Document:

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                                                            Exhibit 10.13

                          CLICKSERVICE SOFTWARE LIMITED

                                    RULES OF

                         UNAPPROVED SHARE OPTION SCHEME
                                  FOR EMPLOYEES

                                    DRAFT (2)

                                   BIRD & BIRD
                                 90 FETTER LANE
                                 LONDON EC4A 1JP

                               TEL: 0171 415 6000
                               FAX: 0171 415 6111

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                          CLICKSERVICE SOFTWARE LIMITED

                            SHARE OPTION SCHEME RULES

1.   DEFINITIONS

In these Rules of the Scheme the following words and expressions shall have the
following meanings:

"ADOPTION DATE" means the date on which the Scheme is adopted by the Company;

"APPROVED SCHEME" means the Approved Executive Share Option Scheme adopted by
the Company on [ ] 2000;

"ARTICLES" means the Articles of Association of the Company from time to time in
force;

"AUDITORS" means the auditors for the time being of the Company;

"BOARD" means the board of directors of the Company or a duly authorised
committee thereof appointed in accordance with Rule 11.2;

"COMPANY" means ClickService Software Limited;

"CONTROL" means control as defined in Section 840 of the Taxes Act;

"ELIGIBLE PERSON" means any person employed directly or indirectly by a member
or members of the Group under a contract of services or engaged under a contract
for services;

"EXERCISE PRICE" the price per Share payable on the exercise of an Option as
determined by the Board being a price not less than the nominal value of a
Share;

"GROUP" means the Company and all of the Subsidiaries and "MEMBER OF THE GROUP"
shall be construed accordingly;

"LISTING" means the listing of equity shares in the Company on a recognised
stock exchange (within the meaning of Section 841 of the Taxes Act);

"OPERATIVE PERIOD" means the period of ten years commencing on the Adoption
Date;

"OPTION" means a right to subscribe for Shares under the Scheme;

"PARTICIPANT" means an Eligible Person who has been granted an Option;

"RULES" means the rules of the Scheme contained in this document and Rule shall
be construed accordingly;

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"SALE" means the sale or transfer of more than fifty per cent. of the issued
ordinary share capital of the Company to another person or group of persons as a
result of a general offer made by such person or group of persons for the
acquisition of Shares or sales or transfers of Shares by private treaty by such
holders to such person or group of persons as part of a single transaction
involving a change of control in the Company;

"SCHEME" means the scheme contained in this document as from time to time
amended in accordance with the provisions hereof;

"SHARES" means Ordinary Shares and `A' Ordinary Shares of NIS 0.01 each in the
capital of the Company as defined in the Company's Articles. "SHARE" shall be
construed accordingly;

"SUBSIDIARY" a company which is a subsidiary of the Company within the meaning
of Section 736 of the Companies Act 1985 and which is under the Control of the
Company;

"SUBSISTING OPTION" means an option granted under this Scheme or the Approved
Scheme which has not lapsed or been exercised;

"TAXES ACT" means the Income and Corporation Taxes Act 1988;

"TERMINATION FOR CAUSE" means in relation to a Participant, termination of the
Participant's employment or engagement, as appropriate, with any member of the
Group in circumstances giving rise to summary dismissal or termination;

"VESTING COMMENCEMENT DATE" means, in relation to an Option, the second
anniversary of the date of grant of the Option or such other date that the Board
determines in relation to the Option and is specified in the option certificate
related to the relevant option; and

"2000 STOCK PLAN" means the 2000 Stock Plan adopted by the Company on [ ] 2000.

Any reference in these Rules to a statutory provision shall include a reference
to that provision as amended or re-enacted from time to time and any subordinate
legislation, orders or regulations made pursuant thereto. Where the context
permits the singular shall include the plural and vice versa and the masculine
gender shall include the feminine.

2.   ELIGIBILITY

     2.1  Subject to the following provisions of this Rule 2, the Board shall
have an absolute discretion as to the selection of persons to whom an Option is
granted by the Company.

     2.2  An Option shall not be granted to any person unless he is an Eligible
Person.

     2.3  An Option shall be personal to the Participant to whom it is granted
and may not be transferred to or exercised by any other person other than his
personal representatives.

3.   GRANT OF OPTIONS

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     3.1  An Option may, subject to Rule 2, be granted to a Participant at such
times and on such terms as the Board shall in its absolute discretion determine.

     3.2  No Option may be granted after the expiry of the Operative Period.

     3.3  An Option shall be granted by the Company executing as a deed and
issuing to the Participant an option certificate which contains an undertaking
by the Participant (duly executed as a deed) to be bound by the rules of this
Scheme and which specifies:

          (a)  the date of grant of the Option;

          (b)  the number of Shares in respect of which the Option is granted;

          (c)  the Exercise Price;

          (d)  the date(s) on which the Option may be exercised and the extent
to which the Option may be exercised on any such date;

          (e)  any performance-related conditions imposed pursuant to Rule 8 to
which the Option is subject;

          (f)  that the Participant agrees to indemnify each member of the Group
in respect of any tax liability falling within Rule 5.5,

          and is otherwise in such form as the Board may from time to time
determine.

     3.4  A Participant shall be entitled to renounce, surrender or cancel, or
agree to the cancellation of, an Option within the period of 30 days immediately
following the date of grant and if any Option is so renounced, surrendered or
cancelled it shall be deemed for the purposes of this Scheme never to have been
granted.

     3.5  An Option shall not be granted by any person other than the Company
without the prior approval of the Board.

4.   EXERCISE PRICE

          The Exercise Price shall be determined by the Board at the date of
grant.

5.   EXERCISE OF OPTIONS

     5.1  NOTICE OF EXERCISE

          An Option shall only be exercised by a Participant within such period
as may be applicable by virtue of the terms on which the Option was granted and
the provisions of Rule 7 and 8 below and subject thereto the exercise shall be
effected in such form and manner as the

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Board may from time to time prescribe. In the absence of the Board prescribing
to the contrary a Participant shall exercise an Option by his giving to the
Company at its registered office prior notice in writing signed by the
Participant, which notice shall specify the number of Shares (which shall be a
multiple of 100 or be equal to the balance of the Shares remaining subject to
the Option) in respect of which the Option is being exercised and shall be
accompanied both by payment in full of the aggregate Exercise Price for the
Shares in respect of which the Option is exercised and the option certificate
evidencing the grant of the relevant Option for cancellation or amendment. The
date of receipt of such notice shall (in the absence of the Board prescribing
otherwise) be deemed to be the date of exercise of the Option or of the relevant
portion of the Option, as the case may be.

     5.2  ALLOTMENT

          The Company shall enter the Participant in the Company's register of
members as the holder of the appropriate number of Shares within thirty days
after the date of exercise of the Option (the date of such entry being, for the
purposes of Rule 5.3 below, the ("DATE OF ALLOTMENT") and (provided that the
Company issues share certificates) the Company shall deliver to the Participant
a definitive share certificate in respect thereof.

     5.3  RIGHTS OF SHARES

          Any Shares issued pursuant to Rule 5.2 above shall rank pari passu in
all respects and form a uniform class with the Shares in issue on the date of
allotment save that they shall not rank for or be entitled to any dividend or
other distribution or any issue of Shares by way of capitalization of profits or
reserves or any issue of securities by way of rights which under the terms of a
resolution passed by the Company is to be or is proposed to be paid or made to
the holders of Shares on the register on a date prior to the date of allotment.
The Shares shall be issued subject to the Articles.

     5.4  LISTING

          The Company shall at its expense make application to the relevant
recognised stock exchange for the admission to Listing of all Shares allotted
pursuant to the exercise of any Option if Shares are then subject to a Listing.

     5.5  CONDITION PRECEDENT

          No Option may be exercised until the Participant has put the Company
in sufficient funds (which shall be determined by the Company) to meet any
obligation of the Company to account for income tax chargeable under the PAYE
system or employee's national insurance contributions in relation to the
exercise of such Option. The Company shall use reasonable endeavours (with the
Participant's assistance if required) to agree with the Inland Revenue the
amount of any such income tax or other liability in advance of any shares being
issued to the Participant following exercise of an Option. In the event that any
funds made available are less than or greater than the amount needed to meet any
obligation of the Company to account for income tax or other amounts that are
chargeable

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under the PAYE system in relation to the exercise of such Option, an appropriate
payment shall be made by the Participant to the Company, or vice versa, as
appropriate.

6.   LIMITATIONS ON GRANTS

          No options shall be granted pursuant to Rule 3 if such grant would
result in the aggregate of:

          (a)  the number of Shares over which Subsisting Options have been
granted under the Scheme after [date], the Approved Scheme and the 2000 Stock
Plan; and

          (b) the number of Shares which have been issued on the exercise of
Options granted under the Scheme after [date], the Approved Scheme and the 2000
Stock Plan,

          exceeding [3,000,000] Shares.

7.   TIME FOR EXERCISE OF OPTIONS

     7.1  Subject to the other provisions of this Rule 7 and Rule 8 and subject
to the terms on which the Option was granted providing otherwise, the Option may
not be exercised prior to the Vesting Commencement Date, whereupon one half of
the number of Shares the subject of the Option may be exercised, and thereafter
the Option may be exercised on the following basis:

          n = a+24  x b
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          Where   n    is the number of Shares over which the Option may be
                       exercised on any date (the "EXERCISE DATE");

                  a    is the number of complete months between the Vesting
                       Commencement Date and the Exercise Date; and

                  b    is the number of shares subject to the Option.

     7.2  If a Participant shall cease to be an Eligible Person by reason of
circumstances giving rise to Termination for Cause the Option shall lapse and
become of no effect.

     7.3  If a Participant shall cease to be an Eligible Person otherwise than
by reason of circumstances giving rise to Termination for Cause, the Participant
(or his successors) may, subject to Rule 7.1 and Rule 8, exercise his Options to
the extent not previously exercised by the Participant within two months of such
cessation and to the extent not exercised after the end of that period the
Option shall lapse and become of no effect.

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     7.4  For the purposes of this Rule 7 where a Participant's employment is
terminated without notice he shall cease to be an Eligible Person on the date on
which the termination takes effect and where the employment is terminated with
notice he shall cease to be an Eligible Person on the date on which such notice
is given.

     7.5  An Option may not be exercised later than ten years after the date on
which it was granted and, to the extent unexercised after the expiry of that
period, it shall lapse and become of no effect.

8.   PERFORMANCE-RELATED CONDITIONS OF EXERCISE

     8.1  The exercise of an Option shall be conditional upon the performance of
the Company and, if the Board so determines, upon the performance of a
Subsidiary and/or the Participant over such period and measured against such
objective criteria as shall be determined by the Board and notified to the
Participant when the Option is granted. If no such objective criteria are
notified to the Participant when the Option is granted, this Rule 8 shall not
apply in relation to the Option.

     8.2  Any such condition may provide that the Option shall become vested in
respect of a given number or proportion of the Shares over which it subsists
according to whether, and the extent to which, any given performance target is
met or exceeded.

     8.3  After an Option has been granted the Board may, in appropriate
circumstances, amend any performance-related condition of exercise of an option
PROVIDED THAT no such amendment shall be made unless an event has occurred or
events have occurred in consequence of which the Board reasonably considers,
having due regard to the interests of the shareholders of the Company, that the
terms of the existing performance-related condition(s) of exercise of the Option
should be so varied for the purposes of ensuring that either the objective
criteria against which the performance of the Company and/or any Subsidiary
and/or the Participant will then be measured will be a fairer measure of such
performance or that any amended performance condition will afford a more
effective incentive to the Participant and will be no more difficult to satisfy
than were the original condition(s) when first set.

     8.4  If, in consequence of a performance condition being met, an Option
becomes vested in respect of some but not all of the number of Shares over which
it subsists it shall thereupon lapse and cease to be exercisable in respect of
the balance of the Shares over which it was held.

9.   VARIATIONS IN THE SHARE CAPITAL OF THE COMPANY

     9.1  VARIATION OF CAPITAL

          If at any time after the date of grant of an Option and before it
ceases to be exercisable there is a variation of the share capital of the
Company which involves the Shares by reason of:

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          9.1.1 a capitalization of reserves; or

          9.1.2 a reduction, sub-division, consolidation or reclassification of
capital, the Exercise Price and/or the number of Shares in respect of which the
Option may be exercised shall be adjusted to such extent and in such manner as
the Auditors shall in their opinion consider and confirm in writing to the Board
to be fair and reasonable, but so that the aggregate Exercise Price payable on
the exercise of an Option previously granted under these Rules shall not be
increased thereby.

     9.2  NOTIFICATION

          All Participants shall be notified in writing of any such adjustments
as soon as practicable thereafter and the Company shall be entitled to call in
the instruments evidencing the grant of the Options affected by such adjustments
for endorsement or replacement, as may appear appropriate.

10.  OPTION ROLL-OVER

     10.1 In the event of a Sale any Participant may at any time within the
applicable period during which Options may be exercised, by agreement with the
Acquiror or other relevant company, release any Option in whole or in part which
has not lapsed ("THE OLD OPTION") in consideration of the grant to him of an
Option ("THE NEW OPTION") which is equivalent to the Old Option but relates to
shares in a different company (whether the Acquiror or some other company).

     10.2 The New Option shall be regarded for the purposes of this Rule 10 as
equivalent to the Old Option and the provisions of this Scheme shall be
construed as if:

          (a)  the New Option were an option granted under the Scheme at the
same time as the Old Option,

          (b)  the reference in the definition of the "Company" in Rule 1 were a
reference to the different company referred to in Rule 10.1,

          (c)  any conditions imposed on the exercise of Options under Rule
3.3(e) shall be regarded as varied in accordance with such terms as shall be
specified by the Acquiror or other relevant company with the agreement of the
Board.

     10.3 For the purposes of this Rule 10, a sale shall be treated as taking
effect on the date on which the agreement(s) for the relevant sales or transfers
is (are) or become(s) unconditional in all respects.

11.  ADMINISTRATION OF THE SCHEME

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     11.1 GENERAL

          The Scheme shall in all respects be administered under the direction
of the Board. The Board may make such rules for the conduct of the Scheme, not
being inconsistent with the provisions of these Rules, as it shall think fit.
Any dispute regarding the interpretation of the Scheme or the terms of any
Option shall be determined by the Board (after seeking such advice as it shall
consider necessary) and its decision shall be final and binding.

     11.2 COMMITTEE

          The Board may delegate all or any of its powers in relation to the
Scheme to a duly authorized committee of the Board.

     11.3 AUTHORISED SHARE CAPITAL

          The Company shall at all times maintain an amount of authorised and
unissued Shares sufficient to satisfy outstanding Options under the Scheme.

     11.4 ARTICLES OF ASSOCIATION

          The provisions of the Company's Articles of Association for the time
being with regard to the service of notices upon members of the Company shall
apply mutatis mutandis to any notice to be given by the Company to Participants
under the Scheme and all notices to be given to the Company under the Scheme
shall be delivered or sent by post to the Company at its registered office.

     11.5 TRUSTEES

          Any member of the Group may provide money to the trustees of any trust
or any other person to enable it, him or them to acquire Shares to be held for
the purposes of the Scheme, to enter into any guarantee or indemnity for these
purposes, to the extent permitted by Section 153 of the Companies Act 1985.

     11.6 COPIES OF DOCUMENTS

          The Participants shall be entitled to receive, upon request, copies of
all accounts, circulars, and notices sent to holders of Shares.

12.  AMENDMENT OF THE SCHEME

     12.1 RESOLUTION OF THE BOARD

          The Board shall at any time be entitled to amend by resolution all or
any of the provisions of the Scheme provided that no amendment to the Scheme
shall be made which would prejudice the subsisting rights of existing
Participants in any manner without the prior written consent of existing
Participants entitled to exercise Options in respect of at least

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three quarters of the total number of Shares over which Options shall at that
time be subsisting;

     12.2 NOTIFICATION

          On any such amendment being made by the Board all Participants shall
be notified in writing as soon as practicable thereafter.

     12.3 TERMINATION

          The Board or the Company in General Meeting shall be entitled by
resolution to terminate the Scheme at any time but Options previously granted
shall continue to be valid and exercisable in accordance with the provisions of
the Scheme.

13.  ADDITIONAL PROVISIONS

     13.1 CONFLICT

          Every Option shall be subject to the condition that no Shares shall be
issued to a Participant following the exercise of an Option if such issue would
be contrary to any enactment or regulation for the time being in force of the
United Kingdom or of any other country having jurisdiction in relation thereto.
The Company shall not be bound to take any action to obtain the consent of any
governmental authority to such issue or to take any action to ensure that any
such issue shall be in accordance with any such enactment or regulation if such
action could in the opinion of the Board be unduly onerous.

     13.2 EMPLOYMENT

          The rights and obligations of a Participant under his terms of
employment with any member of the Group shall not be affected by his
participation in the Scheme and the Scheme shall not afford to a Participant any
additional right to compensation in consequence of the termination of his
employment for any reason whatsoever.

     13.3 AUDITORS

          In any matter in which they are required to act under these Rules the
Auditors shall be deemed to be acting as experts and not as arbitrators.

     13.4 GOVERNING LAW

          The Scheme shall be governed by and interpreted in accordance with
English Law.

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          CLICKSERVICE SOFTWARE LIMITED UNAPPROVED SHARE OPTION SCHEME
                               OPTION CERTIFICATE

Name of Optionholder:
                          ------------------------------------------------------
Address of Optionholder:
                          ------------------------------------------------------

                          ------------------------------------------------------
Date of Grant
                          ------------------------------------------------------
Max. No Shares:
                          ------------------------------------------------------
Exercise Price:
                          ------------------------------------------------------

ClickService Software Limited HEREBY GRANTS to the Optionholder named above an
Option to subscribe the above number of Shares in the Company at the above
Exercise Price.

This Option is exercisable subject to and in accordance with the rules of
ClickService Software Limited Share Option Scheme (the "SCHEME") as they are
amended from time to time. It is exercisable in accordance with the performance
conditions and the limitations on exercise contained in Part A and Part B
respectively of the Schedule (if any) to this Option Certificate and the rules
of the Scheme (and in particular Rule 7). In accordance with Rule 7.5, the
Option may not in any event be exercised later than the tenth anniversary of the
Date of Grant shown above.

To exercise the Option the Optionholder should complete the Notice of Exercise
on the reverse side of this Option Certificate.

The Option is not transferable.

EXECUTED AS A DEED by           Director
                                                    ----------------------------
CLICKSERVICE SOFTWARE
LIMITED
acting by:                      Secretary/Director
                                                    ----------------------------

I HEREBY AGREE to accept the grant of this Option and agree and undertake:

(1)  to be bound by their terms and conditions set out in the rules of the
     ClickService Software Limited Share Option Scheme and the terms and
     conditions of exercise set out in the Appendix to this Option Certificate;

(2)  that to the extent any tax liability falling within Rule 5.5 of the Scheme
     has not been deducted from my salary in the relevant month, my employing
     company is authorised to make deductions from subsequent salary payments
     and to apply the amounts so deduced in reimbursing the person which has
     accounted for such liability;

(3)  to indemnify the Company and each company in the Group in respect of any
     liability falling within (2) above.

SIGNED but not delivered until the date hereof      )
AS A DEED by                                        )
            -----------------------------------
in the presence of:                           )
                                                    ----------------------------
                                                      (Optionholder signature)
Witness signature:
                       --------------------------
Witness name (print)
                       --------------------------

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

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

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

Occupation:
                       --------------------------

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                                    SCHEDULE

                                     PART A
                             PERFORMANCE CONDITIONS

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                                     PART B
                           LIMITATIONS AS TO EXERCISE

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           CLICKERVICE SOFTWARE LIMITED UNAPPROVED SHARE OPTION SCHEME
                          NOTICE OF EXERCISE OF OPTION

To:  Company Secretary
     ClickService Software Limited

I hereby exercise the Option referred to overleaf in respect of ________________
of the Shares over which the Option may be exercised, and request the allotment
or transfer to me of those Shares in accordance with the rules of the Scheme and
the Articles of Association of the Company.

I enclose a cheque made payable to ClickService Software Limited in the sum of
$______________ being the aggregate Exercise Price of such Shares.

Name (block letters)                         Signature

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

Address

--------------------------------------       Date
                                                 -------------------------------
--------------------------------------

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

NOTES:

1.   This form must be accompanied by payment of the Exercise Price for the
     Shares in respect of which the Option is exercised.

2.   The Option may not be exercised in respect of less than 100 Shares or (if
     less) all of the Shares over which the Option subsists.

3.   The Scheme has not been approved by the Inland Revenue. There is no charge
     to income tax on the receipt of a right to acquire Shares under such a
     scheme. Under current tax rules a charge to tax will arise on the exercise
     of the Option on the difference between the market value of the Shares at
     the date of exercise and the price paid for them.

4.   IMPORTANT The Company does not undertake to advise you on the tax
     consequences of exercising your Option. If you are unsure of the tax
     liabilities which may arise, you should take appropriate professional
     advice before exercising your Option.

                                       14<PAGE>   1
                                                                    Exhibit 4.02

                              TALARIAN CORPORATION

                              AMENDED AND RESTATED
                           INVESTORS' RIGHTS AGREEMENT

            This Amended and Restated Investors' Rights Agreement ("Agreement")
is entered into as of February 3, 2000 by and among TALARIAN CORPORATION, a
California corporation (the "Company"), those persons purchasing shares of the
Company's Series D Preferred Stock (the "Series D Stock") listed on Exhibit A
hereto (the "Investors"), those holders of the Company's Series C Preferred
Stock ("Series C Stock") listed on Exhibit B hereto (the "Series C Purchasers"),
those holders of the Company's Series B Preferred Stock ("Series B Stock")
listed on Exhibit B hereto (the "Series B Purchasers"), those holders of the
Company's Series A Preferred Stock ("Series A Stock") listed on Exhibit B hereto
(the "Series A Purchasers"), Dominion Ventures, Inc. ("DVI"), Unitechnic, S.A.
("Unitechnic") and Silicon Valley Bank ("SVB").

                                 R E C I T A L S

            A. Pursuant to an Amended and Restated Investors' Rights Agreement
dated November 30, 1995, as amended, (the "Prior Agreement") the Company granted
certain information, registration and first refusal rights to the Series A
Purchasers, the Series B Purchasers and the Series C Purchasers and certain
registration rights to DVI, Unitechnic and SVB.

            B. Pursuant to a Series D Preferred Stock Purchase Agreement dated
of even date herewith (the "Series D Agreement") the Company is issuing shares
of Series D Stock to the Investors.

            C. Pursuant to the Series D Agreement the Company is to provide the
Investors with the same information, registration and first refusal rights
provided to the Series A Purchasers, Series B Purchasers, and Series C
Purchasers.

            D. The parties desire to enter into this Agreement to set forth the
information, registration and first refusal rights of the Series A Purchasers,
Series B Purchasers, Series C Purchasers and the Investors, and registration
rights of DVI, Unitechnic and SVB in one agreement that will supersede the Prior
Agreement.

                                    AGREEMENT

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

            The Company covenants and agrees as follows:

            (a) Annual and Quarterly Reports. For so long as any Series A
Purchaser, Series B Purchaser, Series C Purchaser or Investor (together, the
"Purchasers", and individually a "Purchaser") holds any shares of Series A
Stock, Series B Stock, Series C Stock, Series D Stock, or any shares of Common
Stock issuable upon conversion of such shares of Series A Stock, Series B Stock,
Series C Stock, or Series D Stock the Company will furnish to such Purchaser:

                  (i) Within ninety (90) days after the end of each fiscal year,
an audited balance sheet as of the end of such fiscal year, an audited statement
of operations, and an audited statement of cash flows of the Company for such
year, setting forth in each case in comparative form the figures from the
previous fiscal year, all prepared in accordance with generally accepted
accounting principles; and

                  (ii) Within forty-five (45) days of the end of each fiscal
quarter (except the last quarter of the fiscal year), quarterly unaudited
financial statements, including an unaudited balance sheet, an unaudited
statement of operations and an unaudited statement of cash flows, prepared in
accordance with generally accepted accounting principles, except for footnotes
and normal year-end adjustments.

            (b) Additional Information. For so long as any Purchaser holds at
least 40,000 shares of Series A Stock, Series B Stock, Series C Stock, or Series
D Stock in any combination, or an equivalent number of shares of Common Stock
issued upon conversion of such shares of Series A Stock, Series B Stock, Series
C Stock, or Series D Stock, the Company will furnish to such Purchaser:

                  (i) As soon as practicable after the end of each month, and in
any event within thirty (30) days thereafter (except the last month of the
fiscal year), monthly unaudited financial statements, including an unaudited
balance sheet, statement of operations and statement of cash flows, prepared in
accordance with generally accepted accounting principles, except for footnotes
and normal year-end adjustments, and setting forth a comparison of the financial
results for each month with the results projected in the Company's annual plan
to be provided pursuant to Section 1(b)(ii) below, with a narrative explaining
any material variations; and

                  (ii) Not later than thirty (30) days prior to the beginning of
each fiscal year, an annual plan for such year which shall include a projected
balance sheet, statement of operations and statement of cash flows for each
month of the year, itemized in such detail as management may reasonably
determine.

            (c) Exception. Anything in this Section 1 to the contrary
notwithstanding, no Purchaser by reason of this Agreement shall have any right
to access any technical trade secrets or technical classified information of the
Company. Each Purchaser hereby agrees to hold in confidence and trust and not to
misuse or disclose any confidential information provided pursuant to this
Section 1.

                                      -2-
<PAGE>   3
            (d) Termination of Rights. The obligation to provide the items and
rights described above will terminate upon consummation of the Company's initial
public offering of securities pursuant to an effective registration statement
filed under the Securities Act of 1933, as amended (the "Securities Act").

      2.    REGISTRATION RIGHTS.

            2.1 Definitions. For purposes of this Section 2:

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

                  (b) The term "Registrable Securities" means (1) any Common
Stock issued or issuable upon conversion of any (i) Series A Stock issued
pursuant to those certain Stock Purchase Agreements dated January 1, 1990 or
February 22, 1991, (ii) Series B Stock issued pursuant to that certain Series B
Preferred Stock Purchase Agreement dated March 24, 1992, (iii) Series C Stock
issued pursuant to that certain Stock Purchase Agreement dated February 28,
1994, (iv) Series C Stock issued pursuant to that certain Stock Purchase
Agreement dated November 30, 1995, (v) Series D Stock issued pursuant to the
Series D Agreement, (vi) Series A Stock issuable upon exercise of the warrants
held by DVI, or (vii) Series B Stock issuable upon exercise of the warrants held
by each of Unitechnic and SVB (such warrants described in (vi) and (vii)
collectively are hereinafter referred to as the "Warrants", and all of such
Common Stock is hereinafter referred to as the "Conversion Shares"), and (2) any
Common Stock of the Company (or any corporation into which the Company merges
for purposes of changing its state of incorporation) issued as (or issuable upon
the conversion or exercise of any warrant, right or other security which is
issued as) a dividend or other distribution with respect to, or in exchange for
or in replacement of, such securities; excluding in all cases, however, any
Registrable Securities (i) sold to the public, or (ii) sold or otherwise
transferred by a person in a transaction in which the rights under this Section
2 are not assigned or assignable.

                  (c) The number of shares of "Registrable Securities then
outstanding" shall be the number of shares of Common Stock which are Registrable
Securities and (1) are then issued and outstanding or (2) are then issuable
pursuant to then exercisable or convertible securities.

                  (d) The term "Holder" means any person who holds Registrable
Securities; provided, however, that for purposes of this Agreement, a record
holder of securities convertible into or exercisable for Registrable Securities,
directly or indirectly, shall be treated as the holder of such Registrable
Securities; and provided, further, that holders of Registrable Securities will
not be required to convert shares of Series A Stock, Series B Stock, Series C,
or Series D Stock into Common Stock, or exercise the Warrants, in order to
exercise registration rights granted hereunder, until immediately before the
closing of the offering to which the registration relates.

                                      -3-
<PAGE>   4
                  (e) The term "Form S-3" means such form under the Securities
Act as is in effect on the date hereof or any successor registration form under
the Securities Act subsequently adopted by the SEC which permits inclusion or
incorporation of substantial information by reference to other documents filed
by the Company with the SEC.

                  (f) The term "SEC" or "Commission" means the Securities and
Exchange Commission.

            2.2   Demand Registration.

                  (a) If the Company shall receive at any time (but not within
six months of the effective date of (i) a registration in which Registrable
Securities were registered hereunder, or (ii) the initial public offering of the
Company's securities pursuant to a registration statement filed with and
declared effective by the Securities Exchange Commission), a written request
from the Holders of at least fifty percent (50%) of the Registrable Securities
then outstanding that the Company file a registration statement under the
Securities Act covering the registration of Registrable Securities having an
anticipated aggregate offering price of $4,000,000 or more, then the Company
shall, within ten (10) days of the receipt thereof, give written notice of such
request (the "Company Notice") to all Holders, and subject to the limitations of
subsection 2.2(b), effect, as soon as practicable, the registration under the
Securities Act of all Registrable Securities which each Holder requests to be
registered in a written notice given to the Company within 30 days after the
Company Notice is given.

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

                  (c) The Company is obligated to effect only one (1) such
registration pursuant to this Section 2.2.

                                      -4-
<PAGE>   5
                  (d) Notwithstanding the foregoing, if the Company shall
furnish to 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 of Directors of the Company, it would be
seriously detrimental to the Company and its shareholders for such registration
statement to be filed and it is therefore essential to defer the filing of such
registration statement, the Company shall have the right to defer such filing
for a period of not more than one hundred twenty (120) days after receipt of the
request of the Initiating Holders; provided, however, that the Company may not
utilize this right more than once in any twelve (12) month period.

                  (e) All expenses incurred in connection with a registration
pursuant to this Section 2.2 (excluding underwriters' discounts and
commissions), including without limitation all registration and qualification
fees, printers' and accounting fees, fees and disbursements of counsel for the
Company, and the reasonable fees and disbursements of one counsel for the
selling Holders, shall be borne by the Company; provided, however, that the
Company shall not be required to pay for any expenses of any registration
proceeding begun pursuant to Section 2.2 if the registration request is
subsequently withdrawn, unless the Holders agree to forfeit their right to a
demand registration pursuant to this Section 2.2 or unless such withdrawal is a
result of the Holders learning of material adverse information about the Company
of which they were not aware at the time of the registration request.

            2.3 Piggyback Registrations. The Company shall notify all Holders of
Registrable Securities in writing at least thirty (30) days prior to filing any
registration statement under the Securities Act for purposes of a public
offering of securities of the Company (including, but not limited to,
registration statements relating to secondary offerings of securities of the
Company, but excluding registration statements relating to employee benefit
plans and corporate reorganizations) and will afford each such Holder an
opportunity to include in such registration statement all or part of such
Registrable Securities held by such Holder. Each Holder desiring to include in
any such registration statement all or any part of the Registrable Securities
held by it shall, within twenty (20) days after receipt of the above described
notice from the Company, so notify the Company in writing, which notice shall
state the intended method of disposition of the Registrable Securities by such
Holder. If a Holder decides not to include all of its Registrable Securities in
any given registration statement filed by the Company, such Holder shall
nevertheless continue to have the right to include any Registrable Securities in
any subsequent registration statement or registration statements as may be filed
by the Company with respect to offerings of its securities, all upon the terms
and conditions set forth herein.

                  (a) If the registration statement under which the Company
gives notice under this Section 2.3 is for an underwritten offering, the Company
shall so advise the Holders of Registrable Securities. In such event, the right
of any such Holder to be included in a Registration pursuant to this Section 2.3
shall be conditioned upon such Holder's participation in such underwriting and
the inclusion of such Holder's Registrable Securities in the underwriting to the
extent provided herein. All Holders proposing to distribute their Registrable
Securities through such underwriting shall enter into an underwriting agreement
in customary form with the underwriter or underwriters selected for such
underwriting. Notwithstanding any other provision of this Agreement, if the
underwriter determines in good faith that marketing factors require a limitation
of the number of shares to be underwritten, the number of shares that may be
included

                                      -5-
<PAGE>   6
in the underwriting shall be allocated as follows: first, to the Company; and
second, to the Holders on a pro rata basis based on the total number of
Registrable Securities held by the Holders; provided however, that the right of
the underwriters described above shall be restricted so that the number of
Registrable Securities included in any registration is not reduced below 25% of
the shares included in the registration, except for a registration relating to
the Company's initial public offering from which all Registrable Securities may
be excluded. 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 five (5) days prior to the effective date of
the registration statement. Any Registrable Securities excluded or withdrawn
from such underwriting shall be withdrawn from the registration.

                  (b) All expenses incurred in connection with a registration
pursuant to this Section 2.3 (excluding underwriters' discounts and
commissions), including, without limitation all registration and qualification
fees, printers' and accounting fees, fees and disbursements of counsel for the
Company, and the reasonable fees and disbursements of one counsel for the
selling 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 Registrable Securities 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, the Company will:

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

                  (b) as soon as practicable, effect such registration and all
such qualifications and compliances as may be so requested and as would permit
or facilitate the sale and distribution of all or such portion of such Holder's
or Holders' Registrable Securities as are specified in such request, together
with all or such portion of the Registrable Securities of any other Holder or
Holders joining in such request as are specified in a written request given
within fifteen (15) days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect any such
registration, qualification or compliance pursuant to this Section 2.4: (1) if
Form S-3 is not available for such offering by the Holders; (2) if the Holders,
together with the holders of any other securities of the Company entitled to
inclusion in such registration, propose to sell Registrable Securities and such
other securities (if any) at an aggregate price to the public of less than
$1,000,000; (3) if the Company shall furnish to the Holders a certificate signed
by the President of the Company stating that in the good faith judgment of the
Board of Directors of the Company, it would be seriously detrimental to the
Company and its shareholders for such Form S-3 Registration to be effected at
such time, in which event the Company shall have the right to defer the filing
of the Form S-3 registration statement once during any twelve month period for a
period of not more than one hundred twenty (120) days after receipt of the
request of the Holder or Holders under this Section 2.4; (4) if the Company has,
within the twelve (12) month period preceding the date of such request, already
effected one registration on Form S-3 for the Holders pursuant to this Section
2.4; or (5) in any particular jurisdiction in which the Company would be
required to qualify to do business or to execute a general consent to service of
process in effecting such registration, qualification or compliance.

                                      -6-
<PAGE>   7
                  (c) Subject to the foregoing, the Company shall file a Form
S-3 registration statement covering the Registrable Securities and other
securities so requested to be registered as soon as practicable after receipt of
the request or requests of the Holders. The Company shall pay all expenses
incurred in connection with the first two registrations requested pursuant to
this Section 2.4, (excluding underwriters' discounts and commissions), including
(without limitation) all registration, filing, qualification, printers' and
accounting fees and the reasonable fees and disbursements of one counsel for the
selling Holder or Holders and counsel for the Company. All expenses incurred in
connection with any subsequent registration requested pursuant to this Section
2.4 shall be borne by the Holders in proportion to the number of Registrable
Securities owned by the Holders included in such registration at the time it
goes effective.

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

                  (a) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective, and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder, keep
such registration statement effective for up to ninety (90) days, provided
however, in the event of an underwritten initial public offering, the Company
shall keep such registration effective until the completion of the distribution
of the securities registered in such offering, or for one hundred twenty (120)
days from the date of effectiveness, whichever is earlier;

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

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

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

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

                  (f) Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered

                                      -7-
<PAGE>   8
under the Securities Act of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing.

                  (g) Furnish, at the request of any Holder requesting
registration of Registrable Securities pursuant to Section 2.2, Section 2.3, or
Section 2.4, on the date that such Registrable Securities are delivered to the
underwriters for sale in connection with such registration, 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 such date, of the
counsel representing the Company for the purposes of such registration, in form
and substance as is customarily given to underwriters, if any, and to the
Holders requesting registration of Registrable Securities and (ii) a letter
dated such date, from the independent certified public accountants of the
Company, in form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public offering, addressed
to the underwriters, if any, and to the Holders requesting registration of
Registrable Securities.

            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 effect the
registration of their Registrable Securities.

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

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

                  (a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, the partners, officers 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 Securities Act or the Securities Exchange Act of 1934, as amended (the
"1934 Act"), against any losses, claims, damages, or liabilities (joint or
several) to which they may become subject under the Securities Act, the l934 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 therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading; or (iii) any violation or alleged violation by the
Company of the Securities Act, the 1934 Act, any state securities law or any
rule or regulation promulgated under the Securities Act, the 1934 Act or any
state securities law in connection with the offering covered by such
registration statement. The Company will reimburse each such

                                      -8-
<PAGE>   9
Holder, partner, officer or director, underwriter or controlling person for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided however, that the indemnity agreement contained in this subsection
2.8(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), nor shall the
Company be liable in any such case for any such loss, claim, damage, liability
or action to the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by such Holder, partner,
officer, director, underwriter or controlling person of such Holder.

                  (b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who 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, 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 1934 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 2.8(b) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Holder, which consent
shall not be unreasonably withheld, provided further, that in no event shall any
indemnity under this Section 2.8(b) exceed the gross proceeds from the offering
received by such Holder.

                  (c) Promptly after receipt by an indemnified party under this
Section 2.8 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 2.8, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party

                                      -9-
<PAGE>   10
under this Section 2.8, 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 2.8.

                  (d) The foregoing indemnity agreements of the Company and
Holders are subject to the condition that, insofar as they relate to any
Violation made in a preliminary prospectus but eliminated or remedied in the
amended prospectus on file with the SEC at the time the registration statement
in question becomes effective or the amended prospectus filed with the SEC
pursuant to SEC Rule 424(b) (the "Final Prospectus"), such indemnity agreement
shall not inure to the benefit of any person if a copy of the Final Prospectus
was furnished to the indemnified party and was not furnished to the person
asserting the loss, liability, claim or damage at or prior to the time such
action is required by the Securities Act.

                  (e) The obligations of the Company and Holders under this
Section 2.8 shall survive the completion of any offering of Registrable
Securities in a registration statement, and otherwise.

            2.9 "Market Stand-Off" Agreement. Each Holder hereby agrees that it
shall not, to the extent requested by the Company or an underwriter of
securities of the Company, sell or otherwise transfer or dispose of any
Registrable Securities (other than to donees or partners of the Holder who agree
to be similarly bound) for up to one hundred eighty (180) days following the
effective date of a registration statement of the Company filed under the
Securities Act; provided, however, that:

                  (a) such agreement shall be applicable only to the first such
registration statement of the Company which covers securities to be sold on its
behalf to the public in an underwritten offering but not to Registrable
Securities sold pursuant to such registration statement; and

                  (b) all officers, directors and ten percent (10%) shareholders
of the Company as of the date of filing the registration statement enter into
similar agreements.

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

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

                  (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 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;

                                      -10-
<PAGE>   11
                  (b) File with the Commission in a timely manner all reports
and other documents required of the Company under the Securities Act and the
1934 Act (at any time after it has become subject to such reporting
requirements); and

                  (c) So long as a Holder owns any Registrable Securities to
furnish to the Holder forthwith upon request a written statement by the Company
as to its compliance with the reporting requirements of said Rule 144 (at any
time after ninety (90) days after the effective date of the first registration
statement filed by the Company for an offering of its securities to the general
public), and of the Securities Act and the 1934 Act (at any time after it has
become subject to such reporting requirements), a copy of the most recent annual
or quarterly report of the Company, and such other reports and documents 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.

            2.11 Termination of the Company's Obligations. The Company shall
have no obligations pursuant to Sections 2.2 through 2.4 with respect to any
request or requests made by any Holder on a date more than five (5) years after
the closing date of the Company's initial public offering.

      3. Right of First Offer. Subject to the terms and conditions specified in
this Section 3, the Company hereby grants to each Purchaser (so long as such
Purchaser holds either (i) at least 50% of the shares of Series A Stock held by
him or her as of February 22, 1991, or the Common Stock issued on conversion
thereof, in any combination, or (ii) at least 100,000 shares of the Series A
Stock, Series B Stock, Series C Stock, or Series D Stock in any combination, or
an equivalent number of shares of Common Stock issued upon conversion of such
Series A Stock, Series B Stock, Series C Stock, or Series D Stock) a right of
first refusal with respect to future sales by the Company of its Shares (as
hereinafter defined). For purposes of this Section 3, Purchaser includes any
partners and affiliates of a Purchaser. A Purchaser shall be entitled to
apportion the right of first offer hereby granted among itself, its partners and
affiliates in such proportions as it deems appropriate.

      Except as set forth in Section 3(d), each time the Company proposes to
issue any shares of, or securities convertible into, or exercisable for, any
shares of any class of its capital stock ("Shares") after the effective date of
this Agreement, the Company shall make an offering of such Shares to each
Purchaser in accordance with the following provisions:

                  (a) The Company shall deliver a notice pursuant to Section
5(a) ("Notice") to each of the Purchasers stating (i) its bona fide intention to
issue such Shares, (ii) the number of such Shares to be issued, and (iii) the
price, if any, for which it proposes to issue such Shares.

                  (b) Each Purchaser shall have fifteen (15) calendar days after
mailing of the Notice to agree in writing to purchase, at the price and on the
terms specified in the Notice, up to that portion of such Shares which equals
the proportion of (x) the number of shares of Common Stock then held by such
Purchaser, plus the number of shares of Common Stock then issuable upon
conversion of the Series A Stock, Series B Stock, Series C Stock, and Series D
Stock then held by such Purchaser, to (y) the total number of shares of Common
Stock issued

                                      -11-
<PAGE>   12
and outstanding plus the total number of shares of Common Stock issuable upon
conversion of all of the then outstanding shares of Series A Stock, Series B
Stock, Series C Stock, and Series D Stock of the Company plus the total number
of shares of Common Stock issuable upon any outstanding rights, options or
warrants to subscribe for, purchase or acquire either Common Stock, Series A
Stock, Series B Stock, Series C Stock, or Series D Stock.

                  (c) The Company may, during the one hundred twenty (120) day
period following the expiration of the period provided in subsection 3(b)
hereof, issue any Shares which Purchasers have not agreed in writing to purchase
pursuant to subparagraph (b) hereof to any person or persons at a price not less
than, and upon terms no more favorable to the offeree than, those specified in
the Notice. If the Company does not consummate the proposed sale of the Shares
within such one hundred twenty (120) day period, the right provided hereunder
shall be deemed to be revived and such Shares shall not be issued unless first
reoffered to the Purchasers in accordance herewith.

                  (d) The right of first refusal in this Section 3 shall not be
applicable to (i) the issuance or sale of shares of Common Stock, Series A
Stock, Series B Stock, Series C Stock, or Series D Stock (or options or warrants
therefor) to employees, officers, directors, or consultants for the primary
purpose of soliciting or retaining their employment, (ii) shares issued or
issuable by the Company in connection with any merger or reorganization
transaction in which the Company is the surviving company, (iii) shares of
capital stock, or options or warrants therefor, issued to banks, leasing
companies, service providers, customers, licensees, licensors or vendors in
connection with a loan, equipment lease, payment advance, payment reduction or
deferral arrangement, or license, (iv) shares issued upon conversion of the
Series A Stock, Series B Stock, Series C Stock, or Series D Stock, (v) any
shares of Common Stock, Series A Stock, Series B Stock or Series C Stock of the
Company that are outstanding on the date of this Agreement, and (vi) up to
1,581,083 shares of Series D Stock, and shall not be applicable after
consummation of a bona fide, firmly underwritten public offering of shares of
the Company's Common Stock.

      4.    ASSIGNMENT; AMENDMENT.

            4.1 Assignment of Rights. The rights to information described in
Section 1 hereof, the rights to cause the Company to register Registrable
Securities pursuant to Section 2 and the right of first offer pursuant to
Section 3 may be assigned by a Holder having such rights to a transferee or
assignee of Registrable Securities (including securities convertible into or
exercisable for Registrable Securities, directly or indirectly) upon notice to
the Company, provided, however, that the Company may refuse any such assignment
if (i) it reasonably determines that the proposed assignee is or is likely to be
a competitor of the Company, or (ii) if the assignment is for less than 100,000
shares of Registrable Securities, and is for less than all of the Registrable
Securities held by the Holder. Notwithstanding the foregoing, such an assignment
may be made to a partner or shareholder of the Holder, to any parent, child or
spouse of the Holder or to the Holder's estate, without obtaining the Company's
consent, and DVI may assign its rights to cause the Company to register
Registrable Securities pursuant to Section 2 under this Agreement to one or more
of its limited partnerships with which DVI is affiliated without obtaining
Company's consent; provided, however, that written notice of such assignments
must be promptly provided to the Company.

                                      -12-
<PAGE>   13
            4.2 Amendment of Rights. 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 (a) as to Sections 1 and 3 hereof by
Purchasers holding a majority of the total outstanding Series A Stock, Series B
Stock, Series C Stock, and Series D Stock, and Common Stock issued on conversion
thereof, calculated on an "as-if-converted" basis, and (b) as to Section 2
hereof by the Holders of a majority of the Registrable Securities then
outstanding. Any amendment or waiver effected in accordance with this Section
4.2 shall be binding upon each Holder or Purchaser and the Company. By
acceptance of any benefits under this Agreement, Holders of Registrable
Securities and Purchasers hereby agree to be bound by the provisions hereunder.

            4.3 Provision of Registration Rights to Future Warrant Holders.
Notwithstanding any other provision hereof, the Company may grant registration
rights hereunder in connection with the issuance of warrants to purchase up to
150,000 shares of Common Stock in connection with loans, equipment leases or
similar transactions (all such warrants, the "New Warrants"), without the need
for any further approval of the Holders of Registrable Securities hereunder.
Such grant of registration rights shall be effective at such time as the Company
and grantee execute an addendum referencing this Agreement in which the grantee
agrees to be bound by Sections 2, 4 and 5 hereof, in which case the Common Stock
issuable upon exercise of the New Warrants shall be "Registrable Securities"
under Section 2.1(b)(1) hereof, and the New Warrants shall be considered
Warrants.

      5.    GENERAL PROVISIONS.

            (a) Notices. Any notice, request or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if personally delivered or if mailed by certified mail return receipt
requested, postage prepaid, as follows:

                  (i)   if to a Purchaser or Holder at such person's
respective addresses as set forth on the Exhibits hereto;

                  (ii) if to the Company, at 333 Distel Circle, Los Altos, CA
94022-1404.

Any party hereto may by notice so given change its address for future notice
hereunder. Notice shall conclusively be deemed to have been given when
personally delivered or three business days after deposited in the mail in the
manner set forth above.

            (b) Entire Agreement. This Agreement constitutes and contains the
entire agreement of the parties with respect to the subject matter hereof and
supersedes any and all prior negotiations, correspondence, understandings,
agreements, duties or obligations between the parties respecting the subject
matter hereof. Without limiting the forgoing, the Prior Agreement is superseded
by this Agreement in its entirety, and is null and void, and the Series A
Purchasers, Series B Purchasers and Series C Purchasers waive any rights they
may have had to be offered the right to purchase any of the Series D Stock being
sold pursuant to the Series D Agreement.

                                      -13-
<PAGE>   14
            (c) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California, excluding that body of
law relating to conflict of laws.

            (d) 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.

            (e) Successors And Assigns. Subject to Section 4.1, 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.

            (f) 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.

            (g) 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.

            (h) Costs And Attorneys' Fees. In the event that 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.

                 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      -14-
<PAGE>   15
      IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.

TALARIAN CORPORATION

____________________________________
Paul Larson, President

NORTEL NETWORKS INC.

By: ____________________________________

Its: ___________________________________

PREVIOUS INVESTORS

____________________________________
Print Name of Purchaser

____________________________________
Signature of Purchaser or Authorized
Signatory, if Applicable

____________________________________
Name and Title of Authorized Purchaser,
if Applicable

                          SIGNATURE PAGE TO AMENDED AND
                      RESTATED INVESTORS' RIGHTS AGREEMENT

                                      -15-
<PAGE>   16
                                    EXHIBIT A

                                    Investors

Nortel Networks Inc.
4401 Great America Parkway
Santa Clara, California  95052
<PAGE>   17
                                    EXHIBIT B

                               Series A Purchasers
                               -------------------

<TABLE>
<CAPTION>
Name and Address
----------------
<S>                                                             <C>
Avalon Ventures III Profit Sharing Plan                         Avalon Ventures IV,
c/o John T. Hendrick                                            a California Limited Partnership
1020 Prospect Street, Suite 405                                 c/o John T. Hendrick
La Jolla, CA  92037                                             1020 Prospect Street, Suite 405
                                                                La Jolla, CA  92037

John T. Hendrick                                                Joseph Zicherman
c/o Avalon Ventures                                             c/o Morgan, Stanley & Company, Inc.
1020 Prospect Street, Suite 405                                 1251 Avenues of the Americas
La Jolla, CA  92037                                             New York, NY  10020

Kevin J. Kinsella, Trustee of the                               Gerald S.J. Cassidy
Kevin J. Kinsella Declaration of Trust dtd 11/2/94              c/o Cassidy & Associates
1735 Castellana Road                                            Metropolitan Square Bldg., Suite 1100
La Jolla, CA 92037                                              655 11th Street, NW
                                                                Washington, D.C.  20005

The Rutherford Group                                            John E. Egbert, Trustee
(formerly Valley Leasing, Ltd.)                                 John E. Egbert Trust dtd 9/28/89
P.O. Box 1165                                                   415 Cambridge Avenue, Suite 13
La Jolla, CA 92038                                              Palo Alto, CA  94306
Attn:  Hugh M. Tietjen

Dr. Federico Faggin                                             Paul G. Abrams
c/o Synaptics, Inc.                                               & Marguerite L.J. Abrams
2698 Orchard Parkway                                            2125 First Avenue, 1602
San Jose, CA  95134-2020                                        Seattle, WA  98121

Third Millenium Venture Capital Limited                         Joann Brainard
P. O. Box 1669                                                  11 Tullivers Isle
Los Altos, CA  94023-1123                                       Irvine, CA  92715
Attn: John Koza

Signal Ventures                                                 James S. Fant
c/o Daniel W. Derbes                                            c/o Lester G. Fant, III
12780 High Bluff Drive, Suite 250                               c/o Sidley & Austin
San Diego, CA  92130                                            1722 I Street, N.W.
                                                                Washington, D.C.  20006
</TABLE>
<PAGE>   18
<TABLE>
<CAPTION>
Name and Address
----------------
<S>                                                             <C>
James P. Fabiani                                                Charles A. Felt
c/o Cassidy & Associates                                        c/o Kessler Asher Group
700 Thirteenth Street, N.W., Suite 400                          440 S. La Salle Street, Suite 1900
Washington, D.C.  20005                                         Chicago, IL  60605

Lester G. Fant, III                                             Merrill Ferguson
c/o Sidley Austin                                               558 Ridge Road
1722 I Street, N.W.                                             Winnetka, IL  60093
Washington, D.C.  20006

Tracy Ray, as Administrator of the Estate of                    Kleiner Perkins Caufield & Byers IV
 Diane Ferguson-Escobar, Deceased                               c/o Mr. Brook H. Byers
344 Cherokee Road                                               2750 Sand Hill Road
Lake Forest, IL  60045                                          Menlo Park, CA  94025-7020

Foggy Bottom Associates Limited Partnership                     Fred O'Donnell
c/o John K. Freeman                                             c/o First Options
Chesapeake Management Company                                   One Financial Place
1301 Connecticut Ave., N.W., #222                               440 South LaSalle Street, Suite 1637
Washington, D.C.  20036                                         Chicago, IL  60605

Martin A. Keane                                                 Lawrence J. Rosenberg
5733 W. Grover                                                  c/o William G. Rosenberg
Chicago, IL  60630                                              2508 I Street, N.W.
                                                                Washington, D.C.  20037

Grace Spann Koza and John R. Koza,                              Mark J. Spehn
Trustees of the Grace Spann Koza Trust dtd 12/17/90             12715 82nd Court
55 Bay Tree Lane                                                Paloss Park, IL  60664
Los Altos, Ca  94022

John R. Koza                                                    Technology Venture Investors 3
Box K                                                           c/o Mark G. Wilson
Los Altos, CA  94022                                            2480 Sand Hill Road, Suite 101
                                                                Menlo Park, CA  94025

R. Eden Martin
c/o Sidley & Austin
One First National Plaza, Suite 480
Chicago, IL  60603

Gabriele Beth Rosenberg
c/o William G. Rosenberg
2508 I Street, N.W.
Washington, D.C.  20037
</TABLE>
<PAGE>   19
Name and Address
----------------

Ivor Royston and
  Collette S.C. Royston
  Co-Trustees, Royston Family Trust
5580 La Jolla Blvd., #391
La Jolla, CA  92037

Sprout Capital V
c/o Keith B. Geeslin
3000 Sand Hill Road
Bldg. 4, Suite 270
Menlo Park, CA  94025-7114

TVI Management - 3
c/o Mark G. Wilson
2480 Sand Hill Road, Suite 101
Menlo Park, CA  94025
<PAGE>   20
                               Series B Purchasers
                               -------------------

<TABLE>
<CAPTION>
Name and Address
----------------
<S>                                                             <C>
Lawrence, Tyrrell, Ortale & Smith II, L.P.                      John E. Egbert, Trustee
515 Madison Avenue, 29th Floor                                  John E. Egbert Trust dtd 9/28/89
New York, NY  10022                                             415 Cambridge Avenue, Suite 13
Attn:  Brian Horey                                              Palo Alto, CA  94306

Third Millenium Venture Capital Limited                         Signal Ventures
P. O. Box 1123                                                  c/o Daniel W. Derbes
Los Altos, CA  94023-1123                                       12780 High Bluff Drive, Suite 250
Attn: John Koza                                                 San Diego, CA  92130

John R. Koza                                                    Martin A. Keane
Box K                                                           5733 W. Grover
Los Altos, CA  94022                                            Chicago, IL  60630

Grace Spann Koza and John R. Koza,
 Trustees of the Grace Spann Koza Trust
 dtd 12/17/90
55 Bay Tree Lane
Los Altos, CA  94022
</TABLE>
<PAGE>   21
                              Series C Purchasers
                              -------------------

<TABLE>
<CAPTION>
Name and Address
----------------
<S>                                                             <C>
John E. Egbert, Trustee                                         Lawrence Tyrell, Ortale & Smith II, L.P.
John E. Egbert Trust dtd 9/28/89                                515 Madison Avenue, 29th Floor
415 Cambridge Avenue, Suite 13                                  New York, NY  10022
Palo Alto, CA  94306                                            Attn:  Brian Horey

Glenn C. Meyers Family Trust dtd 1/20/86                        Signal Ventures
951 Mariner's Island Blvd., Suite 460                           c/o Daniel W. Derbes
San Mateo, CA  94404                                            12780 High Bluff Drive, Suite 250
                                                                San Diego, CA  92130

Roger Sippl                                                     STF II, L.P.
951 Mariner's Island Blvd.                                      2180 Sand Hill Road, Suite 450
Suite 460                                                       Menlo Park, CA  94025
San Mateo, CA  94404                                            Attn:  David E. Gold

F&W Investments 1994                                            Barry J. Kramer
Two Palo Alto Square, #200                                      281 Stanford Avenue
Palo Alto, CA 94306                                             Palo Alto, CA 94306
Attn:  Joel D. Kellman

Jack R. Taylor                                                  John L. deBenedetti
345 Celadon Drive                                               2191 E. Bayshore Rd., Ste. 220
Durango, CO 81301                                               Palo Alto, CA  94303

Gregor G. Peterson and/or
 Dion Z. Peterson, Trustees of the
 Gregor G. Peterson Trust 5/4/73
</TABLE>

<PAGE>   22

                              TALARIAN CORPORATION

                               FIRST AMENDMENT TO
                              AMENDED AND RESTATED
                           INVESTORS' RIGHTS AGREEMENT

            This First Amendment to Amended and Restated Investors' Rights
Agreement (this "Amendment") is entered into as of March 10, 2000 by and among
TALARIAN CORPORATION, a California corporation (the "Company"), Mark Mahowald
("Mahowald"), Ron Lachman ("Lachman"), Scottie Snyder ("Snyder") (Mahowald,
Lachman and Snyder are sometimes collectively referred to herein as the
"WhiteBarn Shareholders") and the holders of Registrable Securities set forth on
the signature pages hereto, and amends that certain Amended and Restated
Investors' Rights Agreement dated February 3, 2000 (the "Investors' Rights
Agreement"), by and among the Company and the holders of shares, or warrants to
purchase shares, of its preferred stock who are parties thereto (the "Existing
Investors"). Terms used but not otherwise defined in this Amendment shall have
the meanings given to such terms in the Investors' Rights Agreement.

                                 R E C I T A L S

            A. The Company and WhiteBarn, Inc., an Illinois corporation
("WhiteBarn"), are parties to an Agreement and Plan of Merger dated as of March
7, 2000 (the "Merger Agreement"), which provides for the merger of WhiteBarn
with and into the Company and for the Company to issue shares of its capital
stock to the WhiteBarn Shareholders.

            B. As a condition to the consummation of the Merger, the Company is
to provide the WhiteBarn Shareholders with the registration rights provided to
the Existing Investors by Section 2 of the Investors' Rights Agreement.

            C. Pursuant to Section 4.2 of the Investors' Rights Agreement,
Section 2 of the Investors' Rights Agreement may be amended with the written
consent of the Company and the holders of a majority of the outstanding
Registrable Securities.

            D. The parties desire to enter into this Amendment to amend the
terms of Section 2 of the Investors' Rights Agreement to include the WhiteBarn
Shareholders as Holders of Registrable Securities.

                                A G R E E M E N T

            NOW, THEREFORE, in consideration of the foregoing recitals and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
<PAGE>   23
      1. Section 2.1(b) of the Investors' Rights Agreement is hereby amended and
restated to read in its entirety as follows (added language is shown in bold):

                        (b) The term "Registrable Securities" means (1) any
      Common Stock issued or issuable upon conversion of any (i) Series A Stock
      issued pursuant to those certain Stock Purchase Agreements dated January
      1, 1990 or February 22, 1991, (ii) Series B Stock issued pursuant to that
      certain Series B Preferred Stock Purchase Agreement dated March 24, 1992,
      (iii) Series C Stock issued pursuant to that certain Stock Purchase
      Agreement dated February 28, 1994, (iv) Series C Stock issued pursuant to
      that certain Stock Purchase Agreement dated November 30, 1995, (v) Series
      D Stock issued pursuant to the Series D Agreement, (vi) Series A Stock
      issuable upon exercise of the warrants held by DVI, or (vii) Series B
      Stock issuable upon exercise of the warrants held by each of Unitechnic
      and SVB (such warrants described in (vi) and (vii) collectively are
      hereinafter referred to as the "Warrants"), (2) any Common Stock issued to
      the WhiteBarn Shareholders pursuant to Section 2.4 of that certain
      Agreement and Plan of Merger dated as of March 7, 2000 between the Company
      and WhiteBarn, Inc. (all of such Common Stock referenced in (1) and (2)
      above is hereinafter referred to as the "Conversion Shares"), and (3) any
      Common Stock of the Company (or any corporation into which the Company
      merges for purposes of changing its state of incorporation) issued as (or
      issuable upon the conversion or exercise of any warrant, right or other
      security which is issued as) a dividend or other distribution with respect
      to, or in exchange for or in replacement of, such securities; excluding in
      all cases, however, any Registrable Securities (i) sold to the public, or
      (ii) sold or otherwise transferred by a person in a transaction in which
      the rights under this Section 2 are not assigned or assignable.

      2. Section 2.1(g) is hereby added to the Investors' Rights Agreement to
read in its entirety as follows:

            (g) The term "WhiteBarn Shareholders" shall mean Mark Mahowald, Ron
      Lachman and Scottie Snyder.

      3. In all respects, the WhiteBarn Shareholders shall be, and shall enjoy
the benefits and undertake the obligations inuring to them as, Holders of
Registrable Securities under Section 2 of the Investors' Rights Agreement.

      3. Effectiveness. This Amendment shall be effective (i) upon the execution
hereof by the Company and the Existing Investors holding, in the aggregate, at
least a majority of the outstanding Registrable Securities and (ii) as to each
of the WhiteBarn Shareholders, as of the date such WhiteBarn Shareholder shall
execute and deliver it to the Company.
<PAGE>   24
      IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.

"WHITEBARN SHAREHOLDERS":                 THE "COMPANY":
                                          TALARIAN CORPORATION

_________________________________         By:________________________________
MARK MAHOWALD                                 Michael A. Morgan
                                              Vice President

_________________________________
RON LACHMAN

_________________________________
SCOTTIE SNYDER

"EXISTING INVESTORS":

_________________________________
Print Name of Investor

_________________________________
Signature of Investor or Authorized
Signatory, if Applicable

_________________________________
Name and Title of Authorized
Signatory, if Applicable

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