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                                                                    Exhibit 10.2

                          SOMAXON PHARMACEUTICALS, INC.
                        2004 EQUITY INCENTIVE AWARD PLAN

                                   ARTICLE 1
                                    PURPOSE

      1.1 General. The purpose of the Somaxon Pharmaceuticals, Inc. 2004 Equity
Incentive Award Plan (the "PLAN") is to promote the success and enhance the
value of Somaxon Pharmaceuticals, Inc. (the "COMPANY") by linking the personal
interests of the members of the Board, employees, consultants, officers, and
executives of the Company and any Subsidiary, to those of Company stockholders
and by providing such individuals with an incentive for outstanding performance
to generate superior returns to Company stockholders. The Plan is further
intended to provide flexibility to the Company in its ability to motivate,
attract, and retain the services of members of the Board, employees,
consultants, officers, and executives of the Company upon whose judgment,
interest, and special effort the successful conduct of the Company's operation
is largely dependent.

                                   ARTICLE 2
                          DEFINITIONS AND CONSTRUCTION

      2.1 Definitions. The following words and phrases shall have the following
meanings:

            (a) "AWARD" means an Option, a Restricted Stock award, a Stock
Appreciation Right award, a Performance Share award, a Dividend Equivalents
award, a Stock Payment award, a Restricted Stock Unit award, or a
Performance-Based Award granted to a Participant pursuant to the Plan.

            (b) "AWARD AGREEMENT" means any written or electronic agreement,
contract, or other instrument or document evidencing an Award.

            (c) "BOARD" means the Board of Directors of the Company.

            (d) "CAUSE" includes one or more of the following: (i) the
commission of an act of fraud, embezzlement or dishonesty by a Participant that
has a material adverse impact on the Company or any successor or parent or
Subsidiary thereof; (ii) a conviction of, or plea of "guilty" or "no contest"
to, a felony by a Participant; (iii) any unauthorized use or disclosure by a
Participant of confidential information or trade secrets of the Company or any
successor or parent or Subsidiary thereof that has a material adverse impact on
any such entity or (iv) any other intentional misconduct by a Participant that
has a material adverse impact on the Company or any successor or parent or
Subsidiary thereof. However, if the term or concept of "Cause" has been defined
in an agreement between a Participant and the Company or any successor or parent
or Subsidiary thereof, then "Cause" shall have the definition set forth in such
agreement. The foregoing definition shall not in any way preclude or restrict
the right of the Company or any successor or parent or Subsidiary thereof to
discharge or dismiss any Participant in the service of such entity for any other
acts or omissions, but such other acts or omissions shall not be deemed, for
purposes of this Plan, to constitute grounds for termination for Cause.

            (e) "CHANGE OF CONTROL" means and includes each of the following:

                  (i) the acquisition, directly or indirectly, by any "person"
or "group" (as those terms are defined in Sections 3(a)(9), 13(d) and 14(d) of
the Exchange Act and the rules thereunder) of "beneficial ownership" (as
determined pursuant to Rule 13d-3 under the Exchange Act) of securities

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entitled to vote generally in the election of directors ("voting securities") of
the Company that represent 50% or more of the combined voting power of the
Company's then outstanding voting securities, other than:

                        (A) an acquisition by a trustee or other fiduciary
holding securities under any employee benefit plan (or related trust) sponsored
or maintained by the Company or any person controlled by the Company or by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any person controlled by the Company, or

                        (B) an acquisition of voting securities by the Company
or a corporation owned, directly or indirectly by the stockholders of the
Company in substantially the same proportions as their ownership of the stock of
the Company;

                  Notwithstanding the foregoing, the following event shall not
constitute an "acquisition" by any person or group for purposes of this
subsection (e): an acquisition of the Company's securities by the Company that
causes the Company's voting securities beneficially owned by a person or group
to represent 50% or more of the combined voting power of the Company's then
outstanding voting securities; provided, however, that if a person or group
shall become the beneficial owner of 50% or more of the combined voting power of
the Company's then outstanding voting securities by reason of share acquisitions
by the Company as described above and shall, after such share acquisitions by
the Company, become the beneficial owner of any additional voting securities of
the Company, then such acquisition shall constitute a Change of Control; or

                  (ii) during any period of two consecutive years, individuals
who, at the beginning of such period, constitute the Board together with any new
director(s) (other than a director designated by a person who shall have entered
into an agreement with the Company to effect a transaction described in clauses
(i) or (iii) of this subsection (e)) whose election by the Board or nomination
for election by the Company's stockholders was approved by a vote of at least
two-thirds of the directors then still in office who either were directors at
the beginning of the two year period or whose election or nomination for
election was previously so approved, cease for any reason to constitute a
majority thereof; or

                  (iii) the consummation by the Company (whether directly
involving the Company or indirectly involving the Company through one or more
intermediaries) of (x) a merger, consolidation, reorganization, or business
combination or (y) a sale or other disposition of all or substantially all of
the Company's assets or (z) the acquisition of assets or stock of another
entity, in each case other than a transaction:

                        (A) which results in the Company's voting securities
outstanding immediately before the transaction continuing to represent (either
by remaining outstanding or by being converted into voting securities of the
Company or the person that, as a result of the transaction, controls, directly
or indirectly, the Company or owns, directly or indirectly, all or substantially
all of the Company's assets or otherwise succeeds to the business of the Company
(the Company or such person, the "SUCCESSOR ENTITY")) directly or indirectly, at
least a majority of the combined voting power of the Successor Entity's
outstanding voting securities immediately after the transaction, and

                        (B) after which no person or group beneficially owns
voting securities representing 50% or more of the combined voting power of the
Successor Entity; provided, however, that no person or group shall be treated
for purposes of this clause (B) as beneficially owning 50% or more of combined
voting power of the Successor Entity solely as a result of the voting power held
in the Company prior to the consummation of the transaction; or

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                  (iv) the Company's stockholders approve a liquidation or
dissolution of the Company.

            Notwithstanding the foregoing, a transaction shall not constitute a
"CHANGE OF CONTROL" if: (w) its sole purpose is to change the state of the
Company's incorporation; (x) its sole purpose is to create a holding company
that will be owned in substantially the same proportions by the persons who held
the Company's securities immediately before such transaction; (y) it constitutes
the Company's initial public offering of its securities; or (z) it is a
transaction effected primarily for the purpose of financing the Company with
cash (as determined by the Committee in its discretion and without regard to
whether such transaction is effectuated by a merger, equity financing or
otherwise).

            The Committee shall have full and final authority, which shall be
exercised in its discretion, to determine conclusively whether a Change of
Control of the Company has occurred pursuant to the above definition, and the
date of the occurrence of such Change of Control and any incidental matters
relating thereto.

            (f) "CODE" means the Internal Revenue Code of 1986, as amended.

            (g) "COMMITTEE" means the committee of the Board described in
Article 12.

            (h) "COVERED EMPLOYEE" means an Employee who is, or could be, a
"covered employee" within the meaning of Section 162(m) of the Code.

            (i) "DISABILITY" means, for purposes of this Plan, that the
Participant qualifies to receive long-term disability payments under the
Company's long-term disability insurance program, as it may be amended from time
to time.

            (j) "DIVIDEND EQUIVALENTS" means a right granted to a Participant
pursuant to Article 8 to receive the equivalent value (in cash or Stock) of
dividends paid on Stock.

            (k) "EMPLOYEE" means any officer or other employee (as defined in
accordance with Section 3401(c) of the Code) of the Company or any Subsidiary. A
person shall not cease to be an Employee in the case of (i) any leave of absence
approved by the Company or (ii) transfers between locations of the Company or
between the Company, any Subsidiary, or any successor. For purposes of Incentive
Stock Options, no such leave may exceed ninety days, unless reemployment upon
expiration of such leave is guaranteed by statute or contract. Neither service
as a director nor payment of a director's fee by the Company shall be
sufficient, by itself, to constitute "employment" by the Company.

            (l) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

            (m) "FAIR MARKET VALUE" shall mean, as of any date, the value of
Stock determined as follows:

                  (i) If the Stock is listed on any established stock exchange
or a national market system, including without limitation the Nasdaq National
Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market
Value shall be the closing sales price for such stock (or the closing bid, if no
sales were reported) as quoted on such exchange or system for the last market
trading day prior to the date of determination, as reported in The Wall Street
Journal or such other source as the Committee deems reliable;

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                  (ii) If the Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean of the closing bid and asked prices for the Stock on the date
prior to the date of determination as reported in The Wall Street Journal or
such other source as the Committee deems reliable; or

                  (iii) In the absence of an established market for the Stock,
the Fair Market Value thereof shall be determined in good faith by the
Committee.

            (n) "GOOD REASON" means a Participant's voluntary resignation
following any one or more of the following that is effected without the
Participant's written consent: (i) a change in his or her position following the
Change of Control that materially reduces his or her duties or responsibilities,
(ii) a reduction in his or her base salary following a Change of Control, unless
the base salaries of all similarly situated individuals are similarly reduced,
or (iii) a relocation of such Participant's place of employment of more than
fifty (50) miles following a Change of Control. However, if the term or concept
of "Good Reason" has been defined in an agreement between a Participant and the
Company or any successor or parent or Subsidiary thereof, then "Good Reason"
shall have the definition set forth in such agreement.

            (o) "INCENTIVE STOCK OPTION" means an Option that is intended to
meet the requirements of Section 422 of the Code or any successor provision
thereto.

            (p) "NON-EMPLOYEE DIRECTOR" means a member of the Board who
qualifies as a "Non-Employee Director" as defined in Rule 16b-3(b)(3) of the
Exchange Act, or any successor definition adopted by the Board.

            (q) "NON-QUALIFIED STOCK OPTION" means an Option that is not
intended to be an Incentive Stock Option.

            (r) "OPTION" means a right granted to a Participant pursuant to
Article 5 of the Plan to purchase a specified number of shares of Stock at a
specified price during specified time periods. An Option may be either an
Incentive Stock Option or a Non-Qualified Stock Option.

            (s) "PARTICIPANT" means a person who, as a member of the Board,
consultant to the Company or any Subsidiary or Employee, has been granted an
Award pursuant to the Plan.

            (t) "PERFORMANCE-BASED AWARD" means an Award granted to selected
Covered Employees pursuant to Articles 6 and 8, but which is subject to the
terms and conditions set forth in Article 9. All Performance-Based Awards are
intended to qualify as Qualified Performance-Based Compensation.

            (u) "PERFORMANCE CRITERIA" means the criteria that the Committee
selects for purposes of establishing the Performance Goal or Performance Goals
for a Participant for a Performance Period. The Performance Criteria that will
be used to establish Performance Goals are limited to the following: net
earnings (either before or after interest, taxes, depreciation and
amortization), net losses, sales or revenue, operating earnings, operating cash
flow, return on net assets, return on stockholders' equity, return on assets,
return on capital, stockholder returns, gross or net profit margin, earnings per
share, price per share of Stock, and market share, any of which may be measured
either in absolute terms or as compared to any incremental increase or as
compared to results of a peer group. The Committee shall, within the time
prescribed by Section 162(m) of the Code, define in an objective fashion the
manner of calculating the Performance Criteria it selects to use for such
Performance Period for such Participant.

            (v) "PERFORMANCE GOALS" means, for a Performance Period, the goals
established in

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writing by the Committee for the Performance Period based upon the Performance
Criteria. Depending on the Performance Criteria used to establish such
Performance Goals, the Performance Goals may be expressed in terms of overall
Company performance or the performance of a division, business unit, or an
individual. The Committee, in its discretion, may, within the time prescribed by
Section 162(m) of the Code, adjust or modify the calculation of Performance
Goals for such Performance Period in order to prevent the dilution or
enlargement of the rights of Participants (i) in the event of, or in
anticipation of, any unusual or extraordinary corporate item, transaction,
event, or development, or (ii) in recognition of, or in anticipation of, any
other unusual or nonrecurring events affecting the Company, or the financial
statements of the Company, or in response to, or in anticipation of, changes in
applicable laws, regulations, accounting principles, or business conditions.

            (w) "PERFORMANCE PERIOD" means the one or more periods of time,
which may be of varying and overlapping durations, as the Committee may select,
over which the attainment of one or more Performance Goals will be measured for
the purpose of determining a Participant's right to, and the payment of, a
Performance-Based Award.

            (x) "PERFORMANCE SHARE" means a right granted to a Participant
pursuant to Article 8, to receive cash, Stock, or other Awards, the payment of
which is contingent upon achieving certain performance goals established by the
Committee.

            (y) "PLAN" means this Somaxon Pharmaceuticals, Inc. 2004 Equity
Incentive Award Plan, as it may be amended from time to time.

            (z) "PUBLIC TRADING DATE" means the first date upon which Stock 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.

            (aa) "QUALIFIED PERFORMANCE-BASED COMPENSATION" means any
compensation that is intended to qualify as "qualified performance-based
compensation" as described in Section 162(m)(4)(C) of the Code.

            (bb) "RESTRICTED STOCK" means Stock awarded to a Participant
pursuant to Article 6 that is subject to certain restrictions and to risk of
forfeiture.

            (cc) "RESTRICTED STOCK UNIT" means a right to receive a share of
Stock during specified time periods pursuant to Article 8.

            (dd) "STOCK" means the common stock of the Company and such other
securities of the Company that may be substituted for Stock pursuant to Article
11.

            (ee) "STOCK APPRECIATION RIGHT" or "SAR" means a right granted
pursuant to Article 7 to receive a payment equal to the excess of the Fair
Market Value of a specified number of shares of Stock on the date the SAR is
exercised over the Fair Market Value on the date the SAR was granted as set
forth in the applicable Award Agreement.

            (ff) "STOCK PAYMENT" means (a) a payment in the form of shares of
Stock, or (b) an option or other right to purchase shares of Stock, as part of
any bonus, deferred compensation or other arrangement, made in lieu of all or
any portion of the compensation, granted pursuant to Article 8.

            (gg) "SUBSIDIARY" means any corporation or other entity of which a
majority of the outstanding voting stock or voting power is beneficially owned
directly or indirectly by the Company.

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                                   ARTICLE 3
                           SHARES SUBJECT TO THE PLAN

      3.1 Number of Shares.

            (a) Subject to Article 11, the aggregate number of shares of Stock
which may be issued or transferred pursuant to Awards under the Plan shall be
2,500,000 shares. The payment of Dividend Equivalents in conjunction with any
outstanding Awards shall not be counted against the shares available for
issuance under the Plan.

            (b) To the extent that an Award terminates, expires, or lapses for
any reason, any shares of Stock subject to the Award shall again be available
for the grant of an Award pursuant to the Plan. Additionally, any shares of
Stock tendered or withheld to satisfy the grant or exercise price or tax
withholding obligation pursuant to any Award shall again be available for the
grant of an Award pursuant to the Plan. To the extent permitted by applicable
law or any exchange rule, shares of Stock issued in assumption of, or in
substitution for, any outstanding awards of any entity acquired in any form of
combination by the Company or any Subsidiary shall not be counted against shares
of Stock available for grant pursuant to this Plan. If shares of Stock issued
pursuant to Awards are repurchased by the Company at no less than their original
purchase price, such shares of Stock shall become available for future grant
under the Plan (unless the Plan has terminated).

            (c) Notwithstanding the provisions of this Section 3.1, no shares of
Stock may again be optioned, granted or awarded if such action would cause an
Incentive Stock Option to fail to qualify as an Incentive Stock Option under
Code Section 422.

      3.2 Stock Distributed. Any Stock distributed pursuant to an Award may
consist, in whole or in part, of authorized and unissued Stock, treasury Stock
or Stock purchased on the open market.

      3.3 Limitation on Number of Shares Subject to Awards. Notwithstanding any
provision in the Plan to the contrary, and subject to Article 11, on and after
the Public Trading Date, the maximum number of shares of Stock with respect to
one or more Awards that may be granted to any one Participant during a calendar
year shall be 2,500,000.

                                   ARTICLE 4
                          ELIGIBILITY AND PARTICIPATION

      4.1 Eligibility.

            (a) General. Persons eligible to participate in this Plan include
Employees, consultants to the Company or any Subsidiary and all members of the
Board, as determined by the Committee.

            (b) Foreign Participants. In order to assure the viability of Awards
granted to Participants employed in foreign countries, the Committee may provide
for such special terms as it may consider necessary or appropriate to
accommodate differences in local law, tax policy, or custom. Moreover, the
Committee may approve such supplements to, or amendments, restatements, or
alternative versions of, the Plan as it may consider necessary or appropriate
for such purposes without thereby affecting the terms of the Plan as in effect
for any other purpose; provided, however, that no such supplements, amendments,
restatements, or alternative versions shall increase the share limitations
contained in Sections 3.1 and 3.3 of the Plan.

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      4.2 Actual Participation. Subject to the provisions of the Plan, the
Committee may, from time to time, select from among all eligible individuals,
those to whom Awards shall be granted and shall determine the nature and amount
of each Award. No individual shall have any right to be granted an Award
pursuant to this Plan.

                                   ARTICLE 5
                                  STOCK OPTIONS

      5.1 General. The Committee is authorized to grant Options to Participants
on the following terms and conditions:

            (a) Exercise Price. The exercise price per share of Stock subject to
an Option shall be determined by the Committee and set forth in the Award
Agreement; provided that the exercise price for any Option shall not be less
than par value of a share of Stock on the date of grant.

            (b) Time And Conditions Of Exercise. The Committee shall determine
the time or times at which an Option may be exercised in whole or in part,
provided that the term of any Option granted under the Plan shall not exceed ten
years, and provided further, that in the case of a Non-Qualified Stock Option,
such Option shall be exercisable for one year after the date of the
Participant's death. The Committee shall also determine the performance or other
conditions, if any, that must be satisfied before all or part of an Option may
be exercised.

            (c) Payment. The Committee shall determine the methods by which the
exercise price of an Option may be paid, the form of payment, including, without
limitation, cash, promissory note bearing interest at such rate as is a market
rate of interest and which also precludes the imputation of interest under the
Code, shares of Stock held for longer than six months having a Fair Market Value
on the date of delivery equal to the aggregate exercise price of the Option or
exercised portion thereof, or other property acceptable to the Committee
(including through the delivery of a notice that the Participant has placed a
market sell order with a broker with respect to shares of Stock then issuable
upon exercise of the Option, and that the broker has been directed to pay a
sufficient portion of the net proceeds of the sale to the Company in
satisfaction of the Option exercise price, provided that payment of such
proceeds is then made to the Company upon settlement of such sale), and the
methods by which shares of Stock shall be delivered or deemed to be delivered to
Participants. Notwithstanding any other provision of the Plan to the contrary,
no Participant who is a member of the Board or an "executive officer" of the
Company within the meaning of Section 13(k) of the Exchange Act shall be
permitted to pay the exercise price of an Option in any method which would
violate Section 13(k).

            (d) Evidence Of Grant. All Options shall be evidenced by a written
Award Agreement between the Company and the Participant. The Award Agreement
shall include such additional provisions as may be specified by the Committee.

      5.2 Incentive Stock Options. Incentive Stock Options shall be granted only
to Employees and the terms of any Incentive Stock Options granted pursuant to
the Plan must comply with the following additional provisions of this Section
5.2:

            (a) Exercise Price. The exercise price per share of Stock shall be
set by the Committee, provided that the exercise price for any Incentive Stock
Option shall not be less than 100% of the Fair Market Value on the date of
grant.

            (b) Expiration Of Option. An Incentive Stock Option may not be
exercised to any extent by anyone after the first to occur of the following
events:

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                  (1) Ten years from the date it is granted, unless an earlier
time is set in the Award Agreement.

                  (2) One year after the date of the Participant's termination
of employment or service on account of Disability or death, unless in the case
of death a shorter or longer period is designated in the Award Agreement. Upon
the Participant's Disability or death, any Incentive Stock Options exercisable
at the Participant's Disability or death may be exercised by the Participant's
legal representative or representatives, by the person or persons entitled to do
so pursuant to the Participant's last will and testament, or, if the Participant
fails to make testamentary disposition of such Incentive Stock Option or dies
intestate, by the person or persons entitled to receive the Incentive Stock
Option pursuant to the applicable laws of descent and distribution.

            (c) Individual Dollar Limitation. The aggregate Fair Market Value
(determined as of the time the Option is granted) of all shares of Stock with
respect to which Incentive Stock Options are first exercisable by a Participant
in any calendar year may not exceed $100,000 or such other limitation as imposed
by Section 422(d) of the Code, or any successor provision. To the extent that
Incentive Stock Options are first exercisable by a Participant in excess of such
limitation, the excess shall be considered Non-Qualified Stock Options.

            (d) Ten Percent Owners. An Incentive Stock Option shall be granted
to any individual who, at the date of grant, owns stock possessing more than ten
percent of the total combined voting power of all classes of Stock of the
Company only if such Option is granted at a price that is not less than 110% of
Fair Market Value on the date of grant and the Option is exercisable for no more
than five years from the date of grant.

            (e) Transfer Restriction. The Participant shall give the Company
prompt notice of any disposition of shares of Stock acquired by exercise of an
Incentive Stock Option within (1) two years from the date of grant of such
Incentive Stock Option or (2) one year after the transfer of such shares of
Stock to the Participant.

            (f) Expiration Of Incentive Stock Options. No Award of an Incentive
Stock Option may be made pursuant to this Plan after the tenth anniversary of
the Effective Date.

            (g) Right To Exercise. During a Participant's lifetime, an Incentive
Stock Option may be exercised only by the Participant.

      5.3 Early Exercisability. The Committee may provide in the terms of a
Participant's Award Agreement that the Participant may, at any time before the
Participant's status as an Employee, member of the Board or consultant to the
Company terminates, exercise the Option(s) granted to such Participant in whole
or in part prior to the full vesting of the Option(s); provided, however, shares
of Stock acquired upon exercise of an Option which has not fully vested may be
subject to any forfeiture, transfer or other restrictions as the Committee may
determine in its sole discretion.

                                   ARTICLE 6
                             RESTRICTED STOCK AWARDS

      6.1 Grant of Restricted Stock. The Committee is authorized to make Awards
of Restricted Stock to any Participant selected by the Committee in such amounts
and subject to such terms and conditions as determined by the Committee. All
Awards of Restricted Stock shall be evidenced by a Restricted Stock Award
Agreement.

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      6.2 Issuance and Restrictions. Restricted Stock shall be subject to such
restrictions on transferability and other restrictions as the Committee may
impose (including, without limitation, limitations on the right to vote
Restricted Stock or the right to receive dividends on the Restricted Stock).
These restrictions may lapse separately or in combination at such times,
pursuant to such circumstances, in such installments, or otherwise, as the
Committee determines at the time of the grant of the Award or thereafter.

      6.3 Forfeiture. Except as otherwise determined by the Committee at the
time of the grant of the Award or thereafter, upon termination of employment or
service during the applicable restriction period, Restricted Stock that is at
that time subject to restrictions shall be forfeited; provided, however, that
the Committee may provide in any Restricted Stock Award Agreement that
restrictions or forfeiture conditions relating to Restricted Stock will be
waived in whole or in part in the event of terminations resulting from specified
causes, and the Committee may in other cases waive in whole or in part
restrictions or forfeiture conditions relating to Restricted Stock.

      6.4 Certificates For Restricted Stock. Restricted Stock granted pursuant
to the Plan may be evidenced in such manner as the Committee shall determine. If
certificates representing shares of Restricted Stock are registered in the name
of the Participant, certificates must bear an appropriate legend referring to
the terms, conditions, and restrictions applicable to such Restricted Stock, and
the Company may, at its discretion, retain physical possession of the
certificate until such time as all applicable restrictions lapse.

                                   ARTICLE 7
                            STOCK APPRECIATION RIGHTS

      7.1 Grant of Stock Appreciation Rights. A Stock Appreciation Right may be
granted to any Participant selected by the Committee. A Stock Appreciation Right
may be granted (a) in connection and simultaneously with the grant of an Option,
(b) with respect to a previously granted Option, or (c) independent of an
Option. A Stock Appreciation Right shall be subject to such terms and conditions
not inconsistent with the Plan as the Committee shall impose and shall be
evidenced by an Award Agreement.

      7.2 Coupled Stock Appreciation Rights.

            (a) A Coupled Stock Appreciation Right ("CSAR") shall be related to
a particular Option and shall be exercisable only when and to the extent the
related Option is exercisable.

            (b) A CSAR may be granted to a Participant for no more than the
number of shares subject to the simultaneously or previously granted Option to
which it is coupled.

            (c) A CSAR shall entitle the Participant (or other person entitled
to exercise the Option pursuant to the Plan) to surrender to the Company
unexercised a portion of the Option to which the CSAR relates (to the extent
then exercisable pursuant to its terms) and to receive from the Company in
exchange therefor an amount determined by multiplying the difference obtained by
subtracting the Option exercise price from the Fair Market Value of a share of
Stock on the date of exercise of the CSAR by the number of shares of Stock with
respect to which the CSAR shall have been exercised, subject to any limitations
the Committee may impose.

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      7.3 Independent Stock Appreciation Rights.

            (a) An Independent Stock Appreciation Right ("ISAR") shall be
unrelated to any Option and shall have a term set by the Committee. An ISAR
shall be exercisable in such installments as the Committee may determine. An
ISAR shall cover such number of shares of Stock as the Committee may determine.
The exercise price per share of Stock subject to each ISAR shall be set by the
Committee; provided, however, that, the Committee in its sole and absolute
discretion may provide that the ISAR may be exercised subsequent to a
termination of employment or service, as applicable, or following a Change of
Control of the Company, or because of the Participant's retirement, death or
disability, or otherwise.

            (b) An ISAR shall entitle the Participant (or other person entitled
to exercise the ISAR pursuant to the Plan) to exercise all or a specified
portion of the ISAR (to the extent then exercisable pursuant to its terms) and
to receive from the Company an amount determined by multiplying the difference
obtained by subtracting the exercise price per share of the ISAR from the Fair
Market Value of a share of Stock on the date of exercise of the ISAR by the
number of shares of Stock with respect to which the ISAR shall have been
exercised, subject to any limitations the Committee may impose.

      7.4 Payment and Limitations on Exercise.

            (a) Payment of the amounts determined under Section 7.2(c) and
7.3(b) above shall be in cash, in Stock (based on its Fair Market Value as of
the date the Stock Appreciation Right is exercised) or a combination of both, as
determined by the Committee.

            (b) To the extent any payment under Section 7.2(c) or 7.3(b) is
effected in Stock it shall be made subject to satisfaction of all provisions of
Article 5 above pertaining to Options.

                                   ARTICLE 8
                              OTHER TYPES OF AWARDS

      8.1 Performance Share Awards. Any Participant selected by the Committee
may be granted one or more Performance Share awards which may be denominated in
a number of shares of Stock or in a dollar value of shares of Stock and which
may be linked to any one or more of the Performance Criteria or other specific
performance criteria determined appropriate by the Committee, in each case on a
specified date or dates or over any period or periods determined by the
Committee. In making such determinations, the Committee shall consider (among
such other factors as it deems relevant in light of the specific type of award)
the contributions, responsibilities and other compensation of the particular
Participant.

      8.2 Dividend Equivalents.

            (a) Any Participant selected by the Committee may be granted
Dividend Equivalents based on the dividends declared on the shares of Stock that
are subject to any Award, to be credited as of dividend payment dates, during
the period between the date the Award is granted and the date the Award is
exercised, vests or expires, as determined by the Committee. Such Dividend
Equivalents shall be converted to cash or additional shares of Stock by such
formula and at such time and subject to such limitations as may be determined by
the Committee.

            (b) Dividend Equivalents granted with respect to Options or SARs
that are intended to be Qualified Performance-Based Compensation shall be
payable, with respect to pre-exercise periods,

                                       10
<PAGE>

regardless of whether such Option or SAR is subsequently exercised.

      8.3 Stock Payments. Any Participant selected by the Committee may receive
Stock Payments in the manner determined from time to time by the Committee. The
number of shares shall be determined by the Committee and may be based upon the
Performance Criteria or other specific performance criteria determined
appropriate by the Committee, determined on the date such Stock Payment is made
or on any date thereafter.

      8.4 Restricted Stock Units. Any Participant selected by the Committee may
be granted an award of Restricted Stock Units in the manner determined from time
to time by the Committee. The number of Restricted Stock Units shall be
determined by the Committee and may be linked to the Performance Criteria or
other specific performance criteria determined to be appropriate by the
Committee, in each case on a specified date or dates or over any period or
periods determined by the Committee. Stock underlying a Restricted Stock Unit
will not be issued until the Restricted Stock Unit has vested, pursuant to a
vesting schedule or performance criteria set by the Committee. Unless otherwise
provided by the Committee, a Participant awarded Restricted Stock Units shall
have no rights as a Company stockholder with respect to such Restricted Stock
Units until such time as the Restricted Stock Units have vested and the Stock
underlying the Restricted Stock Units has been issued.

      8.5 Term. The term of any Award of Performance Shares, Dividend
Equivalents, Stock Payments or Restricted Stock Units shall be set by the
Committee in its discretion.

      8.6 Exercise or Purchase Price. The Committee may establish the exercise
or purchase price of any Award of Performance Shares, Restricted Stock Units or
Stock Payments; provided, however, that such price shall not be less than the
par value of a share of Stock, unless otherwise permitted by applicable state
law.

      8.7 Exercise Upon Termination of Employment or Service. An Award of
Performance Shares, Dividend Equivalents, Restricted Stock Units and Stock
Payments shall only be exercisable or payable while the Participant is an
Employee, consultant to the Company or a member of the Board, as applicable;
provided, however, that the Committee in its sole and absolute discretion may
provide that an Award of Performance Shares, Dividend Equivalents, Stock
Payments or Restricted Stock Units may be exercised or paid subsequent to a
termination of employment or service, as applicable, upon or following a Change
of Control of the Company, or because of the Participant's retirement, death or
disability, or otherwise; provided, however, that any such provision with
respect to Performance Shares shall be subject to the requirements of Section
162(m) of the Code that apply to Qualified Performance-Based Compensation.

      8.8 Form of Payment. Payments with respect to any Awards granted under
this Article 8 shall be made in cash, in Stock or a combination of both, as
determined by the Committee.

      8.9 Award Agreement. All Awards under this Article 8 shall be subject to
such additional terms and conditions as determined by the Committee and shall be
evidenced by a written Award Agreement.

                                   ARTICLE 9
                            PERFORMANCE-BASED AWARDS

      9.1 Purpose. The purpose of this Article 9 is to provide the Committee the
ability to qualify Awards other than Options and SARs and that are granted
pursuant to Articles 6 and 8 as Qualified Performance-

                                       11
<PAGE>

Based Compensation. If the Committee, in its discretion, decides to grant a
Performance-Based Award to a Covered Employee, the provisions of this Article 9
shall control over any contrary provision contained in Articles 6 or 8;
provided, however, that the Committee may in its discretion grant Awards to
Covered Employees that are based on Performance Criteria or Performance Goals
but that do not satisfy the requirements of this Article 9.

      9.2 Applicability. This Article 9 shall apply only to those Covered
Employees selected by the Committee to receive Performance-Based Awards. The
designation of a Covered Employee as a Participant for a Performance Period
shall not in any manner entitle the Participant to receive an Award for the
period. Moreover, designation of a Covered Employee as a Participant for a
particular Performance Period shall not require designation of such Covered
Employee as a Participant in any subsequent Performance Period and designation
of one Covered Employee as a Participant shall not require designation of any
other Covered Employees as a Participant in such period or in any other period.

      9.3 Procedures With Respect to Performance-Based Awards. To the extent
necessary to comply with the Qualified Performance-Based Compensation
requirements of Section 162(m)(4)(C) of the Code, with respect to any Award
granted under Articles 6 and 8 which may be granted to one or more Covered
Employees, no later than ninety (90) days following the commencement of any
fiscal year in question or any other designated fiscal period or period of
service (or such other time as may be required or permitted by Section 162(m) of
the Code), the Committee shall, in writing, (i) designate one or more Covered
Employees, (ii) select the Performance Criteria applicable to the Performance
Period, (iii) establish the Performance Goals, and amounts of such Awards, as
applicable, which may be earned for such Performance Period, and (iv) specify
the relationship between Performance Criteria and the Performance Goals and the
amounts of such Awards, as applicable, to be earned by each Covered Employee for
such Performance Period. Following the completion of each Performance Period,
the Committee shall certify in writing whether the applicable Performance Goals
have been achieved for such Performance Period. In determining the amount earned
by a Covered Employee, the Committee shall have the right to reduce or eliminate
(but not to increase) the amount payable at a given level of performance to take
into account additional factors that the Committee may deem relevant to the
assessment of individual or corporate performance for the Performance Period.

      9.4 Payment of Performance-Based Awards. Unless otherwise provided in the
applicable Award Agreement, a Participant must be employed by the Company or a
Subsidiary on the day a Performance-Based Award for such Performance Period is
paid to the Participant. Furthermore, a Participant shall be eligible to receive
payment pursuant to a Performance-Based Award for a Performance Period only if
the Performance Goals for such period are achieved. In determining the amount
earned under a Performance-Based Award, the Committee may reduce or eliminate
the amount of the Performance-Based Award earned for the Performance Period, if
in its sole and absolute discretion, such reduction or elimination is
appropriate.

      9.5 Additional Limitations. Notwithstanding any other provision of the
Plan, any Award which is granted to a Covered Employee and is intended to
constitute Qualified Performance-Based Compensation shall be subject to any
additional limitations set forth in Section 162(m) of the Code (including any
amendment to Section 162(m) of the Code) or any regulations or rulings issued
thereunder that are requirements for qualification as qualified
performance-based compensation as described in Section 162(m)(4)(C) of the Code,
and the Plan shall be deemed amended to the extent necessary to conform to such
requirements.

                                       12
<PAGE>

                                   ARTICLE 10
                         PROVISIONS APPLICABLE TO AWARDS

      10.1 Stand-Alone and Tandem Awards. Awards granted pursuant to the Plan
may, in the discretion of the Committee, be granted either alone, in addition
to, or in tandem with, any other Award granted pursuant to the Plan. Awards
granted in addition to or in tandem with other Awards may be granted either at
the same time as or at a different time from the grant of such other Awards.

      10.2 Award Agreement. Awards under the Plan shall be evidenced by Award
Agreements that set forth the terms, conditions and limitations for each Award
which may include the term of an Award, the provisions applicable in the event
the Participant's employment or service terminates, and the Company's authority
to unilaterally or bilaterally amend, modify, suspend, cancel or rescind an
Award.

      10.3 Limits on Transfer. No right or interest of a Participant in any
Award may be pledged, encumbered, or hypothecated to or in favor of any party
other than the Company or a Subsidiary, or shall be subject to any lien,
obligation, or liability of such Participant to any other party other than the
Company or a Subsidiary. Except as otherwise provided by the Committee, no Award
shall be assigned, transferred, or otherwise disposed of by a Participant other
than by will or the laws of descent and distribution. The Committee by express
provision in the Award or an amendment thereto may permit an Award (other than
an Incentive Stock Option) to be transferred to, exercised by and paid to
certain persons or entities related to the Participant, including but not
limited to members of the Participant's family, charitable institutions, or
trusts or other entities whose beneficiaries or beneficial owners are members of
the Participant's family and/or charitable institutions, or to such other
persons or entities as may be expressly approved by the Committee, pursuant to
such conditions and procedures as the Committee may establish. Any permitted
transfer may be subject to the condition that the Committee receive evidence
satisfactory to it that the transfer is being made for estate and/or tax
planning purposes (or to a "blind trust" in connection with the Participant's
termination of employment or service with the Company or a Subsidiary to assume
a position with a governmental, charitable, educational or similar non-profit
institution) and on a basis consistent with the Company's lawful issue of
securities.

      10.4 Beneficiaries. Notwithstanding Section 10.3, a Participant may, in
the manner determined by the Committee, designate a beneficiary to exercise the
rights of the Participant and to receive any distribution with respect to any
Award upon the Participant's death. A beneficiary, legal guardian, legal
representative, or other person claiming any rights pursuant to the Plan is
subject to all terms and conditions of the Plan and any Award Agreement
applicable to the Participant, except to the extent the Plan and Award Agreement
otherwise provide, and to any additional restrictions deemed necessary or
appropriate by the Committee. If the Participant is married and resides in a
community property state, a designation of a person other than the Participant's
spouse as his beneficiary with respect to more than 50% of the Participant's
interest in the Award shall not be effective without the prior written consent
of the Participant's spouse. If no beneficiary has been designated or survives
the Participant, payment shall be made to the person entitled thereto pursuant
to the Participant's will or the laws of descent and distribution. Subject to
the foregoing, a beneficiary designation may be changed or revoked by a
Participant at any time provided the change or revocation is filed with the
Committee.

      10.5 Stock Certificates. Notwithstanding anything herein to the contrary,
the Company shall not be required to issue or deliver any certificates
evidencing shares of Stock pursuant to the exercise of any Award, unless and
until the Board has determined, with advice of counsel, that the issuance and
delivery of such certificates is in compliance with all applicable laws,
regulations of governmental authorities and, if applicable, the requirements of
any exchange on which the shares of Stock are listed or traded. All Stock
certificates delivered pursuant to the Plan are subject to any stop-transfer
orders and other restrictions as the Committee deems necessary or advisable to
comply with federal, state, or foreign

                                       13
<PAGE>

jurisdiction, securities or other laws, rules and regulations and the rules of
any national securities exchange or automated quotation system on which the
Stock is listed, quoted, or traded. The Committee may place legends on any Stock
certificate to reference restrictions applicable to the Stock. In addition to
the terms and conditions provided herein, the Board may require that a
Participant make such reasonable covenants, agreements, and representations as
the Board, in its discretion, deems advisable in order to comply with any such
laws, regulations, or requirements. The Committee shall have the right to
require any Participant to comply with any timing or other restrictions with
respect to the settlement or exercise of any Award, including a window-period
limitation, as may be imposed in the discretion of the Committee.

                                   ARTICLE 11
                          CHANGES IN CAPITAL STRUCTURE

      11.1 Adjustments. In the event of any stock dividend, stock split,
combination or exchange of shares, merger, consolidation, spin-off,
recapitalization or other distribution (other than normal cash dividends) of
Company assets to stockholders, or any other change affecting the shares of
Stock or the share price of the Stock, the Committee shall make such
proportionate adjustments, if any, as the Committee in its discretion may deem
appropriate to reflect such change with respect to (i) the aggregate number and
type of shares that may be issued under the Plan (including, but not limited to,
adjustments of the limitations in Sections 3.1 and 3.3); (ii) the terms and
conditions of any outstanding Awards (including, without limitation, any
applicable performance targets or criteria with respect thereto); and (iii) the
grant or exercise price per share for any outstanding Awards under the Plan. Any
adjustment affecting an Award intended as Qualified Performance-Based
Compensation shall be made consistent with the requirements of Section 162(m) of
the Code.

      11.2 Effect of a Change of Control When Awards Are Not Assumed. If a
Change of Control occurs and a Participant's Awards are not assumed by the
surviving or successor entity or its parent or Subsidiary and such successor
does not substitute substantially similar awards for those outstanding under the
Plan, such Awards shall become fully exercisable and/or payable as applicable,
and all forfeiture restrictions on such Awards shall lapse. Upon, or in
anticipation of, a Change of Control, the Committee may cause any and all Awards
outstanding hereunder to terminate at a specific time in the future and shall
give each Participant the right to exercise such Awards during a period of time
as the Committee, in its sole and absolute discretion, shall determine. The
Committee shall have sole discretion to determine whether an Award has been
assumed by the surviving or successor entity or its parent or Subsidiary or
whether such successor has substituted substantially similar awards for those
outstanding under the Plan in connection with a Change of Control.

      11.3 Effect of Change of Control When Awards Are Assumed; Termination
Following Change of Control.

            (a) In the event of a Change of Control where a Participant's Awards
are assumed by the surviving or successor entity or its parent or Subsidiary or
such successor substitutes substantially similar awards for those outstanding
under the Plan, then fifty percent (50%) of such Participant's unvested Awards
shall become fully exercisable and/or payable as applicable, and all forfeiture
restrictions on such Awards shall lapse, immediately prior to such Change of
Control.

            (b) In the event of a Change of Control where a Participant's Awards
are assumed by the surviving or successor entity or its parent or Subsidiary or
such successor substitutes substantially similar awards for those outstanding
under the Plan, if within twelve (12) months following such Change of Control
(i) the Participant's employment or service with the surviving or successor
entity or its parent or Subsidiary is terminated without Cause or (ii) such
Participant voluntarily terminates such Participant's

                                       14
<PAGE>

employment or service with Good Reason, then such Participant's remaining
unvested Awards (including any substituted awards) shall become fully
exercisable and/or payable as applicable, and all forfeiture restrictions on
such Awards (including any substituted awards) shall lapse, on the date of
termination. Such Awards (including any substituted awards) shall remain
exercisable, as applicable, until the earlier of the expiration date of the
Award or three (3) months following such Participant's cessation of employment
or service.

      11.4 Outstanding Awards - Certain Mergers. Subject to any required action
by the stockholders of the Company, in the event that the Company shall be the
surviving corporation in any merger or consolidation (except a merger or
consolidation as a result of which the holders of shares of Stock receive
securities of another corporation), each Award outstanding on the date of such
merger or consolidation shall pertain to and apply to the securities that a
holder of the number of shares of Stock subject to such Award would have
received in such merger or consolidation.

      11.5 Outstanding Awards - Other Changes. In the event of any other change
in the capitalization of the Company or corporate change other than those
specifically referred to in this Article 11, the Committee may, in its absolute
discretion, make such adjustments in the number and class of shares subject to
Awards outstanding on the date on which such change occurs and in the per share
grant or exercise price of each Award as the Committee may consider appropriate
to prevent dilution or enlargement of rights.

      11.6 No Other Rights. Except as expressly provided in the Plan, no
Participant shall have any rights by reason of any subdivision or consolidation
of shares of stock of any class, the payment of any dividend, any increase or
decrease in the number of shares of stock of any class or any dissolution,
liquidation, merger, or consolidation of the Company or any other corporation.
Except as expressly provided in the Plan or pursuant to action of the Committee
under the Plan, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number of shares
of Stock subject to an Award or the grant or exercise price of any Award.

                                   ARTICLE 12
                                 ADMINISTRATION

      12.1 Committee. Unless and until the Board delegates administration to a
Committee as set forth below, the Plan shall be administered by the Board. The
Board may delegate administration of the Plan to a Committee or Committees of
one or more members of the Board, and the term "Committee" shall apply to any
person or persons to whom such authority has been delegated. If administration
is delegated to a Committee, the Committee shall have, in connection with the
administration of the Plan, the powers theretofore possessed by the Board,
including the power to delegate to a subcommittee any of the administrative
powers the Committee is authorized to exercise (and references in this Plan to
the Board shall thereafter be to the Committee or subcommittee), subject,
however, to such resolutions, not inconsistent with the provisions of the Plan,
as may be adopted from time to time by the Board. Notwithstanding the foregoing,
however, from and after the Public Trading Date, a Committee of the Board shall
administer the Plan and the Committee shall consist solely of two or more
members of the Board 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
scope of such authority, the Board or the Committee may (i) delegate to a
committee of one or more members of the Board who are not "outside directors,"
within the meaning of Section 162(m) of the Code 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

                                       15
<PAGE>

the Code and/or (ii) delegate to a committee of one or more members of the Board
who are not Non-Employee Directors, the authority to grant awards under the Plan
to eligible persons who are not then subject to Section 16 of the Exchange Act.
The Board may abolish the Committee at any time and/or revest in the Board the
administration of the Plan. Appointment of Committee members shall be effective
upon acceptance of appointment. Committee members may resign at any time by
delivering written notice to the Board. Vacancies in the Committee may only be
filled by the Board.

      12.2 Action by the Committee. A majority of the Committee shall constitute
a quorum. The acts of a majority of the members present at any meeting at which
a quorum is present, and acts approved in writing by a majority of the Committee
in lieu of a meeting, shall be deemed the acts of the Committee. Each member of
the Committee is entitled to, in good faith, rely or act upon any report or
other information furnished to that member by any officer or other employee of
the Company or any Subsidiary, the Company's independent certified public
accountants, or any executive compensation consultant or other professional
retained by the Company to assist in the administration of the Plan.

      12.3 Authority of Committee. Subject to any specific designation in the
Plan, the Committee has the exclusive power, authority and discretion to:

            (a) Designate Participants to receive Awards;

            (b) Determine the type or types of Awards to be granted to each
Participant;

            (c) Determine the number of Awards to be granted and the number of
shares of Stock to which an Award will relate;

            (d) Determine the terms and conditions of any Award granted pursuant
to the Plan, including, but not limited to, the exercise price, grant price, or
purchase price, any reload provision, any restrictions or limitations on the
Award, any schedule for lapse of forfeiture restrictions or restrictions on the
exercisability of an Award, and accelerations or waivers thereof, any provisions
related to non-competition and recapture of gain on an Award, based in each case
on such considerations as the Committee in its sole discretion determines;
provided, however, that the Committee shall not have the authority to accelerate
the vesting or waive the forfeiture of any Performance-Based Awards;

            (e) Determine whether, to what extent, and pursuant to what
circumstances an Award may be settled in, or the exercise price of an Award may
be paid in, cash, Stock, other Awards, or other property, or an Award may be
canceled, forfeited, or surrendered;

            (f) Prescribe the form of each Award Agreement, which need not be
identical for each Participant;

            (g) Decide all other matters that must be determined in connection
with an Award;

            (h) Establish, adopt, or revise any rules and regulations as it may
deem necessary or advisable to administer the Plan;

            (i) Interpret the terms of, and any matter arising pursuant to, the
Plan or any Award Agreement; and

            (j) Make all other decisions and determinations that may be required
pursuant to the Plan or as the Committee deems necessary or advisable to
administer the Plan.

                                       16
<PAGE>

      12.4 Decisions Binding. The Committee's interpretation of the Plan, any
Awards granted pursuant to the Plan, any Award Agreement and all decisions and
determinations by the Committee with respect to the Plan are final, binding, and
conclusive on all parties.

                                   ARTICLE 13
                          EFFECTIVE AND EXPIRATION DATE

      13.1 Effective Date. The Plan will be submitted for the approval of the
Company's stockholders within twelve months after the date of the Board's
initial adoption of the Plan (the "EFFECTIVE DATE"). Awards may be granted or
awarded prior to such stockholder approval, provided that such Awards shall not
be exercisable, shall not vest and the restrictions thereon shall not lapse
prior to the time when the Plan is approved by the stockholders, and provided
further that if such approval has not been obtained at the end of said
twelve-month period, all Awards previously granted or awarded under the Plan
shall thereupon be canceled and become null and void.

      13.2 Expiration Date. The Plan will expire on, and no Award may be granted
pursuant to the Plan after, the earlier of the tenth anniversary of (i) the
Effective Date or (ii) the date this Plan is approved by the Board. Any Awards
that are outstanding on the tenth anniversary of the Effective Date shall remain
in force according to the terms of the Plan and the applicable Award Agreement.
Each Award Agreement shall provide that it will expire on the tenth anniversary
of the date of grant of the Award to which it relates.

                                   ARTICLE 14
                    AMENDMENT, MODIFICATION, AND TERMINATION

      14.1 Amendment, Modification, and Termination. With the approval of the
Board, at any time and from time to time, the Committee may terminate, amend or
modify the Plan; provided, however, that to the extent necessary and desirable
to comply with any applicable law, regulation, or stock exchange rule, the
Company shall obtain stockholder approval of any Plan amendment in such a manner
and to such a degree as required.

      14.2 Awards Previously Granted. No termination, amendment, or modification
of the Plan shall adversely affect in any material way any Award previously
granted pursuant to the Plan without the prior written consent of the
Participant.

                                   ARTICLE 15
                               GENERAL PROVISIONS

      15.1 No Rights to Awards. No Participant, employee, or other person shall
have any claim to be granted any Award pursuant to the Plan, and neither the
Company nor the Committee is obligated to treat Participants, employees, and
other persons uniformly.

      15.2 No Stockholders Rights. No Award gives the Participant any of the
rights of a stockholder of the Company unless and until shares of Stock are in
fact issued to such person in connection with such Award.

      15.3 Withholding. The Company or any Subsidiary shall have the authority
and the right to deduct or withhold, or require a Participant to remit to the
Company, an amount sufficient to satisfy federal, state, local and foreign taxes
(including the Participant's FICA obligation) required by law to be withheld
with respect to any taxable event concerning a Participant arising as a result
of this Plan. The Committee may in its discretion and in satisfaction of the
foregoing requirement allow a Participant to

                                       17
<PAGE>

elect to have the Company withhold shares of Stock otherwise issuable under an
Award (or allow the return of shares of Stock) having a Fair Market Value equal
to the sums required to be withheld. Notwithstanding any other provision of the
Plan, the number of shares of Stock which may be withheld with respect to the
issuance, vesting, exercise or payment of any Award (or which may be repurchased
from the Participant of such Award within six months after such shares of Stock
were acquired by the Participant from the Company) in order to satisfy the
Participant's federal, state, local and foreign income and payroll tax
liabilities with respect to the issuance, vesting, exercise or payment of the
Award shall be limited to the number of shares which have a Fair Market Value on
the date of withholding or repurchase equal to the aggregate amount of such
liabilities based on the minimum statutory withholding rates for federal, state,
local and foreign income tax and payroll tax purposes that are applicable to
such supplemental taxable income.

      15.4 No Right to Employment or Services. Nothing in the Plan or any Award
Agreement shall interfere with or limit in any way the right of the Company or
any Subsidiary to terminate any Participant's employment or services at any
time, nor confer upon any Participant any right to continue in the employ or
service of the Company or any Subsidiary.

      15.5 Unfunded Status of Awards. The Plan is intended to be an "unfunded"
plan for incentive compensation. With respect to any payments not yet made to a
Participant pursuant to an Award, nothing contained in the Plan or any Award
Agreement shall give the Participant any rights that are greater than those of a
general creditor of the Company or any Subsidiary.

      15.6 Indemnification. To the extent allowable pursuant to applicable law,
each member of the Committee or of the Board shall be indemnified and held
harmless by the Company from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by such member in connection with or
resulting from any claim, action, suit, or proceeding to which he or she may be
a party or in which he or she may be involved by reason of any action or failure
to act pursuant to the Plan and against and from any and all amounts paid by him
or her in satisfaction of judgment in such action, suit, or proceeding against
him or her, provided he or she gives the Company an opportunity, at its own
expense, to handle and defend the same before he or she undertakes to handle and
defend it on his or her own behalf. The foregoing right of indemnification shall
not be exclusive of any other rights of indemnification to which such persons
may be entitled pursuant to the Company's Certificate of Incorporation or
Bylaws, as a matter of law, or otherwise, or any power that the Company may have
to indemnify them or hold them harmless.

      15.7 Relationship to Other Benefits. No payment pursuant to the Plan shall
be taken into account in determining any benefits pursuant to any pension,
retirement, savings, profit sharing, group insurance, welfare or other benefit
plan of the Company or any Subsidiary except to the extent otherwise expressly
provided in writing in such other plan or an agreement thereunder.

      15.8 Expenses. The expenses of administering the Plan shall be borne by
the Company and its Subsidiaries.

      15.9 Titles and Headings. The titles and headings of the Sections in the
Plan are for convenience of reference only and, in the event of any conflict,
the text of the Plan, rather than such titles or headings, shall control.

                                       18
<PAGE>

      15.10 Fractional Shares. No fractional shares of Stock shall be issued and
the Committee shall determine, in its discretion, whether cash shall be given in
lieu of fractional shares or whether such fractional shares shall be eliminated
by rounding up or down as appropriate.

      15.11 Limitations Applicable to Section 16 Persons. Notwithstanding any
other provision of the Plan, the Plan, and any Award granted or awarded to any
Participant who is then subject to Section 16 of the Exchange Act, shall be
subject to any additional limitations set forth in any applicable exemptive rule
under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of
the Exchange Act) that are requirements for the application of such exemptive
rule. To the extent permitted by applicable law, the Plan and Awards granted or
awarded hereunder shall be deemed amended to the extent necessary to conform to
such applicable exemptive rule.

      15.12 Government And Other Regulations. The obligation of the Company to
make payment of awards in Stock or otherwise shall be subject to all applicable
laws, rules, and regulations, and to such approvals by government agencies as
may be required. The Company shall be under no obligation to register pursuant
to the Securities Act of 1933, as amended, any of the shares of Stock paid
pursuant to the Plan. If the shares paid pursuant to the Plan may in certain
circumstances be exempt from registration pursuant to the Securities Act of
1933, as amended, the Company may restrict the transfer of such shares in such
manner as it deems advisable to ensure the availability of any such exemption.

      15.13 Governing Law. The Plan and all Award Agreements shall be construed
in accordance with and governed by the laws of the State of Delaware.

      15.14 Compliance with California Securities Laws. Prior to the Public
Trading Date, this Plan is intended to comply with Section 25102(o) of the
California Corporations Code and the regulations issued thereunder. If any of
the provisions contained in this Plan are inconsistent with such requirements,
such provisions shall be deemed null and void. The invalidity of any provision
of this Plan shall not affect the validity or enforceability of any other
provision of this Plan, which shall remain in full force and effect.

      15.15 Appendices. The Committee may approve such supplements to, or
amendments, or appendices to, the Plan as it may consider necessary or
appropriate for purposes of compliance with applicable laws or otherwise and
such supplements, amendments or appendices shall be considered a part of the
Plan; provided, however, that no such supplements, amendments or appendices
shall increase the share limitations contained in Sections 3.1 and 3.3 of the
Plan.

      15.16 Acceleration Upon Death or Disability. In addition, with respect to
Participants who are Employees or members of the Board of the Company or any
Subsidiary, in the event of a Participant's termination of employment on account
of Disability or death, that number of Participant's unvested Awards that would
have become fully vested, exercisable and/or payable, as applicable, over the
twelve (12) months following the Participant's termination under the vesting
schedules applicable to such Awards had the Participant remained continuously
employed by or providing services to the Company during such period shall
immediately become so vested, exercisable and/or payable, as applicable, on the
date of termination.

      15.17 Acceleration of Stock Awards. For purposes of this Plan, to the
extent the vesting and/or exercisability of any of a Participant's outstanding
Awards shall be accelerated pursuant to this Plan or the terms of the applicable
Award Agreement, if any Award had previously been partially exercised such that
an unexercised portion of the Award still remains outstanding as of the date of
such acceleration, the vesting acceleration provisions of this Plan or the
applicable Award Agreement shall be applied to the total number of shares
subject to such Award that consist of (i) then unvested exercised shares that
were

                                       19
<PAGE>

previously acquired upon the partial exercise of such Award, plus (ii) the
remaining unexercised portion of the Award. The acceleration of vesting shall be
first applied toward the unvested previously exercised shares such that no
unexercised shares shall vest on an accelerated basis in accordance with the
provisions of this Plan or the applicable Award Agreement unless and until all
of the unvested exercised shares subject to such Award have first vested. In
addition, the acceleration of vesting shall be applied to each Award
individually.

                                       20
<PAGE>

                                   APPENDIX I

                                       TO
                          SOMAXON PHARMACEUTICALS, INC.
                        2004 EQUITY INCENTIVE AWARD PLAN

                   CALIFORNIA STATE SECURITIES LAW COMPLIANCE

      Notwithstanding anything to the contrary contained in the Plan, the
provisions set forth in this Appendix shall apply to all Awards granted under
the Somaxon Pharmaceuticals, Inc. 2004 Equity Incentive Award Plan (the "PLAN")
prior to the Public Trading Date. This Appendix shall be of no further force and
effect on or after the Public Trading Date. Definitions as set out in Section 2
of the Plan are applicable to this Appendix.

      The purpose of this Appendix is to set forth those provisions of the Plan
necessary to comply with Section 25102(o) of the California Corporations Code
and the regulations issued thereunder. If any of the provisions contained in
this Appendix are inconsistent with such requirements, such provisions shall be
deemed null and void. The invalidity of any provision of this Appendix shall not
affect the validity or enforceability of any other provision of this Appendix,
which shall remain in full force and effect.

      1.1 Term of Awards. The term of each Award shall be no more than ten years
from the date of grant thereof.

      2.1 Award Exercise or Purchase Price. Except as provided in Article 11,
the per share exercise or purchase price for the Stock to be issued upon
exercise of an Award shall be such price as is determined by the Administrator,
but shall be subject to the following:

      In the case of an Award:

            (a) granted to a Participant who, at the time of grant of such
Award, owns stock representing more than 10% of the voting power of all classes
of stock of the Company or any parent (as defined in Section 175 of the
California Corporations Code) or Subsidiary, the per share exercise or purchase
price shall be no less than 110% of the Fair Market Value per share on the date
of the grant (100% in the case of an Award other than an Option); and

            (b) granted to any other Participant, the per share exercise or
purchase price shall be no less than 85% of the Fair Market Value per share on
the date of grant.

      Notwithstanding the foregoing, Awards may be granted with a per share
exercise or purchase price other than as required above pursuant to a merger or
other corporate transaction.

      3.1 Exercisability. Except with regard to Awards granted to officers,
directors, managers or consultants, in no event shall an Award granted hereunder
become vested and exercisable at a rate of less than 20% per year over five
years from the date the Award is granted, subject to reasonable conditions, such
as continuing to be a service provider.

      4.1 Exercisability Following Termination of Relationship as a Service
Provider.

            (a) Termination Other Than Death or Disability. If a Participant's
employment or service terminates for any reason other than by reason of the
Participant's disability or death, such

                                       21
<PAGE>

Participant may exercise his or her Award within such period of time as is
specified in the Award Agreement to the extent that the Award is vested on the
date of termination; provided, however, that prior to the Public Trading Date,
such period of time shall not be less than thirty days (but in no event later
than the expiration of the term of the Award as set forth in the Award
Agreement). In the absence of a specified time in the Award Agreement, the
Option shall remain exercisable for three months following the Participant's
termination.

            (b) Disability of Participant. If a Participant's employment or
service terminates as a result of the Participant's disability, the Participant
may exercise his or her Award within such period of time as is specified in the
Award Agreement to the extent the Award is vested on the date of termination;
provided, however, that prior to the Public Trading Date, such period of time
shall not be less than six months (but in no event later than the expiration of
the term of such Award as set forth in the Award Agreement). In the absence of a
specified time in the Award Agreement, the Award shall remain exercisable for
twelve months following the Holder's termination.

            (c) Death. If a Participant's employment or service terminates as a
result of the Participant's death, the Award may be exercised within such period
of time as is specified in the Award Agreement; provided, however, that prior to
the Public Trading Date, such period of time shall not be less than six months
(but in no event later than the expiration of the term of such Award as set
forth in the Notice of Grant), by the Participant's estate or by a person who
acquires the right to exercise the Award by bequest or inheritance, but only to
the extent that the Award is vested on the date of death. In the absence of a
specified time in the Award Agreement, the Award shall remain exercisable for
twelve months following the Participant's termination.

      5.1 Repurchase Provisions. In the event the Committee provides that the
Company may repurchase Stock acquired upon exercise of an Award upon the
occurrence of certain specified events, including, without limitation,
termination of a Participant's employment or service, divorce, bankruptcy or
insolvency, then any such repurchase right shall be set forth in the applicable
Award Agreement or in another agreement referred to in such agreement and, to
the extent required by Section 260.140.41 and Section 260.140.42 of Title 10 of
the California Code of Regulations, any such repurchase right set forth in an
Award granted prior to the Public Trading Date to a person who is not an
officer, director, manager or consultant shall be upon the following terms: (i)
if the repurchase option gives the Company the right to repurchase the shares
upon the Participant's termination of employment or service at not less than the
Fair Market Value of the shares to be purchased on the date of termination of
employment or service, then (A) the right to repurchase shall be exercised for
cash or cancellation of purchase money indebtedness for the shares within ninety
days of termination of employment or service (or in the case of shares issued
upon exercise of Awards after such date of termination, within ninety days after
the date of the exercise) or such longer period as may be agreed to by the
Administrator and the Participant and (B) the right terminates on the Public
Trading Date; and (ii) if the repurchase option gives the Company the right to
repurchase the Stock upon the Participant's termination of employment or service
at the original purchase price for such Stock, then (A) the right to repurchase
at the original purchase price shall lapse at the rate of at least 20% of the
shares per year over five (5) years from the date the Award is granted (without
respect to the date the Award was exercised or became exercisable) and (B) the
right to repurchase shall be exercised for cash or cancellation of purchase
money indebtedness for the shares within ninety days of termination of
employment or service (or, in the case of shares issued upon exercise of Awards,
after such date of termination, within ninety days after the date of the
exercise) or such longer period as may be agreed to by the Company and the
Participant.

      6.1 Information Rights. Prior to the Public Trading Date and to the extent
required by Section 260.140.46 of Title 10 of the California Code of
Regulations, the Company shall provide to each Participant and to each
individual who acquires Stock pursuant to the Plan, not less frequently than

                                       22
<PAGE>

annually during the period such Participant has one or more Awards outstanding,
and, in the case of an individual who acquires Stock pursuant to the Plan,
during the period such individual owns such Stock, copies of annual financial
statements. Notwithstanding the preceding sentence, the Company shall not be
required to provide such statements to key employees whose duties in connection
with the Company assure their access to equivalent information.

      7.1 Transferability. Prior to the Public Trading Date, no Award shall be
assigned, transferred, or otherwise disposed of by a Participant other than by
will or the laws of descent and distribution or, with respect to Awards other
than Incentive Stock Options, as permitted by Rule 701 of the Securities Act.

      8.1 Limitation on Number of Shares. Prior to the Public Trading Date, at
no time shall the total number of shares of Stock issuable upon exercise of all
outstanding Options under the Plan and any shares of Stock provided for under
any bonus or similar plan or agreement of the Company exceed 30% of the
then-outstanding shares of Stock of the Company, as calculated pursuant to
Section 260.140.45 of Title 10 of the California Code of Regulations, unless a
percentage higher than 30% is approved by at least two-thirds of the outstanding
securities of the Company entitled to vote. The number of shares of Stock which
may be issued or transferred pursuant to Awards under the Plan shall be reduced
to the extent necessary to comply with this provision.

                                       23
<PAGE>

                          SOMAXON PHARMACEUTICALS, INC.

              STOCK OPTION GRANT NOTICE AND STOCK OPTION AGREEMENT
                   UNDER THE 2004 EQUITY INCENTIVE AWARD PLAN

      Somaxon Pharmaceuticals, Inc. (the "COMPANY"), pursuant to its 2004 Equity
Incentive Award Plan (the "PLAN"), hereby grants to the Optionee listed below
("OPTIONEE"), an option to purchase the number of shares of the Company's Stock
set forth below. This option is subject to all of the terms and conditions as
set forth herein and in the Stock Option Agreement and the Plan, each of which
are attached hereto and incorporated herein by reference. Unless otherwise
defined herein, the terms defined in the Plan shall have the same meanings in
this Stock Option Agreement.

OPTIONEE:                                       ________________________________

GRANT DATE:                                     ________________________________

VESTING COMMENCEMENT DATE:                      ________________________________

EXERCISE PRICE PER SHARE:                       ________________________________

TOTAL NUMBER OF SHARES GRANTED:                 ________________________________

TOTAL EXERCISE PRICE:                           ________________________________

EXPIRATION DATE:                                ________________________________

TYPE OF OPTION:    [] Incentive Stock Option    [] Non-Qualified Stock Option

VESTING SCHEDULE:  [To be specified in individual agreements]

      By his or her signature and the Company's signature below, Optionee agrees
to be bound by the terms and conditions of the Plan and the Stock Option
Agreement attached hereto. Optionee has reviewed the Stock Option Agreement and
the Plan in their entirety, has had an opportunity to obtain the advice of
counsel prior to executing this option and fully understands all provisions of
the Grant Notice, the Stock Option Agreement and the Plan. Optionee hereby
agrees to accept as binding, conclusive and final all decisions or
interpretations of the administrator of the Plan upon any questions arising
under the Plan or this option. Optionee further agrees to notify the Company
upon any change in the residence address indicated below.

SOMAXON PHARMACEUTICALS, INC.:                   OPTIONEE:

By: ____________________________________         By: ___________________________
Print Name: ____________________________         Print Name: ___________________
Title: _________________________________         Address: ______________________
Address: 12750 High Bluff Drive, Suite 310                ______________________
         San Diego, CA 92130

                                       24
<PAGE>

                          SOMAXON PHARMACEUTICALS, INC.
                        2004 EQUITY INCENTIVE AWARD PLAN

                             STOCK OPTION AGREEMENT

      Pursuant to the Stock Option Grant Notice ("GRANT NOTICE") to which this
Stock Option Agreement (this "AGREEMENT") is attached, Somaxon Pharmaceuticals,
Inc. (the "COMPANY") has granted to the Optionee an option under the Company's
2004 Equity Incentive Award Plan (the "PLAN") to purchase the number of shares
of Stock indicated in the Grant Notice at the exercise price indicated in the
Grant Notice. Unless otherwise defined herein, the terms defined in the Plan
shall have the same defined meanings in this Stock Option Agreement.

                                    ARTICLE I
                                   DEFINITIONS

      1.1 General. Wherever the following terms are used in this Agreement they
shall have the meanings specified below, unless the context clearly indicates
otherwise. Capitalized terms not specifically defined herein shall have the
meanings specified in the Plan.

            (a) "DIRECTOR" means a member of the Board. "DIRECTOR" shall include
both a member of the Board who is an Employee and a "NON-EMPLOYEE DIRECTOR" (as
defined in the Plan).

            (b) "EXERCISE NOTICE" means a written notice to the Company,
substantially in the form attached hereto as Exhibit A (or such other form as
the Committee shall approve), stating that the Option or a portion of the Option
is exercised.

            (c) "GRANT DATE" means the date of grant set forth in the Grant
Notice.

            (d) "MANAGING UNDERWRITER" shall have the meaning set forth in
Section 5.3.

            (e) "MARKET STANDOFF PERIOD" shall have the meaning set forth in
Section 5.3.

            (f) "SECRETARY" means the Secretary of the Company.

            (g) "TERMINATION OF SERVICE" means the time when the service
relationship (whether as an Employee or a consultant) between the Optionee and
the Company or any Subsidiary is terminated for any reason, with or without
Cause, including, but not by way of limitation, a termination by resignation,
discharge, death or Disability; but excluding (a) a termination where there is a
simultaneous reemployment or continuing employment or consultancy of the
Optionee by the Company or any Subsidiary or a parent corporation thereof
(within the meaning of Section 422 of the Code), (b) at the discretion of the
Committee, a termination which results in a temporary severance of the
employee-employer relationship, and (c) at the discretion of the Committee, a
termination which is followed by the simultaneous establishment of a consulting
relationship by the Company or a Subsidiary with the former Employee. The
Committee, in its absolute discretion, shall determine the effect of all matters
and questions relating to Termination of Service for the purposes of this
Agreement, including, but not by way of limitation, the question of whether, for
Optionees who are Employees of the Company or any of its Subsidiaries, a
Termination of Service resulted from a discharge for Cause, and all questions of
whether particular leaves of absence for Optionees who are Employees of the
Company or any of its Subsidiaries constitute Terminations of Service; provided,
however, that, if this Option is designated as an Incentive Stock Option, unless
otherwise determined by the Administrator in its discretion, a leave of

<PAGE>

absence, change in status from an Employee to an independent contractor or other
change in the employee-employer relationship shall constitute a Termination of
Service if, and to the extent that, such leave of absence, change in status or
other change interrupts employment for the purposes of Section 422(a)(2) of the
Code and the then applicable regulations and revenue rulings under said Section.
Notwithstanding any other provision of the Plan or this Agreement, the Company
or any Subsidiary has an absolute and unrestricted right to terminate the
Optionee's employment and/or consultancy at any time for any reason whatsoever,
with or without Cause, except to the extent expressly provided otherwise in a
written agreement between the Company and the Optionee.

                                   ARTICLE II
                                 GRANT OF OPTION

      2.1 Grant of Option. In consideration of the Optionee's agreement to
remain in the employ of the Company or its Subsidiaries and for other good and
valuable consideration, effective as of the Grant Date set forth in the Grant
Notice, the Company irrevocably grants to the Optionee the Option to purchase
any part or all of an aggregate of the number of shares of Stock set forth in
the Grant Notice, upon the terms and conditions set forth in this Agreement.
Unless designated as a Non-Qualified Stock Option in the Grant Notice, the
Option shall be an Incentive Stock Option to the maximum extent permitted by
law.

      2.2 Purchase Price. The purchase price of the shares of Stock subject to
the Option per share shall be as set forth in the Grant Notice, without
commission or other charge; provided, however, that if this Option is designated
as an Incentive Stock Option the price per share of the shares subject to the
Option shall not be less than the greater of (i) 100% of the Fair Market Value
of a share of Stock on the Grant Date, or (ii) 110% of the Fair Market Value of
a share of Stock on the Grant Date in the case of an Optionee then owning
(within the meaning of Section 424(d) of the Code) more than 10% of the total
combined voting power of all classes of stock of the Company or any Subsidiary
or parent corporation thereof (within the meaning of Section 422 of the Code).

      2.3 Consideration to the Company. In consideration of the granting of the
Option by the Company, the Optionee agrees to render faithful and efficient
services to the Company or any Subsidiary, with such duties and responsibilities
as the Company shall from time to time prescribe. Nothing in the Plan or this
Agreement shall confer upon the Optionee any right to (a) continue in the employ
of the Company or any Subsidiary or shall interfere with or restrict in any way
the rights of the Company and its Subsidiaries, which are hereby expressly
reserved, to discharge the Optionee, if the Optionee is an Employee, or (b)
continue to provide services to the Company or any Subsidiary or shall interfere
with or restrict in any way the rights of the Company or its Subsidiaries, which
are hereby expressly reserved, to terminate the services of Optionee, if the
Optionee is a Consultant, at any time for any reason whatsoever, with or without
Cause, except to the extent expressly provided otherwise in a written agreement
between the Company and the Optionee.

                                   ARTICLE III
                            PERIOD OF EXERCISABILITY

      3.1 Commencement of Exercisability.

      (a) Subject to Sections 3.3 and 5.11, the Option shall become exercisable
in such amounts and at such times as are set forth in the Grant Notice.

      (b) No portion of the Option which has not become exercisable at
Termination of Service

<PAGE>

shall thereafter become exercisable, except as may be otherwise provided by the
Committee or as set forth in a written agreement between the Company and the
Optionee.

      3.2 Duration of Exercisability. The installments provided for in Section
3.1(a) are cumulative. Each such installment which becomes exercisable pursuant
to Section 3.1 shall remain exercisable until it becomes unexercisable under
Section 3.3.

      3.3 Expiration of Option. The Option may not be exercised to any extent by
anyone after the first to occur of the following events:

      (a) The expiration of ten years from the Grant Date; or

      (b) If this Option is designated as an Incentive Stock Option and the
Optionee owned (within the meaning of Section 424(d) of the Code), at the time
the Option was granted, more than 10% of the total combined voting power of all
classes of stock of the Company or any Subsidiary or parent corporation thereof
(within the meaning of Section 422 of the Code), the expiration of five years
from the date the Option was granted; or

      (c) The expiration of ninety days following the date of the Optionee's
Termination of Service, unless such Termination of Service occurs by reason of
the Optionee's death, or Disability or as set forth in a written agreement with
the Company; or

      (d) The expiration of one year following the date of the Optionee's
Termination of Service by reason of the Optionee's death or Disability if
Optionee is an Employee of the Company or any of its Subsidiaries.

      3.4 Special Tax Consequences. The Optionee acknowledges that, to the
extent that the aggregate Fair Market Value of stock with respect to which
Incentive Stock Options (but without regard to Section 422(d) of the Code),
including the Option, are exercisable for the first time by the Optionee during
any calendar year (under the Plan and all other incentive stock option plans of
the Company, any Subsidiary and any parent corporation thereof (within the
meaning of Section 422 of the Code)) exceeds $100,000, the Option and such other
options shall be treated as not qualifying under Section 422 of the Code but
rather shall be taxed as Non-Qualified Stock Options. The Optionee further
acknowledges that the rule set forth in the preceding sentence shall be applied
by taking options into account in the order in which they were granted. For
purposes of these rules, the Fair Market Value of Stock shall be determined as
of the time the option with respect to such Stock is granted.

                                   ARTICLE IV
                               EXERCISE OF OPTION

      4.1 Person Eligible to Exercise. Except as provided in Sections 5.2(b) and
5.2(c), during the lifetime of the Optionee, only the Optionee may exercise the
Option or any portion thereof. After the death of the Optionee, any exercisable
portion of the Option may, prior to the time when the Option becomes
unexercisable under Section 3.3, be exercised by the Optionee's beneficiary
designated in accordance with Section 10.4 of the Plan. If no beneficiary has
been designated or survives the Optionee, the Option may be exercised by the
person entitled to such exercise pursuant to the Optionee's will or the laws of
descent and distribution.

      4.2 Partial Exercise. Any exercisable portion of the Option or the entire
Option, if then wholly exercisable, may be exercised in whole or in part at any
time prior to the time when the Option or

<PAGE>

portion thereof becomes unexercisable under Section 3.3.

      4.3 Manner of Exercise. The Option, or any exercisable portion thereof,
may be exercised solely by delivery to the Secretary or the Secretary's office
of all of the following prior to the time when the Option or such portion
thereof becomes unexercisable under Section 3.3:

      (a) An Exercise Notice in writing signed by the Optionee or the other
person then entitled to exercise the Option or portion thereof, stating that the
Option or portion thereof is thereby exercised, such notice complying with all
applicable rules established by the Committee. Such notice shall be
substantially in the form attached as Exhibit A (or such other form as is
prescribed by the Committee); and

            (b) (i) Full payment (in cash or by check) for the shares with
      respect to which the Option or portion thereof is exercised, to the extent
      permitted under applicable laws; or

            (ii) With the consent of the Committee, such payment may be made, in
      whole or in part, through the delivery of shares of Stock which have been
      owned by the Optionee for at least six months, duly endorsed for transfer
      to the Company with a Fair Market Value on the date of delivery equal to
      the aggregate exercise price of the Option or exercised portion thereof;
      or

            (iii) To the extent permitted under applicable laws, through the
      delivery of a notice that the Optionee has placed a market sell order with
      a broker with respect to shares of Stock then issuable upon exercise of
      the Option, and that the broker has been directed to pay a sufficient
      portion of the net proceeds of the sale to the Company in satisfaction of
      the Option exercise price, provided, that payment of such proceeds is made
      to the Company upon settlement of such sale; or

            (iv) With the consent of the Committee, any combination of the
      consideration provided in the foregoing subparagraphs (i), (ii) and (iii);
      and

      (c) A bona fide written representation and agreement, in such form as is
prescribed by the Committee, signed by the Optionee or other person then
entitled to exercise such Option or portion thereof, stating that the shares of
Stock are being acquired for the Optionee's own account, for investment and
without any present intention of distributing or reselling said shares or any of
them except as may be permitted under the Securities Act and then applicable
rules and regulations thereunder, and that the Optionee or other person then
entitled to exercise such Option or portion thereof will indemnify the Company
against and hold it free and harmless from any loss, damage, expense or
liability resulting to the Company if any sale or distribution of the shares by
such person is contrary to the representation and agreement referred to above.
The Committee may, in its absolute discretion, take whatever additional actions
it deems appropriate to ensure the observance and performance of such
representation and agreement and to effect compliance with the Securities Act
and any other federal or state securities laws or regulations. Without limiting
the generality of the foregoing, the Committee may require an opinion of counsel
acceptable to it to the effect that any subsequent transfer of shares acquired
on an Option exercise does not violate the Securities Act, and may issue
stop-transfer orders covering such shares. Share certificates evidencing Stock
issued on exercise of the Option shall bear an appropriate legend referring to
the provisions of this subsection (c) and the agreements herein. The written
representation and agreement referred to in the first sentence of this
subsection (c) shall, however, not be required if the shares to be issued
pursuant to such exercise have been registered under the Securities Act, and
such registration is then effective in respect of such shares; and

      (d) Full payment to the Company (or other employer corporation) of all
amounts which,

<PAGE>

under federal, state or local tax law, it is required to withhold upon exercise
of the Option. With the consent of the Committee, (i) shares of Stock owned by
the Optionee for at least six months duly endorsed for transfer or (ii) shares
of Stock issuable to the Optionee upon exercise of the Option, having a Fair
Market Value at the date of Option exercise equal to the statutory minimum sums
required to be withheld, may be used to make all or part of such payment; and

      (e) In the event the Option or portion thereof shall be exercised pursuant
to Section 4.1 by any person or persons other than the Optionee, appropriate
proof of the right of such person or persons to exercise the Option.

      4.4 Conditions to Issuance of Stock Certificates. The shares of Stock
deliverable upon the exercise of the Option, or any portion thereof, may be
either previously authorized but unissued shares or issued shares which have
then been reacquired by the Company. Such shares shall be fully paid and
nonassessable. The Company shall not be required to issue or deliver any
certificate or certificates for shares of Stock purchased upon the exercise of
the Option or portion thereof prior to fulfillment of all of the following
conditions:

      (a) The admission of such shares to listing on all stock exchanges on
which such Stock is then listed; and

      (b) The completion of any registration or other qualification of such
shares under any state or federal law or under rulings or regulations of the
Securities and Exchange Commission or of any other governmental regulatory body,
which the Committee shall, in its absolute discretion, deem necessary or
advisable; and

      (c) The obtaining of any approval or other clearance from any state or
federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable; and

      (d) The receipt by the Company of full payment for such shares, including
payment of all amounts which, under federal, state or local tax law, the Company
(or other employer corporation) is required to withhold upon exercise of the
Option; and

      (e) The lapse of such reasonable period of time following the exercise of
the Option as the Committee may from time to time establish for reasons of
administrative convenience.

      4.5 Rights as Stockholder. The holder of the Option shall not be, nor have
any of the rights or privileges of, a stockholder of the Company in respect of
any shares purchasable upon the exercise of any part of the Option unless and
until such shares shall have been issued by the Company to such holder.

                                    ARTICLE V
                                OTHER PROVISIONS

      5.1 Administration. The Committee shall have the power to interpret the
Plan and this Agreement and to adopt such rules for the administration,
interpretation and application of the Plan as are consistent therewith and to
interpret, amend or revoke any such rules. All actions taken and all
interpretations and determinations made by the Committee in good faith shall be
final and binding upon the Optionee, the Company and all other interested
persons. No member of the Committee shall be personally liable for any action,
determination or interpretation made in good faith with respect to the Plan,
this Agreement or the Option. In its absolute discretion, the Board may at any
time and from time to time exercise any and all rights and duties of the
Committee under the Plan and this Agreement.

<PAGE>

      5.2 Option Not Transferable.

      (a) Subject to Section 5.2(b), the Option may not be sold, pledged,
assigned or transferred in any manner other than by will or the laws of descent
and distribution unless and until the Option has been exercised, or the shares
underlying such Option have been issued, and all restrictions applicable to such
shares have lapsed. Neither the Option nor any interest or right therein shall
be liable for the debts, contracts or engagements of the Optionee or his or her
successors in interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment or any other means
whether such disposition be voluntary or involuntary or by operation of law by
judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect, except to the extent that such disposition is
permitted by the preceding sentence.

      (b) Notwithstanding any other provision in this Agreement, with the
consent of the Committee and to the extent the Option is not intended to qualify
as an Incentive Stock Option, the Option may be transferred to, exercised by and
paid to certain persons or entities related to the Optionee, including but not
limited to members of the Optionee's family, charitable institutes or trusts or
other entities whose beneficiaries or beneficial owners are members of the
Optionee's family or to such other persons or entities as may be expressly
approved by the Committee (each a "Permitted Transferee"), pursuant to such
conditions and procedures as the Committee may require.

      (c) Unless transferred to a Permitted Transferee in accordance with
Section 5.2(b), during the lifetime of the Optionee, only the Optionee may
exercise the Option or any portion thereof. Subject to such conditions and
procedures as the Committee may require, a Permitted Transferee may exercise the
Option or any portion thereof during the Optionee's lifetime. After the death of
the Optionee, any exercisable portion of the Option may, prior to the time when
the Option becomes unexercisable under Section 3.3, be exercised by the
Optionee's beneficiary designated in accordance with Section 10.4 of the Plan.
If no beneficiary has been designated or survives the Optionee, the Option may
be exercised by the person entitled to such exercise pursuant to the Optionee's
will or the laws of descent and distribution.

      5.3 Lock-Up Period. The Optionee hereby agrees that, if so requested by
the Company or any representative of the underwriters (the "MANAGING
UNDERWRITER") in connection with any registration of the offering of any
securities of the Company under the Securities Act, the Optionee shall not sell
or otherwise transfer any shares of Stock or other securities of the Company
during such period as may be requested in writing by the Managing Underwriter
and agreed to in writing by the Company (which period shall not be longer than
one hundred eighty days) (the "MARKET STANDOFF PERIOD") following the effective
date of a registration statement of the Company filed under the Securities Act;
provided, however, that such restriction shall apply only to the first
registration statement of the Company to become effective under the Securities
Act that includes securities to be sold on behalf of the Company to the public
in an underwritten public offering under the Securities Act.

      5.4 Restrictive Legends and Stop-Transfer Orders.

      (a) The share certificate or certificates evidencing the shares of Stock
purchased hereunder shall be endorsed with any legends that may be required by
state or federal securities laws.

      (b) The Optionee 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.

<PAGE>

      (c) The Company shall not be required: (i) to transfer on its books any
shares of Stock 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 of
Stock 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.

      5.5 Shares to Be Reserved. The Company shall at all times during the term
of the Option reserve and keep available such number of shares of Stock as will
be sufficient to satisfy the requirements of this Agreement.

      5.6 Notices. Any notice to be given under the terms of this Agreement to
the Company shall be addressed to the Company in care of the Secretary, and any
notice to be given to the Optionee shall be addressed to the Optionee at the
address given beneath the Optionee's signature on the Grant Notice. By a notice
given pursuant to this Section 5.6, either party may hereafter designate a
different address for notices to be given to that party. Any notice which is
required to be given to the Optionee shall, if the Optionee is then deceased, be
given to the Optionee's designated beneficiary if any, or the person otherwise
entitled to exercise his or her Option pursuant to Section 4.1 by written notice
under this Section 5.6. Any notice shall be deemed duly given when sent via
email or enclosed in a properly sealed envelope or wrapper addressed as
aforesaid and deposited (with postage prepaid) in a post office or branch post
office regularly maintained by the United States Postal Service.

      5.7 Titles. Titles are provided herein for convenience only and are not to
serve as a basis for interpretation or construction of this Agreement.

      5.8 Stockholder Approval. The Plan will be submitted for approval by the
Company's stockholders within twelve months after the date the Plan was
initially adopted by the Board. The Option may not be exercised to any extent by
anyone prior to the time when the Plan is approved by the stockholders, and if
such approval has not been obtained by the end of said twelve month period, the
Option shall thereupon be canceled and become null and void.

      5.9 Notification of Disposition. If this Option is designated as an
Incentive Stock Option, the Optionee shall give prompt notice to the Company of
any disposition or other transfer of any shares of stock acquired under this
Agreement if such disposition or transfer is made (a) within two years from the
Grant Date with respect to such shares or (b) within one year after the transfer
of such shares to him. Such notice shall specify the date of such disposition or
other transfer and the amount realized, in cash, other property, assumption of
indebtedness or other consideration, by the Optionee in such disposition or
other transfer.

      5.10 Construction. This Agreement shall be administered, interpreted and
enforced under the laws of the State of Delaware without regard to conflicts of
laws thereof.

      5.11 Conformity to Securities Laws. The Optionee acknowledges that the
Plan is intended to conform to the extent necessary with all provisions of the
Securities Act and the Exchange Act and any and all regulations and rules
promulgated by the Securities and Exchange Commission thereunder, and state
securities laws and regulations. Notwithstanding anything herein to the
contrary, the Plan shall be administered, and the Option is granted and may be
exercised, only in such a manner as to conform to such laws, rules and
regulations. To the extent permitted by applicable law, the Plan and this
Agreement shall be deemed amended to the extent necessary to conform to such
laws, rules and regulations.

      5.12 Amendments. This Agreement may not be modified, amended or terminated
except by an instrument in writing, signed by the Optionee or such other person
as may be permitted to exercise the

<PAGE>

Option pursuant to Section 4.1 and by a duly authorized representative of the
Company.
<PAGE>

                                    EXHIBIT A

                   TO GRANT NOTICE AND STOCK OPTION AGREEMENT

                             FORM OF EXERCISE NOTICE

      Effective as of today, ___________, _____, the undersigned ("OPTIONEE")
hereby elects to exercise Optionee's option to purchase _________ shares of the
Common Stock (the "SHARES") of Somaxon Pharmaceuticals, Inc. (the "COMPANY")
under and pursuant to the Somaxon Pharmaceuticals, Inc. 2004 Equity Incentive
Award Plan (the "PLAN") and the Grant Notice and Stock Option Agreement dated
_______________, (the "OPTION AGREEMENT"). Capitalized terms used herein without
definition shall have the meanings given in the Option Agreement.

GRANT DATE:
                                         ____________________________
NUMBER OF SHARES AS TO WHICH OPTION IS
EXERCISED:                               ____________________________

EXERCISE PRICE PER SHARE:
                                         ____________________________
TOTAL EXERCISE PRICE:

CERTIFICATE TO BE ISSUED IN NAME OF:     ____________________________

CASH PAYMENT DELIVERED HEREWITH:         $____________ (Representing the full
                                         Exercise Price for the Shares, as well
                                         as any applicable withholding tax)

TYPE OF OPTION:      [ ] Incentive Stock Option  [ ]  Non-Qualified Stock Option

      1. Representations of Optionee. Optionee acknowledges that Optionee has
received, read and understood the Plan and the Option Agreement. Optionee agrees
to abide by and be bound by their terms and conditions.

      2. Rights as Stockholder. Until the Shares are issued (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company), no right to vote or receive dividends or any other rights
as a stockholder shall exist with respect to Shares subject to the Option,
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued) a stock certificate evidencing such Shares promptly after the Option
is exercised. No adjustment will be made for a dividend or other right for which
the record date is prior to the date the stock certificate is issued, except as
provided in Article 11 of the Plan.

      Optionee shall enjoy rights as a stockholder until such time as Optionee
disposes of the Shares or the Company and/or its assignee(s) exercises the Right
of First Refusal hereunder. Upon such exercise, Optionee shall have no further
rights as a holder of the Shares so purchased except the right to receive
payment for the Shares so purchased in accordance with the provisions of this
Agreement, and Optionee shall forthwith cause the certificate(s) evidencing the
Shares so purchased to be surrendered to the Company for transfer or
cancellation.

<PAGE>

3.    Optionee's Rights to Transfer Shares.

      (a) Company's Right of First Refusal. Before any Shares held by Optionee
or any permitted transferee (each, a "HOLDER") may be sold, pledged, assigned,
hypothecated, transferred, or otherwise disposed of (each, a "TRANSFER"), the
Company or its assignee(s) shall have a right of first refusal to purchase the
Shares proposed to be Transferred on the terms and conditions set forth in this
Section (the "RIGHT OF FIRST REFUSAL").

      (b) Notice of Proposed Transfer. In the event any Holder desires to
Transfer any Shares, the Holder 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
other transferee ("PROPOSED TRANSFEREE"); (iii) the number of Shares to be
Transferred to each Proposed Transferee; and (iv) the bona fide cash price for
which the Holder proposes to Transfer the Shares (the "OFFERED PRICE"), and the
Holder shall offer such Shares at the Offered Price to the Company or its
assignee(s).

      (c) Exercise of Right of First Refusal. Within thirty days after receipt
of the Notice, the Company and/or its assignee(s) may elect in writing to
purchase all, but not less than all, of the Shares proposed to be Transferred to
any one or more of the Proposed Transferees. The purchase price will be
determined in accordance with subsection (iii) below.

      (d) Purchase Price. The purchase price ("PURCHASE PRICE") for the Shares
repurchased under this Section shall be the Offered Price.

      (e) 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 of the Holder to the Company (or, in the
case of repurchase by an assignee, to the assignee), or by any combination
thereof within thirty days after receipt of the Notice or in the manner and at
the times mutually agreed to by the Company and the Holder.

      (f) Holder's Right to Transfer. If all of the Shares proposed in the
Notice to be Transferred are not purchased by the Company and/or its assignee(s)
as provided in this Section, 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 one hundred
twenty 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 and the Restricted Stock Purchase Agreement, if applicable, 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 one hundred twenty-day period, 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 as provided herein before any Shares held by the Holder may be
sold or otherwise Transferred.

      (g) Exception for Certain Family Transfers. Anything to the contrary
contained in this Section notwithstanding, the Transfer of any or all of the
Shares during the Optionee's lifetime or upon the Optionee's death by will or
intestacy to the Optionee's Immediate Family or a trust for the benefit of the
Optionee's Immediate Family shall be exempt from the Right of First Refusal. As
used herein, "IMMEDIATE FAMILY" shall mean spouse, lineal descendant or
antecedent, father, mother, brother or sister or stepchild (whether or not
adopted). In such case, the transferee or other recipient shall receive and hold
the Shares so Transferred subject to the provisions of this Section (including
the Right of First Refusal) and the Restricted Stock Purchase Agreement, if
applicable, and there shall be no further Transfer of such Shares except in
accordance with the terms of this Section.

      (h) Termination of Right of First Refusal. The Right of First Refusal
shall terminate as to all Shares upon a 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 (a "PUBLIC OFFERING").

      (i) Transfer Restrictions. Any transfer or sale of the Shares is subject
to restrictions on transfer imposed by any applicable state and federal
securities laws. Any Transfer or attempted Transfer of any of the Shares

<PAGE>

not in accordance with the terms of this Agreement shall be void and the Company
may enforce the terms of this Agreement by stop transfer instructions or similar
actions by the Company and its agents or designees.

      4. Tax Consultation. Optionee understands that Optionee may suffer adverse
tax consequences as a result of Optionee's purchase or disposition of the
Shares. Optionee represents that Optionee has consulted with any tax consultants
Optionee deems advisable in connection with the purchase or disposition of the
Shares and that Optionee is not relying on the Company for any tax advice.

      5. Restrictive Legends and Stop-Transfer Orders.

            (a) Legends. Optionee understands and agrees that the Company shall
cause the legends set forth below or legends substantially equivalent thereto,
to be placed upon any certificate(s) evidencing ownership of the Shares together
with any other legends that may be required by state or federal securities laws:

            THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
            SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR
            OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
            REGISTERED UNDER THE ACT OR, IN THE OPINION OF COUNSEL IN FORM AND
            SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH
            OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE
            THEREWITH.

            THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
            RESTRICTIONS ON TRANSFER AND RIGHT OF FIRST REFUSAL OPTIONS HELD BY
            THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN THE EXERCISE NOTICE
            BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY
            OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH
            TRANSFER RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON
            TRANSFEREES OF THESE SHARES.

            (b) Stop-Transfer Notices. Optionee 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. Optionee Representations. Optionee hereby makes the following
certifications and representations with respect to the Shares listed above:

            (a) Optionee 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. Optionee is
acquiring these Shares for investment for Optionee's 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 of 1933, as amended (the "SECURITIES
ACT").

            (b) Optionee acknowledges and understands that the Shares constitute
"restricted securities" under the Securities Act and have not been registered
under the Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of Optionee's
investment intent

<PAGE>

as expressed herein. Optionee understands that the Shares must be held
indefinitely unless they are subsequently registered under the Securities Act or
an exemption from such registration is available. Optionee further acknowledges
and understands that the Company is under no obligation to register the Shares.
Optionee understands that the certificate evidencing the Securities will be
imprinted with a legend which prohibits the transfer of the Shares unless they
are registered or such registration is not required in the opinion of counsel
satisfactory to the Company and any other legend required under applicable state
securities laws.

            (c) Optionee is familiar with the provisions of Rule 701 and Rule
144, each promulgated under the Securities Act, which, in substance, permit
limited public resale of "restricted securities" acquired, directly or
indirectly from the issuer thereof, in a non-public offering subject to the
satisfaction of certain conditions. Rule 701 provides that if the issuer
qualifies under Rule 701 at the time of the grant of the Option to the Optionee,
the exercise will be exempt from registration under the Securities Act. In the
event the Company becomes subject to the reporting requirements of Section 13 or
15(d) of the Securities Exchange Act of 1934, ninety days thereafter (or such
longer period as any market stand-off agreement may require) the Securities
exempt under Rule 701 may be resold, subject to the satisfaction of certain of
the conditions specified by Rule 144, including: (i) the resale being made
through a broker in an unsolicited "broker's transaction" or in transactions
directly with a market maker (as said term is defined under the Securities
Exchange Act of 1934); and, in the case of an affiliate, (ii) the availability
of certain public information about the Company, (iii) the amount of Securities
being sold during any three month period not exceeding the limitations specified
in Rule 144(e), and (iv) the timely filing of a Form 144, if applicable.

            (d) In the event that the Company does not qualify under Rule 701 at
the time of grant of the Option, then the Securities may be resold in certain
limited circumstances subject to the provisions of Rule 144, which requires the
resale to occur not less than one year after the later of the date the
Securities were sold by the Company or the date the Securities were sold by an
affiliate of the Company, within the meaning of Rule 144; and, in the case of
acquisition of the Securities by an affiliate, or by a non-affiliate who
subsequently holds the Securities less than two years, the satisfaction of the
conditions set forth in sections (i), (ii), (iii) and (iv) of paragraph (c)
above.

            (e) Optionee further understands that in the event all of the
applicable requirements of Rule 701 or 144 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
Rules 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. Optionee understands that no assurances can be given that any
such other registration exemption will be available in such event.

      7. Successors and Assigns. The Company may assign any of its rights under
this Agreement to single or multiple assignees, and this Agreement shall inure
to the benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer herein set forth, this Agreement shall be binding upon
Optionee and his or her heirs, executors, administrators, successors and
assigns.

      8. Interpretation. Any dispute regarding the interpretation of this
Agreement shall be submitted by Optionee or by the Company forthwith to the
Committee, which shall review such dispute at its next regular meeting. The
resolution of such a dispute by the Administrator shall be final and binding on
the Company and on Optionee.

      9. Governing Law; Severability. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware excluding that
body of law pertaining to conflicts of law. Should any provision of this
Agreement be determined by a court of law to be illegal or unenforceable, the
other provisions shall nevertheless remain effective and shall remain
enforceable.

      10. Notices. Any notice required or permitted hereunder shall be given in
accordance with the provisions set forth in Section 5.6 of the Option Agreement.

      11. Further Instruments. The parties agree to execute such further
instruments and to take such further

<PAGE>

action as may be reasonably necessary to carry out the purposes and intent of
this Agreement.

      13. Entire Agreement. The Plan and Option Agreement are incorporated
herein by reference. This Agreement, the Plan and the Option Agreement
constitute the entire agreement of the parties and supersede in their entirety
all prior undertakings and agreements of the Company and Optionee with respect
to the subject matter hereof.

                            (SIGNATURE PAGE FOLLOWS)

ACCEPTED BY:                          SUBMITTED BY:

SOMAXON PHARMACEUTICALS, INC.:        OPTIONEE

By: ______________________________    ______________________________

Name: ____________________________    [Name of Optionee]

Its: _____________________________

                                      Address:
                                      ______________________________
                                      ______________________________
                                      ______________________________

<PAGE>

                          SOMAXON PHARMACEUTICALS, INC.
              STOCK OPTION GRANT NOTICE AND STOCK OPTION AGREEMENT
                   UNDER THE 2004 EQUITY INCENTIVE AWARD PLAN

      Somaxon Pharmaceuticals, Inc. (the "COMPANY"), pursuant to its 2004 Equity
Incentive Award Plan (the "PLAN"), hereby grants to the Optionee listed below
("OPTIONEE"), an option to purchase the number of shares of the Company's Stock
set forth below. This option is subject to all of the terms and conditions as
set forth herein and in the Stock Option Agreement and the Plan, each of which
are attached hereto and incorporated herein by reference. Unless otherwise
defined herein, the terms defined in the Plan shall have the same meanings in
this Stock Option Agreement.

OPTIONEE:                             _________________________________

GRANT DATE:                           _________________________________

VESTING COMMENCEMENT DATE:            _________________________________

EXERCISE PRICE PER SHARE:             _________________________________

TOTAL NUMBER OF SHARES GRANTED:       _________________________________

TOTAL EXERCISE PRICE:                 _________________________________

EXPIRATION DATE:                      _________________________________

TYPE OF OPTION:         []Incentive Stock Option   [] Non-Qualified Stock Option

EXERCISE SCHEDULE:      [x] Early Exercise Permitted

VESTING SCHEDULE:      This Option is exercisable immediately, in
                       whole or in part, at such times as are established by
                       the Committee, conditioned upon Optionee entering
                       into a Restricted Stock Purchase Agreement with
                       respect to any unvested shares of Stock. The shares
                       subject to this Option shall vest and/or be released
                       from the Company's Repurchase Option, as set forth in
                       the Restricted Stock Purchase Agreement attached
                       hereto as Exhibit B (the "Restricted Stock Purchase
                       Agreement"), according to the following schedule:

                       [To be specified in individual agreements]

      By his or her signature and the Company's signature below, Optionee agrees
to be bound by the terms and conditions of the Plan and the Stock Option
Agreement attached hereto. Optionee has reviewed the Stock Option Agreement and
the Plan in their entirety, has had an opportunity to obtain the advice of
counsel prior to executing this option and fully understands all provisions of
the Grant Notice, the Stock Option Agreement and the Plan. Optionee hereby
agrees to accept as binding, conclusive and final all decisions or
interpretations of the administrator of the Plan upon any questions arising
under the Plan or this option. Optionee further agrees to notify the Company
upon any change in the residence address indicated below.

SOMAXON PHARMACEUTICALS, INC.:                  OPTIONEE:
By: _________________________                   By: _________________________

Print Name: _________________________           Print Name: ___________________
-
Title:     _________________________

Address:   12750 High Bluff Drive, Suite 310    Address:   _____________________
           San Diego, CA 92130                             _____________________

<PAGE>

                          SOMAXON PHARMACEUTICALS, INC.
                        2004 EQUITY INCENTIVE AWARD PLAN

                             STOCK OPTION AGREEMENT

      Pursuant to the Stock Option Grant Notice ("GRANT NOTICE") to which this
Stock Option Agreement (this "AGREEMENT") is attached, Somaxon Pharmaceuticals,
Inc. (the "COMPANY") has granted to the Optionee an option under the Company's
2004 Equity Incentive Award Plan (the "PLAN") to purchase the number of shares
of Stock indicated in the Grant Notice at the exercise price indicated in the
Grant Notice. Unless otherwise defined herein, the terms defined in the Plan
shall have the same defined meanings in this Stock Option Agreement.

                                    ARTICLE I
                                   DEFINITIONS

      1.1 General. Wherever the following terms are used in this Agreement they
shall have the meanings specified below, unless the context clearly indicates
otherwise. Capitalized terms not specifically defined herein shall have the
meanings specified in the Plan.

            (a) "DIRECTOR" means a member of the Board. "DIRECTOR" shall include
both a member of the Board who is an Employee and a "NON-EMPLOYEE DIRECTOR" (as
defined in the Plan).

            (b) "EXERCISE NOTICE" means a written notice to the Company,
substantially in the form attached hereto as Exhibit A (or such other form as
the Committee shall approve), stating that the Option or a portion of the Option
is exercised.

            (c) "GRANT DATE" means the date of grant set forth in the Grant
Notice.

            (d) "MANAGING UNDERWRITER" shall have the meaning set forth in
Section 5.3.

            (e) "MARKET STANDOFF PERIOD" shall have the meaning set forth in
Section 5.3.

            (f) "SECRETARY" means the Secretary of the Company.

            (g) "TERMINATION OF SERVICE" means the time when the service
relationship (whether as an Employee or a consultant) between the Optionee and
the Company or any Subsidiary is terminated for any reason, with or without
Cause, including, but not by way of limitation, a termination by resignation,
discharge, death or Disability; but excluding (a) a termination where there is a
simultaneous reemployment or continuing employment or consultancy of the
Optionee by the Company or any Subsidiary or a parent corporation thereof
(within the meaning of Section 422 of the Code), (b) at the discretion of the
Committee, a termination which results in a temporary severance of the
employee-employer relationship, and (c) at the discretion of the Committee, a
termination which is followed by the simultaneous establishment of a consulting
relationship by the Company or a Subsidiary with the former Employee. The
Committee, in its absolute discretion, shall determine the effect of all matters
and questions relating to Termination of Service for the purposes of this
Agreement, including, but not by way of limitation, the question of whether, for
Optionees who are Employees of the Company or any of its Subsidiaries, a
Termination of Service resulted from a discharge for Cause, and all questions of
whether particular leaves of absence for Optionees who are Employees of the
Company or any of its Subsidiaries constitute Terminations of Service; provided,
however, that, if this Option is designated as an Incentive Stock Option, unless
otherwise determined by the Administrator in its discretion, a leave of absence,
change in status from an Employee to an independent contractor or other change
in the

<PAGE>

employee-employer relationship shall constitute a Termination of Service if, and
to the extent that, such leave of absence, change in status or other change
interrupts employment for the purposes of Section 422(a)(2) of the Code and the
then applicable regulations and revenue rulings under said Section.
Notwithstanding any other provision of the Plan or this Agreement, the Company
or any Subsidiary has an absolute and unrestricted right to terminate the
Optionee's employment and/or consultancy at any time for any reason whatsoever,
with or without Cause, except to the extent expressly provided otherwise in a
written agreement between the Company and the Optionee.

                                   ARTICLE II
                                 GRANT OF OPTION

      2.1 Grant of Option. In consideration of the Optionee's agreement to
remain in the employ of the Company or its Subsidiaries and for other good and
valuable consideration, effective as of the Grant Date set forth in the Grant
Notice, the Company irrevocably grants to the Optionee the Option to purchase
any part or all of an aggregate of the number of shares of Stock set forth in
the Grant Notice, upon the terms and conditions set forth in this Agreement.
Unless designated as a Non-Qualified Stock Option in the Grant Notice, the
Option shall be an Incentive Stock Option to the maximum extent permitted by
law.

      2.2 Purchase Price. The purchase price of the shares of Stock subject to
the Option per share shall be as set forth in the Grant Notice, without
commission or other charge; provided, however, that if this Option is designated
as an Incentive Stock Option the price per share of the shares subject to the
Option shall not be less than the greater of (i) 100% of the Fair Market Value
of a share of Stock on the Grant Date, or (ii) 110% of the Fair Market Value of
a share of Stock on the Grant Date in the case of an Optionee then owning
(within the meaning of Section 424(d) of the Code) more than 10% of the total
combined voting power of all classes of stock of the Company or any Subsidiary
or parent corporation thereof (within the meaning of Section 422 of the Code).

      2.3 Consideration to the Company. In consideration of the granting of the
Option by the Company, the Optionee agrees to render faithful and efficient
services to the Company or any Subsidiary, with such duties and responsibilities
as the Company shall from time to time prescribe. Nothing in the Plan or this
Agreement shall confer upon the Optionee any right to (a) continue in the employ
of the Company or any Subsidiary or shall interfere with or restrict in any way
the rights of the Company and its Subsidiaries, which are hereby expressly
reserved, to discharge the Optionee, if the Optionee is an Employee, or (b)
continue to provide services to the Company or any Subsidiary or shall interfere
with or restrict in any way the rights of the Company or its Subsidiaries, which
are hereby expressly reserved, to terminate the services of Optionee, if the
Optionee is a Consultant, at any time for any reason whatsoever, with or without
Cause, except to the extent expressly provided otherwise in a written agreement
between the Company and the Optionee.

                                   ARTICLE III
                            PERIOD OF EXERCISABILITY

      3.1 Commencement of Exercisability.

      (a) Subject to Sections 3.3 and 5.11, the Option shall become exercisable
in such amounts and at such times as are set forth in the Grant Notice.
Alternatively, at the election of the Optionee, this Option may be exercised in
whole or in part at such times as are established by the Committee as to shares
of Stock which have not yet vested. Vested shares shall not be subject to the
Company's Repurchase Option (as set forth in the Restricted Stock Purchase
Agreement). As a condition to exercising this Option for unvested shares of
Stock, the Optionee shall execute the Restricted Stock

<PAGE>

Purchase Agreement.

      (b) No portion of the Option which has not become exercisable at
Termination of Service shall thereafter become exercisable, except as may be
otherwise provided by the Committee or as set forth in a written agreement
between the Company and the Optionee.

      3.2 Duration of Exercisability. The installments provided for in Section
3.1(a) are cumulative. Each such installment which becomes exercisable pursuant
to Section 3.1 shall remain exercisable until it becomes unexercisable under
Section 3.3.

      3.3 Expiration of Option. The Option may not be exercised to any extent by
anyone after the first to occur of the following events:

      (a) The expiration of ten years from the Grant Date; or

      (b) If this Option is designated as an Incentive Stock Option and the
Optionee owned (within the meaning of Section 424(d) of the Code), at the time
the Option was granted, more than 10% of the total combined voting power of all
classes of stock of the Company or any Subsidiary or parent corporation thereof
(within the meaning of Section 422 of the Code), the expiration of five years
from the date the Option was granted; or

      (c) The expiration of ninety days following the date of the Optionee's
Termination of Service, unless such Termination of Service occurs by reason of
the Optionee's death, or Disability or as set forth in a written agreement with
the Company; or

      (d) The expiration of one year following the date of the Optionee's
Termination of Service by reason of the Optionee's death or Disability if
Optionee is an Employee of the Company or any of its Subsidiaries.

      3.4 Special Tax Consequences. The Optionee acknowledges that, to the
extent that the aggregate Fair Market Value of stock with respect to which
Incentive Stock Options (but without regard to Section 422(d) of the Code),
including the Option, are exercisable for the first time by the Optionee during
any calendar year (under the Plan and all other incentive stock option plans of
the Company, any Subsidiary and any parent corporation thereof (within the
meaning of Section 422 of the Code)) exceeds $100,000, the Option and such other
options shall be treated as not qualifying under Section 422 of the Code but
rather shall be taxed as Non-Qualified Stock Options. The Optionee further
acknowledges that the rule set forth in the preceding sentence shall be applied
by taking options into account in the order in which they were granted. For
purposes of these rules, the Fair Market Value of Stock shall be determined as
of the time the option with respect to such Stock is granted.

                                   ARTICLE IV
                               EXERCISE OF OPTION

      4.1 Person Eligible to Exercise. Except as provided in Sections 5.2(b) and
5.2(c), during the lifetime of the Optionee, only the Optionee may exercise the
Option or any portion thereof. After the death of the Optionee, any exercisable
portion of the Option may, prior to the time when the Option becomes
unexercisable under Section 3.3, be exercised by the Optionee's beneficiary
designated in accordance with Section 10.4 of the Plan. If no beneficiary has
been designated or survives the Optionee, the Option may be exercised by the
person entitled to such exercise pursuant to the Optionee's will or the laws of
descent and distribution.

<PAGE>

      4.2 Partial Exercise. Any exercisable portion of the Option or the entire
Option, if then wholly exercisable, may be exercised in whole or in part at any
time prior to the time when the Option or portion thereof becomes unexercisable
under Section 3.3.

      4.3 Manner of Exercise. The Option, or any exercisable portion thereof,
may be exercised solely by delivery to the Secretary or the Secretary's office
of all of the following prior to the time when the Option or such portion
thereof becomes unexercisable under Section 3.3:

      (a) An Exercise Notice in writing signed by the Optionee or the other
person then entitled to exercise the Option or portion thereof, stating that the
Option or portion thereof is thereby exercised, such notice complying with all
applicable rules established by the Committee. Such notice shall be
substantially in the form attached as Exhibit A (or such other form as is
prescribed by the Committee);

      (b) A Restricted Stock Purchase Agreement, if applicable, substantially in
the form attached as Exhibit B;

      (c) (i) Full payment (in cash or by check) for the shares with respect
to which the Option or portion thereof is exercised, to the extent permitted
under applicable laws; or

          (ii) With the consent of the Committee, such payment may be made, in
      whole or in part, through the delivery of shares of Stock which have been
      owned by the Optionee for at least six months, duly endorsed for transfer
      to the Company with a Fair Market Value on the date of delivery equal to
      the aggregate exercise price of the Option or exercised portion thereof;
      or

          (iii) To the extent permitted under applicable laws, through the
      delivery of a notice that the Optionee has placed a market sell order with
      a broker with respect to shares of Stock then issuable upon exercise of
      the Option, and that the broker has been directed to pay a sufficient
      portion of the net proceeds of the sale to the Company in satisfaction of
      the Option exercise price, provided, that payment of such proceeds is made
      to the Company upon settlement of such sale; or

          (iv) With the consent of the Committee, any combination of the
      consideration provided in the foregoing subparagraphs (i), (ii) and (iii);
      and

      (d) A bona fide written representation and agreement, in such form as is
prescribed by the Committee, signed by the Optionee or other person then
entitled to exercise such Option or portion thereof, stating that the shares of
Stock are being acquired for the Optionee's own account, for investment and
without any present intention of distributing or reselling said shares or any of
them except as may be permitted under the Securities Act and then applicable
rules and regulations thereunder, and that the Optionee or other person then
entitled to exercise such Option or portion thereof will indemnify the Company
against and hold it free and harmless from any loss, damage, expense or
liability resulting to the Company if any sale or distribution of the shares by
such person is contrary to the representation and agreement referred to above.
The Committee may, in its absolute discretion, take whatever additional actions
it deems appropriate to ensure the observance and performance of such
representation and agreement and to effect compliance with the Securities Act
and any other federal or state securities laws or regulations. Without limiting
the generality of the foregoing, the Committee may require an opinion of counsel
acceptable to it to the effect that any subsequent transfer of shares acquired
on an Option exercise does not violate the Securities Act, and may issue
stop-transfer orders covering such shares. Share certificates evidencing Stock
issued on exercise of the Option shall bear an appropriate legend referring to
the provisions of this subsection (d) and the agreements herein. The written
representation and agreement referred to in the first sentence of this
subsection (d) shall, however, not be required if the shares to be issued
pursuant to such exercise have been registered under the Securities Act, and
such registration is

<PAGE>

then effective in respect of such shares; and

      (e) Full payment to the Company (or other employer corporation) of all
amounts which, under federal, state or local tax law, it is required to withhold
upon exercise of the Option. With the consent of the Committee, (i) shares of
Stock owned by the Optionee for at least six months duly endorsed for transfer
or (ii) shares of Stock issuable to the Optionee upon exercise of the Option,
having a Fair Market Value at the date of Option exercise equal to the statutory
minimum sums required to be withheld, may be used to make all or part of such
payment; and

      (f) In the event the Option or portion thereof shall be exercised pursuant
to Section 4.1 by any person or persons other than the Optionee, appropriate
proof of the right of such person or persons to exercise the Option.

      4.4 Conditions to Issuance of Stock Certificates. The shares of Stock
deliverable upon the exercise of the Option, or any portion thereof, may be
either previously authorized but unissued shares or issued shares which have
then been reacquired by the Company. Such shares shall be fully paid and
nonassessable. The Company shall not be required to issue or deliver any
certificate or certificates for shares of Stock purchased upon the exercise of
the Option or portion thereof prior to fulfillment of all of the following
conditions:

      (a) The admission of such shares to listing on all stock exchanges on
which such Stock is then listed; and

      (b) The completion of any registration or other qualification of such
shares under any state or federal law or under rulings or regulations of the
Securities and Exchange Commission or of any other governmental regulatory body,
which the Committee shall, in its absolute discretion, deem necessary or
advisable; and

      (c) The obtaining of any approval or other clearance from any state or
federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable; and

      (d) The receipt by the Company of full payment for such shares, including
payment of all amounts which, under federal, state or local tax law, the Company
(or other employer corporation) is required to withhold upon exercise of the
Option; and

      (e) The lapse of such reasonable period of time following the exercise of
the Option as the Committee may from time to time establish for reasons of
administrative convenience.

      4.5 Rights as Stockholder. The holder of the Option shall not be, nor have
any of the rights or privileges of, a stockholder of the Company in respect of
any shares purchasable upon the exercise of any part of the Option unless and
until such shares shall have been issued by the Company to such holder.

<PAGE>

                                    ARTICLE V
                                OTHER PROVISIONS

      5.1 Administration. The Committee shall have the power to interpret the
Plan and this Agreement and to adopt such rules for the administration,
interpretation and application of the Plan as are consistent therewith and to
interpret, amend or revoke any such rules. All actions taken and all
interpretations and determinations made by the Committee in good faith shall be
final and binding upon the Optionee, the Company and all other interested
persons. No member of the Committee shall be personally liable for any action,
determination or interpretation made in good faith with respect to the Plan,
this Agreement or the Option. In its absolute discretion, the Board may at any
time and from time to time exercise any and all rights and duties of the
Committee under the Plan and this Agreement.

      5.2 Option Not Transferable.

      (a) Subject to Section 5.2(b), the Option may not be sold, pledged,
assigned or transferred in any manner other than by will or the laws of descent
and distribution unless and until the Option has been exercised, or the shares
underlying such Option have been issued, and all restrictions applicable to such
shares have lapsed. Neither the Option nor any interest or right therein shall
be liable for the debts, contracts or engagements of the Optionee or his or her
successors in interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment or any other means
whether such disposition be voluntary or involuntary or by operation of law by
judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect, except to the extent that such disposition is
permitted by the preceding sentence.

      (b) Notwithstanding any other provision in this Agreement, with the
consent of the Committee and to the extent the Option is not intended to qualify
as an Incentive Stock Option, the Option may be transferred to, exercised by and
paid to certain persons or entities related to the Optionee, including but not
limited to members of the Optionee's family, charitable institutes or trusts or
other entities whose beneficiaries or beneficial owners are members of the
Optionee's family or to such other persons or entities as may be expressly
approved by the Committee (each a "Permitted Transferee"), pursuant to such
conditions and procedures as the Committee may require.

      (c) Unless transferred to a Permitted Transferee in accordance with
Section 5.2(b), during the lifetime of the Optionee, only the Optionee may
exercise the Option or any portion thereof. Subject to such conditions and
procedures as the Committee may require, a Permitted Transferee may exercise the
Option or any portion thereof during the Optionee's lifetime. After the death of
the Optionee, any exercisable portion of the Option may, prior to the time when
the Option becomes unexercisable under Section 3.3, be exercised by the
Optionee's beneficiary designated in accordance with Section 10.4 of the Plan.
If no beneficiary has been designated or survives the Optionee, the Option may
be exercised by the person entitled to such exercise pursuant to the Optionee's
will or the laws of descent and distribution.

      5.3 Lock-Up Period. The Optionee hereby agrees that, if so requested by
the Company or any representative of the underwriters (the "MANAGING
UNDERWRITER") in connection with any registration of the offering of any
securities of the Company under the Securities Act, the Optionee shall not sell
or otherwise transfer any shares of Stock or other securities of the Company
during such period as may be requested in writing by the Managing Underwriter
and agreed to in writing by the Company (which period shall not be longer than
one hundred eighty days) (the "MARKET STANDOFF PERIOD") following the effective
date of a registration statement of the Company filed under the Securities Act;
provided, however, that such restriction shall apply only to the first
registration statement of the Company to become effective under the Securities
Act that includes securities to be sold on behalf of the Company to

<PAGE>

the public in an underwritten public offering under the Securities Act.

      5.4 Restrictive Legends and Stop-Transfer Orders.

      (a) The share certificate or certificates evidencing the shares of Stock
purchased hereunder shall be endorsed with any legends that may be required by
state or federal securities laws.

      (b) The Optionee 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) The Company shall not be required: (i) to transfer on its books any
shares of Stock 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 of
Stock 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.

      5.5 Shares to Be Reserved. The Company shall at all times during the term
of the Option reserve and keep available such number of shares of Stock as will
be sufficient to satisfy the requirements of this Agreement.

      5.6 Notices. Any notice to be given under the terms of this Agreement to
the Company shall be addressed to the Company in care of the Secretary, and any
notice to be given to the Optionee shall be addressed to the Optionee at the
address given beneath the Optionee's signature on the Grant Notice. By a notice
given pursuant to this Section 5.6, either party may hereafter designate a
different address for notices to be given to that party. Any notice which is
required to be given to the Optionee shall, if the Optionee is then deceased, be
given to the Optionee's designated beneficiary if any, or the person otherwise
entitled to exercise his or her Option pursuant to Section 4.1 by written notice
under this Section 5.6. Any notice shall be deemed duly given when sent via
email or enclosed in a properly sealed envelope or wrapper addressed as
aforesaid and deposited (with postage prepaid) in a post office or branch post
office regularly maintained by the United States Postal Service.

      5.7 Titles. Titles are provided herein for convenience only and are not to
serve as a basis for interpretation or construction of this Agreement.

      5.8 Stockholder Approval. The Plan will be submitted for approval by the
Company's stockholders within twelve months after the date the Plan was
initially adopted by the Board. The Option may not be exercised to any extent by
anyone prior to the time when the Plan is approved by the stockholders, and if
such approval has not been obtained by the end of said twelve month period, the
Option shall thereupon be canceled and become null and void.

      5.9 Notification of Disposition. If this Option is designated as an
Incentive Stock Option, the Optionee shall give prompt notice to the Company of
any disposition or other transfer of any shares of stock acquired under this
Agreement if such disposition or transfer is made (a) within two years from the
Grant Date with respect to such shares or (b) within one year after the transfer
of such shares to him. Such notice shall specify the date of such disposition or
other transfer and the amount realized, in cash, other property, assumption of
indebtedness or other consideration, by the Optionee in such disposition or
other transfer.

      5.10 Construction. This Agreement shall be administered, interpreted and
enforced under the laws of the State of Delaware without regard to conflicts of
laws thereof.

<PAGE>

      5.11 Conformity to Securities Laws. The Optionee acknowledges that the
Plan is intended to conform to the extent necessary with all provisions of the
Securities Act and the Exchange Act and any and all regulations and rules
promulgated by the Securities and Exchange Commission thereunder, and state
securities laws and regulations. Notwithstanding anything herein to the
contrary, the Plan shall be administered, and the Option is granted and may be
exercised, only in such a manner as to conform to such laws, rules and
regulations. To the extent permitted by applicable law, the Plan and this
Agreement shall be deemed amended to the extent necessary to conform to such
laws, rules and regulations.

      5.12 Amendments. This Agreement may not be modified, amended or terminated
except by an instrument in writing, signed by the Optionee or such other person
as may be permitted to exercise the Option pursuant to Section 4.1 and by a duly
authorized representative of the Company.

      5.13 Restrictions on Shares. Optionee hereby agrees that shares of Stock
purchased upon the exercise of the Option shall be subject to such terms and
conditions as the Committee shall determine in its sole discretion, including,
without limitation, restrictions on the transferability of shares of Stock, the
right of the Company to repurchase shares of Stock, and a right of first refusal
in favor of the Company with respect to permitted transfers of shares of Stock.
Such terms and conditions may, in the Committee's sole discretion, be contained
in the Exercise Notice with respect to the Option or in such other agreement as
the Committee shall determine and which the Optionee hereby agrees to enter into
at the request of the Company.

<PAGE>

                                    EXHIBIT A

                   TO GRANT NOTICE AND STOCK OPTION AGREEMENT

                             FORM OF EXERCISE NOTICE

      Effective as of today, ___________, _____, the undersigned ("OPTIONEE")
hereby elects to exercise Optionee's option to purchase _________ shares of the
Common Stock (the "SHARES") of Somaxon Pharmaceuticals, Inc. (the "COMPANY")
under and pursuant to the Somaxon Pharmaceuticals, Inc. 2004 Equity Incentive
Award Plan (the "PLAN") and the Grant Notice and Stock Option Agreement dated
______________ (the "OPTION AGREEMENT"). Capitalized terms used herein without
definition shall have the meanings given in the Option Agreement.

GRANT DATE:                              ____________________________

NUMBER OF SHARES AS TO WHICH OPTION IS
EXERCISED:                               ____________________________

EXERCISE PRICE PER SHARE:                ____________________________

TOTAL EXERCISE PRICE:                    ____________________________

CERTIFICATE TO BE ISSUED IN NAME OF:     ____________________________

CASH PAYMENT DELIVERED HEREWITH:         $_________(Representing the full
                                         Exercise Price for the Shares, as well
                                         as any applicable  withholding tax)

TYPE OF OPTION:    []  Incentive Stock Option    []  Non-Qualified Stock Option

      1. Representations of Optionee. Optionee acknowledges that Optionee has
received, read and understood the Plan and the Option Agreement. Optionee agrees
to abide by and be bound by their terms and conditions.

      2. Rights as Stockholder. Until the Shares are issued (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company), no right to vote or receive dividends or any other rights
as a stockholder shall exist with respect to Shares subject to the Option,
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued) a stock certificate evidencing such Shares promptly after the Option
is exercised. No adjustment will be made for a dividend or other right for which
the record date is prior to the date the stock certificate is issued, except as
provided in Article 11 of the Plan.

      Optionee shall enjoy rights as a stockholder until such time as Optionee
disposes of the Shares or the Company and/or its assignee(s) exercises the Right
of First Refusal hereunder. Upon such exercise, Optionee shall have no further
rights as a holder of the Shares so purchased except the right to receive
payment for the Shares so purchased in accordance with the provisions of this
Agreement, and Optionee shall forthwith cause the certificate(s) evidencing the
Shares so purchased to be surrendered to the Company for transfer or
cancellation.

<PAGE>

      3.    Optionee's Rights to Transfer Shares.

            (a) Company's Right of First Refusal. Before any Shares held by
Optionee or any permitted transferee (each, a "HOLDER") may be sold, pledged,
assigned, hypothecated, transferred, or otherwise disposed of (each, a
"TRANSFER"), the Company or its assignee(s) shall have a right of first refusal
to purchase the Shares proposed to be Transferred on the terms and conditions
set forth in this Section (the "RIGHT OF FIRST REFUSAL").

            (b) Notice of Proposed Transfer. In the event any Holder desires to
Transfer any Shares, the Holder 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
other transferee ("PROPOSED TRANSFEREE"); (iii) the number of Shares to be
Transferred to each Proposed Transferee; and (iv) the bona fide cash price for
which the Holder proposes to Transfer the Shares (the "OFFERED PRICE"), and the
Holder shall offer such Shares at the Offered Price to the Company or its
assignee(s).

            (c) Exercise of Right of First Refusal. Within thirty days after
receipt of the Notice, the Company and/or its assignee(s) may elect in writing
to purchase all, but not less than all, of the Shares proposed to be Transferred
to any one or more of the Proposed Transferees. The purchase price will be
determined in accordance with subsection (iii) below.

            (d) Purchase Price. The purchase price ("PURCHASE PRICE") for the
Shares repurchased under this Section shall be the Offered Price.

            (e) 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 of the Holder to the Company
(or, in the case of repurchase by an assignee, to the assignee), or by any
combination thereof within thirty days after receipt of the Notice or in the
manner and at the times mutually agreed to by the Company and the Holder.

            (f) Holder's Right to Transfer. If all of the Shares proposed in the
Notice to be Transferred are not purchased by the Company and/or its assignee(s)
as provided in this Section, 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 one hundred
twenty 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 and the Restricted Stock Purchase Agreement, if applicable, 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 one hundred twenty-day period, 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 as provided herein before any Shares held by the Holder may be
sold or otherwise Transferred.

            (g) Exception for Certain Family Transfers. Anything to the contrary
contained in this Section notwithstanding, the Transfer of any or all of the
Shares during the Optionee's lifetime or upon the Optionee's death by will or
intestacy to the Optionee's Immediate Family or a trust for the benefit of the
Optionee's Immediate Family shall be exempt from the Right of First Refusal. As
used herein, "IMMEDIATE FAMILY" shall mean spouse, lineal descendant or
antecedent, father, mother, brother or sister or stepchild (whether or not
adopted). In such case, the transferee or other recipient shall receive and hold
the Shares so Transferred subject to the provisions of this Section (including
the Right of First Refusal) and the Restricted Stock Purchase Agreement, if
applicable, and there shall be no further

<PAGE>

Transfer of such Shares except in accordance with the terms of this Section.

            (h) Termination of Right of First Refusal. The Right of First
Refusal shall terminate as to all Shares upon a 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 (a "PUBLIC OFFERING").

            (i) Transfer Restrictions. Any transfer or sale of the Shares is
subject to restrictions on transfer imposed by any applicable state and federal
securities laws. Any Transfer or attempted Transfer of any of the Shares not in
accordance with the terms of this Agreement shall be void and the Company may
enforce the terms of this Agreement by stop transfer instructions or similar
actions by the Company and its agents or designees.

      4. Tax Consultation. Optionee understands that Optionee may suffer adverse
tax consequences as a result of Optionee's purchase or disposition of the
Shares. Optionee represents that Optionee has consulted with any tax consultants
Optionee deems advisable in connection with the purchase or disposition of the
Shares and that Optionee is not relying on the Company for any tax advice.

      5. Restrictive Legends and Stop-Transfer Orders.

            (a) Legends. Optionee understands and agrees that the Company shall
cause the legends set forth below or legends substantially equivalent thereto,
to be placed upon any certificate(s) evidencing ownership of the Shares together
with any other legends that may be required by state or federal securities laws:

            THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
            SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR
            OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
            REGISTERED UNDER THE ACT OR, IN THE OPINION OF COUNSEL IN FORM AND
            SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH
            OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE
            THEREWITH.

            THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
            RESTRICTIONS ON TRANSFER AND RIGHT OF FIRST REFUSAL OPTIONS HELD BY
            THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN THE EXERCISE NOTICE
            BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY
            OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH
            TRANSFER RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON
            TRANSFEREES OF THESE SHARES.

            (b) Stop-Transfer Notices. Optionee 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

<PAGE>

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. Optionee Representations. Optionee hereby makes the following
certifications and representations with respect to the Shares listed above:

            (a) Optionee 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. Optionee is
acquiring these Shares for investment for Optionee's 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 of 1933, as amended (the "SECURITIES
ACT").

            (b) Optionee acknowledges and understands that the Shares constitute
"restricted securities" under the Securities Act and have not been registered
under the Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of Optionee's
investment intent as expressed herein. Optionee understands that the Shares must
be held indefinitely unless they are subsequently registered under the
Securities Act or an exemption from such registration is available. Optionee
further acknowledges and understands that the Company is under no obligation to
register the Shares. Optionee understands that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the transfer of the
Shares unless they are registered or such registration is not required in the
opinion of counsel satisfactory to the Company and any other legend required
under applicable state securities laws.

            (c) Optionee is familiar with the provisions of Rule 701 and Rule
144, each promulgated under the Securities Act, which, in substance, permit
limited public resale of "restricted securities" acquired, directly or
indirectly from the issuer thereof, in a non-public offering subject to the
satisfaction of certain conditions. Rule 701 provides that if the issuer
qualifies under Rule 701 at the time of the grant of the Option to the Optionee,
the exercise will be exempt from registration under the Securities Act. In the
event the Company becomes subject to the reporting requirements of Section 13 or
15(d) of the Securities Exchange Act of 1934, ninety days thereafter (or such
longer period as any market stand-off agreement may require) the Securities
exempt under Rule 701 may be resold, subject to the satisfaction of certain of
the conditions specified by Rule 144, including: (i) the resale being made
through a broker in an unsolicited "broker's transaction" or in transactions
directly with a market maker (as said term is defined under the Securities
Exchange Act of 1934); and, in the case of an affiliate, (ii) the availability
of certain public information about the Company, (iii) the amount of Securities
being sold during any three month period not exceeding the limitations specified
in Rule 144(e), and (iv) the timely filing of a Form 144, if applicable.

            (d) In the event that the Company does not qualify under Rule 701 at
the time of grant of the Option, then the Securities may be resold in certain
limited circumstances subject to the provisions of Rule 144, which requires the
resale to occur not less than one year after the later of the date the
Securities were sold by the Company or the date the Securities were sold by an
affiliate of the Company, within the meaning of Rule 144; and, in the case of
acquisition of the Securities by an affiliate, or by a non-affiliate who
subsequently holds the Securities less than two years, the satisfaction of the
conditions set forth in sections (i), (ii), (iii) and (iv) of paragraph (c)
above.

            (e) Optionee further understands that in the event all of the
applicable requirements of Rule 701 or 144 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

<PAGE>

that persons proposing to sell private placement securities other than in a
registered offering and otherwise than pursuant to Rules 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.
Optionee understands that no assurances can be given that any such other
registration exemption will be available in such event.

      7. Successors and Assigns. The Company may assign any of its rights under
this Agreement to single or multiple assignees, and this Agreement shall inure
to the benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer herein set forth, this Agreement shall be binding upon
Optionee and his or her heirs, executors, administrators, successors and
assigns.

      8. Interpretation. Any dispute regarding the interpretation of this
Agreement shall be submitted by Optionee or by the Company forthwith to the
Committee, which shall review such dispute at its next regular meeting. The
resolution of such a dispute by the Administrator shall be final and binding on
the Company and on Optionee.

      9. Governing Law; Severability. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware excluding that
body of law pertaining to conflicts of law. Should any provision of this
Agreement be determined by a court of law to be illegal or unenforceable, the
other provisions shall nevertheless remain effective and shall remain
enforceable.

      10. Notices. Any notice required or permitted hereunder shall be given in
accordance with the provisions set forth in Section 5.6 of the Option Agreement.

      11. Further Instruments. The parties agree to execute such further
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Agreement.

      13. Entire Agreement. The Plan and Option Agreement are incorporated
herein by reference. This Agreement, the Plan, the Option Agreement and the
Restricted Stock Purchase Agreement, if applicable, constitute the entire
agreement of the parties and supersede in their entirety all prior undertakings
and agreements of the Company and Optionee with respect to the subject matter
hereof.

                            (SIGNATURE PAGE FOLLOWS)

<PAGE>

ACCEPTED BY:                            SUBMITTED BY:

SOMAXON PHARMACEUTICALS, INC.           OPTIONEE

By: __________________________________   ______________________________

Name:        _________________________   [Name of Optionee]

Its:         _________________________
                                        Address:
                                         ______________________________
                                         ______________________________

<PAGE>

                                    EXHIBIT B

                   TO GRANT NOTICE AND STOCK OPTION AGREEMENT

                       RESTRICTED STOCK PURCHASE AGREEMENT

      THIS RESTRICTED STOCK PURCHASE AGREEMENT is made between _________ (the
"PURCHASER") and Somaxon Pharmaceuticals, Inc. (the "COMPANY"), as of
__________________, ______.

                                    RECITALS

      (1) Pursuant to the exercise of the Option granted to Purchaser under the
Company's 2004 Equity Incentive Award Plan (the "PLAN") and pursuant to the
Stock Option Agreement (the "OPTION Agreement") dated _____________, by and
between the Company and Purchaser with respect to such grant, which Option
Agreement is hereby incorporated by reference, Purchaser has elected to purchase
_________ of those shares which have not become vested under the vesting
schedule set forth in the Option Agreement ("UNVESTED SHARES"). The Unvested
Shares and the shares subject to the Option Agreement which have become vested
are sometimes collectively referred to herein as the "SHARES".

      (2) As required by the Option Agreement, as a condition to Purchaser's
election to exercise the option, Purchaser must execute this Restricted Stock
Purchase Agreement, which sets forth the rights and obligations of the parties
with respect to Shares acquired upon exercise of the Option.

      1. Repurchase Option.

            (a) If Purchaser has a Termination of Service (as defined in the
Option Agreement) for any reason, including for cause, death, and disability,
the Company shall have the right and option to purchase from Purchaser, or
Purchaser's personal representative, as the case may be, all of Purchaser's
Unvested Shares as of the date on which Purchaser has a Termination of Service
at the exercise price paid by Purchaser for such Shares in connection with the
exercise of the Option (the "REPURCHASE OPTION").

            (b) The Company may exercise its Repurchase Option by delivering,
personally or by registered mail, to Purchaser (or his or her transferee or
legal representative, as the case may be), within ninety days of the date on
which Purchaser has a Termination of Service, a notice in writing indicating the
Company's intention to exercise the Repurchase Option and setting forth a date
for closing not later than thirty days from the mailing of such notice. The
closing shall take place at the Company's office. At the closing, the holder of
the certificates for the Unvested Shares being transferred shall deliver the
stock certificate or certificates evidencing the Unvested Shares, and the
Company shall deliver the purchase price therefor.

            (c) At its option, the Company may elect to make payment for the
Unvested Shares to a bank selected by the Company. The Company shall avail
itself of this option by a notice in writing to Purchaser stating the name and
address of the bank, date of closing, and waiving the closing at the Company's
office.

<PAGE>

            (d) If the Company does not elect to exercise the Repurchase Option
conferred above by giving the requisite notice within ninety days following the
date on which Purchaser has a Termination of Service, the Repurchase Option
shall terminate.

            (e) 100% of the Unvested Shares shall initially be subject to the
Repurchase Option. The Unvested Shares shall be released from the Repurchase
Option in accordance with the Vesting Schedule set forth in the Notice of Grant
until all Shares are released from the Repurchase Option. Fractional Shares
shall be rounded to the nearest whole share.

      2. Transferability of the Shares; Escrow.

            (a) Purchaser hereby authorizes and directs the secretary of the
Company, or such other person designated by the Company from time to time, to
transfer the Unvested Shares as to which the Repurchase Option has been
exercised from Purchaser to the Company.

            (b) To insure the availability for delivery of Purchaser's Unvested
Shares upon repurchase by the Company pursuant to the Repurchase Option under
Section 1, Purchaser hereby appoints the assistant secretary, or any other
person designated by the Company from time to time as escrow agent, as its
attorney-in-fact to sell, assign and transfer unto the Company, such Unvested
Shares, if any, repurchased by the Company pursuant to the Repurchase Option and
shall, upon execution of this Agreement, deliver and deposit with the assistant
secretary of the Company, or such other person designated by the Company from
time to time, the share certificate(s) representing the Unvested Shares,
together with the stock assignment duly endorsed in blank, attached hereto as
Exhibit B-1. The Unvested Shares and stock assignment shall be held by the
assistant secretary in escrow, pursuant to the Joint Escrow Instructions of the
Company and Purchaser attached as Exhibit B-2 hereto, until the Company
exercises its Repurchase Option as provided in Section 1, until such Unvested
Shares are vested, or until such time as this Agreement no longer is in effect.
As a further condition to the Company's obligations under this Agreement, the
spouse of Purchaser, if any, shall execute and deliver to the Company the
Consent of Spouse set forth on the signature page hereto. Upon vesting of the
Unvested Shares, the escrow agent shall promptly deliver to Purchaser the
certificate or certificates representing such Shares in the escrow agent's
possession belonging to Purchaser, and the escrow agent shall be discharged of
all further obligations hereunder; provided, however, that the escrow agent
shall nevertheless retain such certificate or certificates as escrow agent if so
required pursuant to other restrictions imposed pursuant to this Agreement.

            (c) The Company, or its designee, shall not be liable for any act it
may do or omit to do with respect to holding the Shares in escrow and while
acting in good faith and in the exercise of its judgment.

            (d) Transfer or sale of the Shares is subject to restrictions on
transfer imposed by any applicable state and federal securities laws. Any
transferee shall hold such Shares subject to all the provisions hereof and the
Exercise Notice executed by Purchaser with respect to any Unvested Shares
purchased by Purchaser and shall acknowledge the same by signing a copy of this
Agreement. Any transfer or attempted transfer of any of the Shares not in
accordance with the terms of this Agreement shall be void and the Company may
enforce the terms of this Agreement by stop transfer instructions or similar
actions by the Company and its agents or designees.

<PAGE>

      3. Ownership, Voting Rights, Duties. This Agreement shall not affect in
any way the ownership, voting rights or other rights or duties of Purchaser,
except as specifically provided herein.

      4. Legends. The share certificate evidencing the Shares issued hereunder
shall be endorsed with the following legend (in addition to any legend required
under applicable securities laws):

            THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
            RESTRICTIONS UPON TRANSFER AND RIGHTS OF REPURCHASE AS SET FORTH IN
            AN AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF
            WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.

      5. Adjustment for Stock Split. All references to the number of Shares and
the purchase price of the Shares in this Agreement shall be appropriately
adjusted to reflect any stock split, stock dividend or other change in the
Shares which may be made by the Company after the date of this Agreement.

      6. Notices. Notices required hereunder shall be given in person or by
registered mail to the address of Purchaser shown on the records of the Company,
and to the Company at its principal executive office.

      7. Survival of Terms. This Agreement shall apply to and bind Purchaser and
the Company and their respective permitted assignees and transferees, heirs,
legatees, executors, administrators and legal successors.

      8. Section 83(b) Elections.

            (a) Election for Unvested Shares Purchased Pursuant to a
Non-Qualified Stock Option. Purchaser hereby acknowledges that he or she has
been informed that, with respect to the exercise of a Non-Qualified Stock Option
for Unvested Shares, that unless an election is filed by Purchaser with the
Internal Revenue Service and, if necessary, the proper state taxing authorities,
within thirty days of the purchase of the Shares, electing pursuant to Section
83(b) of the Code (and similar state tax provisions if applicable) to be taxed
currently on any difference between the purchase price of the Shares and their
Fair Market Value on the date of purchase, there will be a recognition of
taxable income to the Optionee, measured by the excess, if any, of the fair
market value of the Shares, at the time the Company's Repurchase Option lapses
over the purchase price for the Shares. Optionee represents that Optionee has
consulted any tax consultant(s) Optionee deems advisable in connection with the
purchase of the Shares or the filing of the Election under Section 83(b) and
similar tax provisions.

            (b) Election for Unvested Shares Purchased Pursuant to an Incentive
Stock Option. Purchaser hereby acknowledges that he or she has been informed
that, with respect to the exercise of an Incentive Stock Option for Unvested
Shares, that unless an election is filed by Purchaser with the Internal Revenue
Service and, if necessary, the proper state taxing authorities, within thirty
days of the purchase of the Shares, electing pursuant to Section 83(b) of the
Code (and similar state tax provisions if applicable) to be taxed currently on
any difference between the purchase price of the Shares and their Fair Market
Value on the date of purchase, there will be a recognition of income to the
Purchaser, for alternative minimum tax purposes, measured by the excess, if any,
of the fair market value of the Shares at the time the Company's

<PAGE>

Repurchase Option lapses over the purchase price for the Shares. Purchaser
represents that Purchaser has consulted any tax consultant(s) Purchaser deems
advisable in connection with the purchase of the Shares or the filing of the
Election under Section 83(b) and similar tax provisions.

      PURCHASER ACKNOWLEDGES THAT IT IS PURCHASER'S SOLE RESPONSIBILITY AND NOT
THE COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION 83(B), EVEN IF PURCHASER
REQUESTS THE COMPANY OR ITS REPRESENTATIVE TO MAKE THIS FILING ON PURCHASER'S
BEHALF.

      9. Representations. Purchaser has reviewed with his or her own tax
advisors the federal, state, local and foreign tax consequences of this
investment and the transactions contemplated by this Agreement. Purchaser is
relying solely on such advisors and not on any statements or representations of
the Company or any of its agents. Purchaser understands that Purchaser (and not
the Company) shall be responsible for his or her own tax liability that may
arise as a result of this investment or the transactions contemplated by this
Agreement.

      10. Governing Law; Severability. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware excluding that
body of law pertaining to conflicts of law. Should any provision of this
Agreement be determined by a court of law to be illegal or unenforceable, the
other provisions shall nevertheless remain effective and shall remain
enforceable.

      Purchaser represents that he or she has read this Agreement and is
familiar with its terms and provisions. Purchaser hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the Board upon
any questions arising under this Agreement.

                            (SIGNATURE PAGE FOLLOWS)

<PAGE>

            IN WITNESS WHEREOF, this Agreement is deemed made as of the date
first set forth above.

                           SOMAXON PHARMACEUTICALS, INC.

                           By: _________________________________________________

                           Name:    ____________________________________________

                           Title:   ____________________________________________

                           PURCHASER

                           By: _________________________________________________

                           Name: _______________________________________________

                           Address:
                           ____________________
                           ____________________

                                CONSENT OF SPOUSE

      I, ____________________, spouse of the Purchaser listed above, have read
and approve this Agreement. In consideration of granting of the right to my
spouse to purchase shares of the Company as set forth in this Agreement, I
hereby appoint my spouse as my attorney-in-fact in respect to the exercise of
any rights under this Agreement and agree to be bound by the provisions of this
Agreement insofar as I may have any rights in said Agreement or any shares
issued pursuant thereto under the community property laws or similar laws
relating to marital property in effect in the state of our residence as of the
date of the signing of this Agreement.

                                                ______________________________
                                                Signature of Spouse

<PAGE>

                                   EXHIBIT B-1

                     TO RESTRICTED STOCK PURCHASE AGREEMENT

                      ASSIGNMENT SEPARATE FROM CERTIFICATE

      FOR VALUE RECEIVED I, ________________, hereby sell, assign and transfer
unto (__________) shares of the Common Stock of Somaxon Pharmaceuticals, Inc.
registered in my name on the books of said corporation represented by
Certificate No. _____ herewith and do hereby irrevocably constitute and appoint
to transfer the said stock on the books of the within named corporation with
full power of substitution in the premises.

      This Assignment Separate from Certificate may be used only in accordance
with the Restricted Stock Purchase Agreement between Somaxon Pharmaceuticals,
Inc. and the undersigned dated ______________,__.

Dated: _______________, ________

                                         Signature:____________________________
                                                   [Name of Purchaser]

INSTRUCTIONS: Please do not fill in any blanks other than the signature line.
The purpose of this assignment is to enable the Company to exercise the
Repurchase Option, as set forth in the Restricted Stock Purchase Agreement,
without requiring additional signatures on the part of Purchaser.

<PAGE>

                                   EXHIBIT B-2

                     TO RESTRICTED STOCK PURCHASE AGREEMENT

                            JOINT ESCROW INSTRUCTIONS

                                                                 ________, _____
Secretary
Somaxon Pharmaceuticals, Inc.

      As Escrow Agent for both Somaxon Pharmaceuticals, Inc. (the "COMPANY") and
the undersigned purchaser of stock of the Company (the "PURCHASER"), you are
hereby authorized and directed to hold the documents delivered to you pursuant
to the terms of that certain Restricted Stock Purchase Agreement ("AGREEMENT")
between the Company and the undersigned, in accordance with the following
instructions:

      1. In the event the Company and/or any assignee of the Company (referred
to collectively for convenience herein as the "COMPANY") exercises the Company's
Repurchase Option set forth in the Agreement, the Company shall give to
Purchaser and you a written notice specifying the number of shares of stock to
be purchased, the purchase price, and the time for a closing hereunder at the
principal office of the Company. Purchaser and the Company hereby irrevocably
authorize and direct you to close the transaction contemplated by such notice in
accordance with the terms of said notice.

      2. At the closing, you are directed (a) to date the stock assignments
necessary for the transfer in question, (b) to fill in the number of shares
being transferred, and (c) to deliver the same, together with the certificate
evidencing the shares of stock to be transferred, to the Company or its
assignee, against the simultaneous delivery to you of the purchase price (by
cash, a check, or a combination thereof) for the number of shares of stock being
purchased pursuant to the exercise of the Company's Repurchase Option.

      3. Purchaser irrevocably authorizes the Company to deposit with you any
certificates evidencing shares of stock to be held by you hereunder and any
additions and substitutions to said shares as defined in the Agreement.
Purchaser does hereby irrevocably constitute and appoint you as Purchaser's
attorney-in-fact and agent for the term of this escrow to execute, with respect
to such securities, all documents necessary or appropriate to make such
securities negotiable and to complete any transaction herein contemplated,
including but not limited to the filing with any applicable state blue sky
authority of any required applications for consent to, or notice of transfer of,
the securities. Subject to the provisions of this paragraph 3, Purchaser shall
exercise all rights and privileges of a stockholder of the Company while the
stock is held by you.

      4. Upon written request of Purchaser, but no more than once per calendar
year, unless the Company's Repurchase Option has been exercised, you will
deliver to Purchaser a certificate or certificates representing the number of
shares of stock as are not then subject to the Company's Repurchase Option.
Within one hundred twenty days after Purchaser has a Termination of Service (as
defined in the Agreement), you will deliver to Purchaser a certificate or
certificates representing the aggregate number of shares held or issued pursuant
to the Agreement and not purchased by the Company or its assignees pursuant to
exercise of the Company's Repurchase Option.

      5. If at the time of termination of this escrow you should have in your
possession any documents, securities, or other property belonging to Purchaser,
you shall deliver all of the same to Purchaser and shall be discharged of all
further obligations hereunder.
<PAGE>

      6. Your duties hereunder may be altered, amended, modified or revoked only
by a writing signed by all of the parties hereto.

      7. You shall be obligated only for the performance of such duties as are
specifically set forth herein and may rely and shall be protected in relying or
refraining from acting on any instrument reasonably believed by you to be
genuine and to have been signed or presented by the proper party or parties. You
shall not be personally liable for any act you may do or omit to do hereunder as
Escrow Agent or as attorney-in-fact for Purchaser while acting in good faith,
and any act done or omitted by you pursuant to the advice of your own attorneys
shall be conclusive evidence of such good faith.

      8. You are hereby expressly authorized to disregard any and all warnings
given by any of the parties hereto or by any other person or corporation,
excepting only orders or process of courts of law and are hereby expressly
authorized to comply with and obey orders, judgments or decrees of any court. In
case you obey or comply with any such order, judgment or decree, you shall not
be liable to any of the parties hereto or to any other person, firm or
corporation by reason of such compliance, notwithstanding any such order,
judgment or decree being subsequently reversed, modified, annulled, set aside,
vacated or found to have been entered without jurisdiction.

      9. You shall not be liable in any respect on account of the identity,
authorities or rights of the parties executing or delivering or purporting to
execute or deliver the Agreement or any documents or papers deposited or called
for hereunder.

      10. You shall not be liable for the expiration of any rights under any
applicable state, federal or local statute of limitations or similar statute or
regulation with respect to these Joint Escrow Instructions or any documents
deposited with you.

      11. You shall be entitled to employ such legal counsel and other experts
as you may deem necessary properly to advise you in connection with your
obligations hereunder, may rely upon the advice of such counsel, and may pay
such counsel reasonable compensation therefore.

      12. Your responsibilities as Escrow Agent hereunder shall terminate if you
shall cease to be an officer or agent of the Company or if you shall resign by
written notice to each party. In the event of any such termination, the Company
shall appoint a successor Escrow Agent.

      13. If you reasonably require other or further instruments in connection
with these Joint Escrow Instructions or obligations in respect hereto, the
necessary parties hereto shall join in furnishing such instruments.

      14. It is understood and agreed that should any dispute arise with respect
to the delivery and/or ownership or right of possession of the securities held
by you hereunder, you are authorized and directed to retain in your possession
without liability to anyone all or any part of said securities until such
disputes shall have been settled either by mutual written agreement of the
parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or defend
any such proceedings.

      15. Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery or upon deposit in
the United States Post Office, by registered or certified mail with postage and
fees prepaid, addressed to each of the other parties thereunto entitled at such
addresses as a party may designate by written notice to each of the other
parties hereto.

<PAGE>

      16. By signing these Joint Escrow Instructions, you become a party hereto
only for the purpose of said Joint Escrow Instructions; you do not become a
party to the Agreement.

      17. This instrument shall be binding upon and inure to the benefit of the
parties hereto, and their respective successors and permitted assigns.

      18. These Joint Escrow Instructions shall be governed by, and construed
and enforced in accordance with, the laws of the State of Delaware, excluding
that body of law pertaining to conflicts of law.

                            (SIGNATURE PAGE FOLLOWS)

<PAGE>

      IN WITNESS WHEREOF, these Joint Escrow Instructions shall be effective as
of the date first set forth above.

                            SOMAXON PHARMACEUTICALS, INC.

                            By: ________________________________________________

                            Name:    ___________________________________________

                            Title:   ___________________________________________

                            PURCHASER:

                            By: ________________________________________________

                            Name: ______________________________________________

                            Address:
                            _____________________
                            _____________________

                            ESCROW AGENT:

                            By:  _______________________________________________

                            Name:    ___________________________________________

                            Title:   Secretary of Somaxon Pharmaceuticals, Inc.<PAGE>
                                                                    Exhibit 10.6

                                                                    CONFIDENTIAL

                         [SOMAXON PHARMACEUTICALS LOGO]

                               2005 INCENTIVE PLAN

<PAGE>

                                                                    CONFIDENTIAL

                          Somaxon Pharmaceuticals, Inc.

                               2005 Incentive Plan

The Somaxon Pharmaceuticals, Inc. (Somaxon) Incentive Plan (the "Plan") is
designed to offer incentive compensation to eligible Employees by rewarding the
achievement of corporate goals and specifically measured individual goals that
are consistent with and support overall corporate goals. The Plan will create an
environment which will focus Employees on the achievement of objectives. Since
cooperation between departments and Employees will be required to achieve
corporate objectives that represent a significant portion of the Plan, the Plan
should help foster improved teamwork and a more cohesive management team.

Purpose of the Plan

The Plan is designed to:

-     Provide an incentive program to achieve overall corporate objectives and
      to enhance shareholder value

-     Reward those individuals who significantly impact corporate results

-     Encourage increased teamwork among all disciplines within the Company

-     Incorporate an incentive program in the Somaxon overall compensation
      program to help attract and retain Employees

-     Incentivize eligible Employees to remain employed by Somaxon throughout
      the Plan year and until the time incentive awards are paid

Plan Governance

The Plan will be governed by the Compensation Committee of the Board of
Directors. The President and CEO of Somaxon will be responsible for
administration of the Plan. The Compensation Committee of the Board will be
responsible for approving any compensation or incentive awards to officers of
the Company.

Eligibility

All full time (40 hours/week) exempt Employees Level 6 (Manager) or higher are
eligible to participate in the Plan. To receive an incentive award, a
participant: (a) must have been in an eligible position for at least three (3)
consecutive months prior to the end of the Plan year and remain employed through
the end of the Plan year and until incentive awards are paid; and (b) must not
be on probation at the time bonus determinations are made.

<PAGE>

                                                                    CONFIDENTIAL

SECTION 1:  BONUS INCENTIVE AWARDS ("BONUS")

Form of Incentive Award Payments

Incentive award payments may be made in cash, through the issuance of stock or
stock options, or by a combination of cash, stock and/or stock options, at the
discretion of the Company's Compensation Committee, subject to the approval of
the Company's Board of Directors. In the event that the Compensation Committee
and the Board of Directors elect to pay incentive awards in stock or stock
options, the Compensation Committee, in its sole discretion, will make a
determination of the number of shares of stock or stock options to be issued to
each Plan participant based, in part, upon each participant's Corporate and
Individual Performance, as described below. The issuance of stock and stock
options may also be subject to the approval of the Company's stockholders, and
any stock options issued will be subject to the terms and conditions of the
Company's 2004 Equity Incentive Award Plan, as amended from time to time by the
Company.

Corporate and Individual Performance

Prior to the beginning of the Plan year, the President and CEO will present to
the Board of Directors a list of the overall corporate objectives for the coming
year, which are subject to approval by the Board. All participants in the Plan
will then develop a list of key individual objectives, which must be approved by
the responsible Vice President and by the President and CEO.

The Plan calls for incentive awards based on the achievement of annual corporate
and individual objectives that have been approved as indicated above.

The relative weight between corporate and individual performance factors may
vary based on the individual's level within the organization. The weighting will
be reviewed annually and may be adjusted, as necessary or appropriate. The
weighting for 2005 will be as follows:

<TABLE>
<CAPTION>
                                                            Corporate   Individual
                                                            ---------   ----------
<S>                                                         <C>         <C>
President and CEO (Grade 12)                                   100%
Vice Presidents/Executive Directors (Grades 10-11)              75%        25%
All Others (Grades 1-9)                                         50%        50%
</TABLE>

Bonus Percentage

Incentive Awards will be determined by applying a "bonus percentage" to the base
salary of participants in the Plan. The following bonus percentages will be used
for this purpose:

<PAGE>

                                                                    CONFIDENTIAL

<TABLE>
<CAPTION>
GRADE LEVEL      POSITION TITLE                 BONUS PERCENTAGE
-----------      -------------------------      ----------------
<S>              <C>                            <C>
   12            President & CEO                      40%
10 - 11          Officers, Sr. VP, CMO, VP            30%
 8 - 9           Sr. Director, Director               15%
 6 - 7           Sr. Manager, Manager                 10%
</TABLE>

Performance Measurement

The following scale will be used to determine the actual award multiplier for
incentive award calculations based upon measurement of corporate and individual
performance versus objectives. Separate payment multipliers will be established
for both the individual and the corporate components of each award. The same
payment multiplier for the corporate component of each participant's annual
award shall be used for all Plan participants in any given year. The award
multiplier for the corporate component shall be determined by the Board of
Directors.

<TABLE>
<CAPTION>
Performance Category                                                 Award Multiplier
------------------------------------------------------------         ----------------
<S>                                                                  <C>
1. Performance for the year met or exceeded objectives
   or was excellent in view of prevailing conditions                    75% - 150%

2. Performance generally met the year's objectives or
   was very acceptable in view of prevailing conditions                  50% - 75%

3. Performance for the year met some, but not all, objectives             25% - 50%

4. Performance for the year was not acceptable in view of
   prevailing conditions                                                      0%
</TABLE>

Calculation of Cash Incentive Award

The example below shows sample cash incentive award calculations under the
Somaxon compensation and Incentive Plan. First, a total bonus potential is
calculated by multiplying the Employee's base salary by the bonus percentage.
This dollar figure is then divided between its corporate component and its
individual component based on the performance factor mix for that specific
position. This calculation establishes specific dollar potential awards for the
performance period for both the individual and corporate components of the
award.

At the end of the performance period, corporate and individual award multipliers
will be established using the criteria described above. The corporate award

<PAGE>

                                                                    CONFIDENTIAL

multiplier, which is based on overall corporate performance, is used to
calculate corporate performance awards for all Plan participants. This is
accomplished by multiplying the bonus percentage established for each individual
at the beginning of the performance period by the actual corporate award
multiplier. The individual award multiplier, which is based on an individual's
performance against objectives, is used in the same way to calculate the actual
individual performance award.

Example: Cash Award Calculation

         Position:                                                   Manager
         Base Salary:                                                $75,000
         Bonus percentage:                                                10%
         Potential bonus dollars:                                    $ 7,500

         Potential bonus components (based on performance factor mix):
         Potential corporate performance bonus (50%):                $ 3,750
         Potential individual performance bonus (50%):               $ 3,750

         Actual Cash Award Calculation
         Assumed payment multipliers based on assessment of
         corporate and individual performance:
         Corporate multiplier 75%-performance generally met year's objectives
         Individual multiplier 125%-performance generally exceeded
         objectives Cash Award:
             Corporate component                $2,812        ($ 3,750 x 75%)
             Individual component               $4,687        ($3,750 x 125%)

Payment of the Incentive Award

Payment of incentive awards will be made as soon as practicable after the end of
the Plan year but not before the completion and issuance of the Company's
year-end audited Financial Statements. Incentive award calculations will be
based on the participant's base salary as of December 31, 2005. Participants'
entitlement to an incentive award under this Plan does not vest until the awards
are actually paid.

Participants who have been in an eligible position for less than a year, but who
hold an eligible position for at least three months prior to the end of the Plan
year and remain continuously employed through the end of the Plan year, will
receive a pro-rata bonus based on the portion of the Plan year they hold an
eligible position. Participants promoted during the year from one "Bonus
percentage" level to another will have their Incentive Award calculated using
their base pay on December 31, 2005. Providing the promotion occurred prior to
October 1, 2005, the calculation will be pro-rated, based on the number on
months at each Bonus Percentage level. If the promotion occurred after October
1, 2005, the entire calculation will be based on the Bonus Percentage applicable
prior to the promotion. Other than as stated above, incentive awards will not be
prorated for partial year service.

<PAGE>

                                                                    CONFIDENTIAL
Termination

A Plan participant whose employment terminates voluntarily prior to the payment
of the incentive awards, will not be eligible to receive an incentive award.
Continued employment until payment of the incentive award is a condition of
vesting. If a participant's employment is terminated involuntarily during the
calendar year, or prior to payment of awards, it will be at the absolute
discretion of the Company whether or not an award payment is made.

Board of Director's Absolute Right to Alter or Abolish the Plan

The Somaxon Board of Directors reserves the right in its absolute discretion to
abolish the Plan at any time or to alter the terms and conditions under which
incentive compensation will be paid. Such discretion may be exercised any time
before, during, and after the Plan year is completed. No participant shall have
any vested right to receive any compensation hereunder until actual delivery of
such compensation.

Employment Duration/Employment Relationship

This Plan does not, and Somaxon's policies and practices in administering this
Plan do not, constitute an express or implied contract or other agreement
concerning the duration of any participant's employment with the Company. The
employment relationship of each participant is "at will" and may be terminated
at any time by Somaxon or by the participant, with or without cause.

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