RIGHT START INC /CA
RIGHTSTART.COM COMMON STOCK PURCHASE AGREEMENT
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>3
<FILENAME>0003.txt
<DESCRIPTION>RIGHTSTART.COM COMMON STOCK PURCHASE AGREEMENT
<TEXT>



                               RightStart.com Inc.




                                  COMMON STOCK
                               PURCHASE AGREEMENT











<PAGE>




                                TABLE OF CONTENTS


                                                                        Page No.


1.       PURCHASE AND SALE OF STOCK...........................................1
         1.1      Sale and Issuance of Common Stock...........................1
         1.2      Closing.....................................................1

2.       REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................1
         2.1      Organization; Good Standing; Qualification..................2
         2.2      Authorization...............................................2
         2.3      Valid Issuance of Preferred and Common Stock................2
         2.4      Governmental Consents.......................................2
         2.5      Capitalization and Voting Rights............................3
         2.6      Subsidiaries................................................4
         2.7      Contracts and Other Commitments.............................4
         2.8      Related-Party Transactions..................................4
         2.9      Registration Rights.........................................4
         2.10     Permits.....................................................4
         2.11     Compliance With Other Instruments...........................5
         2.12     Litigation..................................................5
         2.13     Securities Act..............................................5
         2.14     Title to Property and Assets; Leases........................5
         2.15     Financial Position..........................................6
         2.16     Patents and Trademarks......................................6
         2.17     Employees; Employee Compensation............................6
         2.18     Taxes.......................................................6
         2.19     Insurance...................................................7
         2.20     Environmental Compliance....................................7
         2.21     Books and Records...........................................7
         2.22     Finders.....................................................7
         2.23     Investment Company..........................................7

3.       REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.......................8
         3.1      Authorization...............................................8
         3.2      Purchase Entirely for Own Account...........................8
         3.3      Reliance Upon Investor's Representations....................8
         3.4      Receipt of Information......................................8
         3.5      Investment Experience.......................................9
         3.6      Accredited Investor.........................................9
         3.7      Restricted Securities......................................10
         3.8      Legends....................................................10

4.       TRANSFERS...........................................................11
         4.1      Transfer by Investor.......................................11
         4.2      Exempt Transfers...........................................12
         4.3      Prohibited Transfers.......................................12
         4.4      Term.......................................................12
         4.5      Definitions................................................13

5.       CONDITIONS OF INVESTOR'S OBLIGATIONS AT CLOSING.....................13
         5.1      Representations and Warranties.............................13
         5.2      Performance................................................13
         5.3      Compliance Certificate.....................................13
         5.4      Qualifications.............................................13
         5.5      Proceedings and Documents..................................14
         5.6      Other Agreements...........................................14

6.       CONDITIONS TO COMPANY'S OBLIGATIONS AT CLOSING......................14
         6.1      Representations and Warranties.............................14
         6.2      Qualifications.............................................14

7.       REGISTRATION RIGHTS.................................................14
         7.1      Demand Registration........................................14
         7.2      Registration on Form S-3; Shelf Registration...............17
         7.3      Piggyback Registration.....................................17
         7.4      Expenses of Registration...................................18
         7.5      Registration Procedures....................................19
         7.6      Indemnification............................................20
         7.7      Information by Holder......................................21
         7.8      Transfer or Assignment of Registration Rights..............21
         7.9      "Lock-Up" Agreement........................................22
         7.10     Allocation of Registration Opportunities...................22
         7.11     Delay of Registration......................................23
         7.12     Termination of Registration Rights. .......................23

8.       COVENANTS OF THE COMPANY............................................23
         8.1      Basic Financial Information................................23
         8.2      Additional Information and Rights..........................24
         8.3      Right to Purchase New Securities...........................24
         8.4      Termination of Covenants...................................26

9.       MISCELLANEOUS.......................................................26
         9.1      Entire Agreement...........................................26
         9.2      Survival of Warranties.....................................26
         9.3      Successors and Assigns.....................................26
         9.4      Governing Law..............................................26
         9.5      Counterparts...............................................26
         9.6      Titles and Subtitles.......................................27
         9.7      Notices....................................................27
         9.8      Finder's Fees..............................................27
         9.9      Expenses...................................................27
         9.10     Amendments and Waivers.....................................27
         9.11     California Corporate Securities Law........................27

Exhibit A  Ancillary Agreements
Exhibit B  Insurance Coverage






<PAGE>







                               RightStart.com Inc.


                                  COMMON STOCK
                               PURCHASE AGREEMENT

                  THIS COMMON STOCK PURCHASE  AGREEMENT  (this  "Agreement")  is
made as of the 10th day of October,  2000, by and between RightStart.com Inc., a
Delaware corporation (the "Company"), and Michael Targoff (the "Investor").

                  THE PARTIES HEREBY AGREE AS FOLLOWS:

1.      PURCHASE AND SALE OF STOCK.

         1.1      Sale and Issuance of Common Stock.

Subject to the terms and conditions of this  Agreement,  the Investor  agrees to
purchase shares of the Company's  Common Stock at a purchase price of $[ommitted
and filed  separately  with the  Commission]  per share.  The Investor agrees to
purchase  at the  Closing,  and the  Company  agrees  to sell  and  issue to the
Investor at the Closing,  [ommitted and filed  separately  with the  Commission]
shares of the Company's Common Stock par value $.01 per share ("Common  Stock");
provided that if certain of the Company's current  stockholders  exercise rights
under  that  certain  Investor's  Rights  Agreement  dated as of July 9, 1999 to
purchase a portion of the Common  Stock being sold  pursuant to this  Agreement,
the number of shares issued and sold to Investor  shall be reduced by the number
of shares of Common  Stock so purchased  by such  current  stockholders  and the
Company  shall  refund  the  purchase  price with  respect  to the Common  Stock
purchased  by such  current  stockholders  with  interest at the rate of 10% per
annum.

                  The  Investor  agrees  to pay in  cash  by  wire  transfer  of
immediately  available  funds at Closing to the Company  payment in full for the
shares of the Company's Common Stock so purchased by the Investor.

         1.2      Closing.

                  The  purchase and sale of the Common Stock shall take place at
the offices of Milbank, Tweed, Hadley & McCloy LLP, Los Angeles,  California, at
10 a.m., on October 10, 2000, or at such other time and place as the Company and
the Investor shall mutually  agree,  either orally or in writing (which time and
place are designated as the "Closing").

                  Upon  receipt of payment for the Common  Stock on or after the
Closing (in accordance with Section 1.1 above), the Company shall deliver to the
Investor a certificate representing the shares of Common Stock that the Investor
is purchasing.


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2.      REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

                  The Company  hereby  represents  and  warrants to the Investor
that as of the date of this  Agreement,  except  as set forth on a  Schedule  of
Exceptions furnished to the Investor and special counsel for the Investor, which
exceptions  shall be deemed to  supplement  and inform the  representations  and
warranties contained in this Agreement, as if made hereunder:

         2.1      Organization; Good Standing; Qualification.

                  The Company is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Delaware,  has all requisite
corporate  power and authority to own and operate its properties and to carry on
its business as now  conducted  and as presently  proposed to be  conducted,  to
execute and deliver this Agreement and any other  agreement to which the Company
is a party,  as listed on Exhibit A (the "Ancillary  Agreements"),  to issue and
sell the Common Stock and the Common Stock issuable upon conversion thereof, and
to carry out the provisions of this Agreement and any Ancillary  Agreement.  The
Company is duly qualified and is authorized to transact  business and is in good
standing as a foreign  corporation in each  jurisdiction in which the failure to
so qualify would have a material  adverse  effect on its  business,  properties,
prospects, or financial condition.

         2.2      Authorization.

                  All corporate action on the part of the Company, its officers,
directors  and  stockholders  necessary  for the  authorization,  execution  and
delivery of this Agreement and any Ancillary  Agreement,  the performance of all
obligations  of the Company  hereunder and  thereunder  at the Closing,  and the
authorization, issuance (or reservation for issuance), sale, and delivery of the
Common Stock being sold hereunder,  has been taken or will be taken prior to the
Closing,  and this  Agreement  and any  Ancillary  Agreement,  when executed and
delivered, will constitute valid and legally binding obligations of the Company,
enforceable in accordance with their  respective  terms except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of
general application  affecting  creditors' rights generally,  (ii) as limited by
laws relating to the availability of specific performance, injunctive relief, or
other equitable  remedies,  and (iii) as to rights to indemnity and contribution
that may be limited by applicable laws.

         2.3      Valid Issuance of Preferred and Common Stock.

                  The  Common  Stock  that is being  purchased  by the  Investor
hereunder, when issued, sold, and delivered in accordance with the terms of this
Agreement  for the  consideration  expressed  herein,  will be duly and  validly
issued,  fully paid,  and  nonassessable,  and will be free of  restrictions  on
transfer  other than  restrictions  on transfer  under this  Agreement and under
applicable state and federal securities laws.

         2.4      Governmental Consents.

                  No consent,  approval,  qualification,  order or authorization
of, or filing  with,  any local,  state,  or federal  governmental  authority is
required on the part of the Company in connection  with the Company's  execution

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of, delivery of, or performance by it of its obligations  under, this Agreement,
the offer, sale or issuance of the Common Stock by the Company,  except (i) such
filings as have been made  prior to the  Closing,  and (ii) any  notices of sale
required  to  be  filed  with  the  Securities  and  Exchange  Commission  under
Regulation D of the Securities Act of 1933, as amended (the  "Securities  Act"),
and  such  post-closing  filings  as  may be  required  under  applicable  state
securities  laws,  which  will be timely  filed  within the  applicable  periods
therefor  and  (iii)  such  consents,  approvals,   qualifications,   orders  or
authorizations  which the failure to obtain could reasonably be expected to have
a material adverse effect on the Company.

         2.5      Capitalization and Voting Rights.

                  The  authorized  capital  of the  Company  consists,  or  will
consist immediately prior to the Closing, of:

                  (a)      Preferred Stock.  Five Million (5,000,000) shares  of
Preferred Stock, par value $.01, of  which  none  is  outstanding on the Closing
Date.

                  (b)      Common Stock.  Twenty Million (20,000,000) shares  of
common stock, par value $.01 ("Common Stock"),  of  which  9,100,000  shares are
issued and outstanding.

                  (c)      The outstanding shares of Common Stock have been duly
authorized and validly issued, are fully paid and nonassessable, and were issued
in  accordance  with  the  registration  or  qualification   provisions  of  the
Securities  Act and any  relevant  state  securities  laws or  pursuant to valid
exemptions therefrom.

                  (d)      Except   for  (i)  the  purchase  rights  under  this
Agreement (ii) 2,031,500  options  to  purchase  shares  of the Company's Common
Stock granted under the RightStart.com  Employee Stock Option Plan (the  "Option
Plan"),  (iii)  182,000  shares of Common Stock  issuable  upon  exercise of the
warrants issued to affiliates of Digital Coast Partners, LLP (fka CEA Montgomery
Media L.L.C.) (the "CEA  Warrant")  (iv) 165,000 shares of Common Stock issuable
upon exercise of the warrant issued to Sierra  Ventures and Palomar  Ventures or
their  respective  affiliates (the "VC Warrants"),  (v) 136,500 shares of Common
Stock  issuable  upon  exercise  of the  warrant  issued to Oxygen  Media or its
affiliates (the "Oxygen Warrant"),  (vi) 113,753 shares of Common Stock issuable
upon  exercise  of warrants  (the  "Bridge  Warrants")  issued to holders of the
Company's 10% Secured Bridge Notes due October 18, 2000 ("Bridge  Notes") or its
affiliates,  (viii)  8,740,220  shares of Common Stock issuable upon exercise of
the warrants (the "Contingent  Warrants")  issued to holders of the Bridge Notes
or their respective  affiliates,  (ix) 6,639,484 shares of Common Stock issuable
upon  conversion  of the  Company's  10% Secured  Convertible  Bridge  Notes due
October 18, 2000  ("Convertible  Notes") to holders of the Convertible  Notes or
their respective affiliates (the "Convertible Notes Warrants") and, collectively
with the CEA Warrant,  the VC Warrants,  the Oxygen Warrant, the Bridge Warrants
and  the  Contingent  Warrants,  the  "Convertible  Securities"),  there  are no
outstanding options, warrants, rights (including conversion or preemptive rights
and rights of first refusal (other than those granted among  shareholders  party
to the  Investors'  Rights  Agreement  dated as of July 9, 1999, as amended (the
"Investors' Rights Agreement")), proxy or stockholder agreements (other than the
Investors'  Rights  Agreement)  or  agreements  of any kind for the  purchase or
acquisition  from the  Company of any of its  securities.  The  Company is not a

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<PAGE>

party or  subject  to any  agreement  that  affects  or relates to the voting or
giving of  written  consents  with  respect to any  security  or the voting by a
director of the Company other than the Investors' Rights Agreement.

         2.6      Subsidiaries.

                  The Company does not own or control,  directly or  indirectly,
any interest in any other corporation,  partnership,  limited liability company,
association,   or  other  business  entity.  The  Company  currently  is  not  a
participant in any joint venture,  partnership,  or similar  arrangement  (other
than the transaction set forth in this Agreement).

         2.7      Contracts and Other Commitments.

                  The  Company  does not have and is not  bound by any  material
contract,  agreement,  lease,  commitment,  or proposed  transaction,  judgment,
order, writ or decree, written or oral, absolute or contingent, other than those
that have been entered into in the ordinary  course of business or are set forth
on Schedule 2.7 of the Schedule of Exceptions.

         2.8      Related-Party Transactions.

                  No employee,  officer,  stockholder or director of the Company
or member of his or her  immediately  family is indebted to the Company,  nor is
the Company indebted or committed to make loans, or other payments, or extend or
guarantee  credit to any of them,  other than (i) indebtedness or commitments in
an amount less than $10,000  (ii) for payment of salary for  services  rendered,
(iii)  reimbursement for reasonable  expenses incurred on behalf of the Company,
(iv) for other  standard  employee  benefits  made  generally  available  to all
employees (including stock option agreements  outstanding under any stock option
plan  approved by the Board of  Directors of the  Company),  (v) pursuant to the
terms of a Management  Services  Agreement  dated July 9, 1999 between The Right
Start, Inc. and the Company (the "Management Services Agreement"), (vi) pursuant
to the terms of an  Intellectual  Property  Agreement dated July 9, 1999 between
The Right Start, Inc. and the Company (the "Intellectual  Property  Agreement"),
and (vii) those additional  agreements set forth on Schedule 2.8 of the Schedule
of Exceptions.

         2.9      Registration Rights.

                  Except  as  granted  to  Investor  in   connection   with  the
transactions contemplated by this Agreement, the Investors' Rights Agreement and
registration  rights  granted  to  holders of the  Convertible  Securities,  the
Company is presently not under any obligation to file any registration statement
under the Securities Act relating to any  outstanding  securities of the Company
or  to  have  any  outstanding   securities  of  the  Company  included  in  any
registration statement filed or to be filed under the Securities Act.

         2.10     Permits.

                  The Company has all  franchises,  permits,  licenses,  and any
similar  authority  necessary  for the  conduct  of its  business  as now  being
conducted  and as  currently  proposed to be  conducted by it, the lack of which
could materially and adversely affect the business,  properties,  prospects,  or

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financial condition of the Company. To its knowledge,  Company is not in default
in any material respect under any of such franchises, permits, licenses or other
similar authority.

         2.11     Compliance With Other Instruments.

                  The Company is not in violation or default (i) in any material
respect of any provision of its Certificate of Incorporation, as amended through
the date hereof (the  "Certificate  of  Incorporation")  or Bylaws,  (ii) in any
material  respect of any  provision of any material  agreement,  instrument,  or
contract to which it is a party or by which it is bound, or (iii) to the best of
its knowledge,  of any federal or state judgment,  order, writ, decree, statute,
rule,  regulation or  restriction  applicable  to the Company,  the violation of
which  would have a  material  adverse  effect on the  Company.  The  execution,
delivery,  and  performance  by the Company of this  Agreement and any Ancillary
Agreement,  and the  consummation of the  transactions  contemplated  hereby and
thereby,  will not result in any such violation or  constitute,  with or without
the  passage of time or giving of notice,  either a material  default  under any
such  provision or an event that  results in the creation of any material  lien,
charge,  or  encumbrance  upon any  assets  of the  Company  or the  suspension,
revocation,  impairment,  forfeiture,  or  nonrenewal  of any  material  permit,
license,  authorization,  or approval applicable to the Company, its business or
operations, or any of its assets or properties.

         2.12     Litigation.

                  There  is  no   litigation  or   governmental   proceeding  or
investigation  pending  or,  to the  best  of  the  knowledge  of  the  Company,
threatened by or against the Company  which,  individually  or in the aggregate,
could  reasonably be expected to have a material  adverse effect on the Company.
Neither the Company,  nor, to the best knowledge of the Company,  any officer of
the Company, is in default with respect to any material order, writ, injunction,
decree, ruling or decision of any court,  commission,  board or other government
agency affecting the Company.

         2.13     Securities Act.

                  Subject  to  the  truth  and   accuracy   of  the   Investor's
representations set forth in this Agreement, the offer, sale and issuance of the
Common  Stock as set forth in this  Agreement  are exempt from the  registration
requirements of the Securities Act.

         2.14     Title to Property and Assets; Leases.

                  Except  (i) for liens for  current  taxes not yet  delinquent,
(ii) for liens  imposed by law and incurred in the  ordinary  course of business
for obligations not past due to carriers,  warehousemen,  laborers,  materialmen
and the like,  (iii) for liens in respect of pledges or deposits  under workers'
compensation laws or similar legislation,  (iv) for minor defects in title, none
of which,  individually or in the aggregate,  materially interferes with the use
of such  property,  and (v) liens granted to holders of the Bridge Notes and the
Convertible  Bridge Notes,  the Company has good and marketable title to such of
its fixed assets as are real property, and good and merchantable title to all of
its other  assets,  free of any  mortgages,  pledges,  charges,  claims,  liens,
security  interests or other  encumbrances,  except as could not  reasonably  be
expected to have a material  adverse  effect on the Company.  The Company enjoys
peaceful  and  undisturbed  possession  under all leases  under  which it is the
lessee,  and all said  leases  are valid and  subsisting  and in full  force and

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effect,  subject  to  clauses  (i)-(v)  above,  and  except  as would not have a
material adverse effect on the Company.

         2.15     Financial Position.

                  The  Company  is  not  a  guarantor  or   indemnitor   of  any
indebtedness of any other firm,  person or  corporation,  except as set forth on
Schedule  2.15 of the Schedule of  Exemptions.  The Company  maintains  and will
continue  to  maintain  a  standard   system  of  accounting   established   and
administered in accordance with generally accepted accounting principles.

         2.16     Patents and Trademarks.

                  To the best of its knowledge,  the Company owns or has a valid
right to use the patents,  patent  rights,  licenses,  permits,  trade  secrets,
trademarks,  trade names,  franchises,  copyrights,  inventions and intellectual
property rights  (collectively,  "Intellectual  Property  Rights") being used to
conduct its business as now operated and as now proposed to be operated,  except
Intellectual  Property  Rights that could not  reasonably  be expected to have a
material  adverse  effect  on the  Company;  and to the  best  of the  Company's
knowledge, the conduct of its business as now operated and as now proposed to be
operated does not and will not materially  conflict with  Intellectual  Property
Rights of others. The Company has not received any communications  alleging that
the Company has  violated,  or by  conducting  its business as  proposed,  would
violate any of the  Intellectual  Property Rights of any other person or entity.
The  Company  has no  obligation  to  compensate  any  person for the use of any
Intellectual  Property Rights,  except as required  pursuant to the terms of the
Intellectual  Property  Agreement and the agreement(s)  between The Right Start,
Inc. and Guidance Solutions, Inc. regarding the development of the Company's web
site.  The Company has not granted to any person any license or right to use any
Intellectual  Property  Rights of the Company except as required by the terms of
the Intellectual  Property Agreement,  the agreement(s) between the Right Start,
Inc. and Guidance Solutions, Inc. regarding the development of the Company's web
site and  promotional  agreements  entered  into in the  ordinary  course of its
business.

         2.17     Employees; Employee Compensation.

                  To the best of the  Company's  knowledge,  there is no strike,
labor dispute or union organization  activities pending or threatened between it
and its  employees.  None of the  Company's  employees  belongs  to any union or
collective bargaining unit. There are no unfair labor practice charges,  pending
trials with respect to unfair labor practice charges, pending material grievance
proceedings  or adverse  decisions  of a Trial  Examiner of the  National  Labor
Relations  Board against the Company.  The Company is not a party to or bound by
any currently effective employment contract,  deferred  compensation  agreement,
bonus plan,  incentive plan, profit sharing plan,  retirement agreement or other
employee  compensation  agreement  other than the Option Plan and the  Company's
401(k) plan. Subject to general  principles  related to wrongful  termination of
employees,  the  employment  of each  officer  and  employee  of the  Company is
terminable  at the will of the  Company.  To the best  knowledge of the Company,
relations with employees of the Company are good.

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<PAGE>

         2.18     Taxes.

                  The Company has not elected  pursuant to the Internal  Revenue
Code of 1986,  as amended (the "Code"),  to be treated as an S corporation  or a
collapsible  corporation  pursuant to Section  1362(a) or Section  341(f) of the
Code,  nor has it made any other  elections  pursuant  to the Code  (other  than
elections  that  related  solely to  methods  of  accounting,  depreciation,  or
amortization)  that would have a material  effect on the  business,  properties,
prospects,  or financial condition of the Company. The Company has never had any
tax deficiency  proposed or assessed  against it and has not executed any waiver
of any statute of  limitations  on the  assessment  or  collection of any tax or
governmental charge.

         2.19     Insurance.

                  The Company  carries  insurance  covering its  properties  and
business  adequate and  customary for the type and scope of the  properties  and
business. The Company's present insurance coverage is as set forth on Exhibit B.

         2.20     Environmental Compliance.

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

         2.21     Books and Records.

                  The  books of  account,  ledgers,  order  books,  records  and
documents of the Company accurately reflect all material information relating to
the business of the Company, the nature, acquisition,  maintenance, location and
collection  of the assets of the  Company,  and the  nature of all  transactions
giving rise to the obligations or accounts receivable of the Company.

         2.22     Finders.

                  The Company has not entered into any  agreements for which the
Company,  its  officers,  directors,  or the Investor will be liable for finders
fees relating to the transactions set forth in this Agreement.

         2.23     Investment Company.

                  The Company is  not  an  "investment  company"  or  a  company
"controlled" by an "investment company" within the  meaning  of  the  Investment
Company Act of 1940, as amended, or the regulations promulgated thereunder.

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<PAGE>

3.       REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.

                  Each Investor  hereby  represents and warrants to the Company,
separately and not jointly, that:

         3.1      Authorization.

                  The Investor  has full power and  authority to enter into this
Agreement, and that this Agreement, when executed and delivered, will constitute
a valid and legally binding obligation of the Investor.

         3.2      Purchase Entirely for Own Account.

                  This  Agreement is made with the Investor in reliance upon the
Investor's  representation  to the  Company,  which  by its  execution  of  this
Agreement the Investor hereby confirms, that the Common Stock to be purchased by
the  Investor  ( the  "Securities")  will be  acquired  for  investment  for the
Investor's  own account,  not as a nominee or agent,  and not with a view to the
resale or distribution of any part thereof, and that the Investor has no present
intention of selling,  granting any participation in, or otherwise  distributing
the same. By executing this Agreement,  the Investor further represents that the
Investor does not have any contract, undertaking,  agreement or arrangement with
any person to sell,  transfer or grant  participations  to such person or to any
third person, with respect to any of the Securities.

         3.3      Reliance Upon Investor's Representations.

                  The  Investor  understands  that  the  Common  Stock  is  not,
registered  under the  Securities  Act on grounds that the sale  provided for in
this  Agreement  and  the  issuance  of  securities  hereunder  is  exempt  from
registration under the Securities Act pursuant to Section 4(2) thereof, and that
the  Company's  reliance  on such  exemption  is  predicated  on the  Investor's
representations  set forth herein.  The Investor realizes that the basis for the
exemption  may not be present  if,  notwithstanding  such  representations,  the
Investor has in mind merely  acquiring shares of the Common Stock for a fixed or
determinable  period in the  future,  or for a market  rise,  or for sale if the
market does not rise. The Investor has no such intention.

         3.4      Receipt of Information.

                  The Investor believes that it has received all the information
the Investor considers necessary or appropriate for deciding whether to purchase
the Common Stock. The Investor further represents that it has had an opportunity
to ask  questions and receive  answers from the Company  regarding the terms and
conditions  of the  offering of the Common Stock and the  business,  properties,
prospects,  and  financial  condition  of the Company  and to obtain  additional
information  (to the extent the  Company  possessed  such  information  or could
acquire it  without  unreasonable  effort or  expense)  necessary  to verify the
accuracy of any information furnished to the Investor or to which it had access.

                                       8
<PAGE>

         3.5      Investment Experience.

                  The Investor  represents  that it is experienced in evaluating
and investing in private placement  transactions of securities of companies in a
similar  stage  of  development  and  acknowledges  that it is able to fend  for
itself,  can bear the economic risk of the Investor's  investment,  and has such
knowledge and experience in financial and business  matters that the Investor is
capable  of  evaluating  the merits  and risks of the  investment  in the Common
Stock.  The Investor  also  represents  that it has not been  organized  for the
purpose of acquiring the Common Stock.

         3.6      Accredited Investor.

                  (a)   The term "Accredited Investor" as used herein refers to:

                           (i) A person or entity who is a director or executive
                  officer of the Company;

                           (ii) Any bank as defined  in  Section  3(a)(2) of the
                  Securities  Act, or any savings and loan  association or other
                  institution as defined in Section 3(a)(5)(A) of the Securities
                  Act whether  acting in its  individual or fiduciary  capacity;
                  any broker or dealer registered  pursuant to Section 15 of the
                  Securities  Exchange  Act of 1934;  any  insurance  company as
                  defined in Section 2(13) of the Securities Act; any investment
                  company registered under the Investment Company Act of 1940 or
                  a business  development company as defined in Section 2(a)(48)
                  of that Act; any Small Business Investment Company licensed by
                  the U.S. Small Business Administration under Section 301(c) or
                  (d) of the Small  Business  Investment  Act of 1958;  any plan
                  established   and   maintained  by  a  state,   its  political
                  subdivisions,  or any agency or  instrumentality of a state or
                  its political subdivisions,  for the benefit of its employees,
                  if such plan has total  assets  in excess of  $5,000,000;  any
                  employee  benefit  plan  within the  meaning of Title I of the
                  Employee  Retirement  Income  Security  Act  of  1974,  if the
                  investment decision is made by a plan fiduciary, as defined in
                  Section 3(21) of such Act, which is either a bank, savings and
                  loan association,  insurance company, or registered investment
                  adviser,  or if the employee  benefit plan has total assets in
                  excess  of  $5,000,000  or,  if  a  self-directed  plan,  with
                  investment   decisions   made  solely  by  persons   that  are
                  accredited investors;

                           (iii) Any  private  business  development  company as
                  defined in Section 202(a)(22) of the Investment Advisers Act
                  of 1940;

                           (iv) Any organization  described in Section 501(c)(3)
                  of the Internal  Revenue Code,  corporation,  Massachusetts or
                  similar  business trust,  or  partnership,  not formed for the
                  specific  purpose of acquiring the  securities  offered,  with
                  total assets in excess of $5,000,000;

                           (v) Any natural person whose individual net worth, or
                  joint net worth with that person's spouse,  at the time of the
                  purchase exceeds $1,000,000;

                                       9
<PAGE>

                           (vi) Any natural person who had an individual  income
                  in excess of $200,000 in each of the two most recent  years or
                  joint income with that  person's  spouse in excess of $300,000
                  in each of those  years and has a  reasonable  expectation  or
                  reaching the same income level in the current year;

                           (vii)  Any  trust,  with  total  assets  in excess of
                  $5,000,000,  not formed for the specific  purpose of acquiring
                  the securities offered, whose purchase is directed by a person
                  who  has  such  knowledge  and  experience  in  financial  and
                  business  matters that he or she is capable of evaluating  the
                  merits and risks of the prospective investment; or

                           (viii) Any entity in which all of the  equity  owners
                  are accredited investors.

                  As used in this Section 3.6(a), the term "net worth" means the
excess of total assets over total liabilities.  For the purpose of determining a
person's net worth,  the principal  residence  owned by an individual  should be
valued at fair market value, including the cost of improvements,  net of current
encumbrances.  As used in this Section  3.6(a),  "income" means actual  economic
income,  which may differ from  adjusted  gross income for income tax  purposes.
Accordingly,  the Investor should  consider  whether it should add any or all of
the following  items to the  Investor's  gross income for income tax purposes in
order to reflect more  accurately the Investor's  actual  economic  income:  any
amounts attributable to tax-exempt income received,  losses claimed as a limited
partner  in  any  limited   partnership,   deductions   claimed  for  depletion,
contributions to an IRA or Keogh retirement plan, and alimony payments.

                  (b) The  Investor  further  represents  to the  Company  that,
         except as otherwise  disclosed  to the Company in writing  prior to the
         Investor's execution hereof, it is an Accredited Investor.

         3.7      Restricted Securities

                  The Investor understands that the Common Stock (and any Common
Stock issued on conversion thereof) may not be sold,  transferred,  or otherwise
disposed  of  without  registration  under the  Securities  Act or an  exemption
therefrom,  and  that in the  absence  of an  effective  registration  statement
covering the Common Stock (or the Common Stock issued on conversion  thereof) or
an available  exemption from  registration  under the Securities Act, the Common
Stock  (and  any  Common  Stock  issued  on  conversion  thereof)  must  be held
indefinitely.  In  particular,  the Investor is aware that the Common Stock (and
any Common Stock issued on conversion  thereof) may not be sold pursuant to Rule
144  promulgated  under the  Securities Act unless all of the conditions of that
Rule are met. Among the  conditions for use of Rule 144 may be the  availability
of current information to the public about the Company.  Such information is not
now  available  and the  Company has no present  plans to make such  information
available.

        3.8      Legends.

                  To the extent  applicable,  each certificate or other document
evidencing  any of the Common Stock or any Common  Stock issued upon  conversion
thereof shall be endorsed with the legends  substantially  in the form set forth
below:

                                       10
<PAGE>

                  (a) The following legend under the Securities Act:

                  "THE SHARES  REPRESENTED  HERE HAVE NOT BEEN REGISTERED  UNDER
                  THE SECURITIES  ACT OF 1933, AS AMENDED,  AND MAY NOT BE SOLD,
                  TRANSFERRED,  ASSIGNED,  PLEDGED,  OR HYPOTHECATED  UNLESS AND
                  UNTIL  REGISTERED  UNDER SUCH ACT,  OR UNLESS THE  COMPANY HAS
                  RECEIVED AN OPINION OF COUNSEL OR OTHER EVIDENCE, SATISFACTORY
                  TO THE COMPANY AND ITS COUNSEL,  THAT SUCH REGISTRATION IS NOT
                  REQUIRED."

                  (b) Any legend imposed or required by the Company's  Bylaws or
applicable state securities laws.

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


4.       Transfers

         4.1      Transfer by Investor.

                  (i) Subject to Section  4.2, if  Investor  (or its  respective
Affiliates (as defined in Section 4.5) to whom Securities (as defined in Section
4.5) have been transferred) propose to sell or transfer any Securities in one or
more related transactions which will result in the transfer of any Securities by
such  Investor  or its  Affiliate,  as  applicable,  then such  Investor  or its
Affiliate  proposing  to  transfer  Securities,  as the case may be (a  "Selling
Stockholder")  shall promptly give written  notice  ("Notice") to the Company at
least twenty (20) days prior to the closing of such sale or transfer. The Notice
shall  describe in reasonable  detail the proposed  sale or transfer  including,
without limitation,  the number and type of Securities to be sold or transferred
(the "Notice Shares"), the nature of such sale or transfer, the consideration to
be paid,  the  requested  method of  payment  and the name and  address  of each
prospective  purchaser or transferee.  In the event that the sale or transfer is
being made  pursuant to the  provisions  of Section  4.2, the Notice shall state
under which paragraph and subparagraph the sale or transfer is being made.

                  (ii) The Company,  or its respective  Affiliates acting on its
behalf,  shall have the right,  exercisable  upon written notice to such Selling
Stockholder  within ten (10) days after  receipt of the Notice,  to purchase the
Common Stock proposed to be transferred.

                  (iii) If the Company elects to so purchase all or a portion of
the Notice  Shares,  the Company,  or its  Affiliates  acting on its behalf (the
"Purchasing  Stockholder")  shall  purchase the Notice Shares by delivering  the
consideration  to be paid  for the  Notice  Shares  to the  Selling  Stockholder
pursuant to the payment method specified in the Notice on a date mutually agreed
to by the parties.

                                       11
<PAGE>

                  (iv)   Simultaneously   upon  receipt  of  the   consideration
specified in the Notice and delivered pursuant to the foregoing  paragraph (iii)
of this Section 4.1, the Selling  Stockholder  shall  deliver to the  Purchasing
Stockholder a stock  certificate or certificates  representing the Notice Shares
in  consummation of the sale of such shares pursuant to the terms and conditions
specified in the Notice.

                  (v) The exercise or  non-exercise of the rights of the Company
hereunder (or its Affiliates acting on its behalf) to participate as a purchaser
in one or more sales of  Securities  made by the  Investor  (or its  Affiliates)
shall  not  adversely  affect  its  rights  to  participate  as a  purchaser  in
subsequent sales of Securities subject to paragraph (i) of Section 4.1.

                  (vi) If the  Company  does  not  elect to  participate  in the
purchase of the Notice Shares (or purchase only a portion of the Notice Shares),
then the  Selling  Stockholder  may,  not later than  sixty (60) days  following
delivery of the Notice to the Company, enter into an agreement providing for the
closing of the transfer of the remaining Notice Shares within sixty (60) days of
such agreement on terms and conditions not more favorable to the transferor than
those described in the Notice,  subject to the conditions  noted in Section 3.7.
Any  proposed  transfer  on terms  and  conditions  more  favorable  than  those
described  in the Notice,  as well as any  subsequent  proposed  transfer of any
additional  Securities by the Investor or its Affiliate,  shall again be subject
to the rights of the Company  (and its  Affiliates)  set forth  herein and shall
require compliance with the procedures described in this Section 4.1.

         4.2    Exempt Transfers.

                Notwithstanding the foregoing, the provisions of paragraphs  (i)
through (vi) of Section 4.1 shall not apply to (A) any pledge of Securities made
pursuant to a bona fide loan transaction  that creates a mere security  interest
or (B) any transfer to an Affiliate of transferor; provided that (1) the Selling
Stockholder  shall  inform  the  Company  of such  pledge or  transfer  prior to
effecting it and (2) the pledgee or transferee  shall furnish the Company with a
written  agreement to be bound by and comply with all provisions of Section 4.1.
Such pledged or transferred  Securities under subsections (A) or (B) above shall
remain "Securities" hereunder,  and such pledgee or transferee under subsections
(A) or (B) shall be treated as the "Investor" for purposes of this Section 4.

         4.3      Prohibited Transfers.

                  Any  attempt  by  the  Investor  to  transfer   Securities  in
violation  of Section 4.1 hereof  shall be void and the Company  will not effect
such a transfer nor will it treat any alleged  transferee  as the holder of such
shares without the written  consent of the Company (or its Affiliates  acting on
its behalf).

         4.4      Term.

                   The rights and  obligations set forth in this Section 4 shall
terminate upon the earlier of (i) the closing of a firm commitment  underwritten
public  offering  pursuant  to an  effective  registration  statement  under the
Securities Act of 1933, as amended (the "Securities Act") covering the offer and
sale of the Company's  Common Stock,  and (ii) the closing of the Company's sale
of all or  substantially  all of its assets or the acquisition of the Company by
another entity by means of a merger or  consolidation  resulting in the exchange

                                       12
<PAGE>

of the  outstanding  shares of the  Company's  capital  stock for  securities or
consideration  issued,  or caused to be issued,  by the acquiring  entity or its
subsidiary.

         4.5      Definitions.

         "Affiliate"  of any party  means any person (or group of  persons)  who
effectively  controls,  is effectively  controlled by or is under common control
with such party.

         "Preferred  Stock" shall mean any class or series of preferred stock of
the  Company  in  existence  on the date  hereof or  subsequently  issued by the
Company.

         "Securities"  shall  mean  shares  of the  Company's  Common  Stock and
Preferred Stock (or warrants or other  securities  convertible into Common Stock
or Preferred Stock) now owned or subsequently acquired.


5.       CONDITIONS OF INVESTOR'S OBLIGATIONS AT CLOSING.

                  The obligations of the Investor under  subparagraph  1.1(b) of
this  Agreement are subject to the  fulfillment on or before the Closing of each
of the following conditions,  the waiver of which shall not be effective against
the Investor if it does not consent in writing thereto:

         5.1      Representations and Warranties.

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

         5.2      Performance.

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

         5.3      Compliance Certificate.

                  The  President of the Company shall deliver to the Investor at
the Closing a  certificate  certifying  that the  conditions  specified  in this
Section 4 have been fulfilled.

         5.4      Qualifications.

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

                                       13
<PAGE>

         5.5      Proceedings and Documents.

                  All corporate  and other  proceedings  in connection  with the
transactions  contemplated  at the Closing and all  documents  incident  thereto
shall  be  reasonably  satisfactory  in form  and  substance  to the  Investor's
counsel.

         5.6      Other Agreements.

                  The Company and the  Investor  shall have entered into each of
the Ancillary Agreements listed on Exhibit A to which such party is a signatory.


6.       CONDITIONS TO COMPANY'S OBLIGATIONS AT CLOSING.

                  The  obligations  of the  Company to the  Investor  under this
Agreement are subject to the fulfillment,  on or before the Closing,  of each of
the following conditions by the Investor:

         6.1      Representations and Warranties.

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

         6.2      Qualifications.

                  All  authorizations,  approvals,  or  permits,  if any, of any
governmental  authority or regulatory  body of the United States or of any state
or the  approval  or  authorization  of any other  entity  that are  required in
connection  with the lawful  issuance and sale of the Common  Stock  pursuant to
this Agreement shall be duly obtained and effected as of the Closing.


7.       REGISTRATION RIGHTS.

         7.1      Demand Registration.

                  (a) Procedures. If the Company shall receive at any time after
June 1, 2002 (so long as such request is not within 180 days after the effective
date of a registration  statement filed by the Company  covering an underwritten
offering of any of its securities to the general  public) a written request from
Investor or any person who acquired the Common Stock from  Investor  pursuant to
the terms of this  Agreement  ("Holders")  that the Company file a  registration
statement registering (x) any Common Stock held by a Holder granted or receiving
registration  rights under this Section 7; provided,  however,  shares of Common
Stock  which  have  previously  been  registered  or which have been sold to the
public either  pursuant to a  registration  statement or Rule 144, or which have
been sold in a private  transaction in which the transferor's  rights under this
Agreement  are  not  assigned  shall  be  excluded  ("Registrable   Securities")
constituting  at  least666,666  shares of Common  Stock (as  adjusted  for stock

                                       14
<PAGE>

splits, stock dividends,  reverse stock splits, and the like), or (y) any amount
of Registrable  Securities if the aggregate offering price for the registration,
net of underwriting discounts and commissions, would exceed $5,000,000, then the
Company will:

         (i)      promptly give written notice of the proposed registration to
all other Holders holding Registrable Securities; and

         (ii) as soon as  practicable,  use its  best  efforts  to  effect  such
registration,  on Form S-3 or successor form replacing Form S-3, if practicable,
(including,  without limitation,  filing post-effective amendments,  appropriate
qualifications  under  applicable blue sky or other state  securities  laws, and
appropriate  compliance  with the Securities  Act) as would permit or facilitate
the sale and distribution of all or such portion of such Registrable  Securities
as are  specified  in such  request,  together  with all or such  portion of the
Registrable  Securities  of any Holder or Holders  joining in such  request  (as
permitted  hereunder)  as are  specified  in a written  request  received by the
Company  within  twenty (20) days after such written  notice from the Company is
mailed or delivered.

                  Notwithstanding  the foregoing  provisions,  the Company shall
not be  obligated  to  effect,  or to  take  any  action  to  effect,  any  such
registration pursuant to this Section 7 if:


                                            (1) in any particular jurisdiction,
the Company would be required to execute a general consent to service of process
in effecting such registration, qualification, or compliance (unless the Company
is already subject to service in such jurisdiction and except as may be required
by the Securities Act);
                                            (2) the  Company has  initiated  two
registrations  pursuant to Section 7.1(a)  (counting for these purposes only (A)
registrations  which have been  declared or ordered  effective  and  pursuant to
which securities have been sold and (B) registrations  which have been withdrawn
by the initiating Holders as to which the Holders have not paid the Registration
Expenses pursuant to Section 7.3 and were required to bear such expenses);

                                            (3) such request for registration is
made  during  the  period  starting  with the date  sixty (60) days prior to the
Company's good faith estimate of the date of filing of, and ending on a date one
hundred  eighty  (180) days  after the  effective  date of, a  Company-initiated
registration;  provided that the Company is actively employing in good faith all
reasonable efforts to cause such registration statement to become effective;


                  (b) Subject to the  foregoing  clauses (1)  through  (3),  the
Company shall file a registration  statement covering the Registrable Securities
so  requested  to be  registered  as soon as  practicable  after  receipt of the
request of the Holders (or their respective permitted Affiliate transferees), as
the case may be;  provided,  however,  that if (i) in the good faith judgment of
the  Board  of  Directors  of the  Company  (the  "Board  of  Directors"),  such
registration  would be  seriously  detrimental  to the  Company and the Board of
Directors  concludes,  as a result,  that it is essential to defer the filing of
such registration  statement at such time, and (ii) the Company shall furnish to
such Holders a certificate  signed by the President of the Company  stating that
in the good faith  judgment  of the Board of  Directors,  it would be  seriously

                                       15
<PAGE>

detrimental  to the Company for such  registration  statement to be filed in the
near  future and that it is,  therefore,  essential  to defer the filing of such
registration  statement,  then the  Company  shall  have the right to defer such
filing  (except as  provided  in clause (3) above) for a period of not more than
one hundred  twenty  (120) days after  receipt of the request of the  initiating
Holders (or their  permitted  Affiliate  transferees),  as the case may be, and,
provided further, that the Company shall not defer its obligation in this manner
more than once in any twelve-month period.

                  The  registration  statement  filed pursuant to the request of
the initiating  Holders (or their respective  permitted  Affiliate  transferees)
may,  subject to the  provisions  of  Sections  7.1(d) and 7.10,  include  other
securities of the Company,  with respect to which registration  rights have been
granted, and may include securities of the Company being sold for the account of
the Company.

                  (c)  Underwriting.  The right of any  Holder  to  registration
pursuant to Section 7.1 shall be conditioned upon such Holder's participation in
such underwriting,  the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein and such other restrictions as may be
reasonably  imposed  by the  underwriter.  A Holder may elect to include in such
underwriting all or a part of the Registrable Securities he holds.

                  (d)  Procedures.  The Company shall (together with all Holders
and  other  persons  proposing  to  distribute  their  securities  through  such
underwriting)  enter into an  underwriting  agreement in customary form with the
representative of the underwriter or underwriters selected for such underwriting
by the initiating Holder(s), which underwriters are reasonably acceptable to the
Company. If the Company shall request inclusion in any registration  pursuant to
Section 7.1 of  securities  being sold for its own account,  or if other persons
shall  request  inclusion  in any  registration  pursuant  to Section  7.1,  the
initiating  Holder(s)  shall,  on behalf of all  Holders,  offer to include such
securities in the  underwriting and may condition such offer on their acceptance
of the further applicable provisions of this Section 7 (including Section 7.10).
Notwithstanding  any other provision of this Section 7.1, if the  representative
of the underwriters  advises the initiating  Holder(s) in writing that marketing
factors  require a limitation  on the number of shares to be  underwritten,  the
number of shares to be included in the  underwriting  or  registration  shall be
allocated as set forth in Section 7.10. If a person who has requested  inclusion
in such  registration  as provided above does not agree to the terms of any such
underwriting, such person shall be excluded therefrom by written notice from the
Company, the underwriter or the initiating Holder(s). The securities so excluded
shall also be withdrawn from registration.  Any Registrable  Securities or other
securities  excluded or withdrawn from such underwriting shall also be withdrawn
from such registration.  If shares are so withdrawn from the registration and if
the number of shares to be included in such registration was previously  reduced
as a result of  marketing  factors  pursuant to this  Section  7.1(d),  then the
Company  shall  offer  to all  Holders  who  have  retained  rights  to  include
securities in the registration the right to include additional securities in the
registration in an aggregate  amount equal to the number of shares so withdrawn,
with such  shares to be  allocated  among  such  Holders  requesting  additional
inclusion in accordance with Section 7.10.

                                       16
<PAGE>

         7.2      Registration on Form S-3; Shelf Registration.

                  (a) After the Company has  qualified  for the use of Form S-3,
in addition to the rights  contained  in  Sections  7.1 and 7.3,  the Holders of
Registrable  Securities  who  hold in  excess  of two  percent  (2%) of the then
outstanding  Common  Stock  of the  Company  shall  have the  right  to  request
registrations  on Form S-3 on a continuous or delayed basis pursuant to Rule 415
(such  requests  shall be in  writing  and shall  state the  number of shares of
Registrable Securities to be disposed of and the intended methods of disposition
of such shares by such Holder or Holders),  provided,  however, that the Company
shall  not be  obligated  to effect  any such  registration  (i) if the  Holders
propose to sell  Registrable  Securities  and such other  securities (if any) on
Form S-3 at an aggregate  price to the public of less than  $1,000,000,  (ii) in
the circumstances  described in clauses (1) and (3) of Section 7.1(a),  (iii) if
the Company shall furnish the  certification  described in paragraph 7.1(b) (but
subject to the limitations set forth therein),  (iv) if, in a given twelve-month
period, the Company has effected one (1) such registration in such period or (v)
if it is to be  effected  more than five (5) years after the  Company's  initial
public offering.

                  (b) If a request  complying with the  requirements  of Section
7.2(a) is delivered to the Company,  the  provisions  of Sections  7.1(a)(i) and
Section 7.1(b) hereof shall apply to such  registration.  If the registration is
for an  underwritten  offering,  the  provisions  of Sections  3.1(c) and 3.1(d)
hereof shall apply to such registration.

         7.3      Piggyback Registration.

                  (a) If the Company  shall  determine  to  register  any of its
securities  either for its own  account or the  account of a security  holder or
holders  exercising their respective  demand  registration  rights (other than a
registration  relating  solely to  employee  benefit  plans,  or a  registration
relating to a corporate  reorganization  or other  transaction on Form S-4, or a
registration on any registration form that does not permit secondary sales), the
Company will:

                  (i) promptly give to each Holder written notice thereof; and

                  (ii) use its best efforts to include in such registration (and
         any  related  qualification  under blue sky laws or other  compliance),
         except as set forth in Section  7.3(b) below,  and in any  underwriting
         involved therein, all the Registrable Securities specified in a written
         request or  requests,  made by any Holder and  received  by the Company
         within  ten (10)  days  after  the  written  notice  from  the  Company
         described  in clause (i) above is mailed or  delivered  by the Company.
         Such  written  request  may  specify  all  or  a  part  of  a  Holder's
         Registrable Securities.

                  (b)  Underwriting.  If the  registration  of which the Company
gives notice is for a registered public offering involving an underwriting,  the
Company  shall so advise  the  Holders  as a part of the  written  notice  given
pursuant  to  Section  7.3(a)(i).  In such  event,  the  right of any  Holder to
registration  pursuant  to this  Section  7.3  shall be  conditioned  upon  such
Holder's  participation  in such  underwriting,  the  inclusion of such Holder's
Registrable  Securities in the  underwriting  to the extent  provided herein and
such other  restrictions as may be reasonably imposed by the underwriter and the
Company.  All Holders  proposing to  distribute  their  securities  through such
underwriting  shall  (together  with  the  Company  and  the  other  holders  of

                                       17
<PAGE>

securities  of the  Company  with  registration  rights to  participate  therein
distributing  their  securities   through  such  underwriting)   enter  into  an
underwriting  agreement  in  customary  form  with  the  representative  of  the
underwriter or underwriters selected by the Company.

                  Notwithstanding  any other  provision  of this Section 7.3, if
the  representative  of the  underwriters  advises the  Company in writing  that
marketing   factors  require  a  limitation  on  the  number  of  shares  to  be
underwritten or the Company's Board of Directors reasonably  determines that the
number of shares  proposed  to be  registered  must be  reduced  in view of then
existing  market  conditions,  the  Company  shall be required to include in the
offering only that number of Registrable  Securities that the Board of Directors
determine  in their  sole  discretion  will not  jeopardize  the  success of the
offering  (the  securities  so  included  to be  apportioned  pro rata among the
selling Holders  according to the total amount of Registrable  Securities (to be
determined   assuming  full  conversion  of  all  securities   convertible  into
Registrable  Securities at such time)  entitled to be included  therein owned by
each selling Holder or in such other  proportions as shall mutually be agreed to
be such  selling  Holders),  but in no event  shall the  amount  of  Registrable
Securities  of the selling  Holders  included in such  offering be reduced below
thirty  percent  (30%)  of the  total  amount  of  securities  included  in such
offering,  unless such offering is the initial public  offering of the Company's
securities  (in  which  case,  the  selling  Holders  may  be  excluded  if  the
underwriters make the determination  described above and no other  shareholder's
securities are included in such  offering).  If any person does not agree to the
terms of any such underwriting, he or she shall be excluded therefrom by written
notice from the Company or the underwriter.  Any Registrable Securities or other
securities  excluded or withdrawn from such underwriting shall be withdrawn from
such registration.

                  If shares are so withdrawn  from the  registration  and if the
number of shares of Registrable  Securities to be included in such  registration
was previously reduced as a result of marketing factors,  the Company shall then
offer to all persons who have  retained the right to include  securities  in the
registration the right to include  additional  securities in the registration in
an aggregate amount equal to the number of shares so withdrawn, with such shares
to be allocated among the persons requesting  additional inclusion in accordance
with Section 7.10.

                                       18
<PAGE>

         7.4 Expenses of  Registration.  All Registration  Expenses  incurred in
connection  with any  registration,  qualification  or  compliance  pursuant  to
Sections 7.1, 7.2 or 7.3 shall be borne by the Company; provided,  however, that
if the Holders bear the Registration  Expenses for any  registration  proceeding
begun  pursuant  to  Section  7.1  and  subsequently  withdrawn  by the  Holders
registering shares therein, such registration proceeding shall not be counted as
a requested registration pursuant to Section 7.1. Furthermore, in the event that
a withdrawal by the Holders is based upon material adverse information  relating
to the Company that is different from the  information  known or available (upon
request from the Company or otherwise) to the Holders requesting registration at
the time of their request for registration  under Section 7.1, such registration
shall not be treated as a counted registration for purposes of Section 7.1, even
though the Holders do not bear the Registration  Expenses for such registration.
All Selling Expenses  relating to securities so registered shall be borne by the
holders  of such  securities  pro rata on the  basis of the  number of shares of
securities  so  registered  on their  behalf,  as shall  any other  expenses  in
connection  with the  registration  required  to be borne by the Holders of such
securities.

         7.5 Registration Procedures.  In the case of each registration effected
by the  Company  pursuant to this  Section 7, the Company  will keep each Holder
advised in  writing  as to the  initiation  of each  registration  and as to the
completion thereof. At its expense, the Company will use its best efforts to:

                  (a) Keep such  registration  effective  for a period of ninety
(90) days or until  the  Holder  or  Holders  have  completed  the  distribution
described  in the  registration  statement  relating  thereto,  whichever  first
occurs;  provided,  however, that (i) such 90-day period shall be extended for a
period  of time  equal to the  period  the  Holder  refrains  from  selling  any
securities  included in such  registration  at the request of an  underwriter of
Common Stock (or other  securities) of the Company;  and (ii) in the case of any
registration  of  Registrable  Securities  on Form S-3 which are  intended to be
offered on a continuous or delayed basis,  such 90-day period shall be extended,
if  necessary,  to keep the  registration  statement  effective  until  all such
Registrable  Securities are sold,  however in no event longer than one year from
the effective date of the registration  statement and provided that Rule 415, or
any successor rule under the Securities Act, permits an offering on a continuous
or  delayed  basis,  and  provided  further  that  applicable  rules  under  the
Securities  Act governing  the  obligation  to file a  post-effective  amendment
permit,  in lieu of filing a  post-effective  amendment  that (A)  includes  any
prospectus  required by Section  10(a)(3) of the  Securities Act or (B) reflects
facts or events representing a material or fundamental change in the information
set forth in the  registration  statement,  the  incorporation  by  reference of
information  required  to be included  in (A) and (B) above to be  contained  in
periodic  reports  filed  pursuant to Section 13 or 15(d) of the Exchange Act in
the registration statement;

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

                  (c) Furnish such number of  prospectuses  and other  documents
incident thereto, including any amendment of or supplement to the prospectus, as
a Holder from time to time may reasonably request;

                                       19
<PAGE>

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

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

                  (f) In connection with any underwritten offering pursuant to a
registration  statement  filed  pursuant to Section  7.1, the Company will enter
into an underwriting  agreement in form reasonably necessary to effect the offer
and sale of Common Stock.

         7.6      Indemnification.

                  (a)  The  Company  will  indemnify  each  Holder,  each of its
officers, directors and partners, legal counsel, and accountants and each person
controlling  such Holder within the meaning of Section 15 of the Securities Act,
with  respect  to which  registration,  qualification,  or  compliance  has been
effected  pursuant to this  Section 7,  against all  expenses,  claims,  losses,
damages,  and  liabilities (or actions,  proceedings,  or settlements in respect
thereof)  arising  out of or based on any untrue  statement  of a material  fact
contained in any prospectus, offering circular, or other document (including any
related registration statement,  notification, or the like) incident to any such
registration,  qualification,  or compliance,  or based on any omission to state
therein a material fact  required to be stated  therein or necessary to make the
statements  therein  not  misleading,  or any  violation  by the  Company of the
Securities  Act or any rule or regulation  thereunder  applicable to the Company
and relating to action or inaction  required of the Company in  connection  with
any such  registration,  qualification,  or compliance,  and will reimburse each
such Holder,  each of its officers,  directors,  partners,  legal  counsel,  and
accountants and each person controlling such Holder, each such underwriter,  and
each person who controls any such  underwriter,  as incurred,  for any legal and
any other expenses  reasonably  incurred in connection  with  investigating  and
defending  or  settling  any such claim,  loss,  damage,  liability,  or action;
provided,  however,  that the Company will not be liable in any such case to the
extent that any such claim, loss, damage, liability, or expense arises out of or
is based on any untrue  statement  or omission  based upon  written  information
furnished  to the Company by such Holder or  underwriter.  It is agreed that the
indemnity  agreement contained in this Section 7.6(a) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company.

                  (b) Each Holder will, if Registrable  Securities  held by such
Holder  are  included  in  the   securities  as  to  which  such   registration,
qualification,  or compliance is being effected,  indemnify the Company, each of
its directors,  officers, partners, legal counsel, and accountants,  each person
who controls the Company within the meaning of Section 15 of the Securities Act,
and each Other Stockholder, and each of their officers, directors, and partners,
and each person controlling such Other Stockholder,  against all claims, losses,

                                       20
<PAGE>

damages and liabilities (or actions in respect  thereof) arising out of or based
on any untrue  statement of a material fact  contained in any such  registration
statement,  prospectus, offering circular, or other document, or any omission to
state therein a material fact required to be stated therein or necessary to make
the statements  therein not misleading,  and will reimburse the Company and such
Other  Stockholders,   directors,   officers,   partners,   legal  counsel,  and
accountants,  persons,  underwriters,  or control persons, as incurred,  for any
legal or any other expenses reasonably incurred in connection with investigating
or defending any such claim, loss, damage, liability, or action, in each case to
the extent,  but only to the extent,  that such untrue  statement or omission is
made in such registration  statement,  prospectus,  offering circular,  or other
document in reliance upon and in conformity with written  information  furnished
to the Company by such Holder;  provided,  however, that the obligations of such
Holder  hereunder  shall not apply to  amounts  paid in  settlement  of any such
claims, losses,  damages, or liabilities (or actions in respect thereof) if such
settlement is effected  without the consent of such Holder (which  consent shall
not be unreasonably  withheld);  and provided further that in no event shall any
indemnity  under this Section  7.6(b)  exceed the net proceeds from the offering
received by such Holder.

                  (c) Each party entitled to indemnification  under this Section
7.6 (the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit  the  Indemnifying  Party to  assume  the  defense  of such  claim or any
litigation  resulting  therefrom,  provided  that  counsel for the  Indemnifying
Party,  who shall conduct the defense of such claim or any litigation  resulting
therefrom,  shall be approved by the Indemnified Party (whose approval shall not
be unreasonably  withheld),  and the  Indemnified  Party may participate in such
defense at such party's  expense,  and provided  further that the failure of any
Indemnified  Party to give  notice as  provided  herein  shall not  relieve  the
Indemnifying  Party of its obligations  under this Section 7, to the extent such
failure is not  prejudicial.  No Indemnifying  Party, in the defense of any such
claim or litigation,  shall,  except with the consent of each Indemnified Party,
consent  to entry of any  judgment  or enter into any  settlement  that does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such  Indemnified  Party of a release  from all  liability in respect to such
claim or  litigation.  Each  Indemnified  Party shall  furnish such  information
regarding  itself  or  the  claim  in  question  as an  Indemnifying  Party  may
reasonably request in writing and as shall be reasonably  required in connection
with defense of such claim and litigation resulting therefrom.

                  (d) If the indemnification provided for in this Section 7.6 is
held by a court of competent  jurisdiction  to be  unavailable to an Indemnified
Party with respect to any loss, liability, claim, damage, or expense referred to
therein,  then the Indemnifying  Party, in lieu of indemnifying such Indemnified
Party  hereunder,  shall  contribute  to the  amount  paid  or  payable  by such
Indemnified Party as a result of such loss, liability, claim, damage, or expense
in such  proportion  as is  appropriate  to reflect  the  relative  fault of the
Indemnifying  Party on the one hand and of the Indemnified Party on the other in
connection  with  the  statements  or  omissions  that  resulted  in such  loss,
liability,  claim,  damage,  or expense as well as any other relevant  equitable
considerations.  The  relative  fault  of  the  Indemnifying  Party  and  of the
Indemnified  Party shall be  determined  by reference  to,  among other  things,
whether  the  untrue or  alleged  untrue  statement  of a  material  fact or the
omission  to state a  material  fact  relates  to  information  supplied  by the
Indemnifying Party or by the Indemnified Party and the parties' relative intent,
knowledge,  access to  information,  and  opportunity to correct or prevent such
statement or omission.

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

                                       21
<PAGE>

in conflict with the foregoing  provisions,  the provisions in the  underwriting
agreement  shall  control  and the  foregoing  Section 7.6 shall have no further
force and effect.

         7.7 Information by Holder. Each Holder of Registrable  Securities shall
furnish  to  the  Company  such  information   regarding  such  Holder  and  the
distribution  proposed by such Holder as the Company may  reasonably  request in
writing and as shall be reasonably required in connection with any registration,
qualification, or compliance referred to in this Section 7.


         7.8  Transfer  or  Assignment  of  Registration  Rights.  Prior  to the
Company's initial public offering of its Common Stock, Investor's right to cause
the Company to register Registrable Securities pursuant to Section 7.1 shall not
be  transferable  except to its respective  Affiliates.  The rights to cause the
Company to register a Holder's Registrable  Securities (as presently constituted
and subject to subsequent adjustments for stock splits, stock dividends, reverse
stock splits,  and the like) granted under Section 7.1 (only after the Company's
initial public offering of its Common Stock) and under Section 7.2 or 7.3 may be
transferred  or assigned (a) to a transferee  or assignee  (in  accordance  with
Section  4) who  acquires  at  least  twenty  percent  (20%)  of  such  Holder's
Securities,  (b) to a  transferee  or assignee who acquires at least two percent
(2%) of the Company's  Common Stock from a Holder,  which assignee or transferee
is  acceptable  to the  Company  (which  acceptance  shall  not be  unreasonably
withheld),  (c) to partners or retired partners of the such Holder in accordance
with their partnership  interests,  or (d) to another affiliate of Holder, which
assignee or transferee is acceptable to the Company (which  acceptance shall not
be unreasonably withheld);  provided that the Company is given written notice at
the time of or within a  reasonable  time after  said  transfer  or  assignment,
stating  the name  and  address  of the  proposed  transferee  or  assignee  and
identifying  the securities with respect to which such  registration  rights are
being  transferred  or assigned;  and provided  further,  that the transferee or
assignee of such rights assumes in writing the  obligations of such Holder under
this Section 7.

         7.9   "Lock-Up"   Agreement.   If  requested  by  the  Company  or  any
representative  of an underwriter  of Common Stock (or other  securities) of the
Company  following  an  initial  public  offering,  each of the  holders  of the
Securities  shall not sell or otherwise  transfer or dispose of any Common Stock
or other  securities  of the  Company  held by such  holders  (other  than those
included in the  registration)  during the one hundred  eighty  (180) day period
following the effective  date of a  registration  statement of the Company filed
under the Securities Act. If requested by the Company or any  representative  of
an  underwriter of Common Stock (or other  securities) of the Company  following
the first public  offering of the Company  after the  Company's  initial  public
offering,  each of the  holders of the  Securities  shall not sell or  otherwise
transfer or dispose of any Common Stock or other  securities of the Company held
by such  holders  (other  than those  included in the  registration)  during the
ninety (90) day period following the effective date of a registration  statement
of the Company filed under the Securities Act. The obligations described in this
Section  7.10  shall not apply to a  registration  relating  solely to  employee
benefit plans on Form S-1 or Form S-8 or similar  forms that may be  promulgated
in the future, or a registration relating solely to a transaction on Form S-4 or
similar  forms that may be  promulgated  in the  future.  The Company may impose

                                       22
<PAGE>

stop-transfer  instructions with respect to the shares of Common Stock (or other
securities)  subject to the foregoing  restriction until the end of such lock-up
periods.

         7.10 Allocation of Registration  Opportunities.  In any circumstance in
which all of the  Registrable  Securities  of the Company  (including  shares of
Common  Stock  issued or issuable  upon  conversion  of shares of any  currently
unissued series of preferred stock of the Company) with registration rights (the
"Other  Shares")  requested  to be included in a  registration  on behalf of the
Holders  or other  selling  stockholders  cannot be so  included  as a result of
limitations  of the aggregate  number of shares of  Registrable  Securities  and
Other  Shares  that may be so  included,  the  number of  shares of  Registrable
Securities and Other Shares that may be so included shall be allocated among the
Holders and other selling  stockholders  requesting inclusion of shares pro rata
on the basis of the number of shares of Registrable  Securities and Other Shares
that would be held by such  Holders  and other  selling  stockholders,  assuming
conversion;  provided, however, that such allocation shall not operate to reduce
the aggregate  number of Registrable  Securities and Other Shares to be included
in such  registration,  if any  Holder  or other  selling  stockholder  does not
request inclusion of the maximum number of shares of Registrable  Securities and
Other  Shares  allocated to him pursuant to the  above-described  procedure,  in
which case the remaining  portion of his allocation  shall be reallocated  among
those requesting  Holders and other selling  stockholders  whose allocations did
not  satisfy  their  requests  pro rata on the basis of the  number of shares of
Registrable  Securities and Other Shares which would be held by such Holders and
other selling  stockholders,  assuming  conversion,  and this procedure shall be
repeated  until all of the shares of  Registrable  Securities  and Other  Shares
which may be  included  in the  registration  on behalf of the Holders and other
selling stockholders have been so allocated.

         7.11 Delay of Registration.  No Holder shall have any right to take any
action to restrain, enjoin, or otherwise delay any registration as the result of
any  controversy  that  might  arise  with  respect  to  the  interpretation  or
implementation of this Section 7.

         7.12  Termination of  Registration  Rights.  The right of any Holder to
request  registration or inclusion in any registration  pursuant to Section 7.1,
7.2  or 7.3  shall  terminate  on the  closing  of the  first  Company-initiated
registered  public  offering of Common  Stock of the  Company,  if all shares of
Registrable  Securities  held or  entitled  to be held upon  conversion  by such
Holder may  immediately be sold under Rule 144 during any 90-day period,  or the
earlier  of (i) such date  after  the  closing  of the  first  Company-initiated
registered  public  offering  of Common  Stock of the  Company  as all shares of
Registrable  Securities  held or  entitled  to be held upon  conversion  by such
Holder may immediately be sold under Rule 144 during any 90-day period, and (ii)
five (5) years  after the  closing  of the  first  Company-initiated  registered
public offering.

8.       COVENANTS OF THE COMPANY

                  The Company hereby covenants and agrees as follows:

                                       23
<PAGE>

         8.1      Basic Financial Information.

                  Upon request,  the Company will furnish the following  reports
to a Holder so long as such Holder owns at least 300,000 shares of Common Stock,
(as presently constituted and subject to subsequent adjustment for stock splits,
stock  dividends,  reverse stock splits,  recapitalizations  and the like):  (i)
monthly financial statements as soon as practicable at the end of each month and
(ii) a summary of the financial plan of the Company for each fiscal year as soon
as practicable after the end of each fiscal year;  provided,  however,  that the
obligation  of the Company to furnish  such  monthly  financial  statements  and
annual financial plan shall terminate upon a firmly underwritten public offering
of the Common Stock of the Company.

                  Upon request, the Company will furnish, as soon as practicable
after the end of the first,  second and third  quarterly  accounting  periods in
each fiscal year of the Company, to a Holder if it holds at least 150,000 of the
outstanding  shares of Common  Stock(as  presently  constituted  and  subject to
subsequent  adjustment for stock splits, stock dividends,  reverse stock splits,
recapitalizations  and the like), annual and quarterly financial  statements for
such  period  (including  a balance  sheet of the  Company as of the end of such
period and  statements of income and cash flows of the Company for such period),
prepared  in  accordance   with   generally   accepted   accounting   principles
consistently  applied,  subject to changes  resulting from normal year-end audit
adjustments,  and except  that such  financial  statements  need not contain the
notes required by generally  accepted  accounting  principles.  Annual financial
statements  of the Company  provided to a Holder under this  paragraph  shall be
certified by  independent  public  accountants of recognized  national  standing
selected by the Company.

         8.2      Additional Information and Rights.

                  The Company  will  permit any  Holder,  so long as such Holder
owns at least 300,000 shares of the Common Stock (as presently  constituted  and
subject to subsequent  adjustment  for stock splits,  stock  dividends,  reverse
stock splits,  recapitalizations  and the like) and each Holder which represents
that it is a "venture capital  operating  company" for purposes of Department of
Labor Regulation Section 2510.3-101,  who requests them (a "Significant Holder")
(or a representative of any Significant  Holder) to visit and inspect any of the
properties of the Company, including its books of account and other records, and
to discuss its affairs,  finances and accounts with the  Company's  officers and
its independent public accountants, all at such reasonable times and as often as
any such person may reasonably request.

                  The  provisions  of Section 8.1 and this Section 8.2 shall not
be in limitation of any rights which any Holder or  Significant  Holder may have
with respect to the books and records of the Company and its subsidiaries, or to
inspect their properties or discuss their affairs,  finances and accounts, under
the laws of the jurisdictions in which they are incorporated.

                  Anything in this Agreement to the contrary notwithstanding, no
Holder by reason of this  agreement  shall have  access to any trade  secrets or
classified  information  of the Company.  Each Holder  hereby  agrees to hold in
confidence and trust and not to misuse or disclose any confidential  information
provided  pursuant to this  Section  8.2.  The Company  shall not be required to
comply  with  this  Section  8.2 in  respect  of any  Holder  whom  the  Company

                                       24
<PAGE>

reasonably  determines to be a competitor or an officer,  employee,  director or
greater than ten percent (10%) stockholder of a competitor.

                  From the date the  Company  becomes  subject to the  reporting
requirements  of the  Exchange Act (which shall  include any  successor  federal
statute),  the Company's  obligation to provide financial  information  required
pursuant to Sections 8.1 and 8.2 hereof shall automatically terminate.

                  Each  Holder  who  represents  to  the  Company  that  it is a
"venture  capital  operating  company"  for  purposes  of  Department  of  Labor
Regulation Section 2510.3-101 shall, in addition, have the right to consult with
and advise the officers of the Company as to the management of the Company.

         8.3      Right to Purchase New Securities.

         The  Company  hereby  grants to  Investor  and its  Affiliates  if they
collectively  own  at  least  333,333  shares  of  Common  Stock  (as  presently
constituted  and  subject  to  subsequent  adjustment  for stock  splits,  stock
dividends,  reverse stock splits,  recapitalizations  and the like),  a right to
purchase a pro rata share of New  Securities  (as defined in this  Section  8.3)
which the Company may, from time to time, propose to sell and issue.  investor's
pro rata share, for purposes of this right, is the ratio of the number of shares
of Common Stock owned by Investor (and its Affiliates)  immediately prior to the
issuance of the New  Securities,  to the total  number of shares of Common Stock
outstanding  immediately  prior to the  issuance of New  Securities.  This right
shall be subject to the following provisions:

                  "New  Securities"  shall  mean any  capital  stock  (including
Common Stock and/or  preferred  stock) of the Company  whether now authorized or
not,  and  rights,  options or  warrants to purchase  such  capital  stock,  and
securities  of any type  whatsoever  that are, or may become,  convertible  into
capital  stock;  provided  that the term "New  Securities"  does not include (i)
securities purchased under this Agreement;  (ii) securities issued in connection
with  a  merger,  acquisition,   reorganization  or  other  similar  transaction
undertaken  by the  Company;  (iii) any  borrowings,  direct or  indirect,  from
financial institutions or other persons by the Company, whether or not presently
authorized,  including any type of loan or payment evidenced by any type of debt
instrument,  provided such borrowings do not have any equity features  including
warrants,  options  or  other  rights  to  purchase  capital  stock  and are not
convertible  into  capital  stock of the  Company;  (iv)  securities  issued  to
employees,  consultants,  officers or directors  of the Company  pursuant to any
stock option, stock purchase stock bonus plan, warrant, agreement or arrangement
approved  by the  Board of  Directors;  (v)  securities  issued  to  vendors  or
customers or to other persons in similar commercial  situations with the Company
if such  issuance  is approved by the Board of  Directors  and such  issuance is
undertaken for purposes  primarily other than equity financing;  (vi) securities
issued in connection with obtaining lease financing, whether issued to a lessor,
guarantor or other person and such issuance is undertaken for purposes primarily
other than equity  financing;  (vii)  securities  issued in connection  with any
stock  split,  stock  dividend  or  recapitalization  of  the  Company;   (viii)
securities issued in connection with corporate partnering  transactions on terms
approved by the Board of Directors and such issuance is undertaken  for purposes
primarily other than equity financing;  and (ix) any right, option or warrant to

                                       25
<PAGE>

acquire  any  security   convertible  into  the  securities  excluded  from  the
definition of New Securities pursuant to subsections (i) through (x) above.

                  In the event the Company  proposes to undertake an issuance of
New  Securities,  it  shall  give  Investor  written  notice  of its  intention,
describing  the type of New  Securities,  and their price and the general  terms
upon which the Company  proposes to issue the same.  Investor (or its Affiliate)
shall have ten (10) days after any such notice is mailed or  delivered  to agree
to purchase  Investor's  pro rata share of such New Securities for the price and
upon the terms  specified in the notice by giving  written notice to the Company
and stating therein the quantity of New Securities to be purchased.

         In the event the Investor (or its  Affiliates)  fail to exercise  fully
the right  within  said ten (10) day period,  the Company  shall have sixty (60)
days  thereafter to sell or enter into an agreement  (pursuant to which the sale
of New Securities  covered thereby shall be closed, if at all, within sixty (60)
days  from the date of said  agreement)  to sell the New  Securities  respecting
which  Investor's (or its  Affiliates')  the right set forth in this Section 8.3
was not exercised, at a price and upon terms no more favorable to the purchasers
thereof than specified in the Company's  notice to Investor  pursuant to Section
8.3(b).  In the event the Company has not sold within such sixty (60) day period
or entered into an agreement to sell the New  Securities in accordance  with the
foregoing  within sixty (60) days from the date of said  agreement,  the Company
shall not  thereafter  issue or sell any New  Securities,  without  first  again
offering  such  securities to the Investor  (and its  Affiliates)  in the manner
provided in Section 8.3(b) above.

                  The right set forth in this Section 8.3 may not be assigned or
transferred (except as otherwise expressly permitted above in this Section).

         8.4 Termination of Covenants. The covenants set forth in this Section 8
shall terminate and be of no further force and effect after the  consummation of
the Company's first firm  commitment  underwritten  public  offering  registered
under the Securities Act.


9.       MISCELLANEOUS.

         9.1      Entire Agreement.

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

         9.2      Survival of Warranties.

                  The warranties,  representations, and covenants of the Company
and the Investor  contained in or made pursuant to this Agreement  shall survive
the execution and delivery of this Agreement and the Closing.

                                       26
<PAGE>

         9.3      Successors and Assigns.

                  The parties to this Agreement may not assign or transfer their
rights or obligations  under this Agreement without the prior written consent of
the other parties  hereto.  Nothing in this  Agreement,  express or implied,  is
intended  to  confer  upon any  party  other  than the  parties  hereto or their
respective  successors  and  assigns  any  rights,  remedies,   obligations,  or
liabilities under or by reason of this Agreement,  except as expressly  provided
in this Agreement.

         9.4      Governing Law.

                  This  Agreement  shall be governed by and construed  under the
laws of the State of Delaware (excluding the choice of law provisions thereof).

         9.5      Counterparts.

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

         9.6      Titles and Subtitles.

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

         9.7      Notices.

                  Unless   otherwise    provided,    all   notices   and   other
communications  required or permitted  under this Agreement  shall be in writing
and  shall  be  sent  by  facsimile  or  delivered  personally  by  hand or by a
nationally  recognized  courier  addressed  to the party to be  notified  at the
address or facsimile  number  indicated  for such person on the  signature  page
hereof, or at such other address or facsimile number as such party may designate
by ten (10) days' advance written notice to the other parties  hereto.  All such
notices and other written  communications  shall be effective at such time as it
is delivered to the addressee  (with the return receipt,  the delivery  receipt,
the  affidavit  of messenger or (with  respect to a facsimile)  the  answer-back
being deemed  conclusive  (but not  exclusive)  evidence of such delivery) or at
such time as  delivery  is  refused  by the  addressee  upon  presentation.

        9.8     Finder's Fees.

                  The  Investor  agrees to  indemnify  and to hold  harmless the
Company from any liability for any commission or compensation in the nature of a
finder's fee (and the cost and expenses of defending  against such  liability or
asserted  liability)  for which the Investor or any of its  officers,  partners,
employees, or representatives is responsible.

                  The Company agrees to indemnify and hold harmless the Investor
from any  liability  for any  commission  or  compensation  in the  nature  of a
finder's fee (and the costs and expenses of defending  against such liability or
asserted liability) for which the Company or any of its officers,  employees, or
representatives is responsible.

                                       27
<PAGE>

        9.9      Expenses.

                  The Company and the Investor shall pay all their own costs and
expenses  (including  attorneys'  fees  and  expenses)  in  connection  with the
preparation,  execution  and  delivery  of this  Agreement  and other  Ancillary
Agreements and other documents to be delivered hereunder or thereunder.
9.10     Amendments and Waivers.

                  Any term of this  Agreement may be amended and the  observance
of any term of this Agreement may be waived (either generally or in a particular
instance  and either  retroactively  or  prospectively),  only with the  written
consent of the Company and the Investor  9.11  California  Corporate  Securities
Law.

                  THE  SALE OF THE  SECURITIES  WHICH  ARE THE  SUBJECT  OF THIS
AGREEMENT HAS NOT BEEN QUALIFIED WITH THE  COMMISSIONER  OF  CORPORATIONS OF THE
STATE OF  CALIFORNIA  AND THE  ISSUANCE  OF SUCH  SECURITIES  OR THE  PAYMENT OR
RECEIPT  OF ANY  PART OF THE  CONSIDERATION  FOR SUCH  SECURITIES  PRIOR TO SUCH
QUALIFICATION  IS  UNLAWFUL,  UNLESS  THE  SALE OF  SECURITIES  IS  EXEMPT  FROM
QUALIFICATION  BY SECTION 25100,  25102 OR 25105 OF THE CALIFORNIA  CORPORATIONS
CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON
SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.





                                       28
<PAGE>


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

                                RIGHTSTART.COM INC.


                                By: /s/R.P. Springer
                                Name: Raymond P. Springer
                                Title: Chief Financial Officer


                                Address: RightStart.com Inc.
                                         5388 Sterling Center Drive, Unit C
                                         Westlake Village, California 91361

                                Facsimile: (818) 707-7132



                                /s/ Michael Targoff
                                Michael Targoff




                                Address: 1330 Avenue of the Americas, 36th Floor
                                New York, New York 10019
                                Facsimile: 212.842.1520





                                       29
<PAGE>

                             Schedule of Exceptions
1.       Exception to Paragraph 2.1.  The Company has qualified to do business
         in the State of California.
2.       Exception to Paragraph 2.5(d).  None.
3.       Exception to Paragraph 2.7. *****

                Management Services Agreement
                Intellectual Property Agreement
                Engagement Letter with CEA Montgomery Media, L.L.C.
                Engagement Letter with Cappello Capital Corp.
                Engagement Letter with Morgan Stanley & Company, Incorporated
                Verbal  agreement  with  Guidance  Solutions, Inc.  relating  to
                        website development, hosting of the website and  related
                        services
                The Convertible Securities and related documents
                Investors' Rights Agreement
                Series  A  Preferred  Stock  Purchase  Agreement dated  July  9,
                        1999 between  the  Company, Sierra  Ventures  VII, L.P.,
                        Sierra Ventures Associates VII, LLC,  Ajit Shah,  Robert
                        Simon and Palomar Ventures I, L.P.
                Indemnification  Agreements  with   Series  A  Preferred   Stock
                        Investors
                Stock Grant Agreement dated October 30, 1999 between  The  Right
                        Start, Inc., RightStart.com and Guidance Solutions
                Registration  Rights  Agreement  dated October 30, 1999  between
                        RightStart.com and Guidance Solutions

4.       Exception to Paragraph 2.8.
                Intercompany payables due to Parent.
                The Bridge Notes and the Convertible Bridge Notes held by
                        directors.

5.       Exception to Paragraph 2.9.
                None.

6.       Exception to Paragraph 2.11

                Breaches under agreements with various  vendors.
                The  Company   has   not   yet   held   an   annual  meeting  of
                        shareholders.

7.       Exception to Paragraph 2.14

                The  Bridge  Notes  and the  Contingent  Bridge  Notes are due
                        October 18, 2000 and have not been extended to date.


                                       30
<PAGE>




                                    Exhibit A



                              Ancillary Agreements


[None]




                                       31





</TEXT>
</DOCUMENT>
