Document:

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                                                                    EXHIBIT 10.4

                                 GENECRAFT, INC.

                           2002 EQUITY INCENTIVE PLAN

                           ADOPTED: SEPTEMBER 27, 2002
                  APPROVED BY STOCKHOLDERS: SEPTEMBER 27, 2002
                      TERMINATION DATE: SEPTEMBER 26, 2012

     1. PURPOSES.

          (a) Eligible Stock Award Recipients. The persons eligible to receive
Stock Awards are the Employees, Directors and Consultants of the Company and its
Affiliates.

          (b) Available Stock Awards. The purpose of the Plan is to provide a
means by which eligible recipients of Stock Awards may be given an opportunity
to benefit from increases in value of the Common Stock through the granting of
the following Stock Awards: (i) Incentive Stock Options, (ii) Nonstatutory Stock
Options, (iii) stock bonuses and (iv) rights to acquire restricted stock.

          (c) General Purpose. The Company, by means of the Plan, seeks to
retain the services of the group of persons eligible to receive Stock Awards, to
secure and retain the services of new members of this group and to provide
incentives for such persons to exert maximum efforts for the success of the
Company and its Affiliates.

     2. DEFINITIONS.

          (a) "Affiliate" means any parent corporation or subsidiary corporation
of the Company, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f), respectively, of the Code.

          (b) "Board" means the Board of Directors of the Company.

          (c) "Cause" means, with respect to an Employee: (i) material breach of
the Company's employee handbook or other written Company policy where the breach
constitutes grounds for termination thereunder, (ii) material breach of any
employment agreement, (iii) the commission of any act of fraud, embezzlement or
dishonesty against the Company, (iv) conviction of any felony or any crime of
moral turpitude or dishonesty, (v) intentional damage to the Company's property,
or (vi) any breach of a proprietary information and inventions agreement with
the Company or unauthorized use or disclosure of confidential information or
trade secrets of the Company.

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

          (e) "Committee" means a Committee appointed by the Board in accordance
with subsection 3(c).

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          (f) "Common Stock" means the common stock of the Company.

          (g) "Company" means Genecraft, Inc., a Washington corporation.

          (h) "Consultant" means any person, including an advisor, (i) engaged
by the Company or an Affiliate to render consulting or advisory services and who
is compensated for such services or (ii) who is a member of the Board of
Directors of an Affiliate. However, the term "Consultant" shall not include
either Directors of the Company who are not compensated by the Company for their
services as Directors or Directors of the Company who are merely paid a
director's fee by the Company for their services as Directors.

          (i) "Continuous Service" means that the Participant's service with the
Company or an Affiliate, whether as an Employee, Director or Consultant, is not
interrupted or terminated. The Participant's Continuous Service shall not be
deemed to have terminated merely because of a change in the capacity in which
the Participant renders service to the Company or an Affiliate as an Employee,
Consultant or Director or a change in the entity for which the Participant
renders such service, provided that there is no interruption or termination of
the Participant's Continuous Service, For example, a change in status from an
Employee of the Company to a Consultant of an Affiliate or a Director of the
Company will not constitute an interruption of Continuous Service. The Board or
the chief executive officer of the Company, in that party's sole discretion, may
determine whether Continuous Service shall be considered interrupted in the case
of any leave of absence approved by that party, including sick leave, military
leave or any other personal leave.

          (j) "Corporate Transaction" means any of the following events: (i)
Consummation of any merger or consolidation of the Company in which the Company
is not the continuing or surviving entity, or pursuant to which shares of the
Common Stock are converted into cash, securities or other property (other than a
merger of the Company in which the holders of Common Stock immediately prior to
the merger have the same proportionate ownership of equity of the surviving
entity immediately after the merger); (ii) consummation of any sale, lease,
exchange or other transfer in one transaction or a series of related
transactions of all or substantially all of the Company's assets other than a
transfer of the Company's assets to a majority-owned subsidiary corporation of
the Company; or (iii) approval by the holders of the Common Stock of any plan or
proposal for the liquidation or dissolution of the Company.

          (k) "Covered Employee" means the chief executive officer and the four
(4) other highest compensated officers of the Company for whom total
compensation is required to be reported to stockholders under the Exchange Act,
as determined for purposes of Section 162(m) of the Code.

          (l) "Director" means a member of the Board of Directors of the
Company.

          (m) "Disability" means the permanent and total disability of a person
within the meaning of Section 22(e)(3) of the Code.

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          (n) "Employee" means any person employed by the Company or an
Affiliate. Mere service as a Director or payment of a director's fee by the
Company or an Affiliate shall not be sufficient to constitute "employment" by
the Company or an Affiliate.

          (o) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

          (p) "Fair Market Value" means, as of any date, the value of the Common
Stock determined as follows: (i) if the Common Stock is listed on any
established stock exchange or traded on the Nasdaq National Market or the Nasdaq
SmallCap Market, the Fair Market Value of a share of Common Stock shall be the
closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such exchange or market (or the exchange or market with
the greatest volume of trading in the Common Stock) on the last market trading
day prior to the day of determination, as reported in The Wall Street Journal or
such other source as the Board deems reliable; and (ii) in the absence of such
markets for the Common Stock, the Fair Market Value shall be determined in good
faith by the Board in its sole discretion.

          (q) "Incentive Stock Option" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.

          (r) "Listing Date" means the first date upon which any security of the
Company is listed (or approved for listing) upon notice of issuance on any
securities exchange or designated (or approved for designation) upon notice of
issuance as a national market security on an interdealer quotation system.

          (s) "Non-Employee Director" means a Director of the Company who either
(i) is not a current Employee or Officer of the Company or its parent or a
subsidiary, does not receive compensation (directly or indirectly) from the
Company or its parent or a subsidiary for services rendered as a consultant or
in any capacity other than as a Director (except for an amount as to which
disclosure would not be required under Item 404(a) of Regulation S-K promulgated
pursuant to the Securities Act ("Regulation S-K")), does not possess an interest
in any other transaction as to which disclosure would be required under Item
404(a) of Regulation S-K and is not engaged in a business relationship as to
which disclosure would be required under Item 404(b) of Regulation S-K; or (ii)
is otherwise considered a "non-employee director" for purposes of Rule l6b-3.

          (t) "Nonstatutory Stock Option" means an Option not intended to
qualify as an Incentive Stock Option.

          (u) "Officer" means (i) before the Listing Date, any person designated
by the Company as an officer and (ii) on and after the Listing Date, a person
who is an officer of the Company within the meaning of Section 16 of the
Exchange Act and the rules and regulations promulgated thereunder.

          (v) "Option" means an Incentive Stock Option or a Nonstatutory Stock
Option granted pursuant to the Plan.

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          (w) "Option Agreement" means a written agreement between the Company
and an Optionholder evidencing the terms and conditions of an individual Option
grant. An Option Agreement may be comprised of several separate documents,
including, without limitation, an "agreement" and a separate grant notice
provided to the Optionholder at the time of grant. Each Option Agreement shall
be subject to the terms and conditions of the Plan.

          (x) "Optionholder" means a person to whom an Option is granted
pursuant to the Plan or, if applicable, such other person who holds an
outstanding Option.

          (y) "Outside Director" means a Director of the Company who either (i)
is not a current employee of the Company or an "affiliated corporation" (within
the meaning of Treasury Regulations promulgated under Section 162(m) of the
Code), is not a former employee of the Company or an "affiliated corporation"
receiving compensation for prior services (other than benefits under a tax
qualified pension plan), was not an officer of the Company or an "affiliated
corporation" at any time and is not currently receiving direct or indirect
remuneration from the Company or an "affiliated corporation" for services in any
capacity other than as a Director or (ii) is otherwise considered an "outside
director" for purposes of Section 162(m) of the Code.

          (z) "Participant" means a person to whom a Stock Award is granted
pursuant to the Plan or, if applicable, such other person who holds an
outstanding Stock Award.

          (aa) "Plan" means this Equity Incentive Plan.

          (bb) "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act
or any successor to Rule 16b-3, as in effect from time to time.

          (cc) "Securities Act" means the Securities Act of 1933, as amended.

          (dd) "Stock Award" means any right granted under the Plan, including
an Option, a stock bonus and a right to acquire restricted stock.

          (ee) "Stock Award Agreement" means a written agreement between the
Company and a holder of a Stock Award evidencing the terms and conditions of an
individual Stock Award grant (and, for the avoidance of doubt, shall include an
Option Agreement). Each Stock Award Agreement shall be subject to the terms and
conditions of the Plan.

          (ff) "Ten Percent Stockholder" means a person who owns (or is deemed
to own pursuant to Section 424(d) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or of any of its Affiliates.

          (gg) "Transaction Date" means the date on which a Corporate
Transaction is consummated.

     3. ADMINISTRATION.

          (a) Administration by Board. The Board shall administer the Plan
unless and until the Board delegates administration to a Committee, as provided
in subsection 3(c).

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          (b) Powers of Board. The Board shall have the power, subject to, and
within the limitations of, the express provisions of the Plan:

               (i) To determine from time to time which of the persons eligible
under the Plan shall be granted Stock Awards; when and how each Stock Award
shall be granted; what type or combination of types of Stock Award shall be
granted; the provisions of each Stock Award granted (which need not be
identical), including the time or times when a person shall be permitted to
receive stock pursuant to a Stock Award; and the number of shares with respect
to which a Stock Award shall be granted to each such person.

               (ii) To construe and interpret the Plan and Stock Awards granted
under it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Stock Award Agreement,
in a manner and to the extent it shall deem necessary or expedient to make the
Plan fully effective.

               (iii) To amend the Plan or a Stock Award as provided in Section
12.

               (iv) Generally, to exercise such powers and to perform such acts
as the Board deems necessary or expedient to promote the best interests of the
Company which are not in conflict with the provisions of the Plan.

          (c) Delegation to Committee.

               (i) General. 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. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.

               (ii) Committee Composition when Common Stock is Publicly Traded.
At such time as the Common Stock is publicly traded, in the discretion of the
Board, a Committee may consist solely of two or more Outside Directors, in
accordance with Section 162(m) of the Code, and/or solely of two or more
Non-Employee Directors, in accordance with Rule 16b-3. Within the scope of such
authority, the Board or the Committee may (1) delegate to a committee of one or
more members of the Board who are not Outside Directors, the authority to grant
Stock Awards to eligible persons who are either (a) not then Covered Employees
and are not expected to be Covered Employees at the time of recognition of
income resulting from such Stock Award or (b) not persons with respect to whom
the Company wishes to comply with Section 162(m) of the Code and/or (2) delegate
to a committee of one or more members of the Board who are not Non-Employee

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Directors the authority to grant Stock Awards to eligible persons who are not
then subject to Section 16 of the Exchange Act.

     4. SHARES SUBJECT TO THE PLAN.

          (a) Share Reserve. Subject to the provisions of Section 11 relating to
adjustments upon changes in stock, the stock that may be issued pursuant to
Stock Awards shall not exceed in the aggregate three million seven hundred fifty
thousand (3,750,000) shares of Common Stock.

          (b) Reversion of Shares to the Share Reserve. If any Option shall for
any reason expire or otherwise terminate, in whole or in part, without having
been exercised in full, the stock not acquired under such Option shall revert to
and again become available for issuance under the Plan.

          (c) Source of Shares. The stock subject to the Plan may be unissued
shares or reacquired shares, bought on the market or otherwise.

     5. ELIGIBILITY.

          (a) Eligibility for Specific Stock Awards. Incentive Stock Options may
be granted only to Employees. Stock Awards other than Incentive Stock Options
may be granted to Employees, Directors and Consultants.

          (b) Ten Percent Stockholders. No Ten Percent Stockholder shall be
eligible for the grant of an Incentive Stock Option unless the exercise price of
such Option is at least one hundred ten percent (110%) of the Fair Market Value
of the Common Stock at the date of grant and the Option is not exercisable after
the expiration of five (5) years from the date of grant.

     6. OPTION PROVISIONS.

     Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. All Options shall be separately
designated Incentive Stock Options or Nonstatutory Stock Options at the time of
grant, and a separate certificate or certificates will be issued for shares
purchased on exercise of each type of Option. The provisions of separate Options
need not be identical, but each Option shall include (through incorporation of
provisions hereof by reference in the Option or otherwise) the substance of each
of the following provisions:

          (a) Term. Subject to the provisions of subsection 5(b) regarding Ten
Percent Stockholders, no Incentive Stock Option shall be exercisable more than
ten (10) years from the date of grant.

          (b) Exercise Price of an Incentive Stock Option. Subject to the
provisions of subsection 5(b) regarding Ten Percent Stockholders, the exercise
price of each Incentive Stock Option shall be not less than one hundred percent
(100%) of the Fair Market Value of the stock subject to the Option on the date
the Option is granted. Notwithstanding the foregoing, an Incentive Stock Option
may be granted with an exercise price lower than that set forth in the preceding

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sentence if such Option is granted pursuant to an assumption or substitution for
another option in a manner satisfying the provisions of Section 424(a) of the
Code.

          (c) Consideration. The purchase price of stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised or (ii) at
the discretion of the Board at the time of the grant of the Option (or
subsequently in the case of a Nonstatutory Stock Option) (1) by delivery to the
Company of other Common Stock, (2) according to a deferred payment or other
arrangement (which may include, without limiting the generality of the
foregoing, the use of other Common Stock) with the Participant or (3) in any
other form of legal consideration that may be acceptable to the Board. In the
case of any deferred payment arrangement, interest shall be compounded at least
annually and shall be charged at the minimum rate of interest necessary to avoid
the treatment as interest, under any applicable provisions of the Code, of any
amounts other than amounts stated to be interest under the deferred payment
arrangement.

          (d) Transferability of an Incentive Stock Option. An Incentive Stock
Option shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Optionholder
only by the Optionholder. Notwithstanding the foregoing, the Optionholder may,
by delivering written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of the
Optionholder, shall thereafter be entitled to exercise the Option.

          (e) Transferability of a Nonstatutory Stock Option. A Nonstatutory
Stock Option shall be transferable to the extent provided in the Option
Agreement. If the Nonstatutory Stock Option does not provide for
transferability, then the Nonstatutory Stock Option shall not be transferable
except by will or by the laws of descent and distribution and shall be
exercisable during the lifetime of the Optionholder only by the Optionholder.
Notwithstanding the foregoing, the Optionholder may, by delivering written
notice to the Company, in a form satisfactory to the Company, designate a third
party who, in the event of the death of the Optionholder, shall thereafter be
entitled to exercise the Option.

          (f) Vesting Generally. The Board may establish and set forth in each
Option Agreement (including, specifically and for the avoidance of doubt, in the
component of the Option Agreement consisting of the grant notice provided to the
Optionholder at the time of grant) the time at which or the installments in
which the Option shall vest and become exercisable, which provisions may be
waived or modified by the Board at any time. Any portion of an Option that is
not vested on the date of termination of the Optionholder's Continuous Service
shall terminate and lapse on such date, unless the Board determines otherwise.
If not so established in the Option Agreement, the shares subject to the Option
will vest according to the following schedule, which may be waived or modified
by the Board at any time:

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<TABLE>
<CAPTION>
    PERIOD OF OPTIONHOLDER'S CONTINUOUS
SERVICE WITH COMPANY OR SUBSIDIARIES FROM    PERCENT OF TOTAL OPTION
           DATE OF OPTION GRANT                   THAT IS VESTED
------------------------------------------   -----------------------
<S>                                          <C>
After twelve months                          25%
Each one-month period completed thereafter   An additional 2.083%
After 4 years                                100%
</TABLE>

          (g) Exercise. The Board may establish and set forth in each Option
Agreement whether the Option will continue to be exercisable, and the terms and
conditions of such exercise, if an Optionholder's Continuous Service ceases to
the Company or its Subsidiaries, which provisions may be waived or modified by
the Board at any time. If not so established in the Option Agreement (including,
specifically and for the avoidance of doubt, in the component of the Option
Agreement consisting of the grant notice provided to the Optionholder at the
time of grant), the Option will be exercisable upon the Cessation of an
Optionholder's Continuous Service to the extent of the number of shares vested
at the date of cessation in accordance with the following terms and conditions,
which may be waived or modified by the Board at any time: exercise must occur
(a) within one (1) year if the termination is due to Disability or death, (b)
within thirty (30) days after the termination date if the termination is for
Cause, or (c) within ninety (90) days after the termination date if termination
is for any other reason, provided that in no event shall any exercise be later
than the remaining term of the Option. If an Optionholder's Continuous Service
is suspended pending an investigation of whether the Optionholder shall be
terminated for Cause, all the Optionholder's rights under any Option likewise
shall be suspended during the period of investigation.

          (h) Early Exercise. The Option may, but need not, include a provision
whereby the Optionholder may elect at any time before the Optionholder's
Continuous Service terminates to exercise the Option as to any part or all of
the shares subject to the Option prior to the full vesting of the Option. Any
unvested shares so purchased may be subject to an unvested share repurchase
option in favor of the Company or to any other restriction the Board determines
to be appropriate.

          (i) Right of Repurchase.

               (i) Repurchase Rights. If so specified in the Option Agreement
(which may be done by reference to this subsection 6(i), the Company shall have
the right, but shall not be required, to repurchase from the Optionholder all or
part of (i) the shares of Common Stock that the Optionholder acquires upon
exercise of the Option, and (ii) any other shares of Common Stock or other
securities issued or acquired with respect to the shares specified in the
preceding clause (i) in connection with any stock dividend, stock split,
reclassification, recapitalization, reorganization, split-up, spin-off,
combination, exchange of shares, rights offering, or other transaction or event.
Such right shall be exercisable at any time and from time to time during the
ninety (90) day period commencing on the later of (A) the date of termination of
the Optionholder's employment or services for any reason, or (B) as to an Option
that is exercised following termination of the Optionholder's employment or
services, the date of such exercise.

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<PAGE>

               (ii) Exercise of Repurchase Rights. To exercise its right of
repurchase, the Company shall deliver written notice to the Optionholder
specifying the number of shares or other securities to be repurchased and the
effective date of the repurchase, which date shall not be earlier than the date
of the notice nor later than the date of termination of the Company's right of
repurchase. If an Optionholder transfers shares or other securities that are
subject to the Company's right of repurchase, the shares or other securities
shall remain subject to the Company's right of repurchase during the period
specified in the last sentence of subsection 6(i)(i) (exercise of the right of
repurchase in such event shall be effected by notice to the person or entity
holding the shares or other securities at the time of exercise).

               (iii) Repurchase Price. With respect to each share or other
security to be repurchased by the Company upon its exercise of its right of
repurchase under this subsection 6(i), the repurchase price shall be the Fair
Market Value of the share or security on the effective date of the repurchase.
The Company may elect to pay the amount owed to the Optionholder (or to the
person or entity holding the share or other security to be repurchased) either
(i) in cash, in which case the amount shall be paid, without interest, within
thirty (30) days following the effective date of the repurchase, or (ii) in
three equal installments, the first installment payable on the first anniversary
of the effective date of the repurchase, and the remaining installments payable
on the corresponding date in each of the next two years, with each installment
to include interest on the unpaid principal, computed at the prime rate
published in The Wall Street Journal for the first business day of the month in
which the effective date of the repurchase occurs, for the period from the
effective date of the repurchase or the date of the most recent installment, as
the case may be, to the due date of the installment being paid.

               (iv) Termination of Repurchase Rights. Any right of repurchase
under this subsection 6(i) shall terminate upon the occurrence of an
underwritten public offering by the Company of its equity securities pursuant to
an effective registration statement filed under the Securities Act.

          (j) Right of First Refusal. If so specified in the Option Agreement
(which may be done by reference to this subsection 6(j), if the Optionholder
elects to sell all or any shares of Common Stock that the Optionholder acquires
upon exercise of the Option, then the Optionholder shall not sell the shares
unless the Optionholder shall have first offered in writing to sell the shares
to the Company at Fair Market Value on a date specified in the offer, which date
shall be at least three (3) business days and not more than forty-five (45)
business days following the date of the offer. In the event of any conflict
between the terms of this right of first refusal and any right of first refusal
set forth in any Shareholders Agreement executed by the Optionholder as provided
in subsection 10(d), the terms of the Shareholders Agreement shall control.

     7. PROVISIONS OF STOCK AWARDS OTHER THAN OPTIONS.

          (a) Stock Bonus Awards. Each stock bonus agreement shall be in such
form and shall contain such terms and conditions as the Board shall deem
appropriate. The terms and conditions of stock bonus agreements may change from
time to time, and the terms and conditions of separate stock bonus agreements
need not be identical, but each stock bonus agreement shall include

                                      -9-

<PAGE>

(through incorporation of provisions hereof by reference in the agreement or
otherwise) the substance of each of the following provisions:

               (i) Consideration. A stock bonus shall be awarded in
consideration for past services actually rendered to the Company or an Affiliate
for its benefit.

               (ii) Vesting. Shares of Common Stock awarded under the stock
bonus agreement may, but need not, be subject to a share repurchase option in
favor of the Company in accordance with a vesting schedule to be determined by
the Board.

               (iii) Termination of Participant's Continuous Service. In the
event a Participant's Continuous Service terminates, the Company may reacquire
any or all of the shares of Common Stock held by the Participant which have not
vested as of the date of termination under the terms of the stock bonus
agreement.

               (iv) Transferability. Rights to acquire shares under the stock
bonus agreement shall be transferable by the Participant only upon such terms
and conditions as are set forth in the stock bonus agreement, as the Board shall
determine in its discretion, so long as stock awarded under the stock bonus
agreement remains subject to the terms of the stock bonus agreement.

          (b) Restricted Stock Awards. Each restricted stock purchase agreement
shall be in such form and shall contain such terms and conditions as the Board
shall deem appropriate. The terms and conditions of the restricted stock
purchase agreements may change from time to time, and the terms and conditions
of separate restricted stock purchase agreements need not be identical, but each
restricted stock purchase agreement shall include (through incorporation of
provisions hereof by reference in the agreement or otherwise) the substance of
each of the following provisions:

               (i) Purchase Price. The purchase price under each restricted
stock purchase agreement shall be such amount as the Board shall determine and
designate in such restricted stock purchase agreement.

               (ii) Consideration. The purchase price of stock acquired pursuant
to the restricted stock purchase agreement shall be paid either: (i) in cash at
the time of purchase; (ii) at the discretion of the Board, according to a
deferred payment or other arrangement with the Participant; or (iii) in any
other form of legal consideration that may be acceptable to the Board in its
discretion; provided, however, that at any time that the Company is incorporated
in Delaware, payment of the Common Stock's "par value," as defined in the
Delaware General Corporation Law, shall not be made by deferred payment.

               (iii) Vesting. Shares of Common Stock acquired under the
restricted stock purchase agreement may, but need not, be subject to a share
repurchase option in favor of the Company in accordance with a vesting schedule
to be determined by the Board.

               (iv) Termination of Participant's Continuous Service. In the
event a Participant's Continuous Service terminates, the Company may repurchase
or otherwise reacquire

                                      -10-

<PAGE>

any or all of the shares of Common Stock held by the Participant which have not
vested as of the date of termination under the terms of the restricted stock
purchase agreement.

               (v) Transferability. Rights to acquire shares under the
restricted stock purchase agreement shall be transferable by the Participant
only upon such terms and conditions as are set forth in the restricted stock
purchase agreement, as the Board shall determine in its discretion, so long as
stock awarded under the restricted stock purchase agreement remains subject to
the terms of the restricted stock purchase agreement.

     8. COVENANTS OF THE COMPANY.

          (a) Availability of Shares. During the terms of the Stock Awards, the
Company shall keep available at all times the number of shares of Common Stock
required to satisfy such Stock Awards.

          (b) Securities Law Compliance. The Company shall seek to obtain from
each regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to grant Stock Awards and to issue and sell shares
of Common Stock upon exercise of the Stock Awards; provided, however, that this
undertaking shall not require the Company to register under the Securities Act
the Plan, any Stock Award or any stock issued or issuable pursuant to any such
Stock Award. If, after reasonable efforts, the Company is unable to obtain from
any such regulatory commission or agency the authority which counsel for the
Company deems necessary for the lawful issuance and sale of stock under the
Plan, the Company shall be relieved from any liability for failure to issue and
sell stock upon exercise of such Stock Awards unless and until such authority is
obtained.

     9. USE OF PROCEEDS PROM STOCK.

     Proceeds from the sale of stock pursuant to Stock Awards shall constitute
general funds of the Company.

     10. MISCELLANEOUS.

          (a) Acceleration of Exercisability and Vesting. Individual Stock Award
Agreements may contain different vesting provisions and may, on an individual
basis, contain provisions relating to the acceleration of the exercisability or
vesting of the Stock Award under certain circumstances. In addition, the Board
shall have the power to accelerate the time at which a Stock Award may first be
exercised or the time during which a Stock Award or any part thereof will vest
in accordance with the Plan, notwithstanding the provisions in the Stock Award
stating the time at which it may first be exercised or the time during which it
will vest.

          (b) Stockholder Rights. No Participant shall be deemed to be the
holder of, or to have any of the rights of a holder with respect to, any shares
subject to such Stock Award unless and until such Participant has satisfied all
requirements for exercise of the Stock Award pursuant to its terms.

                                      -11-

<PAGE>

          (c) No Employment or other Service Rights. Nothing in the Plan or any
instrument executed or Stock Award granted pursuant thereto shall confer upon
any Participant any right to continue to serve the Company or an Affiliate in
the capacity in effect at the time the Stock Award was granted or shall affect
the right of the Company or an Affiliate to terminate (i) the employment of an
Employee with or without notice and with or without Cause, (ii) the service of a
Consultant pursuant to the terms of such Consultant's agreement with the Company
or an Affiliate or (iii) the service of a Director pursuant to the Bylaws of the
Company or an Affiliate, and any applicable provisions of the corporate law of
the state in which the Company or the Affiliate is incorporated, as the case may
be.

          (d) Shareholders Agreement. To the extent required by the Board, as a
condition to exercise of an Option or receipt of a stock bonus or acquisition of
restricted stock, the Participant shall execute and deliver to the Company a
Shareholders Agreement in substantially the form in use at the time of exercise,
unless the Participant has previously executed and delivered such Shareholder
Agreement and it is in effect at the time the Participant exercises the Option
or, receives the stock bonus or right to acquire restricted stock.

          (e) Incentive Stock Option $100,000 Limitation. To the extent that the
aggregate Fair Market Value (determined at the time of grant) of stock with
respect to which Incentive Stock Options are exercisable for the first time by
any Optionholder during any calendar year (under all plans of the Company and
its Affiliates) exceeds one hundred thousand dollars ($100,000), the Options or
portions thereof which exceed such limit (according to the order in which they
were granted) shall be treated as Nonstatutory Stock Options.

          (f) Taxation of Incentive Stock Options. In order to obtain certain
tax benefits afforded to Incentive Stock Options under Section 422 of the Code,
the Optionholder must hold the shares issued upon the exercise of an Incentive
Stock Option for two years after the Grant Date of the Incentive Stock Option
and one year from the date of exercise. An Optionholder may be subject to the
alternative minimum tax and/or withholding of social security and employment
taxes at the time of exercise of an Incentive Stock Option. The Board may
require an Optionholder to give the Company prompt notice of any disposition of
shares acquired by the exercise of an Incentive Stock Option prior to the
expiration of such holding periods.

          (g) Investment Assurances. The Company may require a Participant, as a
condition of exercising or acquiring stock under any Stock Award, (i) to give
written assurances satisfactory to the Company as to the Participant's knowledge
and experience in financial and business matters and/or to employ a purchaser
representative reasonably satisfactory to the Company who is knowledgeable and
experienced in financial and business matters and that he or she is capable of
evaluating, alone or together with the purchaser representative, the merits and
risks of exercising the Stock Award; and (ii) to give written assurances
satisfactory to the Company stating that the Participant is acquiring the stock
subject to the Stock Award for the Participant's own account and not with any
present intention of selling or otherwise distributing the stock. The Company
may, upon advice of counsel to the Company, place legends on stock certificates
issued under the Plan as such counsel deems necessary or appropriate in order to
comply with applicable securities laws, including, but not limited to, legends
restricting the transfer of the stock.

                                      -12-

<PAGE>

          (h) Withholding Obligations; Tax Elections. To the extent provided by
the terms of a Stock Award Agreement, the Participant may satisfy any federal,
state or local tax withholding obligation relating to the exercise or
acquisition of stock under a Stock Award by any of the following means (in
addition to the Company's right to withhold from any compensation paid to the
Participant by the Company) or by a combination of such means: (i) tendering a
cash payment; (ii) authorizing the Company to withhold shares from the shares of
the Common Stock otherwise issuable to the participant as a result of the
exercise or acquisition of stock under the Stock Award; or (iii) delivering to
the Company owned and unencumbered shares of the Common Stock. If the
Participant shall fail to pay, or make arrangements satisfactory to the Board
for the payment of, all such taxes, then the Company shall, to the extent not
prohibited by law, have the right to deduct from any payment of any kind
otherwise due to the Participant an amount equal to any taxes of any kind
required to be withheld by the Company with respect to the Stock Award. If the
date of determination of any tax withholding obligation is deferred to a date
later than the date of exercise of an Option or receipt of the stock bonus or
right to acquire restricted stock, share withholding as set forth above shall
not be permitted unless the Participant makes a proper and timely election under
Section 83(b) of the Code, covering the aggregate number of shares of Common
Stock acquired with respect to which such determination is otherwise deferred,
to accelerate the determination of such tax withholding. Notwithstanding the
filing of such election, shares shall be withheld solely from fully vested
shares of Common Stock determined as of the date of exercise or receipt, as the
case may be, that are otherwise issuable to the Participant at that time. Any
adverse consequences to the Participant arising in connection with such share
withholding procedure shall be the Participant's sole responsibility.

          (i) Plan Not Exclusive. Neither the adoption of the Plan by the Board
nor any submission of the Plan to the shareholders of the Company for approval
shall be construed as creating any limitations on the power of the Board to
adopt such other incentive arrangements as it may deem desirable, including, but
not limited to, the granting of stock options and the awarding of stock and cash
outside of the Plan, and such arrangements may be either generally applicable or
applicable only in specific cases.

     11. ADJUSTMENTS UPON CHANGES IN STOCK.

          (a) Capitalization Adjustments. If any change is made in the stock
subject to the Plan, or subject to any Stock Award, without the receipt of
consideration by the Company (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Plan will be appropriately
adjusted in the class(es) and maximum number of securities subject to the Plan
pursuant to subsection 4(a) and the maximum number of securities subject to
award to any person, and the outstanding Stock Awards will be appropriately
adjusted in the class(es) and number of securities and price per share of stock
subject to such outstanding Stock Awards. The Board shall make such adjustments,
and its determination shall be final, binding and conclusive. (The conversion of
any convertible securities of the Company shall not be treated as a transaction
"without receipt of consideration" by the Company.)

                                      -13-

<PAGE>

          (b) Corporate Transactions. The Board may establish and set forth in
each Option Agreement the terms and conditions which shall apply if a Corporate
Transaction occurs, which terms and conditions may be waived or modified by the
Board at any time. If not so established in the Option Agreement, the following
provisions shall apply if a Corporate Transaction occurs:

               (i) Notice. The Company shall use all reasonable efforts to
provide each Optionholder with notice of the pendency of the Corporate
Transaction at least thirty (30) days prior to the expected Transaction Date.

               (ii) Limited Acceleration Rights. Effective immediately prior to
the Transaction Date, if the Optionholder of an Option is in the Continuous
Service of the Company on the Transaction Date and has been in Continuous
Service for at least one (1) year, the Option shall become exercisable for the
number of shares for which it would have been exercisable if the Optionholder
had remained in Continuous Service until the date one year after the Transaction
Date.

               (iii) Exercise. Each Optionholder may, subject to Section
11(b)(iv), exercise all vested Options within the thirty (30) day period
following receipt of the notice specified in subsection 11(b)(i), including, to
the extent applicable, any Options vesting on an accelerated basis under
subsection 1l(b)(ii); provided that any such exercise shall be contingent upon
the consummation of the Corporate Transaction and such accelerated vesting shall
be contingent upon the Optionholder's satisfying the conditions described in
subsection 11(b)(ii).

               (iv) Termination. Upon consummation of the Corporate Transaction,
all Options shall terminate.

               (v) Continuing Options. Notwithstanding the above, subsection
11(b)(ii) through subsection 11(b)(iv) shall not apply to an Option if the Board
determines that the Company or another party to the Corporate Transaction has
made equitable and appropriate provision for continuation of the Option, or for
replacement of the Option with a new award on terms which are, as nearly as
practicable, the financial equivalent of the Option, taking into account the
consideration that Optionholder will receive in the Corporate Transaction. An
equitable and appropriate replacement of an Option shall include, but not be
limited to, the making of a cash payment to the Optionholder, in cancellation of
the Option, of such amount as the Board determines represents the value the
Option would then have if it were exercisable for all of the shares under the
Option.

     12. AMENDMENT OF THE PLAN AND STOCK AWARDS.

          (a) Amendment of Plan. The Board at any time, and from time to time,
may amend the Plan. However, except as provided in Section 11 relating to
adjustments upon changes in stock, no amendment shall be effective unless
approved by the stockholders of the Company to the extent stockholder approval
is necessary to satisfy the requirements of Section 422 of the Code, Rule 16b-3
or any Nasdaq or securities exchange listing requirements.

          (b) Stockholder Approval. The Board may, in its sole discretion,
submit any other amendment to the Plan for stockholder approval, including, but
not limited to, amendments to the Plan intended to satisfy the requirements of
Section 162(m) of the Code and the regulations

                                      -14-

<PAGE>

thereunder regarding the exclusion of performance-based compensation from the
limit on corporate deducibility of compensation paid to certain executive
officers.

          (c) Contemplated Amendments. It is expressly contemplated that the
Board may amend the Plan in any respect the Board deems necessary or advisable
to provide eligible Employees with the maximum benefits provided or to be
provided under the provisions of the Code and the regulations promulgated
thereunder relating to Incentive Stock Options and/or to bring the Plan and/or
Incentive Stock Options granted under it into compliance therewith.

          (d) No Impairment of Rights. Rights under any Stock Award granted
before amendment of the Plan shall not be impaired by any amendment of the Plan
unless (i) the Company requests the consent of the Participant and (ii) the
Participant consents in writing.

          (e) Amendment of Stock Awards. The Board at any time, and from time to
time, may amend the terms of any one or more Stock Awards; provided, however,
that the rights under any Stock Award shall not be impaired by any such
amendment unless (i) the Company requests the consent of the Participant and
(ii) the Participant consents in writing.

     13. TERMINATION OR SUSPENSION OF THE PLAN.

          (a) Plan Term. The Board may suspend or terminate the Plan at any
time. Unless sooner terminated, the Plan shall terminate on the day before the
tenth (10th) anniversary of the date the Plan is adopted by the Board or
approved by the stockholders of the Company, whichever is earlier. No Stock
Awards may be granted under the Plan while the Plan is suspended or after it is
terminated.

          (b) No Impairment of Rights. Suspension or termination of the Plan
shall not impair rights and obligations under any Stock Award granted while the
Plan is in effect except with the written consent of the Participant.

     14. EFFECTIVE DATE OP PLAN.

     The Plan shall become effective as determined by the Board, but no Stock
Award shall be exercised (or, in the case of a stock bonus, shall be granted)
unless and until the Plan has been approved by the stockholders of the Company,
which approval shall be within twelve (12) months before or after the date the
Plan is adopted by the Board.

     15. CHOICE OF LAW.

     All questions concerning the construction, validity and interpretation of
this Plan shall be governed by the law of the State of Washington, without
regard to such state's conflict of laws rules.

                                      -15-<PAGE>

                                                                    EXHIBIT 10.5

                                 GENECRAFT, INC.

                             STOCK OPTION AGREEMENT

                   (INCENTIVE AND NONSTATUTORY STOCK OPTIONS)

     Pursuant to the Stock Option Grant Notice ("Grant Notice") and this Stock
Option Agreement, Genecraft, Inc. (the "Company") has granted you an option
under its 2002 Equity Incentive Plan (the "Plan") to purchase the number of
shares of the Company's Common Stock indicated in the Grant Notice at the
exercise price indicated in the Grant Notice. Defined terms not explicitly
defined in this Stock Option Agreement but defined in the Plan shall have the
same definitions as in the Plan.

     The details of your option are as follows:

     1. VESTING. Subject to the limitations contained herein, your option will
vest as provided in Section 6(f) of the Plan, provided that vesting will cease
immediately upon the termination of your Continuous Service for any reason.

     2. NUMBER OF SHARES AND EXERCISE PRICE. The number of shares subject to
your option and your exercise price per share referenced in the Grant Notice may
be adjusted from time to time for capitalization adjustments, as provided in
Section 11 of the Plan.

     3. METHOD OF PAYMENT. Payment of the exercise price is due in full upon
exercise of all or any part of your option. You may elect to make payment of the
exercise price in cash or by check or in any other manner expressly permitted by
the Plan.

     4. WHOLE SHARES. Your option may only be exercised for whole shares.

     5. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary
contained herein, your option may not be exercised unless the shares issuable
upon exercise of your option are then registered under the Securities Act or, if
such shares are not then so registered, the Company has determined that such
exercise and issuance would be exempt from the registration requirements of the
Securities Act. The exercise of your option must also comply with other
applicable laws and regulations governing the option, and the option may not be
exercised if the Company determines that the exercise would not be in material
compliance with such laws and regulations.

     6. TERM. Unless earlier terminated in accordance with the provisions of the
Plan, your option will terminate on the earliest to occur of:

          (A) the applicable date set forth in Section 6(g) of the Plan;

          (B) the Expiration Date indicated in the Grant Notice;

          (C) the occurrence of certain Corporate Transactions, as set forth in
Section 11 of the Plan.

GENECRAFT, INC.
STOCK OPTION AGREEMENT

                                        1

<PAGE>

If your option is an incentive stock option, note that, to obtain the federal
income tax advantages associated with an "incentive stock option," the Code
requires that at all times beginning on the date of grant of the option and
ending on the day three (3) months before the date of the option's exercise, you
must be an employee of the Company or an Affiliate, except in the event of your
death or your Disability. The Company cannot in any circumstances guarantee that
your option will be treated as an "incentive stock option."

     7. EXERCISE.

          (A) You may exercise the vested portion of your option (and the
unvested portion of your option if the Grant Notice so permits) during its term
by delivering a Notice of Exercise (in a form designated by the Company)
together with the exercise price to the Secretary of the Company, or to such
other person as the Company may designate, during regular business hours,
together with such additional documents as the Company may then require.

          (B) By exercising your option you agree that, as a condition to any
exercise of your option, the Company may require you to enter an arrangement
providing for the payment by you to the Company of any tax withholding
obligation of the Company arising by reason of (1) the exercise of your option,
(2) the lapse of any substantial risk of forfeiture to which the shares are
subject at the time of exercise, and/or (3) the disposition of shares acquired
upon such exercise.

          (C) If your option is an incentive stock option, by exercising your
option you agree that you will notify the Company in writing within fifteen (15)
days after the date of any disposition of any of the shares of the Common Stock
issued upon exercise of your option that occurs within two (2) years after the
date of your option grant or within one (1) year after such shares of Common
Stock are transferred upon exercise of your option.

          (D) By exercising your option you agree that the Company (or a
representative of the underwriters) may, in connection with the first
underwritten registration of the offering of any securities of the Company under
the Securities Act, require that you not sell, dispose of, transfer, make any
short sale of, grant any option for the purchase of, or enter into any hedging
or similar transaction with the same economic effect as a sale, any shares of
Common Stock or other securities of the Company held by you, for a period of
time specified by the underwriter(s) (not to exceed one hundred eighty (180)
days) following the effective date of the registration statement of the Company
filed under the Securities Act. You further agree to execute and deliver such
other agreements as may be reasonably requested by the Company and/or the
underwriter(s) which are consistent with the foregoing or which are necessary to
give further effect thereto. In order to enforce the foregoing covenant, the
Company may impose stop-transfer instructions with respect to your Common Stock
until the end of such period.

          (E) By exercising your option you agree to execute and deliver to the
Company a Shareholders Agreement in substantially the form in use at the time of
exercise, unless you have previously executed and delivered such Shareholders
Agreement and it is in effect at the time you exercise your option.

                                        2

<PAGE>

     8. RIGHT OF REPURCHASE; RIGHT OF FIRST REFUSAL. The Company will have
certain repurchase and first refusal rights with respect to shares you purchase
pursuant to your option, as set forth in Section 6(i) and Section 6(j) of the
Plan, respectively.

     9. TRANSFERABILITY. Your option is not transferable, except by will or by
the laws of descent and distribution, and is exercisable during your life only
by you. Notwithstanding the foregoing, by delivering written notice to the
Company, in a form satisfactory to the Company, you may designate a third party
who, in the event of your death, shall thereafter be entitled to exercise your
option.

     10. OPTION NOT A SERVICE CONTRACT. Your option is not an employment or
service contract, and nothing in your option shall be deemed to create in any
way whatsoever any obligation on your part to continue in the employ of the
Company or any Affiliate, or of the Company or any Affiliate to continue your
employment. In addition, nothing in your option shall obligate the Company or
any Affiliate, their respective stockholders, boards of directors, officers or
employees to continue any relationship that you might have as a director,
officer or consultant for the Company or any Affiliate.

     11. WITHHOLDING OBLIGATIONS.

          (A) At the time your option is exercised, in whole or in part, or at
any time thereafter as requested by the Company, you hereby authorize
withholding from payroll and any other amounts payable to you, and otherwise
agree to make adequate provision for (including by means of a "cashless
exercise" pursuant to a program developed under Regulation T as promulgated by
the Federal Reserve Board to the extent permitted by the Company), any sums
required to satisfy the federal, state, local and foreign tax withholding
obligations of the Company or an Affiliate, if any, which arise in connection
with your option.

          (B) Upon your request and subject to approval by the Company, in its
sole discretion, and compliance with any applicable conditions or restrictions
of law, the Company may withhold from fully vested shares of Common Stock
otherwise issuable to you upon the exercise of your option a number of whole
shares having a Fair Market Value, determined by the Company as of the date of
exercise, not in excess of the minimum amount of tax required to be withheld by
law. If the date of determination of any tax withholding obligation is deferred
to a date later than the date of exercise of your option, share withholding
pursuant to the preceding sentence shall not be permitted unless you make a
proper and timely election under Section 83(b) of the Code, covering the
aggregate number of shares of Common Stock acquired upon such exercise with
respect to which such determination is otherwise deferred, to accelerate the
determination of such tax withholding obligation to the date of exercise of your
option. Notwithstanding the filing of such election and subject to approval by
the Company in its sole discretion, shares shall be withheld solely from fully
vested shares of Common Stock determined as of the date of exercise of your
option that are otherwise issuable to you upon such exercise. Any adverse
consequences to you arising in connection with such share withholding procedure
shall be your sole responsibility.

          (C) Your option is not exercisable unless the tax withholding
obligations of the Company and/or any Affiliate are satisfied. Accordingly, you
may not be able to exercise

                                        3

<PAGE>

your option when desired even though your option is vested, and the Company
shall have no obligation to issue a certificate for such shares or release such
shares from any escrow provided for herein.

     12. NOTICES. Any notices provided for in your option or the Plan shall be
given in writing and shall be deemed effectively given upon receipt or, in the
case of notices delivered by the Company to you, five (5) days after deposit in
the United States mail, postage prepaid, addressed to you at the last address
you provided to the Company.

     13. GOVERNING PLAN DOCUMENT. Your option is subject to all the provisions
of the Plan, the provisions of which are hereby made a part of your option, and
is further subject to all interpretations, amendments, rules and regulations
which may from time to time be promulgated and adopted pursuant to the Plan. In
the event of any conflict between the provisions of your option and those of the
Plan, the provisions of the Plan shall control.

                                        4

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