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Proc-Type: 2001,MIC-CLEAR
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<SEC-DOCUMENT>/in/edgar/work/20000710/0000950172-00-001236/0000950172-00-001236.txt : 20000712
<SEC-HEADER>0000950172-00-001236.hdr.sgml : 20000712
ACCESSION NUMBER:		0000950172-00-001236
CONFORMED SUBMISSION TYPE:	SC 13D
PUBLIC DOCUMENT COUNT:		3
FILED AS OF DATE:		20000710

SUBJECT COMPANY:	

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			NOVADIGM INC
		CENTRAL INDEX KEY:			0000888358
		STANDARD INDUSTRIAL CLASSIFICATION:	 [7372
]		IRS NUMBER:				223160347
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			0331
</COMPANY-DATA>

		FILING VALUES:
			FORM TYPE:		SC 13D
			SEC ACT:		
			SEC FILE NUMBER:	005-49642
			FILM NUMBER:		670302
</FILING-VALUES>

			BUSINESS ADDRESS:	
				STREET 1:		ONE INTERNATIONAL BLVD
				STREET 2:		STE 200
				CITY:			MAHWAH
				STATE:			NY
				ZIP:			07495
				BUSINESS PHONE:		4155418420
</BUSINESS-ADDRESS>

				MAIL ADDRESS:	
					STREET 1:		185 BERRY ST
					STREET 2:		STE 3515
					CITY:			SAN FRANCISCO
					STATE:			CA
					ZIP:			94107
</MAIL-ADDRESS>
</SUBJECT-COMPANY>

					FILED BY:		

						COMPANY DATA:	
							COMPANY CONFORMED NAME:			HEWLETT PACKARD CO
							CENTRAL INDEX KEY:			0000047217
							STANDARD INDUSTRIAL CLASSIFICATION:	 [3570
]							IRS NUMBER:				941081436
							STATE OF INCORPORATION:			DE
							FISCAL YEAR END:			1031
</COMPANY-DATA>

							FILING VALUES:
								FORM TYPE:		SC 13D
</FILING-VALUES>

								BUSINESS ADDRESS:	
									STREET 1:		3000 HANOVER ST
									CITY:			PALO ALTO
									STATE:			CA
									ZIP:			94304
									BUSINESS PHONE:		4158571501
</BUSINESS-ADDRESS>

									MAIL ADDRESS:	
										STREET 1:		3000 HANOVER ST
										STREET 2:		MS 20BL
										CITY:			PALO ALTO
										STATE:			CA
										ZIP:			94304
</MAIL-ADDRESS>
</FILED-BY>
</SEC-HEADER>
<DOCUMENT>
<TYPE>SC 13D
<SEQUENCE>1
<FILENAME>0001.txt
<DESCRIPTION>SCHEDULE 13D
<TEXT>




                               UNITED STATES
                     SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C. 20549

                                SCHEDULE 13D
                 UNDER THE SECURITIES EXCHANGE ACT OF 1934


                               NOVADIGM, INC.
- ------------------------------------------------------------------------------
                              (Name of Issuer)


                       Common Stock, par value $0.001
- ------------------------------------------------------------------------------
                      (Title of Class and Securities)


                                669937 10 4
                               (CUSIP Number)


                             Charles N. Charnas
              Assistant Secretary and Senior Managing Counsel
                          Hewlett-Packard Company
                            3000 Hanover Street
                            Palo Alto, CA 94303
                               (650) 857-1501

- ------------------------------------------------------------------------------
          (Name, Address and Telephone Number of Person Authorized
                   to Receive Notices and Communications)


                               JUNE 30, 2000
- ------------------------------------------------------------------------------
                       (Date of Event which Requires
                         Filing of this Statement)


If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of Sections 240.13d-1(e), 240.13d-1(f) or
240.13d-1(g), check the following box. [ ]

Note: Schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. See Section 240.13d-7
for other parties to whom copies are to be sent.

The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page. The information
required on the remainder of this cover page shall not be deemed to be
"filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the
Act but shall be subject to all other provisions of the Act (however, see
the Notes).





                                SCHEDULE 13D

CUSIP No.  669937 10 4


1.      NAMES OF REPORTING PERSONS
        I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only)
- ------------------------------------------------------------------------------

                        HEWLETT-PACKARD COMPANY (#94-1081436)

2.  CHECK THE APPROPRIATE BOX IF A MEMBER OF A         (a)     (   )
    GROUP:                                             (b)     (X)
- ------------------------------------------------------------------------------
3.  SEC USE ONLY
- ------------------------------------------------------------------------------
4.  SOURCE OF FUNDS*                                   WC/OTHER (1)
- ------------------------------------------------------------------------------
5.  CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS       (     )
    IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E)
- ------------------------------------------------------------------------------
6.  CITIZENSHIP OR PLACE OF ORGANIZATION               DELAWARE
- ------------------------------------------------------------------------------

        NUMBER OF        7.    SOLE VOTING POWER      1,190,000 Shares (2)
         SHARES
      BENEFICIALLY       -----------------------------------------------------
        OWNED BY         8.    SHARED VOTING POWER    - 0 -
     EACH REPORTING      -----------------------------------------------------
         PERSON          9.    SOLE DISPOSITIVE       1,190,000 Shares (2)
          WITH                 POWER
                         -----------------------------------------------------
                         10.   SHARED DISPOSITIVE     - 0 -
                               POWER
- ------------------------------------------------------------------------------
11.     AGGREGATE AMOUNT BENEFICIALLY OWNED BY         1,190,000 SHARES (2)
        EACH REPORTING PERSON
- -----------------------------------------------------------------------------
12.     CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11            (   )
        EXCLUDES CERTAIN  SHARES
- -----------------------------------------------------------------------------
13.     PERCENT OF CLASS REPRESENTED BY AMOUNT IN              6.0% (3)
        ROW 11
- -----------------------------------------------------------------------------
14.     TYPE OF REPORTING PERSON                               CO
- --------------------------------- -------------------------------------------


(1) THE TRANSACTIONS CONTEMPLATED IN THE ALLIANCE AGREEMENT DATED JUNE 30,
2000 BETWEEN THE ISSUER AND HEWLETT-PACKARD ARE CONSIDERATION FOR 940,000
SHARES OF ISSUER'S COMMON STOCK AND A WARRANT FOR THE PURCHASE OF 250,000
SHARES OF ISSUER'S COMMON STOCK, AT AN EXERCISE PRICE OF $20.875 PER SHARE.

(2) THE SHARES OF COMMON STOCK OF THE ISSUER COVERED BY THIS REPORT INCLUDE
250,000 SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF A WARRANT GRANTED
TO HEWLETT-PACKARD ON JUNE 30, 2000.

(3) AFTER GIVING EFFECT TO THE ISSUANCE OF THE COMMON STOCK AND THE
EXERCISE OF THE WARRANT AS DESCRIBED IN THIS STATEMENT.



ITEM 1.        SECURITY AND ISSUER.

               THIS STATEMENT RELATES TO THE COMMON STOCK, PAR VALUE $0.001
(THE "COMMON STOCK"), OF NOVADIGM, INC., A DELAWARE CORPORATION (THE
"ISSUER"). THE ISSUER'S PRINCIPAL EXECUTIVE OFFICES ARE LOCATED AT ONE
INTERNATIONAL BOULEVARD, SUITE 200, MAHWAH, NEW JERSEY 07495.

ITEM 2.        IDENTITY AND BACKGROUND.

               This statement is being filed by Hewlett-Packard Company, a
Delaware corporation ("Hewlett-Packard"). The address of Hewlett-Packard's
principal executive offices is 3000 Hanover Street, Palo Alto, California
94304. Hewlett-Packard is a global provider of computing and imaging
solutions and services for business and home. Hewlett-Packard is focused on
capitalizing on the opportunities of the Internet and the proliferation of
electronic services. Hewlett-Packard's major businesses include Imaging and
Printing Systems, Computing Systems and Information Technology Services.
Imaging and Printing Systems provides laser and inkjet printers, mopiers,
scanners, all-in-one devices, personal color copiers and faxes, digital
senders, wide-and large-format printers, print servers, network-management
software, networking solutions, digital photography products, imaging and
printing supplies, imaging and software solutions, and related professional
and consulting services. Computing Systems provides a broad range of
computing systems for the enterprise, commercial and consumer markets. The
products and solutions range from mission-critical systems and software to
personal computers for the business and home. Major product lines include
UNIX, and PC servers, desktop and mobile personal computers, workstations,
software solutions, and storage solutions. Information Technology Services
provides consulting, education, design and installation services, ongoing
support and maintenance, proactive services, like mission-critical support,
outsourcing and utility-computing capabilities. Financial capabilities
include leasing, automatic technology-refreshment services, solution
financing and venture financing.

               Hewlett-Packard has never been convicted in any criminal
proceeding, and is not and has not been subject to any judgment, decree or
final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any
violation with respect to such laws.

ITEM 3.        SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.

               Pursuant to an Alliance Agreement dated June 30, 2000
between the Issuer and Hewlett-Packard, Hewlett-Packard acquired 940,000
shares of the Issuer's Common Stock, (the "Shares"), and a warrant (the
"Warrant") to purchase an additional 250,000 of the Issuer's Common Stock,
at an exercise price of $20.875 per share. The transactions contemplated in
the Alliance Agreement are the consideration for the Shares and the
Warrant.

ITEM 4.        PURPOSE OF TRANSACTION.

               The purpose of the transaction is for Hewlett-Packard to
make an equity investment in the Issuer in connection with the integration
of the products of Hewlett-Packard's OpenView electronic enterprise and
OpenView service provider business segments with the products of the Issuer.
Pursuant to the Alliance Agreement, Hewlett-Packard and the Issuer will
jointly market and make available to existing and prospective customers the
products of Hewlett-Packard OpenView and the Issuer, as integrated, and will
provide customers the opportunity to replace Hewlett-Packard OpenView's
Desktop Administrator products and services with the Radia products of
the Issuer. Concurrently with the execution of the Alliance Agreement,
Hewlett-Packard and the Issuer also entered into a Distribution Agreement,
a Stockholder Rights Agreement and a letter agreement that provides that
the Issuer will consider the possibility of a Hewlett-Packard board
representative at the meetings of its board of directors.

               Except as disclosed below, Hewlett-Packard does not have any
present plan or proposal as a stockholder which relates to, or would result
in any action with respect to, the matters related in paragraphs (a)
through (j) of Item 4 of Schedule 13D.

               Pursuant to the terms of the Stockholder Rights Agreement,
Hewlett-Packard has agreed that during the period ending June 30, 2002,
Hewlett-Packard and its affiliates will not acquire, or enter into
discussions, negotiations, arrangements or understandings with any third
party to acquire beneficial ownership of any voting stock of the Issuer,
any securities convertible into or exchangeable for the voting stock, or
any other right to acquire the voting stock (except, in any case, by way of
dividends or other distributions or offerings of Issuer securities made
available to holders of any class of voting stock generally) without the
prior written consent of the Issuer, if the effect of the acquisition would
be to increase the voting power of all voting stock beneficially owned by
Hewlett-Packard and its affiliates at the time of the acquisition to more
than 10% of the total voting power of the Issuer's Common Stock.

               Under the Stockholder Rights Agreement, Hewlett-Packard is
not required to obtain the prior written consent of the Issuer to engage in
any acquisition of the voting stock under certain circumstances. Written
consent is not required following (i) the commencement of and prior to the
completion or termination of the acquisition by a person or a 13D Group (as
defined in the Stockholder Rights Agreement), of beneficial ownership of
voting stock representing 20% or more of the then-outstanding voting stock,
(ii) the announcement or commencement by a person or 13D Group, of a tender
or exchange offer to acquire voting stock which, if successful, would
result in such person or 13D Group owning 20% or more of the then-
outstanding voting stock, or (iii) the entering into by the Issuer, or
publicly announced determination by the Issuer to seek to enter into, any
merger, sale or other business combination transaction pursuant to which
(A) the outstanding shares of Issuer's Common Stock would be converted into
cash or securities of another person or 13D Group, (B) 50% or more of the
then-outstanding shares of Issuer's Common Stock would be owned by persons
other than the then-current holders of shares of Issuer's Common Stock, or
(C) all or substantially all of the Issuer's assets would be sold to any
person or 13D Group (unless the Issuer's stockholders will hold voting
stock representing at least 50% of the voting power of the person or 13D
Group purchasing such assets immediately prior to such sale of all or
substantially all of the Issuer's assets).

               Further, under the Stockholder Rights Agreement, during the
period ending June 30, 2001, none of the Shares may be offered for sale,
sold, assigned or transferred to any person other than an affiliate of
Hewlett-Packard. From June 30, 2001 to June 30, 2002, no more than 470,000
of the Shares (as adjusted for stock splits, stock dividends and similar
events), may be offered for sale, sold, assigned or transferred to any
person other than an affiliate of Hewlett-Packard. These transfer
restrictions will terminate upon the consummation of a change in control of
the Issuer. Moreover, with certain exceptions, Hewlett-Packard and each of
its successors and assigns and transferees, as long as they hold
registrable securities, may not sell during any calendar quarter an amount
of the Shares and the Warrant shares, including any shares of Issuer's
Common Stock or other securities of the Issuer issued as (or issuable upon
the conversion or exercise of any warrant, right or other security that is
issued as) a dividend or other distribution with respect to, or in exchange
for, or in replacement of, the shares received as consideration, in the
aggregate, in excess of two percent of the outstanding Issuer Common Stock.

               Pursuant to the Stockholder Rights Agreement,
Hewlett-Packard has agreed that during the period ending June 30, 2002, if
Hewlett-Packard intends to sell securities with voting power constituting
less than five percent of the total voting power of the Issuer to any
person, other than a Qualified Purchaser (as defined in the Stockholder
Rights Agreement), that beneficially owns five percent or more of the total
voting power of the Issuer, as indicated on a Schedule 13D or 13G filed
with the SEC, then Hewlett-Packard will provide written notice to the
Issuer providing the Issuer with the first right to acquire the securities
Hewlett-Packard intends to sell free and clear of all liens. For a period
of ten business days after delivery of the notice, the Issuer will be
entitled to elect to purchase all, but not less than all, of the securities
described in the notice, at the price per share described in the notice.
The notice need not be provided where the sale transaction is (i) an
underwritten public offering as defined in the Stockholder Rights
Agreement, (ii) a tender offer, merger, reorganization or consolidation of
the Issuer or (iii) a sale of the Issuer's Common Stock in a transaction
where a majority of the Issuer's Common Stock is held by stockholders other
than Hewlett-Packard or a majority of the Issuer's Common Stock held by
affiliates of the Issuer is being sold.

ITEM 5.        INTEREST IN SECURITIES OF THE ISSUER.

               The aggregate number of shares beneficially owned by
Hewlett-Packard is 1,190,000 (including the Warrant shares), which
represents 6.0% of the Issuer's outstanding Common Stock after giving
effect to the issuance of Shares and the exercise of the Warrant as
described in this statement (based upon the representation of the Issuer in
its Form 10-K405, filed on June 27, 2000, that it had 18,763,759 shares of
Common Stock outstanding as of June 12, 2000).

               Hewlett-Packard has the sole power to vote the 1,190,000
shares beneficially owned by it (including the Warrant shares) and has the
sole power to dispose of such shares.

               Other than the acquisition of the Shares and the Warrant as
described in this Schedule 13D, there have been no transactions by
Hewlett-Packard in the Issuer's Common Stock in the past sixty days.

ITEM 6.        CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR
               RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER.

(a)     ALLIANCE AGREEMENT

        The Alliance Agreement is described in Items 3 and 4.

(b)     WARRANT

        The Warrant is referred to in Items 3 and 5 and is attached as
Exhibit 1.

(c)     STOCKHOLDER RIGHTS AGREEMENT

        The Stockholder Rights Agreement is described in Item 4 and is
attached as Exhibit 2.

ITEM 7.        MATERIAL TO BE FILED AS EXHIBITS.

               1. Warrant to Purchase Common Stock, dated June 30, 2000,
issued to Hewlett-Packard Company by Novadigm, Inc.

               2. Stockholder Rights Agreement, dated as of June 30, 2000, by
and between Novadigm, Inc. and Hewlett-Packard Company.

               After reasonable inquiry and to the best my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.

Dated:   July 10, 2000


                    HEWLETT-PACKARD COMPANY

                    By: /s/ Charles N. Charnas

                    Name: Charles N. Charnas

                    Title: Assistant Secretary and Senior Managing Counsel







 LIST OF EXHIBITS

 Exhibit No.


1.             Warrant to Purchase Common Stock, dated June 30, 2000, issued
               to Hewlett-Packard Company by Novadigm, Inc.

2.             Stockholder Rights Agreement, dated as of June 30, 2000, by
               and between Novadigm, Inc. and Hewlett-Packard Company.



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>2
<FILENAME>0002.txt
<DESCRIPTION>EXHIBIT 1 - FINAL WARRANT
<TEXT>


                                                                     EXHIBIT 1


NEITHER THIS WARRANT NOR ANY SHARES OF COMMON STOCK ISSUABLE UPON THE
EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"). SUCH SECURITIES HAVE BEEN ACQUIRED
FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
ASSIGNED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT, UNLESS THE HOLDER HEREOF SHALL HAVE
DELIVERED TO THE ISSUER A WRITTEN OPINION OF COUNSEL, IN FORM, SUBSTANCE
AND SCOPE REASONABLY ACCEPTABLE TO THE ISSUER, TO THE EFFECT THAT SUCH
SECURITIES ARE BEING OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT;
PROVIDED, HOWEVER, THAT SUCH OPINION OF COUNSEL WILL NOT BE REQUIRED BY THE
COMPANY FOR ANY DISPOSITIONS MADE BY THE HOLDER (1) TO ANY OF ITS
AFFILIATES (AS SUCH TERM IS DEFINED IN RULE 405 PROMULGATED UNDER THE
SECURITIES ACT) OR (2) PURSUANT TO RULE 144 PROMULGATED UNDER THE
SECURITIES ACT, PROVIDED THAT PRIOR TO SUCH DISPOSITION THE COMPANY
RECEIVES FROM THE HOLDER AND THE RELEVANT BROKER, IF APPLICABLE, SUCH
CERTIFICATIONS AS ARE NECESSARY FOR THE COMPANY TO CONFIRM THAT SUCH
DISPOSITION IS EXEMPT FROM REGISTRATION PURSUANT TO RULE 144 OR OTHERWISE,
AS THE CASE MAY BE. FURTHERMORE, THIS WARRANT MAY ONLY BE SOLD, TRANSFERRED
OR ASSIGNED TO AN AFFILIATE OF HEWLETT-PACKARD COMPANY.


                               NOVADIGM, INC.

                      WARRANT TO PURCHASE COMMON STOCK

Warrant Number:                     1

Number of Shares:                   250,000 Shares of Common Stock
                                    (subject to adjustment as provided herein)

Original Date of Issuance:          June 30, 2000

FOR VALUE RECEIVED, Hewlett-Packard Company, the registered holder hereof
or its permitted assigns ("HOLDER"), is entitled, subject to the terms set
forth below, to purchase from Novadigm, Inc., a Delaware corporation (the
"COMPANY"), upon surrender of this Warrant, at any time or times on or
after the date hereof, but not after 5:00 P.M., Pacific Time, on the date
three years from the commencement of the Milestone Period (as hereinafter
defined) (the "EXPIRATION DATE") Two Hundred Fifty Thousand (250,000) fully
paid and nonassessable shares of common stock, $0.001 par value per share
(the "COMMON STOCK"), of the Company (the "WARRANT SHARES") at the exercise
price per Warrant Share equal to $20.875, subject to adjustment as set
forth herein (the "EXERCISE Price"). This Warrant is issued pursuant to the
terms of the Alliance Agreement (the "ALLIANCE AGREEMENT"), dated as of
June 30, 2000, between the Company and Hewlett-Packard Company ("HP").

         Section 1.  Exercise Price.

                  (a) If, during the Milestone Period (as hereinafter
defined), the Company receives an aggregate of $15,000,000 (the "LICENSE
REVENUES MILESTONE") in license revenues (which revenues shall not include
any revenues from fees charged by the Company for installation,
maintenance, support or other services or training of, or with respect to,
the licensed products) as a result of the reference-selling by HP of
licenses to use the Company's products pursuant to Section 5.6 of the
Alliance Agreement (which reference-selling is documented pursuant to
Section 6.3(c) of the Alliance Agreement), then the Exercise Price shall be
reduced to $0; provided, however, that license revenues received by the
Company from existing customers of HP referred directly to the Company by
HP (and not through reference-selling by HP pursuant to Section 5.6 of the
Alliance Agreement) during the period from the date hereof to the date on
which Milestone Period begins, shall be credited to the License Revenues
Milestone. For purposes hereof, the "MILESTONE PERIOD" means the period
beginning on the date as of which the Company has employed two (2) of the
five (5) pairs of sales representatives and technical consultants it is
required to employ pursuant to Section 3.2 of the Alliance Agreement and
ending twelve (12) months thereafter. The Company shall promptly notify HP
in writing of the commencement of the Milestone Period.

                  (b) Within thirty (30) days of the end of the Milestone
Period, the Company shall deliver to HP written notice of whether the
License Revenues Milestone has been met. In the event that the Company
determines that the License Revenues Milestone has not been met and HP
disagrees with such determination, HP shall deliver written notice to the
Company, within thirty (30) days of the date of the Company's notice, that
it intends to conduct an audit of the records maintained by the Company
pursuant to Section 5.2(d) of the Alliance Agreement. Thereafter, HP shall
select an independent certified public accounting firm (the "HP ACCOUNTING
Firm"), and the Company shall allow the HP Accounting Firm, at HP's sole
expense, to inspect such records and make a determination, within thirty
(30) days of the date of HP's notice, of whether the License Revenues
Milestone has been met. In the event that the HP Accounting Firm determines
that the License Revenues Milestone has been met, the Company and HP shall
select a mutually agreeable independent public accounting firm (which
accounting firm shall not be the HP Accounting Firm or an accounting firm
which conducts audits of the financial statements of the Company or HP)
(the "INDEPENDENT ACCOUNTING FIRM"), and the Company shall allow the
Independent Accounting Firm, with the expenses thereof shared equally by
the Company and HP, to inspect such records and make a determination,
within thirty (30) days of the date of the determination by the HP
Accounting Firm, of whether the License Revenues Milestone has been met.
The determination of the Independent Accounting Firm shall be final and
binding on the Company and HP. The HP Accounting Firm and the Independent
Accounting Firm shall be bound in confidence not to disclose any
information except to the extent necessary to inform the Company and HP of
whether the License Revenues Milestone has been met.

         Section 2.  Exercise of Warrant.

                  (a) Subject to the terms and conditions hereof, this
Warrant may be exercised by Holder, in whole or in part, during normal
business hours on any business day on or after the date hereof and prior to
5:00 P.M., Pacific Time, on the Expiration Date by (i) delivery to the
Company of a duly executed written notice, in the form of the subscription
notice attached as Exhibit A hereto (the "EXERCISE NOTICE"), of such
Holder's election to exercise this Warrant, which Exercise Notice shall
specify the number of Warrant Shares to be purchased, (ii) payment to the
Company of an amount equal to the Exercise Price, if any, multiplied by the
number of Warrant Shares as to which the Warrant is being exercised (the
"AGGREGATE EXERCISE PRICE") in cash or by check or wire transfer of
immediately available funds and (iii) delivery to the Company of this
Warrant.

                  (b) In lieu of making the cash payment equal to the
Aggregate Exercise Price otherwise contemplated to be made to the Company
in Section 2(a), Holder may elect to instead receive upon its exercise of
this Warrant the net number of Warrant Shares computed using the following
formula:
                                X = Y (A-B)
                                    --------
                                       A
                  where

                           X  =     the net number of Warrant Shares to be
                                    issued to Holder under said formula.

                           Y  =     the number of Warrant Shares
                                    otherwise issuable to Holder pursuant
                                    to its exercise of this Warrant.

                           A  =     the last reported sale price on the
                                    Nasdaq National Market, or such other
                                    national securities exchange or market
                                    on which the Common Stock is then
                                    listed, of a share of Common Stock on
                                    the date immediately preceding the date
                                    of the Exercise Notice.

                           B  =     the Exercise Price in effect at the
                                    time of exercise.

                  (c) In the event of any exercise of the rights
represented by this Warrant in compliance with Section 2, a certificate or
certificates for the Warrant Shares so purchased, in such denominations as
may be requested by Holder and registered in the name of Holder, shall be
delivered at the Company's expense to such Holder as soon as reasonably
practicable, and in no event later than ten (10) business days, after the
Company's receipt of the Exercise Notice, the Aggregate Exercise Price, if
any, and this Warrant. Upon exercise, in whole or in part, of this Warrant
in accordance with Section 2, Holder shall be deemed for all corporate
purposes to have become holder of record of the Warrant Shares with respect
to which the Warrant has been exercised immediately prior to the close of
business on the date on which Holder is deemed to have exercised the
Warrant in accordance with Section 2, irrespective of the date of delivery
of certificates evidencing such Warrant Shares.

                  (d) Unless the rights represented by this Warrant shall
have expired or shall have been fully exercised, the Company shall, as soon
as reasonably practicable and in no event later than ten (10) business days
after any exercise and at its own expense, issue a new Warrant
substantially identical to the Warrant exercised, except it shall represent
rights to purchase the number of Warrant Shares purchasable immediately
prior to such exercise under the Warrant exercised, less the number of
Warrant Shares with respect to which such Warrant is exercised.

                  (e) No fractional shares of Common Stock are to be issued
upon the exercise of this Warrant, but rather the number of shares of
Common Stock issued upon exercise of this Warrant shall be rounded up to
the nearest whole number.

         Section 3.  Covenants as to Common Stock.  The Company hereby
covenants and agrees as follows:

                  (a) During the period within which the rights represented
by this Warrant may be exercised, the Company will at all times have
authorized and reserved, solely for issuance and delivery upon exercise of
this Warrant, such number of shares of Common Stock then issuable upon the
exercise of this Warrant.

                  (b) Prior to exercise of this Warrant, the Company shall
secure the listing of the Warrant Shares upon each national securities
exchange or market, if any, upon which shares of Common Stock are then
listed (subject to official notice of issuance upon exercise of this
Warrant) and shall maintain, so long as any other shares of Common Stock
shall be so listed, such listing of the Warrant Shares; and the Company
shall list on each national securities exchange or market, and shall
maintain such listing of, any other shares of capital stock of the Company
issuable upon the exercise of this Warrant if and so long as any shares of
the same class shall be listed on such national securities exchange or
market.

                  (c) The Company will take such actions as may be
necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable shares of Common Stock upon the exercise
of this Warrant.

                  (d) All Warrant Shares that may be issued upon the
exercise of rights represented by this Warrant and payment of the Exercise
Price, if any, all as set forth herein, will be free from all taxes, liens,
security interests, charges and other encumbrances or restrictions on sale
created by the Company, and free and clear of all preemptive rights granted
by the Company or arising under Delaware corporate law. The Company agrees
that its issuance of this Warrant shall constitute full authority to its
officers who are charged with the duty of executing stock certificates to
execute and issue the necessary certificates for shares of Common Stock
upon the exercise of this Warrant.

         Section 4. Taxes. The Company shall pay any and all transfer or
stamp taxes or other similar governmental charges which may be payable with
respect to the issuance and delivery of Warrant Shares upon exercise of
this Warrant.

         Section 5. Holder Not Deemed a Stockholder. This Warrant shall not
entitle Holder to vote or receive dividends or to any other rights of a
stockholder of the Company, including, without limitation, the right to
vote, give or withhold consent to any corporate action (whether a
reorganization, issue of stock, reclassification of stock, consolidation,
merger, conveyance or otherwise). In addition, nothing contained in this
Warrant shall be construed as imposing any liabilities on Holder to
purchase any securities (upon exercise of this Warrant or otherwise) or as
a stockholder of the Company, whether such liabilities are asserted by the
Company or by creditors of the Company.

         Section 6. Representations of Holder. Holder, by the acceptance
hereof, represents that Holder (a) has received such documents, materials
and information as Holder deems necessary or appropriate for evaluation of
the Warrant and the Warrant Shares, (b) has such knowledge and experience
in financial and business matters that it is capable of evaluating the
merits and risks of its investment in the Warrant and the Warrant Shares,
(c) is an "accredited investor" as such term is defined in Rule 501
promulgated under the Securities Act of 1933, as amended (the "SECURITIES
ACT"), and (d) is acquiring the Warrant and the Warrant Shares solely for
its own account, for investment and not with a view to the distribution or
resale thereof.

         Section 7.  Ownership and Transfer.

                  (a) The Company shall maintain at its principal executive
offices (or such other office or agency of the Company as it may designate
by notice to Holder), a register for this Warrant, in which the Company
shall record the name and address of the Person in whose name this Warrant
has been issued, as well as the name and address of each permitted
transferee. The Company may treat the Person in whose name any Warrant is
registered on the register as the owner and holder thereof for all
purposes, but in all events recognizing any transfers made in accordance
with the terms of this Warrant. "PERSON" means an individual, partnership,
corporation, limited liability company, association, joint stock company,
trust, joint venture, unincorporated organization or other entity, or a
governmental entity or any department, agency or political subdivision
thereof.

                  (b) This Warrant and the rights granted to Holder are
transferable, in whole or in part, upon surrender of this Warrant, together
with a properly executed warrant power in the form of Exhibit B attached
hereto, only to an Affiliate of HP; provided, however, that any transfer or
assignment shall be subject to the conditions set forth in Sections 6(c)
and (d) below. For purposes of this Warrant, "AFFILIATE" shall have such
meaning as is ascribed to it in Rule 405 promulgated under the Securities
Act.

                  (c) Holder represents and warrants that it understands
that, except as set forth in the Stockholder Rights Agreement dated as of
June 30, 2000 by and between the Company and HP (the "STOCKHOLDER RIGHTS
AGREEMENT"), the Company is under no obligation to register this Warrant or
the Warrant Shares under the Securities Act and that the Warrant and
Warrant Shares will be characterized as "restricted securities" under the
Securities Act because they are being acquired from the Company in a
transaction not involving a public offering. Holder also represents and
warrants that it understands that neither the Warrant nor the Warrant
Shares may be offered for sale, sold, assigned or transferred unless (a)
subsequently registered pursuant to an effective registration statement
under the Securities Act, or (b) such Holder shall have delivered to the
Company a written opinion of counsel, in form, substance and scope
reasonably acceptable to the Company, to the effect that the securities to
be offered for sale, sold, assigned or transferred are being offered for
sale, sold, assigned or transferred pursuant to an exemption from such
registration; provided, however, that such opinion of counsel will not be
required by the Company for any dispositions made by the Holder (i) to any
of its Affiliates or (ii) pursuant to Rule 144 promulgated under the
Securities Act, provided that prior to such disposition the Company
receives from the Holder and the relevant broker, if applicable, such
certifications as are necessary for the Company to confirm that such
disposition is exempt from registration pursuant to Rule 144 or otherwise,
as the case may be.

                  (d) In addition to the transfer restrictions set forth in
Section 7(c), Holder shall not sell, assign or transfer any Warrant Shares
to any Person other than an Affiliate of HP prior to the first anniversary
of the original issuance of such Warrant Shares. This transfer restriction
shall expire upon a Change in Control (as defined in Section 1.1(a) of the
Stockholder Rights Agreement) of the Company. Holder acknowledges that the
Warrant Shares are also subject to the transfer restrictions set forth in
Section 3 of in the Stockholder Rights Agreement.

                  (e) Any certificates representing Warrant Shares issued
in accordance with this Warrant shall bear a legend substantially in the
following form:

         THE SHARES OF COMMON STOCK OF NOVADIGM, INC. (THE "COMPANY")
         REPRESENTED BY THIS CERTIFICATE (THE "SHARES") HAVE NOT BEEN
         REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
         "SECURITIES ACT"), AND MAY NOT BE OFFERED FOR SALE, SOLD,
         TRANSFERRED OR ASSIGNED EXCEPT PURSUANT TO AN EFFECTIVE
         REGISTRATION STATEMENT FOR SUCH SHARES UNDER THE SECURITIES ACT,
         UNLESS HOLDER HEREOF SHALL HAVE DELIVERED TO THE COMPANY A WRITTEN
         OPINION OF COUNSEL, IN FORM, SUBSTANCE AND SCOPE REASONABLY
         ACCEPTABLE TO THE COMPANY TO THE EFFECT THAT THE SHARES TO BE
         OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED ARE BEING OFFERED
         FOR SALE, SOLD, TRANSFERRED OR ASSIGNED PURSUANT TO AN EXEMPTION
         FROM SUCH REGISTRATION; PROVIDED, HOWEVER, THAT SUCH OPINION OF
         COUNSEL WILL NOT BE REQUIRED BY THE COMPANY FOR ANY DISPOSITIONS
         MADE BY THE HOLDER (I) TO ANY OF ITS AFFILIATES (AS SUCH TERM IS
         DEFINED IN RULE 405 PROMULGATED UNDER THE SECURITIES ACT OR (II)
         PURSUANT TO RULE 144 PROMULGATED UNDER THE SECURITIES ACT,
         PROVIDED THAT PRIOR TO SUCH DISPOSITION THE COMPANY RECEIVES FROM
         THE HOLDER AND THE RELEVANT BROKER, IF APPLICABLE, SUCH
         CERTIFICATIONS AS ARE NECESSARY FOR THE COMPANY TO CONFIRM THAT
         SUCH DISPOSITION IS EXEMPT FROM REGISTRATION PURSUANT TO RULE 144
         OR OTHERWISE, AS THE CASE MAY BE. FURTHERMORE, THE SHARES (A) MAY
         NOT BE SOLD, ASSIGNED OR TRANSFERRED PRIOR TO THE FIRST
         ANNIVERSARY OF THE COMPANY'S ORIGINAL ISSUANCE OF SUCH SHARES AND
         (B) ARE SUBJECT TO THE TRANSFER RESTRICTIONS SET FORTH IN THE
         STOCKHOLDER RIGHTS AGREEMENT DATED AS OF JUNE 30, 2000 BY AND
         BETWEEN THE COMPANY AND HEWLETT-PACKARD COMPANY (THE "STOCKHOLDER
         RIGHTS AGREEMENT"). THE TRANSFER RESTRICTION DESCRIBED IN CLAUSE
         (A) OF THE FOREGOING SENTENCE SHALL EXPIRE UPON A CHANGE OF
         CONTROL OF THE COMPANY (AS DEFINED IN THE STOCKHOLDER RIGHTS
         AGREEMENT).

         Section 8. Adjustment of Exercise Price and Number of Warrant
Shares. The Exercise Price and the number of Warrant Shares issuable upon
exercise of this Warrant shall be adjusted from time to time as follows:

                  (a) Subdivision or Combination of Shares. If the Company
at any time effects a subdivision or combination of the outstanding Common
Stock (through a stock split, reverse stock split or otherwise), the
Exercise Price in effect immediately prior to such event shall be decreased
and the number of Warrant Shares shall be increased, in the case of a
subdivision, or the Exercise Price in effect immediately prior to such
event shall be increased and the number of Warrant Shares shall be
decreased, in the case of a combination, in the same proportions as the
Common Stock is subdivided or combined, in each case effective
automatically upon, and simultaneously with, the effectiveness of the
subdivision or combination which gives rise to the adjustment.

                  (b) Stock Dividends. If the Company at any time pays a
dividend, or makes any other distribution, to holders of Common Stock
payable in shares of Common Stock, or fixes a record date for the
determination of holders of Common Stock entitled to receive a dividend or
other distribution payable in shares of Common Stock, the Exercise Price
shall be decreased by multiplying it by a fraction:

                           (i) the numerator of which shall be the total
         number of shares of Common Stock outstanding immediately prior to
         such dividend or distribution (the "PRIOR OUTSTANDING SHARES"),
         and

                          (ii) the denominator of which shall be the total
        number of shares of Common Stock outstanding immediately after such
        dividend or distribution (plus, if the Company paid cash instead of
        fractional shares otherwise issuable in such dividend or
        distribution, the number of additional shares which would have been
        outstanding had the Company issued fractional shares instead of
        cash) (the "SUBSEQUENT OUTSTANDING SHARES"),

and the number of Warrant Shares shall be increased by multiplying it by a
fraction, the numerator of which shall be the Subsequent Outstanding Shares
and the denominator of which shall be the Prior Outstanding Shares, in each
case effective automatically as of the date of the effectiveness of such
dividend or distribution.

                  (c) Reclassification, Consolidation or Merger. If at any
time, as a result of:

                           (i) a capital reorganization or reclassification
                  (other than a subdivision, combination or dividend
                  provided for elsewhere in this Section 8), or

                           (ii) a merger or consolidation of the Company
                  with another corporation (whether or not the Company is
                  the surviving corporation),

the Common Stock issuable upon exercise of this Warrant shall be changed
into or exchanged for the same or a different number of shares of any class
or classes of stock of the Company or any other corporation, or other
securities convertible into such shares, then, as a part of such
reorganization, reclassification, merger or consolidation, appropriate
adjustments shall be made in the terms of this Warrant (or of any
securities into which this Warrant is exercised or for which this Warrant
is exchanged), so that Holder of this Warrant or of such substitute
securities shall thereafter be entitled to receive, upon exercise of this
Warrant or of such substitute securities, the kind and amount of shares of
stock, other securities, money and property which such Holder would have
received at the time of such capital reorganization, reclassification,
merger, or consolidation, if such Holder had exercised this Warrant
immediately prior to such capital reorganization, reclassification, merger,
or consolidation. This Warrant, including, without limitation, the
provisions of this Section 8(c), will be binding upon any entity succeeding
to the Company by merger, consolidation or acquisition of all or
substantially all of the Company's assets. The provisions of this Section
8(c) shall similarly apply to (x) successive capital reorganizations,
reclassifications, mergers and consolidations and (y) the securities of any
other corporation that are at the time receivable upon the exercise of this
Warrant.

                  (d) Certain Events And No Impairment. If any event occurs
of the type contemplated by the provisions of this Section 8, but not
expressly provided for by such provisions, then the Company's Board of
Directors will make an appropriate adjustment in the Exercise Price and the
number of Warrant Shares obtainable upon exercise of this Warrant so as to
protect the rights of Holder.

                  (e) Certificate as to Adjustments. Upon the occurrence of
each adjustment or readjustment pursuant to this Section 8, the Company at
its expense shall promptly compute such adjustment or readjustment in
accordance with the terms hereof and furnish to each Holder of this Warrant
a certificate setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment is based. The
Company shall, upon the written request, at any time, of any such Holder,
furnish or cause to be furnished to such Holder a like certificate setting
forth: (i) such adjustments and readjustments; (ii) the Exercise Price at
the time in effect; and (iii) the number of Warrant Shares and the amount,
if any, of other property that at the time would be received upon the
exercise of the Warrant.

         Section 9. Lost, Stolen, Mutilated or Destroyed Warrant. If this
Warrant is lost, stolen, mutilated or destroyed, the Company shall, on
receipt of evidence reasonably satisfactory to the Company of the ownership
of, and the loss, theft, mutilation or destruction of, this Warrant and of
an indemnity reasonably satisfactory to the Company (and in the case of
mutilation, upon surrender and cancellation of this Warrant), issue in lieu
thereof a new Warrant of like denomination and tenor as the Warrant so
lost, stolen, mutilated or destroyed.

         Section 10. Notice. Any notices required, permitted or desired to
be given under the terms of this Warrant shall be delivered personally,
sent by overnight courier or mailed, registered or certified mail, return
receipt requested to the following addresses, and shall be deemed to have
been received on the day of personal delivery, one business day after
deposit with a nationally recognized overnight courier or five business
days after deposit in the mail:

                  If to the Company:

                           Novadigm, Inc.
                           One International Blvd.
                           Suite 200
                           Mahwah, New Jersey 07495
                           Attention:       Albion J. Fitzgerald
                                            Robert B. Anderson

                  With a copy to:

                           Katten Muchin Zavis
                           525 West Monroe Street
                           Suite 1600
                           Chicago, Illinois 60661
                           Attention:       Mark D. Wood, Esq.

                  If to Holder:

                           Hewlett-Packard Company
                           3000 Hanover Street, MS 20 BQ
                           Palo Alto, California 94304
                           Attention:       Charles N. Charnas, Esq.

                  With copies to:

                           Hewlett-Packard Company
                           3000 Hanover Street, MS 20 BT
                           Palo Alto, California 94304
                           Attention:       C.D. Portfolio

                           Skadden, Arps, Slate, Meagher & Flom LLP
                           525 University Avenue
                           Palo Alto, California 94301
                           Attention:       Kenton J. King, Esq.

or at such other address as any party may specify in a written notice given
to the other party hereto, including upon the transfer of this Warrant.

         Section 11.  Notices of Record Date.  In the event:

                  (a) the Company shall take a record of holders of its
Common Stock (or other stock or securities at the time receivable upon the
exercise of this Warrant), for the purpose of entitling them to receive any
dividend or other distribution; or

                  (b) of any consolidation or merger of the Company with or
into another corporation, any capital reorganization of the Company, any
reclassification of the capital stock of the Company, or any conveyance of
all or substantially all of the assets of the Company to another
corporation in which holders of the Company's stock are to receive stock,
securities or property of another corporation; or

                  (c) of any voluntary dissolution, liquidation or
winding-up of the Company; or

                  (d) of the occurrence of any event of the type
contemplated by the provisions of Section 8, but not expressly provided for
by such provisions,

then, and in each such case, the Company will mail or cause to be mailed to
Holder a notice specifying, as the case may be, (i) the date on which a
record is to be taken for the purpose of such dividend or distribution,
(ii) the date on which such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation or winding-up
is to take place, or (iii) the date on which such occurrence of any event
of the type contemplated by the provisions of Section 8, but not expressly
provided for by such provisions, is to take place, and the time, if any is
to be fixed, as of which holders of record of Common Stock (or such stock
or securities as at the time are receivable upon the exercise of this
Warrant) shall be entitled to exchange their shares of Common Stock (or
such other stock or securities) for securities or other property
deliverable upon such reorganization, reclassification, consolidation,
merger, conveyance, dissolution, liquidation, winding-up or other event.
Such notice shall be delivered at least fifteen (15) days prior to the date
therein specified.

         Section 12. Miscellaneous. This Warrant and any term hereof may be
changed, waived, discharged, or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver,
discharge or termination is sought. The headings in this Warrant are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof. This Warrant shall be governed by and interpreted under the
laws of the State of Delaware. This Warrant, in all events, shall be wholly
void and of no effect after 5:00 p.m., Pacific time, on the Expiration
Date, except that, notwithstanding any other provisions hereof, the
provisions of Section 7 shall continue in full force and effect after such
date as to any Warrant Shares or other securities issued upon the exercise
of this Warrant.

         Section 13. Successors and Assigns. The terms and provisions of
this Warrant shall inure to the benefit of, and be binding upon, the
Company and the Holder and their respective successors and permitted
assigns.



                            EXHIBIT A TO WARRANT

                             SUBSCRIPTION FORM
             TO BE EXECUTED BY HOLDER TO EXERCISE THIS WARRANT
                               NOVADIGM, INC.

         The undersigned holder hereby irrevocably exercises the right to
purchase ___________ of the shares of Common Stock ("WARRANT SHARES") of
Novadigm, Inc., a Delaware corporation (the "COMPANY"), evidenced by the
attached Warrant (the "WARRANT") and (check the applicable box):

?        Tenders herewith payment of the Aggregate Exercise Price, if any,
         in full in the form of cash or a check or wire transfer in
         immediately available funds in the amount of $__________ for
         __________ Warrant Shares.

?        Elects the net issue exercise option pursuant to Section 2(b) of
         the Warrant with respect to __________ Warrant Shares, and
         accordingly requests delivery of a net of __________ Warrant
         Shares according to the following calculation:

         X = Y (A-B)                ( ____) = ( ____) [( ______)-- ( ____)]
             -------                      ________________________
                A                              ( ------ )


                  X =      the net number of Warrant Shares to be issued to
                           Holder under said formula.

                  Y =      the number of Warrant Shares otherwise
                           issuable to Holder pursuant to its exercise of
                           this Warrant.

                  A =      the last reported sale price on the Nasdaq
                           National Market, or such other national
                           securities exchange or market on which the
                           Common Stock is then listed, of a share of
                           Common Stock on the date immediately preceding
                           the date of this Exercise Notice.

                  B =      the Exercise Price in effect at the time
                           of exercise.

Date: _______________  ___, ______



Name of Holder

Signature:
Name:
Title:
Address:____          ________________________________




  Capitalized terms used herein and not otherwise defined shall have the
  respective meanings set forth in the Warrant.




                            EXHIBIT B TO WARRANT

                           FORM OF WARRANT POWER


          FOR VALUE RECEIVED, the undersigned does hereby assign and
  transfer to _____________________, Federal Identification No.
  _________________________, a warrant to purchase ___________________
  shares of the Common Stock of Novadigm, Inc., a Delaware corporation,
  represented by warrant certificate no. , standing in the name of the
  undersigned on the books of said corporation. The undersigned does hereby
  irrevocably constitute and appoint ______________, attorney to transfer
  the warrants of said corporation, with full power of substitution in the
  premises.



  Dated: _______________________, 200__



                                                   ---------------------------
                                                   By:
                                                   Name:
                                                   Title:




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>3
<FILENAME>0003.txt
<DESCRIPTION>EXHIBIT 2 - STOCKHOLDER RIGHTS AGREEMENT
<TEXT>



                                                                     EXHIBIT 2


                        STOCKHOLDER RIGHTS AGREEMENT

         This Stockholder Rights Agreement (this "AGREEMENT"), dated as of
June 30, 2000 (the "EFFECTIVE DATE"), is between Novadigm, Inc., a Delaware
corporation (the "COMPANY"), and Hewlett-Packard Company, a Delaware
corporation (the "STOCKHOLDER"). Unless otherwise provided herein, all
capitalized terms shall have the meanings set forth in that certain
Alliance Agreement, dated as of even date herewith, by and between the
Company and the Stockholder (the "ALLIANCE AGREEMENT").

                                  RECITALS

         A. In connection with the Alliance Agreement, the Company has
agreed to issue to the Stockholder 940,000 shares (the "CONSIDERATION
SHARES") of the Common Stock, par value $0.001 per share, of the Company
("COMMON STOCK") and a Warrant (the "WARRANT") to purchase 250,000 shares
(the "WARRANT SHARES") of Common Stock, on the terms and conditions set
forth in the Alliance Agreement.

         B. The Stockholder desires to enter into the Alliance Agreement
and receive the Consideration Shares and the Warrant on the terms and
conditions set forth in the Alliance Agreement, provided it receives the
registration and other rights set forth in this Agreement.

         C. The Company is willing to provide such rights requested by the
Stockholder, subject to the limitations set forth in this Agreement.

                                 AGREEMENT

         In consideration of the foregoing recitals, the mutual promises
hereinafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:

1.       DEFINITIONS.

1.1      Definitions.  For purposes of this Agreement:

                  (a) "CHANGE IN CONTROL" means (i) a transaction or series
of related transactions which results in (A) the Company's stockholders
immediately prior to such transaction or series of related transactions not
holding Voting Stock representing at least sixty percent (60%) of the
voting power of the surviving or continuing entity or (B) a sale,
conveyance or disposition of all or substantially all of the assets of the
Company, unless the Company's stockholders immediately prior to such
transaction or series of related transactions will hold Voting Stock
representing at least sixty percent (60%) of the voting power of the
purchasing entity, or (ii) the approval by the stockholders of the Company
of a complete liquidation or dissolution of the Company.

                  (b) "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.

                  (c) "FORM S-3" means such form under the Securities Act
as is in effect on the date hereof or any successor registration form under
the Securities Act subsequently adopted by the SEC that permits inclusion
or incorporation of substantial information by reference to other documents
filed by the Company with the SEC.

                  (d) "HOLDER" means the Stockholder, for so long as it
owns any Registrable Securities, and each of its successors and permitted
assigns and transferees who become registered owners of Registrable
Securities in accordance with the terms of this Agreement.

                  (e) "PERSON" means a corporation, an association, a
partnership, an organization, a business, an individual, a governmental or
political subdivision thereof or a governmental agency.

                  (f) "QUALIFIED PURCHASER" means a Person that (i)
represents that it is acquiring any securities of the Company in the
ordinary course of business and not with the purpose nor with the effect of
changing or influencing the control of the Company, nor in connection with
or as a participant in any transaction having such purpose or effect, and
(ii) is (A) a broker or dealer registered under Section 15 of the Exchange
Act; (B) a bank as defined in Section 3(a)(6) of the Exchange Act; (C) an
insurance company as defined in Section 3(a)(19) of the Exchange Act; (D)
an investment company registered under Section 8 of the Investment Company
Act of 1940, as amended; (E) registered as an investment advisor under
Section 203 of the Investment Advisers Act of 1940, as amended, or under
the laws of any state; (F) an employee benefit plan as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), that is subject to the provisions of ERISA, or any such plan
that is not subject to ERISA that is maintained primarily for the benefit
of the employees of a state or local government or instrumentality, or an
endowment fund; or (G) a savings association as defied in Section 3(b) of
the Federal Deposit Insurance Act.

                  (g) "REGISTRABLE SECURITIES" means (i) the Consideration
Shares; (ii) the Warrant Shares; and (iii) any shares of Common Stock or
other securities of the Company issued as (or issuable upon the conversion
or exercise of any warrant, right or other security that is issued as) a
dividend or other distribution with respect to, or in exchange for, or in
replacement of, the Consideration Shares or Warrant Shares; provided,
however, that such securities shall cease to be Registrable Securities when
such securities (A) are sold, transferred or assigned in violation of this
Agreement or (B) have been sold in a public offering, whether pursuant to
Rule 144 promulgated under the Securities Act ("RULE 144") in a registered
offering or otherwise.

                  (h) "REGISTRATION STATEMENT" means a Demand Registration
Statement (as defined herein) or Piggyback Registration Statement (as
defined herein), as the case may be.

                  (i) "SECURITIES ACT" means the Securities Act of 1933, as
amended.

                  (j) "SEC" means the Securities and Exchange Commission or
any other Federal agency at the time administering the Securities Act.

                  (k) "SIGNIFICANT EVENT" means any of (i) the acquisition
by a Person or "13D Group" (as defined below), other than the Stockholder,
of beneficial ownership of Voting Stock representing twenty percent (20%)
or more of the then-outstanding Voting Stock; (ii) the announcement or
commencement by a Person or 13D Group, other than the Stockholder, of a
tender or exchange offer to acquire Voting Stock which, if successful,
would result in such Person or 13D Group owning, when combined with any
other Voting Stock owned by such Person or 13D Group, twenty percent (20%)
or more of the then-outstanding Voting Stock; or (iii) the entering into by
the Company, or publicly announced determination by the Company to seek to
enter into, any merger, sale or other business combination transaction,
other than a transaction with the Stockholder, pursuant to which (A) the
outstanding shares of Common Stock would be converted into cash or
securities of another Person or 13D Group, other than the Stockholder, (B)
fifty percent (50%) or more of the then-outstanding shares of Common Stock
would be owned by Persons other than the then-current holders of shares of
Common Stock or (C) would result in all or substantially all of the
Company's assets being sold to any Person or 13D Group, other than the
Stockholder (unless the Company's stockholders immediately prior to such
sale of all or substantially all of the Company's assets will hold Voting
Stock representing at least fifty percent (50%) of the voting power of the
Person or 13D Group purchasing such assets).

                  (l) "13D GROUP" means any group of Persons formed for the
purposes of acquiring, holding, voting or disposing of Voting Stock which
would be required under Section 13(d) of the Exchange Act and the rules and
regulations thereunder to file a statement on Schedule 13D with the SEC as
a "person" within the meaning of Section 13(d)(3) of the Exchange Act if
such group beneficially owned voting securities representing more than five
percent (5% ) of the Total Voting Power.

                  (m) "TOTAL VOTING POWER" means the total number of votes
which may be cast in the election of directors of the Company at any
meeting of the stockholders of the Company, if all Voting Stock was
represented and voted to the fullest extent possible at such meeting, other
than the votes that may be cast only upon the happening of a contingency
that has not occurred as of the relevant time;

                  (n) "VOTING POWER" of any Voting Stock means the number
of votes such Voting Stock is entitled to cast for directors of the Company
at any meeting of the stockholders of the Company.

                  (o) "VOTING STOCK" means the Common Stock or other
securities issued by the Company ordinarily entitled to vote in the
election of the board of directors of the Company (other than securities
having such power only upon the happening of a contingency that has not
occurred as of the relevant time).

2.       REGISTRATION.

         2.1      Demand Registration.

                  (a) Request by Holders. Upon the written request from
Holders of at least fifty percent (50%) of the Registrable Securities then
outstanding (the "INITIATING HOLDERS") requesting that the Company effect a
registration of all or part of such Initiating Holders' Registrable
Securities and specifying the intended method or methods of disposition
thereof (which may include block trades) (the "REGISTRATION REQUEST"), then
the Company shall, within fifteen (15) days of the receipt of such
Registration Request, give written notice of such request ("REQUEST
NOTICE") to all Holders (other than Initiating Holders) and, thereafter,
shall prepare and, as soon as reasonably practicable, file with the SEC a
registration statement on Form S-3 (a "DEMAND REGISTRATION STATEMENT")
registering the disposition in a non-underwritten offering pursuant to Rule
415 promulgated under the Securities Act ("RULE 415"), in accordance with
the reasonably intended method or methods of disposition specified in the
Registration Request of all Registrable Securities that Holders request to
be registered and included in such Demand Registration Statement in
accordance with this Section 2.1(a) (a "DEMAND REGISTRATION").
Notwithstanding the foregoing, in no event may Initiating Holders deliver a
request that the Company effect a Demand Registration pursuant to this
Section 2.1(a) earlier than ninety (90) days prior to the first anniversary
of the Effective Date. In the event Form S-3 is unavailable for such a
registration, the Company shall use such other form as is available, in the
Company's reasonable judgment, to register the public resale of the
Registrable Securities in a non-underwritten offering pursuant to Rule 415.
To be included in the Demand Registration Statement, any Holder (other than
Initiating Holders) must provide, within twenty (20) days after receipt of
the Request Notice, written notice to the Company of the number of shares
of Registrable Securities such Holder has elected to include in the Demand
Registration Statement (which notice shall specify the intended method or
methods of disposition of such Registrable Securities, which may include
block trades). The Company shall use its commercially reasonable efforts to
have the Demand Registration Statement declared effective by the SEC as
soon as reasonably practicable after it files the Demand Registration
Statement with the SEC; provided, however, that the Company shall have no
obligation under this Section 2.1(a) to seek to have the Demand
Registration Statement declared effective by the SEC prior to the first
anniversary of the Effective Date. The Stockholder's rights under Section
2.1 are subject to the provisions of Section 3.

                  (b) Number of Demand Registrations. The Company shall not
be required to effect a Demand Registration after the Company has effected
three (3) Demand Registrations or when all the Registrable Securities are
saleable without registration pursuant to Rule 144(k) promulgated under the
Securities Act ("RULE 144(K)").

                  (c) Deferral. The Company shall be entitled to postpone
the filing of any Demand Registration Statement otherwise required to be
prepared and filed by the Company pursuant to this Section 2.1, delay a
request for effectiveness of any such Demand Registration Statement, or
suspend the use of any effective Demand Registration Statement under this
Section 2.1, for a reasonable period of time, but not in excess of
forty-five (45) days (a "DELAY PERIOD"), if the board of directors of the
Company determines that, in its good faith judgment, the registration and
distribution of the Registrable Securities covered or to be covered by such
Demand Registration Statement would be materially detrimental to the
Company or would require the disclosure of material, non-public information
by the Company in the Demand Registration Statement with respect to which
the board of directors of the Company believes that the Company has a bona
fide business purpose for preserving confidentiality, and the Company
promptly gives the Initiating Holders a written certificate signed by an
executive officer of the Company notifying such Holders of such
determination and an approximation of the period of the anticipated delay;
provided, however, that (i) the aggregate number of days included in all
Delay Periods during any consecutive twelve (12) months shall not exceed
the aggregate of ninety (90) days and (ii) a period of at least ninety (90)
days shall elapse between the termination of any Delay Period and the
commencement of the immediately succeeding Delay Period. If the Company
shall so postpone the filing of a Demand Registration Statement, the
Initiating Holders shall have the right to withdraw the Request Notice by
giving written notice within forty-five (45) days after receipt of the
notice of postponement or, if earlier, the termination of such Delay Period
(and, in the event of such withdrawal, such request shall not be counted
for purposes of determining the number of Demand Registrations which the
Company is obligated to effect pursuant to Section 2.1(b)). The time period
for which the Company is required to maintain the effectiveness of any
Demand Registration Statement shall be extended by the aggregate number of
days of all Delay Periods during such registration. The Company shall not
be entitled to initiate a Delay Period unless it shall (A) to the extent
permitted by agreements with other security holders of the Company,
concurrently prohibit sales by such other security holders under
registration statements covering securities held by such other security
holders and (B) in the case of a delay arising as a result of the potential
for premature disclosure of material information, in accordance with the
Company's policies from time to time in effect, forbid purchases and sales
in the open market by directors and executive officers of the Company
during such Delay Period. Upon receipt of a written notice from the Company
of a Delay Period, the Holders shall forthwith discontinue disposition of
all Registrable Securities pursuant to the Demand Registration Statement
and suspend use of any prospectus forming a part thereof until the Company
notifies the Holders that the Delay Period is no longer in effect, and, if
so directed by the Company, deliver to the Company all copies in their
possession of any such prospectus.

                  (d) Effective Registration Statement. The Company shall
use its commercially reasonable efforts to maintain the effectiveness of a
Demand Registration Statement until the earlier of (i) one hundred twenty
(120) days after the effective date thereof or (ii) when all Registrable
Securities covered by such Demand Registration Statement have been disposed
of pursuant to the Demand Registration Statement or otherwise cease to be
Registrable Securities (a "REGISTRATION PERIOD"). A Demand Registration
shall not be deemed to have been effected (A) unless a Demand Registration
Statement with respect thereto has become effective, provided, however,
that a Demand Registration which does not become effective after the
Company has filed a Demand Registration Statement with respect thereto
solely by reason of the refusal to proceed of the Initiating Holders (other
than a refusal to proceed based upon the written advice of counsel relating
to a legal matter with respect to the Company) shall be deemed to have been
effected by the Company at the request of the Initiating Holders unless the
Initiating Holders shall have elected to pay all expenses in connection
with such Demand Registration or (B) if, after it has become effective,
such Demand Registration becomes subject to any stop order or injunction or
similar order or requirement of the SEC or other governmental agency or
court for any reason.

         2.2      Piggyback Registrations.

                  (a) Notification and Rights. The Company shall provide
written notification to all Holders in writing at least thirty (30) days
prior to filing any registration statement under the Securities Act for
purposes of effecting an underwritten public offering of Common Stock for
the Company's account or the account of others (excluding any registration
statement that registers Common Stock in an underwritten public offering
for issuance solely upon conversion, exercise or exchange of other
securities of the Company) (a "PIGGYBACK REGISTRATION STATEMENT") and will
afford each Holder an opportunity to include in such Piggyback Registration
Statement all or any part of the Registrable Securities then held by such
Holder (a "PIGGYBACK REGISTRATION"); provided, however, the Company shall
have no obligation under this Section 2.2(a) to include Registrable
Securities in a Piggyback Registration Statement declared effective by the
SEC prior to the first anniversary of the Effective Date. Each Holder
desiring to include in a Piggyback Registration Statement all or any part
of the Registrable Securities then held by such Holder shall, within thirty
(30) days after receipt of the above-described notice from the Company, so
notify the Company in writing, and in such notice shall inform the Company
of the number of Registrable Securities such Holder wishes to include in
such Piggyback Registration Statement. The Stockholder's rights under
Section 2.2 are subject to the provisions of Section 3. No Piggyback
Registration effected under this Section 2.2 shall relieve the Company of
its obligation to effect any Demand Registration under Section 2.1, nor
shall any Piggyback Registration be deemed to have been effected pursuant
to Section 2.1.

                  (b) Number of Piggyback Registrations. There shall be no
limit on the number of times the Holders may request registration of
Registrable Securities on a Piggyback Registration Statement under Section
2.2(a).

                  (c) Underwriting. If Holders elect to participate in an
underwritten public offering pursuant to Section 2.2(a), all Holders
proposing to distribute their Registrable Securities through the applicable
Piggyback Registration Statement shall enter into, and perform such
obligations set forth in, an underwriting agreement in customary form,
including, without limitation, indemnification and contribution
obligations, with the managing underwriter(s) selected by the Company for
such underwritten public offering. No Holder may participate in an
underwritten public offering pursuant to Section 2.2(a) unless such Holder
(i) agrees to sell such Holder's Registrable Securities on the basis
provided in such underwriting agreement, (ii) completes and executes all
questionnaires, powers of attorney, indemnities, custody agreements and
other documents required under the terms of such underwriting agreement and
(iii) agrees to pay its pro rata share of all underwriting discounts and
commissions. Notwithstanding any other provision of this Agreement, if the
managing underwriter(s) determine(s) in good faith that inclusion of all or
any of the Registrable Securities in the Piggyback Registration Statement
would materially adversely affect the proposed underwritten public
offering, then the managing underwriter(s) may exclude such shares of
Registrable Securities from the Piggyback Registration Statement and the
underwritten public offering; provided, however, that the number of
Registrable Securities, if any, which are permitted by the managing
underwriter(s) to be included in the Piggyback Registration Statement shall
be allocated among Holders requesting inclusion of their Registrable
Securities in such Piggyback Registration Statement pursuant to Section
2.2(a), based on the number of Registrable Securities that such Holders
request to so include.

2.3      Related Obligations of the Company.  The Company shall have the
following obligations:

                  (a) Company's Expenses. All expenses incurred in
connection with any registration of Registrable Securities pursuant to this
Agreement, including all SEC and "blue sky" registration, filing and
qualification fees, printer's and accounting fees, and fees and
disbursements of counsel for the Company, but excluding fees and
disbursements of counsel for the Holders, any discounts, commissions or
other amounts payable to underwriters or brokers and any transfer taxes
relating to Registrable Securities sold by the Holders, shall be borne by
the Company. Each Holder whose Registrable Securities are registered
pursuant to this Agreement shall bear all discounts, commissions or other
amounts payable to underwriters or brokers and transfer taxes in connection
with the offering or sale of such Registrable Securities by such Holder.
Notwithstanding the foregoing, the Company shall not be required to pay for
any expense of any registration proceedings begun pursuant to Section
2.1(a) if the registration request is subsequently withdrawn at the request
of Initiating Holders who hold a majority of the Registrable Securities to
be included in the Demand Registration Statement, unless such Initiating
Holders elect to consider such withdrawn registration request an effected
Demand Registration for purposes of Section 2.1(b).

                  (b) Amendments and Supplements. The Company shall
promptly prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the applicable Registration
Statement and the prospectus forming a part of such Registration Statement
(the "PROSPECTUS"), as may be necessary to keep such Registration Statement
effective and the Prospectus available for use by the applicable Holders
(i) at all times during the Registration Period, with respect to the Demand
Registration Statement, or (ii) until such time as the Registrable
Securities included in a Piggyback Registration Statement shall have been
disposed of in accordance with the intended methods of disposition set
forth therein.

                  (c) Prospectuses. The Company shall furnish to the
Holders whose Registrable Securities are included in a Registration
Statement such number of copies of (i) the Prospectus included in such
Registration Statement, including all amendments or supplements thereto, as
such Holders may reasonably request and (ii) such other documents as such
Holders may reasonably request in order to facilitate the disposition of
such Registrable Securities.

                  (d) Blue Sky. The Company shall, to the extent
applicable, if at all, use its commercially reasonable efforts to register
and qualify the Registrable Securities covered by a Registration Statement
under such state securities or "blue sky" laws of such states as shall be
reasonably requested by the Holders whose Registrable Securities are
included in such Registration Statement and take any other action which may
be reasonably necessary or advisable to enable such Holders to consummate
the disposition of the Registrable Securities in any states; provided that
the Company shall not be required in connection therewith or as a condition
thereto to qualify to do business, file a general consent to service of
process or subject itself to taxation in any such states in which the
Company is not otherwise required to qualify, provide such consent to
service or pay taxes in order to carry on its business.

                  (e) Notification. The Company shall promptly notify each
Holder whose Registrable Securities are included in a Registration
Statement, at any time when a Prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any event as a
result of which the Prospectus included in such Registration Statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances
then existing. Upon receipt of any such notice, such Holders will suspend
their use of such Prospectus until the Company has amended or supplemented
such Prospectus or filed documents that are incorporated by reference into
such Prospectus to correct such misstatements or omission. Subject to
Section 2.1(c), upon the occurrence of an event contemplated by this
Section 2.3(e), the Company shall use its commercially reasonable efforts
to prepare and file with the SEC a supplement or post-effective amendment
to the applicable Registration Statement or Prospectus or file any other
document so that the Prospectus will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading.

                  (f) Review. The Company shall, a reasonable time prior to
the filing of a Registration Statement, any related Prospectus, any
amendment to such Registration Statement or any amendment or supplement to
a related Prospectus, provide copies of such document to the Holders
requesting that their Registrable Securities be included in such
Registration Statement, and shall not at any time file any amendments to
such Registration Statement, any related Prospectus or any amendment or
supplement to such Registration Statement or a related Prospectus, of which
such Holders shall not have previously been advised and furnished a copy or
to which such Holders shall reasonably object within five (5) days of
receipt thereof.

                  (g) Other Notifications. The Company shall promptly
notify the Holders:

                           (i) when a Registration Statement, the
         Prospectus or any prospectus supplement related thereto or
         post-effective amendment to such Registration Statement has been
         filed, and, with respect to such Registration Statement or any
         post-effective amendment thereto, when the same has become
         effective;

                           (ii) of any  request by the SEC for  amendments
         or  supplements  to a  Registration Statement or a Prospectus
         related thereto or for additional information;

                           (iii) of the issuance by the SEC of any stop
         order suspending the effectiveness of a Registration Statement or
         the initiation of any proceedings by any Person for such purpose;
         and

                           (iv) of the receipt by the Company of any
         notification with respect to the suspension of the qualification
         of any Registrable Securities for sale under the securities or
         "blue sky" laws of any jurisdiction or the initiation of any
         proceedings for such purpose.

                  (h) Stop Orders. The Company shall make every reasonable
effort to obtain the withdrawal of any order suspending to the
effectiveness of a Registration Statement at the earliest possible moment.

                  (i) Basic Financial Information. The Company shall
furnish the following reports to each Holder:

                           (i) Within ninety (90) days after the end of
         each fiscal year of the Company, a consolidated balance sheet of
         the Company and its subsidiaries, if any, as at the end of such
         fiscal year, and consolidated statements of income and cash flows
         of the Company and its subsidiaries, if any, for such year,
         prepared in accordance with generally accepted accounting
         principles consistently applied (except as may be indicated in the
         notes thereto) and setting forth in each case in comparative form
         the figures for the previous fiscal year, all in reasonable detail
         and certified by independent public accountants selected by the
         Company; and

                           (ii) Within forty-five days after the end of the
         first, second, and third quarterly accounting periods in each
         fiscal year of the Company, a consolidated balance sheet of the
         Company and its subsidiaries, if any, as of the end of each such
         quarterly period, and consolidated statements of income and cash
         flows of the Company and its subsidiaries, if any, for such period
         and for the current fiscal year to date, prepared in accordance
         with generally accepted accounting principles consistently applied
         (except as may be indicated in the notes thereto) and setting
         forth in comparative form the figures for the corresponding
         periods of the previous fiscal year, subject to changes resulting
         from normal year-end adjustments and excluding footnote disclosure
         of the type associated with audited financial statements, all in
         reasonable detail and certified by the principal financial or
         accounting officer of the Company.

                  (j)      Miscellaneous.  The Company shall:

                           (i) if required by the Stockholder, use
         commercially reasonable efforts to make available to its security
         holders, as soon as reasonably practicable, an earnings statement
         covering the period of at least twelve (12) months, but not more
         than eighteen (18) months, beginning with the first day of the
         Company's first full calendar quarter after the effective date of
         a Registration Statement, which earnings statement shall satisfy
         the provisions of Section 11(a) of the Securities Act and Rule 158
         thereunder;

                           (ii) provide and cause to be maintained a
         transfer agent and registrar for all Registrable Securities
         included in a Registration Statement from and after a date not
         later than the effective date of such Registration Statement; and

                           (iii) use commercially reasonable efforts to
         list all Registrable Securities included in a Registration
         Statement on any securities exchange on which any of the
         securities of the same class as the Registrable Securities are
         then listed.

2.4 Furnish Information. It shall be a condition precedent to the
obligation of the Company to include any Registrable Securities of a Holder
in a Registration Statement pursuant to Sections 2.1 and 2.2 that such
Holder shall furnish to the Company such information regarding itself, the
securities of the Company, including such Registrable Securities,
beneficially owned by it, and the intended method of disposition of such
Registrable Securities as shall be reasonably requested by the Company to
effect the registration of such Registrable Securities. Each Holder that
has included Registrable Securities in a Registration Statement shall
thereafter furnish promptly to the Company all information regarding such
Holder and the proposed distribution by such Holder of such Registrable
Securities required to make the information previously furnished to the
Company by such Holder not materially misleading.

2.5      Indemnification.  In the event any  Registrable  Securities
are included in a  Registration  Statement in accordance with Section 2.1
or 2.2, then:

                  (a) By the Company. The Company agrees to indemnify and
hold harmless each Holder and each Person, if any, who controls any Holder
within the meaning of either Section 15 of the Securities Act or Section 20
of the Exchange Act from and against all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred by such Holder or controlling Person in connection with
defending or investigating any such action or claim) caused by any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement (or any amendment thereto) pursuant to which such
Holder's Registrable Securities were registered under the Securities Act,
or caused by any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, or caused by any untrue statement or alleged untrue
statement of a material fact contained in any related Prospectus (as
amended or supplemented if the Company shall have furnished any amendments
or supplements thereto), or caused by any omission or alleged omission to
state therein a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading,
except insofar as such losses, claims, damages or liabilities were caused
by any such untrue statement or omission or alleged untrue statement or
omission based upon written information related to such Holder furnished to
the Company by, or on behalf of, such Holder specifically for use therein;
provided, however, that the foregoing indemnity with respect to any
Prospectus shall not inure to the benefit of any Holder from whom the
Person asserting any such losses, claims, damages or liabilities acquired
Registrable Securities, or any Person controlling such Holder, if a copy of
the final Prospectus (as then amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) was not sent by, or
delivered on behalf of, such Holder to such Person at or prior to the
written confirmation of the sale of the Registrable Securities to such
Person and the final Prospectus (as so amended or supplemented) would have
cured the defect giving rise to such loss, claim, damage or liability.

                  (b) By Selling Holders. Each Holder agrees, severally and
not jointly, to indemnify and hold harmless the Company and each of its
directors, each of its officers who sign the applicable Registration
Statement and each Person if any, who controls the Company within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act to the same extent as the foregoing indemnity from the Company
to the Holders pursuant to Section 2.5(a), but only with respect to written
information relating to such Holder furnished to the Company by, or on
behalf of, such Holder specifically for use in the applicable Registration
Statement (or any amendment hereto) or any related Prospectus (or any
amendments or supplement thereto). The indemnity on obligations of any
Holder in connection with any Registration Statement under this Section
2.5(b) shall be limited in amount to the total proceeds received by such
Holder from the sale of Registrable Securities pursuant to such
Registration Statement.

                  (c) Procedures. In case any proceeding (including any
governmental investigation) shall be instituted involving any Person in
respect of which indemnity may be sought pursuant to either Section 2.5(a)
or 2.5(b) above, such Person (the "INDEMNIFIED PARTY") shall promptly
notify the Person against whom such indemnity may be sought (the
"INDEMNIFYING PARTY") in writing and, unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties exists with respect to such proceeding, shall permit
the indemnifying party to assume the defense of such proceeding with
counsel reasonably satisfactory to the indemnified party and the
indemnifying party shall pay the fees and disbursements of such counsel
related to such proceeding. It is understood that if an indemnifying party
does not assume the defense of a proceeding, such indemnifying party shall
not, in connection with such proceeding or related proceedings in the same
jurisdiction, be liable for the fees and expenses of more than one separate
firm (in addition to any local counsel) for (i) the Company, its directors,
its officers who signed the applicable Registration Statement and each
Person, if any, who controls the Company or (ii) all Holders and all
Persons, if any, who control any Holders, as the case may be, and that all
such fees and expenses shall be reimbursed as they are incurred. In such
case involving Holders and such Persons who control Holders, such firm
shall be designated in writing by the Holders of a majority of the
Registrable Securities involved in such case. The indemnified party shall
cooperate with the indemnifying party and shall furnish the indemnifying
party all information available to the indemnified party which relate to
such action or claim that the indemnifying party may reasonably request.
The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent but, if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss
or liability by reason of such settlement or judgment. No indemnifying
party shall, without the prior written consent of the indemnified party,
effect any settlement of any pending or threatened proceeding in respect of
which such indemnified party is or could have been a party and indemnity
could have been sought hereunder by such indemnified party, unless such
settlement includes an unconditional release of such indemnified party from
all liability on claims that are the subject matter of such proceeding.

                  (d) Contribution. If the indemnification provided for in
Section 2.5(a) or 2.5(b) is unavailable to an indemnified party, then each
indemnifying party under such Section, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims,
damages or liabilities in such proportion as is appropriate to reflect the
relative fault of the indemnifying party or parties, on the one hand, and
of the indemnified party or parties, on the other hand, in connection with
the statements or omissions that resulted in such losses, claims, damages
or liabilities, as well as other relevant equitable considerations. The
relative fault of the Company and the Holders shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or by the
Holders and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The
Holders' respective obligations to contribute pursuant to this Section
2.5(d) are several in proportion to the respective number of Registrable
Securities of each Holder that were registered pursuant to the applicable
Registration Statement.

         The Company and each Holder agree that it would not be just or
equitable if contribution pursuant this Section 2.5(d) were determined by
pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in the foregoing
paragraph. The amount paid or payable by an indemnified party as a result
of the losses, claims, damages and liabilities referred to in the foregoing
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or
claim. 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 remedies provided for in Section 2.5 are not exclusive and shall not
limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity. Notwithstanding the provisions of
this Section 2.5(d), no Holder shall be required to contribute any amount
in excess of the amount by which the total proceeds received by such Holder
from the sale of Registrable Securities exceeds the amount of any damages
that such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission.

3.       DISTRIBUTION CONTROL MEASURES.

                  3.1      Sales Limitations.

                  (a) Prior to the first anniversary of the Effective Date,
none of the Consideration Shares may be offered for sale, sold, assigned or
transferred to any Person other than an Affiliate of the Stockholder. From,
and including, the first anniversary of the Effective Date, to, but
excluding, the second anniversary of the Effective Date, no more than
470,000 of the Consideration Shares (as adjusted for stock splits, stock
dividends and similar events) in the aggregate, may be offered for sale,
sold, assigned or transferred to any Person other than an Affiliate of the
Stockholder. The transfer restrictions in Section 3.1 shall terminate upon
the consummation of a Change in Control.

                  (b) The Holders, in the aggregate, may not sell, during
any calendar quarter an amount of Consideration Shares and Warrant Shares,
including any shares of Common Stock or other securities of the Company
issued as (or issuable upon the conversion or exercise of any warrant,
right or other security that is issued as) a dividend or other distribution
with respect to, or in exchange for, or in replacement of, the
Consideration Shares (collectively, the "SECURITIES"), in the aggregate, in
excess of two percent (2%) of the Outstanding Company Common Stock.
However, the aforesaid sales limitation and all other sales limitations set
forth in Section 3.1 shall not apply to a sale of Securities by the Holders
(i) in a transaction in which a majority of the Common Stock held by
stockholders other than the Stockholder or a majority of Common Stock held
by Affiliates of the Company is being sold, (ii) in an underwritten public
offering in accordance with Section 2.2 above, (iii) in a tender offer,
merger, consolidation, reorganization, or other business combination of the
Company or (iv) to an Affiliate of the Stockholder; provided, however, that
in the case of clause (iv) the terms, conditions, and limitations on the
sale of Securities set forth in this Agreement shall continue to apply to
such transferred Securities.

                  (c) Any sale of Securities by a Holder must be executed
through a stock brokerage firm.

                  (d) Any sale of Securities by a Holder must be executed
during the regular trading hours of the Nasdaq National Market ("Nasdaq"),
or such other principal exchange or market on which the Common Stock is
trading, and must not be (i) in a transaction which would be reported on
Nasdaq, or such other exchange or market, as the opening transaction for
the applicable day or (ii) executed during the last half hour of such
regular trading hours.

                  (e) Any sale of Securities by a Holder, other than a
block trade or trades to Qualified Purchasers, must be at a price not lower
than the lowest current independent published bid for a share of Common
Stock, and all Securities sold by the Holders on any one day, other than in
a block trade or trades to Qualified Purchasers, must, in the aggregate, be
less than twenty-five percent (25%) of the trading volume for Common Stock
on that day.

         3.2      Standstill.

                  (a) The Stockholder hereby agrees that the Stockholder
and its Affiliates shall neither acquire, nor enter into discussions,
negotiations, arrangements or understandings with any third party to
acquire beneficial ownership (as defined in Rule 13d-3 promulgated under
the Exchange Act) of any Voting Stock (an "VOTING STOCK ACQUISITION"), any
securities convertible into or exchangeable for Voting Stock, or any other
right to acquire Voting Stock (except, in any case, by way of dividends or
other distributions or offerings of Company securities made available to
holders of any class of Voting Stock generally) without the prior written
consent of the Company, if the effect of such Voting Stock Acquisition
would be to increase the Voting Power of all Voting Stock then beneficially
owned by the Stockholder and its Affiliates at the time of such Voting
Stock Acquisition to more than ten percent (10%) of the Total Voting Power
at the time of such Voting Stock Acquisition (the "STANDSTILL PERCENTAGE");
provided, however, that the Stockholder shall not be required to obtain the
prior written consent of the Company to engage in any Voting Stock
Acquisition (i) following the commencement of a Significant Event and (ii)
prior to the completion or termination of such Significant Event.

                  (b) The Stockholder will not be obligated to dispose of
any Voting Stock to the extent that the aggregate percentage of the Total
Voting Power of the Company represented by Voting Stock beneficially owned
by the Stockholder or which the Stockholder has a right to acquire is
increased beyond the Standstill Percentage (i) as a result of a
recapitalization of the Company or a repurchase or exchange of securities
by the Company or any other action taken by the Company or its Affiliates;
(ii) as a result of any tender offer, merger, consolidation or
reorganization of the Company; (iii) by way of stock dividends or other
distributions or rights or offerings made available to holders of shares of
Voting Stock generally; (iv) with the consent of a majority of the total
members of the Company's board of directors; or (v) as part of a
transaction on behalf of any defined benefit pension plan, profit sharing
Plan, 401(k) savings plan, sheltered employee retirement plan or any other
retirement plan of the Stockholder or its Affiliates (collectively, the
"RETIREMENT PLANS"), where the Company securities in such Retirement Plans
are voted by a trustee, the Stockholder or its majority owned subsidiary
for the benefit of employees or, for those Retirement Plans where
Stockholder or this Affiliate agrees not to vote any Company Voting Stock
that would otherwise cause the Standstill Percentage to be exceeded.

                  (c) The provisions of this Section 3.2 shall terminate
upon the second anniversary of the Effective Date of this Agreement.

         3.3      Right of First Refusal.

                  (a) If the Stockholder intends to sell Securities with
Voting Power constituting less than five percent (5%) of the Total Voting
Power of the Company to any Person, other than a Qualified Purchaser, that
beneficially owns five percent (5%) or more of the Total Voting Power of
the Company, as indicated on a Schedule 13D or 13G filed with the SEC, in
either case in a transaction other than in (i) an underwritten public
offering in accordance with Section 2.2 above, (ii) a tender offer, merger,
reorganization or consolidation of the Company or (iii) a sale of the
Common Stock in a transaction where a majority of the Common Stock held by
stockholders other than the Holders or a majority of Common Stock held by
Affiliates of the Company is being sold, then the Stockholder shall provide
written notice thereof to the Company (the "STOCKHOLDER NOTICE") providing
the Company with the first right to acquire the Securities the Stockholder
intends to sell free and clear of all liens. The Stockholder Notice shall
specify the number of Securities involved, the name and address of the
proposed purchaser, and the proposed price per share. For a period of ten
(10) business days after delivery of the Stockholder Notice, the Company
shall be entitled to elect to purchase all, but not less than all, of the
Securities described in the Stockholder Notice, at the price per share
described in such Stockholder Notice. The Company may exercise such right
by delivery of a written notice (a "COMPANY PURCHASE ELECTION") to the
Stockholder, irrevocably electing to purchase such Securities that the
Stockholder intends to sell and shall have thirty (30) days to consummate
said purchase from the Stockholder. In the event that the Company has not
delivered a Company Purchase Election prior to the expiration of such ten
(10) day period or has failed to purchase and pay for such Securities
within said thirty (30) day period, the Company's right to purchase such
Securities shall expire, and the Stockholder shall be entitled to sell the
Securities described in the Stockholder Notice for a period of ninety (90)
days following the date of the Stockholder Notice, but only to the proposed
purchaser set forth in the Stockholder Notice and only for a purchase price
of at least ninety-five percent (95%) of the purchase price set forth in
the Stockholder Notice. In the event the Stockholder has not sold such
Securities by the end of such sixty (60) day period, the rights of the
Company set forth above in this Section 3.3 shall apply to any subsequent
sale of the Voting Stock in excess of the threshold amount by the
Stockholder. Notwithstanding the foregoing, the provisions of this Section
shall not apply to any sales or other transfers by the Stockholder to any
of its Affiliates.

                  (b) The provisions of this Section 3.3 shall terminate
upon the second anniversary of the Effective Date of this Agreement.

         3.4 Holdback. Each Holder and the Company agrees that in the event
of an underwritten public offering of Common Stock or securities
convertible into Common Stock, such Holder and the Company shall not, for a
period beginning seven (7) days prior to the date of the final prospectus
used in connection with such offering through ninety (90) days from the
date of such final prospectus (or such longer period as required by the
managing underwriter(s) of such offering, but in no event in excess of one
hundred and eighty (180) days from the date of such prospectus), offer to
sell, sell, transfer, assign or dispose of, directly or indirectly, any
shares of Common Stock, or any securities convertible into or exercisable
for Common Stock, except as part of such underwritten public offering or
with the prior written consent of the managing underwriter(s) of such
offering; provided, however, that the foregoing restrictions shall not
apply to a transfer to any Affiliate of such Person or to any other
transferee in a private transaction not requiring registration under the
Securities Act, or to any bona fide pledge of such Registrable Securities,
provided that such Affiliate or other transferee or pleedgee acknowledges
in writing that it is bound by the provisions of this Section 3.4 and
enters into a lock-up agreement with such managing underwriter(s)
consistent therewith. If requested by the Company, each Holder shall enter
into a lock-up agreement with such managing underwriter(s) evidencing the
provisions of this Section 3.4.

         3.5 Legend. Any certificates representing Securities issued to a
Holder shall contain a legend to the effect that such Securities are
subject to the transfer restrictions contained in this Agreement until such
time as such restrictions terminate with respect to such Securities.

4.       SECURITIES ACT AND EXCHANGE ACT REPORTS.

         4.1      The Company agrees to:

                  (a) Use commercially reasonable efforts to file with the
SEC in a timely manner all reports and other documents required of the
Company under the Securities Act and the Exchange Act so long as the
Company remains subject to such requirements.

                  (b) Make and keep public information available, as those
terms are understood and defined in Rule 144 under the Securities Act.

                  (c) So long as any Holder owns any Registrable
Securities, furnish to such Holder upon written request (a) a written
statement by the Company as to its compliance with the reporting
requirements of Rule 144, the Securities Act and the Exchange Act, and (b)
such other reports and documents so filed with the SEC as such Holder may
reasonably request in availing itself of any rule or regulation of the SEC
allowing such Holder to sell any such securities without registration. Upon
the request of any Holder, the Company shall take such action as is
necessary to allow transfer of Registrable Securities in accordance with
the provisions of Rule 144(k), including, without limitation, if necessary,
the issuance of new certificates for such Registrable Securities bearing a
legend restricting further transfer.

5.       MISCELLANEOUS.

         5.1 Successors and Assigns. The terms and conditions of this
Agreement will inure to the benefit of, and be binding upon, the respective
successors and permitted assigns of the parties; provided that nothing
herein shall be deemed to permit any assignment, transfer or other
disposition of Securities in violation of the terms of this Agreement or
the Securities. If any permitted transferee of any Holder shall acquire
Securities, in any manner, whether by operation of law or otherwise, such
Securities shall be held subject to all of the terms of this Agreement,
and, by taking and holding such Securities, such Person shall be
conclusively deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Agreement and such Person shall be entitled to
receive the benefits hereof.

         5.2      Governing Law. This  Agreement  will be governed by and
construed  under the internal laws of the State of Delaware, without
reference to principles of conflict of laws.

         5.3 Counterparts. This Agreement may be executed in two
counterparts, each of which will be deemed an original, but all of which
together will constitute the same instrument.

         5.4 Headings. The headings and captions used in this Agreement are
used for convenience of reference only and are not to be considered in
construing or interpreting this Agreement.

         5.5 Notices. Any notices required, permitted or desired to be
given hereunder shall be delivered personally, via facsimile with a written
notice to be delivered pursuant to this Section 5.5, sent by overnight
courier or mailed, registered or certified mail, return-receipt requested,
to the following addresses, and shall be deemed to have been received on
the day of personal delivery, upon receipt of confirmation if by facsimile,
one business day after deposit with a nationally recognized overnight
courier or five (5) business days after deposit in the mail:

                  If to the Company, to:

                           Novadigm, Inc.
                           One International Blvd.
                           Suite 200
                           Mahwah, New Jersey 07495
                           Attention:       Albion J. Fitzgerald
                           Attention:       Robert B. Anderson
                           Facsimile:       (201) 512-1001

                  with a copy to:


                           Katten Muchin Zavis
                           525 West Monroe
                           Suite 1600
                           Chicago, Illinois 60661
                           Attention:       Mark D. Wood, Esq.
                           Facsimile:       (312) 902-1061

                  If to the Stockholder, to:

                           Hewlett-Packard Company
                           3000 Hanover Street, MS 20 BQ
                           Palo Alto, California 94304
                           Attention:       Charles N. Charnas, Esq.
                           Facsimile:       (650) 857-4837

                  with copies to:

                           Hewlett-Packard Company
                           3000 Hanover Street, MS 20 BT
                           Palo Alto, California 94304
                           Attention:       C.D. Portfolio
                           Facsimile:       (650) 852-8442


                           Skadden, Arps, Slate, Meagher & Flom LLP
                           525 University Avenue
                           Suite 220
                           Palo Alto, California 94301
                           Attention:       Kenton J. King, Esq.
                           Facsimile:       (650) 470-4570

or at such other address or facsimile number as any party, including a
Holder other than the Stockholder, may specify in a written notice given to
the other party hereto.

         5.6 Severability. If any provision of this Agreement is held to be
unenforceable under applicable law, such provision will be excluded from
this Agreement and the balance of the Agreement will be interpreted as if
such provision was so excluded and will be enforceable in accordance with
its terms.

         5.7 Entire Agreement. This Agreement and the Alliance Agreement
and the Warrant, together with all schedules and exhibits hereto and
thereto, all other documents expressly referred to herein and therein and
all documents delivered contemporaneously herewith or therewith, constitute
the final agreement of the parties concerning the matters referred to in
those agreements and supersede all prior agreements and understandings,
including the Confidential Disclosure Agreement effective December 22, 1999
between Novadigm and HP.

         5.8 Amendment. Any provision of this Agreement may be amended and
the observance thereof may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of the Company and the Holders of a majority of the Registrable
Securities then outstanding. Any amendment or waiver effected in accordance
with this Section shall be binding upon each Holder and the Company.




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