Document:

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                                                                     Exhibit 4.2

                           RIGEL PHARMACEUTICALS, INC.

                              AMENDED AND RESTATED

                            INVESTOR RIGHTS AGREEMENT

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                                TABLE OF CONTENTS

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SECTION 1.        GENERAL................................................1

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

SECTION 2.        REGISTRATION; RESTRICTIONS ON TRANSFER.................3

         2.1      Restrictions on Transfer...............................3

         2.2      Demand Registration....................................4

         2.3      Piggyback Registrations................................5

         2.4      Form S-3 Registration..................................6

         2.5      Expenses of Registration...............................8

         2.6      Obligations of the Company.............................8

         2.7      Termination of Registration Rights.....................9

         2.8      Delay of Registration; Furnishing Information..........9

         2.9      Indemnification.......................................10

         2.10     Assignment of Registration Rights.....................12

         2.11     Amendment of Registration Rights......................12

         2.12     Limitation on Subsequent Registration Rights..........12

         2.13     "Market Stand-Off" Agreement..........................12

         2.14     Rule 144 Reporting....................................13

SECTION 3.        COVENANTS OF THE COMPANY..............................13

         3.1      Basic Financial Information and Reporting.............13

         3.2      Inspection Rights.....................................14

         3.3      Confidentiality of Records............................15

         3.4      Reservation of Common Stock...........................15

         3.5      Stock Vesting.........................................15

         3.6      Executive Officer Compensation........................15

         3.7      Proprietary Information and Inventions Agreement......15

         3.8      Directors' Liability and Indemnification..............15

         3.9      Real Property Holding Corporation.....................15

         3.10     Termination of Covenants..............................16

SECTION 4.        RIGHTS OF FIRST REFUSAL...............................16

                                       i.

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                                TABLE OF CONTENTS
                                   (CONTINUED)
                                                                       PAGE

         4.1      Subsequent Offerings..................................16

         4.2      Exercise of Rights....................................16

         4.3      Issuance of Equity Securities to Other Persons........17

         4.4      Termination of Rights of First Refusal................17

         4.5      Transfer of Rights of First Refusal...................17

         4.6      Excluded Securities...................................17

SECTION 5.        MISCELLANEOUS.........................................18

         5.1      Governing Law.........................................18

         5.2      Survival..............................................18

         5.3      Successors and Assigns................................18

         5.4      Entire Agreement......................................18

         5.5      Severability..........................................18

         5.6      Amendment and Waiver..................................19

         5.7      Delays or Omissions...................................19

         5.8      Notices...............................................19

         5.9      Attorneys' Fees.......................................19

         5.10     Titles and Subtitles..................................19

         5.11     Counterparts..........................................20
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                                       ii.

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                           RIGEL PHARMACEUTICALS, INC.

                 AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

         THIS AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT (the "Agreement")
is entered into as of February 3, 2000, by and among RIGEL PHARMACEUTICALS,
INC., a Delaware corporation (the "Company"), the holders of the Company's
Series B Preferred Stock ("Series B Stock"), Series C Preferred Stock ("Series C
Stock") and Series D Preferred Stock ("Series D Stock"), set forth on the
Schedule of Investors attached hereto as Schedule A, and the purchasers of the
Company's Series E Preferred Stock ("Series E Stock") set forth on Schedule A of
that certain Series E Preferred Stock Purchase Agreement of even date herewith
(the "Purchase Agreement") and Schedule A hereto together, the "Investors" and
each individually, an "Investor."

                                    RECITALS

         WHEREAS, certain of the Investors hold shares of the Company's Series B
Stock, Series C Stock, Series D Stock and/or shares of Common Stock issued upon
conversion thereof and possess registration rights, information rights, and
other rights pursuant to that certain Amended and Restated Investor Rights
Agreement dated as of December 18, 1998 (as amended May 26, 1999), between the
Company and such Investors (the "Prior Agreement"); and

         WHEREAS, the Investors who hold Series B Stock, Series C Stock and
Series D Stock desire to terminate the Prior Agreement and to accept the rights
created pursuant hereto in lieu of the rights granted to them under the Prior
Agreement; and

         WHEREAS, the Company proposes to sell and issue up to Two Million Seven
Hundred Fifty Thousand (2,750,000) shares of its Series E Stock pursuant to the
Purchase Agreement; and

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

         NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth herein, the
Investors who are parties to the Prior Agreement hereby agree that the Prior
Agreement shall be superseded and replaced in its entirety by this Agreement and
the parties hereto mutually agree as follows:

SECTION 1. GENERAL

         1.1 DEFINITIONS. As used in this Agreement the following terms shall
have the following respective meanings:

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

                                       1.

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               "HOLDER" means any person owning of record Registrable Securities
that have not been sold to the public or any assignee of record of such
Registrable Securities in accordance with Section 2.10 hereof.

               "INITIAL OFFERING" means the Company's first firm commitment
underwritten public offering of its Common Stock registered under the Securities
Act.

               "REGISTER," "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of
effectiveness of such registration statement or document.

               "REGISTRABLE SECURITIES" means (i) Common Stock of the Company
issued or issuable upon conversion of the Shares; and (ii) any Common Stock of
the Company issued as (or issuable upon the conversion or exercise of any
warrant, right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of, such
above-described securities. Notwithstanding the foregoing, Registrable
Securities shall not include any securities sold by a person to the public
either pursuant to a registration statement or Rule 144 or sold in a private
transaction in which the transferor's rights under Section 2 of this Agreement
are not assigned.

               "REGISTRABLE SECURITIES THEN OUTSTANDING" shall be the number of
shares determined by calculating the total number of shares of the Company's
Common Stock that are Registrable Securities and either (1) are then issued and
outstanding or (2) are issuable pursuant to then exercisable or convertible
securities.

               "REGISTRATION EXPENSES" shall mean all expenses incurred by the
Company in complying with Sections 2.2, 2.3 and 2.4 hereof, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel for the Company, reasonable fees and disbursements not
to exceed Fifteen Thousand Dollars ($15,000) of a single special counsel for the
Holders, blue sky fees and expenses and the expense of any special audits
incident to or required by any such registration (but excluding the compensation
of regular employees of the Company which shall be paid in any event by the
Company).

               "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.

               "SELLING EXPENSES" shall mean all underwriting discounts and
selling commissions applicable to the sale.

               "SHARES" shall mean the Company's Series B Stock issued pursuant
to the Series B Preferred Stock Purchase Agreement dated January 22, 1997 and
the Investors listed on Schedule A thereto and their permitted assigns, Series C
Stock issued pursuant to the Series C Preferred Stock Purchase Agreement dated
November 3, 1997 and the Investors listed on Schedule A thereto and their
permitted assigns, Series D Stock issued pursuant to the Series D Preferred
Stock Purchase Agreement dated December 18, 1998 (as amended May 26, 1999) and
the Investors listed on Schedule A thereto and their permitted assigns and
Series E Stock issued

                                       2.

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pursuant to the Purchase Agreement and held by the Investors listed on Schedule
A thereto and their permitted assigns.

               "FORM S-3" means such form under the Securities Act as in effect
on the date hereof or any successor registration form under the Securities Act
subsequently adopted by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the SEC.

               "SEC" OR "COMMISSION" means the Securities and Exchange
Commission.

SECTION 2. REGISTRATION; RESTRICTIONS ON TRANSFER

         2.1 RESTRICTIONS ON TRANSFER.

               (a) Each Holder agrees not to make any disposition of all or any
portion of the Shares or Registrable Securities unless and until:

                    (i) There is then in effect a registration statement under
the Securities Act covering such proposed disposition and such disposition is
made in accordance with such registration statement; or

                    (ii) (A) The transferee has agreed in writing to be bound by
the terms of this Agreement, (B) such Holder shall have notified the Company of
the proposed disposition and shall have furnished the Company with a statement
of the circumstances surrounding the proposed disposition, and (C) if reasonably
requested by the Company, such Holder shall have furnished the Company with an
opinion of counsel, reasonably satisfactory to the Company, that such
disposition will not require registration of such shares under the Securities
Act. It is agreed that the Company will not require opinions of counsel for
transactions made pursuant to Rule 144 except in unusual circumstances.

                    (iii) Notwithstanding the provisions of paragraphs (i) and
(ii) above, no such registration statement or opinion of counsel shall be
necessary for a transfer by a Holder which is (A) a partnership to its partners
or former partners in accordance with partnership interests, (B) a corporation
to its stockholders in accordance with their interest in the corporation, (C) a
limited liability company to its members or former members in accordance with
their interest in the limited liability company, or (D) to the Holder's family
member or trust for the benefit of an individual Holder or his or her family
member; provided that in each case the transferee will be subject to the terms
of this Agreement to the same extent as if he or she were an original Holder
hereunder.

               (b) Each certificate representing Shares or Registrable
Securities shall (unless otherwise permitted by the provisions of the Purchase
Agreement) be stamped or otherwise imprinted with a legend substantially similar
to the following (in addition to any legend required under applicable state
securities laws or as provided elsewhere in this Agreement):

                                       3.

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                    The following legend under the Securities Act:

                    THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
               THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
               TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
               REGISTERED UNDER SUCH ACT, OR UNLESS THE COMPANY HAS RECEIVED AN
               OPINION OF COUNSEL OR OTHER EVIDENCE, SATISFACTORY TO THE COMPANY
               AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.

               (c) The Company shall be obligated to reissue promptly unlegended
certificates at the request of any holder thereof if the holder shall have
obtained an opinion of counsel (which counsel may be counsel to the Company)
reasonably acceptable to the Company to the effect that the securities proposed
to be disposed of may lawfully be so disposed of without registration,
qualification or legend.

               (d) Any legend endorsed on an instrument pursuant to applicable
state securities laws and the stop-transfer instructions with respect to such
securities shall be removed upon receipt by the Company of an order of the
appropriate blue sky authority authorizing such removal.

         2.2 DEMAND REGISTRATION.

               (a) Subject to the conditions of this Section 2.2, if the Company
shall receive a written request from the Holders of more than fifty percent
(50%) of the Registrable Securities then outstanding (the "Initiating Holders")
that the Company file a registration statement under the Securities Act covering
the registration of Registrable Securities having an aggregate offering price to
the public in excess of $5,000,000 (a "Qualified Public Offering"), then the
Company shall, within thirty (30) days of the receipt thereof, give written
notice of such request to all Holders, and subject to the limitations of this
Section 2.2, use its best efforts to effect, as soon as practicable, the
registration under the Securities Act of all Registrable Securities that the
Holders request to be registered.

               (b) If the Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
this Section 2.2 or any request pursuant to Section 2.4 and the Company shall
include such information in the written notice referred to in Section 2.2(a) or
Section 2.4(a), as applicable. In such event, the right of any Holder to include
its Registrable Securities in such registration shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting (unless otherwise mutually agreed by
a majority in interest of the Initiating Holders and such Holder) to the extent
provided herein. All Holders proposing to distribute their securities through
such underwriting shall enter into an underwriting agreement in customary form
with the

                                       4.

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underwriter or underwriters selected for such underwriting by a majority in
interest of the Initiating Holders (which underwriter or underwriters shall be
reasonably acceptable to the Company). Notwithstanding any other provision of
this Section 2.2 or Section 2.4, if the underwriter advises the Company that
marketing factors require a limitation of the number of securities to be
underwritten (including Registrable Securities) then the Company shall so advise
all Holders of Registrable Securities which would otherwise be underwritten
pursuant hereto, and the number of shares that may be included in the
underwriting shall be allocated, first, to the Initiating Holders and, second,
to all other Holders of such Registrable Securities on a pro rata basis based on
the total number of Registrable Securities held by all such Holders. Any
Registrable Securities excluded or withdrawn from such underwriting shall be
withdrawn from the registration.

               (c) The Company shall not be required to effect a registration
pursuant to this Section 2.2:

                    (i) prior to the fourth anniversary of the date of this
Agreement;

                    (ii) after the Company has effected two (2) registrations
pursuant to this Section 2.2, and such registrations have been declared or
ordered effective;

                    (iii) during the period starting with the date of filing of,
and ending on the date one hundred eighty (180) days following the effective
date of the registration statement pertaining to the Initial Offering; provided
that the Company makes reasonable good faith efforts to cause such registration
statement to become effective;

                    (iv) if within thirty (30) days of receipt of a written
request from Initiating Holders pursuant to Section 2.2(a), the Company gives
notice to the Holders of the Company's intention to make its Initial Offering
within ninety (90) days; or

                    (v) if the Company shall furnish to Holders requesting a
registration statement pursuant to this Section 2.2, a certificate signed by the
Chairman of the Board stating that in the good faith judgment of the Board of
Directors of the Company, it would be seriously detrimental to the Company and
its stockholders for such registration statement to be effected at such time, in
which event the Company shall have the right to defer such filing for a period
of not more than ninety (90) days after receipt of the request of the Initiating
Holders; provided that such right to delay a request shall be exercised by the
Company not more than once in any twelve (12) month period.

         2.3 PIGGYBACK REGISTRATIONS. The Company shall notify all Holders of
Registrable Securities in writing at least thirty (30) days prior to the filing
of any registration statement under the Securities Act for purposes of a public
offering of securities of the Company (including a registration statement filed
pursuant to Section 2.2 of this Agreement and including, but not limited to,
registration statements relating to secondary offerings of securities of the
Company, but excluding registration statements relating to employee benefit
plans or with respect to corporate reorganizations or other transactions under
Rule 145 of the Securities Act) and will afford each such Holder an opportunity
to include in such registration statement all or part of

                                       5.

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such Registrable Securities held by such Holder. Each Holder desiring to include
in any such registration statement all or any part of the Registrable Securities
held by it shall, within fifteen (15) days after the above-described notice from
the Company, so notify the Company in writing. Such notice shall state the
intended method of disposition of the Registrable Securities by such Holder. If
a Holder decides not to include all of its Registrable Securities in any
registration statement thereafter filed by the Company, such Holder shall
nevertheless continue to have the right to include any Registrable Securities in
any subsequent registration statement or registration statements as may be filed
by the Company with respect to offerings of its securities, all upon the terms
and conditions set forth herein.

               (a) UNDERWRITING. If the registration statement under which the
Company gives notice under this Section 2.3 is for an underwritten offering, the
Company shall so advise the Holders of Registrable Securities. In such event,
the right of any such Holder to be included in a registration pursuant to this
Section 2.3 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to distribute
their Registrable Securities through such underwriting shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company. Notwithstanding any other
provision of this Agreement, if the underwriter determines in good faith that
marketing factors require a limitation of the number of shares to be
underwritten, the number of shares that may be included in the underwriting
shall be allocated, first, to the Company (or in the case of a registration
pursuant to Section 2.2, the Initiating Holders); second, to the Holders on a
pro rata basis based on the total number of Registrable Securities held by the
Holders; and third, to any stockholder of the Company (other than a Holder) on a
pro rata basis. No such reduction shall (i) reduce the securities being offered
by the Company for its own account to be included in the registration and
underwriting, or (ii) reduce the amount of securities of the selling Holders
included in the registration below twenty-five percent (25%) of the total amount
of securities included in such registration, unless such offering is the Initial
Offering and such registration does not include shares of any other selling
stockholders, in which event any or all of the Registrable Securities of the
Holders may be excluded in accordance with the immediately preceding sentence.
In no event will shares of any other selling stockholder be included in such
registration which would reduce the number of shares which may be included by
Holders without the written consent of Holders of not less than two-thirds (66
2/3%) of the Registrable Securities proposed to be sold in the offering.

               (b) RIGHT TO TERMINATE REGISTRATION. The Company shall have the
right to terminate or withdraw any registration initiated by it under this
Section 2.3 prior to the effectiveness of such registration whether or not any
Holder has elected to include securities in such registration. The Registration
Expenses of such withdrawn registration shall be borne by the Company in
accordance with Section 2.5 hereof.

         2.4 FORM S-3 REGISTRATION. In case the Company shall receive from any
Holder or Holders of Registrable Securities a written request or requests that
the Company effect a registration on Form S-3 (or any successor to Form S-3) or
any similar short-form registration

                                       6.

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

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

               (b) as soon as practicable, effect such registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Holder's or
Holders' Registrable Securities as are specified in such request, together with
all or such portion of the Registrable Securities of any other Holder or Holders
joining in such request as are specified in a written request given within
fifteen (15) days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect any such
registration, qualification or compliance pursuant to this Section 2.4:

                    (i) if Form S-3 (or any successor or similar form) is not
available for such offering by the Holders, or

                    (ii) if the Holders, together with the holders of any other
securities of the Company entitled to inclusion in such registration, propose to
sell Registrable Securities and such other securities (if any) at an aggregate
price to the public of less than $500,000, or

                    (iii) if the Company shall furnish to the Holders a
certificate signed by the Chairman of the Board of Directors of the Company
stating that in the good faith judgment of the Board of Directors of the
Company, it would be seriously detrimental to the Company and its stockholders
for such Form S-3 Registration to be effected at such time, in which event the
Company shall have the right to defer the filing of the Form S-3 registration
statement for a period of not more than ninety (90) days after receipt of the
request of the Holder or Holders under this Section 2.4: provided, that such
right to delay a request shall be exercised by the Company not more than once in
any twelve (12) month period, or

                    (iv) if the Company has, within the twelve (12) month period
preceding the date of such request, already effected two (2) registrations on
Form S-3 for the Holders pursuant to this Section 2.4, or

                    (v) if the Company has already effected three (3)
registrations on Form S-3 for the Holders pursuant to this Section 2.4, or

                    (vi) in any particular jurisdiction in which the Company
would be required to qualify to do business or to execute a general consent to
service of process in effecting such registration, qualification or compliance.

               (c) Subject to the foregoing, the Company shall file a Form S-3
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders.

                                       7.

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         2.5 EXPENSES OF REGISTRATION. Except as specifically provided herein,
all Registration Expenses incurred in connection with any registration,
qualification or compliance pursuant to Section 2.2, Section 2.3 or Section 2.4
herein shall be borne by the Company. All Selling Expenses incurred in
connection with any registrations hereunder, shall be borne by the holders of
the securities so registered pro rata on the basis of the number of shares so
registered. The Company shall not, however, be required to pay for expenses of
any registration proceeding begun pursuant to Section 2.2 or 2.4, the request of
which has been subsequently withdrawn by the Initiating Holders unless (a) the
withdrawal is based upon material adverse information concerning the Company of
which the Initiating Holders were not aware at the time of such request or (b)
the Holders of a majority of Registrable Securities agree to forfeit their right
to one requested registration pursuant to Section 2.2 or Section 2.4, as
applicable, in which event such right shall be forfeited by all Holders. If the
Holders are required to pay the Registration Expenses, such expenses shall be
borne by the holders of securities (including Registrable Securities) requesting
such registration in proportion to the number of shares for which registration
was requested. If the Company is required to pay the Registration Expenses of a
withdrawn offering pursuant to clause (a) above, then the Holders shall not
forfeit their rights pursuant to Section 2.2 or Section 2.4 to a demand or S-3
registration.

         2.6 OBLIGATIONS OF THE COMPANY. Whenever required to effect the
registration of any Registrable Securities, the Company shall, as expeditiously
as reasonably possible:

               (a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use all reasonable efforts to cause
such registration statement to become effective, and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder, keep
such registration statement effective for up to ninety (90) days or, if earlier,
until the Holder or Holders have completed the distribution related thereto.

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

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

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

               (e) In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing

                                       8.

<PAGE>

underwriter(s) of such offering. Each Holder participating in such underwriting
shall also enter into and perform its obligations under such an agreement.

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

               (g) Furnish, at the request of a majority of the Holders
participating in the registration, on the date that such Registrable Securities
are delivered to the underwriters for sale, if such securities are being sold
through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective, (i) an opinion, dated as of such date, of the
counsel representing the Company for the purposes of such registration, in form
and substance as is customarily given to underwriters in an underwritten public
offering and reasonably satisfactory to a majority in interest of the Holders
requesting registration, addressed to the underwriters, if any, and to the
Holders requesting registration of Registrable Securities and (ii) a letter
dated as of such date, from the independent certified public accountants of the
Company, in form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public offering and
reasonably satisfactory to a majority in interest of the Holders requesting
registration, addressed to the underwriters, if any, and if permitted by
applicable accounting standards, to the Holders requesting registration of
Registrable Securities.

         2.7 TERMINATION OF REGISTRATION RIGHTS. All registration rights granted
under this Section 2 shall terminate and be of no further force and effect three
(3) years after the date of the Company's Initial Offering. In addition, a
Holder's registration rights shall expire if (i) the Company has completed its
Initial Offering and is subject to the provisions of the Exchange Act, (ii) such
Holder (together with its affiliates, partners and former partners) holds less
than 1% of the Company's outstanding Common Stock (treating all shares of
convertible Preferred Stock on an as-converted basis) and (iii) all Registrable
Securities held by and issuable to such Holder (and its affiliates, partners and
former partners) may be sold under Rule 144 during any ninety (90) day period.

         2.8 DELAY OF REGISTRATION; FURNISHING INFORMATION.

               (a) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to Section 2.2, 2.3 or 2.4 that the selling
Holders shall furnish to the Company such information regarding themselves, the
Registrable Securities held by them and the intended method of disposition of
such securities as shall be required to effect the registration of their
Registrable Securities.

               (b) The Company shall have no obligation with respect to any
registration requested pursuant to Section 2.2 or Section 2.4 if, due to the
operation of subsection 2.2(b), the number of shares or the anticipated
aggregate offering price of the Registrable Securities to be

                                       9.

<PAGE>

included in the registration does not equal or exceed the number of shares or
the anticipated aggregate offering price required to originally trigger the
Company's obligation to initiate such registration as specified in Section 2.2
or Section 2.4, whichever is applicable.

         2.9 INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under Sections 2.2, 2.3 or 2.4:

               (a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, the partners, officers, directors and legal
counsel of each Holder, any underwriter (as defined in the Securities Act) for
such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Securities Act or the Exchange Act, against any
losses, claims, damages, or liabilities (joint or several) to which they may
become subject under the Securities Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation") by the Company: (i) any
untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading, or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities law in
connection with the offering covered by such registration statement; and the
Company will reimburse each such Holder, partner, officer or director,
underwriter or controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided however, that the indemnity
agreement contained in this Section 2.9(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company, which consent shall
not be unreasonably withheld, nor shall the Company be liable in any such case
for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by such Holder, partner, officer, director, underwriter
or controlling person of such Holder.

               (b) To the extent permitted by law, each Holder will, if
Registrable Securities held by such Holder are included in the securities as to
which such registration, qualification or compliance is being effected,
indemnify and hold harmless the Company, each of its directors, its officers,
and legal counsel and each person, if any, who controls the Company within the
meaning of the Securities Act, any underwriter and any other Holder selling
securities under such registration statement or any of such other Holder's
partners, directors or officers or any person who controls such Holder, against
any losses, claims, damages or liabilities (joint or several) to which the
Company or any such director, officer, controlling person, underwriter or other
such Holder, or partner, director, officer or controlling person of such other
Holder may become subject under the Securities Act, the Exchange Act or other
federal or state law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereto) arise out of or are based upon

                                      10.

<PAGE>

any Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Holder under an instrument duly executed by such Holder and
stated to be specifically for use in connection with such registration; and each
such Holder will reimburse any legal or other expenses reasonably incurred by
the Company or any such director, officer, controlling person, underwriter or
other Holder, or partner, officer, director or controlling person of such other
Holder in connection with investigating or defending any such loss, claim,
damage, liability or action if it is judicially determined that there was such a
Violation; provided, however, that the indemnity agreement contained in this
Section 2.9(b) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without the
consent of the Holder, which consent shall not be unreasonably withheld;
provided further, that in no event shall any indemnity under this Section 2.9
exceed the proceeds from the offering received by such Holder.

               (c) Promptly after receipt by an indemnified party under this
Section 2.9 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 2.9, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if materially prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 2.9, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section 2.9.

               (d) If the indemnification provided for in this Section 2.9 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any losses, claims, damages or liabilities referred to
herein, the indemnifying party, in lieu of indemnifying such indemnified party
thereunder, shall to the extent permitted by applicable law contribute to the
amount paid or payable by such indemnified party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the Violation(s) that resulted in such
loss, claim, damage or liability, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by a court of law by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or

                                      11.

<PAGE>

omission; provided, that in no event shall any contribution by a Holder
hereunder exceed the proceeds from the offering received by such Holder.

               (e) The obligations of the Company and Holders under this Section
2.9 shall survive completion of any offering of Registrable Securities in a
registration statement and the termination of this Agreement. 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 to such claim or litigation.

         2.10 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the Company
to register Registrable Securities pursuant to this Section 2 may be assigned by
a Holder to a transferee or assignee of Registrable Securities which (i) is a
general partner, limited partner or retired partner of a Holder, (ii) is a
Holder's family member or trust for the benefit of an individual Holder or
family member, or (iii) acquires at least three hundred thousand (300,000)
shares of Registrable Securities (as adjusted for stock splits and
combinations); provided, however, (A) the transferor shall, within ten (10) days
after such transfer, furnish to the Company written notice of the name and
address of such transferee or assignee and the securities with respect to which
such registration rights are being assigned and (B) such transferee shall agree
to be subject to all restrictions set forth in this Agreement.

         2.11 AMENDMENT OF REGISTRATION RIGHTS. Any provision of this Section 2
may be amended and the observance thereof may be waived (either generally or in
a particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Holders of at least sixty-six and
two-thirds percent (66 2/3%) of the Registrable Securities then outstanding. Any
amendment or waiver effected in accordance with this Section 2.11 shall be
binding upon each Holder and the Company.

         2.12 LIMITATION ON SUBSEQUENT REGISTRATION RIGHTS. After the date of
this Agreement, the Company shall not, without the prior written consent of the
Holders of sixty-six and two-thirds percent (66 2/3%) of the Registrable
Securities then outstanding, enter into any agreement with any holder or
prospective holder of any securities of the Company that would grant such holder
registration rights senior to or on parity with those granted to the Holders
hereunder.

         2.13 "MARKET STAND-OFF" AGREEMENT. Each Holder hereby agrees that such
Holder shall not sell or otherwise transfer or dispose of any Common Stock (or
other securities) of the Company held by such Holder (other than those included
in the registration) for a period specified by the representative of the
underwriters of Common Stock (or other securities) of the Company not to exceed
one hundred eighty (180) days following the effective date of a registration
statement of the Company filed under the Securities Act, provided that:

               (i) such agreement shall apply only to the Company's Initial
Offering; and

                                      12.

<PAGE>

               (ii) all officers and directors of the Company and holders of at
least three percent (3%) of the Company's voting securities enter into similar
agreements.

         Each Holder agrees to execute and deliver such other agreements as may
be reasonably requested by the Company or the underwriter which are consistent
with the foregoing or which are necessary to give further effect thereto. The
obligations described in this Section 2.13 shall not apply to a registration
relating solely to employee benefit plans on Form S-1 or Form S-8 or similar
forms that may be promulgated in the future, or a registration relating solely
to a Commission Rule 145 transaction on Form S-4 or similar forms that may be
promulgated in the future. The Company may impose stop-transfer instructions
with respect to the shares of Common Stock (or other securities) subject to the
foregoing restriction until the end of said one hundred eighty (180) day period.

         2.14 RULE 144 REPORTING. With a view to making available to the Holders
the benefits of certain rules and regulations of the SEC which may permit the
sale of the Registrable Securities to the public without registration, the
Company agrees to use its best efforts to:

               (a) Make and keep public information available, as those terms
are understood and defined in SEC Rule 144 or any similar or analogous rule
promulgated under the Securities Act, at all times after the effective date of
the first registration filed by the Company for an offering of its securities to
the general public;

               (b) File with the SEC, in a timely manner, all reports and other
documents required of the Company under the Exchange Act;

               (c) So long as a Holder owns any Registrable Securities, furnish
to such Holder forthwith upon request: a written statement by the Company as to
its compliance with the reporting requirements of said Rule 144 of the
Securities Act, and of the Exchange Act (at any time after it has become subject
to such reporting requirements); a copy of the most recent annual or quarterly
report of the Company; and such other reports and documents as a Holder may
reasonably request in availing itself of any rule or regulation of the SEC
allowing it to sell any such securities without registration.

SECTION 3. COVENANTS OF THE COMPANY

         3.1 BASIC FINANCIAL INFORMATION AND REPORTING.

               (a) The Company will maintain true books and records of account
in which full and correct entries will be made of all its business transactions
pursuant to a system of accounting established and administered in accordance
with generally accepted accounting principles consistently applied, and will set
aside on its books all such proper accruals and reserves as shall be required
under generally accepted accounting principles consistently applied.

               (b) As soon as practicable after the end of each fiscal year of
the Company, and in any event within ninety (90) days thereafter, the Company
will furnish each Investor a consolidated balance sheet of the Company, as at
the end of such fiscal year, and a consolidated

                                      13.

<PAGE>

statement of income and a consolidated statement of cash flows of the Company,
for such year, all prepared in accordance with generally accepted accounting
principles consistently applied and setting forth in each case in comparative
form the figures for the previous fiscal year, all in reasonable detail. Such
financial statements shall be accompanied by a report and opinion thereon by
independent public accountants of national standing selected by the Company's
Board of Directors.

               (c) The Company will furnish each Investor, as soon as
practicable after the end of the first, second and third quarterly accounting
periods in each fiscal year of the Company, and in any event within forty-five
(45) days thereafter, a consolidated balance sheet of the Company as of the end
of each such quarterly period, and a consolidated statement of income and a
consolidated statement of cash flows of the Company for such period and for the
current fiscal year to date, prepared in accordance with generally accepted
accounting principles, with the exception that no notes need be attached to such
statements and year-end audit adjustments may not have been made.

               (d) So long as an Investor (with its affiliates) shall own not
less than three-hundred thousand (300,000) shares of Registrable Securities (as
adjusted for stock splits and combinations) (a "Major Investor"), the Company
will furnish each such Major Investor (i) at least thirty (30) days prior to the
beginning of each fiscal year an annual budget and operating plans for such
fiscal year (and as soon as available, any subsequent revisions thereto); and
(ii) as soon as practicable after the end of each month, and in any event within
twenty (20) days thereafter, a consolidated balance sheet of the Company as of
the end of each such month, and a consolidated statement of income and a
consolidated statement of cash flows of the Company for such month and for the
current fiscal year to date, including a comparison to plan figures for such
period, prepared in accordance with generally accepted accounting principles
consistently applied, with the exception that no notes need be attached to such
statements and year-end audit adjustments may not have been made.

         3.2 INSPECTION RIGHTS. Each Investor shall have the right to visit and
inspect any of the properties of the Company or any of its subsidiaries, and to
discuss the affairs, finances and accounts of the Company or any of its
subsidiaries with its officers, and to review such information as is reasonably
requested all at such reasonable times and as often as may be reasonably
requested; provided, however, that the Company shall not be obligated under this
Section 3.2 with respect to a competitor of the Company or with respect to
information which the Board of Directors determines in good faith is
confidential and should not, therefore, be disclosed.

         3.3 CONFIDENTIALITY OF RECORDS. Each Investor agrees to use, and to use
its best efforts to insure that its authorized representatives use, the same
degree of care as such Investor uses to protect its own confidential information
to keep confidential any information furnished to it which the Company
identifies as being confidential or proprietary (so long as such information is
not in the public domain), except that such Investor may disclose such
proprietary or confidential information to any partner, subsidiary or parent of
such Investor for the purpose of

                                      14.
<PAGE>

evaluating its investment in the Company as long as such partner, subsidiary or
parent is advised of the confidentiality provisions of this Section 3.3.

         3.4 RESERVATION OF COMMON STOCK. The Company will at all times reserve
and keep available, solely for issuance and delivery upon the conversion of the
Preferred Stock, all Common Stock issuable from time to time upon such
conversion.

         3.5 STOCK VESTING. Unless otherwise approved by the Board of Directors,
all stock options and other stock equivalents issued after the date of this
Agreement to employees, directors, consultants and other service providers shall
be subject to vesting as follows: (i) twenty percent (20%) of such stock shall
vest at the end of the first year following the earlier of the date of issuance
or such person's services commencement date with the company, and (ii) eighty
percent (80%) of such stock shall vest over the remaining four (4) years. With
respect to any shares of stock purchased by any such person, the Company's
repurchase option shall provide that upon such person's termination of
employment or service with the Company, with or without cause, the Company or
its assignee (to the extent permissible under applicable securities laws and
other laws) shall have the option to purchase at cost any unvested shares of
stock held by such person.

         3.6 EXECUTIVE OFFICER COMPENSATION. The Board of Directors of the
Company shall have the discretion to evaluate and modify the compensation of the
Company's executive officers from time to time (including at the first meeting
of the Board of Directors which occurs after the date hereof).

         3.7 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT. The Company shall
require all officers and employees to execute and deliver a Proprietary
Information and Inventions Agreement in the form attached to the Purchase
Agreement. The Company shall require all consultants to execute and deliver a
consulting agreement containing confidentiality and assignment of inventions
provisions similar to those included in the Proprietary Information and
Inventions Agreement.

         3.8 DIRECTORS' LIABILITY AND INDEMNIFICATION. The Company's Certificate
of Incorporation and Bylaws shall provide (i) for elimination of the liability
of directors to the maximum extent permitted by law and (ii) for indemnification
of directors for acts on behalf of the Company to the maximum extent permitted
by law.

         3.9 REAL PROPERTY HOLDING CORPORATION. The Company covenants that it
will operate in a manner such that it will not become a "United States real
property holding corporation" ("USRPHC") as that term is defined in Section
897(c)(2) of the Internal Revenue Code of 1986, as amended, and the
regulations thereunder ("FIRPTA"). The Company agrees to make determinations
as to its status as a USRPHC, and will file statements concerning those
determinations with the Internal Revenue Service, in the manner and at the
times required under Reg. Section 1.897-2(h), or any supplementary or
successor provision thereto. Within 30 days of a request from an Investor or
any of its partners, the Company will inform the requesting party, in the
manner set forth in Reg. Section 1.897-2(h)(1)(iv) or any supplementary or
successor provision thereto, whether that party's interest in the Company
constitutes a United States real property

                                      15.

<PAGE>

interest (within the meaning of Internal Revenue Code Section 897(c)(1) and the
regulations thereunder) and whether the Company has provided to the Internal
Revenue Service all required notices as to its USRPHC status.

         3.10 TERMINATION OF COVENANTS. All covenants of the Company contained
in Section 3 of this Agreement shall expire and terminate as to each Investor on
the effective date of the registration statement pertaining to a firmly
underwritten public offering of shares of Common Stock of the Company at a price
per share not less than $3.50 and for a total offering of not less than $15.0
million (before deduction of underwriters commissions and expenses) (a
"Qualified IPO").

SECTION 4. RIGHTS OF FIRST REFUSAL

         4.1 SUBSEQUENT OFFERINGS. Each Major Investor shall have a right of
first refusal to purchase its pro rata share of all Equity Securities, as
defined below, that the Company may, from time to time, propose to sell and
issue after the date of this Agreement, other than the Equity Securities
excluded by Section 4.6 hereof. Each Investor's pro rata share is equal to the
ratio of (A) the number of shares of the Company's Common Stock (including all
shares of Common Stock issued or issuable upon conversion of the Shares) of
which such Investor is deemed to be a holder immediately prior to the issuance
of such Equity Securities to (B) the total number of shares of the Company's
outstanding Common Stock (including all shares of Common Stock issued or
issuable upon conversion of the Shares) immediately prior to the issuance of the
Equity Securities. The term "Equity Securities" shall mean (i) any Common Stock,
Preferred Stock or other security of the Company, (ii) any security convertible,
with or without consideration, into any Common Stock, Preferred Stock or other
security (including any option to purchase such a convertible security), (iii)
any security carrying any warrant or right to subscribe to or purchase any
Common Stock, Preferred Stock or other security, or (iv) any such warrant or
right.

         4.2 EXERCISE OF RIGHTS. If the Company proposes to issue any Equity
Securities, it shall give each Major Investor written notice of its intention,
describing the Equity Securities, the price and the terms and conditions upon
which the Company proposes to issue the same. Each Major Investor shall have
fifteen (15) days from the giving of such notice to agree to purchase its pro
rata share of the Equity Securities for the price and upon the terms and
conditions specified in the notice by giving written notice to the Company and
stating therein the quantity of Equity Securities to be purchased.
Notwithstanding the foregoing, the Company shall not be required to offer or
sell such Equity Securities to any Investor who would cause the Company to be in
violation of applicable federal securities laws by virtue of such offer or sale.

         4.3 ISSUANCE OF EQUITY SECURITIES TO OTHER PERSONS. If not all of the
Major Investors elect to purchase their pro rata share of the Equity Securities,
then the Company shall promptly notify in writing the Major Investors who do so
elect and shall offer such Major Investors the right to acquire such
unsubscribed shares. The Major Investors shall have five (5) days after receipt
of such notice to notify the Company of its election to purchase all or a
portion thereof of the unsubscribed shares. If the Investors fail to exercise in
full the rights of first

                                      16.

<PAGE>

refusal, the Company shall have ninety (90) days thereafter to sell the Equity
Securities in respect of which the Major Investors' rights were not exercised,
at a price and upon general terms and conditions materially no more favorable to
the purchasers thereof than specified in the Company's notice to the Major
Investors pursuant to Section 4.2 hereof. If the Company has not sold such
Equity Securities within ninety (90) days of the notice provided pursuant to
Section 4.2, the Company shall not thereafter issue or sell any Equity
Securities without first offering such securities to the Major Investors in the
manner provided above.

         4.4 TERMINATION OF RIGHTS OF FIRST REFUSAL. The rights of first refusal
established by this Section 4 shall not apply to, and shall terminate upon the
effective date of the registration statement pertaining to a Qualified IPO.

         4.5 TRANSFER OF RIGHTS OF FIRST REFUSAL. The rights of first refusal of
each Major Investor under this Section 4 may be transferred to the same parties,
subject to the same restrictions as any transfer of registration rights pursuant
to Section 2.10.

         4.6 EXCLUDED SECURITIES. The rights of first refusal established by
this Section 4 shall have no application to any of the following Equity
Securities:

               (a) up to an aggregate amount of 9,525,000 shares of Common Stock
(and/or options, warrants or other Common Stock purchase rights issued pursuant
to such options, warrants or other rights) issued or to be issued to employees,
officers or directors of, or consultants or advisors to, the Company or any
subsidiary, pursuant to stock purchase or stock option plans or other
arrangements that are approved by the Board of Directors;

               (b) stock issued pursuant to any rights or agreements outstanding
as of the date of this Agreement, options and warrants outstanding as of the
date of this Agreement; and stock issued pursuant to any such rights or
agreements granted after the date of this Agreement, provided that the rights of
first refusal established by this Section 4 applied with respect to the initial
sale or grant by the Company of such rights or agreements;

               (c) any Equity Securities issued for consideration other than
cash pursuant to a merger, consolidation, acquisition or similar business
combination;

               (d) shares of Common Stock issued in connection with any stock
split, stock dividend or recapitalization by the Company;

               (e) shares of Common Stock issued upon conversion of the Shares;

               (f) any Equity Securities issued pursuant to any equipment
leasing arrangement, or debt financing from a bank or similar financial
institution;

               (g) any Equity Securities that are issued by the Company pursuant
to a registration statement filed under the Securities Act; and

                                      17.

<PAGE>

               (h) shares of the Company's Common Stock or Preferred Stock
issued in connection with strategic transactions involving the Company and other
entities, including (A) joint ventures, manufacturing, marketing or distribution
arrangements or (B) technology transfer or development arrangements; provided
that such strategic transactions and the issuance of shares therein, has been
approved by the Company's Board of Directors.

SECTION 5. MISCELLANEOUS

         5.1 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California.

         5.2 SURVIVAL. The representations, warranties, covenants, and
agreements made herein shall survive any investigation made by any Holder and
the closing of the transactions contemplated hereby. All statements as to
factual matters contained in any certificate or other instrument delivered by or
on behalf of the Company pursuant hereto in connection with the transactions
contemplated hereby shall be deemed to be representations and warranties by the
Company hereunder solely as of the date of such certificate or instrument.

         5.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors, and administrators of the
parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of Registrable Securities from time to time;
provided, however, that prior to the receipt by the Company of adequate written
notice of the transfer of any Registrable Securities specifying the full name
and address of the transferee, the Company may deem and treat the person listed
as the holder of such shares in its records as the absolute owner and holder of
such shares for all purposes, including the payment of dividends or any
redemption price.

         5.4 ENTIRE AGREEMENT. This Agreement, the Exhibits and Schedules
hereto, the Purchase Agreement and the other documents delivered pursuant
thereto constitute the full and entire understanding and agreement between the
parties with regard to the subjects hereof and no party shall be liable or bound
to any other in any manner by any representations, warranties, covenants and
agreements except as specifically set forth herein and therein.

         5.5 SEVERABILITY. In case any provision of this Agreement shall be
invalid, illegal, or unenforceable, the validity, legality, and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.

         5.6 AMENDMENT AND WAIVER.

               (a) Except as otherwise expressly provided, this Agreement may be
amended or modified only upon the written consent of the Company and the holders
of at least two-thirds (66 2/3%) of the Registrable Securities.

                                      18.

<PAGE>

               (b) Except as otherwise expressly provided, the obligations of
the Company and the rights of the Holders under this Agreement may be waived
only with the written consent of the holders of at least two-thirds (66 2/3%) of
the Registrable Securities.

               (c) Notwithstanding the foregoing, this Agreement may be amended
with only the written consent of the Company to include additional purchasers of
Shares as "Investors," "Holders" and parties hereto.

         5.7 DELAYS OR OMISSIONS. It is agreed that no delay or omission to
exercise any right, power, or remedy accruing to any Holder, upon any breach,
default or noncompliance of the Company under this Agreement shall impair any
such right, power, or remedy, nor shall it be construed to be a waiver of any
such breach, default or noncompliance, or any acquiescence therein, or of any
similar breach, default or noncompliance thereafter occurring. It is further
agreed that any waiver, permit, consent, or approval of any kind or character on
any Holder's part of any breach, default or noncompliance under this Agreement
or any waiver on such Holder's part of any provisions or conditions of this
Agreement must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement, by law, or otherwise afforded to Holders, shall be cumulative and not
alternative.

         5.8 NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified, (ii) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient; if not, then on the next business
day, (iii) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (iv) one (1) day after deposit
with a nationally recognized overnight courier, specifying next day delivery,
with written verification of receipt. All communications shall be sent to the
party to be notified at the address as set forth on the signature pages hereof
or Schedule A hereto or at such other address as such party may designate by ten
(10) days advance written notice to the other parties hereto.

         5.9 ATTORNEYS' FEES. In the event that any dispute among the parties to
this Agreement should result in litigation, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.

         5.10 TITLES AND SUBTITLES. The titles of the sections and subsections
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.

         5.11 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.

                                      19.

<PAGE>

         Agreed and executed by:

RIGEL PHARMACEUTICALS

By:
   ------------------------------------

Name:
     ----------------------------------

Title:
      ---------------------------------

                 AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
                                 SIGNATURE PAGE

<PAGE>

                                        FRAZIER HEALTHCARE II, L.P.

                                        By:
                                           -----------------------------------

                                        Name:
                                             ---------------------------------

                                        Title:
                                              --------------------------------

                                        FRAZIER & COMPANY, INC.

                                        By:
                                           -----------------------------------

                                        Name:
                                             ---------------------------------

                                        Title:
                                              --------------------------------

                 AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
                                 SIGNATURE PAGE

<PAGE>

                                        LOMBARD, ODIER & CIE

                                        By:
                                           -----------------------------------

                                        Name:
                                             ---------------------------------

                                        Title:
                                              --------------------------------

                 AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
                                 SIGNATURE PAGE

<PAGE>

                                  ALTA CALIFORNIA PARTNERS, L.P.
                                  By: Alta California Management Partners, L.P.

                                  By:
                                     ------------------------------------------
                                          General Partner

                                  ALTA EMBARCADERO PARTNERS, LLC

                                  By:
                                     -------------------------------------------
                                          Member

                 AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
                                 SIGNATURE PAGE

<PAGE>

                                        FORTUNE MAKER CORPORATION

                                        By:
                                           -----------------------------------

                                        Name:
                                             ---------------------------------

                                        Title:
                                              --------------------------------

                 AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
                                 SIGNATURE PAGE

<PAGE>

                                      JOHNSON & JOHNSON DEVELOPMENT CORPORATION

                                      By:
                                         -----------------------------------

                                      Name:
                                           ---------------------------------

                                      Title:
                                            --------------------------------

                 AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
                                 SIGNATURE PAGE

<PAGE>

                                        NOVARTIS PHARMA AG

                                        By:
                                           -----------------------------------

                                        Name:
                                             ---------------------------------

                                        Title:
                                              --------------------------------

                 AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
                                 SIGNATURE PAGE

<PAGE>

                                        PFIZER, INC.

                                        By:
                                           -----------------------------------

                                        Name:
                                             ---------------------------------

                                        Title:
                                              --------------------------------

                 AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
                                 SIGNATURE PAGE

<PAGE>

CMEA LIFE SCIENCES FUND, L.P.

By:
   -----------------------------------

Name:
     ---------------------------------

Title:
      --------------------------------

                 AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
                                 SIGNATURE PAGE

<PAGE>

AURORA BIOSCIENCES CORPORATION

By:
   -----------------------------------

Name:
     ---------------------------------

Title:
      --------------------------------

                 AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
                                 SIGNATURE PAGE

<PAGE>

CB CAPITAL INVESTORS, L.P.

By:  Chase Capital Partners

Its:  Manager

Name:
     ---------------------------------

Title:
      --------------------------------

                 AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
                                 SIGNATURE PAGE

<PAGE>

SUMMIT BANK & TRUST CO.

By:
   -----------------------------------

Name:
     ---------------------------------

Title:
      --------------------------------

                 AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
                                 SIGNATURE PAGE

<PAGE>

R.A. INVESTMENT GROUP

By:
   -----------------------------------

Name:
     ---------------------------------

Title:
      --------------------------------

                 AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
                                 SIGNATURE PAGE

<PAGE>

QUANTUM PARTNERS LDC

By:
   -----------------------------------

Name:
     ---------------------------------

Title:
      --------------------------------

                 AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
                                 SIGNATURE PAGE

<PAGE>

                                        GC & H INVESTMENTS

                                        By:
                                           -----------------------------------

                                        Name:
                                             ---------------------------------

                                        Title:
                                              --------------------------------

                 AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
                                 SIGNATURE PAGE

<PAGE>

                                              Thomas Volpe

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

                 AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
                                 SIGNATURE PAGE

<PAGE>

                           RIGEL PHARMACEUTICALS, INC.
                       SERIES E PREFERRED STOCK FINANCING
                             SCHEDULE OF PURCHASERS
                         FIRST CLOSING-FEBRUARY 3, 2000

<TABLE>
<CAPTION>
NAME AND ADDRESS                         INVESTMENT AMOUNT    NUMBER OF SHARES
----------------                         -----------------    ----------------

<S>                                        <C>                  <C>
Alta California Partners, L.P.              $  977,664             162,944
One Embarcadero Center, Suite 4050
San Francisco, CA 94111

                                            $   22,338               3,723
Alta Embarcadero Partners, LLC
One Embarcadero Center, Suite 4050
San Francisco, CA 94111

Fortune Maker Corporation                      300,000              50,000
11/F King Fook Building
30-32 Des Voeux Road Central
HONG KONG

Frazier Healthcare II, L.P.                    750,000             125,000
Two Union Square
601 Union Street, Suite 3300
Seattle, WA 98101

CMEA Life Sciences Fund                      1,000,000             166,666
235 Montgomery Street, Suite 920
San Francisco, CA 94104

CB Capital Investors                         5,000,000             833,333
c/o Chase Capital Partners
Partners 380
Madison Avenue
12th Floor
New York, NY 10017

Pritzker Entities
  Cynthia J. Cohn                               99,996              16,666
  Hannah S. & Samuel A. Cohn                    99,996              16,666
    Memorial Foundation
  R.A. Investments Group                       800,000             133,333
c/o Diversified Financial Management
  Group
200 West Madison Street
Suite 3800
Chicago, IL 50606

Quantum Partners LDC                         2,000,000             333,333
888 Seventh Avenue
New York, NY 10106

Johnson & Johnson Development                1,000,000             166,666
  Corporation
One Johnson & Johnson Plaza
New Brunswick, NJ 08933

                                  Schedule A-1

<PAGE>

Lombard, Odier & Cie                         3,000,000             500,000
Toedistrasse 36 - Ch 8027
Zurich
Switzerland

Aurora Biosciences Corporation          Transfer of Technology      50,000
11010 Torreyana Road
San Diego, CA 92121

TOTAL                                      $15,049,994           2,558,330
</TABLE>

                                  Schedule A-2

<PAGE>
                                    RIGEL PHARMACEUTICALS, INC.
                                SERIES E PREFERRED STOCK FINANCING
                                       SCHEDULE OF PURCHASERS
                                  SECOND CLOSING - AUGUST 31, 2000

<TABLE>
<CAPTION>
NAME AND ADDRESS                                  INVESTMENT AMOUNT               NUMBER OF SHARES
-------------------------------------             -----------------               ----------------
<S>                                             <C>                             <C>
Thomas Volpe                                           $199,998                        33,333
The Prudential Volpe Technology Group
One Maritime Plaza
Fifth Floor
San Francisco, CA 94111

TOTAL                                                  $199,998                        33,333
</TABLE>

                                  Schedule A-3<PAGE>

                                                                     Exhibit 4.3

THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "1933 ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY
NOT BE SOLD OR TRANSFERRED UNLESS SUCH SALE OR TRANSFER IS IN ACCORDANCE WITH
THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR. SOME OTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS
IS AVAILABLE WITH RESPECT THERETO.

                          COMMON STOCK PURCHASE WARRANT

Warrant No. CS-                          Number of Shares:         Common Stock

                           RIGEL PHARMACEUTICALS, INC.

         1.   ISSUANCE. This Warrant is issued to                         ,
by RIGEL PHARMACEUTICALS, INC., a Delaware corporation (hereinafter with its
successors called the "COMPANY").

         2.   PURCHASE PRICE; NUMBER OF SHARES. The registered holder of this
Warrant (the "HOLDER"), commencing on the date hereof, is entitled upon
surrender of this Warrant with the subscription form annexed hereto duly
executed, at the principal office of the Company, to purchase from the
Company the following securities (collectively, the "SHARES") at a price per
share of $1.14 (the "PURCHASE PRICE"),
(       ) fully paid and nonassessable shares of Common Stock, $.001 par
value, of the Company (the "COMMON STOCK"). Until such time as this Warrant
is exercised in full or expires, the Purchase Price and the securities
issuable upon exercise of this Warrant are subject to adjustment as
hereinafter provided. The person or persons on whose name or names any
certificate representing shares of Common Stock is issued hereunder shall be
deemed to have become the holder of record of the shares represented thereby
as at the close of business on the date this Warrant is exercised with
respect to such shares, whether or not the transfer books of the Company
shall be closed.

         3.   PAYMENT OF PURCHASE PRICE. The Purchase Price may be paid (i)
in cash or by Check, (ii) by the surrender by the Holder to the Company of
any promissory notes or other obligations issued by the Company, with all
such notes and obligations so surrendered being credited against the Purchase
Price in an amount equal to the principal amount thereof plus accrued
interest to the date of surrender, or (iii) by any combination of the
foregoing.

         4.   NET ISSUE ELECTION. The Holder may elect to receive, without
the payment by the Holder of any additional consideration, shares of Common
Stock equal to the value of this Warrant or any portion hereof by the
surrender of this Warrant or such portion to the Company, with the net issue
election notice annexed hereto duly executed, at the principal office of the
Company. Thereupon, the Company shall issue to the Holder such number of
fully paid and nonassessable shares of Common Stock as is computed using the
following formula:

                                  X = Y (A-B)
                                      -------
                                         A

                                       1.
<PAGE>

where:        X =  the number of shares of Common Stock to be issued to the
                   Holder pursuant to this Section 4.

              Y =  the number of shares of Common Stock covered by this Warrant
                   in respect of which the net issue election is made pursuant
                   to this Section 4.

              A =  the Fair Market Value (defined below) of one share of Common
                   Stock, as determined at the time the net issue election is
                   made pursuant to this Section 4.

              B =  the Purchase Price in effect under this Warrant at the time
                   the net issue election is made pursuant to this Section 4.

"Fair Market Value" of a share of Common Stock as of a particular date (the
"Determination Date") shall mean:

              (a)  If the net issue election is made in connection with and
contingent upon the closing of the sale of the Company's Common Stock to the
public in a public offering pursuant to a Registration Statement under the
Act (a "Public Offering"), and if the Company's Registration Statement
relating to such Public Offering ("Registration Statement") has been declared
effective by the SEC, then the initial "Price to Public" specified in the
final prospectus with respect to such offering multiplied by the number of
shares of Common Stock into which each share of Preferred Stock is then
convertible.

              (b)  If the net issue election is not made in connection with
and contingent upon a Public Offering, then as follows:

                   (i)   If traded on a securities exchange or the Nasdaq
National Market, the fair market value of the Common Stock shall be deemed to
be the average of the closing or last reported sale prices of the Common
Stock on such exchange or market over the 30-day period ending five business
days prior to the Determination Date (or, if traded on a securities exchange
or the Nasdaq National Market for less than 35 days as of the Determination
Date, over the period beginning on the date of the Public Offering and ending
five business days prior to the Determination Date);

                   (ii)  If otherwise traded in an over-the-counter market,
the fair market value of the Common Stock shall be deemed to be the average
of the closing ask prices of the Common Stock over the 30-day period ending
five business days prior to the Determination Date; and

                   (iii) If there is no public market for the Common Stock,
then fair market value shall be determined in good faith by the Company's
Board of Directors.

     5.   PARTIAL EXERCISE. This Warrant may be exercised in part, and the
Holder shall be entitled to receive a new warrant, which shall be dated as of
the date of this Warrant, covering the number of shares in respect of which
this Warrant shall not have been exercised.

                                       2.
<PAGE>

     6.   FRACTIONAL SHARES. In no event shall any fractional share of Common
Stock be issued upon any exercise of this Warrant. If, upon exercise of this
Warrant as an entirety, the Holder would, except as provided in this Section
6, be entitled to receive a fractional share of Common Stock, then the
Company shall pay in lieu thereof, the Fair Market Value of such fractional
share in cash.

     7.   EXPIRATION DATE; AUTOMATIC EXERCISE. Except as otherwise set forth
in Section 10, this Warrant shall expire on the earlier of (i) the close of
business on June 1, 2008 and (ii) seven years after the closing of the
initial public offering of the Company's Common Stock pursuant to a
registration statement under the Securities Act of 1933, as amended, and
shall be void thereafter.

     8.   RESERVED SHARES; VALID ISSUANCE. The Company covenants that it will
at all times from and after the date hereof reserve and keep available such
number of its authorized shares of Common Stock, $.001 par value, of the
Company (the "COMMON STOCK"), free from all preemptive or similar rights
therein, as will be sufficient to permit, respectively, the exercise of this
Warrant in full and the conversion into shares of Common Stock upon such
exercise. The Company further covenants that such shares as may be issued
pursuant to such exercise and/or conversion will, upon issuance, be duly and
validly issued, fully paid and nonassessable and free from all taxes, liens
and charges with respect to the issuance thereof.

     9.   STOCK SPLITS AND DIVIDENDS. If after the date hereof the Company
shall subdivide the Common Stock, by split-up or otherwise, or combine the
Common Stock. or issue additional shares of Common Stock in payment of a
stock dividend on the Common Stock, the number of shares of Common Stock
issuable on the exercise of this Warrant shall forthwith be proportionately
increased in the case of a subdivision or stock dividend, or proportionately
decreased in the case of a combination, and the Purchase Price shall
forthwith be proportionately decreased in the case of a subdivision or stock
dividend, or proportionately increased in the case of a combination.

     10.  MERGERS AND RECLASSIFICATIONS. If after the date hereof the Company
shall enter into any Reorganization (as hereinafter defined), then, as a
condition of such Reorganization, lawful provisions shall be made, and duly
executed documents evidencing the same from the Company or its successor
shall be delivered to the Holder, so that the Holder shall thereafter have
the right to purchase, at a total price not to exceed that payable upon the
exercise of this Warrant in full, the kind and amount of shares of stock and
other securities and property receivable upon such Reorganization by a holder
of the number of shares of Common Stock which might have been purchased by
the Holder immediately prior to such Reorganization, and in any such case
appropriate provisions shall be made with respect to the rights and interest
of the Holder to the end that the provisions hereof (including without
limitation, provisions for the adjustment of the Purchase Price and the
number of shares issuable hereunder and the provisions relating to the net
issue election) shall thereafter be applicable in relation to any shares of
stock or other securities and property thereafter deliverable upon exercise
hereof. For the purposes of this Section 10, the term "Reorganization" shall
include without limitation any reclassification, capital reorganization or
change of the Common Stock (other than as a result of a subdivision,

                                       3.
<PAGE>

combination or stock dividend provided for in Section 9 hereof), or any
consolidation of the Company with, or merger of the Company into, another
corporation or other business organization (other than a merger in which the
Company is the surviving corporation and which does not result in any
reclassification or change of the outstanding Common Stock), or any sale or
conveyance to another corporation or other business organization of all or
substantially all of the assets of the Company.

     Notwithstanding the term of this Warrant fixed pursuant to Section 7
above and the provisions of this Section 10, the right to purchase Common
Stock as granted herein shall expire, to the extent not previously exercised,
immediately upon the closing of a merger or consolidation of the Company with
or into another corporation when the Company is not the surviving corporation
(other than a merger or consolidation for the principal purpose of changing
the domicile of the Company), and provided that any securities received in
such merger or consolidation are publicly traded or the sale of all or
substantially all of the Company's capital stock, properties and assets to
any other person, in each case where the stockholders of the Company
immediately prior to such merger, consolidation or sale of assets own
(directly or indirectly) less than 50% of the voting securities of the
surviving entity or purchaser of assets in such transaction (collectively, a
"Merger"), except to the extent assumed by the successor corporation (or
parent thereof) in connection with such Merger. In the event that any
outstanding warrants to purchase equity securities of the Company are
assumed, this Warrant shall also be similarly assumed.

     The Company shall notify the Holder at least fifteen (15) calendar days
prior to any proposed Merger, and if the Company fails to deliver such
notice, then notwithstanding anything to the contrary in this Warrant, the
rights to purchase the Company's Common Stock (or the shares of stock and
other securities and property receivable upon such Merger by a holder of
Common Stock (the "OTHER CONSIDERATION")) shall not expire. The Holder may
exercise the Warrant contingent upon the closing of the Merger. If the Merger
does not close within 60 days after notice, any contingent exercise shall be
void.

     11.  CERTIFICATE OF ADJUSTMENT. Whenever the Purchase Price is adjusted,
as herein provided, the Company shall promptly deliver to the Holder a
certificate of the Company's chief financial officer setting forth the
Purchase Price after such adjustment and setting forth a brief statement of
the facts requiring such adjustment.

     12.  NOTICES OF RECORD DATE, ETC. In the event of:

          (a)  any taking by the Company of a record of the holders of any
class of securities for the purpose of determining the holders thereof who
are entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase, sell or otherwise acquire or dispose of any shares
of stock of any class or any other securities or property, or to receive any
other right;

          (b)  any reclassification of the capital stock of the Company,
capital reorganization of the Company, consolidation or merger involving the
Company, or sale or conveyance of all or substantially all of its assets; or

                                       4.
<PAGE>

          (c)  any voluntary or involuntary dissolution, liquidation or
winding-up of the Company;

then in each such event the Company will provide or cause to be provided to
the Holder a written notice thereof. Such notice shall be provided at least
fifteen (15) calendar days prior to the date specified in such notice on
which any such action is to be taken.

     13.  CORPORATE INFORMATION. As a courtesy to Holder and in order to
enable Holder to make informed decisions regarding the possible exercise of
this Warrant from time to time, the Company agrees, upon written request by
Holder to the chief financial officer of the Company from time to time (but
not more often than twice in any 12-month period), to provide to Holder
copies of the following documents within a reasonable time after such request
(but in all events only to the extent that, and no sooner than the time that,
such documents have been distributed or made available to all the Company's
stockholders): (i) the Company's most recent audited annual financial
statements or, if audited statements are not available, then the Company's
unaudited annual financial statements as of the end of the Company's most
recently ended fiscal year; (ii) unaudited quarterly financial statements for
each quarter of the Company's fiscal year since the date of the annual
financial statements delivered pursuant to clause (i) above; and (iii) any
other reports, proxy statements or notices distributed to holders of the
Company's Common Stock within the last twelve (12) months preceding such
request (or within the period since the last such request by Holder.
whichever is shorter). Notwithstanding the preceding sentence, when the
Company has outstanding a class of publicly-traded securities or is for any
other reason a reporting company under the Securities Exchange Act of 1934,
the rights under this Section 13 shall terminate.

     14.  REPRESENTATIONS, WARRANTIES AND COVENANTS. This Warrant is issued
and delivered by the Company and accepted by each Holder on the basis of the
following representations, warranties and covenants made by the Company:

          (a)  The Company has all necessary authority to issue, execute and
deliver this Warrant and to perform its obligations hereunder. This Warrant
has been duly authorized issued, executed and delivered by the Company and is
the valid and binding obligation of the Company, enforceable in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws of general application
affecting the enforcement of Holders rights or by general equity principals
or public policy concerns.

          (b)  The shares of Common Stock issuable upon the exercise of this
Warrant have been duly authorized and reserved for issuance by the Company
and, when issued in accordance with the terms hereof, will be validly issued,
fully paid and nonassessable.

          (c)  The issuance, execution and delivery of this Warrant do not,
and the issuance of the shares of Common Stock upon the exercise of this
Warrant in accordance with the terms hereof will not, (i) violate or
contravene the Company's Certificate of Incorporation or by-laws, or any law,
statute, regulation, rule, judgment or order applicable to the Company, (ii)
violate, contravene or result in a breach or default under any material
contract, agreement or instrument to which the Company is a party or by which
the Company or any of its assets are

                                       5.
<PAGE>

bound or (iii) require the consent or approval of or the filing of any notice
or registration with any person or entity.

     15.  AMENDMENT AND WAIVER. The terms of this Warrant may be amended,
modified or waived only with the written consent of the party against which
enforcement of the same is sought.

     16.  REPRESENTATIONS AND COVENANTS OF THE HOLDER. This Common Stock
Purchase Warrant has been entered into by the Company in reliance upon the
following representations and covenants of the Holder, which by its execution
hereof the Holder hereby confirms:

          (a)  INVESTMENT PURPOSE. The right to acquire Common Stock or the
Common Stock issuable upon exercise of the Holder's rights contained herein
will be acquired for investment and not with a view to the sale or
distribution of any part thereof, and the Holder has no present intention of
selling or engaging in any public distribution of the same except pursuant to
a registration or exemption.

          (b)  ACCREDITED INVESTOR. Holder is an "accredited investor" within
the meaning of the Securities and Exchange Rule 501 of Regulation D, as
presently in effect.

          (c)  PRIVATE ISSUE. The Holder understands (i) that the Common
Stock issuable upon exercise of the Holder's rights contained herein is not
registered under the 1933 Act or qualified under applicable state securities
laws on the ground that the issuance contemplated by this Warrant will be
exempt from the registration and qualifications requirements thereof, and
(ii) that the Company's reliance on such exemption is predicated on the
representations set forth in this Section 16.

          (d)  FINANCIAL RISK. The Holder has such knowledge and experience
in financial and business matters as to be capable of evaluating the merits
and risks of its investment and has the ability to bear the economic risks of
its investment.

     17.  NOTICES, TRANSFERS, ETC.

          (a)  Any notice or written communication required or permitted to
be given to the Holder may be given by certified mall or delivered to the
Holder at the address most recently provided by the Holder to the Company.

          (b)  Subject to compliance with applicable federal and state
securities laws, this Warrant may be transferred by the Holder with respect
to any or all of the shares purchasable hereunder. Upon surrender of this
Warrant to the Company, together with the assignment notice annexed hereto
duly executed, for transfer of this Warrant as an entirety by the Holder, the
Company shall issue a new warrant of the same denomination to the assignee.
Upon surrender of this Warrant to the Company, together with the assignment
hereof properly endorsed, by the Holder for transfer with respect to a
portion of the shares of Preferred Stock purchasable hereunder, the Company
shall issue a new warrant to the assignee, in such denomination as shall

                                       6.
<PAGE>

be requested by the Holder hereof, and shall issue to such Holder a new
warrant covering the number of shares in respect of which this Warrant shall
not have been transferred.

          (c)  In case this Warrant shall be mutilated, lost, stolen or
destroyed, the Company shall issue a new warrant of like tenor and
denomination and deliver the same (i) in exchange and substitution for and
upon surrender and cancellation of any mutilated Warrant, or (ii) in lieu of
any Warrant lost, stolen or destroyed, upon receipt of an affidavit of the
Holder or other evidence reasonably satisfactory to the Company of the loss,
theft or destruction of such Warrant and an indemnification of loss by the
Holder in favor of the Company.

     18.  NO IMPAIRMENT. The Company will not, by amendment of its
Certificate or through any reclassification, capital reorganization,
consolidation, merger, sale or conveyance of assets, dissolution,
liquidation, issue or sale of securities or any other voluntary action, avoid
or seek to avoid the observance of performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of
all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder.

     19.  GOVERNING LAW. The provisions and terms of this Warrant shall be
governed by and construed in accordance with the internal laws of the State
of California.

     20.  SUCCESSORS AND ASSIGNS. This Warrant shall be binding upon the
Company's successors and assigns and shall inure to the benefit of the
Holder's successors, legal representatives and permitted assigns.

     21.  BUSINESS DAYS. If the last or appointed day for the taking of any
action required or the expiration of any rights granted herein shall be a
Saturday or Sunday or a legal holiday in California, then such action may be
taken or right may be exercised on the next succeeding day which is not a
Saturday or Sunday or such a legal holiday.

DATED: June 2, 1998                RIGEL PHARMACEUTICALS, INC.

                                   By:  /s/ James M Gower
                                      -------------------------------------

                                   Name: James Gower

                                   Title: President

                                       7.
<PAGE>

                                  SUBSCRIPTION

To:_______________________________     Date:_______________________________

     The undersigned hereby subscribes for _____________ shares of Preferred
Stock covered by this Warrant. The certificate(s) for such shares shall be
issued in the name of the undersigned or as otherwise indicated below:

                                   ___________________________________
                                   Signature

                                   ___________________________________
                                   Name for Registration

                                   ___________________________________
                                   Mailing Address

                          NET ISSUE ELECTION NOTICE

To:______________________________      Date:_______________________________

     The undersigned hereby elects under Section 4 to surrender the right to
purchase _______________ shares of Preferred Stock pursuant to this Warrant.
The certificate(s) for such shares issuable upon such net issue election
shall be issued in the name of the undersigned or as otherwise indicated
below:

                                   ___________________________________
                                   Signature

                                   ___________________________________
                                   Name for Registration

                                   ___________________________________
                                   Mailing Address

<PAGE>

                                   ASSIGNMENT

      For value received _____________________ hereby sells, assigns

and transfers unto ______________________________________________________

_________________________________________________________________________
         [Please print or typewrite name and address of Assignee]

_________________________________________________________________________

the within Warrant, and does hereby irrevocably constitute and appoint

___________________ its attorney to transfer the within Warrant on the books

of the within named Company with full power of substitution on the premises.

DATED:____________________________     _______________________________

IN THE PRESENCE OF:

__________________________________

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