Document:

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                                                                     EXHIBIT 4.2

                            INVESTOR RIGHTS AGREEMENT

                                      among

                              SEATTLE GENETICS, INC

                                       and

                           THE INVESTORS NAMED HEREIN

                       Dated as of [__________] [__], 2003

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                                TABLE OF CONTENTS

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                                                                                           PAGE

                <S>                                                                          <C>
ARTICLE I       DEFINITIONS; RULES OF CONSTRUCTION.......................................... 1

      1.1       Definitions................................................................. 1

      1.2       Rules of Construction....................................................... 6

ARTICLE II      BOARD OF DIRECTORS.......................................................... 6

      2.1       Election of Board Members................................................... 6

      2.2       Board Meetings.............................................................. 9

      2.3       Expenses.................................................................... 9

      2.4       Subsidiary Board............................................................ 9

      2.5       Committees.................................................................. 9

      2.6       Qualifications of Board Members............................................. 9

ARTICLE III     ADDITIONAL AGREEMENTS...................................................... 10

      3.1       Inconsistent Agreements.................................................... 10

      3.2       Information Rights......................................................... 10

      3.3       Compliance................................................................. 12

      3.4       Insurance.................................................................. 12

      3.5       Affirmative Covenants...................................................... 12

      3.6       Tax Treatment.............................................................. 14

ARTICLE IV      REGISTRATION RIGHTS........................................................ 14

      4.1       Required Registration...................................................... 14

      4.2       Piggyback Registration..................................................... 16

      4.3       Registrations on Form S-3.................................................. 16

      4.4       Preparation and Filing..................................................... 17

      4.5       Expenses................................................................... 20

      4.6       Indemnification............................................................ 21

      4.7       Underwriting Agreement..................................................... 23

      4.8       Suspension................................................................. 24

      4.9       Information by Holder...................................................... 24

      4.10      Exchange Act Compliance.................................................... 24

      4.11      No Conflict of Rights...................................................... 24

      4.12      Transfer of Registration Rights............................................ 25

      4.13      Termination................................................................ 25

ARTICLE V       SECURITIES LAW COMPLIANCE; LEGENDS......................................... 25

      5.1       Restriction on Transfer.................................................... 25

      5.2       Restrictive Legends........................................................ 25
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                                       (i)

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                <S>                                                                         <C>
ARTICLE VI      AMENDMENT AND WAIVERS...................................................... 26

      6.1       Amendment.................................................................. 26

      6.2       Waivers; Extensions........................................................ 26

ARTICLE VII     TERMINATION................................................................ 27

ARTICLE VIII    MISCELLANEOUS.............................................................. 27

      8.1       Grant of Proxy............................................................. 27

      8.2       Regulatory Matters......................................................... 27

      8.3       Severability............................................................... 28

      8.4       Entire Agreement........................................................... 28

      8.5       Independence of Agreements, Covenants, Representations and Warranties...... 29

      8.6       Successors and Assigns..................................................... 29

      8.7       Counterparts; Facsimile Signatures......................................... 29

      8.8       Remedies................................................................... 29

      8.9       Notices.................................................................... 30

      8.10      Governing Law; Waiver of Jury Trial........................................ 31

      8.11      Further Assurances......................................................... 31

      8.12      Conflicting Agreements..................................................... 31

      8.13      No Third Party Reliance.................................................... 32
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                                      (ii)

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                                        INVESTOR RIGHTS AGREEMENT dated as of
                                [________], 2003, among SEATTLE GENETICS, INC.,
                                a Delaware corporation (the "Company"), and the
                                INVESTORS of the Company listed on Schedule I
                                hereto, and their permitted assigns
                                (collectively, the "Investors").

                WHEREAS, the Company proposes to issue up to an aggregate of
1,640,000 shares of its Series A Convertible Preferred Stock, par value $0.001
per shares (the "Series A Preferred Stock") and warrants (the "Warrants") to
purchase up to 2,050,000 shares of common stock, par value $0.001 per share (the
"Common Stock"), pursuant to a Securities Purchase Agreement dated as of May 12,
2003 (the "Purchase Agreement") among the Company and the Investors.

                WHEREAS, as a condition of entering into the Purchase Agreement,
the Investors have requested that the Company extend to them certain
registration rights, information rights and other rights, and the Company
desires to extend such rights, on terms set forth below.

                NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained in this Agreement, the sufficiency of which is hereby
acknowledged, the parties agree as follows:

                                    ARTICLE I

                       DEFINITIONS; RULES OF CONSTRUCTION

1.1     DEFINITIONS.

        Capitalized terms used in this Agreement and not defined herein have the
meanings ascribed to them in the Purchase Agreement. The following capitalized
terms used in this Agreement have the meanings ascribed to them below:

        "Accountants" has the meaning ascribed to it in Section 3.2(a)(iii).

        "BBI" means collectively, Baker/Tisch Investments, L.P., Baker Bros.
Investments, L.P., Baker Bros. Investments II, L.P., Baker Biotech Fund I, L.P.,
Baker Biotech Fund II, L.P., Baker Biotech Fund II (Z), L.P. and/or any other
entity controlled by, controlling or under common control with any of the
preceding Persons at such time, to the extent such Persons hold shares of Series
A Preferred Stock, Warrants or Common Stock issued upon conversion of the Series
A Preferred Stock or exercise of the Warrants.

        "BBI Director" has the meaning ascribed to it in Section 2.1(b)(ii).

        "Board" means the board of directors of the Company.

        "BAVP" means BAVP, L.P.

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        "Bylaws" means the Bylaws of the Company, as amended, modified,
supplemented or restated and in effect from time to time.

        "Common Stock" has the meaning ascribed to it in the Recitals.

        "Common Stock Equivalents" means all shares of Common Stock outstanding
and all shares of Common Stock issuable (without regard to any present
restrictions on such issuance) upon the conversion, exchange or exercise of all
Securities of the Company that are convertible, exchangeable or exercisable for
Common Stock.

        "Company" has the meaning ascribed to it in the Caption and shall
include any Subsidiary of the Company.

        "Document(s)" means, individually or collectively, this Agreement, the
Purchase Agreement, the Certificate of Designations, the Warrants, the Option
Agreement, the Regulatory Sideletter and all other documents executed in
connection with this transaction.

        "Equity Incentive Plans" means, collectively, the Company's 1998 Stock
Option Plan, the 2000 Directors' Stock Option Plan and the 2000 Employee Stock
Purchase Plan, in each case, as amended, and any stock option, issuance,
appreciation rights or other equity incentive plan for the independent
directors, officers, and full time employees of, and consultants to, the Company
which plan has been approved by the Board.

        "Excluded Investors" means BAVP and T.Rowe.

        "GAAP" means generally accepted accounting principles in the United
States, as in effect from time to time, consistently applied.

        "JPMP Director" has the meaning ascribed to it in Section 2.1(b)(i).

        "JPMP Entities" means, collectively, J.P. Morgan Partners (BHCA), L.P.,
JPMP Global, J.P. Morgan Partners Global Investors (Cayman), L.P., J.P. Morgan
Partners Global Investors A, L.P., J.P. Morgan Partners Global Investors
(Cayman) II, L.P. and/or any other entity controlled by, controlling or under
common control with any of the preceding Persons at such time, including any
entity controlled by JPMP Master Fund Manager, L.P., or any Affiliate thereof,
or any entity managed or advised by J.P. Morgan Partners, LLC, JPMP Capital
Corp. or any Affiliate thereof, to the extent such Persons hold shares of Series
A Preferred Stock or Warrants, or Common Stock issuable upon conversion or
exercise thereof.

        "JPMP Global" means J.P. Morgan Partners Global Investors, L.P.

        "Information" has the meaning ascribed to it in Section 4.4(a)(ix).

        "Inspectors" has the meaning ascribed to it in Section 4.4(a)(ix).

        "Investors' Counsel" has the meaning ascribed to such term in Section
4.4(a)(ii).

                                       -2-

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        "Material Sale" means (i) the sale (in one or a series of related
transactions) of all or substantially all of the Company's assets to a Person or
a group of Persons acting in concert (including, without limitation, the sale of
a division of the Company or such assets of the Company that would materially
change the nature or composition of the Company's business lines), (ii) the sale
or transfer (in one or a series of related transactions) of a majority of the
outstanding capital stock of the Company, to one Person or a group of Persons
acting in concert, or (iii) the merger or consolidation of the Company with or
into another Person that is not an Affiliate of the Company, in each case in
clauses (ii) and (iii) above under circumstances in which the holders of a
majority in voting power of the outstanding capital stock of the Company
immediately prior to such transaction own less than a majority in voting power
of the outstanding capital stock of the Company, or the surviving or resulting
corporation or acquirer, as the case may be, immediately following such
transaction; provided, however, that a debt or equity financing where (x) the
Company is the surviving corporation and (y) individuals who served as members
of the Board immediately prior to such financing constitute at least
three-fourths (3/4) of the members of the Board (rounded up to the nearest whole
number) after such financing, shall not be deemed a Material Sale. A sale (or
multiple related sales) of one or more Subsidiaries (whether by way of merger,
consolidation, reorganization or sale of all or substantially all assets or
securities) which constitutes all or substantially all of the consolidated
assets of the Company shall be deemed a Material Sale.

        "Material Transaction" means any material transaction in which the
Company or any of its Subsidiaries proposes to engage or is engaged, including a
purchase or sale of assets or securities, financing, merger, consolidation,
tender offer or any other transaction that would require disclosure pursuant to
the Exchange Act, and with respect to which the Board has determined in good
faith that compliance with this Agreement may reasonably be expected to either
materially interfere with the Company's or such Subsidiary's ability to
consummate such transaction in a timely fashion or require the Company to
disclose material, non-public information prior to such time as it would
otherwise be required to be disclosed.

        "NASD" has the meaning ascribed to it in Section 4.4(a)(xiv).

        "NMS" has the meaning ascribed to it in Section 4.4(a)(xiv).

        "Observer" has the meaning ascribed to it in Section 2.1(f).

        "Other Shares" means at any time those shares of Common Stock that do
not constitute Primary Shares or Registrable Shares.

        "Preferred Directors" has the meaning ascribed to it in Section
2.1(b)(ii).

        "Preferred Stock" means, collectively, the Series A Preferred Stock and
any other class or series of Preferred Stock issued by the Company in accordance
with the Restated Certificate or any certificate of designations and this
Agreement.

        "Primary Shares" means, at any time, the authorized but unissued shares
of Common Stock or Common Stock held by the Company in its treasury.

                                       -3-

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        "Prospectus" means the prospectus included in a Registration Statement,
including any prospectus subject to completion, and any such prospectus as
amended or supplemented by any prospectus supplement with respect to the terms
of the offering of any portion of the Registrable Shares and, in each case, by
all other amendments and supplements to such prospectus, including
post-effective amendments, and in each case including all material incorporated
by reference therein.

        "Public Offering" means the closing of a public offering of Common Stock
solely for cash pursuant to a Registration Statement declared effective under
the Securities Act, except that a Public Offering shall not include an offering
of securities to be issued as consideration in connection with a business
acquisition pursuant to Rule 145 of the Securities Act, an offering of
securities issuable pursuant to an Equity Incentive Plan, 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
Registrable Securities hereunder.

        "Public Sale" means any sale, occurring simultaneously with or after a
Public Offering, of Securities to the public pursuant to an offering registered
under the Securities Act or to the public through a broker, dealer or market
maker (pursuant to the provisions of Rule 144 or otherwise).

        "Purchase Agreement" has the meaning ascribed to it in the Recitals.

        "Records" has the meaning ascribed to it in Section 4.4(a)(ix).

        "Registrable Shares" means, at any time, (a) Common Stock issued or
issuable upon conversion of the Series A Preferred Stock held, or hereafter
acquired, by the Investors and their permitted assigns, (b) Common Stock issued
or issuable upon exercise of the Warrants held, or hereafter acquired, by the
Investors and their permitted assigns, and (c) any 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, such above-described securities.
Notwithstanding the foregoing, Registrable Shares shall not include any
Securities sold by a Person to the public pursuant to a Registration Statement
which has been declared effective, or Rule 144 or sold in a private transaction
in which the Transferor's rights under Article IV of this Agreement are not
assigned, in each case where the restrictive legends and transfer restrictions
with respect to Common Stock are removed and the Common Stock in the hands of
the purchaser is freely transferable without any restriction or registration
under the Securities Act in any public or private transaction.

        "Registration Statement" means any registration statement of the Company
which covers any of the Registrable Shares, and all amendments and supplements
to any such Registration Statement, including post-effective amendments, in each
case including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.

        "Representative" of a Person shall be construed broadly and shall
include such Person's partners, officers, directors, employees, agents, counsel,
accountants and other representatives.

                                       -4-

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        "Requisite Investors" means those Investors who hold in the aggregate at
least sixty-six and two-thirds percent (66 2/3%) of the outstanding Series A
Preferred Stock (including Common Stock issued upon conversion thereof) held by
all Investors at the time of determination; provided, however, that in the event
such determination is in connection with the required registration of
Registrable Shares as set forth in Sections 4.1 hereof, Requisite Investors
means those Investors who hold in the aggregate in excess of thirty-three and
one-third percent (33 1/3%) of the then outstanding Series A Preferred Stock
held by the Investors; provided, further, however, that in the event such
determination is in connection with the required registration of Registrable
Shares as set forth in Sections 4.3 hereof, Requisite Investors means those
Investors who hold in the aggregate in excess of thirty-three and one-third
percent (33 1/3%) of the then outstanding Series A Preferred Stock (including
Common Stock issued upon conversion thereof) held by the Investors. In any
situation where consent from or approval of the Requisite Investors is required,
the Company may select the Investors constituting the Requisite Investors in its
discretion and the requirement shall be deemed satisfied so long as the consent
or approval is received from Investors who hold the requisite percentage of
Series A Preferred Stock (including Common Stock issued upon conversion thereof)
called for herein. In such case the Company shall promptly provide notice of
such consent or approval to each of the Investors.

        "Restated Certificate" means the Fourth Amended and Restated Certificate
of Incorporation of the Company, as amended and in effect at the time of
determination, including any certificates of designations filed with the
Secretary of State of the State of Delaware pursuant to the terms thereof.

        "Rule 144" means Rule 144 (including Rule 144(k)) and all other
subdivisions thereof) promulgated by the Commission under the Securities Act, as
such rule may be amended from time to time, or any similar or successor rule
then in force.

        "Section 2.1 Notice" has the meaning set forth in Section 2.1(c).

        "Series A Preferred Stock" has the meaning ascribed to it in the
Recitals.

        "Stock" means the Preferred Stock, the Common Stock and any and all
other capital stock or other equity Securities (including, without limitation,
derivative Securities therefor) of the Company.

        "Suspension Period" has the meaning ascribed to it in Sections 4.8.

        "T.Rowe" means T. Rowe Price Health Sciences Fund, Inc.

        "Transfer" of Securities shall be construed broadly and shall include
any issuance, sale, assignment, transfer, participation, gift, bequest,
distribution, or other disposition thereof, or any pledge or hypothecation
thereof, placement of a Lien thereon or grant of a security interest therein or
other encumbrance thereon, in each case whether voluntary or involuntary or by
operation of law or otherwise. "Transferor" means a Person engaging in a
Transfer of Securities, and "Transferee" means a Person acquiring Securities
through a Transfer.

        "Warrants" has the meaning ascribed to it in the Recitals.

                                       -5-

<PAGE>

1.2     RULES OF CONSTRUCTION.

        The term this "Agreement" means this agreement together with all
schedules and exhibits hereto, as the same may from time to time be amended,
modified, supplemented or restated in accordance with the terms hereof. The use
in this Agreement of the term "including" means "including, without limitation."
The words "herein," "hereof," "hereunder" and other words of similar import
refer to this Agreement as a whole, including the schedules and exhibits, as the
same may from time to time be amended, modified, supplemented or restated, and
not to any particular section, subsection, paragraph, subparagraph or clause
contained in this Agreement. All references to sections, schedules and exhibits
mean the sections of this Agreement and the schedules and exhibits attached to
this Agreement, except where otherwise stated. The title of and the section and
paragraph headings in this Agreement are for convenience of reference only and
shall not govern or affect the interpretation of any of the terms or provisions
of this Agreement. The use herein of the masculine, feminine or neuter forms
shall also denote the other forms, as in each case the context may require or
permit. Where specific language is used to clarify by example a general
statement contained herein, such specific language shall not be deemed to
modify, limit or restrict in any manner the construction of the general
statement to which it relates. The language used in this Agreement has been
chosen by the parties to express their mutual intent, and no rule of strict
construction shall be applied against any party. Unless expressly provided
otherwise, the measure of a period of one month or year for purposes of this
Agreement shall be that date of the following month or year corresponding to the
starting date, provided that if no corresponding date exists, the measure shall
be that date of the following month or year corresponding to the next day
following the starting date. For example, one month following February 18 is
March 18, and one month following March 31 is May 1.

                                   ARTICLE II

                               BOARD OF DIRECTORS

2.1     ELECTION OF BOARD MEMBERS.

                (a)     The number of directors constituting the Board, as fixed
from time to time by the Board in accordance with the Bylaws, shall be nine (9).
Notwithstanding any provision in the Bylaws, the number of directors
constituting the Board shall not be increased to greater than eleven (11)
without the prior written consent of the Requisite Investors for so long as both
JPMP Global and BBI are entitled to designate a Preferred Director.

                (b)     At each annual meeting of the holders of any class of
Stock, and at each special meeting of the holders of any class of Stock called
for the purpose of electing directors of the Company, and at any time at which
holders of any class of Stock shall have the right to, or shall, vote for or
consent in writing to the election of directors of the Company, then, and in
each such event, the Investors (other than the Excluded Investors) shall vote
all of the shares of Series A Preferred Stock owned by them or their Affiliates,
and their respective Transferees shall so vote for, or consent in writing with
respect to such shares in favor of, the election of two

                                       -6-

<PAGE>

individuals to serve as directors to the Board pursuant to Article III(A)(3)(a)
of the Certificate of Designations determined as follows:

                        (i)     one individual designated by JPMP Global (the
        "JPMP Director"), for so long as the JPMP Entities collectively own at
        least fifty percent (50%) of the Series A Preferred Stock (or Common
        Stock issued upon conversion thereof) that they acquired on the Closing
        Date; and

                        (ii)    one individual designated by BBI (the "BBI
        Director" and together with the JPMP Director, the "Preferred
        Directors"), for so long as BBI owns at least fifty percent (50%) of the
        Series A Preferred Stock (or Common Stock issued upon conversion
        thereof) that it acquired on the Closing Date;

provided, however, that, in the event that JPMP Global or BBI shall no longer
have the right to designate an individual for election to the Board pursuant to
clause (i) or (ii) above, respectively, the Board shall, upon the expiration of
the term of the JPMP Director or BBI Director, as applicable, and for all times
thereafter, be entitled to (x) fill the vacancy created thereby in accordance
with the Bylaws, or (y) reduce the number of directors constituting the Board by
eliminating the seat previously reserved for the JPMP Director or BBI Director
as the case may be. The Company agrees to nominate for election to the Board as
the JPMP Director and the BBI Director, or for the filling of any vacancies on
the Board created by such nominees, the persons designated by JPMP Global or
BBI, as applicable, pursuant to this Section 2.1. The parties hereby agree that,
effective immediately after the Closing, Srinivas Akkaraju shall be added as a
member of the Board as the JPMP Director and Felix Baker shall be added as a
member of the Board as the BBI Director. The obligation of each Investor to vote
its shares as directed by this Section 2.1(b) (to the extent such obligation
exists hereunder) shall cease, without any further action on the part of the
Investors or the Company, at such time as neither JPMP Global nor BBI are
entitled to designate a director pursuant to clause (i) or (ii) above.

                (c)     The Company shall give at least 30 days prior written
notice of the date of the earliest estimated proposed mailing of proxy materials
for election of directors of the Company. JPMP Global and BBI shall, within 10
Business Days of receipt of such notice from the Company, give written notice (a
"Section 2.1 Notice") to the Company of the name of each individual that JPMP
Global and BBI intend to nominate for election or reelection to the Board and
all information relating to each such individual that is required to be
disclosed in any solicitation of proxies for election of directors, or as
otherwise required, in each case pursuant to Regulation 14A under the Exchange
Act (including such individual's written consent to being named in the proxy
statement as a nominee and to serving as a director if elected). At the request
of the Board, any individual so nominated for election as a director shall
furnish to the Secretary of the Company that information required to be set
forth in the Section 2.1 Notice.

                (d)     Subject to the next sentence, the Investors (other than
the Excluded Investors) shall vote their shares of Series A Preferred Stock (i)
to remove any director whose removal is required by the party or parties with
the power to designate such director and (ii) to fill any vacancy created by the
removal, resignation or death of a director, in each case for the election of a
new director designated and approved, in accordance with the provisions of this
Section 2.1; provided, however, that the obligation of each Investor to vote its
shares as directed by this Section 2.1(d) (to the extent such obligation exists
hereunder) shall cease, without any

                                       -7-

<PAGE>

further action on the part of the Investors or the Company, at such time as
neither JPMP Global nor BBI are entitled to designate a director pursuant to
Sections 2.1(b)(i) or (ii) above. Each of the JPMP Director and the BBI Director
shall only be removed by JPMP Global or BBI, respectively. At all times, the
person serving as the JPMP Director or the BBI Director shall be either (i) an
employee of one of the JPMP Entities or BBI, respectively, holding the position
of "Principal" or any position senior thereto, or (ii) a person reasonably
acceptable to a majority of the other members of the Board of Directors,
provided, however, that in the case of clause (ii) such person must be qualified
to serve as a member of the board of directors of a publicly traded company.
Vacancies on the Board shall be filled within 30 days of the date such vacancy
is created or immediately before the first action to be taken by the Board after
the date such vacancy is created; provided, however, that if a vacancy on the
Board is a result of JPMP Global or BBI no longer having the right to designate
a director pursuant to Section 2.1(b) above, the Board may elect to reduce the
number of directors constituting the Board by eliminating the seat previously
reserved for the JPMP Director or BBI Director, as the case may be.

                (e)     The directors to be elected pursuant to this Section 2.1
shall serve for terms extending from the date of their election and
qualification until their successors shall have been elected and qualified in
accordance with this Section 2.1.

                (f)     JPMP Global and BBI shall have the right to have that
number of representatives (each such representative, an "Observer") determined
as hereinafter provided present at all meetings of the Board. Such right shall
from time to time be exercisable by delivery to the Company of written notice
from the Requisite Investors specifying the names of such Observers. The number
of Observers shall at all times and from time to time be equal to the number of
members of the Board that JPMP Global and BBI are then entitled to designate
pursuant to Section 2.1(b)(i) or (ii) above, as applicable, but whose seats on
the Board are at the time vacant. The Company will give each Observer reasonable
prior notice (it being agreed that the same prior notice given to the Board
shall be deemed reasonable prior notice) in any manner permitted in the Bylaws
for notices to directors of the time and place of any proposed meeting of the
Board. Each such Observer will be entitled (i) to receive true and complete
copies of all documents furnished to any director in connection with such
meeting and (ii) to be present in person as an Observer at any such meeting or,
if a meeting is held by telephone conference, to participate therein for the
purpose of listening thereto; provided, that in each case, the Observers may be
excluded from access to any materials prepared for the Board or meeting or
portion thereof if the Board reasonably believes, upon advice of counsel, that
such exclusion is reasonably necessary to preserve the attorney-client
privilege.

                (g)     Each of JPMP Global and BBI agree to use reasonable
efforts to cause the individual serving as the JPMP Director or the BBI
Director, respectively, to provide the Company, on a timely basis, with any
information relating to such individual that the Company may be required to
disclose pursuant to Applicable Law, including without limitation those rules or
regulations promulgated by the NASD and the NMS.

                                       -8-

<PAGE>

2.2     BOARD MEETINGS.

        The Company shall convene meetings of the Board at least four times each
fiscal year at regular time intervals. The Company may use video conferencing
capabilities or teleconference facilities for meetings of the Board and any
committees thereof ("Committees").

2.3     EXPENSES.

        The Company shall pay or reimburse each of the Preferred Directors and
any Observer for the reasonable out-of-pocket expenses incurred by such
Preferred Director or Observer in connection with attending formal meetings of
the Board, any Committee thereof (including any Subsidiary board or committee
meetings), or attending any other activities in connection with the fulfillment
of such Preferred Director's duties, including, but not limited to, reasonable
travel and related expenses.

2.4     SUBSIDIARY BOARD.

        The Company shall cause the board of directors of each of its
Subsidiaries (except for any Subsidiary that is formed in a jurisdiction other
than the United States) to be constituted in a manner similar to the Board.

2.5     COMMITTEES.

        The Board may, from time to time, establish and maintain certain
Committees. To the extent allowed under Applicable Law, the Board shall, upon
the request of the Preferred Directors, appoint at least one Preferred Director
to serve on each Committee formed by the Board (other than the Option Committee
that is solely responsible for granting stock options to employees of the
Company below the level of "Director", for so long as such Committee is
comprised solely of employee directors).

2.6     QUALIFICATIONS OF BOARD MEMBERS.

        If at any time (a) the holders of Series A Preferred Stock shall be
entitled to elect one or more individuals to serve as directors to the Board
pursuant to Article III(A)(3)(a) of the Certificate of Designations and (b)
Section 2.1 of this Agreement shall have been terminated or shall no longer be
in effect, then each Person elected pursuant to the Certificate of Designations
shall be a Person reasonably acceptable to a majority of the other members of
the Board of Directors (it being understood and agreed by the parties hereto
that an employee of an Investor holding the position of "Principal" or any
position senior thereto shall be deemed acceptable); provided, however, that
such Person must be qualified to serve as a member of the board of directors of
a publicly traded company.

                                       -9-

<PAGE>

                                   ARTICLE III

                              ADDITIONAL AGREEMENTS

3.1     INCONSISTENT AGREEMENTS.

        The Company shall not enter into any agreement containing any provision
which would (a) be violated or breached by the exercise or performance by the
Company of any of its respective rights or obligations under any Document, or
(b) impair the ability of the Company or any Subsidiary to comply with the terms
of the Documents.

3.2     INFORMATION RIGHTS.

                (a)     The Company shall furnish (x) each of the JPMP Director
and the BBI Director or (y) if there is no JPMP Director or BBI Director then
serving on the Board, the JPMP Entities or BBI, as applicable, (provided that
the Company shall be obligated to furnish such information to the JPMP Entities
and BBI only for so long as JPMP Global and BBI continue to have the right to
designate a director pursuant to Section 2.1(b) above) with the following:

                        (i)     Quarterly Reports. As soon as available, but not
        later than 45 days after the end of each quarter in each fiscal year
        (other than the last quarter in each fiscal year) of the Company, a
        balance sheet of the Company and the related statements of income,
        stockholders' equity and cash flows, unaudited but prepared in
        accordance with GAAP consistently applied and certified by the President
        or the Chief Financial Officer of the Company, such balance sheet to be
        as of the end of such quarter and such statements of income,
        stockholders' equity and cash flows to be for such quarter and for the
        period from the beginning of the fiscal year to the end of such quarter,
        in each case with comparative statements for the prior fiscal year. The
        Company providing a copy of its Form 10-Q for the applicable quarter
        shall satisfy the requirements of this Section.

                        (ii)    Annual Audit. As soon as available, but not
        later than 90 days after the end of each fiscal year of the Company,
        audited financial statements of the Company, which shall include a
        statement of cash flows and statement of operations for such fiscal year
        and a balance sheet as at the last day thereof, each prepared in
        accordance with GAAP consistently applied (except as set forth in the
        notes thereto), and accompanied by the report of a firm of independent
        certified public accountants of nationally recognized standing selected
        by the Board (the "Accountants"). The Company shall maintain a system of
        accounting sufficient to enable the Accountants to render the report
        referred to in this clause. The Company providing a copy of its Form
        10-K for the applicable fiscal year shall satisfy the requirements of
        this Section.

                        (iii)   Annual Operating Plan. Within 60 days after the
        beginning of each fiscal year of the Company, an annual operating plan,
        including a qualitative summary by the President of the Company and an
        updated consolidated budget, projected income statements, balance sheets
        and cash flow statements (setting forth in detail the

                                      -10-

<PAGE>

        assumptions therefor) on a monthly basis for the Company and its
        Subsidiaries for such fiscal year of the Company.

                        (iv)    Subsidiaries. If for any period the Company
        shall have any Subsidiary or Subsidiaries whose accounts are
        consolidated with those of the Company, then in respect of such period
        the financial statements delivered pursuant to the foregoing clauses
        shall be consolidated (and consolidating if normally prepared by the
        Company) financial statements of the Company and all such consolidated
        Subsidiaries.

                        (v)     GAAP Reporting. The financial statements and
        reports delivered under this subsection shall fairly present in all
        material respects the financial position and results of operations of
        the Company at the dates thereof and for the periods then ended and
        shall have been prepared in accordance with GAAP, in the case of
        unaudited financial statements, subject to normal year-end audit
        adjustments and the absence of footnotes.

                (b)     Access to Records and Properties. The Company shall
afford the Preferred Directors, during normal business hours and with reasonable
advance notice, reasonable access to (i) visit and inspect the assets,
properties and information (financial or otherwise), (ii) examine upon
reasonable advance notice, the books of accounts and records of the Company and
(iii) make copies of such records and permit such Preferred Directors to discuss
all aspects of the Company and each Subsidiary with any officers, employees or
Accountants of the Company, in each case consistent with the highest level of
access to information and inspection rights granted by the Company to other
members of its Board; provided, however, that such investigation shall not
unreasonably interfere with the operations of the Company. The Company will
instruct the Accountants to discuss such aspects of the financial condition of
the Company with any such Preferred Director as such Preferred Director may
reasonably request, and to permit such Preferred Director to inspect, copy and
make extracts from such financial statements, analyses, work papers and other
documents and information (including electronically stored documents and
information) prepared by the Accountants with respect to the Company as such
Preferred Director may reasonably request.

                (c)     Other Reports; Miscellaneous. The Company shall promptly
provide to each of the Investors:

                        (i)     as soon as available, but not later than 45 days
        after the end of each quarterly accounting period, a Form 10-Q or, if
        the Company does not file quarterly reports with the Commission, the
        documents referred to in Section 3.2(a)(i);

                        (ii)    as soon as available, but not later than 90 days
        after the end of each fiscal year, a Form 10-K or, if the Company does
        not file an annual report with the Commission, the audited consolidated
        financial statements referred to in Section 3.2(a)(ii);

                        (iii)   simultaneously with any distribution of any
        document to holders of the Common Stock, any such document so
        distributed; and

                                      -11-

<PAGE>

                        (iv)    copies of all financial statements, reports,
        press releases, notices, proxy statements and other documents sent by
        the Company or its Subsidiaries to its stockholders generally or
        released to the public and copies of all regular and periodic reports,
        if any, filed by the Company or its Subsidiaries with the Commission,
        any securities exchange or the NASD.

                (d)     Notice of Material Sale. The Company shall promptly
provide to the JPMP Entities and BBI notice of any proposed Material Sale, and
shall afford the Preferred Directors with reasonable time to review and comment
on any agreement relating to such Material Sale, as applicable.

3.3     COMPLIANCE.

        The Company (a) in carrying out its business shall comply in all
material respects with Applicable Law and Orders of any Governmental Authority
applicable to it, its business and the ownership of its assets and (b) shall
obtain and maintain in full force and effect all Federal, state, local and
foreign governmental licenses and permits material to and necessary in the
conduct of its business.

3.4     INSURANCE.

        All the insurable properties of the Company shall be insured for the
benefit of the Company in the full amounts required to protect the Company
against risks usually insured against by Persons operating similar properties in
the localities in which such properties are located under policies in effect and
issued by national insurers of recognized responsibility.

3.5     AFFIRMATIVE COVENANTS.

        The Company shall observe and perform the following, except to the
extent waived upon the written consent of the Requisite Investors:

                (a)     Payment Under the Documents. The Company shall pay or
accrue, as the case may be, any amounts payable under the Documents in
accordance with the terms of the Documents.

                (b)     Payment of Taxes, etc. The Company shall pay and
discharge, and cause each of its Subsidiaries to pay and discharge, before the
same shall become delinquent, (i) all amounts of taxes, assessments and
governmental charges or levies imposed upon it or upon its property and (ii) all
lawful claims that, if unpaid, could reasonably be expected by law to become a
Lien upon its property; provided, however, that the Company shall not be
required to pay or discharge any such tax, assessment, charge or claim that is
being contested in good faith and by proper proceedings and as to which
appropriate reserves are being maintained.

                (c)     Preservation of Corporate Existence, etc. The Company
shall preserve and maintain its corporate existence; provided, however, that any
Subsidiary may merge or consolidate with any other Subsidiary or the Company.
The Company shall preserve and maintain its rights (charter and statutory), and
all material permits, licenses, approvals, privileges and franchises necessary
or desirable in the normal conduct of its business.

                                      -12-

<PAGE>

                (d)     Keeping of Books. The Company shall keep proper books of
record and account, in which entries that are full and correct in all material
respects shall be made of all financial transactions and the assets and business
of the Company and each such Subsidiary in accordance with GAAP.

                (e)     Maintenance of Properties, etc. The Company shall
maintain and preserve all of its properties that are reasonably required in the
conduct of its business in good working order and condition, ordinary wear, tear
and depletion excepted.

                (f)     Transactions with Affiliates. The Company shall conduct
all transactions otherwise permitted under the Documents with any of its
Affiliates on terms that are fair and reasonable and no less favorable to the
Company than it would obtain in a comparable arm's-length transaction with a
Person not an Affiliate.

                (g)     D&O Insurance; Indemnification. The Company shall
maintain director and officer liability insurance, with coverage of at least $10
million, from a nationally recognized insurance company rated "A" or above,
which insurance and amount thereof shall be acceptable to the Investors, and
shall keep such insurance in full force and effect. The Company's Restated
Certificate and Bylaws shall at all times provide for indemnification and
exculpation of the Preferred Directors to the fullest extent permissible under
Applicable Law.

                (h)     Performance of Documents. The Company shall perform and
observe all of the terms and provisions of each Document to be performed or
observed by it, maintain each such Document in full force and effect, and
enforce such Document in accordance with its terms.

                (i)     Proprietary Information and Inventions Agreements. The
Company shall require each employee of the Company as a condition to the
employment of such individual, to execute and deliver a nondisclosure and
proprietary assignment agreement in the Company's standard form.

                (j)     Material Indebtedness. The Company shall perform and
observe any and all of its obligations with respect to material Indebtedness of
the Company.

                (k)     Public Announcements. The Company shall consult with the
Requisite Investors before issuing, and shall provide the Requisite Investors
with the opportunity to review and comment upon, any press release or other
public statements with respect to the transactions contemplated by the Purchase
Agreement and shall not issue any such press release or make any such public
statement without the prior written consent of the Requisite Investors, except
to the extent expressly required by Applicable Law and, in such case, the
Company shall first promptly notify the Requisite Investors of such obligation
and allow such Requisite Investors to provide comment to any such disclosure
prior thereto. Notwithstanding the foregoing, if any such press release or
public statement specifically names or mentions any Investor, the consent of
such Investor will be required prior to the issuance of such press release or
public statement, except as may be expressly required by Applicable Law and, in
such case, the Company shall first promptly notify such Investor of such
obligation and allow such Investor to provide comment to any such disclosure
prior thereto.

                                      -13-

<PAGE>

3.6     TAX TREATMENT.

                (a)     The Company shall treat the shares of Series A Preferred
Stock held by the Investors as stock that participates in the corporate growth
of the Company to a significant extent within the meaning of Treasury Regulation
Section 1.305-5(a), and will not treat such shares as "preferred stock" for
purposes of the Code.

                (b)     On or before January 31 of each year, the Company shall
provide the Investors with a statement containing the Company's "Issuer
Allocation Percentage" for New York State tax purposes if the Company files or
is required to file a tax return in the State of New York for such year.

                                   ARTICLE IV

                               REGISTRATION RIGHTS

4.1     REQUIRED REGISTRATION.

                (a)     If at any time the Company shall be requested by the
Requisite Investors to effect the registration under the Securities Act of
Registrable Shares having an aggregate gross offering price (before underwriters
discounts and commissions) of at least $5,000,000, it shall promptly give
written notice to the other Investors of its requirement to so register such
Registrable Shares (which notice shall specify the number of Registrable Shares
proposed to be included in such registration and the intended method of
distribution, which may be pursuant to a shelf registration) and, upon the
written request, delivered to the Company within 30 days after delivery of any
such notice by the Company, of such other Investors to include in such
registration Registrable Shares of such Investors (which request shall specify
the number of Registrable Shares proposed to be included in such registration),
the Company shall, subject to Section 4.1(b) below, promptly use its best
efforts to effect such registration on an appropriate form, under the Securities
Act of the Registrable Shares which the Company has been so requested to
register.

                (b)     Anything contained in Section 4.1(a) to the contrary
notwithstanding, the Company shall not be obligated to effect pursuant to
Section 4.1(a) any registration under the Securities Act except in accordance
with the following provisions:

                        (i)     the Company shall not be obligated to use its
        best efforts to file and cause to become effective (A) more than two (2)
        Registration Statements initiated pursuant to Section 4.1(a); provided
        however, that if the Investors were unable to sell at least 90% of the
        Registrable Shares requested to be included in the last registration
        initiated by such group pursuant to Section 4.1(a) as a result of an
        underwriter's cutback, then additional registrations shall be added to
        this Section 4.1(b) until the foregoing condition is satisfied for such
        Investors, (B) any Registration Statement during the period starting
        with the date 60 days prior to the Company's good faith estimate of the
        date of filing of, and ending on the date 180 days after the effective
        date of, any other registration

                                      -14-

<PAGE>

        statement (other than on Form S-4 or Form S-8 promulgated under the
        Securities Act or any successor forms thereto) pursuant to which Primary
        Shares are to be or were sold; provided, however, that in the case of
        clause (B) the Company is actively employing in good faith all
        reasonable efforts to cause such Registration Statement to become
        effective and the Investors were offered the right to have the
        Registrable Shares included in such registration pursuant to Section 4.2
        below, or (C) more than one Registration Statement pursuant to Section
        4.1(a) in any consecutive six-month period;

                        (ii)    the Company may delay the filing or
        effectiveness of any Registration Statement for a period of up to 90
        days after the date of a request for registration pursuant to Section
        4.1(a) if at the time of such request the Company is engaged in a
        Material Transaction; provided, however, that the Company may only so
        delay the filing or effectiveness of a registration statement pursuant
        to this Section 4.1(b)(ii) on one occasion during any twelve-month
        period; and

                        (iii)   with respect to any registration pursuant to
        Section 4.1(a), the Company may include in such registration any Primary
        Shares or Other Shares; provided, however, that if the managing
        underwriter advises the Company that the inclusion of all Registrable
        Shares, Primary Shares and Other Shares proposed to be included in such
        registration would interfere with the successful marketing (including
        pricing) of all such Securities, then the number of Registrable Shares,
        Primary Shares and Other Shares proposed to be included in such
        registration shall be included in the following order:

                                (A)     first, the Registrable Shares held by
                the Investors requesting that their Registrable Shares be
                included in such registration pursuant to Section 4.1(a), pro
                rata based upon the number of Registrable Shares owned by each
                such Investor at the time of such registration;

                                (B)     second, the Primary Shares; and

                                (C)     third, the Other Shares.

                (c)     A requested registration under Section 4.1(a) may be
rescinded prior to such registration being declared effective by the Commission
by written notice to the Company from the Requisite Investors; provided,
however, that such rescinded registration shall not count as a registration
initiated pursuant to this Section 4.1 for purposes of subclause (A) of clause
(i) of subsection (b) above if (x) the Company shall have been reimbursed (pro
rata by the Investors requesting registration or in such other proportion as
they may agree) for all out-of-pocket expenses incurred by the Company in
connection with such rescinded registration, provided that each registration
that may be requested under this Section 4.1 may not be rescinded pursuant to
clause (x) more than two times, provided, further that such rescission may not
be made more than once in any 12-month period or (y) (1) the participating
Investors reasonably believed that the registration statement contained an
untrue statement of material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements made therein not
misleading, (2) notified the Company of such fact and requested that the Company
correct such alleged misstatement or omission and (3) the Company has refused to
correct such alleged misstatement or omission.

                                      -15-

<PAGE>

4.2     PIGGYBACK REGISTRATION.

        If the Company proposes for any reason to register Primary Shares or
Other Shares under the Securities Act (other than on Form S-4 or Form S-8
promulgated under the Securities Act or any successor forms thereto), it shall
promptly give written notice to each Investor of its intention so to register
the Primary Shares or Other Shares and, upon the written request, given within
20 days after delivery of any such notice by the Company, of any such Investor
to include in such registration Registrable Shares (which request shall specify
the number of Registrable Shares proposed to be included in such registration),
the Company shall use its best efforts to cause all such Registrable Shares to
be included in such registration on the same terms and conditions as the
Securities otherwise being sold in such registration; provided, however, that if
the managing underwriter advises the Company that the inclusion of all
Registrable Shares or Other Shares proposed to be included in such registration
would interfere with the successful marketing (including pricing) of Primary
Shares proposed to be registered by the Company, then the number of Primary
Shares, Registrable Shares and Other Shares proposed to be included in such
registration shall be included in the following order:

                        (i)     first, the Primary Shares;

                        (ii)    second, the Registrable Shares held by the
        Investors requesting their Registrable Shares be included in such
        registration pursuant to the terms of this Section 4.2 and the holders
        of registrable securities under the Existing Rights Agreement, pro rata
        based upon the number of Common Stock Equivalents owned by each such
        seller at the time of such registration; provided, however, that in no
        event shall the amount of securities requested to be included in such
        registration pursuant to the terms of this Section 4.2(ii) be reduced
        below fifty percent (50%) of the total amount of securities included in
        such registration; and

                        (iii)   third, the Other Shares (excluding the
        registrable securities under the Existing Rights Agreement).

4.3     REGISTRATIONS ON FORM S-3.

                (a)     Anything contained in this Section 4.3 to the contrary
notwithstanding, at such time as and for so long as the Company shall have
qualified for the use of Form S-3 promulgated under the Securities Act or any
successor form thereto, the Requisite Investors shall have the right to request
in writing an unlimited number of registrations on Form S-3, or such successor
form, of Registrable Shares, which request or requests shall (i) specify the
number of Registrable Shares intended to be sold or disposed of, (ii) state the
intended method of disposition of such Registrable Shares and (iii) relate to
Registrable Shares having an aggregate gross offering price (before underwriting
discounts and commissions) of at least $1,000,000, and upon receipt of such
request, the Company shall use its best efforts promptly to effect the
registration under the Securities Act of the Registrable Shares so requested to
be registered. Whenever the Company is required by this Section 4.3(a) to use
its best efforts to effect the registration of Registrable Shares, each of the
procedures and requirements of Section 4.1 (including but not limited to the
requirement that the Company notify all holders of Registrable Shares from whom
notice has not been received and provide them with the opportunity to

                                      -16-

<PAGE>

participate in the offering) shall apply to such registration. A requested
registration on Form S-3 or any such successor form in compliance with this
Section shall not count as a registration demanded pursuant to Section 4.1(a),
but shall otherwise be treated as a registration initiated pursuant to and
shall, except as otherwise expressly provided in this Section, be subject to
Section 4.1(b).

                (b)     Anything contained in Section 4.3(a) to the contrary
notwithstanding, the Company shall not be obligated to effect pursuant to
Section 4.3(a) any registration under the Securities Act except in accordance
with the following provisions:

                        (i)     the Company shall not be obligated to effect
        such registration if it is requested within six (6) months after a
        registered offering of the Company in which the Investors were given the
        opportunity to participate; and

                        (ii)    the Company may delay the filing or
        effectiveness of any Registration Statement on Form S-3 for a period of
        up to 90 days after the date of a request for registration pursuant to
        this Section 4.3 if at the time of such request the Company is engaged
        in a Material Transaction; provided, however, that the Company may only
        so delay the filing or effectiveness of a registration statement
        pursuant to this Section 4.3(b)(ii) on one occasion during any
        twelve-month period.

                (c)     On the effective date of the conversion of the
outstanding shares of Series A Preferred Stock into shares of Common Stock
pursuant to Article V(B)(1) of the Certificate of Designations, the Company
shall send written notice to the holders of such shares of their right to have
such shares registered for sale to the public pursuant to the terms of this
Agreement. Upon receipt of a request for registration of such shares from the
holders of a majority thereof, the Company shall use its best efforts promptly
to effect the registration under the Securities Act of all of the shares of
Common Stock issued upon such conversion in accordance with the provisions of
Section 4.3(a) above; provided, that if the Company shall not be qualified to
use Form S-3 (or any such successor form) at the time such shares of Series A
Preferred Stock are converted into shares of Common Stock, the Company shall use
its best efforts to register all such shares on an appropriate long-form
registration statement under the Securities Act in accordance with Section 4.1
hereof. Notwithstanding anything to the contrary contained in this Agreement,
registration of shares of Common Stock pursuant to this Section 4.3(c) shall be
subject only to Section 4.3(b)(ii) above.

4.4     PREPARATION AND FILING.

                (a)     If and whenever the Company is under an obligation
pursuant to the provisions of this Article IV to use its best efforts to effect
the registration of any Registrable Shares, the Company shall, as expeditiously
as practicable:

                        (i)     With respect to registrations pursuant to
        Sections 4.1, 4.2 and 4.3, use its best efforts to cause a Registration
        Statement that registers such Registrable Shares to become and remain
        effective for a period of 150 days (excluding any period during which
        such effectiveness is suspended) or until all of such Registrable Shares
        have been disposed of (if earlier);

                                      -17-

<PAGE>

                        (ii)    furnish, at least five Business Days before
        filing a Registration Statement that registers such Registrable Shares,
        a Prospectus relating thereto and any amendments or supplements relating
        to such Registration Statement or Prospectus, to one counsel selected
        by, in the case of a Registration initiated pursuant to Section 4.1(a)
        or 4.3, the Requisite Investors (the "Investors' Counsel"), copies of
        all such documents proposed to be filed (it being understood that such
        five Business Day period need not apply to successive drafts of the same
        document proposed to be filed so long as such successive drafts are
        supplied to the Investors' Counsel in advance of the proposed filing by
        a period of time that is customary and reasonable under the
        circumstances);

                        (iii)   prepare and file with the Commission such
        amendments and supplements to such Registration Statement and the
        Prospectus used in connection therewith as may be necessary to keep such
        Registration Statement effective for at least the period set forth in
        Section 4.4(a)(i) or until all of such Registrable Shares have been
        disposed of (if earlier) and to comply with the provisions of the
        Securities Act with respect to the sale or other disposition of such
        Registrable Shares;

                        (iv)    notify the Investors' Counsel promptly in
        writing (A) of any comments by the Commission with respect to such
        Registration Statement or Prospectus, or any request by the Commission
        for the amending or supplementing thereof or for additional information
        with respect thereto, (B) of the issuance by the Commission of any stop
        order suspending the effectiveness of such Registration Statement or
        Prospectus or any amendment or supplement thereto or the initiation of
        any proceedings for that purpose (and the Company shall use its best
        efforts to prevent the issuance thereof or, if issued, to obtain its
        withdrawal) and (C) of the receipt by the Company of any notification
        with respect to the suspension of the qualification of such Registrable
        Shares for sale in any jurisdiction or the initiation or threatening of
        any proceeding for such purposes;

                        (v)     use its best efforts to register or qualify such
        Registrable Shares under such other securities or blue sky laws of such
        jurisdictions as any seller of Registrable Shares reasonably requests
        and do any and all other acts and things which may be reasonably
        necessary or advisable to enable such seller of Registrable Shares to
        consummate the disposition in such jurisdictions of the Registrable
        Shares owned by such seller; provided, however, that the Company will
        not be required to qualify generally to do business, subject itself to
        general taxation or consent to general service of process in any
        jurisdiction where it would not otherwise be required so to do but for
        this clause (v);

                        (vi)    furnish to each seller of such Registrable
        Shares such number of copies of a summary Prospectus or other
        Prospectus, including a preliminary Prospectus, in conformity with the
        requirements of the Securities Act, and such other documents as such
        seller of Registrable Shares may reasonably request in order to
        facilitate the public sale or other disposition of such Registrable
        Shares;

                        (vii)   use its best efforts to cause such Registrable
        Shares to be registered with or approved by such other Governmental
        Authorities as may be necessary by virtue

                                      -18-

<PAGE>

        of the business and operations of the Company to enable the seller or
        sellers thereof to consummate the disposition of such Registrable
        Shares;

                        (viii)  notify on a timely basis each seller of such
        Registrable Shares at any time when a Prospectus relating to such
        Registrable Shares is required to be delivered under the Securities Act
        within the appropriate period mentioned in clause (i) of this Section
        4.4(a) 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 light of the circumstances then existing and,
        at the request of such seller, prepare and furnish to such seller a
        reasonable number of copies of a supplement to or an amendment of such
        Prospectus as may be necessary so that, as thereafter delivered to the
        offerees of such shares, such Prospectus shall not include an untrue
        statement of a material fact or omit to state a material fact required
        to be stated therein or necessary to make the statements therein not
        misleading in light of the circumstances then existing;

                        (ix)    make available for inspection by any seller of
        such Registrable Shares, any underwriter participating in any
        disposition pursuant to such Registration Statement and any attorney,
        accountant or other agent retained by any such seller or underwriter
        (collectively, the "Inspectors"), all pertinent financial, business and
        other records, pertinent corporate documents and properties of the
        Company (collectively, the "Records"), as shall be reasonably necessary
        to enable them to exercise their due diligence responsibility, and cause
        the Company's officers, directors and employees to supply all
        information (together with the Records, the "Information") reasonably
        requested by any such Inspector in connection with such Registration
        Statement (and any of the Information which the Company determines in
        good faith to be confidential, and of which determination the Inspectors
        are so notified, shall not be used by such seller or such Inspector for
        any purpose other than exercise of such due diligence responsibility and
        shall not be disclosed by the Inspectors unless (A) the disclosure of
        such Information is necessary to avoid or correct a material
        misstatement or omission in the Registration Statement, (B) the release
        of such Information is ordered pursuant to a subpoena or other order
        from a court of competent jurisdiction, (C) such Information has been
        made generally available to the public or (D) the seller of Registrable
        Shares agrees that it will, upon learning that disclosure of such
        Information is sought in a court of competent jurisdiction, give notice
        to the Company and allow the Company, at the Company's expense, to
        undertake appropriate action to prevent disclosure of the Information
        deemed confidential);

                        (x)     use its best efforts to obtain from its
        independent certified public accountants a "cold comfort" letter in
        customary form and covering such matters of the type customarily covered
        by cold comfort letters;

                        (xi)    use its best efforts to obtain, from its
        counsel, an opinion or opinions in customary form (which shall also be
        addressed to the Investors selling Registrable Shares in such
        registration);

                                      -19-

<PAGE>

                        (xii)   provide a transfer agent and registrar (which
        may be the same entity and which may be the Company) for such
        Registrable Shares;

                        (xiii)  issue to any underwriter to which any seller of
        Registrable Shares may sell Securities in such offering certificates
        evidencing such Registrable Shares;

                        (xiv)   list such Registrable Shares on any national
        securities exchange on which any shares of the Common Stock are listed
        or, if the Common Stock is not listed on a national securities exchange,
        use its best efforts to qualify such Registrable Shares for inclusion on
        the automated quotation system of the National Association of Securities
        Dealers, Inc. (the "NASD"), National Market System ("NMS"), or such
        other national securities exchange as the Requisite Investors shall
        request if the Common Stock is not then eligible for trading on the NMS;

                        (xv)    otherwise use its best efforts to comply with
        all applicable rules and regulations of the Commission, and make
        available to its securityholders, as soon as reasonably practicable,
        earnings statements which need not be audited covering a period of 12
        months beginning within three months after the effective date of the
        Registration Statement, which earnings statements shall satisfy the
        provisions of Section 11(a) of the Securities Act; and

                        (xvi)   use its best efforts to take all other steps
        necessary to effect the registration of such Registrable Shares
        contemplated hereby.

                (b)     Each holder of Registrable Shares that sells Registrable
Shares pursuant to a registration under this Agreement agrees that during such
time as such seller may be engaged in a distribution of the Registrable Shares,
such seller shall comply with Regulation M promulgated under the Exchange Act
and pursuant thereto it shall, among other things: (i) not engage in any
stabilization activity in connection with the Securities of the Company in
contravention of such rules; (ii) distribute the Registrable Shares under the
Registration Statement solely in the manner described in the Registration
Statement; and (iii) cease distribution of such Registrable Shares pursuant to
such Registration Statement upon receipt of written notice from the Company that
the prospectus covering the Registrable Shares contains any untrue statement of
a material fact or omits a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing.

4.5     EXPENSES.

        All expenses incurred by the Company in complying with Section 4.4,
including, without limitation, all registration and filing fees (including all
expenses incident to filing with the NASD), fees and expenses of complying with
securities and blue sky laws, printing expenses, fees and expenses of the
Company's counsel and accountants and reasonable fees and expenses of the
Investors' Counsel, shall be paid by the Company; provided, however, that all
underwriting discounts and selling commissions applicable to the Registrable
Shares and all fees and expenses of counsel for the seller or sellers other than
the Investors' Counsel, shall not be

                                      -20-

<PAGE>

borne by the Company but shall be borne by the seller or sellers thereof, in
proportion to the number of Registrable Shares sold by such seller or sellers.

4.6     INDEMNIFICATION.

                (a)     To the maximum extent permitted by law, in connection
with any registration of any Registrable Shares under the Securities Act
pursuant to this Article IV, the Company shall indemnify and hold harmless the
seller of such Registrable Shares, each underwriter, broker or any other Person
acting on behalf of such seller, each other Person, if any, who controls any of
the foregoing Persons within the meaning of the Securities Act and each
Representative of any of the foregoing Persons, against any losses, claims,
damages or liabilities, joint or several, to which any of the foregoing Persons
may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement under which such
Registrable Shares were registered, any preliminary Prospectus or final
Prospectus contained therein, any amendment or supplement thereto or any
document incident to registration or qualification of any Registrable Shares, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading or, with respect to any Prospectus, necessary
to make the statements therein in light of the circumstances under which they
were made not misleading, or any violation by the Company of the Securities Act
or state securities or blue sky laws applicable to the Company and relating to
action or inaction required of the Company in connection with such registration
or qualification under such state securities or blue sky laws, and the Company
shall promptly reimburse such seller, such underwriter, such broker, such
controlling Person or such Representatives for any legal or other expenses
incurred by any of them in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the Company
shall not be liable to any such Person to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in said
Registration Statement, preliminary Prospectus, amendment, supplement or
document incident to registration or qualification of any Registrable Shares in
reliance upon and in conformity with written information furnished to the
Company through an instrument duly executed by such Person, or a Person duly
acting on their behalf, specifically for use in the preparation thereof;
provided further, however, that the foregoing indemnity agreement is subject to
the condition that, insofar as it relates to any untrue statement, allegedly
untrue statement, omission or alleged omission made in any preliminary
Prospectus but eliminated or remedied in the final Prospectus (filed pursuant to
Rule 424 of the Securities Act), such indemnity agreement shall not inure to the
benefit of any indemnified party from whom the Person asserting any loss, claim,
damage, liability or expense purchased the Registrable Shares which are the
subject thereof, if a copy of such final Prospectus had been timely made
available to such Indemnified Person and such final Prospectus was not delivered
to such Person with or prior to the written confirmation of the sale of such
Registrable Shares to such Person.

                (b)     To the maximum extent permitted by law, in connection
with any registration of Registrable Shares under the Securities Act pursuant to
this Article IV, each seller of Registrable Shares shall indemnify and hold
harmless (in the same manner and to the same extent as set forth in the
paragraph (a) of this Section 4.6) the Company, each underwriter or

                                      -21-

<PAGE>

broker involved in such offering, each other seller of Registrable Shares under
such Registration Statement, each Person who controls any of the foregoing
Persons within the meaning of the Securities Act and any Representative of the
foregoing Persons with respect to any statement or omission from such
Registration Statement, any preliminary Prospectus or final Prospectus contained
therein, any amendment or supplement thereto or any document incident to
registration or qualification of any Registrable Shares, if such statement or
omission was made in reliance upon and in conformity with written information
furnished to the Company or such underwriter through an instrument duly executed
by such seller or a Person duly acting on their behalf specifically for use in
connection with the preparation of such Registration Statement, preliminary
Prospectus, final Prospectus, amendment or supplement; provided, however, that
the obligation to indemnify will be several, not joint and several, among the
sellers of Registrable Shares, and the maximum amount of liability in respect of
such indemnification shall be in proportion to and limited, in the case of each
seller of Registrable Shares, to an amount equal to the proceeds actually
received by such seller from the sale of Registrable Shares effected pursuant to
such registration.

                (c)     Promptly after receipt by an indemnified party of notice
of the commencement of any action involving a claim referred to in the preceding
paragraphs of this Section 4.6, such indemnified party will, if a claim in
respect thereof is made against an indemnifying party, give written notice to
the latter of the commencement of such action (provided, however, that an
indemnified party's failure to give such notice in a timely manner shall only
relieve the indemnification obligations of an indemnifying party to the extent
such indemnifying party is prejudiced by such failure). In case any such action
is brought against an indemnified party, the indemnifying party will be entitled
to participate in and to assume the defense thereof, jointly with any other
indemnifying party similarly notified to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be responsible for any
legal or other expenses subsequently incurred by the indemnified party in
connection with the defense thereof; provided, however, that if any indemnified
party shall have reasonably concluded that there may be one or more legal or
equitable defenses available to such indemnified party which are in addition to
or conflict with those available to the indemnifying party, or that such claim
or litigation involves or could have an effect upon matters beyond the scope of
the indemnity agreement provided in this Section 4.6, the indemnifying party
shall not have the right to assume the defense of such action on behalf of such
indemnified party and such indemnifying party shall reimburse such indemnified
party and any Person controlling such indemnified party for that portion of the
reasonable fees and expenses of any counsel (plus appropriate special and local
counsel) retained by the indemnified party which are reasonably related to the
matters covered by the indemnity agreement provided in this Section 4.6.
Notwithstanding the foregoing, the indemnity agreement set forth in Section
4.6(a) shall not apply to amounts paid in settlement if such settlement is
effected without the written consent of the Company (which consent shall not be
unreasonably withheld).

                (d)     If the indemnification provided for in this Section 4.6
is held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, claim, damage or liability referred to herein,
then the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amounts paid or payable by such

                                      -22-

<PAGE>

indemnified party as a result of such loss, claim, damage or liability 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 hand in
connection with the statements or omissions which resulted in such loss, claim,
damage or liability as well as any other relevant equitable considerations;
provided, however, that the maximum amount of liability in respect of such
contribution shall be limited, in the case of each seller of Registrable Shares,
to an amount equal to the proceeds actually received by such seller from the
sale of Registrable Shares effected pursuant to such registration. The relative
fault of the indemnifying party and of the indemnified party shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.

                (e)     The indemnification and contribution provided for under
this Article IV will remain in full force and effect regardless of any
investigation made by or on behalf of the indemnified party and will survive the
transfer of Securities.

                (f)     The indemnification required by this Section 4.6 will be
made by periodic payments during the course of the investigation or defense, as
and when bills are received or expenses incurred, subject to prompt refund in
the event any such payments are determined not to have been due and owing
hereunder.

4.7     UNDERWRITING AGREEMENT.

                (a)     Notwithstanding the provisions of Sections 4.4 and 4.6,
to the extent that the sellers of Registrable Shares in a proposed registration
shall enter into an underwriting or similar agreement, which agreement contains
provisions covering one or more issues addressed in such sections of this
Article IV, the provisions contained in such sections of this Article IV
addressing such issue or issues shall be of no force or effect with respect to
such registration, but this provision shall not apply to the Company if the
Company is not a party to the underwriting or similar agreement.

                (b)     If any registration pursuant to Section 4.1 or 4.3 is
requested to be an underwritten offering, the Company shall negotiate in good
faith to enter into a reasonable and customary underwriting agreement with the
underwriters thereof. The Company shall be entitled to receive indemnities from
lead institutions, underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in the distribution, to the same
extent as provided above with respect to information so furnished in writing by
such Persons specifically for inclusion in any Prospectus or Registration
Statement and to the extent customary given their role in such distribution.

                (c)     No holder of Registrable Shares may participate in any
registration hereunder that is underwritten unless such holder agrees (i) to
sell such holder's Registrable Shares proposed to be included therein on the
basis provided in any underwriting arrangements acceptable to the Company and
the Investors holding a majority of the Registrable Shares to be included in
such registration and (ii) as expeditiously as possible, notify the Company of
the

                                      -23-

<PAGE>

occurrence of any event concerning such holder as a result of which the
Prospectus relating to such registration contains 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, in light of the circumstances under
which they were made, not misleading.

4.8     SUSPENSION.

        Anything contained in this Article IV to the contrary notwithstanding,
the Company may (not more than once with respect to each registration), by
notice in writing to each holder of Registrable Shares to which a Prospectus
relates, require such holder to suspend, for up to 90 days (the "Suspension
Period"), the use of any Prospectus included in a Registration Statement filed
under Section 4.1, 4.2 or 4.3 if a Material Transaction exists that would
require an amendment to such Registration Statement or supplement to such
Prospectus (including any such amendment or supplement made through
incorporation by reference to a report filed under Section 13 of the Exchange
Act). The period during which such Prospectus must remain effective shall be
extended by a period equal to the Suspension Period. The Company may (but shall
not be obligated to) withdraw the effectiveness of any Registration Statement
subject to this provision.

4.9     INFORMATION BY HOLDER.

        Each holder of Registrable Shares to be included in any registration
shall furnish to the Company and the managing underwriter such written
information regarding such holder and the distribution proposed by such holder
as the Company or the managing underwriter may reasonably request in writing and
as shall be reasonably required in connection with any registration,
qualification or compliance referred to in this Article IV.

4.10    EXCHANGE ACT COMPLIANCE.

        The Company shall comply with all of the reporting requirements of the
Exchange Act (whether or not it shall be required to do so) and shall comply
with all other public information reporting requirements of the Commission,
which are conditions to the availability of Rule 144 for the sale of the Common
Stock. The Company shall cooperate with each holder of Registrable Shares in
supplying such information as may be reasonably necessary for such holder to
complete and file any information reporting forms presently or hereafter
required by the Commission as a condition to the availability of Rule 144.

4.11    NO CONFLICT OF RIGHTS.

        The Company represents and warrants to the Investors that the
registration rights granted to the Investors hereby do not conflict with any
other registration rights granted by the Company. The Company shall not, after
the date hereof, grant any registration rights which conflict with or impair, or
have any priority over, the registration rights granted hereby, without the
prior consent of the Requisite Investors. In any underwritten public offering,
the managing underwriter shall be a nationally recognized investment banking
firm selected by the Company, and reasonably acceptable to the Requisite
Investors.

                                      -24-

<PAGE>

4.12    TRANSFER OF REGISTRATION RIGHTS.

        The registration rights provided in this Article IV may be Transferred
by any Investor to (i) any principal, officer, or retired or principal officer
of an Investor, (ii) to an Affiliate of an Investor, or (iii) to any Transferee
of at least 100,000 shares of Common Stock held by such Investor, in each case
so long as the Company is, within a reasonable time after such transfer,
furnished with written notice of the name and address of such Transferee and the
securities with respect to which such registration rights are being assigned.

4.13    TERMINATION.

        This Article IV shall terminate and be of no further force or effect, as
to any Investor, upon such time as Rule 144 or another similar exemption under
the Securities Act is available for the sale of all such Investor's Registrable
Shares in a single transaction without regard to volume limitations; provided,
however, that Sections 4.5 and 4.6 shall survive the termination of this Article
IV.

                                    ARTICLE V

                       SECURITIES LAW COMPLIANCE; LEGENDS

5.1     RESTRICTION ON TRANSFER.

                (a)     Except for Transfers that constitute Public Sales and
Transfers to Affiliates, no Investor shall Transfer any Registrable Shares to a
Person not already a party to this Agreement, unless and until such Person
executes and delivers to the Company a joinder agreement, pursuant to which such
Person will thereupon become a party to, and be bound by and obligated to comply
with the terms and provisions of, this Agreement, as an Investor hereunder. No
Person who acquires Company Securities in a Public Sale shall be required to
execute a joinder agreement

                (b)     In addition to any other restrictions on the Transfer of
any Securities contained in this Agreement, the Investors shall not Transfer any
Registrable Shares except in compliance with the conditions specified in this
Article V.

5.2     RESTRICTIVE LEGENDS.

                (a)     Each certificate evidencing Registrable Shares and each
certificate issued in exchange for or upon the Transfer of any Registrable
Shares (if such shares remain Registrable Shares as defined herein after such
Transfer) shall be stamped or otherwise imprinted with a legend in substantially
the following form:

                "THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
                AN INVESTOR RIGHTS AGREEMENT DATED AS OF [_________] [__], 2003,
                AMONG THE ISSUER OF SUCH SECURITIES (THE "COMPANY") AND CERTAIN
                OF THE COMPANY'S STOCKHOLDERS, AS THE SAME

                                      -25-

<PAGE>

                MAY BE AMENDED FROM TIME TO TIME. THE TERMS OF SUCH INVESTOR
                RIGHTS AGREEMENT INCLUDE, AMONG OTHER THINGS, RESTRICTIONS ON
                TRANSFERS. A COPY OF SUCH INVESTOR RIGHTS AGREEMENT WILL BE
                FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF
                UPON WRITTEN REQUEST."

                (b)     The Company shall imprint such legends on certificates
evidencing shares outstanding prior to the date hereof. The legend set forth
above shall be removed from the certificates evidencing any shares that cease to
be Registrable Shares in accordance with the terms of this Agreement.

                                   ARTICLE VI

                              AMENDMENT AND WAIVERS

6.1     AMENDMENT.

        Except as expressly set forth herein, the provisions of this Agreement
may only be amended or waived with the prior written consent of (i) the Company
and (ii) the Requisite Investors; provided, however, that (A) any such
amendment, modification, or waiver that would adversely affect the rights
hereunder of any Investor, in its capacity as an Investor, without similarly
affecting the rights hereunder of all Investors, shall not be effective as to
such Investor without such Investor's prior written consent, (B) any such
amendment, modification, or waiver of Section 2.1(b)(i) hereof shall require the
prior written consent of the JPMP Entities, (C) any such amendment,
modification, or waiver of Section 2.1(b)(ii) hereof shall require the prior
written consent of the BBI Entities, (D) any such amendment, modification, or
waiver the objective of which is to terminate Section 2.1 hereof shall only
require the prior written consent of the JPMP Entities and BBI and (E) Schedule
I to this Agreement shall be deemed to be automatically amended from time to
time to reflect Transfers of Stock made in accordance with the terms of this
Agreement, without requiring the consent of any party, and the Company will,
from time to time, distribute to the Investors a revised Schedule I to reflect
any such changes.

6.2     WAIVERS; EXTENSIONS.

        No course of dealing between the Company and the Investors (or any of
them) or any delay in exercising any rights hereunder will operate as a waiver
of any rights of any party to this Agreement. The failure of any party to
enforce any of the provisions of this Agreement will in no way be construed as a
waiver of such provisions and will not affect the right of such party thereafter
to enforce each and every provision of this Agreement in accordance with its
terms.

                                      -26-

<PAGE>

                                   ARTICLE VII

                                   TERMINATION

        The provisions of this Agreement, except as otherwise expressly provided
herein, shall terminate upon the first to occur of (a) the consummation of a
Liquidation (as such term is defined in the Certificate of Designations) or (b)
the approval of such termination by (i) the Company and (ii) the Requisite
Investors. Anything contained herein to the contrary notwithstanding, as to any
particular Investor, this Agreement shall no longer be binding or of further
force or effect as to such Investor, except as otherwise expressly provided
herein, as of the date such Investor has Transferred all of such Investor's
interest in the Company's Securities and the Transferees of such Securities
have, if required by Section 5.1(a) hereof, executed joinder agreements.

                                  ARTICLE VIII

                                  MISCELLANEOUS

8.1     GRANT OF PROXY.

        Each Investor (other than the Excluded Investors) hereby irrevocably
grants to and appoints J.P. Morgan Partners (BHCA), L.P. ("JPMP-BHCA") (and any
officer of JPMP-BHCA) and BBI (and any officer of BBI), as such Investor's proxy
and attorney-in-fact (with full power of substitution), for and in the name,
place and stead of such Investor, to vote, act by written consent or grant a
consent, proxy or approval in respect of the shares of Series A Preferred Stock
owned by such Investor, with respect to such vote or action by written consent
exclusively as agreed by such Investor in this Agreement in the event that such
Investor shall fail at any time to vote or act by written consent with respect
to any of such Investor's shares of Series A Preferred Stock in favor of the
JPMP Director or BBI Director, as the case may be, as agreed by such Investor in
this Agreement. Each Investor (other than the Excluded Investors) hereby affirms
that any such irrevocable proxy set forth in this Section 8.1 is given in
connection with the Investors' purchase of Securities pursuant to the Purchase
Agreement in order to secure the performance of the obligations of such Investor
under this Agreement. Each such Investor hereby further affirms that any such
proxy hereby granted shall be irrevocable, and shall be deemed coupled with an
interest, in accordance with Section 212(e) of the Delaware General Corporation
Law.

8.2     REGULATORY MATTERS.

                (a)     Cooperation of Other Investors. Each Investor agrees to
cooperate with the Company in all reasonable respects in complying with the
terms and provisions of the letter agreement between the Company and the JPMP
Entities, a duly executed copy of which is attached hereto as Exhibit A,
regarding regulatory matters (the "Regulatory Sideletter"), including, without
limitation, voting to approve an amendment to the Company's Fundamental
Documents or this Agreement in a manner reasonably acceptable to the Company and
each of

                                      -27-

<PAGE>

the JPMP Entities or any Affiliate of any of the JPMP Entities entitled to make
such request pursuant to the Regulatory Sideletter in order to remedy a
Regulatory Problem (as defined in the Regulatory Sideletter). Anything contained
in this Section 8.2(a) to the contrary notwithstanding, no Investor shall be
required under this Section 8.2(a) to take any action that would adversely
affect in any material respect such Investor's rights, obligations or
liabilities under this Agreement or as a stockholder of the Company.

                (b)     Covenant Not to Amend. The Company and each Investor
(other than the JPMP Entities) agree to provide the JPMP Entities with at least
twenty (20) Business Days prior notice of its or their intention to amend, or
effectively amend by permanently foregoing its rights under, the voting or other
provisions of any of the Company's Fundamental Documents or this Agreement and
agree not to amend, or effectively amend by permanently foregoing its rights
under, the voting or other provisions of any Fundamental Document or this
Agreement prior to the earlier to occur of (i) the end of such twenty (20)
Business Day period or (ii) the date that the JPMP Entities notify the Company
and each other Investor that it will not have a Regulatory Problem as a result
thereof. The JPMP Entities agree to notify the Company and each other Investor
as to whether or not it would have a Regulatory Problem within ten (10) Business
Days after the JPMP Entities have received notice of such proposed amendment or
such effective amendment.

8.3     SEVERABILITY.

        It is the desire and intent of the parties that the provisions of this
Agreement be enforced to the fullest extent permissible under the law and public
policies applied in each jurisdiction in which enforcement is sought.
Accordingly, in the event that any provision of this Agreement would be held in
any jurisdiction to be invalid, prohibited or unenforceable for any reason, such
provision, as to such jurisdiction, shall be ineffective, without invalidating
the remaining provisions of this Agreement or affecting the validity or
enforceability of this Agreement or such provision in any other jurisdiction.
Notwithstanding the foregoing, if such provision could be more narrowly drawn so
as not be invalid, prohibited or unenforceable in such jurisdiction, it shall,
as to such jurisdiction, be so narrowly drawn, without invalidating the
remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.

8.4     ENTIRE AGREEMENT.

        This Agreement and the other agreements referred to herein and to be
executed and delivered in connection herewith embody the entire agreement and
understanding among the parties hereto with respect to the subject matter hereof
and thereof and supersede and preempt any and all prior and contemporaneous
understandings, agreements, arrangements or representations by or among the
parties, written or oral, which may relate to the subject matter hereof or
thereof in any way. Other than this Agreement, the other Documents and the other
agreements referred to herein and therein to be executed and delivered in
connection herewith and therewith, there are no other agreements continuing in
effect relating to the subject matter hereof.

                                      -28-

<PAGE>

8.5     INDEPENDENCE OF AGREEMENTS, COVENANTS, REPRESENTATIONS AND WARRANTIES.

        All agreements and covenants hereunder shall be given independent effect
so that if a certain action or condition constitutes a default under a certain
agreement or covenant, the fact that such action or condition is permitted by
another agreement or covenant shall not affect the occurrence of such default,
unless expressly permitted under an exception to such initial covenant. In
addition, all representations and warranties hereunder shall be given
independent effect so that if a particular representation or warranty proves to
be incorrect or is breached, the fact that another representation or warranty
concerning the same or similar subject matter is correct or is not breached will
not affect the incorrectness of or a breach of a representation and warranty
hereunder. The exhibits and schedules attached hereto are hereby made part of
this Agreement in all respects.

8.6     SUCCESSORS AND ASSIGNS.

        Except as otherwise provided herein, this Agreement will bind and inure
to the benefit of and be enforceable by the Company and its successors and
assigns and the Investors and any subsequent holders of Registrable Shares and
the respective successors and assigns of each of them, so long as they hold
Registrable Shares. None of the provisions hereof shall create, or be construed
or deemed to create, any right to employment in favor of any Person by the
Company or any of its Subsidiaries. This Agreement is not intended to create any
third party beneficiaries.

8.7     COUNTERPARTS; FACSIMILE SIGNATURES.

        This Agreement may be executed in any number of counterparts, and each
such counterpart hereof shall be deemed to be an original instrument, but all
such counterparts together shall constitute but one agreement. Facsimile
counterpart signatures to this Agreement shall be acceptable and binding.

8.8     REMEDIES.

                (a)     Each Investor shall have all rights and remedies
reserved for such Investor pursuant to this Agreement and all of the rights that
such holder has under any law or equity. Any Person having any rights under any
provision of this Agreement will be entitled to enforce such rights
specifically, to recover damages by reason of any breach of any provision of
this Agreement and to exercise all other rights granted by law or equity.

                (b)     The parties hereto agree that if any parties seek to
resolve any dispute arising under this Agreement pursuant to a legal proceeding,
the prevailing parties to such proceeding shall be entitled to receive
reasonable fees and expenses (including reasonable attorneys' fees and expenses)
incurred in connection with such proceedings.

                (c)     It is acknowledged that it will be impossible to measure
in money the damages that would be suffered by any party hereto if any Person
also party hereto fails to comply with any of the obligations imposed on it upon
them in this Agreement or in the Restated Certificate or Bylaws and that in the
event of any such failure, the aggrieved party will be irreparably damaged and
will not have an adequate remedy at law. Any such aggrieved party shall,
therefore, be entitled to equitable relief, including specific performance, to
enforce such

                                      -29-

<PAGE>

obligations, and if any action should be brought in equity to enforce any of the
provisions of this Agreement, none of the parties hereto shall raise the defense
that there is an adequate remedy at law.

8.9     NOTICES.

        All notices or other communications which are required or otherwise
delivered hereunder shall be deemed to be sufficient and duly given if contained
in a written instrument (a) personally delivered or sent by telecopier, (b) sent
by nationally-recognized overnight courier guaranteeing next Business Day
delivery or (c) sent by first class registered or certified mail, postage
prepaid, return receipt requested, addressed as follows:

                        (i)     if to the Company, to:

                                Seattle Genetics, Inc.
                                21823 30th Drive S.E.
                                Bothell, WA 98021
                                Telephone: (425) 527-4114
                                Telecopier: (425) 527-4109
                                Attention: Chief Executive Officer

                                With a copy to:

                                Seattle Genetics, Inc.
                                21823 30th Drive S.E.
                                Bothell, WA 98021
                                Telephone: (425) 527-4126
                                Telecopier: (425) 527-4109
                                Attention: General Counsel

                                With an additional copy to:

                                Venture Law Group
                                4750 Carillon Point
                                Kirkland, WA 98033
                                Telephone: (425) 739-8700
                                Telecopier: (425) 739-8750
                                Attention: Sonya F. Erickson

                        (ii)    if to an Investor, to him, her or it at the
        address set forth on Schedule I attached hereto;

or to such other address as the party to whom notice is to be given may have
furnished to each other party in writing in accordance herewith. Any such notice
or communication shall be deemed to have been received (i) when delivered, if
personally delivered, (ii) when sent, if sent by telecopy on a Business Day (or,
if not sent on a Business Day, on the next Business Day after

                                      -30-

<PAGE>

the date sent by telecopy), (iii) on the first Business Day after dispatch, if
sent by nationally recognized, overnight courier guaranteeing next Business Day
delivery and (iv) on the fifth Business Day following the date on which the
piece of mail containing such communication is posted, if sent by mail.

8.10    GOVERNING LAW; WAIVER OF JURY TRIAL.

                (a)     All questions concerning the construction,
interpretation and validity of this Agreement shall be governed by and construed
and enforced in accordance with the domestic laws of the State of New York,
without giving effect to any choice or conflict of law provision or rule
(whether in the State of New York or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of New
York. In furtherance of the foregoing, the internal law of the State of New York
will control the interpretation and construction of this Agreement, even if
under such jurisdiction's choice of law or conflict of law analysis, the
substantive law of some other jurisdiction would ordinarily apply.
Notwithstanding the foregoing provisions of this Section 8.10, those provisions
of this Agreement that relate to the internal governance of the Company and are
required by Delaware corporate law to be governed by such, shall be governed by
and construed and enforced in accordance with the internal laws of the State of
Delaware.

                (b)     BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX
FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN
EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE LAWS TO APPLY
(RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE
RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE
BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE
PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR
PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS
AGREEMENT OR ANY DOCUMENTS RELATED HERETO.

8.11    FURTHER ASSURANCES.

        Each party hereto shall do and perform or cause to be done and performed
all such further acts and things and shall execute and deliver all such other
agreements, certificates, instruments, and documents as any other party hereto
reasonably may request in order to carry out the provisions of this Agreement
and the consummation of the transactions contemplated hereby.

8.12    CONFLICTING AGREEMENTS.

        No Investor shall enter into any stockholder agreements or arrangements
of any kind with any Person with respect to any Securities on terms inconsistent
with the provisions of this Agreement (whether or not such agreements or
arrangements are with other Investors or with Persons that are not parties to
this Agreement), including agreements or arrangements with respect to the
acquisition or disposition of Securities in a manner which is inconsistent with
this Agreement.

                                      -31-

<PAGE>

8.13    NO THIRD PARTY RELIANCE.

        Anything contained herein to the contrary notwithstanding, the
representations and warranties of the Company contained in this Agreement (a)
are being given by the Company as an inducement to the Investors to enter into
this Agreement and the other Documents (and the Company acknowledges that the
Investors have expressly relied thereon) and (b) are solely for the benefit of
the Stockholders. Accordingly, no third party (including, without limitation,
any holder of capital stock of the Company) or anyone acting on behalf of any
thereof other than the Investors, shall be a third party or other beneficiary of
such representations and warranties and no such third party shall have any
rights of contribution against the Investors or the Company with respect to such
representations or warranties or any matter subject to or resulting in
indemnification under this Agreement or otherwise.

                                    * * * * *

                                      -32-

<PAGE>

                IN WITNESS WHEREOF, the undersigned have duly executed this
Investor Rights Agreement as of the date first written above.

                                       COMPANY:

                                       SEATTLE GENETICS, INC.

                                       By:
                                            ------------------------------------
                                            Name:  Clay B. Siegall
                                            Title:  President & CEO

                                       STOCKHOLDERS:

                                       J.P. MORGAN PARTNERS (BHCA), L.P.

                                       By:  JPMP Master Fund Manager, L.P.,
                                            its general partner

                                       By:  JPMP Capital Corp.,
                                            its general partner

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

                                       J.P. MORGAN PARTNERS GLOBAL
                                       INVESTORS, L.P.

                                       By:  JPMP Global Investors, L.P.,
                                            its general partner

                                       By:  JPMP Capital Corp.,
                                            its general partner

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

<PAGE>

                                       J.P. MORGAN PARTNERS GLOBAL
                                       INVESTORS (CAYMAN), L.P.

                                       By:  JPMP Global Investors, L.P.,
                                            its general partner

                                       By:  JPMP Capital Corp.,
                                            its general partner

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

                                       J.P. MORGAN PARTNERS GLOBAL
                                       INVESTORS A, L.P.

                                       By:  JPMP Global Investors, L.P.,
                                            its general partner

                                       By:  JPMP Capital Corp.,
                                            its general partner

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

                                       J.P. MORGAN PARTNERS GLOBAL
                                       INVESTORS (CAYMAN) II, L.P.

                                       By:  JPMP Global Investors, L.P.,
                                            its general partner

                                       By:  JPMP Capital Corp.,
                                            its general partner

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

<PAGE>

                                       BAKER/TISCH INVESTMENTS, L.P.

                                       By:  Baker/Tisch Capital, L.P.,
                                            its general partner

                                       By:  Baker/Tisch Capital (GP), LLC,
                                            its general partner

                                       By:
                                            ------------------------------------
                                            Name:  Felix Baker, Ph.D.
                                            Title:  Managing Member

                                       BAKER BROS. INVESTMENTS, L.P.

                                       By:  Baker Bros. Capital, L.P.,
                                            its general partner

                                       By:  Baker Bros. Capital (GP), LLC,
                                            its general partner

                                       By:
                                            ------------------------------------
                                            Name:  Felix Baker, Ph.D.
                                            Title:  Managing Member

                                       BAKER BROS. INVESTMENTS II, L.P.

                                       By:  Baker Bros. Capital, L.P.,
                                            its general partner

                                       By:  Baker Bros. Capital (GP), LLC,
                                            its general partner

                                       By:
                                            ------------------------------------
                                            Name:  Felix Baker, Ph.D.
                                            Title:  Managing Member

<PAGE>

                                       BAKER BIOTECH FUND I, L.P.

                                       By:  Baker Biotech Capital, L.P.,
                                            its general partner

                                       By:  Baker Biotech Capital (GP), LLC,
                                            its general partner

                                       By:
                                            ------------------------------------
                                            Name:  Felix Baker, Ph.D.
                                            Title:  Managing Member

                                       BAKER BIOTECH FUND II, L.P.

                                       By:  Baker Biotech Capital II, L.P.,
                                            its general partner

                                       By:  Baker Biotech Capital II (GP), LLC,
                                            is general partner

                                       By:
                                            ------------------------------------
                                                Name:  Felix Baker, Ph.D.
                                                Title:  Managing Member

                                       BAKER BIOTECH FUND II (Z), L.P.

                                       By:  Baker Biotech Capital II, L.P.,
                                            its general partner

                                       By:  Baker Biotech Capital II (GP), LLC,
                                            is general partner

                                       By:
                                            ------------------------------------
                                            Name:  Felix Baker, Ph.D.
                                            Title:  Managing Member

<PAGE>

                                       BAVP, L.P.

                                       By:  BA Venture Partners VI, LLC,
                                            its general partner

                                       By:
                                            ------------------------------------
                                            Name:  Louis C. Bock
                                            Title:  Managing Director

                                       DELPHI VENTURES VI, L.P.

                                       By:  Delphi Management Partners VI,
                                            L.L.C., its general partner

                                       By:
                                            ------------------------------------
                                            Name:  Deepa Pakianathan
                                            Title:  Managing Member

                                       DELPHI BIOINVESTMENTS VI, L.P.

                                       By:  Delphi Management Partners VI,
                                            L.L.C., its general partner

                                       By:
                                            ------------------------------------
                                            Name:  Deepa Pakianathan
                                            Title:  Managing Member

                                       T. ROWE PRICE HEALTH SCIENCES FUND,
                                       INC.

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

<PAGE>

                                                                      SCHEDULE I

                                    INVESTORS

        NAME AND ADDRESS

J.P. Morgan Partners (BHCA), L.P.
1221 Avenue of the Americas
New York, NY  10020
Attention:  Official Notices Clerk
(fbo Srinivas Akkaraju)

with a copy to:

O'Melveny & Myers LLP
30 Rockefeller Plaza
New York, NY  10112
Telephone:  (212) 408-2400
Telecopier: (212) 408-2420
Attention:  Phillip Isom, Esq.

J.P. Morgan Partners Global Investors, L.P.
c/o JPMP Global Investors, L.P.
c/o J.P. Morgan Partners, LLC
1221 Avenue of the Americas
New York, NY  10020
Attention:  Official Notices Clerk
(fbo Srinivas Akkaraju)

with a copy to:

O'Melveny & Myers LLP
30 Rockefeller Plaza
New York, NY  10112
Telephone:  (212) 408-2400
Telecopier: (212) 408-2420
Attention:  Phillip Isom, Esq.

<PAGE>

        NAME AND ADDRESS

J.P. Morgan Partners Global Investors
(Cayman), L.P.
c/o JPMP Global Investors, L.P.
c/o J.P. Morgan Partners, LLC
1221 Avenue of the Americas
New York, NY  10020
Attention:  Official Notices Clerk
(fbo Srinivas Akkaraju)

with a copy to:

O'Melveny & Myers LLP
30 Rockefeller Plaza
New York, NY  10112
Telephone:  (212) 408-2400
Telecopier: (212) 408-2420
Attention:  Phillip Isom, Esq.

J.P. Morgan Partners Global Investors A,
L.P.
c/o JPMP Global Investors, L.P.
c/o J.P. Morgan Partners, LLC
1221 Avenue of the Americas
New York, NY  10020
Attention:  Official Notices Clerk
(fbo Srinivas Akkaraju)

with a copy to:

O'Melveny & Myers LLP
30 Rockefeller Plaza
New York, NY  10112
Telephone:  (212) 408-2400
Telecopier: (212) 408-2420
Attention:  Phillip Isom, Esq.

<PAGE>

        NAME AND ADDRESS

J.P. Morgan Partners Global Investors
(Cayman) II, L.P.
c/o JPMP Global Investors, L.P.
c/o J.P. Morgan Partners, LLC
1221 Avenue of the Americas
New York, NY  10020
Attention:  Official Notices Clerk
(fbo Srinivas Akkaraju)

with a copy to:

O'Melveny & Myers LLP
30 Rockefeller Plaza
New York, NY  10112
Telephone:  (212) 408-2400
Telecopier: (212) 408-2420
Attention:  Phillip Isom, Esq.

Baker/Tisch Investments, L.P.
667 Madison Avenue, 17th Floor
New York, New York 10021
Facsimile:  (212) 521-2245
Attention:  Felix Baker

with a copy to:

Baker Brothers Investments
667 Madison Avenue, 17th Floor
New York, New York 10021
Facsimile:  (212) 521-2245
Attention:  Leo Kirby

Baker Bros. Investments, L.P.
667 Madison Avenue, 17th Floor
New York, New York 10021
Facsimile:  (212) 521-2245
Attention:  Felix Baker

with a copy to:

Baker Brothers Investments
667 Madison Avenue, 17th Floor
New York, New York 10021
Facsimile:  (212) 521-2245
Attention:  Leo Kirby

<PAGE>

        NAME AND ADDRESS

Baker Bros. Investments II, L.P.
667 Madison Avenue, 17th Floor
New York, New York 10021
Facsimile:  (212) 521-2245
Attention:  Felix Baker

with a copy to:

Baker Brothers Investments
667 Madison Avenue, 17th Floor
New York, New York 10021
Facsimile:  (212) 521-2245
Attention:  Leo Kirby

Baker Biotech Fund I, L.P.
667 Madison Avenue, 17th Floor
New York, New York 10021
Facsimile:  (212) 521-2245
Attention:  Felix Baker

with a copy to:

Baker Brothers Investments
667 Madison Avenue, 17th Floor
New York, New York 10021
Facsimile:  (212) 521-2245
Attention:  Leo Kirby

Baker Biotech Fund II, L.P.
667 Madison Avenue, 17th Floor
New York, New York 10021
Facsimile:  (212) 521-2245
Attention:  Felix Baker

with a copy to:

Baker Brothers Investments
667 Madison Avenue, 17th Floor
New York, New York 10021
Facsimile:  (212) 521-2245
Attention:  Leo Kirby

<PAGE>

        NAME AND ADDRESS

Baker Biotech Fund II (Z), L.P.
667 Madison Avenue, 17th Floor
New York, New York 10021
Facsimile:  (212) 521-2245
Attention:  Felix Baker

with a copy to:

Baker Brothers Investments
667 Madison Avenue, 17th Floor
New York, New York 10021
Facsimile:  (212) 521-2245
Attention:  Leo Kirby

BAVP, L.P.
c/o BA Venture Partners
950 Tower Lane

Suite 700
Foster City, CA  94404
Attention:  Louis C. Bock

Delphi Ventures VI, L.P.
c/o Delphi Ventures
3000 Sand Hill Rd.
Bldg. 1, Ste. 135
Menlo Park, CA 94025
(650) 854-9650
(650) 854-2961 fax
Attention: Deepa Pakianathan

Delphi BioInvestments VI, L.P.
c/o Delphi Ventures
3000 Sand Hill Rd.
Bldg. 1, Ste. 135
Menlo Park, CA 94025
(650) 854-9650
(650) 854-2961 fax
Attention: Deepa Pakianathan

<PAGE>

        NAME AND ADDRESS

T. Rowe Price Health Sciences Fund, Inc.
c/o T. Rowe Price Associates, Inc.
100 E. Pratt Street
Baltimore, MD 21202
Facsimile:  410-539-8471
Attention: Bonnie Maher

with a copy to:

Darrell N. Braman
Associate Legal Counsel
100 E. Pratt Street
Baltimore, MD 21202
Facsimile:  410-539-8471
Facsimile:  410-345-6575<PAGE>

                                                                    EXHIBIT 10.1

                                                                  EXECUTION COPY

================================================================================

                          SECURITIES PURCHASE AGREEMENT

                            dated as of May 12, 2003

                                      among

                             SEATTLE GENETICS, INC.

                                       and

                           THE PURCHASERS NAMED HEREIN

================================================================================

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                            PAGE

<S>                                                                                          <C>
ARTICLE I      DEFINED TERMS; RULES OF CONSTRUCTION.......................................... 1

     1.1    Defined Terms.................................................................... 1

     1.2    Rules of Construction............................................................ 8

ARTICLE II     PURCHASE AND SALE OF SHARES; CLOSING.......................................... 9

     2.1    Filing of the Certificate of Designations........................................ 9

     2.2    Authorization of Issuance of Preferred Shares and Warrants....................... 9

     2.3    Purchase and Sale of Securities................................................. 10

     2.4    Company Actions................................................................. 10

     2.5    Closing......................................................................... 10

     2.6    Closing Deliveries.............................................................. 10

     2.7    Use of Proceeds................................................................. 11

ARTICLE III    REPRESENTATIONS AND WARRANTIES ABOUT THE COMPANY............................. 11

     3.1    Organization, Power, Authority and Good Standing................................ 11

     3.2    Authorization, Execution, Enforceability and Consents........................... 11

     3.3    Capitalization.................................................................. 12

     3.4    Reports and Financial Information............................................... 14

     3.5    Absence of Undisclosed Liabilities.............................................. 14

     3.6    Compliance with Laws............................................................ 15

     3.7    Absence of Changes.............................................................. 15

     3.8    Taxes........................................................................... 16

     3.9    Title to Assets................................................................. 17

     3.10   Intellectual Property........................................................... 17

     3.11   Litigation and Other Proceedings................................................ 18

     3.12   Material Agreements............................................................. 18

     3.13   Insurance....................................................................... 18

     3.14   ERISA........................................................................... 19

     3.15   Environmental Protection........................................................ 20

     3.16   Accounting...................................................................... 20

     3.17   Investment Company.............................................................. 20
</TABLE>

                                       -i-

<PAGE>

                                TABLE OF CONTENTS
                                   (continued)

<TABLE>
<CAPTION>
                                                                                            PAGE

<S>                                                                                          <C>
     3.18   Private Sale.................................................................... 21

     3.19   Brokers......................................................................... 21

     3.20   State Takeover Statutes......................................................... 21

     3.21   Certificates of Officers........................................................ 21

     3.22   Listed Securities............................................................... 21

ARTICLE IV     REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS............................. 21

     4.1    Authorization of the Documents.................................................. 21

     4.2    Investment Representations...................................................... 22

     4.3    Non-United States Persons....................................................... 23

     4.4    Non-Public Information.......................................................... 23

ARTICLE V      CONDITIONS TO CLOSING........................................................ 24

     5.1    Conditions to Purchasers' Obligations........................................... 24

     5.2    Conditions to the Company's Obligations......................................... 26

ARTICLE VI     INDEMNIFICATION.............................................................. 27

     6.1    Survival of Representations, Warranties, Agreements and Covenants, Etc.......... 27

     6.2    Indemnification................................................................. 27

ARTICLE VII    TRANSFER OF SECURITIES....................................................... 29

      7.1    Restriction on Transfer........................................................ 29

      7.2    Restrictive Legends............................................................ 29

      7.3    Notice of Transfer............................................................. 30

      7.4    Transfer Pursuant to Rule 144.................................................. 31

ARTICLE VIII   ADDITIONAL AGREEMENTS OF THE COMPANY......................................... 31

     8.1    Conduct Pending Closing......................................................... 31

     8.2    Access to Information........................................................... 33

     8.3    No Solicitation................................................................. 33

     8.4    Certain Tax Matters............................................................. 35

     8.5    Other Actions................................................................... 35

     8.6    Advice of Changes; Filings...................................................... 35

     8.7    Financial Information........................................................... 35
</TABLE>

                                      -ii-

<PAGE>

                                TABLE OF CONTENTS
                                   (continued)

<TABLE>
<CAPTION>
                                                                                            PAGE

<S>                                                                                          <C>
     8.8    Stockholders Meeting............................................................ 35

     8.9    Reasonable Efforts; Notification................................................ 36

     8.10   Certain Notifications........................................................... 37

     8.11   Public Announcements............................................................ 38

     8.12   NASD............................................................................ 38

ARTICLE IX     TERMINATION.................................................................. 38

     9.1    Termination..................................................................... 38

     9.2    Effect of Termination........................................................... 40

ARTICLE X      MISCELLANEOUS................................................................ 40

     10.1   Fees............................................................................ 40

     10.2   Further Assurances.............................................................. 41

     10.3   Remedies........................................................................ 41

     10.4   Successors and Assigns.......................................................... 42

     10.5   Entire Agreement................................................................ 42

     10.6   Notices......................................................................... 42

     10.7   Amendments, Modifications and Waivers........................................... 43

     10.8   Governing  Law; Waiver of Jury Trial............................................ 43

     10.9   No Third Party Reliance......................................................... 44

     10.10  Submission to Jurisdiction...................................................... 44

     10.11  Severability.................................................................... 45

     10.12  Independence of Agreements, Covenants, Representations and Warranties........... 45

     10.13  Counterparts; Facsimile Signatures.............................................. 45
</TABLE>

                                      -iii-

<PAGE>

                             SCHEDULES and EXHIBITS

Schedules
Schedule I                 -        Purchasers, Purchase Price
Schedule 3.2(c)            -        Consents and Approvals
Schedule 3.5               -        Undisclosed Liabilities
Schedule 3.7               -        Absence of Changes
Schedule 3.8               -        Taxes
Schedule 3.10              -        Intellectual Property
Schedule 3.12              -        Material Agreements
Schedule 3.13              -        Insurance Policies
Schedule 3.14(g)           -        Employment Agreements
Schedule 8.1(b)(viii)      -        Modifications to Material Agreements

EXHIBITS
Exhibit A                  -        Form of Certificate of Designations for
                                    Series A Preferred Stock
Exhibit B                  -        Form of Warrant
Exhibit C                  -        Form of Investor Rights Agreement
Exhibit D                  -        Form of Regulatory Sideletter
Exhibit E                  -        Form of Legal Opinion of Venture Law Group

<PAGE>

                                                                  EXECUTION COPY

                                        SECURITIES PURCHASE AGREEMENT dated as
                                of May 12, 2003 among SEATTLE GENETICS, INC., a
                                Delaware corporation (the "Company"), and the
                                PURCHASERS listed on Schedule I (collectively,
                                the "Purchasers").

                The Company is in the business of discovering, developing and
commercializing monoclonal antibody-based drugs to treat cancer and other human
diseases (the "Business"). The Company desires to raise up to $40,000,000 in
preferred equity financing, and the Purchasers are willing to purchase (i)
shares of a newly-created series of preferred stock to be designated as Series A
Convertible Preferred Stock, $0.001 par value per share (the "Series A Preferred
Stock"), and (ii) warrants to purchase shares of the Company's Common Stock (the
"Warrants"), all on the terms and subject to the conditions set forth herein.

                ACCORDINGLY, in consideration of the foregoing and the
covenants, agreements, representations and warranties contained in this
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties, the parties hereto
hereby agree as follows:

                                    ARTICLE I
                      DEFINED TERMS; RULES OF CONSTRUCTION

1.1     DEFINED TERMS.

        Capitalized terms used and not otherwise defined in this Agreement have
the meanings given to them below or in the other locations of this Agreement
specified below:

                "Acquisition Proposals" has the meaning given to such term in
Section 8.3.

                "Affiliate" means, with respect to any specified Person, any
corporation or business entity controlled by, controlling or under common
control with such specified Person. In addition, any relative or spouse
(including any partner with whom such person resides on a permanent basis) of
the specified Person, any relative of such spouse, any spouse of any such
relative or any other Person who, directly or indirectly, is under common
ownership or control with, or is owned or controlled by such spouse or relative
shall be considered an Affiliate of such Person. As used in this definition, the
term "control" means the possession, directly or indirectly, of the power to
direct the management and policies of a Person, whether through the ownership of
voting securities, by contract or otherwise. As used in this definition, the
term "relative" means any former or current spouse, parent, grandparent,
great-grandparent, great-great-grandparent, child, grandchild, great-grandchild,
great-great-grandchild, sibling, first uncle, first aunt or first cousin (in
each case, whether natural or adoptive).

                "Agreement" has the meaning given to such term in Section 1.2.

<PAGE>

                "Alternative Transaction" has the meaning given to such term in
Section 8.3.

                "Applicable Law," with respect to any Person, means all
provisions of laws, statutes, ordinances, rules, regulations, permits,
certificates or orders of any Governmental Authority applicable to such Person
or any of its assets or property or to which such Person or any of its assets or
property is subject, and all judgments, injunctions, orders and decrees of all
courts and arbitrators in proceedings or actions in which such Person is a party
or by which it or any of its assets or properties is or may be bound or subject.

                "Applicable Securities" means the Series A Preferred Stock, the
Warrants or the Reserved Common Shares, as applicable.

                "BBI" means collectively, Baker/Tisch Investments, L.P., Baker
Bros. Investments, L.P., Baker Bros. Investments II, L.P., Baker Biotech Fund I,
L.P., Baker Biotech Fund II, L.P., Baker Biotech Fund II (Z), L.P. and/or any
other entity controlled by, controlling or under common control with any of the
preceding Persons at such time, to the extent such Persons hold shares of Series
A Preferred Stock, Warrants or Common Stock issued upon conversion of the Series
A Preferred Stock or exercise of the Warrants.

                "Benefit Arrangement" means each employment, severance or other
similar contract, arrangement or policy (written or oral) and each plan or
arrangement (written or oral) providing for severance benefits, insurance
coverage (including any self-insured arrangements), workers' compensation,
disability benefits, supplemental unemployment benefits, vacation benefits,
retirement benefits or for deferred compensation, profit-sharing, bonuses, stock
options, stock appreciation rights or other forms of incentive compensation or
post-retirement insurance, compensation or benefits which (i) is not an Employee
Plan and (ii) covers any employee or former employee of the Company.

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

                "Breached Representation" has the meaning given to it in Section
8.10.

                "Breaching Purchaser" has the meaning given to it in Section
10.1(c).

                "Business" has the meaning given to it in the Preamble to this
Agreement.

                "Business Day" means any day other than a Saturday, Sunday or a
day on which all United States securities exchanges (or Nasdaq) on which
Securities issued by the Company are listed, are authorized or required to be
closed.

                "Certificate of Designations" means the certificate of
designations, powers, preferences and relative, participating, optional or other
special rights and qualifications, limitations or restrictions of the Series A
Preferred Stock, in substantially the form set forth in Exhibit A.

                                        2

<PAGE>

                "Certificate of Incorporation" means the Fourth Amended and
Restated Certificate of Incorporation of the Company, as it may be amended,
restated or modified from time to time.

                "Claim" means any claim, demand, assessment, judgment, Order,
decree, action, cause of action, litigation, suit, investigation or other
Proceeding initiated or brought by any Third Party.

                "Closing" has the meaning given to it in Section 2.5.

                "Closing Date" has the meaning given to it in Section 2.5.

                "Closing Certificate" has the meaning given to it in Section
6.1.

                "Code" means the Internal Revenue Code of 1986, as amended, or
any similar Federal law then in force, and the rules and regulations promulgated
thereunder, all as the same may from time to time be in effect.

                "Commission" means the Securities and Exchange Commission or any
successor or replacement thereto.

                "Common Stock" means the common stock, par value $0.001 per
share, of the Company.

                "Company" has the meaning given to it in the caption to this
Agreement.

                "Company Indemnified Persons" has the meaning given to it in
Section 6.2(b).

                "Company Update Letter" has the meaning given to it in Section
8.10.

                "Documents" means this Agreement, the Certificate of
Designations, the Investor Rights Agreement, the Warrants, the Option Agreement,
the Regulatory Sideletter and the Assignment Agreement.

                "Employee Plan" means each "employee benefit plan, " as such
term is defined in Section 3(3) of ERISA, that (i) (A) is subject to any
provision of ERISA and (B) is maintained or contributed to by the Company, or
(ii) (A) is subject to any provision of Title IV of ERISA and (B) is maintained
or contributed to by any of the Company's ERISA Affiliates.

                "Environmental Laws" means any Federal, state or local law or
ordinance or regulation pertaining to the protection of human health or the
environment, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. Sections 9601, et seq., the
Emergency Planning and Community Right-to-Know Act, 42 U.S.C. Sections 11001, et
seq., and the Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901,
et seq.

                                        3

<PAGE>

                "Equity Incentive Plans" means the Seattle Genetics, Inc. 1998
Stock Option Plan, the 2000 Directors' Stock Option Plan and the 2000 Employee
Stock Purchase Plan.

                "ERISA" means the Employment Retirement Income Security Act of
1974, as amended, or any similar Federal law in force, and the rules and
regulations promulgated thereunder, all as the same may be amended.

                "ERISA Affiliate" of any entity means any other entity that,
together with such entity, would be treated as a single employer under Section
414 of the Code.

                "Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar Federal Statute then in force, and the rules and
regulations promulgated thereunder, all as the same may from time to time be in
effect.

                "Existing Rights Agreement" has the meaning given to it in
Section 3.3(h).

                "Fee Cap" has the meaning given to it in Section 10.1(a).

                "Financial Statements" has the meaning given to it in Section
3.4(b).

                "Fundamental Documents" means the documents by which any Person
(other than an individual) establishes its legal existence or which govern its
internal affairs. The Fundamental Documents of the Company are the Certificate
of Incorporation and the By-laws of the Company.

                "GAAP" means United States generally accepted accounting
principles.

                "Governmental Authority" means any domestic or foreign
government or political subdivision thereof, whether on a Federal, state or
local level and whether executive, legislative or judicial in nature, including
any agency, authority, board, bureau, commission, court, department or other
instrumentality thereof.

                "Hazardous Substances" means and includes oil and petroleum
products, asbestos, polychlorinated biphenyls, urea formaldehyde and any other
materials classified as hazardous or toxic under any Environmental Laws.

                "Indemnified Persons" means any of the Company Indemnified
Persons or any of the Purchaser Indemnified Persons, as the context may require.

                "Indemnifying Persons" means any of the Purchasers or the
Company, as the context may require.

                "Intellectual Property Rights" has the meaning given to it in
Section 3.10.

                "Investor Rights Agreement" means the Investor Rights Agreement
among the Company and the Purchasers, in substantially the form set forth in
Exhibit C.

                                        4

<PAGE>

                "JPMP Entities" means, collectively, J.P. Morgan Partners
(BHCA), L.P., J.P. Morgan Partners Global Investors, L.P., J.P. Morgan Partners
Global Investors (Cayman), L.P., J.P. Morgan Partners Global Investors A, L.P.,
J.P. Morgan Partners Global Investors (Cayman) II, L.P. and/or any other entity
controlled by, controlling or under common control with any of the preceding
Persons at such time, including any entity controlled by JPMP Master Fund
Manager, L.P., or any Affiliate thereof, or any entity managed or advised by
J.P. Morgan Partners, LLC, JPMP Capital Corp. or any Affiliate thereof, to the
extent such Persons hold shares of Series A Preferred Stock, Warrants or Common
Stock issued upon conversion of the Series A Preferred Stock or exercise of the
Warrants.

                "Knowledge" has the meaning given to it in Section 1.2.

                "Liability" means any liability or obligation, whether known or
unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued,
liquidated or unliquidated and whether due or to become due, regardless of when
asserted.

                "Liens" means and includes mortgages, judgments, claims, liens,
security interests, pledges, escrows, charges, restrictions or other
encumbrances of any kind or character whatsoever.

                "Loss" means any loss (including diminution in value of
Securities), Liability (to the extent incurred or reasonably likely to be
incurred), cost, damage, deficiency, Tax payable (including any Taxes imposed
with respect to any indemnity payments for any such Loss), penalty, fine or
expense, whether or not arising out of any Claims by or on behalf of any party
to this Agreement or any third party, including interest, penalties, reasonable
attorneys' fees and expenses and all amounts paid in investigation, defense or
settlement of any of the foregoing which any such party may suffer, sustain or
become subject to, as a result of, in connection with, relating or incidental to
or by virtue of any indemnifiable event or condition.

                "Material Adverse Change" means, with respect to any Person, a
material adverse change to the business, condition (financial and otherwise),
operations, results of operations, assets (including levels of working capital
and components thereof), Liabilities, and prospects of such Person.
Notwithstanding the foregoing, the following events, matters or occurrences
shall not give rise to a "Material Adverse Change" with respect to the Company:
(a) the Company's expenditures of funds in the ordinary course consistent with
past practice, (b) matters disclosed in the 33 and 34 Act Reports filed on or
prior to March 31, 2003 to the extent the matter giving rise to the "Material
Adverse Change" is consistent with such disclosures and (c) the occurrence of
any Liability, the amount of which has been fully reserved for and disclosed in
the 2002 Financial Statements.

                "Material Adverse Effect" means, with respect to any Person, a
material adverse effect on the business, condition (financial and otherwise),
operations, results of operations, assets (including levels of working capital
and components thereof), Liabilities, and prospects of such Person.
Notwithstanding the foregoing, the following

                                        5

<PAGE>

events, matters or occurrences shall not give rise to a "Material Adverse
Effect" with respect to the Company: (a) the Company's expenditures of funds in
the ordinary course consistent with past practice, (b) matters disclosed in the
33 and 34 Act Reports filed on or prior to March 31, 2003 to the extent the
matter giving rise to the "Material Adverse Effect" is consistent with such
disclosures and (c) the occurrence of any Liability, the amount of which has
been fully reserved for and disclosed in the 2002 Financial Statements.

                "Material Agreements" has the meaning given to it in Section
3.12(a).

                "Multiemployer Plan" means each Employee Plan that is a
multiemployer plan, as defined in Section 3(37) of ERISA.

                "Nasdaq" has the meaning given to it in Section 3.22.

                "Option Agreement" means that certain Option Agreement dated as
of the date hereof among the Company, the JPMP Entities and BBI.

                "Order" means any judgment, writ, decree, injunction, order,
stipulation, compliance agreement or settlement agreement issued or imposed by,
or entered into with, a Governmental Authority, whether or not having the force
of law.

                "Outside Date" has the meaning given to it in Section 9.1(b).

                "Permitted Liens" means (i) liens on the Company's furniture,
fixtures and equipment granted to the Company's landlord as collateral for the
Company's office and laboratory lease, (ii) Liens for taxes not yet due and
payable and for which an appropriate reserve has been taken, (iii) rights of
way, easements and other minor defects in title which do not adversely affect in
any material respect the use or value of the real property subject to such and
(iv) other Liens not to exceed $100,000 in the aggregate.

                "Permits" has the meaning given to it in Section 3.6(c)

                "Person" shall be construed as broadly as possible and shall
include an individual, a partnership (including a limited liability
partnership), a limited liability company, a company, an association, a joint
stock company, a limited liability company, a trust, a joint venture, an
unincorporated organization and a Governmental Authority.

                "Post-Signing Returns" has the meaning given to it in Section
8.4.

                "Preferred Shares" means shares of the Company's Series A
Preferred Stock.

                "Premises" has the meaning given to it in Section 3.15.

                "Proxy Statement" has the meaning given to it in Section 8.8.

                "Proceeding" means any legal, administrative or arbitration
action, suit, complaint, charge, hearing, inquiry, investigation or proceeding.

                                        6

<PAGE>

                "Purchased Securities" means, collectively, the Preferred Shares
issuable hereunder, the shares of Common Stock issuable upon conversion of such
Preferred Shares, the Warrants and the Warrant Shares.

                "Purchaser" has the meaning given to it in the caption to this
Agreement and any Person succeeding to the rights of a Purchaser pursuant to the
terms hereof.

                "Purchaser Indemnified Person" has the meaning given to it in
Section 6.2(a).

                "Purchaser Representatives" has the meaning given to it in
Section 6.2(a).

                "Regulatory Sideletter" means the Regulatory Sideletter among
the Company and the JPMP Entities, in substantially the form set forth in
Exhibit D.

                "Requisite Purchasers" means Purchasers that have agreed
pursuant to the terms of this Agreement to acquire at least 66-2/3% of the
shares of Series A Preferred Stock being sold hereunder.

                "Reserved Common Shares" means shares of Common Stock that will
be reserved for issuance upon the conversion of the Series A Preferred Stock or
the exercise of the Warrants, as the case may be.

                "SEC Reports" has the meaning given to it in Section 3.4(a).

                "Securities" means, with respect to any Person, such Person's
"securities" as defined in Section 2(1) of the Securities Act and includes such
Person's capital stock or other equity interests or any options, warrants or
other securities or rights that are directly or indirectly convertible into, or
exercisable or exchangeable for, such Person's capital stock or other equity
interests.

                "Securities Act" means the Securities Act of 1933, as amended,
or any successor Federal statute, and the rules and regulations of the
Commission promulgated thereunder, all as the same may from time to time be in
effect.

                "Series A Preferred Stock" has the meaning set forth in the
Preamble to this Agreement.

                "Stockholder Approval" has the meaning given to it in Section
8.8.

                "Stockholders Meeting" has the meaning given to it in Section
8.8.

                "Subsidiary" means, at any time, with respect to any Person (the
"Subject Person"), any Person of which either (a) more than 50% of the shares of
stock or other interests entitled to vote in the election of directors or
comparable Persons performing similar functions (excluding shares or other
interests entitled to vote only upon the failure

                                        7

<PAGE>

to pay dividends thereon or other contingencies) or (b) more than a 50% interest
in the profits or capital of such Person, are at the time owned or controlled
directly or indirectly by the Subject Person or through one or more Subsidiaries
of the Subject Person or by the Subject Person and one or more Subsidiaries of
the Subject Person.

                "Tax" means any Taxes and the term "Taxes" means, with respect
to any Person, (A) all income taxes (including any tax on or based upon net
income, or gross income, or income as specially defined, or earnings, or
profits, or selected items of income, earnings or profits) and all gross
receipts, sales, use, ad valorem, transfer, franchise, license, withholding,
payroll, employment, excise, severance, stamp, occupation, premium, property or
windfall profits taxes, alternative or add-on minimum taxes, customs duties or
other taxes, fees, assessments or charges of any kind whatsoever, together with
any interest and any penalties, additions to tax or additional amounts imposed
by any taxing authority (domestic or foreign) on such Person and (B) any
Liability for the payment of any amount of the type described in the immediately
preceding clause (A) as a result of (i) being a "transferee" (within the meaning
of Section 6901 of the Code or any other Applicable Law) of another Person, (ii)
being a member of an affiliated, combined or consolidated group or (iii) a
contractual arrangement or otherwise.

                "Third Party" means any person or "group," as described in Rule
13d-5(b) promulgated under the Exchange Act, other than the Purchasers or any of
their respective Affiliates.

                "2002 Financial Statements" has the meaning given to it in
Section 3.5.

                "Warrants" has the meaning given to it in the Preamble to this
Agreement, which shall be substantially in the form of Exhibit B attached
hereto.

                "Warrant Shares" means the shares of Common Stock issuable upon
exercise of the Warrants.

                "33 and 34 Act Reports" has the meaning given to it in Section
3.4(a).

1.2     RULES OF CONSTRUCTION.

        The term this "Agreement" means this agreement together with all
schedules and exhibits hereto, as the same may from time to time be amended,
modified, supplemented or restated in accordance with the terms hereof. In this
Agreement, the term "Knowledge," "best Knowledge" or words of similar import of
any Person means (i) actual knowledge of such Person (including the actual
knowledge of the officers, key employees and directors of such Person) and (ii)
that knowledge which could have been acquired by such Person after making such
due inquiry and exercising such due diligence as a prudent businessperson would
have made or exercised in the management of his or her business affairs,
including due inquiry of those key employees and professionals of such Person
who could reasonably be expected to have actual knowledge of the matters in
question. The use in this Agreement of the term "including" means "including,
without limitation." The words "herein," "hereof," "hereunder" and other words
of

                                        8

<PAGE>

similar import refer to this Agreement as a whole, including the schedules and
exhibits, as the same may from time to time be amended, modified, supplemented
or restated, and not to any particular section, subsection, paragraph,
subparagraph or clause contained in this Agreement. All references to sections,
schedules and exhibits mean the sections of this Agreement and the schedules and
exhibits attached to this Agreement, except where otherwise stated. The title of
and the section and paragraph headings in this Agreement are for convenience of
reference only and shall not govern or affect the interpretation of any of the
terms or provisions of this Agreement. The use herein of the masculine, feminine
or neuter forms shall also denote the other forms, as in each case the context
may require or permit. Where specific language is used to clarify by example a
general statement contained herein, such specific language shall not be deemed
to modify, limit or restrict in any manner the construction of the general
statement to which it relates. The language used in this Agreement has been
chosen by the parties to express their mutual intent, and no rule of strict
construction shall be applied against any party. Unless expressly provided
otherwise, the measure of a period of one month or year for purposes of this
Agreement shall be that date of the following month or year corresponding to the
starting date, provided that if no corresponding date exists, the measure shall
be that date of the following month or year corresponding to the next day
following the starting date. For example, one month following February 18 is
March 18, and one month following March 31 is May 1.

                                   ARTICLE II
                      PURCHASE AND SALE OF SHARES; CLOSING

2.1     FILING OF THE CERTIFICATE OF DESIGNATIONS.

        Prior to the Closing, the Company shall file with the Secretary of State
of the State of Delaware the Certificate of Designations. The Certificate of
Designations designates 1,600,000 shares of Series A Preferred Stock and sets
forth the powers, preferences and relative, participating, optional or other
special rights and qualifications, limitations or restrictions thereof.

2.2     AUTHORIZATION OF ISSUANCE OF PREFERRED SHARES AND WARRANTS.

        Subject to the Stockholder Approval, the Company has authorized (a) the
issuance to the Purchasers at the Closing of an aggregate of (i) 1,600,000
shares of Series A Preferred Stock at a per share price of $25.00 and (ii)
Warrants to purchase an aggregate of 2,000,000 shares of Common Stock and (b)
the reservation of 18,000,000 Reserved Common Shares for issuance upon
conversion of the Series A Preferred Stock and upon exercise of the Warrants.

2.3     PURCHASE AND SALE OF SECURITIES.

        At the Closing, subject to the satisfaction or waiver of the conditions
set forth in Article V, the Company shall issue and sell to each Purchaser, and
each Purchaser shall severally purchase from the Company, (a) that number of
shares of Series A Preferred Stock set forth opposite such Purchaser's name on
Schedule I and (b) a Warrant

                                        9

<PAGE>

exercisable for that number of Warrant Shares set forth opposite such
Purchaser's name on Schedule I. The aggregate purchase price for the Securities
referred to in this Section 2.3 shall equal the amount set forth opposite such
Purchaser's name on Schedule I, with an aggregate amount of $3,650,000 of such
purchase price allocated to the Warrants on a pro rata basis.

2.4     COMPANY ACTIONS.

        The Company represents and warrants that at meetings duly called and
held, its Board, has (a) taken all necessary steps to render the restrictions of
Section 203 of the Delaware General Corporation Law (the "DGCL") and Section
23B.19.040 of the Washington Business Corporations Act (the "WBCA") inapplicable
to the transactions contemplated by this Agreement and (b) resolved to elect not
to be subject, to the extent permitted by Applicable Law, to any state takeover
law other than Section 203 of the DGCL that may purport to be applicable to the
transactions contemplated by this Agreement.

2.5     CLOSING.

        The closing (the "Closing") hereunder with respect to the issuance and
sale of the Series A Preferred Stock and the Warrants being purchased by each
Purchaser at the Closing, and the consummation of the related transactions
contemplated hereby shall, subject to the satisfaction or waiver of the
applicable conditions set forth in Article V, take place at the offices of
O'Melveny & Myers LLP, 30 Rockefeller Plaza, New York, New York 10112 at 10:00
a.m., local time, on the date that is five Business Days after the Stockholders
Meeting or as otherwise provided herein or agreed upon by the parties hereto
(such date, the "Closing Date").

2.6     CLOSING DELIVERIES.

        At the Closing, the Company shall deliver to each Purchaser a stock
certificate and a warrant agreement, each registered in such Purchaser's name,
representing the number of shares of Series A Preferred Stock and Warrant
Shares, respectively, being purchased by such Purchaser at the Closing, against
receipt by the Company of a wire transfer, of immediately available funds to an
account or accounts designated by the Company, of an aggregate amount equal to
the aggregate purchase price set forth opposite such Purchaser's name on
Schedule I.

2.7     USE OF PROCEEDS.

        The proceeds received by the Company from the sale of all shares of
Series A Preferred Stock and Warrants shall be used by the Company for general
corporate purposes.

                                       10

<PAGE>

                                   ARTICLE III
                REPRESENTATIONS AND WARRANTIES ABOUT THE COMPANY

        The Company represents and warrants to each Purchaser as follows:

3.1     ORGANIZATION, POWER, AUTHORITY AND GOOD STANDING.

                (a)     The Company is duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all requisite
power and authority (corporate or otherwise) to own, lease and operate its
assets and properties and to carry on its Business as presently conducted and as
presently proposed to be conducted.

                (b)     The Company is duly qualified and validly existing
and/or in good standing (as applicable) to transact business as a foreign Person
in each jurisdiction where failure to so qualify could reasonably be expected to
have a Material Adverse Effect on the Company. The Purchasers have been
furnished with true, correct and complete copies of the Fundamental Documents of
the Company, in each case as amended and in effect on the date hereof. The
Company has never engaged in any businesses other than the Business.

3.2     AUTHORIZATION, EXECUTION, ENFORCEABILITY AND CONSENTS.

                (a)     The Company has all requisite power and authority
(corporate and otherwise) to execute, deliver and perform each of its
obligations under this Agreement and each other Document. This Agreement and
each other Document has been duly and validly authorized by the Company. This
Agreement has been and, prior to the Closing, each other Document will be duly
executed and delivered by the Company. This Agreement constitutes and, when
executed and delivered by the Company, each other Document to which it is a
party will constitute a valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms, except that the
enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally (ii) rules of law
governing specific performance, injunctive relief and other equitable remedies
together with general principles of equity and the discretion of the court
before which any proceeding therefor may be brought and (iii) to the extent any
indemnification provisions may be limited by applicable federal or state
securities laws.

                (b)     The authorization, reservation, issuance, sale and
delivery, as applicable, of the shares of Series A Preferred Stock and the
Warrants, have been duly and validly authorized by all requisite action on the
part of the Company. The shares of Series A Preferred Stock and the Reserved
Common Shares (assuming the issuance thereof in accordance with the applicable
terms of the Series A Preferred Stock and/or the Warrants), will be duly and
validly issued and outstanding, fully paid and nonassessable, and not subject to
any preemptive rights, rights of first refusal or other similar rights of the
stockholders of the Company.

                (c)     Except as set forth on Schedule 3.2(c), no consent,
approval, authorization, Permit or Order of any Governmental Authority or third
party is required for the issuance and sale by the Company of the Series A
Preferred Stock or the Warrants to the Purchasers or the consummation by the
Company of the other transactions contemplated hereby or by any other Document.

                                       11

<PAGE>

                (d)     The execution, delivery and performance by the Company
of this Agreement and each other Document, and the consummation of the
transactions contemplated hereby and thereby, including the authorization,
reservation, issuance, sale and delivery, as the case may be, of the shares of
Series A Preferred Stock, the Warrants and the Reserved Common Shares (assuming
the issuance thereof in accordance with the applicable terms of the Series A
Preferred Stock and/or the Warrants), will not (i) violate any Applicable Law or
(ii) conflict with or result in any breach of any of the terms, conditions or
provisions of, or constitute (with due notice or lapse of time, or both) a
default or give rise to any right of termination, cancellation or acceleration,
or result in the creation of any Lien upon any of the properties or assets of
the Company, under any provision of the Fundamental Documents of the Company or
any Material Agreement or Permit to which the Company is a party or by which the
Company or its assets or properties are or may be bound.

3.3     CAPITALIZATION.

        As of the date of this Agreement, the authorized capital stock of the
Company consists of:

                (a)     100,000,000 duly authorized shares of Common Stock, of
which (i) 30,782,344 shares are duly and validly issued and outstanding, fully
paid and nonassessable, (ii) 4,119,852 shares are duly and validly reserved for
issuance pursuant to outstanding options, (iii) 1,984,049 shares are duly and
validly reserved for issuance pursuant to options that may be granted after the
date hereof to employees of the Company pursuant to the Company's Equity
Incentive Plans, (v) 16,000,000 shares shall be duly and validly reserved for
issuance upon conversion of the Series A Preferred Stock, and (vi) 2,000,000
shares shall be duly and validly reserved for issuance upon exercise of the
Warrants.

                (b)     5,000,000 duly authorized shares of Preferred Stock,
1,600,000 of which shall, upon filing of the Certificate of Designations, be
designated Series A Preferred Stock and all of which shares sold pursuant to
this Agreement shall be duly and validly issued and outstanding, fully paid and
nonassessable and held of record and beneficially by the Purchasers and in the
amounts set forth on Schedule I, free and clear of all Liens.

                (c)     All Reserved Common Shares, if and when issued, will be
duly and validly issued and outstanding, fully paid and nonassessable.

                (d)     No outstanding securities are entitled to any
anti-dilution or similar adjustments upon the issuance of additional Securities
of the Company or otherwise.

                (e)     There are no preemptive rights, rights of first refusal
or other similar rights to purchase or otherwise acquire shares of capital stock
or other Securities of the Company pursuant to any Applicable Law, any
Fundamental Document of the Company or any agreement to which the Company is a
party or may be bound.

                                       12

<PAGE>

                (f)     Except as contemplated by the Documents and the
Fundamental Documents of the Company, there is no Lien (such as a right of first
refusal, right of first offer, proxy, voting trust or voting agreement) created
by the Company or, to the Knowledge of the Company, any of its stockholders with
respect to the sale or voting of any Securities of the Company (whether
outstanding or issuable upon the conversion, exchange or exercise of outstanding
Securities).

                (g)     There are no obligations to redeem, repurchase or
otherwise acquire shares of capital stock or other Securities of the Company
pursuant to any Applicable Law, any Fundamental Document of the Company or any
agreement to which the Company is a party or may be bound.

                (h)     Except as contemplated by the Investor Rights Agreement
and the Amended and Restated Investors' Rights Agreement dated December 22, 1999
by and among the Company and certain holders of the Company's Common Stock (the
"Existing Rights Agreement"), no Person has any right to cause the Company to
effect the registration under the Securities Act of any shares of Common Stock
or any other Securities of the Company.

                (i)     The Company does not have any Subsidiaries, nor does it
own any capital stock, any other equity or long-term debt securities or any
equity interest, directly or indirectly, in any other Person other than
short-term and long-term investments made in the ordinary course of business
consistent with past practice as disclosed in the SEC Reports.

                (j)     All Securities issued by the Company have been either
issued in transactions in accordance with, or exempt from registration under,
the Securities Act and the rules and regulations promulgated thereunder and all
applicable state securities or "blue sky" laws, and the Company has not violated
the Securities Act or any applicable state securities or "blue sky" laws in
connection with the issuance of any such Securities. To the Company's Knowledge,
there are no restrictions upon the voting rights associated with, or the
transfer of, any of the capital stock of the Company, except as provided by (i)
United States federal or state securities laws or (ii) the terms and provisions
of the Documents.

3.4     REPORTS AND FINANCIAL INFORMATION.

                (a)     The Company is a reporting company and has, since March
6, 2001, filed in a timely manner, all reports, forms, schedules and statements
and other documents required to be filed by it with the Commission pursuant to
the Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the Commission promulgated thereunder applicable thereto
(collectively, the "SEC Reports"). The Company has previously furnished or made
available to the Purchasers true and complete copies of all SEC Reports. None of
the SEC Reports or any registration statement, definitive proxy statement or
other document filed by the Company with the SEC since March 6, 2001
(collectively, the "33 and 34 Act Reports"), as of their respective dates (as
amended through the date hereof), (i) contained any untrue statement of a
material fact or

                                       13

<PAGE>

omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading or (ii) failed in any material respect to comply with the
requirements of the Securities Act, the Exchange Act or the respective rules and
regulations of the SEC thereunder.

                (b)     The financial statements contained in the 33 and 34 Act
Reports, and the related statements of operations and statements of cash flows
for the periods then ended (collectively, the "Financial Statements") (i) were
in accordance with the books and records of the Company, (ii) presented fairly
in all material respects the consolidated financial condition and results of
operations of the Company as of the dates and for the periods indicated and
(iii) were in all material respects prepared in accordance with GAAP
consistently applied (except as set forth in the notes thereto and subject, in
the case of Financial Statements as at the end of or for the periods other than
fiscal years, to normal year-end audit adjustments, provided that such
adjustments are not material individually or in the aggregate).

                (c)     The Financial Statements complied, when filed, as to
form in all material respects with the applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto, including,
but not limited to, the applicable requirements of Regulation S-X promulgated
under the Exchange Act and the Sarbanes-Oxley Act of 2002.

3.5     ABSENCE OF UNDISCLOSED LIABILITIES.

        Except as set forth on Schedule 3.5, the Company does not have any
material Liability which was not provided for or disclosed in the financial
statements for the Company for the fiscal year ended December 31, 2002, (the
"2002 Financial Statements"), other than Liabilities incurred in the ordinary
course of business consistent with past practice since December 31, 2002.

3.6     COMPLIANCE WITH LAWS.

                (a)     The Company is not in violation of, and to the Knowledge
of the Company is not under investigation by a Governmental Authority with
respect to and has not been threatened to be charged with or given notice of any
violation of, any Applicable Law (including the Sarbanes-Oxley Act of 2002),
except violations that have not had, and would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the
Company.

                (b)     There are no Orders to which the Company or any of its
assets or properties is bound.

                (c)     The Company holds all licenses, certificates and permits
from Governmental Authorities ("Permits") that are necessary to the conduct of
the Business, the lack of which could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company. Such
Permits are in full force and effect, no violations with respect to any thereof
have occurred or are or have been recorded, no Proceeding is pending or, to the
Knowledge of the Company, threatened, to revoke or limit any thereof.

                                       14

<PAGE>

                (d)     To the Knowledge of the Company, there is no proposed
change in any Applicable Law which would require the Company to obtain any
Permits in order to conduct the Business as presently conducted and as presently
proposed to be conducted that the Company does not currently possess and the
lack of which could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company.

                (e)     To the Company's Knowledge, there is no Applicable Law
that would prohibit or restrict the Company from, or otherwise materially
adversely affect the Company in, conducting the Business in any jurisdiction in
which it is now conducting the Business or in which it proposes to conduct the
Business.

                (f)     The Company has not received any opinion or memorandum
or legal advice from legal counsel to the effect that it is exposed, from a
legal standpoint, to any Liability or disadvantage which could reasonably be
expected to have a Material Adverse Effect on the Company.

3.7     ABSENCE OF CHANGES.

        Except as set forth on Schedule 3.7 attached hereto, since December 31,
2002, there has not been any (a) event or condition which has had or could
reasonably be expected to have a Material Adverse Effect on the Company, (b)
material deviation from historical accounting and other practices in connection
with the maintenance of the Company's books and records, (c) except as in the
ordinary course of business consistent with past practice, increase in or
prepayment of the compensation payable or to become payable by the Company to
any of its directors or officers, or the making of any bonus payment or similar
arrangement to or with any of them, (d) except for the write-off of accounts
receivable in the ordinary course of business consistent with past practice,
cancellation of indebtedness due to the Company from others, (e) waiver or
release of any material rights of the Company, except in the ordinary course of
business and for fair value, or any lapse or other loss of a material right of
the Company to use its assets or conduct the Business, (f) material change in
the policies of the Company with respect to the payment of accounts payable or
other current Liabilities or the collection of accounts receivable, including
any acceleration or deferral of the payment or collection thereof, as
applicable, (g) purchase by the Company of any of its outstanding capital stock
nor any declaration or payment of any dividend or other distribution of any kind
on the Company's capital stock, (h) delivery of a notice of non-renewal or any
other failure to renew Material Agreements between the Company, on the one hand,
and its customers, suppliers, collaborators, or strategic partners on the other
hand, which are material, individually or in the aggregate, or (i) loss of any
employee who earned more than $150,000 in the most recent fiscal year (in
salary, bonus and other cash compensation).

                                       15

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3.8     TAXES.

        Except as disclosed on Schedule 3.8, (a) the Company and each other
Person included in any consolidated or combined Tax Return and part of an
affiliated group, within the meaning of Section 1504 of the Code, of which the
Company is or has been a member has filed all returns, declarations of estimated
tax, tax reports, information returns and statements (collectively, the
"Returns") required to be filed by it (other than those for which extensions
have been granted and have not expired) relating to any Taxes; (b) as of the
time of filing, the Returns were complete and correct in all material respects
and all Taxes shown on the Returns have been paid; (c) the Company has paid all
Taxes required to have been paid or made provisions for all Taxes payable for
any period that ended on or before the date hereof and for any period that began
on or before the date hereof and ends after the date hereof, as required by
Applicable Law and GAAP; (d) the Company is not delinquent in the payment of any
Taxes nor has it requested any extension of time within which to file any
Return, which Return has not since been filed (other than any taxes for which
adequate reserves have been established in accordance with GAAP); (e) there are
no pending tax audits of any Returns of the Company and the Company has not
received notice of any pending tax audits of any Returns of the Company; (f) no
tax liens have been filed and no deficiency or addition to Taxes, interest or
penalties for any Taxes have been proposed, asserted or assessed in writing
against the Company; (g) the Company has not granted any extension of the
statute of limitations applicable to any Return or other Tax claim with respect
to any of its income, properties or operations; (h) the Company has complied in
all material respects with all Applicable Laws relating to the withholding of
Taxes and has paid such withheld Taxes (including any sales and use Taxes for
which withholding may be required, and amounts required by law to be withheld
and paid from the wages or salaries of employees), and the Company is not liable
for any Taxes for failure to comply with any such Applicable Law; (i) the
Company has not agreed to, is not required to, and will not be obligated to,
make any adjustments either on, before or after the date hereof, to its existing
tax accounting method by reason of Section 481 of the Code, or due to a
determination by the Board (acting on the advice of the Company's accountant, as
the case may be) that any existing method of accounting is not permissible or
appropriate, and the Internal Revenue Service has not proposed any such
adjustments or changes in the Company's accounting method; (j) no claim has ever
been made by any Taxing authority in a jurisdiction in which the Company does
not file Tax Returns that any such Person is or may be subject to Taxation by
that jurisdiction, and no basis exists for any such claim to be made; (k) the
Company is not and has never been a "United States real property holding
corporation" within the meaning of Section 897(c)(2) of the Code, a "real estate
investment trust" under Section 856 of the Code, or any other type of entity
that is subject to tax treatment different from that normally applicable to
corporations under Subchapter C of the Code; (l) the Company will not be
required to include in income during a taxable period that ends after the
Closing Date any income that economically accrued and was accounted for prior to
the Closing Date by reason of the installment method of accounting, the
completed method of accounting or otherwise; (m) the Company does not have and
has never had any Subsidiary, and is not, and has never been, a member of a
federal, state or local consolidated tax group; and (n) the Company believes its
net operating loss carryforwards for federal and state income tax purposes are
as set forth in the Company's federal and state income tax returns.

                                       16

<PAGE>

3.9     TITLE TO ASSETS.

        The Company has good and marketable title to, or a valid leasehold
interest in, all properties, interests in properties and assets, real, personal,
intangible or mixed, used in the conduct of the Business, free and clear of all
Liens, other than Permitted Liens and Liens which do not have a Material Adverse
Effect on the Company.

3.10    INTELLECTUAL PROPERTY.

        Unless otherwise disclosed on Schedule 3.10, to the best Knowledge of
the Company the Company has sufficient title or ownership of, or rights by
license or other agreement to all of the patents, patent applications,
trademarks, service marks, trademark and service mark applications and
registrations, trade names, copyright applications and registrations (the
"Intellectual Property Rights") necessary for, or used in, the conduct of the
Business as presently conducted and as presently proposed to be conducted, in
each case the lack of which could be reasonably expected to have a Material
Adverse Effect on the Company. To the Company's Knowledge, and except for rights
and restrictions disclosed in the 33 and 34 Act Reports and the exhibits
thereto, the Intellectual Property Rights are not subject to any Lien or any
rights of others, however evidenced or created which would reasonably be
expected to have a Material Adverse Effect on the Company. The Company has not
received any written or oral communications alleging, nor is the Company
otherwise aware, that the Company has violated, or by conducting the Business as
presently conducted or as presently proposed to be conducted, would violate any
of the patents, trademarks, trade names, service marks, copyrights, domain names
or trade secrets or other proprietary rights of any other Person. To the best of
the Company's Knowledge, no other Person is infringing or violating the
Intellectual Property Rights of the Company. To the best of the Company's
Knowledge, no employee of the Company is obligated under any contract
(including, licenses, covenants, or commitments of any nature) or other
agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with the use of such employee's best
efforts to promote the interests of the Company or that would conflict with the
Business as presently conducted and as presently proposed to be conducted.
Neither the execution nor delivery of this Agreement, nor the carrying on of the
Business by the employees of the Company, nor the conduct of the Business as
presently conducted and as proposed, will, to the best of the Company's
Knowledge, conflict with or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any contract, covenant or
instrument under which any of such employees is now obligated.

3.11    LITIGATION AND OTHER PROCEEDINGS.

        There are no (a) Proceedings pending or, to the Knowledge of the
Company, threatened against or involving the Company, whether at law or in
equity, whether civil or criminal in nature or by or before any Governmental
Authority, which if adversely determined could reasonably be expected
individually or in the aggregate to have a Material Adverse Effect on the
Company, nor to the Knowledge of the Company does

                                       17

<PAGE>

there exist any reasonable basis therefor, or (b) Orders of any Governmental
Authority with respect to or involving the Company.

3.12    MATERIAL AGREEMENTS.

                (a)     Except for agreements filed with the 33 and 34 Act
Reports and as set forth on Schedule 3.12, the Company is not a party to (i) any
notes payable by the Company, bonds, mortgages or indentures or (ii) other
written or oral contracts, agreements, instruments and other understandings that
are material to the Business, financial condition or results of operations of
the Company or that would have been required to be described in a prospectus
pursuant to the Securities Act or filed as exhibits to any registration
statement filed in connection therewith (collectively, the "Material
Agreements").

                (b)     Each Material Agreement constitutes a valid and binding
obligation of the Company and, to the Knowledge of the Company, is enforceable
against such other party in accordance with its terms. The Company has in all
material respects performed all of the obligations required to be performed by
it to date pursuant to the Material Agreements, and there exists no default, or
any event which upon the giving of notice or the passage of time, or both, would
give rise to a claim of a default in the performance by the Company or, to the
Knowledge of the Company, any other party to any of the Material Agreements,
except where such default or event, individually or in the aggregate, has not
had nor could it reasonably be expected to have a Material Adverse Effect on the
Company.

3.13    INSURANCE.

        Schedule 3.13 sets forth a list, as of the date hereof, of all insurance
policies (including self insurance policies and arrangements, if any) and sets
forth, with respect to each such policy, a description of the insured loss
coverage, the expiration date and time of coverage, the dollar limitations of
coverage and a general description of each deductible feature. The Company
carries insurance in such amounts and covering such risks as is adequate for the
conduct of the Business and the value of its properties. The Company has not
received any notice that (a) any of such policies has been or will be canceled
or terminated or will not be renewed on substantially the same terms as are now
in effect or (b) the premium on any of such policies will be materially
increased on the renewal thereof.

3.14    ERISA.

                (a)     No Employee Plan is a Multiemployer Plan and no Employee
Plan is subject to Title IV of ERISA. The Company and its Affiliates have not
incurred, nor do they expect to incur, any liability under Title IV of ERISA
arising in connection with the termination of any plan covered or previously
covered by Title IV of ERISA.

                (b)     None of the Employee Plans or other arrangements covers
any non-United States employee or former employee of the Company.

                                       18

<PAGE>

                (c)     No "prohibited transaction," as defined in Section 406
of ERISA or Section 4975 of the Code, has occurred with respect to any Employee
Plan.

                (d)     Except for the Company's 401(k) plan, no Employee Plan
is an "employee pension benefit plan" as defined in Section 3(2) of ERISA.

                (e)     To the Knowledge of the Company, each Benefit
Arrangement has been maintained in substantial compliance with its terms and
with the requirements prescribed by any and all statutes, orders, rules and
regulations, which are applicable to such Employee Plan and Benefit Arrangement.

                (f)     All material contributions required to be made under the
terms of each Employee Plan and Benefit Arrangement have been made or a
reasonable amount has been reflected in the Financial Statements for the
Company's most recent fiscal year. Except as disclosed in writing to the
Purchasers prior to the date hereof, there has been no amendment to, written
interpretation of or announcement (whether or not written) by the Company or any
of its ERISA Affiliates relating to, or change in employee participation or
coverage under, any Employee Plan or Benefit Arrangement that would increase
materially the expense of maintaining such Employee Plan or Benefit Arrangement
above the level of the expense incurred in respect thereof for the fiscal year
ended prior to the date hereof.

                (g)     Except as set forth on Schedule 3.14(g), there is no
contract, agreement, plan or arrangement covering any employee or former
employee of the Company that, individually or collectively, could give rise to
the payment of any amount that would not be deductible pursuant to the terms of
Section 280G of the Code.

                (h)     No tax under Section 4980B or 4980D of the Code has been
incurred in respect of any Employee Plan that is a group health plan, as defined
in Section 5000(b)(1) of the Code.

                (i)     With respect to the employees and former employees of
the Company, there are no employee post-retirement medical or health plans in
effect, except as required by Section 4980B of the Code.

                (j)     No employee, stockholder or consultant of the Company
will become entitled to any bonus, retirement, severance or similar benefit or
enhanced benefit solely as a result of the transactions contemplated hereby.

3.15    ENVIRONMENTAL PROTECTION.

        To the Knowledge of the Company, the Company, the operation of Business,
and any real property that the Company owns, leases or otherwise occupies or
uses (the "Premises") are in compliance, during the period of the Company's
ownership, operation or lease, in all material respects with all applicable
Environmental Laws and Orders or directives of any Governmental Authorities
having jurisdiction under such Environmental Laws, including, without
limitation, any Environmental Laws or orders or directives with respect to any
cleanup or remediation of any release or threat of release of Hazardous

                                       19

<PAGE>

Substances. The Company has not received any citation, directive, letter or
other communication, written or oral, or any notice of any proceeding, claim or
lawsuit, from any Person arising out of the ownership or occupation of the
Premises, or the conduct of its operations, and the Company is not aware of any
basis therefor. The Company has obtained and is maintaining in full force and
effect all necessary Permits and approvals required by all Environmental Laws
applicable to the Premises and the Business operations conducted thereon
(including operations conducted by tenants on the Premises), and is in
compliance in all material respects with all such Permits, licenses and
approvals. The Company has not caused or allowed a release, or a threat of
release, of any Hazardous Substance unto, at or near the Premises, the potential
Liability of which would be required to be disclosed by it in any SEC Report or
described in a prospectus pursuant to the Securities Act, and, to the best of
the Company's Knowledge, neither the Premises nor any property at or adjacent to
the Premises has ever been subject to a release, or a threat of release, of any
Hazardous Substance.

3.16    ACCOUNTING.

        The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (a) transactions are executed
in accordance with management's general or specific authorization; (b)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain accountability for assets;
(c) access to assets is permitted only in accordance with management's general
or specific authorization; and (d) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.

3.17    INVESTMENT COMPANY.

        The Company is not an "investment company" within the meaning of such
term under the Investment Company Act of 1940 and the rules and regulations of
the Commission thereunder.

3.18    PRIVATE SALE.

        Assuming the accuracy of the representations of the Purchasers in
Sections 4.2 and 4.3, the offering, sale, and issuance of the Series A Preferred
Stock, the Warrants and, when and if issued, the Reserved Common Shares, as the
case may be, will be, exempt from registration under the Securities Act and
applicable state securities laws and the rules and regulations promulgated
thereunder.

3.19    BROKERS.

        In connection with this transaction, none of the Company or any of its
officers, directors, stockholders or employees (or any Affiliate of the
foregoing) has employed any broker or finder or incurred any actual or potential
Liability or obligation, whether direct or indirect, for any brokerage fees,
commissions or finders' fees in connection with the transactions contemplated by
this Agreement.

                                       20

<PAGE>

3.20    STATE TAKEOVER STATUTES.

        Other than Section 23B.19.040 of the WBCA and Section 203 of the DGCL,
no state takeover statute or similar statute or regulation applies or purports
to apply to this Agreement or the transactions contemplated by this Agreement.

3.21    CERTIFICATES OF OFFICERS.

        Any certificate signed by any officer of the Company and delivered to
any Purchaser or to counsel for the Purchasers shall be deemed a joint and
several representation and warranty by the Company to each Purchaser as to the
matters covered thereby.

3.22    LISTED SECURITIES.

        The Common Stock is quoted on the Nasdaq National Market System
("Nasdaq") under the ticker symbol SGEN. To the Company's Knowledge, there is no
stop order suspending the trading of the Common Stock on Nasdaq or any
information that would result in the Common Stock being delisted from Nasdaq.

                                   ARTICLE IV
                REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

        Each Purchaser represents and warrants to the Company as to itself
severally, and not jointly as to any other Purchaser, as follows:

4.1     AUTHORIZATION OF THE DOCUMENTS.

        Such Purchaser has all requisite power and authority to execute, deliver
and perform the Documents to which it is a party and the transactions
contemplated thereby, and the execution, delivery and performance by such
Purchaser of the Documents to which it is a party have been duly authorized by
all requisite action (corporate or otherwise) by such Purchaser. This Agreement
has been duly executed and delivered by such Purchaser and each such Document
constitutes a valid and binding obligation of such Purchaser, enforceable
against such Purchaser in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights
generally, (ii) rules of law governing specific performance, injunctive relief
and other equitable remedies together with general principles of equity and the
discretion of the court before which any proceeding therefor may be brought and
(iii) to the extent any indemnification provisions may be limited by applicable
federal or state securities laws.

4.2     INVESTMENT REPRESENTATIONS.

        Solely for establishing that the sale or issuance of the Series A
Preferred Stock, the Warrants, and the Reserved Common Shares (if any), to such
Purchaser, is exempt from the registration requirements of the Securities Act
and comparable provisions of state "blue-sky" laws and not in any way to
mitigate the responsibility or Liability of the

                                       21

<PAGE>

Company for any breach of the representations and warranties made by it in this
Agreement, on which such Purchaser is relying in full in connection with its
decision to invest in the Company:

                (a)     Such Purchaser is acquiring the shares of Series A
Preferred Stock and the Warrants to be purchased hereunder and, in the event
that such Purchaser should acquire any Reserved Common Shares, will be acquiring
such Reserved Common Shares, for its own account, for investment and not with a
view to the distribution thereof in violation of the Securities Act or
applicable state securities laws.

                (b)     Such Purchaser understands that (i) the Series A
Preferred Stock and the Warrants have not been, and the Reserved Common Shares
will not be, registered under the Securities Act or applicable state securities
laws by reason of their issuance by the Company in a transaction exempt from the
registration requirements of the Securities Act and applicable state securities
laws and (ii) the Series A Preferred Stock, the Warrants, and if acquired, the
Reserved Common Shares must be held by such Purchaser indefinitely unless a
subsequent disposition thereof is registered under the Securities Act and
applicable state securities laws or is exempt from such registration.

                (c)     Such Purchaser further understands that the exemption
from registration afforded by Rule 144 (the provisions of which are known to
such Purchaser) promulgated under the Securities Act depends on the satisfaction
of various conditions, and that, if applicable, Rule 144 may afford the basis
for sales of Securities acquired hereunder in limited amounts.

                (d)     Such Purchaser has not employed any broker or finder in
connection with the transactions contemplated by this Agreement.

                (e)     Such Purchaser is an "accredited investor" (as defined
in Rule 501(a) of Regulation D promulgated under the Securities Act). Such
Purchaser has such knowledge and experience in financial and business matters
that it is capable of evaluating the risks and merits of this investment. Such
Purchaser's representations in this subsection shall in no way limit the
enforceability of any representations made by the Company in any of the
Documents to which it is a party.

                (f)     Such Purchaser was not formed for the purpose of
consummating the transactions contemplated hereby.

                (g)     Such Purchaser is an "institutional investor" for
purposes of compliance with "blue sky" laws in the State of New York.

                (h)     The state in which any offer to purchase Series A
Preferred Stock or the Warrants hereunder was made to or accepted by such
Purchaser is the state shown as the Purchaser's address on Schedule I hereto.

                                       22

<PAGE>

4.3     NON-UNITED STATES PERSONS.

        If the Purchaser is not a United States person (as defined by Section
7701(a)(30) of the Code), such Purchaser hereby represents that it has satisfied
itself as to the full observance of the laws of its jurisdiction in connection
with any invitation to subscribe for the Purchased Securities, or any use of
this Agreement, including (i) the legal requirements within its jurisdiction for
the purchase of the Purchased Securities, (ii) any foreign exchange restrictions
applicable to such purchase, (iii) any governmental or other consents that may
need to be obtained, and (iv) the income tax and other tax consequences, if any,
that may be relevant to the purchase, holding, redemption, sale, or transfer of
the Purchased Securities. Such Purchaser's subscription and payment for and
continued beneficial ownership of the Purchased Securities, will not violate any
applicable securities or other laws of the Purchaser's jurisdiction.

4.4     NON-PUBLIC INFORMATION

                (a)     The JPMP Entities acknowledge that they are subject to
the terms of the Non-Disclosure Agreement dated as of January 23, 2002, between
the Company and J.P. Morgan Partners, LLC. BBI acknowledges that it is subject
to the terms of the Non-Disclosure Agreement dated as of November 6, 2002,
between the Company and Baker Bros. Advisors, LLC. Notwithstanding any
provisions contained in such Non-Disclosure Agreements, each party thereto
authorizes the other to disclose all information and materials regarding the
structure and tax aspects of the transaction to the extent required by Internal
Revenue Code Section 6011 and the Treasury Regulations thereunder in order to
avoid the transaction described herein and therein being treated as a
"Confidential Transaction" as defined by such Treasury Regulations.

                (b)     Each Purchaser (other than the JPMP Entities and BBI)
understands and agrees that any information provided to such Purchaser by the
Company in connection with the offering contemplated by this Agreement,
including, without limitation, the existence and nature of discussions regarding
this offering, the Documents and any other presentations or non-public
information given by the Company to such Purchaser (collectively, the
"Confidential Information") is strictly confidential and is being submitted to
such Purchaser solely for such Purchaser's confidential use in connection with
its investment decision regarding the Purchased Securities. Such Purchaser
agrees to use such Confidential Information for the sole purpose of evaluating a
possible investment in the Purchased Securities and such Purchaser hereby
acknowledges that it is prohibited from reproducing, distributing, divulging or
discussing such Confidential Information, in whole or in part, except for use
internally and by its legal counsel and except as required by law or legal
process. Such Purchaser hereby acknowledges that it is aware that the United
States securities laws prohibit any person who has material nonpublic
information about a company from purchasing or selling securities of such
company. Notwithstanding anything to the contrary contained in this Section
4.4(c), Confidential Information shall not include any information that (i) is
in the possession of such Purchaser at the time of disclosure by the Company,
(ii) prior to or after the time of disclosure becomes part of the public
knowledge or literature other than as a result of any improper action by such
Purchaser, (iii) is approved by the Company, in writing, for release, or (iv) is
included in any 33 and 34 Act Reports. Notwithstanding any other provisions
contained herein, each such Purchaser and the Company authorizes the other to
disclose all information and materials regarding the structure and tax aspects

                                       23

<PAGE>

of the transaction to the extent required by Internal Revenue Code Section 6011
and the Treasury Regulations thereunder in order to avoid the transaction
described herein being treated as a "Confidential Transaction" as defined by
such Treasury Regulations.

                                    ARTICLE V
                              CONDITIONS TO CLOSING

5.1     CONDITIONS TO PURCHASERS' OBLIGATIONS.

        The obligation of each Purchaser to purchase and pay for the Securities
to be purchased hereunder at the Closing is subject to the satisfaction of the
following conditions precedent (unless waived by such Purchaser).

                (a)     The Company shall have filed the Certificate of
Designations with, and such filing shall have been accepted by, the Secretary of
State of the State of Delaware and evidence of such filing and acceptance
satisfactory to the Purchasers shall have been delivered to the Purchasers.

                (b)     The Company shall have (i) duly issued and delivered to
each Purchaser (A) a stock certificate for the number of shares of Series A
Preferred Stock purchased by such Purchaser and (B) a warrant agreement
evidencing the right to acquire that number of Warrant Shares purchased by such
Purchaser and (ii) reserved the Reserved Common Stock for issuance upon
conversion of the Series A Preferred Stock and exercise of the Warrants.

                (c)     The Company shall have duly executed and delivered to
each Purchaser the Investor Rights Agreement.

                (d)     The Company shall have duly executed and delivered to
the JPMP Entities the Regulatory Sideletter.

                (e)     The Company and the other requisite parties thereto
shall have amended the Amended and Restated Investor Rights Agreement dated as
of December 22, 1999 to provide for pro rata cutbacks among the stockholders
party to such agreement and the Purchasers in connection with a registration of
securities by the Company in accordance with Section 4.2(ii) of the Investor
Rights Agreement.

                (f)     The Company shall have amended the By-laws to permit
written consents in lieu of meetings by the holders of Series A Preferred Stock.

                (g)     No event or occurrence which could reasonably be
expected to have a Material Adverse Effect shall have occurred with respect to
the Company since the date hereof.

                (h)     The Company shall have performed its obligations under,
and shall have complied with, all the covenants and agreements set forth in this
Agreement and all representations and warranties contained in Article III shall
be true and correct in all material respects (except those representations and
warranties that are qualified as to

                                       24

<PAGE>

materiality, which shall be true and correct in all respects) as of the date
hereof (except for those representations and warranties which are made as of a
specific date, which shall have been true and correct as of such date), and each
Purchaser shall have received a certificate to that effect signed by an officer
of the Company.

                (i)     The Purchasers shall have received from the Company a
certificate signed by an officer of the Company either (i) confirming that no
additional items would be required to be disclosed in the Company Update Letter
pursuant to Section 8.10 if the Company was required to deliver such letter to
the Purchasers on the Closing Date or (ii) if additional items would be required
to be so disclosed, setting forth such items in accordance with Section 8.10.

                (j)     Each Purchaser shall have received a legal opinion from
Venture Law Group, counsel to the Company, in substantially the form attached
hereto as Exhibit E.

                (k)     Each Purchaser shall have received a certificate from
the Secretary or an Assistant Secretary of the Company, dated as of the Closing
Date, certifying (i) that true and complete copies of the Fundamental Documents
of the Company as in effect on the Closing Date are attached thereto, (ii) as to
the incumbency and genuineness of the signatures of each Person executing this
Agreement and the other Documents on behalf of the Company and (iii) the
genuineness of the resolutions (attached thereto) of the board of directors (or
similar governing body of the Company) and the stockholders of the Company
authorizing the execution, delivery and performance of this Agreement and the
other Documents to which the Company is a party and the consummation of the
transactions contemplated hereby and thereby and that all such resolutions are
still in full force and effect.

                (l)     No Applicable Law shall have been enacted after the date
hereof and no Proceeding shall be pending which prohibits or seeks to prohibit,
or materially restricts or delays the consummation of the transactions
contemplated by the Documents or materially restricts or impairs the ability of
the Purchasers to own Securities of the Company.

                (m)     There shall be no Proceeding pending or threatened by
the National Association of Securities Dealers, Inc. (the "NASD") to terminate
the NASD's quotation of the Common Stock on the Nasdaq.

                (n)     The Company shall have made and/or obtained all notices,
consents, approvals, and authorizations necessary to consummate the transactions
contemplated hereby, including, without limitation the Stockholder Approval.

                (o)     The Company shall have in effect director and officer
liability insurance with coverage of at least $10,000,000 from a nationally
recognized insurance company rated "A" or above, and otherwise in form and
substance satisfactory to the Purchasers and shall have agreed to indemnify all
directors to the fullest extent permissible under Applicable Law.

                                       25

<PAGE>

                (p)     The Purchasers shall have received (i) a certificate of
the Secretary of State of the State of Delaware, dated as of a recent date as to
the due incorporation or organization of the Company and its good standing in
such jurisdiction and (ii) a facsimile, telegram, telex or other acceptable
method of confirmation from said Secretary as of the close of business on the
next Business Day preceding the Closing Date as to the continued good standing
of the Company.

                (q)     The Purchasers shall have been provided with a
certificate from an officer of the Company certifying that the conditions
precedent to the Purchasers' obligations set forth in this Section 5.1 shall
have been satisfied.

                (r)     To the extent that any Purchaser did not execute this
Agreement on the date hereof, such Purchaser shall be reasonably acceptable to
each of the JPMP Entities and BBI.

5.2     CONDITIONS TO THE COMPANY'S OBLIGATIONS.

        The obligation of the Company to issue the shares of Series A Preferred
Stock and Warrants to each Purchaser at the Closing is subject to the
satisfaction of the following condition precedent (unless waived by the
Company):

                (a)     A number of shares of Series A Preferred Stock having an
aggregate purchase price hereunder equal to at least $25,000,000 shall have been
purchased by the Purchasers (or such lower amount as is permitted under the
Option Agreement in the event of an exercise of the option granted thereunder).

                (b)     Such Purchaser shall have delivered to the Company by
wire transfer, of immediately available funds to an account or accounts
designated by the Company, an aggregate amount equal to the purchase price for
the shares of Series A Preferred Stock and Warrants being purchased by such
Purchaser.

                (c)     Such Purchaser shall have performed its obligations
under, and shall have complied with, all the covenants and agreements set forth
in this Agreement and all representations and warranties contained in Article IV
shall be true and correct in all material respects (except those representations
and warranties that are qualified as to materiality, which shall be true and
correct in all respects) as of the date hereof and at and as of the Closing Date
with the same effect as if such representations and warranties had been made at
and as of the Closing Date.

                (d)     Such Purchaser shall have duly executed and delivered to
the Company each of the Documents to which such Purchaser is a party.

                (e)     All authorizations, approvals or permits described on
Schedule 3.2(c) above shall have been obtained and shall be effective as of the
Closing Date.

                (f)     The Company shall have obtained Stockholder Approval.

                                       26

<PAGE>

                                   ARTICLE VI
                                 INDEMNIFICATION

6.1     SURVIVAL OF REPRESENTATIONS, WARRANTIES, AGREEMENTS AND COVENANTS, ETC.

        All statements contained in this Agreement or any other Document or any
closing certificate delivered by the Company or the Purchasers, pursuant to this
Agreement or in connection with the transactions contemplated by this Agreement
(each, a "Closing Certificate"), shall constitute representations and warranties
by the Company, or the Purchasers, as applicable, under this Agreement.
Notwithstanding any investigation made at any time by or on behalf of any party
hereto, all representations and warranties contained in this Agreement or made
in writing by or on behalf of the Company, or any Purchaser, in connection with
the transactions contemplated by this Agreement shall survive the Closing until
the first anniversary of the Closing Date; provided, however, that the
representations and warranties contained in Sections 3.1, 3.2(a), 3.2(b) and
3.2(d)(i), 3.18 and 3.19 shall survive the Closing indefinitely and the
representations and warranties contained in Section 3.8 shall survive the
Closing and continue in full force and effect until the sixtieth day after the
expiration of the statute of limitations applicable to the matters covered.

6.2     INDEMNIFICATION.

                (a)     In addition to all other rights and remedies available
to the Purchasers, the Company shall indemnify, defend and hold harmless each
Purchaser and its Affiliates and their respective partners, officers, directors,
employees, agents and representatives (collectively, the "Purchaser
Representatives"; and together with such Purchaser, the "Purchaser Indemnified
Persons") against all Losses, and none of the Purchaser Indemnified Persons
shall be liable to the Company or any other stockholder of the Company for or
with respect to any and all Losses, together with all costs and expenses
(including reasonable legal and accounting fees and expenses) related thereto or
incurred in enforcing this Article VI, (i) arising from the untruth, inaccuracy
or breach of any of the representations or warranties of the Company contained
in any Document or Closing Certificate or any facts or circumstances
constituting any such untruth, inaccuracy or breach, (ii) arising from any
material breach of any covenant or agreement of the Company contained in any
Document or Closing Certificate or any facts or circumstances constituting such
breach, or (iii) arising from any Claim, except for any Claim made by the
Company against such Purchaser pursuant to Section 6.2(b) (whenever made),
resulting from or caused by any transaction, status, event, condition,
occurrence or situation relating to, arising out of or in connection with the
execution, delivery and performance of this Agreement and the other Documents
and the related documents and agreements contemplated hereby and thereby.
Notwithstanding the foregoing, and subject to the following part of this
sentence, upon judicial determination, which is final and no longer appealable,
that the act or omission giving rise to the indemnification pursuant to Section
6.2(a)(iii) resulted primarily out of or was based primarily upon the
indemnified party's gross negligence, fraud or willful misconduct, (unless such
action was based upon the indemnified party's reliance in good faith upon any of
the representations, warranties, covenants or promises made by the Company

                                       27

<PAGE>

herein, or in the Documents), the Company shall not be responsible for any
Losses sought to be indemnified in connection therewith, and the Company shall
be entitled to recover from the indemnified party all amounts previously paid in
full or partial satisfaction of such indemnity, together with all costs and
expenses of the Company reasonably incurred in effecting such recovery, if any.

                (b)     In addition to all other rights and remedies available
to the Company, each Purchaser severally as to itself only and not as to any
other Purchaser, shall indemnify, defend and hold harmless the Company and its
officers, directors, employees, agents and representatives (collectively, the
"Company Indemnified Persons") against all Losses, together with all reasonable
out-of-pocket costs and expenses (including legal and accounting fees and
expenses) related thereto or incurred in enforcing this Article VI, (i) arising
from the untruth, inaccuracy or breach of any of the representations or
warranties of such Purchaser contained in any Document or Closing Certificate or
any facts or circumstances constituting such untruth, inaccuracy or breach or
(ii) arising from any material breach of any covenant or agreement of such
Purchaser contained in any Document or Closing Certificate or any facts or
circumstances constituting such breach.

                (c)     All indemnification rights hereunder shall survive the
execution and delivery of the Documents (subject to the limitations contained in
Section 6.1) and the consummation of the transactions contemplated herein and
therein indefinitely, regardless of any investigation, inquiry or examination
made for or on behalf of, or any knowledge of the Purchaser and/or any of the
other Indemnified Parties or the acceptance by the Purchaser of any certificate
or opinion.

                (d)     By executing this Agreement, the Company agrees that no
Purchaser Indemnified Person shall have any Liability to the Company pursuant to
this Agreement, the other Documents or the transactions contemplated hereby or
thereby (the "Covered Conduct") except (i) as provided in Section 6.2(b), and
(ii) to the extent that a court of competent jurisdiction shall have determined
by final judgment, no longer subject to appeal, that the losses resulting from
such Covered Conduct primarily resulted from or were based primarily upon such
Purchaser Indemnified Person's willful misconduct or gross negligence.

                (e)     Each party agrees that it will not make under any
circumstances, and it will cause it Affiliates not to make under any
circumstances, any claim against any Indemnified Person, with respect to a Claim
or Loss with respect to which such party is entitled to indemnification
hereunder, for any special, indirect or consequential damages in respect of any
breach or wrongful conduct (whether the claim therefore is based on contract,
tort or duty imposed by law) in connection with, arising out of or in any way
related to, the transactions contemplated by and the relationship established by
this Agreement, the other Documents or the transactions contemplated hereby or
thereby, or any act, omission or event occurring in connection therewith,
including, without limitation, the provisions of this Article VI, and waives,
releases and agrees not to sue upon, and it agrees to cause its Affiliates not
to sue upon any such Claim, for any such damages, whether or not accrued and
whether or not known or suspected to exist in any such party's favor.

                                       28

<PAGE>

                                   ARTICLE VII
                             TRANSFER OF SECURITIES

7.1     RESTRICTION ON TRANSFER.

        The Series A Preferred Stock, the Warrants, and, when and if issued, the
Reserved Common Shares, shall not be transferable except upon the conditions
specified in this Article VII, which conditions are intended to insure
compliance with the provisions of the Securities Act in respect of the transfer
thereof.

7.2     RESTRICTIVE LEGENDS.

        Each certificate evidencing the Series A Preferred Stock, the Warrants,
and, when and if issued, the Reserved Common Shares, and each certificate for
any such securities issued to subsequent transferees of any such certificate
shall (unless otherwise permitted by the provisions of Section 7.3 hereof) be
stamped or otherwise imprinted with a legend in substantially the following
form:

        "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THESE SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT OR APPLICABLE STATE BLUE
SKY LAWS. ADDITIONALLY, THE TRANSFER OF THESE SECURITIES IS SUBJECT TO THE
CONDITIONS SPECIFIED IN THE SECURITIES PURCHASE AGREEMENT DATED AS OF MAY 12,
2003 AMONG THE ISSUER HEREOF AND CERTAIN OTHER SIGNATORIES THERETO, AND NO
TRANSFER OF THESE SECURITIES SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS
HAVE BEEN FULFILLED. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY
WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE
SECRETARY OF THE ISSUER HEREOF."

7.3     NOTICE OF TRANSFER.

                (a)     The holder of any Applicable Securities, by acceptance
thereof agrees, prior to any transfer of any such Applicable Securities, to give
written notice to the Company of such holder's intention to effect such transfer
and to comply in all other respects with the provisions of this Section 7.3.
Each such notice shall describe the manner and circumstances of the proposed
transfer and shall be accompanied by the written opinion, addressed to the
Company, of counsel for the holder of such Applicable Securities (unless waived
by the Company), as to whether in the opinion of such counsel (which opinion and
counsel shall be reasonably satisfactory to the Company) such proposed transfer
involves a transaction requiring registration of such Applicable Securities
under the Securities Act; provided, however, that (i) in the case of a holder of

                                       29

<PAGE>

Applicable Securities which is a partnership or a limited liability company, no
such opinion of counsel shall be necessary for a transfer by such holder of
Applicable Securities to a partner or member or a retired partner or retired
member of such holder who retires after the date hereof, or the estate of any
such partner, member, retired partner or retired member and (ii) in the case of
a holder of Applicable Securities which is a corporation, no such opinion of
counsel shall be necessary for a transfer by such holder of Applicable
Securities to an Affiliate, officer or director of such corporation, if in the
case of clause (i) and (ii) the transferee agrees in writing to be subject to
the terms of this Article VII to the same extent as if such transferee were
originally a signatory to this Agreement.

                (b)     If in the opinion of such counsel (if such opinion is
required hereunder) the proposed transfer of Applicable Securities may be
effected without registration under the Securities Act, the holder of Applicable
Securities shall thereupon be entitled to transfer such Applicable Securities in
accordance with the terms of the notice delivered by it to the Company.

                (c)     Each certificate or other instrument evidencing the
securities issued upon the transfer of any Applicable Securities (and each
certificate or other instrument evidencing any untransferred balance of such
Securities) shall bear the legend set forth in Section 7.2 hereof unless (i) in
the opinion of such counsel registration of future transfer is not required by
the applicable provisions of the Securities Act or (ii) the Company shall have
waived the requirement of such legends; provided, however, that such legend
shall not be required on any certificate or other instrument evidencing the
securities issued upon such transfer in the event such transfer shall be made in
compliance with the requirements of Rule 144 (as amended from time to time)
promulgated under the Securities Act (or successor rule thereto), unless the
Company determines in good faith that such legend is required under Applicable
Law as a result of the transferee's ownership of such securities.

7.4     TRANSFER PURSUANT TO RULE 144.

        The Company agrees to make publicly available the current information
with respect to the Company that is required by Rule 144(c) under the Securities
Act and otherwise to take any other action or to execute any certificates
necessary to permit a transfer by any holder of Applicable Securities to qualify
for the exemption set forth in Rule 144. Without limiting the foregoing, if such
information is not publicly available, then, upon a holder's request, the
Company will provide such information to such holder or any prospective
purchaser designated by such holder.

                                       30

<PAGE>

                                  ARTICLE VIII
                      ADDITIONAL AGREEMENTS OF THE COMPANY

8.1     CONDUCT PENDING CLOSING.

                (a)     From the date hereof through the Closing Date, the
Company shall, and shall cause each Subsidiary to:

                        (i)     carry on the Business in the ordinary course
        consistent with past practice and use reasonable efforts to preserve
        intact its current business organization, keep available the services of
        its current officers and preserve its relationships with customers,
        suppliers, licensors, licensees and others having significant business
        dealings with it;

                        (ii)    maintain the assets of the Company in customary
        repair, order and condition, maintain insurance comparable to that in
        effect on the date hereof, replace in accordance with past practice
        inoperable or worn out assets with new assets of comparable quality and,
        in the event of casualty, loss or damage to any of such assets or
        properties prior to the Closing Date for which the Company is insured or
        the condemnation of any assets or properties, either repair or replace
        such assets or property, or, with the consent of the Purchasers, retain
        such insurance or condemnation proceeds; and

                        (iii)   deliver notice to the Purchasers of any capital
        expenditure or expenditures with respect to property, plant or equipment
        that are approved by the Board and which materially increase the amounts
        budgeted therefor.

                (b)     Without limiting the generality of Section 8.1(a) above,
from the date hereof through the Closing Date, the Company shall not and shall
cause each Subsidiary not to (except as expressly permitted by this Agreement or
with the consent of the Requisite Purchasers, which consent will not be
unreasonably withheld):

                        (i)     (A) declare, set aside or pay any dividends on,
        or make any other distributions in respect of, any of its capital stock
        (other than cash dividends and distributions by a wholly-owned
        Subsidiary to the Company or to a Subsidiary all of the capital stock of
        which is owned directly or indirectly by the Company), (B) split,
        combine or reclassify any of its capital stock or issue or authorize the
        issuance of any other securities in respect of, in lieu of or in
        substitution for shares of its capital stock, or (C) purchase, redeem or
        otherwise acquire any shares or any capital stock of the Company or any
        other securities thereof or any rights, warrants or options to acquire
        any such shares or other securities other than for repurchases of shares
        pursuant to agreements providing for the option to repurchase shares at
        cost upon termination of employment;

                        (ii)    issue, deliver, sell, pledge or otherwise
        encumber any Securities except Securities issued pursuant to the Equity
        Incentive Plans;

                        (iii)   amend its Fundamental Documents;

                        (iv)    acquire or agree to acquire (A) by merging or
        consolidating with, or by purchasing a substantial portion of the assets
        or stock of, or by any other manner, any business or any Person or (B)
        any assets except for the purchase of equipment or other assets in the
        ordinary course of business, consistent with past practice;

                                       31

<PAGE>

                        (v)     sell, lease, license, mortgage or otherwise
        encumber or subject to any Lien or otherwise dispose of any of its
        properties or assets, except (i) immaterial assets, (ii) Permitted Liens
        and (iii) in the ordinary course of business consistent with past
        practice;

                        (vi)    except in the ordinary course of business
        consistent with past practice (i) incur any debt or guarantee any such
        debt of another Person, issue or sell any debt securities or warrants or
        other rights to acquire any debt securities of the Company or any
        Subsidiary, guarantee any debt securities of another Person, enter into
        any "keep well" or other agreement to maintain any financial statement
        condition of another Person into any arrangement having the economic
        effect of any of the foregoing or (ii) make any loans, advances (other
        than advances to Subsidiaries or among Subsidiaries) or capital
        contributions to, or investments in, any other Person;

                        (vii)   pay, discharge, settle or satisfy any material
        claims, liabilities or obligations (absolute, accrued, asserted or
        unasserted, contingent or otherwise), other than the payment, discharge
        or satisfaction, in the ordinary course of business consistent with past
        practice or in accordance with their terms, of liabilities reflected or
        reserved against in the most recent consolidated financial statements
        (or the notes thereto) of the Company included in the 2002 Financial
        Statements or incurred thereafter in the ordinary course of business
        consistent with past practice, or waive any material benefits of, or
        agree to modify any confidentiality, standstill, non-solicitation or
        similar agreement to which the Company or any Subsidiary is a party;

                        (viii)  modify or amend in any material respect or
        terminate any Material Agreement to which the Company or any Subsidiary
        is a party, or waive, release or assign any material rights or claims,
        other than as set forth on Schedule 8.1(b)(viii);

                        (ix)    delay or postpone the payment of accounts
        payable and other obligations and Liabilities or accelerate the
        collection of accounts receivable, other than in the ordinary course of
        business;

                        (x)     take any action or omit to take any action which
        would or reasonably could be expected to cause any of the
        representations and warranties contained in Article III to be untrue or
        inaccurate in a manner that could reasonably be expected to constitute a
        Material Adverse Change to the Company or its Business as of the Closing
        Date as if made as of the Closing Date;

                        (xi)    take any action or omit to take any action which
        would or reasonably could be expected to cause any of the conditions set
        forth in Section 5.1 to not be satisfied; or

                        (xii)   authorize any of, or commit or agree to take any
        of, the foregoing actions.

                                       32

<PAGE>

                (c)     The Company shall use its best efforts to ensure that
all conditions to the Closing set forth in Section 5.1 are satisfied on or prior
to the Closing Date, including executing and delivering all documents required
to be delivered by the Company at the Closing and taking any and all actions
which may be necessary on its part to cause each other party to the Documents to
so execute and deliver each Document.

8.2     ACCESS TO INFORMATION.

        From the date hereof and continuing through the Closing Date, the
Company shall afford to the Purchasers (and their respective representatives and
advisors) reasonable access, upon reasonable notice during normal business
hours, to its officers and employees to discuss matters pertaining to the
Company and its Business and during such period shall furnish promptly to the
Purchasers (and their respective representatives and advisors) (a) a copy of
each report, schedule, registration statement and other document filed by it
during such period pursuant to the requirements of Federal or state securities
laws and (b) all information concerning the Business, properties and personnel
as the Purchasers may reasonably request.

8.3     NO SOLICITATION.

        Prior to Closing, the Company shall not and shall cause each Subsidiary
and its Subsidiaries' officers and directors not to, and each of the foregoing
shall not permit their respective agents, representatives, advisors or
subsidiaries to (whether directly or indirectly) (i) solicit, initiate or take
any action knowingly to facilitate the submission of inquiries, proposals or
offers ("Acquisition Proposals") from any Third Party relating to (A) any
acquisition or purchase of assets of the Company and its Subsidiaries other than
in the ordinary course of business consistent with past practice, (B) the
purchase of any equity security of the Company or any of its Subsidiaries
(including a self tender offer) or any security that is convertible,
exchangeable or exercisable for any equity security, other than Securities
issued in connection with corporate partnering activities entered into by the
Company in the ordinary course of its Business (provided that such Securities
shall not have an aggregate value in excess of $5 million) or pursuant to the
Equity Incentive Plans, (C) any merger, consolidation, business combination,
sale of substantially all assets, recapitalization, liquidation, dissolution or
similar transaction involving the Company or any of its Subsidiaries, or (D) any
other transaction the consummation of which would, or could reasonably be
expected to impede, interfere with, prevent or materially delay the transactions
contemplated by this Agreement (each of the foregoing items set forth in (A)
through (D), an "Alternative Transaction"), or agree to or endorse any
Alternative Transaction, or (ii) enter into or participate in any discussions or
negotiations regarding any of the foregoing, or furnish to any Third Party any
information with respect to its business, properties or assets or any of the
foregoing, or otherwise cooperate in any way with, or knowingly assist or
participate in, facilitate or encourage, any effort or attempt by any Third
Party (other than the Purchasers) to do or seek any of the foregoing. Subject to
the provisions of the previous sentence, the Company shall immediately cease and
cause its Subsidiaries and its and their advisors, agents and other
intermediaries to cease any and all existing activities, discussions or
negotiations with any Third Party conducted heretofore with respect to any of
the foregoing, except to

                                       33

<PAGE>

advise such Third Party of the existence of the provisions of this Section, and
shall use its reasonable best efforts to cause any such parties in possession of
confidential information about the Company that was furnished by or on behalf of
the Company to return or destroy all such information in the possession of any
such Third Party or in the possession of any agent or advisor of any such Third
Party; provided, however, that the foregoing shall not prohibit the Company
(either directly or indirectly through advisors, agents or other intermediaries)
from (i) furnishing information pursuant to an appropriate confidentiality
letter (which letter shall not be less favorable to the Company in any material
respect than the Confidentiality Agreement, and a copy of which shall be
provided for informational purposes only to the Purchasers) concerning the
Company and its businesses, properties or assets to a Third Party who has made a
bona fide Acquisition Proposal, (ii) engaging in discussions or negotiations
with such a Third Party who has made a bona fide Acquisition Proposal, (iii)
following receipt of a bona fide Acquisition Proposal, taking and disclosing to
its stockholders a position contemplated by Rule 14d-9 or Rule 14e-2(a) under
the Exchange Act or otherwise making disclosure to its stockholders and/or (iv)
taking any non-appealable, final action ordered to be taken by the Company by
any court of competent jurisdiction but in each case referred to in the
foregoing clauses (i) through (iv) only to the extent that the Board of the
Company shall have concluded in good faith after consultation with outside
counsel that such action is required to prevent the Board of the Company from
breaching its fiduciary duties to the stockholders of the Company under
applicable law (it being understood that the Board of the Company may rely on
the written advice of its outside counsel in good faith and the Purchasers agree
not to take a contrary position to any such written advice); provided, further,
that (A) the Board shall not take any of the foregoing actions until after it
provides at least three (3) Business Days prior notice to the Purchasers of its
intent to take such action; and (B) if the Board receives an Acquisition
Proposal, then the Company shall promptly inform the Purchasers of the terms and
conditions of such Acquisition Proposal and the identity of the Person making
it.

8.4     CERTAIN TAX MATTERS.

        From the date hereof until the Closing Date, (a) the Company and each
Subsidiary will file all material tax returns and reports ("Post-Signing
Returns") required to be filed; (b) the Company and each Subsidiary will timely
pay all taxes shown as due and payable on the Company's Post-Signing Returns
that are so filed; (c) the Company and each Subsidiary will make provision for
all taxes payable by the Company for which no Post-Signing Return is due prior
to the Closing Date; and (d) the Company will promptly notify the Purchasers of
any action, suit, proceeding, claim or audit pending against or with respect to
the Company and each Subsidiary in respect of any tax.

8.5     OTHER ACTIONS.

        Effective immediately after Closing, the Company shall increase the size
of its board of directors to nine persons and cause one person designated by the
JPMP Entities and one person designated by BBI to be added to the Company's
board of directors, who shall initially be Srinivas Akkaraju and Felix Baker,
respectively.

                                       34

<PAGE>

8.6     ADVICE OF CHANGES; FILINGS.

        Prior to Closing, the Company shall confer with the Purchasers on a
regular and frequent basis as reasonably requested by the Purchasers, report on
operational matters and promptly advise the Purchasers orally and, if requested
by the Purchasers, in writing of any material change with respect to the Company
or any Subsidiary. The Company shall promptly provide to the Purchasers (or its
counsel) copies of all filings made by the Company or any Subsidiary with any
Governmental Authority in connection with this Agreement and the transactions
contemplated hereby.

8.7     FINANCIAL INFORMATION.

        Prior to Closing, the Company shall furnish to the Purchasers (a) all
documents filed with or submitted to the Commission by the Company promptly
after such filing or submission; and (b) as soon as available but in any event
within 45 days of each fiscal quarter, the unaudited consolidated and
consolidating balance sheets and income statements of the Company, showing its
financial condition as of the close of such quarter and the results of
operations during such quarter and for then elapsed portion of the Company's
fiscal year, in each case, setting forth, to the extent available, the
comparative figures for the corresponding month in the prior fiscal year, the
corresponding elapsed portion of the prior fiscal year and the budget amount for
such month (all to be prepared in accordance with GAAP consistently applied).
The parties hereto agree that delivery to each Purchaser of a copy of its Form
10-Q for the applicable quarter shall satisfy the requirements of this clause
(b) above.

8.8     STOCKHOLDERS MEETING.

        The Company shall use commercially reasonable efforts to hold a special
meeting of its stockholders within 60 days after the date hereof for the purpose
of voting on the transactions contemplated by this Agreement (the "Stockholders
Meeting"). Such efforts will include, without limitation, the preparation,
delivery and dissemination of a proxy statement or information statement
relating to the transactions contemplated by this Agreement (the "Proxy
Statement"), prepared in accordance with the Exchange Act, to the stockholders
of the Company soliciting their vote in favor of the transactions contemplated
hereby (the "Stockholder Approval") and containing advice that the Board
recommends that the stockholders approve the transactions contemplated by this
Agreement. The Company shall deliver copies of the Proxy Statement to each
Purchaser and such Purchaser's counsel at least two (2) Business Days prior to
the dissemination of the Proxy Statement to the stockholders of the Company.

8.9     REASONABLE EFFORTS; NOTIFICATION.

(a) Upon the terms and subject to the conditions set forth in this Agreement,
each of the parties agrees to use all commercially reasonable efforts to take,
or cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the

                                       35

<PAGE>

transactions contemplated by this Agreement, including (i) the obtaining of all
necessary actions or non-actions, waivers, consents and approvals from
Governmental Authorities and the making of all necessary registrations and
filings (including filings with Governmental Authorities, if any) and the taking
of all reasonable steps as may be necessary to obtain an approval or waiver
from, or to avoid an action or proceeding by, any Governmental Authority, (ii)
the obtaining of all necessary consents, approvals or waivers from third
parties, (iii) the defending of any lawsuits or other legal proceedings, whether
judicial or administrative, challenging this Agreement or the consummation of
any of the transactions contemplated by this Agreement, including seeking to
have any stay or temporary restraining order entered by any court or other
Governmental Authority vacated or reversed, and (iv) the execution and delivery
of any additional instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this Agreement. In
connection with and without limiting the foregoing, the Company and its Board
shall (x) take all action necessary to ensure that no state takeover statute or
similar statute or regulation is or becomes applicable to this Agreement or any
of other transactions contemplated by this Agreement and (y) if any state
takeover statute or similar statute or regulation becomes applicable to any
transaction contemplated by this Agreement, take all action reasonably necessary
to ensure that the transactions contemplated by this Agreement may be
consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such statute or regulation on
this Agreement and the transactions contemplated by this Agreement. Nothing in
this Agreement shall be deemed to require the Company or the Purchasers to
dispose of or hold separate any asset or collection of assets.

                (b)     The Company shall give prompt notice to the Purchasers
of (i) any representation or warranty made by it contained in this Agreement
becoming untrue or inaccurate in any material respect or (ii) the failure by it
or any Subsidiary to comply with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied by it or any
Subsidiary under this Agreement; provided, however, that no such notification
shall affect the representations, warranties, covenants or agreement of the
parties or the conditions to the obligations of the parties under this
Agreement.

                (c)     Each Purchaser shall give prompt notice to the Company
of (i) any representation or warranty made by such Purchaser contained in this
Agreement becoming untrue or inaccurate in any material respect or (ii) the
failure by it to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement; provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.

8.10    CERTAIN NOTIFICATIONS.

        At least five (5) Business Days, but not more than twenty (20) Business
Days, prior to the Closing (or five (5) Business Days after request by the JPMP
Entities or BBI in the event either such Purchaser elects to exercise the option
pursuant to the Option Agreement), the Company shall notify the Purchasers in
writing of the occurrence, or failure to occur, of any event, which occurrence
or failure to occur could be reasonably

                                       36

<PAGE>

likely to cause any representation or warranty by the Company contained in this
Agreement to be untrue or inaccurate in any material respect as if such
representation and warranty were made at such time (except for those
representations and warranties that are qualified as to materiality, which shall
be true and correct in all respects and those representations and warranties
which are made as of a specific date, which shall have been true and correct as
of such date). The Company shall, in good faith, prepare such notice (each, a
"Company Update Letter"), which shall describe in reasonable detail (i) any
event or circumstance which has occurred or arisen, or is reasonably likely to
occur or arise, after the date hereof and has caused or is reasonably likely to
cause the inaccuracy or a breach of any representation or warranty made by the
Company in this Agreement on the date hereof (each, a "Breached
Representation"), (ii) the Breached Representation which will, or is reasonably
likely to, be made inaccurate or be breached and (iii) a good faith estimate of
the amount and composition of the Losses reasonably likely to arise out of,
result from, or relate to such Breached Representation. The receipt or
acceptance by the Purchasers of a Company Update Letter shall not constitute a
waiver of any inaccuracy or breach of any representation or warranty made or to
be made by the Company or prevent the Purchasers from exercising their rights to
terminate this Agreement pursuant to Section 9.1(a)(iv)(A) or (v) at any time
prior to the Closing. Further, the receipt or acceptance by the Purchasers of a
Company Update Letter and the subsequent occurrence of a Closing shall not
constitute a waiver of any Losses which arise out of, result from, or relate to
any fact, circumstance or matter in existence, or event which had occurred, on
or prior to the date hereof and which would have been required to be set forth
or described in response to a representation or warranty made by the Company
hereunder or which is necessary to correct or make the representations and
warranties contained herein correct and complete as of the date hereof.
Notwithstanding anything to the contrary contained in this Section 8.10, in the
event that at any time after the date hereof the Board's good faith estimate of
the amount and composition of the Losses reasonably likely to arise out of,
result from, or relate to Breached Representations equals or exceeds $3,500,000,
the Company shall promptly prepare and deliver a Company Update Letter to the
Purchasers.

8.11    PUBLIC ANNOUNCEMENTS.

        From the date hereof until the Closing Date, the Purchasers, on the one
hand, and the Company, on the other hand, will consult with each other before
issuing, and provide each other the opportunity to review and comment upon, any
press release or other public statements with respect to the transactions
contemplated by this Agreement and shall not issue any such press release or
make any such public statement without the prior consent of the other party
(which consent shall not be unreasonably withheld), except to the extent
expressly required by Applicable Law.

8.12    NASD.

        Prior to the Closing, the Company will not engage in any discussions or
otherwise communicate in writing or orally with the NASD or any of its agents or
representatives with respect to the transactions contemplated by the Documents
without the prior written consent of the Requisite Purchasers. The Purchasers
agree to cooperate and assist the Company in connection with the foregoing.

                                       37

<PAGE>

                                   ARTICLE IX
                                   TERMINATION

9.1     TERMINATION.

                (a)     Except as otherwise provided in Section 9.1(b), this
Agreement may be terminated at any time prior to the Closing Date as follows:

                        (i)     By mutual written consent of the Requisite
        Purchasers and the Company.

                        (ii)    By the Requisite Purchasers (A) if the
        preliminary Proxy Statement shall not have been filed with the
        Commission on or before the 30th day after the date hereof and the
        Stockholders Meeting shall not have been held by the 90th day
        immediately following the date hereof or (B) if the preliminary Proxy
        Statement shall have been filed with the Commission on or before the
        30th day after the date hereof and the Stockholders Meeting shall not
        have been held by the 120th day immediately following the date hereof.

                        (iii)   By either the Requisite Purchasers or the
        Company if any Governmental Authority shall have issued an Order or
        taken any other action permanently enjoining, restraining or otherwise
        prohibiting the issuance of the Series A Preferred Stock and such Order
        or other action shall have become final and nonappealable.

                        (iv)    By the Requisite Purchasers, if (A) any of the
        representations and warranties of the Company contained in this
        Agreement shall fail to be true and correct in any material respect as
        of the date hereof or (B) the Company shall have breached or failed to
        comply in any material respect with any of its obligations under this
        Agreement, and such failure to be true and correct, breach or failure
        shall continue unremedied, if able to be remedied, for 15 days after the
        Company has received written notice from the Requisite Purchasers of the
        occurrence of such failure to be true and correct, breach or failure;
        provided, however, that in remedying any such failure to be true and
        correct, breach or failure the Company shall not have spent any money,
        incurred any liabilities or undertaken any obligations that individually
        or together with the breach or failure so remedied, would itself
        constitute a material breach of or failure to perform any
        representation, warranty or covenant of this Agreement.

                        (v)     By the Requisite Investors if the aggregate
        Losses attributable to any Breached Representations could reasonably be
        expected to exceed $3,500,000.

                        (vi)    By the Requisite Purchasers if there shall have
        occurred any event or occurrence which could reasonably be expected to
        have a Material Adverse Effect on the Company since the date of this
        Agreement.

                                       38

<PAGE>

                        (vii)   By the Company if prior to the Closing Date, (A)
        the Company shall have received an Acquisition Proposal, (B) in
        connection with such Acquisition Proposal, the Board shall have
        concluded in good faith after consultation with outside counsel that it
        is required to terminate this Agreement to prevent the Board from
        breaching its fiduciary duties to its stockholders under Applicable Law,
        (C) the Company has complied and is in compliance with Section 8.3, and
        (D) prior to being entitled to terminate this ----------- Agreement
        under this Section 9.1(a), the Company shall have provided to the
        Purchasers at least five (5) -------------- Business Days prior written
        notice (which notice shall set forth the terms and conditions of such
        Acquisition Proposal and identify the applicable Third Party), the
        Company shall have provided the Purchasers during such five (5) Business
        Day period with the opportunity to make a counter-offer prior to any
        commitment by the Company with respect to such Acquisition Proposal.

                (b)     In the event that on or before the date that is 120 days
after the date of this Agreement (the "Outside Date") (i) the Company has not
held the Stockholders Meeting, (ii) the Stockholders Meeting has been held but
the Company does not obtain the Stockholder Approval or (iii) the Company elects
to terminate this Agreement pursuant to Section 9.1(a)(vii) above, then, as of
the Business Day immediately following the Outside Date or such earlier date on
which the Stockholders Meeting was held under clause (ii) or the Company elected
to terminate this Agreement under clause (iii), this Agreement shall terminate
as to all of the Purchasers, other than the JPMP Entities and BBI, and such
other Purchasers shall not have any further right under this Agreement or
otherwise to purchase shares of Series A Preferred Stock or Warrants. This
Agreement shall remain in full force and effect thereafter solely for the
purpose of giving effect to the options granted to the JPMP Entities and BBI
pursuant to the Option Agreement. A closing under the Option Agreement shall be
deemed the Closing hereunder for all purposes of this Agreement. Notwithstanding
anything to the contrary contained herein, the Company may terminate this
Agreement at any time after the Expiration Date (as such term is defined in the
Option Agreement).

9.2     EFFECT OF TERMINATION.

        In the event of a termination of this Agreement by either the Company or
the Requisite Purchasers as provided in Section 9.1(a), this Agreement shall
forthwith become void and there shall be no liability or obligation on the part
of the Purchasers or the Company or their respective officers, directors or
Affiliates (other than as expressly set forth in Section 9.1(b)), provided that
Section 9.1, this Section 9.2 and Article X shall survive any such termination;
provided further, that nothing herein shall relieve any party for liability for
any breach hereof.

                                       39

<PAGE>

                                    ARTICLE X
                                  MISCELLANEOUS

10.1    FEES.

                (a)     At the Closing, the Company will pay, and save the
Purchasers harmless against all Liability for the payment of, (i) all costs and
other expenses incurred from time to time by the Company in connection with the
Company's performance of and compliance with all agreements and conditions
contained herein on its part to be performed or complied with (including the
reasonable costs and expenses of counsel incurred in connection with the review
and preparation of the Documents), (ii) the actual and reasonable out-of-pocket
costs and expenses incurred by the Purchasers in connection with the
transactions contemplated by this Agreement and by the Documents, including,
without limitation, all fees, expenses and charges of O'Melveny & Myers LLP
(counsel to the Purchasers), accountants and other advisors to the Purchasers,
(iii) the reasonable costs and expenses (including fees, expenses and charges of
counsel) incurred by the Purchasers in connection with any amendment or waiver
of, or enforcement of, any Document relating to the transactions contemplated
hereby and (iv) the reasonable costs and expenses incurred by each Purchaser in
connection with any filing with any Governmental Authority with respect to its
investment in the Company or in any other filing with any Governmental Authority
with respect to the Company that mentions such Purchaser; provided, however,
that the Company's obligation under clauses (ii),(iii) and (iv) of this Section
10.1 shall not exceed, in the aggregate, $150,000 (the "Fee Cap") without the
prior written consent of the Company; provided further, however, that if the
Closing does not occur by reason of (x) the Company's failure to hold the
Stockholders Meeting as described in Section 9.1(a)(ii), or (y) the Company's
acceptance of an Acquisition Proposal, then in each case, the Company shall be
obligated to pay the amounts provided under clause (ii) of this Section 10.1(a),
subject to the Fee Cap.

                (b)     The Company further agrees that it will pay, and will
save the Purchasers harmless from, any and all Liability with respect to any
stamp or similar taxes imposed by the government of the United States or any
state or political subdivision thereof which may be determined to be payable in
connection with the execution and delivery and performance of the Documents or
any modification, amendment or alteration of the terms or provisions of the
Documents, and that it will similarly pay and hold the Purchasers harmless from
all issue taxes imposed by the government of the United States or any state or
political subdivision thereof in respect of the issuance of the Series A
Preferred Stock, the Warrants, and, when and if issued, the Reserved Common
Shares.

                (c)     If, after execution of this Agreement, the JPMP Entities
or BBI (the "Breaching Purchaser") commits a breach of the Purchase Agreement by
failing to close the transactions contemplated hereby for any reason other than
(i) the Company's failure to satisfy any of the conditions set forth in Section
5.1 or (ii) the failure of the Company's conditions in Section 5.2 to have been
satisfied, then the Breaching Purchaser shall reimburse the Company for the
actual, out-of-pocket costs and expenses incurred by the Company prior to the
date of such breach in connection with the transactions

                                       40

<PAGE>

contemplated by this Agreement and by the Documents (including, without
limitation, reasonable fees and expenses of counsel, accountants, and printers,
in connection with the preparation of this Agreement, the Documents and the
consummation of the transactions contemplated hereby and thereby); provided,
however, that the reimbursement obligations of the Breaching Purchaser under
this Section 10.1(c) shall not exceed in the aggregate $150,000; provided,
further, however, that if the Closing occurs and either the JPMP Entities or BBI
purchases at least that number of shares of Series A Preferred Stock set forth
on Schedule I opposite the name of such Person(s), then the Company shall not be
entitled to reimbursement pursuant to this Section 10.1(c) and the Breaching
Purchaser will have no obligation to the Company for the reimbursement of costs
and expenses under this Section 10.1(c), provided that the Company will be
entitled to exercise its rights under Section 6.2. The JPMP Entities or BBI, as
applicable, shall pay amounts payable under this Section 10.1(c), if any, within
five (5) Business Days after receipt of reasonably detailed invoices for such
fees.

                (d)     The Company shall pay amounts payable under Section
10.1(a)(ii), (iii) and (iv) within five (5) Business Days after receipt of
reasonably detailed invoices for such fees.

10.2    FURTHER ASSURANCES.

        The Company and the Purchasers shall duly execute and deliver, or cause
to be duly executed and delivered, at its own cost and expense, such further
instruments and documents and to take all such action, in each case as may be
reasonably necessary or proper to carry out the provisions and purposes of the
Agreement, the other Documents, and to comply with Applicable Law, including,
but not limited to, all information necessary to effect any securities,
governmental, bank regulatory or other governmental filings.

10.3    REMEDIES.

        In case any one or more of the representations, warranties, covenants
and/or agreements set forth in this Agreement shall have been breached by a
party hereto, any other party may proceed to protect and enforce its rights
either by suit in equity and/or by action at law, including an action for
damages as a result of any such breach and/or an action for specific performance
of any such covenant or agreement contained in this Agreement.

10.4    SUCCESSORS AND ASSIGNS.

        This Agreement shall bind and inure to the benefit of the Company and
the Purchasers and their respective successors, assigns, heirs and personal
representatives. Upon any transfer of any Applicable Securities, the transferee
shall be bound by, and entitled to the benefits of, this Agreement with respect
to such transferred Securities in the same manner as the transferring Purchaser.

                                       41

<PAGE>

10.5    ENTIRE AGREEMENT.

        This Agreement and the other writings referred to herein or delivered
pursuant hereto which form a part hereof contain the entire agreement among the
parties with respect to the subject matter hereof and thereof and supersede all
prior and contemporaneous arrangements or understandings with respect thereto,
including, without limitation, the Summary of Principal Terms dated as of April
9, 2003 among the Company, J.P. Morgan Partners, LLC and Baker Bros. Advisors
LLC.

10.6    NOTICES.

        All notices and other communications delivered hereunder (whether or not
required to be delivered hereunder) shall be deemed to be sufficient and duly
given if contained in a written instrument (a) personally delivered, (b) sent by
telecopier, (c) sent by nationally-recognized overnight courier guaranteeing
next Business Day delivery or (d) sent by first class registered or certified
mail, postage prepaid, return receipt requested, in each case addressed as
follows:

                if to the Company, to:

                Seattle Genetics, Inc.
                21823 30th Drive S.E.
                Bothell, WA  98021
                Telephone:  (425) 527-4114
                Telecopier:  (425) 527-4109
                Attention:  Chief Executive Officer

                with a copy to:

                Seattle Genetics, Inc.
                21823 30th Drive S.E.
                Bothell, WA  98021
                Telephone:  (425) 527-4126
                Telecopier:  (425) 527-4109
                Attention:  General Counsel

                With an additional copy to:

                Venture Law Group
                4750 Carillon Point
                Kirkland, WA 98033
                Telephone: (425) 739-8700
                Telecopier: (425) 739-8750
                Attention: Sonya F. Erickson

                if to any Purchaser, to him, her or it at the address set forth
on Schedule I attached hereto;

                                       42

<PAGE>

or to such other address as the party to whom such notice or other communication
is to be given may have furnished to each other party in writing in accordance
herewith. Any such notice or communication shall be deemed to have been received
(i) when delivered, if personally delivered, (ii) when sent, if sent by telecopy
on a Business Day (or, if not sent on a Business Day, on the next Business Day
after the date sent by telecopy), (iii) on the next Business Day after dispatch,
if sent by nationally recognized, overnight courier guaranteeing next Business
Day delivery, and (iv) on the fifth Business Day following the date on which the
piece of mail containing such communication is posted, if sent by mail.

10.7    AMENDMENTS, MODIFICATIONS AND WAIVERS.

        The terms and provisions of this Agreement may not be modified or
amended, nor may any of the provisions hereof be waived, temporarily or
permanently, except pursuant to a written instrument executed by the Company and
Requisite Purchasers; provided however that any such amendment, modification or
waiver that would adversely affect the rights hereunder of any Purchaser, in its
capacity as a Purchaser, without similarly affecting the rights hereunder of all
Purchasers, in their capacities as Purchasers, shall not be effective as to such
Purchaser without its prior written consent. No waiver by any party shall
operate or be construed as a waiver of any subsequent breach by any other party.

10.8    GOVERNING LAW; WAIVER OF JURY TRIAL.

        All questions concerning the construction, interpretation and validity
of this Agreement shall be governed by and construed and enforced in accordance
with the domestic laws of the State of New York, without giving effect to any
choice or conflict of law provision or rule (whether in the State of New York or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of New York. In furtherance of the foregoing,
the internal law of the State of New York will control the interpretation and
construction of this Agreement, even if under such jurisdiction's choice of law
or conflict of law analysis, the substantive law of some other jurisdiction
would ordinarily apply. Notwithstanding the foregoing provisions of this Section
10.8, those provisions of this Agreement that relate to the internal governance
of the Company and are required by Delaware corporate law to be governed by
such, shall be governed by and construed and enforced in accordance with the
internal laws of the State of Delaware.

        BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL
TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND
EXPERT PERSON AND THE PARTIES WISH APPLICABLE LAWS TO APPLY (RATHER THAN
ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A
JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION
OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO
WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO
ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS AGREEMENT OR ANY DOCUMENTS
RELATED HERETO.

                                       43

<PAGE>

10.9    NO THIRD PARTY RELIANCE.

        Anything contained herein to the contrary notwithstanding, the
representations and warranties of the Company contained in this Agreement (a)
are being given by the Company as an inducement to the Purchasers to enter into
this Agreement and the other Documents (and the Company acknowledges that the
Purchasers have expressly relied thereon) and (b) are solely for the benefit of
the Purchasers. Accordingly, no third party (including, without limitation, any
holder of capital stock of the Company) or anyone acting on behalf of any
thereof other than the Purchasers, and each of them, shall be a third party or
other beneficiary of such representations and warranties and no such third party
shall have any rights of contribution against the Purchasers or the Company with
respect to such representations or warranties or any matter subject to or
resulting in indemnification under this Agreement or otherwise.

10.10   SUBMISSION TO JURISDICTION.

        Any legal action or proceeding with respect to this Agreement or the
other Documents may be brought in the courts of the State of New York or
Delaware and the United States of America for the District of New York or
Delaware and, by execution and delivery of this Agreement, the Company hereby
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. The Company hereby
irrevocably waives, in connection with any such action or proceeding, any
objection, including, without limitation, any objection to the venue or based on
the grounds of forum non conveniens, which it may now or hereafter have to the
bringing of any such action or proceeding in such respective jurisdictions. The
Company hereby irrevocably consents to the service of process of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to it at its address
as set forth herein. Nothing herein shall affect the right of the Purchasers to
serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against the Company in any other jurisdiction.

10.11   SEVERABILITY.

        It is the desire and intent of the parties that the provisions of this
Agreement be enforced to the fullest extent permissible under the law and public
policies applied in each jurisdiction in which enforcement is sought.
Accordingly, in the event that any provision of this Agreement would be held in
any jurisdiction to be invalid, prohibited or unenforceable for any reason, such
provision, as to such jurisdiction, shall be ineffective, without invalidating
the remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any jurisdiction. Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as not be invalid,
prohibited or unenforceable in such jurisdiction, it shall, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.

                                       44

<PAGE>

10.12   INDEPENDENCE OF AGREEMENTS, COVENANTS, REPRESENTATIONS AND WARRANTIES.

        All agreements and covenants hereunder shall be given independent effect
so that if a certain action or condition constitutes a default under a certain
agreement or covenant, the fact that such action or condition is permitted by
another agreement or covenant shall not affect the occurrence of such default,
unless expressly permitted under an exception to such initial covenant. In
addition, all representations and warranties hereunder shall be given
independent effect so that if a particular representation or warranty proves to
be incorrect or is breached, the fact that another representation or warranty
concerning the same or similar subject matter is correct or is not breached will
not affect the incorrectness of or a breach of a representation and warranty
hereunder.

10.13   COUNTERPARTS; FACSIMILE SIGNATURES.

        This Agreement may be executed in any number of counterparts, and each
such counterpart hereof shall be deemed to be an original instrument, but all
such counterparts together shall constitute but one agreement. Facsimile
counterpart signatures to this Agreement shall be acceptable and binding.

                                     * * * *

                                       45

<PAGE>

        IN WITNESS WHEREOF, the parties hereto have executed this Securities
Purchase Agreement as of the date first above written.

                                      COMPANY:

                                      SEATTLE GENETICS, INC.

                                      By:   /s/ Clay B. Siegall
                                            Name: Clay B. Siegall
                                            Title: President and CEO

                                      PURCHASERS:

                                      J.P. MORGAN PARTNERS (BHCA), L.P.

                                      By:   JPMP Master Fund Manager, L.P.,
                                            its general partner

                                      By:   JPMP Capital Corp.,
                                            its general partner

                                      By:   /s/ Rodney A. Ferguson
                                            Name: Rodney A. Ferguson
                                            Title:  Managing Director

                                      J.P. MORGAN PARTNERS GLOBAL
                                      INVESTORS, L.P.

                                      By:   JPMP Global Investors, L.P.,
                                            its general partner

                                      By:   JPMP Capital Corp.,
                                            its general partner

                                      By:   /s/ Rodney A. Ferguson
                                            Name: Rodney A. Ferguson
                                            Title:  Managing Director

<PAGE>

                                      J.P. MORGAN PARTNERS GLOBAL
                                      INVESTORS (CAYMAN), L.P.

                                      By:   JPMP Global Investors, L.P.,
                                            its general partner

                                      By:   JPMP Capital Corp.,
                                            its general partner

                                      By:   /s/ Rodney A. Ferguson
                                            Name: Rodney A. Ferguson
                                            Title:  Managing Director

                                      J.P. MORGAN PARTNERS GLOBAL
                                      INVESTORS A, L.P.

                                      By:   JPMP Global Investors, L.P.,
                                            its general partner

                                      By:   JPMP Capital Corp.,
                                            its general partner

                                      By:   /s/ Rodney A. Ferguson
                                            Name: Rodney A. Ferguson
                                            Title:  Managing Director

                                      J.P. MORGAN PARTNERS GLOBAL
                                      INVESTORS (CAYMAN) II, L.P.

                                      By:   JPMP Global Investors, L.P.,
                                            its general partner

                                      By:   JPMP Capital Corp.,
                                            its general partner

                                      By:   /s/ Rodney A. Ferguson
                                            Name: Rodney A. Ferguson
                                            Title:  Managing Director

                                       -2-

<PAGE>

                                      BAKER/TISCH INVESTMENTS, L.P.

                                      By:   Baker/Tisch Capital, L.P.,
                                            its general partner

                                      By:   Baker/Tisch Capital (GP), LLC,
                                            its general partner

                                      By:   /s/ Felix Baker
                                            Name:  Felix Baker, Ph.D.
                                            Title:  Managing Member

                                      BAKER BROS. INVESTMENTS, L.P.

                                      By:   Baker Bros. Capital, L.P.,
                                            its general partner

                                      By:   Baker Bros. Capital (GP), LLC,
                                            its general partner

                                      By:   /s/ Felix Baker
                                            Name:  Felix Baker, Ph.D.
                                            Title:  Managing Member

                                      BAKER BROS. INVESTMENTS II, L.P.

                                      By:   Baker Bros. Capital, L.P.,
                                            its general partner

                                      By:   Baker Bros. Capital (GP), LLC,
                                            its general partner

                                      By:   /s/ Felix Baker
                                            Name:  Felix Baker, Ph.D.
                                            Title:  Managing Member

                                       -3-

<PAGE>

                                      BAKER BIOTECH FUND I, L.P.

                                      By:   Baker Biotech Capital, L.P.,
                                            its general partner

                                      By:   Baker Biotech Capital (GP), LLC,
                                            its general partner

                                      By:   /s/ Felix Baker
                                            Name:  Felix Baker, Ph.D.
                                            Title:  Managing Member

                                      BAKER BIOTECH FUND II, L.P.

                                      By:   Baker Biotech Capital II, L.P.,
                                            its general partner

                                      By:   Baker Biotech Capital II (GP), LLC,
                                            is general partner

                                      By:   /s/ Felix Baker
                                            Name:  Felix Baker, Ph.D.
                                            Title:  Managing Member

                                      BAKER BIOTECH FUND II (Z), L.P.

                                      By:   Baker Biotech Capital II, L.P.,
                                            its general partner

                                      By:   Baker Biotech Capital II (GP), LLC,
                                            is general partner

                                      By:   /s/ Felix Baker
                                            Name:  Felix Baker, Ph.D.
                                            Title:  Managing Member

                                       -4-

<PAGE>

                                      BAVP, L.P.

                                      By:   BA Venture Partners VI, LLC,
                                            its general partner

                                      By:   /s/ Louise C. Bock
                                            Name:  Louis C. Bock
                                            Title:  Managing Director

                                      DELPHI VENTURES VI, L.P.

                                      By:   Delphi Management Partners VI,
                                            L.L.C., its general partner

                                      By:   /s/ Deepa Pakianathan
                                            Name:  Deepa Pakianathan
                                            Title:  Managing Member

                                      DELPHI BIOINVESTMENTS VI, L.P.

                                      By:   Delphi Management Partners VI,
                                            L.L.C., its general partner

                                      By:   /s/ Deepa Pakianathan
                                            Name:  Deepa Pakianathan
                                            Title:  Managing Member

                                       -5-

<PAGE>

                                   SCHEDULE I

<TABLE>
<CAPTION>
                                                NUMBER OF PREFERRED        NUMBER OF     AGGREGATE
    NAME AND ADDRESS                                  SHARES               WARRANTS    PRICE OF SHARES
--------------------------------------------------------------------------------------------------------
<S>                                                    <C>                   <C>       <C>
J.P. Morgan Partners (BHCA), L.P.                      512,031               640,039   $   12,800,775.00
1221 Avenue of the Americas
New York, NY  10020
Attention:  Official Notices Clerk
(fbo Srinivas Akkaraju)

with a copy to:

O'Melveny & Myers LLP
30 Rockefeller Plaza
New York, NY  10112
Telephone:  (212) 408-2400
Telecopier: (212) 408-2420
Attention:  Phillip Isom, Esq.
--------------------------------------------------------------------------------------------------------
J.P. Morgan Partners Global Investors, L.P.             81,137               101,421   $    2,028,425.00
c/o JPMP Global Investors, L.P.
c/o J.P. Morgan Partners, LLC
1221 Avenue of the Americas
New York, NY  10020
Attention:  Official Notices Clerk
(fbo Srinivas Akkaraju)

with a copy to:

O'Melveny & Myers LLP
30 Rockefeller Plaza
New York, NY  10112
Telephone:  (212) 408-2400
Telecopier: (212) 408-2420
Attention:  Phillip Isom, Esq.
--------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                                NUMBER OF PREFERRED        NUMBER OF     AGGREGATE
    NAME AND ADDRESS                                  SHARES               WARRANTS    PRICE OF SHARES
--------------------------------------------------------------------------------------------------------
<S>                                                    <C>                   <C>       <C>
J.P. Morgan Partners Global Investors
(Cayman), L.P.                                          41,182                51,478   $    1,029,550.00
c/o JPMP Global Investors, L.P.
c/o J.P. Morgan Partners, LLC
1221 Avenue of the Americas
New York, NY  10020
Attention:  Official Notices Clerk
(fbo Srinivas Akkaraju)

with a copy to:

O'Melveny & Myers LLP
30 Rockefeller Plaza
New York, NY  10112
Telephone:  (212) 408-2400
Telecopier: (212) 408-2420
Attention:  Phillip Isom, Esq.
--------------------------------------------------------------------------------------------------------
J.P. Morgan Partners Global Investors A, L.P.           11,061                13,826   $      276,525.00
c/o JPMP Global Investors, L.P.
c/o J.P. Morgan Partners, LLC
1221 Avenue of the Americas
New York, NY  10020
Attention:  Official Notices Clerk
(fbo Srinivas Akkaraju)

with a copy to:

O'Melveny & Myers LLP
30 Rockefeller Plaza
New York, NY  10112
Telephone:  (212) 408-2400
Telecopier: (212) 408-2420
Attention:  Phillip Isom, Esq.
--------------------------------------------------------------------------------------------------------
</TABLE>

                                       -2-

<PAGE>

<TABLE>
<CAPTION>
                                                NUMBER OF PREFERRED        NUMBER OF     AGGREGATE
    NAME AND ADDRESS                                  SHARES               WARRANTS    PRICE OF SHARES
--------------------------------------------------------------------------------------------------------
<S>                                                    <C>                   <C>       <C>
J.P. Morgan Partners Global Investors
(Cayman) II, L.P.                                        4,589                 5,736   $      114,725.00
c/o JPMP Global Investors, L.P.
c/o J.P. Morgan Partners, LLC
1221 Avenue of the Americas
New York, NY  10020
Attention:  Official Notices Clerk
(fbo Srinivas Akkaraju)

with a copy to:

O'Melveny & Myers LLP
30 Rockefeller Plaza
New York, NY  10112
Telephone:  (212) 408-2400
Telecopier: (212) 408-2420
Attention:  Phillip Isom, Esq.
--------------------------------------------------------------------------------------------------------
Baker/Tisch Investments, L.P.                           39,650                49,563   $         991,250
667 Madison Avenue, 17th Floor
New York, New York 10021
Facsimile:  (212) 521-2245
Attention:  Felix Baker

with a copy to:

Baker Brothers Investments
667 Madison Avenue, 17th Floor
New York, New York 10021
Facsimile:  (212) 521-2245
Attention:  Leo Kirby
--------------------------------------------------------------------------------------------------------
Baker Bros. Investments, L.P.                           26,780                33,475   $         669,500
667 Madison Avenue, 17th Floor
New York, New York 10021
Facsimile:  (212) 521-2245
Attention:  Felix Baker

with a copy to:

Baker Brothers Investments
667 Madison Avenue, 17th Floor
New York, New York 10021
Facsimile:  (212) 521-2245
Attention:  Leo Kirby
--------------------------------------------------------------------------------------------------------
</TABLE>

                                       -3-

<PAGE>

<TABLE>
<CAPTION>
                                                NUMBER OF PREFERRED        NUMBER OF     AGGREGATE
    NAME AND ADDRESS                                  SHARES               WARRANTS    PRICE OF SHARES
--------------------------------------------------------------------------------------------------------
<S>                                                    <C>                   <C>       <C>
Baker Bros. Investments II, L.P.                        27,625                34,531   $         690,625
667 Madison Avenue, 17th Floor
New York, New York 10021
Facsimile:  (212) 521-2245
Attention:  Felix Baker

with a copy to:

Baker Brothers Investments
667 Madison Avenue, 17th Floor
New York, New York 10021
Facsimile:  (212) 521-2245
Attention:  Leo Kirby
--------------------------------------------------------------------------------------------------------
Baker Biotech Fund I, L.P.                             271,830               339,788   $       6,795,750
667 Madison Avenue, 17th Floor
New York, New York 10021
Facsimile:  (212) 521-2245
Attention:  Felix Baker

with a copy to:

Baker Brothers Investments
667 Madison Avenue, 17th Floor
New York, New York 10021
Facsimile:  (212) 521-2245
Attention:  Leo Kirby
--------------------------------------------------------------------------------------------------------
Baker Biotech Fund II, L.P.                            249,730               312,162   $       6,243,250
667 Madison Avenue, 17th Floor
New York, New York 10021
Facsimile:  (212) 521-2245
Attention:  Felix Baker

with a copy to:

Baker Brothers Investments
667 Madison Avenue, 17th Floor
New York, New York 10021
Facsimile:  (212) 521-2245
Attention:  Leo Kirby
--------------------------------------------------------------------------------------------------------
</TABLE>

                                       -4-

<PAGE>

<TABLE>
<CAPTION>
                                                NUMBER OF PREFERRED        NUMBER OF     AGGREGATE
    NAME AND ADDRESS                                  SHARES               WARRANTS    PRICE OF SHARES
--------------------------------------------------------------------------------------------------------
<S>                                                    <C>                   <C>       <C>
Baker Biotech Fund II (Z), L.P.                         34,385                42,981   $         859,625
667 Madison Avenue, 17th Floor
New York, New York 10021
Facsimile:  (212) 521-2245
Attention:  Felix Baker

with a copy to:

Baker Brothers Investments
667 Madison Avenue, 17th Floor
New York, New York 10021
Facsimile:  (212) 521-2245
Attention:  Leo Kirby
--------------------------------------------------------------------------------------------------------
BAVP, L.P.                                             100,000               125,000   $       2,500,000
c/o BA Venture Partners
950 Tower Lane

Suite 700
Foster City, CA  94404
Attention:  Louis C. Bock
--------------------------------------------------------------------------------------------------------
Delphi Ventures VI, L.P./1/                            200,000               250,000   $       5,000,000
c/o Delphi Ventures
3000 Sand Hill Rd.
Bldg. 1, Ste. 135
Menlo Park, CA 94025
(650) 854-9650
(650) 854-2961 fax
Attention: Deepa Pakianathan
--------------------------------------------------------------------------------------------------------
Delphi BioInvestments VI, L.P.
c/o Delphi Ventures
3000 Sand Hill Rd.
Bldg. 1, Ste. 135
Menlo Park, CA 94025
(650) 854-9650
(650) 854-2961 fax
Attention: Deepa Pakianathan
--------------------------------------------------------------------------------------------------------
</TABLE>

----------
/1/     Prior to Closing, a portion of the shares of Preferred Stock and
        Warrants being purchased by Delphi Ventures VI, L.P. will be allocated
        to Delphi BioInvestments VI, L.P.

                                      -5-

<PAGE>

<TABLE>
<CAPTION>
                                                NUMBER OF PREFERRED        NUMBER OF     AGGREGATE
    NAME AND ADDRESS                                  SHARES               WARRANTS    PRICE OF SHARES
--------------------------------------------------------------------------------------------------------
<S>                                                    <C>                   <C>       <C>
--------------------------------------------------------------------------------------------------------
Total                                                1,600,000             2,000,000   $      40,000,000
--------------------------------------------------------------------------------------------------------
</TABLE>

                                      -6-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00052-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00052-of-00352.parquet"}]]