Exhibit
10.4


 


AMENDMENT
NO. 1 TO

RIGHTS AGREEMENT


 


This AMENDMENT NO. 1, dated as of April 4, 2006 (this “Amendment”),
to the Rights Agreement, dated as of November 8, 1996, and amended and restated
as of September 25, 2001 (as in effect from time to time, the “Rights
Agreement”), by and between Tapestry Pharmaceuticals, Inc., a Delaware
corporation (the “Company”), and American Stock Transfer and Trust
Company (the “Rights Agent”), is made by and between the Company and the
Rights Agent. Capitalized terms used but not defined herein shall have the
meanings set forth in the Rights Agreement.


 


W
I T N E S S E T H


 


WHEREAS, on January
26, 2006, the Board of Directors of the Company approved the terms and
conditions of this Amendment and the entering into by the Company of this
Amendment; and


 


WHEREAS, the parties hereto constitute all of the
parties to the Rights Agreement that are required, pursuant to Section 27
thereof, to amend certain of the terms of the Rights Agreement as set forth in
this Amendment;


 


NOW, THEREFORE, the
parties hereto agree as follows:


 


1.             Amendments. The parties hereto agree to amend the Rights
Agreement as follows:


 


(a)           Each
reference in the Rights Agreement (including the Exhibits thereto) to “NaPro
BioTherapeutics, Inc.” is hereby amended by replacing it with “Tapestry
Pharmaceuticals, Inc.”


 


(b)           The
definition of the term “Acquiring Person” in Section 1(a) of the Rights
Agreement is hereby amended by replacing it in its entirety with the following:


 


“Acquiring Person” means any Person that, together
with all Affiliates and Associates of such Person, is the Beneficial Owner of
15% or more of the shares of Common Stock then outstanding, but shall not
include: (i) the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company, or any Person or
entity organized, appointed or established by the Company for or pursuant to
the terms of any such plan; (ii) any Person who would otherwise become an
Acquiring Person solely as a result of a reduction in the number of shares of
Common Stock outstanding due to the acquisition of shares of Common Stock by
the Company or a Subsidiary of the Company, unless and until such Person shall
thereafter purchase or otherwise become the Beneficial Owner of 


 

















 


additional shares of Common Stock constituting one
percent or more of the then outstanding shares of Common Stock; or (iii) any of
the following Persons who would otherwise become an Acquiring Person solely as
a result of the acquisition by such Person, together with all Affiliates and
Associates of such Person, of Common Stock (or any securities directly or
indirectly convertible into or exchangeable for any Common Stock) pursuant to
the terms of (A) that certain Purchase Agreement, dated as of February 2, 2006, by and among the
Company and the warrants issued under such Purchase Agreement, or (B) any other
acquisition by any such Person, together with all Affiliates and Associates of
such Person, following the date hereof pursuant to which such Person, together
with all Affiliates and Associates of such Person, acquires from the Company or
otherwise, in the aggregate together with all other acquisitions of Common
Stock by such Persons pursuant to this clause (B), no more than 1.0% of the
then issued and outstanding Common Stock: Special Situations Fund III QP, L.P.,
Special Situations Fund III, L.P., Special Situations Cayman Fund, L.P.,
Special Situations Private Equity Fund, L.P., Special Situations Life Sciences
Fund, L.P., 14159, L.P., Baker Biotech
Fund II (Z), L.P., Baker Biotech Fund III, L.P., Baker Biotech Fund III (Z),
L.P., Baker Bros. Investments II, L.P., Biotechnology Value Fund, L.P.,
Biotechnology Value Fund II, L.P., BVF Investments, L.L.C., Investment 10,
L.L.C., Fort Mason Master, L.P., Fort Mason Partners, L.P., Tang Capital
Partners, LP, Kevin C. Tang as Custodian for Julian Kong Tang Under the CA
Transfer to Minors Act, Kevin C. Tang as Custodian for Justin Lee Tang Under
the CA Transfer to Minors Act, Kevin C. Tang as Custodian for Noa Young Tang
Under the CA Transfer to Minors Act, Kevin Tang and Haeyoung Tang Trustees The
Tang Family Trust Dated 8-27-02 and IRA FBO Kevin Tang DB Securities Inc.
Custodian Rollover Account.


 


(c)           The
definition of the term “Distribution Date” in Section 1(h)(ii) of the Rights
Agreement is hereby amended by replacing the reference to “20%” with “15%.”


 


2.             Effect of Amendment. Except as expressly set forth herein, this
Amendment shall not alter, modify, amend or in any way affect any of the terms,
conditions, covenants, obligations or agreements contained in the Rights
Agreement, all of which are ratified and affirmed in all respects and shall
continue to be in full force and effect.


 


3.             Counterparts. This Amendment may be executed in any number of
counterparts, which taken together shall be deemed to constitute one and the
same agreement and each of which individually shall be deemed to be an
original, with the same effect as if the signature on each counterpart were on
the same original.


 


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4.             Governing Law. This Amendment shall be governed by and construed
in accordance with the laws of the State of Delaware without regard to
conflicts of laws principles.


 


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SIGNATURE
PAGE TO AMENDMENT NO. 1.


 


IN WITNESS WHEREOF,
the undersigned have executed this Amendment dated as of the date first written
above.


 


	
   

  	
  TAPESTRY
  PHARMACEUTICALS, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Kai P. Larson

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Kai Larson

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  AMERICAN
  STOCK TRANSFER AND 

  TRUST COMPANY

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Herbert J. Lemmer

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Herbert J. Lemmer

  	
   

  
	
   

  	
   

  	
  Title: 

  	
  Vice President