Document:

SCHABER EMPLOYMENT AGREEMENT

    

      EMPLOYMENT
        AGREEMENT

      

      This
        Agreement (the “Agreement”), dated as of August 29, 2006 (the
        “Effective Date”) by and between DOR BioPharma, Inc., a Delaware corporation
        having a place of business at 1101 Brickell Avenue, Suite 701 South, Miami,
        FL
        33131 (the “Corporation”), and Christopher J. Schaber, Ph.D., an individual (the
“Employee”).

      

      W
        I T N E
        S S E T H:

      

      WHEREAS,
        the Corporation desires to employ Employee as President and Chief Executive
        Officer, and the Employee desires to be employed by the Corporation as President
        and Chief Executive Officer, all pursuant to the terms and conditions
        hereinafter set forth;

      

      NOW,
        THEREFORE, in consideration of the foregoing and the mutual promises and
        covenants herein contained, it is agreed as follows:

      

      
        	
                1.

              	
                EMPLOYMENT DUTIES

              

      

      

      The
        Corporation engages and employs Employee, and Employee hereby accepts engagement
        and  employment,
        as President and Chief Executive Officer and a member of the board of directors,
        and shall  perform
        high quality, full-time service to the Corporation to direct, supervise and
        have
        responsibility for the  operations
        of the Corporation, including, but not limited to: (i) directing and supervising
        the business,  clinical,
        and research and development efforts of the Corporation; (ii) managing the
        other
        executives and  personnel
        of the Corporation; and (iii) evaluating, negotiating, structuring and
        implementing business  transactions
        with the Corporation’s customers and suppliers, and such other activities as may
        be reasonably  requested
        by the Board of Directors of the Corporation. While the Employee remains
        employed by the  Corporation,
        the Corporation shall use its best efforts to nominate and reelect Employee
        as a
        member of the  Board
        of
        Directors of the Corporation. Employee acknowledges and understands that
        his
        employment may  entail
        significant travel on behalf of the Corporation. The location of employment
        shall be the Corporation’s  office
        in
        Miami, FL during the remaining term of Corporation’s lease at 1001 Brickell
        Ave., and thereafter a  mutually
        agreeable city and state. 

      

      

      
        	
                2.

              	
                EMPLOYMENT
                  TERM

              

      

      

      Employee’s
        employment hereunder shall be for a period of three (3) years, unless extended
        by mutual  agreement
        of the parties. The Company will have a two-week period three months before
        end
        of contract  to
        notify
        Employee that contract will not be renewed. If notification does not come
        during
        this time it will  be
        understood by all parties that contract will be automatically renewed for
        another three (3) years. 

      

      
        	
                3.

              	
                COMPENSATION

              

      

      

      As
        compensation for the performance of Employee’s duties on behalf of the
        Corporation, Employee shall  be
        compensated as follows:

      

      (a) (i) The
        Corporation shall pay Employee an annual base salary (“Base Salary”) of three
        hundred thousand dollars ($300,000) per annum, payable in accordance with
        the
        usual payroll period of the Corporation. The base salary shall be reviewed
        at
        the start of each calendar year for the purposes of determining increases,
        if
        any.

      

      (ii)
        The
        Corporation shall pay Employee a minimum annual bonus of one hundred thousand
        dollars ($100,000), payable at the end of each calendar year in prorated
        amount
        if necessary. 

      (b)
         Contingent
        upon Employee’s acceptance of this Agreement, the Compensation Committee of
        the Board
        of
        Directors will grant to Employee Options (“Options”) to purchase two million,
        five hundred
        thousand (2,500,000) shares of DOR Common Stock, of which eight hundred and
        thirty-three
        thousand, three hundred and thirty-three (833,333) will vest immediately
        as of
        the Effective Date
        of
        this Agreement. The remainder will vest quarterly on each three (3) month
        anniversary of the
        Effective Date in equal installments of one hundred and thirty-eight thousand,
        eight hundred and
        ninety (138,890) options per quarterly anniversary while Employee continue
        to be
        employed by
        DOR.
        The exercise price of such Options shall be equal to the market price of
        DORB
        common stock
        as
        of the market close on the Effective Date of this Agreement. The Options
        will be
        granted pursuant
        to the Corporation’s Employee Stock Option Plan and the Corporation’s standard
        Stock Option
        Agreement. All vested options shall be exercisable for a period of one year
        following termination,
        subject to extension in the discretion of the Stock Option Plan administrator.
        Upon a change
        in
        control due to merger or acquisition, all Employee options shall become fully
        vested. In the
        event
        of death of Employee during term of contract, all unvested options shall
        vest
        and become property of Employee’s immediate family. 

      

      (c)
        The
        Corporation shall withhold all applicable federal, state and local taxes;
        social
        security; workers compensation contributions; and such other amounts as may
        be
        required by law or agreed upon by the parties with respect to the compensation
        payable to the Employee pursuant to section 3(a) hereof.

      

      (d)
        The
        Corporation shall reimburse Employee for all normal, usual and necessary
        expenses incurred by Employee in furtherance of the business and affairs
        of the
        Corporation, including reasonable travel and entertainment, including travel
        and
        lodging to and in Miami, against receipt by the Corporation of appropriate
        vouchers or other proof of Employee’s expenditures and otherwise in accordance
        with the policy of the Corporation.

      

      
        	 	
                (e)

              	
                During
                  the term of this Agreement, Employee shall be entitled to a maximum
                  of
                  four (4) weeks paid vacation per annum. Unused vacation may be
                  carried
                  over to successive years.

              

      

      

      
        	 	
                (f)

              	
                The
                  Corporation shall make available to Employee and his dependents
                  such
                  medical, dental, disability, life insurance and such other benefits
                  as the
                  Corporation makes available to its other senior officers and directors.
                  Employee may elect to have the Corporation reimburse Employee for
                  payments
                  made to his own family medical and/or dental plan. Company will
                  maintain a
                  $1,000,000 term life insurance policy for Employee during term
                  of
                  employment.

              

      

      

      
        	
                4.

              	
                REPRESENTATIONS
                  AND WARRANTIES BY EMPLOYEE AND
                  CORPORATION

              

      

      

      (a) Employee
        hereby represents and warrants to the Corporation as follows:

      

      (i) Neither
        the execution and delivery of this Agreement nor the performance by Employee
        of
        his  duties
        and other obligations hereunder violate or will violate any statute, law,
        determination or  award,
        or
        conflict with or constitute a default under (whether immediately, upon the
        giving of  notice
        or
        lapse of time or both) any prior employment agreement, contract, or other
        instrument to  which
        Employee is a party or by which he is bound.

      

      (ii) Employee
        has the full right, power and legal capacity to enter and deliver this Agreement
        and to  perform
        his duties and other obligations hereunder. This Agreement constitutes the
        legal, valid and  binding
        obligation of Employee enforceable against him in accordance with its terms.
        No
 approvals
        or consents of any persons or entities are required for Employee to execute
        and
        deliver  this
        Agreement or perform his duties and other obligations hereunder.

      

      (b)The
        Corporation hereby represents and warrants to Employee as follows:

      

      (i) The
        Corporation is duly organized, validly existing and in good standing under
        the
        laws of the  State
        of
        Delaware, with all requisite corporate power and authority to own its properties
        and  conduct
        its business in the manner presently contemplated.

      

      (ii) The
        Corporation has full power and authority to enter into this Agreement and
        to
        incur and  perform
        its obligations hereunder. This Agreement constitutes the legal, valid and
        binding  obligation
        of the Corporation enforceable against it in accordance with its terms. Except
        as  expressly
        set forth herein, no approvals or consents of any persons or entities are
        required for  Corporation
        to execute and deliver this Agreement or perform its duties and other
        obligations  hereunder.

      

      (iii)
        The
        execution, delivery and performance by the Corporation of this Agreement
        does
        not conflict   with
        or
        result in a breach or violation of or constitute a default under (whether
        immediately, upon  the
        giving of notice or lapse of time or both) the certificate of incorporation
        or
        by-laws of the  Corporation,
        or any agreement or instrument to which the Corporation is a party or by
        which
        the  Corporation
        or any of its properties may be bound or affected.

      

      
        	
                5.

              	
                NON-COMPETITION

              

      

      

      
        	 	
                (a)

              	
                Employee
                  understands and recognizes that his services to the Corporation
                  are
                  special and unique and agrees that, during the term of this Agreement
                  and
                  for a period of two (2) years (or one (1) year in the event that
                  the
                  Employee is terminated within 1 year of the Effective Date), employee
                  shall not in any manner, directly or indirectly, on behalf of himself
                  or
                  any person, firm, partnership, joint venture, corporation or other
                  business entity (“Person”), enter into or engage in any business
                  competitive with the Corporation’s business or research activities, either
                  as an individual for his own account, or as a partner, joint venturer,
                  executive, agent, consultant, salesperson, officer, director of
                  a Person
                  operating or intending to operate in the area of the use of any
                  of the
                  compounds owned or licensed by the Corporation during the time
                  of his
                  employ.

              

      

      

      
        	 	
                (b)

              	
                During the
                  term of this Agreement and for two (2) years (or one (1) year in
                  the event
                  that the Employee is terminated within 1 year of the Effective
                  Date)
                  thereafter, Employee shall not, directly or indirectly, without
                  the prior
                  written consent of the Corporation:

              

      

      

      (i) interfere
        with, disrupt or attempt to disrupt any past, present or prospective
        relationship, contractual
        or otherwise ,
        between
        the Corporation and any of its licensors, licensees, clients, customers,
        suppliers, employees, consultants or other related parties, or solicit or
        induce
        for hire
        any
        of the employees or agents of the Corporation, or any such individual who
        in the
        past was
        employed or retained by the Corporation within six (6) months of the termination
        of said individual’s
        employment or retention by the Corporation; or

      

      (ii) solicit
        or accept employment or be retained by any party who, at any time during
        the
        term of  this
        Agreement, was a customer or supplier of the Corporation or any of its
        affiliates or any licensor
        or licensee thereof where his position will be related to the business of
        the Corporation;
        or

      

            (c) In
        the
        event that Employee breaches any provisions of this Section 5 or
        there
        is a threatened breach,  then,
        in
        addition to any other rights which the
        Corporation       may have, the Corporation
        shall be  entitled
        without the posting of a bond or other security to injunctive relief to enforce
        the restrictions  contained
        herein. 

      

      
        	
                6.

              	
                CONFIDENTIAL
                  INFORMATION

              

      

      

      (a) Employee
        agrees that during the course of his employment or at any time after
        termination, he will  not
        disclose or make accessible to any other person, the Corporation’s or any of its
        subsidiaries’ or  affiliates’,
        (collectively the “Affiliates”) products, services and technology, both current
        and under  development,
        promotion and marketing programs, business plans, lists, customer lists,
        product
        or  licensing
        opportunities, investor lists, trade secrets and other confidential and
        proprietary business  information
        of the Corporation or the Affiliates. Employee agrees: (i) not to use any
        such
        information  for
        himself or others; and (ii) not to take any such material or reproductions
        thereof in any form or  media
        from the Corporation’s facilities at any time during his employment by the
        Corporation, except  as
        required in Employee’s duties to the Corporation. Employee agrees immediately to
        return all such  material
        and reproductions thereof in his possession to the Corporation upon request
        and
        in any event  upon
        termination of employment.

      

      (b) Except
        with prior written authorization by the Corporation, Employee agrees not
        to
        disclose or publish
        any of the confidential, technical or business information or material of
        the
        Corporation, to any
        suppliers, licensors, licensees, customers, partners or other third parties
        to
        whom the Corporation owes
        an
        obligation of confidence, at any time during or after his employment with
        the
        Corporation.

      

      (c) Employee
        hereby assigns to the Corporation all right, title and interest he may have
        or
        acquire in all inventions
        (including patent rights) developed by Employee during the term of this
        Agreement (hereinafter
        the “Inventions”) and agrees that all Inventions shall be the sole property of
        the Corporation
        and its assigns, and the Corporation and its assigns shall be the sole owner
        of
        all patents, copyrights
        and other rights in connection therewith. Employee further agrees to assist
        the
        Corporation in
        every
        proper way (but at the Corporation’s expense) to obtain and from time to time
        enforce patents,
        copyrights or other rights on said Inventions in any and all countries. Employee
        hereby irrevocably
        designates counsel to the Corporation as Employee’s agent and attorney-in-fact
        to do all lawful
        acts necessary to apply for and obtain patents and copyrights and to enforce
        the
        Corporation’s rights
        under this Section. This Section shall survive the termination of this Agreement
        for any reason.

      

      (d) The
        Employee recognizes that in the course of his duties hereunder, he may receive
        from Affiliates or   others
        information which may be considered ‘material, nonpublic information” concerning
        a public company
        that is subject to the reporting requirements of the Securities and Exchange
        Act
        of 1934, as amended.
        The Employee agrees not to:

      

      (i) Buy
        or
        sell any security, option, bond or warrant while in possession of relevant
           material,
        nonpublic information received from Affiliates or others in connection
   herewith;

      

      (ii)  
        Provide
        Affiliates with information with respect to any public company that may be
        considered
        material, nonpublic information; or

      

      (iii)
        Provide any person with material, nonpublic information, received from
        Affiliates, including
        any relative, associate, or other individual who intends to, or may  
otherwise directly
        or indirectly benefit from, such information.

      

      
        	
                7.

              	
                TERMINATION

              

      

      

      (a) The
        Employee’s employment hereunder shall begin on the Effective Date and shall
        continue for the period
        set forth in Section 2 hereof unless renewed by mutual agreement or sooner
        terminated upon the
        first
        to occur of the following events:

      

      (i) The
        death
        of the Employee;

      

      (ii) One
        year
        following the merger or consolidation in which either more than fifty percent
        of
        the  voting
        power of the Corporation is transferred or the Corporation is not the surviving
        entity, or
        sale
        or other disposition of all or substantially all the assets of the
        Corporation;

      

      (iii)
        Termination by the Board of Directors of the Corporation for Just Cause.
        Any of
        the following
        actions by the Employee shall constitute “Just Cause”:

      

      (A) Material
        breach by the Employee of Section 1, Section 5 or
        Section 6 of this Agreement;

      

      (B) Material
        breach by the Employee of any provision of this Agreement other
        than Section
        5
        or Section 6 which is not cured by the Employee within thirty (30) days
        of notice
        thereof from the Corporation;

      

      (C) Any
        action by the Employee to intentionally harm the Corporation or any action
        of  gross
        negligence by the Employee; or

      

      (D) The
        conviction of the Employee of a felony.

      

      (iv)
        Termination by the Employee for Just Cause. Any of the following actions
        or
        omissions by  the
        Corporation shall constitute just cause:

      

      (A) Material
        breach by the Corporation of any provision of this Agreement which is
        not  cured
        by
        the Corporation within thirty (30) days of notice thereof from the
        Employee; or

      

      (B) Any
        action by the Corporation to intentionally harm the Employee, which includes
        but is
        not
        limited to: change in title or scope of responsibility; reduction in
        compensation by
        greater than 10%..

      

      (b)
         Upon
        termination by the Corporation pursuant to either subparagraph (iii) of
        paragraph (a) above or
        by
        Employee other than pursuant to subparagraph (iv) of paragraph (a) above,
        the
        Employee shall
        be
        entitled to receive the Base Salary accrued but unpaid as of the date of
        termination including
        any vacation time accrued but not taken.

      

      (c)
         Upon
        termination by the Corporation without Just Cause or pursuant to subparagraphs
        (i), (ii) or (iv) of
        paragraph (a) above, then the term of the Agreement as set forth in Section
        2
        hereof shall be deemed
        to
        have been terminated as of such date and (i) the Corporation shall pay to
        the
        Employee (or
        his
        estate in the event of termination pursuant to subparagraph (i)), six (6)
        months
        salary and any accrued
        Bonuses payable upon the normal payroll periods of the Corporation including
        any
        vacation accrued
        but not taken. Health benefits and life insurance will also be maintained
        for
        Employee (or his
        dependents in the event of termination pursuant to subparagraph (i)) by Company
        during severance
        period. No unvested options shall vest beyond the termination date, unless
        where previously
        noted in Section 3 (b).  

      

      (d)
        Upon
        the cessation of service to the Company by Employee for any reason, Employee
        will immediately
        resign from the Board of Directors of the Company.

      

      (d) Not
        withstanding any of the foregoing, Sections 5 and 6 shall survive the
        termination or expiration of  this
        Agreement.

      

      8. NOTICES

      

      Any
        notice or other communication under this Agreement shall be in writing and
        shall
        be deemed to have  been
        given: when delivered personally against receipt therefor; one (1) day after
        being sent by Federal  Express
        or similar overnight delivery; or three (3) days after being mailed registered
        or certified mail,  postage
        prepaid, return receipt requested, to either party at the address set forth
        above, or to such other  address
        as such party shall give by notice hereunder to the other party.

      

      9. SEVERABILITY
        OF PROVISIONS

      

      If
        any
        provision of this Agreement shall be declared by a court of competent
        jurisdiction to be invalid, illegal  or
        incapable of being enforced in whole or in part, such provision shall be
        interpreted so as to remain  enforceable
        to the maximum extent permissible consistent with applicable law and the
        remaining conditions  and
        provisions or portions thereof shall nevertheless remain in full force and
        effect and enforceable to the  extent
        they are valid, legal and enforceable, and no provision shall be deemed
        dependent upon any other  covenant
        or provision unless so expressed herein.

      

      10.
         ENTIRE
        AGREEMENT MODIFICATION

      

      This
        Agreement contains the entire agreement of the parties relating to the subject
        matter hereof, and the  parties
        hereto have made no agreements, representations or warranties relating to
        the
        subject matter of this  Agreement
        which are not set forth herein. No modification of this Agreement shall be
        valid
        unless made in  writing
        and signed by the parties hereto.

      

      11. BINDING
        EFFECT

      

      The
        rights, benefits, duties and obligations under this Agreement shall inure
        to,
        and be binding upon, the  Corporation,
        its successors and assigns, and upon Employee and his legal representatives.
        This Agreement  constitutes
        a personal service agreement, and the performance of Employee’s obligations
        hereunder may not  be
        transferred or assigned by Employee.

      

      12. NON-WAIVER

      

      The
        failure of either party to insist upon the strict performance of any of the
        terms, conditions and provisions  of
        this
        Agreement shall not be construed as a waiver or relinquishment of future
        compliance therewith, and  said
        terms, conditions and provisions shall remain in full force and effect. No
        waiver of any term or  condition
        of this Agreement on the part of either party shall be effective for any
        purpose
        whatsoever unless  such
        waiver is in writing and signed by such party.

      

      13. GOVERNING
        LAW

      

      This
        Agreement shall be governed by, and construed and interpreted in accordance
        with, the laws of the  State
        of
        Florida without regard to principles of conflict of laws.

      

      14. HEADINGS

      

      The
        headings of paragraphs are inserted for convenience and shall not affect
        any
        interpretation of this  Agreement.

      

      IN
        WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
        day
        and year first  above
        written.

      

      DOR
        BIOPHARMA, INC.

      

      

      By:
        /s/
        James S. Kuo

      

      James
        S.
        Kuo, M.D.

      Chairman
        of the Board

      

      EMPLOYEE:

      

      

      By:
        /s/
        Christopher J. Schaber

      Christopher
        J. Schaber, Ph.D.CHEMOCENTRYX, INC.

                            AMENDED AND RESTATED
                          INVESTORS RIGHTS AGREEMENT
                                JUNE 13, 2006

                               TABLE OF CONTENTS
                                                                 Page

1. REGISTRATION RIGHTS.............................................1

1.1 DEFINITIONS....................................................1
1.2 REQUEST FOR REGISTRATION.......................................2
1.3 COMPANY REGISTRATION...........................................4
1.4 FORM S-3 REGISTRATION..........................................4
1.5 OBLIGATIONS OF THE COMPANY ....................................5
1.6 FURNISH INFORMATION............................................6
1.7 EXPENSES OF REGISTRATION ......................................7
1.8 UNDERWRITING REQUIREMENTS......................................7
1.9 DELAY OF REGISTRATION..........................................8
1.10 INDEMNIFICATION...............................................8
1.11 REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934................10
1.12 ASSIGNMENT OF REGISTRATION RIGHTS............................10
1.13 LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS................11
1.14 MARKET-STANDOFF AGREEMENT....................................11
1.15 TERMINATION OF REGISTRATION RIGHTS...........................12

2. COVENANTS OF THE COMPANY.......................................12

2.1 DELIVERY OF FINANCIAL STATEMENTS .............................12
2.2 INSPECTION ...................................................12
2.3 RIGHT OF FIRST OFFER..........................................12
2.4 BOARD OF DIRECTORS ...........................................14
2.5 OBSERVATION RIGHTS. ..........................................14
2.6 TERMINATION OF COVENANTS......................................15

3. MISCELLANEOUS..................................................15

3.1 SUCCESSORS AND ASSIGNS .......................................15
3.2 AMENDMENTS AND WAIVERS .......................................15
3.3 NOTICES.......................................................16
3.4 SEVERABILITY..................................................16
3.5 GOVERNING LAW.................................................16
3.6 COUNTERPARTS .................................................16
3.7 TITLES AND SUBTITLES .........................................16
3.8 AGGREGATION OF STOCK..........................................16
3.9 AMENDMENT AND TERMINATION OF PRIOR AGREEMENT..................16

                               -i-

              AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

This Amended and Restated Investors Rights Agreement (the Agreement) is made
as of the 13th day of June, 2006, by and among ChemoCentryx, Inc., a Delaware
corporation (the Company), the individuals or entities who are signatories
hereto, each of which is herein referred to as an Investor, and Thomas J.
Schall (the Founder).

This Agreement supersedes and replaces that certain Amended and Restated
Investors Rights Agreement, dated June 15, 2004, by and among the Company and
the other parties named therein (the Prior Agreement).

                                 RECITALS

WHEREAS, certain of the Investors are purchasing shares of the Company's
Series C Preferred Stock pursuant to that certain Series C Preferred Stock
Subscription Agreement of even date herewith (the Subscription Agreement);
and

WHEREAS, the obligations in the Subscription Agreement are conditioned upon
the execution and delivery of this Agreement, and the parties to the Prior
Agreement desire to amend and restate the Prior Agreement in its entirety.

                             AGREEMENT

The parties hereby agree as follows:

1. Registration Rights. The Company, the Investors and the Founder covenant
and agree as follows:

1.1 Definitions. For purposes of this Section 1:

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

     (b) The term Registrable Securities means (i) the shares of
Common Stock issuable or issued upon conversion of the Series A Preferred
Stock, (ii) the shares of Common Stock issuable or issued upon conversion of
the Series B Preferred Stock, (iii) the shares of Common Stock issuable or
issued upon conversion of the Series C Preferred Stock, (iv) the shares of
Common Stock issued to the Founder (the Founders Stock); provided, however,
that for the purposes of Section 1.2, 1.4 or 1.13 the Founders Stock shall
not be deemed Registrable Securities and the Founder shall not be deemed a
Holder, and (v) any other shares of Common Stock of the Company issued as (or
issuable upon the conversion or exercise of any warrant, right or other
security which is issued as) a dividend or other distribution with respect
to, or in exchange for or in replacement of, the shares listed in (i), (ii),
(iii) and (iv); provided, however, that the foregoing definition shall
exclude in all cases any Registrable Securities sold by a person in a
transaction in which his or her rights under this

                                        1

agreement are not assigned. Notwithstanding the foregoing, Common Stock or
other securities shall only be treated as Registrable Securities if and so
long as they have not been (A) sold to or through a broker or dealer or
underwriter in a public distribution or a public securities transaction, or
(B) sold in a transaction exempt from the registration and prospectus
delivery requirements of the Securities Act under Section 4(1) thereof so
that all transfer restrictions, and restrictive legends with respect thereto,
if any, are removed upon the consummation of such sale;

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

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

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

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

     (g) The term Qualified IPO means a firm commitment underwritten public
offering by the Company of shares of its Common Stock pursuant to a
registration statement on Form S-1 under the Securities Act that is either
(i) at a public offering price of not less than $6.00 per share appropriately
adjusted for any stock split, dividend, combination or other
recapitalization) and which results in aggregate cash proceeds to the Company
of $40,000,000 (net of underwriting discounts and commissions), or (ii) upon
terms approved by a majority of the outstanding shares of the Company's
Preferred Stock.

1.2 Request for Registration.

     (a) If the Company shall receive at any time after the earlier of (i)
November 15, 2008, or (ii) six (6) months after the effective date of the
first registration statement for a public offering of securities of the
Company (other than a registration statement relating either to the sale of
securities to employees of the Company pursuant to a stock option, stock
purchase or similar plan or an SEC Rule 145 transaction), a written request
from either (x) the Holders of a majority of the Series A Preferred Stock (or
the Common Stock issuable or issued upon conversion thereof) then outstanding
or (y) the Holders of a majority of the Series B Preferred Stock (or the
Common Stock issuable or issued upon conversion thereof) then outstanding or
(z) the Holders of a majority of the Series C Preferred Stock (or the Common
Stock issuable or issued upon conversion thereof) then outstanding, that the
Company file a registration statement under the Securities Act covering the
registration of at least thirty percent (30%) of the Registrable Securities
then outstanding (or a lesser percent if the anticipated aggregate offering
price, net of underwriting discounts and commissions, would exceed
$10,000,000), then the Company shall, within ten (10) days of the receipt
thereof, give written notice of such request to all Holders and shall,
subject to the limitations of subsection 1.2(b), use

                                           2

its best efforts to effect as soon as practicable, and in any event within 60
days of the receipt of such request, the registration under the Securities
Act of all Registrable Securities which the Holders request to be registered
within twenty (20) days of the mailing of such notice by the Company in
accordance with Section 3.3.

     (b) If the Holders initiating the registration request hereunder
(Initiating Holders) intend to distribute the Registrable Securities covered
by their request by means of an underwriting, they shall so advise the Company
as a part of their request made pursuant to this Section 1.2 and the Company
shall include such information in the written notice referred to in subsection
1.2(a). The underwriter will be selected by a majority in interest of the
Initiating Holders and shall be reasonably acceptable to the Company. In such
event, the right of any Holder to include his Registrable Securities in such
registration shall be conditioned upon such Holders participation in such
underwriting and the inclusion of such Holders Registrable Securities in the
underwriting (unless otherwise mutually agreed by a majority in interest of
the Initiating Holders and such Holder) to the extent provided herein. All
Holders proposing to distribute their securities through such underwriting
shall (together with the Company as provided in subsection 1.5(e)) enter into
an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting. Notwithstanding any other
provision of this Section 1.2, if the underwriter advises the Initiating
Holders in writing that marketing factors require a limitation of the number
of shares to be underwritten, then the Initiating Holders shall so advise all
Holders of Registrable Securities which would otherwise be underwritten
pursuant hereto, and the number of shares of Registrable Securities that may
be included in the underwriting shall be allocated among all Holders thereof,
in proportion (as nearly as practicable) to the amount of Registrable
Securities of the Company owned by each Holder; provided, however, that in no
event shall (i) any securities held by a Holder (other than an
Initiating Holder) be included in such underwriting if any Initiating
Holder's securities are excluded from the underwriting, or (ii) the number of
shares of Registrable Securities to be included in such underwriting be
reduced unless all other securities are first entirely excluded from the
underwriting.

     (c) Notwithstanding the foregoing, if the Company shall furnish to
Holders requesting a registration statement pursuant to this Section 1.2, a
certificate signed by the President of the Company stating that in the good
faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company and its stockholders for such
registration statement to be filed and it is therefore essential to defer the
filing of such registration statement, the Company shall have the right to
defer such filing for a period of not more than 120 days after receipt of the
request of the Initiating Holders; provided, however, that the Company may
not utilize this right more than once in any twelve-month period.

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

         (i) With respect to Holders of the Series A Preferred Stock (or the
Common Stock issuable or issued upon conversion thereof), after the Company
has effected one (1) registration pursuant to this Section 1.2 at the request
of such Holders of Series A Preferred Stock and such registration has been
declared or ordered effective;

                                    3

        (ii) With respect to Holders of the Series B Preferred Stock (or the
Common Stock issuable or issued upon conversion thereof), after the Company
has effected one (1) registration pursuant to this Section 1.2 at the request
of such Holders of Series B Preferred Stock and such registration has been
declared or ordered effective;

       (iii) With respect to Holders of the Series C Preferred Stock (or the
Common Stock issuable or issued upon conversion thereof), after the Company
has effected one (1) registration pursuant to this Section 1.2 at the request
of such Holders of Series C Preferred Stock and such registration has been
declared or ordered effective;

        (iv) During the period starting with the date sixty (60) days prior
to the Company's good faith estimate of the date of filing of, and ending on
a date one hundred eighty (180) days after the effective date of, a
registration subject to Section 1.3 hereof; provided that the Company is
actively employing in good faith all reasonable efforts to cause such
registration statement to become effective; or

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

1.3 Company Registration. If (but without any obligation to do so) the
Company proposes to register (including for this purpose a registration
effected by the Company for stockholders other than the Holders) any of its
stock under the Securities Act in connection with the public offering of such
securities solely for cash (other than a registration relating solely to the
sale of securities to participants in a Company stock plan or a transaction
covered by Rule 145 under the Securities Act, a registration in which the
only stock being registered is Common Stock issuable upon conversion of debt
securities which are also being registered, or any registration on any form
which does not include substantially the same information as would be
required to be included in a registration statement covering the sale of the
Registrable Securities), the Company shall, at such time, promptly give each
Holder written notice of such registration. Upon the written request of each
Holder given within twenty (20) days after mailing of such notice by the
Company in accordance with Section 3.3, the Company shall, subject to the
provisions of Section 1.8, cause to be registered under the Securities Act
all of the Registrable Securities that each such Holder has requested to be
registered.

1.4 Form S-3 Registration. In case the Company shall receive from any
Holder or Holders of the Registrable Securities, a written request or
requests that the Company file a registration on Form S-3 and the reasonably
anticipated aggregate offering price, net of underwriting discounts and
commissions, would exceed $2,000,000, the Company will:

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

     (b) as soon as practicable, effect such registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Holders
or Holders Registrable Securities as are specified in such request, together
with all or such portion of the Registrable Securities of any

                                   4

other Holder or Holders joining in such request as are specified in a written
request given within 15 days after receipt of such written notice from the
Company; provided, however, that the Company shall not be obligated to effect
any such registration, qualification or compliance, pursuant to this Section
1.4: (i) if Form S-3 is not available for such offering by the Holders;
(ii) if the Company shall furnish to the Holders a certificate signed by the
President of the Company stating that in the good faith judgment of the Board
of Directors of the Company, it would be seriously detrimental to the Company
and its stockholders for such Form S-3 Registration to be effected at such
time, in which event the Company shall have the right to defer the filing of
the Form S-3 registration statement for a period of not more than 120 days
after receipt of the request of the Holder or Holders under this Section 1.4;
provided, however, that the Company shall not utilize this right more than
once in any twelve month period; (iii) if the Company has, within the twelve
(12) month period preceding the date of such request, already effected a
registration on Form S-3 for the Holders pursuant to this Section 1.4; (iv)
in any particular jurisdiction in which the Company would be required to
qualify to do business or to execute a general consent to service of process
in effecting such registration, qualification or compliance; or (v) during
the period ending one hundred eighty (180) days after the effective date of a
registration statement subject to Section 1.3.

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

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

     (a) Prepare and file with the SEC a registration statement with respect
to such Registrable Securities and use its best efforts to cause such
registration statement to become effective, and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder,
keep such registration statement effective for up to one hundred twenty
(120) days.

     (b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of
the Securities Act with respect to the disposition of all securities covered
by such registration statement for up to one hundred twenty (120) days.

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

     (d) Use its best efforts to register and qualify the securities covered
by such registration statement under such other securities or Blue Sky laws
of such jurisdictions as

                                    5

shall be reasonably requested by the Holders, provided that the Company shall
not be required in connection therewith or as a condition thereto to qualify
to do business or to file a general consent to service of process in any such
states or jurisdictions.

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

     (f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any
event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary
to make the statements therein not misleading in the light of the
circumstances then existing, such obligation to continue for one hundred
twenty (120) days.

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

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

     (i) Use its best efforts to furnish, at the request of any Holder
requesting registration of Registrable Securities pursuant to this Section 1,
on the date that such Registrable Securities are delivered to the
underwriters for sale in connection with a registration pursuant to this
Section 1, if such securities are being sold through underwriters, or, if
such securities are not being sold through underwriters, on the date that the
registration statement with respect to such securities becomes effective, (i)
an opinion, dated such date, of the counsel representing the Company for the
purposes of such registration, in form and substance as is customarily given
to underwriters in an underwritten public offering, addressed to the
underwriters, if any, and to the Holders requesting registration of
Registrable Securities and (ii) a letter dated such date, from the
independent certified public accountants of the Company, in form
and substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering, addressed to
the underwriters, if any, and to the Holders requesting registration of
Registrable Securities.

1.6 Furnish Information. It shall be a condition precedent to the obligations
of the Company to take any action pursuant to this Section 1 with respect to
the Registrable Securities of any selling Holder that such Holder shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such
securities as shall be required to effect the registration of such Holders
Registrable Securities. The Company shall have no obligation with respect to
any registration requested pursuant to Section 1.2 or Section 1.4 of this
Agreement if, as a result of the application of the preceding sentence, the
number of shares or the anticipated aggregate offering price of the

                                       6

Registrable Securities to be included in the registration does not equal or
exceed the number of shares or the anticipated aggregate offering price
required to originally trigger the Company's obligation to initiate such
registration as specified in subsection 1.2(a) or subsection 1.4(b)(2),
whichever is applicable.

1.7 Expenses of Registration. All expenses (other than underwriting discounts
and commissions incurred in connection with registrations), filings or
qualifications pursuant to Sections 1.2, 1.3 and 1.4, including (without
limitation) all registration, filing and qualification fees, printers and
accounting fees, fees and disbursements of counsel for the Company, and the
reasonable fees and disbursements of one counsel for the selling Holders
selected by them with the approval of the Company, which approval shall not
be unreasonably withheld, shall be borne by the Company; provided, however,
that the Company shall not be required to pay for any expenses of any
registration proceeding begun pursuant to Section 1.2 if the registration
request is subsequently withdrawn at the request of the Holders of a majority
of the Registrable Securities to be registered (in which case all
participating Holders shall bear such expenses), unless the Initiating
Holders of a majority of the Registrable Securities agree to forfeit their
right to one demand registration pursuant to Section 1.2.

1.8 Underwriting Requirements. In connection with any offering involving an
underwriting of shares of the Companys capital stock, the Company shall not
be required under Section 1.3 to include any of the Holders securities in
such underwriting unless they accept the terms of the underwriting as agreed
upon between the Company and the underwriters selected by it (or by other
persons entitled to select the underwriters), and then only in such quantity
as the underwriters determine in their sole discretion will not jeopardize
the success of the offering by the Company. If the total amount of
securities, including Registrable Securities, requested by stockholders to be
included in such offering exceeds the amount of securities sold other than by
the Company that the underwriters determine in their sole discretion is
compatible with the success of the offering, then the Company shall be
required to include in the offering only that number of such securities,
including Registrable Securities, which the underwriters determine in their
sole discretion will not jeopardize the success of the offering (the
securities so included to be apportioned pro rata among the selling
stockholders according to the total amount of securities entitled to be
included therein owned by each selling stockholder or in such other
proportions as shall mutually be agreed to by such selling stockholders) but
in no event shall (i) the amount of securities of the selling Holders
included in the offering be reduced below twenty percent (20%) of the total
amount of securities included in such offering unless such offering is the
initial public offering of the Company's securities, in which case the
selling Holders may be excluded if the underwriters make the determination
described above and no other stockholders securities are included or (ii) any
securities held by a Founder be included if any securities held by any
selling Holder are excluded. For purposes of the preceding parenthetical
concerning apportionment, for any selling stockholder which is a holder of
Registrable Securities and which is a partnership or corporation, the
partners, retired partners and stockholders of such holder, or the estates
and family members of any such partners and retired partners and any trusts
for the benefit of any of the foregoing persons shall be deemed to be a
single selling stockholder, and any pro-rata reduction with respect to such
selling stockholder shall be based upon the aggregate amount of shares
carrying registration rights owned by all entities and individuals included
in such selling stockholder, as defined in this sentence.

                                       7

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

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

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

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

                                   8

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

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

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

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

                                           9

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

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

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

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

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

     (c) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the
Exchange Act; and

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

1.12 Assignment of Registration Rights. The rights to cause the Company to
register Registrable Securities pursuant to this Section 1 may be assigned
(but only with all related obligations) by a Holder to a transferee or
assignee (a) of at least 1,000,000 shares of such securities, (b) of all
securities owned by a Holder or (c) that is an entity affiliated by common
control with such Holder; provided the Company is, within a reasonable time
after such transfer, furnished with written notice of the name and address of
such transferee or assignee and the securities with respect to which such
registration rights are being assigned. For the purposes of determining the
number of shares of Registrable Securities held by a transferee or assignee,

                                       10

the holdings of transferees and assignees of a partnership who are partners
or retired partners of such partnership (including spouses and ancestors,
lineal descendants and siblings of such partners or spouses who acquire
Registrable Securities by gift, will or intestate succession) shall be
aggregated together and with the partnership; provided that all assignees and
transferees who would not qualify individually for assignment of registration
rights shall have a single attorney-in-fact for the purpose of exercising any
rights, receiving notices or taking any action under Section 1.

1.13 Limitations on Subsequent Registration Rights. From and after the date
of this Agreement, the Company shall not, without the prior written consent
of the Holders of a majority of the Series A Preferred Stock (or the Common
Stock issuable or issued upon conversion thereof), the Series B Preferred
Stock (or the Common Stock issuable or issued upon conversion thereof) and
the Series C Preferred Stock (or the Common Stock issuable or issued upon
conversion thereof), voting together as a single class, enter into any
agreement with any holder or prospective holder of any securities of the
Company which would allow such holder or prospective holder (a) to include
such securities in any registration filed under Section 1.2 hereof, unless
under the terms of such agreement, such holder or prospective holder may
include such securities in any such registration only to the extent that the
inclusion of his securities will not reduce the amount of the Registrable
Securities of the Holders which is included or (b) to make a demand
registration which could result in such registration statement being declared
effective prior to the earlier of either of the dates set forth in subsection
1.2(a) or within one hundred twenty (120) days of the effective date of any
registration effected pursuant to Section 1.2.

1.14 Market-Standoff Agreement.

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

     (b) Limitations. The obligations described in Section 1.14(a) shall
apply only if all officers, directors and five percent (5%)
stockholders of the Company enter into similar agreements, and
shall not apply to a registration relating solely to employee
benefit plans, or to a registration relating solely to a
transaction pursuant to Rule 145 under the Securities Act.

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

                                         11

     (d) Transferees Bound. Each Holder agrees that prior to the Company's
initial public offering it will not transfer securities of the Company
unless each transferee agrees in writing to be bound by all of the
provisions of this Section 1.14.

1.15 Termination of Registration Rights. No Holder shall be entitled to
exercise any right provided for in this Section 1 after the earlier of (i)
five (5) years following the consummation of a Qualified IPO, or (ii) such
time as Rule 144 or another similar exemption under the Securities Act is
available for the sale of all of such Holders shares during a three
(3)-month period without registration and without limitation.

2. Covenants of the Company.

2.1 Delivery of Financial Statements. The Company shall deliver to each
Holder of at least 400,000 shares of Registrable Securities:

     (a) as soon as practicable, after the end of each fiscal year of the
Company, an income statement for such fiscal year, a balance sheet of the
Company and statement of stockholders equity as of the end of such year, and
a statement of cash flows for such year, such year-end financial reports to
be in reasonable detail, prepared in accordance with generally accepted
accounting principles (GAAP), and audited and certified by an independent
public accounting firm of nationally recognized standing selected by the
Company;

     (b) as soon as practicable, after the end of each of the first three
(3) quarters of each fiscal year of the Company, an unaudited
profit or loss statement, a statement of cash flows for such
fiscal quarter and an unaudited balance sheet as of the end of
such fiscal quarter prepared in accordance with GAAP; and

     (c) upon written request, as soon as practicable after the end of each
fiscal year, a budget and business plan for the next fiscal year, prepared on
a monthly basis, and, as soon as prepared, any other budgets or revised
budgets prepared by the Company.

Notwithstanding the foregoing, the Company shall have no obligation to
provide any information to any Investor whom the Company believes is
developing products in competition with or potentially in competition with
the Company. The Investors hereby acknowledge that the Company may elect to
provide different amounts of information relating to the Company to any
such Investors.

2.2 Inspection. The Company shall permit each Holder of at least 400,000
shares of Registrable Securities, at such Holders expense, to visit and
inspect the Company's properties, to examine its books of account and records
and to discuss the Company's affairs, finances and accounts with its
officers, all at such reasonable times as may be requested by the
Investor, as applicable; provided, however, that the Company shall not be
obligated pursuant to this Section 2.2 to provide access to any information
which it reasonably considers to be a trade secret or similar confidential
information, the disclosure of which would have a material adverse effect on
the Company or which would jeopardize the trade secrets status as such.

2.3 Right of First Offer. Subject to the terms and conditions specified in
this Section 2.3, the Company hereby grants to each Holder of at least
1,000,000 shares of

                                         12

Registrable Securities a right of first offer with respect to future sales by
the Company of its Shares (as hereinafter defined). A Holder who chooses to
exercise the right of first offer may designate as purchasers under such
right itself or its partners or affiliates in such proportions as it
deems appropriate.

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

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

     (b) Within 15 calendar days after delivery of the Notice, the Holder may
elect to purchase or obtain, at the price and on the terms specified in the
Notice, up to that portion of such Shares which equals the proportion that
the number of shares of Common Stock issued and held, or issuable upon
conversion and exercise of all convertible or exercisable securities then
held, by such Holder bears to the total number of shares of Common Stock then
outstanding (assuming full conversion and exercise of all convertible or
exercisable securities). The Company shall promptly, in writing, inform each
Holder that purchases all the shares available to it (each, a Fully-
Exercising Investor) of any other Holders failure to do likewise.
During the ten (10)-day period commencing after receipt of such information,
each Fully-Exercising Investor shall be entitled to obtain that portion of
the Shares for which Holders were entitled to subscribe but which were not
subscribed for by the Holders that is equal to the proportion that the number
of shares of Common Stock issued and held, or issuable upon conversion and
exercise of all convertible or exercisable securities then held, by such
Fully-Exercising Investor bears to the total number of shares of Common Stock
then outstanding (assuming full conversion and exercise of all convertible or
exercisable securities).

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

     (d) The right of first offer in this paragraph 2.3 shall not be applicable
(i) to the issuance or sale of up to 5,500,000 shares of Common Stock (or
options therefor) since the inception of the Company to employees,
consultants and directors, pursuant to plans or agreements approved by the
Board of Directors for the primary purpose of soliciting or retaining their
services, (ii) to or after consummation of a Qualified IPO, (iii) to the
issuance of securities pursuant to the conversion or exercise of convertible
or exercisable securities, (iv) to the issuance of securities in connection
with bona fide acquisitions, mergers, technology licenses or purchases,
corporate partnering agreements or similar transactions, the terms of which
are
                                     13

approved by the Board of Directors, (v) to the issuance of securities to
financial institutions or lessors in connection with commercial credit
arrangements, equipment financings, or similar transactions, (vi) to the
issuance or sale of up to an aggregate of 10,000,000 shares of Series C
Preferred Stock of the Company (or warrants therefor), or (vii) to the
issuance of securities that, with unanimous approval of the Board of
Directors of the Company, are not offered to any existing stockholder of the
Company.

2.4 Board of Directors. As of the date of this Agreement, and notwithstanding
anything to the contrary in the Bylaws of the Company, the Board of Directors
of the Company shall consist of six (6) members, not more than two (2) of
which shall be employees of the Company. For so long as OrbiMed Advisors, LLC
and its affiliates (collectively OrbiMed) hold at least 384,615 shares of
Registrable Securities, it shall have the right to designate one (1) member
of the Board of Directors and the OrbiMed designee shall also be a member of
each committee of the Board of Directors, including, without limitation, the
Compensation Committee and the Audit Committee. For so long as HBM
BioVentures (Cayman) Ltd. and its affiliates (collectively HBM) hold at least
365,385 shares of Registrable Securities, it shall have the right to
designate one (1) member of the Board of Directors and the HBM designee shall
also be a member of each committee of the Board of Directors, including,
without limitation, the Compensation Committee and the Audit Committee. The
Board of Directors shall hold a regularly scheduled meeting at least once
every ninety (90) days. Each member of the Board of Directors and the members
of each committee of the Board of Directors shall receive notice of each
meeting at least fifteen (15) days before the meeting and such notice shall
be provided to each member in the same manner. The Company will reimburse the
OrbiMed and HBM directors, as applicable, for their reasonable out-of-pocket
and travel expenses incurred in connection with attending such meetings.

2.5 Observation Rights.

     (a) The Company agrees that for so long as HealthCap III Sidefund
KB or its affiliates (collectively HealthCap) owns 269,231 shares of
Registrable Securities, HealthCap shall be entitled to designate one
individual to act as a non-voting observer of the Board of Directors of the
Company (the HealthCap Observer). The HealthCap Observer shall not have any
right to vote as a director of the Company but shall otherwise be entitled to
notice of and to attend all meetings of the Board of Directors of the
Company, and to receive any material distributed to the directors in their
capacity as directors of the Company. The Company shall not have any
obligation to pay any expenses incurred in connection with the HealthCap
Observers attendance at such meetings.

     (b) The Company agrees that for so long as Alta Partners or its
affiliates (collectively Alta) owns 326,923 shares of Registrable Securities,
Alta shall be entitled to designate one individual to act as a non-voting
observer of the Board of Directors of the Company (the Alta Observer, and
together with the HealthCap Observer, the Observers). The Alta Observer shall
not have any right to vote as a director of the Company but shall otherwise be
entitled to notice of and to attend all meetings of the Board of Directors of
the Company, and to receive any material distributed to the directors in their
capacity as directors of the Company. The Company shall not have any
obligation to pay any expenses incurred in connection with the Alta Observers
attendance at such meetings.

                                    14

     (c) The Observers shall be subject to the obligations of confidentiality
set forth in Section 7.14 of the Subscription Agreement. Notwithstanding
Section 2.5(a), the Company reserves the right not to provide information
and to exclude the Observers from any meeting or portion thereof if
delivery of such information or attendance at such meeting would result in
a loss of trade secret protection for trade secrets of the Company, or
would adversely affect the attorney-client privilege between the Company
and its counsel.

2.6 Termination of Covenants.

     (a) The covenants set forth in Sections 2.1 through Section 2.5 shall
terminate as to each Holder and be of no further force or effect immediately
prior to the consummation of a Qualified IPO.

     (b) The covenants set forth in Sections 2.1 and 2.2 shall terminate as to
each Holder and be of no further force or effect when the Company
first becomes subject to the periodic reporting requirements of
Sections 13 or 15(d) of the Exchange Act, if this occurs earlier than
the events described in Section 2.6(a) above.

3. Miscellaneous.

3.1 Successors and Assigns. Except as otherwise provided in this Agreement,
the terms and conditions of this Agreement shall inure to the benefit of and
be binding upon the respective permitted successors and assigns of the
parties (including transferees of any of the Registrable Securities). Nothing
in this Agreement, express or implied, is intended to confer upon any party
other than the parties hereto or their respective successors and assigns
any rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.

3.2 Amendments and Waivers. Any term of this Agreement may be amended or
waived only with the written consent of the Company and the holders of a
majority of the Registrable Securities then outstanding, not including the
Founders Stock; provided that if (i) such amendment has the effect of
affecting the Founders Stock (a) in a manner different than securities issued
to the Investors and (b) in a manner adverse to the interests of the holders
of the Founders Stock, then such amendment shall require the consent of the
holder or holders of a majority of the Founders Stock, (ii) such amendment
has the effect of affecting the Series A Preferred Stock (j) in a manner
different than the Series B Preferred Stock or the Series C Preferred Stock
and (k) in a manner adverse to the interests of the holders of the Series A
Preferred Stock, then such amendment shall require the consent of the holder
or holders of a majority of the Series A Preferred Stock, (iii) such
amendment has the effect of affecting the Series B Preferred Stock (m) in a
manner different than the Series A Preferred Stock or the Series C Preferred
Stock and (n) in a manner adverse to the interests of the holders of the
Series B Preferred Stock, then such amendment shall require the consent of
the holder or holders of a majority of the Series B Preferred Stock, (iv)
such amendment has the effect of affecting the Series C Preferred Stock (x)
in a manner different than the Series A Preferred Stock or the Series
B Preferred Stock and (y) in a manner adverse to the interests of the holders
of the Series C Preferred Stock, then such amendment shall require the
consent of the holder or holders of a majority of the Series C Preferred
Stock, (v) such amendment alters Section 2.4, then such

                                        15

amendment shall require the consent of OrbiMed and HBM, (vi) such amendment
alters Section 2.5(a), then such amendment shall require the consent of
HealthCap, or (vii) such amendment alters Section 2.5(b), then such amendment
shall require the consent of Alta. Any amendment or waiver effected in
accordance with this paragraph shall be binding upon each holder of any
Registrable Securities then outstanding, each future holder of all such
Registrable Securities, and the Company.

3.3 Notices. Unless otherwise provided, any notice required or permitted by
this Agreement shall be in writing and shall be deemed sufficient upon
delivery, when delivered personally or by overnight courier or sent by
telegram or fax, or forty-eight (48) hours after being deposited in the U.S.
mail, as certified or registered mail, with postage prepaid, and addressed to
the party to be notified at such partys address or fax number as set forth
below hereto or as subsequently modified by written notice; provided,
however, that registered or certified mail shall not be used to effectuate
the delivery of any such notice to addresses outside the United States.

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

3.5 Governing Law. This Agreement and all acts and transactions pursuant
hereto shall be governed, construed and interpreted in accordance with the
laws of the State of California, without giving effect to principles of
conflicts of laws.

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

3.7 Titles and Subtitles. The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.

3.8 Aggregation of Stock. All shares of the Preferred Stock held or acquired
by affiliated entities or persons, successor entities, investment funds
managed or advised by an Investor, a manager or advisor of an Investor, or an
affiliate of such manager or advisor shall be aggregated together for the
purpose of determining the availability of any rights under this Agreement.

3.9 Amendment and Termination of Prior Agreement. The Prior Agreement is
hereby amended in its entirety and restated herein. Such amendment and
restatement is effective upon the execution of this Agreement by the Company
and Investors constituting at least a majority of the Registrable Securities
outstanding, not including the Founders Stock, at least a majority of the
Series A Preferred Stock and at least a majority of the Series B Preferred
Stock. Upon such execution, all provisions of, rights granted and covenants

                                     16

made in the Prior Agreement (including, without limitation, the Right of
First Offer set forth in Section 2.3 of the Prior Agreement) are hereby
waived, released and terminated in their entirety and shall have no further
force and effect (including, without limitation, with respect to the
Series C Preferred Stock issued pursuant to the Subscription Agreement).

3.10 Consent. The execution and delivery of this Agreement by Techne
Corporation (Techne) shall constitute: (i) a complete waiver of Techne's
rights under Sections 6.3, 6.4, 6.5, 6.13, 7.1, 7.2(a) and 8 of that certain
Investment Agreement, dated November 18, 1997, by and between the Company and
Techne; and (ii) consent to the Company's proposed Amended and Restated
Certificate of Incorporation, in the form attached as Exhibit A to the
Subscription Agreement.

                                    17

The parties have executed this Agreement as of the date first above written

COMPANY:                     CHEMOCENTRYX, INC.

                             By:_____________________
                             Name: Thomas J. Shall
                             Title: President and Chief Executive Officer

                             Address: 850 Maude Avenue
                                      Mountain View, CA  94043

                             Fax: (650) 632-2910

FOUNDER:                     _________________________
                             Name Thomas J. Shall
                             Address:  850 Maude Avenue
                             Mountainview, CA  94043

                             Fax:  (650) 632-2910

INVESTORS                    _________________________

                             By:______________________
                             Name:
                             Title:

                             Address:

                             Fax:

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