Document:

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                                                                   EXHIBIT 10.30

                                 ACUSPHERE, INC.

                            INDEMNIFICATION AGREEMENT

         This Indemnification Agreement (the "Agreement") is made as of August
__, 2003, by and between Acusphere, Inc., a Delaware corporation (the
"Company"), and _____________ (the "Indemnitee").

         WHEREAS, in order to continue to attract and retain sophisticated and
experienced individuals to serve as officers of the Company, the Company desires
to provide, independent from the indemnification to which the Indemnitee is
otherwise entitled by law or under the Company's Certificate of Incorporation,
as amended and in effect from time to time (the "Charter"), and/or By-Laws, as
amended and in effect from time to time (the "By-Laws"), indemnification to the
Indemnitee and advances of expenses, all as set forth in this Agreement to the
maximum extent permitted by law;

         NOW, THEREFORE, to induce the Indemnitee to continue to serve the
Company and in consideration of these premises and the mutual agreements set
forth in this Agreement, as well as other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Indemnitee hereby agree as follows:

         1.       INDEMNIFICATION.

                  (a)      Third Party Proceedings. The Company shall indemnify
Indemnitee if Indemnitee is or was a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the Company) by reason of the fact that Indemnitee is or was a
director, officer, employee or agent of the Company, or of any subsidiary of the
Company, or by reason of the fact that Indemnitee is or was serving at the
request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement (if such settlement is approved in advance by the Company, which
approval shall not be unreasonably withheld or delayed) actually and reasonably
incurred by Indemnitee in connection with such action, suit or proceeding if
Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to
be in or not opposed to the best interests of the Company, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe
Indemnitee's conduct was unlawful. The termination of any action or proceeding
by judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that Indemnitee did
not act in good faith and in a manner which Indemnitee reasonably believed to be
in or not opposed to the best interests of the Company, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that Indemnitee's
conduct was unlawful.

                  (b)      Proceedings by or in the Right of the Company. The
Company shall indemnify Indemnitee if Indemnitee was or is a party or is
threatened to be made a party to any

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                                     - 2 -

threatened, pending or completed action or suit by or in the right of the
Company or of any subsidiary of the Company to procure a judgment in its favor
by reason of the fact that Indemnitee is or was a director, officer, employee or
agent of the Company, or of any subsidiary of the Company, or by reason of the
fact that Indemnitee is or was serving at the request of the Company as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys' fees)
actually and reasonably incurred by Indemnitee in connection with the defense or
settlement of such action or suit if Indemnitee acted in good faith and in a
manner Indemnitee reasonably believed to be in or not opposed to the best
interests of the Company, except that no indemnification shall be made in
respect of any claim, issue or matter as to which Indemnitee shall have been
finally adjudged to be liable to the Company unless and only to the extent that
the Delaware Court of Chancery or any other court in which such action or suit
is or was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
Indemnitee is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or other such court shall deem proper.

                  (c)      Mandatory Payment of Expenses. To the extent that
Indemnitee has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Section 1(a) or Section 1(b) or in
defense of any claim, issue or matter therein, Indemnitee shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
Indemnitee in connection therewith.

         2.       EXPENSES; INDEMNIFICATION PROCEDURE.

                  (a)      Advancement of Expenses. The Company shall advance
all expenses incurred by Indemnitee in connection with the investigation,
defense, settlement or appeal of any civil or criminal action, suit or
proceeding referenced in Section 1(a) or Section 1(b) hereof (but not amounts
actually paid in settlement of any such action or proceeding). Indemnitee hereby
undertakes to repay such amounts advanced if, and to the extent that, it shall
ultimately be determined that Indemnitee is not entitled to be indemnified by
the Company as authorized hereby. The advances to be made hereunder shall be
paid by the Company to Indemnitee within twenty (20) days following receipt by
the Company of a written request of the Indemnitee, but only if the Company has
first received an undertaking (the "Undertaking"), substantially in the form
attached hereto as Exhibit 1, by or on behalf of the Indemnitee to repay the
amount of any such advance if and to the extent that it shall ultimately be
determined that the Indemnitee is not entitled to indemnification for such
amount. The Undertaking shall be unsecured and shall bear no interest and shall
be accepted without reference to the financial ability of the Indemnitee to make
repayment.

                  (b)      Notice/Cooperation by Indemnitee. Indemnitee shall,
as a condition precedent to his or her right to be indemnified under this
Agreement, give the Company notice in writing as soon as practicable of any
claim made against Indemnitee for which indemnification is or will be sought
under this Agreement. Notice to the Company shall be directed to the Chief
Executive Officer of the Company at the address shown on the signature page of
this Agreement (or such other address as the Company shall designate in writing
to Indemnitee). Notice shall be deemed received three (3) business days after
the date postmarked if sent by domestic certified

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                                     - 3 -

or registered mail, properly addressed; otherwise notice shall be deemed
received when such notice shall actually be received by the Company. In
addition, Indemnitee shall give the Company such information and cooperation as
it may reasonably require and as shall be within Indemnitee's power.

                  (c)      Procedure. Any indemnification and advances provided
for in Section 1 and this Section 2 shall be made promptly, and in any event
within forty-five (45) days following receipt by the Company of a written
request of the Indemnitee (or within twenty (20) days in the case of advances
made pursuant to Section 2(a)), unless with respect to such requests the Company
reasonably determines within such applicable period that the Indemnitee did not
meet the applicable standard of conduct or that indemnification is not required
under Section 7 below, or unless otherwise ordered by a court. Such
determination shall be made in each instance by: (a) the board of directors by a
majority vote of a quorum consisting of directors of the Company who were not
parties to such action, suit or proceeding in question ("disinterested
directors"); (b) if such quorum is not obtainable, or even if obtainable if a
quorum of disinterested directors so directs, by independent legal counsel (who
may be regular counsel to the Company) in a written opinion; or (c) by the
stockholders of the Company. If a claim under this Agreement, under any statute,
or under any provision of the Company's Charter or By-Laws providing for
indemnification, is not paid in full by the Company within the applicable
period, Indemnitee may bring an action against the Company to recover the unpaid
amount of the claim and Indemnitee shall also be entitled to be paid for the
expenses (including attorneys' fees) of bringing such action, subject to Section
12 of this Agreement, or unless it shall ultimately be determined that
Indemnitee is not entitled to be indemnified by the Company as authorized hereby
or thereby. It shall be a defense to any such action that Indemnitee has not met
the standards of conduct which make it permissible under applicable law or this
Agreement for the Company to indemnify Indemnitee for the amount claimed, but
the burden of proving such defense shall be on the Company and Indemnitee shall
be entitled to receive interim payments of expenses pursuant to Section 2(a)
unless and until such defense may be finally adjudged. It is the parties'
intention that if the Indemnitee brings any such action, the question of
Indemnitee's right to indemnification shall ultimately be for the court to
decide, and neither the failure of the Company (including its Board of
Directors, any committee or subgroup of the Board of Directors, independent
legal counsel, or its stockholders) to have made a determination that
indemnification of Indemnitee is proper in the circumstances because Indemnitee
has met the applicable standard of conduct required by applicable law, nor an
actual determination by the Company (including its Board of Directors, any
committee or subgroup of the Board of Directors, independent legal counsel, or
its stockholders) that Indemnitee has not met such applicable standard of
conduct, shall create a presumption that Indemnitee has or has not met the
applicable standard of conduct.

                  (d)      Notice to Insurers. If, at the time of the receipt of
a notice of a claim pursuant to Section 2(b) hereof, the Company has director
and officer liability insurance in effect, the Company shall give prompt notice
of the commencement of such proceeding to the insurers in accordance with the
procedures set forth in the respective policies. The Company shall thereafter
take all necessary or desirable action to cause such insurers to pay, on behalf
of the Indemnitee, all amounts payable as a result of such proceeding in
accordance with the terms of such policies.

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                                     - 4 -

                  (e)      Assumption of Defense and Selection of Counsel. In
the event the Company shall be obligated under Section 2(a) hereof to pay the
expenses of any proceeding against Indemnitee, the Company, if appropriate,
shall be entitled to assume the defense of such proceeding, with counsel
approved by Indemnitee, which approval shall not be unreasonably withheld, upon
the delivery to Indemnitee of written notice of its election so to do.
Notwithstanding the foregoing, the Company shall not be permitted to settle any
action or claim on behalf of Indemnitee in any manner which would impose any
unindemnified liability or penalty on the Indemnitee or require any
acknowledgment of wrongdoing on the part of Indemnitee without Indemnitee's
written consent, which consent shall not be unreasonably withheld. After
delivery of such notice, approval of such counsel by Indemnitee and the
retention of such counsel by the Company, and notwithstanding anything to the
contrary contained herein, the Company will not be liable to Indemnitee under
this Agreement for any fees of counsel subsequently incurred by Indemnitee with
respect to the same proceeding, provided that (i) Indemnitee shall have the
right to employ his or her counsel in any such proceeding at Indemnitee's
expense; and (ii) if (A) the employment of separate counsel by Indemnitee has
been previously authorized by the Company, (B) Indemnitee shall have reasonably
concluded that there may be a conflict of interest between the Company and
Indemnitee in the conduct of any such defense, or (C) the Company shall not, in
fact, have employed counsel to assume the defense of such proceeding, then the
fees and expenses of Indemnitee's counsel shall be at the expense of the
Company. The Company shall not be entitled, without the consent of the
Indemnitee, to assume the defense of any claim brought by or in the right of the
Company or as to which counsel for the Indemnitee shall have reasonably made the
conclusion provided for in clause (ii)(B) above.

         3.       ADDITIONAL INDEMNIFICATION RIGHTS; NONEXCLUSIVITY.

                  (a)      Scope. Notwithstanding any other provision of this
Agreement, the Company hereby agrees to indemnify the Indemnitee to the fullest
extent permitted by the General Corporation Law of the State of Delaware (the
"DGCL"), notwithstanding that such indemnification is not specifically
authorized by the other provisions of this Agreement or the Company's Charter or
By-Laws. In the event of any change, after the date of this Agreement, under the
DGCL which expands the right of a Delaware corporation to indemnify a member of
its board of directors or an officer, such changes shall be, ipso facto, within
the purview of Indemnitee's rights and the Company's obligations under this
Agreement. In the event of any change under the DGCL which narrows the right of
a Delaware corporation to indemnify a member of its Board of Directors or an
officer, such changes, to the extent not otherwise required by such Section or
any successor section shall have no effect on this Agreement or the parties'
rights and obligations hereunder.

                  (b)      Nonexclusivity. The indemnification provided by this
Agreement shall not be deemed exclusive of any rights to which Indemnitee may be
entitled under the Company's Charter, its By-Laws, any agreement, any vote of
stockholders or disinterested directors, the DGCL, or otherwise, both as to
action in Indemnitee's official capacity and as to action in another capacity
while holding such office. The indemnification provided under this Agreement
shall continue as to Indemnitee for any action taken or not taken while serving
in an indemnified

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                                     - 5 -

capacity even though s/he may have ceased to serve in any such capacity at the
time of any action, suit or other covered proceeding.

         4.       PARTIAL INDEMNIFICATION. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the expenses, judgments, fines or penalties actually or reasonably
incurred by him in the investigation, defense, appeal or settlement of any civil
or criminal action or proceeding, but not, however, for the total amount
thereof, the Company shall nevertheless indemnify Indemnitee for the portion of
such expenses, judgments, fines or penalties to which Indemnitee is entitled.

         5.       SEVERABILITY. Nothing in this Agreement is intended to require
or shall be construed as requiring the Company to do or fail to do any act in
violation of applicable law. The Company's inability, pursuant to court order,
to perform its obligations under this Agreement shall not constitute a breach of
this Agreement. The provisions of this Agreement shall be severable as provided
in this Section 5. If this Agreement or any portion hereof shall be invalidated
on any ground by any court of competent jurisdiction, then the Company shall
nevertheless indemnify Indemnitee to the fullest extent permitted by any
applicable portion of this Agreement that shall not have been invalidated, and
the balance of this Agreement not so invalidated shall be enforceable in
accordance with its terms.

         6.       OFFICER AND DIRECTOR LIABILITY INSURANCE. The Company shall,
from time to time, make the good faith determination whether or not it is
practicable for the Company to obtain and maintain a policy or policies of
insurance with reputable insurance companies providing the officers and
directors of the Company with coverage for losses from wrongful acts, or to
ensure the Company's performance of its indemnification obligations under this
Agreement. Among other considerations, the Company will weigh the costs of
obtaining such insurance coverage against the protection afforded by such
coverage. In all policies of director and officer liability insurance,
Indemnitee shall be named as an insured in such a manner as to provide
Indemnitee the same rights and benefits as are accorded to the most favorably
insured of the Company's directors, if Indemnitee is a director; or of the
Company's officers, if Indemnitee is not a director of the Company but is an
officer; or of the Company's key employees, if Indemnitee is not an officer or
director but is a key employee. Notwithstanding the foregoing, the Company shall
have no obligation to obtain or maintain such insurance if the Company
determines in good faith that such insurance is not reasonably available, if the
premium costs for such insurance are disproportionate to the amount of coverage
provided, if the coverage provided by such insurance is limited by exclusions so
as to provide an insufficient benefit, or if Indemnitee is covered by similar
insurance maintained by a subsidiary or parent of the Company.

         7.       EXCEPTIONS. Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:

                  (a)      To indemnify or advance expenses to Indemnitee with
respect to proceedings or claims initiated or brought voluntarily by Indemnitee
and not by way of defense, except with respect to proceedings brought to
establish or enforce a right to indemnification under this Agreement or any
other statute or law or otherwise as required under Section 145 of the DGCL, but
such indemnification or advancement of expenses may be provided by the

<PAGE>
                                     - 6 -

Company in specific cases if the Board of Directors has approved the initiation
or bringing of the suit; or

                  (b)      To indemnify Indemnitee for any expenses incurred by
Indemnitee with respect to any proceeding instituted by Indemnitee to enforce or
interpret this Agreement, if a court of competent jurisdiction determines that
each of the material assertions made by Indemnitee in such proceeding was not
made in good faith or was frivolous; or

                  (c)      To indemnify Indemnitee for expenses or liabilities
of any type whatsoever (including, but not limited to, judgments, fines, ERISA
excise taxes or penalties, and amounts paid in settlement), but such exception
shall only apply to the extent such expenses or liabilities have been paid
directly to Indemnitee by an insurance carrier under a policy of officers' and
directors' liability insurance; or

                  (d)      To indemnify Indemnitee for expenses or the payment
of profits arising from the purchase and sale by Indemnitee of securities in
violation of Section 16(b) of the Securities Exchange Act of 1934, as amended,
or any similar successor statute; or

                  (e)      To indemnify Indemnitee for any acts, omissions or
transactions from which a director may not be relieved of liability under the
Company's Charter or By-Laws, or from which a court of competent jurisdiction
determines a director may not be relieved of liability under the DGCL.

         8.       CONSTRUCTION OF CERTAIN PHRASES

                  (a)      For purposes of this Agreement, references to the
"Company" shall include, in addition to the resulting corporation, any
constituent corporation (including any constituent of a constituent) absorbed in
a consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, and employees
or agents, so that if Indemnitee is or was a director, officer, employee or
agent of such constituent corporation, or is or was serving at the request of
such constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
Indemnitee shall stand in the same position under the provisions of this
Agreement with respect to the resulting or surviving corporation as Indemnitee
would have with respect to such constituent corporation if its separate
existence had continued.

                  (b)      For purposes of this Agreement, references to "other
enterprises" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on Indemnitee with respect to an employee
benefit plan; and references to "serving at the request of the Company" shall
include any service as a director, officer, employee or agent of the Company
which imposes duties on, or involves services by, such director, officer,
employee or agent with respect to an employee benefit plan, its participants, or
beneficiaries; and if Indemnitee acted in good faith and in a manner Indemnitee
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan, Indemnitee shall be deemed to have acted in a
manner "not opposed to the best interests of the Company" as referred to in this
Agreement.

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                                     - 7 -

         9.       EFFECTIVENESS OF AGREEMENT. This Agreement shall be effective
as of the date set forth on the first page and may apply to acts or omissions of
Indemnitee which occurred prior to such date if Indemnitee was an officer,
director, employee or other agent of the Company, or was serving at the request
of the Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, as the time such act or
omission occurred.

         10.      NO RIGHTS OF CONTINUED SERVICE. This Agreement shall not
impose any obligation of the Company to continue Indemnitee's service to the
Company beyond any period otherwise required by law or by other agreements or
commitments of the parties, if any.

         11.      MISCELLANEOUS.

                  (a)      Governing Law. This Agreement and all acts and
transactions pursuant hereto and the rights and obligations of the parties
hereto shall be governed, construed and interpreted in accordance with the laws
of the State of Delaware, without giving effect to principles of conflict of
law.

                  (b)      Consent to Jurisdiction. The Company and the
Indemnitee each hereby irrevocably consent to the exclusive jurisdiction of the
Court of Chancery of Delaware for any purpose in connection with any actions or
proceedings which arise out of or relate to this Agreement.

                  (c)      Entire Agreement; Enforcement of Rights. This
Agreement sets forth the entire agreement and understanding of the parties
relating to the subject matter herein and merges all prior discussions between
them. No modification of or amendment to this Agreement, nor any waiver of any
rights under this Agreement, shall be effective unless in writing signed by the
parties to this Agreement. The failure by either party to enforce any rights
under this Agreement shall not be construed as a waiver of any rights of such
party.

                  (d)      Construction. This Agreement is the result of
negotiations between, and has been reviewed by, each of the parties hereto and
their respective counsel, if any; accordingly, this Agreement shall be deemed to
be the product of all of the parties hereto, and no ambiguity shall be construed
in favor of or against any one of the parties hereto.

                  (e)      Notices. Unless otherwise provided in this Agreement,
any notice, demand or request required or permitted to be given under this
Agreement shall be in writing and shall be deemed sufficient when directed to
the Chief Executive Officer of the Company at the address shown on the signature
page of this Agreement (or such other address as the Company shall designate in
writing) and when delivered personally or three business days after being
postmarked, as certified or registered mail, with postage prepaid, and addressed
to the party to be notified at such party's address as set forth below or as
subsequently modified by written notice.

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                                     - 8 -

                  (f)      Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.

                  (g)      Successors And Assigns. This Agreement shall be
binding upon the Company and its successors and assigns and shall inure to the
benefit of Indemnitee and Indemnitee's heirs, legal representatives, executives
and administrators.

                  (h) Subrogation. In the event of payment under this Agreement,
the Company shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee, who shall execute all documents required and
shall do all acts that may be necessary to secure such rights and to enable the
Company to effectively bring suit to enforce such rights.

                  (i)      Term. All agreements and obligations of the Company
contained herein shall continue during the period that the Indemnitee is a
director, officer or agent of the Company and shall continue thereafter so long
as Indemnitee shall be subject to any possible claim or threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that Indemnitee was serving in the capacity
referred to herein.

         12.      ATTORNEYS' FEES. In the event that any action is instituted by
Indemnitee under this Agreement to enforce or interpret any of the terms hereof,
and in the event Indemnitee is ultimately successful in such action, Indemnitee
shall be entitled to be paid all court costs and expenses, including reasonable
attorneys' fees, actually and reasonably incurred by Indemnitee with respect to
such action. In the event of an action instituted by or in the name of the
Company under this Agreement or to enforce or interpret any of the terms of this
Agreement, Indemnitee shall be entitled to be paid all court costs and expenses,
including reasonable attorneys' fees, actually and reasonably incurred by
Indemnitee in defense of such action (including with respect to Indemnitee's
counterclaims and cross-claims made in such action), unless the Company is
ultimately successful in such action.

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                                     - 9 -

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

ACUSPHERE, INC.

By: ______________________________          ____________________________________

Name: ____________________________          Indemnitee

Title: ___________________________

Address: Acusphere, Inc.                    Address: ___________________________
         500 Arsenal Street                          ___________________________
         Watertown, MA 02472                         ___________________________
         (617) 648-8800 (phone)
         (617) 926-4750 (fax)

<PAGE>

Exhibit 1
UNDERTAKING

         1.       This Undertaking is submitted pursuant to the Indemnification
Agreement dated as of ________________ between Acusphere, Inc., a Delaware
corporation (the "Company"), and the undersigned (the "Agreement"). Capitalized
terms used but not defined herein shall have the respective meanings set forth
in the Agreement.

         2.       I am requesting certain Expense Advances in connection with a
Claim.

         3.       I hereby undertake to repay such Expense Advances if it shall
ultimately be determined that I am not entitled to be indemnified by the Company
therefor under the Agreement or otherwise.

         4.       The Expense Advances are, in general, all related to:

                                    Signed: ______________________________

                                    Dated: _______________________________
<PAGE>

                            SCHEDULE OF INDEMNITEES

Sherri C. Oberg
Howard Bernstein, M.D., Ph.D.
Michael R. Slater
John F. Thero
Thomas M. Hanlon III
Richard Walovitch, Ph.D
Kristin Rydzewski<PAGE>

                                                                    Exhibit 10.1

                           PENWEST PHARMACEUTICALS CO.

                          SECURITIES PURCHASE AGREEMENT

                                 AUGUST 4, 2003
<PAGE>
<TABLE>
<S>                                                                                                                    <C>
SECTION 1 AUTHORIZATION AND SALE OF SECURITIES...................................................................       1
         1.1      Authorization..................................................................................       1
         1.2      Sale of Units..................................................................................       1

SECTION 2 CLOSING DATE: DELIVERY.................................................................................       1
         2.1      Closing Date...................................................................................       1
         2.2      Delivery.......................................................................................       1
         2.3      Purchase Price.................................................................................       2

SECTION 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY..........................................................       2
         3.1      Subsidiaries; Organization and Standing........................................................       2
         3.2      Corporate Power, Authorization.................................................................       2
         3.3      Issuance and Delivery of the Securities........................................................       3
         3.4      SEC Documents; Financial Statements............................................................       3
         3.5      Governmental Consents..........................................................................       3
         3.6      No Material Adverse Change.....................................................................       4
         3.7      Intellectual Property..........................................................................       4
         3.8      Authorized Capital Stock.......................................................................       4
         3.9      Litigation.....................................................................................       4
         3.10     Use of Proceeds................................................................................       5
         3.11     Accountants....................................................................................       5
         3.12     Compliance With Other Instruments..............................................................       5
         3.13     Permits........................................................................................       5
         3.14     Investment Company.............................................................................       5
         3.15     Securities Laws Disclosure; Publicity..........................................................       5
         3.16     Private Placement..............................................................................       6
         3.17     Form S-3 Eligibility...........................................................................       6
         3.18     Listing and Maintenance Requirements...........................................................       6
         3.19     Application of Takeover Protections............................................................       6
         3.20     Insurance......................................................................................       6
         3.21     Non-Public Information.........................................................................       6
         3.22     Acknowledgment Regarding Purchasers' Purchase of Securities....................................       7

SECTION 4 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASERS............................................       7
         4.1      Power; Authorization...........................................................................       7
         4.2      Investment Experience..........................................................................       7
         4.3      Investment Intent..............................................................................       7
         4.4      Registration or Exemption Requirements.........................................................       8
         4.5      Certain Trading Limitations....................................................................       8
         4.6      Pledge Arrangements............................................................................       9

SECTION 5 CONDITIONS TO CLOSING OF PURCHASERS....................................................................       9
         5.1      Representations and Warranties.................................................................       9
         5.2      Covenants......................................................................................       9
         5.3      Blue Sky.......................................................................................       9
         5.4      Legal Opinion..................................................................................       9
         5.5      Nasdaq Qualification...........................................................................      10
</TABLE>

                                      -i-
<PAGE>
<TABLE>
<S>                                                                                                                    <C>
         5.6      Absence of Litigation..........................................................................      10
         5.7      No Governmental Prohibition....................................................................      10

SECTION 6 CONDITIONS TO CLOSING OF COMPANY.......................................................................      10
         6.1      Representations and Warranties.................................................................      10
         6.2      Covenants......................................................................................      10
         6.3      Blue Sky.......................................................................................      10
         6.4      Nasdaq Qualification...........................................................................      10
         6.5      Absence of Litigation..........................................................................      10
         6.6      No Governmental Prohibition....................................................................      11

SECTION 7 AFFIRMATIVE COVENANTS OF THE COMPANY...................................................................      11
         7.1      Registration Requirements......................................................................      11
         7.2      Indemnification and Contribution...............................................................      13
         7.3      Restrictions on Transferability................................................................      15

SECTION 8 RESTRICTIONS ON TRANSFERABILITY OF SHARES: COMPLIANCE WITH SECURITIES ACT..............................      15
         8.1      Securities Law Transfer Restrictions...........................................................      15
         8.2      Restrictive Legend.............................................................................      16
         8.3      Transfer of Shares After Registration..........................................................      16
         8.4      Purchaser Information..........................................................................      17

SECTION 9 MISCELLANEOUS..........................................................................................      17
         9.1      Waivers and Amendments.........................................................................      17
         9.2      Brokers and Finders............................................................................      17
         9.3      Governing Law..................................................................................      17
         9.4      Survival.......................................................................................      17
         9.5      Successors and Assigns.........................................................................      17
         9.6      Entire Agreement...............................................................................      18
         9.7      Notices, etc...................................................................................      18
         9.8      Severability of this Agreement.................................................................      18
         9.9      Counterparts...................................................................................      18
         9.10     Further Assurances.............................................................................      18
         9.11     Expenses.......................................................................................      18
         9.12     Currency.......................................................................................      18
         9.13     Replacement of Securities......................................................................      19
         9.14     Remedies.......................................................................................      19
         9.15     Independent Nature of Purchasers' Obligations and Rights.......................................      19
</TABLE>

Exhibit A     -  Schedule of Purchasers
Exhibit B     -  Form of Additional Investment Right
Exhibit C     -  Instruction Sheet for Purchaser
Exhibit C-1   -  Stock Certificate Questionnaire
Exhibit C-2   -  Registration Statement Questionnaire
Exhibit C-3   -  Certificate for Individual Purchasers
Exhibit C-4   -  Certificate for Corporate, Partnership, Trust, Foundation
                 and Joint Purchasers

                                      -ii-
<PAGE>
Exhibit D-1   -  Form of Opinion of Company Washington Counsel
Exhibit D-2   -  Form of Opinion of Company Corporate Counsel
Exhibit E     -  Form of Purchaser's Certificate of Subsequent Sale

                                      -iii-
<PAGE>
                           PENWEST PHARMACEUTICALS CO.

                          SECURITIES PURCHASE AGREEMENT

         This Securities Purchase Agreement (the "Agreement") is made as of
August 4, 2003, by and among Penwest Pharmaceuticals Co., a Washington
corporation (the "Company"), with its principal office at 39 Old Ridgebury Road,
Suite 11, Danbury, Connecticut 06810, and the persons listed on the Schedule of
Purchasers attached hereto as Exhibit A (the "Purchasers").

                                   SECTION 1

                      AUTHORIZATION AND SALE OF SECURITIES

1.1 Authorization. The Company has authorized (i) the sale and issuance pursuant
to this Agreement of up to 603,000 Units, each Unit consisting of one share of
Common Stock, $0.001 par value per share (the "Common Stock") and an additional
investment right (an "Additional Investment Right") to purchase 0.2 shares of
Common Stock at an exercise price of $26.00 per share on the terms and in the
form set forth on Exhibit B hereto.

1.2 Sale of Units. Subject to the terms and conditions of this Agreement, the
Company agrees to issue and sell to each Purchaser and each Purchaser severally
agrees to purchase from the Company the number of Units set forth opposite such
Purchaser's name on Exhibit A for $21.00 per Unit (the "Purchase Price"). The
maximum aggregate purchase price payable by the Purchasers to the Company for
all of the Units shall be $12,663,000.

                                   SECTION 2

                             CLOSING DATE: DELIVERY

2.1 Closing Date. The closing of the purchase and sale of the Units hereunder
(the "Closing") shall be held at the offices of Hale and Dorr LLP, 60 State
Street, Boston, Massachusetts 02109, at or before 10:00 a.m. New York local
time, on the date that is two business days after the execution of this
Agreement by the Company and the Purchasers, or at such time and place upon
which the Company and the Purchasers shall agree. The date of the Closing is
hereinafter referred to as the "Closing Date."

2.2 Delivery. At the Closing, the Company will deliver, or cause to be
delivered, to each Purchaser:

            (a) a stock certificate, registered in such Purchaser's name or its
nominee's name as shown on Exhibit A, representing a number of shares of Common
Stock equal to the number of Units purchased by such Purchaser (the "Purchased
Shares");

            (b) Additional Investment Rights, registered in such Purchaser's
name or its nominee's name as shown on Exhibit A, pursuant to which such
Purchaser shall have the right to acquire a number

                                      -1-
<PAGE>
of shares of Common Stock equal to 20% of the number of Units purchased by such
Purchaser; and

            (c) a certificate from the Company that the representations and
warranties made by the Company are true and correct in all material respects on
the Closing Date with the same force and effect as if they had been made on and
as of said date.

2.3 Purchase Price. The delivery of the Purchased Shares and the Additional
Investment Rights pursuant to Section 2.2 shall be made against payment of the
purchase price therefor by wire transfer of immediately available funds to the
Company's account as designated in writing by the Company in the amount set
forth on Exhibit A.

                                   SECTION 3

                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

         The Company represents and warrants to the Purchasers as of the date
hereof as follows:

3.1 Subsidiaries; Organization and Standing. The Company has no direct or
indirect subsidiaries. The Company is a corporation duly organized and validly
existing under, and by virtue of, the laws of the State of Washington and is in
good standing as a domestic corporation under the laws of said state and has all
requisite corporate power and authority to conduct its business as currently
conducted and as currently proposed to be conducted as disclosed in the SEC
Documents (as defined below). The Company is qualified to do business and is in
good standing as a foreign corporation in each jurisdiction in which the nature
of the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as
the case may be, would not reasonably be expected to materially and adversely
affect the business, properties or financial condition of the Company.

3.2 Corporate Power, Authorization. The Company has all requisite corporate
power and has taken all requisite corporate action to execute and deliver this
Agreement, to sell and issue the Units and the Purchased Shares and Additional
Investment Rights comprising such Units (collectively, the "Securities") and to
carry out and perform all of its obligations under this Agreement. This
Agreement constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except (i) as
limited by applicable bankruptcy, insolvency, reorganization or similar laws
relating to or affecting the enforcement of creditors' rights generally, (ii) as
limited with respect to rights of indemnity and contribution by state or federal
securities laws or the public policy underlying such laws and (iii) as limited
by equitable principles generally. The execution and delivery of this Agreement
does not, and the performance of this Agreement and the compliance with the
provisions hereof and the issuance, sale and delivery of the Securities and the
shares of Common Stock issuable upon exercise of the Additional Investment
Rights by the Company will not, conflict with or result in a breach or violation
of the terms, conditions or provisions of, or constitute a default under, or
result in the creation or imposition of any lien pursuant to the terms of, the
Articles of Incorporation or Bylaws of the Company or any statute, law, rule or
regulation or any state or federal order, judgment or decree or any indenture,
mortgage, lease or other agreement or instrument to which the Company or any of
its properties is subject.

                                      -2-
<PAGE>
3.3 Issuance and Delivery of the Securities. The Purchased Shares, when issued
in compliance with the provisions of this Agreement, and the shares of Common
Stock issuable upon exercise of the Additional Investment Rights, when issued
upon such exercise and payment of the consideration provided for therein, will
be validly issued, fully paid and nonassessable and not subject to any liens or
other encumbrances. The Company has duly authorized and reserved for issuance a
sufficient number of its authorized but unissued shares of Common Stock for the
issuance and delivery of the Purchased Shares. The issuance and delivery of the
Securities are not, and the issuance and delivery of the shares of Common Stock
issuable upon exercise of the Additional Investment Rights will not be, subject
to preemptive or any other similar rights of the stockholders of the Company.

3.4 SEC Documents; Financial Statements. The Company has filed in a timely
manner all documents that the Company was required to file with the Securities
and Exchange Commission (the "SEC") under Sections 13, 14(a) and 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), during the
twelve (12) months preceding the date of this Agreement (the "SEC Documents").
As of their respective filing dates all SEC Documents complied in all material
respects with the requirements of the Exchange Act or the Securities Act of
1933, as amended (the "Securities Act"), as applicable. None of the SEC
Documents as of their respective dates contained any 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, in light of the circumstances
under which they were made, not misleading. The financial statements of the
Company included in the SEC Documents (the "Financial Statements"), as of the
dates included in the SEC documents, complied as to form in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto. The Financial Statements have
been prepared in accordance with generally accepted accounting principles
consistently applied as of the dates included in the SEC Documents and fairly
present the consolidated financial position of the Company and any subsidiaries
at the dates thereof and the consolidated results of their operations and
consolidated cash flows for the periods then ended; provided, however, that the
unaudited financial statements are subject to normal recurring year-end
adjustments (which in any case will not be material) and do not contain all
footnotes required under generally accepted accounting principles. All material
agreements that are required to have been filed as exhibits to the SEC Documents
under Item 601 of Regulation S-K to which the Company is a party or to which the
property or assets of the Company are subject have been filed as exhibits to the
SEC Documents.

3.5 Governmental Consents. No consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any
federal, state, or local governmental authority on the part of the Company is
required in connection with the consummation of the transactions contemplated by
this Agreement except for (a) compliance with the securities and blue sky laws
in the states in which the Securities and the shares of Common Stock issuable
upon exercise of the Additional Investment Rights are offered and/or sold, (b)
the filing of the registration statement and all amendments thereto (the
"Registration Statement") with the SEC as contemplated by Section 7.1 of this
Agreement, (c) all required filings with The Nasdaq National Market necessary
for the listing of the Purchased Shares and the shares of Common Stock issuable
upon exercise of the Additional Investment Rights (collectively with the
Purchased Shares, the "Shares") or (d) those consents, approvals, orders or
authorizations of or registrations, qualifications, designations, declarations
or filings with, any federal, state, or local

                                      -3-
<PAGE>
governmental authority on the part of the Company that have been obtained and
will be in effect as of the Closing Date.

3.6 No Material Adverse Change. Except as otherwise disclosed in the SEC
Documents, since March 31, 2003, there have not been any changes in the
business, assets, liabilities, properties, financial condition or operations of
the Company from those reflected in the Financial Statements except changes in
the ordinary course of business which have not been, either individually or in
the aggregate, materially adverse.

3.7 Intellectual Property. The Company owns or possesses sufficient rights to
use all patents, patent rights, inventions, trade secrets, know-how, proprietary
rights and processes that are necessary for the conduct and proposed conduct of
its business as described in the SEC Documents (the "Company's Proprietary
Rights"). The Company believes that there are no third parties who have or will
be able to establish rights to any of the Company's Proprietary Rights, except
for (i) the ownership rights of the third party licensors to the Company's
Proprietary Rights which are licensed to the Company by such third party
licensors and (ii) the third party licensees of the Company's Proprietary
Rights. To the knowledge of the Company, there is no infringement by any third
parties of any of the Company's Proprietary Rights. Except as disclosed in the
SEC Documents, the Company has not received any notice of, and has no knowledge
of any infringement of or conflict with asserted rights of others with respect
to any patent, patent right, invention, trade secret, know-how or other
proprietary rights.

3.8 Authorized Capital Stock. All outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and
nonassessable, have been issued in compliance with all federal and state
securities laws, were not issued in violation of or subject to any preemptive
rights or other rights to subscribe for or purchase securities, and the
authorized and outstanding capital stock of the Company conforms, as of the
dates for which such information is given, in all material respects to the
statements relating thereto contained in the SEC Documents; there is no capital
stock outstanding as of such dates other than as described in the SEC Documents.
As of July 31, 2003, the authorized capital stock of the Company consists of
39,000,000 shares of Common Stock, of which 15,702,299 shares are outstanding,
and 1,000,000 shares of Preferred Stock, $0.001 par value per share, of which
100,000 shares have been designated Series A Junior Participating Preferred
Stock, none of which shares are outstanding. Except as disclosed in or
contemplated by the SEC Documents and the Financial Statements of the Company
and the related notes thereto, the Company does not have outstanding any options
to purchase, or any preemptive rights or other rights to subscribe for or to
purchase, any securities or obligations convertible into, or any contracts or
commitments to issue or sell, shares of its capital stock or any such options,
rights, convertible securities or obligations other than options granted under
the Company's stock plan and its employee stock purchase plan. No stockholder
(other than stockholders that purchased shares in the private placement
disclosed in the press release issued by the Company on August 4, 2003) of the
Company, other than the Purchasers, has any right (which has not been waived or
has not expired by reason of lapse of time following notification of the
Company's intent to file the Registration Statement) to require the Company to
register the sale of any shares owned by such stockholder under the Securities
Act in the Registration Statement.

3.9 Litigation. Except as set forth in the SEC Documents, as of the date hereof,
there are no actions, suits, proceedings or investigations pending or, to the
best of the Company's knowledge, threatened against the Company or any of its
properties before or by any court or arbitrator or

                                      -4-
<PAGE>
any governmental body, agency or official in which there is the possibility of
an adverse decision that (a) would reasonably be expected to have a material
adverse effect on the business, properties or financial condition of the Company
or (b) would reasonably be expected to impair the ability of the Company to
perform its obligations under this Agreement.

3.10 Use of Proceeds. The Company will use the net proceeds from the sale of the
Units to fund the research, development, marketing and commercialization of its
products and technologies, including without limitation oxymorphone ER. The
remainder of the net proceeds will be used for general corporate purposes. The
Company also may use a portion of the net proceeds, currently intended for
general corporate purposes, to acquire or invest in technologies, products or
services that complement its business, although the Company has no present plans
or commitments and is not currently engaged in any material negotiations with
respect to these types of transactions. Pending these uses, the Company intends
to invest the net proceeds from this offering in short-term, interest-bearing,
investment-grade securities.

3.11 Accountants. Ernst & Young LLP, who will express their opinion with respect
to the audited financial statements and schedules to be included as a part of
the Registration Statement prior to the filing of the Registration Statement,
are independent accountants as required by the Securities Act and the rules and
regulations promulgated thereunder.

3.12 Compliance With Other Instruments. The Company is not in violation or
default of any provision of its Articles of Incorporation or Bylaws, each as
amended to date or, in any material respect, of any provision of any federal or
state statute, rule or regulation applicable to the Company. Except as to
defaults and violations which individually or in the aggregate would not
reasonably be expected to have a material adverse effect on the business,
properties or financial condition of the Company, the Company is not in
violation or default of any provision of any agreement, license, permit,
instrument, judgment, order, writ or decree to which it is a party or by which
it is bound.

3.13 Permits. The Company has all franchises, permits, licenses, and any similar
authority necessary for the conduct of its business as now being conducted by it
and as currently proposed to be conducted as disclosed in the SEC Documents, the
lack of which would reasonably be expected to have a material adverse effect on
the business, properties or financial condition of the Company. The Company is
not in default in any material respect under any of such franchises, permits,
licenses, or other similar authority.

3.14 Investment Company. The Company is not an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.

3.15 Securities Laws Disclosure; Publicity. On or before 8:30 a.m., New York
local time, on August 5, 2003 the Company shall issue a press release announcing
the signing of this Agreement and describing the terms of the transactions
contemplated by the Transaction Documents (as defined below). On August 6, 2003,
the Company shall file a Current Report on Form 8-K with the Commission
describing the terms of the transactions contemplated by the Transaction
Documents and including as an exhibit to such Current Report on Form 8-K this
Agreement, in the form required by the Exchange Act.

                                      -5-
<PAGE>
3.16 Private Placement. Neither the Company nor any person acting on the
Company's behalf has sold or offered to sell or solicited any offer to buy any
of the Units by means of any form of general solicitation or advertising.
Neither the Company nor any person acting on the Company's behalf has, directly
or indirectly, at any time within the past six months, made any offer or sale of
any security or solicitation of any offer to buy any security under
circumstances that would (i) eliminate the availability of the exemption from
registration under Regulation D under the Securities Act in connection with the
offer and sale by the Company of the Units as contemplated hereby or (ii) cause
the offering of the Units (the "Offering") to be integrated with prior offerings
by the Company for purposes of any applicable law, regulation or stockholder
approval provisions, including, without limitation, under the rules and
regulations of any Trading Market (as defined below)(other than the private
placement disclosed in the press release issued by the Company on August 4,
2003). The Company is not a United States real property holding corporation
within the meaning of the Foreign Investment in Real Property Tax Act of 1980.
"Trading Market" means the NASDAQ National Market or any other eligible market,
or any national securities exchange, market or trading or quotation facility on
which the Common Stock is then listed or quoted.

3.17 Form S-3 Eligibility. The Company is eligible to register the Shares for
resale by the Purchasers using Form S-3 promulgated under the Securities Act.

3.18 Listing and Maintenance Requirements. The Company has not, in the two years
preceding the date hereof, received notice (written or oral) from any Trading
Market on which the Common Stock is or has been listed or quoted to the effect
that the Company is not in compliance with the listing or maintenance
requirements of such Trading Market. The Company is in compliance with all such
listing and maintenance requirements.

3.19 Application of Takeover Protections. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby will not
impose any restriction on any Purchaser, or create in any party (including any
current stockholder of the Company) any rights, under any share acquisition,
business combination, poison pill (including any distribution under a rights
agreement) or other similar anti-takeover provisions under the Company's charter
documents or the laws of its state of incorporation.

3.20 Insurance. The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as the Company
believes are prudent and customary for a company (i) in the businesses and
location in which the Company is engaged, (ii) with the resources of the Company
and (iii) with products at a similar stage of development as the Company. The
Company has not received any written notice that the Company will not be able to
renew its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to continue
its business without a significant increase in cost.

3.21 Non-Public Information. The Company has not, to the Company's knowledge,
provided the Purchasers with any material non-public information in connection
with the Offering other than information relating to the transactions
contemplated by this Agreement which information shall be disclosed in a press
release issued on August 4, 2003 in accordance with Section 3.15.

                                      -6-
<PAGE>
3.22 Acknowledgment Regarding Purchasers' Purchase of Securities. The Company
acknowledges and agrees that each of the Purchasers is acting solely in the
capacity of an arm's length purchaser with respect to this Agreement and the
transactions contemplated hereby. The Company further acknowledges that no
Purchaser is acting as a financial advisor or fiduciary of the Company (or in
any similar capacity with respect to the Company) with respect to this Agreement
and the transactions contemplated hereby and any advice given by any Purchaser
or any of their respective representatives or agents to the Company in
connection with this Agreement and the transactions contemplated hereby is
merely incidental to such Purchaser's purchase of the Securities. The Company
further represents to each Purchaser that the Company's decision to enter into
this Agreement has been based on the independent evaluation of the transactions
contemplated hereby by the Company and its representatives.

                                   SECTION 4

           REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASERS

         Each Purchaser hereby severally represents and warrants to the Company,
effective as of the date hereof, as follows:

4.1 Power; Authorization. (i) Such Purchaser has all requisite corporate or
other power and capacity and has taken all requisite corporate or other action
to execute and deliver this Agreement, to purchase the Securities and the shares
of Common Stock issuable upon exercise of the Additional Investment Rights to be
purchased by it and to carry out and perform all of its obligations under this
Agreement; and (ii) this Agreement constitutes the legal, valid and binding
obligation of such Purchaser, enforceable against such Purchaser in accordance
with its terms, except (a) as limited by applicable bankruptcy, insolvency,
reorganization, or similar laws relating to or affecting the enforcement of
creditors' rights generally, (b) as limited with respect to rights of indemnity
and contribution by state or federal securities laws or the public policy
underlying such laws and (c) as limited by equitable principles generally.

4.2 Investment Experience. Such Purchaser is an "accredited investor" as defined
in Rule 501(a) of Regulation D under the Securities Act. Such Purchaser has
received and reviewed the SEC Documents, is aware of the Company's business
affairs and financial condition and has had access to and has acquired
sufficient information about the Company to reach an informed and knowledgeable
decision to acquire the Securities being acquired on the date hereof and the
shares of Common Stock that may be acquired by such Purchaser upon exercise of
the Additional Investment Rights. Purchaser has such business and financial
experience as is required to permit it to protect its own interests in
connection with the purchase of such Securities and such shares of Common Stock
issuable upon exercise of the Additional Investment Rights. Such Purchaser's
financial condition is such that it is able to bear the risk of holding such
Securities and such shares of Common Stock for an indefinite period of time and
the risk of loss of its entire investment.

4.3 Investment Intent. Such Purchaser is purchasing the Securities being
acquired on the date hereof and the shares of Common Stock issuable upon
exercise of the Additional Investment

                                      -7-
<PAGE>
Rights for its own account as principal, for investment purposes only, and not
with a present view to, or for, the resale distribution thereof, in whole or in
part, within the meaning of the Securities Act or any state securities laws.
Purchaser understands that its acquisition of such Securities and the shares of
Common Stock issuable upon exercise of the Additional Investment Rights has not
been registered under the Securities Act or registered or qualified under any
state law in reliance on specific exemptions therefrom, which exemptions may
depend upon, among other things, the bona fide nature of such Purchaser's
investment intent as expressed herein. Such Purchaser has completed or caused to
be completed the Purchaser Questionnaire attached hereto as Exhibit C-2 for use
in the Registration Statement, and the responses provided therein shall be true
and correct as of the Closing Date. Except as contemplated by this Agreement,
such Purchaser has no present agreement, undertaking, arrangement, obligation or
commitment providing for the disposition of the Securities or the shares of
Common Stock issuable upon exercise of the Additional Investment Rights. Any
Purchaser that is a corporation or other entity represents that it has not been
organized, reorganized or recapitalized specifically for the purpose of
investing in the Securities or the shares of Common Stock issuable upon exercise
of the Additional Investment Rights. Purchaser has, in connection with its
decision to purchase the Securities or the shares of Common Stock issuable upon
exercise of the Additional Investment Rights, relied solely upon the SEC
Documents, the documents attached as appendices thereto and the materials
provided to the Purchasers by the Company and representations and warranties of
the Company contained herein. Such Purchaser will not, directly or indirectly,
offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to
buy, purchase or otherwise acquire or take a pledge of) any of the Securities or
the shares of Common Stock issuable upon exercise of the Additional Investment
Rights except in compliance with the Securities Act, and the rules and
regulations promulgated thereunder and applicable state securities laws.

4.4 Registration or Exemption Requirements. Such Purchaser further acknowledges,
understands and agrees that the Securities being acquired on the date hereof and
the shares of Common Stock issuable upon exercise of the Additional Investment
Rights may not be resold or otherwise transferred unless (i) they are registered
or such registration is not required, and (ii) if the transfer is pursuant to an
exemption from registration other than Rule 144 under the Securities Act and, if
the Company shall so request in writing, an opinion of counsel reasonably
satisfactory to the Company is obtained to the effect that the transaction is so
exempt; provided, however, that no opinion shall be required with respect to a
transfer to a transferee that is a Qualifying Holder (as defined in Section 7.3)
under clause (i) or (ii) of the definition of Qualifying Holder. The Company
shall affix a legend to the Additional Investment Rights and the certificate(s)
evidencing the Shares to the foregoing effect.

4.5 Certain Trading Limitations. Each Purchaser agrees that beginning on the
date hereof until the earlier to occur of (a) 90 days from the Closing Date and
(b) the effective date of the Registration Statement, it will not enter into any
Short Sales. For purposes of this Section 4.5, a "Short Sale" by a Purchaser
means a sale of Common Stock that is marked as a short sale and that is executed
at a time when such Purchaser has no equivalent offsetting long position in the
Common Stock. For purposes of determining whether a Purchaser has an equivalent
offsetting long position in the Common Stock, all Common Stock that would be
issuable upon exercise in full of all options then held by such Purchaser
(assuming that such options were then fully exercisable, notwithstanding any
provisions to the contrary, and giving effect to any exercise

                                      -8-
<PAGE>
price adjustments scheduled to take effect in the future) shall be deemed to be
held long by such Purchaser.

4.6 Pledge Arrangements. Notwithstanding anything to the contrary herein, the
Company acknowledges and agrees that a Purchaser may from time to time pledge or
grant a security interest in some or all of the Securities (including shares of
Common Stock issuable upon exercise of the Additional Investment Rights) in
connection with a bona fide margin agreement or other loan or financing
arrangement secured by the Securities, provided that such pledge or grant of a
security interest is consistent with all applicable laws, rules and regulations,
including all applicable securities laws (a "Bona Fide Pledge Arrangement"). If
required under the terms of such Bona Fide Pledge Arrangement, such Purchaser
may transfer pledged or secured Securities to the pledgees or secured parties
thereunder, provided that such transfer is consistent with all applicable laws,
rules and regulations, including all applicable securities laws. A Bona Fide
Pledge Arrangement would not be subject to approval of the Company and no legal
opinion of the pledgee, secured party or pledgor shall be required in order to
effectuate such Bona Fide Pledge Arrangement or to transfer pledged shares
pursuant to such Bona Fide Pledge Arrangement. Further, the Purchaser shall not
be required hereunder to notify the Company of a Bona Fide Pledge Agreement. At
the appropriate Purchaser's expense, the Company will execute and deliver such
reasonable documentation as a pledgee or secured party of Securities may
reasonably request in connection with the inclusion of the pledgee or secured
party in the prospectus contemplated by Section 7, through a prospectus
supplement or otherwise.

                                   SECTION 5

                       CONDITIONS TO CLOSING OF PURCHASERS

         Each Purchaser's obligation to purchase the Units at the Closing is, at
the option of such Purchaser, subject to the fulfillment or waiver as of the
Closing Date of the following conditions:

5.1 Representations and Warranties. The representations and warranties made by
the Company in Section 3 hereof shall be true and correct in all material
respects when made, and shall be true and correct in all material respects on
the Closing Date with the same force and effect as if they had been made on and
as of said date.

5.2 Covenants. All covenants, agreements and conditions contained in this
Agreement to be performed by the Company on or prior to the Closing Date shall
have been performed or complied with in all material respects.

5.3 Blue Sky. The Company shall have obtained all necessary blue sky law permits
and qualifications, or secured exemptions therefrom, required by any state or
foreign or other jurisdiction for the offer and sale of the Securities and
shares of Common Stock issuable upon exercise of the Additional Investment
Rights.

5.4 Legal Opinion. The Purchasers shall have received a legal opinion of Perkins
Coie LLP, Washington counsel to the Company, with respect to the matters set
forth on Exhibit D-1 and

                                      -9-
<PAGE>
Hale and Dorr LLP, corporate counsel to the Company, with respect to the matters
set forth on Exhibit D-2.

5.5 Nasdaq Qualification. The Shares shall be duly authorized for listing by The
Nasdaq National Market, subject to official notice of issuance, to the extent
required by the rules of The Nasdaq National Market.

5.6 Absence of Litigation. No proceeding challenging this Agreement or the
transactions contemplated hereby, or seeking to prohibit, alter, prevent or
materially delay the Closing, shall have been instituted or be pending before
any court, arbitrator, governmental body, agency or official.

5.7 No Governmental Prohibition. The sale of Securities and the shares of Common
Stock issuable upon exercise of the Additional Investment Rights by the Company
shall not be prohibited by any law or governmental order or regulation.

                                   SECTION 6

                        CONDITIONS TO CLOSING OF COMPANY

         The Company's obligation to sell and issue the Units at the Closing is,
at the option of the Company, subject to the fulfillment or waiver as of the
Closing Date of the following conditions:

6.1 Representations and Warranties. The representations made by the Purchasers
in Section 4 hereof shall be true and correct in all material respects when
made, and shall be true and correct in all material respects on the Closing Date
with the same force and effect as if they had been made on and as of such date.

6.2 Covenants. All covenants, agreements and conditions contained in this
Agreement to be performed by the Purchasers on or prior to the Closing Date
shall have been performed or complied with in all material respects.

6.3 Blue Sky. The Company shall have obtained all necessary blue sky law permits
and qualifications, or secured exemptions therefrom, required by any state for
the offer and sale of the Securities and shares of Common Stock issuable upon
exercise of the Additional Investment Rights.

6.4 Nasdaq Qualification. The Shares to be issued shall be duly authorized for
listing by The Nasdaq National Market, subject to official notice of issuance,
to the extent required by the rules of The Nasdaq National Market.

6.5 Absence of Litigation. No proceeding challenging this Agreement or the
transactions contemplated hereby, or seeking to prohibit, alter, prevent or
materially delay the Closing, shall have been instituted or be pending before
any court, arbitrator, governmental body, agency or official.

                                      -10-
<PAGE>
6.6 No Governmental Prohibition. The sale of Securities and the shares of Common
Stock issuable upon exercise of the Additional Investment Rights by the Company
shall not be prohibited by any law or governmental order or regulation.

                                   SECTION 7

                      AFFIRMATIVE COVENANTS OF THE COMPANY

         The Company hereby covenants and agrees as follows:

7.1      Registration Requirements.

            (a) The Company shall use its best efforts to prepare and file the
Registration Statement with the SEC under the Securities Act to register the
resale of the Shares by the Purchasers no later than 30 days after the Closing
Date.

            (b) The Company shall pay all Registration Expenses (as defined
below) in connection with any registration, qualification or compliance
hereunder, and each Purchaser shall pay all Selling Expenses (as defined below)
and other expenses that are not Registration Expenses relating to the Shares
resold by such Purchaser. Registration Expenses shall mean all expenses, except
for Selling Expenses, incurred by the Company in complying with the registration
provisions herein described, including, without limitation, all registration,
qualification and filing fees, printing expenses, escrow fees, fees and
disbursements of counsel for the Company, blue sky fees and expenses, and the
expense of any special audits incident to or required by any such registration.
Selling Expenses shall mean all selling commissions, underwriting fees and stock
transfer taxes applicable to the Purchased Shares and the shares of Common Stock
issuable upon exercise of the Additional Investment Right and all fees and
disbursements of counsel for any Purchaser.

            (c) In the case of the registration effected by the Company pursuant
to these registration provisions, the Company will use its reasonable best
efforts to: (i) cause the Registration Statement to become effective as soon as
practicable after the filing thereof but in any event within 90 days after the
Registration Statement is filed by the Company, subject to receipt of necessary
information from the Purchasers after prompt request from the Company to the
Purchasers to provide such information; (ii) keep such registration effective
until the earlier (such date being referred to as the "Registration Termination
Date") of (A) the later of (1) the second anniversary of the Closing Date and
(2) the last date on which Shares are issued upon exercise of an Additional
Investment Right, or (B) such date as all of the Shares have been resold by the
original Purchasers thereof; (iii) prepare and file with the SEC such amendments
and supplements to the Registration Statement and the prospectus used in
connection with the 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 the Registration Statement; (iv) furnish such number of
prospectuses and other documents incident thereto, including any amendment of or
supplement to the prospectus, as a Purchaser from time to time may reasonably
request; (v) cause all Shares registered as described herein to be listed on
each securities exchange and quoted on each quotation service on which similar
securities issued by the Company are then listed or quoted; (vi) provide a
transfer agent and registrar for all Shares registered pursuant to

                                      -11-
<PAGE>
the Registration Statement and a CUSIP number for all such Shares; (vii) to
comply with all applicable rules and regulations of the SEC; and (viii) file the
documents required of the Company and maintain requisite blue sky clearance in
(A) all jurisdictions in which any of the Shares are originally sold and (B) all
other states reasonably specified in writing by a Purchaser, provided, however,
that the Company shall not be required to qualify to do business or consent to
service of process in any state in which it is not now so qualified or has not
so consented. After the Registration Termination Date, the Company shall be
entitled to withdraw the Registration Statement and the Purchasers shall have no
further right to offer or sell any of the Shares pursuant to the Registration
Statement.

(d) With a view to making available to the Purchasers the benefits of Rule 144
promulgated under the Securities Act ("Rule 144") and any other rule or
regulation of the SEC that may at any time permit a Purchaser to sell Shares to
the public without registration or pursuant to a registration on Form S-3, the
Company covenants and agrees to: (i) make and keep public information available,
as those terms are understood and defined in Rule 144, until the earlier of (A)
the second anniversary of the date hereof or (B) such date as all of the Shares
shall have been resold; (ii) 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 (iii) furnish to any Purchaser upon request, as long as the
Purchaser owns any Shares, (A) a written statement by the Company that it is in
compliance with the reporting requirements of the Securities Act and the
Exchange Act, (B) a copy of the most recent annual or quarterly report of the
Company, and (C) such other information as may be reasonably requested in order
to avail any Purchaser of any rule or regulation of the SEC that permits the
selling of any such Shares without registration or pursuant to such Form S-3.

(e) Notwithstanding anything in this Agreement to the contrary, if the Company
shall furnish to the selling Purchasers a certificate signed by the Chief
Executive Officer or the Chief Financial Officer of the Company stating that the
Board of Directors of the Company has made the good faith and reasonable
determination (i) that continued use by the selling Purchasers of the
Registration Statement for purposes of effecting offers or sales of Shares
pursuant thereto would require, under the Securities Act, premature disclosure
in the Registration Statement (or the prospectus relating thereto) of material,
nonpublic information concerning the Company, its business or prospects or any
proposed material transaction involving the Company, (ii) that such premature
disclosure would be materially adverse to the Company, its business or prospects
or any such proposed material transaction or would make the successful
consummation by the Company of any such material transaction significantly less
likely and (iii) that is therefore desirable to suspend the use by the
Purchasers of such Registration Statement (and the prospectus relating thereto)
for purposes of effecting offers or sales of Shares pursuant thereto, then the
right of the selling Purchasers to use the Registration Statement (and the
prospectus relating thereto) for purposes of effecting offers or sales of Shares
pursuant thereto shall be suspended. Notwithstanding the foregoing, the Company
shall not under any circumstances be entitled to exercise its right to suspend
the use of the Registration Statement more than on more than three occasions
during any 12-month period or for more than 30 days per such occasion. Each
Purchaser hereby covenants and agrees that it will not sell any Shares pursuant
to the Registration Statement during the periods the Registration Statement is
withdrawn or the ability to sell thereunder is suspended as set forth in this
Section 7.1(e).

                                      -12-
<PAGE>
7.2      Indemnification and Contribution.

            (a) The Company agrees to indemnify and hold harmless each selling
Purchaser, each of its directors, officers, members, agents, employees and each
person who controls the Purchaser within the meaning of the Securities Act (a
"Purchaser Indemnified Person") from and against any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) to which such
Purchaser Indemnified Person may become subject (under the Securities Act or
otherwise) insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of or are based upon, (X) any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any preliminary prospectus or final prospectus contained
in the Registration Statement, or any amendment or supplement to such
Registration Statement or prospectus or (Y) the omission or alleged omission to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading (in the case of any prospectus or any form of
prospectus or supplement thereto, in light of the circumstances under which they
were made), and the Company will, as incurred, reimburse such Purchaser
Indemnified Person for any legal or other expenses reasonably incurred in
investigating, defending or preparing to defend any such action, proceeding or
claim; provided, however, that the Company shall not be liable to a Purchaser
Indemnified Person in any such case to the extent that such loss, claim, damage
or liability arises out of or is based upon (i) an untrue statement or omission
made in such Registration Statement, preliminary prospectus or prospectus, or
any such amendment or supplement, in reliance upon and in conformity with
written information furnished to the Company by or on behalf of such Purchaser
Indemnified Person specifically for use in the Registration Statement, (ii) the
failure of the selling Purchaser related to such Purchaser Indemnified Person to
comply with the covenants and agreements contained in Section 8.3 hereof, or
(iii) any untrue statement in any prospectus that is corrected in any subsequent
prospectus that was delivered to the Purchaser related to such Purchaser
Indemnified Person prior to the pertinent sale or sales by such Purchaser.

            (b) Each Purchaser, severally and not jointly, agrees to indemnify
and hold harmless the Company, each of its directors, each of its officers who
have signed the Registration Statement and each person who controls the Company
within the meaning of the Securities Act (a "Company Indemnified Person") from
and against any losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) to which the Company may become subject (under
the Securities Act or otherwise) insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of or are
based upon (i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement, any preliminary prospectus or
final prospectus contained in the Registration Statement, or any amendment or
supplement to the Registration Statement or prospectus, or any omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading (in the case of any
prospectus or any form of prospectus or supplement thereto, in light of the
circumstances under which they were made) in reliance upon and in conformity
with written information furnished to the Company by or on behalf of such
Purchaser specifically for use in the Registration Statement, provided, however,
that no Purchaser shall be liable to a Company Indemnified Person in any such
case for any untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact included in any prospectus
which statement or omission has been corrected, in writing, by such Purchaser
and delivered to the Company before the sale from which such loss

                                      -13-
<PAGE>
occurred, or (ii) the delivery by the Purchaser of a prospectus (the "Previous
Prospectus") containing an untrue statement or omission that was corrected by
the Company by delivery to the Purchaser prior to the pertinent sale or sales by
the Purchaser of (X) a subsequent prospectus not containing such untrue
statement or omission and (Y) a written notice advising the Purchaser to
terminate use of the Previous Prospectus, and each Purchaser, severally and not
jointly, will, as incurred, reimburse such Company Indemnified Person for any
legal or other expenses reasonably incurred in investigating, defending or
preparing to defend any such action, proceeding or claim; provided that each
Purchasers' obligations pursuant to this Section 7.2(b) shall be limited to the
net proceeds received by the Purchaser from the sale of the Shares under the
Registration Statement.

            (c) Promptly after receipt by any indemnified person of a notice of
a claim or the beginning of any action in respect of which indemnity is to be
sought against an indemnifying person pursuant to this Section 7.2, such
indemnified person shall notify the indemnifying person in writing of such claim
or of the commencement of such action, and, subject to the provisions
hereinafter stated, in case any such action shall be brought against an
indemnified person and the indemnifying person shall have been notified thereof,
the indemnifying person shall be entitled to participate therein, and, to the
extent that it shall wish, to assume at its expense the defense thereof, with
counsel reasonably satisfactory to the indemnified person. After notice from the
indemnifying person to such indemnified person of the indemnifying person's
election to assume the defense thereof, the indemnifying person shall not be
liable to such indemnified person for any legal expenses subsequently incurred
by such indemnified person in connection with the defense thereof, provided,
however, that if there exists or shall exist a conflict of interest that would
make it inappropriate in the reasonable judgment of the indemnified person for
the same counsel to represent both the indemnified person and such indemnifying
person or any affiliate or associate thereof, the indemnified person shall be
entitled to retain its own counsel at the expense of such indemnifying person.
No indemnifying party, in the defense of any such claim or litigation shall,
except with the consent of each indemnified party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect of such claim or litigation, and no
indemnified party shall consent to entry of any judgment or settle such claim or
litigation without the prior written consent of the indemnifying party, which
consent shall not be unreasonably withheld, conditioned or delayed.

            (d) If the indemnification provided for in this Section 7.2 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying party shall, in lieu of indemnifying such indemnified
party, contribute to the amount paid or payable by such indemnified party as
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect the relative fault of
the Company on the one hand and the Purchasers on the other in connection with
the statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or a Purchaser on
the other

                                      -14-
<PAGE>
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
the Purchasers agree that it would not be just and equitable if contribution
pursuant to this subsection (d) were determined by pro rata allocation (even if
the Purchasers were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable considerations
referred to above in this subsection (d). The amount paid or payable by an
indemnified party as a result of the losses, claim, damages, or liabilities (or
actions in respect thereof) referred to above in this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this subsection (d), no Purchaser
shall be required to contribute any amount in excess of the amount by which the
net amount received by the Purchaser from the sale of the Shares to which such
loss relates exceeds the amount of any damages which such Purchaser has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Purchasers' obligations in this subsection (d)
to contribute are several in proportion to their respective sales of Shares to
which such loss relates and not joint.

            (e) The obligations of the Company and the Purchasers under this
Section 7.2 shall be in addition to any liability which the Company and the
respective Purchasers may otherwise have and shall extend, upon the same terms
and conditions, to each person, if any, who controls the Company or any
Purchaser within the meaning of the Act.

7.3 Restrictions on Transferability. None of the rights of any Purchaser under
this Agreement shall be transferred or assigned to any person unless (a) such
person is a Qualifying Holder (as defined below), and (b) such person agrees to
become a party to, and bound by, all of the terms and conditions of, this
Agreement by duly executing and delivering to the Company an instrument of
adherence in the form prescribed by the Company. For purposes of this Section
7.3, the term "Qualifying Holder" shall mean, with respect to any Purchaser, (i)
any partner thereof, (ii) any corporation, partnership controlling, controlled
by, or under common control with, such Investor or any partner thereof, or (iii)
up to two other direct transferees from such Purchaser. None of the rights of
any Purchaser under this Agreement shall be transferred or assigned to any
Person (including, without limitation, a Qualifying Holder) that acquires Shares
in the event that and to the extent that such Person is eligible to resell such
Shares pursuant to Rule 144(k) of the Securities Act.

                                   SECTION 8

                   RESTRICTIONS ON TRANSFERABILITY OF SHARES:
                         COMPLIANCE WITH SECURITIES ACT

8.1 Securities Law Transfer Restrictions. No Purchaser shall sell, assign,
pledge, transfer or otherwise dispose of or encumber any of the Shares, except
(i) pursuant to an effective registration statement under the Securities Act or
(ii) pursuant to an available exemption from registration under the Securities
Act and applicable state securities laws and, if requested by the Company, upon
delivery by such Purchaser of an opinion of counsel reasonably satisfactory to

                                      -15-
<PAGE>
the Company to the effect that the proposed transfer is exempt from registration
under the Securities Act and applicable state securities laws; provided that no
such opinion shall be requested for any transfer of Shares that is exempt from
such registration under Rule 144 under the Securities Act. Any transfer or
purported transfer of the Shares in violation of this Section 8.1 shall be
voidable by the Company. The Company shall not register any transfer of the
Shares in violation of this Section 8.1. The Company may, and may instruct any
transfer agent for the Company, to place such stop transfer orders as may be
required on the transfer books of the Company in order to ensure compliance with
the provisions of this Section 8.1.

8.2 Restrictive Legend. Each certificate representing Shares shall bear
substantially the following legends (in addition to any legends required under
applicable securities laws):

                  THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
                  FOR INVESTMENT PURPOSES ONLY AND HAVE NOT BEEN REGISTERED
                  UNDER THE SECURITIES ACT OF 1933. THE SHARES MAY NOT BE SOLD
                  OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
                  EXEMPTION THEREFROM.

                  ADDITIONALLY THE TRANSFER OF THE SHARES REPRESENTED BY THIS
                  CERTIFICATE IS SUBJECT TO CERTAIN RESTRICTIONS SPECIFIED IN
                  THE SECURITIES PURCHASE AGREEMENT DATED AUGUST 1, 2003 BETWEEN
                  THE COMPANY AND THE ORIGINAL PURCHASER, AND NO TRANSFER OF
                  SHARES SHALL BE VALID OR EFFECTIVE ABSENT COMPLIANCE WITH SUCH
                  RESTRICTIONS. ALL SUBSEQUENT HOLDERS OF THIS CERTIFICATE WILL
                  HAVE AGREED TO BE BOUND BY CERTAIN OF THE TERMS OF THE
                  AGREEMENT, INCLUDING SECTIONS 8.1 AND 8.3 OF THE AGREEMENT.
                  COPIES OF THE AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN
                  REQUEST MADE BY THE REGISTERED HOLDER OF THIS CERTIFICATE TO
                  THE SECRETARY OF THE COMPANY.

         The legends contained in this Section 8.2 may be removed from a
certificate in accordance with Section 8.3.

8.3 Transfer of Shares After Registration. Each Purchaser hereby covenants with
the Company not to make any sale of the Shares except either (i) in accordance
with the Registration Statement, in which case such Purchaser covenants to
comply with the requirement of delivering a current prospectus, or (ii) pursuant
to an available exemption from registration under the Securities Act and
applicable state securities laws and, if requested by the Company, upon delivery
by such Purchaser of an opinion of counsel reasonably satisfactory to the
Company to the effect that the proposed transfer is exempt from registration
under the Securities Act and applicable state securities laws; provided that no
such opinion shall be requested for any transfer of Shares that is exempt from
such registration under Rule 144 under the Securities Act. Such

                                      -16-
<PAGE>
Purchaser further acknowledges and agrees that such Shares are not transferable
on the books of the Company pursuant to the Registration Statement unless the
certificate submitted to the Company's transfer agent evidencing such Shares is
accompanied by a separate certificate executed by an officer of, or other person
duly authorized by, such Purchaser in the form attached hereto as Exhibit E.

8.4 Purchaser Information. Each Purchaser covenants that it will promptly notify
the Company of any changes in the information set forth in the Registration
Statement regarding such Purchaser or such Purchaser's "Plan of Distribution"
and of any sale of Shares by such Purchaser.

                                   SECTION 9

                                  MISCELLANEOUS

9.1 Waivers and Amendments. The terms of this Agreement may be waived or amended
with the written consent of the Company and each Purchaser.

9.2 Brokers and Finders. Other than Banc of America Securities LLC and its
subagents, each of the parties hereto hereby represents there are no brokers or
finders entitled to compensation in connection with the sale of the Shares to
the Purchasers.

9.3 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed in accordance with the laws of the State of New York. Each party
hereby irrevocable submits to the exclusive jurisdiction of the state and
federal courts sitting in the city of New York, Borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper. Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. The Company and the Purchasers
hereby waive all rights to trial by jury.

9.4 Survival. The representations, warranties, covenants and agreements made in
this Agreement shall survive any investigation made by the Company or the
Purchasers and the Closing.

9.5 Successors and Assigns. The provisions hereof shall inure to the benefit of,
and be binding upon, the successors, assigns, heirs, executors and
administrators of the parties to this Agreement. Except as provided in Section
7.3, notwithstanding the foregoing, no Purchaser shall assign this Agreement
without the prior written consent of the Company.

                                      -17-
<PAGE>
9.6 Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subjects
thereof.

9.7 Notices, etc. All notices and other communications required or permitted
under this Agreement shall be effective upon receipt and shall be in writing and
may be delivered in person, by telecopy, overnight delivery service or
registered or certified United States mail addressed to the Company at its
address set forth below or the Purchasers at their respective addresses set
forth at the beginning of this Agreement or on Exhibit A or at such other
address as the Company or the Purchasers shall have furnished to the other party
in writing. All notices and other communications shall be effective upon the
earlier of actual receipt thereof by the person to whom notice is directed or
(i) in the case of notices and communications sent by personal delivery or
telecopy, one business day after such notice or communication arrives at the
applicable address or was successfully sent to the applicable telecopy number,
(ii) in the case of notices and communications sent by overnight delivery
service, at noon (local time) on the second business day following the day such
notice or communication was sent, and (iii) in the case of notices and
communications sent by United States mail seven days after such notice or
communication shall have been deposited in the United States mail.

         Notices to the Company shall be addressed

<TABLE>
<S>                                                           <C>
         to:                                                  with a copy to:

         Penwest Pharmaceuticals Co.                          Hale and Dorr LLP
         Attn:  Chief Financial Officer                       Attn:  Stuart M. Falber, Esq
         39 Old Ridgebury Road, Suite 11                      60 State Street
         Danbury, Connecticut  06810                          Boston, Massachusetts 02109
         Fax:  (203) 796-1393.                                Fax:  (617) 526-5000
</TABLE>

9.8 Severability of this Agreement. If any provision of this Agreement shall be
judicially determined to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.

9.9 Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be an original, but all of which together shall constitute
one instrument.

9.10 Further Assurances. Each party to this Agreement 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 the other party hereto may reasonably request in order to carry out
the intent and accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.

9.11 Expenses. The Company and each such Purchaser shall bear its own expenses
incurred on its behalf with respect to this Agreement and the transactions
contemplated hereby, including fees of legal counsel.

9.12 Currency. All references to "dollars" or "$" in this Agreement shall be
deemed to refer to United States dollars.

                                      -18-
<PAGE>
9.13 Replacement of Securities. If any certificate or instrument evidencing any
Securities or Common Stock issued upon exercise of the Additional Investment
Right is mutilated, lost, stolen or destroyed, the Company shall issue or cause
to be issued, in exchange and substitution for and upon cancellation thereof, or
in lieu of and substitution therefor, a new certificate or instrument, but only
upon receipt of evidence reasonably satisfactory to the Company of such loss,
theft or destruction and customary and reasonable indemnity, if requested, and
upon satisfaction by the Purchaser of any requirements of the Company's transfer
agent. The applicants for a new certificate or instrument under such
circumstances shall also pay any reasonable third-party costs associated with
the issuance of such replacement Securities or Shares.

9.14 Remedies. In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, each of the Purchasers
and the Company will be entitled to seek specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence.

9.15 Independent Nature of Purchasers' Obligations and Rights. The obligations
of each Purchaser under this Agreement and Additional Investment Rights
(collectively, the "Transaction Documents") are several and not joint with the
obligations of any other Purchaser, and no Purchaser shall be responsible in any
way for the performance of the obligations of any other Purchaser under any
Transaction Document. Each Purchaser represents that the decision of each
Purchaser to purchase Shares pursuant to this Agreement has been made by such
Purchaser independently of any other Purchaser and independently of any
information, materials, statements or opinions as to the business, affairs,
operations, assets, properties, liabilities, results of operations, condition
(financial or otherwise) or prospects of the Company or of the Subsidiary which
may have been made or given by any other Purchaser or by any agent or employee
of any other Purchaser, and no Purchaser or any of its agents or employees shall
have any liability to any other Purchaser (or any other Person) relating to or
arising from any such information, materials, statements or opinions. Nothing
contained herein or in any Transaction Document, and no action taken by any
Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert or as
a group with respect to such obligations or the transactions contemplated by the
Transaction Document. Each Purchaser acknowledges that no other Purchaser has
acted as agent for such Purchaser in connection with making its investment
hereunder and that no other Purchaser will be acting as agent of such Purchaser
in connection with monitoring its investment hereunder. Each Purchaser shall be
entitled to independently protect and enforce its rights, including without
limitation the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such purpose.

               [Remainder of This Page Intentionally Left Blank.]

                                      -19-
<PAGE>
         The foregoing agreement is hereby executed as of the date first above
written.

                                    PENWEST PHARMACEUTICALS CO.

                                    a Washington corporation

                                             /s/ Jennifer L. Good
                                             -----------------------------------
                                    By:      Jennifer L. Good
                                    Title:   Senior Vice President, Finance, and
                                             Chief Financial Officer

                                    PURCHASERS:

                                    Counterpart signature pages attached.

                                      -20-
<PAGE>
                            Purchaser Signature Page

         By its execution and delivery of this signature page, the undersigned
Purchaser hereby joins in and agrees to be bound by the terms and conditions of
the Securities Purchase Agreement dated as of August __, 2003 (the "Purchase
Agreement") by and among Penwest Pharmaceuticals Co. and the Purchasers (as
defined therein), as to the number of shares of Common Stock set forth below,
and authorizes this signature page to be attached to the Purchase Agreement or
counterparts thereof.

                                         Name of Purchaser:

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

                                         Record
                                         Address:
                                                 -------------------------------

                                         Telecopy No.:
                                                      --------------------------

                                         Number of Units:
                                                        ------------------------

                                         Aggregate Purchase Price: $
                                                                    ------------

Agreed to and accepted this
___ day of August, 2003

Penwest Pharmaceuticals Co.

By:
    --------------------------------
         Name:
         Title:
<PAGE>
                                    EXHIBIT A

<TABLE>
<CAPTION>
                                                  Purchased       Investment
           Purchaser                Units          Shares        Right Shares       Purchase Price
           ---------                -----          ------        ------------       --------------
<S>                                 <C>           <C>            <C>             <C>
Perceptive Life Sciences              40,000        40,000         8,000          $  840,000.00
Master Fund, Ltd.
850 3rd Avenue, 17th Floor
New York, NY 10022
Attn: Kenny Kountouras

Mainfield Enterprises Inc.           100,000       100,000        20,000          $2,100,000.00
c/o Sage Capital Growth Inc.
660 Madison Avenue
18th Floor
New York, NY 10021

Smithfield Fiduciary LLC              50,000        50,000        10,000          $1,050,000.00
9 West 57th Street, 27th Floor
New York, NY 10019
Attn: Ari J. Storch /
          Adam J. Chill

CommonFund Hedged                     14,000        14,000         2,800          $  294,000.00
    Equity Co.
485 Underhill Blvd
Suite 205
Syosset, NY 11791

Matterhorn Offshore Fund              22,000        22,000         4,400          $  462,000.00
    Ltd
485 Underhill Blvd
Suite 205
Syosset, NY 11791

Knott Partners, L.P.                  54,000        54,000        10,800          $1,134,000.00
485 Underhill Blvd
Suite 205
Syosset, NY 11791

Shoshone Partners LP                  10,000        10,000         2,000          $  210,000.00
485 Underhill Blvd
Suite 205
Syosset, NY 11791

Welch Life Sciences Fund,              7,850         7,850         1,570          $  164,850.00
    Ltd
c/o Welch Capital Partners
101 E.52nd Street, 31st Floor
New York, NY 10022

Welch Entrepreneurial Fund,           59,390        59,390        11,878          $1,247,190.00
    Ltd
c/o Welch Capital Partners
101 E.52nd Street, 31st Floor
New York, NY 10022

Welch Entrepreneurial Fund,           75,630        75,630        15,126          $1,588,230.00
    (QP), LP
c/o Welch Capital Partners
101 E.52nd Street, 31st Floor
New York, NY 10022

Welch Entrepreneurial Fund,           17,990        17,990         3,598          $  377,790.00
    LP
c/o Welch Capital Partners
101 E.52nd Street, 31st Floor
New York, NY 10022

Welch Life Sciences Fund,             39,140        39,140         7,828          $  821,940.00
    LP
c/o Welch Capital Partners
101 E.52nd Street, 31st Floor
New York, NY 10022

Putnam Funds Trust -                  20,000        20,000         4,000          $  420,000.00
    Putnam Small Cap
    Growth Fund
Nominee: Muico & Co.
c/o Bankers Trust Company
14 Wall Street, Window 44
4th Floor
New York, NY 10005
Attn: Walter Fielding /
          Miriam Awad
Ref: Putnam Accts 096182,
096183

Putnam Emerging Opportunities         20,000        20,000         4,000          $  420,000.00
Portfolio
Nominee: Muico & Co.
c/o Bankers Trust Company
14 Wall Street, Window 44
4th Floor
New York, NY 10005
Attn: Walter Fielding /
          Miriam Awad
Ref:  Putnam Accts 096182,
096183

S.A.C. Healthco Fund, LLC             73,000        73,000        14,600              1,533,000
c/o S.A.C. Capital Advisors,
    LLC
72 Cummings Point Road
Stamford, CT 06902
Attn: General Counsel

</TABLE>

<PAGE>
                                    EXHIBIT B

                       FORM OF ADDITIONAL INVESTMENT RIGHT
<PAGE>
                                    EXHIBIT C

                         INSTRUCTION SHEET FOR PURCHASER

                   (to be read in conjunction with the entire
                         Securities Purchase Agreement)

A.       Complete the following items in the Securities Purchase Agreement:

         1. Complete and execute the Purchaser Signature Page. The Agreement
         must be executed by an individual authorized to bind the Purchaser.

         2. Exhibit C-1 - Stock Certificate Questionnaire:

         Provide the information requested by the Stock Certificate
         Questionnaire;

         3. Exhibit C-2 - Registration Statement Questionnaire:

         Provide the information requested by the Registration Statement
         Questionnaire.

         4. Exhibit C-3 /C-4 - Purchaser Certificate:

         Provide the information requested by the Certificate for Individual
         Purchasers (B-3) or the Certificate for Corporate, Partnership, Trust,
         Foundation and Joint Purchasers (B-4), as applicable.

         5. Return, via facsimile, the signed Securities Purchase Agreement
         including the properly completed Exhibits C-1 through C-4, to:

                                    Hale and Dorr LLP
                                    Facsimile: (617) 526-5000
                                    Telephone: (617) 526-6000
                                    Attn: Omar White

         6. After completing instruction number five (5) above, deliver the
         original signed Securities Purchase Agreement including the properly
         completed Exhibits C-1 through C-4 to:

                                    Hale and Dorr LLP
                                    60 State Street
                                    Boston, MA 02109
                                    Telephone: (617) 526-6000
                                    Attn: Omar White

B.       Instructions regarding the transfer of funds for the purchase of Units
         will be telecopied to the Purchaser by the Company at a later date.
<PAGE>
C.       Upon the resale of any Shares by the Purchaser after the Registration
         Statement covering any Shares is effective, as described in the
         Purchase Agreement, the Purchaser:

                  (i) must deliver a current prospectus, and annual and
                  quarterly reports of the Company to the buyer (prospectuses,
                  and annual and quarterly reports may be obtained from the
                  Company at the Purchaser's request); and

                  (ii) must send a letter in the form of Exhibit E to the
                  Company and the Company's transfer agent so that the Shares
                  may be properly transferred.
<PAGE>
                                   EXHIBIT C-1

                           PENWEST PHARMACEUTICALS CO.

                         STOCK CERTIFICATE QUESTIONNAIRE

         Pursuant to Section 4.3 of the Agreement, please provide us with the
following information:

<TABLE>
<S>                                                                                     <C>
1.           The exact name that the Units are to be registered in (this is
             the name that will appear on the stock certificate(s)).  You may
             use a nominee name if appropriate:                                         --------------

2.           The relationship between the Purchaser of the Securities and the
             Registered Holder listed in response to item 1 above:                      --------------

3.           The mailing address, telephone and telecopy number of the
             Registered Holder listed in response to item 1 above:                      --------------

                                                                                        --------------

                                                                                        --------------

                                                                                        --------------

                                                                                        --------------

4.           The Tax Identification Number of the Registered Holder listed in
             response to item 1 above:                                                  --------------
</TABLE>
<PAGE>
                                   EXHIBIT C-2

                           PENWEST PHARMACEUTICALS CO.

                      REGISTRATION STATEMENT QUESTIONNAIRE

         In connection with the Registration Statement, please provide us with
the following information regarding the Purchaser.

         1. Please state your organization's name exactly as it should appear in
the Registration Statement:

         2. Have you or your organization had any position, office or other
material relationship within the past three years with the Company or its
affiliates?

         _______  Yes                       _______  No

         If yes, please indicate the nature of any such relationship below:

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

         3. Are you the beneficial owner of any other securities of the Company?

         _______  Yes                       _______  No

         If yes, please describe the nature and amount of such ownership.

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
<PAGE>
         4. Have you made or are you aware of any arrangements relating to the
distribution of the shares of the Company pursuant to the Registration
Statement?

         _______  Yes                       _______  No

         If yes, please describe the nature and amount of such arrangements.

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
<PAGE>
                                   EXHIBIT C-3

                           PENWEST PHARMACEUTICALS CO.

                      CERTIFICATE FOR INDIVIDUAL PURCHASERS

         If the investor is an individual Purchaser (or married couple) the
Purchaser must complete, date and sign this Certificate.

                                   CERTIFICATE

         I certify that the representations and responses below are true and
accurate:

         In order for the Company to offer and sell the Units in conformance
with state and federal securities laws, the following information must be
obtained regarding your investor status. Please initial each category applicable
to you as an investor in the Company.

         ___ (1) A natural person whose individual net worth, or joint net worth
with that person's spouse, at the time of his purchase exceeds $1,000,000;

         ___ (2) A natural person who had an individual income in excess of
$200,000 in each of the two most recent years, or joint income with that
person's spouse in excess of $300,000, in each of those years, and has a
reasonable expectation of reaching the same income level in the current year;

         ___ (3) An executive officer or director of the Company.

         Set forth in the space provided below the state(s), if any, in the U.S.
in which you maintained your residence during the past two years and the dates
during which you resided in each state
                                      ------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

Dated:                Name(s) of Purchaser
       -------                             -------------------------------------

                                    Signature
                                              ----------------------------------

                                    Signature
                                              ----------------------------------

                                    Dated                              , 2003
                                          -----------------------------
<PAGE>
                                   EXHIBIT C-4

                           PENWEST PHARMACEUTICALS CO.

                     CERTIFICATE FOR CORPORATE, PARTNERSHIP,
                     TRUST, FOUNDATION AND JOINT PURCHASERS

         If the investor is a corporation, partnership, trust, pension plan,
foundation, joint purchaser (other than a married couple) or other entity, an
authorized officer, partner, or trustee must complete, date and sign this
Certificate.

                                   CERTIFICATE

         The undersigned certifies that the representations and responses below
are true and accurate:

         (a) The investor has been duly formed and is validly existing and has
full power and authority to invest in the Company. The person signing on behalf
of the undersigned has the authority to execute and deliver the Securities
Purchase Agreement on behalf of the Purchaser and to take other actions with
respect thereto.

         (b) Indicate the form of entity of the undersigned:

                  ____ Limited Partnership

                  ____ General Partnership

                  ____ Corporation

                  ____ Revocable Trust (identify each grantor and indicate under
what circumstances the trust is revocable by the grantor):
                                                          ----------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 (Continue on a separate piece of paper, if necessary.)

                  ____ Other type of Trust (indicate type of trust and, for
trusts other than pension trusts, name the grantors and beneficiaries):
                                                                       ---------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 (Continue on a separate piece of paper, if necessary.)

                  ____ Other form of organization (indicate form of
organization(
             -------------------------------------------------------------------

--------------------------------------------------------------------------------

-------------------------------------------------------------------------).
<PAGE>
         ____ (c) Indicate the approximate date the undersigned entity was
formed:
        -------------------------------- .

         (d) In order for the Company to offer and sell the Units in conformance
with state and federal securities laws, the following information must be
obtained regarding your investor status. Please initial each category applicable
to you as an investor in the Company.

                  ___      1. A bank as defined in Section 3(a)(2) of the
                           Securities Act, or any savings and loan association
                           or other institution as defined in Section 3(a)(5)(A)
                           of the Securities Act whether acting in its
                           individual or fiduciary capacity;

                  ___      2. A broker or dealer registered pursuant to Section
                           15 of the Securities Exchange Act of 1934;

                  ___      3. An insurance company as defined in Section 2(13)
                           of the Securities Act;

                  ___      4. An investment company registered under the
                           Investment Company Act of 1940 or a business
                           development company as defined in Section 2(a)(48) of
                           that Act;

                  ___      5. A Small Business Investment Company licensed by
                           the U.S. Small Business Administration under Section
                           301(c) or (d) of the Small Business Investment Act of
                           1958;

                  ___      6. A plan established and maintained by a state, its
                           political subdivisions, or any agency or
                           instrumentality of a state or its political
                           subdivisions, for the benefit of its employees, if
                           such plan has total assets in excess of $5,000,000;

                  ___      7. An employee benefit plan within the meaning of the
                           Employee Retirement Income Security Act of 1974, if
                           the investment decision is made by a plan fiduciary,
                           as defined in Section 3(21) of such Act, which is
                           either a bank, savings and loan association,
                           insurance company, or registered investment advisor,
                           or if the employee benefit plan has total assets in
                           excess of $5,000,000 or, if a self-directed plan,
                           with investment decisions made solely by persons that
                           are accredited investors;

                  ___      8. A private business development company as defined
                           in Section 202(a)(22) of the Investment Advisers Act
                           of 1940;

                  ___      9. An organization described in Section 501(c)(3) of
                           the Internal Revenue Code, corporation, Massachusetts
                           or similar business trust, or partnership, not formed
                           for the specific purpose of acquiring the Shares,
                           with total assets in excess of $5,000,000;
<PAGE>
                  ___      10. A trust, with total assets in excess of
                           $5,000,000, not formed for the specific purpose of
                           acquiring the Shares, whose purchase is directed by a
                           sophisticated person as described in Rule
                           506(b)(2)(ii) of the Exchange Act;

                  ___      11. An entity in which all of the equity owners
                           qualify under any of the above subparagraphs. If the
                           undersigned belongs to this investor category only,
                           list the equity owners of the undersigned, and the
                           investor category which each such equity owner
                           satisfies:

                           -----------------------------------------------------

                           -----------------------------------------------------

                           -----------------------------------------------------

                           -----------------------------------------------------
                           (Continue on a separate piece of paper, if
necessary.)

         Please set forth in the space provided below the (i) states, if any, in
the U.S. in which you maintained your principal office during the past two years
and the dates during which you maintained your office in each state, (ii)
state(s), if any, in which you are incorporated or otherwise organized and (iii)
state(s), if any, in which you pay income taxes.

                           -----------------------------------------------------

                           -----------------------------------------------------

                           -----------------------------------------------------

Dated:                    ., 2003
       --------------------

------------------------------------
Name of investor

------------------------------------
Signature and title of authorized officer, partner or trustee
<PAGE>
                                   EXHIBIT D-1

                      OPINION OF COMPANY WASHINGTON COUNSEL

(a)      The Company is a corporation duly incorporated and validly existing
         under the laws of the State of Washington;

(b)      The Company has the necessary corporate power and authority to enter
         into the Agreement and to issue, sell and deliver to the Purchasers the
         Purchased Shares and the Additional Investment Rights to be issued and
         sold by it thereunder and to issue, sell and deliver the Common Stock
         issuable upon exercise of the Additional Investment Rights.

(c)      The execution and delivery of this Agreement has been duly authorized
         by all necessary corporate action on the part of the Company;

(d)      The performance by the Company of this Agreement and the consummation
         by the Company of the transactions herein contemplated will not
         contravene any provision of the Company's Articles of Incorporation,
         By-laws or the Washington Business Corporation Act; and

(e)      The Shares to be issued by the Company pursuant to the terms of the
         Agreement will be, upon issuance and delivery against payment therefor
         in accordance with the terms of the Agreement or the Additional
         Investment Rights, as applicable, duly authorized, validly issued,
         fully paid and nonassessable. The Additional Investment Rights, when
         issued, sold and delivered in accordance with the terms of the
         Agreement and for the consideration expressed therein, will be validly
         issued. The shares of Common Stock issuable upon exercise of the
         Additional Investment Rights have been validly authorized and reserved
         for issuance and, when issued in accordance with the terms of the
         Additional Investment Rights and for the consideration expressed
         therein, such shares of Common Stock will be fully paid and
         nonassessable. Shareholders of the Company have no preemptive rights
         under the Company's Articles of Incorporation or Bylaws.
<PAGE>
                                   EXHIBIT D-2

                      OPINION OF COMPANY CORPORATE COUNSEL

         (a) The consummation by the Company of the transactions herein
contemplated do not conflict with, violate or breach any of the terms and
provisions, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement, bond, debenture, note agreement or other evidence of
indebtedness, or any lease, contract or other agreement or instrument filed by
the Company as an exhibit to any filing, report or registration statement with
the SEC (an "SEC Exhibit"), or, to such counsel's knowledge, any order, writ or
decree of any court or governmental agency or body having jurisdiction over the
Company, or over any of its properties or operations specifically naming the
Company; provided however, that no opinion need be rendered concerning state or
foreign securities laws, Blue Sky laws or any other laws other than United
States federal laws, the Delaware General Corporate Law statute and the state
laws of the Commonwealth of Massachusetts;

         (b) This Agreement constitutes a valid and binding obligation of the
Company, enforceable against the Company according to its terms, except to the
extent that they may be subject to or affected by (i) applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or similar laws
relating to or affecting the rights of creditors generally, (ii) statutory or
decisional law concerning recourse by creditors to security in the absence of
notice or hearing, (iii) duties and standards imposed on creditors and parties
to contracts, including, without limitation, requirements of good faith,
reasonableness and fair dealing, (iv) general equitable principles and (v) other
customary qualifications (it being recognized that in giving this opinion
counsel will rely on the opinions delivered by Perkins Coie, LLP with respect to
corporate power and authority, due authorization and non-contravention); and

         (c) The stockholders of the Company have no preemptive rights under the
SEC Exhibits; and

         (d) Based in part on the representations of the Purchasers in Section 4
of this Agreement, the offer and sale of the Units was exempt from the
registration requirements of Section 5 of the Securities Act of 1933, as
amended.

         (e) As of their respective filing dates, the SEC Documents (other than
the financial statements and other financial data therein, including the notes
and schedules thereto, as to which such counsel expresses no opinion) complied
as to form in all material respects with the requirements of the Exchange Act
and the rules and regulations of the SEC promulgated thereunder.
<PAGE>
                                    EXHIBIT E

                   PURCHASER'S CERTIFICATE OF SUBSEQUENT SALE

To:      [Transfer agent name and address]

         Attention:
                    ---------------------------------

         The undersigned, the Purchaser or an officer of, or other person duly
authorized by the Purchaser, hereby certifies that _____________________ was the
Purchaser of the Shares_______________________ (fill in name of Purchaser)
evidenced by the attached certificate, and as such, proposes to transfer such
Shares on or about __________ in accordance with the registration statement,
file number ______, and the Purchaser certifies that the transfer has complied
with and will comply with all applicable requirements of the Securities Act of
1933, as amended (the "Act"), including without limitation the requirement of
delivering a current prospectus in a timely manner.

Print or type:

           Name of Purchaser:
                             ---------------------------------------------------
           Name of Individual representing
           Purchaser (if an Institution):
                                         ---------------------------------------
           Title of Individual representing
           Purchaser (if an Institution):
                                         ---------------------------------------

Signature by:

           Purchaser or Individual
           representing Purchaser:
                                  ----------------------------------------------

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