Document:

Exhibit
4.1

    TALON
THERAPEUTICS, INC.

    2010
EQUITY INCENTIVE PLAN

    (as
amended through December 22, 2010)

    

    SECTION
1.

    DEFINITIONS

     

    As used herein, the following terms
shall have the meanings indicated below:

    

    (a)         “Administrator” shall mean the Board of
Directors of the Company, or one or more Committees appointed by the Board, as
the case may be.

     

    (b)         “Affiliate(s)” shall mean a
Parent or Subsidiary of the Company.

     

    (c)         “Award” shall mean any grant of
an Option, Restricted Stock Award, Restricted Stock Unit Award, Stock
Appreciation Right or Performance Award.

     

    (d)         “Change of Control” shall mean
the occurrence, in a single transaction or in a series of related transactions,
of any one or more of the following events.  For purposes of this
definition, a person, entity or group shall be deemed to “Own,” to have “Owned,” to be the “Owner” of, or to have acquired
“Ownership” of
securities if such person, entity or group directly or indirectly, through any
contract, arrangement, understanding, relationship or otherwise, has or shares
voting power, which includes the power to vote or to direct the voting, with
respect to such securities.

     

    (i)           Any
person, entity or group becomes the Owner, directly or indirectly, of securities
of the Company representing more than fifty percent (50%) of the combined voting
power of the Company’s then outstanding securities other than by virtue of a
merger, consolidation or similar transaction.  Notwithstanding the
foregoing, a Change in Control shall not be deemed to occur (A) on account of
the acquisition of securities of the Company by an investor, any affiliate
thereof or any other person, entity or group from the Company in a transaction
or series of related transactions the primary purpose of which is to obtain
financing for the Company through the issuance of equity securities or (B)
solely because the level of Ownership held by any person, entity or group (the
“Subject Person”)
exceeds fifty percent (50%) of the outstanding voting securities as a result of
a repurchase or other acquisition of voting securities by the Company reducing
the number of shares outstanding, provided that if a Change in Control would
occur (but for the operation of this sentence) as a result of the acquisition of
voting securities by the Company, and after such share acquisition, the Subject
Person becomes the Owner of any additional voting securities that, assuming the
repurchase or other acquisition had not occurred, increases the percentage of
the then outstanding voting securities Owned by the Subject Person to more than
fifty percent (50%), then a Change in Control shall be deemed to
occur;

     

    (ii)          There
is consummated a merger, consolidation or similar transaction involving
(directly or indirectly) the Company and, immediately after the consummation of
such merger, consolidation or similar transaction, the stockholders of the
Company immediately prior thereto do not Own, directly or indirectly, either (A)
outstanding voting securities representing more than fifty percent (50%) of the
combined outstanding voting power of the surviving entity in such merger,
consolidation or similar transaction or (B) more than fifty percent (50%) of the
combined outstanding voting power of the parent of the surviving entity in such
merger, consolidation or similar transaction, in each case in substantially the
same proportions as their Ownership of the outstanding voting securities of the
Company immediately prior to such transaction;

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    (iii)        There
is consummated a sale, lease, exclusive license or other disposition of all or
substantially all of the total gross value of the consolidated assets of the
Company and its subsidiaries, other than a sale, lease, license or other
disposition of all or substantially all of total gross value of the consolidated
assets of the Company and its subsidiaries to an entity, more than fifty percent
(50%) of the combined voting power of the voting securities of which are Owned
by stockholders of the Company in substantially the same proportions as their
Ownership of the outstanding voting securities of the Company immediately prior
to such sale, lease, license or other disposition (for purposes of this Section
1(d)(iii), “gross value” means the value of the assets of the Company or the
value of the assets being disposed of, as the case may be, determined without
regard to any liabilities associated with such assets); or

     

    (iv)         Individuals
who, at the beginning of any consecutive twelve-month period, are members of the
Board (the “Incumbent
Board”) cease for any reason to constitute at least a majority of the
members of the Board at any time during that consecutive twelve-month period;
provided, however, that
if the appointment or election (or nomination for election) of any new Board
member was approved or recommended by a majority vote of the members of the
Incumbent Board then still in office or stockholders of the Company at the
beginning of such twelve-month period, such new member shall, for purposes of
this Plan, be considered as a member of the Incumbent Board.

     

    For the
avoidance of doubt, the term Change in Control shall not include a sale of
assets, merger or other transaction effected exclusively for the purpose of
changing the domicile of the Company.  To the extent required, the
determination of whether a Change of Control has occurred shall be made in
accordance with Internal Revenue Code Section 409A and the regulations, notices
and other guidance of general applicability issued thereunder.

    

    (e)         “Committee” shall mean a
Committee of two or more directors who shall be appointed by and serve at the
pleasure of the Board.  To the extent necessary for compliance with
Rule 16b-3, or any successor provision, each of the members of the Committee
shall be a “non-employee director.”  Solely for purposes of this
Section 1(e), “non-employee director” shall have the same meaning as set forth
in Rule 16b-3 under the Exchange Act, or any successor provision, as then in
effect.

     

    (f)          The
“Company” shall mean
Hana Biosciences, Inc., a Delaware corporation.

     

    (g)         “Exchange Act” means the
Securities Exchange Act of 1934, as amended, and the rules and regulations of
the Securities and Exchange Commission promulgated thereunder.

     

    (h)         “Fair Market Value” as of any
date shall mean (i) if such stock is listed on the Nasdaq Global Select Market,
Nasdaq Global Market, Nasdaq Capital Market (“collectively, the “Nasdaq”) or another
established stock exchange, the price of such stock at the close of the regular
trading session of such market or exchange on such date, as reported by
Bloomberg or a comparable reporting service, or, if no sale of such stock shall
have occurred on such date, on the next preceding date on which there was a sale
of stock; (ii) if such stock is quoted by the OTC Bulletin Board, the price of
such stock at the close of the regular trading session of the OTC Bulletin Board
on such date, as reported by Bloomberg or a comparable reporting service, or if
no sale of such stock shall have occurred on such date, on the next preceding
date on which there was a sale of stock; provided, however, that if
there are not reported sales on the OTC Bulletin Board, then the price of such
stock shall be the average of the closing “bid” and “asked” prices quoted on the
OTC Bulletin Board on such date; (iii) if such stock is not listed on the Nasdaq
or another established exchange and is not quoted on the OTC Bulletin Board, the
price of such stock the average of the closing “bid” and “asked” prices quoted
by the National Quotation Bureau, or any comparable reporting service on such
date or, if there are no quoted “bid” and “asked” prices on such date, on the
next preceding date for which there are such quotes; or (iii) if such stock is
not publicly traded as of such date, the per share value as determined by the
Board, or the Committee, in its sole discretion by applying principles of
valuation with respect to the Company’s Common Stock.

    
      
         

      

      
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    (i)          “Incentive Stock Option” means
an Option that qualifies as an “incentive stock option” within the meaning of
Section 422 of the Code and the rules and regulations promulgated
thereunder.

     

    (j)          The
“Internal Revenue Code”
or “Code” is the
Internal Revenue Code of 1986, as amended from time to time.

     

    (k)         “Nonqualified Stock Option”
means an Option that does not, at the time of grant or thereafter, qualify as an
Incentive Stock Option.

     

    (l)          “Option” means an Incentive
Stock Option or Nonqualified Stock Option to purchase shares of Common Stock
pursuant to the Plan.

     

    (m)        “Parent” shall mean any
corporation which owns, directly or indirectly in an unbroken chain, fifty
percent (50%) or more of the total voting power of the Company’s outstanding
stock.

     

    (n)         “Participant” means (i) a key
employee or officer of the Company or any Affiliate to whom an Incentive Stock
Option has been granted pursuant to Section 9; (ii) a consultant or advisor to,
or director, key employee or officer, of the Company or any Affiliate to whom a
Nonqualified Stock Option has been granted pursuant to Section 10; (iii) a
consultant or advisor to, or director, key employee or officer, of the Company
or any Affiliate to whom a Restricted Stock Award or Restricted Stock Unit Award
has been granted pursuant to Section 11; (iv) a consultant or advisor to, or
director, key employee or officer, of the Company or any Affiliate to whom a
Performance Award has been granted pursuant to Section 12; or (v) a consultant
or advisor to, or director, key employee or officer, of the Company or any
Affiliate to whom a Stock Appreciation Right has been granted pursuant to
Section 13.

     

    (o)         “Performance Award” shall mean
any Performance Shares or Performance Units granted pursuant to Section 12
hereof.

     

    (p)         “Performance Objective(s)”
shall mean one or more performance objectives established by the Administrator,
in its sole discretion, for Awards granted under this Plan.

     

    (q)         “Performance Period” shall mean
the period, established at the time any Performance Award is granted or at any
time thereafter, during which any Performance Objectives specified by the
Administrator with respect to such Performance Award are to be
measured.

     

    (r)         “Performance Share” shall mean
any grant pursuant to Section 12 hereof of an Award, which value, if any, shall
be paid to a Participant by delivery of shares of Common Stock of the Company
upon achievement of such Performance Objectives during the Performance Period as
the Administrator shall establish at the time of such grant or
thereafter.

     

    (s)         “Performance Unit” shall mean
any grant pursuant to Section 12 hereof of an Award, which value, if any, shall
be paid to a Participant by delivery of cash upon achievement of such
Performance Objectives during the Performance Period as the Administrator shall
establish at the time of such grant or thereafter.

     

    (t)          The
“Plan” means the Hana
Biosciences, Inc. 2010 Equity Incentive Plan, as amended hereafter from time to
time, including the form of Agreements as they may be modified by the
Administrator from time to time.

    
      
         

      

      
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    (u)         “Restricted Stock Award” or
“Restricted Stock Unit
Award” shall mean any grant of restricted shares of Stock of the Company
or the grant of any restricted stock units pursuant to Section 11
hereof.

     

    (v)         “Securities Act” means the
Securities Act of 1933, as amended.

     

    (w)        “Stock,” “Option Stock” or “Common Stock” shall mean
Common Stock of the Company (subject to adjustment as described in Section
14).

     

    (x)         “Stock Appreciation Right”
shall mean a grant pursuant to Section 13 hereof.

     

    (y)         A
“Subsidiary” shall mean
any corporation of which fifty percent (50%) or more of the total voting power
of the Company’s outstanding Stock is owned, directly or indirectly in an
unbroken chain, by the Company.

     

    SECTION
2.

    PURPOSE

     

    The purpose of the Plan is to promote
the success of the Company and its Affiliates by facilitating the employment and
retention of competent personnel and by furnishing incentive to officers,
directors, employees, consultants, and advisors upon whose efforts the success
of the Company and its Affiliates will depend to a large degree.

    

    It is the intention of the Company to
carry out the Plan through the granting of Options which will qualify as
“incentive stock options” under the provisions of Section 422 of the Internal
Revenue Code, or any successor provision, pursuant to Section 9 of this Plan;
through the granting of Nonqualified Stock Options pursuant to Section 10 of
this Plan; through the granting of Restricted Stock Awards and Restricted Stock
Unit Awards pursuant to Section 11 of this Plan; through the granting of
Performance Awards pursuant to Section 12 of this Plan; and through the granting
of Stock Appreciation Rights pursuant to Section 13 of this
Plan.  Adoption of this Plan shall be and is expressly subject to the
condition of approval by the stockholders of the Company within twelve (12)
months before or after the adoption of the Plan by the Board of
Directors.  Awards may be granted prior to the date this Plan is
approved by the stockholders of the Company; provided, however, that any
Incentive Stock Options granted after adoption of the Plan by the Board of
Directors shall be treated as Nonqualified Stock Options if stockholder approval
is not obtained within such twelve-month period.

    

    SECTION
3.

    EFFECTIVE DATE OF
PLAN

     

    The Plan shall be effective as of the
date of adoption by the Board of Directors, subject to approval by the
stockholders of the Company as required in Section 2.

    
      
         

      

      
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    SECTION
4.

    ADMINISTRATION

     

    The Plan shall be administered by the
Board of Directors of the Company (hereinafter referred to as the “Board”) or by a Committee
which may be appointed by the Board from time to time to administer the Plan
(hereinafter collectively referred to as the “Administrator”). Except as
otherwise provided herein, the Administrator shall have all of the powers vested
in it under the provisions of the Plan, including but not limited to exclusive
authority to determine, in its sole discretion, whether an Award shall be
granted; the individuals to whom, and the time or times at which, Awards shall
be granted; the number of shares subject to each Award; the option price; and
the performance criteria, if any, and any other terms and conditions of each
Award. The Administrator shall have full power and authority to administer and
interpret the Plan, to make and amend rules, regulations and guidelines for
administering the Plan, to prescribe the form and conditions of the respective
agreements evidencing each Award (which may vary from Participant to
Participant), and to make all other determinations necessary or advisable for
the administration of the Plan. The Administrator’s interpretation of the Plan,
and all actions taken and determinations made by the Administrator pursuant to
the power vested in it hereunder, shall be conclusive and binding on all parties
concerned.

    

    No member of the Board or the Committee
shall be liable for any action taken or determination made in good faith in
connection with the administration of the Plan. In the event the Board appoints
a Committee as provided hereunder, any action of the Committee with respect to
the administration of the Plan shall be taken pursuant to a majority vote of the
Committee members or pursuant to the written resolution of all Committee
members.

    

    SECTION
5.

    PARTICIPANTS

     

    The Administrator shall from time to
time, at its discretion and without approval of the stockholders, designate
those employees, officers, directors, consultants, and advisors of the Company
or of any Affiliate to whom Awards shall be granted under this Plan; provided, however, that,
subject to express exceptions, if any, as the Administrator may establish, the
eligibility shall be further limited to those persons as to whom the use of a
Form S-8 registration statement is permissible. The Administrator shall, from
time to time, at its discretion and without approval of the stockholders,
designate those employees of the Company or any Affiliate to whom Awards,
including Incentive Stock Options shall be granted under this Plan. The
Administrator may grant additional Awards, including Incentive Stock Options,
under this Plan to some or all Participants then holding Awards, or may grant
Awards solely or partially to new Participants. In designating Participants, the
Administrator shall also determine the number of shares to be optioned or
awarded to each such Participant and the performance criteria applicable to each
Performance Award. The Administrator may from time to time designate individuals
as being ineligible to participate in the Plan.

    

    SECTION
6.

    STOCK

     

    The Stock to be optioned under this
Plan shall consist of authorized but unissued shares of Common Stock. The
maximum aggregate number of shares of Stock reserved and available for Awards
under the Plan is Eight Million Five Hundred Thousand (8,500,000) shares; provided, however, that all
shares of Stock reserved and available under the Plan shall constitute the
maximum aggregate number of shares of Stock that may be issued through Incentive
Stock Options. The following shares of Stock shall continue to be reserved and
available for Awards granted pursuant to the Plan: (i) any outstanding Award
that expires for any reason, (ii) any portion of an outstanding Option or Stock
Appreciation Right that is terminated prior to exercise, (iii) any portion of an
Award that is terminated prior to the lapsing of the risks of forfeiture on such
Award, (iv) shares of Stock used to pay the exercise price under any Award, (v)
shares of Stock used to satisfy any tax withholding obligation attributable to
any Award, whether such shares are withheld by the Company or tendered by the
Participant, and (vi) shares of Stock covered by an Award to the extent the
Award is settled in cash.

    
      
         

      

      
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    SECTION
7.

    DURATION OF
PLAN

     

    Incentive stock options may be granted
pursuant to the Plan from time to time during a period of ten (10) years from
the effective date as defined in Section 3. Other Awards may be granted pursuant
to the Plan from time to time after the effective date of the Plan and until the
Plan is discontinued or terminated by the Administrator.

    

    SECTION
8.

    PAYMENT

     

    Participants may pay for shares upon
exercise of Options granted pursuant to this Plan (i) in cash, or with a
personal check or certified check, (ii) by the transfer from the Participant to
the Company of previously acquired shares of Common Stock, (iii) through the
withholding of shares of Stock from the number of shares otherwise issuable upon
the exercise of the Option (e.g., a net share
settlement), (iv) through broker-assisted cashless exercise, or (v) by a
combination thereof. Any stock tendered as part of such payment shall be valued
at such stock’s then Fair Market Value, or such other form of payment as may be
authorized by the Administrator. In the event the Optionee elects to pay the
exercise price in whole or in part with previously acquired shares of Common
Stock or through a net share settlement, the Fair Market Value of the shares of
Stock delivered or withheld shall equal the total exercise price for the shares
being purchased in such manner. The Administrator may, in its sole discretion,
limit the forms of payment available to the Participant and may exercise such
discretion any time prior to the termination of the Option granted to the
Participant or upon any exercise of the Option by the Participant.
“Previously-owned shares” means shares of the Company’s Common Stock which the
Participant has owned for at least six (6) months prior to the exercise of the
Option, or for such other period of time, if any, as may be required by
generally accepted accounting principles.

    

    With respect to payment in the form of
Common Stock of the Company, the Administrator may require advance approval or
adopt such rules as it deems necessary to assure compliance with Rule 16b-3
under the Exchange Act, or any successor provision, if applicable.

    

    SECTION
9.

    TERMS AND CONDITIONS OF
INCENTIVE STOCK OPTIONS

     

    Each Incentive Stock Option granted
pursuant to this Section 9 shall be evidenced by a written agreement (the “Incentive Stock Option Agreement”). The
Incentive Stock Option Agreement shall be in such form as may be approved from
time to time by the Administrator and may vary from Participant to Participant;
provided, however, that
each Participant and each Incentive Stock Option Agreement shall comply with and
be subject to the following terms and conditions:

    

    (a)         Number of Shares and Option
Price.  The Incentive Stock Option Agreement shall state the
total number of shares covered by the Incentive Stock Option.  Except
as permitted by Code Section 424(a), or any successor provision, the option
price per share shall not be less than one hundred percent (100%) of the per
share Fair Market Value of the Common Stock on the date the Administrator grants
the Option; provided,
however, that if a Participant owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or of its Parent or any Subsidiary, the option price per share of an
Incentive Stock Option granted to such Participant shall not be less than one
hundred ten percent (110%) of the per share Fair Market Value of the Company’s
Common Stock on the date of the grant of the Option.  The
Administrator shall have full authority and discretion in establishing the
option price and shall be fully protected in so doing.

    
      
         

      

      
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    (b)         Term and Exercisability of
Incentive Stock Option.  The term during which any Incentive
Stock Option granted under the Plan may be exercised shall be established in
each case by the Administrator.  Except as permitted by Code Section
424(a), in no event shall any Incentive Stock Option be exercisable during a
term of more than ten (10) years after the date on which it is granted; provided, however, that if a
Participant owns stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or of its Parent or
any Subsidiary, the Incentive Stock Option granted to such Participant shall be
exercisable during a term of not more than five (5) years after the date on
which it is granted.

     

    The
Incentive Stock Option Agreement shall state when the Incentive Stock Option
becomes exercisable and shall also state the maximum term during which the
Option may be exercised.  In the event an Incentive Stock Option is
exercisable immediately, the manner of exercise of the Option in the event it is
not exercised in full immediately shall be specified in the Incentive Stock
Option Agreement.  The Administrator may accelerate the exercisability
of any Incentive Stock Option granted hereunder which is not immediately
exercisable as of the date of grant.

    

    (c)         Nontransferability.  No
Incentive Stock Option shall be transferable, in whole or in part, by the
Participant other than by will or by the laws of descent and
distribution.  During the Participant’s lifetime, the Incentive Stock
Option may be exercised only by the Participant.  If the Participant
shall attempt any transfer of any Incentive Stock Option granted under the Plan
during the Participant’s lifetime, such transfer shall be void and the Incentive
Stock Option, to the extent not fully exercised, shall terminate.

     

    (d)         No Rights as
Stockholder.  A Participant (or the Participant’s successor or
successors) shall have no rights as a stockholder with respect to any shares
covered by an Incentive Stock Option until the date of the issuance of a stock
certificate evidencing such shares.  No adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or other
property), distributions or other rights for which the record date is prior to
the date such stock certificate is actually issued (except as otherwise provided
in Section 14 of the Plan).

     

    (e)         Withholding.  The
Company or its Affiliate shall be entitled to withhold and deduct from any
future payments to the Participant all legally required amounts necessary to
satisfy any and all withholding and employment-related taxes attributable to the
Participant’s exercise of an Incentive Stock Option or a “disqualifying
disposition” of shares acquired through the exercise of an Incentive Stock
Option as defined in Code Section 421(b).  In the event the
Participant is required under the Incentive Stock Option Agreement to pay the
Company, or make arrangements satisfactory to the Company respecting payment of,
such withholding and employment-related taxes, the Administrator may, in its
discretion and pursuant to such rules as it may adopt, permit the Participant to
satisfy such obligation, in whole or in part, by delivering shares of the
Company’s Common Stock or by electing to have the Company withhold shares of
Common Stock otherwise issuable to the Participant as a result of the exercise
of the Incentive Stock Option.  Such shares shall have a Fair Market
Value equal to the minimum required tax withholding, based on the minimum
statutory withholding rates for federal and state tax purposes, including
payroll taxes, that are applicable to the supplemental income resulting from
such exercise or disqualifying disposition.  In no event may the
Participant deliver shares, nor may the Company or any Affiliate withhold
shares, having a Fair Market Value in excess of such statutory minimum required
tax withholding.  The Participant’s election to have shares withheld
for this purpose shall be made on or before the later of (i) the date the
Incentive Stock Option is exercised or the date of the disqualifying
disposition, as the case may be, or (ii) the date that the amount of tax to be
withheld is determined under applicable tax law.  Such election shall
be approved by the Administrator and otherwise comply with such rules as the
Administrator may adopt to assure compliance with Rule 16b-3 under the Exchange
Act, or any successor provision, as then in effect, if
applicable.

    
      
         

      

      
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    (f)          Other
Provisions.  The Incentive Stock Option Agreement authorized
under this Section 9 shall contain such other provisions as the Administrator
shall deem advisable.  Any such Incentive Stock Option Agreement shall
contain such limitations and restrictions upon the exercise of the Option as
shall be necessary to ensure that such Option will be considered an “incentive
stock option” as defined in Section 422 of the Internal Revenue Code or to
conform to any change therein.

     

    SECTION
10.

    TERMS AND CONDITIONS OF
NONQUALIFIED STOCK OPTIONS

     

    Each Nonqualified Stock Option granted
pursuant to this Section 10 shall be evidenced by a written agreement (a “Nonqualified Stock Option
Agreement”).  The Nonqualified Stock Option Agreement shall be
in such form as may be approved from time to time by the Administrator and may
vary from Participant to Participant; provided, however, that each
Participant and each Nonqualified Stock Option Agreement shall comply with and
be subject to the following terms and conditions:

    

    (a)         Number of Shares and Option
Price.  The Nonqualified Stock Option Agreement shall state the
total number of shares covered by the Nonqualified Stock
Option.  Unless otherwise determined by the Administrator, the option
price per share shall be one hundred percent (100%) of the per share Fair Market
Value of the Common Stock on the date the Administrator grants the
Option.

     

    (b)         Term and Exercisability of
Nonqualified Stock Option.  The term during which any
Nonqualified Stock Option granted under the Plan may be exercised shall be
established in each case by the Administrator.  The Nonqualified Stock
Option Agreement shall state when the Nonqualified Stock Option becomes
exercisable and shall also state the maximum term during which the Option may be
exercised.  In the event a Nonqualified Stock Option is exercisable
immediately, the manner of exercise of the Option in the event it is not
exercised in full immediately shall be specified in the Nonqualified Stock
Option Agreement.   The Administrator may accelerate the
exercisability of any Nonqualified Stock Option granted hereunder which is not
immediately exercisable as of the date of grant.

     

    (c)         Transferability.  A
Nonqualified Stock Option shall be transferable, in whole or in part, by the
Participant by will or by the laws of descent and distribution.  In
addition, the Administrator may, in its sole discretion, permit the Participant
to transfer any or all Nonqualified Stock Options to any member of the
Participant’s “immediate family” as such term is defined in Rule 16a-1(e) under
the Exchange Act, or any successor provision, or to one or more trusts whose
beneficiaries are members of such Participant’s “immediate family” or
partnerships in which such family members are the only partners; provided, however, that the
Participant cannot receive any consideration for the transfer and such
transferred Nonqualified Stock Option shall continue to be subject to the same
terms and conditions as were applicable to such Nonqualified Stock Option
immediately prior to its transfer.

     

    (d)         No Rights as
Stockholder.  A Participant (or the Participant’s successor or
successors) shall have no rights as a stockholder with respect to any shares
covered by a Nonqualified Stock Option until the date of the issuance of a stock
certificate evidencing such shares.  No adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or other
property), distributions or other rights for which the record date is prior to
the date such stock certificate is actually issued (except as otherwise provided
in Section 14 of the Plan).

    
      
         

      

      
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    (e)         Withholding.  The
Company or its Affiliate shall be entitled to withhold and deduct from any
future payments to the Participant all legally required amounts necessary to
satisfy any and all withholding and employment-related taxes attributable to the
Participant’s exercise of a Nonqualified Stock Option.  In the event
the Participant is required under the Nonqualified Stock Option Agreement to pay
the Company, or make arrangements satisfactory to the Company respecting payment
of, such withholding and employment-related taxes, the Administrator may, in its
discretion and pursuant to such rules as it may adopt, permit the Participant to
satisfy such obligation, in whole or in part, by delivering shares of the
Company’s Common Stock or by electing to have the Company withhold shares of
Common Stock otherwise issuable to the Participant as a result of the exercise
of the Nonqualified Stock Option.  Such shares shall have a Fair
Market Value equal to the minimum required tax withholding, based on the minimum
statutory withholding rates for federal and state tax purposes, including
payroll taxes, that are applicable to the supplemental income resulting from
such exercise.  In no event may the Participant deliver shares, nor
may the Company or any Affiliate withhold shares, having a Fair Market Value in
excess of such statutory minimum required tax withholding.  The
Participant’s election to deliver shares or to have shares withheld for this
purpose shall be made on or before the later of (i) the date the Nonqualified
Stock Option is exercised, or (ii) the date that the amount of tax to be
withheld is determined under applicable tax law.  Such election shall
be approved by the Administrator and otherwise comply with such rules as the
Administrator may adopt to assure compliance with Rule 16b-3 under the Exchange
Act, or any successor provision, as then in effect, if applicable.

     

    (f) 
        Other
Provisions.  The Nonqualified Stock Option Agreement authorized
under this Section 10 shall contain such other provisions as the Administrator
shall deem advisable.

     

    SECTION
11.

    RESTRICTED STOCK AND
RESTRICTED STOCK UNIT AWARDS

     

    Each Restricted Stock Award or
Restricted Stock Unit Award granted pursuant to the Plan shall be evidenced by a
written restricted stock or restricted stock unit agreement (the “Restricted Stock Agreement” or
“Restricted Stock Unit
Agreement,” as the case may be).  The Restricted Stock
Agreement or Restricted Stock Unit Agreement shall be in such form as may be
approved from time to time by the Administrator and may vary from Participant to
Participant; provided,
however, that each Participant and each Restricted Stock Agreement or
Restricted Stock Unit Agreement shall comply with and be subject to the
following terms and conditions:

    

    (a)         Number of
Shares.  The Restricted Stock Agreement or Restricted Stock
Unit Agreement shall state the total number of shares of Stock covered by the
Restricted Stock Award or Restricted Stock Unit Award.

     

    (b)         Risks of
Forfeiture.  The Restricted Stock Agreement or Restricted Stock
Unit Agreement shall set forth the risks of forfeiture, if any, including risks
of forfeiture based on Performance Objectives, which shall apply to the shares
of Stock covered by the Restricted Stock Award or Restricted Stock Unit Award,
and shall specify the manner in which such risks of forfeiture shall
lapse.  The Administrator may, in its sole discretion, modify the
manner in which such risks of forfeiture shall lapse but only with respect to
those shares of Stock which are restricted as of the effective date of the
modification.

     

    (c)         Issuance of Shares; Rights
as Stockholder.

     

    (i)           With
respect to a Restricted Stock Award, the Company shall cause to be issued a
stock certificate representing such shares of Stock in the Participant’s name,
and shall hold such certificate until such time as the risks of forfeiture on
such shares have lapsed.  The Company may also place a legend on such
certificate describing the risks of forfeiture and other transfer restrictions
set forth in the Participant’s Restricted Stock Agreement and providing for the
cancellation and return of such certificate if the shares of Stock subject to
the Restricted Stock Award are forfeited.  Until the risks of
forfeiture have lapsed or the shares subject to such Restricted Stock Award have
been forfeited, the Participant shall be entitled to vote the shares of Stock
represented by such stock certificates and shall receive all dividends
attributable to such shares, but the Participant shall not have any other rights
as a stockholder with respect to such shares.

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    (ii)          With
respect to a Restricted Stock Unit Award, as the risks of forfeiture on the
restricted stock units lapse, the Participant shall be entitled to payment of
the Restricted Stock Units.  The Administrator may, in its sole
discretion, pay Restricted Stock Units in cash, shares of Stock or any
combination thereof.  If payment is made in shares of Stock, the
Administrator shall cause to be issued one or more stock certificates in the
Participant’s name and shall deliver such certificates to the Participant in
satisfaction of such restricted stock units.  Until the risks of
forfeiture on the restricted stock units have lapsed, the Participant shall not
be entitled to vote any shares of stock which may be acquired through the
restricted stock units, shall not receive any dividends attributable to such
shares, and shall not have any other rights as a stockholder with respect to
such shares.

     

    (d)         Withholding
Taxes.  The Company or its Affiliate shall be entitled to
withhold and deduct from any future payments to the Participant all legally
required amounts necessary to satisfy any and all withholding and
employment-related taxes attributable to the Participant’s Restricted Stock
Award or Restricted Stock Unit Award.  In the event the Participant is
required under the Restricted Stock Agreement or Restricted Stock Unit Agreement
to pay the Company, or make arrangements satisfactory to the Company respecting
payment of, such withholding and employment-related taxes, the Administrator
may, in its discretion and pursuant to such rules as it may adopt, require the
Participant to satisfy such obligations, in whole or in part, by delivering
shares of Common Stock, including shares of Stock received pursuant to the
Restricted Stock Award or Restricted Stock Unit Award on which the risks of
forfeiture have lapsed.  Such shares shall have a Fair Market Value
equal to the minimum required tax withholding, based on the minimum statutory
withholding rates for federal and state tax purposes, including payroll taxes,
that are applicable to the supplemental income resulting from the lapsing of the
risks of forfeiture on such restricted stock or restricted stock
unit.  In no event may the Participant deliver shares having a Fair
Market Value in excess of such statutory minimum required tax
withholding.  The Participant’s election to deliver shares of Common
Stock for this purpose shall be made on or before the date that the amount of
tax to be withheld is determined under applicable tax law.  Such
election shall be approved by the Administrator and otherwise comply with such
rules as the Administrator may adopt to assure compliance with Rule 16b-3 under
the Exchange Act, or any successor provision, as then in effect, if
applicable.

     

    (e)         Nontransferability.  No
Restricted Stock Award or Restricted Stock Unit Award shall be transferable, in
whole or in part, by the Participant, other than by will or by the laws of
descent and distribution, prior to the date the risks of forfeiture described in
the Restricted Stock Agreement or Restricted Stock Unit Agreement have
lapsed.  If the Participant shall attempt any transfer of any
Restricted Stock Award or Restricted Stock Unit Award granted under the Plan
prior to such date, such transfer shall be void and the Restricted Stock Award
or Restricted Stock Unit Award shall terminate.

     

    (f)          Other
Provisions.  The Restricted Stock Agreement or Restricted Stock
Unit Agreement authorized under this Section 11 shall contain such other
provisions as the Administrator shall deem advisable.

     

    SECTION
12.

    PERFORMANCE
AWARDS

     

    Each Performance Award granted pursuant
to this Section 12 shall be evidenced by a written performance award agreement
(the “Performance Award
Agreement”).  The Performance Award Agreement shall be in such
form as may be approved from time to time by the Administrator and may vary from
Participant to Participant; provided, however, that each
Participant and each Performance Award Agreement shall comply with and be
subject to the following terms and conditions:

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    (a)         Awards.  Performance
Awards in the form of Performance Units or Performance Shares may be granted to
any Participant in the Plan. Performance Units shall consist of monetary awards
which may be earned or become vested in whole or in part if the Company or the
Participant achieves certain Performance Objectives established by the
Administrator over a specified Performance Period.  Performance Shares
shall consist of shares of Stock or other Awards denominated in shares of Stock
that may be earned or become vested in whole or in part if the Company or the
Participant achieves certain Performance Objectives established by the
Administrator over a specified Performance Period.

     

    (b)         Performance
Objectives, Performance Period and Payment.  The Performance Award
Agreement shall set forth:

     

    (i)           the
number of Performance Units or Performance Shares subject to the Performance
Award, and the dollar value of each Performance Unit;

     

    (ii)         one
or more Performance Objectives established by the Administrator;

     

    (iii)        the
Performance Period over which Performance Units or Performance Shares may be
earned or may become vested;

     

    (iv)         the
extent to which partial achievement of the Performance Objectives may result in
a payment or vesting of the Performance Award, as determined by the
Administrator; and

     

    (v)           the
date upon which payment of Performance Units will be made or Performance Shares
will be issued, as the case may be, and the extent to which such payment or the
receipt of such Performance Shares may be deferred.

     

    (c)         Withholding
Taxes.  The Company or its Affiliates shall be entitled to
withhold and deduct from any future payments to the Participant all legally
required amounts necessary to satisfy any and all withholding and
employment-related taxes attributable to the Participant’s Performance
Award.  In the event the Participant is required under the Performance
Award Agreement to pay the Company or its Affiliates, or make arrangements
satisfactory to the Company or its Affiliates respecting payment of, such
withholding and employment-related taxes, the Administrator may, in its
discretion and pursuant to such rules as it may adopt, permit the Participant to
satisfy such obligations, in whole or in part, by delivering shares of Common
Stock, including shares of Stock received pursuant to the Performance
Award.  Such shares shall have a Fair Market Value equal to the
minimum required tax withholding, based on the minimum statutory withholding
rates for federal and state tax purposes, including payroll taxes.  In
no event may the Participant deliver shares having a Fair Market Value in excess
of such statutory minimum required tax withholding.  The Participant’s
election to deliver shares of Common Stock for this purpose shall be made on or
before the date that the amount of tax to be withheld is determined under
applicable tax law.  Such election shall be approved by the
Administrator and otherwise comply with such rules as the Administrator may
adopt to assure compliance with Rule 16b-3 under the Exchange Act, or any
successor provision, as then in effect, if applicable.

     

    (d)         Nontransferability.  No
Performance Award shall be transferable, in whole or in part, by the
Participant, other than by will or by the laws of descent and
distribution.  If the Participant shall attempt any transfer of any
Performance Award granted under the Plan, such transfer shall be void and the
Performance Award shall terminate.

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    (e)         No Rights as
Stockholder.  A Participant (or the Participant’s successor or
successors) shall have no rights as a stockholder with respect to any shares
covered by a Performance Award until the date of the issuance of a stock
certificate evidencing such shares.  No adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or other
property), distributions or other rights for which the record date is prior to
the date such stock certificate is actually issued (except as otherwise provided
in Section 14 of the Plan).

     

    (f)          Other
Provisions.  The Performance Award Agreement authorized under
this Section 12 shall contain such other provisions as the Administrator shall
deem advisable.

     

    SECTION
13.

    STOCK APPRECIATION
RIGHTS

     

    Each Stock Appreciation Right granted
pursuant to this Section 13 shall be evidenced by a written stock appreciation
right agreement (the “Stock
Appreciation Right Agreement”).  The Stock Appreciation Right
Agreement shall be in such form as may be approved from time to time by the
Administrator and may vary from Participant to Participant; provided, however, that each
Participant and each Stock Appreciation Right Agreement shall comply with and be
subject to the following terms and conditions:

    

    (a)         Awards.  A
Stock Appreciation Right shall entitle the Participant to receive, upon
exercise, cash, shares of Stock, or any combination thereof, having a value
equal to the excess of (i) the Fair Market Value of a specified number of shares
of Stock on the date of such exercise, over (ii) a specified exercise
price.  Unless otherwise determined by the Administrator, the
specified exercise price shall not be less than 100% of the Fair Market Value of
such shares of Stock on the date of grant of the Stock Appreciation
Right.

     

    (b)         Term and
Exercisability.  The term during which any Stock Appreciation
Right granted under the Plan may be exercised shall be established in each case
by the Administrator.  The Stock Appreciation Right Agreement shall
state when the Stock Appreciation Right becomes exercisable and shall also state
the maximum term during which such Stock Appreciation Right may be
exercised.  In the event a Stock Appreciation Right is exercisable
immediately, the manner of exercise of such Stock Appreciation Right in the
event it is not exercised in full immediately shall be specified in the Stock
Appreciation Right Agreement.  The Administrator may accelerate the
exercisability of any Stock Appreciation Right granted hereunder which is not
immediately exercisable as of the date of grant.

     

    (c)         Withholding
Taxes.  The Company or its Affiliate shall be entitled to
withhold and deduct from any future payments to the Participant all legally
required amounts necessary to satisfy any and all withholding and
employment-related taxes attributable to the Participant’s Stock Appreciation
Right.  In the event the Participant is required under the Stock
Appreciation Right to pay the Company or its Affiliate, or make arrangements
satisfactory to the Company or its Affiliate respecting payment of, such
withholding and employment-related taxes, the Administrator may, in its
discretion and pursuant to such rules as it may adopt, permit the Participant to
satisfy such obligation, in whole or in part, by delivering shares of the
Company’s Common Stock or by electing to have the Company withhold shares of
Common Stock otherwise issuable to the Participant as a result of the exercise
of the Stock Appreciation Right.  Such shares shall have a Fair Market
Value equal to the minimum required tax withholding, based on the minimum
statutory withholding rates for federal and state tax purposes, including
payroll taxes, that are applicable to the supplemental income resulting from
such exercise.  In no event may the Participant deliver shares, nor
may the Company or any Affiliate withhold shares, having a Fair Market Value in
excess of such statutory minimum required tax withholding.  The
Participant’s election to deliver shares or to have shares withheld for this
purpose shall be made on or before the later of (i) the date the Stock
Appreciation Right is exercised, or (ii) the date that the amount of tax to be
withheld is determined under applicable tax law.  Such election shall
be approved by the Administrator and otherwise comply with such rules as the
Administrator may adopt to assure compliance with Rule 16b-3 under the Exchange
Act, or any successor provision, as then in effect, if
applicable.

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    (d)         Nontransferability.  No
Stock Appreciation Right shall be transferable, in whole or in part, by the
Participant, other than by will or by the laws of descent and
distribution.  If the Participant shall attempt any transfer of any
Stock Appreciation Right granted under the Plan, such transfer shall be void and
the Stock Appreciation Right shall terminate.

     

    (e)         No Rights as
Stockholder.  A Participant (or the Participant’s successor or
successors) shall have no rights as a stockholder with respect to any shares
covered by a Stock Appreciation Right until the date of the issuance of a stock
certificate evidencing such shares.  No adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or other
property), distributions or other rights for which the record date is prior to
the date such stock certificate is actually issued (except as otherwise provided
in Section 14 of the Plan).

     

    (f)          Other
Provisions.  The Stock Appreciation Right Agreement authorized
under this Section 13 shall contain such other provisions as the Administrator
shall deem advisable, including but not limited to any restrictions on the
exercise of the Stock Appreciation Right which may be necessary to comply with
Rule 16b-3 under the Exchange Act as then in effect.

     

    SECTION
14.

    RECAPITALIZATION, SALE,
MERGER, EXCHANGE OR LIQUIDATION

     

    In the event of an increase or decrease
in the number of shares of Common Stock resulting from a stock dividend, stock
split, reverse split, combination or reclassification of the Common Stock, or
any other increase or decrease in the number of issued shares of Common Stock
effected without receipt of consideration by the Company, the Board may, in its
sole discretion, adjust the number of shares of Stock reserved under Section 6
hereof, the number of shares of Stock covered by each outstanding Award, and, if
applicable, the price per share thereof to reflect such
change.  Additional shares which may become covered by the Award
pursuant to such adjustment shall be subject to the same restrictions as are
applicable to the shares with respect to which the adjustment
relates.

    

    Unless otherwise provided in the
agreement evidencing an Award, in the event of a Change of Control, the Board
may provide for one or more of the following:

    

    (a)         the
acceleration of the exercisability of any outstanding Options or Stock
Appreciation Rights, the vesting and payment of any Performance Awards, or the
lapsing of the risks of forfeiture on any Restricted Stock Awards or Restricted
Stock Unit Awards;

     

    (b)         the
complete termination of this Plan, the cancellation of outstanding Options or
Stock Appreciation Rights not exercised prior to a date specified by the Board
(which date shall give Participants a reasonable period of time in which to
exercise such Option or Stock Appreciation Right prior to the effective date of
such Change of Control), the cancellation of any Performance Award and the
cancellation of any Restricted Stock Awards or Restricted Stock Unit Awards for
which the risks of forfeiture have not lapsed;

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    (c)         that
Participants holding outstanding Options and Stock Appreciation Rights shall
receive, with respect to each share of Stock subject to such Option or Stock
Appreciation Right, as of the effective date of any such Change of Control, cash
in an amount equal to the excess of the Fair Market Value of such Stock on the
date immediately preceding the effective date of such Change of Control over the
price per share of such Options or Stock Appreciation Rights; provided that the
Board may, in lieu of such cash payment, distribute to such Participants shares
of Common Stock of the Company or shares of stock of any corporation succeeding
the Company by reason of such Change of Control, such shares having a value
equal to the amount specified in this Section 14(c);

     

    (d)         that
Participants holding outstanding Restricted Stock Awards, Restricted Stock Unit
Awards and Performance Share Awards shall receive, with respect to each share of
Stock subject to such Awards, as of the effective date of any such Change of
Control, cash in an amount equal to the Fair Market Value of such Stock on the
date immediately preceding the effective date of such Change of Control;
provided that the Board may, in lieu of such cash payment, distribute to such
Participants shares of Common Stock of the Company or shares of stock of any
corporation succeeding the Company by reason of such Change of Control, such
shares having a value equal to the amount specified in this Section
14(d);

     

    (e)         the
continuance of the Plan with respect to the exercise of Options or Stock
Appreciation Rights which were outstanding as of the date of adoption by the
Board of such plan for such Change of Control and the right to exercise such
Options and Stock Appreciation Rights as to an equivalent number of shares of
stock of the corporation succeeding the Company by reason of such Change of
Control; and

     

    (f) 
        the continuance of the Plan with
respect to Restricted Stock Awards or Restricted Stock Unit Awards for which the
risks of forfeiture have not lapsed as of the date of adoption by the Board of
such plan for such Change of Control and the right to receive an equivalent
number of shares of stock of the corporation succeeding the Company by reason of
such Change of Control.

     

    (g)         the
continuance of the Plan with respect to Performance Awards and, to the extent
applicable, the right to receive an equivalent number of shares of stock of the
corporation succeeding the Company by reason for such Change of
Control.

     

    The Board
need not take the same action with respect to all Awards or with respect to all
Participants.  The Board may restrict the rights of or the
applicability of this Section 14 to the extent necessary to comply with Section
16(b) of the Exchange Act, the Internal Revenue Code or any other applicable law
or regulation.  The grant of an Award pursuant to the Plan shall not
limit in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge, exchange or consolidate or to dissolve, liquidate, sell
or transfer all or any part of its business or assets.

    

    SECTION
15.

    INVESTMENT
PURPOSE

     

    No shares of Stock shall be issued
pursuant to the Plan unless and until there has been compliance, in the opinion
of Company’s counsel, with all applicable legal requirements, including without
limitation, those relating to securities laws and stock exchange listing
requirements.  As a condition to the issuance of Stock to Participant,
the Administrator may require Participant to (a) represent that the shares of
Stock are being acquired for investment and not resale and to make such other
representations as the Administrator shall deem necessary or appropriate to
qualify the issuance of the shares as exempt from the Securities Act and any
other applicable securities laws, and (b) represent that Participant shall not
dispose of the shares of Stock in violation of the Securities Act or any other
applicable securities laws.

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    

    As a further condition to the grant of
any Option or the issuance of Stock to Participant, Participant agrees to the
following:

    

    (a)         In
the event the Company advises Participant that it plans an underwritten public
offering of its Common Stock in compliance with the Securities Act and the
underwriter(s) seek to impose restrictions under which certain stockholders may
not sell or contract to sell or grant any option to buy or otherwise dispose of
part or all of their stock purchase rights of the Common Stock underlying
Awards, Participant will not, for a period not to exceed 180 days from the
prospectus, sell or contract to sell or grant an option to buy or otherwise
dispose of any Option granted to Participant pursuant to the Plan or any of the
underlying shares of Common Stock without the prior written consent of the
underwriter(s) or its representative(s).

     

    (b)         In
the event the Company makes any public offering of its securities and determines
in its sole discretion that it is necessary to reduce the number of issued but
unexercised stock purchase rights so as to comply with any state’s securities or
Blue Sky law limitations with respect thereto, the Board of Directors of the
Company shall have the right (i) to accelerate the exercisability of any Option
and the date on which such Option must be exercised, provided that the Company
gives Participant prior written notice of such acceleration, and (ii) to cancel
any Options or portions thereof which Participant does not exercise prior to or
contemporaneously with such public offering.

     

    (c)         In
the event of a Change of Control, Participant will comply with Rule 145 under
the Securities Act and any other restrictions imposed under other applicable
legal or accounting principles if Participant is an “affiliate” (as defined in
such applicable legal and accounting principles) at the time of the transaction,
and Participant will execute any documents necessary to ensure compliance with
such rules.

     

    The Company reserves the right to place
a legend on any stock certificate issued in connection with an Award pursuant to
the Plan to assure compliance with this Section 15.

    

    SECTION
16.

    AMENDMENT OF THE
PLAN

     

    The Board may from time to time,
insofar as permitted by law, suspend or discontinue the Plan or revise or amend
it in any respect; provided,
however, that no such revision or amendment, except as is authorized in
Section 14, shall impair the terms and conditions of any Award which is
outstanding on the date of such revision or amendment to the material detriment
of the Participant without the consent of the
Participant.  Notwithstanding the foregoing, no such revision or
amendment shall (i) materially increase the number of shares subject to the Plan
except as provided in Section 14 hereof, (ii) change the designation of the
class of employees eligible to receive Awards, (iii) decrease the price at which
Options may be granted, or (iv) materially increase the benefits accruing to
Participants under the Plan, in each case, without the approval of the
stockholders of the Company if such approval is required for compliance with the
requirements of any applicable law or regulation or the applicable rules and
regulations of any stock exchange on which the Common Stock is then
listed.  Furthermore, the Plan may not, without the approval of the
stockholders, be amended in any manner that will cause Incentive Stock Options
to fail to meet the requirements of Section 422 of the Internal Revenue
Code.

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    

    SECTION
17.

    NO OBLIGATION TO EXERCISE
OPTION

     

    The granting of an Option shall impose
no obligation upon the Participant to exercise such Option.  Further,
the granting of an Award hereunder shall not impose upon the Company or any
Affiliate any obligation to retain the Participant in its employ for any
period.

    

    Adopted
by the Board of Directors:  February 16, 2010

    
      
         

      

      
        16EXHIBIT
4.2

    NONQUALIFIED
STOCK OPTION AGREEMENT

    

    TALON
THERAPEUTICS, INC.

    2010
EQUITY INCENTIVE PLAN

    

    THIS AGREEMENT, made effective as of
this        
 day of ___________, 20__, by and between Talon Therapeutics, Inc.,
a Delaware corporation (the “Company”), and _________________
(“Participant”).

    

    WITNESSETH:

    

    WHEREAS, Participant on the date hereof
is a key employee, officer, director of or consultant or advisor to the Company
or one of its Subsidiaries; and

    

    WHEREAS, the Company wishes to grant a
nonqualified stock option to Participant to purchase shares of the Company’s
Common Stock pursuant to the Company’s 2010 Equity Incentive Plan, as amended
(the “Plan”); and

    

    WHEREAS, the Administrator of the Plan,
or its duly authorized designee, has authorized the grant of a nonqualified
stock option to Participant and has determined that, as of the effective date of
this Agreement, the fair market value of the Company’s Common Stock is $____ per
share;

    

    NOW, THEREFORE, in consideration of the
premises and of the mutual covenants herein contained, the parties hereto agree
as follows:

    

    1.           Grant of
Option.  The Company hereby grants to Participant on the date
set forth above (the “Date of Grant”), the right and option (the “Option”) to
purchase all or portions of an aggregate of  (                             
) shares of Common Stock at a per share price of $                 
 on the terms and conditions set forth herein, and subject to
adjustment pursuant to Section 14 of the Plan.  This Option is a
nonqualified stock option and will not be treated as an incentive stock option,
as defined under Section 422, or any successor provision, of the Internal
Revenue Code of 1986, as amended (the “Code”), and the regulations
thereunder.

     

    2.           Duration and
Exercisability.

     

    (a)           General.  The
term during which this Option may be exercised shall terminate on [10 years from Date of
Grant], except as otherwise
provided in Paragraphs 2(b) through 2(d) below.  [FOR
EMPLOYEES:  [This Option shall become exercisable in
forty-eight (48) equal monthly installments commencing on the first month
anniversary from the Date of Grant.]] [FOR DIRECTORS: [This
Option shall become exercisable in its entirety on the first anniversary of the
Date of Grant.]

     

    Once the Option becomes exercisable to
the extent of one hundred percent (100%) of the aggregate number of shares
specified in Paragraph 1, Participant may continue to exercise this Option under
the terms and conditions of this Agreement until the termination of the Option
as provided herein.  If Participant does not purchase upon an exercise
of this Option the full number of shares which Participant is then entitled to
purchase, Participant may purchase upon any subsequent exercise prior to this
Option’s termination such previously unpurchased shares in addition to those
Participant is otherwise entitled to purchase.

    

    (b)           Termination
of Relationship (other than Disability or Death).  If
Participant ceases to be [an
employee] [a consultant] [a director] of the Company or any Subsidiary
for any reason other than disability or death, this Option shall completely
terminate on the earlier of (i) the close of business on the three-month
anniversary of the date of termination of Participant’s relationship, and
(ii) the expiration date of this Option stated in Paragraph 2(a)
above.  In such period following such termination of Participant’s
relationship, this Option shall be exercisable only to the extent the Option was
exercisable on the vesting date immediately preceding the date on which
Participant’s relationship with the Company or Subsidiary has terminated, but
had not previously been exercised.  To the extent this Option was not
exercisable upon the termination of such relationship, or if Participant does
not exercise the Option within the time specified in this Paragraph 2(b), all
rights of Participant under this Option shall be forfeited.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    (c)           Disability.  If
Participant ceases to be [an
employee] [a consultant] [a director] of the Company or any Subsidiary
because of disability (as defined in Code Section 22(e), or any successor
provision), this Option shall completely terminate on the earlier of (i) the
close of business on the twelve-month anniversary of the date of termination of
Participant’s relationship, and (ii) the expiration date of this Option
stated in Paragraph 2(a) above.  In such period following such
termination of Participant’s relationship, this Option shall be exercisable only
to the extent the Option was exercisable on the vesting date immediately
preceding the date on which Participant’s relationship with the Company or
Subsidiary has terminated, but had not previously been exercised.  To
the extent this Option was not exercisable upon the termination of such
relationship, or if Participant does not exercise the Option within the time
specified in this Paragraph 2(c), all rights of Participant under this Option
shall be forfeited.

     

    (d)           Death.  In
the event of Participant’s death, this Option shall terminate on the earlier of
(i) the close of business on the twelve-month anniversary of the date of
Participant’s death, and (ii) the expiration date of this Option stated in
Paragraph 2(a) above.  In such period following Participant’s death,
this Option may be exercised by the person or persons to whom Participant’s
rights under this Option shall have passed by Participant’s will or by the laws
of descent and distribution only to the extent the Option was exercisable on the
vesting date immediately preceding the date of Participant’s death, but had not
previously been exercised.  To the extent this Option was not
exercisable upon the date of Participant’s death, or if such person or persons
fail to exercise this Option within the time specified in this Paragraph 2(d),
all rights under this Option shall be forfeited.

     

    3.           Manner of
Exercise.

     

    (a)           General.  The
Option may be exercised only by Participant (or other proper party in the event
of death or incapacity), subject to the conditions of the Plan and subject to
such other administrative rules as the Administrator may deem advisable, by
delivering within the option period written notice of exercise to the Company at
its principal office.  The notice shall state the number of shares as
to which the Option is being exercised and shall be accompanied by payment in
full of the option price for all shares designated in the notice.  The
exercise of the Option shall be deemed effective upon receipt of such notice by
the Company and upon payment that complies with the terms of the Plan and this
Agreement.  The Option may be exercised with respect to any number or
all of the shares as to which it can then be so exercised and, if partially
exercised, may be exercised as to the unexercised shares any number of times
during the option period as provided herein.

     

    (b)           Form of
Payment.  Subject to the approval of the Administrator, payment
of the option price by Participant shall be in the form of cash, personal check,
certified check or previously acquired shares of Common Stock of the Company, or
any combination thereof.  Any stock so tendered as part of such
payment shall be valued at its Fair Market Value as provided in the
Plan.  For purposes of this Agreement, “previously acquired shares of
Common Stock” shall include shares of Common Stock that are already owned by
Participant at the time of exercise.

     

    (c)           Stock
Transfer Records.  As soon as practicable after the effective
exercise of all or any part of the Option, Participant shall be recorded on the
stock transfer books of the Company as the owner of the shares purchased, and
the Company shall deliver to Participant one or more duly issued stock
certificates evidencing such ownership.  All requisite original issue
or transfer documentary stamp taxes shall be paid by the Company.

     

    4.           Miscellaneous.

     

    (a)           Employment
or Other Relationship; Rights as Shareholder.  This Agreement shall not
confer on Participant any right with respect to the continuance of employment or
any other relationship with the Company or any of its Subsidiaries, nor will it
interfere in any way with the right of the Company to terminate such employment
or relationship.  Participant shall have no rights as a shareholder with respect
to shares subject to this Option until such shares have been issued to
Participant upon exercise of this Option.  No adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or other
property), distributions or other rights for which the record date is prior to
the date such shares are issued, except as provided in Section 14 of the
Plan.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    (b)           Securities
Law Compliance.  The exercise of all or any parts of this
Option shall only be effective at such time as counsel to the Company shall have
determined that the issuance and delivery of Common Stock pursuant to such
exercise will not violate any state or federal securities or other
laws.  Participant may be required by the Company, as a condition of
the effectiveness of any exercise of this Option, to agree in writing that all
Common Stock to be acquired pursuant to such exercise shall be held, until such
time that such Common Stock is registered and freely tradable under applicable
state and federal securities laws, for Participant’s own account without a view
to any further distribution thereof, that the certificates for such shares shall
bear an appropriate legend to that effect and that such shares will be not
transferred or disposed of except in compliance with applicable state and
federal securities laws.

     

    (c)           Mergers,
Recapitalizations, Stock Splits, Etc.  Except as otherwise
specifically provided in any employment, change of control, severance or similar
agreement executed by the Participant and the Company, pursuant and subject to
Section 14 of the Plan, certain changes in the number or character of the Common
Stock of the Company (through sale, merger, consolidation, exchange,
reorganization, divestiture (including a spin-off), liquidation,
recapitalization, stock split, stock dividend or otherwise) shall result in an
adjustment, reduction or enlargement, as appropriate, in Participant’s rights
with respect to any unexercised portion of the Option (i.e., Participant
shall have such “anti-dilution” rights under the Option with respect to such
events, but shall not have “preemptive” rights).

     

    (d)           Shares
Reserved.  The Company shall at all times during the option
period reserve and keep available such number of shares as will be sufficient to
satisfy the requirements of this Agreement.

     

    (e)           Withholding Taxes.  To
permit the Company to comply with all applicable federal and state income tax
laws or regulations, the Company may take such action as it deems appropriate to
ensure that, if necessary, all applicable federal and state payroll, income or
other taxes are withheld from any amounts payable by the Company to
Participant.  If the Company is unable to withhold such federal and
state taxes, for whatever reason, Participant hereby agrees to pay to the
Company an amount equal to the amount the Company would otherwise be required to
withhold under federal or state law.  Subject to such rules as the
Administrator may adopt, the Administrator may, in its sole discretion, permit
Participant to satisfy such withholding tax obligations, in whole or in part (i)
by delivering shares of Common Stock, or (ii) by electing to have the Company
withhold shares of Common Stock otherwise issuable to Participant, in either
case having a Fair Market Value, as of the date the amount of tax to be withheld
is determined under applicable tax law, equal to the minimum amount required to
be withheld for tax purposes.  Participant’s request to deliver shares
or to have shares withheld for purposes of such withholding tax obligations
shall be made on or before the date that triggers such obligations or, if later,
the date that the amount of tax to be withheld is determined under applicable
tax law.  Participant’s request shall be approved by the Administrator
and otherwise comply with such rules as the Administrator may adopt to assure
compliance with Rule 16b-3 or any successor provision, as then in effect, of the
General Rules and Regulations under the Securities and Exchange Act of 1934, if
applicable.

     

    (f)           Nontransferability.  Except
as otherwise provided in the Plan, during the lifetime of Participant, the
accrued Option shall be exercisable only by Participant or by the Participant’s
guardian or other legal representative, and shall not be assignable or
transferable by Participant, in whole or in part, other than by will or by the
laws of descent and distribution.  The Company shall not be required
to recognize any assignment or transfer of the Option in violation of the terms
of this Agreement or the Plan.

     

    (g)           2010
Equity Incentive Plan.  The Option evidenced by this Agreement
is granted pursuant to the Plan, a copy of which Plan has been made available to
Participant and is hereby incorporated into this Agreement.  This
Agreement is subject to and in all respects limited and conditioned as provided
in the Plan. All defined terms of the Plan shall have the same meaning when used
in this Agreement.  The Plan governs this Option and, in the event of
any questions as to the construction of this Agreement or in the event of a
conflict between the Plan and this Agreement, the Plan shall govern, except as
the Plan otherwise provides.

     

    (h)           Lockup
Period Limitation.  Participant agrees that in the event the
Company advises Participant that it plans an underwritten public offering of its
Common Stock in compliance with the Securities Act of 1933, as amended, and that
the underwriter(s) seek to impose restrictions under which certain shareholders
may not sell or contract to sell or grant any option to buy or otherwise dispose
of part or all of their stock purchase rights of the underlying Common Stock,
Participant hereby agrees that for a period not to exceed 180 days from the
prospectus, Participant will not sell or contract to sell or grant an option to
buy or otherwise dispose of this Option or any of the underlying shares of
Common Stock without the prior written consent of the underwriter(s) or its
representative(s).

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    (i)           Blue Sky
Limitation.
Notwithstanding anything in this Agreement to the contrary, in the event
the Company makes any public offering of its securities and it is determined
that it is necessary to reduce the number of issued but unexercised stock
purchase rights so as to comply with any state securities or Blue Sky law
limitations with respect thereto, and such determination is affirmed by the
Board of Directors, unless the Board of Directors determines otherwise, (i) the
exercisability of this Option and the date on which this Option must be
exercised shall be accelerated, provided that the Company agrees to give
Participant 15 days’ prior written notice of such acceleration, and (ii) any
portion of this Option or any other option granted to Participant pursuant to
the Plan which is not exercised prior to or contemporaneously with such public
offering shall be canceled.  Notice shall be deemed given when
delivered personally or when deposited in the United States mail, first class
postage prepaid and addressed to Participant at the address of Participant on
file with the Company.

     

    (j)           Accounting
Compliance.  Participant agrees that, if a merger,
reorganization, liquidation or other “transaction” as defined in Section 14 of
the Plan occurs and Participant is an “affiliate” of the Company or any
Affiliate (as defined in applicable legal and accounting principles) at the time
of such transaction, Participant will comply with all requirements of Rule 145
of the Securities Act of 1933, as amended, and the requirements of such other
legal or accounting principles, and will execute any documents necessary to
ensure such compliance.

     

    (k)           Stock
Legend.  The Administrator may require that the certificates
for any shares of Common Stock purchased by Participant (or, in the case of
death, Participant’s successors) shall bear an appropriate legend to reflect the
restrictions of Paragraph 4(b) and Paragraphs 4(g) through 4(i) of this
Agreement; provided, however, that
failure to so endorse any of such certificates shall not render invalid or
inapplicable Paragraph 4(b) or Paragraphs 4(g) through 4(i).

     

    (l)           Scope of
Agreement.  This Agreement shall bind and inure to the benefit
of the Company and its successors and assigns and Participant and any successor
or successors of Participant permitted by Paragraph 2 or Paragraph 4(e)
above.

     

    5.           [FOR DIRECTORS] [Change of
Control.  Notwithstanding anything in the Plan or this
Agreement to the contrary, this Option shall become fully vested and exercisable
upon a Change of Control, as such term is defined in the Plan.]

    

    ACCORDINGLY, the parties hereto have
caused this Agreement to be executed on the day and year first above
written.

    

    
      
        	 
      	
                TALON
      THERAPEUTICS, INC.

              
	 
      	 
      	 
      
	 
      	
                By:

              	 
      
	 
      	 
      	
                Its:

              	 
      
	 
      	 
      	 
      
	 
      	 
      
	 
      	
                Participant

              

      

    

    
      
         

      

      
        4

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