Document:

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                                                                    Exhibit 4.2

                           ROSETTA INPHARMATICS, INC.

         SIXTH AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT

         This Sixth Amended and Restated Investors' Rights Agreement (this
"AGREEMENT") is made as of March 15, 2000, by and among Rosetta Inpharmatics,
Inc., a Delaware corporation (the "COMPANY"), and the holders of the outstanding
shares of the Company's Series A Preferred Stock (the "SERIES A PREFERRED")
listed on EXHIBIT A hereto (the "SERIES A HOLDERS"), the holders of the
outstanding shares of the Company's Series B Preferred Stock (the "SERIES B
PREFERRED") listed on EXHIBIT B hereto (the "SERIES B HOLDERS"), the holders of
shares of Series C Preferred Stock (the "SERIES C PREFERRED") listed on EXHIBIT
C hereto (the "SERIES C HOLDERS"), the holder of shares of Series D Preferred
Stock (the "SERIES D PREFERRED") listed on EXHIBIT D hereto (the "SERIES D
HOLDER"), the holders of shares of Series E Preferred Stock (the "SERIES E
PREFERRED") listed on EXHIBIT E hereto (the "SERIES E HOLDERS"), the holders of
certain outstanding shares of the Company's Common Stock (the "COMMON STOCK")
listed on EXHIBIT F-1 hereto (the "FOUNDER COMMON HOLDERS"), the holders of
certain outstanding shares of Common Stock listed on EXHIBIT F-2 hereto (the
"FRED HUTCHINSON COMMON HOLDER") and the holders of certain outstanding shares
of the Common Stock listed on EXHIBIT F-3 hereto (the "ACACIA COMMON HOLDERS"
and, collectively with the Founder Common Holders and Fred Hutchinson Common
Holder, the "COMMON HOLDERS"), the holders of certain outstanding warrants to
purchase Series A and Series C Preferred listed on EXHIBIT G hereto (the
"PREFERRED WARRANT HOLDERS"), and the holders of certain outstanding warrants to
purchase Common Stock listed on EXHIBIT I hereto (the "COMMON WARRANT HOLDERS").
The Series A Holders, the Series B Holders, the Series C Holders, the Series D
Holders, the Series E Holders, the Founder Common Holders, the Fred Hutchinson
Common Holder, the Acacia Common Holders, the Preferred Warrant Holders and the
Common Warrant Holders shall sometimes be collectively referred to hereinafter
as the "INVESTORS" and each individually as an "INVESTOR."

                                    RECITALS

         A. The Company and the Series A Holders entered into an Investors'
Rights Agreement dated as of June 6, 1997 (the "RIGHTS AGREEMENT") in connection
with the initial issuance and sale by the Company of Series A Preferred pursuant
to the Series A Preferred Stock Purchase Agreement dated as of June 6, 1997 by
and among the Company and certain of the Series A Holders.

         B. The Company and the Series A Holders entered into the Amended and
Restated Investors Rights Agreement on October 30, 1997 (the "FIRST RESTATED
RIGHTS AGREEMENT") amending and restating the Rights Agreement in its entirety
to provide certain of the rights set forth therein to the subsequent purchasers
of Series A Preferred in connection with the final closing of the sale of Series
A Preferred Stock on October 30, 1997.

         C. The Company, the Series A Holders, the Common Holders and the
Preferred Warrant Holders entered into a second Amended and Restated Investors'
Rights Agreement on December 19, 1997 (the "SECOND RESTATED RIGHTS AGREEMENT")
amending and restating the First

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Restated Rights Agreement in its entirety in order to provide certain of the
rights set forth therein to the Preferred Warrant Holders and the Common
Holders.

         D. In connection with the closing of the Agreement and Plan of
Reorganization (the "REORGANIZATION AGREEMENT") dated as of January 29, 1999 by
and among the Company, Rosetta Acquisition Corporation, a Delaware corporation
and a wholly-owned subsidiary of the Company ("MERGER SUB"), and Acacia
Biosciences, Inc., a Delaware corporation ("ACACIA"), the Company, and a
majority of the Series A Holders, the Common Holders, the Preferred Warrant
Holders and the Common Warrant Holders agreed to amend and restate the Second
Restated Rights Agreement and enter into a Third Amended and Restated Investors'
Rights Agreement (the "THIRD RESTATED RIGHTS AGREEMENT").

         E. The Company, the Series A Holders, the Series B Holders, the Series
C Holders, the Common Holders, the Acacia Common Holders, the Preferred Warrant
Holders and the Common Warrant Holders entered into a Fourth Amended and
Restated Investors' Rights Agreement (the "FOURTH RESTATED RIGHTS AGREEMENT") in
April, 1999.

         F. The Company, the Series A Holders, the Series B Holders, the Series
C Holders, the Series D Holders, the Common Holders, the Preferred Warrant
Holders and the Common Warrant Holders entered into a Fifth Amended and Restated
Investors' Rights Agreement (the "FIFTH RESTATED RIGHTS AGREEMENT") in October,
1999.

         G. The Company and the Series E Holders are entering into a Series E
Stock Purchase Agreement of even date herewith (the "PURCHASE AGREEMENT")
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 and the Series E Holders 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 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.

         H. The Company and the holders of at least a majority of Registrable
Securities (as defined in the Fifth Restated Rights Agreement) desire to amend
and restate the Fifth Restated Rights Agreement in its entirety in accordance
with the provisions set forth in Section 4.7 of the Fifth Restated Rights
Agreement and to accept the rights created pursuant hereto in lieu of the rights
granted to such holders under the Fifth Restated Rights Agreement in order to
induce the Company and the Series E Holders to enter into the Purchase Agreement
and to provide certain rights to the Series E Holders, all as set forth in this
Agreement.

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                                    AGREEMENT

         The parties hereby agree as follows:

                  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 "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 Preferred held by the Series A Holders set forth on EXHIBIT A, (ii) the shares
of Common Stock issuable or issued upon conversion of the Series B Preferred
held by the Series B Holders set forth on EXHIBIT B, (iii) the shares of Common
Stock issuable or issued upon conversion of the Series C Preferred held by the
Series C Holders set forth on EXHIBIT C, (iv) the shares of Common Stock
issuable or issued upon conversion of the Series D Preferred held by the Series
D Holders set forth on EXHIBIT D, (v) the shares of Common Stock issuable or
issued upon conversion of the Series E Preferred held by the Series E Holders
set forth on EXHIBIT E, (vi) the 352,000 shares of Common Stock issued to the
Fred Hutchinson Cancer Research Center as set forth on EXHIBIT F-2, (vii) the
1,973,842 shares of Common Stock held by the Founder Holders set forth on
EXHIBIT F-1, (viii) the 1,860,176 shares of Common Stock held by the Acacia
Common Holders set forth on EXHIBIT F-3, (ix) the shares of Common Stock
issuable or issued upon the conversion of the Preferred Stock issued upon
exercise of those certain warrants issued to the Preferred Warrant Holders set
forth on EXHIBIT G, and (x) the shares of Common Stock issuable or issued upon
the exercise of those certain warrants set forth on EXHIBIT H (the shares of
Common Stock referenced in (i), (ii), (iii), (iv), (v), (vi), (vii), (viii) (ix)
and (x) of this Section 1.1(b) are collectively referred to hereinafter as the
"STOCK") and (xi) any other shares of Common Stock 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 Stock; PROVIDED, HOWEVER, (A) the shares referred to
in clauses (ii) and (viii) above shall not be Registrable Securities for the
purposes of Sections 1.2 and 1.6 hereof and (B) the shares referred to in clause
(vi) above shall not be Registrable Securities for the purposes of Sections 1.2,
1.6 and 1.12 hereof. 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 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;

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                                   (c) The number of shares of "REGISTRABLE
SECURITIES THEN OUTSTANDING" shall be determined by 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 any Registrable Securities or any assignee
thereof in accordance with Section 1.13 hereof;

                                   (e) The term "FORM S-3" means such form under
the Act as in effect on the date hereof or any successor form under the Act; and

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

                           1.2      REQUEST FOR REGISTRATION

                                   (a) If the Company shall receive at any time
after the earlier of (i) June 1, 2002, or (ii) six (6) months after the
consummation of the sale of securities pursuant to a registration statement
filed by the Company under the Act in connection with the initial firm
commitment underwritten offering of its securities to the general public (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) (the "IPO"), a written request from the
Holders of a majority of the Registrable Securities then outstanding that the
Company file a registration statement under the Act covering the registration of
at least fifty percent (50%) of the Registrable Securities then outstanding (or
a lesser percent if the anticipated aggregate offering price, net of
underwriting discounts and commissions, would exceed $7,500,000), 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 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 4.5.

                                   (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 a
majority in interest of the Initiating Holders and shall be reasonably
acceptable to the Company. In such event, the right of any Holder to include his
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
a majority in interest of 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
1.4(e)) enter into an underwriting agreement in customary form with the

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underwriter or underwriters selected for such underwriting by a majority in
interest of the Initiating Holders. 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 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 the Initiating 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 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 a period of not more than 120 days after
receipt of the request of the Initiating Holders; PROVIDED, HOWEVER, that the
Company may not utilize this right more than once in any twelve-month period.

                                   (d) Notwithstanding the foregoing, after the
Company has effected one registration pursuant to this Section 1.2 and such
registration has been declared or ordered effective, the second such
registration shall require a written request from Holders of only twenty-five
percent (25%) of the Registrable Securities then outstanding that the Company
file a registration statement under the Act covering the registration of at
least twenty-five percent (25%) of the Registrable Securities then outstanding.

                                   (e) 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
two (2) registrations pursuant to this Section 1.2 and such registrations have
been declared or ordered effective;

                                            (ii) During the period  starting
with the date sixty (60) days prior to the Company's good faith estimate of
the date of filing of, and ending on a date one hundred eighty (180) days
after the effective date of, a registration subject to Section 1.3 hereof;
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 1.12
below.

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                           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 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 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 4.5,
the Company shall, subject to the provisions of Section 1.8, cause to be
registered under the Act all of the Registrable Securities that each such Holder
has requested to be registered.

                           1.4      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. The Company shall not be required to file, cause to
become effective or maintain the effectiveness of any registration statement
that contemplates a distribution of securities on a delayed or continuous basis
pursuant to Rule 415 under the Act.

                                   (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 Act with respect to the disposition of all
securities covered by such registration statement for up to one hundred twenty
(120) days.

                                   (c) Furnish to the Holders such numbers of
copies of a prospectus, including a preliminary prospectus, in conformity with
the requirements of the 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

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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 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, such obligation to continue for one hundred twenty (120) days.

                                   (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.

                                   (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, or, if such
securities are not being sold through underwriters, on the date that the
registration statement with respect to such securities becomes effective, (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,
if any, 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.

                           1.5 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 1.12 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 subsection 1.12(b)(2), whichever is applicable.

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                           1.6      EXPENSES OF 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 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 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.

                           1.7      EXPENSES  OF  COMPANY  REGISTRATION.  The
Company shall bear and pay all expenses incurred in connection with any
registration, filing or qualification of Registrable Securities with respect to
the registrations pursuant to Section 1.3 for each Holder (which right may be
assigned as provided in Section 1.13), including (without limitation) all
registration, filing, and qualification fees, printers' and accounting fees
relating or apportionable thereto 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, but excluding
underwriting discounts and commissions relating to Registrable Securities.

                           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 of the
Holders' securities in such underwriting unless they accept 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 be required
to include in the offering only that number of such securities, including
Registrable 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 stockholders according to
the total amount of securities entitled to be included therein owned by each
selling stockholder or in such other proportions as shall mutually be agreed to
by such selling stockholders). For purposes of the preceding parenthetical
concerning apportionment, for any selling stockholder which is a holder of
Registrable Securities and which is a partnership or corporation, the partners,
retired partners and stockholders of such holder, or the estates and family
members of any such partners and retired partners and any trusts for the benefit
of any of the foregoing persons shall be deemed to be a single "SELLING
STOCKHOLDER," and any pro-rata reduction with respect to such "selling
stockholder" shall be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in such
"selling stockholder," as defined in this sentence.

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                           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 Act) for such Holder and each person, if any, who controls such
Holder or underwriter within the meaning of the 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 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 or final 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 Act, the Exchange Act, any state securities law
or any rule or regulation promulgated under the 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 in any such case
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 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 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, any legal or other expenses reasonably incurred by
any person intended to be indemnified pursuant to this

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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.

                                      -10-
<PAGE>

                                   (e) Notwithstanding the foregoing, to the
extent that the provisions on indemnification and contribution contained in the
underwriting agreement entered into in connection with the underwritten public
offering are in conflict with the foregoing provisions, the provisions in the
underwriting agreement shall control.

                                   (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 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 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 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     FORM S-3  REGISTRATION.  Beginning 180 days
after the consummation of the IPO, in case the Company shall receive from any
Holder or Holders of not less than twenty percent (20%) 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

                                      -11-
<PAGE>

compliance with respect to all or a part of the Registrable Securities owned by
such Holder or Holders, the Company will:

                                   (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 1.12: (1) if Form S-3 is not available for such offering by the Holders;
(2) 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
$1,000,000; (3) 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 120 days
after receipt of the request of the Holder or Holders under this Section 1.12;
PROVIDED, HOWEVER, that the Company shall not utilize this right more than once
in any twelve month period; (4) if the Company has, within the twelve (12) month
period preceding the date of such request, already effected one (1) registration
on Form S-3 for the Holders pursuant to this Section 1.12; (5) if the Company
has already effected a total of three (3) registration on Form S-3 for the
Holders pursuant to this Section 1.12; or (6) 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.

                                   (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. All expenses incurred in
connection with a registration requested pursuant to Section 1.12, including
(without limitation) all registration, filing, qualification, printers' and
accounting fees and the reasonable fees and disbursements of counsel for the
selling Holder or Holders and counsel for the Company, but excluding any
underwriters' discounts or commissions associated with Registrable Securities,
shall be borne pro rata by the Holder or Holders participating in the Form S-3
Registration. Registrations effected pursuant to this Section 1.12 shall not be
counted as demands for registration or registrations effected pursuant to
Sections 1.2 or 1.3, respectively.

                           1.13     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 transferee or assignee of at least 100,000 shares of

                                      -12-
<PAGE>

such securities, 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; and provided, further, 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 Act. For the purposes of determining the number of shares
of Registrable Securities held by a transferee or assignee, (i) the holdings of
transferees and assignees of a partnership who are partners or retired partners
of such partnership (including spouses and ancestors, lineal descendants and
siblings of such partners or spouses who acquire Registrable Securities by gift,
will or intestate succession), (ii) the holdings of transferees and assignees of
a corporation that control, are controlled by or under common control with such
corporation, and (iii) the holdings of transferees and assignees of a limited
liability company who are entities managed by the same manager or management
company, or managed or owned by an entity controlling, controlled by, or under
common control with, such manager or management company, shall be aggregated
together and with the partnership, corporation or limited liability company as
the case may be; provided that all assignees and transferees who would not
qualify individually for assignment of registration rights shall have a single
attorney-in-fact for the purpose of exercising any rights, receiving notices or
taking any action under Section 1.

                           1.14     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
outstanding Registrable Securities, 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 1.2 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 his 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.

                           1.15     "MARKET  STAND-OFF"  AGREEMENT.  Each Holder
hereby agrees that, during the period of duration (up to, but not exceeding, 180
days) specified by the Company and an underwriter of Common Stock or other
securities of the Company, following the date of the final prospectus
distributed in connection with a registration statement of the Company filed
under the Act, it shall not, to the extent requested by the Company and such
underwriter, directly or indirectly sell, offer to sell, contract to sell
(including, without limitation, any short sale), grant any option to purchase or
otherwise transfer or dispose of (other than to donees who agree to be similarly
bound) any securities of the Company held by it at any time during such period
except Common Stock included in such registration; PROVIDED, HOWEVER, that:

                                   (a) such agreement shall be applicable only
during the two-year period following the date of the final prospectus
distributed pursuant to the first such

                                      -13-
<PAGE>

registration statement of the Company which covers Common Stock (or other
securities) to be sold on its behalf to the public in an underwritten offering;
and

                                   (b) all officers and directors of the Company
and all five-percent securityholders (on a fully diluted basis) enter into
similar agreements.

                           In order to enforce the foregoing covenant, the
Company may impose stop-transfer instructions with respect to the Registrable
Securities of each Holder (and the shares or securities of every other person
subject to the foregoing restriction) until the end of such period, and each
Holder agrees that, if so requested, such Holder will execute an agreement in
the form provided by the underwriter containing terms which are essentially
consistent with the provisions of this Section 1.15.

                           Notwithstanding the foregoing,  the obligations
described in this Section 1.15 shall not apply to a registration relating solely
to employee benefit plans on Form S-1 or Form S-8 or similar forms which may be
promulgated in the future, or a registration relating solely to an SEC Rule 145
transaction on Form S-4 or similar forms which may be promulgated in the future.

                           1.16     TERMINATION  OF  REGISTRATION  RIGHTS.  No
Holder shall be entitled to exercise any right provided for in this Section 1
after the earlier of (i) three (3) years following the consummation of the IPO,
or (ii) such time as Rule 144 or another similar exemption under the Act is
available for the sale of all of such Holder's shares during a three (3)-month
period without registration.

                  2.       COVENANTS OF THE COMPANY.

                           2.1      DELIVERY OF FINANCIAL  STATEMENTS.  The
Company shall deliver to each Investor holding, and to transferees of, at least
250,000 shares of Registrable Securities, 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 ninety (90) 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 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 thirty (30) days after the end of each of the first three (3) quarters of
each fiscal year of the Company, an unaudited profit or loss statement, a
statement of cash flows for such fiscal quarter and an unaudited balance sheet
as of the end of such fiscal quarter;

                                   (c) as soon as practicable, but in any event
thirty (30) days prior to the end of each fiscal year, a budget for the next
fiscal year, prepared on a monthly basis,

                                      -14-
<PAGE>

including balance sheets and sources and applications of funds statements for
such months and, as soon as prepared, any other budgets or revised budgets
prepared by the Company;

                                   (d) with respect to the financial statements
called for in subsection (b) 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

                                   (e) such other information relating to the
financial condition, business, prospects or corporate affairs of the Company as
the Investor or any assignee of the Investor may from time to time reasonably
request, PROVIDED, HOWEVER, that the Company shall not be obligated under this
subsection (e) or any other subsection of Section 2.1 to provide information
which it deems in good faith to be a trade secret or similar confidential
information.

                           2.2      INSPECTION.  The Company  shall  permit each
Investor who holds not less than 250,000 shares of Registrable Securities,
except for a Holder reasonably deemed by the Company to be a competitor of the
Company, at such Investor'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 at such
reasonable times as may be requested by the Investor; 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.

                           2.3      TERMINATION OF INFORMATION  AND INSPECTION
COVENANTS. The covenants set forth in Sections 2.1 and 2.2 shall terminate as to
Investors and be of no further force or effect when the sale of securities
pursuant to a registration statement filed by the Company under the Act in
connection with the firm commitment underwritten offering of its securities to
the general public is consummated or when the Company first becomes subject to
the periodic reporting requirements of Sections 13 or 15(d) of the Exchange Act,
whichever event shall first occur.

                           2.4      RIGHT OF FIRST OFFER.  Subject to the terms
and conditions specified in this Section 2.4, 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 2.4, a "MAJOR INVESTOR" shall mean any person who holds at least
250,000 shares of the Series A Preferred, Series B Preferred, Series C
Preferred, Series D Preferred and/or Series E Preferred (or the Common Stock
issued upon conversion thereof); PROVIDED, HOWEVER, a holder of Series D
Preferred shall have such right only in the event the Company is not exercising
its Put Right (as defined in the Series D Purchase Agreement between the Company
and the Purchasers named therein) in connection with such

                                      -15-
<PAGE>

sale. For purposes of this Section 2.4, Major Investor includes such shares held
by (i) any general partners and affiliates of a Major Investor and (ii) if the
Major Investor is a limited liability company, any entities managed by the same
manager or management company, or managed or owned by an entity controlling,
controlled by, or under common control with, such manager or management company.
A Major Investor who chooses to exercise the right of first offer may designate
as 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 15 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 conversion of all outstanding
Preferred Stock).

                                   (c) The Company may, during the 60-day period
following the expiration of the period provided in subsection 2.4(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 2.4 shall not be applicable:

                                            (i) to the issuance or sale of
Common Stock (or options therefor) to employees, consultants, directors or
vendors (if, with respect to vendors, in transactions with primarily
non-financing purposes), pursuant to plans or agreements approved by the Board
of Directors for the primary purpose of soliciting or retaining their services,

                                            (ii) to or after consummation of a
bona fide, firmly underwritten public offering of shares of Common Stock,
registered under the Act pursuant to a registration statement,

                                      -16-
<PAGE>

                                            (iii) to the issuance of securities
pursuant to the conversion or exercise of convertible or exercisable
securities,

                                            (iv) to the issuance of securities
in connection with a bona fide business acquisition of or by the Company,
whether by merger, consolidation, sale of assets, sale or exchange of stock or
otherwise,

                                            (v) to the issuance of securities to
financial institutions or lessors in connection with commercial credit
arrangements, equipment financings, or similar transactions,

                                            (vi) to the issuance or sale of the
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock or Series D Preferred Stock,

                                            (vii) to the issuance of securities
that, with unanimous approval of the Board of Directors of the Company,
are not offered to any existing stockholder of the Company,

                                            (viii) to the issuance of securities
in connection with any stock split, stock dividend or recapitalization by
the Company,

                                            (ix) to the issuance of Common Stock
upon conversion of the Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock or Series D Preferred Stock, or pursuant to
options, warrants or other securities outstanding as of the date hereof, or
pursuant to conversion of any convertible securities issuable upon exercise of
options, warrants or other securities outstanding as of the date hereof,

                                            (x) the  issuance of securities
pursuant to transactions involving technology licensing, research or development
activities or the distribution, manufacture or marketing of the Company's
products, or

                                            (xi) the issuance of securities
pursuant to a collaborative partnering arrangement with another corporation
or entity.

                  3.       TERMINATION OF PRIOR AGREEMENTS.

                           3.1      TERMINATION  OF FIFTH RESTATED  RIGHTS
AGREEMENT. Effective upon the consent of holders of a majority of the
Registrable Securities (as defined in the Fifth Restated Rights agreement) and
conditioned upon the purchase and sale of the Series E Preferred Stock pursuant
to the Purchase Agreement, the Fifth Restated Rights Agreement is hereby
terminated and of no further force and effect.

                           3.2      TERMINATION  OF PRIOR  RIGHTS.  Each Series
B Holder and Acacia Common Holder hereby agrees that such Holder shall have no
rights hereunder or under the Fourth Restated Rights Agreement unless such
Holder has executed the Termination Agreement by and among the Company, Acacia
Biosciences, Inc. and the other parties thereto attached as EXHIBIT K to the
Agreement and Plan and Reorganization dated as of January 29, 1999; PROVIDED,
HOWEVER, notwithstanding the foregoing such Holder shall be subject to Section
1.15 hereof.

                                      -17-
<PAGE>

                  4.       MISCELLANEOUS.

                           4.1      SUCCESSORS AND ASSIGNS.  Except as otherwise
provided herein, the terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the respective successors and assigns of the
parties (including transferees of any of the Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock or warrants to purchase Common Stock or Preferred Stock (or any
Common Stock issued upon conversion or exercise thereof) or Common Stock subject
to this Agreement). 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.

                           4.2      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 Washington, without giving effect to
principles of conflicts of laws.

                           4.3      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.

                           4.4      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.

                           4.5      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 and addressed to the party to be notified at
such party's address as set forth below or on EXHIBITS A, B, C, D, E, F, G, OR H
hereto or as subsequently modified by written notice.

                           4.6      EXPENSES.  If any  action at law or in
equity is necessary to enforce or interpret the terms of this Agreement, the
prevailing party shall be entitled to reasonable attorneys' fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled.

                           4.7      AMENDMENTS  AND WAIVERS.  Any term of this
Agreement may be amended and the observance of any term of this Agreement may be
waived (either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
a majority of the Registrable Securities then outstanding. Any amendment or
waiver effected in accordance with this paragraph shall be binding upon each
holder of any Registrable Securities then outstanding, each future holder of all
such Registrable Securities, and the Company.

                           4.8      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

                                      -18-
<PAGE>

faith. In the event that the parties cannot reach a mutually agreeable and
enforceable replacement for such provision, then (x) such provision shall be
excluded from this Agreement, (y) the balance of the Agreement shall be
interpreted as if such provision were so excluded and (z) the balance of the
Agreement shall be enforceable in accordance with its terms.

                           4.9      AGGREGATION  OF STOCK.  All shares of the
Preferred Stock held or acquired by affiliated entities or persons (and with
respect to limited liability companies, any entities managed by the same manager
or management company, or managed or owned by an entity controlling, controlled
by, or under common control with, such manager or management company) shall be
aggregated together for the purpose of determining the availability of any
rights under this Agreement.

                            [Signature pages follow.]

                                      -19-
<PAGE>

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

COMPANY:                                    INVESTORS:

ROSETTA INPHARMATICS, INC.                  ------------------------------------
                                            (Investor)

By: /s/ John J. King                        By:
  ----------------------------------------    ---------------------------------
  John J. King, II, Senior Vice President &
  Chief Operating Officer                   Name:
  Address: 405 Corporate Center                 --------------------------------
           12040 115th Avenue NE                (print)
           Suite 210                        Title:
           Kirkland, Washington  98034           ------------------------------

                                            Address:
                                                   -----------------------------
                                                   -----------------------------
                                                   -----------------------------

                  [SIGNATURE PAGE TO ROSETTA INPHARMATICS, INC.
                AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT]<PAGE>

                           ROSETTA INPHARMATICS, INC.

                                 1997 STOCK PLAN

         1.  PURPOSES OF THE PLAN.  The purposes of this 1997 Stock Plan are
to attract and retain the best available personnel for positions of
substantial responsibility, to provide additional incentive to Employees and
Consultants of the Company and its Subsidiaries and to promote the success of
the Company's business. Options granted under the Plan may be incentive stock
options (as defined under Section 422 of the Code) or nonstatutory stock
options, as determined by the Administrator at the time of grant of an option
and subject to the applicable provisions of Section 422 of the Code, as
amended, and the regulations promulgated thereunder. Stock purchase rights
may also be granted under the Plan.

         2.  DEFINITIONS.  As used herein, the following definitions shall
apply:

             (a)  "ADMINISTRATOR" means the Board or any of its Committees
appointed pursuant to Section 4 of the Plan.

             (b)  "APPLICABLE LAWS" means the legal requirements relating to
the administration of stock option and restricted stock purchase plans under
applicable U.S. state corporate laws, U.S. federal and applicable state
securities laws, the Code, any Stock Exchange rules or regulations and the
applicable laws of any other country or jurisdiction where Options are
granted under the Plan, as such laws, rules, regulations and requirements
shall be in place from time to time.

             (c)  "BOARD" means the Board of Directors of the Company.

             (d)  "CAUSE" for termination of a Participant's Continuous
Service Status will exist if the Participant is terminated for any of the
following reasons: (i) Participant's willful failure substantially to perform
his or her duties and responsibilities to the Company or deliberate violation
of a Company policy; (ii) Participant's commission of any act of fraud,
embezzlement, dishonesty or any other willful misconduct that has caused or
is reasonably expected to result in material injury to the Company; (iii)
unauthorized use or disclosure by Participant of any proprietary information
or trade secrets of the Company or any other party to whom the Participant
owes an obligation of nondisclosure as a result of his or her relationship
with the Company; or (iv) Participant's willful breach of any of his or her
obligations under any written agreement or covenant with the Company. The
determination as to whether a Participant is being terminated for Cause shall
be made in good faith by the Company and shall be final and binding on the
Participant. The foregoing definition does not in any way limit the Company's
ability to terminate a Participant's employment or consulting relationship at
any time as provided in Section 5(d) below, and the term "Company" will be
interpreted to include any Subsidiary, Parent or successor thereto, if
appropriate.

<PAGE>

             (e)  "CHANGE OF CONTROL" means a sale of all or substantially
all of the Company's assets, or any merger or consolidation of the Company
with or into another corporation other than a merger or consolidation in
which the holders of more than 50% of the shares of capital stock of the
Company outstanding immediately prior to such transaction continue to hold
(either by the voting securities remaining outstanding or by their being
converted into voting securities of the surviving entity) more than 50% of
the total voting power represented by the voting securities of the Company,
or such surviving entity, outstanding immediately after such transaction.

             (f)  "CODE" means the Internal Revenue Code of 1986, as amended.

             (g)  "COMMITTEE" means the Committee appointed by the Board of
Directors in accordance with Section 4(a) of the Plan.

             (h)  "COMMON STOCK" means the Common Stock of the Company.

             (i)  "COMPANY" means Rosetta Inpharmatics, Inc., a Delaware
corporation.

             (j)  "CONSULTANT" means any person, including an advisor, who is
engaged by the Company or any Parent or Subsidiary to render services and is
compensated for such services, and any director of the Company whether
compensated for such services or not.

             (k)  "CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT" means the
absence of any interruption or termination of service as an Employee or
Consultant. Continuous Status as an Employee or Consultant shall not be
considered interrupted in the case of: (i) sick leave; (ii) military leave;
(iii) any other leave of absence approved by the Administrator, provided that
such leave is for a period of not more than ninety (90) days, unless
reemployment upon the expiration of such leave is guaranteed by contract or
statute, or unless provided otherwise pursuant to Company policy adopted from
time to time; or (iv) in the case of transfers between locations of the
Company or between the Company, its Subsidiaries or their respective
successors. For purposes of this Plan, a change in status from an Employee to
a Consultant or from a Consultant to an Employee will not constitute an
interruption of Continuous Status as an Employee or Consultant.

             (l)  "CORPORATE TRANSACTION" means a sale of all or
substantially all of the Company's assets, or a merger, consolidation or
other capital reorganization of the Company with or into another corporation
and includes a Change of Control.

             (m)  "EMPLOYEE" means any person, including officers and
directors, employed by the Company or any Parent or Subsidiary of the
Company, with the status of employment determined based upon such minimum
number of hours or periods worked as shall be determined by the Administrator
in its discretion, subject to any requirements of the Code. The payment by
the Company of a director's fee to a Director shall not be sufficient to
constitute "employment" of such Director by the Company.

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

                                      -2-
<PAGE>

             (o)  "FAIR MARKET VALUE" means, as of any date, the fair market
value of the Common Stock, as determined by the Administrator in good faith
on such basis as it deems appropriate and applied consistently with respect
to Participants. Whenever possible, the determination of Fair Market Value
shall be based upon the closing price for the Shares as reported in the WALL
STREET JOURNAL for the applicable date.

             (p)  "INCENTIVE STOCK OPTION" means an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code, as designated in the applicable written option agreement.

             (q)  "INVOLUNTARY TERMINATION" means termination of a
Participant's Continuous Service Status under the following circumstances:
(i) termination without Cause by the Company or a Subsidiary, Parent or
successor thereto, as appropriate; or (ii) voluntary termination by the
Participant within 30 days following (A) a material reduction in the
Participant's job responsibilities, provided that neither a mere change in
title alone nor reassignment following a Change of Control to a position that
is substantially similar to the position held prior to the Change of Control
shall constitute a material reduction in job responsibilities; (B) relocation
by the Company or a Subsidiary, Parent or successor thereto, as appropriate,
of the Participant's work site to a facility or location more than 30 miles
from the Participant's principal work site for the Company at the time of the
Change of Control; or (C) a reduction in Participant's then-current base
salary by at least 25%, provided that an across-the-board reduction in the
salary level of all other employees or consultants in positions similar to
the Participant's by the same percentage amount as part of a general salary
level reduction shall not constitute such a salary reduction.

             (r)  "LISTED SECURITY" means any security of the Company that is
listed or approved for listing on a national securities exchange or
designated or approved for designation as a national market system security
on an interdealer quotation system by the National Association of Securities
Dealers, Inc..

             (s)  "NAMED EXECUTIVE" means any individual who, on the last day
of the Company's fiscal year, is the chief executive officer of the Company
(or is acting in such capacity) or among the four most highly compensated
officers of the Company (other than the chief executive officer). Such
officer status shall be determined pursuant to the executive compensation
disclosure rules under the Exchange Act.

             (t)  "NONSTATUTORY STOCK OPTION" means an Option not intended to
qualify as an Incentive Stock Option, as designated in the applicable written
option agreement.

             (u)  "OPTION" means a stock option granted pursuant to the Plan.

             (v)  "OPTIONED STOCK" means the Common Stock subject to an
Option or a Stock Purchase Right.

             (w)  "OPTIONEE" means an Employee or Consultant who receives an
Option or a Stock Purchase Right.

                                      -3-
<PAGE>

             (x)  "PARENT" means a "parent corporation", whether now or
hereafter existing, as defined in Section 424(e) of the Code, or any
successor provision.

             (y)  "PARTICIPANT" means any holder of one or more Options or
Stock Purchase Rights, or the Shares issuable or issued upon exercise of such
Options or Stock Purchase Rights, under the Plan.

             (z)  "PLAN" means this 1997 Stock Plan.

             (aa)  "REPORTING PERSON" means an officer, director, or greater
than ten percent stockholder of the Company within the meaning of Rule 16a-2
under the Exchange Act, who is required to file reports pursuant to Rule
16a-3 under the Exchange Act.

             (bb)  "RESTRICTED STOCK" means shares of Common Stock acquired
pursuant to a grant of a Stock Purchase Right under Section 10 below.

             (cc)  "RULE 16b-3" means Rule 16b-3 promulgated under the
Exchange Act, as the same may be amended from time to time, or any successor
provision.

             (dd)  "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 12 of the Plan.

             (ee)  "STOCK EXCHANGE" means any stock exchange or consolidated
stock price reporting system on which prices for the Common Stock are quoted
at any given time.

             (ff)  "STOCK PURCHASE RIGHT" means the right to purchase Common
Stock pursuant to Section 10 below.

             (gg)  "SUBSIDIARY" means a "subsidiary corporation," whether now
or hereafter existing, as defined in Section 424(f) of the Code, or any
successor provision.

             (hh)  "TEN PERCENT HOLDER" means a person who owns stock
representing more than ten percent (10%) of the voting power of all classes
of stock of the Company or any Parent or Subsidiary.

         3.  STOCK SUBJECT TO THE PLAN.  Subject to the provisions of Section
12 of the Plan, the maximum aggregate number of Shares that may be optioned
and sold under the Plan is 3,107,825 shares of Common Stock. The Shares may
be authorized, but unissued, or reacquired Common Stock. If an Option should
expire or become unexercisable for any reason without having been exercised
in full, the unpurchased Shares that were subject thereto shall, unless the
Plan shall have been terminated, become available for future grant under the
Plan. In addition, any Shares of Common Stock which are retained by the
Company upon exercise of an Option or Stock Purchase Right in order to
satisfy any withholding taxes due with respect to such exercise shall be
treated as not issued and shall continue to be available under the Plan.
Shares repurchased by the Company pursuant to any repurchase right which the
Company may have shall not be available for future grant under the Plan.

                                      -4-
<PAGE>

         4.  ADMINISTRATION OF THE PLAN.

             (a)  GENERAL.  The Plan shall be administered by the Board or a
Committee, or a combination thereof, as determined by the Board. The Plan may
be administered by different administrative bodies with respect to different
classes of Participants and, if permitted by the Applicable Laws, the Board
may authorize one or more officers to make awards under the Plan.

             (b)  COMMITTEE COMPOSITION.  If a Committee has been appointed
pursuant to this Section 4, such Committee shall continue to serve in its
designated capacity until otherwise directed by the Board. From time to time
the Board may increase the size of any Committee and appoint additional
members thereof, remove members (with or without cause) and appoint new
members in substitution therefor, fill vacancies (however caused) and remove
all members of a Committee and thereafter directly administer the Plan, all
to the extent permitted by the Applicable Laws and, in the case of a
Committee administering the Plan in accordance with the requirements of Rule
16b-3 or Section 162(m) of the Code, to the extent permitted or required by
such provisions.

             (c)  POWERS OF THE ADMINISTRATOR.  Subject to the provisions of
the Plan and in the case of a Committee, the specific duties delegated by the
Board to such Committee, the Administrator shall have the authority, in its
discretion:

                  (i)     to determine the Fair Market Value of the Common
Stock, in accordance with Section 2(o) of the Plan, provided that such
determination shall be applied consistently with respect to Participants
under the Plan;

                  (ii)    to select the Employees and Consultants to whom
Options may from time to time be granted;

                  (iii)   to determine whether and to what extent Options are
granted;

                  (iv)    to determine the number of Shares of Common Stock
to be covered by each award granted;

                  (v)     to approve the form(s) of agreement(s) used under
the Plan;

                  (vi)    to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award granted hereunder,
which terms and conditions include but are not limited to the exercise or
purchase price, the time or times when awards may be exercised (which may be
based on performance criteria), any vesting acceleration or waiver of
forfeiture restrictions, and any restriction or limitation regarding any
Option, Optioned Stock or restricted stock issued upon exercise of an Option,
based in each case on such factors as the Administrator, in its sole
discretion, shall determine;

                  (vii)   to determine whether and under what circumstances
an Option may be settled in cash under Section 10(c) instead of Common Stock;

                                      -5-
<PAGE>

                  (viii)  to implement an Option Exchange Program on such
terms and conditions as the Administrator in its discretion deems
appropriate, provided that no amendment or adjustment to an Option that would
materially and adversely affect the rights of any Optionee shall be made
without the prior written consent of the Optionee;

                  (ix)    to adjust the vesting of an Option held by an
Employee or Consultant as a result of a change in the terms or conditions
under which such person is providing services to the Company;

                  (x)     to construe and interpret the terms of the Plan and
awards granted under the Plan, which constructions, interpretations and
decisions shall be final and binding on all Participants; and

                  (xi)    in order to fulfill the purposes of the Plan and
without amending the Plan, to modify grants of Options to Participants who
are foreign nationals or employed outside of the United States in order to
recognize differences in local law, tax policies or customs.

         5.  ELIGIBILITY.

             (a)  RECIPIENTS OF GRANTS.  Nonstatutory Stock Options and Stock
Purchase Rights may be granted to Employees and Consultants. Incentive Stock
Options may be granted only to Employees. An Employee or Consultant who has
been granted an Option or Stock Purchase Right may, if he or she is otherwise
eligible, be granted additional Options or Stock Purchase Rights.

             (b)  TYPE OF OPTION.  Each Option shall be designated in the
written option agreement as either an Incentive Stock Option or a
Nonstatutory Stock Option. However, notwithstanding such designations, to the
extent that the aggregate Fair Market Value of Shares with respect to which
Options designated as Incentive Stock Options are exercisable for the first
time by any Optionee during any calendar year (under all plans of the Company
or any Parent or Subsidiary) exceeds $100,000, such excess Options shall be
treated as Nonstatutory Stock Options. For purposes of this Section 5(b),
Incentive Stock Options shall be taken into account in the order in which
they were granted, and the Fair Market Value of the Shares subject to an
Incentive Stock Option shall be determined as of the date of the grant of
such Option.

             (c)  The Plan shall not confer upon any Optionee any right with
respect to continuation of employment or consulting relationship with the
Company, nor shall it interfere in any way with such Optionee's right or the
Company's right to terminate his or her employment or consulting relationship
at any time, with or without cause.

         6.  TERM OF PLAN.  The Plan shall become effective upon the earlier
to occur of its adoption by the Board of Directors or its approval by the
stockholders of the Company as described in Section 19 of the Plan. It shall
continue in effect for a term of ten (10) years unless sooner terminated
under Section 15 of the Plan.

                                      -6-
<PAGE>

         7.  TERM OF OPTION.  The term of each Option shall be the term
stated in the Option Agreement; provided, however, that the term shall be no
more than ten (10) years from the date of grant thereof or such shorter term
as may be provided in the Option Agreement and provided further that, in the
case of an Incentive Stock Option granted to an Optionee who, at the time the
Option is granted, is a Ten Percent Holder, the term of the Option shall be
five (5) years from the date of grant thereof or such shorter term as may be
provided in the written option agreement.

         8.  OPTION EXERCISE PRICE AND CONSIDERATION.

             (a)  The per share exercise price for the Shares to be issued
pursuant to exercise of an Option shall be such price as is determined by the
Board and set forth in the applicable agreement, but shall be subject to the
following:

                  (i)     In the case of an Incentive Stock Option that is:

                          (A)  granted to an Employee who, at the time
of the grant of such Incentive Stock Option, is a Ten Percent Holder, the per
Share exercise price shall be no less than 110% of the Fair Market Value per
Share on the date of grant.

                          (B)  granted to any other Employee, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share
on the date of grant.

                  (ii)    In the case of a Nonstatutory Stock Option

                          (A)  granted prior to the date, if any, on which
the Common Stock becomes a Listed Security to a person who is at the time of
grant is a Ten Percent Holder, the per Share exercise price shall be no less
than 110% of the Fair Market Value per Share on the date of grant if required
by the Applicable Laws and, if not so required, shall be such price as is
determined by the Administrator;

                          (B)  granted prior to the date, if any, on which
the Common Stock becomes a Listed Security to any other eligible person, the
per Share exercise price shall be no less than 85% of the Fair Market Value
per Share on the date of grant if required by the Applicable Laws and, if not
so required, shall be such price as is determined by the Administrator.

                          (C)  granted on or after the date, if any, on which
the Common Stock becomes a Listed Security to any eligible person, the per
share Exercise Price shall be such price as determined by the Administrator
provided that if such eligible person is, at the time of the grant of such
Option, a Named Executive of the Company, the per share Exercise Price shall
be no less than 100% of the Fair Market Value on the date of grant if such
Option is intended to qualify as performance-based compensation under Section
162(m) of the Code.

             (b)  The consideration to be paid for the Shares to be issued
upon exercise of an Option, including the method of payment, shall be
determined by the Administrator (and, in the case of an Incentive Stock
Option, shall be determined at the time of grant) and may consist

                                      -7-
<PAGE>

entirely of (1) cash, (2) check, (3) promissory note (subject to the
provisions of Section 153 of the Delaware General Corporation Law), (4) other
Shares that (x) in the case of Shares acquired upon exercise of an Option,
have been owned by the Optionee for more than six months on the date of
surrender or such other period as may be required to avoid a charge to the
Company's earnings, and (y) have a Fair Market Value on the date of surrender
equal to the aggregate exercise price of the Shares as to which such Option
shall be exercised, (5) delivery of a properly executed exercise notice
together with such other documentation as the Administrator and the broker,
if applicable, shall require to effect an exercise of the Option and delivery
to the Company of the sale or loan proceeds required to pay the exercise
price and any applicable income or employment taxes, or (6) any combination
of the foregoing methods of payment. In making its determination as to the
type of consideration to accept, the Administrator shall consider if
acceptance of such consideration may be reasonably expected to benefit the
Company.

         9.  EXERCISE OF OPTION.

             (a)  PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER.  Any
Option granted hereunder shall be exercisable at such times and under such
conditions as determined by the Administrator, consistent with the term of
the Plan and reflected in the Option Agreement, including vesting
requirements and/or performance criteria with respect to the Company and/or
the Optionee; provided however that, if required by the Applicable Laws, any
Option granted prior to the date, if any, upon which the Common Stock becomes
a Listed Security shall become exercisable at the rate of at least 20% per
year over five years from the date the Option is granted if required by the
Applicable Laws. In the event that any of the Shares issued upon exercise of
an Option (which exercise occurs prior to the date, if any, upon which the
Common Stock becomes a Listed Security) should be subject to a right of
repurchase in the Company's favor, such repurchase right shall, if required
by the Applicable Laws, lapse at the rate of at least 20% per year over five
years from the date the Option is granted. Notwithstanding the above, in the
case of an Option granted to an officer, Director or Consultant of the
Company or any Parent or Subsidiary of the Company, the Option may become
fully exercisable, or a repurchase right, if any, in favor of the Company
shall lapse, at any time or during any period established by the
Administrator.

                  An Option may not be exercised for a fraction of a Share.

                  An Option shall be deemed to be exercised when written
notice of such exercise has been given to the Company in accordance with the
terms of the Option by the person entitled to exercise the Option and the
Company has received full payment for the Shares with respect to which the
Option is exercised. Full payment may, as authorized by the Board, consist of
any consideration and method of payment allowable under Section 8(b) of the
Plan. Until the issuance (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company) of the
stock certificate evidencing such Shares, no right to vote or receive
dividends or any other rights as a stockholder shall exist with respect to
the Optioned Stock, not withstanding the exercise of the Option. The Company
shall issue (or cause to be issued) such stock certificate promptly upon
exercise of the Option. No adjustment

                                      -8-
<PAGE>

will be made for a dividend or other right for which the record date is prior
to the date the stock certificate is issued, except as provided in Section 12
of the Plan.

                  Exercise of an Option in any manner shall result in a
decrease in the number of Shares that thereafter may be available, both for
purposes of the Plan and for sale under the Option, by the number of Shares
as to which the Option is exercised.

             (b)  TERMINATION OF EMPLOYMENT OR CONSULTING RELATIONSHIP.
Subject to Section 9(c), in the event of termination of an Optionee's
Continuous Status as an Employee or Consultant with the Company, such
Optionee may, but only within three (3) months (or such other period of time
not less than thirty (30) days as is determined by the Administrator, with
such determination in the case of an Incentive Stock Option being made at the
time of grant of the Option) after the date of such termination (but in no
event later than the expiration date of the term of such Option as set forth
in the Option Agreement), exercise his or her Option to the extent that the
Optionee was entitled to exercise it at the date of such termination. To the
extent that Optionee was not entitled to exercise the Option at the date of
such termination, or if Optionee does not exercise such Option to the extent
so entitled within the time specified herein, the Option shall terminate. No
termination shall be deemed to occur and this Section 9(b) shall not apply if
(i) the Optionee is a Consultant who becomes an Employee; or (ii) the
Optionee is an Employee who becomes a Consultant.

             (c)  DISABILITY OF OPTIONEE.

                  (i)     Notwithstanding Section 9(b) above, in the event of
termination of an Optionee's Continuous Status as an Employee or Consultant
as a result of his or her total and permanent disability (within the meaning
of Section 22(e)(3) of the Code), Optionee may, but only within twelve (12)
months from the date of such termination (but in no event later than the
expiration date of the term of such Option as set forth in the Option
Agreement), exercise the Option to the extent otherwise entitled to exercise
it at the date of such termination. To the extent that Optionee was not
entitled to exercise the Option at the date of termination, or if Optionee
does not exercise such Option to the extent so entitled within the time
specified herein, the Option shall terminate.

                  (ii)    In the event of termination of an Optionee's
Continuous Status as an Employee or Consultant as a result of a disability
which does not fall within the meaning of total and permanent disability (as
set forth in Section 22(e)(3) of the Code), Optionee may, but only within six
(6) months from the date of such termination (but in no event later than the
expiration date of the term of such Option as set forth in the Option
Agreement), exercise the Option to the extent otherwise entitled to exercise
it at the date of such termination. However, to the extent that such Optionee
fails to exercise an Option which is an Incentive Stock Option ("ISO")
(within the meaning of Section 422 of the Code) within three (3) months of
the date of such termination, the Option will not qualify for ISO treatment
under the Code. To the extent that Optionee was not entitled to exercise the
Option at the date of termination, or if Optionee does not exercise such
Option to the extent so entitled within six months (6) from the date of
termination, the Option shall terminate.

                                      -9-
<PAGE>

             (d)  DEATH OF OPTIONEE.  In the event of the death of an
Optionee during the period of Continuous Status as an Employee or Consultant
since the date of grant of the Option, or within thirty (30) days following
termination of Optionee's Continuous Status as an Employee or Consultant, the
Option may be exercised, at any time within six (6) months following the date
of death (but in no event later than the expiration date of the term of such
Option as set forth in the Option Agreement), by Optionee's estate or by a
person who acquired the right to exercise the Option by bequest or
inheritance, but only to the extent of the right to exercise that had accrued
at the date of death or, if earlier, the date of termination of Optionee's
Continuous Status as an Employee or Consultant. To the extent that Optionee
was not entitled to exercise the Option at the date of death or termination,
as the case may be, or if Optionee does not exercise such Option to the
extent so entitled within the time specified herein, the Option shall
terminate.

             (e)  RULE 16b-3. Options granted to Reporting Persons shall
comply with Rule 16b-3 and shall contain such additional conditions or
restrictions as may be required thereunder to qualify for the maximum
exemption for Plan transactions.

             (f)  BUYOUT PROVISIONS.  The Administrator may at any time offer
to buy out for a payment in cash or Shares, an Option previously granted,
based on such terms and conditions as the Administrator shall establish and
communicate to the Optionee at the time that such offer is made.

             (g)  EXTENSION OF EXERCISE PERIOD.  The Administrator shall have
full power and authority to extend the period of time for which an option is
to remain exercisable following termination of an Optionee's Continuous
Status as an Employee or Consultant from the periods set forth in Sections
9(b), 9(c) and 9(d) above or in the Option Agreement to such greater time as
the Board shall deem appropriate, PROVIDED, that in no event shall such
option be exercisable later than the date of expiration of the term of such
Option as set forth in the Option Agreement.

         10.  STOCK PURCHASE RIGHTS.

             (a)  RIGHTS TO PURCHASE.  Stock Purchase Rights may be issued
either alone, in addition to, or in tandem with other awards granted under
the Plan and/or cash awards made outside of the Plan. When the Administrator
determines that it will offer Stock Purchase Rights under the Plan, it shall
advise the offeree in writing of the terms, conditions and restrictions
related to the offer, including the number of Shares that such person shall
be entitled to purchase, the price to be paid, and the time within which such
person must accept such offer, which shall in no event exceed thirty (30)
days from the date upon which the Administrator made the determination to
grant the Stock Purchase Right. In the case of a Stock Purchase Right granted
prior to the date, if any, on which the Common Stock becomes a Listed
Security and if required by the Applicable Laws at that time, the purchase
price of Shares subject to such Stock Purchase Rights shall not be less than
85% of the Fair Market Value of the Shares as of the date of the offer, or,
in the case of a Ten Percent Holder, the price shall not be less than 100% of
the Fair Market Value of the Shares as of the date of the offer. If the
Applicable Laws do not impose the requirements set forth in the preceding
sentence and with respect to any Stock Purchase Rights granted after the
date, if any, on which the Common Stock becomes a Listed Security, the

                                      -10-
<PAGE>

purchase price of Shares subject to Stock Purchase Rights shall be as
determined by the Administrator. The offer to purchase Shares subject to
Stock Purchase Rights shall be accepted by execution of a Restricted Stock
Purchase Agreement in the form determined by the Administrator. Shares
purchased pursuant to the grant of a Stock Purchase Right shall be referred
to herein as "Restricted Stock."

             (b)  REPURCHASE OPTION.  Unless the Administrator determines
otherwise, the Restricted Stock purchase agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination
of the purchaser's employment with the Company for any reason (including
death or disability). The purchase price for Shares repurchased pursuant to
the Restricted Stock purchase agreement shall be the original purchase price
paid by the purchaser and may be paid by cancellation of any indebtedness of
the purchaser to the Company. The repurchase option shall lapse at such rate
as the Administrator may determine, provided that with respect to a Stock
Purchase Right granted prior to the date, if any, on which the Common Stock
becomes a Listed Security to a purchaser who is not an officer, Director or
Consultant of the Company or of any Parent or Subsidiary of the Company, it
shall lapse at a minimum rate of 20% per year if required by the Applicable
Laws.

             (c)  OTHER PROVISIONS.  The Restricted Stock purchase agreement
shall contain such other terms, provisions and conditions not inconsistent
with the Plan as may be determined by the Administrator in its sole
discretion. In addition, the provisions of Restricted Stock purchase
agreements need not be the same with respect to each purchaser.

             (d)  RIGHTS AS A STOCKHOLDER.  Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
stockholder, and shall be a stockholder when his or her purchase is entered
upon the records of the duly authorized transfer agent of the Company. No
adjustment will be made for a dividend or other right for which the record
date is prior to the date the Stock Purchase Right is exercised, except as
provided in Section 12 of the Plan.

         11.  STOCK WITHHOLDING TO SATISFY WITHHOLDING TAX OBLIGATIONS.  At
the discretion of the Administrator, Optionees may satisfy withholding
obligations as provided in this paragraph. When an Optionee incurs tax
liability in connection with an Option or Stock Purchase Right, which tax
liability is subject to tax withholding under applicable tax laws, and the
Optionee is obligated to pay the Company an amount required to be withheld
under applicable tax laws, the Optionee may satisfy the withholding tax
obligation by one or some combination of the following methods: (a) by cash
payment, or (b) out of Optionee's current compensation, (c) if permitted by
the Administrator, in its discretion, by surrendering to the Company Shares
that (i) in the case of Shares previously acquired from the Company, have
been owned by the Optionee for more than six months on the date of surrender,
and (ii) have a fair market value on the date of surrender equal to or less
than Optionee's marginal tax rate times the ordinary income recognized, or
(d) by electing to have the Company withhold from the Shares to be issued
upon exercise of the Option, or the Shares to be issued in connection with
the Stock Purchase Right, if any, that number of Shares having a fair market
value equal to the amount required to be withheld. For this purpose, the fair
market value of the Shares to be withheld shall

                                      -11-
<PAGE>

be determined on the date that the amount of tax to be withheld is to be
determined (the "TAX DATE"). If the Administrator allows the withholding or
surrender of Shares to satisfy a Participant's tax withholding obligations
under this Section 11, the Administrator shall not allow Shares to be
withheld or surrendered in an amount that exceeds the minimum statutory
withholding rates for federal and state tax purposes, including payroll taxes.

             Any surrender by a Reporting Person of previously owned Shares
to satisfy tax withholding obligations arising upon exercise of this Option
must comply with the applicable provisions of Rule 16b-3.

             All elections by an Optionee to have Shares withheld to satisfy
tax with-holding obligations shall be made in writing in a form acceptable to
the Administrator and shall be subject to the following restrictions:

             (a)  the election must be made on or prior to the applicable Tax
Date;

             (b)  once made, the election shall be irrevocable as to the
particular Shares of the Option or Stock Purchase Right as to which the
election is made; and

             (c)  all elections shall be subject to the consent or
disapproval of the Administrator.

             In the event the election to have Shares withheld is made by an
Optionee and the Tax Date is deferred under Section 83 of the Code because no
election is filed under Section 83(b) of the Code, the Optionee shall receive
the full number of Shares with respect to which the Option or Stock Purchase
Right is exercised but such Optionee shall be unconditionally obligated to
tender back to the Company the proper number of Shares on the Tax Date.

         12.  ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, MERGER OR CERTAIN
OTHER TRANSACTIONS.

             (a)  CHANGES IN CAPITALIZATION.  Subject to any required action
by the stockholders of the Company, the number of shares of Common Stock
covered by each outstanding Option or Stock Purchase Right, and the number of
shares of Common Stock that have been authorized for issuance under the Plan
but as to which no Options or Stock Purchase Rights have yet been granted or
that have been returned to the Plan upon cancellation or expiration of an
Option or Stock Purchase Right, as well as the price per share of Common
Stock covered by each such outstanding Option or Stock Purchase Right, shall
be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from a stock split, reverse stock
split, stock dividend, combination, recapitalization or reclassification of
the Common Stock, or any other increase or decrease in the number of issued
shares of Common Stock effected without receipt of consideration by the
Company; provided, however, that conversion of any convertible securities of
the Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive. Except
as expressly provided

                                      -12-
<PAGE>

herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and
no adjustment by reason thereof shall be made with respect to, the number or
price of shares of Common Stock subject to an Option or Stock Purchase Right.

             (b)  DISSOLUTION OR LIQUIDATION.  In the event of the proposed
dissolution or liquidation of the Company, the Board shall notify the
Optionee at least fifteen (15) days prior to such proposed action. To the
extent it has not been previously exercised, the Option or Stock Purchase
Right will terminate immediately prior to the consummation of such proposed
action.

             (c)  CORPORATE TRANSACTION; CHANGE OF CONTROL.  In the event of
a Corporate Transaction, each outstanding Option or Stock Purchase Right
shall be assumed or an equivalent option or right shall be substituted by
such successor corporation or a parent or subsidiary of such successor
corporation (the "SUCCESSOR CORPORATION"), unless the Successor Corporation
does not agree to assume the award or to substitute an equivalent option or
right, in which case such Option or Stock Purchase Right shall terminate upon
the consummation of the transaction.

             Notwithstanding the above, in the event of a Change of Control
and irrespective of whether outstanding awards are being assumed, substituted
or terminated in connection with the transaction, the vesting and
exercisability of each outstanding Option and Stock Purchase Right shall
accelerate such that the Options and Stock Purchase Rights shall become
vested and exercisable to the extent of 50% of the Shares then unvested, and
any repurchase right of the Company with respect to shares issued upon
exercise of an Option or Stock Purchase Right shall lapse as to 50% of the
Shares subject to such repurchase right prior to consummation of the Change
of Control, in each case effective as of immediately prior to consummation of
the transaction; provided, however, that in the event that the Successor
Corporation does not agree to assume the award or to substitute an equivalent
option or right, the vesting and exercisability of each outstanding Option
and Stock Purchase Right shall accelerate such that the Options and Stock
Purchase Rights shall become vested and exercisable to the extent of all of
the Shares then unvested, and any repurchase right of the Company with
respect to shares issued upon exercise of an Option or Stock Purchase Right
shall lapse as to all of the Shares subject to such repurchase right prior to
consummation of the Change of Control, in each case effective as of
immediately prior to consummation of the transaction. To the extent that an
Option or Stock Purchase Right is not exercised prior to consummation of a
Corporate Transaction in which the Option or Stock Purchase Right is not
being assumed or substituted, such Option or Stock Purchase Right shall
terminate upon such consummation.

             In addition, in the event a Participant holding an Option or
Stock Purchase Right assumed or substituted by the Successor Corporation in a
Change of Control, or holding Restricted Stock issued upon exercise of an
Option or Stock Purchase Right with respect to which the Successor
Corporation has succeeded to a repurchase right as a result of the Change of
Control, is Involuntarily Terminated by the Successor Corporation without
Cause in connection with, or within twelve (12) months following consummation
of, the transaction, then any assumed or substituted Option or Stock Purchase
Right held by the terminated Participant at the time of termination shall
accelerate and become exercisable as to all of Shares, and any

                                      -13-
<PAGE>

repurchase right applicable to any Shares shall lapse as to all of Shares.
The acceleration of vesting and lapse of repurchase rights provided for in
the previous sentence shall occur immediately prior to the effective date of
the Participant's termination.

             For purposes of this Section 14(c), an Option or a Stock
Purchase Right shall be considered assumed, without limitation, if, at the
time of issuance of the stock or other consideration upon a Corporate
Transaction or a Change of Control, as the case may be, each holder of an
Option or Stock Purchase Right would be entitled to receive upon exercise of
the award the same number and kind of shares of stock or the same amount of
property, cash or securities as such holder would have been entitled to
receive upon the occurrence of the transaction if the holder had been,
immediately prior to such transaction, the holder of the number of Shares of
Common Stock covered by the award at such time (after giving effect to any
adjustments in the number of Shares covered by the Option or Stock Purchase
Right as provided for in this Section 14); provided that if such
consideration received in the transaction is not solely common stock of the
Successor Corporation, the Administrator may, with the consent of the
Successor Corporation, provide for the consideration to be received upon
exercise of the award to be solely common stock of the Successor Corporation
equal to the Fair Market Value of the per Share consideration received by
holders of Common Stock in the transaction.

             (d)  LIMITATION ON PAYMENTS.  In the event that the vesting
acceleration or lapse of a repurchase right provided for in Section 14(c)
above (x) constitutes "parachute payments" within the meaning of Section 280G
of the Code, and (y) but for this Section 14(d) would be subject to the
excise tax imposed by Section 4999 of the Code (or any corresponding
provisions of state income tax law), then such vesting acceleration or lapse
of a repurchase right shall be either

                  (A)  delivered in full, or

                  (B)  delivered as to such lesser extent which would result
in no portion of such severance benefits being subject to excise tax under
Code Section 4999,

             whichever amount, taking into account the applicable federal,
state and local income taxes and the excise tax imposed by Code Section 4999,
results in the receipt by the Participant on an after-tax basis of the
greater amount of acceleration or lapse of repurchase rights benefits,
notwithstanding that all or some portion of such benefits may be taxable
under Code Section 4999. Any determination required under this Section 14(d)
shall be made in writing by the Company's independent accountants, whose
determination shall be conclusive and binding for all purposes on the Company
and any affected Participant. In the event that (A) above applies, then the
Participant shall be responsible for any excise taxes imposed with respect to
such benefits. In the event that (B) above applies, then each benefit
provided hereunder shall be proportionately reduced to the extent necessary
to avoid imposition of such excise taxes.

             (e)  CERTAIN DISTRIBUTIONS.  In the event of any distribution to
the Company's stockholders of securities of any other entity or other assets
(other than dividends payable in cash or stock of the Company) without
receipt of consideration by the Company, the Administrator

                                      -14-
<PAGE>

may, in its discretion, appropriately adjust the price per Share of Common
Stock covered by each outstanding Option to reflect the effect of such
distribution.

         13.  NON-TRANSFERABILITY OF OPTIONS AND STOCK PURCHASE RIGHTS.

             (a)  GENERAL.  Except as set forth in this Section 13, Options
and Stock Purchase Rights may not be sold, pledged, assigned, hypothecated,
transferred or disposed of in any manner other than by will or by the laws of
descent or distribution. The designation of a beneficiary by an Optionee will
not constitute a transfer. An Option or Stock Purchase Right may be
exercised, during the lifetime of the holder of an Option or Stock Purchase
Right, only by such holder or a transferee permitted by this Section 13.

             (b)  LIMITED TRANSFERABILITY RIGHTS.  Notwithstanding anything
else in this Section 13, prior to the date, if any, on which the Common Stock
becomes a Listed Security, the Administrator may in its discretion grant
Nonstatutory Stock Options that may be transferred by instrument to an inter
vivos or testamentary trust in which the Options are to be passed to
beneficiaries upon the death of the trustor (settlor) or by gift to
"Immediate Family" (as defined below), on such terms and conditions as the
Administrator deems appropriate. Following the date, if any, on which the
Common Stock becomes a Listed Security, the Administrator may in its
discretion grant transferable Nonstatutory Stock Options pursuant to Option
Agreements specifying the manner in which such Nonstatutory Stock Options are
transferable. "IMMEDIATE FAMILY" means any child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, sibling, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law,
and shall include adoptive relationships.

         14.  TIME OF GRANTING OPTIONS AND STOCK PURCHASE RIGHTS.  The date
of grant of an Option or Stock Purchase Right shall, for all purposes, be the
date on which the Administrator makes the determination granting such Option
or Stock Purchase Right, or such other date as is determined by the Board;
provided however that in the case of any Incentive Stock Option, the grant
date shall be the later of the date on which the Administrator makes the
determination granting such Incentive Stock Option or the date of
commencement of the Optionee's employment relationship with the Company.
Notice of the determination shall be given to each Employee or Consultant to
whom an Option or Stock Purchase Right is so granted within a reasonable time
after the date of such grant.

         15.  AMENDMENT AND TERMINATION OF THE PLAN.

             (a)  AUTHORITY TO AMEND OR TERMINATE.  The Board may at any time
amend, alter, suspend or discontinue the Plan, but no amendment, alteration,
suspension or discontinuation shall be made that would impair the rights of
any Optionee under any grant theretofore made, without his or her consent. In
addition, to the extent necessary and desirable to comply with Rule 16b-3 or
with Section 422 of the Code (or any other applicable law or regulation,
including the requirements of any Stock Exchange), the Company shall obtain
stockholder approval of any Plan amendment in such a manner and to such a
degree as required.

                                      -15-
<PAGE>

             (b)  EFFECT OF AMENDMENT OR TERMINATION.  No amendment or
termination of the Plan shall adversely affect Options already granted,
unless mutually agreed otherwise between the Optionee and the Board, which
agreement must be in writing and signed by the Optionee and the Company.

         16.  CONDITIONS UPON ISSUANCE OF SHARES.  Shares shall not be issued
pursuant to the exercise of an Option or Stock Purchase Right unless the
exercise of such Option or Stock Purchase Right and the issuance and delivery
of such Shares pursuant thereto shall comply with all relevant provisions of
law, including, without limitation, the Securities Act of 1933, as amended,
the Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any Stock Exchange. As a condition to the exercise of an
Option, the Company may require the person exercising such Option to
represent and warrant at the time of any such exercise that the Shares are
being purchased only for investment and without any present intention to sell
or distribute such Shares if, in the opinion of counsel for the Company, such
a representation is required by law.

         17.  RESERVATION OF SHARES.  The Company, during the term of this
Plan, will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan. The inability of
the Company to obtain authority from any regulatory body having jurisdiction,
which authority is deemed by the Company's counsel to be necessary to the
lawful issuance and sale of any Shares hereunder, shall relieve the Company
of any liability in respect of the failure to issue or sell such Shares as to
which such requisite authority shall not have been obtained.

         18.  AGREEMENTS.  Options and Stock Purchase Rights shall be
evidenced by written agreements in such form as the Administrator shall
approve from time to time.

         19.  STOCKHOLDER APPROVAL.  Continuance of the Plan shall be subject
to approval by the stockholders of the Company within twelve (12) months
before or after the date the Plan is adopted. Such stockholder approval shall
be obtained in the degree and manner required under applicable state and
federal law and the rules of any Stock Exchange upon which the Common Stock
is listed. All Options and Stock Purchase Rights issued under the Plan shall
become void in the event such approval is not obtained.

         20.  INFORMATION AND DOCUMENTS TO OPTIONEES AND PURCHASERS.  The
Company shall provide financial statements at least annually to each Optionee
and to each individual who acquired Shares Pursuant to the Plan, during the
period such Optionee or purchaser has one or more Options or Stock Purchase
Rights outstanding, and in the case of an individual who acquired Shares
pursuant to the Plan, during the period such individual owns such Shares. The
Company shall not be required to provide such information if the issuance of
Options or Stock Purchase Rights under the Plan is limited to key employees
whose duties in connection with the Company assure their access to equivalent
information. In addition, at the time of issuance of any securities under the
Plan, the Company shall provide to the Optionee or the Purchaser a copy of
the Plan and any agreement(s) pursuant to which securities under the Plan are
issued.

                                      -16-

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