Document:

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                                                                     Exhibit 4.2

                                 XENOPORT, INC.

                           FIFTH AMENDED AND RESTATED

                           INVESTORS RIGHTS AGREEMENT

      This Fifth Amended and Restated Investors Rights Agreement (the
"AGREEMENT") is made and entered into as of December 16, 2004 by and among
XenoPort, Inc., a Delaware corporation located at 3410 Central Expressway, Santa
Clara, California 95051 (the "COMPANY"), and the Holders (as defined below)
listed on EXHIBIT A attached hereto. This Fifth Amended and Restated Investors
Rights Agreement amends and restates in its entirety the Fourth Amended and
Restated Investors Rights Agreement dated January 15, 2004 (the "PRIOR RIGHTS
AGREEMENT") entered into among the Company and certain of the Holders. Upon
execution of this Agreement, all provisions of, rights granted and covenants
made in the Prior Rights Agreement are hereby waived, released and superseded in
their entirety and shall have no further force or effect, including, without
limitation, all rights of first refusal and any notice period associated
therewith otherwise applicable to the transactions contemplated by the Series D
Agreement (as defined below).

      1.    Registration Rights. The Company covenants and agrees as follows:

            1.1 Definitions. For purposes of this Section 1:

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

                  (b) The term "REGISTRABLE SECURITIES" means the Common Stock,
(i) issuable or issued upon conversion of the Series D Preferred Stock issued
pursuant to the Series D Preferred Stock Purchase Agreement of even date
herewith (the "SERIES D AGREEMENT"), including the Dividend Shares (as defined
in the Series D Agreement), (ii) issuable or issued upon conversion of the
Series C Preferred Stock and the Warrants to Purchase Common Stock issued
pursuant to the Series C Preferred Stock Purchase Agreement dated January 15,
2004 (the "SERIES C AGREEMENT") and the Warrant for the Purchase of up to 6,250
Shares of Series C Preferred Stock dated on or about July 28, 2004, (iii)
issuable or issued upon conversion of the Series B Preferred Stock issued
pursuant to the Series B Preferred Stock Purchase Agreement dated May 24, 2002
(the "SECOND SERIES B AGREEMENT"), the Series B Preferred Stock Purchase
Agreement dated November 15, 2000 (the "FIRST SERIES B AGREEMENT"), the Warrant
for the Purchase of up to 25,000 Shares of Series B Preferred Stock dated on or
about November 15, 2000, the two Warrants for the Purchase of up to an aggregate
of 128,000 Shares of Series B Preferred Stock dated on or about December 21,
2001 and the Warrant for the Purchase of up to 24,000 Shares of Series B
Preferred Stock dated on or about November 1, 2002, (iv) issuable or issued upon
conversion of the Series A Preferred Stock issued pursuant to the Series A
Preferred Stock Purchase Agreement dated December 23, 1999 (the "FIRST SERIES A
AGREEMENT"), the Series A Preferred Stock Purchase Agreement dated February 11,
2000 (the "SECOND SERIES A AGREEMENT") and the Warrant for the Purchase of up to
50,000 Shares of

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Series A Preferred Stock dated January 28, 2000 and (v) any Common Stock of the
Company issued as (or issuable upon the conversion or exercise of any warrant,
right or other security that is issued as) a dividend or other distribution with
respect to, or in exchange for or in replacement of, such Common Stock referred
to in (i), (ii), (iii) and (iv) above, excluding from Registrable Securities in
all cases, however, any (i) securities sold by a person in a transaction in
which such person's rights under this Section 1 are not assigned, (ii)
securities sold by a person to the public either pursuant to registration
statement or Rule 144 promulgated under the Act, (iii) held by a Holder
(together with its affiliates) if, as reflected on the Company's list of
stockholders, such Holder (together with its affiliates) holds less than 1% of
the Company's outstanding Common Stock (treating all shares of Preferred Stock
on an as converted basis), the Company has completed its Initial Registration
(as defined below) and all shares of Common Stock of the Company issuable or
issued upon conversion of the shares of Preferred Stock held by and issuable to
such Holder (and its affiliates) may be sold pursuant to Rule 144 during any
ninety (90) day period, (iv) securities held by a Holder who is no longer the
record holder of such securities and (v) securities issuable upon outstanding
warrants providing that (x) such warrants are then currently exercisable under a
provision providing that the exercise price of such warrant is payable in shares
issuable upon exercise of such warrant (a "net exercise" provision) and (y) the
shares issuable upon the net exercise of such warrant would be immediately
available for sale under Rule 144(k);

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

                  (d) The term "HOLDER" means any person owning or having the
right to acquire Registrable Securities or any assignee thereof in accordance
with Section 1.13 hereof;

                  (e) The term "FORM S-3" means such form under the Act as in
effect on the date hereof or any registration form under the Act subsequently
adopted by the Securities and Exchange Commission (the "SEC") that permits
inclusion or incorporation of substantial information by reference to other
documents filed by the Company with the SEC;

                  (f) The term "INVESTOR" means each Investor named in (i) the
First Series A Agreement, (ii) the Second Series A Agreement, (iii) the First
Series B Agreement, (iv) the Second Series B Agreement, (v) the Series C
Agreement and (vi) the Series D Agreement; and

                  (g) The term "DESIGNATED WARRANT HOLDER" means a holder of (i)
those certain Warrants for the Purchase of up to an aggregate of 128,000 Shares
of Series B Preferred Stock dated on or about December 21, 2001 or (ii) that
certain Warrant for the Purchase of up to 24,000 Shares of Series B Preferred
Stock dated on or about November 1, 2002 (collectively, the "DESIGNATED
WARRANTS") or the shares of the Company's capital stock issuable upon the
exercise thereof.

            1.2 Request for Registration.

                  (a) If the Company shall receive at any time on or after six
(6) months after the effective date of the first registration statement for a
public offering of securities of the Company

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(other than a registration statement relating to (i) any employee benefit plan
or (ii) the issuance or resale of securities issued in connection with any
corporate reorganization or transaction under Rule 145 of the Securities Act;
each of such registration statements, a "SPECIAL REGISTRATION STATEMENT") (the
"INITIAL REGISTRATION"), a written request from the Holders (not including any
Designated Warrant Holder) of at least 40% of the Registrable Securities (the
"INITIATING HOLDERS") that the Company file a registration statement under the
Act covering the registration of that number of shares of Registrable
Securities, the aggregate offering price of which, net of underwriting discounts
and commissions, is expected to exceed $10,000,000, then the Company shall,
within ten (10) days of the receipt thereof, give written notice of such request
to all Holders and shall, subject to the limitations of Section 1.2(b), use its
commercially reasonable efforts to effect, as soon as practicable, the
registration under the Act of all Registrable Securities that the Holders
request to be registered within twenty (20) days of the mailing of such written
notice by the Company; provided, however, that the Company shall not be
obligated to take any action to effect any such registration, qualification or
compliance pursuant to this Section 1.2(a):

                  (i) During the period starting with the date ninety (90) days
prior to the Company's estimated date of filing of, and ending on the date 180
days immediately following the effective date of, any registration statement
pertaining to securities of the Company (other than pursuant to a Special
Registration Statement), provided that the Company is actively employing in good
faith all reasonable efforts to cause such registration statement to become
effective;

                  (ii) After the Company has effected two such registrations
pursuant to this Section 1.2(a), and such registrations have been declared or
ordered effective, subject, however, to withdrawals of registrations described
in the last proviso of Section 1.6, which shall not count as one such
registration;

                  (iii) If the Company shall furnish to such Holders a
certificate signed by the Chief Executive Officer or President of the Company
stating that in the good faith judgment of the Board of Directors it would be
seriously detrimental to the Company or its stockholders for a registration
statement to be filed at such time, then the Company's obligation under this
Section 1.2(a) shall be deferred for a period not to exceed 120 days from the
date of receipt of written request from the Holders; provided, however, that the
Company may not utilize this right more than once in any twelve-month period;

                  (iv) If within thirty (30) days of receipt of a written
request from Initiating Holders pursuant to Section 1.2(a), the Company gives
notice to the Holders of the Company's intention to file a registration
statement for a public offering, other than pursuant to a Special Registration
Statement, within sixty (60) days; or

                  (v) If the Initiating Holders propose to dispose of shares of
Registrable Securities that may be immediately registered on Form S-3 pursuant
to a request made pursuant to Section 1.12 below.

            (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 1.2
and the Company shall include such information in the written notice referred to
in Section 1.2(a). In such event, the right of any Holder to include such

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Holder's Registrable Securities in such registration shall be conditioned upon
such Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting (unless otherwise mutually
agreed by a majority in interest of the Initiating Holders and such Holder) to
the extent provided herein. All Holders proposing to distribute their securities
through such underwriting shall (together with the Company as provided in
Section 1.4(e)) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by a majority in
interest of the Initiating Holders. Notwithstanding any other provision of this
Section 1.2, if the underwriter advises the Initiating Holders in writing that
marketing factors require a limitation of the number of shares to be
underwritten, then the Initiating Holders shall so advise all Holders of
Registrable Securities which would otherwise be underwritten pursuant hereto,
and the number of shares of Registrable Securities that may be included in the
underwriting shall be allocated among all Holders thereof, including the
Initiating Holders, in proportion (as nearly as practicable) to the amount of
Registrable Securities of the Company owned by each Holder participating in such
underwriting; provided, however, that no Registrable Securities shall be
excluded from such registration unless all other securities are first entirely
excluded.

            1.3 Company Registration. If (but without any obligation to do so)
the Company proposes to register (including for this purpose a registration
effected by the Company for stockholders other than the Holders) any of its
stock or other securities under the Act in connection with the public offering
of such securities solely for cash (other than a Special Registration Statement,
or a registration on any form which does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of the Registrable Securities), the Company shall, at such
time, promptly give each Holder written notice of such registration. Upon the
written request of each Holder given within twenty (20) days after the effective
date of written notice by the Company (as determined under Section 5.2 below),
the Company shall, subject to the provisions of Section 1.8, cause to be
registered under the Act all of the Registrable Securities that each such Holder
has requested to be registered.

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

                  (a) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its commercially 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 a period of up to one
hundred twenty (120) days or, if earlier, until the distribution contemplated in
the Registration Statement has been completed; provided, that (i) such 120-day
period shall be extended for a period of time equal to the period the Holder
refrains from selling any Registrable Securities included in such registration
at the request of an underwriter or underwriters of Common Stock (or other
securities) of the Company and (ii) only with respect to registrations under
Section 1.3 in which the Company registers securities to be offered by the
Company on a delayed or continuous basis, in the case of any registration of
Registrable Securities on Form S-3 which are intended to be offered on a
continuous or delayed basis, such 120-day period shall be extended, if
necessary, to keep the registration statement effective until all such
Registrable Securities are sold; provided, however, that at any time, upon
written notice to the participating Holders and for a period not to exceed sixty
(60)

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days thereafter (the "SUSPENSION PERIOD"), the Company may suspend the use or
effectiveness of any registration statement (and the Holders hereby agree not to
offer or sell any Registrable Securities pursuant to such registration statement
during the Suspension Period) if the Company reasonably believes that there is
or may be 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. In the event that the Company shall
exercise its right to suspend the use or effectiveness of a registration
hereunder, the applicable time period during which the registration statement is
to remain effective shall be extended by a period of time equal to the duration
of the Suspension Period. The Company may extend the Suspension Period for an
additional consecutive sixty (60) days with the consent of the holders of a
majority of the Registrable Securities registered under the applicable
registration statement. Upon receipt of notice of the Suspension Period by the
Company, all Holders registering shares under such registration statement shall
(x) not offer to sell any Registrable Securities pursuant to the registration
statement during the period in which the suspension is in effect after receiving
notice of such suspension; and (y) use their commercially reasonable efforts to
deliver to the Company (at the Company's expense) all copies, other than
permanent file copies then in such Holders' possession, of the prospectus
relating to such Registrable Securities current at the time of receipt of such
notice.

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

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

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

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

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

                  (h) Use its commercially reasonable efforts to list the
securities covered by such registration statement on the Nasdaq National Market,
or such other exchange for which such securities qualify as the Company deems
reasonable.

                  (i) Provide, or arrange to have provided, with respect to the
securities covered by such registration statement a CUSIP number and reasonable
transfer agent and related services.

                  (j) Notwithstanding the foregoing, except as provided in
Section 1.4(a)(ii), the Company shall not be required to file, cause to become
effective or maintain the effectiveness of any registration statement other than
a registration statement on Form S-3 that contemplates a distribution of
securities on a delayed or continuous basis pursuant to Rule 415 under the Act.

The Company shall have no obligation with respect to any registration requested
pursuant to Section 1.2 or Section 1.12 if the number of shares or the
anticipated aggregate offering price of the Registrable Securities to be
included in the registration does not equal or exceed the number of shares or
the anticipated aggregate offering price required to originally trigger the
Company's obligation to initiate such registration as specified in Section 1.2
or Section 1.12, whichever is applicable.

            1.5 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 1 with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as shall be required to effect the registration of such Holder's Registrable
Securities.

            1.6 Expenses of Demand Registration. All expenses other than
underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Section 1.2, including
(without limitation) all registration, filing and qualification fees, printers'
and accounting fees, fees and disbursements of counsel for the Company, and the
reasonable fees and disbursements of one counsel for the selling Holders (not to
exceed $35,000) shall be borne by the Company; provided, however, that the
Company shall not be required to pay for any expenses of any registration
proceeding begun pursuant to Section 1.2 if the registration request is
subsequently withdrawn at the request of the Holders holding a majority of the
Registrable Securities to be registered (in which case all participating Holders
shall bear such expenses), unless the Holders holding a majority of the
Registrable Securities agree to forfeit their right to one demand registration
pursuant to Section 1.2; provided further, however, that if at the time of such
withdrawal, the Holders have learned of a material adverse change in the
condition, business, or prospects of the

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Company from that known to the Holders at the time of their request, then the
Holders shall not be required to pay any of such expenses and such registration
request and subsequent withdrawal shall not count as one demand registration and
the Holders shall retain their rights pursuant to Section 1.2.

            1.7 Expenses of Company Registration. The Company shall bear and pay
all expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
pursuant to Section 1.3 for each Holder (which right may be assigned as provided
in Section 1.13), including (without limitation) all registration, filing, and
qualification fees, printers and accounting fees relating or apportionable
thereto and the reasonable fees and disbursements of one counsel for the selling
Holders selected by them (not to exceed $25,000), but excluding underwriting
discounts and commissions relating to Registrable Securities.

            1.8 Underwriting Requirements. In connection with any offering
involving an underwriting of shares being issued by the Company, the Company
shall not be required under Section 1.3 to include any of the Holders'
securities in such underwriting unless they accept the terms of the underwriting
as agreed upon between the Company and the underwriters selected by it (or by
other persons entitled to select the underwriters), and then only in such
quantity as will not, in the opinion of the underwriters, jeopardize the success
of the offering by the Company, but in no event will the amount of Registrable
Securities of the selling Holders included in the offering be reduced below
twenty-five percent (25%) of the total amount of securities included in such
offering (the Registrable Securities so included to be apportioned pro rata
among the selling stockholders according to the total amount of Registrable
Securities entitled to be included therein owned by each selling stockholder or
in such other proportions as shall mutually be agreed to by such selling
stockholders), unless such offering is the initial public offering of the
Company's securities, in which case the selling stockholders may be excluded
entirely if the underwriters make the determination described above and no other
stockholder's securities are included. For purposes of apportionment, any
selling stockholder that is a Holder of Registrable Securities and that is a
partnership, limited liability company or corporation, the partners, retired
partners, members, retired members and stockholders of such Holder, or the
estates and family members of any such partners, retired partners, members and
retired members and any trusts for the benefit of any of the foregoing persons
shall be deemed to be a single "selling stockholder," and any pro rata reduction
with respect to such "selling stockholder" shall be based upon the aggregate
amount of shares carrying registration rights owned by all entities and
individuals included in such "selling stockholder," as defined in this sentence.

      The Company shall have the right to include shares of Common Stock held by
entities other than the Company that are not already, by virtue of this
Agreement, deemed Registrable Securities (the "OTHER SHARES") in any
registration pursuant to Section 1.3, provided, however, that all of the Other
Shares shall be excluded from such registration before any Registrable
Securities are excluded from such registration pursuant to Section 1.8 hereof.
If Other Shares are included in a registration pursuant to Section 1.3, each
holder of Other Shares will be deemed a "Holder" (as that term is defined in
Section 1 of this Agreement) for all purposes under this Agreement pertaining to
such registration.

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

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

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

                  (b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its officers, employees, agents
and directors, each person, if any, who controls the Company within the meaning
of the Act, any underwriter, any other Holder selling securities in such
registration statement, the partners, members, officers, employees, agents and
directors of such Holder, any underwriter for such Holder and any controlling
person of any such underwriter or other Holder, against any losses, claims,
damages, or liabilities (joint or several) to which any of the foregoing persons
may become subject, under the Act, the 1934 Act or other federal or state law,
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished by such Holder expressly for
use in connection with such registration; and each such Holder will pay, as
incurred, any legal or other expenses reasonably incurred by any person intended
to be indemnified pursuant to this Section 1.10(b), in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this Section
1.10(b) shall not apply to (i) any alleged untrue statement or alleged omission
unless finally held to be, in fact, an untrue statement or an omission, or (ii)
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; and provided further, that, in no event

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shall any indemnity under this Section 1.10(b) exceed the net proceeds from the
offering received by such Holder.

                  (c) Promptly after receipt by an indemnified party under this
Section 1.10 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.10, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party 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 prejudicial to its ability to defend such
action, shall relieve such indemnifying party of liability to the indemnified
party under this Section 1.10 to the extent of such prejudice, but the omission
so to deliver written notice to the indemnifying party will not relieve it of
any liability that it may have to any indemnified party otherwise than under
this Section 1.10.

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

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

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

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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.

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

                  (a) make and keep public information available, as those terms
are understood and defined in SEC Rule 144, at all times after the effective
date of the first registration statement filed by the Company for the offering
of its securities to the general public;

                  (b) take such action, including the voluntary registration of
its Common Stock under Section 12 of the 1934 Act, as is necessary to enable the
Holders to utilize Form S-3 for the sale of their Registrable Securities, such
action to be taken as soon as practicable after the end of the fiscal year in
which the first registration statement filed by the Company for the offering of
its securities to the general public is declared effective;

                  (c) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act; and

                  (d) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144 (at
any time after ninety (90) days after the effective date of the first
registration statement filed by the Company), the Act and the 1934 Act (at any
time after it has become subject to such reporting requirements), or that it
qualifies as a registrant whose securities may be resold pursuant to Form S-3
(at any time after it so qualifies), (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC that permits the
selling of any such securities without registration or pursuant to such form.

            1.12 Form S-3 Registration.

                  (a) 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 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:

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

                        (ii) 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

                                      -10-
<PAGE>

Holders joining in such request as are specified in a written request given
within twenty (20) days after the effective date of such written notice from the
Company (as determined under Section 5.2 below); provided, however, that the
Company shall not be obligated to effect any such registration, qualification or
compliance, pursuant to this Section 1.12: (1) if Form S-3 is not available for
such offering by the Holders; (2) if the Holders, together with the holders of
any other securities of the Company entitled to inclusion in such registration,
propose to sell Registrable Securities and such other securities (if any) at an
aggregate price to the public (net of any underwriters' discounts or
commissions) of less than $1,000,000; (3) if the Company shall furnish to the
Holders a certificate signed by the Chief Executive Officer or President of the
Company stating that in the good faith judgment of the Board of Directors of the
Company, it would be seriously detrimental to the Company and its stockholders
for such Form S-3 Registration to be effected at such time, in which event the
Company shall have the right to defer the filing of the Form S-3 registration
statement for a period of not more than 120 days after receipt of the request of
the Holder or Holders under this Section 1.12; provided, however, that the
Company shall not utilize this right more than once in any twelve (12) month
period; (4) if the Company has already effected a registration on Form S-3 in
the previous twelve (12) month period preceding the date of such request
pursuant to this Section 1.12; (5) if within thirty (30) days of receipt of a
written request from any Holder or Holders pursuant to this Section 1.12, the
Company gives notice to such Holder or Holders of the Company's intention to
make a public offering within sixty (60) days (other than a Special Registration
Statement) or (6) in any particular jurisdiction in which the Company would be
required to qualify to do business or to execute a general consent to service of
process in effecting such registration, qualification or compliance.

                  (b) If the Holders initiating the registration request
hereunder (the "PARTICIPATING HOLDERS") intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall so
advise the Company as part of their request made pursuant to this Section 1.12
and the Company shall include such information in the written notice referred to
in Section 1.12(a)(i). In such event, the right of any Holder to include such
Holder's 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 Participating Holders and such Holder)
to the extent provided herein. All Holders proposing to distribute their
securities through such underwriting shall (together with the Company as
provided in Section 1.4(e)) enter into an underwriting agreement in customary
form with the underwriter or underwriters selected for such underwriting by a
majority in interest of the Participating Holders. Notwithstanding any other
provision of this Section 1.12, if the underwriter advises the Participating
Holders in writing that marketing factors require a limitation of the number of
shares to be underwritten, then the Participating Holders shall so advise all
Holders of Registrable Securities which would otherwise be underwritten pursuant
hereto, and the number of shares of Registrable Securities that may be included
in the underwriting shall be allocated among all such Holders thereof, including
the Participating Holders, in proportion (as nearly as practicable) to the
amount of Registrable Securities of the Company owned by each Holder; provided,
however, that no Registrable Securities shall be excluded from such registration
unless all other securities are first entirely excluded.

                  (c) Subject to the foregoing, the Company shall file a
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as

                                      -11-
<PAGE>

practicable after receipt of the request or requests of the Holders. All
expenses incurred in connection with a registration requested pursuant to
Section 1.12, including (without limitation) all registration, filing,
qualification, printer's and accounting fees and the reasonable fees and
disbursements of one counsel for the selling Holder or Holders (not to exceed
$20,000) and counsel for the Company, but excluding any underwriters' discounts
or commissions associated with Registrable Securities, shall be borne by the
Company. Registrations effected pursuant to this Section 1.12 shall not be
counted as the demand for registration or registrations effected pursuant to
Section 1.2.

            1.13 Assignment of Registration Rights. The rights to cause the
Company to register Registrable Securities pursuant to this Section 1 may be
assigned by a Holder (i) to a transferee or assignee who acquires at least
500,000 shares of Registrable Securities, (ii) to a limited partner, general
partner, member or other affiliate of a Holder (for so long as such shares
remain Registrable Securities) or (iii) a Designated Warrant Holder to a
transferee permitted by the Designated Warrants, provided, in each case no
transfer shall be deemed effective until the Company is furnished with written
notice of the name and address of such transferee or assignee and the securities
with respect to which such registration rights are being assigned; and provided,
further, that such assignment shall be effective only if immediately following
such transfer the further disposition of such securities by the transferee or
assignee is restricted under the Act.

            1.14 "Market Stand-Off" Agreement. Each Holder hereby agrees, and
each transferee to whom any amount of securities that are or at one time were
Registrable Securities (or that are or were convertible into Registrable
Securities) are transferred shall agree in writing as a condition to the
transfer of any such securities to such transferee, that, during a period not to
exceed 180 days, following the effective date of the Initial Registration of the
Company, it shall not sell or otherwise transfer or dispose of (other than to a
donee who agrees to be similarly bound) any Common Stock of the Company held by
it at any time during such period except Common Stock included in such
registration; provided, however, that:

                  (a) such agreement shall be applicable only to the first such
registration statement of the Company that covers Common Stock (or other
securities) to be sold on its behalf to the public in an underwritten offering;
and

                  (b) all officers and directors of the Company and holders of
at least one percent (1%) of the Company's voting securities are bound by
similar agreements.

      The foregoing covenant shall not apply to the sale of any securities of
the Company to an underwriter pursuant to any underwriting agreement, and if the
Company or any underwriter releases any officer, director or holder of one
percent (1%) or more of the Company's voting securities from his, her or its
sale restrictions so undertaken, then each Investor shall be notified prior to
such release and shall itself be simultaneously released to the same
proportional extent. In order to enforce the foregoing covenant, the Company may
impose stop-transfer instructions with respect to the Registrable Securities of
each Holder (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.

      Upon the request of the Company, each Holder hereby agrees, and each
transferee to whom any amount of securities that are or at one time were
Registrable Securities (or that are or were

                                      -12-
<PAGE>

convertible into Registrable Securities) are transferred shall agree in writing
as a condition to the transfer of any such securities to such transferee, to
enter into an agreement with terms similar to those described above in this
Section 1.14 with the managing underwriters in connection with the Initial
Registration of the Company.

            1.15 Termination of Registration Rights. The rights and obligations
provided for under this Section 1 shall terminate upon the earlier of (i) (x)
two (2) years following the date hereof with respect to any Holder who upon the
date two (2) years following the date hereof owns less than 5% of the Company's
outstanding Common Stock or is not an "affiliate" (as that term is defined in
Rule 144 promulgated under the Act) of the Company or (y) four (4) years
following the closing of the Initial Registration with respect to any Holder who
upon the date two (2) years following the date hereof owns 5% or more of the
Company's outstanding Common Stock or is an "affiliate" (as that term is defined
in Rule 144 promulgated under the Act) of the Company, or (ii) as to a given
Holder, when such Holder can sell all of such Holder's Registrable Securities in
a ninety (90) day period pursuant to Rule 144 promulgated under the Act;
provided, however, that the provisions of (ii) above shall not apply to any
Holder while such Holder owns 5% or more of the Company's outstanding capital
stock. Notwithstanding the above, the rights and obligations provided for under
this section 1 shall terminate no earlier than four (4) years following the date
hereof (the "Four Year Period") if the Company does not complete a firm
commitment underwritten offering of its securities to the general public within
the Four Year Period.

            1.16 Limitation on Subsequent Registration Rights. From and after
the date of this Agreement, the Company shall not, without the prior written
consent of the Holders of a majority of the Registrable Securities then
outstanding, enter into any agreement with any holder or prospective holder of
any securities of the Company that would allow such holder or prospective holder
to include such securities in any registration of the Company, unless under the
terms of such agreement such holder or prospective holder may include such
securities in any such registration only to the extent that the inclusion of its
securities will not reduce the amount of the Registrable Securities of the
Holders which is included.

      2. Information Rights.

            2.1 Inspection. The Company shall permit each Holder holding,
together with its affiliates, an aggregate of 400,000 shares of the Registrable
Securities, at such Holder's expense to visit and inspect the Company's
properties, to examine its books of account and records and to discuss the
Company's affairs, finances and accounts with its officers, all at such
reasonable times as may be requested by the Holder; provided, however, that the
Company shall not be obligated pursuant to this Section 2.1 to provide access to
any information which it reasonably considers to be a trade secret or similar
confidential information unless such Holder agrees in writing to hold such
information in confidence.

            2.2 Delivery of Financial Statements and Operating Budget. The
Company shall deliver to each Holder that holds, together with its affiliates,
an aggregate of 400,000 shares of Registrable Securities:

                  (a) as soon as practicable, but in any event within ninety
(90) days after the end of each fiscal year of the Company, a balance sheet, and
statements of operations and cash flow

                                      -13-
<PAGE>

for such fiscal year. Such year-end financial reports are to be in reasonable
detail, prepared in accordance with generally accepted accounting principles
("GAAP"), and audited and certified by independent public accountants of
nationally recognized standing selected by the Company;

                  (b) within forty-five (45) days after the end of each fiscal
quarter of the Company, an unaudited statement of operations, cash flow and
balance sheet for and as of the end of such quarter, in reasonable detail and
prepared in accordance with GAAP, subject to year end audit adjustments and the
absence of footnotes; and

                  (c) as soon as practicable, but in any event within thirty
(30) days prior to the end of each fiscal year of the Company, an annual
operating budget including monthly and quarterly financial projections for the
following fiscal year, prepared in reasonable detail.

            2.3 Termination of Information Rights. The covenants set forth in
this Section 2 shall terminate as to Holders and be of no further force and
effect upon the consummation of the sale of securities pursuant to a
registration statement filed by the Company under the Act in connection with the
initial firm commitment underwritten offering of its securities to the general
public.

            2.4 Confidentiality of Records. Each Holder agrees to use the same
degree of care as such Holder uses to protect its own confidential information
to keep confidential any information furnished to such Holder hereof that the
Company identifies as being confidential or proprietary (so long as such
information is not in the public domain), except that such Holder may disclose
such proprietary or confidential information (i) to any partner, subsidiary or
parent of such Holder as long as such partner, subsidiary or parent is advised
of and agrees or has agreed to be bound by the confidentiality provisions of
this Section 2.4 or comparable restrictions; (ii) at such time as it enters the
public domain through no fault of such Holder; (iii) that is communicated to it
free of any obligation of confidentiality; (iv) that is developed by Holder or
its agents independently of and without reference to any confidential
information communicated by the Company; or (v) as required by applicable law.

      3. Investors' Right of First Refusal.

            3.1 Right of First Refusal upon Issuances of Securities by the
Company.

                  (a) The Company hereby grants, on the terms set forth in this
Section 3.1, to each Investor who holds at least 400,000 shares of Common Stock
issuable or issued upon conversion of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock and Series D Preferred Stock and upon
exercise of those certain Warrants to purchase Common Stock issued pursuant to
the Series C Agreement (the "COMMON WARRANTS") the right of first refusal to
purchase all or any part of such Investor's pro rata share of the New Securities
(as defined in Section 3.1(b)) that the Company may, from time to time, propose
to sell and issue. The Investors may purchase said New Securities on the same
terms and at the same price at which the Company proposes to sell the New
Securities. The pro rata share of each Investor, for purposes of this right of
first refusal, is the ratio of the total number of shares of Common Stock issued
or issuable upon (i) exercise of the Common Warrants and (ii) conversion of
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock or
Series D Preferred Stock held by such Investor, to the total number of shares of
Common Stock outstanding immediately prior to the issuance of the New

                                      -14-
<PAGE>

Securities (including any shares of Common Stock into which outstanding shares
of Preferred Stock are then convertible and any shares of Common Stock that are
then issuable upon exercise of the Common Warrants). If not all eligible
Investors elect to purchase their pro rata share of the New Securities, then the
Company shall promptly notify in writing the eligible Investors who do so elect
and shall offer such electing Investors the right to acquire such unsubscribed
shares. If all such electing Investors entitled to such notice, in the
aggregate, choose to purchase more than the unsubscribed shares, then such
unsubscribed shares shall be allocated among the electing Investors pro rata on
the basis of the number of shares of Common Stock issuable or issued upon
conversion of Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock and Series D Preferred Stock owned by such electing Investors.

                  (b) "NEW SECURITIES" shall mean any capital stock of the
Company, whether now authorized or not, and any rights, options or warrants to
purchase said capital stock, and securities of any type whatsoever that are, or
may become, convertible into said capital stock; provided that "New Securities"
does not include (i) the Registrable Securities, (ii) securities offered in a
firm commitment underwritten public offering pursuant to a registration
statement filed under the Act, (iii) securities issued pursuant to the
acquisition of another corporation by the Company by merger, purchase of
substantially all of the assets of such corporation or other reorganization that
have been approved by the board of directors of the Company, including at least
a majority of the directors elected solely by holders of the Company's Preferred
Stock, (iv) securities issued or issuable to officers, directors or employees of
the Company pursuant to any incentive plan or arrangement (not for the primary
purpose of raising capital) approved by the board of directors of the Company,
including at least a majority of the directors elected solely by holders of the
Company's Preferred Stock, (v) securities issued or issuable to scientific
advisors or consultants of the Company pursuant to any plan or arrangement (not
for the primary purpose of raising capital) approved by the board of directors
of the Company, including at least a majority of the directors elected solely by
holders of the Company's Preferred Stock, (vi) securities issued, upon the
approval of the board of directors of the Company, including at least a majority
of the directors elected solely by holders of the Company's Preferred Stock,
pursuant to agreements to license technology and/or provide sponsored research
(not for the primary purpose of raising capital), (vii) securities issued in
connection with corporate or strategic partnering arrangements approved by the
board of directors of the Company, including at least a majority of the
directors elected solely by holders of the Company's Preferred Stock and (viii)
securities issued in connection with lending, equipment leasing or equipment
financing arrangements approved by the board of directors of the Company,
including at least a majority of the directors elected solely by holders of the
Company's Preferred Stock.

                  (c) In the event the Company proposes to undertake an issuance
of New Securities, it shall give to the Investors written notice (the "NOTICE")
of its intention, describing the type of New Securities, the price, the terms
upon which the Company proposes to issue the same, and a statement as to the
number of days from receipt of such Notice within which the Investors must
respond to such Notice. The Investors shall have thirty (30) days from the
effective date of the Notice (as determined under Section 5.2 below) to indicate
an intention to purchase any or all of the New Securities for the price and upon
the terms specified in the Notice by giving written notice to the Company and
stating therein the quantity of New Securities to be purchased and forwarding
payment for such New Securities to the Company no later than thirty (30) days
after the date of

                                      -15-
<PAGE>

receipt of the Notice or, if later, the proposed closing date for such
transaction determined by the Company.

                  (d) In the event the Investors do not exercise the right of
first refusal as to all the New Securities within said thirty (30) day period,
the Company shall have ninety (90) days thereafter to sell or enter into an
agreement (pursuant to which the sale of New Securities covered thereby shall be
closed, if at all, within thirty (30) days from date of said agreement) to sell
the New Securities respecting which the Investors' rights were not exercised, at
a price and upon terms no more favorable to the purchasers thereof than
specified in the Notice. In the event the Company has not sold the New
Securities within said ninety (90) day period (or sold and issued New Securities
in accordance with the foregoing within thirty (30) days from the date of said
agreement), the Company shall not thereafter issue or sell any New Securities
without first offering such securities to the Investors in the manner provided
above.

                  (e) The right of first refusal granted under this Section 3.1
shall expire upon:

                        (i) The closing of the Company's first firm commitment
underwritten public offering pursuant to an effective registration statement
filed by the Company under the Act.

                        (ii) For each Investor, the date on which such Investor
no longer holds a minimum of 400,000 shares of Common Stock issued or issuable
upon conversion of Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock and upon exercise of the Common
Warrants.

      4. Waiver of Right of First Refusal. The Investors executing this
Agreement who hold at least a majority of the Registrable Securities under the
Prior Rights Agreement hereby fully waive on behalf of all Investors under the
Prior Rights Agreement their right of first refusal, including all notice
provisions thereof, under Section 3 of the Prior Rights Agreement with respect
to the sale and issuance of shares of the Company's Series D Preferred Stock at
the closing under the Series D Agreement.

      5. Miscellaneous Provisions.

            5.1 Waivers and Amendments. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
at least a majority of the shares of Registrable Securities. Any amendment or
waiver effected in accordance with this Section 5.1 shall be binding upon each
person or entity that is granted certain rights under this Agreement and the
Company.

            5.2 Notices. All notices and other communications required or
permitted hereunder shall be in writing and, except as otherwise noted herein,
shall be deemed effectively given upon personal delivery, delivery by nationally
recognized courier or three days after deposit with the United States Post
Office, (by registered or certified mail, postage prepaid) addressed: (a) if to
the Company, at the address set forth on the first page of this Agreement (or at
such other address as the Company shall have furnished to the Holders in
writing) attention of Chief Executive Officer and

                                      -16-
<PAGE>

(b) if to a Holder, at the latest address of such person shown on the Company's
records. Notwithstanding the foregoing, U.S. mail shall not be used to
effectuate delivery of any such notice required or permitted under this
Agreement to addresses outside of the United States.

         A concurrent copy of such notice to a Holder shall be delivered to:
                           O'Melveny & Myers LLP
                           2765 Sand Hill Road
                           Menlo Park, CA 94025
                           Attention:  Sam Zucker, Esq.
                           Fax: (650) 473-2601
                           Phone: (650) 473-2600

         And to:
                           Jones Day
                           2727 North Harwood
                           Dallas, TX 75201
                           Fax: (214) 969-5100
                           Phone: (214) 969-3702
                           Attention:  Stephen L. Fluckiger

         A concurrent copy of such notice to the Company shall be delivered to:
                           Cooley Godward LLP
                           Five Palo Alto Square
                           3000 El Camino Real
                           Palo Alto, CA 94306
                           Attention:  Suzanne Sawochka Hooper
                           Fax: (650) 849-7400

            5.3 Descriptive Headings. The descriptive headings herein have been
inserted for convenience only and shall not be deemed to limit or otherwise
affect the construction of any provisions hereof.

            5.4 Governing Law. This Agreement shall be governed by and
interpreted under the laws of the State of California as applied to agreements
among California residents, made and to be performed entirely within the State
of California.

            5.5 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument, but only one of which
need be produced.

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

            5.7 Successors and Assigns. Except as otherwise expressly provided
in this Agreement, this Agreement shall benefit and bind the successors,
assigns, heirs, executors and administrators of the parties to this Agreement.

                                      -17-
<PAGE>

            5.8 Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subject
matter of this Agreement and merges, incorporates and supercedes any prior
agreements or understandings with respect thereto, and no party shall be liable
or bound to any other party in any manner with respect to the subjects hereof by
any warranties, representations or covenants except as specifically set forth
herein.

            5.9 Separability; Severability. Unless expressly provided in this
Agreement, the rights of each Holder under this Agreement are several rights,
not rights jointly held with any other Holders. Any invalidity, illegality or
limitation on the enforceability of this Agreement with respect to any Holder
shall not affect the validity, legality or enforceability of this Agreement with
respect to the other Holders. If any provision of this Agreement is judicially
determined to be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not be affected or impaired.

           5.10 Stock Splits. All references to numbers of shares in this
Agreement shall be appropriately adjusted to reflect any stock dividend, split,
combination or other recapitalization of shares by the Company occurring after
the date of this Agreement.

            5.11 Aggregation of Stock. All shares of the Common Stock issued or
issuable upon conversion of Preferred Stock held or acquired by affiliated
entities or persons shall be aggregated together for the purpose of determining
the availability of any rights under this Agreement.

            5.12 Telecopy Execution and Delivery. A facsimile, telecopy or other
reproduction of this Agreement may be executed by one or more parties hereto,
and an executed copy of this Agreement may be delivered by one or more parties
hereto by facsimile or similar electronic transmission device pursuant to which
the signature of or on behalf of such party can be seen, and such execution and
delivery shall be considered valid, binding and effective for all purposes. At
the request of any party hereto, all parties hereto agree to execute an original
of this Agreement as well as any facsimile, telecopy or other reproduction
hereof.

                                      -18-
<PAGE>

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

                                   "COMPANY"

                                   XENOPORT, INC.

                                   By: /s/ Ronald W. Barrett
                                       ------------------------------
                                        Ronald W. Barrett,
                                        Chief Executive Officer

XENOPORT, INC.
FIFTH AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

<PAGE>

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

                                      "HOLDERS"

                                      SUNAMERICA LIFE INSURANCE COMPANY

                                      Signature: /s/ Greg Outcalt

                                      Signer name: Greg Outcalt

                                      Title: Senior Vice President

XENOPORT, INC.
FIFTH AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

<PAGE>

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

                                    "HOLDERS"

                                    ARTAL SERVICES N.V.

                                    Signature: /s/ Bernard Darimont

                                    Signer name: Bernard Darimont

                                    Title: Managing Director

XENOPORT, INC.
FIFTH AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

<PAGE>

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

                                    "HOLDERS"

                                    CADUCEUS PRIVATE INVESTMENTS, LP
                                    By: OrbiMed Capital, LLC, General Partner

                                    Signature: /s/ Eric A. Bittelman

                                    Signer name: Eric A. Bittelman

                                    Title: Chief Financial Officer

                                    ORBIMED ASSOCIATES, LLC
                                    By: OrbiMed Capital, LLC, General
                                    Partner

                                    Signature: /s/ Eric A. Bittelman

                                    Signer name: Eric A. Bittelman

                                    Title: Chief Financial Officer

                                    UBS JUNIPER CROSSOVER FUND, LLC
                                    By: PW Juniper Crossover Management,
                                    LLC, Managing Member
                                    By: OrbiMed Capital, LLC, General
                                    Partner

                                    Signature: /s/ Eric A. Bittelman

                                    Signer name: Eric A. Bittelman

                                    Title: Chief Financial Officer

XENOPORT, INC.
FIFTH AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

<PAGE>

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

                                      "HOLDERS"

                                      DICK M. CHANG

                                      Signature: /s/ Dick M. Chang

XENOPORT, INC.
FIFTH AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

<PAGE>

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

                             "HOLDERS"

                             FRAZIER HEALTHCARE III, L.P.

                             By: /s/ Robert W. Overell
                                 ----------------------------------------------
                                 Robert W. Overell
                                 Member, FHM III, L.L.C.
                                 General Partner, Frazier Healthcare III, L.P.

                             FRAZIER AFFILIATES III, L.P.

                             By: /s/ Robert W. Overell
                                 ----------------------------------------------
                                 Robert W. Overell
                                 Member, FHM III, L.L.C.
                                 General Partner, Frazier Affiliates III, L.P.

XENOPORT, INC.
FIFTH AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

<PAGE>

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

                                          "HOLDERS"

                                          KEITH GOLLUST

                                          Signature: /s/ Keith Gollust

XENOPORT, INC.
FIFTH AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

<PAGE>

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

                              "HOLDERS"

                              GRANITE GLOBAL VENTURES L.P.

                              BY: GRANITE GLOBAL VENTURES L.L.C.,
                              ITS GENERAL PARTNER

                              Signature: /s/ Joel Kellman

                              Signer name: Joel Kellman

                              Title: Managing Director

                              GRANITE GLOBAL VENTURES (Q.P.) L.P.

                              BY: GRANITE GLOBAL VENTURES L.L.C.,
                              ITS GENERAL PARTNER

                              Signature: /s/ Joel Kellman

                              Signer name: Joel Kellman

                              Title: Managing Director

XENOPORT, INC.
FIFTH AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

<PAGE>

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

                                          "HOLDERS"

                                          KARL HANDELSMAN

                                          Signature: /s/ Karl Handelsman

XENOPORT, INC.
FIFTH AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

<PAGE>

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

                                        "HOLDERS"

                                        HBM BIOVENTURES (CAYMAN) LTD.

                                        Signature: /s/ John Arnold

                                        Signer name: John Arnold

                                        Title: Chairman & Managing Director

XENOPORT, INC.
FIFTH AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

<PAGE>

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

                                      "HOLDERS"

                                      HEALTHCARE FOCUS FUND, L.P.
                                      By: ARCH Venture Partners V, L.P.
                                      Its: General Partner
                                      By: ARCH Venture Partners V, L.L.C.
                                      Its: General Partner

                                      Signature: _______________________________

                                      Signer name: _____________________________

                                      Title: ___________________________________

XENOPORT, INC.
FIFTH AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

<PAGE>

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

                                      "HOLDERS"

                                      LILLY BIOVENTURES
                                      ELI LILLY AND COMPANY

                                      Signature: /s/ Joshua M. Salisbury

                                      Signer name: Joshua M. Salisbury

                                      Title: Executive Director

XENOPORT, INC.
FIFTH AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT
<PAGE>

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

                                    "HOLDERS"

                                    LOTUS BIOSCIENCE INVESTMENT
                                    HOLDINGS LIMITED

                                    Signature: /s/ Wong Ken Lum & Mong Cheuk Wai

                                    Signer name: Wong Ken Lum & Mong Cheuk Wai

                                    Title: Directors

XENOPORT, INC.
FIFTH AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

<PAGE>

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

                                          "HOLDERS"

                                          MAVERICK FUND, L.D.C.

                                          By:  Maverick Capital, Ltd.
                                          Its: Investment Advisor

                                          By: /s/ Michelle Perrin

                                          Signer name: Michelle Perrin

                                          Title: Director of Fund Accounting

                                          MAVERICK FUND USA, LTD.

                                          By:    Maverick Capital, Ltd.
                                          Its:   Investment Advisor

                                          By: /s/ Michelle Perrin

                                          Signer name: Michelle Perrin

                                          Title: Director of Fund Accounting

                                          MAVERICK FUND II, LTD.

                                          By:    Maverick Capital, Ltd.
                                          Its:   Investment Advisor

                                          By: /s/ Michelle Perrin

                                          Signer name: Michelle Perrin

                                          Title: Director of Fund Accounting

XENOPORT, INC.
FIFTH AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

<PAGE>

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

                                          "HOLDERS"

                                          MEDIPHASE VENTURE PARTNERS II
                                          LIMITED PARTNERSHIP

                                          By:    Mediphase II LLC
                                          Its:   General Partner

                                          By: /s/ Paul A. Howard
                                              ---------------------------------
                                                  Paul A. Howard
                                                  Manager

XENOPORT, INC.
FIFTH AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

<PAGE>

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

                                          "HOLDERS"

                                          MOUSSESCAPADE L.P.

                                          Signature: /s/ Jean Hoysradt

                                          Signer name: Jean Hoysradt

                                          Title: General Partner

XENOPORT, INC.
FIFTH AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

<PAGE>

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

                                      "HOLDERS"

                                      PRIVATE EQUITY HOLDING - XENOPORT, L.L.C.

                                      Signature: /s/ Landis Zimmerman

                                      Signer name: Landis Zimmerman

                                      Title: Vice President and Chief Investment
                                             Officer

XENOPORT, INC.
FIFTH AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

<PAGE>

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

                                          "HOLDERS"

                                          SCHWEIZERHALL HOLDING AG

                                          Signature: /s/ L. Von Bidder

                                          Signer name: L. Von Bidder

                                          Title: Chief Executive Officer

XENOPORT, INC.
FIFTH AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

<PAGE>

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

                                       "HOLDERS"

                                       SKYLINE VENTURE PARTNERS II, L.P.

                                       By: Skyline Venture Management II LLC
                                       Its: General Partner

                                       By: /s/ John G. Freund
                                           -------------------------------------
                                           John G. Freund
                                           Managing Director

                                       SKYLINE VENTURE PARTNERS
                                       QUALIFIED PURCHASER FUND II, L.P.

                                       By: Skyline Venture Management II LLC
                                       Its: General Partner

                                       By: /s/ John G. Freund
                                           -------------------------------------
                                           John G. Freund
                                           Managing Director

                                       SKYLINE EXPANSION FUND, L.P.

                                       By: Skyline Expansion Fund Management LLC
                                       Its: General Partner

                                       By: /s/ John G. Freund
                                           -------------------------------------
                                           John G. Freund
                                           Managing Director

XENOPORT, INC.
FIFTH AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

<PAGE>

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

                                          "HOLDERS"

                                          VENROCK ASSOCIATES

                                          By:  /s/ Bryan E. Roberts
                                               ---------------------------------
                                               Bryan E. Roberts, General Partner

                                          VENROCK ASSOCIATES II, L.P.

                                          By: /s/ Bryan E. Roberts
                                              ----------------------------------
                                              Bryan E. Roberts, General Partner

XENOPORT, INC.
FIFTH AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

<PAGE>

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

                                   "HOLDERS"

                                   WESTBURY EQUITY PARTNERS SBIC, L.P.

                                   By: Westbury SBIC, Inc., its general partner

                                   By: _________________________________________
                                       Name:
                                       Title:

XENOPORT, INC.
FIFTH AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

<PAGE>

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

                                          "HOLDERS"

                                          SURINVEX INTERNATIONAL CORPORATION

                                          Signature: /s/ Juan C. Rachetti

                                          Signer name: Juan C. Rachetti

                                          Title: Treasurer

                                          ZAFFARONI FAMILY PARTNERSHIP, L.P.

                                          Signature: /s/ Alejandro Zaffaroni

                                          Signer name: Alejandro Zaffaroni

                                          Title: General and Limited Partner

XENOPORT, INC.
FIFTH AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

<PAGE>

                                    EXHIBIT A

                              SCHEDULE OF INVESTORS

SERIES A PREFERRED STOCK

<TABLE>
<CAPTION>
NAME                                                            NO. OF SHARES
-----------------------------------------------------------     -------------
<S>                                                             <C>
Alexandria Real Estate Equities, L.P.
ARCH Venture Fund IV, L.P.
ARCH Entrepreneurs Fund, L.P.
Robert D. Brownell
Kenneth A. Clark
CMEA Life Sciences Fund, L.P.
Diversified Capital L.L.C.
Frazier Affiliates III, L.P.
Frazier Healthcare III, L.P.
Daniel Lazare
Matilda Nieri
Nukahiva Foundation
Mark Pearson
Alexander D. Phillips
Gonzalo M. Silveira
Skyline Venture Partners II, L.P.
Skyline Venture Partners Qualified Purchaser Fund II, L.P.
Surinvex International Corporation
Donna Swanson
Venrock Associates
Venrock Associates II, L.P.
Venrock Entrepreneurs Fund, L.P.
M. Lorette Viaud
WS Investment Company 99B
Alejandro & Lida Zaffaroni Revocable Trust U/T/D 1/24/86
Zaffaroni Family Partnership, L.P.
                                                                -------------
                                            SERIES A TOTAL:

</TABLE>

XENOPORT, INC.
FIFTH AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

<PAGE>

                             EXHIBIT A (CONTINUED)

                             SCHEDULE OF INVESTORS

SERIES B PREFERRED STOCK

<TABLE>
<CAPTION>
NAME                                                            NO. OF SHARES
-----------------------------------------------------------     -------------
<S>                                                             <C>
Alexandria Real Estate Equities, L.P.
Marco Alvarado
ARCH Venture Fund IV, L.P.
ARCH Venture Fund IVA, L.P.
ARCH Entrepreneurs Fund, L.P.
Artal Services N.V.
Maria Benn
Caduceus Private Investments, LP
Caramia LLC
Kenneth A. Clark
CMEA Life Sciences Fund, L.P.
Diversified Capital, L.L.C.
Frazier Affiliates III, L.P.
Frazier Healthcare III, L.P.
Janet R. Frechet
GATX Ventures, Inc.
Paul Goddard
Josephine Gonzales
The Grapa Trust
Hall-Giacobassi Family 1994 Trust
Karl Handelsman
Brian Hartwell
HBM BioVentures (Cayman) Ltd.
Healthcare Focus Fund, L.P.
Hybrid Venture Partners, L.P.
Daniel Lazare
Ana Leech
Lilly BioVentures, Eli Lilly and Company
Lombard Odier Darier Hentsch & Cie
</TABLE>

XENOPORT, INC.
FIFTH AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

<PAGE>

                             EXHIBIT A (CONTINUED)

                             SCHEDULE OF INVESTORS

SERIES B PREFERRED STOCK

<TABLE>
<CAPTION>
NAME                                                            NO. OF SHARES
-----------------------------------------------------------     -------------
<S>                                                             <C>
Lotus BioScience Investment Holdings Limited
Tak Mak
Mariana Maraboli
Scott Minick
Monthoux Limited Partnership
Matilda Nieri
Novartis BioVentures Ltd.
OrbiMed Associates L.L.C.
The Papageno Trust
Mark Pearson
Alexander Phillips
The Pyramid Trust
Schweizerhall Holding AG
Gonzalo M. Silveira
Skyline Venture Partners II, L.P.
Skyline Venture Partners Qualified Purchaser Fund II, L.P.
Skyline Expansion Fund, L.P.
Surinvex International Corporation
Guillermo Surraco
Donna Swanson
Gerald F. Swiss, in trust for IPR INVESTMENTS, LLC
TBCC Funding Trust II
UBS Juniper Crossover Fund, LLC
Richard Ulevitch
Venrock Associates
Venrock Associates II, L.P.
Venrock Entrepreneurs Fund, L.P.
M. Lorette Viaud
WS Investment Company 2000B
</TABLE>

XENOPORT, INC.
FIFTH AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

<PAGE>

                              EXHIBIT A(CONTINUED)

                             SCHEDULE OF INVESTORS

SERIES B PREFERRED STOCK

<TABLE>
<CAPTION>
NAME                                                            NO. OF SHARES
-----------------------------------------------------------     -------------
<S>                                                             <C>
WS Investment Company, LLC
Zaffaroni Family Partnership, L.P.
Alejandro & Lida Zaffaroni Revocable Trust U/T/D 1/24/86
Elisa Zaffaroni
Zderic Family Trust
Varteny Zenountian
                                                                -------------
                                            SERIES B TOTAL:
</TABLE>

SERIES C PREFERRED STOCK AND SHARES SUBJECT TO COMMON WARRANTS

<TABLE>
<CAPTION>
NAME                                       NO. OF COMMON SHARES   NO. OF SERIES C SHARES
----------------------------------------   --------------------   ----------------------
<S>                                        <C>                    <C>
AIG SunAmerica Inc.
ARCH Venture Fund IVA, L.P.
Artal Services N.V.
Caduceus Private Investments, LP
Dick M. Chang
CMEA Life Sciences Fund, L.P.
Digital Coast Ventures, LLC
Frazier Affiliates III, L.P.
Frazier Healthcare III, L.P.
Dr. Jean M.J. Frechet
General Electric Capital Corporation
Sheldon S. Gordon
Granite Global Ventures (Q.P.) L.P.
Granite Global Ventures L.P.
Karl Handelsman
HBM BioVentures (Cayman) Ltd.
Healthcare Focus Fund, L.P.
Stephen Hochman
Lilly BioVentures, Eli Lilly and Company
</TABLE>

XENOPORT, INC.
FIFTH AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

<PAGE>

                             EXHIBIT A (CONTINUED)

                             SCHEDULE OF INVESTORS

SERIES C PREFERRED STOCK AND SHARES SUBJECT TO COMMON WARRANTS

<TABLE>
<CAPTION>
NAME                                       NO. OF COMMON SHARES   NO. OF SERIES C SHARES
-----------------------------------------  --------------------   ----------------------
<S>                                        <C>                    <C>
Lombard Odier Darier Hentsch & Cie
Lotus BioScience Investment Holdings
Limited
Luzon Investments Ltd.
George G. Montgomery
James W. Montgomery
Montgomery XenoPort Partners
Moussescale
Moussescapade L.P.
MPH Enterprises, LLC
Hideo Nagura
Novartis BioVentures Ltd.
OrbiMed Associates LLC
Private Equity Holding-Xenoport, L.L.C.
Schweizerhall Holding AG
Laura Surraco
Donna Swanson
UBS Juniper Crossover Fund, L.L.C.
The Ulevitch Family Trust
Venrock Associates
Venrock Associates II, L.P.
West River Capital, LLC
Alejandro Zaffaroni, Trustee of Zaffaroni
Retirement Trust FBO Gonzalo M. Silveira
Alejandro Zaffaroni, Trustee of Zaffaroni
Retirement Trust FBO Lorette Viaud
Alejandro & Lida Zaffaroni Revocable
Trust U/T/D 1/24/86
Zaffaroni Family Partnership, L.P.
                                           --------------------   ----------------------
       SERIES C AND COMMON SHARE TOTALS:
</TABLE>

XENOPORT, INC.
FIFTH AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

<PAGE>

                              EXHIBIT A (CONTINUED)

                             SCHEDULE OF INVESTORS

XENOPORT, INC.
FIFTH AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

<PAGE>

                              EXHIBIT A (CONTINUED)

                             SCHEDULE OF INVESTORS

<TABLE>
<CAPTION>
SERIES D PREFERRED STOCK                                      NO. OF SERIES D SHARES
----------------------------------------------------------    ----------------------
<S>                                                           <C>
Frazier Affiliates III, L.P.
Frazier Healthcare III, L.P.
Venrock Associates
Venrock Associates II, L.P.
Healthcare Focus Fund, L.P.
Skyline Venture Partners II, L.P.
Skyline Venture Partners Qualified Purchaser Fund II, L.P.
Skyline Expansion Fund, L.P.
Caduceus Private Investments, LP
OrbiMed Associates
Lilly BioVentures, Eli Lilly and Company
HBM BioVentures (Cayman) Ltd.
Granite Global Ventures (Q.P.) L.P.
Granite Global Ventures L.P.
Surinvex International Corporation
Zaffaroni Family Partnership, L.P.
Artal Services N.V.
SunAmerica Life Insurance Company
UBS Juniper Crossover Fund, LLC
Schweizerhall Holding AG
Lotus BioScience Investment Holdings Limited
Moussescapade L.P.
Private Equity Holding-Xenoport, L.L.C.
Dick M. Chang
Wyandanch Partners, L.P.
Westbury Equity Partners SBIC, L.P.
Mediphase Venture Partners II Limited Partnership
Karl Handelsman
Maverick Fund, L.D.C.
</TABLE>

XENOPORT, INC.
FIFTH AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT

<PAGE>

                              EXHIBIT A (CONTINUED)

                             SCHEDULE OF INVESTORS

<TABLE>
<CAPTION>
SERIES D PREFERRED STOCK                                      NO. OF SERIES D SHARES
----------------------------------------------------------    ----------------------
<S>                                                           <C>
Maveric Fund USA, Ltd.
Maverick Fund II, Ltd.
                                                              ----------------------
                                                     TOTAL
</TABLE>

XENOPORT, INC.
FIFTH AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT<PAGE>

                                                                    Exhibit 10.2

                                 XENOPORT, INC.

                   EMPLOYEE PROPRIETARY INFORMATION AGREEMENT

      As a condition of my employment with XenoPort, Inc., its subsidiaries,
affiliates, successors or assigns (together the "COMPANY"), and in consideration
of my employment with the Company and my receipt of the compensation now and
hereafter paid to me by Company, I agree to the following:

      1. At-Will Employment. I understand and acknowledge that my employment
with the Company is for an unspecified duration and constitutes "at-will"
employment. I acknowledge that this employment relationship may be terminated at
any time, with or without good cause or for any or no cause, at the option
either of the Company or myself, with or without notice.

      2. Confidential Information.

            (a) Company Information. I agree at all times during the term of my
employment and thereafter, to hold in strictest confidence, and not to use,
except for the benefit of the Company, or to disclose to any person, firm or
corporation without written authorization of the Board of Directors of the
Company, any Confidential Information of the Company. I understand that
"CONFIDENTIAL INFORMATION" means any Company proprietary information, technical
data, trade secrets or know-how, including, but not limited to, research,
product plans, products, services, customer lists and customers (including, but
not limited to, customers of the Company on whom I called or with whom I became
acquainted during the term of my employment), markets, software, developments,
inventions, processes, formulas, technology, designs, drawings, engineering,
hardware configuration information, marketing, finances or other business
information disclosed to me by the Company either directly or indirectly, in
writing, orally, by drawings, or by observation of parts or equipment. I further
understand that Confidential Information does not include any of the foregoing
items which has become publicly known and made generally available through no
wrongful act of mine or of others who were under confidentiality obligations as
to the item or items involved.

            (b) Former Employer Information. I agree that I will not, during my
employment with the Company, improperly use or disclose any proprietary
information or trade secrets of any former or concurrent employer or other
person or entity and that I will not bring onto the premises of the Company any
unpublished document or proprietary information belonging to any such employer,
person or entity unless consented to in writing by such employer, person or
entity.

            (c) Third Party Information. I recognize that the Company has
received and in the future will receive from third parties their confidential or
proprietary information subject to a duty on the Company's part to maintain the
confidentiality of such information and to use it only for certain limited
purposes. I agree to hold all such confidential or proprietary information in
the strictest confidence and not to disclose it to any person, firm or
corporation or to use it except as necessary in carrying out my work for the
Company consistent with the Company's agreement with such third party.

<PAGE>

      3. Inventions.

            (a) Inventions Retained and Licensed. I have attached hereto, as
Exhibit A, a list describing all inventions, original works of authorship,
developments, improvements, and trade secrets which were made by me prior to my
employment with the Company, which belong to me, which relate to the Company's
proposed business, products or research and development, and which are not
assigned to the Company hereunder (collectively referred to as "Prior
Inventions"); or, if no such list is attached, I represent that there are no
such Prior Inventions. If in the course of my employment with the Company, I
incorporate into any invention, improvement, development, product, copyrightable
material or trade secret any invention, improvement, development, concept,
discovery or other proprietary information owned by me or in which I have an
interest, the Company is hereby granted and shall have a nonexclusive,
royalty-free, irrevocable, perpetual, worldwide license to make, have made,
modify, use and sell such item as part of or in connection with such product,
process or machine.

            (b) Assignment of Inventions. I agree that I will promptly make full
written disclosure to the Company, will hold in trust for the sole right and
benefit of the Company, and hereby assign to the Company, or its designee, all
my right, title, and interest in and to any and all inventions, original works
of authorship, developments, concepts, improvements or trade secrets, whether or
not patentable or registrable under copyright or similar laws, which I may
solely or jointly conceive or develop or reduce to practice, or cause to be
conceived or developed or reduced to practice, during the period of time I am in
the employ of the Company (collectively referred to as "INVENTIONS"), except as
provided in Section 3(f) below. I further acknowledge that all original works of
authorship which are made by me (solely or jointly with others) within the scope
of and during the period of my employment with the Company and which are
protectible by copyright are "works made for hire," as that term is defined in
the United States Copyright Act.

            (c) Inventions Assigned to the United States. I agree to assign to
the United States government all my right, title, and interest in and to any and
all Inventions whenever such full title is required to be in the United States
by a contract between the Company and the United States or any of its agencies.

            (d) Maintenance of Records. I agree to keep and maintain adequate
and current written records of all Inventions made by me (solely or jointly with
others) during the term of my employment with the Company. The records will be
in the form of notes, sketches, drawings, and any other format that may be
specified by the Company. The records will be available to and remain the sole
property of the Company at all times.

            (e) Patent and Copyright Registrations. I agree to assist the
Company, or its designee, at the Company's expense, in every proper way to
secure the Company's rights in the Inventions and any copyrights, patents, mask
work rights or other intellectual property rights relating thereto in any and
all countries, including the disclosure to the Company of all pertinent
information and data with respect thereto, the execution of all applications,
specifications, oaths, assignments and all other instruments which the Company
shall deem necessary in order to apply for and obtain such rights and in order
to assign and convey to the Company, its successors, assigns and nominees the
sole and exclusive rights, title and interest in and to such Inventions,

                                      -2-
<PAGE>

and any copyrights, patents, mask work rights or other intellectual property
rights relating thereto. I further agree that my obligation to execute or cause
to be executed, when it is in my power to do so, any such instrument or papers
shall continue after the termination of this Agreement. If the Company is unable
because of my mental or physical incapacity or for any other reason to secure my
signature to apply for or to pursue any application for any United States or
foreign patents or copyright registrations covering Inventions or original works
of authorship assigned to the Company as above, then I hereby irrevocably
designate and appoint the Company and its duly authorized officers and agents as
my agent and attorney in fact, to act for and in my behalf and stead to execute
and file any such applications and to do all other lawfully permitted acts to
further the prosecution and issuance of letters patent or copyright
registrations thereon with the same legal force and effect as if executed by me.

            (f) Exception to Assignments. I understand that the provisions of
this Agreement requiring assignment of Inventions to the Company do not apply to
any invention which qualifies fully under the provisions set forth on Exhibit B
attached hereto ("EXCEPTED INVENTIONS"). I will advise the Company promptly in
writing of any inventions that I believe meet the criteria of an Excepted
Invention and not otherwise disclosed on Exhibit A.

      4. Conflicting Employment. I agree that, during the term of my employment
with the Company, I will not engage in any other employment, occupation,
consulting or other business activity directly related to the business in which
the Company is now involved or becomes involved during the term of my
employment, nor will I engage in any other activities that conflict with my
obligations to the Company.

      5. Returning Company Documents. I agree that, at the time of leaving the
employ of the Company, I will deliver to the Company (and will not keep in my
possession, recreate or deliver to anyone else) any and all devices, records,
data, notes, reports, proposals, lists, correspondence, specifications,
drawings, blueprints, sketches, materials, equipment, other documents or
property, or reproductions of any aforementioned items developed by me pursuant
to my employment with the Company or otherwise belonging to the Company, its
successors or assigns.

      6. Notification to New Employer. In the event that I leave the employ of
the Company, I hereby grant consent to notification by the Company to my new
employer about my rights and obligations under this Agreement.

      7. Solicitation of Employees. I agree that for a period of twelve (12)
months immediately following the termination of my relationship with the Company
for any reason, whether with or without cause, I shall not either directly or
indirectly solicit, induce, recruit or encourage any of the Company's employees
to leave their employment, or take away such employees, or attempt to solicit,
induce, recruit, encourage or take away employees of the Company, either for
myself or for any other person or entity.

      8. Representations. I agree to execute any proper oath or verify any
proper document required to carry out the terms of this Agreement. I represent
that my performance of all the terms of this Agreement will not breach any
agreement to keep in confidence proprietary information acquired by me in
confidence or in trust prior to my employment by the Company. I

                                       -3-
<PAGE>

have not entered into, and I agree I will not enter into, any oral or written
agreement in conflict herewith.

      9. Arbitration and Equitable Relief.

            (a) Arbitration. Except as provided in Section 9(b) below, I agree
that any dispute or controversy arising out of or relating to any
interpretation, construction, performance or breach of this Agreement, shall be
settled by arbitration to be held in Santa Clara County, California, in
accordance with the rules then in effect of the American Arbitration
Association. The arbitrator may grant injunctions or other relief in such
dispute or controversy. The decision of the arbitrator shall be final,
conclusive and binding on the parties to the arbitration. Judgement may be
entered on the arbitrator's decision in any court having jurisdiction. The
Company and I shall each pay one-half of the costs and expenses of such
arbitration, and each of us shall separately pay our counsel fees and expenses.

            (b) Equitable Remedies. I agree that it would be impossible or
inadequate to measure and calculate the Company's damages from any breach of the
covenants set forth in Sections 2, 3, and 5 herein. Accordingly, I agree that if
I breach any of such Sections, the Company will have available, in addition to
any other right or remedy available, the right to obtain an injunction from a
court of competent jurisdiction restraining such breach or threatened breach and
to specific performance of any such provision of this Agreement. I further agree
that no bond or other security shall be required in obtaining such equitable
relief and I hereby consent to the issuance of such injunction and to the
ordering of specific performance.

      10. General Provisions

            (a) Governing Law; Consent to Personal Jurisdiction. This Agreement
will be governed by the laws of the State of California. I hereby expressly
consent to the personal jurisdiction of the state and federal courts located in
the State of California for any lawsuit filed there against me by the Company
arising from or relating to this Agreement.

            (b) Entire Agreement. This Agreement sets forth the entire agreement
and understanding between the Company and me relating to the subject matter
herein and merges all prior discussions between us. No modification of or
amendment to this Agreement, nor any waiver of any rights under this agreement,
will be effective unless in writing signed by the party to be charged. Any
subsequent change or changes in my duties, salary or compensation will not
affect the validity or scope of this Agreement.

            (c) Severability. If one or more of the provisions in this Agreement
are deemed void by law, then the remaining provisions will continue in full
force and effect.

            (d) Successors and Assigns. This Agreement may not be assigned
without the prior written consent of the Company. Subject to the foregoing
sentence, this Agreement will be binding upon my heirs, executors,
administrators and other legal representatives and will be for the benefit of
the Company, its successors, and its assigns.

            (e) Effective Date. This Agreement shall be deemed to be effective
as of the earlier of (1) the date set forth below or (2) my starting date of
employment with the Company.

                                      -4-
<PAGE>

Notwithstanding anything to the contrary contained in this Agreement, all
provisions hereof shall apply and shall be in full force and effect from such
effective date, regardless of whether such date precedes the actual date of my
commencing employment with the Company.

Date: ____________________, 20___.

                                             __________________________________
                                             Signature

                                             __________________________________
                                             Name of Employee (typed or printed)

_________________________________
Witness

                                      -5-
<PAGE>

                                    EXHIBIT A

                            LIST OF PRIOR INVENTIONS

                        AND ORIGINAL WORKS OF AUTHORSHIP

<TABLE>
<CAPTION>
                       IDENTIFYING NUMBER
TITLE       DATE      OR BRIEF DESCRIPTION
-----       ----      --------------------
<S>         <C>       <C>
</TABLE>

-     No inventions or improvements

-     Additional Sheets Attached

Signature of Employee: _______________________

Print Name of Employee: ______________________

Date: ___________________

                                      -6-
<PAGE>

                                    EXHIBIT B

                               EXCEPTED INVENTIONS

                   EMPLOYMENT AGREEMENTS; ASSIGNMENT OF RIGHTS

      (a) Any provision in an employment agreement which provides that an
employee shall assign, or offer to assign, any of his or her rights in an
invention to his or her employer shall not apply to an invention that the
employee developed entirely on his or her own time without using the employer's
equipment, supplies, facilities, or trade secret information except for those
inventions that either:

            (1) Relate at the time of conception or reduction to practice of the
invention to the employer's business, or actual or demonstrably anticipated
research or development of the employer.

            (2) Result from any work performed by the employee for the employer.

      (b) To the extent a provision in an employment agreement purports to
require an employee to assign an invention otherwise excluded from being
required to be assigned under subdivision (a), the provision is against the
public policy of this state and is unenforceable.

                                      -7-

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