Document:

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                                                                    EXHIBIT 10.1

*CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

                                    AMENDMENT
                                    NO. 1 TO
                        INTELLECTUAL PROPERTY ASSIGNMENT
                            AND ASSUMPTION AGREEMENT

      This Amendment No. 1, dated as of July 16, 2004, amends that certain
Intellectual Property Assignment and Assumption Agreement (the "Agreement"),
dated August 1, 2002, by and between Dr. Reza Fassihi ("Dr. Fassihi") and SCOLR,
Inc. (formerly known as Nutraceutix, Inc., "SCOLR").

      WHEREAS, Dr. Fassihi has performed substantial services to improve and
      enhance the value of the Intellectual Property;

      WHEREAS, Dr. Fassihi has not received the payment required under Section
      4.1 of the Agreement; NOW, THEREFORE

      RESOLVED, that, for good and valuable consideration, the receipt and
      sufficiency of which is hereby acknowledged by the parties, the parties
      agree as follows:

            1.    Paragraph 4 of the Agreement is amended to read in its
                  entirety as follows:

                  "4.1 Assignment Fee. As full compensation for the assignment
      and assumption described in Paragraph 1 of the Agreement and fulfillment
      of all of Dr. Fassihi's obligations under this Agreement, SCOLR shall pay
      Dr. Fassihi (i) Twenty-Five Thousand Dollars ($25,000) promptly upon
      execution of this Agreement, and (ii) Twenty-Five Thousand Dollars
      ($25,000) within five days of the filing of a patent application relating
      to the Intellectual Property with the U.S. Patent & Trademark Office
      ("Patent Application"). The parties hereby represent, warrant and agree
      that such payment constitutes full compensation for the assignment and
      assumption described in Paragraph 1 of the Agreement and waive any and all
      claims that additional or different compensation is due for any reason
      except as specifically set forth herein.

                  4.2 Patent Fee. In the event a United States patent is issued
      pursuant to the Patent Application described in Paragraph 4.1, SCOLR shall
      pay Dr. Fassihi Fifty Thousand Dollars ($50,000) promptly upon issuance of
      the first such patent.

                  4.3 Additional Compensation. In consideration of services to
      be provided by Dr. Fassihi pursuant to Paragraph 7 of the Agreement, SCOLR
      shall pay Dr. Fassihi (i) an amount equal to [*] percent ([*%]) of all
      Up-Front License Fees (as defined below) received by SCOLR upon licensing
      any and all products incorporating the Intellectual Property (each such
      resulting product or products a "Covered Use" and collectively the
      "Covered Uses"),

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      and (ii) royalties equal to [*] percent ([*]%) of SCOLR's Net Sales (as
      defined below) generated from the Covered Uses. Payments hereunder shall
      be made quarterly in arrears, not more than ninety (90) days following the
      end of the applicable quarter."

            For purposes of this Paragraph 4.3:

                  "Net Sales" shall mean shall mean the gross receipts by SCOLR
            from a Covered Use less deductions for (i) transportation charges,
            insurance, sales and excise taxes and duties paid; (ii) normal and
            customary trade, quantity and cash discounts allowed, (iii) sale
            commissions and (iv) allowances on account of rejection or return by
            customers.

                  "Up-Front License Fees" shall mean shall mean compensation
            received by SCOLR upon the grant of a license or licenses for a
            Covered Use. Up-Front License Fees shall exclude (i) any royalty,
            commission, or other compensation, received by SCOLR or any other
            party, which is based upon the number of units sold or revenues
            generated from any license or sale of a Covered Use, and (ii) any
            payments received by SCOLR for research and development or
            feasibility studies with respect to the Intellectual Property, a
            Covered Use, or related applications. Further, Up-Front License Fees
            and Net Sales shall be reduced by all costs and expenses incurred by
            SCOLR in obtaining the Intellectual Property and developing the
            Covered Uses, including without limitation, all costs and expenses
            associated with research and development, legal, business
            development, and travel.

            The payment obligations of SCOLR set forth in Paragraph 4.3 shall
      terminate upon the earlier of (i) expiration of any corresponding patent
      covering the Intellectual Property, (ii) the conclusion of a two year
      period during which SCOLR failed to receive any licensing or royalty
      revenues for the Covered Uses, or (iii) upon the mutual written agreement
      of the parties.

            2.    Paragraph 6 of the Consulting Agreement dated December 22,
      2000, as amended (the "Consulting Agreement") is hereby amended to add the
      following to the end of said paragraph:

            Without limiting the generality of the foregoing, Dr. Fassihi hereby
            represents, warrants and confirms that (i) the concept for the
            Intellectual Property was originated by SCOLR, (ii) he has not
            furnished any information regarding the Intellectual Property to any
            person or entity other than employees of SCOLR, (iii) to the best of
            his knowledge, no person or entity other than SCOLR owns or has
            claim to any proprietary or other right in the Intellectual
            Property, and (iv) the Intellectual Property constitutes a "SCOLR
            Innovation" for all purposes under this Agreement.

            3.    In light of SCOLR's name change from Nutraceutix, Inc. to
      SCOLR, Inc., all references to Nutraceutix in the Agreement, the
      Consulting Agreement (and any related Additional Services Agreements or
      other amendments thereto), shall be deemed a reference to SCOLR.

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            4.    Except as specifically modified by this Amendment, the
      Agreement shall remain in full force and effect.

Dr. Fassihi: SCOLR, Inc.

By: /s/ Reza Fassihi                            By: /s/ Daniel O. Wilds
    ------------------------                        --------------------------
    Reza Fassihi, Ph.D.                             Daniel O. Wilds, President<PAGE>

                                                                    EXHIBIT 10.2

                               SCOLR PHARMA, INC.
                             STOCK OPTION AGREEMENT

      SCOLR Pharma, Inc. has granted to the individual (the "OPTIONEE") named in
the Notice of Grant of Stock Option (the "NOTICE") to which this Stock Option
Agreement (the "OPTION AGREEMENT") is attached an option (the "OPTION") to
purchase certain shares of Stock upon the terms and conditions set forth in the
Notice and this Option Agreement. The Option has been granted pursuant to and
shall in all respects be subject to the terms and conditions of the SCOLR
Pharma, Inc. 2004 Equity Incentive Plan (the "PLAN"), as amended to the Date of
Option Grant, the provisions of which are incorporated herein by reference. By
signing the Notice, the Optionee: (a) represents that the Optionee has received
copies of, and has read and is familiar with the terms and conditions of, the
Notice and this Option Agreement, (b) accepts the Option subject to all of the
terms and conditions of the Notice, the Plan and this Option Agreement, and (c)
agrees to accept as binding, conclusive and final all decisions or
interpretations of the Board upon any questions arising under the Notice, the
Plan or this Option Agreement.

      1.    DEFINITIONS AND CONSTRUCTION.

            1.1   DEFINITIONS. Unless otherwise defined herein, capitalized
terms shall have the meanings assigned to such terms in the Notice or the Plan.

            1.2   CONSTRUCTION. Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of this Option Agreement. Except when otherwise indicated by the
context, the singular shall include the plural and the plural shall include the
singular. Use of the term "or" is not intended to be exclusive, unless the
context clearly requires otherwise.

      2.    TAX CONSEQUENCES.

            2.1   TAX STATUS OF OPTION. This Option is intended to have the tax
status designated in the Notice.

                  (a)   INCENTIVE STOCK OPTION. If the Notice so designates,
this Option is intended to be an Incentive Stock Option within the meaning of
Section 422(b) of the Code, but the Company does not represent or warrant that
this Option qualifies as such. The Optionee should consult with the Optionee's
own tax advisor regarding the tax effects of this Option and the requirements
necessary to obtain favorable income tax treatment under Section 422 of the
Code, including, but not limited to, holding period requirements. (NOTE TO
OPTIONEE: If the Option is exercised more than three (3) months after the date
on which you cease to be an Employee (other than by reason of your death or
permanent and total disability as defined in Section 22(e)(3) of the Code), the
Option will be treated as a Nonstatutory Stock Option and not as an Incentive
Stock Option to the extent required by Section 422 of the Code.)

                  (b)   NONSTATUTORY STOCK OPTION. If the Notice so designates,
this Option is intended to be a Nonstatutory Stock Option and shall not be
treated as an Incentive Stock Option within the meaning of Section 422(b) of the
Code.

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            2.2   ISO FAIR MARKET VALUE LIMITATION. If the Notice designates
this Option as an Incentive Stock Option, then to the extent that the Option
(together with all Incentive Stock Options granted to the Optionee under all
stock option plans of the Participating Company Group, including the Plan)
becomes exercisable for the first time during any calendar year for shares
having a Fair Market Value greater than One Hundred Thousand Dollars ($100,000),
the portion of such options which exceeds such amount will be treated as
Nonstatutory Stock Options. For purposes of this Section 2.2, options designated
as Incentive Stock Options are taken into account in the order in which they
were granted, and the Fair Market Value of stock is determined as of the time
the option with respect to such stock is granted. If the Code is amended to
provide for a different limitation from that set forth in this Section 2.2, such
different limitation shall be deemed incorporated herein effective as of the
date required or permitted by such amendment to the Code. If the Option is
treated as an Incentive Stock Option in part and as a Nonstatutory Stock Option
in part by reason of the limitation set forth in this Section 2.2, the Optionee
may designate which portion of such Option the Optionee is exercising. In the
absence of such designation, the Optionee shall be deemed to have exercised the
Incentive Stock Option portion of the Option first. Separate certificates
representing each such portion shall be issued upon the exercise of the Option.
(NOTE TO OPTIONEE: If the aggregate Exercise Price of the Option (that is, the
Exercise Price multiplied by the Number of Option Shares) plus the aggregate
exercise price of any other Incentive Stock Options you hold (whether granted
pursuant to the Plan or any other stock option plan of the Participating Company
Group) is greater than $100,000, you should contact the Chief Financial Officer
of the Company to ascertain whether the entire Option qualifies as an Incentive
Stock Option.)

      3.    ADMINISTRATION.

      All questions of interpretation concerning this Option Agreement shall be
determined by the Board. All determinations by the Board shall be final and
binding upon all persons having an interest in the Option. Any Officer shall
have the authority to act on behalf of the Company with respect to any matter,
right, obligation, or election which is the responsibility of or which is
allocated to the Company herein, provided the Officer has apparent authority
with respect to such matter, right, obligation, or election.

      4.    EXERCISE OF THE OPTION.

            4.1   RIGHT TO EXERCISE. Except as otherwise provided herein, the
Option shall be exercisable on and after the Date of Option Grant and prior to
the termination of the Option (as provided in Section 6) in an amount not to
exceed the number of Vested Shares less the number of shares previously acquired
upon exercise of the Option. In no event shall the Option be exercisable for
more shares than the Number of Option Shares.

            4.2   METHOD OF EXERCISE. Exercise of the Option shall be by written
notice to the Company which must state the election to exercise the Option, the
number of whole shares of Stock for which the Option is being exercised and such
other representations and agreements as to the Optionee's investment intent with
respect to such shares as may be required pursuant to the provisions of this
Option Agreement. The written notice must be signed by the Optionee and must be
delivered in person, by certified or registered mail, return receipt requested,
by confirmed facsimile transmission, or by such other means as the Company may
permit, to the

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Chief Financial Officer of the Company, or other authorized representative of
the Participating Company Group, prior to the termination of the Option as set
forth in Section 6, accompanied by full payment of the aggregate Exercise Price
for the number of shares of Stock being purchased. The Option shall be deemed to
be exercised upon receipt by the Company of such written notice and the
aggregate Exercise Price.

            4.3   PAYMENT OF EXERCISE PRICE.

                  (a)   FORMS OF CONSIDERATION AUTHORIZED. Except as otherwise
provided below, payment of the aggregate Exercise Price for the number of shares
of Stock for which the Option is being exercised shall be made (i) in cash, by
check, or cash equivalent, (ii) by tender to the Company, or attestation to the
ownership, of whole shares of Stock owned by the Optionee having a Fair Market
Value not less than the aggregate Exercise Price, (iii) by means of a Cashless
Exercise, as defined in Section 4.3(b), or (iv) by any combination of the
foregoing.

                  (b)   LIMITATIONS ON FORMS OF CONSIDERATION.

                        (i)   TENDER OF STOCK. Notwithstanding the foregoing,
the Option may not be exercised by tender to the Company, or attestation to the
ownership, of shares of Stock to the extent such tender or attestation would
constitute a violation of the provisions of any law, regulation or agreement
restricting the redemption of the Company's stock. The Option may not be
exercised by tender to the Company, or attestation to the ownership, of shares
of Stock unless such shares either have been owned by the Optionee for more than
six (6) months (and not used for another option exercise by attestation during
such period). The Company reserves, at any and all times, the right, in the
Company's sole and absolute discretion, to refuse to allow the exercise by
tender to the Company, or attestation to the ownership, of shares of Stock.

                        (ii)  CASHLESS EXERCISE. A "CASHLESS EXERCISE" means the
delivery of a properly executed notice together with irrevocable instructions to
a broker in a form acceptable to the Company providing for the assignment to the
Company of the proceeds of a sale or loan with respect to some or all of the
shares of Stock acquired upon the exercise of the Option pursuant to a program
or procedure approved by the Company (including, without limitation, through an
exercise complying with the provisions of Regulation T as promulgated from time
to time by the Board of Governors of the Federal Reserve System). The Company
reserves, at any and all times, the right, in the Company's sole and absolute
discretion, to decline to approve or terminate any such program or procedure.
Cashless exercise shall not be permitted if the exercise by means of a Cashless
Exercise would be a violation of any law, including Sarbanes-Oxley Act of 2002,
which prohibits public companies from making personal loans to any director or
executive officer.

            4.4   TAX WITHHOLDING. At the time the Option is exercised, in whole
or in part, or at any time thereafter as requested by the Company, the Optionee
hereby authorizes withholding from payroll and any other amounts payable to the
Optionee, and otherwise agrees to make adequate provision for (including by
means of a Cashless Exercise to the extent permitted by the Company), any sums
required to satisfy the federal, state, local and foreign tax

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withholding obligations of the Participating Company Group, if any, which arise
in connection with the Option, including, without limitation, obligations
arising upon (i) the exercise, in whole or in part, of the Option, (ii) the
transfer, in whole or in part, of any shares acquired upon exercise of the
Option, (iii) the operation of any law or regulation providing for the
imputation of interest, or (iv) the lapsing of any restriction with respect to
any shares acquired upon exercise of the Option. The Option is not exercisable
unless the tax withholding obligations of the Participating Company Group are
satisfied. Accordingly, the Company shall have no obligation to deliver shares
of Stock until the tax withholding obligations of the Participating Company
Group have been satisfied by the Optionee.

            4.5   CERTIFICATE REGISTRATION. Except in the event the Exercise
Price is paid by means of a Cashless Exercise, the certificate for the shares as
to which the Option is exercised shall be registered in the name of the
Optionee, or, if applicable, in the names of the heirs of the Optionee.

            4.6   RESTRICTIONS ON GRANT OF THE OPTION AND ISSUANCE OF SHARES.
The grant of the Option and the issuance of shares of Stock upon exercise of the
Option shall be subject to compliance with all applicable requirements of
federal, state or foreign law with respect to such securities. The Option may
not be exercised if the issuance of shares of Stock upon exercise would
constitute a violation of any applicable federal, state or foreign securities
laws or other law or regulations or the requirements of any stock exchange or
market system upon which the Stock may then be listed. In addition, the Option
may not be exercised unless (i) a registration statement under the Securities
Act shall at the time of exercise of the Option be in effect with respect to the
shares issuable upon exercise of the Option or (ii) in the opinion of legal
counsel to the Company, the shares issuable upon exercise of the Option may be
issued in accordance with the terms of an applicable exemption from the
registration requirements of the Securities Act. THE OPTIONEE IS CAUTIONED THAT
THE OPTION MAY NOT BE EXERCISED UNLESS THE FOREGOING CONDITIONS ARE SATISFIED.
ACCORDINGLY, THE OPTIONEE MAY NOT BE ABLE TO EXERCISE THE OPTION WHEN DESIRED
EVEN THOUGH THE OPTION IS VESTED. The inability of the Company to obtain from
any regulatory body having jurisdiction the authority, if any, deemed by the
Company's legal counsel to be necessary to the lawful issuance and sale of any
shares subject to the Option shall relieve the Company of any liability in
respect of the failure to issue or sell such shares as to which such requisite
authority shall not have been obtained. As a condition to the exercise of the
Option, the Company may require the Optionee to satisfy any qualifications that
may be necessary or appropriate, to evidence compliance with any applicable law
or regulation and to make any representation or warranty with respect thereto as
may be requested by the Company.

            4.7   FRACTIONAL SHARES. The Company shall not be required to issue
fractional shares upon the exercise of the Option.

      5.    NONTRANSFERABILITY OF THE OPTION.

      The Option may be exercised during the lifetime of the Optionee only by
the Optionee or the Optionee's guardian or legal representative and may not be
assigned or transferred in any manner except by will or by the laws of descent
and distribution. Following the death of the Optionee, the Option, to the extent
provided in Section 7, may be exercised by the Optionee's

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legal representative or by any person empowered to do so under the deceased
Optionee's will or under the then applicable laws of descent and distribution.

      6.    TERMINATION OF THE OPTION.

      The Option shall terminate and may no longer be exercised after the first
to occur of (a) the Option Expiration Date, (b) the last date for exercising the
Option following termination of the Optionee's Service as described in Section
7, or (c) a Change in Control to the extent provided in Section 8.

      7.    EFFECT OF TERMINATION OF SERVICE.

            7.1   OPTION EXERCISABILITY.

                  (a)   DISABILITY. If the Optionee's Service terminates because
of the Disability of the Optionee, the Option, to the extent unexercised and
exercisable on the date on which the Optionee's Service terminated, may be
exercised by the Optionee (or the Optionee's guardian or legal representative)
at any time prior to the expiration of twelve (12) months after the date on
which the Optionee's Service terminated, but in any event no later than the
Option Expiration Date.

                  (b)   DEATH. If the Optionee's Service terminates because of
the death of the Optionee, the Option, to the extent unexercised and exercisable
on the date on which the Optionee's Service terminated, may be exercised by the
Optionee's legal representative or other person who acquired the right to
exercise the Option by reason of the Optionee's death at any time prior to the
expiration of twelve (12) months after the date on which the Optionee's Service
terminated, but in any event no later than the Option Expiration Date. The
Optionee's Service shall be deemed to have terminated on account of death if the
Optionee dies within three (3) months after the Optionee's termination of
Service (other than a termination for Cause).

                  (c)   TERMINATION FOR CAUSE. Notwithstanding any other
provision of this Option Agreement, if the Optionee's Service is terminated for
Cause, the Option shall terminate and cease to be exercisable on the effective
date of such termination of Service. Unless otherwise defined in a contract of
employment or service between the Optionee and a Participating Company, for
purposes of this Option Agreement "CAUSE" shall mean any of the following: (i)
the Optionee's theft, dishonesty, or falsification of any Participating Company
documents or records; (ii) the Optionee's improper use or disclosure of a
Participating Company's confidential or proprietary information; (iii) any
action by the Optionee which has a detrimental effect on a Participating
Company's reputation or business; (iv) the Optionee's failure or inability to
perform any reasonable assigned duties after written notice from a Participating
Company of, and a reasonable opportunity to cure, such failure or inability; (v)
any material breach by the Optionee of any employment agreement between the
Optionee and a Participating Company, which breach is not cured pursuant to the
terms of such agreement; or (vi) the Optionee's conviction (including any plea
of guilty or nolo contendere) of any criminal act which impairs the Optionee's
ability to perform his or her duties with a Participating Company.

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                  (d)   OTHER TERMINATION OF SERVICE. If the Optionee's Service
terminates for any reason, except Disability, death, or Cause, the Option, to
the extent unexercised and exercisable by the Optionee on the date on which the
Optionee's Service terminated, may be exercised by the Optionee at any time
prior to the expiration of three (3) months (or such other longer period of time
as determined by the Board, in its discretion) after the date on which the
Optionee's Service terminated, but in any event no later than the Option
Expiration Date.

            7.2   EXTENSION IF EXERCISE PREVENTED BY LAW. Notwithstanding the
foregoing, if the exercise of the Option within the applicable time periods set
forth in Section 7.1 is prevented by the provisions of Section 4.6, the Option
shall remain exercisable until three (3) months after the date the Optionee is
notified by the Company that the Option is exercisable, but in any event no
later than the Option Expiration Date.

            7.3   EXTENSION IF OPTIONEE SUBJECT TO SECTION 16(B).
Notwithstanding the foregoing, if a sale within the applicable time periods set
forth in Section 7.1 of shares acquired upon the exercise of the Option would
subject the Optionee to suit under Section 16(b) of the Exchange Act, the Option
shall remain exercisable until the earliest to occur of (i) the tenth (10th) day
following the date on which a sale of such shares by the Optionee would no
longer be subject to such suit, (ii) the one hundred and ninetieth (190th) day
after the Optionee's termination of Service, or (iii) the Option Expiration
Date.

      8.    CHANGE IN CONTROL.

            8.1   DEFINITIONS.

                  (a)   An "OWNERSHIP CHANGE EVENT" shall be deemed to have
occurred if any of the following occurs with respect to the Company: (i) the
direct or indirect sale or exchange in a single or series of related
transactions by the stockholders of the Company of more than fifty percent (50%)
of the voting stock of the Company; (ii) a merger or consolidation in which the
Company is a party; (iii) the sale, exchange, or transfer of all or
substantially all of the assets of the Company; or (iv) a liquidation or
dissolution of the Company.

                  (b)   A "CHANGE IN CONTROL" shall mean an Ownership Change
Event or a series of related Ownership Change Events (collectively, a
"TRANSACTION") wherein the stockholders of the Company immediately before the
Transaction do not retain immediately after the Transaction, in substantially
the same proportions as their ownership of shares of the Company's voting stock
immediately before the Transaction, direct or indirect beneficial ownership of
more than fifty percent (50%) of the total combined voting power of the
outstanding voting securities of the Company or, in the case of a Transaction
described in Section 8.1(a)(iii), the corporation or other business entity to
which the assets of the Company were transferred (the "TRANSFEREE"), as the case
may be. For purposes of the preceding sentence, indirect beneficial ownership
shall include, without limitation, an interest resulting from ownership of the
voting securities of one or more corporations or other business entities which
own the Company or the Transferee, as the case may be, either directly or
through one or more subsidiary corporations or other business entities. The
Board shall have the right to determine whether multiple sales or exchanges of
the voting securities of the Company or

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multiple Ownership Change Events are related, and its determination shall be
final, binding and conclusive.

            8.2   EFFECT OF CHANGE IN CONTROL ON OPTION. In the event of a
Change in Control, the surviving, continuing, successor, or purchasing
corporation or other business entity or parent thereof, as the case may be (the
"ACQUIRING CORPORATION"), may, without the consent of the Optionee, either
assume the Company's rights and obligations under the Option or substitute for
the Option a substantially equivalent option (as determined by the Board) for
the Acquiring Corporation's stock. The Option shall terminate and cease to be
outstanding effective as of the date of the Change in Control to the extent that
the Option is neither assumed or substituted for by the Acquiring Corporation in
connection with the Change in Control nor exercised as of the date of the Change
in Control. Notwithstanding the foregoing, shares acquired upon exercise of the
Option prior to the Change in Control and any consideration received pursuant to
the Change in Control with respect to such shares shall continue to be subject
to all applicable provisions of this Option Agreement except as otherwise
provided herein. Furthermore, notwithstanding the foregoing, if the corporation
the stock of which is subject to the Option immediately prior to an Ownership
Change Event described in Section 8.1(a)(i) constituting a Change in Control is
the surviving or continuing corporation and immediately after such Ownership
Change Event less than fifty percent (50%) of the total combined voting power of
its voting stock is held by another corporation or by other corporations that
are members of an affiliated group within the meaning of Section 1504(a) of the
Code without regard to the provisions of Section 1504(b) of the Code, the Option
shall not terminate unless the Board otherwise provides in its discretion. The
Board may, in its discretion, determine that upon a Change in Control the Option
shall be canceled in exchange for payment with respect to each Vested Share
subject to such Option immediately prior to its cancellation in (a) cash, (b)
stock of the Company or the Acquiring Corporation or (c) other property which,
in any such case, shall be in an amount having a Fair Market Value equal to the
excess of the Fair Market Value of the consideration to be paid per share of
Stock in the Change in Control over the Exercise Price per share under the
Option (subject to any required tax withholding). Such payment shall be made as
soon as practicable following the Change in Control.

      9.    ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE.

      In the event of any stock dividend, stock split, reverse stock split,
recapitalization, combination, reclassification, or similar change in the
capital structure of the Company, appropriate adjustments shall be made in the
number, Exercise Price and class of shares of stock subject to the Option. If a
majority of the shares which are of the same class as the shares that are
subject to the Option are exchanged for, converted into, or otherwise become
(whether or not pursuant to an Ownership Change Event) shares of another
corporation (the "NEW SHARES"), the Board may unilaterally amend the Option to
provide that the Option is exercisable for New Shares. In the event of any such
amendment, the Number of Option Shares and the Exercise Price shall be adjusted
in a fair and equitable manner, as determined by the Board, in its discretion.
Notwithstanding the foregoing, any fractional share resulting from an adjustment
pursuant to this Section 9 shall be rounded down to the nearest whole number,
and in no event may the Exercise Price be decreased to an amount less than the
par value, if any, of the stock subject to the Option. The adjustments
determined by the Board pursuant to this Section 9 shall be final, binding and
conclusive.

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      10.   RIGHTS AS A STOCKHOLDER, EMPLOYEE OR CONSULTANT.

      The Optionee shall have no rights as a stockholder with respect to any
shares covered by the Option until the date of the issuance of a certificate for
the shares for which the Option has been exercised (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company). No adjustment shall be made for dividends, distributions
or other rights for which the record date is prior to the date such certificate
is issued, except as provided in Section 9. If the Optionee is an Employee, the
Optionee understands and acknowledges that, except as otherwise provided in a
separate, written employment agreement between a Participating Company and the
Optionee, the Optionee's employment is "at will" and is for no specified term.
Nothing in this Option Agreement shall confer upon the Optionee any right to
continue in the Service of a Participating Company or interfere in any way with
any right of the Participating Company Group to terminate the Optionee's Service
as an Employee or Consultant, as the case may be, at any time.

      11.   NOTICE OF SALES UPON DISQUALIFYING DISPOSITION.

      The Optionee shall dispose of the shares acquired pursuant to the Option
only in accordance with the provisions of this Option Agreement. In addition, if
the Notice designates this Option as an Incentive Stock Option, the Optionee
shall (a) promptly notify the Chief Financial Officer of the Company if the
Optionee disposes of any of the shares acquired pursuant to the Option within
one (1) year after the date the Optionee exercises all or part of the Option or
within two (2) years after the Date of Option Grant and (b) provide the Company
with a description of the circumstances of such disposition. Until such time as
the Optionee disposes of such shares in a manner consistent with the provisions
of this Option Agreement, unless otherwise expressly authorized by the Company,
the Optionee shall hold all shares acquired pursuant to the Option in the
Optionee's name (and not in the name of any nominee) for the one-year period
immediately after the exercise of the Option and the two-year period immediately
after Date of Option Grant. At any time during the one-year or two-year periods
set forth above, the Company may place a legend on any certificate representing
shares acquired pursuant to the Option requesting the transfer agent for the
Company's stock to notify the Company of any such transfers. The obligation of
the Optionee to notify the Company of any such transfer shall continue
notwithstanding that a legend has been placed on the certificate pursuant to the
preceding sentence.

      12.   LEGENDS.

      The Company may at any time place legends referencing any applicable
federal, state or foreign securities law restrictions on all certificates
representing shares of stock subject to the provisions of this Option Agreement.
The Optionee shall, at the request of the Company, promptly present to the
Company any and all certificates representing shares acquired pursuant to the
Option in the possession of the Optionee in order to carry out the provisions of
this Section. Unless otherwise specified by the Company, legends placed on such
certificates may include, but shall not be limited to, the following:

            12.1  "THE SHARES EVIDENCED BY THIS CERTIFICATE WERE ISSUED BY THE
CORPORATION TO THE REGISTERED HOLDER UPON EXERCISE OF

                                       8
<PAGE>

AN INCENTIVE STOCK OPTION AS DEFINED IN SECTION 422 OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED ("ISO"). IN ORDER TO OBTAIN THE PREFERENTIAL TAX TREATMENT
AFFORDED TO ISOs, THE SHARES SHOULD NOT BE TRANSFERRED PRIOR TO [INSERT
DISQUALIFYING DISPOSITION DATE HERE]. SHOULD THE REGISTERED HOLDER ELECT TO
TRANSFER ANY OF THE SHARES PRIOR TO THIS DATE AND FOREGO ISO TAX TREATMENT, THE
TRANSFER AGENT FOR THE SHARES SHALL NOTIFY THE CORPORATION IMMEDIATELY. THE
REGISTERED HOLDER SHALL HOLD ALL SHARES PURCHASED UNDER THE INCENTIVE STOCK
OPTION IN THE REGISTERED HOLDER'S NAME (AND NOT IN THE NAME OF ANY NOMINEE)
PRIOR TO THIS DATE OR UNTIL TRANSFERRED AS DESCRIBED ABOVE."

      13.   MISCELLANEOUS PROVISIONS.

            13.1  BINDING EFFECT. Subject to the restrictions on transfer set
forth herein, this Option Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective heirs, executors, administrators,
successors and assigns.

            13.2  TERMINATION OR AMENDMENT. The Board may terminate or amend the
Plan or the Option at any time; provided, however, that except as provided in
Section 8.2 in connection with a Change in Control, no such termination or
amendment may adversely affect the Option or any unexercised portion hereof
without the consent of the Optionee unless such termination or amendment is
necessary to comply with any applicable law or government regulation or is
required to enable the Option, if designated an Incentive Stock Option in the
Notice, to qualify as an Incentive Stock Option. No amendment or addition to
this Option Agreement shall be effective unless in writing.

            13.3  NOTICES. Any notice required or permitted hereunder shall be
given in writing and shall be deemed effectively given (except to the extent
that this Option Agreement provides for effectiveness only upon actual receipt
of such notice) upon personal delivery or upon deposit in the United States Post
Office, by registered or certified mail, with postage and fees prepaid,
addressed to the other party at the address shown below that party's signature
on the Notice or at such other address as such party may designate in writing
from time to time to the other party.

            13.4  INTEGRATED AGREEMENT. The Notice, this Option Agreement and
the Plan constitute the entire understanding and agreement of the Optionee and
the Participating Company Group with respect to the subject matter contained
herein or therein and supersedes any prior agreements, understandings,
restrictions, representations, or warranties among the Optionee and the
Participating Company Group with respect to such subject matter other than those
as set forth or provided for herein or therein. To the extent contemplated
herein or therein, the provisions of the Notice and the Option Agreement shall
survive any exercise of the Option and shall remain in full force and effect.

            13.5  APPLICABLE LAW. This Option Agreement shall be governed by the
laws of the State of Washington as such laws are applied to agreements between
Washington residents entered into and to be performed entirely within the State
of Washington.

                                       9
<PAGE>

            13.6  COUNTERPARTS. The Notice may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

                                       10
<PAGE>

(TM) Incentive Stock Option                           Optionee: ________________

(TM) Nonstatutory Stock Option                             Date: _______________

                          STOCK OPTION EXERCISE NOTICE

SCOLR Pharma, Inc.
Attention: Chief Financial Officer
3625 132nd Avenue NE
Suite 300
Bellevue, WA 98006

Ladies and Gentlemen:

      1.    OPTION. I was granted an option (the "OPTION") to purchase shares of
            the common stock (the "SHARES") of SCOLR Pharma, Inc. (the
"COMPANY") pursuant to the Company's 2004 Equity Incentive Plan (the "PLAN"), my
Notice of Grant of Stock Option (the "NOTICE") and my Stock Option Agreement
(the "OPTION AGREEMENT") as follows:

            Grant Number:                                  ________________

            Date of Option Grant:                          ________________

            Number of Option Shares:                       ________________

            Exercise Price per Share:                      $ ______________

      2.    EXERCISE OF OPTION. I hereby elect to exercise the Option to
purchase the following number of Shares, all of which are Vested Shares in
accordance with the Notice and the Option Agreement:

            Total Shares Purchased:                                  ___________

            Total Exercise Price (Total Shares  X  Price per Share)  $ _________

      3.    PAYMENTS. I enclose payment in full of the total exercise price for
the Shares in the following form(s), as authorized by my Option Agreement:

            (TM)  Cash:                               $ _________________

            (TM)  Check:                              $ _________________

            (TM)  Tender of Company Stock:            Contact Plan Administrator

                                       1
<PAGE>

            (TM)  Cashless Exercise:                  Contact Plan Administrator

      4.    TAX WITHHOLDING. I authorize payroll withholding and otherwise will
make adequate provision for the federal, state, local and foreign tax
withholding obligations of the Company, if any, in connection with the Option.
If I am exercising a Nonstatutory Stock Option, I enclose payment in full of my
withholding taxes, if any, as follows:

               (CONTACT PLAN ADMINISTRATOR FOR AMOUNT OF TAX DUE.)

            (TM) Cash:                                      $ ______________

            (TM) Check:                                     $ ______________

      5.    OPTIONEE INFORMATION.

            My address is: _____________________________________________________

                           _____________________________________________________

            My Social Security Number is: ______________________________________

      6.    NOTICE OF DISQUALIFYING DISPOSITION. If the Option is an Incentive
Stock Option, I agree that I will promptly notify the Chief Financial Officer of
the Company if I transfer any of the Shares within one (1) year from the date I
exercise all or part of the Option or within two (2) years of the Date of Option
Grant.

      7.    BINDING EFFECT. I agree that the Shares are being acquired in
accordance with and subject to the terms, provisions and conditions of the
Option Agreement, to all of which I hereby expressly assent. This Agreement
shall inure to the benefit of and be binding upon my heirs, executors,
administrators, successors and assigns.

      I understand that I am purchasing the Shares pursuant to the terms of the
Plan, the Notice and my Option Agreement, copies of which I have received and
carefully read and understand.

                                            Very truly yours,

                                            ____________________________________
                                            (Signature)

Receipt of the above is hereby acknowledged.

                                       2
<PAGE>

SCOLR Pharma, Inc.

By: __________________________

Title: _______________________

Dated: _______________________

                                       3
<PAGE>

                               SCOLR PHARMA, INC.
                         NOTICE OF GRANT OF STOCK OPTION

      ________________________ (the "OPTIONEE") has been granted an option (the
"OPTION") to purchase certain shares of Stock of SCOLR Pharma, Inc. pursuant to
the SCOLR PHARMA, INC. 2004 EQUITY INCENTIVE PLAN (the "PLAN"), as follows:

      GRANT NUMBER:             _______________

      DATE OF OPTION GRANT:     _______________

      NUMBER OF OPTION SHARES:  _______________

      EXERCISE PRICE:           $______________ per share

      INITIAL VESTING DATE      _______________

      OPTION EXPIRATION DATE:   The date ten (10) years after the Date of Option
                                Grant.

      TAX STATUS OF OPTION:     _____________ Stock Option. (Enter "Incentive"
                                or "Nonstatutory."  If blank, this Option will
                                be a Nonstatutory Stock Option.)

      VESTED SHARES: Except as provided in the Stock Option Agreement, the
      number of Vested Shares (disregarding any resulting fractional share) as
      of any date is determined by multiplying the Number of Option Shares by
      the "VESTED RATIO" determined as of such date as follows:

                                                                    Vested Ratio

                                On the Grant Date

                                On the Initial Vesting Date

                                Plus:

                                For each month of the Optionee's
                                continuous Service from the Initial
                                Vesting Date until the Vested Ratio
                                equals 1/1, an additional

      By their signatures below, the Company and the Optionee agree that the
Option is governed by this Notice and by the provisions of the Plan and the
Stock Option Agreement. A copy of the Stock Option Agreement is attached to and
made a part of this document. The Optionee acknowledges receipt of a copy of the
Stock Option Agreement, represents that the Optionee has read and is familiar
with the Plan and the provisions of the Stock Option Agreement, and hereby
accepts the Option subject to all of their terms and conditions.

SCOLR Pharma, Inc.                              OPTIONEE

By: ______________________________              _______________________________
                                                Signature

Its: _____________________________              ________________________________
                                                Date

Address: _________________________              ________________________________
                                                Address

__________________________________              ________________________________

ATTACHMENTS: Stock Option Agreement and Exercise Notice

                                       4

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