10Q doc

December 31, March 31, 1999 1999 ------------ ------------ (unaudited) (Note A) ASSETS -------------------------------------- Current assets: Cash and cash equivalents.................... $158,412 $59,965 Short-term investments....................... 189,624 199,865 Accounts receivable, net..................... 121,339 92,367 Deferred tax assets.......................... 22,881 22,881 Prepaid expenses and other assets............ 17,769 9,176 ------------ ------------ Total current assets.......................... 510,025 384,254 ------------ ------------ Property and equipment, at cost: Computer, office and manufacturing equipment. 78,273 74,867 Office furniture............................. 12,670 10,535 Leasehold improvements....................... 12,343 10,905 ------------ ------------ 103,286 96,307 Accumulated depreciation and amortization.... (57,311) (50,862) ------------ ------------ Property and equipment, net................... 45,975 45,445 Other assets, net............................. 22,135 24,257 ------------ ------------ Total assets.................................. $578,135 $453,956 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY -------------------------------------- Current liabilities: Accounts payable............................. $11,871 $13,848 Accrued employee benefits.................... 27,202 27,212 Income taxes payable......................... 40,540 19,652 Other accrued expenses....................... 23,807 16,334 Current portion of accrued merger and integration expenses....................... 1,012 2,619 Deferred revenue............................. 94,592 76,223 ------------ ------------ Total current liabilities..................... 199,024 155,888 Accrued rent.................................. 800 896 Long-term accrued merger and integration expenses..................................... 1,450 2,800 ------------ ------------ Total liabilities............................. 201,274 159,584 ------------ ------------ Commitments and contingencies Minority Interest 25,253 0 Stockholders' equity: Common stock, $0.01 par value, 150,000 shares authorized........................... 980 933 Additional paid-in capital................... 624,119 562,742 Treasury stock............................... (180,851) (119,488) Accumulated deficit.......................... (86,615) (146,013) Accumulated other comprehensive income(loss). (6,025) (3,802) ------------ ------------ Total stockholders' equity.................... 351,608 294,372 ------------ ------------ Total liabilities, minority interest and stockholders' equity........................ $578,135 $453,956 ============ ============

Three Months Ended Nine Months Ended December 31, December 31, --------- --------- --------- --------- 1999 1998 1999 1998 --------- --------- --------- --------- Net product revenue................ $89,907 $67,382 $240,104 $175,084 Consulting and support revenue..... 56,280 41,751 151,667 111,676 --------- --------- --------- --------- Total revenue.................. 146,187 109,133 391,771 286,760 --------- --------- --------- --------- Cost of product revenue............ 7,059 4,728 18,778 15,809 Cost of consulting and support revenue.......................... 14,910 10,731 39,810 30,310 --------- --------- --------- --------- Total cost of revenue.......... 21,969 15,459 58,588 46,119 --------- --------- --------- --------- Gross margin....................... 124,218 93,674 333,183 240,641 --------- --------- --------- --------- Operating expenses: Research and development......... 24,858 18,683 70,467 50,949 Sales and marketing.............. 54,527 45,465 155,053 121,843 General and administrative....... 12,978 8,201 33,589 24,009 Merger costs..................... -- (1,200) 0 (1,200) --------- --------- --------- --------- Total operating expenses....... 92,363 71,149 259,109 195,601 --------- --------- --------- --------- Operating income............... 31,855 22,525 74,074 45,040 Other income, net.................. 3,496 3,124 8,525 9,473 --------- --------- --------- --------- Income before income taxes........................ 35,351 25,649 82,599 54,513 Provision for income taxes......... 9,971 7,695 23,201 16,354 --------- --------- --------- --------- Net income......................... $25,380 $17,954 $59,398 $38,159 ========= ========= ========= ========= Net income per common share - basic.................... $0.29 $0.21 $0.68 $0.45 Shares used in computing per share amounts - basic............ 87,800 84,269 87,072 85,727 Net income per common share - diluted.................. $0.27 $0.20 $0.63 $0.42 Shares used in computing per share amounts - diluted.......... 95,586 91,254 94,546 91,308

Nine Months Ended December 31 ---------------------- 1999 1998 ---------- ---------- Cash flows from operating activities: Net income.......................................... $59,398 $38,159 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization..................... 16,279 14,933 Tax benefits of stock option exercises............ 0 12,000 Changes in operating assets and liabilities: Accounts receivable............................. (28,972) (6,899) Prepaids and other, net......................... (8,593) (865) Accounts payable................................ (1,977) (2,148) Accrued employee benefits and other accrued expenses..................................... 7,367 (4,826) Income taxes payable............................ 20,888 776 Accrued merger and integration expenses......... (2,957) (22,470) Deferred revenue................................ 18,369 14,364 ---------- ---------- Net cash provided by operating activities.............. 79,802 43,024 ---------- ---------- Cash flows from investing activities: Minority interest investment 25,253 0 Purchase of short-term investments.................. (168,075) (263,094) Maturities and sales of short-term investments...... 178,316 238,736 Purchases of property and equipment................. (14,314) (17,877) Net change in other assets.......................... (373) 2,956 ---------- ---------- Net cash provided (used) by investing activities....... 20,807 (39,279) ---------- ---------- Cash flows from financing activities: Net proceeds from issuance of common stock.......... 61,424 21,195 Repurchases of common stock......................... (61,363) (118,147) ---------- ---------- Net cash used in financing activities.................. 61 (96,952) ---------- ---------- Effect of changes in foreign currency exchange rate on cash.......................................... (2,223) 786 ---------- ---------- Net increase (decrease) in cash and cash equivalents... 98,447 (92,421) Cash and cash equivalents at beginning of period....... 59,965 126,229 ---------- ---------- Cash and cash equivalents at end of period............. $158,412 $33,808 ========== ==========

(in thousands, except per share amounts) Three Months Ended Nine Months Ended December 31, December 31, ------------------- --------- --------- 1999 1998 1999 1998 --------- --------- --------- --------- Numerator: Net income ....................... $25,380 $17,954 $59,398 $38,159 Denominator: Denominator for basic net income per share - weighted average shares.................... 87,800 84,269 87,072 85,727 Incremental common shares attributable to shares issuable under employee stock plans........ 7,786 6,985 7,474 5,581 --------- --------- --------- --------- Denominator for diluted net income per share - weighted average shares and assumed conversions............... 95,586 91,254 94,546 91,308 ========= ========= ========= ========= Net income per share - basic. $0.29 $0.21 $0.68 $0.45 ========= ========= ========= ========= Net income per share - diluted........................... $0.27 $0.20 $0.63 $0.42 ========= ========= ========= =========

DEVCLICK.COM, INC. SERIES A PREFERRED STOCK PURCHASE AGREEMENT October 18, 1999 TABLE OF CONTENTS Page SECTION 1 AUTHORIZATION AND SALE OF SERIES A PREFERRED STOCK 1 1.1 Authorization of Series A Preferred Stock 1 1.2 Sale and Issuance of Series A Preferred 1 SECTION 2 CLOSING DATES; DELIVERY 1 2.1 Closing Date 1 2.2 Delivery and Payment 1 SECTION 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY 2 3.1 Organization and Standing; Certificate of Incorporation and Bylaws 2 3.2 Corporate Power 2 3.3 Subsidiaries 2 3.4 Capitalization 2 3.5 Authorization 3 3.6 Proprietary Rights 3 3.7 Registration Rights 4 3.8 Governmental Consent, etc 4 3.9 Offering 4 3.10 Permits 4 SECTION 4 REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS 4 4.1 Preexisting Relationship with Company; Business and Financial Experience 4 4.2 Investment Intent; Blue Sky 4 4.3 Rule 144 5 4.4 No Public Market 5 4.5 Restrictions on Transfer; Restrictive Legends 5 4.6 Access to Data 5 4.7 Authorization 5 4.8 Brokers or Finders 6 4.9 Tax Liability 6 4.10 Limited Operating History 6 SECTION 5 CONDITIONS TO CLOSING OF THE PURCHASERS 6 5.1 Representations and Warranties Correct 6 5.2 Covenants 6 5.3 Blue Sky 6 5.4 Restated Certificate 6 5.5 Investor Rights Agreement 6 SECTION 6 CONDITIONS TO CLOSING OF THE COMPANY 6 6.1 Representations and Warranties Correct 7 6.2 Covenants 7 6.3 Blue Sky 7 6.4 Restated Certificate 7 6.5 Investor Rights Agreement 7 SECTION 7 MISCELLANEOUS 7 7.1 Governing Law 7 7.2 Entire Agreement; Amendment 7 7.3 Notices, etc 7 7.4 Delays or Omissions 8 7.5 Expenses 8 7.6 Counterparts 8 7.7 Severability 8 7.8 Titles and Subtitles 9 EXHIBITS A. Amended and Restated Certificate of Incorporation B. Investor Rights Agreement C. Schedule of Exceptions DEVCLICK.COM, INC. SERIES A PREFERRED STOCK PURCHASE AGREEMENT This Series A Preferred Stock Purchase Agreement (this "Agreement") is made as of October 18, 1999 by and among DevClick.com, Inc., a Delaware corporation (the "Company"), and Rational Software Corporation (the "Purchasers"). In consideration of the mutual promises and covenants contained herein, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: SECTION 1 AUTHORIZATION AND SALE OF SERIES A PREFERRED STOCK 1.1 Authorization of Series A Preferred Stock. The Company has authorized the sale and issuance to the Purchaser of up to 80,000,000 shares (the "Shares") of its Series A Preferred Stock, par value $0.001 per share (the "Series A Preferred"), having the rights, preferences, privileges and restrictions as set forth in the Amended and Restated Certificate of Incorporation in substantially the form attached hereto as Exhibit A (the "Restated Certificate"). 1.2 Sale and Issuance of Series A Preferred. Subject to the terms and conditions hereof, the Company will severally issue and sell to the Purchaser and the Purchaser will severally buy from the Company up to 80,000,000 Shares at a per share purchase price of $0.625 (the "Per Share Price"), and at the aggregate purchase price of up to $50,000,000. SECTION 2 CLOSING DATES; DELIVERY 2.1 Closing Date. It is anticipated that purchase and sale of the Shares hereunder shall be consummated at a closing (the "Closing") held at the offices of Wilson Sonsini Goodrich & Rosati, 650 Page Mill Road, Palo Alto, California within 45 days of the signing of this Agreement, or at such other date, time and place upon which the Company and the Purchasers shall agree (the date and time of the Closing is hereinafter referred to as the "Closing Date"). 2.2 Delivery and Payment. At the Closing, the Company will deliver to each Purchaser a certificate or certificates, registered in the Purchaser's name, representing the number of Shares to be purchased by the Purchaser at the Closing, against payment of the purchase price therefor, by check payable to the Company, by wire transfer per the Company's instructions, or by any combination of the foregoing. SECTION 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company represents and warrants to the Purchaser that, as of the Closing Date at which the Purchaser consummate its purchase of Shares hereunder: 3.1 Organization and Standing; Certificate of Incorporation and Bylaws. The Company is a corporation duly organized and existing under, and by virtue of, the laws of the State of Delaware and is in good standing under such laws. The Company has requisite corporate power and authority to own and operate its properties and assets and to carry on its business as presently conducted. The Company is presently qualified to do business as a foreign corporation in California and there is no other jurisdiction in which the failure to be so qualified would have a material adverse effect on the business or financial condition of the Company. The Company has furnished the counsel for the Purchasers with copies of its Restated Certificate and Bylaws. Said copies are true, correct and complete and reflect all amendments now in effect. 3.2 Corporate Power. The Company has all requisite legal and corporate power and authority to execute and deliver this Agreement and the Investor Rights Agreement in substantially the form attached hereto as Exhibit B (the "Investor Rights Agreement" and, together with this Agreement, the "Investment Agreements"), to sell and issue the Shares hereunder, to issue the underlying Common Stock (the "Conversion Stock") in accordance with the provisions of the Restated Certificate, and to carry out and perform its obligations under the terms of the Investment Agreements. 3.3 Subsidiaries. The Company has no subsidiaries and does not otherwise own or control, directly or indirectly, any equity interest in any corporation, association or business entity. 3.4 Capitalization. The authorized capital stock of the Company consists of 125,000,000 shares of Common Stock and 80,000,000 shares of Preferred Stock, all of which have been designated Series A Preferred Stock. As of the date hereof, the total number of outstanding shares of Common Stock is 20,000,000. Immediately prior to the Closing, 20,000,000 shares of Common Stock will be outstanding and no shares of Preferred Stock will be outstanding. The Series A Preferred shall have the rights, preferences, privileges and restrictions set forth in the Restated Certificate. All currently outstanding shares of Common Stock have been duly authorized and validly issued, are fully paid and nonassessable, and have been issued in compliance with applicable securities laws. The Company has reserved 80,000,000 shares of Series A Preferred for issuance hereunder and 80,000,000 shares of Common Stock for issuance upon conversion of the Series A Preferred. Of the 25,000,000 shares of Common Stock of the Company reserved for issuance under the Company's 1999 Stock Plan, no options to purchase shares have been granted, and 25,000,000 shares remain available for future option grants. Except as set forth above and as provided in the Company's Restated Certificate and the Schedule of Exceptions, there are no options, warrants or other rights to purchase or acquire any of the Company's authorized and unissued capital stock. 3.5 Authorization. All corporate action on the part of the Company, its directors and stockholders necessary for the authorization, execution, delivery and performance of the Investment Agreements by the Company, the authorization, sale, issuance and delivery of the Shares and the Conversion Stock and the performance of the Company's obligations under the Investment Agreements has been taken or will be taken prior to the Closing. The Investment Agreements, when executed and delivered by the Company, shall constitute valid and binding obligations of the Company, enforceable in accordance with their terms, subject to laws of general application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific performance, injunctive relief or other equitable remedies; provided, however, that the Company makes no representation as to the enforceability of the indemnification provisions contained in the Investor Rights Agreement. The Shares, when issued in compliance with the provisions of this Agreement, will be validly issued, fully paid and nonassessable, and will have the rights, preferences, privileges and restrictions described in the Restated Certificate; the Common Stock issuable upon conversion of the Shares has been duly and validly reserved and, when issued in compliance with the provisions of the Restated Certificate, will be validly issued, fully paid and nonassessable; and the Shares and the Conversion Stock will be free of any liens or encumbrances (assuming the Purchaser takes the Shares with no notice thereof) other than any liens or encumbrances created by or imposed upon the holders; provided, however, that the Shares and the Conversion Stock may be subject to restrictions on transfer under state or federal securities laws and restrictions set forth in the Investor Rights Agreement. The issuance of the Shares is not subject to any preemptive rights or rights of first refusal. 3.6 Proprietary Rights. The Company has title and ownership of, or full right to use, all patents, trademarks, service marks, trade names, copyrights, trade secrets, information, proprietary rights and processes necessary for its business as now conducted and, to the Company's knowledge, without any conflict with or infringement of the rights of others. There are no outstanding options, licenses, or agreements of any kind relating to the foregoing, nor is the Company bound by or a party to any options, licenses or agreements of any kind with respect to the patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses, information, proprietary rights and processes of any other person or entity. The Company has not received any communications alleging that the Company has violated or, by conducting its business as currently conducted, would violate any of the patents, trademarks, service marks, trade names, copyrights or trade proprietary rights of any other person or entity. To the knowledge of the Company, none of its employees is obligated under any contract (including licenses, covenants or commitments of any nature) or other agreement, or subject to any judgment, decree or order of any court or administrative agency, that would interfere with the use of his or her best efforts to promote the interests of the Company or that would conflict with the Company's business as currently conducted. Neither the execution and delivery of the Investment Agreements, nor the carrying on of the Company's business by the employees of the Company, nor the conduct of the Company's business as currently conducted, will, to the Company's knowledge, conflict with or result in a breach of the terms, conditions or provisions of, or constitute a default under, any contract, covenant or instrument under which any of such employees is now obligated. The Company does not believe it is or will be necessary to utilize any inventions of any of its employees (or people it currently intends to hire) made prior to their employment by the Company. 3.7 Registration Rights. Except as set forth in the Investor Rights Agreement, the Company is not under any contractual obligation to register under the Securities Act of 1933, as amended (the "Securities Act"), any of its presently outstanding securities or any of its securities which may hereafter be issued. 3.8 Governmental Consent, etc. No consent, approval order or authorization of or registration, qualification, designation, declaration or filing with any governmental authority on the part of the Company is required in connection with the valid execution and delivery of the Investment Agreements, or the offer, sale or issuance of the Shares or the Conversion Stock, or the consummation of any other transaction contemplated hereby, except (i) the filing of the Restated Certificate in the office of the Delaware Secretary of State prior to the Closing and (ii) the qualification (or taking of such action as may be necessary to secure an exemption from qualification, if available) of the offer and sale of the Shares and the Conversion Stock under applicable Blue Sky laws, which filings and qualifications, if required, will be accomplished in a timely manner. 3.9 Offering. Subject to the accuracy of the Purchaser's representations in Section 4 hereof, the offer, sale and issuance of the Shares and the Conversion Stock constitute transactions exempt from the registration requirements of Section 5 of the Securities Act. 3.10 Permits. The Company has all franchises, permits, licenses, and any similar authority necessary for the conduct of its business as now being conducted by it, the lack of which could materially and adversely affect the business, properties, or financial condition of the Company, and the Company believes it can obtain, without undue burden or expense, any similar authority for the conduct of its business as planned to be conducted. To its knowledge, the Company is not in default in any material respect under any of such franchises, permits, licenses, or other similar authority. SECTION 4 REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS The Purchaser hereby severally represents and warrants to the Company as follows: 4.1 Preexisting Relationship with Company; Business and Financial Experience. By reason of its business or financial experience or the business or financial experience of its professional advisors who are unaffiliated with the Company and who are not compensated by the Company, has the capacity to protect its own interests in connection with the purchase of the Shares and underlying Conversion Stock. 4.2 Investment Intent; Blue Sky. It is acquiring the Shares and the underlying Conversion Stock for investment for its own account, not as a nominee or agent, and not with a view to, or for resale in connection with, any distribution thereof. It understands that the issuance of the Shares and the underlying Conversion Stock has not been, and will not be, registered under the Securities Act by reason of a specific exemption from the registration provisions of the Securities Act, the availability of which depends upon, among other things, the bona fide nature of the Purchaser's investment intent and the accuracy of the Purchaser's representations as expressed herein. pon which the Company may rely for the purpose of complying with applicable "Blue Sky" laws. 4.3 Rule 144. It acknowledges that the Shares and the underlying Conversion Stock must be held indefinitely unless subsequently registered under the Securities Act or unless an exemption from such registration is available. It is aware of the provisions of Rule 144 promulgated under the Securities Act which permit limited resale of shares purchased in a private placement subject to the satisfaction of certain conditions, including, among other things, the existence of a public market for the shares, the availability of certain current public information about the Company, the resale occurring not less than one year after a party has purchased and paid for the security to be sold, the sale being effected through a "broker's transaction" or in a transaction directly with a "market maker," and the number of shares being sold during any three-month period not exceeding specified limitations. 4.4 No Public Market. It understands that no public market now exists for any of the securities issued by the Company and that the Company has made no assurances that a public market will ever exist for the Company's securities. 4.5 Restrictions on Transfer; Restrictive Legends. It understands that the transfer of the Shares and the Conversion Stock is restricted by applicable state and Federal securities laws and by the provisions of the Investor Rights Agreement, and that the certificates representing the Shares and the Conversion Stock will be imprinted with legends restricting transfer except in compliance therewith. 4.6 Access to Data. It has had an opportunity to discuss the Company's business, management and financial affairs with the Company's management. It has also had an opportunity to ask questions of officers of the Company. It understands that such discussions, as well as any written information issued by the Company, were intended to describe certain aspects of the Company's business and prospects but were not a thorough or exhaustive description. 4.7 Authorization. All action on the part of the Purchaser's partners, board of directors, and stockholders, as applicable, necessary for the authorization, execution, delivery and performance of the Investment Agreements by the Purchaser, the purchase of and payment for the Shares and the Conversion Stock and the performance of all of the Purchaser's obligations under the Investment Agreements has been taken or will be taken prior to the Closing. The Investment Agreements, when executed and delivered by the Purchaser, shall constitute valid and binding obligations of the Purchaser, enforceable in accordance with their terms, subject to laws of general application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific performance, injunctive relief or other equitable remedies; provided, however, that the Purchaser makes no representation as to the enforceability of the indemnification provisions contained in the Investor Rights Agreement. 4.8 Brokers or Finders. The Company has not and will not incur, directly or indirectly, as a result of any action taken by the Purchaser, any liability for brokerage or finders' fees or agents' commissions or any similar charges in connection with this Agreement or the transactions contemplated hereby. 4.9 Tax Liability. It has reviewed with its own tax advisors the tax consequences of the transactions contemplated by this Agreement. It relies solely on such advisors and not on any statements or representations of the Company or any of the Company's agents with respect to such tax consequences. It understands that it, and not the Company, shall be responsible for its own tax liability that may arise as a result of the transactions contemplated by this Agreement. 4.10 Limited Operating History. It acknowledges that the Company was incorporated on October 8, 1999 as a new business and has a limited operating history. SECTION 5 CONDITIONS TO CLOSING OF THE PURCHASERS The Purchaser's obligation to purchase the Shares is, unless waived in writing by the Purchaser, subject to the fulfillment as of the date of Closing of the following conditions: 5.1 Representations and Warranties Correct. The representations and warranties made by the Company in Section 3 hereof shall be true and correct in all material respects as of the date of the Closing. 5.2 Covenants. All covenants, agreements and conditions contained in this Agreement to be performed or complied with by the Company on or prior to the Closing Date shall have been performed or complied with in all material respects. 5.3 Blue Sky. The Company shall have obtained all necessary Blue Sky law permits and qualifications, or have the availability of exemptions therefrom, required by any state for the offer and sale of the Shares and the underlying Conversion Stock. 5.4 Restated Certificate. The Restated Certificate shall have been filed in the office of the Delaware Secretary of State. 5.5 Investor Rights Agreement. The Company shall have executed and delivered the Investor Rights Agreement in substantially the form attached hereto as Exhibit B. SECTION 6 CONDITIONS TO CLOSING OF THE COMPANY The Company's obligation to sell and issue the Shares is, unless waived in writing by the Company, subject to the fulfillment as of the date of Closing of the following conditions: 6.1 Representations and Warranties Correct. The representations made in Section 4 hereof by the Purchaser shall be true and correct in all material respects as of the date of Closing. 6.2 Covenants. All covenants, agreements, and conditions contained in this Agreement to be performed or complied with by the Purchaser on or prior to the date of Closing shall have been performed or complied with in all material respects. 6.3 Blue Sky. The Company shall have obtained all necessary Blue Sky law permits and qualifications, or have the availability of exemptions therefrom, required by any state for the offer and sale of the Shares and the underlying Conversion Stock. 6.4 Restated Certificate. The Restated Certificate shall have been filed in the office of the Delaware Secretary of State. 6.5 Investor Rights Agreement. The Purchaser shall have executed and delivered the Investor Rights Agreement in substantially the form attached hereto as Exhibit B. SECTION 7 MISCELLANEOUS 7.1 Governing Law. This Agreement shall be governed in all respects by the internal laws of the State of California without regard to conflict of laws provisions. 7.2 Entire Agreement; Amendment. This Agreement, including the exhibits hereto, constitutes the full and entire understanding and agreement among the parties with regard to the subjects hereof and thereof, and no party shall be liable or bound to any other party in any manner by any warranties, representations or covenants except as specifically set forth herein or therein. Except as expressly provided herein, neither this Agreement nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the party against whom enforcement of any such amendment, waiver, discharge or termination is sought. 7.3 Notices, etc. All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by First Class, registered or certified mail, postage prepaid, or otherwise delivered by facsimile transmission, by hand or by messenger, addressed: (a) if to the Purchaser, to: Rational Software Corporation 18880 Homestead Road Cupertino, CA 95014 Attn: Tim Brennan with a copy to: Wilson Sonsini Goodrich & Rosati 650 Page Mill Road Palo Alto, California 94304-1050 Attn: Katharine A. Martin, Esq. Fax:(650) 493-6811 (b) if to the Company, to: DevClick.com, Inc. 18880 Homestead Road Cupertino, CA 95014 Attn: Paul D. Levy Each such notice or other communication shall for all purposes of this Agreement be treated as effective or having been given when received if delivered personally, if sent by facsimile, the first business day after the date of confirmation that the facsimile has been successfully transmitted to the facsimile number for the party notified, or, if sent by mail, at the earlier of its receipt or 72 hours after the same has been deposited in a regularly maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid. 7.4 Delays or Omissions. Except as expressly provided herein, no delay or omission to exercise any right, power or remedy accruing to any party, upon any breach or default of another party under this Agreement, shall impair any such right, power or remedy of such party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative. 7.5 Expenses. The Company and the Purchaser shall bear their own expenses incurred on their own behalf with respect to this Agreement and the transactions contemplated hereby. 7.6 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, and all of which together shall constitute one instrument. 7.7 Severability. In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision, which shall be replaced with an enforceable provision closest in intent and economic effect as the severed provision; provided that no such severability shall be effective if it materially changes the economic benefit of this Agreement to any party. 7.8 Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. [Remainder of Page Intentionally Left Blank] The foregoing agreement is hereby executed effective as of the date first set forth above. "COMPANY" "PURCHASER" DEVCLICK.COM, INC. RATIONAL SOFTWARE CORPORATION a Delaware corporation By: /s/ Paul D. Levy By: Timothy A. Brennan Name: Paul D. Levy Name: Timothy A. Brennan Title: Chairman Title: CFO [Signature Page to Series A Preferred Stock Purchase Agreement] EXHIBIT A (To Series A Preferred Stock Purchase Agreement) Amended and Restated Certificate of Incorporation (see Tab 3) EXHIBIT B (To Series A Preferred Stock Purchase Agreement) Investor Rights Agreement (see Tab 5) EXHIBIT C (To Series A Preferred Stock Purchase Agreement) Schedule of Exceptions (..continued) TABLE OF CONTENTS (continued)

CATAPULSE INC. INVESTOR RIGHTS AGREEMENT December 3, 1999 TABLE OF CONTENTS Page 1. Certain Definitions 1 2. Restrictions on Transferability 3 3. Restrictive Legend 3 4. Notice of Proposed Transfers 3 5. Registration 4 5.1 Requested Registration 4 5.2 Company Registration 6 5.3 Registration on Form S-3 7 5.4 Subsequent Registration Rights 8 5.5 Expenses of Registration 9 5.6 Registration Procedures 9 5.7 Indemnification 9 5.8 Information by Holder 11 5.9 Rule 144 Reporting 11 5.10 Termination of Registration Rights 12 6. Financial Information Rights 12 7. Lock-Up Agreement 13 8. Right of First Refusal 14 9. Employment, Confidential Information and Invention Assignment Agreements 15 10. Transfer of Rights 15 11. Amendment 15 12. Governing Law 16 13. Entire Agreement 16 14. Notices, etc 16 15. Counterparts 16 CATAPULSE INC. INVESTOR RIGHTS AGREEMENT This Investor Rights Agreement (this "Agreement") is made effective as of December 3, 1999 by and among CataPULSE Inc., a Delaware corporation (the "Company"), and Rational Software Corporation. RECITALS A. The Company and the Purchaser are parties to the Series A Preferred Stock Purchase Agreement dated October 18, 1999 (the "Purchase Agreement"), whereby the Company will sell, and the Purchasers will buy, Series A Preferred Stock of the Company. B. The obligations of the Company and the Purchaser under the Purchase Agreement are conditioned, among other things, upon the execution and delivery of this Agreement by the Company and the Purchaser. C. The Company desires to grant to the Purchaser, and the Purchaser desires to be granted, the rights created herein. AGREEMENT NOW, THEREFORE, in consideration of the mutual promises and covenants herein, the receipt and sufficiency are hereby acknowledged, the parties hereto agree as follows: 1. Certain Definitions. As used in this Agreement, the following terms shall have the following respective meanings: "Commission" means the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act. "Conversion Stock" means the Company's Common Stock issued or issuable pursuant to conversion of the Preferred Stock. "Exchange Act" means the Securities Exchange Act of 1934, as amended, or any similar federal rule or statute and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time. "Holder" means (i) any Purchaser holding Registrable Securities and (ii) any person holding Registrable Securities to whom the rights under this Agreement have been transferred in accordance with Section 11 hereof. "Initiating Holders" means any Holder or Holders who, in the aggregate, hold not less than 50% of the Registrable Securities then outstanding. "Preferred Stock" shall mean the Company's Series A Preferred Stock issued pursuant to the Purchase Agreement. "Qualified Initial Public Offering" shall mean the Company's initial public offering pursuant to an effective registration statement under the Securities Act covering the offer and sale of the Company's Common Stock to the public with gross proceeds to the Company of not less than $15,000,000 at a per share price of at least $1.25. "Registrable Securities" means (i) the Conversion Stock and (ii) any Common Stock of the Company issued or issuable in respect of any of the foregoing upon any stock split, stock dividend, recapitalization or similar event; provided, however, that securities shall only be treated as Registrable Securities if and so long as (x) they have not been registered or sold to or through a broker or dealer or underwriter in a public distribution or a public securities transaction and (y) the registration rights with respect to such securities have not terminated pursuant to Section 5.10. The terms "register," "registered" and "registration" refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement. "Registration Expenses" shall mean all expenses, except as otherwise stated below, incurred by the Company in complying with Sections 5.1, 5.2 and 5.3 hereof, including without limitation, all registration, qualification and filing fees, printing expenses, escrow fees, fees and disbursements of counsel for the Company, blue sky fees and expenses, the expense of any special audits incident to or required by any such registration (but excluding the compensation of regular employees of the Company which shall be paid in any event by the Company). Registration Expenses shall also include the fees and disbursements for one special counsel to the selling stockholders, not to exceed $15,000 per registration. "Restricted Securities" shall mean the securities of the Company required to bear the legends set forth in Section 3 hereof. "Rule 144" and "Rule 145" shall mean Rules 144 and 145, respectively, promulgated under the Securities Act, or any similar federal rules thereunder, all as the same shall be in effect at the time. "Securities Act" shall mean the Securities Act of 1933, as amended, or any similar federal rule or statute and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time. "Selling Expenses" shall mean all underwriting discounts, selling commissions and stock transfer taxes applicable to the securities registered by the Holders and, except as set forth above, all fees and disbursements of counsel for any Holder. 2. Restrictions on Transferability. The Preferred Stock, the Conversion Stock and any other securities issued in respect of such stock upon any stock split, stock dividend, recapitalization, merger or similar event, shall not be sold, assigned, transferred or pledged except upon the conditions specified in this Agreement, which conditions are intended to ensure compliance with the provisions of the Securities Act. Each Holder or transferee will cause any proposed purchaser, assignee, transferee or pledgee of any such shares held by the Holder or transferee to agree to take and hold such securities subject to the restrictions and upon the conditions specified in this Agreement. 3. Restrictive Legend. Each certificate representing the Preferred Stock, the Conversion Stock or any other securities issued in respect of such stock upon any stock split, stock dividend, recapitalization, merger or similar event, shall (unless otherwise permitted by the provisions of Section 4 below) be stamped or otherwise imprinted with legends in substantially the following form (in addition to any legends required by agreement or by applicable state securities laws): THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). SUCH SECURITIES MAY NOT BE TRANSFERRED UNLESS A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO SUCH TRANSFER OR IN THE OPINION OF COUNSEL FOR THE COMPANY, SUCH TRANSFER MAY BE MADE PURSUANT TO RULE 144 OR REGISTRATION UNDER THE ACT IS OTHERWISE UNNECESSARY IN ORDER FOR SUCH TRANSFER TO COMPLY WITH THE ACT. THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A LOCK-UP PERIOD OF UP TO 180 DAYS FOLLOWING THE EFFECTIVE DATE OF A REGISTRATION STATEMENT OF THE COMPANY FILED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AS SET FORTH IN AN AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH LOCK-UP PERIOD IS BINDING ON TRANSFEREES OF THESE SHARES. Each Holder consents to the Company making a notation on its records and giving stop transfer instructions to any transfer agent of its capital stock in order to implement the restrictions on transfer established in this Agreement. 4. Notice of Proposed Transfers. The holder of each certificate representing Restricted Securities by acceptance thereof agrees to comply in all respects with the provisions of this Section 4. Without in any way limiting the immediately preceding sentence, no sale, assignment, transfer or pledge of Restricted Securities shall be made by any holder thereof to any person unless such person shall first agree in writing to be bound by the restrictions of this Agreement. Prior to any proposed sale, assignment, transfer or pledge of any Restricted Securities, unless there is in effect a registration statement under the Securities Act covering the proposed transfer, the holder thereof shall give written notice to the Company of such holder's intention to effect such transfer, sale, assignment or pledge. Each such notice shall describe the manner and circumstances of the proposed transfer, sale, assignment or pledge in sufficient detail, and, if requested by the Company, the holder shall also provide, at such holder's expense, either (i) a written opinion of legal counsel who shall be, and whose legal opinion shall be, reasonably satisfactory to the Company addressed to the Company, to the effect that the proposed transfer of the Restricted Securities may be effected without registration under the Securities Act, or (ii) a "no action" letter from the Commission to the effect that the transfer of such securities without registration will not result in a recommendation by the staff of the Commission that action be taken with respect thereto, whereupon the holder of such Restricted Securities shall be entitled to transfer such Restricted Securities in accordance with the terms of the notice delivered by the holder to the Company; provided, however, that the Company shall not request an opinion of counsel or "no action" letter with respect to (i) a transfer not involving a change in beneficial ownership, (ii) a transaction involving the distribution without consideration of Restricted Securities by the holder to its constituent partners or members in proportion to their ownership interests in the holder, or (iii) a transaction involving the transfer without consideration of Restricted Securities by an individual holder during such holder's lifetime by way of gift or on death by will or intestacy. Each certificate evidencing the Restricted Securities transferred as above provided shall bear, except if such transfer is made pursuant to Rule 144, the appropriate restrictive legend set forth in Section 3 above, except that such certificate shall not bear such restrictive legend if in the opinion of counsel for such holder and counsel for the Company such legend is not required in order to establish compliance with any provision of the Securities Act. Notwithstanding the foregoing, each holder of Restricted Securities agrees that it will not request that a transfer of the Restricted Securities be made or that the legend set forth in Section 3 be removed from the certificate representing the Restricted Securities, solely in reliance on Rule 144(k), if as a result thereof the Company would be rendered subject to the reporting requirements of the Exchange Act. 5. Registration. 5.1 Requested Registration. (a) Request for Registration. In case the Company shall receive from Initiating Holders a written request that the Company effect any registration with respect to shares of Registrable Securities, the Company will: (i) promptly give written notice of the proposed registration to all other Holders; and (ii) as soon as practicable, use commercially reasonable efforts to effect such registration as part of a firm commitment underwritten public offering with underwriters reasonably acceptable to the Initiating Holders and the Company (including, without limitation, appropriate qualification under applicable state securities laws and appropriate compliance with applicable regulations issued under the Securities Act and any other governmental requirements or regulations) as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any Holder or Holders joining in such request by delivering a written notice to such effect to the Company within twenty days after the date of such written notice from the Company. Notwithstanding the foregoing, the Company shall not be obligated to take any action to effect or complete any such registration pursuant to this Section 5.1: (A) Prior to the earlier of (i) one year after the effective date of the Company's first registered public offering of its Common Stock or (ii) five years from the date hereof; (B) Unless the requested registration would have an aggregate offering price of all Registrable Securities sought to be registered by all Holders, net of underwriting discounts and commissions, exceeding $5,000,000; (C) Following the filing of, and for 180 days immediately following the effective date of, any registration statement pertaining to securities of the Company (other than a registration of securities in a Rule 145 transaction or with respect to an employee benefit plan), provided that the Company is actively employing in good faith commercially reasonable efforts to cause such registration statement to become effective; (D) After the Company has effected two registrations pursuant to this Section 5.1(a) in which the Initiating Holders were able to sell at least 50% of the Registrable Securities sought to be included and such registration has been declared or ordered effective; (E) If the Initiating Holders are able to request a registration on Form S-3 pursuant to Section 5.3 hereof; (F) Within twelve months after the Company has effected such a registration pursuant to this Section 5.1(a), and such registration has been declared or ordered effective; or (G) If the Company shall furnish to the Initiating Holders a certificate signed by the President of the Company (i) giving notice of its bona fide intention to effect the filing of a registration statement with the Commission, or (ii) stating that in the good faith judgment of the Board of Directors it would be seriously detrimental to the Company or its stockholders for a registration statement to be filed in the near future. In such case, the Company's obligation to use its commercially reasonable efforts to register, qualify or comply under this Section 5.1(a) shall be deferred one or more times for a period not to exceed 180 days from the receipt of the request to file such registration by such Initiating Holder or Holders, provided that the Company may not exercise this deferral right more than once per twelve-month period. Subject to the foregoing clauses (A) through (G), the Company shall file a registration statement covering the Registrable Securities so requested to be registered as soon as practicable after receipt of the request or requests of the Initiating Holders. (b) Underwriting. In the event of a registration pursuant to Section 5.1, the Company shall advise the Holders as part of the notice given pursuant to Section 5.1(a)(i) that the right of any Holder to registration pursuant to Section 5.1 shall be conditioned upon such Holder's participation in the underwriting arrangements required by this Section 5.1, and the inclusion of such Holder's Registrable Securities in the underwriting to the extent requested shall be limited to the extent provided herein. The Company shall, together with all Holders proposing to distribute their securities through such underwriting, enter into an underwriting agreement in customary form with the managing underwriter selected for such underwriting by a majority in interest of the Initiating Holders, but subject to the Company's reasonable approval. Notwithstanding any other provision of this Section 5.1, if the managing underwriter determines that marketing factors require a limitation of the number of shares to be underwritten, the managing underwriter may limit the Registrable Securities to be included in such registration (i) in the case of the Company's initial public offering, to zero, and (ii) in the case of any other offering, to an amount no less than 33% of all shares requested to be included in such offering. The Company shall so advise all Holders requesting to be included in the registration and underwriting, and the number of shares of Registrable Securities that may be included in the registration and underwriting shall be allocated among all Holders requesting to be included in the registration and underwriting in proportion, as nearly as practicable, to the respective amounts of Registrable Securities held by them at the time of filing the registration statement. No Registrable Securities excluded from the underwriting by reason of the underwriter's marketing limitation shall be included in such registration. To facilitate the allocation of shares in accordance with the above provisions, the Company or the underwriters may round the number of shares allocated to any Holder to the nearest 100 shares. If any Holder of Registrable Securities disapproves of the terms of the underwriting, such person may elect to withdraw therefrom by written notice to the Company. 5.2 Company Registration. (a) Notice of Registration. If at any time or from time to time the Company shall determine to register any of its equity securities, either for its own account or the account of a Holder or other holders, other than (i) a registration relating solely to employee benefit plans, (ii) a registration relating solely to a Rule 145 transaction, or (iii) a registration in which the only equity security being registered is Common Stock issuable upon conversion of convertible debt securities which are also being registered, the Company will: (i) promptly give to each Holder written notice thereof; and (ii) include in such registration (and any related qualifications including compliance with Blue Sky laws), and in any underwriting involved therein, all the Registrable Securities specified in a written request or requests, made within ten days after the date of such written notice from the Company, by any Holder. (b) Underwriting. If the registration of which the Company gives notice is for a registered public offering involving an underwriting, the Company shall so advise the Holders as a part of the written notice given pursuant to Section 5.2(a)(i). In such event, the right of any Holder to registration pursuant to Section 5.2 shall be conditioned upon such Holder's participation in such underwriting and the inclusion of Registrable Securities in the underwriting shall be limited to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall (together with the Company and the other Holders distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the managing underwriter selected for such underwriting by the Company. Notwithstanding any other provision of this Section 5.2, if the managing underwriter determines that marketing factors require a limitation of the number of shares to be underwritten, the managing underwriter may limit the Registrable Securities to be included in such registration (i) in the case of the Company's initial public offering, to zero, and (ii) in the case of any other offering, to an amount no less than 33% of all shares to be included in such offering. The Company shall so advise all Holders requesting to be included in the registration and underwriting, and the number of shares of Registrable Securities that may be included in the registration and underwriting shall be allocated among all the Holders requesting to be included in the registration and underwriting in proportion, as nearly as practicable, to the respective amounts of Registrable Securities held by them at the time of filing the registration statement. To facilitate the allocation of shares in accordance with the above provisions, the Company or the underwriters may round the number of shares allocated to any Holder to the nearest 100 shares. If any Holder disapproves of the terms of any such underwriting, such person may elect to withdraw therefrom by written notice to the Company. (c) Right to Terminate Registration. The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 5.2 prior to the effectiveness of such registration whether or not any Holder has elected to include securities in such registration. 5.3 Registration on Form S-3. (a) Request for Registration. In case the Company shall receive from Initiating Holders a written request that the Company file a registration statement on Form S-3 (or any successor form to Form S-3) for a public offering of shares of the Registrable Securities the aggregate price to the public of which, net of underwriting discounts and commissions, would exceed $3,000,000, and the Company is a registrant entitled to use Form S-3 to register the Registrable Securities for such an offering, the Company shall use commercially reasonable efforts to cause such Registrable Securities to be registered for the offering on such form and to cause such Registrable Securities to be qualified in such jurisdictions as such Holder or Holders may reasonably request; provided, however, that the Company shall not be required to effect more than one registration pursuant to this Section 5.3 in any twelve-month period. If such offer is to be an underwritten offer, the underwriters must be acceptable to both the Initiating Holders and the Company. The Company shall inform the other Holders of the proposed registration and offer them the opportunity to participate. In the event the registration is proposed to be part of a firm commitment underwritten public offering, the substantive provisions of Section 5.1(b) shall be applicable to each such registration initiated under this Section 5.3. (b) Notwithstanding the foregoing, the Company shall not be obligated to take any action pursuant to this Section 5.3: (i) Following the filing of, and for 180 days immediately following the effective date of, any registration statement pertaining to securities of the Company (other than a registration of securities in a Rule 145 transaction or with respect to an employee benefit plan), provided that the Company is actively employing in good faith commercially reasonable efforts to cause such registration statement to become effective; (ii) Within twelve months after the Company has effected such a registration pursuant to this Section 5.3(a), and such registration has been declared or ordered effective; or (iii) If the Company shall furnish to the Initiating Holders a certificate signed by the President of the Company (i) giving notice of its bonafide intention to effect the filing of a registration statement with the Commission, or (ii) stating that, in the good faith judgment of the Board of Directors, it would be seriously detrimental to the Company or its stockholders for a registration statement to be filed in the near future, then the Company's obligation to use its commercially reasonable efforts to file a registration statement shall be deferred one or more times for a period not to exceed 180 days from the receipt of the request to file such registration by such Initiating Holder or Holders, provided that the Company may not exercise this deferral right more than once per twelve-month period. 5.4 Subsequent Registration Rights. (a) Without the consent of any holder of Registrable Securities hereunder, the Company may grant to any holder of securities of the Company registration rights inferior to those granted hereunder. (b) The Company shall not enter into any agreement granting any holder or prospective holder of any securities of the Company registration rights superior to or on a pari passu basis with the rights granted the Purchasers hereunder without the written consent of the holders of a majority of the Registrable Securities. Notwithstanding the foregoing, the Company may, without obtaining any further consent of the holders of Registrable Securities, amend this Agreement to the extent necessary to grant rights and obligations on a pari passu basis with the rights and obligations of the Purchasers to investors in any subsequent round of financing with respect to the securities purchased by such investors in such financing. 5.5 Expenses of Registration. All Registration Expenses incurred in connection with (i) two registrations pursuant to Section 5.1, (ii) all registrations pursuant to Section 5.2, and (iii) all registrations pursuant to Section 5.3, shall be borne by the Company. Notwithstanding the foregoing, in the event that Initiating Holders cause the Company to begin a registration pursuant to Section 5.1, and the request for such registration is subsequently withdrawn by the Initiating Holders or such registration is not completed due to failure to meet the net proceeds requirement set forth in such section or is otherwise not successfully completed due to no fault of the Company, all Holders shall be deemed to have forfeited their right to one registration under Section 5.1 unless the Initiating Holders pay for, or reimburse the Company for, the Registration Expenses incurred in connection with such withdrawn or incomplete registration. Unless otherwise stated, all Selling Expenses relating to securities registered on behalf of the Holders and all other registration expenses shall be borne by the Holders of such securities pro rata on the basis of the number of shares so registered or proposed to be so registered. 5.6 Registration Procedures. In the case of each registration effected by the Company pursuant to this Agreement, the Company will keep each Holder advised in writing as to the initiation of such registration and as to the completion thereof. The Company will: (a) Prepare and file with the Commission a registration statement and such amendments and supplements as may be necessary and use commercially reasonable efforts to cause such registration statement to become and remain effective for at least 90 days or until the distribution described in the registration statement has been completed, whichever first occurs; and (b) Furnish to the Holders participating in such registration and to the underwriters of the securities being registered such reasonable number of copies of the registration statement, preliminary prospectus, final prospectus and such other documents as such underwriters may reasonably request in order to facilitate the public offering of such securities. 5.7 Indemnification. (a) The Company will indemnify each Holder, each of its officers and directors and partners, and each person controlling such Holder within the meaning of Section 15 of the Securities Act, with respect to which registration has been effected pursuant to this Agreement, against all expenses, claims, losses, damages or liabilities (or actions in respect thereof), including any of the foregoing incurred in settlement of any litigation, commenced or threatened, arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any registration statement, prospectus, offering circular or other document, or any amendment or supplement thereto, incident to any such registration, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, or any violation by the Company of the Securities Act, the Exchange Act, state securities laws or any rule or regulation promulgated under such laws applicable to the Company in connection with any such registration, and the Company will reimburse each such Holder, each of its officers and directors, and each person controlling such Holder, for any legal and any other expenses reasonably incurred, as such expenses are incurred, in connection with investigating, preparing or defending any such claim, loss, damage, liability or action, provided that the Company will not be liable in any such case to the extent that any such claim, loss, damage, liability or expense arises out of or is based on any untrue statement or omission or alleged untrue statement or omission, made in reliance upon and in conformity with written information furnished to the Company by an instrument duly executed by such Holder or controlling person, and stated to be specifically for use therein; provided, however, that the foregoing indemnity agreement is subject to the condition that, insofar as it relates to any such untrue statement, alleged untrue statement, omission or alleged omission made in a preliminary prospectus on file with the Commission at the time the registration statement becomes effective or the amended prospectus is filed with the Commission pursuant to Rule 424(b) (the "Final Prospectus"), such indemnity agreement shall not inure to the benefit of any Holder, if a copy of the Final Prospectus was not furnished to the person asserting the loss, liability, claim or damage at or prior to the time such action is required by the Securities Act, and if the Final Prospectus would have cured the defect giving rise to the loss, liability, claim or damage. (b) Each Holder will, if Registrable Securities held by such Holder are included in the securities as to which such registration is being effected, indemnify the Company, each of its directors and officers, other holders of the Company's securities covered by such registration statement, each person who controls the Company within the meaning of Section 15 of the Securities Act, and each other such Holder, each of its officers and directors and each person controlling such Holder within the meaning of Section 15 of the Securities Act, against all claims, losses, 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, or any violation by the Holder of the Securities Act, the Exchange Act, state securities laws or any rule or regulation promulgated under such laws applicable to the Holder, and will reimburse the Company, such other Holders, such directors, officers, persons, underwriters or control persons for any legal or any other expenses reasonably incurred, as such expenses are incurred, in connection with investigating or defending any such claim, loss, damage, liability or action, but in the case of the Company or the other Holders or their officers, directors or controlling persons, 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 information furnished to the Company by such Holder. Notwithstanding the foregoing, the liability of each Holder under this subsection 5.7(b) shall be limited in an amount equal to the initial public offering price of the shares sold by such Holder, unless such liability arises out of or is based on willful misconduct or fraud by such Holder. (c) Each party entitled to indemnification under this Section 5.7 (the "Indemnified Party") shall give notice to the party required to provide indemnification (the "Indemnifying Party") promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of 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 unreasonably be withheld), and the Indemnified Party may participate in such defense at such party's expense, and provided further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Agreement unless the failure to give such notice is materially prejudicial to an Indemnifying Party's ability to defend such action and provided further, that the Indemnifying Party shall not assume the defense for matters as to which there is a conflict of interest or there are separate and different defenses. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party (whose consent shall not be unreasonably withheld), 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. (d) Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained on the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control. 5.8 Information by Holder. The Holder or Holders of Registrable Securities included in any registration shall furnish to the Company such information regarding such Holder or Holders, the Registrable Securities held by them 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 referred to in this Agreement. 5.9 Rule 144 Reporting. With a view to making available the benefits of certain rules and regulations of the Commission which may at any time permit the sale of the Restricted Securities to the public without registration, after such time as a public market exists for the Common Stock of the Company, the Company agrees to use commercially reasonable efforts to: (a) Make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times after the effective date that the Company becomes subject to the reporting requirements of the Securities Act or the Exchange Act; (b) File with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements); and (c) So long as a Holder owns any Restricted Securities, to furnish to the Holder forthwith upon request a written statement by the Company as to its compliance with the reporting requirements of said Rule 144 (at any time after 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), a copy of the most recent annual or quarterly report of the Company, and such other reports and documents of the Company and other information in the possession of or reasonably obtainable by the Company as the Holder may reasonably request in availing itself of any rule or regulation of the Commission allowing the Holder to sell any such securities without registration. 5.10 Termination of Registration Rights. The rights granted pursuant to Sections 5.1, 5.2 and 5.3 of this Agreement shall terminate as to any Holder upon the earlier of (i) the date four years after the effective date of the Company's initial public offering and (ii) the date such Holder is able to immediately sell all shares of Registrable Securities held or entitled to be held upon conversion by such Holder under Rule 144 during any 90-day period. 6. Financial Information Rights. (a) The Company will provide the following documents to each Purchaser who continues to hold at least the lesser of (A) 10,000,000 shares of Preferred Stock and/or Conversion Stock (as adjusted for recapitalizations, stock combinations, stock dividends, stock splits and the like) or (B) fifty percent (50%) of the shares of Preferred Stock and/or Conversion Stock initially acquired by such Purchaser pursuant to the Purchase Agreement (as adjusted for recapitalizations, stock combinations, stock dividends, stock splits and the like): (i) As soon as practicable after the end of each fiscal year, and in any event within 90 days after the end of each such fiscal year, consolidated balance sheets of the Company and its subsidiaries, if any, as of the end of such fiscal year, and consolidated statements of operations and consolidated statements of cash flows and stockholders' equity of the Company and its subsidiaries, if any, for such year, prepared in accordance with generally accepted accounting principles and setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and audited by independent public accountants of national standing selected by the Company, and a capitalization table in reasonable detail for such fiscal year; (ii) As soon as practicable after the end of the first, second and third quarterly accounting periods in each fiscal year of the Company and in any event within 60 days thereafter, a consolidated balance sheet of the Company and its subsidiaries, if any, as of the end of each such quarterly period, and consolidated statements of operations and consolidated statements of cash flows of the Company and its subsidiaries, if any, for such period and for the current fiscal year to date, prepared in accordance with generally accepted accounting principles (other than accompanying notes), subject to changes resulting from year-end audit adjustments, in reasonable detail and signed by the principal financial or accounting officer of the Company, and a capitalization table in reasonable detail for such quarterly period, and such other documents generally distributed or made available to the Company's stockholders; provided, however, that the Company shall not be obligated to provide information which it deems in good faith to be proprietary or confidential. (iii) Such other documents generally distributed or made available to the Company's stockholders; provided, however, that the Company shall not be obligated to provide information which it deems in good faith to be proprietary or confidential. (b) For purposes of determining the minimum holdings pursuant to this Section 6, any Purchaser which is a partnership or limited liability company shall be deemed to hold any Preferred Stock originally purchased by such Purchaser and subsequently distributed to constituent partners or members of such Purchaser, but which have not been resold by such partners or members. If the partnership or limited liability company is still in existence, the Company may satisfy any obligation to distribute reports to individual partners of the partnership or members of a limited liability company by delivering a single copy of each report to the partnership or limited liability company as agent for the constituent partners or members. (c) Each Purchaser or transferee of rights under this Section 6 acknowledges and agrees that any information obtained pursuant to this Section 6 which may be considered nonpublic information will be maintained in confidence by such Purchaser or transferee and will not be utilized by such Purchaser or transferee in connection with purchases or sales of the Company's securities except in compliance with applicable state and Federal securities laws. (d) The covenants of the Company set forth in this Section 6 shall terminate and be of no further force or effect upon the earliest to occur of (i) the closing of a Qualified Initial Public Offering; or (ii) the sale of all or substantially all of the assets of the Company or the acquisition of the Company by another entity by means of merger or consolidation resulting in the exchange of the outstanding shares of the Company for securities or consideration issued, or caused to be issued, by the acquiring corporation or its subsidiary, unless the stockholders of the Company hold at least 50% of the voting power of the surviving corporation in such a transaction. 7. Lock-Up Agreement. Each Purchaser, Holder and transferee hereby agrees that, in connection with the first two registrations of the offering of any securities of the Company under the Securities Act for the account of the Company, if so requested by the Company or any representative of the underwriters (the "Managing Underwriter"), such Purchaser, Holder or transferee shall not sell or otherwise transfer any securities of the Company during the period specified by the Company's Board of Directors at the request of the Managing Underwriter (the "Market Standoff Period"), with such period not to exceed 180 days following the effective date of a registration statement of the Company filed under the Securities Act. The Company may impose stop-transfer instructions with respect to securities subject to the foregoing restrictions until the end of such Market Standoff Period. The Company shall use commercially reasonable efforts to place similar contractual lock-up restrictions on all capital stock issued now or hereafter to officers, directors, employees and consultants of the Company and holders of registration rights with respect to capital stock of the Company. 8. Right of First Refusal. (a) The Company hereby grants to each Purchaser the right of first refusal to purchase its Pro Rata Share of New Securities (as defined in this Section 8) which the Company may, from time to time, propose to sell and issue. A "Pro Rata Share," for purposes of this right of first refusal, equals the proportion that the total number of shares of Common Stock then held by such Purchaser plus the number of shares of Common Stock issuable upon conversion of the Preferred Stock then held by such Purchaser bears to the sum of the total number of shares of Common Stock then outstanding plus the number of shares of Common Stock issuable upon exercise or conversion of all then outstanding securities exercisable for or convertible into, directly or indirectly, Common Stock. (b) Except as set forth below, "New Securities" shall mean any shares of capital stock of the Company, including Common Stock and any series of preferred stock, whether now authorized or not, and rights, options or warrants to purchase said shares of Common Stock or preferred stock, and securities of any type whatsoever that are, or may become, convertible into or exchangeable for said shares of Common Stock or preferred stock. Notwithstanding the foregoing, "New Securities" does not include stock issued and issuable: (i) upon conversion of shares of Preferred Stock; (ii) to an employee, consultant or director pursuant to stock option, stock grant, stock purchase or similar plans and arrangements approved by the Board of Directors; (iii) to an equipment lessor, bank, financial institution or similar entity in a transaction approved by the Board of Directors, the principal purpose of which is other than the raising of capital; (iv) as a dividend or other distribution; (v) in a Qualified Initial Public Offering; (vi) in a merger or acquisition that is approved by the Board of Directors; (vii) pursuant to any transaction approved by the Board of Directors primarily for the purpose of (A) a joint venture, technology licensing or research and development activity, (B) distribution or manufacture of the Company's products or services, or (C) any other transaction involving corporate partners that is primarily for purposes other than raising capital; (viii) if the holders of a majority of the then outstanding Registrable Securities agree in writing that such shares shall not constitute New Securities; or (ix) upon exercise or conversion of securities with respect to which the Purchasers previously had an opportunity to exercise the right of first refusal pursuant to this Section 8. (c) In the event the Company proposes to undertake an issuance of New Securities, it shall give each Purchaser written notice of its intention, describing the amount and type of New Securities, and the price and terms upon which the Company proposes to issue the same. Each Purchaser shall have ten days from the date of receipt of any such notice to agree to purchase up to its respective Pro Rata Share of such New Securities for the price and upon the terms specified in the notice by giving written notice to the Company and stating therein the quantity of New Securities to be purchased. (d) Beginning ten days after the notice given pursuant to Section 8(c) above, the Company shall have 180 days to sell the New Securities not elected or eligible to be purchased by Purchasers at the price and upon the terms no more favorable to the purchasers of such securities than specified in the Company's notice. In the event the Company has not sold all of the New Securities within said 180-day period, the Company shall not thereafter issue or sell any New Securities without first offering such securities in the manner provided above. (e) The provisions of this Section 8 will terminate and be of no further force or effect upon the earlier to occur of: (i) the closing of a Qualified Initial Public Offering, or (ii) the sale of all or substantially all of the assets of the Company or the acquisition of the Company by another entity by means of merger or consolidation resulting in the exchange of the outstanding shares of the Company for securities or consideration issued, or caused to be issued, by the acquiring corporation or its subsidiary, unless the stockholders of the Company hold at least 50% of the voting power of the surviving corporation in such a transaction. 9. Employment, Confidential Information and Invention Assignment Agreements. The Company will maintain a policy requiring each person now or hereafter employed by it or any subsidiary with access to confidential information to enter into an Employment, Confidential Information and Invention Assignment Agreement substantially in a form approved by the Board of Directors. 10. Transfer of Rights. The rights granted under Sections 5, 6 and 8 of this Agreement may be assigned to any transferee or assignee, other than a competitor or potential competitor of the Company (as determined in good faith by the Company's Board of Directors) in connection with any transfer or assignment of Registrable Securities by the Holder, provided that: (i) such transfer is otherwise effected in accordance with applicable securities laws and the terms of this Agreement; (ii) such assignee or transferee acquires at least the lesser of (A) 10,000,000 shares (as adjusted for stock splits, stock dividends, stock combinations and the like) of Registrable Securities (including Preferred Stock convertible into Registrable Securities) or (B) fifty percent (50%) of the shares of Registrable Securities (as adjusted for stock splits, stock dividends, stock combinations and the like) initially acquired by the transferring Holder pursuant to the Purchase Agreement (including Preferred Stock convertible into Registrable Securities), (iii) written notice is promptly given to the Company; and (iv) such transferee or assignee agrees to be bound by the provisions of this Agreement. Notwithstanding the foregoing, the rights granted to the Purchasers hereunder may be assigned without compliance with item (ii) above to any constituent partner or member of a Purchaser which is a partnership or limited liability company, or to an affiliate (as such term is defined in Rule 405 of the Securities Act) of a Purchaser which is a corporation, partnership or limited liability company. 11. Amendment. Except as otherwise provided herein, additional parties may be added to this Agreement, any provision of this Agreement may be amended or the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Holders of a majority of the Registrable Securities then outstanding. Any amendment or waiver effected in accordance with Section 5.4 or Section 11, as applicable, shall be binding upon each Purchaser, Holder of Registrable Securities at the time outstanding, each future holder of any of such securities, and the Company. 12. Governing Law. This Agreement shall be governed in all respects by the internal laws of the State of California without regard to conflict of laws provisions. 13. Entire Agreement. This Agreement constitutes the full and entire understanding and Agreement among the parties regarding the matters set forth herein. 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. 14. Notices, etc. All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by First Class, registered or certified mail, postage prepaid, or otherwise delivered by facsimile transmission, by hand or by messenger, addressed: (a) if to the Purchaser, to; Rational Software Corporation 18880 Homestead Road Cupertino, CA 95014 Attn: Tim Brennan (b) if to the Company, to: CataPULSE Inc. 18880 Homestead Road Cupertino, CA 95014 Attn: Paul D. Levy or at such other address as the Company shall have furnished to the Purchaser, with a copy to: Wilson Sonsini Goodrich & Rosati 650 Page Mill Road Palo Alto, California 94304-1050 Attn: Katharine A. Martin, Esq. Fax: (650) 493-6811 Each such notice or other communication shall for all purposes of this Agreement be treated as effective or having been given when delivered if delivered personally, if sent by facsimile, the first business day after the date of confirmation that the facsimile has been successfully transmitted to the facsimile number for the party notified, or, if sent by mail, at the earlier of its receipt or 72 hours after the same has been deposited in a regularly maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid. 15. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original and all of which together shall constitute one instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first set forth above. "COMPANY" "PURCHASER" CATAPULSE INC. RATIONAL SOFTWARE CORPORATION By: /s/Paul D. Levy By: /s/ Timothy A. Brennan Name: Paul D. Levy Name: Timothy A. Brennan Title: Chairman Title: CFO [Signature Page to Investor Rights Agreement (..continued) TABLE OF CONTENTS (continued) Page

CATAPULSE INC. AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT December 16, 1999 TABLE OF CONTENTS Page 1. Certain Definitions 2 2. Restrictions on Transferability 4 3. Restrictive Legend 4 4. Notice of Proposed Transfers 5 5. Registration 6 5.1 Requested Registration 6 5.2 Company Registration 8 5.3 Registration on Form S-3 9 5.4 Subsequent Registration Rights 10 5.5 Expenses of Registration 10 5.6 Registration Procedures 10 5.7 Indemnification 11 5.8 Information by Holder 13 5.9 Rule 144 Reporting 13 5.10 Termination of Registration Rights 13 6. Financial Information Rights 14 7. Lock-Up Agreement 15 8. Right of First Refusal 16 9. Employment, Confidential Information and Invention Assignment Agreements 18 10. Transfer of Rights 18 11. Amendment 19 12. Governing Law 19 13. Entire Agreement 19 14. Notices, etc 19 15. Counterparts 20 16. Aggregation of Stock 20 CATAPULSE INC. AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT This Amended and Restated Investor Rights Agreement (this "Agreement") is made effective as of December 16, 1999 by and among CataPULSE Inc., a Delaware corporation (the "Company"), the holder of the Company's Series A Preferred Stock ("Series A Preferred") and the purchasers of the Company's Series B Preferred Stock ("Series B Preferred") set forth on Exhibit A hereto (the "Purchasers"). RECITALS A. The Company has granted to the holders of the Series A Preferred (the "Existing Holders") registration and certain other rights under the Investor's Rights Agreement dated December 3, 1999 (the "Prior Agreement"). B. The Company and the Purchasers are parties to the Series B Preferred Stock Purchase Agreement dated December 16, 1999 (the "Purchase Agreement"), whereby the Company will sell, and the Purchasers will buy, Series B Preferred Stock of the Company. C. The obligations of the Company and the Purchasers under the Purchase Agreement are conditioned, among other things, upon the execution and delivery of this Agreement by the Company, the Purchasers and the Existing Holders. D. The Company desires to grant to the Purchasers, and the Purchasers desire to be granted, the rights created herein. AGREEMENT NOW, THEREFORE, in consideration of the mutual promises and covenants herein, the receipt and sufficiency are hereby acknowledged, the Existing Holders agree that the Prior Agreement shall be superceded, and the parties hereto agree as follows: 1. Certain Definitions. As used in this Agreement, the following terms shall have the following respective meanings: "Commission" means the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act. "Common Stock" means the common stock of the Company, par value $.001 per share. "Conversion Stock" means the Company's Common Stock issued or issuable pursuant to conversion of the Preferred Stock. "Exchange Act" means the Securities Exchange Act of 1934, as amended, or any similar federal rule or statute and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time. "Holder" means (i) any purchaser holding Registrable Securities and (ii) any person holding Registrable Securities to whom the rights under this Agreement have been transferred in accordance with Section 11 hereof. "Initiating Holders" means any Holder or Holders who, in the aggregate, hold not less than 30% of the Registrable Securities then outstanding. "Preferred Stock" shall mean the Series A Preferred and the Series B Preferred. "Qualified Initial Public Offering" shall mean the Company's initial public offering pursuant to an effective registration statement under the Securities Act covering the offer and sale of the Company's Common Stock to the public with gross proceeds to the Company of not less than $20,000,000. "Registrable Securities" means (i) the Conversion Stock and (ii) any Common Stock of the Company issued or issuable in respect of any of the foregoing upon any stock split, stock dividend, recapitalization or similar event; provided, however, that securities shall only be treated as Registrable Securities if and so long as (x) they have not been registered or sold to or through a broker or dealer or underwriter in a public distribution or a public securities transaction and (y) the registration rights with respect to such securities have not terminated pursuant to Section 5.10. The terms "register," "registered" and "registration" refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement. "Registration Expenses" shall mean all expenses, except as otherwise stated below, incurred by the Company in complying with Sections 5.1, 5.2 and 5.3 hereof, including without limitation, all registration, qualification and filing fees, printing expenses, escrow fees, fees and disbursements of counsel for the Company, blue sky fees and expenses, the expense of any special audits incident to or required by any such registration (but excluding the compensation of regular employees of the Company which shall be paid in any event by the Company). Registration Expenses shall also include the fees and disbursements for one special counsel to the selling stockholders, not to exceed $15,000 per registration. Registration Expenses shall specifically exclude Seller's Expenses. "Restricted Securities" shall mean the securities of the Company required to bear the legends set forth in Section 3 hereof. "Rule 144" and "Rule 145" shall mean Rules 144 and 145, respectively, promulgated under the Securities Act, or any similar federal rules thereunder, all as the same shall be in effect at the time. "Securities Act" shall mean the Securities Act of 1933, as amended, or any similar federal rule or statute and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time. "Selling Expenses" shall mean all underwriting discounts, selling commissions and stock transfer taxes applicable to the securities registered by the Holders and, except as set forth in the definition of Registration Expenses above, all fees and disbursements of counsel for any Holder. 2. Restrictions on Transferability. The Preferred Stock, the Conversion Stock and any other securities issued in respect of such stock upon any stock split, stock dividend, recapitalization, merger or similar event, shall not be sold, assigned, transferred or pledged except upon the conditions specified in this Agreement, which conditions are intended to ensure compliance with the provisions of the Securities Act. Each Holder or transferee will cause any proposed purchaser, assignee, transferee or pledgee of any such shares held by the Holder or transferee to agree to take and hold such securities subject to the restrictions and upon the conditions specified in this Agreement. 3. Restrictive Legend. Each certificate representing the Preferred Stock, the Conversion Stock or any other securities issued in respect of such stock upon any stock split, stock dividend, recapitalization, merger or similar event, shall (unless otherwise permitted by the provisions of Section 4 below) be stamped or otherwise imprinted with legends in substantially the following form (in addition to any legends required by agreement or by applicable state securities laws): THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). SUCH SECURITIES MAY NOT BE TRANSFERRED UNLESS A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO SUCH TRANSFER OR IN THE OPINION OF COUNSEL FOR THE COMPANY, SUCH TRANSFER MAY BE MADE PURSUANT TO RULE 144 OR REGISTRATION UNDER THE ACT IS OTHERWISE UNNECESSARY IN ORDER FOR SUCH TRANSFER TO COMPLY WITH THE ACT. THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A LOCK-UP PERIOD OF UP TO 180 DAYS FOLLOWING THE EFFECTIVE DATE OF A REGISTRATION STATEMENT OF THE COMPANY FILED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AS SET FORTH IN AN AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH LOCK-UP PERIOD IS BINDING ON TRANSFEREES OF THESE SHARES. Each Holder consents to the Company making a notation on its records and giving stop transfer instructions to any transfer agent of its capital stock in order to implement the restrictions on transfer established in this Agreement. 4. Notice of Proposed Transfers. The holder of each certificate representing Restricted Securities by acceptance thereof agrees to comply in all respects with the provisions of this Section 4. Without in any way limiting the immediately preceding sentence, no sale, assignment, transfer or pledge of Restricted Securities shall be made by any holder thereof to any person unless such person shall first agree in writing to be bound by the restrictions of this Agreement. Prior to any proposed sale, assignment, transfer or pledge of any Restricted Securities, unless there is in effect a registration statement under the Securities Act covering the proposed transfer, the holder thereof shall give written notice to the Company of such holder's intention to effect such transfer, sale, assignment or pledge. Each such notice shall describe the manner and circumstances of the proposed transfer, sale, assignment or pledge in sufficient detail, and, if requested by the Company, the holder shall also provide, at such holder's expense, either (i) a written opinion of legal counsel who shall be, and whose legal opinion shall be, reasonably satisfactory to the Company addressed to the Company, to the effect that the proposed transfer of the Restricted Securities may be effected without registration under the Securities Act, or (ii) a "no action" letter from the Commission to the effect that the transfer of such securities without registration will not result in a recommendation by the staff of the Commission that action be taken with respect thereto, whereupon the holder of such Restricted Securities shall be entitled to transfer such Restricted Securities in accordance with the terms of the notice delivered by the holder to the Company; provided, however, that the Company shall not request an opinion of counsel or "no action" letter with respect to (i) a transfer not involving a change in beneficial ownership, (ii) a transaction involving the distribution without consideration of Restricted Securities by the holder to its constituent partners or members in proportion to their ownership interests in the holder, or (iii) a transaction involving the transfer without consideration of Restricted Securities by an individual holder during such holder's lifetime by way of gift or on death by will or intestacy. Each certificate evidencing the Restricted Securities transferred as above provided shall bear, except if such transfer is made pursuant to Rule 144, the appropriate restrictive legend set forth in Section 3 above, except that such certificate shall not bear such restrictive legend if in the opinion of counsel for such holder and counsel for the Company such legend is not required in order to establish compliance with any provision of the Securities Act. Notwithstanding the foregoing, each holder of Restricted Securities agrees that it will not request that a transfer of the Restricted Securities be made or that the legend set forth in Section 3 be removed from the certificate representing the Restricted Securities, solely in reliance on Rule 144(k), if as a result thereof the Company would be rendered subject to the reporting requirements of the Exchange Act. 5. Registration. 5.1 Requested Registration. (a) Request for Registration. In case the Company shall receive from Initiating Holders a written request that the Company effect any registration with respect to shares of Registrable Securities, the Company will: (i) promptly give written notice of the proposed registration to all other Holders; and (ii) as soon as practicable, use commercially reasonable efforts to effect such registration as part of a firm commitment underwritten public offering with underwriters reasonably acceptable to the Initiating Holders and the Company (including, without limitation, appropriate qualification under applicable state securities laws and appropriate compliance with applicable regulations issued under the Securities Act and any other governmental requirements or regulations) as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any Holder or Holders joining in such request by delivering a written notice to such effect to the Company within twenty days after the date of such written notice from the Company. Notwithstanding the foregoing, the Company shall not be obligated to take any action to effect or complete any such registration pursuant to this Section 5.1: (A) Prior to the earlier of (i) six months after the effective date of the Company's first registered public offering of its Common Stock or (ii) January 1, 2003; (B) Unless the requested registration would have an aggregate offering price of all Registrable Securities sought to be registered by all Holders exceeding $10,000,000; (C) Following the filing of, and for 180 days immediately following the effective date of, any registration statement pertaining to securities of the Company (other than a registration of securities in a Rule 145 transaction or with respect to an employee benefit plan), provided that the Company is actively employing in good faith commercially reasonable efforts to cause such registration statement to become effective; (D) After the Company has effected one registration pursuant to this Section 5.1(a); (E) If the Initiating Holders are able to request a registration on Form S-3 pursuant to Section 5.3 hereof; (F) If the Company shall furnish to the Initiating Holders a certificate signed by the President of the Company (i) giving notice of its bona fide intention to effect the filing of a registration statement with the Commission, or (ii) stating that in the good faith judgment of the Board of Directors it would be seriously detrimental to the Company or its stockholders for a registration statement to be filed in the near future. In such case, the Company's obligation to use its commercially reasonable efforts to register, qualify or comply under this Section 5.1(a) shall be deferred one or more times for a period not to exceed 120 days from the receipt of the request to file such registration by such Initiating Holder or Holders, provided that the Company may not exercise this deferral right more than once per twelve-month period. Subject to the foregoing clauses (A) through (F), the Company shall file a registration statement covering the Registrable Securities so requested to be registered as soon as practicable after receipt of the request or requests of the Initiating Holders. (b) Underwriting. In the event of a registration pursuant to Section 5.1, the Company shall advise the Holders as part of the notice given pursuant to Section 5.1(a)(i) that the right of any Holder to registration pursuant to Section 5.1 shall be conditioned upon such Holder's participation in the underwriting arrangements required by this Section 5.1, and the inclusion of such Holder's Registrable Securities in the underwriting to the extent requested shall be limited to the extent provided herein. The Company shall, together with all Holders proposing to distribute their securities through such underwriting, enter into an underwriting agreement in customary form with the managing underwriter selected for such underwriting by a majority in interest of the Initiating Holders, but subject to the Company's reasonable approval. Notwithstanding any other provision of this Section 5.1, if the managing underwriter determines that marketing factors require a limitation of the number of shares to be underwritten, the managing underwriter may limit the Registrable Securities to be included in such registration (i) in the case of the Company's initial public offering, to zero, and (ii) in the case of any other offering, to an amount no less than 30% of all shares requested to be included in such offering. The Company shall so advise all Holders requesting to be included in the registration and underwriting, and the number of shares of Registrable Securities that may be included in the registration and underwriting shall be allocated among all Holders requesting to be included in the registration and underwriting in proportion, as nearly as practicable, to the respective amounts of Registrable Securities held by them at the time of filing the registration statement. No Registrable Securities excluded from the underwriting by reason of the underwriter's marketing limitation shall be included in such registration. To facilitate the allocation of shares in accordance with the above provisions, the Company or the underwriters may round the number of shares allocated to any Holder to the nearest 100 shares. If any Holder of Registrable Securities disapproves of the terms of the underwriting, such person may elect to withdraw therefrom by written notice to the Company. 5.2 Company Registration. (a) Notice of Registration. If at any time or from time to time the Company shall determine to register any of its equity securities, either for its own account or the account of a Holder or other holders, other than (i) a registration relating solely to employee benefit plans, (ii) a registration relating solely to a Rule 145 transaction, or (iii) a registration in which the only equity security being registered is capital stock issuable upon conversion of convertible debt securities which are also being registered, the Company will: (i) promptly give to each Holder written notice thereof; and (ii) include in such registration (and any related qualifications including compliance with Blue Sky laws), and in any underwriting involved therein, all the Registrable Securities specified in a written request or requests, made within ten days after the date of such written notice from the Company, by any Holder. (b) Underwriting. If the registration of which the Company gives notice is for a registered public offering involving an underwriting, the Company shall so advise the Holders as a part of the written notice given pursuant to Section 5.2(a)(i). In such event, the right of any Holder to registration pursuant to Section 5.2 shall be conditioned upon such Holder's participation in such underwriting and the inclusion of Registrable Securities in the underwriting shall be limited to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall (together with the Company and the other Holders distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the managing underwriter selected for such underwriting by the Company. Notwithstanding any other provision of this Section 5.2, if the managing underwriter determines that marketing factors require a limitation of the number of shares to be underwritten, the managing underwriter may limit the Registrable Securities to be included in such registration (i) in the case of the Company's initial public offering, to zero, and (ii) in the case of any other offering, to an amount no less than 30% of all shares to be included in such offering. The Company shall so advise all Holders requesting to be included in the registration and underwriting, and the number of shares of Registrable Securities that may be included in the registration and underwriting shall be allocated among all the Holders requesting to be included in the registration and underwriting in proportion, as nearly as practicable, to the respective amounts of Registrable Securities held by them at the time of filing the registration statement. To facilitate the allocation of shares in accordance with the above provisions, the Company or the underwriters may round the number of shares allocated to any Holder to the nearest 100 shares. If any Holder disapproves of the terms of any such underwriting, such person may elect to withdraw therefrom by written notice to the Company. (c) Right to Terminate Registration. The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 5.2 prior to the effectiveness of such registration whether or not any Holder has elected to include securities in such registration. 5.3 Registration on Form S-3. (a) Request for Registration. In case the Company shall receive from Initiating Holders a written request that the Company file a registration statement on Form S-3 (or any successor form to Form S-3) for a public offering of shares of the Registrable Securities the aggregate price to the public of which, net of underwriting discounts and commissions, would exceed $1,000,000, and the Company is a registrant entitled to use Form S-3 to register the Registrable Securities for such an offering, the Company shall use commercially reasonable efforts to cause such Registrable Securities to be registered for the offering on such form and to cause such Registrable Securities to be qualified in such jurisdictions as such Holder or Holders may reasonably request; provided, however, that the Company shall not be required to effect more than one registration pursuant to this Section 5.3 in any twelve-month period. If such offer is to be an underwritten offer, the underwriters must be acceptable to the Company. The Company shall inform the other Holders of the proposed registration and offer them the opportunity to participate. In the event the registration is proposed to be part of a firm commitment underwritten public offering, the substantive provisions of Section 5.1(b) shall be applicable to each such registration initiated under this Section 5.3. (b) Notwithstanding the foregoing, the Company shall not be obligated to take any action pursuant to this Section 5.3: (i) Following the filing of, and for 180 days immediately following the effective date of, any registration statement pertaining to securities of the Company (other than a registration of securities in a Rule 145 transaction or with respect to an employee benefit plan), provided that the Company is actively employing in good faith commercially reasonable efforts to cause such registration statement to become effective; (ii) Within twelve months after the Company has effected such a registration pursuant to this Section 5.3(a), and such registration has been declared or ordered effective; or (iii) If the Company shall furnish to the Initiating Holders a certificate signed by the President of the Company (i) giving notice of its bonafide intention to effect the filing of a registration statement with the Commission, or (ii) stating that, in the good faith judgment of the Board of Directors, it would be seriously detrimental to the Company or its stockholders for a registration statement to be filed in the near future, then the Company's obligation to use its commercially reasonable efforts to file a registration statement shall be deferred one or more times for a period not to exceed 120 days from the receipt of the request to file such registration by such Initiating Holder or Holders, provided that the Company may not exercise this deferral right more than once per twelve-month period. 5.4 Subsequent Registration Rights. (a) Without the consent of any holder of Registrable Securities hereunder, the Company may grant to any holder of securities of the Company registration rights inferior to those granted hereunder. (b) The Company shall not enter into any agreement granting any holder or prospective holder of any securities of the Company registration rights superior to or on a pari passu basis with the rights granted the Purchasers hereunder without the written consent of the holders of 75% of the Registrable Securities. 5.5 Expenses of Registration. All Registration Expenses incurred in connection with (i) two registrations pursuant to Section 5.1, (ii) all registrations pursuant to Section 5.2, and (iii) all registrations pursuant to Section 5.3, shall be borne by the Company. Notwithstanding the foregoing, in the event that Initiating Holders cause the Company to begin a registration pursuant to Section 5.1, and the request for such registration is subsequently withdrawn by the Initiating Holders or such registration is not completed due to failure to meet the net proceeds requirement set forth in such section or is otherwise not successfully completed due to no fault of the Company, all Holders shall be deemed to have forfeited their right to one registration under Section 5.1 unless the Initiating Holders pay for, or reimburse the Company for, the Registration Expenses incurred in connection with such withdrawn or incomplete registration. Unless otherwise stated, all Selling Expenses relating to securities registered on behalf of the Holders and all other registration expenses shall be borne by the Holders of such securities pro rata on the basis of the number of shares so registered or proposed to be so registered. 5.6 Registration Procedures. In the case of each registration effected by the Company pursuant to this Agreement, the Company will keep each Holder advised in writing as to the initiation of such registration and as to the completion thereof. The Company will: (a) prepare and file with the Commission a registration statement and such amendments and supplements as may be necessary and use commercially reasonable efforts to cause such registration statement to become and remain effective for at least 90 days or until the distribution described in the registration statement has been completed, whichever first occurs; (b) furnish to the Holders participating in such registration and to the underwriters of the securities being registered such reasonable number of copies of the registration statement, preliminary prospectus, final prospectus and such other documents as such underwriters may reasonably request in order to facilitate the public offering of such securities; (c) use all reasonable efforts to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders, provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions; (d) 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; (e) 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 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; (f) cause all such Registrable Securities registered pursuant hereunder to be listed on each securities exchange on which similar securities issued by the Company are then listed; and (g) provide a transfer agent and registrar for all Registrable Securities registered pursuant hereunder and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration. 5.7 Indemnification. (a) The Company will indemnify each Holder, each of its officers and directors and partners, and each person controlling such Holder within the meaning of Section 15 of the Securities Act, with respect to which registration has been effected pursuant to this Agreement, against all expenses, claims, losses, damages or liabilities (or actions in respect thereof), including any of the foregoing incurred in settlement of any litigation, commenced or threatened, arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any registration statement, prospectus, offering circular or other document, or any amendment or supplement thereto, incident to any such registration, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, or any violation by the Company of the Securities Act, the Exchange Act, state securities laws or any rule or regulation promulgated under such laws applicable to the Company in connection with any such registration, and the Company will reimburse each such Holder, each of its officers and directors, and each person controlling such Holder, for any legal and any other expenses reasonably incurred, as such expenses are incurred, in connection with investigating, preparing or defending any such claim, loss, damage, liability or action, provided that the Company will not be liable in any such case to the extent that any such claim, loss, damage, liability or expense arises out of or is based on any untrue statement or omission or alleged untrue statement or omission, made in reliance upon and in conformity with written information furnished to the Company by an instrument duly executed by such Holder or controlling person, and stated to be specifically for use therein; provided, however, that the foregoing indemnity agreement is subject to the condition that, insofar as it relates to any such untrue statement, alleged untrue statement, omission or alleged omission made in a preliminary prospectus on file with the Commission at the time the registration statement becomes effective or the amended prospectus is filed with the Commission pursuant to Rule 424(b) (the "Final Prospectus"), such indemnity agreement shall not inure to the benefit of any Holder, if a copy of the Final Prospectus was not furnished to the person asserting the loss, liability, claim or damage at or prior to the time such action is required by the Securities Act, and if the Final Prospectus would have cured the defect giving rise to the loss, liability, claim or damage. (b) Each Holder will, if Registrable Securities held by such Holder are included in the securities as to which such registration is being effected, indemnify the Company, each of its directors and officers, other holders of the Company's securities covered by such registration statement, each person who controls the Company within the meaning of Section 15 of the Securities Act, and each other such Holder, each of its officers and directors and each person controlling such Holder within the meaning of Section 15 of the Securities Act, against all claims, losses, 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, or any violation by the Holder of the Securities Act, the Exchange Act, state securities laws or any rule or regulation promulgated under such laws applicable to the Holder, and will reimburse the Company, such other Holders, such directors, officers, persons, underwriters or control persons for any legal or any other expenses reasonably incurred, as such expenses are incurred, in connection with investigating or defending any such claim, loss, damage, liability or action, but in the case of the Company or the other Holders or their officers, directors or controlling persons, 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 information furnished to the Company by such Holder. Notwithstanding the foregoing, the liability of each Holder under this subsection 5.7(b) shall be limited in an amount equal to the initial public offering price of the shares sold by such Holder, unless such liability arises out of or is based on willful misconduct or fraud by such Holder. (c) Each party entitled to indemnification under this Section 5.7 (the "Indemnified Party") shall give notice to the party required to provide indemnification (the "Indemnifying Party") promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of 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 unreasonably be withheld), and the Indemnified Party may participate in such defense at such party's expense, and provided further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Agreement unless the failure to give such notice is materially prejudicial to an Indemnifying Party's ability to defend such action and provided further, that the Indemnifying Party shall not assume the defense for matters as to which there is a conflict of interest or there are separate and different defenses. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party (whose consent shall not be unreasonably withheld), 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. (d) Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained on the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control. 5.8 Information by Holder. The Holder or Holders of Registrable Securities included in any registration shall furnish to the Company such information regarding such Holder or Holders, the Registrable Securities held by them 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 referred to in this Agreement. 5.9 Rule 144 Reporting. With a view to making available the benefits of certain rules and regulations of the Commission which may at any time permit the sale of the Restricted Securities to the public without registration, after such time as a public market exists for the Common Stock of the Company, the Company agrees to use commercially reasonable efforts to: (a) Make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times after the effective date that the Company becomes subject to the reporting requirements of the Securities Act or the Exchange Act; (b) File with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements); and (c) So long as a Holder owns any Restricted Securities, to furnish to the Holder forthwith upon request a written statement by the Company as to its compliance with the reporting requirements of said Rule 144 (at any time after 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), a copy of the most recent annual or quarterly report of the Company, and such other reports and documents of the Company and other information in the possession of or reasonably obtainable by the Company as the Holder may reasonably request in availing itself of any rule or regulation of the Commission allowing the Holder to sell any such securities without registration. 5.10 Termination of Registration Rights. The rights granted pursuant to Sections 5.1, 5.2 and 5.3 of this Agreement shall terminate as to any Holder upon the earlier of (i) the date five years after the effective date of the Company's initial public offering and (ii) the date such Holder is able to immediately sell all shares of Registrable Securities held or entitled to be held upon conversion by such Holder under Rule 144 during any 90-day period. 6. Financial Information Rights. (a) The Company will provide the following documents to each Purchaser who continues to hold at least 10,000,000 shares of Preferred Stock and/or Conversion Stock (as adjusted for recapitalizations, stock combinations, stock dividends, stock splits and the like): (i) As soon as practicable after the end of each fiscal year, and in any event within 90 days after the end of each such fiscal year, consolidated balance sheets of the Company and its subsidiaries, if any, as of the end of such fiscal year, and consolidated statements of operations and consolidated statements of cash flows and stockholders' equity of the Company and its subsidiaries, if any, for such year, prepared in accordance with generally accepted accounting principles and setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and audited by independent public accountants selected by the Company, a capitalization table in reasonable detail for such fiscal year for the upcoming fiscal year to be in reasonable detail and broken down on a monthly basis; (ii) As soon as practicable after the end of the first, second and third quarterly accounting periods in each fiscal year of the Company and in any event within 60 days thereafter, a consolidated balance sheet of the Company and its subsidiaries, if any, as of the end of each such quarterly period, and consolidated statements of operations and consolidated statements of cash flows of the Company and its subsidiaries, if any, for such period and for the current fiscal year to date, prepared in accordance with generally accepted accounting principles (other than accompanying notes), subject to changes resulting from year-end audit adjustments, in reasonable detail and signed by the principal financial or accounting officer of the Company, and a capitalization table in reasonable detail for such quarterly period, and such other documents generally distributed or made available to the Company's stockholders; provided, however, that the Company shall not be obligated to provide information which it deems in good faith to be proprietary or confidential; (iii) As soon as practicable after the end of each month of each fiscal year of the Company and in any event within 60 days thereafter, a consolidated balance sheet of the Company and its subsidiaries, if any, as of the end of each such monthly period, and a consolidated statement of operations of the Company and its subsidiaries, if any, for such period and for the current fiscal year to date, prepared in accordance with generally accepted accounting principles (other than accompanying notes), subject to changes resulting from year-end audit adjustments; (iv) Such other documents generally distributed or made available to the Company's stockholders; provided, however, that the Company shall not be obligated to provide information which it deems in good faith to be proprietary or confidential. (b) For purposes of determining the minimum holdings pursuant to this Section 6, any Purchaser which is a partnership or limited liability company shall be deemed to hold any Preferred Stock originally purchased by such Purchaser and subsequently distributed to constituent partners or members of such Purchaser, but which have not been resold by such partners or members. If the partnership or limited liability company is still in existence, the Company may satisfy any obligation to distribute reports to individual partners of the partnership or members of a limited liability company by delivering a single copy of each report to the partnership or limited liability company as agent for the constituent partners or members. (c) Each Purchaser or transferee of rights under this Section 6 acknowledges and agrees that any information obtained pursuant to this Section 6 which may be considered nonpublic information will be maintained in confidence by such Purchaser or transferee and will not be utilized by such Purchaser or transferee in connection with purchases or sales of the Company's securities except in compliance with applicable state and Federal securities laws. (d) The covenants of the Company set forth in this Section 6 shall terminate and be of no further force or effect upon the earliest to occur of (i) the closing of a Qualified Initial Public Offering; or (ii) the sale of all or substantially all of the assets of the Company or the acquisition of the Company by another entity by means of merger or consolidation resulting in the exchange of the outstanding shares of the Company for securities or consideration issued, or caused to be issued, by the acquiring corporation or its subsidiary, unless the stockholders of the Company hold at least 50% of the voting power of the surviving corporation in such a transaction. 7. Lock-Up Agreement. Each Purchaser, Holder and transferee hereby agrees that, in connection with the initial public offering of the Common Stock of the Company under the Securities Act for the account of the Company, if so requested by the Company or any representative of the underwriters (the "Managing Underwriter"), such Purchaser, Holder or transferee shall not (i) lend, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock (whether such shares or any such securities are then owned by the Holder or are thereafter acquired), or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Common Stock, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common stock or such other securities, in cash or otherwise, during the period specified by the Company's Board of Directors at the request of the Managing Underwriter (the "Market Standoff Period"), with such period not to exceed 180 days following the effective date of a registration statement of the Company filed under the Securities Act pursuant to such offering. The Company may impose stop-transfer instructions with respect to securities subject to the foregoing restrictions until the end of such Market Standoff Period. The foregoing provisions of this Section 7 shall apply only to the Company's initial public offering of equity securities, shall not apply to the sale of any shares to an underwriter pursuant to an underwriting agreement, and shall only be applicable to the Holders if all officers and directors and greater than five percent (5%) shareholders of the Company enter into similar agreements. The underwriters in connection with the Company's initial public offering are intended third party beneficiaries of this Section 7 and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto. 8. Right of First Refusal. (a) The Company hereby grants to each Purchaser the right of first refusal to purchase its Pro Rata Share of New Securities (as defined in this Section 8) which the Company may, from time to time, propose to sell and issue. A "Pro Rata Share," for purposes of this right of first refusal, equals the proportion that the total number of shares of Common Stock then held by such Purchaser plus the number of shares of Common Stock issuable upon conversion of the Preferred Stock then held by such Purchaser bears to the sum of the total number of shares of Common Stock then outstanding plus the number of shares of Common Stock issuable upon exercise or conversion of all then outstanding securities exercisable for or convertible into, directly or indirectly, Common Stock. (b) Except as set forth below, "New Securities" shall mean any shares of capital stock of the Company, including Common Stock and any series of preferred stock, whether now authorized or not, and rights, options or warrants to purchase said shares of Common Stock or preferred stock, and securities of any type whatsoever that are, or may become, convertible into or exchangeable for said shares of Common Stock or preferred stock. Notwithstanding the foregoing, "New Securities" does not include stock issued and issuable: (i) upon conversion of shares of Preferred Stock; (ii) to an employee, consultant or director pursuant to stock option, stock grant, stock purchase or similar plans and arrangements approved by the Board of Directors; (iii) to an equipment lessor, bank, financial institution or similar entity in a transaction approved by the Board of Directors, the principal purpose of which is other than the raising of capital; (iv) as a dividend or other distribution; (v) in a Qualified Initial Public Offering; (vi) in a merger or acquisition that is approved by the Board of Directors; (vii) pursuant to any transaction approved by the Board of Directors primarily for the purpose of (A) a joint venture, technology licensing or research and development activity, (B) distribution or manufacture of the Company's products or services, or (C) any other transaction involving corporate partners that is primarily for purposes other than raising capital; (viii) if the holders of 75% of the then outstanding Registrable Securities agree in writing that such shares shall not constitute New Securities; or (ix) upon exercise or conversion of securities with respect to which the Purchasers previously had an opportunity to exercise the right of first refusal pursuant to this Section 8. (c) In the event the Company proposes to undertake an issuance of New Securities, it shall give each Purchaser written notice of its intention, describing the amount and type of New Securities, and the price and terms upon which the Company proposes to issue the same. Each Purchaser shall have ten days from the date of receipt of any such notice to agree to purchase up to its respective Pro Rata Share of such New Securities for the price and upon the terms specified in the notice by giving written notice to the Company and stating therein the quantity of New Securities to be purchased. (d) Beginning ten days after the notice given pursuant to Section 8(c) above, the Company shall have 180 days to sell the New Securities not elected or eligible to be purchased by Purchasers at the price and upon the terms no more favorable to the purchasers of such securities than specified in the Company's notice. In the event the Company has not sold all of the New Securities within said 180-day period, the Company shall not thereafter issue or sell any New Securities without first offering such securities in the manner provided above. (e) The provisions of this Section 8 will terminate and be of no further force or effect upon the earlier to occur of: (i) the closing of a Qualified Initial Public Offering, or (ii) the sale of all or substantially all of the assets of the Company or the acquisition of the Company by another entity by means of merger or consolidation resulting in the exchange of the outstanding shares of the Company for securities or consideration issued, or caused to be issued, by the acquiring corporation or its subsidiary, unless the stockholders of the Company hold at least 50% of the voting power of the surviving corporation in such a transaction. 9. Voting Agreement. 9.1 The Board of Directors of the Company shall consist of two (2) Series A Directors (as defined below), one (1) Series B Director (as defined below), one (1) Management Director (as defined below), and three (3) Outside Directors (as defined below). 9.2 Subject to the other provisions of this Agreement, at any election of directors of the Company, the members of the Board of Directors shall be nominated as follows: (i) for so long as pursuant to the Amended and Restated Certificate of Incorporation of the Company the holders of the Series A Preferred are entitled to elect 2 members of the Board of Directors, the holder of the Series A Preferred shall have the right to nominate two directors of the Company (each a "Series A Director"); (ii) for so long as pursuant to the Amended and Restated Certificate of Incorporation of the Company the holders of the Series B Preferred are entitled to elect 1 member of the Board of Directors, the holders of the Series B Preferred shall have the right to nominate one director of the Company (a "Series B Director"); (iii) the Chief Executive Officer of the Company shall be nominated as a director of the Company (the "Management Director"); and (iv) the remaining directors shall be nominated by the Series A Directors, Series B Director and Management Director (the "Outside Directors"); and, (v) if a renomination or vacancy occurs or exists on the Board of Directors at any time, including but not limited to a vacancy because of the death, disability, retirement, resignation or removal of any director for cause or otherwise, then the person(s) who nominated the director whose position has become vacant, shall have the sole right to nominate an individual to fill such vacancy. 9.3 Each Holder agrees that it will vote all its Shares in such manner as may be necessary to elect (and maintain in office), as members of the Board of Directors of the Company, all of the nominees selected pursuant to Section 9.1(b). The Company shall promptly give each of the Holders written notice of any change in composition of the Company's Board of Directors and of any proposal to remove or elect a new director. In any election of directors pursuant to this Agreement, the Holders shall vote their shares of Preferred Stock and Conversion Stock in a manner sufficient to elect to the Company's Board of Directors the individuals to be elected thereto as provided in this Agreement, utilizing cumulative voting, if and to the extent necessary to do so. 9.4 The members of the Board of Directors are subject to removal as follows: (a) Any Management Director may be removed from office only upon the determination of the Chief Executive Officer of the Company that the Management Director should no longer serve as such, and upon such determination, the Holders shall vote their voting stock to remove such Management Director. (b) Any Series A Director may be removed from office only upon the determination of the holders of the Series A Preferred that the Series A Director should no longer serve as such, and upon such determination, the Holders shall vote their voting stock to remove such Series A Director. (c) Any Series B Director may be removed from office only upon the determination of the holders of Series B Preferred that the Series B Director should no longer serve as such, and upon such determination, the Holders shall vote their voting stock to remove such Series B Director. (d) Any Outside Director may be removed from office only upon the determination of the Series A Directors, Series B Director and the Management Director that the Outside Director should no longer serve as such, and upon such determination, the Holders shall vote their voting stock to remove such Outside Director. (e) The provisions of this Section 9 shall be binding upon the successors in interest to any of the shares of Preferred Stock or Conversion Stock. The Company shall not permit the transfer of any of such shares on its books or issue new certificates representing any of such shares unless and until the person(s) to whom such shares are to be transferred shall have executed a written agreement, pursuant to which such person becomes a party to this Section 9, and agrees to be bound by all the provisions hereof as if such person was a party hereunder. 9.5 The terms of this Section 9 shall terminate and shall be of no further force and effect upon a Qualified Initial Public Offering. 10. Employment, Confidential Information and Invention Assignment Agreements. The Company will maintain a policy requiring each person now or hereafter employed by it or any subsidiary with access to confidential information to enter into an Employment, Confidential Information and Invention Assignment Agreement substantially in a form approved by the Board of Directors. 11. Transfer of Rights. The rights granted under Sections 5, 6 and 8 of this Agreement may be assigned to any transferee or assignee, other than a competitor or potential competitor of the Company (as determined in good faith by the Company's Board of Directors) in connection with any transfer or assignment of Registrable Securities by the Holder, provided that: (i) such transfer is otherwise effected in accordance with applicable securities laws and the terms of this Agreement; (ii) such assignee or transferee acquires at least the lesser of (A) 5,000,000 shares (as adjusted for stock splits, stock dividends, stock combinations and the like) of Registrable Securities (including Preferred Stock convertible into Registrable Securities) or (B) twenty percent (20%) of the shares of Registrable Securities (as adjusted for stock splits, stock dividends, stock combinations and the like) initially acquired by the transferring Holder pursuant to the Purchase Agreement (including Preferred Stock convertible into Registrable Securities), (iii) written notice is promptly given to the Company; and (iv) such transferee or assignee agrees to be bound by the provisions of this Agreement. Notwithstanding the foregoing, the rights granted to the Purchasers hereunder may be assigned without compliance with item (ii) above to any constituent partner or member of a Purchaser which is a partnership or limited liability company, or to an affiliate (as such term is defined in Rule 405 of the Securities Act) of a Purchaser which is a corporation, partnership or limited liability company. 12. Amendment. Except as otherwise provided herein, additional parties may be added to this Agreement, any provision of this Agreement may be amended or the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Holders of 75% of the Registrable Securities then outstanding. Any amendment or waiver effected in accordance with Section 5.4 or Section 11, as applicable, shall be binding upon each Purchaser, Holder of Registrable Securities at the time outstanding, each future holder of any of such securities, and the Company. 13. Governing Law. This Agreement shall be governed in all respects by the internal laws of the State of California without regard to conflict of laws provisions. 14. Entire Agreement. This Agreement constitutes the full and entire understanding and Agreement among the parties regarding the matters set forth herein. 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. 15. Notices, etc. All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by First Class, registered or certified mail, postage prepaid, or otherwise delivered by facsimile transmission, by hand or by messenger, addressed: (a) if to the Purchasers, to; (b) if to the Company, to: CataPULSE Inc. 18880 Homestead Road Cupertino, CA 95014 Attn: Paul D. Levy or at such other address as the Company shall have furnished to the Purchaser, with a copy to: Wilson Sonsini Goodrich & Rosati 650 Page Mill Road Palo Alto, California 94304-1050 Attn: Katharine A. Martin, Esq. Fax: (650) 493-6811 Each such notice or other communication shall for all purposes of this Agreement be treated as effective or having been given when delivered if delivered personally, if sent by facsimile, the first business day after the date of confirmation that the facsimile has been successfully transmitted to the facsimile number for the party notified, or, if sent by mail, at the earlier of its receipt or 72 hours after the same has been deposited in a regularly maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid. 16. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original and all of which together shall constitute one instrument. 17. Aggregation of Stock. All shares of the Preferred Stock held or acquired by affiliated entities or persons shall be aggregated together for the purpose of determining the availability of any rights of the holders thereof under this Agreement.

Termination of Right to Maintain Agreement For good and sufficient consideration, which is hereby acknowledged, the undersigned does hereby terminate effective immediately the Right to Maintain Agreement (the "Agreement") dated as of October 8, 1999 by and between DevClick.com, Inc. and Paul D. Levy. Accordingly the undersigned hereby acknowledges that the Agreement has no further force and effect. DATED: December 15, 1999. /s/ Paul D. Levy Paul D. Levy Termination of Right to Maintain Agreement For good and sufficient consideration, which is hereby acknowledged, the undersigned does hereby terminate effective immediately the Right to Maintain Agreement (the "Agreement") dated as of October 8, 1999 by and between DevClick.com, Inc. and Michael T. Devlin. Accordingly the undersigned hereby acknowledges that the Agreement has no further force and effect. DATED: December 15, 1999. /s/ Michael T. Devlin Michael T. Devlin

DEVCLICK.COM, INC. RESTRICTED STOCK PURCHASE AGREEMENT THIS RESTRICTED STOCK PURCHASE AGREEMENT is made as of October 8, 1999 (the "Effective Date") by and between DevClick.com, Inc., a Delaware corporation (the "Company"), and Paul D. Levy (the "Purchaser"). WHEREAS the Purchaser is an employee or director of the Company and his continued participation is considered by the Company to be important for the Company's continued growth; and WHEREAS in order to give the Purchaser an opportunity to acquire an equity interest in the Company as an incentive for the Purchaser to participate in the affairs of the Company, the Company is willing to sell to the Purchaser and the Purchaser desires to purchase 10,000,000 shares of Common Stock according to the terms and conditions hereof. THEREFORE, the parties agree as follows: 1. Sale of Stock. The Company hereby agrees to sell to the Purchaser and the Purchaser hereby agrees to purchase an aggregate of 10,000,000 shares of the Company's Common Stock (the "Shares"), at the price of $.001 per share for an aggregate purchase price of $10,000 and the intellectual property set forth in Exhibit A hereof. 2. Payment of Purchase Price. The purchase price for the Shares shall be paid by delivery to the Company at the time of execution of this Agreement of a check in the amount of $10,000 and by assignment of right, title and interest to the intellectual property set forth in Exhibit A hereof. 3. Issuance of Shares. Upon receipt by the Company of the purchase price, the Company shall issue a duly executed certificate evidencing the Shares in the name of the Purchaser to be held in escrow until expiration of the Company's repurchase option as described in this Agreement. 4. Repurchase Option. a. All of the Shares are subject to the Company's repurchase option defined in this section. In the event of the voluntary or involuntary termination of the Purchaser's employment with or services as a director to the Company for any or no reason (including death or disability) before all of the Shares are released from the Company's repurchase option under Section 5, the Company shall, upon the date of such termination (as reasonably fixed and determined by the Company) have an irrevocable, exclusive option for a period of 90 days from such date to repurchase all or any portion of the Shares which have not been released from the repurchase option at such time at the original purchase price per share ($.001) ("Repurchase Option"). Said Repurchase Option shall be exercised by the Company by written notice to the Purchaser or his executor (with a copy to the Escrow Holder (as defined below)) and, at the Company's option, (i) by delivery to the Purchaser or his executor with such notice of a check in the amount of the repurchase price for the Shares being repurchased, or (ii) by cancellation by the Company of an amount of the Purchaser's indebtedness to the Company equal to the repurchase price for the Shares being repurchased, or (iii) by a combination of (i) and (ii) so that the combined payment and cancellation of indebtedness equals such repurchase price. Upon delivery of such notice and the payment of the repurchase price in any of the ways described above, the Company shall become the legal and beneficial owner of the Shares being repurchased and all rights and interests therein or relating thereto, and the Company shall have the right to retain and transfer to its own name the number of Shares being repurchased by the Company. b. Whenever the Company shall have the right to repurchase Shares hereunder, the Company may designate and assign one or more employees, officers, directors or stockholders of the Company or other persons or organizations to exercise all or a part of the Company's repurchase rights under this Agreement and purchase all or a part of such Shares. 5. Release of Shares From Repurchase Option. a. The shares shall be released from the Company's Repurchase Option at the rate of 1/48th (208,333.3333 shares) per month over the four year period following the Effective Date, provided in each case that the Purchaser's services as an employee of or director to the Company have not been terminated prior to the date of any such release. b. Upon the closing of a change of control, all of the remaining shares shall be released from the Company's Repurchase Option. A "change of control" shall mean a merger or consolidation of the Company with or into another corporation, entity or person (where the stockholders of the Company immediately prior to such merger or consolidation hold less than 50% of the capital stock of the surviving corporation immediately following the merger or consolidation), or the sale of all or substantially all of the Company's assets to another corporation, entity or person. In addition, all of the remaining shares shall be released from the Company's Repurchase Option if Purchaser is not elected as a member of the Company's Board of Directors; provided, however that a voluntary resignation from the Board by Purchaser or Purchaser's voluntary election to not stand for election to the Board shall not cause the remaining shares to be released from the Repurchase Option. 6. Restriction on Transfer. Except for the escrow described in Section 7 or transfer of the Shares to the Company or its assignees contemplated by this Agreement, none of the Shares nor any beneficial interest therein shall be transferred, encumbered or otherwise disposed of in any way until the release of such Shares from the Company's Repurchase Option in accordance with the provisions of this Agreement. 7. Escrow of Shares. a. The Shares issued under this Agreement shall be held by the Secretary of the Company as escrow holder ("Escrow Holder"), along with a stock assignment executed by the Purchaser in blank, until the expiration of the Company's Repurchase Option with respect to such Shares as set forth above. b. The Escrow Holder is hereby directed to permit transfer of the Shares only in accordance with this Agreement or instructions signed by both parties. In the event further instructions are desired by the Escrow Holder, he shall be entitled to rely upon directions executed by a majority of the authorized number of the Company's Board of Directors. The Escrow Holder shall have no liability for any act or omission hereunder while acting in good faith in the exercise of his own judgment. c. If the Company or any assignee exercises its Repurchase Option hereunder, the Escrow Holder, upon receipt of written notice of such option exercise from the proposed transferee, shall take all steps necessary to accomplish such transfer. d. When the Repurchase Option has been exercised or expires unexercised or a portion of the Shares has been released from such Repurchase Option, upon Purchaser's request the Escrow Holder shall promptly cause a new certificate to be issued for such released Shares and shall deliver such certificate to the Purchaser. e. Subject to the terms hereof, the Purchaser shall have all the rights of a stockholder with respect to such Shares while they are held in escrow, including without limitation, the right to vote the Shares and receive any cash dividends declared thereon. If, from time to time during the term of the Company's Repurchase Option, there is (i) any stock dividend, stock split or other change in the Shares, or (ii) any merger or sale of all or substantially all of the assets or other acquisition of the Company, any and all new, substituted or additional securities to which the Purchaser is entitled by reason of his ownership of the Shares shall be immediately subject to this escrow, deposited with the Escrow Holder and included thereafter as "Shares" for purposes of this Agreement and the Company's repurchase option. 8. Legends. The share certificate evidencing the Shares issued hereunder shall be endorsed with the following legends: a. "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CON- NECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933". b. "THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANS- FERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY." c. Any legend required to be placed thereon by applicable state securities laws. 9. Investment Representations; Restriction on Transfer. a. In connection with the purchase of the Shares, the Purchaser represents to the Company the following: i. He is aware of the Company's business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the securities. He is purchasing these securities for investment for his own account only and not with a view to, or for resale in connection with, any "distribution" thereof within the meaning of the Securities Act of 1933 (the "Securities Act"). ii. He understands that the securities have not been registered under the Securities Act by reason of a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of his investment intent as expressed herein. In this connection, he understands that, in view of the Securities and Exchange Commission ("Commission"), the statutory basis for such exemption may not be present if his representations meant that his present intention was to hold these securities for a minimum capital gains period under the tax statutes, for a deferred sale, for a market rise, for a sale if the market does not rise, or for a year or any other fixed period in the future. iii. He further acknowledges and understands that the securities must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. He further acknowledges and understands that the Company is under no obligation to register the securities. He understands that the certificate evidencing the securities will be imprinted with a legend which prohibits the transfer of the securities unless they are registered or such registration is not required in the opinion of counsel for the Company. iv. He is aware of the adoption of Rule 144 by the Commission, promulgated under the Securities Act, which permits limited public resale of securities acquired in a non-public offering subject to the satisfaction of certain conditions. v. He further acknowledges that in the event all of the requirements of Rule 144 are not met, compliance with Regulation A or some other registration exemption will be required; and that although Rule 144 is not exclusive, the staff of the Commission has expressed its opinion that persons proposing to sell private placement securities other than in a registered offering and other than pursuant to Rule 144 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales and that such persons and the brokers who participate in the transactions do so at their own risk. b. The Purchaser agrees, in connection with the Company's initial public offering of the Company's securities, (i) not to sell, make short sales of, loan, grant any options for the purchase of, or otherwise dispose of any shares of Common Stock of the Company held by the Purchaser (other than those shares included in the registration) without the prior written consent of the Company or the underwriters managing such initial underwritten public offering of the Company's securities for up to one hundred eighty (180) days from the effective date of such registration and (ii) further agrees to execute any agreement reflecting (i) above as may be requested by the underwriters at the time of the public offering. 10. Adjustment for Stock Split. All references to the number of Shares and the purchase price of the Shares in this Agreement shall be appropriately adjusted to reflect any stock split, stock dividend or other change in the Shares which may be made by the Company after the date of this Agreement. 11. General Provisions. a. This Agreement shall be governed by the internal laws of the State of Delaware. This Agreement represents the entire agreement between the parties with respect to the purchase of Common Stock by the Purchaser, may only be modified or amended in writing signed by both parties and satisfies all of the Company's obligations to the Purchaser with regard to the issuance or sale of securities. b. Any notice, demand or request required or permitted to be given by either the Company or the Purchaser pursuant to the terms of this Agreement shall be in writing and shall be deemed given when delivered personally or deposited in the U.S. mail, First Class with postage prepaid, and addressed to the parties at the addresses of the parties set forth at the end of this Agreement or such other address as a party may request by notifying the other in writing. Any notice to the Escrow Holder shall be sent to the Company's address with a copy to the other party not sending the notice. c. The rights and benefits of the Company under this Agreement shall be transferable to any one or more persons or entities, and all covenants and agreements hereunder shall inure to the benefit of, and be enforceable by the Company's successors and assigns. The rights and obligations of the Purchaser under this Agreement may only be assigned with the prior written consent of the Company. d. Either party's failure to enforce any provision or provisions of this Agreement shall not in any way be construed as a waiver of any such provision or provisions, nor prevent that party thereafter from enforcing each and every other provision of this Agreement. The rights granted both parties herein are cumulative and shall not constitute a waiver of either party's right to assert all other legal remedies available to it under the circumstances. e. The Purchaser agrees upon request to execute any further documents or instruments necessary or desirable to carry out the purposes or intent of this Agreement. f. The Purchaser understands that he (and not the Company) shall be responsible for his own federal, state, local or foreign tax liability and any of his other tax consequences that may arise as a result of the transactions contemplated by this Agreement. The Purchaser shall rely solely on the determinations of his tax advisors or his own determinations, and not on any statements or representations by the Company or any of its agents, with regard to all such tax matters. The Purchaser shall notify the Company in writing if the Purchaser files an election pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended, with the Internal Revenue Service within thirty (30) days from the date of the sale of the Shares hereunder. The Company intends, in the event it does not receive from the Purchaser evidence of such filing, to claim a tax deduction for any amount which would be taxable to the Purchaser in the absence of such an election. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day and year first set forth above. DEVCLICK.COM, INC. PURCHASER: A Delaware corporation /s/ Michael T. Devlin /s/ Paul D. Levy Michael T. Devlin Paul D. Levy Vice Chairman of the Board EXHIBIT A INTELLECTUAL PROPERTY The business plan and any and all ideas or any other intellectual property which Purchaser may own or have rights to relating to the business of the Company. CONSENT OF SPOUSE I, Cindy C. Levy, spouse of Paul D. Levy, have read and approve the foregoing Agreement. In consideration of granting of the right to my spouse to purchase shares of _____________ Common Stock, as set forth in the Agreement, I hereby appoint my spouse as my attorney-in-fact in respect to the exercise of any rights under the Agreement and agree to be bound by the provisions of the Agreement insofar as I may have any rights in said Agreement or any shares issued pursuant thereto under the marital property laws of the State of ____________ or similar laws relating to marital property in effect in the state of our residence as of the date of the signing of the foregoing Agreement. Dated:____________________ Signature /s/ Cindy C. Levy ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED I, ____________________ hereby sell, assign and transfer to _____________________ (________) shares of the Common Stock of _____________ (the "Company") standing in my name on the books of the Company represented by Certificate No. __________ and do hereby irrevocably constitute and appoint Wilson Sonsini Goodrich & Rosati, attorney, to transfer said stock on the books of the Company with full power of substitution in the premises. This Assignment Separate from Certificate may only be used in accordance with the Restricted Stock Purchase Agreement dated _________, 1999. Dated:____________________ Signature: /s/ Paul D. Levy Instruction: Please do not fill in any blanks other than the signature line. The purpose of this assignment is to enable the Company to exercise the Repurchase Right set forth in the Agreement without requiring additional signature on the part of Purchaser. ELECTION UNDER SECTION 83(b) OF THE INTERNAL REVENUE CODE OF 1986 The undersigned taxpayer hereby elects, pursuant to the above- referenced Federal Code, to include in his gross income for the current taxable year, the amount of any compensation taxable to him in connection with his receipt of the property described below: 1. The name, address, taxpayer identification number and taxable year of the undersigned are as follows: NAME: TAXPAYER: SPOUSE: ADDRESS: IDENTIFICATION NO.: TAXPAYER: SPOUSE: TAXABLE YEAR: 2. The property with respect to which the election is made is described as follows: _________ shares of Common Stock (the "Shares"), par value $_________, of DevClick.com, Inc., a Delaware corporation (the "Company"). 3. The date on which the property was transferred is: _________, 1999. 4. The property is subject to the following restrictions: The Company has the right to repurchase a portion of the Shares upon the happening of certain events. This right of repurchase lapses with regard to a portion of the Shares over time. 5. The fair market value at the time of transfer, determined without regard to any restriction other than a restriction which by its terms will never lapse, of such property is: 6. The amount (if any) paid for such property: The undersigned has submitted a copy of this statement to the person for whom the services were performed in connection with the undersigned's receipt of the above-described property. The transferee of such property is the person performing the services in connection with the transfer of said property. The undersigned understands that the foregoing election may not be revoked except with the consent of the Commissioner. Dated: October 9, 1999 Taxpayer /s/ Paul D. Levy The undersigned spouse of taxpayer joins in this election. Dated: October 9, 1999 Spouse of Taxpayer /s/ Cindy C. Levy

DEVCLICK.COM, INC. RESTRICTED STOCK PURCHASE AGREEMENT THIS RESTRICTED STOCK PURCHASE AGREEMENT is made as of October 8, 1999 (the "Effective Date") by and between DevClick.com, Inc., a Delaware corporation (the "Company"), and Michael T. Devlin (the "Purchaser"). WHEREAS the Purchaser is an employee or director of the Company and his continued participation is considered by the Company to be important for the Company's continued growth; and WHEREAS in order to give the Purchaser an opportunity to acquire an equity interest in the Company as an incentive for the Purchaser to participate in the affairs of the Company, the Company is willing to sell to the Purchaser and the Purchaser desires to purchase 10,000,000 shares of Common Stock according to the terms and conditions hereof. THEREFORE, the parties agree as follows: 1. Sale of Stock. The Company hereby agrees to sell to the Purchaser and the Purchaser hereby agrees to purchase an aggregate of 10,000,000 shares of the Company's Common Stock (the "Shares"), at the price of $.001 per share for an aggregate purchase price of $10,000 and the intellectual property set forth in Exhibit A attached hereto. 2. Payment of Purchase Price. The purchase price for the Shares shall be paid by delivery to the Company at the time of execution of this Agreement of a check in the amount of $10,000 and by assignment of right, title and interest to the intellectual property set forth as Exhibit A hereto. 3. Issuance of Shares. Upon receipt by the Company of the purchase price, the Company shall issue a duly executed certificate evidencing the Shares in the name of the Purchaser to be held in escrow until expiration of the Company's repurchase option as described in this Agreement. 4. Repurchase Option. a. All of the Shares are subject to the Company's repurchase option defined in this section. In the event of the voluntary or involuntary termination of the Purchaser's employment with or services as a director to the Company for any or no reason (including death or disability) before all of the Shares are released from the Company's repurchase option under Section 5, the Company shall, upon the date of such termination (as reasonably fixed and determined by the Company) have an irrevocable, exclusive option for a period of 90 days from such date to repurchase all or any portion of the Shares which have not been released from the repurchase option at such time at the original purchase price per share ($ .001) ("Repurchase Option"). Said Repurchase Option shall be exercised by the Company by written notice to the Purchaser or his executor (with a copy to the Escrow Holder (as defined below)) and, at the Company's option, (i) by delivery to the Purchaser or his executor with such notice of a check in the amount of the repurchase price for the Shares being repurchased, or (ii) by cancellation by the Company of an amount of the Purchaser's indebtedness to the Company equal to the repurchase price for the Shares being repurchased, or (iii) by a combination of (i) and (ii) so that the combined payment and cancellation of indebtedness equals such repurchase price. Upon delivery of such notice and the payment of the repurchase price in any of the ways described above, the Company shall become the legal and beneficial owner of the Shares being repurchased and all rights and interests therein or relating thereto, and the Company shall have the right to retain and transfer to its own name the number of Shares being repurchased by the Company. b. Whenever the Company shall have the right to repurchase Shares hereunder, the Company may designate and assign one or more employees, officers, directors or stockholders of the Company or other persons or organizations to exercise all or a part of the Company's repurchase rights under this Agreement and purchase all or a part of such Shares. 5. Release of Shares From Repurchase Option. a. The shares shall be released from the Company's Repurchase Option at the rate of 1/48th (208,333.3333 shares) per month over the four (4) year period following the Effective Date, provided in each case that the Purchaser's services as an employee of or director to the Company have not been terminated prior to the date of any such release. b. Upon the closing of a change of control, all of the remaining shares shall be released from the Company's Repurchase Option. A "change of control" shall mean a merger or consolidation of the Company with or into another corporation, entity or person (where the stockholders of the Company immediately prior to such merger or consolidation hold less than 50% of the capital stock of the surviving corporation immediately following the merger or consolidation), or the sale of all or substantially all of the Company's assets to another corporation, entity or person. In addition, all of the remaining shares shall be released from the Company's Repurchase Option if Purchaser is not elected as a member of the Company's Board of Directors; provided, however that a voluntary resignation from the Board by Purchaser or Purchaser's voluntary election to not stand for election to the Board shall not cause the remaining shares to be released from the Repurchase Option. 6. Restriction on Transfer. Except for the escrow described in Section 7 or transfer of the Shares to the Company or its assignees contemplated by this Agreement, none of the Shares nor any beneficial interest therein shall be transferred, encumbered or otherwise disposed of in any way until the release of such Shares from the Company's Repurchase Option in accordance with the provisions of this Agreement. 7. Escrow of Shares. a. The Shares issued under this Agreement shall be held by the Secretary of the Company as escrow holder ("Escrow Holder"), along with a stock assignment executed by the Purchaser in blank, until the expiration of the Company's Repurchase Option with respect to such Shares as set forth above. b. The Escrow Holder is hereby directed to permit transfer of the Shares only in accordance with this Agreement or instructions signed by both parties. In the event further instructions are desired by the Escrow Holder, he shall be entitled to rely upon directions executed by a majority of the authorized number of the Company's Board of Directors. The Escrow Holder shall have no liability for any act or omission hereunder while acting in good faith in the exercise of his own judgment. c. If the Company or any assignee exercises its Repurchase Option hereunder, the Escrow Holder, upon receipt of written notice of such option exercise from the proposed transferee, shall take all steps necessary to accomplish such transfer. d. When the Repurchase Option has been exercised or expires unexercised or a portion of the Shares has been released from such Repurchase Option, upon Purchaser's request the Escrow Holder shall promptly cause a new certificate to be issued for such released Shares and shall deliver such certificate to the Purchaser. e. Subject to the terms hereof, the Purchaser shall have all the rights of a stockholder with respect to such Shares while they are held in escrow, including without limitation, the right to vote the Shares and receive any cash dividends declared thereon. If, from time to time during the term of the Company's Repurchase Option, there is (i) any stock dividend, stock split or other change in the Shares, or (ii) any merger or sale of all or substantially all of the assets or other acquisition of the Company, any and all new, substituted or additional securities to which the Purchaser is entitled by reason of his ownership of the Shares shall be immediately subject to this escrow, deposited with the Escrow Holder and included thereafter as "Shares" for purposes of this Agreement and the Company's repurchase option. 8. Legends. The share certificate evidencing the Shares issued hereunder shall be endorsed with the following legends: a. "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933". b. "THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY." c. Any legend required to be placed thereon by applicable state securities laws. 9. Investment Representations; Restriction on Transfer. a. In connection with the purchase of the Shares, the Purchaser represents to the Company the following: i. He is aware of the Company's business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the securities. He is purchasing these securities for investment for his own account only and not with a view to, or for resale in connection with, any "distribution" thereof within the meaning of the Securities Act of 1933 (the "Securities Act"). ii. He understands that the securities have not been registered under the Securities Act by reason of a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of his investment intent as expressed herein. In this connection, he understands that, in view of the Securities and Exchange Commission ("Commission"), the statutory basis for such exemption may not be present if his representations meant that his present intention was to hold these securities for a minimum capital gains period under the tax statutes, for a deferred sale, for a market rise, for a sale if the market does not rise, or for a year or any other fixed period in the future. iii. He further acknowledges and understands that the securities must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. He further acknowledges and understands that the Company is under no obligation to register the securities. He understands that the certificate evidencing the securities will be imprinted with a legend which prohibits the transfer of the securities unless they are registered or such registration is not required in the opinion of counsel for the Company. iv. He is aware of the adoption of Rule 144 by the Commission, promulgated under the Securities Act, which permits limited public resale of securities acquired in a non-public offering subject to the satisfaction of certain conditions. v. He further acknowledges that in the event all of the requirements of Rule 144 are not met, compliance with Regulation A or some other registration exemption will be required; and that although Rule 144 is not exclusive, the staff of the Commission has expressed its opinion that persons proposing to sell private placement securities other than in a registered offering and other than pursuant to Rule 144 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales and that such persons and the brokers who participate in the transactions do so at their own risk. b. The Purchaser agrees, in connection with the Company's initial public offering of the Company's securities, (i) not to sell, make short sales of, loan, grant any options for the purchase of, or otherwise dispose of any shares of Common Stock of the Company held by the Purchaser (other than those shares included in the registration) without the prior written consent of the Company or the underwriters managing such initial underwritten public offering of the Company's securities for up to one hundred eighty (180) days from the effective date of such registration and (ii) further agrees to execute any agreement reflecting (i) above as may be requested by the underwriters at the time of the public offering. 10. Adjustment for Stock Split. All references to the number of Shares and the purchase price of the Shares in this Agreement shall be appropriately adjusted to reflect any stock split, stock dividend or other change in the Shares which may be made by the Company after the date of this Agreement. 11. General Provisions. a. This Agreement shall be governed by the internal laws of the State of Delaware. This Agreement represents the entire agreement between the parties with respect to the purchase of Common Stock by the Purchaser, may only be modified or amended in writing signed by both parties and satisfies all of the Company's obligations to the Purchaser with regard to the issuance or sale of securities. b. Any notice, demand or request required or permitted to be given by either the Company or the Purchaser pursuant to the terms of this Agreement shall be in writing and shall be deemed given when delivered personally or deposited in the U.S. mail, First Class with postage prepaid, and addressed to the parties at the addresses of the parties set forth at the end of this Agreement or such other address as a party may request by notifying the other in writing. Any notice to the Escrow Holder shall be sent to the Company's address with a copy to the other party not sending the notice. c. The rights and benefits of the Company under this Agreement shall be transferable to any one or more persons or entities, and all covenants and agreements hereunder shall inure to the benefit of, and be enforceable by the Company's successors and assigns. The rights and obligations of the Purchaser under this Agreement may only be assigned with the prior written consent of the Company. d. Either party's failure to enforce any provision or provisions of this Agreement shall not in any way be construed as a waiver of any such provision or provisions, nor prevent that party thereafter from enforcing each and every other provision of this Agreement. The rights granted both parties herein are cumulative and shall not constitute a waiver of either party's right to assert all other legal remedies available to it under the circumstances. e. The Purchaser agrees upon request to execute any further documents or instruments necessary or desirable to carry out the purposes or intent of this Agreement. f. The Purchaser understands that he (and not the Company) shall be responsible for his own federal, state, local or foreign tax liability and any of his other tax consequences that may arise as a result of the transactions contemplated by this Agreement. The Purchaser shall rely solely on the determinations of his tax advisors or his own determinations, and not on any statements or representations by the Company or any of its agents, with regard to all such tax matters. The Purchaser shall notify the Company in writing if the Purchaser files an election pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended, with the Internal Revenue Service within thirty (30) days from the date of the sale of the Shares hereunder. The Company intends, in the event it does not receive from the Purchaser evidence of such filing, to claim a tax deduction for any amount which would be taxable to the Purchaser in the absence of such an election [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day and year first set forth above. DEVCLICK.COM, INC. PURCHASER: A Delaware corporation /s/ Paul D. Levy /s/ Michael T. Devlin Paul D. Levy Michael T. Devlin Chairman of the Board EXHIBIT A INTELLECTUAL PROPERTY The business plan and any and all ideas or any other intellectual property which Purchaser may own or have rights to relating to the business of the Company. CONSENT OF SPOUSE I,Bobbie Devlin, spouse of Michael T. Devlin, have read and approve the foregoing Agreement. In consideration of granting of the right to my spouse to purchase shares of _______ Common Stock, as set forth in the Agreement, I hereby appoint my spouse as my attorney-in-fact in respect to the exercise of any rights under the Agreement and agree to be bound by the provisions of the Agreement insofar as I may have any rights in said Agreement or any shares issued pursuant thereto under the marital property laws of the State of ____________ or similar laws relating to marital property in effect in the state of our residence as of the date of the signing of the foregoing Agreement. Dated:____________________ /s/ Bobbie Devlin Signature ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED I, ____________________ hereby sell, assign and transfer to _____________________ (________) shares of the Common Stock of _____________ (the "Company") standing in my name on the books of the Company represented by Certificate No. __________ and do hereby irrevocably constitute and appoint Wilson Sonsini Goodrich & Rosati, attorney, to transfer said stock on the books of the Company with full power of substitution in the premises. This Assignment Separate from Certificate may only be used in accordance with the Restricted Stock Purchase Agreement dated _________, 1999. Dated:____________________ Signature:/s/ Michael T. Devlin Instruction: Please do not fill in any blanks other than the signature line. The purpose of this assignment is to enable the Company to exercise the Repurchase Right set forth in the Agreement without requiring additional signature on the part of Purchaser. ELECTION UNDER SECTION 83(b) OF THE INTERNAL REVENUE CODE OF 1986 The undersigned taxpayer hereby elects, pursuant to the above-referenced Federal Code, to include in his gross income for the current taxable year, the amount of any compensation taxable to him in connection with his receipt of the property described below: 1. The name, address, taxpayer identification number and taxable year of the undersigned are as follows: NAME: TAXPAYER: Michael T. Devlin SPOUSE: Bobbie Devlin ADDRESS: 27600 Black Oak Ridge, Forest Hill, CA 95631 IDENTIFICATION NO.: TAXPAYER: SPOUSE: TAXABLE YEAR: 1999 2. The property with respect to which the election is made is described as follows: 10,000,000 shares of Common Stock (the "Shares"), par value $0.001, of DevClick.com, Inc., a Delaware corporation (the "Company"). 3. The date on which the property was transferred is: October 9, 1999. 4. The property is subject to the following restrictions: The Company has the right to repurchase a portion of the Shares upon the happening of certain events. This right of repurchase lapses with regard to a portion of the Shares over time. 5. The fair market value at the time of transfer, determined without regard to any restriction other than a restriction which by its terms will never lapse, of such property is: 6. The amount (if any) paid for such property: The undersigned has submitted a copy of this statement to the person for whom the services were performed in connection with the undersigned's receipt of the above-described property. The transferee of such property is the person performing the services in connection with the transfer of said property. The undersigned understands that the foregoing election may not be revoked except with the consent of the Commissioner. Dated: November 1, 1999 Taxpayer /s/ Michael T. Devlin The undersigned spouse of taxpayer joins in this election. Dated: November 1, 1999 Spouse of Taxpayer /s/ Bobbie Devlin

CataPULSE INC. STAND-ALONE STOCK OPTION AGREEMENT I. NOTICE OF STOCK OPTION GRANT Paul D. Levy Address: You have been granted a Nonstatutory Stock Option to purchase shares (the "Shares") of Common Stock of the Company, subject to the terms and conditions of this Agreement, as follows: Date of Grant December 6, 1999 Vesting Commencement Date December 6, 1999 Exercise Price per Share $0.03 Total Number of Shares Granted 21,111,111 Total Exercise Price $633,333.33 Term/Expiration Date: December 6, 2009 Vesting Schedule: This Option shall vest and may be exercised (in accordance with Section 3), in whole or in part, in accordance with the following schedule: 1/48th of the Shares (439,814.8125 Shares) subject to the Option shall vest each month after the Vesting Commencement Date, so that the Option shall be fully vested four (4) years from the Date of Grant, subject to the Optionee continuing to be a Service Provider on such dates. All of the remaining Shares subject to the Option shall vest immediately prior to the closing of a change of control. A "change of control" shall mean a merger or consolidation of the Company with or into another corporation, entity or person (where the stockholders of the Company immediately prior to such merger or consolidation hold less than 50% of the capital stock of the surviving corporation immediately following the merger or consolidation), or the sale of all or substantially all of the Company's assets to another corporation, entity or person. In addition, all of the remaining Shares subject to the Option shall vest if Optionee is not elected as a member of the Company's Board of Directors, is removed (other than for cause) from the Board of Directors or is not reelected to the Board of Directors, unless, in either event, Optionee has voluntarily resigned as an employee of the Company; provided, however that a voluntary resignation from the Board of Directors by Optionee or Optionee's voluntary election to not stand for election to the Board of Directors shall not cause the remaining Shares subject to the Option to vest. Termination Period This Option may be exercised, to the extent it is then vested, within three (3) months after Optionee ceases to be a Service Provider in accordance with Section 8 of this Agreement. Upon the death or Disability of the Optionee, this Option may be exercised, to the extent it is then vested, within twelve (12) months after the Optionee ceases to be a Service Provider in accordance with Sections 9 and 10 of this Agreement. In no event shall this Option be exercised later than the Term/Expiration Date provided. II. AGREEMENT 1. Definitions. As used herein, the following definitions shall apply: (a) "Agreement" means this stock option agreement between the Company and Optionee evidencing the terms and conditions of this Option. (b) "Applicable Laws" means the requirements relating to the administration of stock options under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any foreign country or jurisdiction that may apply to this Option. (c) "Board" means the Board of Directors of the Company or any committee of the Board that has been designated by the Board to administer this Agreement. (d) "Code" means the Internal Revenue Code of 1986, as amended. (e) "Common Stock" means the common stock of the Company. (f) "Company" means CataPULSE Inc., a Delaware corporation. (g) "Consultant" means any person, including an advisor, engaged by the Company or a Parent or Subsidiary to render services to such entity. (h) "Director" means a member of the Board. (i) "Disability" means total and permanent disability as defined in Section 22(e)(3) of the Code. (j) "Employee" means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. A Service Provider shall not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company, its Parent, any Subsidiary, or any successor. (k) "Exchange Act" means the Securities Exchange Act of 1934, as amended. (l) "Fair Market Value" means, as of any date, the value of Common Stock determined as follows: (i) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation The Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for the last market trading day prior to the time of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; (ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the mean between the high bid and low asked prices for the Common Stock on the last market trading day prior to the day of determination; or (iii) In the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Board. (m) "Nonstatutory Stock Option" means an Option not intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder. (n) "Notice of Grant" means the written notice, in Part I of this Agreement, evidencing certain the terms and conditions of this Option. The Notice of Grant is part of the Agreement. (o) "Officer" means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder. (p) "Option" means this stock option. (q) "Optioned Stock" means the Common Stock subject to this Option. (r) "Optionee" means the person named in the Notice of Grant or such person's successor. (s) "Parent" means a "parent corporation," whether now or hereafter existing, as defined in Section 424(e) of the Code. (t) "Service Provider" means an individual that serves as either an Employee, Director or Consultant (as requested by the Company) for at least twenty-five (25) percent of such individual's time. (u) "Share" means a share of the Common Stock, as adjusted in accordance with Section 11 of this Agreement. (v) "Subsidiary" means a "subsidiary corporation", whether now or hereafter existing, as defined in Section 424(f) of the Code. 2. Grant of Option. The Board hereby grants to the Optionee named in the Notice of Grant, attached as Part I of this Agreement, the Option to purchase the number of Shares, as set forth in the Notice of Grant, at the exercise price per share set forth in the Notice of Grant (the "Exercise Price"), subject to the terms and conditions of this Agreement. 3. Exercise of Option. (a) Right to Exercise. (i) Subject to subsections 3(a)(ii) and 3(a)(iii) below, this Option shall be exercisable cumulatively according to the Vesting Schedule set forth in the Notice of Grant. Alternatively, at the election of the Optionee, this Option may be exercised in whole or in part at any time as to Shares that have not yet vested. For purposes of this Agreement, Shares subject to the Option shall vest based on continued employment of Optionee continuing to be a Service Provider with the Company. Vested Shares shall not be subject to the Company's repurchase right (as set forth in the Restricted Stock Purchase Agreement, attached hereto as Exhibit C-1). (ii) As a condition to exercising this Option for unvested Shares, the Optionee shall execute the Restricted Stock Purchase Agreement. (iii) This Option may not be exercised for a fraction of a Share. (b) Method of Exercise. This Option is exercisable by delivery of an exercise notice, in the form attached as Exhibit A (the "Exercise Notice"), which shall state the election to exercise the Option, the number of Shares in respect of which the Option is being exercised (the "Exercised Shares"), and such other representations and agreements as may be required by the Company. The Exercise Notice shall be completed by the Optionee and delivered to Secretary of the Company. The Exercise Notice shall be accompanied by payment of the aggregate Exercise Price as to all Exercised Shares. This Option shall be deemed to be exercised upon receipt by the Company of such fully executed Exercise Notice accompanied by such aggregate Exercise Price. (c) Legal Compliance. No Shares shall be issued pursuant to the exercise of this Option unless such issuance and exercise complies with Applicable Laws. Assuming such compliance, for income tax purposes the Exercised Shares shall be considered transferred to the Optionee on the date the Option is exercised with respect to such Exercised Shares. (d) Buyout Provisions. The Board may at any time offer to buy out for a payment in cash or Shares an Option previously granted based on such terms and conditions as the Board shall establish and communicate to the Optionee at the time that such offer is made. 4. Optionee's Representations. In the event the Shares have not been registered under the Securities Act of 1933, as amended, at the time this Option is exercised, the Optionee shall, if required by the Company, concurrently with the exercise of all or any portion of this Option, deliver to the Company his or her Investment Representation Statement in the form attached hereto as Exhibit B. 5. Method of Payment. Payment of the aggregate Exercise Price shall be by any of the following, or a combination thereof, at the election of the Optionee: (a) cash or check; (b) consideration received by the Company under a cashless exercise program implemented by the Company; or (c) surrender of other Shares which (i) in the case of Shares acquired upon exercise of an option, have been owned by the Optionee for more than six (6) months on the date of surrender, and (ii) have a Fair Market Value on the date of surrender equal to the aggregate Exercise Price of the Exercised Shares. (d) delivery of Optionee's promissory note (the "Note") in the form attached hereto as Exhibit E, in the amount of the aggregate Exercise Price of the Exercised Shares together with the execution and delivery by the Optionee of the Security Agreement attached hereto as Exhibit D. The Note shall bear interest at the "applicable federal rate" prescribed under the Code and its regulations at time of purchase, and shall be secured by a pledge of the Shares purchased by the Note pursuant to the Security Agreement. 6. Non-Transferability of Option. This Option may not be transferred in any manner otherwise than by will or by the laws of descent or distribution and may be exercised during the lifetime of Optionee only by the Optionee. The terms of this Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee. 7. Term of Option. This Option may be exercised only within the term set out in the Notice of Grant, and may be exercised during such term only in accordance with the terms of this Agreement. 8. Termination of Relationship as a Service Provider. If the Optionee ceases to be a Service Provider (other than for death or Disability), this Option may be exercised for a period of three (3) months after the date of such termination (but in no event later than the expiration date of this Option as set forth in the Notice of Grant) to the extent that the Option is vested on the date of such termination. To the extent that the Optionee does not exercise this Option within the time specified herein, the Option shall terminate. 9. Disability of Optionee. If the Optionee ceases to be a Service Provider as a result of the Optionee's Disability, this Option may be exercised for a period of twelve (12) months after the date of such termination (but in no event later than the expiration date of this Option as set forth in the Notice of Grant) to the extent that the Option is vested on the date of such termination. To the extent that Optionee does not exercise this Option within the time specified herein, the Option shall terminate. 10. Death of Optionee. If the Optionee dies while a Service Provider, the Option may be exercised at any time within twelve (12) months following the date of death (but in no event later than the expiration date of this Option as set forth in the Notice of Grant), by the Optionee's estate or by a person who acquired the right to exercise the Option by bequest or inheritance, but only to the extent that the Option is vested on the date of death. If, after death, the Optionee's estate or a person who acquired the right to exercise the Option by bequest or inheritance does not exercise the Option within the time specified herein, the Option shall terminate. 11. Adjustments Upon Changes in Capitalization, Dissolution, Merger or Asset Sale. (a) Changes in Capitalization. Subject to any required action by the stockholders of the Company, the number of shares of Common Stock covered by this Option, as well as the price per share of Common Stock covered by this Option, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of issued shares of Common Stock effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been "effected without receipt of consideration." Such adjustment shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to this Option. (b) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Board shall notify Optionee as soon as practicable prior to the effective date of such proposed transaction. The Board in its discretion may provide for the Optionee to have the right to exercise his or her Option until fifteen (15) days prior to such transaction as to all of the Optioned Stock covered thereby, including Shares as to which the Option would not otherwise be exercisable. The Board may permit the Option to be exercised contingent upon this transaction. To the extent it has not been previously exercised, the Option will terminate immediately prior to the consummation of such proposed action. 12. Lock-Up Period. Optionee agrees, in connection with the Company's initial public offering of the Company's securities, (i) not to sell, make short sales of, loan, grant any options for the purchase of, or otherwise dispose of any shares of Common Stock of the Company held by Optionee (other than those shares included in the registration) without the prior written consent of the Company or the underwriters managing such initial underwritten public offering of the Company's securities for up to one hundred eighty (180) days from the effective date of such registration and (ii) further agrees to execute any agreement reflecting (i) above as may be requested by the underwriters at the time of the public offering. 13. Notices. Any notice to be given to the Company hereunder shall be in writing and shall be addressed to the Company at its then current principal executive office or to such other address as the Company may hereafter designate to the Optionee by notice as provided in this Section. Any notice to be given to the Optionee hereunder shall be addressed to the Optionee at the address set forth beneath his signature hereto, or at such other address as the Optionee may hereafter designate to the Company by notice as provided herein. A notice shall be deemed to have been duly given when personally delivered or mailed by registered or certified mail to the party entitled to receive it. 14. Tax Consequences. Some of the federal tax consequences relating to this Option, as of the date of this Option, are set forth below. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES. (a) Exercising the Option. The Optionee may incur regular federal income tax liability upon exercise of a Nonstatutory Stock Option (an "NSO"). The Optionee will be treated as having received compensation income (taxable at ordinary income tax rates) equal to the excess, if any, of the Fair Market Value of the Exercised Shares on the date of exercise over their aggregate Exercise Price. If the Optionee is an Employee or a former Employee, the Company will be required to withhold from his or her compensation or collect from Optionee and pay to the applicable taxing authorities an amount in cash equal to a percentage of this compensation income at the time of exercise, and may refuse to honor the exercise and refuse to deliver Shares if such withholding amounts are not delivered at the time of exercise. (b) Disposition of Shares. If the Optionee holds NSO Shares for at least one year, any gain realized on disposition of the Shares will be treated as long-term capital gain for federal income tax purposes. (c) Section 83(b) Election for Unvested Shares Purchased Pursuant to Options. With respect to the exercise of this Option for unvested Shares, an election may be filed by the Optionee with the Internal Revenue Service, within 30 days of the purchase of the Shares, electing pursuant to Section 83(b) of the Code to be taxed currently on any difference between the purchase price of the Shares and their Fair Market Value on the date of purchase. This will result in a recognition of taxable income to the Optionee on the date of exercise, measured by the excess, if any, of the Fair Market Value of the Shares, at the time the Option is exercised over the purchase price for the Shares. Absent such an election, taxable income will be measured and recognized by Optionee at the time or times on which the Company's repurchase option lapses. Optionee is strongly encouraged to seek the advice of his or her own tax consultants in connection with the purchase of the Shares and the advisability of filing of the Election under Section 83(b) of the Code. A form of Election under Section 83(b) is attached hereto as Exhibit C-5 for reference. 15. Entire Agreement; Governing Law. This Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes in its entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee's interest except by means of a writing signed by the Company and Optionee. This agreement is governed by the internal substantive laws, but not the choice of law rules, of California 16. NO GUARANTEE OF CONTINUED SERVICE. OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED AN OPTION OR PURCHASING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE OPTIONEE'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE. By your signature and the signature of the Company's representative below, you and the Company agree that this Option is granted under and governed by the terms and conditions of this Agreement. Optionee has reviewed this Agreement in its entirety, has had an opportunity to obtain the advice of counsel prior to executing this Agreement and fully understands all provisions of this Agreement. Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Board upon any questions relating to this Agreement. Optionee further agrees to notify the Company upon any change in the residence address indicated below. OPTIONEE CATAPULSE INC. /s/ Paul D. Levy /s/ Michael T. Devlin Signature Paul D. Levy Michael T. Devlin Print Name Residence Address CONSENT OF SPOUSE The undersigned spouse of Optionee has read and hereby approves the terms and conditions of this Agreement. In consideration of the Company's granting his or her spouse the right to purchase Shares as set forth in this Agreement, the undersigned hereby agrees to be irrevocably bound by the terms and conditions of this Agreement and further agrees that any community property interest shall be similarly bound. The undersigned hereby appoints the undersigned's spouse as attorney-in-fact for the undersigned with respect to any amendment or exercise of rights under this Agreement. /s/ Cindy C. Levy Spouse of Optionee EXHIBIT A CATAPULSE INC. EXERCISE NOTICE CataPULSE Inc. 18880 Homestead Road Cupertino, CA 95014 Attention: 1. Exercise of Option. Effective as of today, December ___, 1999, the undersigned ("Purchaser") hereby elects to purchase 21,111,111 shares (the "Shares") of the Common Stock of CataPULSE Inc. (the "Company") under and pursuant to the Stand-Alone Stock Option Agreement dated December 6, 1999 (the "Option Agreement"). The purchase price for the Shares shall be $0.03, as required by the Option Agreement. 2. Delivery of Payment. Purchaser herewith delivers to the Company the full purchase price for the Shares. 3. Representations of Purchaser. Purchaser acknowledges that Purchaser has received, read and understood the Option Agreement and agrees to abide by and be bound by its terms and conditions. 4. Rights as Shareholder. Until the issuance (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company) of the Shares, no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. The Shares so acquired shall be issued to the Optionee as soon as practicable after exercise of the Option. No adjustment will be made for a dividend or other right for which the record date is prior to the date of issuance, except as provided in Section 11 of the Option Agreement. 5. Tax Consultation. Purchaser understands that Purchaser may suffer adverse tax consequences as a result of Purchaser's purchase or disposition of the Shares. Purchaser represents that Purchaser has consulted with any tax consultants Purchaser deems advisable in connection with the purchase or disposition of the Shares and that Purchaser is not relying on the Company for any tax advice. 6. Restrictive Legends and Stop-Transfer Orders. (a) Legends. Optionee understands and agrees that the Company shall cause the legends set forth below or legends substan- tially equivalent thereto, to be placed upon any certificate(s) evidencing ownership of the Shares together with any other legends that may be required by the Company or by state or federal securities laws: THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF COMPANY COUNSEL SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH. THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER, INCLUDING A 180-DAY MARKET STANDOFF PROVISION, AS SET FORTH IN THE EXERCISE NOTICE AND THE STAND-ALONE OPTION AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, COPIES OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS ARE BINDING ON TRANSFEREES OF THESE SHARES. (b) Stop-Transfer Notices. Optionee agrees that, in order to ensure compliance with the restrictions referred to herein, the Company may issue appropriate "stop transfer" instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records. (c) Refusal to Transfer. The Company shall not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of this Exercise Notice or (ii) to treat as owner of such Shares or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such Shares shall have been so transferred. (d) Successors and Assigns. The Company may assign any of its rights under this Exercise Notice to single or multiple assignees, and this Exercise Notice shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, this Exercise Notice shall be binding upon Optionee and his or her heirs, executors, administrators, successors and assigns. 7. Arbitration. Any dispute or controversy arising out of, relating to, or concerning any interpretation, construction, performance or breach of this agreement, shall be settled by arbitration to be held in Santa Clara County, California, in accordance with the rules then in effect of the American Arbitration Association. The arbitrator may grant injunctions or other relief in such dispute or controversy. The decision of the arbitrator shall be final, conclusive and binding on the parties to the arbitration. Judgment may be entered on the arbitrator's decision in any court having jurisdiction. The Company and Purchaser shall each pay one-half of the costs and expenses of such arbitration, and each of us shall separately pay our counsel fees and expenses. 8. Entire Agreement; Governing Law. The Option Agreement is incorporated herein by reference. This Agreement, and the Option Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Purchaser with respect to the subject matter hereof, and may not be modified adversely to the Purchaser's interest except by means of a writing signed by the Company and Purchaser. This agreement is governed by the internal substantive laws, but not the choice of law rules, of California. Submitted by: Accepted by: OPTIONEE CATAPULSE INC. /s/ Paul D. Levy /s/ Michael T. Devlin Signature Michael T. Devlin Paul D. Levy Print Name Address 18880 Homestead Road Cupertino, CA 95014 Date Received: December 6,1999 EXHIBIT B INVESTMENT REPRESENTATION STATEMENT OPTIONEE: Paul D. Levy COMPANY: CATAPULSE INC. SECURITY: COMMON STOCK AMOUNT: 21,111,111 Shares DATE: December 6, 1999 In connection with the purchase of the above-listed Securities, the undersigned Optionee represents to the Company the following: (a) Optionee is aware of the Company's business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Securities. Optionee is acquiring these Securities for investment for Optionee's own account only and not with a view to, or for resale in connection with, any "distribution" thereof within the meaning of the Securities Act of 1933, as amended (the "Securities Act"). (b) Optionee acknowledges and understands that the Securities constitute "restricted securities" under the Securities Act and have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of Optionee's investment intent as expressed herein. In this connection, Optionee understands that, in the view of the Securities and Exchange Commission, the statutory basis for such exemption may be unavailable if Optionee's representation was predicated solely upon a present intention to hold these Securities for the minimum capital gains period specified under tax statutes, for a deferred sale, for or until an increase or decrease in the market price of the Securities, or for a period of one year or any other fixed period in the future. Optionee further understands that the Securities must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. Optionee further acknowledges and understands that the Company is under no obligation to register the Securities. Optionee understands that the certificate evidencing the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not required in the opinion of counsel satisfactory to the Company, and any other legend required under applicable state securities laws. (c) Optionee is familiar with the provisions of Rule 701 and Rule 144, each promulgated under the Securities Act, which, in substance, permit limited public resale of "restricted securities" acquired, directly or indirectly from the issuer thereof, in a non- public offering subject to the satisfaction of certain conditions. Rule 701 provides that if the issuer qualifies under Rule 701 at the time of the grant of the Option to the Optionee, the exercise will be exempt from registration under the Securities Act. In the event the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, ninety (90) days thereafter (or such longer period as any market stand-off agreement may require) the Securities exempt under Rule 701 may be resold, subject to the satisfaction of certain of the conditions specified by Rule 144, including: (1) the resale being made through a broker in an unsolicited "broker's transaction" or in transactions directly with a market maker (as said term is defined under the Securities Exchange Act of 1934); and, in the case of an affiliate, (2) the availability of certain public information about the Company, (3) the amount of Securities being sold during any three month period not exceeding the limitations specified in Rule 144(e), and (4) the timely filing of a Form 144, if applicable. In the event that the Company does not qualify under Rule 701 at the time of grant of the Option, then the Securities may be resold in certain limited circumstances subject to the provisions of Rule 144, which requires the resale to occur not less than one year after the later of the date the Securities were sold by the Company or the date the Securities were sold by an affiliate of the Company, within the meaning of Rule 144; and, in the case of acquisition of the Securities by an affiliate, or by a non-affiliate who subsequently holds the Securities less than two years, the satisfaction of the conditions set forth in sections (1), (2), (3) and (4) of the paragraph immediately above. (d) Optionee further understands that in the event all of the applicable requirements of Rule 701 or 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rules 144 and 701 are not exclusive, the Staff of the Securities and Exchange Commission has expressed its opinion that persons proposing to sell private placement securities other than in a registered offering and otherwise than pursuant to Rules 144 or 701 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk. Optionee understands that no assurances can be given that any such other registration exemption will be available in such event. Signature of Optionee: /s/ Paul D. Levy Date: December 6, 1999 EXHIBIT C-1 CATAPULSE INC. RESTRICTED STOCK PURCHASE AGREEMENT THIS AGREEMENT is made between Michael T. Devlin (the "Purchaser") and CataPULSE Inc. (the "Company") as of December 6, 1999. RECITALS A. Pursuant to the exercise of the stock option granted to Purchaser under the Stand-Alone Stock Option Agreement (the "Option Agreement") dated December 6, 1999 by and between the Company and Purchaser, which such Option Agreement is hereby incorporated by reference, Purchaser has elected to purchase 21,111,111 of those shares which have not become vested under the vesting schedule set forth in the Option Agreement ("Unvested Shares"). The Unvested Shares and the shares subject to the Option Agreement which have become vested are sometimes collectively referred to herein as the "Shares." B. As required by the Option Agreement, as a condition to Purchaser's election to exercise the Option, Purchaser must execute this Restricted Stock Purchase Agreement, which sets forth the rights and obligations of the parties with respect to Shares acquired upon exercise of the Option. 1. Repurchase Option. (a) If Purchaser's status as a Service Provider is terminated for any reason, including for cause, death, and disability, the Company shall have the right and option to purchase from Purchaser, or Purchaser's personal representative, as the case may be, all of the Purchaser's Unvested Shares as of the date of such termination at the price paid by the Purchaser for such Shares (the "Repurchase Option"). (b) Upon the occurrence of a termination, the Company may exercise its Repurchase Option by delivering personally or by registered mail, to Purchaser (or his transferee or legal representative, as the case may be), within ninety (90) days of the termination, a notice in writing indicating the Company's intention to exercise the Repurchase Option and setting forth a date for closing not later than thirty (30) days from the mailing of such notice. The closing shall take place at the Company's office. At the closing, the holder of the certificates for the Unvested Shares being transferred shall deliver the stock certificate or certificates evidencing the Unvested Shares, and the Company shall deliver the purchase price therefor. (c) At its option, the Company may elect to make payment for the Unvested Shares to a bank selected by the Company. The Company shall avail itself of this option by a notice in writing to Purchaser stating the name and address of the bank, date of closing, and waiving the closing at the Company's office. (d) If the Company does not elect to exercise the Repurchase Option conferred above by giving the requisite notice within ninety (90) days following the termination, the Repurchase Option shall terminate. (e) The Repurchase Option shall terminate in accordance with the Vesting Schedule in Optionee's Option Agreement. 2. Transferability of the Shares; Escrow. (a) Purchaser hereby authorizes and directs the Secretary of the Company, or such other person designated by the Company, to transfer the Unvested Shares as to which the Repurchase Option has been exercised from Purchaser to the Company. (b) To insure the availability for delivery of Purchaser's Unvested Shares upon repurchase by the Company pursuant to the Repurchase Option under Section 1, Purchaser hereby appoints the Secretary, or any other person designated by the Company as escrow agent, as its attorney-in-fact to sell, assign and transfer unto the Company, such Unvested Shares, if any, repurchased by the Company pursuant to the Repurchase Option and shall, upon execution of this Agreement, deliver and deposit with the Secretary of the Company, or such other person designated by the Company, the share certificates representing the Unvested Shares, together with the stock assignment duly endorsed in blank, attached hereto as Exhibit C-2. The Unvested Shares and stock assignment shall be held by the Secretary in escrow, pursuant to the Joint Escrow Instructions of the Company and Purchaser attached as Exhibit C-3 hereto, until the Company exercises its purchase right as provided in Section 1, until such Unvested Shares are vested, or until such time as this Agreement no longer is in effect. As a further condition to the Company's obligations under this Agreement, the spouse of the Purchaser, if any, shall execute and deliver to the Company the Consent of Spouse attached hereto as Exhibit C-4. Upon vesting of the Unvested Shares, the escrow agent shall promptly deliver to the Purchaser the certificate or certificates representing such Shares in the escrow agent's possession belonging to the Purchaser, and the escrow agent shall be discharged of all further obligations hereunder; provided, however, that the escrow agent shall nevertheless retain such certificate or certificates as escrow agent if so required pursuant to other restrictions imposed pursuant to this Agreement. (c) The Company, or its designee, shall not be liable for any act it may do or omit to do with respect to holding the Shares in escrow and while acting in good faith and in the exercise of its judgment. (d) Transfer or sale of the Shares is subject to restrictions on transfer imposed by any applicable state and federal securities laws. Any transferee shall hold such Shares subject to all the provisions hereof and the Exercise Notice executed by the Purchaser with respect to any Unvested Shares purchased by Purchaser and shall acknowledge the same by signing a copy of this Agreement. 3. Ownership, Voting Rights, Duties. This Agreement shall not affect in any way the ownership, voting rights or other rights or duties of Purchaser, except as specifically provided herein. 4. Legends. The share certificate evidencing the Shares issued hereunder shall be endorsed with the following legend (in addition to any legend required under applicable state securities laws): THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS UPON TRANSFER AND RIGHTS OF REPURCHASE AS SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY. 5. Adjustment for Stock Split. All references to the number of Shares and the purchase price of the Shares in this Agreement shall be appropriately adjusted to reflect any stock split, stock dividend or other change in the Shares which may be made by the Company after the date of this Agreement. 6. Notices. Notices required hereunder shall be given in person or by registered mail to the address of Purchaser shown on the records of the Company, and to the Company at their respective principal executive offices. 7. Survival of Terms. This Agreement shall apply to and bind Purchaser and the Company and their respective permitted assignees and transferees, heirs, legatees, executors, administrators and legal successors. 8. Section 83(b) Election. Purchaser hereby acknowledges that he or she has been informed that, with respect to the exercise of an option for Unvested Shares, an election may be filed by the Purchaser with the Internal Revenue Service, within 30 days of the purchase of the Shares, electing pursuant to Section 83(b) of the Code to be taxed currently on any difference between the purchase price of the Shares and their Fair Market Value on the date of purchase. This will result in a recognition of taxable income to the Purchaser on the date of exercise, measured by the excess, if any, of the fair market value of the Shares, at the time the option is exercised over the purchase price for the Shares. Absent such an election, taxable income will be measured and recognized by Purchaser at the time or times on which the Company's Repurchase Option lapses. Purchaser is strongly encouraged to seek the advice of his or her own tax consultants in connection with the purchase of the Shares and the advisability of filing of the Election under Section 83(b) of the Code. A form of Election under Section 83(b) is attached hereto as Exhibit C-5 for reference. PURCHASER ACKNOWLEDGES THAT IT IS PURCHASER'S SOLE RESPONSIBILITY AND NOT THE COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION 83(b), EVEN IF PURCHASER REQUESTS THE COMPANY OR ITS REPRESENTATIVE TO MAKE THIS FILING ON PURCHASER'S BEHALF. 9. Representations. Purchaser has reviewed with his own tax advisors the federal, state, local and foreign tax consequences of this investment and the transactions contemplated by this Agreement. Purchaser is relying solely on such advisors and not on any statements or representations of the Company or any of its agents. Purchaser understands that he or she (and not the Company) shall be responsible for his or her own tax liability that may arise as a result of this investment or the transactions contemplated by this Agreement. 10. Governing Law. This Agreement shall be governed by the internal substantive laws, but not the choice of law rules, of California. Purchaser represents that he or she has read this Agreement and is familiar with its terms and provisions. Purchaser hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Board upon any questions arising under this Agreement. IN WITNESS WHEREOF, this Agreement is deemed made as of the date first set forth above. CATAPULSE INC. /s/ Michael T. Devlin Michael T. Devlin PURCHASER /s/ Paul D. Levy Signature Paul D. Levy Printed Name Soc. Sec. No. Address: EXHIBIT C-2 ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED I, __________________________, hereby sell, assign and transfer unto CataPULSE Inc. (__________) shares of the Common Stock of CataPULSE Inc. standing in my name of the books of said corporation represented by Certificate No. _____ herewith and do hereby irrevocably constitute and appoint _____________________________ to transfer the said stock on the books of the within named corporation with full power of substitution in the premises. This Stock Assignment may be used only in accordance with the Restricted Stock Purchase Agreement between CataPULSE Inc. and the undersigned dated ______________, ____. Dated: _______________, ____ Signature: INSTRUCTIONS: Please do not fill in any blanks other than the signature line. The purpose of this assignment is to enable the Company to exercise its "repurchase option," as set forth in the Agreement, without requiring additional signatures on the part of the Purchaser. EXHIBIT C-3 JOINT ESCROW INSTRUCTIONS December 6, 1999 Corporate Assistant Secretary CataPULSE Inc. 18880 Homestead Road Cupertino, CA 95014 Attention: Michael Charney Dear Michael: As Escrow Agent for both CataPULSE Inc. (the "Company"), and the undersigned purchaser of stock of the Company (the "Purchaser"), you are hereby authorized and directed to hold the documents delivered to you pursuant to the terms of that certain Restricted Stock Purchase Agreement ("Agreement") between the Company and the undersigned, in accordance with the following instructions: 1. In the event the Company and/or any assignee of the Company (referred to collectively for convenience herein as the "Company") exercises the Company's repurchase option set forth in the Agreement, the Company shall give to Purchaser and you a written notice specifying the number of shares of stock to be purchased, the purchase price, and the time for a closing hereunder at the principal office of the Company. Purchaser and the Company hereby irrevocably authorize and direct you to close the transaction contemplated by such notice in accordance with the terms of said notice. 2. At the closing, you are directed (a) to date the stock assignments necessary for the transfer in question, (b) to fill in the number of shares being transferred, and (c) to deliver same, together with the certificate evidencing the shares of stock to be transferred, to the Company or its assignee, against the simultaneous delivery to you of the purchase price (by cash, a check, or some combination thereof) for the number of shares of stock being purchased pursuant to the exercise of the Company's repurchase option. 3. Purchaser irrevocably authorizes the Company to deposit with you any certificates evidencing shares of stock to be held by you hereunder and any additions and substitutions to said shares as defined in the Agreement. Purchaser does hereby irrevocably constitute and appoint you as Purchaser's attorney-in-fact and agent for the term of this escrow to execute with respect to such securities all documents necessary or appropriate to make such securities negotiable and to complete any transaction herein contemplated, including but not limited to the filing with any applicable state blue sky authority of any required applications for consent to, or notice of transfer of, the securities. Subject to the provisions of this paragraph 3, Purchaser shall exercise all rights and privileges of a stockholder of the Company while the stock is held by you. 4. Upon written request of the Purchaser, but no more than once per calendar year, unless the Company's repurchase option has been exercised, you will deliver to Purchaser a certificate or certificates representing so many shares of stock as are not then subject to the Company's repurchase option. Within 120 days after cessation of Purchaser's continuous employment by or services to the Company, or any parent or subsidiary of the Company, you will deliver to Purchaser a certificate or certificates representing the aggregate number of shares held or issued pursuant to the Agreement and not purchased by the Company or its assignees pursuant to exercise of the Company's repurchase option. 5. If at the time of termination of this escrow you should have in your possession any documents, securities, or other property belonging to Purchaser, you shall deliver all of the same to Purchaser and shall be discharged of all further obligations hereunder. 6. Your duties hereunder may be altered, amended, modified or revoked only by a writing signed by all of the parties hereto. 7. You shall be obligated only for the performance of such duties as are specifically set forth herein and may rely and shall be protected in relying or refraining from acting on any instrument reasonably believed by you to be genuine and to have been signed or presented by the proper party or parties. You shall not be personally liable for any act you may do or omit to do hereunder as Escrow Agent or as attorney-in-fact for Purchaser while acting in good faith, and any act done or omitted by you pursuant to the advice of your own attorneys shall be conclusive evidence of such good faith. 8. You are hereby expressly authorized to disregard any and all warnings given by any of the parties hereto or by any other person or corporation, excepting only orders or process of courts of law and are hereby expressly authorized to comply with and obey orders, judgments or decrees of any court. In case you obey or comply with any such order, judgment or decree, you shall not be liable to any of the parties hereto or to any other person, firm or corporation by reason of such compliance, notwithstanding any such order, judgment or decree being subsequently reversed, modified, annulled, set aside, vacated or found to have been entered without jurisdiction. 9. You shall not be liable in any respect on account of the identity, authorities or rights of the parties executing or delivering or purporting to execute or deliver the Agreement or any documents or papers deposited or called for hereunder. 10. You shall not be liable for the outlawing of any rights under the Statute of Limitations with respect to these Joint Escrow Instructions or any documents deposited with you. 11. You shall be entitled to employ such legal counsel and other experts as you may deem necessary properly to advise you in connection with your obligations hereunder, may rely upon the advice of such counsel, and may pay such counsel reasonable compensation therefor. 12. Your responsibilities as Escrow Agent hereunder shall terminate if you shall cease to be an officer or agent of the Company or if you shall resign by written notice to each party. In the event of any such termination, the Company shall appoint a successor Escrow Agent. 13. If you reasonably require other or further instruments in connection with these Joint Escrow Instructions or obligations in respect hereto, the necessary parties hereto shall join in furnishing such instruments. 14. It is understood and agreed that should any dispute arise with respect to the delivery and/or ownership or right of possession of the securities held by you hereunder, you are authorized and directed to retain in your possession without liability to anyone all or any part of said securities until such disputes shall have been settled either by mutual written agreement of the parties concerned or by a final order, decree or judgment of a court of competent jurisdiction after the time for appeal has expired and no appeal has been perfected, but you shall be under no duty whatsoever to institute or defend any such proceedings. 15. Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery or upon deposit in the United States Post Office, by registered or certified mail with postage and fees prepaid, addressed to each of the other parties thereunto entitled at the following addresses or at such other addresses as a party may designate by ten days' advance written notice to each of the other parties hereto. COMPANY: CataPULSE Inc. 18880 Homestead Road Cupertino, CA 95014 Attention: Paul D. Levy PURCHASER: Paul D. Levy ESCROW AGENT: Corporate Assistant Secretary CataPULSE Inc. 18880 Homestead Road Cupertino, CA 95014 Attention: Michael Charney 16. By signing these Joint Escrow Instructions, you become a party hereto only for the purpose of said Joint Escrow Instructions; you do not become a party to the Agreement. 17. This instrument shall be binding upon and inure to the benefit of the parties hereto, and their respective successors and permitted assigns. 18. These Joint Escrow Instructions shall be governed by the internal substantive laws, but not the choice of law rules, of California. CATAPULSE INC. /s/ Michael T. Devlin Michael T. Devlin Chief Executive Officer PURCHASER /s/ Paul D. Levy Signature Paul D. Levy Typed or Printed Name ESCROW AGENT /s/ Michael Charney Corporate Assistant Secretary EXHIBIT C-4 CONSENT OF SPOUSE I, Cindy C. Levy, spouse of Michael T. Devlin, have read and approve the foregoing Agreement. In consideration of granting of the right to my spouse to purchase shares of Common Stock of CataPULSE Inc., as set forth in the Agreement, I hereby appoint my spouse as my attorney-in-fact in respect to the exercise of any rights under the Agreement and agree to be bound by the provisions of the Agreement insofar as I may have any rights in said Agreement or any shares issued pursuant thereto under the community property laws or similar laws relating to marital property in effect in the state of our residence as of the date of the signing of the foregoing Agreement. Dated: December 6, 1999 /s/ Cindy C. Levy Signature EXHIBIT C-5 ELECTION UNDER SECTION 83(b) OF THE INTERNAL REVENUE CODE OF 1986 Taxpayer The undersigned spouse of taxpayer joins in this election. Dated: December 20, 1999 Cindy C. Levy Spouse of Taxpayer EXHIBIT D SECURITY AGREEMENT This Security Agreement is made as of December 6, 1999, between CataPULSE Inc., a Delaware corporation ("Pledgee"), and Michael T. Devlin ("Pledgor"). Recitals Pursuant to Pledgor's election to purchase shares of Pledgee's common stock ("Common Stock") under the Stand-Alone Stock Option Agreement dated December 6, 1999 (the "Option"), between Pledgor and Pledgee, and Pledgor's election under the terms of the Option to pay for such shares with his promissory note (the "Note"), Pledgor has purchased 21,111,111 shares of Pledgee's Common Stock (the "Shares") at a price of $0.03 per share, for a total purchase price of $633,333.33. The Note and the obligations thereunder are as set forth in Exhibit E to the Option. NOW, THEREFORE, it is agreed as follows: 1. Creation and Description of Security Interest. In consid- eration of the transfer of the Shares to Pledgor under the Option Agreement, Pledgor, pursuant to the California Commercial Code, hereby pledges all of such Shares (herein sometimes referred to as the "Collateral") represented by certificate number ______, duly endorsed in blank or with executed stock powers, and herewith delivers said certificate to the Secretary of Pledgee ("Pledgeholder"), who shall hold said certificate subject to the terms and conditions of this Secu- rity Agreement. The pledged stock (together with an executed blank stock assign- ment for use in transferring all or a portion of the Shares to Pledgee if, as and when required pursuant to this Security Agreement) shall be held by the Pledgeholder as security for the repayment of the Note, and any extensions or renewals thereof, to be executed by Pledgor pursuant to the terms of the Option, and the Pledgeholder shall not encumber or dispose of such Shares except in accordance with the provisions of this Security Agreement. 2. Pledgor's Representations and Covenants. To induce Pledgee to enter into this Security Agreement, Pledgor represents and covenants to Pledgee, its successors and assigns, as follows: (a) Payment of Indebtedness. Pledgor will pay the prin- cipal sum of the Note secured hereby, together with interest thereon, at the time and in the manner provided in the Note. (b) Encumbrances. The Shares are free of all other encumbrances, defenses and liens, and Pledgor will not further encumber the Shares without the prior written consent of Pledgee. (c) Margin Regulations. In the event that Pledgee's Common Stock is now or later becomes margin-listed by the Federal Reserve Board and Pledgee is classified as a "lender" within the meaning of the regulations under Part 207 of Title 12 of the Code of Federal Regulations ("Regulation G"), Pledgor agrees to cooperate with Pledgee in making any amendments to the Note or providing any additional collateral as may be necessary to comply with such regulations. 3. Voting Rights. During the term of this pledge and so long as all payments of principal and interest are made as they become due under the terms of the Note, Pledgor shall have the right to vote all of the Shares pledged hereunder. 4. Stock Adjustments. In the event that during the term of the pledge any stock dividend, reclassification, readjustment or other changes are declared or made in the capital structure of Pledgee, all new, substituted and additional shares or other securities issued by reason of any such change shall be delivered to and held by the Pledgee under the terms of this Security Agreement in the same manner as the Shares originally pledged hereunder. In the event of substitution of such securities, Pledgor, Pledgee and Pledgeholder shall cooperate and execute such documents as are reasonable so as to provide for the substitution of such Collateral and, upon such substitution, references to "Shares" in this Security Agreement shall include the substituted shares of capital stock of Pledgor as a result thereof. 5. Options and Rights. In the event that, during the term of this pledge, subscription Options or other rights or options shall be issued in connection with the pledged Shares, such rights, Options and options shall be the property of Pledgor and, if exercised by Pledgor, all new stock or other securities so acquired by Pledgor as it relates to the pledged Shares then held by Pledgeholder shall be immediately delivered to Pledgeholder, to be held under the terms of this Security Agreement in the same manner as the Shares pledged. 6. Default. Pledgor shall be deemed to be in default of the Note and of this Security Agreement in the event: (a) Payment of principal or interest on the Note shall be delinquent for a period of 10 days or more; or (b) Pledgor fails to perform any of the covenants set forth in the Option or contained in this Security Agreement for a period of 10 days after written notice thereof from Pledgee. In the case of an event of Default, as set forth above, Pledgee shall have the right to accelerate payment of the Note upon notice to Pledgor, and Pledgee shall thereafter be entitled to pursue its remedies under the California Commercial Code. 7. Release of Collateral. Subject to any applicable contrary rules under Regulation G, there shall be released from this pledge a portion of the pledged Shares held by Pledgeholder hereunder upon payments of the principal of the Note. The number of the pledged Shares which shall be released shall be that number of full Shares which bears the same proportion to the initial number of Shares pledged hereunder as the payment of principal bears to the initial full principal amount of the Note. 8. Withdrawal or Substitution of Collateral. Pledgor shall not sell, withdraw, pledge, substitute or otherwise dispose of all or any part of the Collateral without the prior written consent of Pledgee. 9. Term. This pledge of Shares shall continue until the payment of all indebtedness secured hereby, at which time the remaining pledged stock shall be promptly delivered to Pledgor, subject to the provisions for prior release of a portion of the Collateral as provided in paragraph 7 above. 10. Insolvency. Pledgor agrees that if a bankruptcy or insol- vency proceeding is instituted by or against it, or if a receiver is appointed for the property of Pledgor, or if Pledgor makes an assignment for the benefit of creditors, the entire amount unpaid on the Note shall become immediately due and payable, and Pledgee may proceed as provided in the case of default. 11. Pledgeholder Liability. In the absence of willful or gross negligence, Pledgeholder shall not be liable to any party for any of his acts, or omissions to act, as Pledgeholder. 12. Invalidity of Particular Provisions. Pledgor and Pledgee agree that the enforceability or invalidity of any provision or provisions of this Security Agreement shall not render any other provision or provisions herein contained unenforceable or invalid. 13. Successors or Assigns. Pledgor and Pledgee agree that all of the terms of this Security Agreement shall be binding on their respective successors and assigns, and that the term "Pledgor" and the term "Pledgee" as used herein shall be deemed to include, for all purposes, the respective designees, successors, assigns, heirs, executors and administrators. 14. Governing Law. This Security Agreement shall be interpreted and governed under the internal substantive laws, but not the choice of law rules, of California. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. PLEDGOR /s/ Paul D. Levy Signature Paul D. Levy Print Name Address: PLEDGEE CATAPULSE INC., a Delaware corporation /s/ Michael T. Devlin Michael T. Devlin PLEDGEHOLDER /s/ Michael Charney Assistant Secretary of CataPULSE Inc. EXHIBIT E NOTE $633,333.33 Cupertino, California December 6, 1999 FOR VALUE RECEIVED, Michael T. Devlin promises to pay to CataPULSE Inc., a Delaware corporation (the "Company"), or order, the principal sum of Six Hundred Thirty Three Thousand Three Hundred Thirty Three Dollars and Thirty Three Cents ($633,333.33), together with interest on the unpaid principal hereof from the date hereof at the rate of 6.11 percent (6.11%) per annum, compounded semiannually. Principal and interest shall be due and payable on December 6, 2004. Payment of principal and interest shall be made in lawful money of the United States of America. The undersigned may at any time prepay all or any portion of the principal or interest owing hereunder. This Note is subject to the terms of the Stand-Alone Stock Option Agreement, dated as of December 6, 1999. This Note is secured in part by a pledge of the Company's common stock under the terms of a Security Agreement of even date herewith and is subject to all the provisions thereof. The holder of this Note shall have full recourse against the undersigned, and shall not be required to proceed against the collateral securing this Note in the event of default. In the event the undersigned shall cease to be an employee, director or consultant of the Company for any reason, this Note shall, at the option of the Company, be accelerated, and the whole unpaid balance on this Note of principal and accrued interest shall be immediately due and payable. Should any action be instituted for the collection of this Note, the reasonable costs and attorneys' fees therein of the holder shall be paid by the undersigned. Paul D. Levy EX-10.8 9 STAND-ALONE STOCK OPTION AGREEMENT WITH MICHAEL T. DEVLIN Stand-Alone Devlin



                                            CataPULSE INC.
                                 STAND-ALONE STOCK OPTION AGREEMENT

I. NOTICE OF STOCK OPTION GRANT
Michael T. Devlin
Address:

You have been granted a Nonstatutory Stock Option to purchase
shares (the "Shares") of Common Stock of the Company, subject to the
terms and conditions of this Agreement, as follows:
Date of Grant   December 6, 1999
Vesting Commencement Date       December 6, 1999
Exercise Price per Share        $0.03
Total Number of Shares Granted  21,111,111
Total Exercise Price    $633,333.33
Term/Expiration Date:   December 6, 2009
Vesting Schedule:
This Option shall vest and may be exercised (in accordance with
Section 3), in whole or in part, in accordance with the following
schedule:
1/48th of the Shares (439,814.8125 Shares) subject to the Option
shall vest each month after the Vesting Commencement Date, so that the
Option shall be fully vested four (4) years from the Date of Grant,
subject to the Optionee continuing to be a Service Provider on such
dates.
All of the remaining Shares subject to the Option shall vest
immediately prior to the closing of a change of control.  A "change of
control" shall mean a merger or consolidation of the Company with or
into another corporation, entity or person (where the stockholders of
the Company immediately prior to such merger or consolidation hold less
than 50% of the capital stock of the surviving corporation immediately
following the merger or consolidation), or the sale of all or
substantially all of the Company's assets to another corporation,
entity or person.  In addition, all of the remaining Shares subject to
the Option shall vest if Optionee is not elected as a member of the
Company's Board of Directors, is removed (other than for cause) from
the Board of Directors or is not reelected to the Board of Directors,
unless, in either event, Optionee has voluntarily resigned as an
employee of the Company; provided, however that a voluntary resignation
from the Board of Directors by Optionee or Optionee's voluntary
election to not stand for election to the Board of Directors shall not
cause the remaining Shares subject to the Option to vest.
Termination Period
This Option may be exercised, to the extent it is then vested,
within three (3) months after Optionee ceases to be a Service Provider
in accordance with Section 8 of this Agreement.  Upon the death or
Disability of the Optionee, this Option may be exercised, to the extent
it is then vested, within twelve (12) months after the Optionee ceases
to be a Service Provider in accordance with Sections 9 and 10 of this
Agreement.  In no event shall this Option be exercised later than the
Term/Expiration Date provided.
II. AGREEMENT
1. Definitions.  As used herein, the following definitions
shall apply:
(a) "Agreement" means this stock option agreement between
the Company and Optionee evidencing the terms and conditions of this
Option.
(b) "Applicable Laws" means the requirements relating to
the administration of stock options under U.S. state corporate laws,
U.S. federal and state securities laws, the Code, any stock exchange or
quotation system on which the Common Stock is listed or quoted and the
applicable laws of any foreign country or jurisdiction that may apply
to this Option.
(c) "Board" means the Board of Directors of the Company
or any committee of the Board that has been designated by the Board to
administer this Agreement.
(d) "Code" means the Internal Revenue Code of 1986, as
amended.
(e) "Common Stock" means the common stock of the Company.
(f) "Company" means CataPULSE Inc., a Delaware
corporation.
(g) "Consultant" means any person, including an advisor,
engaged by the Company or a Parent or Subsidiary to render services to
such entity.
(h) "Director" means a member of the Board.
(i) "Disability" means total and permanent disability as
defined in Section 22(e)(3) of the Code.
(j) "Employee" means any person, including Officers and
Directors, employed by the Company or any Parent or Subsidiary of the
Company.  A Service Provider shall not cease to be an Employee in the
case of (i) any leave of absence approved by the Company or (ii)
transfers between locations of the Company or between the Company, its
Parent, any Subsidiary, or any successor.
(k) "Exchange Act" means the Securities Exchange Act of
1934, as amended.
(l) "Fair Market Value" means, as of any date, the value
of Common Stock determined as follows:
(i) If the Common Stock is listed on any
established stock exchange or a national market system, including
without limitation The Nasdaq National Market or The Nasdaq SmallCap
Market of The Nasdaq Stock Market, its Fair Market Value shall be the
closing sales price for such stock (or the closing bid, if no sales
were reported) as quoted on such exchange or system for the last market
trading day prior to the time of determination, as reported in The Wall
Street Journal or such other source as the Administrator deems
reliable;
(ii) If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, its
Fair Market Value shall be the mean between the high bid and low asked
prices for the Common Stock on the last market trading day prior to the
day of determination; or
(iii) In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be determined in good
faith by the Board.
(m) "Nonstatutory Stock Option" means an Option not
intended to qualify as an incentive stock option within the meaning of
Section 422 of the Code and the regulations promulgated thereunder.
(n) "Notice of Grant" means the written notice, in Part I
of this Agreement, evidencing certain the terms and conditions of this
Option.  The Notice of Grant is part of the Agreement.
(o) "Officer" means a person who is an officer of the
Company within the meaning of Section 16 of the Exchange Act and the
rules and regulations promulgated thereunder.
(p) "Option" means this stock option.
(q) "Optioned Stock" means the Common Stock subject to
this Option.
(r) "Optionee" means the person named in the Notice of
Grant or such person's successor.
(s) "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(t) "Service Provider" means an individual that serves as
either an Employee, Director or Consultant (as requested by the
Company) for at least twenty-five (25) percent of such individual's
time.
(u) "Share" means a share of the Common Stock, as
adjusted in accordance with Section 11 of this Agreement.
(v) "Subsidiary" means a "subsidiary corporation",
whether now or hereafter existing, as defined in Section 424(f) of the
Code.
2. Grant of Option.  The Board hereby grants to the Optionee
named in the Notice of Grant, attached as Part I of this Agreement, the
Option to purchase the number of Shares, as set forth in the Notice of
Grant, at the exercise price per share set forth in the Notice of Grant
(the "Exercise Price"), subject to the terms and conditions of this
Agreement.
3. Exercise of Option.
(a) Right to Exercise.
(i) Subject to subsections 3(a)(ii) and 3(a)(iii)
below, this Option shall be exercisable cumulatively according to the
Vesting Schedule set forth in the Notice of Grant.  Alternatively, at
the election of the Optionee, this Option may be exercised in whole or
in part at any time as to Shares that have not yet vested.  For
purposes of this Agreement, Shares subject to the Option shall vest
based on continued employment of Optionee continuing to be a Service
Provider with the Company.  Vested Shares shall not be subject to the
Company's repurchase right (as set forth in the Restricted Stock
Purchase Agreement, attached hereto as Exhibit C-1).
(ii) As a condition to exercising this Option for
unvested Shares, the Optionee shall execute the Restricted Stock
Purchase Agreement.
(iii) This Option may not be exercised for a fraction
of a Share.
(b) Method of Exercise.  This Option is exercisable by
delivery of an exercise notice, in the form attached as Exhibit A (the
"Exercise Notice"), which shall state the election to exercise the
Option, the number of Shares in respect of which the Option is being
exercised (the "Exercised Shares"), and such other representations and
agreements as may be required by the Company.  The Exercise Notice
shall be completed by the Optionee and delivered to Secretary of the
Company.  The Exercise Notice shall be accompanied by payment of the
aggregate Exercise Price as to all Exercised Shares.  This Option shall
be deemed to be exercised upon receipt by the Company of such fully
executed Exercise Notice accompanied by such aggregate Exercise Price.
(c) Legal Compliance.  No Shares shall be issued pursuant
to the exercise of this Option unless such issuance and exercise
complies with Applicable Laws.  Assuming such compliance, for income
tax purposes the Exercised Shares shall be considered transferred to
the Optionee on the date the Option is exercised with respect to such
Exercised Shares.
(d) Buyout Provisions.  The Board may at any time offer
to buy out for a payment in cash or Shares an Option previously granted
based on such terms and conditions as the Board shall establish and
communicate to the Optionee at the time that such offer is made.
4. Optionee's Representations.  In the event the Shares have
not been registered under the Securities Act of 1933, as amended, at
the time this Option is exercised, the Optionee shall, if required by
the Company, concurrently with the exercise of all or any portion of
this Option, deliver to the Company his or her Investment
Representation Statement in the form attached hereto as Exhibit B.
5. Method of Payment.  Payment of the aggregate Exercise Price
shall be by any of the following, or a combination thereof, at the
election of the Optionee:
(a) cash or check;
(b) consideration received by the Company under a
cashless exercise program implemented by the Company; or
(c) surrender of other Shares which (i) in the case of
Shares acquired upon exercise of an option, have been owned by the
Optionee for more than six (6) months on the date of surrender, and
(ii) have a Fair Market Value on the date of surrender equal to the
aggregate Exercise Price of the Exercised Shares.
(d) delivery of Optionee's promissory note (the "Note")
in the form attached hereto as Exhibit E, in the amount of the
aggregate Exercise Price of the Exercised Shares together with the
execution and delivery by the Optionee of the Security Agreement
attached hereto as Exhibit D.  The Note shall bear interest at the
"applicable federal rate" prescribed under the Code and its regulations
at time of purchase, and shall be secured by a pledge of the Shares
purchased by the Note pursuant to the Security Agreement.
6. Non-Transferability of Option.  This Option may not be
transferred in any manner otherwise than by will or by the laws of
descent or distribution and may be exercised during the lifetime of
Optionee only by the Optionee.  The terms of this Agreement shall be
binding upon the executors, administrators, heirs, successors and
assigns of the Optionee.
7. Term of Option.  This Option may be exercised only within
the term set out in the Notice of Grant, and may be exercised during
such term only in accordance with the terms of this Agreement.
8. Termination of Relationship as a Service Provider.  If the
Optionee ceases to be a Service Provider (other than for death or
Disability), this Option may be exercised for a period of three (3)
months after the date of such termination (but in no event later than
the expiration date of this Option as set forth in the Notice of Grant)
to the extent that the Option is vested on the date of such
termination.  To the extent that the Optionee does not exercise this
Option within the time specified herein, the Option shall terminate.
9. Disability of Optionee.  If the Optionee ceases to be a
Service Provider as a result of the Optionee's Disability, this Option
may be exercised for a period of twelve (12) months after the date of
such termination (but in no event later than the expiration date of
this Option as set forth in the Notice of Grant) to the extent that the
Option is vested on the date of such termination.  To the extent that
Optionee does not exercise this Option within the time specified
herein, the Option shall terminate.
10. Death of Optionee.  If the Optionee dies while a Service
Provider, the Option may be exercised at any time within twelve (12)
months following the date of death (but in no event later than the
expiration date of this Option as set forth in the Notice of Grant), by
the Optionee's estate or by a person who acquired the right to exercise
the Option by bequest or inheritance, but only to the extent that the
Option is vested on the date of death.  If, after death, the Optionee's
estate or a person who acquired the right to exercise the Option by
bequest or inheritance does not exercise the Option within the time
specified herein, the Option shall terminate.
11. Adjustments Upon Changes in Capitalization, Dissolution,
Merger or Asset Sale.
(a) Changes in Capitalization.  Subject to any required
action by the stockholders of the Company, the number of shares of
Common Stock covered by this Option, as well as the price per share of
Common Stock covered by this Option, shall be proportionately adjusted
for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock, or any
other increase or decrease in the number of issued shares of Common
Stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the
Company shall not be deemed to have been "effected without receipt of
consideration."  Such adjustment shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of
stock of any class, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares of Common
Stock subject to this Option.
(b) Dissolution or Liquidation.  In the event of the
proposed dissolution or liquidation of the Company, the Board shall
notify Optionee as soon as practicable prior to the effective date of
such proposed transaction.  The Board in its discretion may provide for
the Optionee to have the right to exercise his or her Option until
fifteen (15) days prior to such transaction as to all of the Optioned
Stock covered thereby, including Shares as to which the Option would
not otherwise be exercisable. The Board may permit the Option to be
exercised contingent upon this transaction. To the extent it has not
been previously exercised, the Option will terminate immediately prior
to the consummation of such proposed action.
12. Lock-Up Period.  Optionee agrees, in connection with the
Company's initial public offering of the Company's securities, (i) not
to sell, make short sales of, loan, grant any options for the purchase
of, or otherwise dispose of any shares of Common Stock of the Company
held by Optionee (other than those shares included in the registration)
without the prior written consent of the Company or the underwriters
managing such initial underwritten public offering of the Company's
securities for up to one hundred eighty (180) days from the effective
date of such registration and (ii) further agrees to execute any
agreement reflecting (i) above as may be requested by the underwriters
at the time of the public offering.
13. Notices.  Any notice to be given to the Company hereunder
shall be in writing and shall be addressed to the Company at its then
current principal executive office or to such other address as the
Company may hereafter designate to the Optionee by notice as provided
in this Section.  Any notice to be given to the Optionee hereunder
shall be addressed to the Optionee at the address set forth beneath his
signature hereto, or at such other address as the Optionee may
hereafter designate to the Company by notice as provided herein.  A
notice shall be deemed to have been duly given when personally
delivered or mailed by registered or certified mail to the party
entitled to receive it.
14. Tax Consequences.  Some of the federal tax consequences
relating to this Option, as of the date of this Option, are set forth
below.  THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND
REGULATIONS ARE SUBJECT TO CHANGE.  THE OPTIONEE SHOULD CONSULT A TAX
ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
(a) Exercising the Option.  The Optionee may incur
regular federal income tax liability upon exercise of a Nonstatutory
Stock Option (an "NSO").  The Optionee will be treated as having
received compensation income (taxable at ordinary income tax rates)
equal to the excess, if any, of the Fair Market Value of the Exercised
Shares on the date of exercise over their aggregate Exercise Price.  If
the Optionee is an Employee or a former Employee, the Company will be
required to withhold from his or her compensation or collect from
Optionee and pay to the applicable taxing authorities an amount in cash
equal to a percentage of this compensation income at the time of
exercise, and may refuse to honor the exercise and refuse to deliver
Shares if such withholding amounts are not delivered at the time of
exercise.
(b) Disposition of Shares.  If the Optionee holds NSO
Shares for at least one year, any gain realized on disposition of the
Shares will be treated as long-term capital gain for federal income tax
purposes.
(c) Section 83(b) Election for Unvested Shares Purchased
Pursuant to Options.  With respect to the exercise of this Option for
unvested Shares, an election may be filed by the Optionee with the
Internal Revenue Service, within 30 days of the purchase of the Shares,
electing pursuant to Section 83(b) of the Code to be taxed currently on
any difference between the purchase price of the Shares and their Fair
Market Value on the date of purchase.  This will result in a
recognition of taxable income to the Optionee on the date of exercise,
measured by the excess, if any, of the Fair Market Value of the Shares,
at the time the Option is exercised over the purchase price for the
Shares.  Absent such an election, taxable income will be measured and
recognized by Optionee at the time or times on which the Company's
repurchase option lapses.  Optionee is strongly encouraged to seek the
advice of his or her own tax consultants in connection with the
purchase of the Shares and the advisability of filing of the Election
under Section 83(b) of the Code.  A form of Election under
Section 83(b) is attached hereto as Exhibit C-5 for reference.
15. Entire Agreement; Governing Law.  This Agreement
constitutes the entire agreement of the parties with respect to the
subject matter hereof and supersedes in its entirety all prior
undertakings and agreements of the Company and Optionee with respect to
the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company
and Optionee.  This agreement is governed by the internal substantive
laws, but not the choice of law rules, of California
16. NO GUARANTEE OF CONTINUED SERVICE.  OPTIONEE ACKNOWLEDGES
AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE
HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL
OF THE COMPANY (AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED
AN OPTION OR PURCHASING SHARES HEREUNDER).  OPTIONEE FURTHER
ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS
CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT
CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A
SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND
SHALL NOT INTERFERE WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE OPTIONEE'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME,
WITH OR WITHOUT CAUSE.
By your signature and the signature of the Company's
representative below, you and the Company agree that this Option is
granted under and governed by the terms and conditions of this
Agreement.  Optionee has reviewed this Agreement in its entirety, has
had an opportunity to obtain the advice of counsel prior to executing
this Agreement and fully understands all provisions of this Agreement.
Optionee hereby agrees to accept as binding, conclusive and final all
decisions or interpretations of the Board upon any questions relating
to this Agreement.  Optionee further agrees to notify the Company upon
any change in the residence address indicated below.

OPTIONEE                CATAPULSE INC.
/s/ Michael T. Devlin   /s/ Paul D. Levy
Signature               Paul D. Levy
                        Chief Executive Officer
Michael T. Devlin
Print Name

Residence Address




CONSENT OF SPOUSE
The undersigned spouse of Optionee has read and hereby approves
the terms and conditions of this Agreement.  In consideration of the
Company's granting his or her spouse the right to purchase Shares as
set forth in this Agreement, the undersigned hereby agrees to be
irrevocably bound by the terms and conditions of this Agreement and
further agrees that any community property interest shall be similarly
bound.  The undersigned hereby appoints the undersigned's spouse as
attorney-in-fact for the undersigned with respect to any amendment or
exercise of rights under this Agreement.
/s/ Bobbie Devlin
Spouse of Optionee

EXHIBIT A
CATAPULSE INC.
EXERCISE NOTICE

CataPULSE Inc.
18880 Homestead Road
Cupertino, CA  95014
Attention:

1. Exercise of Option.  Effective as of today, December 6,
1999, the undersigned ("Purchaser") hereby elects to purchase
21,111,111 shares (the "Shares") of the Common Stock of CataPULSE Inc.
(the "Company") under and pursuant to the Stand-Alone Stock Option
Agreement dated December 6, 1999 (the "Option Agreement").  The
purchase price for the Shares shall be $0.03, as required by the Option
Agreement.
2. Delivery of Payment.  Purchaser herewith delivers to the
Company the full purchase price for the Shares.
3. Representations of Purchaser.  Purchaser acknowledges that
Purchaser has received, read and understood the Option Agreement and
agrees to abide by and be bound by its terms and conditions.
4. Rights as Shareholder.  Until the issuance (as evidenced by
the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the Shares, no right to
vote or receive dividends or any other rights as a stockholder shall
exist with respect to the Optioned Stock, notwithstanding the exercise
of the Option.  The Shares so acquired shall be issued to the Optionee
as soon as practicable after exercise of the Option.  No adjustment
will be made for a dividend or other right for which the record date is
prior to the date of issuance, except as provided in Section 11 of the
Option Agreement.
5. Tax Consultation.  Purchaser understands that Purchaser may
suffer adverse tax consequences as a result of Purchaser's purchase or
disposition of the Shares.  Purchaser represents that Purchaser has
consulted with any tax consultants Purchaser deems advisable in
connection with the purchase or disposition of the Shares and that
Purchaser is not relying on the Company for any tax advice.
6. Restrictive Legends and Stop-Transfer Orders.
(a) Legends.  Optionee understands and agrees that the
Company shall cause the legends set forth below or legends substan-
tially equivalent thereto, to be placed upon any certificate(s)
evidencing ownership of the Shares together with any other legends that
may be required by the Company or by state or federal securities laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR,
IN THE OPINION OF COMPANY COUNSEL SATISFACTORY TO THE
ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER,
PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER, INCLUDING A 180-DAY
MARKET STANDOFF PROVISION, AS SET FORTH IN THE EXERCISE
NOTICE AND THE STAND-ALONE OPTION AGREEMENT BETWEEN THE
ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, COPIES OF
WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE
ISSUER.  SUCH TRANSFER RESTRICTIONS ARE BINDING ON
TRANSFEREES OF THESE SHARES.
(b) Stop-Transfer Notices.  Optionee agrees that, in
order to ensure compliance with the restrictions referred to herein,
the Company may issue appropriate "stop transfer" instructions to its
transfer agent, if any, and that, if the Company transfers its own
securities, it may make appropriate notations to the same effect in its
own records.
(c) Refusal to Transfer.  The Company shall not be
required (i) to transfer on its books any Shares that have been sold or
otherwise transferred in violation of any of the provisions of this
Exercise Notice or (ii) to treat as owner of such Shares or to accord
the right to vote or pay dividends to any purchaser or other transferee
to whom such Shares shall have been so transferred.
(d) Successors and Assigns.  The Company may assign any
of its rights under this Exercise Notice to single or multiple
assignees, and this Exercise Notice shall inure to the benefit of the
successors and assigns of the Company.  Subject to the restrictions on
transfer herein set forth, this Exercise Notice shall be binding upon
Optionee and his or her heirs, executors, administrators, successors
and assigns.
7. Arbitration. Any dispute or controversy arising out of,
relating to, or concerning any interpretation, construction,
performance or breach of this agreement, shall be settled by
arbitration to be held in Santa Clara County, California, in accordance
with the rules then in effect of the American Arbitration Association.
The arbitrator may grant injunctions or other relief in such dispute or
controversy.  The decision of the arbitrator shall be final, conclusive
and binding on the parties to the arbitration.  Judgment may be entered
on the arbitrator's decision in any court having jurisdiction.  The
Company and Purchaser shall each pay one-half of the costs and expenses
of such arbitration, and each of us shall separately pay our counsel
fees and expenses.
8. Entire Agreement; Governing Law.  The Option Agreement is
incorporated herein by reference.  This Agreement, and the Option
Agreement constitute the entire agreement of the parties with respect
to the subject matter hereof and supersede in their entirety all prior
undertakings and agreements of the Company and Purchaser with respect
to the subject matter hereof, and may not be modified adversely to the
Purchaser's interest except by means of a writing signed by the Company
and Purchaser.  This agreement is governed by the internal substantive
laws, but not the choice of law rules, of California.
Submitted by:                                           Accepted by:
OPTIONEE                CATAPULSE INC.
/s/ Michael T. Devlin   /s/ Paul D. Levy
Signature               Paul D. Levy
                        Chief Executive Officer

Michael T. Devlin
Print Name

Address
                18880 Homestead Road
                Cupertino, CA  95014

                                              Date Received: December 6, 1999



EXHIBIT B
INVESTMENT REPRESENTATION STATEMENT

OPTIONEE:       Michael T. Devlin
COMPANY:        CATAPULSE INC.
SECURITY:       COMMON STOCK
AMOUNT: 21,111,111 Shares
DATE:           December 6, 1999

In connection with the purchase of the above-listed Securities,
the undersigned Optionee represents to the Company the following:
(a) Optionee is aware of the Company's business affairs
and financial condition and has acquired sufficient information about
the Company to reach an informed and knowledgeable decision to acquire
the Securities.  Optionee is acquiring these Securities for investment
for Optionee's own account only and not with a view to, or for resale
in connection with, any "distribution" thereof within the meaning of
the Securities Act of 1933, as amended (the "Securities Act").
(b) Optionee acknowledges and understands that the
Securities constitute "restricted securities" under the Securities Act
and have not been registered under the Securities Act in reliance upon
a specific exemption therefrom, which exemption depends upon, among
other things, the bona fide nature of Optionee's investment intent as
expressed herein.  In this connection, Optionee understands that, in
the view of the Securities and Exchange Commission, the statutory basis
for such exemption may be unavailable if Optionee's representation was
predicated solely upon a present intention to hold these Securities for
the minimum capital gains period specified under tax statutes, for a
deferred sale, for or until an increase or decrease in the market price
of the Securities, or for a period of one year or any other fixed
period in the future.  Optionee further understands that the Securities
must be held indefinitely unless they are subsequently registered under
the Securities Act or an exemption from such registration is available.
Optionee further acknowledges and understands that the Company is under
no obligation to register the Securities.  Optionee understands that
the certificate evidencing the Securities will be imprinted with a
legend which prohibits the transfer of the Securities unless they are
registered or such registration is not required in the opinion of
counsel satisfactory to the Company, and any other legend required
under applicable state securities laws.
(c) Optionee is familiar with the provisions of Rule 701
and Rule 144, each promulgated under the Securities Act, which, in
substance, permit limited public resale of "restricted securities"
acquired, directly or indirectly from the issuer thereof, in a non-
public offering subject to the satisfaction of certain conditions.
Rule 701 provides that if the issuer qualifies under Rule 701 at the
time of the grant of the Option to the Optionee, the exercise will be
exempt from registration under the Securities Act.  In the event the
Company becomes subject to the reporting requirements of Section 13 or
15(d) of the Securities Exchange Act of 1934, ninety (90) days
thereafter (or such longer period as any market stand-off agreement may
require) the Securities exempt under Rule 701 may be resold, subject to
the satisfaction of certain of the conditions specified by Rule 144,
including:  (1) the resale being made through a broker in an
unsolicited "broker's transaction" or in transactions directly with a
market maker (as said term is defined under the Securities Exchange Act
of 1934); and, in the case of an affiliate, (2) the availability of
certain public information about the Company, (3) the amount of
Securities being sold during any three month period not exceeding the
limitations specified in Rule 144(e), and (4) the timely filing of a
Form 144, if applicable.
                In the event that the Company does not qualify under
Rule 701 at the time of grant of the Option, then the Securities may be
resold in certain limited circumstances subject to the provisions of
Rule 144, which requires the resale to occur not less than one year
after the later of the date the Securities were sold by the Company or
the date the Securities were sold by an affiliate of the Company,
within the meaning of Rule 144; and, in the case of acquisition of the
Securities by an affiliate, or by a non-affiliate who subsequently
holds the Securities less than two years, the satisfaction of the
conditions set forth in sections (1), (2), (3) and (4) of the paragraph
immediately above.
(d) Optionee further understands that in the event all of
the applicable requirements of Rule 701 or 144 are not satisfied,
registration under the Securities Act, compliance with Regulation A, or
some other registration exemption will be required; and that,
notwithstanding the fact that Rules 144 and 701 are not exclusive, the
Staff of the Securities and Exchange Commission has expressed its
opinion that persons proposing to sell private placement securities
other than in a registered offering and otherwise than pursuant to
Rules 144 or 701 will have a substantial burden of proof in
establishing that an exemption from registration is available for such
offers or sales, and that such persons and their respective brokers who
participate in such transactions do so at their own risk.  Optionee
understands that no assurances can be given that any such other
registration exemption will be available in such event.

                                                Signature of Optionee:
                                                /s/ Michael T. Devlin



                                                Date: December 6, 1999

EXHIBIT C-1
CATAPULSE INC.
RESTRICTED STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made between Michael T. Devlin (the
"Purchaser") and CataPULSE Inc. (the "Company") as of December 6,
1999.
RECITALS
A.      Pursuant to the exercise of the stock option granted to
Purchaser under the Stand-Alone Stock Option Agreement (the "Option
Agreement") dated December 6, 1999 by and between the Company and
Purchaser, which such Option Agreement is hereby incorporated by
reference, Purchaser has elected to purchase 21,111,111 of those shares
which have not become vested under the vesting schedule set forth in
the Option Agreement ("Unvested Shares").  The Unvested Shares and the
shares subject to the Option Agreement which have become vested are
sometimes collectively referred to herein as the "Shares."
B.      As required by the Option Agreement, as a condition to
Purchaser's election to exercise the Option, Purchaser must execute
this Restricted Stock Purchase Agreement, which sets forth the rights
and obligations of the parties with respect to Shares acquired upon
exercise of the Option.
1. Repurchase Option.
(a) If Purchaser's status as a Service Provider is
terminated for any reason, including for cause, death, and disability,
the Company shall have the right and option to purchase from Purchaser,
or Purchaser's personal representative, as the case may be, all of the
Purchaser's Unvested Shares as of the date of such termination at the
price paid by the Purchaser for such Shares (the "Repurchase Option").
(b) Upon the occurrence of a termination, the Company may
exercise its Repurchase Option by delivering personally or by
registered mail, to Purchaser (or his transferee or legal
representative, as the case may be), within ninety (90) days of the
termination, a notice in writing indicating the Company's intention to
exercise the Repurchase Option and setting forth a date for closing not
later than thirty (30) days from the mailing of such notice. The
closing shall take place at the Company's office.  At the closing, the
holder of the certificates for the Unvested Shares being transferred
shall deliver the stock certificate or certificates evidencing the
Unvested Shares, and the Company shall deliver the purchase price
therefor.
(c) At its option, the Company may elect to make payment
for the Unvested Shares to a bank selected by the Company.  The Company
shall avail itself of this option by a notice in writing to Purchaser
stating the name and address of the bank, date of closing, and waiving
the closing at the Company's office.
(d) If the Company does not elect to exercise the
Repurchase Option conferred above by giving the requisite notice within
ninety (90) days following the termination, the Repurchase Option shall
terminate.
(e) The Repurchase Option shall terminate in accordance
with the Vesting Schedule in Optionee's Option Agreement.
2. Transferability of the Shares; Escrow.
(a) Purchaser hereby authorizes and directs the Secretary
of the Company, or such other person designated by the Company, to
transfer the Unvested Shares as to which the Repurchase Option has been
exercised from Purchaser to the Company.
(b) To insure the availability for delivery of
Purchaser's Unvested Shares upon repurchase by the Company pursuant to
the Repurchase Option under Section 1, Purchaser hereby appoints the
Secretary, or any other person designated by the Company as escrow
agent, as its attorney-in-fact to sell, assign and transfer unto the
Company, such Unvested Shares, if any, repurchased by the Company
pursuant to the Repurchase Option and shall, upon execution of this
Agreement, deliver and deposit with the Secretary of the Company, or
such other person designated by the Company, the share certificates
representing the Unvested Shares, together with the stock assignment
duly endorsed in blank, attached hereto as Exhibit C-2.  The Unvested
Shares and stock assignment shall be held by the Secretary in escrow,
pursuant to the Joint Escrow Instructions of the Company and Purchaser
attached as Exhibit C-3 hereto, until the Company exercises its
purchase right as provided in Section 1, until such Unvested Shares are
vested, or until such time as this Agreement no longer is in effect.
As a further condition to the Company's obligations under this
Agreement, the spouse of the Purchaser, if any, shall execute and
deliver to the Company the Consent of Spouse attached hereto as Exhibit
C-4.  Upon vesting of the Unvested Shares, the escrow agent shall
promptly deliver to the Purchaser the certificate or certificates
representing such Shares in the escrow agent's possession belonging to
the Purchaser, and the escrow agent shall be discharged of all further
obligations hereunder; provided, however, that the escrow agent shall
nevertheless retain such certificate or certificates as escrow agent if
so required pursuant to other restrictions imposed pursuant to this
Agreement.
(c) The Company, or its designee, shall not be liable for
any act it may do or omit to do with respect to holding the Shares in
escrow and while acting in good faith and in the exercise of its
judgment.
(d) Transfer or sale of the Shares is subject to
restrictions on transfer imposed by any applicable state and federal
securities laws.  Any transferee shall hold such Shares subject to all
the provisions hereof and the Exercise Notice executed by the Purchaser
with respect to any Unvested Shares purchased by Purchaser and shall
acknowledge the same by signing a copy of this Agreement.
3. Ownership, Voting Rights, Duties.  This Agreement shall not
affect in any way the ownership, voting rights or other rights or
duties of Purchaser, except as specifically provided herein.
4. Legends.  The share certificate evidencing the Shares
issued hereunder shall be endorsed with the following legend (in
addition to any legend required under applicable state securities
laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS UPON TRANSFER AND RIGHTS OF REPURCHASE
AS SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE
STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY
OF THE COMPANY.
5. Adjustment for Stock Split.  All references to the number
of Shares and the purchase price of the Shares in this Agreement shall
be appropriately adjusted to reflect any stock split, stock dividend or
other change in the Shares which may be made by the Company after the
date of this Agreement.
6. Notices.  Notices required hereunder shall be given in
person or by registered mail to the address of Purchaser shown on the
records of the Company, and to the Company at their respective
principal executive offices.
7. Survival of Terms.  This Agreement shall apply to and bind
Purchaser and the Company and their respective permitted assignees and
transferees, heirs, legatees, executors, administrators and legal
successors.
8. Section 83(b) Election.  Purchaser hereby acknowledges that
he or she has been informed that, with respect to the exercise of an
option for Unvested Shares, an election may be filed by the Purchaser
with the Internal Revenue Service, within 30 days of the purchase of
the Shares, electing pursuant to Section 83(b) of the Code to be taxed
currently on any difference between the purchase price of the Shares
and their Fair Market Value on the date of purchase.  This will result
in a recognition of taxable income to the Purchaser on the date of
exercise, measured by the excess, if any, of the fair market value of
the Shares, at the time the option is exercised over the purchase price
for the Shares.  Absent such an election, taxable income will be
measured and recognized by Purchaser at the time or times on which the
Company's Repurchase Option lapses.  Purchaser is strongly encouraged
to seek the advice of his or her own tax consultants in connection with
the purchase of the Shares and the advisability of filing of the
Election under Section 83(b) of the Code.  A form of Election under
Section 83(b) is attached hereto as Exhibit C-5 for reference.
        PURCHASER ACKNOWLEDGES THAT IT IS PURCHASER'S SOLE
RESPONSIBILITY AND NOT THE COMPANY'S TO FILE TIMELY THE ELECTION UNDER
SECTION 83(b), EVEN IF PURCHASER REQUESTS THE COMPANY OR ITS
REPRESENTATIVE TO MAKE THIS FILING ON PURCHASER'S BEHALF.
9. Representations.  Purchaser has reviewed with his own tax
advisors the federal, state, local and foreign tax consequences of this
investment and the transactions contemplated by this Agreement.
Purchaser is relying solely on such advisors and not on any statements
or representations of the Company or any of its agents.  Purchaser
understands that he or she (and not the Company) shall be responsible
for his or her own tax liability that may arise as a result of this
investment or the transactions contemplated by this Agreement.
10. Governing Law.  This Agreement shall be governed by the
internal substantive laws, but not the choice of law rules, of
California.
Purchaser represents that he or she has read this Agreement
and is familiar with its terms and provisions.  Purchaser hereby agrees
to accept as binding, conclusive and final all decisions or
interpretations of the Board upon any questions arising under this
Agreement.
IN WITNESS WHEREOF, this Agreement is deemed made as of the date
first set forth above.

                        CATAPULSE INC.
                       /s/ Paul D. Levy
                        Paul D. Levy
                        Chief Executive Officer
                        PURCHASER
                       /s/ Michael T. Devlin
                        Signature
                        Michael T. Devlin
                        Printed Name

                        Soc. Sec. No.
                        Address:




EXHIBIT C-2
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED I, __________________________, hereby sell,
assign and transfer unto CataPULSE Inc. (__________) shares of the
Common Stock of CataPULSE Inc. standing in my name of the books of said
corporation represented by Certificate No. _____ herewith and do hereby
irrevocably constitute and appoint _____________________________ to
transfer the said stock on the books of the within named corporation
with full power of substitution in the premises.
This Stock Assignment may be used only in accordance with the
Restricted Stock Purchase Agreement between CataPULSE Inc. and the
undersigned dated ______________, ____.

Dated: _______________, ____
                                Signature:  /s/ Michael T. Devlin

INSTRUCTIONS: Please do not fill in any blanks other than the signature
line.  The purpose of this assignment is to enable the Company to
exercise its "repurchase option," as set forth in the Agreement,
without requiring additional signatures on the part of the Purchaser.

EXHIBIT C-3
JOINT ESCROW INSTRUCTIONS
December 6, 1999
Corporate Assistant Secretary
CataPULSE Inc.
18880 Homestead Road
Cupertino, CA  95014
Attention:  Michael Charney
Dear Michael:
As Escrow Agent for both CataPULSE Inc. (the "Company"), and the
undersigned purchaser of stock of the Company (the "Purchaser"), you
are hereby authorized and directed to hold the documents delivered to
you pursuant to the terms of that certain Restricted Stock Purchase
Agreement ("Agreement") between the Company and the undersigned, in
accordance with the following instructions:
1. In the event the Company and/or any assignee of the Company
(referred to collectively for convenience herein as the "Company")
exercises the Company's repurchase option set forth in the Agreement,
the Company shall give to Purchaser and you a written notice specifying
the number of shares of stock to be purchased, the purchase price, and
the time for a closing hereunder at the principal office of the
Company.  Purchaser and the Company hereby irrevocably authorize and
direct you to close the transaction contemplated by such notice in
accordance with the terms of said notice.
2. At the closing, you are directed (a) to date the stock
assignments necessary for the transfer in question, (b) to fill in the
number of shares being transferred, and (c) to deliver same, together
with the certificate evidencing the shares of stock to be transferred,
to the Company or its assignee, against the simultaneous delivery to
you of the purchase price (by cash, a check, or some combination
thereof) for the number of shares of stock being purchased pursuant to
the exercise of the Company's repurchase option.
3. Purchaser irrevocably authorizes the Company to deposit
with you any certificates evidencing shares of stock to be held by you
hereunder and any additions and substitutions to said shares as defined
in the Agreement.  Purchaser does hereby irrevocably constitute and
appoint you as Purchaser's attorney-in-fact and agent for the term of
this escrow to execute with respect to such securities all documents
necessary or appropriate to make such securities negotiable and to
complete any transaction herein contemplated, including but not limited
to the filing with any applicable state blue sky authority of any
required applications for consent to, or notice of transfer of, the
securities.  Subject to the provisions of this paragraph 3, Purchaser
shall exercise all rights and privileges of a stockholder of the
Company while the stock is held by you.
4. Upon written request of the Purchaser, but no more than
once per calendar year, unless the Company's repurchase option has been
exercised, you will deliver to Purchaser a certificate or certificates
representing so many shares of stock as are not then subject to the
Company's repurchase option.  Within 120 days after cessation of
Purchaser's continuous employment by or services to the Company, or any
parent or subsidiary of the Company, you will deliver to Purchaser a
certificate or certificates representing the aggregate number of shares
held or issued pursuant to the Agreement and not purchased by the
Company or its assignees pursuant to exercise of the Company's
repurchase option.
5. If at the time of termination of this escrow you should
have in your possession any documents, securities, or other property
belonging to Purchaser, you shall deliver all of the same to Purchaser
and shall be discharged of all further obligations hereunder.
6. Your duties hereunder may be altered, amended, modified or
revoked only by a writing signed by all of the parties hereto.
7. You shall be obligated only for the performance of such
duties as are specifically set forth herein and may rely and shall be
protected in relying or refraining from acting on any instrument
reasonably believed by you to be genuine and to have been signed or
presented by the proper party or parties.  You shall not be personally
liable for any act you may do or omit to do hereunder as Escrow Agent
or as attorney-in-fact for Purchaser while acting in good faith, and
any act done or omitted by you pursuant to the advice of your own
attorneys shall be conclusive evidence of such good faith.
8. You are hereby expressly authorized to disregard any and
all warnings given by any of the parties hereto or by any other person
or corporation, excepting only orders or process of courts of law and
are hereby expressly authorized to comply with and obey orders,
judgments or decrees of any court.  In case you obey or comply with any
such order, judgment or decree, you shall not be liable to any of the
parties hereto or to any other person, firm or corporation by reason of
such compliance, notwithstanding any such order, judgment or decree
being subsequently reversed, modified, annulled, set aside, vacated or
found to have been entered without jurisdiction.
9. You shall not be liable in any respect on account of the
identity, authorities or rights of the parties executing or delivering
or purporting to execute or deliver the Agreement or any documents or
papers deposited or called for hereunder.
10. You shall not be liable for the outlawing of any rights
under the Statute of Limitations with respect to these Joint Escrow
Instructions or any documents deposited with you.
11. You shall be entitled to employ such legal counsel and
other experts as you may deem necessary properly to advise you in
connection with your obligations hereunder, may rely upon the advice of
such counsel, and may pay such counsel reasonable compensation
therefor.
12. Your responsibilities as Escrow Agent hereunder shall
terminate if you shall cease to be an officer or agent of the Company
or if you shall resign by written notice to each party.  In the event
of any such termination, the Company shall appoint a successor Escrow
Agent.
13. If you reasonably require other or further instruments in
connection with these Joint Escrow Instructions or obligations in
respect hereto, the necessary parties hereto shall join in furnishing
such instruments.
14. It is understood and agreed that should any dispute arise
with respect to the delivery and/or ownership or right of possession of
the securities held by you hereunder, you are authorized and directed
to retain in your possession without liability to anyone all or any
part of said securities until such disputes shall have been settled
either by mutual written agreement of the parties concerned or by a
final order, decree or judgment of a court of competent jurisdiction
after the time for appeal has expired and no appeal has been perfected,
but you shall be under no duty whatsoever to institute or defend any
such proceedings.
15. Any notice required or permitted hereunder shall be given
in writing and shall be deemed effectively given upon personal delivery
or upon deposit in the United States Post Office, by registered or
certified mail with postage and fees prepaid, addressed to each of the
other parties thereunto entitled at the following addresses or at such
other addresses as a party may designate by ten days' advance written
notice to each of the other parties hereto.
        COMPANY:                CataPULSE Inc.
18880 Homestead Road
Cupertino, CA  95014
                                Attention:  Paul D. Levy
        PURCHASER:      Michael T. Devlin


        ESCROW AGENT:   Corporate Assistant Secretary
                                CataPULSE Inc.
18880 Homestead Road
Cupertino, CA  95014
                                Attention:  Michael Charney
16. By signing these Joint Escrow Instructions, you become a
party hereto only for the purpose of said Joint Escrow Instructions;
you do not become a party to the Agreement.
17. This instrument shall be binding upon and inure to the
benefit of the parties hereto, and their respective successors and
permitted assigns.
18. These Joint Escrow Instructions shall be governed by the
internal substantive laws, but not the choice of law rules, of
California.
                        CATAPULSE INC.
                       /s/ Paul D. Levy
                        Paul D. Levy
                        Chief Executive Officer
                        PURCHASER
                       /s/ Michael T. Devlin
                        Signature
                        Michael T. Devlin
                        Typed or Printed Name
                        ESCROW AGENT
                        /s/   Michael Charney
                        Corporate Assistant Secretary


EXHIBIT C-4
CONSENT OF SPOUSE
        I,  Bobbie Devlin, spouse of Michael T. Devlin, have read
and approve the foregoing Agreement.  In consideration of granting of
the right to my spouse to purchase shares of Common Stock of CataPULSE
Inc., as set forth in the Agreement, I hereby appoint my spouse as my
attorney-in-fact in respect to the exercise of any rights under the
Agreement and agree to be bound by the provisions of the Agreement
insofar as I may have any rights in said Agreement or any shares issued
pursuant thereto under the community property laws or similar laws
relating to marital property in effect in the state of our residence as
of the date of the signing of the foregoing Agreement.
Dated: December 6, 1999
                                                  /s/ Bobbie Devlin
                                                        Signature


EXHIBIT C-5
ELECTION UNDER SECTION 83(b)
OF THE INTERNAL REVENUE CODE OF 1986

                                                Taxpayer
The undersigned spouse of taxpayer joins in this election.
Dated December 20, 1999
Bobbie Devlin
                                                Spouse of Taxpayer

EXHIBIT D
SECURITY AGREEMENT
This Security Agreement is made as of December 6, 1999, between
CataPULSE Inc., a Delaware corporation ("Pledgee"), and Michael T.
Devlin ("Pledgor").
Recitals
Pursuant to Pledgor's election to purchase shares of Pledgee's
common stock ("Common Stock") under the Stand-Alone Stock Option
Agreement dated December 6, 1999 (the "Option"), between Pledgor and
Pledgee, and Pledgor's election under the terms of the Option to pay
for such shares with his promissory note (the "Note"), Pledgor has
purchased 21,111,111 shares of Pledgee's Common Stock (the "Shares") at
a price of $0.03 per share, for a total purchase price of $633,333.33.
The Note and the obligations thereunder are as set forth in Exhibit E
to the Option.
NOW, THEREFORE, it is agreed as follows:
1. Creation and Description of Security Interest.  In consid-
eration of the transfer of the Shares to Pledgor under the Option
Agreement, Pledgor, pursuant to the California Commercial Code, hereby
pledges all of such Shares (herein sometimes referred to as the
"Collateral") represented by certificate number ______, duly endorsed
in blank or with executed stock powers, and herewith delivers said
certificate to the Secretary of Pledgee ("Pledgeholder"), who shall
hold said certificate subject to the terms and conditions of this Secu-
rity Agreement.
The pledged stock (together with an executed blank stock assign-
ment for use in transferring all or a portion of the Shares to Pledgee
if, as and when required pursuant to this Security Agreement) shall be
held by the Pledgeholder as security for the repayment of the Note, and
any extensions or renewals thereof, to be executed by Pledgor pursuant
to the terms of the Option, and the Pledgeholder shall not encumber or
dispose of such Shares except in accordance with the provisions of this
Security Agreement.
2. Pledgor's Representations and Covenants.  To induce Pledgee
to enter into this Security Agreement, Pledgor represents and covenants
to Pledgee, its successors and assigns, as follows:
(a) Payment of Indebtedness.  Pledgor will pay the prin-
cipal sum of the Note secured hereby, together with interest thereon,
at the time and in the manner provided in the Note.
(b) Encumbrances.  The Shares are free of all other
encumbrances, defenses and liens, and Pledgor will not further encumber
the Shares without the prior written consent of Pledgee.
(c) Margin Regulations.  In the event that Pledgee's
Common Stock is now or later becomes margin-listed by the Federal
Reserve Board and Pledgee is classified as a "lender" within the
meaning of the regulations under Part 207 of Title 12 of the Code of
Federal Regulations ("Regulation G"), Pledgor agrees to cooperate with
Pledgee in making any amendments to the Note or providing any
additional collateral as may be necessary to comply with such
regulations.
3. Voting Rights.  During the term of this pledge and so long
as all payments of principal and interest are made as they become due
under the terms of the Note, Pledgor shall have the right to vote all
of the Shares pledged hereunder.
4. Stock Adjustments.  In the event that during the term of
the pledge any stock dividend, reclassification, readjustment or other
changes are declared or made in the capital structure of Pledgee, all
new, substituted and additional shares or other securities issued by
reason of any such change shall be delivered to and held by the Pledgee
under the terms of this Security Agreement in the same manner as the
Shares originally pledged hereunder.  In the event of substitution of
such securities, Pledgor, Pledgee and Pledgeholder shall cooperate and
execute such documents as are reasonable so as to provide for the
substitution of such Collateral and, upon such substitution, references
to "Shares" in this Security Agreement shall include the substituted
shares of capital stock of Pledgor as a result thereof.
5. Options and Rights.  In the event that, during the term of
this pledge, subscription Options or other rights or options shall be
issued in connection with the pledged Shares, such rights, Options and
options shall be the property of Pledgor and, if exercised by Pledgor,
all new stock or other securities so acquired by Pledgor as it relates
to the pledged Shares then held by Pledgeholder shall be immediately
delivered to Pledgeholder, to be held under the terms of this Security
Agreement in the same manner as the Shares pledged.
6. Default.  Pledgor shall be deemed to be in default of the
Note and of this Security Agreement in the event:
(a) Payment of principal or interest on the Note shall be
delinquent for a period of 10 days or more; or
(b) Pledgor fails to perform any of the covenants set
forth in the Option or contained in this Security Agreement for a
period of 10 days after written notice thereof from Pledgee.
In the case of an event of Default, as set forth above,
Pledgee shall have the right to accelerate payment of the Note upon
notice to Pledgor, and Pledgee shall thereafter be entitled to pursue
its remedies under the California Commercial Code.
7. Release of Collateral.  Subject to any applicable contrary
rules under Regulation G, there shall be released from this pledge a
portion of the pledged Shares held by Pledgeholder hereunder upon
payments of the principal of the Note.  The number of the pledged
Shares which shall be released shall be that number of full Shares
which bears the same proportion to the initial number of Shares pledged
hereunder as the payment of principal bears to the initial full
principal amount of the Note.
8. Withdrawal or Substitution of Collateral.  Pledgor shall
not sell, withdraw, pledge, substitute or otherwise dispose of all or
any part of the Collateral without the prior written consent of
Pledgee.
9. Term.  This pledge of Shares shall continue until the
payment of all indebtedness secured hereby, at which time the remaining
pledged stock shall be promptly delivered to Pledgor, subject to the
provisions for prior release of a portion of the Collateral as provided
in paragraph 7 above.
10. Insolvency.  Pledgor agrees that if a bankruptcy or insol-
vency proceeding is instituted by or against it, or if a receiver is
appointed for the property of Pledgor, or if Pledgor makes an
assignment for the benefit of creditors, the entire amount unpaid on
the Note shall become immediately due and payable, and Pledgee may
proceed as provided in the case of default.
11. Pledgeholder Liability.  In the absence of willful or gross
negligence, Pledgeholder shall not be liable to any party for any of
his acts, or omissions to act, as Pledgeholder.
12. Invalidity of Particular Provisions.  Pledgor and Pledgee
agree that the enforceability or invalidity of any provision or
provisions of this Security Agreement shall not render any other
provision or provisions herein contained unenforceable or invalid.
13. Successors or Assigns.  Pledgor and Pledgee agree that all
of the terms of this Security Agreement shall be binding on their
respective successors and assigns, and that the term "Pledgor" and the
term "Pledgee" as used herein shall be deemed to include, for all
purposes, the respective designees, successors, assigns, heirs,
executors and administrators.
14. Governing Law.  This Security Agreement shall be
interpreted and governed under the internal substantive laws, but not
the choice of law rules, of California.

IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
PLEDGOR                         /s/ Michael T. Devlin
                                Signature
                                Michael T. Devlin
                                Print Name
                Address:

PLEDGEE                 CATAPULSE INC.,
                                a Delaware corporation
                               /s/ Paul D. Levy
                                Paul D. Levy
                                Chief Executive Officer
PLEDGEHOLDER                   /s/ Michael Charney
                                Assistant Secretary of
                                CataPULSE Inc.

EXHIBIT E
NOTE
$633,333.33                                          Cupertino, California

December 6, 1999
FOR VALUE RECEIVED, Michael T. Devlin promises to pay to
CataPULSE Inc., a Delaware corporation (the "Company"), or order, the
principal sum of Six Hundred Thirty Three Thousand Three Hundred Thirty
Three Dollars and Thirty Three Cents ($633,333.33), together with
interest on the unpaid principal hereof from the date hereof at the
rate of  6.11 percent (6.11%) per annum, compounded
semiannually.
Principal and interest shall be due and payable on December 6,
2004.  Payment of principal and interest shall be made in lawful money
of the United States of America.
The undersigned may at any time prepay all or any portion of the
principal or interest owing hereunder.
This Note is subject to the terms of the Stand-Alone Stock Option
Agreement, dated as of December 6, 1999.  This Note is secured in part
by a pledge of the Company's common stock under the terms of a Security
Agreement of even date herewith and is subject to all the provisions
thereof.
The holder of this Note shall have full recourse against the
undersigned, and shall not be required to proceed against the
collateral securing this Note in the event of default.
In the event the undersigned shall cease to be an employee,
director or consultant of the Company for any reason, this Note shall,
at the option of the Company, be accelerated, and the whole unpaid
balance on this Note of principal and accrued interest shall be
immediately due and payable.
Should any action be instituted for the collection of this Note,
the reasonable costs and attorneys' fees therein of the holder shall be
paid by the undersigned.

                Michael T. Devlin

EX-10.9 10 LETTER OF AGREEMENT Letter


                                         LETTER AGREEMENT

This Letter Agreement (the  "Agreement") is made as of October 8, 1999
between DevClick.com, Inc., a Delaware corporation (the  "Company"), and
Paul Levy (the  "Stockholder").  As of the date of this Agreement, the
Stockholder is the legal and beneficial owner of ten percent (10%) of the
total shares of capital stock of the Company (on a fully-diluted, as converted
to Common Stock basis (including options, warrants and other rights to
purchase stock, whether or not exercised)) (the " Stockholder's Right to
Maintain Percentage ").  The Stockholder shall be granted, on the last
business day of each calendar month, an option to purchase that number of
shares of Common Stock of the Company (a " Right to Maintain Option ") such
that, upon exercise of said Right to Maintain Option, the Stockholder will own
the Stockholder's Right to Maintain Percentage.  Each Right to Maintain Option
shall have an exercise price per share equal to the fair market value of the
Common Stock of the Company on the date of grant.  Further, each Right to
Maintain Option shall have vesting provisions identical to those contained in
the Stockholder's original stock option grant.  Notwithstanding the foregoing,
the Stockholder shall be provided with a Right to Maintain Option, if
necessary, prior to the consummation of (i) the initial public offering of
shares of capital stock of the Company (the " IPO "), (ii) a Change of Control
Transaction (as defined below) or (iii) any other potentially dilutive event.
Further, the Stockholder's right to receive options pursuant to this Agreement
shall terminate immediately following the earlier of the consummation of (i)
the IPO or (ii) a Change of Control Transaction (as defined below).  A "Change
of Control Transaction " shall mean a transaction or a series of transactions
(including a merger) in which the Stockholders of the Company immediately
before the transaction own immediately after the transaction less than a
majority of the outstanding voting securities of the surviving entity (or its
parent), a sale of substantially all of the assets of the Company or the
acquisition by any person or legal entity holding shares of capital stock of
the Company of one hundred percent (100%) of the voting capital stock of the
Company, whether by merger, stock purchase or otherwise.
COMPANY:
DEVCLICK.COM
By: /s/ Michael T. Devlin
        Name: Michael T. Devlin
        Title:
Stockholder:
By: /s/ Paul D.Levy
        Name: Paul D. Levy
        Title: Chairman of the Board


LETTER AGREEMENT
This Letter Agreement (the  "Agreement") is made as of October 8, 1999
between DevClick.com, Inc., a Delaware corporation (the  "Company"), and
Michael T. Devlin (the  "Stockholder").  As of the date of this Agreement, the
Stockholder is the legal and beneficial owner of ten percent (10%) of the
total shares of capital stock of the Company (on a fully-diluted, as converted
to Common Stock basis (including options, warrants and other rights to
purchase stock, whether or not exercised)) (the " Stockholder's Right to
Maintain Percentage ").  The Stockholder shall be granted, on the last
business day of each calendar month, an option to purchase that number of
shares of Common Stock of the Company (a " Right to Maintain Option ") such
that, upon exercise of said Right to Maintain Option, the Stockholder will own
the Stockholder's Right to Maintain Percentage.  Each Right to Maintain Option
shall have an exercise price per share equal to the fair market value of the
Common Stock of the Company on the date of grant.  Further, each Right to
Maintain Option shall have vesting provisions identical to those contained in
the Stockholder's original stock option grant.  Notwithstanding the foregoing,
the Stockholder shall be provided with a Right to Maintain Option, if
necessary, prior to the consummation of (i) the initial public offering of
shares of capital stock of the Company (the " IPO "), (ii) a Change of Control
Transaction (as defined below) or (iii) any other potentially dilutive event.
Further, the Stockholder's right to receive options pursuant to this Agreement
shall terminate immediately following the earlier of the consummation of (i)
the IPO or (ii) a Change of Control Transaction (as defined below).  A "Change
of Control Transaction " shall mean a transaction or a series of transactions
(including a merger) in which the Stockholders of the Company immediately
before the transaction own immediately after the transaction less than a
majority of the outstanding voting securities of the surviving entity (or its
parent), a sale of substantially all of the assets of the Company or the
acquisition by any person or legal entity holding shares of capital stock of
the Company of one hundred percent (100%) of the voting capital stock of the
Company, whether by merger, stock purchase or otherwise.
COMPANY:
DEVCLICK.COM
By:/s/ Paul D. Levy
        Name:  Paul D. Levy
        Title: Chairman of the Boardk
Stockholder:
By:/s/  Michael T. Devlin
        Name: Michael T. Devlin
        Title:

EX-27.1 11 FINANCIAL DATA SCHEDULE
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED CONSOLIDATED BALANCE SHEETS, CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS MAR-31-2000 OCT-01-1999 DEC-31-1999 158,412 189,624 124,531 3,192 0 510,025 103,286 57,311 578,135 199,024 0 0 0 980 350,628 578,135 89,907 146,187 7,059 21,969 92,363 0 (3,496) 35,351 9,971 25,380 0 0 0 25,380 $0.29 $0.27

~~-----END PRIVACY-ENHANCED MESSAGE-----~~

Delaware	54-1217099
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification Number)

Common Stock, Par Value $.01 Per Share	88,745,550
(Class)	(Shares outstanding on December 31, 1999)



	Timothy A. Brennan
	Senior Vice President Chief Financial Officer and Secretary
	(Principal Accounting and Financial Officer)


	(Registrant)


	Date: January 24, 2000