Document:

<PAGE>
                                                                    Exhibit 10.2

                         QUATRX PHARMACEUTICALS COMPANY

                            2005 STOCK INCENTIVE PLAN

                          NOTICE OF STOCK OPTION GRANT

[Optionee]

     You have been granted an option to purchase Common Stock of QuatRx
Pharmaceuticals Company (the "Company") pursuant to the Company's 2005 Stock
Incentive Plan as follows:

<TABLE>
<S>                               <C>
Board Approval Date:              <<BoardApprovalDate>>

Grant Date (Later of Board
Approval Date or Commencement
of Employment/Consulting):        <<GrantDate>>

Exercise Price per Share:         $<<ExercisePrice>>

Total Number of Shares Granted:   <<NoofShares>>

Total Exercise Price:             $<<TotalExercisePrice>>

Type of Option:                   <<Merge Record #>> Shares Incentive Stock
                                  Option

                                  <<Merge Record #>> Shares Nonstatutory Stock
                                  Option

Expiration Date:                  <<Merge Record #>>/<<ExpirDate>>

Vesting Commencement Date:        <<VestingCommenceDate>>

Vesting/Exercise Schedule:        So long as your employment or consulting
                                  relationship with the Company continues, the
                                  Shares underlying this Option shall vest and
                                  become exercisable in accordance with the
                                  following schedule: [___________ of the total
                                  number of Shares subject to the Option shall
                                  vest and become exercisable on the ________
                                  month anniversary of the Vesting Commencement
                                  Date and _______ of the total number of Shares
                                  subject to the Option shall vest and become
                                  exercisable on the same day of each month
                                  thereafter].
</TABLE>

<PAGE>

<TABLE>
<S>                               <C>
Termination Period:               The vested portion of this Option may be
                                  exercised for ninety (90) days after
                                  termination of employment or consulting
                                  relationship except as set out in Section 5 of
                                  the Stock Option Agreement (but in no event
                                  later than the Expiration Date). Optionee is
                                  responsible for keeping track of these
                                  exercise periods following termination for any
                                  reason of his or her service relationship with
                                  the Company. The Company will not provide
                                  further notice of such periods.

Transferability:                  This Option may not be transferred.
</TABLE>

     By your signature and the signature of the Company's representative below,
you and the Company agree that this option is granted under and governed by the
terms and conditions of the QuatRx Pharmaceuticals Company 2005 Stock Incentive
Plan and the Stock Option Agreement, both of which are attached and made a part
of this document.

     In addition, you agree and acknowledge that your rights to any Shares
underlying the Option will be earned only as you provide services to the Company
over time, that the grant of the Option is not as consideration for services you
rendered to the Company prior to your Vesting Commencement Date, and that
nothing in this Notice or the attached documents confers upon you any right to
continue your employment or consulting relationship with the Company for any
period of time, nor does it interfere in any way with your right or the
Company's right to terminate that relationship at any time, for any reason, with
or without cause.

                                        QuatRx Pharmaceuticals Company

                                        By:
-------------------------------------       ------------------------------------
[Optionee]                              Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                       -2-

<PAGE>

                         QUATRX PHARMACEUTICALS COMPANY

                            2005 STOCK INCENTIVE PLAN

                             STOCK OPTION AGREEMENT

     1. GRANT OF OPTION. QuatRx Pharmaceuticals Company, a Delaware corporation
(the "Company"), hereby grants to [________] ("Optionee"), an option (the
"Option") to purchase the total number of shares of Common Stock (the "Shares")
set forth in the Notice of Stock Option Grant (the "Notice"), at the exercise
price per Share set forth in the Notice (the "Exercise Price") subject to the
terms, definitions and provisions of the QuatRx Pharmaceuticals Company 2005
Stock Incentive Plan (the "Plan") adopted by the Company, which is incorporated
in this Agreement by reference. Unless otherwise defined in this Agreement, the
terms used in this Agreement shall have the meanings defined in the Plan.

     2. DESIGNATION OF OPTION. This Option is intended to be an Incentive Stock
Option as defined in Section 422 of the Code only to the extent so designated in
the Notice, and to the extent it is not so designated or to the extent the
Option does not qualify as an Incentive Stock Option, it is intended to be a
Nonstatutory Stock Option.

     Notwithstanding the above, if designated as an Incentive Stock Option, in
the event that the Shares subject to this Option (and all other Incentive Stock
Options granted to Optionee by the Company or any Subsidiary, including under
other plans of the Company) that first become exercisable in any calendar year
have an aggregate Fair Market Value (determined for each Share as of the Grant
Date of the option covering such Share) in excess of $100,000, the Shares in
excess of $100,000 shall be treated as subject to a Nonstatutory Stock Option,
in accordance with Section 9(b) of the Plan.

     3. EXERCISE OF OPTION. This Option shall be exercisable during its term in
accordance with the Vesting/Exercise Schedule set out in the Notice and with the
provisions of Section 10 of the Plan as follows:

          (a) RIGHT TO EXERCISE.

               (i) This Option may not be exercised for a fraction of a share.

               (ii) In the event of Optionee's death, disability or other
termination of employment, the exercisability of the Option is governed by
Section 5 below, subject to the limitations contained in this Section 3.

               (iii) In no event may this Option be exercised after the
Expiration Date of the Option as set forth in the Notice.

<PAGE>

          (b) METHOD OF EXERCISE.

               (i) This Option shall be exercisable by execution and delivery of
the Exercise Notice and Restricted Stock Purchase Agreement attached hereto as
Exhibit A (the "Exercise Agreement") or of any other form of written or
electronic notice approved for such purpose by the Company which shall state
Optionee's election to exercise the Option, the number of Shares in respect of
which the Option is being exercised, and such other representations and
agreements as to the holder's investment intent with respect to such Shares as
may be required by the Company pursuant to the provisions of the Plan. Such
written notice shall be signed by Optionee and shall be delivered to the Company
by such means as are determined by the Administrator in its discretion to
constitute adequate delivery. The written or electronic notice shall be
accompanied by payment of the Exercise Price and payment of all applicable
withholding taxes. As set forth in Section 10(a)(ii) of the Plan, this Option
shall be deemed to be exercised upon receipt by the Company of such written or
electronic notice accompanied by the Exercise Price and payment of all
applicable withholding taxes.

               (ii) The Company is not obligated, and will have no liability for
failure, to issue or deliver any Shares upon exercise of the Option unless such
issuance or delivery would comply with the Applicable Laws, with such compliance
determined by the Company in consultation with its legal counsel. This Option
may not be exercised until such time as the Plan has been approved by the
stockholders of the Company, or if the issuance of such Shares upon such
exercise or the method of payment of consideration for such shares would
constitute a violation of any applicable federal or state securities or other
law or regulation, including any rule under Part 221 of Title 12 of the Code of
Federal Regulations as promulgated by the Federal Reserve Board. As a condition
to the exercise of this Option, the Company may require Optionee to make any
representation and warranty to the Company as may be required by the Applicable
Laws. Assuming such compliance, for income tax purposes the Shares shall be
considered transferred to Optionee on the date on which the Option is exercised
with respect to such Shares.

     4. METHOD OF PAYMENT. Payment of the Exercise Price shall be by any of the
following, or a combination of the following, at the election of Optionee:

          (a) cash;

          (b) check or wire transfer (denominated in U.S. Dollars);

          (c) by surrender of other Shares which have a Fair Market Value on the
date of surrender equal to the aggregate Exercise Price of the Shares as to
which the Option is being exercised provided that prior to the date on which the
Company becomes subject to FAS 123R, such Shares shall, in the case of Shares
acquired by the Optionee upon the exercise of such Option, have been owned by
Optionee for more than six (6) months on the date of surrender (or such other
period of time as is necessary to avoid the Company's incurring adverse
accounting charges); or

                                       -2-

<PAGE>

          (d) consideration received by the Company under a broker-assisted sale
and remittance program acceptable to the Administrator; or

          (e) provided that it does not result in the Company's incurring any
adverse accounting charges with respect to an Option relative to Options not
having such term, by the Company's withholding from the Option a number of
Shares having as of the exercise date a Fair Market Value equal to the aggregate
exercise price applicable to the Shares being exercised.

     5. TERMINATION OF RELATIONSHIP. Following the date of Optionee's
Termination of Employment for any reason (the "Termination Date"), Optionee may
exercise the Option only as set forth in the Notice and this Section 5. To the
extent that Optionee is not entitled to exercise this Option as of the
Termination Date, or if Optionee does not exercise this Option within the
Termination Period set forth in the Notice or the termination periods set forth
below, the Option (to the extent not exercised) shall automatically terminate.
In no event, may any Option be exercised after the Expiration Date of the Option
as set forth in the Notice.

          (a) TERMINATION. In the event of Optionee's Termination of Employment
other than as a result of Optionee's disability or death, Optionee may exercise
this Option during the Termination Period set forth in the Notice to the extent
such Options were vested and exercisable at the Termination Date.

          (b) OTHER TERMINATIONS. In connection with any termination other than
a termination covered by Section 5(a), Optionee may exercise the Option only as
described below:

               (i) TERMINATION UPON DISABILITY OF OPTIONEE. Upon an Optionee's
Termination of Employment as a result of the Optionee's disability, all
outstanding Options granted to such Optionee that were vested and exercisable as
of the Termination Date may be exercised by the Optionee until one (1) year
following Optionee's Termination of Employment as a result of Optionee's
disability, including Total and Permanent Disability; provided however, that in
no event shall the Option be exercised after the Expiration Date of the Option
as set forth in the Notice.

               (ii) DEATH OF OPTIONEE. Upon an Optionee's Termination of
Employment as a result of the Optionee's death, all outstanding Options granted
to such Optionee that were vested and exercisable as of the date of the
Optionee's death may be exercised until the earlier of (A) one (1) year
following the Optionee's death or (B) the Expiration Date set forth in the
Notice. If an Option is held by the Optionee when he or she dies, the Option may
be exercised, to the extent the Option is vested and exercisable, by the
beneficiary designated by the Optionee (as provided in Section 15 of the Plan),
the executor or administrator of the Optionee's estate or, if none, by the
person(s) entitled to exercise the Option under the Optionee's will or the laws
of descent or distribution.

     6. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred in any
manner otherwise than by will or by the laws of descent or distribution and may
be exercised during the lifetime of Optionee only by him or her. The terms of
this Option shall be binding upon the executors, administrators, heirs,
successors and assigns of Optionee.

                                       -3-

<PAGE>

     7. TAX CONSEQUENCES. Below is a brief summary as of the date of this Option
of certain of the federal tax consequences of exercise of this Option and
disposition of the Shares under the laws in effect as of the Grant Date. THIS
SUMMARY IS INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.
OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING
OF THE SHARES.

          (a) INCENTIVE STOCK OPTION.

               (i) TAX TREATMENT UPON EXERCISE AND SALE OF SHARES. If this
Option qualifies as an Incentive Stock Option, there will be no regular federal
income tax liability upon the exercise of the Option, although the excess, if
any, of the Fair Market Value of the Shares on the date of exercise over the
Exercise Price will be treated as an adjustment to the alternative minimum tax
for federal tax purposes and may subject Optionee to the alternative minimum tax
in the year of exercise. If Shares issued upon exercise of an Incentive Stock
Option are held for at least one year after exercise and are disposed of at
least two years after the Grant Date, any gain realized on disposition of the
Shares will also be treated as long-term capital gain for federal income tax
purposes. If Shares issued upon exercise of an Incentive Stock Option are
disposed of within such one-year period or within two years after the Grant
Date, any gain realized on such disposition will be treated as compensation
income (taxable at ordinary income rates) to the extent of the difference
between the Exercise Price and the lesser of (i) the Fair Market Value of the
Shares on the date of exercise, or (ii) the sale price of the Shares.

               (ii) NOTICE OF DISQUALIFYING DISPOSITIONS. With respect to any
Shares issued upon exercise of an Incentive Stock Option, if Optionee sells or
otherwise disposes of such Shares on or before the later of (i) the date two
years after the Grant Date, or (ii) the date one year after the date of
exercise, Optionee shall immediately notify the Company in writing of such
disposition. Optionee acknowledges and agrees that he or she may be subject to
income tax withholding by the Company on the compensation income recognized by
Optionee from the early disposition by payment in cash or out of the current
earnings paid to Optionee.

          (b) NONSTATUTORY STOCK OPTION. If this Option does not qualify as an
Incentive Stock Option, there may be a regular federal (and state) income tax
liability upon the exercise of the Option. Optionee will be treated as having
received compensation income (taxable at ordinary income tax rates) equal to the
excess, if any, of the Fair Market Value of the Shares on the date of exercise
over the Exercise Price. If Optionee is an Employee, the Company will be
required to withhold from Optionee's compensation or collect from Optionee and
pay to the applicable taxing authorities an amount equal to a percentage of this
compensation income at the time of exercise. If Shares issued upon exercise of a
Nonstatutory Stock Option are held for at least one year, any gain realized on
disposition of the Shares will be treated as long-term capital gain for federal
income tax purposes.

     8. LOCK-UP AGREEMENT. In connection with the initial public offering of the
Company's securities and upon request of the Company or the underwriters
managing any underwritten offering of the Company's securities, Optionee hereby
agrees not to sell, make any short sale of, loan, grant any option for the
purchase of, or otherwise dispose of any securities of

                                       -4-

<PAGE>

the Company however and whenever acquired (other than those included in the
registration) without the prior written consent of the Company or such
underwriters, as the case may be, for such period of time (not to exceed 180
days but subject to extension or extensions as may be required by the
underwriters in order to publish research reports while complying with Rule 2711
of the National Association of Securities Dealers, Inc.) from the effective date
of such registration as may be requested by the Company or such managing
underwriters and to execute an agreement reflecting the foregoing as may be
requested by the underwriters at the time of the public offering.

     9. EFFECT OF AGREEMENT. Optionee acknowledges receipt of a copy of the Plan
and represents that he or she is familiar with the terms and provisions thereof
(and has had an opportunity to consult counsel regarding the Option terms), and
hereby accepts this Option and agrees to be bound by its contractual terms as
set forth herein and in the Plan. Optionee hereby agrees to accept as binding,
conclusive and final all decisions and interpretations of the Administrator
regarding any questions relating to the Option. In the event of a conflict
between the terms and provisions of the Plan and the terms and provisions of the
Notice and this Agreement, the Plan terms and provisions shall prevail. The
Option, including the Plan, constitutes the entire agreement between Optionee
and the Company on the subject matter hereof and supersedes all proposals,
written or oral, and all other communications between the parties relating to
such subject matter.

                            [Signature Page Follows]

                                       -5-

<PAGE>

     This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original and all of which together shall constitute one
document.

[Optionee]                              QUARTRX PHARMACEUTICALS COMPANY

                                        By:
-------------------------------------       ------------------------------------
                                        Name:
Dated:                                        ----------------------------------
      -------------------------------   Title:
                                               ---------------------------------

                                       -6-

<PAGE>

                                    EXHIBIT A

                         QUATRX PHARMACEUTICALS COMPANY

                            2005 STOCK INCENTIVE PLAN

             EXERCISE NOTICE AND RESTRICTED STOCK PURCHASE AGREEMENT

     This Agreement ("Agreement") is made as of _______________, by and between
QuatRx Pharmaceuticals Company, a Delaware corporation (the "Company"), and
[________] ("Purchaser"). To the extent any capitalized terms used in this
Agreement are not defined, they shall have the meaning ascribed to them in the
Company's 2005 Stock Incentive Plan (the "Plan").

     1. EXERCISE OF OPTION. Subject to the terms and conditions hereof,
Purchaser hereby elects to exercise his or her option to purchase [_______]
shares of the Common Stock (the "Shares") of the Company under and pursuant to
the Plan and the Stock Option Agreement granted [_____ __], 2005 (the "Option
Agreement"). The purchase price for the Shares shall be $<<ExercisePrice>> per
Share for a total purchase price of $__________. The term "Shares" refers to the
purchased Shares and all securities received in replacement of the Shares or as
stock dividends or splits, all securities received in replacement of the Shares
in a recapitalization, merger, reorganization, exchange or the like, and all
new, substituted or additional securities or other properties to which Purchaser
is entitled by reason of Purchaser's ownership of the Shares.

     2. TIME AND PLACE OF EXERCISE. The purchase and sale of the Shares under
this Agreement shall occur at the principal office of the Company simultaneously
with the execution and delivery of this Agreement in accordance with the
provisions of Section 3(b) of the Option Agreement. On such date, the Company
will deliver to Purchaser a certificate representing the Shares to be purchased
by Purchaser (which shall be issued in Purchaser's name or, if requested by
Purchaser, in the name of the Purchaser and his or her spouse) against payment
of the exercise price therefor by Purchaser by any method listed in Section 4 of
the Option Agreement.

     3. LIMITATIONS ON TRANSFER. In addition to any other limitation on transfer
created by applicable securities laws, Purchaser shall not assign, encumber or
dispose of any interest in the Shares except in compliance with the provisions
below and applicable securities laws.

          (a) RIGHT OF FIRST REFUSAL. Before any Shares held by Purchaser or any
transferee of Purchaser (either being sometimes referred to herein as the
"Holder") may be sold or otherwise transferred (including transfer by gift or
operation of law), the Company or its assignee(s) shall have a right of first
refusal to purchase the Shares on the terms and conditions set forth in this
Section 3(a) (the "Right of First Refusal").

               (i) NOTICE OF PROPOSED TRANSFER. The Holder of the Shares shall
deliver to the Company a written notice (the "Notice") stating: (i) the Holder's
bona fide intention to sell or otherwise transfer such Shares; (ii) the name of
each proposed purchaser or

<PAGE>

other transferee ("Proposed Transferee"); (iii) the number of Shares to be
transferred to each Proposed Transferee; and (iv) the terms and conditions of
each proposed sale or transfer. The Holder shall offer the Shares at the same
price (the "Offered Price") and upon the same terms (or terms as similar as
reasonably possible) to the Company or its assignee(s).

               (ii) EXERCISE OF RIGHT OF FIRST REFUSAL. At any time within
thirty (30) days after receipt of the Notice, the Company and/or its assignee(s)
may, by giving written notice to the Holder, elect to purchase all, but not less
than all, of the Shares proposed to be transferred to any one or more of the
Proposed Transferees, at the purchase price determined in accordance with
subsection (iii) below.

               (iii) PURCHASE PRICE. The purchase price ("Purchase Price") for
the Shares purchased by the Company or its assignee(s) under this Section 3(a)
shall be the Offered Price. If the Offered Price includes consideration other
than cash, the cash equivalent value of the non-cash consideration shall be
determined by the Board of Directors of the Company in good faith.

               (iv) PAYMENT. Payment of the Purchase Price shall be made, at the
option of the Company or its assignee(s), in cash (by check), by cancellation of
all or a portion of any outstanding indebtedness, or by any combination thereof
within 30 days after receipt of the Notice or in the manner and at the times set
forth in the Notice.

               (v) HOLDER'S RIGHT TO TRANSFER. If all of the Shares proposed in
the Notice to be transferred to a given Proposed Transferee are not purchased by
the Company and/or its assignee(s) as provided in this Section 3(a), then the
Holder may sell or otherwise transfer such Shares to that Proposed Transferee at
the Offered Price or at a higher price, provided that such sale or other
transfer is consummated within 60 days after the date of the Notice and provided
further that any such sale or other transfer is effected in accordance with any
applicable securities laws and the Proposed Transferee agrees in writing that
the provisions of this Section 3 shall continue to apply to the Shares in the
hands of such Proposed Transferee. If the Shares described in the Notice are not
transferred to the Proposed Transferee within such period, or if the Holder
proposes to change the price or other terms to make them more favorable to the
Proposed Transferee, a new Notice shall be given to the Company, and the Company
and/or its assignees shall again be offered the Right of First Refusal before
any Shares held by the Holder may be sold or otherwise transferred.

               (vi) EXCEPTION FOR CERTAIN FAMILY TRANSFERS. Anything to the
contrary contained in this Section 3(a) notwithstanding, the transfer of any or
all of the Shares during Purchaser's lifetime or on Purchaser's death by will or
intestacy to Purchaser's Immediate Family or a trust for the benefit of
Purchaser's Immediate Family shall be exempt from the provisions of this Section
3(a). "Immediate Family" as used herein shall mean spouse, lineal descendant or
antecedent, father, mother, brother or sister. In such case, the transferee or
other recipient shall receive and hold the Shares so transferred subject to the
provisions of this Section, and there shall be no further transfer of such
Shares except in accordance with the terms of this Section 3.

                                      -2-

<PAGE>

          (b) INVOLUNTARY TRANSFER.

               (i) COMPANY'S RIGHT TO PURCHASE UPON INVOLUNTARY TRANSFER. In the
event, at any time after the date of this Agreement, of any transfer by
operation of law or other involuntary transfer (including death or divorce, but
excluding a transfer to Immediate Family as set forth in Section 3(a)(vi) above)
of all or a portion of the Shares by the record holder thereof, the Company
shall have an option to purchase all of the Shares transferred at the greater of
the purchase price paid by Purchaser pursuant to this Agreement or the Fair
Market Value of the Shares on the date of transfer. Upon such a transfer, the
person acquiring the Shares shall promptly notify the Secretary of the Company
of such transfer. The right to purchase such Shares shall be provided to the
Company for a period of thirty (30) days following receipt by the Company of
written notice by the person acquiring the Shares.

               (ii) PRICE FOR INVOLUNTARY TRANSFER. With respect to any stock to
be transferred pursuant to Section 3(b)(i), the price per Share shall be a price
set by the Board of Directors of the Company that will reflect the current value
of the stock in terms of present earnings and future prospects of the Company.
The Company shall notify Purchaser or his or her executor of the price so
determined within thirty (30) days after receipt by it of written notice of the
transfer or proposed transfer of Shares. However, if the Purchaser does not
agree with the valuation as determined by the Board of Directors of the Company,
the Purchaser shall be entitled to have the valuation determined by an
independent appraiser to be mutually agreed upon by the Company and the
Purchaser and whose fees shall be borne equally by the Company and the
Purchaser.

          (c) ASSIGNMENT. The right of the Company to purchase any part of the
Shares may be assigned in whole or in part to any shareholder or shareholders of
the Company or other persons or organizations.

          (e) RESTRICTIONS BINDING ON TRANSFEREES. All transferees of Shares or
any interest therein will receive and hold such Shares or interest subject to
the provisions of this Agreement. Any sale or transfer of the Company's Shares
shall be void unless the provisions of this Agreement are satisfied.

          (f) TERMINATION OF RIGHTS. The right of first refusal granted the
Company by Section 3(a) above and the option to repurchase the Shares in the
event of an involuntary transfer granted the Company by Section 3(b) above shall
terminate upon the first sale of Common Stock of the Company to the general
public pursuant to a registration statement filed with and declared effective by
the Securities and Exchange Commission under the Securities Act of 1933, as
amended (the "Securities Act"). Upon termination of the right of first refusal
described in Section 3(a) above, a new certificate or certificates representing
the Shares not repurchased shall be issued, on request, without the legend
referred to in Section 5(a)(ii) herein and delivered to Purchaser.

     4. INVESTMENT AND TAXATION REPRESENTATIONS. In connection with the purchase
of the Shares, Purchaser represents to the Company the following:

                                      -3-

<PAGE>

          (a) Purchaser is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Shares. Purchaser is
purchasing these securities for investment for his or her own account only and
not with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Securities Act or under any applicable provision of
state law. Purchaser does not have any present intention to transfer the Shares
to any person or entity.

          (b) Purchaser understands that the Shares have not been registered
under the Securities Act by reason of a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of Purchaser's
investment intent as expressed herein.

          (c) Purchaser further acknowledges and understands that the securities
must be held indefinitely unless they are subsequently registered under the
Securities Act or an exemption from such registration is available. Purchaser
further acknowledges and understands that the Company is under no obligation to
register the securities. Purchaser understands that the certificate(s)
evidencing the securities will be imprinted with a legend which prohibits the
transfer of the securities unless they are registered or such registration is
not required in the opinion of counsel for the Company.

          (d) Purchaser is familiar with the provisions of Rules 144 and 701,
each promulgated under the Securities Act, which, in substance, permit limited
public resale of "restricted securities" acquired, directly or indirectly, from
the issuer of the securities (or from an affiliate of such issuer), in a
non-public offering subject to the satisfaction of certain conditions. Purchaser
understands that the Company provides no assurances as to whether he or she will
be able to resell any or all of the Shares pursuant to Rule 144 or Rule 701,
which rules require, among other things, that the Company be subject to the
reporting requirements of the Securities Exchange Act of 1934, as amended, that
resales of securities take place only after the holder of the Shares has held
the Shares for certain specified time periods, and under certain circumstances,
that resales of securities be limited in volume and take place only pursuant to
brokered transactions. Notwithstanding this paragraph (d), Purchaser
acknowledges and agrees to the restrictions set forth in paragraph (e) below.

          (e) Purchaser further understands that in the event all of the
applicable requirements of Rule 144 or 701 are not satisfied, registration under
the Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rules 144
and 701 are not exclusive, the Staff of the Securities and Exchange Commission
has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rule 144 or 701 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk.

          (f) Purchaser understands that Purchaser may suffer adverse tax
consequences as a result of Purchaser's purchase or disposition of the Shares.
Purchaser represents that Purchaser has consulted any tax consultants Purchaser
deems advisable in connection with the

                                      -4-

<PAGE>

purchase or disposition of the Shares and that Purchaser is not relying on the
Company for any tax advice.

     5. RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.

          (a) LEGENDS. The certificate or certificates representing the Shares
shall bear the following legends (as well as any legends required by applicable
state and federal corporate and securities laws):

               (i)  THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
                    REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN
                    ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN
                    CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH
                    SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE
                    REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF
                    COUNSEL FOR THE COMPANY THAT SUCH REGISTRATION IS NOT
                    REQUIRED UNDER THE SECURITIES ACT OF 1933.

               (ii) THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE
                    TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN
                    AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF
                    WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.

          (b) STOP-TRANSFER NOTICES. Purchaser agrees that, in order to ensure
compliance with the restrictions referred to herein, the Company may issue
appropriate "stop transfer" instructions to its transfer agent, if any, and
that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.

          (c) REFUSAL TO TRANSFER. The Company shall not be required (i) to
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement or (ii) to treat as owner
of such Shares or to accord the right to vote or pay dividends to any purchaser
or other transferee to whom such Shares shall have been so transferred.

     6. NO EMPLOYMENT RIGHTS. Nothing in this Agreement shall affect in any
manner whatsoever the right or power of the Company, or a parent or subsidiary
of the Company, to terminate Purchaser's employment or consulting relationship,
for any reason, with or without cause.

     7. LOCK-UP AGREEMENT. In connection with the initial public offering of the
Company's securities and upon request of the Company or the underwriters
managing any

                                      -5-

<PAGE>

underwritten offering of the Company's securities, Purchaser agrees not to sell,
make any short sale of, loan, grant any option for the purchase of, or otherwise
dispose of any securities of the Company however or whenever acquired (other
than those included in the registration) without the prior written consent of
the Company or such underwriters, as the case may be, for such period of time
(not to exceed 180 days but subject to extension or extensions as may be
required by the underwriters in order to publish research reports while
complying with Rule 2711 of the National Association of Securities Dealers,
Inc.) from the effective date of such registration as may be requested by the
Company or such managing underwriters and to execute an agreement reflecting the
foregoing as may be requested by the underwriters at the time of the public
offering.

     8. MISCELLANEOUS.

          (a) GOVERNING LAW. This Agreement and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
Delaware, without giving effect to principles of conflicts of law.

          (b) ENTIRE AGREEMENT; ENFORCEMENT OF RIGHTS. This Agreement sets forth
the entire agreement and understanding of the parties relating to the subject
matter herein and merges all prior discussions between them. No modification of
or amendment to this Agreement, nor any waiver of any rights under this
Agreement, shall be effective unless in writing signed by the parties to this
Agreement. The failure by either party to enforce any rights under this
Agreement shall not be construed as a waiver of any rights of such party.

          (c) SEVERABILITY. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, the parties agree to renegotiate such
provision in good faith. In the event that the parties cannot reach a mutually
agreeable and enforceable replacement for such provision, then (i) such
provision shall be excluded from this Agreement, (ii) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (iii)
the balance of the Agreement shall be enforceable in accordance with its terms.

          (d) CONSTRUCTION. This Agreement is the result of negotiations between
and has been reviewed by each of the parties hereto and their respective
counsel, if any; accordingly, this Agreement shall be deemed to be the product
of all of the parties hereto, and no ambiguity shall be construed in favor of or
against any one of the parties hereto.

          (e) NOTICES. Any notice required or permitted by this Agreement shall
be in writing and shall be deemed sufficient when delivered personally or sent
by telegram or fax or forty-eight (48) hours after being deposited in the U.S.
mail, as certified or registered mail, with postage prepaid, and addressed to
the party to be notified at such party's address as set forth below or as
subsequently modified by written notice.

          (f) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.

                                      -6-

<PAGE>

          (g) SUCCESSORS AND ASSIGNS. The rights and benefits of this Agreement
shall inure to the benefit of, and be enforceable by the Company's successors
and assigns. The rights and obligations of Purchaser under this Agreement may
only be assigned with the prior written consent of the Company.

                            [Signature Page Follows]

                                      -7-

<PAGE>

     The parties have executed this Exercise Notice and Restricted Stock
Purchase Agreement as of the date first set forth above.

                                        COMPANY:

                                        QUATRX PHARMACEUTICALS COMPANY

                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                        PURCHASER:

                                        [Optionee]

                                        ----------------------------------------
                                        (Signature)

                                        Address:
                                                 -------------------------------

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

                                       -8-

<PAGE>

                                     RECEIPT

     The undersigned hereby acknowledges receipt of Certificate No. _____ for
__________ shares of Common Stock of QuatRx Pharmaceuticals Company.

Dated:                                  ----------------------------------------
       ---------------                  [Optionee]

<PAGE>

                                     RECEIPT

     QuatRx Pharmaceuticals Company (the "Company") hereby acknowledges receipt
of (check as applicable):

     ________   A check in the amount of $________

     ________   The cancellation of indebtedness in the amount of $________

     ________   Certificate No. _____ representing __________ shares of the
                Company's Common Stock with a fair market value of $_______

given by [Optionee] as consideration for Certificate No. _____ for _________
shares of Common Stock of the Company.

Dated:
       --------------

                                        QuatRx Pharmaceuticals Company

                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                              (print)
                                        Title:
                                               ---------------------------------<PAGE>
                                                                    Exhibit 10.3

                         PEGASUS PHARMACEUTICALS COMPANY
                           2000 EQUITY INCENTIVE PLAN
                          AS ADOPTED DECEMBER 19, 2000

     ARTICLE 1. DEFINITIONS.

     As used in this Plan, the following terms will have the following meanings:

     1.1. "AWARD" means any award under this Plan, including any Option or
Restricted Stock Award.

     1.2. "AWARD AGREEMENT" means, with respect to each Award, the signed
written agreement between the Company and the Participant setting forth the
terms and conditions of the Award.

     1.3. "BOARD" means the Board of Directors of the Company.

     1.4. "CAUSE" means Termination because of (i) any willful material
violation by the Participant of any law or regulation applicable to the business
of the Company, (ii) the Participant's conviction of, or plea of nolo confendre
or guilty with respect to, a felony or a crime involving moral turpitude, (iii)
any willful perpetration by the Participant of a common law fraud, (iv) the
Participant's commission of an act of personal dishonesty which involves
personal profit in connection with the Company or any other entity having a
business relationship with the Company, (v) any material breach by the
Participant of any provision of any agreement or understanding between the
Company and the Participant regarding the terms of the Participant's service as
an employee, director or consultant to the Company, including without
limitation, the willful and continued failure or refusal of the Participant to
perform the material duties required of such Participant as an employee,
director or consultant of the Company, other than as a result of having a
Disability, or a breach of any applicable invention assignment and
confidentiality agreement or similar agreement between the Company and the
Participant, (vi) Participant's disregard of the policies of the Company so as
to cause loss, damage or injury to the property, reputation or employees of the
Company, or (vii) any other misconduct by the Participant which is materially
injurious to the financial condition or business reputation of, or is otherwise
materially injurious to, the Company.

     1.5. "CODE" means the Internal Revenue Code of 1986, as amended.

     1.6. "COMMITTEE" means the committee appointed by the Board to administer
this Plan, or if no committee is appointed, the Board. Notwithstanding the
foregoing, however, from and after the Public Trading Date, the Committee the
Committee shall consist solely of two or more directors who are not employees of
the Company each of whom is both an "outside director," within the meaning of
Section 162(m) of the Code, and a "non-employee director" within the meaning of
Rule 16b-3 of the Exchange Act. Within the scope of such authority, the board of
directors or the Committee may (i) delegate to a committee of one or more
members of the board who do not meet the above requirements the authority to
grant awards under the Plan to eligible persons who are either (1) not then
"covered employees," within the meaning of Section 162(m) of the Code and are
not expected to be "covered employees" at the time of recognition of income
resulting from such award or (2) not persons with respect to whom the Company
wishes to comply with Section 162(m) of the Code and/or (ii) delegate to a
committee

                                        1

<PAGE>

of one or more members of the Board who are "non-employee directors," within the
meaning of Rule 16b-3, the authority to grant awards under the Plan to eligible
persons who are not then subject to Section 16 of the Exchange Act.

     1.7. "COMMON STOCK" means the Company's common stock, par value $.01 per
share.

     1.8. "COMPANY" means Pegasus Pharmaceuticals Company, a Delaware
corporation, or any successor corporation.

     1.9. "DISABILITY" means a disability, whether temporary or permanent,
partial or total, as determined by the Committee.

     1.10. "EXERCISE PRICE" means the price at which a holder of an Option may
purchase Shares issuable upon exercise of the Option.

     1.11. "FAIR MARKET VALUE" means, as of any date, the value of a share of
Common Stock determined as follows:

          1.11.1. if such Common Stock is then quoted on the Nasdaq National
     Market, its closing price on the Nasdaq National Market on the date of
     determination as reported in The Wall Street Journal;

          1.11.2. if such Common Stock is publicly traded and is then listed on
     a national securities exchange, its closing price on the date of
     determination on the principal national securities exchange on which the
     Common Stock is listed or admitted to trading as reported in The Wall
     Street Journal;

          1.11.3. if such Common Stock is publicly traded but is not quoted on
     the Nasdaq National Market nor listed or admitted to trading on a national
     securities exchange, the average of the closing bid and asked prices on the
     date of determination as reported by The Wall Street Journal (or, if not so
     reported, as otherwise reported by any newspaper or other source as the
     Board may determine); or

          1.11.4. if none of the foregoing is applicable, by the Committee in
     such manner as it shall deem reasonable in good faith.

     1.12. "IMMEDIATE FAMILY" means parents, siblings, spouse, in-laws and
issue, spouses of such issue and any trust in which such individuals have more
than a fifty percent beneficial interest, a foundation in which these
individuals control the management of assets and any other entity in which these
persons (or the employee) own more than fifty percent of the voting interests.

     1.13. "OPTION" means an award of an option to purchase Shares pursuant to
Article 5.

     1.14. "PARTICIPANT" means a person who receives an Award under this Plan.

     1.15. "PLAN" means this Pegasus Pharmaceuticals Company 2000 Equity
Incentive Plan, as amended from time to time.

                                        2

<PAGE>

     1.16. "PURCHASE PRICE" the price at which a Participant may purchase
Restricted Stock.

     1.17. "PUBLIC TRADING DATE" means the first date upon which Common Stock of
the Company is listed (or approved for listing) upon notice of issuance on any
securities exchange or designated (or approved for designation) upon notice of
issuance as a national market security on an interdealer quotation system.

     1.18. "RESTRICTED STOCK" means Shares purchased pursuant to a Restricted
Stock Award.

     1.19. "RESTRICTED STOCK AWARD" means an award of Shares pursuant to Article
6.

     1.20. "SEC" means the United States Securities and Exchange Commission.

     1.21. "SECURITIES ACT" means the federal Securities Act of 1933, as
amended.

     1.22. "SHARES" means shares of Common Stock reserved for issuance under
this Plan, as adjusted pursuant to Section 3.2 and Article 17, and any successor
security.

     1.23. "TERMINATION" OR "TERMINATED" means, for purposes of this Plan with
respect to a Participant, that the Participant has for any reason ceased to
provide services as an employee, officer, director or consultant to the Company.
A Participant will not be deemed to have ceased to provide services in the case
of (i) sick leave, (ii) military leave, or (iii) any other leave of absence
approved by the Committee, provided that such leave is for a period of not more
than ninety (90) days unless reinstatement (or, in the case of an employee with
an ISO, reemployment) upon the expiration of such leave is guaranteed by
contract or statute, or unless provided otherwise pursuant to formal policy
adopted from time to time by the Company and issued and promulgated in writing.
In the case of any participant on (i) sick leave, (ii) military leave or (iii)
on an approved leave of absence, the Committee may make such provisions
respecting suspension of vesting of the Award while on leave from the Company as
it may deem appropriate, except that in no event may an Option be exercised
after the expiration of the term set forth in the Stock Option Agreement. The
Committee will have sole discretion to determine whether a Participant has
ceased to provide services and the effective date on which the Participant
ceased to provide services (the "Termination Date").

     1.24. "UNVESTED SHARES" means "Unvested Shares" as defined in the Award
Agreement.

     ARTICLE 2. PURPOSE.

     2.1. The purpose of this Plan is to provide incentives to attract, retain
and motivate eligible persons whose present and potential contributions are
important to the success of the Company, by offering them an opportunity to
participate in the Company's future performance through awards of Options and
Restricted Stock. This Plan is intended to be a written compensatory benefit
plan within the meaning of Rule 701 promulgated under the Securities Act of
1933.

                                        3

<PAGE>

     ARTICLE 3. SHARES SUBJECT TO THE PLAN.

     3.1. Number Of Shares Available. Subject to Sections 3.2 and Article 17,
the total number of Shares reserved and available for grant and issuance
pursuant to this Plan will be One Million Three Hundred Seventy-Five Thousand
(1,375,000) Shares. No individual shall be granted, in any calendar year,
Options or Restricted Stock with respect to more than Five Hundred Thousand
(500,000) Shares; provided, however, that the foregoing limitation shall not
apply prior to the Public Trading Date and, following the Public Trading Date,
the foregoing limitation shall not apply until the earliest of: (i) the first
material modification of the Plan (including any increase in the number of
shares reserved for issuance under the Plan in accordance with Section 3); (ii)
the issuance of all of the shares of Common Stock reserved for issuance under
the Plan; (iii) the expiration of the Plan; (iv) the first meeting of
stockholders at which directors of the Company are to be elected that occurs
after the close of the third calendar year following the calendar year in which
occurred the first registration of an equity security of the Company under
Section 12 of the Exchange Act; or (v) such other date required by Section
162(m) of the Code and the rules and regulations promulgated thereunder. The
foregoing limitation shall be adjusted proportionately in connection with any
change in the Company's capitalization as described in Section 3.2. For purposes
of this Section 3.1, if an Option is canceled in the same calendar year it was
granted (other than in connection with a transaction described in Section 3.2),
the canceled Option will be counted against the limit set forth in this Section
3.1. For this purpose, if the Exercise Price of an Option is reduced, the
transaction shall be treated as a cancellation of the Option and the grant of a
new Option. No Award may be granted if the number of shares to which such Award
relates, when added to the number of shares previously issued under the Plan and
the number of shares which may then be acquired pursuant to other outstanding,
unexercised Awards, exceeds the number of shares available for issuance pursuant
to the Plan. Subject to Sections 3.2 and Article 17, if any shares subject to an
Award are forfeited or such Award is settled in cash or otherwise terminates for
any reason whatsoever without an actual distribution of shares to the
Participant, any shares counted against the number of shares available for
issuance pursuant to the Plan with respect to such Award shall, to the extent of
any such forfeiture, settlement, or termination, again be available for Awards
under the Plan; provided, however, that the Committee may adopt procedures for
the counting of shares relating to any Award to ensure appropriate counting,
avoid double counting, and provide for adjustments in any case in which the
number of shares actually distributed differs from the number of shares
previously counted in connection with such Award. At all times the Company will
reserve and keep available a sufficient number of Shares as are required to
satisfy the requirements of all Awards granted under this Plan.

     3.2. Adjustment Of Shares. In the event that the number of outstanding
shares of Common Stock is changed by a stock dividend, recapitalization, stock
split, reverse stock split, subdivision, combination, reclassification or
similar change in the capital structure of the Company without consideration,
then (a) the number of Shares reserved for issuance under this Plan, (b) the
Exercise Prices of and number of Shares subject to outstanding Options, and (c)
the Purchase Prices of and number of Shares subject to other outstanding Awards
will be proportionately adjusted, subject to any required action by the Board or
the shareholders of the Company and compliance with applicable securities laws;
provided, however, that fractions of a Share will not be issued but will either
be paid in cash at Fair Market Value of such fraction of a Share or will be
rounded down to the nearest whole Share, as determined by the Committee.

                                        4

<PAGE>

     ARTICLE 4. ADMINISTRATION.

     4.1. Committee Authority. The Committee, or the Board acting as the
Committee, will administer this Plan. Subject to the general purposes, terms and
conditions of this Plan, and to the direction of the Board, the Committee will
have full power to implement and carry out this Plan. Without limitation, the
Committee will have the authority to:

          4.1.1. construe and interpret this Plan, any Award Agreement and any
     other agreement or document executed pursuant to this Plan;

          4.1.2. prescribe, amend and rescind rules and regulations relating to
     this Plan;

          4.1.3. select persons to receive Awards;

          4.1.4. determine the form and terms of Awards;

          4.1.5. determine the number of Shares or other consideration subject
     to Awards;

          4.1.6. determine whether Awards will be granted singly, in combination
     with, in tandem with, in replacement of, or as alternatives to, other
     Awards under this Plan or awards under any other incentive or compensation
     plan of the Company;

          4.1.7. grant waivers of Plan or Award conditions;

          4.1.8. determine the vesting, exercisability and payment of Awards;

          4.1.9. correct any defect, supply any omission, or reconcile any
     inconsistency in this Plan, any Award, any Award Agreement, any Exercise
     Agreement or any Restricted Stock Purchase Agreement;

          4.1.10. determine whether an Award has been earned; and

          4.1.11. make all other determinations necessary or advisable for the
     administration of this Plan.

     4.2. Committee Discretion. Any determination made by the Committee with
respect to any Award will be made in its sole discretion at the time of grant of
the Award or, unless in contravention of any express term of this Plan or Award,
and subject to Section 5.10, at any later time, and such determination will be
final and binding on the Company and on all persons having an interest in any
Award under this Plan. The Committee may delegate to one or more officers of the
Company the authority to grant an Award under this Plan.

     ARTICLE 5. OPTIONS.

     The Committee may grant Options to eligible persons and will determine
whether such Options will be Incentive Stock Options within the meaning of the
Code ("ISOs") or Nonqualified Stock Options ("NQSOs"), the number of Shares
subject to the Option, the Exercise Price of the Option, the period during which
the Option may be exercised, and all other terms and conditions of the Option,
subject to the following:

     5.1. Eligibility for Grants. ISOs may be granted only to employees
(including officers

                                        5

<PAGE>

and directors who are also employees) of the Company. All other Awards may be
granted to employees, officers, directors and consultants of the Company;
provided such consultants are natural persons and they render bona fide services
to the Company not in connection with the offer and sale of securities in a
capital-raising transaction. A person may be granted more than one Award under
this Plan.

     5.2. Form Of Option Grant. Each Option granted under this Plan will be
evidenced by an Award Agreement which will expressly identify the Option as an
ISO or an NQSO ("Stock Option Agreement"), and will be in such form and contain
such provisions (which need not be the same for each Participant) as the
Committee may from time to time approve, and which will comply with and be
subject to the terms and conditions of this Plan.

     5.3. Date Of Grant. The date of grant of an Option will be the date on
which the Committee makes the determination to grant such Option, unless
otherwise specified by the Committee. The Stock Option Agreement and a copy of
this Plan will be delivered to the Participant within a reasonable time after
the granting of the Option.

     5.4. Exercise Period. Options may be exercisable immediately (subject to
repurchase pursuant to Article 11 of this Plan) or may be exercisable within the
times or upon the events determined by the Committee as set forth in the Stock
Option Agreement governing such Option; provided, however, that no Option will
be exercisable after the expiration of ten (10) years from the date the Option
is granted; and provided further that no ISO granted to a person who directly or
by attribution owns more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company ("Ten Percent Shareholder") will be
exercisable after the expiration of five (5) years from the date the ISO is
granted. The Committee also may provide for Options to become exercisable at one
time or from time to time, periodically or otherwise, in such number of Shares
or percentage of Shares as the Committee determines.

     5.5. Exercise Price. The Exercise Price of an Option will be determined by
the Committee when the Option is granted and may not be less than 85% of the
Fair Market Value of the Shares on the date of grant; provided that (i) the
Exercise Price of an ISO will not be less than 100% of the Fair Market Value of
the Shares on the date of grant, and (ii) the Exercise Price of an ISO granted
to a Ten Percent Shareholder will not be less than 110% of the Fair Market Value
of the Shares on the date of grant. Payment for the Shares purchased must be
made in accordance with Article 7 of this Plan.

     5.6. Method Of Exercise. Options may be exercised only by delivery to the
Company of a written stock option exercise agreement (the "Exercise Agreement")
in a form approved by the Committee (which need not be the same for each
Participant), stating the number of Shares being purchased, the restrictions
imposed on the Shares purchased under such Exercise Agreement, if any, and such
representations and agreements regarding Participant's investment intent and
access to information and other matters, if any, as may be required or desirable
by the Company to comply with applicable securities laws, together with payment
in full of the Exercise Price, and any applicable taxes, for the number of
Shares being purchased.

     5.7. Termination. Subject to earlier termination pursuant to Articles 17
and 18 and notwithstanding the exercise periods set forth in the Stock Option
Agreement, exercise of an Option will always be subject to the following:

                                        6

<PAGE>

          5.7.1. If the Participant is Terminated for any reason except death,
     Disability or for Cause, then the Participant may exercise such
     Participant's Options, only to the extent that such Options are exercisable
     upon the Termination Date, and no later than three (3) months after the
     Termination Date (or within such shorter time period, not less than thirty
     (30) days, or within such longer time period, not exceeding five (5) years,
     after the Termination Date as may be determined by the Committee, with any
     exercise beyond three (3) months after the Termination Date deemed to be an
     NQSO) but in any event, no later than the expiration date of the Options.

          5.7.2. If the Participant is Terminated because of Participant's death
     or Disability (or the Participant dies within three (3) months after a
     Termination other than because of Participant's Disability or Cause), then
     Participant's Options may be exercised only to the extent that such Options
     are exercisable by Participant on the Termination Date, and must be
     exercised by Participant (or Participant's legal representative or
     authorized assignee) no later than twelve (12) months after the Termination
     Date (or within such shorter time period, not less than six (6) months, or
     within such longer time period, not exceeding five (5) years, after the
     Termination Date as may be determined by the Committee, with any exercise
     beyond (x) three (3) months after the Termination Date when the Termination
     is for any reason other than the Participant's death or disability, within
     the meaning of Section 22(e)(3) of the Code, or (y) twelve (12) months
     after the Termination Date when the Termination is for Participant's
     disability, within the meaning of Section 22(e)(3) of the Code, deemed to
     be an NQSO) but in any event no later than the expiration date of the
     Options.

          5.7.3. If the Participant is terminated for Cause, then Participant's
     Options shall expire on such Participant's Termination Date, or if the
     Committee otherwise provides in its sole discretion, at such later time and
     on such conditions as are determined by the Committee.

     5.8. Limitations On Exercise. The Committee may specify a reasonable
minimum number of Shares that may be purchased on any exercise of an Option,
provided that such minimum number will not prevent Participant from exercising
the Option for the full number of Shares for which it is exercisable at any
time.

     5.9. Limitations On ISOs. The aggregate Fair Market Value (determined as of
the date of grant) of Shares with respect to which ISOs are exercisable for the
first time by a Participant during any calendar year (under this Plan or under
any other incentive stock option plan of the Company) will not exceed $100,000.
If the Fair Market Value of Shares on the date of grant with respect to which
ISOs are exercisable for the first time by a Participant during any calendar
year exceeds $100,000, then the Options for the first $100,000 worth of Shares
to become exercisable in such calendar year will be ISOs and the Options for the
amount in excess of $100,000 that become exercisable in that calendar year will
be NQSOs. In the event that the Code or the regulations promulgated thereunder
are amended after the Effective Date (as defined in Article 18 below) to provide
for a different limit on the Fair Market Value of Shares permitted to be subject
to ISOs, then such different limit will be automatically incorporated herein and
will apply to any Options granted after the effective date of such amendment.

                                        7

<PAGE>

     5.10. Modification, Extension Or Renewal. The Committee may modify, extend
or renew outstanding Options and authorize the grant of new Options in
substitution therefor, provided that any such action may not, without the
written consent of a Participant, impair any of such Participant's rights under
any Option previously granted. Any outstanding ISO that is modified, extended,
renewed or otherwise altered will be treated in accordance with Section 424(h)
of the Code. The Committee may reduce the Exercise Price of outstanding Options
without the consent of Participants affected by a written notice to them;
provided, however, that the Exercise Price may not be reduced below the minimum
Exercise Price that would be permitted under Section 5.5 of this Plan for
Options granted on the date the action is taken to reduce the Exercise Price.

     5.11. No Disqualification. Notwithstanding any other provision in this
Plan, no term of this Plan relating to ISOs will be interpreted, amended or
altered, nor will any discretion or authority granted under this Plan be
exercised, so as to disqualify this Plan under Section 422 of the Code or,
without the consent of the Participant affected, to disqualify any ISO under
Section 422 of the Code.

     ARTICLE 6. RESTRICTED STOCK.

     A Restricted Stock Award is an offer by the Company to sell or grant to an
eligible person Shares that are subject to restrictions. The Committee will
determine to whom an offer or grant will be made, the number of Shares subject
to such offer or grant, the Purchase Price, if any, and the restrictions to
which the Shares will be subject, and all other terms and conditions of the
Restricted Stock Award, subject to the following:

     6.1. Form Of Restricted Stock Award. All purchases under a Restricted Stock
Awards made pursuant to this Plan will be evidenced by an Award Agreement
("Restricted Stock Purchase Agreement") that will be in such form (which need
not be the same for each Participant) as the Committee will from time to time
approve, and will comply with and be subject to the terms and conditions of this
Plan.

     6.2. Restrictions. Restricted Stock Awards may be subject to the
restrictions set forth in Article 11 of this Plan or such other restrictions as
the Committee may determine.

     ARTICLE 7. PAYMENT FOR SHARE PURCHASES.

     7.1. Payment. Payment for Shares purchased pursuant to this Plan may be
made in cash (by check) or, where expressly approved for the Participant by the
Committee and where permitted by law:

          7.1.1. by cancellation of indebtedness of the Company to the
     Participant;

          7.1.2. by surrender of shares that either: (1) have been owned by
     Participant for more than six (6) months and have been paid for within the
     meaning of SEC Rule 144 (and, if such shares were purchased from the
     Company by use of a promissory note, such note has been fully paid with
     respect to such shares); or (2) were obtained by Participant in the public
     market;

                                        8

<PAGE>

          7.1.3. by tender of a full recourse promissory note having such terms
     as may be approved by the Committee and bearing interest at a rate
     sufficient to avoid imputation of income under Sections 483 and 1274 of the
     Code; provided, however, that Participants who are not employees or
     directors of the Company will not be entitled to purchase Shares with a
     promissory note unless the note is adequately secured by collateral other
     than the Shares.

          7.1.4. by waiver of compensation due or accrued to the Participant for
     services rendered;

          7.1.5. with respect only to purchases upon exercise of an Option, on
     and after the Public Trading Date:

               7.1.5.1. through a "same day sale" commitment from the
          Participant and a broker-dealer that is a member of the National
          Association of Securities Dealers (an "NASD Dealer") whereby the
          Participant irrevocably elects to exercise the Option and to sell a
          portion of the Shares so purchased to pay for the Exercise Price, and
          whereby the NASD Dealer irrevocably commits upon receipt of such
          Shares to forward the Exercise Price directly to the Company; or

               7.1.5.2. through a "margin" commitment from the Participant and
          an NASD Dealer whereby the Participant irrevocably elects to exercise
          the Option and to pledge the Shares so purchased to the NASD Dealer in
          a margin account as security for a loan from the NASD Dealer in the
          amount of the Exercise Price, and whereby the NASD Dealer irrevocably
          commits upon receipt of such Shares to forward the Exercise Price
          directly to the Company;

               7.1.5.3. by the surrender of Shares then issuable upon exercise
          of the Option having a Fair Market Value on the date of exercise equal
          to the aggregate Exercise Price of the Option or exercised portion
          thereof to the Company; and

               7.1.5.4. by any combination of the foregoing.

     7.2. Loan Guarantees. The Committee may help the Participant pay for Shares
purchased under this Plan by authorizing a guarantee by the Company of a
third-party loan to the Participant.

     ARTICLE 8. WITHHOLDING TAXES.

     8.1. Withholding Generally. Whenever Shares are to be issued in
satisfaction of Awards granted under this Plan, the Company may require the
Participant to remit to the Company an amount sufficient to satisfy federal,
state and local withholding tax requirements prior to the delivery of any
certificate or certificates for such Shares. Whenever, under this Plan, payments
in satisfaction of Awards are to be made in cash, such payment will be net of an
amount sufficient to satisfy federal, state, and local withholding tax
requirements.

     8.2. Stock Withholding. When, under applicable tax laws, a Participant
incurs tax liability in connection with the exercise or vesting of any Award
that is subject to tax

                                        9

<PAGE>

withholding and the Participant is obligated to pay the Company the amount
required to be withheld, the Committee may in its sole discretion allow the
Participant to satisfy the minimum withholding tax obligation by electing to
have the Company withhold from the Shares to be issued that number of Shares
having a Fair Market Value equal to the minimum amount required to be withheld,
determined on the date that the amount of tax to be withheld is to be
determined. All elections by a Participant to have Shares withheld for this
purpose will be made in accordance with the requirements established by the
Committee for such elections and will be in writing in a form acceptable to the
Committee.

     ARTICLE 9. PRIVILEGES OF STOCK OWNERSHIP.

     9.1. Voting And Dividends. No Participant will have any of the rights of a
shareholder with respect to any Shares until the Shares are issued to the
Participant. After Shares are issued to the Participant, the Participant will be
a shareholder and have all the rights of a shareholder with respect to such
Shares, including the right to vote and receive all dividends or other
distributions made or paid with respect to such Shares; provided, that if such
Shares are Restricted Stock, then any new, additional or different securities
the Participant may become entitled to receive with respect to such Shares by
virtue of a stock dividend, stock split or any other change in the corporate or
capital structure of the Company will be subject to the same restrictions as the
Restricted Stock; provided, further, that the Participant will have no right to
retain such stock dividends or stock distributions with respect to Unvested
Shares that are repurchased pursuant to Article 11.

     ARTICLE 10. TRANSFERABILITY.

     10.1. Awards Non-Transferable. Awards granted under this Plan, and any
interest therein, will not be transferable or assignable by Participant, and may
not be made subject to execution, attachment or similar process, otherwise than
by will or by the laws of descent and distribution. During the lifetime of the
Participant an Award will be exercisable only by the Participant, and only the
Participant may make any elections with respect to an Award. Notwithstanding the
foregoing, to the extent permitted by applicable securities laws, the Committee
may, in its discretion, provide that Awards or other rights or interests of a
Participant granted pursuant to the Plan (other than an ISO) be transferable,
without consideration, to Immediate Family members. The Committee may attach to
such transferability feature such terms and conditions as it deems advisable. In
addition, a Participant may, in the manner established by the Committee,
designate a beneficiary (which may be a person or a trust) to exercise the
rights of the Participant, and to receive any distribution, with respect to any
Award upon the death of the Participant. A beneficiary, guardian, legal
representative or other person claiming any rights under the Plan from or
through any Participant shall be subject to all terms and conditions of the Plan
and any Award Agreement applicable to such Participant, except as otherwise
determined by the Committee, and to any additional restrictions deemed necessary
or appropriate by the Committee.

     ARTICLE 11. RESTRICTIONS ON SHARES.

     11.1. Right Of First Refusal. At the discretion of the Committee, the
Company may reserve to itself and/or its assignee(s) in the Award Agreement a
right of first refusal to purchase all Shares that a Participant (or a
subsequent transferee) may propose to transfer to a third

                                       10

<PAGE>

party, provided, that such right of first refusal terminates upon the Company's
initial public offering of Common Stock pursuant an effective registration
statement filed under the Securities Act.

     11.2. Right Of Repurchase. At the discretion of the Committee, the Company
may reserve to itself and/or its assignee(s) in the Award Agreement a right to
repurchase Unvested Shares held by a Participant, for cash and/or cancellation
of purchase money indebtedness, following such Participant's Termination at any
time within the later of ninety (90) days after the Participant's Termination
Date and the date the Participant purchases Shares under the Plan, at the
Participant's Exercise Price or Purchase Price, as the case may be, provided,
that unless the Participant is an officer, director or consultant of the
Company, such right of repurchase lapses at the rate of at least twenty percent
(20%) per year over five (5) years from: (A) the date of grant of the Option, or
(B) in the case of Restricted Stock, the date the Participant purchases the
Shares.

     ARTICLE 12. CERTIFICATES.

     12.1. Legends. All certificates for Shares or other securities delivered
under this Plan will be subject to such stock transfer orders, legends and other
restrictions as the Committee may deem necessary or advisable, including
restrictions under any applicable federal, state or foreign securities law, or
any rules, regulations and other requirements of the SEC or any stock exchange
or automated quotation system upon which the Shares may be listed or quoted.
These may include appropriate "stop-transfer" instructions issued to the
Company's transfer agent, if any, or, if the Company transfers its own
securities, appropriate notations to the same effect in its own records.

     ARTICLE 13. ESCROW; PLEDGE OF SHARES.

     13.1. Deposit of Shares. To enforce any restrictions on a Participant's
Shares, the Committee may require the Participant to deposit all certificates
representing Shares, together with stock powers or other instruments of transfer
approved by the Committee, appropriately endorsed in blank, with the Company or
an agent designated by the Company to hold in escrow until such restrictions
have lapsed or terminated, and the Committee may cause a legend or legends
referencing such restrictions to be placed on the certificates. Any Participant
who is permitted to execute a promissory note as partial or full consideration
for the purchase of Shares under this Plan will be required to pledge and
deposit with the Company all or part of the Shares so purchased as collateral to
secure the payment of Participant's obligation to the Company under the
promissory note; provided, however, that the Committee may require or accept
other or additional forms of collateral to secure the payment of such obligation
and, in any event, the Company will have full recourse against the Participant
under the promissory note notwithstanding any pledge of the Participant's Shares
or other collateral. In connection with any pledge of the Shares, Participant
will be required to execute and deliver a written pledge agreement in such form
as the Committee will from time to time approve. The Shares purchased with the
promissory note may be released from the pledge on a pro rata basis as the
promissory note is paid.

                                       11

<PAGE>

     ARTICLE 14. EXCHANGE AND BUYOUT OF AWARDS.

     14.1. Committee Determination. The Committee may, at any time or from time
to time, authorize the Company, with the consent of the respective Participants,
to issue new Awards in exchange for the surrender and cancellation of any or all
outstanding Awards. The Committee may at any time buy from a Participant an
Award previously granted with payment in cash, shares of Common Stock of the
Company (including restricted stock) or other consideration, based on such terms
and conditions as the Committee and the Participant may agree.

     ARTICLE 15. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE.

     15.1. Condition of Effectiveness. An Award will not be effective unless
such Award is in compliance with all applicable federal and state securities
laws, rules and regulations of any governmental body, and the requirements of
any stock exchange or automated quotation system upon which the Shares may then
be listed or quoted, as they are in effect on the date of grant of the Award and
also on the date of exercise or other issuance. Notwithstanding any other
provision in this Plan, the Company will have no obligation to issue or deliver
certificates for Shares under this Plan prior to (a) obtaining any approvals
from governmental agencies that the Company determines are necessary or
advisable, and/or (b) compliance with any exemption or completion of any
registration or other qualification of such Shares under any state or federal
law or ruling of any governmental body that the Company determines to be
necessary or advisable. The Company will be under no obligation to register the
Shares with the SEC or to effect compliance with the exemption, registration,
qualification or listing requirements of any state securities laws, stock
exchange or automated quotation system, or take any other steps as may be
necessary to enable the shares to be offered and sold or resold under federal or
other securities laws, and the Company will have no liability for any inability
or failure to do so.

     ARTICLE 16. NO OBLIGATION TO EMPLOY.

     16.1. No Right of Continued Employment. This Plan does not constitute a
contract of employment and participation in the Plan will not give a participant
the right to continue in the employ of the Company on a full-time, part-time or
any other basis. Nothing in this Plan or any Award granted under this Plan will
confer or be deemed to confer on any Participant any right to continue in the
employ of, or to continue any other relationship with, the Company or limit in
any way the right of the Company to terminate Participant's employment or other
relationship at any time, with or without Cause.

     ARTICLE 17. CORPORATE TRANSACTIONS.

     17.1. Assumption Or Replacement Of Awards By Successor. In the event of (a)
a dissolution or liquidation of the Company, (b) a merger or consolidation in
which the Company is not the surviving corporation (other than a merger or
consolidation with a wholly-owned subsidiary, a reincorporation of the Company
in a different jurisdiction, or other transaction in which there is no
substantial change in the shareholders of the Company or their relative stock
holdings and the Awards granted under this Plan are assumed, converted or
replaced by the successor corporation, which assumption, conversion or
replacement will be binding on all

                                       12

<PAGE>

Participants), (c) a merger in which the Company is the surviving corporation
but after which the shareholders of the Company immediately prior to such merger
(other than any shareholder which merges with the Company in such merger, or
which owns or controls another corporation which merges, with the Company in
such merger) cease to own their shares or other equity interests in the Company,
or (d) the sale of all or substantially all of the assets of the Company, any or
all outstanding Awards may be assumed, converted or replaced by the successor
corporation (if any), which assumption, conversion or replacement will be
binding on all Participants. In the alternative, the successor corporation may
substitute equivalent Awards or provide substantially similar consideration to
Participants as was provided to shareholders (after taking into account the
existing provisions of the Awards). The successor corporation may also issue, in
place of outstanding Shares of the Company held by the Participant,
substantially similar shares or other property subject to repurchase
restrictions and other provisions no less favorable to the Participant than
those which applied to such outstanding Shares immediately prior to such
transaction. In the event the successor corporation (if any) refuses to assume
or substitute Awards, as provided above, pursuant to a transaction described in
this Section 17.1, then notwithstanding any other provision in this Plan to the
contrary, the Committee or Board may make such provisions regarding all
outstanding Awards as it shall deem advisable, including but not limited to
providing for the acceleration of vesting and for settlement, including cash
payment of an Award, upon or immediately before the effectiveness of such
transaction.

     17.2. Other Treatment Of Awards. Subject to any greater rights granted to
Participants under the foregoing provisions of this Article 17, in the event of
the occurrence of any transaction described in Section 17.1, any outstanding
Awards will be treated as provided in the applicable agreement or plan of
merger, consolidation, dissolution, liquidation or sale of assets.

     17.3. Assumption Of Awards By The Company. The Company, from time to time,
also may substitute or assume outstanding awards granted by another company,
whether in connection with an acquisition of such other company or otherwise, by
either granting an Award under this Plan in substitution of such other company's
award or assuming such award as if it had been granted under this Plan if the
terms of such assumed award could be applied to an Award granted under this
Plan. Such substitution or assumption will be permissible if the holder of the
substituted or assumed award would have been eligible to be granted an Award
under this Plan if the other company had applied the rules of this Plan to such
grant. In the event the Company assumes an award granted by another company, the
terms and conditions of such award will remain unchanged (except that the
Exercise Price and the number and nature of shares issuable upon exercise of any
such option will be adjusted appropriately pursuant to Section 424(a) of the
Code). In the event the Company elects to grant a new Option rather than
assuming an existing option, such new Option may be granted with a similarly
adjusted Exercise Price.

     ARTICLE 18. TERM OF PLAN/GOVERNING LAW.

     18.1. Term. Unless earlier terminated as provided herein, this Plan will
terminate ten (10) years from the Effective Date or, if earlier, the date of
shareholder approval.

     18.2. Governing Law. This Plan and all agreements hereunder shall be
governed by and construed in accordance with the laws of the State of Delaware,
without giving effect to choice of law principles which would require the
application of the laws of any other jurisdiction.

                                       13

<PAGE>

     ARTICLE 19. AMENDMENT OF PLAN

     19.1. Authority to Amend. The Plan may be amended by the Committee as it
deems necessary or appropriate to better achieve the purposes of the Plan,
except that no such amendment shall be made without the approval of the
Company's stockholders which would increase the number of shares available for
issuance in accordance with Articles 5 and 6 of the Plan. The Board may suspend
the Plan or terminate the Plan at any time; provided, that no such action shall
adversely affect any outstanding benefit. Any shares authorized under Article 3
(or any amendment thereof) with respect to which no Award is granted prior to
termination of the Plan, or with respect to which an Award is terminated,
forfeited or canceled after termination of the Plan, shall automatically be
transferred so as to be available to satisfy awards or grants under any
subsequent stock incentive plan or similar plan for employees of the Company.

     ARTICLE 20. ADDITIONAL PROVISIONS.

     20.1. Plan Nonexclusive. Neither the adoption of this Plan by the Board,
the submission of this Plan to the shareholders of the Company for approval, nor
any provision of this Plan will be construed as creating any limitations on the
power of the Board to adopt such additional compensation arrangements as it may
deem desirable, including, without limitation, the granting of stock options and
other equity awards otherwise than under this Plan, and such arrangements may be
either generally applicable or applicable only in specific cases.

     20.2. Unfunded Plan. Unless otherwise determined by the Committee, the Plan
shall be unfunded and shall not create (or be construed to create) a trust or a
separate fund or funds. The Plan shall not establish any fiduciary relationship
between the Company and any participant or other person. To the extent any
person holds any rights by virtue of an Award granted under the Plan, such
rights shall be no greater than the rights of an unsecured general creditor of
the Company.

     20.3. Use of Proceeds. Cash proceeds received by the Company from the
issuance of shares pursuant to Awards under the Plan shall constitute general
funds of the Company.

                                       14

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