Document:

SECURITIES PURCHASE AGREEMENT

         SECURITIES  PURCHASE AGREEMENT (the "Agreement"),  dated as of November
6, 2003,  by and among VA Software  Corporation,  a Delaware  corporation,  with
headquarters  located at 47071 Bayside Parkway,  Fremont,  California 94538 (the
"Company"),  and the investors  listed on the Schedule of Buyers attached hereto
(individually, a "Buyer" and collectively, the "Buyers").

         WHEREAS:

         A.  The  Company  and each  Buyer  is  executing  and  delivering  this
Agreement in reliance upon the exemption from securities  registration  afforded
by Section 4(2) of the Securities Act of 1933, as amended (the "1933 Act"),  and
Rule 506 of Regulation D  ("Regulation  D") as  promulgated by the United States
Securities and Exchange Commission (the "SEC") under the 1933 Act;

         B. Each Buyer wishes to purchase,  and the Company wishes to sell, upon
the terms and conditions stated in this Agreement,  (i) that aggregate amount of
shares of the Company's  Common  Stock,  par value $0.001 per share (the "Common
Stock") set forth  opposite  such  Buyer's name in column (3) on the Schedule of
Buyers (which  aggregate amount for all Buyers together shall be $15,000,000 and
shall  collectively  be  referred  to herein as the  "Common  Shares")  and (ii)
warrants,   in  substantially  the  form  attached  hereto  as  Exhibit  A  (the
"Warrants"), to acquire that number of shares of Common Stock set forth opposite
such  Buyer's  name in column (4) on the  Schedule  of Buyers  (which  aggregate
amount for all Buyers  together  shall be  705,883  shares of Common  Stock) (as
exercised, collectively, the "Warrant Shares");

         C. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement,
substantially in the form attached hereto as Exhibit B (the "Registration Rights
Agreement"),  pursuant  to which  the  Company  has  agreed to  provide  certain
registration  rights with respect to the Common  Shares,  and the Warrant Shares
under the 1933 Act and the rules and  regulations  promulgated  thereunder,  and
applicable state securities laws.

         D.  The  Common   Shares,   the  Warrants  and  the  Warrant  Shares
collectively are referred to herein as the "Securities".

     NOW, THEREFORE, the Company and each Buyer hereby agree as follows:

         1. PURCHASE AND SALE OF COMMON SHARES AND WARRANTS.

                  (a) Purchase of Common Shares and Warrants.

         Subject to the  satisfaction (or waiver) of the conditions set forth in
Sections 6 and 7 below, the Company shall issue and sell to each Buyer, and each
Buyer  severally,  but not jointly,  agrees to purchase  from the Company on the
Closing  Date (as defined  below),  the number of Common  Shares as is set forth
opposite  such Buyer's name in column (3) on the Schedule of Buyers,  along with
Warrants to acquire that number of Warrant  Shares as is set forth opposite such
Buyer's name in column (4) on the Schedule of Buyers (the "Closing").

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                  (b) Purchase  Price.  The  purchase  price for each Buyer (the
"Purchase  Price") of the Common Shares and related  Warrants to be purchased by
each such Buyer at  Closing  shall be equal to $4.25 for each  Common  Share and
related Warrants being purchased by such Buyer at the Closing.

                  (c)  Closing  Date.  The  date and  time of the  Closing  (the
"Closing  Date")  shall be 9:00  a.m.,  local  time,  on the date  hereof  after
notification  of  satisfaction  (or waiver) of the conditions to the Closing set
forth in  Sections  6 and 7 below (or such  later  time and date as is  mutually
agreed to by the Company and each Buyer) at the offices of Schulte  Roth & Zabel
LLP, 919 Third Avenue, New York, New York 10022.

                  (d) Form of Payment. On the Closing Date, (i) each Buyer shall
pay its Purchase  Price to the Company for the Common  Shares and Warrants to be
issued and sold to such Buyer at the Closing,  by wire  transfer of  immediately
available funds in accordance with the Company's written wire instructions, (ii)
the Company  shall  deliver to each Buyer the  Warrants  (in the amounts as such
Buyer shall  request) such Buyer is  purchasing,  duly executed on behalf of the
Company and registered in the name of such Buyer or its designee,  and (iii) the
Company shall authorize its transfer agent (the "Transfer  Agent") to issue each
Buyer one or more stock  certificates or credit shares to the applicable balance
account registered in the name of such Buyer, respectively, the number of shares
set forth  opposite  such  Buyer's name in column (3) on the Schedule of Buyers,
which shall bear the following legend referring to the fact that the Shares were
sold in reliance upon the exemption from  registration  provided by Section 4(2)
of the Securities Act of 1933, as amended (the  "Securities  Act"), and Rule 506
under the Securities Act:

   [NEITHER  THE  ISSUANCE  AND SALE OF THE  SECURITIES  REPRESENTED  BY THIS
   CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE
   HAVE BEEN][THE  SECURITIES  REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN]
   REGISTERED  UNDER THE SECURITIES  ACT OF 1933, AS AMENDED.  THE SECURITIES
   MAY NOT BE OFFERED FOR SALE,  SOLD,  TRANSFERRED  OR  ASSIGNED  (I) IN THE
   ABSENCE OF (A) AN  EFFECTIVE  REGISTRATION  STATEMENT  FOR THE  SECURITIES
   UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR (B) AN OPINION OF COUNSEL,
   IN FORM REASONABLY  SATISFACTORY TO VA SOFTWARE,  THAT REGISTRATION IS NOT
   REQUIRED  UNDER SAID ACT OR (II) UNLESS SOLD  PURSUANT TO RULE 144 OR RULE
   144A UNDER SAID ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE
   PLEDGED IN  CONNECTION  WITH A BONA FIDE  MARGIN  ACCOUNT OR OTHER LOAN OR
   FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

         2. BUYER'S REPRESENTATIONS AND WARRANTIES.

         Each Buyer represents and warrants with respect to only itself that:

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                  (a) No Public Sale or Distribution; Prior Sales. Such Buyer is
(i)  acquiring  the Common Shares and the Warrants and (ii) upon exercise of the
Warrants will acquire the Warrant Shares issuable upon exercise thereof,  in the
ordinary course of business for its own account and not with a view towards,  or
for resale in connection with, the public sale or distribution  thereof,  except
pursuant to sales registered or exempted under the 1933 Act and has no agreement
or understanding,  directly or indirectly,  with any Person to distribute any of
the Securities;  provided,  however, that by making the representations  herein,
such Buyer does not agree to hold any of the Securities for any minimum or other
specific term and reserves the right to dispose of the Securities at any time in
accordance with this Agreement,  the  Registration  Rights  Agreement,  and with
federal  and  state  securities  laws  applicable  to  such  transfer,  sale  or
disposition.

                  (b) Investor Status.

                           (i) Such Buyer is an  "accredited  investor"  as that
term is defined in Rule 501(a) of Regulation D.

                           (ii)  Buyer  is   knowledgeable,   sophisticated  and
experienced  in making,  and is  qualified  to make,  decisions  with respect to
investments in shares  representing an investment decision like that involved in
the purchase of the Shares,  including  investments in securities  issued by the
Company, and has requested, received, reviewed and considered all information it
deems relevant in making an informed decision to purchase the Shares.

                           (iii) The  Purchaser  has  completed  or caused to be
completed the Stock  Certificate  Questionnaire  and the Registration  Statement
Questionnaire,  attached to this  Agreement  as  Appendices I and II, for use in
preparation of the Registration Statement (as defined in Section 7.3 below), and
the answers to the  Questionnaires are true and correct in all material respects
as of the  date of  this  Agreement  and  will be  true  and  correct  as of the
effective date of the Registration Statement; provided that the Purchasers shall
be  entitled to update  such  information  by  providing  notice  thereof to the
Company before the effective date of such Registration Statement.

                  (c) Reliance on Exemptions.  Such Buyer  understands  that the
Securities  are being offered and sold to it in reliance on specific  exemptions
from the registration requirements of United States federal and state securities
laws and that the Company is relying in part upon the truth and accuracy of, and
such Buyer's  compliance  with,  the  representations,  warranties,  agreements,
acknowledgments  and  understandings  of such Buyer set forth herein in order to
determine the  availability of such exemptions and the eligibility of such Buyer
to acquire the Securities.

                  (d)  Information.  Such Buyer and its  advisors,  if any, have
been  furnished  with all  materials  relating to the  business,  finances,  and
operations  of the Company and  materials  relating to the offer and sale of the
Securities which have been requested by such Buyer. Such Buyer and its advisors,
if any,  have been  afforded the  opportunity  to ask  questions of the Company.
Neither such inquiries nor any other due diligence  investigations  conducted by
such Buyer or its advisors,  if any, or its representatives  shall modify, amend
or  affect  such  Buyer's  right to rely on the  Company's  representations  and
warranties contained herein. Such

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<PAGE>

Buyer  understands that its investment in the Securities  involves a high degree
of risk and is able to afford a complete loss of such investment. Such Buyer has
sought such accounting,  legal and tax advice as it has considered  necessary to
make an informed  investment  decision  with respect to its  acquisition  of the
Securities.  Such Buyer has, in  connection  with its  decision to purchase  the
number of shares and warrant  shares set forth on the Schedule of Buyers  relied
solely upon the representations and warranties of the Company in this Agreement,
the SEC Documents (as defined below) and publicly available information.

                  (e) No Governmental  Review.  Such Buyer  understands  that no
United States  federal or state agency or any other  government or  governmental
agency has passed on or made any recommendation or endorsement of the Securities
or the fairness or suitability of the investment in the Securities nor have such
authorities  passed  upon  or  endorsed  the  merits  of  the  offering  of  the
Securities.

                  (f) Transfer or Resale.  Such Buyer understands that except as
provided in the Registration Rights Agreement:  (i) the Securities have not been
and are not being  registered  under the 1933 Act or any state  securities laws,
and may not be  offered  for sale,  sold,  assigned  or  transferred  unless (A)
subsequently  registered thereunder,  (B) such Buyer shall have delivered to the
Company an opinion of counsel, in form reasonably  acceptable to the Company, to
the effect that such Securities to be sold, assigned or transferred may be sold,
assigned or transferred pursuant to an exemption from such registration,  or (C)
such Buyer  provides  the Company  with  reasonable  assurance  (including  such
representations  and  warranties  as may be requested by the Company)  that such
Securities  can be sold,  assigned or  transferred  pursuant to Rule 144 or Rule
144A promulgated  under the 1933 Act, as amended,  (or a successor rule thereto)
(collectively,  "Rule 144"); (ii) any sale of the Securities made in reliance on
Rule 144 may be made only in accordance  with the terms of Rule 144 and further,
if Rule 144 is not applicable,  any resale of the Securities under circumstances
in which the seller (or the Person  through whom the sale is made) may be deemed
to be an  underwriter  (as that term is  defined  in the 1933  Act) may  require
compliance  with  some  other  exemption  under  the 1933 Act or the  rules  and
regulations of the SEC  thereunder;  and (iii) neither the Company nor any other
Person is under any obligation to register the Securities  under the 1933 Act or
any state  securities  laws or to comply  with the terms and  conditions  of any
exemption  thereunder.  The Securities may be pledged in connection  with a bona
fide margin  account or other loan secured by the  Securities and such pledge of
Securities  shall not be  deemed to be a  transfer,  sale or  assignment  of the
Securities  hereunder,  and no Buyer  effecting a pledge of Securities  shall be
required to provide the Company with any notice  thereof or  otherwise  make any
delivery to the  Company  pursuant to this  Agreement  or any other  Transaction
Document,  including,  without limitation,  this Section 2(f); provided, that in
order to make any sale, transfer or assignment of Securities, such Buyer and its
pledgee makes such  disposition in accordance with or pursuant to a registration
statement or an exemption under the 1933 Act.

                  (g) Legends.  Such Buyer  understands that the certificates or
other  instruments  representing  the Common Shares and the Warrants and,  until
such time as the resale of the Common  Shares and the  Warrant  Shares have been
registered  under  the  1933  Act as  contemplated  by the  Registration  Rights
Agreement, the stock certificates representing the Warrant Shares, except as set
forth  below,  shall bear any legend as  required  by the "blue sky" laws of any
state and a restrictive  legend in  substantially  the form set forth in Section
1(d) (and a

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<PAGE>

stop-transfer order may be placed against transfer of such stock  certificates).
The legend set forth in Section  1(d)  shall be  removed  if,  unless  otherwise
required by state  securities  laws, (i) such Securities are registered for sale
under  the  1933  Act,  (ii) in  connection  with a sale,  assignment  or  other
transfer,  such holder provides the Company with an opinion of counsel,  in form
reasonably  acceptable to the Company, to the effect that such sale,  assignment
or transfer of the  Securities may be made without  registration  under the 1933
Act and that such legend is no longer  required,  or (iii) such holder  provides
the Company with reasonable  assurance that the Securities can be sold, assigned
or  transferred  pursuant  to  Rule  144.  The  Company  shall,  and  shall  use
commercially reasonable efforts to cause its transfer agent to, promptly process
requests for transfer or  de-legending  of Shares or  certificates  representing
Shares in compliance with this Agreement.

                  (h) Validity; Enforcement. This Agreement and the Registration
Rights Agreement have been duly and validly  authorized,  executed and delivered
on  behalf of such  Buyer and shall  constitute  the  legal,  valid and  binding
obligations  of such Buyer  enforceable  against such Buyer in  accordance  with
their respective terms,  except as such enforceability may be limited by general
principles of equity or to applicable  bankruptcy,  insolvency,  reorganization,
moratorium,  liquidation  and other  similar  laws  relating  to,  or  affecting
generally,  the enforcement of applicable  creditors'  rights and remedies.  The
execution,  delivery and  performance of this Agreement and the  consummation of
the transactions contemplated in this Agreement and the fulfillment of the terms
of this  Agreement have been duly  authorized by all necessary  corporate or LLC
action and will not conflict with or  constitute a breach of, or default  under,
or result in the creation or imposition of any lien,  charge or encumbrance upon
any property or assets of the Purchaser  pursuant to, any  contract,  indenture,
mortgage, loan agreement,  deed, trust, note, lease, sublease, voting agreement,
voting trust or other  instrument or agreement to which the Purchaser is a party
or by which it or any of them may be bound,  or to which any of the  property or
assets of the Purchaser is subject, nor will such action result in any violation
of the provisions of the charter or bylaws, or other  organizational  documents,
of the Purchaser or any applicable statute,  law, rule,  regulation,  ordinance,
decision,  directive  or order  applicable  to the  Purchaser or its property or
assets.

                  (i)  Residency.  Such Buyer is a resident  of that  country or
state specified below its address on the Schedule of Buyers.

                  (j) Certain Trading Limitations.  Each Buyer agrees that prior
to the  earlier  to  occur  of (a) 90 days  from  the  Closing  Date and (b) the
effective date of the registration  statement to be filed in connection with the
sale of the Shares, it will not enter into any Short Sales. For purposes of this
Agreement, a "Short Sale" by a Buyer means a sale of Common Stock that is marked
as a short sale and that is executed at a time when such Buyer has no equivalent
offsetting  long  position in the Common  Stock.  For  purposes  of  determining
whether a Buyer has an equivalent  offsetting long position in the Common Stock,
all Common Stock that would be issuable upon exercise in full of all  Securities
then  held  by such  Buyer  (assuming  that  such  Securities  were  then  fully
exercisable,  notwithstanding any provisions to the contrary,  and giving effect
to any exercise price adjustments  scheduled to take effect in the future) shall
be deemed to be held long by such Buyer.

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<PAGE>

         3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

         Except as set forth on the Schedule of  Exemptions  attached  hereto as
Exhibit C, the Company  represents  and warrants to each of the Buyers as of the
date hereof and as of the Closing Date that:

                  (a)  Organization and  Qualification.  Each of the Company and
its Subsidiaries  are  corporations  duly organized and validly existing in good
standing under the laws of the jurisdiction in which they are incorporated,  and
have the requisite corporate power and authorization to own their properties and
to carry on their business as now being conducted.  Each of the Company and each
Subsidiary is duly  qualified as a foreign  corporation to do business and is in
good  standing in every  jurisdiction  in which its ownership of property or the
nature of the  business  conducted  by it makes  such  qualification  necessary,
except to the extent that the failure to be so qualified or be in good  standing
would not have a Material Adverse Effect.  As used in this Agreement,  "Material
Adverse  Effect"  means any material  adverse  effect on the  business  affairs,
properties, assets or results of operations of the Company and its Subsidiaries,
taken  as a  whole,  or on  the  transactions  contemplated  hereby  or  by  the
agreements and instruments to be entered into in connection herewith,  or on the
authority  or  ability  of the  Company to  perform  its  obligations  under the
Transaction  Documents  (as defined  below).  For  purposes  of this  Agreement,
"Subsidiary" means any entity in which the Company, directly or indirectly, owns
capital  stock or holds an equity or similar  interest  which would require such
entity to be  consolidated  in its  financial  statements.  The  Company  has no
Subsidiaries except as set forth on the Schedule of Exceptions.

                  (b) Authorization;  Enforcement; Validity. The Company has the
requisite   corporate  power  and  authority  to  enter  into  and  perform  its
obligations  under  this  Agreement,  the  Registration  Rights  Agreement,  the
Irrevocable  Transfer  Agent  Instructions  (as  defined in Section  5(b)),  the
Warrants and each of the other agreements  entered into by the parties hereto in
connection with the transactions  contemplated by this Agreement  (collectively,
the "Transaction Documents") and, to issue the Securities in accordance with the
terms  hereof  and  thereof.  The  execution  and  delivery  of the  Transaction
Documents by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby, including,  without limitation, the issuance of
the Common  Shares and the  Warrants  and the  reservation  for issuance and the
issuance of the Warrant  Shares  issuable upon  exercise  thereof have been duly
authorized  by the  Company's  Board of  Directors  and no  further  consent  or
authorization  is  required  by the  Company,  its  Board  of  Directors  or its
stockholders.  This Agreement and the other  Transaction  Documents of even date
herewith have been duly executed and  delivered by the Company,  and  constitute
the legal, valid and binding  obligations of the Company enforceable against the
Company  in  accordance  with  their  respective  terms,   except  (i)  as  such
enforceability  may be  limited by general  principles  of equity or  applicable
bankruptcy, insolvency, reorganization,  moratorium, liquidation or similar laws
relating to, or affecting  generally,  the enforcement of applicable  creditors'
rights and remedies,  or (ii) as any rights to indemnity or  contribution  under
the  Transaction  Documents may be limited by federal and state  securities laws
and public policy  consideration.  As of the Closing, the Transaction  Documents
dated after the date hereof and  required to have been  executed  and  delivered
with respect to the Closing  shall have been duly  executed and delivered by the
Company,  and shall constitute the legal,  valid and binding  obligations of the
Company enforceable against the Company in accordance with

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their  respective  terms,  except (i) as such  enforceability  may be limited by
general   principles   of   equity   or   applicable   bankruptcy,   insolvency,
reorganization,   moratorium,  liquidation  or  similar  laws  relating  to,  or
affecting  generally,  the  enforcement  of  applicable  creditor's  rights  and
remedies  or  (ii)  as  any  rights  to  indemnity  or  contribution  under  the
Transaction  Documents may be limited by federal and state  securities  laws and
public policy consideration.

                  (c) Issuance of Securities. The Common Shares and Warrants are
duly authorized and, upon issuance in accordance with the terms hereof, shall be
free from all taxes,  liens and encumbrances  with respect to the issue thereof.
As of the Closing Date, the Company shall have duly  authorized and reserved for
issuance a number of shares of Common  Stock which  equals the number of Warrant
Shares. The Company shall, so long as any of the Warrants are outstanding,  take
all action  necessary to reserve and keep  available out of its  authorized  and
unissued Capital Stock,  solely for the purpose of effecting the exercise of the
Warrants, 120% of the number of shares of Common Stock issuable upon exercise of
the Warrants.  Upon exercise in accordance with the Warrants, the Warrant Shares
will be validly issued,  fully paid and  nonassessable  and free from all taxes,
liens and encumbrances with respect to the issue thereof, with the holders being
entitled  to all  rights  accorded  to a holder of Common  Stock.  Assuming  the
accuracy of each of the  representations  and  warranties set forth in Section 2
hereof,  the issuance by the Company of the Securities in conformance  with this
Agreement is exempt from the registration  requirements of Section 5 of the 1933
Act.

                  (d) No Conflicts.  The execution,  delivery and performance of
the Transaction  Documents by the Company and the consummation by the Company of
the transactions contemplated hereby and thereby (including, without limitation,
the issuance of the Common Shares and Warrants and  reservation for issuance and
issuance  of the  Warrant  Shares)  will not (i)  result in a  violation  of the
certificate of incorporation,  any certificate of designations,  preferences and
rights of any outstanding  series of preferred stock or Bylaws of the Company or
any Subsidiary or (ii) conflict with, or constitute a default (or an event which
with notice or lapse of time or both would become a default)  under,  or give to
others any rights of termination,  amendment,  acceleration or cancellation  of,
any agreement  filed with the SEC  Documents,  or (iii) result in a violation of
any law, rule,  regulation,  order,  judgment or decree  (including  federal and
state  securities  laws and  regulations  and the rules and  regulations  of the
Nasdaq National Market (the  "Principal  Market"))  applicable to the Company or
any  Subsidiary  or by  which  any  property  or  asset  of the  Company  or any
Subsidiary  is bound or affected,  except in the case of clauses (ii) and (iii),
for such  breaches  or defaults  as would not be  reasonably  expected to have a
Material Adverse Effect.

                  (e)  Consents.  The  Company  is not  required  to obtain  any
consent, authorization or order of, or make any filing or registration with, any
court,  governmental  agency or any regulatory or self-regulatory  agency or any
other  Person  in  order  for  it to  execute,  deliver  or  perform  any of its
obligations under or contemplated by the Transaction Documents,  in each case in
accordance  with the terms  hereof or  thereof.  All  consents,  authorizations,
orders,  filings  and  registrations  which the  Company is  required  to obtain
pursuant to the preceding sentence have been obtained or effected on or prior to
the Closing Date. The Company is not in violation of the listing requirements of
the  Principal  Market and has no knowledge  of any facts that would  reasonably
lead to delisting or suspension of the Common Stock in the next 12 months.

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                  (f)  Acknowledgment  Regarding Buyer's Purchase of Securities.
The  Company  acknowledges  and agrees  that each Buyer is acting  solely in the
capacity of arm's length purchaser with respect to the Transaction Documents and
the  transactions   contemplated   hereby  and  thereby.   The  Company  further
acknowledges  that no Buyer is acting as a financial advisor or fiduciary of the
Company (or in any similar  capacity) with respect to the Transaction  Documents
and the transactions  contemplated hereby and thereby, and any advice given by a
Buyer or any of its representatives or agents in connection with the Transaction
Documents  and the  transactions  contemplated  hereby  and  thereby  is  merely
incidental  to such  Buyer's  purchase of the  Securities.  The Company  further
represents  to each  Buyer  that  the  Company's  decision  to  enter  into  the
Transaction Documents has been based solely on the independent evaluation by the
Company  and its  representatives  and in reliance  on the  representations  and
warranties of each Buyer hereunder.

                  (g) No General  Solicitation;  Placement Agent's Fees. Neither
the Company,  nor any of its  affiliates,  nor any Person acting on its or their
behalf, has engaged in any form of general  solicitation or general  advertising
(within the meaning of Regulation D) in connection with the offer or sale of the
Securities.  The Company shall be  responsible  for the payment of any placement
agent's fees,  financial advisory fees, or brokers'  commissions (other than for
persons engaged by any Buyer or its investment  advisor)  relating to or arising
out of the  transactions  contemplated  hereby.  The Company shall pay, and hold
each Buyer harmless against, any liability, loss or expense (including,  without
limitation,  attorney's fees and  out-of-pocket  expenses) arising in connection
with any such claim.

                  (h)  No  Integrated   Offering.   None  of  the  Company,  any
Subsidiary,  any of their affiliates, and any Person acting on their behalf has,
directly or  indirectly,  made any offers or sales of any  security or solicited
any  offers  to  buy  any  security,  under  circumstances  that  would  require
registration of any of the Securities  under the 1933 Act or cause this offering
of the  Securities  to be  integrated  with prior  offerings  by the Company for
purposes  of the 1933 Act or any  applicable  stockholder  approval  provisions,
including,  without limitation,  under the rules and regulations of any exchange
or automated  quotation system on which any of the securities of the Company are
listed or designated.  None of the Company or any Subsidiary,  their  affiliates
and any Person acting on their behalf will take any action or steps  referred to
in the preceding  sentence that would cause the offering of the Securities to be
integrated  with other  offerings for purposes of any  registration  requirement
under the 1933 Act or any applicable rules of the Principal Market.

                  (i) Application of Takeover Protections; Rights Agreement. The
Company and its board of directors have taken all necessary  action,  if any, in
order  to  render   inapplicable   any  control  share   acquisition,   business
combination,  poison pill (including any distribution  under a rights agreement)
or other similar anti-takeover  provision under the Certificate of Incorporation
(as defined in Section 3(q)) or the laws of the state of its incorporation which
is or could  become  applicable  to any  Buyer as a result  of the  transactions
contemplated by this Agreement,  including,  without  limitation,  the Company's
issuance of the  Securities  and any Buyer's  ownership of the  Securities.  The
Company  has not  adopted  a  stockholder  rights  plan or  similar  arrangement
relating to accumulations of beneficial ownership of Common Stock or a change in
control of the Company.

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                  (j) SEC Documents;  Financial Statements. Since July 31, 2002,
the Company has timely filed all reports,  forms, statements and other documents
required to be filed by it with the SEC pursuant to the  reporting  requirements
of the 1934 Act (all of the foregoing filed prior to the date hereof or prior to
the  date of the  Closing,  and all  exhibits  included  therein  and  financial
statements and schedules thereto and documents incorporated by reference therein
being hereinafter referred to as the "SEC Documents"). The Company has delivered
to the Buyers or their  respective  representatives  true,  correct and complete
copies of the SEC Documents  not  available on the EDGAR system.  As of the date
filed, the SEC Documents complied in all material respects with the requirements
of the 1934 Act and the rules and regulations of the SEC promulgated  thereunder
applicable to the SEC Documents, and none of the SEC Documents, at the time they
were filed with the SEC,  contained  any untrue  statement of a material fact or
omitted to state a material fact  required to be stated  therein or necessary in
order to make the statements  therein,  in the light of the circumstances  under
which they were made, not  misleading.  The financial  statements of the Company
included in the SEC Documents  complied as to form in all material respects with
the published  rules and  regulations  of the SEC with respect  thereto and have
been prepared in accordance  with United States  generally  accepted  accounting
principles ("GAAP"),  consistently applied,  during the periods involved (except
(i) as may be otherwise  indicated  in such  financial  statements  or the notes
thereto, or (ii) in the case of unaudited interim statements, to the extent they
may exclude  footnotes  or may be condensed  or summary  statements)  and fairly
present in all material respects the financial  position of the Company and each
Subsidiary as of the dates  indicated and the results of its operations and cash
flows for the periods then ended (subject,  in the case of unaudited statements,
to normal year-end audit adjustments).

                  (k) Absence of Certain  Changes.  Except as  disclosed  in the
Schedule of Exceptions,  since July 31, 2003, there has been no material adverse
change and no material adverse development in the business affairs,  properties,
assets,  or results of operations of the Company or any  Subsidiary.  Since July
31, 2003,  the Company has not (i)  declared or paid any  dividends or (ii) sold
any assets,  individually or in the aggregate,  in excess of $100,000 outside of
the  ordinary  course of  business.  The  Company  has not filed for  protection
pursuant to any  bankruptcy law nor does the Company have any knowledge that its
creditors intend to initiate  involuntary  bankruptcy  proceedings or any actual
knowledge of any fact which would reasonably lead a creditor to do so within the
next 12 months.  The Company  currently is not and,  after giving  effect to the
transactions contemplated hereby to occur at each Closing, will not be Insolvent
(as defined below). For purposes of this Section 3(k), "Insolvent" means (i) the
present  fair  saleable  value of the  Company's  assets is less than the amount
required to pay the Company's total indebtedness,  contingent or otherwise, (ii)
the Company is unable to pay its debts and liabilities, subordinated, contingent
or otherwise,  as such debts and liabilities become absolute and matured,  (iii)
the Company  intends to incur or believes that it will incur debts that would be
beyond  its  ability  to pay as such  debts  mature  or  (iv)  the  Company  has
unreasonably  small  capital  with which to conduct the  business in which it is
engaged as such business is now conducted and is proposed to be conducted.

                  (l)  No  Undisclosed  Events,  Liabilities,   Developments  or
Circumstances. No event, liability,  development or circumstance has occurred or
exists with respect to the Company or any  Subsidiary  that would be required to
be  disclosed by the Company on a balance  sheet or in the related  notes to the
consolidated financial statements

                                       9
<PAGE>

prepared in accordance  with GAAP which were,  individually or in the aggregate,
material to the business,  results or  operations or financial  condition of the
Company taken as a whole,  except (i) as has been publicly  announced or (ii) as
otherwise incurred in the ordinary course of business.

                  (m)  Conduct of  Business;  Regulatory  Permits.  Neither  the
Company nor any  Subsidiary  is in violation of any term of or in default  under
its Certificate of Incorporation,  any Certificate of Designations,  Preferences
and Rights of any outstanding series of preferred stock of the Company or Bylaws
or their organizational charter or bylaws, respectively. Neither the Company nor
any Subsidiary is in violation of any judgment,  decree or order or any statute,
ordinance,  rule or  regulation  applicable  to the  Company or any  Subsidiary,
except for violations which would not, individually or in the aggregate,  have a
Material Adverse Effect.  Without limiting the generality of the foregoing,  the
Company is not in violation of any of the rules,  regulations or requirements of
the  Principal  Market.  Since  July 31,  2003,  (i) the  Common  Stock has been
designated for quotation or listed on the Principal Market,  (ii) trading in the
Common Stock has not been suspended by the SEC or the Principal Market and (iii)
the Company has received no communication,  written or oral, from the SEC or the
Principal  Market regarding the suspension or delisting of the Common Stock from
the Principal Market. The Company and its Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate  federal,  state or foreign
regulatory authorities necessary to conduct their respective businesses,  except
where the failure to possess such certificates,  authorizations or permits would
not have,  individually  or in the aggregate,  a Material  Adverse  Effect,  and
neither the Company nor any  Subsidiary  has received any notice of  proceedings
relating to the revocation or modification of its certificate,  authorization or
permit.

                  (n) Transactions  With Affiliates.  Except as set forth in the
Company's  Annual Report on Form 10-K for the year ended July 31, 2003,  none of
the officers,  directors or employees of the Company is presently a party to any
transaction  with the Company or any Subsidiary  (other than for ordinary course
services as employees, officers or directors), including any contract, agreement
or  other  arrangement  providing  for  the  furnishing  of  services  to or by,
providing  for rental of real or  personal  property  to or from,  or  otherwise
requiring payments to or from any such officer,  director or employee or, to the
knowledge of the Company, any corporation, partnership, trust or other entity in
which any such officer,  director,  or employee has a substantial interest or is
an officer, director, trustee or partner.

                  (o) Equity Capitalization. As of the date hereof,

                           (i)  The  authorized  capital  stock  of the  Company
consists  of  250,000,000  shares  of  Common  Stock  and  10,000,000  shares of
Preferred Stock, par value $0.001 per share.

                           (ii) The issued and outstanding  capital stock of the
Company consists of 56,974,623  shares of Common Stock. The shares of issued and
outstanding  capital stock of the Company have been duly  authorized and validly
issued,  are fully paid and  nonassessable and have not been issued in violation
of or are not otherwise subject to any preemptive or other similar rights.

                                       10
<PAGE>

                           (iii) The Company has reserved  20,719,465  shares of
Common  Stock  for  issuance  upon the  exercise  of stock  options  granted  or
available for future grant under the Company's stock option plan.

                           (iv) The Company  has  reserved  2,181,528  shares of
Common Stock for purchase under the Company's Employee Stock Purchase Plan.

         With the  exception  of the  foregoing,  there  are (i) no  outstanding
subscriptions,  options,  warrants,  convertible or  exchangeable  securities or
other rights granted to or by the Company to purchase  shares of Common Stock or
other  securities of the Company and there are no commitments,  or agreements to
issue  any  shares  of  Common  Stock  or  any  security   convertible  into  or
exchangeable  for Common Stock;  (ii) there are no outstanding  debt securities,
notes,  credit agreements,  credit facilities or other agreements,  documents or
instruments evidencing  Indebtedness (as defined in Section 3(q)) of the Company
or any  Subsidiary  or by which the Company or any  Subsidiary  is or may become
bound;  (iii) except as set forth in Exhibit 10.5 of the Company's Form 10-K for
the year ended July 31, 2003,  there are no  agreements  or  arrangements  under
which the Company or any  Subsidiary  is obligated to register the sale of their
securities under the 1933 Act (except the Registration  Rights  Agreement);  and
(iv) there are no securities or instruments containing  anti-dilution or similar
provisions that will be triggered by the issuance of the Securities.

                  (p) Indebtedness  and Other Contracts.  Except as disclosed in
the Schedule of  Exceptions,  neither the Company nor any Subsidiary (i) has any
outstanding Indebtedness (as defined below), or (ii) is in violation of any term
of or in default  under any contract,  agreement or  instrument  relating to any
Indebtedness,  except  where such  violations  and  defaults  would not  result,
individually or in the aggregate,  in a Material Adverse Effect. For purposes of
this Agreement:  (x) "Indebtedness" of any Person means, without duplication (A)
all indebtedness for borrowed money, (B) all obligations  issued,  undertaken or
assumed as the deferred purchase price of property or services (other than trade
payables entered into in the ordinary course of business), (C) all reimbursement
or payment obligations with respect to letters of credit, surety bonds and other
similar instruments,  (D) all obligations evidenced by notes, bonds,  debentures
or  similar  instruments,   including   obligations  so  evidenced  incurred  in
connection  with the  acquisition  of property,  assets or  businesses,  (E) all
indebtedness  created  or  arising  under any  conditional  sale or other  title
retention  agreement,  or incurred as financing,  in either case with respect to
any property or assets  acquired  with the proceeds of such  indebtedness  (even
though the rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such property),  (F) all
monetary  obligations  under  any  leasing  or  similar  arrangement  which,  in
connection with generally accepted accounting  principles,  consistently applied
for the periods  covered  thereby,  is  classified as a capital  lease,  (G) all
indebtedness  referred to in clauses  (A)  through (F) above  secured by (or for
which the holder of such  Indebtedness  has an  existing  right,  contingent  or
otherwise,  to be secured  by) any  mortgage,  lien,  pledge,  change,  security
interest  or other  encumbrance  upon or in any  property  or assets  (including
accounts and contract rights) owned by any Person,  even though the Person which
owns such assets or property has not assumed or become liable for the payment of
such indebtedness, and (H) all Contingent Obligations in respect of indebtedness
or  obligations  of others of the kinds  referred  to in clauses (A) through (G)
above;  (y)  "Contingent  Obligation"  means,  as to any  Person,  any direct or
indirect liability, contingent or otherwise, of that Person

                                       11
<PAGE>

with respect to any indebtedness, lease, dividend or other obligation of another
Person if the primary purpose or intent of the Person  incurring such liability,
or the primary effect  thereof,  is to provide  assurance to the obligee of such
liability that such liability will be paid or discharged, or that any agreements
relating  thereto will be complied  with, or that the holders of such  liability
will be protected (in whole or in part) against loss with respect  thereto;  and
(z) "Person" means an individual, a limited liability company, a partnership,  a
joint venture,  a corporation,  a trust, an  unincorporated  organization  and a
government or any department or agency thereof.

                  (q)  Absence  of  Litigation.  Except  as  set  forth  in  the
Company's  10-K for the year ended July 31, 2003,  there is no material  action,
suit,  proceeding,  inquiry or investigation  before or by the Principal Market,
any court, public board, government agency, self-regulatory organization or body
pending,  to the knowledge of the Company,  threatened  against or affecting the
Company,  the Common  Stock or any  Subsidiary  or any of the  Company's  or any
Subsidiary's officers or directors in their capacities as such.

                  (r) Insurance. The Company and its Subsidiaries are insured by
insurers of recognized  financial  responsibility  against such losses and risks
and in such  amounts as  management  of the  Company  believes to be prudent and
customary  in the  businesses  in which the  Company  and its  Subsidiaries  are
engaged.

                  (s) Employee Relations.

                           (i) Neither the Company nor any Subsidiary is a party
to any  collective  bargaining  agreement or employs any member of a union.  The
Company and its  Subsidiaries  believe that their relations with their employees
are good. No executive  officer of the Company (as defined in Rule 501(f) of the
1933 Act) has  notified  the  Company  that such  officer  intends  to leave the
Company or otherwise terminate such officer's employment with the Company.

                           (ii)  The  Company  and  its   Subsidiaries   are  in
compliance  with all  federal,  state,  local and foreign  laws and  regulations
respecting  employment  and  employment  practices,   terms  and  conditions  of
employment and wages and hours,  except where failure to be in compliance  would
not, either  individually or in the aggregate,  reasonably be expected to result
in a Material Adverse Effect.

                  (t) Title.  The  Company  and its  Subsidiaries  have good and
marketable title to all personal property owned by them which is material to the
business of the Company and its Subsidiaries, in each case free and clear of all
liens, encumbrances and defects or such as do not materially affect the value of
such property and do not interfere  with the use made and proposed to be made of
such property by the Company and its  Subsidiaries.  Neither the Company nor any
Subsidiary  owns any real property.  Any real property and facilities held under
lease  by the  Company  and its  Subsidiaries  are  held by  them  under  valid,
subsisting and  enforceable  leases with such exceptions as are not material and
do not interfere  with the use made and proposed to be made of such property and
buildings by the Company and its Subsidiaries.

                                       12
<PAGE>

                  (u)  Intellectual  Property  Rights.  To the  knowledge of the
Company,  the Company and its  Subsidiaries  own or possess  adequate  rights or
licenses  to use all  trademarks,  trade  names,  service  marks,  service  mark
registrations,  service names, patents, patent rights,  copyrights,  inventions,
licenses,  approvals,  governmental  authorizations,  trade  secrets  and  other
intellectual  property  rights  ("Intellectual  Property  Rights")  necessary to
conduct  their  respective  businesses as now  conducted.  None of the Company's
issued patents that are assigned to it or any Intellectual  Property Rights that
are material to the business of the Company have expired or  terminated,  or are
expected  to  expire  or  terminate  within  three  years  from the date of this
Agreement.  The Company does not have any knowledge of any  infringement  by the
Company or any Subsidiary of Intellectual Property Rights of others except where
such infringement would not,  individually or in the aggregate,  have a Material
Adverse Effect on the Company. There is no claim, action or proceeding or to the
knowledge of the Company,  pending or being  threatened,  against the Company or
any Subsidiary  regarding its  Intellectual  Property  Rights which could have a
Material  Adverse Effect.  The Company is unaware of any facts or  circumstances
which might give rise to any of the foregoing  infringements or claims,  actions
or proceedings.  The Company and its Subsidiaries have taken reasonable security
measures  to  protect  the  secrecy,  confidentiality  and value of all of their
Intellectual Property Rights.

                  (v) Environmental  Laws. To the knowledge of the Company,  the
Company  and  its   Subsidiaries   (i)  are  in  compliance  with  any  and  all
Environmental  Laws (as  hereinafter  defined),  (ii) have received all permits,
licenses or other approvals required of them under applicable Environmental Laws
to conduct their  respective  businesses  and (iii) are in  compliance  with all
terms and conditions of any such permit,  license or approval  where, in each of
the  foregoing  clauses (i),  (ii) and (iii),  the failure to so comply could be
reasonably  expected  to have,  individually  or in the  aggregate,  a  Material
Adverse Effect. The term "Environmental Laws" means all federal, state, local or
foreign  laws  relating  to  pollution  or  protection  of human  health  or the
environment  (including,   without  limitation,   ambient  air,  surface  water,
groundwater,  land surface or subsurface strata), including, without limitation,
laws  relating to  emissions,  discharges,  releases or  threatened  releases of
chemicals, pollutants,  contaminants, or toxic or hazardous substances or wastes
(collectively,   "Hazardous  Materials")  into  the  environment,  or  otherwise
relating to the manufacture,  processing, distribution, use, treatment, storage,
disposal,  transport  or  handling  of  Hazardous  Materials,  as  well  as  all
authorizations,   codes,  decrees,  demands  or  demand  letters,   injunctions,
judgments,  licenses,  notices  or notice  letters,  orders,  permits,  plans or
regulations issued, entered, promulgated or approved thereunder.

                  (w) Subsidiary  Rights. The Company has the unrestricted right
to vote,  and  (subject to  limitations  imposed by  applicable  law) to receive
dividends and  distributions  on, all capital  securities of each  Subsidiary as
owned by the Company.

                  (x) Taxes.  The Company has filed all income tax and all other
material tax returns required to be filed, which returns are true and correct in
all material  respects,  and the Company is not in default in the payment of any
taxes,  including penalties and interest,  assessments,  fees and other charges,
shown  thereon due or otherwise  assessed,  other than those being  contested in
good faith and for which adequate reserves have been provided or those currently
payable  without  interest  which were  payable  pursuant to said returns or any
assessments with respect thereto.

                                       13
<PAGE>

                  (y)  Disclosure.  To  the  Company's  knowledge,  the  Company
confirms  that neither it nor any other Person acting on its behalf has provided
any of the Buyers or their  respective  agents or counsel  with any  information
that constitutes or might constitute material, nonpublic information, other than
information  related to the  transactions  contemplated by this  Agreement.  The
Company   acknowledges   and  agrees  that  no  Buyer  makes  or  has  made  any
representations  or  warranties  with respect to the  transactions  contemplated
hereby other than those specifically set forth in the Transaction Documents.

                  (z) Sarbanes-Oxley  Act. The Company is in compliance with any
and all  applicable  requirements  of the  Sarbanes-Oxley  Act of 2002  that are
effective  as of  the  date  hereof,  and  any  and  all  applicable  rules  and
regulations  promulgated by the SEC thereunder that are effective as of the date
hereof,  to the extent that the foregoing  are  effective and  applicable to the
Company,  except  where such  noncompliance  would not have a  Material  Adverse
Effect.

                  (aa) Form S-3 Eligibility. The Company is eligible to register
shares of Common Stock for resale by the Buyers under Form S-3 promulgated under
the 1933 Act.

         4. COVENANTS.

                  (a) Best Efforts. Each party shall use its best efforts timely
to satisfy each of the  conditions to be satisfied by it as provided in Sections
6 and 7 of this Agreement.

                  (b) Form D and Blue Sky.  The Company  agrees to file a Form D
with respect to the Securities as required  under  Regulation D and to provide a
copy thereof to each Buyer promptly after such filing.  The Company shall, on or
before the  Closing  Date,  take such  action as the  Company  shall  reasonably
determine is  necessary  in order to obtain an  exemption  for or to qualify the
Securities  for sale to the Buyers at the  Closing  pursuant  to this  Agreement
under  applicable  securities  or "Blue  Sky" laws of the  states of the  United
States (or to obtain an exemption  from such  qualification),  and shall provide
evidence  of any such  action so taken to the Buyers on or prior to the  Closing
Date.  The  Company  shall  make all  filings  and  reports  that it  reasonably
determines  are  necessary  relating  to the  offer  and sale of the  Securities
required  under  applicable  securities  or "Blue Sky" laws of the states of the
United States following the Closing Date;  provided,  however,  that the Company
shall not for any such  purpose be  required  to qualify  generally  to transact
business  as a  foreign  corporation  in  any  jurisdiction  where  it is not so
qualified or to consent to general service of process in any such jurisdiction.

                  (c) Listing.  The Company shall promptly secure the listing of
all of the  Registrable  Securities  (as  defined  in  the  Registration  Rights
Agreement)  upon each  national  securities  exchange  and  automated  quotation
system,  if any,  upon which shares of Common Stock are then listed  (subject to
official notice of issuance) and shall maintain,  so long as any other shares of
Common Stock shall be so listed, such listing of all Registrable Securities from
time to time issuable under the terms of the Transaction Documents.  The Company
shall use reasonable  best efforts to maintain the Common Stock's  authorization
for quotation on the  Principal  Market,  except in  connection  with an Organic
Change (as defined in the Warrants). The Company shall pay all fees and expenses
in connection with satisfying its obligations under this Section 4(c).

                                       14
<PAGE>

                  (d)  Fees.  The  Company  shall  reimburse  the  Buyers in the
aggregate  $25,000 for the Buyers'  reasonable  expenses  incurred in connection
with the  preparation,  execution  and  performance  of this  Agreement  and the
transactions  contemplated hereunder,  which amount shall be net funded from the
Purchase Price of The Riverview  Group LLC at the Closing.  The Company shall be
responsible  for  the  payment  of  any  placement   agent's  fees  or  broker's
commissions relating to or arising out of the transactions  contemplated hereby.
Except as otherwise set forth in this  Agreement or in the  Registration  Rights
Agreement,  each  party  to  this  Agreement  shall  bear  its own  expenses  in
connection with the sale of the Securities to the Buyers.

                  (e) Disclosure of Transactions and Other Material Information.
On or before 8:30 a.m.,  New York City Time,  on the first Trading Day following
the Closing Date,  the Company shall file a Current  Report on Form 8-K with the
SEC describing the terms of the transactions  contemplated by this Agreement and
attaching this Agreement, the form of Warrant, the Registration Rights Agreement
and the press  release  referred  to below as  exhibits to such filing (the "8-K
Filing").  Upon the 8-K Filing with the SEC, no Buyer shall be in  possession of
any material, nonpublic information received from the Company, any Subsidiary or
any of its  respective  officers,  directors,  employees or agents,  that is not
disclosed  in the 8-K  Filing.  The  Company  shall  not,  and shall  cause each
Subsidiary and each of its respective officers, directors, employees and agents,
not to, provide any Buyer with any material nonpublic  information regarding the
Company or any  Subsidiary  from and after the filing of the 8-K Filing with the
SEC without the express written consent of such Buyer;  provided,  however, that
the foregoing  obligation  shall not apply in the event that the Buyer  requests
such material  nonpublic  information from the Company.  Neither the Company nor
any Buyer shall issue any press  releases or any other  public  statements  with
respect to the transactions contemplated by this Agreement;  provided,  however,
that the Company shall be entitled,  without the prior approval of any Buyer, to
make  any  press  release  or  other  public  disclosure  with  respect  to such
transactions   (i)  in   substantial   conformity   with  the  8-K   Filing  and
contemporaneously therewith and (ii) is required by applicable law.

                  (f) Additional Registration Statements. Until such time as the
Registration  Statement  (as defined in the  Registration  Rights  Agreement) is
declared  effective  by the  SEC,  the  Company  will  not  file a  registration
statement under the 1933 Act relating to securities that are not the Securities.

                  (g)  Right of  First  Refusal.  (i) For a  period  of one year
following the Closing Date, the Company shall not issue, sell or exchange, agree
or  obligate  itself to issue,  sell or  exchange  or  reserve  or set aside for
issuance, sale or exchange, (A) any shares of Common Stock, (B) any other equity
security of the Company, including without limitation shares of preferred stock,
(C) any debt security of the Company  (other than debt with no equity  feature),
including without limitation any debt security which by its terms is convertible
into or exchangeable for any equity security of the Company, (D) any security of
the Company that is a combination of debt and equity, or (E) any option, warrant
or other right to subscribe for,  purchase or otherwise  acquire any such equity
security  or any such  debt  security  of the  Company,  unless in each case the
Company  shall  have  first  offered  to  sell  such  securities  (the  "Offered
Securities")  to the Buyers as follows:  The Company shall offer to sell to each
Buyer (1) that  portion  of the  Offered  Securities  as the number of shares of
Common Stock (including

                                       15
<PAGE>

all Common Shares and Warrant Shares on an as-converted basis) then held by such
Buyer and acquired pursuant to the terms of the Transaction Documents,  bears to
the total  number of shares of Common  Stock  (including  all  shares of capital
stock convertible into Common Stock on an as-converted  basis) held on such date
by all Buyers and acquired  pursuant to the terms of the  Transaction  Documents
(the "Basic Amount"),  and (2) such additional portion of the Offered Securities
as such Buyer shall indicate it will purchase should the other Buyers  subscribe
for less than their Basic Amounts (the  "Undersubscription  Amount"), at a price
and on such other terms as shall have been  specified  by the Company in writing
delivered  to such Buyer (the  "Offer"),  which Offer by its terms shall  remain
open and  irrevocable for a period of ten (10) Business Days from receipt of the
Offer.

                           (ii) Notice of each Buyer's  intention to accept,  in
whole or in part, any Offer made pursuant to Section  4(g)(i) shall be evidenced
by a writing  signed by such Buyer and delivered to the Company prior to the end
of the 10-day  period of such offer,  setting  forth such of the  Buyer's  Basic
Amount as such  Buyer  elects to  purchase  and,  if such Buyer  shall  elect to
purchase  all of its Basic  Amount,  the  Undersubcription  Amount as such Buyer
shall elect to  purchase  (the  "Notice of  Acceptance").  If the Basic  Amounts
subscribed  for by all Buyers are less than the total  Offered  Securities  then
each  Buyer  who  has set  forth  Undersubscription  Amounts  in its  Notice  of
Acceptance  shall be entitled to purchase  all  Undersubcription  Amounts it has
subscribed for; provided,  however,  that should the  Undersubscription  Amounts
subscribed  for exceed the  difference  between the Offered  Securities  and the
Basic Amounts  subscribed for (the "Available  Undersubcription  Amount"),  each
Buyer who has  subscribed for any  Undersubcription  Amount shall be entitled to
purchase  only that  portion  of the  Available  Undersubcription  Amount as the
Undersubcription  Amount  subscribed  for by  such  Buyer  bears  to  the  total
Undersubcription  Amounts  subscribed for by all Buyers,  subject to rounding by
the Board of Directors to the extent it deems reasonably necessary.

                           (iii) Permitted Sales of Refused  Securities.  In the
event that  Notices of  Acceptance  are not given by the Buyer in respect of all
the  Offered  Securities,  the  Company  shall  have  sixty  (60)  days from the
expiration  of the period set forth in Section  4(g)(i) to close the sale of all
or any part of such Offered  Securities as to which a Notice of  Acceptance  has
not been given by the Buyer (the "Refused  Securities") to the person or persons
specified in the Offer,  but only for cash and  otherwise  in all respects  upon
terms and conditions,  including,  without  limitation,  unit price and interest
rates,  which are no more favorable,  in the aggregate,  to such other person or
persons or less favorable to the Company than those set forth in the Offer.

                           (iv)  Reduction in Amount of Offered  Securities.  In
the event the Company shall propose to sell less than all the Refused Securities
(any  such  sale to be in the  manner  and on the  terms  specified  in  Section
4(g)(iii)  above),  then each  Buyer  may,  at its sole  option  and in its sole
discretion, reduce the number or other units of the Offered Securities specified
in its Notice of Acceptance to an amount which shall be not less than the amount
of the  Offered  Securities  which such Buyer  elected to  purchase  pursuant to
Section 4(g)(ii)  multiplied by a fraction,  (A) the numerator of which shall be
the amount of Offered  Securities which the Company  actually  proposes to sell,
and (B) the denominator of which shall be the amount of all Offered  Securities.
In the event  that any Buyer so elects to reduce the number or amount of Offered
Securities  specified in its Notice of  Acceptance,  the Company may not sell or
otherwise

                                       16
<PAGE>

dispose of more than the  reduced  amount of the Offered  Securities  until such
securities have been offered to the Buyers in accordance with Section 4(g).

                           (v)  Closing.  Upon each  closing  under this Section
4(g), which shall include full payment to the Company,  the Buyer shall purchase
from the Company,  and the Company shall sell to the Buyer the number of Offered
Securities  specified  in the  Notices of  Acceptance,  as reduced  pursuant  to
Section  4(g)(iv) if the Buyers have so elected,  upon the terms and  conditions
specified in the Offer. The purchase by the Buyers of any Offered  Securities is
subject in all cases to the  preparation,  execution and delivery by the Company
and the Buyers of a  purchase  agreement  relating  to such  Offered  Securities
reasonably satisfactory in form and substance to the Buyers and their respective
counsel.

                           (vi)  Further  Sale.   In  each  case,   any  Offered
Securities  not purchased by the Buyers or other Person or Persons in accordance
with  Section 4 may not be sold or  otherwise  disposed  of until they are again
offered to the Buyers under the procedures specified in Section 4(g).

                           (vii) Exception.  The rights of the Buyers under this
Section 4(g) shall not apply to: (A) Common Stock issued as a stock  dividend to
holders of Common  Stock or upon any  subdivision  or  combination  of shares of
Common Stock, (B) shares of Common Stock issued upon exercise of the Warrants or
issued upon conversion or exercise of any other currently outstanding securities
of the Company pursuant to the terms of such securities,  (C) pursuant to a bona
fide underwritten  firm commitment public offering with a nationally  recognized
underwriter  which  generates  gross  proceeds  to  the  Company  in  excess  of
$20,000,000 (other than an "at the market offering" as defined in Rule 415(a)(4)
under the 1933 Act and "equity  lines"),  (D) in  connection  with any  employee
benefit  plan which has been  approved by the Board of Directors of the Company,
pursuant  to which the  Company's  securities  may be  issued  to any  employee,
officer or director of, or consultant or other service  provider to, the Company
for services  provided to the Company,  (E)  securities of the Company issued in
connection with the  acquisition of any Person  (whether by merger,  purchase of
stock or assets  or  otherwise)  the  primary  purpose  of which is not to raise
capital and (F) securities of the Company issued in connection  with one or more
strategic  partnerships  or  joint  ventures  in which  there  is a  significant
commercial relationship with the Company and (G) securities of the Company where
the  principal  purpose of the  issuance,  sale or exchange is not capital  fund
raising (collectively, "Excluded Securities").

         5. REGISTER; TRANSFER AGENT INSTRUCTIONS.

                  (a)  Register.  The Company  shall  maintain at its  principal
executive  offices or its transfer  agent (or such other office or agency of the
Company as it may  designate by notice to each holder of  Warrants),  a register
for the Warrants,  in which the Company shall record the name and address of the
Person in whose  name the  Warrants  have been  issued  (including  the name and
address of each  transferee),  and the number of Warrant  Shares  issuable  upon
exercise  of the  Warrants  held by such  Person.  The  Company  shall  keep the
register open and available at all times during  business  hours for  reasonable
inspection of any Buyer or its legal representatives.

                                       17
<PAGE>

                  (b)  Transfer  Agent  Instructions.  The  Company  shall issue
irrevocable  instructions  to its transfer  agent,  and any subsequent  transfer
agent, to issue certificates or credit shares to the applicable balance accounts
at DTC, registered in the name of each Buyer or its respective  nominee(s),  for
the Warrant  Shares in such amounts as specified from time to time by each Buyer
to the Company  upon  exercise of the Warrants in the form of Exhibit D attached
hereto (the  "Irrevocable  Transfer Agent  Instructions").  The Company warrants
that no  instruction  other than the  Irrevocable  Transfer  Agent  Instructions
referred to in this Section 5(b), and stop transfer  instructions to give effect
to Section 2(f) hereof and as contemplated by the Registration Rights Agreement,
will be given by the Company to its transfer  agent,  and that, as to actions by
the Company,  the Securities shall otherwise be freely transferable on the books
and records of the Company as and to the extent  provided in this  Agreement and
the  other  Transaction  Documents.  If a Buyer  effects a sale,  assignment  or
transfer of the  Securities in accordance  with Section 2(f),  the Company shall
permit the transfer and shall promptly  instruct its transfer agent to issue one
or more certificates or credit shares to the applicable  balance accounts at DTC
in such name and in such denominations as specified by such Buyer to effect such
sale,  transfer  or  assignment.  In the event  that such  sale,  assignment  or
transfer  involves Warrant Shares sold,  assigned or transferred  pursuant to an
effective  registration  statement or pursuant to Rule 144,  the transfer  agent
shall issue such Warrant  Shares to the Buyer,  assignee or  transferee,  as the
case may be,  without any  restrictive  legend,  subsequent to  compliance  with
applicable state and federal securities laws.

         6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.

         Closing Date. The obligation of the Company hereunder to issue and sell
the  Common  Shares and the  related  Warrants  to each Buyer at the  Closing is
subject to the  satisfaction,  at or before  the  Closing  Date,  of each of the
following conditions,  provided that these conditions are for the Company's sole
benefit and may be waived by the Company at any time in its sole  discretion  by
providing each Buyer with prior written notice thereof:

                           (i)  Such  Buyer  shall  have  executed  each  of the
Transaction  Documents  to which  it is a party  and  delivered  the same to the
Company and .

                           (ii) Such Buyer shall have  delivered  to the Company
the Purchase Price (less, the amounts withheld pursuant to Section 4(e)) for the
Common  Shares and the related  Warrants  being  purchased  by such Buyer at the
Closing by wire transfer of  immediately  available  funds  pursuant to the wire
instructions provided by the Company.

                           (iii)  The  representations  and  warranties  of such
Buyer  shall  be  true  and  correct  in  all  material   respects  (except  for
representations and warranties that are qualified by materiality, which shall be
true and correct in all respects) as of the date when made and as of the Closing
Date as though made at that time (except for representations and warranties that
speak as of a specific date), and such Buyer shall have performed, satisfied and
complied  in  all  material  respects  (except  for  covenants,  agreements  and
conditions that are qualified by materiality, which shall be true and correct in
all respects)  with the covenants,  agreements  and conditions  required by this
Agreement to be performed,  satisfied or complied with by such Buyer at or prior
to the Closing Date.

                                       18
<PAGE>

         7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.

         Closing Date.  The  obligation of each Buyer  hereunder to purchase the
Common  Shares  and the  related  Warrants  at the  Closing  is  subject  to the
satisfaction,  at  or  before  the  Closing  Date,  of  each  of  the  following
conditions, provided that these conditions are for each Buyer's sole benefit and
may be waived by such Buyer at any time in its sole  discretion by providing the
Company with prior written notice thereof:

                           (i) The Company  shall have executed and delivered to
such Buyer each of the Transaction  Documents and the related  Warrants (in such
amounts as such Buyer shall  request)  and shall have  authorized  the  Transfer
Agent to issue the Common  Shares (in such amounts as such Buyer shall  request)
being purchased by such Buyer at the Closing  pursuant to this Agreement  within
two (2) Business Days of the Closing.

                           (ii) Such Buyer  shall have  received  the opinion of
Wilson Sonsini Goodrich & Rosati, the Company's counsel, dated as of the Closing
Date, in form, scope and substance reasonably  satisfactory to such Buyer and in
substantially the form of Exhibit E attached hereto.

                           (iii) The Company shall have  delivered to such Buyer
a copy of the Irrevocable Transfer Agent Instructions,  in the form of Exhibit D
attached hereto,  which  instructions shall have been delivered to the Company's
transfer agent.

                           (iv) The Company shall have delivered to such Buyer a
certificate evidencing the incorporation and good standing of the Company in its
state of  incorporation  issued  by the  Secretary  of  State  of such  state of
incorporation as of a date within 10 days of the Closing Date.

                           (v) The Company shall have  delivered to such Buyer a
certificate evidencing the Company's  qualification as a foreign corporation and
good standing  issued by the Secretary of State of the State of California as of
a date within five days of the Closing Date.

                           (vi) The Company shall have delivered to such Buyer a
certificate,  executed by the Assistant Secretary of the Company and dated as of
the Closing  Date,  as to (i) the  resolutions  consistent  with Section 3(b) as
adopted by the Company's Board of Directors in a form  reasonably  acceptable to
such Buyer (the "Resolutions"),  (ii) the Certificate of Incorporation and (iii)
the Bylaws,  each as in effect at the Closing,  in the form  attached  hereto as
Exhibit F.

                           (vii)  The  representations  and  warranties  of  the
Company  shall  be  true  and  correct  in all  material  respects  (except  for
representations and warranties that are qualified by materiality, which shall be
true and correct in all respects) as of the date when made and as of the Closing
Date as though made at that time (except for representations and warranties that
speak as of a specific date) and the Company shall have performed, satisfied and
complied  in  all  material  respects  (except  for  covenants,  agreements  and
conditions  that are qualified by  materiality,  which shall be complied with in
all respects)  with the covenants,  agreements  and  conditions  required by the
Transaction Documents to be performed, satisfied or complied with

                                       19
<PAGE>

by the Company at or prior to the Closing Date. Such Buyer shall have received a
certificate, executed by the Chief Executive Officer of the Company, dated as of
the Closing Date, to the foregoing effect and as to such other matters as may be
reasonably requested by such Buyer in the form attached hereto as Exhibit G.

                           (viii) The Company shall have delivered to such Buyer
a letter from the Company's  transfer  agent  certifying the number of shares of
Common Stock outstanding as of a date within five days of the Closing Date.

                           (ix)   The   Company    shall   have   obtained   all
governmental,  regulatory  or  third  party  consents  and  approvals,  if  any,
necessary  for the sale of the  Common  Shares  and the  Warrants  ,  including,
without  limitation,  the expiration or waiver of the 15-day period set forth in
Rule 4310(c)(17) of the National Association of Securities Dealers, Inc.

                           (x) The  Common  Stock  (I) shall be  designated  for
quotation  or  listed  on the  Principal  Market  and (II)  shall  not have been
suspended  by the SEC or the  Principal  Market  from  trading on the  Principal
Market  nor  shall  suspension  by the SEC or the  Principal  Market  have  been
threatened  either (A) in writing by the SEC or the  Principal  Market or (B) by
falling  below the minimum  listing  maintenance  requirements  of the Principal
Market.

         8.  TERMINATION.  In the  event  that  the  Closing  shall  not have
occurred with respect to a Buyer on or before  forty-five  (45) days from the
date  hereof due to the  Company's  or such  Buyer's  failure to satisfy  the
conditions set forth in Sections 6 and 7 above (and the nonbreaching  party's
failure to waive such unsatisfied condition(s)), the nonbreaching party shall
have the option to terminate  this  Agreement  with respect to such breaching
party at the close of business on such date without liability of any party to
any other party;  provided,  however,  that if this  Agreement is  terminated
pursuant to this Section 8 by Buyer and the Company has failed to satisfy the
conditions  in  Section  7 above,  the  Company  shall  remain  obligated  to
reimburse the Buyers for the expenses described in Section 4(e) above.

         9. MISCELLANEOUS.

                  (a) Governing  Law;  Jurisdiction;  Jury Trial.  All questions
concerning the construction,  validity,  enforcement and  interpretation of this
Agreement  shall be  governed  by the  internal  laws of the  State of New York,
without  giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New York or any other  jurisdictions)  that would cause
the  application  of the laws of any  jurisdictions  other than the State of New
York. Each party hereby irrevocably submits to the non-exclusive jurisdiction of
the  state and  federal  courts  sitting  in The City of New  York,  Borough  of
Manhattan  for  the  adjudication  of any  dispute  hereunder  or in  connection
herewith or with any transaction  contemplated  hereby or discussed herein,  and
hereby  irrevocably  waives,  and  agrees  not to assert in any suit,  action or
proceeding,  any claim that it is not personally  subject to the jurisdiction of
any  such  court,  that  such  suit,  action  or  proceeding  is  brought  in an
inconvenient  forum or that the  venue of such  suit,  action or  proceeding  is
improper.  Each party hereby  irrevocably waives personal service of process and
consents  to process  being  served in any such suit,  action or  proceeding  by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing

                                       20
<PAGE>

contained  herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. EACH PARTY HEREBY  IRREVOCABLY  WAIVES ANY RIGHT
IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY
DISPUTE  HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.

                  (b)  Counterparts.  This  Agreement  may be executed in two or
more identical  counterparts,  all of which shall be considered one and the same
agreement and shall become effective when  counterparts have been signed by each
party and  delivered to the other  party;  provided  that a facsimile  signature
shall be  considered  due  execution  and shall be  binding  upon the  signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.

                  (c)  Headings.   The  headings  of  this   Agreement  are  for
convenience   of   reference   and  shall  not  form  part  of,  or  affect  the
interpretation of, this Agreement.

                  (d) Severability.  If any provision of this Agreement shall be
invalid   or   unenforceable   in   any   jurisdiction,   such   invalidity   or
unenforceability  shall  not  affect  the  validity  or  enforceability  of  the
remainder  of  this   Agreement  in  that   jurisdiction   or  the  validity  or
enforceability of any provision of this Agreement in any other jurisdiction.

                  (e) Entire Agreement;  Amendments.  This Agreement  supersedes
all other prior oral or written  agreements  between the  Buyers,  the  Company,
their  affiliates and Persons acting on their behalf with respect to the matters
discussed  herein,  and this  Agreement and the  instruments  referenced  herein
contain  the entire  understanding  of the parties  with  respect to the matters
covered  herein and therein  and,  except as  specifically  set forth  herein or
therein,  neither the Company nor any Buyer makes any representation,  warranty,
covenant or  undertaking  with  respect to such  matters.  No  provision of this
Agreement may be amended  other than by an  instrument in writing  signed by the
Company and the holders of Common Shares representing at least a majority of the
amount of the Common Shares, or, if prior to the Closing Date, the Buyers listed
on the Schedule of Buyers as being  obligated to purchase at least a majority of
the amount of the Common Shares. No provision hereof may be waived other than by
an instrument in writing signed by the party against whom enforcement is sought.
No such amendment  shall be effective to the extent that it applies to less than
all of the holders of the Common Shares then outstanding. No consideration shall
be offered or paid to any Person to amend or consent to a waiver or modification
of  any  provision  of  any  of  the  Transaction   Documents  unless  the  same
consideration  also  is  offered  to  all  of the  parties  to  the  Transaction
Documents,  holders of Common Shares or holders of the Warrants, as the case may
be. The Company has not,  directly or indirectly,  made any agreements  with any
Buyers relating to the terms or conditions of the  transactions  contemplated by
the Transaction Documents except as set forth in the Transaction Documents.

                  (f)  Notices.   Any  notices,   consents,   waivers  or  other
communications  required  or  permitted  to be  given  under  the  terms of this
Agreement must be in writing and will be deemed to have been delivered: (i) upon
receipt,  when delivered  personally;  (ii) upon receipt, when sent by facsimile
(provided confirmation of transmission is mechanically or electronically

                                       21
<PAGE>

generated  and kept on file by the sending  party);  or (iii) one  Business  Day
after deposit with an overnight courier service, in each case properly addressed
to the party to receive the same.  The addresses and facsimile  numbers for such
communications shall be:

         If to the Company:

                  47071 Bayside Parkway
                  Fremont, CA 94538
                  Phone: (510) 687-7000
                  Fax: (408) 745-9130
                  Attention:  Ms. Kathleen R. McElwee

         with a copy to:

                  Wilson Sonsini Goodrich & Rosati, R.C.
                  650 Page Mill Road
                  Palo Alto, CA  94304
                  Phone:  (650) 493-9300
                  Fax:  (650) 493-6811
                  Attention:  Bret M. DiMarco, Esq.

         If to the Transfer Agent:

                  EquiServe Trust Company, N.A.
                  P.O. Box 43023
                  Providence, RI 02940-3023
                  Phone:  (816) 843-4299
                  Fax:  (617) 360-6900
                  Attention:  Investor Relations

If to a Buyer, to its address and facsimile  number set forth on the Schedule of
Buyers, with copies to such Buyer's representatives as set forth on the Schedule
of Buyers,  or to such  other  address  and/or  facsimile  number  and/or to the
attention of such other Person as the  recipient  party has specified by written
notice  given to each other  party five (5) days prior to the  effectiveness  of
such change.  Written confirmation of receipt (A) given by the recipient of such
notice,   consent,   waiver  or  other   communication,   (B)   mechanically  or
electronically  generated by the sender's facsimile machine containing the time,
date,  recipient  facsimile  number  and an  image  of the  first  page  of such
transmission or (C) provided by an overnight courier service shall be rebuttable
evidence of personal service,  receipt by facsimile or receipt from an overnight
courier   service  in   accordance   with  clause  (i),  (ii)  or  (iii)  above,
respectively.

                  (g)  Successors and Assigns.  This Agreement  shall be binding
upon and inure to the benefit of the parties and their respective successors and
assigns,  including any  purchasers  of the Common  Shares or the Warrants.  The
Company shall not assign this Agreement or any rights or  obligations  hereunder
without the prior written  consent of the holders of Common Shares  representing
at least a majority of the number of the Common  Shares,  including by merger or
consolidation. A Buyer may assign some or all of its rights hereunder

                                       22
<PAGE>

without the consent of the Company, in which event such assignee shall be deemed
to be a Buyer hereunder with respect to such assigned rights.

                  (h) No Third Party  Beneficiaries.  This Agreement is intended
for the benefit of the parties hereto and their respective  permitted successors
and  assigns,  and is not for the  benefit of, nor may any  provision  hereof be
enforced by, any other Person.

                  (i)  Survival.  Unless  this  Agreement  is  terminated  under
Section 8, the  representations  and  warranties  of the  Company and the Buyers
contained  in  Sections  2 and 3, the  agreements  and  covenants  set  forth in
Sections 4, 5 and 9 shall  survive until the three (3) year  anniversary  of the
Closing.  Each  Buyer  shall be  responsible  only for its own  representations,
warranties, agreements and covenants hereunder.

                  (j) Further  Assurances.  Each party shall do and perform,  or
cause to be done and  performed,  all such  further  acts and things,  and shall
execute and deliver all such other  agreements,  certificates,  instruments  and
documents,  as the other party may reasonably  request in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

                  (k)   Indemnification.   In   consideration  of  each  Buyer's
execution and delivery of the Transaction Documents and acquiring the Securities
thereunder and in addition to all of the Company's other  obligations  under the
Transaction  Documents,  the Company shall defend,  protect,  indemnify and hold
harmless  each Buyer and each other  holder of the  Securities  and all of their
stockholders,  partners, members, officers,  directors,  employees and direct or
indirect   investors  and  any  of  the  foregoing   Persons'  agents  or  other
representatives  (including,  without  limitation,  those retained in connection
with  the  transactions  contemplated  by  this  Agreement)  (collectively,  the
"Indemnitees")  from and against any and all actions,  causes of action,  suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith  (irrespective of whether any such Indemnitee is a party to
the  action  for which  indemnification  hereunder  is  sought),  and  including
reasonable  attorneys' fees and disbursements  (the "Indemnified  Liabilities"),
incurred by any Indemnitee as a result of, or arising out of, or relating to (a)
any  misrepresentation  or breach of any  representation or warranty made by the
Company in the  Transaction  Documents or any other  certificate,  instrument or
document  contemplated  hereby  or  thereby,  (b) any  breach  of any  covenant,
agreement or obligation of the Company contained in the Transaction Documents or
any other certificate,  instrument or document contemplated hereby or thereby or
(c) any cause of action,  suit or claim brought or made against such  Indemnitee
by a third party  (including for these  purposes a derivative  action brought on
behalf of the Company) and arising out of or resulting  from (i) the  execution,
delivery,  performance or enforcement of the Transaction  Documents or any other
certificate,  instrument or document contemplated hereby or thereby, or (ii) any
transaction  financed  or to be  financed  in  whole  or in  part,  directly  or
indirectly,  with the proceeds of the issuance of the Securities.  To the extent
that the  foregoing  undertaking  by the  Company may be  unenforceable  for any
reason,  the  Company  shall make the  maximum  contribution  to the payment and
satisfaction of each of the Indemnified  Liabilities  which is permissible under
applicable  law.  Except  as  otherwise  set forth  herein,  the  mechanics  and
procedures  with respect to the rights and  obligations  under this Section 9(k)
shall be the same as those set forth in  Section  6 of the  Registration  Rights
Agreement.

                                       23
<PAGE>

                  (l)  No  Strict  Construction.   The  language  used  in  this
Agreement  will be deemed to be the  language  chosen by the  parties to express
their mutual intent, and no rules of strict construction will be applied against
any party.

                  (m)  Remedies.  Each Buyer and each  holder of the  Securities
shall have all rights and remedies set forth in the  Transaction  Documents  and
all rights and  remedies  which such holders have been granted at any time under
any other  agreement  or contract  and all of the rights which such holders have
under  any law.  Any  Person  having  any  rights  under any  provision  of this
Agreement shall be entitled to enforce such rights specifically (without posting
a bond or other  security),  to  recover  damages by reason of any breach of any
provision of this  Agreement  and to exercise  all other rights  granted by law.
Furthermore,  the Company recognizes that in the event that it fails to perform,
observe,  or discharge any or all of its obligations  under this Agreement,  any
remedy  at law may prove to be  inadequate  relief to the  Buyers.  The  Company
therefore  agrees  that the  Buyers  shall be  entitled  to seek  temporary  and
permanent  injunctive  relief in any such case without the  necessity of proving
actual damages and without posting a bond or other security.

                  (n) Payment Set Aside.  To the extent that the Company makes a
payment or  payments  to the Buyers  hereunder  or  pursuant to any of the other
Transaction  Documents or the Buyers enforce or exercise their rights  hereunder
or thereunder,  and such payment or payments or the proceeds of such enforcement
or exercise or any part  thereof are  subsequently  invalidated,  declared to be
fraudulent  or  preferential,  set aside,  recovered  from,  disgorged by or are
required to be refunded, repaid or otherwise restored to the Company, a trustee,
receiver or any other Person under any law (including,  without limitation,  any
bankruptcy  law, state or federal law, common law or equitable cause of action),
then to the  extent  of any such  restoration  the  obligation  or part  thereof
originally intended to be satisfied shall be revived and continued in full force
and effect as if such  payment had not been made or such  enforcement  or setoff
had not occurred.

                  (o) Independent Nature of Buyers'  Obligations and Rights. The
obligations  of each Buyer under any  Transaction  Document  are several and not
joint with the obligations of any other Buyer, and no Buyer shall be responsible
in any way for the  performance of the  obligations of any other Buyer under any
Transaction  Document.  Nothing  contained  herein or in any  other  Transaction
Document,  and no action taken by any Buyer pursuant hereto or thereto, shall be
deemed to  constitute  the  Buyers as a  partnership,  an  association,  a joint
venture or any other kind of entity, or create a presumption that the Buyers are
in any way acting in concert or as a group with respect to such  obligations  or
the transactions  contemplated by the Transaction Documents. Each Buyer confirms
that it has  independently  participated  in the  negotiation of the transaction
contemplated hereby with the advice of its own counsel and advisors.  Each Buyer
shall be entitled to  independently  protect and enforce its rights,  including,
without  limitations,  the rights  arising out of this  Agreement  or out of any
other Transaction  Documents,  and it shall not be necessary for any other Buyer
to be joined as an additional party in any proceeding for such purpose.

                            [Signature Page Follows]

                                       24
<PAGE>

IN WITNESS  WHEREOF,  each Buyer and the Company  have  caused  this  Securities
Purchase Agreement to be duly executed as of the date first written above.

COMPANY:                                       BUYERS:

VA SOFTWARE CORPORATION                        THE RIVERVIEW GROUP LLC

By:                                            By:
   -------------------------------                ----------------------------
   Name:  Ali Jenab                               Name:  Terry Feeney
   Title: Chief Executive Officer                 Title: Chief Operating Officer

<PAGE>

                               SCHEDULE OF BUYERS
<TABLE>
<CAPTION>

          (1)                            (2)                        (3)            (4)                       (5)
                                     Address and                 Number of       Number of    Legal Representative's Address and
         Buyer                     Facsimile Number            Common Shares     Warrants             Facsimile Number
         -----                     ----------------            -------------     --------             ----------------
<S>                           <C>                              <C>               <C>                  <C>
The Riverview Group LLC       666 Fifth Avenue, 8th floor        3,529,412        705,883         Schulte Roth & Zabel LLP
                              New York, New York 10103                                            919 Third Avenue
                              Attention: Manager                                                  New York, NY 10022
                              Facsimile: (212) 841-4141                                           Attn:  Eleazer Klein, Esq.
                              Telephone: (212) 841-4100                                           Facsimile:  (212) 593-5955
                              Residence: New York                                                 Telephone:  (212) 756-2000

</TABLE>

                                    EXHIBITS
                                    --------

Exhibit A  Form of Warrants
Exhibit B  Form of Registration Rights Agreement
Exhibit C  Schedule of Exceptions
Exhibit D  Form of Irrevocable Transfer Agent Instructions
Exhibit E  Form of Company Counsel Opinion
Exhibit F  Form of Secretary's Certificate
Exhibit G  Form of Officer's CertificateREGISTRATION RIGHTS AGREEMENT

         REGISTRATION RIGHTS AGREEMENT (this "Agreement"),  dated as of November
6, 2003,  by and among VA Software  Corporation,  a Delaware  corporation,  with
headquarters  located at 47071 Bayside Parkway,  Fremont,  California 94538 (the
"Company"),  and the investors  listed on the Schedule of Buyers attached hereto
(each, a "Buyer" and collectively, the "Buyers").

         WHEREAS:

         A. In connection  with the Securities  Purchase  Agreement by and among
the parties hereto of even date herewith (the "Securities Purchase  Agreement"),
the  Company has agreed,  upon the terms and  subject to the  conditions  of the
Securities  Purchase  Agreement,  to issue  and sell on the date  hereof  to the
Buyers (i) Three Million Five Hundred  Twenty Nine Thousand Four Hundred  Twelve
(3,529,412)  shares (the "Common  Shares") of the Company's  common  stock,  par
value $.001 per share (the "Common  Stock"),  and (ii) warrants (the "Warrants")
which will be  exercisable  to  purchase  shares of Common  Stock (as  exercised
collectively, the "Warrant Shares");

         B. To induce the Buyers to execute and deliver the Securities  Purchase
Agreement,  the Company has agreed to provide certain  registration rights under
the  Securities  Act  of  1933,  as  amended,  and  the  rules  and  regulations
thereunder, or any similar successor statute (collectively, the "1933 Act"), and
applicable state securities laws.

         NOW,  THEREFORE,  in  consideration  of the  premises  and  the  mutual
covenants  contained  herein  and other  good and  valuable  consideration,  the
receipt and sufficiency of which are hereby  acknowledged,  the Company and each
of the Buyers hereby agree as follows:

         1. Definitions.

         As used in this Agreement, the following terms shall have the following
meanings:

                  a. "Business Day" means any day other than Saturday, Sunday or
any other day on which  commercial  banks in The City of New York are authorized
or required by law to remain closed.

                  b.  "Investor"  means a  Buyer,  any  transferee  or  assignee
thereof to whom a Buyer  assigns its rights under this  Agreement and who agrees
to become bound by the provisions of this Agreement in accordance with Section 9
and any transferee or assignee  thereof to whom a transferee or assignee assigns
its rights under this Agreement and who agrees to become bound by the provisions
of this Agreement in accordance with Section 9.

                  c. "Person" means an individual,  a limited liability company,
a  partnership,  a joint  venture,  a corporation,  a trust,  an  unincorporated
organization and governmental or any department or agency thereof.

<PAGE>

                  d. "register,"  "registered,"  and  "registration"  refer to a
registration   effected  by  preparing  and  filing  one  or  more  Registration
Statements  (as defined  below) in compliance  with the 1933 Act and pursuant to
Rule 415  under  the 1933  Act or any  successor  rule  providing  for  offering
securities on a continuous or delayed basis ("Rule 415"), and the declaration or
ordering of effectiveness of such Registration Statement(s) by the United States
Securities and Exchange Commission (the "SEC").

                  e. "Registrable  Securities" means (i) the Common Shares, (ii)
the Warrant  Shares  issued or issuable  upon exercise of the Warrants and (iii)
any  shares of  capital  stock  issued or  issuable  with  respect to the Common
Shares, the Warrant Shares or the Warrants as a result of any stock split, stock
dividend,  recapitalization,  exchange or similar  event or  otherwise,  without
regard to any limitations on exercise of the Warrants.

                  f. "Registration  Statement" means a registration statement or
registration  statements  of the Company  filed under the 1933 Act  covering the
Registrable Securities.

         Capitalized  terms used herein and not otherwise  defined  herein shall
have the respective meanings set forth in the Securities Purchase Agreement.

         2. Registration.

                  a. Mandatory Registration.  The Company shall prepare, and, as
soon as  practicable  but in no event later than 30 days after the Closing  Date
(as defined in the Securities Purchase Agreement) (the "Filing Deadline"),  file
with the SEC a Registration  Statement on Form S-3 covering the resale of all of
the Registrable Securities. In the event that Form S-3 is unavailable for such a
registration,  the Company  shall use such other form as is available for such a
registration,  subject to the  provisions  of  Section  2(d).  The  Registration
Statement prepared pursuant hereto shall register for resale 5,082,354 shares of
Common Stock  (subject to  adjustment).  The Company shall use  reasonable  best
efforts to have the Registration Statement declared effective by the SEC as soon
as  practicable,  but in no event  later than the date which is (i) in the event
that the  Registration  Statement is not subject to a review by the SEC, 60 days
after the Closing Date or (ii) in the event that the  Registration  Statement is
subject  to a  review  by  the  SEC,  180  days  after  the  Closing  Date  (the
"Effectiveness  Deadline");  provided,  however,  that the Company  shall not be
deemed  to have  breached  this  Section  2(a) if it fails to meet the dates set
forth herein as a result of the unreasonable actions by Legal Counsel.

                  b. Allocation of Registrable Securities. The initial number of
Registrable  Securities included in any Registration Statement and each increase
in the number of Registrable  Securities included therein shall be allocated pro
rata among the Investors  based on the number of Registrable  Securities held by
each  Investor at the time the  Registration  Statement  covering  such  initial
number of Registrable  Securities or increase  thereof is declared  effective by
the SEC. In the event that an Investor sells or otherwise  transfers any of such
Investor's Registrable Securities, each transferee shall be allocated a pro rata
portion of the then remaining

                                       2
<PAGE>

number of Registrable  Securities  included in such  Registration  Statement for
such transferor. Any shares of Common Stock included in a Registration Statement
and which remain  allocated  to any Person which ceases to hold any  Registrable
Securities  covered by such  Registration  Statement  shall be  allocated to the
remaining Investors, pro rata based on the number of Registrable Securities then
held by such Investors which are covered by such Registration  Statement.  In no
event shall the Company include any securities other than Registrable Securities
on any  Registration  Statement  without  the prior  written  consent  of Buyers
holding at least a majority of the Registrable Securities.

                  c. Legal  Counsel.  Subject  to  Section 5 hereof,  the Buyers
holding at least a majority of the Registrable  Securities  shall have the right
to select one legal counsel to review and oversee any  registration  pursuant to
this  Section 2 ("Legal  Counsel"),  which shall be Schulte  Roth & Zabel LLP or
such  other  counsel  as  thereafter  designated  by the  holders  of at least a
majority of the  Registrable  Securities.  The Company and Legal  Counsel  shall
reasonably  cooperate  with each other in performing  the Company's  obligations
under this Agreement.

                  d.  Ineligibility  for Form S-3. In the event that Form S-3 is
not  available  for the  registration  of the resale of  Registrable  Securities
hereunder,  the  Company  shall  (i)  register  the  resale  of the  Registrable
Securities on another  appropriate form reasonably  acceptable to the holders of
at least a majority of the Registrable Securities and (ii) undertake to register
the  Registrable  Securities  on Form  S-3 as soon  as such  form is  available,
provided that the Company shall maintain the  effectiveness  of the Registration
Statement then in effect until such time as a Registration Statement on Form S-3
covering the Registrable Securities has been declared effective by the SEC.

                  e. Sufficient  Number of Shares  Registered.  In the event the
number of shares  available  under a  Registration  Statement  filed pursuant to
Section 2(a) is insufficient to cover all of the Registrable Securities required
to be covered by such Registration  Statement or an Investor's allocated portion
of the Registrable  Securities pursuant to Section 2(b), the Company shall amend
the applicable  Registration Statement, or file a new Registration Statement (on
the short form available  therefor,  if applicable),  or both, so as to cover at
least  the  number  of  such  Registrable  Securities  as  of  the  trading  day
immediately  preceding  the  date  of  the  filing  of  such  amendment  or  new
Registration Statement,  in each case, as soon as practicable,  but in any event
not later than fifteen (15) Business Days after the Company becomes aware of the
necessity  therefor.  The Company shall use its reasonable best efforts to cause
such amendment and/or new Registration  Statement to become effective as soon as
practicable  following  the  filing  thereof.  For  purposes  of  the  foregoing
provision,  the number of shares available under a Registration  Statement shall
be deemed  "insufficient  to cover all of the Registrable  Securities" if at any
time the  number of shares of Common  Stock  available  for  resale  under  such
Registration  Statement is less than the number of Registrable Securities issued
or issuable  upon  exercise of the Warrants.  The  calculation  set forth in the
foregoing  sentence  shall be made  without  regard  to any  limitations  on the
exercise of the Warrants and such calculation shall assume that the Warrants are
then  exercisable  into shares of Common  Stock at the then  prevailing  Warrant
Exercise Price (as defined in the Warrants).

                  f. Effect of Failure to Obtain and Maintain  Effectiveness  of
Registration  Statement.  If  (i) a  Registration  Statement  covering  all  the
Registrable Securities

                                       3
<PAGE>

required to be covered thereby and required to be filed by the Company  pursuant
to  this  Agreement  is not  declared  effective  by the  SEC on or  before  the
Effectiveness  Deadline  (an  "Effectiveness  Failure") or (ii) on any day after
such Registration  Statement has been declared effective by the SEC sales of all
the  Registrable  Securities  required  to  be  included  on  such  Registration
Statement  cannot be made  (other  than  pursuant  to  Section  3(l))(including,
without  limitation,  because of a failure to keep such  Registration  Statement
effective,  to disclose  such  information  as is necessary for sales to be made
pursuant to such  Registration  Statement  or to register  sufficient  shares of
Common Stock)(a  "Maintenance  Failure"),  then, except where such Effectiveness
Failure or Maintenance  Failure is as a result of actions or inactions of one or
more Investors or Legal Counsel, as partial relief for the damages to any holder
by  reason  of any  such  delay  in or  reduction  of its  ability  to sell  the
underlying  shares of Common Stock  (which  remedy shall not be exclusive of any
other  remedies  available at law or in equity),  the Company  shall pay to each
Investor  relating  to  such  Registration  Statement:  (A) in the  event  of an
Effectiveness  Failure,  an amount in cash equal to 2.00% of the total  purchase
price of the Common Stock purchased by such Investor  pursuant to the Securities
Purchase   Agreement  on  the  earlier  of  each  30  day  period  following  an
Effectiveness Failure or the third Business Day after such Effectiveness Failure
is cured,  (B) subject to Section 3(l),  in the event of a Maintenance  Failure,
the  Company  shall pay each  Investor  an amount in cash  equal to 2.00% of the
total purchase price of the Common Stock purchased by such Investor  pursuant to
the  Securities  Purchase  Agreement  which has not yet been disposed of by such
Investor on the earlier of each 30 day period following a Maintenance Failure or
the third  Business  Day after  such  Maintenance  Failure  is cured;  provided,
however, that if there is an Effectiveness Failure or a Maintenance Failure as a
result of delay caused by the unreasonable  actions of Legal Counsel, no penalty
shall be payable hereunder. Notwithstanding the foregoing, a Maintenance Failure
shall not be deemed to have occurred if such Maintenance Failure is cured within
three (3) Business Days (the  "Maintenance  Failure Grace Period") and there has
been no  other  Maintenance  Failure  at any  time  within  the  prior  120 days
(determined as though there is no Maintenance Failure Grace Period).

         3. Related Obligations.

         At such  time  as the  Company  is  obligated  to  file a  Registration
Statement with the SEC pursuant to Section 2(a),  2(d) or 2(e), the Company will
use its reasonable  best efforts to effect the  registration  of the Registrable
Securities in accordance  with the intended  method of disposition  thereof and,
pursuant thereto, the Company shall have the following obligations:

                  a. Subject to Section  3(c),  the Company  shall submit to the
SEC,  within two (2) Business Days after the Company  learns that no review of a
particular  Registration  Statement will be made by the staff of the SEC or that
the  staff  of the SEC has no  further  comments  on a  particular  Registration
Statement,  as the case may be, a request for  acceleration of  effectiveness of
such  Registration  Statement to a time and date not later than two (2) Business
Days after the submission of such request,  or at such later time as approved by
Legal  Counsel.  The Company shall keep each  Registration  Statement  effective
pursuant  to Rule 415 at all times until the earlier of (i) the date as of which
the  Investors  may  sell  all of the  Registrable  Securities  covered  by such
Registration Statement without restriction pursuant to Rule 144(k) (or successor
thereto)  promulgated under the 1933 Act or (ii) the date on which the Investors
shall have sold all the  Registrable  Securities  covered  by such  Registration
Statement

                                       4
<PAGE>

(the  "Registration  Period").  The Company shall ensure that each  Registration
Statement  (including  any amendments or  supplements  thereto and  prospectuses
contained  therein) shall not contain any untrue statement of a material fact or
omit to state a material  fact  required to be stated  therein,  or necessary to
make the statements  therein (in the case of  prospectuses,  in the light of the
circumstances in which they were made) not misleading; the immediately preceding
sentence  shall not include any  information  provided by Investors  pursuant to
Section 7 or by Legal Counsel.

                  b.  The  Company  shall  prepare  and  file  with the SEC such
amendments   (including   post-effective   amendments)   and  supplements  to  a
Registration   Statement  and  the  prospectus  used  in  connection  with  such
Registration  Statement,  which  prospectus is to be filed  pursuant to Rule 424
promulgated  under the 1933 Act, as may be necessary  to keep such  Registration
Statement  effective at all times during the  Registration  Period,  and, during
such  period,  comply with the  provisions  of the 1933 Act with  respect to the
disposition  of all  Registrable  Securities  of the  Company  covered  by  such
Registration  Statement until the end of the Registration Period. In the case of
amendments and supplements to a Registration  Statement which are required to be
filed pursuant to this Agreement  (including  pursuant to this Section 3(b)), by
reason of the Company filing a report on Form 10-K, Form 10-Q or Form 8-K or any
analogous  report under the  Securities  Exchange  Act of 1934,  as amended (the
"1934 Act"), the Company shall have  incorporated  such report by reference into
such  Registration  Statement,  if applicable,  or shall file such amendments or
supplements  with the SEC on the same day on which the 1934 Act  report is filed
which  created  the  requirement  for the  Company to amend or  supplement  such
Registration Statement.

                  c.  The  Company  shall  (A)  permit  Legal  Counsel,  at  the
Investors' expense,  to review and comment upon (i) a Registration  Statement at
least  two (2)  Business  Days  prior  to its  filing  with the SEC and (ii) all
amendments and  supplements to all  Registration  Statements  (except for Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form
8-K and similar or successor  reports) within a reasonable  amount of time prior
to their  filing with the SEC,  and (B) not file any  Registration  Statement or
amendment  or  supplement  thereto in a form to which Legal  Counsel  reasonably
objects. The Company shall furnish to Legal Counsel,  without charge, (i) copies
of any correspondence from the SEC or the staff of the SEC to the Company or its
representatives relating to any Registration Statement,  (ii) promptly after the
same is prepared and filed with the SEC, one copy of any Registration  Statement
and any amendment(s) thereto,  including financial statements and schedules, all
documents incorporated therein by reference, if requested by an Investor and not
otherwise  available  on the EDGAR  system,  and all exhibits and (iii) upon the
effectiveness of any Registration Statement, one copy of the prospectus included
in such Registration Statement and all amendments and supplements thereto.

                  d.  The  Company  shall   furnish  to  each   Investor   whose
Registrable  Securities  are  included in any  Registration  Statement,  without
charge, (i) promptly after the same is prepared and filed with the SEC, at least
one copy of such Registration Statement and any amendment(s) thereto,  including
financial  statements  and  schedules,  all  documents  incorporated  therein by
reference,  if requested by an Investor and not otherwise available on the EDGAR
system,   all  exhibits  and  each   preliminary   prospectus,   (ii)  upon  the
effectiveness of any Registration  Statement,  ten (10) copies of the prospectus
included in such Registration Statement

                                       5
<PAGE>

and all  amendments and  supplements  thereto (or such other number of copies as
such Investor may reasonably request) and (iii) additional  reasonable number of
copies of any preliminary or final prospectus, as such Investor may request from
time  to  time  in  order  to  facilitate  the  disposition  of the  Registrable
Securities owned by such Investor.

                  e. The Company  shall use its  reasonable  best efforts to (i)
register and qualify,  unless an exemption from  registration and  qualification
applies,  the resale by Investors  of the  Registrable  Securities  covered by a
Registration  Statement  under such other  securities  or "blue sky" laws of all
applicable  jurisdictions  in the United  States,  (ii) unless an exemption from
registration and qualification applies,  prepare and file in those jurisdictions
such amendments  (including  post-effective  amendments) and supplements to such
registrations   and   qualifications   as  may  be  necessary  to  maintain  the
effectiveness  thereof  during  the  Registration  Period,  and (iii)  unless an
exemption from registration and qualification  applies,  take such other actions
as may be necessary to maintain such  registrations and qualifications in effect
at all times during the Registration Period; provided, however, that the Company
shall not be required in connection  therewith or as a condition  thereto to (x)
qualify to do  business  in any  jurisdiction  where it would not  otherwise  be
required to qualify but for this  Section  3(e),  (y) subject  itself to general
taxation in any such  jurisdiction,  or (z) file a general consent to service of
process in any such  jurisdiction.  The  Company  shall  promptly  notify  Legal
Counsel and each Investor who holds Registrable Securities of the receipt by the
Company of any  notification  with respect to the suspension of the registration
or  qualification  of any of the  Registrable  Securities  for  sale  under  the
securities  or "blue sky" laws of any  jurisdiction  in the United States or its
receipt of actual notice of the  initiation or threatening of any proceeding for
such purpose.

                  f. The  Company  shall  use its  reasonable  best  efforts  to
prevent the  issuance,  other than where such  issuance  results from actions or
inactions of an Investor, of any stop order or other suspension of effectiveness
of a Registration  Statement,  or the suspension of the  qualification of any of
the Registrable Securities for sale in any jurisdiction and, if such an order or
suspension  is issued,  to obtain the  withdrawal of such order or suspension as
soon as  practicable  and to notify  Legal  Counsel and each  Investor who holds
Registrable  Securities  being  sold  of the  issuance  of  such  order  and the
resolution  thereof or its receipt of actual notice of the  initiation or threat
of any proceeding for such purpose.

                  g.  The  Company  shall  hold in  confidence  and not make any
disclosure of information  concerning an Investor provided to the Company unless
(i) disclosure of such  information is necessary to comply with federal or state
securities  laws, (ii) the disclosure of such  information is necessary to avoid
or correct a misstatement or omission in any Registration  Statement,  (iii) the
release of such  information  is ordered  pursuant to a subpoena or other final,
non-appealable   order  from  a  court  or   governmental   body  of   competent
jurisdiction,  or (iv) such information has been made generally available to the
public other than by  disclosure  in  violation  of this  Agreement or any other
agreement.  The Company agrees that it shall,  upon learning that  disclosure of
such  information  concerning  an  Investor  is  sought  in  or  by a  court  or
governmental body of competent  jurisdiction or through other means, give prompt
written  notice to such  Investor  and allow such  Investor,  at the  Investor's
expense, to undertake  appropriate action to prevent disclosure of, or to obtain
a protective order for, such information.

                                       6
<PAGE>

                  h. The Company shall use its reasonable best efforts either to
(i) cause all the Registrable  Securities covered by a Registration Statement to
be listed on each securities  exchange on which  securities of the same class or
series  issued by the  Company are then  listed,  if any, if the listing of such
Registrable  Securities is then permitted  under the rules of such exchange,  or
(ii) secure designation and quotation of all the Registrable  Securities covered
by a Registration Statement on the NASDAQ National Market. The Company shall pay
all fees and expenses in connection  with  satisfying its obligation  under this
Section 3(k).

                  i. The Company  shall  cooperate  with the  Investors who hold
Registrable  Securities being offered and, to the extent applicable,  facilitate
the timely preparation and delivery of certificates (not bearing any restrictive
legend)  representing  the  Registrable  Securities to be offered  pursuant to a
Registration  Statement and enable such certificates to be in such denominations
or amounts,  as the case may be, as the  Investors  may  reasonably  request and
registered in such names as the Investors may request.

                  j. If requested by an Investor,  the Company shall (i) as soon
as  practicable   incorporate  in  a  prospectus  supplement  or  post-effective
amendment  such  information as an Investor  reasonably  requests to be included
therein  relating  to the  sale  and  distribution  of  Registrable  Securities,
including,  without  limitation,  information  with  respect  to the  number  of
Registrable  Securities  being  offered or sold,  the purchase  price being paid
therefor and any other terms of the offering of the Registrable Securities to be
sold in such offering;  (ii) as soon as practicable make all required filings of
such prospectus  supplement or post-effective  amendment after being notified of
the matters to be incorporated in such prospectus  supplement or  post-effective
amendment;  and (iii) as soon as  practicable,  supplement or make amendments to
any  Registration  Statement if reasonably  requested by an Investor holding any
Registrable Securities.

                  k. The Company shall make generally  available to its security
holders  as soon as  practical,  but not later than  ninety  (90) days after the
close of the period covered  thereby,  an earnings  statement (in form complying
with,  and in the manner  provided by, the provisions of Rule 158 under the 1933
Act) covering a  twelve-month  period  beginning not later than the first day of
the Company's fiscal quarter next following the effective date of a Registration
Statement.

                  l.  Each   Investor   hereby   acknowledges   that  there  may
occasionally  be times when the  Company  determines,  in good  faith  following
consultation with its board of directors or a committee thereof,  the use of the
prospectus  forming  a part of the  Registration  Statement  (the  "Prospectus")
should  be  suspended  until  such time as an  amendment  or  supplement  to the
Registration  Statement or the  Prospectus has been filed by the Company and any
such  amendment  to the  Registration  Statement  is declared  effective  by the
Commission,  or until such time as the Company has filed an  appropriate  report
with the  Commission  pursuant to the Exchange  Act,  provided  that the Company
shall use reasonable best efforts to lift such suspension.  Each Investor hereby
covenants that it will not sell any Shares pursuant to the Prospectus during the
period  commencing at the time at which the Company  gives the Investor  written
notice of the suspension of the use of the Prospectus and ending at the time the
Company  gives the Investor  written  notice that the  Investor  may  thereafter
effect sales pursuant to the  Prospectus,  or provides a supplemented or amended
Prospectus pursuant to Section 3(d). The

                                       7
<PAGE>

Company  may,  upon  written  notice to the  Investors,  suspend  the use of the
Prospectus for up to thirty (30) days based on the reasonable  determination  of
the Company's  board of directors that there is a significant  business  purpose
for such determination,  such as pending corporate developments,  public filings
with the SEC or similar event;  provided,  however, that the Company may suspend
the use of the Prospectus on no more than two occasions per year and for no more
than forty-five  (45) days in the aggregate per year; and provided  further that
the Company may not initiate the second such suspension  until at least ten (10)
days after the expiration of the first such suspension.  The Company shall in no
event be required to disclose  the business  purpose for which it has  suspended
the use of the  Prospectus;  provided,  however,  that this shall not affect the
obligations in Section 4(e) of the Securities Purchase  Agreement.  In addition,
the  Company  shall  notify each  Investor  (i) of any request by the SEC for an
amendment  or any  supplement  to such  Registration  Statement  or any  related
prospectus,  or any other information  request by any other governmental  agency
directly  relating to the  offering,  and (ii) of the issuance by the SEC of any
stop order suspending the effectiveness of such Registration Statement or of any
order  preventing  or  suspending  the  use of  any  related  prospectus  or the
initiation or threat of any proceeding for that purpose.

         4. Obligations of The Investors.

                  a.  At  least  five  (5)  Business  Days  prior  to the  first
anticipated  filing date of a Registration  Statement,  the Company shall notify
each Investor in writing of the information the Company  requires from each such
Investor  if such  Investor  elects to have any of such  Investor's  Registrable
Securities  included  in such  Registration  Statement.  It shall be a condition
precedent  to the  obligations  of the  Company  to  complete  the  registration
pursuant to this  Agreement  with  respect to the  Registrable  Securities  of a
particular  Investor  that such  Investor  shall  furnish  to the  Company  such
information  regarding  itself,  the  Registrable  Securities held by it and the
intended method of disposition of the Registrable Securities held by it as shall
be reasonably  required to effect the  effectiveness of the registration of such
Registrable  Securities and shall execute such documents in connection with such
registration as the Company may reasonably request.

                  b.  Each  Investor,  by  such  Investor's  acceptance  of  the
Registrable  Securities,  agrees to  cooperate  with the  Company as  reasonably
requested by the Company in connection  with the  preparation  and filing of any
Registration Statement hereunder,  unless such Investor has notified the Company
in  writing  of such  Investor's  election  to  exclude  all of such  Investor's
Registrable Securities from such Registration Statement.

                  c. Each Investor  agrees that, upon receipt of any notice from
the Company pursuant to Section 3(l) such Investor will immediately  discontinue
disposition of Registrable Securities pursuant to any Registration  Statement(s)
covering such Registrable Securities until such Investor's receipt of the copies
of a  supplemented  or amended  prospectus or receipt of notice from the Company
that no  supplement  or amendment is required.  Notwithstanding  anything to the
contrary,  the Company shall use  reasonable  best efforts to cause its transfer
agent to  deliver  unlegended  shares  of  Common  Stock to a  transferee  of an
Investor in accordance  with the terms of the Securities  Purchase  Agreement in
connection  with any sale of  Registrable  Securities  with  respect to which an
Investor has entered into a contract for sale prior to the Investor's receipt of
a notice from the Company pursuant to Section 3(l) and for which the

                                       8
<PAGE>

Investor  has not yet  settled,  upon  delivery of written  confirmation  of the
foregoing in form and  substance  reasonably  acceptable  to the Company and its
transfer agent.

                  d. Each Investor hereby covenants with the Company not to make
any sale of the Shares without satisfying the requirements of the Securities Act
and the rules and regulations thereunder,  including, in the event of any resale
under the Registration Statement, the prospectus delivery requirements under the
Securities Act.

         5. Expenses of Registration.

     All reasonable expenses, other than underwriting discounts and commissions,
incurred  in  connection  with  the  performance  of the  Company's  obligations
hereunder   and   under  the   transactions   contemplated   hereby,   including
registrations,   filings  or  qualifications  pursuant  to  Sections  2  and  3,
including,  without  limitation,  all registration,  listing and  qualifications
fees,  printers and accounting  fees, and fees and  disbursements of counsel for
the Company  shall be paid by the  Company.  The  Company  shall  reimburse  the
Investors for the fees and  disbursements  of Legal  Counsel in connection  with
registration,  filing or  qualification  pursuant  to  Sections  2 and 3 of this
Agreement, which amount shall be limited to $10,000.

         6. Indemnification.

         In the event any Registrable  Securities are included in a Registration
Statement under this Agreement:

                  a. To the fullest  extent  permitted by law, the Company will,
and hereby  does,  indemnify,  hold  harmless  and  defend  each  Investor,  the
directors,  officers, partners, employees, agents,  representatives of, and each
Person,  if any, who controls any Investor within the meaning of the 1933 Act or
the 1934 Act (each,  an  "Indemnified  Person"),  against  any  losses,  claims,
damages,  liabilities,  judgments, fines, penalties,  charges, costs or expenses
(including  reasonable  attorney's  fees),  joint  or  several,  to  which  such
Indemnified  Person may become subject,  under the 1933 Act, the 1934 Act or any
other  federal  or  state  statutory  law or  regulation,  or at  common  law or
otherwise  (including  in settlement of any  litigation,  if such  settlement is
effected  with the written  consent of the Company,  which  consent shall not be
unreasonably  withheld)  (collectively,  "Claims"),  incurred in  investigating,
preparing  or  defending  any  action,   claim,   suit,   inquiry,   proceeding,
investigation  or appeal  taken  from the  foregoing  by or before  any court or
governmental,  administrative  or  other  regulatory  agency,  body or the  SEC,
whether pending or threatened,  whether or not an indemnified party is or may be
a party thereto ("Indemnified Damages"), to which any of them may become subject
insofar  as such  Claims  (or  actions  or  proceedings,  whether  commenced  or
threatened,  in respect  thereof) arise out of or are based upon: (i) any untrue
statement  or alleged  untrue  statement  of a material  fact in a  Registration
Statement  or any  post-effective  amendment  thereto or in any  filing  made in
connection with the  qualification of the offering under the securities or other
"blue sky" laws of any jurisdiction in which Registrable  Securities are offered
("Blue Sky  Filing"),  or the  omission or alleged  omission to state a material
fact required to be stated therein or necessary to make the  statements  therein
not  misleading,  (ii) any untrue  statement  or alleged  untrue  statement of a
material  fact  contained  in any  preliminary  prospectus  if used prior to the
effective  date  of such  Registration  Statement,  or  contained  in the  final
prospectus (as amended or supplemented, if the

                                       9
<PAGE>

Company files any amendment  thereof or supplement  thereto with the SEC) or the
omission or alleged  omission to state  therein any material  fact  necessary to
make the statements made therein,  in the light of the circumstances under which
the statements therein were made, not misleading, (iii) any violation or alleged
violation  by the  Company  of the  1933  Act,  the 1934  Act,  any  other  law,
including,  without  limitation,  any  state  securities  law,  or any  rule  or
regulation  thereunder  relating  to  the  offer  or  sale  of  the  Registrable
Securities  pursuant to a Registration  Statement or (iv) any material violation
of this Agreement (the matters in the foregoing  clauses (i) through (iv) being,
collectively,   "Violations").  Subject  to  Section  6(c),  the  Company  shall
reimburse the  Indemnified  Persons,  promptly as such expenses are incurred and
are due and payable, for any legal fees or other reasonable expenses incurred by
them  in   connection   with   investigating   or  defending   any  such  Claim.
Notwithstanding  anything to the contrary contained herein, the  indemnification
agreement  contained  in this  Section  6(a)  shall not apply to:  (i) an untrue
statement or alleged  untrue  statement or omission or alleged  omission made in
the Registration Statement, the Prospectus or any amendment or supplement of the
Registration  Statement or Prospectus  in reliance  upon and in conformity  with
written  information  furnished to the Company by or on behalf of the  Purchaser
expressly for use in the Registration  Statement or the Prospectus,  or (ii) the
failure of such Purchaser to comply with the covenants and agreements  contained
in the  Transaction  Documents  respecting  resale of the  Shares,  or (iii) the
inaccuracy  of any  representations  made by such  Purchaser in the  Transaction
Documents or (iv) any untrue  statement or omission of a material  fact required
to make such statement not misleading in any Prospectus that is corrected in any
subsequent  Prospectus that was delivered to the Purchaser  before the pertinent
sale or sales by the  Purchaser,  or (v) to the extent  such Claim is based on a
failure of the  investor to deliver or to cause to be delivered  the  prospectus
made  available  by the  Company,  including  a  corrected  prospectus,  if such
prospectus  or  corrected  prospectus  was timely made  available by the Company
pursuant to Section  3(d), or (vi) shall not apply to amounts paid in settlement
of any Claim if such settlement is effected without the prior written consent of
the Company,  which consent shall not be unreasonably  withheld or delayed. Such
indemnity shall remain in full force and effect  regardless of any investigation
made by or on behalf of the Indemnified Person and shall survive the transfer of
the Registrable Securities by the Investors pursuant to Section 9.

                  b. In connection with any  Registration  Statement in which an
Investor  is  participating,  each such  Investor  agrees to  severally  and not
jointly indemnify,  hold harmless and defend, to the same extent and in the same
manner as is set forth in Section 6(a), the Company, each of its directors, each
of its officers who signs the  Registration  Statement and each Person,  if any,
who  controls  the  Company  within the  meaning of the 1933 Act or the 1934 Act
(each,  an  "Indemnified  Party"),  against any Claim or Indemnified  Damages to
which  any of them may  become  subject,  under  the 1933  Act,  the 1934 Act or
otherwise,  insofar as such  Claim or  Indemnified  Damages  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  to the  Company by such  Investor  expressly  for use in
connection with such Registration Statement;  and, subject to Section 6(c), such
Investor will  reimburse any legal or other expenses  reasonably  incurred by an
Indemnified  Party in connection with  investigating or defending any such Claim
promptly  as such  expenses  are  incurred  and are due and  payable;  provided,
however,  that the  indemnity  agreement  contained in this Section 6(b) and the
agreement with respect to contribution contained in Section 7 shall not apply to
amounts paid in settlement of any Claim if such  settlement is effected  without
the prior written consent of such

                                       10
<PAGE>

Investor, which consent shall not be unreasonably withheld or delayed; provided,
further,  however,  than an Investor shall be liable under this Section 6(b) for
only that amount of a Claim or Indemnified  Damages as does not exceed the gross
proceeds  to such  Investor  as a result of the sale of  Registrable  Securities
pursuant to such  Registration  Statement.  Such indemnity  shall remain in full
force and effect  regardless of any  investigation  made by or on behalf of such
Indemnified  Party and shall survive the transfer of the Registrable  Securities
by the Investors pursuant to Section 9. Notwithstanding anything to the contrary
contained herein, the  indemnification  agreement contained in this Section 6(b)
with respect to any preliminary prospectus shall not inure to the benefit of any
Indemnified Party if the untrue statement or omission of material fact contained
in the preliminary prospectus was corrected on a timely basis in the prospectus,
as then  amended  or  supplemented  and such  prospectus  was  delivered  to the
purchaser.

                  c.  Promptly  after  receipt  by  an  Indemnified   Person  or
Indemnified  Party  under this  Section 6 of notice of the  commencement  of any
action or proceeding (including any governmental action or proceeding) involving
a Claim,  such  Indemnified  Person or  Indemnified  Party shall,  if a Claim in
respect thereof is to be made against any indemnifying  party under this Section
6,  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 control of the defense thereof
with counsel mutually satisfactory to the indemnifying party and the Indemnified
Person or the Indemnified Party, as the case may be; provided,  however, that an
Indemnified  Person or Indemnified  Party shall have the right to retain its own
counsel  with the fees  and  expenses  of not  more  than one  counsel  for such
Indemnified  Person or Indemnified  Party to be paid by the indemnifying  party,
if, in the  reasonable  opinion  of the  Indemnified  Person or the  Indemnified
Party, as the case may be, the representation by such counsel of the Indemnified
Person or Indemnified  Party and the  indemnifying  party would be inappropriate
due to actual or potential  differing  interests between such Indemnified Person
or  Indemnified  Party and any other party  represented  by such counsel in such
proceeding.  In the case of an Indemnified Person,  legal counsel referred to in
the immediately preceding sentence shall be selected by the Investors holding at
least a majority  in  interest  of the  Registrable  Securities  included in the
Registration  Statement to which the Claim  relates.  The  Indemnified  Party or
Indemnified  Person  shall  cooperate  fully  with  the  indemnifying  party  in
connection  with any  negotiation  or defense of any such action or Claim by the
indemnifying  party and shall furnish to the indemnifying  party all information
reasonably  available  to the  Indemnified  Party or  Indemnified  Person  which
relates  to such  action  or  Claim.  The  indemnifying  party  shall  keep  the
Indemnified  Party or  Indemnified  Person fully apprised at all times as to the
status of the defense or any settlement  negotiations  with respect thereto.  No
indemnifying  party shall be liable for any  settlement of any action,  claim or
proceeding effected without its prior written consent,  provided,  however, that
the indemnifying party shall not unreasonably  withhold,  delay or condition its
consent.  No indemnifying party shall,  without the prior written consent of the
Indemnified  Party or  Indemnified  Person,  consent to entry of any judgment or
enter into any  settlement  or other  compromise  which  does not  include as an
unconditional  term  thereof  the giving by the  claimant or  plaintiff  to such
Indemnified  Party or  Indemnified  Person of a release  from all  liability  in
respect to such Claim or litigation.  Following  indemnification as provided for
hereunder,  the  indemnifying  party  shall be  subrogated  to all rights of the
Indemnified Party or Indemnified Person with respect to all third parties, firms
or corporations relating to the matter

                                       11
<PAGE>

for which  indemnification  has been made. The failure to deliver written notice
to the  indemnifying  party within a reasonable time of the  commencement of any
such action shall not relieve such  indemnifying  party of any  liability to the
Indemnified  Person or  Indemnified  Party  under this  Section 6, except to the
extent that the  indemnifying  party is prejudiced in its ability to defend such
action.

                  d. The  indemnification  required  by this  Section 6 shall be
made by  periodic  payments  of the  amount  thereof  during  the  course of the
investigation or defense,  as and when bills are received or Indemnified Damages
are incurred.

                  e.  The  indemnity  agreements  contained  herein  shall be in
addition to (i) any cause of action or similar right of the Indemnified Party or
Indemnified  Person  against  the  indemnifying  party or  others,  and (ii) any
liabilities the indemnifying party may be subject to pursuant to the law.

         7. Contribution.

         To  the  extent  any   indemnification  by  an  indemnifying  party  is
prohibited or limited by law, the  indemnifying  party,  in lieu of indemnifying
such indemnified party, agrees to make the maximum  contribution with respect to
any  amounts  for  which it would  otherwise  be liable  under  Section 6 to the
fullest extent  permitted by law in such proportion as is appropriate to reflect
the relative fault of the indemnifying  party and indemnified  party;  provided,
however,  that:  (i) no Person  involved in the sale of  Registrable  Securities
which Person is guilty of  fraudulent  misrepresentation  (within the meaning of
Section 11(f) of the 1933 Act) in connection with such sale shall be entitled to
contribution from any Person involved in such sale of Registrable Securities who
was not guilty of fraudulent misrepresentation;  (ii) contribution by any seller
of  Registrable  Securities  shall be limited  in amount to the gross  amount of
proceeds  received by such seller from the sale of such  Registrable  Securities
pursuant to such Registration Statement.

         8. Reports Under The 1934 Act.

         With a view to making  available to the  Investors the benefits of Rule
144  promulgated  under the 1933 Act or any other  similar rule or regulation of
the SEC that may at any time  permit the  Investors  to sell  securities  of the
Company to the pu blic without  registration  ("Rule 144"), until Rule 144(k) is
available to the Investors, the Company agrees to:

                  a. file with the SEC all reports and other documents  required
of the  Company  under  the 1933  Act and the  1934  Act so long as the  Company
remains  subject to such  requirements  and the filing of such reports and other
documents is required for the applicable provisions of Rule 144; and

                  b.  furnish to each  Investor  so long as such  Investor  owns
Registrable  Securities,  promptly upon request,  (i) a written statement by the
Company,  if true, that it has complied with the reporting  requirements of Rule
144(c)(1)  of the 1933 Act,  the 1933 Act and the 1934  Act,  (ii) a copy of the
most recent annual or quarterly report of the Company and such other reports and
documents so filed by the Company, if not otherwise available on Edgar and

                                       12
<PAGE>

(iii) such other  information  as may be  reasonably  requested and necessary to
permit  the  Investors  to sell such  securities  pursuant  to Rule 144  without
registration.

         9. Assignment of Registration Rights.

         The rights under this Agreement  shall be  automatically  assignable by
the  Investors  to any  transferee  of all or any  portion  of  such  Investor's
Registrable  Securities  if:  (i)  the  Investor  agrees  in  writing  with  the
transferee  or assignee to assign such rights,  and a copy of such  agreement is
furnished to the Company within a reasonable  time after such  assignment;  (ii)
the Company is,  within a  reasonable  time after such  transfer or  assignment,
furnished with written notice of (a) the name and address of such  transferee or
assignee,  and (b) the securities with respect to which such registration rights
are being transferred or assigned;  (iii) immediately following such transfer or
assignment  the further  disposition  of such  securities  by the  transferee or
assignee is restricted  under the 1933 Act and applicable state securities laws;
(iv) at or before the time the Company receives the written notice  contemplated
by clause (ii) of this  sentence the  transferee  or assignee  agrees in writing
with the Company to be bound by all of the provisions  contained herein; and (v)
such  transfer   shall  have  been  made  in  accordance   with  the  applicable
requirements of the Securities Purchase Agreement.

         10. Amendment of Registration Rights.

         Provisions 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 Investors who then hold at least a majority of the  Registrable  Securities.
Any  amendment or waiver  effected in  accordance  with this Section 10 shall be
binding upon each Investor and the Company. No such amendment shall be effective
to the extent that it applies to less than all of the holders of the Registrable
Securities.  No consideration shall be offered or paid to any Person to amend or
consent to a waiver or  modification  of any provision of any of this  Agreement
unless the same  consideration  also is  offered  to all of the  parties to this
Agreement.

         11. Miscellaneous.

                  a. A Person is deemed to be a holder of Registrable Securities
whenever  such  Person  owns or is  deemed  to own of  record  such  Registrable
Securities.  If  the  Company  receives  conflicting  instructions,  notices  or
elections  from  two or  more  Persons  with  respect  to the  same  Registrable
Securities,  the  Company  shall act upon the basis of  instructions,  notice or
election received from the such record owner of such Registrable Securities.

                  b. Any  notices,  consents,  waivers  or other  communications
required or permitted to be given under the terms of this  Agreement  must be in
writing  and will be deemed  to have  been  delivered:  (i) upon  receipt,  when
delivered  personally;  (ii)  upon  receipt,  when sent by  facsimile  (provided
confirmation of transmission  is  mechanically or  electronically  generated and
kept on file by the sending party);  or (iii) one (1) Business Day after deposit
with a nationally  recognized  overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and facsimile  numbers
for such communications shall be:

                                       13
<PAGE>

                  If to the Company:

                  VA Software Corporation
                  47071 Bayside Parkway
                  Fremont, CA 94538
                  Phone: (510) 687-7000
                  Fax: (408) 745-9130
                  Attention: Ms. Kathleen R. McElwee

                  with a copy to:

                  Wilson Sonsini Goodrich & Rosati
                  650 Page Mill Road
                  Palo Alto, CA 94034
                  Phone: (650) 493-9300
                  Fax: (650) 493-6811
                  Attention: Bret M. DiMarco, Esq.

                  If to Legal Counsel:

                  Schulte Roth & Zabel LLP
                  919 Third Avenue
                  New York, New York  10022
                  Phone: (212) 756-2000
                  Fax: (212) 593-5955
                  Attention: Eleazer Klein, Esq.

If to an Investor, to its address and facsimile number set forth on the Schedule
of Buyers attached hereto,  with copies to such Buyer's  representatives  as set
forth on the  Schedule  of Buyers,  or to such other  address  and/or  facsimile
number and/or to the  attention of such other Person as the recipient  party has
specified by written  notice  given to each other party five (5)  Business  Days
prior to the effectiveness of such change.  Written  confirmation of receipt (A)
given by the recipient of such notice,  consent,  waiver or other communication,
(B) mechanically or electronically  generated by the sender's  facsimile machine
containing the time, date,  recipient facsimile number and an image of the first
page of such  transmission  or (C)  provided by a courier or  overnight  courier
service shall be rebuttable  evidence of personal service,  receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.

                  c.  Failure of any party to exercise any right or remedy under
this  Agreement or otherwise,  or delay by a party in  exercising  such right or
remedy, shall not operate as a waiver thereof.

                  d.  All  questions  concerning  the  construction,   validity,
enforcement  and  interpretation  of this  Agreement  shall be  governed  by the
internal laws of the State of New York,  without  giving effect to any choice of
law or conflict of law  provision  or rule  (whether of the State of New York or
any other  jurisdictions)  that would cause the  application  of the laws of any
jurisdictions  other than the State of New York.  Each party hereby  irrevocably
submits  to the  non-exclusive  jurisdiction  of the  state and  federal  courts
sitting The City of New York, Borough

                                       14
<PAGE>

of Manhattan,  for the  adjudication  of any dispute  hereunder or in connection
herewith or with any transaction  contemplated  hereby or discussed herein,  and
hereby  irrevocably  waives,  and  agrees  not to assert in any suit,  action or
proceeding,  any claim that it is not personally  subject to the jurisdiction of
any  such  court,  that  such  suit,  action  or  proceeding  is  brought  in an
inconvenient  forum or that the  venue of such  suit,  action or  proceeding  is
improper.  Each party hereby  irrevocably waives personal service of process and
consents  to process  being  served in any such suit,  action or  proceeding  by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof.  Nothing contained herein shall be deemed
to limit in any way any right to serve  process in any manner  permitted by law.
If any  provision of this  Agreement  shall be invalid or  unenforceable  in any
jurisdiction,  such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or the
validity or  enforceability  of any  provision  of this  Agreement  in any other
jurisdiction.  EACH PARTY HEREBY  IRREVOCABLY  WAIVES ANY RIGHT IT MAY HAVE, AND
AGREES  NOT TO  REQUEST,  A JURY  TRIAL  FOR  THE  ADJUDICATION  OF ANY  DISPUTE
HEREUNDER  OR IN  CONNECTION  HEREWITH OR ARISING OUT OF THIS  AGREEMENT  OR ANY
TRANSACTION CONTEMPLATED HEREBY.

                  e. This  Agreement,  the Securities  Purchase  Agreement,  the
Warrants and the instruments referenced herein and therein constitute the entire
agreement among the parties hereto with respect to the subject matter hereof and
thereof. There are no restrictions,  promises, warranties or undertakings, other
than those set forth or  referred to herein and  therein.  This  Agreement,  the
Securities  Purchase  Agreement,  the  Warrants and the  instruments  referenced
herein and therein supersede all prior agreements and  understandings  among the
parties hereto with respect to the subject matter hereof and thereof.

                  f. Subject to the  requirements  of Section 9, this  Agreement
shall inure to the benefit of and be binding upon the permitted  successors  and
assigns of each of the parties hereto.

                  g. The  headings  in this  Agreement  are for  convenience  of
reference only and shall not limit or otherwise affect the meaning hereof.

                  h. This  Agreement may be executed in identical  counterparts,
each of which shall be deemed an original but all of which shall  constitute one
and the same  agreement.  This  Agreement,  once  executed  by a  party,  may be
delivered to the other party hereto by facsimile  transmission of a copy of this
Agreement bearing the signature of the party so delivering this Agreement.

                  i. Each party  shall do and  perform,  or cause to be done and
performed,  all such further acts and things,  and shall execute and deliver all
such other  agreements,  certificates,  instruments and documents,  as any other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.

                                       15
<PAGE>

                  j. All consents and other  determinations  required to be made
by the Investors  pursuant to this  Agreement  shall be made,  unless  otherwise
specified in this  Agreement,  by  Investors  holding at least a majority of the
Registrable Securities,  determined as if all the Warrants then outstanding have
been exercised for Registrable  Securities  without regard to any limitations on
exercises of the Warrants.

                  k. The language  used in this  Agreement  will be deemed to be
the language  chosen by the parties to express  their mutual intent and no rules
of strict construction will be applied against any party.

                  l. This  Agreement  is intended for the benefit of the parties
hereto and their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person.

                  m. Each Investor and each holder of the Registrable Securities
shall have all rights and  remedies set forth in this  Agreement  and all rights
and  remedies  which such  holders have been granted at any time under any other
agreement  or contract  and all of the rights  which such holders have under any
law. Any Person having any rights under any provision of this Agreement shall be
entitled to enforce such rights  specifically  (without  posting a bond or other
security),  to recover  damages by reason of any breach of any provision of this
Agreement  and to exercise all other  rights  granted by law.  Furthermore,  the
Company  recognizes  that in the event  that it fails to  perform,  observe,  or
discharge any or all of its obligations under this Agreement,  any remedy at law
may prove to be inadequate relief to the Investors. The Company therefore agrees
that the Investors shall be entitled to seek temporary and permanent  injunctive
relief in any such case  without the  necessity  of proving  actual  damages and
without posting a bond or other security.

                  n. Each of the  Investors  and the Company  acknowledges  that
Wilson Sonsini  Goodrich & Rosati,  Professional  Corporation  ("WSGR") may have
represented and may currently represent certain of the Investors.  In the course
of such  representation,  WSGR may have come  into  possession  of  confidential
information  relating to such  Investor.  Each of the  Investors and the Company
acknowledges that WSGR is representing only the Company in this transaction.  By
executing  this  Agreement,  each of the Investors and the Company hereby waives
any actual or  potential  conflict  of  interest  which may arise as a result of
WSGR's  representation  of such persons and entities,  WSGR's possession of such
confidential  information  (so long as WSGR does not release  such  confidential
information) and the participation by WSGR's affiliate in the financing. Each of
the  Investors and the Company  represents  that it has had the  opportunity  to
consult with independent counsel concerning the giving of this waiver.

                                   * * * * * *

                                       16
<PAGE>

         IN WITNESS WHEREOF,  the parties have caused this  Registration  Rights
Agreement to be duly executed as of day and year first above written.

COMPANY:                                       BUYERS:

VA SOFTWARE CORPORATION                        THE RIVERVIEW GROUP LLC

By:                                            By:
   -------------------------------                ----------------------------
   Name:  Ali Jenab                               Name:  Terry Feeney
   Title: Chief Executive Officer                 Title: Chief Operating Officer

                                       17
<PAGE>

                               SCHEDULE OF BUYERS
<TABLE>
<CAPTION>

                                       Investor Address               Investor's Representative's Address
       Investor                      and Facsimile Number                     and Facsimile Number
       --------                      --------------------                     --------------------
<S>                              <C>                                      <C>
The Riverview Group LLC          666 Fifth Avenue, 8th floor               Schulte Roth & Zabel LLP
                                 New York, New York  10103                 919 Third Avenue
                                 Attention:  Manager                       New York, NY 10022
                                 Facsimile:   (212) 841-4141               Attn:  Eleazer Klein, Esq.
                                 Telephone: (212) 841-4100                 Facsimile:  (212) 593-5955
                                                                           Telephone:  (212) 756-2000
</TABLE>

<PAGE>

                                                                       EXHIBIT A

                         FORM OF NOTICE OF EFFECTIVENESS
                            OF REGISTRATION STATEMENT

EquiServe Trust Company, N.A.
P.O. Box 43023
Providence, RI 02940-3023
Attention:  Investor Relations

                  Re: VA Software Corporation

Ladies and Gentlemen:

         We are counsel to VA Software Corporation,  a Delaware corporation (the
"Company"),  and have  represented  the Company in connection  with that certain
Securities  Purchase  Agreement,  dated as of  November  6, 2003 (the  "Purchase
Agreement"),  entered into by and among the Company and the buyers named therein
(collectively,  the  "Holders")  pursuant  to which  the  Company  issued to the
Holders its shares of the Company's Common Stock, par value $.001 per share (the
"Common Stock") and warrants exercisable for shares of Company Common Stock (the
"Warrants"). Pursuant to the Securities Purchase Agreement, the Company also has
entered into a Registration Rights Agreement with the Holders (the "Registration
Rights Agreement")  pursuant to which the Company agreed, among other things, to
register  the  resale  of  the   Registrable   Securities  (as  defined  in  the
Registration  Rights  Agreement),  including the shares of Company  Common Stock
issuable  upon  exercise of the Warrants  under the  Securities  Act of 1933, as
amended (the "1933 Act"). In connection with the Company's obligations under the
Registration  Rights  Agreement,  on ____________ ___, 2003, the Company filed a
Registration   Statement   on  Form  S-3  (File  No.   333-_____________)   (the
"Registration  Statement")  with the  Securities  and Exchange  Commission  (the
"SEC") relating to the Registrable Securities which names each of the Holders as
a selling stockholder thereunder.

         In connection  with the  foregoing,  we advise you that a member of the
SEC's  staff has  advised  us by  telephone  that the SEC has  entered  an order
declaring the Registration Statement effective under the 1933 Act at [ENTER TIME
OF  EFFECTIVENESS]  on [ENTER DATE OF  EFFECTIVENESS]  and we have no knowledge,
after  telephonic  inquiry of a member of the SEC's  staff,  that any stop order
suspending its  effectiveness  has been issued or that any  proceedings for that
purpose  are  pending  before,  or  threatened  by, the SEC and the  Registrable
Securities  are  available  for  resale  under  the  1933  Act  pursuant  to the
Registration Statement.

                                                    Very truly yours,

                                                    [ISSUER'S COUNSEL]

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

CC: [LIST NAMES OF HOLDERS]

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