate in its entirety:

                  (a) the date of the  closing of a firmly  underwritten  public
offering of the Common Stock pursuant to a registration statement filed with the
Securities and Exchange Commission,  and declared effective under the Securities
Act of 1933,  as amended,  which  results in the Series A and Series B Preferred
Stock being converted into Common Stock;

                  (b) the date of the  closing of any other  public  offering of
the Company's securities pursuant to which the Company's  outstanding  Preferred
Stock is  converted  into  shares  of Common  Stock  pursuant  to the  Company's
Articles of Incorporation;

                  (c) at such time as the Investors  hold less than an aggregate
of one million  (1,000,000)  shares of Series A Preferred  Stock and one million
(1,000,000)  shares of the Series B Preferred  Stock (each as adjusted for stock
splits, dividends or the like);

                  (d) ten (10) years from the Effective Date;

                  (e)  the  date  of the  closing  of a sale,  lease,  or  other
disposition of all or substantially all of the Company's assets or the Company's
merger into or consolidation  with any other corporation or other entity, or any
other  corporate   reorganization,   in  which  the  holders  of  the  Company's
outstanding voting stock immediately prior to such transaction own,  immediately
after such transaction, securities representing less than fifty percent (50%) of
the voting power of the corporation or other entity surviving such  transaction,
provided  that  this  Section  2.1(e)  shall  not  apply  to a  merger  effected
exclusively for the purpose of changing the domicile of the Company; or

                  (f) the date as of which the parties  terminate this Agreement
by written  consent of a majority in interest of the Investors and a majority in
interest of the Key Stockholders.


                                       4
<PAGE>

3.       MISCELLANEOUS.

         3.1 Specific Performance.  The parties declare that it is impossible to
measure  in money the  damages  which  will  accrue to a party  hereto or to its
heirs,  personal  representatives,  or assigns by reason of a failure to perform
any of the  obligations  under this  Agreement  and agree that the terms of this
Agreement shall be specifically enforceable. If any party or its heirs, personal
representatives,  or assigns institutes any action or proceeding to specifically
enforce the provisions hereof, any person against whom such action or proceeding
is  brought  hereby  waives any claim or  defense  that such  party or  personal
representative has an adequate remedy at law, and such person shall not offer in
any such  action or  proceeding  any claim or  defense  that such  remedy at law
exists.

         3.2 Governing Law. This Agreement shall be governed by and construed in
accordance  with  the laws of the  State of  California  as such  laws  apply to
agreements among California  residents made and to be performed  entirely within
the State of California.

         3.3 Amendment or Waiver. This Agreement shall be amended (or provisions
of this  Agreement  waived) only by an instrument  in writing  signed by (i) the
Company,  (ii) a majority in interest of the  Investors  and (iii) a majority in
interest of the Key  Stockholders.  Any amendment or waiver so effected shall be
binding upon each of the parties and any of their assignees.

         3.4 Severability. If one or more of the provisions of this Agreement is
held  invalid,  illegal  or  unenforceable  in  any  respect,  such  invalidity,
illegality  or  unenforceability  shall not affect any other  provisions of this
Agreement,  and this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein.

         3.5  Successors.  This  Agreement  shall inure to the benefit of and be
binding  upon the  parties  and their  respective  heirs,  successors,  assigns,
administrators, executors and other legal representatives.

         3.6 Additional  Shares. If subsequent to the Effective Date, any shares
or  other  securities  are  issued  on,  or in  exchange  for,  any of  the  Key
Stockholder  Shares or Investor  Shares by reason of any stock  dividend,  stock
split,  combination  of shares,  reclassification  or the like,  such  shares or
securities shall be deemed to be Key Stockholder or Investor Shares, as the case
may be, for purposes of this Agreement.

         3.7  Addition of  Investors.  Notwithstanding  anything to the contrary
contained  herein,  if the Company shall issue additional shares of its Series B
Preferred Stock pursuant to the Purchase Agreement, any purchaser of such shares
of Series B Preferred Stock shall become a party to this Agreement  (without any
further action by any then current  signatory hereto or successor in interest to
such  signatory's  interest  in  Series B  Preferred  Stock)  by  executing  and
delivering an additional  counterpart signature page to this Agreement and shall
be deemed an "Investor" hereunder.

         3.8  Counterparts.  This  Agreement  may be  executed  in  one or  more
counterparts, each of which will be deemed an original but all of which together
shall constitute one and the same agreement.


                                       5
<PAGE>

         3.9  Waiver.  No waivers of any breach of this  Agreement  by any party
shall be  construed  as a waiver of any rights or remedies of any other party or
with  respect to any  subsequent  breach,  unless such waiver so provides by its
terms.

         3.10  Attorney's  Fees.  If any suit or action is instituted to enforce
any provision in this Agreement,  the prevailing  party in such dispute shall be
entitled to recover from the losing party reasonable fees, costs and expenses of
enforcing  any right of such  prevailing  party  under or with  respect  to this
Agreement,  including without  limitation,  such reasonable fees and expenses of
attorneys, which shall include, without limitation,  fees, costs and expenses of
appeals.

         3.11 Notices.  Any notices  required in connection  with this Agreement
shall be in writing and shall be deemed  effectively  given:  (i) upon  personal
delivery to the party to be notified;  (ii) when sent by confirmed  facsimile if
sent  during  normal  business  hours of the  recipient  (provided  that same is
followed up by certified or registered  mail  immediately as otherwise  provided
herein;  (iii) five (5) days after having been sent by  registered  or certified
mail,  return  receipt  requested,  postage  prepaid;  or (iv) one (1) day after
deposit with a nationally  recognized  overnight  courier,  specifying  next day
delivery,  with written  notification of receipt. All notices shall be addressed
to the holder  appearing  on the books of the Company or at such address as such
party may designate by ten (10) days advance written notice to the other parties
hereto.

         3.12 Entire Agreement.  This Agreement and its Exhibits  constitute the
full and entire understanding and agreement among the parties with regard to its
subject  matter and no party shall be liable or bound to any other in any manner
with respect to such subject  matter by any other  representations,  warranties,
covenants and agreements.

         3.13  Termination  of  Prior  Agreement.  Upon  the  execution  of this
Agreement  by the  Company,  Mark  Underseth  and the  holders of a majority  in
interest  of the Series A  Preferred  Stock held by the  Investors  named in the
Prior Voting  Agreement and  outstanding as of the date of this  Agreement,  the
Prior  Voting  Agreement  is hereby  terminated  in its  entirety  and  restated
herein..  Upon such  execution,  all provisions of, rights granted and covenants
made in the Prior Voting Agreement are hereby waived, released and terminated in
their entirety and shall have no further force and effect.


                                       6
<PAGE>

         IN WITNESS  WHEREOF,  the  parties  hereto  have  executed  this VOTING
AGREEMENT as of the date first above written.

COMPANY:                                INVESTORS:

S2 TECHNOLOGIES, INC.                   ORYX TECHNOLOGIES, INC.



By:____________________________________ By:_____________________________________
         President
                                        Name:___________________________________

                                        Title:__________________________________




                                        ORYX VENTURES


                                        By:_____________________________________

                                        Name:___________________________________

                                        Title:__________________________________



                                        PROFILE VENTURE PARTNERS FUND 1, L.P.


                                        By:_____________________________________

                                        Name:___________________________________

                                        Title:__________________________________



                                        STAR TRUST 1982


                                        By:_____________________________________

                                        Name:___________________________________

                                        Title:__________________________________




                      AMENDED AND RESTATED VOTING AGREEMENT
                                 SIGNATURE PAGE


<PAGE>

                                        VMR HIGH OCTANE FUND


                                        By:_____________________________________

                                        Name:___________________________________

                                        Title:__________________________________



                                        CRENSHAW INVESTMENTS LIMITED


                                        By:_____________________________________

                                        Name:___________________________________

                                        Title:__________________________________



                                        DIABLO PARTNERS


                                        By:_____________________________________

                                        Name:___________________________________

                                        Title:__________________________________


                                        KEY STOCKHOLDERS:



                                        ________________________________________
                                         Mark Underseth




                      AMENDED AND RESTATED VOTING AGREEMENT
                                 SIGNATURE PAGE

<PAGE>

                                    EXHIBIT A

                            LIST OF KEY STOCKHOLDERS

Mark Underseth



<PAGE>


                                    EXHIBIT B

                                LIST OF INVESTORS

Oryx Technologies, Inc.

Oryx Ventures

Profile Venture Partners Fund 1, L.P.

Star Trust 1982

VMR High Octane Fund

Crenshaw Investments Limited

Diablo Partners

<PAGE>


                                   EXHIBIT F-1

                      MANAGEMENT SERVICES AGREEMENT (ORYX)




<PAGE>

                          MANAGEMENT SERVICES AGREEMENT

         This Management  Services Agreement is made effective as of October 18,
2001, by and between Oryx Ventures,  LLC a Delaware  limited  liability  company
("Consultant"),   and  S2  Technologies,  Inc.  a  California  corporation  (the
"Company").

                                R E C I T A L S :

         A. Whereas,  the Company is presently in the process of developing  its
operations;

         B. Whereas, the Company desires to engage the services of Consultant in
connection  with certain  strategic,  operating and other business  advisory and
consulting services;

         C. Whereas,  Consultant  desires to consult with the Board of Directors
and the  officers  of the  Company  and to  undertake  for the  Company  certain
strategic  consulting  activities with respect to the direction of the Company's
operations and financial affairs.

         NOW, THEREFORE, for good and valuable consideration and intending to be
legally bound, the parties agree as follows:

         1. Term of Agreement.  The  respective  duties and  obligations  of the
parties  hereto shall  commence  effective on the date hereof and shall continue
for a period of one (1) year thereafter.  At least thirty (30) days prior to the
expiration  of the term of this  Agreement  (or of any renewal term) the parties
shall negotiate in good faith to extend the term of this engagement,  if, in the
Company's   sole   discretion,   further   consulting   services   are   needed.
Notwithstanding  the  foregoing,  Company shall have no obligation to extend the
term of this engagement following the initial one (1) year term.

         2.  Consultation.  Consultant  shall  make those  employees  and agents
identified  on  Schedule  1  hereto  available  to  consult  with  the  Board of
Directors,  the officers of the Company,  and other employees of the Company, at
such times as  described  in  Section 9 of this  Agreement,  concerning  certain
strategic  business  matters,  including,  but not  limited  to:  (i)  executive
recruiting;   (ii)  business   development   and  strategic   marketing;   (iii)
administrative  functions,  such as advising and performing the following duties
and/or   services:   human   resources   administration   and   management   and
administration   of  accounting  and  information   systems;   (iv)  operational
functions, such as materials management, distribution and manufacturing; and (v)
debt and/or equity financing strategies.

         3.  Consultant  an  Independent  Contractor.  The parties agree that in
performing Consultant's duties and obligations under this Agreement,  Consultant
and all  employees  and  other  agents  of  Consultant  shall  be  deemed  to be
independent  contractors  and not  employees  of the  Company.  The  Company and
Consultant  agree that,  in all cases,  Consultant  and its  employees and other
agents are,  with respect to the Company,  free to choose the manner,  means and
timing of their  performance,  and are not  employees of the Company  within the
meaning of Section 3401(c) of the Internal Revenue Code of 1986, as amended, and
Treasury  Regulations Section  31.3401(c)-1.  The Company shall not withhold any
taxes or other payroll deductions

                                       1
<PAGE>

from any  compensation  payable to Consultant  under this Agreement.  Each party
shall  indemnify and hold  harmless the other party from any losses,  penalties,
taxes,  interest,  attorneys' fees, costs and other expenses  resulting from any
claims for the amount of any payroll and income  withholding  taxes with respect
to compensation paid under this Agreement.  Consultant warrants that (i) amounts
paid by it to its employees in  connection  with  services  rendered  under this
Agreement will have appropriate  payroll and income taxes withheld from them and
(ii) it will pay all taxes payable with respect to the compensation  received by
it hereunder.

         4.  Employment of Certified  Public  Accountants.  It is understood and
agreed by the parties  hereto that the services to be performed by Consultant do
not  include the  auditing of the books of the  Company,  the  preparing  of any
financial  statements,  the  preparing  of any tax  returns  or other  documents
required to be prepared by any governmental body having  jurisdiction to tax, or
any other acts or services normally  performed by certified public  accountants.
Consultant may, at the written request of the Company, engage, hire, retain, and
employ,  in the name and for the account of the Company,  one or more, or a firm
of,  certified  public  accountants  to perform  for the  Company  the  services
described above in this paragraph.

         5.  Employment  of  Assistants.  If  it  is  reasonably  necessary  for
Consultant  to have the aid of  assistants  or the  services  of other  persons,
companies,  or firms in order to  properly  perform  the duties and  obligations
required of Consultant  under this Agreement,  Consultant may, from time to time
and with the prior written consent of the Company, employ, engage, or retain the
same.  The cost to  Consultant  for said  services  shall be  chargeable  to the
Company,  and the Company shall  reimburse and pay over to Consultant said costs
on demand.

         6.  Limited  Liability.  With regard to the services to be performed by
Consultant  pursuant  to the terms of this  Agreement,  Consultant  shall not be
liable to the Company,  or to anyone who may claim any right due to Consultant's
relationship  with the Company,  for any acts or omissions in the performance of
said  services  on the  part  of  Consultant  or on the  part of the  agents  or
employees of  Consultant;  except when said acts or omissions of Consultant  are
due to  willful  misconduct  and  under  circumstances  in  which  indemnity  is
expressly  prohibited by applicable law. The Company shall indemnify  Consultant
and hold it free and harmless from any and all obligations,  liabilities, costs,
claims,  actions,  judgments,  attorneys' fees, and attachments  arising from or
growing  out of any matter or  transaction  occurring  prior to the date of this
Agreement and arising from or growing out of the services rendered by Consultant
to the Company  pursuant to the terms of this  Agreement or in any way connected
with the rendering of said services, except when the same shall arise due to the
willful misconduct of Consultant,  and under circumstances in which indemnity is
expressly prohibited by applicable law.

         7.  Compensation.  At the  beginning of each month of this  Agreement's
term, the Company shall pay Consultant ten thousand dollars ($10,000) in advance
to secure Consultant's services in such month.

         8. Termination;  Suspension of Performance.  Consultant may suspend its
performance  under this  Agreement  at any time if the Company has not  provided
compensation  in accordance  with the terms of Paragraph 7 hereof.  Either party
may terminate this Agreement  following a material breach by the other party and
fifteen (15) days written notice by either party

                                       2
<PAGE>

to the other of such  breach  and the  nature  thereof,  if the  breach  remains
uncured after the  expiration  of said 15-day  notice period after breach.  Upon
thirty (30) days written  notice by the Company to  Consultant,  the Company may
terminate this  Agreement for "cause,"  which,  for purposes of this  Agreement,
shall be defined as, with respect to each of Consultant's  Agents,  such Agent's
gross  dishonesty  or  fraud  in  the  performance  of the  respective  services
hereunder,  gross  negligence  in  the  performance  of  the  respective  duties
hereunder  and  intentional  engagement  in acts  seriously  detrimental  to the
Company's operations.  In addition,  the Company may terminate this Agreement at
any time upon its  payment  to  Consultant  of any  unpaid  compensation  due to
Consultant  pursuant  to  Paragraph  7  hereof  for the  remaining  term of this
Agreement.

         9.  Minimum  Amount  of  Service.  Consultant  shall  devote  up to ___
workdays over the initial one year term of this  Agreement to the affairs of the
Company,   principally  through  the  services  of  Philip  Micciche  and  Mitch
Underseth. Anything contained in this Agreement to the contrary notwithstanding,
Consultant  shall devote only so much time, in excess of eight (8) work days per
month,  to the  affairs  of the  Company  as it,  in its  sole  judgment,  deems
necessary;  and Consultant may represent,  perform services for, and be employed
by, any additional  clients,  persons,  or companies as Consultant,  in its sole
discretion, sees fit.

         10. Expenses.  In addition to the compensation  specified in Section 7,
the Company will pay reasonable out-of-pocket expenses incurred by Consultant in
the  furtherance  of or in connection  with the  performance  of the  consulting
services hereunder; provided Consultant provides reasonable backup documentation
therefor.

         11. Confidential Information.

                  (a) For  purposes of this  Section 11, the term  "Confidential
Information"  shall  mean all  information  developed  by or  disclosed  or made
available to Consultant,  its employees or  representatives,  in connection with
the  performance by Consultant of the consulting  services  hereunder  which the
Company protects against unrestricted  disclosure to others and which: (i) if in
written or other tangible  form, is clearly  designated as  "Confidential";  and
(ii) if disclosed orally,  is reduced to a writing  designating such information
as "Confidential"  which is delivered to Consultant promptly following such oral
disclosure. By way of illustration but not limitation "Confidential Information"
includes (a) trade secrets, inventions, mask works, ideas, processes,  formulas,
source and object codes, data,  programs,  other works of authorship,  know-how,
improvements, discoveries, developments, designs and techniques (hereinafter for
purposes of clauses (a), (b), and (c) of this Section 11, collectively  referred
to  as  "Inventions");   and  (b)  information  regarding  plans  for  research,
development,  new products,  marketing and selling,  business plans, budgets and
unpublished  financial  statements,  licenses,  prices and costs,  suppliers and
customers;  and (c) information  regarding the skills and  compensation of other
employees of Company.

                  (b)  Consultant  agrees,  with  respect  to  any  Confidential
Information  developed  by or  disclosed  to  it  hereunder:  (i)  to  use  such
Confidential  Information  only for the purposes of  performing  the  consulting
services  hereunder;  (ii) to use the same methods and degree of care to prevent
disclosure of such Confidential  Information as it uses to prevent disclosure of
its  own

                                       3
<PAGE>

proprietary and  confidential  information;  (iii) to disclose the  Confidential
Information to its employees  only on a  need-to-know  basis and not to disclose
any  Confidential  Information  to any third  party  without  the prior  written
consent of the Company;  and (iv) to return any Confidential  Information in any
tangible  form to the  Company at the  request of the  Company  and to retain no
copies or reproductions thereof.

                  (c) Consultant shall not be obligated to treat  information as
Confidential Information if such information: (i) was rightfully in Consultant's
possession  or was  rightfully  known to  Consultant  prior to receipt  from the
Company;  (ii) is or becomes  publicly  known  without the fault of  Consultant;
(iii) is or becomes  rightfully  available to  Consultant  without  confidential
restriction  from a source  not  bound by a  confidentiality  obligation  to the
Company;  (iv) is  independently  developed  by  Consultant  without  use of the
Confidential Information disclosed hereunder; provided, however, that the burden
of proof of such independent  development  shall be upon  Consultant;  or (v) is
required to be  disclosed  pursuant  to court or  government  action;  provided,
however, that Consultant gives the Company reasonable prior notice of disclosure
pursuant  to such  court or  government  action  and,  upon the  request  of the
Company, the Consultant shall cooperate in contesting such disclosure.

                  (d)  Consultant  agrees  that any and all  ideas,  inventions,
discoveries,   improvements,   know-how  and  techniques   that  the  Consultant
conceives,  reduces to practice or  develops  during the term of the  Agreement,
alone or in conjunction with others,  during or as a direct result of performing
the services for the Company under this Agreement (collectively, for purposes of
this clause (d), the "Inventions")  shall be the sole and exclusive  property of
the Company.  Consultant  hereby assigns and agrees to assign to the Company his
entire right,  title and interest in and to all  Inventions.  Consultant  hereby
designates  the  Company as his agent for,  and grants to the Company a power of
attorney  with full power of  substitution,  which  power of  attorney  shall be
deemed  coupled  with an  interest,  solely  for the  purpose of  effecting  the
foregoing  assignments  from the Consultant to the Company.  Consultant  further
agrees to cooperate and provide  reasonable  assistance to the Company to obtain
and from time to time enforce United States and foreign patents, copyrights, and
other rights and protections claiming, covering or relating to the Inventions in
any and all countries.

         12. Miscellaneous.

                  (a)  Relationship  of Parties.  Consultant  shall at all times
during the performance of its services  hereunder be an independent  contractor,
maintaining sole and exclusive  control over its business and operations.  At no
time will  either  party  hold  itself out to be the  agent,  employee,  lessee,
sublessee,  partner, or joint venturer of the other party.  Neither party hereto
shall have the  express or implied  right or  authority  to assume or create any
obligation on behalf of or in the name of the other party,  or to bind the other
party in regard to any contract, agreement or undertaking with any third party.

                  (b)  Entire  Agreement.  This  Agreement,  together  with  the
exhibits  attached hereto,  constitutes the entire agreement between the parties
relating  to its  subject  matter  and  supersedes  all  prior,  written or oral
negotiations,   representations  or  agreements  respecting  cash  payments  for
consulting services described herein; provided,  however, that this Agreement is
in

                                       4
<PAGE>

addition to and shall not supersede  the terms of the  agreement  dated July 20,
2000  between  Oryx  Technologies,  Inc.  and the  Company  (the "July 20,  2000
Agreement");  all the  terms of the July 20,  2000  Agreement  shall  remain  in
effect.  No  modification  of this  Agreement  shall be binding on either  party
unless it is in writing and signed by both parties.

                  (c)  Severability.   The  provisions  of  this  Agreement  are
severable, and if one or more provisions are judicially determined to be illegal
or otherwise  unenforceable,  in whole or in part,  the remaining  provisions or
portions of this Agreement  shall  nevertheless be binding on and enforceable by
and between the parties hereto.

                  (d)  Assignment.  This Agreement shall inure to the benefit of
and be  binding  upon the  successors  and  assigns  of the  parties;  provided,
however,  that  Consultant  shall not transfer or assign this Agreement  without
prior written consent of the Company.

                  (e) Governing  Law. The rights and  obligations of the parties
to this Agreement shall be governed by and construed in accordance with the laws
of the State of California.

                  (f)  Headings.   Section   headings  are  for  convenience  of
reference  only  and  shall  not be  considered  in the  interpretation  of this
Agreement.

                  (g) Unavoidable Delays.  Either party shall be excused for any
delays or defaults in the  performance of this Agreement  (except the payment of
amounts due and payable  hereunder)  unavoidably caused by the act of the other,
the act of any agent of the other, the act of any governmental  authority,  acts
of God, the elements,  war, litigation,  strikes,  walkouts,  or any other cause
beyond its reasonable control.  Each party shall use all reasonable diligence to
avoid any such delay or default and to resume  performance  under this Agreement
as soon as practicable after such delay or default. (h) Notices. All notices and
other  communications  required or permitted  hereunder  shall be in writing and
shall be deemed  effectively  given upon personal delivery or on the day sent by
facsimile  transmission if a true and correct copy is sent the same day by first
class mail,  postage prepaid,  or by dispatch by an  internationally  recognized
express courier service, and in each case addressed as follows:

                  To Consultant:              Oryx Ventures LLC
                                              C/O ORYX TECHNOLOGIES, INC.
                                              4340 Almaden Expressway, Suite 220
                                              San Jose, California 95118
                                              Attention: Louis Borge

                  To the Company:             S2 TECHNOLOGIES, INC.
                                              3420 Camino Alegre
                                              Carlsbad, CA 92009
                                              Attn: Mark Underseth

                                       5
<PAGE>

         13.  Counterparts.  This  Agreement  may be  executed  in any number of
counterparts,  each of which  shall be an  original,  but all of which  together
shall constitute one instrument.





                      [THIS SPACE INTENTIONALLY LEFT BLANK]




                                       6
<PAGE>


         IN WITNESS  WHEREOF,  the  parties  have  executed  this  Agreement  at
Fremont, California on the day and year first above mentioned.

                                        S2 TECHNOLOGIES, INC.



                                        By:
                                           -------------------------------------


                                        Its:    CEO
                                            ------------------------------------




                                        CONSULTANT: Oryx Ventures, LLC





                                        By:
                                           -------------------------------------


                                               Its: Managing Director




<PAGE>

                                   SCHEDULE 1


Phil Micciche

Mitch Underseth


<PAGE>


                                   EXHIBIT F-2

                       MANAGEMENT SERVICES AGREEMENT (PVP)







<PAGE>


                                    EXHIBIT G

                 PROPIETARY INFORMATION AND INVENTIONS AGREEMENT




<PAGE>


                                    EXHIBIT H

                              FORM OF LEGAL OPINION




<PAGE>


                                    EXHIBIT I

                                  BUSINESS PLAN