Document:

Exhibit 10.1

    EXHIBIT
      10.1

     

    AMENDMENT
      NO. 1

    to

    CREDIT
      AND SECURITY AGREEMENT

    

     

    This
      AMENDMENT
      NO. 1 TO CREDIT AND SECURITY AGREEMENT,
      made as
      of August 31, 2006 (this “Amendment”), among HAWK
      CORPORATION,
      a
      Delaware corporation, ALLEGHENY
      CLEARFIELD, INC.,
      a
      Pennsylvania corporation,
      FRICTION PRODUCTS CO.,
      an Ohio
      corporation,
      HAWK MIM, INC.,
      an Ohio
      corporation,
      HAWK MOTORS, INC.,
      a
      Delaware corporation,
      HAWK PRECISION COMPONENTS GROUP, INC.,
      an Ohio
      corporation,
      HELSEL, INC.,
      a
      Delaware corporation,
      LOGAN METAL STAMPINGS, INC.,
      an Ohio
      corporation,
      NET SHAPE TECHNOLOGIES LLC,
      a
      Delaware limited liability company, QUARTER
      MASTER INDUSTRIES, INC.,
      a
      Delaware corporation,
      SINTERLOY CORPORATION,
      a
      Delaware corporation,
      S.K. WELLMAN CORP.,
      a
      Delaware corporation,
      S.K. WELLMAN HOLDINGS, INC.,
      a
      Delaware corporation,
      TEX RACING ENTERPRISES, INC.,
      a
      Delaware corporation,
      WELLMAN PRODUCTS GROUP, INC.,
      an Ohio
      corporation, and
      WELLMAN
      PRODUCTS, LLC,
      an Ohio
      limited liability company, each as a Borrower and collectively as the Borrowers,
      the LENDERS
      listed
      on the signature pages of this Agreement, KEYBANK
      NATIONAL ASSOCIATION,
      a
      national banking association, as Administrative Agent, and KEYBANK
      NATIONAL ASSOCIATION, a
      national banking association, as LC Issuer, 

     

    WITNESSETH:

     

    WHEREAS,
      the
      Borrower has been extended certain financial accommodations pursuant to that
      certain Credit and Security Agreement, dated as of November 1, 2004, (the
“Credit Agreement”), among the Borrowers, the Lenders, the Administrative Agent,
      and the LC Issuer; 

     

    WHEREAS,
      the
      parties desire to amend certain
      provisions of the Credit Agreement as set forth herein; and 

     

    WHEREAS,
      the
      Lenders which are signatories hereto constitute all of the Lenders for the
      purposes of amending the Credit Agreement pursuant to Section 19.1
      thereof;

     

    NOW
      THEREFORE,
      in
      consideration of the mutual promises and agreements contained herein and other
      good and valuable consideration, the receipt and adequacy of which are hereby
      acknowledged, the Borrowers, the Administrative Agent, the Lenders and the
      LC
      Issuer do hereby agree as follows: 

     

    Section
      1  DEFINED
      TERMS.

     

    Each
      defined term used herein and not otherwise defined herein shall have the meaning
      ascribed to such term in the Credit Agreement.

     

    

     

    Section
      2  AMENDMENTS
      TO THE CREDIT AGREEMENT.

     

    2.1  Amendment
      to Annex II to Credit Agreement. Annex
      II
      to the Credit Agreement is hereby amended by deleting the existing definition
      of
“Adjustment Date” and “Applicable Margin” and replacing it with the following
      new definition to read as follows:

     

    “Adjustment
      Date”
      means
      the first (1st) day of each Fiscal Month beginning with September 1, 2006
      after the Borrower delivers the Officer’s Certificate containing the calculation
      of Average Excess Availability required to be furnished by the Borrowers on
      or
      before the twentieth (20th) day of each Fiscal Month pursuant to (and complying
      with) Section 11.1(d).

     

    “Applicable
      Margin”
      means,
      with respect to any Borrowing: (i) from the Amendment No. 1 Effective Date
      until the first Adjustment Date, (x) for the Unused Commitment Fees, 25 bps
      per annum and (y) for Revolving Credit Borrowings, zero (0) bps with
      respect to Alternate Base Rate Advances and 175 bps per annum with respect
      to
      LIBOR Rate Advances, and (ii) with respect the first Adjustment Date and
      any subsequent Adjustment Date, the percentage per annum applicable to Alternate
      Base Rate Borrowings or LIBOR Rate Borrowings, as the case may be, corresponding
      to the level of the Average Excess Availability reported on the twentieth (20th)
      day of the Fiscal Month immediately preceding such Adjustment Date in the table
      set forth below; provided,
      however,
      that
      notwithstanding clauses (i)
      and (ii)
      above,
      to the extent that the Officer’s Certificate required to be delivered following
      any Fiscal Month is not delivered by the due date therefor, or (B) any
      Event of Default occurs, then the Applicable Margin shall be, from and after
      such due date or the date of such Event of Default (as applicable) until the
      date on which such financial statements and Officer’s Certificate are delivered
      or such Event of Default is no longer continuing (as applicable), the per annum
      percentages set forth in Level IV; provided,
      further,
      however,
      that
      nothing in herein shall limit the applicability of Section 6.1(c) with
      respect to the imposition of a default rate of interest.

     

    
      	
               

              Level

               

            	
               

              Average
                Excess Availability 

               

            	
               

              Alternate
                Base Rate Margin (bps)

               

            	
               

              LIBOR
                Rate Margin (bps)

               

            	
               

              Unused

               

               

              Commitment
                Fee Margin (bps)

               

            
	
               

              I

               

            	
               

              >$20,000,000

               

            	
               

              0
                bps

               

            	
               

              150
                bps

               

            	
               

              25
                bps

               

            
	
               

              II

               

            	
              >$10,000,000
                but

               

              <$20,000,000

               

            	
               

              0 bps

               

            	
               

              175
                bps

               

            	
               

              25
                bps

               

            
	
               

              III

               

            	
               

              >$5,000,000
                but

               

               

              <$10,000,000

               

            	
               

              0
                bps

               

            	
               

              200
                bps

               

            	
               

              25
                bps

               

            
	
               

              IV

               

            	
               

              <$5,000,000

               

            	
               

              0
                bps

               

            	
               

              250
                bps

               

            	
               

              25
                bps

               

            

    

    

     

    2.2  Amendment
      to Annex II to the Credit Agreement.
      Annex II
      to the Credit Agreement is hereby amended by adding the following new definition
      of “Amendment No. 1 Effective Date”) and “Average Excess Availability” to Annex
      II in the proper alphabetical order:

     

    “Amendment
      No. 1 Effective Date” shall mean August 1, 2006.

     

    “Average
      Excess Availability” means, with respect to a Person for any period,
the
      average daily Excess Availability of the Borrowers as calculated for such
      period.

     

    2.3  Amendment
      to Section 11.1(d).
      Section
      11.1(d) of the Credit Agreement shall be amended by deleting the existing
      Section 11.1(d) and replacing with the following new
      Section 11.1(d):

     

    (d) Officer’s
      Certificate. 

     

    The
      Borrower Representative shall furnish to the Administrative Agent and each
      Lender, (1) concurrently with the financial statements delivered in connection
      with Sections 11.1(a), a certificate of a Responsible Officer or the
      non-officer controller of the Borrower Representative, in his or her capacity
      as
      a Responsible Officer, setting forth the computations necessary to determine
      the
      Average Excess Availability of the Borrowers and their consolidated Subsidiaries
      for purposed of adjusting the Applicable Margin; (2) concurrently with the
      financial statements delivered in connection with Sections 11.1(b) and
      11.1(c), a certificate of a Responsible Officer or the non-officer controller
      of
      the Borrower Representative, in his or her capacity as a Responsible Officer,
      setting forth the computations necessary to determine whether the Borrowers
      and
      their consolidated Subsidiaries are in compliance with the financial covenants
      set forth in Section 11.4 of this Agreement; and (3) certifying,
      concurrently with the financial statements delivered in connection with
      Sections 11.1(a), 11.1(b) and 11.1(c), that: (A) those financial
      statements fairly present in all material respects the financial condition
      and
      results of operations of the Borrowers and their consolidated Subsidiaries
      (to
      the knowledge of the Responsible Officer with respect to
      Section 11.1(a))subject in the case of interim financial statements, to
      routine year-end audit adjustments, absence of notes and absence of information
      on discontinued operations (with respect to Sections 11.1(a) and 11.1(b))
      and (B) no Potential Default or Event of Default then exists or, if any
      Potential Default or Event of Default does exist, a brief description of the
      Potential Default or Event of Default and the Borrowers’ intentions in respect
      thereof.

     

    Section
      3  REPRESENTATIONS
      AND WARRANTIES.

    

    The
      Borrower hereby represents and warrants to the Lenders, the Administrative
      Agent
      and the LC Issuer as follows: 

    

    3.1  The
      Amendment. This
      Amendment has been duly and validly executed by an authorized executive officer
      of the Borrower and constitutes the legal, valid and binding obligation of
      the
      Borrower enforceable against the Borrower in accordance with its terms. The
      Credit Agreement, as amended by this Amendment, remains in full force and effect
      and remains the valid and binding obligation of the Borrower enforceable against
      the Borrower in accordance with its terms. The Borrower hereby ratifies and
      confirms the Credit Agreement as amended by this Amendment.

     

    3.2  Nonwaiver.
      The
      execution, delivery, performance and effectiveness of this Amendment shall
      not
      operate nor be deemed to be nor construed as a waiver (i) of any right, power
      or
      remedy of the Lenders or the Administrative Agent under the Credit Agreement
      or
      any other Loan Document, or (ii) of any term, provision, representation,
      warranty or covenant contained in the Credit Agreement or any other
      documentation executed in connection therewith. Further, none of the provisions
      of this Amendment shall constitute, be deemed to be or construed as, a waiver
      of
      any Potential Default or Event of Default under the Credit Agreement as amended
      by this Amendment.

     

    3.3  Reference
      to and Effect on the Credit Agreement. Upon
      the
      Effectiveness of this Amendment, each reference in the Credit Agreement amended
      hereby to “this Agreement,” “hereunder,” “hereof,” “herein,” or words of like
      import shall mean and be a reference to the Credit Agreement, as amended by
      the
      prior amendments thereto and this Amendment and each reference to the Credit
      Agreement in any other document, instrument or agreement executed and/or
      delivered in connection with the Credit Agreement shall mean and be a reference
      to the Credit Agreement, as amended by the prior amendments thereto and this
      Amendment.

     

    Section
      4  CONDITIONS
      TO EFFECTIVENESS

     

    The
      effectiveness of this Amendment is subject to the condition precedent
      that:

     

     

      
4.1  Amendment
      No. 1 to Credit and Security Agreement.
      The
      Administrative Agent shall have received an original counterpart of this
      Amendment No. 1 to Credit and Security Agreement, executed and delivered by
      a duly authorized officer of each Borrower, the Lenders and the LC
      Issuer.

     

    Section
      5  MISCELLANEOUS.

     

             5.1  Governing
      Law.
      This
      Amendment shall be governed by and construed in accordance with the laws of
      the
      State of Ohio with out giving effect to the conflict of laws rules
      thereof.

     

            5.2  Severability.
      In the
      event any provision of this Amendment should be invalid, the validity of the
      other provisions hereof and of the Credit Agreement shall not be affected
      thereby. 

     

            5.3  Counterparts.
      This
      Amendment may be executed in one or more counterparts, each of which, when
      taken
      together, shall constitute but one and the same agreement.

     

    
      
        
        

      

      
        
        

        
        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF,
      the
      Borrowers, the Administrative Agent, the Lenders and the LC Issuer have caused
      this Amendment No. 1 to Credit and Security Agreement to be duly executed by
      their respective officers or agents thereunto duly authorized as of the date
      first written above.

     

    BORROWERS

    

    

    HAWK
      CORPORATION

     

    /s/
      Thomas Gilbride

    By:
      Thomas
      Gilbride

    Its:
      Vice
      President - Finance

    

    

    ALLEGHENY
      CLEARFIELD, INC.

     

    /s/
      Thomas Gilbride

    By:
      Thomas
      Gilbride

    Its:
      Vice
      President - Finance

    

    FRICTION
      PRODUCTS CO.

     

    /s/
      Thomas Gilbride

    By:
      Thomas
      Gilbride

    Its:
      Vice
      President - Finance

    

    

    HAWK
      MIM, INC.

     

    /s/
      Thomas Gilbride

    By:
      Thomas
      Gilbride

    Its:
      Vice
      President - Finance

    

    

    HAWK
      MOTORS, INC.

     

    /s/
      Thomas Gilbride

    By:
      Thomas
      Gilbride

    Its:
      Vice
      President - Finance

    

    

    HAWK
      PRECISION COMPONENTS GROUP, INC.

    

    /s/
      Thomas Gilbride

    By:
      Thomas
      Gilbride

    Its:
      Vice
      President - Finance

     

     

     

     

     

    
 

    HELSEL,
      INC.

     

    /s/
      Thomas Gilbride

    By:
      Thomas
      Gilbride

    Its:
      Vice
      President - Finance

    

    

    LOGAN
      METAL STAMPINGS, INC.

     

    /s/
      Thomas Gilbride

    By:
      Thomas
      Gilbride

    Its:
      Vice
      President - Finance

    

    

    NET
      SHAPE TECHNOLOGIES LLC

     

    By:
      Hawk
      MIM, Inc., its sole member

     

    /s/
      Thomas Gilbride

    By:
      Thomas
      Gilbride

    Its:
      Vice
      President - Finance

    

    QUARTER
      MASTER INDUSTRIES, INC.

     

    /s/
      Thomas Gilbride

    By:
      Thomas
      Gilbride

    Its:
      Vice
      President - Finance

    

    

    SINTERLOY
      CORPORATION

     

    /s/
      Thomas Gilbride

    By:
      Thomas
      Gilbride

    Its:
      Vice
      President - Finance

    

    

    S.K.
      WELLMAN CORP.

    

    /s/
      Thomas Gilbride

    By:
      Thomas
      Gilbride

    Its:
      Vice
      President - Finance

    

    

    S.K.
      WELLMAN HOLDINGS, INC.

     

    /s/
      Thomas Gilbride

    By:
      Thomas
      Gilbride

    Its:
      Vice
      President - Finance

    

    

    TEX
      RACING ENTERPRISES, INC.

     

    /s/
      Thomas Gilbride

    By:
      Thomas
      Gilbride

    Its:
      Vice
      President - Finance

    

    

    WELLMAN
      PRODUCTS GROUP, INC.

     

    /s/
      Thomas Gilbride

    By:
      Thomas
      Gilbride

    Its:
      Vice
      President - Finance

    

    

    WELLMAN
      PRODUCTS, LLC

     

    By:
      Wellman Products Group, Inc.,

    its
      sole member

     

    /s/
      Thomas Gilbride

    By:
      Thomas
      Gilbride

    Its:
      Vice
      President - Finance

    

    

    
      
        
        

      

      
        
        

        
        

      

      
        
        

      

    

    ADMINISTRATIVE
      AGENT

    

    KEYBANK
      NATIONAL ASSOCIATION 

    as
      a
      Administrative Agent

     

     

    /s/
      John P. Dunn

    By:
      John
      P. Dunn

    Its:
      Vice
      President

    

    

    LENDERS

    

    KEYBANK
      NATIONAL ASSOCIATION 

    as
      a
      Lender 

     

     

    /s/
      John P. Dunn

    By:
      John
      P. Dunn

    Its:
      Vice
      President

    

    

    LC
      ISSUER

    

    KEYBANK
      NATIONAL ASSOCIATION

    as
      LC
      Issuer

     

     

    /s/
      John P. Dunn

    By:
      John
      P. Dunn

    Its:
      Vice
      President<PAGE>

                                                                     Exhibit 4.2

                              ISILON SYSTEMS, INC.

             FOURTH AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT

                                  JULY 19, 2006

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                           Page
                                                                                                           ----
<S>                                                                                                        <C>
A. Amendments of Prior Rights Agreement; Waiver of Right of First Offer.................................     2

   1. Registration Rights...............................................................................     2

      1.1       Definitions.............................................................................     2
      1.2       Request for Registration................................................................     4
      1.3       Company Registration....................................................................     5
      1.4       Form S-3 Registration...................................................................     5
      1.5       Obligations of the Company..............................................................     6
      1.6       Furnish Information.....................................................................     8
      1.7       Expenses of Registration................................................................     8
      1.8       Underwriting Requirements...............................................................     9
      1.9       Delay of Registration...................................................................    10
      1.10      Indemnification.........................................................................    10
      1.11      Reports Under Securities Exchange Act of 1934...........................................    12
      1.12      Assignment of Registration Rights.......................................................    12
      1.13      Limitations on Subsequent Registration Rights...........................................    13
      1.14      Lock-Up Agreement.......................................................................    13
      1.15      Termination of Registration Rights......................................................    14

   2. Covenants of the Company..........................................................................    14

      2.1       Delivery of Financial Statements........................................................    14
      2.2       Inspection..............................................................................    15
      2.3       Right of First Offer....................................................................    15
      2.4       Like Treatment of Holders...............................................................    17
      2.5       Termination of Covenants................................................................    17
      2.6       Travel Expenses.........................................................................    17

   3. Miscellaneous.....................................................................................    18

      3.1       Termination of Entire Agreement.........................................................    18
      3.2       Successors and Assigns..................................................................    18
      3.3       Amendments and Waivers..................................................................    18
      3.4       Notices.................................................................................    18
      3.5       Severability............................................................................    18
      3.6       Governing Law...........................................................................    18
      3.7       Counterparts............................................................................    18
      3.8       Titles and Subtitles....................................................................    19
      3.9       Aggregation of Stock....................................................................    19
      3.10      Delays or Omissions.....................................................................    19
</TABLE>

                                      -i-
<PAGE>

                              ISILON SYSTEMS, INC.

             FOURTH AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT

      This Fourth Amended and Restated Investors' Rights Agreement (the
"Agreement") is made as of the 19th day of July, 2006, by and among Isilon
Systems, Inc., a Delaware corporation (the "Company"), the holders of the
Company's Series A Preferred Stock set forth on Exhibit A attached hereto (the
"Series A Holders"), the holders of Series B Preferred Stock also set forth on
Exhibit A hereto (the "Series B Holders"), the holders of Series C Preferred
Stock also set forth on Exhibit A hereto (the "Series C Holders"), the holders
of Series D Preferred Stock also set forth on Exhibit A hereto (the "Series D
Holders"), the holders of Series E Preferred Stock also set forth on Exhibit A
hereto (the "Series E Holders" and together with the Series A Holders, Series B
Holders, Series C Holders and Series D Holders, the "Investors"), Silicon Valley
Bancshares as assignee of Silicon Valley Bank ("SVB"), Horizon Technology
Funding Company II LLC and Horizon Technology Funding Company III LLC (together,
the "Horizon Entities") and collectively with SVB, the "Warrant Holders") and
Paul Mikesell and Sujal Patel, each of whom is herein referred to as a
"Founder."

      For the avoidance of doubt, for purposes of this Agreement only, any
Investor whose Series A, Series B, Series C, Series D or Series E Preferred
Stock, as applicable, of the Company is converted by special mandatory
conversion to Series A-1, Series B-1, Series C-1, Series D-1, Series E-1
Preferred Stock or any other Series of Preferred Stock, as applicable, issued
under Article IV, Section (B)8 or any similar successor provision of the
Company's Fifth Amended and Restated Certificate of Incorporation, shall be
deemed hereunder to be a holder of Series A, Series B, Series C, Series D or
Series E Preferred Stock, as applicable, and shall continue to be included in
the definition of "Investor." All references to Series A, Series B, Series C,
Series D and Series E Preferred Stock hereunder shall be deemed to include
Series A-1, Series B-1, Series C-1, Series D-1 or Series E-1 Preferred Stock
issued upon conversion thereof and any other Series of Preferred Stock issued
under Article IV, Section (B)8 or any similar successor provision of the
Company's Fifth Amended and Restated Certificate of Incorporation.

                                    RECITALS

      A. The Company, the Founders, SVB, the Series A Holders, the Series B
Holders, the Series C Holders and the Series D Holders have previously entered
into an Investors' Rights Agreement dated as of May 10, 2005, as amended (the
"Prior Rights Agreement"), pursuant to which the Company granted the Founders,
SVB, the Series A Holders, the Series B Holders the Series C Holders and the
Series D Holders certain rights.

      B. The Company and the Series E Holders have entered into a Series E
Preferred Stock Purchase Agreement (the "Purchase Agreement") of even date
herewith pursuant to which the Company desires to sell to the Series E Holders
and the Series E Holders desire to purchase from the Company shares of the
Company's Series E Preferred Stock. A condition to the Series E Holders'
obligations under the Purchase Agreement is that the Company, the Founders, the
Warrant Holders and the Investors enter into this Agreement in order to provide
the Series E Holders with (i) certain rights to register shares of the Company's
Common Stock issuable upon conversion of

<PAGE>

the Series E Preferred Stock held by the Series E Holders, (ii) certain rights
to receive or inspect information pertaining to the Company, and (iii) a right
of first offer with respect to certain issuances by the Company of its
securities. The Company desires to induce the Series E Holders to purchase
shares of Series E Preferred Stock pursuant to the Purchase Agreement by
agreeing to the terms and conditions set forth herein.

      D. The Company, the Founders, SVB, the Series A Holders, the Series B
Holders, the Series C Holders and the Series D Holders each desire to amend and
restate the Prior Rights Agreement to add as parties to this Agreement and make
certain other changes.

                                    AGREEMENT

      The parties hereby agree as follows:

      AMENDMENTS OF PRIOR RIGHTS AGREEMENT; WAIVER OF RIGHT OF FIRST OFFER.
Effective and contingent upon execution of this Agreement by the Company and the
holders of a majority of the Registrable Securities, as that term is defined in
the Prior Rights Agreement, not including the Founders' Stock, as that term is
defined in the Prior Rights Agreement, and upon closing of the transactions
contemplated by the Purchase Agreement, the Prior Rights Agreement is hereby
amended and restated in its entirety to read as set forth in this Agreement, and
the Company, the Founders, the Warrant Holders and the Investors hereby agree to
be bound by the provisions hereof as the sole agreement of the Company, the
Founders, the Warrant Holders and the Investors with respect to registration
rights of the Company's securities and the other rights set forth herein. The
Series A Holders, Series B Holders, Series C Holders and Series D Holders that
are Major Investors (as that term is defined in the Prior Rights Agreement)
hereby waive the Right of First Offer, including the notice requirements, set
forth in the Prior Rights Agreement with respect to the issuance of Series E
Preferred Stock.

            1. REGISTRATION RIGHTS. The Company and the Investors covenant and
agree as follows:

                  1.1 DEFINITIONS. For purposes of this Section 1:

                        (a) The terms "register," "registered," and
"registration" refer to a registration effected by preparing and filing a
registration statement or similar document in compliance with the Securities Act
of 1933, as amended (the "Securities Act"), and the declaration or ordering of
effectiveness of such registration statement or document;

                        (b) The term "Registrable Securities" means (i) the
shares of Common Stock issuable or issued upon conversion of the Series A,
Series B, Series C, Series D and Series E Preferred Stock (but not including the
SVB Warrant Stock and the Horizon Warrant Stock), other than shares for which
registration rights have terminated pursuant to Section 1.15 hereof, (ii) the
shares of Common Stock issued to the Founders (the "Founders' Stock"), provided,
however, that for the purposes of Section 1.2, 1.4, 1.5(a) and 1.13 of this
Agreement, the Founders' Stock shall not be deemed Registrable Securities and
the Founders shall not be deemed Holders, (iii) the Common Stock issued or
issuable upon conversion of the SVB Warrant Stock, provided,

                                      -2-
<PAGE>

however, that for the purposes of Sections 1.2, 1.5(a) and 1.13 of this
Agreement, such Common Stock shall not be deemed Registrable Securities and the
holders of such shares shall not be deemed Holders, (iv) the Common Stock issued
or issuable upon conversion of the Horizon Warrant Stock, provided, however,
that for the purposes of Sections 1.2, 1.4, 1.5(a) and 1.13 of this Agreement,
such Common Stock shall not be deemed Registrable Securities and the holders of
such shares shall not be deemed Holders, and (v) any other shares of Common
Stock of the Company issued as (or issuable upon the conversion or exercise of
any warrant, right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of, the
shares listed in (i) through (iv) and deemed to be Registrable Securities
thereunder; provided, however, that the foregoing definition shall exclude in
all cases any Registrable Securities sold by a person in a transaction in which
his or her rights under this Agreement are not assigned. Notwithstanding the
foregoing, Common Stock or other securities shall only be treated as Registrable
Securities if and so long as they have not been (A) sold to or through a broker
or dealer or underwriter in a public distribution or a public securities
transaction, or (B) sold in a transaction exempt from the registration and
prospectus delivery requirements of the Securities Act under Section 4(1)
thereof so that all transfer restrictions, and restrictive legends with respect
thereto, if any, are removed upon the consummation of such sale;

                        (c) The number of shares of "Registrable Securities then
outstanding" shall be the sum of the number of shares of Common Stock
outstanding which are, and the number of shares of Common Stock issuable
pursuant to then exercisable or convertible securities which are, Registrable
Securities;

                        (d) The term "Holder" means any person owning or having
the right to acquire Registrable Securities or any assignee thereof to whom
registration rights are assigned in accordance with Section 1.12 of this
Agreement;

                        (e) The term "Form S-3" means such form under the
Securities Act as in effect on the date hereof or any successor form under the
Securities Act that permits significant incorporation by reference of the
Company's subsequent public filings under the Securities Exchange Act of 1934;

                        (f) The term "SEC" means the Securities and Exchange
Commission;

                        (g) The term "Qualified IPO" means a firm commitment
underwritten public offering by the Company of shares of its Common Stock
pursuant to a registration statement on Form S-1 under the Securities Act, the
public offering price of which is not less than $3.6609 per share (appropriately
adjusted for any stock split, dividend, combination or other recapitalization)
and which results in aggregate cash proceeds to the Company of at least
$25,000,000 (net of underwriting discounts and commissions);

                        (h) The term "SVB Warrants" means, taken together, the
warrant to purchase Series A Preferred Stock issued to SVB on June 28, 2001 and
the warrants to purchase Series C Preferred Stock issued to SVB on June 24, 2004
and March 10, 2005; and

                                      -3-
<PAGE>

                        (i) The term "SVB Warrant Stock" means the shares of
Series A Preferred Stock and the shares of Series C Preferred Stock issuable
upon exercise of the SVB Warrants.

                        (j) The term "Horizon Warrants" means, taken together,
the warrants to purchase Series D Preferred Stock issued to Horizon Technology
Funding Company II LLC and Horizon Technology Funding Company III LLC, each
dated March 22, 2006.

                        (k) The term "Horizon Warrant Stock" means the shares of
Series D Preferred Stock issuable upon exercise of the Horizon Warrants.

                  1.2 REQUEST FOR REGISTRATION.

                        (a) If the Company shall receive at any time after the
earlier of (i) May 6, 2008, or (ii) six (6) months after the effective date of
the first registration statement for a public offering of securities of the
Company (other than a registration statement relating either to the sale of
securities to employees of the Company pursuant to a stock option, stock
purchase or similar plan or an SEC Rule 145 transaction), a written request from
the Holders of at least 50% of the Registrable Securities then outstanding that
the Company file a registration statement under the Securities Act covering the
registration of a majority of the Registrable Securities then outstanding (or a
lesser percent if the anticipated aggregate offering price, net of underwriting
discounts and commissions, would exceed $5,000,000), then the Company shall,
within ten (10) days of the receipt thereof, give written notice of such request
to all Holders and shall, subject to the limitations of subsection 1.2(b), use
its best efforts to effect as soon as practicable, and in any event within 60
days of the receipt of such request, the registration under the Securities Act
of all Registrable Securities which the Holders request to be registered within
twenty (20) days of the mailing of such notice by the Company in accordance with
Section 3.4.

                        (b) If the Holders initiating the registration request
hereunder ("Initiating Holders") intend to distribute the Registrable Securities
covered by their request by means of an underwriting, they shall so advise the
Company as a part of their request made pursuant to this Section 1.2 and the
Company shall include such information in the written notice referred to in
subsection 1.2(a). The underwriter will be selected by the holders of a majority
of the Registrable Securities held by the Initiating Holders and shall be
reasonably acceptable to the Company. In such event, the right of any Holder to
include such Holder's Registrable Securities in such registration shall be
conditioned upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the underwriting (unless
otherwise mutually agreed by the holders of a majority of the Registrable
Securities held by the Initiating Holders and such Holder) to the extent
provided herein. All Holders proposing to distribute their securities through
such underwriting shall (together with the Company as provided in subsection
1.5(e)) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting. Notwithstanding any
other provision of this Section 1.2, if the underwriter advises the Initiating
Holders in writing that marketing factors require a limitation of the number of
shares to be underwritten, then the Initiating Holders shall so advise all
Holders of Registrable Securities which would otherwise be underwritten pursuant
hereto, and the number of shares of Registrable Securities that may be included
in the underwriting shall be allocated among all Holders thereof, including the
Initiating Holders, in proportion (as nearly as practicable) to the amount of
Registrable Securities of the Company owned by each Holder; provided, however,
that the number

                                      -4-
<PAGE>

of shares of Registrable Securities to be included in such underwriting shall
not be reduced unless all other securities are first entirely excluded from the
underwriting.

                        (c) Notwithstanding the foregoing, if the Company shall
furnish to Holders requesting a registration statement pursuant to this Section
1.2, a certificate signed by the President of the Company stating that in the
good faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company and its stockholders for such registration
statement to be filed and it is therefore essential to defer the filing of such
registration statement, the Company shall have the right to defer such filing
for two (2) periods of not more than ninety (90) days individually, or one
period of one hundred twenty (120) days in the aggregate in any twelve (12)
month period.

                        (d) In addition, the Company shall not be obligated to
effect, or to take any action to effect, any registration pursuant to this
Section 1.2:

                              (i) After the Company has effected three (3)
registrations pursuant to this Section 1.2 and such registrations have been
declared or ordered effective;

                              (ii) If, within thirty (30) days of the Company's
receipt of a request pursuant to Section 1.2(a) hereof, the Company delivers
notice to the Initiating Holders that the Company intends to file a registration
subject to Section 1.3 hereof within sixty (60) days of the Company's delivery
of such notice; provided that the Company is actively employing in good faith
all reasonable efforts to cause such registration statement to become effective;
or

                              (iii) If the Initiating Holders propose to dispose
of shares of Registrable Securities that may be immediately registered on Form
S-3 pursuant to a request made pursuant to Section 1.4 below.

                  1.3 COMPANY REGISTRATION. If (but without any obligation to do
so) the Company proposes to register (including for this purpose a registration
effected by the Company for stockholders other than the Holders) any of its
stock under the Securities Act in connection with the public offering of such
securities solely for cash (other than a registration relating solely to the
sale of securities to participants in a Company stock plan or a transaction
covered by Rule 145 under the Securities Act, a registration in which the only
stock being registered is Common Stock issuable upon conversion of debt
securities which are also being registered, or any registration on any form
which does not include substantially the same information as would be required
to be included in a registration statement covering the sale of the Registrable
Securities), the Company shall, at such time, promptly give each Holder written
notice of such registration. Upon the written request of each Holder given
within twenty (20) days after mailing of such notice by the Company in
accordance with Section 3.4, the Company shall, subject to the provisions of
Section 1.8, cause to be registered under the Securities Act all of the
Registrable Securities that each such Holder has requested to be registered.

                  1.4 FORM S-3 REGISTRATION. In case the Company shall receive
from any Holder or Holders of the Registrable Securities then outstanding a
written request or requests that the Company effect a registration on Form S-3
and any related qualification or compliance with respect to all or a part of the
Registrable Securities owned by such Holder or Holders, the Company will:

                                      -5-
<PAGE>

                        (a) promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other Holders;
and

                        (b) as soon as practicable, effect such registration and
all such qualifications and compliances as may be so requested and as would
permit or facilitate the sale and distribution of all or such portion of such
Holder's or Holders' Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any other
Holder or Holders joining in such request as are specified in a written request
given within 15 days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect any such
registration, qualification or compliance, pursuant to this Section 1.4: (i) if
Form S-3 is not available for such offering by the Holders; (ii) if the Holders,
together with the holders of any other securities of the Company entitled to
inclusion in such registration, propose to sell Registrable Securities and such
other securities (if any) at an aggregate price to the public (net of any
underwriters' discounts or commissions) of less than $2,500,000; (iii) if the
Company shall furnish to the Holders a certificate signed by the President of
the Company stating that in the good faith judgment of the Board of Directors of
the Company, it would be seriously detrimental to the Company and its
stockholders for such Form S-3 Registration to be effected at such time, in
which event the Company shall have the right to defer the filing of the Form S-3
registration statement for a period of not more than ninety (90) days after
receipt of the request of the Holder or Holders under this Section 1.4;
provided, however, that the Company shall not utilize this right more than once
in any twelve month period; (iv) in any particular jurisdiction in which the
Company would be required to qualify to do business or to execute a general
consent to service of process in effecting such registration, qualification or
compliance; (v) if the Company has effected two (2) registrations on Form S-3 in
the prior twelve (12) month period; or (vi) during the period ending one hundred
eighty (180) days after the effective date of a registration statement subject
to Section 1.3.

                        (c) Subject to the foregoing, the Company shall file a
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders. Registrations effected pursuant to this
Section 1.4 shall not be counted as demands for registration or registrations
effected pursuant to Sections 1.2 or 1.3, respectively.

                  1.5 OBLIGATIONS OF THE COMPANY. Whenever required under this
Section 1 to effect the registration of any Registrable Securities, the Company
shall, as expeditiously as reasonably possible:

                        (a) Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use its best efforts
to cause such registration statement to become effective, and, upon the request
of the Holders of a majority of the Registrable Securities registered
thereunder, keep such registration statement effective for up to one hundred
twenty (120) days; ; provided, however, that (i) such 120-day period shall be
extended for a period of time equal to the period the Holder refrains from
selling any securities included in such registration at the request of an
underwriter of Common Stock (or other securities) of the Company; and (ii) in
the case of any registration of Registrable Securities on Form S-3 which are
intended to be offered on a continuous or delayed basis, such 120-day period
shall be extended, if necessary, to keep the registration statement effective
until all such Registrable Securities are sold; provided, however, that such
120-day period shall not be extended for more than ninety (90) days (so that the
entire

                                      -6-
<PAGE>

period shall not exceed 210 days); and provided further, that Rule 415, or any
successor rule under the Securities Act, permits an offering on a continuous or
delayed basis; and provided further, that applicable rules under the Securities
Act governing the obligation to file a post-effective amendment permit, in lieu
of filing a post-effective amendment which (I) includes any prospectus required
by Section 10(a)(3) of the Securities Act or (II) reflects facts or events
representing a material or fundamental change in the information set forth in
the registration statement, the incorporation by reference of information
required to be included in (I) and (II) above to be contained in periodic
reports filed pursuant to Section 13 or 15(d) of the Exchange Act in the
registration statement.

                        (b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement for the period of time
described in Section 1.5(a) above.

                        (c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.

                        (d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders, provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions.

                        (e) In the event of any underwritten public offering,
enter into and perform its obligations under an underwriting agreement, in usual
and customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.

                        (f) Notify each Holder of Registrable Securities covered
by such registration statement at any time when a prospectus relating thereto is
required to be delivered under the 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, for the period of time described in Section 1.5(a) above.

                        (g) Cause all such Registrable Securities registered
pursuant hereunder to be listed on each securities exchange on which similar
securities issued by the Company are then listed.

                        (h) Provide a transfer agent and registrar for all
Registrable Securities registered pursuant hereunder and a CUSIP number for all
such Registrable Securities, in each case not later than the effective date of
such registration.

                                      -7-
<PAGE>

                        (i) Use its best efforts to furnish, at the request of
any Holder requesting registration of Registrable Securities pursuant to this
Section 1, on the date that such Registrable Securities are delivered to the
underwriters for sale in connection with a registration pursuant to this Section
1, if such securities are being sold through underwriters, (i) an opinion, dated
such date, of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters in
an underwritten public offering, addressed to the underwriters and to the
Holders requesting registration of Registrable Securities and (ii) a letter
dated such date, from the independent certified public accountants of the
Company, in form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public offering, addressed
to the underwriters, if any, and to the Holders requesting registration of
Registrable Securities.

                        (j) In the event of any underwritten public offering,
cooperate with the Holders requesting registration pursuant to this Section, the
underwriters participating in the offering and their counsel in any due
diligence investigation reasonably requested by the Holders or the underwriters
in connection therewith and participate, to the extent reasonably requested by
the managing underwriter for the offering or the Holders, in efforts to sell the
Registrable Securities under the offering (including without limitation,
participating in "roadshow" meetings with prospective investors) that would be
customary for underwritten primary offerings of a comparable amount of equity
securities by the Company.

                        (k) Otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC.

                  1.6 FURNISH INFORMATION. It shall be a condition precedent to
the obligations of the Company to take any action pursuant to this Section 1
with respect to the Registrable Securities of any selling Holder that such
Holder shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required to effect the registration of such Holder's
Registrable Securities. The Company shall have no obligation with respect to any
registration requested pursuant to Section 1.2 or Section 1.4 of this Agreement
if, as a result of the application of the preceding sentence, the number of
shares or the anticipated aggregate offering price of the Registrable Securities
to be included in the registration does not equal or exceed the number of shares
or the anticipated aggregate offering price required to originally trigger the
Company's obligation to initiate such registration as specified in subsection
1.2(a) or if the anticipated aggregate offering price does not equal or exceed
the $2,500,000 threshold set forth in subsection 1.4(b)(ii), whichever is
applicable.

                  1.7 EXPENSES OF REGISTRATION.

                        (a) DEMAND REGISTRATION. All expenses other than
underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Section 1.2, including
(without limitation) all registration, filing and qualification fees, printers'
and accounting fees, fees and disbursements of counsel for the Company, and the
reasonable fees and disbursements of one counsel for the selling Holders
selected by them with the approval of the Company, which approval shall not be
unreasonably withheld, shall be borne by the Company; provided, however, that
the Company shall not be required to pay for any expenses of any registration
proceeding begun pursuant to Section 1.2 if the registration request is
subsequently

                                      -8-
<PAGE>

withdrawn at the request of the Holders of a majority of the Registrable
Securities to be registered (in which case all participating Holders shall bear
such expenses), unless the Holders of a majority of the Registrable Securities
agree to forfeit their right to one demand registration pursuant to Section 1.2;
provided further, however, that if at the time of such withdrawal, the Holders
have learned of a material adverse change in the condition, business, or
prospects of the Company from that known to the Holders at the time of their
request and have withdrawn the request with reasonable promptness following
disclosure by the Company of such material adverse change, then the Holders
shall not be required to pay any of such expenses and shall retain all of their
rights pursuant to Section 1.2.

                        (b) COMPANY REGISTRATION AND REGISTRATION ON FORM S-3.
All expenses other than underwriting discounts and commissions incurred in
connection with registrations, filings or qualifications of Registrable
Securities pursuant to Section 1.3 and/or Section 1.4 for each Holder, including
(without limitation) all registration, filing, and qualification fees, printers'
and accounting fees, fees and disbursements of counsel for the Company and the
reasonable fees and disbursements of one counsel for the selling Holder or
Holders selected by them with the approval of the Company, which approval shall
not be unreasonably withheld, shall be borne by the Company.

                  1.8 UNDERWRITING REQUIREMENTS. In connection with any offering
involving an underwriting of shares of the Company's capital stock, the Company
shall not be required under Section 1.3 to include any Holder's securities in
such underwriting unless such Holder accepts the terms of the underwriting as
agreed upon between the Company and the underwriters selected by it (or by other
persons entitled to select the underwriters), and then only in such quantity as
the underwriters determine in their sole discretion will not jeopardize the
success of the offering by the Company. If the total amount of securities,
including Registrable Securities, requested by stockholders to be included in
such offering exceeds the amount of securities sold other than by the Company
that the underwriters determine in their sole discretion is compatible with the
success of the offering, then the Company shall exclude from the offering all
securities held by selling stockholders other than the securities offered by the
Company and the securities issuable or issued upon conversion of the Series A,
Series B, Series C, Series D and Series E Preferred Stock and shall include in
the offering only that number of such securities which the underwriters
determine in their sole discretion will not jeopardize the success of the
offering (the securities so included to be apportioned pro rata among the
selling Holders according to the total amount of securities entitled to be
included therein owned by each selling Holder or in such other proportions as
shall mutually be agreed to by such selling Holders) but in no event shall the
amount of securities issuable or issued upon conversion of the Series A, Series
B, Series C, Series D and Series E Preferred Stock be reduced below twenty-five
percent (25%) of the total amount of securities included in such offering unless
such offering is the initial public offering of the Company's securities, in
which case, the selling Holders may be excluded if the underwriters make the
determination described above and no other stockholder's securities are included
(including, without limitation, any Founder's Stock). For purposes of the
preceding parenthetical concerning apportionment, for any selling stockholder
which is a Holder of Registrable Securities and which is a partnership, limited
liability company or corporation, the partners, retired partners, members,
stockholders, and affiliated entities of such holder, or the estates and family
members of any such partners, retired partners, members and stockholders and any
trusts for the benefit of any of the foregoing persons shall be deemed to be a
single "selling Holder," and any pro-rata reduction with

                                      -9-
<PAGE>

respect to such "selling Holder" shall be based upon the aggregate amount of
shares carrying registration rights owned by all entities and individuals
included in such "selling Holder," as defined in this sentence.

                  1.9 DELAY OF REGISTRATION. No Holder shall have any right to
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 1.

                  1.10 INDEMNIFICATION. In the event any Registrable Securities
are included in a registration statement under this Section 1:

                        (a) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, any underwriter (as defined in the
Securities Act) for such Holder and each person, if any, who controls such
Holder or underwriter within the meaning of the Securities Act or the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), against any losses,
claims, damages, or liabilities (joint or several) to which they may become
subject under the Securities Act, the Exchange Act or other federal or state
law, insofar as such losses, claims, damages, or liabilities (or actions in
respect thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation"): (i) any untrue statement
or alleged untrue statement of a material fact contained in such registration
statement, including any preliminary prospectus, final prospectus or
free-writing prospectus contained therein or any amendments or supplements
thereto, (ii) the omission or alleged omission to state therein a material fact
required to be stated therein, or necessary to make the statements therein not
misleading, or (iii) any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, any state securities law or any rule or
regulation promulgated under the Securities Act, the Exchange Act or any state
securities law; and the Company will pay to each such Holder, underwriter or
controlling person, as incurred, any legal or other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
damage, liability, or action; provided, however, that the indemnity agreement
contained in this subsection 1.10(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable to any Holder,
underwriter or controlling person for any such loss, claim, damage, liability,
or action to the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by any such Holder,
underwriter or controlling person.

                        (b) To the extent permitted by law, each selling Holder
will indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Securities Act or the Exchange
Act, any underwriter, any other Holder selling securities in such registration
statement and any controlling person of any such underwriter or other Holder,
against any losses, claims, damages, or liabilities (joint or several) to which
any of the foregoing persons may become subject, under the Securities Act, the
Exchange Act or other federal or state law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereto) arise out of or are
based upon any Violation, in each case to the extent (and only to the extent)
that such Violation occurs in reliance upon and in conformity with written
information furnished by such Holder expressly for use in connection with such
registration; and each such Holder will pay, as incurred,

                                      -10-
<PAGE>

any legal or other expenses reasonably incurred by any person intended to be
indemnified pursuant to this subsection 1.10(b), in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this subsection
1.10(b) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of the Holder, which consent shall not be unreasonably withheld; provided that
in no event shall any indemnity under this subsection 1.10(b) exceed the net
proceeds from the offering received by such Holder, except in the case of
willful fraud by such Holder.

                        (c) Promptly after receipt by an indemnified party under
this Section 1.10 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.10, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the reasonable fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
1.10, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 1.10.

                        (d) If the indemnification provided for in this Section
1.10 is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage or expense
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party hereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such loss, liability, claim, damage, or
expense in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with the statements or omissions that resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations; provided that in no event shall any contribution by a Holder
under this Subsection 1.10(d) exceed the net proceeds from the offering received
by such Holder, except in the case of willful fraud by such Holder. The relative
fault of the indemnifying party and of the indemnified party shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party and
the parties' relative intent, knowledge, access to information, and opportunity
to correct or prevent such statement or omission.

                        (e) Notwithstanding the foregoing, to the extent that
the provisions on indemnification and contribution contained in the underwriting
agreement entered

                                      -11-
<PAGE>

into in connection with the underwritten public offering are in conflict with
the foregoing provisions, the provisions in the underwriting agreement shall
control.

                        (f) The obligations of the Company and Holders under
this Section 1.10 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1, and otherwise.

                  1.11 REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a
view to making available to the Holders the benefits of Rule 144 promulgated
under the Securities Act and any other rule or regulation of the SEC that may at
any time permit a Holder to sell securities of the Company to the public without
registration or pursuant to a registration on Form S-3, the Company agrees to:

                        (a) make and keep public information available, as those
terms are understood and defined in SEC Rule 144, at all times after ninety (90)
days after the effective date of the first registration statement filed by the
Company for the offering of its securities to the general public so long as the
Company remains subject to the periodic reporting requirements under Sections 13
or 15(d) of the Exchange Act;

                        (b) take such action, including the voluntary
registration of its Common Stock under Section 12 of the Exchange Act, as is
necessary to enable the Holders to utilize Form S-3 for the sale of their
Registrable Securities, such action to be taken as soon as practicable after the
end of the fiscal year in which the first registration statement filed by the
Company for the offering of its securities to the general public is declared
effective;

                        (c) 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; and

                        (d) furnish to any Holder, so long as the Holder owns
any Registrable Securities, forthwith upon request (i) a written statement by
the Company that it has complied with the reporting requirements of SEC Rule 144
(at any time after ninety (90) days after the effective date of the first
registration statement filed by the Company), the Securities Act and the
Exchange Act (at any time after it has become subject to such reporting
requirements), or that it qualifies as a registrant whose securities may be
resold pursuant to Form S-3 (at any time after it so qualifies), (ii) a copy of
the most recent annual or quarterly report of the Company and such other reports
and documents so filed by the Company, and (iii) such other information as may
be reasonably requested in availing any Holder of any rule or regulation of the
SEC which permits the selling of any such securities without registration or
pursuant to such form.

                        1.12 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to
cause the Company to register Registrable Securities pursuant to this Section 1
may be assigned (but only with all related obligations) by a Holder to (a) any
partner or retired partner of any Holder which is a partnership, (b) any family
member or trust for the benefit of any individual Holder, (c) an affiliate (as
defined below) of any Holder, (d) any transferee or assignee of at least one
million (1,000,000) shares of such securities (appropriately adjusted for any
stock split, dividend, combination or other recapitalization), provided the
Company is, within a reasonable time after such transfer, furnished with written
notice of the name and address of such transferee or assignee and the securities
with respect to which such registration rights are being assigned; provided,
further,

                                      -12-
<PAGE>

that such assignment shall be effective only if immediately following such
transfer the further disposition of such securities by the transferee or
assignee is restricted under the Securities Act; and provided, further, that no
assignment or transfer may be made to a competitor of the Company, as determined
by the Board of Directors, and transfer of registration rights to a partner,
member or shareholder of any Investor may be made without restriction as to
minimum shareholdings. In addition, the Horizon Entities may assign their rights
to cause the Company to register Registrable Securities pursuant to this Section
1 in accordance with Section 9 of each of the Horizon Warrants.

                  1.13 LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From and
after the date of this Agreement, the Company shall not, without the prior
written consent of the Holders of a majority of the Registrable Securities then
outstanding, enter into any agreement with any holder or prospective holder of
any securities of the Company which would allow such holder or prospective
holder (a) to include such securities in any registration filed under Section
1.3 or 1.4 hereof, unless under the terms of such agreement, such holder or
prospective holder may include such securities in any such registration only to
the extent that the inclusion of such holder's securities will not reduce the
amount of the Registrable Securities of the Holders which is included or (b) to
make a demand registration which could result in such registration statement
being declared effective prior to the earlier of either of the dates set forth
in subsection 1.2(a) or within one hundred twenty (120) days of the effective
date of any registration effected pursuant to Section 1.2.

                  1.14 LOCK-UP AGREEMENT.

                        (a) LOCK-UP PERIOD; AGREEMENT. In connection with the
initial public offering of the Company's securities and upon request of the
Company or the underwriters managing such offering of the Company's securities,
each Holder agrees not to sell, make any short sale of, loan, grant any option
for the purchase of, or otherwise dispose of any securities of the Company,
however or whenever acquired (other than those included in the registration)
without the prior written consent of the Company or such underwriters, as the
case may be, for such period of time (not to exceed 180 days) from the effective
date of such registration as may be requested by the Company or such managing
underwriters and to execute an agreement reflecting the foregoing as may be
requested by the underwriters at the time of the Company's initial public
offering.

                        (b) LIMITATIONS. The obligations described in Section
1.14(a) shall apply only if all Founders, officers and directors of the Company,
and all holders of at least 1% of the Company's outstanding Common Stock on an
as-converted basis (other than such 1% or greater holders who, with the express
prior approval of the Board of Directors of the Company, including a majority of
the Preferred Directors (as defined in Section 2.3(d)), acquired their stock
without the obligation to enter into the agreements described in Section
1.14(a)), enter into similar agreements, and shall not apply to a registration
relating solely to employee benefit plans, or to a registration relating solely
to a transaction pursuant to Rule 145 under the Securities Act.

                        (c) STOP-TRANSFER INSTRUCTIONS. In order to enforce the
foregoing covenants, the Company may impose stop-transfer instructions with
respect to the securities of each Holder (and the securities of every other
person subject to the restrictions referenced in Section 1.14(a)).

                        (d) TRANSFEREES BOUND. Each Holder, Investor and Founder
agrees that it will not transfer securities of the Company unless each
transferee agrees in writing to

                                      -13-
<PAGE>

be bound by all of the provisions of this Section 1.14, provided that this
Section 1.14(d) shall not apply to transfers pursuant to a registration
statement or transfers 180 days after the effective date of the Company's
initial registration statement subject to this Section 1.14.

                        (e) LEGEND. Each certificate representing any securities
of the Company held by a Holder shall be stamped or otherwise imprinted with a
legend substantially similar to the following:

            "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A LOCK-UP
            PERIOD OF UP TO 180 DAYS IN THE EVENT OF AN INITIAL PUBLIC OFFERING,
            AS SET FORTH IN AN INVESTORS' RIGHTS AGREEMENT AMONG THE COMPANY AND
            THE ORIGINAL HOLDERS OF THESE SHARES, A COPY OF WHICH MAY BE
            OBTAINED AT THE PRINCIPAL OFFICE OF THE COMPANY."

                  1.15 TERMINATION OF REGISTRATION RIGHTS. No Holder shall be
entitled to exercise any right provided for in this Section 1 (excluding the
rights described in Section 1.10 hereof) after the earlier of (i) five (5) years
following the consummation of a Qualified IPO, (ii) such time as Rule 144 or
another similar exemption under the Securities Act is available for the sale of
all of such Holder's shares during a three (3)-month period without
registration, or (iii) upon termination of the entire Agreement upon a change in
control of the Company, as provided in Section 3.1.

            2. COVENANTS OF THE COMPANY.

                  2.1 DELIVERY OF FINANCIAL STATEMENTS. The Company shall
deliver to each Holder of at least 2,000,000 shares (appropriately adjusted for
any stock split, dividend, combination or other recapitalization) of Registrable
Securities or at least 1,000,000 shares (appropriately adjusted for any stock
split, dividend, combination or other recapitalization) of Series E Preferred
Stock (including shares of Common Stock issued or issuable upon conversion of
the Series E Preferred Stock) (other than a Holder reasonably deemed by the
Company to be a competitor of the Company):

                        (a) as soon as practicable, but in any event within one
hundred eighty (180) days after the end of each fiscal year of the Company, an
income statement for such fiscal year, a balance sheet of the Company and
statement of stockholder's equity as of the end of such year, and a statement of
cash flows for such year, such year-end financial reports to be in reasonable
detail, prepared in accordance with United States generally accepted accounting
principles ("GAAP"), and audited and certified by an independent public
accounting firm of nationally recognized standing selected by the Company;

                        (b) as soon as practicable, but in any event within
forty five (45) days after the end of each of the first three (3) quarters of
each fiscal year of the Company, an unaudited income statement, a statement of
cash flows for such fiscal quarter and an unaudited balance sheet as of the end
of such fiscal quarter and the comparison of each to the then-current budget, as
well as a management narrative explaining all significant deviations from
forecasts and all significant current developments;

                                      -14-
<PAGE>

                        (c) within forty five (45) days of the end of each
month, an unaudited income statement; a statement of cash flows for such month
and a balance sheet as of the end of such month, in reasonable detail;

                        (d) as soon as practicable, but in any event thirty (30)
days prior to the end of each fiscal year, a budget and business plan for the
next fiscal year (including annual capital and operating budgets, cash flow
projections and income statements in reasonable detail), prepared on a monthly
basis, and, as soon as prepared, any other budgets or revised budgets prepared
by the Company;

                        (e) with respect to the financial statements called for
in subsections (b) and (c) of this Section 2.1, an instrument executed by the
Chief Financial Officer or President of the Company and certifying that such
financials were prepared in accordance with GAAP consistently applied with prior
practice for earlier periods (with the exception of footnotes that may be
required by GAAP) and fairly present the financial condition of the Company and
its results of operation for the period specified, subject to year-end audit
adjustment, provided that the foregoing shall not restrict the right of the
Company to change its accounting principles consistent with GAAP, if the Board
of Directors determines that it is in the best interest of the Company to do so;
and

                        (f) other information reasonably requested by such
Holder, provided such Holder is not employed by or is not an affiliate (as
defined below) of a competitor of the Company.

                  2.2 INSPECTION. The Company shall permit each Holder of at
least 2,000,000 shares (appropriately adjusted for any stock split, dividend,
combination or other recapitalization) of Registrable Securities and Granite
Global Ventures II L.P., so long as it continues to hold at least 500,000 shares
of Series E Preferred Stock, or such Holder's authorized representative (except
for a Holder or representative reasonably deemed by the Company to be a
competitor of the Company), at such Holder's expense, to visit and inspect the
Company's properties, to examine its books of account and records and to discuss
the Company's affairs, finances and accounts with its officers, all during
normal business hours as may be requested by such Holder or its authorized
representative following reasonable notice to the Company; provided, however,
that the Company shall not be obligated pursuant to this Section 2.2 to provide
access to any information which it reasonably considers to be a trade secret or
similar confidential information to any representative of such holder who is not
an employee of an Investor without a duly executed confidentiality agreement
between the Company and such representative.

                  2.3 RIGHT OF FIRST OFFER. Subject to the terms and conditions
specified in this Section 2.3, the Company hereby grants to each Major Investor
(as hereinafter defined) a right of first offer with respect to future sales by
the Company of its Shares (as hereinafter defined). For purposes of this Section
2.3, a "Major Investor" shall mean any person who holds (i) at least 2,000,000
shares of Common Stock issued or issuable upon conversion of the Series A,
Series B, Series C, Series D and Series E Preferred Stock in the aggregate, or
(ii) at least 1,000,000 shares of Common Stock issued or issuable upon
conversion of the Series E Preferred Stock (in each case, appropriately adjusted
for any stock split, dividend, combination or other recapitalization). For
purposes of this Section 2.3, Major Investor includes any general partners and
affiliates of a Major Investor. A Major Investor who chooses to exercise the
right of first offer may designate as

                                      -15-
<PAGE>

purchasers under such right itself or its partners or affiliates in such
proportions as it deems appropriate.

      Each time the Company proposes to offer any shares of, or securities
convertible into or exercisable for any shares of, any class of its capital
stock ("Shares"), the Company shall first make an offering of such Shares to
each Major Investor in accordance with the following provisions:

                        (a) The Company shall deliver a notice by certified mail
("Notice") to the Major Investors stating (i) its bona fide intention to offer
such Shares, (ii) the number of such Shares to be offered, and (iii) the price
and terms, if any, upon which it proposes to offer such Shares.

                        (b) Within twenty (20) calendar days after delivery of
the Notice, the Major Investor may elect to purchase or obtain, at the price and
on the terms specified in the Notice, up to that portion of such Shares which
equals the proportion that the number of shares of Common Stock issued and held,
or issuable upon conversion and exercise of all convertible or exercisable
securities then held, by such Major Investor bears to the total number of shares
of Common Stock then outstanding assuming full conversion and exercise of all
convertible or exercisable securities (such portion, with respect to each such
Major Investor, the "Pro Rata Portion" and the aggregate number of such Shares
subject to all of the Major Investors' Pro Rata Portions, the "Total Shares
Amount"). Such purchase shall be completed at the same closing as that of any
third party purchasers or at an additional closing thereunder. The Company shall
promptly, in writing, inform each Major Investor that purchases all the shares
available to it (each, a "Fully-Exercising Investor") of any other Major
Investor's failure to do likewise (but only if the total number of Shares
purchased is less than the Total Shares Amount). During the ten (10) day period
commencing after receipt of such information, each Fully-Exercising Investor
shall be entitled to obtain that portion of the Shares for which Major Investors
were entitled to subscribe but which were not subscribed for by the Major
Investors that is equal to the proportion that the number of shares of Common
Stock issued and held, or issuable upon conversion and exercise of all
convertible or exercisable securities then held, by such Fully-Exercising
Investor bears to the total number of shares of Common Stock then outstanding
(assuming full conversion and exercise of all convertible or exercisable
securities).

                        (c) The Company may, during the 45-day period following
the expiration of the period provided in subsection 2.3(b) hereof, offer the
remaining unsubscribed portion of the Shares to any person or persons at a price
not less than, and upon terms no more favorable to the offeree than those
specified in the Notice. If the Company does not enter into an agreement for the
sale of the Shares within such period, or if such agreement is not consummated
within 60 days of the execution thereof, the right provided hereunder shall be
deemed to be revived and such Shares shall not be offered unless first reoffered
to the Major Investors in accordance herewith.

                        (d) The right of first offer in this paragraph 2.3 shall
not be applicable to (i) the issuance of securities in connection with stock
splits or dividends; (ii) the issuance or sale of Common Stock (or options
therefor) to employees, consultants and directors, pursuant to stock option or
stock purchase plans or agreements approved by the Board of Directors for the
primary purpose of soliciting or retaining their services, including a majority
of the members of the Board of Directors serving as representatives of the
holders of the Company's Preferred

                                      -16-
<PAGE>

Stock (the "Preferred Directors"); (iii) the issuance of securities to financial
institutions, lessors, brokers or similar persons in connection with commercial
credit arrangements, equipment financings, commercial property lease
transactions, or similar transactions approved by the Board of Directors,
including a majority of the Preferred Directors; (iv) the issuance of securities
pursuant to the conversion or exercise of convertible or exercisable securities
currently outstanding; (v) the issuance of securities in connection with bona
fide acquisition, merger or similar transactions, the terms of which have been
approved by the Board of Directors, including a majority of Preferred Directors;
(vi) the issuance or sale of the Series E Preferred Stock pursuant to the
Purchase Agreement, (vii) the issuance of common stock in an initial public
offering registered under the Securities Act; or (viii) the issuance of
securities to an entity, as a component of any strategic partnership or other
business relationship with such entity not entered into primarily for
capital-raising purposes and approved by the Board of Directors, including a
majority of Preferred Directors. In addition to the foregoing, the right of
first offer in this paragraph 2.3 shall not be applicable with respect to any
Major Investor and any subsequent securities issuance, if (i) at the time of
such subsequent securities issuance, the Major Investor is not an "accredited
investor," as that term is then defined in Rule 501(a) under the Securities Act,
and (ii) such subsequent securities issuance is otherwise being offered only to
accredited investors.

                        (e) Notwithstanding the foregoing, the right of first
offer in this Section 2.3 shall terminate with respect to any Major Investor who
fails to purchase all of such Major Investor's Pro Rata Portion pursuant to this
Section 2.3.

                  2.4 LIKE TREATMENT OF HOLDERS. Neither the Company nor any of
its affiliates shall, directly or indirectly, without the consent of the Board
of Directors including the approval of a majority of the Preferred Directors,
pay or cause to be paid any consideration, whether by way of interest, fee,
payment for the redemptions or exchange of Series A, Series B, Series C, Series
D or Series E Preferred Stock (together, the "Preferred Stock"), or otherwise,
to any holder of Preferred Stock for or as an inducement to, or in connection
with solicitation of, any consent, waiver or amendment of any terms or
provisions of the Preferred Stock bound by such consent, waiver or amendment,
whether or not such holders so consent, waive or agree to amend and whether or
not such holders tender their Preferred Stock for redemption or exchange.

                  2.5 TERMINATION OF COVENANTS.

                        (a) The covenants set forth in Sections 2.1 through
Section 2.4 shall terminate as to each Holder and be of no further force or
effect (i) immediately prior to the consummation of a Qualified IPO, or (ii)
upon termination of the entire Agreement upon a change in control of the
Company, as provided in Section 3.1.

                        (b) The covenants set forth in Sections 2.1 and 2.2
shall terminate as to each Holder and be of no further force or effect when the
Company first becomes subject to the periodic reporting requirements of Sections
13 or 15(d) of the Exchange Act, if this occurs earlier than the events
described in Section 2.5(a) above.

                  2.6 TRAVEL EXPENSES. The Company shall reimburse the
reasonable and documented travel expenses, including coach class airfare,
incurred by the non-employee Board members in connection with their physical
attendance at Board of Directors meetings.

                                      -17-
<PAGE>

            3. MISCELLANEOUS.

                  3.1 TERMINATION OF ENTIRE AGREEMENT. This Agreement shall
terminate upon a deemed liquidation pursuant to Article IV, Section B(2)(c)(i)
of the Company's Fifth Amended and Restated Certificate of Incorporation, as
such may be amended from time to time.

                  3.2 SUCCESSORS AND ASSIGNS. Except as otherwise provided in
this Agreement, the terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the respective permitted successors and assigns
of the parties (including transferees of any of the Preferred Stock or any
Common Stock issued upon conversion thereof). Nothing in this Agreement, express
or implied, is intended to confer upon any party other than the parties hereto
or their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.

                  3.3 AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended or waived only with the written consent of the Company and the holders
of a majority of the Registrable Securities then outstanding, not including the
Founders' Stock; provided that if such amendment would affect the Founders'
Stock (i) in a manner different than securities issued to the Investors and (ii)
in a manner adverse to the interests of the holders of the Founders' Stock, then
such amendment also shall require the consent of the holder or holders of a
majority of the Founders' Stock. Any amendment or waiver effected in accordance
with this paragraph shall be binding upon each party to the Agreement, whether
or not such party has signed such amendment or waiver, each future holder of all
such Registrable Securities, and the Company.

                  3.4 NOTICES. Unless otherwise provided, any notice required or
permitted by this Agreement shall be in writing and shall be deemed sufficient
upon delivery, when delivered personally or by overnight courier or sent by
telegram or fax (upon customary notice of delivery), or forty-eight (48) hours
after being deposited in the U.S. mail, as certified or registered mail, with
postage prepaid, and addressed to the party to be notified at such party's
address or fax number as set forth on the signature pages hereto or as
subsequently modified by written notice.

                  3.5 SEVERABILITY. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, the parties agree to
renegotiate such provision in good faith. In the event that the parties cannot
reach a mutually agreeable and enforceable replacement for such provision, then
(a) such provision shall be excluded from this Agreement, (b) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (c) the
balance of the Agreement shall be enforceable in accordance with its terms.

                  3.6 GOVERNING LAW. This Agreement and all acts and
transactions pursuant hereto shall be governed, construed and interpreted in
accordance with the laws of the State of Delaware, without giving effect to
principles of conflicts of laws.

                  3.7 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

                                      -18-
<PAGE>

                  3.8 TITLES AND SUBTITLES. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.

                  3.9 AGGREGATION OF STOCK. All shares of Series A, Series B,
Series C, Series D and Series E Preferred Stock held or acquired by affiliated
entities or persons or related venture funds shall be aggregated together for
the purpose of determining the availability of any rights under this Agreement.
For the purposes of this Agreement, "affiliate" means a person that directly, or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, the person specified and includes, without
limitation any person meeting the definition of "affiliate" set forth in Rule
405 of the Securities Act.

                  3.10 DELAYS OR OMISSIONS. No delay or omission to exercise any
right, power or remedy accruing to any party under this Agreement, upon any
breach or default of any other party under this Agreement, shall impair any such
right, power or remedy of such non-breaching or non-defaulting party nor shall
it be construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any party of any
breach or default under this Agreement, or any waiver on the part of any party
of any provisions or conditions of this Agreement, must be in writing and shall
be effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
party, shall be cumulative and not alternative.

                            [Signature Page Follows]

                                      -19-
<PAGE>

      The parties have executed this Fourth Amended and Restated Investors'
Rights Agreement as of the date first above written.

                                      COMPANY:

                                      ISILON SYSTEMS, INC.,
                                      a Delaware corporation

                                      By: /s/ Steven Goldman
                                         ---------------------------------------
                                         Steven Goldman, President

                                      Address:
                                      3101 Western Avenue
                                      Seattle, WA 98121

                                      Fax: (206) 315-7501

       [SIGNATURE PAGE TO ISILON SYSTEMS, INC. FOURTH AMENDED AND RESTATED
                          INVESTORS' RIGHTS AGREEMENT]

<PAGE>

                                      FOUNDERS:

                                      /s/ Sujal Patel
                                      ------------------------------------------
                                      Sujal Patel

                                      Address: 3101 Western Avenue
                                               Seattle, WA 98121

                                      Fax: (206) 315-7501

       [SIGNATURE PAGE TO ISILON SYSTEMS, INC. FOURTH AMENDED AND RESTATED
                          INVESTORS' RIGHTS AGREEMENT]

<PAGE>

       [SIGNATURE PAGE TO ISILON SYSTEMS, INC. FOURTH AMENDED AND RESTATED
                          INVESTORS' RIGHTS AGREEMENT]

<PAGE>

                                      INVESTORS:

                                      GRANITE GLOBAL VENTURES II L.P.

                                      By: Granite Global Ventures II L.L.C.,
                                      its General Partner

                                      By: /s/ Glenn Solomon
                                         ---------------------------------------
                                         Glenn Solomon
                                         Managing Director

                                      GGV II ENTREPRENEURS FUND L.P.

                                      By: Granite Global Ventures II L.L.C.,
                                      its General Partner

                                      By: /s/ Glenn Solomon
                                         ---------------------------------------
                                         Glenn Solomon
                                         Managing Director

                                      Address: 2494 Sand Hill Road, Suite 100
                                               Menlo Park, California 94025
                                      Fax: 650 475-2151

       [SIGNATURE PAGE TO ISILON SYSTEMS, INC. FOURTH AMENDED AND RESTATED
                          INVESTORS' RIGHTS AGREEMENT]

<PAGE>

                                      INVESTORS:

                                      FOCUS VENTURES II, L.P.

                                      By: Focus Ventures Partners II, L.P.

                                      By: /s/ James H. Boettcher
                                          --------------------------------------
                                          James H. Boettcher
                                          General Partner

                                      FV INVESTORS II QP, L.P.

                                      By: Focus Ventures Partners II, L.P.

                                      By: /s/ James H. Boettcher
                                          --------------------------------------
                                          James H. Boettcher
                                          General Partner

                                      FV INVESTORS II A, L.P.

                                      By: Focus Ventures Partners II, L.P.

                                      By: /s/ James H. Boettcher
                                          --------------------------------------
                                          James H. Boettcher
                                          General Partner

                                      Address: 525 University Avenue
                                               Suite 1400
                                               Palo Alto, CA 94301

                                      Fax: (650) 325-8400

       [SIGNATURE PAGE TO ISILON SYSTEMS, INC. FOURTH AMENDED AND RESTATED
                          INVESTORS' RIGHTS AGREEMENT]

<PAGE>

                                      INVESTORS:

                                      LEHMAN BROTHERS VENTURE
                                      PARTNERS 2003-C, L.P.

                                      By: Lehman Brothers Venture GP Partnership
                                          2003 L.P.,
                                      Its:  General Partner

                                      By:   Lehman Brothers Venture Associates
                                            2003 LLC,
                                      Its:  General Partner

                                      By:   /s/ Brian Paul
                                            ------------------------------------
                                            Brian Paul
                                            Vice President

                                      LEHMAN BROTHERS VENTURE
                                      PARTNERS 2003-P, L.P.

                                      By: Lehman Brothers Venture GP Partnership
                                          2003 L.P.,
                                      Its:  General Partner

                                      By:   Lehman Brothers Venture Associates
                                            2003 LLC,
                                      Its:  General Partner

                                      By:   /s/ Brian Paul
                                            ------------------------------------
                                            Brian Paul
                                            Vice President

                                      Address: 155 Linfield Drive
                                               Menlo Park, CA 94025
                                      Fax:     (650) 289-4900

       [SIGNATURE PAGE TO ISILON SYSTEMS, INC. FOURTH AMENDED AND RESTATED
                          INVESTORS' RIGHTS AGREEMENT]

<PAGE>

                               LEHMAN BROTHERS VENTURE CAPITAL
                               2003 PARTNERSHIP

                               By:  Lehman Brothers Venture Associates
                                    2003 LLC,
                               Its: General Partner

                               By:  LB I Group Inc.,
                               Its: General Partner

                               By:  /s/ Brian Paul
                                    -------------------------------------------
                                    Brian Paul
                                    Vice President

                               LEHMAN BROTHERS P.A. LLC

                               By:  /s/ Brian Paul
                                    -------------------------------------------
                                    Brian Paul
                                    Vice President

                               LEHMAN BROTHERS VENTURE CAPITAL PARTNERS II, L.P.

                               By:   Lehman Brothers Venture Associates II LLC,
                               Its:  General Partner

                               By:  /s/ Brian Paul
                                    -------------------------------------------
                                    Brian Paul
                                    Vice President

       [SIGNATURE PAGE TO ISILON SYSTEMS, INC. FOURTH AMENDED AND RESTATED
                          INVESTORS' RIGHTS AGREEMENT]

<PAGE>

                                   LEHMAN BROTHERS PARTNERSHIP
                                   ACCOUNT 2000/2001, L.P.

                                   By:  Lehman Brothers Partnership GP
                                        2000/2001, L.P.,
                                   Its: General Partner

                                   By:  LB I Group Inc.,
                                   Its: General Partner

                                   By:  /s/ Brian Paul
                                        ----------------------------------------
                                        Brian Paul
                                        Vice President

                                   LEHMAN BROTHERS OFFSHORE PARTNERSHIP
                                   ACCOUNT 2000/2001, L.P.

                                   By:  Lehman Brothers Offshore
                                        Partnership GP 2000/2001, L.P.,
                                   Its: General Partner

                                   By:  Lehman Brothers Offshore Partners Ltd.,
                                   Its: General Partner

                                   By:  /s/ Brian Paul
                                        ----------------------------------------
                                        Brian Paul
                                        Vice President

       [SIGNATURE PAGE TO ISILON SYSTEMS, INC. FOURTH AMENDED AND RESTATED
                          INVESTORS' RIGHTS AGREEMENT]

<PAGE>

                                      INVESTORS:

                                      SEQUOIA CAPITAL X
                                      SEQUOIA TECHNOLOGY PARTNERS X
                                      SEQUOIA CAPITAL X PRINCIPALS FUND

                                      By:  SCX Management, L.L.C.
                                           A Delaware Limited Liability Company
                                           General Partner of Each

                                      By:    /s/ Doug Leone
                                            ------------------------------------
                                            (signature)

                                      Name:  Doug Leone
                                            ------------------------------------
                                            (print name)

                                      Title: Managing Member

                                      Address: 3000 Sand Hill Road
                                               Building 4, Suite 280
                                               Menlo Park, CA 94025

                                      Fax:     (650) 854-2977

       [SIGNATURE PAGE TO ISILON SYSTEMS, INC. FOURTH AMENDED AND RESTATED
                          INVESTORS' RIGHTS AGREEMENT]

<PAGE>

                                      INVESTORS:

                                      ATLAS VENTURE FUND V, L.P.
                                      ATLAS VENTURE PARALLEL FUND V-A C.V.
                                      ATLAS VENTURE ENTREPRENEURS' FUND V, L.P.

                                      By:   Atlas Venture Associates V, L.P.
                                      Its:  General Partner

                                      By:   Atlas Venture Associates V, Inc.
                                      Its:  General Partner

                                      By:   /s/ Jeanne Larkin Henry
                                            -----------------------------------
                                            (signature)

                                      Name: Jeanne Larkin Henry
                                            -----------------------------------
                                            (print name)

                                      Title: VP

                                      Address: 890 Winter Street, Suite 320
                                               Waltham, MA 02451

                                      Fax:     (781) 622-1701

       [SIGNATURE PAGE TO ISILON SYSTEMS, INC. FOURTH AMENDED AND RESTATED
                          INVESTORS' RIGHTS AGREEMENT]

<PAGE>

                                      INVESTORS:

                                      MADRONA VENTURE FUND I-A, LP

                                      By:    Madrona Investment Partners, LLC,
                                      Its:   General Partner

                                      By:      /s/ Matthew McIlwain
                                             -----------------------------------
                                             (signature)

                                      Name:    Matthew McIlwain
                                             -----------------------------------
                                             (print name)

                                      Title: Managing Director

                                      MADRONA VENTURE FUND I-B, LP

                                      By:    Madrona Investment Partners, LLC,
                                      Its:   General Partner

                                      By:      /s/ Matthew McIlwain
                                             -----------------------------------
                                             (signature)

                                      Name:    Matthew McIlwain
                                             -----------------------------------
                                             (print name)

                                      Title: Managing Director

                                      MADRONA MANAGING DIRECTOR FUND, LLC

                                      By:      /s/ Matthew McIlwain
                                             -----------------------------------
                                             (signature)

                                      Name:    Matthew McIlwain
                                             -----------------------------------
                                             (print name)

                                      Title: Managing Director

                                      Address: 1000 Second Avenue, Suite 3700
                                               Seattle, WA 98104
                                      Fax:     (206) 674-8703

       [SIGNATURE PAGE TO ISILON SYSTEMS, INC. FOURTH AMENDED AND RESTATED
                          INVESTORS' RIGHTS AGREEMENT]

<PAGE>

                                      INVESTORS:

                                        /s/ Sujal Patel
                                      ------------------------------------------
                                      Sujal Patel

                                      Address: 3101 Western Avenue
                                               Seattle, WA 98121

                                      Fax: (206) 315-7501

       [SIGNATURE PAGE TO ISILON SYSTEMS, INC. FOURTH AMENDED AND RESTATED
                          INVESTORS' RIGHTS AGREEMENT]

<PAGE>
INVESTOR:
Rolling Bay Ventures LLC
a Washington limited
liability company

By: /s/ Geoffrey R. Entress
Geoffrey R. Entress

[SIGNATURE PAGE TO ISILON SYSTEMS, INC. FOURTH AMENDED AND RESTATED
                          INVESTORS' RIGHTS AGREEMENT]

<PAGE>

                                    EXHIBIT A
                                    INVESTORS

      CLOSING: JULY 19, 2006

<TABLE>
<CAPTION>
                                           NO. OF SHARES OF  NO. OF SHARES OF  NO. OF SHARES OF  NO. OF SHARES OF  NO. OF SHARES OF
                                               SERIES A          SERIES B          SERIES C          SERIES D         SERIES E
                   INVESTOR NAME           PREFERRED STOCK    PREFERRED STOCK  PREFERRED STOCK   PREFERRED STOCK   PREFERRED STOCK
                   -------------           ----------------  ----------------  ----------------  ----------------  ----------------
<S>                                        <C>               <C>               <C>               <C>               <C>
Granite Global Ventures II L.P.                      -0-               -0-               -0-                -0-        1,083,607
GGV II Entrepreneurs Fund L.P.                       -0-               -0-               -0-                -0-           22,679
Focus Ventures II, L.P.                              -0-               -0-               -0-          3,260,192          100,266
FV Investors II QP, L.P.                             -0-               -0-               -0-            128,691            3,958
FV Investors II A, L.P.                              -0-               -0-               -0-             42,898            1,319
Lehman Brothers Venture Capital
 Partners II, L.P.                                   -0-               -0-         1,049,645            419,735           45,190
Lehman Brothers P.A. LLC                             -0-               -0-           737,014            294,720           31,731
Lehman Brothers Partnership
 Account 2000/2001, L.P.                             -0-               -0-           332,061            132,786           14,296
Lehman Brothers Offshore Partnership
 Account 2000/2001, L.P.                             -0-               -0-            86,120             34,438            3,708
Lehman Brothers Venture Capital
 2003 Partnership                                    -0-               -0-         1,023,939            409,456           44,083
Lehman Brothers Venture
 Partners 2003-C, L.P.                               -0-               -0-         1,683,502            673,204           72,480
Lehman Brothers Venture
 Partners 2003-P, L.P.                               -0-               -0-         1,754,386            701,550           75,532
Sequoia Capital X                                    -0-        12,960,526         4,837,823          3,824,316          676,583
Sequoia Technology Partners X                        -0-         1,921,053           696,828            550,845           97,453
Sequoia Capital X Principals Fund                    -0-         1,565,789           431,341            340,977           60,324
Atlas Venture Fund V, L.P.                     8,645,432         7,797,528         5,797,773          4,679,817          827,934
Atlas Venture Parallel Fund V-A C.V.           1,073,900           968,577           720,175            581,307          205,684
Atlas Venture Parallel Fund V-B C.V.           1,073,900           968,577           720,175            581,307              -0-
Atlas Venture Entrepreneurs' Fund V, L.P.        143,910           129,797            96,509             77,899           13,782
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                           NO. OF SHARES OF  NO. OF SHARES OF  NO. OF SHARES OF  NO. OF SHARES OF  NO. OF SHARES OF
                                               SERIES A          SERIES B          SERIES C          SERIES D         SERIES E
                   INVESTOR NAME           PREFERRED STOCK    PREFERRED STOCK  PREFERRED STOCK   PREFERRED STOCK   PREFERRED STOCK
                   -------------           ----------------  ----------------  ----------------  ----------------  ----------------
<S>                                        <C>               <C>               <C>               <C>               <C>
Madrona Venture Fund I-A, LP                   5,786,870         5,219,343         4,552,701          3,231,931          577,908
Madrona Venture Fund I-B, LP                     629,835           568,052           495,496            351,749           62,897
Madrona Managing Director Fund LLC               760,439           685,850           598,249            424,693           75,940
Sujal Patel                                      698,057            21,930             8,333              2,080              -0-
Paul Mikesell                                    116,343            10,965             8,333              2,080              -0-
Rolling Bay Ventures LLC                         114,286            16,447            75,000             25,999              -0-
Daniel S. Weld                                       -0-            16,446            50,000             25,999              -0-
WS Investment Company, LLC                           -0-               -0-            52,930                -0-              -0-
CLEF, L.P.                                           -0-               -0-            25,000                -0-              -0-
Eastman Kodak Company                                -0-               -0-         1,666,667                -0-              -0-
VLG Investments, LLC                              45,715            35,087               -0-                -0-              -0-
UBS Financial Services, Inc. FBO Craig
 Sherman                                           5,714             4,386               -0-                -0-              -0-
CNA Trust Corporation TTEE VLG 401(k)
 Retirement Savings Plan FBO
 Mark Handfelt                                     5,714               -0-               -0-                -0-              -0-
John C. Morrow                                       -0-             4,384               -0-                -0-              -0-
</TABLE>

                                      -2-

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