<PAGE>



                                                                     Exhibit 2.3


                            SPEAR TECHNOLOGIES, INC.

                   SERIES C PREFERRED STOCK PURCHASE AGREEMENT

                                                                  March __, 2000



         This Series C Preferred Stock Purchase  Agreement (this "Agreement") is
entered into as of the date set forth above between Spear Technologies,  Inc., a
California   corporation   (the   "Company")  and  the   undersigned   purchaser
("Purchaser"). The parties hereby agree as follows:

                                    SECTION 1

                      AUTHORIZATION AND SALE OF SECURITIES

           Authorization.  The  Company  has  authorized  the sale and  issuance
  pursuant to the terms and conditions hereof of up to _________________________
  (...........) shares of its Series C Preferred Stock (the "Securities") having
  the rights, restrictions, privileges and  preferences set forth in the Second
  Amended and Restated Articles of Incorporation (the "Restated Articles") to be
  filed  with the  California  Secretary  of  State  in  substantially  the form
  attached hereto as Exhibit A.
                     ---------

           Sale of Securities.  Subject to the terms and conditions  hereof, the
  Company will issue and sell to Purchaser, and Purchaser will purchase from the
  Company,  the  number  of  Securities  set  forth  above in  exchange  for the
  surrender  of the  warrant  issued by the  Company  to  Purchaser  dated as of
  November  14,  1997 (the  "Warrant").  Surrender  of the  Warrant  shall occur
  immediately prior to the closing.

                                    SECTION 2

                                CLOSING; DELIVERY



<PAGE>



           Closing. The closing of the purchase by the Purchaser and the sale by
  the Company of the Securities shall be held at the offices of Gray Cary Ware &
  Freidenrich LLP, counsel to the Company,  at 4365 Executive Drive, Suite 1600,
  San Diego,  CA, 92121,  on March ___, 2000, or at such other time and place as
  the Company and  Purchaser  may agree in writing.  The closing  referred to in
  this Section 2.1 shall be  hereinafter  referred to as the  "Closing"  and the
  date thereof shall be the "Closing Date."

           Delivery.  At the  Closing,  in  exchange  for the  surrender  of the
  Warrant,  the Company  will issue the  Securities  and deliver to  Purchaser a
  certificate in such Purchaser's name representing the Securities.

                                    SECTION 3

                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

         Except as set forth in the Schedule of  Exceptions  attached  hereto as
Exhibit C, the Company  hereby  represents  and warrants to  Purchaser  that the
statements in the following paragraphs of this Section 3 are true and correct as
of the date of this Agreement:



<PAGE>



           Organization  and  Standing.   The  Company  is  a  corporation  duly
  incorporated  and existing under the laws of the State of California and is in
  good standing under such laws. The Company has the requisite  corporate  power
  to own and operate its properties and assets,  and to carry on its business as
  presently conducted.

           Authorization.  All corporate action on the part of the Company,  its
  directors  and  shareholders  necessary  for  the  authorization,   execution,
  delivery and performance of this Agreement by the Company,  the authorization,
  sale,  issuance  and delivery of the  Securities  and the  performance  of the
  Company's  obligations  hereunder  has been taken prior to the  Closing.  This
  Agreement, when executed and delivered by the Company, will constitute a valid
  and binding  obligation  of the Company  enforceable  in  accordance  with its
  terms,  subject  to (i)  laws of  general  application  relating  to  specific
  performance, injunctive relief or other equitable remedies and (ii) applicable
  bankruptcy,  insolvency,  reorganization or other laws of general  application
  relating to or affecting the enforcement of creditors' rights generally.

           Valid  Issuance  of  Stock.  When  issued,   sold  and  delivered  in
  accordance with the terms of this Agreement for the consideration provided for
  herein,  the Securities shall be duly authorized,  validly issued,  fully paid
  and  non-assessable  and  shall be free of any liens or  encumbrances,  except
  those  liens or  encumbrances  arising  as a result  of the  ownership  of the
  Securities  by  Purchaser.  Shares of Common  Stock  sufficient  to permit the
  conversion of the Securities have been duly and validly  reserved for issuance
  and, upon issuance in accordance with the terms of the Restated Articles, will
  be duly authorized, validly issued, fully paid and non-assessable.

           Capitalization.  Immediately prior to the Closing, the capitalization
  of the Company will consist of the following:

                  Common  Stock.   A  total  of  One  Hundred   Thirty   Million
(130,000,000)   authorized  shares  of  Common  Stock  of  which  Eight  Hundred
Sixty-four Thousand and Eighty-four (864,084) shares are issued and outstanding.

                  Preferred  Stock. A total of Fifty-Nine  Million  (59,000,000)
authorized  shares of Preferred  Stock,  consisting of Nine Million  (9,000,000)
shares  designated as Series A-1 Preferred  Stock (the "Series A-1  Preferred"),
Seven  Million  Six  Hundred  Eleven  Thousand  Seven  Hundred  and  Seventy-two
(7,611,772)  shares of which are  issued  and  outstanding,  Forty-Five  Million
(45,000,000)  shares  designated  as  Series  B  Preferred  Stock (the "Series B
Preferred"),_______________ of which are issued and outstanding and Five Million
(5,000,000) shares of Series C Preferred Stock, (the "Series C Preferred"), none
of which are issued and outstanding.



<PAGE>



                  Options,  Warrants  and  Convertible  Notes.  The  Company has
reserved Twenty-Seven Million (27,000,000) shares of its Common Stock for future
issuance to  employees,  directors  and  officers  of, and  consultants  to, the
Company  under the 1998 Stock Option Plan (the "1998 Plan") as may be determined
by the  Company's  Board of  Directors  from time to time.  Under the 1998 Plan,
there are options outstanding to purchase Five Million Five Thousand Six Hundred
Sixty-Eight (5,005,668) shares. In addition to the Warrant,  additional warrants
are  outstanding  to purchase  (i) up to One  Million  Two Hundred  Twenty-Three
Thousand  Eight  Hundred One  (1,223,801)  shares of the Series A-1 Preferred at
$1.00 per share, (ii) up to Fifteen Million Five Thousand Five Hundred Fifty-One
(15,005,551)  shares of Common Stock,  and (iii) up to Three Million  Sixty-Four
Thousand Ninety-Five (3,064,095) shares of the Series B Preferred.

                  Settlement Agreement.  The Company has agreed to issue certain
holders of its Series A-1  Preferred  Stock  warrants to purchase  shares of its
Common  Stock  for a  nominal  exercise  price  per share in the event it issues
shares  of  its  stock  of a  type  and  at  a  price  that  would  trigger  the
anti-dilution  provisions of the Restated Articles. The issuance of the Series B
Preferred  Stock has triggered these  provisions.  The number of shares issuable
pursuant  to these  warrants is the  difference  between the number of shares of
Common Stock into which the shares of Series A-1  Preferred  Stock held by these
parties or subject to warrants  held by these  parties  (the  "Subject  Shares")
would  convert if the Series A-1  Preferred  Stock was entitled to  full-ratchet
anti-dilution  protection,  or 21,000,000  shares,  less the number of shares of
Common   Stock  into  which  the   subject   shares   may   convert   under  the
weighted-average anti-dilution provisions of the Restated Articles. Based on the
number of shares of the Series B Preferred Stock sold to date, the provisions of
the Restated Articles allow conversion of the Subject Shares into  approximately
6,800,000  shares of Common Stock,  resulting in an obligation to issue warrants
to these parties for approximately 14,200,000 shares of Common Stock.

      Following  the Closing,  the rights,  preferences  and  privileges  of the
Securities will be as set forth in the Restated Articles and as provided by law.



<PAGE>



           Subsidiaries.  As of the date hereof,  the Company does not presently
  own or  control,  directly  or  indirectly,  any equity  interest in any other
  corporation, partnership, trust, joint venture, association or other entity.

           Governmental Consents. No consent,  approval,  order or authorization
  of, or registration,  qualification,  designation, declaration or filing with,
  any federal,  state or local governmental authority by the Company is required
  in connection with the consummation of the  transactions  contemplated by this
  Agreement  except:  (i) the  filing of a Notice  of  Transaction  pursuant  to
  Section  25102(f)  of the  California  Corporate  Securities  Law of 1968,  as
  amended, and the rules thereunder (the "California  Securities Law"), and (ii)
  such other  qualifications  or filings  under the  Securities  Act of 1933, as
  amended,  and the regulations  thereunder (the "Securities Act") and all other
  applicable  securities  laws  as  may  be  required  in  connection  with  the
  transactions  contemplated  by this  Agreement.  All such  qualifications  and
  filings will, in the case of  qualifications,  be effective on the Closing and
  will, in the case of filings, be made within the time prescribed by law.

           Compliance  with Law and  Charter  Documents.  The  Company is not in
  violation or default of any provisions of its Restated  Articles or Bylaws, as
  amended to date. To the Company's  knowledge,  the Company is in compliance in
  all material  respects with all applicable  statutes,  laws,  regulations  and
  executive  orders of the United  States of  America  and all  states,  foreign
  countries or other governmental  bodies and agencies having  jurisdiction over
  the  Company's  business or  properties,  except as where the failure to be in
  compliance  therewith  could not  reasonably  be  expected  to have a material
  adverse effect on the business,  property,  financial  condition or results of
  operations (a "Material Adverse Effect") of the Company.

           Registration Rights. Except as provided in the Rights Agreement dated
  as of the date  hereof and  attached  hereto as Exhibit B, the Company has not
  granted  or agreed to grant to any  person or  entity  any  rights  (including
  piggyback   registration  rights)  to  have  any  securities  of  the  Company
  registered with the United States Securities and Exchange  Commission  ("SEC")
  or any other  governmental  authority,  except  those  piggyback  registration
  rights  granted  to (i)  Silicon  Valley  Bank  in  its  warrant  to  purchase
  Thirty-Four Thousand Eight Hundred (34,800) shares of Series A-1 Preferred and
  Twenty-Five  Thousand Two Hundred  (25,200) shares of Common Stock and (ii) to
  Purchaser, in the Warrant.



<PAGE>



           Full  Disclosure.  This Agreement,  the exhibits  hereto,  the Rights
  Agreement and all other documents delivered by the Company to the Purchaser or
  its  attorneys  or agents in  connection  herewith  or  therewith  or with the
  transactions  contemplated  hereby  or  thereby,  do not  contain  any  untrue
  statement of a material fact nor, to the Company's knowledge,  omit to state a
  material fact  necessary in order to make the statements  contained  herein or
  therein not misleading. Notwithstanding the foregoing, the projected quarterly
  balance  sheets,  income  statements and statements of cash flow for the years
  2000 and 2001 (the  "Projections")  provided to the Purchaser were prepared by
  the management of the Company in a good faith effort to describe the Company's
  projected  financial  status at the applicable  time period.  The  assumptions
  applied in preparing the Projections  appeared  reasonable to management as of
  the date  they  were  prepared;  however,  there is no  assurance  that  these
  assumptions  will  prove  to be valid or that  the  results  set  forth in the
  Projections 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 agreements  referred to herein or in other documents  delivered to
  Purchaser or its attorneys or agents in connection herewith.

                                    SECTION 4

                   REPRESENTATIONS AND WARRANTIES OF PURCHASER

IV.

         Purchaser hereby represents and warrants as follows:



<PAGE>



           Authorization.  This  Agreement  constitutes  Purchaser's  valid  and
  legally binding obligation, enforceable in accordance with its terms except as
  may be limited by (i) applicable  bankruptcy,  insolvency,  reorganization  or
  other laws of general application  relating to or affecting the enforcement of
  creditors'  rights generally and (ii) the effect of rules of law governing the
  availability of equitable  remedies.  Purchaser  represents that Purchaser has
  full power and authority to enter into this Agreement.

           Investment.  Purchaser is acquiring the Securities for investment for
  Purchaser's  own  account  and not  with  the  view to the  public  resale  or
  distribution  thereof within the meaning of the Securities  Act, and Purchaser
  has no  present  intention  of  selling,  granting  any  participation  in, or
  otherwise  distributing  the  Securities.  No other  person  has a  direct  or
  indirect  beneficial  interest,  in  whole  or in  part,  in such  Securities.
  Purchaser  understands  that the Securities have not been registered under the
  Securities  Act by  reason  of a  specific  exemption  from  the  registration
  provisions of the Securities  Act, which exemption  depends upon,  among other
  things,  the bona fide nature of  Purchaser's  investment  intent as expressed
  herein.

           Relationship  to  Company;   Sophistication.   Purchaser  (i)  has  a
  preexisting  business or personal  relationship with the Company and/or any of
  its  officers,   directors  or  controlling  persons  or  (ii)  by  reason  of
  Purchaser's  business or  financial  experience  or the  business or financial
  experience  of  Purchaser's  personal  representative(s),   if  any,  who  are
  unaffiliated with and who are not compensated,  directly or indirectly, by the
  Company or any affiliate or selling agent of the Company,  has the capacity to
  protect  Purchaser's own interests in connection with Purchaser's  acquisition
  of the Securities.

           Restrictions on Transfer.  Purchaser acknowledges that the Securities
  must be held indefinitely unless subsequently  registered under the Securities
  Act or the Company receives an opinion of counsel  satisfactory to the Company
  that such  registration is not required.  Purchaser is aware of the provisions
  of Rule 144  promulgated  under the Securities Act which permit limited resale
  of stock  purchased  in a private  placement  subject to the  satisfaction  of
  certain conditions,  including,  among other things, the existence of a public
  market for the stock, the  availability of certain current public  information
  about the Company,  the resale  occurring not less than one year after a party
  has  purchased  and paid for the stock to be sold,  the sale  being  through a
  "broker's  transaction" or in transactions  directly with a "market maker" and
  the number of shares of the stock being sold during any three-month period not
  exceeding   specified   limitations.   Purchaser   further   acknowledges  and
  understands  that  the  Company  may  not be  satisfying  the  current  public
  information  requirement of Rule 144 at the time Purchaser  wishes to sell the
  Securities;  and,  if so,  Purchaser  would  be  precluded  from  selling  the
  Securities under Rule 144 even if the one year minimum holding period has been
  satisfied.

           No Public  Market.  Purchaser  understands  that no public market now
  exists  for  the  Securities  issued  by the  Company,  that  there  can be no
  assurance that a public market will ever exist for the Securities and that the
  Company is under no obligation to register the Securities.



<PAGE>



           Exemption from Registration.  Purchaser further acknowledges that, in
  the event all of the  requirements  of Rule 144 are not met,  compliance  with
  Regulation A or some other registration  exemption will be required; and that,
  although  Rule 144 is not  exclusive,  the staff of the SEC has  expressed its
  opinion that persons proposing to sell private placement securities other than
  in a  registered  offering  and other  than  pursuant  to Rule 144 will have a
  substantial   burden  of  proof  in   establishing   that  an  exemption  from
  registration is available for such offers or sales,  that such persons and the
  brokers who participate in the transactions do so at their own risk, and that,
  therefore,  there is no assurance that any exemption from  registration  under
  the Securities Act will be available or, if available,  will allow such person
  to dispose of, or otherwise transfer, all or any portion of the Securities.

           Access to Data.  Purchaser  has had an  opportunity  to  discuss  the
  Company's  business,  management  and  financial  affairs  with the  Company's
  management and the  opportunity to inspect  Company  facilities and such books
  and records and  material  contracts  as  Purchaser  deemed  necessary  to its
  determination to purchase the Securities.

           Experience.  Purchaser and/or Purchaser's personal  representative(s)
  have such knowledge and experience in financial,  tax and business  matters so
  as to  enable  Purchaser  and/or  Purchaser's  personal  representative(s)  to
  utilize  the  information  made  available  to  Purchaser  and/or  Purchaser's
  personal  representative(s) in connection with the offering of the Securities,
  to evaluate the merits and risks of the prospective  investment and to make an
  informed   investment   decision   with   respect   thereto.   Each   personal
  representative,   if  any,  to  Purchaser,   in  connection  with  Purchaser's
  investment in the Securities, has confirmed in writing the specific details of
  any and all past,  present or future  relationships,  actual or  contemplated,
  between  Purchaser  or  Purchaser's  affiliates  and  the  Company  or  any of
  Purchaser's affiliates.

           Purchaser's Liquidity.  Purchaser (i) has adequate means of providing
  for Purchaser's current needs and possible personal contingencies, (ii) has no
  need  for  liquidity  in  Purchaser's  investment,  (iii)  is able to bear the
  substantial  economic  risks  of  an  investment  in  the  Securities  for  an
  indefinite  period and (iv) at the present time, can afford a complete loss of
  such investment.  Purchaser's  commitment to investments which are not readily
  marketable is not  disproportionate  to Purchaser's  net worth and Purchaser's
  investment in the Securities will not cause Purchaser's  overall commitment to
  become excessive.

           Offer and Sale. Purchaser understands that the sale of the Securities
  has not been registered under the Securities Act in reliance upon an exemption
  therefrom.  Purchaser  was not  offered or sold the  Securities,  directly  or
  indirectly,   by  means  of  any  form  of  general  solicitation  or  general
  advertisement, including the following: (i) any advertisement, article, notice
  or other communication published in any newspaper,  magazine or similar medium
  or broadcast  over  television  or radio or (ii) any seminar or other  meeting
  whose   attendees  had  been  invited  by  general   solicitation  or  general
  advertising.



<PAGE>



           Risks.  Purchaser  is  experienced  in  evaluating  and  investing in
  high-risk   technology  companies  such  as  the  Company  and  by  reason  of
  Purchaser's  business  and  financial  experience  has the capacity to protect
  Purchaser's own interests in connection with the acquisition of the Securities
  and has the  ability  to bear the  economic  risk of  Purchaser's  investment.
  Purchaser is aware that the Securities are highly  speculative  and that there
  can be no  assurance  as to what return,  if any,  there may be.  Purchaser is
  aware that,  subject to the provisions of the Restated  Articles,  the Company
  may issue  additional  securities  in the  future  which  could  result in the
  dilution of Purchaser's ownership interest in the Company.

           Investment Entity. Purchaser, if a corporation, partnership, trust or
  other entity,  is authorized and otherwise duly qualified to purchase and hold
  the  Securities;  such entity has its principal place of business as set forth
  on the signature page hereof;  and such entity (i) has not been formed for the
  specific  purpose of acquiring  Securities  in the Company or (ii) each equity
  owner  thereof  has  executed  and  delivered  simultaneously  herewith a duly
  completed Purchase Questionnaire.

           Reliance.  Purchaser has relied only upon the information provided to
  him or her in writing by the Company, or information from books and records of
  the  Company.  No oral  representations  have  been  made or oral  information
  furnished  to  Purchaser  or his or her  advisor(s)  in  connection  with  the
  offering  of  the  Securities  which  were  not  contained   therein  or  were
  inconsistent therewith.

                                    SECTION 5
                CONDITIONS TO PURCHASER'S OBLIGATIONS AT CLOSING

         The  obligations  of Purchaser  under  Section 2 of this  Agreement are
subject to the fulfillment or waiver,  on or before the Closing,  of each of the
following  conditions,  the waiver of which shall not be  effective  against any
Purchaser  who does not consent to such  waiver,  which  consent may be given by
written, oral or telephone communication to the Company or its counsel:

         Representations  and Warranties True. Each of the  representations  and
warranties  of the Company  contained  in Section 3 shall be true and correct in
all  material  respects on and as of the Closing  with the same effect as though
such  representations  and warranties had been made on and as of the date of the
Closing.



<PAGE>



         Performance.  The  Company  shall have  performed  and  complied in all
material respects with all agreements,  obligations and conditions  contained in
this  Agreement  that are required to be performed or complied  with by it on or
before  the  Closing  and  shall  have  obtained  all  approvals,  consents  and
qualifications necessary to complete the purchase and sale described herein.

         Restated Articles Effective. The Restated Articles shall have been duly
adopted  by the  Company  by all  necessary  corporate  action  of its  Board of
Directors and shareholders,  and shall have been duly filed with and accepted by
the Secretary of State of the State of California.

           Securities  Exemptions.  The  offer  and  sale of the  Securities  to
  Purchaser  pursuant to this  Agreement  shall be exempt from the  registration
  requirements  of the Securities  Act, the  qualification  requirements  of the
  California   Securities  Law  and  the   registration   and/or   qualification
  requirements of all other applicable state securities laws.

           Rights Agreement.  The Rights Agreement shall have  been executed and
  delivered by the parties thereto.


                                    SECTION 6

                 CONDITIONS TO COMPANY'S OBLIGATIONS AT CLOSING

         The  Company's  obligation  to sell and  issue  the  Securities  at the
Closing is subject to the  fulfillment or waiver by the Company of the following
conditions:

         Representations and Warranties. The representations and warranties made
by the  Purchaser in Section 4 hereof shall be true and correct when made and on
the Closing Date as if made on and as of the Closing Date.

         Consents  and  Waivers.  The Company  shall have  obtained  any and all
consents  and  waivers   necessary  or  appropriate  for   consummation  of  the
transactions contemplated by this Agreement.

         Surrender of Warrant.  Purchaser shall  have  delivered to  the Company
the Warrant.

         Restated Articles Effective. The Restated Articles shall have been duly
adopted  by the  Company  by all  necessary  corporate  action  of its  Board of
Directors and shareholders,  and shall have been duly filed with and accepted by
the Secretary of State of the State of California.

         Securities  Exemptions.  The  offer  and  sale  of  the  Securities  to
Purchaser  pursuant  to this  Agreement  shall be exempt  from the  registration
requirements  of the  Securities  Act, the  qualifications  requirements  of the
California Securities Law and the registration and/or qualification requirements
of all other applicable state securities laws.



<PAGE>



                                    SECTION 7

                  RESTRICTIONS ON TRANSFERABILITY OF SECURITIES

           Restrictions  on   Transferability.   The  Securities  shall  not  be
  transferable except upon the conditions specified in this Section 7. Purchaser
  will cause any  proposed  transferee  of the  Securities  held by Purchaser to
  agree to take and hold such Securities  subject to the provisions and upon the
  conditions specified in this Section 7.

           Restrictive  Legends.  Each certificate  representing the Securities,
  and any other  securities  issued in respect of the Securities  upon any stock
  split,  stock dividend,  recapitalization,  merger,  consolidation  or similar
  event  (except as  otherwise  permitted by the  provisions  of this Section 7)
  shall be stamped or  otherwise  imprinted  with legends in  substantially  the
  following form:

           "THE  SECURITIES   EVIDENCED  BY  THIS   CERTIFICATE  HAVE  NOT  BEEN
  REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,  AND MAY NOT BE SOLD,
  TRANSFERRED,   ASSIGNED  OR   HYPOTHECATED   UNLESS   THERE  IS  AN  EFFECTIVE
  REGISTRATION  STATEMENT UNDER SUCH ACT COVERING SUCH  SECURITIES,  THE SALE IS
  MADE IN  ACCORDANCE  WITH RULE 144 UNDER THE ACT, OR THE  COMPANY  RECEIVES AN
  OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY  SATISFACTORY
  TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER,  ASSIGNMENT OR HYPOTHECATION
  IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS  DELIVERY  REQUIREMENTS OF SUCH
  ACT."

           Any other legends required by applicable state securities laws.

      The Company  need not register a transfer of legended  Securities  and may
also instruct its transfer agent not to register the transfer of the Securities,
unless the conditions specified in each of the  foregoing legends are satisfied.



<PAGE>



           Removal of Legend and Transfer Restrictions. Any legend endorsed on a
  certificate  pursuant to Section 7.2 and the stop transfer  instructions  with
  respect to such legended  Securities  shall be removed,  and the Company shall
  issue a  certificate  without such legend to the holder of such  Securities if
  such  Securities  are  registered  under the  Securities  Act and a prospectus
  meeting the  requirements  of Section 10 of the Securities Act is available or
  if such holder satisfies the requirements of Rule 144(k).

                                    SECTION 8

                                  MISCELLANEOUS

           Governing  Law. This  Agreement  shall be governed in all respects by
  the internal laws of the State of California,  without reference to principles
  of conflict of laws or choice of law.

           Survival.  The representations, warranties, covenants and agreements
  made herein shall survive the execution and delivery of this Agreement and the
  Closing.

           Successors  and Assigns.  Except as otherwise  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.

           Entire Agreement;  Amendment. This Agreement and the exhibits to this
  Agreement  constitute the full and entire  understanding and agreement between
  the parties with regard to the subjects  hereof and thereof.  Any term of this
  Agreement may be amended and the  observance of any term of this Agreement may
  be  waived  (either   generally  or  in  a  particular   instance  and  either
  retroactively or prospectively),  only with the written consent of the Company
  and the Purchaser.  Any amendment or waiver  effected in accordance  with this
  section shall be binding upon the Company, Purchaser and each future holder of
  the securities purchased hereunder.

           Notices,  Etc.  All  notices  and other  communications  required  or
  permitted  hereunder  shall be in writing and shall be mailed by registered or
  certified mail, postage prepaid, or otherwise delivered by hand,  messenger or
  a  nationally  recognized  overnight  courier  service,  addressed  (a)  if to
  Purchaser,  at  Purchaser's  address set forth on  Purchaser's  signature page
  hereto,  or at such other  address as  Purchaser  shall have  furnished to the
  Company in  writing,  (b) if to any other  holder of any  Securities,  at such
  address as such holder shall have  furnished  the Company in writing or, until
  any such holder so furnishes an address to the Company,  to and at the address
  of the last holder of such  Securities  who has so furnished an address to the
  Company or (c) if to the Company, at the following address:



<PAGE>



                       Spear Technologies, Inc.

                       One Market Street, Steuart Tower, Suite 700

                       San Francisco, CA  94105

                       Attention: President

                       Fax: (415) 836-8099



  or at such other address as the Company shall have furnished to the Purchaser,



                  with a copy to:



                  Gray Cary Ware & Freidenrich LLP

                  400 Hamilton Avenue

                  Palo Alto, CA 94301-1809

                  Attn:  Thomas W. Furlong

      All such notices,  requests and other communications will (i) if delivered
personally or by express courier to the address as provided in this Section,  be
deemed given upon delivery,  or (ii) if delivered by facsimile  transmission  to
the facsimile number as provided in this Section,  be deemed given upon receipt.
Any party from time to time may change its  address,  facsimile  number or other
information  for the  purpose  of notices to that party by giving ten (10) days'
prior written notice specifying such change to the other party hereto.



<PAGE>



           Counterparts.  This  Agreement  may  be  executed  in any  number  of
  counterparts,  each of which shall be enforceable against the parties actually
  executing such  counterparts,  and all of which together shall  constitute one
  instrument.

           Headings.  The headings and captions used in this  Agreement are used
  for  convenience   only  and  are  not  to  be  considered  in  construing  or
  interpreting  this  Agreement.  All  references in this Agreement to sections,
  paragraphs,  exhibits and schedules shall, unless otherwise provided, refer to
  sections and paragraphs hereof and exhibits and schedules attached hereto, all
  of which exhibits and schedules are incorporated herein by this reference.

           No Finder's Fees.  Each party  represents that it neither is nor will
  be obligated for any finder's or broker's fee or commission in connection with
  this  transaction.  Purchaser  agrees to  indemnify  and to hold  harmless the
  Company from any liability for any commission or compensation in the nature of
  a  finders'  or  broker's  fee (and any  asserted  liability)  for  which  the
  Purchaser or any of its officers,  partners,  employees, or representatives is
  responsible.  The Company agrees to indemnify and hold harmless Purchaser from
  any liability for any commission or  compensation  in the nature of a finder's
  or broker's fee (and any asserted  liability)  for which the Company or any of
  its officers, employees or representatives is responsible.

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



<PAGE>




         IN WITNESS  WHEREOF,  the parties  hereto have  executed  this Series C
Preferred Stock Purchase Agreement as of the date first set forth above.

                                      SPEAR TECHNOLOGIES, INC.





                                       By: ________________________________

                                       Michael Bealmear
                                       President



<PAGE>



                          COUNTERPART SIGNATURE PAGE TO
                   SERIES C PREFERRED STOCK PURCHASE AGREEMENT







                                   PURCHASER:




                                      Name: ______________________________
                                            (Please print or type)





                                   Signature:_____________________________

                                    Address: _____________________________

                                             _____________________________



<PAGE>



                                    Exhibit A

              SECOND AMENDED AND RESTATED ARTICLES OF INCORPORATION



<PAGE>



                                    Exhibit B

                  SECOND AMENDED AND RESTATED RIGHTS AGREEMENT
                            SPEAR TECHNOLOGIES, INC.

                  SECOND AMENDED AND RESTATED RIGHTS AGREEMENT

         This Second Amended and Restated Rights Agreement (the  "Agreement") is
entered  into  as of  the  1st  day  of  December,  1999,  by  and  among  Spear
Technologies,  Inc., a California  corporation (the "Company"),  the undersigned
parties  purchasing shares of the Company's Series B Preferred Stock on the date
hereof (the  "Investors"),  the undersigned  holders of the Series A-1 Preferred
Stock of the Company (the "Prior Rights  Holders"),  the undersigned  holders of
the Common Stock of the Company (the  "Founders"),  Silicon  Valley Bank ("SVB")
and Tenera,  Inc.  ("Tenera").  The Prior Rights  Holders and the  Investors are
sometimes collectively referred to herein as the "Purchasers."

                                    RECITALS

A.              The Prior Rights Holders hold shares of the Company's Series A-1
             Preferred Stock.

B.           The Company, the Prior Rights Holders and the Founders have entered
             into that certain Amended and Restated Rights  Agreement,  dated as
             of March 29, 1999 (the "Prior Rights  Agreement"),  pursuant to the
             terms of which the Company granted certain  registration  and other
             rights to the Prior Rights Holders and the Founders.

C. On November 14, 1997 the Company  granted a warrant to purchase shares of its
Common Stock to Tenera (the "Tenera Warrant").  Simultaneously with the grant of
the Tenera  Warrant,  the Company  agreed to provide  "piggy-back"  registration
rights  for the  shares of the  Company's  Common  Stock  underlying  the Tenera
Warrant.  On the date  hereof,  Tenera  surrendered  the  Tenera  Warrant to the
Company in exchange for shares of the  Company's  Series C Preferred  Stock (the
"Tenera Stock").

D. On August 10, 1998, the Company  granted a warrant to purchase  shares of its
Series A Preferred  Stock to SVB (the "SVB  Warrant").  Simultaneously  with the
grant  of  the  SVB  Warrant,   the  Company  agreed  to  provide   "piggy-back"
registration  rights for the shares of the Company's Common Stock underlying the
SVB Warrant (such Common Stock being hereinafter referred to as the "SVB Warrant
Stock").

E.           On the date  hereof,  the  Company  has sold shares of its Series B
             Preferred  Stock  to the  Investors  pursuant  to a  Series B Stock
             Purchase  Agreement  dated of even  date  herewith  (the  "Purchase
             Agreement").



<PAGE>



F.   By this  Agreement,  the Company  and the Prior  Rights  Holders  desire to
     restate  and  amend  the  Prior  Rights   Agreement   to  provide   certain
     registration and other rights to the Investors, SVB and Tenera as set forth
     herein, and to include in this agreement the separate rights granted to SVB
     and Tenera, joining the Investors, SVB and Tenera as parties hereto.

                                    AGREEMENT

         NOW,  THEREFORE,  in  consideration  of the foregoing and of the mutual
promises and covenants contained herein, the parties agree as follows:

  Registration Rights.

Certain  Definitions.  As used in this Agreement, the following terms shall have
the following respective meanings:

"Affiliate" shall mean a person that directly, or indirectly through one or more
intermediaries,  controls, is controlled by, is under common control with, or is
a partner or a partner of a partner of a Holder.

"Commission"  shall mean the  Securities  and Exchange  Commission  or any other
federal agency at the time administering the Securities Act.

"Conversion  Stock"  shall  mean  the  Common  Stock  issued  or  issuable  upon
conversion  of the Series A-1  Preferred  Stock or the Series B Preferred  Stock
held by the Purchasers, as well as shares of Common Stock received by holders of
the Series A Preferred Stock upon conversion of the Company's Series A Preferred
Stock into shares of Series A-1 Preferred Stock and Common Stock.

"Holder"  shall  mean  any  shareholder  of  the  Company  holding   Registrable
Securities or securities convertible into Registrable Securities, and any person
holding  Registrable  Securities  or  securities  convertible  into  Registrable
Securities  to whom the rights  under this  Section 1 have been  transferred  in
accordance with Section 1.10.

"Initiating  Holders" shall mean any Holder or Holders of at least fifty percent
(50%) of the  Registrable  Securities  (adjusted  after  the  original  issuance
thereof for stock splits, stock dividends, recapitalizations and the like).

"Offered Stock" shall mean all Stock proposed to be Transferred by a Holder.

"Registrable Securities" shall mean (i) the Conversion Stock; (ii) the shares of
Common  Stock  underlying  the Series A-1  Preferred  Stock and the Common Stock
purchaseable pursuant to that certain warrant issued by the Company to Robert K.
Dahl on January 30,  1998;  (iii) the shares of Common Stock  purchaseable  upon
exercise  of  warrants to  purchase  Common  Stock  issued by the Company to the
parties to the Settlement Agreement among the Company and certain holders of the
Series A-1 Preferred Stock (the "Settlement Agreement") and (iv) stock issued in



<PAGE>



respect  of the  stock  referred  to in (i) (ii) or (iii) as a result of a stock
split, stock dividend,  recapitalization or the like, which has not been sold to
the public. Except for subsections 1.2 and 1.4,  "Registrable  Securities" shall
also include the common stock  issuable  upon  conversion  of the Tenera  Stock.
Except for  subsections  1.2,  1.4 and 4,  "Registrable  Securities"  shall also
include  the shares of Common  Stock of the  Company  issued or  issuable to the
Founders,  the shares of Common Stock of the Company issued or issuable to those
officers  and  directors  of the Company to whom the Board of  Directors  of the
Company  by  unanimous  vote  extends  the  registration   rights  contained  in
subsection 1.3, and the SVB Warrant Stock.

The terms "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 the  effectiveness  of such
registration statement.

"Registration  Expenses"  shall mean all  expenses,  except as otherwise  stated
below,  incurred by the Company in  complying  with  Sections  1.2,  1.3 and 1.4
hereof,  including,  without  limitation,  all  registration,  qualification and
filing fees,  printing expenses,  escrow fees, fees and disbursements of counsel
for the Company,  blue sky fees and expenses,  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)  and the  reasonable  fees and  disbursements  of one  counsel  for all
Holders in the event of each registration  provided for in Sections 1.2, 1.3 and
1.4 hereof.

"Securities  Act" shall mean the  Securities  Act of 1933,  as  amended,  or any
similar  federal  statute  and  the  rules  and  regulations  of the  Commission
thereunder, all as the same shall be in effect at the time.

"Selling Expenses" shall mean all underwriting  discounts,  selling  commissions
and stock transfer taxes applicable to the securities  registered by the Holders
and, except as set forth above, all reasonable fees and disbursements of counsel
for the selling Holders.

"Stock" means and includes all shares of Common Stock issued and  outstanding at
the  relevant  time plus (i) all shares of Common  Stock that may be issued upon
exercise of any  options,  warrants  and other  rights of any kind that are then
exercisable,  and (ii) all  shares  of  Common  Stock  that may be  issued  upon
conversion of (A) any convertible  securities,  including,  without  limitation,
preferred stock and debt securities then  outstanding,  which are by their terms
then  convertible  into  or  exchangeable  for  Common  Stock  or (B)  any  such
convertible  securities  issuable  upon  exercise of options,  warrants or other
rights that are then exercisable.

"Transfer" means and includes any sale, assignment, encumbrance,  hypothecation,
pledge,  conveyance in trust, gift,  transfer by bequest,  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, except:



<PAGE>



any bona fide pledge by a Holder if the pledgee  executes a counterpart  copy of
this Agreement and becomes bound thereby as a Holder;

any transfers of Stock by a Holder to such Holder's spouse, lineal descendant or
antecedent,  father,  mother, brother or sister of the Holder, the adopted child
or adopted grandchild of the Holder, or the spouse of any child,  adopted child,
grandchild or adopted  grandchild of the Holder, or to a trust or trusts for the
exclusive benefit of such Holder or such Holder's family members as described in
this  Section,  or transfers  of Stock by a Holder by devise or descent,  in all
cases if the transferee or other recipient  executes a counterpart  copy of this
Agreement and becomes bound thereby as a Holder;

any  transfer  of  Stock  by  a  Holder  made:  (A)  pursuant  to  a  merger  or
consolidation  of the Company with or into another  corporation or corporations;
(B) pursuant to the winding up and  dissolution  of the Company;  or (C) at, and
pursuant to, a firm commitment underwritten public offering; or

any transfer of Stock by a Holder to an Affiliate of such Holder,  provided such
Affiliate agrees in writing to be bound by the provisions of this Agreement.

  Requested Registration.

Request for  Registration.  In case the Company  shall  receive from  Initiating
Holders a written request that the Company effect any registration  with respect
to at  least  twenty-five  percent  (25%) of the  then  outstanding  Registrable
Securities and the reasonably  anticipated aggregate public offering price would
equal or exceed $5,000,000, the Company will:

promptly give  written  notice  of  the proposed  registration, qualification or
compliance to all other Holders; and

as soon as  practicable,  use its best  efforts  to  effect  such  registration,
qualification  or  compliance   (including,   without  limitation,   appropriate
qualification  under  applicable  blue sky or other  state  securities  laws and
appropriate  compliance with applicable  regulations issued under the Securities
Act  and  any  other  governmental  requirements  or  regulations)  as may be so
requested and as would permit or facilitate the sale and  distribution of all or
such portion of such  Registrable  Securities  as are specified in such request,
together with all or such portion of the Registrable Securities of any Holder or
Holders joining in such request as are specified in a written  request  received
by the Company within twenty (20) days after receipt of such written notice from
the Company; provided,  however, that the Company shall not be obligated to take
any action to effect any such registration, qualification or compliance pursuant
to this Section 1.2:

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



<PAGE>




at any time prior to the later of three (3) months after the  effective  date of
the  Company's  initial  public  offering  of  its  securities   pursuant  to  a
registration  statement declared effective under the Securities Act ("IPO"),  or
three  (3)  years  from the  closing  of the  transactions  contemplated  by the
Purchase Agreement;

after the Company has effected  two  (2)  such  registrations  pursuant  to this
Section 1.2(a);

if the  Company  shall  furnish  to such  Holders  a  certificate  signed by the
President of the Company stating that in the good faith judgment of the Board of
Directors it would be seriously  detrimental to the Company or its Holders for a
registration  statement  to be  filed  in the near  future,  then the  Company's
obligation  to use its best  efforts to  register,  qualify or comply under this
Section  1.2 shall be  deferred  for a period not to exceed one  hundred  twenty
(120)  days from the date of  receipt of  written  request  from the  Initiating
Holders,  provided  that the  Company  may not use this right or the right under
Section 1.4(b)(iv) more than once in any twelve (12) month period; and

within  six (6)  months  following  the  effective  date  of a prior  registered
offering of the Company's securities.

         Subject to the  foregoing  clauses (A) through (E),  the Company  shall
file a registration  statement covering the Registrable  Securities so requested
to be  registered  as soon as  practicable,  after  receipt  of the  request  or
requests of the Initiating Holders.

Underwriting.  In the event that a registration pursuant to Section 1.2 is for a
registered  public  offering  involving an  underwriting,  the Company  shall so
advise the Holders as part of the notice given pursuant to Section 1.2(a)(i). In
such event, the right of any Holder to participate in such registration shall be
conditioned upon such Holder's  participation  in the underwriting  arrangements
required by this  Section 1.2, and the  inclusion of such  Holder's  Registrable
Securities in the  underwriting to the extent  requested shall be limited to the
extent provided herein.

         The Company shall  (together  with all Holders  proposing to distribute
their securities through such underwriting) enter into an underwriting agreement
in customary form with the managing  underwriter  selected for such underwriting
by a  majority  in  interest  of the  Initiating  Holders,  but  subject  to the
Company's  reasonable  approval.  Notwithstanding  any other  provision  of this
Section  1.2, if the  managing  underwriter  advises the  Initiating  Holders in
writing that marketing  factors  require a limitation of the number of shares to
be underwritten,  then the Company shall so advise all participating Holders and
the  number of shares of  Registrable  Securities  that may be  included  in the
registration  and  underwriting  shall be allocated among all Holders thereof in
proportion,  as nearly as practicable,  to the respective amounts of Registrable
Securities  held  by  such  Holders  at the  time  of  filing  the  registration
statement. No Registrable Securities excluded from the underwriting by reason of
the underwriter's  marketing  limitation shall be included in such registration.
To facilitate the allocation of shares in accordance with the above  provisions,
the Company or the  underwriters may round the number of shares allocated to any
Holder to the nearest 100 shares.



<PAGE>



         If any Holder of Registrable Securities disapproves of the terms of the
underwriting,  such person may elect to withdraw therefrom by written notice, on
or  before  the  fifth  day  prior  to the  effectiveness  of  the  registration
statement,  to the Company, the managing underwriter and the Initiating Holders.
The  Registrable  Securities  or other  securities  so  withdrawn  shall also be
withdrawn from  registration,  and such securities shall not be transferred in a
public  distribution  prior to ninety (90) days after the effective date of such
registration,  or such  other  shorter  period of time as the  underwriters  may
require.

         If the underwriter has not limited the number of Registrable Securities
to be underwritten,  the Company may include  securities for its own account (or
for the  account  of other  purchasers)  in such  registration  if the  managing
underwriter  so agrees and if the number of  Registrable  Securities  that would
otherwise  have been included in such  registration  and  underwriting  will not
thereby be limited.

  Company Registration.

Notice of  Registration.  If at any time or from time to time the Company  shall
determine to register any of its  securities,  either for its own account or the
account of a security holder or holders,  other than (i) a registration relating
solely to employee  benefit plans,  or (ii) a registration  relating solely to a
Commission Rule 145 transaction, the Company will:

except in the case of a  registration  effected  pursuant to Sections 1.2 or 1.4
hereof, promptly give to each Holder written notice thereof, and include in such
registration  (and  any  related  qualification  under  blue  sky  laws or other
compliance),  and in any  underwriting  involved  therein,  all the  Registrable
Securities  specified in a written request or requests,  made within twenty (20)
days after receipt of such written notice from the Company, by any Holder; and

promptly give to each Holder of the  Registrable  Securities  issued or issuable
upon conversion of the Tenera Stock written notice thereof,  and include in such
registration  (and  any  related  qualification  under  blue  sky  laws or other
compliance),  and in any  underwriting  involved  therein,  all the  Registrable
Securities issued or issuable upon conversion of the Tenera Stock specified in a
written request or requests,  made within twenty (20) days after receipt of such
written notice from the Company, by any such holder of Series C Preferred Stock.

Underwriting.  If the  registration  of which the Company  gives notice is for a
registered  public  offering  involving an  underwriting,  the Company  shall so
advise the Holders as a part of the written  notice  given  pursuant to Sections
1.3(a)(i) or 1.3(a)(ii).  In such event the right of any Holder to  registration
pursuant to Section 1.3 shall be conditioned upon such Holder's participation in
such  underwriting  to the extent  provided  herein.  All Holders  proposing  to
distribute their securities  through such underwriting  shall (together with the
Company  and the  other  holders  distributing  their  securities  through  such
underwriting)  enter into an  underwriting  agreement in customary form with the
managing  underwriter selected for such underwriting by the Company, but subject
to the  reasonable  approval  of Holders  holding  more than a  majority  of the
Registrable Securities to be included in such registration.  Notwithstanding any
other provision of this Section 1.3, if the managing underwriter determines that



<PAGE>



marketing factors require limitation of the number of shares to be underwritten,
the managing underwriter may limit the Registrable  Securities to be included in
such  registration.  The Company  shall so advise all Holders and other  holders
distributing  their  securities  through  such  underwriting,  and the number of
shares of securities that may be included in the  registration  and underwriting
(other than in behalf of the Company)  shall be allocated  among all Holders and
such other holders (provided that such other holders have contractual  rights to
participate in such  registration  which are not  subordinate to the Holders) in
proportion,  as nearly as practicable,  to the respective amounts of Registrable
Securities or other securities  requested to be included in such registration by
such Holders and such other holders;  provided,  however,  in no event shall the
amount of  Registrable  Securities  of the Holders  included in the  offering be
reduced below twenty percent (20%) of the total amount of securities included in
such  offering,  unless  such  offering is the  initial  public  offering of the
Company's  securities in which case the Holders may be excluded  entirely if the
underwriters  make the  determination  described  above or the Holders holding a
majority of the Registrable  Securities  consent in writing to such a reduction;
and provided,  further,  that the  Registrable  Securities  held by the Founders
shall be reduced  before  any  reduction  in the  Registrable  Securities  to be
offered by other  Holders.  To facilitate the allocation of shares in accordance
with the above provisions,  the Company may round the number of shares allocated
to any Holder or holder to the nearest one hundred (100)  shares.  If any Holder
or holder  disapproves  of the terms of any such  underwriting,  he may elect to
withdraw   therefrom  by  written   notice  to  the  Company  and  the  managing
underwriter.  Except as set forth in Section 1.11,  any  securities  excluded or
withdrawn from such underwriting shall be withdrawn from such registration,  and
shall not be  transferred  in a public  distribution  prior to ninety  (90) days
after the effective date of the registration statement relating thereto, or such
other shorter period of time as the underwriters may require.

  Registration on Form S-3.

If any Holder or Holders request that the Company file a registration  statement
on Form S-3 (or any successor form to Form S-3) for a public  offering of shares
of the Registrable  Securities the reasonably anticipated aggregate price to the
public  of which  would  exceed  $5,000,000,  and the  Company  is a  registrant
entitled  to use Form S-3 to register  the  Registrable  Securities  for such an
offering,  the  Company  shall use its best  efforts to cause  such  Registrable
Securities  to be  registered  for the  offering  on such form and to cause such
Registrable  Securities to be qualified in such  jurisdictions  as the Holder or
Holders may reasonably  request.  The  substantive  provisions of Section 1.2(b)
shall be applicable to each registration initiated under this Section 1.4.

Notwithstanding  the  foregoing,  the Company shall not be obligated to take any
action pursuant to this Section 1.4:

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



<PAGE>



if the  Company,  within  ten (10) days of the  receipt  of the  request  of the
Holders,  gives  notice of its bona fide  intention  to effect  the  filing of a
registration  statement with the Commission within sixty (60) days of receipt of
such request (other than with respect to a registration  statement relating to a
Rule 145 transaction,  an offering solely to employees or any other registration
which is not appropriate for the registration of Registrable Securities);

within three (3) months of the effective date of any registration referred to in
Sections 1.2 and 1.3 above;

if the  Company  shall  furnish  to such  Holder  a  certificate  signed  by the
President of the Company stating that in the good faith judgment of the Board of
Directors  it would be  seriously  detrimental  to the Company or the Holder for
registration  statements  to be  filed in the near  future,  then the  Company's
obligation  to use its best efforts to file a  registration  statement  shall be
deferred  for a period  not to exceed  one  hundred  twenty  (120) days from the
receipt of the request to file such  registration by such Holder,  provided that
the Company may not use this right or the right under Section 1.2(a)(ii)(D) more
than once in any twelve month period; or

if the Company has effected one (1) registration pursuant to this subsection 1.4
within a twelve (12) month period from the date of such request.

Expenses of Registration. Unless otherwise stated, all Selling Expenses relating
to securities  registered on behalf of the Holders shall be borne by the Holders
of such  securities pro rata on the basis of the number of shares so registered.
All Registration Expenses incurred in connection with all registrations pursuant
to Sections 1.2, 1.3 and 1.4 shall be borne by the Company.

Registration  Procedures.  In the case of each  registration,  qualification  or
compliance  effected by the Company pursuant to this Section 1, the Company will
keep each Holder  advised in writing as to the  initiation of each  registration
and as to the completion thereof. At its expense the Company will:

prepare and file with the  Commission a  registration  statement with respect to
such securities and use its best efforts to cause such registration statement to
become and remain  effective for at least one hundred eighty (180) days or until
the distribution described in the registration statement has been completed;

furnish  to  the  Holders   participating  in  such   registration  and  to  the
underwriters of the securities being registered such reasonable number of copies
of the registration statement, preliminary prospectus, final prospectus and such
other  documents  as such  underwriters  may  reasonably  request  in  order  to
facilitate the public offering of such securities;

prepare and file with the Commission  such  amendments  and  supplements to such
registration   statement  and  the  prospectus  used  in  connection  with  such



<PAGE>



registration  statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement;

use its best  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;

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

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; and

use its best  efforts  to  furnish,  at the  request  of any  Holder  requesting
registration of Registrable  Securities  pursuant to this Section 1, on the date
that such  Registrable  Securities are delivered to the underwriters for sale in
connection  with a registration  pursuant to this Section 1, if such  securities
are being sold through  underwriters,  or, if such securities are not being sold
through underwriters,  on the date that the registration  statement with respect
to such securities  becomes effective,  (i) an opinion,  dated such date, of the
counsel representing the Company for the purposes of such registration,  in form
and substance as is customarily given to underwriters in an underwritten  public
offering,  addressed to the underwriters,  if any, and to the Holders requesting
registration  of Registrable  Securities and (ii) a letter dated such date, from
the  independent  certified  public  accountants  of the  Company,  in form  and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering,  addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities.

  Indemnification.

The Company will indemnify each Holder,  each of Holder's officers and directors
and  partners,  and each person  controlling  such person  within the meaning of
Section  15  of  the  Securities  Act,  with  respect  to  which   registration,
qualification  or compliance  has been effected  pursuant to this Section 1, and
each  underwriter,  if any, and each person who controls any underwriter  within
the meaning of Section 15 of the Securities Act,  against all expenses,  claims,
losses, damages or liabilities (or actions in respect thereof), including any of
the foregoing incurred in settlement of any litigation, commenced or threatened,
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any registration  statement,  prospectus,  offering



<PAGE>



circular or other document, or any amendment or supplement thereto,  incident to
any such registration, qualification or compliance, or based on any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements  therein,  in light of the  circumstances in
which they were made,  not  misleading,  or any  violation by the Company of the
Securities  Act or any rule or regulation  promulgated  under the Securities Act
applicable   to  the  Company  in   connection   with  any  such   registration,
qualification  or  compliance,  and the Company will reimburse each such Holder,
each of  Holder's  officers  and  directors,  and each person  controlling  such
Holder, each such underwriter and each person who controls any such underwriter,
for any legal and any other  expenses  reasonably  incurred in  connection  with
investigating, preparing or defending any such claim, loss, damage, liability or
action,  provided  that the Company will not be liable to any such person in any
such case to the extent that any such claim, loss, damage,  liability or expense
arises out of or is based on any untrue statement or omission (or alleged untrue
statement or omission),  made in reliance  upon and in  conformity  with written
information  furnished  to the Company by an  instrument  duly  executed by such
Holder,  controlling person or underwriter and stated to be specifically for use
therein or the preparation thereby.

Each Holder will, if Registrable  Securities held by such Holder are included in
the  securities as to which such  registration,  qualification  or compliance is
being effected,  indemnify the Company, each of its directors and officers, each
underwriter,  if any, of the Company's securities covered by such a registration
statement,  each person who controls the Company or such underwriter  within the
meaning of Section 15 of the Securities Act, and each other such Holder, each of
its officers and  directors and each person  controlling  such Holder within the
meaning of Section 15 of the Securities Act, against all claims, losses, damages
and  liabilities  (or  actions in  respect  thereof)  arising  out of any untrue
statement (or alleged  untrue  statement)  of a material  fact  contained in any
registration statement,  prospectus, offering circular or other document, or any
omission (or alleged  omission) to state  therein a material fact required to be
stated therein or necessary to make the statements  therein not misleading,  and
will reimburse the Company,  such Holders,  such directors,  officers,  persons,
underwriters or control  persons for any legal or any other expenses  reasonably
incurred in  connection  with  investigating,  preparing or  defending  any such
claim, loss,  damage,  liability or action, in each case to the extent, but only
to the extent,  that such untrue  statement  (or alleged  untrue  statement)  or
omission  (or  alleged  omission)  is  made  in  such  registration   statement,
prospectus,  offering  circular  or  other  document  in  reliance  upon  and in
conformity  with written  information  furnished to the Company by an instrument
duly  executed by such Holder and stated to be  specifically  for use therein or
the preparation  thereby.  Notwithstanding the foregoing,  the liability of each
Holder under this  subsection (b) shall be limited to an amount equal to the net
proceeds received by such Holder from the sale of Registrable Securities held by
such Holder in such registration.

Each party entitled to indemnification  under this Section 1.7 (the "Indemnified
Party") shall give notice to the party required to provide  indemnification (the
"Indemnifying Party") promptly after such Indemnified Party has actual knowledge
of any  claim  as to  which  indemnity  may be  sought,  and  shall  permit  the
Indemnifying  Party to assume the  defense  of any such claim or any  litigation
resulting therefrom, provided that counsel for the Indemnifying Party, who shall



<PAGE>



conduct  the  defense  of such claim or  litigation,  shall be  approved  by the
Indemnified  Party (whose approval shall not unreasonably be withheld),  and the
Indemnified  Party may participate in such defense at such party's expense,  and
provided  further  that the failure of any  Indemnified  Party to give notice as
provided  herein  shall not relieve the  Indemnifying  Party of its  obligations
under  this  Section 1 unless  the  failure  to give such  notice is  materially
prejudicial  to an  Indemnifying  Party's  ability  to defend  such  action  and
provided further,  that the Indemnifying  Party shall not assume the defense for
matters as to which there is a conflict of  interest or separate  and  different
defenses. 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 a release  from all  liability  in  respect  to such claim or
litigation.

Information by Holder.  The Holders of securities  included in any  registration
shall  furnish to the Company  such  information  regarding  such  Holders,  the
Registrable  Securities  held by  them  and the  distribution  proposed  by such
Holders  as the  Company  may  request in writing  and as shall be  required  in
connection with any  registration,  qualification  or compliance  referred to in
this Section 1.

Rule 144  Reporting.  With a view to making  available  the  benefits of certain
rules and regulations of the Commission which may at any time permit the sale of
the Registrable  Securities to the public without registration,  after such time
as a public  market  exists for the Common  Stock of the  Company,  the  Company
agrees to use its best efforts to:

Make and keep public  information  available,  as those terms are understood and
defined in Rule 144 under the  Securities  Act, at all times after the effective
date that the  Company  becomes  subject to the  reporting  requirements  of the
Securities Act or the  Securities  Exchange Act of 1934, as amended (as amended,
the "Exchange Act").

Use its best efforts to file with the  Commission in a timely manner all reports
and other  documents  required of the Company under the  Securities  Act and the
Exchange  Act (at  any  time  after  it has  become  subject  to such  reporting
requirements);

So long as a Holder  owns any  Registrable  Securities  to furnish to the Holder
forthwith  upon request a written  statement by the Company as to its compliance
with the reporting  requirements of said Rule 144 (at any time after ninety (90)
days after the effective date of the first  registration  statement filed by the
Company for an offering of its  securities  to the general  public),  and of the
Securities  Act and 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 of the Company and
other  information in the possession of or reasonably  obtainable by the Company
as the  Holder  may  reasonably  request  in  availing  itself  of any  rule  or
regulation  of the  Commission  allowing the Holder to sell any such  securities
without registration.



<PAGE>



Transfer  of  Registration  Rights.  Subject to Section 3 hereof,  the rights to
cause the Company to register  securities  granted to the Holder under  sections
1.2,  1.3 and 1.4 may be assigned  to a  transferee  or  assignee  (other than a
competitor as reasonably  determined by the Company in good faith) in connection
with any transfer or assignment of Registrable Securities by the Holder provided
that the  transferor  provides the Company  with written  notice of the proposed
transfer, the transferee agrees to be bound by the terms of this Agreement, and:
(i) the transferee acquires all of the transferor's  Registrable  Securities not
sold to the public;  (ii) the transferee  acquires at least the lesser of all or
500,000 shares (subject to adjustments for stock splits, combinations, dividends
or the like) of the transferor's  Registrable Securities not sold to the public;
or (iii) the transferee is a shareholder or Affiliate of the Holder.

Standoff Agreement. Each Holder agrees, in connection with the Company's initial
public  offering of the Company's  securities and upon request of the Company or
the underwriters managing any underwritten offering of the Company's securities,
not to sell, make any short sale of, loan, grant any option for the purchase of,
or otherwise dispose of any Registrable Securities (other than those included in
the  registration)  without  the prior  written  consent of the  Company or such
underwriters,  as the case may be,  for such  period  of not to  exceed a period
commencing upon the effective date of such  registration  and ending one hundred
and eighty (180) days thereafter;  provided,  that the officers and directors of
the  Company  who own stock of the  Company  and all  shareholders  owning  five
percent or more of any class or series of the Company's stock also agree to such
restrictions.

Termination.  Any  registration  rights granted pursuant to this Section 1 shall
terminate  with respect to any Holder at such date after the  Company's  initial
registered  public  offering when all remaining  Registrable  Securities held or
entitled  to be held by such Holder may be sold under Rule 144 during any ninety
(90) day period.

Other  Registration  Rights.  The Company  shall not,  without the prior written
consent of Holders of a majority of the Registrable  Securities then outstanding
grant any registration rights superior to or on a parity with the rights granted
pursuant to this Section 1.

  Purchaser Right of First Refusal Upon Issuance of Securities by the Company.
  ---------------------------------------------------------------------------

Right of First  Refusal.  The Company  hereby grants to each Prior Rights Holder
and each Investor  holding at least  1,000,000  shares of the Series B Preferred
Stock (as adjusted for any stock split,  stock  dividend,  recapitalization,  or
similar event) (a "Qualified  Series B Holder") or any  transferees  pursuant to
Section  2.1(f) hereof  (collectively,  hereinafter,  the "Rights  Holders") the
right of first  refusal  to  purchase  all or part of its pro rata  share of New
Securities  (as defined in this Section 2.1) which the Company may, from time to
time,  propose to sell and issue. For purposes of this right of first refusal, a
pro rata  share for a Rights  Holder is the ratio  that the  number of shares of
Conversion  Stock and  warrants to purchase  Conversion  Stock then held by such
Rights Holder bears to the number of shares of Stock then outstanding.

"Equity  Securities"  shall  mean any  securities  having  voting  rights in the
election  of  the  Board  of  Directors  not  contingent  upon  default,  or any
securities  evidencing an ownership  interest in the Company,  or any securities



<PAGE>



convertible  into  or  exercisable  for  any  shares  of the  foregoing,  or any
securities  issuable pursuant to any agreement or commitment to issue any of the
foregoing.

Except as set forth below,  "New Securities"  shall mean any Equity  Securities,
whether now authorized or not, and rights,  options or warrants to purchase said
Equity  Securities.  Notwithstanding  the foregoing,  "New  Securities" does not
include  (i)  securities   offered  to  the  public  generally   pursuant  to  a
registration  statement  under the Securities  Act; (ii) the  Conversion  Stock;
(iii)  stock  issued in  connection  with any stock  split,  stock  dividend  or
recapitalization by the Company, (iv) shares of Common Stock issued to officers,
directors,  employees or  consultants  of the Company  pursuant to stock grants,
stock  purchase  and  stock  option  plans or other  stock  incentive  programs,
agreements or  arrangements  approved by the Board of  Directors,  (v) shares of
Common Stock or Preferred  Stock of the Company issued to or issuable to lenders
upon  conversion,  exercise or exchange of warrants in  connection  with loan or
lease agreements approved by the Board of Directors, (vi) shares of Common Stock
of the  Company  issued or  issuable  upon  conversion,  exercise or exchange of
warrants  issued to the parties to the Settlement  Agreement,  (vii)  securities
issued  pursuant  to the  acquisition  of all or part of another  company by the
Company by merger or other reorganization,  or by purchase or all or part of the
assets of another  company,  pursuant to a plan or  arrangement  approved by the
Board of Directors,  (viii)  securities  issued in  transactions  with strategic
partners,  (ix)  shares of Series B  Preferred  sold  pursuant  to the  Purchase
Agreement, as the same is amended from time to time, and (x) the Tenera Stock.

In the event the Company proposes to undertake an issuance of New Securities, it
shall give each Rights Holder written  notice of its  intention,  describing the
type of New Securities,  and the price and terms upon which the Company proposes
to issue the same.  Each Rights Holder shall have ten (10) days from the date of
receipt of any such notice to agree to purchase  up to its  respective  pro rata
share of such New  Securities  for the  price  and  upon  the  applicable  terms
specified  in the notice by giving  written  notice to the  Company  and stating
therein the quantity of New Securities to be purchased.

If,  within  ten (10) days from the date of  receipt  of the  Company's  written
notice a Rights  Holder does not notify the Company  that it desires to purchase
its pro rata share of the New Securities,  those Rights Holders who have elected
to   purchase   their   pro   rata   share   of   such   New   Securities   (the
"Fully-participating  Rights  Holders")  may  elect to  purchase  their pro rata
portion of the New  Securities  not elected to be purchased.  No later than five
(5) days  after  expiration  of the ten  (10)  days  after  the  receipt  of the
Company's   notice,   the   Company   will   send  a   second   notice   to  the
Fully-participating  Rights Holders  providing notice of the number of shares of
the New Securities  available for purchase pursuant to this over-allotment right
(the "Over-allotment Right"). Each of these  Fully-participating  Rights Holders
shall have an additional  five (5) days after the date of the  Company's  second
notice to notify the Company  that it elects to  purchase  its pro rata share of
New Securities so offered.  Each  Fully-participating  Rights  Holder's pro rata
share of such New  Securities  shall be the ratio  that the  number of shares of
Conversion  Stock and  warrants to purchase  Conversion  Stock then held by such
Fully-participating Rights Holder bears to the sum of the total number of shares



<PAGE>



of  Conversion  Stock plus  Conversion  Stock  subject to  warrants  held by all
Fully-participating Rights Holders.

In the event a Fully-participating  Rights Holder fails to exercise the right of
first   refusal   within   said  five  (5)  day   period  or  if  there  are  no
Fully-participating  Rights  Holders  within  ten (10)  days of  receipt  of the
Company's initial notice,  the Company shall have ninety (90) days thereafter to
sell or enter into an agreement  (pursuant  to which the sale of New  Securities
covered thereby shall be closed, if at all, within sixty (60) days from the date
of said  agreement)  to sell the New  Securities  not elected to be purchased by
Rights  Holders  at the  price  and upon  the  terms  no more  favorable  to the
purchasers of such securities than specified in the Company's  original  notice.
In the event the Company has not sold the New Securities within said ninety (90)
day period (or sold and issued New  Securities in accordance  with the foregoing
within sixty (60) days from the date of said  agreement),  the Company shall not
thereafter  issue  or sell  any  New  Securities  without  first  offering  such
securities in the manner provided above.

The right of first  refusal  granted  under this  section  shall expire upon the
closing of the earlier of (i) the first firm commitment underwritten offering of
the  Company's  securities to the public  pursuant to an effective  registration
statement  under  the  Securities  Act  or  (ii)  a  statutory  share  exchange,
consolidation  or merger of this Company with or into any other  corporation  or
corporations  (other than a wholly-owned  subsidiary),  or the sale, transfer or
other  disposition of all or substantially  all of the assets of this Company or
the  consummation  of any  transaction or series of related  transactions  which
results in the Company's shareholders  immediately prior to such transaction not
holding at least a majority of the voting power of the  surviving or  continuing
entity.

Subject  to  Section  3  hereof,  the right of first  refusal  hereunder  may be
assigned to a  transferee  or assignee  (other than a competitor  as  reasonably
determined  by the Company in good  faith) in  connection  with any  transfer or
assignment by a Purchaser of Registrable Securities provided that the transferor
provides the Company with written  notice of the proposed  transfer,  transferee
agrees  to be  bound  by the  terms of this  Agreement,  and (i) the  transferee
acquires all of the transferor's  Registrable Securities not sold to the public;
(ii) the transferee acquires at least 500,000 shares (subject to adjustments for
stock  splits,  combinations,   dividends  or  the  like)  of  the  transferor's
Registrable  Securities,  or (iii) the transferee is shareholder or Affiliate of
the Purchaser.

If the  Board  of  Directors  of the  Company  determines  it to be in the  best
interests of the Company, it may authorize  completion of any issuance or series
of  issuances of New  Securities  without  first  offering  the  Purchasers  the
opportunity  to  exercise  their  rights  pursuant  to this  section  as long as
promptly  following  such  issuances  the  Company  offers  each  Purchaser  the
opportunity  to purchase  such New  Securities as it would have been entitled to
purchase pursuant to this section.

Company Right of First Refusal  Upon  Transfer by Holders.  The  Holders  hereby
agree as follows:



<PAGE>



Notice of Proposed  Transfer.  Before any Holder may effect any  Transfer of any
Stock, the Holder must give to the Company a written notice signed by the Holder
(the "Holder's Notice") stating (a) the Holder's bona fide intention to transfer
such Offered Stock; (b) the number of shares of the Offered Stock; (c) the name,
address and  relationship,  if any, to the Holder of each proposed  purchaser or
other  transferee;  and (d) the bona fide cash price or, in  reasonable  detail,
other  consideration,  per share for which the Holder  proposes to transfer such
Offered Stock (the "Offered Price"). Upon the request of the Company, the Holder
will  promptly  furnish  such  information  to the Company as may be  reasonably
requested to establish that the offer and proposed transferee are bona fide.

  Right of First Refusal.
  ----------------------

Company's Right. Pursuant to this Agreement, the Company and its assignees shall
have the right of first  refusal (the "Right of First  Refusal") to purchase all
or any part of the Holder's  Offered Stock,  if the Company gives written notice
(the  "Company's  Exercise  Notice") of the exercise of such right to the Holder
within thirty (30) days (the "Company's  Refusal  Period") after the date of the
Holder's Notice to the Company.

Purchase Price.  The purchase price for the Offered Stock to be purchased by the
Company  exercising  its Right of First Refusal under this Agreement will be the
Offered Price, but will be payable as set forth in Section 3.2(c) hereof. If the
Offered Price includes  consideration other than cash, the cash equivalent value
of the non-cash  consideration  will be  determined by the Board of Directors of
the Company in good faith, which  determination will be binding upon the Company
and the Holder absent fraud or error.

Payment.  Payment of the purchase  price for the Offered Stock  purchased by the
Company exercising its Right of First Refusal will be made within seven (7) days
after the date of the Company's  Exercise Notice.  Payment of the purchase price
will be made,  at the option of the Company (i) in cash (by  cashier's  check or
wire  transfer),  (ii) by  cancellation  of all or a portion of any  outstanding
indebtedness  of the Holder to the  Company or (iii) by any  combination  of the
foregoing.

Rights as a Shareholder.  If the Company or its assignees  exercise the Right of
First  Refusal to purchase  all of the Offered  Stock,  then,  upon the date the
notice of such exercise is given by the Company, the Holder will have no further
rights as a holder of such Offered  Stock with respect to which a Right of First
Refusal has been exercised, except the right to receive payment for such Offered
Stock from the Company in accordance with the terms of this  Agreement,  and the
Holder will forthwith cause all certificate(s)  evidencing such Offered Stock to
be surrendered to the Company for cancellation.

Holder's  Right To  Transfer.  If the Company has not elected to purchase all of
the Offered  Stock,  then,  the Holder may transfer any such  remaining  Offered
Stock permitted to be sold by the Holder,  to any person named as a purchaser or
other  transferee  in the Holder's  Notice,  at the Offered Price or at a higher
price,  provided that such transfer (i) is  consummated  within ninety (90) days
after the date of the  Holder's  Notice and (ii) is in  accordance  with all the



<PAGE>



terms of this Agreement.  If the Offered Stock is not so transferred during such
ninety (90) day period,  then the Holder may not  transfer  any of such  Offered
Stock without complying again in full with the provisions of this Agreement.

Legend.  All  certificates  representing  any  shares of Registrable  Securities
shall have endorsed thereon the following legend:

               THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A RIGHT
         OF FIRST REFUSAL IN FAVOR OF THE  CORPORATION OR ITS ASSIGNEE SET FORTH
         IN AN AGREEMENT  BETWEEN THE CORPORATION AND THE REGISTERED  HOLDER, OR
         HIS OR HER  PREDECESSOR IN INTEREST,  A COPY OF WHICH IS ON FILE AT THE
         PRINCIPAL OFFICE OF THE CORPORATION.

The right to  Holder's  Notice  and Right of First  Refusal  granted  under this
Section 3 shall  expire  upon the  closing of the  earlier of (i) the first firm
commitment  underwritten  offering  of the  Company's  securities  to the public
pursuant to an effective  registration  statement  under the  Securities Act and
(ii) a statutory share exchange, consolidation or merger of this Company with or
into  any  other   corporation  or  corporations   (other  than  a  wholly-owned
subsidiary),  or the sale, transfer or other disposition of all or substantially
all of the assets of this  Company or the  consummation  of any  transaction  or
series of  related  transactions  which  results in the  Company's  shareholders
immediately  prior to such  transaction  not  holding at least a majority of the
voting power of the surviving or continuing entity.

  Information Rights.
  ------------------

Annual Financial Information. The Company shall deliver to each Holder within 90
days after the end of each fiscal year,  income,  shareholders'  equity and cash
flow statements of the Company for such year, and a balance sheet of the Company
as of the end of such year, such year-end  financial reports to be in reasonable
detail,  prepared in accordance with generally  accepted  accounting  principles
("GAAP"),  and certified by independent  public accountants of national standing
selected by the Company's Board of Directors.

Quarterly Financial Information. The Company shall deliver to each Holder within
45 days after the end of each  quarter  (except  the last  quarter of the fiscal
year), an unaudited quarterly report including a balance sheet, income statement
and cash flow  analysis  prepared in  accordance  with GAAP (except for required
footnotes),  all in reasonable  detail and signed,  subject to changes resulting
from year-end audit  adjustments,  by the principal  financial  officer or chief
executive officer of the Company.

Monthly  Financial  Information.  The Company shall deliver to each Holder of at
least 1,500,000  shares of Conversion  Stock  converted or convertible  from the
Series A Preferred  Stock or Series A-1  Preferred  Stock (as  adjusted  for any
stock split, stock dividend,  recapitalization,  or similar event) (a "Qualified
Series A-1 Holder") and each  Qualified  Series B Holder within thirty (30) days



<PAGE>



after the monthly  accounting  period of the Company an unaudited monthly report
including a balance sheet, income statement and cash flow statement.

Annual  Financial  Plan.  Prior to the end of the fiscal year, the Company shall
provide each Qualified Series A-1 Holder and each Qualified Series B Holder with
the Company's  annual  financial  plan and operating  budget for the next fiscal
year as approved by the Company's Board of Directors.

Inspection.  The  Company  shall  permit  any  Qualified  Series  A-1 Holder and
Qualified Series B Holder,  at such Holder's  expense,  to visit and inspect the
Company's properties, to examine its books of account and records and to discuss
the Company's  affairs,  finances and accounts  with its  officers,  all at such
reasonable times as may be requested by the Holder; provided,  however, that the
Company shall not be obligated pursuant to this section to provide access to any
information  which it  reasonably  considers  to be a trade  secret  or  similar
confidential information.

Termination of Information  Covenants and  Confidentiality  of Information.  The
covenants  of the Company set forth in this  section  shall  terminate as to all
Holders and be of no further  force or effect (i) upon the  consummation  by the
Company  of the IPO (as  defined  in  subsection  1.2  above),  or (ii) when the
Company first becomes subject to the periodic reporting  requirements of Section
12(g) or 15(d) of the Exchange  Act,  whichever  event shall first  occur.  Each
Holder  agrees that it will keep  confidential  and will not disclose or divulge
any confidential, proprietary or secret information which such Holder may obtain
from the Company,  and which the Company has prominently marked  "confidential,"
"proprietary" or "secret," pursuant to financial  statements,  reports and other
materials  submitted  by  the  Company  as  required   hereunder,   unless  such
information  is or  becomes  known to the  Holder  from a source  other than the
Company  without  violation  of any  rights  of the  Company,  or is or  becomes
publicly  known, or unless the Company gives its written consent to the Holder's
release  of such  information,  except  that no such  written  consent  shall be
required  (and the Holder  shall be free to  release  such  information  to such
recipient)  if such  information  is to be  provided  to a  Holder's  counsel or
accountant (and the provision of such information is directly necessary in order
for such recipient to provide services to Holder), or to an officer, director or
partner of a Holder,  provided that the Holder shall inform the recipient of the
confidential nature of such information, and such recipient agrees in writing in
advance of disclosure to treat the information as confidential.

         Amendment, Restatement  and  Waiver of  Rights of Prior Rights Holders;
Addition of Parties.

 Amendment,  Restatement of Prior Rights Agreement;  Approval of Grant of Rights
to Investors. Pursuant to Section 6.5 of the Prior Rights Agreement, the parties
to this  Agreement,  among whom are  holders of a majority  of the  "Registrable
Securities"  as defined by the Prior Rights  Agreement,  on behalf of themselves
and  all  other  holders  of  Registrable  Securities  under  the  Prior  Rights
Agreement,  hereby  agree that (i) the Prior  Rights  Agreement  is amended  and
restated in its entirety by this Agreement, (ii) the registration rights, rights



<PAGE>



of first refusal and obligations of the holders of Registrable  Securities under
the Prior Rights  Agreement are exclusively as set forth in this Agreement,  and
(iii) the Company is authorized to enter into this  Agreement  with Tenera,  SVB
and the  Investors,  grant the Investors the  registration  rights and rights of
first refusal and first offer set forth in this Agreement,  and grant Tenera and
SVB the  registration  rights set forth in Section  1.3 of this  Agreement.  The
parties to this Agreement agree that any parties added to the Purchase Agreement
subsequent  to the  date of this  Agreement  can be  added  as  parties  to this
Agreement  with all of the  rights  and  obligations  of the  Investors  without
further approval by the parties to this Agreement.

Waiver of Right of First  Refusal.  Pursuant to Section 6.5 of the Prior  Rights
Agreement,  the  parties  to this  Agreement,  among  whom are the  holders of a
majority of "Registrable  Securities" as defined in the Prior Rights  Agreement,
on behalf of themselves  and all other holders of such  Registrable  Securities,
waive any and all  rights  granted  pursuant  to  Section 2 of the Prior  Rights
Agreement  with respect to the sale and issuance of up to  thirty-eight  million
(38,000,000) shares of Series B Preferred Stock to the Investors pursuant to the
Purchase  Agreement  in  closings  on or after the date hereof and the shares of
Series C Preferred  stock to Tenera in exchange for tender to the Company of the
Tenera Warrant.

  Miscellaneous.
  -------------

Governing Law. This  Agreement  shall be governed in all respects by the laws of
the  State of  California  as  applied  to  transactions  taking  place  between
California residents and wholly within the State of California.

Survival. The representations,  warranties, covenants and agreements made herein
shall survive any investigation  made by any party hereto and the closing of the
transactions contemplated hereby.

Successors  and Assigns.  Except as otherwise  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.

Determination  of  Share  Amounts.   To  determine  the  number  of  Registrable
Securities  held by a Holder for purposes of this Agreement,  including  without
limitation Sections 1.2, 1.3(b), 1.10, 1.13, 2.1(f), 4, and 6.5, all Registrable
Securities  held by an  Affiliate  of the  Holder  shall be deemed  held by such
Holder.

Entire  Agreement;  Amendment.  This Agreement  constitutes  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 party in any manner
by any warranties, representations or covenants except as specifically set forth
herein. With the written consent of the record or beneficial holders of at least
a majority of the Registrable Securities held by the Purchasers, the obligations
of the Company and the rights of the Holders under this  Agreement may be waived
(either  generally  or  in  a  particular  instance,   either  retroactively  or
prospectively,  and either for a specified period of time or indefinitely),  and
with the same consent the Company, when authorized by resolution of its Board of



<PAGE>



Directors,  may enter into a  supplementary  agreement for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
of this Agreement.  Notwithstanding the foregoing,  the rights of the holders of
the Series C Preferred  Stock under Sections 1.3, 1.5, 1.6, 1.7 and 4 may not be
modified in a manner  materially  more adverse to such rights than to the rights
of the holders of the Series B Preferred  Stock under the same sections  without
the  consent  of holders of a  majority  of the  outstanding  shares of Series C
Preferred Stock. Upon the effectuation of each such waiver,  consent,  agreement
or amendment or  modification,  the Company shall  promptly give written  notice
thereof  to the  record  holders  of the  Registrable  Securities  who  have not
previously consented thereto in writing.  This Agreement or any provision hereof
may be changed, waived,  discharged or terminated only by a statement in writing
signed by the party against which enforcement of the change,  waiver,  discharge
or termination is sought, except to the extent provided in this Section 6.5.

Notices,  etc.  All  notices  and other  communications  required  or  permitted
hereunder shall be in writing and shall be delivered personally,  via facsimile,
mailed by first  class  mail,  postage  prepaid,  or  delivered  by  courier  or
overnight  delivery,  addressed (a) at such Holder's address as set forth in the
Company's  records,  or at such other address or facsimile  number as the Holder
shall have  furnished  to the Company in writing or (b) if to the Company at One
Market  Street,  Steuart  Tower,  Suite 700, San  Francisco,  CA 94105,  or such
address as the Company shall have  furnished to the Holder in writing.  All such
notices,  requests and other  communications will (i) if delivered personally or
by express  courier to the address as provided in this Section,  be deemed given
upon delivery,  or (ii) if delivered by facsimile  transmission to the facsimile
number as provided in this Section, be deemed given upon receipt.

Delays or Omissions.  Except as expressly  provided herein, no delay or omission
to exercise any right,  power or remedy accruing to any Holder,  upon any breach
or default of the Company  under this  Agreement,  shall  impair any such right,
power or remedy of such Holder nor shall it be  construed  to be a waiver of any
such  breach or default,  or an  acquiescence  therein,  or of or in any similar
breach or  default  thereafter  occurring;  nor shall any  waiver of any  single
breach or default be deemed a waiver of any other breach or default  theretofore
or thereafter occurring.  Any waiver, permit, consent or approval of any kind or
character  on the  part of any  Holder  of any  breach  or  default  under  this
Agreement,  or any  waiver  on the  part  of any  Holder  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 any holder shall be cumulative
and not alternative.

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.

Severability.  If any provision of this Agreement,  or the application  thereof,
shall  for any  reason  and to any  extent  be  invalid  or  unenforceable,  the
remainder of this  Agreement  and  application  of such  provision to persons or
circumstances shall be interpreted so as best to reasonably effect the intent of
the  parties  hereto;  the  parties  further  agree  to  replace  such  void  or
unenforceable provision of this Agreement with a valid and enforceable provision



<PAGE>



which will  achieve to the extent  possible,  the  economic,  business and other
purposes of the void or unenforceable provision.

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



<PAGE>



         The foregoing  agreement is hereby  executed as of the date first above
written.

                                  "COMPANY"

                                  SPEAR TECHNOLOGIES, INC.

                                  By:___________________________________________
                                  Title:________________________________________










    (Company Signature Page to Second Amended and Restated Rights Agreement)



<PAGE>



                          COUNTERPART SIGNATURE PAGE TO

                            SPEAR TECHNOLOGIES, INC.

                  SECOND AMENDED AND RESTATED RIGHTS AGREEMENT





                                           "FOUNDER"

                                           If you are an individual, print your
                                         name and sign below.




                                           -------------------------------------
                                           Name (Please Print)




                                           -------------------------------------
                                           Signature



<PAGE>



                          COUNTERPART SIGNATURE PAGE TO

                            SPEAR TECHNOLOGIES, INC.

                  SECOND AMENDED AND RESTATED RIGHTS AGREEMENT





                                           "PRIOR RIGHTS HOLDER"



                                            If you are an individual, print your
                                         name and sign below.




                                           -------------------------------------
                                           Name (Please Print)




                                           -------------------------------------
                                           Signature

                                           If you  are  signing  on behalf of an
                                       entity,  please print  the  name  of  the
                                       entity  and  sign  below, indicating your
                                       title.



                                           -------------------------------------
                                           Name (Please Print)




                                           -------------------------------------
                                           Signature


                                           -------------------------------------
                                           Title



<PAGE>



                          COUNTERPART SIGNATURE PAGE TO

                            SPEAR TECHNOLOGIES, INC.

                  SECOND AMENDED AND RESTATED RIGHTS AGREEMENT





                                           "INVESTOR"


                                            If you are an individual, print your
                                         name and sign below.


                                           -------------------------------------
                                           Name (Please Print)




                                           -------------------------------------
                                           Signature

                                           If you  are  signing  on behalf of an
                                       entity,  please print  the  name  of  the
                                       entity  and  sign  below, indicating your
                                       title.



                                           -------------------------------------
                                           Name (Please Print)




                                           -------------------------------------
                                           Signature


                                           -------------------------------------
                                           Title



<PAGE>



                          COUNTERPART SIGNATURE PAGE TO

                            SPEAR TECHNOLOGIES, INC.

                  SECOND AMENDED AND RESTATED RIGHTS AGREEMENT







                                  "TENERA"


                                  TENERA, INC.

                                  By:___________________________________________

                                  Title:________________________________________






                                  "SVB"


                                  SILICON VALLEY BANK

                                  By:___________________________________________

                                  Title:________________________________________



<PAGE>



                                    Exhibit C
                             SCHEDULE OF EXCEPTIONS