Exhibit No. 10.3


 


Schedule Required by
Instruction 2 to Item 601

of Regulation S-K


 


The Warrants are substantially identical in
all material respects except as to the parties thereto, the amount of Warrant Shares
and the inclusion of the bracketed language in Section 3.


 


	
  Party

  	
   

  	
  Amount of Warrant

  Shares

  	
   

  	
  Bracketed language

  in Section 3

  	
   

  
	
  14159, L.P.

  	
   

  	
  113,874

  	
   

  	
  yes

  	
   

  
	
  Baker Biotech Fund II (Z), L.P.

  	
   

  	
  54,481

  	
   

  	
  yes

  	
   

  
	
  Baker Biotech Fund III, L.P.

  	
   

  	
  1,525,130

  	
   

  	
  yes

  	
   

  
	
  Baker Biotech Fund III (Z), L.P.

  	
   

  	
  264,874

  	
   

  	
  yes

  	
   

  
	
  Baker Bros. Investments II, L.P.

  	
   

  	
  41,641

  	
   

  	
  yes

  	
   

  
	
  Biotechnology Value Fund, L.P.

  	
   

  	
  336,000

  	
   

  	
  yes

  	
   

  
	
  Biotechnology Value Fund II, L.P.

  	
   

  	
  229,800

  	
   

  	
  yes

  	
   

  
	
  BVF Investments, L.L.C.

  	
   

  	
  833,100

  	
   

  	
  yes

  	
   

  
	
  Investment 10, L.L.C.

  	
   

  	
  101,100

  	
   

  	
  yes

  	
   

  
	
  Fort Mason Master, L.P.

  	
   

  	
  1,408,650

  	
   

  	
  yes

  	
   

  
	
  Fort Mason Partners, L.P.

  	
   

  	
  91,350

  	
   

  	
  yes

  	
   

  
	
  Capital Ventures International

  	
   

  	
  1,000,000

  	
   

  	
  yes

  	
   

  
	
  Merlin BioMed Long Term Appreciation, LP

  	
   

  	
  175,000

  	
   

  	
  yes

  	
   

  
	
  Merlin BioMed Offshore Master Fund

  	
   

  	
  325,000

  	
   

  	
  yes

  	
   

  
	
  Special Situations Cayman Fund, L.P.

  	
   

  	
  350,000

  	
   

  	
  no

  	
   

  
	
  Special Situations Fund III, L.P.

  	
   

  	
  100,000

  	
   

  	
  no

  	
   

  
	
  Special Situations Fund III QP, L.P.

  	
   

  	
  1,200,000

  	
   

  	
  no

  	
   

  
	
  Special Situations Life Sciences Fund, L.P.

  	
   

  	
  350,000

  	
   

  	
  no

  	
   

  
	
  Special Situations Private Equity Fund, L.P.

  	
   

  	
  500,000

  	
   

  	
  no

  	
   

  
	
  IRA FBO Chung W. Kong DB Securities Inc. Custodian Roth Conversion
  Account

  	
   

  	
  10,000

  	
   

  	
  yes

  	
   

  
	
  IRA FBO Chang L. Kong DB Securities Inc. Custodian Roth Conversion
  Account

  	
   

  	
  10,000

  	
   

  	
  yes

  	
   

  
	
  Tang Capital Partners, LP

  	
   

  	
  1,705,000

  	
   

  	
  yes

  	
   

  
	
  Kevin C. Tang as Custodian for Julian Kong Tang Under the CA Transfer
  to Minors Act

  	
   

  	
  35,000

  	
   

  	
  yes

  	
   

  
	
  Kevin C. Tang as Custodian for Justin Lee Tang Under the CA Transfer
  to Minors Act

  	
   

  	
  50,000

  	
   

  	
  yes

  	
   

  
	
  Kevin C. Tang as Custodian for Noa Young Tang Under the CA Transfer
  to Minors Act

  	
   

  	
  15,000

  	
   

  	
  yes

  	
   

  
	
  Kevin Tang and Haeyoung Tang Trustees The Tang Family Trust Dated
  8-27-02

  	
   

  	
  150,000

  	
   

  	
  yes

  	
   

  
	
  IRA FBO Kevin Tang DB Securities Inc. Custodian Rollover Account

  	
   

  	
  25,000

  	
   

  	
  yes

  	
   

  



 

















 


	
  Versant Capital Management LLC

  	
   

  	
  750,000

  	
   

  	
  yes

  	
   

  
	
  Xmark JV Investment Partners, LLC

  	
   

  	
  500,000

  	
   

  	
  yes

  	
   

  
	
  Xmark Opportunity Fund, L.P.

  	
   

  	
  225,000

  	
   

  	
  yes

  	
   

  
	
  Xmark Opportunity Fund, Ltd.

  	
   

  	
  275,000

  	
   

  	
  yes

  	
   

  



 


2

















 


THE SECURITIES REPRESENTED HEREBY MAY NOT
BE TRANSFERRED UNLESS (I) SUCH SECURITIES HAVE BEEN REGISTERED FOR SALE
PURSUANT TO THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), (II) SUCH SECURITIES MAY BE SOLD PURSUANT TO RULE 144(K) OF THE
SECURITIES ACT, OR (III) THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO IT THAT SUCH TRANSFER MAY LAWFULLY BE MADE
WITHOUT REGISTRATION UNDER THE SECURITIES ACT OR QUALIFICATION UNDER APPLICABLE
STATE SECURITIES LAWS.


 


SUBJECT TO THE
PROVISIONS OF SECTION 10 HEREOF, THIS WARRANT SHALL BE VOID AFTER 5:00 P.M.
EASTERN TIME ON THE FIFTH ANNIVERSARY (THE “EXPIRATION DATE”) OF THE DATE OF
ISSUANCE OF THIS WARRANT (THE “DATE OF ISSUANCE”).


 


No.        


 


 


TAPESTRY
PHARMACEUTICALS, INC.


 


WARRANT TO
PURCHASE         SHARES OF


COMMON
STOCK, PAR VALUE $0.0075 PER SHARE


 


For VALUE
RECEIVED,                        
(“Warrantholder”), is entitled to purchase, subject to the provisions of this
Warrant, from Tapestry Pharmaceuticals, Inc., a Delaware corporation (“Company”),
at any time not later than 5:00 P.M., Eastern time, on the Expiration Date
(as defined above), at an exercise price per share equal to $2.40 (the exercise
price in effect being herein called the “Warrant Price”),                          
(“Warrant Shares”) of the Company’s Common Stock, par value $0.0075 per share (“Common
Stock”).  The number of Warrant Shares
purchasable upon exercise of this Warrant and the Warrant Price shall be
subject to adjustment from time to time as described herein.


 


Section 1.       Registration.  The Company shall maintain books for the
transfer and registration of this Warrant. 
Upon the initial issuance of this Warrant, the Company shall issue and
register this Warrant in the name of the Warrantholder.


 


Section 2.       Transfers.  As provided herein, this Warrant may be
transferred only pursuant to a registration statement filed under the
Securities Act or pursuant to an exemption from such registration.  Subject to such restrictions, the Company
shall transfer this Warrant from time to time upon the books to be maintained
by the Company for that purpose, within five calendar days following the
surrender hereof for transfer, properly endorsed or accompanied by appropriate
instructions for transfer and such other documents as may be reasonably
required by the Company, including, if required by the Company, an opinion of
counsel to the transferor to the effect that such transfer is exempt from the
registration requirements of the Securities Act, to establish that such
transfer is being made in accordance with the terms hereof, and a new Warrant
shall be issued to the transferee and the surrendered Warrant shall be canceled
by the 


 


3

















 


Company within such five
calendar day period; provided that the Company shall advise the Warrantholder
in writing of any and all documentation (including the form and substance of
any instruction for transfer) that the Company requires to effectuate such
transfer within five calendar days of receipt by the Company of a written
request by the Warrantholder with respect thereto.


 


Section 3.       Exercise
of Warrant.  Subject to the
provisions hereof, the Warrantholder may exercise this Warrant, in whole or in
part, at any time prior to its expiration upon surrender of this Warrant,
together with delivery of a duly executed Warrant exercise form, in the form
attached hereto as Appendix A (the “Exercise Agreement”) and payment by cash,
certified check or wire transfer of funds (or, in certain circumstances, by
cashless exercise as provided below) of  the aggregate Warrant Price for that number of
Warrant Shares then being purchased, to the Company during normal business
hours on any business day at the Company’s principal executive offices (or such
other office or agency of the Company as it may designate by notice to the
Warrantholder).  The Warrant Shares so
purchased shall be deemed to be issued to the Warrantholder or the
Warrantholder’s designee, as the record owner of such shares, as of the close
of business on the date on which this Warrant shall have been surrendered (or
the date evidence of loss, theft or destruction thereof and security or
indemnity satisfactory to the Company has been provided to the Company), the
Warrant Price shall have been paid and the completed Exercise Agreement shall
have been delivered.  Certificates for
the Warrant Shares so purchased shall be delivered to the Warrantholder within
a reasonable time, not exceeding three (3) business days, after this
Warrant shall have been so exercised. 
The certificates so delivered shall be in such denominations as may be
requested by the Warrantholder and shall be registered in the name of the
Warrantholder or such other name as shall be designated by the Warrantholder,
as specified in the Exercise Agreement. 
If this Warrant shall have been exercised only in part, then, unless
this Warrant has expired, the Company shall, at its expense, at the time of
delivery of such certificates, deliver to the Warrantholder a new Warrant
representing the right to purchase the number of shares with respect to which
this Warrant shall not then have been exercised.  As used herein, “business day” means a day,
other than a Saturday or Sunday, on which banks in New York City are open for
the general transaction of business. 
Each exercise hereof shall constitute the re-affirmation by the
Warrantholder that the representations and warranties contained in Section 5
of the Purchase Agreement (as defined below) are true and correct in all
material respects with respect to the Warrantholder as of the time of such
exercise.  [Notwithstanding anything to
the contrary contained herein, the number of Warrant Shares that may be
acquired by the Warrantholder upon any exercise of this Warrant (or otherwise
in respect hereof) shall be limited to the extent necessary to insure that,
following such exercise (or other issuance), the total number of shares of
Common Stock then beneficially owned by such Warrantholder and its Affiliates
and any other Persons (each as defined in the Purchase Agreement) whose
beneficial ownership of Common Stock would be aggregated with the Warrantholder’s
for purposes of Section 13(d) of the United States Securities
Exchange Act of 1934, as amended (the “Exchange Act”), does not exceed 9.999%
(the “Maximum Percentage”) of the total number of issued and outstanding shares
of Common Stock (including for such purpose the shares of Common Stock issuable
upon such exercise).  For such purposes,
beneficial ownership shall be determined in accordance with Section 13(d) of
the Exchange Act and the rules and regulations promulgated
thereunder.  Each delivery of an Exercise
Agreement hereunder will constitute an Exercise Agreement for the lesser of (i) the
full number of Warrant 


 


4

















 


Shares requested in such
Exercise Agreement or (ii) such number of Warrant Shares giving effect to
the limitation set forth in the foregoing sentences.  The Company and the Warrantholder shall
cooperate to determine the effect of the limitations set forth herein.  The Company’s right and obligation to issue
shares of Common Stock in excess of the limitation referred to in this Section 3
shall be suspended (and, except as provided below, shall not terminate or
expire notwithstanding any contrary provisions hereof) until such time, if any,
as such shares of Common Stock may be issued in compliance with such
limitation; provided that, if, as of 5:00 p.m., Eastern time, on the
Expiration Date, the Company has not received written notice that the shares of
Common Stock may be issued in compliance with such limitation, the Company’s
obligation to issue such shares shall terminate.  This provision shall not restrict the number
of shares of Common Stock which a Warrantholder may receive or beneficially own
in order to determine the amount of securities or other consideration that such
Warrantholder may receive in the event of a transaction of the type
contemplated in Section 8(b) of this Warrant.  The restrictions set forth in this Section 3
may be waived by the Warrantholder upon not less than 61 days’ written notice
to the Company.]


 


Section 4.       Compliance
with the Securities Act of 1933. Except as provided in the Purchase
Agreement (as defined below), the Company may cause the legend set forth on the
first page of this Warrant to be set forth on each Warrant, and a similar
legend on any security issued or issuable upon exercise of this Warrant, unless
counsel for the Company is of the opinion as to any such security that such
legend is unnecessary.


 


Section 5.       Payment
of Taxes.  The Company will pay any
documentary stamp taxes attributable to the initial issuance of Warrant Shares
issuable upon the exercise of this Warrant; provided, however, that the Company
shall not be required to pay any tax or taxes which may be payable in respect of
any transfer involved in the issuance or delivery of any certificates for
Warrant Shares in a name other than that of the Warrantholder in respect of
which such shares are issued, and in such case, the Company shall not be
required to issue or deliver any certificate for Warrant Shares or any Warrant
until the person requesting the same has paid to the Company the amount of such
tax or has established to the Company’s reasonable satisfaction that such tax
has been paid.  The Warrantholder shall
be responsible for income taxes due under federal, state or other law, if any
such tax is due.


 


Section 6.       Mutilated
or Missing Warrants.  In case this
Warrant shall be mutilated, lost, stolen, or destroyed, the Company shall issue
in exchange and substitution of and upon surrender and cancellation of the
mutilated Warrant, or in lieu of and substitution for this Warrant lost, stolen
or destroyed, a new Warrant of like tenor and for the purchase of a like number
of Warrant Shares, but only upon receipt of evidence reasonably satisfactory to
the Company of such loss, theft or destruction of this Warrant, and with
respect to a lost, stolen or destroyed Warrant, reasonable indemnity or bond
with respect thereto, if requested by the Company.


 


Section 7.       Reservation
of Common Stock.  The Company hereby
represents and warrants that there have been reserved, and the Company shall at
all applicable times keep reserved until issued (if necessary) as contemplated
by this Section 7, out of the authorized and unissued shares of Common
Stock, sufficient shares to provide for the exercise of the rights of 


 


5

















 


purchase represented by this
Warrant.  The Company agrees that all
Warrant Shares issued upon due exercise of this Warrant shall be, at the time
of delivery of the certificates for such Warrant Shares, duly authorized,
validly issued, fully paid and non-assessable shares of Common Stock of the
Company.


 


Section 8.       Adjustments.  Subject and pursuant to the provisions of
this Section 8, the Warrant Price and number of Warrant Shares subject to
this Warrant shall be subject to adjustment from time to time as set forth
hereinafter.


 


(a)   If
the Company shall, at any time or from time to time while this Warrant is
outstanding, pay a dividend or make a distribution on its Common Stock in
shares of Common Stock, subdivide its outstanding shares of Common Stock into a
greater number of shares or combine its outstanding shares of Common Stock into
a smaller number of shares or issue by reclassification of its outstanding
shares of Common Stock any shares of its capital stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing corporation), then the number of Warrant Shares purchasable
upon exercise of this Warrant and the Warrant Price in effect immediately prior
to the date upon which such change shall become effective, shall be adjusted by
the Company so that the Warrantholder thereafter exercising this Warrant shall
be entitled to receive the number of shares of Common Stock or other capital
stock which the Warrantholder would have received if this Warrant had been
exercised immediately prior to such event upon payment of a Warrant Price that
has been adjusted to reflect a fair allocation of the economics of such event
to the Warrantholder.  Such adjustments
shall be made successively whenever any event listed above shall occur.


 


(b)   If
any capital reorganization, reclassification of the capital stock of the
Company, consolidation or merger of the Company with another corporation in
which the Company is not the survivor, or sale, transfer or other disposition
of all or substantially all of the Company’s assets to another corporation
shall be effected, then, as a condition of such reorganization,
reclassification, consolidation, merger, sale, transfer or other disposition,
lawful and adequate provision shall be made whereby each Warrantholder shall
thereafter have the right to purchase and receive upon the basis and upon the
terms and conditions herein specified and in lieu of the Warrant Shares
immediately theretofore issuable upon exercise of this Warrant, such shares of
stock, securities or assets as would have been issuable or payable with respect
to or in exchange for a number of Warrant Shares equal to the number of Warrant
Shares immediately theretofore issuable upon exercise of this Warrant, had such
reorganization, reclassification, consolidation, merger, sale, transfer or
other disposition not taken place, and in any such case appropriate provision
shall be made with respect to the rights and interests of each Warrantholder to
the end that the provisions hereof (including, without limitation, provision
for adjustment of the Warrant Price) shall thereafter be applicable, as nearly
equivalent as may be practicable in relation to any shares of stock, securities
or assets thereafter deliverable upon the exercise hereof.  The Company shall not effect any such
consolidation, merger, sale, transfer or other disposition unless prior to or
simultaneously with the consummation thereof the successor corporation (if
other than the Company) resulting from such consolidation or merger, or the
corporation purchasing or otherwise acquiring such assets or other appropriate
corporation or entity shall assume the obligation to deliver to the
Warrantholder, at the last address of the Warrantholder appearing on the books
of the Company, such shares of stock, securities or assets as, in 


 


6

















 


accordance with the foregoing
provisions, the Warrantholder may be entitled to purchase, and the other
obligations under this Warrant.  The
provisions of this paragraph (b) shall similarly apply to successive
reorganizations, reclassifications, consolidations, mergers, sales, transfers
or other dispositions.


 


(c)   In
case the Company shall fix a payment date for the making of a distribution to
all holders of Common Stock (including any such distribution made in connection
with a consolidation or merger in which the Company is the continuing
corporation) of evidences of indebtedness or assets (other than dividends or
distributions referred to in Section 8(a)), or subscription rights or
warrants, the Warrant Price to be in effect after such payment date shall be
determined by multiplying the Warrant Price in effect immediately prior to such
payment date by a fraction, the numerator of which shall be the total number of
shares of Common Stock outstanding multiplied by the Market Price (as defined
below) per share of Common Stock immediately prior to such payment date, less
the fair market value (as determined by the Company’s Board of Directors in
good faith) of said assets or evidences of indebtedness so distributed, or of
such subscription rights or warrants, and the denominator of which shall be the
total number of shares of Common Stock outstanding multiplied by such Market
Price per share of Common Stock immediately prior to such payment date.  “Market Price” as of a particular date (the “Valuation
Date”) shall mean the following: (a) if the Common Stock is then listed on
a national stock exchange, the closing sale price of one share of Common Stock
on such exchange on the last trading day prior to the Valuation Date; (b) if
the Common Stock is then quoted on The Nasdaq Stock Market, Inc. (“Nasdaq”),
the National Association of Securities Dealers, Inc. OTC Bulletin Board
(the “Bulletin Board”) or such similar quotation system or association, the
closing sale price of one share of Common Stock on Nasdaq, the Bulletin Board
or such other quotation system or association on the last trading day prior to
the Valuation Date or, if no such closing sale price is available, the average
of the high bid and the low asked price quoted thereon on the last trading day
prior to the Valuation Date; or (c) if the Common Stock is not then listed
on a national stock exchange or quoted on Nasdaq, the Bulletin Board or such
other quotation system or association, the fair market value of one share of
Common Stock as of the Valuation Date, as determined in good faith by the Board
of Directors of the Company and the Warrantholder.  If the Common Stock is not then listed on a
national securities exchange, the Bulletin Board or such other quotation system
or association, the Board of Directors of the Company shall respond promptly,
in writing, to an inquiry by the Warrantholder prior to the exercise hereunder
as to the fair market value of a share of Common Stock as determined by the
Board of Directors of the Company.  In
the event that the Board of Directors of the Company and the Warrantholder are
unable to agree upon the fair market value in respect of subpart (c) of
this paragraph, the Company and the Warrantholder shall jointly select an
appraiser, who is experienced in such matters. 
The decision of such appraiser shall be final and conclusive, and the
cost of such appraiser shall be borne equally by the Company and the
Warrantholder.  Such adjustment shall be
made successively whenever such a payment date is fixed.


 


(d)   An
adjustment to the Warrant Price shall become effective immediately after the
payment date in the case of each dividend or distribution and immediately after
the effective date of each other event which requires an adjustment.


 


7

















 


(e)   In
the event that, as a result of an adjustment made pursuant to this Section 8,
the Warrantholder shall become entitled to receive any shares of capital stock
of the Company other than shares of Common Stock, the number of such other
shares so receivable upon exercise of this Warrant shall be subject thereafter
to adjustment from time to time in a manner and on terms as nearly equivalent
as practicable to the provisions with respect to the Warrant Shares contained
in this Warrant.


 


(f)    Except
as provided in subsection (g) hereof, if and whenever the Company
shall issue or sell, or is, in accordance with any of subsections (f)(l)
through (f)(7) hereof, deemed to have issued or sold, any shares of Common
Stock for no consideration or for a consideration per share less than the
Warrant Price in effect immediately prior to the time of such issue or sale,
then and in each such case (a “Trigger Issuance”) the then-existing
Warrant Price, shall be reduced, as of the close of business on the effective
date of the Trigger Issuance, to a price determined as follows:


 


Adjusted
Warrant Price = (A x B) + D


A+C


 


where


 


“A” equals the
number of shares of Common Stock outstanding, including Additional Shares of
Common Stock (as defined below) deemed to be issued hereunder, immediately
preceding such Trigger Issuance;


 


“B” equals the
Warrant Price in effect immediately preceding such Trigger Issuance;


 


“C” equals the
number of Additional Shares of Common Stock issued or deemed issued hereunder
as a result of the Trigger Issuance; and


 


“D” equals the
aggregate consideration, if any, received or deemed to be received by the
Company upon such Trigger Issuance;


 


provided, however, that in no event shall the
Warrant Price after giving effect to such Trigger Issuance be greater than the
Warrant Price in effect prior to such Trigger Issuance.


 


For purposes
of this subsection (f), “Additional Shares of Common Stock” shall mean all
shares of Common Stock issued by the Company or deemed to be issued pursuant to
this subsection (f), other than Excluded Issuances (as defined in subsection (g) hereof).


 


For purposes
of this subsection (f), the following subsections (f)(l) to (f)(7) shall
also be applicable:


 


(f)(1) 
Issuance of Rights or Options.  In case
at any time the Company shall in any manner grant (directly and not by
assumption in a merger or otherwise) any warrants or other rights to subscribe
for or to purchase, or any


 


8

















 


options for
the purchase of, Common Stock or any stock or security convertible into or
exchangeable for Common Stock (such warrants, rights or options being called “Options”
and such convertible or exchangeable stock or securities being called “Convertible
Securities”) whether or not such Options or the right to convert or exchange
any such Convertible Securities are immediately exercisable, and the price per
share for which Common Stock is issuable upon the exercise of such Options or
upon the conversion or exchange of such Convertible Securities (determined by
dividing (i) the sum (which sum shall constitute the applicable
consideration) of (x) the total amount, if any, received or receivable by the
Company as consideration for the granting of such Options, plus (y) the
aggregate amount of additional consideration payable to the Company upon the
exercise of all such Options, plus (z), in the case of such Options which
relate to Convertible Securities, the aggregate amount of additional
consideration, if any, payable upon the issue or sale of such Convertible
Securities and upon the conversion or exchange thereof, by (ii) the total
maximum number of shares of Common Stock issuable upon the exercise of such
Options or upon the conversion or exchange of all such Convertible Securities
issuable upon the exercise of such Options) shall be less than the Warrant
Price in effect immediately prior to the time of the granting of such Options,
then the total number of shares of Common Stock issuable upon the exercise of
such Options or upon conversion or exchange of the total amount of such
Convertible Securities issuable upon the exercise of such Options shall be
deemed to have been issued for such price per share as of the date of granting
of such Options or the issuance of such Convertible Securities and thereafter
shall be deemed to be outstanding for purposes of adjusting the Warrant
Price.  Except as otherwise provided in
subsection 8(f)(3), no adjustment of the Warrant Price shall be made upon
the actual issue of such Common Stock or of such Convertible Securities upon
exercise of such Options or upon the actual issue of such Common Stock upon
conversion or exchange of such Convertible Securities.


 


(f)(2) 
Issuance of Convertible Securities.  In
case the Company shall in any manner issue (directly and not by assumption in a
merger or otherwise) or sell any Convertible Securities, whether or not the
rights to exchange or convert any such Convertible Securities are immediately
exercisable, and the price per share for which Common Stock is issuable upon
such conversion or exchange (determined by dividing (i) the sum (which sum
shall constitute the applicable consideration) of (x) the total amount received
or receivable by the Company as consideration for the issue or sale of such
Convertible Securities, plus (y) the aggregate amount of additional
consideration, if any, payable to the Company upon the conversion or exchange
thereof, by (ii) the total number of shares of Common Stock issuable upon
the conversion or exchange of all such Convertible Securities) shall be less
than the Warrant Price in effect immediately prior to the time of such issue or
sale, then the total maximum number of shares of Common Stock issuable upon
conversion or exchange of all such Convertible Securities shall be deemed to
have been issued for such price per share as of the date of the issue or sale
of such Convertible Securities and thereafter shall be deemed to be 


 


9

















 


outstanding
for purposes of adjusting the Warrant Price, provided that (a) except as
otherwise provided in subsection 8(f)(3), no adjustment of the Warrant
Price shall be made upon the actual issuance of such Common Stock upon
conversion or exchange of such Convertible Securities and (b) no further
adjustment of the Warrant Price shall be made by reason of the issue or sale of
Convertible Securities upon exercise of any Options to purchase any such
Convertible Securities for which adjustments of the Warrant Price have been
made pursuant to the other provisions of subsection 8(f).


 


(f)(3) Change in Option Price or Conversion Rate.  Upon the happening of any of the following
events, namely, if the purchase price provided for in any Option referred to in
subsection 8(f)(l) hereof, the additional consideration, if any, payable
upon the conversion or exchange of any Convertible Securities referred to in
subsections 8(f)(l) or 8(f)(2), or the rate at which Convertible Securities
referred to in subsections 8(f)(l) or 8(f)(2) are convertible into or
exchangeable for Common Stock shall change at any time (including, but not
limited to, changes under or by reason of provisions designed to protect
against dilution), the Warrant Price in effect at the time of such event shall
forthwith be readjusted to the Warrant Price which would have been in effect at
such time had such Options or Convertible Securities still outstanding provided
for such changed purchase price, additional consideration or conversion rate,
as the case may be, at the time initially granted, issued or sold.  On the termination of any Option for which
any adjustment was made pursuant to this subsection 8(f) or any right
to convert or exchange Convertible Securities for which any adjustment was made
pursuant to this subsection 8(f) (including without limitation upon
the redemption or purchase for consideration of such Convertible Securities by
the Company), the Warrant Price then in effect hereunder shall forthwith be
changed to the Warrant Price which would have been in effect at the time of
such termination had such Option or Convertible Securities, to the extent
outstanding immediately prior to such termination, never been issued.


 


(f)(4) Stock Dividends. 
Subject to the provisions of this Section 8(f), in case the Company
shall declare a dividend or make any other distribution upon any stock of the
Company (other than the Common Stock) payable in Common Stock, Options or
Convertible Securities, then any Common Stock, Options or Convertible
Securities, as the case may be, issuable in payment of such dividend or
distribution shall be deemed to have been issued or sold without consideration.


 


(f)(5) Consideration for Stock. 
In case any shares of Common Stock, Options or Convertible Securities
shall be issued or sold for cash, the consideration received therefor shall be
deemed to be the net amount received by the Company therefor, after deduction
therefrom of any expenses incurred or any underwriting commissions or
concessions paid or allowed by the Company in connection therewith.  In case any shares of Common Stock, Options
or Convertible Securities shall be issued or sold for a consideration other
than cash, the amount of the consideration other than cash received by the
Company shall be deemed to be the fair value of such consideration as
determined in good faith by 


 


10

















 


the Board of Directors of the Company, after deduction of any expenses
incurred or any underwriting commissions or concessions paid or allowed by the
Company in connection therewith.  In case
any Options shall be issued in connection with the issue and sale of other
securities of the Company, together comprising one integral transaction in
which no specific consideration is allocated to such Options by the parties
thereto, such Options shall be deemed to have been issued for such consideration
as determined in good faith by the Board of Directors of the Company.  If Common Stock, Options or Convertible
Securities shall be issued or sold by the Company and, in connection therewith,
other Options or Convertible Securities (the “Additional Rights”) are issued,
then the consideration received or deemed to be received by the Company shall
be reduced by the fair market value of the Additional Rights (as determined
using the Black-Scholes option pricing model or another method mutually agreed
to by the Company and the Warrantholder). 
The Board of Directors of the Company shall respond promptly, in
writing, to an inquiry by the Warrantholder as to the fair market value of the
Additional Rights.  In the event that the
Board of Directors of the Company and the Warrantholder are unable to agree
upon the fair market value of the Additional Rights, the Company and the
Warrantholder shall jointly select an appraiser, who is experienced in such
matters.  The decision of such appraiser
shall be final and conclusive, and the cost of such appraiser shall be borne
evenly by the Company and the Warrantholder.


 


(f)(6) Record Date.  In case
the Company shall take a record of the holders of its Common Stock for the
purpose of entitling them (i) to receive a dividend or other distribution
payable in Common Stock, Options or Convertible Securities or (ii) to
subscribe for or purchase Common Stock, Options or Convertible Securities, then
such record date shall be deemed to be the date of the issue or sale of the shares
of Common Stock deemed to have been issued or sold upon the declaration of such
dividend or the making of such other distribution or the date of the granting
of such right of subscription or purchase, as the case may be.


 


(f)(7) Treasury Shares.  The
number of shares of Common Stock outstanding at any given time shall not
include shares owned or held by or for the account of the Company or any of its
wholly-owned subsidiaries, and the disposition of any such shares (other than
the cancellation or retirement thereof) shall be considered an issue or sale of
Common Stock for the purpose of this subsection (f).


 


(g)   Anything
herein to the contrary notwithstanding, the Company shall not be required to
make any adjustment of the Warrant Price in the case of the issuance of (A) capital
stock, Options or Convertible Securities issued to directors, officers,
employees or consultants of the Company in connection with their service as
directors of the Company, their employment by the Company or their retention as
consultants by the Company pursuant to an equity compensation program approved
by the Board of Directors of the Company or the compensation committee of the
Board of Directors of the Company, (B) shares of Common Stock issued upon
the conversion or exercise of Options or Convertible Securities issued prior to
the date hereof, 


 


11

















 


provided such securities are not amended
after the date hereof to increase the number of shares of Common Stock issuable
thereunder or to lower the exercise or conversion price thereof, (C) securities
issued pursuant to that certain Purchase Agreement dated February 2, 2006,
among the Company and the Investors named therein (the “Purchase Agreement”)
and securities issued upon the exercise or conversion of those securities, (D) shares
of Common Stock issued or issuable by reason of a dividend, stock split or
other distribution on shares of Common Stock (but only to the extent that such
a dividend, split or distribution results in an adjustment in the Warrant Price
pursuant to the other provisions of this Warrant), and (E) capital stock,
Options or Convertible Securities issued to suppliers, vendors and service
providers of and to the Company and its subsidiaries with an aggregate Market
Price (determined as of the time of such issuance) not to exceed $250,000 in
any fiscal year (collectively, “Excluded Issuances”).


 


(h)   Upon any adjustment to the Warrant Price
pursuant to Section 8(f) above, the number of Warrant Shares purchasable hereunder
shall be adjusted by multiplying such number by a fraction, the numerator of
which shall be the Warrant Price in effect immediately prior to such adjustment
and the denominator of which shall be the Warrant Price in effect immediately
thereafter.


 


Section 9.       Fractional
Interest.  The Company shall not be
required to issue fractions of Warrant Shares upon the exercise of this
Warrant.  If any fractional share of
Common Stock would, except for the provisions of the first sentence of this Section 9,
be deliverable upon such exercise, the Company, in lieu of delivering such
fractional share, shall pay to the exercising Warrantholder an amount in cash
equal to the Market Price of such fractional share of Common Stock on the date
of exercise.


 


Section 10.     Extension
of Expiration Date.  If the Company
fails to cause any Registration Statement covering Registrable Securities
(unless otherwise defined herein, capitalized terms are as defined in the
Registration Rights Agreement relating to the Warrant Shares (the “Registration
Rights Agreement”)) to be declared effective prior to the applicable dates set
forth therein, or if any of the events specified in Section 2(c)(ii) of
the Registration Rights Agreement occurs, and the Blackout Period (whether
alone, or in combination with any other Blackout Period) continues for more
than 60 days in any 12 month period, or for more than a total of 90 days, then
the Expiration Date of this Warrant shall be extended one day for each day
beyond the 60-day or 90-day limits, as the case may be, that the Blackout
Period continues.


 


Section 11.     Benefits.  Nothing in this Warrant shall be construed to
give any person, firm or corporation (other than the Company and the
Warrantholder) any legal or equitable right, remedy or claim, it being agreed
that this Warrant shall be for the sole and exclusive benefit of the Company
and the Warrantholder.


 


Section 12.     Notices
to Warrantholder.  Upon the happening
of any event requiring an adjustment of the Warrant Price, the Company shall
promptly give written notice thereof to the Warrantholder at the address
appearing in the records of the Company, stating the adjusted Warrant Price and
the adjusted number of Warrant Shares resulting from such event and setting
forth in reasonable detail the method of calculation and the facts upon which
such calculation is 


 


12

















 


based.  Failure to give such notice to the
Warrantholder or any defect therein shall not affect the legality or validity
of the subject adjustment.


 


Section 13.     Identity
of Transfer Agent.  The Transfer
Agent for the Common Stock is American Stock Transfer & Trust
Company.  Upon the appointment of any
subsequent transfer agent for the Common Stock or other shares of the Company’s
capital stock issuable upon the exercise of the rights of purchase represented
by this Warrant, the Company will mail to the Warrantholder a statement setting
forth the name and address of such transfer agent.


 


Section 14.     Notices.  Unless otherwise provided, any notice
required or permitted under this Warrant shall be given in writing and shall be
deemed effectively given as hereinafter described (i) if given by personal
delivery, then such notice shall be deemed given upon such delivery, (ii) if
given by telex or facsimile, then such notice shall be deemed given upon
receipt of confirmation of complete transmittal, (iii) if given by mail,
then such notice shall be deemed given upon the earlier of (A) receipt of
such notice by the recipient or (B) three days after such notice is
deposited in first class mail, postage prepaid, and (iv) if given by an
internationally recognized overnight air courier, then such notice shall be
deemed given one business day after delivery to such carrier.  All notices shall be addressed as follows: if
to the Warrantholder, at its address as set forth in the Company’s books and
records and, if to the Company, at the address as follows, or at such other
address as the Warrantholder or the Company may designate by ten days’ advance
written notice to the other:


 


If to the
Company:


 


Tapestry
Pharmaceuticals, Inc.


4840 Pearl
East Circle, Suite 300W


Boulder,
Colorado 80301


Attention:  Leonard Shaykin, Chairman and Chief Executive
Officer


Fax:  (212) 319-2808


 


With a copy
to:


 


Kirkland &
Ellis LLP


Citigroup
Center


153 East 53rd
Street


New York, New
York 10022-4611


Attention:  Michael Movsovich


Fax: (212) 446-6460


 


Section 15.     Registration
Rights.  The initial Warrantholder is
entitled to the benefit of certain registration rights with respect to the shares
of Common Stock issuable upon the exercise of this Warrant as provided in the
Registration Rights Agreement, and any subsequent Warrantholder may be entitled
to such rights.


 


13

















 


Section 16.     Successors.  All the covenants and provisions hereof by or
for the benefit of the Warrantholder shall bind and inure to the benefit of its
respective successors and assigns hereunder.


 


Section 17.     Governing
Law; Consent to Jurisdiction; Waiver of Jury Trial.  This Warrant shall be governed by, and
construed in accordance with, the internal laws of the State of New York,
without reference to the choice of law provisions thereof.  The Company and, by accepting this Warrant,
the Warrantholder, each irrevocably submits to the exclusive jurisdiction of
the courts of the State of New York located in New York County and the United
States District Court for the Southern District of New York for the purpose of
any suit, action, proceeding or judgment relating to or arising out of this
Warrant and the transactions contemplated hereby.  Service of process in connection with any
such suit, action or proceeding may be served on each party hereto anywhere in
the world by the same methods as are specified for the giving of notices under
this Warrant.  The Company and, by
accepting this Warrant, the Warrantholder, each irrevocably consents to the
jurisdiction of any such court in any such suit, action or proceeding and to
the laying of venue in such court.  The
Company and, by accepting this Warrant, the Warrantholder, each irrevocably
waives any objection to the laying of venue of any such suit, action or
proceeding brought in such courts and irrevocably waives any claim that any
such suit, action or proceeding brought in any such court has been brought in
an inconvenient forum.  EACH OF THE COMPANY AND, BY ITS ACCEPTANCE
HEREOF, THE WARRANTHOLDER HEREBY WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN
ANY LITIGATION WITH RESPECT TO THIS WARRANT AND REPRESENTS THAT COUNSEL HAS
BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.


 


Section 18.     Call
Provision.


 


(a)   Subject
to the provisions of clauses (b) and (c) below, in the event that the
closing bid price of a share of Common Stock as traded on Nasdaq (or such other
exchange or stock market on which the Common Stock may then be listed or
quoted) equals or exceeds $4.80 (appropriately adjusted for any stock split,
reverse stock split, stock dividend or other reclassification or combination of
the Common Stock occurring after the date hereof) for at least twenty (20)
consecutive trading days during which the Registration Statement (as defined in
the Registration Rights Agreement) has been effective (the “Trading Condition”),
the Company, upon thirty (30) days prior written notice (the “Notice Period”)
given to the Warrantholder within three (3) business days immediately
following the end of such twenty (20) consecutive trading day period, may call
this Warrant at a redemption price equal to $0.0075 per share of Common Stock
then purchasable pursuant to this Warrant; provided that (i) the Company
simultaneously calls all Company Warrants (as defined below) on the same terms
and on a pro rata basis based on the aggregate number of shares of Common Stock
then purchasable pursuant to such Company Warrants, (ii) all of the shares
of Common Stock issuable hereunder either (A) are registered pursuant to
an effective Registration Statement (as defined in the Registration Rights
Agreement) which has not been suspended and for which no stop order is in
effect, and pursuant to which the Warrantholder is able to sell such shares of
Common Stock at all times during the Notice Period or (B) no longer
constitute Registrable Securities (as defined in the Registration Rights
Agreement) and (iii) this Warrant is fully exercisable for the full amount
of 


 


14

















 


Warrant Shares covered hereby.  Notwithstanding any such notice by the
Company, the Warrantholder shall have the right to exercise this Warrant prior
to the end of the Notice Period.


 


(b)   In
any three-month period, no more than the lesser of (i) 20% of the
aggregate amount of Warrants initially issued to a Warrantholder or (ii) the
number of Warrants held by the Warrantholder, may be called by the Company and
the Company may not call additional Warrants in any subsequent three-month
period unless all the conditions specified in Section 18(a) are again
met (including without limitation, the Trading Condition) at the time that any
subsequent call notice is given.


 


(c)   In
connection with any transfer or exchange of less than all of this Warrant, the
transferring Warrantholder shall deliver to the Company an agreement or
instrument executed by the transferring Warrantholder and the new Warrantholder
allocating between them on whatever basis they may determine in their sole
discretion any subsequent call of this Warrant by the Company, such that after
giving effect to such transfer the Company shall have the right to call the
same number of Warrants that it would have had if the transfer or exchange had
not occurred.


 


Section 19.     Cashless
Exercise.  Notwithstanding any other
provision contained herein to the contrary, from and after the first
anniversary of the Date of Issuance, the Warrantholder may elect to receive,
without payment by the Warrantholder of the aggregate Warrant Price in respect
of the shares of Common Stock to be acquired, shares of Common Stock having a
fair market value equal to the Market Price of all shares of Common Stock that
may then be purchased upon full exercise of this Warrant, less the aggregate
exercise price for all such shares, or any specified portion thereof (including
as contemplated by clause (b) below), by the surrender to the Company of
this Warrant (or such portion of this Warrant being so exercised) together with
a Net Issue Election Notice, in the form annexed hereto as Appendix B, duly
executed, to the Company; provided that such election may be made only, (a) for
so long as the Company is required under the Registration Rights Agreement to
have effected the registration of the Warrant Shares for resale to the public
pursuant to a Registration Statement (as such term is defined in the
Registration Rights Agreement), if the Warrant Shares may not be freely sold to
the public for any reason (including, but not limited to, the failure of the
Company to have effected the registration of the Warrant Shares or to have a
current prospectus available for delivery or otherwise, but excluding the
period of any Allowed Delay (as defined in the Registration Rights Agreement),
or (b) at any other time, with respect to an aggregate number of Warrant
Shares equal to up to, but not in excess of, 50% of the Warrant Shares (in
aggregate together with all prior cashless exercises of a portion of this
Warrant) initially issued to the initial Warrantholder pursuant to the Purchase
Agreement.  Thereupon, the Company shall
issue to the Warrantholder such number of fully paid, validly issued and
nonassessable shares of Common Stock as is computed using the following formula:


 


X = Y (A - B)


A


 


where


 


15

















 


X =          the
number of shares of Common Stock to which the Warrantholder is entitled upon
such cashless exercise;


 


Y =          the
total number of shares of Common Stock covered by this Warrant for which the
Warrantholder has surrendered purchase rights at such time for cashless
exercise (including both shares to be issued to the Warrantholder and shares as
to which the purchase rights are to be canceled as payment therefor);


 


A =         the
“Market Price” of one share of Common Stock as at the date the net issue
election is made; and


 


B =          the
Warrant Price in effect under this Warrant at the time the net issue election
is made.


 


Section 20.     No
Rights as Stockholder.  Prior to the
exercise of this Warrant, the Warrantholder shall not have or exercise any
rights as a stockholder of the Company by virtue of its ownership of this
Warrant.


 


Section 21.     Amendment;
Waiver.  This Warrant is one of a
series of Warrants of like tenor issued by the Company pursuant to the Purchase
Agreement and initially covering an aggregate of 12,750,000 shares of Common
Stock (collectively, the “Company Warrants”).  Any term of this Warrant may be amended or
waived (including the adjustment provisions included in Section 8 of this
Warrant) upon the written consent of the Company and the holders of Company
Warrants representing at least 50% of the number of shares of Common Stock then
subject to all outstanding Company Warrants (the “Majority Holders”); provided,
that (x) any such amendment or waiver must apply to all Company Warrants; and
(y) the number of Warrant Shares subject to this Warrant, the Warrant Price and
the Expiration Date may not be amended, and the right to exercise this Warrant
may not be altered or waived, without the written consent of the Warrantholder.


 


Section 22.     Section Headings.  The section headings in this Warrant are
for the convenience of the Company and the Warrantholder and in no way alter,
modify, amend, limit or restrict the provisions hereof.


 


16

















 


SIGNATURE PAGE
TO WARRANT


 


IN WITNESS
WHEREOF, the Company has caused this Warrant to be duly executed, as of the           
day of                 ,
2006.


 


	
   

  	
  TAPESTRY PHARMACEUTICALS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Kai P. Larson

  
	
   

  	
  Title:

  	
  Vice President, General Counsel and

  Secretary

  
						



 

















 


SIGNATURE PAGE
TO WARRANT


 


ACCEPTED AND AGREED TO AS OF
THE DATE SET FORTH ABOVE BY:


 


	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  



 


18

















 


APPENDIX A


TAPESTRY
PHARMACEUTICALS, INC.


WARRANT
EXERCISE FORM


 


To: Tapestry
Pharmaceuticals, Inc.


 


The
undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Warrant (“Warrant”) for, and to purchase thereunder
by the payment of the Warrant Price and surrender of the Warrant,                         
shares of Common Stock (“Warrant Shares”) provided for therein, and requests
that certificates for the Warrant Shares be issued as follows:


 


	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Federal Tax ID or Social Security No.

  	
   

  



 


	
   

  	
  and delivered by

  	
   

  	
  (certified mail to the above address, or

  
	
   

  	
   

  	
   

  	
  (electronically
  (provide DWAC
  Instructions:                                 ),
  or

  
	
   

  	
   

  	
   

  	
  (other (specify):
                                                                                ).

  



 


and, if the number of Warrant
Shares shall not be all the Warrant Shares purchasable upon exercise of the
Warrant, that a new Warrant for the balance of the Warrant Shares purchasable upon
exercise of this Warrant be registered in the name of the undersigned
Warrantholder or the undersigned’s Assignee as below indicated and delivered to
the address stated below.


 


	
  Dated:
                          ,
       

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Note: The signature must correspond with

  	
   

  	
   

  	
  Signature:

  	
   

  	
   

  
	
  the name of the Warrantholder as written

  	
   

  	
   

  	
   

  	
   

  
	
  on the first page of the Warrant in
  every

  	
   

  	
   

  	
   

  	
   

  
	
  particular, without alteration or
  enlargement

  	
   

  	
   

  	
  Name (please print)

  	
   

  
	
  or any change whatever, unless the Warrant

  	
   

  	
   

  	
   

  	
   

  
	
  has been assigned.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Address

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Federal Identification or

  	
   

  
	
   

  	
   

  	
   

  	
  Social Security No.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Assignee:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  



 

















 


APPENDIX B


TAPESTRY
PHARMACEUTICALS, INC.


NET ISSUE
ELECTION NOTICE


 


 


To: Tapestry Pharmaceuticals, Inc.


 


Date: [                                           ]


 


 


The
undersigned hereby elects under Section 19 of this Warrant to
surrender the right to purchase [                       ]
shares of Common Stock pursuant to this Warrant and hereby requests the
issuance of [                       ]
 shares of Common Stock.  The certificate(s) for the shares issuable
upon such net issue election shall be issued in the name of the undersigned or
as otherwise indicated below.


 


 


	
   

  	
   

  
	
  Signature

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Name for Registration

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Mailing Address