Document:

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                                                                  EXHIBIT 10.5

                      LANDA MANAGEMENT SYSTEMS CORPORATION

                   SERIES D PREFERRED STOCK PURCHASE AGREEMENT

                               FEBRUARY 27, 1998

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                                TABLE OF CONTENTS
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SECTION 1.     AGREEMENT TO SELL AND PURCHASE ................................  2
       1.1     Authorization of Shares .......................................  2
       1.2     Sale and Purchase .............................................  2
SECTION 2.     CLOSING, DELIVERY AND PAYMENT .................................  2
       2.1     Closing .......................................................  2
       2.2     Delivery ......................................................  2
       2.3     Contemplated Transfers ........................................  2
SECTION 3.     REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE LANGS ...  3
       3.1     Organization, Good Standing and Qualification .................  3
       3.2     Capitalization; Voting Rights .................................  3
       3.3     Authorization; Binding Obligations ............................  4
       3.4     Financial Statements ..........................................  4
       3.5     Liabilities ...................................................  4
       3.6     Agreements; Action ............................................  4
       3.7     Obligations to Related Parties ................................  5
       3.8     Changes .......................................................  5
       3.9     Title to Properties and Assets; Liens, etc. ...................  6
       3.10    Patents and Trademarks ........................................  7
       3.11    Compliance with Other Instruments .............................  8
       3.12    Litigation ....................................................  8
       3.13    Tax Returns and Payments ......................................  9
       3.14    Employees .....................................................  9
       3.15    Proprietary Information and Inventions Agreements .............  9
       3.16    Obligations of Management; Stipulated Activities ..............  9
       3.17    Registration Rights ........................................... 10
       3.18    Compliance with Laws; Permits ................................. 10
       3.19    Environmental and Safety Laws ................................. 10
       3.20    Offering Valid ................................................ 10
       3.21    Full Disclosure ............................................... 10
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                                       i.
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                                 TABLE OF CONTENTS
                                    (CONTINUED)

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       3.22    Minute Books .................................................. 11
       3.23    Section 83(b) Elections ....................................... 11
       3.24    Insurance ..................................................... 11
SECTION 4.     REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS ............ 11
SECTION 5.     REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS .............. 11
       5.1     Requisite Power and Authority ................................. 12
       5.2     Investment Representations .................................... 12
       5.3     Transfer Restrictions ......................................... 13
SECTION 6.     CONDITIONS TO CLOSING ......................................... 13
       6.1     Conditions to Purchasers' Obligations at the Closing .......... 13
       6.2     Conditions to Obligations of the Company ...................... 15
SECTION 7.     SHAREHOLDER RELEASES; SURVIVAL; INDEMNIFICATION ............... 16
       7.1     Shareholder Release ........................................... 16
       7.2     Survival; Remedies ............................................ 16
       7.3     Indemnification of Purchaser .................................. 16
       7.4     Indemnification by Purchasers ................................. 17
       7.5     Notice of Claim ............................................... 17
SECTION 8.     MISCELLANEOUS ................................................. 17
       8.1     Governing Law ................................................. 17
       8.2     Successors and Assigns ........................................ 17
       8.3     Entire Agreement .............................................. 17
       8.4     Severability .................................................. 17
       8.5     Amendment and Waiver .......................................... 18
       8.6     Delays or Omissions ........................................... 18
       8.7     Notices ....................................................... 18
       8.8     Expenses ...................................................... 18
       8.9     Attorneys' Fees ............................................... 18
       8.10    Titles and Subtitles .......................................... 19
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                                       ii.
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                                TABLE OF CONTENTS
                                   (CONTINUED)
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       8.11    Counterparts .................................................. 19
       8.12    Broker's Fees ................................................. 19
       8.13    Exculpation Among Purchasers .................................. 19
       8.14    Pronouns ...................................................... 19
       8.15    Broker's Fees ................................................. 19
       8.16    California Corporate Securities Law ........................... 19
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                                      iii.
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                      LANDA MANAGEMENT SYSTEMS CORPORATION

                   SERIES D PREFERRED STOCK PURCHASE AGREEMENT

         THIS SERIES D PREFERRED STOCK PURCHASE AGREEMENT (the "Agreement") is
entered into as of February 27, 1998, by and among LANDA MANAGEMENT SYSTEMS
CORPORATION, a California corporation (the "Company"), and severally and not
jointly, Brack Davis ("Davis"), Hugh Curnutt ("Curnutt"), Westminster Health
Care Limited ("Westminster"), and Gilbert Lang, Beulah Lang, Beulah J.T. Lang
(the "Langs"; Davis, Curnutt, Westminster and the Langs are sometimes referred
to collectively as the "Shareholders" and each individually as a "Shareholder"),
and each of those persons and entities, severally and not jointly, whose names
are set forth on the Schedule of Purchasers attached hereto as Exhibit A-1
(which persons and entities are hereinafter collectively referred to as
"Purchasers" and each individually as a "Purchaser").

                                    RECITALS

         WHEREAS, the Company and the Shareholders have entered into an Exchange
Agreement dated as of the date hereof (the "Exchange Agreement") pursuant to
which (i) Davis and Curnutt have exchanged 21,300 shares and 20,000 shares,
respectively, of Series A Preferred Stock of the Company held by each of them
for an equal number of shares of Series D Preferred Stock of the Company
("Series D Preferred"), (ii) Westminster has exchanged 115,446 shares of Series
B Preferred Stock of the Company and 450,481 shares of Series C Preferred Stock
of the Company held by it for an aggregate of 1,125,000 shares of Series D
Preferred, and (iii) the Langs exchanged an aggregate of 178,332.5 shares of
Common Stock of the Company held by them for an aggregate of 17,833 shares of
Series D Preferred (the shares of Series D Preferred issued to each of the
Shareholders pursuant to the Exchange Agreement are referred to collectively as
the "Exchange Series D Shares");

         WHEREAS, it is a condition to the willingness of Westminster to approve
the amendment to the Company's Articles of Incorporation contemplated by this
Agreement and the sale and delivery of the Exchange Series D Shares held by it
hereunder that the Company issue and deliver to Westminster warrants to purchase
250,000 shares of Common Stock of the Company (the "Westminster Warrant");

         WHEREAS, the Purchasers desire to purchase from the Shareholders all of
the Exchange Series D Shares held by each of them on the terms and conditions
set forth herein;

         WHEREAS, each of the Shareholders desires to sell the Exchange Series D
Shares held by it to the Purchasers on the terms and conditions set forth
herein;

         WHEREAS, the Purchasers desire to purchase directly from the Company an
aggregate of 5,615,867 shares of Series D Preferred (the "Shares") on the terms
and conditions set forth herein; and;

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

         NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises hereinafter set forth, the parties hereto agree as follows:

                                       1.
<PAGE>   6

SECTION 1. AGREEMENT TO SELL AND PURCHASE.

         1.1      AUTHORIZATION OF SHARES. On or prior to the Closing (as
defined in Section 2 below), (a) (i) the Exchange Series D Shares shall have
been issued to each of the Shareholders pursuant to the Exchange Agreement and
(ii) each Shareholder, to the extent necessary, shall have authorized the sale
to the Purchasers of the Exchange Series D Shares held by it, and (b) the
Company shall have authorized (i) the sale and issuance to Purchasers of the
Shares and (ii) the issuance of such shares of Common Stock to be issued upon
conversion of the Shares (the "Conversion Shares"). The Shares, the Exchange
Series D Shares and the Conversion Shares shall have the rights, preferences,
privileges and restrictions set forth in the Amended and Restated Articles of
Incorporation of the Company, as amended, in the form attached hereto as Exhibit
B (the "Restated Articles").

         1.2      SALE AND PURCHASE. Subject to the terms and conditions hereof,
at the Closing (as hereinafter defined) (a) the Company hereby agrees to issue
and sell to each Purchaser, severally and not jointly, and each Purchaser agrees
to purchase from the Company, severally and not jointly, the number of Shares
set forth opposite such Purchaser's name on Exhibit A, and (b) each Shareholder
hereby agrees to sell to each Purchaser, severally and not jointly, and each
Purchaser agrees to Purchase from each Shareholder, severally and not jointly,
the number of Exchange Series D Shares set forth opposite such Purchaser's name
on Exhibit A, in each case at a purchase price of one dollar and twenty cents
($1.20) per share.

SECTION 2. CLOSING, DELIVERY AND PAYMENT.

         2.1      CLOSING. The closing of the sale and purchase of the Shares
and the Exchange Series D Shares under this Agreement (the "Closing") shall take
place at 5:00 p.m. on the date hereof, at the offices of Cooley Godward LLP,
3000 Sand Hill Road, Building 3, Suite 230, Menlo Park, California 94025, or at
such other time or place as the Company and Purchasers may mutually agree (such
date is hereinafter referred to as the "Closing Date").

         2.2      DELIVERY. At the Closing, subject to the terms and conditions
hereof, (a) the Company will deliver to the Purchasers certificates representing
the number of Shares to be purchased from the Company at the Closing by each
Purchaser, and (b) each Shareholder will deliver to the Purchasers certificates
representing the number of Exchange Series D Shares to be purchased from it at
the Closing by each Purchaser, against payment of the purchase price therefor by
check or wire transfer made payable to the order of the Company or a
Shareholder, as applicable, cancellation of indebtedness or any combination of
the foregoing.

         2.3      CONTEMPLATED TRANSFERS. Notwithstanding anything herein or in
the Investor Rights Agreement (as defined below) to the contrary, Bedrock
Capital Side-By-Side, L.P. ("Bedrock Side Fund") shall be entitled, at any time
or times within one hundred eighty (180) days immediately following the Closing,
to transfer to no more than three (3) of its affiliates all, or any lesser
number as it deems appropriate, of the Shares and/or Exchange Series D Shares
purchased by it hereunder. From and after any such transfer, such transferee
shall be deemed a "Purchaser" for all purposes of this Agreement and an
"Investor" for all purposes of the Investor Rights Agreement and the Voting
Agreement (as each term is defined in Section 3.1 below).

                                       2.
<PAGE>   7

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

         Except as set forth on a Schedule of Exceptions delivered by the
Company and the Langs to the Purchasers at the Closing, the Company and the
Langs each hereby represent and warrant to each Purchaser as of the date of this
Agreement as follows:

         3.1      ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is
a corporation duly organized, validly existing and in good standing under the
laws of the State of California. The Company has all requisite corporate power
and authority to own and operate its properties and assets, to execute and
deliver this Agreement, the Investor Rights Agreement in the form attached
hereto as Exhibit C (the "Investor Rights Agreement") and the Voting Agreement
in the form attached hereto as Exhibit D (the "Voting Agreement"; the Investor
Rights Agreement and the Voting Agreement, collectively, the "Related
Agreements" and the Agreement and the Related Agreements together, the
"Agreements"), to issue and sell the Shares and the Conversion Shares and to
carry out the provisions of the Agreements and the Restated Articles and to
carry on its business as presently conducted and as presently proposed to be
conducted. The Company is duly qualified and is authorized to do business and is
in good standing as a foreign corporation in all jurisdictions in which the
nature of its activities and of its properties (both owned and leased) makes
such qualification necessary, except for those jurisdictions in which failure to
do so would not have a material adverse effect on the Company or its business.
The Company owns no equity securities of any other corporation, limited
partnership or similar entity. The Company is not a participant in any joint
venture, partnership or similar arrangement.

         3.2      CAPITALIZATION; VOTING RIGHTS. The authorized capital stock of
the Company, immediately prior to the Closing, consists of Fifteen Million
(15,000,000) shares of Common Stock, no par value share, (a) 1,025,674.76 shares
of which are issued and outstanding, (b) 1,047,848 shares of which are reserved
for future issuance to key employees pursuant to the Company's 1984 Stock Option
Plan, as amended, and the 1995 Stock Option Plan (collectively, the "Stock
Option Plans"), and (c) Eight Million (8,000,000) shares of Preferred Stock, no
par value, (i) 41,300 of which are designated Series A Preferred Stock, none of
which are issued and outstanding, (ii) 115,446 of which are designated as Series
B Preferred Stock, none of which are issued and outstanding, (iii) 450,481 of
which are designated as Series C Preferred Stock, none of which are issued and
outstanding, and (iv) 6,800,000 of which are designated Series D Preferred
Stock, 1,184,133 of which are issued and outstanding. All issued and outstanding
shares of the Company's Common Stock and Preferred Stock (A) have been duly
authorized and validly issued to the persons listed an Exhibit D hereto, (B) are
fully paid and nonassessable, and (C) were issued in compliance with all
applicable state, federal and foreign laws concerning the issuance of
securities. The rights, preferences, privileges and restrictions of the Shares
and the Exchange Series D Shares are as stated in the Restated Articles. Each
series of Preferred Stock is convertible into Common Stock on a one-for-one
basis. The Conversion Shares have been duly and validly reserved for issuance.
Other than as set forth on Exhibit E, there are no outstanding options,
warrants, rights (including conversion or preemptive rights and rights of first
refusal), proxy or shareholder agreements, or agreements of any kind for the
purchase or acquisition from the Company of any of its securities. When issued
in compliance with the provisions of this Agreement and the Restated Articles,
the Shares and the Conversion Shares will be validly issued, fully paid and
nonassessable, and will be free of any liens or encumbrances; provided, however,
that the Shares, the Exchange Series D Shares and the Conversion Shares may be
subject to restrictions on transfer under state and/or federal securities laws
as set forth herein or as otherwise required by such laws at the time a transfer
is proposed.

                                       3.
<PAGE>   8

         3.3      AUTHORIZATION; BINDING OBLIGATIONS. All corporate action on
the part of the Company, its officers, directors and shareholders necessary for
the authorization of the Exchange Agreement, the Agreement and each Related
Agreement, the performance of all obligations of the Company hereunder and
thereunder at the Closing and the authorization, sale, issuance and delivery of
the Shares pursuant hereto and the Conversion Shares pursuant to the Restated
Articles has been taken or will be taken prior to the Closing. The Exchange
Agreement is a valid and binding obligation of the Company, and each Agreement,
when executed and delivered, will be a valid and binding obligation of the
Company enforceable in accordance with its terms, except in each case (a) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application affecting enforcement of creditors' rights;
(b) general principles of equity that restrict the availability of equitable
remedies; and (c) to the extent that the enforceability of the indemnification
provisions in Sections 2.9 and 2.15 of the Investor Rights Agreement may be
limited by applicable laws. The sale of the Shares and the subsequent conversion
of the Shares and Exchange Series D Shares into Conversion Shares are not and
will not be subject to any preemptive rights or rights of first refusal that
have not been properly waived or complied with.

         3.4      FINANCIAL STATEMENTS. Attached hereto as Exhibit F are copies
of the Company's (a) audited balance sheets as of December 31, 1996 and
September 30, 1997 and audited statement of income and cash flows for the nine
months ending September 30, 1997, and (b) its unaudited balance sheet as at
December 31, 1997 (the "Statement Date") (collectively, the "Financial
Statements"). The Financial Statements, together with the notes thereto, are
complete and correct in all material respects, have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the periods indicated, except as disclosed therein, and present
fairly the financial condition and position of the Company as of September 30,
1997 and the Statement Date; provided, however, that the unaudited financial
statements are subject to normal recurring year-end audit adjustments (which are
not expected to be material), and do not contain all footnotes required under
generally accepted accounting principles.

         3.5      LIABILITIES. The Company has no material liabilities and, to
the best knowledge of the Company and the Langs, there are no material
contingent liabilities not disclosed in the Financial Statements, except current
liabilities incurred in the ordinary course of business subsequent to the
Statement Date which have not been, either in any individual case or in the
aggregate, materially adverse to the Company. The Company has not assumed, by
contract, agreement, operation or law or otherwise, any material obligations of
Landacorp UK Ltd.

         3.6      AGREEMENTS; ACTION.

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

                  (b)      There are no agreements, understandings, instruments,
contracts, proposed transactions, judgments, orders, writs or decrees to which
the Company is a party or, to the knowledge of the Company or the Langs, by
which the Company is bound which may involve (i) obligations (contingent or
otherwise) of, or payments to, the Company in excess of $15,000 (other than
obligations of, or payments to, the Company arising from purchase or sale
agreements entered into in the ordinary course of business), or (ii) the license
of any patent, copyright, trade secret or other proprietary right to or from the
Company (other than licenses arising from the purchase of "off the shelf" or
other standard products), or (iii)

                                       4.

<PAGE>   9

provisions restricting or affecting the development, manufacture or distribution
of the Company's products or services, or (iv) indemnification by the Company
with respect to infringements of proprietary rights (other than indemnification
obligations arising from purchase or sale agreements entered into in the
ordinary course of business).

                  (c)      The Company has not (i) declared or paid any
dividends, or authorized or made any distribution upon or with respect to any
class or series of its capital stock, (ii) incurred any indebtedness for money
borrowed or any other liabilities (other than with respect to dividend
obligations, distributions, indebtedness and other obligations incurred in the
ordinary course of business or as disclosed in the Financial Statements)
individually in excess of $15,000 or, in the case of indebtedness and/or
liabilities individually less than $15,000, or in excess of $25,000 in the
aggregate, (iii) made any loans or advances to any person, other than ordinary
advances for travel expenses, or (iv) sold, exchanged or otherwise disposed of
any of its assets or rights, other than the sale of its inventory in the
ordinary course of business.

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

                  (e)      The Company has not engaged, in the past three (3)
months, in any discussion (i) with any representative of any corporation or
corporations regarding the consolidation or merger of the Company with or into
any such corporation or corporations, (ii) with any corporation, partnership,
association or other business entity or any individual regarding the sale,
conveyance or disposition of all or substantially all of the assets of the
Company, or a transaction or series of related transactions involving the
disposition of more than fifty percent (50%) of the voting power of the Company,
or (iii) regarding any other form of acquisition, liquidation, dissolution or
winding up of the Company.

         3.7      OBLIGATIONS TO RELATED PARTIES. There are no obligations of
the Company to any officer, director, shareholder, or employee of the Company
other than (a) for payment of salary for services rendered, (b) reimbursement
for reasonable expenses incurred on behalf of the Company and (c) for other
standard employee benefits made generally available to all employees (including
stock option agreements outstanding under any stock option plan approved by the
Board of Directors of the Company). No officer, director or shareholder of the
Company, nor any member of any of their immediate families, is indebted to the
Company or has any direct or indirect ownership interest in any firm or
corporation with which the Company is affiliated or with which the Company has a
business relationship, or any firm or corporation which competes with the
Company, except that officers, directors and/or shareholders of the Company may
own stock in publicly traded companies which may compete with the Company. No
officer, director or shareholder, nor any member of any of their immediate
families, is, directly or indirectly, interested in any material contract with
the Company (other than such contracts as relate to any such person's ownership
of capital stock or other securities of the Company). Except as may be disclosed
in the Financial Statements, the Company is not a guarantor or indemnitor of any
indebtedness of any other person, firm or corporation.

         3.8      CHANGES. Since the Statement Date, there has not been, to the
knowledge of the Company or the Langs;

                  (a)      Any change in the assets, liabilities, financial
condition or operations of the Company from that reflected in the Financial
Statements, other than changes in the ordinary course of

                                       5.
<PAGE>   10

business, none of which individually or in the aggregate has had or is expected
to have a material adverse effect on such assets, liabilities, financial
condition or operations of the Company;

                  (b)      Any resignation or termination of any key officer of
the Company; and the Company, to the best knowledge of the Company and the
Langs, does not know of the impending resignation or termination of employment
of any such officer;

                  (c)      Any material change, except in the ordinary course of
business, in the contingent obligations of the Company by way of guaranty,
endorsement, indemnity, warranty or otherwise;

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

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

                  (f)      Any direct or indirect loans made by the Company to
any shareholder, employee, officer or director of the Company, other than
advances made in the ordinary course of business;

                  (g)      Any material change in any compensation arrangement
or agreement with any employee, officer, director or shareholder;

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

                  (i)      Any labor organization activity;

                  (j)      Any debt, obligation or liability incurred, assumed
or guaranteed by the Company, except those for immaterial amounts and for
current liabilities incurred in the ordinary course of business;

                  (k)      Any sale, assignment or transfer of any patents,
trademarks, copyrights, trade secrets or other intangible assets;

                  (1)      Any change in any material agreement to which the
Company is a party or by which it is bound which materially and adversely
affects the business, assets, liabilities, financial condition, operations or
prospects of the Company, including compensation agreements with the Company's
employees;

                  (m)      Any threatened discontinuance, or proposed material
amendment to the terms of, any agreement of the Company, with (i) any creditor
of the Company, to which the Company's annual obligations exceed $20,000, or
(ii) any customer of the Company under which payments to the Company on an
annual basis exceed $20,000; or

                  (n)      Any other event or condition of any character that,
either individually or cumulatively, has materially and adversely affected the
business, assets, liabilities, financial condition, operations or prospects of
the Company.

         3.9      TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. The Company has
good and marketable title to its properties and assets, including the properties
and assets reflected in the most recent balance sheet

                                       6.

<PAGE>   11

included in the Financial Statements, and good title to its leasehold estates,
in each case subject to no mortgage, pledge, lien, lease, encumbrance or
charge, other than (a) those resulting from taxes which have not yet become
delinquent, (b) minor liens and encumbrances which do not materially detract
from the value of the property subject thereto or materially impair the
operations of the Company, and (c) those that have otherwise arisen in the
ordinary course of business. All facilities, machinery, equipment, fixtures,
vehicles and other properties owned, leased or used by the Company are in good
operating condition and repair and are reasonably fit and usable for the
purposes for which they are being used. The Company is in compliance with all
material terms of each lease to which it is a party or is otherwise bound.

         3.10     PATENTS AND TRADEMARKS.

                  (a)      The Company owns or possesses sufficient legal rights
to all patents, trademarks, service marks, trade names, copyrights, trade
secrets, information and other proprietary rights and processes necessary for
its business as now conducted and as proposed to be conducted, without any
infringement of the rights of others.

                  (b)      There is no outstanding, nor has the Company ever
entered into, any option, license or agreement of any kind relating to any
patents, trademarks, service marks, trade names, copyrights, trade secrets,
information or other proprietary rights or processes that grant any form of an
exclusive right or license to any third party.

                  (c)      No trade secret, confidential, proprietary or other
non-public information relating to, contained in, or used by or in connection
with, the computer software program commonly referred to as, and marketed by the
Company under the name of, Maxsys II ("Maxsys II") is contained in or may be
derived from Prizm (as hereinafter defined).

                  (d)      No part of the Source Code (as hereinafter defined)
of Prizm has been released or made available to any third party except the
following hospitals located in the United Kingdom: St. Thomas' and Guys
Hospital, Hastings Hospital, Brighton Hospital, Worthings and Southlands
Hospital and Bromley Hospital (collectively, the "Hospitals"). For purposes of
this Agreement, "Source Code" shall mean any computer software program which is
not in machine readable format, and is not suitable for machine execution
without the intervening steps of interpretation or compilation, but including
any accompanying documentation, manuals or supporting materials. For purposes of
this Agreement, "Prizm" shall mean the computer software program commonly
referred to as Prizm and developed by the Company pursuant to the Development
Agreement of August 11, 1989 between the South East Thames Regional Health
Authority and Landa Management Systems Corporation.

                  (e)      The Company has granted to the Hospitals a
non-exclusive, non-transferable license (without the right to grant sublicenses)
to use the Source Code of Prizm solely for maintenance of Prizm and for no other
reason (the "License"). The License provides that the Source Code of Prizm must
be treated as the confidential information of the Company, may not be disclosed
to third parties, and may not be used in a manner inconsistent with the License.
To the best knowledge of the Company and the Langs, the Hospitals are not now,
and have not at any time been, in breach of the License.

                  (f)      Neither the Company nor the Langs have received any
communication alleging that the Company has violated or, by conducting its
business as proposed, would violate any of the patents, trademarks, service
marks, trade names, copyrights or trade secrets or other proprietary rights of
any other person or entity.

                                       7.
<PAGE>   12

                  (g)      The Company has taken all reasonable measures and
precautions necessary to protect and maintain the confidentiality and secrecy of
the Company's patents, trademarks, service marks, trade names, copyrights, trade
secrets, information and other proprietary rights and processes and otherwise to
maintain and protect the value thereof and has obtained from all current and
former employees and from all current and former consultants and independent
contractors signed agreements appropriately assigning to the Company, and
restricting the use and disclosure of, such patents, trademarks, service marks,
trade names, copyrights, trade secrets, information and other proprietary rights
and processes.

                  (h)      No employee of the Company is obligated under any
contract (including licenses, covenants or commitments of any nature) or other
agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with his or her duty to the Company
or that would conflict with the Company's business as proposed to be conducted.

                  (i)      Neither the execution nor delivery of this Agreement,
nor the carrying on of the Company's business by the employees of the Company,
not the conduct of the Company's business as proposed, will conflict with or
result in a breach of the terms, conditions or provisions of, or constitute a
default under, any contract, covenant or instrument under which any Company
employee is now obligated.

                  (j)      It will not be necessary to utilize any inventions,
trade secrets or proprietary information of any of the Company's employees made
prior to their employment by the Company, except for inventions, trade secrets
or proprietary information that have been assigned to the Company.

         3.11     COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in
violation or default of any term of its Restated Articles or Bylaws, or of any
provision of any mortgage, indenture, contract, agreement, instrument or
contract to which it is party or by which it is bound or of any judgment,
decree, order, writ or, to the knowledge of the Company or the Langs, any
statute, rule or regulation applicable to the Company which would materially and
adversely affect the business, assets, liabilities, financial condition,
operations or prospects of the Company. The execution, delivery, and performance
of and compliance with this Agreement and each Related Agreement, and the
issuance and sale of the Shares pursuant hereto and of the Conversion Shares
pursuant to the Restated Articles, will not, with or without the passage of time
or giving of notice, result in any such material violation, or be in conflict
with or constitute a default under any such term, or result in the creation of
any mortgage, pledge, lien, encumbrance or charge upon any of the properties or
assets of the Company or the suspension, revocation, impairment, forfeiture or
nonrenewal of any permit license, authorization or approval applicable to the
Company, its business or operations or any of its assets or properties.

         3.12     LITIGATION. There is no action, suit, proceeding or
investigation pending, or to the knowledge of the Company or the Langs currently
threatened, against the Company that questions the validity of this Agreement,
or any related Agreement or the right of the Company to enter into any of such
agreements, or to consummate the transactions contemplated hereby or thereby, or
which might result, either individually or in the aggregate, in any material
adverse change in the assets, condition, affairs or prospects of the Company,
financially or otherwise, or any change in the current equity ownership of the
Company, nor are the Company or the Langs aware that there is any basis for the
foregoing. The foregoing includes, without limitation, actions pending or
threatened (or any basis therefor known to the Company or the Langs) involving
the prior employment of any of the Company's employees, their use in connection
with the Company's business of any information or techniques allegedly
proprietary to any of their former employers, or their obligations under any
agreements with prior employers. The Company is neither a party nor subject to
the provisions of any order, writ, injunction, judgment or decree of any court
or

                                       8.
<PAGE>   13

government agency or instrumentality. There is no action, suit, proceeding or
investigation by the Company currently pending or which the Company intends to
initiate.

        3.13     TAX RETURNS AND PAYMENTS. The Company has timely filed all tax
returns (foreign, federal, state and local) required to be filed by it. All
taxes shown to be due and payable on such returns, any assessments imposed, and
to the knowledge of the Company and the Langs, all other taxes due and payable
by the Company on or before the Closing have been paid or will be paid prior to
the time they become delinquent. Neither the Company nor the Langs have been
advised (a) that any of the Company's returns, foreign, federal, state or other,
have been or are being audited as of the date hereof, or (b) of any deficiency
in assessment or proposed judgment to the Company's foreign, federal, state or
other taxes. Neither the Company nor the Langs has knowledge of any liability
for any tax to be imposed upon the Company's properties or assets as of the date
of this Agreement for which the Company has not adequately provided.

        3.14     EMPLOYEES. The Company has no collective bargaining agreement
with any of its employees. There is no labor union organizing activity pending
or, to the knowledge of the Company or the Langs, threatened with respect to the
Company. No employee has any agreement or contract, written or verbal, regarding
his employment. The Company is not a party to or bound by any currently
effective employment contract, deferred compensation arrangement, bonus plan,
incentive plan, profit sharing plan, retirement agreement or other employee
compensation plan or agreement. To the knowledge of the Company and the Langs,
no employee of the Company, nor any consultant with whom the Company has
contracted, is in violation of any term of any employment contract, proprietary
information agreement or any other agreement relating to the right of any such
individual to be employed by, or to contract with, the Company because of the
nature of the business to be conducted by the Company, and to the knowledge of
the Company and the Langs, the continued employment by the Company of its
present employees, and the performance of the Company's contracts with its
independent contractors, will not result in any such violation. Neither the
Company nor the Langs has received any notice alleging that any such violation
has occurred. No employee of the Company has been granted the right to continued
employment by the Company or to any material compensation following termination
of employment with the Company. Neither the Company nor the Langs is aware that
any officer or key employee, or that any group of key employees, intends to
terminate his, her or their employment with the Company, nor does the Company
have a present intention to terminate the employment of any officer, key
employee or group of key employees.

        3.15     PROPRIETARY INFORMATION AND INVENTIONS AGREEMENTS. Each
current employee, officer and consultant of the Company has executed a
Proprietary Information and Inventions Agreement in the form of Exhibit G
attached hereto, and each former employee, officer and consultant of the Company
has executed a "proprietary information and inventions agreement" in a form
satisfactory to the Purchasers. No current employee, officer or consultant of
the Company has excluded works or inventions made prior to his or her
employment with the Company from his or her assignment of inventions pursuant to
such employee, officer or consultant's Proprietary Information and Inventions
Agreement.

        3.16     OBLIGATIONS OF MANAGEMENT; STIPULATED ACTIVITIES. Each
officer of the Company is currently devoting one hundred percent (100%) of his
or her business time to the conduct of the business of the Company. Neither the
Company nor the Langs is aware that any officer or key employee of the Company
plans to work less than full time at the Company in the future. Exhibit H hereto
sets forth a complete and accurate list of all "Stipulated Activities" of each
senior officer of the Company (each a "Principal"). The term "Stipulated
Activity" shall mean any of the following as to each Principal: (a) being

                                       9.

<PAGE>   14

the beneficial owner of (i) more than 5% of the outstanding equity securities of
any entity other than the Company or (ii) securities (including debt securities
and guarantees of indebtedness, but excluding securities traded on a national
securities exchange or in the over-the-counter market and securities issued by
money market or similar funds) of any entity other than the Company with an
original cost, fair market value and/or obligation on the part of such
Principal, contingent or otherwise (even if the obligation is evidenced by
non-recourse debt or guaranty), in excess of $100,000; or (b) being an employee,
officer, director or general partners of, or consultant to, any person or entity
other than that Company. For purposes of determining Stipulated Activities, any
actions taken by the spouse, children or entities controlled by each Principal
will be imputed to be activities conducted by such Principal.

         3.17     REGISTRATION RIGHTS. Except as required pursuant to the
Investor Rights Agreement, the Company is presently not under any obligation,
and has not granted any rights, to register (as defined in Section 1.1 of the
Investor Rights Agreement) any of the Company's presently outstanding securities
or any of its securities that may hereinafter be issued.

         3.18     COMPLIANCE WITH LAWS; PERMITS. To the knowledge of the Company
and the Langs, the Company is not in violation of any applicable statute, rule,
regulation, order or restriction of any domestic or foreign government or any
instrumentality or agency thereof in respect of the conduct of its business or
the ownership of its properties, which violation would materially and adversely
affect the business, assets, liabilities, financial condition, operations or
prospects of the Company. No governmental order, permission, consent, approval
or authorization is required to be obtained and no registration or declaration
is required to be filed in connection with the execution and delivery of this
Agreement and the issuance of the Shares or the Conversion Shares, except such
as has been duly and validly obtained or filed, or with respect to any filing
that must be made after the Closing, as will be filed in a timely manner. The
Company has all franchises, permits, licenses and any similar authority
necessary for the conduct of its business as now being conducted by it, the lack
of which could materially and adversely affect the business, properties,
prospects or financial condition of the Company and the Company and the Langs
believe the Company can obtain, without undue burden or expense, any similar
authority for the conduct of its business as planned to be conducted.

         3.19     ENVIRONMENTAL AND SAFETY LAWS. To the knowledge of the Company
and the Langs, the Company is not in violation of any applicable statute, law or
regulation relating to the environment or occupational health and safety, and to
their knowledge, no material expenditures are or will be required in order to
comply with any such existing statute, law or regulation.

         3.20     OFFERING VALID. Assuming the accuracy of the representations
and warranties of the Purchasers contained in Section 5.2 hereof, the offer,
sale and issuance of the Shares and the Conversion Shares will be exempt from
the registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and will have been registered or qualified (or are exempt
from registration and qualification) under the registration, permit or
qualification requirements of all applicable state securities laws. Neither the
Company nor any agent on its behalf has solicited or will solicit any offers to
sell or has offered to sell or will offer to sell all or any part of the Shares
to any person or persons so as to bring the sale of such Shares by the Company
within the registration provisions of the Securities Act or any state securities
laws.

         3.21     FULL DISCLOSURE. This Agreement, the Exhibits hereto, the
Investor Rights Agreement and all other documents delivered by the Company to
Purchasers or their attorneys or agents in connection herewith of therewith or
with the transactions contemplated hereby or thereby, do not contain any untrue

                                       10.
<PAGE>   15

statement of a material fact nor, to the knowledge of the Company or the Langs,
omit to state a material fact, necessary in order to make the statements
contained herein or therein not misleading. To the knowledge of the Company and
the Langs, there are no facts which (individually or in the aggregate)
materially adversely affect the business, assets, liabilities, financial
condition, prospects or operations of the Company that have not been set forth
in the Agreement, the Exhibits hereto, any Related Agreement or in other
documents delivered to Purchasers or their attorneys or agents in connection
herewith.

         3.22     MINUTE BOOKS. The minute books of the Company provided to the
Purchasers contain a complete summary of all meetings of directors and
shareholders since the time of its incorporation.

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

         3.24     INSURANCE. The Company has fire and casualty insurance
policies with coverage customary for companies similarly situated to the
Company.

SECTION 4.  REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS.

         4.1      AUTHORIZATION. This Agreement constitutes the valid and
binding obligation of each Shareholder, enforceable in accordance with its
terms.

         4.2      TITLE TO SERIES D EXCHANGE SHARES. Each Shareholder represents
that it has good, valid and absolute title to, and beneficial ownership of the
Exchange Series D Shares being sold by it hereunder, and neither such shares nor
the rights of such Shareholder to such shares have been assigned, transferred,
hypothecated, pledged or otherwise disposed of, in whole or in part. The
Exchange Series D Shares, when sold and delivered by each Shareholder to the
Purchasers as contemplated by this Agreement, will transfer to the Purchasers
good, valid and absolute title to, and beneficial ownership of, the Exchange
Series D Shares, free and clear of all liens and encumbrances. The Exchange
Series D Shares being sold and delivered by each Shareholder to the Purchasers
pursuant to this Agreement constitute all of the equity securities of the
Company held by each such Shareholder (including, without limitation, options,
warrants, and other securities convertible or exercisable into equity securities
of the Company).

         4.3      SHAREHOLDER INVESTMENT DECISION. Each Shareholder has entered
into this Agreement based on his, her or its own investigation and analysis and
that of advisors retained by such Shareholder. Each Shareholder understands that
the Company's plans for the future, if successful, may result in an increase in
the value of the Exchange Series D Shares being sold by it hereunder, and that
the future value of the Exchange Series D Shares could exceed the amounts
payable to each Shareholder hereunder. Neither any Purchaser nor any Releasee
(as defined below) has made any representation to the Shareholder about the
advisability of the decision to sell his, her or its Exchange Series D Shares.

SECTION 5.  REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.

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

                                      11.
<PAGE>   16
         5.1      REQUISITE POWER AND AUTHORITY. Purchaser has all necessary
power and authority under all applicable provisions of law to execute and
deliver this Agreement and each Related Agreement and to carry out their
provisions. All action on Purchaser's part required for the lawful execution and
delivery of this Agreement and each Related Agreement have been or will be
effectively taken prior to the Closing. Upon their execution and delivery, this
Agreement and the Related Agreement will be valid and binding obligations of
Purchaser, enforceable in accordance with their terms, except (a) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application affecting enforcement of creditors' rights, (b) general
principles of equity that restrict the availability of equitable remedies, and
(c) to the extent that the enforceability of the indemnification provisions of
Sections 2.9 and 2.15 of the Investor Rights Agreement may be limited by
applicable laws.

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

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

                  (b)    ACQUISITION FOR OWN ACCOUNT. Purchaser is acquiring
the Shares, the Exchange Series D Shares and the Conversion Shares for
Purchaser's own account for investment only, and not with a view towards their
distribution.

                  (c)    PURCHASER CAN PROTECT ITS INTEREST. Purchaser
represents that by reason of its, or of its management's business or financial
experience, Purchaser has the capacity to protect its own interests in
connection with the transactions contemplated in this Agreement and the
Investor Rights Agreement. Further, Purchaser is aware of no publication of any
advertisement in connection with the transactions contemplated in the Agreement.

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

                  (e)    COMPANY INFORMATION. Purchaser has received and read
the Financial Statements and has had an opportunity to discuss the Company's
business, management and financial affairs with directors, officers and
management of the Company and has had the opportunity to review the Company's
operations and facilities. Purchaser has also had the opportunity to ask
questions of and

                                      12.

<PAGE>   17
receive answers from, the Company and its management regarding the terms and
conditions of this investment.

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

                  (g)    RESIDENCE. If the Purchaser is an individual, then the
Purchaser resides in the state or province identified in the address of the
Purchaser set forth on Exhibit A-1; if the Purchaser is a partnership,
corporation, limited liability company or other entity, then the office or
offices of the Purchaser in which its investment decision was made is located
at the address or addresses of the Purchaser set forth on Exhibit A-1.

         5.3      TRANSFER RESTRICTIONS. Each Purchaser acknowledges and agrees
that the Shares and the Exchange Series D Shares, if issued, the Conversion
Shares are subject to restrictions on transfer as set forth in the Investor
Rights Agreement.

SECTION 6.   CONDITIONS TO CLOSING.

         6.1      CONDITION TO PURCHASERS' OBLIGATIONS AT THE CLOSING.
Purchasers' obligations to purchase the Shares and the Exchange Series D Shares
at the Closing are subject to the satisfaction or waiver, at or prior to the
Closing, of the following conditions:

                  (a)    REPRESENTATIONS AND WARRANTIES TRUE; PERFORMANCE OF
OBLIGATIONS. The representations and warranties made by the Company and the
Langs in Section 3 hereof, and the representations and warranties made by each
Shareholder in Section 4 hereof, shall be true and correct in all material
respects as of the Closing Date with the same force and effect as if they had
been made as of the Closing Date, and the Company and each of the Shareholders
shall have performed all obligations and conditions herein required to be
performed or observed by each of them on or prior to the Closing.

                  (b)    LEGAL INVESTMENT. On the Closing Date, the sale and
issuance of the Shares and the Exchange Series D Shares and the proposed
issuance of the Conversion Shares shall be legally permitted by all laws and
regulations to which Purchasers, the Company and the Shareholders are subject.

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

                  (d)    FILING OF RESTATED ARTICLES. The Restated Articles
shall have been filed with the Secretary of the State of California.

                                      13.

<PAGE>   18
                  (e)    CORPORATE DOCUMENTS. The Company shall have delivered
to Purchasers or their counsel, copies of all corporate documents of the
Company as Purchasers shall reasonably request.

                  (f)    RESERVATION OF CONVERSION SHARES. The Conversion
Shares issuable upon conversion of the Shares and the Exchange Series D Shares
shall have been duly authorized and reserved for issuance upon such conversion.

                  (g)    COMPLIANCE CERTIFICATE. The Company shall have
delivered to Purchasers a Compliance Certificate, executed by the President of
the Company, dated the date of the Closing, to the effect that the conditions
specified in subsections (a), (c), (d) and (f) of this Section 6.1 have been
satisfied.

                  (h)    INVESTOR RIGHTS AGREEMENT. An Investor Rights
Agreement substantially in the form attached hereto as Exhibit C shall have
been executed and delivered by the parties thereto.

                  (i)    VOTING AGREEMENT. A Voting Agreement substantially in
the form attached hereto as Exhibit D shall have been executed and delivered by
the Company, each Purchaser and holders of no less than sixty percent (60%) of
all Common Stock outstanding as of the Closing.

                  (j)    BOARD OF DIRECTORS. Upon the Closing, the authorized
size of the Board of Directors of the Company shall be five (5) members and the
Board shall consist of Jason Rosenbluth, Howard Cox, Tom Stephenson, Bryan
Lang and Gene Cattarina.

                  (k)    LEGAL OPINION. The Purchasers shall have received from
legal counsel to the Company and opinion addressed to them, dated as of the
Closing Date, in substantially the form attached hereto as Exhibit I.

                  (l)    EXCHANGES. The Exchange Agreement shall have been
entered into by the Company and the Shareholders and all transactions
contemplated thereby shall have been consummated.

                  (m)    LOAN REPAYMENT. The Company and each of the Langs
shall have entered into an agreement in form and substance satisfactory to
the Purchasers pursuant to which, in exchange for payment by the Company of
$1,692,600.00 (the "Loan Redemption Agreement") and issuance to the Langs of
warrants to purchase 100,000 shares of the Company's Common Stock in
substantially the form attached hereto as Exhibit J (the "Warrant"), all
obligations of the Company under all demand and other debt instruments dated
prior to February 27, 1998 shall be satisfied, and the Company and the Langs
shall be prepared to effect such transactions simultaneous with the
transactions contemplated hereby.

                  (n)    WESTMINSTER WARRANT. The Company shall have delivered
to Westminster the Westminster Warrant in substantially the form attached
hereto as Exhibit J.

                  (o)    CAPITALIZATION CERTIFICATE. The Company shall have
delivered to the Purchasers a Capitalization Certificate, executed by the
President and the Chief Operating Officer of the Company, dated the date of
Closing, certifying as to the number, form and ownership of all outstanding
equity securities of the Company (including, without limitation, options,
warrants and other securities convertible or exercisable into equity
securities).

                  (p)    TAX PAYMENTS. The Company shall have provided evidence
satisfactory to each of the Purchasers of the amounts of all tax obligations
(foreign, federal, state and local) of the Company,

                                      14.

<PAGE>   19
together with evidence satisfactory to the Purchasers that all such tax
obligations shall be satisfied immediately following the Closing.

                  (q)    BYLAWS. The Company shall have adopted Amended and
Restated Bylaws in the form attached hereto as Exhibit L.

                  (r)    PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT. Each
employee, and each consultant of the Company requested by the Purchasers to do
so, shall have entered into a Proprietary Information and Inventions Agreement.

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

         6.2      CONDITIONS TO OBLIGATIONS OF THE COMPANY. The Company's
obligation to issue and sell the Shares and the obligations of each Shareholder
to sell the Exchange Series D Shares held by it, at the Closing is subject to
the satisfaction or waiver, on or prior to the Closing, of the following
conditions:

                  (a)    REPRESENTATIONS AND WARRANTIES TRUE. The
representations and warranties made by the Purchasers acquiring Shares in
Section 4 hereof shall be true and correct in all material respects at the date
of the Closing, with the same force and effect as if they had been made on and
as of such date.

                  (b)    PERFORMANCE OF OBLIGATIONS. The Purchasers shall have
performed and complied with all agreements and conditions herein required to be
performed or complied with by the Purchasers on or before the Closing.

                  (c)    FILING OF RESTATED ARTICLES. The Restated Articles
shall have been filed with the Secretary of State of the State of California.

                  (d)    INVESTOR RIGHTS AGREEMENT. An Investor Rights
Agreement substantially in the form attached hereto as Exhibit C shall have
been executed and delivered by the Purchasers.

                  (e)    VOTING AGREEMENT. A Voting Agreement substantially in
the form attached hereto as Exhibit D shall have been executed and delivered by
the Company, each Purchaser and holders of no less than sixty percent (60%) of
all Common Stock outstanding as of the Closing.

                  (f)    CONSENTS, PERMITS, AND WAIVERS. The Company shall have
obtained any and all consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated by the Agreement and the Investor
Rights Agreement (except for such as may be properly obtained subsequent to the
Closing).

                                      15.
<PAGE>   20
SECTION 7.  SHAREHOLDER RELEASES; SURVIVAL; INDEMNIFICATION.

         7.1      SHAREHOLDER RELEASE.

                  (a)    Each Shareholder hereby discharges and releases each
Purchaser and each of its officers, directors, employees, agents, attorneys,
parents, subsidiaries and affiliates, and their respective partners, former
partners, members and former members (collectively, the "Releasees") from all
rights, claims, obligations, debts liabilities and relationships of whatever
kind or nature, known or unknown, past, present, or future, whether contractual
or fiduciary, arising out of such Shareholders' investment in, and ownership
and sale to the Purchasers of the Exchange Series D Shares sold by it hereunder.

                  (b)    Each Shareholder has considered the possibility that
he, she or it may not now fully know the nature or value of the claims which
are released pursuant to subsection (a) above. Nevertheless, each Shareholder
intends to assume the risk of releasing such unknown claims. TO THAT END, EACH
SHAREHOLDER EXPRESSLY WAIVES ITS RIGHTS UNDER SECTION 1542 OF THE CALIFORNIA
CIVIL CODE, WHICH PROVIDES:

         "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
         NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
         RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
         SETTLEMENT WITH THE DEBTOR."

         7.2     SURVIVAL; REMEDIES.

                 (a)     The parties hereto agree that the representations,
warranties, obligations and covenants contained in this Agreement shall survive
the Closing Date for a period of five (5) years thereafter; provided, however,
that in the event a claim for indemnification is made or a notice of claim is
given prior to the expiration date, the indemnification obligation shall
continue until the applicable claim has been finally resolved.

                 (b)     In addition to any other remedy to which any Purchaser
shall be entitled, whether at law or in equity, and notwithstanding any
applicable statute of limitations, each Purchaser shall have the right to
rescind the purchase of Series D Shares and/or Exchange Series D Shares from
the Company and/or any Shareholder, at a price per share of $1.20, in the event
of any material breach by the Company and/or such Shareholder of any
representation and warranty made by it hereunder.

         7.3     INDEMNIFICATION OF PURCHASER. Subject to the provisions of
this Section 7, the Shareholders and the Company hereby agree that each
Purchaser shall be held harmless from, protected against and reimbursed for any
and all Loss (as defined below), resulting from the inaccuracy or breach of any
representation, warranty, obligation or covenant made or given by it in or
pursuant to this Agreement; provided, however, that for purposes of this
Section 7.3, the final sentence of Section 3.10(e) shall be interpreted without
regard to the initial clause thereof. Each Shareholder and the Company shall be
obligated to satisfy such party's pro rata portion of the indemnification
obligation to the Purchasers determined by dividing the indemnification
obligation by the total number of Exchange Series D Shares and Series D Shares
and multiplying the result by the number of Exchange Series D Shares and Series
D Shares owned by it. Except as set forth in the immediately succeeding
sentence, in no event shall a Shareholder be obligated hereunder for an amount
exceeding the amount paid to it hereunder for its Exchange Series D Shares. The
aggregate amount the Langs shall be obligated to pay hereunder shall not

                                      16.

<PAGE>   21
exceed $1,750,000, representing the aggregate amount paid to it in
consideration of the Exchange Series D Shares sold by it hereunder and under
the Loan Redemption Agreement. As used in this Agreement, the term "Loss" means
any cost, damage, disbursement, expense, liability, loss, deficiency,
diminution in value, penalty, fine, assessment or settlement of any kind or
nature, whether foreseeable or unforeseeable, including but not limited to,
interest or other carrying costs, penalties, legal, accounting or other
professional fees or expenses incurred in the investigation, collection,
prosecution or defense of claims, inquiries, hearings or other legal or
administrative proceedings and amounts paid in settlement, that may be imposed
on or otherwise incurred or suffered by any Purchaser. The parties agree that,
notwithstanding anything herein contrary, with respect to any claim or
indemnification for any Loss brought by any Purchaser against any Shareholder,
such Shareholder shall have no right of contribution against the Company.

          7.4    INDEMNIFICATION BY PURCHASERS. Each Purchaser shall indemnify
and hold harmless the Company and its Shareholders from and against any Loss
resulting from the inaccuracy or breach of any representation, warranty,
obligation or covenant made or given by it in or pursuant to this Agreement.

          7.5    NOTICE OF CLAIM. An indemnified party shall give an
indemnifying party prompt written notice of any threatened, potential or actual
claim or the commencement of any action by a third party in respect of which
indemnification may be sought hereunder. For purposes hereof, any notice to be
given by a Purchaser hereunder shall be given to each of the Shareholders and
the Company. The indemnifying party shall have the right to participate in or
control any such action at its own expense and the indemnified party shall have
the right (but not the duty) to participate in the defense thereof, which shall
be at the indemnifying party's expense, unless it is finally determined that
the indemnified party was not entitled to indemnification. Whether or not an
indemnifying party chooses to control the defense of any indemnified party's
action, each party hereto and their respective successors and assigns will
cooperate in the defense and shall take all actions in connection with such
defense as may be reasonably requested.

SECTION 8.  MISCELLANEOUS.

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

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

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

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

                                      17.

<PAGE>   22
          8.5     AMENDMENT AND WAIVER.

                  (a)    This Agreement may be amended or modified only upon the
written consent of the Company and holders of at least a majority of the Shares
and Exchange Series D Shares (treated as if converted and including any
Conversion Shares into which the Shares and/or Exchange Series D Shares have
been converted that have not been sold to the public) and each Shareholder
adversely affected by any such proposed amendment.

                  (b)    The obligations of the Company, each Shareholder and
the rights of the holders of the Shares, the Exchange Series D Shares and the
Conversion Shares under the Agreement may be waived only with the written
consent of the holders of at least a majority of the Shares and/or Exchange
Series D Shares (treated as if converted and including any Conversion Shares
into which the Shares have been converted that have not been sold to the public)
and each Shareholder adversely affected by any such proposed amendment.

          8.6      DELAYS OR OMISSIONS. It is agreed that no delay or omission
to exercise any right, power or remedy accruing to any party, upon any breach,
default or noncompliance by another party under this Agreement, the Investor
Rights Agreement or the Restated Articles, shall impair any such right, power or
remedy, nor shall it be construed to be a waiver of any such breach, default or
noncompliance, or any acquiescence therein, or of or in any similar breach,
default or noncompliance thereafter occurring. It is further agreed that any
waiver, permit, consent or approval of any kind or character on any Purchaser's
part of any breach, default or noncompliance under this Agreement, the Investor
Rights Agreement or under the Restated Articles or any waiver on such party's
part of any provisions or conditions of the Agreement, the Investor Rights
Agreement, or the Restated Articles must be in writing and shall be effective
only to the extent specifically set forth in such writing. All remedies, either
under this Agreement, the Related Agreements, the Restated Articles, by law, or
otherwise afforded to any party, shall be cumulative and not alternative.

          8.7      NOTICES. All notices required or permitted hereunder shall be
in writing and shall be deemed effectively given: (a) upon personal delivery to
the party to be notified; (b) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day; (c) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid; or (d) one (1) day after deposit with
a nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt.  All communications shall be sent to the
Company at the address as set forth on the signature page hereof, to Purchaser
at the address set forth on Exhibit A-1 attached hereto and to the Shareholder
at the address set forth on Exhibit A-2 attached hereto or at such other address
as the Company, a Purchaser or a Shareholder may designate by ten (10) days
advance written notice to the other parties hereto.

          8.8      EXPENSES. The Company shall pay all costs and expenses that
it incurs with respect to the negotiation, execution, delivery and performance
of the Agreement. The Company shall, at the Closing, reimburse the reasonable
fees and expenses of the Purchasers, including the fees and expenses of Cooley
Godward LLP, special counsel for the Purchasers incurred in connection with the
negotiation, execution, delivery and performance of this Agreement; provided,
however, that the Company's obligations hereunder shall not exceed $50,000
without the Company's prior written consent.

          8.9      ATTORNEYS' FEES. In the event that any dispute among the
parties to this Agreement should result in litigation, the prevailing party in
such dispute shall be entitled to recover from the losing party all

                                      18.
<PAGE>   23
fees, costs and expenses of enforcing any right of such prevailing party under
or with respect to this Agreement, including without limitation, such
reasonable fees and expenses of attorneys and accountants, which shall include,
without limitation, all fees, costs and expenses of appeals.

     8.10      TITLES AND SUBTITLES. The titles of the sections and subsections
of the Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.

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

     8.12      BROKER'S FEES. Each party hereto represents and warrants that no
agent, broker, investment banker, person or firm acting on behalf of or under
the authority of such party hereto is or will be entitled to any broker's or
finder's fee or any other commission directly or indirectly in connection with
the transactions contemplated herein. Each party hereto further agrees to
indemnify each other party for any claims, losses or expenses incurred by such
other party as a result of the representation in this Section 8.12 being untrue.

     8.13      EXCULPATION AMONG PURCHASERS. Each Purchaser acknowledges that it
is not relying upon any person, firm, or corporation, other than the Company and
its officers and directors, in making its investment or decision to invest in
the Company. Each Purchaser agrees that no Purchaser, nor any respective
controlling person, officer, director, partner, agent, or employee of any
Purchaser, shall be liable for any action heretofore or hereafter taken or
omitted to be taken by any of them in connection with the Shares, the Series D
Exchange Shares and Conversion Shares.

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

     8.15      BROKER'S FEES. Each party hereto represents and warrants that no
agent, broker, investment banker, person or firm acting on behalf of or under
the authority of such party hereto is or will be entitled to any broker's or
finder's fee or any other commission directly or indirectly in connection with
the transactions contemplated herein. Each party hereto further agrees to
indemnify each other party for any claims, losses or expenses incurred by such
other party as a result of the representation in this Section 8.15 being untrue.

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

                                      19.
<PAGE>   24

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

COMPANY:                                PURCHASERS:

LANDA MANAGEMENT SYSTEMS CORPORATION    BEDROCK CAPITAL PARTNERS I, L.P.

By:   /s/ [ILLEGIBLE]                   By:
   --------------------------------        -------------------------------

Title:    [ILLEGIBLE]                   Title:
      -----------------------------           ----------------------------

SHAREHOLDERS:                           BEDROCK CAPITAL SIDE-BY-SIDE, L.P.

                                        By:
                                           -------------------------------
-----------------------------------
BRACK DAVIS                             Title:
                                              ----------------------------
-----------------------------------
HUGH CURNUTT                            GREYLOCK IX LIMITED PARTNERSHIP
                                        By: GREYLOCK IX GP LIMITED PARTNERSHIP
                                        ITS GENERAL PARTNER

WESTMINSTER HEALTH CARE LIMITED         By:
                                           -------------------------------
By:
   --------------------------------     SEQUOIA CAPITAL VII,
Its:                                    A CALIFORNIA LIMITED PARTNERSHIP
    -------------------------------     BY: SC VII-A MANAGEMENT, LLC A
                                            CALIFORNIA LIMITED LIABILITY
     /s/ GILBERT H. LANG                    COMPANY,
-----------------------------------     ITS GENERAL PARTNER
GILBERT H. LANG

                                        By:
                                           -------------------------------
                                           Managing Member

-----------------------------------
BEULAH T. LANG
                                        SEQUOIA TECHNOLOGY PARTNERS VII
                                        A CALIFORNIA LIMITED PARTNERSHIP
                                        By: SC VII-A MANAGEMENT, LLC A
                                            CALIFORNIA LIMITED LIABILITY
-----------------------------------         COMPANY,
GILBERT H. and BEULAH T. LANG           ITS GENERAL PARTNER

                                        By:
                                           -------------------------------
                                           Managing Member

-----------------------------------
BEULAH J.T. LANG

         SIGNATURE PAGE TO SERIES D PREFERRED STOCK PURCHASE AGREEMENT
<PAGE>   25

                           SQP 1997
                           By: SC VII-A Management, LLC A California
                           Limited Liability Company,
                           Its General Partner

                           By:
                              ---------------------------------------
                                Managing Member

                           SEQUOIA 1997 LLC
                           By: SC VII-A Management, LLC A California
                           Limited Liability Company,
                           Its General Partner

                           By:
                              ---------------------------------------
                                Managing Member

                           SEQUOIA INTERNATIONAL PARTNERS
                           By: SC VII-A Management, LLC A California
                           Limited Liability Company,
                           Its General Partner

                           By:
                              ---------------------------------------
                                Managing Member

                           ------------------------------------------
                           GENE CATTARINA

                           ------------------------------------------
                           JOHN KARLEN

         SIGNATURE PAGE TO SERIES D PREFERRED STOCK PURCHASE AGREEMENT<PAGE>   1

                                                                  EXHIBIT 10.6

                      LANDA MANAGEMENT SYSTEMS CORPORATION

                           INVESTOR RIGHTS AGREEMENT
<PAGE>   2

                               TABLE OF CONTENTS
<TABLE>
<CAPTION>

                                                                    PAGE
                                                                    ----
<S>                                                                <C>
1.   GENERAL..........................................................1

     1.1  Definitions.................................................1

2.   REGISTRATION; RESTRICTIONS ON TRANSFER...........................2

     2.1  Restrictions on Transfer....................................2

     2.2  Demand Registration.........................................3

     2.3  Piggyback Registrations.....................................4

     2.4  Form S-3 Registration.......................................5

     2.5  Expenses of Registration....................................6

     2.6  Obligations of the Company..................................7

     2.7  Termination of Registration Rights..........................8

     2.8  Delay of Registration; Furnishing Information...............8

     2.9  Indemnification.............................................8

     2.10 Assignment of Registration Rights..........................10

     2.11 Amendment of Registration Rights...........................10

     2.12 Limitation on Subsequent Registration Rights...............10

     2.13 "Market Stand-Off" Agreement...............................10

     2.14 Rule 144 Reporting.........................................11

     2.15 Indemnification and Contribution...........................11

3.   COVENANTS OF THE COMPANY........................................12

     3.1  Basic Financial Information and Reporting..................12

     3.2  Inspection Rights..........................................13

     3.3  Confidentiality of Records.................................13

     3.4  Reservation of Common Stock................................13

     3.5  Key Man Insurance..........................................13

     3.6  Proprietary Information and Inventions Agreement...........13

     3.7  Related Party Transactions.................................13

     3.8  Board of Directors Approval................................13

     3.9  Directors' Liability and Indemnification...................14

     3.10 Reincorporation............................................14

     3.11 Executive Compensation.....................................14

     3.12 Real Property Holding Corporation..........................15
</TABLE>
<PAGE>   3
     3.13 Stipulated Activities.............................................. 15

     3.14 Termination of Covenants........................................... 15

4.   MISCELLANEOUS........................................................... 15

     4.1  Governing Law...................................................... 15

     4.2  Survival........................................................... 15

     4.3  Successors and Assigns............................................. 15

     4.4  Entire Agreement................................................... 16

     4.5  Severability....................................................... 16

     4.6  Amendment and Waiver............................................... 16

     4.7  Delays or Omissions................................................ 16

     4.8  Notices............................................................ 16

     4.9  Attorneys' Fees.................................................... 16

     4.10 Titles and Subtitles............................................... 17

     4.11 Counterparts....................................................... 17

Attachment A   Schedule of Investors                                       A-1
Attachment B   Form of Indemnity Agreement                                 B-1
<PAGE>   4
                      LANDA MANAGEMENT SYSTEMS CORPORATION

                           INVESTOR RIGHTS AGREEMENT

          THIS INVESTOR RIGHTS AGREEMENT (the "Agreement") is entered into as
of the 27th day of February, 1998, by and among LANDA MANAGEMENT SYSTEMS
CORPORATION, a California corporation (the "Company"), and the purchasers of
the Company's Series D Preferred Stock ("Series D Stock") set forth on Exhibit
A-1 of that certain Series D Preferred Stock Purchase Agreement of even date
herewith (the "Purchase Agreement") and Attachment A hereto. The purchasers of
the Series D Stock shall be referred to hereinafter as the "Investors" and each
individually as an "Investor."

                                    RECITALS

          WHEREAS, pursuant to the Purchase Agreement, the Investors propose to
purchase an aggregate of Six Million Eight Hundred Thousand (6,800,000) shares
of the Company's Series D Stock, of which Five Million Six Hundred Fifteen
Thousand Eight Hundred Sixty-Seven (5,615,867) shall be issued and sold by the
Company to the Investors and an aggregate of One Million One Hundred
Eighty-Four Thousand One Hundred Thirty-Three (1,184,133) shall be sold to the
Investors by certain holders of outstanding shares of Series D Stock (the
"Shareholders"), which shares represent all shares of Series D Stock currently
held by such Shareholders; and

          WHEREAS, as a condition of entering into the Purchase Agreement, the
Investors have requested that the Company extend to them registration rights,
information rights and other rights as set forth below.

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

1.   GENERAL.

     1.1  DEFINITIONS. As used in this Agreement the following terms shall have
the following respective meanings:

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

          "FORM S-3" means such form under the Securities Act as in effect on
the date hereof or any successor registration form under the Securities Act
subsequently adopted by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the SEC.

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

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

                                       1.
<PAGE>   5
          "REGISTER," "REGISTERED," AND "REGISTRATION" refer to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of effectiveness of such
registration statement or document.

          "REGISTRABLE SECURITIES" means (a) Common Stock of the Company issued
or issuable upon conversion of the Shares; (b) Common Stock of the Company
issued or issuable upon exercise of that certain Warrant to purchase 250,000
shares of Common Stock issued to Westminster Health Care Limited and dated as of
the date hereof; and (c) any Common Stock of the Company issued as (or issuable
upon the conversion or exercise of any warrant, right or other security which is
issued as) a dividend or other distribution with respect to, or in exchange for
or in replacement of, such above-described securities. Notwithstanding the
foregoing, Registrable Securities shall not include any securities sold by a
person to the public either pursuant to a registration statement or Rule 144 or
sold in a private transaction in which the transferror's rights under Section 2
of this Agreement are not assigned.

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

          "REGISTRATION EXPENSES" shall mean all expenses incurred by the
Company in complying with Sections 2.2, 2.3 and 2.4 hereof, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel for the Company, reasonable fees and disbursements not
to exceed Fifteen Thousand Dollars ($15,000) of a single special counsel for the
Holders, blue sky fees and expenses and the expense of any special audits
incident to or required by any such registration (but excluding the compensation
of regular employees of the Company which shall be paid in any event by the
Company).

          "SEC" OR "COMMISSION" means the Securities and Exchange Commission.

          "SECURITIES ACT" shall mean the Securities Act of 1933, as amended.

          "SELLING EXPENSES" shall mean all underwriting discounts and selling
commissions applicable to the sale.

          "SHARES" shall mean (i) the Company's Series D Stock issued and sold
by the Company and (ii) the Company's Series D Stock sold by the Shareholders
pursuant to the Purchase Agreement, and held by the Investors listed on Exhibit
A hereto and their permitted assigns.

2.   REGISTRATION; RESTRICTIONS ON TRANSFER.

     2.1 RESTRICTIONS ON TRANSFER.

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

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

                                       2.
<PAGE>   6

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

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

          (b) Each certificate representing Shares or Registrable Securities
shall (unless otherwise permitted by the provisions of the Agreement) be
stamped or otherwise imprinted with a legend substantially similar to the
following (in addition to any legend required under applicable state securities
laws or as provided elsewhere in this Agreement):

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

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

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

     2.2 DEMAND REGISTRATION.

          (a) Subject to the conditions of this Section 2.2, if the Company
shall receive a written request from the Holders of more than thirty percent
(30%) of the Registrable Securities then outstanding (the "Initiating Holders")
that the Company file a registration statement under the Securities Act
covering the registration of Registrable Securities having an aggregate
offering price to the public in excess of $15,000,000 (a "Qualified Public
Offering"), then the Company shall, within thirty (30) days of the receipt
thereof, give written notice of such request to all Holders, and subject to the
limitations of this Section 2.2, use its best efforts to effect, as soon as
practicable, the registration under the Securities Act of all Registrable
Securities that the Holders request to be registered.

                                       3.
<PAGE>   7

          (b) If the Initiating Holders intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall so
advise the Company as a part of their request made pursuant to this Section 2.2
or any request pursuant to Section 2.4 and the Company shall include such
information in the written notice referred to in Section 2.2(a) or Section
2.4(a), as applicable. In such event, the right of any Holder to include its
Registrable Securities in such registration shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting (unless otherwise mutually agreed by
a majority in interest of the Initiating Holders and such Holder) to the extent
provided herein. All Holders proposing to distribute their securities through
such underwriting shall enter into an underwriting agreement in customary form
with the underwriter or underwriters selected for such underwriting by a
majority in interest of the Initiating Holders (which underwriter or
underwriters shall be reasonably acceptable to the Company). Notwithstanding
any other provision of this Section 2.2 or Section 2.4, if the underwriter
advises the Company that marketing factors require a limitation of the number
of securities to be underwritten (including Registrable Securities) then the
Company shall so advise all Holders of Registrable Securities which would
otherwise be underwritten pursuant hereto, and the number of shares that may be
included in the underwriting shall be allocated to the Holders of such
Registrable Securities on a pro rata basis based on the number of Registrable
Securities held by all such Holders (including the Initiating Holders). Any
Registrable Securities excluded or withdrawn from such underwriting shall be
withdrawn from the registration.

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

               (i)   prior to the second anniversary of the date of this
Agreement; or

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

               (iii) during the period starting with the date of filing of, and
ending on the date one hundred eighty (180) days following the effective date
of the registration statement pertaining to the Initial Offering; provided that
the Company makes reasonable good faith efforts to cause such registration
statement to become effective;

               (iv)  if within thirty (30) days of receipt of a written request
from Initiating Holders pursuant to Section 2.2(a), the Company gives notice to
the Holders of the Company's intention to make its Initial Offering within
ninety (90) days; or

               (v)   if the Company shall furnish to Holders requesting a
registration statement pursuant to this Section 2.2, a certificate signed by
the Chairman of the Board stating that in the good faith judgment of the Board
of Directors of the Company, it would be seriously detrimental to the Company
and its shareholders for such registration statement to be effected at such
time, in which event the Company shall have the right to defer such filing for
a period of not more than ninety (90) days after receipt of the request of the
Initiating Holders; provided that such right to delay a request shall be
exercised by the Company not more than twice in any twelve (12) month period.

     2.3 PIGGYBACK REGISTRATIONS. The Company shall notify all Holders of
Registrable Securities in writing at least thirty (30) days prior to the filing
of any registration statement under the Securities Act for purposes of a public
offering of securities of the Company (including, but not limited to,
registration statements relating to secondary offerings of securities of the
Company, but excluding registration statements relating to employee benefit
plans or with respect to corporate reorganizations or other transactions under
Rule 145 of the Securities Act) and will afford each such Holder an opportunity
to

                                       4.
<PAGE>   8
include in such registration statement all or part of such Registrable
Securities held by such Holder. Each Holder desiring to include in any such
registration statement all or any part of the Registrable Securities held by it
shall, within fifteen (15) days after the above-described notice from the
Company, so notify the Company in writing. Such notice shall state the intended
method of disposition of the Registrable Securities by such Holder. If a Holder
decides not to include all of its Registrable Securities in any registration
statement thereafter filed by the Company, such Holder shall nevertheless
continue to have the right to include any Registrable Securities in any
subsequent registration statement or registration statements as may be filed by
the Company with respect to offerings of its securities, all upon the terms and
conditions set forth herein.

          (a) UNDERWRITING. If the registration statement under which the
Company gives notice under this Section 2.3 is for an underwritten offering, the
Company shall so advise the Holders of Registrable Securities. In such event,
the right of any such Holder to be included in a registration pursuant to this
Section 2.3 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to distribute
their Registrable Securities through such underwriting shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company. Notwithstanding any other
provision of the Agreement, if the underwriter determines in good faith that
marketing factors require a limitation of the number of shares to be
underwritten, the number of shares that may be included in the underwriting
shall be allocated, first, to the Company; second, to the Holders on a pro rata
basis based on the total number of Registrable Securities held by the Holders;
and third, to any shareholder of the Company (other than a Holder) on a pro rata
basis. No such reduction shall reduce the securities being offered by the
Company for its own account to be included in the registration and underwriting
or (ii) reduce the amount of securities of the selling Holders included in the
registration below twenty-five (25%) of the total amount of securities included
in such registration, unless such offering is the Initial Offering and such
registration does not include shares of any other selling shareholders, in which
event any or all of the Registrable Securities of the Holders may be excluded in
accordance with the immediately preceding sentence. In no event will shares of
any other selling shareholder be included in such registration which would
reduce the number of shares which may be included by Holders without the written
consent of Holders of not less than a majority of the Registrable Securities
proposed to be sold in the offering.

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

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

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

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

                                       5.
<PAGE>   9
all or such portion of the Registrable Securities of any other Holder or
Holders joining in such request as are specified in a written request given
within fifteen (15) days after receipt of such written notice from the Company,
provided, however, that the Company shall not be obligated to effect any such
registration, qualification or compliance pursuant to this Section 2.4:

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

               (ii)  if the Holders, together with the holders of any other
securities of the Company entitled to inclusion in such registration, propose
to sell Registrable Securities and such other securities (if any) at an
aggregate price to the public of less than $500,000, or

               (iii) if the Company shall furnish to the Holders a certificate
signed by the Chairman of the Board of Directors of the Company stating that in
the good faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company and its shareholders for such Form S-3
Registration to be effected at such time, in which event the Company shall have
the right to defer the filing of the Form S-3 registration statement for a
period of not more than ninety (90) days after receipt of the request of the
Holder or Holders under this Section 2.4; provided, that such right to delay a
request shall be exercised by the Company not more than once in any twelve (12)
month period, or

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

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

          (c) Subject to the foregoing, the Company shall file a Form S-3
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders. All such Registration Expenses incurred in
connection with registrations requested pursuant to this Section 2.4 after the
first two (2) registrations shall be paid by the selling Holders pro rata in
proportion to the number of shares sold by each.

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

                                       6.
<PAGE>   10

     2.6 OBLIGATIONS OF THE COMPANY. Whenever required to effect the
registration of any Registrable Securities, the Company shall, as expeditiously
as reasonably possible:

          (a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use all reasonable efforts to cause
such registration statement to become effective, and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder, keep
such registration statement effective for up to ninety (90) days or, if
earlier, until the Holder or Holders have completed the distribution related
thereto.

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

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

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

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

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

          (g) Furnish, at the request of a majority of the Holders
participating in the registration, on the date that such Registrable Securities
are delivered to the underwriters for sale, if such securities are being sold
through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective, (i) an opinion, dated as of such date, of the
counsel representing the Company for the purposes of such registration, in form
and substance as is customarily given to underwriters in an underwritten public
offering and reasonably satisfactory to a majority in interest of the Holders
requesting registration, addressed to the underwriters, if any, and to the
Holders requesting registration of Registrable Securities and (ii) a letter
dated as of such date, from the independent certified public accountants of the
Company, in form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public offering and
reasonably satisfactory to a majority in interest of the Holders requesting
registration, addressed to the underwriters, if any, and if permitted by
applicable accounting standards, to the Holders requesting registration of
Registrable Securities.

                                       7.

<PAGE>   11
     2.7 TERMINATION OF REGISTRATION RIGHTS. All registration rights granted
under this Section 2 shall terminate and be of no further force and effect five
(5) years after the date of the Company's Initial Offering. In addition, a
Holder's registration rights shall expire if (a) the Company has completed its
Initial Offering and is subject to the provisions of the Exchange Act, (b) such
Holder (together with its affiliates, partners and former partners, members and
former members) holds less than 1% of the Company's outstanding Common Stock
(treating all share of convertible Preferred Stock on an as converted basis) and
(c) all Registrable Securities held by and issuable to such Holder (and its
affiliates, partners and former partners) may be sold under Rule 144 during any
ninety (90) day period.

     2.8 DELAY OF REGISTRATION; FURNISHING INFORMATION.

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

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

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

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

          (a) To the extent permitted by law, the Company will indemnify and
hold harmless each Holder, the partners, officers, directors and legal counsel
of each Holder, any underwriter (as defined in the Securities Act) for such
Holder and each person, if any, who controls such Holder or underwriter within
the meaning of the Securities Act or the Exchange Act, against any losses,
claims, damages, or liabilities (joint or several) to which they may become
subject under the Securities Act, the Exchange Act or other federal or state
law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively a "Violation") by the
Company: (i) any untrue statement or alleged untrue statement of a material
fact contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the
statements therein not misleading, or (iii) any violation or alleged violation
by the Company of the Securities Act, the Exchange Act, any state securities
law or any rule or regulation promulgated under the Securities Act, the
Exchange Act or any state securities law in connection with the offering
covered by such registration statement; and the Company will reimburse each
such Holder, partner, officer, director, legal counsel, underwriter or
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided however, that the indemnity agreement contained in
this Section 2.9(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Company, which consent shall not be

                                       8.
<PAGE>   12
unreasonably withheld, nor shall the Company be liable in any such case for any
such loss, claim, damage, liability or action to the extent that it arises out
of or is based upon a Violation which occurs in reliance upon and in conformity
with written information furnished expressly for use in connection with such
registration by such Holder, partner, officer, director, legal counsel,
underwriter or controlling person of such Holder.

          (b)  To the extent permitted by law, each Holder will, if Registrable
Securities held by such Holder are included in the securities as to which such
registration qualifications or compliance is being effected, indemnify and hold
harmless the Company, each of its directors, its officers, and legal counsel
and each person, if any, who controls the Company within the meaning of the
Securities Act, any underwriter and any other Holder selling securities under
such registration statement or any of such other Holder's partners, directors
or officers or any person who controls such Holder, against any losses, claims,
damages or liabilities (joint or several) to which the Company or any such
director, officer, controlling person, underwriter or other such Holder, or
partner, director, officer or controlling person of such other Holder may
become subject under the Securities Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages or liabilities (or actions
in respect thereto) arise out of or are based upon any Violation, in each case
to the extent (and only to the extent) that such Violation occurs in reliance
upon and in conformity with written information furnished by such Holder under
an instrument duly executed by such Holder and stated to be specifically for
use in connection with such registration, and each such Holder will reimburse
any legal or other expenses reasonably incurred by the Company or any such
director, officer, legal counsel, controlling person, underwriter or other
Holder, or partner, officer, director, legal counsel or controlling person of
such other Holder in connection with investigating or defending any such loss,
claim, damage, liability or action if it is judicially determined that there
was such a Violation; provided, however, that the indemnity agreement contained
in this Section 2.9(b) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Holder, which consent shall not be unreasonably withheld;
provided further, that in no event shall any indemnity under this Section 2.9
exceed the proceeds from the offering received by such Holder.

          (c)  Promptly after receipt by an indemnified party under this Section
2.9 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 2.9, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if materially prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 2.9, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section 2.9.

          (d)  If the indemnification provided for in this Section 2.9 is held
by a court of competent jurisdiction to be unavailable to an indemnified party
with respect to any losses, claims, damages or liabilities referred to herein,
the indemnifying party, in lieu of indemnifying such indemnified party
thereunder, shall to the extent permitted by applicable law contribute to the
amount paid or payable by such

                                       9

<PAGE>   13
indemnified party as a result of such loss, claim, damage or liability in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other in connection
with the Violation(s) that resulted in such loss, claim, damage or
liability, as well as any other relevant equitable considerations. The relative
fault of the indemnifying party and of the indemnified party shall be determined
by a court of law by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission to state a material
fact relates to information supplied by the indemnifying party or by the
indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission;
provided, that in no event shall any contribution by a Holder hereunder exceed
the proceeds from the offering received by such Holder.

          (e)  The obligations of the Company and the Holders under this Section
2.9 shall survive completion of any offering of Registrable Securities in a
registration statement and the termination of this agreement. No Indemnifying
Party, in the defense of any such claim or litigation, shall, except with the
consent of each Indemnified Party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release from
all liability in respect to such claim or litigation.

     2.10 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the Company to
register Registrable Securities pursuant to this Section 2 may be assigned by a
Holder to a transferee or assignee of Registrable Securities which (a) is a
subsidiary, parent, general partner, limited partner or retired partner, member
or former member of a Holder, (b) is a Holder's family member or trust for the
benefit of an individual Holder, or (c) acquires at least two hundred fifty
thousand (250,000) shares of Registrable Securities (as adjusted for stock
splits and combinations); provided, however, (i) the transferor shall, within
ten (10) days after such transfer, furnish to the Company written notice of the
name and address of such transferee or assignee and the securities with respect
to which such registration rights are being assigned and (ii) such transferee
shall agree to be subject to all restrictions set forth in this Agreement.
Notwithstanding the foregoing, and transfer effected pursuant to Section 2.3 of
the Stock Purchase Agreement shall not be subject to the limitation set forth in
subsection (c) above.

     2.11 AMENDMENT OF REGISTRATION RIGHTS.  Any provision of this Section 2
may be amended and the observance thereof may be waived (either generally or in
a particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Holders of at least a majority of the
Registrable Securities then outstanding. Any amendment or waiver effected in
accordance with this Section 2.11 shall be binding upon each Holder and the
Company. By acceptance of any benefits under this Article II, Holders of
Registrable Securities hereby agree to be bound by the provisions hereunder.

     2.12 LIMITATION ON SUBSEQUENT REGISTRATION RIGHTS. After the date of this
Agreement, the Company shall not, without the prior written consent of the
Holders of a majority of the Registrable Securities then outstanding, enter
into any agreement with any holder or prospective holder of any securities of
the Company that would grant such holder registration rights senior to those
granted to the Holders hereunder.

     2.13 "MARKET STAND-OFF" AGREEMENT. Each Holder hereby agrees that
such Holder shall not sell or otherwise transfer or dispose of any Common Stock
(or other securities) of the Company held by such Holder (other than those
included in the registration) for a period specified by the representative of
the underwriters of Common Stock (or other securities) of the Company not to
exceed one hundred eighty (180) days following the effective date of a
registration statement of the Company filed under the Securities Act, provided
that:

                                      10.
<PAGE>   14

               (i)   such agreement shall apply only to the Company's Initial
Offering; and

               (ii)  all officers and directors of the Company and holders of
at least one percent (1%) of the Company's voting securities enter into similar
agreements.

     Each Holder agrees to execute and deliver such other agreements as may be
reasonably requested by the Company or the underwriter which are consistent
with the foregoing or which are necessary to give further effect thereto. The
obligations described in this Section 2.13 shall not apply to a registration
relating solely to employee benefit plans on Form S-1 or Form S-8 or similar
forms that may be promulgated in the future, or a registration relating solely
to a Commission Rule 145 transaction on Form S-4 or similar forms that may be
promulgated in the future. The Company may impose stop-transfer instructions
with respect to the shares of Common Stock (or other securities) subject to the
foregoing restriction until the end of said one hundred eighty (180) day period.

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

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

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

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

     2.15     INDEMNIFICATION AND CONTRIBUTION. In addition to the
indemnification obligations of the Company pursuant to Sections 2.9 and 3.9
hereto:

          (a) The Company agrees to indemnify and hold harmless each Investor
and its general partners (collectively, the "Indemnitees") against any
investigations, proceedings, claims, or actions and for any expenses, damages,
liabilities, or losses (joint or several) arising out of any such
investigation, proceeding, claim or action, to which any such Investor may
become subject under the Securities Act and any rules or regulation promulgated
thereunder, the Exchange Act and any rules or regulations promulgated
thereunder, or any state law or regulation, or common law, arising out of,
related to or in any way attributable to an Indemnitee's investment in the
Company that arise out of or are based upon (i) any breach of any
representation, warranty, agreement or covenant of the Company contained herein
or in the Purchase Agreement, (ii) any untrue statement or alleged omission to
state a material fact in any registration statement filed by the Company or any
amendment or supplement thereto, or (iii) any untrue statement or alleged
untrue statement of any material fact or the omission or alleged omission to
state a material fact in any prospectus distributed by the Company or any
amendment or supplement thereto or (iv) any round of financing of the Company
(including but not limited to non-participation or non-pro rata

                                      11.

<PAGE>   15
participation), or (v) any statement by or on behalf of the Company or action
taken by or on behalf of the Company. Upon written request, the Company agrees
to reimburse each Indemnitee for any legal or other expenses reasonably
incurred in connection with investigating or defending any such investigation,
proceeding, claim, or action, as such expenses or other costs are incurred;
provided, however, each Indemnitee shall reimburse the Company for any such
sums paid to it if it is ultimately determined by final judgment of a court of
competent jurisdiction that such Indemnitee is not entitled to indemnification.
The Indemnitees, collectively, may select their own counsel. This indemnity
agreement shall extend upon the same terms and conditions to, and shall inure
to the benefit of, each person, if any, who controls any Indemnitee within the
meaning of the Securities Act or the Exchange Act.

3.   COVENANTS OF THE COMPANY.

     3.1  BASIC FINANCIAL INFORMATION AND REPORTING.

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

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

          (c)  The Company will furnish each Investor, as soon as practicable
after the end of the first, second and third quarterly accounting periods in
each fiscal year of the Company, and in any event within forty-five (45) days
thereafter, a consolidated balance sheet of the Company as of the end of each
such quarterly period, and a consolidated statement of income and a
consolidated statement of cash flows of the Company for such period and for the
current fiscal year to date, prepared in accordance with generally accepted
accounting principles, with the exception that no notes need be attached to such
statements and year-end audit adjustments may not have been made.

          (d)  So long as an Investor (with its affiliates) shall own not less
than two hundred fifty thousand (250,000) shares of Registrable Securities (as
adjusted for stock splits and combinations) (a "Major Investor"), the Company
will furnish each such Major Investor (i) at least thirty (30) days prior to
the beginning of each fiscal year an annual budget and operating plans for such
fiscal year (and as soon as available, any subsequent revisions thereto); and
(ii) as soon as practicable after the end of each month, and in any event
within twenty (20) days thereafter, a consolidated balance sheet of the Company
as of the end of each such month, and a consolidated statement of income and a
consolidated statement of cash flows of the Company for such month and for the
current fiscal year to date, including a comparison to plan figures for such
period, prepared in accordance with generally accepted accounting principles
consistently applied, with the exception that no notes need be attached to such
statements and year-end audit adjustments may not have been made.

                                       12.
<PAGE>   16
     3.2 INSPECTION RIGHTS. Each Major Investor shall have the right to visit
and inspect any of the properties of the Company or any of its subsidiaries,
and to discuss the affairs, finances and accounts of the Company or any of its
subsidiaries with its officers, and to review such information as is reasonably
requested at all such reasonable times and as often as may be reasonably
requested; provided, however, that the Company shall not be obligated under
this Section 3.2 with respect to a competitor of the Company or with respect to
information which the Board of Directors determines in good faith is
confidential and should not, therefore, be disclosed.

     3.3 CONFIDENTIALITY OF RECORDS. Each Investor agrees to use, and to use
its best efforts to insure that its authorized representatives use, the same
degree of care as such Investor uses to protect its own confidential
information to keep confidential any information furnished to it which the
Company identifies as being confidential or proprietary (so long as such
information is not in the public domain), except that such Investor may
disclose such proprietary or confidential information to any partner,
subsidiary or parent of such Investor for the purpose of evaluating its
investment in the Company as long as such partner, subsidiary or parent is
advised of the confidentiality provisions of this Section 3.3.

     3.4 RESERVATION OF COMMON STOCK. The Company will at all times reserve and
keep available, solely for issuance and delivery upon the conversion of the
Series D Stock, all Common Stock issuable from time to time upon such
conversion.

     3.5 KEY MAN INSURANCE. Subject to the approval of the Board of Directors,
the Company will use its best efforts to obtain and maintain in full force and
effect term life insurance in the amount of two million dollars ($2,000,000) on
the lives of each of Bryan Lang, Stephen Kay and one million dollars
($1,000,000) on the life of Brandon L. Raines, naming the Company as
beneficiary.

     3.6 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT. The Company shall
require all employees and consultants to execute and deliver a Proprietary
Information and Inventions Agreement in the form attached to the Purchase
Agreement.

     3.7 RELATED PARTY TRANSACTIONS. The Company shall not enter into any
agreement with any shareholder, officer or director of the Company, or any
"affiliate" or "associate" of any such person (as such terms are defined in the
rules and regulations promulgated under the Securities Act), including without
limitation any agreement or other arrangement providing for the furnishing of
services by, rental of real or personal property from, or otherwise requiring
payments to, any such person or entity, without the consent of at least a
majority of the members of the Company's Board of Directors having no interest
in such agreement or arrangement.

     3.8 BOARD OF DIRECTORS APPROVAL. The Company shall not, without the
approval of a majority of the Board of Directors with all Directors voting,
take any of the following actions:

          (a) repurchase or redeem any equity securities, pay or declare a
dividend, whether in cash or property, or otherwise authorize any distribution
to shareholders (except for acquisitions of common stock by the Company
pursuant to agreements which permit the company to repurchase such shares upon
termination of employment, the exercise of the Company's right of first refusal
upon a proposed transfer, or as set forth in Company's Articles of
Incorporation in connection with the rights preferences and privileges of the
Series D Stock);

          (b) purchase equity securities of, loan to or invest in any business
entity more than one hundred thousand ($100,000) dollars;

                                      13.
<PAGE>   17
          (c)  incur any debt in any twelve month period in excess of one
hundred thousand ($100,000) dollars, except pursuant to short term commercial
lending arrangements of six months or less for working capital purposes or in
accordance with the company's budget as previously approved by the company's
Board of Directors or otherwise in the ordinary course of business in accordance
with the Company's past practices;

          (d)  sell or otherwise transfer securities of any of its subsidiaries
to any third party;

          (e)  except as required by law in the event of an employee's
termination, pay any deferred salaries or fees except for those employees' and
directors' salaries and fees incurred from October 1, 1997 to the date hereof;
or

          (f)  make any fundamental change in the operations of the Company as
now conducted or as proposed to be conducted.

     3.9  DIRECTORS' LIABILITY AND INDEMNIFICATION. The Company's Articles of
Incorporation and Bylaws shall provide (a) for elimination of the liability of
director to the maximum extent permitted by law and (b) for indemnification of
directors for acts on behalf of the Company to the maximum extent permitted by
law. In addition, the Company shall enter into and use its best efforts to at
all times maintain indemnification contracts substantially in the form attached
as Attachment B hereto with each of its directors to indemnify such directors to
the maximum extent permissible under California law.

     3.10 REINCORPORATION. Subject to the approval of the Board of Directors and
the shareholders of the Company, the Company shall, within six (6) months of the
date hereof, reincorporate the Company in the State of Delaware. In the event of
any delay, the Company shall use its best efforts to effect such reincorporation
as promptly as possible following the expiration of such six (6) month period.

     3.11 EXECUTIVE COMPENSATION. Subject to the approval of the Board of
Directors of the Company, promptly following the date hereof, (a) the Company
and Bryan Lang ("Lang") shall enter into an agreement which shall include,
without limitation, provision for (i) Lang's waiver of all prospective bonuses
or commissions that may otherwise be due under agreements between Lang and the
Company as of the date hereof, (ii) bonuses to be paid to Lang based upon
performance criteria mutually agreed upon by Lang and the Company, and (iii) a
waiver of all deferred compensation owed to Lang by the Company as of the date
hereof in exchange for the right to receive, as a performance bonus, $335,000
upon an Initial Offering, or a change of control (as defined below) in which the
aggregate proceeds payable to the Company and/or its Shareholders exceeds Forty
Million Dollars ($40,000,000) and (b) the Company and Stephen Kay ("Kay") shall
enter into an agreement which shall include, without limitation, provision for
(i) Kay's waiver of all prospective bonuses or commissions that may otherwise be
due under agreements between Kay and the Company as of the date hereof and (ii)
bonuses to be paid to Kay based upon performance criteria mutually agreed upon
by Kay and the Company.

     A "Change in Control" shall be deemed to have occurred if (i) a tender
offer shall be made and consummated for the ownership of more than fifty percent
(50%) of the outstanding voting securities of the Company, (ii) the Company
shall be merged or consolidate with another corporation and as a result of such
merger or consolidation less than fifty percent (50%) of the outstanding voting
securities of the surviving or resulting corporation shall be owned in the
aggregate by the former shareholders of the Company, as the same shall have
existed immediately prior to such merger or consolidation, (iii) the Company
shall sell all or substantially all of its assets to another corporation which
is not a wholly-owned subsidiary, or (iv) a person within the meaning of Section
3(a)(9) or Section 13(d)(3) (as in effect on the date hereof) of the

                                       14.
<PAGE>   18
Securities and Exchange act of 1934 ("Exchange Act"), shall acquire more than
fifty percent (50%) of the outstanding voting securities of the Company
(whether directly, indirectly, beneficially or of record). For purposes hereof,
ownership of voting securities shall take into account and shall including
ownership as determined by applying the provisions of Rule 13d-3(d)(1)(i) (as
in effect on the date hereof) pursuant to the Exchange Act.

     3.12 REAL PROPERTY HOLDING CORPORATION. The Company covenants that it will
operate in a manner such that it will not become a "United States real property
holding corporation" as that term is defined in Section 897(c)(2) of the
Internal Revenue Code of 1986, as amended, and the regulations thereunder
("FIRPTA"). The Company agrees to make determinations as to its status as a
USRPHC, and will file statements concerning those determinations with the
Internal Revenue Service, in the manner and at the times required under Reg.
Section 1.897-2(h), or any supplementary or successor provision thereto. Within
30 days of a request from an Investor or any of its partners, the Company will
inform the requesting party, in the manner set forth in Reg. Section
1.897-2(h)(1)(iv) or any supplementary or successor provision thereto, whether
that party's interest in the Company constitutes a United States real property
interest (within the meaning of Internal Revenue Code Section 897(c)(1) and the
regulations thereunder) and whether the Company has provided to the Internal
Revenue Service all required notices as to its USRPHC status.

     3.13 STIPULATED ACTIVITIES. Each senior officer of the Company (each, a
"Principal") shall, within ten (10) days of the occurrence thereof, provide the
Board of Directors of the Company with a list and description of each
Stipulated Activity (as defined in the Purchase Agreement) in which such
Principal is engaged or otherwise involved which has commenced, expired or been
modified since such Principal delivered the most recent such list and
description to the Board of Directors.

     3.14 TERMINATION OF COVENANTS. All covenants of the Company contained in
Section 3 of this Agreement shall expire and terminate as to each Investor on
the effective date of the registration statement pertaining to the Initial
Offering.

4.   MISCELLANEOUS.

     4.1  GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California.

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

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

                                      15.
<PAGE>   19
     4.4  ENTIRE AGREEMENT. This Agreement, the Exhibits and Schedules hereto,
the Purchase Agreement and the other documents delivered pursuant thereto
constitute the full and entire understanding and agreement between the parties
with regard to the subjects hereof and no party shall be liable or bound to any
other in any manner by any representations, warranties, covenants and agreements
except as specifically set forth herein and therein.

     4.5  SEVERABILITY. In case any provision of the Agreement shall be invalid,
illegal, or unenforceable, the validity, legality, and unenforceability of the
remaining provisions shall not in any way be affected or impaired thereby.

     4.6  AMENDMENT AND WAIVER.

          (a) Except as otherwise expressly provided, this Agreement may be
amended or modified only upon the written consent of the Company and the holders
of at least a majority of the Registrable Securities.

          (b) Except as otherwise expressly provided, the obligations of the
Company and the rights of the Holders under this Agreement may be waived only
with the written consent of the holders of at least a majority of the
Registrable Securities.

          (c) Notwithstanding the foregoing, this Agreement may be amended with
only the written consent of the Company to include additional purchasers of
Shares as "Investors," "Holders" and parties hereto.

     4.7  DELAYS OR OMISSIONS. It is agreed that no delay or omission to
exercise any right, power, or remedy accruing to any Holder, upon any breach,
default, or noncompliance of the Company under this Agreement shall impair any
such right, power, or remedy, nor shall it be construed to be a waiver of any
such breach, default or noncompliance, or any acquiescence therein, or of any
similar breach, default or noncompliance thereafter occurring. It is further
agreed that any waiver, permit, consent, or approval of any kind or character on
any Holder's part of any breach, default or noncompliance under the Agreement or
any waiver on such Holder's part of any provisions or conditions of this
Agreement must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement, by law, or otherwise afforded to Holders, shall be cumulative and not
alternative.

     4.8  NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the
party to be notified, (b) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient; if not, then on the next business
day, (c) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (d) one (1) day after deposit with
a nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the party
to be notified at the address as set forth on the signature pages hereof or
Exhibit A hereto or at such other address as such party may designate by ten
(10) days advance written notice to the other parties hereto.

     4.9  ATTORNEYS' FEES. In the event that any dispute among the parties to
this Agreement should result in litigation, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include,  without limitation, all fees,
costs and expenses of appeals.

                                      16.
<PAGE>   20

     4.10 TITLES AND SUBTITLES. The titles of the sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.

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

                                      17.
<PAGE>   21
     IN WITNESS WHEREOF, the parties hereto have executed this INVESTOR RIGHTS
AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                     INVESTORS:

LANDA MANAGEMENT SYSTEMS CORPORATION         BEDROCK CAPITAL PARTNERS I, L.P.

By: /s/ [ILLEGIBLE]                          By:
   ---------------------------------            --------------------------------

Title: [ILLEGIBLE]                           Title:
      ------------------------------               -----------------------------

                                             BEDROCK CAPITAL SIDE-BY-SIDE, L.P.

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

                                             Title:
                                                   -----------------------------

                                             GREYLOCK IX LIMITED PARTNERSHIP
                                             BY: GREYLOCK IX GP LIMITED
                                             PARTNERSHIP,
                                             ITS GENERAL PARTNER

                                             By: /s/ [ILLEGIBLE]
                                                --------------------------------

                                             SEQUOIA CAPITAL VII
                                             A CALIFORNIA LIMITED PARTNERSHIP
                                             BY: SC VII-A MANAGEMENT, LLC A
                                             CALIFORNIA LIMITED LIABILITY
                                             COMPANY,
                                             ITS GENERAL PARTNER

                                             By:
                                                --------------------------------
                                                 Managing Member

                                             SEQUOIA TECHNOLOGY PARTNERS VII
                                             A CALIFORNIA LIMITED PARTNERSHIP
                                             BY: SC VII-A MANAGEMENT, LLC A
                                             CALIFORNIA LIMITED LIABILITY
                                             COMPANY,
                                             ITS GENERAL PARTNER

                                             By:
                                                --------------------------------
                                                 Managing Member

                  SIGNATURE PAGE TO INVESTOR RIGHTS AGREEMENT
<PAGE>   22
                                             SQP 1997
                                             BY: SC VII-A MANAGEMENT, LLC A
                                             CALIFORNIA LIMITED LIABILITY
                                             COMPANY,
                                             ITS GENERAL PARTNER

                                             By:
                                                --------------------------------
                                                 Managing Member

                                             SEQUOIA 1997 LLC
                                             BY: SC VII-A MANAGEMENT, LLC A
                                             CALIFORNIA LIMITED LIABILITY
                                             COMPANY,
                                             ITS GENERAL PARTNER

                                             By:
                                                --------------------------------
                                                 Managing Member

                                             SEQUOIA INTERNATIONAL PARTNERS
                                             BY: SC VII-A MANAGEMENT, LLC A
                                             CALIFORNIA LIMITED LIABILITY
                                             COMPANY,
                                             ITS GENERAL PARTNER

                                             By:
                                                --------------------------------
                                                 Managing Member

                                             -----------------------------------
                                             GENE CATTARINA

                                             -----------------------------------
                                             JOHN KARLEN

                  SIGNATURE PAGE TO INVESTOR RIGHTS AGREEMENT

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