Document:

<PAGE>

                                                                     EXHIBIT 4.1

                          THIRD AMENDED AND RESTATED

                          INVESTORS' RIGHTS AGREEMENT

                          MOTIVE COMMUNICATIONS, INC.

                               JANUARY 28, 2000
<PAGE>

                               TABLE OF CONTENTS
                               -----------------

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>                                                                         <C>
1.   Registration Rights...................................................   2
     1.1   Definitions.....................................................   2
     1.2   Request for Registration........................................   3
     1.3   Company Registration............................................   5
     1.4   Obligations of the Company......................................   5
     1.5   Furnish Information.............................................   6
     1.6   Expenses of Demand Registration.................................   7
     1.7   Expenses of Company Registration................................   7
     1.8   Underwriting Requirements.......................................   7
     1.9   Delay of Registration...........................................   8
     1.10  Indemnification.................................................   8
     1.11  Reports Under Securities Exchange Act of 1934...................  10
     1.12  Form S-3 Registration...........................................  10
     1.13  Assignment of Registration Rights...............................  11
     1.14  "Market Stand-Off" Agreement Rights.............................  12
     1.15  Limitations on Subsequent Registration Rights...................  12
     1.16  Termination of Registration Rights..............................  13

2.   Covenants of the Company..............................................  13
     2.1   Delivery of Financial Statements................................  13
     2.2   Inspection......................................................  14
     2.3   Termination of Information and Inspection Covenants.............  14
     2.4   Key-Man Insurance...............................................  14
     2.5   Right of First Offer............................................  14
     2.6   Assignments of Rights of First Refusal..........................  16
     2.7   Right to Participate in Initial Public Offering.................  16
     2.8   Voting Provisions...............................................  16

3.   Miscellaneous.........................................................  19
     3.1   Successors and Assigns..........................................  19
     3.2   Governing Law...................................................  20
     3.3   Counterparts....................................................  20
     3.4   Titles and Subtitles............................................  20
     3.5   Notices.........................................................  20
     3.6   Expenses........................................................  20
     3.7   Amendments and Waivers..........................................  20
     3.8   Severability....................................................  20
     3.9   Aggregation of Stock............................................  20
     3.10  Entire Agreement................................................  21

Schedule A  Schedule of Investors
</TABLE>
<PAGE>

                          THIRD AMENDED AND RESTATED
                          INVESTORS' RIGHTS AGREEMENT

          THIS THIRD AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT (this
"Agreement") is made as of January 28, 2000, by and among Motive Communications,
Inc., a Delaware corporation (the "Company"), and the investors listed on
Schedule A hereto, each of which is herein referred to as an "Investor" and the
founders listed on Schedule B hereto, each of which is herein referred to as a
"Founder".

                                   RECITALS
                                   --------

          WHEREAS, certain of the Investors (the "Existing Investors") have
heretofore purchased Series A Preferred Stock from the Company pursuant to that
certain Series A Preferred Stock Purchase Agreement dated June 6, 1997, Series B
Preferred Stock from the Company pursuant to that certain Series B Preferred
Stock Purchase Agreement dated July 15, 1998  and Series C Preferred Stock from
the Company pursuant to that certain Series C Preferred Stock Purchase Agreement
dated June 24, 1999 .

          WHEREAS, the Existing Investors possess registration rights,
information rights and other rights (the "Rights") pursuant to that certain
Second Amended and Restated Investors' Rights Agreement dated as of June 24,
1999 (the "Prior Agreement").

          WHEREAS, the Existing Investors are holders of at least a majority of
the Registrable Securities (as defined in the Prior Agreement) and desire to
amend and restate the Prior Agreement as allowed in Section 3.7 of the Prior
Agreement, to read as set forth herein so that all Rights of the Existing
Investors and the Investors shall, upon the effectiveness of this Agreement, be
consolidated and restated herein and the provisions of the Prior Agreement shall
be of no further force or effect.

          WHEREAS, the Company has entered into as Agreement and Plan of
Reorganization by and among the Company and Ventix Systems Inc. dated January
10, 2000 (the "Merger Agreement") which provides that as condition to Closing,
this Agreement must be executed and delivered by certain existing Investors
holding at least a majority of the Registrable Securities and the Company.

          NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:

          1.   Registration Rights.  The Company covenants and agrees as
               -------------------
follows:

          1.1  Definitions.  For purposes of this Section 1:
               -----------
          (a)  The term "Act" means the Securities Act of 1933, as amended.

          (b)  The term "Form S-3" means such form under the Act as in effect on
the date hereof or any registration form under the Act subsequently adopted by
the SEC (as defined

                                       2
<PAGE>

below) that permits inclusion or incorporation of substantial information by
reference to other documents filed by the Company with the SEC.

          (c)  The term "Holder" means any person owning or having the right to
acquire Registrable Securities (as defined below) or any assignee thereof in
accordance with Section 1.13 hereof.

          (d)  The term "1934 Act" shall mean the Securities Exchange Act of
1934, as amended.

          (e)  The term "register," "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Act, and the declaration or ordering of
effectiveness of such registration statement or document.

          (f)  The term "Registrable Securities" means (i) the Common Stock
issuable or issued upon conversion of the Series A Preferred Stock, the Series B
Preferred Stock, the Series C Preferred Stock or the Series D Preferred Stock,
(ii) the shares of Common Stock issued to the Founders; provided, however, that
such shares of Common Stock shall not be deemed Registrable Securities and the
aforementioned individuals shall not be deemed Holders for the purposes of
Sections 1.2, 1.12, 1.15 and 3.7, and (iii) any Common Stock of the Company
issued as (or issuable upon the conversion or exercise of any warrant, right or
other security that is issued as) a dividend or other distribution with respect
to, or in exchange for, or in replacement of the shares referenced in (i) and
(ii) above, excluding in all cases, however, any Registrable Securities sold by
a person in a transaction in which his rights under this Section 1 are not
assigned.

          (g)  The number of shares of "Registrable Securities then outstanding"
shall be determined by the number of shares of Common Stock outstanding that
are, and the number of shares of Common Stock issuable pursuant to then
exercisable or convertible securities that are, Registrable Securities.

          (h)  The term "SEC" shall mean the Securities and Exchange Commission.

          1.2  Request for Registration.
               ------------------------

          (a)  If the Company shall receive at any time after the earlier of (i)
June 24, 2002, or (ii) three (3) months after the effective date of the first
registration statement for a public offering of securities of the Company (other
than a registration statement relating either to the sale of securities to
employees of the Company pursuant to a stock option, stock purchase or similar
plan or a SEC Rule 145 transaction), a written request from the Holders of two-
thirds of the Registrable Securities then outstanding that the Company file a
registration statement under the Act covering the registration of at least forty
percent (40%) of the Registrable Securities then outstanding (or a lesser
percent if the anticipated aggregate offering price, net of underwriting
discounts and commissions, would exceed $15,000,000), then the Company shall:

                                       3
<PAGE>

               (i)  within ten (10) days of the receipt thereof, give written
notice of such request to all Holders; and

               (ii) effect as soon as practicable, and in any event within sixty
(60) days of the receipt of such request, the registration under the Act of all
Registrable Securities that the Holders request to be registered, subject to the
limitations of subsection 1.2(b), within twenty (20) days of the mailing of such
notice by the Company in accordance with Section 3.5.

          (b)  If the Holders initiating the registration request hereunder
("Initiating Holders") intend to distribute the Registrable Securities covered
by their request by means of an underwriting, they shall so advise the Company
as a part of their request made pursuant to subsection 1.2(a) and the Company
shall include such information in the written notice referred to in subsection
1.2(a). The underwriter will be selected by a majority in interest of the
Initiating Holders and shall be reasonably acceptable to the Company. In such
event, the right of any Holder to include his Registrable Securities in such
registration shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting (unless otherwise mutually agreed by a majority in interest of the
Initiating Holders and such Holder) to the extent provided herein. All Holders
proposing to distribute their securities through such underwriting shall
(together with the Company as provided in subsection 1.4(e)) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting. Notwithstanding any other provision of this
Section 1.2, if the underwriter advises the Initiating Holders in writing that
marketing factors require a limitation of the number of shares to be
underwritten, then the Initiating Holders shall so advise all Holders of
Registrable Securities that would otherwise be underwritten pursuant hereto, and
the number of shares of Registrable Securities that may be included in the
underwriting shall be allocated among all Holders thereof, including the
Initiating Holders, in proportion (as nearly as practicable) to the amount of
Registrable Securities of the Company owned by each Holder; provided, however,
that the number of shares of Registrable Securities to be included in such
underwriting shall not be reduced unless all other securities are first entirely
excluded from the underwriting.

          (c)  Notwithstanding the foregoing, if the Company shall furnish to
Holders requesting a registration statement pursuant to this Section 1.2, a
certificate signed by the Chief Executive Officer of the Company stating that in
the good faith judgment of the Board of Directors of the Company it would be
seriously detrimental to the Company and its stockholders for such registration
statement to be filed and it is therefore essential to defer the filing of such
registration statement, the Company shall have the right to defer taking action
with respect to such filing for a period of not more than one hundred twenty
(120) days after receipt of the request of the Initiating Holders; provided,
however, that the Company may not utilize this right more than once in any
twelve (12) month period.

          (d)  In addition, the Company shall not be obligated to effect, or to
take any action to effect, any registration pursuant to this Section 1.2:

                                       4
<PAGE>

               (i)   After the Company has effected two (2) registrations
pursuant to this Section 1.2 and such registrations have been declared or
ordered effective;

               (ii)  Within twelve (12) months of the effective date of a
registration statement filed pursuant to this Section 1.2; or

               (iii) During the period starting with the date sixty (60) days
prior to the Company's good faith estimate of the date of filing of, and ending
on a date one hundred eighty (180) days after the effective date of, a
registration filed pursuant to Section 1.3 or Section 1.12 hereof; provided that
the Company is actively employing in good faith all reasonable efforts to cause
such registration statement to become effective.

          1.3  Company Registration.  If (but without any obligation to do so)
               --------------------
the Company proposes to register (including for this purpose a registration
effected by the Company for stockholders other than the Holders) any of its
stock or other securities under the Act in connection with the public offering
of such securities solely for cash (other than a registration pursuant to
Section 1.2, a registration relating solely to the sale of securities to
participants in a Company stock plan, a registration on any form that does not
include substantially the same information as would be required to be included
in a registration statement covering the sale of the Registrable Securities or a
registration in which the only Common Stock being registered is Common Stock
issuable upon conversion of debt securities that are also being registered), the
Company shall, at such time, promptly give each Holder written notice of such
registration. Upon the written request of each Holder given within twenty (20)
days after mailing of such notice by the Company in accordance with Section 3.5,
the Company shall, subject to the provisions of Section 1.8, cause to be
registered under the Act all of the Registrable Securities that each such Holder
has requested to be registered.

          1.4  Obligations of the Company.  Whenever required under this
               --------------------------
Section 1 to effect the registration of any Registrable Securities, the Company
shall, as expeditiously as reasonably possible:

          (a)  Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective, and, upon the request of the Holders
of a majority of the Registrable Securities registered thereunder, keep such
registration statement effective for a period of up to one hundred twenty (120)
days or until the distribution contemplated in the Registration Statement has
been completed.

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

          (c)  Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Act, and such other

                                       5
<PAGE>

documents as they may reasonably request in order to facilitate the disposition
of Registrable Securities owned by them.

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

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

          (f)  Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the 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.

          (g)  Cause all such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange on which similar securities
issued by the Company are then listed.

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

          1.5  Furnish Information.
               -------------------

          (a)  It shall be a condition precedent to the obligations of the
Company to take any action pursuant to this Section 1 with respect to the
Registrable Securities of any selling Holder that such Holder shall furnish to
the Company such information regarding itself, the Registrable Securities held
by it, and the intended method of disposition of such securities as shall be
required to effect the registration of such Holder's Registrable Securities.

          (b)  The Company shall have no obligation with respect to any
registration requested pursuant to Section 1.2 or Section 1.12 if, due to the
operation of subsection 1.5(a), the number of shares or the anticipated
aggregate offering price of the Registrable Securities to be included in the
registration does not equal or exceed the number of shares or the anticipated
aggregate offering price required to originally trigger the Company's obligation
to initiate such registration as specified in subsection 1.2(a) or subsection
1.12(b)(2), whichever is applicable.

          1.6  Expenses of Demand Registration.  All expenses other than
               -------------------------------
underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Section 1.2, including
(without limitation) all registration, filing and qualification

                                       6
<PAGE>

fees, printers' and accounting fees and fees and disbursements of counsel for
the Company shall be borne by the Company; provided, however, that the Company
shall not be required to pay for any expenses of any registration proceeding
begun pursuant to Section 1.2 if the registration request is subsequently
withdrawn at the request of the Holders of a majority of the Registrable
Securities to be registered (in which case all participating Holders shall bear
such expenses), unless the Holders of a majority of the Registrable Securities
agree to forfeit their right to one demand registration pursuant to Section 1.2.
All other expenses of any registration proceeding pursuant to Section 1.2,
including the expenses of counsel for the selling Holders, shall be borne pro-
rata by the selling Holders.

          1.7  Expenses of Company Registration.  The Company shall bear and
               --------------------------------
pay all expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
pursuant to Section 1.3 for each Holder (which right may be assigned as provided
in Section 1.13), including (without limitation) all registration, filing, and
qualification fees, and printers and accounting fees relating or apportionable
thereto, but excluding underwriting discounts and commissions relating to
Registrable Securities and the fees and disbursements of counsel for the selling
Holders.

          1.8  Underwriting Requirements.  In connection with any offering
               -------------------------
involving an underwriting of shares of the Company's capital stock, the Company
shall not be required under Section 1.3 to include any Holder's securities in
such underwriting unless such Holder accepts the terms of the underwriting as
agreed upon between the Company and the underwriters selected by it (or by other
persons entitled to select the underwriters), and then only in such quantity as
the underwriters determine in their sole discretion will not jeopardize the
success of the offering by the Company. If the total amount of securities,
including Registrable Securities, requested by stockholders to be included in
such offering exceeds the amount of securities sold other than by the Company
that the underwriters determine in their sole discretion is compatible with the
success of the offering, then the Company shall be required to include in the
offering only that number of such securities, including Registrable Securities,
that the underwriters determine in their sole discretion will not jeopardize the
success of the offering (the securities so included to be apportioned pro rata
among the selling stockholders according to the total amount of securities
entitled to be included therein owned by each selling stockholder or in such
other proportions as shall mutually be agreed to by such selling stockholders)
but in no event shall (i) the amount of securities of the selling Holders
included in the offering be reduced below twenty-five percent (25%) 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 selling
Holders may be excluded if the underwriters make the determination described
above and no other stockholder's securities are included or (ii) notwithstanding
(i) above, any shares being sold by a stockholder exercising a demand
registration right granted in Section 1.2 or a registration right similar to
that granted in Section 1.2 be excluded from such offering. For purposes of the
preceding parenthetical concerning apportionment, for any selling stockholder
that is a holder of Registrable Securities and that is a partnership or
corporation, the partners, retired partners and stockholders of such holder, or
the estates and family members of any such partners and retired partners and any
trusts for the benefit of any of the foregoing persons shall be deemed to be a
single "selling stockholder," and any pro-rata reduction with respect to such
"selling stockholder" shall be based upon the aggregate amount of shares
carrying registration rights

                                       7
<PAGE>

owned by all entities and individuals included in such "selling stockholder," as
defined in this sentence.

          1.9   Delay of Registration.  No Holder shall have any right to obtain
                ---------------------
or seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 1.

          1.10  Indemnification. In the event any Registrable Securities are
                ---------------
included in a registration statement under this Section 1:

          (a)   To the extent permitted by law, the Company will indemnify and
hold harmless each Holder, any underwriter (as defined in the Act) for such
Holder, and each person, if any, who controls such Holder or underwriter within
the meaning of the Act or the 1934 Act, against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject under the Act,
the 1934 Act or other federal or state law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or are
based upon any of the following statements, omissions or violations
(collectively, a "Violation"): (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Act, the 1934 Act, any state securities law or
any rule or regulation promulgated under the Act, the 1934 Act or any state
securities law; and the Company will pay to each such Holder, underwriter or
controlling person, as incurred, any legal or other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the indemnity agreement
contained in this subsection 1.10(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable in any such case
for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation that occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by any such Holder, underwriter or controlling person.

          (b)   To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Act, any underwriter, any other
Holder selling securities in such registration statement and any controlling
person of any such underwriter or other Holder, against any losses, claims,
damages or liabilities (joint or several) to which any of the foregoing persons
may become subject under the Act, the 1934 Act or other federal or state law,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished by such Holder expressly for
use in connection with such registration; and each such Holder will pay, as
incurred, any legal or other expenses reasonably incurred by any person intended
to be indemnified pursuant to this subsection 1.10(b)

                                       8
<PAGE>

in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this subsection 1.10(b) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Holder (which consent shall not be unreasonably
withheld); provided that in no event shall any indemnity under this subsection
1.10(b) exceed the net proceeds from the offering received by such Holder.

          (c)   Promptly after receipt by an indemnified party under this
Section 1.10 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.10, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties that may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
1.10, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 1.10.

          (d)   If the indemnification provided for in this Section 1.10 is held
by a court of competent jurisdiction to be unavailable to an indemnified party
with respect to any loss, liability, claim, damage or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.

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

                                       9
<PAGE>

          (f)   The obligations of the Company and Holders under this Section
1.10 shall survive the completion of any offering of Registrable Securities in a
registration statement under this Section 1, and otherwise.

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

          (a)   make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times after the effective date of
the first registration statement filed by the Company for the offering of its
securities to the general public;

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

          (c)   file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act; and

          (d)   furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144 (at
any time after ninety (90) days after the effective date of the first
registration statement filed by the Company), the Act and the 1934 Act (at any
time after it has become subject to such reporting requirements), or that it
qualifies as a registrant whose securities may be resold pursuant to Form S-3
(at any time after it so qualifies), (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC that permits the
selling of any such securities without registration or pursuant to such form.

          1.12  Form S-3 Registration.  In case the Company shall receive a
                ---------------------
written request from the Holders of twenty-five percent (25%) of the Registrable
Securities then outstanding that the Company effect a registration on Form S-3
and any related qualification or compliance with respect to all or a part of the
Registrable Securities owned by such Holder or Holders, the Company will:

          (a)   promptly give written notice of the proposed registration, and
any related qualification or compliance, to all other Holders; and

          (b)   as soon as practicable, effect such registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Holder's or
Holders' Registrable Securities as are specified in such request, together with
all or such portion of the Registrable Securities of any

                                       10
<PAGE>

other Holder or Holders joining in such request as are specified in a written
request given within fifteen (15) days after receipt of such written notice from
the Company; provided, however, that the Company shall not be obligated to
effect any such registration, qualification or compliance, pursuant to this
section 1.12: (1) if Form S-3 is not available for such offering by the Holders;
(2) if the Holders, together with the holders of any other securities of the
Company entitled to inclusion in such registration, propose to sell Registrable
Securities and such other securities (if any) at an aggregate price to the
public (net of any underwriters' discounts or commissions) of less than
$500,000; (3) if the Company shall furnish to the Holders a certificate signed
by the President of the Company stating that in the good faith judgment of the
Board of Directors of the Company, it would be seriously detrimental to the
Company and its stockholders for such Form S-3 Registration to be effected at
such time, in which event the Company shall have the right to defer the filing
of the Form S-3 registration statement for a period of not more than ninety (90)
days after receipt of the request of the Holder or Holders under this Section
1.12; provided, however, that the Company shall not utilize this right more than
once in any twelve (12) month period; (4) if the Company has, within the twelve
(12) month period preceding the date of such request, already effected one (1)
registration on Form S-3 for the Holders pursuant to this Section 1.12, or if
the Company has already effected a total of three (3) registrations on Form S-3
for the Holders pursuant to this Section 1.12; or (5) in any particular
jurisdiction in which the Company would be required to qualify to do business or
to execute a general consent to service of process in effecting such
registration, qualification or compliance.

          (c)   Subject to the foregoing, the Company shall file a registration
statement covering the Registrable Securities and other securities so requested
to be registered as soon as practicable after receipt of the request or requests
of the Holders. All expenses incurred in connection with a registration
requested pursuant to Section 1.12, including (without limitation) all
registration, filing, qualification, printer's and accounting fees and the
reasonable fees and disbursements of counsel for the selling Holder or Holders
and counsel for the Company, but excluding any underwriters' discounts or
commissions associated with Registrable Securities, shall be borne by the
Company. Registrations effected pursuant to this Section 1.12 shall not be
counted as demands for registration or registrations effected pursuant to
Sections 1.2 or 1.3, respectively.

          1.13  Assignment of Registration Rights.  The rights to cause the
                ---------------------------------
Company to register Registrable Securities pursuant to this Section 1 may be
assigned (but only with all related obligations) by a Holder to a transferee or
assignee of such securities who, after such assignment or transfer, holds at
least 750,000 shares of Registrable Securities (subject to appropriate
adjustment for stock splits, stock dividends, combinations and other
recapitalizations), provided: (a) the Company is, within a reasonable time after
such transfer, furnished with written notice of the name and address of such
transferee or assignee and the securities with respect to which such
registration rights are being assigned; (b) such transferee or assignee agrees
in writing to be bound by and subject to the terms and conditions of this
Agreement, including without limitation the provisions of Section 1.14 below;
and (c) such assignment shall be effective only if immediately following such
transfer the further disposition of such securities by the transferee or
assignee is restricted under the Act. For the purposes of determining the number
of shares of Registrable Securities held by a transferee or assignee, the
holdings of transferees and assignees of a partnership who are partners or
retired partners of such

                                       11
<PAGE>

partnership (including spouses and ancestors, lineal descendants and siblings of
such partners or spouses who acquire Registrable Securities by gift, will or
intestate succession) or of an LLC who are members of such LLC shall be
aggregated together and with the partnership; provided that all assignees and
transferees who would not qualify individually for assignment of registration
rights shall have a single attorney-in-fact for the purpose of exercising any
rights, receiving notices or taking any action under this Section 1.

          1.14  "Market Stand-Off" Agreement Rights.  Each Holder hereby agrees
                -----------------------------------
that, during the period of duration specified by the Company and an underwriter
of Common Stock or other securities of the Company, following the effective date
of a registration statement of the Company filed under the Act, it shall not, to
the extent requested by the Company and such underwriter, directly or indirectly
sell, offer to sell, contract to sell (including, without limitation, any short
sale), grant any option to purchase or otherwise transfer or dispose of (other
than to donees who agree to be similarly bound) any Registrable Securities of
the Company held by it at any time during such period except Common Stock
included in such registration; provided, however, that:

          (a)   such agreement shall be applicable only to the first such
registration statement of the Company that covers Common Stock (or other
securities) to be sold on its behalf to the public in an underwritten offering;
and

          (b)   such market stand-off time period shall not exceed one hundred
eighty (180) days.

          In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of each
Holder (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.

          1.15  Limitations on Subsequent Registration Rights.  From and after
                ---------------------------------------------
the date of this Agreement, the Company shall not, without the prior written
consent of the Holders of a majority of the outstanding Registrable Securities,
enter into any agreement with any holder or prospective holder of any securities
of the Company which would allow such holder or prospective holder (a) to
include such securities in any registration filed under Section 1.2 hereof,
unless under the terms of such agreement, such holder or prospective holder may
include such securities in any such registration only to the extent that the
inclusion of its securities will not reduce the amount of the Registrable
Securities of the Holders which is included or (b) to make a demand registration
which could result in such registration statement being declared effective prior
to the earlier of either of the dates set forth in subsection 1.2(a) or within
one hundred twenty (120) days of the effective date of any registration effected
pursuant to Section 1.2

          1.16  Termination of Registration Rights. No Holder shall be entitled
                ----------------------------------
to exercise any right provided for in this Section 1 after (a) four (4) years
following the consummation of the sale of securities pursuant to a registration
statement filed by the Company under the Act in connection with the initial firm
commitment underwritten offering of its securities to the general public or, (b)
as to any Holder, such earlier time at which all Registrable

                                       12
<PAGE>

Securities held by such Holder can be sold without registration in compliance
with and without regard to the volume limitations of Rule 144 of the Act.

          2.    Covenants of the Company.
                ------------------------

          2.1   Delivery of Financial Statements.  The Company shall deliver
                --------------------------------
to each Investor:

          (a)   so long as such Investor holds at least 150,000 shares of
Registrable Securities, as soon as practicable, but in any event within ninety
(90) days after the end of each fiscal year of the Company, an income statement
for such fiscal year, a balance sheet of the Company and statement of
stockholder's equity as of the end of such year, and a statement of cash flows
for such year, such year-end financial reports to be in reasonable detail,
prepared in accordance with generally accepted accounting principles ("GAAP"),
and audited and certified by independent public accountants of nationally
recognized standing selected by the Company;

          (b)   so long as such Investor holds at least 150,000 shares of
Registrable Securities, as soon as practicable, but in any event within forty-
five (45) days after the end of each of the first three (3) quarters of each
fiscal year of the Company, an unaudited income statement and statement of cash
flows for such fiscal quarter and an unaudited balance sheet and a statement of
stockholder's equity as of the end of such fiscal quarter;

          (c)   so long as such Investor holds at least 150,000 shares of
Registrable Securities, as soon as practicable, but in any event within thirty
(30) days of the end of each month, an unaudited income statement and statement
of cash flows and balance sheet for and as of the end of such month, in
reasonable detail;

          (d)   so long as such Investor holds at least 150,000 shares of
Registrable Securities, as soon as practicable, but in any event at least thirty
(30) days prior to the end of each fiscal year, a budget for the next fiscal
year, prepared on a monthly basis, including balance sheets and statements of
cash flows, for such months, and, as soon as prepared, any other budgets or
revised budgets prepared by the Company; and

          (e)   with respect to the financial statements called for in
subsections (b) and (c) of this Section 2.1, an instrument executed by the Chief
Financial Officer or President of the Company certifying that such financials
were prepared in accordance with GAAP consistently applied with prior practice
for earlier periods (with the exception of footnotes that may be required by
GAAP) and fairly present the financial condition of the Company and its results
of operation for the period specified, subject to year-end audit adjustment.

          2.2   Inspection.  So long as an Investor holds at least 150,000
                ----------
shares of Registrable Securities, the Company shall permit such Investor, at
such Investor'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 Investor; provided, however, that the Company shall not be

                                       13
<PAGE>

obligated pursuant to this Section 2.2 to provide access to any information that
it reasonably considers to be a trade secret or similar confidential
information.

          2.3   Termination of Information and Inspection Covenants.  The
                ---------------------------------------------------
covenants set forth in Section 2.1 and Section 2.2 shall terminate as to
Investors and be of no further force or effect when the sale of securities
pursuant to a registration statement filed by the Company under the Act in
connection with the firm commitment underwritten offering of its securities to
the general public is consummated or when the Company first becomes subject to
the periodic reporting requirements of Sections 12(g) or 15(d) of the 1934 Act,
whichever event shall first occur.

          2.4   Key-Man Insurance.  The Company shall maintain in full force
                -----------------
and effect term life insurance in the amount of $2,000,000 on the life of Scott
L. Harmon, and such other officers of the Company and in such amounts as the
Board of Directors deems necessary, with proceeds payable to the Company until
such time as the Board of Directors determines that such insurance should be
discontinued.

          2.5   Right of First Offer.  Subject to the terms and conditions
                --------------------
specified in this paragraph 2.5, the Company hereby grants to each Major
Investor (as hereinafter defined) a right of first offer with respect to future
sales by the Company of its Shares (as hereinafter defined). For purposes of
this Section 2, a Major Investor shall mean any Investor that holds 150,000
shares of Registrable Securities, (subject to appropriate adjustment for stock
splits, stock dividends, combinations and other recapitalizations). A Major
Investor includes any partners, LLC members and affiliates of a Major Investor
and a Major Investor shall be entitled to apportion the right of first offer
hereby granted to it among itself and its partners and affiliates in such
proportions as it deems appropriate.

          Each time the Company proposes to offer any shares of, or securities
convertible into or exercisable for, any shares of any class of its capital
stock ("Shares"), the Company shall first make an offering of such Shares to
each Major Investor in accordance with the following provisions:

          (a)   The Company shall deliver a notice by certified mail ("Notice")
to the Major Investors stating (i) its bona fide intention to offer such Shares,
(ii) the number of such Shares to be offered, and (iii) the price and terms, if
any, upon which it proposes to offer such Shares.

          (b)   By written notification received by the Company, within twenty
(20) calendar days after delivery of the Notice, each Major Investor may elect
to purchase or obtain, at the price and on the terms specified in the Notice, up
to that portion of such Shares that equals the proportion that the number of
shares of Common Stock issued and held, or issuable upon conversion of the
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and
Series D Preferred Stock then held, by such Major Investor bears to the total
number of shares of Common Stock of the Company then outstanding (assuming full
conversion, exercise and exchange of all then convertible, exercisable or
exchangeable securities). The Company shall promptly, in writing, inform each
Major Investor which purchases all the shares

                                       14
<PAGE>

available to it (each, a "Fully Exercising Investor") of any other Major
Investor's failure to do likewise. During the ten-day period commencing after
delivery of notification of such information to the Fully Exercising Investors,
each Fully Exercising Investor shall be entitled to obtain that portion of the
Shares for which Major Investors were entitled to subscribe but which were not
subscribed for by the Major Investors which is equal to the proportion that the
number of shares of Common Stock issued and held, or issuable upon conversion of
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock or
Series D Preferred Stock then held, by such Fully Exercising Investor bears to
the total number of shares of Common Stock issued and held, or issuable upon
conversion of such Preferred Stock then held, by all Fully Exercising Investors
who wish to purchase some of the unsubscribed shares.

          (c)   If all Shares that Major Investors are entitled to obtain
pursuant to subsection 2.5(b) are not elected to be obtained as provided in
subsection 2.5(b) hereof, the Company may, during the sixty (60) day period
following the expiration of the ten-day or twenty-day period provided in
subsection 2.5(b) hereof, as the case may be, offer the remaining unsubscribed
portion of such Shares to any person or persons at a price not less than, and
upon terms no more favorable to the offeree than, those specified in the Notice.
If the Company does not enter into an agreement for the sale of the Shares
within such period, or if the transaction contemplated by such agreement is not
consummated within thirty (30) days of the execution thereof, the right provided
hereunder shall be deemed to be revived and such Shares shall not be offered
unless first reoffered to the Major Investors in accordance herewith.

          (d)   The right of first offer in this paragraph 2.5 shall not be
applicable (i) to the issuance or sale of not more than 24,217,638 shares of
Common Stock (or options therefor) (or such other number as is unanimously
agreed by the Company's Board of Directors) to employees or directors of or
consultants to the Company for the primary purpose of soliciting or retaining
their services; provided that any shares so issued or sold shall, to the extent
vested, be subject to rights of first refusal in favor of the Company and its
assignees so long as no shares of the Company are sold in an offering registered
under the Act, (ii) to or after consummation of a public offering of shares of
Common Stock, registered under the Act pursuant to a registration statement on
Form S-1 or SB-2 on any comparable successor form then in effect, at an offering
price of at least $9.92 per share (appropriately adjusted for any stock split,
dividend, combination or other recapitalization) and $25,000,000 in the
aggregate, (iii) the issuance of securities pursuant to the conversion, exercise
or exchange of convertible, exercisable or exchangeable securities, (iv) the
issuance of securities with the approval of at least seventy-five percent (75%)
of the members of the corporation's Board of Directors in connection with a bona
fide business acquisition of or by the Company, whether by merger,
consolidation, sale of assets, sale or exchange of stock or otherwise, or (v)
the issuance of stock, warrants or other securities or rights to persons or
entities with which the Company has business relationships, provided such
issuances are for other than primarily equity financing purposes.

          2.6   Assignments of Rights of First Refusal.  So long as shares of
                --------------------------------------
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock or
Series D Preferred Stock are outstanding, the Company agrees that, as a
condition to issuing any shares of Common Stock to any employee or director of
the Company under the Company's 1997 Stock Option/Stock Issuance Plan, or any
successor or subsequent stock option or stock purchase plan adopted by the

                                       15
<PAGE>

Company (each a "Plan"), such employee or director shall be required to enter
into an agreement with the Company which shall provide the Company, or any
assignee or assignees of the Company, with a right of first refusal to purchase
any shares which such employee or director has acquired a vested interest in and
which such employee or director proposes to sell to a person other than the
Company. The Company further covenants and agrees that, in the event (i) an
employee or director who has vested in shares purchased under a Plan proposes to
sell such shares to a person other than the Company, (ii) the Company has not
sold shares of the Company's capital stock in an offering registered under the
Act and (iii) the Company has determined not to elect to exercise its right of
first refusal to purchase all of the vested shares that are proposed to be sold
by such employee or director (such balance of the shares not elected to be
purchased by the Company being the "Available Shares"), then the Company agrees
that it shall assign its right of first refusal to purchase the Available Shares
to the Major Investors by notice to the Major Investors made at least three (3)
business days prior to the expiration of the Company's right of first refusal,
and each Major Investor shall thereafter have the right to elect to exercise
such right of first refusal to purchase its proportionate share of the Available
Shares based on the number of shares of Registrable Securities then held by such
Major Investor bears to the aggregate number of shares of Registrable Securities
then held by all Major Investors. The exercise of such right of first refusal by
the Major Investors shall be made subject to and in compliance with the terms
applicable to the right of first refusal in favor of the Company as set forth in
the applicable agreements used under the Plan. Notwithstanding the foregoing,
shares of Common Stock held by the Founders shall be subject to that certain
Third Amended and Restated Right of First Refusal Agreement dated the date
hereof and not the provisions of this Section 2.6

          2.7   Right to Participate in Initial Public Offering.  Subject to
                -----------------------------------------------
the terms and conditions specified in this Section 2.7, the Company hereby
grants to each Major Investor other than holders of the Series D Preferred Stock
and entities affiliated with Austin Ventures, SSM Ventures and Accel Partners
(the "IPO Major Investors") a right to purchase shares of Common Stock in the
Company's first public offering of shares of its Common Stock registered under
the Act pursuant to a registration statement on Form S-1 or Form SB-2 (the
"Initial Offering").

          In connection with the Initial Offering, the Company shall use all
reasonable efforts to require that its underwriter make an offering of the
shares of its Common Stock to be sold in such offering (excluding any shares
sold in any over-allotment option) (the "IPO Shares") to each IPO Major Investor
in accordance with the following provisions:

          (a)   The Company shall deliver a notice in accordance with Section
3.5 ("IPO Notice") to the IPO Major Investors stating (i) its bona fide
intention to consummate the Initial Offering, (ii) the number of IPO Shares
proposed to be offered, and (iii) the proposed price range upon which the IPO
Shares will be offered. The difference from the high end of such price range and
the low end of such price range shall not exceed $3.00. In the event of a change
in the price range, the Company shall promptly deliver notice to each IPO Major
Investor of such change (the "Price Change Notice").

          (b)   By written notification received by the Company, within ten (10)
calendar days after receipt of the IPO Notice, (i) entities affiliated with
Attractor LP, Attractor

                                       16
<PAGE>

Institutional LP and Attractor Ventures LLC (collectively, "Attractor") may
elect to purchase, at the gross price per share negotiated by the Company with
the underwriters as reflected on the final prospectus (the "Gross IPO Price Per
Share"), up to an aggregate of 2.5% of such IPO Shares and (ii) each IPO Major
Investor may elect to purchase, at the Gross IPO Price Per Share, up to that
portion of such IPO Shares that equals the product of 4.5% of the total number
of IPO Shares multiplied by the proportion that the number of shares of Common
Stock of the Company issued and held, or issuable upon conversion of the Series
B Preferred Stock or Series C Preferred Stock then held, by such IPO Major
Investor bears to the total number of shares of Common Stock of the Company
issued and held, or issuable upon conversion of the Series B Preferred Stock or
Series C Preferred Stock then held, by all IPO Major Investors (such Investor's
"IPO Pro-Rata Share").

          (c)   The Company shall promptly, in writing, inform each IPO Major
Investor that elects to purchase its IPO Pro-Rata Share (a "Fully-Exercising IPO
Investor") of any other IPO Major Investor's failure to do likewise. During the
five (5) day period commencing after such information is given, each Fully-
Exercising IPO Investor may elect to purchase that portion of the IPO Shares for
which IPO Major Investors were entitled to subscribe but which were not
subscribed for by the IPO Major Investors (the "Unsubscribed IPO Shares") that
is equal to the proportion that the number of shares of Common Stock of the
Company issued and held, or issuable upon conversion of Series B Preferred Stock
or Series C Preferred Stock then held, by such Fully-Exercising IPO Investor
bears to the total number of shares of Common Stock of the Company issued and
held, or issuable upon conversion of the Series B Preferred Stock or Series C
Preferred Stock then held, by all Fully-Exercising IPO Investors who wish to
purchase any of the Unsubscribed IPO Shares. Notwithstanding the foregoing, no
Fully-Exercising IPO Investor shall have rights to purchase Unsubscribed IPO
Shares in the event that (i) the Company's underwriters request that such Fully-
Exercising IPO Investor waive its right to purchase Unsubscribed IPO Shares
pursuant to subsection 2.7(c) and (ii) such Fully-Exercising IPO Investor agrees
to waive its right to purchase Unsubscribed IPO Shares pursuant to subsection
2.7(c).

          (d)   The rights set forth in this Section 2.7 shall only be
applicable to the Initial Offering. The right of each IPO Major Investor to
purchase its IPO Pro-Rata Share pursuant to subsection 2.7(b) may only be waived
with respect to a given IPO Major Investor by such IPO Major Investor.

          (e)   By written notification received by the Company within twenty-
four hours after delivery of the Price Change Notice (or such shorter period of
time as may be requested by the Company or the Company's underwriters, such
period of time to be no shorter than four hours), an IPO Major Investor may
elect to increase or decrease the number of IPO Shares for which such IPO Major
Investor had elected to purchase; provided however, the total number of IPO
Shares available for purchase by the IPO Major Investors shall not exceed seven
percent (7%) of the IPO Shares. Any IPO Shares that become available for
purchase by IPO Major Investors pursuant to this Section 2.7(e) shall be
allocated among the Fully--Exercising IPO Investors in accordance with the
provisions of Section 2.7(c).

                                       17
<PAGE>

          (f)   Notwithstanding the foregoing, the underwriter of the Initial
Offering, if any, shall be entitled to reduce the number of IPO Shares to be
offered to the IPO Major Investors to the extent deemed necessary in the
underwriter's reasonable judgment (i) to ensure the success of the Initial
Offering for reasons set forth in writing no less than one week prior to the
anticipated effective date of the registration statement covering such Initial
Offering, or (ii) to comply with applicable rules and regulations for reasons
set forth in writing no less than one day prior to the anticipated effective
date of the registration statement covering such Initial Offering. If the number
of IPO Shares is reduced, such reduction shall be made pro rata among the IPO
Major Investors proportionate to the amount the IPO Major Investors would
otherwise be entitled to receive under subsection 2.7(b) above.

          2.8   Voting Provisions.
                -----------------

          (a)   Composition of Board of Directors. Subject to paragraph 2.8(b),
                ---------------------------------
with respect to the member of the Company's Board of Directors provided in the
Amended and Restated Certificate of Incorporation to be elected by the Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock (voting together as a single class and not as separate series,
and on an as-converted basis), the Investors hereby agree that in any election
of directors of the Company they shall vote all shares of capital stock of the
Company owned or controlled by them, including shares of Common Stock and
Preferred Stock, to elect David Sikora as a member of the Board of Directors of
the Company. The obligation to vote shares in accordance with this paragraph
2.8(a) shall be specifically applicable to and enforceable against any
transferees of the parties hereto.

          (b)   Vacancies; Removal.  Except as otherwise provided below, in
                ------------------
the event that Mr. Sikora resigns or is no longer able to serve as a director,
the vacancy shall be filled as provided in the Company's Amended and Restated
Certificate of Incorporation. In the event that:

                (i)   the Company's recognized revenues for the year ended
December 31, 2000 are 20% or more below those projected, or the Company's total
cash spending for the year ended December 31, 2000 is 20% or more above those
projected in the Company's Year 2000 operating plan as approved at the Company's
first Board of Directors meeting after the date hereof, as such plan may be
adjusted for board approved initiatives that materially increase or reduce cash
spending as a result of positive developments or to address positive
opportunities; or

                (ii)  (x) the Company has not consummated a public offering of
its capital stock under an effective registration statement for reasons other
than poor market conditions or (y) a Change of Control has not occurred (as
defined below), in either case of (x) or (y) prior to the first anniversary of
the closing of the Company's acquisition of Ventix Systems Inc., then, each
Investor agrees to vote all shares of capital stock of the Company owned or
controlled by such Investor, including shares of Common Stock and Preferred
Stock, for (i) the removal of Mr. Sikora whenever (but only whenever) there
shall be presented to the Board of Directors and the Investors the written
direction that Mr. Sikora be so removed signed by the holders of at least 51% of
the Series D Preferred Stock then outstanding and (ii) following such

                                       18
<PAGE>

removal, for the election of a successor director nominated by the holders of at
least 51% of the Series D Preferred Stock then outstanding. In any other event,
Mr. Sikora may be removed only by the vote of the Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock
(voting together as a single class and not as separate series, and on an as-
converted basis). "Change of Control" shall mean either of the following
stockholder-approved transactions to which the Company is a party:

                (i)    a merger or consolidation in which securities possessing
more than fifty percent (50%) of the total combined voting power of the
Company's outstanding securities are transferred to a person or persons
different from the persons holding those securities immediately prior to such
transaction, or

                (ii)   the sale, transfer or other disposition of all or
substantially all of the Company's assets in complete liquidation or dissolution
of the Company.

          (c)   Termination.  The provisions of this Section 2.8 shall
                -----------
terminate as to Investors and be of no further force or effect when the sale of
securities pursuant to a registration statement filed by the Company under the
Act in connection with the firm commitment underwritten offering of its
securities to the general public is consummated or when the Company first
becomes subject to the periodic reporting requirements of Sections 12(g) or
15(d) of the 1934 Act, whichever event shall first occur.

          (d)   Amendments; Waivers.  Any term of this section 2.8 may be
                -------------------
amended and the observance of any term of this section 2.8 may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Holders of
a majority of the Registrable Securities then outstanding or issuable, including
in any event the Holders of at least a majority of the Series D Preferred Stock
then outstanding. Any amendment or waiver effected in accordance with this
paragraph shall be binding upon each holder of any Registrable Securities then
outstanding, each future holder of all such Registrable Securities, and the
Company.

          3.    Miscellaneous.
                -------------

          3.1   Successors and Assigns.  Except as otherwise provided herein,
                ----------------------
the terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any shares of Registrable Securities). Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.

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

                                       19
<PAGE>

          3.3   Counterparts.  This Agreement may be executed in two or more
                ------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

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

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

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

          3.7   Amendments and Waivers.  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 Holders of
a majority of the Registrable Securities then outstanding or issuable; provided,
however, that in the event such amendment or waiver adversely affects the rights
and/or obligations of any party under this Agreement in a different manner than
the other parties, such amendment or waiver shall also require the written
consent of the Holders of seventy-five percent (75%) of the Common Stock or
Registrable Securities held by such affected parties. Any amendment or waiver
effected in accordance with this paragraph shall be binding upon each holder of
any Registrable Securities then outstanding, each future holder of all such
Registrable Securities, and the Company.

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

          3.9   Aggregation of Stock.  All shares of Registrable Securities
                --------------------
held or acquired by affiliated entities or persons shall be aggregated together
for the purpose of determining the availability of any rights under this
Agreement. For the purposes of this Agreement, the term "affiliated" shall
include entities under common investment management.

          3.10  Entire Agreement.  This Agreement (including the Exhibits
                ----------------
hereto, if any) constitutes the full and entire understanding and agreement
between the parties with regard to the subjects hereof and thereof. This
Agreement supersedes the Prior Agreement in its entirety.

                                       20
<PAGE>

          3.11  Further Assurances.  Each party agrees, without necessity of
                ------------------
further consideration, to execute and deliver any and all such further documents
and take any and all such actions as may be necessary or appropriate to carry
out the intent and purposes of this Agreement and to consummate the transaction
contemplated herein.

                 [REMAINDER OF PAGE LEFT BLANK INTENTIONALLY.]
                 ---------------------------------------------

                                       21
<PAGE>

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

                              MOTIVE COMMUNICATIONS, INC.

                              By: /s/ Scott L. Harmon
                                 ----------------------------------------
                                 Scott L. Harmon
                                 President

                              Address: 9211 Waterford Center Boulevard
                                       Suite 100
                                       Austin, Texas 78758
                                       (512) 339-8335
                                       (512) 339-9040-fax

                 SIGNATURE PAGE TO MOTIVE COMMUNICATIONS, INC.
            THIRD AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>

                              INVESTORS:

                              ATTRACTOR LP

                              By: Attractor Ventures, LLC
                                  its General Partner

                              By: /s/ Gigi Brisson
                                 --------------------------------------
                                 Gigi Brisson, its  MM
                                                   ----

                              ATTRACTOR VENTURES, LLC

                              By: Attractor Ventures, LLC
                                  its General Partner

                              By: /s/ Gigi Brisson
                                 --------------------------------------
                                 Gigi Brisson, its  MM
                                                   ----

                              ATTRACTOR INSTITUTIONAL LP

                              By: Attractor Ventures, LLC
                                  its General Partner

                              By: /s/ Gigi Brisson
                                 --------------------------------------
                                 Gigi Brisson, its  MM
                                                   ----
                              ATTRACTOR QP LP

                              By: Attractor Ventures, LLC
                                  its General Partner

                              By: /s/ Gigi Brisson
                                 --------------------------------------
                                 Gigi Brisson, its  MM
                                                   ----
                              Address:  1440 Chapin Ave., Suite 201
                                        Burlingame, California 94010

                              with a copy to:

                                     Rick Cohen
                                     Buchalter, Nemer, Fields & Young, P.C.
                                     601 Figueroa Street, Suite 2400
                                     Los Angeles, California  90017

                 SIGNATURE PAGE TO MOTIVE COMMUNICATIONS, INC.
            THIRD AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>

                              MACARTHUR FOUNDATION

                              By: /s/ Lyn Hutton
                                 --------------------------------------
                                 Lyn Hutton

                              Address: 140 South Dearborn Street, Suite 1100
                                       Chicago, Illinois 60603-5285

                 SIGNATURE PAGE TO MOTIVE COMMUNICATIONS, INC.
            THIRD AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>

                              AUSTIN VENTURES V, L.P.

                              By: AV Partners V, L.P.,
                                  its General Partner

                              By: /s/ John Thornton
                                 --------------------------------------
                                 John Thornton

                              AUSTIN VENTURES V AFFILIATES
                              FUND, L.P.

                              By: AV Partners V, L.P.
                                  Its General Partner

                              By: /s/ John Thornton
                                 --------------------------------------
                                 John Thornton

                              /s/ Brian Goffman
                              -----------------------------------------
                              Brian Goffman

                              SILVERTON PARTNERS

                              By: /s/ William Wood
                                 --------------------------------------
                                 William Wood, its general partner

                              Address: Austin Ventures
                                       14 West 7th Street, Suite 1300
                                       Austin, Texas 78701

                 SIGNATURE PAGE TO MOTIVE COMMUNICATIONS, INC.
            THIRD AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>

                              SSM I, L.P.
                              General Partner of SSM Venture Partners, L.P.

                              By: SSM Corporation
                                  its General Partner

                              By: /s/ Eric L. Jones
                                 --------------------------------------
                              Print Name: ERIC L. JONES
                                         ------------------------------
                              Title: Authorized Signatory
                                    -----------------------------------

                              Address: 10528 Glass Mountain Trail
                                       Austin, Texas 78750

                 SIGNATURE PAGE TO MOTIVE COMMUNICATIONS, INC.
            THIRD AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>

                              ACCEL V L.P.

                              By: Accel V Associates L.L.C.
                                  its General Partner

                              By: /s/ G. Carter Sednaoui
                                 ------------------------------------
                                 Managing Member

                              ACCEL INTERNET/STRATEGIC TECHNOLOGY FUND L.P.

                              By: Accel Internet/Strategic Technology Fund
                                  Associates L.L.C.
                                  its General Partner

                              By: /s/ G. Carter Sednaoui
                                  -----------------------------------
                                 Managing Member

                              ACCEL KEIRETSU V L.P.

                              By: Accel Keiretsu V Associates L.L.C.
                                  its General Partner

                              By: /s/ G. Carter Sednaoui
                                 ------------------------------------
                                 Managing Member

                              ACCEL INVESTORS `97 L.P.

                              By: /s/ G. Carter Sednaoui
                                 ------------------------------------
                                 General Partner

                              ELLMORE C. PATTERSON PARTNERS

                              By: /s/ Ellmore C. Patterson
                                 ------------------------------------
                                 General Partner

                              Address:  James W. Breyer
                                        Accel Partners
                                        428 University Avenue
                                        Palo Alto, California 94301
                              with a copy to:
                                        G. Carter Sednaoui
                                        Accel Partners
                                        One Palmer Square
                                        Princeton, New Jersey 08542

                 SIGNATURE PAGE TO MOTIVE COMMUNICATIONS, INC.
            THIRD AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>

                              /s/ Douglas McNary
                              ---------------------------------------
                              Douglas McNary

                              Address: c/o Motive Communications, Inc.
                                       9211 Waterford Center Boulevard
                                       Suite 100
                                       Austin, Texas 78758

                 SIGNATURE PAGE TO MOTIVE COMMUNICATIONS, INC.
            THIRD AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>

                              /s/ Patrick Motola
                              --------------------------------------------
                              Patrick Motola

                              Address: c/o Motive Communications, Inc.
                                       9211 Waterford Center Boulevard
                                       Suite 100
                                       Austin, Texas  78758

                 SIGNATURE PAGE TO MOTIVE COMMUNICATIONS, INC.
            THIRD AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>

                              /s/ John T. Galligan
                              --------------------------------------------
                              John T. Galligan

                              Address: c/o Motive Communications, Inc.
                                       9211 Waterford Center Boulevard
                                       Suite 100
                                       Austin, Texas  78758
<PAGE>

                              CHARLES SCHWAB & CO. INC.
                              FBO JOHN T. GALLIGAN IRA

                              By: /s/ John T. Galligan
                                 -------------------------------------
                              Print Name: John T. Galligan
                                         -----------------------------
                              Title: Director System Engineers
                                    ----------------------------------

                              Address: c/o Charles Schwab & Co. Inc.
                                       101 Montgomery Street
                                       San Francisco, California  94104
                                       Attn. Securities Deposits
<PAGE>

                           PALANTIR ASSOCIATES, LLC

                              By: /s/ Glenn Doshay
                                 ------------------------------------
                                 Glenn Doshay

                              Address: Palantir Associates, LLC
                                       6279 Via Campo Verde
                                       Rancho Santa Fe, California  92067

                              with a copy to:

                                       Doug Hammer
                                       Shartis, Friese & Ginsburg
                                       One Maritime Plaza, 18/th/ Floor
                                       San Francisco, California  94111
                                       (415) 249-1572

                                       Tom Sullivan
                                       Citicorp Center
                                       153 East 53/rd/ Street
                                       New York, New York 10022
                                       (212) 292-6764

                 SIGNATURE PAGE TO MOTIVE COMMUNICATIONS, INC.
            THIRD AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>

                              PIVOTAL PARTNERS, L.P.
                              a California limited partnership

                              By: Pivotal Asset Management, LLC
                                  Its General Partner

                              By: /s/ Christopher H. Lord
                                 --------------------------------------
                              Print Name: CHRISTOPHER H. LORD
                                         ------------------------------
                              Title: General Partner
                                    -----------------------------------

                    Address:  Pivotal Capital Management
                              One Embarcadero, Suite 2300
                              San Francisco, California  94111-3162
                              (415) 249-1572

                 SIGNATURE PAGE TO MOTIVE COMMUNICATIONS, INC.
            THIRD AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>

                              HAMBRECHT AND QUIST CALIFORNIA

                              By: /s/ Robert N. Savole
                                 --------------------------------------------
                              Print Name: Robert N. Savole
                                         ------------------------------------
                              Title: Tax Director, Attorney-in-Fact
                                    -----------------------------------------

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

                              By: H&Q Venture Management, L.L.C.
                              Its:  General Partner

                              By: /s/ Robert N. Savole
                                 --------------------------------------------
                              Print Name: Robert N. Savole
                                         ------------------------------------
                              Title: Tax Director, Attorney-in-Fact
                                    -----------------------------------------

                              ACCESS TECHNOLOGY PARTNERS, L.P.

                              By: Access Technology Management, L.L.C.
                              Its:  General Partner

                                 By:  H&Q Venture Management, L.L.C.
                                 Its: Managing Member

                              By: /s/ Robert N. Savole
                                 --------------------------------------------
                              Print Name: Robert N. Savole
                                         ------------------------------------
                              Title: Tax Director, Attorney-in-Fact
                                    -----------------------------------------

                              Address: One Bush Street
                                       San Francisco, California  94104
                                       (415) 439-3000

                 SIGNATURE PAGE TO MOTIVE COMMUNICATIONS, INC.
            THIRD AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>

                              ACCESS TECHNOLOGY PARTNERS BROKERS FUND, L.P.

                              By: H&Q Venture Management, L.L.C.
                              Its:  General Partner

                              By: /s/ Robert N. Savole
                                 --------------------------------------------
                              Print Name: Robert N. Savole
                                         ------------------------------------
                              Title: Tax Director, Attorney-in-Fact
                                    -----------------------------------------

                              H&Q MOTIVE COMMUNICATIONS INVESTORS, LLC

                              By: /s/ Robert N. Savole
                                 --------------------------------------------
                              Print Name: Robert N. Savole
                                         ------------------------------------
                              Title: Tax Director, Attorney-in-Fact
                                    -----------------------------------------

                              Address: One Bush Street
                                       San Francisco, California  94104
                                       (415) 439-3000

                 SIGNATURE PAGE TO MOTIVE COMMUNICATIONS, INC.
            THIRD AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>

                              DELL USA, L.P.
                              By: Dell Gen. P. Corp.

                              By: /s/ Alex C. Smith
                                 --------------------------------------
                              Print Name: Alex C. Smith
                                         ------------------------------
                              Title: Vice President
                                    -----------------------------------

                              Address: Dell Computer Corporation
                                       Thomas H. Welch, Jr.
                                       Vice President, Deputy General Counsel
                                       One Dell Way, RRI, Mail Code #8033
                                       Round Rock, Texas  78682

                              with a copy to:

                                       William Volk
                                       Vinson & Elkins L.L.P.
                                       One American Center, Suite 2700
                                       600 Congress Avenue
                                       Austin, Texas  78701-3200

                 SIGNATURE PAGE TO MOTIVE COMMUNICATIONS, INC.
            THIRD AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>

                              GE INFORMATION SERVICES, INC.

                              By: /s/ Bruce E. Hunter
                                 -----------------------------------
                              Name: Bruce E. Hunter
                                   ---------------------------------
                              Title: Vice President
                                    --------------------------------

                              Address: 100 Edison Park Drive
                                       -----------------------------
                                       Gaithersburg, MD 20878
                                       -----------------------------
                                       _____________________________

                 SIGNATURE PAGE TO MOTIVE COMMUNICATIONS, INC.
            THIRD AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>

                              ABS EMPLOYEES' VENTURE FUND LIMITED PARTNERSHIP

                              By: Alex.Brown Investments, Inc.
                              Its:  General Partner

                              By: /s/ Margaret-Mary V. Preston
                                 ---------------------------------------
                                  Margaret-Mary V. Preston
                                  Vice President

                              Address: 1 South Street
                                       ----------------------
                                       Baltimore, MD 21202
                                       ----------------------
                                       Mail Stop 1-17-6
                                       ----------------------

                 SIGNATURE PAGE TO MOTIVE COMMUNICATIONS, INC.
            THIRD AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>

                              BT INVESTMENT PARTNERS, INC.

                              By: /s/ Kristine Cicardo
                                 -------------------------------
                              Name: KRISTINE CICARDO
                                   -----------------------------
                              Title: Vice President
                                    ----------------------------

                              Address: 130 Liberty St.
                                       ------------------------
                                       29/th/ Floor
                                       ------------------------
                                       New York, NY 10006
                                       ------------------------

                 SIGNATURE PAGE TO MOTIVE COMMUNICATIONS, INC.
            THIRD AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>

                              INTEL CORPORATION

                              By: /s/ Neal Lazo
                                 ------------------------------------------
                              Name:  Neal Lazo
                                   ----------------------------------------
                              Title: Assistant Treasurer Intel Corporation
                                    ---------------------------------------

                              Address: ATTN: M&A Portfolio MGR
                                       --------------------------
                                       2200 Mission College Blvd.
                                       --------------------------
                                       RN6-46
                                       --------------------------
                                       Santa Clara, CA 95052

                                SIGNATURE PAGE TO MOTIVE COMMUNICATIONS, INC.
            THIRD AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>

                                        PIPER JAFFRAY TECHNOLOGY CAPITAL
                                        SBIC, L.P.

                                        By:  Piper Venture Capital, Inc.
                                        Its: General Partner

                                        By: /s/ Gary Blauer
                                           -------------------------------------
                                            Gary J. Blauer
                                            Vice President

                                        Address:  222 S. 9TH ST.
                                                  ----------------------
                                                  MINNEAPOLIS, MN 55402
                                                  ----------------------

                                                  ______________________

                 SIGNATURE PAGE TO MOTIVE COMMUNICATIONS, INC.
            THIRD AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>

                                        STANDBY FUND 1998

                                        By: /s/ Buzz Benson
                                           ------------------------------------
                                            Buzz Benson
                                            General Partner

                                        /s/ Kent Adams
                                        --------------------------------------
                                        KENT ADAMS, Individually

                                        /s/ William Benjamin
                                        ---------------------------------------
                                        WILLIAM BENJAMIN, Individually

                                        /s/ Kyle Crowe
                                        --------------------------------------
                                        KYLE CROWE, Individually

                 SIGNATURE PAGE TO MOTIVE COMMUNICATIONS, INC.
            THIRD AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>

                                   TL VENTURES III L.P.

                                   By:  TL VENTURES III MANAGEMENT, L.P.
                                   Its: General Partner

                                   By: TL VENTURES III LLC, its general partner

                                   By: /s/ Robert Fabbio
                                      ------------------------------------------
                                       Robert Fabbio
                                       Managing Director

                                   TL VENTURES III OFFSHORE L.P.

                                   By:  TL VENTURES III OFFSHORE PARTNERS
                                   Its: General Partner

                                   By: TL VENTURES III OFFSHORE LTD., its
                                   general partner

                                   By: /s/ Robert Fabbio
                                      ------------------------------------------
                                       Robert Fabbio
                                       Vice President

                                   TL VENTURES III INTERFUND L.P.

                                   By:  TL VENTURES LLC
                                   Its: General Partner

                                   By: /s/ Robert Fabbio
                                      ------------------------------------------
                                       Robert Fabbio
                                       Managing Director

                                   THE FABBIO FAMILY LIMITED
                                   PARTNERSHIP

                                   By: /s/ Robert Fabbio
                                      ------------------------------------------
                                       Robert Fabbio
                                       Managing Director

                                   Address:  ___________________
                                             ___________________
                                             ___________________

                 SIGNATURE PAGE TO MOTIVE COMMUNICATIONS, INC.
            THIRD AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>

                                        /s/ Robert Fabbio
                                        -----------------------------------
                                        ROBERT FABBIO, Individually

                 SIGNATURE PAGE TO MOTIVE COMMUNICATIONS, INC.
            THIRD AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>

                                        /s/ Gerald H. Weghorst
                                        --------------------------------------
                                        GERALD H. WEGHORST, individually

                 SIGNATURE PAGE TO MOTIVE COMMUNICATIONS, INC.
            THIRD AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>

                                             FOUNDERS:

                                             /s/ Scott L. Harmon
                                             ----------------------------------
                                             Scott L. Harmon

                                             /s/ Michael J. Maples, Jr.
                                             ----------------------------------
                                             Michael J. Maples, Jr.

                                             /s/ Scott R. Abel
                                             ----------------------------------
                                             Scott R. Abel

                                             /s/ Brian J. Vetter
                                             ----------------------------------
                                             Brian J. Vetter

                                             /s/ Thomas W. Bereiter
                                             ----------------------------------
                                             Thomas W. Bereiter

                 SIGNATURE PAGE TO MOTIVE COMMUNICATIONS, INC.
            THIRD AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>

                                  SCHEDULE A
                                  ----------

                             Schedule of Investors

NAME AND ADDRESS
----------------

Attractor LP
Attractor Ventures LLC
Attractor Institutional LP
 1110 Burlingame Avenue, Suite 211
 Burlingame, California 94010

 with a copy to:
 Rick Cohen
 Buchalter, Nemer, Fields & Young, P.C.
 601 Figueroa Street, Suite 2400
 Los Angeles, California 90017

MacArthur Foundation
 Attn. Lyn Hutton
 140 South Dearborn Street, Suite 1100
 Chicago, Illinois 60603-5285

Austin Ventures V, L.P.
Austin Ventures V Affiliates Fund, L.P.
 114 West 7/th/ Street, Suite 1300
 Austin, Texas 78701

Brian Goffman
 c/o Austin Ventures
 114 West 7/th/ Street, Suite 1300
 Austin, Texas 78701

Silverton Partners
 c/o Austin Ventures
 14 West 7/th/ Street, Suite 1300
 Austin, Texas 78701
 Attn. William Wood

SSM I, L.P.
 c/o SSM Corporation
 10528 Glass Mountain Trail
 Austin, Texas 78750

                                      A-1
<PAGE>

Name and Address
----------------

Accel V L.P.
Accel Internet/Strategic Technology Fund L.P.
Accel Keiretsu V L.P.
Accel Investors '97 L.P.
Ellmore C. Patterson Partners
 c/o Mr. James Breyer
 Accel Partners
 428 University Avenue
 Palo Alto, California 94301

 with a copy to:
 G. Carter Sednaoui
 Accel Partners
 One Palmer Square
 Princeton, New Jersey 08542

Douglas McNary
 c/o Motive Communications, Inc.
 9211 Waterford Centre Boulevard, #100
 Austin, Texas 78758

Patrick Motola
 c/o Motive Communications, Inc.
 9211 Waterford Centre Boulevard, #100
 Austin, Texas 78758

John T. Galligan
 c/o Motive Communications, Inc.
 9211 Waterford Centre Boulevard, #100
 Austin, Texas 78758

Charles Schwab & Co. Inc. FBO John T. Galligan IRA
 c/o Charles Schwab & Co. Inc.
 101 Montgomery Street
 San Francisco, California 94104
 Attn. Securities Deposits

                                      A-2
<PAGE>

Name and Address
----------------

Palantir Associates , LLC
 6279 Via Campo Verde
 Rancho Santa Fe, California 92067
 Attn. Glenn Doshay

 with a copy to:
 Doug Hammer
 Shartis Friese & Ginsburg
 One Maritime Plaza, 18/th/ Floor
 San Francisco, California 94111

 Tim Sullivan
 Citicorp Center
 153 East 53/rd/ Street
 New York, New York 10022

Pivotal Partners, L.P.
 c/o Pivotal Capital Management
 One Embarcadero, Suite 2300
 San Francisco, California 94111-3162

Hambrecht and Quist California
Hambrecht & Quist Employee Venture Fund, L.P. II
Access Technology Partners, L.P.
Access Technology Partners Brokers Fund, L.P.
H&Q Motive Communications Investors, LLC
 Mr. Michael Beblo
 One Bush Street
 San Francisco, California 94104

                                      A-3
<PAGE>

Name and Address
----------------

Dell USA, L.P.
 c/o Dell Computer Corporation
 One Dell Way, Building One
 Round Rock, Texas 78682

 with a copy to:
 William Volk
 Vinson & Elkins L.L.P.
 One American Center, Suite 2700
 600 Congress Avenue
 Austin, Texas 78701-3200

GE Information Services, Inc.
ABS Employees' Venture Fund Limited Partnership
BT Investment Partners, Inc.
Intel Corporation
Piper Jaffray Technology Capital SBIC, L.P.
Standby Fund 1998
Kent Adams
William Benjamin
Kyle Crowe
TL Ventures III, L.P.
TL Ventures III Offshore L.P.
TL Ventures III Interfund L.P.
The Fabbio Family Limited Partnership
Mr. Robert Fabbio

Gerald H. Weghorst

                                      A-4
<PAGE>

                                  Schedule B
                                  ----------

                             Schedule of Founders

Scott L. Harmon
9211 Waterford Centre Boulevard, #100
Austin, Texas 78758

Michael J. Maples, Jr.
9211 Waterford Centre Boulevard, #100
Austin, Texas 78758

Scott R. Abel
9211 Waterford Centre Boulevard, #100
Austin, Texas 78758

Brian J. Vetter
9211 Waterford Centre Boulevard, #100
Austin, Texas 78758

Thomas W. Bereiter
9211 Waterford Centre Boulevard, #100
Austin, Texas 78758<PAGE>

                                                                    EXHIBIT 10.8

Confidential treatment has been requested for portions of this exhibit.  The
copy filed herewith omits the information subject to the confidentiality
request.  Omissions are designated as [*].  A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

                            DISTRIBUTION AGREEMENT

This DISTRIBUTION AGREEMENT ("Agreement") entered into as of April 13, 2000
("Effective Date"), between Peregrine Systems  ("Partner"), with its principal
place of business at 12670 High Bluff Dr., San Diego, CA and Motive
Communications, Inc. known as ("Motive"), with its principal place of business
at 9211 Waterford Centre Blvd, Austin, TX 78758.

WITNESSETH:

WHEREAS, Motive is in the business of developing, marketing and supporting
certain computer software products, including the Product (as hereinafter
defined);

WHEREAS, Partner wishes [*] the Product [*] offering ("Partner System") and
distribute the Product with the Partner System in the Territory (as hereinafter
defined); and

WHEREAS, Partner wishes to obtain, and Motive is willing to grant Partner, a
limited right to [*] the Product (as hereinafter defined), to such Customers.

NOW, THEREFORE, in consideration of the foregoing promises and the mutual
representations and agreements set forth herein, and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, Motive
and Partner, intending to be legally bound, hereby agree as follows:

Section 1 - DEFINITIONS

For purposes of this Agreement, the following terms shall have the respective
meanings indicated below:

1.1  "Confidential Information."  Any data or information, oral or written,
treated as confidential that relates to either party's (or, if either party is
bound to protect the confidentiality of any other person's information, such
other person's) past, present, or future research, development or business
activities, software, systems, pricing, or related product information,
including any unannounced product(s) and service(s), or any other information
marked as proprietary and/or confidential shall be deemed Confidential
Information.  Confidential Information shall also include the terms of this
Agreement.  Notwithstanding the foregoing, Confidential Information shall not be
deemed to include information that (1) is publicly available or in the public
domain at the time disclosed; (2) is or becomes publicly available or enters the
public domain through no fault of the party receiving such information; (3) is
rightfully communicated to the recipient by persons not bound by confidentiality
obligations with respect thereto; (4) is already in the recipient's possession
free of any confidentiality obligations with respect thereto at the time of
disclosure; (5) is independently developed by the recipient; or (6) is approved
for release or disclosure by the disclosing party without restriction.

1.2  "Customer."  Any entity that licenses the Partner System for [*]
distribution or sublicense and for which Motive has received the appropriate
Royalty Fee.

1.3  "Product."  The Motive software programs, as set forth in Schedule No. 1,
which Partner wishes to [*] and distribute with the Partner System.

1.4  "Documentation."  The user guides, reference manuals, and other materials
developed by Motive for distribution and use in combination with the Product.

1.5  "Partner System." The Partner solution offering of software and/or services
that Partner licenses to its Customers.

1.5  "Territory."  Unless otherwise agreed to in writing by both parties, the
"Territory" granted in this Agreement is [*].

                                       1

*    Certain confidential information on this page has been omitted and filed
     separately with the Securities and Exchange Commission.

<PAGE>

Section 2 - GRANT OF DISTRIBUTION RIGHT

2.1  License.  Motive hereby grants to Partner, and Partner hereby accepts from
Motive, a nontransferable, nonexclusive right and license to sublicense and
otherwise distribute the Product and Documentation to [*].

2.2  Reserved Rights. All rights not specifically granted to Partner herein are
reserved by Motive. Furthermore, all rights and title to the Product or any
portion thereof including but not limited to derivative works created by either
party are reserved by and remain with Motive. Motive does not convey any
intellectual property rights to Partner herein.

Section 3 - PARTNER MARKETING RIGHTS AND OBLIGATIONS

3.1  Marketing and Distribution to Customers.  The Product shall be distributed
under and used in accordance with a Partner License Agreement that contains
substantially the same protections and restrictions contained in Motive's
standard license agreement, a copy of which will be provided to Partner (a copy
of which is attached as Attachment A).

3.2  Promotional Efforts.  Partner shall use its reasonable efforts to promote
the marketing and distribution of the Product to Customers in the Territory.
Partner may customize/modify the Motive marketing collateral and documentation
for purposes of marketing and distributing the Product.

3.3  Product Packaging.  The Product shall be packaged as a Partner product
offering and shall be subject to the branding requirements, if any, set forth in
Schedule No. 1.

3.4  Reports.  A report shall accompany any Royalty Payment made by Partner to
Motive under this Agreement. The report shall serve to provide sufficient
details such as quantities, prices, etc. to explain the Royalty Payment.

3.5  Publicity.  Upon execution of this Agreement Partner may issue press
releases announcing the Product that will be available to Customers upon prior
written consent of Motive which shall not be unreasonably withheld.

Section 4 - FEES & PAYMENT

4.1  Royalty Payments.  The partner shall use its best efforts to sell the
product on [*] however may also [*]. All fees for the Product, including
renewals thereafter, shall be paid by Customers directly to Partner who will in
turn pay a portion of those fees ("Royalty Payments") to Motive. For [*]
licenses, royalty Payments shall be remitted no less than [*] days from the [*]
in which the order for the Product is placed by the Customer. Royalty Payments
for both [*] shall be calculated as specified in Schedule 1. For [*] licenses,
royalties will be paid [*] of the [*] contract. In the event a customer [*]
contract, Partner shall pay Motive a royalty on any cancellation fee charged to
the customer.

4.2  Other Fees. Partner shall reimburse Motive for [*] authorized in advance by
Partner in accordance with the terms specified in Schedule 1.  Partner shall
remit these fees within [*] days of receipt of a correct invoice from Motive.

4.3  Royalty Sales Verification. With [*] prior written notice, Partner will
Provide Motive access to all necessary records required to confirm compliance
with the terms and conditions set forth in this Agreement.

Section 5 - DELIVERY

5.1  Updates.  Motive shall provide Partner product updates through the standard
Maintenance and Support terms provided Partner is under a current Maintenance
and Support Agreement.   The Partner may distribute Product updates only to its
Customers under a current Maintenance and Support Agreement for the Product.

5.2  Delivery to Customers.  The Product shall be delivered to Customers by
Partner. Any professional services required by the Customer shall be performed
by Partner or through its authorized channel partners.

5.3  Partner may distribute [*] copies of the Product at [*] Partner's sales and
support personnel as well as Partner's channel partners.

                                       2

*    Certain confidential information on this page has been omitted and filed
     separately with the Securities and Exchange Commission.

<PAGE>

5.4  Partner may provide a [*] of the Product to Partner's customers [*]
provided such evaluation is done under a written agreement which is no less
protective than the form Partner uses to allow customers to evaluate Partners
other products.

Section 6 - SUPPORT SERVICES

6.1  Maintenance. Partner will provide [*] support to Customers for the Product
delivered under this Agreement. Motive agrees to provide [*] support to Partner
who in turn will work directly with the Customers to resolve any Product issues
and problems. For purposes of this Agreement Level I, II and II maintenance and
support are defined as follows:

     Level I Support - Partner shall take initial Customer calls and work to
     investigate, diagnose and repair the problem or error that the Customer is
     experiencing based on a list of known issues.

     Level II Support - Partner support personnel shall work with Customer to
     provide a solution, fix, workaround, etc. to the reported problem or error
     in a manner consistent with its then current support and maintenance
     policies

     Level III Support - If Partner is unable to repair or otherwise provide a
     fix as specified in Level II Support, Partner shall contact a Motive
     support analyst and provide them with all relevant information regarding
     the Customer and their reported problem or error. Motive support personnel
     shall work to provide a solution, fix, workaround, etc. to the reported
     problem or error in a manner consistent with its then current support and
     maintenance policies. If Motive's Level III Support can not rectify the
     Customer problem in a reasonable timeframe, Motive shall involve their
     product development team and personnel as necessary to provide a solution,
     fix or acceptable workaround in a timeframe consistent with their then
     current support and maintenance policies. Unless otherwise requested by
     Partner, Motive shall provide all solutions, fixes, workarounds, etc. to
     Partner who will provide them to the Customers.

Section 7 - PRODUCT WARRANTY & LIABILITY

7.1  Scope of Warranty.  Subject to the terms and conditions of this Agreement,
Motive warrants that the Product will, when and as delivered to Partner, conform
to their specifications in all material respects, and is free from defects in
materials and workmanship.

7.2  Term of Warranty.  Motive's warranty shall commence upon delivery of the
Product and [*] days after receipt of the said Product by Customer. If during
the term of the warranty the Product does not materially conform to its
specifications, Motive shall use commercially reasonable efforts to repair or
replace the defective Product in a timely manner.

7.4  Disclaimer. THE WARRANTY STATED IN THIS SECTION IS THE SOLE AND EXCLUSIVE
WARRANTY PERTAINING TO THE PRODUCT OR ANY PORTION THEREOF, AND MOTIVE HEREBY
DISCLAIMS ANY OTHER WARRANTY, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION,
ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

7.5  Limitation of Liability. EXCEPT AS SPECIFIED IN THE SECTION ENTITLED
"INDEMNIFICATION," MOTIVE SHALL NOT BE LIABLE OR OBLIGATED WITH RESPECT TO THE
SUBJECT MATTER OF THIS AGREEMENT OR UNDER ANY CONTRACT, NEGLIGENCE, STRICT
LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY FOR (I) ANY AMOUNTS IN EXCESS IN
THE AGGREGATE OF THE FEES PAID TO IT HEREUNDER WITH RESPECT TO THE APPLICABLE
SOFTWARE PROGRAM OR PROFESSIONAL SERVICES; (II)  ANY COST OF PROCUREMENT OF
SUBSTITUTE GOODS, TECHNOLOGY, SERVICES OR RIGHTS; (III)  ANY INCIDENTAL OR
CONSEQUENTIAL DAMAGES; (IV)  INTERRUPTION OF USE OR LOSS OR CORRUPTION OF DATA;
OR (V)  ANY MATTER BEYOND ITS REASONABLE CONTROL.

Section 8 - FREEDOM OF ACTION

8.1  Partner Pricing.  Partner is free to determine its own prices for the
Product.

8.2  Relationship of the Parties.  The relationship of Motive and Partner
established by this Agreement is of licensor and licensee, each to constitute an
independent contractor.  Nothing in this Agreement shall be construed to give
either party the power to direct or control the daily activities of the other
party, or to make any agreement or commitment on behalf of the other.

                                       3

*    Certain confidential information on this page has been omitted and filed
     separately with the Securities and Exchange Commission.

<PAGE>

Section 9.  TRADEMARKS AND INTELLECTUAL PROPERTY RIGHTS

9.1  Trademark Use During Term of Agreement.  During the term of this Agreement,
Partner is authorized by Motive to use its trademark in connection with
Partner's rights under this Agreement.  Nothing contained in this Agreement
shall give Partner any interest in such trademark or the right to use the
trademark with any software other than the Product subject to this Agreement.

9.2  Confidential Information. During the course of performance of this
Agreement, either party (the "Disclosing Party") may disclose certain
Confidential Information to the other party (the "Receiving Party").  Receiving
Party shall use commercially reasonable efforts to maintain the secrecy of all
such Confidential Information.  Partner shall refrain from using any
Confidential Information for any purpose not specifically authorized in this
Agreement.  All Confidential Information shall be returned or destroyed promptly
upon termination or expiration of this Agreement

9.3  Motive warrants that it has the right to license any Product licensed
herein.  Motive also warrants that the Product does not infringe on any patent,
trademark, or copyright of a third party and hereby agrees to indemnify,
protect, defend, and hold Partner and Customers harmless from all claims, suits,
actions, losses, damages, judgments, costs and expenses which may be sustained
by Partner for an infringement of patent, trademark, trade secret, or copyright
by Motive; provided that (i) Partner gives prompt written notice of any suit to
Motive, and (ii) Motive shall have sole control of the defense of any action or
claim and all negotiations for  settlement or compromise thereof.  Partner may
elect to participate in any such action with an attorney of its own choice and
at its own expense.  In the event Partner is precluded by a court of competent
jurisdiction from using or distributing Product as a result of the infringement
by Motive of any patent, trademark, trade secret, or copyright of a third party,
Motive may, in its reasonable discretion, (i) obtain the right to use the
Product for Partner, or (ii) replace or modify the Product so that it no longer
infringes, or (iii) if neither (i) or (ii) above is commercially reasonable, in
Motive's reasonable discretion, then Motive may terminate the license for the
affected Product with a refund of the fees paid by Partner under this Agreement.

Section 10 - TERM AND TERMINATION

10.1 Term. This Agreement will be effective as stated on Schedule 1. Upon
completion of the term, the agreement may be renewed [*] by written mutual
consent of Partner and Motive. In the event a material breach by either party
goes uncured for [*] days after receipt of written notice of breach from the
non-breaching party, the non-breaching party may terminate this Agreement.
Additionally either party may terminate this Agreement in the event of a
substantial change in ownership of the other party.

No termination of this Agreement shall affect any licenses, including the
maintenance and support obligations of Partner and Motive for a period of [*]
from the date of termination. Additionally, Motive's obligation to provide
updates as specified in Section 5.1 shall continue for the duration of any [*]
contracts in place at the time of termination for up to [*] from the termination
date and provided Partner continues to pay the [*] maintenance fee per Schedule
No. 1.

10.2 Consequences.  Upon termination of this Agreement, Partner shall [*]
promotion, distribution, selling, sublicensing and marketing of the Product.
Without limiting the generality of the foregoing, Partner shall [*] display,
advertising, and use of all Motive names, trademarks, logos or designations.

Section 11 - GENERAL PROVISIONS

11.1 Governing Law.  This Agreement, including any Schedules, shall for all
purposes be deemed subject to the laws of the State of Texas, U.S.A.

11.2 Marketing Plan. The parties agree to produce a mutually agreed upon
rolling six-month marketing plan on a semi-annual basis. This is an informal
process that will be conducted between Partner and the Motive account team.

11.3 Motive will provide Partner with access to the Motive's Internet forum
and/or Motive's Internet home page. Motive will use this forum to disseminate
technical, marketing and channel information.

11.4 The parties agree that Peregrine will participate in Motive's beta
programs.

*    Certain confidential information on this page has been omitted and filed
     separately with the Securities and Exchange Commission.

                                       4
<PAGE>

11.5  Severability; Waiver.  In the event that any one or more of the provisions
contained herein shall for any reason be held to be unenforceable in any
respect, such enforceability shall not affect any other provision of this
Agreement, and this Agreement shall then be construed as if such unenforceable
provision(s) had never been contained herein. No term or provision hereof shall
be deemed waived and no breach consented to unless such waiver or consent shall
be in writing and signed by both parties.

11.6  Assignment. This Agreement shall be binding on and inure to the benefit of
the parties hereto and their respective successors and assigns. Neither party
may assign this Agreement without the prior express written consent of the other
party, which consent shall not be unreasonably withheld or delayed.
Notwithstanding the foregoing, either party may, without the consent of the
other party, assign its rights and obligations hereunder to a majority owned
(fifty-one percent or greater) an affiliate, or to a successor in interest or to
a purchaser of all or substantially all of its assets or of the assets of that
portion of such party's business as to which this Agreement pertains provided
such successor is not a competitor of Partner.

11.7  Notice.  Any notice or other communication required or permitted herein
shall be given in writing to the other party at such address as shall be given
by either party to the other in writing. Such notice shall be deemed to have
been given when (i) delivered personally, (ii) sent via certified mail (return
receipt requested) (iii) sent via cable, telegram, telex, telecopier, fax (all
with confirmation of receipt), or (iv) by recognized air courier service.

11.8  Entire Agreement.  The Agreement and the applicable Schedules constitute
the entire agreement between the parties and will become binding upon Motive
when signed by an authorized representative. Neither party shall be bound by any
additional provisions that may appear in a purchase order, acknowledgement of
the purchase order, or any other communication between Partner and Motive. This
Agreement or any Schedule may not be modified, except by a written addendum
signed by duly authorized representatives of both parties.

11.9  Compliance with Laws.  Partner shall comply with all applicable
international, federal, state and local laws and regulations in performing its
duties herein and in any of its dealings with respect to the Product.
Additionally, Partner agrees to comply with any applicable U.S. laws,
regulations, rulings and executive orders on exportation (including without
limitation the export and destination control regulations of the United States
Commerce and State Departments and the anti-boycott regulations of the United
States Commerce and Treasury Departments) and with all applicable laws on import
of software and technology.

11.10 Force Majeure.  Neither party shall be responsible for any failure to
perform due to unforeseen circumstances or to causes beyond either party's
reasonable control, including but not limited to acts of God, war, riot,
embargoes, acts of civil or military authorities, fire, floods, accidents,
strikes, or shortages of transportation, facilities, fuel, energy, labor, or
materials. In the event of any such delay, either party may defer the delivery
date for a period equal to the time of such delay.

11.11 Survival.  The provisions of Section 7, Section 9 and Section 10 shall
survive termination of this Agreement.

BY SIGNING BELOW, BOTH PARTIES AGREE TO ALL THE TERMS AND CONDITIONS SET FORTH
HEREIN.

Agreed and Accepted By:                Agreed and Accepted By:
Motive Corporation                     Peregrine Systems, Inc.

Signature: /s/ Pat Motola              Signature: /s/ D.S. Powanda
           -----------------------                ------------------------------
Name:      Pat Motola                  Name:      D.S. Powanda
           -----------------------                ------------------------------
Title:     CFO, VP                     Title:     EVP Operations
           -----------------------                ------------------------------
Date:      April 13, 2000              Date:      April 13, 2000
           -----------------------                ------------------------------

                                       5
<PAGE>

                           PURCHASING SCHEDULE NO. 1

                             DATED APRIL 13, 2000

     This Purchasing Schedule No. 1 ("Schedule") documents the product licenses
and services being purchased by Peregrine under the terms and conditions of the
License Agreement dated April 13, 2000, between Motive Communications, Inc., a
Delaware corporation with an office at 9211 Waterford Centre Blvd, Suite 100,
Austin, TX 78758 and Peregrine Systems, Inc. ("Peregrine").

1.   OVERVIEW

     In accordance with this Schedule, Motive will license its [*] (or
     subsequent name for the same product), Integration Server and Support Tuner
     (herein after "Product") as described in Attachment B to Peregrine for the
     sole purpose of Peregrine [*] and sublicensing and distributing to
     Peregrine's Customers.  Peregrine will only use the Integration Server and
     Support Tuner for use with a properly licensed [*].

2.   SCHEDULE VALUE

     The total minimum value of this Schedule is [*] plus the [*] fee and , with
     respect to perpetual licenses under Section 5B, any applicable fees for
     maintenance.  All fees exclude applicable taxes.

3.   PAYMENT COMMITMENT

     Peregrine will pay Motive royalty fees, as outlined in this Schedule, at
     the minimum of:

     Year                      Minimum Payment Amount
     ----                      ----------------------
     [*]                              [*]

4.   TERM

     a) The term of this Schedule ("Term") shall begin either a) [*] if Motive
        delivers the Product and [*] on or before [*] or b) [*] if Motive
        delivers the Product and [*] between [*] and [*] and [*] thereafter.
        Motive currently projects that the Product and Peregrine [*] will be
        delivered on or before [*]. If the Product and Peregrine [*] are not
        delivered by [*], the start date will be [*].

     b) During the first [*] years of the Term, Peregrine may [*] Products to
        Customers on a [*] basis (hereinafter called "Selling Term"). At the
        conclusion of the Selling Term, Peregrine will [*] to any new customers
        or increase the number of licenses sold to existing Customers.

     c) During the full [*] year Term, Peregrine may continue to use the
        Products and support the Products licensed to Customers. During the
        latter [*] years of the Term, Peregrine shall have the right to continue
        to collect [*] sub-licensed during the Selling Term. At the conclusion
        of the Term, Peregrine and Peregrine [*] Customers will [*]
        Products and accessing [*] or using any Support Components downloaded
        from [*]. Customers with [*] licenses may at this time procure
        maintenance and support directly from Motive for an additional
        maintenance fee. Customers with [*] licenses may at this time and at
        their discretion renew their licenses with Motive.

5.   LICENSE MODEL AND FEES

The Products may be licensed to Customers on a [*].  It is agreed by both
parties that the primary licensing model is a [*] model and the Product may be
licensed on a [*] basis as required.

A.   [*] License based Pricing Model:

The Product and Services licensed on an [*] basis are based on the number of [*]
who have access to the Products.  Included in the [*] fee is:

 . [*] license for [*] Product infrastructure components (the Motive Support
  Tuner and Motive Integration Server) required to support number of licensed
  users.

 . Product updates and enhancements

 . Premium [*] Premium Service (provided Peregrine has elected and paid for the
  Motive [*] Premium Service)

 . Each Customer [*] term will not be less than a [*] term.

* Certain confidential information on this page has been omitted and filed
  separately with the Securities and Exchange Commission.

                                      -1-
<PAGE>

 . Customer may not [*] during the initial [*] term.

 . After the [*] Customer [*] term, Peregrine shall pay Motive a royalty on any
  cancellation fees per the terms of the Discount Schedule in Section 5C.

                                      [*] Fee Model

[*]

B.   [*] License based Pricing Model

The Product can also be licensed on a [*] License Model as well.  The [*]
License covers only the Product and all additional services are licensed
separately on an [*] basis.

                                      [*] License Fee Model

                                      [*]

[*] License Fee                       [*]

[*] Basic Level III Maintenance &     [*]
     Support Plus Product Upgrades

C.   Discount Schedule:

A minimum [*] commitment is required to qualify for the OEM Program and Product
Fee discounts [*] are based on [*] volumes. All fees are net Product Fees to
Motive and [*] Fees are paid [*].

To qualify for a discount level, a [*] of the [*] Minimum is required. Once the
[*] Product Fee Net amount has been meet for a discount level during the [*]
Term, all [*] during the remainder of the [*] Term shall be at the new discount
level. At the beginning of the next year, the discount level will start at the
level the previous year ended and continue to build to the next level. A Product
Fee [*] can be made any time during the [*] Term.

Level       [*] Product Fee           [*]            Prepayment
                   Net

[*]                [*]                [*]                [*]

D.   Initiation Schedule:

     "Initiation" is the start of the [*] term for a Customer license.
     Peregrine must initiate Customer [*] licenses or buy [*] licenses per the
     following schedule:

                                    Minimum License Fee    Minimum License Fee

     Year  Period  Amount  Period  Amount
     ----  ------  ------  ------  ------

     [*]    [*]      [*]     [*]    [*]

E.   In the event that Peregrine exceeds the minimum fee for a given year, the
     excess shall be counted toward the minimum fee for the subsequent year.

6.   ROYALTY PAYMENTS

Royalty Report and Payment.  On a [*] basis Peregrine shall provide Motive with
a [*] Report accompanied by payment.  This report will include standard field
requirements like Customer Company Name, Address, Part Number, and Serial Number
with a statement detailing how much of the [*] have been consumed or what new
amount is owed to Motive. [*] reports and the accompanying payment will be sent
to Motive by the [*] of the [*] following the [*] in which the Product

* Certain confidential information on this page has been omitted and filed
  separately with the Securities and Exchange Commission.

                                      -2-
<PAGE>

was shipped or [*] were charged. If at the end of each Year [*], Peregrine's
royalty payments have not met the minimum amounts outlined in the Section 5
Peregrine will immediately pay Motive any delta balance up to the committed
payment amounts. During Years [*] of the Term, Peregrine will continue remitting
royalty and maintenance payments to Motive on a [*] basis.

7.   [*] PREMIUM [*] SERVICES

During the Term, Motive will provide Peregrine access to Motive's [*]
Premium Service, and its content updates for use and distribution to its
customers.  If elected, the [*] to be paid by Peregrine for this service is [*].

8.   MAINTENANCE SERVICES

Motive shall provide Peregrine a primary contact to the Motive service
organization for escalation of problems on a [*] basis. Peregrine will have the
option to use the Motive technology to support its products sold to Customers
and for Peregrine's for [*]. Peregrine's [*] during the Term will be limited to
a maximum of [*]. The [*] fee for this maintenance and support service is [*].
For payment of this [*] maintenance fee, Peregrine shall also receive Product
updates and enhancements for [*].

9.   SERVICES

Motive will provide Peregrine the following services.

a)   Motive will provide Peregrine the following Professional Services for [*]
for reimbursement of [*] to build a Peregrine adapter (the adapter which
integrates the Product to Peregrines product offering):

     . [*] of Professional Services resources (which equals [*].  One man day is
       defined as one person for an 8-hour day)

     . Additional [*] days increments of Professional Services may be purchased
       for [*] to solely support the Peregrine [*].

b)   Motive will provide Peregrine the following Implementation Support and
Training service for [*] for reimbursement of [*]:

     . [*] of implementation support and training (which equals [*].[*] consist
       of [*] and [*]). One man day is defined as one person for an 8-hour day.

     . Additional [*] for implementation support and training may be purchased
       for [*] plus [*]

10.  SALES SUPPORT

During the first [*] of the Term, Motive will provide the following [*] sales
support resources for relationship management, sales training, pre sales
technical support and sales support.  These resources will be both domestic and
international (Europe). Peregrine will reimburse Motive for reasonable travel
and living expenses incurred in providing the sales support services.

 . [*]

 . During the [*], Motive will promote cooperation with Partner's sales force.
  Motive account executives shall be compensated based upon [*] for any sales
  made by Peregrine into an Account Executive target account list.

11.  IMPLEMENTATION SUPPORT AND TRAINING SERVICES

During the first [*] following general availability of the [*], Motive shall
provide Peregrine an identified consulting service resource in both North
America and Europe [*] to assist Peregrine in developing [*].  To assist in the
training and ramp up of Peregrine's personnel resources, as part of the
partnership Motive shall provide at no charge:

 . Up to [*] per year in the Motive [*] Program. This is an extensive [*] program
  for consultants and implementation specialists

 . [*] people per year in [*] Program

* Certain confidential information on this page has been ommitted and filed
  separately with the Securities and Exchange Commission.

                                      -3-
<PAGE>

 . [*] days per year of on-site sales training

 . Motive shall make available to Peregrine its best practices models and
  training materials for use in developing Peregrine's implementation best
  practices training programs.

12.  MARKETING SCOPE

Motive will assist Peregrine in the following areas:

 . [*]

Motive will make available to [*] for reprint, customization, and distribution.
Motive and Peregrine will work together on a case-by-case basis on marketing and
PR activities to drive sales revenue and market awareness.  Such activities are
anticipated to include [*], partner and customer [*], participation at each
other's [*], and [*] to each other's web sites.

13.  REFERENCE ACCOUNT

In consideration of the favorable pricing and terms provided to Peregrine under
this Schedule, Peregrine agrees to the release of an individual press
announcement that Peregrine has licensed Motive technology to deliver internet
based technical support for Peregrine's products. Additionally, a Peregrine
spokesperson will speak to news reporters and industry analysts in conjunction
with said release.  Such press release will be coordinated with Peregrine and
shall be subject to its prior approval that shall not be unreasonably withheld.

14.  PRODUCT INTEGRATION

Following the execution of this agreement, he parties shall work together to
define the specific  requirements of building a [*] Product with the [*] product
offering.  A preliminary description of the [*] is provided in Attachment B.

15.  PRICE ADJUSTMENTS

All Product pricing is based on Motives [*].  If during [*] the Motive [*] for
the Products [*] Schedule for future purchases may be adjusted by applying the
discounts stated herein to the [*].

Peregrine, by its execution hereof, orders and purchases for delivery, under the
terms and conditions of the Agreement, the Licensed Product(s) and Support
Services provided in accordance with this Schedule.

Peregrine Systems, Inc. ("Peregrine")   Motive Communications, Inc. ("Motive")
-----------------------                 ---------------------------

By: /s/ D.S. Powanda                    By: /s/  Pat Motola
    ---------------------------------       ------------------------------------
Printed Name: D.S. Powanda              Printed Name: Pat Motola
              -----------------------                 --------------------------
Title: EVP Operations                   Title: CFO, VP
       ------------------------------          ---------------------------------
Date: 4/13/00                           Date: 4/13/2000
      -------------------------------         ----------------------------------

* Certain confidential information on this page has been omitted and filed
  separately with the Securities and Exchange Commission.

                                      -4-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00014-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00014-of-00352.parquet"}]]