Document:

Kranem Corp: Exhibit 10.15 - Filed by newsfilecorp.com

Exhibit 10.15

CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE
COMMISSION.
REDACTED MATERIAL IS MARKED AS
______________

SPA 

STOCK PURCHASE AGREEMENT 

THIS Restricted Stock Purchase Agreement (the
“Agreement”), to be effective on November 1, 2011 (the “Effective
Date”), is by and between Adora ICT Srl, an Italian corporation (the
“Company”), Kranem Corporation, a Colorado corporation (the
“Purchaser”), Massimo Santangelo who is the Chief Executive Officer
(Amministratore Unico) of the Company (“Mr. Santangelo”), Cristina Carra
(“Mrs. Carra”), an individual, who owns 50 % of the Company, and
E-Company Srl (“E-Company”), represented by its Chief Executive Officer
(Amministratore Unico), Mr. Giovanni Fiori, which owns 50% of the Company,
(Mrs. Carra with E-Company, the “Sellers”) The Company, the
Purchaser, Mr. Santangelo, Mrs. Carra and E-Company are hereinafter sometimes
referred to collectively as the “Parties” and individually as a
“Party.”

WHEREAS, the Purchaser wishes to purchase from the
Sellers all of the Purchaser’s shares of the of the Company (the “Company Shares”) under the terms and conditions of this Agreement;

WHEREAS, the Sellers desire to sell to the Purchaser the
Company Shares under the terms and conditions of this Agreement;

WHEREAS, the Sellers own 100% of the Company; and 

WHEREAS, the Company consents to the sale of the Company
by the Sellers to the Purchaser under the terms and conditions of this
Agreement.

NOW, THEREFORE, in consideration of the mutual promises
contained herein and other good and valuable consideration, receipt of which is
hereby acknowledged, the Parties to this Agreement agree as follows: 

1. Sale of the Shares. 

(a) Sale of the Company. The Sellers agree
to sell to the Purchaser and the Purchaser agrees to purchase the Company for a
total price equal to 50% of the 2011 revenues of the Company as identified in
the audit of the Company’s financials to be completed as soon as possible after
the Effective Date (the “Purchase Price”), 50% of which shall be paid in
cash (the “Cash Consideration”) and 50% of which shall be paid in the
common stock of the Purchaser (the “Common Stock”) calculated using the
closing market price of the Company’s stock (the “Stock Consideration”)
on the Effective Date. The Cash Consideration shall be paid as follows: (a) 50%
of the cash shall be paid at the later of the day after the date (i) that the
2011 audit (the “2011 Audit”) of the Company is completed or (ii) the
Purchaser closes its next round of equity financing; (b) 50% of the cash shall
be paid on the day after the date that the 2012 audit (the “2012 Audit”)
of the Company is completed provided that the revenues and earnings of the
Company before income tax (“EBIT”) is the same or better than the
revenues and EBIT in the 2011 Audit. The Stock Consideration shall be paid as
follows: (a) 50% shall be paid within one day of the completion of the 2011
Audit and (b) 50% shall be paid within one day of the completion of the 2011
provided that the revenues and net income of the Company is the same orbetter that the revenues and EBIT in the 2011 Audit. The Parties agree that the 2011 Audit and the 2012 Audit shall be conducted in accordance with US GAAP. The Parties agree and each Seller acknowledges that the Stock Consideration and the Cash
Consideration shall be split between the Sellers on the basis of each Seller’ percent ownership of the Company.

 1 of 8

CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE
COMMISSION.
REDACTED MATERIAL IS MARKED AS
______________

SPA 

(b) Closing; Delivery. The closing of this Agreement shall take place on the Effective Date at the Purchaser’s offices at 10:00 a.m., California standard time, or at such other time and place as the Sellers, the Company
and the Purchaser mutually agree (the “Closing”). The Purchaser shall deliver or cause its transfer agent to deliver to the Sellers stock certificates in the name of each of the Sellers split in accordance with Section 1(b) above
as soon as possible after the Closing. 

(c) Restricted Securities. The Sellers hereby confirm that they have been informed that the Purchaser Shares are “restricted securities” under the Securities Act of 1933, as amended (the “1933 Act”). The
Sellers, jointly and severally, acknowledge that the Purchaser Shares may not be resold or transferred unless the Purchaser Shares are first registered under the federal securities laws or unless an exemption from such registration is available.
Each Seller hereby acknowledges that he/she is prepared to hold the Purchaser Shares for an indefinite period. Each Seller acknowledges that he/she is aware that Rule 144 of the Securities and Exchange Commission issued under the 1933 Act is not
presently available to exempt the sale of the Purchaser Shares from the registration requirements of the 1933 Act. The Parties acknowledge that the requirements of Rule 144 are subject to change at any time.

(d) Disposition of the Shares. Subject to the terms of this Agreement, each Seller hereby agrees that he/she shall transfer, sell or otherwise dispose of the Purchaser Shares in accordance with Rule 144. The Purchaser shall not be
required to transfer on its books any Purchaser Shares, which have been sold or transferred in violation of the provisions of this Agreement. The Purchaser shall not be required to treat any transferee to whom the Purchaser Shares have been
transferred in contravention of this Agreement as the owner of the Purchaser Shares. 

(f) Transfer Restrictions.

(i) Definition of Owner. For purposes of this Agreement, the term “Owner” shall include each Seller and all subsequent holders of the Purchaser Shares, who derive their ownership through a permitted transfer from each
Seller in accordance with subsection 1(f)(ii) below. 

(ii) Restriction on Transfer. The Owner shall not transfer, assign, encumber or otherwise dispose of any of the Purchaser Shares except in accordance with all federal and state securities law.

(iii) Obligations of Transferee. Each person to whom the Purchaser Shares are transferred by means of one of the permitted transfers must, as a condition precedent
to the validity of such transfer, acknowledge in writing to the Purchaser that such person is bound by the provisions of this Agreement. 

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CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE
COMMISSION.
REDACTED MATERIAL IS MARKED AS
______________

SPA 

(g) Company Consent. The Company hereby consents to the sale of the Company Shares by the Sellers to the Purchaser and agrees to take whatever steps and file or issue whatever documents necessary to effectuate the sale of the Company
Shares and the intent of this Agreement. 

(h) Employment and Non-compete. As additional consideration for the Purchaser to purchase the Company Shares from the Sellers and issue the Purchaser Shares to the Sellers, the Sellers and Mr. Santangelo hereby covenant to the
Purchaser that Mr. Santangelo, to the greatest extent allowed under applicable law, will (i) continue to work for the Company as the Chief Executive Officer (Amministratore Unico) at an annual salary of €
________(which salary shall be
reviewed annually by the Board), for five years from the Effective Date provided the Company does not significantly change his responsibilities or his compensation; and (ii) not work for a competitor of the Company nor compete with the Company for
two years after his termination by the Company. The Company agrees to continue to employ Mr. Santangelo for five years after the Effective Date provided he is not guilty of (i) a crime, (ii) unethical activities, (iii) disloyalty to the Company,
(iv) moral turpitude, (v) in connection with the performance of Employee’s duties (a) gross misconduct, (b) breach of fiduciary duty, or (c) insubordination (d), (vi) dishonesty or theft, or (vii) disparagement of the Company, its officers,
directors, shareholders or other employee.

2. Representations and Warranties of the Company and the Sellers. The Company and each Seller, jointly and severally, hereby represents and warrants to the Purchaser that: 

(a) Organization, Good Standing and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of Italy and has all requisite corporate power and authority to carry on its
business as now conducted and as proposed to be conducted. 

(b) Authorization. All corporate action on the part of the Company, its officers, directors and shareholders necessary for the authorization, execution and delivery of this Agreement and the authorization, sale, issuance and
delivery of the Company Shares and the performance of all obligations of the Company hereunder has been taken or will be taken prior to the Closing.

(c) Valid Obligations. The Agreement, when executed and delivered by the Sellers, Mr. Alesio and the Company, shall constitute valid and legally binding obligations of the Sellers and the Company, enforceable against the Sellers and
the Company in accordance with their terms.

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CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE
COMMISSION.
REDACTED MATERIAL IS MARKED AS
______________

SPA 

(d) Intellectual Property. The Company exclusively owns all right, title and interest to and in the Company’s intellectual property described to the Purchaser during discussions in connection with this Agreement free and clear of
any Encumbrances. 

(e) Assets. The Sellers own, and has good and valid title to, all of the assets set forth in the Company’s financial statements, given to the Purchaser during discussions in connection with this Agreement, free and clear of any
encumbrances. 

(f) Articles of Incorporation. The Company and the Sellers have delivered to the Purchaser accurate and complete current copies of the Company’s articles of incorporation and bylaws.

(g) Financial Statements. The Company and the Sellers have delivered to the Purchaser accurate and complete current copies of the Company’s financial statements, which shall cover the period through the end of the second quarter
of 2011 (“Financial Statements”). 

(h) Legal Requirements. The Company is in full compliance with each legal requirement that is applicable to it or to the conduct of its business or the ownership or use of any of its assets and the Company has at all times been in full
compliance with each legal requirement that is or was applicable to it or to the conduct of its business or the ownership or use of any of its assets. 

(i) Full Disclosure. This Agreement does not contain any untrue statement of fact and does not omit to state any fact necessary to make any of the representations, warranties or other statements or information contained therein not
misleading. All of the information regarding the Company and its business, condition, assets, liabilities, operations, financial performance, net income and prospects that has been furnished to the Purchaser or any of the Purchaser’s
Representatives by or on behalf of the Sellers or the Company is accurate and complete in all respects. Each Seller agrees and acknowledges that, if a liability or debt owed by the Company on the Effective Date has not been previously identified in
writing in the Financial Statements given to the Purchaser on or before the Effective Date will be transferred to and become the liability and debt of the Sellers and shall not be a liability or debt of the Company or the Purchaser.

3. Representations and Warranties of the Sellers. Each Seller hereby severally represents and warrants to the Purchaser that: 

(a) Purchase Entirely for Own Account. The Purchaser Shares (“Securities”) to be acquired by each of the Sellers will be acquired for investment for the Seller’s own account, not as a nominee or agent,
and not with a view to the resale or distribution of any part thereof, and each of the Sellers has no present intention of selling, granting any participation in, or otherwise distributing the same.

(b) Knowledge. Each Seller is aware of the Purchaser’s business affairs and financial condition and has acquired sufficient information about the Purchaser to make an informed and knowledgeable decision to acquire the
Securities. 

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CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE
COMMISSION.
REDACTED MATERIAL IS MARKED AS
______________

SPA 

(c) Restricted Securities. Each Seller understands that the Securities are “restricted securities” under applicable U.S. federal and state securities laws. Each Seller acknowledges that the Company has no obligation
to register or qualify the Securities for resale.

(d) Accredited Investor. Each Seller is an “Accredited Investor” as defined in Rule 501(a) of Regulation D promulgated under the Act. 

4. Representations and Warranties of the Purchaser. The Purchaser hereby represents and Warrant to each Seller that 

(a) Organization, Good Standing and Qualification. The Purchaser is a corporation duly organized, validly existing and in good standing under the laws of California and has all requisite corporate power and authority to carry on its
business as now conducted and as proposed to be conducted. 

(b) Authorization. All corporate action on the part of the Purchaser, its officers, directors and shareholders necessary for the authorization, execution and delivery of this Agreement and the authorization, sale, issuance and delivery
of the Purchaser Shares and the performance of all obligations of the Purchaser hereunder has been taken or will be taken prior to the Closing.

(c) Valid Obligations. The Agreement, when executed and delivered by the Purchaser, shall constitute valid and legally binding obligations of the Purchaser, enforceable against the Purchaser in accordance with their terms. 

(d) Capital Stock. All of the outstanding capital stock of the Purchaser is, and upon issuance of the Purchaser Shares pursuant to this Agreement, all of the Purchaser Shares will be, validly issued, fully paid and nonassessable. All
outstanding the Purchaser’s capital stock has been issued in full compliance with applicable law.

5. Conditions of the Purchaser’s Obligations at Closing. The obligations of the Purchaser to each Seller under this Agreement are subject to the fulfillment, on or before the Closing, of the following conditions,
unless otherwise waived: 

(a) Representations and Warranties. The representations and warranties of each Seller and the Company contained in Sections 2 and 3 shall be true on and as of the Closing with the same effect as though such representations and
warranties had been made on and as of the date of the Closing. 

(b) Qualifications. All authorizations, approvals or permits, if any, of any governmental authority or regulatory body of the United States or of any country or state that are required in connection with the lawful issuance and
sale of the Securities pursuant to this Agreement shall be obtained and effective as of the Effective Date. 

5 of 9 

CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE
COMMISSION.
REDACTED MATERIAL IS MARKED AS
______________

SPA 

6. Conditions of the Sellers’ Obligations at Closing. The obligations of each Seller under this Agreement are subject to the fulfillment, on or before the Closing, of the following conditions, unless otherwise
waived: 

(a) Representations and Warranties. The representations and warranties of the Purchaser contained in Section 4 shall be true on and as of the Closing with the same effect as though such representations and warranties had been
made on and as of the Closing. 

(b) Qualifications. All authorizations, approvals or permits, if any, of any governmental authority or regulatory body of the United States or of country or any state that are required in connection with the lawful issuance and
sale of the Securities pursuant to this Agreement shall be obtained and effective as of the Closing.

7. Miscellaneous. 

(a) Successors and Assigns. 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. 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. 

(b) Governing Law; Venue. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the Parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of
California, without giving effect to principles of conflicts of law. The Parties acknowledge that any action brought by a Party to interpret or enforce any provision of this Agreement shall be brought in, and the other Parties agree to and do
hereby, submit to the jurisdiction and venue of, the courts of Santa Clara County in the state of California.

(c) Facsimile and Counterparts. This Agreement may be signed by facsimile and executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument. 

(d) 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. 

(e) Notices. Any notice required or permitted by this Agreement shall be in writing and shall be deemed sufficient upon receipt, when delivered personally or by courier, overnight delivery service or confirmed facsimile, or
forty-eight (48) hours after being deposited in the U.S. mail as certified or registered mail with postage prepaid, if such notice is addressed to the Party to be notified at such Party’s address or facsimile number is set forth in such
Party’s files. 

(f) Finder’s Fee. Each Party represents that it neither is nor will be obligated for any finder’s fee or commission in connection with this transaction. Each Party agrees to
indemnify and to hold harmless the other Parties from any liability for any commission or compensation in the nature of a finder’s fee (and the costs and expenses of defending against such liability or asserted liability) for which such Party
or any of its officers, employees, or representatives is responsible.

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CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE
COMMISSION.
REDACTED MATERIAL IS MARKED AS
______________

SPA 

(g) Amendments and Waivers. Any term of this Agreement may be amended or waived only with the written consent of the Company and the holders of at least a majority in interest of the Note. Any amendment or waiver affected in
accordance with this Section 7(g) shall be binding upon the Purchaser and the transferee of the Securities, the future holder of all such Securities, and the Company. 

(h) Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the Parties agree to renegotiate such provision in good faith, in order to maintain the economic position enjoyed
by the Party as close as possible to that under the provision rendered unenforceable. In the event that the Parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded from this
Agreement, (ii) the balance of the Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of the Agreement shall be enforceable in accordance with its terms. 

(i) Entire Agreement. This Agreement and the documents referred to herein constitute the entire agreement between the Parties hereto pertaining to the subject matter hereof, and any and all other written or oral agreements
existing between the Parties hereto are expressly canceled. 

(j) Exculpation. Each Seller acknowledges that he/she is not relying upon any person, firm or corporation, other than the Purchaser and its officers and directors, in making its decision to accept the Purchaser Shares as partial
consideration for his sale of the Company Shares. 

(k) Sellers Remedies. In addition to any other remedy available to the Sellers at law or in equity, each Seller, at such Seller’s option, may require the Purchaser to (i) return the Company Shares to the Sellers if the Purchaser
does make the Cash Consideration as set forth in Section 1(a) above; or (ii) issue an additional US$100,000.00 of the Purchaser common stock at the same price as the Purchaser Shares.

(l) Purchaser Remedies. In addition to any other remedy available to the Purchaser at law or in equity, if (i) either of the Seller or the Company breaches this Agreement or (ii) the Purchaser discovers within one year of the date on
which the 2012 Audit is completed that the representations and warranties set forth in Sections 2 or 3 above are not true and accurate, the Purchaser, at the Purchaser’s sole option, may (iii) cancel this Agreement and require each Seller to
refund the Cash Consideration and return the Purchaser Shares; or (iv) require each Seller to return 50% of the Cash Consideration and return 50% of the Purchaser Shares.

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CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE
COMMISSION.
REDACTED MATERIAL IS MARKED AS
______________

SPA 

(m) Waiver. No failure on the part of any Party to exercise any power, right, privilege or remedy under this Agreement, and no delay on the part of any Party in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no single or partial exercise of any such power, right, privilege or remedy shall preclude any other or further exercise thereof or of any other power, right, privilege or
remedy.

(n) Further Assurances. Each Party hereto shall execute and/or cause to be delivered to each other Party hereto such instruments and other documents, and shall take such other actions, as such other Party may reasonably request for the
purpose of carrying out or evidencing any of the Transactions.

[REST OF PAGE INTENTIONALLY LEFT BLANK] 

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CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE
COMMISSION.
REDACTED MATERIAL IS MARKED AS
______________

SPA 

IN WITNESS WHEREOF, the Parties have executed this Stock
Purchase Agreement as of the Effective Date. 

	THE PURCHASER 	 	THE SELLERS 	 
	  	 	  	 
	Signature:
      /s/ Ajay Batheja 	 	For E-Company 	 
	Name: Ajay Batheja 	 	Signature: /s/ Giovanni Fiori 	 
	Title: President and CEO 	 	Title: Amministratore Unico 	 
	  	 	Date Signed: 	 
	  	 	  	 
	  	 	Name: Giovanni Fiori 	 
	  	 	Date Signed: 	 
	  	 	  	 
	THE COMPANY 	 	Signature: /s/ Cristina Carra 	 
	  	 	Name: Cristina Carra 	 
	Signature:
      /s/ Massimo Santangelo 	 	Date Signed: 	 
	Name: Massimo Santangelo 	 	  	 
	Title: Amministratore Unico 	 	  	 
	Date
      Signed: 	 	  	 
	  	 	  	 
	MR. SANTANGELO 	 	  	 
	  	 	  	 
	Signature:
      /s/ Massimo Santangelo 	 	  	 
	Name: Massimo Santangelo 	 	  	 
	Date
      Signed: 	 	  	 

9 of 9Kranem Corporation: Exhibit 10.16 - Filed by newsfilecorp.com

XALTED NETWORKS, INC. 

SERIES BB PREFERRED 

AND SERIES CC PREFERRED 

STOCK PURCHASE AGREEMENT 

February 10, 2004 

TABLE OF CONTENTS 

	  	  	  	Page 
	  	  	  	  
	1. 	PURCHASE AND SALE OF STOCK. 	1 
	  	1.1. 	Sale and Issuance of Series CC
      Preferred Stock. 	1 
	  	1.2. 	Sale and Issuance
      of Series BB Preferred 	2 
	  	1.3. 	Initial Closing Date 	2 
	  	1.4. 	Subsequent
      Closings 	2 
	  	  	  	  
	2. 	REPRESENTATIONS AND WARRANTIES OF THE COMPANY 	2 
	  	2.1. 	Organization, Good Standing and
      Qualification 	3 
	  	2.2. 	Capitalization
      and Voting Rights 	3 
	  	2.3. 	Subsidiaries 	4 
	  	2.4. 	Authorization 	4 
	  	2.5. 	Valid Issuance of Preferred and
      Common Stock 	4 
	  	2.6. 	Governmental
      Consents 	4 
	  	2.7. 	Offering 	5 
	  	2.8. 	Litigation 	5 
	  	2.9. 	Proprietary Information and
      Inventions Agreements 	5 
	  	2.10. 	Patents and
      Trademarks 	5 
	  	2.11. 	Compliance with Other Instruments
    	6 
	  	2.12. 	Agreements;
      Action. 	6 
	  	2.13. 	Related-Party Transactions 	7 
	  	2.14. 	Financial
      Statements 	7 
	  	2.15. 	Changes 	7 
	  	2.16. 	Tax Returns 	8 
	  	2.17. 	Permits 	9 
	  	2.18. 	Title to Property
      and Assets 	9 
	  	2.19. 	Employee Benefit Plans 	9 
	  	2.20. 	Disclosure 	9 
	  	2.21. 	Minute Book 	9 
	  	2.22. 	Qualified Small
      Business Stock 	10 
	  	  	  	  
	3. 	REPRESENTATIONS AND WARRANTIES OF THE INVESTORS 	10 
	  	3.1. 	Authorization 	10 
	  	3.2. 	Purchase Entirely
      for Own Account 	10 
	  	3.3. 	Disclosure of Information 	10 
	  	3.4. 	Investment
      Experience 	11 
	  	3.5. 	Accredited Investor 	11 
	  	3.6. 	Restricted
      Securities 	11 
	  	3.7. 	Further Limitations on
      Disposition 	11 
	  	3.8. 	Legends 	12 
	  	  	  	  
	4. 	CONDITIONS OF INVESTORS’ OBLIGATIONS AT INITIAL CLOSING 	12 
	  	4.1. 	Representations and Warranties
	12 
	  	4.2. 	Performance 	12 

-i- 

	  	4.3. 	Compliance
      Certificate 	12 
	  	4.4. 	Qualifications 	12 
	  	4.5. 	Proceedings and
      Documents 	12 
	  	4.6. 	Opinion of Company Counsel 	13 
	  	4.7. 	Investors’ Rights
      Agreement 	13 
	  	4.8. 	Co-Sale Agreement 	13 
	  	4.9. 	Voting Agreement
    	13 
	  	4.10. 	Resignation and Appointment of
      Board Members 	13 
	  	4.11. 	Section 144 of
      the Delaware General Corporation Law 	13 
	  	  	  	  
	5. 	RESERVED 	13 
	  	  	  	  
	6. 	CONDITIONS OF THE COMPANY’S OBLIGATIONS AT CLOSING 	13 
	  	6.1. 	Representations and Warranties
	13 
	  	6.2. 	Qualifications
	14 
	  	6.3. 	Investors’ Rights Agreement 	14 
	  	6.4. 	Co-Sale Agreement
    	14 
	  	6.5. 	Voting Agreement 	14 
	  	6.6. 	Section 144 of
      the Delaware General Corporation Law 	14 
	  	  	  	  
	7. 	MISCELLANEOUS. 	14 
	  	7.1. 	Survival 	14 
	  	7.2. 	Successors and
      Assigns 	14 
	  	7.3. 	Governing Law 	14 
	  	7.4. 	Titles and
      Subtitles 	14 
	  	7.5. 	Notices 	15 
	  	7.6. 	Finder’s Fee 	15 
	  	7.7. 	Expenses 	15 
	  	7.8. 	Amendments and
      Waivers 	15 
	  	7.9. 	Severability 	15 
	  	7.10. 	Aggregation of
      Stock 	16 
	  	7.11. 	Entire Agreement 	16 
	  	7.12. 	Counterparts 	16 
	  	7.13. 	Facsimile 	16 
	  	7.14. 	Waiver of
      Conflicts 	16 

-ii- 

	Exhibit A 	- 	Schedule of Investors 
	Exhibit B 	- 	Schedule of Series BB Investors 
	Exhibit C 	- 	Amended and Restated
      Certificate of Incorporation 
	Exhibit D 	- 	Form of Investors’ Rights Agreement 
	Exhibit E 	- 	Form of Co-Sale Agreement

	Exhibit F 	- 	Form of Voting Agreement 
	Exhibit G 	- 	Schedule of Exceptions 
	Exhibit H 	- 	Proprietary Information and Inventions
      Agreements 
	Exhibit I 	- 	Form of Opinion of Company
      Counsel 

-iii- 

SERIES BB PREFERRED STOCK AND SERIES CC PREFERRED 
STOCK
PURCHASE AGREEMENT 

          THIS
SERIES BB PREFERRED STOCK AND SERIES CC PREFERRED STOCK PURCHASE AGREEMENT (this
“Agreement”) is made on the 10th day of February, 2004, by and among
Xalted Networks, Inc., a Delaware corporation (the “Company”), and the
investors listed on Exhibit A hereto (each, an “Investor” and
collectively, the “Investors”). 

W I T N E S S E T H : 

          WHEREAS,
the Company desires to sell to the Investors, and the Investors desire to
purchase from the Company shares of the Company’s Series CC Preferred Stock
(“Series CC Preferred Stock”) on the terms and conditions set forth in this
Agreement; 

          WHEREAS,
certain Investors desire to purchase, and the Company agrees to sell, shares of
Series BB Preferred Stock in consideration for the cancellation of indebtedness
to certain Investors as set forth on Exhibit B pursuant to the terms and
conditions previously agreed upon by the parties and memorialized in this
Agreement. 

          NOW,
THEREFORE, IN CONSIDERATION of the mutual premises contained herein and made
pursuant hereto, and good available consideration, receipt of which is hereby
acknowledged, the parties hereto do hereby agree as follows: 

          1.
Purchase and Sale of Stock. 

                    1.1.
Sale and Issuance of Series CC Preferred Stock. 

                              (a)
The Company shall adopt and file with the Secretary of State of Delaware on or
before the Initial Closing (as defined below) the Amended and Restated
Certificate of Incorporation in the form attached hereto as Exhibit C
(the “Restated Certificate”), and the Restated Certificate shall be in
effect as of the Initial Closing. 

                              (b)
Subject to the terms and conditions of this Agreement, each Investor agrees,
severally, to purchase at the applicable Closing, as provided herein, and the
Company agrees to sell and issue to each Investor at such Closing, that number
of shares of the Company’s Series CC Preferred Stock set forth opposite each
Investor’s name on Exhibit A hereto for the purchase price set forth
thereon. Payment shall be made in the form of cancellation of indebtedness or
cash (by check or wire transfer) in the amount set forth opposite such
Investors’ name on Exhibit A.

                              (c)
At each Closing as provided herein, the Company shall deliver to each Investor a
certificate representing the Series CC Preferred Stock that such Investor is
purchasing against payment of the purchase price therefor. Each Investor paying
by cancellation of indebtedness shall surrender to the Company for cancellation
at the Initial Closing any evidence of such indebtedness and shall execute an
instrument of cancellation in form and substance acceptable to the Company. 

                    1.2.
Sale and Issuance of Series BB Preferred. Subject to the terms and
conditions hereof, the Company will severally issue to certain Investors (the
“Series BB Investors”) and such Series BB Investors will severally
receive from the Company, a certain number of shares of Series BB Preferred
Stock as set forth opposite such Series BB Investors’ name on Exhibit B
for the purchase price set forth thereon. Payment shall be made in the form of
cancellation of indebtedness or cash (by check or wire transfer) in the amount
set forth opposite such Series BB Investors’ name on Exhibit B. At the
Initial Closing (as defined below), the Company shall deliver to each Series BB
Investor a certificate representing the Series BB Preferred Stock that such
Series BB Investor is purchasing against payment of the purchase price therefor.
Each Series BB Investor paying by cancellation of indebtedness shall surrender
to the Company for cancellation at the Initial Closing any evidence of such
indebtedness and shall execute an instrument of cancellation in form and
substance acceptable to the Company. 

                    1.3.
Initial Closing Date. The initial closing of the sale and issuance of the
Series BB Preferred Stock and sale and issuance of shares of Series CC Preferred
Stock hereunder (the “Initial Closing”) shall be held at the offices of
Wilson Sonsini Goodrich & Rosati, 650 Page Mill Road, Palo Alto, California
at 3:00 p.m., P.S.T., on February 10, 2004 or at such other time (whether
earlier or later) and place upon which the Company and the Purchasers shall
agree (the date of the Initial Closing is hereinafter referred to as the
“Initial Closing Date”). After the Initial Closing, no additional shares
of Series BB Preferred Stock shall be issued or sold by the Company. 

                    1.4.
Subsequent Closings. Subject to the prior written approval of Investors
purchasing a majority of the shares of Series CC Preferred Stock at the Initial
Closing, the remaining authorized shares of Series BB Preferred Stock or Series
CC Preferred Stock not agreed to be purchased by Investors on the date hereof
may be sold at a subsequent closings (“Subsequent Closings” and together
with the Initial Closing, the “Closings”) at such places and times as the
parties shall mutually agree, but in any event the agreement to purchase such
shares must be made not more than sixty (60) days after the Initial Closing. Any
such sale shall be made upon substantially the same terms and conditions as
those contained herein, and such persons or entities shall become parties to
this Agreement, that certain Amended and Restated Investor Rights Agreement
dated the date hereof, in the form attached hereto as Exhibit D (the
“Investors’ Rights Agreement”), that certain Amended and Restated Right of First
Refusal and Co-Sale Agreement dated the date hereof, in the form attached hereto
as Exhibit E (the “Co-Sale Agreement”) and that certain Amended and
Restated Voting Agreement dated the date hereof, in the form attached hereto as
Exhibit F (the “Voting Agreement”), and shall have the rights and
obligations hereunder and thereunder. The Investors’ Rights Agreement, the
Co-Sale Agreement and the Voting Agreement are sometimes referred to herein
collectively as the “Related Agreements.” 

          2.
Representations and Warranties of the Company. The Company hereby
represents and warrants to each Investor that as of the date hereof, except as
set forth on a Schedule of Exceptions (the “Schedule of Exceptions”)
furnished each Investor prior to execution hereof and attached hereto as
Exhibit G, which exceptions shall be deemed to be representations and
warranties as if made hereunder on the date hereof:

 -2- 

                    2.1.
Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
own and operate its properties and assets and to carry on its business as now
conducted and as presently proposed to be conducted. The Company is duly
qualified to transact business and is in good standing in each jurisdiction in
which the failure to so qualify would have a material adverse effect on its
business or properties. 

                    2.2.
Capitalization and Voting Rights. Immediately prior to the Initial
Closing, the authorized capital of the Company shall consist of: 

                              (a)
Preferred Stock. Thirty Six Million One Hundred and Fourteen Thousand
Nine Hundred and Forty Three (36,114,943) shares of Preferred Stock, par value
$0.001, of which (i) One Million One Hundred and Fourteen Thousand Nine Hundred
and Forty Three (1,114,943) shares have been designated Series AA Preferred
Stock (the “Series AA Preferred Stock”), of which One Million One Hundred
Twelve Thousand Eight Hundred and Eighty-Two (1,112,882) are issued and
outstanding upon the filing of the Restated Certificate and prior to the Initial
Closing, (ii) Twenty Million (20,000,000) shares have been designated Series BB
Preferred Stock (the “Series BB Preferred Stock”), none of which are
issued and outstanding upon the filing of the Restated Certificate and prior to
the Initial Closing, and (iii) Fifteen Million (15,000,000) shares have been
designated Series CC Preferred Stock, none of which are issued upon the filing
of the Restated Certificate and prior to the Initial Closing. The Series AA
Preferred Stock, Series BB Preferred Stock and Series CC Preferred Stock are
collectively referred to herein as the “Preferred Stock”. The rights,
privileges and preferences of the Preferred Stock are as stated in the Company’s
Restated Certificate.

                              (b)
Common Stock. Forty Seven Million (47,000,000) shares of common stock,
par value $0.001 (the “Common Stock”) are authorized, of which (i) One
Hundred Sixty Thousand and Sixty Two (165,062) shares are issued and
outstanding, (ii) Twenty Five Thousand (25,000) shares are reserved for issuance
to employees, officers, directors and consultants under the Company’s 2000 Stock
Option/Stock Issuance Plan (the “2000 Plan”) and Six Million Eight Hundred and
Two Thousand (6,802,000) shares are reserved for issuance to employees,
officers, directors and consultants under the Company’s 2003 Stock Plan (the
“2003 Plan”), and (iii) Thirty Six Million One Hundred Fourteen Thousand Nine
Hundred and Forty-Three (36,114,943) shares are reserved for future issuance
upon conversion of the Preferred Stock. Of the 25,000 shares reserved for
issuance under the 2000 Plan, (a) options to purchase 2,114 shares of Common
Stock are currently outstanding and (b) 18,808 shares of Common Stock remain
available for issuance under the 2000 Plan. Of the 6,802,000 shares reserved for
issuance under the 2003 Plan, all of the shares of Common Stock remain available
for issuance under the 2003 Plan. 

                              (c)
The outstanding shares of Common Stock and Preferred Stock are all duly and
validly authorized and issued, fully paid and nonassessable, and were issued in
compliance with all applicable state and federal laws concerning the issuance of
securities. 

 -3- 

                              (d)
Except for (i) the conversion privileges of the Preferred Stock, (ii) the rights
provided in the Investors’ Rights Agreement and in the Right of First Refusal
and Co-Sale Agreement, (iii) currently outstanding options to purchase 2,114
shares of Common Stock granted pursuant to the Plan, and (iv) warrants to
purchase 2,055 shares of Series AA Preferred Stock, there are no outstanding
options, warrants, rights (including conversion or preemptive rights) or
agreements for the purchase or acquisition from the Company of any shares of its
capital stock. The Company is not a party or subject to any agreement or
understanding, and to the knowledge of the Company there is no agreement or
understanding between any persons and/or entities, that affects or relates to
the voting or giving of written consents with respect to any security or by a
director of the Company. 

                              (e)
Immediately after the Initial Closing, each outstanding share of Series AA
Preferred Stock, Series BB Preferred Stock and Series CC Preferred Stock will be
convertible into one share of Common Stock. 

                    2.3.
Subsidiaries. The Company does not presently own or control, directly or
indirectly, any interest in any other corporation, association or other business
entity. The Company is not a participant in any joint venture, partnership or
similar arrangement. 

                    2.4.
Authorization. All corporate action on the part of the Company, its
officers, directors and stockholders necessary for the authorization, execution
and delivery of this Agreement and the Related Agreements, the performance of
all obligations of the Company hereunder and thereunder and the authorization
(or reservation for issuance), sale and issuance of the Series BB Preferred
Stock and Series CC Preferred Stock being sold hereunder and the Common Stock
issuable upon conversion of the Series CC Preferred Stock and Series BB
Preferred Stock has been taken or will be taken prior to the Closing. This
Agreement and the Related Agreements constitute valid and legally binding
obligations of the Company, enforceable in accordance with their terms, except
(i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of creditors’ rights
generally and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies.

                    2.5.
Valid Issuance of Preferred and Common Stock. The Series BB Preferred
Stock and Series CC Preferred Stock that is being purchased by the Investors
(including the Series BB Investors) hereunder, when issued, sold and delivered
in accordance with the terms of this Agreement and the Restated Certificate for
the consideration expressed herein, will be duly and validly issued, fully paid
and nonassessable and will be free of restrictions on transfer, other than
restrictions on transfer under this Agreement, Related Agreements and applicable
state and federal securities laws. The Common Stock issuable upon conversion of
the Series BB Preferred Stock and Series CC Preferred Stock purchased under this
Agreement has been duly and validly reserved for issuance and, upon issuance in
accordance with the terms of the Restated Certificate, will be duly and validly
issued, fully paid and nonassessable and will be free of restrictions on
transfer, other than restrictions on transfer under this Agreement, the Related
Agreements and applicable state and federal securities laws. 

                    2.6.
Governmental Consents. No consent, approval, order or authorization of,
or registration, qualification, designation, declaration or filing with, any
federal, state or local governmental authority on the part of the
Company is required in connection with the consummation of the transactions
contemplated by this Agreement and the Related Agreements, except for such
filings required pursuant to applicable federal and state securities laws and
blue sky laws, which filings will be effected within the required statutory
period. 

-4- 

                    2.7.
Offering. Subject in part to the truth and accuracy of each Investor’s
representations set forth in Section 3 of this Agreement, the offer, sale and
issuance of the Series BB Preferred Stock and Series CC Preferred Stock as
contemplated by this Agreement are exempt from the registration requirements of
the Securities Act of 1933, as amended (the “Act”), and the qualification
or registration requirements of applicable blue sky laws. Neither the Company
nor any authorized agent acting on its behalf will take any action hereafter
that would cause the loss of such exemptions. 

                    2.8.
Litigation. There is no action, suit, proceeding or investigation
pending, or to the Company’s knowledge, currently threatened against the Company
that questions the validity of this Agreement, the Related Agreements, or the
right of the Company to enter into such agreements or to consummate the
transactions contemplated hereby, or that might result, either individually or
in the aggregate, in any material adverse changes in the business, assets or
condition of the Company, financially or otherwise, or any change in the current
equity ownership of the Company. The foregoing includes, without limitation, any
action, suit, proceeding or investigation pending or currently threatened
involving the prior employment of any of the Company’s employees, their use in
connection with the Company’s business of any information or techniques that are
proprietary to any of their former employers, their obligations under any
agreements with prior employers, or their obligations under any agreements with
prior employers, in each such case if such action, suit proceeding or
investigation might result, either individually or in the aggregate, in any
material adverse changes in the business, assets or condition of the Company,
financially or otherwise, or any change in the current equity ownership of the
Company. The Company is not a party or subject to the provisions of any order,
writ, injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or investigation by the
Company currently pending or that the Company intends to initiate. 

                    2.9.
Proprietary Information and Inventions Agreements. Each employee, officer
and consultant of the Company has executed a Proprietary Information and
Inventions Agreement in substantially one of the forms attached hereto as
Exhibit H.

                    2.10.
Patents and Trademarks. To the best of its knowledge (but without having
conducted any special investigation or search), the Company possesses all
patents, patent rights, trademarks, trademark rights, service marks, service
mark rights, trade names, trade name rights and copyrights (collectively, the
“Intellectual Property”) necessary for its business without any conflict
with or infringement of the valid rights of others and the lack of which could
materially and adversely affect the operations or condition, financial or
otherwise, of the Company, and the Company has not received any notice of
infringement upon or conflict with the asserted rights of others. To the best of
its knowledge, the Company has the right to use its proprietary information free
and clear of any rights, liens, encumbrances or claims of others, except that
the possibility exists that other persons may have independently developed trade
secrets or technical information similar or identical to those of the Company.
The Company is not aware of any such independent development nor of any
misappropriation of its proprietary information. The Company is not aware that
any of its employees is obligated under any contract (including licenses,
covenants or commitments of any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, that would
interfere with the use of his or her best efforts to promote the interests of
the Company or that would conflict with the Company’s business. The Company does
not reasonably believe it is or will be necessary to utilize any inventions of
any of its employees (or people it currently intends to hire) made prior to
their employment by the Company. 

-5- 

                    2.11.
Compliance with Other Instruments. The Company is not in violation in any
material respect of any provision of its Restated Certificate or Bylaws nor, to
its knowledge, in any material respect of any instrument, judgment, order, writ,
decree or contract, statute, rule or regulation to which the Company is subject
and a violation of which would have a material adverse effect on the condition,
financial or otherwise, or operations of the Company. The execution, delivery
and performance of this Agreement and the Related Agreements and the
consummation of the transactions contemplated hereby and thereby will not result
in any such violation, or be in conflict with or constitute, with or without the
passage of time and giving of notice, either a default under any such provision
or an event that results in the creation of any lien, charge or encumbrance upon
any assets of the Company or the suspension, revocation, impairment, forfeiture
or nonrenewal of any material permit, license, authorization or approval
applicable to the Company, its business or operations or any of its assets or
properties. 

                    2.12.
Agreements; Action. 

                              (a)
Except for this Agreement, the Related Agreements or any other agreements
explicitly contemplated hereby, there are no agreements, understandings or
proposed transactions between the Company and any of its officers, directors,
affiliates or any affiliate thereof. 

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

                              (c)
The Company has not (i) declared or paid any dividends or authorized or made any
distribution upon or with respect to any class or Series of its capital stock,
(ii) incurred any indebtedness for money borrowed or any other liabilities
individually in excess of $15,000 or, in the case of indebtedness and/or
liabilities individually less than $15,000, in excess of $50,000 in the
aggregate, (iii) made any loans or advances to any person, other than ordinary
advances for travel expenses, or (iv) sold, exchanged or otherwise disposed of
any of its assets or rights. 

-6- 

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

                    2.13.
Related-Party Transactions. Except as set forth in the Schedule of
Exceptions, no employee, officer or director of the Company or member of his or
her immediate family is indebted to the Company, nor is the Company indebted (or
committed to make loans or extend or guarantee credit) to any of them. To the
Company’s knowledge, none of such persons has any direct or indirect ownership
interest in any firm or corporation with which the Company is affiliated or with
which the Company has a business relationship, or any firm or corporation that
competes with the Company, except that employees, officers or directors of the
Company and members of their immediate families may own stock in publicly traded
companies that may compete with the Company. No member of the immediate family
of any officer or director of the Company is directly or indirectly interested
in any material contract with the Company. 

                    2.14.
Financial Statements. The Company has made available to each Investor its
unaudited balance sheet as of November 21, 2003 (the “Balance Sheet
Date”) and its unaudited statements of income and cash flows for the three
month period ending September 30, 2003 (the “Financial Statements”). The
Financial Statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
indicated and with each other, except that unaudited Financial Statements may
not contain all footnotes required by generally accepted accounting principles.
The Financial Statements fairly present the financial condition and operating
results of the Company as of the dates, and for the periods, indicated therein,
subject in the case of unaudited Financial Statements to normal year-end audit
adjustments. Except as set forth in the Financial Statements, the Company has no
material liabilities, contingent or otherwise, other than (i) liabilities
incurred in the ordinary course of business subsequent to the Balance Sheet Date
and (ii) obligations under contracts and commitments incurred in the ordinary
course of business and not required under generally accepted accounting
principles to be reflected in the Financial Statements, which, in both cases,
individually or in the aggregate, are not material to the financial condition or
operating results of the Company. The Company maintains and will continue to
maintain a standard system of accounting established and administered in
accordance with generally accepted accounting principles. 

                    2.15.
Changes. Since the Balance Sheet Date there has not been: 

                              (a)
any change in the assets, liabilities, financial condition or operating results
of the Company from that reflected in the Financial Statements, except changes
in the ordinary course of business that have not been, in the aggregate,
materially adverse to the Company; 

                              (b)
any damage, destruction or loss, whether or not covered by insurance, materially
and adversely affecting the business, properties or financial condition of the
Company (as such business is presently conducted and as it is proposed to be
conducted); 

-7- 

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

                              (d)
any satisfaction or discharge of any lien, claim, or encumbrance or payment of
any obligation by the Company, except in the ordinary course of business and
that is not material to the business, properties or financial condition of the
Company (as such business is presently conducted and as it is proposed to be
conducted); 

                              (e)
any material change to a material contract, agreement or arrangement by which
the Company or any of its assets is bound or subject; 

                              (f)
any material change in any compensation arrangement or agreement with any
employee, officer, director or stockholder; 

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

                              (h)
any resignation or termination of employment of any officer or key employee of
the Company; and the Company is not aware of any impending resignation or
termination of employment of any such officer or key employee; 

                              (i)
any mortgage, pledge, transfer of a security interest in, or lien, created by
the Company, with respect to any of its material properties or assets, other
than sales of products and services and licenses in the ordinary course of
business and consistent with past practice and except for liens for taxes not
yet due or payable; 

                              (j)
any loans or guarantees made by the Company to or for the benefit of its
employees, officers or directors, or any members of their immediate families,
other than travel advances and other advances made in the ordinary course of
business; 

                              (k)
any declaration, setting aside or payment or other distribution in respect to
any of the Company’s capital stock, or any direct or indirect redemption,
purchase, or other acquisition of any of such stock by the Company, other than
repurchases of shares of capital stock pursuant to the Plan; 

                              (l)
to the Company’s knowledge, any other event or condition of any character that
might materially and adversely affect the business, properties or financial
condition of the Company; 

                              (m)
any receipt of notice by the Company that there has been a loss of, or material
order cancellation by, any major customer of the Company (as such business is
presently conducted and as it is proposed to be conducted); or 

                              (n)
any agreement or commitment by the Company to do any of the things described in
this Section 2.15. 

                    2.16.
Tax Returns. The Company has timely filed all material tax returns and
reports (federal, state and local) as required by law. These returns and reports
are true and correct in all material respects. The Company has paid
all taxes and other assessments due, except those contested by it in good faith.
The Company has not elected pursuant to the Internal Revenue Code of 1986, as
amended (the “Code”), to be treated as an S corporation or a collapsible
corporation pursuant to Section 1362(a) or Section 341(f) of the Code. The
Company does not have a tax deficiency proposed or assessed against it and has
not executed any waiver of any statute of limitations on the assessment or
collection of any tax. None of the Company’s federal income tax returns and none
of its state income or franchise tax or sales or use tax returns has ever been
audited by governmental authorities. The Company has withheld or collected from
each payment made to each of its employees, the amount of all taxes, including,
but not limited to, federal income taxes, Federal Insurance Contribution Act
taxes and Federal Unemployment Tax Act taxes required to be withheld or
collected therefrom, and has paid the same to the proper tax receiving officers
or authorized depositories. 

-8- 

                    2.17.
Permits. The Company has all franchises, permits, licenses and any
similar authority necessary for the conduct of its business, the lack of which
could materially and adversely affect the business, properties or financial
condition of the Company. The Company is not in default in any material respect
under any of such franchises, permits, licenses or other similar authority. 

                    2.18.
Title to Property and Assets. The property and assets the Company owns
are owned by the Company free and clear of all mortgages, liens, loans and
encumbrances, except (i) for statutory liens for the payment of current taxes
that are not yet delinquent, and (ii) for liens, encumbrances and security
interests that arise in the ordinary course of business and minor defects in
title, none of which, individually or in the aggregate, materially impair the
Company’s ownership or use of such property or assets. With respect to the
property and assets it leases, the Company is in material compliance with such
leases and, to its knowledge, holds a valid leasehold interest free of any
liens, claims or encumbrances, subject to clauses (i) and (ii) above. 

                    2.19.
Employee Benefit Plans. The Company does not have any Employee Benefit
Plan as defined in the Employee Retirement Income Security Act of 1974. 

                    2.20.
Disclosure. The Company has provided each Investor with or made available
all of the information reasonably available to it without undue expense that
such Investor has requested for deciding whether to purchase the Series CC
Preferred Stock and/or Series BB Preferred Stock. and all information that the
Company believes is reasonably necessary to enable such Investor to make such
decision. To the best of the Company’s knowledge after reasonable investigation,
neither this Agreement nor any other agreements, written instruments or
certificates made or delivered in connection herewith contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements herein or therein not misleading. 

                    2.21.
Section 83(b) Elections. To the best of the Company’s knowledge, all
individuals who have purchased shares of the Company’s Common Stock under
agreements that provide for the vesting of such shares have filed timely
elections under Section 83(b) of the Internal Revenue Code and any analogous
provisions of applicable state tax laws. 

-9- 

                    2.22.
Minute Book. The copy of the minute book of the Company provided to or
made available for special counsel for the Investors contains minutes of all
meetings of directors and stockholders since May 17, 2002 and all actions by
written consent without a meeting by the directors and stockholders since May
17, 2002 and accurately reflects all actions by the directors (and any committee
of directors) and stockholders with respect to all transactions referred to in
such minutes in all material respects. 

                    2.23.
Qualified Small Business Stock. As of and immediately following the date
hereof, the Company believes it meets all of the requirements for qualification
as a “qualified small business” set forth in Section 1202(d) of the Internal
Revenue Code of 1986, as amended (the “Code”), including without limitation the
following: (i) the Company will be a domestic C corporation and (ii) the
Company’s aggregate gross assets, as defined by Code Section 1202(d)(2), at no
time between August 10, 1993 through the date hereof, have exceeded $50 million,
taking into account the assets of any corporations required to be aggregated
with the Company in accordance with Code Section 1202(d)(3). In addition, the
Company has not made any purchases of its own stock described in Code Section
1202(c)(3)(B) during the one year period preceding the date hereof. Finally, as
of the date hereof, the Company is an eligible corporation, as defined by Code
Section 1202(e)(4).

          3.
Representations and Warranties of the Investors. Each Investor hereby
represents, warrants and covenants that: 

                    3.1.
Authorization. Such Investor has full power and authority to enter into
this Agreement and such agreement constitutes its valid and legally binding
obligation, enforceable in accordance with its terms. 

                    3.2.
Purchase Entirely for Own Account. This Agreement is made with such
Investor in reliance upon such Investor’s representation to the Company, which
by such Investor’s execution of this Agreement such Investor hereby confirms,
that the Series CC Preferred Stock and/or Series BB Preferred Stock to be
received by such Investor (including shares of Series CC Preferred Stock and/or
Series BB Preferred Stock received pursuant to the Exchange Right) and the
Common Stock issuable upon conversion thereof (collectively, the
“Securities”) will be acquired for investment for such Investor’s own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and that such Investor has no present
intention of selling, granting any participation in or otherwise distributing
the same. By executing this Agreement, such Investor further represents that
such Investor does not have any contract, undertaking, agreement or arrangement
with any person to sell, transfer or grant participations to such person or to
any third person, with respect to any of the Securities. 

                    3.3.
Disclosure of Information. Such Investor believes it has received all the
information it considers necessary or appropriate for deciding whether to
purchase the Series CC Preferred Stock and/or Series BB Preferred Stock. Such
Investor further represents that it has had an opportunity to ask questions and
receive answers from the Company regarding the terms and conditions of the
offering of the Series CC Preferred Stock and/or Series BB Preferred Stock and
the business, properties, prospects and financial condition of the Company.

-10- 

The foregoing, however, does not limit or modify the
representations and warranties of the Company in Section 2 of this Agreement or
the right of the Investors to rely thereon. 

                    3.4.
Investment Experience. Such Investor is an investor in securities of
companies in the development stage and acknowledges that it can bear the
economic risk of its investment, and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of the investment in the Series CC Preferred Stock and/or Series BB
Preferred Stock. If other than an individual, such Investor also represents it
has not been organized for the purpose of acquiring the Series CC Preferred
Stock and/or Series BB Preferred Stock. 

                    3.5.
Accredited Investor. Such Investor has read and is familiar with the
definition of “accredited investor” within the meaning of Securities and
Exchange Commission (“SEC”) Rule 501 of Regulation D, as presently in
effect, and such Investor is an “accredited investor” as so defined. 

                    3.6.
Restricted Securities. Such Investor understands that the Securities it
is purchasing are characterized as “restricted securities” under the federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such Securities may be resold without registration under
the Act only in certain limited circumstances. In the absence of an effective
registration statement covering the Securities (or the Common Stock issued on
conversion thereof) or an available exemption from registration under the Act,
the Series BB Preferred Stock and Series CC Preferred Stock (and any Common
Stock issued on conversion thereof) must be held indefinitely. In this
connection, such Investor represents that it is familiar with SEC Rule 144, as
presently in effect, and understands the resale limitations imposed thereby and
by the Act, including without limitation the Rule 144 condition that current
information about the Company be available to the public. Such information is
not now available and the Company has no present plans to make such information
available. 

                    3.7.
Further Limitations on Disposition. Without in any way limiting the
representations set forth above, such Investor further agrees not to make any
disposition of all or any portion of the Securities unless and until the
transferee has agreed in writing for the benefit of the Company to be bound by
this Section 3 and: 

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

                              (b)
(i) Such Investor shall have notified the Company of the proposed disposition
and shall have furnished the Company with a reasonable statement of the
circumstances surrounding the proposed disposition, and (ii) if requested by the
Company, such Investor shall have furnished the Company with an opinion of
counsel, reasonably satisfactory to the Company that such disposition will not
require registration of such shares under the Act. It is agreed that the Company
will not require opinions of counsel for transactions made pursuant to Rule 144
except in unusual circumstances. 

 -11- 

                              (c)
Notwithstanding the provisions of subsections (a) and (b) above, no such
registration statement or opinion of counsel shall be necessary for a transfer
(i) by an Investor to any of its affiliated entities or (ii) by an Investor that
is a partnership to a partner of such partnership or a retired partner of such
partnership who retires after the date hereof, or to the estate of any such
partner or retired partner or the transfer by gift, will or intestate succession
of any partner to his or her spouse or to the siblings, lineal descendants or
ancestors of such partner or his or her spouse, provided that, in
each case, the transferee agrees in writing to be subject to the terms hereof to
the same extent as if he or she were an original Investor hereunder. 

                    3.8.
Legends. It is understood that the certificates evidencing the Securities
may bear one or all of the following or comparable legends: 

                              (a)
“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES
UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT.”

                              (b)
Any legend required by the securities laws of any state or other governmental or
regulatory agency having authority over the issuance of the Securities. 

          4.
Conditions of Investors’ Obligations at Initial Closing. The obligations
of each Investor under Section 1 of this Agreement are subject to the
fulfillment on or before the Initial Closing of each of the following
conditions, the waiver of which shall not be effective against any Investor who
does not consent in writing thereto: 

                    4.1.
Representations and Warranties. The representations and warranties of the
Company contained in Section 2 shall be true on and as of the Initial Closing
with the same effect as though such representations and warranties had been made
on and as of the date of the Initial Closing. 

                    4.2.
Performance. The Company shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Initial
Closing. 

                    4.3.
Compliance Certificate. The President of the Company shall deliver to
each Investor, upon request, at the Initial Closing a certificate stating that
the conditions specified in Sections 4.1 and 4.2 have been fulfilled. 

                    4.4.
Qualifications. All authorizations, approvals or permits, if any, of any
governmental authority or regulatory body of the United States or of any state
that are required in connection with the lawful issuance and sale of the
Securities pursuant to this Agreement shall be duly obtained and effective as of
the Initial Closing. 

                    4.5.
Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated at the Initial Closing and all
documents incident thereto shall be reasonably satisfactory in form and
substance to the Investors, and they shall have received all such counterpart
original and certified or other copies of such documents as they may reasonably
request. 

-12- 

                    4.6.
Opinion of Company Counsel. The Investors shall have received an opinion
from Wilson Sonsini Goodrich & Rosati, P.C., counsel for the Company, dated
as of the Initial Closing, substantially in the form attached hereto as
Exhibit I. 

                    4.7.
Investors’ Rights Agreement. The Company, the Investors and the requisite
number of other parties necessary to effectuate the amendment and restatement of
the Investor’s Rights Agreement shall have entered into the Investors’ Rights
Agreement in the form attached hereto as Exhibit D hereto. 

                    4.8.
Co-Sale Agreement. The Company, the Investors and the requisite number of
other parties necessary to effectuate the amendment and restatement of the
Co-Sale Agreement shall have entered into the Co-Sale Agreement in the form
attached hereto as Exhibit E. 

                    4.9.
Voting Agreement. The Company, the Investors and the requisite number of
other parties necessary to effectuate the amendment and restatement of the
Voting Agreement shall have entered into the Voting Agreement in the form
attached hereto as Exhibit F. 

                    4.10.
Resignation and Appointment of Board Members. Tim Phillips shall have
resigned from the Board of Directors of the Company prior to the Initial Closing
and Bob Kondamoori, C.N. Reddy and Ravi Chiruvolu shall be appointed to the
Board of Directors, effective upon the Initial Closing. 

                    4.11.
Section 144 of the Delaware General Corporation Law. The approval of the
transaction by the Board of Directors and the stockholder shall have been made
in compliance with Section 144 of the Delaware General Corporation Law. 

                    4.12.
Minimum Purchase . Investors must agree to purchase in the aggregate a
minimum of $4,000,000 of Series CC Preferred Stock for cash or cancellation of
indebtedness and $4,091,625 of Series BB Preferred Stock for cancellation of
indebtedness. 

                    4.13.
Creditor settlements . Settlements with outside creditors satisfactory to
Charter Ventures IV, L.P. shall have been signed. 

          5.
Reserved.

          6.
Conditions of the Company’s Obligations at Closing. The obligations of
the Company to each Investor under this Agreement are subject to the fulfillment
on or before each Closing of each of the following conditions by that Investor:

                    6.1.
Representations and Warranties. The representations and warranties of the
Investor contained in Section 3 shall be true on and as of the applicable
Closing with the same effect as though such representations and
warranties had been made on and as of such Closing. 

-13- 

                    6.2.
Qualifications. All authorizations, approvals or permits, if any, of any
governmental authority or regulatory body of the United States or of any state
that are required in connection with the lawful issuance and sale of the
securities pursuant to this Agreement shall be duly obtained and effective as of
the applicable Closing. 

                    6.3.
Investors’ Rights Agreement. The Company, the Investors and the requisite
number of other parties necessary to effectuate the amendment and restatement of
the Investor’s Rights Agreement shall have entered into the Investors’ Rights
Agreement in the form attached hereto as Exhibit D hereto. 

                    6.4.
Co-Sale Agreement. The Company, the Investors and the requisite number of
other parties necessary to effectuate the amendment and restatement of the
Co-Sale Agreement shall have entered into the Co-Sale Agreement in the form
attached hereto as Exhibit E. 

                    6.5.
Voting Agreement. The Company, the Investors and the requisite number of
other parties necessary to effectuate the amendment and restatement of the
Voting Agreement shall have entered into the Voting Agreement in the form
attached hereto as Exhibit F. 

                    6.6.
Section 144 of the Delaware General Corporation Law. The approval of the
transaction by the Board of Directors and the stockholder shall have been made
in compliance with Section 144 of the Delaware General Corporation Law. 

          7.
Miscellaneous. 

                    7.1.
Survival. The warranties, representations and covenants of the Company
and Investors contained in or made pursuant to this Agreement shall survive the
execution and delivery of this Agreement and all Closings. 

                    7.2.
Successors and Assigns. Except as otherwise provided herein, the terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the respective successors and assigns of the parties (including transferees
of any 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.

                    7.3.
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. 

                    7.4.
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. 

-14- 

                    7.5.
Notices. All notices required or permitted hereunder shall be in writing
and shall be deemed effectively given: (i) upon personal delivery to the party
to be notified, (ii) when sent by confirmed telex or facsimile if sent during
normal business hours of the recipient, if not, then on the next business day;
(iii) five days after having been sent by registered or certified mail, return
receipt requested, postage prepaid; or (iv) one day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the address
as set forth on the signature page hereof or at such other address as such party
may designate by ten days advance written notice to the other parties hereto.

                    7.6.
Finder’s Fee. Each party represents that it neither is nor will be
obligated for any finders’ fee or commission in connection with this
transaction. Each Investor agrees to indemnify and to hold harmless the Company
and each other Investor from any liability for any commission or compensation in
the nature of a finders’ fee (and the costs and expenses of defending against
such liability or asserted liability) for which such Investor or any of its
officers, partners, employees or representatives is responsible. The Company
agrees to indemnify and hold harmless each Investor from any liability for any
commission or compensation in the nature of a finders’ fee (and the costs and
expenses of defending against such liability or asserted liability) for which
the Company or any of its officers, employees or representatives is responsible.

                    7.7.
Expenses. Irrespective of whether the Closing is effected, the Company
shall pay all costs and expenses that it incurs with respect to the negotiation,
execution, delivery and performance of this Agreement. If the Closing is
effected, the Company shall pay immediately following the Closing, and upon
receipt of a bill, the reasonable fees and expenses of GCA Law Partners LLP,
special counsel to Charter Ventures IV, L.P., not to exceed $25,000 in the
aggregate.

                    7.8.
Amendments and Waivers. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the holders of a majority of the Common Stock
not previously sold to the public that is issued or issuable upon conversion of
the Series BB Preferred Stock and Series CC Preferred Stock sold pursuant to
this Agreement. Any amendment or waiver effected in accordance with this
paragraph shall be binding upon each holder of any securities purchased under
this Agreement at the time outstanding (including securities into which such
securities are convertible), each future holder of all such securities and the
Company. Notwithstanding the above, additional Investors may be added to this
Agreement and the Related Agreements for a period of up to 180 days after the
date hereof with the Company’s consent, and each such additional Investor shall
become a party to this Agreement, upon execution and delivery to the Company of
the signature pages hereto. 

                    7.9.
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. 

-15- 

                    7.10.
Aggregation of Stock. All shares of the Preferred Stock or Common Stock
issued upon conversion thereof held or acquired by affiliated entities or
persons shall be aggregated together for the purpose of determining the
availability of any rights under this Agreement. 

                    7.11.
Entire Agreement. This Agreement and the documents referred to herein
constitute the entire agreement among the parties and no party shall be liable
or bound to any other party in any manner by any warranties, representations or
covenants except as specifically set forth herein or therein. 

                    7.12.
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. 

                    7.13.
Facsimile. This Agreement may be signed by facsimile. 

                    7.14.
Waiver of Conflicts. Each party to this Agreement acknowledges that
Wilson Sonsini Goodrich & Rosati, P.C., counsel for the Company, has in the
past and may continue in the future to perform legal services for certain of the
Investors in matters unrelated to the transactions described in this Agreement,
including the representation of such Investors in venture capital financings.
Accordingly, each party to this Agreement hereby (i) acknowledges that they have
had an opportunity to ask for information relevant to this disclosure, (ii)
acknowledges that Wilson Sonsini Goodrich & Rosati, P.C. represented the
Company in the transaction contemplated by this Agreement and has not
represented any individual Investor or any individual stockholder or employee of
the Company in connection with such transaction, and (iii) gives its informed
consent to the representation by Wilson Sonsini Goodrich & Rosati, P.C. of
certain of the Investors in such unrelated matters and the representation by
Wilson Sonsini Goodrich & Rosati, P.C. of the Company in connection with
this Agreement and the transactions contemplated hereby.

[Remainder of page intentionally left blank]

 -16- 

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

	 	COMPANY: 
	 	 
	 	XALTED NETWORKS, INC. 
	 	  
	 	 
	 	Pratap (Bob) Kondamoori 
	 	(Please print name or type name) 
	 	 
	 	/s/
      Pratap (Bob) Kondamoori 
	 	(Signature) 
	 	 
	 	Chief Executive Officer 
	 	(Title) 

	 	INVESTORS: 
	 	 
	 	Alliance Ventures V, LP 
	 	  
	 	V.R. Ranganath 
	 	(Please print name or type name) 
	 	 
	 	/s/
      V.R. Ranganath 
	 	(Signature) 
	 	 
	 	President 
	 	(Title, if applicable) 

	 	INVESTORS: 
	 	Charter Venture IV, LP 
	 	  
	 	  
	 	  
	 	Ravi Chiruvolu 
	 	(Please print name or type name) 
	 	  
	 	/s/
      Ravi Chiruvolu 
	 	(Signature) 
	 	  
	 	Partner 
	 	(Title, if applicable) 

	 	INVESTORS: 
	 	Charter Entrepreneur IV, LP 
	 	  
	 	  
	 	  
	 	Ravi Chiruvolu 
	 	(Please print name or type name) 
	 	  
	 	/s/
      Ravi Chiruvolu 
	 	(Signature) 
	 	  
	 	Partner 

	 	INVESTORS: 
	 	Charter Advisors Fund IV, LP 
	 	  
	 	  
	 	  
	 	Ravi Chiruvolu 
	 	(Please print name or type name) 
	 	  
	 	/s/
      Ravi Chiruvolu 
	 	(Signature) 
	 	  
	 	Partner 
	 	(Title, if applicable) 

	 	INVESTORS: 
	 	Empire Capital Partners 
	 	  
	 	  
	 	  
	 	Peter Richards 
	 	(Please print name or type name) 
	 	  
	 	/s/
      Peter Richards 
	 	(Signature) 
	 	  
	 	General Partner 
	 	(Title, if applicable) 

	 	INVESTORS: 
	 	Galaxy Venture Partners II, LLC 
	 	  
	 	  
	 	  
	 	V.R. Ranganath 
	 	(Please print name or type name) 
	 	  
	 	/s/
      V.R. Ranganath 
	 	(Signature) 
	 	  
	 	Managing Member 
	 	(Title, if applicable) 

	 	INVESTORS: 
	 	Glenbrook Capital, LP 
	 	  
	 	  
	 	  
	 	Grover Wickersham 
	 	(Please print name or type name) 
	 	  
	 	/s/
      Grover Wickersham 
	 	(Signature) 
	 	  
	 	General Partner 
	 	(Title, if applicable) 

	 	INVESTORS: 
	 	Raj S. Judge 
	 	  
	 	  
	 	  
	 	/s/
      Raj S. Judge 
	 	(Signature) 
	 	  
	 	  
	 	(Title, if applicable) 

	 	INVESTORS: 
	 	Oxal Venture Fund LP 
	 	  
	 	  
	 	  
	 	Stevan Birnbaum 
	 	(Please print name or type name) 
	 	  
	 	/s/
      Stevan Birnbaum 
	 	(Signature) 
	 	  
	 	President 
	 	(Title, if applicable) 

	 	INVESTORS: 
	 	 
	 	Tim Philips 
	 	  
	 	/s/
      Tim Philips 
	 	(Signature) 
	 	 
	 	(Title, if applicable) 

	 	INVESTORS: 
	 	Solar Venture Partners LP 
	 	  
	 	  
	 	  
	 	V.R. Ranganath 
	 	(Please print name or type name) 
	 	  
	 	/s/
      V.R. Ranganath 
	 	(Signature) 
	 	  
	 	General Partner 
	 	(Title, if applicable) 

	 	INVESTORS: 
	 	WS Investment Company LLC (2004 A) 
	 	  
	 	  
	 	  
	 	Raj Judge 
	 	(Please print name or type name) 
	 	  
	 	/s/
      Raj Judge 
	 	(Signature) 
	 	  
	 	Member 
	 	(Title, if applicable) 

EXHIBIT A 

Schedule of Series CC Preferred Stock Investors 
$0.674
per share 

Initial Closing: FEBRUARY 10, 2004 

	  	 	Principal 	 	 	  	 	 	  	 	 	  	 	 	Number of 	 
	  	 	Amount of 	 	 	Accrued 	 	 	Cash 	 	 	Total 	 	 	Shares of Series 	 
	Holder 	 	Indebtedness 	 	 	Interest 	 	 	Consideration 	 	 	Consideration 	 	 	CC Issued 	 
	  	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	  	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	  	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	Charter Ventures IV, L.P. 
525
      University Avenue, Suite 1400 
Palo Alto, CA 94301 
Attn: Andy Klatt
    	 $	

 1,342,826 	 	 $	

 40,226.97 	 	 $	

 561,598.79* 	 	 $	

 1,944,651.76 	 	 	

2,885,240 	 
	  	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	Charter Entrepreneurs Fund IV, L.P. 
525
      University Avenue, Suite 1400 
Palo Alto, CA 94301 
Attn: Andy Klatt
    	 	

43,465.20 	 	 	

1302.08 	 	 	

29,193.82 	 	 	

73,961.10 	 	 	

109,734 	 
	  	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	Charter Advisors Fund IV, L.P. 
525
      University Avenue, Suite 1400 
Palo Alto, CA 94301 
Attn: Andy Klatt
    	 	

13,708.80 	 	 	

410.67 	 	 	

9,207.39 	 	 	

23,326.86 	 	 	

34,609 	 
	  	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	Alliance Ventures V, L.P. 
C/o Alliance
      Venture Management, LLC 
2575 Augustine Drive 
Santa Clara, CA 75025
      
Attn: V. R. Ranganath 	 	

650,081 	 	 	

18,641 	 	 	

1,149,919 	 	 	

1,818,641 	 	 	

2,698,280 	 
	  	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	Empire Capital Partners 
One Gorman
      Island, 2nd Floor 
Westport, CT 06880 	 	

145,563
    	 	 	

3,360 	 	 	

305,000
    	 	 	

455,923
    	 	 	

676,443
    	 
	  	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	Glenbrook Capital, L.P. 
430 Cambridge Avenue, Suite 100
      
Palo Alto, CA 94306 	 	

200,000 	 	 	

2,104 	 	 	

	 	 	

202,104 	 	 	

299,857 	 
	Phillips and
      Associates 
3128 Charring Cross 
Plano, TX 75025 
Attn: Tim
      Phillips 	 	

	 	 	

	 	 	

$50,000** 	 	 	

$50,000** 	 	 	

74,183 	 
	  	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	WS Investment
      Company 
650 Page Mill Road 
Palo Alto, CA 94304 	 	

	 	 	

	 	 	

$22,500 	 	 	

$22,500 	 	 	

33,382 	 
	Sanjeev Raj 
C/o WSGR 
650 Page Mill Road 
Palo Alto,
      CA 94304 	 	

	 	 	

	 	 	

$2,500 	 	 	

$2,500 	 	 	

3,709 	 
	  	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	  	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	Totals 	$	2,395,644.00 	 	$	68,044.72 $	 	 	2,129,919.00 	 	$	4,593,607.72 	 	 	6,815,437 	 

*Charter Ventures IV, L.P. has elected to have $69,435.07 in
expenses owed by the Company (which was to be paid at the initial closing to
Charter) applied towards its cash consideration obligations as set forth above.

**The Company has agreed to grant Phillips and
Associates $50,000 worth of Series CC Preferred Stock pursuant to the Consulting
Services Agreement between the Company and Phillips and Associates made as of
September 5, 2003 in exchange for services rendered. 

EXHIBIT B 

Schedule of Series BB Preferred Stock Investors 
$0.22 per
share 

Initial Closing: December 19, 2003 

	  	 	  	 	 	  	 	 	  	 	 	Shares of Series BB Preferred 	 
	  	 	  	 	 	  	 	 	  	 	 	Stock Issued in Exchange for
	 
	  	 	Principal 	 	 	  	 	 	  	 	 	Cancellation of Principal and
    	 
	  	 	Amount of 	 	 	  	 	 	  	 	 	Accrued Interest Owed by 	 
	Creditor
	 	Indebtedness 	 	 	Accrued Interest  	 	 	Total 	 	 	Company 	 
	  	 	  	 	 	  	 	 	  	 	 	  	 
	Charter Ventures IV, L.P. 
525
      University Avenue, Suite 1400 
Palo Alto, CA 94301 
Attn: Andy Klatt
    	 $	

 2,084,618.43	 	 $ 	

 153,839.62 	 	 $	

 2,238,458.05 	 	 	

10,284,880 	 
	  	 	  	 	 	  	 	 	  	 	 	  	 
	Charter Entrepreneurs Fund IV, L.P. 
525
      University Avenue, Suite 1400 
Palo Alto, CA 94301 
Attn: Andy Klatt
    	 	

79284.47 	 	 	

5,850.99 	 	 	

85,135.46 	 	 	

391,165 	 
	  	 	  	 	 	  	 	 	  	 	 	  	 
	Charter Advisors Fund IV, L.P. 
525
      University Avenue, Suite 1400 
Palo Alto, CA 94301 
Attn: Andy Klatt
    	 	

25,006.10 	 	 	

1,845.39 	 	 	

26,851.49 	 	 	

123,372 	 
	  	 	  	 	 	  	 	 	  	 	 	  	 
	Alliance Ventures V, LP 
C/o Alliance
      Venture Management, LLC 
2575 Augustine Drive 
Santa Clara, CA 75025
      
Attn: V. R. Ranganath 	 	

750,000 	 	 	

56,255 	 	 	

806,255 	 	 	

3,704,395 	 
	  	 	  	 	 	  	 	 	  	 	 	  	 
	Galaxy Venture Partners II, LLC 
nka
      Todd U.S. Ventures LLC 
5954 Glen Eagles Circle 
San Jose, CA 95138
    	 	

425,000 	 	 	

11,562 	 	 	

436,561 	 	 	

2,006,813 	 
	  	 	  	 	 	  	 	 	  	 	 	  	 
	Solar Venture Partners, L.P. 
5954 Glen
      Eagles Circle 
San Jose, CA 95138 	 	

250,000
    	 	 	

16,365
    	 	 	

266,365
    	 	 	

1,223,950 	 
	  	 	  	 	 	  	 	 	  	 	 	  	 
	Empire Capital Partners 
One Gorman
      Island, 2nd Floor 
Westport, CT 06880 	 	

350,000
    	 	 	

17,785
    	 	 	

367,785
    	 	 	

1,690,231 	 
	  	 	  	 	 	  	 	 	  	 	 	  	 
	Glenbrook Capital, L.P. 
430 Cambridge
      Avenue, Suite 100 
Palo Alto, CA 94306 	 	

34,425
    	 	 	

1,177
	 	 	

35,602
    	 	 	

163,645
    	 
	  	 	  	 	 	  	 	 	  	 	 	  	 
	OxCal Venture Fund 
17308 Avenida de la Herradura
      
Pacific 
Palisades, CA 90272 	 	

57,375 	 	 	

1,962 	 	 	

59,337 	 	 	

272,740 	 
	  	 	  	 	 	  	 	 	  	 	 	  	 
	Totals: 	$	 4,055,709.00 	 	$	313,754.22 	 	$	4,369,463.22 	 	 	19,861,191 	 

EXHIBIT C 

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION 
OF

XALTED NETWORKS, INC. 

     Xalted Networks, Inc., a
corporation organized and existing under the General Corporation Law of the
State of Delaware DOES HEREBY CERTIFY:

     FIRST: The original Certificate
of Incorporation of Xalted Networks, Inc. (then named Xalted IP Networks, Inc.)
was filed with the Secretary of State of Delaware on December 1, 1999.

     SECOND: The Amended and Restated
Certificate of Incorporation of Xalted Networks, Inc. in the form attached
hereto as Exhibit A has been duly adopted in accordance with the
provisions of Sections 245 and 242 of the General Corporation Law of the State
of Delaware by the directors and stockholders of the Corporation. 

     THIRD: The Amended and Restated
Certificate of Incorporation so adopted reads in full as set forth in Exhibit
A attached hereto and is hereby incorporated herein by this reference. 

     IN WITNESS WHEREOF, Xalted
Networks, Inc. has caused this Certificate to be signed by the President this
10th day of February, 2004. 

	 	XALTED NETWORKS, INC. 
	 	  	  
	 	  	  
	 	  	  
	 	By 	/s/
      Bob Kondamoori 
	 	  	Bob Kondamoori, President

EXHIBIT A 

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION 

OF 

XALTED NETWORKS, INC., 
a Delaware corporation 

ARTICLE I. 

          The
name of the corporation (the “Corporation”) is Xalted Networks, Inc. 

ARTICLE II. 

          The
address of the registered office of the Corporation in the State of Delaware is
1209 Orange Street, in the city of Wilmington, Delaware, in the County of New
Castle, and the name of the registered agent at that address is The Corporation
Trust Company.

ARTICLE III. 

          The
purpose of the Corporation is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of Delaware.

ARTICLE IV. 

          A.
Classes of Stock. This Corporation is authorized to issue two classes of
shares to be designated respectively Preferred Stock (the “Preferred Stock”) and
Common Stock (the “Common Stock”). The total number of shares of capital stock
that the Corporation is authorized to issue is Eighty Three Million One Hundred
and Fourteen Thousand Nine Hundred and Forty Three (83,114,943). The total
number of shares of Preferred Stock this Corporation shall have authority to
issue is Thirty Six Million One Hundred and Fourteen Thousand Nine Hundred and
Forty Three (36,114,943). The total number of shares of Common Stock this
Corporation shall have authority to issue is Forty Seven Million (47,000,000).
One Milllion One Hundred and Fourteen Thousand Nine Hundred and Forty Three
(1,114,943) shares of Preferred Stock are hereby designated “Series AA Preferred
Stock,” Twenty Million (20,000,000) shares of Preferred Stock are hereby
designated “Series BB Preferred Stock,” and Fifteen Million (15,000,000) shares
of Preferred Stock are hereby designated “Series CC Preferred Stock.” No shares
of Series A Preferred Stock, Series A-1 Preferred Stock and Series B Preferred
Stock remain outstanding, and the designation and the rights, privileges and
restrictions of those respective series of Preferred Stock have been eliminated
from this Amended and Restated Certificate of Incorporation. Effective upon the
filing of this amendment and restatement of the Amended and Restated Certificate
of Incorporation and after giving effect to the reclassification of Series C
Preferred Stock pursuant to the following paragraph, no shares of Series C
Preferred Stock remain outstanding, and the designation and the rights,
privileges and restrictions of the Series C Preferred Stock have been eliminated
from this Amended and Restated Certificate of Incorporation. The Preferred Stock shall have a par value of
$0.001 per share, and the Common Stock shall have a par value of $0.001 per
share.

          Effective
upon the filing of this amendment and restatement of the Amended and Restated
Certificate of Incorporation, (i) each twenty-two (22) shares of outstanding
Common Stock shall be combined into one (1) share of Common Stock (including
shares issuable pursuant to outstanding options or reserved for issuance
pursuant to the Company’s Stock Plans) (the “Common Stock Combination”) and (ii)
each twenty-two (22) shares of outstanding Series C Preferred Stock (including
shares of Series C Preferred issuable upon the exercise of outstanding warrants)
shall be combined into and reclassified as one (1) share of Series AA Preferred
Stock. 

          No
fractional shares shall be issued upon the reclassification and combination of
the shares of Series C Preferred Stock or the Common Stock Combination. If the
reclassification and combination of the Series C Preferred Stock or the Common
Stock Combination would result in the issuance of a fraction of a share of
Series AA Preferred Stock or Common Stock, as the case may be, the Corporation
shall, in lieu of issuing any fractional share, pay the holder otherwise
entitled to such fraction a sum in cash equal to the fair market value of such
fraction on the date of conversion. 

          The
number of authorized shares of Common Stock may be increased or decreased (but
not below the number of shares thereof then outstanding or reserved for issuance
pursuant to a plan or plans approved by the Board) by the affirmative vote of
the holders of a majority of the stock of this Corporation entitled to vote,
irrespective of the provisions of Section 242(b)(2) of the Delaware General
Corporation Law. 

          B.
The Rights, Preferences and Restrictions of Preferred Stock. The powers,
preferences, rights, restrictions, and other matters relating to the Preferred
Stock are as follows: 

                    1.
Dividends. 

                              a.
The holders of the Series AA Preferred Stock shall be entitled to receive
dividends on a pari passu basis with the holders of the Series BB
Preferred Stock and the Series CC Preferred Stock at the rate of $0.3894 per
share (as adjusted for any stock dividends, combinations or splits with respect
to such shares) per annum payable out of funds legally available therefor. The
holders of the Series BB Preferred Stock shall be entitled to receive dividends
on a pari passu basis with the holders of the Series AA Preferred
Stock and the Series CC Preferred Stock at the rate of $0.0176 per share (as
adjusted for any stock dividends, combinations or splits with respect to such
shares) per annum payable out of funds legally available therefor. The holders
of the Series CC Preferred Stock shall be entitled to receive dividends on a
pari passu basis with the holders of the Series AA Preferred Stock
and the Series BB Preferred Stock at the rate of $0.0536 per share (as adjusted
for any stock dividends, combinations or splits with respect to such shares) per
annum payable out of funds legally available therefor. Such dividends shall be
payable only when, as and if declared by the Board of Directors (the “Board”)
and shall be non-cumulative. 

                    No
dividends (other than those payable solely in the Common Stock) shall be paid on
any Common Stock during any fiscal year of the Corporation until dividends at
the rate of (i) $0.3894 per share (as adjusted for any stock
dividends, combinations or splits with respect to such shares) on the Series AA
Preferred Stock, (ii) $0.0176 per share (as adjusted for any stock dividends,
combinations or splits with respect to such shares) on the Series BB Preferred
Stock and (iii) $0.0536 per share (as adjusted for any stock dividends,
combinations or splits with respect to such shares) on the Series CC Preferred
Stock shall have been paid or declared and set apart during that fiscal year. 

                              b.
If, after dividends in the full preferential amount specified in this Section 1
for the Preferred Stock have been paid or declared and set apart in full in any
fiscal year of the Corporation, the Board shall declare additional dividends out
of funds legally available therefor in that fiscal year, then such additional
dividends shall be declared pro rata on the Common Stock and the Preferred Stock
on a pari passu basis according to the number of shares of Common
Stock held by such holders, where each holder of shares of Preferred Stock is to
be treated for this purpose as holding the greatest whole number of shares of
Common Stock then issuable upon conversion of all shares of Preferred Stock held
by such holder pursuant to Section 5 hereof. 

                              c.
If the Corporation shall declare a distribution payable in securities of other
persons, evidences of indebtedness issued by the Corporation or other persons,
assets (excluding cash dividends) or options or rights to purchase any such
securities or evidences of indebtedness, then, in each such case the holders of
the Preferred Stock shall be entitled to a proportionate share of any such
distribution on a pari passu basis as though the holders of the
Preferred Stock were the holders of the number of shares of Common Stock of the
Corporation into which their respective shares of Preferred Stock are
convertible as of the record date fixed for the determination of the holders of
Common Stock of the Corporation entitled to receive such distribution. 

                    1.
Liquidation Preference. 

                              a.
In the event of any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, the holders of the Series CC Preferred Stock
shall be entitled to receive, prior and in preference to any distribution of any
of the assets or surplus funds of the Corporation to the holders of the Common
Stock, the Series AA Preferred Stock and the Series BB Preferred Stock by reason
of their ownership thereof, the amount of (a) $1.348 per share (as adjusted for
any stock dividends, combinations or splits with respect to such shares), plus
all declared but unpaid dividends on such share for each share of Series CC
Preferred Stock then held by them. If upon the occurrence of such event, the
assets and funds thus distributed among the holders of the Series CC Preferred
Stock shall be insufficient to permit the payment to such holders of the full
aforesaid preferential amount, then the entire assets and funds of the
Corporation legally available for distribution shall be distributed ratably
among the holders of the Series CC Preferred Stock in proportion to the
preferential amount each such holder is otherwise entitled to receive. The
“Original Series CC Purchase Price” is equal to $0.674 per share (as adjusted
for any stock dividends, combinations or splits with respect to such shares).

                              b.
After full payment to the holders of the Series CC Preferred Stock of the amount
set forth in Section B.2.a. above, the holders of the Series BB Preferred Stock
shall be entitled to receive, prior and in preference to any distribution of any
of the assets or surplus funds of the Corporation to the holders of the Common
Stock or Series AA Preferred Stock by reason of their ownership thereof, the
amount of $0.44 per share (as adjusted for any stock dividends, combinations or
splits with respect to such shares), plus all declared but unpaid dividends on
such share for each share of Series BB Preferred Stock then held by them. If
upon the occurrence of such event, the assets and funds thus distributed among
the holders of the Series BB Preferred Stock shall be insufficient to permit the
payment to such holders of the full aforesaid preferential amount, then the
entire assets and funds of the Corporation legally available for distribution
shall be distributed ratably among the holders of the Series BB Preferred Stock
in proportion to the preferential amount each such holder is otherwise entitled
to receive. The “Original Series BB Purchase Price” is equal to $0.22 per share
(as adjusted for any stock dividents, combinations, or splits with respect to
such shares). 

                              c.
After full payment to the holders of the Series CC Preferred Stock of the amount
set forth in Section B.2.a. above and to the holders of the Series BB Preferred
Stock of the amount set forth in Section B.2.b, the holders of the Series AA
Preferred Stock shall be entitled to receive, prior and in preference to any
distribution of any of the assets or surplus funds of the Corporation to the
holders of the Common Stock, by reason of their ownership thereof, the amount of
$9.7328 per share (as adjusted for any stock dividends, combinations or splits
with respect to such shares), plus all declared but unpaid dividends on such
share for each share of Series AA Preferred Stock then held by them. If upon the
occurrence of such event, the assets and funds thus distributed among the
holders of the Series AA Preferred Stock shall be insufficient to permit the
payment to such holders of the full aforesaid preferential amount, then the
entire assets and funds of the Corporation legally available for distribution
shall be distributed ratably among the holders of the Series AA Preferred Stock
in proportion to the preferential amount each such holder is otherwise entitled
to receive. The “Original Series AA Purchase Price” is equal to $4.8664 per
share (as adjusted for any stock dividents, combinations, or splits with respect
to such shares). 

                              d.
After payment to the holders of the Preferred Stock of the amounts set forth in
Section B.2.a, Section B.2.b and Section B.2.c above, the remaining assets and
funds of the Corporation shall be distributed among the holders of the Common
Stock, the Series AA Preferred Stock, Series BB Preferred Stock and Series CC
Preferred Stock in proportion to the shares of Common Stock then held by them
and the shares of Common Stock which they then have the right to acquire upon
conversion of the shares of Series AA Preferred Stock, Series BB Preferred Stock
and Series CC Preferred Stock then held by them, as the case may be. 

                              e.
For purposes of this Section B.2, (i) any acquisition of the Corporation by
means of merger or other form of corporate reorganization in which outstanding
shares of the Corporation are exchanged for securities or other consideration
issued, or caused to be issued, by the acquiring corporation or its subsidiary
(other than a mere reincorporation transaction) and pursuant to which the
holders of the outstanding voting securities of the Corporation immediately
prior to such merger or other form of corporate reorganization fail to hold
equity securities representing a majority of the voting power of the Corporation
or surviving entity immediately following such merger or other form of corporate
reorganization, (ii) a sale of all or substantially all of the assets of the
Corporation or (iii) license of substantially all of the Company’s intellectual
property, shall be treated as a liquidation, dissolution or winding up of the
Corporation and shall entitle the holders of the Common Stock and Preferred
Stock to receive at the closing in cash, securities or other property (valued as
provided in Section B.2.f below) amounts as specified in Section B.2.a, Section
B.2.b, Section B.2.c, and Section B.2.d above. 

                              f.
Whenever the distribution provided for in this Section B.2 shall be payable in
securities or property other than cash, the value of such distribution shall be
the fair market value of such securities or other property as determined in good
faith by the Board of Directors. 

                    3.
Redemption. The Preferred Stock shall not be redeemable. 

                    4.
Voting Rights.

                              a.
General Rights. Each holder of shares of Preferred Stock shall be
entitled to the number of votes equal to the number of shares of Common Stock
into which such shares of Preferred Stock could be converted (also referred to
as “on an as converted to Common Stock basis”) and shall have voting rights and
powers equal to the voting rights and powers of the Common Stock (except as
otherwise expressly provided herein or as required by law, voting together with
the Common Stock as a single class) and shall be entitled to notice of any
stockholders’ meeting in accordance with the Bylaws of the Corporation.
Fractional votes shall not, however, be permitted and any fractional voting
rights resulting from the above formula (after aggregating all shares into which
shares of Preferred Stock held by each holder could be converted) shall be
rounded to the nearest whole number (with one-half being rounded upward). The
number of authorized shares of Common Stock may be increased or decreased (but
not below the number of Common Stock outstanding) by an affirmative vote of the
holders of a majority of the outstanding stock of the corporation. 

                    vb.
Election of Directors. The authorized number of the Board of Directors of
the Corporation shall consist of three (3) members, and the authorized number of
directors shall not be changed without the approval of at least a majority of
the outstanding shares of Preferred Stock, voting together on an as converted to
Common Stock basis. Notwithstanding Section 4(a) above, for so long as at least
an aggregate of 5,000,000 shares of Preferred Stock (as adjusted for any stock
dividends, combinations or splits with respect to such shares) remain
outstanding, (i) the holders of Preferred Stock, voting together on an as
converted to Common Stock basis, shall be entitled to elect two (2) members of
the Board of Directors (the “Preferred Stock Director-Designees”), (ii) the
holders of Common Stock and Preferred Stock, voting together on an as converted
to Common Stock basis, shall be entitled to elect one (1) member of the Board of
Directors and (iii) in the event of a vacancy in the office of any director
elected by the holders of the Preferred Stock, a successor shall be elected to
hold office for the unexpired term of such director by the holders of shares of
the Preferred Stock. 

                    5.
Conversion. The holders of the Preferred Stock shall have conversion
rights as follows (the “Conversion Rights”): 

                              a.
Right to Convert. Each share of Preferred Stock shall be convertible, at
the option of the holder thereof, at any time after the date of issuance of such
share, at the office of the Corporation or any transfer agent for such stock,
into such number of fully paid and nonassessable shares of Common Stock as is
determined herein. The number of shares of Common Stock to which a holder of Series AA Preferred
Stock shall be entitled upon conversion shall be determined by dividing $0.22
per share by the Series AA Conversion Price for the Series AA Preferred Stock in
effect on the date the certificate is surrendered for conversion (rounded down
to a whole number of shares for each such holder). The price at which shares of
Common Stock shall be deliverable upon conversion of shares of the Series AA
Preferred Stock (the “Series AA Conversion Price”) shall initially be $0.22,
subject to adjustment as hereinafter provided. The number of shares of Common
Stock to which a holder of Series BB Preferred Stock shall be entitled upon
conversion shall be determined by dividing the Original Series BB Purchase Price
by the Series BB Conversion Price for the Series BB Preferred Stock in effect on
the date the certificate is surrendered for conversion (rounded down to a whole
number of shares for each such holder). The price at which shares of Common
Stock shall be deliverable upon conversion of shares of the Series BB Preferred
Stock (the “Series BB Conversion Price”) shall initially be $0.22, subject to
adjustment as hereinafter provided. The number of shares of Common Stock to
which a holder of Series CC Preferred Stock shall be entitled upon conversion
shall be determined by dividing the Original Series CC Purchase Price by the
Series CC Conversion Price for the Series CC Preferred Stock in effect on the
date the certificate is surrendered for conversion (rounded down to a whole
number of shares for each such holder). The price at which shares of Common
Stock shall be deliverable upon conversion of shares of the Series CC Preferred
Stock (the “Series CC Conversion Price”) shall initially be $0.674 as of the
Original Issue Date, subject to adjustment as hereinafter provided. Each of the
Series AA Conversion Price, the Series BB Conversion Price and the Series CC
Conversion Price is sometimes referred to herein as a “Conversion Price.” 

                              b.
Automatic Conversion. Each share of Series AA Preferred Stock, Series BB
Preferred Stock and Series CC Preferred Stock shall automatically be converted
into shares of Common Stock at the then effective Conversion Price for such
series, upon the earliest of (i) the date specified by written consent or
agreement of holders of at least a majority of the outstanding shares of the
applicable series of Preferred Stock, or (ii) immediately upon the closing of
the sale of the Corporation’s Common Stock in a firm commitment, underwritten
public offering registered under the Securities Act of 1933, as amended (the
“Securities Act”), at a per share price to the public of not less than $4.00 (as
adjusted for stock splits, dividends, recapitalizations and the like) and in
which the aggregate net proceeds to the Corporation (after deduction for
underwriters’ discounts and expenses relating to the issuance) exceed
$40,000,000 (a “Qualifying IPO”). 

                              c.
Mechanics of Conversion. 

                                        (i)
Before any holder of Preferred Stock shall be entitled to convert the same into
shares of Common Stock, such holder shall surrender the certificate or
certificates therefor, duly endorsed, at the office of the Corporation or of any
transfer agent for such stock, and shall give written notice to the Corporation
at such office that he elects to convert the same and shall state therein the
name or names in which he wishes the certificate or certificates for shares of
Common Stock to be issued. The Corporation shall, as soon as practicable
thereafter, issue and deliver at such office to such holder of Preferred Stock,
a certificate or certificates for the number of shares of Common Stock to which
he shall be entitled as aforesaid. Such conversion shall be deemed to have been
made immediately prior to the close of business on the date of surrender of the
shares of Preferred Stock to be converted, and the person or persons entitled to receive the shares of Common
Stock issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock on such date. 

                                        (ii)
If the conversion is in connection with an underwritten offering of securities
pursuant to the Securities Act, the conversion may, at the option of any holder
tendering shares of Preferred Stock for conversion, be conditioned upon the
closing with the underwriters of the sale of securities pursuant to such
offering, in which event the person(s) entitled to receive the Common Stock upon
conversion of the Preferred Stock shall not be deemed to have converted such
Preferred Stock until immediately prior to the closing of such sale of
securities. 

                              d.
Adjustments to Conversion Prices for Certain Dilutive Issuances. 

                                        (i)
Special Definitions. For purposes of this Section B.5.d., the following
definitions apply: 

                                                  (1)
“Options” shall mean rights, options or warrants to subscribe for,
purchase or otherwise acquire either Common Stock or Convertible Securities
(defined below). 

                                                  (2)
“Original Issue Date” shall mean the date on which a share of Series CC
Preferred Stock was first issued. 

                                                  (3)
“Convertible Securities” shall mean any evidences of indebtedness, shares
or other securities convertible into or exchangeable for Common Stock. 

                                                  (4)
“Additional Shares of Common Stock” shall mean all shares of Common Stock
issued (or, pursuant to Section B.5.d.(iii) deemed to be issued) by the
Corporation on or after the Original Issue Date, other than shares of Common
Stock issued (or, pursuant to Section B.5.d.(iii) deemed to be issued) or
issuable: 

                                                            (A)
upon conversion of shares of Preferred Stock or exercise of any Options issued
and outstanding on the Original Issue Date or upon conversion of any Convertible
Securities issued and outstanding on the Original Issue Date; 

                                                            (B)
pursuant to options, other rights or agreements to purchase Common Stock to
officers, directors or employees of, or consultants to, or vendors or customers
of, the Corporation or a subsidiary or parent pursuant to stock option or stock
purchase plans or agreements on terms approved by the Board of Directors; 

                                                            (C)
as a dividend or distribution on Preferred Stock; 

                                                            (D)
to strategic partners, vendors, joint venturers, customers, lenders, lessors or
comparable entities pursuant to agreements approved by the Board of Directors of
the Corporation including approval by at least one Preferred Stock
Director-Designee; 

                                                            (E)
in accordance with adjustment of the respective Conversion Prices pursuant to
Section B.5.e. or Section B.5.f; or 

                                                            (F)
upon the issuance of Series CC Preferred Stockor Series BB Preferred Stock
issued not later than 60 days after the Original Issue Date. 

                                                            (G)
following the approval of a majority of the shares of Preferred Stock voting
together as a single class. 

                                        (ii)
No Adjustment of Respective Conversion Prices. Any provision herein to
the contrary notwithstanding, no adjustment in the Series AA Conversion Price,
Series BB Conversion Price or Series CC Conversion Price shall be made in
respect of the issuance of Additional Shares of Common Stock unless the
consideration per share (determined pursuant to Section B.5.d.(v) hereof) for an
Additional Share of Common Stock issued or deemed to be issued by the
Corporation is less than the respective Conversion Price in effect on the date
of, and immediately prior to, such issue. 

                                        (iii)
Deemed Issue of Additional Shares of Common Stock. In the event the
Corporation at any time or from time to time after the Original Issue Date shall
issue any Options or Convertible Securities or shall fix a record date for the
determination of holders of any class of securities then entitled to receive any
such Options or Convertible Securities, then the maximum number of shares (as
set forth in the instrument relating thereto without regard to any provisions
contained therein designed to protect against dilution) of Common Stock issuable
upon the exercise of such Options or, in the case of Convertible Securities and
Options therefor, the conversion or exchange of such Convertible Securities,
shall be deemed to be Additional Shares of Common Stock issued as of the time of
such issue or, in case such a record date shall have been fixed, as of the close
of business on such record date, provided further that in any such case in which
Additional Shares of Common Stock are deemed to be issued: 

                                                  (1)
no further adjustments in the Series AA Conversion Price, Series BB Conversion
Price or Series CC Conversion Price shall be made upon the subsequent issue of
Convertible Securities or shares of Common Stock upon the exercise of such
Options or conversion or exchange of such Convertible Securities; 

                                                  (2)
if such Options or Convertible Securities by their terms provide, with the
passage of time or otherwise, for any increase or decrease in the consideration
payable to the Corporation, or decrease or increase in the number of shares of
Common Stock issuable, upon the exercise, conversion or exchange thereof, the
Series AA Conversion Price, Series BB Conversion Price or Series CC Conversion
Price computed upon the original issue thereof (or upon the occurrence of a
record date with respect thereto), and any subsequent adjustments based thereon,
shall, upon any such increase or decrease becoming effective, be recomputed to
reflect such increase or decrease insofar as it affects such Options or the
rights of conversion or exchange under such Convertible Securities (provided,
however, that no such adjustment of the Series AA Conversion Price, Series BB
Conversion Price or Series CC Conversion Price shall affect Common Stock
previously issued upon conversion of any series of such Preferred Stock); 

                                                  (3)
upon the expiration of any such Options or rights, the termination of any such
rights to convert or exchange or the expiration of any Options or rights related
to such Convertible Securities or exchangeable securities, the Series AA
Conversion Price, Series BB Conversion Price or Series CC Conversion Price, to
the extent in any way affected by or computed using such Options, rights or
Convertible Securities or Options or rights related to such Convertible
Securities, shall be recomputed to reflect the issuance of only the number of
shares of Common Stock (and convertible or exchangeable securities that remain
in effect) actually issued upon the exercise of such Options or rights, upon the
conversion or exchange of such Convertible Securities or upon the exercise of
the Options or rights related to such Convertible Securities; 

                                                  (4)
no readjustment pursuant to clause (2) or (3) above shall have the effect of
increasing the Series AA Conversion Price, Series BB Conversion Price or Series
CC Conversion Price to an amount that exceeds the lower of (a) the Series AA
Conversion Price, Series BB Conversion Price or Series CC Conversion Price, as
the case may be, on the original adjustment date, or (b) the Series AA
Conversion Price, Series BB Conversion Price or Series CC Conversion Price, as
applicable, that would have resulted from any issuance of Additional Shares of
Common Stock between the original adjustment date and such readjustment date.

                                        (iv)
Adjustment of Series AA Conversion Price, Series BB Conversion Price
or Series CC Conversion Price Upon Issuance of Additional Shares of
Common Stock.

                                                  (1)
Except with respect to issuances for which an adjustment is made pursuant to
Section B.5.d.(iv)(2) below, if this Corporation, at any time after the Original
Issue Date, shall issue Additional Shares of Common Stock (including Additional
Shares of Common Stock deemed to be issued pursuant to Section B.5.d.(iii))
without consideration or for a consideration per share less than the Series AA
Conversion Price, Series BB Conversion Price or Series CC Conversion Price in
effect on the date of and immediately prior to such issue, then, and in such
event, the Series AA Conversion Price, Series BB Conversion Price or Series CC
Conversion Price, as the case may be, shall be reduced, concurrently with such
issue, to a price (calculated to the nearest cent) determined by multiplying the
applicable Conversion Price by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding immediately prior to such issue
plus the number of shares of Common Stock that the aggregate consideration
received by the Corporation for the total number of Additional Shares of Common
Stock so issued would purchase at the applicable Conversion Price in effect
immediately prior to such issuance, and the denominator of which shall be the
number of shares of Common Stock outstanding immediately prior to such issue
plus the number of such Additional Shares of Common Stock so issued. For the
purpose of the above calculation, the number of shares of Common Stock
outstanding immediately prior to such issue shall be calculated as if all shares
of Preferred Stock had been fully converted into shares of Common Stock, and
shall also include the conversion or exercise of any outstanding Options or
other rights for the purchase of shares of stock or Convertible Securities as of
such date. 

                                                  (2)
If this Corporation, at any time on or before the first anniversary of the
Original Issue Date, shall issue Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be
issued pursuant to Section B.5.d.(iii)) without consideration or for a
consideration per share less than the Series CC Conversion Price in effect on
the date of and immediately prior to such issue, then, and in such event, the
Series CC Conversion Price shall be reduced, concurrently with such issue, to a
price equal to the price paid per share for such Additional Shares of Common
Stock. 

                                        (v)
Determination of Consideration. For purposes of this Section B.5.d., the
consideration received by the Corporation for the issue of any Additional Shares
of Common Stock shall be computed as follows: 

                                                  (1)
Cash and Property. Such consideration shall: 

                                                            (A)
insofar as it consists of cash, be computed at the aggregate amount of cash
received by the Corporation excluding amounts paid or payable for accrued
interest or accrued dividends; 

                                                            (B)
insofar as it consists of property other than cash, be computed at the fair
market value thereof at the time of such issue, as determined in good faith by
the Board; and 

                                                            (C)
in the event Additional Shares of Common Stock are issued together with other
shares or securities or other assets of the Corporation for consideration that
covers both, be the proportion of such consideration so received, computed as
provided in clauses (A) and (B) above, as determined in good faith by the Board.

                                                  (2)
Options and Convertible Securities. The consideration per share received
by the Corporation for Additional Shares of Common Stock deemed to have been
issued pursuant to Section B.5.d.(iii), relating to Options and Convertible
Securities shall be determined by dividing: 

                                                            (A)
the total amount, if any, received or receivable by the Corporation as
consideration for the issue of such Options or Convertible Securities, plus the
minimum aggregate amount of additional consideration (as set forth in the
instruments relating thereto, without regard to any provision contained therein
designed to protect against dilution) payable to the Corporation upon the
exercise of such Options or the conversion or exchange of such Convertible
Securities, or in the case of Options for Convertible Securities, the exercise
of such Options for Convertible Securities and the conversion or exchange of
such Convertible Securities by 

                                                            (B)
the maximum number of shares of Common Stock (as set forth in the instruments
relating thereto, without regard to any provision contained therein designed to
protect against the dilution) issuable upon the exercise of such Options or
conversion or exchange of such Convertible Securities. 

                              e.
Adjustments to Conversion Prices for Stock Dividends and for
Combinations or Subdivisions of Common Stock. If this Corporation, at any
time or from time to time after the Original Issue Date shall declare or pay,
without consideration, any dividend on the Common Stock payable in Common Stock
or in any right to acquire Common Stock for no consideration, or shall effect a subdivision of the outstanding
shares of Common Stock into a greater number of shares of Common Stock (by stock
split, reclassification or otherwise than by payment of a dividend in Common
Stock or in any right to acquire Common Stock), or if the outstanding shares of
Common Stock shall be combined or consolidated, by reclassification or
otherwise, into a lesser number of shares of Common Stock, then the Conversion
Price for any series of Preferred Stock in effect immediately prior to such
event shall, concurrently with the effectiveness of such event, be
proportionately decreased or increased, as appropriate. In the event that this
Corporation shall declare or pay, without consideration, any dividend on the
Common Stock payable in any right to acquire Common Stock for no consideration
then the Corporation shall be deemed to have made a dividend payable in Common
Stock in an amount of shares equal to the maximum number of shares issuable upon
exercise of such rights to acquire Common Stock. 

                              f.
Adjustments for Reclassification and Reorganization. If or after the
Original Issue Date the Common Stock issuable upon conversion of the Preferred
Stock shall be changed into the same or a different number of shares of any
other class or classes of stock, whether by capital reorganization,
reclassification or otherwise (other than a subdivision or combination of shares
provided for in Section B.5.e. above or a merger or other reorganization
referred to in Section B.2.e. above), the respective Conversion Prices for any
series of Preferred Stock then in effect shall, concurrently with the
effectiveness of such reorganization or reclassification, be proportionately
adjusted so that the Series AA Preferred Stock, Series BB Preferred Stock or
Series CC Preferred Stock shall be convertible into, in lieu of the number of
shares of Common Stock that the holders would otherwise have been entitled to
receive, a number of shares of such other class or classes of stock equivalent
to the number of shares of Common Stock that would have been subject to receipt
by the holders upon conversion of the Series AA Preferred Stock, Series BB
Preferred Stock or Series CC Preferred Stock, respectively, immediately before
that change. 

                              g.
No Impairment. The Corporation will not, by amendment of its Certificate
of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Corporation, but will at
all times in good faith assist in the carrying out of all the provisions of this
Section B.5 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Preferred Stock against impairment. 

                              h.
Certificates as to Adjustments. Upon the occurrence of each adjustment or
readjustment of any Conversion Price pursuant to this Section B.5, the
Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and prepare and furnish to each
holder of Preferred Stock a certificate executed by the Corporation’s President
or a Vice President setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment is based. The
Corporation shall, upon the written request at any time of any holder of
Preferred Stock, furnish or cause to be furnished to such holder a like
certificate setting forth (i) such adjustments and readjustments, (ii) the
Conversion Price for such series of Preferred Stock at the time in effect, and (iii) the number of shares of Common Stock and the amount,
if any, of other property that at the time would be received upon the conversion
of the Preferred Stock of such series. 

                              i.
Notices of Record Date. If the Corporation shall propose at any time: (i)
to declare any dividend or distribution upon its Common Stock, whether in cash,
property, stock or other securities, whether or not a regular cash dividend and
whether or not out of earnings or earned surplus; (ii) to offer for subscription
pro rata to the holders of any class or series of its stock any additional
shares of stock of any class or series or other rights; (iii) to effect any
reclassification or recapitalization of its Common Stock outstanding involving a
change in the Common Stock; or (iv) to merge or consolidate with or into any
other Corporation, or sell, lease or convey all or substantially all of its
assets, or to liquidate, dissolve or wind up; then, in connection with each such
event, the Corporation shall send to the holders of Preferred Stock: (1) at
least ten (10) days prior written notice of the date on which a record shall be
taken for such dividend, distribution or subscription rights (and specifying the
date on which the holders of Common Stock shall be entitled thereto) or for
determining rights to vote, if any, in respect of the matters referred to in
(iii) and (iv) above; and (2) in the case of the matters referred to in (iii)
and (iv) above, at least ten (10) days prior written notice of the date when the
same shall take place (and specifying the date on which the holders of Common
Stock shall be entitled to exchange their Common Stock for securities or other
property deliverable upon the occurrence of such event). 

                              j.
Reservation of Stock Issuable Upon Conversion. The Corporation shall at
all times reserve and keep available out of its authorized but unissued shares
of Common Stock, solely for the purpose of effecting the conversion of the
shares of the Preferred Stock, such number of its shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all
outstanding shares of the Preferred Stock; and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then outstanding shares of the Preferred Stock, the
Corporation will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purpose,
including, without limitation, engaging in best efforts to obtain the requisite
stockholder approval of any necessary amendment to this Certificate. 

                              k.
Fractional Shares. No fractional share shall be issued upon the
conversion of any share or shares of Preferred Stock. All shares of Common Stock
(including fractions thereof) issuable upon conversion of more than one share of
Preferred Stock by a holder thereof shall be aggregated for purposes of
determining whether the conversion would result in the issuance of any
fractional share. If, after the aforementioned aggregation, the conversion would
result in the issuance of a fraction of a share of Common Stock, the Corporation
shall, in lieu of issuing any fractional share, pay the holder otherwise
entitled to such fraction a sum in cash equal to the fair market value of such
fraction on the date of conversion (as determined in good faith by the Board of
Directors). 

                              l.
Notices. Any notice required by the provisions of this Section B.5 to be
given to the holders of shares of Preferred Stock shall be deemed given if
deposited in the United States mail, postage prepaid, and addressed to each
holder of record at his address appearing on the books of the Corporation. 

                    6.
Restrictions and Limitations. So long as at least 5,000,000 shares of
Preferred Stock remain outstanding (as adjusted for any stock dividends,
combinations or splits with respect to such shares), the Corporation shall not,
without the vote or written consent by the holders of at a majority of the then
outstanding shares of Preferred Stock: 

                              a.
Authorize, create or issue, or obligate itself to issue, any other equity
security (including any security convertible into or exercisable for any equity
security) having rights, preferences or privileges senior to or on a parity with
any series of Preferred Stock in right, preference or privilege including with
respect to dividends or upon a liquidation; 

                              b.
Do any act or thing that results in the redemption of any shares of Preferred
Stock or Common Stock (except repurchases upon termination of service and
similar contractual arrangements); 

                              c.
Do any act or thing that results in the payment or declaration of any dividend
on any shares of Common Stock or Preferred Stock (except repurchases upon
termination of service and similar contractual arrangements);

                              d.
Consummate any transaction that constitutes a liquidation, dissolution or
winding up as defined under Section B.2.e. above; 

                              e.
Amend or alter its Certificate of Incorporation or Bylaws, or waive any
provision thereof; 

                              f.
Increase or decrease (other than by conversion) the authorized number of shares
of Common Stock or any class or series of Preferred Stock; 

                              g.
Increase the number of shares reserved for issuance pursuant to any stock
incentive plan adopted by the Corporation; 

                              h.
Alter or change the rights, preferences or privileges of any series of Preferred
Stock; or 

                              i.
Increase or decrease the authorized size of the Corporation’s Board of
Directors. 

                    7.
No Reissuance of Preferred Stock. No share or shares of Preferred Stock
acquired by the Corporation by reason of purchase, conversion or otherwise shall
be reissued, and all such shares shall be cancelled, retired and eliminated from
the shares that the Corporation shall be authorized to issue. 

          C.
The Common Stock. 

                    1.
Dividend Rights. Subject to the prior rights of the holders of all
classes of stock at the time outstanding having prior rights as to dividends,
the holders of the Common Stock shall be entitled to receive, when and as
declared by the Board of Directors, out of any assets or the Corporation legally
available therefor, such dividends as may be declared from time to time by the
Board of Directors. 

                    2.
Liquidation Rights. Upon the liquidation, dissolution or winding up of
the Corporation, the assets of the Corporation shall be distributed as provided
in Section 2 of Division (B) of this Article IV. 

                    3.
Voting Rights. The holder of each share of Common Stock shall have the
right to one vote, and shall be entitled to notice of any stockholders’ meeting
in accordance with the Bylaws of this Corporation, and shall be entitled to vote
upon such matters and in such manner as may be provided by law. 

ARTICLE V. 

                    A
director of the Corporation shall not be personally liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director’s duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv)
for any transaction from which the director derived any improper personal
benefit. If the Delaware General Corporation Law is amended after approval by
the stockholders of this Article to authorize Corporation action further
eliminating or limiting the personal liability of directors then the liability
of a director of the Corporation shall be eliminated or limited to the fullest
extent permitted by the Delaware General Corporation Law as so amended. 

                    Any
repeal or modification of the foregoing provisions of this Article V by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification. 

ARTICLE VI. 

                    To
the fullest extent permitted by applicable law, the Corporation shall provide
indemnification of (and advancement of expenses to) directors and officers of
the Corporation with respect to actions or threatened actions related to his or
her status as an officer or director of the Corporation for breach of duty to a
corporation, its stockholders and other. 

                    Any
repeal or modification of the foregoing provisions of this Article VI, by
amendment of this Article VI or by operation of law, shall not adversely affect
any right or protection of a director, officer, employee, agent or other person
existing at the time of, or increase the liability of any such director,
officer, agent or other person of the Corporation with respect to any acts or
omissions of such director, officer, agent or other person occurring prior to
such repeal or modification. 

ARTICLE VII. 

                    Meetings
of stockholders may be held within or without the State of Delaware, as the
Bylaws may provide. The books of the Corporation may be kept (subject to any
provision contained in the statutes) outside the State of Delaware at such place
or places as may be designated from time to time by the Board of Directors or in
the Bylaws of the Corporation. 

ARTICLE VIII. 

Except as otherwise provided in this Certificate of
Incorporation, in furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, repeal, alter,
amend and rescind any or all of the Bylaws of the Corporation. 

EXHIBIT D 

Form of Amended and Restated Investors’ Rights Agreement

 

 

XALTED NETWORKS, INC. 

AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT 

Dated as of February 10, 2004 

TABLE OF CONTENTS 

	  	  	  	Page 
	  	  	  	  
	1. 	INFORMATION RIGHTS. 	1 
	  	1.1 	Financial Information 	1 
	  	1.2 	Inspection Rights
    	2 
	  	1.3 	Termination of Certain Rights 	2 
	  	  	  	  
	2. 	REGISTRATION RIGHTS.
	3 
	  	2.1 	Definitions 	3 
	  	2.2 	Request for Registration 	4 
	  	2.3 	Piggyback
      Registrations 	6 
	  	2.4 	Form S-3 Registration 	7 
	  	2.5 	Obligations of
      the Company 	8 
	  	2.6 	Furnish Information 	10 
	  	2.7 	Indemnification
    	10 
	  	2.8 	Rule 144 Reporting 	12 
	  	2.9 	Termination of
      the Company’s Obligations 	13 
	  	2.10 	Limitations on Subsequent
      Registration Rights 	13 
	  	2.11 	“Market
      Stand-Off” Agreement 	13 
	  	2.12 	S-3 Registration Requirements 	14 
	  	  	  	  
	3. 	RIGHT OF FIRST OFFER.
    	14 
	  	3.1 	General 	14 
	  	3.2 	New Securities 	15 
	  	3.3 	Procedures 	16 
	  	3.4 	Failure to Exercise 	16 
	  	3.5 	Termination 	16 
	  	  	  	  
	4. 	COVENANTS OF THE COMPANY. 	17 
	  	4.1 	Insurance 	17 
	  	4.2 	Key Person Life
      Insurance 	17 
	  	4.3 	Proprietary Information and
      Inventions Agreements 	17 
	  	4.4 	Employee Pool.
	17 
	  	4.5 	Stock Vesting 	17 
	  	4.6 	Reimbursement	 17 
	  	  	  	  
	5. 	ASSIGNMENT AND AMENDMENT. 	17 
	  	5.1 	Assignment 	17 
	  	5.2 	Amendment of
      Rights 	18 
	  	  	  	  
	6. 	GENERAL
      PROVISIONS. 	18 
	  	6.1 	Notices 	18 

-i- 

	 	6.2 	Entire Agreement
    	19 
	 	6.3 	Governing Law 	19 
	 	6.4 	Severability 	19 
	 	6.5 	Third Parties 	19 
	 	6.6 	Successors And
      Assigns 	19 
	 	6.7 	Captions 	19 
	 	6.8 	Counterparts 	19 
	 	6.9 	Costs And Attorneys’ Fees 	19 
	 	6.10 	Adjustments for
      Stock Splits, Etc 	19 
	 	6.11 	Aggregation of Stock 	20 
	 	6.12 	Facsimile 	20 

-ii- 

AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT 

                    This
Amended and Restated Investors’ Rights Agreement (this “Agreement”) is
made and entered into as of February 10, 2004 (the “Effective Date”), by
and among Xalted Networks, Inc., a Delaware corporation (the “Company”),
Tim Phillips and Pratap (Bob) Kondamoori (each, a “Founder” and,
collectively, the “Founders”) and the investors set forth on Exhibit
A (each of which is referred to herein as an “Investor” and,
collectively, as the “Investors”). 

R E C I T A L S 

                    WHEREAS,
in connection with the Series C Preferred Stock Purchase Agreement, dated May
17, 2002, the Company and certain of the Investors and Founders entered into an
Amended and Restated Investors’ Rights Agreement, dated as of May 17, 2002 (the
“Prior Agreement”); 

                    WHEREAS,
certain of the Investors are purchasing shares of the Company’s Series BB
Preferred Stock and Series CC Preferred Stock (the “Series BB Preferred Stock”
and the “Series CC Preferred Stock” and collectively with the Series AA
Preferred Stock of the Company, the “Preferred Stock”) pursuant to that certain
Series BB and Series CC Preferred Stock Purchase Agreement, dated as of even
date herewith (the “Stock Purchase Agreement”), by and among the Company and the
Investors; and 

                    WHEREAS,
in order to induce the Company to enter into the Stock Purchase Agreement and to
induce certain of the Investors to invest funds in the Company pursuant to the
Stock Purchase Agreement, the Investors, the Founders and the Company hereby
agree that this Agreement shall govern the rights of the Investors and the
Founders to cause the Company to register shares of the common stock of the
Company (the “Common Stock”) issued or issuable to the Investors upon conversion
of the Preferred Stock or held by the Founders, and certain other matters as set
forth herein and intend that this Agreement shall supersede and replace the
Prior Agreement; 

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

          1.
INFORMATION RIGHTS. 

                    1.1
Financial Information.

                              (a)
The Company covenants and agrees that, commencing on the date of this Agreement
and for so long as any Investor continues to hold any shares of Preferred Stock
and/or any shares of Common Stock issued upon conversion of such shares of
Preferred Stock (the “Conversion Stock”), the Company will: 

-1- 

                                        (i)
Annual Reports. Furnish to such Investor within ninety (90) days of the
end of each fiscal year, an audited consolidated balance sheet as of the end of
such fiscal year, an audited consolidated statement of operations and an audited
consolidated statement of cash flows of the Company and its subsidiaries for
such fiscal year, all prepared in accordance with generally accepted accounting
principles; and 

                                        (ii)
Quarterly Reports. Furnish to such Investor as soon as practicable, and
in any case within forty-five (45) days of the end of each quarter of the
Company, quarterly unaudited consolidated financial statements, including an
unaudited consolidated balance sheet, an unaudited consolidated statement of
operations and an unaudited consolidated statement of cash flows, together with
a certificate of the Chief Financial Officer or President of the Company stating
that such statements fairly present the consolidated financial position and
consolidated financial results of the Company for the fiscal quarter covered.

                              (b)
The Company covenants and agrees that, commencing on the date of this Agreement
and for so long as any Investor holds at least 2,000,000 shares of Preferred
Stock and/or the equivalent number (on an as-converted basis) of the Conversion
Stock (a “Major Investor”), the Company will: 

                                        (i)
Monthly Reports. Furnish to such Major Investor as soon as practicable,
and in any case within thirty (30) days of the end of each month of the Company,
monthly unaudited consolidated financial statements, including an unaudited
consolidated balance sheet, an unaudited consolidated statement of operations
and an unaudited consolidated statement of cash flows (in each case compared
against the Company’s annual operating plan), together with a certificate of the
Chief Financial Officer or President of the Company stating that such statements
fairly present the consolidated financial position and consolidated financial
results of the Company for the fiscal month covered; and

                                        (ii)
Annual Budget. Furnish to such Major Investor a copy of the Company’s
annual operating plan, prepared on a quarterly basis, within thirty (30) days
prior to the beginning of the Company’s fiscal year.

                    1.3
Inspection Rights. The Company shall permit each Major Investor or its
transferees (as permitted pursuant to Section 5.1(a) hereof), at such Major
Investor’s expense, to visit and inspect the Company’s properties, to examine
its books of account and records and to discuss the Company’s affairs, finances
and accounts with its officers, all at such reasonable times as may be requested
by such Major Investor; provided, however, that the Company shall
not be obligated under this Section 1.2 to provide information that it deems in
good faith to be a trade secret or similar confidential or proprietary
information. 

                    1.4
Termination of Certain Rights. The Company’s obligations under Sections
1.1 and 1.2 above will terminate upon the earlier of: (a) the closing of a firm
commitment underwritten public offering of the Common Stock pursuant to an
effective registration statement filed under the Securities Act of 1933, as
amended (the “Securities Act”) at a per share price not less than $4.00
(as adjusted for stock splits, dividends and the like) and for a total offering with net proceeds to the Company of not
less than $40,000,000 (after deduction of underwriters commissions and expenses)
(a “Qualified IPO”) or (b) when the Company first becomes subject to the
periodic reporting requirements of Sections 12(g) or 15(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”). 

-2- 

          2.
REGISTRATION RIGHTS. 

                    2.1
Definitions. For purposes of this Agreement: 

                              (a)
Registration. The terms “register,” “registered” and
“registration” refer to a registration effected by preparing and filing a
registration statement or similar document pursuant to the Securities Act, and
the declaration or ordering of effectiveness of such registration statement or
document. 

                              (b)
Registrable Securities. The term “Registrable Securities” means:
(i) the shares of Common Stock issued or issuable upon the conversion of any
shares of the Series AA Preferred Stock or warrants exercisable for such shares
of Series AA Preferred Stock, (ii) the shares of Common Stock issued or issuable
upon the conversion of any shares of the Series BB Preferred Stock, (iii) the
shares of Common Stock issued or issuable upon the conversion of any shares of
the Series CC Preferred Stock, (iv) the shares of Common Stock issued prior to
the date of this Agreement upon the conversion of shares of Series A Preferred
Stock, Series A-1 Preferred Stock or Series B Preferred Stock, (v) the shares of
Common Stock issued to the Founders (provided, however, that such
shares of Common Stock shall not be deemed Registrable Securities and the
aforementioned individuals shall not be deemed Holders for the purpose of
Sections 2.2, 2.4 and 2.10), and (vi) any shares of Common Stock issued as (or
issuable upon the conversion or exercise of any warrant, right or other security
that is issued as) a dividend or other distribution with respect to, in exchange
for or in replacement of any shares of Common Stock or Preferred Stock described
in clause (i)-(vi) of this subsection (b); excluding in all cases,
however, any Registrable Securities following the sale thereof (x) in a
transaction in which rights under this Section 2 are not assigned in accordance
with this Agreement (y) to the public or (z) pursuant to Rule 144 promulgated
under the Securities Act. 

                              (c)
Registrable Securities then Outstanding. The number of shares of
“Registrable Securities then outstanding” shall mean the number of shares
of Common Stock that are Registrable Securities and (i) are then issued and
outstanding or (ii) are then issuable pursuant to the exercise or conversion of
then outstanding and then exercisable options, warrants or convertible
securities. 

                              (d)
Holder. For purposes of Sections 2, 3 and 5 of this Agreement, the term
“Holder” means any person owning of record Registrable Securities that
have not been sold to the public or pursuant to Rule 144 promulgated under the
Securities Act, or any assignee of record of such Registrable Securities to whom
rights under Section 2 or Section 3 have been duly assigned in accordance with
this Agreement; provided, however, that for purposes of this
Agreement, a record holder of shares of Preferred Stock of the Company
convertible into such Registrable Securities shall be deemed to be the Holder of
such Registrable Securities; and provided, further, that the Company shall in no
event be obligated to register shares of Preferred Stock, and the Holders of
Registrable Securities will not be required to convert their shares of Preferred
Stock into Common Stock in order to exercise the registration rights granted
hereunder until immediately before the closing of the offering to which the
registration relates (and then only to the extent necessary to sell the
Registrable Securities to be sold in such offering). 

 -3- 

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

                              (f)
SEC. The term “SEC” or “Commission” means the United States
Securities and Exchange Commission. 

                    2.2
Request for Registration.

                              (a)
If the Company shall receive at any time on or after February 10, 2006 a written
request from the Holders of at least 25% of the Registrable Securities then
outstanding that the Company file a registration statement under the Securities
Act (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) having an aggregate
offering price of not less than $7,500,000, then the Company shall: 

                                        (i)
within 20 days of the receipt thereof, give written notice of such request to
all Holders; and

                                        (ii)
effect as soon as practicable, and in any event within 90 days of the receipt of
such request, the registration under the Securities Act of all Registrable
Securities that the Holders request to be registered, subject to the limitations
of subsection 2.2(b) . 

                              (b)
If the Holders initiating the registration request hereunder (the “Initiating
Holders”) intend to distribute the Registrable Securities covered by their
request by means of an underwriting, they shall so advise the Company as a part
of their request made pursuant to subsection 2.2(a) and the Company shall
include such information in the written notice referred to in subsection 2.2(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 or her 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 to 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 2.5(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 2.2, 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
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. 

-4- 

                              (c)
Notwithstanding the foregoing, if the Company shall furnish to the Holders
requesting a registration statement pursuant to this Section 2.2 a certificate
signed by the President of the Company stating that in the good faith judgment
of the Board it would be detrimental to the Company and its stockholders for
such registration statement to be filed and it is therefore in the best
interests of the Company 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 90 days; provided, however, that the
Company may not utilize this right more than once in any 12-month period. 

                              (d)
In addition, the Company shall not be obligated to effect, or to take any action
to effect, any registration pursuant to this Section 2.2: 

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

                                        (ii)
during the period starting with the date 90 days prior to the Board’s good faith
estimate of the filing date of the first registration statement for a firm
commitment underwritten public offering of the Company’s Common Stock subject to
Section 2.3 hereof (provided that notice of such estimated filing date is given
to the Initiating Holders within 30 days of their request for registration) and
ending on the date 180 days after the effective date of such registration
statement; provided that the Company is actively employing in good faith
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 2.4 below. 

                              (e)
The Company shall pay all expenses incurred in connection with each registration
requested pursuant to this Section 2.2 (excluding underwriters’ or brokers’
discounts and commissions) including, without limitation, all filing, federal
and “blue sky” registration and qualification fees, printers’ and accounting
fees, the fees and expenses of counsel for the Company, and the reasonable fees
and disbursements of one counsel for the selling Holder or Holders;
provided, however, that the Company shall not be required to pay
for any expenses of any registration proceeding begun pursuant to this Section
2.2 if the registration request is subsequently withdrawn at the request of the
Holders of at least 50% of the Registrable Securities to be registered, unless
the registration is withdrawn because the Company disclosed information that is materially adverse to the Company or its
stock price, in which case the Company will be required to pay such expenses. 

-5- 

                    2.3
Piggyback Registrations. The Company shall promptly notify all Holders of
Registrable Securities in writing prior to filing any registration statement
under the Securities Act for purposes of effecting a public offering of
securities of the Company (including, but not limited to, registration
statements relating to secondary offerings of securities of the Company, but
excluding (i) registration statements relating to any registration under Section
2.4 of this Agreement, to any employee benefit plan or to a corporate
reorganization, and (ii) registrations on any form that does not include
substantially the same information as would be required to be included in a
registration statement covering the sale of the Registrable Securities or
registrations in which the only Common Stock being registered is Common Stock
issuable upon conversion of debt securities that are also being registered) and
will afford each such Holder an opportunity to include in such registration
statement all or any part of the Registrable Securities then held by such
Holder. Each Holder desiring to include in any such registration statement all
or any part of the Registrable Securities held by such Holder shall, within 20
days after receipt of the above-described notice from the Company, so notify the
Company in writing, and in such notice shall inform the Company of the number of
Registrable Securities such Holder wishes to include in such registration
statement. If a Holder decides not to include all of its Registrable Securities
in any registration statement thereafter filed by the Company, such Holder shall
nevertheless continue to have the right to include any Registrable Securities in
any subsequent registration statement or registration statements as may be filed
by the Company with respect to offerings of its securities, all upon the terms
and conditions set forth herein. Any Holder who elects to include some or all of
its Registrable Securities pursuant to this Section 2.3 shall cooperate with the
Company in the preparation of any and all documents and instruments the Company
deems necessary or convenient for the preparation of any applicable registration
statement, and such Holders shall supply the Company with any and all
information the Company deems necessary or convenient with respect to any
registration statement. 

                              (a)
Right to Terminate Registration. The Company shall have the right to
terminate or withdraw any registration initiated by it under this Section 2.3
prior to the effectiveness of such registration whether or not any Holder has
elected to include securities in such registration. The expenses of such
withdrawn registration shall be borne by the Company in accordance with 2.3(c) .                            

 -6- 

(b)
Underwriting. If a registration statement for which the Company gives
notice pursuant to this Section 2.3 is for an underwritten offering, then the
Company shall so advise the Holders of Registrable Securities. In such event,
the right of any Holder’s Registrable Securities to be included in a
registration pursuant to this Section 2.3 shall be conditioned upon such
Holder’s participation in such underwriting and the inclusion of such Holder’s
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their Registrable Securities through such
underwriting shall enter into an underwriting agreement in customary form with
the managing underwriter or underwriter(s) selected for such underwriting.
Notwithstanding any other provision of this Agreement, if the managing underwriter(s) determine(s) in good faith that
marketing factors require a limitation of the number of shares to be
underwritten, then the managing underwriter(s) may exclude shares (including
Registrable Securities) from the registration and the underwriting, and the
number of shares that may be included in the registration and the underwriting
shall be allocated first, to the Company and second, to the
Holders requesting inclusion of their Registrable Securities in such
registration on a pro rata basis based upon the total number of Registrable
Securities then held by each such Holder; provided, however, that
the right of the underwriters to exclude shares from the registration and
underwriting as described above in this Section 2.3 shall be restricted so that
all shares held by securityholders that are not Registrable Securities shall
first be excluded from such registration. No such reduction shall reduce the
amount of securities of the selling Holders included in the registration below
twenty-five percent (25%) of the total amount of securities included in such
offering, unless such offering is the initial public offering of the Company’s
securities and such registration does not include shares of any other selling
shareholders, in which event any or all Registrable Securities of the Holders
may be excluded in accordance with the immediately preceding sentence. If any
Holder disapproves of the terms of any such underwriting, such Holder may elect
to withdraw therefrom by written notice to the Company and the underwriter,
delivered at least 20 business days prior to the effective date of the
registration statement. Any Registrable Securities excluded or withdrawn from
such underwriting shall be excluded and withdrawn from the registration. For any
Holder that is a partnership or corporation, the partners, retired partners and
shareholders of such Holder, or the estates and family members of any such
partners, shareholders and retired partners and any trusts for the benefit of
any of the foregoing persons shall be deemed to be a single “Holder,” and any
pro rata reduction with respect to such “Holder” shall be based upon the
aggregate amount of shares carrying registration rights owned by all entities
and individuals included in such “Holder,” as defined in this sentence. No
shareholder of the Company shall be granted piggyback registration rights which
would reduce the number of shares includable by the holders of the Registrable
Securities in such registration without the consent of the holders of at least
two-thirds of the Registrable Securities. 

                              (c)
Expenses. All expenses incurred in connection with a registration
pursuant to this Section 2.3 (excluding underwriters’ and brokers’ discounts and
commissions) including, without limitation, all filing, federal and “blue sky”
registration and qualification fees, printers’ and accounting fees, the fees and
expenses of counsel for the Company, and the reasonable fees and disbursements
of one counsel for the selling Holder or Holders shall be borne by the Company.

                    2.4
Form S-3 Registration. In case the Company shall receive from any Holder
or Holders of at least 25% of all Registrable Securities then outstanding a
written request or requests that the Company effect a registration on Form S-3
and any related qualification or compliance with respect to all or a part of the
Registrable Securities owned by such Holder or Holders, then the Company will:

-7- 

                              (a)
Notice. Promptly give written notice of the proposed registration and the
Holder’s or Holders’ request therefor, and any related qualification or
compliance, to all other Holders; and 

                              (b)
Registration. As soon as reasonably practicable, effect such registration
and all such qualifications and compliances as may be so requested and as would
permit or facilitate the sale and distribution of all or such portion of such
Holder’s or Holders’ Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any other
Holder or Holders joining in such request as are specified in a written request
given within 20 days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to
effect any such registration, qualification or compliance pursuant to this
Section 2.4: 

                                        (i)
if Form S-3 is not available for such offering by the Holders; or 

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

                              (c)
Expenses. The Company shall pay all expenses incurred in connection with
each registration requested pursuant to this Section 2.4 (excluding
underwriters’ or brokers’ discounts and commissions) including, without
limitation, all filing, federal and “blue sky” registration and qualification
fees, printers’ and accounting fees, the fees and expenses of counsel for the
Company, and the reasonable fees and disbursements of one counsel for the
selling Holder or Holders. 

                    2.5
Obligations of the Company. Whenever required to effect the registration
of any Registrable Securities under this Agreement, the Company shall, as
expeditiously as reasonably possible: 

                              (a)
Prepare and file with the SEC a registration statement with respect to such
Registrable Securities and use its reasonable efforts to cause such registration
statement to become effective and, upon the request of the Holders of a majority
of the Registrable Securities registered thereunder, keep such registration
statement effective for up to 120 successive days. 

                              (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 reasonably necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement. 

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

-8- 

                              (d)
Use its 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 or
subject itself to taxation in any such states or jurisdictions. 

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

                              (f)
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. 

                              (g)
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 date by which such actions are required to be taken
by applicable law or by the rules of any securities exchange on which securities
issued by the Company are then listed or approved for listing. 

                              (h)
Notify each Holder covered by such registration statement at any time when a
prospectus relating thereto is required to be delivered under the Securities Act
of the happening of any event of which the Company becomes aware 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. 

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

-9- 

                    2.6
Furnish Information. It shall be a condition precedent to the obligations
of the Company to take any action pursuant to Sections 2.2, 2.3 or 2.4 that the
selling Holders shall furnish to the Company such information regarding
themselves, the Registrable Securities held by them and the intended method of
disposition of such securities as shall be required to timely effect the
registration of their Registrable Securities.

                    2.7
Indemnification. In the event any Registrable Securities are included in
a registration statement under Sections 2.2, 2.3 or 2.4: 

                              (a)
By the Company. To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, the partners, officers and directors of
each Holder, any underwriter (as defined in the Securities Act) for such Holder
and each person, if any, who controls such Holder or underwriter within the
meaning of the Exchange Act, against any losses, claims, damages or liabilities
(joint or several) to which they may become subject under the Securities Act,
the Exchange Act or other federal or state law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any of the following statements, omissions or violations (collectively a
“Violation”): 

                                        (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 in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, a material fact required to be stated
therein, or necessary to make the statements therein not misleading; or

                                        (iii)
any violation or alleged violation by the Company of the Securities Act, the
Exchange Act, any federal or state securities law or any rule or regulation
promulgated under the Securities Act, the Exchange Act or any federal or state
securities law in connection with the offering covered by such registration
statement; 

and the Company will reimburse each such Holder or partner,
officer, director, underwriter or controlling person or Affiliate of such
Holders for any legal or other expenses reasonably incurred by them, in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity
agreement contained in this subsection 2.7(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company, which consent shall
not be unreasonably withheld or delayed, nor shall the Company be liable in any
case for any loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation that occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
such Holder, partner, officer, director, underwriter or controlling person of
such Holder. 

-10- 

                              (b)
By Selling Holders. 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 have signed the registration statement, each person, if any, who
controls the Company within the meaning of the Securities Act, any underwriter
and any other Holder selling securities under such registration statement or any
of such other Holder’s partners, directors or officers or any person who
controls such Holder within the meaning of the Securities Act or the Exchange
Act, against any losses, claims, damages or liabilities (joint or several) to
which the Company or any such director, officer, controlling person, underwriter
or other such Holder, partner or director, officer or controlling person of such
other Holder may become subject under the Securities Act, the Exchange Act or
other federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Holder expressly for use in connection with such registration;
and each such Holder will reimburse any legal or other expenses reasonably
incurred by the Company or any such director, officer, controlling person,
underwriter or other Holder, partner, officer, director or controlling person of
such other Holder in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this subsection 2.7(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 such Holder, which consent
shall not be unreasonably withheld or delayed; and provided,
further, that the total amounts payable in indemnity and contribution by
a Holder under Sections 2.7(b) and 2.7(d) in respect of any Violation shall not
exceed the net proceeds received by such Holder in the registered offering out
of which such Violation arises. 

                              (c)
Notice. Promptly after receipt by an indemnified party under this Section
2.7 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 2.7, 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 of 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 liability to the extent so prejudiced to the indemnified party under this
Section 2.7, but the omission so to deliver written notice to the indemnifying
party will not relieve it of any liability that it may have to any indemnified
party otherwise than under this Section 2.7. 

-11- 

                              (d)
Contribution. In order to provide for just and equitable contribution to
joint liability under the Securities Act in any case in which either (i) the
Company, or any Holder exercising rights under this Agreement, or any
controlling person of any such Holder, makes a claim for indemnification
pursuant to this Section 2.7 but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section 2.7 provides for indemnification in such case, or (ii) contribution
under the Securities Act may be required on the part of the Company or any such
selling Holder or any such controlling person in circumstances for which
indemnification of such party is provided under this Section 2.7, then, and in
each such case, the Company and such Holder will contribute to the aggregate
losses, claims, damages or liabilities to which they may be subject (after
contribution from others) in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the statements or omissions that resulted
in such loss, liability, claim, damage or expense as well as any other relevant
equitable considerations. The relative fault of the indemnifying party and of
the indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties’ relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission; provided, however, that, in any such case,
(A) no Holder will be required to contribute any amount in excess of the net
proceeds received by such Holder from the public offering price of Registrable
Securities offered and sold by such Holder pursuant to such registration
statement, except in the case of willful fraud by such Holder, and (B) no person
or entity guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) will be entitled to contribution from any person or
entity who was not guilty of such fraudulent misrepresentation. 

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

                              (f)
Survival. The obligations of the Company and Holders under this Section
2.7 shall survive the closing of the transactions contemplated hereby. 

                    2.8
Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission that may at any time permit the
sale of the Registrable Securities to the public without registration,
after such time as the Company has become subject to the reporting requirements
of the Exchange Act, the Company agrees to: 

-12- 

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

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

                              (c)
so long as a Holder owns any Registrable Securities, furnish to such Holder
forthwith upon request (i) a written statement by the Company as to its
compliance with the reporting requirements of Rule 144 (at any time after 90
days after the effective date of the first registration statement filed by the
Company for an offering of its securities to the general public) and of the
Securities Act and the Exchange Act (at any time after it has become subject to
the reporting requirements of the Exchange Act), (ii) a copy of the most recent
annual or quarterly report of the Company and (iii) such other reports and
documents of the Company as a Holder may reasonably request in availing itself
of any rule or regulation of the Commission allowing a Holder to sell any such
securities without registration (at any time after the Company has become
subject to the reporting requirements of the Exchange Act). 

                    2.9
Termination of the Company’s Obligations. The Company shall have no
obligations provided in Section 2 hereof with respect to: (i) any request or
requests for registration made by any Holder on a date more than three (3) years
after the consummation of the Company’s initial public offering; or (ii) any
Registrable Securities proposed to be sold by a Holder in a registration
pursuant to Sections 2.2, 2.3 or 2.4 hereof if all such Registrable Securities
proposed to be sold by a Holder may then be sold in a three-month period without
registration under the Securities Act pursuant to Rule 144 under the Securities
Act without regard to subsection (k) thereof. 

                    2.10
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 at least a majority of the Registrable Securities then outstanding,
enter into any agreement with any holder or prospective holder of any securities
of the Company that would allow such holder or prospective holder (a) to include
such securities in any registration filed under Sections 2.2, 2.3 or 2.4 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 such securities will not reduce the amount of Registrable
Securities of the Holders to be included or (b) to demand registration of their
securities; provided, however, such consent is not necessary for allowing any
holder or prospective holder of Series C Preferred Stock to become a party to
this Agreement.

                    2.11
“Market Stand-Off” Agreement. 

-13- 

                              (a)
The Investors hereby agree 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 the first registration statement for a firm
commitment underwritten public offering of the Company’s securities filed under
the Securities Act, it shall not, to the extent requested by the Company and
such underwriter, directly or indirectly, sell, offer to sell, contract to sell
(including, without limitation, any short sale), grant any option to purchase or
otherwise transfer or dispose of (other than to donees who agree to be similarly
bound), or reduce its interest in (collectively, “Transfer”), any
securities of the Company held by it at any time during such period except
Common Stock included in such registration; provided, however,
that: 

                                        (i)
all executive officers and directors of the Company and all other persons
holding at least 1% of the Company’s outstanding stock enter into and are bound
by similar agreements; and 

                                        (ii)
such market stand-off time period shall not exceed 180 days. 

In order to enforce the foregoing covenants, the Company may
impose stop-transfer instructions with respect to the Registrable Securities of
the Investors (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 2.11 shall not apply to a
registration relating solely to employee benefit plans on Form S-1 or Form S-8
or similar forms that may be promulgated in the future, or to a registration
relating solely to a Commission Rule 145 transaction. 

                    2.12
S-3 Registration Requirements. Notwithstanding anything else contained in
this Agreement, the Company shall not become obligated to become subject to the
Exchange Act and, the Investors acknowledge, until such time as the Company
becomes subject to the Exchange Act, the Company will be legally precluded from
registering securities under a Form S-3 and, accordingly, no provisions in this
Agreement to the contrary shall be deemed to require the Company to undertake
such a registration until the Company legally is qualified to do so. 

          3.
RIGHT OF FIRST OFFER. 

                    3.1
General. Each Major Investor (each such Major Investor hereinafter
referred to as a “Rights Holder”) has the right of first offer to
purchase such Rights Holder’s Pro Rata Share (as defined below) of all (or any
part) of any “New Securities” (as defined in Section 3.2) that the Company may
from time to time issue after the date of this Agreement. A Rights Holder’s
“Pro Rata Share” for purposes of this right of first offer is the ratio
of (a) the number of Registrable Securities as to which such Rights Holder is
the Holder (and/or is deemed to be the Holder under Section 2.1(d)) to (b) a
number of shares of Common Stock equal to the sum of (i) the total number of
shares of Common Stock then outstanding plus (ii) the total number of shares of
Common Stock into which all then outstanding shares of Preferred Stock of the
Company are then convertible plus (iii) the total number of shares of Common
Stock issuable upon the exercise of all then exercisable outstanding options
to purchase shares of Common Stock pursuant to equity incentive plans approved
by the Board or upon the conversion of other convertible securities. 

-14- 

                    3.2
New Securities. “New Securities” shall mean any Common Stock or
preferred stock of the Company, whether now authorized or not, and rights,
options or warrants to purchase such Common Stock or preferred stock, and
securities of any type whatsoever, including notes or other debt instruments,
that are, or may become, convertible or exchangeable into such Common Stock or
preferred stock; provided, however, that the term “New Securities”
does not include: 

                                        (i)
shares of the Common Stock (and/or options or warrants therefor) issued or
issuable to employees, officers, directors, contractors, advisors or consultants
of the Company pursuant to stock options or other stock incentive agreements or
plans approved by the Board; 

                                        (ii)
any Common Stock or other securities issuable upon conversion of or with respect
to any then outstanding shares of Preferred Stock, Common Stock or other
securities, provided that either (A) the original issuance of the underlying
Preferred Stock, Common Stock or other security was subject to or exempt from
the right of first offer under this Section 3, or (B) the underlying Preferred
Stock, Common Stock or other security was outstanding on the date of this
Agreement;

                                        (iii)
any shares of the Company’s Common Stock or preferred stock (or any other
security of the Company) issued in connection with any stock split or stock
dividend; 

                                        (iv)
any securities issued pursuant to the acquisition of another corporation or
entity by the Company by consolidation, merger, purchase of all or substantially
all of the assets or other reorganization approved by the Board of Directors of
the Company in which the Company acquires, in a single transaction or series of
related transactions, all or substantially all of the assets of such other
corporation or entity, 50% or more of the voting power of such other corporation
or entity, or 50% or more of the equity ownership of such other entity; or 

                                        (v)
shares of any capital stock (and/or options or warrants therefor) issued to
parties providing the Company with equipment leases, real property leases,
loans, credit lines, guaranties of indebtedness, cash price reductions or
similar financing approved by the Board of Directors of the Company;

                                        (vi)
shares of any capital stock (or any other security of the Company) issued in
connection with strategic transactions involving the Company and other entities,
including (A) joint ventures, manufacturing, marketing or distribution
arrangements or (B) technology transfer or development arrangements;
provided that such strategic transactions and the issuance of shares
therein, has been approved by the Board of Directors of the Company;

 -15- 

                                        (vii)
shares of Series CC Preferred Stock or Series BB Preferred Stock sold under the
Stock Purchase Agreement; or 

                    3.3
Procedures. If the Company proposes to undertake an issuance of New
Securities, it shall give written notice to each Rights Holder of its intention
to issue New Securities (the “Notice”), describing the type of New
Securities and the price and the general terms upon which the Company proposes
to issue such New Securities. Each Rights Holder shall have ten days from the
date of mailing of any such Notice to agree in writing to purchase such Rights
Holder’s Pro Rata Share of such New Securities for the price and upon the
general terms specified in the Notice by giving written notice to the Company
and stating therein the quantity of New Securities to be purchased (not to
exceed such Rights Holder’s Pro Rata Share). Notwithstanding the terms set forth
in the Notice, each Rights Holder shall have the right to pay cash for New
Securities offered in the Notice. If any Rights Holder fails to so agree in
writing within such ten day period to purchase such Rights Holder’s full Pro
Rata Share of an offering of New Securities (a “Nonpurchasing Holder”),
then such Nonpurchasing Holder shall forfeit the right hereunder to purchase
that part of its Pro Rata Share of such New Securities that it did not so agree
to purchase and the Company shall promptly give each Rights Holder (if any) who
has timely agreed to purchase its full Pro Rata Share of such offering of New
Securities (a “Purchasing Holder”) written notice of the failure of any
Nonpurchasing Holder to purchase such Nonpurchasing Rights Holder’s full Pro
Rata Share of such offering of New Securities (the “Overallotment
Notice”). Each Purchasing Holder shall have a right of overallotment such
that such Purchasing Holder may agree to purchase a portion of the Nonpurchasing
Holder’s unpurchased Pro Rata Share of such offering on a pro rata basis
according to the relative Pro Rata Shares of the Purchasing Rights Holders at
any time within five days after receiving the Overallotment Notice. 

                    3.4
Failure to Exercise. If the Rights Holders fail to exercise in full the
right of first offer within such ten plus five day period, then the Company
shall have 60 days thereafter to sell the New Securities with respect to which
the Rights Holders’ rights of first offer hereunder were not exercised, at a
price and upon general terms not materially more favorable to the purchasers
thereof than specified in the Notice. If the Company has not issued and sold the
New Securities within such 60 day period, then the Company shall not thereafter
issue or sell any New Securities without again first offering such New
Securities to the Rights Holders pursuant to this Section 3. 

                    3.5
Termination. This right of first offer shall terminate (i) immediately
before the closing of a Qualified IPO or (ii) upon (a) the acquisition of all or
substantially all the assets of the Company or (b) an acquisition of the Company
by another corporation or entity by consolidation or merger in which the holders
of the Company’s outstanding voting stock immediately prior to such transaction
own, immediately after such transaction, securities representing less than 50%
or more of the voting power of the corporation or other entity surviving such
transaction. 

-16- 

          4.
COVENANTS OF THE COMPANY. 

                    The
Company hereby covenants and agrees, so long as any Holder owns any Registrable
Securities as follows: 

                    4.1
Insurance. The Company shall maintain in full force and effect fire and
casualty insurance policies, with extended coverage, and in such amounts as are
customary for similar businesses. 

                    4.2
Key Person Life Insurance. The Company shall maintain from financially
sound and reputable insurers term life insurance on the lives of certain key
employees, in each case, in the amount of and in accordance with policies
adopted unanimously by the Company’s Board of Directors. The Company will cause
to be maintained the term life insurance required by this Section 4.2 hereof,
except as otherwise decided in accordance with policies adopted unanimously by
the Company’s Board of Directors. Such policies shall name the Company as loss
payee and shall not be cancelable by the Company without prior unanimous
approval of the Board of Directors. 

                    4.3
Proprietary Information and Inventions Agreements. The Company hereby
covenants that it shall require each new officer, employee and consultant of the
Company to enter into and execute a Proprietary Information and Inventions
Agreement in the standard form used by the Company. 

                    4.4
Reserved.

                    4.5
Stock Vesting. Unless otherwise unanimously approved by the Board of
Directors of the Company, all stock and stock equivalents issued after the
Effective Date to employees, directors, consultants and other service providers
will be subject to vesting restrictions at least as restrictive as the
following: 25% to vest at the end of the first year following such issuance,
with the remaining 75% to vest monthly over the next three years. The repurchase
option shall provide that upon termination of the employment of the stockholder,
with or without cause, the Company or its assignee (to the extent permissible
under applicable securities law qualification) retains the option to repurchase
at cost any unvested shares held by such stockholder.

                    4.6
Reimbursement of Outside Directors Expenses. The Company shall reimburse
the reasonable expenses of the Directors elected by the holders of Preferred
Stock for costs incurred in attending meetings of the Board of Directors. 

          5.
ASSIGNMENT AND AMENDMENT. 

                    5.1
Assignment. Notwithstanding anything herein to the contrary: 

                              (a)
Information and Inspection Rights. The rights of the Investors under
Section 1.1 or 1.2 hereof may be assigned only to a party who acquires from the
Investors (or the Investors’ permitted assigns) at least that number of
shares of Preferred Stock and/or an equivalent number (on an as-converted basis)
of shares of Conversion Stock described in Section 1.1 or 1.2 hereof,
respectively.

-17- 

                              (b)
Registration Rights; Refusal Rights. The registration rights of a Holder
under Section 2 hereof and the rights of first offer of a Rights Holder under
Section 3 hereof may be assigned only to: (i) any direct or indirect partner or
retired partner of any such Holder or Rights Holder that is a partnership; (ii)
any member or former member of any holder which is a limited liability company;
(iii) any family member or trust for the benefit of any Holder or Rights Holder
who is an individual; (iv) any wholly owned subsidiary of such Holder; and (v)
any transferee who acquires at least 500,000 shares of Registrable Securities;
provided, however, that no party may be assigned any of the
foregoing rights unless the Company is given written notice by the assigning
party at the time of such assignment stating the name and address of the
assignee and identifying the securities of the Company as to which the rights in
question are being assigned; provided, further, that any such
assignee shall receive such assigned rights subject to all the terms and
conditions of this Agreement, including without limitation the provisions of
this Section 5. 

                    5.2
Amendment of Rights. Unless otherwise provided for herein, any provision
of this Agreement may be amended and the observance thereof may be waived
(either generally or in a particular instance and either retroactively or
prospectively) only with the written consent of the Company and the holders of a
majority of the Registrable Securities. Notwithstanding the foregoing, any
waiver or amendment of any term of this Agreement that is detrimental to a
holder of Preferred Stock in a manner different than any other holder of
Preferred Stock shall also require the written consent of such holder of
Preferred Stock. Any amendment or waiver effected in accordance with this
Section 5.2 shall be binding upon each Investor, Holder and Rights Holder, each
permitted successor or assignee of each Investor, Holder or Rights Holder, and
the Company. 

          6.
GENERAL PROVISIONS. 

                    6.1
Notices. Any notice, request or other communication required or permitted
hereunder shall be in writing and shall be deemed to have been duly given when
personally delivered or five days after deposit in the U.S. mail by registered
or certified mail, return receipt requested, postage prepaid, as follows: 

                              (a)
if to the Investors, at the addresses set forth on the signature pages hereto.

                              (b)
if to the Company, at Xalted Networks, Inc., 4677 Old Ironsides Drive, #380,
Santa Clara, CA 95054; with a copy to Wilson Sonsini Goodrich & Rosati,
Attn: Raj S. Judge, 650 Page Mill Road, Palo Alto, CA 94304.

Any party hereto (and such party’s permitted assigns) may by
notice so given change its address for future notices hereunder by giving ten
days’ advance notice to all other parties. Notice shall conclusively be deemed to have been given when personally
delivered or when deposited in the mail in the manner set forth above. 

-18- 

                    6.2
Entire Agreement. This Agreement, together with all the exhibits hereto,
constitutes and contains the entire agreement and understanding of the parties
with respect to the subject matter hereof and supersedes any and all prior
negotiations, correspondence, agreements, understandings, duties or obligations
between the parties respecting the subject matter hereof. 

                    6.3
Governing Law. This Agreement shall be governed by and construed
exclusively in accordance with the internal laws of the State of California as
applied to agreements among California residents entered into and to be
performed entirely within California, excluding that body of law relating to
conflict of laws and choice of law. 

                    6.4
Severability. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, then such provision(s) shall be excluded
from this Agreement and the balance of this Agreement shall be interpreted as if
such provision(s) were so excluded and shall be enforceable in accordance with
its terms. 

                    6.5
Third Parties. Nothing in this Agreement, express or implied, is intended
to confer upon any person, other than the parties hereto and their successors
and assigns, any rights or remedies under or by reason of this Agreement. 

                    6.6
Successors And Assigns. Subject to the provisions of Section 5, the
provisions of this Agreement shall inure to the benefit of, and shall be binding
upon, the successors and permitted assigns of the parties hereto. 

                    6.7
Captions. The captions to sections of this Agreement have been inserted
for identification and reference purposes only and shall not be used to construe
or interpret this Agreement. 

                    6.8
Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. 

                    6.9
Costs And Attorneys’ Fees. If any action, suit or other proceeding is
instituted concerning or arising out of this Agreement or any transaction
contemplated hereunder, the prevailing party shall recover all of such party’s
costs and attorneys’ fees incurred in each such action, suit or other
proceeding, including any and all appeals or petitions therefrom. 

                    6.10
Adjustments for Stock Splits, Etc. Wherever in this Agreement there is a
reference to a specific number of shares of Common Stock or preferred stock of
the Company of any class or series, then, upon the occurrence of any
subdivision, combination or stock dividend of such class or Series of stock, the
specific number of shares so referenced in this Agreement shall automatically be proportionally adjusted to reflect the
effect on the outstanding shares of such class or Series of stock by such
subdivision, combination or stock dividend.

-19- 

                    6.11
Aggregation of Stock. All shares held or acquired by affiliated entities
or persons shall be aggregated together for the purpose of determining the
availability of any rights under this Agreement. 

                    6.12
Facsimile. This Agreement may be signed by facsimile. 

[Remainder of Page Intentionally Left Blank]

-20- 

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

	 	COMPANY: 
	 	 
	 	XALTED NETWORKS, INC. 
	 	 
	 	(Please print name or type name) 
	 	 
	 	(Signature) 
	 	 
	 	(Title) 
	 	 
	 	 
	 	FOUNDERS: 
	 	 
	 	 
	 	Pratap (Bob) Kondamoori 
	 	 
	 	Tim Phillips 

[Signature Page to the Amended And Restated Investors’ Rights
Agreement]

	 	INVESTORS: 
	 	 
	 	 
	 	(Please print name or type name) 
	 	 
	 	(Signature) 
	 	 
	 	(Title, if applicable) 

[Signature Page to the Amended and Restated Investors’ Rights
Agreement]

Exhibit A 

	1. 	
      BlueStream Ventures, L.P.

	2. 	
      TI Venture III, L.P.

	3. 	
      Granite Ventures, LLC

	4. 	
      Alliance Ventures I, LP

	5. 	
      Alliance Ventures V, LP

	6. 	
      Empire Capital Partners

	7. 	
      Charter Ventures IV, L.P.

	8. 	
      Oxcal Venture Fund

	9. 	
      Glenbrook Capital, L.P.

	10. 	
      Solar Venture Partners, L.P.

	11. 	
      Zodiac Venture Fund II, L.P.

	12. 	
      Brobeck, Phleger & Harrison LLP

	13. 	
      Satwik Fund I, LLC

	14. 	
      Satwik Affiliates I, LLC

	15. 	
      Todd U.S. Ventures LLC

EXHIBIT E 

AMENDED AND RESTATED
RIGHT OF FIRST REFUSAL AND
CO-SALE AGREEMENT 

          THIS
AMENDED AND RESTATED RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT (the
“Agreement”) is made as of February 10, 2003, by and among Xalted
Networks, Inc., a Delaware corporation (the “Company”), Tim Phillips and
Pratap (Bob) Kondamoori (each, a “Founder” and, collectively, the
“Founders”) and the investors set forth on Exhibit A hereto (each,
an “Investor” and, collectively, the “Investors”). 

          WHEREAS,
the Company, Founders, and certain of the Investors are parties to that certain
Amended and Restated Right of First Refusal and Co-Sale Agreement, made as of
May 17, 2002 (the “Prior Agreement”); 

          WHEREAS,
the parties desire to set forth certain rights related to the ownership and
disposition of their shares of capital stock in the Company and intend that this
Agreement shall supersede and replace the Prior Agreement; 

          WHEREAS,
the Founders and the Investors wish to provide further inducement to certain of
the Investors to purchase the Series BB Preferred Stock and Series CC Preferred
Stock of the Company; 

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

          1.
Definitions. 

                    (a)
“Stock” shall mean shares of the Company’s Common Stock now owned or
subsequently acquired by the Founders (except upon conversion of any Preferred
Stock). 

                    (b)
“Common Stock” shall mean shares of the Company’s outstanding common
stock. 

                    (c)
“Preferred Stock” shall mean shares of the Company’s outstanding Series
AA Preferred Stock, Series BB Preferred Stock and Series CC Preferred Stock.

                    (d)
“Capital Stock” shall mean (i) the Common Stock and (ii) shares of Common
Stock issued or issuable upon conversion of the Preferred Stock. 

                    (e)
“Owner” shall include the Founders and any permitted transferees of the
Stock pursuant to Section 2.1 hereof. 

-1- 

          2.
Right of First Refusal 

                    2.1
Restriction on Transfer. The Founders shall not transfer, assign,
encumber or otherwise make the subject of disposition any Stock in contravention
of Sections 2.3 and 3 of this Agreement. Such restrictions, however, shall
not be applicable to: (i) any gratuitous transfer of the Stock to any
spouse or member of a Founder’s immediate family (including adopted children) or
grandchildren, or to a custodian, trustee (including a trustee of a voting
trust), executor or other fiduciary for the account of his spouse or members of
his immediate family or grandchildren, or to a trust for himself, or a
charitable remainder trust, provided and only if the Owner obtains the
Company’s prior written consent to such transfer; (ii) a transfer of title to
the Stock effected pursuant to the Owner’s will or the laws of intestate
succession; (iii) a transfer to the Company in pledge as security for any
purchase-money indebtedness incurred by the Owner in connection with the
acquisition of the Stock; (iv) up to a cumulative aggregate over the term of
this Agreement of 3,750 shares of Common Stock per Founder (as adjusted for
stock splits, recapitalizations and the like); or (v) the repurchase of unvested
Stock under a Founder’s restricted stock purchase agreement, provided
that, in each case, each such transferee or assignee, prior to the completion of
the sale, transfer or assignment shall have executed documents assuming the
obligations of the Founder under this Agreement with respect to the transferred
securities. 

                    2.2
Transferee Obligations. Each person (other than the Company) to whom the
Stock is transferred by means of one of the permitted transfers specified in
Section 2.1 must, as a condition precedent to the validity of such transfer,
acknowledge in writing to the Company that such person is bound by the
provisions of this Agreement and that the transferred shares are subject to the
terms of this Agreement to the same extent such Stock would be so subject if
retained by the Owner. 

                    2.3
Grant. The Company is hereby granted the right of first refusal (the
“First Refusal Right”), exercisable in connection with any proposed
transfer of the Stock by any Owner. For purposes of this Section 2, the term
“transfer” shall include any sale, assignment, pledge, encumbrance or
other disposition for value of the Stock intended to be made by an Owner, but
shall not include any of the permitted transfers under Section 2.1. 

                    2.4
Notice of Intended Disposition. If an Owner desires to accept a bona fide
offer from a third party (the “Prospective Transferee”) for any or all of
the Stock (the stock subject to such offer to be hereinafter called the
“Target Stock”), the Owner shall promptly deliver to the Secretary of the
Company written notice (the “Disposition Notice”) of the terms and
conditions of the offer, including the purchase price and the identity of the
third-party offeror.

                    2.5
Exercise of Right. The Company (or its assignees) shall, for a period of
thirty (30) days following receipt of the Disposition Notice, have the right to
repurchase any or all of the Target Stock specified in the Disposition Notice
upon substantially the same terms and conditions specified therein. Such right
shall be exercisable by delivery of written notice (the “Exercise
Notice”) to the Owner prior to the expiration of the thirty (30) day
exercise period. If such right is exercised with respect to all the Target Stock
specified in the Disposition Notice, then the Company (or its assignees) shall
effect the repurchase of the Target Stock, including payment of the purchase price, not more than
ten (10) business days after delivery of the Exercise Notice; and at such time
the Owner shall deliver to the Company the certificates representing the Target
Stock to be repurchased, each certificate to be properly endorsed for
transfer.

-2- 

                    2.6
Grant of Secondary Refusal Right. If the Company declines to exercise its
First Refusal Right with respect to any Target Stock, it must so notify each
Investor holding at least 2,000,000 shares of Capital Stock (a “Major
Investor”) in writing at least fifteen (15) days prior to the expiration of
the Company’s First Refusal Right with respect to any Target Stock, and then the
Major Investors shall have the right, for a period of thirty (30) days after
receipt of the Company’s written notice that the Company has declined to
exercise the First Refusal Right with respect to any such Target Stock, to
purchase such unpurchased Target Stock at the same price and on the same terms
that such Target Stock was offered to the Prospective Transferee(s) (the
“Secondary Refusal Right”). Each Major Investor may exercise the
Secondary Refusal Right and, thereby, purchase all or any portion of his or its
Pro Rata Share (as defined below and with any reallotments as provided below) of
the Target Stock, by notifying the Owner and the Company in writing, before
expiration of the thirty (30) day period as to the number of such shares that he
or it wishes to purchase. If any such Prospective Transferee has offered to pay
for any Stock with property, services or any other non-cash consideration, then
the Major Investor shall nevertheless have the right to pay for such Stock with
cash in an amount equal to the fair market value of the non-cash consideration
offered by the Prospective Transferee in question, where the fair market value
of such non-cash consideration shall be conclusively determined in good faith by
the Board of Directors. For the purposes of this Agreement, the term “Pro
Rata Share” shall mean that number of shares of Common Stock equal to the
product obtained by multiplying (i) the aggregate number of shares of Target
Stock covered by the Disposition Notice by (ii) a fraction, the numerator of
which is the number of shares of Capital Stock owned by the Major Investor at
the time of the sale or transfer and the denominator of which is the total
number of shares of Capital Stock owned by all Major Investors at the time of
the sale or transfer. If any Major Investor fails to purchase such Major
Investor’s Pro Rata Share pursuant to this Section 2, the Founder shall give
notice of such failure (the “Overallotment Notice”) to each other Major
Investor who is purchasing such Major Investor’s Pro Rata Share of the Target
Stock (the “Purchasing Stockholders”). Such Overallotment Notice may be
made by telephone if confirmed in writing within two (2) days. The Purchasing
Stockholders shall have a right of overallotment such that they shall have (4)
four days from the date such Overallotment Notice was given to agree to buy
their Pro Rata Share of the unsold portion of the Target Stock.

                    2.7
Non-Exercise of Right. If the Exercise Notice is not given to the Owner
within thirty (30) days following the date of the Company’s receipt of the
Disposition Notice and the Major Investors decline to exercise the Secondary
Refusal Right, the Owner shall have a period of sixty (60) days thereafter in
which to sell or otherwise dispose of the Target Stock to the Prospective
Transferee(s) identified in the Disposition Notice upon terms and conditions
(including the purchase price) no more favorable to such Prospective
Transferee(s) than those specified in the Disposition Notice. If the Owner does
not effect such sale or disposition of the Target Stock within the specified
sixty (60) day period, the Company’s First Refusal Right and the Major
Investors’ Secondary Refusal Right shall continue to be applicable to any subsequent disposition of the Target Stock by the Owner
until such right terminates in accordance with Section 5.4. 

-3- 

                    2.8
Partial Exercise of Right. If the Company (or its assignees) makes a
timely exercise of the First Refusal Right with respect to a portion, but not
all, of the Stock specified in the Disposition Notice, the Owner shall: 

                              (i)
sell to the Company (or its assignees) the portion of the Stock that the Company
(or its assignees) has elected to purchase, such sale to be effected in
conformity with Section 2.5 of this Agreement, and 

                              (ii)
sell the remaining Stock to the Major Investors (if the Major Investors exercise
their Secondary Refusal Right) or the Prospective Transferee(s) (if the Major
Investors do not exercise their Secondary Refusal Right) identified in the
Disposition Notice, but in full compliance with the requirements of Section 2.6
and Section 2.7. 

                    2.9
Recapitalization. In the event of any stock dividend, stock split,
recapitalization or other transaction affecting the Company’s outstanding Common
Stock as a class effected without receipt of consideration, then any new,
substituted or additional securities or other property that is by reason of such
transaction distributed with respect to the Stock shall be immediately subject
to the Company’s First Refusal Right and the Major Investors’ Secondary Refusal
Right hereunder. 

                    2.10
Sales of Company Securities by Stockholders. Pursuant to the Company’s
Bylaws, the Company has a right of first refusal to purchase all (but not less
than all) of the shares of common stock of the Company held by any of its
stockholders (the “Refusal Right Shares”) that any such stockholder may,
from time to time, propose to sell, assign, pledge, or in any manner transfer,
subject to certain exceptions provided in the Bylaws (the “Bylaw Refusal
Right”). If the Company elects not to exercise its Bylaw Refusal Right, the
Company shall assign its rights to each Investor with respect to such Investor’s
Pro Rata Share subject to the Bylaw Refusal Right. The Company shall promptly
give each Investor written notice of such assignment, which notice shall set
forth the number of Refusal Right Shares not purchased by the Company. 

          3.
Sales by Founders. 

                    a)
If a Founder proposes to sell any shares of Stock (i) as to which the Company
either waived or to the extent the Company did not exercise its First Refusal
Right with respect to such shares and (ii) that have not been purchased by the
Major Investors pursuant to the Secondary Refusal Right, then such Founder
promptly shall give written notice (the “Notice”) to the Company and the
Major Investors at least ten (10) days prior to the closing of such proposed
sale. The Notice shall describe in reasonable detail the proposed sale
including, without limitation, the number of shares of Stock to be sold (the
“Co-Sale Shares”), the nature of such sale, the consideration to be paid,
and the name of each prospective purchaser.

                    (b)
The Major Investors shall have the right, exercisable by written notice to the
Founder within ten (10) days after receipt of the Notice, to participate in such
sale of Stock on the same terms and conditions and as set forth in subparagraph
(c) below. 

-4- 

                    (c)
Each Major Investor may sell all or any part of that number of shares equal to
the product obtained by multiplying (i) the aggregate number of shares of Stock
covered by the Notice by (ii) a fraction, the numerator of which is the number
of shares of Capital Stock owned by such Major Investor at the time of the
Notice and the denominator of which is the sum of (X) the number of shares of
Stock owned by the Founder and (Y) the aggregate number of shares of Capital
Stock owned by all Major Investors at the time of the Notice. 

                    (d)
The Major Investors shall effect their participation in the sale by promptly
delivering to the Founder, for transfer to the prospective purchaser, one or
more certificates, properly endorsed for transfer, that represent: 

                              (i)
the number of shares of Common Stock that the Major Investor elects to sell; or

                              (ii)
that number of shares of Preferred Stock that is at such time convertible into
the number of shares of Common Stock that the Major Investor elects to sell;
provided, however, that if the prospective purchaser objects to
the delivery of Preferred Stock in lieu of Common Stock, the Major Investor
shall convert such Preferred Stock into Common Stock and deliver Common Stock as
provided in Section 3(d)(i) above. The Company agrees to make any such
conversion concurrent with the actual transfer of such shares to the purchaser.

                    (e)
If any Major Investor fails to elect to fully participate in such Founder’s sale
pursuant to this Section 3, the Founder shall give notice of such failure to the
Major Investors who did so elect (the “Participants”). Such notice may be
made by telephone if confirmed in writing within two (2) days. The Participants
shall have two (2) days from the date such notice was given to agree to sell
their pro rata share of the unsold portion. For purposes of this paragraph, a
Participant’s pro rata share of the unsold portion shall be equal to the product
obtained by multiplying (i) the number of shares in the unsold portion by (ii) a
fraction, the numerator of which is the number of shares of Stock held by such
Participant and the denominator of which is the total number of shares of
Capital Stock held by the Participants and the Founder. 

                    (f)
The stock certificate or certificates that any Major Investor delivers to the
Founder pursuant to Section 3(d) shall be transferred to the prospective
purchaser in consummation of the sale of the Stock pursuant to the terms and
conditions specified in the Notice, and the Founder shall concurrently therewith
remit to the Major Investor that portion of the sale proceeds to which the Major
Investor is entitled by reason of its participation in such sale. To the extent
that any prospective purchaser or purchasers prohibit(s) such assignment or
otherwise refuse(s) to purchase shares or other securities from a Major Investor
exercising its right of co-sale hereunder, the Founder shall not sell to such
prospective purchaser or purchasers any Stock unless and until, simultaneously
with and on the same terms as such sale, the Founder shall purchase such shares
or other securities from the Major Investor(s). 

                    (g)
The exercise or non-exercise of the right of the Major Investors hereunder to
participate in one or more sales of Stock made by the Founder shall not
adversely affect their right to participate in subsequent sales of Stock subject
to paragraph 3(a). 

-5- 

                    (h)
If none of the Major Investors elect to participate in the sale of the Co-Sale
Shares subject to the Notice, the Founder may, not later than sixty (60) days
following delivery to the Company and each of the Major Investors of the Notice,
enter into an agreement providing for the closing of the transfer of the Co-Sale
Shares covered by the Notice within thirty (30) days of such agreement on terms
and conditions not more favorable to the transferor than those described in the
Notice. Any proposed transfer on terms and conditions more favorable than those
described in the Notice, as well as any subsequent proposed transfer of any of
the Co-Sale Shares by the Founder, shall again be subject to the co-sale rights
of the Major Investors and shall require compliance by the Founder with the
procedures described in this Section 3. 

          4.
Legend. 

                    (a)
Each certificate representing shares of Stock now or hereafter owned by the
Founder or issued to any person in connection with a transfer pursuant to
Section 2.1 hereof shall be endorsed with the following or comparable legend:

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

                    (b)
The Founder agrees that the Company may instruct its transfer agent to impose
transfer restrictions on the shares represented by certificates bearing the
legend referred to in Section 4(a) above to enforce the provisions of this
Agreement and the Company agrees to promptly do so. The legend shall be removed
upon termination of this Agreement. 

          5.
Miscellaneous. 

                    5.1
Governing Law. This Agreement shall be governed by and construed under
the laws of the State of California as applied to agreements among California
residents, made and to be performed entirely within the State of California.

                    5.2
Amendment. Any provision of this Agreement may be amended and the
observance thereof may be waived (either generally or in a particular instance
and either retroactively or prospectively) only by the written consent of (i)
the Company, (ii) a majority interest of the Investors and (iii) a majority
interest of the Founders. Any amendment or waiver effected in accordance with
clauses (i), (ii) and (iii) of this section shall be binding upon the Investors,
their successors and assigns, the Company, and the Founders and their successors
and assigns. 

                    5.3
Assignment of Rights. This Agreement and the rights and obligations of
the parties hereunder shall inure to the benefit of, and be binding upon, their
respective successors, assigns and legal representatives. 

-6- 

                    5.4
Term. This Agreement shall terminate upon the earlier to occur of
(i) the closing of a firm commitment underwritten public offering pursuant to an
effective registration statement under the Securities Act of 1933, as amended,
covering the offer and sale of Common Stock of the Company at a per share price
not less than $4.00 (as adjusted for stock splits, dividends and the like) and
for a total offering with net proceeds of not less than $40,000,000 (after
deduction of underwriters commissions and expenses) or (ii) the closing of the
Company’s sale of all or substantially all of its assets or the acquisition of
the Company by another entity in any merger transaction or series of related
merger transactions (including, without limitation, any reorganization or
consolidation) that will result in the Company’s stockholders immediately prior
to such transaction holding (by virtue of such shares or securities issued
solely with respect thereto) less than a majority of the voting power of the
surviving or continuing entity; provided, however, that the rights of refusal
and co-sale granted by the Founders to the Investors pursuant to this Agreement
shall only expire pursuant to clause (ii) hereof if such sale of all or
substantially all of the Company’s assets or the acquisition of the Company by
means of a merger or consolidation is to or by an entity whose capital stock is
traded on a public market. 

                    5.5
Ownership. Each Founder represents and warrants that such Founder is the
sole legal and beneficial owner of the shares of stock subject to this Agreement
and that no other person has any interest (other than a community property
interest) in such shares. 

                    5.6
Notices. All notices required or permitted hereunder shall be in writing
and shall be deemed effectively given upon personal delivery to the party to be
notified or five days after deposit in the United States mail, by registered or
certified mail, postage prepaid and properly addressed to the party to be
notified as set forth on the signature page hereof or at such other address as
such party may designate by ten days’ advance written notice to the other
parties hereto. 

                    5.7
Severability. If one or more of the provisions of this Agreement should,
for any reason, be held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provision of this Agreement, and this Agreement shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein.

                    5.8
Attorneys’ Fees. If any dispute among the parties to this Agreement
results in litigation, the prevailing party in such dispute shall be entitled to
recover from the losing party all fees, costs and expenses of enforcing any
right of such prevailing party under or with respect to this Agreement,
including, without limitation, such reasonable fees and expenses of attorneys
and accountants, that shall include, without limitation, all fees, costs and
expenses of appeals. 

                    5.9
Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. 

-7- 

                    5.10
Aggregation of Stock. All shares of Capital Stock held or acquired by
affiliated entities or persons shall be aggregated together for the purpose of
determining the availability of any rights under this Agreement. 

                    5.11
Entire Agreement. This Agreement constitutes the entire agreement among
the parties relative to the specific subject matter hereof. Any previous
agreement among the parties relative to the specific subject matter hereof is
superceded by this Agreement. 

                    5.12
Facsimile. This Agreement may be signed by facsimile. 

-8- 

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

	 	COMPANY: 
	 	  
	 	XALTED NETWORKS, INC. 
	 	 
	 	 
	 	(Please print name or type name) 
	 	 
	 	(Signature) 
	 	 
	 	(Title) 
	 	 
	 	 
	 	FOUNDERS: 
	 	 
	 	 
	 	Tim Phillips 
	 	 
	 	Address:
_________________________________
	 	 
	 	 
	 	  
	 	 
	 	Pratap (Bob) Kondamoori 
	 	 
	 	Address:
_________________________________
	 	 
	 	 

[Signature Page to the Amended & Restated Right of First
Refusal & Co-Sale Agreement] 

	 	INVESTORS: 
	 	 
	 	 
	 	(Please print name or type name) 
	 	 
	 	(Signature) 
	 	 
	 	(Title, if applicable) 

[Signature Page to the Amended & Restated Right of First
Refusal & Co-Sale Agreement] 

EXHIBIT A 

Investors 

	1. 	
      BlueStream Ventures, L.P.

	2. 	
      TI Venture III, L.P.

	3. 	
      Granite Ventures, LLC

	4. 	
      Alliance Ventures I, LP

	5. 	
      Alliance Ventures V, LP

	6. 	
      Empire Capital Partners

	7. 	
      Charter Ventures IV, L.P.

	8. 	
      Oxcal Venture Fund

	9. 	
      Glenbrook Capital, L.P.

	10. 	
      Solar Venture Partners, L.P.

	11. 	
      Zodiac Venture Fund II, L.P.

	12. 	
      Brobeck, Phleger & Harrison LLP

	13. 	
      Satwik Fund I, LLC

	14. 	
      Satwik Affiliates I, LLC

CONSENT OF SPOUSE 

     I acknowledge that I have read
the foregoing Amended and Restated Right of First Refusal and Co-Sale Agreement
made as of November ___, 2003 (the “Agreement”) and that I know its
contents. I am aware that by its provisions if I and/or my spouse agree to sell
all or part of the shares of Xalted Networks, Inc., a Delaware corporation, held
of record by either or both of us, including my community interest in such
shares, if any, a right of first refusal and a right of co-sale (as described in
the Agreement) must be granted to the Investors (as defined in the Agreement). I
hereby agree that those shares and my interest in them, if any, are subject to
the provisions of the Agreement and that I will take no action at any time to
hinder the operation of, or violate, the Agreement. 

	 	 
	 	(signature) 
	 	 
	 	Print Name:
      ___________________________________________
	 	 
	 	Spouse of:
      ____________________________________________
	 	 
	 	Date: November ____, 2003

EXHIBIT F 

AMENDED AND RESTATED VOTING AGREEMENT 

          THIS
AMENDED AND RESTATED VOTING AGREEMENT (the “Agreement”) by and among
Xalted Networks, Inc., a Delaware corporation (the “Company”), Tim
Phillips and Pratap (Bob) Kondamoori (each, a “Founder” and,
collectively, the “Founders”) and the investors set forth on Exhibit
A hereto (the “Investors”) is dated as of February 10, 2004. 

          WHEREAS,
certain of the Investors are purchasing shares of the Company’s Series BB
Preferred Stock and Series CC Preferred Stock; and 

          WHEREAS,
the Company and certain of the Investors are parties to that certain Amended and
Restated Voting Agreement, dated as of May 17, 2002 (the “Prior
Agreement”);

          WHEREAS,
in order to induce certain of the Investors to consummate their purchase of the
Series BB Preferred Stock and Series CC Preferred Stock of the Company, the
parties have agreed to enter into this Amended and Restated Voting Agreement
which will replace in its entirety the Prior Agreement; and 

          WHEREAS,
the parties have agreed that the holders of a majority in interest of the shares
of Preferred Stock, voting together as a single class on an as converted to
Common Stock basis, shall be entitled to elect two (2) directors (the
“Preferred Directors”) to the Company’s Board of Directors; and the
holders of a majority in interest of the shares of Common Stock and Preferred
Stock, voting together as a single class on an as converted to Common Stock
basis, shall be entitled to elect one (1) director (the “Joint Director”)
to the Company’s Board of Directors. 

          NOW,
THEREFORE, IT IS HEREBY AGREED AS FOLLOWS: 

          1.
Agreement to Vote. 

                    (a)
The Investors agree to vote all of the shares of capital stock of the Company at
a regular or special meeting of stockholders (or by written consent) now held or
hereafter acquired by them in accordance with the provisions of this Agreement.

                    (b)
The Founders agree to vote all of the shares of capital stock of the Company at
a regular or special meeting of stockholders (or by written consent) now held or
hereafter acquired by them in accordance with the provisions of this Agreement.

          2.
Board Size. Each of the Founders and the Investors shall vote at a
regular or special meeting of stockholders (or by written consent) all of its
shares of capital stock to ensure that the size of the Company’s Board of
Directors shall be set and remain at three (3) directors. 

          3.
Election of the Preferred Directors. On all matters relating to the
election of the Preferred Directors, the Investors shall (to the extent they are
entitled to do so pursuant to the Amended and Restated Certificate of Incorporation) vote at
a regular or special meeting of stockholders (or by written consent) all of
their shares of capital stock to elect (A) the one person designated by (i)
Charter Ventures IV, L.P. (“Charter”) (the “Charter Nominee”) who
shall initially be Ravi Chiruvolu and (B) the one person designated by Alliance
Ventures (“Alliance”) (the “Alliance Nominee”) which initially shall be C.N.
Reddy. 

-1- 

          Any
vacancy occurring because of the death, resignation, removal or disqualification
of either Preferred Director shall be filled according to this Section 3. 

          4.
Election of the Joint Director. On all matters relating to the election
of the Joint Director, each of the Founders and the Investors shall vote at a
regular or special meeting of stockholders (or by written consent) all of its
shares of capital stock to ensure that the Joint Director shall be elected to
the Board of Directors and the Joint Director shall be the person designated by
the Company’s Chief Executive Officer, which Joint Director shall initially be
Bob Kondamoori. 

          5.
Removal of the Preferred Directors. On all matters relating to the
removal of any Preferred Director, each of the Investors shall vote at a regular
or special meeting of stockholders (or by written consent) all of its shares of
capital stock to ensure that any Preferred Director selected for removal as a
Charter Preferred Director by Charter or as an Alliance Preferred Director by
Alliance, as the case may be, shall be so removed. Any vacancy created by such
removal shall be filled pursuant to paragraph 3 herein. 

          6.
Removal of the Joint Director. On all matters relating to the removal of
the Joint Director, each of the Founders and the Investors shall vote at a
regular or special meeting of stockholders (or by written consent) all of its
shares of capital stock to ensure that any Joint Director selected for removal
as a Joint Director by the holders of a majority in interest of all of the
shares of Common Stock shall be so removed. Any vacancy created by such removal
shall be filled pursuant to paragraph 4 herein. 

          7.
Covenants of the Company. The Company agrees to use its best efforts to
ensure that the rights granted hereunder are effective and that the parties
hereto enjoy the benefits thereof. Such actions include, without limitation, the
use of the Company’s best efforts to cause the nomination and election of the
directors as provided above. The Company will not, by any voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
performed hereunder by the Company, but will at all times in good faith assist
in the carrying out of all of the provisions of this Agreement and in the taking
of all such actions as may be necessary, appropriate or reasonably requested by
the holders of a majority of the outstanding voting securities held by the
parties hereto assuming conversion of all outstanding preferred securities in
order to protect the rights of the parties hereunder against impairment. 

          8.
No Liability for Election of Recommended Directors. None of the Company,
the Founders nor the Investors nor any officer, director, stockholder, partner,
employee or agent of such party, if any, makes any representation or warranty as
to the fitness or competence of the nominee of any party hereunder to serve on
the Company’s Board by virtue of such party’s execution of this Agreement or by
the act of such party in voting for such nominee pursuant to this Agreement.

-2- 

          9.
Specific Enforcement. It is agreed and understood that monetary damages
would not adequately compensate an injured party for the breach of this
Agreement by any party, that this Agreement shall be specifically enforceable,
and that any breach or threatened breach of this Agreement shall be the proper
subject of a temporary or permanent injunction or restraining order without a
requirement of posting bond. Further, each party hereto waives any claim or
defense that there is an adequate remedy at law for such breach or threatened
breach. Should the provisions of this Agreement be construed to constitute the
granting of proxies, such proxies shall be deemed coupled with an interest and
irrevocable for the term of this Agreement 

          10.
No Liability of Stockholders. No Investor shall, by reason of his or its
ability to designate and cause the election of any member of the Board of
Directors hereunder, or otherwise, be subject to any liability or obligation
whatsoever with respect to the management and affairs of the Company or
otherwise be or become responsible for any debts, liabilities or obligations of
the Company. Neither any Investor nor any controlling person, officer, director,
partner, agent or employee of any Investor (each an “Investor Agent”)
shall be liable to any other Investor or Investors Agents in connection with the
rights and obligations of such Investor arising under this Agreement. 

          11.
Successors in Interest. 

                    (a)
The provisions of this Agreement shall be binding upon the successors in
interest to any securities of the Company held by any party to this Agreement
and their successors and assigns. The Company shall not permit the transfer of
any of the securities on its books or issue new certificates representing any
such securities unless and until the person(s) to whom such shares are to be
transferred shall have executed a written agreement, substantially in the form
of this Agreement, pursuant to which such person becomes a party to this
Agreement and agrees to be bound by all the provisions hereof as if such person
was a party hereunder. 

                    (b)
Each certificate representing each of the securities shall bear a legend reading
as follows: 

	
      “THE SHARES EVIDENCED HEREBY ARE SUBJECT TO THE TERMS OF
      A VOTING AGREEMENT (A COPY OF WHICH MAY BE OBTAINED WITHOUT CHARGE FROM
      THE COMPANY), AND BY ACCEPTING ANY INTEREST IN SUCH SHARES THE PERSON
      ACCEPTING SUCH INTEREST SHALL BE DEEMED TO AGREE TO AND SHALL BECOME BOUND
      BY ALL THE PROVISIONS OF THE VOTING AGREEMENT.”

          12.
Execution by the Company. The Company, by its execution in the space
provided below, agrees that it will cause the certificates evidencing the shares
of capital stock subject to this Agreement to bear the legend required by
paragraph 11 herein, and it shall supply, free of charge, a copy of this
Agreement to any holder of a certificate evidencing shares of capital stock of
the Company upon written request from such holder to the Company at its
principal office. The parties hereto do hereby agree that the failure to cause
the certificates evidencing the shares of capital stock subject to this
Agreement to bear the legend required by paragraph 11 herein and/or failure of
the Company to supply, free of charge, a copy of this Agreement as provided
under this paragraph 12 shall not effect the validity or enforcement of this
Agreement. 

-3- 

          13.
Termination. This Agreement shall terminate upon the earliest to occur
of:

                    (a)
the written consent of (a) the Company; (b) Charter; and (c) the holders of at
least a majority in interest of the shares of the Preferred Stock outstanding
(or Common Stock issued upon the conversion thereof), voting together as a
single class on an as converted to Common Stock basis; 

                    (b)
the closing date of a firm commitment underwritten public offering of the
Company's Common Stock or other equity securities pursuant to an effective
registration statement under the Securities Act of 1933, as amended; 

                    (c)
such time as the Company is required to file reports pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934, as amended;

                    (d)
the consolidation or merger of the Company (but only with respect to a
consolidation or merger pursuant to which stockholders of the Company
(determined prior to such consolidation or merger) hold less than 50% of the
voting equity of the surviving corporation), the sale of all or substantially
all of the assets of the Company, or the granting of an exclusive license of all
or substantially all of the Company's intellectual property used to generate all
or substantially all of the Company's revenues; or 

                    (e)
such time as fewer than twenty-five percent (25%) of the aggregate shares of
Preferred Stock remains outstanding; or 

                    (f)
with respect to the election of the Charter Nominee or Alliance Nominee, such
time as Charter or Alliance, as the case may be, no longer owns any shares of
Preferred Stock. 

          14.
Captions. The captions, headings and arrangements used in this Agreement
are for convenience only and do not in any way limit or amplify the terms and
provisions hereof. 

          15.
Manner of Voting. The voting of shares pursuant to this Agreement may be
effected in person, by proxy, by written consent, or in any other manner
permitted by applicable law. 

          16.
Stock Splits, Stock Dividends, etc. In the event of any issuance of
shares of the Company’s voting securities hereafter to any of the parties hereto
(including, without limitation, in connection with any stock split, stock
dividend, recapitalization, reorganization, or the like), such shares shall
become subject to this Agreement and shall be endorsed with the legend set forth
in paragraph 11. 

-4- 

          17.
Amendments and Waivers. Any term hereof may be amended (either generally
or in a particular instance and either retroactively or prospectively) only with
the written consent of (a) the Company; (b) the holders of at least a majority
of the shares of common stock held by the Founders; (c) the holders of at least
a majority of the shares of Preferred Stock outstanding (or Common Stock issued
upon the conversion thereof); and (d) with respect to the rights of Charter or
Alliance, such affected party. The observance of any term hereof may be waived
(either generally or in a particular instance and either retroactively or
prospectively) only with the written consent of the party so waiving the
observance of such term. Any amendment or waiver so effected shall be binding
upon the Company, the Founders, the Investors and all of their respective
successors and assigns whether or not such party, assignee or other stockholder
entered into or approved such amendment or waiver. 

          18.
Entire Agreement. This Agreement is intended to be the sole agreement of
the parties as it relates to this subject matter.

          19.
Enforceability/Severability. The parties hereto agree that each provision
of this Agreement shall be interpreted in such a manner as to be effective and
valid under applicable law. If any provision of this Agreement shall
nevertheless be held to be prohibited by or invalid under applicable law, (a)
such provision shall be invalid only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement, and (b) the parties shall, to the extent
permissible by applicable law, amend this Agreement so as to make effective and
enforceable the intent of this Agreement. 

          20.
Governing Law. This Agreement shall be governed by and construed under
the laws of the State of California as applied to contracts among California
residents entered into and to be performed entirely within California. 

          21.
Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. 

          22.
Successors and Assigns. The provisions hereof shall inure to the benefit
of, and be binding upon, the successors and assigns of the parties hereto. 

          23.
Facsimile. This Agreement may be signed by facsimile.

[Remainder of page intentionally left blank] 

-5- 

          IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day
and year hereinabove first written. 

	 	COMPANY: 
	 	  
	 	XALTED NETWORKS, INC. 
	 	 
	 	 
	 	(Please print name or type name) 
	 	 
	 	(Signature) 
	 	 
	 	(Title) 
	 	 
	 	 
	 	FOUNDERS: 
	 	 
	 	 
	 	Tim D. Phillips 
	 	 
	 	Address:
      ___________________________________________ 
	 	 
	 	 
	 	  
	 	 
	 	Pratap (Bob) Kondamoori 
	 	 
	 	Address:
      ___________________________________________
	 	 
	 	 

[Signature Page to the Voting Agreement] 

	 	INVESTORS: 
	 	 
	 	 
	 	(Please print name or type name) 
	 	 
	 	(Signature) 
	 	 
	 	(Title, if applicable) 

[Signature Page to the Voting Agreement] 

EXHIBIT A 

Investors 

	1. 	
      BlueStream Ventures, L.P.

	2. 	
      TI Venture III, L.P.

	3. 	
      Granite Ventures, LP

	4. 	
      Alliance Ventures I, LP

	5. 	
      Alliance Ventures V, LP

	6. 	
      Empire Capital Partners

	7. 	
      Charter Ventures IV, L.P.

	8. 	
      Oxcal Venture Fund

	9. 	
      Glenbrook Capital, L.P.

	10. 	
      Solar Venture Partners, L.P.

	11. 	
      Zodiac Venture Fund II, L.P.

	12. 	
      Brobeck, Phleger & Harrison LLP

	13. 	
      Satwik Fund I, LLC

	14. 	
      Satwik Affiliates I, LLC

	15. 	
      Todd U.S. Ventures LLC

EXHIBIT G 

Schedule of Exceptions

          This
Schedule of Exceptions, dated as of February 10, 2004, is made and given
pursuant to Section 2 of the Xalted Networks (the “Company”) Series BB and CC
Preferred Stock Purchase Agreement, as amended, of even date herewith (the
“Agreement”). The paragraph numbers in this Schedule of Exceptions correspond to
the paragraph numbers in the Agreement; however, any information disclosed
herein under any paragraph number shall be deemed to be disclosed and
incorporated into any other paragraph number under the Agreement to the extent
such disclosure on its face would reasonably be deemed to apply. Any terms
defined in the Agreement shall have the same meaning when used in this Schedule
of Exceptions as when used in the Agreement unless the context otherwise
requires. 

          1.1
Organization, Good Standing and Qualification 

          None

          1.2
Capitalization and Voting Rights 

                    (a)
Empire Capital Partners holds 55,033 shares of Common Stock (on a pre-reverse
split basis) and 1,186,705 shares of Series C Preferred Stock (on a pre-reverse
split basis) that were issued in reliance upon the exemption set forth in
Section 36(b)-21(b)(10) of the Connecticut Uniform Securities Act and Section
4(2) of the Securities Act of 1933. Regulations enacted by the State of
Connecticut governing Section 36(b)-21(b)(1) call for the Company to have
provided a prefiling notice and check for $150.00 when relying on the above
referenced exemption. The Company is not aware of whether such notice was ever
provided to the State of Connecticut. 

                    (b)
The Company entered into a Confidential Termination Agreement and Mutual General
Release dated December 16, 2003 with Tim Phillips. Pursuant to that agreement,
the Company has agreed to cancel $30,000 of indebtedness owed by Mr. Phillips to
the Company in exchange for termination of Mr. Phillips employment agreement
with the Company and a release from the Company’s obligations to make payment of
all wages currently owed under his employment agreement. 

Mr. Manikonda and Mr. Kondamoori have agreed pursuant to a
certain side letter, dated December 19, 2003, which amends and restates in its
entirety a certain May 1, 2002 agreement between Mr. Manikonda and Xalted
Networks, Inc., that they will transfer all of their respective ownership
interests in Xalted Information Systems, Pvt. Ltd. (“XNI”) to the Company or
intermediate company wholly-owned by the Company in exchange for (i) the
reimbursement of any loans made to XNI and documents out-of-pocket costs
incurred in connection with the organization of XNI that have not been repaid
along with interest on such loans which shall accrue at 6% per annum. Mr.
Manikonda and Mr. Kondamoori further agree that the Company shall have the right
to make such payment in the form of shares of Series CC Preferred Stock with a
value of $.674 per share. As of January 27, 2004, Mr. Manikonda has provided XNA with loans with a principal amount of $298,489.00 at 6%
interest per annum beginning on May 1, 2002.

According to an agreement between the Company and WSGR, WSGR
will cancel $25,000 in accrued fees in exchange for shares of Series CC
Preferred Stock.

          1.3
Subsidiaries 

          The
Company purchased two million shares of Series B Preferred Stock of SysteamUS,
Inc. (“SysteamUS”) on August 8, 2003 at a price of $0.50 per share. The Company
agreed to secure purchasers for an additional two million shares of Series B
Preferred Stock at $0.50 per share and to purchase the balance of the two
million shares not committed to by additional purchasers. The Company will
invest not more than $375,000 of the proceeds of this investment towards this
purchase, the balance being contributed by the Company’s affiliated investors.
Pursuant to this transaction, the Company will hold 39% of SysteamUS on a
fully-diluted basis. 

          The
Company has a consulting and license agreement with Xalted Information Systems
Ltd. (“XNI”) pursuant to which XNI provides the Company with software
consulting. XNI and the Company have agreed to enter into a side agreement
whereby Bob Kondamoori and Raj Manikonda will transfer all of their shares of
XNI to the Company. 

          See
disclosure in Section 2.2(d) regarding XNI. 

          1.4
Authorization 

          None

          1.5
Valid Issuance of Preferred and Common Stock 

          None

          1.6
Governmental Contracts 

          None

          1.7
Offering 

          None

          1.8
Litigation 

          Citicorp
Vendor Finance (“Citicorp”): Citicorp sued the Company for approximately
$154,000 in payments related to a buy-back lease for test equipment signed by
the Company. The Company has reached a settlement with Citicorp Vendor Finance
for a settlement amount of $144,000 payable in 4 equal monthly installments
which started December 5, 2003. If we are unable to make such payments, then the
Company will be considered to be in violation of this agreement. The Company
made its first payment of $36,000 on December 5, 2003, a second payment of $36,000 on January 5, 2004 and a
third payment of $36,000 on February 4, 2004. 

          The
Company owes certain ex-employees wages due for the bi-monthly period ending
July 5, 2003. While the company has substantially paid these obligations, the
Company still owes approximately $28,000 in wages due plus payroll taxes of
approximately $5,000 on such wages. To the extent that the Company cannot or
will not pay these wages to ex-employees, there exists the possibility the
ex-employees will sue the Company for these wages. 

          Certain
ex-employees claim that the Company owes them wages that were withheld as
deferred compensation as part of a 10% reduction in wages instituted by the
Company due to cash flow problems. While there is no documentation of the
deferrals and no board resolution authorizing such deferrals, the Company, prior
to the appointment of present management, accounted for this 10% reduction in
salary as a deferral. The Company has represented to the Texas Workforce
Commission that such deferred salary, while not documented, could be payable
upon the completion of at least a $5,000,000 round of venture financing. To the
extent that the Company cannot or will not pay these wages to ex-employees,
there exists the possibility the ex-employees will sue the Company for the
disputed amount. 

          An
ex-employee named James Dickerson has claimed the above mentioned deferred wages
amounting to $11,942.31 through an appeal filed with the Texas Workforce
Commission. A preliminary hearing has been scheduled for February 17, 2004 to
resolve this issue. 

          The
Company owes Pirola Pennuto Zei & Associati (“Pirola”) Euros 52,482 in
connection with its purchase of Series B Preferred Stock of SysteamUS. Pirola
has e-mailed the Company that it will potentially pursue legal steps to recover
those fees if payment is not made. SysteamUS has made a $10,000 payment to
forestall any legal actions by Pirola. 

          Each
of the liabilities referenced above in this Section 2.8 is reflected in (and not
in addition to) the liabilities shown on the Company’s balance sheet as of
February 10, 2004, which is attached to this Schedule of Exceptions as
Attachment 1 (the “Balance Sheet”). 

          1.9
Proprietary Information and Inventions Agreements 

          None

          1.10
Patents and Trademarks 

          None

          1.11
Compliance with Other Instruments 

          None.

          1.12
Agreements; Action 

          All
amounts described in more detail below in this Section 2.12 are included within
(and not in addition to) the liabilities reflected on the Balance Sheet except
for (i) the commitment of the Company to purchase not more than $375,000 worth
of additional shares of SysteamUS, (ii) the commitment to pay Mr. Manikonda
$289,489.00 plus accrued interest as described in Section 2.2(d) of this
Schedule of Exceptions, (iii) approximately $36,000 of fees accrued to WSGR
since they have not been invoiced, and (iv) the contingent liabilities set forth
in the Corona Agreement referenced in this section of the disclosure schedule.

          Charter
Ventures and the Trustee in Bankruptcy for Corona Networks, Inc. entered into an
agreement in December 2003 whereby Charter Ventures acquired all of the
intellectual property of Corona Networks for $110,000.00. Pursuant to the terms
of the Agreement, the Company paid the trustee the $110,000.00 and in
consideration, Charter is required to either license or assign the intellectual
property rights to Xalted. In addition, in the event Xalted licenses the Corona
intellectual property to any third party, Xalted will be required to pay 50% of
the consideration received with respect to the license to the Trustee, up to a
maximum of $100,000. 

          The
Company issued subordinated promissory notes of $200,000 each to Charter
Ventures and Glenbrook Capital in December 2003. The Company issued subordinated
promissory notes of $150,080.88 to Alliance Ventures in February 2004. 

          The
Company and WSGR have agreed on a settlement of fees whereby the majority of
fees will be paid at the initial closing. 

          The
Company has a commitment to invest not more than $375,000 in SysteamUS. The
Company has already invested a million dollars to date. See Section 2.3 for
additional details. 

          The
Company owes secured and unsecured creditors a total of approximately $6.5
million in loans. The principal of and interest on these loans are listed on
Exhibits A and Exhibits B (other than loans from SysteamUS, in the amount of
$52,000 and Euros10,000 which are interest free short term loans) to the
Agreement and will be converted into Series BB and Series CC Preferred Stock at
the Initial Closing. 

          As
of February 10, 2004, the Company owed an additional $382,000 in accrued
interest related to these loans. 

          The
Company owes ex-employees approximately $134,000 in wages and deferred wages and
severance benefits. Of this amount approximately $78,000 are related to deferred
wages from a 10% reduction in pay that the ex-employees claim management made a
verbal promise to repay. However, there is no written communication regarding
the date of repayment and the Company has made representations to the Texas
Workforce Commission that such payments are not due until the Company completes
a venture financing round of at least $5,000,000. 

          If
and when such payments are made by the Company, it is estimated that the Company
would owe approximately $10,276 in payroll taxes on the distribution. 

          The
Company may owe payroll taxes on the $50,000 worth of Series CC stock that was
granted to Mr. Tim Phillips as part of his settlement of past due wages with the
Company. 

          The
Company is in discussions with YPoint Capital, Inc. about payments for services
rendered by Mr. Div Harish over and above the contractual requirement of 24
hours per week. Per requests from Mr. Bob Kondamoori, Mr. Div Harish provided
almost round the clock support as the Interim CFO for the MIC deal, the
restructuring and clean-up of debts with creditors and the balance sheet,
multiple bridge loans and the Series BB&CC financing. In light of this,
YPoint Capital and Bob Kondamoori are having discussions to come to an agreement
about the appropriate compensation for these additional services requested by
Xalted and provided by YPoint Capital. 

          The
Company entered into consulting agreements with two former Corona service
providers which have a cap of $8,000 per month. Currently the December invoice
for one of the consultants was $1,750 and $0 for the other. 

          See
disclosure in Section 2.2(d) of this Schedule of Exceptions. 

          The
Company owed as of February 8, 2004 the following parties funds related to
purchases of products or services by the Company: Wilson Sonsini Goodrich &
Rosati: $500,000.00

	Citicorp Vendor Finance: 	$36,000 pursuant to a lease
      settlement. The Company has three remaining payments on this obligation.
    
		$30,095 additional lease obligation for office
      equipment. 
	Brobeck, Phleger &
      Harrison: 	$79,578 (Disputed Amount)

	Charter Venture IV L.P. 	$69,435.07 (Expense reimbursements) 
	Pirola Pennuto Zei &
      Associati: 	Euros 43,928 (SysteamUS fees,
      Euros 10K paid by Systeam) 
	SysteamUS 	Euros 10,000 & $52,000 
	GTW Law 	$30,000 (SysteamUS legal fees)
    
	GCA Law Partners 	$23, 768 (Series CC legal fees) 
	Krishna Vishwanadham 	$22,109 (Fees for Dec/Jan &
      Expense Reimb.) 
	Farrow, McMahon & Rasmussen: 	$20,735 (legal expenses) 
	Price Waterhouse Coopers: 	$20,311 (Systeam transaction
      fees) 
	Bob Connolly: 	$19,343 ( Fees for Nov/Dec 2003, Jan 2004)
  
	Savastra Systems 	$15,200 (Fees for Nov/Dec 2003)
    
	Raj Manikonda 	$13,248 (Fees Jan 2004 and expenses)
  

	YPoint Capital, Inc. 	12,500 (Consulting Fees for Nov
      & Dec 2003) 
	Narendra Dhara 	$ 8,250 (Corona Consulting) 
	Hal Lasky: 	$7,227.50 (legal fees for
      bankruptcy) 
	Parkway Plaza 	$ 6,815 (Rent for February 2004) 
	Shyam Gettu 	$ 5000 (Jan 2004 Fees) 
	All other creditors with amounts owed less
      than $5000: 	approximately $17,500 in the aggregate.
  

          1.13
Related Party Transactions 

          Mr.
Rajendra Manikonda is an officer of Xalted Networks, Inc. (“XNA”) and is also an
officer and shareholder of Xalted Information Systems Ltd. (“XNI”). XNA has a
consulting and licensing agreement with XNI pursuant to which XNI offers
software development solutions. 

          Mr.
Pratap (“Bob”) Kondamoori, the CEO of Xalted Networks is also a Venture Partner
at Charter Ventures – one of the venture investors in Xalted Networks. Bob is on
a leave of absence from Charter currently and is the full time CEO of Xalted
Networks. 

          1.14
Financial Statements 

          None

          1.15
Changes 

          None

          1.16
Tax Returns 

          None

          1.17
Permits 

          None

          1.18
Title to Property and Assets 

          Citicorp
Vendor Finance may have liens on certain test equipment that were pledged as
collateral pursuant to a lease buy back arrangement. As part of the settlement,
the Company will get all such liens cancelled and the property will become the
fully owned property of Xalted Networks. 

          1.19
Employee Benefit Plans 

          The
Company had a 401(k) plan in place until October 31, 2003. This plan was
terminated and all the funds in the plan were rolled over into employee
retirement accounts or were disbursed according to instructions from current and
ex-employees. 

          1.20
Disclosure 

          The
Company filed for Chapter 11 Bankruptcy Protection on July 5, 2002. The filing
was dismissed on January 23, 2003 because the debtor-in-possession did not file
and confirm a plan of reorganization. All the creditors that existed pre-filing
remained as creditors post filing. The Company has negotiated settlements with a
number of these creditors. With the exception of the Company’s commitment to
purchase additional shares of SysteamUS, all other obligations that remain
outstanding (including without limitation those outstanding under existing
settlements) are included in the accounts payable section of the Balance Sheet.

          1.21
Section 83(b) Elections 

          None

          1.22
Minute Books 

          None

          1.23
Qualified Small Business Stock 

          None

Attachment 1 

Balance Sheet 

EXHIBIT H 

Proprietary Information and Inventions Agreements 

1 

EXHIBIT H 

Proprietary Information and Inventions Agreements 

2 

XALTED NETWORXS, INC. 
AT WILL EMPLOYMENT,
CONFIDENTIAL INFORMATION,
 INVENTION ASSIGNMENT 
AND ARBITRATION
AGREEMENT 

                    As
a condition of my employment with Xalted Networks, Inc., its
subsidiaries, affiliates, successors or assigns (together the “Company”), and in
consideration of my employment with the Company and my receipt of the
compensation now and hereafter paid to me by Company, I agree to the following:

          1.
At-Will Employment. 

                    I
UNDERSTAND AND ACKNOWLEDGE THAT MY EMPLOYMENT WITH THE COMPANY IS FOR AN
UNSPECIFIED DURATION AND CONSTITUTES “AT-WILL” EMPLOYMENT. I ALSO UNDERSTAND
THAT ANY REPRESENTATION TO THE CONTRARY IS UNAUTHORIZED AND NOT VALID UNLESS
OBTAINED IN WRITING AND SIGNED BY THE PRESIDENT OF THE COMPANY. I ACKNOWLEDGE
THAT THIS EMPLOYMENT RELATIONSHIP MAY BE TERMINATED AT ANY TIME, WITH OR WITHOUT
GOOD CAUSE OR FOR ANY OR NO CAUSE, AT THE OPTION EITHER OF THE COMPANY OR
MYSELF, WITH OR WITHOUT NOTICE. 

          2.
Confidential Information. 

                    A.
Company Information. I agree at all times during the term of my
employment and thereafter, to hold in strictest confidence, and not to use,
except for the benefit of the Company or to disclose to any person, firm or
corporation without written authorization of the Board of Directors of the
Company, any Confidential Information of the Company, except under a
non-disclosure agreement duly authorized and executed by the Company. I
understand that “Confidential Information” means any non-public information that
relates to the actual or anticipated business or research and development of the
Company, technical data, trade secrets or know-how, including, but not limited
to research, product plans or other information regarding Company’s products or
services and markets therefor, customer lists and customers (including, but not
limited to, customers of the Company on whom I called or with whom I became
acquainted during the term of my employment), software, developments,
inventions, processes, formulas, technology, designs, drawings, engineering,
hardware configuration information, marketing, finances or other business
information. I further understand that Confidential information does not include
any of the foregoing items which have become publicly known and made generally
available through no wrongful act of mine or of others who were under
confidentiality obligations as to the item or items involved or improvements or
new versions thereof. 

                    B.
Former Employer Information. I agree that I will not, during my
employment with the Company, improperly use or disclose any proprietary
information or trade secrets of any former or concurrent employer or other
person or entity and that I will not bring onto the premises of the Company any
unpublished document or proprietary information belonging to any such employer,
person or entity unless consented to in writing by such employer, person or
entity. 

                    C.
Third Party Information. I recognize that the Company has received and in
the future will receive from third parties their confidential or proprietary
information subject to a duty on the Company’s part to maintain the
confidentiality of such information and to use it only for certain limited
purposes. I agree to bold all such confidential or proprietary information in
the strictest confidence and not to disclose it to any person, firm or
corporation or to use it except as necessary in carrying out my work for the
Company consistent with the Company’s agreement with such third party. 

          3.
Inventions. 

                    A.
Inventions Retained and Licensed. I have attached hereto, as Exhibit
A, a list describing all inventions, original works of authorship,
developments, improvements, and trade secrets which were made by me prior to my
employment with the Company (collectively referred to as “Prior Inventions”),
which belong to me, which relate to the Company’s proposed business, products or
research and development, and which are not assigned to the Company hereunder;
or, if no such list is attached, I represent that there are no such Prior
Inventions. If in the course of my employment with the Company, I incorporate
into a Company product, process or service a Prior Invention owned by me or in
which I have an interest, I hereby grant to the Company a nonexclusive,
royalty-free, fully paid-up, irrevocable, perpetual, worldwide license to make,
have made, modify, use and sell such Prior Invention as part of or in connection
with such product, process or service, and to practice any method related
thereto. 

                    B.
Assignment of Inventions. I agree that I will promptly make fall written
disclosure to the Company, will hold in trust for the sole right and benefit of
the Company, and hereby assign to the Company, or its designee, all my right,
title, and interest in and to any and all inventions, original works of
authorship, developments, concepts, improvements, designs, discoveries, ideas,
trademarks or trade secrets, whether or-not patentable or registrable under
copyright or similar laws, which I may solely or jointly conceive or develop or
reduce to practice, or cause to be conceived or developed or reduced to
practice, during the period of time I am in the employ of the Company
(collectively referred to as ‘‘Inventions”), except as provided in Section 3.F
below. I further acknowledge that all original works of authorship which are
made by me (solely or jointly with others) within the scope of and during the
period of my employment with the Company and which are protectable by copyright
are “Works made for hire,” as that term is defined in the United States
Copyright Act. I understand and agree that the decision whether or not to
commercialize or market any invention developed by me solely or jointly with
others is within the Company’s sole discretion and for the Company’s sole
benefit and that no royalty will be due to me as a result of the Company’s
efforts to commercialize or market any such invention. 

                    C.
Inventions Assigned to the United States. I agree to assign to the United
States government all my right, title, and interest in and to any and all
Inventions whenever such full title is required to be in the United States by a
contract between the Company and the United States or any of its agencies. 

                    D.
Maintenance of Records. I agree to keep and maintain adequate and current
written records of all Inventions made by me (solely or jointly with others)
during the term of my employment with the Company. The records will be in the
form of notes, sketches, drawings, and any other format that may be specified by the
Company. The records will be available to and remain the sole property of the
Company at all times. 

4 

                    E.
Patent and Copyright Registrations. I agree to assist the Company, or its
designee, at the Company’s expense, in every proper way to secure the Company’s
rights in the Inventions and any copyrights, patents, mask work rights or other
intellectual property rights relating thereto in any and all countries,
including the disclosure to the Company of all pertinent information and dam
with respect thereto, the execution of all applications, specifications, oaths,
assignments and all other instruments which the Company shall deem necessary in
order to apply for and obtain such rights and in order to assign and convey to
the Company, its successors, assigns, end nominees the sole and exclusive
rights, title and interest in and to such Inventions, and any copyrights,
patents, mask work rights or other intellectual property rights relating
thereto. I further agree that my obligation to execute or cause to be executed,
when it is in my power to do so, any such instrument or papers shall continue
after the termination of this Agreement. If the Company is unable because of my
mental or physical incapacity or for any other reason to secure my signature to
apply for or to pursue any application for any United States or foreign patents
or copyright registrations covering Inventions or original works of authorship
assigned to the Company as above, then I hereby irrevocably designate and
appoint the Company and its duly authorized officers and agents as my agent and
attorney in fact, to act for and in my behalf and stead to execute and file any
such applications and to do all other lawfully permitted acts to further the
prosecution and issuance of letters patent or copyright registrations thereon
with the same legal force and effect as if executed by me. 

                    F.
Exception to Assignments. I understand that the provisions of this
Agreement requiring assignment of Inventions to the Company do not apply to any
inventions which qualifies fully under the provisions of California Labor Code
Section 2870 (attached hereto ns Exhibit B). I will advise the Company
promptly in writing of any inventions that I believe meet the criteria in
California Labor Code Section 2870 and not otherwise disclosed on Exhibit
A. 

          4.
Conflicting Employment. I agree that, during the term of my employment
with the Company, I will not engage in any other employment, occupation or
consulting directly related to the business in which the Company is now involved
or becomes involved during the term of my employment, nor will I engage in any
other activities that conflict with my obligations to the Company. 

          5.
Returning Company Documents. I agree that, at the time of leaving the
employ of the Company, I will deliver to the Company (and will not keep in my
possession, recreate or deliver to anyone else) any and all devices, records,
data, notes, reports, proposals, lists, correspondence, specifications, drawings
blueprints, sketches, materials, equipment, other documents or property, or
reproductions of any aforementioned items developed by me pursuant to my
employment with the Company or otherwise belonging to the Company, its
successors or assigns, including, without limitation, those records maintained
pursuant to paragraph 3.D. In the event of the termination of my
employment, I agree to sign and deliver the “Termination Certification” attached
hereto as Exhibit C.

5 

          6.
Notification of New Employer. In the event that I leave the employ of the
Company, I hereby grant consent to notification by the Company to my new
employer about my rights and obligations under this Agreement. 

          7.
Solicitation of Employees. I agree that for a period of twelve (12)
months immediately following the termination of my relationship with the Company
for any reason, whether with or without cause, I shall not either directly or
indirectly solicit, induce, recruit or encourage any of the Company’s employees
to leave their employment, or take away such employees, or attempt to solicit,
induce, recruit, encourage or take away employees of the Company, either for
myself or for my other person or entity. 

          8.
Conflict of Interest Guidelines. I agree to diligently adhere to the
Conflict of Interest Guidelines attached as Exhibit D hereto. 

          9.
Representations. I agree to execute any proper oath or verify any proper
document required to carry out the terms of this Agreement. I represent that my
performance of all the terms of this Agreement will not breach any agreement to
keep in confidence proprietary information acquired by me in confidence or in
trust prior to my employment by the Company. I hereby represent and warrant that
I have not entered into, and I will not enter into, any oral or written
agreement in conflict herewith. 

          10.
Arbitration and Equitable Relief. 

                    A.
Arbitration. IN CONSIDERATION OF MY EMPLOYMENT WITH THE COMPANY, ITS
PROMISE TO ARBITRATE ALL EMPLOYMENT-RELATED DISPUTES AND MY RECEIPT OF THE
COMPENSATION, PAY RAISES AND OTHER BENEFITS PAID TO ME BY THE COMPANY, AT
PRESENT AND IN THE FUTURE, I AGREE THAT ANY AND ALL CONTROVERSIES, CLAIMS, OR
DISPUTES WITH ANYONE (INCLUDING THE COMPANY AND ANY EMPLOYEE, OFFICER, DIRECTOR,
SHAREHOLDER OR BENEFIT PLAN OF THE COMPANY IN THEIR CAPACITY AS SUCH OR
OTHERWISE) ARISING OUT OF, RELATING TO, OR RESULTING FROM MY EMPLOYMENT WITH THE
COMPANY OR THE TERMINATION OF MY EMPLOYMENT WITH THE COMPANY, INCLUDING ANY
BREACH OF THIS AGREEMENT SHALL BE SUBJECT TO BINDING ARBITRATION UNDER THE
ARBITRATION RULES SET FORTH IN CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 1280
THROUGH 1294.2, INCLUDING SECTION 1283.05 (THE ‘‘RULES”) AND PURSUANT TO
CALIFORNIA LAW. DISPUTES WHICH I AGREE TO ARBITRATE, AND THEREBY AGREE TO WAIVE
ANY RIGHT TO A TRIAL BY JURY, INCLUDE ANY STATUTORY CLAIMS UNDER, STATE OR
FEDERAL LAW, INCLUDING, BUT NOT LIMITED TO, CLAIMS UNDER TITLE VII OF THE CIVIL
RIGHTS ACT OF 1964, THE AMERICANS WITH DISABILITIES ACT OF 1990, THE AGE
DISCRIMINATION IN EMPLOYMENT ACT OF 1967, THE OLDER WORKERS BENEFIT PROTECTION
ACT, THE CALIFORNIA FAIR EMPLOYMENT AND HOUSING ACT, THE CALIFORNIA LABOR CODE,
CLAIMS OF HARASSMENT, DISCRIMINATION OR WRONGFUL TERMINATION AND ANY STATUTORY
CLAIMS. I FURTHER UNDERSTAND THAT THIS AGREEMENT TO ARBITRATE ALSO APPLIES TO
ANY DISPUTES THAT THE COMPANY MAY HAVE WITH ME. 

6 

                    B.
Procedure. I AGREE THAT ANY ARBITRATION WILL BE ADMINISTERED BY THE
AMERICAN ARBITRATION ASSOCIATION (“AAA”) AND THAT THE NEUTRAL ARBITRATOR WILL BE
SELECTED IN A MANNER CONSISTENT WITH ITS NATIONAL RULES FOR THE RESOLUTION OF
EMPLOYMENT DISPUTES. I AGREE THAT THE ARBITRATOR SHALL HAVE THE POWER TO DECIDE
ANY MOTIONS BROUGHT BY ANY PARTY TO THE ARBITRATION, INCLUDING MOTIONS FOR
SUMMARY JUDGMENT AND/OR ADJUDICATION AND MOTIONS TO DISMISS AND DEMURRERS, PRIOR
TO ANY ARBITRATION HEARING. I ALSO AGREE THAT THE ARBITRATOR SHALL HAVE THE
POWER TO AWARD ANY REMEDIES, INCLUDING ATTORNEYS’ FEES AND COSTS, AV AVAILABLE
UNDER APPLICABLE LAW. I UNDERSTAND THE COMPANY WILL PAY FOR ANY ADMINISTRATIVE
OR HEARING FEES CHARGED BY THE ARBITRATOR OR AAA EXCEPT THAT I SHALL PAY THE
FIRST $125.00 OF ANY FILING FEES ASSOCIATED WITH ANY ARBITRATION I INITIATE. I
AGREE THAT THE ARBITRATOR SHALL ADMINISTER AND CONDUCT ANY ARBITRATION IN A
MANNER CONSISTENT WITH THE RULES AND THAT TO THE EXTENT THAT THE AAA’S NATIONAL
RULES FOR THE RESOLUTION OF EMPLOYMENT DISPUTES CONFLICT WITH THE RULES, THE
RULES SHALL TAKE PRECEDENCE. I AGREE THAT THE DECISION OF THE ARBITRATOR SHALL
BE IN WRITING. 

                    C.
Remedy. EXCEPT AS PROVIDED BY THE RULES AND THIS AGREEMENT, ARBITRATION
SHALL BE THE SOLE, EXCLUSIVE AND FINAL REMEDY FOR ANY DISPUTE BETWEEN ME AND THE
COMPANY. ACCORDINGLY, EXCEPT AS PROVIDED FOR BY THE RULES AND THIS AGREEMENT,
NEITHER I NOR THE COMPANY WILL BE PERMITTED TO PURSUE COURT ACTION REGARDING
CLAIMS THAT ARE SUBJECT TO ARBITRATION. NOTWITHSTANDING, THE ARBITRATOR WILL NOT
HAVE THE AUTHORITY TO DISREGARD OR REFUSE TO ENFORCE ANY LAWFUL COMPANY POLICY,
AND THE ARBITRATOR SHALL NOT ORDER OR REQUIRE THE COMPANY TO ADOPT A POLICY NOT
OTHERWISE REQUIRED BYLAW WHICH THE COMPANY HAS NOT ADOPTED. 

                    D.
Availability of Injunctive Relief. IN ADDITION TO THE RIGHT UNDER THE
RULES TO PETITION THE COURT FOR PROVISIONAL RELIEF, I AGREE THAT ANY PARTY MAY
ALSO PETITION THE COURT FOR INJUNCTIVE RELIEF WHERE EITHER PARTY ALLEGES OR
CLAIMS A VIOLATION OF THE EMPLOYMENT, CONFIDENTIAL INFORMATION, INVENTION
ASSIGNMENT AGREEMENT BETWEEN ME AND THE COMPANY OR ANY OTHER AGREEMENT REGARDING
TRADE SECRETS, CONFIDENTIAL INFORMATION, NON SOLICITATION OR LABOR CODE §2870. I
UNDERSTAND THAT ANY BREACH OR THREATENED BREACH OF SUCH AN AGREEMENT WILL CAUSE
IRREPARABLE INJURY AND THAT MONEY DAMAGES WILL NOT PROVIDE AN ADEQUATE REMEDY
THEREFOR AND BOTH PARTIES HEREBY CONSENT TO THE ISSUANCE OF AN INJUNCTION. IN
THE EVENT EITHER PARTY SEEKS INJUNCTIVE RELIEF. THE PREVAILING PARTY SHALL BE
ENTITLED TO RECOVER REASONABLE COSTS AND ATTORNEYS FEES.

                    E.
Administrative Relief. I UNDERSTAND THAT THIS AGREEMENT DOES NOT PROHIBIT
ME FROM PURSUING AN ADMINISTRATIVE CLAIM WITH A LOCAL, STATE OR FEDERAL ADMINISTRATIVE BODY SUCH AS THE
DEPARTMENT OF FAIR EMPLOYMENT AND HOUSING, THE EQUAL EMPLOYMENT OPPORTUNITY
COMMISSION OR THE WORKERS’ COMPENSATION BOARD. THIS AGREEMENT DOES, HOWEVER,
PRECLUDE ME FROM PURSUING COURT ACTION REGARDING ANY SUCH CLAIM. 

7 

                    F.
Voluntary Nature of Agreement. I ACKNOWLEDGE AND AGREE THAT I AM
EXECUTING THIS AGREEMENT VOLUNTARILY AND WITHOUT ANY DURESS OR UNDUE INFLUENCE
BY THE COMPANY OR ANYONE ELSE. I FURTHER ACKNOWLEDGE AND AGREE THAT I HAVE
CAREFULLY READ THIS AGREEMENT AND THAT I HAVE ASKED ANY QUESTIONS NEEDED FOR ME
TO UNDERSTAND THE TERMS, CONSEQUENCES AND BINDING EFFECT OF THIS AGREEMENT AND
FULLY UNDERSTAND IT, INCLUDING THAT I AM WAIVING MY RIGHT TO A JURY
TRIAL. FINALLY, I AGREE THAT I HAVE BEEN PROVIDED AN OPPORTUNITY TO SEEK
THE ADVICE OF AN ATTORNEY OF MY CHOICE BEFORE SIGNING THIS AGREEMENT. 

          11.
General Provisions. 

                    A.
Governing Law, Consent to Personal Jurisdiction. This Agreement will be
governed by the laws of the State of California. I hereby expressly consent to
the personal jurisdiction of the state and federal courts located in California
for any lawsuit filed there against me by the Company arising from or relating
to this Agreement. 

                    B.
Entire Agreement. This Agreement sets forth the entire agreement and
understanding between the Company and me relating to the subject matter herein
and supersedes all prior discussions or representations between us including,
but not limited to, any representations made during my interview(s) or
relocation negotiations, whether written or oral. No modification of or
amendment to this Agreement, nor any waiver of any rights under this Agreement,
will be effective unless in writing signed by the President of the Company and
me. Any subsequent change or changes in my duties, salary or compensation will
not affect the validity or scope of this Agreement.

                    C.
Severability. If one or more of the provisions in this Agreement are
deemed void by law, then the remaining provisions will continue in full force
and effect. 

                    D.
Successors and .Assigns. This Agreement will be binding upon my heirs,
executors, administrators and other legal representatives and will be for the
benefit of the Company, in successors, and its assigns. 

8 

Exhibit A 

LIST OF PRIOR INVENTIONS 
AND ORIGINAL WORKS OF
AUTHORSHIP 

	  	  	Identifying Number or Brief 
	Title 	Date
    	Description 

__ No inventions or improvements 

__ Additional Sheets Attached 

Signature of Employee: ___________________________

Print Name of Employee: __________________________

Date:

Exhibit B 

CALIFORNIA LABOR CODE SECTION 2870 
INVENTION ON OWN
TIME-EXEMPTION FROM AGREEMENT 

          “(a)
Any provision in an employment agreement which provides that an employee shall
assign or offer to assign any of his or her rights in an invention to his or her
employer shall not apply to an invention that the employee developed entirely on
his or her own time without using the employer’s equipment, supplies,
facilities, or trade secret information except for those inventions that either:

          (1)
Relate at the time of conception or reduction to practice of the invention to
the employer’s business, or actual or demonstrably anticipated research or
development of the employer; or 

          (2)
Result from any work performed by the employee for the employer. 

          (b)
To the extent a provision in an employment agreement purports to require an
employee to assign an invention otherwise excluded from being required to be
assigned under subdivision (a), the provision is against the public policy of
this state and is unenforceable.” 

EXHIBIT I 

Form of Opinion of Company Counsel 

[Wilson Sonsini Goodrich & Rosati
Letterhead] 

February 10, 2004 

	To the Purchasers Listed on 
	Exhibit A and Exhibit B
      of the Xalted Networks, Inc. 
	Series BB and CC Preferred Stock 
	Purchase Agreement 
	Dated February 10, 2004 

Ladies and Gentlemen: 

          Reference
is made to the Series BB and CC Preferred Stock Purchase Agreement dated as of
February 10, 2004 (the “Agreement”), by and among Xalted Networks, a Delaware
corporation (the “Company”), and you, which provides for the sale and issuance
by the Company to you of shares of Series BB Preferred Stock and shares of
Series CC Preferred Stock (the “Shares”). This opinion is rendered to you
pursuant to Section 4.6 of the Agreement, and all terms used herein have the
meanings defined for them in the Agreement unless otherwise defined herein.
Reference in this opinion to the Agreement excludes any substantive agreement
attached as an exhibit, unless otherwise indicated. 

          We
have acted as counsel for the Company in connection with the negotiation of the
Agreement, the Amended and Restated Investors’ Rights Agreement (the “Rights
Agreement”) and the Amended and Restated Right of First Refusal and Co-Sale
Agreement (the “Co-Sale Agreement,” and collectively with the Agreement and the
Rights Agreement the “Investment Agreements”) and the issuance of the Shares. As
such counsel, we have made such legal and factual examinations and inquiries as
we have deemed advisable or necessary for the purpose of rendering this opinion.
In addition, we have examined originals or copies of corporate records of the
Company, certificates of public officials and such other documents and questions
of law that we consider necessary or advisable for the purpose of rendering this
opinion. In such examination, we have assumed the genuineness of all signatures
on original documents, the authenticity and completeness of all documents
submitted to us as originals, the conformity to original documents of all copies
submitted to us as copies thereof, the legal capacity of natural persons, and
the due execution and delivery of all documents (except as to due execution and
delivery by the Company) where due execution and delivery are a prerequisite to
the effectiveness thereof. 

          As
used in this opinion, the expression “to our knowledge,” “known to us” or
similar language with reference to matters of fact means that, after an
examination of documents made available to us by the Company, and after
inquiries of officers of the Company, but without any further independent
factual investigation, we find no reason to believe that the opinions expressed
herein are factually incorrect. Further, the expression “to our knowledge,”
“known to us” or similar language with reference to matters of fact refers to
the actual knowledge of the attorneys of this firm who have worked on matters
for the Company. Except to the extent expressly set forth herein or as we
otherwise believe to be necessary to our opinion, we have not undertaken any
independent investigation to determine the existence or absence of any fact, and
no inference as to our knowledge of the existence or absence of any fact should
be drawn from our representation of the Company or the rendering of the opinion
set forth below. 

          For
purposes of this opinion, we are assuming that you have all requisite power and
authority, and have taken any and all necessary corporate or partnership action,
to execute and deliver the Investment Agreements, and we are assuming that the
representations and warranties made by you in the Agreement and pursuant thereto
are true and correct. We are also assuming that you have purchased the Shares
for value, in good faith and without notice of any adverse claims within the
meaning of the California Uniform Commercial Code. 

          The
opinions hereinafter expressed are subject to the following qualifications: 

          12.
We express no opinion as to whether the Company’s Board of Directors and its
stockholders have each complied with applicable fiduciary duties in connection
with the transactions contemplated by the Investment Agreements; 

          13.
We express no opinion as to the effect of applicable bankruptcy, insolvency,
reorganization, moratorium or other similar federal or state laws affecting the
rights of creditors; 

          14.
We express no opinion as to compliance with applicable anti-fraud provisions of
federal or state securities laws; 

          15.
We express no opinion as to the enforceability of the indemnification provisions
of Section 2.7 of the Rights Agreement, to the extent such provisions may be
subject to limitations of public policy and the effect of applicable statutes
and judicial decisions; 

          16.
We are members of the Bar of the State of California and, except as set forth in
paragraph 8 below with respect to the securities laws of other states, we are
not expressing any opinion as to any matter relating to the laws of any
jurisdiction other than the federal laws of the United States of America, the
General Corporation Law of the State of Delaware and the laws of the State of
California. We note that the parties to the Investment Agreements have
designated the laws of the State of California as the laws governing the
Investment Agreements. Our opinion in paragraph 5 below as to the validity,
binding effect and enforceability of the Investment Agreements is premised upon
the result that would be obtained if a California court were to apply the
internal laws of the State of California (excluding conflict of law principles)
to the interpretation and enforcement of the Investment Agreements. To the
extent this opinion addresses applicable securities laws of states other than
the State of California, we have not retained nor relied on the opinion of
counsel admitted to the bar of such states, but rather have relied on
compilations of the securities laws of such states contained in reporting
services presently available to us; 

          17.
Our opinions are qualified in their entirety by the limitations imposed by
general principals of equity, upon the availability of equitable remedies for
the enforcement of provisions of the Investment Agreements and related documents
and by the effect of judicial decisions which have held that certain provisions
and agreements are unenforceable when their enforcement would violate the
implied covenant of good faith and fair dealing, or would be commercially
unreasonable, or where their breach is not material and we further express no
opinion as to any ‘quasi-preemptive rights’ that may be available as a result of
judicial decisions, or as to the effect of rules of law governing specific
performance and injunction relief (regardless of whether any such remedy is
considered in a proceeding at law or in equity); 

          18.
We are assuming that, for purposes of our opinion, the transactions contemplated
by the Investment Agreements are fair, just and reasonable, within the meaning
of Section 310 of the California General Corporation Law and Section 144 of the
General Corporation Law of the State of Delaware; 

          19.
We have made no review of litigation dockets and are relying on the certificate
of the Company regarding the status of litigation involving the Company or any
of its officers and directors; and 

          20.
We express no opinion as to compliance with the anti-fraud provisions of
applicable securities laws. Furthermore, we express no opinion as to the
accuracy and completeness of the information provided by the Company to the
Purchasers and the Company’s stockholders in connection with the offer and sale
of the Shares. 

          Based
upon and subject to the foregoing, and except as disclosed in the Agreement or
in the Schedule of Exceptions thereto, we are of the opinion that: 

     A. The Company is a corporation
duly organized and validly existing under, and by virtue of, the laws of the
State of Delaware and is in good standing under such laws. The Company has
requisite. corporate power to own and operate its properties and assets, and to
carry on its business as currently conducted. To our knowledge, the Company is
qualified to do business in the State of California and all jurisdictions where
the failure to so qualify would have a material adverse impact upon the Company
or its business, assets, condition (financial or otherwise) or results of
operations. 

     B. The Company has all requisite
legal and corporate power to execute and deliver the Investment Agreements, to
sell and issue the Shares under the Agreement, to issue the Common Stock
issuable upon conversion of the Shares and to carry out and perform its
obligations under the terms of these agreements. 

     C. The authorized capital stock
of the Company consists of 47,000,000 shares of Common Stock and 36,114,943
shares of Preferred Stock, 1,114,943 of which are designated as Series AA
Preferred, 20,000,000 of which are designated as Series BB Preferred and
15,000,000 of which are designated as Series CC Preferred. Immediately prior to
the Closing there were
issued and outstanding 165,062 shares of Common Stock, 1,112,882 shares of Series AA Preferred Stock, no shares of Series BB Preferred Stock and no shares of Series CC Preferred Stock. All such issued and outstanding shares have been duly
authorized, validly issued and are fully paid and nonassessable. The Company has reserved 35,000,000 shares of Common Stock for issuance upon conversion of the Shares. There are 6,802,000 shares of Common Stock reserved for issuance under the
Company’s 2003 Stock Plan and 25,000 shares of Common Stock reserved for issuance under the Company’s 2000 Stock Plan. To the best of our knowledge, except as set forth in the Investment Agreements, the Schedule of Exceptions thereto, and
the Company’s Amended and Restated Certificate of Incorporation, there are no preemptive rights, options, warrants or conversion privileges (other than the conversion privileges of the Shares issued pursuant to the Agreement) or other rights in
writing (or agreements for any such rights) outstanding to purchase or otherwise obtain any of the Company’s securities. 

     D. The Shares, when issued, sold and delivered in accordance with the terms of the Agreement, will be validly issued, fully paid and nonassessable and will be free and clear of any liens or encumbrances. The shares of
Common Stock issuable upon conversion of the Shares have been duly and validly reserved and, upon issuance in accordance with the terms of the Agreement and the Amended and Restated Certificate of Incorporation, will be validly issued, fully paid
and nonassessable and will be free and clear of any liens or encumbrances, other than those imposed by holders thereof. However, the Shares (and the Common Stock issuable upon conversion of the Shares) may be subject to restrictions on transfer
under state and federal securities laws. 

     E. All corporate actions on the part of the Company and its directors and stockholders that are necessary for the authorization, execution, delivery and performance of the Investment Agreements by the Company, the
authorization, sale, issuance and delivery of the Shares (and the Common Stock issuable upon conversion of the Shares), and the performance of the Company’s obligations under the Investment Agreements have been taken. The Investment Agreements
have been duly and validly executed and delivered by the Company, and constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms. 

     F. The execution and delivery by the Company of the Investment Agreements, the performance by the Company of its obligations under the Investment Agreements, and the issuance of the Shares (and the Common Stock issuable
upon conversion thereof) do not violate any provision of the Amended and Restated Certificate of Incorporation or Bylaws, or any provision of any applicable federal or state law, rule or regulation known to us to be customarily applicable to
transactions of this nature. 

     G. To our knowledge, except as set forth in the Schedule of Exceptions to the Agreement, there are no actions, suits, proceedings or investigations pending against the Company or its properties before any court or
governmental agency (nor, to our knowledge, is there any written threat thereof), which, (either in any case or in the aggregate) if adversely determined, might result in any material adverse change in the business or financial condition of the
Company or which questions the validity of the Investment Agreements or any action taken or to be taken by the Company in connection therewith. Except as set forth in the Schedule of Exceptions to the Agreement, we are not aware that there is any
litigation pending against the Company or any of its officers, directors or
employees, or that any of the foregoing has received any threat thereof, by
reason of the proposed activities of the Company, the past employment
relationships of its officers, directors or employees, or negotiations by the
Company or any of its officers or directors with possible investors in the
Company or its business. 

     H. Other than in connection with
compliance with any securities laws (with respect to which we direct you to the
opinion in paragraph 9 below) no consent, approval, order or authorization of,
or designation, declaration or filing with, any federal, state or local
governmental authority on the part of the Company is required in connection with
the execution and delivery of the Investment Agreements, or the offer, sale or
issuance of the Shares (and the Common Stock issuable upon conversion of the
Shares) or the consummation of any other transaction contemplated by the
Investment Agreements. 

     I. Subject to the accuracy of
your representations set forth in Section 3 of the Agreement, the offer, sale
and issuance of the Shares (and the Common Stock issuable upon conversion of the
Shares) to you in conformity with the terms of the Agreement are exempt from the
registration requirements of Section 5 of the Securities Act of 1933, as amended
and qualification under California Corporate Securities Law of 1968, as amended.

          This
opinion is furnished to you solely for your benefit in connection with the
purchase of the Shares, and may not be relied upon by any other person or for
any other purposes without prior written consent. 

	 	Very truly yours, 
	 	 
	 	WILSON SONSINI GOODRICH & ROSATI 
	 	Professional Corporation 
	 	 
	 	/s/ Wilson, Sonsini, Goodrich & Rosati

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