Document:

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                                                                    EXHIBIT 10.2

            SIXTH AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

         AGREEMENT made as of the 16th day of June, 2000, by and among Sitara
Networks, Inc., a Delaware corporation (the "Company"), Malik Z. Khan (the
"Founder") and each of the persons listed as Investors on Schedule RRA-1 hereto,
as amended (the "Investors").

         WHEREAS, the Company, certain of the Investors and the Founder entered
into a Fifth Amended and Restated Registration Rights Agreement dated January
14, 2000, as amended (the "Existing Registration Rights Agreement"), in
conjunction with the issuance by the Company to certain Investors of shares of
the Company's Series F Convertible Preferred Stock, $.00001 par value (the
"Series F Preferred Stock"), all of which are convertible into shares of the
Company's Common Stock, $.00001 par value (the "Common Stock");

         WHEREAS, the Company is this date issuing to certain of the Investors
up to 4,650,000 shares of the Company's Series G Convertible Preferred Stock,
$.00001 par value (the "Series G Preferred Stock"), all of which are convertible
into shares of Common Stock, pursuant to a Series G Convertible Preferred Stock
Purchase Agreement dated as of the date hereof (the "Series G Preferred Stock
Purchase Agreement"); and

         WHEREAS, the parties hereto, who hold sufficient Shares of Registrable
Stock (as hereinafter defined) to amend the Existing Registration Rights
Agreement, desire to amend and restate the Existing Registration Rights
Agreement in order to add the purchasers of the Series G Preferred Stock as
parties thereto, to grant such purchasers registration rights with respect to
the Common Stock issuable upon conversion of the Series G Preferred Stock, as
hereinafter provided and to amend certain other provisions of the Existing
Registration Rights Agreement.

         NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto hereby agree as follows:

         1. Definitions. The following terms shall be used in this Agreement
with the following respective meanings:

         "Affiliate" means (i) any Person directly or indirectly controlling,
controlled by or under common control with another Person; (ii) any Person
owning or controlling ten (10%) percent or more of the outstanding voting
securities of such other Person; (iii) any officer, director or partner of such
Person; and (iv) if such Person is an officer, director or partner, any such
company for which such Person acts in such capacity.

         "Commission" means the Securities and Exchange Commission.

         "Common Stock" means and includes (a) the Company's Common Stock,
$.00001 par value per share, as authorized on the date of this Agreement and (b)
any other securities into which or for which the securities described in (a)
above may be converted or exchanged pursuant to a plan of recapitalization,
reorganization, merger, sale of assets or otherwise.
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         "Exchange Act" means the Securities Exchange Act of 1934, or any
successor Federal statute, and the rules and regulations of the Commission (or
of any other Federal agency then administering the Exchange Act) thereunder, all
as the same shall be in effect at the time.

         "Founder Registrable Stock" means (a) all Common Stock now or hereafter
owned by the Founder or any Affiliate of the Founder (other than the Company),
and (b) any other shares of Common Stock issued in respect of such shares by way
of a stock dividend, or stock split or in connection with a combination of
shares, recapitalization, merger or consolidation or reorganization; provided,
however, that shares of Common Stock shall only be treated as Founder
Registrable Stock if and so long as they have not been (i) sold to or through a
broker or dealer or underwriter in a public distribution or a public securities
transaction, or (ii) 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
to such Common Stock are removed upon the consummation of such sale.

         "Holder" means any holder of Registrable Stock or Founder Registrable
Stock.

         "Initial Public Offering" means the effective date for the Company's
first registration statement covering a public offering of securities of the
Company under the Securities Act.

         "Investors" means the persons listed as Investors on Schedule RRA-1
hereto, as amended from time to time.

         "NASD" means the National Association of Securities Dealers, Inc.

         "Person" means any natural person, partnership, corporation or other
legal entity.

         "Registrable Stock" means (a) the Common Stock issued or issuable upon
conversion of the Series A Convertible Preferred Stock, $.00001 par value (the
"Series A Preferred Stock"), the Series B Convertible Preferred Stock, $.00001
par value (the "Series B Preferred Stock"), the Series C Convertible Preferred
Stock, $.00001 par value (the "Series C Preferred Stock"), the Series D
Convertible Preferred Stock, $.00001 par value (the "Series D Preferred Stock"),
the Series E Convertible Preferred Stock, $.00001 par value (the "Series E
Preferred Stock"), the Series F Preferred Stock, and the Series G Preferred
Stock, whether or not such Common Stock is owned by any Investors; (b) all
Common Stock now or hereafter owned by any Investor which is acquired otherwise
than upon conversion of the Series A Preferred Stock, the Series B Preferred
Stock, the Series C Preferred Stock, the Series D Preferred Stock, the Series E
Preferred Stock, the Series F Preferred Stock and the Series G Preferred Stock
so long as it is held by any Investor or an Affiliate of any Investor; (c) any
other shares of Common Stock issued in respect of such shares by way of a stock
dividend, or stock split or in connection with a combination of shares,
recapitalization, merger or consolidation or reorganization; provided, however,
that shares of Common Stock shall only be treated as Registrable Stock if and so
long as they have not been (i) sold to or through a broker or dealer or
underwriter in a public distribution or a public securities transaction, or (ii)
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 to such Common Stock
are removed upon the consummation of such sale; (d) all shares of Common Stock
issued or issuable upon exercise of any warrant now or

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hereafter held by Lighthouse Capital Partners II, L.P. or Lighthouse Capital
Partners III, L.P.; and (e) all shares of Common Stock issued or issuable upon
exercise of any warrant now or hereafter held by Deutsche Banc Alex Brown
Incorporated.

         "Registration Statement" means a registration statement filed by the
Company with the Commission for a public offering and sale of securities of the
Company (other than a registration statement on Form S-8, Form S-4, or successor
forms, or any registration statement covering only securities proposed to be
issued in exchange for securities or assets of another corporation).

         "Securities Act" means the Securities Act of 1933, or any successor
Federal statute, and the rules and regulations of the Commission (or of any
other Federal agency then administering the Securities Act) thereunder, all as
the same shall be in effect at the time.

         2. Required Registration.

                  (a) At any time after the earlier of (i) 180 days after any
         Registration Statement covering a public offering of securities of the
         Company under the Securities Act having become effective and (ii) June
         30, 2002, the Holder or Holders of at least twenty-five (25%) percent
         of all Registrable Stock then outstanding (the "Initiating Holders")
         may by notice in writing to the Company request the Company to register
         under the Securities Act all or any portion of shares of Registrable
         Stock held by such Initiating Holder or Holders for sale in the manner
         specified in such notice, provided, that, (i) at least fifteen (15%)
         percent of the total amount of Registrable Stock shall be included in
         the Public Offering or (ii) the reasonably anticipated aggregate price
         to the public of such lesser number of shares of Registrable Stock and
         Founder Registrable Stock to be included in such public offering shall
         exceed $10,000,000. Notwithstanding anything to the contrary contained
         herein, the Company shall not be required to seek to cause a
         Registration Statement to become effective pursuant to this Section 2:
         (A) within a period of 90 days after the effective date of a
         Registration Statement 180 days if the Registration Statement is for
         the Initial Public Offering) filed by the Company (other than a
         Registration Statement on Forms S-4, S-8 or any successors thereto),
         provided that the Company shall use its best efforts to cause a
         registration requested hereunder to be declared effective promptly
         following such period if such request is made during such period; (B)
         if the Company shall furnish to the Holders a certificate signed by the
         President of the Company stating that in the good faith judgment of the
         Board of Directors it would be materially detrimental to the Company or
         its shareholders for a Registration Statement to be filed at such time,
         or that it would require disclosure of material non-public information
         relating to the Company which, in the reasonable opinion of the Board
         of Directors, should not be disclosed, then the Company's obligation to
         use all reasonable efforts to register, qualify or comply under this
         Section 2 shall be deferred for a period not to exceed ninety (90) days
         from the date of receipt of written request from such Holders;
         provided, however, that the Company may not utilize this deferral right
         more than once in any twelve-month period.

                  (b) Following receipt of any notice given under this Section 2
         by the Initiating Holders, the Company shall immediately notify in
         writing all Holders that such registration is to be effected and shall
         use its best efforts to register under the Securities

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         Act, for public sale in accordance with the method of disposition
         specified in such notice from requesting Holders, the number of shares
         of Registrable Stock and Founder Registrable Stock, specified in such
         notice (and in all notices received by the Company pursuant hereto).
         Holders, other than the Initiating Holders, shall notify the Company of
         their desire to participate in the Registration within twenty (20) days
         of the Company's notice to them. The Holders of a majority of the
         shares of Registrable Stock to be sold in such offering may designate
         the managing underwriter of such offering, subject to the approval of
         the Company, which approval shall not be unreasonably withheld or
         delayed. The Company shall be obligated to register Registrable Stock
         and Founder Registrable Stock pursuant to this Section 2 on two
         occasions only, provided, however, that such obligation shall be deemed
         satisfied only when a Registration Statement covering all shares of
         Registrable Stock, specified in notices received as aforesaid and which
         have not been withdrawn by the Holder thereof, for sale in accordance
         with the method of disposition specified by the Initiating Holders,
         shall have become effective. A registration which does not become
         effective after the Company has filed a Registration Statement with
         respect thereto solely by reason of the refusal of the Initiating
         Holders to proceed shall be deemed to have been effected by the Company
         at the request of such Initiating Holders unless such requesting
         Holders shall have elected to pay all the Company's reasonable expenses
         in connection with such registration.

                  (c) If the Registration Statement is to cover an underwritten
         distribution and in the good faith judgment of the managing underwriter
         of such public offering the inclusion of all of the Registrable Stock
         and Founder Registrable Stock, requested for inclusion pursuant to this
         Section 2 would interfere with the successful marketing of a smaller
         number of shares to be offered, then the number of shares of
         Registrable Stock and Founder Registrable Stock to be included in the
         Offering shall be reduced to the required level with the participation
         in such offering to be reduced pro rata among the Holders requesting
         such registration, based upon the number of shares of Registrable Stock
         and Founder Registrable Stock owned by such Holders. The Company shall
         be entitled to include in any Registration Statement referred to in
         this Section 2, for sale in accordance with the method of disposition
         specified by the Initiating Holders, shares of Common Stock for the
         Company's own account, except as and to the extent that, in the opinion
         of the managing underwriter, if any, such inclusion would adversely
         affect the marketing of the Registrable Stock and Founder Registrable
         Stock to be sold. Except for registration statements on Form S-4, S-8
         or any successors thereto, the Company will not file with the
         Commission any other registration statement with respect to its Common
         Stock, whether for its own account or that of other stockholders, from
         the date of receipt of a notice from the Initiating Holders pursuant to
         this Section 2 until the completion of the period of distribution of
         the registration contemplated thereby.

                  (d) So long as the Founder is the Chief Executive Officer or a
         director of the Company, Holders of Founder Registrable Stock shall not
         sell in the aggregate more than 675,000 shares of Common Stock (which
         amount shall be appropriately adjusted for any stock splits, stock
         dividends, recapitalizations or other changes affecting the Common
         Stock after the date of this Agreement) in any registration under this
         Section 2 or Section 4 hereof.

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         3. Incidental Registration. Each time the Company shall determine to
file a Registration Statement in connection with the proposed offer and sale for
money of any of its securities by it or any of its security holders, the Company
will give written notice thereof to all Holders. Upon the written request of one
or more Holder(s) given within twenty (20) days after the giving of any such
notice by the Company, the Company will use its best efforts to cause all such
shares of Registrable Stock and Founder Registrable Stock, the Holders of which
have so requested registration thereof, to be included in such Registration
Statement, all to the extent requisite to permit the sale or other disposition
by the prospective seller or sellers of the Registrable Stock and Founder
Registrable Stock to be so registered. If the Registration Statement is to cover
an underwritten distribution, the Company shall use its best efforts to cause
the Registrable Stock and Founder Registrable Stock requested for inclusion
pursuant to this Section 3 to be included in the underwriting on the same terms
and conditions as the securities otherwise being sold through the underwriters.
If, in the good faith judgment of the managing underwriter of such public
offering, the inclusion of all of the Registrable Stock and Founder Registrable
Stock requested for inclusion pursuant to this Section 3 would interfere with
the successful marketing of a smaller number of shares to be offered, then the
number of shares of Registrable Stock, Founder Registrable Stock and other
securities to be included in the offering (except for shares to be issued (i) by
the Company in an offering initiated by the Company or (ii) by any other party
in an offering initiated by such party pursuant to registration rights granted
to such party) shall be reduced to the required level by reducing (down to zero
if so required) the participation of the Holders in such offering (such
reduction to be pro rata among the Holders requesting such registration, based
upon the number of shares of Registrable Stock owned by such Holders); provided,
however, that (i) except in the Company's Initial Public Offering, in no event
shall the participation of the Holders of Registrable Stock and Founder
Registrable Stock be less than thirty-five (35%) percent of such offering, (ii)
so long as the Founder is either the Chief Executive Officer or a director of
the Company, in no event shall the Holders of the Founder Registrable Stock sell
in the aggregate more than 675,000 shares of Common Stock (which amount shall be
appropriately adjusted for any stock splits, stock dividends, recapitalization
or other changes affecting the Common Stock after the date of this Agreement) in
any single distribution and (iii) all shares that are not Registrable Stock or
Founder Registrable Stock and are held by any other person, including, without
limitation, any person who is an employee, officer or director of the Company or
any subsidiary of the Company (other than the Founder) shall first be excluded
from such registration and underwriting before any Registrable Stock or Founder
Registrable Stock are so excluded.

         4. Registration on Form S-3. If at any time after the date hereof (i) a
Holder or Holders request that the Company file a registration statement on Form
S-3 or any successor thereto for a public offering of all or any portion of the
shares of Registrable Stock held by such requesting Holder or Holders, the
reasonably anticipated aggregate proceeds of which would exceed $1,000,000, and
(ii) the Company is a registrant entitled to use Form S-3 or any successor
thereto to register such shares, then the Company shall use its best efforts to
register under the Securities Act on Form S-3 or any successor thereto, for
public sale in accordance with the method of disposition specified in such
notice, the number of shares of Registrable Stock and Founder Registrable Stock
specified in such notice. Whenever the Company is required by this Section 4 to
use its best efforts to effect the registration of Registrable Stock and Founder
Registrable Stock, each of the procedures, requirements and limitations of
Section 2 (including

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but not limited to the requirement that the Company notify all Holders from whom
notice has not been received and provide them with the opportunity to
participate in the offering and the requirement of subparagraph (b)) shall apply
to such registration; provided, however, that there shall be no limitation on
the number of registrations on Form S-3 which may be requested and obtained
under this Section 4; and provided, further, however, that the $10,000,000
minimum dollar amount set forth in the first sentence of Section 2(a) shall not
apply to any registration on Form S-3 which may be requested and obtained under
this Section 4.

         5. Registration Procedures. If and whenever the Company is required by
the provisions of Section 2, 3 or 4 hereof to effect the registration of shares
of Registrable Stock or Founder Registrable Stock under the Securities Act, the
Company will, at its expense, as expeditiously as possible:

                  (a) In accordance with the Securities Act and the rules and
         regulations of the Commission, prepare and file with the Commission a
         Registration Statement with respect to the Registrable Stock or Founder
         Registrable Stock and use its best efforts to cause such Registration
         Statement to become and remain effective until the Registrable Stock or
         Founder Registrable Stock covered by such Registration Statement has
         been sold, and prepare and file with the Commission such amendments to
         such Registration Statement and supplements to the prospectus contained
         therein as may be necessary to keep such Registration Statement
         effective and such Registration Statement and prospectus accurate and
         complete until the Registrable Stock or Founder Registrable Stock
         covered by such Registration Statement has been sold;

                  (b) If the offering is to be underwritten in whole or in part,
         enter into a written underwriting agreement in form and substance
         reasonably satisfactory to the managing underwriter, if any, of the
         public offering and the Holders participating in such offering;

                  (c) Furnish to the participating Holders and to the
         underwriters such reasonable number of copies of the Registration
         Statement, preliminary prospectus, final prospectus and such other
         documents as such underwriters and participating Holders may reasonably
         request in order to facilitate the public offering of such securities;

                  (d) Use its best efforts to register or qualify the
         Registrable Stock and Founder Registrable Stock covered by such
         Registration Statement under such state securities or blue sky laws of
         such jurisdictions (i) as shall be reasonably appropriate for the
         distribution of the Registrable Stock and Founder Registrable Stock
         covered by such Registration Statement or (ii) as such participating
         Holders and underwriters may reasonably request within twenty (20) days
         following the original filing of such Registration Statement, except
         that the Company shall not for any purpose be required to execute a
         general consent to service of process, to subject itself to taxation,
         or to qualify to do business as a foreign corporation in any
         jurisdiction where it is not so qualified;

                  (e) Notify the Holders participating in such registration,
         promptly after it shall receive notice thereof, of the date and time
         when such Registration Statement and each post-effective amendment
         thereto has become effective or a supplement to any prospectus forming
         a part of such Registration Statement has been filed;

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                  (f) Notify the Holders participating in such registration
         promptly of any request by the Commission or any state securities
         commission or agency for the amending or supplementing of such
         Registration Statement or prospectus or for additional information;

                  (g) Prepare and file with the Commission, promptly upon the
         request of any such participating Holders, any amendments or
         supplements to such Registration Statement or prospectus which, in the
         opinion of counsel representing the Company in such Registration (and
         which counsel is reasonably acceptable to such participating Holders),
         is required under the Securities Act or the rules and regulations
         thereunder in connection with the distribution of the Registrable Stock
         and Founder Registrable Stock by such participating Holders;

                  (h) Prepare and promptly file with the Commission, and
         promptly notify such participating Holders of the filing of, such
         amendments or supplements to such Registration Statement or prospectus
         as may be necessary to correct any statements or omissions if, at the
         time when a prospectus relating to such Registrable Stock and Founder
         Registrable Stock is required to be delivered under the Securities Act,
         any event has occurred as the result of which any such prospectus or
         any other prospectus as then in effect would include an untrue
         statement of a material fact or omit to state any material fact
         required to be stated therein or necessary to make the statements
         therein not misleading;

                  (i) In case any of such participating Holders or any
         underwriter for any such Holders is required to deliver a prospectus at
         a time when the prospectus then in circulation is not in compliance
         with the Securities Act or the rules and regulations of the Commission,
         prepare promptly upon request such amendments or supplements to such
         Registration Statement and such prospectus as may be necessary in order
         for such prospectus to comply with the requirements of the Securities
         Act and such rules and regulations;

                  (j) Advise such participating Holders, promptly after it shall
         receive notice or obtain knowledge of the issuance of any stop order by
         the Commission or any state securities commission or agency suspending
         the effectiveness of such Registration Statement or the initiation or
         threatening of any proceeding for that purpose and promptly use its
         best efforts to prevent the issuance of any stop order or to obtain its
         withdrawal if such stop order should be issued;

                  (k) At the request of any such participating Holder (i)
         furnish to such Holder on the effective date of the Registration
         Statement or, if such registration includes an underwritten public
         offering, at the closing provided for in the underwriting agreement, an
         opinion, dated such date, of the counsel representing the Company for
         the purposes of such registration, addressed to the underwriters, if
         any, and to the Holder or Holders making such request, covering such
         matters with respect to the registration statement, the prospectus and
         each amendment or supplement thereto, proceedings under state and
         Federal securities laws, other matters relating to the Company, the
         securities being registered and the offer and sale of such securities
         as are customarily the subject of

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         opinions of issuer's counsel provided to underwriters in underwritten
         public offerings and (ii) use its best efforts to furnish to such
         Holder letters dated each such effective date and such closing date,
         from the independent certified public accountants of the Company,
         addressed to the underwriters, if any, and to the Holder or Holders
         making such request, stating that they are independent certified public
         accountants within the meaning of the Securities Act and dealing with
         such matters as the underwriters may request, or, if the offering is
         not underwritten, that in the opinion of such accountants the financial
         statements and other financial data of the Company included in the
         Registration Statement or the prospectus or any amendment or supplement
         thereto comply in all material respects with the applicable accounting
         requirements of the Securities Act, and additionally covering such
         other financial matters, including information as to the period ending
         not more than five (5) business days prior to the date of such letter
         with respect to the Registration Statement and prospectus, as such
         requesting Holder or Holders may reasonably request; and

                  (l) Use its best efforts to ensure the obtaining of all
         necessary approvals from the NASD.

         6. Expenses.

                  (a) With respect to each registration effected pursuant to
         Section 2, 3 or 4 hereof, all fees, costs and expenses of and
         incidental to such registration and the public offering in connection
         therewith shall be borne by the Company; provided, however, (i) that
         Holders and other holders of the Company's stock participating in any
         such registration shall bear their pro rata share of the underwriting
         discounts and selling commissions, and (ii) any such fee, cost or
         expense which does not constitute a fee, cost or expense customary in
         such a registration and which is attributable solely to one (1) Holder
         or other holder of the Company's stock participating in any such
         registration shall be borne by that holder or Holder.

                  (b) The fees, costs and expenses of registration to be borne
         as provided in paragraph (a) above, shall include, without limitation,
         all registration, filing and NASD fees, printing expenses, fees and
         disbursements of counsel and accountants for the Company, fees and
         disbursements of counsel for the underwriter or underwriters of such
         securities (if the Company and/or selling security holders are
         otherwise required to bear such fees and disbursements), all legal fees
         and disbursements and other expenses of complying with state securities
         or blue sky laws of any jurisdictions in which the securities to be
         offered are to be registered or qualified, reasonable fees and
         disbursements of one counsel for the selling Holders and the other
         holders of the Company's stock and the premiums and other costs of
         policies of insurance insuring the Company against liability arising
         out of such public offering.

         7. Indemnification and Contribution.

                  (a) To the fullest extent permitted by law, the Company will
         indemnify and hold harmless each Holder, whether or not such Holder's
         shares of Registrable Stock are included in a Registration Statement
         pursuant to the provisions of this Agreement, and

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         any underwriter (as defined in the Securities Act) for such Holder, and
         any Person who controls such Holder or such underwriter within the
         meaning of the Securities Act, and each of their successors, from and
         against, and will reimburse such Holder and each such underwriter and
         controlling Person with respect to, any and all claims, actions,
         demands, losses, damages, liabilities, costs and expenses to which such
         Holder or any such underwriter or controlling Person may become subject
         under the Securities Act or otherwise, insofar as such claims, actions,
         demands, losses, damages, liabilities, costs or expenses arise out of
         or are based upon any untrue statement or allegedly untrue statement of
         any material fact contained in such Registration Statement, any
         prospectus contained therein or any amendment or supplement thereto, or
         arise out of or are based upon the omission or alleged omission to
         state therein a material fact required to be stated therein or
         necessary to make the statements therein not misleading or arise out of
         any violation by the Company of any rule or regulation under the
         Securities Act applicable to the Company and relating to action or
         inaction required of the Company in connection with such registration;
         provided, however, that the Company will not be liable in any such case
         to the extent that any such claim, action, demand, loss, damage,
         liability, cost or expense arises out of or is based upon an untrue
         statement or alleged untrue statement or omission or alleged omission
         so made in reliance upon and in conformity with information furnished
         by or on behalf of any such Holder, such underwriter or controlling
         Person in writing specifically for use in the preparation thereof, and
         provided, further, that this indemnity shall not be deemed to relieve
         any underwriter of any of its due diligence obligations; and provided,
         further, that if any claim, action, demand, loss, damage, liability,
         cost or expense arises out of or is based upon an untrue statement or
         alleged untrue statement or omission or alleged omission contained in
         any preliminary prospectus which did not appear in the final prospectus
         and if the Holder delivered a copy of the preliminary prospectus to the
         person alleging damage and failed to deliver a copy of the final
         prospectus to such persons, the Company shall not be liable with
         respect to the claims of such person.

                  (b) Each Holder of shares of Registrable Stock which are
         included in a Registration pursuant to the provisions of this Agreement
         will, severally and not jointly, indemnify and hold harmless the
         Company from and against, and will reimburse the Company with respect
         to, any and all losses, damages, liabilities, costs or expenses to
         which the Company may become subject under the Securities Act or
         otherwise, to the extent that any such loss, damage, liability, cost or
         expense arises out of or is based upon any untrue or alleged untrue
         statement of any material fact contained therein or any amendment or
         supplement thereto, or arises out of or is based upon 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
         each case to the extent, but only to the extent that such untrue
         statement or alleged untrue statement or omission or alleged omission
         was so made in reliance upon and in conformity with written information
         furnished by or on behalf of such Holder for use in the preparation
         thereof, provided, that, the liability of each Holder hereunder shall
         not, in any event. exceed the proceeds received by such Holder from the
         sale of shares of Registrable Stock covered by a Registration
         Statement; and provided, further, that this indemnity shall not be
         deemed to relieve any underwriter of any of its due diligence
         obligations.

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                  (c) Promptly after receipt by a party to be indemnified
         pursuant to the provisions of paragraph (a) or (b) of this Section 7
         (an "indemnified party") of actual knowledge or notice of the
         commencement of any action involving the subject matter of the
         foregoing indemnity provisions, such indemnified party will, if a claim
         thereof is to be made against the indemnifying party pursuant to the
         provisions of paragraph (a) or (b), notify the indemnifying party of
         the commencement thereof; but the omission so to notify the
         indemnifying party will not relieve it from any liability which it may
         have to an indemnified party otherwise than under this Section 7 and
         shall not relieve the indemnifying party from liability under this
         Section 7 unless such indemnifying party is prejudiced by such
         omission. In case such action is brought against any indemnified party
         and it notifies the indemnifying party of the commencement thereof, the
         indemnifying party shall have the right to participate in, and, to the
         extent that it may wish, jointly with any other indemnifying party
         similarly notified, to assume the defense thereof, with counsel
         reasonably satisfactory to such indemnified party, and after notice
         from the indemnifying party to such indemnified party of its election
         so to assume the defense thereof, the indemnifying party will not be
         liable to such indemnified party pursuant to the provisions of such
         paragraph (a) and (b) for any legal or other expense subsequently
         incurred by such indemnified party in connection with the defense
         thereof other than reasonable costs of investigation. No indemnifying
         party shall be liable to an indemnified party for any settlement of any
         action or claim without the consent of the indemnifying party; no
         indemnifying party may unreasonably withhold its consent to any such
         settlement. No indemnifying party will consent to entry of any judgment
         or enter into any settlement which does not include as an unconditional
         term thereof the giving by the claimant or plaintiff to such
         indemnified party of a release from all liability in respect to such
         claim or litigation.

                  (d) In order to provide for just and equitable contribution to
         joint liability under the Securities Act in any case in which either
         (i) any Holder exercising rights under this Agreement, or any
         controlling person of any such Holder, makes a claim for
         indemnification pursuant to this Section 7 but it is judicially
         determined (by the entry of a final judgment or decree by a court of
         competent jurisdiction and the expiration of time to appeal or the
         denial of the last right of appeal) that such indemnification may not
         be enforced in such case notwithstanding the fact that this Section 7
         provides for indemnification in such case, or (ii) contribution under
         the Securities Act may be required on the part of any such selling
         Holder or any such controlling person in circumstances for which
         indemnification is provided under this Section 7; then, and in each
         such case, the Company and such Holder will contribute to the aggregate
         losses, claims, damages or liabilities to which they may be subject
         (after contribution from others) in such proportion as is appropriate
         to reflect the relative fault of the indemnifying party on the one hand
         and of the indemnified party on the other in connection with the
         violation(s) that resulted in such loss, claim, damage or liability, as
         well as any other relevant equitable considerations. The relative fault
         of the indemnifying party and of the indemnified party shall be
         determined by a court of law by reference to, among other things,
         whether the untrue or alleged untrue statement of a material fact or
         the omission to state a material fact relates to information supplied
         by the indemnifying party or by the indemnified party and the parties'
         relative intent, knowledge, access to information and

                                      -10-
<PAGE>   11
         opportunity to correct or prevent such statement or omission; provided,
         however, that, in any such case; (A) no such Holder will be required to
         contribute any amount in excess of the public offering price, less
         underwriting discounts and commissions, of all such Registrable Stock
         offered and sold by such Holder pursuant to such registration
         statement; and (B) no person or entity guilty of fraudulent
         misrepresentation (within the meaning of Section 11(f) of the
         Securities Act) will be entitled to contribution from any person or
         entity who was not guilty of such fraudulent misrepresentation.

                  (e) Survival. The obligations of the Company and Holders under
         this Section 7 shall survive until the fifth anniversary of the
         completion of any offering of Registrable Stock in a registration
         statement, regardless of the expiration of any statutes of limitation
         or extensions of such statutes.

         8. Reporting Requirements Under Securities Exchange Act of 1934. When
it is first legally required to do so, the Company shall register its Common
Stock under Section 12 of the Exchange Act and shall keep effective such
registration and shall timely file such information, documents and reports as
the Commission may require or prescribe under Section 13 of the Exchange Act.
From and after the effective date of the first Registration Statement filed by
the Company, the Company shall use its best efforts to (whether or not it shall
then be required to do so) timely file such information, documents and reports
as the Commission may require or prescribe under Section 13 or 15(d) (whichever
is applicable) of the Exchange Act. Immediately upon becoming subject to the
reporting requirements of either Section 13 or 15(d) of the Exchange Act, the
Company shall forthwith upon request furnish any Holder (i) a written statement
by the Company that it has complied with such reporting requirements, (ii) a
copy of the most recent annual or quarterly report of the Company, and (iii)
such other reports and documents filed by the Company with the Commission as
such Holder may reasonably request in availing itself of an exemption for the
sale of Registrable Stock without registration under the Securities Act. The
Company acknowledges and agrees that the purposes of the requirements contained
in this Section 8 are (a) to enable any such Holder to comply with the current
public information requirement contained in Paragraph (c) of Rule 144 under the
Securities Act should such Holder ever wish to dispose of any of the securities
of the Company acquired by it without registration under the Securities Act in
reliance upon Rule 144 (or any other similar or successor exemptive provision),
and (b) to qualify the Company for the use of Registration Statements on Form
S-3. In addition, the Company shall take such other measures and file such other
information, documents and reports, as shall hereafter be required by the
Commission as a condition to the availability of Rule 144 under the Securities
Act (or any similar or successor exemptive provision hereafter in effect) and
the use of Form S-3. The Company also covenants to use its best efforts, to the
extent that it is reasonably within its power to do so, to qualify for the use
of Form S-3. From and after the effective date of the first Registration
Statement filed by the Company, the Company agrees to use its best efforts to
facilitate and expedite transfers of Registrable Stock pursuant to Rule 144
under the Securities Act (or any similar or successor exemptive provision
hereafter in effect), which efforts shall include timely notice to its transfer
agent to expedite such transfers of Registrable Stock.

         9. Stockholder Information. The Company may require each Holder of
Registrable Stock as to which any registration is to be effected pursuant to
this Agreement to furnish the Company in a timely manner such information with
respect to such Holder and the distribution

                                      -11-
<PAGE>   12
of such Registrable Stock as the Company may from time to time reasonably
request in writing and as shall be required by law or by the Commission in
connection therewith.

         10. Lock-Up Agreements.

                  (a) Restrictions on Public Sale by the Company. The Company
         agrees not to effect any public sale or other distribution of its
         equity securities, or any securities convertible into or exchangeable
         or exercisable for such equity securities, during the period, not to
         exceed one hundred eighty (180) days (as requested by the managing
         underwriter), following the effective date of the Initial Public
         Offering, or ninety (90) days following the effective date of any other
         underwritten public offering of securities of the Company, except in
         connection with any such underwritten offering and except for equity
         securities issued pursuant to employee stock option or employee stock
         purchase plans or in conjunction with any merger or consolidation with,
         or acquisition of the stock or assets of, any other entity.

                  (b) Restrictions on Public Sale by the Holders. Each Holder
         agrees that it will not, to the extent requested by the Company and the
         managing underwriter of such offering, sell or otherwise dispose of any
         equity securities of the Company, including any sale pursuant to Rule
         144, during a period specified by the Company and such underwriter (not
         to exceed one hundred eighty (180) days after the effective date of the
         Initial Public Offering or ninety (90) days after any other
         underwritten offering), except in conjunction with such underwritten
         offering; provided, that, each officer and director of the Company
         shall enter into similar agreements.

         11. Notices. Any notice required or permitted to be given hereunder
shall be in writing and shall be deemed to be properly given when sent by
registered or certified mail, return receipt requested, by Federal Express, DHL
or other guaranteed overnight delivery service or by facsimile transmission,
addressed as follows:

             If to the Company:          Sitara Networks, Inc.
                                         60 Hickory Drive
                                         Waltham, MA 02154
                                         Attention:  President
                                         Telecopier:  (781) 890-8042

             with a copy to:             McDermott, Will & Emery
                                         28 State Street
                                         Boston, MA  02109
                                         Attention:  Arthur I. Anderson, P.C.
                                         Telecopier:  (617) 535-3800

             If to the Founder:          Malik Z. Khan
                                         240 Western Avenue
                                         Sherborn, MA 01770

                                      -12-
<PAGE>   13
             If to any Investor:         To the address of such Investor set
                                         forth on Schedule RRA-1 hereto

and if to any other Holder at such Holder's address for notice as set forth in
the register maintained by the Company, or, as to any of the foregoing, to such
other address as any such party may give the others notice of pursuant to this
Section, provided that a change of address shall only be effective upon receipt.

         All notices, requests, consents and other communications hereunder
shall be deemed to have been received (i) if by hand, at the time of delivery
thereof to the receiving party at the address of such party set forth above or
as so designated, (ii) if made by telecopy or facsimile transmission, at the
time that receipt thereof has been acknowledged by electronic confirmation or
otherwise, (iii) if sent by overnight courier, on the day such notice is
delivered by the courier service, or (iv) if sent by registered or certified
mail, on the fifth business day following the day such mailing is made.

         12. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the substantive laws of the Commonwealth of Massachusetts
(without regard to conflict of laws provisions).

         13. Waivers; Amendments. No waiver of any right hereunder by any party
shall operate as a waiver of any other right, or of the same right with respect
to any subsequent occasion for its exercise, or of any right to damages. No
waiver by any party of any breach of this Agreement shall be held to constitute
a waiver of any other breach or a continuation of the same breach. All remedies
provided by this Agreement are in addition to all other remedies provided by
law. This Agreement may not be amended except by a writing executed by the
Company and (i) the Holders of at least sixty (60%) percent of the Registrable
Stock and the securities convertible into, exchangeable for or exercisable for
Registrable Stock (calculated on an as converted, exchanged or exercised basis),
and (ii) if the amendment affects adversely any of the rights of the Founder
hereunder, by the Founder as well.

         14. Other Registration Rights. The Company shall not grant to any third
party any registration rights more favorable than any of those contained herein,
or which would interfere with or delay the exercise by the Holders of their
registrations rights hereunder, so long as any of the registration rights under
this Agreement remains in effect, unless approved by Holders of at least sixty
(60%) percent of the shares of Registrable Stock, which approval may require
that such rights be granted only pursuant to an amendment or restatement of this
Agreement.

         15. Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the respective legal representatives, successors
and assigns of the parties hereto; provided, however, that the registration
rights conferred herein shall only inure to the benefit of a transferee of
Registrable Stock if (i) there is transferred to such transferee at least ten
(10%) percent of the Registrable Stock originally issued by the Company to the
direct or indirect transferor of such transferee, (ii) such transferee is a
partner, shareholder, member or affiliate of a party hereto; and in each case
such transferee becomes a party to this Agreement by signing a counterpart
hereof, at which point such transferee shall become an "Investor" for the
purposes of this Agreement, or (iii) such transferee is a member of the family
(i.e., spouse, sibling, spouse's

                                      -13-
<PAGE>   14
sibling, child (natural or adopted), stepchild, grandchild, parent, grandparent
or any other lineal ancestor or descendent) of a party or partner, shareholder,
member or affiliate of a party hereto; provided, however, that no expansion of
the definition of Holders set forth above shall be effected by this Section 15.

         16. 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.

         17. Prior Understandings. This Agreement represents the complete
agreement of the parties with respect to the transactions contemplated hereby
and supersedes all prior agreements and understandings.

         18. Headings. Headings in this Agreement are included for reference
only and shall have no effect upon the construction or interpretation of any
part of this Agreement.

         19. Severability. If any provision of this Agreement shall be held to
be illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any manner
affect or render illegal, invalid or unenforceable any other provision of this
Agreement, and this Agreement shall be carried out as if any such illegal,
invalid or unenforceable provision were not contained herein.

                  [Remainder of Page Intentionally Left Blank]

                                      -14-
<PAGE>   15
         IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by a duly authorized officer, and each Investor has duly executed this
Agreement (or has caused it to be executed by a duly authorized officer,
partner, trustee or agent, as the case may be), as of the date first above
recited.

ATTEST:                              COMPANY:

                                     SITARA NETWORKS, INC.

/s/ Arthur Anderson                  By: /s/ Malik Z. Khan
-------------------                      --------------------------
Secretary                                    Malik Z. Khan, President

                                     FOUNDER:

                                     /s/ Malik Z. Khan
                                     ------------------------------
                                         Malik Z. Khan

                                     INVESTORS:

                                     ONELIBERTY FUND III, L.P.

                                     By: One Liberty Partners III, L.P.,
                                     its general partner

                                     By: /s/ Edwin M. Kania
                                         --------------------------
                                         Edwin M. Kania, Jr.
                                         One Liberty Square
                                         Boston,  MA 02109
<PAGE>   16
                                     FW VENTURES IV L.P.

                                     By: /s/ David Brown
                                         --------------------------
                                     Name:  David Brown
                                     Title:
                                     201 Main Street, Suite 3100
                                     Fort Worth,  TX  76102

                                     ESSEX PRIVATE PLACEMENT FUND III-A,
                                     LIMITED PARTNERSHIP.

                                     By:  Essex Investment Management Company,
                                     LLC, its general partner

                                     By: /s/ Susan P. Stickells
                                         --------------------------
                                     Name:   Susan P. Stickells
                                     Title:  Principal
                                     125 High Street, 29th Floor
                                     Boston,  MA 02110

                                     ESSEX PRIVATE PLACEMENT FUND III-B,
                                     LIMITED PARTNERSHIP.

                                     By:  Essex Investment Management Company,
                                     LLC,its general partner

                                     By: /s/ Susan P. Stickells
                                         --------------------------
                                     Name:   Susan P. Stickells
                                     Title:  Principal
                                     125 High Street, 29th Floor
                                     Boston,  MA 02110

                                     ESSEX HIGH TECHNOLOGY FUND L.P.

                                     By:  Essex Investment Management Company,
                                     LLC, its general partner

                                     By: /s/ Susan P. Stickells
                                         --------------------------
                                     Name:   Susan P. Stickells
                                     Title:  Principal
                                     125 High Street, 29th Floor
                                     Boston,  MA 02110
<PAGE>   17
                                     TWP SITARA INVESTORS

                                     By: /s/ David A. Baylor
                                         --------------------------
                                     Name:  David A. Baylor
                                     Title: Managing Partner

                                     TAILWIND CAPITAL PARTNERS 2000, L.P.

                                     By:  Thomas Weisel Capital Partners LLC,
                                     General Partner

                                     By: /s/ David Baylor
                                         --------------------------
                                     Name:  David Baylor
                                     Title: General Counsel

                                     /s/ Barry Davis
                                     ------------------------------
                                         Barry Davis

                                     NEW ENTERPRISE ASSOCIATES VII, LP

                                     By: /s/ Arthur J. Marks
                                         --------------------------
                                     Name:   Arthur J. Marks

                                     NEA PRESIDENTS' FUND, L.P.

                                     By: /s/ Arthur J. Marks
                                         --------------------------
                                     Name:   Arthur J. Marks

                                     PRISM VENTURE PARTNERS I, L.P.

                                     By:  Prism Investment Partners, L.L.C.,
                                     its general partner

                                     By: /s/ Robert Fleming
                                         --------------------------
                                     Name:   Robert Fleming
                                     100 Lowder Brook Drive
                                     Suite 2500
                                     Westwood,  MA  02090
<PAGE>   18
                                     MFS SERIES TRUST I on behalf of
                                     MFS New Discovery Fund ("NDF")
                                     ($4,841,584.65; 743,715 shares)
                                     Nominee:  Clump & Co.
                                     Nominee ID:  04-3208074
                                     Tax ID:  04-3339400

                                     By: /s/ Ellen Moynihan
                                         --------------------------
                                     Name:   Ellen Moynihan
                                     Title:  Assistant Treasurer

                                     MFS/SUN LIFE SERIES TRUST on behalf
                                     of MFS New Discovery Series ("NWD")
                                     ($482,391; 74,100 shares)
                                     Nominee:  Inletbluff & Co.
                                     Nominee ID:  04-3409455
                                     Tax ID:  04-3417488

                                     By: /s/ Ellen Moynihan
                                         --------------------------
                                     Name:   Ellen Moynihan
                                     Title:  Assistant Treasurer

                                     MFS VARIABLE INSURANCE TRUST on
                                     behalf of MFS New Discovery Series ("VND")
                                     ($276,024; 42,400 shares)
                                     Nominee:  Newwind & Co.
                                     Nominee ID:  04-3409369
                                     Tax ID:  04-3417481

                                     By: /s/ Ellen Moynihan
                                         --------------------------
                                     Name:   Ellen Moynihan
                                     Title:  Assistant Treasurer
<PAGE>   19
                                     MFS SERIES TRUST I on behalf of
                                     MFS Technology Fund ("SCT")
                                     ($400,000.44; 61,444 shares)
                                     Nominee:  Distinguish & Co.
                                     Nominee ID:  04-3208197
                                     Tax ID:  04-3339406

                                     By: /s/ Ellen Moynihan
                                         --------------------------
                                     Name:   Ellen Moynihan
                                     Title:  Assistant Treasurer

                                     VAN WAGONER CAPITAL MANAGEMENT

                                     By: /s/ Audrey Lam
                                         --------------------------
                                     Name:   Audrey Lam
                                     Title:  Managing Director
                                     345 California Street, Suite 2450
                                     San Francisco,  CA  94104

                                     BT INVESTMENT PARTNERS, INC.

                                     By: /s/ Kristine Cicardo
                                         --------------------------
                                     Name:   Kristine Cicardo
                                     Title:  Director

                                     CHARLES RIVER PARTNERSHIP VII, L.P.

                                     By: /s/ Michael Zak
                                         --------------------------
                                     Name:   Michael Zak
                                     Title:  General Partner
                                     1000 Winter Street, Suite 3300
                                     Waltham,  MA  02154

                                     SIEMENS SERVICES, INC.

                                     By: /s/ Michael Rowan
                                         --------------------------
                                     Name:   Michael Rowan
                                     Title:  Vice President
                                     Chase Manhattan Center, Suite 1402
                                     1201 Market Street
                                     Wilmington, DE  19801
<PAGE>   20
                                     SIEMENS SERVICES, INC.

                                     By: /s/ Christine Krzyzarnski
                                         --------------------------
                                     Name:   Christine Krzyzarnski
                                     Title:  Vice President
                                     Chase Manhattan Center, Suite 1402
                                     1201 Market Street
                                     Wilmington, DE  19801

                                     /s/ Dipak Rastogi
                                     ------------------------------
                                         Dipak Rastogi

                                     /s/ Audrey M. Rastogi
                                     ------------------------------
                                         Audrey M. Rastogi

                                     /s/ John Halligan
                                     ------------------------------
                                         John Halligan

                                     /s/ Andy Fox
                                     ------------------------------
                                         Andy Fox

                                     /s/ Michael Bassinger
                                     ------------------------------
                                         Michael Bassinger

                                     /s/ Rhys Williams
                                     ------------------------------
                                         Rhys Williams
                                         General Partner, SIVO G.P.

                                     /s/ Manny Fernandez
                                     ------------------------------
                                         Manny Fernandez

                                     SI VENTURE FUND II, L.P.

                                     By: /s/ Manny Fernandez
                                         --------------------------
                                     Name:   Manny Fernandez
                                     Title:  Managing Director
<PAGE>   21
                                     ANGLO AMERICAN SECURITY FUND, L.P.

                                     By: /s/ John S. Grace
                                         --------------------------
                                     Name:   John S. Grace
                                     Title:  General Partner

                                     CABIN INTERIORS, LP
                                     By: Cabin Interiors, Inc., its general
                                     partner

                                     By: /s/ John S. Grace
                                         --------------------------
                                     Name:   John S. Grace
                                     Title:  President

                                     DIVERSIFIED LONG TERM GROWTH FUND, L.P.
                                     By: Associated Asset Management, Inc.
                                     its general partner

                                     By: /s/ John S. Grace
                                         --------------------------
                                     Name:   John S. Grace
                                     Title:  Co-Chairman

                                     DRAKE ASSOCIATES, L.P.
                                     By: Associated Asset Management, Inc.
                                     its general partner

                                     By: /s/ John S. Grace
                                         --------------------------
                                     Name:   John S. Grace
                                     Title:  Co-Chairman

                                     STERLING GRACE CAPITAL MANAGEMENT, LP.
                                     By: Sterling Grace Corporation,
                                     its general partner

                                     By: /s/ John S. Grace
                                         --------------------------
                                     Name:   John S. Grace
                                     Title:  President
<PAGE>   22
                                     GRACE-ARTEL INVESTORS, INC.

                                     By: /s/ Oliver R. Grace
                                         --------------------------
                                     Name:   Oliver R. Grace
                                     Title:  Chairman

                                     THE SOG FUND LP
                                     By: The Special Opportunities Group, LLC
                                     its managing general partner

                                     By: /s/ Christopher G. Miller
                                         --------------------------
                                     Name:   Christopher G. Miller
                                     Title:  Chief Executive Officer

                                     THE SOG FUND II LP
                                     By:  The Special Opportunities Group, LLC
                                     its managing general partner

                                     By: /s/ Christopher G. Miller
                                         --------------------------
                                     Name:   Christopher G. Miller
                                     Title:  Chief Executive Officer
<PAGE>   23
                                 SCHEDULE RRA-1

<TABLE>
<CAPTION>
    INVESTOR & ADDRESS                   NUMBER OF            NUMBER OF           NUMBER OF          NUMBER OF
    ------------------                  SHARES  OF             SHARES              SHARES             SHARES
                                         SERIES A            OF SERIES B         OF SERIES C       OF SERIES D
                                      PREFERRED STOCK      PREFERRED STOCK     PREFERRED STOCK    PREFERRED STOCK
                                      ---------------      ---------------     ---------------    ---------------
<S>                                   <C>                  <C>                 <C>                <C>
Charles River Partnership                 2,352,941              785,714            359,090              --
VII, L.P.
1000 Winter Street
Suite 3300
Waltham, MA 02154
Attn:  Michael Zak
Telecopier:  (617) 487-7005

OneLiberty Fund III, L.P.
One Liberty Square                        2,352,941              785,714            359,090              --
Boston, MA 02109
Attn:  Edward Kania
Telecopier: (617) 338-4362

New Enterprise Associates
VII, LP                                     958,824            1,785,715            318,710              --
1119 St. Paul Street
Baltimore, MD 21202
Attn:  Nancy Dorman
Telecopier:

Prism Venture Partners I, L.P.
100 Lowder Brook Drive                           --            1,428,571            163,441              --
Suite 2500
Westwood, MA 02090
Attn:  Robert Fleming
</TABLE>

<TABLE>
<CAPTION>
    INVESTOR & ADDRESS                    NUMBER OF               NUMBER OF              NUMBER OF
    ------------------                     SHARES                  SHARES                 SHARES
                                         OF SERIES E             OF SERIES F             OF SERIES G
                                       PREFERRED STOCK          PREFERRED STOCK        PREFERRED STOCK
                                       ---------------          ---------------        ---------------
<S>                                    <C>                      <C>                    <C>
Charles River Partnership                   142,144                   --
VII, L.P.
1000 Winter Street
Suite 3300
Waltham, MA 02154
Attn:  Michael Zak
Telecopier:  (617) 487-7005

OneLiberty Fund III, L.P.
One Liberty Square                          142,144                   --
Boston, MA 02109
Attn:  Edward Kania
Telecopier: (617) 338-4362

New Enterprise Associates
VII, LP                                     122,263                   --
1119 St. Paul Street
Baltimore, MD 21202
Attn:  Nancy Dorman
Telecopier:

Prism Venture Partners I, L.P.
100 Lowder Brook Drive                       64,697                   --
Suite 2500
Westwood, MA 02090
Attn:  Robert Fleming
</TABLE>
<PAGE>   24
                            SCHEDULE RRA-1 CONTINUED

<TABLE>
<CAPTION>
    INVESTOR & ADDRESS                     NUMBER OF           NUMBER OF          NUMBER OF           NUMBER OF
    ------------------                     SHARES OF           SHARES OF          SHARES OF           SHARES OF
                                           SERIES A             SERIES B           SERIES C            SERIES D
                                        PREFERRED STOCK      PREFERRED STOCK    PREFERRED STOCK    PREFERRED STOCK
                                        ---------------      ---------------     ---------------    ---------------
<S>                                     <C>                  <C>                <C>                <C>
NEA Presidents' Fund, L.P.                   41,176                   --                --                 --
1119 St. Paul Street
Baltimore, MD 21202
Attn:  Nancy Dorman

M/C Investors L.L.C                         588,235              178,572            87,729                 --
75 State Street
Boston, MA 02109
Attn: Jim Wade
Telecopier:

Sharon Sisskind                             117,647               17,857            15,503                 --
70 Barnstable Road
West Newton, MA 02165

K. Paul Singh                                58,825               17,857             8,773                 --
Primus Telecommunications
1700 Old Meadow Road
3rd Floor
McLean, VA 22102

Intel Corporation                                --                   --                --            787,402
2200 Mission College Blvd.
Santa Clara, CA 95052

FW Ventures IV L.P.                              --                   --                --                 --
201 Main Street, Suite 3100
Fort Worth, TX 76102

Essex High Technology Fund L.P.                  --                   --                --                 --
125 High Street, 29th Floor
Boston, MA 02110
Attn:  Susan Stickells
</TABLE>

<TABLE>
<CAPTION>
    INVESTOR & ADDRESS                     NUMBER OF             NUMBER OF          NUMBER OF
    ------------------                     SHARES OF             SHARES OF          SHARES OF
                                           SERIES E              SERIES F           SERIES G
                                        PREFERRED STOCK       PREFERRED STOCK     PREFERRED STOCK
                                        ---------------       ---------------     ---------------
<S>                                     <C>                   <C>                 <C>
NEA Presidents' Fund, L.P.                    3,896                   --
1119 St. Paul Street
Baltimore, MD 21202
Attn:  Nancy Dorman

M/C Investors L.L.C                           34,727                  --
75 State Street
Boston, MA 02109
Attn: Jim Wade
Telecopier:

Sharon Sisskind                                6,137                  --
70 Barnstable Road
West Newton, MA 02165

K. Paul Singh                                  3,473                  --
Primus Telecommunications
1700 Old Meadow Road
3rd Floor
McLean, VA 22102

Intel Corporation                                 --                  --
2200 Mission College Blvd.
Santa Clara, CA 95052

FW Ventures IV L.P.                        2,077,922                  --
201 Main Street, Suite 3100
Fort Worth, TX 76102

Essex High Technology Fund L.P.              181,818                 --
125 High Street, 29th Floor
Boston, MA 02110
Attn:  Susan Stickells
</TABLE>
<PAGE>   25
<TABLE>
<CAPTION>
    INVESTOR & ADDRESS                     NUMBER OF          NUMBER OF           NUMBER OF           NUMBER OF
    ------------------                     SHARES OF          SHARES OF           SHARES OF           SHARES OF
                                           SERIES A            SERIES B            SERIES C            SERIES D
                                        PREFERRED STOCK     PREFERRED STOCK     PREFERRED STOCK    PREFERRED STOCK
                                        ---------------     ---------------     ---------------    ---------------
<S>                                     <C>                 <C>                 <C>                <C>
Utility Competitive Advantage                  --                 --                   --                 --
Fund L.P.
2 Wisconsin Circle, Suite 620
Chevy Chase, MD 20815

ABS Employees Venture Fund L.P.                --                 --                   --                 --
1 South Street, 17th Floor
Baltimore, MD 21202

Van Wagoner Capital Management                 --                 --                   --                 --
345 California Street,
Suite 2450
San Francisco, CA 94104

Michael Murray                                 --                 --                   --                 --
D. Alex Brown
101 Federal Street
15th Floor
Boston, MA 02110

Gunjan Sinha                                   --                 --                   --                 --
e-gain
624 East Evelyn Ave
Sunnyvale, CA 94086

Valhalla Capital, LP                           --                 --                   --                 --
10863 Pleasant Hill
Potomac, MD 20854

America Online, Inc.                           --                 --                   --                 --
22000 AOL Way
Dulles, VA 20166
</TABLE>

<TABLE>
<CAPTION>
    INVESTOR & ADDRESS                    NUMBER OF           NUMBER OF           NUMBER OF
    ------------------                    SHARES OF           SHARES OF           SHARES OF
                                           SERIES E            SERIES F            SERIES G
                                        PREFERRED STOCK     PREFERRED STOCK     PREFERRED STOCK
                                        ---------------     ---------------     ---------------
<S>                                     <C>                 <C>                 <C>
Utility Competitive Advantage             779,221                 --
Fund L.P.
2 Wisconsin Circle, Suite 620
Chevy Chase, MD 20815

ABS Employees Venture Fund L.P.           148,874                 --
1 South Street, 17th Floor
Baltimore, MD 21202

Van Wagoner Capital Management            779,221                 --
345 California Street,
Suite 2450
San Francisco, CA 94104

Michael Murray                              2,600                 --
D. Alex Brown
101 Federal Street
15th Floor
Boston, MA 02110

Gunjan Sinha                              129,870                 --
e-gain
624 East Evelyn Ave
Sunnyvale, CA 94086

Valhalla Capital, LP                       64,935                 --
10863 Pleasant Hill
Potomac, MD 20854

America Online, Inc.                     1,038,961                --
22000 AOL Way
Dulles, VA 20166
</TABLE>
<PAGE>   26
<TABLE>
<CAPTION>
    INVESTOR & ADDRESS                     NUMBER OF          NUMBER OF           NUMBER OF           NUMBER OF
    ------------------                     SHARES OF          SHARES OF           SHARES OF           SHARES OF
                                           SERIES A            SERIES B            SERIES C            SERIES D
                                        PREFERRED STOCK     PREFERRED STOCK     PREFERRED STOCK    PREFERRED STOCK
                                        ---------------     ---------------     ---------------    ---------------
<S>                                     <C>                 <C>                 <C>                <C>
Primus Telecommunications Group                --                 --                   --                 --
Inc.
1700 Old Meadow Road
3rd Floor
McLean, VA 22102
Attn:  K. Paul Singh

Presidio Venture Partners, LLC                 --                 --                   --                 --
600 Third Avenue
New York, NY 10016-2001
Attn:  Mr. Seiji Sato

Kenneth W. Slutsky                             --                 --                   --                 --
Sepulveda Capital
920 Manhatten Beach Blvd.
Manhatten Beach, CA 90266

Checchi Family Trust                           --                 --                   --                 --
c/o Kenneth W. Slutsky
Sepulveda Capital
920 Manhatten Beach Blvd.
Manhatten Beach, CA 90266

Robert Kutnick                                 --                 --                   --                 --
3043 Durham-B
Century Village East
Deerfield Beach, Florida 33442

Robert A. Morris                               --                 --                   --                 --
1239 Hillsboro Mile, No. 409
Hillsboro Beach, Florida 33062

David Weiss                                    --                 --                   --                 --
20088 West Key Drive
Boca Raton, Florida 33498

Jeffrey Issac Krantz                           --                 --                   --                 --
21503 Sweetwater Lane South
Boca Raton, Florida 33428
</TABLE>

<TABLE>
<CAPTION>
    INVESTOR & ADDRESS                    NUMBER OF           NUMBER OF           NUMBER OF
    ------------------                    SHARES OF           SHARES OF           SHARES OF
                                           SERIES E            SERIES F            SERIES G
                                        PREFERRED STOCK     PREFERRED STOCK     PREFERRED STOCK
                                        ---------------     ---------------     ---------------
<S>                                     <C>                 <C>                 <C>
Primus Telecommunications Group               --               600,000
Inc.
1700 Old Meadow Road
3rd Floor
McLean, VA 22102
Attn:  K. Paul Singh

Presidio Venture Partners, LLC                --               200,000
600 Third Avenue
New York, NY 10016-2001
Attn:  Mr. Seiji Sato

Kenneth W. Slutsky                            --               100,000
Sepulveda Capital
920 Manhatten Beach Blvd.
Manhatten Beach, CA 90266

Checchi Family Trust                          --               100,000
c/o Kenneth W. Slutsky
Sepulveda Capital
920 Manhatten Beach Blvd.
Manhatten Beach, CA 90266

Robert Kutnick                                --                20,000
3043 Durham-B
Century Village East
Deerfield Beach, Florida 33442

Robert A. Morris                              --                10,000
1239 Hillsboro Mile, No. 409
Hillsboro Beach, Florida 33062

David Weiss                                   --                10,000
20088 West Key Drive
Boca Raton, Florida 33498

Jeffrey Issac Krantz                          --                10,000
21503 Sweetwater Lane South
Boca Raton, Florida 33428
</TABLE>
<PAGE>   27
<TABLE>
<CAPTION>
    INVESTOR & ADDRESS                     NUMBER OF          NUMBER OF           NUMBER OF           NUMBER OF
    ------------------                     SHARES OF          SHARES OF           SHARES OF           SHARES OF
                                           SERIES A            SERIES B            SERIES C            SERIES D
                                        PREFERRED STOCK     PREFERRED STOCK     PREFERRED STOCK    PREFERRED STOCK
                                        ---------------     ---------------     ---------------    ---------------
<S>                                     <C>                 <C>                 <C>                <C>
Andy Stergiades                               --                  --                  --                  --
4205 Intracoastal Drive
Highland Beach, Florida  33487

John P. Cunningham                            --                  --                  --                  --
121 Stonebridge Square
Chappaqua, New York  10515

Scott Broder                                  --                  --                  --                  --
923 NE 24th Street
Boca Raton, Florida  33431]

Ed Iacobucci                                  --                  --                  --                  --
901 South Ocean Blvd.
Delray Beach, FL 33483
</TABLE>

<TABLE>
<CAPTION>
    INVESTOR & ADDRESS                    NUMBER OF           NUMBER OF           NUMBER OF
    ------------------                    SHARES OF           SHARES OF           SHARES OF
                                           SERIES E            SERIES F            SERIES G
                                        PREFERRED STOCK     PREFERRED STOCK     PREFERRED STOCK
                                        ---------------     ---------------     ---------------
<S>                                     <C>                 <C>                 <C>
Andy Stergiades                               --                 10,000
4205 Intracoastal Drive
Highland Beach, Florida  33487

John P. Cunningham                            --                  5,000
121 Stonebridge Square
Chappaqua, New York  10515

Scott Broder                                  --                  5,000
923 NE 24th Street
Boca Raton, Florida  33431]

Ed Iacobucci                                  --                 40,000
901 South Ocean Blvd.
Delray Beach, FL 33483
</TABLE>
<PAGE>   28
                               AMENDMENT NO. 1 TO

                              SITARA NETWORKS, INC.
                      SERIES G CONVERTIBLE PREFERRED STOCK
                               PURCHASE AGREEMENT,

                           SIXTH AMENDED AND RESTATED
                             STOCKHOLDERS AGREEMENT

                                       AND

                           SIXTH AMENDED AND RESTATED
                          REGISTRATION RIGHTS AGREEMENT

                              SEPTEMBER ____, 2000

         WHEREAS, the undersigned, being (i) Sitara Networks, Inc., a Delaware
corporation (the "Company"), (ii) the holders (the "Required Holders") of at
least sixty (60%) percent of the issued and outstanding shares of Series A
Convertible Preferred Stock, $0.00001 par value per share, (the "Series A
Stock"), Series B Convertible Preferred Stock, $0.00001 par value per share (the
"Series B Stock"), Series C Convertible Preferred Stock, $0.00001 par value per
share (the "Series C Stock"), Series D Convertible Preferred Stock, $0.00001 par
value (the "Series D Stock"), Series E Convertible Preferred Stock, $0.00001 par
value per share (the "Series E Stock"), Series F Convertible Preferred Stock,
$0.00001 par value per share (the "Series F Stock"), and Series G Convertible
Preferred Stock, $0.00001 (the "Series G Stock" and together with the Series A
Stock, the Series B Stock, the Series C Stock, the Series D Stock, the Series E
Stock, and the Series F Stock the "Preferred Stock") of the Company, calculated
as a single class (treating all Preferred Stock for all purposes herein as if
converted to Common Stock, par value $.00001 per share ), and (iii) Malik Z.
Khan, in his capacity as the founder of the Company (the "Founder"), desire to
amend (1) that certain Series G Convertible Preferred Stock Purchase Agreement,
dated as of June 16, 2000, by and among the Company and the other parties
thereto (the "Series G Purchase Agreement"), (2) that certain Sixth Amended and
Restated Stockholders Agreement, dated as of June 16, 2000, by and among the
Company and the other parties thereto (the "Stockholders Agreement") and (3)
that certain Sixth Amended and Restated Registration Rights Agreement, dated as
of June 16, 2000 by and among the Company and the other parties thereto (the
"Registration Rights Agreement");

         WHEREAS, Section 6.02 of the Series G Purchase Agreement permits
amendments to such agreement upon the written consent of the Company and the
Required Holders;

         WHEREAS, Section 14 of the Stockholders Agreement permits amendments to
such agreement upon the written consent of the Company, the Required Holders and
the Founder; and

         WHEREAS, Section 13 of the Registration Rights Agreement permits
amendments to such agreement upon the written consent of the Company, the
Required Holders and the Founder;
<PAGE>   29
         NOW, THEREFORE, in consideration of the mutual covenants set forth
herein, the parties hereto agree as follows:

         A.       That, the Series G Purchase Agreement be amended to the extent
set forth below:

                  1. The second sentence of Section 2.03(b) of the Agreement is
         hereby amended and restated in its entirety to read as follows:

                  "Such purchase and sale shall take place at a closing or
                  series of closings (the "Subsequent Closings" and together
                  with the Initial Closing, the "Closing") to be held at the
                  office of Counsel to the Company, 28 State Street, Boston,
                  Massachusetts 02109, at any time or from time to time, through
                  and including October 15, 2000, as may be mutually agreed upon
                  by the Company and such Purchasers."

                  2. The Company is hereby empowered to amend and restate
         Exhibit 2.01A of the Series G Purchase Agreement to reflect any
         additional sales of Series G Stock in any Subsequent Closings.

         B.       That the Stockholders Agreement be amended (i) to the extent
necessary to add any persons who purchase any shares of Series G Stock at any
Subsequent Closing to the Stockholders Agreement as "Investors" thereunder and
(ii) to the extent set forth below:

                  1. The number of shares current issuable under the Company's
         Stock Incentive Program that are excluded from the pre-emptive rights
         set forth in Section 12 of the Stockholders Agreement shall be
         increased by replacing the number "7,200,000" in clause (E) of the
         first sentence of Section 12 of the Stockholders Agreement with the
         number "9,200,000".

         C.       That the Registration Rights Agreement be amended to the
extent necessary to add any persons who purchase any shares of Series G Stock at
any Subsequent Closing to the Registration Rights Agreement as "Investors"
thereunder and to accordingly amend and restate Schedule RRA-1 of the
Registration Rights Agreement.

                            [SIGNATURE PAGES FOLLOW]

                                       2
<PAGE>   30
         IN WITNESS WHEREOF, the undersigned have executed this Amendment No. 1
to the Sitara Networks, Inc. Series G Convertible Preferred Stock Purchase
Agreement, the Sixth Amended and Restated Stockholders Agreement and the Sixth
Amended and Restated Registration Rights Agreement as of the date first written
above.

                                          COMPANY:

                                          SITARA NETWORKS, INC.

                                          By:    /s/ Malik Khan
                                                 -----------------------------
                                          Name:  Malik Khan
                                          Title: President

                                          FOUNDER:

                                          /s/ Malik Khan
                                          Malik Z. Khan

                                          PREFERRED STOCKHOLDERS:

                                          CHARLES RIVER PARTNERSHIP VII, L.P.

                                          By:    /s/ Michael Zak
                                                 -----------------------------
                                                 Michael Zak, General Partner

                                          ONE LIBERTY FUND III, L.P.

                                          By:  OneLiberty Partners III, L.P.,
                                               its general partner

                                          By:    /s/ Edwin M. Kania, Jr.
                                                 -----------------------------
                                          Name:  Edwin M. Kania, Jr.
                                          Title: General Partner

<PAGE>   31
                                          NEW ENTERPRISE ASSOCIATES VII, LP

                                          By:    /s/ Arthur Marks
                                                 -----------------------------
                                          Name:  Arthur Marks
                                          Title: General Partner

                                          NEA PRESIDENTS' FUND, L.P.

                                          By:    /s/ Arthur Marks
                                                 -----------------------------
                                          Name:  Arthur Marks
                                          Title: General Partner

                                          FW VENTURES IV, L.P.

                                                 By:    /s/ David G. Brown
                                                        ------------------------
                                                 Name:  David G. Brown
                                                 Title: Vice President

                                          PRISM VENTURE PARTNERS I, L.P.

                                          By:    Prism Investment Partners,
                                                 L.P., its general partner

                                                 By:   Prism Venture Partners,
                                                       L.L.C., its general
                                                       partner

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

<PAGE>   32
                               AMENDMENT NO. 2 TO

                              SITARA NETWORKS, INC.
                           SIXTH AMENDED AND RESTATED
                          REGISTRATION RIGHTS AGREEMENT

                               NOVEMBER 16, 2000

     WHEREAS, the undersigned, being (i) Sitara Networks, Inc., a Delaware
corporation (the "Company"), (ii) the holders (the "Required Holders") of at
least sixty (60%) percent of the issued and outstanding shares of Series A
Convertible Preferred Stock, $0.00001 par value per share, (the "Series A
Stock"), Series B Convertible Preferred Stock, $0.00001 par value per share (the
"Series B Stock"), Series C Convertible Preferred Stock, $0.00001 par value per
share (the "Series C Stock"), Series D Convertible Preferred Stock, $0.00001 par
value (the "Series D Stock"), Series E Convertible Preferred Stock, $0.00001 par
value per share (the "Series E Stock"), Series F Convertible Preferred Stock,
$0.00001 par value per share (the "Series F Stock"), and Series G Convertible
Preferred tock, $0.00001 (the "Series G Stock" and together with the Series A
Stock, the Series B Stock, the Series C Stock, the Series D Stock, the Series E
Stock, and the Series F Stock the "Preferred Stock") of the Company, calculated
as a single class (treating all Preferred Stock for all purposes herein as if
converted to Common Stock, par value $.00001 per share ), and (iii) Malik Z.
Khan, in his capacity as the founder of the Company (the "Founder"), desire to
amend that certain Sixth Amended and Restated Registration Rights Agreement,
dated as of June 16, 2000 by and among the Company and the other parties thereto
(the "Registration Rights Agreement");

     WHEREAS, Section 13 of the Registration Rights Agreement permits amendments
to such agreement upon the written consent of the Company, the Required Holders
and the Founder; and

     WHEREAS, the capitalized terms not defined herein shall have the meanings
ascribed to them in the Registration Rights Agreement;

     NOW, THEREFORE, in consideration of the mutual covenants set forth herein,
the parties hereto agree as follows:

     That the Registration Rights Agreement be amended to the extent necessary
to irrevocably waive (i) the right of each Holder to have any shares of
Registrable Securities or Founder Registrable Securities included on any
Registration Statement filed with respect to the Company's Initial Public
Offering (provided that the Company's Initial Public Offering is consummated on
or prior to June 30, 2001) and (ii) the right to receive notice of the filing of
any such Registration Statement.

                            [SIGNATURE PAGES FOLLOW]

<PAGE>   33

      IN WITNESS WHEREOF, the undersigned have executed this Amendment No. 2 to
the Sitara Networks, Inc. Sixth Amended and Restated Registration Rights
Agreement as of the date first written above.

                               COMPANY:

                               SITARA NETWORKS, INC.

                               By:   /s/ Malik Khan
                                     ------------------------
                               Name: Malik Khan
                               Title:President

                               FOUNDER:

                               Malik Z. Khan

                               PREFERRED STOCKHOLDERS:

                               CHARLES RIVER PARTNERSHIP VII, L.P.

                               By:   /s/ Michael J. Zak
                                     ---------------------------
                               Name: Michael J. Zak
                               Title:

                               ONE LIBERTY FUND III, L.P.

                               By:  OneLiberty Partners III, L.P.,
                                    its general partner

                               By:   /s/ Edwin M. Kania, Jr.
                                     ---------------------------
                               Name: Edwin M. Kania, Jr.
                               Title: General Partner

<PAGE>   34

                               NEW ENTERPRISE ASSOCIATES VII, LP

                               By:   /s/ Arthur Marks
                                     --------------------------
                               Name: Arthur Marks
                               Title: General Partner

                               NEA PRESIDENTS' FUND, L.P.

                               By:   /s/ Arthur Marks
                                     --------------------------
                               Name: Arthur Marks
                               Title: General Partner

                               FW VENTURES IV, L.P.

                               By:   /s/ John H. Fant
                                     --------------------------
                               Name: John H. Fant
                               Title: Vice President

                               PRISM VENTURE PARTNERS I, L.P.

                               By:   Prism Investment Partners, L.P., its
                                     general partner

                                     By:   Prism Venture Partners, L.L.C., its
                                           general partner

                                     By:   /s/ Robert Fleming
                                           -----------------------------------
                                           Managing Director<PAGE>   1
                                                                    EXHIBIT 10.5

                              SITARA NETWORKS, INC,
                      SERIES E CONVERTIBLE PREFERRED STOCK
                               PURCHASE AGREEMENT

         This Series E Convertible Preferred Stock Purchase Agreement is entered
into on this 9th day of July, 1999 by and among Sitara Networks, Inc., a
Delaware corporation (the "Company"), and the Persons listed on Exhibit 2.01A
hereto, as amended (each such Person being hereinafter sometimes referred to
individually as a "Purchaser" and all such Persons being hereinafter sometimes
referred to collectively as the "Purchasers").

         WHEREAS, the Company wishes to issue and the Purchasers wish to
purchase Series E Convertible Preferred Stock of the Company;

         WHEREAS, the Company and certain Persons are parties to a Series A
Convertible Preferred Stock Purchase Agreement dated as of December 11, 1996
(the "Series A Purchase Agreement");

         WHEREAS, the Company and certain Persons are parties to a Series B
Convertible Preferred Stock Purchase Agreement dated as of September 9, 1997;

         WHEREAS, the Company and certain Persons are parties to a Series C
Convertible Preferred Stock Purchase Agreement dated as of May 18, 1998;

         WHEREAS, the Company and Intel Corporation are parties to a Series D
Convertible Preferred Stock Purchase Agreement dated as of December 17, 1998
(the "Series D Purchase Agreement"); and

         WHEREAS, (A) the holders hereunder representing at least sixty percent
(60%) of the holders of the Series A Convertible Preferred Stock, $.00001 par
value, the Series B Convertible Preferred Stock, $.00001 par value, Series C
Convertible Preferred Stock, $.00001 par value and Series D Convertible
Preferred Stock, $.00001 par value, of the Company, voting as a single class,
wish to amend (i) Section 5.02 of the Series D Purchase Agreement and (ii) the
definition of Qualified Public Offering in the Series D Purchase Agreement and
(B) the holders hereunder representing at least sixty percent (60%) of each such
series, voting separately (other than the holders of Series D Convertible
Preferred Stock), wish to amend the definition of Qualified Public Offering in
each of the Series A Purchase Agreement, Series B Purchase Agreement and Series
C Purchase Agreement, in order to carry out the purchase hereunder;

         NOW THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this
Agreement, the parties hereto hereby agree as follows:

                                     - 1 -
<PAGE>   2
                        DEFINITIONS AND ACCOUNTING TERMS

         1.01 Certain Definitions. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):

         "Agreement" shall mean this Series E Convertible Preferred Stock
Purchase Agreement, as from time to time amended and in effect between the
parties hereto.

         "Board of Directors" shall mean the then present members of the Board
of Directors of the Company.

         "Charter" shall mean the Restated Certificate of Incorporation of the
Company in the form of Exhibit 2.01B hereto, as amended from time to time.

         "Closing" shall have the meaning assigned to that term in Section
2.03(b) hereto.

         "Company" shall mean and include Sitara Networks, Inc. (formerly K2
Net, Inc.), a Delaware corporation, and its successors and assigns.

         "Company's Auditors" shall mean the firm of independent public
accountants employed by the Company from time to time to conduct its annual
audit, which firm shall be a "Big Five" accounting firm or such other accounting
firm acceptable to the holders of at least sixty (60%) percent of the Preferred
Stock.

         "Common Stock" shall mean (a) the Company's Common Stock, $.00001 par
value per share, as authorized on the date of this Agreement, (b) any other
capital stock of any class or classes (however designated) of the Company,
authorized on or after the date hereof, the holders of which shall have the
right either to all or to a share of the balance of current dividends and
liquidating distributions after the preference of the Preferred Stock, or the
holders of which shall ordinarily, in the absence of contingencies, be entitled
to vote for the election of a majority of directors of the Company (even though
the right so to vote has been suspended by the happening of such a contingency),
and (c) any other securities into which or for which any of the securities
described in (a) or (b) may be converted or exchanged pursuant to a plan of
recapitalization, reorganization, merger, sale of assets or otherwise.

         "Consolidated" when used with reference to any term defined herein
shall mean that term as applied to the accounts of the Company and its
Subsidiaries consolidated in accordance with generally accepted accounting
principles after eliminating intercompany items and minority interests.

         "Conversion Shares" shall have the meaning assigned to that term in
Section 2.01 hereof.

         "Counsel to the Company" shall mean McDermott, Will & Emery.

         "ERISA" shall have the meaning assigned to that term in Section 4.12
hereof.

                                     - 2 -
<PAGE>   3
         "Exchange Act" shall mean the Securities Exchange Act of 1934, or any
similar Federal statute, and the rules and regulations of the Securities and
Exchange Commission (or of any other Federal agency then administering the
Exchange Act) thereunder, all as the same shall be in effect at the time.

         "Founder" means Malik Z. Khan.

         "Indebtedness" shall mean all obligations, contingent and otherwise,
which should, in accordance with generally accepted accounting principles
consistently applied, be classified upon the obligor's balance sheet as
liabilities, but in any event including, without limitation, liabilities secured
by any mortgage or security interest on real or personal property owned or
acquired subject to such mortgage or security interest, whether or not the
liability secured thereby shall have been assumed, and also including, without
limitation, (a) all guaranties, endorsements and other contingent obligations in
respect of Indebtedness of others, whether or not the same are or should be so
reflected in said balance sheet, except guaranties by endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business, and (b) the present value of any lease payments due under
leases required to be capitalized in accordance with applicable Statements of
Financial Accounting Standards, determined by discounting all such payments at
the interest rate determined in accordance with applicable Statements of
Financial Accounting Standards.

         "Issue Price" shall mean $3.85, which is the price per share at which
the Purchased Shares are being issued hereunder.

         "Key Employee" shall mean and include the Founder, the President, the
Chief Executive Officer, any Vice President, the Treasurer and the Chief
Financial Officer of the Company or any Subsidiary, or any person who is not an
officer of the Company or any Subsidiary and is in charge of one or more of the
following functions: sales, marketing, production, or engineering and technical
development or any other position or employee so designated by the Board of
Directors of the Company.

         "Person" shall mean an individual, corporation, partnership, joint
venture, trust, limited liability company, unincorporated organization, or
similar entity, or a government or any agency or political subdivision thereof.

         "Preferred Stock" shall mean the Series A Convertible Preferred Stock,
the Series B Convertible Preferred Stock, Series C Convertible Preferred Stock,
Series D Convertible Preferred Stock and Series E Convertible Preferred Stock,
each $.00001 par value, of the Company, and any subseries thereof, the rights,
preference and other terms and conditions of which are set forth in Exhibit
2.01B hereto.

         "Purchased Shares" shall have the meaning assigned to that term in
Section 2.01 hereof.

         "Purchasers" shall mean and include the Persons listed on Exhibit 2.01A
hereto, as the same may be amended from time to time through and including July
31, 1999 to include additional Purchasers who purchase Purchased Shares at a
Closing.

                                     - 3 -
<PAGE>   4
         "Qualified Public Offering" shall mean and include the closing of a
firmly underwritten public offering pursuant to an effective registration
statement under the Securities Act covering the offer and sale of Common Stock
for the account of the Company from which the aggregate net proceeds to the
Company are at least $15,000,000 and the price per share of such Common Stock is
not less than $7.70 (such amount to be equitably adjusted whenever there is a
stock split, combination, stock dividend, reclassification or similar event
affecting the Common Stock). This definition supersedes and replaces the
corresponding definition in each of the Series A Purchase Agreement, Series B
Purchase Agreement, Series C Purchase Agreement and Series D Purchase Agreement.

         "Securities Act" shall mean the Securities Act of 1933, or any similar
Federal statute, and the rules and regulations of the Securities and Exchange
Commission (or of any other Federal agency then administering the Securities
Act) thereunder, all as the same shall be in effect at the time.

         "Stock Option Plans" shall mean the 1996 Sitara Networks, Inc. Stock
Incentive Plan of the Company, as amended, providing for the issuance of, or
grant of options to purchase, up to 3,300,000 shares of Common Stock to
officers, directors, employees of and consultants to the Company and any
amendment thereto.

         "Subsidiary" or "Subsidiaries" shall mean any corporation, 50% or more
of the outstanding voting stock of which shall at the time be owned by the
Company or by one or more Subsidiaries, or any other entity or enterprise, 50%
or more of the equity of which shall at the time be owned by the Company or by
one or more Subsidiaries.

         "Wholly-Owned Subsidiary" or "Wholly-Owned Subsidiaries" shall mean any
corporation, 100% of the outstanding voting stock of which shall at the time be
owned by the Company or by one or more Wholly-Owned Subsidiaries, or any other
entity or enterprise, 100% of the equity of which shall at the time be owned by
the Company or by one or more Wholly-Owned Subsidiaries.

         1.02 Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles, consistently applied, and all other financial data submitted
pursuant to this Agreement shall be prepared and calculated in accordance with
such principles.

                                   ARTICLE II.

                       PURCHASE, SALE AND TERMS OF SHARES

         2.01 The Purchased Shares. The Company has authorized the issuance and
sale of up to 6,493,506 shares (the "Purchased Shares") of the previously
authorized but unissued shares of its Series E Convertible Preferred Stock to
the Persons and in the respective amounts set forth in Exhibit 2.0lA hereto. The
designation, rights, preferences and other terms and conditions relating to the
Preferred Stock shall be as set forth in Exhibit 2.01B hereto. Any shares of
Common Stock issuable upon conversion of the Purchased Shares, and such shares
when issued, are herein referred to as the "Conversion Shares".

                                     - 4 -
<PAGE>   5
         2.02 Reservation of Shares. The Company has authorized and reserved and
covenants to continue to reserve, free of preemptive rights and other
preferential rights, a sufficient number of its previously authorized but
unissued shares of Common Stock to satisfy the rights of conversion of the
holders of the Purchased Shares.

         2.03 Purchase and Sale of Purchased Shares.

                  (a) Initial Closing. The Company agrees to issue and sell to
the Purchasers, and, subject to and in reliance upon the representations,
warranties, terms and conditions of this Agreement, the Purchasers, severally
but not jointly, agree to purchase at the Issue Price all, and not less than
all, of that portion of the Purchased Shares, at the purchase price, set forth
opposite their respective names in Exhibit 2.01A. Such purchase and sale shall
take place at an initial closing (the " Initial Closing") to be held at the
office of Counsel to the Company, 28 State Street, Boston, Massachusetts 02109,
on July 9, 1999 at 10:00 a.m., or on such other date and at such time as may be
mutually agreed upon by the Company and a majority in interest of the
Purchasers. At the Initial Closing the Company will issue and deliver
certificates evidencing such Purchased Shares sold at the Initial Closing
registered in the name of the Purchasers or their nominees, all in the amounts
set forth opposite their respective names in Exhibit 2.01A hereto against (i)
delivery of checks payable to the order of the Company, or (ii) transfer by wire
transfer to the account of the Company, in payment of the full purchase price
for such Purchased Shares.

                  (b) Subsequent Closings. The Company agrees to issue and sell
to other Persons, who upon execution of a counterpart signature page hereto
shall be considered in all circumstances as a Purchaser herein, and, subject to
and in reliance upon the representations, warranties, terms and conditions of
this Agreement, such Purchasers, severally but not jointly, agree to purchase at
the Issue Price all, and not less than all, of that portion of the Purchased
Shares, at the purchase price, set forth opposite their respective names in
Exhibit 2.01A, as amended. Such purchase and sale shall take place at a closing
or series of closings (the "Subsequent Closings" and together with the Initial
Closing, the "Closing") to be held at the office of Counsel to the Company, 28
State Street, Boston, Massachusetts 02109, at any time or from time to time,
through and including July 31, 1999, as may be mutually agreed upon by the
Company and such Purchasers. At a Subsequent Closing the Company will issue and
deliver certificates evidencing such Purchased Shares sold at such Subsequent
Closing registered in the name of such Purchasers or their nominees, all in the
amounts set forth opposite their respective names in Exhibit 2.01A hereto, as
amended, against (i) delivery of checks payable to the order of the Company, or
(ii) transfer by wire transfer to the account of the Company, in payment of the
full purchase price for such Purchased Shares.

                  (c) Use of Proceeds. The Company agrees to use the proceeds
from the issuance and sale of the Purchased Shares to fund operating losses, for
general working capital of the Company and other general corporate purposes.

         2.04 Representations, Warranties and Covenants of the Purchasers. All
representations and warranties of the Purchasers in this Section 2.04 are made
severally and not jointly as follows:

                                     - 5 -
<PAGE>   6
                  (a) Each Purchaser represents that it is acquiring the
Purchased Shares and any Conversion Shares for its own account for the purpose
of investment and not with a view to distribution or resale thereof, subject,
nevertheless, to the condition that the disposition of the property of each
Purchaser shall at all times be within its control. Each Purchaser which is not
an individual further represents and warrants that it was not organized for the
specific purpose of acquiring the Purchased Shares. Each Purchaser further
represents and warrants that such Purchaser is (or, in the case of a
partnership, it and each of its partners is) an "accredited investor" for
purposes of the Securities Act and Regulation D thereunder and has knowledge and
experience in financial and business matters such that it is capable of
evaluating the merits and risks of the investment to be made hereunder, and that
such Purchaser is financially able to undertake the risks involved in such an
investment. Each Purchaser further acknowledges that it has had a full
opportunity to request from the Company and to review all information which it
deems relevant in making a decision to purchase the Purchased Shares being
purchased by it hereunder. Each Purchaser understands and agrees that (i) the
Purchased Shares and the Conversion Shares have not been registered under the
Securities Act by reason of their issuance in a transaction exempt from the
registration requirements of the Securities Act pursuant to Section 4(2) or
Regulation D promulgated thereunder, (ii) the Purchased Shares and the
Conversion Shares must be held indefinitely unless a registration statement
covering such shares is effective under the Securities Act or unless an
exception from registration under such Act is available supported by a written
opinion of counsel to that effect, (iii) the Purchased Shares and the Conversion
Shares will bear a legend to that effect and (iv) the Company will make a
notation on its transfer books to such effect.

                  (b) The principal office or residence of each Purchaser, and
the place at which the decision to participate in this Agreement and the
transactions contemplated hereby was made, is located at the address appearing
below such Purchaser's name on Exhibit 2.01A hereto. Each Purchaser which is not
an individual and whose address appearing below such Purchaser's name on Exhibit
2.01A is located in Massachusetts further represents that it is an
"institutional buyer" as that term is used in Section 402(b)(8) of the
Massachusetts Uniform Securities Act.

                  (c) Each Purchaser represents and warrants that this Agreement
and all transactions contemplated hereunder have been duly authorized by all
necessary action on its part and that this Agreement has been duly executed and
delivered by it or on its behalf and is a valid and binding agreement
enforceable against it in accordance with its terms.

                  (d) Each Purchaser represents that no person, firm or
corporation, other than BT Alex.Brown, has or will have, as a result of any act
or omission by such Purchaser, any right, interest or valid claim against the
Company for any commission, fee or other compensation as a finder or broker, or
in any similar capacity, in connection with the transactions contemplated by
this Agreement.

                  (e) If any Purchaser sells any Conversion Shares pursuant to
Rule 144A promulgated under the Securities Act, the Purchaser will take all
necessary steps in order to perfect the exemption from registration provided
thereby, including (i) obtaining on behalf of the Company information to enable
the Company to establish a reasonable belief that the purchaser is a qualified
institutional buyer and (ii) advising such purchaser that Rule 144A is being
relied upon with respect to such resale.

                                     - 6 -
<PAGE>   7
                                  ARTICLE III.

                      CONDITIONS TO PURCHASERS' OBLIGATIONS

         The obligation of each Purchaser to purchase and pay for the Purchased
Shares at the Closing is subject to the following conditions:

         3.01 Representations and Warranties. Each of the representations and
warranties of the Company set forth in Article IV hereof shall be true as of the
date hereof and as of the date of the Closing.

         3.02 Documentation at Closing. The Purchasers shall have received prior
to or at the Closing all of the following, each in form and substance reasonably
satisfactory to the Purchasers and all of the following events shall have
occurred prior to or simultaneously with the Closing.

                  (a) A copy of the Charter of the Company certified by the
Secretary of State of Delaware.

                  (b) A favorable opinion of Counsel to the Company as to
matters set forth in Exhibit 3.02B hereto.

                  (c) A certificate of the Secretary or an Assistant Secretary
of the Company (a) attesting to the incumbency of the officers of the Company
and their authority to sign this Agreement, the certificates for the Purchased
Shares and the other documents or certificates to be delivered pursuant to this
Agreement by the Company or any of its officers, together with the true
signatures of such officers; (b) certifying a copy of the resolutions of the
Board of Directors and the stockholders of the Company, evidencing approval of
this Agreement, the amendment or restatement of the Charter, the authorization
for issuance of the Purchased Shares and other matters contemplated hereby; (c)
certifying a copy of the By-laws of the Company; and (d) certifying copies of
all documents evidencing other necessary corporate or other action and
governmental approvals, if any, with respect to this Agreement and the Purchased
Shares, including the qualification of the Company to do business in the
Commonwealth of Massachusetts.

                  (d) A certificate from a duly authorized officer of the
Company stating that the representations and warranties of the Company contained
in Article IV hereof are true and correct in all respects and that all
conditions required to be performed by the Company prior to or at the Closing
have been performed, and that no condition or event has occurred or is
continuing or will result from the execution and delivery of this Agreement or
the issuance of the Purchased Shares which constitutes an event of default or
would constitute an event of default but for the requirement that notice be
given or time elapse or both.

                  (e) A Fourth Amended and Restated Stockholders Agreement in
the form and substance set forth in Exhibit 3.02E hereto, executed by the
parties named therein (the "Stockholders Agreement").

                                     - 7 -
<PAGE>   8
                  (f) A Fourth Amended and Restated Registration Rights
Agreement in the form and substance set forth in Exhibit 3.02H hereto, executed
by the Company and the parties named therein.

         3.03 The Board of Directors of the Company shall consist of a maximum
of seven (7) members, as specified in the Stockholders Agreement.

         3.04 The Company shall have performed all other covenants and
agreements set forth in this Agreement expressly required to be performed by it
prior to or on the date of Closing.

         3.05 Consents, Waivers, etc. Prior to Closing, the Company shall have
obtained all consents or waivers, if any, necessary to execute and deliver this
Agreement, issue the Purchased Shares and to carry out the transactions
contemplated hereby and thereby, and all such consents and waivers shall be in
full force and effect. All corporate and other action and governmental filings
necessary to effectuate the terms of this Agreement, the Purchased Shares and
other agreements and instruments executed and delivered by the Company in
connection herewith shall have been made or taken, except for any postsale
filing that may be required under federal and state securities laws, as to which
filing the Company agrees to make promptly after Closing. In addition to the
documents set forth above, the Company shall have provided the Purchasers any
other information or copies of documents that they may reasonably request.

                                  ARTICLE IV.

                  REPRESENTATIONS AND WARRANTIES BY THE COMPANY

The Company represents and warrants as follows:

         4.01 Organization and Standing of the Company. The Company is a
corporation duly organized and validly existing in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority for
the ownership and operation of its properties and for the carrying on of its
business as now conducted and as now proposed to be conducted. The Company is
duly licensed or qualified and in good standing as a foreign corporation
authorized to do business in Massachusetts and in each other jurisdiction in
which the nature of the business transacted by it or the character of the
properties owned or leased by it requires such licensing or qualification.
unless the failure to so qualify does not and will not have a material and
adverse effect on the business operations or financial condition of the Company.

         4.02 Corporate Action. The Company has all necessary corporate power
and has taken all corporate action required to make this Agreement, the
Purchased Shares and any other agreements and instruments executed in connection
herewith and therewith, the valid and enforceable obligations of the Company.
Sufficient shares of authorized but unissued Common Stock of the Company have
been reserved by appropriate corporate action in connection with the prospective
conversion of the Purchased Shares. The issuance of the Purchased Shares, and
the issuance of the Conversion Shares upon the conversion of the Purchased
Shares, are not subject to preemptive or other preferential rights, or similar
statutory or contractual rights, either arising pursuant to any agreement or
instrument to which the Company is a party or which are otherwise binding upon
the Company.

                                     - 8 -
<PAGE>   9
         4.03 Governmental Approvals. All authorizations, consents, approvals,
licenses, exemptions from or filings, or registrations with any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, necessary for, or in connection with, the offer, issuance,
sale, execution or delivery by the Company, or for the performance by it of its
obligations under, this Agreement, the agreements referred to in Article III
hereof or the Purchased Shares shall have been made prior to, and shall be
effective as of, the Closing.

         4.04 Litigation. Except as set forth in Exhibit 4.04, there is no
litigation or governmental proceeding or investigation pending or threatened
against the Company affecting any of its properties or assets, or, to the
knowledge of the Company, after due inquiry, against any officer, Key Employee
or Founder of the Company that might foreseeably result, either in any case or
in the aggregate, in any material adverse change in the business, prospects,
operations, affairs or condition of the Company, or any of its properties or
assets, or that questions the validity of this Agreement, the Purchased Shares,
or any action taken or to be taken pursuant hereto or thereto. To the best of
the Company's knowledge, there is no factual or legal basis for any such
litigation or governmental proceeding or investigation that might result,
individually or in the aggregate, in any material adverse change in the
business, properties, assets, financial condition, affairs or prospects of the
Company. Neither the Company nor, to the knowledge of the Company, after due
inquiry, any officer, Key Employee or Founder of the Company or its
Subsidiaries, is in default with respect to any order, writ, injunction, decree,
ruling or decision of any court, commission, board or other government agency
that might foreseeably result, either in any case or in the aggregate, in any
material adverse change in the business, operations, prospects, affairs or
condition of the Company or any of its properties or assets. The foregoing
sentences include, without limiting their generality, actions pending or
threatened (or any basis therefor known to the Company) involving the prior
employment of employees of the Company and the use in any of the Company's
business of any information or techniques allegedly proprietary to any of their
former employers.

         4.05 Certain Agreements of Officers and Employees.

                  (a) To the best of the Company's knowledge and belief, after
due inquiry, no employee of the Company is, or is now expected to be, in
violation of any term of any employment contract, patent disclosure agreement,
non-competition agreement, or any other contract or agreement or any restrictive
covenant relating to the right of any such employee to be employed by the
Company because of the nature of the business conducted or to be conducted by
the Company or as a result of the use of trade secrets or proprietary
information of others, and to the best of the Company's knowledge and belief,
the continued employment of the Company's employees does not subject the Company
or the Purchasers to any liability with respect to the foregoing.

                  (b) To the best of the knowledge of the officers of the
Company, after due inquiry, no officer of the Company, nor any Key Employee of
the Company whose termination, either individually or in the aggregate, would
have a material adverse effect on the Company, has any present intention of
terminating his employment with the Company.

                                     - 9 -
<PAGE>   10
                  (c) The Company is not a party to any collective bargaining
agreement and, to the best of its knowledge, after due inquiry, there have been
no pending labor problems involving collective disputes or disturbances with any
group of employees and there have been no attempts to organize its employees by
any union or similar association.

         4.06 Compliance with Other Instruments. The Company is in compliance in
all respects with the terms and provisions of this Agreement which it is
required to be in compliance with as of the date hereof, and of the Charter and
By-laws, as amended, and in all material respects with the terms and provisions
of each mortgage, indenture, lease, agreement and other instrument relating to
obligations of the Company, and, to the best of the Company's knowledge, of all
judgments, decrees, governmental orders, statutes, rules or regulations by which
it is bound or to which its properties or assets are subject. Neither the
execution and delivery of this Agreement and the Purchased Shares, nor the
consummation of any transaction contemplated hereby or thereby, has constituted
or resulted in or will constitute or result in a default or violation of any
term or provision in any of the foregoing documents or instruments.

         4.07 Federal Reserve Regulations. The Company is not engaged in the
business of extending credit for the purpose of purchasing or carrying margin
securities (within the meaning of Regulation G of the Board of Governors of the
Federal Reserve System), and no part of the proceeds of the Purchased Shares
will be used to purchase or carry any margin security or to extend credit to
others for the purpose of purchasing or carrying any margin security or in any
other manner which would involve a violation of any of the regulations of the
Board of Governors of the Federal Reserve System.

         4.08 Title to Assets. The Company has good and marketable title in fee
to such of its fixed assets as are real property, and good title to all of its
other assets now carried on its books, including those reflected in the most
recent balance sheet of the Company which forms a part of Exhibit 4.10A attached
hereto, or acquired since the date of such balance sheet (except personal
property disposed of since said date in the ordinary course of business), free
of any mortgages, pledges, charges, liens, security interests or other
encumbrances, except those indicated in Exhibit 4.08 hereto. The Company enjoys
peaceful and undisturbed possession under all leases under which it is operating
and is in compliance with all such leases, and all said leases are valid and
subsisting and in full force and effect.

         4.09 Patents and Intellectual Property Rights. The Company owns or has
a valid right to use the patents, patent rights, licenses, trade secrets,
trademarks, trademark rights, trade names or trade name rights or franchises,
copyrights, inventions, and intellectual property rights being used to conduct
its businesses as now operated or as now proposed to be operated (the "Company's
Intellectual Property"); and, the conduct of business as now operated or as now
proposed to be operated does not, to its knowledge, conflict with valid patents,
patent rights, licenses, trade secrets, trademarks, trademark rights, trade
names or trade name rights or franchises, copyrights, inventions, and
intellectual property rights of others. Except for normal license fees payable
for the use of off-the-shelf software products, the Company has no obligation to
compensate any Person for the use of any of the Company's Intellectual Property
and has granted to no Person any license or other rights to use in any manner
any of the Company's Intellectual Property, whether requiring the payment of
royalties or not. All licenses and other agreements relating to the Company's
Intellectual Property are in full force and effect

                                     - 10 -
<PAGE>   11
without default by the Company or, to the best of the Company's knowledge,
without default by any other party thereto.

         4.10 Financial Information. The internally prepared balance sheet and
statement of profit and loss of the Company as of May 31, 1999, attached hereto
as Exhibit 4.10A (the "Financial Statements"), present fairly the financial
position and results of operation of the Company as at and for the period ended
on the date thereof. The Company does not have, and has no reasonable grounds to
know of, any liability, contingent or other, not adequately reflected in or
reserved against in the aforesaid balance sheet in accordance with generally
accepted accounting principles. The Financial Statements (a) are in accordance
with the books and records of the Company, (b) are true, correct and complete
and present fairly the financial condition of the Company at the date or dates
therein indicated and the results of operations for the period or periods
therein specified, and (c) have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis, except as to the
unaudited financial statements, for the omission of notes thereto and normal
year end audit adjustments. Since May 31, 1999, there has not been, except as
set forth in Exhibit 4.10B:

                  (a) Any material change in the assets, liabilities, financial
condition, or operations of the Company from that reflected in the financial
statements attached hereto as Exhibit 4.10A;

                  (b) Any change in the contingent obligations of the Company by
way of guaranty, endorsement, indemnity, warranty, or otherwise;

                  (c) Any damage, destruction, or loss, whether or not covered
by insurance, materially and adversely affecting the properties or business of
the Company;

                  (d) Any waiver or compromise by the Company of a valuable
right or of a material debt owed to it;

                  (e) Any loans made or promised by the Company to its
employees, officers, or directors other than travel advances made in the
ordinary course of business;

                  (f) Any extraordinary increases in the compensation of any of
the Company's employees, officers, or directors;

                  (g) Any declaration or payment of any dividend or other
distribution of the assets of the Company;

                  (h) Any issuance or sale by the Company of any shares of its
Common Stock or other securities;

                  (i) Any other event or condition of any character that has
materially and adversely affected the Company's business or prospects; or

                  (j) Any agreement or commitment by the Company to do any of
the things described in this Section 4.10.

                                     - 11 -
<PAGE>   12
         4.11 Taxes. The Company has correctly and completely prepared and filed
within the time prescribed by law all federal, state and other tax returns
required by law to be filed by it, has paid all taxes shown to be due and all
additional assessments, including penalties and interest, received by it, and
adequate provisions have been made and are reflected in the Company's financial
statements for all current taxes and other charges to which the Company is
subject and which are not currently due and payable. None of the state, local or
federal income tax returns of the Company have been audited by, or are currently
under audit by, any state or local tax authority or by the Internal Revenue
Service. The Company knows of no additional assessments or adjustments pending
or threatened for any period. There are no tax liens upon the assets or property
of the Company. The Company has not granted any extension to any taxing
authority of the limitation period during which any tax liability may be
asserted. The Company has not committed any violation of any federal, state,
local or foreign tax laws except where such violation would not result in a
material adverse change in the business, operations or condition of the Company
or any of its properties or assets. All monies required to be withheld by the
Company from employees or collected from customers for income taxes, social
security and unemployment insurance taxes and sales, excise and use taxes, and
the portion of any such taxes to be paid by the Company to governmental agencies
or set aside in accounts for such purpose have been so paid or set aside, or
such monies have been approved, reserved against and entered upon the books and
financial statements of the Company. The Company does not have in effect any tax
election or consent for federal income tax purposes under Sections 108, 341(f),
471, 1017, 1033 or 4977 of the Internal Revenue Code of 1986, as amended.

         4.12 ERISA. Except as set forth in Exhibit 4.12 hereto:

                  (a) The Company does not maintain or make contributions to any
defined benefit or defined contribution pension plans for its employees which
are subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA").

                  (b) The Company does not currently maintain, nor has it ever
maintained a retiree medical plan or program or other welfare benefit plan
intended to provide benefits to retired employees of the Company.

                  (c) The Company does not currently maintain, nor has it ever
maintained, a medical plan for active employees.

                  (d) The Company does not currently maintain, nor has it ever
maintained an employee benefit plan which constitutes, or has constituted a
Multi-Employer Plan within the meaning of Section 4001(a)(3) of ERISA and the
Company has not incurred any liability to any Multi-Employer Plan which remains
unsatisfied in connection with a complete or partial withdrawal from any such
plan within the meaning of Section 4203 or 4205 of ERISA.

                  (e) The consummation of the transaction contemplated hereby
will not result in (i) an "excess parachute payment" (as defined in section
28OG(b)(1) of the Code) which is subject to the imposition of an excise tax
under section 4999 of the Code or which would not be deductible by reason of
section 28OG of the Code or (ii) the payment of any severance benefits or
compensation in lieu thereof.

                                     - 12 -
<PAGE>   13
                  (f) The Company does not currently maintain any employee
welfare plans.

         4.13 Contracts; Commitments. Except as set forth in Exhibit 4.13
hereto, the Company is not a party to (i) any employment or consulting
contracts, (ii) any contracts or commitments (or group of related contracts or
commitments) involving more than $5,000 or having a term (including renewals or
extensions optional with another party) of more than one (1) year from the date
thereof, or (iii) any agreements, contracts, leases, licenses, instruments,
commitments (oral or written), indebtedness, liabilities and other obligations
to which the Company is a party or by which it is bound that (A) involve any of
the officers, directors or shareholder of the Company or (B) are otherwise
material to the conduct and operations of the Company's business and properties.
All of the contracts and commitments listed on Exhibit 4.13 are in full force
and neither the Company nor, to the best knowledge of the Company, any other
party to any such contracts or commitments is in default of any material
covenant or obligation thereunder.

         4.14 Transactions with Affiliates. Except as set forth on Exhibit 4.14,
there are no loans, leases, royalty agreements or other continuing transactions
between the Company, its Subsidiaries, any of its or their customers or
suppliers and any officer or director of the Company or any Person owning five
(5%) percent or more of any class of capital stock of the Company or any member
of such officer, director or stockholder's immediate family or any corporation
or other entity controlled by such officer, director or stockholder or a member
of such officer, director or stockholder's immediate family.

         4.15 Assumptions or Guaranties of Indebtedness of Other Persons. The
Company has not assumed, guaranteed, endorsed or otherwise become directly or
contingently liable on (including, without limitation, liability by way of
agreement, contingent or otherwise, to purchase, to provide funds for payment,
to supply funds to or otherwise invest in any debtor or otherwise to assure any
creditor against loss), any Indebtedness of any other Person.

         4.16 Investments in Other Persons. Other than advances for reimbursable
business expenses made in the ordinary course of business to employees, which
are not in the aggregate material, the Company has not made any loan or advance
to any Person which is outstanding on the date of this Agreement, nor is it
committed or obligated to make any such loan or advance, nor does the Company
have any Subsidiaries or own any capital stock, assets comprising the business
of, obligations of, or any interest in, any Person, except as set forth in
Exhibit 4.16.

         4.17 Disclosure. Neither this Agreement, the financial statements
incorporated herein as Exhibit 4.10A, nor any other agreement, document.
certificate or written statement provided to the Purchasers by or on behalf of
the Company contains an untrue statement or omits to state a material fact
necessary in order to make the statements contained herein or therein not
misleading. There is no fact or fact relating to an event or circumstance within
the knowledge of the Company or any of its executive officers which has not been
disclosed herein or in writing to the Purchasers which materially adversely
affects, or in the future in their opinion has a substantial possibility to,
insofar as they can now reasonably foresee, materially adversely affect the
business, properties, assets or condition, financial or otherwise, of the
Company. Without limiting the foregoing, the Company has no knowledge or belief
that there exists any patent, invention, device, application or principle or
that there is pending any statute, rule, law,

                                     - 13 -
<PAGE>   14
regulation, standard or code which the Company believes would materially
adversely affect the condition, financial or otherwise, or the operations of the
Company.

         4.18 Registration Rights. Except as provided in the Fourth Amended and
Restated Registration Rights Agreement set forth in Exhibit 3.02H hereto, no
Person has the right to demand or other rights to cause the Company to file any
registration statement under the Securities Act relating to any securities of
the Company, presently outstanding or that may be subsequently issued, or any
right to participate in any such registration statement.

         4.19 Securities Act of 1933. The Company has complied and will comply
with all applicable federal or state securities laws in connection with the
issuance and sale of the Purchased Shares. Neither the Company nor anyone acting
on its behalf has offered or will offer to sell the Purchased Shares or similar
securities to, or solicit offers with respect thereto from, or enter into any
preliminary conversations or negotiations relating thereto with, any Person, so
as to bring the issuance and sale of the Purchased Shares under the registration
provisions of the Securities Act.

         4.20 No Brokers or Finders. Other than BT Alex.Brown, no Person has or
will have, as a result of the transactions contemplated by this Agreement, any
right. interest or valid claim against or upon the Purchasers or the Company for
any commission, fee or other compensation as a finder or broker; and the Company
agrees to indemnify and hold the Purchasers harmless against any such
commissions, fees or other compensation.

         4.21 Capitalization; Status of Capital Stock. The Company has a total
authorized capitalization consisting of 32,625,000 shares of Common Stock,
$.00001 par value per share, 5,858,966 of which are issued and outstanding;
6,500,000 shares of Series A Convertible Preferred Stock, $.00001 par value per
share, 6,470,589 of which shares are issued and outstanding; 5,000,000 shares of
Series B Convertible Preferred Stock, $.00001, par value per share, 5,000,000 of
which shares are issued and outstanding; 1,350,000 shares of Series C
Convertible Preferred Stock, 1,312,336 of which are issued and outstanding;
800,000 shares of Series D Convertible Preferred Stock, 787,402 of which are
issued and outstanding, and 6,500,000 shares of Series E Convertible Preferred
Stock, none of which are issued and outstanding prior to the Initial Closing. A
complete list of the currently issued and outstanding shares of capital stock of
the Company and the names in which such shares are registered is set forth in
Exhibit 4.21 hereto. All of the outstanding shares of capital stock of the
Company have been duly authorized, are validly issued and are fully paid and
nonassessable. All shares of capital stock issuable upon exercise of outstanding
options and warrants have been duly authorized and, when issued in accordance
with the terms of such options and warrants, will be validly issued, and fully
paid and nonassessable. The Purchased Shares, when issued and delivered in
accordance with the terms hereof, and the Conversion Shares, when issued and
delivered upon conversion of the Purchased Shares, will be duly authorized,
validly issued and fully paid and nonassessable. Except as set forth in Exhibit
4.21 hereto, there are no options, warrants or rights to purchase shares of
capital stock or other securities authorized, issued or outstanding, nor is the
Company obligated in any other manner to issue shares of its capital stock or
other securities. Except as set forth in Exhibit 4.21 hereto, there are no
restrictions on the transfer of shares of capital stock of the Company other
than those imposed by relevant state and federal securities laws. Except as set
forth in this Agreement and the Stockholders Agreement,

                                     - 14 -
<PAGE>   15
no holder of any security of the Company is entitled to preemptive or similar
statutory or contractual rights, either arising pursuant to any agreement or
instrument to which the Company is a party or that are otherwise binding upon
the Company, and all such rights have been duly waived with respect to the
issuance of the Purchased Shares and the Conversion Shares. The offer and sale
of all shares of capital stock or other securities of the Company issued before
the Closing complied with or were exempt from registration or qualification
under all federal and state securities laws.

         4.22 Insurance. The Company will carry insurance covering its
properties and business adequate and customary for the type and scope of its
properties and business, but in any event in amounts sufficient to prevent the
Company from becoming a co-insurer (other than for reasonable deductible amounts
as provided by such insurance policies). The Company has not suffered the
cancellation of any of its insurance, nor has the Company been denied insurance
which it has applied for or requested.

         4.23 Books and Records. The books of account, ledgers, order books,
records and documents of the Company accurately and completely reflect all
material information relating to the business of the Company, the nature,
acquisition, maintenance, location and collection of each of its assets, and the
nature of all transactions giving rise to the obligations or accounts receivable
of the Company.

         4.24 Environmental Matters. The Company has not generated, used,
stored, treated or disposed of any Hazardous Substances (as defined below) in
connection with the operations of its business, other than cleaning and/or
office supplies required in the ordinary course of the Company's operations. The
Company has not transported nor has it arranged or contracted with any party for
the transportation, storage, treatment or disposal of any Hazardous Substance.
To the Company's knowledge, the Company, the operation of its business, and any
real property that the Company owns, leases or otherwise occupies or uses (the
"Premises") are in compliance with all applicable Environmental Laws (as defined
below) and orders or directives of any governmental authorities having
jurisdiction under such Environmental Laws, including, without limitation, any
Environmental Laws or Orders or directives with respect to any cleanup or
remediation of any release or threat of release of Hazardous Substances. The
Company has not received any citation, directive, letter or other communication
or any notice of any proceedings, claims or lawsuits, from any person, entity or
governmental authority arising under Environmental Laws with respect to the
Premises, or the conduct of its operations, nor is it aware of any basis
therefor. The Company has obtained and is maintaining in full force and effect
all permits, licenses and approvals required by any Environmental Laws
applicable to the Premises and the Company's business operations conducted
thereon, and is in compliance with all such permits, licenses and approvals,
except for such failures or noncompliance which would not, either individually
or in the aggregate, have a material adverse effect on the Company or the
conduct of its business. To the Company's knowledge, the Company has not caused
or allowed a release, or a threat of release, of any Hazardous Substance on the
Premises. For purposes of this Section, the term "Environmental Laws" shall mean
any federal, state or local law, ordinance or regulation pertaining to the
protection of human health or the environment, including, without limitation,
the Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S. C. Sections 9601, et seq., Emergency Planning and Community Right-to-Know
Act, 42 U.S.C. Sections 11001, et seq., and the Resource Conservation and
Recovery Act, 42 U.S.C.

                                     - 15 -
<PAGE>   16
Sections 6901, et seq. For purposes of this Section, the term "Hazardous
Substances" shall include oil and petroleum products, asbestos, polychlorinated
biphenyls and urea formaldehyde, and any other material classified as hazardous
or toxic under any Environmental Laws.

         4.25 Year 2000 Compatibility. To the best of the Company's knowledge
(i) all of the Company's products (including products currently under
development) will record, store, process and calculate and present calendar
dates falling on and after January 1, 2000 and will calculate any information
dependent on or relating to such dates in the same manner and with the same
functionality, data integrity and performance as the products record, store,
process, calculate and present calendar dates on or before December 31, 1999, or
calculate any information dependent on or relating to such dates (collectively
"Year 2000 Compliant"); (ii) all of the Company's material products will lose no
functionality with respect to the introduction of records containing dates
falling on or after January 1, 2000; and (iii) all of the Company's internal
computer systems, including without limitation, its accounting systems, are Year
2000 Compliant.

                                   ARTICLE V.

                            COVENANTS OF THE COMPANY

         5.01 Affirmative Covenants of the Company Other Than Reporting
Requirements. Without limiting any other covenants and provisions hereof, the
Company covenants and agrees that, until the first to occur of (i) less than
500,000 of the Purchased Shares are issued and outstanding and (ii) a Qualified
Public Offering, it will perform and observe the following covenants and
provisions and will cause each Subsidiary, if any, to perform and observe such
of the following covenants and provisions as are applicable to such Subsidiary:

                  (a) Payment of Taxes and Trade Debt. Pay and discharge all
taxes, assessments and governmental charges or levies imposed upon it or upon
its income or profits or business, or upon any properties belonging to it, prior
to the date on which penalties attach thereto, and all lawful claims, which, if
unpaid, might become a lien or charge upon any properties of the Company,
provided that the Company shall not be required to pay any such tax, assessment,
charge, levy or claim that is being contested in good faith and by appropriate
proceedings if the Company shall have set aside on its books and shall have
funded, in accordance with generally accepted accounting principles, adequate
reserves with respect thereto. Pay when due, or in conformity with customary
trade terms, all lease obligations, all trade debt, and all other Indebtedness
incident to the operations of the Company, except such as are being contested in
good faith and by appropriate proceedings if the Company shall have set aside on
its books and shall have funded, in accordance with generally accepted
accounting principles, adequate reserves with respect thereto.

                  (b) Maintenance of Insurance. Maintain with responsible and
reputable insurance companies or associations insurance in such amounts and
covering such risks as is usually carried by companies of similar size engaged
in similar businesses and owning similar properties in the same general areas in
which the Company operates. Maintain in full force and effect term life
insurance payable to the Company in the amount of $1,000,000 (net of any policy
loans) on the life of Malik Z. Khan ("Khan"). A portion of such life insurance
proceeds may, in the

                                     - 16 -
<PAGE>   17
discretion of the Board of Directors of the Company, and the approval of Khan's
estate, be used to repurchase from Khan's estate or legal representative some or
all of the shares of capital stock of the Company owned by Khan at the time of
his death.

                  (c) Preservation of Corporate Existence. Preserve and maintain
its corporate existence, rights, franchises and privileges in the jurisdiction
of its incorporation, and qualify and remain qualified as a foreign corporation
in each jurisdiction in which such qualification is necessary or desirable in
view of its business and operations or the ownership of its properties. Use its
best efforts to preserve and maintain all material licenses and other rights to
use patents, processes, licenses, trademarks, trade names, inventions,
intellectual property rights or copyrights owned or possessed by it and
necessary to the conduct of its business.

                  (d) Compliance with Laws. Comply in all material respects with
all applicable laws, rules, regulations and orders of any governmental
authority, noncompliance with which could materially adversely affect its
business or condition, financial or otherwise, except noncompliance being
contested in good faith through appropriate proceedings so long as the Company
shall have set up and funded sufficient reserves, if any, required under
generally accepted accounting principles with respect to such items.

                  (e) Keeping of Records and Books of Account. Keep adequate
records and books of account, in which complete entries will be made in
accordance with generally accepted accounting principles consistently applied,
reflecting all financial transactions of the Company, and in which, for each
fiscal year, all proper reserves for depreciation, depletion, obsolescence,
amortization, taxes, bad debts and other purposes in connection within its
business shall be made.

                  (f) Maintenance of Properties, etc. Maintain and preserve all
of its properties necessary or useful in the proper conduct of its business, in
good repair, working order and condition, ordinary wear and tear excepted, and
from time to time make all necessary and proper repairs, renewals, replacements,
additions and improvements thereto. Comply with the provisions of all material
leases to which the Company is a party or under which the Company occupies
property so as to prevent any loss or forfeiture thereof or thereunder.

                  (g) New Developments. Cause technological or other proprietary
developments, inventions, discoveries or improvements by the Company's employees
to be fully documented in accordance with the prevailing industrial professional
standards, cause all Key Employees and technological or other consultants of the
Company that work with the Company's technological or other proprietary
developments, inventions, discoveries or improvements, to execute appropriate
patent and technology assignment agreements to the Company and, where possible
and appropriate, to file and prosecute United States and foreign patent and
copyright applications relating to and protecting such developments on behalf of
the Company.

                  (h) Non-Disclosure and Developments Agreements. As a condition
to employment, cause each Key Employee now or hereafter employed by the Company
promptly to execute an agreement substantially in the form of Exhibit 3.02F
hereto or in a form approved by the Board of Directors.

                                     - 17 -
<PAGE>   18
                  (i) Visitation Rights. Permit the Purchasers and each other
holder of at least 200,000 of the Purchased Shares, or any legal or financial
representative thereof periodically, upon reasonable notice during normal
business hours, to examine the books and records of the Company at the Company's
premises and permit such Purchasers (or any general partners thereof) to meet,
and to discuss the business affairs, finances and accounts of the Company with
any of its officers or directors and independent accountants.

                  (j) Board of Directors; Indemnification. The Company shall use
its best efforts to hold meetings of the Board at least once every four to six
weeks unless otherwise agreed to by the Board. The Charter or By-laws of the
Company shall at all times provide for the indemnification of the Board to the
fullest extent provided by the law of the jurisdiction in which the Company is
organized. The Company shall promptly reimburse in full each director of the
Company who is not an employee of the Company for all reasonable out-of-pocket
expenses incurred in attending each meeting of the Board of Directors of the
Company or any committee thereof.

                  (k) Rule 144A Information. The Company shall, upon the request
of any Purchaser, make available to such Purchaser and to any prospective
transferee of such Purchaser the information concerning the Company described in
Rule 144(d)(4) under the Securities Act.

         5.02 Negative Covenants of the Company. Without limiting any other
covenants and provisions hereof, the Company covenants and agrees that until the
first to occur of (i) less than 500,000 shares of the Preferred Stock are issued
and outstanding, and, (ii) a Qualified Public Offering, it will comply with and
observe the following covenants and provisions, and will cause each Subsidiary,
if any, to comply with and observe such of the following covenants and
provisions as are applicable to such Subsidiary, and will not (nor will any such
Subsidiary), except with the consent of holders of at least sixty (60%) percent
of the then issued and outstanding Preferred Stock, voting or consenting as a
single class on an as converted basis:

                  (a) Mergers, Sale of Assets, etc. Merge or consolidate with,
or sell, assign, lease, license or otherwise dispose of or voluntarily part with
the control of (whether in one transaction or in a series of transactions), a
material portion of its assets or technology rights (whether now owned or
hereafter acquired) to any Person, or permit any Subsidiary to do any of the
foregoing, except for sales or other dispositions of assets in the ordinary
course of business and except for (1) any Wholly-Owned Subsidiary merging into
or consolidating with or transferring assets to any other Wholly-Owned
Subsidiary, and (2) any Wholly-Owned Subsidiary merging into or transferring
assets to the Company.

                  (b) Maintenance of Ownership of Subsidiaries. Create any
subsidiary that is not a Wholly-Owned Subsidiary, sell or otherwise dispose of
any shares of capital stock of any Subsidiary, or permit any Subsidiary to merge
or consolidate with, transfer assets to, issue, sell or otherwise dispose of any
shares of its capital stock or the capital stock of any Subsidiary to, any other
Person, except to the Company or a Wholly-Owned Subsidiary.

                  (c) Dealings with Affiliates and Others. Enter into any
transaction, including, without limitation, any loans or extensions of credit or
royalty agreements, with any officer or director of the Company or a Subsidiary,
if any, or holder of shares of any class of capital stock

                                     - 18 -
<PAGE>   19
of the Company, or any member of their respective immediate families or any
corporation or other entity directly or indirectly controlled by one or more of
such officers, directors or stockholders or members of their immediate families
unless such transaction is for travel or business expenses of the Company
incurred in the ordinary course of business or is approved in advance by a
majority of disinterested members of the Board of Directors.

                  (d) Change in Nature of Business. Make, or permit any
Subsidiary to make, any material change in the nature of its business as carried
on at the date hereof or as contemplated in written materials delivered to the
Purchasers prior to the date hereof, or enter new lines of business or exit the
Company's current line of business.

                  (e) Acquisition/Investments. (i) Make, or permit a Subsidiary,
if any, to make, any loan or advance to any Person, other than advances to
employees for business expenses in the ordinary course of business and other
than the acceptance of promissory notes for the purchase of capital stock by
employees, (ii) purchase, otherwise acquire, or permit a Subsidiary, if any, to
purchase or otherwise acquire the capital stock, assets comprising the business
of, obligations of, or any interest in any other Person; or (iii) merge or
consolidate with any other Person (other than a merger or consolidation
permitted by Subsection 5.02(a)).

                  (f) Dividends. Prior to a Qualified Public Offering, declare
or pay any dividends on any class of the Company's or any Subsidiary's capital
stock now or hereafter outstanding (other than cash dividends on the Preferred
Stock or payable in Common Stock or by any Subsidiary either to the Company or
to another Subsidiary that is the parent of the paying Subsidiary), or purchase,
redeem or otherwise acquire or retire any of the Company's or any Subsidiary's
capital stock of any class now or hereafter outstanding or otherwise return
capital or make distributions of assets to stockholders as such, except (i)
repurchase of capital stock of the Company from employees or consultants upon
termination of employment or consulting pursuant to stock restriction or
repurchase agreements or other agreements with any such employees or consultants
(not to exceed in the aggregate $25,000 plus the prices paid by any such
employees or consultants for such shares) unless otherwise approved by the
directors designated by the holders of the Preferred Stock, (ii) redemptions of
the Preferred Stock in compliance with the provisions of the Charter, and (iii)
redemption of shares of capital stock from Khan's estate or legal
representatives, following his death and utilizing the proceeds of the life
insurance on Khan's life maintained by the Company in accordance with Section
5.01(b) hereof.

                  (g) Stock Options/Vesting. Increase the number of shares of
capital stock issuable under the Stock Option Plans, or grant options under the
Stock Option Plans which will vest or become exercisable from the date of such
grant at a rate faster than 25% annually over a four year period, commencing one
year from the date of grant (except that upon closing of any merger,
consolidation, sale or other transaction, which results in more than fifty (50%)
percent of the voting capital stock of the Company outstanding immediately after
the effective date of such transaction being owned of record or beneficially by
persons other than the holders of such voting capital stock immediately prior to
the closing of such transaction, thereafter the balance of unvested options
shall vest ratably each quarter over the first year following such transaction,
or over the original vesting schedule, if faster), unless consented to by a
majority of the directors designated solely by the holders of the Preferred
Stock.

                                     - 19 -
<PAGE>   20
                  (h) Amendments. Make any amendment to its Charter or its
By-laws which limits its legal capacity or ability to perform its obligations
under this Agreement, the Preferred Stock, or any other instrument or agreement
executed or to be executed pursuant to the provisions hereof or thereof or which
materially adversely affect the rights of the holders of the Preferred Stock.

                  (i) Capital Expenditures. Make any single capital expenditure
in excess of $100,000 unless (1) such capital expenditure was provided for in a
capital expenditure plan previously approved by the Board of Directors or (2) is
separately approved by the Board of Directors in any fiscal year.

                  (j) Employee Loans. Make loans or advances to employees,
except in the ordinary course of business as part of travel advances or salary
or promissory notes executed for the purchase by employees of shares of Common
Stock, and except further that the Chief Executive Officer of the Company may
make loans to employees where, in the reasonable discretion of the Chief
Executive Officer, special circumstances warrant, not to exceed $25,000 to any
one employee; provided, however, that at no time shall loans to employees exceed
$50,000 in the aggregate.

                  (k) Third Party Loans. Except as permitted in Sections 5.02(e)
and 5.02(j) make any loans or advances to any other persons.

                  (l) Guaranties. Make any guaranty of any other party's
obligations except in the ordinary course of business.

                  (m) Debt. Incur, issue or permit any Subsidiary to incur or
issue, any secured or unsecured debt security (other than a sale and leaseback
transaction) senior to any series of Preferred Stock, or mortgage, pledge or
grant a security interest in, or permit any Subsidiary to mortgage, pledge or
grant a security interest in any of the Company assets or any Subsidiary's
assets to secure debt, except to institutional lenders pursuant to commercially
routine debt instruments in transactions approved by the Board of Directors
(such approval to include directors selected or designated by the holders of the
Preferred Stock if such transaction involves a lien on all or substantially all
of the assets (other than the Company's Intellectual Property)), and provided
that in no event whatsoever may the Company or a Subsidiary, if any, mortgage,
pledge or otherwise encumber any of the Company's (or such Subsidiary's)
Intellectual Property.

                  The provisions of this Section 5.02 supersede and replace the
corresponding Section 5.02 of the Series D Purchase Agreement which Section 5.02
is hereby deleted from said Agreement.

         5.03 Reporting Requirement. Until the occurrence of a Qualified Public
Offering, the Company will furnish (x) all the following to all directors and
board observers of the Company, (y) the information specified in Sections
5.03(a),(b),(c),(d),(h) and (i) to the Purchaser and each other holder of at
least 200,000 of the Purchased Shares and (z) the information specified in
Sections 5.03(a), (d) and (h) to all other holders of Purchased Shares.

                  (a) as soon as available and in any event within ninety (90)
days after the end of each fiscal year of the Company, a copy of the annual
audit report for such year for the Company

                                     - 20 -
<PAGE>   21
and its Subsidiaries, including therein consolidated balance sheets of the
Company and its Subsidiaries as of the end of such fiscal year and consolidated
statements of income and retained earnings and of changes in financial position
of the Company and its Subsidiaries for such fiscal year, if any, setting forth
in each case in comparative form the corresponding figures for the preceding
fiscal year, together with supporting notes thereto, all duly certified by the
Company's Auditors;

                  (b) as soon as available and in any event within thirty (30)
days after the end of each month, unaudited financial statements of the Company
and its Subsidiaries for the month and the fiscal period ending with such month,
all in such form and detail as the Board of Directors may specify from time to
time and prepared in accordance with generally accepted accounting principles
consistently applied.

                  (c) as soon as available and in any event within forty-five
(45) days after the end of each fiscal quarter of the Company, unaudited
consolidated balance sheets of the Company and its Subsidiaries as of the end of
such quarter, and unaudited consolidated statements of income and retained
earnings and of changes in financial position of the Company and its
Subsidiaries for the period ending with such quarter, setting forth in each case
in comparative form the corresponding figures for the corresponding period of
the prior fiscal year, if any, all in reasonable detail and duly certified
(subject to year-end audit adjustments, none of which shall be material,
individually or in the aggregate) by the chief financial officer of the Company
as having been prepared in accordance with generally accepted accounting
principles consistently applied.

                  (d) at the time of delivery of each annual statement, a
certificate, executed by the Company's Auditors stating that they have caused
Sections 5.01(a) (insofar as it relates to payment of federal and state income
taxes), 5.02(b), 5.02(c), 5.02(e), 5.02(f), 5.02(j) and 5.02(k) hereof to be
reviewed and have no knowledge of any default by the Company or any Subsidiary
in the performance or observance of any of the provisions of this Agreement or
the Purchased Shares or, if such Auditors have such knowledge, specifying such
default and the nature thereof;

                  (e) promptly after receipt, a copy of any written report
submitted to the Company by the Company's Auditors in connection with an annual
or interim audit of the books of the Company and its Subsidiaries made by such
accountants;

                  (f) promptly after the commencement thereof, notice of all
actions, suits and proceedings before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
materially affecting the Company and the Subsidiaries when considered as a whole
of the type described in Section 4.04 hereof,

                  (g) prior to the commencement of each fiscal year of the
Company, a copy of the annual business plan (including development, operating
and strategic plans and objectives) and month by month budget for the upcoming
fiscal year (the "Annual Plan");

                  (h) promptly after sending, making available, or filing the
same, all other reports and financial statements that the Company or any
Subsidiary generally sends or makes available to the stockholders of the Company
or to the Securities and Exchange Commission; and

                                     - 21 -
<PAGE>   22
                  (i) all other information respecting the business, properties
or the condition or operations, financial or otherwise, of the Company or any of
its Subsidiaries that such Purchaser may from time to time reasonably request.

         5.04 Confidentiality. Any confidential information obtained by any
holder of the Purchased Shares or Conversion Shares pursuant to this Agreement
shall be treated as confidential and shall not be disclosed to a third party
without the prior written consent of the Company, except that any Purchaser may
disclose such information to its officers, directors, shareholders and/or
partners (except for confidential technical information), and except further
that such information shall not be deemed confidential for the purpose of
enforcement of this Agreement and said information shall not be deemed
confidential after it becomes publicly known through no fault of the recipient.

         5.05 Reserve for Conversion Shares. The Company shall at all times
reserve and keep available out of its authorized but unissued shares of Common
Stock, for the purpose of effecting the conversion of the Purchased Shares and
otherwise complying with the terms of this Agreement, such number of its duly
authorized shares of Common Stock as shall be sufficient to effect the
conversion of the Purchased Shares from time to time outstanding or otherwise to
comply with the terms of this Agreement. If at any time the number of authorized
but unissued shares of Common Stock shall not be sufficient to effect the
conversion of the Purchased Shares or otherwise to comply with the terms of this
Agreement, the Company will forthwith take such corporate action as may be
necessary to increase its authorized but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purposes. The Company will
obtain any authorization, consent, approval or other action by or make any
filing with any court or administrative body that may be required under
applicable state securities laws in connection with the issuance of shares of
Common Stock upon conversion of the Purchased Shares.

                                  ARTICLE VI.

                                 MISCELLANEOUS

         6.01 No Waiver; Cumulative Remedies. No failure or delay on the part of
any Purchaser, or any other holder of the Purchased Shares or Conversion Shares
in exercising any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy hereunder. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.

         6.02 Amendments, Waivers and Consents. Changes in or additions to this
Agreement may be made, and compliance with any covenant or provision herein or
therein set forth may be omitted or waived, upon the mutual written consent of
the Company and Persons holding an aggregate of at least sixty (60%) percent of
the issued and outstanding Preferred Stock, voting as a single class (treating
for this purpose all Preferred Stock as if converted to Common Stock) and shall,
in each such case, deliver copies of such consent in writing to any holders who
did not execute the same; provided, however, that no such consent shall be
effective to reduce the percentage of the consent of the holders of the
Preferred Stock which is required under this Section nor to affect or alter any
other Person's rights under Section 5.01(i) and 5.03 hereof

                                     - 22 -
<PAGE>   23
without their consent (so long as they hold any Preferred Stock and/or Common
Stock). Any waiver or consent may be given subject to satisfaction of conditions
stated therein and any waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.

         6.03 Addresses for Notices, etc. All notices, requests, demands and
other communications provided for hereunder shall be in writing (including
telegraphic communication) and sent by registered or certified mail (return
receipt requested), by Federal Express, DHL or other guaranteed overnight
delivery service, or by facsimile transmission or delivered to the applicable
party at the addresses indicated below:

  If to the Company:            Sitara Networks, Inc.
                                60 Hickory Drive
                                Waltham, MA  02154
                                ATTN:  President
                                Facsimile:  (781) 890-8042

  With a copy to:               McDermott, Will & Emery
                                28 State Street
                                Boston, MA  02109
                                ATTN:  Arthur I. Anderson, P.C.
                                Facsimile:  (617) 535-3800

  If to the Purchasers:         At the addresses set forth under their
                                respective names on Exhibit 2.01A hereto.

  If to any other holder of     At such holder's address for notice as set forth
  Preferred Stock, Purchased    in the register maintained by the Company;
  Shares or Conversion Shares:

or, as to each of the foregoing, at such other address as shall be designated by
such Person in a written notice to the other party complying as to delivery with
the terms of this Section.

All notices, requests, consents and other communications hereunder shall be
deemed to have been received (i) if by hand, at the time of delivery thereof to
the receiving party at the address of such party set forth above or as so
designated, (ii) if made by telecopy or facsimile transmission, at the time that
receipt thereof has been acknowledged by electronic confirmation or otherwise,
(iii) if sent by overnight courier, on the day such notice is delivered by the
courier service, or (iv) if sent by registered or certified mail, on the fifth
business day following the day such mailing is made.

         6.04 Costs, Expenses and Taxes. The Company agrees to pay any and all
stamp and other taxes payable or determined to be payable in connection with the
execution and delivery of this Agreement, the Purchased Shares, the Conversion
Shares and other instruments and documents to be delivered hereunder or
thereunder and agrees to save the Purchasers harmless from and against any and
all liabilities with respect to or resulting from any delay in paying or

                                     - 23 -
<PAGE>   24
omission to pay such taxes and filing fees. The Company also agrees to pay the
reasonable fees and expenses of FW Ventures L.P., including the reasonable fees
and expenses of its Special Counsel, Cooley Godward LLP, incurred with respect
to its purchase of its portion of the Purchased Shares, up to a maximum
aggregate amount of $25,000.

         6.05 Binding Effect; Assignment. This Agreement shall be binding upon
and inure to the benefit of the Company and the Purchasers and their respective
successors and assigns, except that the Company shall not have the right to
assign its rights hereunder or any interest herein without the prior written
consent of the Purchasers obtained in accordance with Section 6.02 hereof and
the rights and interests of the Purchasers shall be assignable without the
consent of the Company to any assignee.

         6.06 Survival of Covenants, Representations and Warranties. All
covenants, representations and warranties made in this Agreement, the Purchased
Shares, or any other instrument or document delivered in connection herewith or
therewith, shall survive the execution and delivery hereof or thereof.

         6.07 Prior Agreements. This Agreement constitutes the entire agreement
between the parties and supersedes any prior understandings or agreements
concerning the subject matter hereof.

         6.08 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the Commonwealth of Massachusetts (without
regard to conflict or choice of law provisions).

         6.09 Specific Performance. The Company acknowledges that money damages
alone would not be a sufficient remedy for any breach by it of this Agreement
and agrees that the Purchasers shall be entitled to specific performance and
injunctive relief as remedies for any such breach, in addition to any other
remedies available to them under law. The Purchasers acknowledge that money
damages alone would not be a sufficient remedy for any breach by them of Section
5.04 of this Agreement and agree that the Company shall be entitled to specific
performance and injunctive relief as remedies for any such breach, in addition
to any other remedies available to it under law. All remedies of the Purchasers
hereunder shall be cumulative and shall not preclude the assertion by any party
hereto of any other rights or the seeking of any other remedies against any
party hereto.

         6.10 Headings. Article, Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.

         6.11 Sealed Instrument. This Agreement is executed as an instrument
under seal.

         6.12 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.

         6.13 Further Assurances. From and after the date of this Agreement,
upon the reasonable request of the Purchasers, the Company and each Subsidiary
shall execute and deliver

                                     - 24 -
<PAGE>   25
such instruments, documents and other writings as may be necessary or desirable
to confirm and carry out and to effectuate fully the intent and purposes of this
Agreement and the Purchased Shares.

                           (INTENTIONALLY LEFT BLANK)

                                     - 25 -
<PAGE>   26
         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written,

                                    COMPANY:

ATTEST:                             SITARA NETWORKS, INC.

/s/ Arthur Anderson                 By:  /s/ Malik Z. Khan
-------------------                      ---------------------------------------
Secretary                                Malik Z. Khan, President

                                    INVESTORS:

                                    INVESTOR and Purchaser under the Series A,
                                    B, C and E Purchase Agreements:

                                    NEW ENTERPRISE ASSOCIATES VII, LP

                                    By:  /s/ Nancy Dorman
                                        ----------------------------------------

                                    INVESTOR and Purchaser under the Series A
                                    and E Purchase Agreements:

                                    NEA PRESIDENTS' FUND, L.P.

                                    By:  /s/ Nancy Dorman
                                        ----------------------------------------

                                     - 26 -
<PAGE>   27
                                    INVESTOR and Purchaser
                                    under the Series A, B, C
                                    and E Purchase Agreements:

                                    PRISM VENTURE PARTNERS I, L.P.

                                    By:  Prism Investment Partners, L.P., its
                                           general partner

                                           By:  Prism Venture Partners, L.L.C.,
                                                  its general partner

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

                                    INVESTOR and Purchaser under the Series A,
                                    B, C and E Purchase Agreements:

                                    CHARLES RIVER PARTNERSHIP VII, L.P.

                                    By:  /s/ Michael Zak
                                        ----------------------------------------
                                             Michael Zak, General Partner

                                    INVESTOR and Purchaser under the Series A,
                                    B, C and E Purchase Agreements:

                                    ONE LIBERTY FUND III, L.P.

                                    By: /s/ Edwin M. Kania
                                        ----------------------------------------
                                        Edwin M. Kania

                                     - 27 -
<PAGE>   28
                                 INVESTOR and Purchaser under the Series A,
                                 B, C and E Purchase Agreements:

                                 M/C INVESTORS, L.L.C.

                                 By:  /s/ James Wade
                                     ----------------------------------------

                                 INVESTOR and Purchaser under the Series A, B, C
                                 and E Purchase Agreements:

                                 By:  /s/ Sharon Sisskind
                                     ----------------------------------------
                                          Sharon Sisskind

                                 INVESTOR and Purchaser under the Series D
                                 Purchase Agreement:

                                 INTEL CORPORATION

                                 By:  Arvind Sodhani
                                     ----------------------------------------
                                 Name:  Arvind Sodhani
                                 Title:  President and Treasurer
                                 2200 Mission College Blvd.
                                 Santa Clara, CA  95052

                                     - 28 -
<PAGE>   29
                                    INVESTOR and Purchaser under the Series E
                                    Purchase Agreement:

                                    ABS EMPLOYEES VENTURE FUND L.P.

                                    By: /s/ Alex Brown Investments Inc
                                        ----------------------------------------
                                            General Partner

                                           By: /s/ Nancy Palmer
                                              ----------------------------------
                                           Name:  Nancy Palmer
                                           Title:  Assistant Secretary

                                    INVESTOR and Purchaser under the Series E
                                    Purchase Agreement:

                                    VAN WAGONER CAPITAL MANAGEMENT

                                    By:  /s/ Garrett Van Wagoner
                                        ----------------------------------------
                                    Name:  Garrett Van Wagoner
                                    Title: President

                                     - 29 -
<PAGE>   30
                                    INVESTOR and Purchaser under the Series E
                                    Purchase Agreement:

                                    UTILITY COMPETITIVE ADVANTAGE FUND, L.L.C.

                                    By: Kinetic Competitive Advantage Partners,
                                    L.L.C., its Managing Member

                                    By: Kinetic Ventures, L.L.C., its Managing
                                    Member

                                    /s/ William T. Heflin
                                    --------------------------------------------
                                    William T. Heflin
                                    Managing Director

                                    INVESTOR and Purchaser under the Series E
                                    Purchase Agreement:

                                    FW VENTURES IV L.P.

                                    By: /s/ John H. Fant
                                        ----------------------------------------

                                    INVESTOR and Purchaser under the Series E
                                    Purchase Agreement:

                                    ESSEX HIGH TECHNOLOGY FUND L.P.

                                    By: /s/ S.P. Stickells
                                        ----------------------------------------

                                    Name:  S.P. Stickells
                                    Title: Principal/Vice President

                                     - 30 -
<PAGE>   31
                     COUNTERPART SIGNATURE PAGE AND JOINDER
                         TO THE SITARA NETWORKS, INC.,
                      SERIES E CONVERTIBLE PREFERRED STOCK
                               PURCHASE AGREEMENT

     The undersigned, by execution of this counterpart signature page hereby
joins in, becomes a party to, and agrees to be bound by all the terms and
provisions of that Series E Convertible Preferred Stock Purchase Agreement by
and among Sitara Networks, Inc., a Delaware corporation (the "Company"), and the
Persons listed on Exhibit 2.01A thereto, as amended (collectively the
"Purchasers"), dated July 9, 1999, and shall for all purposes be deemed to be a
Purchaser thereunder, subject to all of the obligations of a Purchaser set
forth therein, and hereby agrees that all shares of common or preferred stock of
the Company now or hereafter held by the undersigned shall be subject to the
restrictions on transfer, rights of purchase and co-sale and other provisions of
that certain Fourth Amended and Restated Stockholders Agreement dated as of July
9, 1999 by and among the Company, Malik Z. Khan and each of the persons listed
as Investors on Schedule RRA-1 therein, as amended.

     EXECUTED on this 28 day of July, 1999.
                      --

                                     /s/ K. Paul Singh
                                     -----------------------------------------
                                     Name: K. Paul Singh
                                           -----------------------------------

<PAGE>   32
                     COUNTERPART SIGNATURE PAGE AND JOINDER
                         TO THE SITARA NETWORKS, INC.,
                      SERIES E CONVERTIBLE PREFERRED STOCK
                               PURCHASE AGREEMENT

     The undersigned, by execution of this counterpart signature page hereby
joins in, becomes a party to, and agrees to be bound by all the terms and
provisions of that Series E Convertible Preferred Stock Purchase Agreement by
and among Sitara Networks, Inc., a Delaware corporation (the "Company"), and the
Persons listed on Exhibit 2.01A thereto, as amended (collectively the
"Purchasers"), dated July 9, 1999, and shall for all purposes be deemed to be a
Purchaser thereunder, subject to all of the obligations of a Purchaser set
forth therein, and hereby agrees that all shares of common or preferred stock of
the Company now or hereafter held by the undersigned shall be subject to the
restrictions on transfer, rights of purchase and co-sale and other provisions of
that certain Fourth Amended and Restated Stockholders Agreement dated as of July
9, 1999 by and among the Company, Malik Z. Khan and each of the persons listed
as Investors on Schedule RRA-1 therein, as amended.

     EXECUTED on this 28 day of July, 1999.
                      --

                                     /s/ [illegible]
                                     -----------------------------------------
                                     Name:
                                           -----------------------------------

<PAGE>   33
                     COUNTERPART SIGNATURE PAGE AND JOINDER
                         TO THE SITARA NETWORKS, INC.,
                      SERIES E CONVERTIBLE PREFERRED STOCK
                               PURCHASE AGREEMENT

     The undersigned, by execution of this counterpart signature page hereby
joins in, becomes a party to, and agrees to be bound by all the terms and
provisions of that Series E Convertible Preferred Stock Purchase Agreement by
and among Sitara Networks, Inc., a Delaware corporation (the "Company"), and the
Persons listed on Exhibit 2.01A thereto, as amended (collectively the
"Purchasers"), dated July 9, 1999, and shall for all purposes be deemed to be a
Purchaser thereunder, subject to all of the obligations of a Purchaser set
forth therein, and hereby agrees that all shares of common or preferred stock of
the Company now or hereafter held by the undersigned shall be subject to the
restrictions on transfer, rights of purchase and co-sale and other provisions of
that certain Fourth Amended and Restated Stockholders Agreement dated as of July
9, 1999 by and among the Company, Malik Z. Khan and each of the persons listed
as Investors on Schedule RRA-1 therein, as amended.

     EXECUTED on this 29 day of July, 1999.
                      --

                                     /s/ Michael Murray
                                     -----------------------------------------
                                     Name: Michael Murray
                                           -----------------------------------

<PAGE>   34
                     COUNTERPART SIGNATURE PAGE AND JOINDER
                         TO THE SITARA NETWORKS, INC.,
                      SERIES E CONVERTIBLE PREFERRED STOCK
                               PURCHASE AGREEMENT

     The undersigned, by execution of this counterpart signature page hereby
joins in, becomes a party to, and agrees to be bound by all the terms and
provisions of that Series E Convertible Preferred Stock Purchase Agreement by
and among Sitara Networks, Inc., a Delaware corporation (the "Company"), and the
Persons listed on Exhibit 2.01A thereto, as amended (collectively the
"Purchasers"), dated July 9, 1999, and shall for all purposes be deemed to be a
Purchaser thereunder, subject to all of the obligations of a Purchaser set
forth therein, and hereby agrees that all shares of common or preferred stock of
the Company now or hereafter held by the undersigned shall be subject to the
restrictions on transfer, rights of purchase and co-sale and other provisions of
that certain Fourth Amended and Restated Stockholders Agreement dated as of July
9, 1999 by and among the Company, Malik Z. Khan and each of the persons listed
as Investors on Schedule RRA-1 therein, as amended.

     EXECUTED on this  6  day of August, 1999.
                      ---

                                     Valhalla Capital LP
                                     By: Valhalla Capital Management LLC

                                     /s/ Nancy Casey
                                     -----------------------------------------
                                     Name: Nancy Casey
                                           -----------------------------------
                                           GP and Managing Member
<PAGE>   35
                     COUNTERPART SIGNATURE PAGE AND JOINDER
                         TO THE SITARA NETWORKS, INC.,
                      SERIES E CONVERTIBLE PREFERRED STOCK
                               PURCHASE AGREEMENT

     The undersigned, by execution of this counterpart signature page hereby
joins in, becomes a party to, and agrees to be bound by all the terms and
provisions of that Series E Convertible Preferred Stock Purchase Agreement by
and among Sitara Networks, Inc., a Delaware corporation (the "Company"), and the
Persons listed on Exhibit 2.01A thereto, as amended (collectively the
"Purchasers"), dated July 9, 1999, and shall for all purposes be deemed to be a
Purchaser thereunder, subject to all of the obligations of a Purchaser set
forth therein, and hereby agrees that all shares of common or preferred stock of
the Company now or hereafter held by the undersigned shall be subject to the
restrictions on transfer, rights of purchase and co-sale and other provisions of
that certain Fourth Amended and Restated Stockholders Agreement dated as of July
9, 1999 by and among the Company, Malik Z. Khan and each of the persons listed
as Investors on Schedule RRA-1 therein, as amended.

     EXECUTED on  August 9, 1999.
                  --------

                                     America Online, Inc.

                                     By: /s/ [illegible]
                                         -------------------------------------
                                     Name:
                                           -----------------------------------
                                     Title:
                                            ----------------------------------

<PAGE>   36
                                 SCHEDULE 2.01A

<TABLE>

___________________________________________________________________________________________________________________________________
     Investor & Address                 Number of Shares    Number of      Number of Shares    Number of Shares    Number of Shares
                                          Of Series A        Shares          of Series C         of Series D         of Series E
                                        Preferred Stock    of Series B     Preferred Stock     Preferred Stock     Preferred Stock
                                                         Preferred Stock
___________________________________________________________________________________________________________________________________
<S>                                       <C>              <C>                 <C>                  <C>             <C>

Charles River Partnership VII, L.P.        2,352,941        785,714             359,090               --              142,144
1000 Winter Street
Suite 3300
Waltham, MA 02154
Attn: Michael Zak
Telecopier: (617) 487-7005
___________________________________________________________________________________________________________________________________
OneLiberty Fund III, L.P.                  2,352,941        785,714             359,090               --              142,144
One Liberty Square
Boston, MA 02109
Attn: Edward Kania
Telecopier: (617) 338-4362
___________________________________________________________________________________________________________________________________
New Enterprise Associates VII, LP            958,824      1,785,715             318,710               --              122,263
1119 St. Paul Street
Baltimore, MD 21202
Attn: Nancy Dorman
Telecopier:
___________________________________________________________________________________________________________________________________
Prism Venture Partners I, L.P.                 --         1,428,571             163,441               --               64,697
100 Lowder Brook Drive
Suite 2500
Westwood, MA 02090
Attn: Robert Fleming
___________________________________________________________________________________________________________________________________

</TABLE>
<PAGE>   37
                            SCHEDULE 2.01A CONTINUED

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
       INVESTOR & ADDRESS        NUMBER OF SHARES    NUMBER OF SHARES    NUMBER OF SHARES    NUMBER OF SHARES    NUMBER OF SHARES
                                   OF SERIES A         OF SERIES B          OF SERIES C         OF SERIES D         OF SERIES E
                                 PREFERRED STOCK     PREFERRED STOCK      PREFERRED STOCK     PREFERRED STOCK     PREFERRED STOCK
---------------------------------------------------------------------------------------------------------------------------------
<S>                                <C>                <C>                   <C>               <C>                 <C>
NEA Presidents' Fund, L.P.          41,176               --                   --                 --                   3,896
1119 St. Paul Street
Baltimore, MD   21202
Attn: Nancy Dorman
---------------------------------------------------------------------------------------------------------------------------------
M/C Investors L.L.C.               588,235            178,572               87,729               --                  34,727
75 State Street
Boston, MA 02109
Attn: Jim Wade
Telecopier:
---------------------------------------------------------------------------------------------------------------------------------
Sharon Sisskind                    117,647             17,857               15,503               --                   6,137
70 Barnstable Road
West Newton, MA 02165
---------------------------------------------------------------------------------------------------------------------------------
K. Paul Singh                       58,825             17,857                8,773               --                   3,473
Primus Telecommunications
1700 Old Meadow Road
3rd Floor
McLean, VA 22102
---------------------------------------------------------------------------------------------------------------------------------
Intel Corporation                     --                 --                   --               787,402                --
2200 Mission College Blvd.
Santa Clara, CA 95052
---------------------------------------------------------------------------------------------------------------------------------
FW Ventures IV L.P.                   --                 --                   --                 --               2,077,922
201 Main Street, Suite 3100
Fort Worth, TX 76102
---------------------------------------------------------------------------------------------------------------------------------
Essex High Technology Fund L.P.       --                 --                   --                 --                 181,818
125 High Street, 29th Floor
Boston, MA 02110
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>   38
<TABLE>
<CAPTION>

INVESTOR & ADDRESS                          NUMBER OF         NUMBER OF         NUMBER OF         NUMBER OF     NUMBER OF
                                            SHARES OF         SHARES OF         SHARES OF         SHARES OF     SHARES OF
                                            SERIES A          SERIES B          SERIES C          SERIES D      SERIES E
                                          PREFERRED STOCK   PREFERRED STOCK   PREFERRED STOCK  PREFERRED STOCK  PREFERRED STOCK
<S>                                    <C>               <C>               <C>               <C>              <C>
--------------------------------------------------------------------------------------------------------------------------------

Utility Competitive Advantage Fund L.P.             --                --                --               --          779,221
2 Wisconsin Circle, Suite 620
Chevy Chase, MD 20815
--------------------------------------------------------------------------------------------------------------------------------
ABS Employees Venture Fund L.P.                     --                --                --               --          148,874
1 South Street, 17th Floor
Baltimore, MD 21202
--------------------------------------------------------------------------------------------------------------------------------
Van Wagoner Capital Management                      --                --                --               --          779,221
345 California Street, Suite 2450
San Francisco, CA 94104
--------------------------------------------------------------------------------------------------------------------------------
Michael Murray                                      --                --                --               --           26,000
D. Alex Brown
101 Federal Street
15th Floor
Boston, MA 02110
--------------------------------------------------------------------------------------------------------------------------------
Gunjan Sinha                                        --                --                --               --          129,870
e-gain
624 East Evelyn Ave.
Sunnyvale, CA 94086
--------------------------------------------------------------------------------------------------------------------------------
Valhalka Capital, LP                                --                --                --               --           64,935
10863 Pleasant Hill
Potomac, MD 20854
--------------------------------------------------------------------------------------------------------------------------------
America Online, Inc.                                --                --                --               --        1,038,961
22000 AOL Way
Dulles, VA 20166
--------------------------------------------------------------------------------------------------------------------------------

</TABLE>

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