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

May 17, 2002
Date of Report (Date of earliest event reported)

EXABYTE CORPORATION
(Exact name of registrant as specified in its charter)

Delaware	0-18033	84-0988566
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1685 38th Street
Boulder, Colorado 80301
(Address of principal executive offices)

(303) 442-4333
Registrant's telephone number, including area code

INFORMATION TO BE INCLUDED IN THE REPORT

Item 5. Other Events

On May 17, 2002, Exabyte Corporation ("Exabyte") entered into the Series I Preferred Stock Purchase Agreement (the "Agreement"), attached hereto as an exhibit, with certain investors listed on Schedule A to the Agreement. The Agreement provides for the sale of 6,060,000 shares of Series I Convertible Preferred Stock ("Series I Preferred") at $1.00 per share in two closings. The first closing on May 17, 2002 concerned the sale of 3.9 million shares of Series I Preferred for $3.9. The net proceeds of the first closing are being used for working capital. The second closing for at least 2.5 million shares is subject to stockholder approval.

The Series I Preferred is senior to other Exabyte stock, and each share is convertible into common stock of Exabyte at a conversion price of $.5965, which is subject to adjustment for any future stock splits, stock combinations, stock dividends or similar transactions affecting the Series I Preferred. Upon certain conditions noted in the Series I Certificate of Designation (attached hereto as an exhibit), the Series I Preferred will automatically convert into common stock of Exabyte. In no event will conversions of the Series I Preferred issued in the first closing exceed 20% of the outstanding common stock or voting power of Exabyte, until stockholder approval has been obtained for issuances above the 20% threshold.

The Series I Preferred will accrue dividends at a rate of 12% per annum. However, on the earlier of January 1, 2007 or the date of a change in control (as defined in the Series I Certificate of Designation), the dividend rate will increase to 15% per annum.

The Series I Preferred has a preferential liquidation value of the sum of $2 per share plus any unpaid accrued dividends. The liquidation value will increase to $3.00 per share on the earlier of January 1, 2007 or the date of a change in control. If there is a change in control occurring prior to May 17, 2004, such step-up will not be effective until 30 days following the date of such change in control.

On the earlier of May 17, 2003 or the date of a change in control, Exabyte will have the right, but not the obligation, to redeem some or all shares of the then-outstanding Series I Preferred at a price per share equal to the liquidation value. Exabyte may not redeem any shares of Series I Preferred prior to the receipt of stockholder approval of the transactions contemplated by the Agreement. Should Exabyte redeem Series I Preferred, the Agreement provides that the purchasers will receive a warrant to purchase a number of shares of common stock of Exabyte equal to the number of shares issuable upon conversion of the redeemed Series I Preferred, at a per-share price equal to the conversion price in effect on the date of such redemption. The form of warrant is attached hereto as an exhibit.

Each share of Series I Preferred Stock is entitled to a number of votes determined by dividing the original issue price of $1.00 by the closing price of the common stock on May 17, 2002.

In accordance with the Agreement, Exabyte's bylaws have been amended to provide limitations on the grant of stock options, the issuance of conversion or other rights exercisable to purchase common stock, and certain arrangements for the sale of common stock, unless stockholder approval is obtained.

As part of the Series I Preferred sales, after stockholder approval of the transactions under the Agreement, Exabyte will enlarge its board of directors to a total of eight, and one of the investors, Meritage Private Equity Fund, L.P., will be permitted to designate the new director. Meritage currently has a representative on the board as a result of Exabyte's merger with Ecrix Corporation in November 2001. As a result of the first closing, Meritage entities beneficially own 27.2% of Exabyte common stock (including common stock issuable to Meritage entities upon conversion of Series I Preferred and earlier issued Series H Preferred Stock).

The Agreement contains a price protection provision for the Series I Preferred that comes into play if during the period beginning on May 17, 2002 and ending 270 days after the first closing the Company sells or enters into an agreement to sell shares of its common stock, or issues options or other rights to receive shares of common stock, at a price per share that is less than the then-effective conversion price of the Series I Preferred. The difference between the conversion price and the price in the dilutive issuance is payable in cash; or, subject to stockholder approval, alternatively holders of the Series I Preferred Stock may exchange Series I Preferred shares for securities issued in the dilutive issuance at the price reflected in the dilutive issuance.

The Agreement provides the purchasers of Series I Preferred with certain registration rights.

Under the Agreement, the Company has the right for up to the 120-day anniversary of the first closing, to issue all or any portion of the balance of the 10,000,000 authorized shares of Series I Preferred Stock that are not issued pursuant to the Agreement at one or more closings; provided, however, that (1) such additional issuances are on terms no less favorable to Exabyte than those set forth in the Agreement, (2) the issuances are effective pursuant to a purchase agreement substantially identical to the Agreement, and (3) any new investors are reasonably satisfactory to each of the purchasers under the Agreement.

Exabyte intends to hold a special meeting of stockholders to seek approval of the transactions covered by the Agreement and possible sales of additional shares of Series I Preferred up to an aggregate (including those subject to the Agreement) of 10,000,000 shares of Series I Preferred.

A press release of May 17, 2002 by Exabyte regarding the sale of the Series I Preferred in the first closing is attached as an exhibit.

The above summary descriptions of the Agreement and the terms of the Series I Preferred are qualified in their entirety by reference to the Agreement and the Series I Certificate of Designation, each of which are being filed herewith.

SEC MATTERS

In connection with the transactions described above, Exabyte will be filing a proxy statement with the Securities and Exchange Commission. Stockholders of Exabyte are urged to read the proxy statement when it becomes available because it will contain important information regarding these transactions. Investors and shareholders may obtain a free copy of the proxy statement when it becomes available at the SEC's website at www.sec.gov or at Exabyte's website at www.Exabyte.com.

Exabyte, its Board of Directors, executive officers and employees, and certain other persons, may be deemed to be participants in the solicitation of proxies of Exabyte stockholders to approve the transactions under the Series I Preferred Stock Purchase Agreement. These individuals may have interests in the transactions, including as a result of acquiring Series I Preferred or holding options or other shares of Exabyte. Information concerning these individuals and their interests in the transactions and the participants in the solicitation will be contained in the proxy statement to be filed with the Securities and Exchange Commission in connection with the transactions.

Exabyte's Series I Preferred has not been registered under the Securities Act of 1933 and may not be offered or sold in the United States unless registered under such act or eligible for an exemption from registration.

Item 7. Financial Statements and Exhibits

The following exhibits are filed herewith:

10.1	Series I Preferred Stock Purchase Agreement, dated May 17, 2002, by and among Exabyte Corporation and the purchasers listed on Schedule A thereto.
10.2	Series I Certificate of Designation.
10.3	Form of Common Stock Purchase Warrant.
99.1	Press Release dated May 17, 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 hereto duly authorized.

			EXABYTE CORPORATION
			(Registrant)
Date	May 17, 2002	By	/s/ Stephen F. Smith
			Stephen F. Smith
			Vice President, General Counsel & Secretary

EXHIBIT INDEX

10.1	Series I Preferred Stock Purchase Agreement, dated May 17, 2002, by and among Exabyte Corporation and the purchasers listed on Schedule A thereto.
10.2	Series I Certificate of Designation.
10.3	Form of Common Stock Purchase Warrant.
99.1	Press Release dated May 17, 2002

EX-10

Execution Copy

Series I Preferred Stock PURCHASE AGREEMENT

This Series I Preferred Stock Purchase Agreement (this "Agreement"), is made and entered into as of May 17, 2002, by and among Exabyte Corporation, a Delaware corporation (the "Company"), and the purchasers listed on Schedule A attached hereto (collectively, the "Purchasers" and individually, a "Purchaser").

1.     Authorization of Sale of the Shares

Subject to the terms and conditions of this Agreement, the Company has authorized the sale of up to 10,000,000 shares (the "Shares") of Series I Preferred Stock, par value $.001 per share (the "Series I Preferred Stock"), of the Company. The Series I Preferred Stock shall have the terms and conditions set forth in the Certificate of Designations attached hereto as Exhibit A (the "Certificate of Designations").

2.      Agreement to Sell and Purchase the Shares

     2.1     Purchase and Sale

Subject to the terms and conditions of this Agreement, each Purchaser severally agrees to purchase, and the Company agrees to sell and issue to each Purchaser, (x) at the Initial Closing (as defined below), that number of Shares set forth opposite such Purchaser's name on Schedule A attached hereto under the caption "Initial Closing", and (y) at the Subsequent Closing (as defined below), that number of Shares set forth opposite such Purchaser's name on Schedule A under the caption "Subsequent Closing".

     2.2     Purchase Price; Price Protection

The purchase price of each Share shall be $1.00 in cash; provided, however, that Meritage Private Equity Fund, L.P. ("Meritage") shall be entitled to offset the unpaid principal amount and accrued interest on its outstanding $1.0 million bridge loan to the Company against the purchase price for the Shares to be acquired by it and its affiliates at the Subsequent Closing. In the event that, during the period beginning on the date of this Agreement and ending 270 days after the Initial Closing Date (as defined below), the Company shall sell or issue or enter into an agreement to sell or issue (i) shares of the Company's Common Stock, $.001 par value per share (the "Common Stock"), at a price per share that is less than the then-effective conversion price of the Series I Preferred Stock determined pursuant to the Certificate of Designations (the "Conversion Price"), or (ii) options, warrants or any other securities that can be converted into, or otherwise exchanged or exercised for, share s of Common Stock at a conversion, exchange or exercise price per share that is less than the Conversion Price (other than (a) pursuant to employee stock options issued under plans adopted by the Company's board of directors with exercise prices equal to or greater than the fair market value of the Common Stock on the date of grant, or (b) pursuant to the Company's existing employee stock purchase plan approved by the Company's board of directors prior to the date hereof) (each a "Dilutive Issuance"), then the Company shall, within ten (10) business days after each such Dilutive Issuance, either (x) pay to each Purchaser a cash amount equal to the number of shares of Common Stock issuable upon conversion of the Shares held by such Purchaser multiplied by the difference between the Conversion Price and the effective price per share of Common Stock reflected in such Dilutive Issuance, or (y) with respect to any Dilutive Issuance occurring after the Subsequent Closing, at the option of such Purchaser, permit su ch Purchaser to exchange its Shares for the securities issued in such Dilutive Issuance at the purchase price reflected in such Dilutive Issuance, with each Share valued at $1.00 plus accrued dividends for such purpose. For purposes of this Section 2.2, the "effective price per share of Common Stock" reflected in a Dilutive Issuance of options or warrants shall take into account the consideration received by the Company upon issuance of such options or warrants plus the additional consideration, if any, payable upon exercise thereof. The value of any non-cash consideration shall be determined in good faith by the Company's board of directors.

     2.3     Issuance of Warrants

Upon any redemption or other involuntary retirement of Shares by the Company (other than pursuant to a conversion of Shares or a reclassification or exchange of Shares for other securities that preserve in all respects the benefits of the conversion rights of the Shares), the Company agrees to issue to the former holder of the Shares so redeemed, for no additional consideration, warrants in the form of Exhibit B hereto (the "Warrants") representing the right to acquire, at a per-share exercise price equal to the Conversion Price in effect on the date of such redemption, a number of shares of Common Stock equal to the number of shares of Common Stock issuable upon conversion of the Shares so redeemed immediately prior to such redemption (the "Warrant Stock").

     2.4     Limitation Relating to Conversions

The Purchasers acknowledge that Section 6(g) of the Certificate of Designations contains a limitation on conversion of the Shares providing that in no event shall the number of shares of Common Stock issued upon the conversion of Series I Preferred Stock be equal to or greater than 20% of the outstanding number of shares of Common Stock or 20% of the combined voting power of the Company, in each case determined as of the Original Series I Issue Date (as defined), until the Company has received stockholder approval for the issuance of Common Stock upon the conversion of Series I Preferred Stock in excess of such limitations. Such limitations are to be determined after subtraction of a total of 118,609 shares of Common Stock issuable pursuant to warrants issued to Meritage in connection with the bridge loan referred to above and to a third party as an introduction fee regarding one of the Purchasers, and shall be adjusted for any stock splits, stock dividends or similar transactions affe cting the Common Stock after the Original Series I Issue Date. The Purchasers hereby agree that the Company shall not be obligated to issue shares of Common Stock upon the conversion of Shares in excess of such limitations, and that such limitations shall be binding upon any transferees of the Shares. These limitations shall cease to be effective upon approval by the Company's stockholders of the issuance of Common Stock in connection with the Subsequent Closing.

3.      Delivery of the Shares

     3.1     Initial Closing

The initial purchase and sale of the Shares (the "Initial Closing") shall occur at the executive offices of the Company at 9:00 a.m. (local time) on the date of this Agreement or at such other time and date as may be agreed by the parties (the "Initial Closing Date").

     3.2     Subsequent Closing

The purchase and sale of the balance of the Shares to be acquired by the Purchasers (the "Subsequent Closing") shall occur at 9:00 a.m. (local time) on the third business day following the receipt of stockholder approval of the transactions contemplated by this Agreement or such other time and date as may be agreed by the parties (the "Subsequent Closing Date").

     3.3     Closing Deliveries

At each Closing, the Company shall authorize its transfer agent (the "Transfer Agent") to issue to each Purchaser one or more stock certificates registered in the name of such Purchaser, or in such nominee name(s) as designated by such Purchaser in writing, representing the number of Shares purchased by such Purchaser at such Closing pursuant to Section 2 above and bearing an appropriate legend referring to the fact that the Shares were sold in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, as amended (the "Securities Act"), and Rule 506 under the Securities Act. The Company will deliver such certificate(s) (the "Certificates") against delivery of payment for such Shares by the Purchasers. Prior to the Purchasers' delivery of payment for the Shares, the Company will deliver via facsimile a copy of the Certificates to be delivered at such Closing to the Purchasers (at their fax numbers indicated on the signature pages attached heret o).

     3.4     Closing Conditions

     (a)      The Company's obligation to complete the purchase and sale of the Shares at the Initial Closing or the Subsequent Closing shall be subject to the following conditions, any one or more of which may be waived by the Company:

          (i)      receipt by the Company from stockholders holding rights to require the Company to register the sale of any securities owned by such holder in the Registration Statement (as defined below) of waivers of such rights (including the waiver of any notice requirements related to such rights);

          (ii)      receipt by the Company of same-day funds in the full amount of the purchase price for the Shares being purchased at such Closing under this Agreement; and

          (iii)      the accuracy in all material respects of the representations and warranties made by the Purchasers and the fulfillment in all material respects of those undertakings of the Purchasers to be fulfilled on or before such Closing; and

          (iv)      with respect to the Subsequent Closing only, the Company shall have received the approval of its stockholders of the transactions contemplated by this Agreement at a special meeting of its stockholders duly called for such purpose.

     (b)      The Purchasers' obligations to accept delivery of such stock certificates and to pay for the Shares evidenced by the certificates at the Initial Closing or the Subsequent Closing (except as otherwise indicated below) shall be subject to the following conditions, any one or more of which may be waived by a Purchaser with respect to such Purchaser's obligation:

          (i)      the representations and warranties made by the Company in this Agreement shall be accurate in all material respects (except to the extent any representation and warranty is already qualified by materiality, in which case it shall be true and correct in all respects) and the undertakings of the Company to be fulfilled on or prior to such Closing shall have been fulfilled in all material respects;

          (ii)      the Company shall have delivered to the Purchasers a certificate executed by the chairman of the board or president and the chief financial or accounting officer of the Company, dated as of the date of such closing, in form and substance reasonably satisfactory to the Purchasers, to the effect that the representations and warranties of the Company set forth in Section 4 hereof are true and correct in all material respects as of the date of this Agreement and as of the date of such closing, and that the Company has complied with all the agreements and satisfied all the conditions in this Agreement on its part to be performed or satisfied on or before such Closing; and

          (iii)      the Company shall have delivered to Purchasers a legal opinion in substantially the form attached hereto as Exhibit C.

          (iv)      each other Purchaser shall have purchased the Shares to be acquired by it at such Closing.

          (v)      with respect to the Subsequent Closing only, the Company shall have entered into a new revolving credit facility to replace its existing facility with Congress Financial.

          (vi)      with respect to the Subsequent Closing only, the Company shall have received the approval of its stockholders of the transactions contemplated by this Agreement at a special meeting of its stockholders duly called for such purpose.

          (vii)      with respect to the Subsequent Closing only, the Company's board of directors shall have elected a designee of Meritage Private Equity Fund, L.P. to fill the existing vacancy on the board.

     3.5     Additional Issuances of Series I Preferred

The Company shall have the right, at any time up to the 120-day anniversary of the Initial Closing, to issue all or any portion of the balance of the authorized shares of Series I Preferred Stock that are not issued pursuant to this Agreement at one or more closings at the discretion of the Company's board of directors; provided, however, that (x) such additional issuances shall be on terms no less favorable to the Company than those set forth herein, (y) such issuances shall be effected pursuant to a purchase agreement substantially identical to this Agreement (and in any event to include without modification the provisions set forth in Section 5.4 hereof), and (z) any new investors shall be reasonably satisfactory to each of the Purchasers.

4.0     Representations, Warranties and Covenants of the Company

Except as set forth on the Schedule of Exceptions attached hereto as Exhibit D, the Company hereby represents, warrants and covenants to the Purchasers as follows (which representations, warranties and covenants shall be deemed to apply, where appropriate, to each subsidiary of the Company):

     4.1     Organization and Qualification

The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware. The Company has the corporate power and authority to own, lease and operate its properties and to conduct its business as currently conducted and to enter into and perform its obligations under this Agreement. The Company is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to so qualify would not, singly or in the aggregate, have a material adverse effect on the condition, financial or otherwise, or the earnings, assets, business affairs or business prospects of the Company.

     4.2     Capitalization

     (a)      As of the date hereof, the authorized capital stock of the Company consists of 100,000,000 shares of Common Stock and 30,000,000 shares of Preferred Stock, of which 1,500,000 shares have been designated as Series G Preferred Stock, 9,650,000 shares have been designated as Series H Preferred Stock and 10,000,000 shares have been designated as Series I Preferred Stock.

     (b)      As of May 10, 2002, the issued and outstanding capital stock of the Company consisted of 33,366,576 shares of Common Stock, 1,500,000 shares of Series G Preferred Stock and 9,650,000 shares of Series H Preferred Stock. The shares of issued and outstanding capital stock of the Company have been duly authorized and validly issued, are fully paid and nonassessable and have not been issued in violation of or are not otherwise subject to any preemptive or other similar rights.

      (c)      The Company has reserved 2,058,000 shares of Common Stock for issuance upon conversion of the Series G Preferred Stock, 9,650,000 shares of Common Stock for issuance upon conversion of the Series H Preferred Stock, 14,754,850 shares of Common Stock for issuance upon the exercise of stock options granted or available for future grant under the Company's stock option plans, and 100,000 shares of Common Stock for issuance upon the exercise of outstanding warrants to purchase Common Stock.

With the exception of the foregoing, there are no outstanding subscriptions, options, warrants, convertible or exchangeable securities or other rights granted to or by the Company to purchase shares of Common Stock or other securities of the Company and there are no commitments, plans or arrangements to issue any shares of Common Stock or any security convertible into or exchangeable for Common Stock.

     4.3     Issuance, Sale and Delivery of the Shares

     (a)      The Shares have been duly authorized for issuance and sale to the Purchasers pursuant to this Agreement and, when issued and delivered by the Company pursuant to this Agreement against payment of the consideration set forth in this Agreement, will be validly issued and fully paid and nonassessable and free and clear of all pledges, liens and encumbrances. The shares of Common Stock issuable upon conversion of the Shares (the "Conversion Stock") have been duly authorized and reserved for issuance and, when issued by the Company upon conversion of the Shares, will be validly issued and fully paid and nonassessable and free and clear of all pledges, liens and encumbrances. The certificates evidencing the Shares are in due and proper form under Delaware law. The Warrants and the Warrant Stock have been duly authorized for issuance. When issued in accordance with this Agreement, the Warrants will be valid and binding obligation s of the Company enforceable in accordance with their terms. The Warrant Stock has been duly reserved for issuance and, when issued upon exercise of the Warrants, the Warrant Stock will be validly issued and fully paid and nonassessable and free and clear of all pledges, liens and encumbrances.

     (b)      The issuance of the Shares, the Conversion Stock, the Warrants and the Warrant Stock is not subject to preemptive or other similar rights. No further approval or authority of the shareholders or the Board of Directors of the Company will be required for the issuance and sale of the Shares to be sold by the Company as contemplated in this Agreement or the issuance of the Conversion Stock, the Warrants or the Warrant Stock.

     (c)      Subject to the accuracy of the Purchasers' representations and warranties in Section 5 of this Agreement, the offer, sale, and issuance of the Shares, the Warrants, the Conversion Stock and the Warrant Stock in conformity with the terms of this Agreement constitute transactions exempt from the registration requirements of Section 5 of the Securities Act and from the registration or qualification requirements of the laws of any applicable state or United States jurisdiction.

     4.4     Financial Statements

The financial statements included (as exhibits or otherwise) in the Company Documents (as defined below) present fairly the financial position of the Company as of the dates indicated and the results of their operations for the periods specified. Except as otherwise stated in such Company Documents, such financial statements have been prepared in conformity with generally accepted accounting principles applied on a consistent basis, and any supporting schedules included with the financial statements present fairly the information stated in the financial statements. The financial and statistical data set forth in the Company Documents were prepared on an accounting basis consistent with such financial statements.

     4.5     No Material Change

Since December 31, 2001,

     (a)      there has been no material adverse change or any development involving a prospective material adverse change in or affecting the condition, financial or otherwise, or in the earnings, assets, business affairs or business prospects of the Company, whether or not arising in the ordinary course of business;

     (b)      there have been no transactions entered into by the Company other than those in the ordinary course of business, which are material with respect to the Company; and

     (c)      there has been no dividend or distribution of any kind declared, paid or made by the Company on any class of its capital stock.

The Company has no material contingent obligations.

     4.6     Environmental

Except as would not, singly or in the aggregate, reasonably be expected to have a material adverse effect on the condition, financial or otherwise, or the earnings, assets, business affairs or business prospects of the Company,

     (a)      the Company is in compliance with all applicable Environmental Laws (as defined below);

     (b)      the Company has all permits, authorizations and approvals required under any applicable Environmental Laws and is in compliance with the requirements of such permits authorizations and approvals;

     (c)      there are no pending or, to the best knowledge of the Company, threatened Environmental Claims (as defined below) against the Company; and

     (d)      under applicable law, there are no circumstances with respect to any property or operations of the Company that are reasonably likely to form the basis of an Environmental Claim against the Company.

For purposes of this Agreement, the following terms shall have the following meanings: "Environmental Law" means any United States (or other applicable jurisdiction's) Federal, state, local or municipal statute, law, rule, regulation, ordinance, code, policy or rule of common law and any judicial or administrative interpretation thereof, including any judicial or administrative order, consent decree or judgment, relating to the environment, health, safety or any chemical, material or substance, exposure to which is prohibited, limited or regulated by any governmental authority. "Environmental Claims" means any and all administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of noncompliance or violation, investigations or proceedings relating in any way to any Environmental Law.

     4.7     No Defaults

The Company is not in violation of its certificate of incorporation or bylaws or in material default in the performance or observance of any obligation, agreement, covenant or condition contained in any material contract, indenture, mortgage, loan agreement, deed, trust, note, lease, sublease, voting agreement, voting trust, or other instrument or material agreement to which the Company is a party or by which it may be bound, or to which any of the property or assets of the Company is subject.

     4.8     Labor Matters

No labor dispute with the employees of the Company exists or, to the best knowledge of the Company, is imminent.

     4.9     No Actions

There is no action, suit or proceeding before or by any court or governmental agency or body, domestic or foreign, now pending, or, to the knowledge of the Company, threatened, against or affecting the Company which, singly or in the aggregate, might result in any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company, or which, singly or in the aggregate, might materially and adversely affect the properties or assets thereof or which might materially and adversely affect the consummation of this Agreement, nor, to the best knowledge of the Company, is there any reasonable basis therefor. The Company is not in default with respect to any judgment, order or decree of any court or governmental agency or instrumentality which, singly or in the aggregate, would have a material adverse effect on the assets, properties or business of the Company.

     4.10     Intellectual Property

     (a)      The Company, to the best of its knowledge in the course of diligent inquiry, owns or is licensed to use all patents, patent applications, inventions, trademarks, trade names, applications for registration of trademarks, service marks, service mark applications, copyrights, know-how, manufacturing processes, formulae, trade secrets, licenses and rights in any thereof and any other intangible property and assets that are material to the business of the Company as now conducted and as proposed to be conducted (in this Agreement called the "Proprietary Rights"), or is seeking, or will seek, to obtain rights to use such Proprietary Rights that are material to the business of the Company as proposed to be conducted.

     (b)      The Company does not have actual knowledge of, and the Company has not given or received any notice of, any pending conflicts with or infringement of the rights of others with respect to any Proprietary Rights or with respect to any license of Proprietary Rights which are material to the business of the Company.

     (c)      No action, suit, arbitration, or legal, administrative or other proceeding, or investigation is pending, or, to the best knowledge of the Company, threatened, which involves any Proprietary Rights, nor, to the best knowledge of the Company, is there any reasonable basis therefor.

     (d)      The Company is not subject to any judgment, order, writ, injunction or decree of any court or any Federal, state, local, foreign or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, or any arbitrator, and has not entered into or is not a party to any contract which restricts or impairs the use of any such Proprietary Rights in a manner which would have a material adverse effect on the Company's use of any of the Proprietary Rights.

     (e)      The Company has not received written notice of any pending conflict with or infringement upon any third-party proprietary rights.

     (f)      The Company has not entered into any consent, indemnification, forbearance to sue or settlement agreement with respect to Proprietary Rights other than in the ordinary course of business. No claims have been asserted by any person with respect to the validity of the Company's ownership or right to use the Proprietary Rights and, to the best knowledge of the Company, there is no reasonable basis for any such claim to be successful.

     (g)      The Company has complied, in all material respects, with its obligations relating to the protection of the Proprietary Rights which are material to the business of the Company used pursuant to licenses.

     (h)      To the best knowledge of the Company, no person is infringing on or violating the Proprietary Rights.

     4.11     Permits

The Company possesses and is operating in compliance with all material licenses, certificates, consents, authorities, approvals and permits from all state, federal, foreign and other regulatory agencies or bodies necessary to conduct the businesses now operated by it, and the Company has not received any notice of proceedings relating to the revocation or modification of any such permit or any circumstance which would lead it to believe that such proceedings are reasonably likely which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would materially and adversely affect the condition, financial or otherwise, or the earnings, assets, business affairs or business prospects of the Company.

     4.12     Due Execution, Delivery and Performance

     (a)      This Agreement has been duly executed and delivered by the Company and constitutes a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms.

     (b)      The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated in this Agreement and the fulfillment of the terms of this Agreement, including the sale, issuance and delivery of the Shares and the Warrants and the issuance of the Conversion Stock and the Warrant Stock, (i) have been duly authorized by all necessary corporate action on the part of the Company, its directors and stockholders; (ii) will not conflict with or constitute a breach of, or default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company pursuant to, any contract, indenture, mortgage, loan agreement, deed, trust, note, lease, sublease, voting agreement, voting trust or other instrument or agreement to which the Company is a party or by which it may be bound, or to which any of the property or assets of the Company is subject; (iii) will not trigger anti-dilution rights or other rights to acquire additional equity securities of the Company; and (iv) will not result in any violation of the provisions of the articles of incorporation or bylaws of the Company or any applicable statute, law, rule, regulation, ordinance, decision, directive or order.

     4.13     Properties

Except as would not, individually or in the aggregate, have a material adverse effect on the business or financial condition of the Company, the Company has good and marketable title to its properties, free and clear of all material security interests, mortgages, pledges, liens, charges, encumbrances and claims of record. The properties of the Company are, in the aggregate, in good repair (reasonable wear and tear excepted), and suitable for their respective uses. Any real property held under lease by the Company is held under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the conduct of the business of the Company. The Company owns or leases all such properties as are necessary to its business or operations as now conducted.

     4.14     Compliance

The Company has conducted and is conducting its business in compliance with all applicable Federal, state, local and foreign statutes, laws, rules, regulations, ordinances, codes, decisions, decrees, directives and orders, except where the failure to do so would not, singly or in the aggregate, have a material adverse effect on the condition, financial or otherwise, or on the earnings, assets, business affairs or business prospects of the Company.

     4.15     Security Measures

The Company takes security measures designed to enable the Company to assert trade secret protection in its non-patented technology.

     4.16     Contributions

To the best of the Company's knowledge, neither the Company nor any employee or agent of the Company has made any payment of funds of the Company or received or retained any funds in violation of any law, rule or regulation.

     4.17     Use of Proceeds; Investment Company

The Company intends to use the proceeds from the sale of the Shares for working capital and other general corporate purposes. The Company is not now, and after the sale of the Shares under this Agreement and under all other agreements and the application of the net proceeds from the sale of the Shares described in the proceeding sentence will not be, an "investment company" within the meaning of the Investment Company Act of 1940, as amended.

     4.18     Prior Offerings

To the Company's best knowledge, all offers and sales of capital stock of the Company before the date of this Agreement were at all relevant times duly registered or exempt from the registration requirements of the Securities Act and were duly registered or subject to an available exemption from the registration requirements of the applicable state securities or Blue Sky laws.

     4.19     Taxes

The Company has filed all material tax returns required to be filed, which returns are true and correct in all material respects, and the Company is not in default in the payment of any taxes, including penalties and interest, assessments, fees and other charges, shown thereon due or otherwise assessed, other than those being contested in good faith and for which adequate reserves have been provided or those currently payable without interest which were payable pursuant to said returns or any assessments with respect thereto.

     4.20     Other Governmental Proceedings

To the Company's knowledge, there are no rulemaking or similar proceedings before any Federal, state, local or foreign government bodies that involve or affect the Company, which, if the subject of an action unfavorable to the Company, could involve a prospective material adverse change in or effect on the condition, financial or otherwise, or in the earnings, assets, business affairs or business prospects of the Company.

     4.21     Non-Competition Agreements

To the knowledge of the Company, any full-time employee who has entered into any non-competition, non-disclosure, confidentiality or other similar agreement with any party other than the Company is neither in violation of nor is expected to be in violation of that agreement as a result of the business currently conducted or expected to be conducted by the Company or such person's performance of his or her obligations to the Company. The Company has not received written notice that any consultant or scientific advisor of the Company is in violation of any non-competition, non-disclosure, confidentiality or similar agreement.

     4.22     Transfer Taxes

On the Closing Date, all stock transfer or other taxes (other than income taxes) that are required to be paid in connection with the sale and transfer of the Shares to be sold to the Purchasers under this Agreement will be, or will have been, fully paid or provided for by the Company and all laws imposing such taxes will be or will have been fully complied with.

     4.23     Insurance

The Company maintains insurance of the type and in the amount that the Company reasonably believes is adequate for its business, including, but not limited to, insurance covering all real and personal property owned or leased by the Company against theft, damage, destruction, acts of vandalism and all other risks customarily insured against by similarly situated companies, all of which insurance is in full force and effect.

     4.24     Governmental/ Regulatory Consents

No registration, authorization, approval, qualification or consent with or required by any court or governmental/ regulatory authority or agency is necessary in connection with the execution and delivery of this Agreement or the offering, issuance or sale of the Shares under this Agreement.

     4.25     Securities and Exchange Commission Filings

The Company has timely filed with the Securities and Exchange Commission (the "Commission") all documents required to be filed by the Company under the Securities Exchange Act of 1934, as amended (the "Exchange Act.")

     4.26     Additional Information

The Company represents and warrants that the information contained in the following documents (the "Company Documents"), which will be provided to Purchaser before the Closing, is or will be true and correct in all material respects as of their respective final dates:

     (a)      the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2001;

     (b)      the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2002;

     (c)      the Company's Proxy Statement for its 2002 Annual Meeting of Shareholders; and

     (d)      all other documents, if any, filed by the Company with the Commission since December 31, 2001 pursuant to the reporting requirements of the Securities Exchange Act.

     4.27     Contracts

The contracts described in the Company Documents or incorporated by reference therein are in full force and effect on the date hereof, except for contracts the termination or expiration of which would not, singly or in the aggregate, have a material adverse effect on the business, properties or assets of the Company. Neither the Company nor, to the best knowledge of the Company, any other party is in material breach of or default under any such contracts.

     4.28     No Integrated Offering

Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has directly or indirectly made any offers or sales in any security or solicited any offers to buy any security under circumstances that would require registration under the Securities Act of the issuance of the Shares to the Purchasers. The issuance of the Shares to the Purchasers will not be integrated with any other issuance of the Company's securities (past, current or future) for purposes of the Securities Act or any applicable rules of Nasdaq (or of any national securities exchange on which the Company's Common Stock is then traded). The Company will not make any offers or sales of any security (other than the Shares) that would cause the offering of the Shares to be integrated with any other offering of securities by the Company for purposes of any registration requirement under the Securities Act or any applicable rules of Nasdaq (or of any national securities exchange on which the Com pany's Common Stock is then traded).

     4.29     Listing of Shares

The Company agrees to promptly secure the listing of the Conversion Stock and Warrant Stock upon each national securities exchange or automated quotation system upon which shares of Common Stock are then listed and, so long as any Purchaser owns any of the Shares, Warrants, Conversion Stock or Warrant Stock, shall maintain such listing. The Company has taken no action designed to delist, or which is likely to have the effect of delisting, the Common Stock from any of the national securities exchange or automated quotation system upon which the shares of Common Stock are then listed.

     4.30     No Manipulation of Stock

The Company has not taken and will not take any action in violation of applicable law that is designed to or that might reasonably be expected to cause or result in unlawful manipulation of the price of the Common Stock to facilitate the sale or resale of the Shares.

5.      Representations, Warranties and Covenants of the Purchasers

     5.1     Securities Law Representations and Warranties

Each Purchaser represents, warrants and covenants to the Company as follows:

     (a)      The Purchaser is knowledgeable, sophisticated and experienced in making, and is qualified to make, decisions with respect to investments in shares representing an investment decision like that involved in the purchase of the Shares, including investments in securities issued by the Company, and has requested, received, reviewed and considered all information it deems relevant in making an informed decision to purchase the Shares.

     (b)      The Purchaser is acquiring the number of Shares set forth in Section 2 above, and will acquire the Conversion Stock, the Warrants and the Warrant Stock (as applicable), in the ordinary course of its business and for its own account for investment (as defined for purposes of the Hart-Scott-Rodino Antitrust Improvement Act of 1976 and the regulations thereunder) only, and has no present intention of distributing any of the Shares, the Warrants the Conversion Stock or the Warrant Stock nor any arrangement or understanding with any other persons regarding the distribution of such securities within the meaning of Section 2(11) of the Securities Act, other than as contemplated in Section 7 of this Agreement.

     (c)      The Purchaser will not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of) any of the Shares, the Warrants, the Conversion Stock or the Warrant Stock except in compliance with the Securities Act and the rules and regulations promulgated thereunder (the "Rules and Regulations").

     (d)      The Purchaser has completed or caused to be completed the Stock Certificate Questionnaire and the Registration Statement Questionnaire, attached to this Agreement as Appendices I and II, for use in preparation of the Registration Statement (as defined in Section 7.3 below), and the answers to the Questionnaires are true and correct as of the date of this Agreement and will be true and correct as of the effective date of the Registration Statement; provided that the Purchasers shall be entitled to update such information by providing notice thereof to the Company before the effective date of such Registration Statement.

     (e)      The Purchaser has, in connection with its decision to purchase the number of Shares set forth in Section 2 above, relied solely upon the Company Documents and the representations and warranties of the Company contained in this Agreement.

     (f)      The Purchaser is an "accredited investor" within the meaning of Rule 501 of Regulation D promulgated under the Securities Act.

     (g)      The Shares, Conversion Shares, Warrants and Warrant Shares were not offered to the Purchaser through any form of general solicitation or general advertisement.

      (h)      The address of the Purchaser's office at which the decision to invest in the Shares was made is set forth on the signature page to this Agreement.

     5.2     Resales of Shares

     (a)      The Purchaser hereby covenants with the Company not to make any sale of the Shares, the Warrants, the Conversion Stock or the Warrant Stock without satisfying the requirements of the Securities Act and the Rules and Regulations, including, in the event of any resale under the Registration Statement, the prospectus delivery requirements under the Securities Act, and the Purchaser acknowledges and agrees that such securities are not transferable on the books of the Company pursuant to a resale under the Registration Statement unless the certificate submitted to the transfer agent evidencing such securities is accompanied by a separate officer's certificate

          (i)      in the form of Appendix III to this Agreement;

          (ii)      executed by an officer of, or other authorized person designated by, the Purchaser; and

          (iii)      to the effect that (A) the Shares, the Warrants, the Conversion Stock or Warrant Stock (as applicable) have been sold in accordance with the Registration Statement and (B) the requirement of delivering a current prospectus has been satisfied.

     (b)      The Purchaser acknowledges that there may occasionally be times when the Company determines, in good faith following consultation with its Board of Directors or a committee thereof, the use of the prospectus forming a part of the Registration Statement (the "Prospectus," as further defined in Section 7.3.1 below) should be suspended until such time as an amendment or supplement to the Registration Statement or the Prospectus has been filed by the Company and any such amendment to the Registration Statement is declared effective by the Commission, or until such time as the Company has filed an appropriate report with the Commission pursuant to the Exchange Act. The Purchaser hereby covenants that it will not sell any Shares, Warrants, Conversion Stock or Warrant Stock pursuant to the Prospectus during the period commencing at the time at which the Company gives the Purchaser written notice of the suspension of the use of the Prospectus and ending at the time the Company gives the Purchaser written notice that the Purchaser may thereafter effect sales pursuant to the Prospectus. The Company may, upon written notice to the Purchasers, suspend the use of the Prospectus for up to thirty (30) days in any 365-day period (less the number of days in such 365-day period that the Purchasers must suspend their use of the Prospectus pursuant to the first sentence of this paragraph) based on the reasonable determination of the Company's Board of Directors that there is a significant business purpose for such determination, such as pending corporate developments, public filings with the SEC or similar events. The Company shall in no event be required to disclose the business purpose for which it has suspended the use of the Prospectus if the Company determines in its good faith judgment that the business purpose should remain confidential. In addition, the Company shall notify each Purchaser (i) of any request by the SEC for an amendment or any supplement to such Registration Statement or any related prospectus, or any other information request by any other governmental agency directly relating to the offering, and (ii) of the issuance by the SEC of any stop order suspending the effectiveness of such Registration Statement or of any order preventing or suspending the use of any related prospectus or the initiation or threat of any proceeding for that purpose.

     (c)      The Purchaser further covenants to notify the Company promptly of the sale of any of its Shares, Warrants, Conversion Stock or Warrant Stock, other than sales pursuant to a Registration Statement contemplated in Section 7 of this Agreement or sales upon termination of the transfer restrictions pursuant to Section 7.4 of this Agreement.

      (d)      The Purchaser further covenants that, if requested by the Company or any managing underwriter for the Company, such Purchaser shall not sell or otherwise transfer or dispose of any Shares, Warrants, Conversion Stock or Warrant Stock (other than pursuant to such registration) during the 60-day period following the effective date of any registration statement relating to an underwritten public offering of Common Stock, other than a registration on Form S-4 or Form S-8 or similar forms which may be promulgated in the future.

     5.3     Due Execution, Delivery and Performance

Each Purchaser represents and warrants to the Company as follows:

     (a)      This Agreement has been duly executed and delivered by the Purchaser and constitutes a valid and binding obligation of the Purchaser, enforceable against the Purchaser in accordance with its terms.

     (b)      The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated in this Agreement and the fulfillment of the terms of this Agreement have been duly authorized by all necessary corporate, agency or other action and will not conflict with or constitute a breach of, or default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Purchaser pursuant to, any contract, indenture, mortgage, loan agreement, deed, trust, note, lease, sublease, voting agreement, voting trust or other instrument or agreement to which the Purchaser is a party or by which it or any of them may be bound, or to which any of the property or assets of the Purchaser is subject, nor will such action result in any violation of the provisions of the charter or bylaws of the Purchaser or any applicable statute, law, rule, regulation, ordinance, deci sion, directive or order.

     5.4     Prohibition on Shorting

Each Purchaser ("Warranting Purchaser") represents, warrants and covenants to each other Purchaser and the Company that none of such Warranting Purchaser or its affiliates (a) has ever held or will hold any (i) short positions in the Company's securities or (ii) put or other option to dispose of the Company's securities, or (b) has ever entered into or will enter into any transaction that has the effect of or is equivalent to selling short the Company's securities. The parties to this Agreement intend that each Purchaser and the Company be direct beneficiaries of the rights and benefits arising from the representations, warranties and covenants made by each other Purchaser under this Section 5.4, and expressly acknowledge and agree that any such beneficiary may exercise and enforce such rights and benefits.

6.      Survival of Representations, Warranties and Agreements.

Notwithstanding any investigation made by any party to this Agreement, all covenants, agreements, representations and warranties made by the Company and the Purchasers in this Agreement and in the certificates for the Shares delivered pursuant to this Agreement shall survive the execution of this Agreement, the delivery to the Purchasers of the Shares being purchased and the payment therefor.

7.      Form D Filing; Registration; Compliance with the Securities Act; Covenants

     7.1     Form D Filing; Registration of Shares

          7.1.1     Registration Statement; Expenses

The Company shall:

     (a)      file in a timely manner a Form D relating to the sale of the Shares under this Agreement, pursuant to Securities and Exchange Commission Regulation D.

     (b)      as soon as practicable after the Closing Date, but in no event later than the 15th day following the Closing Date, prepare and file with the Commission a Registration Statement on Form S-3 relating to the sale of the Shares, the Warrants, the Conversion Stock and the Warrant Stock (collectively, the "Securities") by the Purchasers from time to time on the Nasdaq National Market (or the facilities of any national securities exchange on which the Company's Common Stock is then traded) or in privately negotiated transactions (the "Registration Statement");

     (c)      provide to Purchasers any information required to permit the sale of the Securities under Rule 144A of the Securities Act;

     (d)      subject to receipt of necessary information from the Purchasers, use its best efforts to cause the Commission to notify the Company of the Commission's willingness to declare the Registration Statement effective on or before 90 days after the Closing Date;

     (e)      notify Purchasers promptly upon the Registration Statement, and any post-effective amendment thereto, being declared effective by the Commission;

     (f)      prepare and file with the Commission such amendments and supplements to the Registration Statement and the Prospectus (as defined in Section 7.3.1 below) and take such other action, if any, as may be necessary to keep the Registration Statement effective until the earlier of (i) the date on which the Securities may be resold by the Purchasers without registration and without regard to any volume limitations by reason of Rule 144(k) under the Securities Act or any other rule of similar effect or (ii) all of the Securities have been sold pursuant to the Registration Statement or Rule 144 under the Securities Act or any other rule of similar effect;

     (g)      promptly furnish to the Purchasers such reasonable number of copies of the Prospectus, including any supplements to or amendments of the Prospectus, in order to facilitate the public sale or other disposition of all or any of the Securities by the Purchasers;

     (h)      during the period when copies of the Prospectus are required to be delivered under the Securities Act or the Exchange Act, will file all documents required to be filed with the Commission pursuant to Section 13, 14 or 15 of the Exchange Act within the time periods required by the Exchange Act and the rules and regulations promulgated thereunder;

     (i)      file documents required of the Company for customary Blue Sky clearance in all states requiring Blue Sky clearance; provided, however, that the Company shall not be required to qualify to do business or consent to service of process in any jurisdiction in which it is not now so qualified or has not so consented;

     (j)      advise each Purchaser, promptly after it shall receive notice or obtain knowledge of the issuance of any stop order by the Commission delaying or suspending the effectiveness of the Registration Statement or of the initiation of any proceeding for that purpose; and it will promptly use its best efforts to prevent the issuance of any stop order or to obtain its withdrawal at the earliest practicable moment if such stop order should be issued; and

     (k)      bear all expenses in connection with the procedures in paragraphs (a) through (j) of this Section 7.1.1 and the registration of the Securities pursuant to the Registration Statement.

          7.1.2     Delay in Effectiveness of Registration Statement

In the event that the Registration Statement is not declared effective on or before the 90^th day following the Closing Date (the "Penalty Date"), the Company shall pay to each Purchaser in cash liquidated damages in an amount equal to 0.25% of the total purchase price of the Shares purchased by such Purchaser pursuant to this Agreement for each week after the Penalty Date that the Registration Statement is not declared effective.

     7.2     Transfer of Shares After Registration

Each Purchaser agrees that it will not effect any disposition of the Securities that would constitute a sale within the meaning of the Securities Act, except as contemplated in the Registration Statement referred to in Section 7.1 or as otherwise permitted by law, and that it will promptly notify the Company of any changes in the information set forth in the Registration Statement regarding the Purchaser or its plan of distribution.

     7.3     Indemnification

For the purpose of this Section 7.3, the term "Registration Statement" shall include any preliminary or final prospectus, exhibit, supplement or amendment included in or relating to the Registration Statement referred to in Section 7.1.

          7.3.1     Indemnification by the Company

The Company agrees to indemnify and hold harmless each of the Purchasers and each person, if any, who controls any Purchaser within the meaning of the Securities Act, against any losses, claims, damages, liabilities or expenses, joint or several, to which such Purchasers or such controlling person may become subject, under the Securities Act, the Exchange Act, or any other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of the Company, which consent shall not be unreasonably withheld), insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, including the Prospectus, financial statements and schedules, and all other documents filed as a part thereof, as amende d at the time of effectiveness of the Registration Statement, including any information deemed to be a part thereof as of the time of effectiveness pursuant to paragraph (b) of Rule 430A, or pursuant to Rule 434, of the Rules and Regulations, or the Prospectus, in the form first filed with the Commission pursuant to Rule 424(b) of the Regulations, or filed as part of the Registration Statement at the time of effectiveness if no Rule 424(b) filing is required (the "Prospectus"), or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state in any of them a material fact required to be stated therein or necessary to make the statements in any of them, in light of the circumstances under which they were made, not misleading, or arise out of or are based in whole or in part on any inaccuracy in the representations and warranties of the Company contained in this Agreement, or any failure of the Company to perform its obligations under this Agreement or under a pplicable law, and will reimburse each Purchaser and each such controlling person for any legal and other expenses as such expenses are reasonably incurred by such Purchaser or such controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage, liability or expense arises out of or is based upon (i) an untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, the Prospectus or any amendment or supplement of the Registration Statement or Prospectus in reliance upon and in conformity with written information furnished to the Company by or on behalf of the Purchaser expressly for use in the Registration Statement or the Prospectus, or (ii) the failure of such Purchaser to comply with the covenants and agreements contained in Sections 5.2 o r 7.2 of this Agreement respecting resale of the Securities, or (iii) the inaccuracy of any representations made by such Purchaser in this Agreement or (iv) any untrue statement or omission of a material fact required to make such statement not misleading in any Prospectus that is corrected in any subsequent Prospectus that was delivered to the Purchaser before the pertinent sale or sales by the Purchaser.

          7.3.2     Indemnification by the Purchaser

Each Purchaser will severally and not jointly indemnify and hold harmless the Company, each of its directors, each of its officers who signed the Registration Statement and each person, if any, who controls the Company within the meaning of the Securities Act, against any losses, claims, damages, liabilities or expenses to which the Company, each of its directors, each of its officers who signed the Registration Statement or controlling person may become subject, under the Securities Act, the Exchange Act, or any other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of such Purchaser, which consent shall not be unreasonably withheld) insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon (i) any failure on the part of such Purchaser to comply with the covenants and a greements contained in Sections 5.2 or 7.2 of this Agreement respecting the sale of the Securities or (ii) the inaccuracy of any representation made by such Purchaser in this Agreement or (iii) any untrue or alleged untrue statement of any material fact contained in the Registration Statement, the Prospectus, or any amendment or supplement to the Registration Statement or Prospectus, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, the Prospectus, or any amendment or supplement thereto, in reliance upon and in conformity with written information furnished to the Company by or on behalf of such Purchaser expressly for use therein; provided, however, that the Purchaser shall not be liable for any such untrue or alleged untrue statement or omission or alleged omission of which the Purchaser has delivered to the Company in writing a correction before the occurrence of the transaction from which such loss was incurred, and the Purchaser will reimburse the Company, each of its directors, each of its officers who signed the Registration Statement or controlling person for any legal and other expense reasonably incurred by the Company, each of its directors, each of its officers who signed the Registration Statement or controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action.

          7.3.3     Indemnification Procedure

     (a)      Promptly after receipt by an indemnified party under this Section 7.3 of notice of the threat or commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under this Section 7.3, promptly notify the indemnifying party in writing of the claim; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party for contribution or otherwise under the indemnity agreement contained in this Section 7.3 or to the extent it is not prejudiced as a result of such failure.

     (b)      In case any such action is brought against any indemnified party and such indemnified party seeks or intends to seek indemnity from an indemnifying party, the indemnifying party will be entitled to participate in, and, to the extent that it may wish, jointly with all other indemnifying parties similarly notified, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party; provided, however, if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be a conflict between the positions of the indemnifying party and the indemnified party in conducting the defense of any such action or that there may be legal defenses available to it or other indemnified parties that are different from or additional to those available to the indemnifying party, the indemnified party or par ties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of its election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 7.3 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless:

          (i)      the indemnified party shall have employed such counsel in connection with the assumption of legal defenses in accordance with the proviso to the preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel, approved by such indemnifying party representing all of the indemnified parties who are parties to such action) or

          (ii)      the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of action, in each of which cases the reasonable fees and expenses of counsel shall be at the expense of the indemnifying party. Notwithstanding the provisions of this Section 7.3, the Purchaser shall not be liable for any indemnification obligation under this Agreement in excess of the amount of net proceeds actually received by the Purchaser from the sale of Securities pursuant to such registration statement.

          7.3.4     Contribution

If the indemnification provided for in this Section 7.3 is required by its terms but is for any reason held to be unavailable to or otherwise insufficient to hold harmless an indemnified party under this Section 7.3 in respect to any losses, claims, damages, liabilities or expenses referred to in this Agreement, then each applicable indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of any losses, claims, damages, liabilities or expenses referred to in this Agreement

     (a)      in such proportion as is appropriate to reflect the relative benefits received by the Company and the Purchaser from the placement of the Shares or

     (b)      if the allocation provided by clause (a) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (a) above but the relative fault of the Company and the Purchaser in connection with the statements or omissions or inaccuracies in the representations and warranties in this Agreement that resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations.

The respective relative benefits received by the Company on the one hand and each Purchaser on the other shall be deemed to be in the same proportion as the amount paid by such Purchaser to the Company pursuant to this Agreement for the Shares purchased by such Purchaser that were sold pursuant to the Registration Statement bears to the difference (the "Difference") between the amount such Purchaser paid for the Shares that were sold pursuant to the Registration Statement and the amount received by such Purchaser from such sale. The relative fault of the Company and each Purchaser shall be determined by reference to, among other things, whether the untrue or alleged statement of a material fact or the omission or alleged omission to state a material fact or the inaccurate or the alleged inaccurate representation or warranty relates to information supplied by the Company or by such Purchaser and the parties' relative intent, knowledge, access to information and opportunity to correct or pre vent such statement or omission. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in Section 7.3.3, any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. The provisions set forth in Section 7.3.3 with respect to the notice of the threat or commencement of any threat or action shall apply if a claim for contribution is to be made under this Section 7.3.4; provided, however, that no additional notice shall be required with respect to any threat or action for which notice has been given under Section 7.3 for purposes of indemnification. The Company and each Purchaser agree that it would not be just and equitable if contribution pursuant to this Section 7.3 were determined solely by pro rata allocation (even if the Purchaser were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in this paragraph. Notwithstanding the provisions of this Section 7.3, no Purchaser shall be required to contribute any amount in excess of the amount by which the Difference exceeds the amount of any damages that such Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Purchasers' obligations to contribute pursuant to this Section 7.3 are several and not joint.

     7.4     Termination of Conditions and Obligations

The restrictions imposed by Section 5 (other than Section 5.2(a), (b) and (d)) or this Section 7 upon the transferability of the Shares shall cease and terminate as to any particular Securities upon the passage of two years from the date of original issuance thereof or at such time as an opinion of counsel satisfactory in form and substance to the Company shall have been rendered to the effect that such conditions are not necessary in order to comply with the Securities Act.

     7.5     Information Available

From the date of this Agreement through the date the Registration Statement covering the resale of Securities owned by any Purchaser is no longer effective, the Company will furnish to such Purchaser:

     (a)      as soon as practicable after available (but in the case of the Company's Annual Report to Shareholders, within 90 days after the end of each fiscal year of the Company), one copy of:

          (i)      its Annual Report to Shareholders (which Annual Report shall contain financial statements audited in accordance with generally accepted accounting principles by a national firm of certified public accountants);

          (ii)      if not included in substance in the Annual Report to Shareholders, its Annual Report on Form 10-K;

          (iii)      if not included in substance in its Quarterly Reports to Shareholders, its quarterly reports on Form 10-Q; and

          (iv)      a full copy of the particular Registration Statement covering the Shares (the foregoing, in each case, excluding exhibits);

     (b)      upon the request of the Purchaser, a reasonable number of copies of the Prospectus to supply to any other party requiring the Prospectus.

     7.6     Rule 144 Information

Until the earlier of (i) the date on which the Securities may be resold by the Purchasers without registration and without regard to any volume limitations by reason of Rule 144(k) under the Securities Act or any other rule of similar effect or (ii) all of the Securities have been sold pursuant to the Registration Statement or Rule 144 under the Securities Act or any other rule of similar effect, the Company shall file all reports required to be filed by it under the Securities Act, the Rules and Regulations and the Exchange Act and shall take such further action to the extent required to enable the Purchasers to sell the Shares pursuant to Rule 144 under the Securities Act (as such rule may be amended from time to time).

     7.7     Stock Option Matters and Prohibition on Toxics

The Company shall, within thirty (30) days of the Closing Date, adopt such amendments to, with respect to (i), (ii) and (v) below, the Company's stock option plans and By-laws, and, with respect to (iii) and (iv) below, the Company's By-laws (together, the "Stock Option Plan and By-law Amendments") to provide that,unless approved by a majority vote of the then-outstanding voting stock of the Company, the Company shall not:

          (i)      grant any stock option, including stock appreciation right, with an exercise price that is less than 100% of the fair market value of the underlying stock on the date of grant;

          (ii)      reduce the exercise price of any stock option, including stock appreciation right, outstanding or to be granted in the future; cancel and re-grant options at a lower exercise price (including entering into any "6 month and 1 day" cancellation and re-grant scheme), whether or not the cancelled options are put back into the available pool for grant; replace underwater options with restricted stock in an exchange, buy-back or other scheme; or replace any options with new options having a lower exercise price or accelerated vesting schedule in an exchange, buy-back or other scheme;

          (iii)      sell or issue any security of the Company convertible, exercisable or exchangeable into shares of common stock of the Company, having a conversion, exercise or exchange price per share which is subject to downward adjustment (except for appropriate adjustments made to give effect to any stock splits, stock dividends or similar transactions); or

          (iv)      enter into (a) any equity line or similar agreement or arrangement; or (b) any agreement to sell common stock of the Company (or any security convertible, exercisable or exchangeable into shares of common stock ("Common Stock Equivalent")) at a per share price (or, with respect to a Common Stock Equivalent, at a conversion, exercise or exchange price, as the case may be ("Equivalent Price")) that is to be fixed or is subject to adjustment after the execution date of the agreement, whether or not based on any predetermined price-setting formula or calculation method. Notwithstanding the foregoing provisions of this Section 7.7, however, a price protection clause shall be permitted in an agreement for sale of common stock or Common Stock Equivalent, if such clause provides for an adjustment to the price per share of common stock or, with respect to a Common Stock Equivalent, to the Equivalen t Price (provided that such price or Equivalent Price is fixed on or before the execution date of the agreement) (the "Fixed Price") in the event that the Company, during the period beginning on the date of the agreement and ending no later than 90 days after the closing date of the transaction, sells shares of common stock or Common Stock Equivalent to another investor at a price or Equivalent Price, as the case may be, below the Fixed Price.

          (v)      amend or repeal any of the provisions relating to (i) to (iv) above.

Upon the adoption of the Stock Option Plan and By-law Amendments, the Company shall promptly furnish a copy of such amendments to the Purchasers. The Company agrees that, prior to the adoption of the Stock Option Plan and By-law Amendments by all necessary corporate action of the Company as described above, the Company shall not conduct any of the actions specified in (i), (ii), (iii) or (iv) above of this Section 7.7; provided, however, that nothing in this Section 7.7 shall preclude the operation of the provisions of this Agreement, including Section 2.2 hereof.

     7.8     Stockholder Approval

The Company shall, as soon as practicable after the date of this Agreement, call a special meeting of its stockholders for the purpose of approving the transactions contemplated by this Agreement (the "Special Meeting"). The Company shall file proxy materials with the Securities and Exchange Commission, shall (subject to applicable fiduciary duties) recommend that stockholders vote to approve the transactions contemplated hereby at the Special Meeting and shall solicit proxies with respect to such approval. The Company shall exercise its best efforts to obtain such stockholder approval within 90 days of the date of this Agreement.

8.      Legal Fees and Other Transaction Expenses

At the Closing, the Company agrees to pay a flat fee of $7,500 to the State of Wisconsin Investment Board for their legal and other transaction expenses (whether internal or external) arising in connection with the transactions contemplated by this Agreement.

9.      Brokers

Each party to this Agreement agrees to indemnify and hold harmless each other party from and against any liability for fees, commissions or similar payments due to any broker, finder or other person or entity acting on its behalf in connection with the transactions contemplated hereby.

10.      Notices

All notices, requests, consents and other communications under this Agreement shall be in writing, shall be mailed by first-class registered or certified airmail, confirmed facsimile or nationally recognized overnight express courier postage prepaid, and shall be delivered as addressed as follows:

     (a)      if to the Company, to:

               Exabyte Corporation

               1685 38^th Street

               Boulder, Colorado 80301

               Attention: Stephen F. Smith

               Facsimile: (303) 417-7164

or to such other person at such other place as the Company shall designate to the Purchaser in writing; and

     (b)      if to a Purchaser, at its address as set forth on the signature page to this Agreement, or at such other address or addresses as may have been furnished to the Company in writing.

Such notice shall be deemed effectively given upon confirmation of receipt by facsimile, one business day after deposit with such overnight courier or three days after deposit of such registered or certified airmail with the U.S. Postal Service, as applicable.

11.      Modification; Amendment

This Agreement may not be modified or amended except pursuant to an instrument in writing signed by the Company and each of the Purchasers; provided, however, that 75% in interest of the Purchasers may approve any modification or amendment relating to the Company's post-closing obligations hereunder.

12.      Termination

This Agreement may be terminated as to any Purchaser, at the option of such Purchaser, as to all of its obligations hereunder if the Initial Closing has not occurred on or before 30 days after the date of this Agreement or as to its obligations to purchase Shares at the Subsequent Closing if the Subsequent Closing has not occurred on or before 120 days after the date of this Agreement.

13.     Headings

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

14.       Severability

If any provision contained in this Agreement should be held to be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained in this Agreement shall not in any way be affected or impaired thereby.

15.     Governing Law; Jurisdiction

This Agreement shall be governed by and construed in accordance with the laws of the state of Delaware and the federal law of the United States of America. The parties hereto hereby submit to the jurisdiction of the courts of the State of Wisconsin, or of the United States of America sitting in the State of Wisconsin, over any action, suit, or proceeding arising out of or relating to this Agreement. Nothing herein shall affect the right of the Purchaser to serve process in any manner permitted by law or limit the right of the Purchaser to bring proceedings against the Company in the competent courts of any other jurisdiction or jurisdictions.

16.      No Conflicts of Interest.

The Company represents, warrants, and covenants that, to the best of its knowledge, no trustee or employee of the State of Wisconsin Investment Board identified on the attached list, either directly or indirectly (a) currently holds, except as may be specifically set forth below, a personal interest in the Company or any of its affiliates (together, the "Entity") or the Entity's property or securities, or (b) will, in connection with the investment made pursuant to this Agreement, receive (i) a personal interest in the Entity or the Entity's property or securities or (ii) anything of substantial economic value for his or her private benefit from the Entity or anyone acting on its behalf. As to ownership of an interest in the Entity's publicly traded securities, "knowledge" hereunder is based on an examination of record holders of the Entity's securities and actual knowledge of the undersigned.

17.      Counterparts

This Agreement may be executed in two or more counterparts, each of which shall constitute an original, but all of which, when taken together, shall constitute but one instrument, and shall become effective when one or more counterparts have been signed by each party to this Agreement and delivered to the other parties.

In Witness Whereof, the parties to this Agreement have caused this Agreement to be executed by their duly authorized representatives as of the day and year first above written.

Exabyte Corporation

By /s/ Juan A. Rodriguez
Name: Juan A. Rodriguez
Its: President & CEO

State of Wisconsin Investment Board

By: /s/ John Nelson
Name: John Nelson
Title: Investment Director

Address:

121 East Wilson Street
Madison, WI 53702
Facsimile: (608) 266-2436

Meritage Private Equity Fund, L.P.
Meritage Private Equity Parallel Fund, L.P.
Meritage Entrepreneurs Fund, L.P.

By Meritage Investment Partners, LLC
     General Partner
By: /s/ John R. Garrett
Name: John R. Garrett
Title: Principal

Address:
1600 Wynkoop Street, Suite 300
Denver, Colorado 80202
Facsimile: (303) 352-2050

Crestview Capital Fund, LP
Crestview Capital Fund II, LP
Crestview Capital Offshore Fund, Inc.

By  Kingsport Capital Partners, LLC
General Partner
By: /s/ Stewart R. Flink
Name: Stewart R. Flink
Title: Managing Member

Address:
95 Revere Drive
Northbrook, Illinois
Facsimile: (847) 559 5807

Valley Ventures II, L.P.

By VV II Management, L.L.C.
General Partner
By: /s/ John M. Holliman
Name: John M. Holliman
Title: Managing Member

Address:
6720 N. Scottsdale Road, Suite 280
Scottsdale, Arizona 85253
Facsimile: (480) 661 6262

Millennial Holdings LLC
The Millennial Fund
Tankersley Family Limited Partnership

By G. Jackson Tankersley, Jr.
By: /s/ G. Jackson Tankersley, Jr.
Name: G. Jackson Tankersley, Jr.
Title: Member

Address:
1600 Wynkoop Suite 300
Denver, CO 80202
Facsimile: (303) 352 2050

Hexagon Investments LLC
Grandhaven LLC
Legacy Enterprises LLC
Labyrinth Enterprises LLC

By: Hexagon Investments, Inc.
Manager
By: /s/ Brian Fleischmann
Name: Brian Fleischmann
Title: V.P.

Address:
Larimer Square
1407 Larimer Street, Suite 300
Denver, CO 80202
Facsimile: (303) 571 1221

Allen Builder

By: /s/ Allen Builder
Name: Allen Builder
Title:

Address:
Builder Investment Group, Inc
5 Piedmont Center, Suite 700
Atlanta, GA 30305
Facsimile: (404) 237 3168

Mark Rossi 

By: /s/ Mark Rossi
Name: Mark Rossi
Title:

Address:
717 Fifth Avenue, Suite 1100
New York, NY 10022
Facsimile: (212) 826 6798

The Sama Partnership

By Alicia Sama Rodriguez
General Partner
By: /s/ Alicia S. Rodriguez
Name: Alicia S. Rodriguez
Title: General Partner

Address:
2100 Gulf Boulevard, #1201
South Padre Island, TX 78597
Facsimile: (303) 417 7142

Schedule A
Purchasers

	Purchased Shares
Name and Address	Initial Closing	Subsequent Closing	Total Investment
Meritage Private Equity Fund, L.P.	$1,315,200	$876,8001	$2,192,000
1600 Wynkoop Street, Suite 300
Denver, Colorado 80202
Meritage Private Equity Parallel Fund, L.P.	$160,800	$107,2001	$268,000
1600 Wynkoop Street, Suite 300
Denver, Colorado 80202
Meritage Entrepreneurs Fund, L.P.	$24,000	$16,0001	$40,000
1600 Wynkoop Street, Suite 300
Denver, Colorado 80202
State of Wisconsin Investment Board	$1,750,000	$0	$1,750,000
121 East Wilson Street
Madison, Wisconsin 53702
Valley Ventures II, L.P.	$74,000	$126,000	$200,000
6720 N. Scottsdale Road, Suite 280
Scottsdale, Arizona 85253
Millennial Holdings LLC	$0	$46,758	$46,758
The Millennial Fund	$0	$13,242	$13,242
Tankersley Family Limited Partnership	$0	$20,000	$20,000
1600 Wynkoop Street, Suite 300
Denver, Colorado 80202
Crestview Capital Fund, LP	$185,000	$315,000	$500,000
95 Revere Drive
Northbrook, Illinois 60062
Crestview Capital Fund II, LP	$185,000	$295,000	$480,000
95 Revere Drive
Northbrook, Illinois 60062
Crestview Capital Offshore Fund, Inc.	$0	$20,000	$20,000
95 Revere Drive
Northbrook, Illinois 60062
Hexagon Investments, LLC	$41,625	$70,875	$112,500
Larimer Square
1407 Larimer Street, Suite 300
Denver, CO 80202
Grandhaven, LLC	$83,250	$141,750	$225,000
Larimer Square
1407 Larimer Street, Suite 300
Denver, CO 80202
Legacy Enterprises, LLC	$24,975	$42,525	$67,500
Larimer Square
1407 Larimer Street, Suite 300
Denver, CO 80202
Labyrinth Enterprises, LLC	$16,650	$28,350	$45,000
Larimer Square
1407 Larimer Street, Suite 300
Denver, CO 80202
Allen Builder	$18,500	$31,500	$50,000
Builder Investment Group, Inc
5 Piedmont Center, Suite 700
Atlanta, GA 30305
Mark Rossi	$11,100	$18,900	$30,000
717 Fifth Avenue, Suite 1100
New York, NY 10022
The Sama Partnership	$0	$500,000	$500,000
2100 Gulf Boulevard #1201
South Padre Island, TX 78597
Totals:	$3,890,100	$2,669,900	$6,560,000

Note¹ Payable in the form the conversion of an outstanding bridge loan. The dollar amount of shares issued will be increased by the amount of accrued but unpaid interest on the note.

EX-10

Certificate of Designation
of

Powers, Preferences, Rights, Qualifications,
Limitations and Restrictions
of
Series I Convertible Preferred Stock
of
Exabyte Corporation

     1.      Designation of Series I Preferred. Exabyte Corporation, a Delaware corporation (the "Corporation"), hereby certifies that Ten Million (10,000,000) of authorized shares of Preferred Stock are hereby designated "Series I Preferred Stock" (the "Series I Preferred"). The rights, preferences, privileges, restrictions and other matters relating to the Series I Preferred are as follows:

     2.      Dividend Rights.

      (a)      Preferential Dividends. Holders of the outstanding shares of Series I Preferred (the "Holders"), in preference to the holders of the Corporation's Series G Preferred Stock, Series H Preferred Stock and Common Stock and any other stock of the Corporation that is not by its terms expressly senior to in right of payment to the Series I Preferred (collectively, "Junior Stock"), will be entitled to receive, when, as and if declared by the Board of Directors, out of legally available funds, dividends on the Series I Preferred in an amount per share (the "Dividend Payment Amount") calculated at a compound annual rate of twelve percent (12.0%) of the Original Series I Issue Price (the "Dividend Rate"), payable in cash on a quarterly basis commencing June 30, 2002 and on each September 30, December 31, March 31 and June 30 thereafter that any shares of Series I Preferred remain outstanding (each, a "Dividend Payment Date "). All dividends will be cumulative, whether or not declared, from the Original Series I Issue Date and will be payable quarterly in arrears with respect to shares outstanding on each Dividend Payment Date to Holders of record on the 15^th day of the month in which such Dividend Payment Date occurs. If the full Dividend Payment Amount is not declared and paid on any Dividend Payment Date, then the unpaid portion shall accumulate and shall thereafter accrue dividends at the Dividend Rate. Notwithstanding the foregoing, commencing on the earlier of January 1, 2007 or the date of a Change in Control (as defined below), the Dividend Rate will increase to fifteen percent (15.0%) per annum.

     (b)      Participation Rights. After payment of all preferential dividends (including all arrearages of preferential dividends) to the holders of the Series I Preferred as provided in Section 2(a), dividends may be declared and paid upon shares of Common Stock or any other Junior Stock in any fiscal year of the Corporation, but only if dividends are also concurrently declared and paid on the Series I Preferred in an amount per share equal to: (a) in the case of a dividend declared on the Common Stock, the product of the Series I Conversion Rate and the amount per share declared on each such share of Common Stock, (b) in the case of a dividend declared on junior preferred stock convertible into Common Stock, the amount determined by dividing (i) the product of the Series I Conversion Rate and the aggregate amount of the dividend declared and paid on all outstanding shares of such junior preferred stock, (ii) by the numb er of shares of Common Stock which such outstanding shares of junior preferred stock are convertible into as of the record date for such dividend, and (c) in the case of junior preferred stock that is not convertible into Common Stock, in an amount determined by the Board of Directors in good faith such that the holders of Series I Preferred receive an equivalent dividend in such circumstances. The record date for any such dividend shall be the same record date as set for holders of Common Stock or junior preferred stock, as the case may be. The foregoing provisions shall not restrict the payment of dividends on the Common Stock or the Corporation's Series G Preferred Stock payable solely in shares of Common Stock for which an adjustment to the Series I Conversion Price is provided pursuant to Section 7 below.

     (c)      Participation with Common. If any dividend or other distribution payable in property other than cash is declared on the Common Stock (excluding any dividend or other distribution for which adjustment to the Conversion Price is provided by Section 7), each holder of Series I Preferred on the record date for such dividend or distribution shall be entitled to receive on the date of payment or distribution of such dividend or other distribution the same property that such holder would have received if on such record date such holder was the holder of record of the number (including for purposes of this Section 2 any fraction) of shares of Common Stock into which the shares of Series I Preferred then held by such holder are convertible.

     (d)      Limits upon Dividends. Without otherwise limiting the dividend rights set forth in this Section 2 or elsewhere in this Certificate, the Corporation shall not declare or pay any cash dividends for so long as it is prohibited from doing so under any agreements governing the Corporation's indebtedness for borrowed money, whether now existing or hereafter incurred.

     3.      Voting Rights. Except as otherwise provided herein or as required by law, the Series I Preferred shall vote with the shares of the Common Stock of the Corporation (and not as a separate class) at any annual or special meeting of stockholders of the Corporation, and may act by written consent in the same manner as the Common Stock, in either case upon the following basis: each share of Series I Preferred shall be entitled to a number of votes determined by dividing the Original Series I Issue Price by the greater of (x) the Series I Conversion Price or (y) the closing price of the Common Stock in the NASDAQ National Market System on the Original Series I Issue Date. Such voting rights shall be appropriately adjusted for any stock splits, stock dividends or similar transactions affecting the Common Stock after the Original Series I Issue Date. Upon the conversion of any Series I Preferred into C ommon Stock pursuant to Section 6, the Common Stock so issued shall be voting Common Stock as set forth in Article Fourth of the Restated Certificate of Incorporation, as amended to date.

     4.      Liquidation Rights.

     (a)      Liquidation Value. Upon any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, before any distribution or payment shall be made to the holders of any Junior Stock, the holders of Series I Preferred shall be entitled to be paid out of the assets of the Corporation an amount with respect to each then-outstanding share of Series I Preferred equal to the sum of (i) two times the Original Series I Issue Price ($2.00) plus (ii) all accrued but unpaid dividends thereon (the "Series I Liquidation Value"). Notwithstanding the foregoing, the Series I Liquidation Value shall increase to $3.00 per share on the earlier of January 1, 2007 or the date of a Change in Control; provided, however, that in the case of a Change in Control occurring prior to May 17, 2004, such step-up shall not be effective until 30 days following the date of such Change in Control.

     (b)      Proportionate Payments. If, upon any liquidation, dissolution or winding up, the assets of the Corporation shall be insufficient to make payment in full to all holders of Series I Preferred, then such assets shall be distributed among the holders of Series I Preferred at the time outstanding, ratably in proportion to the full amounts to which they would otherwise be respectively entitled.

     (c)      Participation Rights. After the payment of the full liquidation preference of the Series I Preferred as set forth in Section 4(a) above and after the payment of the full liquidation preference of all shares of Junior Stock having a preference on liquidation over the Common Stock, the remaining funds and other assets of the Corporation legally available for distribution, if any, shall be distributed pro rata among the holders of the Common Stock and the Series I Preferred on an as-converted basis.

     5.      Redemption Rights.

     (a)      Optional Redemptions. Commencing on the earlier of the first anniversary of the Original Series I Issue Date or the date of a Change in Control, the Corporation shall have the right but not the obligation to redeem some or all shares of the then-outstanding Series I Preferred at a price per share equal to the Series I Liquidation Value. Notwithstanding the foregoing, the Corporation shall not redeem any shares of Series I Preferred prior to the receipt of stockholder approval of the transactions contemplated by the Series I Purchase Agreement.

     (b)      Redemption Payments. For each share of Series I Preferred to be redeemed hereunder, the Corporation shall be obligated on the Scheduled Redemption Date (as defined below) to pay to the holder thereof (upon surrender by such holder at the Corporation's principal office of the certificate representing such share) an amount in cash equal to the Series I Liquidation Value.

     (c)      Notice of Redemption. The Corporation shall mail written notice of each redemption of Series I Preferred to each record holder thereof not more than 60 nor less than 30 days prior to the date fixed for such purpose (the "Scheduled Redemption Date"). The holders of Series I Preferred to be redeemed shall in any event have the right to convert their shares into Common Stock at any time prior to the close of business on the Scheduled Redemption Date. In case fewer than the total number of shares represented by any certificate are redeemed, a new certificate representing the number of unredeemed shares shall be issued to the holder thereof without cost to such holder within five business days after surrender of the certificate representing the redeemed shares.

     (d)      Determination of Number of Shares to be Redeemed. The number of shares of Series I Preferred to be redeemed from each holder thereof in redemptions hereunder shall be the number of shares determined by multiplying the total number of shares of Series I Preferred to be redeemed by a fraction, the numerator of which shall be the total number of shares of Series I Preferred then held by such holder and the denominator of which shall be the total number of shares of Series I Preferred then outstanding.

     6.      Conversion Rights.

The holders of the Series I Preferred shall have the following rights with respect to the conversion of the Series I Preferred into shares of Common Stock:

     (a)      Optional Conversion. Subject to and in compliance with the provisions of this Section 6, any shares of Series I Preferred may, at the option of the holder, be converted at any time into fully-paid and nonassessable shares of Common Stock. The number of shares of Common Stock to which a holder of Series I Preferred shall be entitled upon conversion shall be the product obtained by multiplying the "Series I Conversion Rate" then in effect (determined as provided in Section 6(c)) by the number of shares of Series I Preferred being converted.

     (b)      Mandatory Conversion. All outstanding shares of Series I Preferred shall be automatically converted into Common Stock at the then-effective Series I Conversion Rate at the close of business on the date on which all of the following conditions have been satisfied: (x) the closing sales price of the Common Stock on the NASDAQ National Market System has been at $4.00 or more per share (as appropriately adjusted for stock splits, stock dividends or similar transactions affecting the Common Stock after the Original Series I Issue Date) for a period of 30 consecutive trading days and the average daily trading volume of the Common Stock has exceeded 100,000 shares (as appropriately adjusted for stock splits, stock dividends or similar transactions affecting the Common Stock after the Original Series I Issue Date) during such period, (y) resales of the Common Stock issuable upon conversion of the Series I Preferred are covered by an effective registration statement filed with the Securities and Exchange Commission at all times during such period of 30 consecutive trading days, and (z) all outstanding shares of the Corporation's Series G Preferred Stock and Series H Preferred Stock are previously or simultaneously converted into Common Stock in accordance with their respective terms. The Corporation shall give written notice of such mandatory conversion to each holder of Series I Preferred within three business days after such event.

     (c)      Series I Conversion Rate. The conversion rate in effect at any time for conversion of the Series I Preferred (the "Series I Conversion Rate") shall be the quotient obtained by dividing the Original Series I Issue Price by the "Series I Conversion Price" calculated as provided in Section 6(d).

     (d)      Conversion Price. The conversion price for the Series I Preferred (the "Series I Conversion Price") shall initially be $.5965, as appropriately adjusted for any future stock splits, stock combinations, stock dividends or similar transactions affecting the Series I Preferred. Such initial Series I Conversion Price shall be adjusted from time to time in accordance with Section 7. All references to the Series I Conversion Price herein shall mean the Series I Conversion Price as so adjusted.

     (e)      Mechanics of Conversion.

          (i)      Optional Conversion. Each holder of Series I Preferred who desires to convert the same into shares of Common Stock pursuant to this Section 6 shall surrender the certificate or certificates therefor, duly endorsed, at the office of the Corporation or any transfer agent for the Series I Preferred, and shall give written notice to the Corporation at such office that such holder elects to convert the same. Such notice shall state the number of shares of Series I Preferred being converted. Thereupon, the Corporation shall promptly issue and deliver at such office to such holder a certificate or certificates for the number of shares of Common Stock to which such holder is entitled together with dividends thereon in accordance with Section 6(d)(ii) below. Such conversion shall be deemed to have been made at the close of business on the date of such surrender of the certificate represe nting the shares of Series I Preferred to be converted, and the person entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder of such shares of Common Stock on such date.

          (ii)      Mandatory Conversion. Upon the occurrence of the events specified in Section 6(b) above, the outstanding shares of Series I Preferred shall be converted into Common Stock automatically without any further action by the holders of such shares and whether or not the certificates representing such shares are surrendered to the Corporation or its transfer agent; provided, however, that the Corporation shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon such conversion unless the certificates evidencing such shares of Series I Preferred are either delivered to the Corporation or its transfer agent as provided below, or the holder notifies the Corporation or its transfer agent that such certificates have been lost, stolen or destroyed and executes an agreement satisfactory to the Corporation to indemnify the Corporation from any loss incurred by it in connection with such certificates. Upon surrender by any holder of the certificates formerly representing shares of Series I Preferred at the office of the Corporation or any transfer agent for the Series I Preferred, there shall be issued and delivered to such holder promptly at such office and in its name as shown on such surrendered certificate or certificates, a certificate or certificates for the number of shares of Common Stock into which the shares of Series I Preferred surrendered were convertible on the date on which such automatic conversion occurred. Until surrendered as provided above, each certificate formerly representing shares of Series I Preferred shall be deemed for all corporate purposes to represent the number of shares of Common Stock resulting from such automatic conversion.

          (iii)      Dividends. Upon conversion of any shares of Series I Preferred (the "Converted Shares"), any accrued but unpaid dividends on the Converted Shares (including prorated dividends for the current quarter) shall be paid in cash or, at the option of the Holder, in shares of Common Stock determined by dividing the aggregate amount of accrued but unpaid dividends by the Conversion Price then in effect. 

     (f)      Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of Series I Preferred. All shares of Common Stock (including fractions thereof) issuable upon conversion of more than one share of Series I Preferred by a holder thereof shall be aggregated for purposes of determination whether the conversion would result in the issuance of any fractional share. If, after the aforementioned aggregation, the conversion would result in the issuance of any fractional share, the Corporation shall, in lieu of issuing any fractional share, pay cash equal to the product of such fraction multiplied by the Common Stock's fair market value (as determined by the Board) on the date of conversion.

     (g)      Conversion Limitation. Notwithstanding anything to the contrary herein, in no event shall the number of shares of Common Stock issued upon conversion of the Series I Preferred be equal to or greater than 20% of the outstanding number of shares of Common Stock or 20% of the combined voting power of the Corporation, in each case determined as of the Original Series I Issue Date, until the Corporation has received stockholder approval for the issuance of Common Stock upon conversion of the Series I Preferred in excess of such limitations. Such limitation shall be appropriately adjusted for any stock splits, stock dividends or similar transactions affecting the Common Stock after the Original Series I Issue Date.

     7.      Adjustments to Conversion Price

     (a)      Adjustment for Stock Splits and Combinations. If the Corporation shall at any time or from time to time after the Original Series I Issue Date effect a subdivision of the outstanding Common Stock, the Series I Conversion Price in effect immediately before that subdivision shall be proportionately decreased. Conversely, if the Corporation shall at any time or from time to time after the Original Series I Issue Date combine the outstanding shares of Common Stock into a smaller number of shares, the Series I Conversion Price in effect immediately before the combination shall be proportionately increased. Any adjustment under this Section 7(a) shall become effective at the close of business on the date the subdivision or combination becomes effective.

     (b)      Adjustment for Common Stock Dividends and Distributions. If the Corporation at any time or from time to time after the Original Series I Issue Date makes, or fixes a record date for the determination of holders of Common Stock or other securities of the Corporation entitled to receive, a divided or other distribution payable in additional shares of Common Stock, in each such event the Series I Conversion Price then in effect shall be decreased as of the time of such issuance or, in the event such record date is fixed, as of the close of business on such record date, by multiplying the Series I Conversion Price then in effect by a fraction (1) the numerator of which is the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date, and (2) the denominator of which is the total number of shares of Common Stock issued a nd outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution; provided, however, that if such record date is fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Series I Conversion Price shall be recomputed accordingly as of the close of business on such record date and thereafter the Series I Conversion Price shall be adjusted pursuant to this Section 7(b) to reflect the actual payment of such dividend or distribution.

     (c)      Adjustment for Reclassification, Exchange and Substitution. If at any time or from time to time after the Original Series I Issue Date, the Common Stock issuable upon the conversion of the Series I Preferred is changed into the same or a different number of shares of any class or classes of stock, whether by recapitalization, reclassification or otherwise (other than a subdivision or combination of shares or stock dividend or a reorganization, merger, consolidation or sale of assets provided for elsewhere in this Section 7), in any such event each holder of Series I Preferred shall have the right thereafter (i) to convert such stock into the kind and amount of stock and other securities and property receivable in connection with such recapitalization, reclassification or other change by holders of the maximum number of shares of Common Stock into which such shares of Series I Preferred could have been converte d immediately prior to such recapitalization, reclassification or change, all subject to further adjustments as provided herein or with respect to such other securities or property by the terms thereof, and (ii) unless such dividends are paid in cash prior to conversion, to elect to receive as dividends the kind and amount of stock and other securities and property receivable in connection with such recapitalization, reclassification or other change by holders of the maximum number of shares of Common Stock issuable as dividends on such shares of Series I Preferred immediately prior to such recapitalization, reclassification or change, all subject to further adjustments as provided herein or with respect to such other securities or property by the terms thereof. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 7(c) with respect to the rights of the holders of the Series I Preferred after the recapitalization, reclassification or otherwise to the end that the provisions of this Section 7(c) (including adjustment of the Series I Conversion Price then in effect and the number of shares issuable upon conversion of the Series I Preferred) shall be applicable after that event and be as nearly equivalent as practicable.

     (d)      Reorganizations, Mergers, Consolidations or Sales of Assets. If at any time or from time to time after the Original Series I Issue Date, there is a capital reorganization of the Common Stock (other than a recapitalization, subdivision, combination, reclassification, exchange or substitution of shares provided for elsewhere in this Section 7)or a consolidation or merger of the Company with or into another corporation or business entity (other than a consolidation or merger (i) with a subsidiary in which the Company is the surviving corporation or (ii) which does not result in any reclassification, capital reorganization or other change of outstanding shares of Common Stock), as a part of such transaction, provision shall be made so that the holders of the Series I Preferred shall thereafter be entitled (1) to receive upon conversion of the Series I Preferred the number of s hares of stock or other securities or property of the Corporation to which a holder of the maximum number of shares of Common Stock deliverable upon conversion would have been entitled in connection with such transaction, subject to adjustment in respect of such stock or securities by the terms thereof, and (2) unless such dividends are paid in cash prior to conversion, to elect to receive as dividends the number of shares of stock or other securities or property of the Corporation to which a holder of the maximum number of shares of Common Stock issuable as dividends on such shares of Series I Preferred would have been entitled in connection with such transaction, subject to adjustment in respect of such stock or securities by the terms thereof. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 7 with respect to the rights of the holders of Series I Preferred after the transaction to the end that the provisions of this Section 7(d) (in cluding adjustment of the Series I Conversion Price and the number of shares issuable upon conversion of the Series I Preferred) shall be applicable after that event and be as nearly equivalent as practicable. In case of a consolidation or merger, the surviving or successor corporation or other entity shall duly execute and deliver to each Holder of the Series I Preferred a supplement hereto acknowledging such corporation's or entity's obligations under this Section 7(d). The foregoing provisions of this Section 7(d) shall similarly apply to successive reclassifications, capital reorganizations and other changes, consolidations or mergers.

     (e)      Certificate of Adjustment. In each case of an adjustment or readjustment of the Series I Conversion Price or the number of shares of Common Stock or other securities issuable upon conversion of the Series I Preferred, the Corporation, at its expense, shall compute such adjustment or readjustment in accordance with the provisions hereof and prepare a certificate showing such adjustment or readjustment, and shall mail such certificate, by first class mail, postage prepaid, to each registered holder of Series I Preferred at the holder's address as shown in the Corporation's books. The certificate shall set forth such adjustment or readjustment, showing in detail the facts upon which such adjustment or readjustment is based, including a statement of (1) the consideration received or deemed to be received by the Corporation for any additional shares of Common Stock issued or sold or deemed to have been issued or so ld, (2) the Series I Conversion Price at the time in effect, (3) the number of additional shares of Common Stock issued or sold or deemed to have been issued or sold, and (4) the type and amount, if any, of other property which at the time would be received upon conversion of the Series I Preferred. The Company shall provide each Holder of the Series I Preferred with not less than 10 days prior written notice of any event, other than an Acquisition or Asset Transfer, resulting in an adjustment under Section 7. With respect to a proposed Acquisition or Asset Transfer, the Holders of the Series I Preferred shall be given sufficient notice of such event so that they will have a minimum of 30 days to consider whether or not to consent to such proposed Acquisition or Asset Transfer pursuant to Section 8.

     (f)      Determination of Shares. For purposes of determining the adjusted Series I Conversion Price, the number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Corporation or any Subsidiary, and the disposition of any shares so owned or held shall be considered an issue or sale of Common Stock.

     8.      Protective Provisions. In addition to any other rights provided by law or in the Restated Certificate of Incorporation, so long as any shares of Series I Preferred shall be outstanding, the Corporation shall not, without first obtaining the affirmative vote or written consent of the holders of not less than two-thirds of the outstanding shares of the Series I Preferred Stock (the "Required Holders"), which consent in each case shall not be unreasonably withheld or delayed (provided that the Holders are given not less than 30 days to consider such proposed actions), take any of the following actions:

          (i)      any amendment or change of the rights, preferences, privileges or powers of, or the restrictions provided for the benefit of, the Series I Preferred that adversely affects such rights, preferences, privileges or powers of the Series I Preferred;

          (ii)      any action that authorizes, creates or issues shares of any class of stock having preferences superior to the Series I Preferred;

          (iii)      any action that reclassifies any outstanding shares into shares having preferences or priority as to dividends or assets senior to the preference of the Series I Preferred Stock;

          (iv)      any amendment of the Company's Restated Certificate of Incorporation that adversely affects the rights of the Series I Preferred;

          (v)      the declaration or payment of a dividend on the Common Stock or other Junior Securities other than a dividend on the Common Stock or the Series G Preferred Stock payable solely in shares of Common Stock; or

          (vi)     any Acquisition or Asset Transfer.

     9.      Certain Definitions.

"Acquisition" means any merger, consolidation, business combination, reorganization or recapitalization of the Corporation (including, without limitation, pursuant to a tender offer) in any single transaction or series of related transactions in any such case in which the stockholders of the Corporation immediately prior to such transaction own capital stock representing less than fifty percent (50%) of the Corporation's voting power immediately after such transaction, or any transaction or series of related transactions in which capital stock representing in excess of fifty percent (50%) of the Corporation's voting power is transferred.

"Asset Transfer" means any sale, lease or other disposition of all or substantially all of the assets of the Corporation.

"Change in Control" means either (i) the acquisition by any person or "group" (as defined in regulations of the Securities and Exchange Commission), other than stockholders of the Corporation on the Original Series I Issue Date and affiliates of such stockholders, of voting securities of the Corporation representing a majority of the combined ordinary voting power of all outstanding voting securities of the Corporation, or (ii) the recomposition of the Corporation's Board of Directors such that a majority of the Board is comprised of persons other than that are neither (x) members of the Board on the Original Series I Issue Date or persons whose nomination or election to the Board was approved by a majority of such directors ("Continuing Directors"), (y) designees or nominees of entities that were stockholders of the Corporation on the Original Series I Issue Date ("Continuing Directors") or (zy) other persons whose nomination or election to the Board was approved by a majori ty of the Continuing Directors then in office.

"Common Stock" means the Company's authorized common stock, $.001 par value per share.

"Original Series I Issue Date" means May 176, 2002.

"Original Series I Issue Price" means One Dollar ($1.00) per share.

"Series I Purchase Agreement" means the Series I Preferred Stock Purchase Agreement dated May 176, 2002 among the Corporation and the various purchasers of Series I Preferred, as amended from time to time.

"Subsidiary" means any corporation of which the shares of outstanding capital stock possessing the voting power (under ordinary circumstances) in electing the board of directors are, at the time as of which any determination is being made, owned by the Corporation either directly or indirectly through Subsidiaries.

     10.      Amendment and Waiver.

No amendment, modification or waiver of any of the terms or provisions of the Series I Preferred shall be binding or effective without the prior affirmative vote or written consent of the Required Holders. Any amendment, modification or waiver of any of the terms or provisions of the Series I Preferred by the Required Holders, whether prospective or retroactively effective, shall be binding upon all holders of Series I Preferred Stock.

     11.      General Provisions.

     (a)      Registration of Transfer. The Corporation shall keep at its principal office a register for the registration of the Series I Preferred. Upon the surrender of any certificate representing Series I Preferred at such place, the Corporation shall, at the request of the record holder of such certificate, execute and deliver (at the Corporation's expense) a new certificate or certificates in exchange therefor representing in the aggregate the number of shares represented by the surrendered certificate. Each such new certificate shall be registered in such name and shall represent such number of shares as is requested by the holder of the surrendered certificate and shall be substantially identical in form to the surrendered certificate.

     (b)      Replacement. Upon receipt of evidence reasonably satisfactory to the Corporation (an affidavit of the registered holder shall be satisfactory) of the ownership and the loss, theft, destruction or mutilation of any certificate evidencing shares of Series I Preferred, and in the case of any such loss, theft or destruction, upon receipt of indemnity reasonably satisfactory to the Corporation (provided that if the holder is a financial institution or other institutional investor its own agreement shall be satisfactory), or in the case of any such mutilation upon surrender of such certificate, the Corporation shall (at its expense) execute and deliver in lieu of such certificate a new certificate of like kind representing the number of shares of such class represented by such lost, stolen, destroyed or mutilated certificate and dated the date of such lost, stolen, destroyed or mutilated certificate.

     (c)      Reservation of Common Stock Issuable Upon Conversion. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of the Series I Preferred, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of the Series I Preferred. If at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then-outstanding shares of the Series I Preferred, the Corporation will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose.

     (d)      Notices. Any notice required by the provisions of this Certificate of Designation shall be in writing and shall be deemed effectively given: (i) upon personal delivery to the party to be notified, (ii) when sent by confirmed telex or facsimile if sent during normal business hours of the recipient; if not, then on the next business day, (iii) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (iv) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All notices to stockholders shall be addressed to each holder of record at the address of such holder appearing on the books of the Corporation.

     (e)      Payment of Taxes. The Corporation will pay all taxes (other than taxes based upon income) and other governmental charges that may be imposed with respect to the issue or delivery of shares of Common Stock upon conversion of shares of Series I Preferred, excluding any tax or other charge imposed in connection with any transfer involved in the issue and delivery of shares of Common Stock in a name other than that in which the shares of Series I Preferred so converted were registered.

     (f)      No Dilution or Impairment. The Corporation shall not amend its Restated Certificate of Incorporation or participate in any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, for the purpose of avoiding or seeking to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Corporation.

      (g)      Status of Converted Stock. In the event that any shares of Series I Preferred shall be redeemed pursuant to Section 5 or converted pursuant to Section 6, the shares so converted shall resume the status of authorized, undesignated, and unissued shares of Preferred Stock.

* * * * *

EX-10

This Warrant was originally issued on [date] and has not been registered under the Securities Act of 1933, as amended (the "Act"), or any state securities laws. This Warrant may not be transferred in the absence of an effective registration statement under the Act (and other applicable securities laws) or an available exemption therefrom.

COMMON STOCK PURCHASE WARRANT

Date of Issuance: _____________ Certificate No. W-___

For value received, Exabyte Corporation, a Delaware corporation (the "Company"), hereby grants to __________________ , or its transferees and assigns, the right to purchase from the Company a total of ____________________ (_____) shares of the Company's Common Stock, $.001 par value (the "Warrant Shares"), at a price of $___ per share (the "Exercise Price"). The Exercise Price and number of Warrant Shares (and the amount and kind of other securities) for which this Warrant is exercisable shall be subject to adjustment as provided herein. This Warrant is one of the stock purchase warrants (collectively, the "Warrants") issued pursuant to Section 2.3 of the Series I Preferred Stock Purchase Agreement dated as of May 17, 2002 among the Company and the Purchasers signatory thereto.

          SECTION 1. Exercise of Warrant.

                    1A. Exercise Period. The purchase rights represented by this Warrant may be exercised, in whole or in part, at any time and from time to time during the period (the "Exercise Period") beginning on the Date of Issuance and ending on the tenth anniversary of the Date of Issuance or, if such day is not a business day, on the next succeeding business day. The Company will give the Registered Holder of this Warrant written notice of the expiration of the Exercise Period at least 30 days (but no more than 45 days) prior to the date of such expiration.

                    1B. Exercise Procedure.

                     (i) This Warrant shall be deemed to have been exercised when all of the following items have been delivered to the Company (the "Exercise Time"):

                               (a) a completed Exercise Agreement, as described in Section 1C below, executed by the person exercising all or part of the purchase rights represented by this Warrant (the "Purchaser");

                               (b) this Warrant;

                     (c) if the Purchaser is not the registered holder of this Warrant reflected in the Company's records maintained pursuant to Section 7 hereof (the "Registered Holder"), an Assignment or Assignments in the form set forth in Exhibit II hereto evidencing the assignment of this Warrant to the Purchaser; and

                     (d) either (x) a check payable to the Company in an amount equal to the product of the Exercise Price multiplied by the number of Warrant Shares being purchased upon such exercise (the "Aggregate Exercise Price"), (y) the surrender to the Company of shares of the Company's Common Stock having a fair market value equal to the Aggregate Exercise Price, or (z) the delivery of a notice to the Company that the Purchaser is exercising the Warrant by authorizing the Company to reduce the number of Warrant Shares subject to the Warrant by that number of shares having an aggregate "spread" (i.e., the excess of fair market value over the Exercise Price) equal to the Aggregate Exercise Price. For purposes of this provision, "fair market value" shall mean, in the case of Common Stock, the average of the closing sales prices for the Common Stock on the principal national securi ties exchange on which the Common Stock is listed (or on the NASDAQ National Market System in the event that the Common Stock is not listed on a national securities exchange) for the 30 trading days preceding the date of exercise or, in the event that the Common Stock is not listed on a national securities exchange or quoted in the NASDAQ National Market System, the value of the Common Stock as determined in good faith by the Company's board of directors.

                     (ii) Certificates for Warrant Shares purchased upon exercise of this Warrant shall be delivered by the Company to the Purchaser within three business days after the date of the Exercise Time together with any cash payable in lieu of a fraction of a share pursuant to Section 8 hereof. Unless this Warrant has expired or all of the purchase rights represented hereby have been exercised, the Company shall prepare a new Warrant, substantially identical hereto, representing the rights formerly represented by this Warrant which have not expired or been exercised and shall deliver such new Warrant to the person designated for delivery in the Exercise Agreement concurrently with the delivery of certificates for Warrant Shares.

                     (iii) The Warrant Shares issuable upon the exercise of this Warrant shall be deemed to have been issued to the Purchaser at the Exercise Time, and the Purchaser shall be deemed for all purposes to have become the record holder of such Warrant Shares at the Exercise Time.

                     (iv) The issuance of certificates for Warrant Shares upon exercise of this Warrant shall be made without charge to the Registered Holder for any issuance tax in respect thereof or other cost incurred by the Company in connection with such exercise and the related issuance of Warrant Shares, except for any taxes or changes payable in connection with the issuance of Warrant Shares to any Person other than the Registered Holder.

                     (v) The Company shall not close its books against the transfer of this Warrant or of any Warrant Shares issued or issuable upon the exercise of this Warrant in any manner which interferes with the timely exercise of this Warrant.

                     (vi) The Company shall at all times reserve and keep available out of its authorized but unissued capital stock, solely for the purpose of issuance upon the exercise of this Warrant, the maximum number of Warrant Shares issuable upon the exercise of this Warrant. All Warrant Shares which are so issuable shall, when issued and upon the payment of the applicable Exercise Price, be duly and validly issued, fully paid and nonassessable and free from all taxes, liens and charges.

          SECTION 2. Adjustment of Exercise Price and Number of Warrant Shares. In order to prevent dilution of the rights granted under this Warrant, the Exercise Price and the number of Warrant Shares or other securities obtainable upon exercise of this Warrant shall be subject to adjustment from time to time as provided in this Section 2.

                    2A. Adjustment for Stock Splits and Combinations. If the Company at any time after the Date of Issuance effects a subdivision of the outstanding Warrant Shares, the Exercise Price in effect immediately prior to that subdivision shall be proportionately decreased. Conversely, if the Company any time after the Date of Issuance combines the outstanding Warrant Shares into a smaller number of shares, the Exercise Price in effect immediately prior to the combination shall be proportionately increased. Any adjustment under this Section 2A shall become effective at the close of business on the date the subdivision or combination becomes effective.

                    2B. Adjustment for Stock Dividends and Distributions. If the Company at any time after the Date of Issuance makes, or fixes a record date for the determination of holders of Warrant Shares entitled to receive, a dividend or other distribution payable in additional Warrant Shares, in each such event the Exercise Price then in effect shall be decreased as of the time of such issuance or, in the event such record date is fixed, as of the close of business on such record date, by multiplying the Exercise Price then in effect by a fraction (1) the numerator of which is the total number of Warrant Shares issued and outstanding immediately prior to the time of such issuance or the close of business on such record date, and (2) the denominator of which is the total number of Warrant Shares issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of Warrant Shares issuable in payment of such dividend or distribution; provided, however, that if such record date is fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Exercise Price shall be recomputed accordingly as of the close of business on such record date and thereafter the Exercise Price shall be adjusted pursuant to this Section 2B to reflect the actual payment of such dividend or distribution.

                    2C. Adjustments for Other Dividends and Distributions. If the Company at any time after the Date of Issuance makes, or fixes a record date for the determination of holders of Warrant Shares entitled to receive a dividend or other distribution (other than a dividend or distribution payable solely in Warrant Shares), in each such event provision shall be made so that the holder of this Warrant shall receive upon exercise hereof, in addition to the number of Warrant Shares receivable thereupon, the dividend or distribution which such holder would have received had such exercise occurred immediately prior to such event.

                    2D. Adjustment for Reclassification, Exchange and Substitution. If at any time after the Date of Issuance the Warrant Shares issuable upon exercise of this Warrant are changed into the same or a different number of shares of any class or classes of stock, whether by recapitalization, reclassification or otherwise (other than a subdivision or combination of shares or stock dividend or a reorganization, merger or consolidation provided for elsewhere in this Section 2), in any such event this Warrant shall thereafter represent the right to receive upon exercise hereof the kind and amount of stock and other securities and property receivable in connection with such recapitalization, reclassification or other change with respect to the maximum number of Warrant Shares issuable upon exercise of this Warrant immediately prior to such recapitalization, reclassification or change, all s ubject to further adjustments as provided herein or with respect to such other securities or property by the terms thereof.

                    2E. Reorganizations, Mergers or Consolidations. If at any time after the Date of Issuance the Warrant Shares are converted into other securities or property, whether pursuant to a reorganization, merger, consolidation or otherwise (other than a recapitalization, subdivision, combination, reclassification, exchange or substitution of shares provided for elsewhere in this Section 2), as a part of such transaction, provision shall be made so that this Warrant shall thereafter represent the right to receive upon exercise hereof the number of shares of stock or other securities or property to which a holder of the maximum number of Warrant Shares issuable upon exercise of this Warrant immediately prior to such transaction would have been entitled in connection with such transaction, subject to further adjustments as provided herein or with respect to such other securities or propert y by the terms thereof. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 2 with respect to the rights of the holder of this Warrant after such transaction to the end that the provisions of this Section 2 (including adjustment of the Exercise Price and the number of Warrant Shares issuable upon exercise of this Warrant) shall be applicable after that event and be as nearly equivalent as practicable. The Company shall not be a party to any reorganization, merger or consolidation in which the Company is not the surviving entity unless the entity surviving such transaction assumes, by written instrument satisfactory to the holders of a majority of the outstanding Warrants, all of the Company's obligations hereunder.

                    2F. Certificate of Adjustment. In each case of an adjustment or readjustment of the Exercise Price, the Company, at its expense, shall compute such adjustment or readjustment in accordance with the provisions hereof and prepare a certificate showing such adjustment or readjustment, and shall mail such certificate, by first class mail, postage prepaid, to the Registered Holder of this Warrant. The certificate shall set forth such adjustment or readjustment, showing in detail the facts upon which such adjustment or readjustment is based.

                    2G. Adjustment of Number of Warrant Shares. Upon each adjustment of the Exercise Price hereunder, the number of Warrant Shares acquirable upon exercise of this Warrant shall be adjusted to equal the number of shares determined by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of Warrant Shares acquirable upon exercise of this Warrant immediately prior to such adjustment and dividing the product thereof by the Exercise Price resulting from such adjustment.

                    2H. Notices. The Company shall give written notice to the Registered Holder of this Warrant at least 15 days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the Common Stock, (B) with respect to any pro rata subscription offer to holders of Common Stock or (C) for determining rights to vote with respect to any transaction described in Section 2D or 2E hereof or any dissolution or liquidation of the Company.

          SECTION 3. Warrant Transferable. This Warrant and the purchase rights represented hereby are transferable, in whole or in part, without charge to the Registered Holder upon surrender of this Warrant with a properly executed assignment (in the Form of Exhibit II hereto) at the principal office of the Company.

          SECTION 4. Warrant Exchangeable for Different Denominations. This Warrant is exchangeable, upon the surrender hereof by the Registered Holder at the principal office of the Company, for new Warrants of like tenor representing in the aggregate the purchase rights hereunder, and each of such new Warrants shall represent such portion of such rights as is designated by the Registered Holder at the time of such surrender.

          SECTION 5. Replacement. Upon receipt of evidence reasonably satisfactory to the Company (an affidavit of the Registered Holder shall be satisfactory) of the ownership and the loss, theft, destruction or mutilation of any certificate evidencing this Warrant, and in the case of any such loss, theft or destruction, upon receipt of indemnity reasonably satisfactory to the Company (provided that if the holder is a financial institution or other institutional investor its own agreement shall be satisfactory), or, in the case of any such mutilation upon surrender of such certificate, the Company shall (at its expense) execute and deliver in lieu of such certificate a new certificate of like kind representing the same rights represented by such lost, stolen, destroyed or mutilated certificate and dated the date of such lost, stolen, destroyed or mutilated certificate.

          SECTION 6. Amendment and Waiver. Except as otherwise provided herein, the provisions of this Warrant may be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the prior affirmative vote or written consent of the holders of Warrants representing not less than two-thirds of the Warrant Shares issuable upon exercise of all then-outstanding Warrants.

          SECTION 7. Warrant Register. The Company shall maintain at its principal executive offices books for the registration of ownership and transfer of this Warrant. The Company may deem and treat the Registered Holder as the absolute owner hereof (notwithstanding any notation of ownership or other writing thereon made by anyone) for all purposes and shall not be affected by any notice to the contrary.

          SECTION 8. Fractions of Shares. The Company may, but shall not be required to, issue a fraction of a Warrant Share upon the exercise of this Warrant in whole or in part. As to any fraction of a share which the Company elects not to issue, the Company shall make a cash payment in respect of such fraction in an amount equal to the same fraction of the fair market value of a Warrant Share on the date of such exercise.

          SECTION 9. Governing Law. This Warrant shall be governed by and construed in accordance with the domestic laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.

* * * * *

          IN WITNESS WHEREOF, the Company has caused this Warrant to be signed and attested by its duly authorized officers under its corporate seal and to be dated the date hereof.

EXABYTE CORPORATION

By:

Name:

Title:

Attest:

Secretary

EXHIBIT I

EXERCISE AGREEMENT

To: Dated:

The undersigned, pursuant to the provisions set forth in the attached Warrant (Certificate No. W-____), hereby agrees to subscribe for the purchase of ______ Warrant Shares covered by such Warrant and makes payment herewith in full therefor at the price per share provided by such Warrant.

The undersigned requests that a certificate for such Warrant Shares be registered in the name of __________________ whose address is _________________________________ and whose social security number or other identifying number is ___________, and that such certificate be delivered to _________________ whose address is _________________________. If said number of Warrant Shares is less than all of the Warrant Shares purchasable hereunder, the undersigned requests that a new Warrant evidencing the right to purchase the remaining balance of Warrant Shares for which this Warrant is exercisable be registered in the name of __________________ whose address is _________________________ and whose social security number or other identifying number is _________, and that such certificate be delivered to ______________ whose address is ____________________________________.

Signature

Address

EXHIBIT II

ASSIGNMENT

FOR VALUE RECEIVED, __________________ hereby sells, assigns and transfers all of the rights of the undersigned under the attached Warrant (Certificate No. W- ) with respect to the number of the Warrant Shares covered thereby set forth below, unto:

Names of Assignee Address No. of Warrant Shares

Dated:	Signature
Witness

EX-99

MEDIA CONTACTS:

Exabyte Corporation
Annette Smith
(303) 417-7695
annettes@exabyte.com

ExabyteÒ ANNOUNCES $6 million financing

Exabyte sells $6.56 million in Series I Convertible Preferred Stock

Boulder, CO - May 17, 2002 - Exabyte Corporation (NASDAQ: EXBT), a performance and value leader in tape backup systems, today announced that it has completed, subject in part to shareholder approval, the sale to private investors, lead by Meritage Private Equity Funds, L.P., State of Wisconsin Investment Board and Crestview Capital Funds, of 6.56 million shares of the Company's newly-created Series I Convertible Preferred Stock at $1.00 per share. The Offering will be completed in two phases. The first phase, which closed today, represents a funding in the amount of $3.9 million and is convertible into shares of the Company's common stock in the aggregate amount of less than 20% of the Company's current outstanding shares. The second phase, subject to shareholder approval, provides the Company an incremental funding of $2.6 million, approximately $1 million of which represents the conversion of the previously announced $1 million bridge loan from Meritage. The Series I Convertible Preferred Sto ck is senior to the Company's other classes of stock.

The proceeds from the sale of the Series I Convertible Preferred Stock shall be applied to working capital requirements. "This financing represents a major step in our restructuring efforts, strengthens our balance sheet and helps to position us to solidify a new bank facility with improved terms. In addition, the cash generated from this stock offering provides us the liquidity we need in order to move closer to achieving Company profitability," stated Juan Rodriguez, Interim President and CEO of Exabyte. For more details, see Exabyte's Current Report on Form 8-K filed with the Securities and Exchange Commission today.

SEC Matters

In connection with the transactions described above, Exabyte will be filing a proxy statement with the Securities and Exchange Commission. Stockholders of Exabyte are urged to read the proxy statement when it becomes available because it will contain important information regarding these transactions. Investors and shareholders may obtain a free copy of the proxy statement when it becomes available at the SEC's website at www.sec.gov or at Exabyte's website at www.exabyte.com.

Exabyte, its Board of Directors, executive officers and employees, and certain other persons, may be deemed to be participants in the solicitation of proxies of Exabyte stockholders to approve the transactions under the Series I Preferred Stock Purchase Agreement. These individuals may have interests in the transactions, including interests resulting from acquiring Series I Preferred Stock or holding options or other shares of Exabyte. Information concerning these individuals and their interests in the transactions and the participants in the solicitation will be contained in the proxy statement to be filed with the Securities and Exchange Commission in connection with the transactions.

Exabyte's Series I Preferred Stock has not been registered under the Securities Act of 1933 and may not be offered or sold in the United States unless registered under such act or eligible for an exemption from registration.

About Exabyte Corporation

Since 1987, when it introduced the world's first 8mm tape drive for data storage, Exabyte Corporation (NASDAQ: EXBT) has been recognized as a leading innovator in tape storage and automation. Exabyte tape solutions offer value, performance and reliability for midrange servers, workstations and computer networks. Exabyte products include Mammoth-2 (M2™) tape drives; VXA®-1, the first packet format tape drive; and the 110L™ autoloader, one of the first tape automation units for LTO™ (Ultrium™). Exabyte markets VXA, 8mm and MammothTape™ drives, and automation for MammothTape, VXA, LTO (Ultrium), Advanced Intelligent Tape™ (AIT™) and DLTtape™. Exabyte's worldwide network of distributors, resellers and OEMs includes IBM, Compaq, Fujitsu, Apple Computer, Toshiba and Tech Data, Ingram Micro and Arrow Electronics.

For additional information, call 1-800-EXABYTE or visit www.exabyte.com. For investor relations inquires e-mail investor@exabyte.com.

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The foregoing includes forward-looking statements related to the company's business prospects. Such statements are subject to one or more risks. Words such as "believes," "anticipates," "expects," "intends," "plans," "positions" and similar expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. The actual results that the company achieves, particularly with regard to its profitability, may differ materially from such forward-looking statements due to risks and uncertainties related to increase in revenues, reduction of operating expenses, the ability to close this and additional equity and financing arrangements, as well as the ability to obtain a new bank line of credit, and other such risks as noted in the company's 2001 Form 10-K and Form 10-Q for the quarter ending March 30, 2002. Please refer to the company's Forms 8-K, Form 10-K and Forms 10-Q for a description of such risks.

Exabyte and VXA are registered trademarks, and M2 and MammothTape are trademarks of Exabyte Corp. DLTtape is a registered trademark of Quantum Corporation. LTO and Ultrium are U.S. trademarks of IBM, Seagate and HP. Advanced Intelligent Tape is a registered trademark of Sony Corporation. All other trademarks are the property of their respective owners.