EXHIBIT 4.2 FIFTH AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

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                                                                     EXHIBIT 4.2

                           FIFTH AMENDED AND RESTATED

                            INVESTOR RIGHTS AGREEMENT

      FIFTH AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT (this "Agreement")
made as of September 21, 2005 (the "Effective Date") by and among (i) PTC
Therapeutics, Inc., a Delaware corporation (the "Company"), (ii) the persons
identified on the signature page of this Agreement as Founders (the "Founders"),
(iii) those Holders of shares of Series A Stock and Series B Stock (each as
defined below) of the Company listed on Exhibit A attached hereto (the "Series A
and Series B Investors"), (iv) those Holders of shares of Series C Stock (as
defined below) of the Company listed on Exhibit B attached hereto (the "Series C
Purchasers"), (v) the Holders of shares of Series D Stock (as defined below) of
the Company listed on Exhibit C attached hereto (the "Series D Purchasers"),
(vi) those Holders of Series E Stock (as defined below) of the Company listed on
Exhibit D attached hereto (the "Series E Purchasers"), (vii) the purchasers of
Series E-2 Stock (as defined below) of the Company listed on Exhibit E attached
hereto (the "Series E-2 Purchasers") and (viii) the holders of warrants to
purchase Preferred Stock and/or Common Stock of the Company listed on Exhibit F
attached hereto (the "Warrant Purchasers"). The Series A and Series B Investors,
the Series C Purchasers, the Series D Purchasers, the Series E Purchasers and
the Series E-2 Purchasers may be referred to herein individually as an
"Investor" and collectively as the "Investors." The Founders and the Investors
may be referred to herein individually as a "Stockholder" and collectively as
the "Stockholders."

      WHEREAS, the Company proposes to issue and sell up to an aggregate of
4,132,232 shares of Series E-2 Convertible Preferred Stock, par value $.001 per
share (the "Series E-2 Stock"), to the Series E-2 Purchasers pursuant to that
certain Subscription Agreement dated as of the date hereof among the Company and
the Series E-2 Purchasers (the "Subscription Agreement");

      WHEREAS, in connection with their respective purchases of shares of the
Series C Stock, the Series D Stock, the Series E Stock and the Series E-2 Stock,
the Series C Purchasers, the Series D Purchasers, the Series E Purchasers and
the Series E-2 Purchasers have requested that the Company extend to them
registration rights and certain other rights and covenants as set forth herein,
and the Series C Purchasers, the Series D Purchasers, the Series E Purchasers
and the Series E-2 Purchasers have requested that the Founders enter into
certain restrictions on the transfer of Common Stock (as hereinafter defined)
owned or controlled by such Founders;

      WHEREAS, in connection with their purchase of certain warrants, the
Warrant Purchasers have requested that the Company extend to them registration
rights as set forth herein;

      WHEREAS, the Board of Directors of the Company has determined that it is
in the best interests of the Company that the Company enter into this Agreement;
and

      WHEREAS, the Company and the holders of two-thirds of the outstanding
shares of the Company's Series A Convertible Preferred Stock, par value $.001
per share (the

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"Series A Stock"), the Company's Series B Convertible Preferred Stock, par value
$.001 per share (the "Series B Stock"), the Company's Series C Convertible
Preferred Stock, par value $.001 per share (the "Series C Stock"), the holders
of the Company's Series D Convertible Preferred Stock, par value $.001 per share
(the "Series D Stock") and the Company's Series E Convertible Preferred Stock,
par value $.001 per share (the "Series E Stock") (the Series A Stock, the Series
B Stock, the Series C Stock, the Series D Stock, the Series E Stock and the
Series E-2 Stock, collectively being referred to herein as the "Preferred
Stock") have consented to the terms of this Agreement and the amendment and
restatement of that certain Fourth Amended and Restated Investor Rights
Agreement, dated as of December 17, 2003, among the Company and the Investors
named therein (the "Fourth Amended Rights Agreement"), which amended and
restated that certain Third Amended and Restated Investor Rights Agreement,
dated as of August 17, 2001, among the Company and the Investors named therein
(the "Third Amended Rights Agreement"), which amended and restated that certain
Second Amended and Restated Investor Rights Agreement dated as of May 26, 2000
among the Company and the Investors named therein (the "Second Amended Rights
Agreement") which amended and restated that certain Amended and Restated
Investor Rights Agreement dated as of February 9, 2000 among the Company and the
Investors named therein (the "Amended Rights Agreement"), which amended and
restated that certain Investor Rights Agreement dated as of August 19, 1998
among the Company and the Series A and Series B Investors named therein (the
"Original Rights Agreement"), as set forth herein and have evidenced such
consent by executing and delivering either (i) an omnibus signature page in the
form attached hereto as Exhibit H-1 or (ii) a written consent of stockholders in
the form attached hereto as Exhibit H-2 to this Agreement.

      NOW, THEREFORE, in consideration of the covenants and agreements set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby mutually acknowledged, the parties hereto amend
and restate in its entirety the Third Amended Rights Agreement and covenant and
agree as follows:

1.     GENERAL PROVISIONS

1.1. SHARES SUBJECT TO THIS AGREEMENT. The Stockholders expressly agree that the
terms and restrictions of this Agreement shall apply to all shares of capital
stock which any of them now owns or hereafter acquires by any means, including
without limitation by purchase, assignment or operation of law, or as a result
of any stock dividend, stock split, reorganization, reclassification, whether
voluntary or involuntary, or other similar transaction, and to any shares of
capital stock of any successor in interest of the Company, whether by sale,
merger, consolidation or other similar transaction, or by purchase, assignment
or operation of law (the "Shares").

1.2. NO PARTNERSHIP RELATIONSHIP. Notwithstanding, but not in limitation of, any
other provision of this Agreement, the parties understand and agree that the
creation, management and operation of the Company shall not create or imply a
general partnership between or among the Stockholders and shall not make any
Stockholder the agent or partner of any other Stockholder for any purpose.

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

      "Additional Closing Date" shall have the meaning assigned to such term in
the Subscription Agreement.

      "Affiliate" has the meaning ascribed to that term in Rule 12b-2 under the
Exchange Act, or any successor rule.

      "Commission" shall mean the Securities and Exchange Commission and any
successor agency of the Federal government administering the Securities Act and
the Exchange Act.

      "Common Stock" shall mean (i) the common stock, $.001 par value per share,
of the Company, (ii) any other capital stock of the Company, however designated,
authorized on or after the date hereof, which shall neither be limited to a
fixed sum or percentage of par value in respect of the rights of the holders
thereof to participate in dividends nor entitled to a preference in the
distribution of assets upon the voluntary or involuntary liquidation,
dissolution or winding up of the Company; and (iii) any other securities into
which or for which any of the securities described in (i) or (ii) may be
converted or exchanged pursuant to a plan of recapitalization, reorganization,
merger, consolidation, sale of assets or other similar transaction.

      "Company Stock Option Plan" shall mean the Company's 1998 Employee,
Director and Consultant Stock Option Plan (as amended from time-to-time); or
such other arrangements, contracts, or plans as are recommended by management
and approved by the Board of Directors or compensation committee established by
the Board of Directors.

      "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and any similar or successor Federal statute, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect from time to time.

      "Holder" shall mean the Investors and Warrant Purchasers holding
Registrable Securities or securities convertible into Registrable Securities and
any person holding such securities to whom the rights under this Agreement have
been transferred in accordance with Section 4.12 hereof.

      "Initial Closing Date" shall have the meaning assigned to such term in the
Subscription Agreement.

      "Initial Public Offering" shall mean either (i) the first underwritten
public offering of Common Stock of the Company, offered on a firm commitment
basis pursuant to a registration statement filed with the Commission under the
Securities Act on Form S-1 or its then equivalent with net proceeds to the
Company of not less than $50,000,000 and a per share price of not less than an
amount equal to two times the Adjusted Series E-2 Price (subject to equitable
adjustment in the event of any stock dividend, stock split, combination,
reorganization, recapitalization or similar event involving a change in the
Common Stock) or (ii) any other public offering upon the written election of the

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Company and Holders of at least sixty-six and two-thirds percent (66 2/3 %) of
the outstanding shares of Preferred Stock, on an as-converted basis.

      "Person" means an individual, corporation, company, partnership, joint
venture, trust or unincorporated organization, or a government or any agency or
political subdivision thereof.

      The terms "register", "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement, or, as the context may require, under the Exchange Act
or applicable state securities laws.

      "Registrable Securities" shall mean any (i) shares of Common Stock issued
or issuable pursuant to the conversion of the Preferred Stock; (ii) shares of
Common Stock issued or issuable pursuant to the exercise of the Warrants (and
the conversion of any Preferred Stock issued or issuable pursuant thereto)
pursuant to the terms set forth therein and (iii) shares of Common Stock issued
or issuable pursuant to the conversion of the Preferred Stock, the exercise of
the Warrants or the exercise or conversion of any warrant, right or other
security issued in exchange for or in replacement of the Preferred Stock or
issued with respect to the Preferred Stock or issued upon any stock split, stock
dividend or other distribution, recapitalization, reorganization, merger,
consolidation, sale of assets or similar event. As to any particular Registrable
Securities, once issued, such securities shall cease to be Registrable
Securities when (a) a registration statement with respect to the sale of such
securities shall have become effective under the Securities Act and such
securities shall have been disposed of in accordance with such registration
statement, (b) they shall have been sold as permitted by Rule 144 (or any
successor provision) under the Securities Act and the purchaser thereof does not
receive "restricted securities" as defined in Rule 144, (c) they shall have been
otherwise transferred, new certificates for them not bearing a legend
restricting further transfer shall have been delivered by the Company and
subsequent public distribution of them shall not, in the opinion of counsel for
the holders, require registration of them under the Securities Act or (d) they
shall have ceased to be outstanding.

      "Registration Expenses" shall mean the expenses so described in Section
4.7.

      "Securities Act" shall mean the Securities Act of 1933, as amended, and
any similar or successor Federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.

      "Selling Expenses" shall mean the expenses so described in Section 4.7.

      "Subsidiary" or "Subsidiaries" shall mean any corporation, partnership,
trust or other entity of which the Company and/or any of its other Subsidiaries
directly or indirectly owns at the time a majority of the outstanding shares of
any class of equity security of such corporation, partnership, trust or other
entity.

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      "Warrants" shall mean those certain warrants to purchase capital stock
issued by the Company to the Warrant Purchasers listed on Exhibit E attached
hereto.

2.     PERCENTAGE MAINTENANCE RIGHTS

2.1. NOTICE OF NEW ISSUANCE. Except with respect to "Exempt Issuances" as
defined in Section 2.3, in the event that the Company issues any (i) shares of
Common Stock, (ii) warrants, options or other rights to purchase Common Stock
(collectively, "Rights"), or (iii) any debentures or other securities
convertible into or exchangeable for shares of Common Stock (collectively,
"Convertible Securities"), the Company will deliver to those Investors then
holding more than half of one percent (0.5%) of the shares of the Preferred
Stock (each a "Qualified Stockholder") a notice (the "Offer Notice") upon the
completion of such issuance (the "New Issuance"), stating the price and other
terms and conditions thereof.

2.2. RIGHT TO PURCHASE SHARES, RIGHTS OR CONVERTIBLE SECURITIES. In the event of
a New Issuance (other than an Exempt Issuance), any Qualified Stockholder shall
have the right to purchase such number of shares of Common Stock, Rights or
Convertible Securities at the price and on the terms upon which the New Issuance
was made, such price to be paid in full in cash or by check at the time of
issuance of such securities to such Qualified Stockholders so that, after giving
effect to the issuance to the Qualified Stockholders and the conversion,
exercise and exchange into or for (whether directly or indirectly) shares of
Common Stock of all such Rights and Convertible Securities, each Qualified
Stockholder who exercises such right will continue to maintain its same
proportionate ownership of Common Stock as of the date immediately preceding the
New Issuance, treating each Qualified Stockholder, for the purpose of such
computation, as the Holder of the number of shares of Common Stock which would
be issuable to it upon conversion, exercise and exchange of all Rights and
Convertible Securities held by it on the date immediately preceding the New
Issuance and assuming the like conversion, exercise and exchange of all such
securities held by other persons. The rights set forth in this Article 2 shall
be exercised by the Qualified Stockholders, if at all, by written notice to the
Company delivered not later than thirty (30) days after the receipt by the
Investors of the Offer Notice in accordance with the terms and conditions stated
therein, and such right shall expire with respect to a Qualified Stockholder at
the end of the thirtieth day after the day of the receipt by such Qualified
Stockholders of the Offer Notice. The Company shall, promptly following the
expiration of such thirty (30) day period, notify all Qualified Stockholders who
have exercised their purchase rights under this Section 2.2 of the aggregate
number of shares of Common Stock, Rights and Convertible Securities to be issued
pursuant to this Section 2.2, and afford each Qualified Stockholder the
opportunity to adjust the number of such securities it purchases under this
Section 2.2 in order to conform its proportionate ownership after the New
Issuance and the exercise of rights under this Section 2.2 to its proportionate
ownership as of the date immediately preceding the New Issuance.

2.3. EXEMPT ISSUANCES. The issuances referred to in Section 2.1 which will not
give the Investors the rights described in Section 2.2 (the "Exempt Issuances")
are issuances in which shares of Common Stock or Rights or Convertible
Securities of the Company are

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issued or deemed issued (i) as a dividend or distribution payable pro rata to
all holders of Common Stock or other securities of the Company; (ii) up to
2,326,008 shares of Common Stock (subject to equitable adjustment in the event
of any stock dividend, stock split, combination, reorganization,
recapitalization or similar event involving a change in the Common Stock),
including Options therefor, pursuant to the Corporation's 1998 Employee Director
and Consultant Stock Option Plan (as amended from time-to-time); and shares of
Common Stock or Options therefor in excess of such 2,326,008 shares that are
issued pursuant to the Corporation's 1998 Employee, Director and Consultant
Stock Option Plan (as amended from time-to-time), or such other arrangements,
contracts, or plans that are recommended by management and approved by the Board
of Directors or compensation committee established by the Board of Directors,
upon written consent of the holders of a majority of the Preferred Stock; (iii)
upon conversion or exercise of any Rights (including shares issued in connection
with any subsequent conversion of the shares issued upon the exercise of such
Rights) or Convertible Securities outstanding on the date hereof; (iv) as up to
4,132,232 shares of Series E-2 Stock in connection with the Subscription
Agreement (including shares issued in connection with any subsequent conversion
of such Series E-2 Stock); (vi) as up to that number of shares equal to 1% of
the aggregate number of shares (subject to equitable adjustment in the event of
any stock dividend, stock split, combination, reorganization, recapitalization
or similar event involving a change in the Common Stock) of outstanding Common
Stock on an as-converted, fully-diluted basis (after giving effect to the
issuance of the Series E-2 Stock pursuant to the Subscription Agreement)
measured as of the date of the latest issuance of Series E-2 Stock issued after
the date hereof, in each case, in accordance with the terms of the Subscription
Agreement, to institutional lenders in connection with the establishment or
maintenance by the Company of credit facilities, including equipment lease
facilities, approved in each case by a majority of the Board of Directors of the
Company; (vii) pursuant to a registered public offering, the closing of which is
on or after the date hereof; (viii) as up to that number of shares equal to 1%
of the aggregate number of shares (subject to equitable adjustment in the event
of any stock dividend, stock split, combination, reorganization,
recapitalization or similar event involving a change in the Common Stock) of
outstanding Common Stock on an as-converted, fully-diluted basis (after giving
effect to the issuance of the Series E-2 Stock pursuant to the Subscription
Agreement) measured as of the date of the latest issuance of Series E-2 Stock
issued after the date hereof, in each case, in accordance with the terms of the
Subscription Agreement in connection with the sale of Common Stock or
Convertible Securities of the Company to any licensor of technology or patent
rights to the Company or to any collaborative partner or licensee with respect
to the development or commercialization of products; or (ix) as up to that
number of shares equal to 4% of the aggregate number of shares (subject to
equitable adjustment in the event of any stock dividend, stock split,
combination, reorganization, recapitalization or similar event involving a
change in the Common Stock) of outstanding Common Stock on an as-converted,
fully-diluted basis (after giving effect to the issuance of the Series E-2 Stock
pursuant to the Subscription Agreement) measured as of the date of the latest
issuance of Series E-2 Stock issued after the date hereof, in each case, in
accordance with the terms of the Subscription Agreement in connection with the
acquisition by the Company of another business entity by merger,

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purchase of all or substantially all of its assets or acquisition of all or
substantially all of the equity interest of such business entity.

3.     RESTRICTIONS ON TRANSFER

3.1. NON-COMPLYING TRANSFERS PROHIBITED. No Founder may sell, assign, transfer,
exchange, gift, devise, pledge, hypothecate, encumber or otherwise alienate or
dispose of any Shares owned by such Founder, or any right or interest therein,
whether voluntarily or involuntarily, by operation of law or otherwise, except
in accordance with this Agreement. Notwithstanding the foregoing, a Founder may
transfer any or all of his Shares (i) to his spouse or children or to a trust
established for the benefit of his spouse, children or himself, or (ii) under
his will (each such transferee, a "Permitted Transferee"); provided that such
Shares shall remain subject to this Agreement and such permitted transferee
shall, as a condition to such transfer, deliver to the Company a written
instrument confirming that such transferee shall be bound by all of the terms
and conditions of this Agreement. The restrictions on the transfer of shares by
the Founders are in addition to, and not in lieu of, any restrictions on such
Shares contained in each of the Stock Restriction Agreements between the
Founders and the Company dated August 19, 1998.

3.2.   RIGHTS OF FIRST REFUSAL ON VOLUNTARY TRANSFERS.

      3.2.1. RIGHT OF FIRST REFUSAL OF THE COMPANY. Except in cases explicitly
      permitted by Section 3.1, any Founder who intends to sell, assign,
      transfer or otherwise voluntarily alienate or dispose of any Shares (the
      "Selling Stockholder") shall, prior to any such transfer, give written
      notice (the "Selling Stockholder's Notice") of such intention to the
      Company and to each Qualified Stockholder. The Selling Stockholder's
      Notice shall include the name of the proposed transferee, the proposed
      purchase price per Share, the terms of payment of such purchase price and
      all other matters relating to such sale and shall be accompanied by a copy
      of a binding written agreement of the proposed transferee to purchase such
      Shares from the Selling Stockholder. The Selling Stockholder's Notice
      shall constitute a binding offer by the Selling Stockholder to sell to the
      Company all or any part of such number of Shares (the "Offered Shares")
      then owned by the Selling Stockholder as are proposed to be sold in the
      Selling Stockholder's Notice at the monetary price per Share designated in
      the Selling Stockholder's Notice, payable as provided in Section 3.2.3
      hereof. Not later than thirty (30) days after receipt of the Selling
      Stockholder's Notice, the Company shall deliver written notice (the
      "Company Notice") to the Selling Stockholder stating whether the Company
      has accepted the offer stated in the Selling Stockholder's Notice (in
       whole or in part). The closing of any purchase of the Offered Shares by
      the Company shall take place on the later of (i) fifteen (15) days after
      the end of the thirty (30) day period set forth above and (ii) the date on
      which the Buying Stockholders (as hereinafter defined in Section 3.2.2)
      consummate any purchase of Offered Shares pursuant to Section 3.2.2 below.

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      3.2.2. RIGHT OF FIRST REFUSAL OF THE STOCKHOLDERS. If the Company does not
      accept the offer to purchase all of the Offered Shares within the thirty
      (30) day period provided in Section 3.2.1, no later than the end of such
      thirty (30) day period the Company shall give notice (the "Second Company
       Notice") of that fact to each Qualified Stockholder, and each Qualified
      Stockholder shall have the right to purchase all or any part of its
      Proportionate Percentage (as defined below) of the Offered Shares not
      purchased by the Company (the "Remaining Shares"), at the monetary price
      per Share designated in the Selling Stockholder's Notice, payable as
      provided in Section 3.2.3. Not later than fifteen (15) days after delivery
      of the Second Company Notice, each Qualified Stockholder shall deliver to
      the Company, the other Qualified Stockholders and the Selling Stockholder
      a written notice stating whether such Qualified Stockholder has accepted
      the offer stated in the Selling Stockholder's Notice with respect to its
      Proportionate Percentage of the Remaining Shares. Promptly following the
      expiration of such fifteen (15) day period, the Company shall notify each
      Qualified Stockholder that has exercised its rights under this Section
      3.2.2 (each a "Buying Stockholder") of the number of Remaining Shares (if
      any) that other Qualified Stockholders have not elected to purchase. If
      one or more of the Qualified Stockholders elects not to purchase all of
      the Remaining Shares which it is entitled to purchase pursuant to this
      Section 3.2.2, the Buying Stockholders, by written notice to the Company
      and the Selling Stockholder within five (5) days after the delivery of the
      Company's notice pursuant to the proceeding sentence, may elect to
      purchase all or a part of such unpurchased Remaining Shares without the
      consent of any non-purchasing Qualified Stockholders, pro rata between or
      among them or in such other manner as they may agree. The closing of any
      purchase of the Remaining Shares by the Buying Stockholders shall take
      place no later than fifteen (15) days after the end of the fifteen (15)
      day period set forth above. As used in this Section 3.2.2, "Proportionate
      Percentage" shall mean with respect to each Qualified Stockholder a
      fraction, the numerator of which is the number of Shares owned by such
      Qualified Stockholder (calculated on a fully diluted basis), and the
      denominator of which is the total number of Shares owned by all the
      Qualified Stockholders (calculated on a fully-diluted basis).

      3.2.3. CLOSING. The place for the closing of any purchase and sale
      described in Section 3.2.1 or Section 3.2.2 shall be the principal office
      of the Company or at such other place as the parties shall agree. At the
      closing, the Selling Stockholder shall accept payment on the terms offered
      by the proposed transferee named in the Selling Stockholder's Notice,
      provided, however, that the Company and the Buying Stockholders shall not
      be required to meet any non-monetary terms of the proposed transfer,
      including, without limitation, delivery of other securities in exchange
      for the Shares proposed to be sold. At the closing, the Selling
      Stockholder shall deliver to the Company or the Buying Stockholders, as
      the case may be, in exchange for Shares purchased and sold at the closing,
      certificates for the number of Shares stated in the Selling Stockholder's
      Notice, accompanied by duly executed instruments of transfer.

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      3.2.4. TRANSFERS TO THIRD PARTIES. If the Company and the Buying
      Stockholders in aggregate fail to accept the offer stated in the Selling
      Stockholder's Notice with respect to all of the Offered Shares, they shall
      not have the right to purchase any Offered Shares, and the Selling
      Stockholder shall, subject to Section 3.3 herein, be free to sell all, but
      not less than all, of the Offered Shares to the designated transferee at a
      price and on terms no less favorable to the Selling Stockholder than
      described in the Selling Stockholder's Notice, provided, however, that
      such sale is consummated within ninety (90) days after the giving of the
      Selling Stockholder's Notice pursuant to Section 3.2.1. As a condition
      precedent to the effectiveness of a transfer pursuant to this Section
      3.2.4, the proposed transferee(s) shall agree in writing prior to such
      transfer to become a party to this Agreement and shall thereafter be
      permitted to transfer Shares only in accordance with this Agreement.

3.3.   PARTICIPATION IN SALES.

      3.3.1. TAKE-ALONG RIGHT. In the event that a Founder (the "Offeree")
      receives a bona fide offer from a third party or parties other than the
      Company or any other Stockholder (the "Third Party Buyer") to purchase any
      of the Shares owned by the Offeree (the "Take-Along Shares"), for a
      specified price payable in cash or otherwise and on specified terms and
      conditions (the "Offer"), and the Offeree proposes to sell or otherwise
      transfer the Take-Along Shares to the Third Party Buyer pursuant to the
      Offer, each Qualified Stockholder shall have the right to sell to the
      Third Party Buyer, at the same price per Share and on the same terms and
      conditions as stated in the Offer, up to the number of Shares equal to the
      Take-Along Shares multiplied by a fraction, the numerator of which is the
      aggregate number of Shares owned by such Qualified Stockholder (calculated
      on a fully diluted, as converted to Common Stock basis) and the
      denominator shall be the aggregate number of Shares held by all
      stockholders (calculated on a fully-diluted, as converted to Common Stock
      basis), provided, however, that if the prospective third-party purchaser
      objects to the delivery of any series of Preferred Stock in lieu of Common
      Stock, such selling Qualified Stockholder shall convert such Preferred
      Stock into Common Stock and deliver Common Stock as provided in this
      Section 3.3.1. The Company agrees to make any such conversion concurrent
      with the actual transfer of such shares to the purchaser and contingent on
      such transfer; and provided further, that such rights of the Qualified
      Stockholders granted pursuant to this 3.3.1 shall not apply to the
      transfer or transfers by a Founder of up to 100,000 Shares in the
      aggregate (subject to appropriate adjustment for stock splits, stock
      dividends, combinations and similar recapitalization events) (a "Permitted
      Transfer"), provided that, such Shares transferred pursuant to a Permitted
      Transfer shall remain subject to this Agreement and such permitted
      transferee shall, as a condition to such transfer, deliver to the Company
      a written instrument confirming that such transferee shall be bound by all
      of the terms and conditions of this Agreement.

      3.3.2. NOTICES OF OFFER AND INTENT TO PARTICIPATE. If a Qualified
      Stockholder wishes to participate in any sale pursuant to Section 3.3.1 it
      shall notify the

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      Offeree in writing of such intention and the number of Shares it wishes to
      sell pursuant to this Section 3.3 not later than fifteen (15) days after
      delivery of the Second Company Notice (as described in Section 3.2.2
      above). If the Offeree does not receive such notice from a Qualified
      Stockholder within such fifteen (15) day period, the Offeree shall be free
      to consummate the proposed transaction without any obligation to include
      such Qualified Stockholder's Shares in such transaction. The non-exercise
      or partial exercise of the rights of any Qualified Stockholder hereunder
      to participate in one or more sales of Shares made by a Founder shall not
      adversely affect such Qualified Stockholder's right to participate in
      subsequent sales of Shares by a Founder.

      3.3.3. SALE OF TAKE-ALONG SHARES. The Offeree and each Qualified
      Stockholder who has provided timely notice in accordance with Section
      3.3.2 above shall sell to the Third Party Buyer all, or at the option of
      the Third Party Buyer, any part of the Shares proposed to be sold by them
      at not less than the price and upon other terms and conditions, if any,
      not more favorable to the Third Party Buyer than those stated in the
      Offer, provided, however, that any purchase of less than all of such
      Shares by the Third Party Buyer shall be made from the Offeree and each
      Qualified Stockholder pro rata based upon the relative amount of the
      Shares that the Offeree and such Qualified Stockholder is entitled to sell
      pursuant to Section 3.3.1. The stock certificate or certificates that the
      selling Qualified Stockholder delivers to the Offeree pursuant to this
      Section 3.3 shall be transferred to the prospective purchaser in
      consummation of the sale of the Shares pursuant to the terms and
      conditions specified in the transfer notice, and the Offeree shall
      concurrently therewith remit to such selling Qualified Purchaser that
       portion of the sale proceeds to which such selling Qualified Purchaser is
      entitled by reason of its participation in such sale. To the extent that
      any prospective purchaser or purchasers prohibits such assignment or
      otherwise refuses to purchase shares or other securities from a selling
      Qualified Stockholder exercising its take along rights hereunder, the
      Offeree shall not sell to such prospective purchaser or purchasers any
      Shares unless and until, simultaneously with such sale, the Offeree shall
      purchase such shares or other securities from such selling Qualified
      Stockholder for the same consideration and on the same terms and
      conditions as the proposed transfer described in the transfer notice.

       3.3.4. PROHIBITED TRANSFERS.

            (a) In the event any Founder should sell any Shares in contravention
      of the take-along rights of the Qualified Stockholders under Section 3 (a
      "Prohibited Transfer"), the Qualified Stockholders, in addition to such
      other remedies as may be available at law, in equity or hereunder, shall
      have the put option provided below, and such Founder
      shall be bound by the applicable provisions of such option.

            (b) In the event of a Prohibited Transfer, each Qualified
      Stockholder shall have the right to sell to such Founder the type and
      number of the Shares equal to the number of shares each Qualified
      Stockholder would have been

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      entitled to transfer to the third-party transferee(s) under Section 3.3
      hereof had the Prohibited Transfer been effected pursuant to and in
      compliance with the terms hereof. Such sale shall be made on the following
      terms and conditions:

                  (i) The price per share at which the shares are to be sold to
            such Founder shall be equal to the price per share paid by the
            third-party transferee(s) to such Founder in the Prohibited
            Transfer. Such Founder shall also reimburse each Qualified
            Stockholder for any and all fees and expense, including legal fees
            and expenses, incurred pursuant to the exercise or the attempted
            exercise of the Qualified Stockholder's rights under Section 3.3.4.

                  (ii) Within 45 days after the later of the dates on which the
            Qualified Stockholder (A) received notice of the Prohibited Transfer
            or (B) otherwise became aware of the Prohibited Transfer, each
            Qualified Stockholder shall, if exercising the option created
            hereby, deliver to such Founder the certificate or certificates
            representing shares to be sold, each certificate to be properly
             endorsed for transfer.

                  (iii) Such Founder shall, upon receipt of the certificate or
            certificates for the shares to be sold by a Qualified Stockholder,
            pursuant to this Section 3.3.4, pay the purchase price therefor and
            the amount of reimbursable fees and expenses, as specified in
            Section 3.3.4(b)(i), in cash or by other means acceptable to such
            Qualified Stockholder.

                  (iv) Notwithstanding the foregoing, any attempt by a Founder
            to transfer the Shares in violation of this Agreement shall be null
            and void ab initio and the Company agrees it will not effect such a
            transfer nor will it treat any alleged transferee(s) as the owner of
            such shares without the written consent of a majority in interest of
            the Qualified Stockholders.

            (c) The Qualified Stockholders, severally but not jointly, will
      indemnify the Company against all liabilities incurred by the Company
      relating to tax obligations owed by the Company pursuant to the exercise
      by such Qualified Stockholders of the option set forth in this Section
      3.3.4.

3.4. COMPANY RECORDS. The Company shall not transfer on its books any of the
shares of Common Stock held by any Stockholder or Permitted Transferee without
first ascertaining compliance with all of the applicable provisions of this
Agreement with respect to such transfer. Each Founder agrees that, in order to
ensure compliance with the restrictions referred to herein, the Company may
issue appropriate "stop-transfer" instructions to its transfer agent, if any,
and that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records. The Company shall not be
required (i) to transfer on its books any Shares that have been sold or
otherwise transferred in violation of any of the provisions of this Section 3.3,
or (ii) to treat as owner of such Shares or to accord the right to vote or pay
dividends to any purchaser or other transferee to whom such Shares shall have
been transferred.

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<PAGE>

3.5. LEGEND-REQUIREMENT. All certificates evidencing Shares subject to Section
3.3 herein shall, during the term of this Agreement, bear such restrictive
legends as the Company and the Company's counsel deem necessary or advisable
under applicable law or pursuant to this Agreement, including without limitation
the following (or a substantially similar legend):

            "THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO A RIGHT OF CO-SALE
      BY CERTAIN SHAREHOLDERS OF THE COMPANY, PURSUANT TO AN AGREEMENT RELATING
      TO SUCH SECURITIES, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT IN
      COMPLIANCE WITH THE TERMS OF SUCH AGREEMENT."

4.     TRANSFER OF REGISTRABLE SECURITIES; REGISTRATION

4.1. RESTRICTIVE LEGEND. Each certificate representing shares of Preferred Stock
or Registrable Securities shall, except as otherwise provided in this Section
4.1 or in Section 4.2, be stamped or otherwise imprinted with a legend
substantially in the following form (in addition to any legend required under
applicable state securities laws):

            "The securities represented by this certificate have not been
            registered under the Securities Act of 1933, as amended, or any
            other securities laws. These securities have been acquired for
            investment and not with a view to distribution or resale. Such
            securities may not be offered for sale, sold, delivered after sale,
            transferred, pledged or hypothecated in the absence of an effective
            registration statement covering such securities under the Securities
            Act of 1933 and any other applicable securities laws, unless the
            holder shall have obtained an opinion of counsel reasonably
            satisfactory to the corporation that such registration is not
            required."

      Upon request of a Holder of such a certificate, the Company shall remove
the foregoing legend (as well as the legend set forth in Section 4.2 of the
Subscription Agreement) from the certificate or issue to such Holder a new
certificate therefor free of any transfer legend, if there is an effective
registration statement covering the securities represented by such certificate
or, with such request, the Company shall have received either the opinion
referred to in Section 4.2(i) or the "no-action" letter referred to in Section
4.2(ii).

4.2. NOTICE OF PROPOSED TRANSFER. Prior to any proposed sale, pledge,
hypothecation or other transfer of any shares of Preferred Stock or Registrable
Securities (other than under the circumstances described in Section 4.3, 4.4 or
4.5), the Holder thereof shall give written notice to the Company of its
intention to effect such sale, pledge, hypothecation or other transfer. Each
such notice shall describe the manner of the proposed sale, pledge,
hypothecation or other transfer and, if requested by the Company

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<PAGE>

shall be accompanied by either (i) an opinion of counsel reasonably satisfactory
to the Company stating that that the proposed sale, pledge, hypothecation or
other transfer may be effected without registration under the Securities Act or
(ii) a "no action" letter from the Commission to the effect that the
distribution of such securities without registration will not result in a
recommendation by the staff of the Commission that action be taken with respect
thereto, whereupon the Holder of such stock shall be entitled to transfer such
stock in accordance with the terms of its notice; provided, however, that no
such opinion of counsel shall be required for (x) a distribution to one or more
partners of the transferor (in the case of a transferor that is a partnership),
stockholders (in the case of a transferor that is a corporation) or members (in
the case of a transferor that is a limited liability company) in each case in
respect of the beneficial interest of such partner, stockholder or member or (y)
Affiliates, except in the case of clause (y), as the Company shall otherwise
reasonably request. Each certificate for Preferred Stock or Registrable
Securities transferred as above provided shall bear the appropriate restrictive
legend set forth in Section 4.1, except that such certificate shall not bear
such legend if (i) such transfer is in accordance with the provisions of Rule
144 (or any other rule permitting public sale without registration under the
Securities Act) or (ii) the opinion of counsel or "no-action" letter referred to
above is to the further effect that the transferee and any subsequent transferee
(other than an affiliate of the Company) would be entitled to transfer such
securities in a public sale without registration under the Securities Act or
that such legend is not required to establish compliance with any provisions of
the Securities Act. Notwithstanding any other provision hereof, the restrictions
provided for in this Section 4.2 shall not apply to securities which are not
required to bear the legend prescribed by Section 4.1 in accordance with the
provisions of that Section. If the Company does not accept an opinion of counsel
required hereby signed by the original Holder's counsel, the Company will pay
the reasonable fees and disbursements of other counsel in connection with all
opinions rendered by them pursuant to this Section 4.2.

4.3.   REGISTRATION ON FORM S-1.

            (a) If at any time, Holders of more than 20% of the outstanding
      shares of Registrable Securities request that the Company file a
      registration statement for at least 20% of the shares of the outstanding
      Registrable Securities, (such Holders, the "Initiating Holders")
      anticipated aggregate proceeds of which, net of underwriting discounts and
      commissions, would exceed $10,000,000, the Company shall:

                  (i) within ten days of the receipt by the Company of such
            notice, give written notice of the proposed registration,
            qualification or compliance to all other Holders; and

                  (ii)