1 EXHIBIT 10.11 AURORA BIOSCIENCES CORPORATION PREFERRED STOCK PURCHASE AGREEMENT MARCH 8, 1996 2

1
EXHIBIT 10.11

AURORA BIOSCIENCES CORPORATION

PREFERRED STOCK PURCHASE AGREEMENT

MARCH 8, 1996
2

SECTION 1 Sale of Shares....................................................1
1.2 Closing Date.......................................................1
1.3 Delivery...........................................................2

SECTION 2 Representations and Warranties of the Company.....................2
2.1 Organization and Standing..........................................2
2.2 Corporate Power....................................................3
2.3 Subsidiaries.......................................................3
2.4 Capitalization.....................................................3
2.5 Authorization......................................................4
2.6 Contracts and Other Commitments....................................5
2.7 Compliance with Other Instruments, etc.............................5
2.8 Litigation, etc....................................................5
2.9 Registration Rights................................................6
2.10 Permits...........................................................6
2.11 Governmental Consent, etc.........................................6
2.12 Disclosure........................................................6
2.13 Offering..........................................................7
2.14 Liabilities.......................................................7
2.15 Changes...........................................................7
2.16 Title to Properties and Assets; Liens, Leases, etc................9
2.17 Patents and Trademarks............................................9
2.18 Tax Returns; Taxes...............................................10
2.19 Employees........................................................10
2.20 No Defaults......................................................11
2.21 Insurance........................................................11
2.22 Brokers or Finders...............................................12
2.23 Environmental and Safety Laws....................................12
2.24 No Dividends.....................................................12
2.25 Employee Benefit Plan Obligations................................12
2.26 Qualification as a Qualified Small Business......................12
2.27 Financial Statements.............................................12
2.28 Transactions with Affiliates.....................................12
2.29 Proprietary Information and Inventions Agreements................13
2.30 U.S. Real Property Holding Corporation...........................13

SECTION 3 Investment Representations.......................................13
3.1 Power and Authority...............................................13
3.2 Due Execution.....................................................13
3.3 Experience; Accredited Investor...................................14
3.4 Investment........................................................14
3.5 Rule 144..........................................................14
3.6 No Public Market..................................................14

i.
3

3.7 Disclosure of Information.........................................14
SECTION 4 Conditions of the Purchaser's Obligations at Closing ............15
4.1 Representations and Warranties....................................15
4.2 Covenants.........................................................15
4.3 No Material Adverse Change........................................15
4.4 Securities Laws...................................................15
4.5 Compliance Certificate............................................15
4.6 Opinion of Counsel................................................15
4.7 Investors' Rights Agreement.......................................15
4.8 Proceedings and Documents.........................................15
4.9 Supporting Documents..............................................16
4.10 Management Rights Agreements.....................................16
4.11 Voting Agreement.................................................16
4.12 Amendment to Employment Agreement................................17
4.13 Charter..........................................................17
4.14 Bylaws...........................................................17
4.14 Proprietary Information Agreements...............................17
4.15 Election of Directors............................................17
4.16 Certificate as to Disqualified Persons...........................17
4.18 Fees of Purchasers' Counsel......................................17

SECTION 5 Conditions of the Company's Obligations at Closing...............18
5.1 Representations and Warranties....................................18
5.2 Covenants.........................................................18

SECTION 6 Miscellaneous....................................................18
6.1 Governing Law.....................................................18
6.2 Successors and Assigns............................................18
6.3 Entire Agreement..................................................18
6.4 Notices, etc......................................................18
6.5 Expenses..........................................................19
6.6 Counterparts......................................................19
6.7 Severability......................................................19
6.8 Survival of Agreements............................................19
6.9 Brokerage.........................................................19
6.10 Amendments.......................................................20

ii.
4

EXHIBIT

A RESTATED CERTIFICATE OF INCORPORATION
B SCHEDULE OF EXCEPTIONS
C INVESTORS' RIGHTS AGREEMENT
D FORM OF MANAGEMENT RIGHTS LETTER
E FORM OF VOTING AGREEMENT
F FORM OF PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
G FORM OF LEGAL OPINION OF COMPANY COUNSEL

iii.
5
AURORA BIOSCIENCES CORPORATION

PREFERRED STOCK PURCHASE AGREEMENT

THIS AGREEMENT is made as of March 8, 1996 between Aurora Biosciences
Corporation, a Delaware corporation (the "COMPANY"), with its principal office
at 0000 Xxxxxxxx Xxxxxx, Xxxxx 000, Xx Xxxxx, Xxxxxxxxxx 00000, and the
purchasers listed on Schedule A hereto who execute this Agreement (each a
"Purchaser", and collectively, the "Purchasers").

WHEREAS, the Company has authorized the issuance and sale of up to
10,239,115 shares of its Series A Preferred Stock (the "SERIES A PREFERRED"),
555,555 shares of Series B Preferred Stock (the "SERIES B PREFERRED"), and
750,000 shares of Series C Preferred Stock (the "SERIES C PREFERRED")
(collectively, the "SHARES") having the rights, preferences, privileges and
restrictions set forth in the Restated Certificate of Incorporation of the
Company in the form attached to this Agreement as Exhibit A (the "RESTATED
CERTIFICATE").

NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and conditions set forth below, and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties to this
Agreement agree as follows:

SECTION 1

SALE OF SHARES

1.1 SALE OF SHARES. Subject to the terms and conditions hereof, at the
Closing (as hereinafter defined), each Purchaser (severally but not jointly)
agrees to purchase from the Company, and the Company agrees to sell and issue,
shares of Preferred Stock of the Company being of the number, Series, and price
per share as set forth opposite each Purchaser's name on Schedule A hereto.

1.2 CLOSING DATE. The purchase and sale of the Shares hereunder shall take
place in up to three (3) closings, each of which shall be held at the law
offices of Xxxxxx Godward Xxxxxx Xxxxxxxxx & Xxxxx, 0000 Xxxxxxxxx Xxxxx, Xxxxx
0000, Xxx Xxxxx, Xxxxxxxxxx 00000. The first closing of such purchase and sale
hereunder, at which the shares of Series A Preferred to be purchased and sold
hereunder shall be so purchased and sold (the "FIRST CLOSING"), shall be held on
the date of this Agreement or at such other time upon which the Company and the
Purchasers participating in the First Closing shall agree. The closing of the
purchase and sale of the Series B Preferred hereunder (the "SERIES B CLOSING")
and the closing of the purchase and sale of the Series C Preferred hereunder
(the "SERIES C CLOSING") (the Series B Closing and the Series C Closing are

1
6
hereinafter collectively referred to as the "SUBSEQUENT Closings" and the First
Closing and the Subsequent Closings are hereinafter collectively referred to as
the "Closings") shall be held as soon as practicable but in each case not more
than thirty (30) days following the date hereof as agreed upon by the Company
and Purchasers purchasing at least a majority of the Shares to be purchased and
sold in such Subsequent closing.

Upon delivery of a duly executed copy of this Agreement, the Investor's
Rights Agreement (defined below) and the Voting Agreement (defined below), any
purchaser of Shares at a Subsequent Closing shall be deemed to be a party to
this Agreement, the Investors' Rights Agreement and the Voting Agreement, such
purchaser shall be deemed to be a "Purchaser" for purposes of this Agreement, a
"Stockholder" for purposes of the Investor's Rights Agreement and a "Purchaser"
for purposes of the Voting Agreement, and the Shares acquired by such purchaser
shall be deemed to have been acquired pursuant to this Agreement.

1.3 DELIVERY. At each Closing, the Company will deliver to each Purchaser
purchasing Shares in such Closing a certificate representing the Shares being
purchased upon payment of the aggregate purchase price therefor (as set forth
opposite each Purchaser's name on Schedule A hereto) by (i) check payable to the
order of the Company, (ii) wire transfer of immediately available funds made
payable to the order of the Company or (iii) cancellation of outstanding
principal and accrued interest under promissory notes issued by the Company, or
any combination of the foregoing, as provided on Schedule A.

Section 2

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as set forth in the Schedule of Exceptions attached
hereto as Exhibit B, the Company hereby represents and warrants to the
Purchasers as follows:

2.1 ORGANIZATION AND STANDING. The Company is a corporation duly
organized and validly existing under, and by virtue of, the laws of the State of
Delaware and is in good standing under such laws. The Company has all requisite
corporate power to own and operate its assets and to carry on its business as
presently conducted and as proposed to be conducted. The Company is qualified to
do business as a foreign corporation, and is in good standing, under the laws of
all jurisdictions where the nature of its business requires such qualification
or where the failure to so qualify would have a Material Adverse Effect. As used
in this Agreement, "Material Adverse Effect" shall mean material adverse effect
on the Company's business as presently conducted or planned to be conducted or
the Company's financial condition, operations or prospects.

2
7
2.2 CORPORATE POWER. The Company has, and at the time of each Closing
will have, all requisite legal and corporate power to execute and deliver this
Agreement, the Investors' Rights Agreement in substantially the form attached
hereto as Exhibit C (the "INVESTORS' RIGHTS AGREEMENT"), the Management Rights
letter agreements between the Company and certain of the Purchasers
substantially in the form attached hereto as Exhibit D (the "MANAGEMENT RIGHTS
AGREEMENTS") and the Voting Agreement in substantially the form attached hereto
as Exhibit E (this Agreement, the Investors' Rights Agreement, the Management
Rights Agreements and the Voting Agreement are hereinafter collectively referred
to as the "AGREEMENTS"), to sell and issue the Shares under this Agreement, to
issue the Common Stock issuable upon conversion of the Shares and to carry out
and perform its obligations under the terms of the Agreements, including all
exhibits and schedules hereto and thereto.

2.3 SUBSIDIARIES. The Company does not own (of record or beneficially)
or control, directly or indirectly, any equity interest in any other
corporation, association or business entity (other than investments in
marketable securities). The Company is not a participant in any joint venture,
partnership or similar arrangement.

2.4 CAPITALIZATION. The authorized capital stock of the Company
consists of 50,000,000 shares of Common Stock, of which 2,508,500 shares will be
issued and outstanding immediately prior to the First Closing, and 25,000,000
shares of Preferred Stock, of which 10,500,000 are designated Series A Preferred
Stock, 600,000 are designated Series B Preferred Stock, and 800,000 are
designated Series C Preferred Stock, none of which will be issued and
outstanding immediately prior to the First Closing. No other shares of capital
stock or other securities of the Company are outstanding. All such issued and
outstanding shares have been duly authorized and validly issued and are fully
paid and nonassessable and have been offered, issued, sold and delivered by the
Company in compliance with applicable federal and state securities laws. The
Shares have the rights, preferences and privileges set forth in the Restated
Certificate, and all such rights, preferences and privileges are valid, binding
and enforceable in accordance with all applicable laws. The stockholders of
record and holders of subscriptions, warrants, options, convertible securities
and other rights to purchase or otherwise acquire equity securities of the
Company, and the number of shares of Common Stock and the number of such
subscriptions, warrants, options, convertible securities, and other such rights
held by each are as set forth in Exhibit B. All of the outstanding shares of
stock held by each such holder are subject to vesting as described in Exhibit B,
and the Company has the right to repurchase unvested shares upon the termination
of such holder's employment or other business relationship with the Company at
the original purchase price per share paid to the Company by such holder. The
Company has reserved 1,000,000 shares of its Common Stock (the "Reserved
Shares") for issuance pursuant to the Company's 1996 Stock Plan. Except for the
transactions contemplated in the Agreements, the conversion privileges of the
Company's

3
8
Series A, Series B and Series C Preferred Stock specified in the Restated
Certificate, and as set forth in Exhibit B, there are no options, warrants,
conversion privileges or other rights or agreements presently outstanding to
purchase or otherwise acquire any authorized but unissued shares of the
Company's capital stock or other securities of the Company and there is no
commitment by the Company to issue shares, options, warrants, convertible
securities or other rights to purchase or otherwise acquire shares of the
Company's capital stock or other securities of the Company. Except as set forth
in Section 45 of the Company's Bylaws and as contemplated by the Agreements or
as provided for in Exhibit B, to the best of the Company's knowledge, there are
no voting trusts or agreements, stockholders' agreements, pledge agreements,
buy-sell agreements, rights of first refusal, preemptive rights or proxies
relating to securities of the Company (whether or not the Company is a party
thereto). The Company has no obligation (contingent or other) to purchase,
redeem or otherwise acquire any of its equity securities.

2.5 AUTHORIZATION. All corporate action on the part of the Company, its
directors and shareholders necessary for the authorization, execution, delivery
and performance of the Agreements by the Company, the authorization, sale,
issuance and delivery of the Shares (and the Common Stock issuable upon
conversion of the Shares) and the performance of the Company's obligations under
the Agreements has been taken or will be taken prior to the First Closing. The
Agreements, when executed and delivered by the Company, will constitute valid
and binding obligations of the Company enforceable in accordance with their
terms, subject to laws of general application relating to bankruptcy,
insolvency, the relief of debtors, general equity principles and limitations
upon rights to indemnity. This Agreement has been duly executed and delivered by
the Company. The Shares, when issued in compliance with the provisions of this
Agreement, will be duly and validly issued, fully paid and nonassessable and
will be free and clear of all liens, encumbrances or restrictions imposed by or
through the Company. The Common Stock issuable upon conversion of the Shares has
been duly and validly reserved and, when issued in compliance with the
provisions of the Restated Certificate, will be duly and validly issued, fully
paid and nonassessable and will be free and clear of all liens, encumbrances or
restrictions imposed by or through the Company. The issuance of the Shares (and
the Common Stock issuable upon conversion of the Shares) is not subject to any
preemptive rights, rights of first refusal or similar rights that have not been
waived; provided, however, that the Shares (and the Common Stock issuable upon
conversion of the Shares) are subject to a right of first refusal as set forth
in Section 45 of the Company's Bylaws, and may be subject to restrictions on
transfer under state and/or federal securities laws as set forth herein.

4
9
2.6 CONTRACTS AND OTHER COMMITMENTS. The Company does not have any
contract, agreement, lease, commitment, or proposed transaction, written or
oral, absolute or contingent, other than contracts for the purchase of supplies
and services that were entered into in the ordinary course of business and that
do not involve more than $25,000 individually or $50,000 in the aggregate. For
the purpose of this paragraph, employment and consulting contracts (including
any severance arrangements), license agreements and any other agreements
relating to the acquisition or disposition of the Company's technology (other
than pursuant to the Company's standard form of Proprietary Information and
Inventions Agreement (the "PROPRIETARY INFORMATION AGREEMENT")) shall not be
considered to be contracts entered into in the ordinary course of business. The
Company is not a party to or bound by any judgment, order, writ or decree
restricting or affecting the development, manufacture or distribution of the
Company's products or services or proposed products or services or limiting or
restricting the Company's right to compete with any person in any respect.

2.7 COMPLIANCE WITH OTHER INSTRUMENTS, ETC. The Company is not, and will
not by virtue of entering into and performing the Agreements and the
transactions contemplated thereunder be, in violation (with or without the
passage of time or giving of notice or both) of any term of the Restated
Certificate or its Bylaws or any term or provision of any material mortgage,
indenture, contract, agreement, instrument, judgment or decree to which it is a
party or by which it is bound, and is not, and will not by virtue of entering
into and performing the Agreements and the transactions contemplated thereunder
be, in violation of any material order, statute, rule or regulation applicable
to the Company, other than any of the foregoing such violations that do not
impair the Company's ability to enter into or perform its obligations under the
Agreements or which, either individually or in the aggregate, do not have a
Material Adverse Effect. Entering into and performing the Agreements and the
transactions contemplated thereunder by the Company will not result in the
creation of any mortgage, pledge, lien, encumbrance or charge upon any of the
properties or assets of the Company or the suspension, revocation, impairment,
forfeiture or nonrenewal of any permit, license, authorization or approval
applicable to the Company or its properties or business.

2.8 LITIGATION, ETC. There is neither pending nor, to the Company's
knowledge and belief, threatened any action, suit, proceeding, investigation,
governmental inquiry, or claim, or any basis therefor or threat thereof, whether
or not purportedly on behalf of the Company, to which the Company is or may be
named as a party or its property is or may be subject or, to the Company's
knowledge, to which any officer, key employee, key consultant, or principal
shareholder of the Company is subject; and the Company has no knowledge (i) of
any unasserted claim, the assertion of which is likely and which, if asserted,
will seek damages, an injunction or other legal, equitable, monetary or
nonmonetary relief, which claim individually or collectively with other such
unasserted claims if granted would have a Material Adverse Effect, or (ii) that
there exists, or there is

5
10
pending or planned, any patent, trademark, tradename, invention, device,
application or principle, or any statute, rule, law, regulation, standard or
code which would result in a Material Adverse Effect. There is no pending or, to
the Company's knowledge and belief, threatened claim or litigation against or
affecting the Company contesting, or which if adversely determined might
materially impair, its right to produce, manufacture, sell or use any product,
process, method, substance, part or other material presently produced,
manufactured, sold or used or planned to be produced, manufactured, sold or used
by the Company in connection with the operations of the Company. The Company has
no current plans to initiate any action, suit or proceeding.

2.9 REGISTRATION RIGHTS. Except as set forth in the Investors' Rights
Agreement, the Company is not under any obligation to register (as defined in
the Investors' Rights Agreement), and has not granted any rights to register,
any of its presently outstanding securities or any of its securities that may
hereafter be issued.

2.10 PERMITS. The Company has all franchises, permits, licenses, and
any similar authority necessary for the conduct of its business as now being
conducted by it and as proposed to be conducted, the lack of which would have a
Material Adverse Effect. The Company is not in default or violation in any
material respect under any of such franchises, permits, licenses, or other
similar authority, and the execution and delivery of the Agreements will not
result in any such default or violation, with or without the passage of time or
giving of notice or both.

2.11 GOVERNMENTAL CONSENT, ETC. No consent, approval or authorization
of or designation, declaration or filing with any governmental authority on the
part of the Company is required in connection with the valid execution and
delivery of the Agreements, or the offer, sale or issuance of the Shares (and
the Common Stock issuable upon conversion of the Shares) or the consummation of
any other transaction contemplated thereby, except the filing of the Restated
Certificate in the Office of the Secretary of State of the State of Delaware and
the qualification (or taking such action as may be necessary to secure an
exemption from qualification, if available) of the offer and sale of the Shares
(and the Common Stock issuable upon conversion of the Shares) under the
California Corporate Securities Law, which filing and qualification, if
required, will be accomplished in a timely manner prior to or promptly upon
completion of the First Closing.

2.12 DISCLOSURE. The Company has provided each Purchaser with all the
information reasonably available to it without undue expense that such Purchaser
has requested or could reasonably be expected to be material in deciding whether
to purchase the Shares. The Agreements and the Exhibits thereto as well as any
other document, certificate, schedule, financial, business or other statement
furnished to such Purchaser by or on behalf of the Company in connection with
the transactions contemplated hereby,

6
11
including, without limitation, the Business Plan dated January 8, 1996, do not
contain any untrue statement of a material fact and do not omit to state a
material fact necessary in order to make the statements contained herein or
therein not misleading; provided, however, that with respect to any projections,
expressions of opinion, forecasts, predictions or the like (collectively,
"Projections") contained in such Business Plan, the Company represents only that
such Projections were made in good faith and that the Company believes there is
a reasonable basis therefor.

2.13 OFFERING. Subject to the accuracy of the representations set forth in
Section 3 hereof, the offer, sale and issuance of the Shares pursuant to this
Agreement and the issuance of the Common Stock to be issued upon conversion of
the Shares constitute transactions exempt from the registration requirements of
Section 5 of the Securities Act of 1933, as amended (the "SECURITIES ACT"), and
neither the Company nor any authorized agent acting on its behalf will take any
action hereafter that would cause the loss of such exemption.

2.14 LIABILITIES. The Company has no indebtedness for borrowed money that
the Company has directly or indirectly created, incurred, assumed, or
guaranteed, or with respect to which the Company has otherwise become directly
or indirectly liable, other than obligations not in excess of $25,000
individually or in the aggregate. The Company has not assumed, guaranteed,
endorsed or otherwise become directly or contingently liable on any indebtedness
of any other person (including, without limitation, liability by way of
agreement, contingent or otherwise, to purchase, to provide funds for payment,
to supply funds to or otherwise invest in the debtor, or otherwise to assure the
creditor against loss), except for guaranties by endorsement of negotiable
instruments for deposit or collection in the ordinary course of business.

2.15 CHANGES. Since December 31, 1995, there has not been:

(a) any change in the assets, liabilities, financial condition, or
operating results of the Company except changes in the ordinary course of
business that have not been, in the aggregate, materially adverse;

(b) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the business, properties,
prospects, or financial condition of the Company (as such business is presently
conducted and as it is proposed to be conducted);

7
12
(d) any satisfaction or discharge of any lien, claim, or encumbrance or
payment of any obligation by the Company, except in the ordinary course of
business and that is not material to the business, properties, prospects, or
financial condition of the Company (as such business is presently conducted and
as it is proposed to be conducted);

(e) to the best of the Company's knowledge, any material change to a
material contract or arrangement by which the Company or any of its assets is
bound or subject;

(f) any material change in any compensation arrangement or agreement
with any employee, consultant, officer, director or shareholder;

(g) any sale, assignment, license or transfer of any patents,
trademarks, copyrights, trade secrets, Proprietary Information (as defined
herein) or other intangible assets;

(h) any resignation or termination of employment of any key officer of
the Company or termination of engagement of any key consultant of the Company;
and the Company, to the best of its knowledge, does not know of the impending
resignation or termination of employment of any such officer or termination of
engagement of any such consultant;

(i) receipt of notice that there has been a loss of, or material order
cancellation by, any major customer of the Company;

(j) any mortgage, pledge, transfer of a security interest in, or lien
created by the Company, with respect to any of its material properties or
assets, except liens for taxes not yet due or payable;

(k) any loans or guarantees made by the Company to or for the benefit
of any person, other than travel advances to employees and/or consultants and
other advances to employees and/or consultants made in the ordinary course of
its business;

(l) to the best of the Company's knowledge, any other event or
condition of any character that might, individually or in the aggregate,
materially and adversely affect the business, properties, prospects, or
financial condition of the Company (as such business is presently conducted and
as it is proposed to be conducted);

(m) any amount borrowed or any liability (absolute, accrued or
contingent) incurred, or to which the Company has become subject, except
liabilities not in excess of $25,000 individually or $50,000 in the aggregate
and except current liabilities incurred

8
13
and liabilities under contracts entered into in the ordinary course of business
which have not been, individually or in the aggregate materially adverse;

(n) any transaction except in the ordinary course of business or as
otherwise contemplated hereby; or

(o) any agreement or commitment by the Company to do any of the things
described in this paragraph 2.15.

2.16 TITLE TO PROPERTIES AND ASSETS; LIENS, LEASES, ETC. The Company has
good and marketable title to its properties and assets and has good title to all
of its leasehold interests, in each case subject to no mortgage, pledge, lien,
lease, encumbrance or charge, other than (i) the lien of current taxes not yet
due and payable, and (ii) possible minor liens and encumbrances that do not in
any case materially detract from the value of the property subject thereto or
materially impair the operations of the Company and which have not arisen
otherwise than in the ordinary course of business.

Set forth on Exhibit B is a correct and complete list (including the
amount of rents called for and a description of the leased property) of all
material leases (involving more than $25,000 either individually or in the
aggregate if such leases are of a similar nature or with the same lessor) under
which the Company is a lessee. The Company enjoys peaceful and undisturbed
possession under all such leases, all of such leases are valid and subsisting
and, except as would not result in a Material Adverse Effect, the Company and,
to the Company's knowledge, each other party to such leases is not in default
thereunder.

2.17 PATENTS AND TRADEMARKS. The Company has sufficient title and
ownership of all patents, trademarks, service marks, applications for each of
the foregoing, trade names, copyrights, trade secrets, information, proprietary
rights and processes (collectively "PROPRIETARY INFORMATION"), or has, or
believes to the best of its knowledge that it has the ability to acquire on
comercially reasonable terms, valid licenses to such Proprietary Information (as
described further on Exhibit B), as necessary for its business as now conducted
and as proposed to be conducted without any conflict with or infringement of the
rights of others. The Schedule of Exceptions contains a complete list of patents
and pending patent applications of the Company or of which the Company is a
licensee. There are no outstanding options, licenses, or agreements of any kind
relating to Proprietary Information owned by the Company, nor is the Company
bound by or a party to any options, licenses or agreements of any kind with
respect to the patents, trademarks, service marks, applications for each of the
foregoing, trade names, copyrights, trade secrets, licenses, information,
proprietary rights and processes of any other person or entity. The Company is
not aware of any impropriety with regard to the granting of any licenses of
Proprietary Information to or from the Company, and no claim is pending or, to
the Company's knowledge, threatened to the effect that any such Property
Information owned or licensed by the Company, or which the Company otherwise has
the right to use, is

9
14
invalid or unenforceable by the Company (and to the Company's knowledge, there
is no basis for any such claim). Neither the Company nor, to the Company's
knowledge, any of its employees or consultants has received any written
communications alleging, nor does the Company know of any grounds for any claims
or allegations now or in the future, that the Company or its employees or
consultants has violated or infringed or that the Company or its employees or
consultants would, by conducting its business as proposed, violate or infringe
any of the patents, trademarks, service marks, applications for each of the
foregoing, trade names, copyrights or trade secrets or other proprietary rights
of any other person or entity. The Company is not aware that any of its
employees or consultants is obligated under any contract (including licenses,
covenants, or commitments of any nature) or other agreement, or subject to any
judgment, decree, or order of any court or administrative agency, that would, in
the case of employees, interfere with the use of such employee's best efforts to
promote the interests of the Company or that would conflict with the Company's
business as proposed to be conducted or, in the case of consultants, which would
conflict with their obligations in serving as consultants to the Company. No
third party, including the employers or former employers of the Company's
employees and consultants, has asserted any rights or claims to the Proprietary
Information or any inventions used or proposed to be used in the Company's
business, and the Company does not believe that any such third party has a right
to assert any such rights or claims, except to the extent that such Proprietary
Information or such inventions are licensed to or from such third party. Except
pursuant to the terms of the Proprietary Information Agreements, there are no
agreements, understandings, instruments, or contracts to which the Company is a
party or by which it is bound that involve the license of any patent, copyright,
trade secret or other similar proprietary right to or from the Company.

2.18 TAX RETURNS; TAXES. The Company has accurately prepared and timely
filed all federal, state and other tax returns which are required to be filed
and has timely paid all taxes covered by such returns which have become due and
payable. The Company has not been advised that any of its returns, federal,
state or other, have been or are being audited as of the date hereof. The
Company is not delinquent in taxes or assessments and has no tax deficiency
proposed or assessed and has made no waiver of the statute of limitations
regarding assessments or collections. All taxes, if any, imposed by law in
connection with the issuance, sale and delivery of the Shares shall have been
paid, and all laws imposing such taxes shall have been fully complied with,
prior to the First Closing. Neither the Company nor any of its present or former
stockholders has ever filed an election pursuant to Section 1362 of the Internal
Revenue Code of 1986, as amended (the "Code"), that the Company be taxed as an S
corporation.

2.19 EMPLOYEES. None of the Company's employees belongs to any union or
collective bargaining unit. To the best of its knowledge, the Company has
complied in all material respects with all applicable state and federal equal
opportunity and other laws related to employment. To the best of the Company's
knowledge, no employee of or

10
15
consultant to the Company is or will be in violation of any judgment, decree, or
order, or any term of any employment contract, patent disclosure agreement,
proprietary information and inventions agreement, or any restrictive covenant,
or any other common law obligation to a former employer, or any other contract
or agreement relating to the relationship of any such person with the Company,
or any other party, or to the use of trade secrets or proprietary information of
others, because of the nature of the business conducted or to be conducted by
the Company or the use by any such employee of his best efforts with respect to
such business or the performance by any such consultant of his obligations to
the Company. To the knowledge of the Company, no third party has claimed or has
reason to claim that any employee of or consultant to the Company has disclosed
or may be disclosing or utilized or may be utilizing any trade secret or
proprietary information or documentation of such third party, or interfered or
may be interfering in the employment relationship between such third party and
any of its present or former employees and, to the Company's knowledge, no such
person proposes to do any of such things. The Company is not a party to or bound
by any currently effective employment contract, deferred compensation agreement,
bonus plan, incentive plan, profit sharing plan, retirement agreement, or other
employee compensation agreement, other than with respect to the Company's 1996
Stock Plan, a true and correct copy of which has been provided to each
Purchaser. The Company is not aware that any officer, key employee or key
consultant, or that any group of key employees or key consultants, intends to
terminate their employment or consultancy with the Company, nor does the Company
have a present intention to terminate the employment or engagement as a
consultant of any of the foregoing. Subject to general principles related to
wrongful termination of employees, the employment of each officer and employee
of the Company is terminable at the will of the Company. The Company has
delivered to counsel for the Purchasers a copy of each consulting agreement to
which it is a party.

2.20 NO DEFAULTS. The Company has, in all material respects, performed all
material obligations required to be performed by it to date and is not in
default under any of the contracts, loans, notes, mortgages, indentures,
licenses, security agreements, agreements, leases, documents, commitments or
other arrangements to which it is a party or by which it is otherwise bound,
except for such defaults which in the aggregate would not have a Material
Adverse Effect, and no event or condition has occurred which, with the lapse of
time or the giving of notice, or both, would constitute such a default.

2.21 INSURANCE. The Company maintains adequate insurance on its properties
of a character and in such amounts and on such terms usually insured by
corporations engaged in the same or a similar business against loss or damage
resulting from fire or other risks insured against by such corporations, and
maintains in full force and effect public liability insurance against claims for
personal injury, death or property damage occurring upon, in, about or in
connection with the use of any of its properties, products

11
16
or services and maintains such other insurance as may be required by law or
other agreement to which the Company is a party.

2.22 BROKERS OR FINDERS. The Company has not incurred, and will not incur,
any liability for brokerage or finders' fees or agents' commissions or any
similar charges in connection with the Agreements.

2.23 ENVIRONMENTAL AND SAFETY LAWS. To the best of its knowledge, the
Company is not in violation of any applicable statute, law or regulation
relating to the environment or occupational health and safety, and to the best
of its knowledge, no material expenditures are or will be required in order to
comply with any such existing statute, law or regulation.

2.24 NO DIVIDENDS. The Company has never made any declaration, setting
aside for payment or other distribution in respect of any of the Company's
capital stock or any direct or indirect redemption, repurchase or other
acquisition of any of such stock.

2.25 EMPLOYEE BENEFIT PLAN OBLIGATIONS. The Company does not maintain or
have any obligations with respect to any employee benefit plan (within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974
("ERISA")). The Company is not, nor was it at any time, obligated to contribute
to any employee pension benefit plan which is or was a multi-employer plan
within the meaning of Section 3(37) of ERISA.

2.26 QUALIFICATION AS A QUALIFIED SMALL BUSINESS. The Company is a
"qualified small business," as defined in Section 1202(b) of the Internal
Revenue Code (the "Code") and the Shares constitute "qualified small business
stock" as defined in Section 1202(c) of the Code. The Company covenants and
agrees to comply with the reporting and recordkeeping requirements of Section
1202 of the Code and any regulations promulgated thereunder and to execute and
deliver to the Purchasers and the Internal Revenue Service, from time to time,
such forms, documents, schedules and other instruments as may be reasonably
requested thereby to cause the Shares and the shares of Common Stock issuable
upon conversion of the Shares to qualify as a "qualified small business stock,"
as defined in Section 1202(c) of the Code.

2.27 FINANCIAL STATEMENTS. The Company has furnished to the Purchasers the
unaudited balance sheet of the Company as of January 31, 1996 and the related
unaudited statement of income for the period from the Company's inception
through January 31, 1996. All such financial statements fairly present the
financial position of the Company as of January 31, 1996, and the results of
operations during such period.

2.28 TRANSACTIONS WITH AFFILIATES. No director or officer or, to the
Company's knowledge, employee or stockholder of the Company, or, to the
Company's knowledge,

12
17
member of the family of any such person, or, to the Company's knowledge, any
corporation, partnership, trust or other entity in which any such person, or any
member of the family of any such person, has a substantial interest or is an
officer, director, trustee, partner or holder of more than 5% of the outstanding
capital stock thereof, is a party to any material transaction with the Company,
including any contract, agreement or other arrangement providing for the
employment of, furnishing of services by, rental of real or personal property
from or otherwise requiring payments to any such person or firm, other than
employment-at-will arrangements in the ordinary course of business.

2.29 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENTS. Each of the
officers of the Company, each key employee and each other employee now employed
by the Company who has access to confidential information of the Company has
executed the Proprietary Information Agreement substantially in the form of
Exhibit F (collectively, the "Proprietary Information Agreements"), and such
agreements are in full force and effect. The Company is not aware that any of
such persons is in violation of any such agreement.

2.30 U.S. REAL PROPERTY HOLDING CORPORATION. The Company is not now and
has never been a "United States real property holding corporation," as defined
in Section 897(c)(2) of the Code and Section 1.897-2(b) of the Regulations
promulgated by the Internal Revenue Service, and the Company has filed with the
Internal Revenue Service all statements, if any, with its United States income
tax returns which are required under Section 1.897-2(h) of such Regulations.

SECTION 3

INVESTMENT REPRESENTATIONS

Each Purchaser, severally and not jointly, hereby represents and warrants
to the Company as follows:

3.1 POWER AND AUTHORITY. Such Purchaser has the requisite power and
authority to enter into this Agreement, to purchase the Shares hereunder, to
convert the Shares into Common Stock, and to carry out and perform its
obligations under the terms of this Agreement.

3.2 DUE EXECUTION. This Agreement has been duly authorized, executed and
delivered by such Purchaser, and, upon due execution and delivery by the
Company, this Agreement will be a valid and binding agreement of such Purchaser,
subject to laws of general application relating to bankruptcy, insolvency, the
relief of debtors and general equity principles.

13
18
3.3 EXPERIENCE; ACCREDITED INVESTOR. Such Purchaser has, from time to
time, evaluated investments in start-up companies and has, either individually
or through the personal experience of one or more of its current officers or
partners, experience in evaluating and investing in start-up companies. Such
Purchaser is an "accredited investor" as defined in Regulation D promulgated
under the Securities Act.

3.4 INVESTMENT. Such Purchaser is acquiring the Shares (and any Common
Stock issuable upon conversion of the Shares) for investment for its own account
and not with the view to, or for resale in connection with, any distribution
thereof. Such Purchaser understands that the Shares (and any Common Stock
issuable upon conversion of the Shares) to be purchased have not been registered
under the Securities Act by reason of a specific exemption from the registration
provisions of the Securities Act which depends upon, among other things, the
bona fide nature of the investment intent as expressed herein.

3.5 RULE 144. Such Purchaser acknowledges that the Shares must be held
indefinitely unless subsequently registered under the Securities Act or an
exemption from such registration is available. Such Purchaser is aware of the
provisions of Rule 144 promulgated under the Securities Act which permits
limited resale of shares purchased in a private placement subject to the
satisfaction of certain conditions, including, among other things the existence
of a public market for the shares, the availability of certain current public
information about the Company, the resale occurring not less than two years
after a party has purchased and paid for the securities to be sold, the sale
being through a "BROKER'S TRANSACTION" or in transactions directly with a
"MARKET MAKER" (as provided by Rule 144(f)) and the number of shares being sold
during any three-month period not exceeding specified limitations. Such
Purchaser is aware that the conditions for resale set forth in Rule 144 have not
been satisfied and that the Company has no plan to satisfy these conditions in
the foreseeable future.

3.6 NO PUBLIC MARKET. Such Purchaser understands that no public market now
exists for the Shares and that a public market may never exist for the Shares.

3.7 DISCLOSURE OF INFORMATION. Such Purchaser believes it has received all
the information it considers necessary or appropriate for deciding whether to
purchase the Shares. Such Purchaser further represents that it has had an
opportunity to ask questions and receive answers from the Company regarding the
terms and conditions of the offering of the Shares.

14
19
SECTION 4

CONDITIONS OF THE PURCHASER'S OBLIGATIONS AT CLOSING

Each Purchaser's obligation to purchase the Shares at each Closing, as
applicable, is subject to the fulfillment on or prior to such Closing of the
following conditions:

4.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
the Company contained in Section 2 shall be true when made and on and as of the
date of such Closing with the same effect as though such representations and
warranties had been made on and as of the date of such Closing.

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

4.3 NO MATERIAL ADVERSE CHANGE. There shall have been no material adverse
change in the Company's business or financial condition or affairs between the
date of this Agreement and the date of such Closing, if different.

4.4 SECURITIES LAWS. The Company shall have obtained all necessary permits
and qualifications, or secured exemptions therefrom, required under the
Securities Act or by any state for the offer and sale of the Shares and Common
Stock issuable upon conversion of the Shares.

4.5 COMPLIANCE CERTIFICATE. The Company shall have delivered on the date
of such Closing a certificate signed by the President and Chief Financial
Officer of the Company certifying that the conditions specified in Sections 4.1,
4.2, 4.3, 4.7, 4.9, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16 and 4.17 have been
fulfilled.

4.6 OPINION OF COUNSEL. The Purchasers purchasing shares in such Closing
shall have received from Xxxxxx Godward Xxxxxx Xxxxxxxxx & Xxxxx, counsel for
the Company, an opinion dated as of such Closing in substantially the form
attached hereto as Exhibit G.

4.7 INVESTORS' RIGHTS AGREEMENT. The Company shall have executed and
delivered the Investors' Rights Agreement.

4.8 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the transactions contemplated at such Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to the
Purchasers' counsel,

15
20
which shall have received all such counterpart original and certified or other
copies of such documents as it may reasonably request.

4.9 SUPPORTING DOCUMENTS. The Purchasers purchasing shares in such Closing
and their counsel shall have received copies of the following documents:

(i) (A) the Certificate of Incorporation of the Company,
certified as of a recent date by the Secretary of State of the State of
Delaware and (B) a certificate of said Secretary dated as of a recent
date as to the due incorporation and good standing of the Company, the
payment of all excise taxes by the Company and listing all documents of
the Company on file with said Secretary.

(ii) a certificate of the Secretary or an Assistant Secretary
of the Company dated the date of such Closing and certifying: (A) that
attached thereto is a true and complete copy of the Bylaws of the
Company as in effect on the date of such certification; (B) that
attached thereto is a true and complete copy of all resolutions adopted
by the Board of Directors or the stockholders of the Company
authorizing the execution, delivery and performance of the Agreements,
the issuance, sale and delivery of the Shares, and the reservation,
issuance and delivery of the shares of Common Stock issuable upon
conversion of the Shares, and that all such resolutions are in full
force and effect and are all the resolutions adopted in connection with
the transactions contemplated by the Agreements; (C) that the
Certificate of Incorporation has not been amended since the date of the
last amendment referred to in the certificate delivered pursuant to
clause (i)(B) above, except for the filing of the Restated Certificate;
and (D) to the incumbency and specimen signature of each officer of the
Company executing the Agreements, the stock certificates representing
the Shares and any certificate or instrument furnished pursuant hereto,
and a certification by another officer of the Company as to the
incumbency and signature of the officer signing the certificate
referred to in this clause (ii); and

(iii) such additional supporting documents and other
information with respect to the operations and affairs of the Company
as the Purchasers or their counsel reasonably may request.

4.10 MANAGEMENT RIGHTS AGREEMENTS. The Company shall have executed and
delivered the Management Rights Agreements to those Purchasers participating in
such Closing who have made a request to the Company therefor and are subject in
any manner with respect to their investment in the Company to ERISA.

4.11 VOTING AGREEMENT. The Company and the other parties thereto shall
have executed and delivered the Voting Agreement.

16
21
4.12 AMENDMENT TO EMPLOYMENT AGREEMENT. Xxxxxxx X. Xxxx and the Company
shall have entered into an amendment (the "EMPLOYMENT AMENDMENT") to the terms
of his employment arrangements with the Company in a form satisfactory to Xx.
Xxxx, the Purchasers and their counsel, and a copy thereof shall have been
delivered to counsel for the Purchasers.

4.13 CHARTER. The Certificate of Incorporation of the Company shall read
in its entirety as set forth in Exhibit A.

4.14 BYLAWS. The Company's Bylaws shall have been amended, if necessary,
to provide that (i) any three directors shall have the right to call a meeting
of the Board of Directors and (ii) the number of directors fixed in accordance
therewith shall in no event conflict with any of the terms or provisions of the
Series A Preferred Stock. Series B Preferred Stock and Series C Preferred Stock
as set forth in the Restated Certificate.

4.15 PROPRIETARY INFORMATION AGREEMENTS. Copies of the Proprietary
Information Agreements shall have been delivered to counsel for the Purchasers.

4.16 ELECTION OF DIRECTORS. The number of directors constituting the
entire Board of Directors shall have been fixed at seven (7) and the following
persons shall have been elected as the directors and shall each hold such
position as of the First Closing: Xxxxxxx X. Xxxx and Xxxxxx Xxxxxx, as the
directors elected solely by the holders of the Common Stock, and Xxxxx X.
Xxxxxxxx, Xxxxxxx X. Xxxxxxxxx, Xxxxxxx Xxxxxxx, Xxxxx X. Xxxxx and Xxxx X.
Xxxxxxxx, Xx., as the directors elected solely by the holders of the Series A
Preferred Stock, the Series B Preferred Stock and the Series C Preferred Stock.

4.17 CERTIFICATE AS TO DISQUALIFIED PERSONS. The Company shall have
executed and delivered to New Enterprise Associates VI, Limited Partnership
("NEA VI") a Certificate as to Disqualified Persons, as requested by NEA VI,
dated the Closing Date, in form and substance satisfactory to NEA VI.

4.18 FEES OF PURCHASERS' COUNSEL. The Company shall have paid in
accordance with Section 6.5 the reasonable fees and disbursements of Xxxxx,
Xxxxxxx and Xxxxxxxxx in connection with this Agreement and related transactions
as specified on a reasonably detailed invoice, detailing all time entries and
costs, submitted to counsel to the Company a reasonable time in advance of such
Closing.

17
22
SECTION 5

CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING

The Company's obligation to issue and sell the Shares at each Closing
is subject to the fulfillment on or prior to such Closing of the following
conditions:

5.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Purchasers contained in Section 3 shall be true when made and on and as
of the date of such Closing with the same effect as though such representations
and warranties had been made on and as of the date of such Closing.

5.2 COVENANTS. All covenants, agreements and conditions contained in
this Agreement to be performed by the Purchasers on or prior to the date of such
Closing shall have been performed or complied with in all respects.

SECTION 6

MISCELLANEOUS

6.1 GOVERNING LAW. This Agreement shall be governed by the laws of the
State of California as applicable to contracts entered into and performed
entirely within the State of California by residents of California.

6.2 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto;
provided, however, that the rights of the Purchasers to purchase the Shares
shall not be assignable (other than to a corporation a majority of whose
outstanding voting shares are owned or controlled, directly or indirectly, by
the Purchaser) without the consent of the Company, and the Company's obligations
hereunder shall not be assignable without the consent of the Purchasers.

6.3 ENTIRE AGREEMENT. This Agreement, its Exhibits, and the other
documents delivered pursuant hereto constitute the full and entire understanding
and agreement between the parties with regard to the subjects hereof and
thereof.

6.4 NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be sent by facsimile or mailed
by registered or

18
23
certified mail, postage prepaid, or otherwise delivered by hand or by messenger,
addressed (a) if to a Purchaser, to the address set forth on Schedule A hereto,
or at such other address as shall have been furnished to the Company in writing
by such Purchaser, or (b) if to the Company, one copy to its address set forth
above and addressed to the attention of the President, or at such other address
or addresses as the Company shall have furnished in writing to the Purchasers,
and one copy to Xxxxxx Godward Xxxxxx Xxxxxxxxx & Xxxxx, 0000 Xxxxxxxxx Xxxxx,
Xxxxx 0000, Xxx Xxxxx, XX 00000, Attn: Xxxxxx X. Xxxx, Esq. All notices and
other communications pursuant to the provisions of this Section 6.4 shall be
deemed delivered when mailed or sent by facsimile or delivered by hand or
messenger. Notwithstanding the foregoing, any notice or communication to an
address outside the United States shall be sent by facsimile and confirmed in
writing contemporaneously sent by two-day guaranteed international courier.

6.5 EXPENSES. Each party to this Agreement shall bear its own expenses
and legal fees incurred by it with respect to this Agreement and all related
transactions; provided, however, that the Company shall pay the reasonable fees
and expenses of the Purchasers' special counsel, Xxxxx, Xxxxxxx and Xxxxxxxxx,
in connection with this Agreement and such transactions and any subsequent
amendment, waiver, consent or enforcement thereof.

6.6 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be enforceable against the party actually executing such
counterpart, and which together shall constitute one instrument.

6.7 SEVERABILITY. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that no such severability shall be effective if
it materially changes the economic benefit of this Agreement to any party.

6.8 SURVIVAL OF AGREEMENTS. All covenants, agreements, representations
and warranties made herein or in the other Agreements, or any certificate or
instrument delivered to the Purchasers pursuant to or in connection with the
Agreements, shall survive the execution and delivery of the Agreements, the
issuance, sale and delivery of the Shares, and the issuance and delivery of the
shares of Common Stock issuable upon conversion of the Shares, and all
statements contained in any certificate or other instrument delivered by the
Company hereunder or thereunder or in connection herewith or therewith shall be
deemed to constitute representations and warranties made by the Company.

6.9 BROKERAGE. Each party hereto will indemnify and hold harmless the
others against and in respect of any claim for brokerage or other commissions
relative to this

19
24
Agreement or to the transactions contemplated hereby, based in any way on
agreements, arrangements or understandings made or claimed to have been made by
such party with any third party.

6.10 AMENDMENTS. This Agreement may not be amended or modified, and no
provisions hereof may be waived, without the written consent of the Company and
the holders of at least two-thirds of the shares of Common Stock issued or
issuable upon conversion of the Shares.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

20
25
The foregoing Preferred Stock Purchase Agreement is hereby executed as
of the date first above written.

THE COMPANY:

AURORA BIOSCIENCES CORPORATION

By: __________________________

Title: _______________________

THE PURCHASERS:

AVALON MEDICAL PARTNERS, L.P.

By: __________________________

Title: _______________________

AVALON BIOVENTURES II, L.P.

By: __________________________

Title: _______________________

21
26
XXXXXXXXX CAPITAL PARTNERS, X.X. XX

By: Xxxxxxxxx Associates, L.P.

By: __________________________

Title: General Partner

ABINGWORTH BIOVENTURES SICAV

By: __________________________

Title: _______________________

NEW ENTERPRISES ASSOCIATES VI, LIMITED PARTNERSHIP

By: NEA Partners VI, Limited Partnership,
its General Partner

By: __________________________

Title: General Partner

NEA VENTURES 1996, L.P.

By: __________________________

Title: Authorized Signatory

22
27
DP III ASSOCIATES, L.P.

By: One Xxxxxx Square Associates III, L.P.,
its General Partner

By: __________________________
General Partner

DOMAIN PARTNERS III, L.P.

By: One Xxxxxx Square Associates III, L.P.,
its General Partner

By: __________________________
General Partner

BIOTECHNOLOGY INVESTMENTS LIMITED

By: Old Court Limited

By: __________________________
Attorney - in - Fact

PACKARD INSTRUMENT COMPANY, INC.

By: __________________________

Title: _______________________

[SIGNATURE PAGE FOR PREFERRED STOCK PURCHASE AGREEMENT]

23
28
SEQUANA THERAPEUTICS, INC.

By: __________________________

Title: _______________________

GC&H INVESTMENTS

By: __________________________

Title: _______________________

______________________________
XXXXX X. XXXXXXXX

______________________________
XXXXX X. XXXXX

______________________________
XXXXXXX X. GLOBE

______________________________
XXXXXXX X. XXXXX

24
29
______________________________
XXXXXXX X. XXXXXXXXX

______________________________
XXXX X. XXXXX, XX.

______________________________
XXXXXX XXXXXX

______________________________
XXXXXX X. XXXXXX

______________________________
XXXXXX LUETOLF
FOR XXXXXX X.X. LANGINGER

______________________________
XXXXXXX X. XXXXX

______________________________
XXXX X. XXXXXXXX, XX.

______________________________
XXXXXX XXXXXXXX

25
30
THE XXXXXX FAMILY TRUST

By: __________________________
XXXXXX X. XXXXXX, XX., TRUSTEE

By: __________________________
XXXXXX XXXXXX, TRUSTEE

______________________________
XXXXXXX X. XXXX

XXXXXXXXX & XXXXX GROUP

By: __________________________
Xxxxxx X. Xxxxxxx

Title: _______________________

26
31
SCHEDULE A
PURCHASERS OF PREFERRED STOCK

---------------------------------------------------------------------------------------------------------------------------------
AMOUNT OF SHARES PRICE PER METHOD OF
SHAREHOLDER INVESTMENT PURCHASED CLASS SHARE PAYMENT(1)
---------------------------------------------------------------------------------------------------------------------------------

AVALON MEDICAL PARTNERS L.P. $424,998.84 319,548 Ser A $1.33 CD
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xx Xxxxx, XX 00000
Fax: (000) 000-0000
---------------------------------------------------------------------------------------------------------------------------------
AVALON BIOVENTURES II L.P. 499,998.87 375,939 Ser A $1.33 CD
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xx Xxxxx, XX 00000
Fax: (000) 000-0000
---------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXX CAPITAL PARTNERS, X.X. XX 999,999.07 751,879 Ser A $1.33 C/W
0000 Xxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Fax: (000) 000-0000
---------------------------------------------------------------------------------------------------------------------------------
ABINGWORTH BIOVENTURES SICAV 3,499,998.74 2,631,578 Ser A $1.33 C/W
x/x Xxxxx & Xxx
Xxxxx Xxxxxxx 000
X-0000 Xxxxxxxxx
Xxxx: Xxxx Xxxxx
Fax: 000-00-00-00

with a copy to:
Xxxxxxx Xxxxxxx
Abingworth Management Ltd.
00 Xx. Xxxxx Xxxxxx
Xxxxxx XX0X0XX
Fax: 00-000-000-0000

Xxxxxx X. Xxxxxxxxx
Xxxxx Xxxxxxx & Xxxxxxxxx
000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Fax: (000) 000-0000
---------------------------------------------------------------------------------------------------------------------------------

NEW ENTERPRISE ASSOCIATES VI 2,749,999.77 2,067,669 Ser A $1.33 C/W
LIMITED PARTNERSHIP
0000 Xx. Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
---------------------------------------------------------------------------------------------------------------------------------
XXX XXXXXXXX 0000, X.X. 9,998.94 7,518 Ser A $1.33 C/W
0000 Xx. Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
---------------------------------------------------------------------------------------------------------------------------------
DP III ASSOCIATES, L.P. 95,301.15 71,655 Ser A $1.33 C/W
Xxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
---------------------------------------------------------------------------------------------------------------------------------
DOMAIN PARTNERS III., L.P. 2,754,698.66 2,071,202 Ser A $1.33 C/W
Xxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
---------------------------------------------------------------------------------------------------------------------------------
BIOTECHNOLOGY INVESTMENTS LIMITED 1,899,999.43 1,428,571 Ser A $1.33 C/W
Xxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Fax: (000)000-0000
---------------------------------------------------------------------------------------------------------------------------------
XXXXX X. XXXXXXXX 49,998.69 37,593 Ser A $1.33 C/W
Avalon Ventures
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xx Xxxxx, XX 00000
Fax: (000) 000-0000
---------------------------------------------------------------------------------------------------------------------------------
XXXXX X. XXXXX 199,500.00 150,000 Ser A $1.33 C/W
0000 Xxxxxxxxxx Xxxxx
Xx Xxxxx, XX 00000
Fax: (000) 000-0000
---------------------------------------------------------------------------------------------------------------------------------
XXXXXXX X. GLOBE 50,540.00 38,000 Ser A $1.33 C/W
000 Xxxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx X0X0X0
Fax: (000) 000-0000
---------------------------------------------------------------------------------------------------------------------------------

XXXXXXX X. XXXXX 79,800.00 60,000 Ser A $1.33 C/W
UCSD
Cellular & Molecular Medicine Xxxx
Xx Xxxxx, XX 00000
Fax: (000) 000-0000
---------------------------------------------------------------------------------------------------------------------------------
XXXXXXX X. XXXXXXXXX 29,999.48 22,556 Ser A $1.33 C/W
UCSD
Eukaryotic Regulatory Biology Program
Room 345 C.M.M.
0000 Xxxxxx Xxxxx
Xx Xxxxx, XX 00000
Fax: (000) 000-0000
---------------------------------------------------------------------------------------------------------------------------------
XXXX X. XXXXX, XX. 4,999.47 3,759 Ser A $1.33 C/W
Argonaut Technologies, Inc.
000-X Xxxxxxxxxx Xx., Xxx. X
Xxx Xxxxxx, XX 00000-0000
Fax: (000) 000-0000
---------------------------------------------------------------------------------------------------------------------------------
XXXXXX XXXXXX 37,499.35 28,195 Ser A $1.33 C/W
000 Xxxxxx Xxxxxxx
Xxxxxxxx, XX 00000
Fax: (000) 000-0000
---------------------------------------------------------------------------------------------------------------------------------
XXXXXX X. XXXXXX 37,499.35 28,195 Ser A $1.33 C/W
000 Xxxxxx Xxxxxxx
Xxxxxxxx, XX 00000
Fax: (000) 000-0000
---------------------------------------------------------------------------------------------------------------------------------
XXXXXX X.X. LANGINGER 53,200.00 40,000 Ser A $1.33 C/W
x/x XXXXXX XXXXXX
XXXX Xxxxxxxxxxxxxxxxxxx XX
0000 Xxxxxx
Xxxxxxxxxxx 00
Xxxxxxxx 0000
Fax: 00-000 00 00
---------------------------------------------------------------------------------------------------------------------------------

GC&H INVESTMENTS 49,998.69 37,593 Ser A $1.33 C/W
Xxxxxx Godward Xxxxxx Xxxxxxxxx & Xxxxx
0000 Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxxx, XX 00000
Fax: (000) 000-0000
---------------------------------------------------------------------------------------------------------------------------------
XXXXXXX X. XXXXX 24,998.68 18,796 Ser A $1.33 C/W
Xxxxxxx, Xxxxx & Xxxxx
Xxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Fax: (000) 000-0000
---------------------------------------------------------------------------------------------------------------------------------
XXXX X. XXXXXXXX, XX. 4,999.47 3,759 Ser A $1.33 C/W
New Enterprise Associates
0000 Xx. Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
---------------------------------------------------------------------------------------------------------------------------------
XXXXXX XXXXXXXX 9,998.94 7,518 Ser A $1.33 C/W
P.O. Box 3471
16360 La Xxxxxx
Xxxxxx Xxxxx Xx, XX 00000
Fax: (000) 000-0000
---------------------------------------------------------------------------------------------------------------------------------
THE XXXXXX FAMILY TRUST 24,998.68 18,796 Ser A $1.33 C/W
C/O XXXXXX X. XXXXXX, XX.
0000 Xxxxx Xxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Fax: (000) 000-0000
---------------------------------------------------------------------------------------------------------------------------------
XXXXXXX X. XXXX 24,998.68 18,796 Ser A $1.33 C/W
0000 Xx Xxxxx Xxxxxxxxx, #0
Xx Xxxxx, XX 00000
Fax: (000) 000-0000
---------------------------------------------------------------------------------------------------------------------------------
PACKARD INSTRUMENT COMPANY, INC. 999,999.00 555,555 Ser B $1.80 C/W
000 Xxxxxxxx Xxxxxxx
Xxxxxxx, XX 00000
Fax: (000) 000-0000
---------------------------------------------------------------------------------------------------------------------------------

SEQUANA THERAPEUTICS, INC. 1,500,000.00 750,000 Ser C $2.00 C/W
00000 Xxxxx Xxxxxx Xxxxx Xx., Xxx. 000
Xx Xxxxx, XX 00000
Fax: (000) 000-0000
---------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXX & XXXXX GROUP 499,998.60 277,777 Ser B $1.80 C/W
000 Xxxx Xxx., 00xx Xx.
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx
Fax: (000) 000-0000
---------------------------------------------------------------------------------------------------------------------------------
TOTALS $16,618,020.55 11,822,447
---------------------------------------------------------------------------------------------------------------------------------

1 "C/W" indicates check or wire transfer; "CD" indicates cancellation of
indebtedness.
36
EXHIBIT A

RESTATED CERTIFICATE OF INCORPORATION
37

RESTATED CERTIFICATE OF INCORPORATION
OF
AURORA BIOSCIENCES CORPORATION

AURORA BIOSCIENCES CORPORATION, a corporation organized and existing
under the laws of the state of Delaware, hereby certifies as follows:

FIRST. The name of the corporation is Aurora Biosciences Corporation.

SECOND. The date of the filing of the corporation's original Certificate
of Incorporation with the Secretary of State of Delaware was
January 22, 1996.

THIRD. This Restated Certificate of Incorporation was duly adopted by
the corporation in accordance with Section 245 of the General
Corporation Law of the State of Delaware.

FOURTH. The Certificate of Incorporation of the corporation shall be
amended and restated to read in full as follows.

I.
The name of this corporation is AURORA BIOSCIENCES CORPORATION.

1
38

II.
The address, including street, number, city, and county, of the
registered office of the corporation in the State of Delaware is 0000 Xxxxx
Xxxxx Xxxxxx, Xxxx xx Xxxxx, Xxxxxx of Kent; and the name of the registered
agent of the corporation in the State of Delaware at such address is CorpAmerica
Inc.

III.
The purpose of this corporation is to engage in any lawful act or
activity for which a corporation may be organized under the Delaware General
Corporation Law.

IV.
A. CLASSES OF STOCK. This corporation is authorized to issue two classes
of stock to be designated, respectively, "COMMON STOCK" and "PREFERRED STOCK."
The total number of shares which the corporation is authorized to issue is
seventy-five million (75,000,000) shares. Fifty million (50,000,000) shares
shall be Common Stock, each having a par value of one-tenth of one cent
($0.001). Twenty-five million (25,000,000) shares shall be Preferred Stock, each
having a par value of one-tenth of one cent ($0.001). Notwithstanding Section
242 of the General Corporation Law of the State of Delaware, the number of
authorized shares of Common Stock may be increased or decreased (but not below
the number of shares then outstanding) by the affirmative vote of holders of a
majority of the outstanding shares of capital stock of the corporation, with
each such share being entitled to such number of votes per share as is provided
in this Article IV.

The Preferred Stock may be issued from time to time in one or
more series. Subject to compliance with applicable voting rights, if any, which
may have been granted to the Preferred

2
39

Stock or any series thereof, the Board of Directors is hereby authorized, by
filing a certificate pursuant to the Delaware General Corporation Law, to fix or
alter from time to time the designation, powers, preferences and rights of the
shares of each such series and the qualifications, limitations or restrictions
thereof, including without limitation the dividend rights, dividend rate,
conversion rights, voting rights and the liquidation preferences of any wholly
unissued series of Preferred Stock, and to establish from time to time the
number of shares constituting any such series and the designation thereof, or
any of them; and to increase or decrease the number of shares of any series
subsequent to the issuance of shares of that series, but not below the number of
shares of such series then outstanding. In case the number of shares of any
series shall be so decreased, the shares constituting such decrease shall resume
the status that they had prior to the adoption of the resolution originally
fixing the number of shares of such series. Of the Preferred Stock, ten million
five hundred thousand (10,500,000) shares shall be designated "Series A
Preferred Stock," six hundred thousand (600,000) shares shall be designated
"Series B Preferred Stock", and eight hundred thousand (800,000) shares shall be
designated "Series C Preferred Stock." The Series A Preferred Stock, the Series
B Preferred Stock and the Series C Preferred Stock is hereinafter sometimes
collectively referred to as the "Designated Preferred."

B. RIGHTS, PREFERENCES, PRIVILEGES AND RESTRICTIONS OF THE SERIES A,
SERIES B AND SERIES C PREFERRED STOCK.

SECTION 1. DIVIDENDS. The holders of the Designated Preferred shall be
entitled to receive dividends at the rate per annum of $0.1064 per share of
Series A Preferred Stock, $0.1440 per share of Series B Preferred Stock, and
$0.1600 per share of Series C Preferred Stock, when, as and if declared by the
Board of Directors out of any funds legally

3
40

available therefor, prior and in preference to any declaration or payment of any
dividend on the Common Stock of this corporation ("COMMON") payable other than
in Common. Such dividends shall not be cumulative. Such dividends shall be
distributed ratably among the holders of each Series of Designated Preferred
based on the full dividend to which such holder is entitled. No dividends or
other distributions shall be made with respect to the Common in any year, other
than dividends payable solely in Common, unless and until (i) the full amount of
the dividend provided for above with respect to the Designated Preferred for
such year has been paid or declared and set apart for payment, and (ii) an equal
dividend per share shall have been paid or declared and set apart for payment to
the holders of the Designated Preferred (in addition to the dividend provided
for above) for each share of Common which the holders of the Designated
Preferred then have the right to acquire upon conversion of their respective
shares under this Certificate.

SECTION 2. LIQUIDATION PREFERENCE.

A. In the event of any liquidation, dissolution or winding up
of the corporation, either voluntary or involuntary, the holders of the
Designated Preferred shall be entitled to receive, prior and in preference to
any distribution of any of the assets or surplus funds of the corporation to the
holders of the Common by reason of their ownership thereof: (i) the sum of $1.33
per share of Series A Preferred Stock, $1.80 per share of Series B Preferred
Stock, and $2.00 per share of Series C Preferred Stock then held by them (such
amounts per share with respect to each such Series are hereinafter referred to
as the "Original Issue Price"), and (ii) an amount equal to all declared but
unpaid dividends on the Designated Preferred then held by them. If, upon the
occurrence of such event, the assets and funds thus distributed among the
holders of the Designated Preferred shall be insufficient to permit the payment
to such holders of the full aforesaid

4
41

preferential amount, then the entire assets and funds of the corporation legally
available for distribution shall be distributed ratably among the holders of the
Designated Preferred in proportion to the preferential amount each such holder
would have been entitled to receive pursuant to this Section 2a. if such
distribution had been sufficient to permit the full payment of such preferential
amount.

B. Upon the completion of the distribution provided for in
Section 2a., all of the assets remaining in the corporation, if any, shall be
distributed pro rata among the holders of the Common, based upon the number of
shares of Common held by each such holder.

C. For purposes of this Section 2, a merger or consolidation of
this corporation with or into any other corporation or corporations where the
stockholders of this corporation immediately prior to such merger or
consolidation do not beneficially own more than 50% of the outstanding voting
stock of the surviving entity immediately following such merger or consolidation
and in which the stockholders of this corporation receive distributions in cash
or in securities of another corporation as a result of such merger or
consolidation, or a sale or other disposition of all or substantially all of the
assets of the corporation, shall be treated as a liquidation, dissolution or
winding up of the corporation.

SECTION 3. CONVERSION. The holders of the Designated Preferred shall
have conversion rights as follows (the "CONVERSION RIGHTS"):

A. OPTIONAL CONVERSION. Each share of Designated Preferred
shall be convertible at the option of the holder thereof, without payment of
additional consideration, at any time, at the office of the corporation or any
transfer agent for the Designated Preferred, into one share of Common, subject
to adjustment as provided in Sections 3.d. and 3.e. below.

5
42

B. AUTOMATIC CONVERSION. Each share of Designated Preferred
shall automatically be converted into the number of shares of Common into which
such share of Designated Preferred is then convertible pursuant to Section 3a
(i) in the event that the holders of not less than sixty-seven percent (67%) of
the outstanding Designated Preferred consent to such conversion, or (ii) upon
the closing of a firm commitment underwritten public offering pursuant to an
effective registration statement under the Securities Act of 1933, as amended
(the "ACT"), covering the offer and sale by the corporation of Common to the
public at an aggregate offering price of not less than $10,000,000 (prior to
underwriters' discounts and expenses), and at a public offering price not less
than $6.00 per share, subject to adjustment for stock splits, stock dividends,
reorganizations and the like with respect to the Common.

C. MECHANICS OF CONVERSION.

(1) No fractional shares of Common shall be issued upon
conversion of the Designated Preferred. In lieu of any fractional share, the
corporation shall pay cash equal to such fraction multiplied by the then current
fair market value of a share of Common as determined in good faith by the Board
of Directors of the corporation. Before any holder of Designated Preferred shall
be entitled to convert the same into shares of Common, it shall surrender the
certificate or certificates therefor, duly endorsed, at the office of the
corporation or of any transfer agent for the Designated Preferred, and shall
give written notice to the corporation at such office that it elects to convert
the same (except that no such written notice of election to convert shall be
necessary in the event of an automatic conversion pursuant to Section 3b.). The
corporation shall, as soon as practicable thereafter, issue and deliver at such
office to such holder of Designation Preferred a certificate or certificates,
registered in such names as specified by the

6
43

holder, for the number of shares of Common to which such holder shall be
entitled as aforesaid, and a check payable to the holder in the amount of any
amounts payable for fractional shares and any declared and unpaid dividends on
the converted Designated Preferred. Such conversion shall be deemed to have been
made immediately prior to the close of business on the date of such surrender of
the shares of the Designated Preferred to be converted, and the person or
persons entitled to receive the shares of Common issuable upon such conversion
shall be treated for all purposes as the record holder or holders of such shares
of Common on such date (except that in the event of an automatic conversion
pursuant to Section 3b.(i), such conversion shall be deemed to have been made at
the close of business on the date fixed in the vote approving such automatic
conversion and in the event of automatic conversion pursuant to Section 3b.(ii),
such conversion shall be deemed to have been made immediately prior to the
closing of the offering referred to in Section 3b.(ii)). If the conversion is in
connection with an underwritten offer of securities registered pursuant to the
Act, the conversion may, at the option of any holder tendering Designated
Preferred for conversion, be conditioned upon the closing with the underwriter
of the sale of securities pursuant to such offering, in which event the
person(s) entitled to receive the Common issuable upon such conversion of
Designated Preferred shall not be deemed to have converted such Designated
Preferred until immediately prior to the closing of such sale of securities. If
such conversion is in connection with a merger, consolidation or sale of assets
which would be treated as a liquidation, dissolution or winding up of the
corporation in accordance with and for purposes of Section 2, the conversion
may, at the option of the holder tendering Designated Preferred for conversion,
be conditioned upon the consummation of such transaction, in which event the
person(s) entitled to receive the Common issuable upon such conversion of
Designated

7
44

Preferred shall not be deemed to have converted such Designated Preferred until
immediately prior to the consummation of such transaction.

D. ADJUSTMENTS FOR SUBDIVISIONS, DIVIDENDS, COMBINATIONS
OR CONSOLIDATIONS OF COMMON.

(1) In the event the outstanding shares of Common shall be
combined or consolidated, by reclassification or otherwise, into a lesser number
of shares of Common, the number of shares of Common into which the Designated
Preferred is convertible immediately prior to such combination or consolidation
shall, concurrently with the effectiveness of such combination or consolidation,
be proportionately decreased.

(2) In the event the corporation shall declare or pay any
dividend on the Common payable in Common or in the event the outstanding shares
of Common shall be subdivided, by reclassification or otherwise than by payment
of a dividend in Common, into a greater number of shares of Common, the number
of shares of Common into which the Designated Preferred is convertible
immediately prior to such dividend or subdivision shall be proportionately
increased:

(A) in the case of any such dividend, immediately
after the close of business on the record date for the determination of holders
of any class of securities entitled to receive such dividend, or

(B) in the case of any such subdivision, at the close
of business on the date immediately prior to the date upon which such corporate
action becomes effective.

8
45

(3) If such record date shall have been fixed and such
dividend shall not have been fully paid on the date fixed therefor, the
adjustment previously made in accordance with this Subsection d. shall be
canceled (to the extent such dividend was not paid) as of the close of business
on the date so fixed, and thereafter the number of shares of Common into which
the Designated Preferred is convertible shall be adjusted as of the time of
actual payment of such dividend.

E. ADJUSTMENTS FOR OTHER RECLASSIFICATIONS, DIVIDENDS AND
DISTRIBUTIONS. If there occurs any capital reorganization or any
reclassification of the capital stock of the corporation (other than any
subdivision, dividend, combination, consolidation or other transaction provided
for in Section 3d), each share of Designated Preferred shall thereafter be
convertible into the same kind and amounts of securities or other assets, or
both, that were issuable or distributable to the holders of shares of
outstanding Common Stock of the corporation upon such reorganization or
reclassification, in proportion to that number of shares of Common Stock into
which such shares of Designated Preferred might have been converted immediately
prior to such reorganization or reclassification; and in any such case,
appropriate adjustments (as determined by the Board of Directors) shall be made
in the application of the provisions herein set forth with respect to the rights
and interests thereafter of the holders of Designated Preferred to the end that
the provisions of this Certificate shall thereafter be applicable, as nearly as
reasonably may be, in relation to any securities or other assets thereafter
deliverable upon the conversion of the Designated Preferred.

F. NO IMPAIRMENT. The Corporation will not, by amendment of its
Certificate of Incorporation, by filing a Certificate of Designation or through
any reorganization,

9
46

transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
corporation but will at all times in good faith assist in the carrying out of
all the provisions of this Section 3 and in the taking of all such action as may
be necessary or appropriate in order to protect the Conversion Rights of the
holders of Designated Preferred against impairment.

G. CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment, pursuant to this Section 3, of the number of shares
of Common into which any shares of Designated Preferred are convertible, the
corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
such shares of Designated Preferred a certificate setting forth such adjustment
or readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The corporation shall, upon the written request at any
time of any holder of Designated Preferred, furnish or cause to be furnished to
such holder a like certificate setting forth (i) such adjustments and
readjustments, (ii) the number of shares of Common into which the Designated
Preferred is then convertible, and (iii) the number of shares of Common and the
amount, if any, of other property which at the time would be received upon the
conversion of Designated Preferred.

H. NOTICES OF RECORD DATE. In the event that this Corporation
shall propose at any time:

(1) to declare any dividend or distribution upon the
Common, whether in cash, property, stock or other securities, whether or not a
regular cash dividend and whether or not out of earnings or earned surplus;

10
47

(2) to offer for subscription pro rata to the holders of
any class or series of its stock any additional shares of stock of any class or
series or other rights;

(3) to effect any reclassification or recapitalization of
its Common shares outstanding involving a change in the Common shares; or

(4) to merge or consolidate with or into any other
corporation, or sell, lease or convey all or substantially all its property or
business, or to liquidate, dissolve or wind up; then, in connection with each
such event, this corporation shall send to the holders of the Designated
Preferred:

(A) at least 10 days' prior written notice of the date
on which a record shall be taken for such dividend, distribution or subscription
rights (and specifying the date on which the holders of Common shares shall be
entitled thereto) or for determining rights to vote in respect of the matters
referred to in (1) and (2) above; and

(B) in the case of the matters referred to in (3) and
(4) above, at least 10 days' prior written notice of the date when the same
shall take place (and specifying, if practicable, or estimating the date on
which the holders of Common shares shall be entitled to exchange their Common
shares for securities or other property deliverable upon the occurrence of such
event).

(C) Each such written notice shall be given by first
class mail, postage prepaid, addressed to the holders of the Designated
Preferred at the address for each such holder as shown on the books of this
Corporation; provided that any such notice to an address

11
48

outside the United States shall be given by facsimile and confirmed in writing
contemporaneously sent by two-day guaranteed international courier.

I. COMMON STOCK RESERVED. The Corporation shall at all times
reserve and keep available out of its authorized but unissued shares of Common
Stock, solely for the purpose of effecting the conversion of the shares of
Designated Preferred, such number of shares of Common Stock as shall from time
to time be sufficient to effect the conversion of all outstanding shares of
Designated Preferred, and if at any time the number of authorized but unissued
shares of Common Stock shall not be sufficient to effect the conversion of all
then-outstanding shares of Designated Preferred, the Corporation shall take such
corporate action as may, in the opinion of its counsel, be necessary to increase
its authorized but unissued shares of Common Stock to such number of shares as
shall be sufficient for such purpose.

J. ISSUE TAX. The issuance of certificates for shares of Common
upon conversion of Designated Preferred shall be made without charge to the
holders thereof for any issuance tax in respect thereof, provided that the
corporation shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any certificate in a
name other than that of the holder of the Designated Preferred which is being
converted.

K. CLOSING OF BOOKS. The corporation will at no time close its
transfer books against the transfer of any Designated Preferred or of any shares
of Common issued or issuable upon the conversion of any shares of Designated
Preferred in any manner which interferes

12
49

with the timely conversion of such Designated Preferred, except as may otherwise
be required to comply with applicable securities laws.

SECTION 4. VOTING RIGHTS.

A. GENERAL. Except as otherwise required by law or this
Certificate of Incorporation, (i) each share of Common issued and outstanding
shall have one vote; (ii) each share of Designated Preferred issued and
outstanding shall have a number of votes equal to the number of Common shares
(including fractions of a share) into which such share of Designated Preferred
is then convertible as adjusted from time to time pursuant to Section 3 hereof;
and (iii) the Common and the Designated Preferred and any other class and series
of Stock of the corporation shall vote together as a single class.

B. BOARD SIZE. The corporation shall not, without the written
consent or affirmative vote of the holders of at least sixty-seven percent (67%)
of the then outstanding shares of Designated Preferred, given in writing or by
vote at a meeting, consenting or voting (as the case may be) separately as a
class, increase the maximum number of directors constituting the Board of
Directors to a number of excess of nine (9).

C. BOARD SEATS. The holders of the Designated Preferred, voting
as a separate class, shall be entitled to elect five (5) directors of the
corporation. The holders of Common, voting as a separate class, shall be
entitled to elect two (2) directors of the corporation. At any meeting (or in a
written consent in lieu thereof) held for the purpose of electing directors, the
presence in person or by proxy (or the written consent) of the holders of a
majority of the shares of Designated Preferred then outstanding shall constitute
a quorum of the Designated Preferred for

13
50

the election of directors to be elected solely by the holders of the Designated
Preferred. A vacancy in any directorship elected by the holders of the
Designated Preferred shall be filled only by vote or written consent of the
holders of the Designated Preferred and a vacancy in any directorship elected by
the holders of Common shall be filled only by vote or written consent of the
holders of Common. A director elected by the holders of Designated Preferred may
be removed without cause only by vote of holders of a majority of the
outstanding shares of Designated Preferred and a director elected by the holders
of Common may be removed without cause only by vote of holders of a majority of
the outstanding shares of Common.

SECTION 5. COVENANTS.

A. In addition to any other rights provided by law, this
corporation shall not, without first obtaining the affirmative vote or written
consent of the holders of not less than sixty-seven percent (67%) of all
outstanding shares of Designated Preferred, voting together as a class:

(1) make any amendment to the corporation's Certificate of
Incorporation or Bylaws that would materially and adversely alter or change the
rights, preferences, or privileges of the outstanding Designated Preferred;

(2) increase or decrease the authorized number of shares of
Preferred Stock or any Series thereof;

(3) create (by reclassification, Certificate of Designation
or otherwise) any new class or series of shares of stock having a preference
over the Series A Preferred Stock, Series B Preferred Stock or Series C
Preferred Stock with respect to voting rights, liquidation preferences, or
dividends; increase the authorized amount of any class or series of shares

14
51

of stock having a preference over the Series A Preferred Stock, Series B
Preferred Stock or Series C Preferred Stock with respect to voting rights,
liquidation preferences or dividends; or create or authorize (by
reclassification, Certificate of Designation or otherwise) any obligation or
security convertible into shares of any class or series of stock having a
preference over the Series A Preferred Stock, Series B Preferred Stock or Series
C Preferred Stock with respect to voting rights, liquidation preferences or
dividends; or

(4) take any action that results in any liquidation,
dissolution or winding up of the corporation or any merger, consolidation, or
other corporate reorganization, or effect any transaction in which all or
substantially all of the assets of the corporation are sold or otherwise
disposed of.

B. In addition to any other rights provided by law, this
corporation shall not, without first obtaining the affirmative vote or written
consent of the holders of a majority of the outstanding shares of a particular
Series of Designated Preferred, take any action that would (i) materially and
adversely alter or change the rights, preferences, or privileges of such Series
in a manner different than the other Series, (ii) increase or decrease the
authorized number of shares of such Series or (iii) amend the terms of another
Series of Designated Preferred which, when established, was pari pasu with such
Series with respect to voting rights, liquidation preferences or dividends, if
such amendment results in the other Series having a preference over such Series
with respect to voting rights, liquidation preferences or dividends..

SECTION 6. STATUS OF CONVERTED OR REDEEMED STOCK. In case any shares
of Designated Preferred shall be converted pursuant to Section 3 hereof, the
shares so converted shall resume the status of authorized but unissued and
undesignated shares of Preferred Stock.

15
52

SECTION 7. RESIDUAL RIGHTS. All rights accruing to the outstanding
shares of this corporation not expressly provided for to the contrary herein
shall be vested in the Common.

For the management of the business and for the conduct of the affairs of
the corporation, and in further definition, limitation and regulation of the
powers of the corporation, of its directors and of its stockholders or any class
thereof, as the case may be, it is further provided that:

A. The management of the business and the conduct of the affairs of the
corporation shall be vested in its Board of Directors. Subject to Section 4b of
Article IV, the number of directors which shall constitute the whole Board of
Directors shall be fixed by the Board of Directors in the manner provided in the
Bylaws, provided that such number shall not be less than the number of directors
provided for in Section 4 of Article IV.

B. Subject to Section 5 of Article IV, the Board of Directors may from
time to time make, amend, supplement or repeal the Bylaws; provided, however,
that (subject to such Section 5) the stockholders may change or repeal any Bylaw
adopted by the Board of Directors by the affirmative vote of the holders of a
majority of the voting power of all of the then outstanding shares of the
capital stock of the corporation (considered for this purpose as one class);
and, provided further, that no amendment or supplement to the Bylaws adopted by
the Board of Directors shall vary or conflict with any amendment or supplement
thus adopted by the stockholders.

C. The directors of the corporation need not be elected by written ballot
unless the Bylaws so provide.

16
53

D. Following the effectiveness of the registration of any class of
securities of the corporation pursuant to the requirements of the Securities
Exchange Act of 1934, as amended, no action shall be taken by the stockholders
of the corporation except at an annual or special meeting of stockholders called
in accordance with the Bylaws and no action shall be taken by the stockholders
by written consent.

E. Advance notice of stockholder nominations for the election of
directors and of business to be brought by stockholders before any meeting of
the stockholders of the corporation shall be given in the manner provided in the
Bylaws of the corporation.

VI.
A director of the corporation shall, to the full extent not prohibited by
the Delaware General Corporation Law, as the same exists or may hereafter be
amended, not be liable to the corporation or its stockholders for monetary
damages for breach of his fiduciary duty as a director.

VII.
The corporation is to have perpetual existence.

17
54

VIII.
Subject to the provisions of this Certificate of Incorporation, the
corporation reserves the right to amend, alter, change or repeal any provision
contained in this Certificate of Incorporation, in the manner now or hereafter
prescribed by statute, and all rights conferred upon the stockholders herein are
granted subject to this right.

IN WITNESS WHEREOF, said Aurora Biosciences Corporation has caused this
Certificate to be signed by its President and Chief Executive Officer, Xxxxxxx
X. Xxxx, and attested to by its Secretary, Xxxx X. Xxxxxxxx, this 6th day of
March, 1996.

-------------------------------------
XXXXXXX X. XXXX
PRESIDENT AND CHIEF EXECUTIVE OFFICER

ATTEST:

---------------------------------
XXXX X. XXXXXXXX
SECRETARY

18
55
EXHIBIT B

SCHEDULE OF EXCEPTIONS
56
EXHIBIT C

INVESTORS' RIGHTS AGREEMENT
57

AURORA BIOSCIENCES CORPORATION

INVESTORS RIGHTS AGREEMENT

MARCH 8, 1996
58

AURORA BIOSCIENCES CORPORATION

INVESTORS' RIGHTS AGREEMENT

This Investors' Rights Agreement (the "AGREEMENT") is entered into as
of March 8, 1996 among Aurora Biosciences Corporation, a Delaware corporation
(the "COMPANY"), with its principal office located at 0000 Xxxxxxxx Xxxxxx,
Xxxxx 000, Xx Xxxxx, XX 00000 and the persons or entities listed as
Stockholders in the signature pages hereto who execute this Agreement (each a
"Stockholder", collectively, the "STOCKHOLDERS"). This Agreement is being
entered into pursuant to Section 4.7 of that certain Preferred Stock Purchase
Agreement of even date herewith (the "PURCHASE AGREEMENT") among the Company
and the Stockholders.

In consideration of the mutual agreements, covenants and conditions
contained herein, the Company and the Stockholders hereby agree as follows
(unless otherwise defined herein, capitalized terms used herein shall have the
meanings assigned in the Purchase Agreement):

1. RESTRICTIONS ON TRANSFER; REGISTRATION RIGHTS

1.1. RESTRICTIONS ON TRANSFERABILITY. Neither the shares of the
Company's Series A, Series B or Series C Preferred Stock purchased by the
Stockholders pursuant to the Purchase Agreement (the "DESIGNATED PREFERRED")
nor the Registrable Securities (as defined below) shall be transferable except
upon compliance with (i) the Right of First Refusal set forth in Section 45 of
the Company's Bylaws, (ii) the conditions specified in this Agreement, which
conditions are intended to insure compliance with the provisions of the
Securities Act (as defined below), and (iii) if such shares are Restricted
Securities, upon such other terms as are in the opinion of counsel to the
Company necessary to comply with the provisions of the Securities Act;
provided, however that such restrictions shall not apply to transfers under the
circumstances described in Sections 1.5, 1.6 or 1.7 and that the requirements
of clause (iii) shall not apply to a transfer without consideration to one or
more partners or shareholders of the Stockholder (e.g., an in-kind distribution
pursuant to the terms of the Stockholder's governing documents). Except for
transfers made pursuant to Rule 144 of the Securities Act, each Stockholder
will cause any proposed transferee of Designated Preferred or Registrable
Securities held by such Stockholder to agree to take and hold such securities
subject to the provisions and upon the conditions specified in this Agreement
and it will be a condition precedent to the effectiveness of any such transfer
that such Stockholder shall have secured a written agreement of such transferee
in form and substance satisfactory to the Company to that effect, if so
requested by the Company; provided, however, that this sentence shall not apply
with respect to any proposed transferee in whose hands the transferred shares
will not be Restricted Securities.

1.2. CERTAIN DEFINITIONS. As used in this Agreement, the following
terms shall have the following respective meanings:

"COMMISSION" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.

"COMMON STOCK" shall mean the Common Stock, $.001 par value, of the
Company, as constituted on the date of this Agreement.

"FORM S-3" shall mean Form S-3 under the Securities Act (as defined
below) as in effect on the date of this Agreement, or any substantially
similar, equivalent or successor form under the Securities Act.

"HOLDER" shall mean each holder of Registrable Securities.

"INITIAL PUBLIC OFFERING" shall mean the Company's initial firm
commitment underwritten public offering pursuant to an effective registration
statement under the Securities Act of 1933, as amended (the "ACT"), covering
the offer and sale by the Company of Common Stock to the public at an aggregate
offering price of not less than $10,000,000 (prior to underwriters' discounts
and expenses), and at a public offering price not less than $6.00 per share,
subject to adjustment for stock splits, stock dividends, reorganizations and
the like with respect to such shares.

"REGISTRABLE SECURITIES" means shares of the Company's Common Stock
(i) issued or issuable upon conversion of Designated Preferred which have not
been sold to the public, and (ii) issued in respect of the shares of Common
Stock referred to under the foregoing clause (i) by reason of any stock split,
stock dividend, recapitalization or similar event which have not been sold to
the public.

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

"REGISTRATION EXPENSES" shall mean all expenses incurred by the
Company in complying with Sections 1.5, 1.6 and 1.7 hereof other than Selling
Expenses, including, without limitation, all registration, qualification and
filing fees, printing expenses, escrow fees, fees and disbursements of counsel,
blue sky fees and expenses (including counsel fees), and the expense of any
special audits incident to or required by any such registration (but excluding
the compensation of regular employees of the Company which shall be paid in any
event by the Company).

"RESTRICTED SECURITIES" shall mean the securities of the Company
required to bear the legends set forth in Section 1.3 hereof or legends
substantially similar thereto.

"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, or
any similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.

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

1.3. RESTRICTIVE LEGEND(S). Each certificate representing the
shares of Designated Preferred and Registrable Securities shall (unless
otherwise permitted by the provisions of Section 1.4 below) be stamped or
otherwise imprinted with legends in the following form (in addition to any
other legend required by the Bylaws of the Company, or under applicable
California or other state securities laws):

2.
60

(A) THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933. SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT. COPIES OF
THE AGREEMENT COVERING THE PURCHASE OF THESE SHARES AND RESTRICTING
THEIR TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY
THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE
CORPORATION.

(B) THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
RIGHT OF FIRST REFUSAL OPTION IN FAVOR OF THE CORPORATION'S
STOCKHOLDERS, AS PROVIDED IN THE BYLAWS OF THE CORPORATION.

1.4. NOTICE OF PROPOSED TRANSFERS. The holder of each certificate
representing the Restricted Securities, by acceptance thereof, agrees to
comply, in addition to the requirements of Section 45 of the Company's Bylaws,
in all respects with the provisions of this Section 1.4. Prior to any proposed
transfer of any Restricted Securities, unless there is in effect a registration
statement under the Securities Act covering the proposed transfer, the holder
thereof shall give written notice to the Company of such holder's intention to
effect such transfer. Each such notice shall describe the manner and
circumstances of the proposed transfer in sufficient detail, and shall be
accompanied (except in transactions in compliance with Rule 144 and except for
transfers without consideration to one or more partners or shareholders of the
holder (e.g., an in-kind distribution pursuant to the terms of the holder's
governing documents)) by either (i) a written opinion of legal counsel who
shall be reasonably satisfactory to the Company (it being agreed that Xxxxx
Xxxxxxx & Xxxxxxxxx is satisfactory) addressed to the Company and reasonably
satisfactory in form and substance to the Company's counsel, to the effect that
the proposed transfer of the Restricted Securities may be effected without
registration under the Securities Act, or (ii) a "no action" letter from the
Commission, a copy of any holder's request (together with all supplements or
amendments thereto) for which shall have been provided to the Company, at or
prior to the time of first delivery to the Commission's staff, to the effect
that the transfer of such securities without registration will not result in a
recommendation by such staff that action be taken with respect thereto,
whereupon the holder of such Restricted Securities shall be entitled to
transfer such Restricted Securities in accordance with the terms of the notice
delivered by the holder to the Company. Each certificate evidencing the
Restricted Securities transferred as provided for above shall bear the
appropriate restrictive legends set forth in Section 1.3 above, except that
such certificate shall not bear the restrictive legend set forth in Section
1.3(a) above if, in the opinion of counsel for the Company or counsel for such
holder, such legend is not required in order to establish compliance with any
provisions of the Securities Act and except that such certificate shall not
bear the restrictive legend set forth in Section 1.3(b) above if the right of
first refusal set forth in the Company's Bylaws is no longer applicable.

1.5. DEMAND REGISTRATION RIGHTS.

(A) Commencing on the earlier of (i) five (5) years after
the date hereof, or (ii) one (1) year after the Company's initial public
offering of securities pursuant to a registration statement

3.
61

under the Securities Act, if the Company shall receive a written request
(specifying that it is being made pursuant to this Section 1.5) from the
Holders of at least fifty percent (50%) of the Registrable Securities that the
Company file a registration statement or similar document under the Securities
Act covering the registration of the greater of (i) 20% of the shares which are
then Registrable Securities, or (ii) Registrable Securities the expected
aggregate offering price to the public of which is at least $5,000,000, then
the Company shall promptly notify all other Holders of such request and shall
use its best efforts to promptly and expeditiously cause all Registrable
Securities that such Holders have requested, within 15 days after receipt of
such written notice, to be registered in accordance with this Section 1.5 to be
registered under the Securities Act. The Holders making the written request
pursuant to this Section 1.5 shall be referred to hereinafter as the
"INITIATING HOLDERS".

Notwithstanding the foregoing: (i) the Company shall not be obligated
to effect a registration pursuant to this Section 1.5 during the period
starting with the date one hundred twenty (120) days prior to the Company's
estimated date of filing of, and ending on a date one hundred twenty (120) days
following the effective date of, a registration statement pertaining to an
underwritten public offering of the Company's securities, provided that the
Company is actively employing in good faith all reasonable efforts to cause
such registration statement to become effective and that the Company's estimate
of the date of filing such registration statement is made in good faith; or
(ii) if the Company shall furnish to such Holders a certificate signed by the
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 in the near future, then
the Company's obligation to use its best efforts to file a registration
statement shall be deferred for a period not to exceed six (6) months;
provided, however, that the Company shall not obtain such a deferral more than
once in any 12-month period.

The Company shall not be obligated to effect more than two (2)
registrations pursuant to this Section 1.5 for which holders of Registrable
Securities are the Initiating Holders; provided, however that such obligation
shall be deemed satisfied only when a registration statement covering all
Registrable Securities requested by Holders to be registered pursuant to such
demand shall have become effective and, if such method of disposition is a firm
commitment underwritten public offering, all such shares shall have been sold
pursuant thereto.

(B) If the Initiating Holders intend to distribute the
Registrable Securities covered by their demand by means of an underwriting,
they shall so advise the Company as part of their demand made pursuant to this
Section 1.5, and the Company shall include such information in the notice
referred to in Section 1.5(a). In such event, the right of any Holder to
registration pursuant to this Section 1.5 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.

The Company shall, together with all Holders proposing to distribute
their securities through such underwriting, enter into an underwriting
agreement in customary form with the underwriter or underwriters selected by a
majority of interest of the Initiating Holders and reasonably satisfactory to
the Company. Notwithstanding any other provision of this Section 1.5, if the
underwriter shall advise the Company in writing that marketing factors
(including, without limitation, an adverse effect on the per share offering
price) require a limitation of the number of shares to be underwritten, then
the

4.
62

Company shall so advise all Holders of Registrable Securities that would
otherwise be registered and underwritten pursuant hereto, and the number of
shares of Registrable Securities that may be included in the registration and
underwriting shall be reduced and shall be allocated pro rata among such
Holders thereof in proportion, as nearly as practicable, to the respective
amounts of Registrable Securities held by such Holders at the time of filing
the registration statement. No Registrable Securities excluded from the
underwriting by reason of the underwriter's marketing limitation shall be
included in such registration.

If any Holder disapproves of the terms of the underwriting, such
Holder may elect to withdraw therefrom by written notice to the Company, the
underwriter, and the Initiating Holders. The Registrable Securities so
withdrawn shall also be withdrawn from registration. If by the withdrawal of
such Registrable Securities a greater number of Registrable Securities held by
other Holders may be included in such registration (up to the maximum of any
limitation imposed by the underwriters), then the Company shall offer to all
Holders who have included Registrable Securities in the registration the right
to include additional Registrable Securities in the same proportion used in
determining the underwriter limitation in this Section 1.5.

If the underwriter has not limited the number of Registrable
Securities to be underwritten, the Company may include securities for its own
account (or for the account of other securityholders) in such registration if
the underwriter so agrees and if the number of Registrable Securities that
would otherwise have been included in such registration and underwriting will
not thereby be limited and if such inclusion will not adversely affect the
marketing of the Registrable Securities.

Except for registration statements on Form X-0, X-0 or any successor
thereto, the Company will not file with the Commission any other registration
statement with respect to its Common Stock, whether for its own account or that
of other stockholders, from the date of receipt of a request for registration
from Initiating Holders pursuant to this Section 1.5 until the earlier of (a)
one hundred twenty (120) days from the receipt of the initial request pursuant
to Section 1.5(a) or (b) the completion of the period of distribution of the
registration contemplated thereby. Although the Company shall have no
obligation to register any Designated Preferred, in any underwritten public
offering contemplated by this Section 1.5 or Section 1.6 or 1.7, holders of
Designated Preferred shall be entitled to sell shares of Designated Preferred
representing Registrable Securities to be included in such underwriting to the
underwriters for conversion and sale of the Registrable Securities issued upon
conversion thereof.

1.6. COMPANY REGISTRATION.

(A) If, at any time or from time to time, the Company
shall determine to register any of its securities, either for its own account
or the account of a security holder or holders exercising their respective
demand registration rights, other than a registration (A) relating solely to
employee benefit plans on Form S-8 or similar forms which may be promulgated in
the future, (B) a registration on Form S-4 or similar forms which may be
promulgated in the future relating solely to a Securities and Exchange
Commission Rule 145 or similar transaction or (C) in connection with the
Company's Initial Public Offering, the Company will (i) promptly give to each
Holder written notice thereof and (ii) include in such registration (and any
related qualification under Blue Sky laws or other compliance),

5.
63

and in any underwriting involved therein, all Registrable Securities of such
Holders as specified in a written request or requests made within 15 days after
receipt of such written notice from the Company.

(B) If the registration of which the Company gives notice
is for a registered public offering involving an underwriting, the Company
shall so indicate in the notice given pursuant to Section 1.6(a). In such
event the right of any Holder to registration pursuant to this Section 1.6
shall be conditioned upon such Holder's agreeing to participate in such
underwriting and in the inclusion of such Holder's Registrable Securities in
the underwriting to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall (together with the
Company and the other holders distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by the Company or by
other holders exercising any demand registration rights to the extent such
holders are not excluded from the registration pursuant to the Underwriter
Cutback described below. Notwithstanding any other provision of this Section
1.6, if the underwriter determines that marketing factors require a limitation
of the number of shares to be underwritten, the underwriter may exclude some or
all Registrable Securities or other securities from such registration and
underwriting (hereinafter an "UNDERWRITER CUTBACK"). In the event of an
Underwriter Cutback, the Company shall so advise all Holders and the other
holders distributing their securities through such underwriting, and the
Underwriter Cutback shall be implemented on the basis that the holders who are
not Holders shall be cut back before any cutback of Holders. If the limitation
determined by the underwriter requires an Underwriter Cutback with respect to
the Registrable Securities to be included, such Underwriter Cutback shall be in
proportion, as nearly as practicable, to the respective amounts of Registrable
Securities held by such Holders at the time of filing the registration
statement. If any Holder disapproves of the terms of any such underwriting,
such Holder may elect to withdraw therefrom by written notice to the Company
and the underwriter. Any securities excluded or withdrawn from such
underwriting shall be withdrawn from such registration.

1.7. FORM S-3 REGISTRATION RIGHTS. After the Initial Public
Offering, the Company shall use its best efforts to qualify for registration on
Form S-3, and to that end the Company shall use its best efforts to comply with
the reporting requirements of the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT"), within twelve (12) months following the effective date of
the first registration of any securities of the Company for an underwritten
registered public offering. After the Company has qualified for the use of
Form S-3, and subject to the provisions of Section 1.14, each Holder shall have
the right to request registrations on Form S-3 (such requests shall be in
writing and shall state the number of shares of Registrable Securities to be
disposed of and the intended method of disposition of such shares by each such
Holder), subject only to the following limitations:

(A) The Company shall not be obligated to cause a
registration on Form S-3 to become effective prior to one hundred twenty (120)
days following the effective date of a Company initiated registration (other
than a registration effected solely to qualify an employee benefit plan or to
effect a business combination pursuant to Rule 145);

(B) The Company shall not be required to effect a
registration pursuant to this Section 1.7 unless the Holder or Holders
requesting such a registration propose to dispose of shares of Registrable
Securities having an aggregate disposition price (before deduction of
underwriting discounts and expenses of sale) of at least $1,000,000 (unless the
value of all of the Registrable

6.
64

Securities held by all Holders is less than $1,000,000, in which case the
Holders shall be entitled to a final demand registration pursuant to this
Section 1.7 for an amount equal to the value of the Registrable Securities held
by all Holders at the time of such demand; provided that for purposes of the
foregoing, "value" shall be determined based on the average of the last sale
prices of the Company's Common Stock on the principal exchange or market on
which such Common Stock is traded during the five (5) trading days immediately
preceding such demand);

(C) The Company shall not be required to effect a
registration pursuant to this Section 1.7 if the Company shall furnish to the
requesting Holders a certificate signed by the President of the Company stating
that in the good faith judgment of the Board of Directors of the Company it
would be seriously detrimental to the Company or its stockholders for the
registration statement to be filed at the date filing would be required, in
which case the Company shall have an additional period of not more than one
hundred twenty (120) days within which to file such registration statement;
provided however, that the Company shall not use this right more than once in
any twelve-month period;

(D) The Company shall not be required to maintain and
keep any such registration on Form S-3 effective for a period exceeding one
hundred twenty (120) days from the effective date thereof; and

(E) The Company shall not be obligated to cause a
registration on Form S-3 if in the prior twelve-month period the Company has
caused a registration on Form S-3 to become effective as the result of a
request pursuant to this Section 1.7.

The Company shall give notice to all Holders of the receipt of a
request for registration pursuant to this Section 1.7 and shall use its best
efforts to cause all Registrable Securities that such Holders have requested,
within 15 days after receipt of such written notice, be registered in
accordance with this Section 1.7 to be registered under the Securities Act.
Subject to the foregoing, the Company will use its best efforts to effect
promptly any registration pursuant to this Section 1.7. The provisions of
Section 1.5(b) shall apply to any registration effected pursuant to this
Section 1.7

1.8. EXPENSES OF REGISTRATION. All Registration Expenses incurred
in connection with any registration, qualification or compliance pursuant to
Sections 1.5, 1.6 and 1.7 (exclusive of Selling Expenses but inclusive of the
reasonable fees and expenses of one special counsel to the selling Holders)
shall be borne by the Company. Notwithstanding anything to the contrary
herein, the Company shall not be required to pay for any expenses of any
registration proceeding under Section 1.5 if the registration request is
subsequently withdrawn at the request of the Holders of a majority of the
Registrable Securities to have been registered, unless such Holders agree to
forfeit their right to a demand registration pursuant to Section 1.5 (in which
event such right shall be forfeited by all Holders). In the absence of such an
agreement to forfeit, the Holders of Registrable Securities to have been
registered shall bear all such expenses pro rata on the basis of the
Registrable Securities to have been registered. Notwithstanding the foregoing,
however, if at the time of the withdrawal, the Holders have learned of a
material adverse change in the condition, business, or prospects of the Company
from that known to the Holders at the time of their request, of which the
Company had knowledge at the time of the request, then the Holders shall not be
required to pay any of said expenses and shall retain their rights pursuant to
Section 1.5.

7.
65

1.9. REGISTRATION PROCEDURES. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Section 1,
the Company will keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof. At its expense the Company will:

(A) Keep such registration, qualification or compliance
effective for a period of one hundred twenty (120) days or until the Holder or
Holders have completed the distribution described in the registration statement
relating thereto, whichever first occurs;

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

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

(D) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities
or Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders or the underwriters, 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 (and provide customary due diligence materials
and information to) the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement;

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

(G) use its best efforts to list the Registrable
Securities covered by such registration statement with any securities exchange
on which the Common Stock of the Company is then listed.

Notwithstanding any provision to the contrary in this Agreement, the
Company shall not be required in connection with any registration pursuant to
Sections 1.5, 1.6 or 1.7 to qualify shares in any state or jurisdiction which
requires the Company to qualify to do business or to file a general consent to
service of process.

8.
66
1.10. INDEMNIFICATION.

(A) The Company will indemnify each Holder, each of its
officers and directors and partners, and each person controlling such Holder
within the meaning of Section 15 of the Securities Act, with respect to which
registration, qualification or compliance has been effected pursuant to this
Section 1, and each underwriter, if any, and each person who controls any
underwriter within the meaning of Section 15 of the Securities Act, against all
expenses, claims, losses, damages and liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in which they were
made, not misleading, or any violation by the Company of any rule or regulation
promulgated under the Securities Act applicable to the Company and relating to
action or inaction required of the Company in connection with any such
registration, qualification or compliance, and will promptly reimburse each
such Holder, each of its officers and directors and partners, and each person
controlling such Holder, each such underwriter and each person who controls any
such underwriter, for any legal and any other expenses reasonably incurred (as
and when incurred) in connection with investigating, preparing to defend or
defending any such claim, loss, damage, liability or action, provided that the
Company will not be liable in any such case to the extent that any such claim,
loss, damage, liability or expense arises out of or is based on any untrue
statement or omission or alleged untrue statement or omission, made in reliance
upon and in conformity with written information furnished to the Company by an
instrument duly executed by such Holder or underwriter and stated to be
specifically for use therein.

(B) Each Holder will, if Registrable Securities held by
such Holder are included in the securities as to which such registration,
qualification or compliance is being effected, severally and not jointly
indemnify the Company, each of its directors and officers, each underwriter, if
any, of the Company's securities covered by such a registration statement, each
person who controls the Company or such underwriter within the meaning of
Section 15 of the Securities Act, and each other such Holder, each of its
officers and directors and partners and each person controlling such Holder
within the meaning of Section 15 of the Securities Act, against all expenses,
claims, losses, damages and liabilities (or actions in respect thereof)
including any of the foregoing incurred in settlement of any litigation
commenced or threatened, arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any amendment or
supplement thereto, incident to any such registration, qualification or
compliance or based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances in which they were made, not
misleading, or any violation by the Company of any rule or regulation
promulgated under the Securities Act applicable to the Company in connection
with any such registration, qualification, or compliance, and will promptly
reimburse the Company, such Holders, such directors, officers, partners,
persons, underwriters or control persons for any legal or any other expenses
reasonably incurred (as and when incurred) in connection with investigation,
preparing to defend or defending any such claim, loss, damage, liability or
action, in each case to the extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or alleged

9.
67

omission) is made in such registration statement, prospectus, offering circular
or other document or any amendment or supplement thereto in reliance upon and
in conformity with written information furnished to the Company by an
instrument duly executed by such Holder and stated to be specifically for use
therein; provided, however, that the obligations of each such Holder hereunder
shall be limited to an amount equal to the proceeds to each such Holder of
Registrable Securities sold in such registration as contemplated herein.

(C) Each party entitled to indemnification under this
Section 1.10 (the "INDEMNIFIED PARTY") shall give notice to the party required
to provide indemnification (the "INDEMNIFYING PARTY") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may
be sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld), and the Indemnified Party may participate in such
defense at its own expense; provided, however, that, if the defendants in any
such claim or litigation include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be reasonable defenses available to it which are different from
or additional to those available to the indemnifying party or if the interests
of the indemnified party reasonably may be deemed to conflict with the
interests of the indemnifying party, the indemnified party shall have the right
to select a separate counsel and to assume such legal defenses and otherwise to
participate in the defense of such action, with the expenses and fees of such
separate counsel and other expenses related to such participation to be
reimbursed by the indemnifying party as incurred, and provided further that the
failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this Section 1 unless
such failure resulted in actual detriment to the Indemnifying Party. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party a release from all liability in respect of such claim or
litigation.

(D) If the indemnification provided for in this Section
1.10 is held by a court of competent jurisdiction to be unavailable to an
Indemnified Party with respect to any loss, liability, claim, damage, or
expense referred to therein, then the Indemnifying Party, in lieu of
indemnifying such Indemnified Party hereunder, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such loss, liability,
claim, damage, or expense in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party on the one hand and of the Indemnified
Party on the other in connection with the statements or omissions that resulted
in such loss, liability, claim, damage, or expense as well as any other
relevant equitable considerations. 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, provided, however, that in no case will any seller of
Registrable Securities be required to contribute any

10.
68

amount in excess of the amount of proceeds to such seller of Registrable
Securities sold pursuant to the registration statement with respect to which
the contribution obligation arose.

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

1.11. INFORMATION BY HOLDER. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders and the distribution proposed by
such Holder or Holders as the Company may request in writing and as shall be
required in connection with any registration, qualification or compliance
referred to in this Section 1.

1.12. RULE 144 REPORTING. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Restricted Securities to the public without
registration, after such time as a public market exists for the Common Stock of
the Company, the Company agrees to:

(A) Use its best efforts to make and keep public
information available, as those terms are understood and defined in Rule 144
under the Securities Act at all times after the effective date of the first
registration under the Securities Act filed by the Company for an offering of
its securities to the general public;

(B) Use its best efforts to then file with the Commission
in a timely manner all reports and other documents required of the Company
under the Exchange Act at any time after it has become subject to such
reporting requirements;

(C) So long as a Stockholder owns any Restricted
Securities, to furnish to the Stockholder forthwith upon request a written
statement by the Company as to its compliance with the reporting requirements
of said Rule 144 (at any time after 90 days after the effective date of the
first registration statement filed by the Company for an offering of its
securities to the general public) and of the Securities Act and the Exchange
Act (at any time after it has become subject to such reporting requirements), a
copy of the most recent annual or quarterly report of the Company, and such
other reports and documents of the Company as a Stockholder may reasonably
request in availing itself of any rule or regulation of the Commission allowing
a Stockholder to sell any such securities without registration.

1.13. TRANSFER OF REGISTRATION RIGHTS. The rights to cause the
Company to register securities granted under Sections 1.5, 1.6 and 1.7 may be
assigned or otherwise conveyed to a transferee or assignee of Registrable
Securities, who shall be considered a "Holder," and the transferred shares
shall be considered "Registrable Securities," for purposes of this Section 1,
provided that (i) said transferee acquires Registrable Securities (including
shares of Designated Preferred prior to conversion into Registrable Securities)
in a private transaction, and (ii) the Company is given written notice by such
Holder at the time of or within a reasonable time (but not more than 30 days)
after said transfer, stating the name and address of said transferee or
assignee and identifying the securities with respect to

11.
69

which such registration rights are being assigned, subject to said transferee's
agreement to be bound by and comply with the provisions of this Section 1.

1.14. TERMINATION OF REGISTRATION RIGHTS. The registration rights
granted pursuant to this Section 1 shall terminate (i) upon the seventh
anniversary of the effective date of the Initial Public Offering or (ii) if
earlier, as to any individual Holder, at such time after the Company's Initial
Public Offering as all Registrable Securities held by such Holder can be sold
within any three-month period without compliance with the registration
requirements of the Securities Act pursuant to Rule 144 (including Rule 144(k))
promulgated thereunder.

1.15. "MARKET STAND OFF" AGREEMENT. Each Holder hereby agrees that
it shall not, to the extent requested by the Company and the underwriters
managing any underwritten offering of the Company's Common Stock (or other
securities), sell or otherwise transfer or dispose of (other than to those who
agree to be similarly bound) any Registrable Securities or any other securities
of the Company during the one hundred eighty (180) day period following the
effective date of a registration statement of the Company filed in connection
with the Company's Initial Public Offering. In order to enforce the foregoing
covenant, the Company may impose stop-transfer instructions with respect to the
Registrable Securities and other securities of the Holders (and the shares or
securities of every other person subject to the foregoing restriction) until
the end of such one hundred eighty (180) day period.

1.16. OTHER REGISTRATION RIGHTS. The Company shall not grant to any
third party any registration rights more favorable than or inconsistent with
any of those contained herein, so long as any of the registration rights under
this Agreement remains in effect.

1.17. CHANGES IN COMMON STOCK OR PREFERRED STOCK. If, and as often
as, there is any change in the Common Stock or the Designated Preferred by way
of a stock split, stock dividend, combination or reclassification, or through a
merger, consolidation, reorganization or recapitalization, or by any other
means, appropriate adjustment shall be made in the provisions hereof so that
the rights and privileges granted hereby shall continue with respect to the
Common Stock or the Designated Preferred as so changed.

2. AFFIRMATIVE COVENANTS OF THE COMPANY AND STOCKHOLDERS

2.1. FINANCIAL INFORMATION. Subject to Section 2.16, the Company
will furnish the following reports to the Stockholders for so long as the
Stockholders are Holders of Registrable Securities:

(A) As soon as practicable after the end of each fiscal
year (other than the fiscal year ended March 31, 1996), and in any event within
90 days thereafter, audited consolidated balance sheets of the Company and its
subsidiaries, if any, as of the end of such fiscal year, and consolidated
statements of income, stockholders= equity and cash flows of the Company and
its subsidiaries, if any, for such year, prepared in accordance with generally
accepted accounting principles and setting forth in each case in comparative
form the figures for the previous fiscal year, all in reasonable detail and
certified by independent public accountants of recognized national standing
selected by the Company; and

12.
70

(B) As soon as practicable after the end of each fiscal
quarter, and in any event within 45 days thereafter, unaudited consolidated
balance sheets of the Company and its subsidiaries, if any, as of the end of
such quarter, and unaudited consolidated statements of income, stockholders'
equity and cash flows of the Company and its subsidiaries, if any, for such
quarter and for the period from the beginning of the fiscal year to the end of
such quarter, prepared in accordance with generally accepted accounting
principles (but subject to normal year-end audit adjustments) and certified by
the chief financial officer.

2.2. ASSIGNMENT OF RIGHTS TO FINANCIAL INFORMATION. The rights
granted pursuant to Section 2.1 and Section 2.3 may be assigned by the
Stockholders (or by any permitted transferee of any such rights) so long as (i)
the Company is given notice of any such assignment within a reasonable time
after the date the same is effected, (ii) the transferee shall have acquired
Registrable Securities (including shares of Designated Preferred prior to
conversion into Registrable Securities) in a private transaction, and (iii) the
transferee is not engaged in a business that is competitive with the Company.

2.3. INSPECTION AND VISITATION RIGHTS. Each Stockholder, so long
as such Stockholder holds Registrable Securities, shall have the right to visit
and inspect the Company's principal place of business, subject to such
limitations and restrictions as the President of the Company in good faith
determines to be necessary for the protection of the Company's Proprietary
Information.

2.4. RESERVE FOR CONVERSION SHARES. The Company shall at all times
reserve and keep available out of its authorized but unissued shares of Common
Stock, for the purpose of effecting the conversion of the Designated Preferred
and otherwise complying with the terms of this Agreement, such number of its
duly authorized shares of Common Stock as shall be sufficient to effect the
conversion of the Designated Preferred from time to time outstanding or
otherwise to comply with the terms of this Agreement. If at any time the
number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of the Designated Preferred or otherwise to
comply with the terms of this Agreement, the Company will forthwith take such
corporate action as may be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purposes. The Company will obtain any authorization, consent, approval or
other action by or make any filing with any court or administrative body that
may be required under applicable state securities laws in connection with the
issuance of shares of Common Stock upon conversion of the Designated Preferred.

2.5. PROPERTIES, BUSINESS, INSURANCE. The Company shall maintain
and cause each of its subsidiaries to maintain as to their respective
properties and business, with financially sound and reputable insurers,
insurance against such casualties and contingencies and of such types and in
such amounts as is customary for companies similarly situated, which insurance
shall be deemed by the Company to be sufficient.

2.6. RESTRICTIVE AGREEMENTS PROHIBITED. Neither the Company nor
any of its subsidiaries shall become a party to any agreement which by its
terms restricts the Company's performance of this Agreement, the Management
Rights Agreements, the Voting Agreements or the Restated Certificate.

2.7. TRANSACTIONS WITH AFFILIATES. Except for transactions
contemplated by the Agreements or as otherwise approved by the Board of
Directors, neither the Company nor any of

13.
71

its subsidiaries shall enter into any material transaction with any director,
officer, employee or holder of more than 5% of the outstanding capital stock of
any class or series of capital stock of the Company or any of its subsidiaries,
or to the Company's knowledge any member of the family of any such person, any
corporation, partnership, trust or other entity in which any such person, or
member of the family of any such person, is a director, officer, trustee,
partner or holder of more than 5% of the outstanding capital stock thereof,
except for transactions on customary terms related to such person's employment.

2.8. EXPENSES OF DIRECTORS. The Company shall promptly reimburse
in full, each director of the Company who is not an employee of the Company for
all of his reasonable out-of-pocket expenses incurred in attending each meeting
of the Board of Directors of the Company or any Committee thereof.

2.9. BYLAWS. The Company shall at all times cause its Bylaws to
provide that (a) any three directors shall have the right to call a meeting of
the Board of Directors and (b) the number of directors fixed in accordance
therewith shall in no event conflict with any of the terms or provisions of the
Designated Preferred as set forth in the Restated Certificate. The Company
shall at all times maintain provisions in its Bylaws and/or Certificate of
Incorporation indemnifying all directors against liability and absolving all
directors from liability to the Company and its stockholders to the maximum
extent permitted under the laws of the State of Delaware.

2.10. PERFORMANCE OF CONTRACTS. The Company shall not amend,
modify, terminate, waive or otherwise alter, in whole or in part, any of the
Proprietary Information Agreements or the provisions contained in the
Employment Amendment without the approval of the Company's Board of Directors.

2.11. PROPRIETARY INFORMATION AGREEMENTS. The Company shall use its
best efforts to obtain, and shall cause its subsidiaries to use their best
efforts to obtain, a Proprietary Information Agreement in substantially the
form of Exhibit F to the Purchase Agreement from all future officers, key
employees and other employees who will have access to confidential information
of the Company or any of its subsidiaries, upon their employment or engagement
by the Company or any of its subsidiaries. The Company shall use its
reasonable best efforts to cause any consultant with whom the Company contracts
to agree to maintain the confidentiality of the Company's confidential or
Proprietary information, and to assign to the Company any proprietary rights
arising from work performed by the consultant for the Company.

2.12. COMPLIANCE WITH LAWS. The Company shall comply, and cause
each subsidiary to comply, with all applicable laws, rules, regulations and
orders, noncompliance with which could materially adversely affect its business
or condition, financial or otherwise.

2.13. KEEPING OF RECORDS AND BOOKS OF ACCOUNT. The Company shall
keep, and cause each subsidiary to keep, adequate records and books of account,
in which complete entries will be made in accordance with United States
generally accepted accounting principles ("GAAP") consistently applied,
reflecting financial transactions of the Company and each subsidiary in
accordance with GAAP.

14.
72

2.14. U.S. REAL PROPERTY INTEREST STATEMENT. The Company shall
provide prompt written notice to each Stockholder following any Adetermination
date@ (as defined in Treasury Regulation Section 1.897-2(c)(i)) on which the
Company becomes a United States real property holding corporation. In
addition, upon a written request by any Stockholder, the Company shall provide
such Stockholder with a written statement informing the Stockholder whether
such Stockholder's interest in the Company constitutes a U.S. real property
interest. The Company's determination shall comply with the requirements of
Treasury Regulation Section 1.897-2(h)(1) or any successor regulation, and the
Company shall provide timely notice to the Internal Revenue Service, in
accordance with and to the extent required by Treasury Regulation Section
1.897-2(h)(2) or any successor regulation, that such statement has been made.
The Company's written statement to any Stockholder shall be delivered to such
Stockholder within ten (10) days of such Stockholder's written request
therefor. In addition, upon request by any foreign Stockholder but subject to
the succeeding sentence, the Company shall provide along with such statement
either or both of the following documents: (i) an affidavit in conformance with
the requirements of Section 1445(b)(3) of the Code and the regulations
thereunder or (ii) a notarized statement, executed by an officer having actual
knowledge of the facts, that the shares of Company stock held by such
Stockholder are of a class that is regularly traded on an established
securities market, within the meaning of Section 1445(b)(6) of the Code and the
regulations thereunder. If the Company is unable to provide either of the
documents described in (i) or (ii) above upon request, it shall promptly, and
in any event within such ten (10) day period, notify such Stockholder in
writing of the reason for such inability. Finally, upon the request of a
foreign Stockholder and without regard to whether either document described in
(i) or (ii) above has been requested, the Company shall reasonably cooperate
with the efforts of such foreign Stockholder to obtain a Aqualifying statement@
within the meaning of Section 1445(b)(4) of the Code and the regulations
thereunder or such other documents as would excuse a transferee of a foreign
Stockholder=s interest from withholding of income tax imposed pursuant to
Section 897(a) of the Code.

2.15. RULE 144A INFORMATION. The Company shall, at all times during
which it is not subject to the reporting requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, as amended, provide in writing, upon the
written request of any Stockholder or a prospective buyer of Registrable
Securities (including Designated Preferred before conversion into Registrable
Securities) from any Stockholder, all information required by Rule
144A(d)(4)(i) of the General Regulations promulgated by the Commission under
the Securities Act ("Rule 144A Information"). The Company's obligations under
this Section 2.15 shall at all times be contingent upon the relevant
Stockholder's obtaining from the prospective buyer of such Registrable
Securities a written agreement to take all reasonable precautions to safeguard
the Rule 144A Information from disclosure to anyone other than a person who
will assist such buyer in evaluating the purchase of such Registrable
Securities.

2.16. TERMINATION OF COVENANTS. The covenants set forth in Section
2.1, Sections 2.3 through 2.13 and Section 2.15 shall terminate and be of no
further force or effect upon the earlier of (i) the closing of the Initial
Public Offering, or (ii) the date on which none of the Registrable Securities
(including shares of Designated Preferred prior to conversion into Common
Stock) is outstanding. The Covenants set forth in Section 2.14 shall terminate
five (5) years after the closing of the Initial Public Offering.

15.
73

2.17. CONFIDENTIAL INFORMATION, ETC. Each Holder agrees that (i)
all information received by it pursuant to this Section 2 which the Company
designates as or promptly confirms in writing to be AConfidential@ or the like,
and (ii) any other information relating to the Company's technology, processes
or formulas that is disclosed by the Company to any Holder in writing and is
marked "Confidential" or the like, shall be considered confidential
information. Each Holder further agrees that it shall hold all such
confidential information in confidence and shall not, without the Company=s
prior express written consent, disclose any such confidential information to
any third party other than its counsel, accountants, employees and other
professional advisors, representatives and agents, all of whom shall have a
need to know such information and shall be bound by the provisions of this
Section 2.17, nor shall such Holder, without the Company's prior express
written consent, use such confidential information for any purpose other than
evaluation of such Holder's investment in the Company; provided, however, that
the foregoing obligation to hold in confidence and not to disclose confidential
information shall not apply to any such information that (a) was known to the
public or the Holder or its representatives prior to disclosure by the Company,
(b) becomes known to the public through no fault of such Holder, (c) is
disclosed to such Holder on a non-confidential basis by a third party having a
legal right to make such disclosure, (d) is independently developed by such
Holder, or (e) is required to be disclosed as a matter of law or pursuant to
court order; and provided further that the foregoing obligation to hold in
confidence and not to disclose confidential information shall not prohibit such
Holder from disclosing to its partners or shareholders financial and other
information described in clause (i) of this Section 2.17 which is of a type
customarily provided by such Holder to such partners or shareholders in the
ordinary course or from disclosing to a bona-fide prospective transferee of its
securities of the Company such financial and other information described in
such clause (i) which is reasonably necessary to provide such transferee with
adequate disclosure of material information.

3. RIGHTS OF FIRST REFUSAL

3.1. RIGHT OF FIRST REFUSAL ON COMPANY ISSUANCES.

(A) The Company hereby grants to each Stockholder the
right of first refusal to purchase its Pro Rata Share (defined below) of all
(or any part) of New Securities (defined below) that the Company may from time
to time propose to sell and issue. Stockholder's "PRO RATA SHARE," for
purposes of this Section 3, is the ratio of the number of shares of Common
Stock (assuming conversion of all shares of Designated Preferred) then held by
such Stockholder to the total number of shares of Common Stock then outstanding
(assuming conversion of all shares of Designated Preferred). This right of
first refusal shall be subject to the following provisions:

(B) "NEW SECURITIES" shall mean any Common Stock or
Preferred Stock of the Company, whether now authorized or not, and rights,
options, or warrants to purchase said Common Stock or Preferred Stock, and
securities of any type whatsoever that are, or may become, convertible into or
exchangeable for said Common Stock or Preferred Stock; provided, however, that
"NEW SECURITIES" does not include (i) securities issuable upon conversion of or
with respect to the Designated Preferred; (ii) shares of the Company's Common
Stock (or related options) issued to officers, directors, employees of and/or
consultants to the Company pursuant to plans or agreements as approved by the
Company's Board of Directors; (iii) shares of the Company's Common Stock or
Preferred Stock issued to holders of the Designated Preferred in connection
with any stock split, stock

16.
74

dividend, or recapitalization by the Company; (iv) securities issued in
connection with any equipment leasing, technology licensing, corporate
partnering, strategic alliance, acquisition, merger, purchase of assets or
similar transaction as approved by the Company's Board of Directors; (v) shares
of Common Stock issued to holders of Common Stock in connection with a stock
split or stock dividend with respect to the Common Stock; and (vi) shares
issued in the Initial Public Offering.

(C) In the event that the Company proposes to undertake
an issuance of New Securities, it shall give the Stockholders written notice of
its intention, describing the type of New Securities, the price, and the
general terms upon which the Company proposes to issue the same. The
Stockholders shall have twenty (20) days from the date of receipt of any such
notice to agree to purchase for cash some or all of its Pro Rata Share of such
New Securities for the price and upon the general terms, including deferred
payment, if any, specified in the notice by giving written notice to the
Company and stating therein the quantity of New Securities to be purchased.

(D) In the event that any Stockholder (a "Non-exercising
Stockholder") fails to exercise in full the right of first refusal within said
twenty (20) day period, notice shall promptly be given by the Company to those
Stockholders who have exercised the right of first refusal in full. Such
Stockholders shall have the right for an additional ten (10) days to elect by
notice to the Company to purchase any or all of the New Securities which the
Non-exercising Stockholders were entitled to purchase but elected not to, with
such right of over- subscription to be allocated among such Stockholders in
accordance with their respective Pro Rata Shares or as they may otherwise
agree. After the aggregate thirty (30) day period during which Stockholders
may exercise their first refusal right, the Company shall have one hundred
twenty (120) 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 one hundred twenty (120) days from the date of said agreement) the New
Securities respecting which the Stockholder's rights were not exercised, at a
price and upon general terms no more favorable to the purchasers thereof than
specified in the Company's notice. In the event the Company has not sold the
New Securities within said one hundred twenty (120) day period (or sold and
issued New Securities in accordance with the foregoing agreement within one
hundred twenty (120) 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 Stockholders in the manner provided above.

(E) The right of first refusal granted under this Section
3.1 shall not apply to and shall expire upon the closing of the Company's
Initial Public Offering.

(F) The rights granted pursuant to this Section 3.1 may
be assigned by the Stockholder (or by any permitted transferee of any such
rights) so long as (i) the Company is given notice of any such assignment
within a reasonable time after the date the same is effected and (ii) the
transferee shall have acquired Registrable Securities (including shares of
Designated Preferred prior to conversion into Registrable Securities) in a
private transaction.

17.
75

4. MISCELLANEOUS

4.1. GOVERNING LAW. This Agreement shall be governed by the laws
of the State of California as applicable to contracts entered into and
performed entirely within the State of California by California residents.

4.2. SUCCESSORS AND ASSIGNS. Except as otherwise provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.

4.3. ENTIRE AGREEMENT. This Agreement constitutes the full and
entire understanding and agreement between the parties with regard to the
subject matter hereof.

4.4. NOTICES, ETC. All notices and other communications required
or permitted hereunder shall be in writing and shall be sent by facsimile or by
registered or certified mail, postage prepaid, or otherwise delivered by hand
or by messenger, addressed (a) if to a Stockholder, to such Stockholder's
address set forth in the Purchase Agreement or to such other address as such
Stockholder shall have furnished to the Company in writing, (b) if to any other
holder of Registrable Securities, at such address as such holder shall have
furnished the Company in writing, or (c) if to the Company, to its address set
forth above and addressed to the attention of the President or at such other
address as the Company shall have furnished to the Stockholders. All notices
and other communications pursuant to the provisions of this Section 4.4 shall
be deemed delivered when mailed or sent by facsimile. Notwithstanding the
foregoing, any notice or communication to an address outside the United States
shall be sent by facsimile and confirmed in writing contemporaneously sent by
two day guaranteed international courier.

4.5. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be enforceable against the party actually executing such
counterpart, and which together shall constitute one instrument.

4.6. SEVERABILITY. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provision; provided that no such severability shall be
effective if it materially changes the economic benefit of this Agreement to
any party.

4.7. APPROVAL OF AMENDMENTS AND WAIVERS. Any term of this
Agreement may be amended or terminated and the observance of any term of this
Agreement may be waived (either generally or in a particular instance and
either retroactively or prospectively) with the written consent of (i) the
Company and (ii) the holders of at least two-thirds (2/3) of the shares which
are then Registrable Securities. Any amendment, termination or waiver effected
in accordance with this section shall be binding upon the Stockholders, each of
their transferees and the Company. The Stockholders acknowledge that by the
operation of this Section the holders of two-thirds (2/3) of the outstanding
Registrable Securities as aforesaid may have the right and power to diminish or
eliminate all rights of such Stockholder under this Agreement.

18.
76
The foregoing Investors' Rights Agreement is hereby executed as of the
date first above written.

THE COMPANY:

AURORA BIOSCIENCES CORPORATION

By ________________________________________________

Title _____________________________________________

THE STOCKHOLDERS:

AVALON MEDICAL PARTNERS, L.P.

By:________________________________________________

Title:_____________________________________________

AVALON BIOVENTURES II, L.P.

By:________________________________________________

Title:_____________________________________________

XXXXXXXXX CAPITAL PARTNERS, X.X. XX

By: Xxxxxxxxx Associates, L.P.

By:________________________________________________

Title: General Partner

ABINGWORTH BIOVENTURES SICAV

19.
77

By:________________________________________________

Title:_____________________________________________

NEW ENTERPRISES ASSOCIATES VI, LIMITED PARTNERSHIP

By: NEA Partners VI, Limited Partnership,

its General Partner

By:________________________________________________

Title: General Partner

NEA VENTURES 1996, L.P.

By:________________________________________________

Title: Authorized Signatory

DP III ASSOCIATES, L.P.

By: One Xxxxxx Square Associates III, L.P.,

its General Partner

By:________________________________________________

General Partner

DOMAIN PARTNERS III, L.P.

By: One Xxxxxx Square Associates III, L.P.,

its General Partner

By:________________________________________________

General Partner

20.
78

BIOTECHNOLOGY INVESTMENTS LIMITED

By: Old Court Limited

By:________________________________________________

Attorney-in-Fact

PACKARD INSTRUMENT COMPANY, INC.

By:________________________________________________

Title:_____________________________________________

[SIGNATURE PAGE FOR INVESTORS' RIGHTS AGREEMENT]

SEQUANA THERAPEUTICS, INC.

By:________________________________________________

Title:_____________________________________________

GC&H INVESTMENTS

By:________________________________________________

Title:_____________________________________________

___________________________________________________

XXXXX X. XXXXXXXX

___________________________________________________

XXXXX X. XXXXX

00.
79

___________________________________________________

XXXXXXX X. GLOBE

___________________________________________________

XXXXXXX X. XXXXX

___________________________________________________

XXXXXXX X. XXXXXXXXX

___________________________________________________

XXXX X. XXXXX, XX.

___________________________________________________

XXXXXX XXXXXX

___________________________________________________

XXXXXX X. XXXXXX

___________________________________________________

XXXXXX LUETOLF

FOR XXXXXX X.X. LANGINGER

___________________________________________________

XXXXXXX X. XXXXX

22.
80

___________________________________________________

XXXX X. XXXXXXXX, XX.

___________________________________________________

XXXXXX XXXXXXXX

THE XXXXXX FAMILY TRUST

By:________________________________________________

XXXXXX X. XXXXXX, XX., TRUSTEE

By:________________________________________________

XXXXXX XXXXXX, TRUSTEE

___________________________________________________

XXXXXXX X. XXXX

XXXXXXXXX & XXXXX GROUP

By:________________________________________________

Xxxxxx X. Xxxxxxx

Title:_____________________________________________

23.
81

1. RESTRICTIONS ON TRANSFER; REGISTRATION RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

1.1. Restrictions on Transferability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

1.2. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

1.3. Restrictive Legend(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

1.4. Notice of Proposed Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

1.5. Demand Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

1.6. Company Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

1.7. Form S 3 Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

1.8. Expenses of Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

1.9. Registration Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

1.10. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

1.11. Information by Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

1.12. Rule 144 Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

1.13. Transfer of Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

1.14. Termination of Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

1.15. "Market Stand Off" Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

1.16. Other Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

1.17. Changes in Common Stock or Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 13

2. AFFIRMATIVE COVENANTS OF THE COMPANY AND STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . 13

2.1. Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

2.2. Assignment of Rights to Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . 13

2.3. Inspection and Visitation Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

2.4. Reserve for Conversion Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

2.5. Properties, Business, Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

2.6. Restrictive Agreements Prohibited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

2.7. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

2.8. Expenses of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

2.9. Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

2.10. Performance of Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

2.11. Proprietary Information Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

i.
82

2.12. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

2.13. Keeping of Records and Books of Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

2.14. U.S. Real Property Interest Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

2.15. Rule 144A Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

2.16. Termination of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

2.17. Confidential Information, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

3. RIGHTS OF FIRST REFUSAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

3.1. Right of First Refusal on Company Issuances . . . . . . . . . . . . . . . . . . . . . . . . . . 17

4. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

4.1. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

4.2. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

4.3. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

4.4. Notices, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

4.5. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

4.6. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

4.7. Approval of Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

ii.
83
EXHIBIT D

FORM OF MANAGEMENT RIGHTS LETTER
84
AURORA BIOSCIENCES CORPORATION
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xx Xxxxx, Xxxxxxxxxx 00000

March 8, 1996

Re: Management Rights
-----------------

Ladies and Gentlemen:

This letter will confirm our agreement that in connection with your
purchase of shares of Series A Preferred Stock of Aurora Biosciences
Corporation (the "Company"), you will be entitled to the following contractual
management rights, in addition to rights to certain non-public financial
information, inspection rights and other rights specifically provided to you
under that certain Investors' Rights Agreement of even date herewith:

(1) If and for so long as you do not have a representative on the
Company's Board of Directors ("Unrepresented Party"), you shall be permitted to
select one representative ("Representative") to consult with and advise
management of the Company on significant business issues, including
management's proposed annual operating plans, and management will make itself
available to meet with your Representative regularly during each year at the
Company's facilities at mutually agreeable times for such consultation and
advice and to review progress in achieving said plans.

(2) If and for so long as you are an Unrepresented Party, your
Representative may examine the books and records of the Company and inspect its
facilities and may request information at reasonable times and intervals
concerning the general status of the Company's financial condition and
operations, provided that access to highly confidential proprietary information
and facilities need not be provided.

(3) If and for so long as you are an Unrepresented Party, the
Company shall invite you to send your Representative to attend in a nonvoting
observer capacity all meetings of its Board of Directors and, in this respect,
shall give your Representative copies of all notices, minutes, consents, and
other material that it provides to its Directors; provided, however, that the
Company reserves the right to exclude your Representative from access to any
material or meeting or portion thereof if the Company believes upon advice of
counsel that such exclusion is reasonably necessary to preserve the
attorney-client privilege, to protect highly confidential proprietary
information or for other similar reasons. Your Representative may participate
in discussions of matters brought to the Board.

85
Page 2

(4) Within ten (10) days after the date of this letter, the Company
shall deliver to you, with a copy to , a table showing in reasonable
detail the fully-diluted capitalization of the Company, taking into account the
investments being made on the date hereof.

(5) Any notice or communication to you or to any of your
representatives which is to be sent to an address outside the United States
shall, in addition to any other method(s), be given by telecopy and confirmed in
writing contemporaneously sent by two-day guaranteed international courier. A
copy of any communication sent by the Company to you will also be sent to
at their respective addresses set forth in the Preferred Stock
Purchase Agreement of even date hereof or at such other address as may be
provided to the Company.

The rights described herein shall terminate and be of no further force
or effect upon the earliest to occur of (a) the closing of a public offering of
shares of the Company's capital stock pursuant to a registration statement filed
by the Company under the Securities Act of 1933 which has become effective
thereunder (other than a registration statement relating solely to employee
benefit plans or a transaction covered by Rule 145), (b) such time as the
Company becomes required to file reports with the Securities and Exchange
Commission under Sections 12(g) or 15(d) of the Securities Exchange Act of
1934, or (c) such time as you or your affiliates hold, in the aggregate, less
than 20% of the shares of Series A Preferred Stock purchased by you on the date
hereof or, if such shares have been converted into Common Stock, less than 20%
of the shares of Common Stock issued upon conversion of such shares, adjusted,
in each case, for stock splits, stock dividends, combinations and the like with
respect to the particular class or series of stock.

This letter may be executed in counterparts, each of which shall be an
original, but all of which taken together shall constitute one and the same
instrument.

Very truly yours,

AURORA BIOSCIENCES CORPORATION

By: /s/ XXXXXXX X. XXXX
------------------------------------

Title: President and CEO
---------------------------------

ACCEPTED AND AGREED TO:

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

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

86
EXHIBIT E

FORM OF VOTING AGREEMENT
87
VOTING AGREEMENT

AGREEMENT dated as of March 8, 1996, among Aurora Biosciences
Corporation, a Delaware corporation (the "Company"), the persons listed as
Purchasers in the signature pages hereto who execute this Agreement
(collectively, the "Purchasers" and individually, a "Purchaser"), and the other
persons and entities who execute a signature page hereto.

WHEREAS, on the date hereof the Purchasers are purchasing from the
Company shares of its Series A Preferred Stock, Series B Preferred Stock and
Series C Preferred Stock (collectively, the "Designated Preferred") pursuant to
the terms of a Preferred Stock Purchase Agreement dated the date hereof between
the Company and the Purchasers (the "Purchase Agreement"); and

WHEREAS, certain of the Stockholders (as defined below) are the holders
of at least a majority of the outstanding Common Stock, $.001 par value, of the
Company ("Common Stock");

WHEREAS, the Stockholders wish to make certain provisions for the voting
of their Shares (as defined below);

WHEREAS, the purchases by the Purchasers will benefit the Company and its
current stockholders; and

WHEREAS, it is a condition to the obligations of the Purchasers under the
Purchase Agreement that this Agreement be executed by the parties hereto, and
the parties are willing to execute this Agreement and to be bound by the
provisions hereof;

NOW, THEREFORE, in consideration of the premises, the agreements set
forth below, and the parties' desire to further the interests of the Company and
its present and future stockholders, the parties agree as follows:

1. DEFINITION. As used in this Agreement, (a) the term "Shares" means
all shares of capital stock of the Company (i) now or hereafter owned (either
beneficially or of record) by a Stockholder, and (ii) which a Stockholder does
not own (either beneficially or of record) but as to which it now or hereafter
has the right to exercise voting control, and (b) the term "Stockholders" means
collectively the Purchasers and each other person or entity executing a
signature page hereto.

2. DESIGNATION OF NOMINEES. Each of Avalon Bioventures II, L.P.
("Avalon"), Xxxxxxxxx Capital Partners, X.X. XX ("Xxxxxxxxx"), Abingworth
Bioventures SICAV ("Abingworth"), New Enterprises Associates VI, Limited
Partnership ("NEA") and Domain Partners III, L.P. ("Domain") (together, the
"Nominating Purchasers" and

1.
88

individually, a "Nominating Purchaser"), so long as it or its affiliates
continues to own at least 20% of the shares of Designated Preferred acquired by
it and its affiliates on the date hereof (appropriately adjusted to reflect
stock splits, stock dividends, combinations of shares and the like with respect
to the Designated Preferred), shall have the right to designate a nominee for
election as one of the directors of the Company who shall be elected solely by
the holders of the Designated Preferred, voting separately as a single class
(together, the "Nominees" and individually, a "Nominee"). At least ten days
prior to any meeting (or written action in lieu of a meeting) of stockholders of
the Company at or by which directors are to be elected by the holders of
Designated Preferred, voting separately as a single class, each Nominating
Purchaser shall notify the other Purchasers in writing of the Nominee designated
by such Nominating Purchaser for election as a director. In the absence of any
such notification, it shall be presumed that the Nominating Purchaser's then
incumbent Nominee has been redesignated as its Nominee. The initial Nominees of
Avalon, Xxxxxxxxx, Abingworth, NEA and Domain are Xxxxx X. Xxxxxxxx, Xxxxxxx X.
Xxxxxxxxx, Xxxxxxx Xxxxxxx, Xxxx X. Xxxxxxxx, Xx. and Xxxxx X. Xxxxx,
respectively. Each Nominating Purchaser shall cause its Nominee to nominate the
other Nominees for election to the Board of Directors of the Company in any
manner which may be required by the Bylaws of the Company.

3. ELECTION OF DIRECTORS. At each meeting (or written action in lieu
of a meeting) of stockholders of the Company at or by which directors are to be
elected by the holders of the Designated Preferred, voting separately as a
single class, each Stockholder shall vote all of its Shares of Designated
Preferred to elect, as directors of the Company, the Nominees designated in the
manner provided in Section 2. At each meeting (or written action in lieu of a
meeting) of stockholders of the Company at or by which directors are to be
elected by the holders of Common Stock, voting separately as a class, each of
the Stockholders shall vote all of its Shares of Common Stock to elect, as
directors of the Company, (a) the then current Chief Executive Officer of the
Company (the "CEO/Director"), which shall initially be Xxxxxxx X. Xxxx, and (b)
a person (the "Additional Director") designated jointly by Xxxxx X. Xxxxx and
Xxxxxxx X. Xxxxx who is reasonably acceptable to a majority of the other members
of the Company's Board of Directors, who shall initially be Xxxxxx Xxxxxx. At
least 30 days prior to any meeting (or written action in lieu of a meeting) of
stockholders of the Company at or by which directors are to be elected by the
holders of Common Stock, voting separately as a class, Drs. Tsien and Zuker
shall notify the Company and the Board of Directors of their designee pursuant
to clause (b), and if such person is reasonably acceptable to a majority of the
other members of the Board of Directors, the Company shall notify the
Stockholders of such designee at least ten days prior to such meeting or written
action. In the absence of any such notification, it shall be presumed that the
then incumbent Additional Director has been redesignated. Notwithstanding the
foregoing, if both Xx. Xxxxx'x and Xx. Xxxxx'x services as consultants to the
Company terminate, for any reason or for no reason, then such Additional
Director shall be designated as above by the holders of a majority of the Common
Stock of the Company.
89

4. SUCCESSOR DIRECTORS. If a Nominee shall cease to serve as a
director for any reason, the Nominating Purchaser which designated such Nominee
shall have the right to designate a successor Nominee and each of the other
Stockholders shall use its best efforts to ensure that such successor Nominee is
duly elected as a director. If a Nominating Purchaser notifies the other
Stockholders that it desires to remove its Nominee as a director, each of the
other Stockholders shall use its best efforts to ensure that such Nominee is
duly removed as a director. If the CEO/Director ceases to be the Chief Executive
Officer of the Company for any reason, each Stockholder shall use its best
efforts to ensure that such person is promptly removed as a director and that
the newly appointed Chief Executive Officer is elected as a director. If the
Additional Director ceases to be a director for any reason, a successor may be
designated in the manner set forth in Section 3(b) and each Stockholder shall
use its best efforts to ensure that such successor is duly elected as a
director. If Drs. Tsien and Zuker jointly (or, pursuant to the last sentence of
Section 3, the holders of a majority of the outstanding Common Stock of the
Company) desire to remove the Additional Director as a director, each of the
Stockholders shall use its best efforts to ensure that such member is duly
removed as a director. If a Nominating Purchaser notifies the Company that it
desires to remove its Nominee as a director and/or designate a successor Nominee
or if Drs. Tsien and Zuker jointly (or, pursuant to the last sentence of Section
3, the holders of a majority of the outstanding Common Stock of the Company)
notify the Company that they desire to remove the Additional Director as a
director and/or designate a successor, the Company shall, upon request, use its
best efforts to ensure that a meeting of stockholders of the Company is promptly
called for such purpose.

5. CHANGE OF CONTROL. Each Purchaser agrees that such Purchaser will
not sell or dispose of any of its Shares (excluding shares of capital stock
which are Shares solely because of clause (ii) of the definition of Shares) in
connection with any transaction or series of related transactions occurring
subsequent to the date hereof which results or is intended to result in (i) a
sale or transfer of 50% or more of the then outstanding voting securities of the
Company to one or more related purchasers (including persons acting as a
partnership, syndicate or other group for the purpose of acquiring securities of
the Company); (ii) a merger, consolidation or other corporate reorganization
where the stockholders of the Company immediately prior to such transaction do
not immediately following such transaction own at least 50% of the surviving
entity; or (iii) a transfer of all or substantially all of the assets of the
Company (collectively, a "Change of Control"), unless such Change of Control has
been approved or consented to by holders of at least sixty-six and two-thirds
percent (66-2/3%) of the outstanding shares of Designated Preferred, considered
as a single class. Each Purchaser further agrees that it will vote all of its
Shares in favor of (and, if applicable, will tender their Shares to the
acquiring party pursuant to) any Change in Control which is approved by
Purchasers holding at least sixty-six and two-thirds percent (66-2/3%) of the
outstanding shares of Designated Preferred (the "Required Approval"). If,
however, despite the foregoing sentences, a Change of Control for which the
Required Approval
90

has not been obtained does occur (because of sales by holders of the Company's
voting securities who are not subject to this provision), the foregoing
restriction shall not apply and the Purchasers may tender their Shares in
connection with and otherwise participate in such Change of Control transaction.
The provisions of this Section 5 shall be of no further force or effect
following a Change of Control occurring subsequent to the date hereof.

6. TERM. This Agreement shall continue until the earlier of (i) such
time as no shares of Designated Preferred remain outstanding or (ii) the tenth
anniversary of the date of this Agreement.

7. SPECIFIC ENFORCEMENT. Each Stockholder and the Company expressly
agrees that the Stockholders will be irreparably damaged if this Agreement is
not specifically enforced. Upon a breach or threatened breach of the terms,
covenants and/or conditions of this Agreement by a Stockholder or the Company,
the other Stockholders shall, in addition to all other remedies, be entitled to
a temporary or permanent injunction, without showing any actual damage, and/or a
decree for specific performance, in accordance with the provisions hereof.

8. LEGEND. Each certificate evidencing Shares shall bear a legend
substantially as follows:

"The shares represented by this certificate are subject to the
terms and conditions of a certain Voting Agreement dated as of
March __, 1996, a copy of which the Company will furnish to the
holder of this certificate upon request and without charge, and
may only be transferred subject to such terms and conditions."

9. NOTICES. All notices or other communications given hereunder shall
be in writing and shall be deemed effective upon delivery at the address of the
party to be notified and shall be mailed by certified or registered mail, return
receipt requested, delivered by courier, telecopied, or sent by other facsimile
method, addressed to the address specified below such party's signature hereto
or such other address as such party may subsequently notify the other parties of
in writing. Notwithstanding the foregoing, all notices or other communications
to an address outside of the United States shall, in addition to any other
method, be given by telecopy and confirmed in writing sent contemporaneously by
two-day guaranteed international courier.

10. FURTHER ASSURANCES. The Company shall use its best efforts to
cause any persons or entities that acquire newly issued shares of Common Stock
after the date hereof to execute a counterpart signature page to this Agreement
and to become a party to this Agreement in order to ensure that at all times
holders of at least a majority of the Company's outstanding Common Stock are
subject to this Agreement.

11. ENTIRE AGREEMENT AND AMENDMENTS. This Agreement constitutes the
entire agreement of the parties with respect to the subject matter hereof and
neither this Agreement nor any provision hereof may be waived, modified, amended
or terminated except by a written agreement signed by the Company, Purchasers
owning at least two-thirds of the then outstanding shares of Designated
Preferred held by Purchasers and, with respect to waivers, modifications, etc.,
which adversely effect the rights of any Stockholders (other than Purchasers),
at least fifty percent of the Common Stock held by persons or entities executing
this Agreement; provided however, that no waiver, modification, amendment or
termination shall adversely effect the rights of a particular Nominating
Purchaser with respect to the designation and removal of a member of the
Company's Board of Directors without the written consent of such Nominating
Purchaser.

12. GOVERNING LAW; SUCCESSORS AND ASSIGNS. This Agreement shall be
governed by the laws of the State of Delaware and shall bind and inure to the
benefit of the heirs, personal representatives, executors, administrators,
successors and assigns of the parties. Without limiting the generality of the
foregoing, all covenants and agreements of the Stockholders shall bind any and
all subsequent holders of their Shares, and the Company agrees that it shall not
transfer on its records any such Shares unless (i) the transferor Stockholder
shall have first delivered to the Company and the other Purchasers the written
agreement of the transferee to be bound by this Agreement to the same extent as
if such transferee had originally been a Stockholder hereunder and (ii) the
certificate or certificates evidencing the Shares so transferred bear the legend
specified in Section 8.

13. CAPTIONS. Captions are for convenience only and are not deemed to
be part of this Agreement.

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

15. ADDITIONAL PARTIES. Additional persons and entities may become
parties to this Agreement by executing a counterpart signature page hereto which
sets forth the address of such person or entity and pursuant to which such
person or entity agrees to be bound by this Agreement, and upon execution
thereof, such person or entity shall be deemed a Stockholder for all purposes
hereunder.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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

COMPANY:

AURORA BIOSCIENCES CORPORATION

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

Title:
------------------------------------
Address: 0000 Xxxxxxxx Xxxxxx, Xxx. 000
Xx Xxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000

PURCHASERS:

AVALON MEDICAL PARTNERS, L.P.

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

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

Address: 0000 Xxxxxxxx Xxxxxx, Xxx. 000
Xx Xxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000

AVALON BIOVENTURES II, L.P.

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

Title:
------------------------------------
Address: 0000 Xxxxxxxx Xxxxxx, Xxx. 000
Xx Xxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
93

XXXXXXXXX CAPITAL PARTNERS, X.X. XX

By: Xxxxxxxxx Associates, L.P.

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

Title: General Partner

Address: 0000 Xxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000

ABINGWORTH BIOVENTURES SICAV

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

Title: Attorney-in-fact pursuant to Power of
Attorney dated March 6, 1996

Address: x/x Xxxxx & Xxx
Xxxxx Xxxxxxx 000
X-0000 Xxxxxxxxxx
Telecopy: (352) 43 5410

With a copy to:

Xx. Xxxxxxx Xxxxxxx
Abingworth Management
Limited
00 Xx. Xxxxx'x Xxxxxx
Xxxxxx, Xxxxxxx XX0X 0XX
Telecopy: 00-000-000-0000

Xxxxxx X. Xxxxxxxxx, Esq.
Xxxxx, Xxxxxxx & Xxxxxxxxx
High Street Tower
000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Telecopy: (000) 000-0000
94

NEW ENTERPRISE ASSOCIATES VI,
LIMITED PARTNERSHIP

By: NEA Partners VI, Limited
Partnership, its General Partner

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

Address: 0000 Xx. Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000

XXX XXXXXXXX 0000, X.X.

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

Title: Authorized Signatory

Address: 0000 Xx. Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000

DP III ASSOCIATES, L.P.

By: One Xxxxxx Square Associates III, L.P.,
its General Partner

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

Title: General Partner

Address: Xxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx Xxx Xxxxxx 00000
Facsimile: (000) 000-0000

DOMAIN PARTNERS III, L.P.

By: One Xxxxxx Square Associates III, L.P.,
its General Partner

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

Title: General Partner

Address: Xxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx Xxx Xxxxxx 00000
Facsimile: (000) 000-0000

BIOTECHNOLOGY INVESTMENTS LIMITED

By: Old Court Limited

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

Title: Attorney-in-Fact

Address: Xxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx Xxx Xxxxxx 00000
Facsimile: (000) 000-0000

PACKARD INSTRUMENT COMPANY, INC.

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

Address: 000 Xxxxxxxx Xxxxxxx
Xxxxxxx XX 00000
Facsimile: (000) 000-0000

[SIGNATURE PAGE FOR VOTING AGREEMENT]
96

SEQUANA THERAPEUTICS, INC.

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

Address: 00000 Xxxxx Xxxxxx Xxxxx
Xx., Xxxxx 000
Xx Xxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000

GC&H INVESTMENTS

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

Address: 0000 Xxxxxxxxx Xx., Xxx. 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000

----------------------------------------
XXXXX X. XXXXXXXX
Address: Avalon Ventures
0000 Xxxxxxxx Xxxxxx,Xxxxx 000
Xx Xxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000

----------------------------------------
XXXXX X. XXXXX
Address: 0000 Xxxxxxxxxx Xxxxx
Xx Xxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000

----------------------------------------
XXXXXXX X. GLOBE
Address: 000 Xxxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx X0X0X0
Facsimile: (000) 000-0000

----------------------------------------
XXXXXXX X. XXXXX
Address: UCSD
Cellular & Molecular
Medicine West
0000 Xxxxxx Xxxxx, Xx. 000
Xx Xxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000

----------------------------------------
XXXXXXX X. XXXXXXXXX
Address: UCSD
Eukaryotic Regulatory
Biology Program
Room 345 C.M.M.
0000 Xxxxxx Xxxxx
Xx Xxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000

----------------------------------------
XXXX X. XXXXX, XX.
Address: Argonaut Technologies, Inc.
000-X Xxxxxxxxxx Xxxx, Xxx. X
Xxx Xxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000

----------------------------------------
XXXXXX XXXXXX
Address: 000 Xxxxxx Xxxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
98

----------------------------------------
XXXXXX X. XXXXXX
Address: 000 Xxxxxx Xxxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000

----------------------------------------
XXXXXX LUETOLF
FOR XXXXXX X.X. LANGINGER
Address: ATAG Vermogensverwaltung AG
8022 Zurich
Xxxxxxxxxxx 00
Xxxxxxxx 0000
Xxxxxxxxx: 00-000 00 00

----------------------------------------
XXXXXXX X. XXXXX
Address: Xxxxxxx, Xxxxx & Xxxxx
Xxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Facsimilie: (000) 000-0000

----------------------------------------
XXXX X. XXXXXXXX, XX.
Address: New Enterprise Associates
000 Xx. Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000

----------------------------------------
XXXXXX XXXXXXXX
Address: P.O. Box 3471
16360 La Xxxxxx
Xxxxxx Xxxxx Xx, XX 00000
Facsimile: (000) 000-0000
99

THE XXXXXX FAMILY TRUST

By:
------------------------------------
XXXXXX X. XXXXXX, XX., TRUSTEE

By:
------------------------------------
XXXXXX XXXXXX, TRUSTEE

Address: c/o Xxxxxx X. Xxxxxx, Xx.
0000 Xxxxx Xxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000

----------------------------------------
XXXXXXX X. XXXX
Address: 0000 Xx Xxxxx Xxxxxxxxx, #0
Xx Xxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000

XXXXXXXXX & XXXXX GROUP

By:
-------------------------------------
Xxxxxx X. Xxxxxxx

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

Address: 000 Xxxx Xxxxxx, 00xx Xx.
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000

[END OF PURCHASERS]

[OTHER STOCKHOLDER SIGNATURE PAGES FOLLOW IMMEDIATELY]

100

OTHER STOCKHOLDER SIGNATURE PAGE

The undersigned hereby executes the Voting Agreement among Aurora
Biosciences Corporation and the other parties thereto, authorizes this signature
page to be attached to a counterpart of such Agreement and agrees to be bound by
such Agreement.

Print Exact Name of Stockholder:_____________________________

Signature:___________________________________________________

Print Name of Signer:________________________________________

Print Title of Signer Here, if applicable:___________________

Print Address of Stockholder Here:___________________________

_____________________________________________________________

101
EXHIBIT F

FORM OF PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
102
AURORA BIOSCIENCES CORPORATION

EMPLOYEE PROPRIETARY INFORMATION
AND INVENTIONS AGREEMENT

In consideration of my employment or continued employment by AURORA
BIOSCIENCES CORPORATION (the "COMPANY"), and the compensation now and hereafter
paid to me, I hereby agree as follows:

1. NONDISCLOSURE

1.1 RECOGNITION OF COMPANY'S RIGHTS; NONDISCLOSURE. At all times
during my employment and thereafter, I will hold in strictest confidence and
will not disclose, use, lecture upon or publish any of the Company's
Proprietary Information (defined below), except as such disclosure, use or
publication may be required in connection with my work for the Company, or
unless an officer of the Company expressly authorizes such in writing. I will
obtain Company's written approval before publishing or submitting for
publication any material (written, verbal, or otherwise) that relates to my
work at Company and/or incorporates any Proprietary Information. I hereby
assign to the Company any rights I may have or acquire in such Proprietary
Information and recognize that all Proprietary Information shall be the sole
property of the Company and its assigns.

1.2 PROPRIETARY INFORMATION. The term "PROPRIETARY INFORMATION"
shall mean any and all confidential and/or proprietary knowledge, data or
information of the Company. By way of illustration but not limitation,
"PROPRIETARY INFORMATION" includes (a) tangible and intangible information
relating to antibodies and other biological materials, cell lines, samples of
assay components, media and/or cell lines and procedures and formulations for
producing any such assay components, media and/or cell lines, formulations,
products, processes, know-how, designs, drawings, formulas, methods,
developmental or experimental work, clinical data, improvements, discoveries
(hereinafter collectively referred to as "INVENTIONS"); (b) plans for research,
new products, manufacturing, trade secrets, inventions, programs, marketing and
selling, business plans, budgets and unpublished financial statements,
licenses, prices and costs, suppliers and customers; and (c) information
regarding the skills and compensation of other employees of the Company.
Notwithstanding the foregoing, it is understood that, at all such times, I am
free to use information which is generally known in the trade or industry,
which is not gained as result of a breach of this Agreement, and my own, skill,
knowledge, know-how and experience to whatever extent and in whichever way I
wish.

1.3 THIRD PARTY INFORMATION. I understand, in addition, that the
Company has received and in the future will receive from third parties
confidential or proprietary information ("THIRD PARTY 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. During the term
of my employment and thereafter, I will hold Third Party Information in the
strictest confidence and will not disclose to anyone (other than Company
personnel who need to know such information in connection with their work for
the Company) or use, except in connection with my work for the Company, Third
Party Information unless expressly authorized by an officer of the Company in
writing.

1.4 NO IMPROPER USE OF INFORMATION OF PRIOR EMPLOYERS AND OTHERS.
During my employment by the Company I will not improperly use or disclose any
confidential information or trade secrets, if any, of any former employer or
any other person to whom I have an obligation of confidentiality, and I will
not bring onto the premises of the Company any unpublished documents or any
property belonging to any former employer or any other person to whom I have an
obligation of confidentiality unless consented to in writing by that former
employer or person. I will use in the performance of my duties only
information which is generally known and used by persons with training and
experience comparable to my own, which is common knowledge in the industry or
otherwise legally in the public domain, or which is otherwise provided or
developed by the Company.

2. ASSIGNMENT OF INVENTIONS.

2.1 PROPRIETARY RIGHTS. The term "PROPRIETARY RIGHTS" shall mean
all trade secret, patent,

1.
103

2.2 PRIOR INVENTIONS. Inventions, if any, patented or unpatented,
which I made prior to the commencement of my employment with the Company are
excluded from the scope of this Agreement. To preclude any possible
uncertainty, I have set forth on Exhibit B (Previous Inventions) attached
hereto a complete list of all Inventions that I have, alone or jointly with
others, conceived, developed or reduced to practice or caused to be conceived,
developed or reduced to practice prior to the commencement of my employment
with the Company, that I consider to be my property or the property of third
parties and that I wish to have excluded from the scope of this Agreement
(collectively referred to as "PRIOR INVENTIONS"). If disclosure of any such
Prior Invention would cause me to violate any prior confidentiality agreement,
I understand that I am not to list such Prior Inventions in Exhibit B but am
only to disclose a cursory name for each such invention, a listing of the
party(ies) to whom it belongs and the fact that full disclosure as to such
inventions has not been made for that reason. A space is provided on Exhibit B
for such purpose. If no such disclosure is attached, I represent that there
are no Prior Inventions. If, in the course of my employment with the Company,
I incorporate a Prior Invention into a Company product, process or machine, the
Company is hereby granted and shall have a nonexclusive, royalty-free,
irrevocable, perpetual, worldwide license (with rights to sublicense through
multiple tiers of sublicensees) to make, have made, modify, use and sell such
Prior Invention. Notwithstanding the foregoing, I agree that I will not
incorporate, or permit to be incorporated, Prior Inventions in any Company
Inventions without the Company's prior written consent.

2.3 ASSIGNMENT OF INVENTIONS. Subject to Sections 2.4, and 2.6, I
hereby assign and agree to assign in the future (when any such Inventions or
Proprietary Rights are first reduced to practice or first fixed in a tangible
medium, as applicable) to the Company all my right, title and interest in and
to any and all Inventions (and all Proprietary Rights with respect thereto)
whether or not patentable or registrable under copyright or similar statutes,
made or conceived or reduced to practice or learned by me, either alone or
jointly with others, during the period of my employment with the Company.
Inventions assigned to the Company, or to a third party as directed by the
Company pursuant to this Section 2, are hereinafter referred to as "COMPANY
INVENTIONS."

2.4 NONASSIGNABLE INVENTIONS. This Agreement does not apply to an
Invention which qualifies fully as a nonassignable Invention under Section 2870
of the California Labor Code (hereinafter "SECTION 2870"). I have reviewed the
notification on Exhibit A (Limited Exclusion Notification) and agree that my
signature acknowledges receipt of the notification.

2.5 OBLIGATION TO KEEP COMPANY INFORMED. During the period of my
employment with the Company, I will promptly disclose to the Company fully and
in writing all Inventions authored, conceived or reduced to practice by me,
either alone or jointly with others. In addition, I will promptly disclose to
the Company all patent applications filed by me or on my behalf prior to
termination of employment. For a period of six (6) months following
termination of my employment with the Company, I will promptly disclose to the
Company fully and in writing all Inventions authored, conceived or reduced to
practice by me, either alone or jointly with others, and all patent
applications filed by me or on my behalf, which Inventions or patent
applications directly relate to the field of my work at the Company at the time
of termination or within three (3) years prior thereto. At the time of each
such disclosure, I will advise the Company in writing of any Inventions that I
believe fully qualify for protection under Section 2870; and I will at that
time provide to the Company in writing all evidence necessary to substantiate
that belief. The Company will keep in confidence and will not use for any
purpose or disclose to third parties without my consent any confidential
information disclosed in writing to the Company pursuant to this Agreement
relating to Inventions that qualify fully for protection under the provisions
of Section 2870. I will preserve the confidentiality of any Invention that
does not fully qualify for protection under Section 2870.

2.6 GOVERNMENT OR THIRD PARTY. I also agree to assign all my
right, title and interest in and to any particular Invention to a third party,
including without limitation the United States, as directed by the Company.

2.7 WORKS FOR HIRE. I acknowledge that all original works of
authorship which are made by me (solely or jointly with others) within the
scope of my employment and which are protectable by copyright are "works made
for hire," pursuant to United States Copyright Act (17 U.S.C., Section 101).

2.
104

2.8 ENFORCEMENT OF PROPRIETARY RIGHTS. I will assist the Company
in every proper way to obtain, and from time to time enforce, United States and
foreign Proprietary Rights relating to Company Inventions in any and all
countries. To that end I will execute, verify and deliver such documents and
perform such other acts (including appearances as a witness) as the Company may
reasonably request for use in applying for, obtaining, perfecting, evidencing,
sustaining and enforcing such Proprietary Rights and the assignment thereof.
In addition, I will execute, verify and deliver assignments of such Proprietary
Rights to the Company or its designee. My obligation to assist the Company
with respect to Proprietary Rights relating to such Company Inventions in any
and all countries shall continue beyond the termination of my employment, but
the Company shall compensate me at a reasonable rate after my termination for
the time actually spent by me at the Company's request on such assistance.

2.9 In the event the Company is unable for any reason, after
reasonable effort, to secure my signature on any document needed in connection
with the actions specified in the preceding paragraph, I hereby irrevocably
designate and appoint the Company and its duly authorized officers and agents
as my agent and attorney in fact, which appointment is coupled with an
interest, to act for and in my behalf to execute, verify and file any such
documents and to do all other lawfully permitted acts to further the purposes
of the preceding paragraph with the same legal force and effect as if executed
by me. I hereby waive and quitclaim to the Company any and all claims, of any
nature whatsoever, which I now or may hereafter have for infringement of any
Proprietary Rights assigned hereunder to the Company.

3. RECORDS. I agree to keep and maintain adequate and current records
(in the form of notes, sketches, drawings and in any other form that may be
required by the Company) of all Proprietary Information developed by me and all
Inventions made by me during the period of my employment at the Company, which
records shall be available to and remain the sole property of the Company at
all times.

4. ADDITIONAL ACTIVITIES. I agree that during the period of my
employment by the Company I will not, without the Company's express written
consent, engage in any employment or business activity which is competitive
with, or would otherwise conflict with, my employment by the Company. I agree
further that for the period of my employment by the Company and for one (l)
year after the date of termination of my employment by the Company I will not
induce any employee of the Company to leave the employ of the Company.

5. NO CONFLICTING OBLIGATION. I represent that my performance of all the
terms of this Agreement and as an employee of the Company does not and will not
breach any agreement to keep in confidence information acquired by me in
confidence or in trust prior to my employment by the Company. I have not
entered into, and I agree I will not enter into, any agreement either written
or oral in conflict herewith.

6. RETURN OF COMPANY DOCUMENTS. When I leave the employ of the Company,
I will deliver to the Company any and all drawings, notes, memoranda,
specifications, devices, formulas, and documents, together with all copies
thereof, and any other material containing or disclosing any Company
Inventions, Third Party Information or Proprietary Information of the Company.
I further agree that any property situated on the Company's premises and owned
by the Company, including disks and other storage media, filing cabinets or
other work areas, is subject to inspection by Company personnel at any time
with or without notice. Prior to leaving, I will cooperate with the Company in
completing and signing the Company's termination statement.

7. LEGAL AND EQUITABLE REMEDIES. Because my services are personal and
unique and because I may have access to and become acquainted with the
Proprietary Information of the Company, the Company shall have the right to
enforce this Agreement and any of its provisions by injunction, specific
performance or other equitable relief, without bond and without prejudice to
any other rights and remedies that the Company may have for a breach of this
Agreement.

8. NOTICES. Any notices required or permitted hereunder shall be given
to the appropriate party at the address specified below or at such other
address as the party shall specify in writing. Such notice shall be deemed
given upon personal delivery to the appropriate address or if sent by certified
or registered mail, three (3) days after the date of mailing.

9. NOTIFICATION OF NEW EMPLOYER. In the event that I leave the employ of
the Company, I hereby consent to the notification of my new employer of my
rights and obligations under this Agreement.

10. GENERAL PROVISIONS.

3.
105

10.1 GOVERNING LAW; CONSENT TO PERSONAL JURISDICTION. This
Agreement will be governed by and construed according to the laws of the State
of California, as such laws are applied to agreements entered into and to be
performed entirely within California between California residents. I hereby
expressly consent to the personal jurisdiction of the state and federal courts
located in San Diego County, California for any lawsuit filed there against me
by Company arising from or related to this Agreement.

10.2 SEVERABILITY. In case any one or more of the provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect the other provisions of this Agreement, and
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein. If moreover, any one or more of the
provisions contained in this Agreement shall for any reason be held to be
excessively broad as to duration, geographical scope, activity or subject, it
shall be construed by limiting and reducing it, so as to be enforceable to the
extent compatible with the applicable law as it shall then appear.

10.3 SUCCESSORS AND ASSIGNS. 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.

10.4 SURVIVAL. The provisions of this Agreement shall survive the
termination of my employment and the assignment of this Agreement by the
Company to any successor in interest or other assignee.

10.5 EMPLOYMENT. I agree and understand that nothing in this
Agreement shall confer any right with respect to continuation of employment by
the Company, nor shall it interfere in any way with my right or the Company's
right to terminate my employment at any time, with or without cause.

10.6 WAIVER. No waiver by the Company of any breach of this
Agreement shall be a waiver of any preceding or succeeding breach. No waiver
by the Company of any right under this Agreement shall be construed as a waiver
of any other right. The Company shall not be required to give notice to
enforce strict adherence to all terms of this Agreement.

10.7 ENTIRE AGREEMENT. The obligations pursuant to Sections 1 and
2 of this Agreement shall apply to any time during which I was previously
employed, or am in the future employed, by the Company as a consultant if no
other agreement governs nondisclosure and assignment of inventions during such
period. This Agreement is the final, complete and exclusive agreement of the
parties with respect to the subject matter hereof and supersedes 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 and 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.

This Agreement shall be effective as of the first day of my employment
with the Company, namely: _____________, 19__.

I HAVE READ THIS AGREEMENT CAREFULLY AND UNDERSTAND ITS TERMS. I HAVE
COMPLETELY FILLED OUT EXHIBIT B TO THIS AGREEMENT.

Dated:____________________________

________________________________________________________
SIGNATURE

________________________________________________________
(PRINTED NAME)

ACCEPTED AND AGREED TO:

AURORA BIOSCIENCES CORPORATION

BY:_____________________________________________________

TITLE:__________________________________________________

________________________________________________________
(ADDRESS)

________________________________________________________

4.
106

EXHIBIT A

LIMITED EXCLUSION NOTIFICATION

THIS IS TO NOTIFYyou in accordance with Section 2872 of the California
Labor Code that the foregoing Agreement between you and the Company does not
require you to assign or offer to assign to the Company any invention that you
developed entirely on your own time without using the Company'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 Company's business, or actual or demonstrably anticipated
research or development of the Company;

(2) Result from any work performed by you for the Company.

To the extent a provision in the foregoing Agreement purports to
require you to assign an invention otherwise excluded from the preceding
paragraph, the provision is against the public policy of this state and is
unenforceable.

This limited exclusion does not apply to any patent or invention
covered by a contract between the Company and the United States or any of its
agencies requiring full title to such patent or invention to be in the United
States.

I ACKNOWLEDGE RECEIPT of a copy of this notification.

By:_____________________________________
(Printed Name of Employee)

Date:___________________________________
WITNESSED BY:

________________________________________________
Signature

________________________________________________
(Printed Name of Representative)

Dated:________________________________________________

A-1.

107

EXHIBIT B

TO: AURORA BIOSCIENCES CORPORATION

FROM: ___________________________

DATE: ___________________________

SUBJECT: PREVIOUS INVENTIONS

1. Except as listed in Section 2 below, the following is a
complete list of all inventions or improvements relevant to the subject matter
of my employment by Aurora Biosciences Corporation (the "COMPANY") that have
been made or conceived or first reduced to practice by me alone or jointly with
others prior to my engagement by the Company:

[ ] No inventions or improvements.

[ ] See below:

__________________________________________________________________

[ ] Additional sheets attached.

2. Due to a prior confidentiality agreement, I cannot complete
the disclosure under Section 1 above with respect to inventions or improvements
generally listed below, the proprietary rights and duty of confidentiality with
respect to which I owe to the following party(ies):

INVENTION OR IMPROVEMENT PARTY(IES) RELATIONSHIP

1. ___________________________ ____________________ ____________

2. ___________________________ ____________________ ____________

3. ___________________________ ____________________ ____________

[ ] Additional sheets attached.
_________________________
(Name of Employee)

B-1.

108
EXHIBIT G

FORM OF LEGAL OPINION OF COMPANY COUNSEL

109

March 8, 1996

To the Purchasers listed on Schedule A
of that certain Preferred Stock Purchase Agreement
of even date herewith referred to below

Ladies and Gentlemen:

We have acted as counsel for Aurora Biosciences Corporation, a Delaware
corporation (the "Company"), in connection with the issuance and sale of
10,239,115 shares of Series A Preferred Stock, 555,555 shares of Series B
Preferred Stock, and 750,000 shares of Series C Preferred Stock under the
Preferred Stock Purchase Agreement dated March 8, 1996, among the Company and
the purchasers listed on Schedule A thereto (the "Agreement"). We are
rendering this opinion pursuant to Section 4.6 of the Agreement. Except as
otherwise defined herein, capitalized terms used but not defined herein have
the respective meanings given to them in the Agreement.

In connection with this opinion, we have examined and relied upon the
representations and warranties as to factual matters contained in and made
pursuant to the Agreement by the various parties and originals or copies
certified to our satisfaction, of such records, documents, certificates,
opinions, memoranda and other instruments as in our judgment are necessary or
appropriate to enable us to render the opinion expressed below. Where we
render an opinion "to the best of our knowledge" or concerning an item "known
to us" or our opinion otherwise refers to our knowledge, it is based solely
upon (i) an inquiry of attorneys within this firm who perform legal services
for the Company, (ii) receipt of a certificate executed by an officer of the
Company covering such matters and (iii) such other investigation, if any, that
we specifically set forth herein.

In rendering this opinion, we have assumed: the genuineness and authenticity
of all signatures on original documents; the authenticity of all documents
submitted to us as originals; the conformity to originals of all documents
submitted to us as copies; the accuracy, completeness and authenticity of
certificates of public officials; and the due authorization, execution and
delivery of all documents (except the due authorization, execution and delivery
by the Company of the Agreement, the Investors' Rights Agreement, the
Management Rights Agreements and the Voting Agreement (collectively, the
"Agreements")), where authorization, execution and delivery are prerequisites
to the effectiveness of such documents. We have also assumed: that all
individuals executing and delivering documents had the legal capacity to so
execute and deliver; that you have received all documents you were to receive
under the Agreements; that the Agreements are an obligation binding upon you;
if you are a corporation or other entity, that you have filed any required
California franchise or income tax returns and have paid any required
California franchise or income taxes; and that there are no extrinsic
agreements or understandings among the parties to the Agreements that would
modify or interpret the terms of the Agreements or the respective rights or
obligations of the parties thereunder.

110
To the Purchasers
March 8, 1996
Page Two

Our opinion is expressed only with respect to the federal laws of the United
States of America, the General Corporation Law of the State of Delaware, and
the laws of the State of California. We express no opinion as to whether the
laws of any particular jurisdiction apply, and no opinion to the extent that
the laws of any jurisdiction other than those identified above are applicable
to the subject matter hereof. We are not rendering any opinion as to
compliance with any antifraud law, rule or regulation relating to securities,
or to the sale or issuance thereof.

With regard to our opinion in paragraph 4 below, we have examined and relied
upon a certificate executed by an officer of the Company to the effect that the
consideration for all outstanding shares of capital stock of the Company was
received by the Company in accordance with the provisions of the applicable
Board of Directors resolutions and any plan or agreement relating to the
issuance of such shares, and we have undertaken no independent verification
with respect thereto.

With regard to our opinion in paragraph 5 below with respect to material
defaults under any material agreement known to us, we have relied solely upon
(i) inquiries of officers of the Company, (ii) a list supplied to us by the
Company, a copy of which is attached hereto, of material agreements to which
the Company is a party or by which it is bound and (iii) an examination of the
items on the aforementioned list; we have made no further investigation.

On the basis of the foregoing, in reliance thereon and with the foregoing
qualifications, we are of the opinion that:

1. The Company has been duly incorporated and is a validly
existing corporation in good standing under the laws of the State of Delaware.

2. The Company has the requisite corporate power to own or lease
its property and assets, to conduct its business as it is currently being
conducted and to execute and perform the Agreements, is qualified as a foreign
corporation to do business in California and, to the best of our knowledge, is
not required to qualify as a foreign corporation to do business in any other
jurisdiction in the United States.

3. The Agreements have been duly and validly authorized, executed
and delivered by the Company and constitute valid and binding agreements of the
Company enforceable against the Company in accordance with their terms, except
as rights to indemnity under section 1.10 of the Investors' Rights Agreement
may be limited by applicable laws and except as enforcement of the Agreements
may be limited by applicable bankruptcy, insolvency, reorganization,
arrangement, moratorium or other similar laws affecting creditors' rights, and
subject to general equity principles and to limitations on availability of
equitable relief, including specific performance.

111

To the Purchasers
March 8, 1996
Page Three

4. The authorized capital stock of the Company consists of
50,000,000 shares of Common Stock, of which 2,508,500 shares are issued and
outstanding immediately prior to the First Closing, and 25,000,000 shares of
Preferred Stock, of which 10,500,000 are designated Series A Preferred Stock,
600,000 are designated Series B Preferred Stock, and 800,000 are designated
Series C Preferred Stock, none of which will be issued and outstanding
immediately prior to the First Closing. No other shares of capital stock or
other securities of the Company are outstanding. All such issued and
outstanding shares have been duly authorized and validly issued and are fully
paid and nonassessable. The Shares have the rights, preferences and privileges
set forth in the Restated Certificate. The Shares have been duly authorized,
and upon issuance and delivery against payment therefor in accordance with the
terms of the Agreement, the Shares will be validly issued, outstanding, fully
paid and nonassessable, provided, however, that the Shares (and the Common Stock
issuable upon conversion of the Shares) are subject to a right of first refusal
as set forth in Section 45 of the Company's Bylaws, and may be subject to
restrictions on transfer under state and/or federal securities laws. The shares
of Common Stock issuable upon conversion of the Shares have been duly authorized
and reserved for issuance, and upon issuance in accordance with the terms of the
Restated Certificate, will be validly issued, outstanding, fully paid and
nonassessable. To the best of our knowledge, (a) there are no options,
warrants, conversion privileges, preemptive rights or other rights presently
outstanding to purchase any of the authorized but unissued capital stock of the
Company, other than as disclosed in the Agreement or on Exhibit B thereto, and
(b) other than as disclosed in the Agreement or Exhibit B thereto, there is no
commitment by the Company to issue shares, warrants, options, convertible
securities or such other rights. Neither the issuance, sale or delivery of the
Shares nor the issuance or delivery of the shares of Common Stock issuable upon
conversion of the Shares is subject to any preemptive right of stockholders of
the Company arising under law or the Restated Certificate or Bylaws of the
Company or, to our knowledge, to any contractual right of first refusal or other
similar right in favor of any person under any agreement on the list attached
hereto which has not been waived. To our knowledge, the Company has no
obligation (contingent or otherwise) to purchase, redeem or otherwise acquire
any of its equity securities or any interest therein.

5. The execution and delivery of the Agreements by the Company,
the performance by the Company of its obligations thereunder and the issuance of
the Shares pursuant thereto (and the issuance of shares of Common Stock upon
conversion of the Shares (assuming conversion of the Shares by the Purchasers
as of the date hereof)) do not violate any provision of the Company's Restated
Certificate of Incorporation or Bylaws, and do not constitute a material
default under the provisions of any material agreement known to us to which the
Company is a party or by which it is bound, and do not violate or contravene
(a) any governmental statute, rule or regulation applicable to the Company or
(b) any order, writ, judgment, injunction, decree, determination or award which
has been entered against the Company and of which we are aware, the violation
or

112

To the Purchasers
March 8, 1996
Page Four

contravention of which would materially and adversely affect the Company, its
assets, financial condition or operations or impair the Company's ability to
execute and perform the Agreements.

6. To the best of our knowledge, there is no action, proceeding or
investigation pending or overtly threatened against the Company before any
court, administrative agency or other governmental instrumentality that
questions the validity of the Agreements or might result, either individually
or in the aggregate, in any material adverse change in the assets, financial
condition, or operations of the Company.

7. All consents, approvals, authorizations, or orders of, and
filings, registrations, and qualifications with any regulatory authority or
governmental body in the United States required for the consummation by the
Company of the transactions contemplated by the Agreements (including issuance
of the Shares and issuance of the shares of Common Stock upon conversion of the
Shares (assuming conversion of the Shares by the Purchasers as of the date
hereof)), have been made or obtained, except (a) for the filing of a Notice of
Transaction Pursuant To Section 25102(f) of the California Corporate Securities
Law of 1968, and (b) for the filing of a Form D pursuant to Securities and
Exchange Commission Regulation D.

8. The offer and sale of the Shares is, and the issuance of the
shares of Common Stock upon conversion of the Shares (assuming conversion of the
Shares by the Purchasers as of the date hereof) will be, exempt from the
registration requirements of the Securities Act of 1933, as amended.

This opinion is intended solely for your benefit and is not to be made
available to or be relied upon by any other person, firm, or entity without our
prior written consent.

Very truly yours,

XXXXXX GODWARD XXXXXX
XXXXXXXXX & XXXXX

By:_______________________________
Xxxxxx X. Xxxx

TAC:flm
35939 v4/SD

Document Metadata

Table of Contents

1 EXHIBIT 10.11 AURORA BIOSCIENCES CORPORATION PREFERRED STOCK PURCHASE AGREEMENT MARCH 8, 1996 2

Document Metadata