INVESTOR RIGHTS AGREEMENT

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EXHIBIT 10.9

NxSTAGE MEDICAL, INC.

INVESTOR RIGHTS AGREEMENT

THIS INVESTOR RIGHTS AGREEMENT (this "Agreement") is entered into as of

the 30th day of June, 1999, by and among NxSTAGE MEDICAL, INC. (formerly known

as Qb Medical, Inc.), a Delaware corporation (the "Company"), and the purchasers

of the Company's Series B Preferred Stock par value $0.001 per share (the

"Series B Preferred Stock") set forth on the List of Investors attached hereto

as Exhibit A (hereinafter, the "Investors" and each individually an "Investor").

RECITALS

WHEREAS, the Company and the Investors have entered into a Series B

Preferred Stock Purchase Agreement of even date herewith (the "Purchase

Agreement"), pursuant to which the Investors will purchase that number of shares

of Series B Preferred Stock set forth opposite its name on Exhibit A;

WHEREAS, the Company proposes to issue and sell an aggregate of One

Million Eight Hundred Seventy-Five Thousand (1,875,000) shares of its Series B

Preferred Stock pursuant to the Purchase Agreement;

WHEREAS, as a condition of entering into the Purchase Agreement, the

Investors have requested that the Company extend to them registration rights,

information rights and other rights as set forth below.

NOW THEREFORE, in consideration of the mutual promises, representations,

warranties, covenants and conditions set forth in this Agreement and in the

Purchase Agreement, the parties mutually agree as follows:

1. GENERAL

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

the following respective meanings:

"CONVERSION SHARES" means the shares of the Company's common stock, par

value $0.001 per share ("Common Stock") issued upon conversion of the Shares.

"EQUITY SECURITIES" means (i) any common stock, preferred stock or other

security of the Company, (ii) any security convertible, with or without

consideration, into any common stock, preferred stock or other security

(including any option to purchase such a convertible security), (iii) any

security carrying any warrant or right to subscribe to or purchase any common

stock, preferred stock or other security or (iv) any such warrant or right.

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

"FORM S-3" means such form under the Securities Act as in effect on the

date hereof or any successor registration form under the Securities Act

subsequently adopted by the SEC which

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permits inclusion or incorporation of substantial information by reference to

other documents filed by the Company with the SEC.

"HOLDER" means any person owning of record Registrable Securities that

have not been sold to the public or any assignee of record of such Registrable

Securities in accordance with Section 2.10 hereof.

"INITIAL OFFERING" means the Company's first firmly underwritten public

offering of its Common Stock registered under the Securities Act.

"REGISTER," "REGISTERED," AND "REGISTRATION" refer to a registration

effected by preparing and filing a registration statement in compliance with the

Securities Act, and the declaration or ordering of effectiveness of such

registration statement or document.

"REGISTRABLE SECURITIES" means (i) Common Stock of the Company issued or

issuable upon conversion of the Shares or upon conversion pursuant to the

Purchase Agreement of shares of the Company's Series A Preferred Stock held by

any of the Investors; and (ii) any Common Stock of the Company issued as (or

issuable upon the conversion or exercise of any warrant, right or other security

which is issued as) a dividend or other distribution with respect to, or in

exchange for or in replacement of, such above-described securities.

Notwithstanding the foregoing, Registrable Securities shall not include any

securities sold by a person to the public either pursuant to a registration

statement or Rule 144 or sold in a private transaction in which the transferor's

rights under Section 2 of this Agreement are not assigned.

"REGISTRABLE SECURITIES THEN OUTSTANDING" shall mean the total number of

shares of the Company's Common Stock that are Registrable Securities and either

(1) are then issued and outstanding, or (2) are issuable pursuant to then

exercisable or convertible securities.

"REGISTRATION EXPENSES" shall mean all expenses incurred by the Company in

complying with Sections 2.2, 2.3 and 2.4 hereof, including, without limitation,

all registration and filing fees, printing expenses, fees and disbursements of

counsel for the Company, reasonable fees and disbursements not to exceed Fifteen

Thousand Dollars ($15,000) of a single special counsel for the Holders, blue sky

fees and expenses and the expense of any special audits incident to or required

by any such registration (but excluding the compensation of regular employees of

the Company which shall be paid in any event by the Company).

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

"SELLING EXPENSES" shall mean all underwriting discounts and selling

commissions applicable to the sate.

"SEC" or "COMMISSION" means the United States Securities and Exchange

Commission.

"SHARES" shall mean the Company's Series B Preferred Stock issued pursuant

to the purchase Agreement.

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2. REGISTRATION; RESTRICTIONS ON TRANSFER

2.1 RESTRICTIONS ON TRANSFER.

a. Each Holder agrees not to make any disposition of all or any

portion of the Shares or Registrable Securities unless and until:

i. There is then in effect a registration statement under the

Securities Act covering such proposed disposition and such disposition is made

in accordance with such registration statement; or

ii. (A) The transferee has agreed in writing to be bound by

this Section 2.1. (B) such Holder shall have notified the Company of the

proposed disposition and shall have furnished the Company with a detailed

statement of the circumstances surrounding the proposed disposition, and (C) if

reasonably requested by the Company, such Holder shall have furnished the

Company with an opinion of counsel, reasonably satisfactory to the Company, that

such disposition will not require registration of such shares under the

Securities Act. It is agreed that the Company will not require a Holder to

obtain an opinion of counsel to such Holder for transactions made pursuant to

Rule 144 except in unusual circumstances.

iii. Notwithstanding the provisions of paragraphs (i) and (ii)

above, no such registration statement or opinion of counsel shall be necessary

for a transfer by a Holder which is (A) a partnership to its partners or former

partners in accordance with partnership interests, (B) a corporation to its

shareholders in accordance with their interest in the corporation, (C) a limited

liability company to its members or former members in accordance with their

interest in the limited liability company, or (D) to the Holder's family member

or trust for the benefit of an individual Holder, provided the transferee will

be subject to the terms of this Section 2.1 to the same extent as if such

transferee were an original Holder hereunder.

b. Each certificate representing Shares or Registrable Securities

shall (unless otherwise permitted by the provisions of the Agreement) be stamped

or otherwise imprinted with a legend substantially similar to the following (in

addition to any legend required under applicable state securities laws or as

provided elsewhere in this Agreement):

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE

SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR

OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND

UNTIL REGISTERED UNDER THE ACT OR UNLESS THE COMPANY HAS RECEIVED AN

OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT

SUCH REGISTRATION IS NOT REQUIRED.

c. The Company shall be obligated to reissue promptly unlegended

certificates at the request of any Holder thereof if the Holder shall have

obtained an opinion of counsel (which counsel may be counsel to the Company)

reasonably acceptable to the Company

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to the effect that the securities proposed to be disposed of may lawfully be so

disposed of without registration, qualification or legend.

d. Any legend endorsed on an instrument pursuant to applicable state

securities laws and the stop-transfer instructions with respect to such

securities shall be removed upon receipt by the Company of an order of the

appropriate blue sky authority authorizing such removal.

2.2 DEMAND REGISTRATION.

a. Subject to the conditions of this Section 2.2, if the Company

shall receive a written request from the Holders of more than thirty percent

(30%) of the Shares or the Registrable Securities (or a combination of such

Shares and Registrable Securities) then outstanding (the "Initiating Holders")

that the Company file a registration statement under the Securities Act covering

the registration of Registrable Securities having a reasonably anticipated

aggregate offering price to the public, net of underwriting discounts and

commissions, in excess of $5,000,000 (a "Qualified Public Offering"), then the

Company shall, within thirty (30) days of the receipt thereof, give written

notice of such request to all Holders, and subject to the limitations of this

Section 2.2, effect, as soon as practicable, the registration under the

Securities Act of all Registrable Securities that the Holders request to be

registered.

b. If the Initiating Holders intend to distribute the Registrable

Securities covered by their request by means of an underwriting, they shall so

advise the Company as a part of their request made pursuant to this Section 2.2

and the Company shall include such information in the written notice referred to

in this Section 2.2. In such event, the right of any Holder to include its

Registrable Securities in such registration shall be conditioned upon such

Holder's participation in such underwriting and the inclusion of such Holder's

Registrable Securities in the underwriting (unless otherwise mutually agreed by

a majority in interest of the Initiating Holders and such Holder) to the extent

provided herein. All Holders proposing to distribute their securities through

such underwriting shall enter into an underwriting agreement in customary form

with the underwriter or underwriters selected for such underwriting by a

majority in interest of the Initiating Holders (which underwriter or

underwriters shall be reasonably acceptable to the Company). Notwithstanding any

other provision of this Section 2.2, if the underwriter advises the Company that

marketing factors require a limitation of the number of securities to be

underwritten (including Registrable Securities) then the Company shall so advise

all Holders of Registrable Securities which would otherwise be underwritten

pursuant hereto, and the number of shares that May be included in the

underwriting shall be allocated to the Holders of such Registrable Securities on

a pro rata basis based on the number of Registrable Securities held by all

Holders (including the initiating Holders). Any Registrable Securities excluded

or withdrawn from such underwriting shall be withdrawn from the registration.

c. The Company shall not be required to effect a registration

pursuant to this Section 2.2:

i. After the Company has effected two (2) registrations

pursuant to this Section 2.2, and such registrations have been declared or

ordered effective; or

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ii. During the period starting with the date of filing of, and

ending on the date one hundred eighty (180) days following the effective date of

the registration statement pertaining to the Initial Offering, provided that the

Company is making reasonable and good faith effects to cause such registration

statement to become effective; or

iii. If within thirty (30) days of receipt of a written

request from Initiating Holders pursuant to Section 2.2 the Company gives notice

to the Holders of the Company's intention to make its Initial Offering within

ninety (90) days; or

iv. If the Company shall furnish to Holders requesting a

registration statement pursuant to this Section 2.2, a certificate signed by the

Chairman of the Board of Directors of the Company (the "Board") stating that in

the good faith judgment of the Board, it would be seriously detrimental to the

Company and its shareholders for such registration statement to be effected at

such time, in which event the Company shall have the right to defer such filing

for a period of not more than ninety (90) days after receipt of the request of

the Initiating Holders; provided, however, that such right to delay a request

shall be exercised by the Company no more than once in any one-year period.

2.3 PIGGYBACK REGISTRATIONS. The Company shall notify all Holders of

Registrable Securities in writing at least thirty (30) days prior to the filing

of any registration statement under the Securities Act for purposes of a public

offering of securities of the Company (including, but not limited to,

registration statements relating to secondary offerings of securities of the

Company, but excluding registration statements relating to employee benefit

plans or with respect to corporate reorganizations or other transactions under

Rule 145 of the Securities Act) and will afford each such Holder an opportunity

to include in such registration statement all or part of such Registrable

Securities held by such Holder. Each Holder desiring to include in any such

registration statement all or any part of the Registrable Securities held by it

shall, within fifteen (15) days after the above-described notice from the

Company, so notify the Company in writing. Such notice shall state the intended

method of disposition of the Registrable Securities by such Holder. If a Holder

decides not to include all of its Registrable Securities in any registration

statement thereafter filed by the Company, such Holder shall nevertheless

continue to have the right to include any Registrable Securities in any

subsequent such registration statement or registration statements as may be

filed by the Company with respect to offerings of its securities, all upon the

terms and conditions set forth herein.

a. If the registration statement under which the Company gives

notice under this Section 2.3 is for an underwritten offering, the Company shall

so advise the Holders of Registrable Securities. In such event, the right of any

such Holder to be included in a registration pursuant to this Section 2.3 shall

be conditioned upon such Holder's participation in such underwriting and the

inclusion of such Holder's Registrable Securities in the underwriting to the

extent provided herein. All Holders proposing to distribute their Registrable

Securities through such underwriting shall enter into an underwriting agreement

in customary form with the underwriter or underwriters selected for such

underwriting by the Company. Notwithstanding any other provision of this

Agreement, if the underwriter determines in good faith that marketing factors

require a limitation of the number of shares to be underwritten, the number of

shares that may be included in the underwriting shall be allocated, first, to

the Company; second, to the Holders on a pro rata basis based on the total

number of Registrable Securities held by the

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Holders; and third, to any shareholder of the Company (other than a Holder) on a

pro rata basis. No such reduction shall reduce the securities being offered by

the Company for its own account to be included in the registration and

underwriting, and in no event shall the amount of securities of the selling

Holders included in the registration be reduced below twenty percent (20%) of

the total amount of securities requested by the selling Holders to be included

in such registration, unless such offering is the Initial Offering and such

registration does not include shares of any other selling shareholders, in which

event any or all of the Registrable Securities of the Holders may be excluded in

accordance with the immediately preceding sentence. In no event will shares of

any other selling shareholder be included in such registration which would

reduce the number of shares which may be included by Holders without the written

consent of Holders of not less than two-thirds (66 2/3%) of the Registrable

Securities proposed to be sold in the offering.

b. The Company shall have the right to terminate or withdraw any

registration initiated or withdraw any registration initiated by it under this

Section 2.3 prior to the effectiveness such registration whether or not any

Holder has elected to include securities in such registration. The Registration

Expenses of such withdrawn registration shall be borne by the Company in

accordance with Section 2.5 hereof.

2.4 FORM S-3 REGISTRATION. In case the Company shall receive from any

Holder or Holders of Registrable Securities a written request or requests that

the Company effect a registration on Form S-3 or any similar short-form

registration statement and any related qualification or compliance with respect

to all or a part of the Registrable Securities owned by such Holder or Holders,

the Company will:

a. Promptly give written notice of the proposed registration, and

any related qualification or compliance, to all other Holders of Registrable

Securities; and

b. As soon as practicable, effect such registration and all such

qualifications and compliances as may be so requested and as would permit or

facilitate the sale and distribution of all or such portion of such Holder's or

Holders' Registrable Securities as are specified in such request, together with

all or such portion of the Registrable Securities of any other Holder or Holders

joining in such request as are specified in a written request given within

fifteen (15) days after receipt of such written notice from the Company;

provided, however, that the Company shall not be obligated to effect any such

registration, qualification or compliance pursuant to this Section 2.4:

i. If Form S-3 is not available for such offering by the

Holders, or

ii. If the Holders, together with the holders of any other

securities of the Company entitled to inclusion in such registration, propose to

sell Registrable Securities and such other securities (if any) at an aggregate

price to the public of less than five hundred thousand dollars ($500,000), or

iii. If the Company shall furnish to the Holders a certificate

signed by the Chairman of the, Board of Directors of the Company stating that in

the good faith judgment of the, Board of Directors of the Company, it would be

seriously detrimental to the Company and its shareholders for such Form S-3

Registration to be effected at such time, in which event the

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Company shall have the right to defer the filing of the Form S-3 registration

statement for a period of not more than ninety (90) days after receipt of the

request of the Holder or Holders under this Section 2.4; provided, that such

right to delay a request shall be exercised by the Company nor more than twice

in any one-year period, or

iv. If the Company has, already effected two (2) registrations

on Form S-3 for the Holders pursuant to this Section 2.4, or

v. In any particular jurisdiction in which the Company would

be required to qualify to do business or to execute a general consent to service

of process in effecting such registration, qualification or compliance.

c. Subject to the foregoing, the Company shall file a Form S-3

registration statement covering the Registrable Securities and other securities

so requested to be registered as soon as practicable after receipt of the

request or requests of the Holders. All such Registration Expenses incurred in

connection with registrations requested pursuant to this Section 2.4 after the

first two (2) registrations shall be paid by the selling Holders pro rata in

proportion to the number of shares sold by each.

2.5 EXPENSES OF REGISTRATION. Except as specifically provided herein, all

Registration Expenses incurred in connection with any registration,

qualification or compliance pursuant to Section 2.2 or any registration under

Section 2.3 or Section 2.4 herein shall be borne by the Company. All Selling

Expenses incurred in connection with any registrations hereunder, shall be borne

by the holders of the securities so registered pro rata on the basis of the

number of shares so registered. The Company shall not, however, be required to

pay for expenses of any registration proceeding begun pursuant to Section 2.2 or

2.4, the request of which has been subsequently withdrawn by the Initiating

Holders unless (a) the withdrawal is based upon material adverse information

concerning the Company of which the Initiating Holders were not aware at the

time of such request or (b) the Holders of a majority of Registrable Securities

agree to forfeit their right to one requested registration pursuant to Section

2.2 or Section 2.4, as applicable, in which event such right shall be forfeited

by all Holders). If the Holders are required to pay the Registration Expenses,

such expenses shall be borne by the holders of securities (including Registrable

Securities) requesting such registration in proportion to the number of shares

for which registration was requested. If the Company is required to pay the

Registration Expenses of a withdrawn offering pursuant to clause (a) above, then

the Holders shall not forfeit their rights pursuant to Section 2.2 or Section

2.4 to a demand registration.

2.6 OBLIGATIONS OF THE COMPANY. Whenever required to effect the

registration of any Registrable Securities, the Company shall, as expeditiously

as reasonably possible:

a. Prepare and file with the SEC a registration statement with

respect to such Registrable Securities and use all reasonable efforts to cause

such registration statement to become effective, and, upon the request of the

Holders of a majority of the Registrable Securities registered thereunder, keep

such registration statement effective for up to ninety (90) days or, if earlier,

until the Holder or Holders have completed the distribution related thereto.

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b. Prepare and file with the SEC such amendments and supplements to

such registration statement and the prospectus used in connection with such

registration statement as may be necessary to comply with the provisions of the

Securities Act with respect to the disposition of all securities covered by such

registration statement.

c. Furnish to the Holders such number of copies of a prospectus,

including a preliminary prospectus, in conformity with the requirements of the

Securities Act, and such other documents as they may reasonably request in order

to facilitate the disposition of Registrable Securities owned by them.

d. Use all reasonable efforts to register and qualify the securities

covered by such registration statement under such other securities or Blue Sky

laws of such jurisdictions as shall be reasonably requested by the Holders,

provided that the Company shall not be required in connection therewith or as a

condition thereto to qualify to do business or to file a general consent to

service of process in any such states or jurisdictions.

e. In the event of any underwritten public offering, enter into and

perform its obligations under an underwriting agreement, in usual and customary

form, with the managing underwriter(s) of such offering. Each Holder

participating in such underwriting shall also enter into and perform its

obligations under such an agreement.

f. Notify each Holder of Registrable Securities covered by such

registration statement at any time when a prospectus relating thereto is

required to be delivered under the Securities Act of the happening of any event

as a result of which the prospectus included in such registration statement, as

then in effect, includes an untrue statement of a material fact or omits to

state a material fact required to be stated therein or necessary to make the

statements therein not misleading in the light of the circumstances then

existing.

g. Furnish, at the request of a majority of the Holders

participating in the registration, on the date that such Registrable Securities

are delivered to the underwriters for sale, if such securities are being sold

through underwriters, or, if such securities are not being sold through

underwriters, on the date that the registration statement with respect to such

securities becomes effective, (i) an opinion, dated as of such date, of the

counsel representing the Company for the purposes of such registration, in form

and substance as is customarily given to underwriters in an underwritten public

offering and reasonably satisfactory to a majority in interest of the Holders

requesting registration, addressed to the underwriters, if any, and to the

Holders requesting registration of Registrable Securities and (ii) a letter

dated as of such date, from the independent certified public accountants of the

Company, in form and substance as is customarily given by independent certified

publics accountants to underwriters in an underwritten public offering and

reasonably satisfactory to a majority in interest of the Holders requesting

registration, addressed to the underwriters, if any, and if permitted by

applicable accounting standards, to the Holders requesting registration of

Registrable Securities.

2.7 TERMINATION OF REGISTRATION RIGHTS. All registration rights granted

under this Section 2 shall terminate and be of no further force and effect seven

(7) years after the date of the Company's Initial Offering. In addition, a

Holder's registration rights shall expire if (i) the Company has completed its

Initial Offering and is subject to the provisions of the Exchange Act

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and (ii) all Registrable Securities held by and issuable to such Holder may be

sold under Rule 144 during any ninety (90) day period.

2.8 DELAY OF REGISTRATION; FURNISHING INFORMATION.

a. No Holder shall have any right to obtain or seek an injunction

restraining or otherwise delaying any such registration as the result of any

controversy that might arise with respect to the interpretation or

implementation of this Section 2.

b. It shall be a condition precedent to the obligations of the

Company to take any action pursuant to Section 2.2, 2.3 or 2.4 that the selling

Holders shall furnish to the Company such information regarding themselves, the

Registrable Securities held by them and the intended method of disposition of

such securities as shall be required to effect the registration of their

Registrable Securities.

2.9 INDEMNIFICATION. In the event any Registrable Securities are included

in a registration statement under Sections 2.2, 2.3 or 2.4:

a. To the extent permitted by law, the Company will indemnify and

hold harmless each Holder, the partners, officers, directors and legal counsel

of each Holder, any underwriter (as defined in the Securities Act) for such

Holder and each person, if any, who controls such Holder or underwriter within

the meaning of the Securities Act or the Exchange Act, against any losses,

claims, damages, or liabilities (joint or several) to which they may become

subject under the Securities Act, the Exchange Act or other federal or state

law, insofar as such losses, claims, damages or liabilities (or actions in

respect thereof) arise out of or are based upon any of the following statements,

omissions or violations (collectively a "Violation") by the Company: (i) any

untrue statement or alleged untrue statement of a material fact contained in

such registration statement, including any preliminary prospectus or final

prospectus contained therein or any amendments or supplements thereto, (ii) the

omission or alleged omission to state therein material fact required to be

stated therein, or necessary to make the statements therein not misleading, or

(iii) any violation or alleged violation by the Company of the Securities Act,

the Exchange Act, any state securities law or any rule or regulation promulgated

under the Securities Act, the Exchange Act or any state securities law in

connection with the offering covered by such registration statement; and the

Company will reimburse each such Holder, partner, officer or director,

underwriter or controlling person for any legal or other expenses reasonably

incurred by them in connection with investigating or defending any such loss,

claim, damage, liability or action; provided however, that the indemnity

agreement contained in this Section 2.9(a) shall not apply to amounts paid in

settlement of any such loss, claim, damage, liability or action if such

settlement is effected without the consent of the Company, which consent shall

not be unreasonably withheld, nor shall the Company be liable in any such case

for any such loss, claim, damage, liability or action to the extent that it

arises out of or is based upon a Violation which occurs in reliance upon and in

conformity with written information furnished expressly for use in connection

with such registration by such Holder, partner, officer, director, underwriter

or controlling person of such Holder.

b. To the extent permitted by law, each Holder will, if Registrable

Securities held by such Holder are included in the securities as to which such

registration qualifications or

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compliance is being effected, indemnify and hold harmless the Company, each of

its directors, its officers, and legal counsel and each person, if any, who

controls the Company within the meaning of the Securities Act, any underwriter

and any other Holder selling securities under such registration statement or any

of such other Holder's partners, directors or officers or any person who

controls such Holder, against any losses, claims, damages or liabilities (joint

or several) to which the Company or any such director, officer, controlling

person, underwriter or other such Holder, or partner, director, officer or

controlling person of such other Holder may become subject under the Securities

Act, the Exchange Act or other federal or state law, insofar as such losses,

claims, damages or liabilities (or actions in respect thereto) arise out of or

are based upon any Violation, in each case to the extent (and only to the

extent) that such Violation occurs in reliance upon and in conformity with

written information furnished by such Holder under an instrument duly executed

by such Holder and stated to be specifically for use in connection with such

registration; and each such Holder will reimburse any legal or other expenses

reasonably incurred by the Company or any such director, officer, controlling

person, underwriter or other Holder, or partner, officer, director or

controlling person of such other Holder in connection with investigating or

defending any such loss, claim, damage, liability or action; provided, however,

that the indemnity agreement contained in this Section 2.9(b) shall not apply to

amounts paid in settlement of any such loss, claim, damage, liability or action

if such settlement is effected without the consent of the Holder, which consent

shall not be unreasonably withheld; and provided further, that in no event shall

any indemnity under this Section 2.9 exceed the proceeds from the offering

received by such Holder.

c. Promptly after receipt by an indemnified party under this Section

2.9 of notice of the commencement of any action (including any governmental

action), such indemnified party will, if a claim in respect thereof is to be

made against any indemnifying party under this Section 2.9, deliver to the

indemnifying party a written notice of the commencement thereof and the

indemnifying party shall have the right to participate in, and, to the extent

the indemnifying party so desires, jointly with any other indemnifying party

similarly noticed, to assume the defense thereof with counsel mutually

satisfactory to the parties; provided, however, that an indemnified party shall

have the right to retain its own counsel, with the fees and expenses to be paid

by the indemnifying party, if representation of such indemnified party by the

counsel retained by the indemnifying party would be inappropriate due to actual

or potential differing interests between such indemnified party and any other

party represented by such counsel in such proceeding. The failure to deliver

written notice to the indemnifying party within a reasonable time of the

commencement of any such action, if materially prejudicial to its ability to

defend such action, shall relieve such indemnifying party of any liability to

the indemnified party under this Section 2.9, but the omission so to deliver

written notice to the indemnifying party will not relieve it of any liability

that it may have to any indemnified party otherwise than under this Section 2.9.

d. If the indemnification provided for in this Section 2.9 is held

by a court of competent jurisdiction to be unavailable to an indemnified party

with respect to any losses, claims, damages or liabilities referred to herein,

the indemnifying party, in lieu of indemnifying such indemnified party

thereunder, shall to the extent permitted by applicable law contribute to the

amount paid or payable by such indemnified party as a result of such loss,

claim, damage or liability in such proportion as is appropriate to reflect the

relative fault of the indemnifying party on the one hand and of the indemnified

party on the other in connection with the Violation(s)

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that resulted in such loss, claim, damage or liability, as well as any other

relevant equitable considerations. The relative fault of the indemnifying party

and of the indemnified party shall be determined by a court of law by reference

to, among other things, whether the untrue or alleged true 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, that in no event shall any

contribution by a Holder hereunder exceed the proceeds from the offering

received by such Holder.

e. The obligations of the Company and Holders under this Section 2.9

shall survive completion of any offering of Registrable Securities in a

registration statement. No indemnifying party, in the defense of any such claim

or litigation, shall, except with the consent of each indemnified party, consent

to entry of any judgment or enter into any settlement which does not include as

an unconditional term thereof the giving by the claimant or plaintiff to such

indemnified party of a release from all liability in respect to such claim or

litigation. In the event any offering of Registrable Securities is underwritten,

and the underwriting agreement provides for indemnification and/or contribution

by the Company and the Holders offering securities thereunder, the

indemnification and/or contribution obligations of the Company and the Holders

hereunder shall in no event exceed the obligations of the parties set forth in

such underwriting agreement.

2.10 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the Company to

register Registrable Securities pursuant to this Section 2 may be assigned by a

Holder to a transferee or assignee of Registrable Securities which (i) is a

subsidiary, parent, general partner, limited partner or retired partner of a

Holder. (ii) is a Holder's family member or trust for the benefit of an

individual Holder, or (iii) acquires at least one hundred thousand (100,000)

shares of Registrable Securities (as presently constituted and as adjusted for

stock splits, reverse stock splits, stock dividends, recapitalizations,

combinations and the like); provided, however, (A) the transferor shall, within

ten (10) days after such transfer, furnish to the Company written notice of the

name and address of such transferee or assignee and the securities with respect

to which such registration rights are being assigned and (B) such transferee

shall agree to be subject to all restrictions set forth in this Agreement.

2.11 AMENDMENT OF REGISTRATION RIGHTS. Any provision of this Section 2 may

be amended and the observance thereof may be waived (either generally or in a

particular instance and either retroactively or prospectively), only with the

written consent of the Company and the Holders of at least sixty-six and

two-thirds percent (66 2/3 %) of the Registrable Securities. Any amendment or

waiver effected in accordance with this Section 2.11 shall be binding upon each

Holder and the Company. By acceptance of any benefits under this Section 2,

Holders of Registrable Securities hereby agree to be bound by the provisions

hereunder.

2.12 LIMITATION ON SUBSEQUENT REGISTRATION RIGHTS. After the date of this

Agreement, the Company shall not, without the prior written consent of the

Holders of sixty-six and two-thirds percent (66 2/3%) of the Registrable

Securities, enter into any agreement with any holder or prospective holder of

any securities of the Company that would grant such holder registration rights

senior to those granted to the Holders hereunder.

-11-

<PAGE>

2.13 "MARKET STAND-OFF" AGREEMENT. If requested by the Company as the

representative of the underwriters of Common Stock (or other securities) of the

Company, each Holder shall not sell or otherwise transfer or dispose of any

Shares Common Stock (or other securities) of the Company held by such each

Holder (other than those included in the registration) for a period specified by

the representative of the underwriters not to exceed one hundred eighty (180)

days following the effective date of a registration statement of the Company

filed under the Securities Act, provided that all officers and directors of the

Company and holders of at least one percent (1%) of the Company's voting

securities enter into similar agreements.

The obligations described in this Section 2.13 shall not apply to a

registration relating solely to employee benefit plans on Form S-3 or Form S-8

or similar forms that may be promulgated in the future, or a registration

relating solely to a Commission Rule 145 transaction on Form S-4 or similar

forms that may be promulgated in the future. The Company may impose

stop-transfer instructions with respect to the shares of Common Stock (or other

securities) subject to the foregoing restriction until the end of said one

hundred eighty (180) day period.

2.14 RULE 144 REPORTING. With a view to making available to the Holders

the benefits of certain rules and regulations of the SEC which may permit the

sale of the Registrable Securities to the public without registration, the

Company agrees to use its best efforts to:

a. Make and keep public information available, as those terms are

understood and defined in SEC Rule 144 or any similar or analogous rule

promulgated under the Securities Act, at all times after the effective date of

the first registration filed by the Company for an offering of its securities to

the general public;

b. File with the SEC, in a timely manner, all reports and other

documents required of the Company under the Exchange Act;

c. So long as a Holder owns any Registrable Securities, furnish to

such Holder forthwith upon request a written statement by the Company as to its

compliance with the reporting requirements of said Rule 144 of the Securities

Act and of the Exchange Act (at any time after it has become subject to such

reporting requirements), a copy of the most recent annual or quarterly report of

the Company, and such other reports and documents as a Holder may reasonably

request in availing itself of any rule or regulation of the SEC allowing it to

sell any such securities without registration.

3. COVENANTS OF THE COMPANY

3.1 BASIC FINANCIAL INFORMATION AND REPORTING.

a. The Company will maintain true books and records of account in

which full and correct entries will be made of all its business transactions

pursuant to a system of accounting established and administered in accordance

with generally accepted accounting principles consistently applied, and will set

aside on its books all such proper accruals and reserves as shall be required

under generally accepted accounting principles consistently applied.

-12-

<PAGE>

b. As soon as practicable after the end of each fiscal year of the

Company, and in any event within ninety (90) days thereafter, the Company will

furnish each Investor a consolidated balance sheet of the Company, as at the end

of such fiscal year, and a consolidated statement of income and a consolidated

statement of cash flows of the Company, for such year all prepared in accordance

with generally accepted accounting principles consistently applied and setting

forth in each case in comparative form the figures for the previous fiscal year,

all in reasonable detail. Such financial statements shall be accompanied by a

report and opinion thereon by independent public accountants of national

standing selected by the Company's Board of Directors.

c. The Company will furnish each Investor, as soon as practicable

after the end of the first, second and third quarterly accounting periods in

each fiscal year of the Company, and any event within forty-five (45) days

thereafter, a consolidated balance sheet of the Company as of the end of each

such quarterly period, and a consolidated statement of income and a consolidated

statement of cash flows of the Company for such period and for the current

fiscal year to date, prepared in accordance with generally accepted accounting

principles, with the exception that no notes need be attached to such statements

and year-end audit adjustments may not have been made.

d. So long as an Investor (with its affiliates) shall own not less

than one hundred thousand (100,000) shares of Registrable Securities (as

presently constituted and subject to subsequent adjustment for stock splits,

reverse stock splits, stock dividends, recapitalizations, combinations and the

like) (a "Major Investor"), the Company will furnish each such Major Investor

(i) at least thirty (30) days prior to the beginning of each fiscal year an

annual budget and operating plan for such fiscal year (and as soon as available,

any subsequent revisions thereto); and (ii) as soon as practicable after the end

of each month, and in any event within twenty (20) days thereafter, a

consolidated balance sheet of the Company as of the end of each such month, and

a consolidated statement of income and a consolidated statement of cash flows of

the Company for such month and for the current fiscal year to date, including a

comparison to plan figures for such period, prepared in accordance with

generally accepted accounting principles consistently applied, with the

exception that no notes need be attached to such statements and year-end audit

adjustments may not have been made.

3.2 INSPECTION RIGHTS. Each Major Investor shall have the right to visit

and inspect any of the properties of the Company or any of its subsidiaries, and

to discuss the affairs, finances and accounts of the Company or any of its

subsidiaries with its officers, and to review such information as is reasonably

requested all at such reasonable times and as often as may be reasonably

requested; provided, however, that the Company shall not be obligated under this

Section 12 with respect to a competitor of the Company or with respect to

information which the Board of Directors determines in good faith is

confidential and should not, therefore, be disclosed.

3.3 CONFIDENTIALITY OF RECORDS.

a. Each Investor agrees not to use Confidential Information (as

hereinafter defined) of the Company for its own use or for any purpose except to

evaluate and enforce its equity investment in the Company. Each Investor shall

undertake to treat such Confidential

-13-

<PAGE>

Information in a manner consistent with the treatment of its own information of

such proprietary nature and agrees that it shall protect the confidentiality of

and use reasonable best efforts to prevent disclosure of the Confidential

Information to prevent it from falling into the public domain or the possession

of unauthorized persons. Each transferee of any Investor who receives

Confidential Information shall agree to be bound by such provisions. For

purposes of this Section, "Confidential Information" means any information,

technical data, or know-how, including, but not limited to, the Company's

research, products, software, services, development, inventions, processes,

designs, drawings, engineering, marketing, or finances, disclosed by the Company

either directly or indirectly in writing, orally or by drawings or inspection of

parts or equipment.

b. Confidential Information does not include information, technical

data or know-how which (i) is in the Investor's possession at the time of

disclosure as shown by Investor's files and records immediately prior to the

time of disclosure; (ii) before or after it has been disclosed to the Investor,

it is part of the public knowledge or literature, not as a result of any action

or inaction of the Investor; or (iii) is disclosed to an Investor on a

non-confidential basis by third party having a legal right to such information,

(iv) is reasonably demonstrated by Investor have been independently developed by

Investor, or (v) is approved for release by written authorization of Company.

c. The provisions of this Section shall not apply (i) to the extent

that an Investor is required to disclose Confidential Information pursuant to

any law, statue, rule or regulation or any order of any court or jurisdiction

process or pursuant to any direction, request or requirement (whether or not

having the force of law but if not having the force of law being of a type with

which institutional investors in the relevant jurisdiction are accustomed to

comply) of any self-regulating organization or any governmental, fiscal,

monetary or other authority provided that the Company is given notice and an

opportunity to restrict reasonably the scope of such disclosure; (ii) to the

disclosure of Confidential Information to an Investor's employees, counsel,

accountants or other professional advisors provided such recipients also are

bound by obligations of confidentiality; (iii) to the extent that an Investor

needs to disclose Confidential Information for the protection of any of such

Investor's rights or interest against the Company, whether under this Agreement

or otherwise; or (iv) with the prior written consent of the Company, which

consent shall not be unreasonably withheld, to the disclosure of Confidential

Information to a prospective transferee of securities which agrees in writing to

be bound by the provisions of this Section in connection with the receipt of

such Confidential Information.

d. The Company covenants and agrees that, promptly after the

issuance of the Series B Preferred Stock pursuant to the Purchase Agreement, it

shall adopt a confidentiality reasonably acceptable to the Investors, and that

it will at all times use reasonable efforts to stamp or otherwise conspicuously

mark written and other tangible Confidential Information "Confidential" or

"Proprietary" or, if and to the extent that Confidential Information is

disclosed orally, to promptly confirm in writing that such information is

Confidential Information.

3.4 RESERVATION OF COMMON STOCK. The Company will at all times reserve and

keep available, solely for issuance and delivery upon the conversion of the

Shares, all Common Stock issuable from time to time upon such conversion.

-14-

<PAGE>

3.5 STOCK VESTING. Unless otherwise approved by seventy-five percent (75

%) of the of Directors, with all Directors voting:

a. The Common Stock to be granted and issued to Directors pursuant

to Section 3.9 hereof shall vest at the rate of one third (1/3rd) of the stock

so granted to a Director at the end of each year for a period of three (3) years

commencing upon the date on which such Director is elected and qualified to

serve on the Board.

b. All other stock options and other stock equivalents issued after

the date of Agreement to employees, officers, directors, consultants and other

service providers shall be subject to vesting as follows: (i) twenty-five

percent (25 %) of such stock shall vest at the end of the first year following

the earlier of the date of issuance or such person's services commencement date

with the company, and (ii) seventy-five percent (75 a) of such stock shall vest

at the rate of one thirty-sixth (1/36th) per month over the remaining three (3)

years. With respect to any shares of stock purchased by any such person, the

Company's repurchase option shall provide that upon such person's termination of

employment or service with the Company, with or without cause, the Company or

its assignee (to the extent permissible under applicable securities laws and

other laws) shall have the option to purchase at cost any unvested shares of

stock held by such person.

3.6 KEY PERSON INSURANCE. Subject to the approval of the Board, the

Company will use its best efforts to obtain and maintain in full force and

effect term life insurance in the amount of one million ($1,000,000) dollars on

the life of the Chief Executive Officer of the Company naming the Company as

beneficiary.

3.7 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT. The Company shall

require all employees to execute and deliver a Proprietary Information and

Inventions Agreement substantially in the form attached to the Purchase

Agreement.

3.8 APPROVAL OF RELATED PARTY AGREEMENTS. The Company shall not without

the approval of a majority of the Board of Directors, with all non-interested

Directors voting, authorize or enter into any transactions with any director or

management employee, or such director's or employee's immediate family.

3.9 DIRECTORS' EXPENSES. The Company shall reimburse all members of the

Company's Board of Directors for all reasonable and necessary costs and expenses

incurred by such members in connection with the performance of their duties as a

Director. In addition, as compensation for the performance of their duties as a

Director, the Company shall grant to each member Fifteen Thousand (15,000)

shares of the Company's Common Stock out of the pool of Common Stock reserved

for issuance to the Company's employees, consultants and directors, which shares

shall vest at the rate of one-third (1/3rd) per year at the end of each year

over a three (3) year period commencing upon the date such member is elected and

qualified as a Director.

3.10 DIRECTORS' INDEMNIFICATION. The Company shall enter into and use its

best efforts to at all times maintain indemnification contracts, in a form

reasonably satisfactory to the

-15-

<PAGE>

designees of the Series B Preferred Stock and their counsel, with each of its

directors to indemnify such directors to the maximum extent permissible under

Delaware law.

3.11 REAL PROPERTY HOLDING CORPORATION. The Company covenants that it will

operate in a manner such that it will not become a "United States real property

holding corporation" ("USRPHC") as that term is defined in Section 897(c)(2) of

the Internal Revenue Code of 1986, as amended, and the regulations thereunder.

The Company agrees to make determinations as to its status as a USRPHC, and will

file statements concerning those determinations with the Internal Revenue

Service, in the manner and at the times required under Reg. Section 1.897-2(h),

or any supplementary or successor provision thereto. Within 30 days of a request

from an Investor or any of its partners, the Company will inform the requesting

party, in the manner set forth in Reg. Section 1.897 -2(h)(l)(iv) or any

supplementary or successor provision thereto, whether that party's interest in

the Company constitutes a United States real property interest (within the

meaning of Internal Revenue Code Section 897(c)(l) and the regulations

thereunder) and whether the Company has provided to the Internal Revenue Service

all required notices as to its USRPHC status.

3.12 TERMINATION OF COVENANTS. All covenants of the Company contained in

Section 3 of this Agreement shall expire and terminate as to each Investor on

the effective date of the registration statement pertaining to the Initial

Offering.

4. RIGHTS OF FIRST REFUSAL

4.1 SUBSEQUENT OFFERINGS. Each Investor shall have a right of first

refusal to purchase its pro rata share of all Equity Securities that the Company

may, from time to time, propose to sell and issue after the date of this

Agreement, other than the Equity Securities excluded by Section 4.6 hereof. Each

Investor's pro rata share is equal to the ratio of (A) the number of shares of

the Company's Common Stock, including Conversion Shares or shares issuable upon

conversion of the Shares, which such Investor is deemed to be a holder of

immediately prior to the issuance of such Equity Securities to (B) the total

number of shares of the Company's outstanding Common Stock (including all shares

of Common Stock issued or issuable upon conversion of the Shares) immediately

prior to the issuance of the Equity Securities and assuming exercise of all

outstanding options and warrants to purchase securities of the Company.

4.2 EXERCISE OF RIGHTS. If the Company proposes to issue any Equity

Securities, it shall give each Investor written notice of its intention,

describing the Equity Securities, the price and the terms and conditions upon

which the Company proposes to issue the same. Each Investor shall have fifteen

(15) days from the giving of such notice to agree to purchase his, her or its

pro rata share of the Equity Securities for the price and upon the terms and

conditions specified in the notice by giving written notice to the Company and

stating therein the quantity of Equity Securities to be purchased.

Notwithstanding the foregoing, the Company shall not be required to offer or

sell such Equity Securities to any Investor who would cause the Company to be in

violation of applicable federal securities laws by virtue of such offer or sale.

4.3 ISSUANCE OF EQUITY SECURITIES TO OTHER PERSONS. If not all of the

Investors elect to purchase their pro rata share of the Equity Securities, then

the Company shall promptly notify

-16-

<PAGE>

in writing the Investors who do so elect and shall offer them the right to

acquire their pro rata shares of such unsubscribed shares. Such Investors shall

have five (5) days after receipt of such notice to notify the Company of his,

her or its election to purchase all or a portion thereof of the unsubscribed

shares. If the Investors so notified fail to exercise in full the rights of

first refusal, the Company shall have ninety (90) days thereafter to sell the

Equity Securities in respect of which the Investors' rights were not exercised,

at a price and upon general terms and conditions materially no more favorable to

the purchasers thereof than specified in the Company's notice to the Investors

pursuant to Section 4.2 hereof. If the Company has not sold such Equity

Securities within ninety (90) days of the notice provided pursuant to Section

4.2, the Company shall not thereafter issue or sell any Equity Securities,

without first offering such securities to the Investors in the manner provided

above.

4.4 TERMINATION OF RIGHTS OF FIRST REFUSAL. The rights of first refusal

established by this Section 4 shall terminate upon the effective date of the

registration statement pertaining to a Qualified Public Offering.

4.5 TRANSFER OF RIGHTS OF FIRST REFUSAL. The rights of first refusal of

each Investor under this Section 4 may be transferred to the same parties

subject to the same restrictions as those restrictions on transfer of

registration rights set forth in Section 2.10 hereof.

4.6 EXCLUDED SECURITIES. The rights of first refusal established by this

Section 4 shall have no application to any of the following Equity Securities:

a. Shares of Common Stock (and/or options, warrants or other Common

Stock purchase rights issued pursuant to such options, warrants or other rights)

issued or to be issued to employees, officers or directors of, or consultants or

advisors to the Company or any subsidiary, pursuant to stock purchase or stock

option plans or other arrangements that are approved by the Board of Directors;

b. Stock issued pursuant to any rights or agreements outstanding as

of the date of this Agreement, options and warrants outstanding as of the date

of this Agreement; and stock issued pursuant to any such rights or agreements

granted after the date of this Agreement, provided that the rights of first

refusal established by this Section 4 applied with respect to the initial sale

or grant by the Company of such rights or agreements;

c. Any Equity Securities issued for consideration other than cash

pursuant to a merger, consolidation, acquisition or similar business

combination;

d. Shares of Common Stock issued in connection with any stock split,

stock dividend or recapitalization by the Company;

e. Shares of Common Stock issued upon conversion of the Shares;

f. Any Equity Securities issued pursuant to any equipment leasing

arrangement, or bank financing;

g. Any Equity Securities that are issued by the Company pursuant to

a registration statement filed under the Securities Act; and

-17-

<PAGE>

h. Equity Securities issued in connection with strategic

transactions involving the Company and other entities, including (i) joint

ventures, manufacturing, marketing or distribution arrangements or (ii)

technology transfer or development arrangements; provided that such strategic

transactions and the issuance of shares therein, has been approved by not less

than seventy-five percent (75%) the Company's Board of Directors, with all

Directors voting.

5. MISCELLANEOUS

5.1 GOVERNING LAW. This Agreement shall be governed by and construed under

the laws of the State of Delaware as applied to agreements among Delaware

residents entered into and to be performed entirely within Delaware.

5.2 SURVIVAL. The representations, warranties, covenants, and agreements

made herein shall survive any investigation made by any Holder and the closing

of the transactions contemplated hereby. All statements as to factual matters

contained in any certificate or other instrument delivered by or on behalf of

the Company pursuant hereto in connection with the transactions contemplated

hereby shall be deemed to be representations and warranties by the Company

hereunder solely as of the date of such certificate or instrument.

5.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided herein,

the provisions hereof shall inure to the benefit of, and be binding upon, the

successors, assigns, heirs, executors, and administrators of the parties hereto

and shall inure to the benefit of and be enforceable by each person who shall be

a holder of Registrable Securities from time to time; provided, however, that

prior to the receipt by the Company of adequate written notice of the transfer

of any Registrable Securities specifying the full name and address of the

transferee, the Company may deem and treat the person listed as the holder of

such shares in its records as the absolute owner and holder of such shares for

all purposes, including the payment of dividends or any redemption price.

5.4 SEVERABILITY. In case any provision of the Agreement shall be invalid,

illegal, or unenforceable, the validity, legality, and enforceability of the

remaining provisions shall not in any way be affected or impaired thereby.

5.5 AMENDMENT AND WAIVER.

a. Except as otherwise expressly provided, this Agreement may be

amended or modified only upon the written consent of the Company and the holders

of at least two-thirds (66 2/3%) of the Registrable Securities.

b. Except as otherwise expressly provided, the obligations of the

Company and the rights of the Holders under this Agreement may be waived only

with the written consent of the holders of at least two-thirds (66 2/3%) of the

Registrable Securities.

c. Notwithstanding the foregoing, this Agreement may be amended with

only the written consent of the Company to include additional purchasers of

Shares as "Investors," "Holders" and parties hereto.

-18-

<PAGE>

5.6 DELAYS OR OMISSIONS. It is agreed that no delay or omission to

exercise any right, power, or remedy accruing to any Holder, upon any breach,

default or noncompliance of the Company under this Agreement shall impair any

such right, power, or remedy, nor shall it be construed to be a waiver of any

such breach, default or noncompliance, or any acquiescence therein, or of any

similar breach, default or noncompliance thereafter occurring. It is further

agreed that any waiver, permit, consent, or approval of any kind or character on

any Holder's part of any breach, default or noncompliance under the Agreement or

any waiver on such Holder's part of any provisions or conditions of this

Agreement must be in writing and shall be effective only to the extent

specifically set forth in such writing. All remedies, either under this

Agreement, by law, or otherwise afforded to Holders, shall be cumulative and not

alternative.

5.7 NOTICES. All notices required or permitted hereunder shall be in

writing and shall be deemed effectively given: (i) upon personal delivery to the

party to be notified, (ii) when sent by confirmed telex or facsimile if sent

during normal business hours of the recipient; if not, then on the next business

day, (iii) five (5) days after having been sent by registered or certified mail,

return receipt requested, postage prepaid, or (iv) one (1) day after deposit

with a nationally recognized overnight courier, specifying next day delivery,

with written verification of receipt. All communications shall be sent to the

party to be notified at the address as set forth on the signature pages hereof

or Exhibit A hereto or at such other address as such party may designate ten

(10) days advance written notice to the other parties hereto.

5.8 ATTORNEYS' FEES. In the event that any dispute among the parties to

this Agreement should result in litigation, the prevailing party in such dispute

shall be entitled to recover from the using party all fees, costs and expenses

of enforcing any right of such prevailing party under or with respect to this

Agreement, including without limitation, such reasonable fees and expenses of

attorneys and accountants, which shall include, without limitation, all fees,

costs and expenses of appeals.

5.9 TITLES AND SUBTITLES. The titles of the sections and subsections of

this Agreement are for convenience of reference only and are not to be

considered in construing this Agreement.

5.10 COUNTERPARTS. This Agreement may be executed in any number of

counterparts, each of which shall be an original, but all of which together

shall constitute one instrument.

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<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this Investor Rights

Agreement as of the date first set forth above.

COMPANY:

NxSTAGE MEDICAL, INC.

By: /s/ Jeffrey H. Burbank

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

Name: Jeffrey H. Burbank

Title: President

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<PAGE>

INVESTORS

/s/ Jeffrey H. Burbank

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

Jeffrey H. Burbank

/s/ David S. Utterberg

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

David S. Utterberg

WPG ENTERPRISE FUND III, L.L.C.

By: WPG VC Fund Adviser, L.L.C.,

Fund Investment Advisory Member

By: /s/ Jeani Delagardelle

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

Name: Jeani Delagardelle

Title: Managing Member

WEISS, PECK & GREER VENTURE

ASSOCIATES IV, L.L.C.

By: WPG VC Fund Adviser, L.L.C.,

Fund Investment Advisory Member

By: /s/ Jeani Delagardelle

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

Name: Jeani Delagardelle

Title: Managing Member

WEISS, PECK & GREER VENTURE

ASSOCIATES IV CAYMAN, L.P.

By: WPG Venture Advisers, Ltd.,

Administrative General Partner

By: /s/ Scott Dakers

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

Name: Scott Dakers

Title: Director

-21-

<PAGE>

ATLAS VENTURE FUND III, L.P.

By: Atlas Venture Associates III,

LLC

Its General Partner

By: /s/ [illegible]

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

Name:

Title:

ATLAS VENTURE ENTREPRENEURS'

FUND III, L.P.

By: Atlas Venture Associates III,

LLC

Its General Partner

By: /s/ [illegible]

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

Name:

Title:

-22-

<PAGE>

SPROUT CAPITAL VIII, L.P.

By: DLJ CAPITAL CORP.

Its Managing General Partner

By: /s/ Philippe O. Chambon

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

Name: Philippe O. Chambon

Title: Attorney In Fact

SPROUT VENTURE CAPITAL, L.P.

By: DLJ CAPITAL CORP.

Its Managing General Partner

By: /s/ Philippe O. Chambon

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

Name: Philippe O. Chambon

Title: Attorney In Fact

DLJ CAPITAL CORP.

By: /s/ Philippe O. Chambon

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

Name: Philippe O. Chambon

Title: Attorney In Fact

DLJ ESC II, L.P.

By: DLJ LBO Plans Management

Corporation

Its General Partner

By: /s/ Philippe O. Chambon

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

Name: Philippe O. Chambon

Title: Attorney In Fact

-23-

<PAGE>

EXHIBIT A

LIST OF INVESTORS

<TABLE>

<CAPTION>

Number Aggregate

Name and Address of Shares Purchase Price

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

<S> <C> <C>

Jeffrey H. Burbank 74,906 $ 199,999.02

18 Sunrise Road

Boxford, Massachusetts 01921

Sprout Capital VIII, L.P. 981,202 $ 2,619,809.34

3000 Sand Hill Road

Building 3, Suite 170

Menlo Park, California 94025

Sprout Venture Capital, L.P. 58,872 $ 157,188.24

3000 Sand Hill Road

Building 3, Suite 170

Menlo Park, California 94025

DLJ Capital Corp. 3,273 $ 8,738.91

3000 Sand Hill Road

B