8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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) March 15, 2002

	TICKETS.COM, INC
	(Exact name of registrant as specified in its charter)
Delaware	000-27893	06-1424841
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)
555 Anton Boulevard, 11th Floor, Costa Mesa, California		92626
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code (714) 327-5400

Not Applicable
(Former name or former address, if changed since last report)

TABLE OF CONTENTS

	Item 1. Change of Control.
	Item 5. Other Events.
	Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
SIGNATURES
EXHIBIT 3.1
EXHIBIT 10.1
EXHIBIT 99.1
EXHIBIT 99.2

Item 1. Change of Control.

         On March 15, 2002, Tickets.com, Inc. (the “Company”) entered into a Securities Purchase Agreement (the “Purchase Agreement”) by and among the Company and General Atlantic Partners 74, L.P., GAP Coinvestment Partners II, L.P., and GapStar, LLC (collectively, the “Investors”). Pursuant to the Purchase Agreement, the Company will sell an aggregate of 8,474,576 shares of its Series G Senior Cumulative Redeemable Convertible Participating Preferred Stock (the “Series G Preferred Stock”) and warrants (the “Warrants”) to purchase 1,800,000 shares of its common stock (the “Common Stock”), at an exercise price of $2.36 per share, to the Investors for an aggregate purchase price of $20,000,000 (the “Purchase Price”). The Investors will pay the Purchase Price in cash. The Investors have advised the Company that the Purchase Price will be paid out of the Investors’ internally available funds. The closing of the purchase of the Series G Preferred Stock and the Warrants will occur on March 25, 2002 (the “Closing”). The three entities comprising Investors are controlled by General Atlantic Partners, LLC (“GAP LLC”), a private equity investment firm.

         The Investors currently own approximately 33% of the outstanding voting power of the Company. As a result of the sale of the Series G Preferred Stock, the Investors will own approximately 62% of the outstanding voting power of the Company. Additionally, the Warrants will be exercisable by the Investors at any time by delivery to the Company of a duly executed exercise form, as attached to the Warrants, and payment of the exercise price as set forth in the Warrants. Upon exercise of the Warrants, the Investors will own approximately 65% of the outstanding voting power of the Company.

         Currently the Company’s board of directors (the “Board”) consists of seven members. Of the seven members, three are designated by holders of the Company’s Series F Preferred Stock (the “Series F Directors”) and the remaining four are elected by all outstanding voting stock of the Company, voting as a single class. The Investors own a majority of the issued and outstanding Series F Preferred Stock of the Company and therefore, have the ability to designate the Series F Directors. After the transaction contemplated by the Purchase Agreement, the Board will consist of nine members. Of the nine members, three will continue to be designated by holders of the Company’s Series F Preferred Stock and two will be designated by holders of the Series G Preferred Stock (the “Series G Directors”). Because GAP LLC holds a majority of the outstanding shares of the Series F Preferred Stock and will hold all of the outstanding shares of the Series G Preferred Stock, GAP LLC will control the designation of the Series F Directors and the Series G Directors. The Series F Directors and Series G Directors will constitute a majority of the Board. The remaining four directors will be elected by all outstanding voting stock of the Company, voting as a single class.

         As a result of the sale of the Series G Preferred Stock, the Conversion Price (as such term is defined in the Certificate of the Powers, Designations, Preferences and Rights of the Series F Senior Cumulative Redeemable Preferred Stock) of the Series F Preferred Stock will be adjusted to equal $2.36.

         The following is a summary of the terms of the Series G Preferred Stock:

         Rank. The Series G Preferred Stock ranks senior to the Common Stock, all other classes of preferred stock (including the Series F Preferred Stock) and each other class or series of capital stock of the Company hereafter created that does not expressly rank pari passu with or senior to the Series G Preferred Stock with respect to dividends, distributions, rights upon liquidation and certain payments in connection with major corporate transactions.

         Dividend Rights. If the Company pays dividends on the Common Stock, then the holders of the Series G Preferred Stock (the “Series G Preferred Holders”) shall be entitled to share in such dividends on a pro rata basis as if their shares of Series G Preferred Stock had been converted into Common Stock. In addition, the Series G Preferred Holders shall be paid cumulative dividends at an annual rate of (i) nine percent per annum of the Accreted Value (as defined below), over (ii) any cash dividends paid to the Series G Preferred Holders in accordance with the immediately preceding sentence. Such dividends shall accrue and compound quarterly (the “Compounding Date”) whether or not declared by the Board, and shall be added to the Accreted Value on each such quarterly date. “Accreted Value” means, with respect to each share of Series G Preferred Stock, $2.36 plus the amount of any dividends which have accrued, compounded and been added thereto.

         Conversion Rights. Each share of Series G Preferred Stock will be convertible at the option of the Series G Preferred Holders into shares of Common Stock at the conversion ratio equal to (i) the Accreted Value plus all dividends accrued since the previous Compounding Date divided by (ii) $2.36, subject to adjustment as provided under the antidilution adjustments described below (the “Conversion Price”). In addition, in the event of a conversion after March 25, 2004, the Series G Preferred Holders shall be entitled to receive an additional amount equal to the Liquidation Payment (as defined below) for each shares of Series G Preferred Stock converted (with respect to a maximum of 2,824,858 shares and 5,649,717 shares converted prior to March 25, 2005 and March 25, 2006, respectively), payable at the election of a majority of the Series G Preferred Holders in either cash or shares of Common Stock.

         Redemption Rights. On March 25, 2007, all of the shares of Series G Preferred Stock will automatically be redeemed by the Company in cash, at a redemption price per share equal to the greater of (i) the Liquidation Payment calculated on such date or (ii) the average trading price of one share of Common Stock on each of the twenty consecutive trading days ending on and including the trading day prior to such date.

         Liquidation Rights. In the event of a merger, consolidation or sale of voting stock or assets of the Company (a “Sale Transaction”) or the liquidation, dissolution or winding up of the Company (a “Liquidation”), each Series G Preferred Holder will be entitled (i) to be paid for each share of Series G Preferred Stock an amount equal to the product of the Participation Factor (as hereinafter defined) times the sum of the Accreted Value of such share of Series G Preferred Stock at the time of such event plus all dividends accrued since the previous Compounding Date (such product, the “Liquidation Payment”), and (ii) to receive the number of shares of Common Stock to which such share of Series G Preferred Stock is convertible upon the closing of such event. “Participation Factor” means two, but shall be reduced from two to one in the case of a Sale Transaction if the Participation Reduction Amount (as hereinafter defined) equals an amount that is greater than the product of (x) two multiplied by (y) the Conversion Price. “Participation Reduction Amount” means a fraction, (A) the numerator of which is the excess of (x) the aggregate value of the consideration paid to the holders of the Company’s capital stock in such Sale Transaction minus (y) the aggregate Accreted Value of the shares of Series G Preferred Stock on the closing date of such Sale Transaction plus all dividends accrued since the previous Compounding Date minus (z) the amount of the aggregate Participation Payment (as defined in Section 4(a) of the Certificate of the Powers, Designations, Preferences and Rights of the Series F Preferred Stock) payable to the holders of the shares of Series F Preferred Stock in the event of a Sale Transaction (for purposes of this clause (z), assuming there is sufficient aggregate consideration in such Sale Transaction to pay such amount in full to the holders of the Series F Preferred Stock) and (B) the denominator of which is the aggregate number of outstanding shares of Common Stock assuming the conversion of the shares of the Series G Preferred Stock, the shares of Series F Preferred Stock and all other securities convertible into shares of Common Stock immediately prior to the closing date of such Sale Transaction.

         Voting Rights. The holders of the Series G Preferred Stock have the right to vote, on an as converted basis, on all matters that require a vote of the holders of Common Stock. In addition, the following actions require the approval of the holders of a majority of the outstanding Series G Preferred Stock: (i) any modification or amendment to the Company’s Certificate of Incorporation or Bylaws that would affect the rights, preferences, powers and privileges of the Series G Preferred Stock; (ii) the issuance or authorization of any additional capital stock of the Company or option to acquire shares of capital stock; (iii) the redemption for cash of any capital stock of the Company that is junior to, or on parity with, the Series G Preferred Stock; (iv) the declaration or payment of any dividends or other distributions on any capital stock of the Company that is junior to, or on parity with, the Series G Preferred Stock; (v) a Liquidation or any Sale Transaction; (vi) any action resulting in a deemed dividend under section 305 of the Internal Revenue Code; (vii) the assumption or issuance of debt in excess of $3,000,000; (ix) capital expenditures in excess of $1,500,000 individually or $4,000,000 in the aggregate in any twelve-month period, or $1,000,000 not included in the annual operating budget; (x) any change in the material accounting methods or policies of the Company; and (xi) any modification in the number of directors constituting the Board. As long as the Investors and/or any of their affiliates own at least a majority of the outstanding shares of Series G Preferred Stock, the Series G Preferred Holders, voting as a separate class, have the right to elect two directors of the Company’s Board.

         Antidilution Adjustments. The holders of the Series G Preferred Stock are entitled to customary antidilution rights including, adjustments for stock splits, stock dividends and other structural changes. In addition, if the Company issues Common Stock (or securities convertible into or exchangeable for Common Stock) at a price per share (“New Issue Price”) less than the Conversion Price then in effect, the Conversion Price shall be adjusted to equal the New Issue Price.

         Registration Rights. Under the Amended and Restated Registration Rights Agreement, to be entered into among the Investors, the Company and certain others (the “Other Investors”) in connection with the Closing, the Investors have two demand registration rights for an underwritten offering, and all of the Investors and the Other Investors shall have customary “piggy-back” registration rights in both primary and secondary offerings (i.e., the Investors and the Other Investors have a right to participate in registrations initiated by the Company or other stockholders of the Company).

Item 5. Other Events.

         On March 15, 2002, the Company entered into the Purchase Agreement by and among the Company and the Investors. Pursuant to the Purchase Agreement, the Company will sell an aggregate of 8,474,576 shares of the Series G Preferred Stock and Warrants to purchase 1,800,000 shares of its Common Stock, at an exercise price of $2.36 per share, to the Investors for an aggregate purchase price of $20,000,000. The closing of the purchase of the Series G Preferred Stock and the Warrants will occur on March 25, 2002.

         The above is a summary of the principal terms of the Purchase Agreement and does not purport to explain all of the material terms of the transaction. YOU SHOULD READ THE PURCHASE AGREEMENT, WHICH IS FILED AS AN EXHIBIT TO THIS REPORT, FOR A MORE DETAILED UNDERSTANDING OF THE TERMS OF THE PURCHASE AGREEMENT. Also attached as Exhibit 3.1 to this report is the Certificate of the Powers, Designations, Preferences and Rights of the Series G Preferred Stock. Also attached as Exhibit 99.1 to this report is a press release issued on March 15, 2002 regarding the sale of the Series G Preferred Stock and the Warrants

to the Investors. Also attached as Exhibit 99.2 to this report is a notice to stockholders mailed on March 15, 2002 to all stockholders of record of the Company regarding the sale of the Series G Preferred Stock and the Warrants to the Investors.

Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.

         (c)  Exhibits.

3.1	Certificate of the Powers, Designations, Preferences and Rights of the Series G Preferred Stock.
10.1	Securities Purchase Agreement dated March 15, 2002 by and among the Company and the Investors.
99.1	Press Release issued by the Company on March 15, 2002.
99.2	Notice to Stockholders mailed by the Company on March 15, 2002.

SIGNATURES

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

	TICKETS.COM, INC. (Registrant)
Date: March 15, 2002	By /s/ Eric Bauer
	Name: Eric Bauer Title: Chief Financial Officer

INDEX TO EXHIBITS

Exhibit No.	Description
3.1	Certificate of the Powers, Designations, Preferences and Rights of the Series G Preferred Stock.
10.1	Securities Purchase Agreement dated March 15, 2002 by and among the Company and the Investors.
99.1	Press Release issued by the Company on March 15, 2002.
99.2	Notice to Stockholders mailed by the Company on March 15, 2002.

EX-3.1 3 a79833ex3-1.txt EXHIBIT 3.1 EXHIBIT 3.1 TICKETS.COM, INC. CERTIFICATE OF THE POWERS, DESIGNATIONS, PREFERENCES AND RIGHTS OF THE SERIES G SENIOR CUMULATIVE REDEEMABLE CONVERTIBLE PARTICIPATING PREFERRED STOCK, PAR VALUE $0.000225 PER SHARE Pursuant to Section 151 of the Delaware General Corporation Law The undersigned, Ronald Bension, Chief Executive Officer of Tickets.com, Inc., a Delaware corporation (the "Corporation"), DOES HEREBY CERTIFY that the following resolution, creating a series of 8,474,576 shares of Preferred Stock was duly adopted by a special committee of the board of directors (the "Special Committee") of the Corporation, on March 6, 2002: WHEREAS, the Special Committee is authorized, in accordance with Section 141(c)(2) of the General Corporation Law of the State of Delaware and within the limitations and restrictions stated in the Certificate of Incorporation of the Corporation, to provide by resolution or resolutions for the issuance of shares of preferred stock, par value $0.000225 per share, of the Corporation, in one or more classes or series with such voting powers, full or limited, or no voting powers, and such designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions as shall be stated and expressed in the resolution or resolutions providing for the issuance thereof adopted by the Special Committee, and as are not stated and expressed in the Certificate of Incorporation, or any amendment thereto, including (but without limiting the generality of the foregoing) such provisions as may be desired concerning voting, redemption, dividends, dissolution or the distribution of assets and such other subjects or matters as may be fixed by resolution or resolutions of the Special Committee under the General Corporation Law of the State of Delaware; and WHEREAS, it is the desire of the Special Committee, pursuant to its authority as aforesaid, to authorize and fix the terms of a series of preferred stock and the number of shares constituting such series. NOW, THEREFORE, BE IT RESOLVED: 1. Designation and Number of Shares. There shall be hereby created and established a series of preferred stock designated as "Series G Senior Cumulative Redeemable Convertible Participating Preferred Stock" (the "Series G Preferred Stock"). The authorized number of shares of Series G Preferred Stock shall be 8,474,576. Capitalized terms used herein and not otherwise defined shall have the meanings set forth in Section 10 below. 2 2. Rank. (a) The Series G Preferred Stock shall, with respect to (i) the payment of (A) the Liquidation Payment in the event of a Liquidation, (B) the Conversion Payment in the event of a Qualifying Conversion, (C) the Sale Payment in the event of a Sale Transaction, (D) the Redemption Payment in the event of an automatic redemption pursuant to Section 5 hereof and (E) dividends and (ii) the distributions of assets and rights upon the occurrence of a Liquidation, rank senior to (x) all classes of common stock of the Corporation (including, without limitation, the Common Stock, par value $0.000225 per share, of the Corporation (the "Common Stock")), (y) all other classes of preferred stock of the Corporation (including, without limitation, the Series F Senior Cumulative Redeemable Preferred Stock, par value $0.000225 per share, of the Corporation (the "Series F Preferred Stock")) and (z) each other class or series of Capital Stock of the Corporation hereafter created which does not expressly rank pari passu with or senior to the Series G Preferred Stock (clauses (x), (y) and (z), together, the "Junior Stock"). (b) Notwithstanding anything to the contrary contained in the Certificate of Incorporation, the vote of the holders of a majority of the Series G Preferred Stock shall be a prerequisite to the designation or issuance of any shares of Capital Stock ranking pari passu with or senior to the Series G Preferred Stock in the event of a Liquidation or with respect to the payment of dividends, the Liquidation Payment, the Conversion Payment, the Sale Payment or the Redemption Payment. 3. Dividends. (a) If the Corporation declares and pays dividends on the Common Stock then, in that event, the holders of shares of Series G Preferred Stock shall be entitled to share in such dividends on a pro rata basis, as if their shares had been converted into shares of Common Stock pursuant to Section 7(a) below immediately prior to the record date for determining the stockholders of the Corporation eligible to receive such dividends. (b) The holders of shares of Series G Preferred Stock shall receive cumulative dividends at an annual rate equal to the excess (if any) of (i) 9% of the Accreted Value over (ii) any cash dividends paid in accordance with Section 3(a) above, calculated on the basis of a 360-day year, consisting of twelve 30-day months, which shall accrue on a daily basis from the date of issuance thereof, whether or not declared. Accrued and unpaid dividends shall not be paid in cash but instead shall compound and be added to the Accreted Value in effect immediately prior to the Compounding Date, on a quarterly basis on March 31st, June 30th, September 30th and December 31st of each year (each such date, a "Compounding Date"), whether or not declared by the Board of Directors. (c) All accrued dividends shall be mandatorily paid upon the earlier to occur of (i) a Liquidation in accordance with Section 4(a) below, (ii) an optional conversion of shares of Series G Preferred Stock in accordance with Section 7(a) below, 3 (iii) the consummation of a Sale Transaction or (iv) the redemption of shares of the Series G Preferred Stock in accordance with Section 5 below. (d) The Corporation shall not declare or pay any dividends on, or make any other distributions with respect to or redeem, purchase or otherwise acquire for consideration, any shares of any Junior Stock unless and until all accrued dividends on the Series G Preferred Stock have been paid in full. 4. Liquidation. (a) Liquidation Payment. Upon the occurrence of a Liquidation, the holders of shares of Series G Preferred Stock shall be paid in cash for each share of Series G Preferred Stock held thereby, out of, but only to the extent of, the assets of the Corporation legally available for distribution to its stockholders, before any payment or distribution is made to any Junior Stock, an amount per share equal to the product of (i) two multiplied by (ii) the sum of (x) the Accreted Value of such share of Series G Preferred Stock plus (y) all dividends that have accrued since the previous Compounding Date to the date of such Liquidation (the product of clauses (i) and (ii), the "Liquidation Payment") calculated on the date of such Liquidation. If the assets of the Corporation available for distribution to the holders of shares of Series G Preferred Stock shall be insufficient to permit payment in full to such holders of the aggregate Liquidation Payment, then all of the assets available for distribution to holders of shares of Series G Preferred Stock shall be distributed among and paid to such holders ratably in proportion to the amounts that would be payable to such holders if such assets were sufficient to permit payment in full. (b) Participation Payment. Upon the completion of (i) the distribution and payment required by Section 4(a) above, (ii) the distribution and payment required by Section 4(a) of the Certificate of Powers, Designations, Preferences and Rights of the Series F Preferred Stock and (iii) any other distribution and payment to any other class or series of Capital Stock of the Corporation ranking senior to the Common Stock, if assets remain in the Corporation, the remaining assets of the Corporation available for distribution to stockholders shall be distributed among the holders of shares of Series G Preferred Stock, the holders of shares of any series of preferred stock entitled to a participating payment and the holders of Common Stock pro rata based on the number of shares of the Common Stock held by each (assuming the conversion of all such Series G Preferred Stock in accordance with Section 7(a) below). (c) Notice. Written notice of a Liquidation stating a payment or payments and the place where such payment or payments shall be payable, shall be delivered in person, mailed by certified mail, return receipt requested, mailed by overnight mail or sent by telecopier, not less than ten (10) days prior to the earliest payment date stated therein, to the holders of record of shares of Series G Preferred Stock, such notice to be addressed to each such holder at its address as shown by the records of the Corporation. 4 5. Automatic Redemption. (a) Automatic Redemption Date and Payment. On March 15, 2007 (the "Automatic Redemption Date"), all of the shares of Series G Preferred Stock (the "Redeemed Shares") shall automatically, with no further action required to be taken by the Corporation or the holder thereof, be redeemed by the Corporation (unless otherwise prevented by law) in cash, at a redemption price per share equal to the greater of (i) the Liquidation Payment calculated on the Automatic Redemption Date or (ii) the Per Share Price. Written notice of such Automatic Redemption Date shall be delivered in person, mailed by certified mail, return receipt requested, mailed by overnight mail or sent by telecopier not less than thirty (30), nor more than sixty (60), days prior to the Automatic Redemption Date to the holders of record of the shares of Series G Preferred Stock such notice to be addressed to each such holder at its address as shown in the records of the Corporation. The total sum payable per share of Series G Preferred Stock redeemed on the Automatic Redemption Date is referred to as the "Redemption Price," and the aggregate payment to be made on the Automatic Redemption Date for all of the Redeemed Shares is referred to as the "Redemption Payment." The Redemption Payment shall be made by wire transfer of immediately available funds to accounts designated in writing by the holders of shares of Series G Preferred Stock. Upon notice from the Corporation, each holder of shares of Series G Preferred Stock so redeemed shall promptly surrender to the Corporation, at any place where the Corporation shall maintain a transfer agent for its shares of Series G Preferred Stock, certificates representing the shares so redeemed, duly endorsed in blank or accompanied by proper instruments of transfer. Notwithstanding anything to the contrary set forth in this Certificate of Designation, any holder of Series G Preferred Stock may convert its shares of Series G Preferred Stock pursuant to Section 7(a) hereof until the Redemption Price has been paid in full by the Corporation to any such holder. (b) Termination of Rights. If shares of Series G Preferred Stock are to be redeemed pursuant to Section 5(a) above, then, subject to Section 5(c) below, on and after the Automatic Redemption Date, all rights of any holder of such shares of Series G Preferred Stock shall cease and terminate, and such Redeemed Shares shall no longer be deemed to be outstanding, whether or not the certificates representing such shares have been received by the Corporation; provided, however, that, if the Corporation defaults in the payment of the Redemption Payment, the rights of the holders of such shares of Series G Preferred Stock shall continue until the Corporation cures such default. (c) Insufficient Funds for Redemption. If the funds of the Corporation available for redemption of the Redeemed Shares on the Automatic Redemption Date are insufficient to redeem the Redeemed Shares on such date, then the holders of Redeemed Shares shall share ratably in any funds available by law for redemption of such shares according to the respective amounts which would be payable with respect to the number of shares owned by them if the shares to be so redeemed on such Automatic Redemption Date were redeemed in full. Any Redeemed Shares that the Corporation is not able to redeem on the Automatic Redemption Date due to insufficient funds shall continue to be outstanding until redeemed and dividends on such shares shall 5 continue to accrue and cumulate until redeemed. The Corporation shall in good faith use all reasonable efforts as expeditiously as possible to eliminate, or obtain an exception, waiver or exemption from, any and all restrictions that prevented the Corporation from paying the Redemption Price and redeeming all of the Redeemed Shares. At any time thereafter when additional funds of the Corporation are available by law for the redemption of the Redeemed Shares, such funds shall be used, at the end of the next succeeding fiscal quarter, to redeem the balance of such shares, or such portion thereof for which funds are available, on the basis set forth above. 6. Voting Rights; Election of Director. (a) General. In addition to the voting rights to which the holders of Series G Preferred Stock are entitled under or granted by Delaware law, the holders of Series G Preferred Stock shall be entitled to vote, in person or by proxy, at a special or annual meeting of stockholders or in any written consent in lieu of meeting, on all matters entitled to be voted on by holders of shares of Common Stock voting together as a single class with the Common Stock (and with other shares entitled to vote thereon, if any). With respect to any such vote, each share of Series G Preferred Stock shall entitle the holder thereof to cast that number of votes as is equal to the number of votes that such holder would be entitled to cast had such holder converted its shares of Series G Preferred Stock into shares of Common Stock pursuant to Section 7(a) below on the record date for determining the stockholders of the Corporation eligible to vote on any such matters. (b) Directors. If General Atlantic Partners 74, L.P.("GAP LP"), GAP Coinvestment Partners II, L.P. ("GAP Coinvestment"), GapStar, LLC ("GapStar") and/or any Affiliate thereof in the aggregate own at least a majority of the outstanding shares of Series G Preferred Stock, then the holders of shares of Series G Preferred Stock, voting together as a separate class, shall be entitled to elect two (2) directors of the Corporation (the "Series G Directors"). If the Board of Directors is classified, then each of the Series G Directors shall be allocated to one of the classes of the Board of Directors, provided that the Series G Directors shall not be allocated to the same class. (c) Major Actions. Notwithstanding anything to the contrary set forth in the Certificate of Incorporation, the Bylaws of the Corporation or otherwise, neither the Corporation, the Board of Directors nor the stockholders of the Corporation shall approve, consent to or ratify any of the following actions without the affirmative vote or written consent of the holders of a majority of the outstanding shares of Series G Preferred Stock, voting as a separate class: (i) any modification, amendment or alteration or change to the Certificate of Incorporation or the bylaws of the Corporation that would affect the rights, preferences, powers (including, without limitation, voting powers) and privileges of the Series G Preferred Stock; 6 (ii) the issuance, reservation for issuance or authorization of any Capital Stock of the Corporation or any right or option to acquire shares of Capital Stock (excluding shares issuable upon the exercise conversion of the Series G Preferred Stock or any other securities convertible into or exchangeable for shares of Capital Stock issued and outstanding on the date hereof and shares of Common Stock issuable upon exercise of options granted pursuant to the Stock Option Plan), or any increase or decrease in the authorized number of shares of Series G Preferred Stock; (iii) the redemption for cash of any Capital Stock that is junior to, or pari passu with, the Series G Preferred Stock (other than the repurchase of unvested Common Stock from employees, directors or consultants upon termination of their employment with, or service to, the Corporation); (iv) the declaration or payment of any dividend or other distribution on or in respect of any Capital Stock that is junior to or pari passu with the Series G Preferred Stock (other than dividends payable to holders of Series G Preferred Stock); (v) any action that results in a deemed dividend to the Series G Preferred Stock under section 305 of the Internal Revenue Code; (vi) the Corporation or any of its Subsidiaries issuing, assuming or otherwise becoming liable for any long term debt in excess of $3,000,000 in the aggregate; (vii) the Corporation making or causing any Subsidiaries of the Corporation to make, an aggregate amount of capital expenditures in excess of (i) $1,500,000 individually or $4,000,000 in the aggregate in any 12-month period, or (ii) $1,000,000, not included in the annual operating budget approved by the Board of Directors; (viii) any change in the material accounting methods or policies of the Corporation; (ix) approval of the Liquidation of the Corporation or the approval, authorization or recommendation of any Sale Transaction; and (x) any modification of the number of directors constituting the entire Board of Directors or any amendment or modification of this Section 6(c). (d) Elections. The Series G Preferred Stock shall vote together as a single class with the Common Stock (and all other classes and series of stock of the Corporation entitled to vote thereon, if any) with respect to the election of all of the other directors of the Corporation, except for the directors elected by the holders of the Series F Preferred Stock voting as a separate class. If the conditions set forth in Section 6(b) necessary for the holders of shares of Series G Preferred Stock to vote as a separate class for the election of the Series G Directors are not satisfied, then the Series G Preferred 7 Stock shall vote together as a single class with the Common Stock (and all other classes and series of stock of the Corporation entitled to vote thereon, if any) with respect to the election of all of the directors of the Corporation, except for the directors elected by the holders of Series F Preferred Stock voting as a separate class. At any meeting held for the purpose of electing directors at a time when the holders of shares of Series G Preferred Stock are entitled to vote as a separate class for the election of the Series G Directors, (i) the presence in person or by proxy of the holders of a majority of the shares of Series G Preferred Stock then outstanding shall constitute a quorum of the Series G Preferred Stock for the election of the Series G Directors, (ii) the holders of shares of Series G Preferred Stock shall be entitled to cast one vote per share of Series G Preferred Stock in any such election and (iii) the Series G Directors shall be elected by the affirmative vote of the holders of a majority of the outstanding shares of Series G Preferred Stock. A vacancy in a directorship filled by the holders of the Series G Preferred Stock voting as a separate class pursuant to Section 6(b) shall be filled only by vote or written consent of the holders of shares of Series G Preferred Stock. The directors elected pursuant to Section 6(b) may not be removed without the consent of the holders of a majority of the Series G Preferred Stock. 7. Conversion. (a) Optional Conversion. Any holder of shares of Series G Preferred Stock shall have the right, at its option, at any time and from time to time, to convert, subject to the terms and provisions of this Section 7, any or all of such holder's shares of Series G Preferred Stock into the sum of (I) such number of fully paid and non-assessable shares of Common Stock as is equal to the product of (A) the number of shares of Series G Preferred Stock being so converted multiplied by (B) the quotient of (x) the sum of the Accreted Value plus all dividends accrued since the previous Compounding Date divided by (y) the conversion price of $2.36 per share, subject to adjustment as provided in Section 7(d) below (such price in clause (y), the "Conversion Price") plus (II) in the event of a Qualifying Conversion, (x) in the case of a conversion prior to March 15, 2006, a payment, with respect to each share of Series G Preferred Stock being converted until the aggregate number of shares of Series G Preferred Stock converted pursuant to this Section 7(a) prior to March 15, 2006 exceeds the Qualifying Conversion Share Limit, equal to the Liquidation Payment calculated on the date of such conversion and (y) in the case of a conversion on or after March 15, 2006, a payment, with respect to each share of Series G Preferred Stock being converted, equal to the Liquidation Payment calculated on the date of such conversion (the payment payable pursuant to (x) or (y) above shall be referred to as the "Conversion Payment"). The Conversion Payment shall be paid, at the option of the holders of a majority of the shares of Series G Preferred Stock, in cash or by the Corporation through the issuance of a number of fully paid and non-assessable shares of Common Stock equal to Conversion Payment divided by the Conversion Price then in effect. Such conversion right shall be exercised by the surrender of certificate(s) representing the shares of Series G Preferred Stock to be converted to the Corporation at any time during usual business hours at its principal place of business to be maintained by it (or such other office or agency of the Corporation as the Corporation may designate by notice in writing to the holders of shares of Series G Preferred Stock), accompanied by written notice that the holder elects to convert such 8 shares of Series G Preferred Stock and specifying the name or names (with address) in which a certificate or certificates for shares of Common Stock are to be issued and (if so required by the Corporation) by a written instrument or instruments of transfer in form reasonably satisfactory to the Corporation duly executed by the holder or its duly authorized legal representative and transfer tax stamps or funds therefor, if required pursuant to Section 7(j) below. All certificates representing shares of Series G Preferred Stock surrendered for conversion shall be delivered to the Corporation for cancellation and canceled by it. As promptly as practicable after the surrender of any shares of Series G Preferred Stock, the Corporation shall (subject to compliance with the applicable provisions of federal and state securities laws) deliver to the holder of such shares so surrendered certificate(s) representing the number of fully paid and non-assessable shares of Common Stock into which such shares are entitled to be converted and, to the extent funds are legally available therefor, an amount equal to all accrued and unpaid dividends, if any, payable with respect to such shares in accordance with Section 3 above. At the time of the surrender of such certificate(s), the Person in whose name any certificate(s) for shares of Common Stock shall be issuable upon such conversion shall be deemed to be the holder of record of such shares of Common Stock on such date, notwithstanding that the share register of the Corporation shall then be closed or that the certificates representing such Common Stock shall not then be actually delivered to such Person. (b) Sale Transaction. (i) Upon the consummation of a Sale Transaction, each outstanding share of Series G Preferred Stock shall be automatically converted, with no further action required to be taken by the Corporation or the holder thereof, into the following: (A) an amount equal to the product of (i) the Participation Factor multiplied by (ii) the sum of (x) the Accreted Value on the closing date of such Sale Transaction plus (y) all dividends that have accrued since the previous Compounding Date to the closing date of such Sale Transaction (the product of clauses (i) and (ii), the "Sale Payment"); plus (B) the number of fully paid and non-assessable shares of Common Stock equal to the product of (A) the number of shares of Series G Preferred Stock being so converted multiplied by (B) the quotient of (x) the sum of the Accreted Value on the closing date of such Sale Transaction plus all dividends accrued since the previous Compounding Date divided by (y) the Conversion Price (after giving effect to any adjustments pursuant to Section 7(d) below). (ii) The Sale Payment shall be paid, at the option of the holders of a majority of the shares of Series G Preferred Stock, in the form of consideration paid in such Sale Transaction on the closing date of such Sale Transaction or in cash. 9 (iii) Any securities of the surviving person to be delivered to the holders of shares of Series G Preferred Stock pursuant to this Section 7(b) shall be valued as follows: (A) With respect to securities that do not constitute "restricted securities," as such term is defined in Rule 144(a)(3) promulgated under the Securities Act, the value shall be deemed to be the Current Market Price of such securities as of three (3) days prior to the date of distribution. (B) With respect to securities that constitute "restricted securities," as such term is defined in Rule 144(a)(3) promulgated under the Securities Act, and that are of the same class or series as securities that are publicly traded, the value shall be adjusted to make an appropriate discount from the value as set forth in Section 7(b)(iii)(A) above to reflect the appropriate fair market value thereof, as mutually determined by the Board of Directors and the holders of a majority of the shares of Series F Preferred Stock, or if there is no active public market with respect to such class or series of securities, such securities shall be valued in accordance with Section 7(b)(iii)(A) above, giving appropriate weight, if any, to such restriction as determined in good faith by the Board of Directors. (iv) Immediately upon conversion as provided herein, each holder of shares of Series G Preferred Stock shall be deemed to be the holder of record of the Common Stock issuable upon conversion of such holder's shares of Series G Preferred Stock, notwithstanding that the share register of the Corporation shall then be closed or that certificates representing the Common Stock shall not then actually be delivered to such Person. Upon written notice from the Corporation, each holder of shares of Series G Preferred Stock so converted shall promptly surrender to the Corporation at its principal place of business to be maintained by it (or at such other office or agency of the Corporation as the Corporation may designate by such notice to the holders of shares of Series G Preferred Stock) certificates representing the shares so converted. (c) Termination of Rights. On the date of an optional conversion pursuant to Section 7(a) above or of such automatic conversion pursuant to Section 7(b) above, all rights with respect to the shares of Series G Preferred Stock so converted, including the rights, if any, to receive notices and vote, shall terminate, except only the rights of holders thereof to (i) receive certificates for the number of shares of Common Stock into which such shares of Series G Preferred Stock have been converted, (ii) receive the Conversion Payment in the case of a Qualifying Conversion, (iii) receive the Sale Payment in the case of an automatic conversion pursuant to Section 7(b) above, (iv) the payment of dividends pursuant to Section 3 above and (v) exercise the rights to which they are entitled as holders of Common Stock. 10 (d) Antidilution Adjustments. The Conversion Price, and the number and type of securities to be received upon conversion of shares of Series G Preferred Stock, shall be subject to adjustment as follows: (i) Dividend, Subdivision, Combination or Reclassification of Common Stock. In the event that the Corporation shall at any time or from time to time, prior to conversion of shares of Series G Preferred Stock (w) pay a dividend or make a distribution on the outstanding shares of Common Stock payable in Capital Stock of the Corporation, (x) subdivide the outstanding shares of Common Stock into a larger number of shares, (y) combine the outstanding shares of Common Stock into a smaller number of shares or (z) issue any shares of its Capital Stock in a reclassification of the Common Stock (other than any such event for which an adjustment is made pursuant to another clause of this Section 7(d)), then, and in each such case, the Conversion Price in effect immediately prior to such event shall be adjusted (and any other appropriate actions shall be taken by the Corporation) so that the holder of any share of Series G Preferred Stock thereafter surrendered for conversion shall be entitled to receive the number of shares of Common Stock or other securities of the Corporation that such holder would have owned or would have been entitled to receive upon or by reason of any of the events described above, had such share of Series G Preferred Stock been converted immediately prior to the occurrence of such event. An adjustment made pursuant to this Section 7(d)(i) shall become effective retroactively (x) in the case of any such dividend or distribution, to a date immediately following the close of business on the record date for the determination of holders of Common Stock entitled to receive such dividend or distribution or (y) in the case of any such subdivision, combination or reclassification, to the close of business on the day upon which such corporate action becomes effective. (ii) Issuance of Common Stock or Common Stock Equivalent below Conversion Price. (A) If the Corporation shall at any time or from time to time prior to conversion of shares of Series G Preferred Stock, issue or sell any shares of Common Stock or Common Stock Equivalents at a price per share of Common Stock (the "New Issue Price") that is less than the Conversion Price then in effect as of the record date or Issue Date (as defined below), as the case may be (treating the price per share of Common Stock, in the case of the issuance of any Common Stock Equivalent, as equal to (x) the sum of the price for such Common Stock Equivalent plus any additional consideration payable (without regard to any anti-dilution adjustments) upon the conversion, exchange or exercise of such Common Stock Equivalent divided by (y) the number of shares of Common Stock initially underlying such Common Stock Equivalent), other than (A) issuances or sales for which an adjustment is made pursuant to another clause of this Section 7(d) and (B) issuances in connection with an Excluded Transaction, then, and in each such case, the Conversion Price then in effect shall be adjusted to equal the New Issue Price. 11 (B) Such adjustment shall be made whenever such shares of Common Stock or Common Stock Equivalents are issued, and shall become effective retroactively (x) in the case of an issuance to the stockholders of the Corporation, as such, to a date immediately following the close of business on the record date for the determination of stockholders entitled to receive such shares of Common Stock or Common Stock Equivalents and (y) in all other cases, on the date (the "Issue Date") of such issuance; provided, however, that the determination as to whether an adjustment is required to be made pursuant to this Section 7(d)(ii) shall only be made upon the issuance of such shares of Common Stock or Common Stock Equivalents, and not upon the issuance of any security into which the Common Stock Equivalents convert, exchange or may be exercised. (C) In case at any time any shares of Common Stock or Common Stock Equivalents or any rights or options to purchase any shares of Common Stock or Common Stock Equivalents shall be issued or sold for cash, the consideration received therefor shall be deemed to be the amount received by the Corporation therefor, without deduction therefrom of any expenses incurred or any underwriting commissions or concessions or discounts paid or allowed by the Corporation in connection therewith. In case any shares of Common Stock or Common Stock Equivalents or any rights or options to purchase any Common Stock or Common Stock Equivalents shall be issued or sold for a consideration other than cash, the amount of the consideration other than cash received by the Corporation shall be deemed to be the fair market value of such consideration, without deduction therefrom of any expenses incurred or any underwriting commissions or concessions or discounts paid or allowed by the Corporation in connection therewith, as determined in good faith by the Board of Directors. (D) If any Common Stock Equivalents (or any portions thereof) which shall have given rise to an adjustment pursuant to this Section 7(d)(ii) shall have expired or terminated without the exercise thereof and/or if by reason of the terms of such Common Stock Equivalents there shall have been an increase or increases, with the passage of time or otherwise, in the price payable upon the exercise or conversion thereof, then the Conversion Price hereunder shall be readjusted (but to no greater extent than originally adjusted) in order to (1) eliminate from the computation any additional shares of Common Stock corresponding to such Common Stock Equivalents as shall have expired or terminated, (2) treat the additional shares of Common Stock, if any, actually issued or issuable pursuant to the previous exercise of such Common Stock Equivalents as having been issued for the consideration actually received and receivable therefor and (3) treat any of such Common Stock Equivalents which remain outstanding as being subject to exercise or conversion on the basis of such exercise or conversion price as shall be in effect at the time. (iii) Certain Distributions. In case the Corporation shall at any time or from time to time, prior to conversion of shares of Series G Preferred 12 Stock, distribute to all holders of shares of the Common Stock (including any such distribution made in connection with a merger or consolidation in which the Corporation is the resulting or surviving Person and the Common Stock is not changed or exchanged) cash, evidences of indebtedness of the Corporation or another issuer, securities of the Corporation or another issuer or other assets (excluding cash dividends in which holders of shares of Series G Preferred Stock participate, in the manner provided in Section 3, dividends payable in shares of Common Stock for which adjustment is made under another paragraph of this Section 7(d) and any distribution in connection with an Excluded Transaction) or rights or warrants to subscribe for or purchase of any of the foregoing, then, and in each such case, the Conversion Price then in effect shall be adjusted (and any other appropriate actions shall be taken by the Corporation) by multiplying the Conversion Price in effect immediately prior to the date of such distribution by a fraction (x) the numerator of which shall be the Current Market Price of the Common Stock immediately prior to the date of distribution less the then fair market value (as determined by the Board of Directors in the exercise of their fiduciary duties) of the portion of the cash, evidences of indebtedness, securities or other assets so distributed or of such rights or warrants applicable to one share of Common Stock and (y) the denominator of which shall be the Current Market Price of the Common Stock immediately prior to the date of distribution (but such fraction shall not be greater than one); provided, however, that no adjustment shall be made with respect to any distribution of rights or warrants to subscribe for or purchase securities of the Corporation if the holder of shares of Series G Preferred Stock would otherwise be entitled to receive such rights or warrants upon conversion at any time of shares of Series G Preferred Stock into Common Stock. Such adjustment shall be made whenever any such distribution is made and shall become effective retroactively to a date immediately following the close of business on the record date for the determination of stockholders entitled to receive such distribution. (iv) Other Changes. In case the Corporation at any time or from time to time, prior to the conversion of shares of Series G Preferred Stock, shall take any action affecting its Common Stock similar to or having an effect similar to any of the actions described in any of Sections 7(d)(i), (ii) or (iii) above or Section 7(g) below (but not including any action described in any such Section) and the Board of Directors in good faith determines that it would be equitable in the circumstances to adjust the Conversion Price as a result of such action, then, and in each such case, the Conversion Price shall be adjusted in such manner and at such time as the Board of Directors in good faith determines would be equitable in the circumstances (such determination to be evidenced in a resolution, a certified copy of which shall be mailed to the holders of shares of Series G Preferred Stock). (v) No Adjustment. Notwithstanding anything herein to the contrary, no adjustment under this Section 7(d) need be made to the Conversion Price if the Corporation receives written notice from holders of a majority of the outstanding shares of Series G Preferred Stock that no such adjustment is required. (e) Abandonment. If the Corporation shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or 13 other distribution, and shall thereafter and before the distribution to stockholders thereof legally abandon its plan to pay or deliver such dividend or distribution, then no adjustment in the Conversion Price shall be required by reason of the taking of such record. (f) Certificate as to Adjustments. Upon any adjustment in the Conversion Price, the Corporation shall within a reasonable period (not to exceed ten (10) days) following any of the foregoing transactions deliver to each registered holder of shares of Series G Preferred Stock a certificate, signed by an executive officer of the Corporation, setting forth in reasonable detail the event requiring the adjustment and the method by which such adjustment was calculated and specifying the increased or decreased Conversion Price then in effect following such adjustment. (g) Reorganization, Reclassification. In case of any merger or consolidation of the Corporation (other than a Sale Transaction) or any capital reorganization, reclassification or other change of outstanding shares of Common Stock (other than a change in par value, or from par value to no par value, or from no par value to par value) (each, a "Transaction"), the Corporation shall execute and deliver to each holder of shares of Series G Preferred Stock at least ten (10) Business Days prior to effecting such Transaction a certificate, signed by an executive officer of the Corporation, stating that the holder of each share of Series G Preferred Stock shall have the right to receive in such Transaction, in exchange for each share of Series G Preferred Stock, a security identical to (and not less favorable than) the Series G Preferred Stock, and provision shall be made therefor in the agreement, if any, relating to such Transaction. Any certificate delivered pursuant to this Section 7(g) shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 7. The provisions of this Section 7(g) and any equivalent thereof in any such certificate similarly shall apply to successive transactions. (h) Notices. In case at any time or from time to time: (w) the Corporation shall declare a dividend (or any other distribution) on its shares of Common Stock; (x) the Corporation shall authorize the granting to the holders of its Common Stock rights or warrants to subscribe for or purchase any shares of Capital Stock of any class or of any other rights or warrants; (y) there shall be any Transaction; or (z) there shall occur a Sale Transaction; then the Corporation shall mail to each holder of shares of Series G Preferred Stock at such holder's address as it appears on the transfer books of the Corporation, as promptly as possible but in any event at least ten (10) Business Days prior to the applicable date hereinafter specified, a notice stating (A) the date on which a record is to be taken for the purpose of such dividend, distribution or granting of rights or warrants or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be 14 entitled to such dividend, distribution or granting of rights or warrants are to be determined, or (B) the date on which such Transaction or Sale Transaction is expected to become effective and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their Common Stock for shares of stock or other securities or property or cash deliverable upon such Transaction or Sale Transaction. Notwithstanding the foregoing, in the case of any event to which Section 7(g) above is applicable, the Corporation shall also deliver the certificate described in Section 7(g) above to each holder of shares of Series G Preferred Stock at least ten (10) Business Days prior to effecting such reorganization or reclassification as aforesaid. (i) Reservation of Common Stock. The Corporation shall at all times reserve and keep available for issuance upon the conversion of shares of Series G Preferred Stock, such number of its authorized but unissued shares of Common Stock as will from time to time be sufficient to permit the conversion of all outstanding shares of Series G Preferred Stock, and shall take all action to increase the authorized number of shares of Common Stock if at any time there shall be insufficient authorized but unissued shares of Common Stock to permit such reservation or to permit the conversion of all outstanding shares of Series G Preferred Stock; provided that (x) the holders of shares of Series G Preferred Stock vote such shares in favor of any such action that requires a vote of stockholders and (y) such holders cause any directors elected by them pursuant to Section 6(b) above to vote in favor of any such action that requires a vote of the Board of Directors. (j) No Conversion Tax or Charge. The issuance or delivery of certificates for Common Stock upon the conversion of shares of Series G Preferred Stock shall be made without charge to the converting holder of shares of Series G Preferred Stock for such certificates or for any tax in respect of the issuance or delivery of such certificates or the securities represented thereby, and such certificates shall be issued or delivered in the respective names of, or (subject to compliance with the applicable provisions of federal and state securities laws) in such names as may be directed by, the holders of the shares of Series G Preferred Stock converted; provided, however, that the Corporation shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any such certificate in a name other than that of the holder of the shares of Series G Preferred Stock converted, and the Corporation shall not be required to issue or deliver such certificate unless or until the Person or Persons requesting the issuance or delivery thereof shall have paid to the Corporation the amount of such tax or shall have established to the reasonable satisfaction of the Corporation that such tax has been paid. 8. Certain Remedies. Any registered holder of shares of Series G Preferred Stock shall be entitled to an injunction or injunctions to prevent breaches of the provisions of this Certificate of Designations and to enforce specifically the terms and provisions of this Certificate of Designations in any court of the United States or any state thereof having jurisdiction, this being in addition to any other remedy to which such holder may be entitled at law or in equity. 15 9. Business Day. If any payment shall be required by the terms hereof to be made on a day that is not a Business Day, such payment shall be made on the immediately succeeding Business Day. 10. Definitions. As used in this Certificate of Designations, the following terms shall have the following meanings (with terms defined in the singular having comparable meanings when used in the plural and vice versa), unless the context otherwise requires: "Accreted Value" means, as of any date, with respect to each share of Series G Preferred Stock, $2.36 (subject to adjustment for the events described in Section 7(d)(i)(w), Section 7(d)(i)(x) or Section 7(d)(i)(y) if such events occur with respect to the shares of Series G Preferred Stock) plus the amount of dividends which have accrued, compounded and been added thereto to such date pursuant to Section 3(b) hereof. "Affiliate" means any Person who is an "affiliate" as defined in Rule 12b-2 of the General Rules and Regulations under the Exchange Act. In addition, the following shall be deemed to be Affiliates of GAP Coinvestment, GAP LP and GapStar: (a) GAP LLC, the members of GAP LLC, the limited partners of GAP Coinvestment and GAP LP and the members of GapStar; (b) any Affiliate of GAP LLC, the members of GAP LLC, the limited partners of GAP Coinvestment and GAP LP or the members of GapStar; and (c) any limited liability company or partnership a majority of whose members or partners, as the case may be, are members or former members of GAP LLC or consultants or key employees of General Atlantic Service Corporation, a Delaware corporation and an Affiliate of GAP LLC. In addition, GAP LP, GAP Coinvestment and GapStar shall be deemed to be Affiliates of one another. "Automatic Redemption Date" shall have the meaning ascribed to it in Section 5(a) hereof. "Board of Directors" means the Board of Directors of the Corporation. "Business Day" means any day except a Saturday, a Sunday, or other day on which commercial banks in the State of New York are authorized or required by law or executive order to close. "Capital Stock" means, with respect to any Person, any and all shares, interests, participations, rights in, or other equivalents (however designated and whether voting or non-voting) of, such Person's capital stock (including, without limitation, common stock and preferred stock) and any and all rights, warrants or options exchangeable for or convertible into such capital stock. "Commission" means the United States Securities and Exchange Commission. 16 "Common Stock" shall have the meaning ascribed to it in Section 2 hereof. "Common Stock Equivalent" means any security or obligation which is by its terms, directly or indirectly, convertible, exchangeable or exercisable into or for shares of Common Stock, including, without limitation, the Series G Preferred Stock, and any option, warrant or other subscription or purchase right with respect to Common Stock or any Common Stock Equivalent. "Compounding Date" shall have the meaning ascribed to it in Section 3(b) hereof. "Conversion Payment" shall have the meaning ascribed to it in Section 7(a) hereof. "Conversion Price" shall have the meaning ascribed to it in Section 7(a) hereof. "Corporation" shall have the meaning ascribed to it in the first paragraph of this Certificate of Designation. "Current Market Price" per share of Capital Stock of any Person means, as of the date of determination, (a) the average of the daily Market Price under clause (a), (b) or (c) of the definition thereof of such Capital Stock during the immediately preceding thirty (30) trading days ending on such date, and (b) if such Capital Stock is not then listed or admitted to trading on any national securities exchange or quoted in the over-the-counter market, then the Market Price under clause (d) of the definition thereof on such date. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder. "Excluded Transaction" means (a) any issuance of up to an aggregate of 2,630,817 shares of restricted stock or options to purchase shares of Common Stock (subject to adjustment in the event of stock splits, combinations or similar occurrences) to employees, officers or directors of the Corporation pursuant to the Stock Option Plan, (b) any issuance of Common Stock (i) upon the conversion of shares of Series G Preferred Stock, (ii) upon the conversion of shares of Series F Preferred Stock, (iii) as a dividend on shares of Series G Preferred Stock or (iv) upon conversion or exercise of any Common Stock Equivalents and/or (c) any issuance of Common Stock in connection with any Liquidation Payment or Sale Payment. "GAP Coinvestment" shall have the meaning ascribed to it in Section 6(b) hereof. 17 "GAP LLC" means General Atlantic Partners, LLC, a Delaware limited liability company and the general partner of GAP LP and the managing member of GapStar, and any successor to such entity. "GAP LP" shall have the meaning ascribed to it in Section 6(b) hereof. "GapStar" shall have the meaning ascribed to it in Section 6(b) hereof. "Issue Date" shall have the meaning ascribed to it in Section 7(d)(ii)(B) hereof. "Junior Stock" shall have the meaning ascribed to it in Section 2(a) hereof. "Liquidation" means the voluntary or involuntary liquidation under applicable bankruptcy or reorganization legislation, or the dissolution or winding up of the Corporation. "Liquidation Payment" shall have the meaning ascribed to it in Section 4(a) hereof. "Market Price" means, with respect to the Capital Stock of any Person, as of the date of determination, (a) if such Capital Stock is listed on a national securities exchange, the closing price per share of such Capital Stock on such date published in The Wall Street Journal (National Edition) or, if no such closing price on such date is published in The Wall Street Journal (National Edition), the average of the closing bid and asked prices on such date, as officially reported on the principal national securities exchange on which such Capital Stock is then listed or admitted to trading; or (b) if such Capital Stock is not then listed or admitted to trading on any national securities exchange but is designated as a national market system security by the National Association of Securities Dealers, Inc., the last trading price of such Capital Stock on such date; or (c) if there shall have been no trading on such date or if such Capital Stock is not designated as a national market system security by the National Association of Securities Dealers, Inc., the average of the reported closing bid and asked prices of such Capital Stock on such date as shown by NASDAQ and reported by any member firm of the New York Stock Exchange selected by the Corporation; or (d) if none of (a), (b) or (c) is applicable, a market price per share determined in good faith by the Board of Directors. "NASDAQ" means The Nasdaq Stock Market, Inc. "New Issue Price" shall have the meaning ascribed to it in Section 7(d)(ii)(A) hereof. "Participation Factor" means two (2), but shall be reduced from two (2) to one (1) in the case of a Sale Transaction if the Participation Reduction Amount equals an amount that is greater than the product of (x) two multiplied by (y) the Conversion Price (after giving effect to any adjustments pursuant to Section 7(d) above). 18 "Participation Reduction Amount" means, with respect to a Sale Transaction, a fraction, (A) the numerator of which is the excess of (x) the aggregate value of the consideration paid to the holders of the Corporation's Capital Stock in such Sale Transaction as determined in good faith by the Board of Directors minus (y) the aggregate Accreted Value of the shares of Series G Preferred Stock on the closing date of such Sale Transaction plus all dividends accrued since the previous Compounding Date minus (z) the amount of the aggregate Participation Payment (as defined in Section 4(a) of the Certificate of Powers, Designations, Preferences and Rights of the Series F Preferred Stock) payable to the holders of the shares of Series F Preferred Stock in the event of a Sale Transaction (for purposes of this clause (z), assuming there is sufficient aggregate consideration in such Sale Transaction to pay such amount in full to the holders of the Series F Preferred Stock) and (B) the denominator of which is the aggregate number of outstanding shares of Common Stock assuming the conversion of the shares of Preferred Stock, the shares of Series F Preferred Stock and all other Common Stock Equivalents immediately prior to the closing date of such Sale Transaction. "Per Share Price" means, as of any date, the average trading price of one share of Common Stock, as reported on NASDAQ or such other exchange or quotation system that may on such date constitute the primary exchange or quotation system on which the shares of Common Stock are then listed or quoted, on each of the twenty (20) consecutive Trading Days ending on and including the Trading Day prior to such date. "Person" means any individual, firm, corporation, partnership, limited liability company, trust, incorporated or unincorporated association, joint venture, joint stock company, governmental body or other entity of any kind. "Qualifying Conversion" means any conversion of the Series G Preferred Stock pursuant to Section 7(a) on or after March 15, 2004. "Qualifying Conversion Share Limit" means (a) in the case of a Qualifying Conversion on or after March 15, 2004, but prior to March 15, 2005, 2,824,858 shares of Series G Preferred Stock (subject to adjustment for the events described in Section 7(d)(i)(w), Section 7(d)(i)(x) or Section 7(d)(i)(y) if such events occur with respect to the shares of Series G Preferred Stock) and (b) in the case of a Qualifying Conversion on or after March 15, 2005, but prior to March 15, 2006, 5,649,717 shares of Series G Preferred Stock (subject to adjustment for the events described in Section 7(d)(i)(w), Section 7(d)(i)(x) or Section 7(d)(i)(y) if such events occur with respect to the shares of Series G Preferred Stock). "Redeemed Shares" shall have the meaning ascribed to it in Section 5(a) hereof. "Redemption Payment" shall have the meaning ascribed to it in Section 5(a) hereof. "Redemption Price" shall have the meaning ascribed to it in Section 5(a) hereof. 19 "Sale Payment" has the meaning ascribed to it in Section 7(b)(i)(A) hereof. "Sale Transaction" shall mean (a) (i) the merger or consolidation of the Corporation into or with one or more Persons, (ii) the merger or consolidation of one or more Persons into or with the Corporation or (iii) a tender offer or other business combination if, in the case of (i), (ii) or (iii), the stockholders of the Corporation prior to such merger or consolidation do not retain at least a majority of the voting power of the surviving Person, (b) the voluntary sale, conveyance, exchange or transfer to another Person of (i) the voting Capital Stock of the Corporation if, after such sale, conveyance, exchange or transfer, the stockholders of the Corporation prior to such sale, conveyance, exchange or transfer do not retain at least a majority of the voting power of the Corporation or (ii) all or substantially all of the assets of the Corporation, or (c) the sale of assets of the Corporation, other than such a sale in the ordinary course of business, the gross proceeds of which exceed $10,000,000; provided, that with respect to (b)(ii) above, for the avoidance of doubt, the sale, conveyance, exchange or transfer of the Ticketing Service Group shall be deemed to be such a Sale, conveyance or transfer of substantially all of the assets of the Corporation. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder. "Series F Preferred Stock" shall have the meaning ascribed to it in 2(a) hereof. "Series G Directors" shall have the meaning ascribed to it in Section 6(b) hereof. "Series G Preferred Stock" shall have the meaning ascribed to it in Section 1 hereof. "Stock Option Plan" means (a) the 1999 Stock Incentive Plan of the Corporation and (b) the 2001 Stock Option Plan of the Corporation, pursuant to which up to an aggregate of 2,630,817 shares of restricted stock and options to purchase shares of Common Stock have been reserved and available for grant to officers, directors, employees and consultants of the Corporation. "Subsidiaries" means, as of the relevant date of determination, with respect to any Person, a corporation or other Person of which 50% or more of the voting power of the outstanding voting equity securities or 50% or more of the outstanding economic equity interest is held, directly or indirectly, by such Person. "Transaction" shall have the meaning ascribed to it in Section 7(g) hereof. "Trading Day" shall mean any day for which quotations are available in respect of shares of Common Stock on NASDAQ or such other exchange or quotation 20 system that may on such date constitute the primary exchange or quotation system on which the shares of Common Stock are then listed or quoted. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 21 IN WITNESS WHEREOF, the undersigned has executed and subscribed this certificate this 11th day of March, 2002. s/ Ronald Bension --------------------------------- Ronald Bension Chief Executive Officer EX-10.1 4 a79833ex10-1.txt EXHIBIT 10.1 Exhibit 10.1 - -------------------------------------------------------------------------------- SECURITIES PURCHASE AGREEMENT among TICKETS.COM, INC., GENERAL ATLANTIC PARTNERS, 74, L.P., GAP COINVESTMENT PARTNERS II, L.P. and GAPSTAR, LLC ------------------------ Dated: March 15, 2002 ------------------------ - -------------------------------------------------------------------------------- Table of Contents Page ---- ARTICLE I DEFINITIONS ............................................... 1 1.1 Definitions ........................................... 1 ARTICLE II PURCHASE AND SALE OF PREFERRED STOCK AND WARRANTS ........ 8 2.1 Purchase and Sale of Preferred Stock .................. 8 2.2 Certificates of Designations .......................... 8 2.3 Use of Proceeds ....................................... 8 2.4 Deliveries on the Date Hereof by the Company .......... 8 2.5 Deliveries on the Date Hereof by the Purchasers ....... 10 2.6 Closing ............................................... 10 2.7 Notice of Issuance to Stockholders .................... 10 ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY ........... 10 3.1 Corporate Existence and Power ......................... 11 3.2 Authorization; No Contravention ....................... 11 3.3 Governmental Authorization; Third Party Consents ...... 11 3.4 Binding Effect ........................................ 12 3.5 Litigation ............................................ 12 3.6 Compliance with Laws .................................. 12 3.7 Capitalization ........................................ 13 3.8 No Default or Breach; Contractual Obligations ......... 14 3.9 SEC Documents; Financial Statements ................... 15 3.10 No Material Adverse Change; Ordinary Course of Business 15 3.11 Taxes ................................................. 16 3.12 Private Offering ...................................... 16 3.13 Employee Benefit Plans ................................ 16 3.14 Change of Control Payments ............................ 17 3.15 Liabilities ........................................... 17 3.16 Intellectual Property ................................. 18 3.17 Privacy of Customer Information ....................... 20 3.18 Environmental Matters ................................. 20 3.19 Broker's, Finder's or Similar Fees .................... 20 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS ......... 20 4.1 Existence and Power ................................... 20 4.2 Authorization; No Contravention ....................... 20 4.3 Governmental Authorization; Third Party Consents ...... 21 4.4 Binding Effect ........................................ 21 4.5 Purchase for Own Account .............................. 21 4.6 Restricted Securities ................................. 22 4.7 Broker's, Finder's or Similar Fees .................... 22 4.8 Accredited Investor ................................... 22 i Page ---- ARTICLE V INDEMNIFICATION ........................................... 22 5.1 Indemnification ....................................... 22 5.2 Notification .......................................... 23 5.3 Contribution .......................................... 24 ARTICLE VI AFFIRMATIVE COVENANTS .................................... 24 6.1 Conduct of Business of the Company .................... 24 6.2 No Solicitation ....................................... 25 6.3 Reasonable Efforts .................................... 25 6.4 Reservation of Common Stock ........................... 25 6.5 NASDAQ Listing ........................................ 26 6.6 Insurance ............................................. 26 6.7 Tax Reporting ......................................... 26 6.8 Books and Records ..................................... 26 6.9 Back-ups of Computer Software ......................... 26 6.10 Inspection ............................................ 26 6.11 Board of Directors .................................... 26 ARTICLE VII MISCELLANEOUS ........................................... 27 7.1 Survival of Representations and Warranties ............ 27 7.2 Notices ............................................... 27 7.3 Successors and Assigns; Third Party Beneficiaries ..... 28 7.4 Amendment and Waiver .................................. 28 7.5 Counterparts .......................................... 29 7.6 Headings .............................................. 29 7.7 GOVERNING LAW ......................................... 29 7.8 Severability .......................................... 29 7.9 Rules of Construction ................................. 29 7.10 Entire Agreement ...................................... 29 7.11 Fees .................................................. 29 7.12 Publicity; Confidentiality ............................ 29 7.13 Further Assurances .................................... 30 EXHIBITS - -------- A Form of Warrant B Amended and Restated Bylaws C Form of Certificate of Designations D Amended and Restated Certificate of Incorporation E Form of Amended and Restated Registration Rights Agreement F Form of Brobeck Phleger & Harrison LLP Opinion Delivered on the date hereof G Form of Brobeck Phleger & Harrison LLP Opinion Delivered on the Closing Date SCHEDULES 2.1 Purchased Shares, Warrants and Purchase Price ii 2.4(h) Waivers of Change of Control Contracts 3.1(a) Corporate Existence 3.1(c) Due Qualification 3.2 Execution, Delivery and Performance 3.3 Authorizations and Consents 3.5 Litigation 3.7(a) Options, Warrants, Conversion Privileges, Subscription or Purchase Rights 3.7(b) List of Subsidiaries and their Equity Holders 3.7(c) NASDAQ Listing Compliance 3.8(a) Contractual Obligations 3.8(b) Change of Control Contracts 3.10(a) Material Adverse Change in Condition of Company 3.10(b) Material Transactions 3.13 Employee Benefit Plans 3.14 Change of Control Payments 3.16(a)(ii) Intellectual Property Orders and Threatened Litigation 3.16(a)(iv) Infringements by the Company of Intellectual Property of Others 3.16(a)(v) Intellectual Property Litigation 3.16(b) Infringements of Intellectual Property of the Company 3.16(d) Licenses or Other Agreements Requiring Material Royalty Payments iii SECURITIES PURCHASE AGREEMENT SECURITIES PURCHASE AGREEMENT, dated March 15, 2002 (this "Agreement"), by and among Tickets.com, Inc., a Delaware corporation (the "Company"), General Atlantic Partners 74, L.P., a Delaware limited partnership ("GAP LP"), GAP Coinvestment Partners II, L.P., a Delaware limited partnership ("GAP Coinvestment"), and GapStar, LLC, a Delaware limited liability company ("GapStar" and, collectively with GAP LP and GAP Coinvestment, the "Purchasers"). WHEREAS, upon the terms and conditions set forth in this Agreement, the Company proposes to issue and sell to each of the Purchasers (i) the aggregate number of shares of Series G Senior Cumulative Redeemable Convertible Participating Preferred Stock, par value $0.000225 per share (the "Preferred Stock"), of the Company set forth opposite such Purchaser's name on Schedule 2.1 hereto and (ii) a warrant (each a "Warrant" and all of the Warrants so issued, the "Warrants") to purchase, subject to the terms and conditions thereof, the aggregate number of shares of Common Stock (subject to adjustment) set forth opposite such Purchaser's name on Schedule 2.1 hereto, at an exercise price of $2.36 per share (subject to adjustment), containing the terms and conditions set forth in the form of warrant attached hereto as Exhibit A, each of (i) and (ii) together for the aggregate purchase price set forth opposite such Purchaser's name on Schedule 2.1 hereto; and WHEREAS, each share of Preferred Stock is convertible (subject to adjustment) into one share, par value $0.000225 per share, of common stock of the Company (the "Common Stock"). NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, the parties hereto agree as follows: ARTICLE I DEFINITIONS 1.1 Definitions. As used in this Agreement, and unless the context requires a different meaning, the following terms have the meanings indicated: "Affiliate" shall mean any Person who is an "affiliate" as defined in Rule 12b-2 of the General Rules and Regulations under the Exchange Act. In addition, the following shall be deemed to be Affiliates of GAP Coinvestment, GAP LP and GapStar: (a) GAP LLC, the members of GAP LLC, the limited partners of GAP Coinvestment, the limited partners of GAP LP and the members of GapStar; (b) any Affiliate of GAP LLC, the members of GAP LLC, the limited partners of GAP Coinvestment or GAP LP and the members of GapStar; and (c) any limited liability company or partnership a majority of whose members or partners, as the case may be, are members or former members of GAP LLC or consultants or key employees of General 2 Atlantic Service Corporation, a Delaware corporation and an Affiliate of GAP LLC. In addition, GAP LP, GAP Coinvestment and GapStar shall be deemed to be Affiliates of one another. "Agreement" means this Agreement as the same may be amended, supplemented or modified in accordance with the terms hereof. "Alternative Proposal" shall mean (a) any offer or proposal, or any indication of interest in making an offer or proposal, made by any "person" or "group" (as such terms are used for purposes of Section 13(d)(3) of the Exchange Act) at any time (i) which is structured to permit such person or group to acquire beneficial ownership of at least ten percent (10%) of the assets of the Company and its Subsidiaries taken as a whole, or at least ten percent (10%) of the outstanding capital stock of the Company pursuant to a merger, consolidation, tender offer or other business combination, sale or purchase of capital stock or Stock Equivalents, sale of assets, tender offer or exchange offer or similar transaction or (ii) which involves the incurrence or assumption of Indebtedness by the Company or any of its Subsidiaries on a secured or unsecured basis of at least $5,000,000, including, in the case of clauses (i) and (ii) above, any single or multi-step transaction or series of related transactions, in each case other than the transactions with the Purchasers and (b) any offer or proposal made in the context of a proxy contest with respect to clause (i) above. "Audit Committee" has the meaning set forth in Section 5.8 of this Agreement. "Board of Directors" means the Board of Directors of the Company. "Business Day" means any day other than a Saturday, Sunday or other day on which commercial banks in the State of New York are authorized or required by law or executive order to close. "Bylaws" means the Amended and Restated Bylaws of the Company in effect on the date hereof and the Closing Date and attached hereto as Exhibit B, as the same may be amended from time to time. "Certificate of Designations" means the Certificate of Designations with respect to the Preferred Stock adopted by a special committee of the Board of Directors and duly filed with the Secretary of State of the State of Delaware on or before the date hereof substantially in the form attached hereto as Exhibit C. "Certificate of Incorporation" means the Amended and Restated Certificate of Incorporation of the Company in effect on the date hereof and the Closing Date and attached hereto as Exhibit D, as the same may be amended from time to time. "Change of Control Contracts" has the meaning set forth in Section 3.8(b) of this Agreement. 3 "Claims" has the meaning set forth in Section 3.5 of this Agreement. "Closing" has the meaning set forth in Section 2.6 of this Agreement. "Closing Date" has the meaning set forth in Section 2.6 of this Agreement. "Code" means the Internal Revenue Code of 1986, as amended, or any successor statute thereto. "Commission" means the United States Securities and Exchange Commission or any similar agency then having jurisdiction to enforce the Securities Act. "Common Stock" has the meaning set forth in the recitals to this Agreement. "Commonly Controlled Entity" means any entity which is under common control with the Company within the meaning of Code section 414(b), (c), (m), (o) or (t). "Company" has the meaning set forth in the preamble to this Agreement. "Company Plans" has the meaning set forth in Section 3.13 of this Agreement. "Condition of the Company" means the assets, business, properties, prospects, operations or condition (financial or otherwise) of the Company and its Subsidiaries, taken as a whole. "Contingent Obligation" means, as applied to any Person, any direct or indirect liability of that Person with respect to any Indebtedness, lease, dividend, guaranty, letter of credit or other obligation, contractual or otherwise (the "primary obligation") of another Person (the "primary obligor"), whether or not contingent, (a) to purchase, repurchase or otherwise acquire such primary obligations or any property constituting direct or indirect security therefor, (b) to advance or provide funds (i) for the payment or discharge of any such primary obligation, or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency or any balance sheet item, level of income or financial condition of the primary obligor, (c) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation, or (d) otherwise to assure or hold harmless the owner of any such primary obligation against loss or failure or inability to perform in respect thereof. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof. "Contractual Obligations" means, as to any Person, any provision of any security issued by such Person or of any agreement, undertaking, contract, indenture, 4 mortgage, deed of trust or other instrument to which such Person is a party or by which it or any of its property is bound. "Copyrights" means any foreign or United States copyright registrations and applications for registration thereof, and any non-registered copyrights. "Environmental Laws" means federal, state, local and foreign laws, principles of common laws, civil laws, regulations, and codes, as well as orders, decrees, judgments or injunctions, issued, promulgated, approved or entered thereunder relating to pollution, protection of the environment or public health and safety. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder. "Financial Statements" has the meaning set forth in Section 3.9 of this Agreement. "GAAP" means United States generally accepted accounting principles in effect from time to time. "GAP Coinvestment" has the meaning set forth in the preamble to this Agreement. "GAP LLC" means General Atlantic Partners, LLC, a Delaware limited liability company and the general partner of GAP LP and the managing member of GapStar, and any successor to such entity. "GAP LP" has the meaning set forth in the preamble to this Agreement. "GapStar" has the meaning set forth in the preamble to this Agreement. "Governmental Authority" means the government of any nation, state, city, locality or other political subdivision thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing. "Indebtedness" means, as to any Person, (a) all obligations of such Person for borrowed money (including, without limitation, reimbursement and all other obligations with respect to surety bonds, letters of credit and bankers' acceptances, whether or not matured), (b) all obligations of such Person to pay the deferred purchase price of property or services, except trade accounts payable and accrued commercial or trade liabilities arising in the ordinary course of business, (c) all interest rate and currency swaps, caps, collars and similar agreements or hedging devices under which payments are obligated to be made by such Person, whether periodically or upon the happening of a 5 contingency, (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all obligations of such Person under leases which have been or should be, in accordance with GAAP, recorded as capital leases, (f) all indebtedness secured by any Lien (other than Liens in favor of lessors under leases other than leases included in clause (e)) on any property or asset owned or held by that Person regardless of whether the indebtedness secured thereby shall have been assumed by that Person or is non-recourse to the credit of that Person, and (g) any Contingent Obligation of such Person. "Indemnified Party" has the meaning set forth in Section 5.1 of this Agreement. "Indemnifying Party" has the meaning set forth in Section 5.1 of this Agreement. "Intellectual Property" has the meaning set forth in Section 3.16 of this Agreement. "Internet Assets" means any Internet domain names and other computer user identifiers and any rights in and to sites on the worldwide web, including rights in and to any text, graphics, audio and video files and html or other code incorporated in such sites. "Knowledge" means the knowledge of the Company after due inquiry. "Liabilities" has the meaning set forth in Section 3.15 of this Agreement. "Lien" means any mortgage, deed of trust, pledge, hypothecation, assignment, encumbrance, lien (statutory or other) or preference, priority, right or other security interest or preferential arrangement of any kind or nature whatsoever (excluding preferred stock and equity related preferences). "Losses" has the meaning set forth in Section 5.1 of this Agreement. "NASDAQ" means The Nasdaq Stock Market, Inc. "Note" has the meaning set forth in Section 2.1 of this Agreement. "Orders" has the meaning set forth in Section 3.2 of this Agreement. "Patents" means any foreign or United States patents and patent applications, including any divisions, continuations, continuations-in-part, substitutions or reissues thereof, whether or not patents are issued on such applications and whether or not such applications are modified, withdrawn or resubmitted. "Permits" has the meaning set forth in Section 3.6(b) of this Agreement. 6 "Person" means any individual, firm, corporation, partnership, trust, incorporated or unincorporated association, joint venture, joint stock company, limited liability company, Governmental Authority or other entity of any kind, and shall include any successor (by merger or otherwise) of such entity. "Plan" means any employee benefit plan, arrangement, policy, program, agreement or commitment (whether or not an employee plan within the meaning of section 3(3) of ERISA), including, without limitation, any employment, consulting or deferred compensation agreement, executive compensation, bonus, incentive, pension, profit-sharing, savings, retirement, stock option, stock purchase or severance pay plan, any life, health, disability or accident insurance plan, whether oral or written, whether or not subject to ERISA, as to which the Company or any Commonly Controlled Entity has or in the future could have any direct or indirect, actual or contingent liability. "Preferred Stock" has the meaning set forth in the recitals to this Agreement. "Purchased Shares" has the meaning set forth in Section 2.1 of this Agreement. "Purchasers" has the meaning set forth in the preamble to this Agreement. "Registration Rights Agreement" means the Amended and Restated Registration Rights Agreement substantially in the form attached hereto as Exhibit E. "Requirements of Law" means, as to any Person, any law, statute, treaty, rule, regulation, right, privilege, qualification, license or franchise or determination of an arbitrator or a court or other Governmental Authority or stock exchange, in each case applicable or binding upon such Person or any of its property or to which such Person or any of its property is subject or pertaining to any or all of the transactions contemplated or referred to herein. "Retiree Welfare Plan" means any welfare plan (as defined in Section 3(1) of ERISA) that provides benefits to current or former employees beyond their retirement or other termination of service (other than coverage mandated by Section 4980A of the Code, commonly referred to as "COBRA," the cost of which is fully paid by the current or former employee or his or her dependents). "SEC Documents" has the meaning set forth in Section 3.9 of this Agreement. "Securities" means the Purchased Shares and the Warrants. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations of the Commission thereunder. 7 "Series F Certificate of Designations" means the Certificate of Designations with respect to the Series F Preferred Stock adopted by the Board of Directors and duly filed with the Secretary of State of the State of Delaware on June 21, 2001. "Series F Preferred Stock" means the Series F Senior Cumulative Redeemable Preferred Stock, par value $0.000225 per share, of the Company. "Software" means any computer software programs, source code, object code, data and documentation, including, without limitation, any computer software programs that incorporate and run the Company's pricing models, formulae and algorithms. "Stock Equivalents" means any security or obligation which is by its terms, whether directly or indirectly, convertible into or exchangeable or exercisable for shares of Common Stock or other capital stock of the Company, and any option, warrant or other subscription or purchase right with respect to Common Stock or such other capital stock. "Stock Option Plan" means (a) the 1999 Stock Incentive Plan of the Company and (b) the 2001 Stock Option Plan of the Company, pursuant to which up to 2,630,817 shares of restricted stock and options to purchase shares of Common Stock have been reserved and available for grant to officers, directors, employees and consultants of the Company. "Subsidiaries" means, as of the relevant date of determination, with respect to any Person, a corporation or other Person of which 50% or more of the voting power of the outstanding voting equity securities or 50% or more of the outstanding economic equity interest is held, directly or indirectly, by such Person. Unless otherwise qualified, or the context otherwise requires, all references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries of the Company. "Taxes" means any federal, state, provincial, county, local, foreign and other taxes (including, without limitation, income, profits, windfall profits, alternative, minimum, accumulated earnings, personal holding company, capital stock, premium, estimated, excise, sales, use, occupancy, gross receipts, franchise, ad valorem, severance, capital levy, production, transfer, withholding, employment, unemployment compensation, payroll and property taxes, import duties and other governmental charges and assessments), whether or not measured in whole or in part by net income, and including deficiencies, interest, additions to tax or interest, and penalties with respect thereto, and including expenses associated with contesting any proposed adjustments related to any of the foregoing. "Trade Secrets" means any trade secrets, research records, processes, procedures, manufacturing formulae, technical know-how, technology, blue prints, designs, plans, inventions (whether patentable and whether reduced to practice), invention disclosures and improvements thereto. "Trademarks" means any foreign or United States trademarks, service marks, trade dress, trade names, brand names, designs and logos, corporate names, product or service identifiers, whether registered or unregistered, and all registrations and applications for registration thereof. 8 "Transaction Documents" means, collectively, this Agreement, the Warrants, the Certificate of Designations and the Registration Rights Agreement. "Warrant Shares" has the meaning set forth in Section 2.1 of this Agreement. "Warrants" has the meaning set forth in the recitals to this Agreement. ARTICLE II PURCHASE AND SALE OF PREFERRED STOCK AND WARRANTS 2.1 Purchase and Sale of Preferred Stock. Subject to the terms and conditions herein set forth, the Company agrees to issue and sell to each Purchaser, and each Purchaser, severally and not jointly, agrees to purchase from the Company, on the Closing Date, (i) the aggregate number of shares of Preferred Stock set forth opposite such Purchaser's name on Schedule 2.1 hereto (all of the shares of Preferred Stock being purchased pursuant hereto being referred to herein as the "Purchased Shares"), and (ii) a Warrant to purchase the aggregate number of shares of Common Stock set forth opposite such Purchaser's name on Schedule 2.1 hereto (all of the shares of Common Stock issuable upon the exercise of the Warrants being purchased pursuant hereto being referred to herein as the "Warrant Shares"), together for the aggregate purchase price set forth opposite such Purchaser's name on Schedule 2.1 hereto. 2.2 Certificates of Designations. The Purchased Shares shall have the preferences and rights set forth in the Certificate of Designations. 2.3 Use of Proceeds. The Company shall use the proceeds from the sale of the Securities to the Purchasers (a) first, to repay any indebtedness owed by the Company to GAP LP or any of its Affiliates and (b) second, to fund the Company's working capital. 2.4 Deliveries on the Date Hereof by the Company. On the date hereof, the Company shall deliver to each Purchaser the following: (a) Secretary's Certificate. The Company shall deliver to the Purchasers a certificate from the Company, in form and substance satisfactory to the Purchasers, dated the date hereof and signed by the Secretary or an Assistant Secretary of the Company, certifying (a) that the Company is in good standing with the Secretary of State of the State of Delaware, (b) that the attached copies of the Certificate of Incorporation, the Bylaws and resolutions of the Board of Directors of the Company approving this Agreement and the other Transaction Documents and the transactions contemplated hereby and thereby, are all true, complete and correct and remain unamended and in full force and effect and (c) as to the incumbency and specimen signature of each officer of the Company executing this Agreement, the Warrants, the other Transaction Documents and any other document delivered in connection herewith on behalf of the Company. 9 (b) Filing of Certificate of Designations. The Company shall deliver to the Purchasers written evidence, in form and substance reasonably satisfactory to the Purchasers, of the filing of the Certificate of Designations with the Secretary of State of the State of Delaware in accordance with the General Corporation Law of the State of Delaware. (c) Registration Rights Agreement. The Company and each of the Major Stockholders (as defined in the Registration Rights Agreement) shall deliver to the Purchasers the executed Registration Rights Agreement. (d) Opinion of Counsel. The Company shall deliver to the Purchasers an opinion of Brobeck, Phleger & Harrison LLP, dated the date hereof, relating to the transactions contemplated by or referred to herein, substantially in the form attached hereto as Exhibit F. (e) Nasdaq Waiver. The Company shall deliver to the Purchasers a written exemption from NASDAQ, in form and substance reasonably satisfactory to the Purchasers, from the stockholder approval requirement of Nasdaq Marketplace Rule 4350, in connection with the sale and issuance of the shares of Preferred Stock, the Conversion Shares issuable upon conversion of the shares of Preferred Stock, the Warrants and the Warrant Shares, and the Company shall have complied with any conditions contained in such exemption in order to consummate the transactions contemplated hereby at the Closing. The Company shall have taken all reasonable steps necessary to ensure that the Conversion Shares issuable upon conversion of the Purchased Notes and exercise of the Warrants will have been accepted for listing on NASDAQ pending official notice of issuance. (f) Good Standing Certificates. The Company shall deliver to the Purchasers a good standing certificates for the Company and each of its Subsidiaries for each of their respective jurisdictions of incorporation. (g) Board of Directors. The Company shall deliver to the Purchasers written evidence, in form and substance satisfactory to the Purchasers, that the Bylaws have been amended to, among other things, increase the size of the Board of Directors to nine (9) members. (h) Waiver of Change of Control Provisions. The Company shall deliver to the Purchasers written amendments or written waivers, in form and substance satisfactory to the Purchasers, from the parties to the Change of Control Contracts specified on Schedule 2.4(h), amending or waiving the effect of the consummation of the transactions contemplated by this Agreement (including the sale and issuance of the shares of Preferred Stock, the Conversion Shares issuable upon conversion of the shares of Preferred Stock, the Warrants and the Warrant Shares). 2.5 Deliveries on the Date Hereof by the Purchasers. On the date hereof, each Purchaser shall deliver to the Company the executed Registration Rights Agreement. 10 2.6 Closing. The closing of the sale and purchase of the Securities (the "Closing") shall take place at the offices of Paul, Weiss, Rifkind, Wharton & Garrison, 1285 Avenue of the Americas, New York, New York 10019, at 10:00 a.m., local time on March 25, 2002 (the "Closing Date"). On the Closing Date, the Company shall deliver to each Purchaser (a)(i) a certificate or certificates in definitive form and registered in the name of such Purchaser, representing its Purchased Shares and (ii) its Warrant, against delivery by each of the Purchasers to the Company of the aggregate purchase price therefor by wire transfer of immediately available funds and (b)(i) certificate from the Company, in form and substance satisfactory to the Purchasers, dated the Closing Date and signed by a senior executive officer, certifying that (x) the representations and warranties of the Company contained in Article 3 hereof are true and correct in all material respects at and on the Closing Date (except for such representations and warranties containing materiality or material adverse effect qualifications, which shall be true and correct in all respects) and (y) the Company has performed and complied in all material respects with all of the agreements and conditions set forth or contemplated herein that are required to be performed or complied with by the Company on or before the Closing Date; (ii) its executed Warrant, substantially in the form attached hereto as Exhibit A, and registered in the name of such Purchaser; and (iii) the opinion of Brobeck, Phleger & Harrison LLP, dated the Closing Date, relating to the transactions contemplated by or referred to herein, substantially in the form attached hereto as Exhibit G. 2.7 Notice of Issuance to Stockholders. On the date hereof, the Company shall mail to each of its stockholders a notice, in form and substance reasonably satisfactory to the Purchasers, notifying them of the omission by the Company to seek the stockholder approval that, absent the exemption provided for by Nasdaq Marketplace Rule 4350(i)(2), would have been required pursuant to Nasdaq Marketplace Rule 4350 and indicating that the audit committee of the Company has expressly approved such omission to seek such stockholder approval. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company represents and warrants to each of the Purchasers as follows: 3.1 Corporate Existence and Power. Each of the Company and its Subsidiaries (a) is a corporation duly organized, validly existing and, except as set forth on Schedule 3.1(a), in good standing under the laws of the jurisdiction of its incorporation, (b) has all requisite power and authority to own and operate its property, to lease the property it operates as lessee and to conduct the business in which it is currently, or is proposed to be, engaged, (c) is duly qualified as a foreign corporation, licensed and, except as set forth on Schedule 3.1(c), in good standing under the laws of each jurisdiction in which its ownership, lease or operation of property or the conduct of its business requires such qualification, except where the failure to be so qualified could not reasonably be expected to have a material adverse effect on the Condition of the 11 Company and (d) has the corporate power and authority to execute, deliver and perform its obligations under this Agreement and the other Transaction Documents. No jurisdiction, other than those referred to in clause (c) above, has claimed, in writing or otherwise, that either the Company or any of its Subsidiaries is required to qualify as a foreign corporation or other entity therein, and neither the Company nor any of its Subsidiaries files any franchise, income or other tax returns in any other jurisdiction based upon the ownership or use of property therein or the derivation of income therefrom. Neither the Company nor any of its Subsidiaries owns or leases property in any jurisdiction other than its jurisdiction of incorporation and the jurisdictions referred to in clause (c) above. 3.2 Authorization; No Contravention. Except as set forth on Schedule 3.2, the execution, delivery and performance by the Company of this Agreement and each of the other Transaction Documents and the transactions contemplated hereby and thereby (a) have been duly authorized by all necessary corporate action of the Company, (b) do not contravene the terms of the Certificate of Incorporation or the Bylaws or the certificate of incorporation, bylaws or other organizational documents of any of its Subsidiaries, (c) do not violate, conflict with or result in any breach, default or contravention of (or with due notice or lapse of time or both would result in any breach, default or contravention of), or the creation of any Lien under, any Contractual Obligation of the Company or its Subsidiaries or any Requirement of Law applicable to the Company or its Subsidiaries and (d) do not violate any judgment, injunction, writ, award, decree or order of any nature (collectively, "Orders") of any Governmental Authority against, or binding upon, the Company or its Subsidiaries. The approval of the transactions contemplated by this Agreement, the conversion of the shares of Preferred Stock into shares of Common Stock in accordance with the terms of the Certificate of Designations and the exercise of the Warrants for the Warrant Shares do not require the approval of the Company's stockholders under any Requirement of Law, including, without limitation, the rules and regulations of the NASDAQ. 3.3 Governmental Authorization; Third Party Consents. Except as set forth in Schedule 3.3, no approval, consent, compliance, exemption, authorization or other action by, or notice to, or filing with, any Governmental Authority or any other Person, and no lapse of a waiting period under a Requirement of Law, is necessary or required in connection with the execution, delivery or performance (including, without limitation, the sale, issuance and delivery of the Purchased Shares) by, or enforcement against, the Company of this Agreement and the other Transaction Documents or the transactions contemplated hereby and thereby. 3.4 Binding Effect. This Agreement, the Certificate of Designations and the Registration Rights Agreement have been, and as of the Closing Date the Warrants will have been, duly executed and delivered by the Company, and this Agreement, the Certificate of Designations and the Registration Rights Agreement constitute, and as of the Closing Date the Warrants will constitute, the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, except as enforceability may be limited by applicable bankruptcy, 12 insolvency, reorganization, fraudulent conveyance or transfer, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general principles of equity relating to enforceability (regardless of whether considered in a proceeding at law or in equity). 3.5 Litigation. Except as set forth on Schedule 3.5 or as disclosed in the SEC Documents, there are no actions, suits, proceedings, claims, complaints, disputes, arbitrations or investigations (collectively, "Claims") pending or, to the Knowledge of the Company, threatened, at law, in equity, in arbitration or before any Governmental Authority against the Company or its Subsidiaries nor is the Company aware that there is any basis for any of the foregoing. The foregoing includes, without limitation, Claims pending or, to the Knowledge of the Company, threatened or any basis therefor known by the Company involving the prior employment of any of the employees of the Company or its Subsidiaries, their use in connection with the Company's business of any information or techniques allegedly proprietary to any of their former employers or their obligations under any agreements with prior employers. No Order has been issued by any court or other Governmental Authority against the Company purporting to enjoin or restrain the execution, delivery or performance of this Agreement or any of the other Transaction Documents. 3.6 Compliance with Laws. (a) The Company and its Subsidiaries are in compliance in all material respects with all Requirements of Law and all Orders issued by any court or Governmental Authority against the Company and such Subsidiaries in all respects. To the Company's Knowledge, there is no existing or proposed Requirement of Law which could reasonably be expected to prohibit or restrict the Company or its Subsidiaries from, or otherwise materially adversely effect the Company or its Subsidiaries in, conducting their businesses in any jurisdiction in which they now conduct or propose to conduct such businesses. (b) (i) The Company and its Subsidiaries have all material licenses, permits and approvals of any Governmental Authority (collectively, "Permits") that are necessary for the conduct of the business of the Company and its Subsidiaries; (ii) such Permits are in full force and effect; and (iii) no violations are or have been recorded in respect of any Permit. (c) No material expenditure is presently required by the Company or its Subsidiaries to comply with any existing Requirement of Law or Order. 3.7 Capitalization. (a) On the date hereof and on the Closing Date, after giving effect to the transactions contemplated by this Agreement, the authorized capital stock of the Company shall consist of (i) 225,000,000 shares of Common Stock, (ii) 28,333,333 shares of Series F Preferred Stock, (iii) 8,474,576 shares of Preferred Stock and (iv) 8,192,091 shares of undesignated "blank check" preferred 13 stock. As of the close of business on March 13, 2002, 7,444,705 shares of Common Stock were issued and outstanding and 28,333,333 shares of Series F Preferred Stock were issued and outstanding. On the date hereof and on the Closing Date, after giving effect to the transactions contemplated by this Agreement, one share of Series F Preferred Stock shall be convertible into the sum of (x) 0.2542 shares of Common Stock (subject to adjustment) plus (y) a number of shares of Common Stock equal to a fraction (I) the numerator of which is the amount of dividends accrued but not yet paid on such share of Series F Preferred Stock and (II) the denominator of which is the Conversion Price (as defined in the Series F Certificate of Designations). As of the date of this Agreement, the aggregate number of shares underlying options to purchase shares of Common Stock which may be issued under the Stock Option Plan is 2,630,817, of which 824,165 are available for future grant. The Company has reserved an aggregate of 40,000,000 shares of Common Stock for issuance upon conversion of the Purchased Shares and 1,800,000 shares of Common Stock for issuance upon exercise of the Warrants. Except as set forth on Schedule 3.7(a) or as disclosed in the SEC Documents and except for the Warrants, there are no options, warrants, conversion privileges, subscription or purchase rights or other rights presently outstanding to purchase or otherwise acquire (i) any authorized but unissued, unauthorized or treasury shares of the Company's capital stock, (ii) any Stock Equivalents or (iii) any other securities of the Company and there are no commitments, contracts, agreements, arrangements or understandings by the Company to issue any shares of the Company's capital stock or any Stock Equivalents or other securities of the Company. The Securities are duly authorized, and when issued and sold to the Purchasers after payment therefor, will be validly issued, fully paid and non-assessable, will be issued in compliance with the registration and qualification requirements of all applicable federal, state and foreign securities laws and will be free and clear of all other Liens. The shares of Common Stock issuable upon conversion of the Purchased Shares and exercise of the Warrants, when issued in compliance with the provisions of the Certificate of Designations and the Warrants (in the case of the Warrant Shares), will be validly issued, fully paid and non-assessable and not subject to any preemptive rights or similar rights that have not been satisfied and will be free and clear of all other Liens. All of the issued and outstanding shares of Common Stock and Preferred Stock are all duly authorized, validly issued, fully paid and non-assessable, and were issued in compliance with the registration and qualification requirements of all applicable federal, state and foreign securities laws. (b) Schedule 3.7(b) sets forth, as of the date hereof and the Closing Date, a true and complete list of (x) each of the Subsidiaries of the Company, (y) the percentage of the authorized shares of capital stock of such Subsidiary owned by the Company and (z) the stockholders of such Subsidiary and, opposite the name of each stockholder, the amount of all outstanding capital stock and Stock Equivalents owned by such stockholder. The Company owns all of the issued and outstanding capital stock of the Subsidiaries, free and clear of all Liens. All of such shares of capital stock are duly authorized, validly issued, fully paid and non-assessable, and were issued in compliance with the registration and qualification requirements of all applicable federal, state and foreign securities laws. Except as set forth on Schedule 3.7(b), there are no options, warrants, conversion privileges, subscription or purchase rights or other rights presently outstanding to purchase or otherwise acquire any authorized but unissued, unauthorized or treasury shares of capital stock or other securities of, or any proprietary interest in, any of the Subsidiaries, and there is no outstanding security of any kind convertible into or exchangeable for such shares or proprietary interest. Except as set forth on 14 Schedule 3.7(b), neither the Company nor any of its Subsidiaries, owns any interest, or has a right to acquire any interest, in any Person that is not a Subsidiary. (c) The Common Stock is currently listed for trading on the NASDAQ and (i) except as set forth on Schedule 3.7(c), the Company and the Common Stock meet the currently applicable criteria for continued listing and trading on NASDAQ, (ii) no suspension of trading in the Common Stock is in effect and (iii) the Company has delivered to NASDAQ all required notices. 3.8 No Default or Breach; Contractual Obligations. (a) Neither the Company nor any of its Subsidiaries have received notice of a default nor is in default under, or with respect to, any material Contractual Obligation nor does any condition exist that with notice or lapse of time or both would constitute a default thereunder. Except as described in the SEC Documents or as set forth on Schedule 3.8(a), neither the Company nor any of its Subsidiaries is a party to any Contractual Obligations, whether written or oral, (i) which involve an amount in excess of $100,000 or (ii) which are otherwise material to the Condition of the Company. All of such Contractual Obligations are valid, subsisting, in full force and effect and binding upon the Company and its Subsidiaries, as the case may be, and, to the Knowledge of the Company, the other parties thereto, and the Company and its Subsidiaries have paid in full or accrued all amounts due thereunder and have satisfied in full or provided for all of their liabilities and obligations thereunder. To the Knowledge of the Company, no other party to any such Contractual Obligation is in default thereunder, nor does any condition exist that with notice or lapse of time or both would constitute a default by such other party thereunder. (b) Schedule 3.8(b) sets forth all Contractual Obligations to which the Company or any of its Subsidiaries are a party or to which their respective assets or properties are bound that contain a "change of control" or similar provision pursuant to which (i) payment or other obligations of the Company are accelerated or arise, (ii) termination rights arise or (iii) notice is required to be delivered, in each case upon the occurrence of a "change of control," upon the sale of the Purchased Shares, upon the conversion of the Purchased Shares into shares of Common Stock upon the issuance of the Warrants or the exercise of the Warrants for the Warrant Shares (the "Change of Control Contracts"). The Company has delivered to GAP LP true and complete copies of the Change of Control Contracts. Except as set forth on Schedule 3.8(b), no "change of control" or similar provision in any such Change of Control Contract shall be triggered by the consummation of the transactions contemplated by this Agreement, the conversion of the Purchased Shares into shares of Common Stock, the exercise of the Warrants for the Warrant Shares or any of the other Transaction Documents. 3.9 SEC Documents; Financial Statements. Since November 3, 1999, the Company has filed all reports, schedules, forms, statements and other documents required to be filed by it with the Commission pursuant to the reporting requirements of the Exchange Act (all of the foregoing filed prior to the date hereof and all exhibits 15 included therein and financial statements and schedules thereto and documents incorporated by reference therein being hereinafter referred to as the "SEC Documents"). As of their respective dates, the SEC Documents complied in all material respects with the requirements of the Exchange Act and the rules and regulations of the Commission promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the Commission, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. As of their respective dates, the financial statements of the Company (the "Financial Statements") included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the Commission with respect thereto. The Financial Statements have been prepared in accordance with GAAP, consistently applied, during the periods involved (except in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). No other information provided by or on behalf of the Company to the Purchasers which is not included in the SEC Documents contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein, in the light of the circumstance under which they are or were made, not misleading. 3.10 No Material Adverse Change; Ordinary Course of Business. Since December 31, 2000, (a) except as set forth in Schedule 3.10(a), there has not been any material adverse change, nor is any such change reasonably expected, in the Condition of the Company, (b) except as set forth on Schedule 3.10(b), the Company and its Subsidiaries have not participated in any transaction material to the Condition of the Company or otherwise acted outside the ordinary course of business, including, without limitation, declaring or paying any dividend or declaring or making any distribution to its stockholders except out of the earnings of the Company and or its Subsidiaries, as the case may be, (c) the Company and its Subsidiaries have not increased the compensation of any of its officers or the rate of pay of any of its employees, except as part of regular compensation increases in the ordinary course of business, (d) the Company and its Subsidiaries have not created or assumed any Lien on a material asset of the Company and such Subsidiaries, (e) the Company and its Subsidiaries have not entered into any Contractual Obligation, other than in the ordinary course of business and (f) there has not occurred a material change in the accounting principles or practice of the Company or any of its Subsidiaries except as required by reason of a change in GAAP. 3.11 Taxes. (a) The Company and its Subsidiaries have paid all Taxes which have come due and are required to be paid by them through the date hereof, and all deficiencies or other additions to Tax, interest and penalties owed by them in connection with any such Taxes, other than Taxes being disputed by the Company or its Subsidiaries in good faith for which adequate reserves have been made in accordance with GAAP; (b) the Company and its Subsidiaries have timely filed or caused to be filed all returns for Taxes that they are required to file on and through the date hereof (including all applicable extensions), and all such Tax returns are accurate and complete; (c) with 16 respect to all Tax returns of the Company and its Subsidiaries, (i) there is no unassessed Tax deficiency proposed or, to the Knowledge of the Company, threatened against the Company or its Subsidiaries and (ii) no audit is in progress with respect to any return for Taxes, no extension of time is in force with respect to any date on which any return for Taxes was or is to be filed and no waiver or agreement is in force for the extension of time for the assessment or payment of any Tax; (d) all provisions for Tax liabilities of the Company and its Subsidiaries with respect to the Financial Statements have been made in accordance with GAAP, consistently applied, and all liabilities for Taxes of the Company and its Subsidiaries attributable to periods prior to or ending on the date hereof and the Closing Date have been adequately provided for on the Financial Statements; and (e) there are no Liens for Taxes on the assets of the Company and its Subsidiaries. 3.12 Private Offering. No form of general solicitation or general advertising was used by the Company or its representatives in connection with the offer, sale or issuance of the Purchased Shares or the Warrants. No registration of the Purchased Shares, pursuant to the provisions of the Securities Act or any state securities or "blue sky" laws, will be required by the offer, sale or issuance of the Purchased Shares. The Company agrees that neither it, nor anyone acting on its behalf, shall offer to sell the Purchased Shares or any other securities of the Company so as to require the registration of the Purchased Shares pursuant to the provisions of the Securities Act or any state securities or "blue sky" laws, unless such Purchased Shares or other securities are so registered. 3.13 Employee Benefit Plans. (a) Schedule 3.13 hereto and the SEC Documents together list each Plan that the Company or any of its Subsidiaries maintain or to which the Company or any of its Subsidiaries contribute (the "Company Plans"). The Company and its Subsidiaries have no liability under any Plans other than the Company Plans. Except as set forth on Schedule 3.13, neither the Company nor its Subsidiaries nor any Commonly Controlled Entity maintains or contributes to, or has within the preceding six years maintained or contributed to, or may have any liability with respect to any Plan subject to Title IV of ERISA or Section 412 of the Code or any "multiple employer plan" within the meaning of the Code or ERISA. Each Company Plan (and related trust, insurance contract or fund) has been established and administered in accordance with its terms, and complies in form and in operation with the applicable requirements of ERISA and the Code and other applicable Requirements of Law. All contributions (including all employer contributions and employee salary reduction contributions) which are due have been paid to each Company Plan. (b) No Claim with respect to the administration or the investment of the assets of any Company Plan (other than routine claims for benefits) is pending. (c) Each Company Plan that is intended to be qualified under Section 401(a) of the Code is so qualified and has been so qualified during the period 17 since its adoption; each trust created under any such Plan is exempt from tax under Section 501(a) of the Code and has been so exempt since its creation. (d) No Company Plan is a Retiree Welfare Plan. (e) There are no unfunded obligations under any Company Plan which are not fully reflected on the Financial Statements. (f) The Company has no liability, whether absolute or contingent, including any obligations under any Company Plan, with respect to any misclassification of any person as an independent contractor rather than as an employee. 3.14 Change of Control Payments. Neither the execution and delivery of this Agreement nor the transactions contemplated hereby will, except as set forth on Schedule 3.14, (i) result in any payment (including, without limitation, severance, unemployment compensation, golden parachute, bonus or otherwise) becoming due to, accelerate the time of payment or vesting of or increase the amount of compensation due to any director, officer, employee, former employee, consultant or former consultant of the Company or any of its Subsidiaries, under any Company Plan or otherwise, (ii) increase any benefits otherwise payable under any Company Plan, (iii) result in the acceleration of the time of payment or vesting of any such benefits, (iv) create a right to receive payments upon a subsequent termination of employment or (v) result in the acceleration of the time of payment of any of the Company's or any of its Subsidiary's accounts payable. 3.15 Liabilities. The Company and its Subsidiaries do not have any direct or indirect obligation or liability (the "Liabilities") other than (a) Liabilities fully and adequately reflected in or reserved against on the Financial Statements and (b) Liabilities incurred since December 31, 2000 in the ordinary course of business. The Company has no Knowledge of any circumstance, condition, event or arrangement that could reasonably be expected to give rise hereafter to any Liabilities of the Company or its Subsidiaries except in the ordinary course of business. 3.16 Intellectual Property. (a) (i) The Company and its Subsidiaries are the owners of all, or have the license or right to use, sell and license all of, the Copyrights, Patents, Trade Secrets, Trademarks, Internet Assets, Software and other proprietary rights (collectively, "Intellectual Property") that are used in connection with their businesses as presently conducted or contemplated in the business plan of the Company and its Subsidiaries, free and clear of all Liens. (ii) Other than as set forth on Schedule 3.16 (a)(ii), none of the Intellectual Property is subject to any outstanding Order, and no action, suit, proceeding, hearing, investigation, charge, complaint, claim or demand is pending or, to the Knowledge of the Company, threatened, which challenges the validity, enforceability, use or ownership of the item. 18 (iii) With regard to all Intellectual Property licenses, sublicenses, distributor agreements and other agreements under which the Company or its Subsidiaries are either a licensor, licensee or distributor, except such licenses, sublicenses and other agreements relating to off-the-shelf software, which is commercially available on a retail basis and used solely on the computers of the Company or its Subsidiaries, the Company and its Subsidiaries have substantially performed all obligations imposed upon them thereunder, and are not, nor to the Knowledge of the Company is any other party thereto, in breach of or default thereunder in any respect, nor is there any event which with notice or lapse of time or both would constitute a default thereunder. All of the Intellectual Property licenses are valid, enforceable and in full force and effect, and will continue to be so on identical terms immediately following the Closing, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general principles of equity relating to enforceability (regardless of whether considered in a proceeding at law or in equity). (iv) Other than as set forth on Schedule 3.16(a)(iv), none of the Intellectual Property currently sold or licensed by the Company or its Subsidiaries to any Person or used by or licensed to the Company or its Subsidiaries by any Person infringes upon or otherwise violates any Intellectual Property rights of others. (v) Except as set forth on Schedule 3.16(a)(v), no litigation is pending and no Claim has been made against the Company or its Subsidiaries or, to the Knowledge of the Company, is threatened, contesting the right of the Company or its Subsidiaries to sell or license to any Person or use the Intellectual Property presently sold or licensed to such Person or used by the Company or its Subsidiaries. (b) Except as set forth on Schedule 3.16(b), to the Knowledge of the Company, no Person is infringing upon or otherwise violating the Intellectual Property rights of the Company and its Subsidiaries. (c) No former employer of any employee of the Company or its Subsidiaries, and no current or former client of any consultant of the Company or its Subsidiaries, has made a claim against the Company, its Subsidiaries, or any Affiliates thereof or, to the Knowledge of the Company, against any other Person, that such employee or such consultant is utilizing Intellectual Property of such former employer or client. (d) Except as set forth on Schedule 3.16(d) or disclosed in the SEC Documents, neither the Company nor any of its Subsidiaries are parties to or bound by any license or other agreement requiring the payment by the Company or such Subsidiaries of any royalty payment, excluding such agreements relating to software licensed for use solely on the computers of the Company or such Subsidiaries. (e) To the Knowledge of the Company, no employee of the Company or its Subsidiaries is in violation of any Requirement of Law applicable to such employee, or any term of any employment agreement, patent or invention disclosure 19 agreement or other contract or agreement relating to the relationship of such employee with the Company or its Subsidiaries or any prior employer. (f) To the Knowledge of the Company, none of the Trade Secrets of the Company or its Subsidiaries, wherever located, the value of which is contingent upon maintenance of confidentiality thereof, has been disclosed to any Person other than employees, representatives and agents of the Company or its Subsidiaries, except as required pursuant to the filing of a patent application by the Company or its Subsidiaries. (g) It is not necessary for the business of the Company and its Subsidiaries to use any Intellectual Property owned by any director, officer, employee or consultant of the Company or its Subsidiaries (or Persons the Company or any of its Subsidiaries presently intend to hire). To the Company's Knowledge, at no time during the conception or reduction to practice of any of the Company's or its Subsidiaries' Intellectual Property was any developer, inventor or other contributor to such Intellectual Property operating under any grants from any Governmental Authority or subject to any employment agreement, invention assignment, nondisclosure agreement or other Contractual Obligation with any Person that could adversely affect the Company's or such Subsidiaries' rights to their Intellectual Property. (h) All present employees of the Company and its Subsidiaries have executed and delivered proprietary invention agreements with the Company or such Subsidiaries, as the case may be, and are obligated under the terms thereof to assign all inventions made by them during the course of employment to the Company or its Subsidiaries. No such employee or present consultant of the Company or its Subsidiaries has excluded works or inventions made prior to his employment with or work for the Company or its Subsidiaries from his assignment of inventions pursuant to such proprietary invention agreements. 3.17 Privacy of Customer Information. Neither the Company nor its Subsidiaries uses any of the customer information it receives through its websites or otherwise in an unlawful manner, or in a manner violative of the Company's or such Subsidiaries' privacy policy or the privacy rights of its customers. The Company and its Subsidiaries have not collected any customer information through their websites in an unlawful manner or in violation of its privacy policy. The Company and its Subsidiaries have adequate security measures in place to protect the customer information they receive through their websites and which they store in their computer systems from illegal use by third parties or use by third parties in a manner violative of the rights of privacy of their customers. The Company and its Subsidiaries represent to their customers that they assure complete security as to the customer information they receive through their websites. 3.18 Environmental Matters. The Company and its Subsidiaries are in compliance with all applicable Environmental Laws. There is no civil, criminal or administrative judgment, action, suit, demand, claim, hearing, notice of violation, investigation, proceeding, notice or demand letter pending or, to the Knowledge of the 20 Company, threatened against the Company or its Subsidiaries pursuant to Environmental Laws. To the Knowledge of the Company, there are no past or present events, conditions, circumstances, activities, practices, incidents, agreements, actions or plans which could reasonably be expected to prevent compliance with, or which have given rise to or will give rise to liability which would have a material adverse effect on the Condition of the Company, under Environmental Laws. 3.19 Broker's, Finder's or Similar Fees. There are no brokerage commissions, finder's fees or similar fees or commissions payable by the Company or any of its Subsidiaries in connection with the transactions contemplated hereby based on any agreement, arrangement or understanding with the Company or any of its Subsidiaries or any action taken by any such Person. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS Each of the Purchasers hereby represents and warrants, severally and not jointly, to the Company as follows: 4.1 Existence and Power. Such Purchaser (a) is a limited partnership or limited liability company, as the case may be, duly organized and validly existing under the laws of the jurisdiction of its formation and (b) has the requisite partnership or limited liability company, as the case may be, power and authority to execute, deliver and perform its obligations under this Agreement and the other Transaction Documents to which it is a party. 4.2 Authorization; No Contravention. The execution, delivery and performance by such Purchaser of this Agreement and each of the other Transaction Documents to which it is a party and the transactions contemplated hereby and thereby, (a) have been duly authorized by all necessary partnership or limited liability company, as the case may be, action, (b) do not contravene the terms of such Purchaser's organizational documents, or any amendment thereof, (c) do not violate, conflict with or result in any breach or contravention of, or the creation of any Lien under, any Contractual Obligation of such Purchaser or any Requirement of Law applicable to such Purchaser (except for the Lien created on the Purchased Shares purchased by GapStar to secure its obligations under a bona fide loan made to acquire such Purchased Shares), and (d) do not violate any Orders of any Governmental Authority against, or binding upon, such Purchaser. 4.3 Governmental Authorization; Third Party Consents. No approval, consent, compliance, exemption, authorization or other action by, or notice to, or filing with, any Governmental Authority or any other Person, and no lapse of a waiting period under any Requirement of Law, is necessary or required in connection with the execution, delivery or performance (including, without limitation, the purchase of the Purchased Shares) by, or enforcement against, such Purchaser of this Agreement and the other Transaction Documents or the transactions contemplated hereby and thereby. 21 4.4 Binding Effect. This Agreement and the Registration Rights Agreement have been duly executed and delivered by such Purchaser, and constitute the legal, valid and binding obligations of such Purchaser, enforceable against it in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or similar laws affecting the enforcement of creditors' rights generally or by equitable principles relating to enforceability (regardless of whether considered in a proceeding at law or in equity). 4.5 Purchase for Own Account. The Securities to be acquired by such Purchaser pursuant to this Agreement are being or will be acquired for its own account and with no intention of distributing or reselling such Purchased Shares or Warrants or any part thereof in any transaction that would be in violation of the securities laws of the United States, any state of the United States or any foreign jurisdiction, without prejudice, however, to the rights of such Purchaser at all times to sell or otherwise dispose of all or any part of such Purchased Shares or Warrants under an effective registration statement under the Securities Act, or under an exemption from such registration available under the Securities Act, and subject, nevertheless, to the disposition of such Purchaser's property being at all times within its control. If such Purchaser should in the future decide to dispose of any of such Purchased Shares, such Purchaser understands and agrees that it may do so only in compliance with the Securities Act and applicable state and foreign securities laws, as then in effect. Such Purchaser agrees to the imprinting, so long as required by law, of a legend on certificates representing all of its Purchased Shares and shares of Common Stock issuable upon conversion of its Purchased Shares and exercise of its Warrants to the following effect: THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY FOREIGN JURISDICTION. THE SECURITIES MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE AND FOREIGN SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS. 4.6 Restricted Securities. Such Purchaser understands that the Purchased Shares will not be registered at the time of their issuance under the Securities Act for the reason that the sale provided for in this Agreement is exempt pursuant to Section 4(2) of the Securities Act and that the reliance of the Company on such exemption is predicated in part on such Purchaser's representations set forth herein. 4.7 Broker's, Finder's or Similar Fees. There are no brokerage commissions, finder's fees or similar fees or commissions payable by such Purchaser in connection with the transactions contemplated hereby based on any agreement, arrangement or understanding with such Purchaser or any action taken by such Purchaser. 22 4.8 Accredited Investor. Such Purchaser is an "Accredited Investor" within the meaning of Rule 501 of Regulation D under the Securities Act, as presently in effect. ARTICLE V INDEMNIFICATION 5.1 Indemnification. Except as otherwise provided in this Article V, the Company (the "Indemnifying Party") agrees to indemnify, defend and hold harmless each of the Purchasers and its Affiliates and their respective officers, directors, agents, employees, subsidiaries, partners, members and controlling persons (each, an "Indemnified Party") to the fullest extent permitted by law from and against any and all losses, Claims, or written threats thereof (including, without limitation, any Claim by a third party), damages, expenses (including reasonable fees, disbursements and other charges of counsel reasonably incurred by the Indemnified Party in any action between the Indemnifying Party and the Indemnified Party or between the Indemnified Party and any third party or otherwise) or other liabilities (collectively, "Losses") resulting from or arising out of any breach of any representation or warranty, covenant or agreement by the Company in this Agreement or the Registration Rights Agreement. The amount of any payment to any Indemnified Party herewith in respect of any Loss shall be of sufficient amount to make such Indemnified Party whole for any diminution in value of the Purchased Shares. In connection with the obligation of the Indemnifying Party to indemnify for expenses as set forth above, the Indemnifying Party shall, upon presentation of appropriate invoices containing reasonable detail, reimburse each Indemnified Party for all such expenses (including reasonable fees, disbursements and other charges of counsel incurred by the Indemnified Party in any action between the Indemnifying Party and the Indemnified Party or between the Indemnified Party and any third party) as they are incurred by such Indemnified Party; provided, however, that if an Indemnified Party is reimbursed under this Article V for any expenses, such reimbursement of expenses shall be refunded to the extent it is finally judicially determined that the Losses in question resulted primarily from the willful misconduct or gross negligence of such Indemnified Party. 5.2 Notification. Each Indemnified Party under this Article V shall, promptly after the receipt of notice of the commencement of any Claim against such Indemnified Party in respect of which indemnity may be sought from the Indemnifying Party under this Article V, notify the Indemnifying Party in writing of the commencement thereof. The omission of any Indemnified Party to so notify the Indemnifying Party of any such action shall not relieve the Indemnifying Party from any liability which it may have to such Indemnified Party (a) other than pursuant to this Article V or (b) under this Article V unless, and only to the extent that, such omission results in the Indemnifying Party's forfeiture of substantive rights or defenses. In case any such Claim shall be brought against any Indemnified Party, and it shall notify the Indemnifying Party of the commencement thereof, the Indemnifying Party shall be entitled to assume the defense thereof at its own expense, with counsel satisfactory to such Indemnified Party in its reasonable judgment; provided, however, that any 23 Indemnified Party may, at its own expense, retain separate counsel to participate in such defense at its own expense. Notwithstanding the foregoing, in any Claim in which both the Indemnifying Party, on the one hand, and an Indemnified Party, on the other hand, are, or are reasonably likely to become, a party, such Indemnified Party shall have the right to employ separate counsel and to control its own defense of such Claim if, in the reasonable opinion of counsel to such Indemnified Party, either (x) one or more defenses are available to the Indemnified Party that are not available to the Indemnifying Party or (y) a conflict or potential conflict exists between the Indemnifying Party, on the one hand, and such Indemnified Party, on the other hand, that would make such separate representation advisable; provided, however, that the Indemnifying Party (i) shall not be liable for the fees and expenses of more than one counsel to all Indemnified Parties and (ii) shall reimburse the Indemnified Parties for all of such fees and expenses of such counsel incurred in any action between the Indemnifying Party and the Indemnified Parties or between the Indemnified Parties and any third party, as such expenses are incurred. The Indemnifying Party agrees that it will not, without the prior written consent of the Purchasers, settle, compromise or consent to the entry of any judgment in any pending or threatened Claim relating to the matters contemplated hereby (if any Indemnified Party is a party thereto or has been actually threatened to be made a party thereto) unless such settlement, compromise or consent includes an unconditional release of each Indemnified Party from all liability arising or that may arise out of such Claim. The Indemnifying Party shall not be liable for any settlement of any Claim effected against an Indemnified Party without its written consent, which consent shall not be unreasonably withheld. The rights accorded to an Indemnified Party hereunder shall be in addition to any rights that any Indemnified Party may have at common law, by separate agreement or otherwise; provided, however, that notwithstanding the foregoing or anything to the contrary contained in this Agreement, nothing in this Article V shall restrict or limit any rights that any Indemnified Party may have to seek equitable relief. 5.3 Contribution. If the indemnification provided for in this Article V from the Indemnifying Party is unavailable to an Indemnified Party hereunder in respect of any Losses referred to herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party, 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 and Indemnified Party in connection with the actions which resulted in such Losses, as well as any other relevant equitable considerations. The relative faults of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the Losses referred to above shall be deemed to include, subject to the limitations set forth in Sections 5.1 and 5.2, any legal or other fees, charges or expenses reasonably incurred by such party in connection with any investigation or proceeding. 24 ARTICLE VI AFFIRMATIVE COVENANTS The Company hereby covenants and agrees with the Purchasers as follows: 6.1 Conduct of Business of the Company. Except as contemplated by this Agreement or with the prior written consent of the Purchasers, during the period from the date of this Agreement to the Closing Date, the Company will conduct its operations only in the ordinary course of business consistent with past practice and, to the extent consistent therewith, with no less diligence and effort then would be applied in the absence of this Agreement, will use its reasonable best efforts to preserve intact the business organization of the Company, to keep available the services of the present officers and key employees of the Company and to preserve the good will of customers, suppliers and all other Persons having business relationships with the Company. Without limiting the generality of the foregoing, and except as otherwise contemplated by this Agreement, prior to the Closing Date, the Company will not, without the prior written consent of the Purchasers, which consent will not be unreasonably withheld or delayed: (a) engage in any transaction (including, without limitation, capital expenditures) out of the ordinary course of its business and consistent with past practices; (b) issue, reissue or sell, or authorize the issuance, reissuance or sale of shares of capital stock of any class, or securities convertible into capital stock of any class, or any rights, warrants or options to acquire any convertible securities or capital stock; (c) dispose of any of its assets or properties except to the extent these are used, retired or replaced in the ordinary course of its business; (d) fail to keep in force any governmental licenses, permits, authorizations, consents or approvals required by the Company to own its assets and properties or to carry on its business as currently conducted; (e) fail to keep in force its Intellectual Property rights; (f) fail to perform all material obligations required to be performed by it under any of the Contractual Obligations; (g) enter into transactions with affiliates of the Company; (h) pay dividends to, or redeem the shares of, stockholders of the Company other than pursuant to an existing restricted stock purchase agreement with current or former employees; and (i) amend the Certificate of Incorporation or the Bylaws of the Company. 6.2 No Solicitation. The Company shall not, and shall cause its Subsidiaries and the officers, directors, employees, representatives (including, without limitation, investment bankers, attorneys and accountants), agents or affiliates of the Company and its Subsidiaries not to, directly or indirectly, (i) solicit, initiate, encourage or facilitate any inquiries or the making of the proposal or offer with respect to an Alternative Proposal or (ii) participate in any discussions or negotiations with, or provide any non-public information to, or afford any access to the properties, books or records of the Company or any of its Subsidiaries, or otherwise take any other action to assist or facilitate (including granting any waiver or release under any standstill or similar agreement with respect to any securities of the Company or any of its Subsidiaries), any "person" or "group" (as such terms are used for purposes of Section 13(d)(3) of the 25 Exchange Act) (other than the Purchasers or any Affiliate or associate of the Purchasers) concerning any Alternative Proposal. 6.3 Reasonable Efforts. Subject to the terms and conditions herein provided, each of the parties hereto agrees to use its reasonable best efforts to take, or cause to be taken, all appropriate action, and to do, or cause to be done, all things necessary, proper or advisable under applicable Requirements of Law to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated by this Agreement. Without limiting the foregoing, each of the Company and the Purchasers shall use its reasonable best efforts to make promptly any required submissions under any applicable Requirements of Law that the Company or the Purchasers determines should be made, in each case, with respect to the transactions contemplated hereby and to respond as promptly as practicable to all inquiries received from any Governmental Authority with respect to such submissions for additional information or documentation. 6.4 Reservation of Common Stock. The Company shall at all times reserve and keep available out of its authorized shares of Common Stock, solely for the purpose of issue or delivery upon conversion of the Purchased Shares and exercise of the Warrants, as provided in the Certificate of Designations and the Warrants, respectively, the maximum number of shares of Common Stock that may be issuable or deliverable upon such conversion or exercise. Such shares of Common Stock are duly authorized and, when issued or delivered in accordance with the Certificate of Designations and the Warrants, shall be validly issued, fully paid and non-assessable. The Company shall issue such shares of Common Stock, in accordance with the terms of the Certificate of Designations and the Warrants, and otherwise comply with the terms hereof and thereof. 6.5 NASDAQ Listing. (a) The Company shall use its best efforts to prevent the Common Stock from being delisted on NASDAQ, including without limitation, (i) taking all actions reasonably related to maintaining NASDAQ listing standards, (ii) following recommendations by NASDAQ or advice of counsel and (ii) refraining from taking actions reasonably expected to cause the Company to not meet NASDAQ listing standards. (b) If requested by the Company, each Purchaser shall use commercially reasonable efforts to assist the Company in preparing any materials to be submitted to NASDAQ by the Company for the purposes of maintaining the Company's listing thereon. 6.6 Insurance. The Company currently maintains insurance with an insurance company or association and it shall continue to maintain such coverage. 6.7 Tax Reporting. The Company shall not treat the Purchased Shares as "preferred stock" for purposes of the Code, including but not limited to Section 305 thereof. 26 6.8 Books and Records. The Company and its Subsidiaries shall keep proper books of record and account, in which full and correct entries shall be made of all financial transactions and the assets and business of the Company and its Subsidiaries in accordance with GAAP consistently applied. 6.9 Back-ups of Computer Software. The Company and its Subsidiaries shall make back-ups of all material computer software programs and databases and shall maintain such software programs and databases at a secure off-site location. 6.10 Inspection. The Company shall permit representatives of the Purchasers to visit and inspect any of its and its Subsidiaries properties, to examine their corporate, financial and operating records and make copies thereof or abstracts therefrom, and to discuss their affairs, finances and accounts with their respective directors, officers and independent public accountants, all at such reasonable times during normal business hours and as often as may be reasonably requested upon reasonable advance notice to the Company. 6.11 Board of Directors. Immediately following the Closing, the Board of Directors shall convene a meeting to elect, by a majority vote of all of the members of the Board of Directors, including the directors elected by the holders of the Preferred Stock, a Chairman of the Board of Directors designated by the Purchasers. ARTICLE VII MISCELLANEOUS 7.1 Survival of Representations and Warranties. All of the representations and warranties made herein shall survive the execution and delivery of this Agreement until the date that is ninety (90) days after the receipt by the Purchasers of audited financial statements of the Company for the fiscal year ending December 31, 2002 (or, if such fiscal year changes and no such audited consolidated financial statements are available, then the successor fiscal year), except for (a) Sections 3.1, 3.2, 3.4, 3.7, 3.8(b) and 3.14, which representations and warranties shall survive until the third anniversary of the Closing Date, and (b) Section 3.11 which shall survive until the later to occur of (i) the lapse of the statute of limitations with respect to the assessment of any Tax to which such representation and warranty relates (including any extensions or waivers thereof) and (ii) sixty (60) days after the final administrative or judicial determination of the Taxes to which such representation and warranty relates, and no claim with respect to Section 3.11 may be asserted thereafter with the exception of claims arising out of any fact, circumstance, action or proceeding to which the party asserting such claim shall have given notice to the other parties to this Agreement prior to the termination of such period of reasonable belief that a tax liability will subsequently arise therefrom. 27 7.2 Notices. All notices, demands and other communications provided for or permitted hereunder shall be made in writing and shall be by registered or certified first-class mail, return receipt requested, telecopier, courier service or personal delivery: (a) if to the Company: Tickets.com, Inc. 555 Anton Boulevard, 12th Floor Costa Mesa, CA 92626 Telecopy: (714) 327-5410 Attention: Ronald Bension with a copy to: Brobeck Phleger & Harrison LLP 550 South Hope Street Los Angeles, CA 90071-2604 Telecopy: (213) 745-3345 Attention: Richard S. Chernicoff (b) if to any of the Purchasers: c/o General Atlantic Service Corporation 3 Pickwick Plaza Greenwich, CT 06830 Telecopy: (203) 622-8818 Attention: Matthew Nimetz Thomas J. Murphy with a copy to: Paul, Weiss, Rifkind, Wharton & Garrison 1285 Avenue of the Americas New York, NY 10019-6064 Telecopy: (212) 757-3990 Attention: Douglas A. Cifu, Esq. All such notices, demands and other communications shall be deemed to have been duly given when delivered by hand, if personally delivered; when delivered by courier, if delivered by commercial courier service; five (5) Business Days after being deposited in the mail, postage prepaid, if mailed; and when receipt is mechanically acknowledged, if telecopied. Any party may by notice given in accordance with this Section 7.2 designate another address or Person for receipt of notices hereunder. 7.3 Successors and Assigns; Third Party Beneficiaries. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of the parties hereto. Subject to applicable securities laws and the terms and 28 conditions thereof, the Purchasers may assign any of their rights under this Agreement or the Registration Rights Agreement to any of their respective Affiliates. The Company may not assign any of its rights under this Agreement without the written consent of the Purchasers. Except as provided in Article V, no Person other than the parties hereto and their successors and permitted assigns is intended to be a beneficiary of this Agreement. 7.4 Amendment and Waiver. (a) No failure or delay on the part of the Company or the Purchasers in exercising any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies provided for herein are cumulative and are not exclusive of any remedies that may be available to the Company or the Purchasers at law, in equity or otherwise. (b) Any amendment, supplement or modification of or to any provision of this Agreement, any waiver of any provision of this Agreement, and any consent to any departure by the Company or the Purchasers from the terms of any provision of this Agreement, shall be effective (i) only if it is made or given in writing and signed by the Company and each of the Purchasers and (ii) only in the specific instance and for the specific purpose for which made or given. Except where notice is specifically required by this Agreement, no notice to or demand on the Company in any case shall entitle the Company to any other or further notice or demand in similar or other circumstances. 7.5 Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. 7.6 Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. 7.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF. 7.8 Severability. If any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired, unless the provisions held invalid, illegal or unenforceable shall substantially impair the benefits of the remaining provisions hereof. 7.9 Rules of Construction. Unless the context otherwise requires, references to sections or subsections refer to sections or subsections of this Agreement. 29 7.10 Entire Agreement. This Agreement, together with the exhibits and schedules hereto, and the Registration Rights Agreement are intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein and therein. There are no restrictions, promises, representations, warranties or undertakings, other than those set forth or referred to herein or therein. This Agreement, together with the exhibits and schedules hereto, and the Registration Rights Agreement supersede all prior agreements and understandings between the parties with respect to such subject matter. 7.11 Fees. Upon the Closing, the Company shall reimburse the Purchasers for all of their reasonable fees, disbursements and other charges of counsel reasonably incurred in connection with the transactions contemplated by this Agreement up to an aggregate amount of $100,000. 7.12 Publicity; Confidentiality. Except as may be required by applicable Requirements of Law, none of the parties hereto shall issue a publicity release or public announcement or otherwise make any disclosure concerning this Agreement, the transactions contemplated hereby, the Purchasers or the business, technology and financial affairs of the Company, without prior approval by the other parties hereto; provided, however, that nothing in this Agreement shall restrict any of the Purchasers from disclosing information (a) that is already publicly available, (b) that was known to such Purchaser on a non-confidential basis prior to its disclosure by the Company, (c) that may be required or appropriate in response to any summons or subpoena or in connection with any litigation, provided that such Purchaser will use reasonable efforts to notify the Company in advance of such disclosure so as to permit the Company to seek a protective order or otherwise contest such disclosure, and such Purchaser will use reasonable efforts to cooperate, at the expense of the Company, with the Company in pursuing any such protective order, (d) to the extent that such Purchaser reasonably believes it appropriate in order to protect its investment in the Purchased Shares or in order to comply with any Requirement of Law, (e) to such Purchaser's or the Company's officers, directors, shareholders, advisors, employees, members, partners, controlling persons, auditors or counsel or (f) to Persons from whom releases, consents or approvals are required, or to whom notice is required to be provided, pursuant to the transactions contemplated by the Transaction Documents; and provided further, that GAP LLC may disclose on its worldwide web page, www.gapartners.com, the name of the Company, the name of the Chief Executive Officer of the Company, a brief description of the business of the Company, the Company's logo and the aggregate amount of the Purchasers' investment in the Company. If any announcement is required by applicable law or the rules of any securities exchange or market on which such shares of Common Stock are traded to be made by any party hereto, prior to making such announcement such party will deliver a draft of such announcement to the other parties and shall give the other parties reasonable opportunity to comment thereon. 7.13 Further Assurances. Each of the parties shall execute such documents and perform such further acts (including, without limitation, obtaining any consents, exemptions, authorizations or other actions by, or giving any notices to, or 30 making any filings with, any Governmental Authority or any other Person) as may be reasonably required or desirable to carry out or to perform the provisions of this Agreement. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this Securities Purchase Agreement on the date first written above. TICKETS.COM, INC. By: /s/ Ronald Bension _________________________________ Name: Ronald Bension Title: Chief Executive Officer GENERAL ATLANTIC PARTNERS, 74, L.P. By: GENERAL ATLANTIC PARTNERS, LLC, its General Partner By: /s/ Matthew Nimetz _________________________________ Name: Matthew Nimetz Title: A Managing Member GAP COINVESTMENT PARTNERS II, L.P. By: /s/ Matthew Nimetz _________________________________ Name: Matthew Nimetz Title: A General Partner GAPSTAR, LLC By: GENERAL ATLANTIC PARTNERS, LLC, its Managing Member By: /s/ Matthew Nimetz _________________________________ Name: Matthew Nimetz Title: A Managing Member Schedule 2.1 Purchased Shares, Warrants and Purchase Price

Purchaser Purchased Shares Warrants Purchase Price --------- ---------------- -------- -------------- GAP LP 7,003,889 1,487,626 $ 16,529,178.00 GapStar 124,524 26,449 $ 293,877.00 GAP Coinvestment 1,346,163 285,925 $ 3,176,945.00 Total: 8,474,576 1,800,000 $ 20,000,000.00

EX-99.1 5 a79833ex99-1.txt EXHIBIT 99.1 Exhibit 99.1 [TICKETS.COM(SM) LOGO - THE INNOVATIVE, FLEXIBLE TICKETING COMPANY(SM)] FOR IMMEDIATE RELEASE TICKETS.COM RELEASES FOURTH QUARTER RESULTS COMPANY SECURES $20 MILLION IN FINANCING COSTA MESA, CA. - March 15, 2002 - Tickets.com (Nasdaq: TIXX), a leading ticketing services provider for live events, today reported financial results for the fourth quarter ending December 31, 2001. The company also secured $20 million in financing from existing investor General Atlantic Partners, to fund future growth and working capital needs, announced Tickets.com CEO, Ron Bension. The company's fourth quarter results were impacted by the fallout from the September 11th attacks. Cancelled events and poor attendance at those events that were held, significantly reduced the company's earnings for the quarter. Throughout the difficult economic environment of the fourth quarter, however, the Company has maintained its ongoing focus on reducing its overall cost structure. The Q4 results demonstrate a continuation of a process to build the pipeline for top-line growth while concurrently reducing costs and enhancing efficiency at all levels. Tickets.com's business philosophy has enabled the company to remain flexible while aggressively developing new technology to better attract and service clients. Specifically the company now provides a suite of services including their unique private label software, Internet ticketing solutions and complete outsourcing services. This technology is currently being utilized by 20 of the 30 Major League baseball teams and some of the industry's most prestigious entertainment and sports venues, including some new additions, the renowned 9:30 Club, the Greensboro Coliseum and the Mohegan Sun Casino. At the end of the fourth quarter, Tickets.com announced the hiring of Ron Bension, a seasoned recreational entertainment executive as CEO. Bension's extensive experience uniquely qualifies him to lead the company as it enters the next phase of its business cycle. "Although our business experienced reduced revenue due to the widespread effect of September 11, we remain confident in continued growth and to providing the best ticketing service, technology and state of the art functionality for clients," said Bension. "This financing further demonstrates the confidence that our investors have in our business model and the potential it represents in 2002 and beyond". Due to the impact of September 11th and the capital required to bring on-line several major new clients signed in the quarter, the company projected the need for additional funding to support future operations. This new round of financing will address the short-term working capital requirements and provide the company with significant funding to continue its growth. "Despite the challenging business environment in Q4 and its impact on the performance of Tickets.com, we are pleased to deepen our relationship with the company" said Braden Kelly, partner at General Atlantic Partners. "We believe Tickets.com has the leadership, assets, and long-term orientation required to create continued innovation in the ticketing industry and build an attractive business. The company's intense focus on driving customer satisfaction is consistent with our philosophy of how great businesses are built." The Company will receive proceeds of $20 million from the issuance of approximately 8.5 million shares of Series G Preferred Stock. The company will use the proceeds to address near-term liquidity demands and longer term growth opportunities. The Series G Preferred Stock is initially convertible into shares of Tickets.com common stock representing approximately 33.4 percent of the company's voting power on a fully diluted basis and, when combined with General Atlantic's other stock holdings in the company, will result in General Atlantic holding a majority of the company's outstanding equity. In addition, the Company will issue General Atlantic warrants to purchase 1.8 million shares of its common stock. Additional terms of the financing will be set forth in a Current Report on Form 8-K to be filed with the SEC. Driven by a combination of cancelled events and attendance drop-off precipitated by the September 11th tragedy, net revenues in the fourth quarter of 2001 fell 36.6 percent to $9.7 million from $15.3 million in the same quarter a year ago. For the full year, the company reported net revenues of $56.1 million, which represents a 4.4 percent decrease to the prior year's figure of $58.7 million. The company posted solid margin expansion during 2001, with a full year gross margin of 42.8 percent as compared to 35.8 percent for 2000. The fourth quarter margin of 36.0 percent represents a significant reduction from prior year and internal expectations, and was driven primarily by a softer top-line and costs associated with event cancellations. The company's operating expenses, however, continued to decrease, to $13.9 million in the fourth quarter, down 15.0 percent from the previous quarter, and 33.5 percent from $21.0 million posted in the fourth quarter of 2000. Tickets.com's ongoing focus on tighter expense management continues to produce meaningful cost savings across numerous areas of the business. For the full year of 2001, the company incurred operating expenses of $65.6 million excluding the impact of non-recurring items. Total operating expenses for 2001 represent a 30 percent reduction versus 2000, net of non-recurring items. The net loss to common shareholders for the fourth quarter was $10.8 million, or $1.45 per diluted share. This compares with a net loss, of $13.8 million, or $1.87 per share (adjusted for the August one-for-eight reverse stock split) in the fourth quarter of 2000. For the full year 2001, the net loss was $57.2 million. This compares to a net loss in 2000 of $105.7 million. The above referenced net loss figures include a number of non-cash charges. EBITDA (earnings before interest, taxes, depreciation and amortization) loss for the fourth quarter was $6.1 million as compared to $9.6 million in the fourth quarter of 2000. For the full year, the EBITDA loss was $39.6 million as compared to $91.6 million for the prior year. Pro forma EBITDA (which excludes the affect of certain non-cash prepaid marketing and advertising relationships) loss for the fourth quarter was $6.0 million. This softer performance versus the third quarter of 2001 primarily reflects the impact of revenue shortfalls. For the full year, the pro-forma EBITDA loss of $21.9 million reflects a 55.9 percent improvement versus the prior year loss of $49.7 million. Pro forma EBITDA is presented in addition to results provided in accordance with U.S. generally accepted accounting principles (GAAP). Management measures the progress of the business using this pro forma information as an indicator of operating cash usage. "Our youth and flexibility are ultimately competitive advantages in this evolving industry. Tickets.com's ability to be nimble and aggressive has resulted in developing state-of-the-art services for the industry that supercede previously existing options. We remain optimistic that these advantages will culminate in success," said Bension. ABOUT GENERAL ATLANTIC General Atlantic Partners, LLC, is the world's leading private equity investment firm focused exclusively on investing in information technology and communications businesses globally. The firm was founded in 1980 and has over $3 billion of capital available for investment. General Atlantic has invested in over 120 companies and has current holdings in over 60 companies, of which almost one-third are based outside the United States and which include Critical Path, E*TRADE Group, Inc., Eclipsys, Exact, EXE Technologies, Exult, Firepond, iFormation Group, 2 Manugistics, Predictive Systems, ProBusiness, Rebus, Screaming Media, SESA, Upromise, Xchanging and Zagat. The firm is distinguished within the investment community by its deep experience and expertise in information technology, its global perspective and worldwide presence, its long-term approach to investments, and its commitment to provide sustained strategic assistance for its portfolio companies. General Atlantic has about 90 professionals among its 130 employees worldwide with offices in Greenwich, New York, Palo Alto, Reston, London, Dusseldorf, Singapore, Tokyo, Hong Kong, and Sao Paulo. See www.gapartners.com for additional information. ABOUT TICKETS.COM Tickets.com is a leading live event business-to-business ticketing solutions provider. The company facilitates the sale of tickets by enabling venues and entertainment organizations with proprietary and cutting edge software, retail outlets, call centers and interactive voice response (IVR) systems. Tickets.com develops private label Ticketing Gateways(SM) to enable live entertainment organizations with e-commerce distribution platforms. The company also sells tickets directly to consumers at http://www.tickets.com, providing tickets and information on virtually all events and entertainment organizations, as well as offering related products and services. Tickets.com's automated ticketing solutions are used by thousands of entertainment organizations such as leading performing arts centers, professional sports organizations and various stadiums and arenas in the U.S., Canada, Europe, Australia and Latin America. Tickets.com is the official ticketing supplier to the 2002 Olympic Winter Games as well as the official online ticketing solutions provider for MLB Advanced Media, LP. FORWARD-LOOKING STATEMENTS The statements contained in this press release that are not historical facts are forward-looking statements under the federal securities law. These forward-looking statements are not guarantees of future growth or performance and involve risks, uncertainties and assumptions that are difficult to predict including changes and additions to the management team of the Company; the Company's dependence on increasing ticket sales; seasonality; public attendance at events hosted by venues utilizing the services of the Company; continuing public acceptance of the Internet as a viable means to locate and acquire tickets to events; ability to increase Internet ticketing revenue; the acceptance of an open ticketing environment; strikes or work stoppages in the sports and entertainment industry; the Company's ability to execute its announced reorganization; ability to manage its financial resources effectively; ability to accelerate profitability as currently anticipated; the Company's ability to meet its ongoing operating expenses and revenue targets; and the execution of partnerships or agreements for international expansion. Actual outcomes and results may differ materially from what is expressed in, or implied by, such forward-looking statements. Tickets.com, Inc. undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Among the important factors that could cause Tickets.com, Inc.'s actual results to differ are (i) the Company's ability to become the market leader in Internet ticketing, (ii) its ability to increase brand recognition and extend consumer reach, (iii) the Company's ability to broaden distribution via emerging channels and to drive Web-based transactions and increase technological efficiencies, (iv) changes in general economic conditions, increased or unexpected competition, (v) fluctuations in customer demand, particularly those that might results from a Major League Baseball strike, (vi) the continued availability of financing for the Company's business and other matters disclosed in Tickets.com, Inc.'s filings with the Securities and Exchange Commission from time to time. Tickets.com, Inc.'s profitability, cash burn rate, long-term success, 2002 earnings are among these forward- looking statements. 3 TICKETS.COM, INC. CONSOLIDATED STATEMENT OF OPERATIONS FOR THE TWELVE MONTHS ENDING DECEMBER 31, 2001 (IN THOUSANDS, EXCEPT PER SHARE DATA)

Three Months Ended Year Ended December 31, December 31, 2001 2000 2001 2000 -------- -------- -------- --------- (unaudited) (unaudited) Net revenues $ 9,687 $ 15,294 $ 56,131 $ 58,670 Cost of Services 6,195 8,409 32,136 37,651 -------- -------- -------- --------- Gross profit 3,492 6,885 23,995 21,019 -------- -------- -------- --------- Gross margin % of net revenue 36.05% 45.02% 42.75% 35.83% Operating Expenses Sales & Marketing Expenses 3,681 9,087 19,290 39,401 Technology Development 2,675 2,265 10,408 13,901 General & Administrative 5,137 7,249 26,397 30,678 Amortization of Intangibles 2,455 2,358 9,534 9,799 Restructuring 0 0 (2,669) 35,124 Impairment of Long Lived Assets 0 0 17,952 0 -------- -------- -------- --------- Total Operating Expenses 13,947 20,959 80,911 128,903 -------- -------- -------- --------- Income (loss) from operations (10,455) (14,074) (56,916) (107,884) Other income (expenses) 134 187 447 2,272 Minority Interest 97 58 241 (10) -------- -------- -------- --------- Total other income (expense) 231 245 688 2,262 Income (loss) before income tax (10,224) (13,829) (56,228) (105,622) Tax provision (benefit) 39 (3) 111 107 -------- -------- -------- --------- Net loss (10,263) (13,826) (56,339) (105,729) Preferred dividends 390 0 705 0 Accretion of issuance costs 137 0 137 0 -------- -------- -------- --------- Net loss available to common shareholders ($10,790) ($13,826) ($57,181) ($105,729) ======== ======== ======== ========= Basic and diluted net loss per share ($ 1.45) ($ 1.87) ($ 7.70) ($ 14.43) Weighted average common shares - basic and diluted 7,439 7,410 7,426 7,327

4 TICKETS.COM, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS)

DECEMBER 31, 2001 2000 ------- -------- (UNAUDITED) ASSETS Cash & cash equivalents $11,330 $ 20,026 Other current assets 13,775 31,025 ------- -------- Total current assets 25,105 51,051 ------- -------- Property and equipment, net 14,516 16,920 Goodwill and other intangibles, net 40,518 48,604 Other assets 4,278 14,841 ------- -------- Total assets $84,417 $131,416 ======= ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities $21,407 $ 26,075 Long-term debt and capital lease obligations 249 1,406 Other long-term liabilities 701 1,916 Stockholders' equity 62,060 102,019 ------- -------- Total liabilities and stockholders' equity $84,417 $131,416 ------- --------

5 TICKETS.COM, INC. CONSOLIDATED - EBITDA RECONCILIATION FOR THE TWELVE MONTHS ENDING DECEMBER 31, 2001 (IN THOUSANDS, EXCEPT PER SHARE DATA)

Three Months Ended Year Ended December 31, December 31, 2001 2000 2001 2000 -------- -------- -------- --------- (unaudited) (unaudited) Loss from operations ($10,455) ($14,074) ($56,916) ($107,884) Add back: Depreciation and amortization 4,313 4,517 17,344 16,286 -------- -------- -------- --------- EBITDA (6,142) (9,557) (39,573) (91,598) Add back: Non-cash marketing expenses 165 1,813 2,411 5,747 Restructuring charges 0 0 (2,669) 35,124 Abandoned acquisition costs 0 0 0 995 Impairment of long-lived assets 0 0 17,953 0 -------- -------- -------- --------- Pro forma EBITDA loss ($ 5,977) ($ 7,744) ($21,878) ($ 49,732) -------- -------- -------- --------- Pro forma EBITDA loss per share ($ 0.80) ($ 1.05) ($ 2.95) ($ 6.79) Weighted average common shares 7,439 7,410 7,426 7,327

6 EX-99.2 6 a79833ex99-2.txt EXHIBIT 99.2 TICKETS.COM, INC. 555 ANTON BOULEVARD, 11TH FLOOR COSTA MESA, CALIFORNIA 92626 ---------------- NOTICE TO STOCKHOLDERS To the Stockholders of Tickets.com, Inc. Due to the negative impact of the events of September 11th on the revenue of Tickets.com, Inc. (the "Company") and the capital required to bring on-line several major new clients signed in the fourth quarter, the Company requires additional funding to meet its near term liquidity needs and support future operations. For that reason, over the past few months the Company has explored a number of possible sources of financing. Because one of the possible sources included existing investors in the Company affiliated with members of the Company's board of directors (the "Board"), a special committee (the "Special Committee") consisting of four independent members of the Board was established. The Special Committee was responsible for reviewing and considering the financing alternatives available to the Company and approving such a financing on behalf of the full Board. On March 15, 2002, pursuant to approval of the Special Committee, the Company entered into a Securities Purchase Agreement (the "Purchase Agreement") among the Company and General Atlantic Partners 74, L.P., GAP Coinvestment Partners II, L.P., and GapStar, LLC (collectively, the "Investors"). Pursuant to the Purchase Agreement, the Company will sell an aggregate of 8,474,576 shares of its Series G Senior Cumulative Redeemable Convertible Participating Preferred Stock (the "Series G Preferred Stock") and warrants to purchase 1,800,000 shares of its common stock (the "Warrants"), at an exercise price of $2.36 per share, to the Investors for an aggregate purchase price of $20,000,000 (the "Purchase Price"). The Investors will pay the Purchase Price in cash. The closing of the purchase of the Series G Preferred Stock and the Warrants is scheduled to occur on March 25, 2002. The Investors currently own approximately 33% of the outstanding voting power of the Company. As a result of the sale of the Series G Preferred Stock, the Investors will own approximately 62% of the outstanding voting power of the Company. Additionally, the Warrants will be exercisable by the Investors at any time by delivery to the Company of a duly executed exercise form and payment of the exercise price as set forth in the Warrants. Upon exercise of the Warrants, the Investors will own approximately 65% of the outstanding voting power of the Company. In order for the common stock of the Company to continue to be listed on Nasdaq's National Market the Company must comply with certain governance standards as set forth in Marketplace Rules 4350 and 4351 of the Nasdaq Stock Market, Inc. ("NASDAQ"). Those rules require that the Company obtain stockholder approval for the sale or issuance in a transaction of a number of shares of common stock (or securities convertible into or exchangeable for common stock, such as the Series G Preferred Stock and the Warrants) equal to or in excess of twenty percent of the number of shares of common stock outstanding prior to such transaction if such issuance is for a purchase price which is less than the greater of the book or market value of the common stock. Additionally, Marketplace Rules 4350 and 4351 require that the Company obtain stockholder approval for the sale or issuance in a transaction of a number of shares of common stock (or securities convertible into or exchangeable for common stock) when the issuance will result in a change of control. 1 The issuance of the Series G Preferred Stock and the Warrants will result in the issuance of a number of securities convertible into common stock greater than twenty percent of the outstanding common stock as well as a change of control. Marketplace Rule 4350 provides that NASDAQ may grant exceptions to the stockholder approval requirements of Marketplace Rules 4350 and 4351 when the delay in securing stockholder approval would seriously jeopardize the financial viability of the enterprise. Because the Company's near term liquidity needs exceed its financial resources, the delay in securing stockholder approval would have a detrimental effect on the Company's financial viability. Therefore, the Company requested a waiver from NASDAQ of the stockholder approval requirements of Marketplace Rules 4350 and 4351. The audit committee of the Board expressly approved the use of the exception under Marketplace Rule 4350 and the Company's request of a waiver from NASDAQ. On March 8, 2002, NASDAQ granted the Company a waiver from the stockholder approval requirements of Marketplace Rules 4350 and 4351, subject to the Company mailing to all stockholders this notice. A copy of the Purchase Agreement is contained in a Current Report on Form 8-K to be filed with the Securities and Exchange Commission. s/Ronald Bension Ronald Bension Chief Executive Officer Costa Mesa, California March 15, 2002 2 -----END PRIVACY-ENHANCED MESSAGE-----

EX-3.1

                                                                     EXHIBIT 3.1



                                TICKETS.COM, INC.

                    CERTIFICATE OF THE POWERS, DESIGNATIONS,

                          PREFERENCES AND RIGHTS OF THE

                      SERIES G SENIOR CUMULATIVE REDEEMABLE

                   CONVERTIBLE PARTICIPATING PREFERRED STOCK,

                          PAR VALUE $0.000225 PER SHARE

         Pursuant to Section 151 of the Delaware General Corporation Law

            The undersigned, Ronald Bension, Chief Executive Officer of
Tickets.com, Inc., a Delaware corporation (the "Corporation"), DOES HEREBY
CERTIFY that the following resolution, creating a series of 8,474,576 shares of
Preferred Stock was duly adopted by a special committee of the board of
directors (the "Special Committee") of the Corporation, on March 6, 2002:

            WHEREAS, the Special Committee is authorized, in accordance with
Section 141(c)(2) of the General Corporation Law of the State of Delaware and
within the limitations and restrictions stated in the Certificate of
Incorporation of the Corporation, to provide by resolution or resolutions for
the issuance of shares of preferred stock, par value $0.000225 per share, of the
Corporation, in one or more classes or series with such voting powers, full or
limited, or no voting powers, and such designations, preferences and relative,
participating, optional or other special rights, and qualifications, limitations
or restrictions as shall be stated and expressed in the resolution or
resolutions providing for the issuance thereof adopted by the Special Committee,
and as are not stated and expressed in the Certificate of Incorporation, or any
amendment thereto, including (but without limiting the generality of the
foregoing) such provisions as may be desired concerning voting, redemption,
dividends, dissolution or the distribution of assets and such other subjects or
matters as may be fixed by resolution or resolutions of the Special Committee
under the General Corporation Law of the State of Delaware; and

            WHEREAS, it is the desire of the Special Committee, pursuant to its
authority as aforesaid, to authorize and fix the terms of a series of preferred
stock and the number of shares constituting such series.

            NOW, THEREFORE, BE IT RESOLVED:

            1. Designation and Number of Shares. There shall be hereby created
and established a series of preferred stock designated as "Series G Senior
Cumulative Redeemable Convertible Participating Preferred Stock" (the "Series G
Preferred Stock"). The authorized number of shares of Series G Preferred Stock
shall be 8,474,576. Capitalized terms used herein and not otherwise defined
shall have the meanings set forth in Section 10 below.

                                                                               2


            2. Rank.

                  (a) The Series G Preferred Stock shall, with respect to (i)
the payment of (A) the Liquidation Payment in the event of a Liquidation, (B)
the Conversion Payment in the event of a Qualifying Conversion, (C) the Sale
Payment in the event of a Sale Transaction, (D) the Redemption Payment in the
event of an automatic redemption pursuant to Section 5 hereof and (E) dividends
and (ii) the distributions of assets and rights upon the occurrence of a
Liquidation, rank senior to (x) all classes of common stock of the Corporation
(including, without limitation, the Common Stock, par value $0.000225 per share,
of the Corporation (the "Common Stock")), (y) all other classes of preferred
stock of the Corporation (including, without limitation, the Series F Senior
Cumulative Redeemable Preferred Stock, par value $0.000225 per share, of the
Corporation (the "Series F Preferred Stock")) and (z) each other class or series
of Capital Stock of the Corporation hereafter created which does not expressly
rank pari passu with or senior to the Series G Preferred Stock (clauses (x), (y)
and (z), together, the "Junior Stock").

                  (b) Notwithstanding anything to the contrary contained in the
Certificate of Incorporation, the vote of the holders of a majority of the
Series G Preferred Stock shall be a prerequisite to the designation or issuance
of any shares of Capital Stock ranking pari passu with or senior to the Series G
Preferred Stock in the event of a Liquidation or with respect to the payment of
dividends, the Liquidation Payment, the Conversion Payment, the Sale Payment or
the Redemption Payment.

            3. Dividends.

                  (a) If the Corporation declares and pays dividends on the
Common Stock then, in that event, the holders of shares of Series G Preferred
Stock shall be entitled to share in such dividends on a pro rata basis, as if
their shares had been converted into shares of Common Stock pursuant to Section
7(a) below immediately prior to the record date for determining the stockholders
of the Corporation eligible to receive such dividends.

                  (b) The holders of shares of Series G Preferred Stock shall
receive cumulative dividends at an annual rate equal to the excess (if any) of
(i) 9% of the Accreted Value over (ii) any cash dividends paid in accordance
with Section 3(a) above, calculated on the basis of a 360-day year, consisting
of twelve 30-day months, which shall accrue on a daily basis from the date of
issuance thereof, whether or not declared. Accrued and unpaid dividends shall
not be paid in cash but instead shall compound and be added to the Accreted
Value in effect immediately prior to the Compounding Date, on a quarterly basis
on March 31st, June 30th, September 30th and December 31st of each year (each
such date, a "Compounding Date"), whether or not declared by the Board of
Directors.

                  (c) All accrued dividends shall be mandatorily paid upon the
earlier to occur of (i) a Liquidation in accordance with Section 4(a) below,
(ii) an optional conversion of shares of Series G Preferred Stock in accordance
with Section 7(a) below,

                                                                               3


(iii) the consummation of a Sale Transaction or (iv) the redemption of shares of
the Series G Preferred Stock in accordance with Section 5 below.

                  (d) The Corporation shall not declare or pay any dividends on,
or make any other distributions with respect to or redeem, purchase or otherwise
acquire for consideration, any shares of any Junior Stock unless and until all
accrued dividends on the Series G Preferred Stock have been paid in full.

            4. Liquidation.

                  (a) Liquidation Payment. Upon the occurrence of a Liquidation,
the holders of shares of Series G Preferred Stock shall be paid in cash for each
share of Series G Preferred Stock held thereby, out of, but only to the extent
of, the assets of the Corporation legally available for distribution to its
stockholders, before any payment or distribution is made to any Junior Stock, an
amount per share equal to the product of (i) two multiplied by (ii) the sum of
(x) the Accreted Value of such share of Series G Preferred Stock plus (y) all
dividends that have accrued since the previous Compounding Date to the date of
such Liquidation (the product of clauses (i) and (ii), the "Liquidation
Payment") calculated on the date of such Liquidation. If the assets of the
Corporation available for distribution to the holders of shares of Series G
Preferred Stock shall be insufficient to permit payment in full to such holders
of the aggregate Liquidation Payment, then all of the assets available for
distribution to holders of shares of Series G Preferred Stock shall be
distributed among and paid to such holders ratably in proportion to the amounts
that would be payable to such holders if such assets were sufficient to permit
payment in full.

                  (b) Participation Payment. Upon the completion of (i) the
distribution and payment required by Section 4(a) above, (ii) the distribution
and payment required by Section 4(a) of the Certificate of Powers, Designations,
Preferences and Rights of the Series F Preferred Stock and (iii) any other
distribution and payment to any other class or series of Capital Stock of the
Corporation ranking senior to the Common Stock, if assets remain in the
Corporation, the remaining assets of the Corporation available for distribution
to stockholders shall be distributed among the holders of shares of Series G
Preferred Stock, the holders of shares of any series of preferred stock entitled
to a participating payment and the holders of Common Stock pro rata based on the
number of shares of the Common Stock held by each (assuming the conversion of
all such Series G Preferred Stock in accordance with Section 7(a) below).

                  (c) Notice. Written notice of a Liquidation stating a payment
or payments and the place where such payment or payments shall be payable, shall
be delivered in person, mailed by certified mail, return receipt requested,
mailed by overnight mail or sent by telecopier, not less than ten (10) days
prior to the earliest payment date stated therein, to the holders of record of
shares of Series G Preferred Stock, such notice to be addressed to each such
holder at its address as shown by the records of the Corporation.

                                                                               4


            5. Automatic Redemption.

                  (a) Automatic Redemption Date and Payment. On March 15, 2007
(the "Automatic Redemption Date"), all of the shares of Series G Preferred Stock
(the "Redeemed Shares") shall automatically, with no further action required to
be taken by the Corporation or the holder thereof, be redeemed by the
Corporation (unless otherwise prevented by law) in cash, at a redemption price
per share equal to the greater of (i) the Liquidation Payment calculated on the
Automatic Redemption Date or (ii) the Per Share Price. Written notice of such
Automatic Redemption Date shall be delivered in person, mailed by certified
mail, return receipt requested, mailed by overnight mail or sent by telecopier
not less than thirty (30), nor more than sixty (60), days prior to the Automatic
Redemption Date to the holders of record of the shares of Series G Preferred
Stock such notice to be addressed to each such holder at its address as shown in
the records of the Corporation. The total sum payable per share of Series G
Preferred Stock redeemed on the Automatic Redemption Date is referred to as the
"Redemption Price," and the aggregate payment to be made on the Automatic
Redemption Date for all of the Redeemed Shares is referred to as the "Redemption
Payment." The Redemption Payment shall be made by wire transfer of immediately
available funds to accounts designated in writing by the holders of shares of
Series G Preferred Stock. Upon notice from the Corporation, each holder of
shares of Series G Preferred Stock so redeemed shall promptly surrender to the
Corporation, at any place where the Corporation shall maintain a transfer agent
for its shares of Series G Preferred Stock, certificates representing the shares
so redeemed, duly endorsed in blank or accompanied by proper instruments of
transfer. Notwithstanding anything to the contrary set forth in this Certificate
of Designation, any holder of Series G Preferred Stock may convert its shares of
Series G Preferred Stock pursuant to Section 7(a) hereof until the Redemption
Price has been paid in full by the Corporation to any such holder.

                  (b) Termination of Rights. If shares of Series G Preferred
Stock are to be redeemed pursuant to Section 5(a) above, then, subject to
Section 5(c) below, on and after the Automatic Redemption Date, all rights of
any holder of such shares of Series G Preferred Stock shall cease and terminate,
and such Redeemed Shares shall no longer be deemed to be outstanding, whether or
not the certificates representing such shares have been received by the
Corporation; provided, however, that, if the Corporation defaults in the payment
of the Redemption Payment, the rights of the holders of such shares of Series G
Preferred Stock shall continue until the Corporation cures such default.

                  (c) Insufficient Funds for Redemption. If the funds of the
Corporation available for redemption of the Redeemed Shares on the Automatic
Redemption Date are insufficient to redeem the Redeemed Shares on such date,
then the holders of Redeemed Shares shall share ratably in any funds available
by law for redemption of such shares according to the respective amounts which
would be payable with respect to the number of shares owned by them if the
shares to be so redeemed on such Automatic Redemption Date were redeemed in
full. Any Redeemed Shares that the Corporation is not able to redeem on the
Automatic Redemption Date due to insufficient funds shall continue to be
outstanding until redeemed and dividends on such shares shall

                                                                               5


continue to accrue and cumulate until redeemed. The Corporation shall in good
faith use all reasonable efforts as expeditiously as possible to eliminate, or
obtain an exception, waiver or exemption from, any and all restrictions that
prevented the Corporation from paying the Redemption Price and redeeming all of
the Redeemed Shares. At any time thereafter when additional funds of the
Corporation are available by law for the redemption of the Redeemed Shares, such
funds shall be used, at the end of the next succeeding fiscal quarter, to redeem
the balance of such shares, or such portion thereof for which funds are
available, on the basis set forth above.

            6. Voting Rights; Election of Director.

                  (a) General. In addition to the voting rights to which the
holders of Series G Preferred Stock are entitled under or granted by Delaware
law, the holders of Series G Preferred Stock shall be entitled to vote, in
person or by proxy, at a special or annual meeting of stockholders or in any
written consent in lieu of meeting, on all matters entitled to be voted on by
holders of shares of Common Stock voting together as a single class with the
Common Stock (and with other shares entitled to vote thereon, if any). With
respect to any such vote, each share of Series G Preferred Stock shall entitle
the holder thereof to cast that number of votes as is equal to the number of
votes that such holder would be entitled to cast had such holder converted its
shares of Series G Preferred Stock into shares of Common Stock pursuant to
Section 7(a) below on the record date for determining the stockholders of the
Corporation eligible to vote on any such matters.

                  (b) Directors. If General Atlantic Partners 74, L.P.("GAP
LP"), GAP Coinvestment Partners II, L.P. ("GAP Coinvestment"), GapStar, LLC
("GapStar") and/or any Affiliate thereof in the aggregate own at least a
majority of the outstanding shares of Series G Preferred Stock, then the holders
of shares of Series G Preferred Stock, voting together as a separate class,
shall be entitled to elect two (2) directors of the Corporation (the "Series G
Directors"). If the Board of Directors is classified, then each of the Series G
Directors shall be allocated to one of the classes of the Board of Directors,
provided that the Series G Directors shall not be allocated to the same class.

                  (c) Major Actions. Notwithstanding anything to the contrary
set forth in the Certificate of Incorporation, the Bylaws of the Corporation or
otherwise, neither the Corporation, the Board of Directors nor the stockholders
of the Corporation shall approve, consent to or ratify any of the following
actions without the affirmative vote or written consent of the holders of a
majority of the outstanding shares of Series G Preferred Stock, voting as a
separate class:

                        (i) any modification, amendment or alteration or change
to the Certificate of Incorporation or the bylaws of the Corporation that would
affect the rights, preferences, powers (including, without limitation, voting
powers) and privileges of the Series G Preferred Stock;

                                                                               6


                        (ii) the issuance, reservation for issuance or
authorization of any Capital Stock of the Corporation or any right or option to
acquire shares of Capital Stock (excluding shares issuable upon the exercise
conversion of the Series G Preferred Stock or any other securities convertible
into or exchangeable for shares of Capital Stock issued and outstanding on the
date hereof and shares of Common Stock issuable upon exercise of options granted
pursuant to the Stock Option Plan), or any increase or decrease in the
authorized number of shares of Series G Preferred Stock;

                        (iii) the redemption for cash of any Capital Stock that
is junior to, or pari passu with, the Series G Preferred Stock (other than the
repurchase of unvested Common Stock from employees, directors or consultants
upon termination of their employment with, or service to, the Corporation);

                        (iv) the declaration or payment of any dividend or other
distribution on or in respect of any Capital Stock that is junior to or pari
passu with the Series G Preferred Stock (other than dividends payable to holders
of Series G Preferred Stock);

                        (v) any action that results in a deemed dividend to the
Series G Preferred Stock under section 305 of the Internal Revenue Code;

                        (vi) the Corporation or any of its Subsidiaries issuing,
assuming or otherwise becoming liable for any long term debt in excess of
$3,000,000 in the aggregate;

                        (vii) the Corporation making or causing any Subsidiaries
of the Corporation to make, an aggregate amount of capital expenditures in
excess of (i) $1,500,000 individually or $4,000,000 in the aggregate in any
12-month period, or (ii) $1,000,000, not included in the annual operating budget
approved by the Board of Directors;

                        (viii) any change in the material accounting methods or
policies of the Corporation;

                        (ix) approval of the Liquidation of the Corporation or
the approval, authorization or recommendation of any Sale Transaction; and

                        (x) any modification of the number of directors
constituting the entire Board of Directors or any amendment or modification of
this Section 6(c).

                  (d) Elections. The Series G Preferred Stock shall vote
together as a single class with the Common Stock (and all other classes and
series of stock of the Corporation entitled to vote thereon, if any) with
respect to the election of all of the other directors of the Corporation, except
for the directors elected by the holders of the Series F Preferred Stock voting
as a separate class. If the conditions set forth in Section 6(b) necessary for
the holders of shares of Series G Preferred Stock to vote as a separate class
for the election of the Series G Directors are not satisfied, then the Series G
Preferred

                                                                               7


Stock shall vote together as a single class with the Common Stock (and all other
classes and series of stock of the Corporation entitled to vote thereon, if any)
with respect to the election of all of the directors of the Corporation, except
for the directors elected by the holders of Series F Preferred Stock voting as a
separate class. At any meeting held for the purpose of electing directors at a
time when the holders of shares of Series G Preferred Stock are entitled to vote
as a separate class for the election of the Series G Directors, (i) the presence
in person or by proxy of the holders of a majority of the shares of Series G
Preferred Stock then outstanding shall constitute a quorum of the Series G
Preferred Stock for the election of the Series G Directors, (ii) the holders of
shares of Series G Preferred Stock shall be entitled to cast one vote per share
of Series G Preferred Stock in any such election and (iii) the Series G
Directors shall be elected by the affirmative vote of the holders of a majority
of the outstanding shares of Series G Preferred Stock. A vacancy in a
directorship filled by the holders of the Series G Preferred Stock voting as a
separate class pursuant to Section 6(b) shall be filled only by vote or written
consent of the holders of shares of Series G Preferred Stock. The directors
elected pursuant to Section 6(b) may not be removed without the consent of the
holders of a majority of the Series G Preferred Stock.

            7. Conversion.

                  (a) Optional Conversion. Any holder of shares of Series G
Preferred Stock shall have the right, at its option, at any time and from time
to time, to convert, subject to the terms and provisions of this Section 7, any
or all of such holder's shares of Series G Preferred Stock into the sum of (I)
such number of fully paid and non-assessable shares of Common Stock as is equal
to the product of (A) the number of shares of Series G Preferred Stock being so
converted multiplied by (B) the quotient of (x) the sum of the Accreted Value
plus all dividends accrued since the previous Compounding Date divided by (y)
the conversion price of $2.36 per share, subject to adjustment as provided in
Section 7(d) below (such price in clause (y), the "Conversion Price") plus (II)
in the event of a Qualifying Conversion, (x) in the case of a conversion prior
to March 15, 2006, a payment, with respect to each share of Series G Preferred
Stock being converted until the aggregate number of shares of Series G Preferred
Stock converted pursuant to this Section 7(a) prior to March 15, 2006 exceeds
the Qualifying Conversion Share Limit, equal to the Liquidation Payment
calculated on the date of such conversion and (y) in the case of a conversion on
or after March 15, 2006, a payment, with respect to each share of Series G
Preferred Stock being converted, equal to the Liquidation Payment calculated on
the date of such conversion (the payment payable pursuant to (x) or (y) above
shall be referred to as the "Conversion Payment"). The Conversion Payment shall
be paid, at the option of the holders of a majority of the shares of Series G
Preferred Stock, in cash or by the Corporation through the issuance of a number
of fully paid and non-assessable shares of Common Stock equal to Conversion
Payment divided by the Conversion Price then in effect. Such conversion right
shall be exercised by the surrender of certificate(s) representing the shares of
Series G Preferred Stock to be converted to the Corporation at any time during
usual business hours at its principal place of business to be maintained by it
(or such other office or agency of the Corporation as the Corporation may
designate by notice in writing to the holders of shares of Series G Preferred
Stock), accompanied by written notice that the holder elects to convert such

                                                                               8


shares of Series G Preferred Stock and specifying the name or names (with
address) in which a certificate or certificates for shares of Common Stock are
to be issued and (if so required by the Corporation) by a written instrument or
instruments of transfer in form reasonably satisfactory to the Corporation duly
executed by the holder or its duly authorized legal representative and transfer
tax stamps or funds therefor, if required pursuant to Section 7(j) below. All
certificates representing shares of Series G Preferred Stock surrendered for
conversion shall be delivered to the Corporation for cancellation and canceled
by it. As promptly as practicable after the surrender of any shares of Series G
Preferred Stock, the Corporation shall (subject to compliance with the
applicable provisions of federal and state securities laws) deliver to the
holder of such shares so surrendered certificate(s) representing the number of
fully paid and non-assessable shares of Common Stock into which such shares are
entitled to be converted and, to the extent funds are legally available
therefor, an amount equal to all accrued and unpaid dividends, if any, payable
with respect to such shares in accordance with Section 3 above. At the time of
the surrender of such certificate(s), the Person in whose name any
certificate(s) for shares of Common Stock shall be issuable upon such conversion
shall be deemed to be the holder of record of such shares of Common Stock on
such date, notwithstanding that the share register of the Corporation shall then
be closed or that the certificates representing such Common Stock shall not then
be actually delivered to such Person.

                  (b) Sale Transaction.

                        (i) Upon the consummation of a Sale Transaction, each
outstanding share of Series G Preferred Stock shall be automatically converted,
with no further action required to be taken by the Corporation or the holder
thereof, into the following:

                              (A) an amount equal to the product of (i) the
      Participation Factor multiplied by (ii) the sum of (x) the Accreted Value
      on the closing date of such Sale Transaction plus (y) all dividends that
      have accrued since the previous Compounding Date to the closing date of
      such Sale Transaction (the product of clauses (i) and (ii), the "Sale
      Payment"); plus

                              (B) the number of fully paid and non-assessable
      shares of Common Stock equal to the product of (A) the number of shares of
      Series G Preferred Stock being so converted multiplied by (B) the quotient
      of (x) the sum of the Accreted Value on the closing date of such Sale
      Transaction plus all dividends accrued since the previous Compounding Date
      divided by (y) the Conversion Price (after giving effect to any
      adjustments pursuant to Section 7(d) below).

                        (ii) The Sale Payment shall be paid, at the option of
the holders of a majority of the shares of Series G Preferred Stock, in the form
of consideration paid in such Sale Transaction on the closing date of such Sale
Transaction or in cash.

                                                                               9


                        (iii) Any securities of the surviving person to be
delivered to the holders of shares of Series G Preferred Stock pursuant to this
Section 7(b) shall be valued as follows:

                              (A) With respect to securities that do not
      constitute "restricted securities," as such term is defined in Rule
      144(a)(3) promulgated under the Securities Act, the value shall be deemed
      to be the Current Market Price of such securities as of three (3) days
      prior to the date of distribution.

                              (B) With respect to securities that constitute
      "restricted securities," as such term is defined in Rule 144(a)(3)
      promulgated under the Securities Act, and that are of the same class or
      series as securities that are publicly traded, the value shall be adjusted
      to make an appropriate discount from the value as set forth in Section
      7(b)(iii)(A) above to reflect the appropriate fair market value thereof,
      as mutually determined by the Board of Directors and the holders of a
      majority of the shares of Series F Preferred Stock, or if there is no
      active public market with respect to such class or series of securities,
      such securities shall be valued in accordance with Section 7(b)(iii)(A)
      above, giving appropriate weight, if any, to such restriction as
      determined in good faith by the Board of Directors.

                        (iv) Immediately upon conversion as provided herein,
each holder of shares of Series G Preferred Stock shall be deemed to be the
holder of record of the Common Stock issuable upon conversion of such holder's
shares of Series G Preferred Stock, notwithstanding that the share register of
the Corporation shall then be closed or that certificates representing the
Common Stock shall not then actually be delivered to such Person. Upon written
notice from the Corporation, each holder of shares of Series G Preferred Stock
so converted shall promptly surrender to the Corporation at its principal place
of business to be maintained by it (or at such other office or agency of the
Corporation as the Corporation may designate by such notice to the holders of
shares of Series G Preferred Stock) certificates representing the shares so
converted.

                        (c) Termination of Rights. On the date of an optional
conversion pursuant to Section 7(a) above or of such automatic conversion
pursuant to Section 7(b) above, all rights with respect to the shares of Series
G Preferred Stock so converted, including the rights, if any, to receive notices
and vote, shall terminate, except only the rights of holders thereof to (i)
receive certificates for the number of shares of Common Stock into which such
shares of Series G Preferred Stock have been converted, (ii) receive the
Conversion Payment in the case of a Qualifying Conversion, (iii) receive the
Sale Payment in the case of an automatic conversion pursuant to Section 7(b)
above, (iv) the payment of dividends pursuant to Section 3 above and (v)
exercise the rights to which they are entitled as holders of Common Stock.

                                                                              10


                  (d) Antidilution Adjustments. The Conversion Price, and the
number and type of securities to be received upon conversion of shares of Series
G Preferred Stock, shall be subject to adjustment as follows:

                        (i) Dividend, Subdivision, Combination or
Reclassification of Common Stock. In the event that the Corporation shall at any
time or from time to time, prior to conversion of shares of Series G Preferred
Stock (w) pay a dividend or make a distribution on the outstanding shares of
Common Stock payable in Capital Stock of the Corporation, (x) subdivide the
outstanding shares of Common Stock into a larger number of shares, (y) combine
the outstanding shares of Common Stock into a smaller number of shares or (z)
issue any shares of its Capital Stock in a reclassification of the Common Stock
(other than any such event for which an adjustment is made pursuant to another
clause of this Section 7(d)), then, and in each such case, the Conversion Price
in effect immediately prior to such event shall be adjusted (and any other
appropriate actions shall be taken by the Corporation) so that the holder of any
share of Series G Preferred Stock thereafter surrendered for conversion shall be
entitled to receive the number of shares of Common Stock or other securities of
the Corporation that such holder would have owned or would have been entitled to
receive upon or by reason of any of the events described above, had such share
of Series G Preferred Stock been converted immediately prior to the occurrence
of such event. An adjustment made pursuant to this Section 7(d)(i) shall become
effective retroactively (x) in the case of any such dividend or distribution, to
a date immediately following the close of business on the record date for the
determination of holders of Common Stock entitled to receive such dividend or
distribution or (y) in the case of any such subdivision, combination or
reclassification, to the close of business on the day upon which such corporate
action becomes effective.

                        (ii) Issuance of Common Stock or Common Stock Equivalent
below Conversion Price.

                              (A) If the Corporation shall at any time or from
      time to time prior to conversion of shares of Series G Preferred Stock,
      issue or sell any shares of Common Stock or Common Stock Equivalents at a
      price per share of Common Stock (the "New Issue Price") that is less than
      the Conversion Price then in effect as of the record date or Issue Date
      (as defined below), as the case may be (treating the price per share of
      Common Stock, in the case of the issuance of any Common Stock Equivalent,
      as equal to (x) the sum of the price for such Common Stock Equivalent plus
      any additional consideration payable (without regard to any anti-dilution
      adjustments) upon the conversion, exchange or exercise of such Common
      Stock Equivalent divided by (y) the number of shares of Common Stock
      initially underlying such Common Stock Equivalent), other than (A)
      issuances or sales for which an adjustment is made pursuant to another
      clause of this Section 7(d) and (B) issuances in connection with an
      Excluded Transaction, then, and in each such case, the Conversion Price
      then in effect shall be adjusted to equal the New Issue Price.

                                                                              11


                              (B) Such adjustment shall be made whenever such
      shares of Common Stock or Common Stock Equivalents are issued, and shall
      become effective retroactively (x) in the case of an issuance to the
      stockholders of the Corporation, as such, to a date immediately following
      the close of business on the record date for the determination of
      stockholders entitled to receive such shares of Common Stock or Common
      Stock Equivalents and (y) in all other cases, on the date (the "Issue
      Date") of such issuance; provided, however, that the determination as to
      whether an adjustment is required to be made pursuant to this Section
      7(d)(ii) shall only be made upon the issuance of such shares of Common
      Stock or Common Stock Equivalents, and not upon the issuance of any
      security into which the Common Stock Equivalents convert, exchange or may
      be exercised.

                              (C) In case at any time any shares of Common Stock
      or Common Stock Equivalents or any rights or options to purchase any
      shares of Common Stock or Common Stock Equivalents shall be issued or sold
      for cash, the consideration received therefor shall be deemed to be the
      amount received by the Corporation therefor, without deduction therefrom
      of any expenses incurred or any underwriting commissions or concessions or
      discounts paid or allowed by the Corporation in connection therewith. In
      case any shares of Common Stock or Common Stock Equivalents or any rights
      or options to purchase any Common Stock or Common Stock Equivalents shall
      be issued or sold for a consideration other than cash, the amount of the
      consideration other than cash received by the Corporation shall be deemed
      to be the fair market value of such consideration, without deduction
      therefrom of any expenses incurred or any underwriting commissions or
      concessions or discounts paid or allowed by the Corporation in connection
      therewith, as determined in good faith by the Board of Directors.

                              (D) If any Common Stock Equivalents (or any
      portions thereof) which shall have given rise to an adjustment pursuant to
      this Section 7(d)(ii) shall have expired or terminated without the
      exercise thereof and/or if by reason of the terms of such Common Stock
      Equivalents there shall have been an increase or increases, with the
      passage of time or otherwise, in the price payable upon the exercise or
      conversion thereof, then the Conversion Price hereunder shall be
      readjusted (but to no greater extent than originally adjusted) in order to
      (1) eliminate from the computation any additional shares of Common Stock
      corresponding to such Common Stock Equivalents as shall have expired or
      terminated, (2) treat the additional shares of Common Stock, if any,
      actually issued or issuable pursuant to the previous exercise of such
      Common Stock Equivalents as having been issued for the consideration
      actually received and receivable therefor and (3) treat any of such Common
      Stock Equivalents which remain outstanding as being subject to exercise or
      conversion on the basis of such exercise or conversion price as shall be
      in effect at the time.

                        (iii) Certain Distributions. In case the Corporation
shall at any time or from time to time, prior to conversion of shares of Series
G Preferred

                                                                              12


Stock, distribute to all holders of shares of the Common Stock (including any
such distribution made in connection with a merger or consolidation in which the
Corporation is the resulting or surviving Person and the Common Stock is not
changed or exchanged) cash, evidences of indebtedness of the Corporation or
another issuer, securities of the Corporation or another issuer or other assets
(excluding cash dividends in which holders of shares of Series G Preferred Stock
participate, in the manner provided in Section 3, dividends payable in shares of
Common Stock for which adjustment is made under another paragraph of this
Section 7(d) and any distribution in connection with an Excluded Transaction) or
rights or warrants to subscribe for or purchase of any of the foregoing, then,
and in each such case, the Conversion Price then in effect shall be adjusted
(and any other appropriate actions shall be taken by the Corporation) by
multiplying the Conversion Price in effect immediately prior to the date of such
distribution by a fraction (x) the numerator of which shall be the Current
Market Price of the Common Stock immediately prior to the date of distribution
less the then fair market value (as determined by the Board of Directors in the
exercise of their fiduciary duties) of the portion of the cash, evidences of
indebtedness, securities or other assets so distributed or of such rights or
warrants applicable to one share of Common Stock and (y) the denominator of
which shall be the Current Market Price of the Common Stock immediately prior to
the date of distribution (but such fraction shall not be greater than one);
provided, however, that no adjustment shall be made with respect to any
distribution of rights or warrants to subscribe for or purchase securities of
the Corporation if the holder of shares of Series G Preferred Stock would
otherwise be entitled to receive such rights or warrants upon conversion at any
time of shares of Series G Preferred Stock into Common Stock. Such adjustment
shall be made whenever any such distribution is made and shall become effective
retroactively to a date immediately following the close of business on the
record date for the determination of stockholders entitled to receive such
distribution.

                        (iv) Other Changes. In case the Corporation at any time
or from time to time, prior to the conversion of shares of Series G Preferred
Stock, shall take any action affecting its Common Stock similar to or having an
effect similar to any of the actions described in any of Sections 7(d)(i), (ii)
or (iii) above or Section 7(g) below (but not including any action described in
any such Section) and the Board of Directors in good faith determines that it
would be equitable in the circumstances to adjust the Conversion Price as a
result of such action, then, and in each such case, the Conversion Price shall
be adjusted in such manner and at such time as the Board of Directors in good
faith determines would be equitable in the circumstances (such determination to
be evidenced in a resolution, a certified copy of which shall be mailed to the
holders of shares of Series G Preferred Stock).

                        (v) No Adjustment. Notwithstanding anything herein to
the contrary, no adjustment under this Section 7(d) need be made to the
Conversion Price if the Corporation receives written notice from holders of a
majority of the outstanding shares of Series G Preferred Stock that no such
adjustment is required.

                  (e) Abandonment. If the Corporation shall take a record of the
holders of its Common Stock for the purpose of entitling them to receive a
dividend or

                                                                              13


other distribution, and shall thereafter and before the distribution to
stockholders thereof legally abandon its plan to pay or deliver such dividend or
distribution, then no adjustment in the Conversion Price shall be required by
reason of the taking of such record.

                  (f) Certificate as to Adjustments. Upon any adjustment in the
Conversion Price, the Corporation shall within a reasonable period (not to
exceed ten (10) days) following any of the foregoing transactions deliver to
each registered holder of shares of Series G Preferred Stock a certificate,
signed by an executive officer of the Corporation, setting forth in reasonable
detail the event requiring the adjustment and the method by which such
adjustment was calculated and specifying the increased or decreased Conversion
Price then in effect following such adjustment.

                  (g) Reorganization, Reclassification. In case of any merger or
consolidation of the Corporation (other than a Sale Transaction) or any capital
reorganization, reclassification or other change of outstanding shares of Common
Stock (other than a change in par value, or from par value to no par value, or
from no par value to par value) (each, a "Transaction"), the Corporation shall
execute and deliver to each holder of shares of Series G Preferred Stock at
least ten (10) Business Days prior to effecting such Transaction a certificate,
signed by an executive officer of the Corporation, stating that the holder of
each share of Series G Preferred Stock shall have the right to receive in such
Transaction, in exchange for each share of Series G Preferred Stock, a security
identical to (and not less favorable than) the Series G Preferred Stock, and
provision shall be made therefor in the agreement, if any, relating to such
Transaction. Any certificate delivered pursuant to this Section 7(g) shall
provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 7. The provisions of
this Section 7(g) and any equivalent thereof in any such certificate similarly
shall apply to successive transactions.

                  (h) Notices. In case at any time or from time to time:

                        (w) the Corporation shall declare a dividend (or any
other distribution) on its shares of Common Stock;

                        (x) the Corporation shall authorize the granting to the
holders of its Common Stock rights or warrants to subscribe for or purchase any
shares of Capital Stock of any class or of any other rights or warrants;

                        (y) there shall be any Transaction; or

                        (z) there shall occur a Sale Transaction;

then the Corporation shall mail to each holder of shares of Series G Preferred
Stock at such holder's address as it appears on the transfer books of the
Corporation, as promptly as possible but in any event at least ten (10) Business
Days prior to the applicable date hereinafter specified, a notice stating (A)
the date on which a record is to be taken for the purpose of such dividend,
distribution or granting of rights or warrants or, if a record is not to be
taken, the date as of which the holders of Common Stock of record to be

                                                                              14


entitled to such dividend, distribution or granting of rights or warrants are to
be determined, or (B) the date on which such Transaction or Sale Transaction is
expected to become effective and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their Common
Stock for shares of stock or other securities or property or cash deliverable
upon such Transaction or Sale Transaction. Notwithstanding the foregoing, in the
case of any event to which Section 7(g) above is applicable, the Corporation
shall also deliver the certificate described in Section 7(g) above to each
holder of shares of Series G Preferred Stock at least ten (10) Business Days
prior to effecting such reorganization or reclassification as aforesaid.

                  (i) Reservation of Common Stock. The Corporation shall at all
times reserve and keep available for issuance upon the conversion of shares of
Series G Preferred Stock, such number of its authorized but unissued shares of
Common Stock as will from time to time be sufficient to permit the conversion of
all outstanding shares of Series G Preferred Stock, and shall take all action to
increase the authorized number of shares of Common Stock if at any time there
shall be insufficient authorized but unissued shares of Common Stock to permit
such reservation or to permit the conversion of all outstanding shares of Series
G Preferred Stock; provided that (x) the holders of shares of Series G Preferred
Stock vote such shares in favor of any such action that requires a vote of
stockholders and (y) such holders cause any directors elected by them pursuant
to Section 6(b) above to vote in favor of any such action that requires a vote
of the Board of Directors.

                  (j) No Conversion Tax or Charge. The issuance or delivery of
certificates for Common Stock upon the conversion of shares of Series G
Preferred Stock shall be made without charge to the converting holder of shares
of Series G Preferred Stock for such certificates or for any tax in respect of
the issuance or delivery of such certificates or the securities represented
thereby, and such certificates shall be issued or delivered in the respective
names of, or (subject to compliance with the applicable provisions of federal
and state securities laws) in such names as may be directed by, the holders of
the shares of Series G Preferred Stock converted; provided, however, that the
Corporation shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any such certificate in
a name other than that of the holder of the shares of Series G Preferred Stock
converted, and the Corporation shall not be required to issue or deliver such
certificate unless or until the Person or Persons requesting the issuance or
delivery thereof shall have paid to the Corporation the amount of such tax or
shall have established to the reasonable satisfaction of the Corporation that
such tax has been paid.

            8. Certain Remedies. Any registered holder of shares of Series G
Preferred Stock shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Certificate of Designations and to enforce
specifically the terms and provisions of this Certificate of Designations in any
court of the United States or any state thereof having jurisdiction, this being
in addition to any other remedy to which such holder may be entitled at law or
in equity.

                                                                              15


            9. Business Day. If any payment shall be required by the terms
hereof to be made on a day that is not a Business Day, such payment shall be
made on the immediately succeeding Business Day.

            10. Definitions. As used in this Certificate of Designations, the
following terms shall have the following meanings (with terms defined in the
singular having comparable meanings when used in the plural and vice versa),
unless the context otherwise requires:

            "Accreted Value" means, as of any date, with respect to each share
of Series G Preferred Stock, $2.36 (subject to adjustment for the events
described in Section 7(d)(i)(w), Section 7(d)(i)(x) or Section 7(d)(i)(y) if
such events occur with respect to the shares of Series G Preferred Stock) plus
the amount of dividends which have accrued, compounded and been added thereto to
such date pursuant to Section 3(b) hereof.

            "Affiliate" means any Person who is an "affiliate" as defined in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act. In
addition, the following shall be deemed to be Affiliates of GAP Coinvestment,
GAP LP and GapStar: (a) GAP LLC, the members of GAP LLC, the limited partners of
GAP Coinvestment and GAP LP and the members of GapStar; (b) any Affiliate of GAP
LLC, the members of GAP LLC, the limited partners of GAP Coinvestment and GAP LP
or the members of GapStar; and (c) any limited liability company or partnership
a majority of whose members or partners, as the case may be, are members or
former members of GAP LLC or consultants or key employees of General Atlantic
Service Corporation, a Delaware corporation and an Affiliate of GAP LLC. In
addition, GAP LP, GAP Coinvestment and GapStar shall be deemed to be Affiliates
of one another.

            "Automatic Redemption Date" shall have the meaning ascribed to it in
Section 5(a) hereof.

            "Board of Directors" means the Board of Directors of the
Corporation.

            "Business Day" means any day except a Saturday, a Sunday, or other
day on which commercial banks in the State of New York are authorized or
required by law or executive order to close.

            "Capital Stock" means, with respect to any Person, any and all
shares, interests, participations, rights in, or other equivalents (however
designated and whether voting or non-voting) of, such Person's capital stock
(including, without limitation, common stock and preferred stock) and any and
all rights, warrants or options exchangeable for or convertible into such
capital stock.

            "Commission" means the United States Securities and Exchange
Commission.

                                                                              16


            "Common Stock" shall have the meaning ascribed to it in Section 2
hereof.

            "Common Stock Equivalent" means any security or obligation which is
by its terms, directly or indirectly, convertible, exchangeable or exercisable
into or for shares of Common Stock, including, without limitation, the Series G
Preferred Stock, and any option, warrant or other subscription or purchase right
with respect to Common Stock or any Common Stock Equivalent.

            "Compounding Date" shall have the meaning ascribed to it in Section
3(b) hereof.

            "Conversion Payment" shall have the meaning ascribed to it in
Section 7(a) hereof.

            "Conversion Price" shall have the meaning ascribed to it in Section
7(a) hereof.

            "Corporation" shall have the meaning ascribed to it in the first
paragraph of this Certificate of Designation.

            "Current Market Price" per share of Capital Stock of any Person
means, as of the date of determination, (a) the average of the daily Market
Price under clause (a), (b) or (c) of the definition thereof of such Capital
Stock during the immediately preceding thirty (30) trading days ending on such
date, and (b) if such Capital Stock is not then listed or admitted to trading on
any national securities exchange or quoted in the over-the-counter market, then
the Market Price under clause (d) of the definition thereof on such date.

            "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder.

            "Excluded Transaction" means (a) any issuance of up to an aggregate
of 2,630,817 shares of restricted stock or options to purchase shares of Common
Stock (subject to adjustment in the event of stock splits, combinations or
similar occurrences) to employees, officers or directors of the Corporation
pursuant to the Stock Option Plan, (b) any issuance of Common Stock (i) upon the
conversion of shares of Series G Preferred Stock, (ii) upon the conversion of
shares of Series F Preferred Stock, (iii) as a dividend on shares of Series G
Preferred Stock or (iv) upon conversion or exercise of any Common Stock
Equivalents and/or (c) any issuance of Common Stock in connection with any
Liquidation Payment or Sale Payment.

            "GAP Coinvestment" shall have the meaning ascribed to it in Section
6(b) hereof.

                                                                              17


            "GAP LLC" means General Atlantic Partners, LLC, a Delaware limited
liability company and the general partner of GAP LP and the managing member of
GapStar, and any successor to such entity.

            "GAP LP" shall have the meaning ascribed to it in Section 6(b)
hereof.

            "GapStar" shall have the meaning ascribed to it in Section 6(b)
hereof.

            "Issue Date" shall have the meaning ascribed to it in Section
7(d)(ii)(B) hereof.

            "Junior Stock" shall have the meaning ascribed to it in Section 2(a)
hereof.

            "Liquidation" means the voluntary or involuntary liquidation under
applicable bankruptcy or reorganization legislation, or the dissolution or
winding up of the Corporation.

            "Liquidation Payment" shall have the meaning ascribed to it in
Section 4(a) hereof.

            "Market Price" means, with respect to the Capital Stock of any
Person, as of the date of determination, (a) if such Capital Stock is listed on
a national securities exchange, the closing price per share of such Capital
Stock on such date published in The Wall Street Journal (National Edition) or,
if no such closing price on such date is published in The Wall Street Journal
(National Edition), the average of the closing bid and asked prices on such
date, as officially reported on the principal national securities exchange on
which such Capital Stock is then listed or admitted to trading; or (b) if such
Capital Stock is not then listed or admitted to trading on any national
securities exchange but is designated as a national market system security by
the National Association of Securities Dealers, Inc., the last trading price of
such Capital Stock on such date; or (c) if there shall have been no trading on
such date or if such Capital Stock is not designated as a national market system
security by the National Association of Securities Dealers, Inc., the average of
the reported closing bid and asked prices of such Capital Stock on such date as
shown by NASDAQ and reported by any member firm of the New York Stock Exchange
selected by the Corporation; or (d) if none of (a), (b) or (c) is applicable, a
market price per share determined in good faith by the Board of Directors.

            "NASDAQ" means The Nasdaq Stock Market, Inc.

            "New Issue Price" shall have the meaning ascribed to it in Section
7(d)(ii)(A) hereof.

            "Participation Factor" means two (2), but shall be reduced from two
(2) to one (1) in the case of a Sale Transaction if the Participation Reduction
Amount equals an amount that is greater than the product of (x) two multiplied
by (y) the Conversion Price (after giving effect to any adjustments pursuant to
Section 7(d) above).

                                                                              18


            "Participation Reduction Amount" means, with respect to a Sale
Transaction, a fraction, (A) the numerator of which is the excess of (x) the
aggregate value of the consideration paid to the holders of the Corporation's
Capital Stock in such Sale Transaction as determined in good faith by the Board
of Directors minus (y) the aggregate Accreted Value of the shares of Series G
Preferred Stock on the closing date of such Sale Transaction plus all dividends
accrued since the previous Compounding Date minus (z) the amount of the
aggregate Participation Payment (as defined in Section 4(a) of the Certificate
of Powers, Designations, Preferences and Rights of the Series F Preferred Stock)
payable to the holders of the shares of Series F Preferred Stock in the event of
a Sale Transaction (for purposes of this clause (z), assuming there is
sufficient aggregate consideration in such Sale Transaction to pay such amount
in full to the holders of the Series F Preferred Stock) and (B) the denominator
of which is the aggregate number of outstanding shares of Common Stock assuming
the conversion of the shares of Preferred Stock, the shares of Series F
Preferred Stock and all other Common Stock Equivalents immediately prior to the
closing date of such Sale Transaction.

            "Per Share Price" means, as of any date, the average trading price
of one share of Common Stock, as reported on NASDAQ or such other exchange or
quotation system that may on such date constitute the primary exchange or
quotation system on which the shares of Common Stock are then listed or quoted,
on each of the twenty (20) consecutive Trading Days ending on and including the
Trading Day prior to such date.

            "Person" means any individual, firm, corporation, partnership,
limited liability company, trust, incorporated or unincorporated association,
joint venture, joint stock company, governmental body or other entity of any
kind.

            "Qualifying Conversion" means any conversion of the Series G
Preferred Stock pursuant to Section 7(a) on or after March 15, 2004.

            "Qualifying Conversion Share Limit" means (a) in the case of a
Qualifying Conversion on or after March 15, 2004, but prior to March 15, 2005,
2,824,858 shares of Series G Preferred Stock (subject to adjustment for the
events described in Section 7(d)(i)(w), Section 7(d)(i)(x) or Section 7(d)(i)(y)
if such events occur with respect to the shares of Series G Preferred Stock) and
(b) in the case of a Qualifying Conversion on or after March 15, 2005, but prior
to March 15, 2006, 5,649,717 shares of Series G Preferred Stock (subject to
adjustment for the events described in Section 7(d)(i)(w), Section 7(d)(i)(x) or
Section 7(d)(i)(y) if such events occur with respect to the shares of Series G
Preferred Stock).

            "Redeemed Shares" shall have the meaning ascribed to it in Section
5(a) hereof.

            "Redemption Payment" shall have the meaning ascribed to it in
Section 5(a) hereof.

            "Redemption Price" shall have the meaning ascribed to it in Section
5(a) hereof.

                                                                              19


            "Sale Payment" has the meaning ascribed to it in Section 7(b)(i)(A)
hereof.

            "Sale Transaction" shall mean (a) (i) the merger or consolidation of
the Corporation into or with one or more Persons, (ii) the merger or
consolidation of one or more Persons into or with the Corporation or (iii) a
tender offer or other business combination if, in the case of (i), (ii) or
(iii), the stockholders of the Corporation prior to such merger or consolidation
do not retain at least a majority of the voting power of the surviving Person,
(b) the voluntary sale, conveyance, exchange or transfer to another Person of
(i) the voting Capital Stock of the Corporation if, after such sale, conveyance,
exchange or transfer, the stockholders of the Corporation prior to such sale,
conveyance, exchange or transfer do not retain at least a majority of the voting
power of the Corporation or (ii) all or substantially all of the assets of the
Corporation, or (c) the sale of assets of the Corporation, other than such a
sale in the ordinary course of business, the gross proceeds of which exceed
$10,000,000; provided, that with respect to (b)(ii) above, for the avoidance of
doubt, the sale, conveyance, exchange or transfer of the Ticketing Service Group
shall be deemed to be such a Sale, conveyance or transfer of substantially all
of the assets of the Corporation.

            "Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the Commission promulgated thereunder.

            "Series F Preferred Stock" shall have the meaning ascribed to it in
2(a) hereof.

            "Series G Directors" shall have the meaning ascribed to it in
Section 6(b) hereof.

            "Series G Preferred Stock" shall have the meaning ascribed to it in
Section 1 hereof.

            "Stock Option Plan" means (a) the 1999 Stock Incentive Plan of the
Corporation and (b) the 2001 Stock Option Plan of the Corporation, pursuant to
which up to an aggregate of 2,630,817 shares of restricted stock and options to
purchase shares of Common Stock have been reserved and available for grant to
officers, directors, employees and consultants of the Corporation.

            "Subsidiaries" means, as of the relevant date of determination, with
respect to any Person, a corporation or other Person of which 50% or more of the
voting power of the outstanding voting equity securities or 50% or more of the
outstanding economic equity interest is held, directly or indirectly, by such
Person.

            "Transaction" shall have the meaning ascribed to it in Section 7(g)
hereof.

            "Trading Day" shall mean any day for which quotations are available
in respect of shares of Common Stock on NASDAQ or such other exchange or
quotation

                                                                              20


system that may on such date constitute the primary exchange or quotation system
on which the shares of Common Stock are then listed or quoted.


                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                                                              21


            IN WITNESS WHEREOF, the undersigned has executed and subscribed this
certificate this 11th day of March, 2002.

                                        s/ Ronald Bension
                                        ---------------------------------
                                        Ronald Bension
                                        Chief Executive Officer

EX-10.1

                                                                    Exhibit 10.1


- --------------------------------------------------------------------------------




                          SECURITIES PURCHASE AGREEMENT


                                      among


                               TICKETS.COM, INC.,


                      GENERAL ATLANTIC PARTNERS, 74, L.P.,


                       GAP COINVESTMENT PARTNERS II, L.P.


                                       and


                                  GAPSTAR, LLC










                            ------------------------

                              Dated: March 15, 2002

                            ------------------------





- --------------------------------------------------------------------------------

                                Table of Contents




                                                                           Page
                                                                           ----
                                                                       
ARTICLE I DEFINITIONS ...............................................       1
      1.1     Definitions ...........................................       1

ARTICLE II PURCHASE AND SALE OF PREFERRED STOCK AND WARRANTS ........       8
      2.1     Purchase and Sale of Preferred Stock ..................       8
      2.2     Certificates of Designations ..........................       8
      2.3     Use of Proceeds .......................................       8
      2.4     Deliveries on the Date Hereof by the Company ..........       8
      2.5     Deliveries on the Date Hereof by the Purchasers .......      10
      2.6     Closing ...............................................      10
      2.7     Notice of Issuance to Stockholders ....................      10

ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY ...........      10
      3.1     Corporate Existence and Power .........................      11
      3.2     Authorization; No Contravention .......................      11
      3.3     Governmental Authorization; Third Party Consents ......      11
      3.4     Binding Effect ........................................      12
      3.5     Litigation ............................................      12
      3.6     Compliance with Laws ..................................      12
      3.7     Capitalization ........................................      13
      3.8     No Default or Breach; Contractual Obligations .........      14
      3.9     SEC Documents; Financial Statements ...................      15
      3.10    No Material Adverse Change; Ordinary Course of Business      15
      3.11    Taxes .................................................      16
      3.12    Private Offering ......................................      16
      3.13    Employee Benefit Plans ................................      16
      3.14    Change of Control Payments ............................      17
      3.15    Liabilities ...........................................      17
      3.16    Intellectual Property .................................      18
      3.17    Privacy of Customer Information .......................      20
      3.18    Environmental Matters .................................      20
      3.19    Broker's, Finder's or Similar Fees ....................      20

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS .........      20
      4.1     Existence and Power ...................................      20
      4.2     Authorization; No Contravention .......................      20
      4.3     Governmental Authorization; Third Party Consents ......      21
      4.4     Binding Effect ........................................      21
      4.5     Purchase for Own Account ..............................      21
      4.6     Restricted Securities .................................      22
      4.7     Broker's, Finder's or Similar Fees ....................      22
      4.8     Accredited Investor ...................................      22



                                       i



                                                                           Page
                                                                           ----
                                                                       
ARTICLE V INDEMNIFICATION ...........................................      22
      5.1     Indemnification .......................................      22
      5.2     Notification ..........................................      23
      5.3     Contribution ..........................................      24

ARTICLE VI AFFIRMATIVE COVENANTS ....................................      24
      6.1     Conduct of Business of the Company ....................      24
      6.2     No Solicitation .......................................      25
      6.3     Reasonable Efforts ....................................      25
      6.4     Reservation of Common Stock ...........................      25
      6.5     NASDAQ Listing ........................................      26
      6.6     Insurance .............................................      26
      6.7     Tax Reporting .........................................      26
      6.8     Books and Records .....................................      26
      6.9     Back-ups of Computer Software .........................      26
      6.10    Inspection ............................................      26
      6.11    Board of Directors ....................................      26

ARTICLE VII MISCELLANEOUS ...........................................      27
      7.1     Survival of Representations and Warranties ............      27
      7.2     Notices ...............................................      27
      7.3     Successors and Assigns; Third Party Beneficiaries .....      28
      7.4     Amendment and Waiver ..................................      28
      7.5     Counterparts ..........................................      29
      7.6     Headings ..............................................      29
      7.7     GOVERNING LAW .........................................      29
      7.8     Severability ..........................................      29
      7.9     Rules of Construction .................................      29
      7.10    Entire Agreement ......................................      29
      7.11    Fees ..................................................      29
      7.12    Publicity; Confidentiality ............................      29
      7.13    Further Assurances ....................................      30



EXHIBITS
- --------
A           Form of Warrant
B           Amended and Restated Bylaws
C           Form of Certificate of Designations
D           Amended and Restated Certificate of Incorporation
E           Form of Amended and Restated Registration Rights Agreement
F           Form of Brobeck Phleger & Harrison LLP Opinion Delivered on
                 the date hereof
G           Form of Brobeck Phleger & Harrison LLP Opinion Delivered on
                 the Closing Date


SCHEDULES

2.1         Purchased Shares, Warrants and Purchase Price


                                       ii

2.4(h)      Waivers of Change of Control Contracts
3.1(a)      Corporate Existence
3.1(c)      Due Qualification
3.2         Execution, Delivery and Performance
3.3         Authorizations and Consents
3.5         Litigation
3.7(a)      Options, Warrants, Conversion Privileges, Subscription or
                  Purchase Rights
3.7(b)      List of Subsidiaries and their Equity Holders
3.7(c)      NASDAQ Listing Compliance
3.8(a)      Contractual Obligations
3.8(b)      Change of Control Contracts
3.10(a)     Material Adverse Change in Condition of Company
3.10(b)     Material Transactions
3.13        Employee Benefit Plans
3.14        Change of Control Payments
3.16(a)(ii) Intellectual Property Orders and Threatened Litigation
3.16(a)(iv) Infringements by the Company of Intellectual Property of Others
3.16(a)(v)  Intellectual Property Litigation
3.16(b)     Infringements of Intellectual Property of the Company
3.16(d)     Licenses or Other Agreements Requiring Material Royalty Payments


                                      iii

                          SECURITIES PURCHASE AGREEMENT


            SECURITIES PURCHASE AGREEMENT, dated March 15, 2002 (this
"Agreement"), by and among Tickets.com, Inc., a Delaware corporation (the
"Company"), General Atlantic Partners 74, L.P., a Delaware limited partnership
("GAP LP"), GAP Coinvestment Partners II, L.P., a Delaware limited partnership
("GAP Coinvestment"), and GapStar, LLC, a Delaware limited liability company
("GapStar" and, collectively with GAP LP and GAP Coinvestment, the
"Purchasers").

            WHEREAS, upon the terms and conditions set forth in this Agreement,
the Company proposes to issue and sell to each of the Purchasers (i) the
aggregate number of shares of Series G Senior Cumulative Redeemable Convertible
Participating Preferred Stock, par value $0.000225 per share (the "Preferred
Stock"), of the Company set forth opposite such Purchaser's name on Schedule 2.1
hereto and (ii) a warrant (each a "Warrant" and all of the Warrants so issued,
the "Warrants") to purchase, subject to the terms and conditions thereof, the
aggregate number of shares of Common Stock (subject to adjustment) set forth
opposite such Purchaser's name on Schedule 2.1 hereto, at an exercise price of
$2.36 per share (subject to adjustment), containing the terms and conditions set
forth in the form of warrant attached hereto as Exhibit A, each of (i) and (ii)
together for the aggregate purchase price set forth opposite such Purchaser's
name on Schedule 2.1 hereto; and

            WHEREAS, each share of Preferred Stock is convertible (subject to
adjustment) into one share, par value $0.000225 per share, of common stock of
the Company (the "Common Stock").

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

                                   ARTICLE I

                                   DEFINITIONS

            1.1 Definitions. As used in this Agreement, and unless the context
requires a different meaning, the following terms have the meanings indicated:

            "Affiliate" shall mean any Person who is an "affiliate" as defined
in Rule 12b-2 of the General Rules and Regulations under the Exchange Act. In
addition, the following shall be deemed to be Affiliates of GAP Coinvestment,
GAP LP and GapStar: (a) GAP LLC, the members of GAP LLC, the limited partners of
GAP Coinvestment, the limited partners of GAP LP and the members of GapStar; (b)
any Affiliate of GAP LLC, the members of GAP LLC, the limited partners of GAP
Coinvestment or GAP LP and the members of GapStar; and (c) any limited liability
company or partnership a majority of whose members or partners, as the case may
be, are members or former members of GAP LLC or consultants or key employees of
General

                                                                               2


Atlantic Service Corporation, a Delaware corporation and an Affiliate of GAP
LLC. In addition, GAP LP, GAP Coinvestment and GapStar shall be deemed to be
Affiliates of one another.

            "Agreement" means this Agreement as the same may be amended,
supplemented or modified in accordance with the terms hereof.

            "Alternative Proposal" shall mean (a) any offer or proposal, or any
indication of interest in making an offer or proposal, made by any "person" or
"group" (as such terms are used for purposes of Section 13(d)(3) of the Exchange
Act) at any time (i) which is structured to permit such person or group to
acquire beneficial ownership of at least ten percent (10%) of the assets of the
Company and its Subsidiaries taken as a whole, or at least ten percent (10%) of
the outstanding capital stock of the Company pursuant to a merger,
consolidation, tender offer or other business combination, sale or purchase of
capital stock or Stock Equivalents, sale of assets, tender offer or exchange
offer or similar transaction or (ii) which involves the incurrence or assumption
of Indebtedness by the Company or any of its Subsidiaries on a secured or
unsecured basis of at least $5,000,000, including, in the case of clauses (i)
and (ii) above, any single or multi-step transaction or series of related
transactions, in each case other than the transactions with the Purchasers and
(b) any offer or proposal made in the context of a proxy contest with respect to
clause (i) above.

            "Audit Committee" has the meaning set forth in Section 5.8 of this
Agreement.

            "Board of Directors" means the Board of Directors of the Company.

            "Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks in the State of New York are authorized or
required by law or executive order to close.

            "Bylaws" means the Amended and Restated Bylaws of the Company in
effect on the date hereof and the Closing Date and attached hereto as Exhibit B,
as the same may be amended from time to time.

            "Certificate of Designations" means the Certificate of Designations
with respect to the Preferred Stock adopted by a special committee of the Board
of Directors and duly filed with the Secretary of State of the State of Delaware
on or before the date hereof substantially in the form attached hereto as
Exhibit C.

            "Certificate of Incorporation" means the Amended and Restated
Certificate of Incorporation of the Company in effect on the date hereof and the
Closing Date and attached hereto as Exhibit D, as the same may be amended from
time to time.

            "Change of Control Contracts" has the meaning set forth in Section
3.8(b) of this Agreement.

                                                                               3


            "Claims" has the meaning set forth in Section 3.5 of this Agreement.

            "Closing" has the meaning set forth in Section 2.6 of this
Agreement.

            "Closing Date" has the meaning set forth in Section 2.6 of this
Agreement.

            "Code" means the Internal Revenue Code of 1986, as amended, or any
successor statute thereto.

            "Commission" means the United States Securities and Exchange
Commission or any similar agency then having jurisdiction to enforce the
Securities Act.

            "Common Stock" has the meaning set forth in the recitals to this
Agreement.

            "Commonly Controlled Entity" means any entity which is under common
control with the Company within the meaning of Code section 414(b), (c), (m),
(o) or (t).

            "Company" has the meaning set forth in the preamble to this
Agreement.

            "Company Plans" has the meaning set forth in Section 3.13 of this
Agreement.

            "Condition of the Company" means the assets, business, properties,
prospects, operations or condition (financial or otherwise) of the Company and
its Subsidiaries, taken as a whole.

            "Contingent Obligation" means, as applied to any Person, any direct
or indirect liability of that Person with respect to any Indebtedness, lease,
dividend, guaranty, letter of credit or other obligation, contractual or
otherwise (the "primary obligation") of another Person (the "primary obligor"),
whether or not contingent, (a) to purchase, repurchase or otherwise acquire such
primary obligations or any property constituting direct or indirect security
therefor, (b) to advance or provide funds (i) for the payment or discharge of
any such primary obligation, or (ii) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet item, level of income or financial condition of
the primary obligor, (c) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation, or
(d) otherwise to assure or hold harmless the owner of any such primary
obligation against loss or failure or inability to perform in respect thereof.
The amount of any Contingent Obligation shall be deemed to be an amount equal to
the stated or determinable amount of the primary obligation in respect of which
such Contingent Obligation is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof.

            "Contractual Obligations" means, as to any Person, any provision of
any security issued by such Person or of any agreement, undertaking, contract,
indenture,

                                                                               4


mortgage, deed of trust or other instrument to which such Person is a party or
by which it or any of its property is bound.

            "Copyrights" means any foreign or United States copyright
registrations and applications for registration thereof, and any non-registered
copyrights.

            "Environmental Laws" means federal, state, local and foreign laws,
principles of common laws, civil laws, regulations, and codes, as well as
orders, decrees, judgments or injunctions, issued, promulgated, approved or
entered thereunder relating to pollution, protection of the environment or
public health and safety.

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

            "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder.

            "Financial Statements" has the meaning set forth in Section 3.9 of
this Agreement.

            "GAAP" means United States generally accepted accounting principles
in effect from time to time.

            "GAP Coinvestment" has the meaning set forth in the preamble to this
Agreement.

            "GAP LLC" means General Atlantic Partners, LLC, a Delaware limited
liability company and the general partner of GAP LP and the managing member of
GapStar, and any successor to such entity.

            "GAP LP" has the meaning set forth in the preamble to this
Agreement.

            "GapStar" has the meaning set forth in the preamble to this
Agreement.

            "Governmental Authority" means the government of any nation, state,
city, locality or other political subdivision thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.

            "Indebtedness" means, as to any Person, (a) all obligations of such
Person for borrowed money (including, without limitation, reimbursement and all
other obligations with respect to surety bonds, letters of credit and bankers'
acceptances, whether or not matured), (b) all obligations of such Person to pay
the deferred purchase price of property or services, except trade accounts
payable and accrued commercial or trade liabilities arising in the ordinary
course of business, (c) all interest rate and currency swaps, caps, collars and
similar agreements or hedging devices under which payments are obligated to be
made by such Person, whether periodically or upon the happening of a

                                                                               5


contingency, (d) all indebtedness created or arising under any conditional sale
or other title retention agreement with respect to property acquired by such
Person (even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (e) all obligations of such Person under leases which have been or
should be, in accordance with GAAP, recorded as capital leases, (f) all
indebtedness secured by any Lien (other than Liens in favor of lessors under
leases other than leases included in clause (e)) on any property or asset owned
or held by that Person regardless of whether the indebtedness secured thereby
shall have been assumed by that Person or is non-recourse to the credit of that
Person, and (g) any Contingent Obligation of such Person.

            "Indemnified Party" has the meaning set forth in Section 5.1 of this
Agreement.

            "Indemnifying Party" has the meaning set forth in Section 5.1 of
this Agreement.

            "Intellectual Property" has the meaning set forth in Section 3.16 of
this Agreement.

            "Internet Assets" means any Internet domain names and other computer
user identifiers and any rights in and to sites on the worldwide web, including
rights in and to any text, graphics, audio and video files and html or other
code incorporated in such sites.

            "Knowledge" means the knowledge of the Company after due inquiry.

            "Liabilities" has the meaning set forth in Section 3.15 of this
Agreement.

            "Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, encumbrance, lien (statutory or other) or preference, priority,
right or other security interest or preferential arrangement of any kind or
nature whatsoever (excluding preferred stock and equity related preferences).

            "Losses" has the meaning set forth in Section 5.1 of this Agreement.

            "NASDAQ" means The Nasdaq Stock Market, Inc.

            "Note" has the meaning set forth in Section 2.1 of this Agreement.

            "Orders" has the meaning set forth in Section 3.2 of this Agreement.

            "Patents" means any foreign or United States patents and patent
applications, including any divisions, continuations, continuations-in-part,
substitutions or reissues thereof, whether or not patents are issued on such
applications and whether or not such applications are modified, withdrawn or
resubmitted.

            "Permits" has the meaning set forth in Section 3.6(b) of this
Agreement.

                                                                               6


            "Person" means any individual, firm, corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, limited liability company, Governmental Authority or other entity of
any kind, and shall include any successor (by merger or otherwise) of such
entity.

            "Plan" means any employee benefit plan, arrangement, policy,
program, agreement or commitment (whether or not an employee plan within the
meaning of section 3(3) of ERISA), including, without limitation, any
employment, consulting or deferred compensation agreement, executive
compensation, bonus, incentive, pension, profit-sharing, savings, retirement,
stock option, stock purchase or severance pay plan, any life, health, disability
or accident insurance plan, whether oral or written, whether or not subject to
ERISA, as to which the Company or any Commonly Controlled Entity has or in the
future could have any direct or indirect, actual or contingent liability.

            "Preferred Stock" has the meaning set forth in the recitals to this
Agreement.

            "Purchased Shares" has the meaning set forth in Section 2.1 of this
Agreement.

            "Purchasers" has the meaning set forth in the preamble to this
Agreement.

            "Registration Rights Agreement" means the Amended and Restated
Registration Rights Agreement substantially in the form attached hereto as
Exhibit E.

            "Requirements of Law" means, as to any Person, any law, statute,
treaty, rule, regulation, right, privilege, qualification, license or franchise
or determination of an arbitrator or a court or other Governmental Authority or
stock exchange, in each case applicable or binding upon such Person or any of
its property or to which such Person or any of its property is subject or
pertaining to any or all of the transactions contemplated or referred to herein.

            "Retiree Welfare Plan" means any welfare plan (as defined in Section
3(1) of ERISA) that provides benefits to current or former employees beyond
their retirement or other termination of service (other than coverage mandated
by Section 4980A of the Code, commonly referred to as "COBRA," the cost of which
is fully paid by the current or former employee or his or her dependents).

            "SEC Documents" has the meaning set forth in Section 3.9 of this
Agreement.

            "Securities" means the Purchased Shares and the Warrants.

            "Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder.

                                                                              7

            "Series F Certificate of Designations" means the Certificate of
Designations with respect to the Series F Preferred Stock adopted by the Board
of Directors and duly filed with the Secretary of State of the State of Delaware
on June 21, 2001.

            "Series F Preferred Stock" means the Series F Senior Cumulative
Redeemable Preferred Stock, par value $0.000225 per share, of the Company.

            "Software" means any computer software programs, source code, object
code, data and documentation, including, without limitation, any computer
software programs that incorporate and run the Company's pricing models,
formulae and algorithms.

            "Stock Equivalents" means any security or obligation which is by its
terms, whether directly or indirectly, convertible into or exchangeable or
exercisable for shares of Common Stock or other capital stock of the Company,
and any option, warrant or other subscription or purchase right with respect to
Common Stock or such other capital stock.

            "Stock Option Plan" means (a) the 1999 Stock Incentive Plan of the
Company and (b) the 2001 Stock Option Plan of the Company, pursuant to which up
to 2,630,817 shares of restricted stock and options to purchase shares of Common
Stock have been reserved and available for grant to officers, directors,
employees and consultants of the Company.

            "Subsidiaries" means, as of the relevant date of determination, with
respect to any Person, a corporation or other Person of which 50% or more of the
voting power of the outstanding voting equity securities or 50% or more of the
outstanding economic equity interest is held, directly or indirectly, by such
Person. Unless otherwise qualified, or the context otherwise requires, all
references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer
to a Subsidiary or Subsidiaries of the Company.

            "Taxes" means any federal, state, provincial, county, local, foreign
and other taxes (including, without limitation, income, profits, windfall
profits, alternative, minimum, accumulated earnings, personal holding company,
capital stock, premium, estimated, excise, sales, use, occupancy, gross
receipts, franchise, ad valorem, severance, capital levy, production, transfer,
withholding, employment, unemployment compensation, payroll and property taxes,
import duties and other governmental charges and assessments), whether or not
measured in whole or in part by net income, and including deficiencies,
interest, additions to tax or interest, and penalties with respect thereto, and
including expenses associated with contesting any proposed adjustments related
to any of the foregoing.

            "Trade Secrets" means any trade secrets, research records,
processes, procedures, manufacturing formulae, technical know-how, technology,
blue prints, designs, plans, inventions (whether patentable and whether reduced
to practice), invention disclosures and improvements thereto.

            "Trademarks" means any foreign or United States trademarks, service
marks, trade dress, trade names, brand names, designs and logos, corporate
names, product or service identifiers, whether registered or unregistered, and
all registrations and applications for registration thereof.

                                                                               8


            "Transaction Documents" means, collectively, this Agreement, the
Warrants, the Certificate of Designations and the Registration Rights Agreement.

            "Warrant Shares" has the meaning set forth in Section 2.1 of this
Agreement.

            "Warrants" has the meaning set forth in the recitals to this
Agreement.

                                   ARTICLE II

                PURCHASE AND SALE OF PREFERRED STOCK AND WARRANTS

            2.1 Purchase and Sale of Preferred Stock. Subject to the terms and
conditions herein set forth, the Company agrees to issue and sell to each
Purchaser, and each Purchaser, severally and not jointly, agrees to purchase
from the Company, on the Closing Date, (i) the aggregate number of shares of
Preferred Stock set forth opposite such Purchaser's name on Schedule 2.1 hereto
(all of the shares of Preferred Stock being purchased pursuant hereto being
referred to herein as the "Purchased Shares"), and (ii) a Warrant to purchase
the aggregate number of shares of Common Stock set forth opposite such
Purchaser's name on Schedule 2.1 hereto (all of the shares of Common Stock
issuable upon the exercise of the Warrants being purchased pursuant hereto being
referred to herein as the "Warrant Shares"), together for the aggregate purchase
price set forth opposite such Purchaser's name on Schedule 2.1 hereto.

            2.2 Certificates of Designations. The Purchased Shares shall have
the preferences and rights set forth in the Certificate of Designations.

            2.3 Use of Proceeds. The Company shall use the proceeds from the
sale of the Securities to the Purchasers (a) first, to repay any indebtedness
owed by the Company to GAP LP or any of its Affiliates and (b) second, to fund
the Company's working capital.

            2.4 Deliveries on the Date Hereof by the Company. On the date
hereof, the Company shall deliver to each Purchaser the following:

                  (a) Secretary's Certificate. The Company shall deliver to the
Purchasers a certificate from the Company, in form and substance satisfactory to
the Purchasers, dated the date hereof and signed by the Secretary or an
Assistant Secretary of the Company, certifying (a) that the Company is in good
standing with the Secretary of State of the State of Delaware, (b) that the
attached copies of the Certificate of Incorporation, the Bylaws and resolutions
of the Board of Directors of the Company approving this Agreement and the other
Transaction Documents and the transactions contemplated hereby and thereby, are
all true, complete and correct and remain unamended and in full force and effect
and (c) as to the incumbency and specimen signature of each officer of the
Company executing this Agreement, the Warrants, the other Transaction Documents
and any other document delivered in connection herewith on behalf of the
Company.

                                                                               9


                  (b) Filing of Certificate of Designations. The Company shall
deliver to the Purchasers written evidence, in form and substance reasonably
satisfactory to the Purchasers, of the filing of the Certificate of Designations
with the Secretary of State of the State of Delaware in accordance with the
General Corporation Law of the State of Delaware.

                  (c) Registration Rights Agreement. The Company and each of the
Major Stockholders (as defined in the Registration Rights Agreement) shall
deliver to the Purchasers the executed Registration Rights Agreement.

                  (d) Opinion of Counsel. The Company shall deliver to the
Purchasers an opinion of Brobeck, Phleger & Harrison LLP, dated the date hereof,
relating to the transactions contemplated by or referred to herein,
substantially in the form attached hereto as Exhibit F.

                  (e) Nasdaq Waiver. The Company shall deliver to the Purchasers
a written exemption from NASDAQ, in form and substance reasonably satisfactory
to the Purchasers, from the stockholder approval requirement of Nasdaq
Marketplace Rule 4350, in connection with the sale and issuance of the shares of
Preferred Stock, the Conversion Shares issuable upon conversion of the shares of
Preferred Stock, the Warrants and the Warrant Shares, and the Company shall have
complied with any conditions contained in such exemption in order to consummate
the transactions contemplated hereby at the Closing. The Company shall have
taken all reasonable steps necessary to ensure that the Conversion Shares
issuable upon conversion of the Purchased Notes and exercise of the Warrants
will have been accepted for listing on NASDAQ pending official notice of
issuance.

                  (f) Good Standing Certificates. The Company shall deliver to
the Purchasers a good standing certificates for the Company and each of its
Subsidiaries for each of their respective jurisdictions of incorporation.

                  (g) Board of Directors. The Company shall deliver to the
Purchasers written evidence, in form and substance satisfactory to the
Purchasers, that the Bylaws have been amended to, among other things, increase
the size of the Board of Directors to nine (9) members.

                  (h) Waiver of Change of Control Provisions. The Company shall
deliver to the Purchasers written amendments or written waivers, in form and
substance satisfactory to the Purchasers, from the parties to the Change of
Control Contracts specified on Schedule 2.4(h), amending or waiving the effect
of the consummation of the transactions contemplated by this Agreement
(including the sale and issuance of the shares of Preferred Stock, the
Conversion Shares issuable upon conversion of the shares of Preferred Stock, the
Warrants and the Warrant Shares).

            2.5 Deliveries on the Date Hereof by the Purchasers. On the date
hereof, each Purchaser shall deliver to the Company the executed Registration
Rights Agreement.

                                                                              10


            2.6 Closing. The closing of the sale and purchase of the Securities
(the "Closing") shall take place at the offices of Paul, Weiss, Rifkind, Wharton
& Garrison, 1285 Avenue of the Americas, New York, New York 10019, at 10:00
a.m., local time on March 25, 2002 (the "Closing Date"). On the Closing Date,
the Company shall deliver to each Purchaser (a)(i) a certificate or certificates
in definitive form and registered in the name of such Purchaser, representing
its Purchased Shares and (ii) its Warrant, against delivery by each of the
Purchasers to the Company of the aggregate purchase price therefor by wire
transfer of immediately available funds and (b)(i) certificate from the Company,
in form and substance satisfactory to the Purchasers, dated the Closing Date and
signed by a senior executive officer, certifying that (x) the representations
and warranties of the Company contained in Article 3 hereof are true and correct
in all material respects at and on the Closing Date (except for such
representations and warranties containing materiality or material adverse effect
qualifications, which shall be true and correct in all respects) and (y) the
Company has performed and complied in all material respects with all of the
agreements and conditions set forth or contemplated herein that are required to
be performed or complied with by the Company on or before the Closing Date; (ii)
its executed Warrant, substantially in the form attached hereto as Exhibit A,
and registered in the name of such Purchaser; and (iii) the opinion of Brobeck,
Phleger & Harrison LLP, dated the Closing Date, relating to the transactions
contemplated by or referred to herein, substantially in the form attached hereto
as Exhibit G.

            2.7 Notice of Issuance to Stockholders. On the date hereof, the
Company shall mail to each of its stockholders a notice, in form and substance
reasonably satisfactory to the Purchasers, notifying them of the omission by the
Company to seek the stockholder approval that, absent the exemption provided for
by Nasdaq Marketplace Rule 4350(i)(2), would have been required pursuant to
Nasdaq Marketplace Rule 4350 and indicating that the audit committee of the
Company has expressly approved such omission to seek such stockholder approval.

                                  ARTICLE III

                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

            The Company represents and warrants to each of the Purchasers as
follows:

            3.1 Corporate Existence and Power. Each of the Company and its
Subsidiaries (a) is a corporation duly organized, validly existing and, except
as set forth on Schedule 3.1(a), in good standing under the laws of the
jurisdiction of its incorporation, (b) has all requisite power and authority to
own and operate its property, to lease the property it operates as lessee and to
conduct the business in which it is currently, or is proposed to be, engaged,
(c) is duly qualified as a foreign corporation, licensed and, except as set
forth on Schedule 3.1(c), in good standing under the laws of each jurisdiction
in which its ownership, lease or operation of property or the conduct of its
business requires such qualification, except where the failure to be so
qualified could not reasonably be expected to have a material adverse effect on
the Condition of the

                                                                              11


Company and (d) has the corporate power and authority to execute, deliver and
perform its obligations under this Agreement and the other Transaction
Documents. No jurisdiction, other than those referred to in clause (c) above,
has claimed, in writing or otherwise, that either the Company or any of its
Subsidiaries is required to qualify as a foreign corporation or other entity
therein, and neither the Company nor any of its Subsidiaries files any
franchise, income or other tax returns in any other jurisdiction based upon the
ownership or use of property therein or the derivation of income therefrom.
Neither the Company nor any of its Subsidiaries owns or leases property in any
jurisdiction other than its jurisdiction of incorporation and the jurisdictions
referred to in clause (c) above.

            3.2 Authorization; No Contravention. Except as set forth on Schedule
3.2, the execution, delivery and performance by the Company of this Agreement
and each of the other Transaction Documents and the transactions contemplated
hereby and thereby (a) have been duly authorized by all necessary corporate
action of the Company, (b) do not contravene the terms of the Certificate of
Incorporation or the Bylaws or the certificate of incorporation, bylaws or other
organizational documents of any of its Subsidiaries, (c) do not violate,
conflict with or result in any breach, default or contravention of (or with due
notice or lapse of time or both would result in any breach, default or
contravention of), or the creation of any Lien under, any Contractual Obligation
of the Company or its Subsidiaries or any Requirement of Law applicable to the
Company or its Subsidiaries and (d) do not violate any judgment, injunction,
writ, award, decree or order of any nature (collectively, "Orders") of any
Governmental Authority against, or binding upon, the Company or its
Subsidiaries. The approval of the transactions contemplated by this Agreement,
the conversion of the shares of Preferred Stock into shares of Common Stock in
accordance with the terms of the Certificate of Designations and the exercise of
the Warrants for the Warrant Shares do not require the approval of the Company's
stockholders under any Requirement of Law, including, without limitation, the
rules and regulations of the NASDAQ.

            3.3 Governmental Authorization; Third Party Consents. Except as set
forth in Schedule 3.3, no approval, consent, compliance, exemption,
authorization or other action by, or notice to, or filing with, any Governmental
Authority or any other Person, and no lapse of a waiting period under a
Requirement of Law, is necessary or required in connection with the execution,
delivery or performance (including, without limitation, the sale, issuance and
delivery of the Purchased Shares) by, or enforcement against, the Company of
this Agreement and the other Transaction Documents or the transactions
contemplated hereby and thereby.

            3.4 Binding Effect. This Agreement, the Certificate of Designations
and the Registration Rights Agreement have been, and as of the Closing Date the
Warrants will have been, duly executed and delivered by the Company, and this
Agreement, the Certificate of Designations and the Registration Rights Agreement
constitute, and as of the Closing Date the Warrants will constitute, the legal,
valid and binding obligations of the Company, enforceable against the Company in
accordance with their terms, except as enforceability may be limited by
applicable bankruptcy,

                                       12


insolvency, reorganization, fraudulent conveyance or transfer, moratorium or
similar laws affecting the enforcement of creditors' rights generally and by
general principles of equity relating to enforceability (regardless of whether
considered in a proceeding at law or in equity).

            3.5 Litigation. Except as set forth on Schedule 3.5 or as disclosed
in the SEC Documents, there are no actions, suits, proceedings, claims,
complaints, disputes, arbitrations or investigations (collectively, "Claims")
pending or, to the Knowledge of the Company, threatened, at law, in equity, in
arbitration or before any Governmental Authority against the Company or its
Subsidiaries nor is the Company aware that there is any basis for any of the
foregoing. The foregoing includes, without limitation, Claims pending or, to the
Knowledge of the Company, threatened or any basis therefor known by the Company
involving the prior employment of any of the employees of the Company or its
Subsidiaries, their use in connection with the Company's business of any
information or techniques allegedly proprietary to any of their former employers
or their obligations under any agreements with prior employers. No Order has
been issued by any court or other Governmental Authority against the Company
purporting to enjoin or restrain the execution, delivery or performance of this
Agreement or any of the other Transaction Documents.

            3.6 Compliance with Laws.

                  (a) The Company and its Subsidiaries are in compliance in all
material respects with all Requirements of Law and all Orders issued by any
court or Governmental Authority against the Company and such Subsidiaries in all
respects. To the Company's Knowledge, there is no existing or proposed
Requirement of Law which could reasonably be expected to prohibit or restrict
the Company or its Subsidiaries from, or otherwise materially adversely effect
the Company or its Subsidiaries in, conducting their businesses in any
jurisdiction in which they now conduct or propose to conduct such businesses.

                  (b) (i) The Company and its Subsidiaries have all material
licenses, permits and approvals of any Governmental Authority (collectively,
"Permits") that are necessary for the conduct of the business of the Company and
its Subsidiaries; (ii) such Permits are in full force and effect; and (iii) no
violations are or have been recorded in respect of any Permit.

                  (c) No material expenditure is presently required by the
Company or its Subsidiaries to comply with any existing Requirement of Law or
Order.

            3.7 Capitalization.

                  (a) On the date hereof and on the Closing Date, after giving
effect to the transactions contemplated by this Agreement, the authorized
capital stock of the Company shall consist of (i) 225,000,000 shares of Common
Stock, (ii) 28,333,333 shares of Series F Preferred Stock, (iii) 8,474,576
shares of Preferred Stock and (iv) 8,192,091 shares of undesignated "blank
check" preferred

                                       13


stock. As of the close of business on March 13, 2002, 7,444,705 shares of Common
Stock were issued and outstanding and 28,333,333 shares of Series F Preferred
Stock were issued and outstanding. On the date hereof and on the Closing Date,
after giving effect to the transactions contemplated by this Agreement, one
share of Series F Preferred Stock shall be convertible into the sum of (x)
0.2542 shares of Common Stock (subject to adjustment) plus (y) a number of
shares of Common Stock equal to a fraction (I) the numerator of which is the
amount of dividends accrued but not yet paid on such share of Series F Preferred
Stock and (II) the denominator of which is the Conversion Price (as defined in
the Series F Certificate of Designations). As of the date of this Agreement, the
aggregate number of shares underlying options to purchase shares of Common Stock
which may be issued under the Stock Option Plan is 2,630,817, of which 824,165
are available for future grant. The Company has reserved an aggregate of
40,000,000 shares of Common Stock for issuance upon conversion of the Purchased
Shares and 1,800,000 shares of Common Stock for issuance upon exercise of the
Warrants. Except as set forth on Schedule 3.7(a) or as disclosed in the SEC
Documents and except for the Warrants, there are no options, warrants,
conversion privileges, subscription or purchase rights or other rights presently
outstanding to purchase or otherwise acquire (i) any authorized but unissued,
unauthorized or treasury shares of the Company's capital stock, (ii) any Stock
Equivalents or (iii) any other securities of the Company and there are no
commitments, contracts, agreements, arrangements or understandings by the
Company to issue any shares of the Company's capital stock or any Stock
Equivalents or other securities of the Company. The Securities are duly
authorized, and when issued and sold to the Purchasers after payment therefor,
will be validly issued, fully paid and non-assessable, will be issued in
compliance with the registration and qualification requirements of all
applicable federal, state and foreign securities laws and will be free and clear
of all other Liens. The shares of Common Stock issuable upon conversion of the
Purchased Shares and exercise of the Warrants, when issued in compliance with
the provisions of the Certificate of Designations and the Warrants (in the case
of the Warrant Shares), will be validly issued, fully paid and non-assessable
and not subject to any preemptive rights or similar rights that have not been
satisfied and will be free and clear of all other Liens. All of the issued and
outstanding shares of Common Stock and Preferred Stock are all duly authorized,
validly issued, fully paid and non-assessable, and were issued in compliance
with the registration and qualification requirements of all applicable federal,
state and foreign securities laws.

                  (b) Schedule 3.7(b) sets forth, as of the date hereof and the
Closing Date, a true and complete list of (x) each of the Subsidiaries of the
Company, (y) the percentage of the authorized shares of capital stock of such
Subsidiary owned by the Company and (z) the stockholders of such Subsidiary and,
opposite the name of each stockholder, the amount of all outstanding capital
stock and Stock Equivalents owned by such stockholder. The Company owns all of
the issued and outstanding capital stock of the Subsidiaries, free and clear of
all Liens. All of such shares of capital stock are duly authorized, validly
issued, fully paid and non-assessable, and were issued in compliance with the
registration and qualification requirements of all applicable federal, state and
foreign securities laws. Except as set forth on Schedule 3.7(b), there are no
options, warrants, conversion privileges, subscription or purchase rights or
other rights presently outstanding to purchase or otherwise acquire any
authorized but unissued, unauthorized or treasury shares of capital stock or
other securities of, or any proprietary interest in, any of the Subsidiaries,
and there is no outstanding security of any kind convertible into or
exchangeable for such shares or proprietary interest. Except as set forth on

                                       14


Schedule 3.7(b), neither the Company nor any of its Subsidiaries, owns any
interest, or has a right to acquire any interest, in any Person that is not a
Subsidiary.

                  (c) The Common Stock is currently listed for trading on the
NASDAQ and (i) except as set forth on Schedule 3.7(c), the Company and the
Common Stock meet the currently applicable criteria for continued listing and
trading on NASDAQ, (ii) no suspension of trading in the Common Stock is in
effect and (iii) the Company has delivered to NASDAQ all required notices.

            3.8 No Default or Breach; Contractual Obligations.

                  (a) Neither the Company nor any of its Subsidiaries have
received notice of a default nor is in default under, or with respect to, any
material Contractual Obligation nor does any condition exist that with notice or
lapse of time or both would constitute a default thereunder. Except as described
in the SEC Documents or as set forth on Schedule 3.8(a), neither the Company nor
any of its Subsidiaries is a party to any Contractual Obligations, whether
written or oral, (i) which involve an amount in excess of $100,000 or (ii) which
are otherwise material to the Condition of the Company. All of such Contractual
Obligations are valid, subsisting, in full force and effect and binding upon the
Company and its Subsidiaries, as the case may be, and, to the Knowledge of the
Company, the other parties thereto, and the Company and its Subsidiaries have
paid in full or accrued all amounts due thereunder and have satisfied in full or
provided for all of their liabilities and obligations thereunder. To the
Knowledge of the Company, no other party to any such Contractual Obligation is
in default thereunder, nor does any condition exist that with notice or lapse of
time or both would constitute a default by such other party thereunder.

                  (b) Schedule 3.8(b) sets forth all Contractual Obligations to
which the Company or any of its Subsidiaries are a party or to which their
respective assets or properties are bound that contain a "change of control" or
similar provision pursuant to which (i) payment or other obligations of the
Company are accelerated or arise, (ii) termination rights arise or (iii) notice
is required to be delivered, in each case upon the occurrence of a "change of
control," upon the sale of the Purchased Shares, upon the conversion of the
Purchased Shares into shares of Common Stock upon the issuance of the Warrants
or the exercise of the Warrants for the Warrant Shares (the "Change of Control
Contracts"). The Company has delivered to GAP LP true and complete copies of the
Change of Control Contracts. Except as set forth on Schedule 3.8(b), no "change
of control" or similar provision in any such Change of Control Contract shall be
triggered by the consummation of the transactions contemplated by this
Agreement, the conversion of the Purchased Shares into shares of Common Stock,
the exercise of the Warrants for the Warrant Shares or any of the other
Transaction Documents.

            3.9 SEC Documents; Financial Statements. Since November 3, 1999, the
Company has filed all reports, schedules, forms, statements and other documents
required to be filed by it with the Commission pursuant to the reporting
requirements of the Exchange Act (all of the foregoing filed prior to the date
hereof and all exhibits

                                       15


included therein and financial statements and schedules thereto and documents
incorporated by reference therein being hereinafter referred to as the "SEC
Documents"). As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Exchange Act and the rules and
regulations of the Commission promulgated thereunder applicable to the SEC
Documents, and none of the SEC Documents, at the time they were filed with the
Commission, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. As of their respective dates, the financial statements of
the Company (the "Financial Statements") included in the SEC Documents complied
as to form in all material respects with applicable accounting requirements and
the published rules and regulations of the Commission with respect thereto. The
Financial Statements have been prepared in accordance with GAAP, consistently
applied, during the periods involved (except in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). No other
information provided by or on behalf of the Company to the Purchasers which is
not included in the SEC Documents contains any untrue statement of a material
fact or omits to state any material fact necessary in order to make the
statements therein, in the light of the circumstance under which they are or
were made, not misleading.

            3.10 No Material Adverse Change; Ordinary Course of Business. Since
December 31, 2000, (a) except as set forth in Schedule 3.10(a), there has not
been any material adverse change, nor is any such change reasonably expected, in
the Condition of the Company, (b) except as set forth on Schedule 3.10(b), the
Company and its Subsidiaries have not participated in any transaction material
to the Condition of the Company or otherwise acted outside the ordinary course
of business, including, without limitation, declaring or paying any dividend or
declaring or making any distribution to its stockholders except out of the
earnings of the Company and or its Subsidiaries, as the case may be, (c) the
Company and its Subsidiaries have not increased the compensation of any of its
officers or the rate of pay of any of its employees, except as part of regular
compensation increases in the ordinary course of business, (d) the Company and
its Subsidiaries have not created or assumed any Lien on a material asset of the
Company and such Subsidiaries, (e) the Company and its Subsidiaries have not
entered into any Contractual Obligation, other than in the ordinary course of
business and (f) there has not occurred a material change in the accounting
principles or practice of the Company or any of its Subsidiaries except as
required by reason of a change in GAAP.

            3.11 Taxes. (a) The Company and its Subsidiaries have paid all Taxes
which have come due and are required to be paid by them through the date hereof,
and all deficiencies or other additions to Tax, interest and penalties owed by
them in connection with any such Taxes, other than Taxes being disputed by the
Company or its Subsidiaries in good faith for which adequate reserves have been
made in accordance with GAAP; (b) the Company and its Subsidiaries have timely
filed or caused to be filed all returns for Taxes that they are required to file
on and through the date hereof (including all applicable extensions), and all
such Tax returns are accurate and complete; (c) with

                                                                              16


respect to all Tax returns of the Company and its Subsidiaries, (i) there is no
unassessed Tax deficiency proposed or, to the Knowledge of the Company,
threatened against the Company or its Subsidiaries and (ii) no audit is in
progress with respect to any return for Taxes, no extension of time is in force
with respect to any date on which any return for Taxes was or is to be filed and
no waiver or agreement is in force for the extension of time for the assessment
or payment of any Tax; (d) all provisions for Tax liabilities of the Company and
its Subsidiaries with respect to the Financial Statements have been made in
accordance with GAAP, consistently applied, and all liabilities for Taxes of the
Company and its Subsidiaries attributable to periods prior to or ending on the
date hereof and the Closing Date have been adequately provided for on the
Financial Statements; and (e) there are no Liens for Taxes on the assets of the
Company and its Subsidiaries.

            3.12 Private Offering. No form of general solicitation or general
advertising was used by the Company or its representatives in connection with
the offer, sale or issuance of the Purchased Shares or the Warrants. No
registration of the Purchased Shares, pursuant to the provisions of the
Securities Act or any state securities or "blue sky" laws, will be required by
the offer, sale or issuance of the Purchased Shares. The Company agrees that
neither it, nor anyone acting on its behalf, shall offer to sell the Purchased
Shares or any other securities of the Company so as to require the registration
of the Purchased Shares pursuant to the provisions of the Securities Act or any
state securities or "blue sky" laws, unless such Purchased Shares or other
securities are so registered.

            3.13 Employee Benefit Plans.

                  (a) Schedule 3.13 hereto and the SEC Documents together list
each Plan that the Company or any of its Subsidiaries maintain or to which the
Company or any of its Subsidiaries contribute (the "Company Plans"). The Company
and its Subsidiaries have no liability under any Plans other than the Company
Plans. Except as set forth on Schedule 3.13, neither the Company nor its
Subsidiaries nor any Commonly Controlled Entity maintains or contributes to, or
has within the preceding six years maintained or contributed to, or may have any
liability with respect to any Plan subject to Title IV of ERISA or Section 412
of the Code or any "multiple employer plan" within the meaning of the Code or
ERISA. Each Company Plan (and related trust, insurance contract or fund) has
been established and administered in accordance with its terms, and complies in
form and in operation with the applicable requirements of ERISA and the Code and
other applicable Requirements of Law. All contributions (including all employer
contributions and employee salary reduction contributions) which are due have
been paid to each Company Plan.

                  (b) No Claim with respect to the administration or the
investment of the assets of any Company Plan (other than routine claims for
benefits) is pending.

                  (c) Each Company Plan that is intended to be qualified under
Section 401(a) of the Code is so qualified and has been so qualified during the
period

                                                                              17


since its adoption; each trust created under any such Plan is exempt from tax
under Section 501(a) of the Code and has been so exempt since its creation.

                  (d) No Company Plan is a Retiree Welfare Plan.

                  (e) There are no unfunded obligations under any Company Plan
which are not fully reflected on the Financial Statements.

                  (f) The Company has no liability, whether absolute or
contingent, including any obligations under any Company Plan, with respect to
any misclassification of any person as an independent contractor rather than as
an employee.

            3.14 Change of Control Payments. Neither the execution and delivery
of this Agreement nor the transactions contemplated hereby will, except as set
forth on Schedule 3.14, (i) result in any payment (including, without
limitation, severance, unemployment compensation, golden parachute, bonus or
otherwise) becoming due to, accelerate the time of payment or vesting of or
increase the amount of compensation due to any director, officer, employee,
former employee, consultant or former consultant of the Company or any of its
Subsidiaries, under any Company Plan or otherwise, (ii) increase any benefits
otherwise payable under any Company Plan, (iii) result in the acceleration of
the time of payment or vesting of any such benefits, (iv) create a right to
receive payments upon a subsequent termination of employment or (v) result in
the acceleration of the time of payment of any of the Company's or any of its
Subsidiary's accounts payable.

            3.15 Liabilities. The Company and its Subsidiaries do not have any
direct or indirect obligation or liability (the "Liabilities") other than (a)
Liabilities fully and adequately reflected in or reserved against on the
Financial Statements and (b) Liabilities incurred since December 31, 2000 in the
ordinary course of business. The Company has no Knowledge of any circumstance,
condition, event or arrangement that could reasonably be expected to give rise
hereafter to any Liabilities of the Company or its Subsidiaries except in the
ordinary course of business.

            3.16 Intellectual Property.

                 (a)   (i) The Company and its Subsidiaries are the owners of
all, or have the license or right to use, sell and license all of, the
Copyrights, Patents, Trade Secrets, Trademarks, Internet Assets, Software and
other proprietary rights (collectively, "Intellectual Property") that are used
in connection with their businesses as presently conducted or contemplated in
the business plan of the Company and its Subsidiaries, free and clear of all
Liens.

                       (ii)  Other than as set forth on Schedule 3.16 (a)(ii),
none of the Intellectual Property is subject to any outstanding Order, and no
action, suit, proceeding, hearing, investigation, charge, complaint, claim or
demand is pending or, to the Knowledge of the Company, threatened, which
challenges the validity, enforceability, use or ownership of the item.

                                                                              18


                      (iii) With regard to all Intellectual Property licenses,
sublicenses, distributor agreements and other agreements under which the Company
or its Subsidiaries are either a licensor, licensee or distributor, except such
licenses, sublicenses and other agreements relating to off-the-shelf software,
which is commercially available on a retail basis and used solely on the
computers of the Company or its Subsidiaries, the Company and its Subsidiaries
have substantially performed all obligations imposed upon them thereunder, and
are not, nor to the Knowledge of the Company is any other party thereto, in
breach of or default thereunder in any respect, nor is there any event which
with notice or lapse of time or both would constitute a default thereunder. All
of the Intellectual Property licenses are valid, enforceable and in full force
and effect, and will continue to be so on identical terms immediately following
the Closing, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance or transfer, moratorium or
similar laws affecting the enforcement of creditors' rights generally and by
general principles of equity relating to enforceability (regardless of whether
considered in a proceeding at law or in equity).

                       (iv) Other than as set forth on Schedule 3.16(a)(iv),
none of the Intellectual Property currently sold or licensed by the Company or
its Subsidiaries to any Person or used by or licensed to the Company or its
Subsidiaries by any Person infringes upon or otherwise violates any Intellectual
Property rights of others.

                       (v) Except as set forth on Schedule 3.16(a)(v), no
litigation is pending and no Claim has been made against the Company or its
Subsidiaries or, to the Knowledge of the Company, is threatened, contesting the
right of the Company or its Subsidiaries to sell or license to any Person or use
the Intellectual Property presently sold or licensed to such Person or used by
the Company or its Subsidiaries.

                  (b) Except as set forth on Schedule 3.16(b), to the Knowledge
of the Company, no Person is infringing upon or otherwise violating the
Intellectual Property rights of the Company and its Subsidiaries.

                  (c) No former employer of any employee of the Company or its
Subsidiaries, and no current or former client of any consultant of the Company
or its Subsidiaries, has made a claim against the Company, its Subsidiaries, or
any Affiliates thereof or, to the Knowledge of the Company, against any other
Person, that such employee or such consultant is utilizing Intellectual Property
of such former employer or client.

                  (d) Except as set forth on Schedule 3.16(d) or disclosed in
the SEC Documents, neither the Company nor any of its Subsidiaries are parties
to or bound by any license or other agreement requiring the payment by the
Company or such Subsidiaries of any royalty payment, excluding such agreements
relating to software licensed for use solely on the computers of the Company or
such Subsidiaries.

                  (e) To the Knowledge of the Company, no employee of the
Company or its Subsidiaries is in violation of any Requirement of Law applicable
to such employee, or any term of any employment agreement, patent or invention
disclosure

                                                                              19


agreement or other contract or agreement relating to the relationship of such
employee with the Company or its Subsidiaries or any prior employer.

                  (f) To the Knowledge of the Company, none of the Trade Secrets
of the Company or its Subsidiaries, wherever located, the value of which is
contingent upon maintenance of confidentiality thereof, has been disclosed to
any Person other than employees, representatives and agents of the Company or
its Subsidiaries, except as required pursuant to the filing of a patent
application by the Company or its Subsidiaries.

                  (g) It is not necessary for the business of the Company and
its Subsidiaries to use any Intellectual Property owned by any director,
officer, employee or consultant of the Company or its Subsidiaries (or Persons
the Company or any of its Subsidiaries presently intend to hire). To the
Company's Knowledge, at no time during the conception or reduction to practice
of any of the Company's or its Subsidiaries' Intellectual Property was any
developer, inventor or other contributor to such Intellectual Property operating
under any grants from any Governmental Authority or subject to any employment
agreement, invention assignment, nondisclosure agreement or other Contractual
Obligation with any Person that could adversely affect the Company's or such
Subsidiaries' rights to their Intellectual Property.

                  (h) All present employees of the Company and its Subsidiaries
have executed and delivered proprietary invention agreements with the Company or
such Subsidiaries, as the case may be, and are obligated under the terms thereof
to assign all inventions made by them during the course of employment to the
Company or its Subsidiaries. No such employee or present consultant of the
Company or its Subsidiaries has excluded works or inventions made prior to his
employment with or work for the Company or its Subsidiaries from his assignment
of inventions pursuant to such proprietary invention agreements.

            3.17 Privacy of Customer Information. Neither the Company nor its
Subsidiaries uses any of the customer information it receives through its
websites or otherwise in an unlawful manner, or in a manner violative of the
Company's or such Subsidiaries' privacy policy or the privacy rights of its
customers. The Company and its Subsidiaries have not collected any customer
information through their websites in an unlawful manner or in violation of its
privacy policy. The Company and its Subsidiaries have adequate security measures
in place to protect the customer information they receive through their websites
and which they store in their computer systems from illegal use by third parties
or use by third parties in a manner violative of the rights of privacy of their
customers. The Company and its Subsidiaries represent to their customers that
they assure complete security as to the customer information they receive
through their websites.

            3.18 Environmental Matters. The Company and its Subsidiaries are in
compliance with all applicable Environmental Laws. There is no civil, criminal
or administrative judgment, action, suit, demand, claim, hearing, notice of
violation, investigation, proceeding, notice or demand letter pending or, to the
Knowledge of the

                                       20


Company, threatened against the Company or its Subsidiaries pursuant to
Environmental Laws. To the Knowledge of the Company, there are no past or
present events, conditions, circumstances, activities, practices, incidents,
agreements, actions or plans which could reasonably be expected to prevent
compliance with, or which have given rise to or will give rise to liability
which would have a material adverse effect on the Condition of the Company,
under Environmental Laws.

            3.19 Broker's, Finder's or Similar Fees. There are no brokerage
commissions, finder's fees or similar fees or commissions payable by the Company
or any of its Subsidiaries in connection with the transactions contemplated
hereby based on any agreement, arrangement or understanding with the Company or
any of its Subsidiaries or any action taken by any such Person.

                                   ARTICLE IV

                REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

            Each of the Purchasers hereby represents and warrants, severally and
not jointly, to the Company as follows:

            4.1 Existence and Power. Such Purchaser (a) is a limited partnership
or limited liability company, as the case may be, duly organized and validly
existing under the laws of the jurisdiction of its formation and (b) has the
requisite partnership or limited liability company, as the case may be, power
and authority to execute, deliver and perform its obligations under this
Agreement and the other Transaction Documents to which it is a party.

            4.2 Authorization; No Contravention. The execution, delivery and
performance by such Purchaser of this Agreement and each of the other
Transaction Documents to which it is a party and the transactions contemplated
hereby and thereby, (a) have been duly authorized by all necessary partnership
or limited liability company, as the case may be, action, (b) do not contravene
the terms of such Purchaser's organizational documents, or any amendment
thereof, (c) do not violate, conflict with or result in any breach or
contravention of, or the creation of any Lien under, any Contractual Obligation
of such Purchaser or any Requirement of Law applicable to such Purchaser (except
for the Lien created on the Purchased Shares purchased by GapStar to secure its
obligations under a bona fide loan made to acquire such Purchased Shares), and
(d) do not violate any Orders of any Governmental Authority against, or binding
upon, such Purchaser.

            4.3 Governmental Authorization; Third Party Consents. No approval,
consent, compliance, exemption, authorization or other action by, or notice to,
or filing with, any Governmental Authority or any other Person, and no lapse of
a waiting period under any Requirement of Law, is necessary or required in
connection with the execution, delivery or performance (including, without
limitation, the purchase of the Purchased Shares) by, or enforcement against,
such Purchaser of this Agreement and the other Transaction Documents or the
transactions contemplated hereby and thereby.

                                                                              21


            4.4 Binding Effect. This Agreement and the Registration Rights
Agreement have been duly executed and delivered by such Purchaser, and
constitute the legal, valid and binding obligations of such Purchaser,
enforceable against it in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance or transfer, moratorium or similar laws affecting the enforcement of
creditors' rights generally or by equitable principles relating to
enforceability (regardless of whether considered in a proceeding at law or in
equity).

            4.5 Purchase for Own Account. The Securities to be acquired by such
Purchaser pursuant to this Agreement are being or will be acquired for its own
account and with no intention of distributing or reselling such Purchased Shares
or Warrants or any part thereof in any transaction that would be in violation of
the securities laws of the United States, any state of the United States or any
foreign jurisdiction, without prejudice, however, to the rights of such
Purchaser at all times to sell or otherwise dispose of all or any part of such
Purchased Shares or Warrants under an effective registration statement under the
Securities Act, or under an exemption from such registration available under the
Securities Act, and subject, nevertheless, to the disposition of such
Purchaser's property being at all times within its control. If such Purchaser
should in the future decide to dispose of any of such Purchased Shares, such
Purchaser understands and agrees that it may do so only in compliance with the
Securities Act and applicable state and foreign securities laws, as then in
effect. Such Purchaser agrees to the imprinting, so long as required by law, of
a legend on certificates representing all of its Purchased Shares and shares of
Common Stock issuable upon conversion of its Purchased Shares and exercise of
its Warrants to the following effect:

            THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY FOREIGN JURISDICTION.
THE SECURITIES MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE AND FOREIGN
SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF SUCH ACT AND SUCH LAWS.

            4.6 Restricted Securities. Such Purchaser understands that the
Purchased Shares will not be registered at the time of their issuance under the
Securities Act for the reason that the sale provided for in this Agreement is
exempt pursuant to Section 4(2) of the Securities Act and that the reliance of
the Company on such exemption is predicated in part on such Purchaser's
representations set forth herein.

            4.7 Broker's, Finder's or Similar Fees. There are no brokerage
commissions, finder's fees or similar fees or commissions payable by such
Purchaser in connection with the transactions contemplated hereby based on any
agreement, arrangement or understanding with such Purchaser or any action taken
by such Purchaser.

                                                                              22


            4.8 Accredited Investor. Such Purchaser is an "Accredited Investor"
within the meaning of Rule 501 of Regulation D under the Securities Act, as
presently in effect.

                                   ARTICLE V

                                 INDEMNIFICATION

            5.1 Indemnification. Except as otherwise provided in this Article V,
the Company (the "Indemnifying Party") agrees to indemnify, defend and hold
harmless each of the Purchasers and its Affiliates and their respective
officers, directors, agents, employees, subsidiaries, partners, members and
controlling persons (each, an "Indemnified Party") to the fullest extent
permitted by law from and against any and all losses, Claims, or written threats
thereof (including, without limitation, any Claim by a third party), damages,
expenses (including reasonable fees, disbursements and other charges of counsel
reasonably incurred by the Indemnified Party in any action between the
Indemnifying Party and the Indemnified Party or between the Indemnified Party
and any third party or otherwise) or other liabilities (collectively, "Losses")
resulting from or arising out of any breach of any representation or warranty,
covenant or agreement by the Company in this Agreement or the Registration
Rights Agreement. The amount of any payment to any Indemnified Party herewith in
respect of any Loss shall be of sufficient amount to make such Indemnified Party
whole for any diminution in value of the Purchased Shares. In connection with
the obligation of the Indemnifying Party to indemnify for expenses as set forth
above, the Indemnifying Party shall, upon presentation of appropriate invoices
containing reasonable detail, reimburse each Indemnified Party for all such
expenses (including reasonable fees, disbursements and other charges of counsel
incurred by the Indemnified Party in any action between the Indemnifying Party
and the Indemnified Party or between the Indemnified Party and any third party)
as they are incurred by such Indemnified Party; provided, however, that if an
Indemnified Party is reimbursed under this Article V for any expenses, such
reimbursement of expenses shall be refunded to the extent it is finally
judicially determined that the Losses in question resulted primarily from the
willful misconduct or gross negligence of such Indemnified Party.

            5.2 Notification. Each Indemnified Party under this Article V shall,
promptly after the receipt of notice of the commencement of any Claim against
such Indemnified Party in respect of which indemnity may be sought from the
Indemnifying Party under this Article V, notify the Indemnifying Party in
writing of the commencement thereof. The omission of any Indemnified Party to so
notify the Indemnifying Party of any such action shall not relieve the
Indemnifying Party from any liability which it may have to such Indemnified
Party (a) other than pursuant to this Article V or (b) under this Article V
unless, and only to the extent that, such omission results in the Indemnifying
Party's forfeiture of substantive rights or defenses. In case any such Claim
shall be brought against any Indemnified Party, and it shall notify the
Indemnifying Party of the commencement thereof, the Indemnifying Party shall be
entitled to assume the defense thereof at its own expense, with counsel
satisfactory to such Indemnified Party in its reasonable judgment; provided,
however, that any

                                                                              23


Indemnified Party may, at its own expense, retain separate counsel to
participate in such defense at its own expense. Notwithstanding the foregoing,
in any Claim in which both the Indemnifying Party, on the one hand, and an
Indemnified Party, on the other hand, are, or are reasonably likely to become, a
party, such Indemnified Party shall have the right to employ separate counsel
and to control its own defense of such Claim if, in the reasonable opinion of
counsel to such Indemnified Party, either (x) one or more defenses are available
to the Indemnified Party that are not available to the Indemnifying Party or (y)
a conflict or potential conflict exists between the Indemnifying Party, on the
one hand, and such Indemnified Party, on the other hand, that would make such
separate representation advisable; provided, however, that the Indemnifying
Party (i) shall not be liable for the fees and expenses of more than one counsel
to all Indemnified Parties and (ii) shall reimburse the Indemnified Parties for
all of such fees and expenses of such counsel incurred in any action between the
Indemnifying Party and the Indemnified Parties or between the Indemnified
Parties and any third party, as such expenses are incurred. The Indemnifying
Party agrees that it will not, without the prior written consent of the
Purchasers, settle, compromise or consent to the entry of any judgment in any
pending or threatened Claim relating to the matters contemplated hereby (if any
Indemnified Party is a party thereto or has been actually threatened to be made
a party thereto) unless such settlement, compromise or consent includes an
unconditional release of each Indemnified Party from all liability arising or
that may arise out of such Claim. The Indemnifying Party shall not be liable for
any settlement of any Claim effected against an Indemnified Party without its
written consent, which consent shall not be unreasonably withheld. The rights
accorded to an Indemnified Party hereunder shall be in addition to any rights
that any Indemnified Party may have at common law, by separate agreement or
otherwise; provided, however, that notwithstanding the foregoing or anything to
the contrary contained in this Agreement, nothing in this Article V shall
restrict or limit any rights that any Indemnified Party may have to seek
equitable relief.

            5.3 Contribution. If the indemnification provided for in this
Article V from the Indemnifying Party is unavailable to an Indemnified Party
hereunder in respect of any Losses referred to herein, then the Indemnifying
Party, in lieu of indemnifying such Indemnified Party, 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 and Indemnified Party in connection with the actions which
resulted in such Losses, as well as any other relevant equitable considerations.
The relative faults of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact, has been made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties relative intent, knowledge, access to information and opportunity to
correct or prevent such action. The amount paid or payable by a party as a
result of the Losses referred to above shall be deemed to include, subject to
the limitations set forth in Sections 5.1 and 5.2, any legal or other fees,
charges or expenses reasonably incurred by such party in connection with any
investigation or proceeding.

                                                                              24


                                   ARTICLE VI

                              AFFIRMATIVE COVENANTS

            The Company hereby covenants and agrees with the Purchasers as
follows:

            6.1 Conduct of Business of the Company. Except as contemplated by
this Agreement or with the prior written consent of the Purchasers, during the
period from the date of this Agreement to the Closing Date, the Company will
conduct its operations only in the ordinary course of business consistent with
past practice and, to the extent consistent therewith, with no less diligence
and effort then would be applied in the absence of this Agreement, will use its
reasonable best efforts to preserve intact the business organization of the
Company, to keep available the services of the present officers and key
employees of the Company and to preserve the good will of customers, suppliers
and all other Persons having business relationships with the Company. Without
limiting the generality of the foregoing, and except as otherwise contemplated
by this Agreement, prior to the Closing Date, the Company will not, without the
prior written consent of the Purchasers, which consent will not be unreasonably
withheld or delayed: (a) engage in any transaction (including, without
limitation, capital expenditures) out of the ordinary course of its business and
consistent with past practices; (b) issue, reissue or sell, or authorize the
issuance, reissuance or sale of shares of capital stock of any class, or
securities convertible into capital stock of any class, or any rights, warrants
or options to acquire any convertible securities or capital stock; (c) dispose
of any of its assets or properties except to the extent these are used, retired
or replaced in the ordinary course of its business; (d) fail to keep in force
any governmental licenses, permits, authorizations, consents or approvals
required by the Company to own its assets and properties or to carry on its
business as currently conducted; (e) fail to keep in force its Intellectual
Property rights; (f) fail to perform all material obligations required to be
performed by it under any of the Contractual Obligations; (g) enter into
transactions with affiliates of the Company; (h) pay dividends to, or redeem the
shares of, stockholders of the Company other than pursuant to an existing
restricted stock purchase agreement with current or former employees; and (i)
amend the Certificate of Incorporation or the Bylaws of the Company.

            6.2 No Solicitation. The Company shall not, and shall cause its
Subsidiaries and the officers, directors, employees, representatives (including,
without limitation, investment bankers, attorneys and accountants), agents or
affiliates of the Company and its Subsidiaries not to, directly or indirectly,
(i) solicit, initiate, encourage or facilitate any inquiries or the making of
the proposal or offer with respect to an Alternative Proposal or (ii)
participate in any discussions or negotiations with, or provide any non-public
information to, or afford any access to the properties, books or records of the
Company or any of its Subsidiaries, or otherwise take any other action to assist
or facilitate (including granting any waiver or release under any standstill or
similar agreement with respect to any securities of the Company or any of its
Subsidiaries), any "person" or "group" (as such terms are used for purposes of
Section 13(d)(3) of the

                                       25


Exchange Act) (other than the Purchasers or any Affiliate or associate of the
Purchasers) concerning any Alternative Proposal.

            6.3 Reasonable Efforts. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use its reasonable best efforts
to take, or cause to be taken, all appropriate action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable Requirements of
Law to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement. Without limiting
the foregoing, each of the Company and the Purchasers shall use its reasonable
best efforts to make promptly any required submissions under any applicable
Requirements of Law that the Company or the Purchasers determines should be
made, in each case, with respect to the transactions contemplated hereby and to
respond as promptly as practicable to all inquiries received from any
Governmental Authority with respect to such submissions for additional
information or documentation.

            6.4 Reservation of Common Stock. The Company shall at all times
reserve and keep available out of its authorized shares of Common Stock, solely
for the purpose of issue or delivery upon conversion of the Purchased Shares and
exercise of the Warrants, as provided in the Certificate of Designations and the
Warrants, respectively, the maximum number of shares of Common Stock that may be
issuable or deliverable upon such conversion or exercise. Such shares of Common
Stock are duly authorized and, when issued or delivered in accordance with the
Certificate of Designations and the Warrants, shall be validly issued, fully
paid and non-assessable. The Company shall issue such shares of Common Stock, in
accordance with the terms of the Certificate of Designations and the Warrants,
and otherwise comply with the terms hereof and thereof.

            6.5 NASDAQ Listing.

                  (a) The Company shall use its best efforts to prevent the
Common Stock from being delisted on NASDAQ, including without limitation, (i)
taking all actions reasonably related to maintaining NASDAQ listing standards,
(ii) following recommendations by NASDAQ or advice of counsel and (ii)
refraining from taking actions reasonably expected to cause the Company to not
meet NASDAQ listing standards.

                  (b) If requested by the Company, each Purchaser shall use
commercially reasonable efforts to assist the Company in preparing any materials
to be submitted to NASDAQ by the Company for the purposes of maintaining the
Company's listing thereon.

            6.6 Insurance. The Company currently maintains insurance with an
insurance company or association and it shall continue to maintain such
coverage.

            6.7 Tax Reporting. The Company shall not treat the Purchased Shares
as "preferred stock" for purposes of the Code, including but not limited to
Section 305 thereof.

                                       26


            6.8 Books and Records. The Company and its Subsidiaries shall keep
proper books of record and account, in which full and correct entries shall be
made of all financial transactions and the assets and business of the Company
and its Subsidiaries in accordance with GAAP consistently applied.

            6.9 Back-ups of Computer Software. The Company and its Subsidiaries
shall make back-ups of all material computer software programs and databases and
shall maintain such software programs and databases at a secure off-site
location.

            6.10 Inspection. The Company shall permit representatives of the
Purchasers to visit and inspect any of its and its Subsidiaries properties, to
examine their corporate, financial and operating records and make copies thereof
or abstracts therefrom, and to discuss their affairs, finances and accounts with
their respective directors, officers and independent public accountants, all at
such reasonable times during normal business hours and as often as may be
reasonably requested upon reasonable advance notice to the Company.

            6.11 Board of Directors. Immediately following the Closing, the
Board of Directors shall convene a meeting to elect, by a majority vote of all
of the members of the Board of Directors, including the directors elected by the
holders of the Preferred Stock, a Chairman of the Board of Directors designated
by the Purchasers.

                                  ARTICLE VII

                                  MISCELLANEOUS

            7.1 Survival of Representations and Warranties. All of the
representations and warranties made herein shall survive the execution and
delivery of this Agreement until the date that is ninety (90) days after the
receipt by the Purchasers of audited financial statements of the Company for the
fiscal year ending December 31, 2002 (or, if such fiscal year changes and no
such audited consolidated financial statements are available, then the successor
fiscal year), except for (a) Sections 3.1, 3.2, 3.4, 3.7, 3.8(b) and 3.14, which
representations and warranties shall survive until the third anniversary of the
Closing Date, and (b) Section 3.11 which shall survive until the later to occur
of (i) the lapse of the statute of limitations with respect to the assessment of
any Tax to which such representation and warranty relates (including any
extensions or waivers thereof) and (ii) sixty (60) days after the final
administrative or judicial determination of the Taxes to which such
representation and warranty relates, and no claim with respect to Section 3.11
may be asserted thereafter with the exception of claims arising out of any fact,
circumstance, action or proceeding to which the party asserting such claim shall
have given notice to the other parties to this Agreement prior to the
termination of such period of reasonable belief that a tax liability will
subsequently arise therefrom.

                                       27


            7.2 Notices. All notices, demands and other communications provided
for or permitted hereunder shall be made in writing and shall be by registered
or certified first-class mail, return receipt requested, telecopier, courier
service or personal delivery:

                  (a)   if to the Company:

                        Tickets.com, Inc.
                        555 Anton Boulevard, 12th Floor
                        Costa Mesa, CA 92626
                        Telecopy:  (714) 327-5410
                        Attention:  Ronald Bension

                        with a copy to:

                        Brobeck Phleger & Harrison LLP
                        550 South Hope Street
                        Los Angeles, CA 90071-2604
                        Telecopy:  (213) 745-3345
                        Attention:  Richard S. Chernicoff

                  (b)   if to any of the Purchasers:

                        c/o General Atlantic Service Corporation
                        3 Pickwick Plaza
                        Greenwich, CT 06830
                        Telecopy:  (203) 622-8818
                        Attention:  Matthew Nimetz
                                    Thomas J. Murphy

                        with a copy to:

                        Paul, Weiss, Rifkind, Wharton & Garrison
                        1285 Avenue of the Americas
                        New York, NY 10019-6064
                        Telecopy:  (212) 757-3990
                        Attention:  Douglas A. Cifu, Esq.

            All such notices, demands and other communications shall be deemed
to have been duly given when delivered by hand, if personally delivered; when
delivered by courier, if delivered by commercial courier service; five (5)
Business Days after being deposited in the mail, postage prepaid, if mailed; and
when receipt is mechanically acknowledged, if telecopied. Any party may by
notice given in accordance with this Section 7.2 designate another address or
Person for receipt of notices hereunder.

            7.3 Successors and Assigns; Third Party Beneficiaries. This
Agreement shall inure to the benefit of and be binding upon the successors and
permitted assigns of the parties hereto. Subject to applicable securities laws
and the terms and

                                                                              28


conditions thereof, the Purchasers may assign any of their rights under this
Agreement or the Registration Rights Agreement to any of their respective
Affiliates. The Company may not assign any of its rights under this Agreement
without the written consent of the Purchasers. Except as provided in Article V,
no Person other than the parties hereto and their successors and permitted
assigns is intended to be a beneficiary of this Agreement.

            7.4 Amendment and Waiver.

                  (a) No failure or delay on the part of the Company or the
Purchasers in exercising any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to the
Company or the Purchasers at law, in equity or otherwise.

                  (b) Any amendment, supplement or modification of or to any
provision of this Agreement, any waiver of any provision of this Agreement, and
any consent to any departure by the Company or the Purchasers from the terms of
any provision of this Agreement, shall be effective (i) only if it is made or
given in writing and signed by the Company and each of the Purchasers and (ii)
only in the specific instance and for the specific purpose for which made or
given. Except where notice is specifically required by this Agreement, no notice
to or demand on the Company in any case shall entitle the Company to any other
or further notice or demand in similar or other circumstances.

            7.5 Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

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

            7.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAW THEREOF.

            7.8 Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.

            7.9 Rules of Construction. Unless the context otherwise requires,
references to sections or subsections refer to sections or subsections of this
Agreement.

                                                                              29


            7.10 Entire Agreement. This Agreement, together with the exhibits
and schedules hereto, and the Registration Rights Agreement are intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein and therein. There are no
restrictions, promises, representations, warranties or undertakings, other than
those set forth or referred to herein or therein. This Agreement, together with
the exhibits and schedules hereto, and the Registration Rights Agreement
supersede all prior agreements and understandings between the parties with
respect to such subject matter.

            7.11 Fees. Upon the Closing, the Company shall reimburse the
Purchasers for all of their reasonable fees, disbursements and other charges of
counsel reasonably incurred in connection with the transactions contemplated by
this Agreement up to an aggregate amount of $100,000.

            7.12 Publicity; Confidentiality. Except as may be required by
applicable Requirements of Law, none of the parties hereto shall issue a
publicity release or public announcement or otherwise make any disclosure
concerning this Agreement, the transactions contemplated hereby, the Purchasers
or the business, technology and financial affairs of the Company, without prior
approval by the other parties hereto; provided, however, that nothing in this
Agreement shall restrict any of the Purchasers from disclosing information (a)
that is already publicly available, (b) that was known to such Purchaser on a
non-confidential basis prior to its disclosure by the Company, (c) that may be
required or appropriate in response to any summons or subpoena or in connection
with any litigation, provided that such Purchaser will use reasonable efforts to
notify the Company in advance of such disclosure so as to permit the Company to
seek a protective order or otherwise contest such disclosure, and such Purchaser
will use reasonable efforts to cooperate, at the expense of the Company, with
the Company in pursuing any such protective order, (d) to the extent that such
Purchaser reasonably believes it appropriate in order to protect its investment
in the Purchased Shares or in order to comply with any Requirement of Law, (e)
to such Purchaser's or the Company's officers, directors, shareholders,
advisors, employees, members, partners, controlling persons, auditors or counsel
or (f) to Persons from whom releases, consents or approvals are required, or to
whom notice is required to be provided, pursuant to the transactions
contemplated by the Transaction Documents; and provided further, that GAP LLC
may disclose on its worldwide web page, www.gapartners.com, the name of the
Company, the name of the Chief Executive Officer of the Company, a brief
description of the business of the Company, the Company's logo and the aggregate
amount of the Purchasers' investment in the Company. If any announcement is
required by applicable law or the rules of any securities exchange or market on
which such shares of Common Stock are traded to be made by any party hereto,
prior to making such announcement such party will deliver a draft of such
announcement to the other parties and shall give the other parties reasonable
opportunity to comment thereon.

            7.13 Further Assurances. Each of the parties shall execute such
documents and perform such further acts (including, without limitation,
obtaining any consents, exemptions, authorizations or other actions by, or
giving any notices to, or

                                                                              30


making any filings with, any Governmental Authority or any other Person) as may
be reasonably required or desirable to carry out or to perform the provisions of
this Agreement.



                       [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

            IN WITNESS WHEREOF, the undersigned have executed, or have caused to
be executed, this Securities Purchase Agreement on the date first written above.


                                   TICKETS.COM, INC.


                                   By: /s/ Ronald Bension
                                       _________________________________
                                       Name: Ronald Bension
                                       Title: Chief Executive Officer


                                   GENERAL ATLANTIC PARTNERS, 74, L.P.

                                   By: GENERAL ATLANTIC PARTNERS,   LLC,
                                         its General Partner


                                   By: /s/ Matthew Nimetz
                                       _________________________________
                                       Name: Matthew Nimetz
                                       Title: A Managing Member


                                   GAP COINVESTMENT PARTNERS II, L.P.


                                   By: /s/ Matthew Nimetz
                                       _________________________________
                                       Name: Matthew Nimetz
                                       Title: A General Partner


                                   GAPSTAR, LLC

                                   By: GENERAL ATLANTIC PARTNERS,   LLC,
                                         its Managing Member


                                   By: /s/ Matthew Nimetz
                                       _________________________________
                                       Name: Matthew Nimetz
                                       Title: A Managing Member


                                                                    Schedule 2.1



                  Purchased Shares, Warrants and Purchase Price




      Purchaser            Purchased Shares       Warrants        Purchase Price
      ---------            ----------------       --------        --------------
                                                       
GAP LP                        7,003,889          1,487,626       $ 16,529,178.00
GapStar                         124,524             26,449       $    293,877.00
GAP Coinvestment              1,346,163            285,925       $  3,176,945.00
                Total:        8,474,576          1,800,000       $ 20,000,000.00

EX-99.1

                                                                    Exhibit 99.1


[TICKETS.COM(SM) LOGO - THE INNOVATIVE, FLEXIBLE TICKETING COMPANY(SM)]



FOR IMMEDIATE RELEASE

                   TICKETS.COM RELEASES FOURTH QUARTER RESULTS

                    COMPANY SECURES $20 MILLION IN FINANCING


COSTA MESA, CA. - March 15, 2002 - Tickets.com (Nasdaq: TIXX), a leading
ticketing services provider for live events, today reported financial results
for the fourth quarter ending December 31, 2001. The company also secured $20
million in financing from existing investor General Atlantic Partners, to fund
future growth and working capital needs, announced Tickets.com CEO, Ron Bension.

The company's fourth quarter results were impacted by the fallout from the
September 11th attacks. Cancelled events and poor attendance at those events
that were held, significantly reduced the company's earnings for the quarter.
Throughout the difficult economic environment of the fourth quarter, however,
the Company has maintained its ongoing focus on reducing its overall cost
structure. The Q4 results demonstrate a continuation of a process to build the
pipeline for top-line growth while concurrently reducing costs and enhancing
efficiency at all levels.

Tickets.com's business philosophy has enabled the company to remain flexible
while aggressively developing new technology to better attract and service
clients. Specifically the company now provides a suite of services including
their unique private label software, Internet ticketing solutions and complete
outsourcing services. This technology is currently being utilized by 20 of the
30 Major League baseball teams and some of the industry's most prestigious
entertainment and sports venues, including some new additions, the renowned
9:30 Club, the Greensboro Coliseum and the Mohegan Sun Casino.

At the end of the fourth quarter, Tickets.com announced the hiring of Ron
Bension, a seasoned recreational entertainment executive as CEO. Bension's
extensive experience uniquely qualifies him to lead the company as it enters the
next phase of its business cycle. "Although our business experienced reduced
revenue due to the widespread effect of September 11, we remain confident in
continued growth and to providing the best ticketing service, technology and
state of the art functionality for clients," said Bension. "This financing
further demonstrates the confidence that our investors have in our business
model and the potential it represents in 2002 and beyond".

Due to the impact of September 11th and the capital required to bring on-line
several major new clients signed in the quarter, the company projected the need
for additional funding to support future operations. This new round of
financing will address the short-term working capital requirements and provide
the company with significant funding to continue its growth.

"Despite the challenging business environment in Q4 and its impact on the
performance of Tickets.com, we are pleased to deepen our relationship with the
company" said Braden Kelly, partner at General Atlantic Partners. "We believe
Tickets.com has the leadership, assets, and long-term orientation required to
create continued innovation in the ticketing industry and build an attractive
business. The company's intense focus on driving customer satisfaction is
consistent with our philosophy of how great businesses are built."

The Company will receive proceeds of $20 million from the issuance of
approximately 8.5 million shares of Series G Preferred Stock. The company will
use the proceeds to address near-term liquidity demands and longer term growth
opportunities. The Series G Preferred Stock is initially convertible into shares
of Tickets.com common stock representing approximately 33.4 percent of the
company's voting power on a fully diluted basis and, when combined with General
Atlantic's other stock holdings in the company, will result in General Atlantic
holding a majority of the company's outstanding equity. In addition, the Company
will issue General Atlantic warrants to





purchase 1.8 million shares of its common stock. Additional terms of the
financing will be set forth in a Current Report on Form 8-K to be filed with the
SEC.

Driven by a combination of cancelled events and attendance drop-off precipitated
by the September 11th tragedy, net revenues in the fourth quarter of 2001 fell
36.6 percent to $9.7 million from $15.3 million in the same quarter a year ago.
For the full year, the company reported net revenues of $56.1 million, which
represents a 4.4 percent decrease to the prior year's figure of $58.7 million.

The company posted solid margin expansion during 2001, with a full year gross
margin of 42.8 percent as compared to 35.8 percent for 2000. The fourth quarter
margin of 36.0 percent represents a significant reduction from prior year and
internal expectations, and was driven primarily by a softer top-line and costs
associated with event cancellations.

The company's operating expenses, however, continued to decrease, to $13.9
million in the fourth quarter, down 15.0 percent from the previous quarter, and
33.5 percent from $21.0 million posted in the fourth quarter of 2000.
Tickets.com's ongoing focus on tighter expense management continues to produce
meaningful cost savings across numerous areas of the business. For the full year
of 2001, the company incurred operating expenses of $65.6 million excluding the
impact of non-recurring items. Total operating expenses for 2001 represent a 30
percent reduction versus 2000, net of non-recurring items.

The net loss to common shareholders for the fourth quarter was $10.8 million, or
$1.45 per diluted share. This compares with a net loss, of $13.8 million, or
$1.87 per share (adjusted for the August one-for-eight reverse stock split) in
the fourth quarter of 2000. For the full year 2001, the net loss was $57.2
million. This compares to a net loss in 2000 of $105.7 million. The above
referenced net loss figures include a number of non-cash charges.

EBITDA (earnings before interest, taxes, depreciation and amortization) loss for
the fourth quarter was $6.1 million as compared to $9.6 million in the fourth
quarter of 2000. For the full year, the EBITDA loss was $39.6 million as
compared to $91.6 million for the prior year. Pro forma EBITDA (which excludes
the affect of certain non-cash prepaid marketing and advertising relationships)
loss for the fourth quarter was $6.0 million. This softer performance versus the
third quarter of 2001 primarily reflects the impact of revenue shortfalls. For
the full year, the pro-forma EBITDA loss of $21.9 million reflects a 55.9
percent improvement versus the prior year loss of $49.7 million. Pro forma
EBITDA is presented in addition to results provided in accordance with U.S.
generally accepted accounting principles (GAAP). Management measures the
progress of the business using this pro forma information as an indicator of
operating cash usage.

"Our youth and flexibility are ultimately competitive advantages in this
evolving industry. Tickets.com's ability to be nimble and aggressive has
resulted in developing state-of-the-art services for the industry that supercede
previously existing options. We remain optimistic that these advantages will
culminate in success," said Bension.

ABOUT GENERAL ATLANTIC

General Atlantic Partners, LLC, is the world's leading private equity investment
firm focused exclusively on investing in information technology and
communications businesses globally. The firm was founded in 1980 and has over $3
billion of capital available for investment. General Atlantic has invested in
over 120 companies and has current holdings in over 60 companies, of which
almost one-third are based outside the United States and which include Critical
Path, E*TRADE Group, Inc., Eclipsys, Exact, EXE Technologies, Exult, Firepond,
iFormation Group,


                                                                               2



Manugistics, Predictive Systems, ProBusiness, Rebus, Screaming Media, SESA,
Upromise, Xchanging and Zagat. The firm is distinguished within the investment
community by its deep experience and expertise in information technology, its
global perspective and worldwide presence, its long-term approach to
investments, and its commitment to provide sustained strategic assistance for
its portfolio companies. General Atlantic has about 90 professionals among its
130 employees worldwide with offices in Greenwich, New York, Palo Alto, Reston,
London, Dusseldorf, Singapore, Tokyo, Hong Kong, and Sao Paulo. See
www.gapartners.com for additional information.

ABOUT TICKETS.COM

Tickets.com is a leading live event business-to-business ticketing solutions
provider. The company facilitates the sale of tickets by enabling venues and
entertainment organizations with proprietary and cutting edge software, retail
outlets, call centers and interactive voice response (IVR) systems. Tickets.com
develops private label Ticketing Gateways(SM) to enable live entertainment
organizations with e-commerce distribution platforms. The company also sells
tickets directly to consumers at http://www.tickets.com, providing tickets and
information on virtually all events and entertainment organizations, as well as
offering related products and services. Tickets.com's automated ticketing
solutions are used by thousands of entertainment organizations such as leading
performing arts centers, professional sports organizations and various stadiums
and arenas in the U.S., Canada, Europe, Australia and Latin America. Tickets.com
is the official ticketing supplier to the 2002 Olympic Winter Games as well as
the official online ticketing solutions provider for MLB Advanced Media, LP.

FORWARD-LOOKING STATEMENTS

The statements contained in this press release that are not historical facts are
forward-looking statements under the federal securities law. These
forward-looking statements are not guarantees of future growth or performance
and involve risks, uncertainties and assumptions that are difficult to predict
including changes and additions to the management team of the Company; the
Company's dependence on increasing ticket sales; seasonality; public attendance
at events hosted by venues utilizing the services of the Company; continuing
public acceptance of the Internet as a viable means to locate and acquire
tickets to events; ability to increase Internet ticketing revenue; the
acceptance of an open ticketing environment; strikes or work stoppages in the
sports and entertainment industry; the Company's ability to execute its
announced reorganization; ability to manage its financial resources effectively;
ability to accelerate profitability as currently anticipated; the Company's
ability to meet its ongoing operating expenses and revenue targets; and the
execution of partnerships or agreements for international expansion. Actual
outcomes and results may differ materially from what is expressed in, or implied
by, such forward-looking statements. Tickets.com, Inc. undertakes no obligation
to update publicly any forward-looking statements, whether as a result of new
information, future events or otherwise. Among the important factors that could
cause Tickets.com, Inc.'s actual results to differ are (i) the Company's ability
to become the market leader in Internet ticketing, (ii) its ability to increase
brand recognition and extend consumer reach, (iii) the Company's ability to
broaden distribution via emerging channels and to drive Web-based transactions
and increase technological efficiencies, (iv) changes in general economic
conditions, increased or unexpected competition, (v) fluctuations in customer
demand, particularly those that might results from a Major League Baseball
strike, (vi) the continued availability of financing for the Company's business
and other matters disclosed in Tickets.com, Inc.'s filings with the Securities
and Exchange Commission from time to time. Tickets.com, Inc.'s profitability,
cash burn rate, long-term success, 2002 earnings are among these forward-
looking statements.


                                                                               3



                                TICKETS.COM, INC.
                      CONSOLIDATED STATEMENT OF OPERATIONS
                 FOR THE TWELVE MONTHS ENDING DECEMBER 31, 2001
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)




                                                                 Three Months Ended                     Year Ended
                                                                     December 31,                       December 31,
                                                                2001             2000             2001              2000
                                                              --------         --------         --------         ---------
                                                                    (unaudited)                        (unaudited)
                                                                                                     
Net revenues                                                  $  9,687         $ 15,294         $ 56,131         $  58,670

Cost of Services                                                 6,195            8,409           32,136            37,651
                                                              --------         --------         --------         ---------
Gross profit                                                     3,492            6,885           23,995            21,019
                                                              --------         --------         --------         ---------
Gross margin % of net revenue                                    36.05%           45.02%           42.75%            35.83%

Operating Expenses
   Sales & Marketing Expenses                                    3,681            9,087           19,290            39,401
   Technology Development                                        2,675            2,265           10,408            13,901
   General & Administrative                                      5,137            7,249           26,397            30,678
   Amortization of Intangibles                                   2,455            2,358            9,534             9,799
   Restructuring                                                     0                0           (2,669)           35,124
   Impairment of Long Lived Assets                                   0                0           17,952                 0
                                                              --------         --------         --------         ---------
      Total Operating Expenses                                  13,947           20,959           80,911           128,903
                                                              --------         --------         --------         ---------
Income (loss) from operations                                  (10,455)         (14,074)         (56,916)         (107,884)

   Other income (expenses)                                         134              187              447             2,272
   Minority Interest                                                97               58              241               (10)
                                                              --------         --------         --------         ---------
Total other income (expense)                                       231              245              688             2,262
Income (loss) before income tax                                (10,224)         (13,829)         (56,228)         (105,622)
Tax provision (benefit)                                             39               (3)             111               107
                                                              --------         --------         --------         ---------
Net loss                                                       (10,263)         (13,826)         (56,339)         (105,729)

Preferred dividends                                                390                0              705                 0
Accretion of issuance costs                                        137                0              137                 0
                                                              --------         --------         --------         ---------
Net loss available to common shareholders                     ($10,790)        ($13,826)        ($57,181)        ($105,729)
                                                              ========         ========         ========         =========
Basic and diluted net loss per share                          ($  1.45)        ($  1.87)        ($  7.70)        ($  14.43)
     Weighted average common shares - basic and diluted          7,439            7,410            7,426             7,327



                                                                               4



                                TICKETS.COM, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)




                                                              DECEMBER 31,
                                                          2001           2000
                                                        -------       --------
                                                              (UNAUDITED)
                                                                
             ASSETS
Cash & cash equivalents                                 $11,330       $ 20,026
Other current assets                                     13,775         31,025
                                                        -------       --------
     Total current assets                                25,105         51,051
                                                        -------       --------



Property and equipment, net                              14,516         16,920
Goodwill and other intangibles, net                      40,518         48,604
Other assets                                              4,278         14,841
                                                        -------       --------
     Total assets                                       $84,417       $131,416
                                                        =======       ========

             LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities                                     $21,407       $ 26,075
Long-term debt and capital lease obligations                249          1,406
Other long-term liabilities                                 701          1,916
Stockholders' equity                                     62,060        102,019
                                                        -------       --------
     Total liabilities and stockholders' equity         $84,417       $131,416
                                                        -------       --------



                                                                               5



                                TICKETS.COM, INC.
                      CONSOLIDATED - EBITDA RECONCILIATION
                 FOR THE TWELVE MONTHS ENDING DECEMBER 31, 2001
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)




                                               Three Months Ended                 Year Ended
                                                  December 31,                    December 31,
                                              2001            2000            2001             2000
                                            --------        --------        --------        ---------
                                                  (unaudited)                       (unaudited)
                                                                               
Loss from operations                        ($10,455)       ($14,074)       ($56,916)       ($107,884)

Add back:
      Depreciation and amortization            4,313           4,517          17,344           16,286
                                            --------        --------        --------        ---------

EBITDA                                        (6,142)         (9,557)        (39,573)         (91,598)

Add back:
      Non-cash marketing expenses                165           1,813           2,411            5,747
      Restructuring charges                        0               0          (2,669)          35,124
      Abandoned acquisition costs                  0               0               0              995
      Impairment of long-lived assets              0               0          17,953                0
                                            --------        --------        --------        ---------


 Pro forma EBITDA loss                      ($ 5,977)       ($ 7,744)       ($21,878)       ($ 49,732)
                                            --------        --------        --------        ---------


 Pro forma EBITDA loss per share            ($  0.80)       ($  1.05)       ($  2.95)       ($   6.79)

      Weighted average common shares           7,439           7,410           7,426            7,327



                                                                               6

EX-99.2

                                TICKETS.COM, INC.
                         555 ANTON BOULEVARD, 11TH FLOOR
                          COSTA MESA, CALIFORNIA 92626

                                ----------------

                             NOTICE TO STOCKHOLDERS


To the Stockholders of Tickets.com, Inc.

         Due to the negative impact of the events of September 11th on the
revenue of Tickets.com, Inc. (the "Company") and the capital required to bring
on-line several major new clients signed in the fourth quarter, the Company
requires additional funding to meet its near term liquidity needs and support
future operations. For that reason, over the past few months the Company has
explored a number of possible sources of financing. Because one of the possible
sources included existing investors in the Company affiliated with members of
the Company's board of directors (the "Board"), a special committee (the
"Special Committee") consisting of four independent members of the Board was
established. The Special Committee was responsible for reviewing and considering
the financing alternatives available to the Company and approving such a
financing on behalf of the full Board.

         On March 15, 2002, pursuant to approval of the Special Committee, the
Company entered into a Securities Purchase Agreement (the "Purchase Agreement")
among the Company and General Atlantic Partners 74, L.P., GAP Coinvestment
Partners II, L.P., and GapStar, LLC (collectively, the "Investors"). Pursuant to
the Purchase Agreement, the Company will sell an aggregate of 8,474,576 shares
of its Series G Senior Cumulative Redeemable Convertible Participating Preferred
Stock (the "Series G Preferred Stock") and warrants to purchase 1,800,000 shares
of its common stock (the "Warrants"), at an exercise price of $2.36 per share,
to the Investors for an aggregate purchase price of $20,000,000 (the "Purchase
Price"). The Investors will pay the Purchase Price in cash. The closing of the
purchase of the Series G Preferred Stock and the Warrants is scheduled to occur
on March 25, 2002.

         The Investors currently own approximately 33% of the outstanding voting
power of the Company. As a result of the sale of the Series G
Preferred Stock, the Investors will own approximately 62% of the
outstanding voting power of the Company. Additionally, the Warrants will be
exercisable by the Investors at any time by delivery to the Company of a duly
executed exercise form and payment of the exercise price as set forth in the
Warrants. Upon exercise of the Warrants, the Investors will own approximately
65% of the outstanding voting power of the Company.

         In order for the common stock of the Company to continue to be listed
on Nasdaq's National Market the Company must comply with certain governance
standards as set forth in Marketplace Rules 4350 and 4351 of the Nasdaq Stock
Market, Inc. ("NASDAQ"). Those rules require that the Company obtain stockholder
approval for the sale or issuance in a transaction of a number of shares of
common stock (or securities convertible into or exchangeable for common stock,
such as the Series G Preferred Stock and the Warrants) equal to or in excess of
twenty percent of the number of shares of common stock outstanding prior to such
transaction if such issuance is for a purchase price which is less than the
greater of the book or market value of the common stock. Additionally,
Marketplace Rules 4350 and 4351 require that the Company obtain stockholder
approval for the sale or issuance in a transaction of a number of shares of
common stock (or securities convertible into or exchangeable for common stock)
when the issuance will result in a change of control.


                                       1

         The issuance of the Series G Preferred Stock and the Warrants will
result in the issuance of a number of securities convertible into common stock
greater than twenty percent of the outstanding common stock as well as a change
of control. Marketplace Rule 4350 provides that NASDAQ may grant exceptions to
the stockholder approval requirements of Marketplace Rules 4350 and 4351 when
the delay in securing stockholder approval would seriously jeopardize the
financial viability of the enterprise. Because the Company's near term liquidity
needs exceed its financial resources, the delay in securing stockholder approval
would have a detrimental effect on the Company's financial viability. Therefore,
the Company requested a waiver from NASDAQ of the stockholder approval
requirements of Marketplace Rules 4350 and 4351. The audit committee of the
Board expressly approved the use of the exception under Marketplace Rule 4350
and the Company's request of a waiver from NASDAQ. On March 8, 2002, NASDAQ
granted the Company a waiver from the stockholder approval requirements of
Marketplace Rules 4350 and 4351, subject to the Company mailing to all
stockholders this notice.

        A copy of the Purchase Agreement is contained in a Current Report on
Form 8-K to be filed with the Securities and Exchange Commission.



                                                  s/Ronald Bension

                                                  Ronald Bension
                                                  Chief Executive Officer

Costa Mesa, California
March 15, 2002








                                       2