8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest event reported): April 27, 2004

i2 TECHNOLOGIES, INC.

(Exact Name of Registrant as Specified in Charter)

Delaware	0-28030	75-2294945
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

One i2 Place 11701 Luna Road Dallas, Texas	75234
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (469) 357-1000

Not Applicable

(Former Name or Former Address, if Changed since Last Report)

Item 5. Other Events.

On April 27, 2004, i2 Technologies, Inc. (the “Company”) entered into a Preferred Stock Purchase Agreement (the “Purchase Agreement”) with R² Investments, LDC (the “Investor”), whereby the Investor has agreed to purchase, subject to certain conditions, 100,000 shares of the Company’s 2.5% Series B Convertible Preferred Stock (the “Series B Shares”) at a purchase price of $1,000 per Series B Share. Pursuant to the terms of the Purchase Agreement, the Investor will also have certain preemptive rights upon the issuance of certain of our securities during the three year period following closing of the transaction. The terms of the purchase and sale are more fully set forth in the Purchase Agreement attached hereto as Exhibit 4.1 and incorporated herein by reference.

Dividends on the Series B Shares, which may be paid in cash or in additional Series B Shares, will be payable semi-annually at the rate of 2.5% per year. The Series B Shares will automatically convert into shares of the Company’s common stock on the tenth anniversary of issuance and will be convertible into shares of common stock at the option of the holder at any time prior thereto. The initial conversion price, which is subject to certain adjustments, will be $.926 per share. Under certain circumstances, the Company will also have the right to redeem the Series B Shares. The terms and conditions of the Series B Shares are set forth in the form of Certificate of Designations attached hereto as Exhibit 3.1 and incorporated herein by reference (the “Certificate of Designations”).

Concurrently with the closing of the transactions contemplated by the Purchase Agreement, the Company and the Investor will enter into a Registration Rights Agreement, the form of which is attached hereto as Exhibit 10.1 and incorporated herein by reference (the “Registration Rights Agreement”). Pursuant to the terms of the Registration Rights Agreement, the Company will agree to prepare and file with the Securities and Exchange Commission a registration statement covering the resale of the Company’s common stock and the Company’s 5.25% Convertible Subordinated Debentures due 2006, beneficially owned by the Investor.

In connection with the execution of the Purchase Agreement, the Company has amended the Rights Agreement, dated as of January 17, 2002, between the Company and Mellon Investor Services, LLC (the “Rights Agreement”), to exclude the Investor from the definition of an Acquiring Person under the Rights Agreement, so long as the Investor’s beneficial ownership of the Company’s common stock, excluding any shares acquired pursuant to the terms of the Purchase Agreement and the Certificate of Designations, is less than 15% of the outstanding shares of common stock of the Company. This description of the amendment to the Rights Agreement is qualified in its entirety by the First Amendment to Rights Agreement attached hereto as Exhibit 4.2 and incorporated herein by reference.

On April 27, 2004, the Company issued a press release related to the Purchase Agreement and the transactions contemplated thereby. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

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Item 7. Exhibits.

(c) Exhibits.

Exhibit Number	Description
3.1	Form of Certificate of Designation of 2.5% Series B Convertible Preferred Stock of i2 Technologies, Inc.
4.1	Preferred Stock Purchase Agreement, dated as of April 27, 2004, by and between i2 Technologies, Inc. and R2 Investments, LDC
4.2	First Amendment to Rights Agreement, dated as of April 27, 2004, between i2 Technologies, Inc. and Mellon Investor Services LLC
10.1	Form of Registration Rights Agreement to be entered into by and between i2 Technologies, Inc. and R2 Investments, LDC
99.1	Press Release dated April 27, 2004.

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SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

i2 TECHNOLOGIES, INC.
By:	/s/ Katy Murray
Name:	Katy Murray
Title:	Executive Vice President and Chief Financial Officer
	(Principal Financial and Accounting Officer)

Dated: May 3, 2004

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EXHIBIT INDEX

Exhibit Number	Description
3.1	Form of Certificate of Designation of 2.5% Series B Convertible Preferred Stock of i2 Technologies, Inc.
4.1	Preferred Stock Purchase Agreement, dated as of April 27, 2004, by and between i2 Technologies, Inc. and R2 Investments, LDC
10.1	Form of Registration Rights Agreement to be entered into by and between i2 Technologies, Inc. and R2 Investments, LDC
99.1	Press Release dated April 27, 2004.

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EX-3.1

EXHIBIT 3.1

CERTIFICATE OF DESIGNATIONS OF

2.5% SERIES B CONVERTIBLE PREFERRED STOCK

OF

i2 TECHNOLOGIES, INC.

i2 Technologies, Inc., a corporation duly organized and existing under the General Corporation Law of the State of Delaware (the “Company”), does hereby certify that pursuant to authority conferred on the Board of Directors of the Company by the Restated Certificate of Incorporation of the Company and pursuant to Section 151 of the General Corporation law of the State of Delaware, the Board of Directors at a meeting duly held adopted the following resolution on [date], 2004:

“RESOLVED, that the Company is authorized to issue 150,000 shares of 2.5% Series B Convertible Preferred Stock, par value $0.001 per share (“Series B Preferred Stock”), with the powers, designations, preferences and relative, participating, optional and other special rights, and the qualifications, limitations and restrictions as set forth on Annex I.

ANNEX I

1. Number; Rank. The number of authorized shares of Series B Preferred Stock shall be 150,000. The Series B Preferred Stock shall, with respect to dividend rights, voting rights, redemption rights and rights on liquidation, dissolution, winding up or other similar event rank senior to all classes of the Company’s Common Stock, par value $0.00025 per share (“Common Stock”), the Company’s Series A Junior Participating Preferred Stock, par value $0.001 per share (the “Series A Preferred Stock”), and to each other class or series of capital stock of the Company now or hereafter established that, with respect to dividend rights, voting rights, redemption rights and rights on liquidation, dissolution, winding up or other similar event ranks junior to the Series B Preferred Stock (collectively with the Common Stock and the Series A Preferred Stock, the “Junior Securities”). The definition of Junior Securities shall also include any rights or options exercisable for or convertible into any of the Junior Securities.

2. Dividends.

(a) When and as declared by the Company’s Board of Directors (the “Board”) and to the extent permitted under applicable law, the Company shall pay preferential dividends in cash to the holders of Series B Preferred Stock, as provided in this Section 2; provided that, subject to Section 2(f) below, the Company shall be permitted to pay any accrued and unpaid dividends on the Series B Preferred Stock by issuing to each record holder of Series B Preferred Stock a number of additional shares of Series B Preferred Stock that have an aggregate Liquidation Value (as defined) equal to the amount of such accrued and unpaid dividends. Dividends on each share of Series B Preferred Stock (each such share, a “Share”) shall accrue on

a daily basis at the rate of 2.5% per annum compounded annually of the Liquidation Value plus accumulated and unpaid dividends thereon. Such dividends on the Shares shall accrue in each case from and including the date of issuance of such Share to and including the first to occur of the date on which (i) the Liquidation Payment of such Share is paid to the holder thereof in connection with a Liquidation Event, (ii) such Share is redeemed by the Company pursuant to the provisions hereof, (iii) such Share is converted into shares of Conversion Stock hereunder or (iv) such Share is otherwise acquired by the Company. Such dividends shall accrue whether or not they have been declared and whether or not there are profits, surplus or other funds of the Company legally available for the payment of dividends. The date on which the Company initially issues any Share shall be deemed to be its “date of issuance” regardless of the number of times transfer of such Share is made on the stock records maintained by or for the Company and regardless of the number of certificates which may be issued to evidence such Share. No fractional shares of Series B Preferred Stock shall be issued upon payment of a dividend in shares of Series B Preferred Stock, and in lieu of any fractional Shares to which the holder would otherwise be entitled, such amount shall be paid in cash. The Company covenants that all shares of Series B Preferred Stock that may be issued upon payment of a dividend on the Series B Preferred Stock will upon issue be fully paid and nonassessable and free of all taxes, liens and charges for the issue thereof.

(b) To the extent not paid on June 30 and December 31 of each year (each such date, a “Dividend Reference Date” and collectively, the “Dividend Reference Dates”), beginning on the first June 30 or December 31 following the initial issuance of the Series B Preferred Stock, all dividends which have accrued on each Share outstanding during the six-month period (or other period in the case of the initial Dividend Reference Date) ending upon each such Dividend Reference Date shall be accumulated and shall remain accumulated dividends with respect to such Share until paid to the holder thereof.

(c) Except as otherwise provided herein, if at any time the Company pays less than the total amount of dividends then accrued with respect to the Series B Preferred Stock, such payment shall be distributed pro rata among the holders thereof based upon the aggregate accrued but unpaid dividends on the Shares held by each such holder.

(d) In case the Company shall fix a record date for the making of any dividend or distribution to holders of Common Stock, whether payable in cash, securities or other property (other than dividends or distributions payable solely in Common Stock), the holder of each Share on such record date shall be entitled to receive an equivalent dividend or distribution based on the number of shares of Common Stock into which such Share is convertible on such record date.

(e) So long as any Shares are outstanding and except as provided in the Rights Agreement dated as of January 17, 2002, (i) no Junior Securities shall be redeemed, purchased or otherwise acquired for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any shares of any such stock) by the Company, directly or indirectly (except by conversion into or exchange for Junior Securities), and (ii) no dividends or distributions shall be declared or paid on any Junior Security, in each case without the prior written consent of the holders of a majority of the Shares then outstanding.

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(f) Notwithstanding anything to the contrary herein, following the authorization of the Common Stock after the Series B Closing Date for quotation or listing on The New York Stock Exchange, Inc., the American Stock Exchange, Inc. or The Nasdaq National Market or SmallCap Market, the Company may only pay accrued and unpaid dividends on the Series B Preferred Stock by issuing to each record holder of Series B Preferred Stock a number of additional shares of Series B Preferred Stock if (i) (x) a shelf registration statement covering resales of the Conversion Stock is effective and available for use on the applicable Dividend Reference Date and is expected to remain effective and available for use for not less than ninety (90) days following the Dividend Reference Date in accordance with the terms of the Registration Rights Agreement (as defined) or (y) the Conversion Stock may be sold by the holders thereof pursuant to Rule 144(k) under the Securities Act, and (ii) the Conversion Stock is authorized for quotation or listing on The New York Stock Exchange, Inc., the American Stock Exchange, Inc. or The Nasdaq National Market or SmallCap Market; no written threat of suspension of such authorization by any such exchange or market shall have been made and not withdrawn; and the Company shall not have fallen below the minimum listing maintenance requirements of such exchange or market at any time during the forty-five (45) days prior to the applicable Dividend Reference Date. The “Registration Rights Agreement” means the Registration Rights Agreement, dated as of [date], 2004, among the Company and the initial purchaser of the Series B Preferred Stock as such agreement may be amended, supplemented and modified from time to time.

3. Liquidation Preference.

(a) In the event of any liquidation, dissolution or winding up or other similar event of the Company (whether voluntary or involuntary) (a “Liquidation Event”), before any payment or distribution of the assets of the Company (whether capital or surplus) shall be made to or set apart for the holders of Junior Securities, the holder of each Share shall be entitled to receive an amount per share equal to the greater of (i) 100% of the Liquidation Value of such Share plus all accrued and unpaid dividends thereon, it being understood that such amount shall be calculated by including dividends accruing to the actual date of such Liquidation Event, rather than the most recent Dividend Reference Date, and (ii) the amount such holder would be entitled to receive if such Share had been converted into Conversion Stock immediately prior to such Liquidation Event (such greater amount, such Share’s “Liquidation Payment”), and such holders shall not be entitled to any further payment. If, upon any liquidation, dissolution or winding up or other similar event of the Company, the assets of the Company, or proceeds thereof, distributable among the holders of the Shares shall be insufficient to pay in full the preferential amount aforesaid, then such assets, or the proceeds thereof, shall be distributed among the holders of Shares ratably in accordance with the respective amounts that would be payable on such Shares if all amounts payable thereon were paid in full. Not less than 30 days prior to the payment date stated therein, the Company shall mail written notice of any Liquidation Event to each record holder of Series B Preferred Stock, setting forth in reasonable detail the amount of proceeds payable under each of clause (i) and clause (ii) above with respect to each Share.

(b) Unless otherwise agreed to in writing by holders of a majority of the Series B Preferred Stock, a Change in Control (as defined) of the Company will be deemed to be

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a liquidation, dissolution, winding up or other similar event of the Company for purposes of this Section 3 and in the event there is a Change of Control, the amount to which each holder would be entitled under Section 3(a) above for each Share shall be deemed to be an amount equal to (i) 110% of the Liquidation Value of such Share plus (ii) all accrued and unpaid dividends thereon, it being understood that such amount shall be calculated by including dividends accruing to the actual date of Change in Control, rather than the most recent Dividend Reference Date.

(c) After payment shall have been made in full to the holders of the Series B Preferred Stock, as provided in this Section 3, any other series or class or classes of Junior Securities shall, subject to the respective terms and provisions (if any) applying thereto, be entitled to receive any and all assets remaining to be paid or distributed to holders of capital stock of the Company, and the holders of the Series B Preferred Stock shall not be entitled to share therein.

4. Redemption.

(a) If at any time after the four year anniversary of the Series B Closing Date and prior to the Automatic Conversion Date, then the Company may elect to redeem all of the then issued and outstanding Shares in accordance with the terms of this Section 4. The Company shall be obligated on the Redemption Date (as defined) to pay to each holder of Series B Preferred Stock with respect to each Share held by such holder an amount in cash in immediately available funds equal to 104% of the sum of the Liquidation Value of such Share plus all accrued and unpaid dividends thereon (such amount, the “Section 4(a) Redemption Price”).

(b) If the Conversion Price (as defined) is required to be adjusted pursuant to Section 5(b)(v) or Section 5(b)(vi) below then the Company may elect to redeem all of the then issued and outstanding Shares in accordance with the terms of this Section 4. The Company shall be obligated on the Redemption Date to pay to each holder of Series B Preferred Stock with respect to each Share held by such holder an amount in cash in immediately available funds equal to 125% of the sum of the Liquidation Value of such Share plus all accrued and unpaid dividends thereon (the “Section 4(b) Redemption Price”).

(c) The Company will mail written notice of each redemption of Series B Preferred Stock pursuant to Section 4(a) or 4(b) to each record holder no less than thirty (30) days and not more than forty-five (45) days prior to the date on which such redemption is to be made (the “Redemption Date”). If the Company elects to redeem the Series B Preferred Stock pursuant to Section 4(b), written notice of such election must be mailed to each record holder within 2 Business Days after the last day of the 5(b)(v) Measurement Period or the 5(b)(vi) Measurement Period, as applicable. The date on which such notice is mailed is the “Redemption Notice Date.” Each such notice of redemption shall specify the date fixed for redemption, the place or places of payment, that payment will be made upon presentation and surrender of such Shares and the current Conversion Price. Each Share shall be convertible into Conversion Stock at the option of the holder thereof in accordance with the provisions of Section 5 at any time prior to the Redemption Date; provided, however, that notwithstanding anything to the contrary herein, a conversion that is to be effected following delivery by the Company of a notice of redemption pursuant to Section 4(b) shall be effected at a Conversion Price that is not adjusted pursuant to Section 5(b)(v) or 5(b)(vi).

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(d) No Share shall be entitled to any rights, preferences or privileges hereunder after the date on which the Section 4(a) Redemption Price or the Section 4(b) Redemption Price, as applicable, of such Share is paid in full to the holder of such Share. On such date, all rights of the holder of such Share shall cease, and such Share shall no longer be deemed to be issued and outstanding.

(e) Any Shares which are redeemed or otherwise acquired by the Company shall be canceled and retired and shall not be reissued, sold or transferred.

(f) Notwithstanding anything herein to the contrary, following the authorization of the Common Stock after the Series B Closing Date for quotation or listing on The New York Stock Exchange, Inc., the American Stock Exchange, Inc. or The Nasdaq National Market or SmallCap Market, no redemptions may be made under this Section 4 unless (i) (x) a shelf registration statement covering resales of the Conversion Stock is effective and available for use in accordance with the terms of the Registration Rights Agreement and is at all times during the period beginning on the Redemption Notice Date and ending on the Redemption Date and is expected to remain effective and available for use for not less than ninety (90) days following the Redemption Date or (y) the Conversion Stock may be sold by the holders thereof pursuant to Rule 144(k) under the Securities Act, and (ii) the Conversion Stock is authorized for quotation or listing on The New York Stock Exchange, Inc., the American Stock Exchange, Inc. or The Nasdaq National Market or SmallCap Market; no written threat of suspension of such authorization by any such exchange or market shall have been made and not withdrawn and the Company shall not have fallen below the minimum listing maintenance requirements of such exchange or market at any time during the ninety (90) days prior to the Redemption Date.

5. Conversion.

(a) (i) Each holder of Shares shall have the right, at any time and from time to time prior to the Automatic Conversion Date, at such holder’s option, to convert its outstanding Shares, in whole or in part, into fully paid and non-assessable shares of Conversion Stock. The number of shares of Conversion Stock deliverable upon conversion of one Share shall be equal to the Liquidation Value of such Share on the date of conversion, divided by the Conversion Price on the date of conversion. In order to exercise the conversion privilege set forth in Section 5(a), the holder of the Shares to be converted shall surrender the certificate representing such Shares at the principal office of the Company, with a written notice of election to convert completed and signed, specifying the number of Shares to be converted. Each conversion pursuant to Section 5(a) shall be deemed to have been effected immediately prior to the close of business on the date on which the certificates for Shares shall have been surrendered and such notice received by the Company as aforesaid, and the person in whose name or names any certificate or certificates for shares of Conversion Stock shall be issuable upon such conversion shall be deemed to have become the holder of record of the shares of Conversion Stock represented thereby at such time on such date. Effective upon such conversion, the Shares so converted shall no longer be deemed to be outstanding, and all rights of a holder with respect to such Shares surrendered for conversion shall immediately terminate except the right to receive the Conversion Stock and other amounts payable pursuant to this Section 5.

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(ii) Notwithstanding any other provision hereof, if a conversion of Shares is to be made in connection with any transaction, the conversion of any Shares may, at the election of the holder thereof, be conditioned upon the consummation of such transaction in which case such conversion shall not be deemed to be effective until immediately prior to the time such transaction has been consummated.

(iii) As soon as possible after a conversion has been effected, including, without limitation, a conversion pursuant to Section 5(i) below, the Company shall deliver to the converting holder (A) the number of shares of Conversion Stock issuable by reason of such conversion in such name or names and such denomination or denominations as the converting holder has specified, (B) payment in an amount equal to the amount, if any, payable under Section 5(a)(vii) below with respect to such conversion; (C) payment in cash of an amount equal to all accrued dividends with respect to each Share converted which have not been paid thereto and (D) a certificate representing any Shares which were represented by the certificate or certificates delivered to the Company in connection with such conversion but which were not converted. The Company shall effect delivery of Conversion Stock, as long as the Company’s designated transfer agent or co-transfer agent in the United States for the Common Stock (the “Transfer Agent”) participates in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer program (“FAST”), by crediting the account of the holder or its nominee at DTC (as specified in the applicable notice of election to convert) with the number of Conversion Shares required to be delivered, no later than the close of business on the Delivery Date (as defined). In the event that the Transfer Agent is not a participant in FAST or if the holder so specifies in its notice of election to convert or otherwise in writing, the Company shall effect delivery of Conversion Shares by delivering to the holder or its nominee physical certificates representing such Conversion Shares, no later than the close of business on the Delivery Date. If the Company shall fail for any reason to deliver to the holder any or all of the item(s) described in the preceding sentence within 5 Business Days after the Conversion Date (such 5th Business Day, the “Delivery Date”), the Company shall, in addition to any other remedies under the Preferred Stock Purchase Agreement (as defined below) or otherwise available to such holder, pay as additional damages in cash to such holder on each day after the Delivery Date such item(s) are not delivered in an amount equal to one-half percent (0.5%) per month multiplied by the product of (i) the sum of the number of shares of Common Stock into which the Shares converted were converted and (ii) the Average Market Price (as defined) of the Common Stock on the Delivery Date. The “Preferred Stock Purchase Agreement” means the Preferred Stock Purchase Agreement, dated as of April 27, 2004, between the Company and the initial purchaser of the Series B Preferred Stock as such agreement may be amended, supplemented and modified from time to time.

(iv) The issuance of certificates for shares of Conversion Stock upon conversion of Series B Preferred Stock shall be made without charge to the holders of such Series B Preferred Stock for any issuance tax in respect thereof or other cost incurred by the Company in connection with such conversion and the related issuance of shares of Conversion Stock. Upon conversion of each Share, the Company shall take all such actions as are necessary in order to ensure that the Conversion Stock issuable with respect to such conversion shall be validly issued, fully paid and nonassessable, and free and clear of all taxes, liens, charges and encumbrances with respect to the issuance thereof.

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(v) The Company shall not close its books against the transfer of Series B Preferred Stock or of Conversion Stock issued or issuable upon conversion of Series B Preferred Stock in any manner which interferes with the timely conversion of Series B Preferred Stock unless such transfer is prohibited by applicable law or governmental regulation. The Company shall use its commercially reasonable efforts to assist and cooperate with any holder of Shares required to make any governmental filings or obtain any governmental approval prior to or in connection with any conversion of Shares hereunder (including making any filings required to be made by the Company).

(vi) The Company shall at all times following the issuance of the Series B Preferred Stock reserve and keep available out of its authorized but unissued shares of Conversion Stock, solely for the purpose of issuance upon the conversion of the Series B Preferred Stock, such number of shares of Conversion Stock issuable upon the conversion of all outstanding Series B Preferred Stock. The Company shall take all such actions as may be necessary to ensure that all such shares of Conversion Stock may be so issued without violation of any applicable law or governmental regulation or any requirements of any domestic securities exchange upon which shares of Conversion Stock may be listed (except for official notice of issuance which shall be delivered by the Company upon each such issuance). The Company shall not take any action which would cause the number of authorized but unissued shares of Conversion Stock to be less than the number of such shares required to be reserved hereunder for issuance upon conversion of the Series B Preferred Stock.

(vii) In connection with the conversion of any Shares, no fractional shares of Conversion Stock shall be issued, but in lieu thereof the Company shall pay to the holder thereof the value of such share of Conversion Stock in cash as determined by reference to the Average Market Price on the date of conversion.

(b) Conversion Price.

(i) The initial “Conversion Price” is $0.926. In order to prevent dilution of the conversion rights granted under this Section 5, the Conversion Price shall be subject to adjustment from time to time pursuant to this Section 5.

(ii) If and whenever during the period beginning on or after the original date of issuance of the Series B Preferred Stock and ending on the first anniversary of the Series B Closing Date (the “First Year”), the Company (A) issues or sells or agrees to issue or sell, (B) in accordance with Section 5(c) below is deemed to have issued or sold, or (C) agrees to enter into a transaction in which, in accordance with Section 5(c) below, it will be deemed to have issued or sold, any shares of its Conversion Stock without consideration or at a price per share less than the Conversion Price in effect immediately prior to such issuance or sale (or deemed issuance or sale), then in each such case, the Conversion Price, upon each such issuance or sale, except as hereinafter provided, shall be lowered so as to be equal to the consideration at which such Conversion Stock was issued or sold, or deemed issued or sold. For the avoidance of

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doubt, if the Company agrees to issue or sell Conversion Stock during the First Year, but the Conversion Stock is not issued or sold, or deemed to be issued or sold, in accordance with such agreement until after the First Year has ended, the Conversion Price shall be adjusted if required pursuant to this Section 5 at the time such Conversion Stock is issued or sold or deemed to be issued or sold; provided, that the Conversion Price shall be adjusted in accordance with this Section 5(b)(ii) and not in accordance with Section 5(b)(iii) at such time.

(iii) If and whenever during the period beginning on the day after the first anniversary of the Series B Closing Date and ending on the second anniversary of the Series B Closing Date, the Company issues or sells, or in accordance with Section 5(c) below is deemed to have issued or sold, any shares of its Conversion Stock without consideration or at a price per share less than the Conversion Price in effect immediately prior to such issuance or sale (or deemed issuance or sale), then in each such case, the Conversion Price, upon each such issuance or sale, except as hereinafter provided, shall be lowered so as to be equal to an amount determined by multiplying the Conversion Price in effect immediately prior to such issuance or sale by the following fraction:

P + N

P + F

where

P = the number of shares of Conversion Stock outstanding immediately prior to such issuance or sale, assuming the exercise or conversion of all outstanding Convertible Securities at any time on or after the date of such calculation

N = the number of shares of Conversion Stock which the net aggregate consideration, if any, received by the Company for the total number of such additional shares of Conversion Stock so issued or sold would purchase at the Conversion Price in effect immediately prior to such issuance or sale

F = the number of additional shares of Conversion Stock so issued or sold

(iv) Notwithstanding the foregoing, there shall be no adjustment in the Conversion Price as a result of any issue or sale (or deemed issue or sale) of (v) Options to acquire shares of Common Stock to employees, officers, directors, consultants and agents of the Company pursuant to the Stock Option Plan so long as the exercise price of such Options is not less than the Fair Market Value (as defined in the Stock Option Plan) of the Company’s Common Stock on the date such Options are issued as determined by the Board in its good faith judgment, (v) shares of Common Stock issuable pursuant to the exercise of such Options, (w) additional shares of Series B Preferred Stock issued in accordance with Section 2 hereof in payment of accrued and unpaid dividends, (x) shares of Common Stock issued upon conversion of the Series B Preferred Stock, (y) any issuance of shares of Common Stock pursuant to the exercise of Options outstanding as of the Series B Closing Date or (z) shares of Common Stock for a purchase price of up to $2,000,000 issued to Gregory A. Brady pursuant to the Stock Purchase

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Agreement to be entered into between the Company and Mr. Brady. In addition, notwithstanding anything to the contrary herein, the following issuances or sales, or deemed issuances or sales, of Conversion Stock in connection with an exchange of the Company’s 5.25% Convertible Subordinated Debentures due 2006 (the “Debentures”) pursuant to Section 3(a)(9) of the Securities Act (each such exchange, a “3(a)(9) Exchange”) shall not result in an adjustment to the Conversion Price pursuant to Section 5(b)(ii) and Section 5(b)(iii) above:

(A) the issuance or sale (or deemed issuance or sale) of shares of Conversion Stock in exchange for up to $10,000,000 in aggregate principal amount of Debentures during the 90 day period beginning on the Series B Closing Date, provided that for purposes of this Section 5(b)(iv)(A), the principal amount of Debentures exchanged in any 3(a)(9) Exchange between the date of the Preferred Stock Purchase Agreement and the day prior to the Series B Closing Date shall be deemed to have been exchanged during the 90 day period beginning on the Series B Closing Date;

(B) the issuance or sale (or deemed issuance or sale) of shares of Conversion Stock in exchange for up to $15,000,000 in aggregate principal amount of Debentures during the period beginning on the Series B Closing Date and ending on the 180th day after the Series B Closing Date, provided that any 3(a)(9) Exchanges done in accordance with Section 5(b)(iv)(A) shall be counted towards the $15,000,000 limit herein;

(C) the issuance or sale (or deemed issuance or sale) of shares of Conversion Stock in exchange for Debentures during the period beginning on the 91st day after the Series B Closing Date and ending on the 180th day after the Series B Closing Date at a price per share equal to or greater than 90% of the Conversion Price in effect immediately prior to such issuance or sale (or deemed issuance or sale);

(D) the issuance or sale (or deemed issuance or sale) of shares of Conversion Stock in exchange for up to $20,000,000 in aggregate principal amount of Debentures during the period beginning on the Series B Closing Date and ending on the 270th day after the Series B Closing Date, provided that (1) any 3(a)(9) Exchanges done in accordance with Sections 5(b)(iv)(A) or (B) shall be counted towards the $20,000,000 limit herein and (2) no more than $15,000,000 in aggregate principal amount of Debentures is exchanged in any three-month period;

(E) the issuance or sale (or deemed issuance or sale) of shares of Conversion Stock in exchange for Debentures during the period beginning on the 181st day after the Series B Closing Date and ending on the 270th day after the Series B Closing Date at a price per share equal to or greater than 85% of the Conversion Price in effect immediately prior to such issuance or sale (or deemed issuance or sale);

(F) the issuance or sale (or deemed issuance or sale) of shares of Conversion Stock in exchange for up to $25,000,000 in aggregate principal amount of Debentures during the period beginning on the Series B Closing Date and ending on the 365th day after the Series B Closing Date provided that (1) any 3(a)(9) Exchanges done in accordance with Sections 5(b)(iv)(A), (B) or (D) shall be counted towards the $25,000,000 limit herein and (2) no more than $15,000,000 in aggregate principal amount of Debentures is exchanged in any three-month period;

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(G) the issuance or sale (or deemed issuance or sale) of shares of Conversion Stock in exchange for Debentures during the period beginning on the 271st day after the Series B Closing Date and ending on the 365th day after the Series B Closing Date at a price per share equal to or greater than 80% of the Conversion Price in effect immediately prior to such issuance or sale (or deemed issuance or sale); and

(H) the issuance or sale (or deemed issuance or sale) of shares of Conversion Stock in exchange for Debentures after the first anniversary of the Series B Closing Date.

(v) In addition to any adjustments to the Conversion Price required hereunder, if 105% of the Average Market Price for the 5(b)(v) Measurement Period is less than the Conversion Price otherwise in effect on the last day of the 5(b)(v) Measurement Period, the Conversion Price shall be decreased to an amount equal to 105% of such Average Market Price. Notwithstanding anything to the contrary herein, no adjustment shall be made to the Conversion Price pursuant to this Section 5b(v) if the Final Settlement Amount payable by the Company for the Class Action Litigation is less than or equal to $44,100,000.

(vi) In addition to any adjustments to the Conversion Price required hereunder, if 105% of the Average Market Price for the 5(b)(vi) Measurement Period is less than the Conversion Price otherwise in effect on the last day of the 5(b)(vi) Measurement Period, the Conversion Price shall be decreased to an amount equal to 105% of such Average Market Price. Notwithstanding anything to the contrary herein, no adjustment shall be made to the Conversion Price pursuant to this Section 5b(vi) if the Final Settlement Amount for the Securities and Exchange Commission Investigation is less than or equal to $20,000,000.

(vii) Notwithstanding anything to the contrary herein, if any adjustment to the Conversion Price required pursuant to Section 5(b)(v) or Section 5(b)(vi) or as a result of a 3(a)(9) Exchange would cause the Conversion Price to be lowered to an amount less than $0.6019, then the Conversion Price shall be lowered to $0.6019 instead of such lower amount.

(c) Effect on Conversion Price of Certain Events. For purposes of determining the adjusted Conversion Price under Sections 5(b)(ii) and 5(b)(iii), the following shall be applicable:

(i) Issuance of Rights or Options. Except for Options granted in accordance with the provisions of Section 5(b)(iv) above, if the Company in any manner grants or sells any Options and the price per share for which Common Stock is issuable upon the exercise of such Options, or upon conversion or exchange of any Convertible Securities issuable upon exercise of such Options, is less than the Conversion Price in effect immediately prior to the time of the granting or sale of such Options, then the total maximum number of shares of Common Stock issuable upon the exercise of such Options or upon conversion or exchange of the total maximum amount of such Convertible Securities issuable upon the exercise of such

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Options shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such Options for such price per share. For purposes of this Section, the “price per share for which Common Stock is issuable” shall be determined by dividing (A) the total amount, if any, received or receivable by the Company as consideration for the granting or sale of such Options, plus the minimum aggregate amount of additional consideration payable to the Company upon exercise of all such Options, plus in the case of such Options which relate to Convertible Securities, the minimum aggregate amount of additional consideration, if any, payable to the Company upon the issuance or sale of such Convertible Securities and the conversion or exchange thereof, by (B) the total maximum number of shares of Common Stock issuable upon the exercise of such Options or upon the conversion or exchange of all such Convertible Securities issuable upon the exercise of such Options. No further adjustment of the Conversion Price shall be made when Convertible Securities are actually issued upon the exercise of such Options or when Common Stock is actually issued upon the exercise of such Options or the conversion or exchange of such Convertible Securities.

(ii) Issuance of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities and the price per share for which Common Stock is issuable upon conversion or exchange thereof is less than (a) the Conversion Price in effect immediately prior to the time of such issue or sale, then the maximum number of shares of Common Stock issuable upon conversion or exchange of such Convertible Securities shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities for such price per share. For the purposes of this Section, the “price per share for which Common Stock is issuable” shall be determined by dividing (A) the total amount received or receivable by the Company as consideration for the issue or sale of such Convertible Securities, plus the minimum aggregate amount of additional consideration, if any, payable to the Company upon the conversion or exchange thereof, by (B) the total maximum number of shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities. No further adjustment of the Conversion Price shall be made when Common Stock is actually issued upon the conversion or exchange of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustments of the Conversion Price had been or are to be made pursuant to other provisions of this Section 5, no further adjustment of the Conversion Price shall be made by reason of such issue or sale.

(iii) Change in Option Price or Conversion Rate. Except for Options granted in accordance with the provisions of Section 5(b)(iv) above, if (x) the purchase price provided for in any Options, (y) the additional consideration, if any, payable upon the conversion or exchange of any Convertible Securities, (z) or the rate at which any Convertible Securities are convertible into or exchangeable for Common Stock, changes at any time, the Conversion Price in effect at the time of such change shall be immediately adjusted to the Conversion Price which would have been in effect at such time had such Options or Convertible Securities still outstanding provided for such changed purchase price, additional consideration or conversion rate, as the case may be, at the time initially granted, issued or sold; provided that if such adjustment would result in an increase of the Conversion Price then in effect, such adjustment shall not be effective until 10 days after written notice thereof has been given by the Company to all holders of the Series B Preferred Stock. For purposes of Section 5(c), if the terms of any

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Option or Convertible Security which was outstanding as of the original date of issuance of the Series B Preferred Stock are changed in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such change; provided that no such change shall at any time cause the Conversion Price hereunder to be increased.

(iv) Treatment of Expired Options and Unexercised Convertible Securities. Upon the expiration of any Option or the termination of any right to convert or exchange any Convertible Security without the exercise of any such Option or right, the Conversion Price then in effect hereunder shall be adjusted immediately to the Conversion Price which would have been in effect at the time of such expiration or termination had such Option or Convertible Security, to the extent outstanding immediately prior to such expiration or termination, never been issued; provided that if such expiration or termination would result in an increase in the Conversion Price then in effect, such increase shall not be effective until 10 days after written notice thereof has been given to all holders of the Series B Preferred Stock. For purposes of Section 5(c), the expiration or termination of any Option or Convertible Security which was outstanding as of the date of issuance of the Series B Preferred Stock shall not cause the Conversion Price hereunder to be adjusted unless, and only to the extent that, a change in the terms of such Option or Convertible Security caused it to be deemed to have been issued after the original date of issuance of the Series B Preferred Stock.

(v) Calculation of Consideration Received. If any Common Stock, Option or Convertible Security is issued or sold or deemed to have been issued or sold for cash, the consideration received therefor shall be deemed to be the amount received by the Company therefor. If any Common Stock, Option or Convertible Security is issued or sold for a consideration other than cash, the amount of the consideration other than cash received by the Company shall be the fair value of such consideration, except where such consideration consists of securities, in which case the amount of consideration received by the Company shall be the Average Market Price thereof on the date of receipt. If any Common Stock, Option or Convertible Security is issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving Company, the amount of consideration therefor shall be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such Common Stock, Option or Convertible Security, as the case may be. The fair value of any consideration other than cash and securities shall be determined jointly by the Company and the holders of a majority of the outstanding Series B Preferred Stock. If such parties are unable to reach agreement within a reasonable period of time, the fair value of such consideration shall be determined by an independent appraiser experienced in valuing such type of consideration selected by the holders of a majority of the outstanding Series B Preferred Stock and reasonably acceptable to the Company. The determination of such appraiser shall be final and binding upon the parties, and the fees and expenses of such appraiser shall be borne by the Company.

(vi) Integrated Transactions. In case any Option is issued in connection with the issue or sale of other securities of the Company, together comprising one integrated transaction in which no specific consideration is allocated to such Option by the parties thereto, the Option shall be deemed to have been issued for a consideration of $0.01.

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(vii) Treasury Shares. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Company or any Subsidiary, and the disposition of any shares so owned or held shall be considered an issue or sale of Common Stock.

(viii) Record Date. If the Company sets a record date of the holders of Common Stock for the purpose of entitling them (a) to receive a dividend or other distribution payable in Common Stock, Options or in Convertible Securities or (b) to subscribe for or purchase Common Stock, Options or Convertible Securities, then the date of payment or subscription shall be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or upon the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be.

(d) Subdivision or Combination of Common Stock. If the Company at any time subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Conversion Price in effect immediately prior to such subdivision shall be proportionately reduced, and if the Company at any time combines (by reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Conversion Price in effect immediately prior to such combination shall be proportionately increased.

(e) Reorganization, Reclassification, Consolidation, Merger or Sale. Any recapitalization, reorganization, reclassification, consolidation, merger, sale of all or substantially all of the Company’s assets or other transaction, in each case which is effected in such a manner that the holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock, is referred to herein as an “Organic Change”. Prior to the consummation of any Organic Change, the Company shall make appropriate provisions (in form and substance reasonably satisfactory to the holders of a majority of the Series B Preferred Stock then outstanding) to insure that each of the holders of Series B Preferred Stock shall thereafter have the right to acquire and receive, in lieu of the shares of Conversion Stock immediately theretofor acquirable and receivable upon the conversion of such holder’s Series B Preferred Stock, such shares of stock, securities or assets as such holder would have received in connection with such Organic Change if such holder had converted its Series B Preferred Stock immediately prior to such Organic Change. The Company shall not effect any such consolidation, merger or sale, unless prior to the consummation thereof, the successor entity (if other than the Company) resulting from consolidation or merger or the entity purchasing such assets assumes by written instrument (in form and substance reasonably satisfactory to the holders of a majority of the Series B Preferred Stock then outstanding), the obligation to deliver to each such holder such shares of stock, securities or assets as, in accordance with the foregoing provisions, such holder may be entitled to acquire.

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(f) Certain Events. If any event occurs of the type contemplated by the provisions of this Section 5 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Board shall make an appropriate adjustment in the Conversion Price so as to protect the rights of the holders of Series B Preferred Stock; provided that no such adjustment shall increase the Conversion Price as otherwise determined pursuant to this Section 5 or decrease the number of shares of Conversion Stock issuable upon conversion of each Share.

(g) Optional Reductions of Conversion Price. To the extent permitted by applicable law, the Company from time to time may reduce the Conversion Price by any amount for any period of time if the period is at least 20 days, the reduction is irrevocable during the period and the Board shall have made a determination that such reduction would be in the best interests of the Company, which determination shall be conclusive and described in a resolution of the Board. Whenever the Conversion Price is reduced pursuant to the preceding sentence, the Company shall mail to each record holder of Series B Preferred Stock a written notice of the reduction at least 15 days prior to the date the reduced Conversion Price takes effect, and such notice shall state the reduced Conversion Price and the period during which it will be in effect.

(h) Notices.

(i) Immediately upon any adjustment of the Conversion Price, the Company shall give written notice thereof to all holders of Series B Preferred Stock, setting forth in reasonable detail and certifying the calculation of such adjustment.

(ii) The Company shall give written notice to all holders of Series B Preferred Stock at least 20 days prior to the date on which the Company closes its books or sets a record date (a) with respect to any dividend or distribution upon Common Stock, (b) with respect to any pro rata subscription offer to holders of Common Stock or (c) for determining rights to vote with respect to any Organic Change or Liquidation Event.

(iii) The Company shall also give written notice to the holders of Series B Preferred Stock at least 20 days prior to the date on which any Organic Change shall take place.

(i) Automatic Conversion. All Shares outstanding on the ten year anniversary of the Series B Closing Date (the “Automatic Conversion Date”) shall automatically convert into fully paid and non-assessable shares of Conversion Stock without any further action by the Company or any holder of record of Series B Preferred Stock. Such automatic conversion shall be deemed to have been effected immediately prior to the close of business on the Automatic Conversion Date, and the person in whose name or names any certificate or certificates for shares of Conversion Stock shall be issuable upon such conversion shall be deemed to have become the holder of record of the shares of Conversion Stock represented thereby at such time on such date. The number of shares of Conversion Stock deliverable upon conversion of one Share pursuant to this Section 5(i) shall be equal to the Liquidation Value of such Share on the Automatic Conversion Date, divided by the Conversion Price on the Automatic Conversion Date. Effective upon conversion pursuant to this Section 5(i), the Shares

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so converted shall no longer be deemed to be outstanding, and all rights of a holder with respect to such Shares shall immediately terminate except the right to receive the Conversion Stock and other amounts payable pursuant to this Section 5.

(j) Conversion at the Option of the Company. If at any time after the two year anniversary of the Series B Closing Date and prior to the Automatic Conversion Date, (i) the Average Market Price for a period of 60 consecutive trading days (a “Forced Conversion Period”) is greater than $2.50 (as such dollar amount is proportionately adjusted to reflect any stock dividend, stock split, reverse stock split or other combination or subdivision of the Common Stock after the Series B Closing Date); and (ii) a shelf registration statement covering resales of the Conversion Stock is effective and available for use in accordance with the Registration Rights Agreement at all times during the period beginning on the Forced Conversion Notice Date (as defined) and ending on the Forced Conversion Date (as defined), and is expected to remain effective and available for use for at least ninety (90) days following the Forced Conversion Date or (y) the Conversion Stock may be sold by the holders thereof pursuant to Rule 144(k) under the Securities Act; then the Company may elect to convert some or all of the then issued and outstanding Shares in accordance with the terms of this Section 5 (such conversion, a “Forced Conversion”). In order to effect a Forced Conversion, the Company must deliver to all holders of Series B Preferred Stock written notice thereof (a “Forced Conversion Notice”) on or before 5:00 p.m., New York time, on the Business Day immediately following the last trading day of the Forced Conversion Period (such Business Day, the “Forced Conversion Date”). Notwithstanding the delivery by the Company of a Forced Conversion Notice, nothing contained herein shall be deemed to limit in any way (i) the right of a holder of Series B Preferred Stock to convert Shares prior to the Forced Conversion Date or (ii) the availability of any and all remedies that are provided to a holder of Series B Preferred Stock hereunder, including without limitation in the event that the Company fails to deliver Conversion Shares upon a Forced Conversion. The Forced Conversion Notice shall (i) specify the number of Shares that is subject to the Forced Conversion, which number shall not exceed the number of Shares that would convert into a number of shares of Conversion Stock greater than the aggregate number of shares of Common Stock traded on the Company’s Principal Market (as defined) during the twenty (20) trading days immediately preceding the Forced Conversion Date and (ii) shall be allocated among the holders of the Series B Preferred Stock on a pro rata basis. Notwithstanding anything herein to the contrary, following the authorization of the Common Stock after the Series B Closing Date for quotation or listing on The New York Stock Exchange, Inc., the American Stock Exchange, Inc. or The Nasdaq National Market or SmallCap Market, no Forced Conversion may be made under this Section 5(j) unless the Conversion Stock is authorized for quotation or listing on The New York Stock Exchange, Inc., the American Stock Exchange, Inc. or The Nasdaq National Market or SmallCap Market; no written threat of suspension of such authorization by any such exchange or market shall have been made and not withdrawn and the Company shall not have fallen below the minimum listing maintenance requirements of such exchange or market at any time during the ninety (90) days prior to the Forced Conversion Date.

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6. Voting Rights.

(a) Except as otherwise provided in Section 6(b) or as required by law, each holder of Series B Preferred Stock shall be entitled to vote on all matters subject to a stockholders vote and shall be entitled to that number of votes equal to the number of shares of Conversion Stock into which such holder’s Shares could be converted, pursuant to the provisions of Section 5 hereof, on the record date for the determination of stockholders entitled to vote on such matter or, if no such record date is established, on the date such vote is taken or any written consent of stockholders is solicited. Except as otherwise expressly provided herein or as required by law, the holders of Shares and Common Stock shall vote together as a single class on all matters.

(b) For so long as 50,000 Shares remain outstanding (as such share number is proportionately adjusted to reflect any stock dividend, stock split, reverse stock split or other combination or subdivision of the Series B Preferred Stock after the Series B Closing Date), the holders of the Series B Preferred Stock, voting separately as a single class to the exclusion of all other classes of the Company’s capital stock and with each Share entitled to one vote, shall be entitled to elect two (2) directors to serve on the Board until such directors’ successors are duly elected by the holders of the Series B Preferred Stock or such directors are removed from office by the holders of the Series B Preferred Stock. If the number of directors is increased to a number greater than 7 directors, the number of directors the holders of the Series B Preferred Stock are entitled to elect shall be increased such that the holders of the Series B Preferred Stock shall be entitled to elect one additional director for every four directors that are added to the Board. For example, if the number of directors on the Board is increased to 11, the holders of the Series B Preferred shall be entitled to elect a total of 3 directors. Notwithstanding anything to the contrary herein, in the event that the number of Shares outstanding is fewer than 50,000 but 25,000 or greater (as such share numbers are proportionately adjusted to reflect any stock dividend, stock split, reverse stock split or other combination or subdivision of the Series B Preferred Stock after the Series B Closing Date), the holders of the Series B Preferred Stock, voting separately as a single class to the exclusion of all other classes of the Company’s capital stock and with each Share entitled to one vote, shall be entitled to elect one (1) director to serve on the Board until such director’s successor is duly elected by the holders of the Series B Preferred Stock or such director is removed from office by the holders of the Series B Preferred Stock. If the holders of the Series B Preferred Stock for any reason fail to elect anyone to fill any such directorships, such positions shall remain vacant until such time as the holders of the Series B Preferred Stock elect a director to fill such position and shall not be filled by resolution or vote of the Board or the Company’s other stockholders. The Company shall, at the election of the holders of a majority of the Shares, cause the board of directors of any Subsidiary of the Company to be comprised of the same members as are on the Board. Except as otherwise required by law, at least one director elected by the holders of a majority of the Shares shall be appointed to the nominating committee of the Board. Notwithstanding anything herein to the contrary, during the period beginning on the Series B Closing Date and ending on the earlier of (i) the 90^th day after the Series B Closing Date and (ii) the date the number of directors serving on the Board is equal to six (6) or more, the holders of the Series B Preferred Stock shall only be entitled to elect one (1) director to serve on the Board.

(c) In addition, so long as (1) any shares of Series B Preferred Stock remain outstanding with respect to the following clauses (i), (iv), (v), (vi) or (vii) and (2) at least 20,000

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shares of the Series B Preferred Stock remain outstanding with respect to the following clauses (ii) and (iii) (as such share number is proportionately adjusted to reflect any stock dividend, stock split, reverse stock split or other combination or subdivision of the Series B Preferred Stock after the Series B Closing Date), the affirmative vote of the holders of a majority of the outstanding Shares shall be necessary to:

(i) alter or change the preferences, rights or powers of the Series B Preferred Stock, whether by amendment of the Certificate of Designations of the Series B Preferred Stock or as a result of a recapitalization, reorganization, reclassification, consolidation, merger or otherwise;

(ii) create, authorize or issue any capital stock that ranks prior (whether with respect to dividend rights or upon liquidation, dissolution, winding up or other similar event) to the Series B Preferred Stock;

(iii) create, authorize or issue any capital stock that ranks pari passu (whether with respect to dividend rights or upon liquidation, dissolution, winding up or other similar event) to the Series B Preferred Stock, provided that the affirmative vote of the holders of a majority of the outstanding Shares shall not be necessary to create, authorize or issue up to $175,000,000 of capital stock that ranks pari passu (whether with respect to dividend rights or upon liquidation, dissolution, winding up or other similar event) to the Series B Preferred Stock;

(iv) increase the authorized number of Shares;

(v) effect a Change of Control, provided that the affirmative vote of the holders of a majority of the outstanding Shares shall not be necessary to effect a Change of Control if as a result of such Change in Control each Share will be entitled to receive not less than 100% of the Liquidation Value of such Share plus all accrued and unpaid dividends thereon in accordance with Section 3 above;

(vi) effect a voluntary liquidation, dissolution, winding up or other similar event of the Company, provided that the affirmative vote of the holders of a majority of the outstanding Shares shall not be necessary to effect a voluntary liquidation, dissolution, winding up or other similar event of the Company if each Share, as a result of such voluntary liquidation, dissolution, winding up or other similar event, will be entitled to receive not less than 100% of the Liquidation Value of such Share plus all accrued and unpaid dividends thereon in accordance with Section 3 above; or

(vii) become subject to, or permit any of its Subsidiaries to become subject to, (including by way of amendment to or modification of) any agreement or instrument which by its terms would (under any circumstances) restrict the Company’s right to comply with these terms of the Series B Preferred Stock.

7. Announcement. The Company shall publicly announce the final settlement of (a) the Class Action Litigation within two (2) Business Days of the date the Company enters into a binding settlement agreement with respect thereto, (b) the SEC Investigation within two

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(2) Business Days of the date the Company enters into a binding settlement agreement with respect thereto and (c) the Derivative Litigation within two (2) Business Days of the date the Company enters into a binding settlement agreement with respect thereto.

8. Notices. All notices required to be sent by the Company hereunder shall be sent by certified mail, return receipt requested. At the same time that the Company delivers any written notice to the record holders of the Series B Preferred Stock, the Company shall send a copy of such notice by email to those holders that have provided an email address to the Company.

9. Compliance. The Company will not, through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company.

10. Definitions. The following terms, as used herein, shall have the following meanings:

“5(b)(v) Measurement Period” means the seven trading days following the day the Company publicly announces the final settlement of the Class Action Litigation if such public announcement is made after 4:00 P.M., New York time; provided, that if such public announcement is made before 4:00 P.M., New York time, “5(b)(v) Measurement Period” means the period beginning on the day such announcement is made and ending on the sixth trading day thereafter.

“5(b)(vi) Measurement Period” means the seven trading days following the day the Company publicly announces the final settlement of the Securities and Exchange Commission Investigation if such public announcement is made after 4:00 P.M., New York time; provided, that if such public announcement is made before 4:00 P.M., New York time, “5(b)(vi) Measurement Period” means the period beginning on the day such announcement is made and ending on the sixth trading day thereafter.

“Affiliate” means, as to any Person (the “subject Person”), any other Person that directly or indirectly through one or more intermediaries controls or is controlled by, or is under direct or indirect common control with, the subject Person. For the purposes of this definition, “control” when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, through representation on such Person’s Board of Directors or other management committee or group, by contract or otherwise.

“Average Market Price” of any security for any time period means the volume-weighted average of the sale prices for such security during such time period on all securities exchanges on which such security may at the time be listed, or, if such security is not so listed during such time period, the volume-weighted average of the sale prices for such security during such time period quoted in the NASDAQ System, or, if such security is not quoted in the NASDAQ System during such time period, the volume-weighted average of the sale prices for such security during such time period on the domestic over-the-counter market as reported by the National Quotation

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Bureau, Incorporated, or any similar successor organization. If such security is not listed on any securities exchange or quoted in the NASDAQ System or the over-the-counter market during the relevant time period, the “Average Market Price” shall be the fair value thereof determined jointly by the Company and the holders of a majority of the Series B Preferred Stock. If such parties are unable to reach agreement within a reasonable period of time, such fair value shall be determined by an independent appraiser experienced in valuing securities selected by the holders of a majority of the Series B Preferred Stock and reasonably acceptable to the Company. The determination of such appraiser shall be final and binding upon the parties, and the Company shall pay the fees and expenses of such appraiser.

“Business Day” means any day excluding Saturday, Sunday, and any day which is a legal holiday under the laws of the State of New York or is a day on which banking institutions located in such state are authorized or required by law or other governmental action to close.

“Change of Control” means: (i) the sale, lease, transfer, conveyance or other disposition, in one or a series of related transactions, of all or substantially all the assets of the Company and its subsidiaries taken as a whole to any “person” (as such term is used in Section 13(d)(3) of the Exchange Act), or (ii) the consummation of any transaction (including any merger or consolidation) the result of which is that any “person” (as defined above), becomes the beneficial owner (as determined in accordance with Rules 13d-3 and 13d-5 under the Exchange Act except that a person will be deemed to have beneficial ownership of all shares that such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 50% of the Voting Securities of the Company.

“Class Action Litigation” means the class action litigation described in Item 3 of the Company’s Amended Annual Report on Form 10K/A for the year ended December 31, 2003 under the caption “Class Action Litigation”.

“Conversion Stock” means shares of the Common Stock; provided that if there is a change such that the securities issuable upon conversion of the Series B Preferred Stock are issued by an entity other than the Company or there is a change in the type or class of securities so issuable, then the term “Conversion Stock” shall mean one share of the security issuable upon conversion of the Series B Preferred Stock if such security is issuable in shares, or shall mean the smallest unit in which such security is issuable if such security is not issuable in shares.

“Convertible Securities” means any stock or securities directly or indirectly convertible into or exchangeable for Common Stock.

“Derivative Litigation” means the derivative litigation described in Item 3 of the Company’s Amended Annual Report on Form 10K/A for the year ended December 31, 2003 under the caption “Derivative Litigation”.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Final Settlement Amount” with respect to the Class Action Litigation means the total of all amounts required to be paid by the Company to the plaintiffs in settlement of such litigation;

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and with respect to the Securities and Exchange Commission Investigation, means the total of all amounts required to be paid by the Company by the Securities and Exchange Commission in connection with such investigation

“GAAP” means generally accepted accounting principles, applied on a consistent basis, as set forth in (i) opinions of the Accounting Principles Board of the American Institute of Certified Public Accountants, (ii) statements of the Financial Accounting Standards Board and (iii) interpretations of the Securities and Exchange Commission and the Staff of the Securities and Exchange Commission and each of their respective successors and which are applicable in the circumstances as of the date in question. Accounting principles are applied on a “consistent basis” when the accounting principles applied in a current period are comparable in all material respects to those accounting principles applied in a preceding period.

“Liquidation Value” on any date means, with respect to one Share, $1,000 (as such dollar amount is proportionately adjusted to reflect any stock dividend, stock split, reverse stock split or other combination or subdivision of the Series B Preferred Stock after the Series B Closing Date).

“Options” means any rights, warrants or options to subscribe for or purchase Common Stock or Convertible Securities.

“Person” or “person” means any corporation, individual, limited liability company, joint stock company, joint venture, partnership, unincorporated association, governmental regulatory entity, country, state or political subdivision thereof, trust, municipality or other entity.

“Principal Market” means the principal exchange or market on which the Common Stock is listed or traded.

“Securities Act” means the Securities Act of 1933, as amended.

“Securities and Exchange Commission Investigation” means the Securities and Exchange Commission investigation described in Item 3 of the Company’s Amended Annual Report on Form 10K/A for the year ended December 31, 2003 under the caption “Securities and Exchange Commission Investigation”.

“Series B Closing Date” means the date of the initial issuance by the Company of the Series B Preferred Stock.

“Stock Option Plan” means any capital stock plan adopted by the Company for the benefit of the Company’s officers, employees, consultants, agents or directors which has been or is approved by the Board or a committee thereof that has the authority to administer any such plan, including, without limitation:

(i) i2 Technologies, Inc. 1995 Stock Option/Stock Issuance Plan, as amended and restated through April 12, 2001;

(ii) 2001 Non-officer Stock Option/Stock Issuance Plan;

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(iii) i2 Technologies, Inc. Employee Stock Purchase Plan, as amended and restated through April 23, 2001;

(iv) i2 Technologies, Inc. International Employee Stock Purchase Plan, as amended and restated through April 23, 2001;

(v) Think Systems Corporation 1997 Incentive Stock Plan;

(vi) Optimax Systems Corporation Stock Option Plan;

(vii) InterTrans Logistics Solutions Limited 1997 Stock Incentive Plan;

(viii) SMART Technologies, Inc. 1996 Stock Option/Stock Issuance Plan;

(ix) SupplyBase, Inc. 1999 Stock Plan;

(x) Aspect Development, Inc. 1997 Nonstatutory Stock Option Plan;

(xi) Aspect Development, Inc. 1992 Stock Option Plan;

(xii) Aspect Development, Inc. 1996 Employee Stock Purchase Plan;

(xiii) Aspect Development, Inc. 1996 Outside Directors Stock Option Plan;

(xiv) Transition Analysis Component Technology, Inc. 1997 Stock Plan;

(xv) Cadis, Inc. 1991 Stock Option Plan; and

(xvi) Think Systems 1996 Incentive Stock Option Plan.

“Subsidiary” means, with respect to any Person, any company, limited liability company, partnership, association or other business entity of which (i) if a company, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a limited liability company, partnership, association or other business entity, a majority of the partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by any Person or one or more Subsidiaries of that person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a limited liability company, partnership, association or other business entity if such Person or Persons shall be allocated a majority of limited liability company, partnership, association or other business entity gains or losses or shall be or control the managing general partner of such limited liability company, partnership, association or other business entity.

“Voting Securities” means securities of the Company ordinarily having the power to vote for the election of directors of the Company; provided that when the term “Voting Securities” is used with respect to any other Person it means the capital stock or other equity interests of any class or kind ordinarily having the power to vote for the election of directors or other members of the governing body of such Person.

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IN WITNESS WHEREOF, i2 Technologies, Inc. has caused this Certificate of Designations to be duly executed on [date], 2004.

i2 Technologies, Inc.

By:

Name:

Title:

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EX-4.1

EXHIBIT 4.1

PREFERRED STOCK PURCHASE AGREEMENT

THIS PREFERRED STOCK PURCHASE AGREEMENT (this “Agreement”) is dated as of April 27, 2004 between i2 Technologies, Inc., a Delaware corporation (the “Company”) and R² Investments, LDC, a Cayman Islands limited duration company (“Investor”).

Investor desires to purchase from the Company, and the Company desires to sell and issue to Investor, 100,000 shares of the Company’s 2.5% Series B Convertible Preferred Stock, par value $.001 per share (the “Series B Preferred Stock”).

In consideration of the mutual promises, representations, warranties, covenants and conditions set forth in this Agreement, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

1.1 Definitions; Interpretation.

(a) For purposes of this Agreement, the following terms have the indicated meanings:

“Affiliate” means, as to any Person (the “subject Person”), any other Person that directly or indirectly through one or more intermediaries controls or is controlled by, or is under direct or indirect common control with, the subject Person. For the purposes of this definition, “control” when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, through representation on such Person’s Board of Directors or other management committee or group, by contract or otherwise.

“Board” or “Board of Directors” means the board of directors of the Company.

“Business Day” means any day excluding Saturday, Sunday, and any day which is a legal holiday under the laws of the State of Texas or is a day on which banking institutions located in such state are authorized or required by law or other governmental action to close.

“Certificate” means the Certificate of Designations of the Company attached hereto as Exhibit A.

“Closing” has the meaning set forth in Section 3.1 hereof.

“Closing Date” has the meaning set forth in Section 3.1 hereof.

“Code” means the Internal Revenue Code of 1986, as amended.

“Common Stock” means the Company’s common stock, par value $.00025 per share, and any securities into which such Common Stock is hereafter converted or exchanged.

“Common Stock Deemed Outstanding” means the number of shares of Common Stock, determined on a fully diluted as if converted basis giving effect to all Common Stock Equivalents and any options, warrants or other rights to acquire Common Stock or Common Stock Equivalents.

“Common Stock Equivalent” means any security convertible into or exchangeable for Common Stock.

“Company” has the meaning set forth in the preamble hereof.

“Consolidated Subsidiary” means, for any Person, each Subsidiary of such Person (whether now existing or hereafter created or acquired) the financial statements of which are consolidated for financial statement reporting purposes with the financial statements of such Person in accordance with GAAP.

“Conversion Shares” means shares of Common Stock issued or issuable upon conversion of the Series B Preferred Stock.

“Convertible Securities” means any stock or securities directly or indirectly convertible into or exchangeable for Common Stock.

“Environmental and Safety Requirements” means all federal, state, local and foreign statutes, regulations, ordinances and other provisions having the force or effect of law, all judicial and administrative orders and determinations and all common law concerning public health and safety, worker health and safety, and pollution or protection of the environment, including without limitation all those relating to the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, testing, processing, discharge, release, threatened release, control, or cleanup of any hazardous materials, substances or wastes, chemical substances or mixtures, pesticides, pollutants, contaminants, toxic chemicals, petroleum products or by-products, asbestos, polychlorinated biphenyls, noise or radiation.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“ERISA Affiliate” means any entity, which together with the Company or any parent or Subsidiary of the Company, would be treated as a single employer for purposes of Section 414 of the Code.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Financial Officer” means the chief financial officer, principal accounting officer, treasurer or controller of the Company.

“Financial Statements” has the meaning set forth in Section 4.5(b) hereof.

“GAAP” means generally accepted accounting principles, applied on a consistent basis, as set forth in (i) opinions of the Accounting Principles Board of the American Institute of Certified Public Accountants, (ii) statements of the Financial Accounting Standards Board, (iii) interpretations of the Securities and Exchange Commission and the Staff of the Securities and

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Exchange Commission and each of their respective successors and which are applicable in the circumstances as of the date in question. Accounting principles are applied on a “consistent basis” when the accounting principles applied in a current period are comparable in all material respects to those accounting principles applied in a preceding period.

“Governmental Agency” means any federal, state, local, foreign or other governmental agency, instrumentality, commission, authority, board or body and any market or exchange upon which the Common Stock is listed or quoted.

“HSR Act” shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

“Indebtedness” means at a particular time, without duplication, (i) any indebtedness for borrowed money or issued in substitution for or exchange of indebtedness for borrowed money; (ii) any indebtedness evidenced by any note, bond, debenture or other debt security; (iii) any indebtedness for the deferred purchase price of property or services with respect to which a Person is liable, contingently or otherwise, as obligor or otherwise (other than trade payables and other current liabilities incurred in the ordinary course of business which are not more than 90 days past due); (iv) any commitment by which a Person assures a creditor against loss (including contingent reimbursement obligations with respect to letters of credit); (v) any indebtedness guaranteed in any manner by a Person (including guarantees in the form of an agreement to repurchase or reimburse); (vi) any obligations under capitalized leases with respect to which a Person is liable, contingently or otherwise, as obligor, guarantor or otherwise, or with respect to which obligations a Person assures a creditor against loss; (vii) any indebtedness secured by a Lien (other than Permitted Liens) on a Person’s assets; (viii) any unsatisfied obligation for “withdrawal liability” to a “multiemployer plan” as such terms are defined under the Employee Retirement Income Security Act of 1974, as amended; (x) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances, (xi) the principal balance outstanding under any synthetic lease, tax retention operating lease, off-balance sheet loan or similar off-balance sheet financing product of a Person where such transaction is considered borrowed money indebtedness for tax purposes but is classified as an operating lease under GAAP, (xii) all obligations of a Person to pay a specified purchase price for goods or services whether or not delivered or accepted (e.g., take-or-pay obligations) or similar obligations; and (xiii) all liabilities and obligations of a Person to redeem or retire shares of capital stock of such Person (other than the Company’s right to redeem the Shares under the circumstances specified in the Certificate). The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.

“Indemnified Liabilities” has the meaning set forth in Section 10.1(a) hereof.

“Indemnitees” has the meaning set forth in Section 10.1(a) hereof.

“Intellectual Property” means all U.S. or foreign patents, patent rights, inventions, trademarks, service marks, trade dress, trade names, brand names, corporate names, logos and other trade designations (including unregistered names and marks), copyrights; registrations,

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applications and renewals for any of the foregoing, trade secrets, formulations, processes, methods, know-how, technical and computer data, documentation and software, financial, business and marketing plans, customer and supplier information, royalty rights, all goodwill associated with the foregoing and all other intellectual property rights and all copies and tangible embodiments of the foregoing.

“IRS” means the Internal Revenue Service.

“Knowledge” means, with respect to any representation, warranty or statement of any party in this Agreement that is qualified by such party’s “knowledge”, the actual knowledge of a party and all knowledge that a reasonably prudent person should have if such person duly performed his or her duties as an officer, director or employee, as the case may be, of such party and exercised due diligence and care with respect to the matter to which such qualification applies. “Knowledge of the Company” or “Company’s Knowledge” shall mean the Knowledge of (i) the directors of the Company and (ii) the officers of the Company listed on Schedule 1.1.

“Lien” means, with respect to any property, any mortgage or pledge, hypothecation, assignment, deposit arrangement, security interest, tax lien, financing statement, pledge, charge, or other lien, charge, easement, encumbrance, preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever on or with respect to such property (including, without limitation, any conditional sale or other title retention agreement having substantially the same economic effect as any of the foregoing).

“Material Adverse Effect” means, with respect to a Person, any occurrence, event, or effect that either individually or in the aggregate with all other such occurrences, events or effects is, or could reasonably be expected to be (whether or not such occurrence, event or effect has, at the time in question, manifested itself in such Person’s historical financial statements), materially adverse to (i) the business, operations, prospects, results of operations, properties, condition, financial or otherwise, assets or liabilities of such Person and its Subsidiaries taken as a whole on a consolidated basis or (ii) the ability of such Person to perform its obligations under this Agreement or any other Related Document, excluding any such material adverse effect to the extent resulting from or arising in connection with (i) changes or conditions generally affecting the industries or segments in which such Person operates, (ii) changes in general economic, market or political conditions or (iii) the announcement and pendency of the transactions contemplated by this Agreement and the Related Documents which, in the case of (i) or (ii), is not specifically related to, or does not have a materially disproportionate effect (relative to other industry participants) on, such Person; provided, that any reduction in the market price or trading volume of such Person’s publicly traded common stock shall not be deemed to constitute a Material Adverse Effect (it being understood that the foregoing shall not prevent a Party from asserting that any underlying cause of such reduction independently constitutes such a Material Adverse Effect).

“Most Recent Audited Balance Sheet Date” has the meaning set forth in Section 4.6 hereof.

“Ownership Ratio” means the percentage obtained by dividing the number of shares of Common Stock owned by Investor at the time of determination on a fully diluted as if converted basis, by the aggregate number of shares of Common Stock Deemed Outstanding at such time.

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“Ordinary Course of Business” means any action taken by a Person if consistent with past practice (including with respect to quantity, quality and frequency) and not required to be authorized by the board of directors of such Person (or by any Person or group of Persons exercising similar authority) and not required to be authorized by the parent company (if any) of such Person.

“Permitted Affiliate Transaction” means any contract, agreement, arrangement or transaction entered into by the Company or any of its Subsidiaries with any Affiliate of any such Person as part of an employment relationship or pursuant to any Stock Option Plan.

“Permitted Liens” means:

(i) Liens existing on the Closing Date and securing Indebtedness of the Company and its Subsidiaries to the extent such Indebtedness is disclosed on the Most Recent Audited Balance Sheet Date or incurred since such date in the Ordinary Course of Business;

(ii) Liens imposed by governmental authorities for Taxes, assessments or other charges not yet subject to penalty or which are being contested in good faith and by appropriate proceedings, if adequate reserves with respect thereto are maintained on the books of the Company in accordance with GAAP;

(iii) statutory liens of carriers, warehousemen, mechanics, material men, landlords, repairmen or other like Liens arising by operation of law in the Ordinary Course of Business; provided, that (A) the underlying obligations are not overdue for a period of more than 60 days, or (B) such Liens are being contested in good faith and by appropriate proceedings and adequate reserves with respect thereto are maintained on the books of the Company in accordance with GAAP;

(iv) Liens securing the performance of bids, trade contracts (other than borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the Ordinary Course of Business;

(v) easements, rights-of-way, zoning, similar restrictions and other similar encumbrances or minor imperfections of title which, in the aggregate, do not in any case materially detract from the value of the property subject thereto (as such property is used by the Company or any of its Subsidiaries) or interfere with the ordinary conduct of the business of the Company and any of its Subsidiaries taken as a whole;

(vi) pledges or deposits made in the Ordinary Course of Business in connection with workers’ compensation, unemployment insurance and other types of social security legislation;

(vii) Liens securing Indebtedness of a Person existing at the time such Person becomes a Subsidiary or is merged with or into the Company or a Subsidiary; provided, that such Liens were in existence prior to the date of such acquisition, merger or consolidation, were not incurred in anticipation thereof, and do not extend to any other assets;

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(viii) leases or subleases granted to other Persons in the Ordinary Course of Business not materially interfering with the conduct of the business of the Company or any of its Subsidiaries or materially detracting from the value of the relative assets of the Company or any Subsidiary; and

(ix) Liens arising from precautionary Uniform Commercial Code financing statement filings regarding operating leases entered into by the Company or any of its Subsidiaries in the Ordinary Course of Business.

“Person” or “person” means any corporation, individual, limited liability company, joint stock company, joint venture, partnership, unincorporated association, governmental regulatory entity, country, state or political subdivision thereof, trust, municipality or other entity.

“Plan” means any employee benefit pension plan (as defined in Section 3(3) of ERISA), an employee welfare benefit plan (as defined in Section 3(1) of ERISA) and all other material benefit plans maintained, or contributed to, by the Company or any ERISA Affiliate.

“Principal Market” means the principal exchange or market on which the Common Stock is listed or traded.

“Purchase Price” has the meaning set forth in Section 2.1 hereof.

“Registration Rights Agreement” means the Registration Rights Agreement between the Company and Investor in the form of Exhibit B hereto.

“Related Documents” means all documents and instruments to be executed or adopted by the Company in connection herewith, including without limitation, the Certificate, the certificates evidencing the Series B Shares, and the Registration Rights Agreement.

“SEC” means the Securities and Exchange Commission.

“SEC Documents” means all reports, schedules, registration statements, forms and other documents filed by, or incorporated by reference in a filing by, the Company with the SEC from and including the filing of the Company’s Annual Report on Form 10-K for the year ended December 31, 2002 on July 21, 2003, including those that the Company may file with the SEC after the date of this Agreement until the Closing.

“Securities Act” means the Securities Act of 1933, as amended.

“Series B Preferred Stock” has the meanings set forth in the recitals hereof.

“Series B Shares” has the meaning set forth in Section 2.1 hereof.

“Stock Option Plan” means any capital stock plan adopted by the Company for the benefit of the Company’s officers, employees, consultants, agents or directors which has been or is approved by the Board of Directors or a committee thereof that has the authority to administer any such plan, including, without limitation:

(i) i2 Technologies, Inc. 1995 Stock Option/Stock Issuance Plan, as amended and restated through April 12, 2001;

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(ii) 2001 Non-officer Stock Option/Stock Issuance Plan;

(iii) i2 Technologies, Inc. Employee Stock Purchase Plan, as amended and restated through April 23, 2001;

(iv) i2 Technologies, Inc. International Employee Stock Purchase Plan, as amended and restated through April 23, 2001;

(v) Think Systems Corporation 1997 Incentive Stock Plan;

(vi) Optimax Systems Corporation Stock Option Plan;

(vii) InterTrans Logistics Solutions Limited 1997 Stock Incentive Plan;

(viii) SMART Technologies, Inc. 1996 Stock Option/Stock Issuance Plan;

(ix) SupplyBase, Inc. 1999 Stock Plan;

(x) Aspect Development, Inc. 1997 Nonstatutory Stock Option Plan;

(xi) Aspect Development, Inc. 1992 Stock Option Plan;

(xii) Aspect Development, Inc. 1996 Employee Stock Purchase Plan;

(xiii) Aspect Development, Inc. 1996 Outside Directors Stock Option Plan;

(xiv) Transition Analysis Component Technology, Inc. 1997 Stock Plan;

(xv) Cadis, Inc. 1991 Stock Option Plan; and

(xvi) Think Systems 1996 Incentive Stock Option Plan.

“Subsidiary” means, with respect to any Person, any company, limited liability company, partnership, association or other business entity of which (i) if a company, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a limited liability company, partnership, association or other business entity, a majority of the partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by any Person or one or more Subsidiaries of that person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a limited liability company, partnership, association or other business entity if such Person or Persons shall be allocated a majority of limited liability company, partnership, association or other business entity gains or losses or shall be or control the managing general partner of such limited liability company, partnership, association or other business entity.

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“Tax” means any federal, state, local, or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Code §59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not.

“Tax Returns” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

(b) The words “herein”, “hereof” and “hereunder” and words of similar import shall, unless otherwise stated, refer to this Agreement as a whole (including all schedules and exhibits) and not to any particular article, section or other subdivision of this Agreement, (ii) words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other genders as the context requires, (iii) the word “including” and words of similar import when used in this Agreement shall mean “including, without limitation,” unless the context otherwise requires or unless otherwise specified, and (iv) the word “or” shall not be exclusive.

ARTICLE II

ISSUANCE AND SALE OF PREFERRED STOCK

2.1 Number of Shares and Purchase Price. On the terms and subject to the conditions of this Agreement, at the Closing, the Company shall issue and sell to Investor, and Investor shall purchase from the Company, in the aggregate, 100,000 shares of Series B Preferred Stock (the “Series B Shares”) for an aggregate purchase price of $100,000,000 (the “Purchase Price”).

ARTICLE III

CLOSING; CLOSING DELIVERIES

3.1 Closing. Unless this Agreement shall have terminated pursuant to Article IX, and subject to the satisfaction or waiver of the closing conditions for the Closing set forth in Article VII, the closing of the transactions contemplated hereby (the “Closing”) shall take place at the offices of Gibson, Dunn & Crutcher, LLP, Dallas, Texas at 10:00 a.m. on the fifth (5th) Business Day after all of the conditions to the Closing set forth in Article VII (other than those that will be satisfied by the delivery of documents or tender of payment at the Closing) are either satisfied or duly waived, or at such other time, place and/or date as shall be agreed upon by the parties hereto. The date upon which the Closing occurs is referred to herein as the “Closing Date.”

3.2 Payment for and Delivery of Preferred Shares. At the Closing, the Company shall issue and deliver to Investor a stock certificate duly executed and registered in the name of Investor evidencing ownership of the number of Series B Shares to be purchased by Investor at the Closing against payment by Investor of the Purchase Price to be paid by Investor at the Closing by wire transfer of immediately available funds to the account designated by the Company in writing.

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ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby represents and warrants to Investor that, except as set forth on the Schedule of Exceptions:

4.1 Existence; Qualification; Subsidiaries. The Company and each Subsidiary are duly organized, validly existing and in good standing under the laws of their applicable jurisdictions of organization and have full corporate power and authority to conduct their business and own and operate their properties as now conducted, owned and operated. The Company has delivered to Investor copies of the Restated Certificate of Incorporation and Amended and Restated By-laws of the Company that are true, correct and complete copies of such documents. The Company and each Subsidiary of the Company is licensed or qualified as a foreign corporation or company and is in good standing in all jurisdictions where such Person is required to be so licensed or qualified except where failure to be licensed or qualified would not have Material Adverse Effect. Except as set forth in Schedule 4.1, all of the issued shares of capital stock of each Subsidiary have been duly and validly authorized and issued, are fully paid and non-assessable and are owned directly or indirectly by the Company, free and clear of all Liens.

4.2 Authorization, Noncontravention and Enforceability; Issuance of Shares.

(a) The Company has the requisite corporate power and authority to enter into and perform its obligations under this Agreement and the Related Documents. The Company has the requisite corporate power and authority to issue and sell the Series B Shares and the Conversion Shares to the Investor in accordance with the terms hereof and to issue the Conversion Shares upon conversion of the Series B Shares in accordance with the terms of the Certificate. The Company’s Board of Directors has approved the execution and delivery of, and the performance by the Company of its obligations under, this Agreement and the Related Documents. All corporate action on the part of the Company by its officers, directors and stockholders necessary for the authorization, execution and delivery of, and the performance by the Company of its obligations under, this Agreement and the Related Documents has been taken, and no further consent or authorization of the Company, its directors, stockholders, any Governmental Agency (other than such approval as may be required under the Securities Act and applicable state securities laws in respect of the Registration Rights Agreement), or any other person or entity is required (pursuant to any rule of the National Association of Securities Dealers (“NASD”) or otherwise). None of the execution, delivery and performance by the Company of this Agreement and the Related Documents, including, without limitation, the issuance and delivery of the Series B Shares and the Conversion Shares, will (i) violate or conflict with any provision of the Restated Certificate of Incorporation of the Company, the Amended and Restated By-laws of the Company or of any applicable law, regulation, order, judgment or decree, (ii) result in the breach of or constitute a default (or an event which, with notice or lapse of time or both would constitute a default) under any material agreement, instrument or understanding to which the Company is a party or by which it is bound, or (iii) result in or constitute a “change in control” under any agreement, instrument or understanding to which the Company is a party or by which it is bound. This Agreement and the Related Documents each constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except to the extent limited by applicable bankruptcy, insolvency, reorganization, moratorium and similar laws of

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general application related to the enforcement of creditor’s rights generally (collectively “Creditors Rights Laws”) and except as rights to indemnity thereunder may be limited by applicable federal or state laws.

(b) The Series B Shares, when issued and delivered in accordance with this Agreement, will be duly authorized, validly issued, fully paid and nonassessable, and will be free of any and all Liens (other than any restrictions on transfer under state and/or federal securities laws, this Agreement and the Related Documents). The Conversion Shares, when issued, will be duly authorized, validly issued, fully paid and nonassessable, and will be free of any and all Liens (other than any restrictions on transfer under state and/or federal securities laws, this Agreement and the Related Documents). The Reserved Amount (as defined) has been duly reserved for issuance upon conversion of the Series B Shares. Neither the issuance and delivery of the Series B Shares nor the issuance and delivery of any Conversion Shares is subject to any preemptive right of any stockholder of the Company or to any right of first refusal or other similar right in favor of any Person which has not been waived.

4.3 Capitalization. As of the date hereof, the authorized capital stock of the Company consists of: (i) 2,000,000,000 shares of Common Stock and (ii) 5,000,000 shares of preferred stock, par value $.001 per share, of which 2,000,000 shares have been designated Series A Junior Participating Preferred Stock. On April 27, 2004, (i) 434,618,621 shares of Common Stock were outstanding, (ii) 135,000,000 shares are reserved for issuance upon conversion of the Series B Preferred Stock, and (iii) 249,489,093 shares are reserved for issuance in connection with equity awards granted or permitted to be granted pursuant to the Stock Option Plans or upon the exercise of stock options granted or permitted to be granted pursuant to the Stock Option Plans, and no shares are held in treasury. At the time of the Closing, all of the outstanding capital stock will be validly issued, fully paid and nonassessable and will have been issued in compliance with all applicable securities laws (including the provisions of the Securities Act and the rules and regulations promulgated thereunder). Except pursuant to a Stock Option Plan or as set forth on Schedule 4.3, neither the Company nor any of its Subsidiaries has granted or issued any options, Convertible Securities, warrants, calls, pledges, phantom stock, stock appreciation rights, transfer restrictions (except restrictions imposed by federal and state securities laws), Liens, currently effective rights of first offer, currently effective rights of first refusal, currently effective antidilution provisions or commitments of any character relating to any issued or unissued shares of capital stock of the Company other than as contemplated in this Agreement and the Related Documents. Except as contemplated by this Agreement and the Related Documents or as set forth on Schedule 4.3, there are no preemptive rights, rights of first offer, antidilution provisions or any other preferential rights applicable to the issuance and sale of securities of the Company or any of its Subsidiaries, including, but not limited to, the Series B Shares.

4.4 Private Sale; Voting Agreements.

(a) Assuming the accuracy of Investor’s representations contained herein, neither the offer, sale and issuance of the Series B Shares hereunder nor the issuance and delivery of any Conversion Shares requires registration under the Securities Act or any state securities laws.

(b) To the Company’s Knowledge, there are no agreements obligating any of its stockholders to vote as directed by another Person or any proxies granted by any stockholder other than proxies submitted in connection with the Company’s meetings of shareholders.

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4.5 SEC Reports; Financial Statements.

Except as set forth on Schedule 4.5:

(a) The Company has filed all SEC Documents required to be filed as of the date hereof. The SEC Documents (i) were or will be filed on a timely basis, (ii) at the time filed, were or will be prepared in compliance in all material respects with the applicable requirements of the Securities Act and the Exchange Act, as the case may be, and the rules and regulations of the SEC thereunder applicable to such SEC Documents, and (iii) did not or will not at the time they were or are filed contain any untrue statement of a material fact or omit to state a material fact required to be stated in such SEC Documents or necessary in order to make the statements in such SEC Documents, in the light of the circumstances under which they were made, not misleading.

(b) Each of the financial statements (including, in each case, any notes thereto) contained in the SEC Documents (the “Financial Statements”) complies as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto and was prepared in all material respects in accordance with GAAP applied on a consistent basis throughout the periods indicated (except as may be indicated in the notes thereto or, in the case of unaudited statements, as permitted by Rule 10-01 of Regulation S-X promulgated by the SEC) and each fairly presented in all material respects (subject to, in the case of the unaudited statements, normal, recurring audit adjustments, none of which are material) the consolidated financial position, results of operations, stockholders’ equity and cash flows of the Company and the Consolidated Subsidiaries as at the respective dates thereof and for the respective periods indicated therein. Except as set forth on Schedule 4.5, as of the dates of the Financial Statements, the Company had no material obligation, indebtedness or liability (whether accrued, absolute, contingent or otherwise, known or unknown, and whether due or to become due), which was not reflected or reserved against in the balance sheets or the notes thereto which are part of the Financial Statements, except for those incurred in the Ordinary Course of Business and which are fully reflected on the Company’s books of account.

4.6 Absence of Certain Changes. Except as set forth on Schedule 4.6, since December 31, 2003 (the “Most Recent Audited Balance Sheet Date”), neither the Company nor any Subsidiary has:

(a) incurred any material liabilities other than current liabilities incurred, or obligations under contracts entered into, in the Ordinary Course of Business;

(b) paid, discharged or satisfied any claim, Lien or liability, other than any claim, Lien or Liability (A) reflected or reserved against on the balance sheet contained in the Financial Statements as of the Most Recent Audited Balance Sheet Date (the “Current Balance Sheet”) and paid, discharged or satisfied in the Ordinary Course of Business or (B) incurred since the Most Recent Audited Balance Sheet Date and paid, discharged or satisfied, in each case in the Ordinary Course of Business;

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(c) other than a Permitted Affiliate Transaction, paid any amount to or entered into any agreement, arrangement or transaction with any Affiliate (including its officers, directors and employees) outside the Ordinary Course of Business and which was not approved by a majority of the Company’s disinterested directors;

(d) declared, set aside, or paid any dividend or distribution with respect to its capital stock or redeemed, purchased or otherwise acquired any of its capital stock;

(e) made any material change in any method of accounting or accounting practice;

(f) suffered or caused any other occurrence, event or transaction which, individually or together with each other occurrence, event or transaction, has had or could reasonably be expected to have a Material Adverse Effect; or

(g) agreed, in writing or otherwise, to any of the foregoing.

4.7 Litigation. Except as set forth in Schedule 4.7, as of the date of this Agreement, no claim, suit, proceeding or investigation is pending or, to the Knowledge of the Company, threatened against or affecting the Company or any Subsidiary or any officer or director thereof or the Company’s and the Subsidiaries’ business which if decided adversely to any such Person could have or reasonably be expected to have a Material Adverse Effect.

4.8 Licenses, Compliance with Law, Other Agreements, Etc. The Company and each Subsidiary have all material franchises, permits, licenses and other rights to allow it to conduct its business and is not in violation in any material respects of any order or decree of any court, or of any law, order or regulation of any Governmental Agency, including, without limitation, any applicable statutory state anti-takeover law, or of the provisions of any contract or agreement to which it is a party or by which it is bound, except where noncompliance would not reasonably be expected to have a Material Adverse Effect and neither this Agreement nor the Related Documents nor the transactions contemplated hereby or thereby will result in any such violation. The Company and each Subsidiary’s businesses have been conducted in compliance with all applicable federal, state and local laws, ordinances, rules and regulations except where noncompliance would not reasonably be expected to have a Material Adverse Effect.

4.9 Third-Party Approvals. Assuming the accuracy of the representations and warranties of Investor contained in this Agreement, except as set forth on Schedule 4.9, the Company is not required to obtain any order, consent, approval or authorization of, or to make any declaration or filing with, any Governmental Agency or other third party (including under any state securities or “blue sky” laws) in connection with the execution and delivery of this Agreement or the Related Documents, or the consummation of the transactions contemplated hereby or thereby to occur on the Closing Date, except for (i) filings under the HSR Act or any similar foreign antitrust law or regulation, (ii) the filing of the Certificate, (iii) any necessary filings with any state securities commission under state blue-sky laws or filings under the Securities Act and/or Exchange Act in connection with a registration of securities pursuant to the registration rights agreement; and (iv) and filings on Form D under the Securities Act.

4.10 Disclosure. This Agreement, together with all exhibits and schedules hereto, and the agreements, certificates and other documents furnished to Investor by or on behalf of the Company and its Subsidiaries in connection with the transactions contemplated under this

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Agreement, do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained herein or therein, in the light of the circumstances under which they were made, not misleading.

4.11 Owned Real Property. The Company and its Subsidiaries have good and marketable title in fee simple to all real property owned by the Company or any of its Subsidiaries and good and marketable title to all personal property owned by them, in each case free and clear of all Liens, except for Permitted Liens and defects in title that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.

4.12 Leases. Any real or personal property held under lease by the Company and its Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made or proposed to be made of such property by the Company and its Subsidiaries. Except as set forth on Schedule 4.12, there exists no material event of default (nor, to the Company’s Knowledge, any event which with notice or lapse of time would constitute an event of default) with respect to the Company, any Subsidiary and, to the Company’s Knowledge, with respect to any other party thereto under any agreement pursuant to which the Company is the lessee or lessor of any real or personal property.

4.13 Contracts and Commitments.

(a) Except as set forth on Schedule 4.13(a), the Company is not a party to or bound by any written or oral contract or agreement that is a “material contract” within the meaning of Item 601(b) of Regulation S-K other than those contracts and agreements that are filed as exhibits to, or incorporated by reference into, the SEC Documents (collectively, the “Material Contracts”).

(b) Each Material Contract (i) is legal, valid and binding, enforceable against the Company in accordance with the terms (except to the extent required by Creditors Rights Laws), and in full force and effect; and (ii) will continue to be legal, valid and binding, enforceable against the Company in accordance with the terms (except to the extent required by Creditors Rights Laws), and in full force and effect on identical terms following the consummation of the transactions contemplated hereby. Except as set forth on Schedule 4.13(b), to the Company’s Knowledge, no party to a Material Contract is in breach or default of the terms thereof, and to the Company’s Knowledge no event has occurred which with notice or lapse of time would constitute a breach or default, or permit termination, modification, or acceleration, under a Material Contract; and no party to a Material Contract has repudiated any provision thereof. Except as set forth on Schedule 4.13(b), the Company has not entered into any contracts, agreements or instruments since the Most Recent Audited Balance Sheet Date that the Company is required to file as an exhibit to SEC Documents as a “material contract” except for such contracts, agreements or instruments that have been filed as exhibits to the SEC Documents. The Company has provided a copy of any contracts, agreements or instrument on Schedule 4.13(b) to Investor.

(c) Except as specifically set forth in Schedule 4.13(c), the Company is not a party to any contract, agreement, instrument or understanding that contains a “change in control,” “potential change in control,” or similar provision, in each case, that would be triggered by the transactions contemplated hereunder or under the Related Documents.

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4.14 Intellectual Property.

(a) Except as set forth on Schedule 4.14(a):

(i) the Company owns and possesses all right, title, and interest in and to, or has a valid and enforceable written license to use, all of the Intellectual Property owned or used by the Company and/or necessary for the operation of the business of the Company as presently conducted and as presently proposed to be conducted (collectively, the “Company Intellectual Property”);

(ii) the Company Intellectual Property is not subject to any Liens (other than Permitted Liens), and is not subject to any restrictions or limitations regarding use or disclosure;

(iii) the Company has not infringed or misappropriated or otherwise violated, and the operation of the business, does not and, to the Company’s Knowledge, will not infringe, misappropriate or otherwise violate any material Intellectual Property of any third party. To the Knowledge of the Company, the Company has not been threatened with any of the foregoing and has no Knowledge of any facts which indicate a likelihood of any of the foregoing. The Company has not received any notices regarding any of the foregoing that is currently outstanding (including, without limitation, any demands or offers to license any Intellectual Property from any third party);

(iv) the Company has taken commercially reasonable actions to maintain and protect all of the Company Intellectual Property and will continue to maintain and protect all of the Company Intellectual Property prior to the Closing so as not to adversely affect the ownership, validity or enforceability thereof;

(v) except as set forth on Schedule 4.14(a), the Company has not licensed any Intellectual Property from any third parties;

(vi) no third party has materially infringed or misappropriated any Company Intellectual Property and the Company has no Knowledge of any facts that indicate a likelihood of any of the foregoing;

(vii) immediately subsequent to the Closing, the Company Intellectual Property will be owned by or available for use by the Company on terms and conditions identical to those under which the Company owned or used the Company Intellectual Property immediately prior to the Closing;

(viii) no material claim by any third party contesting the validity, enforceability, use or ownership of any of the Company Intellectual Property has been made, is currently outstanding, or, to the Knowledge of the Company, is threatened, and to the Company’s Knowledge, there are no grounds for the same; and

(ix) except in the Ordinary Course of Business, no loss or expiration of any of the Company Intellectual Property is threatened, pending or reasonably foreseeable, except for

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patents and copyrights expiring at the end of their statutory terms (and not as a result of any act or omission by the Company, including, without limitation, a failure by the Company to pay any required maintenance fees).

4.15 Employees. The Company is not a party to or bound by any collective bargaining agreement except as set forth in Schedule 4.19, nor has it experienced any strike, material grievance, material claim of unfair labor practice or other collective bargaining dispute. To the Knowledge of the Company there is no organizational effort being made or threatened by or on behalf of any labor union with respect to its employees. The Company has not committed any unfair labor practice or materially violated any federal, state or local law or regulation regulating employers or the terms and conditions of its employees’ employment, including laws regulating employee wages and hours, employment discrimination, employee civil rights, equal employment opportunity and employment of foreign nationals, except for such violations as would not in the aggregate be expected to have a Material Adverse Effect. There are no outstanding loans or other extensions of credit made by the Company or any of its Subsidiaries to or for the account of any director, executive officer or employee of the Company or any of it is Subsidiaries.

4.16 ERISA; Employee Benefits. Each Plan that is intended to be qualified under Section 401(a) of the Code has received a favorable determination letter from the Internal Revenue Service or has timely filed for a favorable determination letter from the Internal Revenue Service and no event has occurred since the date of the last determination letter that could reasonably be expected to materially adversely affect the qualified status of such Plan. Each Plan is in full force and effect and has been administered in accordance with its material terms and is and has been, and each plan administrator and fiduciary of a Plan is acting and has been acting, in compliance with all applicable requirements of the Code and ERISA (including the funding, reporting and disclosure and prohibited transaction provisions thereof) and other applicable laws, regulations and rulings in connection with each such Plan. No Plan has been terminated or partially terminated. The Company has no Plan which is a “multiemployer plan” within the meaning of Section 4001(a)(3) of ERISA. The Company or one of its Subsidiaries has made, accrued or provided for all contributions required under each Plan. To the Knowledge of the Company, no event has occurred or is reasonably expected to occur with respect to any employee pension benefit plan of the Company or any member of the Company’s controlled group (within the meaning of Section 414 of the Code), which could reasonably be expected to directly or indirectly result in any material liability (other than liability arising in the Ordinary Course of Business) to the Company or any member of its controlled group pursuant to Title IV of ERISA or Section 412 of the Code. No Plan has incurred an “accumulated funding deficiency” within the meaning of Section 412 of the Code or Section 302 of ERISA.

4.17 Environment, Health and Safety.

(a) The Company (as used in this Section 4.17, “Company” shall include the Company’s Subsidiaries) has complied and is in compliance with all Environmental and Safety Requirements that are applicable to the Company’s business except where failure to so comply would not reasonably be expected to have a Material Adverse Effect;

(b) The Company has not received any written notice, report or other information regarding any liabilities or potential liabilities (whether accrued, absolute, contingent,

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unliquidated or otherwise), including any investigatory, remedial or corrective obligations, relating to the Company or its facilities and arising under Environmental and Safety Requirements; and

(c) Other than pursuant to publicly announced acquisitions of other companies, the Company has not, either expressly or by operation of law, assumed or undertaken any liability, including without limitation any obligation for corrective or remedial action, of any other Person relating to Environmental and Safety Requirements.

4.18 Transactions With Affiliates. Except for Permitted Affiliate Transactions or as disclosed in Schedule 4.18, neither the Company nor any Subsidiary is party to any agreement, arrangement or transaction with any Affiliate.

4.19 Taxes. Except as set forth on Schedule 4.19:

(a) each of the Company and its Subsidiaries has filed all federal Tax Returns and all material foreign, state, and local Tax Returns that it was required to file, and has paid all Taxes shown thereon as owing;

(b) all such Tax Returns are true, correct and complete in all material respects;

(c) none of the Company and its Subsidiaries (A) has been a member of an affiliated group filing a consolidated federal Tax Return (other than a group the common parent of which is the Company) or (B) has any Liability for the Taxes of any Person (other than any of the Company and its Subsidiaries) under Treas. Reg. §1.1502-6 (or any similar provision of state, local, or foreign law), or as a transferee or successor, by contract, or otherwise (excluding for these purposes any customary tax indemnification or tax responsibility provisions contained in contracts or agreements entered into by the Company in the ordinary course of its trade or business);

(d) each of the Company and its Subsidiaries has withheld and paid in all material respects all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder, or other third party; and

(e) there is no dispute or claim concerning any Tax liability of any of the Company and its Subsidiaries either (A) claimed or raised by any Governmental Agency in writing or (B) as to which any of the directors and officers (and employees responsible for Tax matters) of the Company and its Subsidiaries has Knowledge based upon personal contact with any agent of such authority and which is material to the Company and its Subsidiaries taken as a whole.

4.20 Investment Company. The Company is not an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

4.21 Exchange Act Registration; Listing. The Company’s Common Stock is registered pursuant to Section 12(g) of the Exchange Act and the Company has taken no action designed to, or which, to the Knowledge of the Company, is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act.

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4.22 Transfer Taxes. No stock transfer or other Taxes (other than income taxes) are required to be paid in connection with the issuance and sale of any of the Series B Preferred Stock, other than such taxes for which the Company has established appropriate reserves and intends to pay in full on or before the Closing.

4.23 Internal Controls and Procedures. Since January 1, 2003, the Company has maintained internal accounting controls, policies and procedures, and such books and records as are reasonably designed to provide reasonable assurance that (i) all transactions to which the Company or any Subsidiary is a party or by which its properties are bound are effected by a duly authorized employee or agent of the Company, supervised by and acting within the scope of the authority granted by the Company’s senior management; (ii) the recorded accounting of the Company’s consolidated assets is compared with existing assets at regular intervals; and (iii) all transactions to which the Company or any Company Subsidiary is a party, or by which its properties are bound, are recorded (and such records maintained) in accordance with all requirements and as may be necessary or appropriate to ensure that the financial statements of the Company are prepared in accordance with GAAP.

4.24 Foreign Corrupt Practices. Neither the Company, nor any of its Subsidiaries nor any director, officer, agent, employee or other person acting on behalf of the Company or any Subsidiary, has (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity, (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee, or (iii) violated any provision of the Foreign Corrupt Practices Act of 1977, as amended, or made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.

4.25 Insurance. The Company maintains insurance for itself and its Subsidiaries in such amounts and covering such losses and risks as is reasonably sufficient and customary in the businesses in which the Company and its Subsidiaries are engaged. No notice of cancellation has been received for any of such policies and the Company is in compliance with all of the terms and conditions thereof. The Company has no reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant increase in cost. Without limiting the generality of the foregoing, the Company maintains director’s and officer’s liability insurance in an amount of $50,000,000 in the aggregate for all claims made during the policy period from November 16, 2003 to November 16, 2004.

4.26 Certain Fees. Other than any fees to be paid to Goldman, Sachs & Co. (which are set forth on Schedule 4.26) which acted as financial advisor to the special committee of the Board of Directors, no fees or commissions will be payable by the Company to any broker, financial advisor, finder, investment banker, or bank with respect to the transactions contemplated by this Agreement. Investor shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of any Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by this Agreement.

4.27 Takeover Statutes. No “fair price,” “moratorium,” “control share acquisition,” “business combination,” “stockholder protection” or other form of anti-takeover statute or

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regulations enacted under Delaware law or under the law of any other jurisdiction, including, without limitation, Section 203 of the Delaware General Corporation Law, is or will be applicable to the execution, delivery or performance by the Company of this Agreement and the Related Documents.

4.28 Amendment to Rights Agreement. The Company has delivered to Investor a true, correct and complete copy of the Rights Agreement, dated as of January 17, 2002, between the Company and Mellon Investor Services, LLC (the “Rights Agreement”) including, without limitation, the First Amendment to the Rights Agreement dated as of the date hereof.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF INVESTOR

Investor hereby represents and warrants to the Company as follows:

5.1 Authorization and Enforceability. Investor is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization. Investor has full power and authority and has taken all action necessary to permit it to execute and deliver this Agreement and the other documents and instruments to be executed by it pursuant hereto and to carry out the terms hereof and thereof. This Agreement and such other documents and instruments each constitutes a legal, valid and binding obligation of Investor, enforceable against Investor in accordance with its terms, except to the extent limited by applicable bankruptcy, insolvency, reorganization, moratorium and similar laws of general application related to the enforcement of creditor’s rights generally and except as rights to indemnity thereunder may be limited by applicable federal securities laws.

5.2 Government Approvals. Investor is not required to obtain any order, consent, approval or authorization of, or to make any declaration or filing with, any Governmental Agency in connection with the execution and delivery of this Agreement and the other documents and instruments to be executed by it pursuant hereto or the consummation of the transactions contemplated hereby and thereby, except for such order, consent, approval, authorization, declaration or filing as which has been or will be obtained or made.

5.3 Noncontravention. The execution, delivery and performance by Investor of this Agreement and the Related Documents, and the consummation of the transactions contemplated hereby and thereby do not and will not violate the organizational documents of Investor, or any applicable material law, rule, regulation, judgment, injunction, order or decree.

5.4 Investment Intent of Investor. Investor is acquiring the Series B Shares and the Conversion Shares pursuant to this Agreement for investment and not with a view to the resale or distribution of such securities or any interest therein, without prejudice, however, to Investor’s right, subject to compliance with the Related Documents, at all times to sell or otherwise dispose of all or any part of such securities pursuant to an effective registration statement under the Securities Act or under an exemption from such registration and in compliance with applicable federal and state securities laws. Investor is acquiring the Series B Shares and Conversion Shares hereunder in the ordinary course of business. Except as contemplated by the Registration Rights Agreement, Investor has no present agreement, undertaking, arrangement, obligation or commitment providing for the disposition of such Securities. Investor has not been organized, reorganized or recapitalized specifically for the purpose of investing in such securities.

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5.5 Status of Series B Shares. Investor has been informed by the Company that the Series B Shares have not been and will not be registered under the Securities Act or under any state securities laws and are being offered and sold in reliance upon federal and state exemptions for transactions not involving any public offering.

5.6 Sophistication and Financial Condition of Investor. Investor represents and warrants to the Company that it is an “Accredited Investor” as defined in Regulation D under the Securities Act and that it considers itself to be an experienced and sophisticated investor and to have such knowledge and experience in financial and business matters as are necessary to evaluate the merits and risks of an investment in the Series B Shares. Investor has been given access to such information regarding the Company and its Subsidiaries as it has requested and has had the opportunity to obtain additional information as desired and to ask questions and has received answers regarding such information in order to evaluate the merits and the risks inherent in holding the Series B Shares and the Conversion Shares. The facts set forth in the preceding sentence, shall not affect any representation or warranty in this Agreement and the Related Documents or any condition to the obligations of the parties hereto, nor shall it affect the Company’s indemnification obligations arising under Article X hereof.

5.7 Transfer of Series B Shares and Conversion Shares.

Investor acknowledges that each certificate evidencing the ownership of Series B Shares or Conversion Shares shall be imprinted with a legend substantially in the following form until such shares (i) are transferred or sold pursuant to an effective registration statement, (ii) are transferred or sold pursuant to an exemption from registration provided by Rule 144 under the Securities Act or (iii) may be transferred pursuant to Rule 144(k) (or any successor provision) under the Securities Act:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION THEREFROM. THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY THE SECURITIES.

5.8 Certain Fees. Except for fees and expenses of Investor to be paid by the Company pursuant to the terms of this Agreement, Investor has not retained or authorized an investment banker, broker, finder or other intermediary to act on behalf of Investor who might be entitled to any fee or commission from the Company or any of its Affiliates upon consummation of the transactions contemplated by this Agreement.

5.9 Financing. Investor has, and will have at Closing, immediately available funds in U.S. dollars (through cash or cash equivalents and existing committed credit arrangements) sufficient to pay the Purchase Price and any other amounts payable pursuant to this Agreement and to consummate the transactions contemplated by, and otherwise satisfy the obligations of Investor under, this Agreement.

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ARTICLE VI

COVENANTS OF THE COMPANY AND INVESTOR

6.1 Form D; Blue Sky Qualifications; Press Release; Current Report on Form 8-K. The Company agrees with Investor that the Company will, following the Closing:

(a) file a Form D with respect to the Series B Shares issued at the Closing as required under Regulation D and to provide a copy thereof to Investor promptly after such filing;

(b) take such action as the Company reasonably determines upon the advice of counsel is necessary to qualify the Series B Shares issued at the Closing for sale under applicable state or “blue-sky” laws or obtain an exemption therefrom, and shall provide evidence of any such action to Investor at Investor’s request; and

(c) provide Investor with a reasonable opportunity to review and comment on any press release or Form 8-K discussing this Agreement and the transactions contemplated hereby prior to the issuance or filing thereof. Thereafter, the Company shall timely file any filings and notices required by the SEC or applicable law with respect to the transactions contemplated hereby.

6.2 Conduct of the Company and its Subsidiaries. From the date hereof until the Closing, the Company shall, and the Company shall cause each of its Subsidiaries, to conduct their respective businesses in the Ordinary Course of Business and to use their reasonable best efforts to preserve intact their business organizations and relationships with third parties, to preserve the goodwill of the suppliers, customers and others having business relations with the Company or such Subsidiaries. From the date hereof until the Closing, neither the Company nor its Subsidiaries shall (i) take or agree or commit to take any action that would make any representation and warranty set forth in Article IV hereof (other than those expressed as being made as at a specific date) inaccurate in any respect at, or as of any time prior to, the Closing, (ii) omit or agree or commit to omit to take any action necessary to prevent any such representation or warranty from being inaccurate in any respect at any such time, (iii) split, combine or reclassify any shares of the Company’s capital stock without appropriately adjusting the conversion price of the Series B Shares prior to their issuance at the Closing, or (iv) declare or pay any individual dividend or distribution (whether in cash, stock or property) in respect of its Common Stock.

6.3 Further Action.

(a) The Company and Investor shall, as promptly as practicable, make their respective filings and any other required or requested submissions under the HSR Act, promptly respond to any requests for additional information from either the Federal Trade Commission or the Department of Justice, and cooperate in the preparation of, and coordinate, such filings, submissions and responses (including the exchange of drafts between each party’s outside counsel) so as to reduce the length of any review periods. Subject to the terms and conditions of this Agreement, the Company and Investor shall use their reasonable best efforts to take, or

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cause to be taken, all actions and to do, or cause to be done, all things necessary under applicable laws and regulations to consummate and make effective the transactions contemplated by this Agreement and the Related Documents, including providing information and using their reasonable best efforts to obtain all necessary exemptions, rulings, consents, authorizations, approvals and waivers to effect all necessary registrations and filings and to lift any injunction or other legal bar to the transactions contemplated by this Agreement and the Related Documents, as promptly as practicable, and to take all other actions necessary to consummate such transactions in a manner consistent with applicable law. The Company and Investor will consult and cooperate with one another, and consider in good faith the views of one another, in connection with any analyses, appearances, presentations, memoranda, briefs, arguments, opinions and proposals made or submitted by or on behalf of any party hereto in connection with proceedings under or relating to the HSR Act or any other federal, state or foreign antitrust or fair trade law, and will provide one another with copies of all material communications from and filings with, any Governmental Agency in connection with the transactions contemplated hereby. The Company shall pay all applicable fees of the Company and Investor in connection with the filings required by this Section 6.3(a). Notwithstanding anything to the contrary in this Section 6.3, none of the Company, Investor or their respective Subsidiaries shall be required to take any action that would reasonably be expected to have a Material Adverse Effect on the Company or Investor.

6.4 Notice of Certain Events. The Company shall promptly notify Investor in writing of:

(a) any notice or other communication to or from any Person alleging that the consent of such Person is or may be required in connection with the transactions contemplated by this Agreement or the Related Documents;

(b) any notice or other communication from any Governmental Agency in connection with the transactions contemplated by this Agreement or the Related Documents;

(c) the occurrence, or failure to occur, of any event which occurrence or failure would cause any representation and warranty of the Company contained in Article IV of this Agreement to be untrue or inaccurate in any material respect (or, in the case of any such representation and warranty qualified by materiality or Material Adverse Effect, to be untrue or inaccurate in any respect) at any time from the date hereof to the Closing Date or that will result in the failure to satisfy any of the conditions specified in Section 7.1. Such notice (i) shall specify the representation or warranty impacted and (ii) will not be deemed to amend the Schedules attached hereto; and

(d) any failure of the Company or any of its Subsidiaries to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it under this Agreement.

6.5 No Issuances.

(a) From the date hereof until the Closing, the Company shall not issue, or agree to issue, without the prior written consent of the Investor, any equity or debt securities other than (i) pursuant to a Stock Option Plan in effect on the date hereof, (ii) issuances of Common Stock in

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exchange for the Company’s 5.25% Convertible Subordinated Debentures due 2006 (the “Debentures”) pursuant to Section 3(a)(9) of the Securities Act (each such exchange, a “3(a)(9) Exchange”) or (iii) pursuant to the Stock Purchase Agreement to be entered into between Sanjiv Sidhu and the Company (the “Sidhu Agreement”) or pursuant to the Stock Purchase Agreement to be entered into between Gregory Brady and the Company (the “Brady Agreement”).

(b) The Series B Shares shall be deemed to have been issued on the date of this Agreement and any adjustments required to be made to the Conversion Price (as defined in the Certificate) of the Series B Preferred Stock pursuant to Section 5 of the Certificate shall be made in accordance with such Section 5 if any of the following occurs: (i) the Company issues or agrees to issue any Common Stock, or is deemed to have issued or sold any Common Stock in accordance with Section 5(c) of the Certificate, in connection with a 3(a)(9) Exchange, (ii) the Company issues or agrees to issue any Common Stock, or is deemed to have issued or sold any Common Stock in accordance with Section 5(c) of the Certificate, any Common Stock in connection with the Sidhu Agreement, (iii) the Company issues or agrees to issue any Common Stock, or is deemed to have issued or sold any Common Stock in accordance with Section 5(c) of the Certificate, for a purchase price in excess of $2,000,000 in connection with the Brady Agreement, (iv) the Company announces the final settlement of the class action litigation described in Item 3 of the Company’s Amended Annual Report on Form 10K/A for the year ended December 31, 2003 under the caption “Class Action Litigation” or (v) the Company announces the final settlement of the Securities and Exchange Commission investigation described in Item 3 of the Company’s Amended Annual Report on Form 10K/A for the year ended December 31, 2003 under the caption “Securities and Exchange Commission Investigation”.

(c) The Company shall use its reasonable best efforts to issue and sell to Mr. Sidhu for cash consideration of not less than $20,000,000 shares of Common Stock pursuant to the Sidhu Agreement.

6.6 Reservation of Shares. The Company shall, on the Closing Date, have authorized and reserved for issuance, free from any preemptive rights, a number of shares of Common Stock at least equal to one hundred and twenty five percent (125%) of the maximum number of shares of Common Stock issuable upon (A) conversion of the Series B Preferred to be issued to Investor in full at the Conversion Price then in effect and (B) conversion of the maximum number of shares of Series B Preferred Stock issuable in accordance with Section 2(a) of the Certificate in payment of dividends on the Series B Preferred Stock (the “Reserved Amount”). In the event that, as a result of an adjustment to the Conversion Price of the Series B Preferred Stock (pursuant to anti-dilution adjustments or otherwise), the Reserved Amount is less than 110% of the number of shares of Common Stock then issuable upon conversion of all of the Series B Preferred Stock then outstanding, the Company shall take action (including without limitation seeking stockholder approval for the authorization or reservation of additional shares of Common Stock) as soon as practicable (but in no event later than the tenth (10^th) Business Day or, in the event that stockholder approval is required, the sixtieth (60^th) day following such date) to increase the Reserved Amount to no less than 125% of the number of shares of Common Stock into which such outstanding shares of Series B Preferred Stock are convertible.

6.7 Company’s Instructions to Transfer Agent. On or prior to the Closing Date, the Company shall execute and deliver irrevocable written instructions to the transfer agent for its

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Common Stock (the “Transfer Agent”), and provide Investor with a copy thereof, directing the Transfer Agent (i) to issue certificates representing Conversion Shares upon conversion of the Series B Preferred Stock in accordance with the Certificate, in the name of Investor or its nominee, and (ii) to deliver such certificates to Investor no later than the close of business on the Delivery Date (as defined in the Certificate). Such certificates may bear legends pursuant to applicable provisions of this Agreement or applicable law. The Company shall instruct the Transfer Agent that, in lieu of delivering physical certificates representing shares of Common Stock to Investor upon conversion of the Series B Preferred Stock, as long as the Transfer Agent is a participant in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer program, and Investor has not informed the Company that it wishes to receive physical certificates therefor, and no legend is required to appear on any physical certificate if issued, the Transfer Agent shall effect delivery of Conversion Shares by crediting the account of Investor or its nominee at DTC for the number of shares for which delivery is required hereunder within the time frame specified above for delivery of certificates. The Company represents to and agrees with Investor that it will not give any instruction to the Transfer Agent that will conflict with the foregoing instruction or otherwise restrict Investor’s right to convert the Series B Preferred Stock or to receive Conversion Shares in accordance with the terms of the Certificate. In the event that the Company’s relationship with the Transfer Agent should be terminated for any reason, the Company shall use its best efforts to cause the Transfer Agent to continue acting as transfer agent pursuant to the terms hereof until such time that a successor transfer agent is appointed by the Company and receives the instructions described above.

6.8 Affirmative Covenants. So long as any of the Series B Preferred Stock is outstanding, the Company shall, and shall cause each Subsidiary to:

(a) at all times cause to be done all things reasonable to maintain, preserve and renew its corporate existence and all material licenses, authorizations and permits necessary to the conduct of its businesses;

(b) maintain and keep its properties in reasonably good repair, working order and condition, and from time to time make all reasonable repairs, renewals and replacements, so that its businesses may be properly conducted;

(c) pay and discharge when payable all taxes, assessments and governmental charges imposed upon its properties or upon the income or profits therefrom (in each case before the same become delinquent and before penalties accrue thereon), unless the same are being contested in good faith by appropriate proceedings and adequate reserves in accordance with GAAP, consistently applied, are being maintained by the Company;

(d) comply with all applicable laws, rules and regulations of all Government Agencies and material obligations of the Company, the violation of which could reasonably be expected to have a Material Adverse Effect;

(e) use its reasonable best efforts to cause the Common Stock to be authorized for quotation or listing on a national securities or The Nasdaq National Market or SmallCap Market and thereafter maintain such authorization at all times;

(f) maintain proper books of record and account which present fairly in all material

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respects its financial condition and results of operations and make provisions on its financial statements for all such proper reserves as in each case are required in accordance with GAAP, consistently applied;

(g) take all such actions as may be necessary to assure that all shares of Common Stock issuable upon the conversion of all outstanding Series B Shares may be so issued without violation of any applicable law or governmental regulation or any requirements of any domestic securities exchange upon which shares of Common Stock may be listed (except for official notice of issuance which shall be immediately transmitted by the Company upon issuance);

(h) maintain the registration of the Common Stock pursuant to Section 12(g) of the Exchange Act;

(i) use its reasonable best efforts to at all times file all reports (including annual reports, quarterly reports and the information, documentation and other reports) required to be filed by the Company under the Exchange Act and Sections 13 and 15 of the rules and regulations adopted by the SEC thereunder, and the Company shall use its reasonable best efforts to file each of such reports on a timely basis, and take such further action as any holder or holders of Securities may reasonably request, all to the extent required to enable such holders to sell securities pursuant to Rule 144 adopted by the SEC under the Securities Act (as such rule may be amended from time to time) or any similar rule or regulation hereafter adopted by the SEC and to enable the Company to register securities with the SEC on Form S-3 or any similar short-form registration statement and upon the filing of each such report deliver a copy thereof to each holder of the Series B Shares.

6.9 Rights Agreement. The Company agrees that it shall not, by further amendment or supplement to the Rights Agreement or otherwise, amend clause (iv) of the definition of “Acquiring Person” included in the Rights Agreement without the prior written consent of Investor.

ARTICLE VI

CONDITIONS PRECEDENT

7.1 Conditions to Obligations of Investor at Closing. The obligation of Investor to purchase the Series B Shares at the Closing in accordance with Section 3.2 shall be subject to the satisfaction or waiver by Investor of the following conditions precedent on or prior to the Closing Date:

(a) the Certificate shall have been filed with the Secretary of State of the State of Delaware and shall be in full force and effect as of the Closing Date and shall not have been modified in any manner;

(b) as of the Closing Date there shall be an absence of (i) any general suspension of trading in, or limitation on prices for securities on any national securities exchange or in the over-the-counter market, or (ii) the declaration of any banking moratorium or any suspension of payments in respect of banks or any material limitation (whether or not mandatory) on the extension of credit by lending institutions in the United States;

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(c) as of the Closing Date the representations and warranties made by the Company in Article IV hereof and in any Related Document shall be true and correct in all respects (except that to the extent that any such representation or warranty relates to a particular date, such representation or warranty shall be true and correct in all respects as of that particular date) to the extent they are qualified by materiality or Material Adverse Effect, and to the extent not so qualified shall be true and correct in all material respects;

(d) the Company shall have fulfilled, performed or complied in all material respects with the covenants and conditions set forth in this Agreement and the Related Documents that are required to be performed by the Company on or before the Closing Date;

(e) as of the Closing Date the Company shall have received all consents and approvals, including, without limitation, Board of Director, governmental and material third party consents or approvals that are required to be obtained in connection with the transactions contemplated under this Agreement and the Related Documents;

(f) no temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other Governmental Agency of competent jurisdiction or other legal restraint or prohibition preventing or making illegal the consummation of the transactions contemplated by this Agreement and the other Related Documents shall be in effect; provided, however, that the parties hereto shall use their reasonable best efforts to have any such injunction, order, restraint or prohibition vacated

(g) any waiting period under the HSR Act shall have expired or been terminated;

(h) the following documents and items shall have been delivered to Investor at the Closing:

(i) the written opinion of outside counsel to the Company, dated as of the Closing Date and satisfactory in form and substance to Investor;

(ii) the written opinion of Baker Botts L.L.P., special counsel to the special committee of the Board, dated as of the Closing Date and satisfactory in form and substance to Investor;

(iii) a counterpart of the Registration Rights Agreement and all applicable Related Documents duly executed and delivered by the Company;

(iv) certificates evidencing ownership of the Series B Shares purchased by Investor, in each case duly executed and delivered by the Company;

(v) a certificate of a duly authorized officer of the Company dated as of the Closing Date certifying that (A) the closing conditions described in Section 7.1(a) through Section 7.1(k) have been satisfied, and (B) as to the resolutions of the Board of Directors attached thereto (which resolutions shall have, among other things, authorized all of the transactions contemplated by this Agreement and the Related Documents, and approved this Agreement and the Related Documents (including, without limitation, the Certificate));

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(vi) payment by wire transfer of immediately available funds to an account designated by Investor, all reasonable out-of-pocket expenses of Investor, including reasonable legal fees, in connection with this Agreement and the Related Documents, up to $200,000; and

(vii) such other documents relating to the transactions contemplated hereby as Investor may reasonably request;

(i) prior to the Closing Date, the Company shall have received at least $20,000,000 from Sanjiv S. Sidhu, the Chief Executive Officer of the Company, in payment for shares of Common Stock pursuant to the Sidhu Agreement;

(j) one individual designated by Investor shall have been elected as a member of the Board of Directors;

(k) as of the Closing Date, neither the Company nor any Subsidiary shall have suffered or caused to have been suffered since the date of this Agreement, any occurrence, event or transaction which, individually or together with each other occurrence, event or transaction, shall have had or could reasonably be expected to have had a Material Adverse Effect; and

(l) the Company shall have filed with the SEC its Quarterly Report on Form 10-Q for the three-month period ended March 31, 2004.

7.2 Conditions to Obligations of the Company. The obligation of the Company to sell and issue the Series B Shares to Investor at the Closing in accordance with Section 3.2 shall be subject to:

(a) the delivery by Investor of the Purchase Price payable by Investor at the Closing in accordance with Section 3.2;

(b) as of the Closing Date, Investor having received all consents and approvals, including, without limitation, governmental and third party consents or approvals that are required to be obtained in connection with the transactions contemplated under this Agreement and the Related Documents;

(c) as of the Closing Date, the representations and warranties made by Investor in Article V hereof being true and correct in all respects (except that to the extent that any such representation or warranty relates to a particular date, such representation or warranty shall be true and correct in all respects as of that particular date) to the extent they are qualified by materiality or Material Adverse Effect, and to the extent not so qualified shall be true and correct in all material respects.

(d) Any waiting period under the HSR Act shall have expired or been terminated; and

(e) no temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other Governmental Agency of competent

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jurisdiction or other legal restraint or prohibition preventing or making illegal the consummation of the transactions contemplated by this Agreement and the other Related Documents shall be in effect; provided, however, that the parties hereto shall use their reasonable best efforts to have any such injunction, order, restraint or prohibition vacated

ARTICLE VIII

ADDITIONAL COVENANTS OF THE COMPANY

8.1 Use of Proceeds. The proceeds from the issuance of the Series B Preferred Stock will be used by the Company for working capital and general corporate purposes.

8.2 Information and Access Rights. Promptly following any request therefor, the Company shall provide to Investor such information regarding the operations, business affairs and financial condition of the Company or any Subsidiary, or compliance with the terms of the this Agreement or any Related Document, as Investor may reasonably request. The Company shall permit Investor, its agents and representatives to have reasonable access to the management personnel, premises, contracts, books and records of the Company and its Subsidiaries upon reasonable notice during regular business hours.

8.3 Dividend Payments.

(a) The Company and the Investor agree to treat for all Tax purposes and report on all Tax Returns the Series B Preferred Stock as stock that participates in Company growth to a significant extent, and not as “preferred stock” as that term is used in Code Section 305. Furthermore, the Company and the Investor agree that the adjustments to the Conversion Price permitted under Section 5(b) of the Certificate are intended to prevent the dilution of the interest of the Investor and (in the case of the adjustments permitted under Section 5(b)(v) and (vi)) are intended to constitute adjustments to the Purchase Price of the Series B Preferred Stock, and the Company and the Investor agree to treat for Tax purposes and report on all Tax Returns any adjustments to the Conversion Price in a manner consistent with such intent.

(b) Prior to any actual or deemed dividend payment to Investor with respect to the Series B Preferred Stock, the Company shall in good faith reasonably estimate whether Issuer will have accumulated or current earnings and profits (as that term is used in Section 316(a) of the Code) for the taxable year that includes the date of such actual or deemed payment. The existence of any actual or deemed dividend shall be determined in a manner consistent with Section 8.3(a) of this Agreement. If the Company reaches a tentative conclusion that it (or any intermediary) is required to withhold federal income taxes under Code Section 1441 or 1442 or equivalent state taxes (collectively, “Section 8.3 Taxes”) on any actual or deemed dividend payments to Investor, the Company shall (x) inform Investor no less than thirty (30) days prior to such actual or deemed dividend payment and provide Investor with the opportunity to participate in the decision of whether withholding for Section 8.3 Taxes is required and (y) withhold from any such actual or deemed payment the amount of Section 8.3 Taxes for which withholding is required under applicable law.

(c) Any amounts that the Company, after giving due effect to Section 8.3(a) and (b), withholds from any deemed dividend payment to Investor will reduce the amount of any subsequent payment on the Series B Preferred Stock that the Company is obligated to pay to Investor (other than a payment pursuant to the indemnification provisions of Article X).

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8.4 Right to Participate.

(a) At any time during the three-year period following the Closing, if the Company proposes to issue any shares of Common Stock or any Common Stock Equivalents or any rights to acquire Common Stock Equivalents, the Company will offer to sell to Investor a number of such securities (“Offered Shares”) so that Investor’s Ownership Ratio immediately after the issuance of such securities (and assuming the purchase of such Offered Shares) would be equal to Investor’s Ownership Ratio immediately prior to such issuance of securities. The Company shall give Investor at least 15 days written notice of any proposed issuance, which notice shall disclose in reasonable detail the proposed terms and conditions of such issuance (the “Issuance Notice”). Investor will be entitled to purchase such securities at the same price, on the same terms (including, if more than one type of security is issued, the same proportionate mix of such securities), and at the same time as the securities are issued, by delivery of irrevocable written notice (the “Election Notice”) to the Company of such election within 15 days after delivery of the Issuance Notice (the “Preemptive Period”). To the extent Investor does not elect to purchase all of the Offered Shares, then the Company may issue the remaining Offered Shares at a price and on terms no more favorable to the transferee(s) thereof specified in the Issuance Notice during the 90-day period following the Preemptive Period. The rights contained in this Section 8.4(a) shall not apply to the issuance of Common Stock or Common Stock Equivalents or any rights to acquire Common Stock Equivalents (i) as a stock dividend or upon any subdivision or stock split of the outstanding shares of Common Stock; (ii) upon conversion of any shares of Convertible Securities outstanding as of the Closing Date; (iii) upon conversion of any Shares of Series B Preferred Stock; (iv) to officers, directors, consultants and other employees or agents of the Company in accordance with the Stock Option Plan; (v) pursuant to the acquisition of another business entity by the Company by merger, purchase of substantially all of the assets of such entity, or other transaction whereby the Company acquires not less than a majority of the voting power of such entity; (vi) the issuance of securities pursuant to the Sidhu Agreement or the Brady Agreement or (vi) in connection with a 3(a)(9) Exchange.

(b) At any time during the three-year period following the Closing, if the Company proposes to issue any debt securities or any rights to acquire debt securities, the Company will offer to sell to Investor a percentage of the aggregate principal amount represented by such debt securities equal to the Investor’s Ownership Ratio at the time of such offering (such amount, the “Offered Debt Securities”). The Company shall give Investor at least 15 days written notice of any proposed issuance, which notice shall disclose in reasonable detail the proposed terms and conditions of such issuance (the “Debt Issuance Notice”). Investor will be entitled to purchase such securities at the same price, on the same terms (including, if more than one type of security is issued, the same proportionate mix of such securities), and at the same time as the securities are issued, by delivery of irrevocable written notice (the “Debt Election Notice”) to the Company of such election within 15 days after delivery of the Debt Issuance Notice (the “Debt Preemptive Period”). To the extent Investor does not elect to purchase all of the Offered Debt Securities, then the Company may issue the remaining Offered Debt Securities at a price and on terms no more favorable to the transferee(s) thereof specified in the Debt Issuance Notice during the 90-day period following the Debt Preemptive Period. The rights contained in this Section 8.4(b)

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shall not apply to (i) the issuance of debt securities or any rights to acquire debt securities pursuant to the acquisition of another business entity by the Company by merger, purchase of substantially all of the assets of such entity, or other transaction whereby the Company acquires not less than a majority of the voting power of such entity or (ii) bank indebtedness or similar credit arrangements with a commercial lending institution.

ARTICLE IX

TERMINATION

9.1 Termination. This Agreement may be terminated at any time prior to the Closing:

(a) by Investor, so long as Investor is not in material breach of any covenant or agreement set forth in this Agreement, if there has been a material breach by the Company or any of its Subsidiaries of any covenant or agreement of the Company set forth in this Agreement, other than the covenants in Sections 6.2, 6.4 or 6.8 which breach is not cured to the reasonable satisfaction of Investor within 15 days after notice thereof is received by the Company;

(b) by the Company, so long as the Company is not in material breach of any covenant or agreement set forth in this Agreement, if there has been a material breach by Investor of any covenant or agreement of Investor set forth in this Agreement which breach is not cured to the reasonable satisfaction of the Company within 15 days after notice thereof is received by Investor;

(c) by mutual written agreement of the Company and Investor;

(d) by either the Company or Investor if the Closing shall not have been consummated on or before the date that is 60 calendar days after the date of this Agreement; provided, that the party seeking to terminate this Agreement is not then in material breach of this Agreement; and

(e) by Investor, so long as Investor is not in material breach of any covenant or agreement set forth in this Agreement, if there has been a breach by the Company or any of its Subsidiaries of Sections 6.2, 6.4 or 6.8 which breach has a Material Adverse Effect on the Company.

The party or parties desiring to terminate this Agreement pursuant to any of clauses (a) through (i) above shall give written notice of such termination to the other parties.

9.2 Effect of Termination. If this Agreement is terminated as permitted by Section 9.1, this Agreement shall forthwith become void and there shall be no liability or obligation of any party (or any stockholder, partner, director, officer, employee, agent, consultant or representative of such party) to the other parties to this Agreement, except that Article XII shall continue in full force and effect and all fees and expenses payable thereunder, if any, shall be payable, and (ii) nothing herein will relieve any party from liability for any breach of any representation, warranty, agreement or covenant contained herein prior to such termination.

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ARTICLE X

INDEMNIFICATION

10.1 Indemnification.

(a) In consideration of Investor’s execution and delivery of this Agreement and acquiring the Series B Shares hereunder and in addition to all of the Company’s other obligations under this Agreement, the Company shall defend, protect, indemnify and hold harmless Investor and all of its respective Affiliates, officers, managers, advisors, directors, employees and agents (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the “Investor Indemnitees”) from and against any and all actions, causes of action, suits, claims (including without limitation actions, causes of action, suits and claims brought by or against Person, including stockholders of the Company on behalf of themselves and their respective subsidiaries), losses, costs, penalties, fees, liabilities and damages, and expenses (including, without limitation, costs of suit and all reasonable attorneys’ fees and expenses incurred in connection with investigating, preparing for and responding to third party subpoenas or enforcing this Agreement) in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought) or other liabilities or losses (the “Investor Indemnified Liabilities”), incurred by the Indemnitees or any of them as a result of, or arising out of, or relating to (i) the breach of any representation or warranty contained in this Agreement or in any Related Document or (ii) the breach of any promise, agreement or covenant contained in this Agreement or in any Related Document.

(b) Investor shall defend, protect, indemnify and hold harmless the Company and all of its respective Affiliates, officers, managers, advisors, directors, employees and agents (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the “Company Indemnitees” and, together with the Investor Indemnitees, the “Indemnitees”) from and against any and all actions, causes of action, suits, claims (including without limitation actions, causes of action, suits and claims brought by or against Person, including stockholders of the Company on behalf of themselves and their respective subsidiaries), losses, costs, penalties, fees, liabilities and damages, and expenses (including, without limitation, costs of suit and all reasonable attorneys’ fees and expenses incurred in connection with investigating, preparing for and responding to third party subpoenas or enforcing this Agreement) in connection therewith (the “Company Indemnified Liabilities” and, together with the Investor Indemnified Liabilities, the “Indemnified Liabilities”), incurred by the Company Indemnitees or any of them as a result of, or arising out of, or relating to the breach of any representation or warranty contained in this Agreement or in any Related Document.

(c) An indemnifying party shall reimburse the Indemnitees for the Indemnified Liabilities as such Indemnified Liabilities are incurred. To the extent that the foregoing undertaking by an indemnifying party may be unenforceable for any reason, an indemnifying party shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. The indemnification provided for under this Agreement will remain in full force and effect regardless of any investigation made by or on behalf of the Indemnitee or any officer, director or controlling Person of such Indemnitee and will survive the transfer of securities.

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(d) Any Person entitled to indemnification hereunder (i) will give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification and (ii) if the Indemnified Liability arises from a third party claim, unless in such Indemnitee’s reasonable judgment a conflict of interest between the indemnifying party and such Indemnitee may exist with respect to such third party claim, will permit the indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the Indemnitee. An indemnifying party will not be subject to any liability for any settlement made by the Indemnitee without its consent (but such consent will not be unreasonably withheld). If the indemnifying party is not entitled to, or elects not to, assume the defense of a claim hereunder, the indemnifying party will not be obligated to pay the fees and expenses of more than one counsel for all Indemnitees with respect to such claim, unless in the reasonable judgment of any Indemnitee a conflict of interest may exist between such Indemnitee and any other of such Indemnitees with respect to such claim. In such instance, the conflicting Indemnitees shall have the right to obtain one separate counsel, chosen by the majority of each separate group of conflicting Indemnitees, at the expense of the indemnifying party

(e) Payments by the Company pursuant to Section 10.1(a) or by Investor pursuant to Section 10.1(b) shall be limited to the amount of any liability or damage that remains after deducting therefrom any insurance proceeds and any indemnity, contribution or other similar payment recovered by the Indemnitees from any third party with respect thereto.

(f) Notwithstanding anything to the contrary set forth herein, no Indemnitee shall be entitled to be indemnified pursuant to this Article X for any Indemnified Liability that arises as a result of the Indemnitee’s gross negligence or willful misconduct; provided, however, that the indemnifying party shall pay the expenses incurred by any such Indemnitee hereunder, as such expenses are incurred, in connection with any proceeding in advance of the final disposition, so long as the indemnifying party receives an undertaking by such Indemnitee to repay the full amount advanced if there is a final determination that such Indemnitee failed the standards set forth above or that such Indemnitee is not entitled to indemnification as provided herein for other reasons; and provided, further, that the termination of any action, suit or proceeding by judgment, order, settlement, conviction, or a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that such Indemnitee was either grossly negligent or engaged in willful misconduct.

10.2 Survivability. All of the representations and warranties of the Company and the Investor contained in this Agreement (other than in Sections 4.2, 4.3 and 4.19) and in the Related Documents shall survive the execution and delivery hereof and thereof and the issuance, sale and delivery of the Shares, and shall remain in full force and effect until the second anniversary of the Closing Date (the “Survival Date”); provided, however, that (i) the representations of the Company contained in Sections 4.2 and 4.3 shall survive indefinitely and (ii) the representations of the Company contained in Section 4.19 shall survive until the expiration of the statute of limitations applicable thereto. All covenants and agreements of the Company and the Purchasers contained in this Agreement and in the Related Documents shall survive the execution and delivery hereof and thereof and the issuance, sale and delivery of the Shares, and shall remain in full force and effect in accordance with their respective terms. Without limiting the generality of the foregoing, with respect to a breach of any representation or warranty for which notice is given prior to 5:00 p.m., Dallas, Texas time, on the Survival Date, the indemnification obligation set forth in Section 10.1 shall survive the Survival Date until the claim identified in the notice is finally resolved.

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ARTICLE XI

GENERAL PROVISIONS

11.1 Public Announcements. Neither Investor nor the Company shall make, or permit any agent or Affiliate to make, any public statements, including, without limitation, any press releases, with respect to this Agreement and the transactions contemplated hereby without the prior written consent of the other; provided, however, that in the case of announcements, statements, acknowledgments or revelations which either party is required by law to make, issue or release, the making, issuing or releasing of any such announcement, statement, acknowledgment or revelation by the party so required to do so by law shall not constitute a breach of this Agreement if such party shall have given, to the extent reasonably possible, not less than two (2) calendar days prior notice to the other party, and shall have attempted, to the extent reasonably possible, to clear such announcement, statement, acknowledgment or revelation with the other party. Each party hereto agrees that it will not unreasonably withhold any such consent or clearance.

11.2 Successors and Assigns. This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and assigns, including each subsequent holder of Series B Shares or Conversion Shares. Except as otherwise specifically provided herein, this Agreement shall not be assignable by the Company without the prior written consent of Investor. Investor shall be entitled to assign its rights and obligations under this Agreement to any Affiliate of the Investor without the consent of the Company and to any other Person with the consent of the Company (such consent not to be unreasonably withheld) so long as such transferee(s) agree in writing to be bound by the terms of this Agreement.

11.3 Entire Agreement. This Agreement, the Related Documents and each other writing referred to herein or delivered pursuant hereto constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior arrangements or understandings.

11.4 Notices. All notices, requests, consents and other communications provided for herein shall be in writing and shall be (i) delivered in person, (ii) transmitted by telecopy, (iii) sent by first-class, registered or certified mail, postage prepaid, or (iv) sent by reputable overnight courier service, fees prepaid, to the recipient at the address or telecopy number set forth below, or such other address or telecopy number as may hereafter be designated in writing by such recipient. Notices shall be deemed given upon personal delivery, seven days following deposit in the mail as set forth above, upon acknowledgment by the receiving telecopier or one day following deposit with an overnight courier service.

To the Company, to:

i2 Technologies, Inc.

One i2 Place

11701 Luna Road

Dallas, Texas 75234

Attention: General Counsel

Facsimile: 469.357.6893

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With a copy, which shall not constitute notice to the Company, to:

Baker Botts L.L.P.

2001 Ross Avenue, Suite 700

Dallas, Texas 75201

Attention: Andrew M. Baker

Facsimile: 214.953.6503

To Investor, to:

General Counsel

R² Investments, LDC

C/o Amalgamated Gadget, L.P.

C/o Scepter Holdings, Inc.

301 Commerce Street

Suite 2975

Fort Worth, Texas 76102

Telephone: 817 332-9500

Telecopier: 817 332-9606

Email: BusinessAffairs@acmewidget.com

            FINARB@acmewidget.com

With a copy, which shall not constitute notice to

Gibson, Dunn & Crutcher, LLP

200 Park Avenue

New York, NY 10166

Telephone: 212 351-4000

Telecopier: 212 351-4035

Attn: Sean P. Griffiths

or, in each case, to such other address or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party.

11.5 Amendment and Waiver. No amendment or waiver of any provision of this Agreement shall be effective, unless the same shall be in writing and signed by the Company and Investor. No such waiver shall operate as a waiver of, or estoppel with respect to, any subsequent or other failure. No failure by any party to take any action against any breach of this Agreement or default by any other party shall constitute a waiver of such party’s right to enforce any provision hereof or to take any such action.

11.6 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one agreement.

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11.7 Headings. The headings of the various sections of this Agreement have been inserted for reference only and shall not be deemed to be a part of this Agreement.

11.8 Specific Performance. The Company, on the one hand, and Investor, on the other hand, acknowledges that money damages may not be a sufficient remedy for any breach of this Agreement. It is accordingly agreed that the parties shall be entitled to seek specific performance and injunctive relief as remedies for any such breach, these remedies being in addition to any of the remedies to which they may be entitled at law or equity.

11.9 Remedies Cumulative. Except as otherwise provided herein, the remedies provided herein shall be cumulative and shall not preclude the assertion by any party hereto of any other rights or the seeking of any other remedies against any other party hereto.

11.10 Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of Texas, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Texas or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Texas.

11.11 Arbitration.

(a) Resolution of Disputes. If a Dispute arises between the parties, the parties agree to use the following procedures in good faith to resolve such Dispute promptly and non-judicially. For purposes of this Agreement, “Dispute” shall mean any alleged material breach of any representation, warranty or obligation herein, or a disagreement regarding the interpretation, performance or nonperformance of any provision thereof, or the validity, scope and enforceability of these dispute resolution procedures, or any dispute regarding any damages arising from the termination of this Agreement. Any party may give written notice to any other party of the existence of a Dispute (a “Dispute Notice”).

(b) Negotiation. Within ten days after delivery of any Dispute Notice the parties involved in the Dispute shall meet at a mutually agreeable time and place and thereafter as often as they deem reasonably necessary to exchange relevant information and attempt in good faith to negotiate a resolution of the Dispute. If the Dispute has not been resolved within ten days after the first meeting of the parties, or, if the party receiving the Dispute Notice will not meet within ten days after receipt of the Dispute Notice, then either party may, by delivering notice to the other party, commence arbitration proceedings.

(c) Arbitration. If the parties are not successful in resolving a Dispute, then the Dispute shall be resolved by binding arbitration conducted by three arbitrators in accordance with the Commercial Arbitration Rules of the American Arbitration Association as in effect from time to time as modified by the terms hereof (the “Arbitration Law”). Either party may initiate final resolution of the Dispute by delivering a written demand for arbitration to the other party. Each party shall notify the other party of its appointment of one neutral arbitrator within seven days after receipt of such written demand for arbitration and the third neutral arbitrator shall be

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appointed by a court of competent jurisdiction in Texas. Each of the three arbitrators shall function as an arbitrator without any one of them having more authority than the other two. If such arbitrator appointments are not made within said time periods, the arbitrators shall be selected by a court of competent jurisdiction in Texas. All arbitrators must be attorneys with experience in law relating to investment funds. Further, no arbitrator may be a current or former client or employee of any party or an attorney that has provided legal advice to any party within the preceding twelve months, nor may an arbitrator be a current or former employee of a direct competitor of any of the parties. Additionally, prior to their assumption of duties as an arbitrator, all arbitrators must sign an oath of neutrality in customary form. If requested by either party, the arbitration award shall set forth findings of fact and conclusions of law upon which the award is based in the same manner as a judgment from a court of Texas. Judgment upon the award rendered by the arbitrators shall be binding upon the parties and may be entered by any court having jurisdiction thereof. The place of arbitration shall be Dallas, Texas, unless the parties mutually agree otherwise. The language of the arbitration shall be English. The arbitrators may allocate against the losing party all reasonable attorneys’ fees and costs of arbitration including the fees of the arbitrators and any other costs described herein so long as such arbitrators direct in the award that any such costs shall not be taxable in the courts of Texas. The parties agree that a party’s remedies under this arbitration procedure may be inadequate and that, notwithstanding this clause (c), such aggrieved party shall be entitled to seek injunctive relief. The institution and maintenance of an action to obtain or enforce equitable remedies shall not constitute a waiver of the right of any party including the plaintiff to submit the controversy or claim to arbitration.

(d) General Dispute Resolution Provisions.

(i) All deadlines specified in this Section 11.11 may be extended by mutual agreement. The procedures specified in this Section 11.11 are an essential provision of the Agreement and are legally binding on the parties. These procedures shall be the sole and exclusive procedures for the resolution of any Dispute between the parties arising out of or relating to this Agreement. Any and all actions to enforce the obligations under this Section 11.11 shall be brought in any court of competent jurisdiction in courts located in Texas.

(ii) The parties acknowledge that the provisions of this Section 11.11 are intended to provide a private resolution of Disputes between them. Accordingly, all documents, records, and other information relating to the Dispute shall at all times be maintained in the strictest confidence and not disclosed to any third party, other than the arbitrators, except where specifically allowed hereunder and except as required to be disclosed as a matter of law. All proceedings, communications and negotiations pursuant to this Section 11.11 are confidential. In the event of any judicial challenge to, or enforcement of, any order or award hereunder, any party may designate such portions of the record of such proceedings, communications, and negotiations as such party deems appropriate to be filed under seal. All proceedings, communications and negotiations pursuant to this Section 11.11 shall be treated as compromise negotiations for all purposes, including for purposes of the U.S. Federal Rules of Evidence and state rules of evidence. None of the statements, disclosures, offers, or communications (or other assertions made in any proceeding or negotiation) made pursuant to this Section 11.11 shall be deemed admissions, nor shall any of said statements, disclosures, offers, communications or assertions be admissible for any purpose other than the enforcement of the terms of this Section 11.11.

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(iii) The parties agree to act in good faith to comply with all of their respective obligations under this Agreement as much as possible as if there were no Dispute during any pending mediation or arbitration hereunder.

(iv) The parties agree that the terms of this Section 11.11 shall survive the termination or expiration of this Agreement.

(e) Notice. The parties agree to have any Dispute decided by neutral arbitration as provided in this Section 11.11 and the parties are giving up any rights they might possess to have the Dispute litigated in a court or by a jury trial. The parties are giving up their judicial rights to discovery and appeal, unless such rights are specifically included in this Section 11.11. The parties acknowledge and agree that their agreement to this arbitration provision is voluntary.

11.12 No Third Party Beneficiaries. Except as specifically set forth or referred to herein, nothing herein is intended or shall be construed to confer upon any person or entity other than the parties hereto and their successors or assigns, any rights or remedies under or by reason of this Agreement.

11.13 Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated.

11.14 Time of the Essence; Computation of Time. Time is of the essence for each and every provision of this Agreement. Whenever the last day for the exercise of any privilege or the discharge or any duty hereunder shall fall upon a non-Business Day, the party having such privilege or duty may exercise such privilege or discharge such duty on the next succeeding Business Day.

11.15 Construction. The parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement. Notwithstanding any principles of contract interpretation to the contrary, when construing the provisions of this Agreement, no regard shall be paid to the negotiating history of the Parties, including, without limitation, prior drafts of the Agreement and oral or written communications between the parties or other extraneous evidence, in each case that was produced by and/or exchanged or expressed between the Parties prior to the date hereof,

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IN WITNESS WHEREOF, the parties have caused their duly authorized officers to execute this Preferred Stock Purchase Agreement as of the date first above written.

“COMPANY”
i2 Technologies, Inc.
By:	/s/ Robert C. Donohoo
Its:	Sr. Vice President and General Counsel
“INVESTOR”
R2 Investments, LDC
By:	Amalgamated Gadget, L.P.,
	as its Investment Manager
By:	Scepter Holdings, Inc.,
	its General Partner
By:	/s/ Dave Gillespie
	Dave Gillespie
	Chief Financial Officer

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EX-4.2

Exhibit 4.2

FIRST AMENDMENT TO RIGHTS AGREEMENT

This FIRST AMENDMENT TO RIGHTS AGREEMENT, dated as of April 27, 2004 (this “Amendment”), is entered into by and between i2 Technologies, Inc., a Delaware corporation (the “Company”), and Mellon Investor Services LLC, a New Jersey limited liability company (the “Rights Agent”).

RECITALS:

WHEREAS, the Company and the Rights Agent entered into a Rights Agreement, dated as of January 17, 2002 (the “Rights Agreement”);

WHEREAS, Section 27 of the Rights Agreement provides that, in certain circumstances, the Company may from time to time supplement or amend the Rights Agreement, without the approval of any holders of Rights, by action of the Company’s board of directors;

WHEREAS, the Company intends to enter into a Preferred Stock Purchase Agreement (the “Preferred Stock Purchase Agreement”) by and between the Company and R² Investments, LDC, a Cayman Islands limited duration company (the “Investor”), pursuant to which the Company will issue and sell, and the Investor will purchase, 100,000 shares (the “Shares”) of the Company’s 2.5% Series B Convertible Preferred Stock, par value $0.001 per share (the “Series B Preferred Stock”);

WHEREAS, on April 27, 2004, the Special Committee of the Board of Directors of the Company resolved to amend the Rights Agreement to ensure that the Investor (or any Affiliate or Associate thereof) is not intended to be nor will be deemed to be an “Acquiring Person” nor, under any circumstances, will a “Share Acquisition Date” nor a “Distribution Date” be triggered within the meaning of the Rights Agreement, after taking into account the shares of Common Stock beneficially owned as of the date of the Preferred Stock Purchase Agreement and shares of Common Stock that may be issued upon conversion of any securities convertible into or exchangeable for Common Stock (“Common Stock Equivalents”) beneficially owned as of the date of the Preferred Stock Purchase Agreement by the Investor (or any Affiliate or Associate thereof) (the “Current Ownership Interest”), as a result of (i) the execution and delivery of the Preferred Stock Purchase Agreement and the consummation of the transactions contemplated thereby, including but not limited to the acquisition of the Shares or shares of Common Stock upon a conversion in accordance with the Certificate of Designations of the Series B Preferred Stock (the “Certificate of Designations”), (ii) the acquisition of the Shares, the shares of Common Stock upon a conversion in accordance with the Certificate of Designations and the acquisition of any additional securities pursuant to the terms of the Preferred Stock Purchase Agreement or (iii) the acquisition of shares of Common Stock (whether directly or indirectly through the acquisition of Common Stock Equivalents) after the date of the Preferred Stock Purchase Agreement other than Shares or shares of Common Stock described in (i) or (ii); provided that such amount specified in this clause

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(iii) when added to the Current Ownership Interest does not exceed 15% of the shares of Common Stock then outstanding; and

WHEREAS, the Company desires to modify the terms of the Rights Agreement in certain respects as set forth herein, and in connection therewith, is entering into this Amendment and directing the Rights Agent to enter into this Amendment;

NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereby agree as follows:

1. Effect of Amendment. Except as expressly provided herein, the Rights Agreement shall be and remain in full force and effect.

2. Capitalized Terms. All capitalized, undefined terms used in this Amendment shall have the meanings assigned thereto in the Rights Agreement.

3. Amendments to Section 1.

(a) The definition of “Acquiring Person” in Section 1 of the Rights Agreement is hereby amended to read in its entirety as follows:

‘Acquiring Person’ shall mean any Person (as such term is hereinafter defined) who or which, together with all Affiliates and Associates (as such terms are hereinafter defined) of such Person, shall be the Beneficial Owner (as such term is hereinafter defined) of 15% or more of the shares of Common Stock of the Company then outstanding, but shall not include the Company, any Subsidiary (as such term is hereinafter defined) of the Company, any employee benefit plan of the Company or any Subsidiary of the Company, or any entity holding shares of Common Stock of the Company for or pursuant to the terms of any such plan. Notwithstanding the foregoing:

(i) no Person shall become an ‘Acquiring Person’ as the result of an acquisition of shares of Common Stock by the Company which, by reducing the number of shares outstanding, increases the proportionate number of shares beneficially owned by such Person to 15% or more of the shares of Common Stock of the Company then outstanding; provided, however, that if a Person shall become the Beneficial Owner of 15% or more of the shares of Common Stock of the Company then outstanding as a result of any such acquisition of shares of Common Stock by the Company and shall, after such acquisition of shares by the Company, become the Beneficial Owner of any additional shares of Common Stock of the Company (other than as a result of a stock dividend, stock split or similar transaction effected by the Company in which all holders of Common Stock of the Company are treated equally), then such Person shall be deemed to be an ‘Acquiring Person;’

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(ii) if the board of directors of the Company determines in good faith that a Person who would otherwise be an ‘Acquiring Person’ as defined pursuant to the provisions of subparagraph (i), has become such inadvertently, and such Person divests as promptly as practicable a sufficient number of shares of Common Stock of the Company so that such Person would no longer be an ‘Acquiring Person,’ then such Person shall not be deemed to be an ‘Acquiring Person’ for any purpose of this Agreement;

(iii) Sanjiv S. Sidhu, together with his spouse, lineal descendants (whether by blood or adoption) and any Persons (whether now or hereafter existing) formed primarily for Mr. Sidhu’s or his spouse’s or his lineal descendants’ estate planning purposes, shall not be deemed an Acquiring Person with respect to (x) shares beneficially owned as of the date of this Agreement or (y) additional shares as to which Mr. Sidhu, his spouse, any such lineal descendants or any other such Person acquires Beneficial Ownership after the date of this Agreement, provided that if the aggregate amount of additional shares of Common Stock of the Company acquired pursuant to clause (y) exceeds 5% of the shares of Common Stock outstanding at the first such acquisition described in clause (y) of additional shares of Common Stock of the Company (as such amount may be appropriately adjusted for such events as stock splits, stock dividends and recapitalizations with respect to shares of Common Stock of the Company), then all shares described in (x) and (y) shall be included for purposes of determining whether or not Mr. Sidhu, his spouse, any such lineal descendants or any other such Person is an Acquiring Person; and

(iv) Neither the Investor (as such term is hereinafter defined) nor any of its Affiliates or Associates shall be deemed Acquiring Persons on account of (w) shares beneficially owned as of the date of the Preferred Stock Purchase Agreement (as such term is hereinafter defined) and shares of Common Stock issuable upon conversion of the Common Stock Equivalents (as such term is hereinafter defined) beneficially owned as of the date of the Preferred Stock Purchase Agreement, (x) the execution and delivery of the Preferred Stock Purchase Agreement and the consummation of the transactions contemplated thereby, including but not limited to (1) the acquisition of the Shares (as such term is hereinafter defined) or shares of Common Stock upon a conversion in accordance with the Certificate of Designations (as such term is hereinafter defined), and (2) the acquisition of any additional securities pursuant to the terms of the Preferred Stock Purchase Agreement, (y) the acquisition of shares of Common Stock or Common Stock Equivalents after the date of the Preferred Stock Purchase Agreement other than Shares or shares of Common Stock described in (x) (provided that such amount specified in this clause (y) when added to the amount specified in clause (w) does not

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exceed 15% of the shares of Common Stock then outstanding) and (z) any additional shares of Common Stock or Common Stock Equivalents acquired pursuant to a dividend, distribution or antidilution adjustment paid or made by the Company on the outstanding Common Stock, Common Stock Equivalents or the Series B Preferred Stock (as such term is hereinafter defined) or pursuant to a split or subdivision of the outstanding Common Stock, Common Stock Equivalents or the Series B Preferred Stock.”

(b) The definitions contained in Section 1 of the Rights Agreement shall be supplemented by adding the following definitions in correct alphabetical order:

“Certificate of Designations” shall mean the Certificate of Designations of Series B Preferred Stock.

“Common Stock Equivalent” shall mean any security convertible into or exchangeable for Common Stock.

“Investor” shall mean R² Investments, LDC, a Cayman Islands limited duration company.

“Preferred Stock Purchase Agreement” shall mean the Preferred Stock Purchase Agreement to be entered into by and between the Company and the Investor.

“Series B Preferred Stock” or “Shares” shall mean the number of shares of the Company’s Series B Convertible Preferred Stock, par value $0.001 per share, to be issued and sold to the Investor pursuant to the Preferred Stock Purchase Agreement, plus any and all shares of the Company’s Series B Convertible Preferred Stock, par value $0.001 per share, paid to the Investor as a dividend on such shares or portion thereof.

4. New Section 35. Section 35 is hereby added to the Rights Agreement to read in its entirety as follows:

“Section 35. The Preferred Stock Purchase Agreement. Notwithstanding anything contained in this Agreement to the contrary, neither the approval, execution or delivery of the Preferred Stock Purchase Agreement nor the consummation of the transactions contemplated thereby or the performance of the Company’s obligations thereunder or under the Certificate of Designations shall cause (i) the Investor or any of its Affiliates or Associates to be an Acquiring Person, (ii) a Share Acquisition Date to occur or (iii) a Distribution Date to occur.”

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5. Effective Date. This Amendment is effective as of April 27, 2004, immediately prior to the execution and delivery of the Preferred Stock Purchase Agreement.

6. Governing Law. This Amendment shall be governed by, construed and enforced in accordance with the laws of the State of Delaware without reference to the conflicts or choice of law principles thereof; provided, however, that all provisions regarding the rights, duties and obligations of the Rights Agent shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed entirely within such State.

7. Counterparts; Facsimile Signatures. This Amendment may be executed in any number of counterparts (including facsimile signature) each of which shall be an original with the same effect as if the signatures thereto and hereto were upon the same instrument.

8. Headings. The headings in this Amendment are included for convenience of reference only and shall be ignored in the construction or interpretation hereof.

[Remainder of Page Intentionally Left Blank; Signature Page Follows]

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed, all as of the day and year first above written.

i2 TECHNOLOGIES, INC.
By:	/s/    Robert C. Donohoo
Name:	Robert C. Donohoo
Title:	Sr. V.P. and General Counsel

MELLON INVESTOR SERVICES LLC
By:	/s/    Cindy Bennett
Name:	Cindy Bennett
Title:	Client Service Manager

EX-10.1

EXHIBIT 10.1

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made as of [date]     , 2004, by and between i2 Technologies, Inc., a Delaware corporation (the “Company”), and R² Investments, LDC, a Cayman Islands limited duration company. R² Investments, LDC and any Person to whom rights under this agreement are transferred pursuant to Section 9(e) hereof shall each be referred to as an “Investor” and, collectively, as the “Investors”.

The parties to this Agreement have agreed, on the terms and subject to the conditions set forth in the Preferred Stock Purchase Agreement dated April 27, 2004 (the “Purchase Agreement”), to issue and sell to Investor 100,000 shares of the Company’s 2.5% Series B Convertible Preferred Stock, par value $.001 per share (the “Series B Preferred Stock”). The Preferred Stock is convertible into shares of the Company’s common stock, par value $0.00025 per share (“Common Stock”).

In order to induce the Investor to enter into the Purchase Agreement, the Company has agreed to provide the registration rights set forth in this Agreement. The execution and delivery of this Agreement is a condition to the Closing under the Purchase Agreement. Capitalized terms used herein but not otherwise defined shall have the respective meanings set forth in the Purchase Agreement.

NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows:

1. REGISTRATION.

(a) Mandatory Registration. The Company shall prepare and file with the Commission a registration statement on Form S-3 or S-2, or any applicable successor forms, as a “shelf” registration statement under Rule 415 under the Securities Act covering the resale of a number of shares of Registrable Securities equal to one hundred and ten percent (110%) of the number of shares of Registrable Securities. If the Company is not eligible to file a registration statement on either Form S-3 or Form S-2, then it shall file a registration statement on Form S-1, or any applicable successor form. The Registration Statement shall state, to the extent permitted by Rule 416 under the Securities Act, that it also covers such indeterminate number of shares of Common Stock as may be required to effect conversion of the Preferred Stock in order to prevent dilution resulting from stock splits, stock dividends or similar events.

(b) Effectiveness. The Company shall use its commercially reasonable efforts to cause the Registration Statement to become effective no later than the Registration Deadline. The Company shall respond promptly to any and all comments made by the staff of the Commission regarding the Registration Statement, and shall submit to the Commission, within two (2) Business Days after the Company learns that no review of the Registration Statement will be made by the staff of the Commission or that the staff of the Commission has no further comments on the Registration Statement, as the case may be, a request for acceleration of the

effectiveness of the Registration Statement to a time and date not later than forty-eight (48) hours after the submission of such request. The Company will maintain the effectiveness of the Registration Statement until the earlier to occur of (i) the date on which all of the Registrable Securities eligible for resale thereunder have been publicly sold pursuant to either the Registration Statement or Rule 144 and (ii) the date on which all of the Registrable Securities remaining to be sold under the Registration Statement (in the opinion of counsel to the Company reasonably satisfactory in substance and in form to Holders of a majority of the Registrable Securities) may be immediately sold to the public by the Holders under Rule 144(k) or any successor provision (the period beginning on the Closing Date and ending on the earlier to occur of (i) or (ii) above being referred to herein as the “Registration Period”).

(c) Acceleration. In the event that the Closing Price of the Common Stock for any ten (10) consecutive Trading Days exceeds two hundred percent (200%) of the Conversion Price (as defined in the Certificate) then in effect, the Holders of a majority of the Registrable Securities may thereafter request the accelerated registration under the Securities Act of all of the Registrable Securities by sending written notice pursuant to this Section 1(c) to the Company, at which time the Registration Deadline will be the earlier of the Registration Deadline and the ninetieth (90th) day following the date of such written notice.

“Closing Price” means the closing price of the Common Stock for any Trading Day on the principal national securities exchange on which the Common Stock is listed or admitted to trading, or, if the Common Stock is not so listed or admitted to trading, the average of the per share closing bid price and per share closing asked price for such date as quoted on the National Association of Securities Dealers Automated Quotation System, including without limitation the OTC Bulletin Board (“NASDAQ”), or such other market in which such prices are regularly quoted, or, if the Common Stock is not then quoted by NASDAQ, the Closing Price shall be determined by agreement between the Company and the holders of a majority of the Registrable Securities. If such parties are unable to reach agreement within a reasonable period of time, such fair value shall be determined by an independent appraiser experienced in valuing securities jointly selected by the Company and the holders of a majority of the Registrable Securities. The determination of such appraiser shall be final and binding upon the parties, and the Company shall pay the fees and expenses of such appraiser.

(d) Registration Default. If (i) the Registration Statement is not declared effective by the Commission on or before the Registration Deadline, (ii) after the Registration Statement has been declared effective by the Commission and during a period in which an Allowed Delay (as hereinafter defined) is not in effect, sales of Registrable Securities cannot be made by a Holder under the Registration Statement for any reason not within the exclusive control of such Holder (other than such Registrable Securities as are then freely saleable pursuant to Rule 144(k)), or (iii) an amendment to the Registration Statement, or a new registration statement, required to be filed pursuant to the terms of Section 1(f) hereof is not filed on or before the date required by such paragraph, (each of (i), (ii) and (iii) being referred to herein as a “Registration Default”), then, as partial relief for the damages to the Holders by reason of any such delay in or reduction of their ability to sell the Registrable Securities, the Company shall make payments to each Holder of Registrable Securities equal to one percent (1.0%) of the aggregate purchase price paid by such Holder for the Registrable Securities then held by such Holder for each thirty (30) day period until the applicable Registration Default is cured (prorated

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for any period of less than thirty days). Notwithstanding the foregoing, with respect to a Registration Default described in clause (iii), the payment to be made by the Company to each Holder of Registrable Securities shall be equal to one percent (1.0%) of the aggregate purchase price paid by such Holder for the Registrable Securities then held by such Holder that are not covered by the Registration Statement. All payments required under this Section 1(d) shall be made within five (5) Business Days following the last day of the calendar month in which a Registration Default occurs. Any such payment shall be in addition to any other remedies available to each Holder of Registrable Securities at law or in equity, whether pursuant to the terms hereof, the Purchase Agreement or otherwise.

(e) Allowed Delay. The Company may delay the disclosure of material non-public information, and suspend the availability of the Registration Statement, for no more than forty-five (45) calendar days in any twelve (12) month period, provided, that no single Allowed Delay shall exceed twenty (20) consecutive days, in the event of a proposed merger, reorganization or similar transaction involving the Company, as long as its board of directors (i) has determined, upon the advice of counsel, that such information would be required to be disclosed in an offering registered under the Securities Act and (ii) reasonably deems it in the Company’s best interests not to disclose such information publicly (an “Allowed Delay”). The Company shall promptly (x) notify each Holder in writing of the existence of material non-public information giving rise to an Allowed Delay (but in no event, without the prior written consent of such Holder, shall the Company disclose to such Holder any of the facts or circumstances regarding any material non-public information), (y) advise each Holder in writing to cease all sales under the Registration Statement until the termination of the Allowed Delay and (z) notify each Holder in writing immediately upon the termination or expiration of an Allowed Delay.

(f) Amendments to Registration Statement. In the event that, at any time, the number of shares available under the Registration Statement is insufficient to cover one hundred percent (100%) of the Registrable Securities, including, without limitation, any Registrable Securities acquired by or first issuable to an Investor on or after the Effective Date, the Company shall promptly amend the Registration Statement or file a new registration statement, in any event as soon as practicable, but not later than the fifteenth (15^th) day following notice from a Holder of the occurrence of such event, so that the Registration Statement or such new registration statement, or both, covers no less than one hundred and ten percent (110%) of the Registrable Securities. The Company shall use its reasonable best efforts to cause such amendment and/or new registration statement to become effective as soon as practicable following the filing thereof. Any registration statement filed pursuant to this Section 1(f) shall state that, to the extent permitted by Rule 416 under the Securities Act, such Registration Statement also covers such indeterminate number of additional shares of Common Stock as may become issuable upon conversion of the Preferred Stock in order to prevent dilution resulting from stock splits, stock dividends or similar events. Unless and until such amendment or new registration statement becomes effective, each Holder shall have the rights described in Section 1(d) above.

(g) Selection of Underwriters. In the event that there is an underwritten offering of the Registrable Securities, the Holders of a majority of the Registrable Securities shall have the right to select the investment banker(s) and manager(s) to administer the offering which investment banker(s) and manager(s) shall be nationally recognized institutions that are reasonably acceptable to the Company.

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(h) Other Registration Rights. The Company represents and warrants that it is not a party to, or otherwise subject to, any other agreement granting registration rights to any Person other than the Investor with respect to any securities of the Company other than pursuant to the Registration Rights Agreement, dated April 1, 1996, among the Company, Sanjiv S. Sidhu and Sidhu-Singh Family Investments, Ltd. Except as provided in this Agreement, the Company shall not grant to any Persons the right (other than such rights that are subordinate to the registration rights granted pursuant to this Agreement) to request or require the Company to register any equity securities of the Company, or any securities convertible or exchangeable into or exercisable for such securities, without the prior written consent of the Holders of at least a majority of the Registrable Securities

(i) Legal Counsel. Subject to Section 3 hereof, Holders of at least a majority of the Registrable Securities shall have the right to select one legal counsel to review and comment upon any registration pursuant to this Agreement (the “Legal Counsel”), which the Investors agree shall be Gibson, Dunn & Crutcher LLP or such other counsel as thereafter designated in writing by the Holders of at least a majority of the Registrable Securities. The Investors hereby waive any conflict of interest or potential conflict of interest that may arise as a result of the representation of such Investors by Gibson, Dunn & Crutcher LLP in connection with the subject matter of this Agreement. This Section 1(i) will not prohibit any other counsel to an Investor from reviewing and commenting on any registration filed pursuant to this Agreement at no cost to the Company.

(j) Registration of Other Securities. During the period beginning on the date hereof and ending on the Effective Date, the Company shall refrain from filing any registration statement (other than (i) the Registration Statement or (ii) a registration statement on Form S-8 with respect to stock option plans and stock plans currently in effect).

(k) Allocation of Conversion Shares. The initial number of Conversion Shares included in the Registration Statement and each increase in the number thereof included therein shall be allocated pro rata among the Holders based on the aggregate number of Registrable Securities issuable to each Holder at the time the Registration Statement covering such initial number of Registrable Securities or increase thereof is declared effective by the Commission (such number to be determined using the Conversion Price in effect at such time). In the event that a Holder sells or otherwise transfers any of such Holder’s Registrable Securities, each transferee shall be allocated the portion of the then remaining number of Registrable Securities included in such Registration Statement allocable to the transferor.

2. REGISTRATION PROCEDURES. In fulfilling its obligations to register Registrable Securities pursuant to Section 1 hereof, the Company shall use its best efforts to effect the registration and the sale of such Registrable Securities in accordance with the intended method of disposition thereof, and pursuant thereto the Company shall as expeditiously as possible:

(a) prepare and file with the Securities and Exchange Commission the Registration Statement, and all amendments and supplements thereto and related prospectuses as

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may be necessary to comply with applicable securities laws, with respect to such Registrable Securities and use its commercially reasonable efforts to cause the Registration Statement to become effective;

(b) permit Legal Counsel and counsel for each Holder to review the Registration Statement and all amendments and supplements thereto, and any comments made by the staff of the Commission concerning such Holder and/or the transactions contemplated by the Transaction Documents and the Company’s responses thereto, within a reasonable period of time (but in no event less than three (3) Business Days after such Holder has received such documents) prior to the filing thereof with the Commission (or, in the case of comments made by the staff of the Commission, within a reasonable period of time following the receipt thereof by the Company);

(c) furnish to the Investors and Legal Counsel, without charge, (i) promptly after receipt of such correspondence, copies of all correspondence from the Commission or the staff of the Commission to the Company or its representatives relating to each Registration Statement, Prospectus and all amendments and supplements thereto, (ii) promptly after the same is prepared and filed with the Commission, one (1) copy of each Registration Statement, Prospectus and all amendments and supplements thereto, including all exhibits and financial statements related thereto, and (iii) promptly upon the effectiveness of each Registration Statement and each amendment and supplement thereto, one (1) copy of the Prospectus included in each such Registration Statement and all amendments and supplements thereto;

(d) consider, and cause its counsel to consider, in good faith any comments or objections from Legal Counsel as to the form or content of each Registration Statement, Prospectus and all amendments or supplements thereto or any request for acceleration of the effectiveness of each Registration Statement, Prospectus and all amendments or supplements thereto;

(e) notify each Holder of Registrable Securities of the effectiveness of each registration statement filed hereunder and prepare and file with the Securities and Exchange Commission such amendments and supplements to such registration statement and the Prospectus used in connection therewith as may be necessary to keep such registration statement effective for the Registration Period;

(f) furnish to each Holder of Registrable Securities such number of copies of the Registration Statement, each amendment and supplement thereto, the Prospectus included in the Registration Statement (including each preliminary prospectus) and such other documents as such seller may reasonably request in order to facilitate the public sale or other disposition of the Registrable Securities owned by such Holder;

(g) use its commercially reasonable efforts to register or qualify such Registrable Securities under such other securities or blue sky laws of such jurisdictions as any Holder of Registrable Securities reasonably requests and do any and all other acts and things which may be reasonably necessary to enable such seller to consummate the disposition in such jurisdictions of the Registrable Securities owned by such Holder;

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(h) notify each Holder of Registrable Securities, at any time when a Prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event as a result of which the Prospectus included in such registration statement contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading, and, at the request of any Holder, the Company shall prepare a supplement or amendment to such Prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such Prospectus shall not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading;

(i) provide a transfer agent and registrar for all Registrable Securities not later than the effective date of the Registration Statement;

(j) enter into such customary agreements (including underwriting agreements in customary form) and take all such other actions as the Holders of a majority of the Registrable Securities being sold or the underwriters, if any, reasonably request in order to expedite or facilitate the disposition of Registrable Securities (including effecting a stock split or a combination of shares);

(k) make available for inspection by any Holder of Registrable Securities, any underwriter participating in any disposition pursuant to the Registration Statement and any attorney, accountant or other agent retained by any such Holder or underwriter, all financial and other records, pertinent corporate documents and properties of the Company, and cause the Company’s officers, directors, employees and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with the Registration Statement;

(l) otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations of the Commission;

(m) permit any Holder of Registrable Securities which Holder, in its sole and exclusive judgment, might be deemed to be an underwriter or a controlling person of the Company, to participate in the preparation of the Registration Statement and to require the insertion therein of material, furnished to the Company in writing, which in the reasonable judgment of such Holder and its counsel should be included;

(n) If the Registration Statement refers to any Holder by name or otherwise as the Holder of any securities of the Company and if in its sole and exclusive judgment, such Holder is or might be deemed to be an underwriter or a controlling person of the Company, such Holder shall have the right to require:

(i) the insertion therein of language, in form and substance satisfactory to such Holder and presented to the Company in writing, to the effect that the holding by such Holder of such securities is not to be construed as a recommendation by such Holder of the investment quality of the Company’s securities covered thereby and that such holding does not imply that such Holder shall assist in meeting any future financial requirements of the Company, or

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(ii) in the event that such reference to such Holder by name or otherwise is not required by the Securities Act or any similar Federal statute then in force, the deletion of the reference to such Holder; provided that with respect to this clause (ii) such Holder shall furnish to the Company an opinion of counsel to such effect, which opinion and counsel shall be reasonably satisfactory to the Company;

(o) in the event of the issuance of any stop order suspending the effectiveness of the Registration Statement, or of any order suspending or preventing the use of any related Prospectus or suspending the qualification of any Registrable Securities included in the Registration Statement for sale in any jurisdiction, the Company shall use its best efforts promptly to obtain the withdrawal of such order;

(p) use its best efforts to cause such Registrable Securities covered by the Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the sellers thereof to consummate the disposition of such Registrable Securities;

(q) obtain a cold comfort letter from the Company’s independent public accountants in customary form and covering such matters of the type customarily covered by cold comfort letters as the Holders of a majority of the Registrable Securities being sold reasonably request;

(r) after the Common Stock has been listed on the Nasdaq National Market, the Nasdaq SmallCap Market, the New York Stock Exchange, or any other market or exchange, secure the listing of all Registrable Securities on such market or exchange, and provide each Holder with reasonable evidence thereof; and

(s) the Company (i) shall not effect any public sale or distribution of its equity securities, or any securities convertible into or exchangeable or exercisable for such securities, during the seven days prior to and during the 90-day period beginning on the effective date of any underwritten sale pursuant to the Registration Statement (except pursuant to registrations on Form S-4, Form S-8 or any successor form), unless the underwriters managing the underwritten sale otherwise agree, and (ii) shall use its best efforts to cause each officer and director of the Company to agree not to effect any public sale or distribution (including sales pursuant to Rule 144 of the Securities Act) of any such securities during such period (except as part of such underwritten registration, if otherwise permitted), unless the underwriters managing the underwritten sale otherwise agree.

3. REGISTRATION EXPENSES.

(a) All expenses of the Company incident to the Company’s performance of or compliance with this Agreement, including without limitation all registration, qualification and filing fees, fees and expenses of compliance with securities or blue sky laws, printing expenses, messenger and delivery expenses, fees and disbursements of custodians, and fees and disbursements of counsel for the Company and all independent certified public accountants, underwriters (excluding discounts and commissions) and other Persons retained by the Company (all such expenses being herein called “Registration Expenses”), shall be borne as provided in this Agreement, except that the Company shall, in any event, pay its internal expenses

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(including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit or quarterly review, the expense of any liability insurance and the expenses and fees for listing the securities to be registered on each securities exchange on which similar securities issued by the Company are then listed or on the NASDAQ automated quotation system.

(b) In connection with the Registration Statement to be filed pursuant to Section 1 hereof, the Company shall reimburse the Holders of Registrable Securities included in such registration for the reasonable fees and disbursements of the Legal Counsel.

4. HOLDER COVENANTS

(a) Each Holder agrees that, upon receipt of any notice from the Company of the happening of any event requiring the preparation of a supplement or amendment to a Prospectus relating to Registrable Securities so that, as thereafter delivered to such Holder, such Prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, each Holder will forthwith discontinue disposition of Registrable Securities pursuant to the Registration Statements until its receipt of copies of the supplemented or amended Prospectus from the Company or until it is advised in writing by the Company that use of the applicable Prospectus may be resumed and, in either case, has received copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such Prospectus or Registration Statement. If so directed by the Company, each Holder shall deliver to the Company all copies, other than permanent file copies then in such Holder’s possession, of the Prospectus covering such Registrable Securities that is current at the time of receipt of such notice.

(b) The Holder(s) included in any registration shall furnish to the Company such information regarding such Holder(s), the Registrable Securities owned by such Holders and the distribution proposed by such Holder(s), as the Company may reasonably request in writing and as shall be reasonably required under applicable law in connection with any registration, qualification or compliance referred to in this Agreement. Each Holder agrees to notify the Company, at any time when a Prospectus relating to the Registration Statement contemplated by this Agreement is required to be delivered by it under the Securities Act, of the occurrence of any event relating to such Holder which requires the preparation of a supplement or amendment to such Prospectus so that, as thereafter delivered to the purchasers of Registrable Securities the information with respect to such Holder in such Prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading relating to such Holder, and such Holder shall promptly make available to the Company information necessary to enable the Company to prepare any such supplement or amendment. Each Holder agrees not to take any action with respect to any distribution deemed to be made pursuant to such registration statement that constitutes a violation of Regulation M under the Exchange Act or any other applicable rule, regulation or law.

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5. INDEMNIFICATION.

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

(a) The Company agrees to indemnify, to the extent permitted by law, each Holder of Registrable Securities, its officers, directors, employees, agents and representatives and each Person who controls (within the meaning of the Securities Act) such Holder (collectively, the “Indemnitees”) against all losses, claims, actions, damages, liabilities and expenses (collectively, “Losses”) caused by (i) any untrue or alleged untrue statement of material fact contained in any registration statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, or (ii) any violation by the Company of any rule or regulation promulgated under the Securities Act applicable to the Company and relating to action or inaction required of the Company in connection with any such registration, qualification or compliance, and to pay to each Indemnitee, as incurred, any legal and any other expenses reasonably incurred in connection with investigating, preparing or defending any such claim, loss, damage, liability or action (except as otherwise provided in this Section 5), except insofar as the same are caused by or contained in any information furnished in writing to the Company by such Indemnitee expressly for use in the Registration Statement, Prospectus or preliminary prospectus or any amendment thereof or supplement thereto or by such Indemnitee’s failure to deliver a copy of the Registration Statement or Prospectus or any amendments or supplements thereto made available by the Company, if such delivery is required by applicable law. In connection with an underwritten offering, the Company shall indemnify such underwriters, their officers and directors and each Person who controls such underwriters (within the meaning of the Securities Act) to the same extent as provided above with respect to the indemnification of the Indemnitees.

(b) In connection with any Registration Statement in which a Holder of Registrable Securities is participating, each such Holder shall furnish to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with any such Registration Statement, any Prospectus or preliminary prospectus or any amendment thereof or supplement thereto and, to the extent permitted by law, shall indemnify the Company, its directors, officers, employees, agents and representatives and each Person who controls the Company (within the meaning of the Securities Act) against any Losses resulting from any untrue or alleged untrue statement of material fact contained in the Registration Statement, Prospectus or preliminary prospectus or any amendment thereof or supplement thereto, or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement or omission is contained in any information or affidavit so furnished in writing by such Holder; provided that the obligation to indemnify shall be individual, not joint and several, for each Holder and shall be limited (except in the case of willful fraud by such Holder) to the net amount of proceeds received by such Holder from the sale of Registrable Securities pursuant to such Registration Statement. Such Holder shall pay, as incurred, to any person intended to be indemnified pursuant to this Section 5(b), any legal and any other expenses reasonably incurred in connection with investigating, preparing or defending any such claim, loss, damage, liability or action.

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(c) Any Person entitled to indemnification hereunder shall (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give prompt notice shall not impair any Person’s right to indemnification hereunder to the extent such failure has not prejudiced the indemnifying party) and (ii) unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent shall not be unreasonably withheld). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of counsel to any indemnified party a conflict of interest may exist if the same counsel were to represent such indemnified party and any other of such indemnified parties with respect to such claim. In such instance, the conflicting indemnified parties shall have a right to retain one separate counsel, chosen by the Holders of a majority of the Registrable Securities included in the registration, at the expense of the indemnifying party. No indemnifying party, in the defense of such claim or litigation, shall, except with the consent of each indemnified party, consent to the 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) The indemnification provided for under this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling Person of such indemnified party and shall survive the transfer of securities.

(e) If the indemnification provided for in this Section 5 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any Losses, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such Losses in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations; provided, that in no event shall any contribution by a Holder under this Section 5(e) exceed the net proceeds received by such Holder from the sale of Registrable Securities pursuant to the Registration Statement, except in the case of willful fraud by such Holder. The relative fault of the indemnifying party and of the indemnified party shall be determined by a court of competent jurisdiction.

(f) Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in 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.

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6. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Person may participate in any registration hereunder which is underwritten unless such Person completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements; provided, that (i) the Holders of Registrable Securities to be distributed by such underwriters shall be parties to such underwriting agreement and may, at their option, require that any or all of the representations and warranties by the Company to and for the benefit of such underwriters shall also be made to and for the benefit of such Holders and (ii) no Holder of Registrable Securities included in any underwritten registration shall be required to make any representations or warranties to the Company or the underwriters (other than representations and warranties regarding such Holder, such Holder’s ownership of securities being included in the registration, and related customer matters, and such Holder’s intended method of distribution) or to undertake any indemnification obligations to the Company with respect thereto, except as otherwise provided in Section 5(b) hereof.

7. RULE 144 REPORTING. With a view to making available to the Holders of Registrable Securities the benefits of certain rules and regulations of the Securities and Exchange Commission which may permit the sale of the Registrable Securities to the public without registration, the Company agrees to use its reasonable best efforts to:

(a) make and keep current public information available, within the meaning of Rule 144 or any similar or analogous rule promulgated under the Securities Act;

(b) file with the Commission, in a timely manner, all reports and other documents required of the Company under the Securities Act and Exchange Act; and

(c) so long as any party hereto owns any Registrable Securities, furnish to such party forthwith upon request, a written statement by the Company as to its compliance with the reporting requirements of said Rule 144, the Securities Act and the Exchange Act; a copy of the most recent annual or quarterly report of the Company; and such other reports and documents as such Person may reasonably request in availing itself of any rule or regulation of the Securities and Exchange Commission allowing it to sell any such Registrable Securities without registration.

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

(a) “Business Day” means any day excluding Saturday, Sunday, and any day which is a legal holiday under the laws of the State of Texas or is a day on which banking institutions located in Texas are authorized or required by law or other governmental action to close.

(b) “Commission” means the United States Securities and Exchange Commission.

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(c) “Common Stock” means the Company’s common stock, par value $0.0025 per share.

(d) “Effective Date” means the date on which the Registration Statement is declared effective by the Commission.

(e) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(f) “Holder” means any person owning or having the right to acquire, through conversion of the Preferred Stock or otherwise, Registrable Securities, including initially the Investor and thereafter any permitted assignee thereof, provided that such assignee agrees in writing to be bound by all of the provisions hereof.

(g) “Investor” has the meaning set forth in the first paragraph of this Agreement.

(h) “Legal Counsel” has the meaning set forth in Section 1(i) hereof.

(i) “Person” means an individual, a partnership, a corporation, an association, a joint stock company, a limited liability company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof.

(j) “Prospectus” means the prospectus included in the Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by the Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.

(k) “Registrable Securities” means (i) any Common Stock issued or issuable pursuant to the terms of the Series B Preferred Stock; (ii) any Common Stock not covered by clause (i) held by or issuable to an Investor including, without limitation, any such Common Stock acquired by or first issuable to an Investor on or after the Effective Date; (iii) any of the Company’s 5.25% Convertible Subordinated Debentures due 2006 held by an Investor including, without limitation, any such debentures acquired by an Investor on or after the Effective Date; and (iv) any capital stock issued or issuable with respect to the securities referred to in clauses (i) (ii) and (iii) above by way of a stock dividend or stock split; in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization; or in replacement of, in exchange for or otherwise in respect of the securities referred to in clauses (i), (ii) and (iii) above. As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when they have been distributed to the public pursuant to a offering registered under the Securities Act or sold to the public through a broker, dealer or market maker in compliance with Rule 144 under the Securities Act (or any similar rule then in force), or repurchased by the Company or any subsidiary of the Company. and any shares of capital stock issued or issuable from time to time (with any adjustments) in replacement of, in exchange for or otherwise in respect of the Conversion Share

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(l) “Registration Deadline” means the first anniversary of the Closing Date, or such earlier date as a Registration Statement is required to become effective pursuant to Section 1(c) hereof.

(m) “Registration Expenses” has the meaning set forth in Section 3 hereof.

(n) “Registration Statement” means any Registration Statement to be filed hereunder relating to resales of the Registrable Securities.

(o) “Rule 144” means Rule 144 under the Securities Act.

(p) “Securities Act” means the Securities Act of 1933, as amended.

(q) “Trading Day” means (i) any day on which the Common Stock is listed or quoted and traded on the Nasdaq National Market, the New York Stock Exchange, the American Stock Exchange or the Nasdaq SmallCap Market or (ii) if the Common Stock is not traded on any such market, then a day on which trading occurs on the New York Stock Exchange (or any successor thereto).

8. MISCELLANEOUS.

(a) No Inconsistent Agreements. The Company shall not hereafter enter into any agreement with respect to its securities which is inconsistent with or violates the rights granted to the Holders of Registrable Securities in this Agreement.

(b) Adjustments Affecting Registrable Securities. The Company shall not take any action with respect to its securities which would adversely affect the ability of the Holders of Registrable Securities to include such securities in a registration undertaken pursuant to this Agreement or which would materially and adversely affect the marketability of such securities in any such registration (including, without limitation, effecting a stock split or a combination of shares).

(c) Remedies. Any Person having rights under any provision of this Agreement shall be entitled to enforce such rights specifically to recover damages caused by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that, in addition to any other rights and remedies existing in its favor, any party shall be entitled to specific performance and/or other injunctive relief from any court of law or equity of competent jurisdiction (without posting any bond or other security) in order to enforce or prevent violation of the provisions of this Agreement.

(d) Amendments and Waivers. Except as otherwise provided herein, the provisions of this Agreement may be amended or waived, on behalf of all Holders of Registrable

13

Securities, only upon the prior written consent of the Company and Holders of at least 75% of the total number of Registrable Securities. The failure of any party to enforce any of the provisions of this Agreement shall in no way be construed as a waiver of such provisions and shall not affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms.

(e) Assignment. Upon the transfer of one or more shares of Preferred Stock or Registrable Securities by a Holder, the rights of such Holder hereunder with respect to such securities so transferred shall be assigned automatically to the transferee thereof, and such transferee shall thereupon be deemed to be a “Holder” for purposes of this Agreement, as long as: (i) the Company is, within a reasonable period of time following such transfer, furnished with written notice of the name and address of such transferee, (ii) the transferee agrees in writing with the Company to be bound by all of the provisions hereof, and (iii) such transfer is made in accordance with the applicable requirements of the Purchase Agreement; provided, however, that the registration rights granted in this Agreement shall not be transferred to any person or entity that receives Registrable Securities in a public transaction pursuant to an effective registration statement under the Securities Act or pursuant to Rule 144.

(f) Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement.

(g) Counterparts. This Agreement may be executed simultaneously in two or more counterparts, any one of which need not contain the signatures of more than one party, but all such counterparts taken together shall constitute one and the same Agreement.

(h) Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

(i) Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of Texas applicable to contracts made and to be performed entirely within the State of Texas.

(j) Notices. All notices, requests, consents and other communications provided for herein shall be in writing and shall be (i) delivered in person, (ii) transmitted by telecopy, (iii) sent by first-class, registered or certified mail, postage prepaid, or (iv) sent by reputable overnight courier service, fees prepaid, to the recipient at the address or telecopy number set forth below, or such other address or telecopy number as may hereafter be designated in writing by such recipient. Notices shall be deemed given upon personal delivery, seven days following deposit in the mail as set forth above, upon acknowledgment by the receiving telecopier or one day following deposit with an overnight courier service.

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To the Company, to:

i2 Technologies, Inc.

One i2 Place

11701 Luna Road

Dallas, Texas 75234

Telecopier: 469 357-6893

Attention: General Counsel

With a copy, which shall not constitute notice to the Company, to:

Baker Botts L.L.P.

2001 Ross Avenue

7th Floor

Dallas, Texas 75201

Attention: Andrew M. Baker

Telecopier: 214 953-6503

To Investor, to:

General Counsel

C/o Amalgamated Gadget, L.P.

C/o Scepter Holdings, Inc.

R² Investments, LDC

301 Commerce Street

Suite 2975

Fort Worth, Texas 76102

Telephone: 817 332-9500

Telecopier: 817 332-9606

Email: BusinessAffairs@acmewidget.com

                                         FINARB@acmewidget.com

With a copy, which shall not constitute notice to Investor, to:

Gibson, Dunn & Crutcher, LLP

200 Park Avenue

New York, NY 10166

Telephone: 212 351-4000

Telecopier: 212 351-4035

Attn: Sean P. Griffiths

or to such other address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party.

(k) Time of the Essence; Computation of Time. Time is of the essence for each and every provision of this Agreement. Whenever the last day for the exercise of any privilege or other discharge or any duty hereunder shall fall upon a Non-Business Day, the party having such privilege or duty may exercise such privilege or discharge such duty on the next succeeding day which is a regular Business Day.

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(l) Arbitration.

(i) Resolution of Disputes. If a Dispute arises between the parties, the parties agree to use the following procedures in good faith to resolve such Dispute promptly and non-judicially. For purposes of this Agreement, “Dispute” shall mean any alleged material breach of any representation, warranty or obligation herein, or a disagreement regarding the interpretation, performance or nonperformance of any provision thereof, or the validity, scope and enforceability of these dispute resolution procedures, or any dispute regarding any damages arising from the termination of this Agreement. Any party may give written notice to any other party of the existence of a Dispute (a “Dispute Notice”).

(ii) Negotiation. Within ten days after delivery of any Dispute Notice the parties involved in the Dispute shall meet at a mutually agreeable time and place and thereafter as often as they deem reasonably necessary to exchange relevant information and attempt in good faith to negotiate a resolution of the Dispute. If the Dispute has not been resolved within ten days after the first meeting of the parties, or, if the party receiving the Dispute Notice will not meet within ten days after receipt of the Dispute Notice, then either party may, by delivering notice to the other party, commence arbitration proceedings.

(iii) Arbitration. If the parties are not successful in resolving a Dispute, or arbitration proceedings are commenced in accordance with Section 9(l)(ii) above, then the Dispute shall be resolved by binding arbitration conducted by three arbitrators in accordance with the Commercial Arbitration Rules of the American Arbitration Association as in effect from time to time as modified by the terms hereof (the “Arbitration Law”). Either party may initiate final resolution of the Dispute by delivering a written demand for arbitration to the other party. Each party shall notify the other party of its appointment of one neutral arbitrator within seven days after receipt of such written demand for arbitration and the third neutral arbitrator shall be appointed by a court of competent jurisdiction in Texas. Each of the three arbitrators shall function as an arbitrator without any one of them having more authority than the other two. If such arbitrator appointments are not made within said time periods, the arbitrators shall be selected by a court of competent jurisdiction in Texas. All arbitrators must be attorneys with experience in law relating to investment funds. Further, no arbitrator may be a current or former client or employee of any party or an attorney that has provided legal advice to any party within the preceding twelve months, nor may an arbitrator be a current or former employee of a direct competitor of any of the parties. Additionally, prior to their assumption of duties as an arbitrator, all arbitrators must sign an oath of neutrality in customary form. If requested by either party, the arbitration award shall set forth findings of fact and conclusions of law upon which the award is based in the same manner as a judgment from a court of Texas. Judgment upon the award rendered by the arbitrators shall be binding upon the parties and may be entered by any court having jurisdiction thereof. The place of arbitration shall be Dallas, Texas, unless the parties mutually agree otherwise. The language of the arbitration shall be English. The arbitrators may allocate against the losing party all reasonable attorneys’ fees and costs of arbitration including the fees of the arbitrators and any other costs described herein so long as such arbitrators direct in the award that any such costs shall not be taxable in the courts of Texas. The parties agree

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that a party’s remedies under this arbitration procedure may be inadequate and that, notwithstanding this clause (iii), such aggrieved party shall be entitled to seek injunctive relief. The institution and maintenance of an action to obtain or enforce equitable remedies shall not constitute a waiver of the right of any party including the plaintiff to submit the controversy or claim to arbitration.

(iv) General Dispute Resolution Provisions.

(A) All deadlines specified in this Section 9(l) may be extended by mutual agreement. The procedures specified in this Section 9(l) are an essential provision of the Agreement and are legally binding on the parties. These procedures shall be the sole and exclusive procedures for the resolution of any Dispute between the parties arising out of or relating to this Agreement. Any and all actions to enforce the obligations under this Section 9(l) shall be brought in any court of competent jurisdiction in courts located in Texas.

(B) The parties acknowledge that the provisions of this Section 9(l) are intended to provide a private resolution of Disputes between them. Accordingly, all documents, records, and other information relating to the Dispute shall at all times be maintained in the strictest confidence and not disclosed to any third party, other than the arbitrators, except as required by law or where specifically allowed hereunder. All proceedings, communications and negotiations pursuant to this Section 9(l) are confidential. In the event of any judicial challenge to, or enforcement of, any order or award hereunder, any party may designate such portions of the record of such proceedings, communications, and negotiations as such party deems appropriate to be filed under seal. All proceedings, communications and negotiations pursuant to this Section 9(l) shall be treated as compromise negotiations for all purposes, including for purposes of the U.S. Federal Rules of Evidence and state rules of evidence. None of the statements, disclosures, offers, or communications (or other assertions made in any proceeding or negotiation) made pursuant to this Section 9(l) shall be deemed admissions, nor shall any of said statements, disclosures, offers, communications or assertions be admissible for any purpose other than the enforcement of the terms of this Section 9(l).

(C) The parties agree to act in good faith to comply with all of their respective obligations under this Agreement as much as possible as if there were no Dispute during any pending mediation or arbitration hereunder.

(D) The parties agree that the terms of this Section 9(l) shall survive the termination or expiration of this Agreement.

(v) Notice. The parties agree to have any Dispute decided by neutral arbitration as provided in this Section 9(l) and the parties are giving up any rights they might possess to have the Dispute litigated in a court or by a jury trial. The parties are giving up their judicial rights to discovery and appeal, unless such rights are specifically included in this Section 9(l). The parties acknowledge and agree that their agreement to this arbitration provision is voluntary.

(m) Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person.

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

i2 TECHNOLOGIES, INC.
Name:
Title:
R2 INVESTMENTS, LDC
By:	Amalgamated Gadget, L.P.,
	as its Investment Manager
By:	Scepter Holdings, Inc.,
	its General Partner
Name:
Title:

[Signature Page to Registration Rights Agreement]

EX-99.1

Exhibit 99.1

[i2 logo]

i2 Announces $100 Million Equity Investment by Q Investments

Investment expands Q Investments current position in i2; strengthens i2 balance sheet and cash position

i2 PLANET – SAN DIEGO – April 27, 2004 - i2 Technologies, Inc. (OTC: ITWO), a leading provider of closed-loop supply chain management solutions, today announced that Q Investments, a private investment firm and one of i2’s significant investors, has agreed to make a $100 million equity investment in i2. Q Investments currently holds approximately 32 million shares of common stock and $9 million of the convertible debt of i2. This investment will expand Q Investment’s equity holdings in i2 to approximately 140 million shares, representing a 26 percent ownership of the company on an as converted basis.

The $100 million investment will increase i2’s cash position to approximately $390 million based on the ending cash position of $290 million as of March 31, 2004 As a part of the investment agreement, i2 has agreed to expand its current board of directors to seven members of which two of the board members will represent Q Investments.

Equity Investment

The investment of $100 million by Q Investments will be in the form of a mandatorily convertible preferred stock, which is convertible into common stock of i2 at $.926 per share representing 105 percent of the volume weighted average price of the common stock for the two trading days of April 23 and April 26, 2004. The preferred stock is mandatorily convertible into common stock after ten years, and during the term, bears an annual 2 ¹/2 percent dividend which is payable semi-annually, in cash or in kind, at the company’s discretion. Terms also stipulate that if i2 common stock is trading at the equivalent of more than $2.50 per share any time after twenty-four months from the date of investment, i2 can require that Q’s preferred stock be converted to common stock. In addition, after four years, the company can force redemption by buying out the preferred stock for cash at 104% of the liquidation value of the security. The closing is expected to occur in the second quarter subject to satisfying the conditions to closing, including HSR approval.

“We believe that this investment significantly strengthens i2, and will benefit our customers and our shareholders. Q Investments has a successful track record in investing in companies in transition,” said Katy Murray, i2’s CFO. “This investment strengthens our financial position by increasing our total cash position and by putting the company in a net positive cash position. Customers can purchase i2 solutions and services with the confidence that i2 is a long-term partner. The investment also gives us a solid platform to pursue other strategies to further strengthen our balance sheet, should we decide to do so in the future.”

“Q has been a significant investor in i2 for the past four years, and as this new investment demonstrates, we continue to believe strongly in the company’s products, its strong management team, and its leadership position in the industry. The company will use this new capital to increase its cash position. This investment will provide the company with additional liquidity to fund and expand its business profitably,” said Pranav Parikh of Q Investments.

- more -

i2 Announces $100 Million Equity Investment by Q Investments

Page 2

i2 designs and delivers an extensive breadth of industry-leading supply chain software to help companies integrate between planning and execution by constantly adapting their planning models for changing business conditions. i2’s global customer base consists of some of the world’s market leaders – including seven of the Fortune global top 10 – and spans a variety of industries including automotive, high technology, retail and consumer product goods with additional resources put towards metals, aerospace and defense, and transportation companies.

i2 Planet

i2 will host an analyst meeting from its annual i2 Planet conference tomorrow, April 28, in San Diego. i2 Planet San Diego is a three-day interactive forum for the exchange of ideas and best practices in supply chain management, featuring presentations and networking opportunities with executives from some of the world’s most successful and innovative companies. i2 management will address analysts and investors from the event. A live web cast of the analyst meeting will be available beginning at 4:30 p.m. Eastern via the Company’s website at www.i2.com/investors.

About i2

A leading provider of closed-loop supply chain management solutions, i2 designs and delivers software that helps customers optimize and synchronize activities involved in successfully managing supply and demand. i2’s global customer base consists of some of the world’s market leaders – including seven of the Fortune global top 10. Founded in 1988 with a commitment to customer success, i2 remains focused on delivering value by implementing solutions designed to provide a rapid return on investment. Learn more at www.i2.com.

i2 is a registered trademark of i2 Technologies US, Inc. and i2 Technologies, Inc.

i2 Cautionary Language

This press release contains forward-looking statements that involve risks and uncertainties, including forward-looking statements regarding the expansion of i2’s board of directors, i2’s growth prospects, competitiveness and financial position. These forward-looking statements involve risks and uncertainties that may cause actual results to differ from those projected. For a discussion of factors which could impact i2’s financial results and cause actual results to differ materially from those in forward-looking statements, please refer to i2’s recent filings with the SEC, particularly the Annual Report on Form 10-K/A filed on March 17, 2004. i2 assumes no obligation to update the forward-looking information contained in this news release.

About Q

Q Investments is a private investment firm based in Fort Worth, TX. The firm currently manages through its family of funds $2 billion in capital for large institutions and wealthy families. The firm was founded in 1994 and has invested successfully across the whole capital structure including bank debt, bonds and equity with an emphasis on value investing.

For More Information Contact:

Melanie Ofenloch

i2 Corporate Communications

469-357-3027

melanie_ofenloch@i2.com

Barry Sievert

Shelton Investor Relations for i2

972-239-5119 ext 134

bsievert@sheltongroup.com