Document:

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                                                                    EXHIBIT 10.7

                                 ACKNOWLEDGEMENT

        AGREEMENT (this "Agreement") is entered into as of August 31, 1999 by
and between The MacManus Group, Inc., a Delaware corporation ("MacManus"), and
Novo MediaGroup, Inc., a California corporation ("Novo").

        WHEREAS, MacManus and Novo are parties to a certain Exchange Agreement
dated the date hereof, and certain other transactions, whereby among other
things Novo will become the owner of all of the outstanding capital stock of
Blue Marble Advanced Communications Group, Ltd., a Delaware corporation ("Blue
Marble"), and MacManus will become the owner of certain of the outstanding
capital stock of Novo; and

        WHEREAS, the parties wish to acknowledge certain understandings between
them relating to the transactions contemplated by the Exchange Agreement
referred to above.

        Accordingly, the parties agree as follows:

        1. PREFERRED PROVIDER. It is the intention of the parties hereto that
Novo shall be a preferred provider of Internet professional services to
MacManus' operating companies and their clients, such that MacManus will seek
where appropriate to provide introductions and recommendations that Novo be a
provider of Internet professional services to its affiliated companies and their
clients, with the understanding that the respective MacManus affiliated
companies and their clients shall have the ability to make independent decisions
regarding their use of the services of Novo. In turn, it is the intention of the
parties that Novo will cooperate with MacManus' affiliated companies and make
available to their clients the full range of Internet professional services
capabilities and services offered by Novo. In connection therewith, it is
intended that Novo will participate in new business presentations with MacManus
companies. The parties mutually agree to use their reasonable efforts to
position Novo and take all other reasonable action as may be necessary to
resolve any client conflicts in a manner as will enable Novo to handle the
client accounts of MacManus' affiliated companies.

        2. CLIENT CONFLICT POLICIES. Novo agrees that at all times that MacManus
owns at least 1% of the outstanding voting capital stock of Novo, it will abide
by the specific client conflict of interest policies maintained by the following
clients of the MacManus group of companies: Coca-Cola, General Motors and
Procter & Gamble. Notwithstanding the foregoing, Novo will not be required by
MacManus to resign Toyota as a client. Novo also agrees to use its reasonable
efforts to abide by any client conflict policies of other MacManus clients which
are applicable to Novo. MacManus will use its reasonable efforts to position
Novo and its client relationships so as to avoid their being viewed as
conflicts, where possible.

        3. NON-SOLICITATION OF BLUE MARBLE CLIENTS. For a period of at least two
years from the date of this Agreement, MacManus shall not, and shall cause its
subsidiary companies not to, solicit any of the specific client brand or product
assignments for

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which Blue Marble currently is providing Internet professional services as of
the date of this Agreement, for the purpose of causing such client to transfer
such assignment(s) from Novo to any other MacManus business unit which may then
be providing Internet professional services directly in competition with Novo;
but subject in all cases to the ability of clients to make independent decisions
regarding their use of the services of Novo, and subject to Novo continuing to
perform services for such clients in a manner which satisfies the standards and
expectations of such clients.

        4. BUDGET APPROVAL PROCESS. The parties acknowledge that prior to the
commencement of each fiscal year of Novo, an annual operating budget for Novo
shall be prepared, which budget will be consistent with the general strategic
direction of Novo, and set forth in sufficient detail all significant items of
income and expense. Such operating budget, and any material deviations
therefrom, will be presented to the Board of Directors of Novo for its review
and approval, which process will include a review of all significant financial
items of Novo, including compensation and incentive packages for senior
management of Novo, employment contracts, capital expenditures and borrowings or
other financing arrangements.

        5. MISCELLANEOUS:

        5.1 AMENDMENT; WAIVER. This Agreement may not be modified, amended,
supplemented, canceled, or discharged, except by written instrument executed by
all parties. No failure to exercise, and no delay in exercising, any right,
power or privilege under this Agreement shall operate as a waiver, nor shall any
single or partial exercise of any right, power or privilege hereunder preclude
the exercise of any other right, power or privilege. No waiver of any breach of
any provision shall be deemed to be a waiver of any preceding or succeeding
breach of the same or any other provision, nor shall any waiver be implied from
any course of dealing between the parties. No extension of time for performance
of any obligations or other acts hereunder or under any other agreement shall be
deemed to be an extension of the time for performance of any other obligations
or any other acts.

        5.2 NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be deemed given if
delivered by certified or registered mail (first class postage pre-paid),
guaranteed overnight delivery or facsimile transmission if such transmission is
confirmed by delivery by certified or registered mail (first class postage
pre-paid) or guaranteed overnight delivery, to the following addresses and
telecopy numbers (or to such other addresses or telecopy numbers which any party
shall designate in writing to the other parties):

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                                        (a) if to Novo to:

                                            Novo MediaGroup, Inc.
                                            222 Sutter Street
                                            San Francisco, CA 94108
                                            Attn: Chief Financial Officer
                                            Telecopy: (415) 646-7001

                                            with a copy to:

                                            Britton Silberman & Cervantez LLP
                                            461 Second Street, Suite 332
                                            San Francisco, CA 94107
                                            Attn: Tbomas J. Cervantez, Esq.
                                            Telecopy: (415) 538-9000

                                        (b) if to MacManus to:

                                            The MacManus Group, Inc
                                            1675 Broadway
                                            New York, NY 100 10019
                                            Attn: Craig D. Brown
                                            Telecopy: (212) 468-3085

                                            with a copy to:

                                            Davis & Gilbert LLP
                                            1740 Broadway
                                            New York, NY 10019
                                            Attention: Lewis A. Rubin, Esq.
                                            Telecopy: (212) 468-4888

        5.3 PREVAILING PARTY. 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.

        5.4 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one and the same instrument.

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        5.5 GOVERNING LAW. Interpretation. This Agreement shall be construed in
accordance with and governed for all purposes by the laws of the State of
California applicable to contacts executed and to be wholly performed with
such state.

                                            The MacManus Group, Inc.

                                            By /S/ DAVID WINCLECHTER
                                              ----------------------------------

                                            Novo MediaGroup, Inc.

                                            By /S/ KELLY RODRIQUES
                                              ----------------------------------

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                                                                    EXHIBIT 10.8

                              NOVO MEDIAGROUP, INC.

                           INVESTORS' RIGHTS AGREEMENT

        This Investors' Rights Agreement (the "Agreement" is made as of the 31st
day of August, 1999, by and among Novo MediaGroup, Inc., a California
corporation (the "Company"), the holders of the Company's Series A Preferred
Stock (the "Investors"), N.W. Ayer Communications, Inc. (solely as to the Right
of First Offer set forth in Section 3 hereof) and Kelly Rodriques and Anthony
Westreich ("Westreich", together with "Rodriques", collectively, the "Founders"
and each, a "Founder").

                                    RECITALS

        The Company and the Investors have entered into a Stock Purchase
Agreement (the "Acquisition Agreement") of even date herewith pursuant to which
the Company desires to sell to the Investors and the Investors desire to
purchase from the Company shares of the Company's Series A Preferred Stock. A
condition to the Investors' obligations under the Acquisition Agreement is that
the Company, the Founders and the Investors enter into this Agreement in order
to provide (i) the Investors with certain rights to register shares of the
Company's Common. Stock issuable upon conversion of the Company's Series A
Preferred Stock held by the Investors, (ii) the Investors with certain rights to
receive or inspect information pertaining to the, Company, (iii) the Investors
with a right of first offer with respect to certain issuances by the Company of
its securities; and (iv) the Investors with co-sale rights with respect to
proposed share dispositions by the Founders and other members of the Company's
management. The Company and the Founders each desire to induce the Investors to
purchase shares of Series A Preferred Stock pursuant to the Acquisition
Agreement by agreeing to the terms and conditions set forth herein.

                                    AGREEMENT

        The parties hereby agree as follows:

        1. Registration Rights. The Company and the Investors covenant and agree
as follows:

                1.1 Definitions. For purposes of this Section 1:

                        (a) The terms "register," "registered," and
"registration" refer to a registration effected by preparing and filing a
registration statement or similar document in compliance with the Securities Act
of 1933, as amended (the "Securities Act"), and the declaration or ordering of
effectiveness of such registration statement or document by the Commission;

                        (b) The term "Registrable Securities" means:

                                (i)     The shares of Series A Common Stock of
                                        the Company issuable or issued upon
                                        conversion of the Series A

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                                        Preferred Stock of the Company held by
                                        the Investors (including the Series A
                                        Common Stock issued upon conversion of
                                        the Series C Common Stock initially to
                                        be issued upon conversion of the Series
                                        A Preferred Stock);

                                (ii)    any other shares of Common Stock of the
                                        Company issued as (or issuable upon the
                                        conversion or exercise of any warrant,
                                        right or other security which is issued
                                        as) a dividend or other distribution
                                        with respect to, or in exchange for or
                                        in replacement of the shares listed in
                                        (i) above, provided, however, that the
                                        foregoing definition shall exclude in
                                        all cases any Registrable Securities
                                        sold by a person in a transaction in
                                        which his or her rights under this
                                        Agreement are not assigned.
                                        Notwithstanding the foregoing, Common
                                        Stock and other securities shall only be
                                        treated as Registrable Securities if and
                                        so long as they have not been (A) sold
                                        to or through a broker or dealer or
                                        underwriter in a public distribution or
                                        a public securities transaction, or (B)
                                        sold in a transaction exempt from the
                                        registration and prospectus delivery
                                        requirements of the Securities Act under
                                        Section 4(l) thereof so that all
                                        transfer restrictions, and restrictive
                                        legends with respect thereto, if any,
                                        are removed upon the consummation of
                                        such sale;

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

                        (d) The term "Holder" means any person owning or having
the right to acquire Registrable Securities or any assignee thereof in
accordance with Section 1.11 hereof;

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

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

                        (g) "Registration Expenses" shall mean all expenses
incurred by the Company in complying with Sections 2.2,2.3 and 2.10 hereof,
including, without limitation, all registration and filing fees, printing
expenses, fees and disbursements of counsel for the Company, fees and
disbursements of a single counsel for the Holders, blue sky fees and expenses,
and the expense of any special audits incident to or required by any such
registration (but excluding the compensation of regular employees of the Company
which shall be paid in any event by the Company).

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                        (h) "Selling Expenses" shall mean all underwriting
discounts and selling commissions applicable to the sale.

                        (i) "Founder Shares" shall mean vested shares of the
Company's Common Stock now owned or subsequently acquired by the Founders
excluding any Common Stock issuable upon conversion of any Preferred Stock which
may be subsequently purchased by the Founders.

                1.2 Requested Registration. In case the Company shall receive
from Holders owning at least 33% of the Registrable Securities (the "Initiating
Holders") at any time after the Company's initial registration statement
including shares on its behalf to be sold to the public is declared effective by
the Commission, a written request that the Company effect any registration with
respect to at least thirty-three percent (33%) of all the Registrable Securities
then outstanding (or any lesser percentage if the anticipated offering price,
net of underwriter's commissions, would exceed $5,000,000), the Company will:

                        (a) promptly give written notice of the proposed
registration to all other Holders; and

                        (b) as soon as practicable, use its diligent best
efforts to effect such registration (including, without limitation, the
execution of an undertaking to file post effective amendments, appropriate
qualification under applicable blue sky or other state securities laws and
appropriate compliance with applicable regulations issued under the Securities
Act) as may be so requested at the earliest possible date and as would permit or
facilitate the sale and distribution of all or such portion of such Registrable
Securities as are specified in such request, together with all or such portion
of the Registrable Securities of any Holder or Holders joining in such request
as are specified in a written request given within fifteen (15) days after
receipt of such written notice from the Company; provided that the Company shall
not be obligated to take any action to effect any such registration,
qualification or compliance pursuant to this Section 1.2:

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

                                (ii)    At any time after the date that is five
                                        years following the effective date of
                                        the Company's first registered
                                        underwritten offering to the general
                                        public of its securities for its own
                                        account;

                                (iii)   Within six (6) months immediately
                                        following the effective date of the
                                        filing of the initial registration
                                        statement pertaining to an underwritten
                                        public offering of securities of the
                                        Company for its own account (other than
                                        a

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                                        registration relating solely to a
                                        Commission Rule 145 transaction or a
                                        registration relating solely to employee
                                        benefit plans or a registration on any
                                        registration form which does not include
                                        substantially the same information as
                                        would be required to be included in a
                                        registration statement covering the sale
                                        of Registrable Securities), and within
                                        four (4) months of any subsequent
                                        registration pursuant to an underwritten
                                        public offering; and

                                (iv)    After the Company has effected one
                                        registration pursuant to this Section
                                        1.2 and such registration has been
                                        declared or ordered effective.

        Subject to the foregoing clauses (i) through (iv) and to Section 1.2(d),
the Company shall file a registration statement covering the Registrable
Securities so requested to be registered as soon as practicable after receipt of
the request of the Initiating Holders, and in any event within ninety (90) days
of such request; provided, however, that if the Company shall furnish to such
Initiating Holders, within 30 days after receipt of notice from the Initiating
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 shareholders for such registration
statement to be filed on or before the date filing would be required and it is
therefore essential to defer the date of such filing, the Company shall have the
right to defer such filing for a period of not more than ninety (90) days after
receipt of the request of the Initiating Holders; provided, however that the
Company may not make such certification more than once in any 12 month period.

                        (c) Underwriting. If the Initiating Holders intend to
distribute the Registrable Securities covered by their request by means of an
underwriting, they shall so advise the Company as a part of their request made
pursuant to Section 1.2 and the Company shall include such information in the
written notice referred to in Section 1.2(a). The right of any Holder to
registration pursuant to Section 1.2 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent requested (unless
otherwise mutually agreed by a majority in interest of the Initiating Holders
and such Holder) to the extent provided herein.

        The Company shall (together with all Holders proposing to distribute
their securities through such underwriting) enter into an underwriting agreement
in customary form with the underwriter or underwriters selected for such
underwriting by a majority in interest of the Initiating Holders.
Notwithstanding any other provision of this Section 1.2, if the underwriter (or
the managing underwriter on behalf of the underwriters) determines that
marketing factors require a limitation of the number of shares to be
underwritten and so advises the Initiating Holders in writing, then the
Initiating Holders shall so advise all Holders (except those Holders who have
indicated to the Company their decision not to distribute any of their
Registrable Securities through such underwriting) and the number of shares of
Registrable Securities that may be included in the registration and underwriting
shall be allocated among all such Holders in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities owned by such
Holders at the time of filing the registration statement. No Registrable
Securities excluded

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from the underwriting by reason of the underwriter's marketing limitation shall
be included in such registration.

        If any Holder disapproves of the terms of the underwriting, such person
may elect to withdraw therefrom by written notice to the Company, the
underwriter (or managing underwriter on behalf of all of the underwriters) and
the Initiating Holders. The Registrable Securities and/or other securities so
withdrawn from such underwriting shall also be withdrawn from such registration;
provided, however, that, if by the withdrawal of such Registrable Securities a
greater number of Registrable Securities held by other Holders may be Included
in such registration (up to the maximum of any limitation imposed by the
underwriters), then the Company shall offer to all Holders who have included
Registrable Securities in the registration the right to include additional
Registrable Securities in the same proportion used in determining the
underwriter limitation in this Section 1.2(c).

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

                (d) Delay of Registration. If at the time of any request to
register Registrable Securities pursuant to this Section 1.2 the Company is
engaged or has fixed plans to engage within sixty (60) days of the time of the
request in a registered public offering as to which the Holders will be able to
include Registrable Securities pursuant to Sections 1.2 or 1.3, then the Company
may at its option direct that such request be delayed for a period not in excess
of six months from the effective date of such offering, provided that the
Company is actively employing in good faith all reasonable efforts to cause such
registration statement to become effective and, provided further, that no other
person or entity could require the Company to file a registration statement
during such period. Such right to delay a request may be exercised by the
Company not more than once in any two-year period.

        1.3 Company Registration.

                (a) If at any time or from time to time, the Company shall
determine to register any of its Common Stock, for its own account or for the
account of shareholders (other than the Holders) exercising any demand
registration rights which they may have, other than a registration relating
solely to employee benefit plans, or a registration relating solely to a
Commission Rule 145 transaction or any Rule adopted by the Commission in
substitution thereof or in amendment thereto, or a registration on any
registration form which does not include substantially the same information as
would be required to be included in a registration statement covering the sale
of Registrable Securities, the Company will:

                                (i)     promptly give to each Holder written
                                        notice thereof; and

                                (ii)    include in such registration (and any
                                        related qualification under blue sky
                                        laws or other compliance therewith), and
                                        in any underwriting involved therein,
                                        all the Registrable

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                                        Securities specified in a written
                                        request or requests, made within fifteen
                                        (15) days after receipt of such written
                                        notice from the Company, by any Holder
                                        or Holders.

                        (b) Underwriting. If the registration of which the
Company gives notice is for a registered public offering involving an
underwriting, THE Company shall so advise the Holders as a part of the written
notice given pursuant to Section 13(a)(i). In such event the right of any Holder
to registration pursuant to Section 1.3 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their securities through such underwriting shall
(together with the Company and the other holders distributing their securities
through such underwriting) enter into an underwriting agreement in customary
form with the underwriter or underwriters selected for such underwriting by the
Company. Notwithstanding any other provision of this Section 1.3, if the
underwriter (or managing underwriter on behalf of all of the underwriters)
determines in good faith that marketing factors require a limitation of the
number of shares to be underwritten, the underwriter (or managing underwriter on
behalf of all of the underwriters) may exclude some or all Registrable
Securities from such registration and underwriting -- the Company will, however,
use its best efforts to include such Registrable Shares in such offering. The
Company shall so advise all Holders (except those Holders who have indicated to
the Company their decision not to distribute any of their Registrable Securities
through such underwriting), and the number of shares of Registrable Securities
that may be included in the registration and underwriting shall be allocated
among such Holders in proportion, as nearly as practicable, to the respective
amounts of Registrable Securities owned by such Holders at the time of filing
the registration statement. No Registrable Securities excluded from the
underwriting by reason of the underwriter's marketing limitation shall be
included in such registration. If any Holder disapproves of the terms of any
such underwriting, such person may elect to withdraw therefrom by written notice
to the Company and the underwriter. The Registrable Securities and/or other
securities so withdrawn from such underwriting shall also be withdrawn from such
registration.

                1.4 Form S-3 Registration. In case the Company shall receive
from any Holder or Holders of Registrable Securities a written request or
requests that the Company effect a registration on Form S-3 (or any successor to
Form S-3) or any similar short-form registration statement and any related
qualification or compliance with respect to all or a part of the Registrable
Securities owned by such Holder or Holders, the Company will:

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

                (b) as soon as practicable, effect such registration and all
such qualifications and compliances as may be so requested and as would permit
or facilitate the sale and distribution of all or such portion of such Holder's
or Holders' Registrable Securities as are specified in such request, together
with all or such portion of the Registrable Securities of any other Holder or
Holders joining in such request as are specified in a written request given
within fifteen (15) days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect any such
registration, qualification or compliance pursuant to this Section 1.4:

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                        (i) if Form S-3 (or any successor or similar form) is
not available for such offering by the Holders, or

                        (ii) if the Holders, together with the holders of any
other securities of the Company entitled to inclusion in such registration,
propose to sell Registrable Securities and such other securities (if any) at an
aggregate price to the public of less than two million dollars ($2,000,000), or

                        (iii) if within thirty (30) days of receipt of a written
request from any Holder or Holders pursuant to this Section 1.4, the Company
shall furnish to the Holders a certificate signed by the Chairman of the Board
of Directors of the Company stating that in the good faith judgment of the Board
of Directors of the Company it is the Company's intention to make a public
offering within ninety (90) days;

                        (iv) if the Company shall furnish to the Holders a
certificate signed by the Chairman of the Board of Directors of the Company
stating that in the good faith judgment of the Board of Directors of the
Company, it would be seriously detrimental to the Company and its shareholders
for such Form S-3 registration to be effected at such time, in which event the
Company shall have the right to defer the filing of the Form S-3 registration
statement for a period of not more than ninety (90) days after receipt of the
request of the Holder or Holders under this Section 1.4; provided, that such
right to delay a request shall be exercised by the Company not more than once in
any twelve (12) month period, or

                        (v) if the Company has already effected three (3)
registrations on Form S-3 for the Holders pursuant to this Section 1.4, or

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

                (c) Subject to the foregoing, the Company shall file a Form S-3
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders. Registrations effected pursuant to this
Section 1.4 shall not be counted as demands for registration or registrations
effected pursuant to Sections 1.2.

                1.5 Expenses of Registration. All Registration Expenses incurred
in connection with any registration, qualification or compliance pursuant to
Section 1.2 or any registration under Section 1.3 shall be borne by the Company;
and all Selling Expenses shall be borne by the holders of the securities so
registered pro rata, on the basis of the number of shares so registered. The
Company and the holders shall mutually bear the cost of a registration under
Section 1.4 on a 50/50 basis with the Holders portion of such costs being borne
on a pro-rata basis based on the number of securities so registered.

                1.6 Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Section 1,
the Company will keep each

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Holder advised in writing as to the initiation of each registration,
qualification and compliance and as to the completion thereof. At its expense
the Company will:

                        (a) Keep such registration, qualification or compliance
effective for a period of one hundred twenty (120) days or until the Holder or
Holders have completed the distribution described in the registration statement
relating thereto, whichever first occurs;

                        (b) Furnish such number of prospectuses and other
documents incident thereto as a Holder from time to time may reasonably request;

                        (c) Use its best efforts and qualify the securities
covered by such registration statement under such 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 such states or jurisdictions;

                        (d) 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 underwriter or underwriters of such offering. Each
Holder participating in such underwriting shall also enter into and perform its
obligations under such an agreement; and

                        (e) Notify each Holder of Registrable Securities covered
by such registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing.

                1.7 Indemnification,

                        (a) The Company will indemnify each Holder, each of its
officers and directors and partners, and such Holder's legal counsel and
independent accountants and each person controlling such Holder, with respect to
whose Registrable Securities registration, qualification or compliance has been
effected pursuant to this Section 1, and each underwriter, if any, and each
person who controls any underwriter against all claims, losses, damages and
liabilities (or actions in respect thereof), including any of the foregoing
incurred in settlement of any litigation, commenced or threatened, arising out
of or based on (i) any untrue statement (or alleged untrue statement) of a
material fact contained in any prospectus, offering circular or other similar
document (including any amendment or supplement thereto and any related
registration statement notification or the like) incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances under which they were made, or (ii) any violation by the Company
of any federal, state or common law rule or regulation applicable to the Company
and relating to action or inaction required of the Company in connection with
any such registration, qualification or compliance, and will reimburse each such
Holder, each of its officers, directors and partners, and

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such holder's legal counsel and independent accountants and each person
controlling such Holder, each such underwriter and each person who controls any
such underwriter, for any legal and any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, provided that the Company will not be liable in any such
case to the extent that any such claim, loss, damage, liability or expense
arises out of or is based on any untrue statement or commission based upon
written information furnished to the Company by an instrument duly executed by
such Holder or underwriter and stated to be specifically for use therein.

                        (b) Each Holder will, if Registrable Securities held by
such Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers, each legal counsel and independent accountant of the
Company, each underwriter, if any, of the Company's securities covered by such a
registration statement, each person who controls the Company or such underwriter
within the meaning of the Securities Act, and each other such Holder, each of
its officers and directors and each person controlling such Holder, against all
claims, losses, damages and liabilities (or actions in respect thereof) arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement, prospectus, offering
circular of other similar document (including any amendment or supplement
thereto), or any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made, and
will reimburse the Company, such Holders, such directors, officers, persons,
underwriters or control persons for any legal or any other expenses reasonably
incurred in connection with investigating or defending any such claim, loss,
damage, liability or action, in each case to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by such Holder and
stated to be specifically for use therein; provided, however, that (i) the
indemnity agreement contained in this Section 1.7(b) shall not apply to amounts
paid in settlement of any such loss, claim, damage or liability if such
settlement is effected without the consent of the Holder (which consent shall
not be unreasonably withheld or delayed); and (ii), in no event shall the
liability of any Holder under this Section 1.7(b) exceed the net proceeds from
the offering received by such Holder; and (iii) the indemnity agreement
contained in this paragraph shall not apply in the case of a sale directly by
the Company of its securities (including a sale of such securities through any
lead institution or underwriter retained by the Company to engage in a
distribution solely on behalf of the Company) in which an untrue statement or
omission or alleged untrue state or omission was contained in a preliminary
prospectus and corrected in a final or amended prospectus, and the Company or
such lead institution or underwriter failed to deliver a copy of the final or
amended prospectus at or prior to the sale of the Registrable Securities.

                        (c) Each party entitled to indemnification under this
Section 1.6 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has received written notice of any claim as to which indemnity
may be sought, and shall permit the Indemnifying Party to assume the defense of
any such claim or any litigation resulting therefrom, provided that counsel for
the

                                       9
<PAGE>   10

Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense, provided, however that the indemnifying Party
shall bear the expense of such indemnified Party if the indemnified Party
reasonably determines that representation of both parties by the same counsel
would be inappropriate due to actual or potential conflicts of interest. The
failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this Section 1.7 unless
such failure to give notice shall materially adversely affect the Indemnifying
Party in the defense of any such claim or any such litigation. No Indemnifying
Party, in the defense of any such claim or litigation, shall, except with the
consent of each indemnified Party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release from
all liability in respect to such claim or litigation.

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

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

                        (a) Use its best efforts to facilitate the sale of the
Restricted Securities to the public, without registration under the Securities
Act pursuant to Rule 144 under the Securities Act ("Rule 144"), provided that
nothing contained in this Section 1.8 shall require the Company to file reports
under the Securities Act and the Exchange Act at anytime prior to the Company's
being otherwise required to file such reports.

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

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

                        (d) So long as a Purchaser owns any Restricted
Securities, to furnish to the Purchaser forthwith upon request (i) a written
statement by the Company as to its compliance with the reporting requirements of
Rule 144 (at any time after ninety (90) days after the effective date of the
first registration statement filed by the Company for an offering of its
securities to the general public), and of the Securities Act and the Exchange
Act (at any time after it has become subject to such reporting requirements),
(ii) a copy of the most recent annual or quarterly report

                                       10
<PAGE>   11

of the Company, and (iii) such other reports and documents so filed by the
Company as a Purchaser may reasonably request in availing itself of any rule or
regulation of the Commission allowing a Purchaser to sell any such securities
without registration.

                1.10 "Market Stand-off" Agreement. Investors hereby agree, if
requested by the Company and the underwriter managing the offering of Common
Stock (or other securities) of the Company, not to sell or otherwise transfer or
dispose of any Common Stock (or other securities) of the Company held by
Investors, without the prior consent of the Company or of such underwriter
during any period requested by the Company and such underwriter (not to exceed
one hundred eighty (180) days) following the effective date of a registration
statement of the Company filed under the Securities Act provided that:

                        (a) such agreement shall only apply to the first such
registration statement of the Company including shares (or securities) to be
sold on its behalf to the public in an underwritten offering;

                        (b) all officers and directors and 5% or greater
shareholders of the Company enter into similar agreements. The Company may
impose stop-transfer instructions with respect to the shares (or securities)
subject to the foregoing restriction until the end of said period.

                1.11 Transfer of Registration Rights. The rights to cause the
Company to register securities granted Investors under Sections 1.2, 1.3 and 1.4
may be assigned or otherwise conveyed by any Holder; provided, that the Company
is given written notice by such transferee at the time of or within a reasonable
time after said transfer, stating the name and address of said transferee and
said transferee's agreement to be bound by the provisions of Section 1 of this
agreement; provided, however, that the failure to so notify shall not affect the
validity or effectiveness of such transfer or assignment. Each Purchaser will
cause any proposed transferee of the Shares (or of the Common Stock into which
the Shares are convertible) held by a Purchaser to agree to take and hold such
securities subject to the provisions and upon the conditions specified in this
Section 1.

                1.12 Obligations of the Company. Whenever required to effect the
registration of any Registrable Securities, the Company shall, as expeditiously
as reasonably possible:

                        (a) Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use all reasonable
efforts to cause such registration statement to become effective, and keep such
registration statement effective for up to one hundred twenty (120) days or, if
earlier, until the Holder or Holders have completed the distribution related
thereto. The Company shall not be required to file, cause to become effective or
maintain the effectiveness of any registration statement that contemplates a
distribution of securities on a delayed or continuous basis pursuant to Rule 415
under the Securities Act.

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

                                       11
<PAGE>   12

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

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

                (d) Use its 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(s) of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.

                (f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.

                (g) Use its best efforts to furnish, on the date that such
Registrable Securities are delivered to the underwriters for sale, if such
securities are being sold through underwriters, (i) an opinion, dated as of
such date, of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters in
an underwritten public offering, addressed to the underwriters, if any, and (ii)
a letter dated as of such date, from the independent certified public
accountants of the Company, in form and substance as is customarily given by
independent certified public accountants to underwriters in an underwritten
public offering addressed to the underwriters.

                (h) Immediately notify each Holder of Registrable Securities
covered by such registration statement and confirm such advice in writing: (i)
when the registration statement has become effective and (ii) when any
post-effective amendment to the registration statement becomes effective.

                (i) Cause all Registrable Securities registered pursuant hereto
on a Registration Statement for resale by a Holder to be listed on each
securities exchange or included for trading in such automated quotation system
on or in which the shares of Common Stock of the Company are then listed or
included.

                                       12
<PAGE>   13

                1.13 Delay of Registration.

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

                (b) It shall be a condition precedent to the obligations of the
Company to register the shares of any Holder pursuant to Section 1.2, 1.3 or 1.4
that such selling Holders shall furnish to the Company such information
regarding themselves, the Registrable Securities hold by them and their intended
method of disposition of such securities as shall be required to effect the
registration of their Registrable Securities.

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

                1.14 Limitation on Subsequent Registration Rights. From and
after the date of this Agreement, the Company shall not, without the prior
written consent of a majority in interest of the Holders, enter into any
agreement with any holder or prospective holder of any securities of the Company
giving such holder or prospective holder any registration rights the terms of
which are more favorable than the registration rights granted to the Holders
hereunder.

                1.15 Termination of Registration Rights. The rights granted to
any Holder under this Section 1 shall terminate five (5) years from the date of
the Company's initial registration statement including shares on its behalf to
be sold to the public is declared effective by the Commission and shall also
terminate earlier (but in no event prior to one year after the date of the
Company's initial public offering) as to any Holder who could sell all shares of
Common Stock in any 90 day period pursuant to Rule 144.

        2. Covenants of the Company.

                2.1 Delivery of Financial Statements. The Company shall deliver
to each Holder of, at least 10% of all Registrable Securities (including for the
purposes hereof the Series A Preferred Stock and Series C Common Stock into
which it may convert) (each, a "Major Investor"):

                        (a) as soon as practicable after the end of each
calendar year (assuming that the calendar year and the fiscal year are the same,
and if not, then delivery of financials will follow the fiscal year) of the
Company, an income statement for such calendar year, a balance sheet of the
Company and statement of shareholder'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 an independent public
accounting firm of nationally recognized standing selected by the Company -
provided, however, that unaudited financials will

                                       13
<PAGE>   14

be provided within a minimum of 90 days after the end of the calendar year and
that the audited financials will be provided as soon as practicable after the
completion of the applicable audit;

                        (b) 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 profit or loss statement for such
fiscal quarter and an unaudited balance sheet as of the end of such fiscal
quarter;

                        (c) within forty-five (45) days of the end of each
month, an unaudited income statement and balance sheet for and as of the end of
such month, in reasonable detail;

                        (d) as soon as practicable, but in any event no later
than the beginning of each fiscal year, a budget and business plan for such
fiscal year, prepared on a monthly basis, including balance sheets and sources
and applications of funds statements for such months and, as soon as prepared,
any other budgets or revised budgets prepared by the Company; and

                        (e) provided, however, that with respect to the
 financial information provided for in Section 2.1(a) to (d), that except as
 may be required by law or as otherwise permitted or expressly contemplated
 herein, no Holder or their respective affiliates, employees, agents and
 representatives shall disclose to any third party any confidential information
 or other proprietary knowledge concerning the business or affairs of the
 Company which it may have acquired from the Company without the prior consent
 of the Company; provided, that (i) any information that is otherwise publicly
 available, without breach of this provision, or has been obtained from a third
 party without a breach of such third party's duties, shall not be deemed
 confidential information and (ii) that either party hereto shall be able to
 disclose such information to its employees and agents and to such other third
 parties as necessary as part of the operation of its business, including
 disclosure to existing or potential investors, lenders, acquirors or
 joint-venture candidates or as required by law or court order.

                2.2 Inspection. The Company shall permit each Major Investor, at
such Major 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 such Major Investor; provided, however, that the Company shall not
be obligated pursuant to this Section 2.2 to provide access to any information
which it reasonably considers to be a trade secret or similar confidential
information.

                2.3 Right to Maintain Interest.

                        (a) Mechanics. 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 notify each
Investor of such proposal and permit each Investor to participate in such
offering in order to maintain such Investor's percentage ownership interest in
the Company in accordance with the following provisions:

                                (i)     The, Company shall deliver a notice
                                        ("Notice") to each Investor stating (A)
                                        its bona fide intention to offer such
                                        Shares; (B) the number of such Shares to
                                        be offered; and

                                       14
<PAGE>   15

                                        (C) the price and terms, if any, upon
                                        which it proposes to offer such Shares.

                                (ii)    Within fifteen (15) days after delivery
                                        of the Notice, each Investor may submit
                                        to the Company an irrevocable commitment
                                        to purchase or obtain, within
                                        thirty-five (35) days after receipt of
                                        the Notice, at the price and on the
                                        terms specified in the Notice, up to
                                        that portion of such Shares which equals
                                        the proportion that the number of shares
                                        of Common Stock, including Common Stock
                                        then issuable upon conversion of any
                                        Preferred Stock held by such Investor
                                        bears to the total number of shares of
                                        Common Stock and Preferred Stock then
                                        outstanding (assuming the exercise or
                                        conversion of all securities exercisable
                                        for or convertible into Common Stock).

                                (iii)   The Company may, during the 60-day
                                        period following the expiration of the
                                        35-day period provided in Section
                                        2.3(a)(ii), offer the remaining
                                        unsubscribed portion of the 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 such agreement is not consummated
                                        within sixty (60) days of the execution
                                        thereof, the right provided hereunder
                                        shall be deemed to be revived and such
                                        Shares shall not be offered unless the
                                        Investors are permitted to maintain
                                        their percentage ownership interest in
                                        the Company in such offering in
                                        accordance with this Section 2.3.

                (b) Exclusions. The right to maintain interest in this Section
2.3 shall not be applicable to the issuance of:

                                (i)     securities issued pursuant to the
                                        conversion or exercise of convertible or
                                        exercisable securities, subject to
                                        adjustments hereunder and under the
                                        Company's charter documents;

                                (ii)    securities in connection with the
                                        acquisition by the Company of another
                                        entity, as approved by the Board of
                                        Directors, whether by merger,
                                        consolidation, sale of assets, sale or
                                        exchange of stock or otherwise, subject
                                        to the provisions of the Company's
                                        charter documents;

                                (iii)   securities to financial institutions or
                                        lessors in connection with commercial
                                        credit arrangements, equipment
                                        financings or similar transactions
                                        approved by the Board of Directors; or

                                       15
<PAGE>   16

                                (iv)    securities to any person or entity in
                                        which such issuance is approved by the
                                        Board of Directors in connection with a
                                        strategic business relationship between
                                        the Company and such person or entity
                                        also involving material marketing,
                                        distribution, product development or
                                        technology licensing rights, as
                                        determined in good faith by the Board of
                                        Directors of the Company and securities
                                        offered to the Company by the holders of
                                        Registrable Securities and any
                                        transferees of holder of Registrable
                                        Securities as part of any Right of First
                                        Refusal subsequently agreed to between
                                        the holders of Registrable Securities as
                                        applied to shares of Registrable
                                        Securities and any other securities of
                                        the Company which a holder of
                                        Registrable Securities may obtain from
                                        the Company.

                        (c) Assignment of Right. Each Investor shall be
permitted to assign the right to maintain interest in this Section 2.3 to
constituent partners or members of such investor or any entity controlling,
controlled by or under common control with such Investor.

                2.4 Co-Sale Rights.

                        (a) Sales by a Founder.

                                (i)     If any Founder proposes to sell or
                                        transfer any Founder Shares in one or
                                        more related transactions which will
                                        result in the transfer of 50,000 or more
                                        shares of Founder Shares by such
                                        Founder, then such Founder shall
                                        promptly give written notice (the
                                        "Notice") to the Company and to each of
                                        the Major Investors at least 30 days
                                        prior to the closing of such sale or
                                        transfer. The Notice shall describe in
                                        reasonable detail the proposed sale or
                                        transfer including, without limitation,
                                        the number of Founder Shares to be sold
                                        or transferred, the nature of such sale
                                        or transfer, the consideration to be
                                        paid, and the name and address of each
                                        prospective purchaser or transferee. In
                                        the event that the sale or transfer is
                                        being made pursuant to the provisions of
                                        subsection (b) hereof, the Notice shall
                                        state under which section and subsection
                                        the sale or transfer is being made.

                                (ii)    Each Major Investor shall have the
                                        right, exercisable upon written notice
                                        to such Founder within twenty (20) days
                                        after receipt of the Notice, to
                                        participate in such sale on the same
                                        terms and conditions specified in the
                                        Notice. To the extent that one or more
                                        of the Major Investors exercise such
                                        right of participation in accordance
                                        with the terms and conditions set forth
                                        below, the number of Founder Shares

                                       16
<PAGE>   17

                                        that the Founder may sell in the
                                        transaction shall be correspondingly
                                        reduced.

                                (iii)   Each Major Investor may sell all or any
                                        part of that number of shares of Common
                                        Stock equal to the product obtained by
                                        multiplying (A) the aggregate number of
                                        Founder Shares covered by the Notice by
                                        (B) a fraction, the numerator of which
                                        is the number of shares of Common Stock
                                        owned by the Major Investor at the time
                                        of the sale or transfer and the
                                        denominator of which is the total number
                                        of shares of Common Stock owned by the
                                        Founder and the Major Investors at the
                                        time of the sale or transfer (each such
                                        Major Investor who elects to sell shares
                                        in such a transaction is defined as a
                                        "Participant" for purposes of such
                                        sale).

                                (iv)    If any Major Investor fails to elect to
                                        fully participate in such Founder's sale
                                        pursuant to this subsection (b), then
                                        the other Major Investors may elect to
                                        purchase such shares on a pro-rata basis
                                        within 10 days of such notice not to
                                        participate, and thereafter such Founder
                                        may sell an additional number of Founder
                                        Shares that is equal to the pro-rata
                                        share of any such Major Investor who so
                                        elects not to become a Participant and
                                        with respect to which there is room for
                                        additional sales of stock by such
                                        Founder.

                                (v)     Each Participant shall effect its
                                        participation in the sale by promptly
                                        delivering to the Founder for transfer
                                        to the prospective purchaser one or more
                                        certificates, properly endorsed for
                                        transfer, which represent:

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

                                        (B)  that number of shares of Preferred
                                             Stock which is at such time
                                             convertible into the number of
                                             shares of Common Stock which such
                                             Participant elects to sell;
                                             provided, however, that if the
                                             prospective purchaser objects to
                                             the delivery of Preferred Stock in
                                             lieu of Common Stock, such
                                             Participant shall convert such
                                             Preferred Stock into Common Stock
                                             and deliver Common Stork as
                                             provided in subparagraph 2(e)(i)
                                             above. The Company agrees to make
                                             any such conversion concurrent with
                                             the actual transfer of such shares,
                                             to the purchaser.

                                       17
<PAGE>   18

                                (vi)    The stock certificate or certificates
                                        that the Participant delivers to the
                                        Founder pursuant to paragraph 2(e) shall
                                        be transferred to the prospective
                                        purchaser in consummation of the sale of
                                        the Common Stock pursuant to the terms
                                        and conditions specified in the Notice,
                                        and the Founder shall concurrently
                                        therewith remit to such Participant that
                                        portion of the sale proceeds to which
                                        such Participant is entitled by reason
                                        of such participant's participation in
                                        such sale. To the extent that any
                                        prospective purchaser, or purchasers,
                                        prohibits such assignment or otherwise
                                        refuses to purchase shares or other
                                        securities a Participant exercising
                                        rights of co-sale hereunder, the Founder
                                        shall not sell to such prospective
                                        purchaser or purchasers any Founder
                                        Shares unless and until, simultaneously
                                        with such sale, the Founder shall
                                        purchase such shares or other securities
                                        from such Participant.

                                (vii)   The exercise or non-exercise of the
                                        rights of the Participants hereunder to
                                        participate in one or more sales of
                                        Founder Shares made by a Founder shall
                                        not adversely affect their rights to
                                        participate in subsequent sales of
                                        Founder Shares subject to paragraph
                                        2(a).

                                (viii)  If none of the Major Investors elects to
                                        participate in the sale of the Founder
                                        Shares subject to the Notice, the
                                        Founder may, not later than sixty (60)
                                        days following delivery to the Company
                                        and each of the Major Investors of the
                                        Notice, enter into an agreement
                                        providing for the closing of the
                                        transfer of the Founder Shares covered
                                        by the Notice within thirty (30) days of
                                        such agreement on terms and conditions
                                        not more favorable to the transferor
                                        than those described in the Notice. Any
                                        proposed transfer on terms and
                                        conditions more favorable than those
                                        described in the Notice, as well as any
                                        subsequent proposed transfer of any of
                                        the Founder Shares by the Founder, shall
                                        again be subject to the co-sale rights
                                        of the Major Investors and shall require
                                        compliance by the Founder with the
                                        procedures described in this subsection
                                        (b).

                        (b) Exempt Transfers.

                                (i)     Notwithstanding the foregoing, the
                                        provisions of subsections (a)(ii)
                                        through (a)(viii) shall not apply to (A)
                                        any pledge of Founder Shares made
                                        pursuant to a bona fide loan transaction
                                        that creates a mere security interest;
                                        (B) any transfer to the ancestors,
                                        descendants or spouse of a Founder or to
                                        trusts for the benefit of such persons
                                        or a

                                       18
<PAGE>   19
                                        Founder; or (C) any bona fide gift;
                                        provided that (I) the transferring
                                        Founder shall inform the Major Investors
                                        of such pledge, transfer or gift prior
                                        to effecting it and (II) the pledgee,
                                        transferee or donee shall furnish the
                                        Major Investors with a written agreement
                                        to be bound by and comply with all
                                        provisions of subsection (a) above, as
                                        well as the terms of any stock purchase
                                        or other agreement pursuant to which
                                        such Founder Shares were issued. Such
                                        transferred Founder Shares shall remain
                                        "Founder Shares" hereunder, and such
                                        pledgee, transferee or donee shall be
                                        treated as a "Founder" for purposes of
                                        this Agreement.

                                (ii)    Notwithstanding the foregoing, the
                                        provisions of subsection (a) above shall
                                        not apply to the sale of any Founder
                                        Shares (i) to the public pursuant to a
                                        registration statement filed with, and
                                        declared effective by, the Securities
                                        and Exchange Commission under the
                                        Securities Act of 1933, as amended (the
                                        "Securities Act"); (ii) to the Company,
                                        or (iii) if prior to such sale, the
                                        Founder held less than 5% of the
                                        Company's outstanding shares or the
                                        Founders collectively held less than 10%
                                        of the Company's outstanding shares.

                        (c) Prohibited Transfers.

                                (i)     In the event a Founder should sell any
                                        Founder Shares in contravention of the
                                        co-sale rights of the Major Investors
                                        under this Agreement (a "Prohibited
                                        Transfer"), each Major Investor, in
                                        addition to such other remedies as may
                                        be available at law, in equity or
                                        hereunder, shall have the put option
                                        provided below, and the Founder shall
                                        be bound by the applicable provisions of
                                        such option.

                                (ii)    In the event of a Prohibited Transfer by
                                        a Founder, each Major Investor shall
                                        have the right to sell to such Founder
                                        the number of shares of Common Stock
                                        equal to the number of shares each Major
                                        Investor would have been entitled to
                                        transfer to the purchaser under
                                        subsection (a)(iii) had the Prohibited
                                        Transfer hereof been effected pursuant
                                        to and in compliance with the terms
                                        hereof. Such sale shall be made on the
                                        following terms and conditions:

                                        (A)  The price per share at which the
                                             shares are to be sold to the
                                             Founder shall be equal to the price
                                             per share paid by the purchaser to
                                             the Founder in the Prohibited
                                             Transfer. 'The Founder shall also
                                             reimburse each Major Investor for
                                             any and all fees and expenses,
                                             including legal fees and expenses,

                                       19
<PAGE>   20

                                             incurred pursuant to the exercise
                                             or the attempted exercise of the
                                             Major Investor's rights under
                                             subsection (b).

                                        (B)  Within 90 days after the later of
                                             the dates on which the Major
                                             Investor (I) received notice of the
                                             Prohibited Transfer or (II)
                                             otherwise became aware of the
                                             Prohibited Transfer, each Major
                                             Investor shall, if exercising the
                                             option created hereby, deliver to
                                             the Founder the certificate or
                                             certificates representing shares to
                                             be sold, each certificate to be
                                             properly endorsed for transfer.

                                        (C)  The Founder shall, upon receipt of
                                             the certificate or certificates for
                                             the shares to be sold by a Major
                                             Investor, pursuant to this
                                             subparagraph (c)(ii), pay the
                                             aggregate purchase price therefor
                                             and the amount of reimbursable fees
                                             and expenses, as specified in
                                             subparagraph (c)(2)(A), in cash or
                                             by other means acceptable to the
                                             Major Investor

                                        (D)  Notwithstanding the foregoing, any
                                             attempt by a Founder to transfer
                                             Founder Shares in violation of
                                             subsection (b) hereof shall be void
                                             and the Company agrees it will not
                                             effect such a transfer nor will it
                                             treat any alleged transferee as the
                                             holder of such shares without the
                                             written consent of a majority in
                                             interest of the Major Investors.

                        (d) Legend.

                                (i)     Each certificate representing shares of
                                        Stock now or hereafter owned by the
                                        Founders or issued to any person in
                                        connection with a transfer pursuant to
                                        subsection (a)(i) hereof shall be
                                        endorsed with the following legend:

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

                                (ii)    Each Founder agrees that the Company may
                                        instruct its transfer agent to impose
                                        transfer restrictions on the shares
                                        represented by certificates bearing the
                                        legend referred to in subsection (d)(i)
                                        above to enforce the provisions of this

                                       20
<PAGE>   21

                                        Agreement and the Company agrees
                                        promptly to do so. The legend shall be
                                        removed upon termination of this
                                        Agreement.

                        (e) Right of First Offer

                                (i)     In the event that a Notice is delivered
                                        to each Major Investor pursuant to
                                        subsection (a)(i) above, each such Major
                                        Investor, in lieu of the exercise of the
                                        rights set forth in subsection (a)(ii)
                                        above, shall have the right within
                                        twenty (20) days following receipt of
                                        the Notice, to purchase any or all of
                                        the Founder Shares specified in the
                                        Notice (including any shares being sold
                                        by Participants pursuant to this
                                        paragraph 2) upon substantially the same
                                        terms and conditions specified therein.
                                        Each such Major Investor so electing to
                                        purchase such Founder Shares is referred
                                        to herein as a "Purchasing Investor."
                                        Such right shall be exercisable by
                                        written notice (the "Purchase Notice")
                                        delivered by the Purchasing Investor(s)
                                        to the Company, the Founders and the
                                        Participants prior to the expiration of
                                        the twenty (20) day exercise period. If
                                        such right is exercised with respect to
                                        all or any of the Founder Shares
                                        specified in the Notice, then the
                                        Purchasing Investor(s) shall effect the
                                        purchase of the Founder Shares,
                                        including payment of the purchase price,
                                        not more than ten (10) business days
                                        after delivery of the Purchase Notice;
                                        and at such time the Founder and/or
                                        Participant shall deliver to the
                                        Purchasing Investor the certificates
                                        representing the Founder Shares to be
                                        purchased, properly endorsed for
                                        transfer.

                                (ii)    In the event that no Major Investor
                                        exercises the rights provided in this
                                        subsection (e), the Founder Shares shall
                                        be sold pursuant to the provisions of
                                        subsection (a)(viii) above. In the event
                                        that the Purchasing Investor(s) make a
                                        timely exercise of the rights contained
                                        in this subsection (e) with respect to a
                                        portion, but not all of the Founder
                                        Shares subject to the Notice, then the
                                        remainder of the Founder Shares subject
                                        to such Notice shall be sold pursuant to
                                        the provisions of subsection (a)(viii)
                                        above.

                2.6 Termination of Covenants. The covenants set forth in
Sections 2.1 through Section 2.4 shall terminate as to each Major Investor and
be of no further force or effect upon the earliest of (a) the effective date of
the Company's first registration statement filed under the Securities Act for
the sale of its securities to the public; (b) the closing of the sale,
conveyance, or other disposition or encumbrance all or substantially all of the
Company's assets or business or the merger into or consolidation with any other
entity (other than a wholly-owned

                                       21
<PAGE>   22

subsidiary corporation) or any other transaction or series of related
transactions in which more than fifty percent (50%) of the voting power of the
Company is disposed of (other than a merger effected exclusively for the purpose
of changing the domicile of the Company); and (c) when the Company first becomes
subject to the periodic reporting requirements of Sections 13 or 15(d) of the
Exchange Act.

                2.7 Aggregation of Stock. For purposes of the share threshold
used in determining which Investors are "Major Investors" under this Agreement,
all shares of Registrable Securities held or acquired by affiliated entities or
persons shall be aggregated together.

        3. Right of First Offer of Company.

                (a) If MacManus proposes to sell or transfer any shares of the
Series A Preferred Stock or any other stock of Novo which MacManus shall acquire
in respect of the Series A Preferred Stock in any subsequent or simultaneous
transaction or any shares of Series C Common Stock issued to MacManus or an
affiliate of MacManus in connection with any share transfer or exchange between
MacManus or its controlled affiliates and Novo (collectively, for purposes of
this Section 3, the "Transfer Shares") to any purchaser other than Novo or as
otherwise set forth below, then MacManus shall promptly give written notice (the
"Offer Notice") to Novo offering to sell to Novo such Transfer Shares at a price
and on such other terms as shall be specified in such Offer Notice.

                (b) Upon receipt of an Offer Notice, Novo, or any assignee of
Novo, shall have the right within thirty (30) business days following receipt of
the Transfer Notice, to purchase all (but not less than all) of the Transfer
Shares specified in the Offer Notice (which right shall be exercised at the
discretion of the Board of Directors of Novo or any Committee thereof to which
such power shall be delegated by such Board) upon substantially the same terms
and conditions specified therein. Such right shall be exercisable by written
notice (the "Purchase Notice") delivered by Novo or its assignee to MacManus
prior to the expiration of the thirty (30) business day exercise period. If such
right is exercised with respect to all of the Transfer Shares specified in the
Offer Notice, then Novo shall effect the purchase of such Transfer Shares,
including payment of the purchase price, not more than ten (10) business days
after delivery of the Purchase Notice; and at such time MacManus shall deliver
to Novo or its designate the certificates representing such Transfer Shares to
be purchased, properly endorsed for transfer.

                (c) In the event that Novo, or its assignee, elects not to
exercise the rights provided in this Section 3, the Transfer Shares specified in
the Offer Notice may be sold by MacManus to any third party (subject to
paragraph (g) below and the provisions of Article 3 above); provided the terms
of such sale are not materially more favorable to the third party purchaser than
the terms set forth in the Offer Notice; and further provided that such sale
takes place within one hundred twenty (120) days after the Offer Notice was
first delivered to Novo. MacManus shall be required to satisfy again with the
procedures contained in this Section 3 in the event any such proposed sale to
the third party shall not comply with the provisos contained in the immediately
preceding sentence.

                                       22
<PAGE>   23

                (d) The covenants set forth in this Section 3 shall terminate
and be of no further force or effect upon the earliest of (i) the effective date
of Novo's first registration statement filed under the Securities Act for the
sale of its securities to the public; and (ii) when Novo first becomes subject
to the periodic reporting requirements of Sections 13 or 15(d) of the Exchange
Act or (iii) when MacManus ceases to own Series A Preferred Stock and/or Series
C Common Stock representing at least 20% of the total outstanding voting stock
of Novo.

                (e) In the event of any subsequent receipt of shares of Novo by
MacManus in respect of the shares of Series A Preferred Stock acquired
hereunder, whether by stock dividend, reclassification, share exchange or any
other form of transaction, MacMamus agrees that such shares shall be
automatically subject to the terms of this Right of First Offer set forth above.

                (f) The Right of First Offer contained in this Section 3 shall
not apply to any transfer of Transfer Shares by MacManus to any MacManus
Affiliate, including for these purposes any transfer directly to or to any
company controlled by the shareholders of MacManus or in correction with any
transaction where MacManus is selling all or a substantial portion of its
business.

                (g) Notwithstanding anything to the contrary above, in the event
the Transfer Shares that MacManus intends to transfer to a third party represent
30% or more of the then outstanding voting capital stock of Novo, Novo shall
have the right, to the extent it has reasonable, good faith objections to the
identity of the proposed purchaser (such as if such purchaser is a direct
competitor of Novo or has an unfavorable reputation in the Internet industry) to
require that MacManus not sell shares constituting 30% or more of such voting
stock to such proposed purchaser. Any such objection by Novo must be made in
writing to MacManus within 10 business days of the date Novo is first informed
by MacManus of the identity of such proposed purchaser.

                (h) So long as the securities subject to this Agreement are
subject to the Right of First Offer set forth in this Agreement, such shares
subject to the Right of First Offer shall have the following legend:

        "THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
TRANSFERRED, ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN COMPLIANCE WITH
THE TERMS OF A WRITTEN AGREEMENT BETWEEN THE COMPANY AND THE INITIAL HOLDER
HEREOF. SUCH AGREEMENT PROVIDES FOR CERTAIN TRANSFER RESTRICTIONS, INCLUDING
RIGHTS OF FIRST OFFER UPON AN ATTEMPTED TRANSFER OF SECURITIES. THE SECRETARY OF
THE COMPANY WILL UPON WRITTEN REQUEST FURNISH A COPY OF SUCH AGREEMENT TO THE
HOLDER HEREOF WITHOUT CHARGE."

        4. Miscellaneous.

                                       23
<PAGE>   24
                4.1 Additional Parties. In the event of (a) an additional
closing or closings of the purchase of shares of Series A Preferred Stock; or
(b) the issuance of any additional warrants to purchase shares of Series A
Preferred Stock to financial institutions or lessors in connection with
commercial credit arrangements, equipment financings or similar transactions,
the terms of which approved are by the Board of Directors, then upon execution
of a signature page counterpart hereto by any purchaser, financial institution
or lessor and without need for an amendment hereto except to add such entity's
name to Exhibit A hereto, any such entity shall become a party to this
Agreement, shall be deemed an "Investor" for purposes of this Agreement, and
shall have the identical rights and obligations hereunder as the other
Investors, in each case as of the date of execution of such counterpart
signature page.

                4.2 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 permitted successors and assigns of the parties
(including transferees of any of the 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.

                4.3 Governing Law. This Agreement and all acts and transactions
pursuant hereto shall be governed, construed and interpreted in accordance with
the laws of the State of California, without giving effect to principles of
conflicts of laws.

                4.4 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.

                4.5 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.

                4.6 Notices. Unless otherwise provided, any notice required or
permitted by this Agreement shall be in writing and shall be deemed sufficient
upon delivery, when delivered personally or by overnight courier or sent by
telegram or fax, or forty-eight (48) hours after being deposited in the U.S.
mail, as certified or registered mail, with postage prepaid, and addressed to
the party to be notified at such party's address or fax number as set forth on
the signature pages hereto or on Exhibit A hereto or as subsequently modified by
written notice, and if to the Company, with a copy to (i) Thomas J. Cervantez,
Esq., c/o Britton Silberman & Cervantez LLP, 461 Second Street, San Francisco,
California 94107 and (ii) Lewis A. Rubin, Esq., c/o David & Gilbert LLP, 1740
Broadway, New York, New York 10019.

                4.7 Prevailing Party. 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.

                                       24
<PAGE>   25

                4.8 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, not including the
Founders' Stock; provided that if such amendment has the effect of affecting the
Founders' Stock (a) in a manner different than securities issued to the
Investors and (b) in a manner adverse to the interests of the holders of the
Founders' Stock, then such amendment shall require the consent of the holder or
holders of a majority of the Founders' Stock. 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.

                4.9 Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, the parties agree to
renegotiate such provision in good faith. In the event that the parties cannot
reach a mutually agreeable and enforceable replacement for such provision, then
(a) such provision shall be excluded from this Agreement, (b) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (c) the
balance of the Agreement shall be enforceable in accordance with its terms.

                4.10 Delays or Omissions. No delay or omission to exercise any
right, power or remedy accruing to any party to this Agreement upon any breach
or default of any other party under this Agreement shall impair any such right,
power or remedy of such party nor shall it be construed to be a waiver of any
such breach or default, or an acquiescence therein, or of or in any similar
breach or default thereafter occurring; nor shall any waiver of any single
breach or default be deemed a waiver of any other breach or default theretofore
or thereafter occurring.

                4.11 Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto pertaining to the subject matter hereof,
and any and all other written or oral agreements existing between the parties
hereto are expressly canceled.

                            [Signature Page Follows]

                                       25
<PAGE>   26

        The parties have executed this Investors' Rights Agreement as of the
date first above written.

COMPANY:                                INVESTORS:

NOVO MEDIAGROUP, INC.                   THE MACMANUS GROUP, INC.

By: /s/ KELLY RODRIQUES                 By: /s/ DAVID WINCLECHTER
   -----------------------------           -------------------------------------
   Kelly Rodriques, C.E.O.              Name: David Winclechter
                                             -----------------------------------
                                        Title: VP/SECRETARY
                                              ----------------------------------
Address:
                                        Address:

     Facsimile:
                                             Facsimile:
FOUNDERS:

/s/ KELLY RODRIQUES                     /s/ ANTHONY WESTREICH
--------------------------------        ----------------------------------------
Kelly Rodriques                         Anthony Westreich

Address: 222 Sutter 6th Floor           Address: 222 Sutter Street 6th Floor
         San Francisco, CA. 94108                San Francisco, CA. 94108

   Facsimile:                              Facsimile:

                                        N.W. AYER COMMUNICATIONS, INC. (to be
                                        bound by the Right of First Offer in
                                        Section 3 hereof as relates to the
                                        Series C Common Stock and any
                                        distributions thereon)

                                        By: /s/ DAVID WINCLECHTER
                                           -------------------------------------
                                        Name: David Winclechter
                                             -----------------------------------
                                        Title: VP/SECRETARY
                                              ----------------------------------
                                        Address:
                                        Facsimile:

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