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                                                                    EXHIBIT 10.4

                               SABA SOFTWARE, INC.
                        2000 EMPLOYEE STOCK PURCHASE PLAN

               The following constitute the provisions of the 2000 Employee
Stock Purchase Plan of Saba Software, Inc.

               1. Purpose. The purpose of the Plan is to provide employees of
the Company and its Designated Parents or Subsidiaries with an opportunity to
purchase Common Stock of the Company through accumulated payroll deductions. It
is the intention of the Company to have the Plan qualify as an "Employee Stock
Purchase Plan" under Section 423 of the Code. The provisions of the Plan,
accordingly, shall be construed so as to extend and limit participation in a
manner consistent with the requirements of that section of the Code.

               2. Definitions. As used herein, the following definitions shall
apply:

               (a) "Administrator" means either the Board or a committee of the
Board that is responsible for the administration of the Plan as is designated
from time to time by resolution of the Board.

               (b) "Applicable Laws" means the legal requirements relating to
the administration of employee stock purchase plans, if any, under applicable
provisions of federal securities laws, state corporate and securities laws, the
Code, the rules of any applicable stock exchange or national market system, and
the rules of any foreign jurisdiction applicable to participation in the Plan by
residents therein.

               (c) "Board" means the Board of Directors of the Company.

               (d) "Change in Control" means a change in ownership or control of
the Company effected through the direct or indirect acquisition by any person or
related group of persons (other than an acquisition from or by the Company or by
a Company-sponsored employee benefit plan or by a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Company) of beneficial ownership (within the meaning of Rule 13d-3 of the
Exchange Act) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Company's outstanding securities.

               (e) "Code" means the Internal Revenue Code of 1986, as amended.

               (f) "Common Stock" means the common stock of the Company.

               (g) "Company" means Saba Software, Inc., a Delaware corporation.

               (h) "Compensation" means an Employee's base salary, bonuses and
commissions from the Company or one or more Designated Parents or Subsidiaries,
including such amounts of base salary as are deferred by the Employee (i) under
a qualified cash or deferred arrangement described in Section 401(k) of the
Code, or (ii) to a plan qualified under Section 125 of the Code. Compensation
does

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not include overtime, annual awards, other incentive payments (except to the
extent expressly referenced in the first sentence), reimbursements or other
expense allowances, fringe benefits (cash or noncash), moving expenses, deferred
compensation, contributions (other than contributions described in the first
sentence) made on the Employee's behalf by the Company or one or more Designated
Parents or Subsidiaries under any employee benefit or welfare plan now or
hereafter established, and any other payments not specifically referenced in the
first sentence.

               (i) "Corporate Transaction" means any of the following
transactions:

                      (1) a merger or consolidation in which the Company is not
               the surviving entity, except for a transaction the principal
               purpose of which is to change the state in which the Company is
               incorporated;

                      (2) the sale, transfer or other disposition of all or
               substantially all of the assets of the Company (including the
               capital stock of the Company's subsidiary corporations) in
               connection with complete liquidation or dissolution of the
               Company;

                      (3) any reverse merger in which the Company is the
               surviving entity but in which securities possessing more than
               fifty percent (50%) of the total combined voting power of the
               Company's outstanding securities are transferred to a person or
               persons different from those who held such securities immediately
               prior to such merger; or

                      (4) acquisition by any person or related group of persons
               (other than the Company or by a Company-sponsored employee
               benefit plan) of beneficial ownership (within the meaning of Rule
               13d-3 of the Exchange Act) of securities possessing more than
               fifty percent (50%) of the total combined voting power of the
               Company's outstanding securities (whether or not in a transaction
               also constituting a Change in Control), but excluding any such
               transaction that the Administrator determines shall not be a
               Corporate Transaction

               (j) "Designated Parents or Subsidiaries" means the Parents or
Subsidiaries which have been designated by the Administrator from time to time
as eligible to participate in the Plan.

               (k) "Effective Date" means the effective date of the Registration
Statement relating to the Company's initial public offering of its Common Stock.
However, should any Designated Parent or Subsidiary become a participating
company in the Plan after such date, then such entity shall designate a separate
Effective Date with respect to its employee-participants.

               (l) "Employee" means any individual, including an officer or
director, who is an employee of the Company or a Designated Parent or Subsidiary
for purposes of Section 423 of the Code. For purposes of the Plan, the
employment relationship shall be treated as continuing intact while the
individual is on sick leave or other leave of absence approved by the
individual's employer. Where the period of leave exceeds ninety (90) days and
the individual's right to reemployment is not guaranteed either by statute or by
contract, the employment relationship will

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be deemed to have terminated on the ninety-first (91st) day of such leave, for
purposes of determining eligibility to participate in the Plan.

               (m) "Enrollment Date" means the first day of each Offer Period.

               (n) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

               (o) "Exercise Date" means the last day of each Purchase Period.

               (p) "Fair Market Value" means, as of any date, the value of
Common Stock determined as follows:

                      (1) Where there exists a public market for the Common
               Stock, the Fair Market Value shall be (A) the closing price for a
               share of Common Stock for the last market trading day prior to
               the time of the determination (or, if no closing price was
               reported on that date, on the last trading date on which a
               closing price was reported) on the stock exchange determined by
               the Administrator to be the primary market for the Common Stock
               or the Nasdaq National Market, whichever is applicable or (B) if
               the Common Stock is not traded on any such exchange or national
               market system, the average of the closing bid and asked prices of
               a share of Common Stock on the Nasdaq Small Cap Market for the
               day prior to the time of the determination (or, if no such prices
               were reported on that date, on the last date on which such prices
               were reported), in each case, as reported in The Wall Street
               Journal or such other source as the Administrator deems reliable;

                      (2) In the absence of an established market of the type
               described in (1), above, for the Common Stock, and subject to
               (3), below, the Fair Market Value thereof shall be determined by
               the Administrator in good faith; or

                      (3) On the initial Effective Date of the Plan, the Fair
               Market Value shall be the price at which the Board, or if
               applicable, the Pricing Committee of the Board, and the
               underwriters agree to offer the Common Stock to the public in the
               initial public offering of the Common Stock.

               (q) "Offer Period" means an Offer Period established pursuant to
Section 4 hereof.

               (r) "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.

               (s) "Participant" means an Employee of the Company or Designated
Parent or Subsidiary who is actively participating in the Plan.

               (t) "Plan" means this Employee Stock Purchase Plan.

               (u) "Purchase Period" means a period of approximately six months,
commencing on January 1 and July 1 of each year and terminating on the next
following June 30 or December

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31, respectively; provided, however, that the first Purchase Period shall
commence on the Effective Date and shall end on December 31, 2000.

               (v) "Purchase Price" shall mean an amount equal to 85% of the
Fair Market Value of a share of Common Stock on the Enrollment Date or on the
Exercise Date, whichever is lower.

               (w) "Reserves" means the sum of the number of shares of Common
Stock covered by each option under the Plan which have not yet been exercised
and the number of shares of Common Stock which have been authorized for issuance
under the Plan but not yet placed under option.

               (x) "Subsidiary" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.

               3. Eligibility.

               (a) General. Any individual who is an Employee on a given
Enrollment Date shall be eligible to participate in the Plan for the Offer
Period commencing with such Enrollment Date.

               (b) Limitations on Grant and Accrual. Any provisions of the Plan
to the contrary notwithstanding, no Employee shall be granted an option under
the Plan (i) if, immediately after the grant, such Employee (taking into account
stock owned by any other person whose stock would be attributed to such Employee
pursuant to Section 424(d) of the Code) would own stock and/or hold outstanding
options to purchase stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of stock of the Company or of any
Parent or Subsidiary, or (ii) which permits the Employee's rights to purchase
stock under all employee stock purchase plans of the Company and its Parents or
Subsidiaries to accrue at a rate which exceeds Twenty-Five Thousand Dollars
($25,000) worth of stock (determined at the Fair Market Value of the shares at
the time such option is granted) for each calendar year in which such option is
outstanding at any time. The determination of the accrual of the right to
purchase stock shall be made in accordance with Section 423(b)(8) of the Code
and the regulations thereunder.

               (c) Other Limits on Eligibility. Notwithstanding Subsection (a),
above, the following Employees shall not be eligible to participate in the Plan
for any relevant Offer Period: (i) Employees whose customary employment is 20
hours or less per week; (ii) Employees whose customary employment is for not
more than five months in any calendar year; (iii) Employees who have been
employed for fewer than three business days; and (iv) Employees who are subject
to rules or laws of a foreign jurisdiction that prohibit or make impractical the
participation of such Employees in the Plan.

               4. Offer Periods.

               (a) The Plan shall be implemented through overlapping or
consecutive Offer Periods until such time as (i) the maximum number of shares of
Common Stock available for issuance under the Plan shall have been purchased or
(ii) the Plan shall have been sooner terminated in accordance with Section 19
hereof. The maximum duration of an Offer Period

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shall be twenty-seven (27) months. Initially, the Plan shall be implemented
through overlapping Offer Periods of twenty-four (24) months' duration
commencing each January 1 and July 1 following the Effective Date (except that
the initial Offer Period shall commence on the Effective Date and shall end on
June 30, 2002.

               (b) A Participant shall be granted a separate option for each
Offer Period in which he or she participates. The option shall be granted on the
Enrollment Date and shall be automatically exercised in successive installments
on the Exercise Dates ending within the Offer Period.

               (c) If on the first day of any Purchase Period in an Offer Period
in which a Participant is participating, the Fair Market Value of the Common
Stock is less than the Fair Market Value of the Common Stock on the Enrollment
Date of the Offer Period (after taking into account any adjustment during the
Offer Period pursuant to Section 18(a)), the Offer Period shall be terminated
automatically and the Participant shall be enrolled automatically in the new
Offer Period which has its first Purchase Period commencing on that date,
provided the Participant is eligible to participate in the Plan on that date and
has not elected to terminate participation in the Plan.

               (d) Except as specifically provided herein, the acquisition of
Common Stock through participation in the Plan for any Offer Period shall
neither limit nor require the acquisition of Common Stock by a Participant in
any subsequent Offer Period.

               5. Participation.

               (a) An eligible Employee may become a Participant in the Plan by
completing a subscription agreement authorizing payroll deductions in the form
of Exhibit A to this Plan and filing it with the designated payroll office of
the Company at least ten (10) business days prior to the Enrollment Date for the
Offer Period in which such participation will commence, unless a later time for
filing the subscription agreement is set by the Administrator for all eligible
Employees with respect to a given Offer Period.

               (b) Payroll deductions for a Participant shall commence with the
first partial or full payroll period beginning on the Enrollment Date and shall
end on the last complete payroll period during the Offer Period, unless sooner
terminated by the Participant as provided in Section 10.

               6. Payroll Deductions.

               (a) At the time a Participant files a subscription agreement, the
Participant shall elect to have payroll deductions made during the Offer Period
in amounts between one percent (1%) and not exceeding fifteen percent (15%) of
the Compensation which the Participant receives during the Offer Period.

               (b) All payroll deductions made for a Participant shall be
credited to the Participant's account under the Plan and will be withheld in
whole percentages only. A Participant may not make any additional payments into
such account.

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               (c) A Participant may discontinue participation in the Plan as
provided in Section 10, or may increase or decrease the rate of payroll
deductions during the Offer Period by completing and filing with the Company a
change of status notice in the form of Exhibit B to this Plan authorizing an
increase or decrease in the payroll deduction rate. Any increase or decrease in
the rate of a Participant's payroll deductions shall be effective with the first
full payroll period commencing ten (10) business days after the Company's
receipt of the change of status notice unless the Company elects to process a
given change in participation more quickly. A Participant's subscription
agreement (as modified by any change of status notice) shall remain in effect
for successive Offer Periods unless terminated as provided in Section 10. The
Administrator shall be authorized to limit the number of payroll deduction rate
changes during any Offer Period.

               (d) Notwithstanding the foregoing, to the extent necessary to
comply with Section 423(b)(8) of the Code and Section 3(b) herein, a
Participant's payroll deductions may be decreased to 0% at such time during any
Purchase Period which is scheduled to end during the current calendar year (the
"Current Purchase Period") that the aggregate of all payroll deductions which
were previously used to purchase stock under the Plan in a prior Purchase Period
which ended during that calendar year plus all payroll deductions accumulated
with respect to the Current Purchase Period equal $21,250. Payroll deductions
shall recommence at the rate provided in such Participant's subscription
agreement, as amended, at the beginning of the first Purchase Period which is
scheduled to end in the following calendar year, unless terminated by the
Participant as provided in Section 10.

               7. Grant of Option. On the Enrollment Date, each Participant
shall be granted an option to purchase (at the applicable Purchase Price) two
thousand (2000) shares of the Common Stock, subject to adjustment as provided in
Section 18 hereof; provided (i) that such option shall be subject to the
limitations set forth in Sections 3(b), 6 and 12 hereof, and (ii) the maximum
number of shares of Common Stock a Participant shall be permitted to purchase in
any Purchase Period shall be five hundred (500) shares, subject to adjustment as
provided in Section 18 hereof. Exercise of the option shall occur as provided in
Section 8, unless the Participant has withdrawn pursuant to Section 10, and the
option, to the extent not exercised, shall expire on the last day of the Offer
Period.

               8. Exercise of Option. Unless a Participant withdraws from the
Plan as provided in Section 10, below, the Participant's option for the purchase
of shares will be exercised automatically on each Exercise Date, by applying the
accumulated payroll deductions in the Participant's account to purchase the
number of full shares subject to the option by dividing such Participant's
payroll deductions accumulated prior to such Exercise Date and retained in the
Participant's account as of the Exercise Date by the applicable Purchase Price.
No fractional shares will be purchased; any payroll deductions accumulated in a
Participant's account which are not sufficient to purchase a full share shall be
carried over to the next Purchase Period or Offer Period, whichever applies, or
returned to the Participant, if the Participant withdraws from the Plan.
Notwithstanding the foregoing, any amount remaining in a Participant's account
following the purchase of shares on the Exercise Date due to the application of
Section 423(b)(8) of the Code or Section 7, above, shall be returned to the
Participant and shall not be carried over

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to the next Offer Period. During a Participant's lifetime, a Participant's
option to purchase shares hereunder is exercisable only by the Participant.

               9. Delivery. Upon receipt of a request from a Participant after
each Exercise Date on which a purchase of shares occurs, the Company shall
arrange the delivery to such Participant, as promptly as practicable, of a
certificate representing the shares purchased upon exercise of the Participant's
option. The Company may require each Participant to maintain an account at a
brokerage firm selected by the Administrator to which the Company shall make
such delivery; provided, however, that the Company shall deliver the
certificate directly to a Participant if such Participant so requests.

               10. Withdrawal; Termination of Employment.

               (a) A Participant may either (i) withdraw all but not less than
all the payroll deductions credited to the Participant's account and not yet
used to exercise the Participant's option under the Plan or (ii) terminate
future payroll deductions, but allow accumulated payroll deductions to be used
to exercise the Participant's option under the Plan at any time by giving
written notice to the Company in the form of Exhibit B to this Plan. If the
Participant elects withdrawal alternative (i) described above, all of the
Participant's payroll deductions credited to the Participant's account will be
paid to such Participant as promptly as practicable after receipt of notice of
withdrawal, such Participant's option for the Offer Period will be automatically
terminated, and no further payroll deductions for the purchase of shares will be
made during the Offer Period. If the Participant elects withdrawal alternative
(ii) described above, no further payroll deductions for the purchase of shares
will be made during the Offer Period, all of the Participant's payroll
deductions credited to the Participant's account will be applied to the exercise
of the Participant's option on the next Exercise Date, and after such Exercise
Date, such Participant's option for the Offer Period will be automatically
terminated. If a Participant withdraws from an Offer Period, payroll deductions
will not resume at the beginning of the succeeding Offer Period unless the
Participant delivers to the Company a new subscription agreement.

               (b) Upon termination of a Participant's employment relationship
(as described in Section 2(k)) at a time more than three (3) months from the
next scheduled Exercise Date, the payroll deductions credited to such
Participant's account during the Offer Period but not yet used to exercise the
option will be returned to such Participant or, in the case of his/her death, to
the person or persons entitled thereto under Section 14, and such Participant's
option will be automatically terminated. Upon termination of a Participant's
employment relationship (as described in Section 2(k)) within three (3) months
of the next scheduled Exercise Date, the payroll deductions credited to such
Participant's account during the Offer Period but not yet used to exercise the
option will be applied to the purchase of Common Stock on the next Exercise
Date, unless the Participant (or in the case of the Participant's death, the
person or persons entitled to the Participant's account balance under Section
14) withdraws from the Plan by submitting a change of status notice in
accordance with subsection (a) of this Section 10. In such a case, no further
payroll deductions will be credited to the Participant's account following the
Participant's termination of employment and the Participant's option under the
Plan will be automatically terminated after the purchase of Common Stock on the
next scheduled Exercise Date.

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               11. Interest. No interest shall accrue on the payroll deductions
credited to a Participant's account under the Plan.

               12. Stock.

               (a) Subject to adjustment upon changes in capitalization of the
Company as provided in Section 18, the maximum number of shares of Common Stock
which shall be made available for sale under the Plan shall be two million
(2,000,000) shares, plus an annual increase to be added on the first day of the
Company's fiscal year beginning in 2001 equal to the least of (i) two million
(2,000,000) shares, (ii) two percent (2%) of the outstanding shares on such
date, or (iii) a lesser number of shares determined by the Administrator. If on
a given Exercise Date the number of shares with respect to which options are to
be exercised exceeds the number of shares then available under the Plan, the
Administrator shall make a pro rata allocation of the shares remaining available
for purchase in as uniform a manner as shall be practicable and as it shall
determine to be equitable.

               (b) A Participant will have no interest or voting right in shares
covered by the Participant's option until such shares are actually purchased on
the Participant's behalf in accordance with the applicable provisions of the
Plan. No adjustment shall be made for dividends, distributions or other rights
for which the record date is prior to the date of such purchase.

               (c) Shares to be delivered to a Participant under the Plan will
be registered in the name of the Participant or in the name of the Participant
and his or her spouse.

               13. Administration. The Plan shall be administered by the
Administrator which shall have full and exclusive discretionary authority to
construe, interpret and apply the terms of the Plan, to determine eligibility
and to adjudicate all disputed claims filed under the Plan. Every finding,
decision and determination made by the Administrator shall, to the full extent
permitted by Applicable Law, be final and binding upon all persons.

               14. Designation of Beneficiary.

               (a) Each Participant will file a written designation of a
beneficiary who is to receive any shares and cash, if any, from the
Participant's account under the Plan in the event of such Participant's death.
If a Participant is married and the designated beneficiary is not the spouse,
spousal consent shall be required for such designation to be effective.

               (b) Such designation of beneficiary may be changed by the
Participant (and the Participant's spouse, if any) at any time by written
notice. In the event of the death of a Participant and in the absence of a
beneficiary validly designated under the Plan who is living (or in existence) at
the time of such Participant's death, the Company shall deliver such shares
and/or cash to the executor or administrator of the estate of the Participant,
or if no such executor or administrator has been appointed (to the knowledge of
the Administrator), the Administrator shall deliver such shares and/or cash to
the spouse (or domestic partner, as determined by the Administrator) of the
Participant, or if no spouse (or domestic partner) is known to the

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Administrator, then to the issue of the Participant, such distribution to be
made per stirpes (by right of representation), or if no issue are known to the
Administrator, then to the heirs at law of the Participant determined under in
accordance with Section 27.

               15. Transferability. Neither payroll deductions credited to a
Participant's account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 14 hereof) by the Participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Administrator may treat such act as an election to
withdraw funds from an Offer Period in accordance with Section 10.

               16. Use of Funds. All payroll deductions received or held by the
Company under the Plan may be used by the Company for any corporate purpose, and
the Company shall not be obligated to segregate such payroll deductions.

               17. Reports. Individual accounts will be maintained for each
Participant in the Plan. Statements of account will be given to Participants at
least annually, which statements will set forth the amounts of payroll
deductions, the Purchase Price, the number of shares purchased and the remaining
cash balance, if any.

               18. Adjustments Upon Changes in Capitalization; Corporate
Transactions.

               (a) Adjustments Upon Changes in Capitalization. Subject to any
required action by the stockholders of the Company, the Reserves, the Purchase
Price, as well as any other terms that the Administrator determines require
adjustment shall be proportionately adjusted for (i) any increase or decrease in
the number of issued shares of Common Stock resulting from a stock split,
reverse stock split, stock dividend, combination or reclassification of the
Common Stock, (ii) any other increase or decrease in the number of issued shares
of Common Stock effected without receipt of consideration by the Company, or
(iii) as the Administrator may determine in its discretion, any other
transaction with respect to Common Stock to which Section 424(a) of the Code
applies; provided, however that conversion of any convertible securities of the
Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Administrator and its
determination shall be final, binding and conclusive. Except as the
Administrator determines, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason hereof shall be made with respect to, the
Reserves and the Purchase Price.

               (b) Corporate Transactions. In the event of a proposed Corporate
Transaction, each option under the Plan shall be assumed by such successor
corporation or a parent or subsidiary of such successor corporation, unless the
Administrator determines, in the exercise of its sole discretion and in lieu of
such assumption, to shorten the Offer Period then in progress by setting a new
Exercise Date (the "New Exercise Date"). If the Administrator shortens the Offer
Period then in progress in lieu of assumption in the event of a Corporate
Transaction, the Administrator shall notify each Participant in writing, at
least ten (10) days prior to the New Exercise Date, that the Exercise Date for
the Participant's option has been changed to the New

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Exercise Date and that the Participant's option will be exercised automatically
on the New Exercise Date, unless prior to such date the Participant has
withdrawn from the Offer Period as provided in Section 10. For purposes of this
Subsection, an option granted under the Plan shall be deemed to be assumed if,
in connection with the Corporate Transaction, the option is replaced with a
comparable option with respect to shares of capital stock of the successor
corporation or Parent thereof. The determination of option comparability shall
be made by the Administrator prior to the Corporate Transaction and its
determination shall be final, binding and conclusive on all persons.

               19. Amendment or Termination.

               (a) The Administrator may at any time and for any reason
terminate or amend the Plan. Except as provided in Section 18, no such
termination can affect options previously granted, provided that an Offer Period
may be terminated by the Administrator on any Exercise Date if the Administrator
determines that the termination of the Offer Period is in the best interests of
the Company and its stockholders. Except as provided in Section 18, no amendment
may make any change in any option theretofore granted which adversely affects
the rights of any Participant without the consent of affected Participants. To
the extent necessary to comply with Section 423 of the Code (or any successor
rule or provision or any other Applicable Law), the Company shall obtain
stockholder approval in such a manner and to such a degree as required.

               (b) Without stockholder consent and without regard to whether any
Participant rights may be considered to have been "adversely affected," the
Administrator shall be entitled to limit the frequency and/or number of changes
in the amount withheld during Offer Periods, change the length of Purchase
Periods within any Offer Period, determine the length of any future Offer
Period, whether future Offer Periods shall be consecutive or overlapping,
establish the exchange ratio applicable to amounts withheld in a currency other
than U.S. dollars, establish additional terms, conditions, rules or procedures
to accommodate the rules or laws of applicable foreign jurisdictions, permit
payroll withholding in excess of the amount designated by a Participant in order
to adjust for delays or mistakes in the Company's processing of properly
completed withholding elections, establish reasonable waiting and adjustment
periods and/or accounting and crediting procedures to ensure that amounts
applied toward the purchase of Common Stock for each Participant properly
correspond with amounts withheld from the Participant's Compensation, and
establish such other limitations or procedures as the Administrator determines
in its sole discretion advisable and which are consistent with the Plan.

               20. Notices. All notices or other communications by a Participant
to the Company under or in connection with the Plan shall be deemed to have been
duly given when received in the form specified by the Administrator at the
location, or by the person, designated by the Administrator for the receipt
thereof.

               21. Conditions Upon Issuance of Shares. Shares shall not be
issued with respect to an option unless the exercise of such option and the
issuance and delivery of such shares pursuant thereto shall comply with all
Applicable Laws and shall be further subject to the approval of counsel for the
Company with respect to such compliance. As a condition to the exercise of an
option, the Company may require the Participant to represent and warrant at the

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time of any such exercise that the shares are being purchased only for
investment and without any present intention to sell or distribute such shares
if, in the opinion of counsel for the Company, such a representation is required
by any of the aforementioned Applicable Laws. In addition, no options shall be
exercised or shares issued hereunder before the Plan shall have been approved by
stockholders of the Company as provided in Section 23.

               22. Term of Plan. The Plan shall become effective upon the
earlier to occur of its adoption by the Board or its approval by the
stockholders of the Company. It shall continue in effect for a term of ten (10)
years unless sooner terminated under Section 19.

               23. Stockholder Approval. Continuance of the Plan shall be
subject to approval by the stockholders of the Company within twelve (12) months
before or after the date the Plan is adopted. Such stockholder approval shall be
obtained in the degree and manner required under Applicable Laws.

               24. No Employment Rights. The Plan does not, directly or
indirectly, create any right for the benefit of any employee or class of
employees to purchase any shares under the Plan, or create in any employee or
class of employees any right with respect to continuation of employment by the
Company or a Designated Parent or Subsidiary, and it shall not be deemed to
interfere in any way with such employer's right to terminate, or otherwise
modify, an employee's employment at any time.

               25. No Effect on Retirement and Other Benefit Plans. Except as
specifically provided in a retirement or other benefit plan of the Company or a
Designated Parent or Subsidiary, participation in the Plan shall not be deemed
compensation for purposes of computing benefits or contributions under any
retirement plan of the Company or a Designated Parent or Subsidiary, and shall
not affect any benefits under any other benefit plan of any kind or any benefit
plan subsequently instituted under which the availability or amount of benefits
is related to level of compensation. The Plan is not a "Retirement Plan" or
"Welfare Plan" under the Employee Retirement Income Security Act of 1974, as
amended.

               26. Effect of Plan. The provisions of the Plan shall, in
accordance with its terms, be binding upon, and inure to the benefit of, all
successors of each Participant, including, without limitation, such
Participant's estate and the executors, administrators or trustees thereof,
heirs and legatees, and any receiver, trustee in bankruptcy or representative of
creditors of such Participant.

               27. Governing Law. The Plan is to be construed in accordance with
and governed by the internal laws of the State of California (as permitted by
Section 1646.5 of the California Civil Code, or any similar successor provision)
without giving effect to any choice of law rule that would cause the application
of the laws of any jurisdiction other than the internal laws of the State of
California to the rights and duties of the parties, except to the extent the
internal laws of the State of California are superseded by the laws of the
United States. Should any provision of the Plan be determined by a court of law
to be illegal or unenforceable, the other provisions shall nevertheless remain
effective and shall remain enforceable.

                                       11
<PAGE>   12

                                    EXHIBIT A
              Saba Software, Inc. 2000 Employee Stock Purchase Plan
                             SUBSCRIPTION AGREEMENT

                  Effective with the Offer Period beginning on:
      [ ] ESPP Effective Date [ ] <JANUARY 1, 200__> or [ ] <JULY 1, 200__>

1.  PERSONAL INFORMATION <MODIFY DATA REQUESTED AS APPROPRIATE>

<TABLE>
<S>                                                                       <C>
    Legal Name (Please Print) __________________________________________  _______________ ___________
                              (Last)          (First)        (MI)          Location       Department

    Street Address______________________________________________________  ___________________________
                                                                           Daytime Telephone

    City, State/Country, Zip____________________________________________  ___________________________
                                                                           E-Mail Address

    Social Security No. __ __ __ - __ __ - __ __ __ __Employee I.D. No.   ___________________________
                                                                           Manager      Mgr. Location
</TABLE>

2.  ELIGIBILITY Any Employee whose customary employment is more than 20 hours
    per week and more than five months per calendar year, who has been an
    Employee for more than three business days and who does not hold (directly
    or indirectly) five percent (5%) or more of the combined voting power of the
    Company, a parent or a subsidiary, whether in stock or options to acquire
    stock is eligible to participate in the Saba Software, Inc. 2000 Employee
    Stock Purchase Plan (the "ESPP"); provided, however, that Employees who are
    subject to the rules or laws of a foreign jurisdiction that prohibit or make
    impractical the participation of such Employees in the ESPP are not eligible
    to participate.

3.  DEFINITIONS Each capitalized term in this Subscription Agreement shall have
    the meaning set forth in the ESPP.

4.  SUBSCRIPTION I hereby elect to participate in the ESPP and subscribe to
    purchase shares of the Company's Common Stock in accordance with this
    Subscription Agreement and the ESPP. I have received a complete copy of the
    ESPP and a prospectus describing the ESPP and understand that my
    participation in the ESPP is in all respects subject to the terms of the
    ESPP. The effectiveness of this Subscription Agreement is dependent on my
    eligibility to participate in the ESPP.

5.  PAYROLL DEDUCTION AUTHORIZATION I hereby authorize payroll deductions from
    my Compensation during the Offer Period in the percentage specified below
    (payroll reductions may not exceed 15% of Compensation nor $21,250 per
    calendar year):

<TABLE>
<S>                                             <C>
    ----------------------------------------------------------------------------------------------------------
    Percentage to be Deducted (circle one)      1%  2%  3%  4%  5%  6%  7%  8%  9%  10%  11% 12%  13%  14% 15%
    ----------------------------------------------------------------------------------------------------------
</TABLE>

6.  ESPP ACCOUNTS AND PURCHASE PRICE I understand that all payroll deductions
    will be credited to my account under the ESPP. No additional payments may be
    made to my account. No interest will be credited on funds held in the
    account at any time including any refund of the account caused by withdrawal
    from the ESPP. All payroll deductions shall be accumulated for the purchase
    of Company Common Stock at the applicable Purchase Price determined in
    accordance with the ESPP.

7.  WITHDRAWAL AND CHANGES IN PAYROLL DEDUCTION I understand that I may
    discontinue my participation in the ESPP at any time prior to an Exercise
    Date as provided in Section 10 of the ESPP, but if I do not withdraw from
    the ESPP, any accumulated payroll deductions will be applied automatically
    to purchase Company Common Stock. I may increase or decrease the rate of my
    payroll deductions in whole percentage increments to not less than one
    percent (1%) on two occasions in the aggregate during any Purchase Period
    by completing and timely filing a Change of Status Notice. Any increase or
    decrease will be effective for the full payroll period occurring after ten
    (10) business days from the Company's receipt of the Change of Status
    Notice.

8.  PERPETUAL SUBSCRIPTION I understand that this Subscription Agreement shall
    remain in effect for successive Offer Periods until I withdraw from
    participation in the ESPP, or termination of the ESPP.

                                      A-1
<PAGE>   13

9.  TAXES I have reviewed the ESPP prospectus discussion of the federal tax
    consequences of participation in the ESPP and consulted with tax consultants
    as I deemed advisable prior to my participation in the ESPP. I hereby agree
    to notify the Company in writing within thirty (30) days of any disposition
    (transfer or sale) of any shares purchased under the ESPP if such
    disposition occurs within two (2) years of the Enrollment Date (the first
    day of the Offer Period during which the shares were purchased) or within
    one (1) year of the Exercise Date (the date I purchased such shares), and I
    will make adequate provision to the Company for foreign, federal, state or
    other tax withholding obligations, if any, which arise upon the disposition
    of the shares. In addition, the Company may withhold from my Compensation
    any amount necessary to meet applicable tax withholding obligations incident
    to my participation in the ESPP, including any withholding necessary to make
    available to the Company any tax deductions or benefits contingent on such
    withholding.

10. DESIGNATION OF BENEFICIARY In the event of my death, I hereby designate the
    following person or trust as my beneficiary to receive all payments and
    shares due to me under the ESPP: [ ] I am single [ ] I am married

<TABLE>
<S>                                                                       <C>
    Beneficiary (please print) _________________________________________  Relationship to Beneficiary (if any)
                                (Last)          (First)          (MI)

    Street Address _____________________________________________________  ___________________________

    City, State/Country, Zip ___________________________________________
</TABLE>

11. TERMINATION OF ESPP I understand that the Company has the right, exercisable
    in its sole discretion, to amend or terminate the ESPP at any time, and a
    termination may be effective as early as an Exercise Date (after purchase of
    shares on such date) within each outstanding Offer Period.

<TABLE>
<S>                                          <C>
    Date: __________________________         Employee Signature:__________________________________________

                                                                __________________________________________
                                                                spouse's signature (if beneficiary is
                                                                other than spouse)
</TABLE>

                                      A-2
<PAGE>   14

                                    EXHIBIT B

              Saba Software, Inc. 2000 Employee Stock Purchase Plan

                             CHANGE OF STATUS NOTICE

__________________________________________
 Participant Name (Please Print)

__________________________________________
 Social Security Number

        WITHDRAWAL FROM ESPP

        I hereby withdraw from the Saba Software, Inc. 2000 Employee Stock
        Purchase Plan (the "ESPP") and agree that my option under the applicable
        Offer Period will be automatically terminated and all accumulated
        payroll deductions credited to my account will be refunded to me or
        applied to the purchase of Common Stock depending on the alternative
        indicated below. No further payroll deductions will be made for the
        purchase of shares in the applicable Offer Period and I shall be
        eligible to participate in a future Offer Period only by timely delivery
        to the Company of a new Subscription Agreement.

 [ ]    WITHDRAWAL AND PURCHASE OF COMMON STOCK

        Payroll deductions will terminate, but your account balance will be
        applied to purchase Common Stock on the next Exercise Date. Any
        remaining balance will be refunded.

 [ ]    WITHDRAWAL WITHOUT PURCHASE OF COMMON STOCK

        Entire account balance will be refunded to me and no Common Stock will
        be purchased on the next Exercise Date provided this notice is submitted
        to the Company ten (10) business days prior to the next Exercise Date.

================================================================================

 [ ]    CHANGE IN PAYROLL DEDUCTION

        I hereby elect to change my rate of payroll deduction under the ESPP as
        follows (select one):

<TABLE>
<S>                                            <C>
    ----------------------------------------------------------------------------------------------------------
    Percentage to be Deducted (circle one)      1%  2%  3%  4%  5%  6%  7%  8%  9%  10%  11% 12%  13%  14% 15%
    ----------------------------------------------------------------------------------------------------------
</TABLE>

        An increase or a decrease in payroll deduction will be effective for the
        first full payroll period commencing no fewer than ten (10) business
        days following the Company's receipt of this notice, unless this change
        is processed more quickly.

================================================================================

<PAGE>   15

 [ ]    CHANGE OF BENEFICIARY             [ ]  I am single     [ ]  I am married

        This change of beneficiary shall terminate my previous beneficiary
        designation under the ESPP. In the event of my death, I hereby designate
        the following person or trust as my beneficiary to receive all payments
        and shares due to me under the ESPP:

<TABLE>
<S>                                                                     <C>
    Beneficiary (please print) ______________________________________   Relationship to Beneficiary (if any)
                                (Last)          (First)        (MI)

    Street Address __________________________________________________  ______________________________

    City, State/Country, Zip ________________________________________

    Date: __________________________    Employee Signature:__________________________________________

                                                           __________________________________________
                                                           spouse's signature (if beneficiary is
                                                           other than spouse)
</TABLE>

                                      B-1<PAGE>   1

                                                                    EXHIBIT 10.5

                               SABA SOFTWARE, INC.
                           THIRD AMENDED AND RESTATED
                           INVESTORS' RIGHTS AGREEMENT

           ---------------------------------------------------------

                THIS THIRD AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
(this "Agreement") is made as of November 10, 1999, by and between Saba
Software, Inc., a Delaware corporation (the "Company"), each of the investors
listed on Schedule A hereto (each an "Investor" and collectively the
"Investors"), and Babak Yazdani (the "Founder").

                                 R E C I T A L S

                WHEREAS, certain of the Investors (the "Existing Investors")
hold shares of the Company's Series A Preferred Stock (the "Series A Preferred
Stock"), the Company's Series B Preferred Stock (the "Series B Preferred
Stock"), the Company's Series C Preferred Stock (the "Series C Preferred Stock")
and/or shares of Common Stock issuable upon the conversion thereof and possess
registration rights and other rights pursuant to a Second Amended and Restated
Investors' Rights Agreement, dated as of April 14, 1999, by and among the
Company, the Founder and the Existing Investors (the "Prior Agreement");

                WHEREAS, the Founder and the Existing Investors are holders of
at least that number of Registrable Securities (as defined in the Prior
Agreement) required to amend each section of the Prior Agreement pursuant to
Section 3.7 thereof;

                WHEREAS, the Company and certain Investors have entered into, as
of the date hereof, a Series D Preferred Stock Purchase Agreement (the "Series D
Agreement") pursuant to which the Company will issue and sell shares of the
Series D Preferred Stock of the Company (the "Series D Preferred Stock");

                WHEREAS, certain of the Company's and such Investors'
obligations under the Series D Agreement are conditioned upon the execution and
delivery of this Agreement by such Investors, the holders of a majority of the
outstanding shares of Series B Preferred Stock, the holders of two-thirds (2/3)
of the outstanding shares of Series C Preferred Stock, and the holders of a
majority of the outstanding shares of Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock voting together as a single class,
the Founder and the Company.

        NOW, THEREFORE, in consideration of the mutual premises and covenants
set forth herein, the Company, the Existing Investors and the Founder hereby
agree that the Prior Agreement shall be amended and restated as set forth
herein, and the parties hereto further agree as follows:

        1. REGISTRATION RIGHTS. The Company covenants and agrees as follows:

                1.1. DEFINITIONS. For purposes of this Agreement:

                                       1
<PAGE>   2

                        (a) The term "Act" means the Securities Act of 1933, as
amended.

                        (b) The term "Founder's Shares" means the 7,000,000
shares of Common Stock (subject to appropriate adjustment for stock splits,
stock dividends, combinations and other recapitalizations (collectively, a
"Recapitalization")) issued to the Founder.

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

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

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

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

                        (g) The term "Registrable Securities" means (i) the
Common Stock issuable or issued upon conversion of the Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock or Series D Preferred Stock,
(ii) the Founder's Shares and (iii) 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 the shares referenced in (i) or (ii)
above, excluding in all cases, however, any Registrable Securities that have
been sold by a person in a transaction in which his or her rights under this
Section 1 are not assigned or that have been sold by a person pursuant to a
registration statement under the Act covering such Registrable Securities that
has been declared effective by the SEC or in an open market transaction under
Rule 144 of the Act. Notwithstanding anything to the contrary set forth in this
Section 1.1(g), neither the Common Stock issuable or issued upon conversion of
the Series A Preferred Stock or the Founder's Shares (or any shares of Common
Stock otherwise deemed "Registrable Securities" with respect thereto pursuant to
clause (iii) of this Section 1.1(g)) shall be deemed Registrable Securities and
the holders thereof shall not be deemed Holders for the purposes of Section 1.2,
1.6, 1.12, and 1.14.

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

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

                                       2
<PAGE>   3

                1.2. REQUEST FOR REGISTRATION.

                        (a) If the Company shall receive at any time after the
earlier of the five-year anniversary of the date hereof or six (6) months after
the effective date of the first registration statement for a public offering of
securities of the Company (other than a registration statement relating either
to the sale of securities to employees of the Company pursuant to a stock
option, stock purchase or similar plan or an SEC Rule 145 transaction), a
written request from the Holders of a majority of the Registrable Securities
then outstanding that the Company file a registration statement under the Act
covering the registration of at least twenty-five percent (25%) of the
Registrable Securities then outstanding (or a lesser percent if the anticipated
aggregate offering price, net of underwriting discounts and commissions, would
exceed $7,500,000), then the Company shall:

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

                                (ii) as soon as practicable, use commercially
reasonable efforts to effect the registration under the Act of all Registrable
Securities which the Holders request to be registered, together with all or such
portion of the Registrable Securities of any Holder or Holders joining in such
request as are specified in a written request received by the Company, within
twenty (20) days of the mailing of such notice by the Company in accordance with
Section 3.5, subject to the limitations of subsection 1.2(b).

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

                                       3
<PAGE>   4

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

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

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

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

                                (iii) If the Initiating Holders propose to
dispose of shares of Registrable Securities that may be immediately registered
on Form S-3 pursuant to a request made pursuant to Section 1.12 below.

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

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

                                       4
<PAGE>   5

                        (a) Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use commercially
reasonable efforts to cause such registration statement to become effective;

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

                        (c) Furnish to each Holder such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as it may reasonably request
from time to time in order to facilitate the disposition of Registrable
Securities owned by it;

                        (d) Use commercially 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, unless the Company is already required to qualify to do business
or subject to service in such jurisdiction and except as may be required by the
Act;

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

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

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

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

                1.5. FURNISH INFORMATION. It shall be a condition precedent to
the obligations of the Company to take any action pursuant to this Section 1
with respect to Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of

                                       5
<PAGE>   6

such securities as shall be required to effect the registration of such Holder's
Registrable Securities.

                1.6. EXPENSES OF DEMAND REGISTRATION. All expenses other than
underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Section 1.2, including
(without limitation) all registration, filing and qualification fees, printers'
and accounting fees, fees and disbursements of counsel for the Company
(including fees and disbursements of counsel for the Company in its capacity as
counsel to the selling Holders hereunder; if Company counsel does not make
itself available for this purpose, the Company will pay the reasonable fees and
disbursements of one counsel for the selling Holders) shall be borne by the
Company; provided, however, that the Company shall not be required to pay for
any expenses of any registration proceeding begun pursuant to Section 1.2 if the
registration request is subsequently withdrawn at the request of the Holders of
a majority of the Registrable Securities to be registered (in which case all
participating Holders shall bear such expenses), unless the Holders of a
majority of the Registrable Securities agree to forfeit their right to one
demand registration pursuant to Section 1.2.

                1.7. EXPENSES OF COMPANY REGISTRATION. The Company shall bear
and pay all expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
pursuant to Section 1.3 for each Holder, including (without limitation) all
registration, filing, and qualification fees, printers and accounting fees
relating or apportionable thereto and the fees and disbursements of counsel for
the Company in its capacity as counsel to the selling Holders thereunder (if
Company counsel does not make itself available for this purpose, the Company
will pay the reasonable fees and disbursements of one counsel for the selling
Holders selected by them), but excluding underwriting discounts and commissions
relating to Registrable Securities.

                1.8. UNDERWRITING REQUIREMENTS. In connection with any offering
involving an underwriting of shares of the Company's capital stock, the Company
shall not be required under Section 1.3 to include any of the Holders'
securities in such underwriting unless they accept the terms of the underwriting
as agreed upon between the Company and the underwriters selected by it and then
only in such quantity as the underwriters determine in their sole discretion
will not, jeopardize the success of the offering by the Company. If the total
amount of securities, including Registrable Securities, requested by
stockholders to be included in such offering exceeds the amount of securities
sold other than by the Company that the underwriters determine in their sole
discretion is compatible with the success of the offering, then the number of
shares of Holders' securities to be included in such offering shall be reduced
in such manner as the Company and the underwriters determine to permit the
success of such offering (the securities so included to be apportioned pro rata
among the selling stockholders according to the total amount of securities
entitled to be included therein owned by each selling stockholder or in such
other proportions as shall mutually be agreed to by such selling stockholders)
but in no event shall (i) the amount of securities of the selling Holders of
Registrable Securities included in the offering be reduced below thirty percent
(30%) of the total amount of securities included in such offering, unless such
offering is the initial public offering of the Company's securities in which
case the selling stockholders may be excluded if the underwriters make the
determination described above and no other stockholders' securities are
included, (ii) notwithstanding (i) above, any shares

                                       6
<PAGE>   7

being sold by a stockholder exercising a demand registration right similar to
that granted in Section 1.2 be excluded from such offering, or (iii) the number
of shares of Registrable Securities to be included in such underwriting
(excluding any Founder's Shares) be reduced unless the Founder's Shares are
first entirely excluded from such underwriting. For purposes of the preceding
parenthetical concerning apportionment, for any selling stockholder which is a
holder of Registrable Securities and which is a partnership or corporation, the
partners, retired partners and stockholders of such holder, or the estates and
family members of any such partners and retired partners and any trusts for the
benefit of any of the foregoing persons shall be deemed to be a single "selling
stockholder," and any pro-rata reduction with respect to such "selling
stockholder" shall be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in such
"selling stockholder," as defined in this sentence.

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

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

                        (a) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, any underwriter (as defined in the Act)
for such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Act or the 1934 Act, against any losses, claims,
damages, or liabilities (joint or several) to which they may become subject
under the Act or the 1934 Act, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon any
of the following statements, omissions or violations (collectively a
"Violation"): (i) any untrue statement or alleged untrue statement of a material
fact contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading, or (iii) any violation or alleged violation by the
Company of the Act, the 1934 Act, or any rule or regulation promulgated under
the Act or the 1934 Act; and the Company will pay to each such Holder,
underwriter or controlling person any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this subsection 1.10(a) shall not apply to (1) amounts
paid in settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), or (2) 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 any such Holder,
underwriter or controlling person.

                        (b) To the extent permitted by law, each selling Holder
will indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the

                                       7
<PAGE>   8

registration statement, each person, if any, who controls the Company within the
meaning of the Act, any underwriter, any other stockholder of the Company that
is selling securities in such registration statement and any controlling person
of any such underwriter or such other stockholder, against any losses, claims,
damages, or liabilities (joint or several) to which any of the foregoing persons
may become subject, under the Act or the 1934 Act, insofar as such losses,
claims, damages, or liabilities (or actions in respect thereto) arise out of or
are based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by such Holder expressly for use in connection
with such registration; and each such Holder will pay any legal or other
expenses reasonably incurred by any person intended to be indemnified pursuant
to this subsection 1.10(b), in connection with investigating or defending any
such loss, claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this subsection 1.10(b) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Holder, which consent
shall not be unreasonably withheld; provided, that, in no event shall any
indemnity under this subsection 1.10(b) exceed the gross proceeds from the
offering received by such Holder.

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

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

                                       8
<PAGE>   9

of a material fact or the omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party and
the parties' relative intent, knowledge, access to information, and opportunity
to correct or prevent such statement or omission.

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

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

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

                        (a) make and keep public information available, as those
terms are understood and defined in SEC Rule 144, at all times after ninety (90)
days after the effective date of the first registration statement filed by the
Company for the offering of its securities to the general public;

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

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

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

                1.12. FORM S-3 REGISTRATION. In case the Company shall receive
from any Holder or Holders a written request or requests that the Company effect
a registration on Form S-

                                       9
<PAGE>   10

3 and any related qualification or compliance with respect to all or a part of
the Registrable Securities owned by such Holder or Holders, the Company will:

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

                        (b) as soon as practicable, use commercially reasonable
efforts to effect such registration and all such qualifications and compliances
as may be so requested and as would permit or facilitate the sale and
distribution of all or such portion of such Holder's or Holders' Registrable
Securities as are specified in such request, together with all or such portion
of the Registrable Securities of any other Holder or Holders joining in such
request as are specified in a written request given within 15 days after receipt
of such written notice from the Company; provided, however, that the Company
shall not be obligated to effect any such registration, qualification or
compliance, pursuant to this section 1.12: (1) if Form S-3 is not available for
such offering by the Holders; (2) if the Holders, together with the holders of
any other securities of the Company entitled to inclusion in such registration,
propose to sell Registrable Securities and such other securities (if any) at an
aggregate price to the public (net of any underwriters' discounts or
commissions) of less than $5,000,000; (3) if the Company shall furnish to the
Holders a certificate signed by the Chief Executive Officer of the Company
stating that in the good faith judgment of the Board of Directors of the
Company, it would be seriously detrimental to the Company and its stockholders
for such 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 60 days after receipt of the request of
the Holder or Holders under this Section 1.12; provided, however, that the
Company shall not utilize this right more than once in any twelve (12) month
period; (4) if the Company has, within the twelve (12) month period preceding
the date of such request, already effected two registrations on Form S-3 for the
Holders pursuant to this Section 1.12; or (5) in any particular jurisdiction in
which the Company would be required to qualify to do business or to execute a
general consent to service of process in effecting such registration,
qualification or compliance.

                        (c) Subject to the foregoing, the Company shall use
commercially reasonable efforts to file a registration statement covering the
Registrable Securities and other securities so requested to be registered as
soon as practicable after receipt of the request or requests of the Holders. All
expenses other than underwriting discounts and commissions incurred in
connection with the first three (3) registrations requested pursuant to Section
1.12, including (without limitation) all registration, filing and qualification
fees, printers' and accounting fees, fees and disbursements of counsel for the
Company (including fees and disbursements of counsel for the Company in its
capacity as counsel to the selling Holders hereunder; if Company counsel does
not make itself available for this purpose, the Company will pay the reasonable
fees and disbursements of one counsel for the selling Holders) shall be borne by
the Company; provided, however, that the Company shall not be required to pay
for any expenses of any registration proceeding begun pursuant to Section 1.12
if the registration request is subsequently withdrawn at the request of the
Holders of a majority of the Registrable Securities to be registered (in which
case all participating Holders shall bear such expenses), unless the Holders of
a majority of the Registrable Securities agree to forfeit their right to have
the Company bear the expenses of one (1) Form S-3 registration pursuant to this
Section 1.12.

                                       10
<PAGE>   11

Except as provided in the immediately preceding sentence, all expenses incurred
in connection with a registration requested pursuant to this Section 1.12,
including (without limitation) all registration, filing, qualification,
printer's and accounting fees and the reasonable fees and disbursements of
counsel for the selling Holder or Holders and counsel for the Company, shall be
borne pro rata by the Holder or Holders participating in the Form S-3
Registration. Registrations effected pursuant to this Section 1.12 shall not be
counted as demands for registration or registrations effected pursuant to
Sections 1.2 or 1.3, respectively.

                1.13. ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the
Company to register Registrable Securities pursuant to this Section 1 may be
assigned (but only with all related obligations) by a Holder to a transferee or
assignee of such securities who, after such assignment or transfer, holds at
least Eight Hundred Thousand (800,000) shares of Registrable Securities (subject
to appropriate adjustment for Recapitalizations), provided: (a) the Company is,
within a reasonable time after such transfer, furnished with written notice of
the name and address of such transferee or assignee and the securities with
respect to which such registration rights are being assigned; (b) such
transferee or assignee agrees in writing to be bound by and subject to the terms
and conditions of this Agreement, including without limitation the provisions of
Section 1.15 below; and (c) such assignment shall be effective only if
immediately following such transfer the further disposition of such securities
by the transferee or assignee is restricted under the Act. For the purposes of
determining the number of shares of Registrable Securities held by a transferee
or assignee, the holdings of transferees and assignees of a partnership who are
partners or retired partners of such partnership (including spouses and
ancestors, lineal descendants and siblings of such partners or spouses who
acquire Registrable Securities by gift, will or intestate succession) shall be
aggregated together and with the partnership; provided that all assignees and
transferees who would not qualify individually for assignment of registration
rights shall have a single attorney-in-fact for the purpose of exercising any
rights, receiving notices or taking any action under this Section 1.

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

                1.15. "MARKET STAND-OFF" AGREEMENT. Each Holder hereby agrees
that, during the period of duration specified by the Company and an underwriter
of Common Stock or other securities of the Company, following the effective date
of a registration statement of the Company filed under the Act, it shall not, to
the extent requested by the Company and such underwriter, directly or indirectly
sell, offer to sell, contract to sell (including, without limitation, any short
sale), grant any option to purchase or otherwise transfer or dispose of (other
than to

                                       11
<PAGE>   12

donees who agree to be similarly bound) any securities of the Company held by it
at any time during such period except Common Stock included in such
registration; provided, however, that:

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

                        (b) such market stand-off time period shall not exceed
180 days; and

                        (c) all officers and directors of the Company, all
holders of one percent (1%) or more of the outstanding equity securities of the
Company, and all other persons with registration rights enter into similar
agreements.

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

                Notwithstanding the foregoing, the obligations described in this
Section 1.15 shall not apply to a registration relating solely to employee
benefit plans on Form S-1 or Form S-8 or similar forms which may be promulgated
in the future, or a registration relating solely to a Commission Rule 145
transaction on Form S-4 or similar forms which may be promulgated in the future.

                1.16. TERMINATION OF REGISTRATION RIGHTS.

                        (a) No Holder shall be entitled to exercise any right
provided for in this Section 1 after three (3) years following the consummation
of the sale of securities pursuant to a registration statement filed by the
Company under the Act in connection with the initial firm commitment
underwritten offering of its Common Stock to the general public.

                        (b) In addition, the right of any Holder to request
registration or inclusion in any registration pursuant to Section 1.3 shall
terminate on the closing of the first Company-initiated registered public
offering of Common Stock of the Company if all shares of Registrable Securities
held or entitled to be held upon conversion by such Holder may immediately be
sold under Rule 144 during any 90-day period, or on such date after the closing
of the first Company-initiated registered public offering of Common Stock of the
Company as all shares of Registrable Securities held or entitled to be held upon
conversion by such Holder may immediately be sold under Rule 144 during any
90-day period.

        2. COVENANTS OF THE COMPANY.

                2.1. DELIVERY OF FINANCIAL STATEMENTS. The Company shall deliver
to each Investor holding at least Eight Hundred Thousand (800,000) shares of
Registrable Securities (subject to appropriate adjustment for any
Recapitalization):

                        (a) as soon as practicable, but in any event within
ninety (90) days after the end of each fiscal year of the Company, an income
statement for such fiscal year, a

                                       12
<PAGE>   13

balance sheet of the Company and statement of stockholder's equity as of the end
of such year, and a schedule as to the sources and applications of funds for
such year, such year-end financial reports to be in reasonable detail, prepared
in accordance with generally accepted accounting principles ("GAAP"), and
audited and certified by independent public accountants of nationally recognized
standing selected by the Company;

                        (b) as soon as practicable, but in any event within
forty-five (45) days after the end of each of the first three (3) quarters of
each fiscal year of the Company, an unaudited profit or loss statement, schedule
as to the sources and application of funds for such fiscal quarter and an
unaudited balance sheet as of the end of such fiscal quarter.

                        (c) within thirty (30) days of the end of each month, an
unaudited income statement and schedule as to the sources and application of
funds and balance sheet for and as of the end of such month, in reasonable
detail;

                        (d) as soon as practicable, but in any event thirty (30)
days prior to the end of each fiscal year, a budget for the next fiscal year,
including balance sheets and sources and applications of funds statements and,
as soon as prepared, any other budgets or revised budgets prepared by the
Company;

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

                        (f) such other information relating to the financial
condition, business, prospects or corporate affairs of the Company as the
Investor or any assignee of the Investor may from time to time reasonably
request, provided, however, that the Company shall not be obligated under this
subsection 2.1(f) or any other subsection of Section 2.1 to provide information
which could adversely affect the attorney-client privilege between the Company
and its counsel or which it deems in good faith to be a trade secret or similar
confidential information, and provided further that the Company may require the
Investor to execute a nondisclosure agreement prior to disclosure of any such
information.

                2.2. INSPECTION. The Company shall permit Investors holding at
least Eight Hundred Thousand (800,000) shares of Registrable Securities (subject
to appropriate adjustment for any Recapitalization) to visit and inspect the
Company's properties, to examine its books of account and records and to discuss
the Company's affairs, finances and accounts with its officers, all at such
reasonable times as may be requested by the Investor; provided, however, that
the Company shall not be obligated pursuant to this Section 2.2 to provide
access to any information which the Company reasonably considers to be a trade
secret or similar confidential information.

                2.3. TERMINATION OF INFORMATION AND INSPECTION COVENANTS. The
covenants set forth in Sections 2.1 and 2.2 shall terminate and be of no further
force or effect when the sale

                                       13
<PAGE>   14

of securities pursuant to a registration statement filed by the Company under
the Act in connection with the firm commitment underwritten offering of its
securities to the general public is consummated or when the Company first
becomes subject to the periodic reporting requirements of Sections 12(g) or
15(d) of the 1934 Act, whichever event shall first occur.

                2.4. RIGHT OF FIRST OFFER. Subject to the terms and conditions
specified in this Section 2.4, the Company hereby grants to each Major Investor
(as hereinafter defined) a right of first offer with respect to future sales by
the Company of its Shares (as hereinafter defined). For purposes of this Section
2.4, a Major Investor shall mean any Investor that holds at least Eight Hundred
Thousand (800,000) shares (subject to appropriate adjustment for any
Recapitalization) of Series B Preferred Stock, Series C Preferred Stock, Series
D Preferred Stock or Common Stock issued upon conversion thereof and any person
who acquires at least Eight Hundred Thousand (800,000) shares (subject to
appropriate adjustment for any Recapitalization) of Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock or Common Stock issued upon
conversion thereof. For purposes of this Section 2.4, Investor includes any
general partners and affiliates of an Investor. An Investor shall be entitled to
apportion the right of first offer hereby granted it among itself and its
partners and affiliates in such proportions as it deems appropriate.

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

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

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

                        (c) If all Shares referred to in the Notice are not
elected to be obtained as provided in subsection 2.4(b) hereof, the Company may,
during the 60-day period following the expiration of the period provided in
subsection 2.4(b) hereof, offer the remaining unsubscribed portion of such
Shares to any person or persons at a price not less than, and upon terms no more
favorable to the offeree than those specified in the Notice. If the Company does
not enter into an agreement for the sale of the Shares within such period, or if
such agreement is not consummated within 60 days of the execution thereof, the
right provided hereunder shall be deemed to be revived and such Shares shall not
be offered unless first reoffered to the Major Investors in accordance herewith.

                                       14
<PAGE>   15

                        (d) The right of first offer in this Section 2.4 shall
not be applicable to (i) the issuance or sale of Common Stock to officers,
directors, employees or consultants for the primary purpose of soliciting or
retaining their employment or services if such issuance is approved by the Board
of Directors, (ii) to or after consummation of a firm commitment underwritten
public offering of shares of Common Stock registered under the Act, (iii) the
issuance of securities pursuant to the conversion or exercise of convertible or
exercisable securities, (iv) the issuance of securities in connection with a
bona fide business acquisition by the Company, whether by merger, consolidation,
sale of assets, sale or exchange of stock or otherwise, or (v) the issuance or
sale of Common Stock, or securities convertible into or exchangeable for Common
Stock (A) in connection with any borrowings, direct or indirect, from financial
institutions by the Company, whether or not presently authorized, including any
type of loan or payment evidenced by any type of debt instrument, (B) to vendors
or customers or to other persons in similar commercial situations with the
Company if such issuance is approved by the Board of Directors or (C) in
connection with obtaining lease financing, whether issued to a lessor, guarantor
or other person.

                        (e) The right of first refusal set forth in this Section
2.4 may not be assigned or transferred, except, other than with respect to a
direct competitor of the Company, as reasonably determined by the Company, that
(i) such right is assignable by each Major Investor to any wholly owned
subsidiary or parent of, or to any corporation or entity that is, within the
meaning of the Act, controlling, controlled by or under common control with, any
such Major Investor, and (ii) such right is assignable to a transferee or
assignee who holds after such transfer at least Eight Hundred Thousand (800,000)
shares of Registrable Securities (subject to appropriate adjustment for any
Recapitalization).

        3. MISCELLANEOUS.

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

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

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

                3.4. TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.

                                       15
<PAGE>   16

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

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

                3.7. AMENDMENTS AND WAIVERS. Any term of Section 1 of this
Agreement may be amended and the observance of any term of Section 1 of this
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company,
the holders of a majority of the then-outstanding Registrable Securities subject
to or enjoying the rights under the provisions being amended or waived, and the
holders of at least two-thirds (2/3) of the then-outstanding shares of Common
Stock issued or issuable upon conversion of the Series C Preferred Stock subject
to or enjoying the rights under the provisions being amended or waived. Any term
of Section 2 of this Agreement may be amended and the observance of any term of
Section 2 of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of the Company, the holders of a majority of the then-outstanding shares
of Common Stock issued or issuable upon conversion of the Series B Preferred
Stock, Series C Preferred Stock and Series D Preferred Stock, and the holders of
at least two-thirds (2/3) of the then-outstanding shares of Common Stock issued
or issuable upon conversion of the Series C Preferred Stock. Any term of Section
3 of this Agreement may be amended and the observance of any term of Section 3
of this Agreement may be waived (either generally or in a particular instance
and either retroactively or prospectively), only with the written consent of the
Company, the holders of a majority of the Registrable Securities then
outstanding, and the holders of at least two-thirds (2/3) of the
then-outstanding shares of Common Stock issued or issuable upon conversion of
the Series C Preferred Stock. Any amendment or waiver effected in accordance
with this Section 3.7 shall be binding upon each holder of any Registrable
Securities then outstanding, each future holder of all such Registrable
Securities, and the Company.

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

                3.9. AGGREGATION OF STOCK. All shares of Registrable Securities
held or acquired by affiliated or associated entities or persons shall be
aggregated together for the purpose of determining the availability of any
rights under this Agreement.

                                       16
<PAGE>   17

                3.10. AMENDMENT OF PRIOR AGREEMENT AND WAIVER OF RIGHT OF FIRST
REFUSAL. Effective upon the later of (i) the Closing (as defined in the Series D
Agreement) and (ii) the execution and delivery of this Agreement by the Company,
the Founder and Existing Investors holding at least that number of Registrable
Securities (as defined in the Prior Agreement) required to amend the Prior
Agreement pursuant to Section 3.7 thereof, the Prior Agreement shall be amended
and restated in its entirety as set forth herein. Effective upon the execution
and delivery of this Agreement by the Company and Existing Investors holding at
least that number of Registrable Securities (as defined in the Prior Agreement)
required to waive the provisions of Section 2.4 of the Prior Agreement pursuant
to Section 3.7 thereof, the Major Investors hereby waive any right to receive
notice of, and to participate in, the sale by the Company of (i) any shares of
Series D Preferred Stock pursuant to the Series D Agreement and (ii) any other
securities of the Company sold prior to the Closing (as defined in the Series D
Agreement).

                3.11. ENTIRE AGREEMENT. This Agreement (including the Exhibits
hereto, if any) constitutes the full and entire understanding and agreement
between the parties with regard to the subjects hereof and thereof.

                                       17
<PAGE>   18

                                                      Third Amended and Restated
                                                     Investors' Rights Agreement

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

SABA SOFTWARE, INC.

By: /s/ BABAK YAZDANI
   ----------------------------------
   Babak Yazdani, President

Address: 2400 Bridge Parkway
         Redwood Shores, CA 94065

FOUNDER:

By: /s/ BABAK YAZDANI
   ----------------------------------
   Babak Yazdani

INVESTORS:

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

Name:
     --------------------------------

Address:
        -----------------------------

        -----------------------------

        -----------------------------

[signed by the following:
Crosslink Omega Ventures III, L.L.C.
Crosslink Offshore Omega Ventures III
Omega Bayview, L.L.C.
Crosslink Crossover Fund III, L.P.
Sequoia Capital VIII
Sequoia International Technology Partners VIII
Sequoia International Technology Partners VIII(Q)
CMS Partners LLC
Sequoia Capital Franchise Fund
Sequoia Capital Franchise Partners
Comdisco, Inc.
Robert or Martha A. Cohn, TTEES, The Wellington Trust U/A/D 1-30-86
Stuart L. Rudick
Delaware Charter Guarantee & Trust Company TTEE FBO Stuart Rudick GTC IRA
    Rollover
Stuart Rudick Cust. Tmima Rudick CAUTMA Until Age 18
Mindful Partners, L.P.
The Hollis Trust, Nathaniel de Rothschild Trustee
Nathaniel de Rothschild
London Pacific Life & Annuity Company
Goldman Sachs Group
State Street Bank and Trust Company as Trustee for Northrup Grumman Corporation
    Master Trust
Upstart Communications, Inc.
Howard Marc Block
Tim Crossely
Philip Brook Manville
Jeffrey S. Milum
Daniel H. Case, III
Joseph B. Costello]

<PAGE>   19

                                                      Third Amended and Restated
                                                     Investors' Rights Agreement

                                   Schedule A

                              Schedule of Investors

Kamyar Kaviani
Mohammad J. Kaviani
Farzin Arsanjani
Patrick Bischoff
Gaurav Mehra
Brett Newbold
Abraham Kleinfeld
Kaveh Chehrehsa
Wayne A. Merrick
Atri Chatterjee
Richard Beard

Sequoia Capital VIII
Sequoia International Technology Partners VIII
Sequoia International Technology Partners VIII (Q)
CMS Partners LLC
Sequoia 1997
Klaus Murko
Axel Doehner
Clark Callander
Nick Zaldastani
Benigna Kirsten
Joachim R. Kirsten
Larry Solomon
Baum Family Trust
Broadview Associates
David Lamond
Stuart Rudick
Nina Bischoff
Ludwig Schloesser
Hans Christoph von Mitschke-Collande
Dieter Bischoff
Marc Benioff
John Martin
Christopher von Mitschke-Collande
Uwe Fischer
David C. Martin
David C. and Kim S. Martin
Grant Ricketts
Mark Hoefig
Andrew Loveless
Mindful Partners L.P.
Stuart Rudick cust Tmima Rudick
Martin Rudick

<PAGE>   20

Marie Codling
Ed Ott

Omega Ventures III, L.L.C.
RS & Co. Offshore Omega Ventures III
Omega Bayview, L.L.C.
Crossover Fund II, L.P.
Tullius Partners, LLC
Sequoia Capital Franchise Fund
Sequoia Capital Franchise Partners
Comdisco, Inc.
Robert or Martha A. Cohn, TTEES, The Wellington Trust U/A/D 1-30-86
Stuart Jacobson
David Lamond
Patrick Bischoff
David C. Martin
Carola Stroehlein
John Martin
Christopher von Mitschke-Collande
Mindful Partners L.P.
Stuart Rudick
The Hollis Trust, Nathaniel de Rothschild Trustee
Nathaniel de Rothschild
Amitabh Shukla
Janet McCabe
Clark Callander
Peter J. Mooney as nominee for the Broadview Partners Group

Crosslink Omega Ventures III, L.L.C.
Crosslink Offshore Omega Ventures III
Omega Bayview, L.L.C.
Crosslink Crossover Fund III, L.P.
Sequoia Capital VIII
Sequoia International Technology Partners VIII
Sequoia International Technology Partners VIII(Q)
CMS Partners LLC
Sequoia Capital Franchise Fund
Sequoia Capital Franchise Partners
Comdisco, Inc.
Robert or Martha A. Cohn, TTEES, The Wellington Trust U/A/D 1-30-86
Stuart L. Rudick
Delaware Charter Guarantee & Trust Company TTEE FBO Stuart Rudick GTC IRA
    Rollover
Stuart Rudick Cust. Tmima Rudick CAUTMA Until Age 18
Mindful Partners, L.P.
The Hollis Trust, Nathaniel de Rothschild Trustee
Nathaniel de Rothschild
London Pacific Life & Annuity Company

<PAGE>   21

                                                      Third Amended and Restated
                                                     Investors' Rights Agreement

Goldman Sachs Group
State Street Bank and Trust Company as Trustee for Northrup Grumman Corporation
    Master Trust
Upstart Communications, Inc.
Howard Marc Block
Tim Crossely
Philip Brook Manville
Jeffrey S. Milum
Daniel H. Case, III
Joseph B. Costello

<PAGE>   22

                               SABA SOFTWARE, INC.

                               AMENDMENT NO. 1 TO
             THIRD AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT

                THIS AMENDMENT NO. 1 TO THIRD AMENDED AND RESTATED INVESTORS'
RIGHTS AGREEMENT (the "Amendment") is made as of _______________, 2000, by and
between Saba Software, Inc., a Delaware corporation (the "Company"), certain
holders of capital stock of the Company (the "Existing Investors") and General
Electric Company, a New York corporation acting through its Power Systems
business unit (the "Warrantholder").

                                    RECITALS

                WHEREAS, each of the Existing Investors holds that number of
shares of Common Stock, Series B Preferred Stock, Series C Preferred Stock and
Series D Preferred Stock of the Company and/or shares of Common Stock issued
upon conversion thereof set forth beneath such Existing Investor's name on the
signature page hereto, and possesses registration rights, information rights,
rights of first refusal, and other rights pursuant to the Third Amended and
Restated Investors' Rights Agreement, dated as of November 10, 1999 (the
"Investors' Rights Agreement");

                WHEREAS, the Warrantholder has been issued a warrant (the
"Warrant") to purchase a certain number of shares of Common Stock of the Company
(the "Warrant Shares") pursuant to that certain Warrant to Purchase Shares of
Common Stock of Saba Software, Inc. dated as of December 30, 1999 (the "Warrant
Agreement");

                WHEREAS, the Existing Investors are holders of a majority of the
outstanding Registrable Securities (as defined in the Investors' Rights
Agreement) and the Existing Investors are the holders of at least two-thirds of
the outstanding shares of Common Stock issued or issuable upon conversion of the
Series C Preferred Stock of the Company currently outstanding;

                WHEREAS, the Company and such Existing Investors desire to amend
the Investors' Rights Agreement as provided herein; and

                NOW, THEREFORE, in consideration of the mutual premises and
covenants set forth herein, the Existing Investors and the Company hereby agree
that the Investors' Rights Agreement shall be amended as set forth herein, and
the parties hereto further agree as follows:

1. Amendment of Definition of "Registrable Securities". Section 1.1(g) of the
Investors' Rights Agreement is hereby amended to read as follows:

<PAGE>   23

        (g) The term "Registrable Securities" means (i) the Common Stock
        issuable or issued upon conversion of the Series A Preferred Stock,
        Series B Preferred Stock, Series C Preferred Stock or Series D Preferred
        Stock, (ii) the Founder's Shares, (iii) solely for purposes of Sections
        1 and 3 of the Agreement, the Common Stock issued upon exercise of that
        certain Warrant to Purchase Shares of Common Stock of Saba Software,
        Inc., by and between the Company and General Electric Company acting
        through its Power Systems business unit and dated as of December 30,
        1999 (the "Warrant Shares") and (iv) 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
        the shares referenced in (i), (ii) or (iii) above, excluding in all
        cases, however, any Registrable Securities that have been sold by a
        person in a transaction in which his or her rights under this Section 1
        are not assigned or that have been sold by a person pursuant to a
        registration statement under the Act covering such Registrable
        Securities that has been declared effective by the SEC or in an open
        market transaction under Rule 144 of the Act. Notwithstanding anything
        to the contrary set forth in this Section 1.1(g), neither the Common
        Stock issuable or issued upon conversion of the Series A Preferred Stock
        or the Founder's Shares (or any shares of Common Stock otherwise deemed
        "Registrable Securities" with respect thereto pursuant to clause (iv) of
        this Section 1.1(g)) shall be deemed Registrable Securities and the
        holders thereof shall not be deemed Holders for the purposes of Section
        1.2, 1.6, 1.12, and 1.14. Notwithstanding anything to the contrary set
        forth in this Section 1.1(g), neither the Warrant Shares nor any shares
        of Common Stock otherwise deemed "Registrable Securities" with respect
        thereto pursuant to clause (iv) of this Section 1.1(g) shall be deemed
        Registrable Securities and the holders thereof shall not be deemed
        Holders for the purposes of (i) Section 1.14, and (ii) determining
        whether the Company is required to effect a registration or file a
        registration statement pursuant to Section 1.2 or Section 1.12.

2. Amendment of Underwriting Requirements for "Demand" Registrations. The
penultimate sentence of Section 1.2(b) of the Investors' Rights Agreement is
hereby amended to read as follows:

        Notwithstanding any other provision of this Section 1.2, if the
        underwriter advises the Initiating Holders in writing that marketing
        factors require a limitation of the number of shares to be underwritten,
        then the Initiating Holders shall so advise all Holders of Registrable
        Securities which would otherwise be underwritten pursuant hereto, and
        the number of shares of Registrable Securities that may be included in
        the underwriting shall be allocated among all Holders thereof, including
        the Initiating Holders, in proportion (as nearly as practicable) to the
        amount of Registrable Securities of the Company owned by each Holder;
        provided, however, that the number of shares of Registrable Securities
        to be included in such underwriting shall not be reduced unless all
        other securities are first entirely excluded from the underwriting;
        provided, further, that the number of shares of Registrable Securities
        to be included in such underwriting (excluding any Warrant Shares or
        other securities issuable upon the exercise of warrants or options
        granted to vendors or customers of the Company ("Vendor/Customer
        Shares") which are entitled to be included in such underwriting) shall
        not be reduced unless the Warrant Shares and Vendor/Customer Shares are
        first entirely excluded from such underwriting.

3. Amendment of Underwriting Requirements for "Piggy-Back" Registration. Section
1.8 of the Investors' Rights Agreement is hereby amended to read as follows:

        1.8. UNDERWRITING REQUIREMENTS. In connection with any offering
        involving an underwriting of shares of the Company's capital stock, the
        Company shall not be required

                                       2
<PAGE>   24

        under Section 1.3 to include any of the Holders' securities in such
        underwriting unless they accept the terms of the underwriting as agreed
        upon between the Company and the underwriters selected by it and then
        only in such quantity as the underwriters determine in their sole
        discretion will not, jeopardize the success of the offering by the
        Company. If the total amount of securities, including Registrable
        Securities, requested by stockholders to be included in such offering
        exceeds the amount of securities sold other than by the Company that the
        underwriters determine in their sole discretion is compatible with the
        success of the offering, then the number of shares of Holders'
        securities to be included in such offering shall be reduced in such
        manner as the Company and the underwriters determine to permit the
        success of such offering (the securities so included to be apportioned
        pro rata among the selling stockholders according to the total amount of
        securities entitled to be included therein owned by each selling
        stockholder or in such other proportions as shall mutually be agreed to
        by such selling stockholders) but in no event shall (i) the amount of
        securities of the selling Holders of Registrable Securities included in
        the offering be reduced below thirty percent (30%) of the total amount
        of securities included in such offering, unless such offering is the
        initial public offering of the Company's securities in which case the
        selling stockholders may be excluded if the underwriters make the
        determination described above and no other stockholders' securities are
        included, (ii) notwithstanding clause (i) above and except as provided
        in clause (iii) below, any shares being sold by a stockholder exercising
        a demand registration right similar to that granted in Section 1.2 be
        excluded from such offering, (iii) the number of shares of Registrable
        Securities to be included in such underwriting (excluding any Warrant
        Shares or Vendor/Customer Shares which are entitled to be included in
        such underwriting), be reduced unless the Warrant Shares and
        Vendor/Customer Shares are first entirely excluded from such
        underwriting, and (iv) the number of shares of Registrable Securities to
        be included in such underwriting (excluding any Founder's Shares,
        Warrant Shares and Vendor/Customer Shares) be reduced unless the
        Founder's Shares are first entirely excluded from such underwriting. For
        purposes of the preceding parenthetical concerning apportionment, for
        any selling stockholder which is a holder of Registrable Securities and
        which is a partnership or corporation, the partners, retired partners
        and stockholders of such holder, or the estates and family members of
        any such partners and retired partners and any trusts for the benefit of
        any of the foregoing persons shall be deemed to be a single "selling
        stockholder," and any pro-rata reduction with respect to such "selling
        stockholder" shall be based upon the aggregate amount of shares carrying
        registration rights owned by all entities and individuals included in
        such "selling stockholder," as defined in this sentence.

4. Amendment of Underwriting Requirements for "Form S-3" Registrations. Section
1.12(b) of the Investors' Rights Agreement is hereby amended by adding the
following sentence to the end of such Section 1.12(b):

        Notwithstanding any other provision of this Section 1.12, if the
        underwriter of shares to be registered and sold pursuant to this Section
        1.12 advises, in writing, the Holders desiring to participate in such
        registration that marketing factors require a limitation of the number
        of shares to be underwritten, then the number of shares of Registrable
        Securities that may be included in the underwriting shall be allocated
        among all Holders thereof, including the Holders initiating the
        registration request hereunder, in proportion (as nearly as practicable)
        to the amount of Registrable Securities of the Company owned by each
        Holder; provided, however, that the number of shares of Registrable
        Securities to be included in such underwriting (excluding any Warrant
        Shares or Vendor/Customer Shares which are entitled to be included in
        such underwriting) shall not be reduced unless the Warrant Shares and
        Vendor/Customer Shares are first entirely excluded from such
        underwriting.

                                       3
<PAGE>   25

5. Agreement to be Bound. Upon execution of this Amendment, the Warrantholder
shall be deemed to be a party to the Investors' Rights Agreement and
Warrantholder agrees to be subject to the terms and conditions thereof.

6. Interpretation of Amendment. This Amendment shall be considered a part of and
construed in conjunction with the Investors' Rights Agreement. In the event of
any inconsistency or conflict between the Investors' Rights Agreement and this
Amendment, the terms, conditions and provisions of this Amendment shall govern
and control.

7. Continuance of Investors' Rights Agreement. Except as expressly modified by
this Amendment, the Investors' Rights Agreement will continue in full force and
effect in accordance with its terms.

8. Miscellaneous.

        8.1 Amendment of Investors' Rights Agreement. Effective upon the
execution and delivery of this Amendment by the Company, the Warrantholder and
the Existing Investors, the Investors' Rights Agreement shall be amended as
herein provided pursuant to Section 3.7 of the Investors' Rights Agreement. This
Amendment is entered into on behalf of all Investors (as defined in the
Investors' Rights Agreement) and shall be binding upon each holder of any
Registrable Securities currently outstanding, each future holder of all such
Registrable Securities, the Warrantholder and the Company.

        8.2 Governing Law. This Amendment 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.

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

        8.4 Entire Agreement. The Investors' Rights Agreement and this Amendment
constitute the full and entire understanding and agreement between the parties
with regard to the subjects hereof and thereof. All previous discussions and
agreements with respect to such subject matter are superseded by the Investors'
Rights Agreement and this Amendment.

                                      * * *

                                       4
<PAGE>   26

       Amendment No. 1 to Third Amended and Restated Investors' Rights Agreement

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

COMPANY:

Saba Software, Inc.

By:
   ----------------------------------
   Babak Yazdani, President

WARRANTHOLDER:

General Electric Company

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

Name:
     --------------------------------

Its:
    ---------------------------------

EXISTING INVESTOR:

Babak Yazdani
(7,000,000 shares of Common Stock)

By:
   ----------------------------------
   Babak Yazdani

<PAGE>   27

       Amendment No. 1 to Third Amended and Restated Investors' Rights Agreement

EXISTING INVESTORS:

Sequoia Capital VIII
(5,177,822 shares of Series B Preferred Stock)
(594,062 shares of Series C Preferred Stock)
(282,286 shares of Series D Preferred Stock)

Sequoia International Technology Partners VIII
(65,701 shares of Series B Preferred Stock)
(7,538 shares of Series C Preferred Stock)
(3,573 shares of Series D Preferred Stock)

Sequoia International Technology Partners VIII (Q)
(342,788 shares of Series B Preferred Stock)
(39,329 shares of Series C Preferred Stock)
(18,643 shares of Series D Preferred Stock)

By: SC VIII Management LLC, a California limited
liability partner
Its: General Partner

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

CMS Partners LLC
(114,263 shares of Series B Preferred Stock)
(13,109 shares of Series C Preferred Stock)
(6,214 shares of Series D Preferred Stock)

Sequoia 1997
(12,569 shares of Series B Preferred Stock)
(1,442 shares of Series C Preferred Stock)

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

Sequoia Capital Franchise Fund
(947,168 shares of Series C Preferred Stock)
(465,569 shares of Series D Preferred Stock)

<PAGE>   28

       Amendment No. 1 to Third Amended and Restated Investors' Rights Agreement

Sequoia Capital Franchise Partners
(167,147 shares of Series C Preferred Stock)
(63,487 shares of Series D Preferred Stock)

By: SCFF Management, LLC, a Delaware limited liability company

Its: General Partner

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

<PAGE>   29

       Amendment No. 1 to Third Amended and Restated Investors' Rights Agreement

EXISTING INVESTORS:

Omega Ventures III, L.L.C.
(677,806 shares of Series C Preferred Stock)

RS & Co. Offshore Omega Ventures III
(1,056,970 shares of Series C Preferred Stock)

By: RS Omega III Holdings, L.L.C.
Its: Authorized Signatory

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

Omega Bayview, L.L.C.
(93,448 shares of Series C Preferred Stock)
(23,522 shares of Series D Preferred Stock)

By:
   ----------------------------------
   Authorized Signatory

Crossover Fund II, L.P.
(173,526 shares of Series C Preferred Stock)

By:  Crossover Investment Management, L.L.C.
Its:  General Partner

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

Crosslink Omega Ventures III, L.L.C.
(170,612 shares of Series D Preferred Stock)

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

Crosslink Offshore Omega Ventures III
(266,051 shares of Series D Preferred Stock)

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

<PAGE>   30

       Amendment No. 1 to Third Amended and Restated Investors' Rights Agreement

Crosslink Crossover Fund III, L.P.
(43,678 shares of Series D Preferred Stock)

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

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