TEKNOWLEDGE CORP
TEK 8-K EXHIBIT 10.2
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>2
<FILENAME>tek8k_exhibit10-2.htm
<DESCRIPTION>TEK 8-K EXHIBIT 10.2
<TEXT>
<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 3.2 Final//EN">
<HTML>
<HEAD>
     <!-- Created by EDGAR Ease Plus (EDGAR Ease+) -->
     <!-- Project:        G:\Audit\2004\SEC\Q3\tek8k_092004.eep                            -->
     <!-- Control Number: t8k0930                                                          -->
     <!-- Rev Number:                                                                      -->
     <!-- Client Name:    Teknowledge Corporation                                          -->
     <!-- Project Name:   Tek 8K Financial Changes 9/30/04                                 -->
     <!-- Firm Name:      Teknowledge Corportation                                         -->
     <TITLE>Tek 8K Financial Changes Exhibit 10.2</TITLE>
</HEAD>
<BODY>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=700>
<TR VALIGN=Bottom>
     <TH></TH>
     <TH></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=9% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=91% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
</TABLE>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=640>
<TR VALIGN=Bottom>
     <TH></TH>
     <TH></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=10% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=90% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
</TABLE>




<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<A NAME=A001></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BUSINESS FINANCING
MODIFICATION AGREEMENT </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
Business Financing Modification Agreement is entered into as of September 1, 2004 by and
between Teknowledge Corporation (the &#147;Borrower&#148;) and Bridge Bank, National
Association (&#147;Lender&#148;). </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1.&nbsp;&nbsp;&nbsp;&nbsp;
          <U>DESCRIPTION OF EXISTING INDEBTEDNESS</U>: Among other indebtedness which may
          be owing by Borrower to Lender, Borrower is indebted to Lender pursuant to,
          among other documents, a Business Financing Agreement, dated as of March 28,
          2003 by and between Borrower and Lender, as may be amended from time to time
          (the &#147;Business Financing Agreement&#148;). Capitalized terms used without
          definition herein shall have the meanings assigned to them in the Business
          Financing Agreement. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Hereinafter,
all indebtedness owing by Borrower to Lender shall be referred to as the
&#147;Indebtedness&#148; and the Business Financing Agreement and any and all other
documents executed by Borrower in favor of Lender shall be referred to as the
&#147;Existing Documents.&#148; </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2.&nbsp;&nbsp;&nbsp;&nbsp;
          <U>DESCRIPTION OF CHANGE IN TERMS</U>. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Sub 2 Left-TNR" FSL="Workstation" -->
<A NAME=A002></A>
<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Waive of Default</U>: </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 2- TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=right WIDTH=11%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN=LEFT WIDTH=89%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
An Event of Default has occurred due to Borrower not maintaining a quarterly net
          income within 80% of its plan dated May 6, 2004, as specified in Section 7 (q)
          of the Business Financing Agreement. Lender hereby waives compliance with this
          requirement as of the date hereof. This waiver does not constitute a continuing
          waiver or a course of conduct waiving this or any other provision of the
          Business Financing Agreement.  </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Modification(s) to Business Financing Agreement</U>: </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 2- TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=RIGHT WIDTH=11%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN=LEFT WIDTH=89%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Effective
as of the date hereof, the following defined terms in Section 1.1 are amended
to read as follows:  </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 2- TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=RIGHT WIDTH=11%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN=LEFT WIDTH=89%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
&#147;<U>Cash Infusion</U>&#148; means Borrowers receipt of cash in a form acceptable to Lender,
resulting from subordinated debt, equity or a cash settlement related to patent
infringement lawsuits, in amount no less than $1,000,000.00 on or before 12/31/2004. </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 2- TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=RIGHT WIDTH=11%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></TD>
<TD ALIGN=LEFT WIDTH=89%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
&#147;<U>Finance
Charge Percentage</U>&#148; means a rate per year equal to the Prime Rate plus 3.00%.  </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 2- TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=RIGHT WIDTH=11%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN=LEFT WIDTH=89%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
following subsections under Section 7 are hereby amended and restated as
          follows:  </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 3- TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=RIGHT WIDTH=16%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(p)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN=LEFT WIDTH=84%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>at
all times maintain liquidity in the form of cash with Lender, in an amount no
               less than 100% of the aggregate outstanding balance of all Term Loan
Advances.  </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 3- TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=RIGHT WIDTH=16%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(q)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN=LEFT WIDTH=84%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>not
have a negative variance of greater than 20% from its net income as reported
               in the plan submitted to Lender dated as of 8/27/2004 and attached as
Exhibit A.  </FONT></TD>
</TR>
</TABLE>
<BR>


<P Align=Center><FONT face="Times New Roman, Times, Serif" size=2>2</FONT></P>
<HR SIZE=3 NOSHADE>

<P STYLE="page-break-after:always">
</P>



<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 2- TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=RIGHT WIDTH=11%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN=LEFT WIDTH=89%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
following subsections is hereby incorporated in to Section 7:  </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 3- TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=RIGHT WIDTH=16%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(r)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></TD>
<TD ALIGN=LEFT WIDTH=84%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>provide
to Lender, no later than Monday of each week, a rolling 60 day cash flow
               forecast in a form and substance acceptable to Lender, and evidencing
Borrowers                sustainability. Additionally, Borrower must maintain with 80% of
such forecast.  </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.&nbsp;&nbsp;&nbsp;&nbsp;
          <U>CONSISTENT CHANGES</U>. The Existing Documents are each hereby amended
          wherever necessary to reflect the changes described above. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.&nbsp;&nbsp;&nbsp;&nbsp;
          <U>PAYMENT OF THE MODIFICATION FEE</U>. Borrower shall pay Lender a fee in the
          amount $10,000.00 (&#147;Modification Fee&#148;) in connection with this
          Business Financing Modification Agreement. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5.&nbsp;&nbsp;&nbsp;&nbsp;
          <U>NO DEFENSES OF BORROWER</U>. Borrower agrees that, as of this date, it has no
          defenses against the obligations to pay any amounts under the Indebtedness. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6.&nbsp;&nbsp;&nbsp;&nbsp;
          <U>CONTINUING VALIDITY</U>. Borrower understands and agrees that in modifying
          the existing Indebtedness, Lender is relying upon Borrower&#146;s
          representations, warranties, and agreements, as set forth in the Existing
          Documents. Except as expressly modified pursuant to this Business Financing
          Modification Agreement, the terms of the Existing Documents remain unchanged and
          in full force and effect. Lender&#146;s agreement to modifications to the
          existing Indebtedness pursuant to this Business Financing Modification Agreement
          in no way shall obligate Lender to make any future modifications to the
          Indebtedness. Nothing in this Business Financing Modification Agreement shall
          constitute a satisfaction of the Indebtedness. It is the intention of Lender and
          Borrower to retain as liable parties all makers and endorsers of Existing
          Documents, unless the party is expressly released by Lender in writing. No
          maker, endorser, or guarantor will be released by virtue of this Business
          Financing Modification Agreement. The terms of this paragraph apply not only to
          this Business Financing Modification Agreement, but also to any subsequent
          Business Financing modification agreements. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7.&nbsp;&nbsp;&nbsp;&nbsp;
          <U>INTENTIONALLY OMITTED</U>. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8.&nbsp;&nbsp;&nbsp;&nbsp;
          <U>COUNTERSIGNATURE</U>. This Business Financing Modification Agreement shall
          become effective only when executed by Borrower and Lender. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>9.&nbsp;&nbsp;&nbsp;&nbsp;
          <U>EFFECT</U>. Except as specifically set forth herein, this Business Financing
          Modification Agreement does not limit, modify, amend, waive, grant any consent
          with respect to or otherwise affect (a) any right, power or remedy of the Lender
          under the Business Financing Agreement or any other related document, (b) any
          provision of the Business Financing Agreement or any other related documents all
          of which shall remain in full force and effect and are hereby ratified and
          confirmed. This Business Financing Agreement does not entitle, or imply any
          consent or agreement to, any further or future modification of, amendment to,
          waiver of, or consent with respect to any provision of the Business Financing
          Agreement or any other related document. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10.&nbsp;&nbsp;&nbsp;&nbsp;
          <U>COUNTERPARTS; FACSIMILE SIGNATURES</U>. This Business Financing Modification
          Agreement may be executed in any number of counterparts and by different parties
          hereto in separate counterparts, each of which when so executed and delivered
          shall be deemed to be an original with the same effect as if all the signatures
          were on the same instrument. Delivery of an executed counterpart of the
          signature page to this Business Financing Modification Agreement by telecopier
          shall be effective as delivery of a manually executed counterpart of this
          Business Financing Modification Agreement. Any party delivering an executed
          counterpart of the signature page to this Business Financing Modification
          Agreement by telecopier shall thereafter promptly deliver a manually executed
          counterpart of this Business Financing Modification Agreement, but the failure
          to deliver such manually executed counterpart shall not affect the validity,
          enforcement, and binding effect of this Business Financing Modification
          Agreement. </FONT></P>


<P Align=Center><FONT face="Times New Roman, Times, Serif" size=2>3</FONT></P>
<HR SIZE=3 NOSHADE>

<P STYLE="page-break-after:always">
</P>



<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Default" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>11.&nbsp;&nbsp;&nbsp;&nbsp;
          <U>GOVERNING LAW, AND WAIVER OF JURY TRIAL</U>. THIS BUSINESS FINANCING
          MODIFICATION AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
          INTERNAL LAWS OF THE STATE OF CALIFORNIA AND IS SUBJECT TO THE PROVISIONS OF
          SECTION 14 OF THE BUSINESS FINANCING AGREEMENT, RELATING TO WAIVER OF JURY
          TRIAL, THE PROVISIONS OF WHICH ARE BY THIS REFERENCE HEREBY INCORPORATED HERIEN
          IN FULL. </FONT></P>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=650>
<TR VALIGN=Bottom>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=50% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>BORROWER:</B></FONT></TD>
     <TD WIDTH=3% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=45% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>LENDER:</B></FONT></TD>
     <TD WIDTH=2% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>TEKNOWLEDGE CORPORATION</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BRIDGE BANK, NATIONAL ASSOCIATION</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>By:&nbsp;<u>/s/ Dennis A. Bugbee&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u>
</FONT></TD>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>By:&nbsp;<u>/s/ Lee A. Shodiss&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</u>
</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Name:&nbsp;<u>Dennis A. Bugbee
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u>
</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Name:&nbsp;<u>Lee A. Shodiss

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;</u>
</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Title:&nbsp;<u>Vice President Finance,
Chief Financial Officer</u>
</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Title:&nbsp;<u>Senior Vice President &amp; Manager</u>
</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
</TABLE>


<P Align=Center><FONT face="Times New Roman, Times, Serif" size=2>4</FONT></P>
<HR SIZE=3 NOSHADE>

<P STYLE="page-break-after:always">
</P>


<!-- MARKER FORMAT-SHEET="Head Minor Center-TNR" FSL="Workstation" -->
<A NAME=A033></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>REGISTRATION RIGHTS
AGREEMENT </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
REGISTRATION RIGHTS AGREEMENT, dated as of September 1, 2004, is between Bridge Bank,
National Association (&#147;Purchaser&#148;) and the Company whose name appears on the
last page of this Agreement. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Center Underline-TNR" FSL="Workstation" -->
<A NAME=A034></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>Recitals  </U></FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Hang LV 1-TNR" FSL="Workstation" -->
          <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
               <TR VALIGN=TOP>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>A. </FONT></TD>
               <TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
               Concurrently with the execution of this Agreement, the Purchaser is purchasing
               from the Company a Warrant to Purchase Stock (the &#147;Warrant&#148;) pursuant
               to which Purchaser has the right to acquire from the Company the Shares (as
               defined in the Warrant). </FONT></TD>
               </TR>
               </TABLE>
               <BR>

<!-- MARKER FORMAT-SHEET="Para (List) Hang LV 1-TNR" FSL="Workstation" -->
          <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
               <TR VALIGN=TOP>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>B. </FONT></TD>
               <TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
               By this Agreement, the Purchaser and the Company desire to set forth the
               registration rights of the Shares all as provided herein. </FONT></TD>
               </TR>
               </TABLE>
               <BR>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;NOW, THEREFORE,
in consideration of the mutual promises, covenants and conditions hereinafter set forth,
the parties hereto agree as follows:  </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Hang LV 1-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1. </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>Registration
Rights</U>.  </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Hang Lv 2 -TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1.1  </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>Definitions</U>.
For purposes of this Section 1:  </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp; (a) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Theterm &#147;register,&#148; &#147;registered,&#148;
 and &#147;registration&#148; refer
to a registration effected by preparing and           filing a registration statement or
similar document in compliance with the           Securities Act of 1933, as amended (the
&#147;Securities Act&#148;), and the           declaration or ordering of effectiveness
of such registration statement or           document;  </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          The
term &#147;Registrable Securities&#148; means (i) the Shares (if Common           Stock)
or all shares of Common Stock of the Company issuable or issued upon           conversion
of the Shares and (ii) any Common Stock of the Company issued as (or           issuable
upon the conversion or exercise of any warrant, right or other security           which
is issued as) a dividend or other distribution with respect to, or in           exchange
for or in replacement of, any stock referred to in (i).  </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          The terms &#147;Holder&#148; or &#147;Holders&#148; means the Purchaser or
          qualifying transferees under subsection 1.8 hereof who hold
Registrable Securities.</FONT></P>
<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;(d)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          The term &#147;SEC&#148; means the Securities and Exchange Commission. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Hang Lv 2 -TNR" FSL="Workstation" -->
<A NAME=A036></A>
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1.2  </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><u>Company
Registration.</U> </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Default" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;(a)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Registration</U>. If at any time or from time to time, the Company shall
          determine to register any of its securities, for its own account or the account
          of any of its shareholders, other than a registration on Form S-1 or S-8
          relating solely to employee stock option or purchase plans, or a registration on
          Form S-4 relating solely to an SEC Rule 145 transaction, or a registration on
          any other form (other than Form S-1, S-2, S-3 or S-18, or their successor forms)
          or any successor to such forms, which does not include substantially the same
          information as would be required to be included in a registration statement
          covering the sale of Registrable Securities, the Company will: </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Default" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;
          promptly give to each Holder written notice thereof (which shall include a list
          of the jurisdictions in which the Company intends to attempt to qualify such
          securities under the applicable blue sky or other state securities laws); and </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Default" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;
          include in such registration (and compliance), and in any underwriting involved
          therein, all the Registrable Securities specified in a written request or
          requests, made within 30 days after receipt of such written notice from the
          Company, by any Holder or Holders, except as set forth in subsection 1.2(b)
          below. </FONT></P>

<P Align=Center><FONT face="Times New Roman, Times, Serif" size=2>5</FONT></P>
<HR SIZE=3 NOSHADE>

<P STYLE="page-break-after:always">
</P>


<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Default" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;
<U>Underwriting</U>. 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 subsection
          1.2(a)(i). In such event the right of any Holder to registration pursuant to
          this subsection 1.2 shall be conditioned upon such Holder&#146;s participation
          in such underwriting and the inclusion of such Holder&#146;s Registrable
          Securities in the underwriting to the extent provided herein. All Holders
          proposing to distribute their securities through such underwriting shall
          (together with the Company and the other shareholders distributing their
          securities through such underwriting) enter into an underwriting agreement in
          customary form with the underwriter or underwriters selected for such
          underwriting by the Company. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.3
&nbsp;&nbsp;&nbsp;&nbsp;
<U>Expenses of Registration</U>. All expenses incurred in connection with any
registration, qualification or compliance pursuant to this Section 1 including without
limitation, all registration, filing and qualification fees, printing expenses, fees and
disbursements of counsel for the Company and expenses of any special audits incidental to
or required by such registration, shall be borne by the Company except the Company shall
not be required to pay underwriters&#146; fees, discounts or commissions relating to
Registrable Securities. All expenses of any registered offering not otherwise borne by
the Company shall be borne pro rata among the Holders participating in the offering and
the Company.  </FONT></P>



<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4&nbsp;&nbsp;&nbsp;&nbsp;
<U>Registration Procedures</U>. In the case of each registration, qualification or
compliance effected by the Company pursuant to this Registration Rights Agreement, the
Company will keep each Holder participating therein advised in writing as to the
initiation of each registration, qualification and compliance and as to the completion
thereof. Except as otherwise provided in subsection 1.3, at its expense the Company will: </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Default" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;
          Prepare and file with the SEC a registration statement with respect to such
          Registrable Securities and use its best efforts to cause such registration
          statement to become effective, and, upon the request of the Holders of a
          majority of the Registrable Securities registered thereunder, keep such
          registration statement effective for up to 120 days. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Default" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;
          Prepare and file with the SEC such amendments and supplements to such
          registration statement and the prospectus used in connection with such
          registration statement as may be necessary to comply with the provisions of the
          Securities Act with respect to the disposition of all securities covered by such
          registration statement. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Default" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;
          Furnish to the Holders such numbers of copies of a prospectus, including a
          preliminary prospectus, in conformity with the requirements of the Securities
          Act, and such other documents as they may reasonably request in order to
          facilitate the disposition of Registrable Securities owned by them. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Default" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;
          Use its best efforts to register and qualify the securities covered by such
          registration statement under such other securities or Blue Sky laws of such
          jurisdictions as shall be reasonably requested by the Holders, provided that the
          Company shall not be required in connection therewith or as a condition thereto
          to qualify to do business or to file a general consent to service of process in
          any such states or jurisdictions. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Default" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;
          In the event of any underwritten public offering, enter into and perform its
          obligations under an underwriting agreement, in usual and customary form, with
          the managing underwriter of such offering. Each Holder participating in such
          underwriting shall also enter into and perform its obligations under such an
          agreement. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Default" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;
          Notify each Holder of Registrable Securities covered by such registration
          statement at any time when a prospectus relating thereto is required to be
          delivered under the Securities Act or the happening of any event as a result of
          which the prospectus included in such registration statement, as then in effect,
          includes an untrue statement of a material fact or omits to state a material
          fact required to be stated therein or necessary to make the statements therein
          not misleading in the light of the circumstances then existing. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Sub 2 Left-TNR" FSL="Workstation" -->
<A NAME=A037></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.5&nbsp;&nbsp;&nbsp;&nbsp;
<u>Indemnification</U>.</FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Default" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;
          The Company will indemnify each Holder of Registrable Securities and each of its
          officers, directors and partners, and each person controlling such Holder, with
          respect to which such registration, qualification or compliance has been
          effected pursuant to this Rights Agreement, and each underwriter, if any, and
          each person who controls any underwriter of the Registrable Securities
          held by or issuable to such Holder, against all claims, losses, expenses,
        damages</FONT></P>

<P Align=Center><FONT face="Times New Roman, Times, Serif" size=2>6</FONT></P>
<HR SIZE=3 NOSHADE>

<P STYLE="page-break-after:always">
</P>



          <!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Default" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>  and liabilities (or actions
        in respect thereto) arising out of or based on any
          untrue statement (or alleged 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 (or alleged
          omission) to state therein a material fact required to be stated therein or
          necessary to make the statement therein not misleading, or any violation or alleged
        violation by the Company of the Securities Act, the Securities Exchange
          Act of 1934, as amended, (&#147;Exchange Act&#148;) or any state securities law
          applicable to the Company or any rule or regulation promulgated under the
          Securities Act, the Exchange Act or any such state law and relating to action or
          inaction required of the Company in connection with any such registration,
          qualification of compliance, and will reimburse each such Holder, each of its
          officers, directors and partners, and each person controlling such Holder, each
          such underwriter and each person who controls any such underwriter, within a
          reasonable amount of time after incurred for any reasonable legal and any other
          expenses incurred in connection with investigating, defending or settling any
          such claim, loss, damage, liability or action; provided, however, that the
          indemnity agreement contained in this subsection 1.5(a) shall not apply to
          amounts paid in settlement of any such claim, loss, damage, liability, or action
          if such settlement is effected without the consent of the Company (which consent
          shall not be unreasonably withheld); and provided further, that the Company will
          not be liable in any such case to the extent that any such claim, loss, damage
          or liability arises out of or is based on any untrue statement or omission based
          upon written information furnished to the Company by an instrument duly executed
          by such Holder or underwriter specifically for use therein. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Default" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;
          Each Holder will, if Registrable Securities held by or issuable to 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 and
          officers, each underwriter, if any, of the Company&#146;s securities covered by
          such a registration statement, each person who controls the Company within the
          meaning of the Securities Act, and each other such Holder, each of its officers,
          directors and partners and each person controlling such Holder, against all
          claims, losses, expenses, damages and liabilities (or actions in respect
          thereof) arising out of or based on any untrue statement (or alleged untrue
          statement) of a material fact contained in any such registration statement,
          prospectus, offering circular or other document, or any omission (or alleged
          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, such Holders, such directors, officers, partners, persons or
          underwriters for any reasonable legal or any other expenses incurred in
          connection with investigating, defending or settling any such claim, loss,
          damage, liability or action, in each case to the extent, but only to the extent,
          that such untrue statement (or alleged untrue statement) or omission (or alleged
          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 an instrument duly executed by such Holder
          specifically for use therein; provided, however, that the indemnity agreement
          contained in this subsection 1.5(b) shall not apply to amounts paid in
          settlement of any such claim, loss, damage, liability or action if such
          settlement is effected without the consent of the Holder, (which consent shall
          not be unreasonably withheld); and provided further, that the total amount for
          which any Holder shall be liable under this subsection 1.5(b) shall not in any
          event exceed the aggregate proceeds received by such Holder from the sale of
          Registrable Securities held by such Holder in such registration. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Default" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;
          Each party entitled to indemnification under this subsection 1.5 (the
          &#147;Indemnified Party&#148;) shall give notice to the party required to
          provide indemnification (the &#147;Indemnifying Party&#148;) 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 any
          such claim or any litigation resulting therefrom; provided that counsel for the
          Indemnifying Party, who shall conduct the defense of such claim or litigation,
          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&#146;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 hereunder, unless such failure resulted in
          prejudice to the Indemnifying Party; and provided further, that an Indemnified
          Party (together with all other Indemnified Parties which may be represented
          without conflict by one counsel) shall have the right to retain one separate
          counsel, with the fees and expenses to be paid by the Indemnifying Party, if
          representation of such Indemnified Party by the counsel retained by the
          Indemnifying Party would be inappropriate due to actual or potential differing
          interests between such Indemnified Party and any other party represented by such
          counsel in such proceeding. 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 which 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. </FONT></P>

<P Align=Center><FONT face="Times New Roman, Times, Serif" size=2>7</FONT></P>
<HR SIZE=3 NOSHADE>

<P STYLE="page-break-after:always">
</P>


<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.6&nbsp;&nbsp;&nbsp;&nbsp;
<U>Information by Holder</U>. Any Holder or Holders of Registrable Securities included in
any registration shall promptly furnish to the Company such information regarding such
Holder or Holders and the distribution proposed by such Holder or Holders as the Company
may request in writing and as shall be required in connection with any registration,
qualification or compliance referred to herein. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.7&nbsp;&nbsp;&nbsp;&nbsp;
<U>Rule 144 Reporting</U>. With a view to making available to Holders the benefits of
certain rules and regulations of the SEC which may permit the sale of the Registrable
Securities to the public without registration, the Company shall at all times: </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Default" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;
          make and keep public information available, as those terms are understood and
          defined in SEC Rule 144, after 90 days after the effective date of the first
          registration filed by the Company for an offering of its securities to the
          general public; </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Default" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;
          file with the SEC in a timely manner all reports and other documents required of
          the Company under the Securities Act and the Exchange Act (at any time after it
          has become subject to such reporting requirements); and </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Default" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;
          so long as a Holder owns any Registrable Securities, to furnish to such Holder
          forthwith upon request a written statement by the Company as to its compliance
          with the reporting requirements of said Rule 144 (at any time after 90 days
          after the effective date of the first registration statement filed by the
          Company for an offering of its securities to the general public), and of the
          Securities Act and the Exchange Act (at any time after it has become subject to
          such reporting requirements), a copy of the most recent annual or quarterly
          report of the Company, and such other reports and documents so filed by the
          Company as the Holder may reasonably request in complying with any rule or
          regulation of the SEC allowing the Holder to sell any such securities without
          registration. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.8&nbsp;&nbsp;&nbsp;&nbsp;
<U>Transfer of Registration Rights</U>. Holders&#146; rights to cause the Company to
register their securities and keep information available, granted to them by the Company
under subsections 1.2 and 1.7 may be assigned to a transferee or assignee of a
Holder&#146;s Registrable Securities not sold to the public, provided, that the Company is
given written notice by such Holder at the time of or within a reasonable time after said
transfer, stating the name and address of said transferee or assignee and identifying the
securities with respect to which such registration rights are being assigned. The Company
may prohibit the transfer of any Holders&#146; rights under this subsection 1.8 to any
proposed transferee or assignee who the Company reasonably believes is a competitor of the
Company. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Hang LV 1-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2.  </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>General</U>.  </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1&nbsp;&nbsp;&nbsp;&nbsp;
<U>Waivers and Amendments</U>. With the written consent of the record or beneficial
holders of at least a majority of the Registrable Securities, the obligations of the
Company and the rights of the Holders of the Registrable Securities under this agreement
may be waived (either generally or in a particular instance, either retroactively or
prospectively, and either for a specified period of time or indefinitely), and with the
same consent the Company, when authorized by resolution of its Board of Directors, may
enter into a supplementary agreement for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement; provided,
however, that no such modification, amendment or waiver shall reduce the aforesaid
percentage of Registrable Securities without the consent of all of the Holders of the
Registrable Securities. Upon the effectuation of each such waiver, consent, agreement of
amendment or modification, the Company shall promptly give written notice thereof to the
record holders of the Registrable Securities who have not previously consented thereto in
writing. This Agreement or any provision hereof may be changed, waived, discharged or
terminated only by a statement in writing signed by the party against which enforcement of
the change, waiver, discharge or termination is sought, except to the extent provided in
this subsection 2.1. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2&nbsp;&nbsp;&nbsp;&nbsp;
<u>Governing Law</U>. This Agreement shall be governed in all respects by the laws of the
State of California as such laws are applied to agreements between California residents
entered into and to be performed entirely within California. </FONT></P>

<P Align=Center><FONT face="Times New Roman, Times, Serif" size=2>8</FONT></P>
<HR SIZE=3 NOSHADE>

<P STYLE="page-break-after:always">
</P>


<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.3&nbsp;&nbsp;&nbsp;&nbsp;
<U>Successors and Assigns</U>. Except as otherwise expressly provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the successors,
assigns, heirs, executors and administrators of the parties hereto. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.4&nbsp;&nbsp;&nbsp;&nbsp;
<U>Entire Agreement</U>. Except as set forth below, this Agreement and the other documents
delivered pursuant hereto constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and thereof. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.5&nbsp;&nbsp;&nbsp;&nbsp;
<u>Notices, etc</U>. All notices and other communications required or permitted hereunder
shall be in writing and shall be mailed by first class mail, postage prepaid, certified or
registered mail, return receipt requested, addressed (a) if to Holder, at such
Holder&#146;s address as set forth below, or at such other address as such Holder shall
have furnished to the Company in writing, or (b) if to the Company, at the Company&#146;s
address set forth below, or at such other address as the Company shall have furnished to
the Holder in writing. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.6&nbsp;&nbsp;&nbsp;&nbsp;
<U>Severability</U>. In case any provision of this Agreement shall be invalid, illegal, or
unenforceable, the validity, legality and enforceability of the remaining provisions of
this Agreement or any provision of the other Agreement s shall not in any way be affected
or impaired thereby. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.7&nbsp;&nbsp;&nbsp;&nbsp;
<U>Titles and Subtitles</U>. The titles of the sections and subsections of this Agreement
are for convenience of reference only and are not to be considered in construing this
Agreement. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.8&nbsp;&nbsp;&nbsp;&nbsp;
<U>Counterparts</U>. This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall constitute one instrument. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered by
their duly authorized officers as of the date first above written. </FONT></P>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=600>
<TR VALIGN=Bottom>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=40% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>COMPANY:</FONT></TD>
     <TD WIDTH=2% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=56% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>TEKNOWLEDGE CORPORATION, a Delaware corporation</FONT></TD>
     <TD WIDTH=2% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>By&nbsp;<u>/s/ Neil A. Jacobstein&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Name:&nbsp;<u>Neil A. Jacobstein&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Title: <U>Chairman of the Board and Chief Executive Officer</U></FONT></TD>
</TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Address:&nbsp;<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></FONT></TD>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;1800 Embarcadero Road&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;</u></FONT></TD>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;Palo Alto, CA 94303&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></FONT></TD>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>

<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PURCHASER:</FONT></TD>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>

     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BRIDGE BANK, NATIONAL ASSOCIATION</FONT></TD>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>

    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>By&nbsp;<u>/s/ Michael Field&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></FONT></TD>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Name:&nbsp;<u>Michael Field&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></FONT></TD>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Title:&nbsp;<u>Executive Vice President &amp; Manager&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;</u></FONT></TD>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Address:&nbsp;<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></FONT></TD></TR>
<TR VALIGN=Bottom>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><u>&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2120 El Camino Real&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></FONT></TD></TR>
<TR VALIGN=Bottom>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;Santa Clara, CA 95050&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></FONT></TD></TR>

</TABLE>


<P Align=Center><FONT face="Times New Roman, Times, Serif" size=2>9</FONT></P>
<HR SIZE=3 NOSHADE>

<P STYLE="page-break-after:always">
</P>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>THIS WARRANT AND THE SHARES ISSUABLE
HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF
UNDER SUCH ACT OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
THE CORPORATION AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor Center-TNR" FSL="Workstation" -->
<A NAME=A003></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>WARRANT TO PURCHASE
STOCK </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<A NAME=A004></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Issuer: Teknowledge
Corporation, a Delaware corporation (the &#147;Company&#148;) </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Number of Shares: 15,000, as the same
may be from time to time adjusted pursuant to Article 2 hereof. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<A NAME=A005></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Class of Stock: Common </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Exercise Price: $2.50 per share as
the same may be from time to time adjusted pursuant to Article 2 hereof. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<A NAME=A006></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Issue Date: September 1,
2004 </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<A NAME=A007></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Expiration Date:
September 1, 2009 </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>THIS WARRANT CERTIFIES THAT, for the
agreed upon value of $1.00 and for other good and valuable consideration, BRIDGE BANK,
NATIONAL ASSOCIATION (&#147;Holder&#148;) is entitled to purchase the number of fully paid
and nonassessable Shares of the Company at the Exercise Price per Share set forth above
(the &#147;Shares&#148;), subject to the provisions and upon the terms and conditions set
forth in this Warrant. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ARTICLE 1 &nbsp;&nbsp;&nbsp;&nbsp;EXERCISE. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1&nbsp;&nbsp;&nbsp;&nbsp;
<U>Method of Exercise</U>. This Warrant is exercisable, in whole or in part, from the
first anniversary of the Issue Date hereof through the Expiration Date set forth above.
Holder may exercise this Warrant by delivering a duly executed Notice of Exercise, in
substantially the form attached as Appendix 1, to the principal office of Company. Unless
Holder is exercising the conversion right set forth in Section 1.2, Holder shall also
deliver to Company a check for the aggregate Exercise Price for Shares being purchased. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2&nbsp;&nbsp;&nbsp;&nbsp;
<U>Conversion Right</U>. In lieu of exercising this Warrant as specified in Section 1.1,
Holder may from time to time convert this Warrant, in whole or in part, into a number of
Shares determined by dividing (a) the aggregate fair market value of Shares or other
securities otherwise issuable upon exercise of this Warrant minus the aggregate Exercise
Price of such Shares by (b) the fair market value of one Share. The fair market value of
Shares shall be determined pursuant to Section 1.3. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.3&nbsp;&nbsp;&nbsp;&nbsp;
<U>Fair Market Value</U>. If the Shares are traded in a public market, the fair market
value of the Shares shall be the closing price of the Shares (or the closing price of the
Company&#146;s stock into which the Shares are convertible) reported for the business day
immediately before Holder delivers its Notice of Exercise to the Company. If the Shares
are not traded in a public market, the Board of Directors of Company shall determine fair
market value in its reasonable good faith judgment. The foregoing notwithstanding, if
Holder advises the Board of Directors in writing that Holder disagrees with such
determination, then Company and Holder shall promptly agree upon a reputable investment
banking firm to undertake such valuation. If the valuation of such investment banking firm
is greater than that determined by the Board of Directors, then all fees and expenses of
such investment banking firm shall be paid by Company. In all other circumstances, such
fees and expenses shall be paid by Holder. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4&nbsp;&nbsp;&nbsp;&nbsp;
<U>Delivery of Certificate and New Warrant</U>. Promptly after Holder exercises or
converts this Warrant, Company shall deliver to Holder certificates for Shares acquired
and, if this Warrant has not been fully exercised or converted and has not expired, a new
Warrant representing Shares not so acquired. </FONT></P>

<P Align=Center><FONT face="Times New Roman, Times, Serif" size=2>10</FONT></P>
<HR SIZE=3 NOSHADE>

<P STYLE="page-break-after:always">
</P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.5&nbsp;&nbsp;&nbsp;&nbsp;
<U>Replacement of Warrants</U>. On receipt of evidence reasonably satisfactory to Company
of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss,
theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in
form and amount to Company or, in the case of mutilation, on surrender and cancellation of
this Warrant, Company at its expense shall execute and deliver, in lieu of this Warrant, a
new warrant of like tenor. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.6&nbsp;&nbsp;&nbsp;&nbsp;
<U>Repurchase on Sale, Merger, or Consolidation of Company</U>. For the purpose of this
Warrant, &#147;Acquisition&#148; means any sale, license, or other disposition of all or
substantially all of the assets of Company, or any reorganization, consolidation, or
merger of Company where the holders of Company&#146;s securities before the transaction
beneficially own less than 50% of the outstanding voting securities of the surviving
entity after the transaction. Upon the closing of any Acquisition, the successor entity
shall assume the obligations of this Warrant, and this Warrant shall be exercisable for
the same securities, cash, and property as would be payable for Shares issuable upon
exercise of the unexercised portion of this Warrant as if such Shares were outstanding on
the record date for the Acquisition and subsequent closing, and the Exercise Price shall
be adjusted accordingly; <U>provided</U> that if pursuant to such Acquisition the entire
outstanding class of Shares issuable upon exercise of the unexercised portion of this
Warrant are cancelled and the total consideration payable to the holders of such class of
Shares consists entirely of cash, then, upon payment to the holder of this Warrant of an
amount equal to the amount such holder would receive if such holder held Shares issuable
upon exercise of the unexercised portion of this Warrant and such Shares were outstanding
on the record date for the Acquisition <U>less</U> the aggregate Exercise Price of such
Shares, this Warrant shall be cancelled. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ARTICLE 2 &nbsp;&nbsp;&nbsp;&nbsp;ADJUSTMENTS. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1&nbsp;&nbsp;&nbsp;&nbsp;
<U>Stock Dividends, Splits, Etc</U>. If Company declares or pays a dividend on its common
stock (or Shares if Shares are securities other than common stock) payable in common stock
or other securities, subdivides the outstanding common stock into a greater amount of
common stock, or, if Shares are securities other than common stock, subdivides Shares in a
transaction that increases the amount of common stock into which Shares are convertible,
then upon exercise of this Warrant, for each Share acquired, Holder shall receive, without
cost to Holder, the total number and kind of securities to which Holder would have been
entitled had Holder owned Shares of record as of the date the dividend or subdivision
occurred. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2&nbsp;&nbsp;&nbsp;&nbsp;
<U>Reclassification, Exchange or Substitution</U>. Except in the case of an Acquisition to
which Section 1.6 is applicable, upon any reclassification, exchange, substitution, or
other event that results in a change of the number and/or class of the securities issuable
upon exercise or conversion of this Warrant, Holder shall be entitled to receive, upon
exercise or conversion of this Warrant, the number and kind of securities and property
that Holder would have received for Shares if this Warrant had been exercised immediately
before such reclassification, exchange, substitution, or other event. Company or its
successor shall promptly issue to Holder a new Warrant for such new securities or other
property. The new Warrant shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Article 2
including, without limitation, adjustments to the Exercise Price and to the number of
securities or property issuable upon exercise of the new Warrant. The provisions of this
Section 2.2 shall similarly apply to successive reclassifications, exchanges,
substitutions, or other events. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.3&nbsp;&nbsp;&nbsp;&nbsp;
<U>Adjustments for Combinations, Etc</U>. If the outstanding Shares are combined or
consolidated, by reclassification or otherwise, into a lesser number of shares, the
Exercise Price shall be proportionately increased and the number of Shares as to which
this warrant is exercisable shall be proportionately decreased. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.4&nbsp;&nbsp;&nbsp;&nbsp;
<U>Adjustments for Diluting Issuances</U>. The Exercise Price and the number of Shares
issuable upon exercise of this Warrant or, if Shares are Preferred Stock, the number of
shares of common stock issuable upon conversion of Shares, shall be subject to adjustment,
from time to time in the manner set forth on Exhibit A in the event of Diluting Issuances
(as defined on Exhibit A). </FONT></P>

<P Align=Center><FONT face="Times New Roman, Times, Serif" size=2>11</FONT></P>
<HR SIZE=3 NOSHADE>

<P STYLE="page-break-after:always">
</P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.5&nbsp;&nbsp;&nbsp;&nbsp;
<U>No Impairment</U>. Company shall not, by amendment of its Articles/Certificate of
Incorporation or through a reorganization, transfer of assets, consolidation, merger,
dissolution, issue, or sale of securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms to be observed or performed under
this Warrant by Company, but shall at all times in good faith assist in carrying out of
all the provisions of this Article 2 and in taking all such action as may be necessary or
appropriate to protect Holder&#146;s rights under this Article against impairment. If
Company takes any dilutive action affecting Shares or its common stock other than as
described above that adversely affects Holder&#146;s rights under this Warrant, the
Exercise Price shall be adjusted downward and the number of Shares issuable upon exercise
of this Warrant shall be adjusted upward in such a manner that such dilutive action is
offset and the aggregate Exercise Price of this Warrant is unchanged. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.6&nbsp;&nbsp;&nbsp;&nbsp;
<U>Fractional Shares</U>. No fractional Shares shall be issuable upon exercise or
conversion of the Warrant and the number of Shares to be issued shall be rounded down to
the nearest whole Share. If a fractional share interest arises upon any exercise or
conversion of the Warrant, Company shall eliminate such fractional share interest by
paying Holder an amount computed by multiplying the fractional interest by the fair market
value of a full Share. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.7&nbsp;&nbsp;&nbsp;&nbsp;
<U>Certificate as to Adjustments</U>. Upon each adjustment of the Exercise Price, Company
at its expense shall promptly compute such adjustment, and furnish Holder with a
certificate of its Chief Financial Officer setting forth such adjustment and the facts
upon which such adjustment is based. Company shall, upon written request, furnish Holder a
certificate setting forth the Exercise Price in effect upon the date thereof and the
series of adjustments leading to such Exercise Price. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ARTICLE 3 &nbsp;&nbsp;&nbsp;&nbsp;COVENANTS OF COMPANY. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1&nbsp;&nbsp;&nbsp;&nbsp;
<U>Valid Issuance</U>. Company shall take all steps necessary to insure that all Shares
which may be issued upon the exercise of this Warrant, and all securities, if any,
issuable upon conversion of Shares, shall, upon issuance, be duly authorized, validly
issued, fully paid and nonassessable, and free of any liens and encumbrances except for
restrictions on transfer provided for herein or under applicable federal and state
securities laws. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2&nbsp;&nbsp;&nbsp;&nbsp;
<U>Notice of Certain Events</U>. If Company proposes at any time (a) to declare any
dividend or distribution upon its common stock, whether in cash, property, stock, or other
securities and whether or not a regular cash dividend; (b) to offer for subscription pro
rata to the holders of any class or series of its stock any additional shares of stock of
any class or series or other rights; (c) to effect any reclassification or
recapitalization of common stock; (d) to merge or consolidate with or into any other
corporation, or sell, lease, license, or convey all or substantially all of its assets, or
to liquidate, dissolve or wind up; or (e) offer holders of registration rights the
opportunity to participate in an underwritten public offering of the Company&#146;s
securities for cash, then, in connection with each such event, Company shall give Holder
(1) in the case of the matters referred to in (a) and (b) above at least 20 days prior
written notice of the date on which a record will be taken for such dividend,
distribution, or subscription rights (and specifying the date on which the holders of
common stock will be entitled thereto) or for determining rights to vote, if any, in
respect of the matters referred to in (c) and (d) above; (2) in the case of the matters
referred to in (c) and (d) above at least 20 days prior written notice of the date when
the same will take place (and specifying the date on which the holders of common stock
will be entitled to exchange their common stock for securities or other property
deliverable upon the occurrence of such event); and (3) in the case of the matter referred
to in (e) above, the same notice as is given to the holders of such registration rights. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.3&nbsp;&nbsp;&nbsp;&nbsp;
<U>Information</U>. So long as the Holder holds this Warrant and/or any of the Shares,
Company shall deliver to Holder (a) promptly, copies of all notices or other written
communications to which Holder would be entitled if it held Shares as to which this
Warrant was then exercisable and (b) such other financial statements required under and in
accordance with any loan documents between Holder and Company, or if there are no such
requirements or if the subject loan(s) are no longer are outstanding, then within 45 days
after the end of each of the first three quarters of each fiscal year, Company&#146;s
quarterly, unaudited financial statements and within 90 days after the end of each fiscal
year, Company&#146;s annual, audited financial statements. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.4&nbsp;&nbsp;&nbsp;&nbsp;
<U>Notice of Expiration</U>. Company shall give Holder written notice of Holder&#146;s
right to exercise this Warrant in the form attached as Appendix 2 not more than 90 days
and not less than 15 days before the Expiration Date and, in the case of an Acquisition to
which the proviso of Section 1.6 shall be applicable, 15 days notice of such Acquisition.
If the notice is not so given, the Expiration Date shall automatically be extended until
15 days after the date Company delivers the notice to Holder. </FONT></P>

<P Align=Center><FONT face="Times New Roman, Times, Serif" size=2>12</FONT></P>
<HR SIZE=3 NOSHADE>

<P STYLE="page-break-after:always">
</P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.5&nbsp;&nbsp;&nbsp;&nbsp;
<U>Registration Rights</U>. The Company agrees that the Shares shall have the registration
rights set forth on Exhibit B hereto. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ARTICLE 4 MISCELLANEOUS. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1&nbsp;&nbsp;&nbsp;&nbsp;
<U>Legends</U>. This Warrant and the Shares (and the securities issuable, directly or
indirectly, upon conversion of Shares, if any) shall be imprinted with a legend in
substantially the following form: </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>THIS SECURITY HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE
TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR PURSUANT TO RULE
144 OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO COMPANY AND ITS COUNSEL THAT SUCH
REGISTRATION IS NOT REQUIRED. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2&nbsp;&nbsp;&nbsp;&nbsp;
<U>Compliance with Securities Laws on Transfer</U>. This Warrant and the Shares issuable
upon exercise of this Warrant (and the securities issuable, directly or indirectly, upon
conversion of Shares, if any) may not be transferred or assigned in whole or in part
without compliance with applicable federal and state securities laws by the transferor and
the transferee (including, without limitation, the delivery of investment representation
letters and legal opinions reasonably satisfactory to Company, as reasonably requested by
Company). Company shall not require Holder to provide an opinion of counsel if the
transfer is to an affiliate of Holder or if there is no material question as to the
availability of current information as referenced in Rule 144(c), Holder represents that
it has complied with Rule 144(d) and (e) in reasonable detail, the selling broker
represents that it has complied with Rule 144(f), and the Company is provided with a copy
of Holder&#146;s notice of proposed sale. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.3&nbsp;&nbsp;&nbsp;&nbsp;
<U>Transfer Procedure</U>. Subject to the provisions of Section 4.3 Holder may transfer
all or part of this Warrant or the Shares issuable upon exercise of this Warrant (or the
securities issuable, directly or indirectly, upon conversion of Shares, if any) at any
time to Holders holding company, or to any other transferee acceptable to Company (which
acceptance shall not be unreasonably withheld or delayed) by giving Company notice of the
portion of the Warrant being transferred setting forth the name, address and taxpayer
identification number of the transferee and surrendering this Warrant to Company for
reissuance to the transferee(s) (and Holder if applicable). Unless Company is filing
financial information with the SEC pursuant to the Securities Exchange Act of 1934,
Company shall have the right to refuse to transfer any portion of this Warrant to any
person who directly competes with Company. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.4&nbsp;&nbsp;&nbsp;&nbsp;
<U>Notices</U>. All notices and other communications from Company to Holder, or vice
versa, shall be in writing and shall be deemed delivered and effective when given
personally or mailed by first-class registered or certified mail, postage prepaid, or by
overnight courier, at such address as may have been furnished to Company or Holder, as the
case may be, in writing by Company or such Holder from time to time. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.5&nbsp;&nbsp;&nbsp;&nbsp;
<U>Attorneys Fees</U>. In the event of any dispute between the parties concerning the
terms and provisions of this Warrant, the party prevailing in such dispute shall be
entitled to collect from the other party all costs incurred in such dispute, including
reasonable attorneys&#146; fees. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.6&nbsp;&nbsp;&nbsp;&nbsp;
<U>Governing Law</U>. This Warrant shall be governed by and construed in accordance with
the laws of the State of California, without giving effect to its principles regarding
conflicts of law. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN
WITNESS WHEREOF, Company has caused this Warrant to be duly executed by its authorized
officers, all as of the day and year first above written. </FONT></P>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=600>
<TR VALIGN=Bottom>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=40% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=2% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=56% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>COMPANY:</FONT></TD>
     <TD WIDTH=2% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>

<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>TEKNOWLEDGE CORPORATION, a Delaware corporation</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>By&nbsp;<u>/s/&nbsp;Neil A. Jacobstein&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Name:&nbsp;<u>Neil A. Jacobstein&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Title:<U>&nbsp;Chairman of the Board and Chief Executive Officer</U></FONT></TD>
</TR>
</table>

<!-- MARKER FORMAT-SHEET="Head Minor Center-TNR" FSL="Workstation" -->
<A NAME=A009></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>APPENDIX 1 </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor Center-TNR" FSL="Workstation" -->
<A NAME=A0010></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notice of Exercise </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>[Strike paragraph that does not apply.] </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1.&nbsp;&nbsp;&nbsp;&nbsp;
          The undersigned hereby elects to purchase <U> &nbsp;&nbsp;&nbsp;&nbsp;</U> shares of the Common/Series
          ______ Preferred [strike one] Stock of __________________________pursuant to the
          terms of the attached Warrant, and tenders herewith payment of the purchase
          price of such shares in full. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1.&nbsp;&nbsp;&nbsp;&nbsp;
          The undersigned hereby elects to convert the attached Warrant into Shares/cash
          [strike one] in the manner specified in the Warrant. This conversion is
          exercised with respect to _____________________ of the Shares covered by the
          Warrant. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2.&nbsp;&nbsp;&nbsp;&nbsp;
          Please issue a certificate or certificates representing said shares in the name
          of the undersigned or in such other name as is specified below: </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Workstation" -->
<A NAME=A011></A>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Name: &nbsp;<u>&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Workstation" -->
<A NAME=A012></A>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Address: &nbsp;<u>&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></FONT></P>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><u>&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></FONT></P>


<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Default" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.&nbsp;&nbsp;&nbsp;&nbsp;
          The undersigned represents it is acquiring the shares solely for its own account
          and not as a nominee for any other party and not with a view toward the resale
          or distribution thereof except in compliance with applicable securities laws. </FONT></P>



<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=600>
<TR VALIGN=Bottom>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=42% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=12% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=44% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><u>&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></FONT></TD>
     <TD WIDTH=2% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Signature)</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><u>&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Date)</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
</TABLE>

<P Align=Center><FONT face="Times New Roman, Times, Serif" size=2>14</FONT></P>
<HR SIZE=3 NOSHADE>

<P STYLE="page-break-after:always">
</P>


<!-- MARKER FORMAT-SHEET="Head Minor Center-TNR" FSL="Workstation" -->
<A NAME=A013></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>APPENDIX 2 </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor Center-TNR" FSL="Workstation" -->
<A NAME=A014></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notice that Warrant Is
About to Expire </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor Center-TNR" FSL="Default" -->
<A NAME=A015></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>[Insert Date of Notice] </FONT></P>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=600>
<TR VALIGN=Bottom>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=6% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>To:</FONT></TD>
     <TD WIDTH=6% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=70% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Bridge Bank, National Association</FONT></TD>
     <TD WIDTH=6% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=10% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=2% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Attn: Mike Field</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2120 El Camino Real</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Santa Clara, CA 95050</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
</TABLE>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Warrant issued to you
described below will expire on  ______________, ____. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<A NAME=A016></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Issuer: </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<A NAME=A017></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Issue Date: </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<A NAME=A018></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Class of Security
Issuable: </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<A NAME=A019></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Exercise Price per Share: </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<A NAME=A020></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Number of Shares Issuable: </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<A NAME=A021></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Procedure for Exercise: </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Please contact __________ at (___)
___-____ with any questions you may have concerning exercise of the Warrant. This is your
only notice of pending expiration. </FONT></P>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=600>
<TR VALIGN=Bottom>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=42% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=12% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=44% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><u>&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></FONT></TD>
     <TD WIDTH=2% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Name of Issuer)</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>By&nbsp;<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Its:&nbsp;<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
</TABLE>

<P Align=Center><FONT face="Times New Roman, Times, Serif" size=2>15</FONT></P>
<HR SIZE=3 NOSHADE>

<P STYLE="page-break-after:always">
</P>


<!-- MARKER FORMAT-SHEET="Head Center Underline-TNR" FSL="Workstation" -->
<A NAME=A022></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>EXHIBIT A  </U></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor Center-TNR" FSL="Workstation" -->
<A NAME=A023></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Anti-Dilution Provisions </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor Center-TNR" FSL="Workstation" -->
<A NAME=A024></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(For Common Stock
Warrants Where </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor Center-TNR" FSL="Workstation" -->
<A NAME=A025></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Anti-Dilution
Protection is Inadequate or Non-existent) </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
the event of the issuance (a &#147;Diluting Issuance&#148;) by Company, after the Issue
Date of the Warrant, of Common Stock (or options or other rights to subscribe thereto or
securities convertible into or exchangeable for Common Stock) at a price per share less
than the Exercise Price or less than the fair market value of the Common Stock at the date
of such issuance, then the number of Shares issuable upon exercise of the Warrant and the
Exercise Price, shall be adjusted as a result of Diluting Issuances in accordance with the
following (<U>provided</U> that under no circumstances shall the aggregate Exercise Price
payable by Holder upon exercise of the Warrant increase as a result of any adjustment
arising from a Diluting Issuance): </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1.&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Definitions</U>. As used in these Antidilution Provisions, the following
          terms have the following respective meanings: </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;
          &#147;Option&#148; means any right, option, or warrant to subscribe for,
          purchase, or otherwise acquire common stock or Convertible Securities. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;
          &#147;Convertible Securities&#148; means any evidences of indebtedness, shares
          of stock, or other securities directly or indirectly convertible into or
          exchangeable for common stock. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;
          &#147;Issue&#148;, means to grant, issue, sell, assume, or fix a record date for
          determining persons entitled to receive, any security (including Options),
          whichever of the foregoing is the first to occur. Any variation of the term
          &#147;Issue&#148; including, without limitation, &#147;Issuable&#148;,
          &#147;Issuance&#148; or &#147;Issued&#148; shall have the same meaning as set
          forth in this section 1(c). </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;
          &#147;Additional Common Shares&#148; means all common stock (including reissued
          shares) issued (or deemed to be issued pursuant to Section 2) after the date of
          the Warrant. Additional Common Shares does not include, however, any common
          stock issued in a transaction described in Sections 2.1 and 2.2 of the Warrant;
          any common stock Issued upon conversion of preferred stock outstanding on the
          date of the Warrant; the Shares; or common stock Issued as incentive or in a
          nonfinancing transaction to employees, officers, directors, or consultants to
          Company. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;
          The shares of common stock ultimately Issuable upon exercise of an Option
          (including the shares of common stock ultimately Issuable upon conversion or
          exercise of a Convertible Security Issuable pursuant to an Option) are deemed to
          be Issued when the Option is Issued. The shares of common stock ultimately
          Issuable upon conversion or exercise of a Convertible Security (other than a
          Convertible Security Issued pursuant to an Option) shall be deemed Issued upon
          Issuance of the Convertible Security. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2.&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Deemed Issuance of Additional Common Shares</U>. The shares of common stock
          ultimately Issuable upon exercise of an Option (including the shares of common
          stock ultimately Issuable upon conversion or exercise of a Convertible Security
          Issuable pursuant to an Option) are deemed to be Issued when the Option is
          Issued. The shares of common stock ultimately Issuable upon conversion or
          exercise of a Convertible Security (other than a Convertible Security Issued
          pursuant to an Option) shall be deemed Issued upon Issuance of the Convertible
          Security. The maximum amount of common stock Issuable is determined without
          regard to any future adjustments permitted under the instrument creating the
          Options or Convertible Securities. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<A NAME=A026></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3. &nbsp;&nbsp;&nbsp;&nbsp;
<u>Adjustment of Exercise
Price for Diluting Issuances </U></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1&nbsp;&nbsp;&nbsp;&nbsp;
<U>Weighted Average Adjustment</U>. If Company issues Additional Common Shares after the
date of the Warrant and the consideration per Additional Common Share (determined pursuant
to Section 9) is less than the Exercise Price in effect immediately before such Issue, the
Exercise Price shall be reduced, concurrently with such Issue, to a price (calculated to
the nearest hundredth of a cent) determined by multiplying the Exercise Price by a
fraction: </FONT></P>

<P Align=Center><FONT face="Times New Roman, Times, Serif" size=2>16</FONT></P>
<HR SIZE=3 NOSHADE>

<P STYLE="page-break-after:always">
</P>


<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;
          the numerator of which is the amount of such common stock outstanding
          immediately before such Issue plus the amount of common stock that the aggregate
          consideration received by Company for the Additional Common Shares would
          purchase at the Exercise Price in effect immediately before such Issue, and </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;
          the denominator of which is the amount of common stock outstanding immediately
          before such Issue plus the number of such Additional Common Shares. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2&nbsp;&nbsp;&nbsp;&nbsp;
<U>Adjustment of Number of Shares</U>. Upon each adjustment of the Exercise Price, the
number of Shares issuable upon exercise of the Warrant shall be increased to equal the
quotient obtained by dividing (a) the product resulting from multiplying (i) the number of
Shares issuable upon exercise of the Warrant and (ii) the Exercise Price, in each case as
in effect immediately before such adjustment, by (b) the adjusted Exercise Price. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.3&nbsp;&nbsp;&nbsp;&nbsp;
<U>Securities Deemed Outstanding</U>. For the purpose of this Section 3, all securities
issuable upon exercise of any outstanding Convertible Securities or Options, warrants, or
other rights to acquire securities of Company shall be deemed to be outstanding. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.&nbsp;&nbsp;&nbsp;&nbsp;
          <U>No Adjustment for Issuances Following Deemed Issuances</U>. No adjustment to
          the Exercise Price shall be made upon the exercise of Options or conversion of
          Convertible Securities. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5.&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Adjustment Following Changes in Terms of Options or Convertible
          Securities</U>. If the consideration payable to, or the amount of common stock
          Issuable by, Company increases or decreases, respectively, pursuant to the terms
          of any outstanding Options or Convertible Securities, the Exercise Price shall
          be recomputed to reflect such increase or decrease. The recomputation shall be
          made as of the time of the Issuance of the Options or Convertible Securities.
          Any changes in the Exercise Price that occurred after such Issuance because
          other Additional Common Shares were Issued or deemed Issued shall also be
          recomputed. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6.&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Recomputation Upon Expiration of Options or Convertible Securities</U>. The
          Exercise Price computed upon the original Issue of any Options or Convertible
          Securities, and any subsequent adjustments based thereon, shall be recomputed
          when any Options or rights of conversion under Convertible Securities expire
          without having been exercised. In the case of Convertible Securities or Options
          for common stock, the Exercise Price shall be recomputed as if the only
          Additional Common Shares Issued were the shares of common stock actually Issued
          upon the exercise of such securities, if any, and as if the only consideration
          received therefor was the consideration actually received upon the Issue,
          exercise or conversion of the Options or Convertible Securities. In the case of
          Options for Convertible Securities, the Exercise Price shall be recomputed as if
          the only Convertible Securities Issued were the Convertible Securities actually
          Issued upon the exercise thereof, if any, and as if the only consideration
          received therefor was the consideration actually received by Company (determined
          pursuant to Section 9), if any, upon the Issue of the Options for the
          Convertible Securities. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7.&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Limit on Readjustments</U>. No readjustment of the Exercise Price pursuant to
          Sections 5 or 6 shall increase the Exercise Price more than the amount of any
          decrease made in respect of the Issue of any Options or Convertible Securities. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8.&nbsp;&nbsp;&nbsp;&nbsp;
          <U>30 Day Options</U>. In the case of any Options that expire by their terms not
          more than 30 days after the date of Issue thereof, no adjustment of the Exercise
          Price shall be made until the expiration or exercise of all such Options. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>9.&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Computation of Consideration</U>. The consideration received by Company for
          the Issue of any Additional Common Shares shall be computed as follows: </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Cash</U> shall be valued at the amount of cash received by Company, excluding
          amounts paid or payable for accrued interest or accrued dividends. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Property</U>. Property other than cash shall be computed at the fair market
          value thereof at the time of the Issue as determined in good faith by the Board
          of Directors of Company. </FONT></P>

<P Align=Center><FONT face="Times New Roman, Times, Serif" size=2>17</FONT></P>
<HR SIZE=3 NOSHADE>

<P STYLE="page-break-after:always">
</P>


<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Mixed Consideration</U>. The consideration for Additional Common Shares
          Issued together with other property of Company for consideration that covers
          both shall be determined in good faith by the Board of Directors of Company. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Options and Convertible Securities</U>. The consideration per Additional
          Common Share for Options and Convertible Securities shall be determined by
          dividing: </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;
          the total amount, if any, received or receivable by Company for the Issue of the
          Options or Convertible Securities, plus the minimum amount of additional
          consideration (as set forth in the instruments relating thereto, without regard
          to any provision contained therein for a subsequent adjustment of such
          consideration) payable to Company upon exercise of the Options or conversion of
          the Convertible Securities, by </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;
          the maximum amount of common stock (as set forth in the instruments relating
          thereto, without regard to any provision contained therein for a subsequent
          adjustment of such number) ultimately Issuable upon the exercise of such Options
          or the conversion of such Convertible Securities. </FONT></P>

<P Align=Center><FONT face="Times New Roman, Times, Serif" size=2>18</FONT></P>
<HR SIZE=3 NOSHADE>

<P STYLE="page-break-after:always">
</P>


</BODY>
</HTML>

</TEXT>
</DOCUMENT>
