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Exhibit 10.1  

 
 

TAPESTRY PHARMACEUTICALS, INC.
  
    2004 EQUITY INCENTIVE PLAN

ADOPTED: APRIL 19, 2004

APPROVED BY STOCKHOLDERS: JULY 6, 2004

TERMINATION DATE: APRIL 19, 2014

1.     PURPOSES.

         (a)   Eligible Stock Award Recipients. The persons eligible to receive Stock Awards are Employees and Consultants. 

         (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
Purchase Awards, (iii) Stock Bonus Awards, (iv) Stock Appreciation Rights, (v) Stock Unit Awards and (vi) Other Stock Awards. 

         (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)   "Capitalization Adjustment" has the meaning ascribed to that term in Section 11(a). 

        (d)   "Change in Control" means the occurrence, in a single transaction or in a series of related transactions,
 of any one or
more of the following events:

         (i)    any Exchange Act Person becomes the Owner, directly or indirectly, of securities of the Company representing more than fifty
percent (50%) of the
combined voting power of the Company's then outstanding securities other than by virtue of a merger, consolidation or similar transaction; 

        (ii)   there is consummated a merger, consolidation or similar transaction involving (directly or indirectly) the Company if, immediately after
the
consummation of such merger, consolidation or similar transaction, the stockholders of the Company immediately prior thereto do not Own, directly or indirectly, either (A) outstanding voting
securities representing more than fifty percent (50%) of the combined outstanding voting power of the surviving Entity in such merger, consolidation or similar transaction or (B) more than
fifty percent (50%) of the combined outstanding voting power of the parent of the surviving Entity in such merger, consolidation or similar transaction; 

        (iii) the stockholders of the Company approve or the Board approves a plan of complete dissolution or liquidation of the Company, or a complete
dissolution or liquidation of the Company shall otherwise occur; 

 

         (iv)  there is consummated a sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Company and its
Subsidiaries, other than a sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries to an Entity, more than fifty percent
(50%) of the combined voting power of the voting securities of which are Owned by stockholders of the Company in substantially the same proportion as their Ownership of the Company immediately prior
to such sale, lease, license or other disposition; or 

         (v)   individuals who, on the date this Plan is adopted by the Board, are members of the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the members of the Board; (provided, however, that if the appointment or election (or nomination for election) of any
new Board member was approved or recommended by a majority vote of the members of the Incumbent Board then still in office, such new member shall, for purposes of this Plan, be considered as a member
of the Incumbent Board). 

        The
term Change in Control shall not include a sale of assets, merger or other transaction effected exclusively for the purpose of changing the domicile of the Company. 

        Notwithstanding
the foregoing or any other provision of this Plan, the definition of Change in Control (or any analogous term) in an individual written agreement between the Company or
any Affiliate and the Participant shall supersede the foregoing definition with respect to Stock Awards subject to such agreement (it being understood, however, that if no definition of Change in
Control or any analogous term is set forth in such an individual written agreement, the foregoing definition shall apply). 

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

         (f)    "Committee" means a committee of one (1) or more members of the Board appointed by the Board
in accordance with
Section 3(c). 

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

         (h)   "Company" means Tapestry Pharmaceuticals, Inc., a Delaware corporation. 

         (i)    "Consultant" means any person other than a Director or Employee (i) who acts as a consultant
or advisor to the
Company or an Affiliate and who is compensated for such services or (ii) who serves as a member of the Board of Directors of an Affiliate and who is compensated for such services. 

         (j)    "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. 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 service with the Company or an Affiliate, shall not
terminate a Participant's Continuous Service. For example, a change in status from an employee of the Company to a consultant to an Affiliate or to a Director shall 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. Notwithstanding the foregoing, a leave of absence shall be treated as Continuous Service
for purposes of vesting in a Stock Award only to such extent as may be provided in the Company's leave of absence policy or in the written terms of the Participant's leave of absence. 

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         (k)   "Corporate Transaction" means the occurrence, in a single transaction or in a series of related
transactions, of any one
or more of the following events:

         (i)    a sale or other disposition of all or substantially all, as determined by the Board in its discretion, of the consolidated assets
of the Company
and its Subsidiaries; 

        (ii)   a sale or other disposition of at least [ninety percent
(90%)] of the outstanding securities of the Company; 

         (iii) a merger, consolidation or similar transaction following which the Company is not the surviving corporation; or 

         (iv)  a merger, consolidation or similar transaction following which the Company is the surviving corporation but the shares of Common Stock
outstanding immediately preceding the merger, consolidation or similar transaction are converted or exchanged by virtue of the merger, consolidation or similar transaction into other property, whether
in the form of securities, cash or otherwise. 

         (l)    "Covered Employee" means a covered employee as defined in Section 162(m) of the Code.

         (m)  "Director" means a member of the Board. 

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

         (o)   "Employee" means any person employed by the Company or an Affiliate. However, service as a Director, or
payment of a fee
for such service, shall not cause a Director to be considered an Employee for purposes of the Plan. 

        (p)   "Entity" means a corporation, partnership or other entity. 

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

         (r)   "Exchange Act Person" means any natural person, Entity or "group" (within the meaning of
Section 13(d) or 14(d) of
the Exchange Act), except that "Exchange Act Person" shall not include (A) the Company or any Subsidiary of the Company, (B) any employee benefit plan of the Company or any Subsidiary of
the Company or any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Subsidiary of the Company, (C) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (D) an Entity Owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their
Ownership of stock of the Company. 

         (s)   "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, unless otherwise determined by the Board, 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 day of determination (or if such day of
determination does not fall on a market trading day, then 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. 

        (ii)   In the absence of such markets for the Common Stock, the Fair Market Value shall be determined by the Board in good faith. 

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         (t)    "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. 

         (u)   "Non-Employee Director" means a Director who either (i) is not currently an employee or officer of
the
Company or an Affiliate, does not receive compensation, either directly or indirectly, from the Company or an Affiliate, 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 for which disclosure would be required under Item 404(a) of Regulation S-K, and is not
engaged in a business relationship for which disclosure would be required pursuant to Item 404(b) of Regulation S-K; or (ii) is otherwise considered a
"non-employee director" for purposes of Rule 16b-3. 

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

         (w)  "Officer" means 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. 

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

         (y)   "Option Agreement" means a written agreement between the Company and an Optionholder evidencing the
terms and conditions
of an individual Option grant. Each Option Agreement shall be subject to the terms and conditions of the Plan. 

        (z)   "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. 

         (aa) "Other Stock Award" means an award based in whole or in part by reference to the Common Stock which is granted
pursuant
to the terms and conditions of Section 7(e). 

         (bb) "Other Stock Award Agreement" means a written agreement between the Company and a holder of an Other Stock Award
evidencing the terms and conditions of an Other Stock Award grant. Each Other Stock Award Agreement shall be subject to the terms and conditions of the Plan. 

         (cc) "Outside Director" means a Director 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" who receives
compensation for prior services (other than benefits under a tax-qualified retirement plan) during the taxable year, has not been an officer of the Company or an "affiliated corporation",
and does not receive remuneration from the Company or an "affiliated corporation," either directly or indirectly, 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. 

         (dd) "Own," "Owned," "Owner," "Ownership" A person or Entity shall be deemed to "Own," to have "Owned," to be the
"Owner" of,
or to have acquired "Ownership" of securities if such person or Entity, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares voting power,
which includes the power to vote or to direct the voting, with respect to such securities. 

        (ee) "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. 

         (ff)  "Plan" means this Tapestry Pharma, Inc. 2004 Equity Incentive Plan. 

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        (gg) "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. 

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

         (ii)   "Stock Appreciation Right" means a right to receive the appreciation on Common Stock that is granted
pursuant to the
terms and conditions of Section 7(c). 

        (jj)  "Stock Appreciation Right Agreement" means a written agreement between the Company and a holder of a Stock
Appreciation
Right evidencing the terms and conditions of a Stock Appreciation Right grant. Each Stock Appreciation Right Agreement shall be subject to the terms and conditions of the Plan. 

         (kk) "Stock Award" means any right granted under the Plan, including an Option, a Stock Purchase Award, a Stock Bonus
Award,
a Stock Appreciation Right, a Stock Unit Award or any Other Stock Award. 

        (ll)   "Stock Award Agreement" means a written agreement between the Company and a Participant evidencing the
terms and
conditions of an individual Stock Award grant. Each Stock Award Agreement shall be subject to the terms and conditions of the Plan. 

         (mm) Stock Bonus Award" means an award of shares of Common Stock which is granted pursuant to the terms and conditions
of
Section 7(b). 

         (nn) "Stock Bonus Award Agreement" means a written agreement between the Company and a holder of a Stock Bonus Award
evidencing the terms and conditions of a Stock Bonus Award grant. Each Stock Bonus Award Agreement shall be subject to the terms and conditions of the Plan. 

         (oo) "Stock Purchase Award" means an award of shares of Common Stock which is granted pursuant to the terms and
conditions of
Section 7(a). 

         (pp) "Stock Purchase Award Agreement" means a written agreement between the Company and a holder of a Stock Purchase
Award
evidencing the terms and conditions of a Stock Purchase Award grant. Each Stock Purchase Award Agreement shall be subject to the terms and conditions of the Plan. 

         (qq) "Stock Unit Award" means a right to receive shares of Common Stock which is granted pursuant to the terms and
conditions
of Section 7(c). 

         (rr)  "Stock Unit Award Agreement" means a written agreement between the Company and a holder of a Stock Unit
Award evidencing
the terms and conditions of a Stock Unit Award grant. Each Stock Unit Award Agreement shall be subject to the terms and conditions of the Plan. 

        (ss) "Subsidiary" means, with respect to the Company, (i) any corporation of which more than fifty percent (50%) of
the outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, stock of any other class or classes
of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, Owned by the Company, and (ii) any partnership
in which the Company has a direct or indirect interest (whether in the form of voting or participation in profits or capital contribution) of more than fifty percent (50%). 

        (tt)  "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. 

3.     ADMINISTRATION.

        (a)   Administration by Board. The Board shall administer the Plan unless and until the Board delegates administration of the Plan to a
Committee, as
provided in Section 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 Common Stock pursuant to a Stock Award; and the number of shares of Common Stock 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)  To terminate or suspend the Plan as provided in Section 13. 

         (v)   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 and that are not in conflict with the provisions of the Plan. 

         (c)   Delegation to Committee.

         (i)    General. The Board may delegate some or all of the administration of the Plan to a
Committee or
Committees of one (1) 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 that has been delegated to the Committee, 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 retain the authority to concurrently administer
the Plan with the Committee and may, at any time, revest in the Board any or all of the powers previously delegated. 

         (ii)   Section 162(m) and Rule 16b-3 Compliance. In the discretion of the
Board, the 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. In addition, the Board or the Committee, in their discretion, may (1) delegate to a committee of one or more members of the Board who need not be
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 (1) or more members of the Board who need not be Non-Employee Directors the authority to grant Stock Awards to eligible persons who are not then subject to Section 16
of the Exchange Act. 

         (d)   Delegation to an Officer. The Board may delegate to one or more Officers of the Company the authority to do one or both of the following
(i) designate Employees of the Company or any of its Subsidiaries who are not Officers to be recipients of Stock Awards and (ii) determine the number of shares of Common Stock to be
subject to such Stock Awards granted to such Employees of the Company; provided, however, that the Board resolutions regarding such delegation shall
specify the total number of shares of Common Stock that may be subject to the Stock Awards granted by such Officer 

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and
that such Officer may not grant a Stock Award to himself or herself. Notwithstanding the foregoing, the Board may not delegate authority to an Officer to determine the Fair Market Value of the
Common Stock. 

        (e)   Effect of Board's Decision. All determinations, interpretations and constructions made by the Board in good faith shall not be subject to
review
by any person and shall be final, binding and conclusive on all persons. 

4.     SHARES SUBJECT TO THE PLAN.

         (a)   Share Reserve. Subject to the provisions of Section 11(a) relating to Capitalization Adjustments, the Common Stock that may be
issued
pursuant to Stock Awards shall not exceed in the aggregate two million (2,000,000) shares of Common Stock; provided, however, that subject to the
provisions of Section 11(a) relating to Capitalization Adjustments, the aggregate maximum number of shares of Common Stock that may be issued as Stock Purchase Awards, Stock Bonus Awards, Stock
Unit Awards or Other Stock Awards shall be five hundred thousand (500,000) shares of Common Stock. 

         (b)   Reversion of Shares to the Share Reserve. If any Stock Award shall for any reason expire or otherwise terminate, in whole or in part,
without
having been exercised in full, or if any shares of Common Stock issued to a Participant pursuant to a Stock Award are forfeited back to or repurchased by the Company, including, but not limited to,
any repurchase or forfeiture caused by the failure to meet a contingency or condition required for the vesting of such shares, then the shares of Common Stock not acquired under such Stock Award shall
revert to and again become available for issuance under the Plan; provided, however, that subject to the provisions of Section 11(a) relating to
Capitalization Adjustments, the aggregate maximum number of shares of Common Stock that may be issued as Incentive Stock Options shall be two million (2,000,000) shares of Common Stock. If any shares
subject to a Stock Award are not delivered to a Participant because such shares are withheld for the payment of taxes or the Stock Award is exercised through a reduction of shares subject to the Stock
Award (i.e., "net exercised"), then the number of shares that are not delivered shall revert to and again become available for issuance under the Plan.
If the exercise price of any Stock Award is satisfied by tendering shares of Common Stock held the Participant (either by actual deliver or attestation), then the number of such tendered shares shall
revert to and again become available for issuance under the Plan. 

         (c)   Source of Shares. The shares of Common 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 and Consultants. 

         (b)   Ten Percent Stockholders. A Ten Percent Stockholder shall not be granted 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 on the date of grant and the Option is not exercisable after the expiration of five (5) years from the date of
grant. 

        (c)   Section 162(m) Limitation on Annual Grants. Subject to the provisions of Section 11(a) relating to Capitalization Adjustments,
no
Employee shall be eligible to be granted Options or Stock Appreciation Rights covering more than four hundred thousand (400,000) shares of Common Stock during any calendar year. 

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         (d)   Consultants. A Consultant shall not be eligible for the grant of a Stock Award if, at the time of grant, a Form S-8
Registration Statement under the Securities Act ("Form S-8") is not available to register either the offer or the sale of the Company's securities to such Consultant because of the
nature of the services that the Consultant is providing to the Company, because the Consultant is not a natural person, or because of any other rule governing the use of Form S-8. 

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, if certificates are issued, a separate certificate or certificates shall be issued for shares of Common Stock 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. The Board shall determine the term of any Option granted under the Plan; provided that,
subject to the provisions of Section 5(b) regarding Ten Percent Stockholders, no Incentive Stock Option shall be exercisable after the expiration of ten (10) years from the date on which
it was granted. 

        (b)   Exercise Price of an Incentive Stock Option. Subject to the provisions of Section 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 Common 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 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)   Exercise Price of a Nonstatutory Stock Option. The exercise price of each Nonstatutory Stock Option shall be not less than
one-hundred percent (100%) of the Fair Market Value of the Common Stock subject to the Option on the date the Option is granted. Notwithstanding the foregoing, a Nonstatutory Stock Option
may be granted with an exercise price lower than that set forth in the preceding 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. 

         (d)   Consideration. The purchase price of Common Stock acquired pursuant to an Option shall be paid, to the extent permitted by applicable
statutes
and regulations, either (i) in cash or check 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 at the time the Option is exercised, (2) according to a deferred payment or other similar
arrangement with the Optionholder or (3) by a "net exercise" of the Option (as further described below) (4) pursuant to a program developed under Regulation T as promulgated by
the Federal Reserve Board that, prior to the issuance of Common Stock, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the aggregate
exercise price to the Company from the sales proceeds or (5) in any other form of legal consideration that may be acceptable to the Board. Unless otherwise specifically provided in the Option,
the purchase price of Common Stock acquired pursuant to an Option that is paid by delivery to the Company of other Common Stock acquired, directly or indirectly from the Company, shall be paid only by
shares of the Common Stock of the Company that have been held for more than six (6) months (or such longer or shorter period of time required to avoid a charge to earnings for financial
accounting purposes). 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. 

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        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 (1) 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 and (2) the treatment of the
Option as a variable award for financial accounting purposes. 

        In
the case of a "net exercise" of an Option, the Company will not require a payment of the exercise price of the Option from the Participant but will reduce the number of shares of
Common Stock issued upon the exercise by the largest number of whole shares that has a Fair Market Value that does not exceed the aggregate exercise price. With respect to any remaining balance of the
aggregate exercise price, the Company shall accept a cash payment from the Participant. Shares of Common Stock will no longer be outstanding under an Option (and therefore not thereafter be
exercisable) following the exercise of such Option to the extend of (i) shares used to pay the exercise price of an Option under a "net exercise" (ii) shares actually delivered to the
Participant as a result of such exercise, and (iii) shares withheld for purposes of tax withholding. 

         (e)   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 provided by or otherwise 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)    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 provided by
or otherwise 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. 

         (g)   Vesting Generally. The total number of shares of Common Stock subject to an Option may, but need not, vest and therefore become
exercisable in
periodic installments that may, but need not, be equal. The Option may be subject to such other terms and conditions on the time or times when it may be exercised (which may be based on performance or
other criteria) as the Board may deem appropriate. The vesting provisions of individual Options may vary. The provisions of this Section 6(g) are subject to any Option provisions governing the
minimum number of shares of Common Stock as to which an Option may be exercised. 

         (h)   Termination of Continuous Service. In the event that an Optionholder's Continuous Service terminates (other than upon the Optionholder's
death or
Disability), the Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled to exercise such Option as of the date of termination) but only within such period of
time ending on the earlier of (i) the expiration of the term of the Option as set forth in the Option Agreement or (ii) the date one hundred eighty (180) days (ninety
(90) days in the case of Incentive Stock Options) following the termination of the Optionholder's Continuous Service (or such longer or shorter period specified in the Option Agreement). If,
after termination of Continuous Service, the Optionholder does not exercise his or her Option within the time specified in the Option Agreement (as applicable), the Option shall terminate. 

         (i)    Extension of Termination Date. An Optionholder's Option Agreement may (but need not) provide that if the exercise of the Option
following the
termination of the Optionholder's Continuous Service (other than upon the Optionholder's death or Disability) would be prohibited at any time solely because the issuance of shares of Common Stock
would violate the registration requirements under the 

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Securities
Act, then the Option shall terminate on the earlier of (i) the expiration of the term of the Option set forth in Section 6(a) or (ii) the expiration of a period of
three (3) months after the termination of the Optionholder's Continuous Service during which the exercise of the Option would not be in violation of such registration requirements. 

        (j)    Disability of Optionholder. In the event that an Optionholder's Continuous Service terminates as a result of the Optionholder's
Disability, the
Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled to exercise such Option as of the date of termination of Continuous Service), but only within such period
of time ending on the earlier of (i) the expiration of the term of the Option as set forth in the Option Agreement or (ii) the date twelve (12) months following such termination
(or such longer or shorter period specified in the Option Agreement). If, after termination of Continuous Service, the Optionholder does not exercise his or her Option within the time specified herein
or in the Option Agreement (as applicable), the Option shall terminate. 

        (k)   Death of Optionholder. In the event that (i) an Optionholder's Continuous Service terminates as a result of the Optionholder's death
or
(ii) the Optionholder dies within the period (if any) specified in the Option Agreement after the termination of the Optionholder's Continuous Service, then the Option may be exercised (to the
extent the Optionholder was entitled to exercise such Option as of the date of death) by the Optionholder's estate, by a person who acquired the right to exercise the Option by bequest or inheritance
or by a person designated to exercise the option upon the Optionholder's death pursuant to Section 6(e) or 6(f), but only within the period ending on the earlier of (i) the expiration of
the term of such Option as set forth in the Option Agreement of (ii) the date eighteen (18) months following the date of death (or such longer or shorter period specified in the Option
Agreement or (2). If, after the Optionholder's death, the Option is not exercised within the time specified herein or in the Option Agreement (as applicable), the Option shall terminate. 

         (l)    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 of Common Stock subject to the Option prior to the full vesting of the Option. Any unvested shares of Common
Stock so purchased may be subject to a repurchase option in favor of the Company or to any other restriction the Board determines to be appropriate. The Company shall not be required to exercise its
repurchase option until at least six (6) months (or such longer or shorter period of time required to avoid a charge to earnings for financial accounting purposes) have elapsed following
exercise of the Option unless the Board otherwise specifically provides in the Option. 

7.     PROVISIONS OF STOCK AWARDS OTHER THAN OPTIONS.

        (a)   Stock Purchase Awards. Each Stock Purchase Award Agreement shall be in such form and shall contain such terms and conditions as the Board
shall
deem appropriate. At the Board's election, shares of Common Stock may be (i) held in book entry form subject to the Company's instructions until any restrictions relating to the Stock Purchase
Award lapse; or (ii) evidenced by a certificate, which certificate shall be held in such form and manner as determined by the Board. The terms and conditions of Stock Purchase Award Agreements
may change from time to time, and the terms and conditions of separate Stock Purchase Award Agreements need not be identical, provided, however, that
each Stock Purchase Award Agreement shall include (through incorporation of the provisions hereof by reference in the agreement or otherwise) the substance of each of the following
provisions:

         (i)    Purchase Price. At the time of the grant of a Stock Purchase Award, the Board will
determine the
price to be paid by the Participant for each share subject to the Stock Purchase Award. To the extent required by applicable law, the price to be paid by the Participant for each share of the Stock
Purchase Award will not be less than the par value of a share of Common Stock. 

10

 

         (ii)   Consideration. At the time of the grant of a Stock Purchase Award, the Board will
determine the
consideration permissible for the payment of the purchase price of the Stock Purchase Award. The purchase price of Common Stock acquired pursuant to the Stock Purchase Award shall be paid either:
(i) in cash at the time of purchase or (ii) in any other form of legal consideration that may be acceptable to the Board and permissible under the Delaware General Corporation Law. 

         (iii) Vesting. Shares of Common Stock acquired under a Stock Purchase Award may be subject to a share
repurchase right or 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 that a Participant's Continuous
Service terminates, the Company shall have the right, but not the obligation, to repurchase or otherwise reacquire, any or all of the shares of Common Stock held by the Participant that have not
vested as of the date of termination under the terms of the Stock Purchase Award Agreement. At the Board's election, the repurchase right may be at the least of: (i) the Fair Market Value on
the relevant date or (ii) the Participant's original cost. The Company shall not be required to exercise its repurchase option until at least six (6) months (or such longer or shorter
period of time required to avoid a charge to earnings for financial accounting purposes) have elapsed following the purchase of the restricted stock unless otherwise determined by the Board or
provided in the Stock Purchase Award Agreement. 

        (v)   Transferability. Rights to purchase or receive shares of Common Stock granted under a Stock
Purchase Award shall be transferable by the Participant only upon such terms and conditions as are set forth in the Stock Purchase Award Agreement, as the Board shall determine in its sole discretion,
and so long as Common Stock awarded under the Stock Purchase Award remains subject to the terms of the Stock Purchase Award Agreement. 

         (b)   Stock Bonus Awards. Each Stock Bonus Award Agreement shall be in such form and shall contain such terms and conditions as the Board shall
deem
appropriate. At the Board's election, shares of Common Stock may be (i) held in book entry form subject to the Company's instructions until any restrictions relating to the Stock Bonus Award
lapse; or (ii) evidenced by a certificate, which certificate shall be held in such form and manner as determined by the Board. The terms and conditions of Stock Bonus Award Agreements may
change from time to time, and the terms and conditions of separate Stock Bonus Award Agreements need not be identical, but each Stock Bonus Award Agreement shall include (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 Award may be awarded in consideration for past services
actually
rendered to the Company or an Affiliate. 

         (ii)   Vesting. Shares of Common Stock awarded under the Stock Bonus Award Agreement may be
subject to
forfeiture to 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 receive via a forfeiture condition, any or all of the shares of Common Stock held by the Participant which have not vested as of the date of termination of
Continuous Service under the terms of the Stock Bonus Award Agreement. 

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

11

 

         (c)   Stock Unit Awards. Each Stock Unit Award 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 Unit Award Agreements may change from time to time, and the terms and conditions of separate Stock Unit Award Agreements need not be identical,  provided, however, that each Stock Unit Award Agreement shall include (through incorporation of the provisions hereof by reference in the agreement or
otherwise) the substance of each of the following provisions:

         (i)    Consideration. At the time of grant of a Stock Unit Award, the Board will determine
the
consideration, if any, to be paid by the Participant upon delivery of each share of Common Stock
subject to the Stock Unit Award. To the extent required by applicable law, the consideration to be paid by the Participant for each share of Common Stock subject to a Stock Unit Award will not be less
than the par value of a share of Common Stock. The consideration may be paid in any form permitted under applicable law. 

        (ii)   Vesting. At the time of the grant of a Stock Unit Award, the Board may impose such
restrictions
or conditions to the vesting of the Stock Unit Award as it, in its sole discretion, deems appropriate. 

         (iii) Payment. A Stock Unit Award may be settled by the delivery of shares of Common Stock, their
cash equivalent, any combination thereof or in any other form of consideration as determined by the Board and contained in the Stock Unit Award Agreement. 

        (iv)  Additional Restrictions. At the time of the grant of a Stock Unit Award, the Board, as it deems
appropriate, may impose such restrictions or conditions that delay the delivery of the shares of Common Stock (or their cash equivalent) subject to a Stock Unit Award after the vesting of such Stock
Unit Award. 

         (v)   Dividend Equivalents. Dividend equivalents may be credited in respect of shares of Common
Stock
covered by a Stock Unit Award, as determined by the Board and contained in the Stock Unit Award Agreement. At the sole discretion of the Board, such dividend equivalents may be converted into
additional shares of Common Stock covered by the Stock Unit Award in such manner as determined by the Board. Any additional shares covered by the Stock Unit Award credited by reason of such dividend
equivalents will be subject to all the terms and conditions of the underlying Stock Unit Award Agreement to which they relate. 

         (vi)  Termination of Participant's Continuous Service. Except as otherwise provided in the applicable
Stock Unit Award Agreement, such portion of the Stock Unit Award that has not vested will be forfeited upon the Participant's termination of Continuous Service. 

        (d)   Stock Appreciation Rights. Each Stock Appreciation Right 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 Appreciation Right Agreements may change from time to time, and the terms and conditions of separate Stock Appreciation Right Agreements need
not be identical, provided, however, that each Stock Appreciation Right Agreement shall include (through incorporation of the provisions hereof by
reference in the agreement or otherwise) the substance of each of the following provisions:

        (i)    Strike Price and Calculation of Appreciation. Each Stock Appreciation Right will be
denominated
in share of Common Stock equivalents. The appreciation distribution payable on the exercise of a Stock Appreciation Right will be not greater than an amount equal to the excess of (A) the
aggregate Fair Market Value (on the date of the exercise of the Stock Appreciation Right) of a number of shares of Common Stock equal to the number of share of Common Stock equivalents in which the
Participant is vested under such Stock Appreciation Right, and with respect to which the Participant is exercising the Stock Appreciation Right on such date, over (B) an amount (the strike
price) that will be determined by the Board at the time of grant of the Stock Appreciation Right. 

12

 

         (ii)   Vesting. At the time of the grant of a Stock Appreciation Right, the Board may impose
such
restrictions or conditions to the vesting of such Stock Appreciation Right as it, in its sole discretion, deems appropriate. 

        (iii) Exercise. To exercise any outstanding Stock Appreciation Right, the Participant must provide
written notice of exercise to the Company in compliance with the provisions of the Stock Appreciation Right Agreement evidencing such Stock Appreciation Right. 

         (iv)  Payment. The appreciation distribution in respect to a Stock Appreciation Right may be paid in
Common Stock, in cash, in any combination of the two or in any other form of consideration as determined by the Board and contained in the Stock Appreciation Right Agreement evidencing such Stock
Appreciation Right. 

        (v)   Termination of Continuous Service. In the event that a Participant's Continuous Service
terminates, the Participant may exercise his or her Stock Appreciation Right (to the extent that the Participant was entitled to exercise such Stock Appreciation Right as of the date of termination)
but only within such period of time ending on the earlier of (i) the date three (3) months following the termination of the Participant's Continuous Service (or such longer or shorter
period specified in the Stock Appreciation Right Agreement) or (ii) the expiration of the term of the Stock Appreciation Right as set forth in the Stock Appreciation Right Agreement. If, after
termination, the Participant does not exercise his or her Stock Appreciation Right within the time specified herein or in the Stock Appreciation Right Agreement (as applicable), the Stock Appreciation
Right shall terminate. 

         (e)   Other Stock Awards. Other forms of Stock Awards valued in whole or in part by reference to, or otherwise based on, Common Stock may be
granted
either alone or in addition to Stock Awards provided for under Section 6 and the preceding provisions of this Section 7. Subject to the provisions of the Plan, the Board shall have sole
and complete authority to determine the persons to whom and the time or times at which such Other Stock Awards will be granted, the number of shares of Common Stock (or the cash equivalent thereof) to
be granted pursuant to such Awards and all other terms and conditions of such Awards. 

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 Common 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 Common
Stock under the Plan, the Company shall be relieved from any liability for failure to issue and sell Common Stock upon exercise of such Stock Awards unless and until such authority is obtained. 

9.     USE OF PROCEEDS FROM STOCK.

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

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10.   MISCELLANEOUS.

         (a)   Acceleration of Exercisability and Vesting. 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 of
Common Stock subject to such Stock Award unless and until such Participant has satisfied all requirements for exercise of the Stock Award pursuant to its terms. 

         (c)   No Employment or other Service Rights. Nothing in the Plan, any Stock Award Agreement or any other instrument executed thereunder or any
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)   Incentive Stock Option $100,000 Limitation. To the extent that the aggregate Fair Market Value (determined at the time of grant) of
Common 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 that exceed such limit (according to the order in which they were granted) shall be treated as Nonstatutory Stock Options, notwithstanding
any contrary provision of the applicable Option Agreement. 

         (e)   Investment Assurances. The Company may require a Participant, as a condition of exercising or acquiring Common 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 Common Stock
subject to the Stock Award for the Participant's own account and not with any present intention of selling or otherwise distributing the Common Stock. The foregoing requirements, and any assurances
given pursuant to such requirements, shall be inoperative if (1) the issuance of the shares of Common Stock upon the exercise or acquisition of Common Stock under the Stock Award has been
registered under a then currently effective registration statement under the Securities Act or (2) as to any particular requirement, a determination is made by counsel for the Company that such
requirement need not be met in the circumstances under the then applicable securities laws. 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 Common Stock. 

         (f)    Withholding Obligations. To the extent provided by the terms of a Stock Award Agreement, the Company may, in its sole discretion,
satisfy any
federal, state or local tax withholding obligation relating to 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) causing the Participant to tender a cash payment; (ii) withholding shares of Common Stock 

14

 

from
the shares of Common Stock issued or otherwise issuable to the Participant in connection with the Stock Award; or (iii) via such other method as may be set forth in the Stock Award
Agreement. 

11.   ADJUSTMENTS UPON CHANGES IN STOCK.

        (a)   Capitalization Adjustments. If any change is made in, or other event occurs with respect to, the Common 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 (each a
"Capitalization Adjustment"), the Plan will be appropriately adjusted in the class(es) and maximum number of securities subject to the Plan pursuant to Sections 4(a) and 4(b) and the maximum number of
securities subject to award to any person pursuant to Section 5(c), and the outstanding Stock Awards will be appropriately adjusted in the class(es) and number of securities and price per share
of Common Stock subject to such outstanding Stock Awards. The Board shall make such adjustments, and its determination shall be final, binding and conclusive. (Notwithstanding the foregoing, the
conversion of any convertible securities of the Company shall not be treated as a transaction "without receipt of consideration" by the Company.) 

         (b)   Dissolution or Liquidation. In the event of a dissolution or liquidation of the Company, then all outstanding Stock Awards shall
terminate
immediately prior to the completion of such dissolution or liquidation. 

        (c)   Corporate Transaction. In the event of a Corporate Transaction, any surviving corporation or acquiring corporation may (but need not)
assume or
continue any or all Stock Awards outstanding under the Plan or may (but need not) substitute similar stock awards for Stock Awards outstanding under the Plan (including awards to acquire the same
consideration paid to the stockholders of the Company, as the case may be, pursuant to the Corporate Transaction), and any reacquisition or repurchase rights held by the Company in respect of Common
Stock issued pursuant to Stock Awards may be assigned by the Company to the successor of the Company (or the successor's parent company), if any, in connection with such Corporate Transaction. In the
event that any surviving corporation or acquiring corporation does not assume or continue all such outstanding Stock Awards or substitute similar stock awards for all such outstanding Stock Awards,
then with respect to Stock Awards that have been not assumed, continued or substituted and that are held by Participants whose Continuous Service has not terminated prior to the effective time of the
Corporate Transaction, the vesting of such Stock Awards (and, if applicable, the time at which such Stock Awards may be exercised) shall (contingent upon the effectiveness of the Corporate
Transaction) be accelerated in full to a date prior to the effective time of such Corporate Transaction as the Board shall determine (or, if the Board shall not determine such a date, to the date that
is five (5) days prior to the effective time of the Corporate Transaction), and such Stock Awards shall terminate if not exercised (if applicable) at or prior to such effective time, and any
reacquisition or repurchase rights held by the Company with respect to such Stock Awards shall (contingent upon the effectiveness of the Corporate Transaction) lapse. With respect to any other Stock
Awards outstanding under the Plan that have not been assumed, continued or substituted, the vesting of such Stock Awards (and, if applicable, the time at which such Stock Award may be exercised) shall
not be accelerated, unless otherwise provided in a written agreement between the Company or any Affiliate and the holder of such Stock Award, and such Stock Awards shall terminate if not exercised (if
applicable) prior to the effective time of the Corporate Transaction. 

         (d)   Change in Control. A Stock Award may be subject to additional acceleration of vesting and exercisability upon or after a Change of
Control as may
be provided in the Stock Award Agreement for such Stock Award or as may be provided in any other written agreement between the Company or any Affiliate and the Participant, but in the absence of such
provision, no such acceleration shall occur. 

15

 

12.   AMENDMENT OF THE PLAN AND STOCK AWARDS.

        (a)   Amendment of Plan. Subject to the limitations, if any of applicable law, the Board at any time, and from time to time, may amend the Plan.
However, except as provided in Section 11(a) relating to Capitalization Adjustments, no amendment shall be effective unless approved by the stockholders of the Company to the extent stockholder
approval is necessary to satisfy applicable law or any securities exchange listing requirements. 

         (b)   Stockholder Approval. The Board, in its sole discretion, may 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 thereunder regarding the exclusion of performance-based compensation
from the limit on corporate deductibility of compensation paid to Covered Employees. 

         (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, including,
but not
limited to, amendments to provide terms more favorable than previously provided in the agreement evidencing the Stock Award, subject to any specified limits in the Plan that are not subject to Board
discretion; 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; and provided further, however, that no previously granted Stock
Award may be repriced, replaced or regranted through cancellation, or by lowering the exercise price of a previously granted Stock Award without the prior approval of the Company's stockholders. 

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 OF PLAN.

        The
Plan shall become effective upon receipt of approval of the Company's stockholders. 

15.   CHOICE OF LAW.

        The
law of the State of Delaware shall govern all questions concerning the construction, validity and interpretation of this Plan, without regard to such state's conflict of laws rules. 

        The
Company has executed this Plan effective July 6, 2004. 

	 	 	Tapestry Pharmaceuticals, Inc.
	

  	
 	

 	
 	

 
	

 	
 	
BY:	
 	

/s/  KAI P. LARSON      

16

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Exhibit 10.2  

 
 

TAPESTRY PHARMACEUTICALS, INC.
  
    2004 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN  
  

ADOPTED APRIL 19, 2004

APPROVED BY STOCKHOLDERS JULY 6, 2004

1.     PURPOSES.  

         (a)   Eligible Option Recipients. The persons eligible to receive Options are the Non-Employee Directors of the Company. 

         (b)   Available Options. The purpose of the Plan is to provide a means by which Non-Employee Directors may be given an opportunity to
benefit from increases in value of the Common Stock through the granting of Nonstatutory Stock Options. 

        (c)   General Purpose. The Company, by means of the Plan, seeks to retain the services of its Non-Employee Directors, to secure and retain
the services of new Non-Employee Directors 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)   "Capitalization Adjustment" has the meaning ascribed to that term in Section 11(a). 

        (d)   "Change in Control" means the occurrence, in a single transaction or in a series of related transactions,
 of any one or
more of the following events:

         (i)    any Exchange Act Person becomes the Owner, directly or indirectly, of securities of the Company representing more than fifty
percent (50%) of the
combined voting power of the Company's then outstanding securities other than by virtue of a merger, consolidation or similar transaction; 

        (ii)   there is consummated a merger, consolidation or similar transaction involving (directly or indirectly) the Company if, immediately after
the
consummation of such merger, consolidation or similar transaction, the stockholders of the Company immediately prior thereto do not Own, directly or indirectly, either (A) outstanding voting
securities representing more than fifty percent (50%) of the combined outstanding voting power of the surviving Entity in such merger, consolidation or similar transaction or (B) more than
fifty percent (50%) of the combined outstanding voting power of the parent of the surviving Entity in such merger, consolidation or similar transaction; 

        (iii) the stockholders of the Company approve or the Board approves a plan of complete dissolution or liquidation of the Company, or a complete
dissolution or liquidation of the Company shall otherwise occur; 

         (iv)  there is consummated a sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Company and its
Subsidiaries, other than a sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries to an Entity, more than fifty percent
(50%) of the combined voting power of the voting securities of which are Owned by stockholders of the Company in substantially the same 

 

proportion
as their Ownership of the Company immediately prior to such sale, lease, license or other disposition; or 

         (v)   individuals who, on the date this Plan is adopted by the Board, are members of the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the members of the Board; (provided, however, that if the appointment or election (or nomination for election) of any
new Board member was approved or recommended by a majority vote of the members of the Incumbent Board then still in office, such new member shall, for purposes of this Plan, be considered as a member
of the Incumbent Board). 

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

         (f)    "Committee" means a committee of one (1) or more members of the Board appointed by the Board
in accordance with
Section 3(c). 

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

         (h)   "Company" means Tapestry Pharmaceuticals, Inc., a Delaware corporation. 

         (i)    "Consultant" means any person other than a Director or Employee (i) who acts as a consultant
or advisor to the
Company or an Affiliate and who is compensated for such services or (ii) who serves as a member of the Board of Directors of an Affiliate and who is compensated for such services. 

         (j)    "Continuous Service" means that the Participant's service with the Company or an Affiliate,
whether as an Director,
Employee or Consultant, is not interrupted or terminated. A change in the capacity in which the Participant renders service to the Company or an Affiliate as an Director, Employee or Consultant 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 service with the Company or an Affiliate, shall not
terminate a Participant's Continuous Service. For example, a change in status from a Director of the Company to a Consultant to an Affiliate or to an Employee shall not constitute an interruption of
Continuous Service. The Board, in its sole discretion, may determine whether Continuous Service shall be considered interrupted in the case of any leave of absence approved by the Board, including
sick leave, military leave or any other personal leave. Notwithstanding the foregoing, a leave of absence shall be treated as Continuous Service for purposes of vesting in a Option only to such extent
as may be provided in the Company's leave of absence policy or in the written terms of the Participant's leave of absence. 

        (k)   "Corporate Transaction" means the occurrence, in a single transaction or in a series of related
transactions, of any one
or more of the following events:

         (i)    a sale or other disposition of all or substantially all, as determined by the Board in its discretion, of the consolidated assets
of the Company
and its Subsidiaries; 

        (ii)   a sale or other disposition of at least ninety percent (90%) of the outstanding securities of the Company; 

         (iii) a merger, consolidation or similar transaction following which the Company is not the surviving corporation; or 

         (iv)  a merger, consolidation or similar transaction following which the Company is the surviving corporation but the shares of Common Stock
outstanding immediately preceding the merger, consolidation or similar transaction are converted or exchanged by virtue of the merger, consolidation or similar transaction into other property, whether
in the form of securities, cash or otherwise. 

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

2

 

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

         (n)   "Eligible Director" has the meaning ascribed to that term in Section 6
(a). 

         (o)   "Employee" means any person employed by the Company or an Affiliate. Service as a Director or payment
of a director's fee
by the Company for such service or for service as a member of the Board of Directors of an Affiliate shall not be sufficient to constitute "employment" by the Company or an Affiliate. 

         (p)   "Entity" means a corporation, partnership or other entity. 

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

        (r)   "Exchange Act Person" means any natural person, Entity or "group" (within the meaning of Section 13
(d) or 14(d) of
the Exchange Act), except that "Exchange Act Person" shall not include (A) the Company or any Subsidiary of the Company, (B) any employee benefit plan of the Company or any Subsidiary of
the Company or any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Subsidiary of the Company, (C) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (D) an Entity Owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their
Ownership of stock of the Company. 

        (s)   "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, unless otherwise determined by the Board, 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 day of determination (or if such day of determination does not fall on a market trading
day, then 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. 

         (ii)   In the absence of such markets for the Common Stock, the Fair Market Value shall be determined in good faith by the Board. 

        (t)    "Non-Employee Director" means a Director who is not an Employee. 

         (u)   "Nonstatutory Stock Option" means an Option not intended to qualify as an incentive stock option within
the meaning of
Section 422 of the Code and the regulations promulgated thereunder. 

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

        (w)  "Option Agreement" means a written agreement between the Company and an Optionholder evidencing the terms and
conditions
of an individual Option 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)   "Own," "Owned," "Owner," "Ownership" A person or Entity shall be deemed to "Own," to have "Owned," to be
the "Owner" of,
or to have acquired "Ownership" of securities if such person or Entity, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares voting power,
which includes the power to vote or to direct the voting, with respect to such securities. 

3

 

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

         (aa) "Plan" means this Tapestry Pharmaceuticals, Inc. 2004 Non-Employee Director Stock Option Plan. 

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

        (cc) "Subsidiary" means, with respect to the Company, (i) any corporation of which more than fifty percent (50%) of
the outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, stock of any other class or classes
of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, Owned by the Company, and (ii) any partnership
in which the Company has a direct or indirect interest (whether in the form of voting or participation in profits or capital contribution) of more than fifty percent (50%). 

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
Section 3(c). 

         (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 the provisions of each Option to the extent not specified in the Plan. 

         (ii)   To construe and interpret the Plan and Options 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 Option 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 an Option 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 and that are not in conflict with the provisions of the Plan. 

         (c)   Delegation to Committee. The Board may delegate administration of the Plan to a Committee or Committees of one (1) 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. 

        (d)   Effect of Board's Decision. All determinations, interpretations and constructions made by the Board in good faith shall not be subject to
review
by any person and shall be final, binding and conclusive on all persons. 

4.     SHARES SUBJECT TO THE PLAN.  

         (a)   Share Reserve. Subject to the provisions of Section 11 relating to adjustments upon changes in the Common Stock, the Common Stock
that may
be issued pursuant to Options shall not exceed in the aggregate four hundred thousand (400,000) shares of Common Stock. 

4

 

         (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, or if any shares of Common Stock issued to a Participant pursuant to an Option are forfeited back to or repurchased by the Company, including, but not limited to, any
repurchase or forfeiture caused by the failure to meet a contingency or condition required for the vesting of such shares, then the shares of Common Stock not acquired under such Option shall revert
to and again become available for issuance under the Plan. If any shares subject to an Option are not delivered to a Participant because such shares are withheld for the payment of taxes or the Option
is exercised through a reduction of shares subject to the Option (i.e., "net exercised"), then the number of shares that are not delivered shall revert
to and again become available for issuance under the Plan. If the exercise price of any Option is satisfied by tendering shares of Common Stock held the Participant (either by actual deliver or
attestation), then the number of such tendered shares shall revert to and again become available for issuance under the Plan. 

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

5.     ELIGIBILITY.  

        The Options shall be granted to Non-Employee Directors as specified in Section 6. 

6.     AUTOMATIC AND DISCRETIONARY OPTION GRANTS.  

        (a)   Automatic Option Grants.

         (i)    Options covering 10,000 shares of Common Stock shall be automatically granted to each Non-Employee Director who (A) is elected
or reelected as a director of the Company at an annual meeting of the Company's stockholders, (B) continues service as a director of the Company after an annual meeting of the Company's
stockholders at which the director is not subject to reelection, or (C) is appointed as a director of the Company in accordance with its Bylaws following an annual meeting (each, an "Eligible
Director"), on the next business day following each such annual meeting or appointment. 

         (ii)   In addition, Options covering 10,000 shares of Common Stock shall be automatically granted to each Eligible Director who is appointed or
reappointed as the chairman of the Audit, Compensation or Nominating and Corporate Governance Committee of the Board (or any additional permanent committee of the Board other than the Research and
Development Committee, whose grants are addressed in Section 6(a)(iii)) following an annual meeting of the Company's stockholders, on the business day next succeeding each such appointment or
continuation of service, as the case may be. 

         (iii) In addition, Options covering 7,500 shares of Common Stock shall be automatically granted to each Eligible Director who is appointed to the
Research and Development Committee of the Board, on the next business day following such appointment. Thereafter, Options covering 3,000 shares of Common Stock shall automatically be granted to each
Eligible Director who continues service as a member of the Research and Development Committee of the Board after an annual meeting of the Company's stockholders, on the next business day following
such Eligible Director's continuation of such service. 

        Options
automatically granted to an Eligible Director pursuant to this Section 6(a) shall be subject to the applicable provisions of Section 7. 

         (b)   Discretionary Option Grants. In addition to the automatic grant of Options to Eligible Directors set forth in Section 6(a), the
Board
shall have the authority to grant Eligible Directors 

5

 

Options
at such times and on such terms as it may determine in its sole discretion, subject however, to the applicable provisions of Section 7. 

7.     OPTION PROVISIONS. 

        Each
Option shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate and as required by the Plan. 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. Options granted automatically under Section 6(a) shall expire ten (10) years after the date of grant. Options granted at
the
discretion of the Board under Section 6(b) shall not expire more than ten (10) years after the date of grant as specified by the Board in its discretion. 

         (b)   Exercise Price. The exercise price of each Option shall be equal to one-hundred percent (100%) of the Fair Market Value of the Common
Stock subject to the Option on the date the Option is granted. 

        (c)   Consideration. The purchase price of Common Stock acquired pursuant to an Option shall be paid, to the extent permitted by applicable
statutes
and regulations, in any combination of (i) in cash or check at the time the Option is exercised, (ii) by delivery to the Company of other Common Stock, (iii) pursuant to a program
developed under Regulation T as promulgated by the Federal Reserve Board that, prior to the issuance of Common Stock, results in either the receipt of cash (or check) by the Company or the
receipt of irrevocable instruction to pay the aggregate exercise price to the Company from the sales proceeds, (iv) in the discretion of the Board, (1) according to a deferred payment or
other similar arrangement with the Optionholder or (2) by a "net exercise" of the Option (as further described below) or (v) in any other form of legal consideration that may be
acceptable to the Board. Unless otherwise specifically provided in the Option, the purchase price of Common Stock acquired pursuant to an Option that is paid by delivery to the Company of other Common
Stock acquired, directly or indirectly from the Company, shall be paid only by shares of the Common Stock of the Company that have been held for more than six (6) months (or such longer or
shorter period of time required to avoid a charge to earnings for financial accounting purposes). 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. 

        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 (1) 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 and (2) the treatment of the
Option as a variable award for financial accounting purposes. 

        In
the case of a "net exercise" of an Option, the Company will not require a payment of the exercise price of the Option from the Participant but will reduce the number of shares of
Common Stock issued upon the exercise by the largest number of whole shares that has a Fair Market Value that does not exceed the aggregate exercise price. With respect to any remaining balance of the
aggregate exercise price, the Company shall accept a cash payment from the Participant. The shares of Common Stock so used to pay the exercise price of an Option under a "net exercise" will be
considered to have resulted from the exercise of the Option, and accordingly, the Option will not again be exercisable with respect to such shares, the shares actually delivered to the Participant,
and any shares withheld for purposes of tax withholding. 

         (d)   Transferability of an Option. An Option shall be transferable to the extent provided in the Option Agreement. If the Option does not
provide for
transferability, then the Option shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the 

6

 

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)   Vesting Generally. Options granted pursuant to Section 6(a) shall become exercisable in full on the first anniversary following the
date
of grant; provided, however, that an Option granted pursuant to Section 6(a) to an Eligible Director who is first appointed by the Board (rather
than elected by the stockholders at an annual meeting of stockholders) will become exercisable in full on the first business day immediately following the later of the Company's annual meeting of
stockholders next following the date of grant or six months following the date of grant. For Options granted pursuant to Section 6(b), (1) the total number of shares of Common Stock
subject to an Option may, but need not, vest and therefore become exercisable in periodic installments that may, but need not, be equal as determined by the Board, and (2) the Option may be
subject to such other terms and conditions on the time or times when it may be exercised (which may be based on performance or other criteria) as the Board may deem appropriate. The vesting provisions
of individual Options granted pursuant to Section 6(b) may vary. The Board may accelerate vesting of any Option granted pursuant to Section 6(b), but not those granted pursuant to
Section 6(a), whose vesting will be governed by the Plan. 

         (f)    Termination of Continuous Service. In the event that an Optionholder's Continuous Service terminates (other than upon the
Optionholder's removal
for cause), the Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled to exercise such Option as of the date of termination or with respect to such greater
number of shares as determined by the Board) but only within such period of time ending on the earlier of (i) the date three (3) years following the termination of the Optionholder's
Continuous Service (or such longer or shorter period specified in the Option Agreement) or (ii) the expiration of the term of the Option as set forth in the Option Agreement. If, after
termination, the Optionholder does not exercise his or her Option within the time specified in the Option Agreement, the Option shall terminate. In the event that an Optionholder's Continuous Service
terminates upon his or her removal for cause, all Options held by that Optionholder shall immediately terminate. 

         (g)   Extension of Termination Date. An Optionholder's Option Agreement may also provide that if the exercise of the Option following the
termination
of the Optionholder's Continuous Service (other than upon the Optionholder's removal for cause) would be prohibited at any time solely because the issuance of shares of Common Stock would violate the
registration requirements under the Securities Act, then the Option shall terminate on the earlier of (i) the expiration of the term of the Option set forth in Section 7(a) or
(ii) the expiration of a period of three (3) years after the termination of the Optionholder's Continuous Service during which the exercise of the Option would not be in violation of
such registration requirements. 

         (h)   Death of Optionholder. In the event that (i) an Optionholder's Continuous Service terminates as a result of the Optionholder's death
or
(ii) the Optionholder dies within the period (if any) specified in the Option Agreement after the termination of the Optionholder's Continuous Service for a reason other than death, then the
Option may be exercised (to the extent the Optionholder was entitled to exercise such Option as of the date of death) by the Optionholder's estate, by a person who acquired the right to exercise the
Option by bequest or inheritance or by a person designated by the Optionholder to exercise the option upon the Optionholder's death. If, after death, the Option is not exercised within the time
specified in Section 7(f), the Option shall terminate. 

         (i)    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 of Common Stock subject to the Option prior to the full vesting of 

7

 

the
Option. Any unvested shares of Common Stock so purchased may be subject to a repurchase option in favor of the Company or to any other restriction the Board determines to be appropriate. The
Company will not exercise its repurchase option until at least six (6) months (or such longer or shorter period of time required to avoid a charge to earnings for financial accounting purposes)
have elapsed following exercise of the Option unless the Board otherwise specifically provides in the Option. 

8.     COVENANTS OF THE COMPANY.  

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

         (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 Options and to issue and sell shares of Common Stock upon exercise of the Options; provided, however, that this
undertaking shall not require the Company to register under the Securities Act the Plan, any Option or any Common Stock issued or issuable pursuant to any such Option. 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 Common Stock under the
Plan, the Company shall be relieved from any liability for failure to issue and sell Common Stock upon exercise of such Options unless and until such authority is obtained. 

9.     USE OF PROCEEDS FROM STOCK.  

        Proceeds from the sale of Common Stock pursuant to Option shall constitute general funds of the Company. 

10.   MISCELLANEOUS.  

         (a)   Stockholder Rights. No Optionholder 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 Option unless and until such Optionholder has satisfied all requirements for exercise of the Option pursuant to its terms. 

        (b)   No Service Rights. Nothing in the Plan or any instrument executed or Option granted pursuant thereto shall confer upon any Optionholder
any right
to continue to serve the Company as a Non-Employee Director or on any committee of the Board 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. 

        (c)   Investment Assurances. The Company may require a Participant, as a condition of exercising or acquiring Common Stock under any Option,
(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 Option; and (ii) to give written assurances satisfactory to the Company stating that the Participant is acquiring Common Stock subject to
the Option for the Participant's own account and not with any present intention of selling or otherwise distributing the Common Stock. The foregoing requirements, and any assurances given pursuant to
such requirements, shall be inoperative if (1) the issuance of the shares of Common Stock upon the exercise or acquisition of Common Stock under the Option has been registered under a then
currently effective registration statement under the Securities Act or (2) as to any particular requirement, a determination is made by counsel for the Company that such requirement need not be 

8

 

met
in the circumstances under the then applicable securities laws. 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 Common Stock. 

         (d)   Withholding Obligations. The Optionholder may satisfy any federal, state or local tax withholding obligation relating to the exercise or
acquisition of stock under an Option by any of the following means (in addition to the Company's right to withhold from any compensation paid to the Optionholder 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 Optionholder as a result of the
exercise or acquisition of stock under the Option, provided, however, that no shares of Common Stock are withheld with a value exceeding the minimum amount of tax required to be withheld by law; or
(iii) delivering to the Company owned and unencumbered shares of the Common Stock. 

11.   ADJUSTMENTS UPON CHANGES IN STOCK.  

        (a)   Capitalization Adjustments. If any change is made in, or other event occurs with respect to, the Common Stock subject to the Plan or
subject to
any Option 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 (each a
"Capitalization Adjustment"), the Plan will be appropriately adjusted in the class(es) and maximum number of securities subject to the Plan pursuant to Sections 4(a) and 4(b), and the outstanding
Options will be appropriately adjusted in the class(es) and number of securities and price per share of Common Stock subject to such outstanding Options. 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.) 

         (b)   Dissolution or Liquidation. In the event of a dissolution or liquidation of the Company, then all outstanding Options shall terminate
immediately
prior to the completion of such dissolution or liquidation, and shares of Common Stock subject to the Company's repurchase option may be repurchased by the Company notwithstanding the fact that the
holder of such stock is still in Continuous Service. 

         (c)   Corporate Transaction. In the event of a Corporate Transaction, any surviving corporation or acquiring corporation may assume or continue
any or
all Options outstanding under the Plan or may substitute similar stock awards for Options outstanding under the Plan (it being understood that similar stock awards include, but are not limited to,
awards to acquire the same consideration paid to the stockholders or the Company, as the case may be, pursuant to the Corporate Transaction), and any reacquisition or repurchase rights held by the
Company in respect of Common Stock issued pursuant to Options may be assigned by the Company to the successor of the Company (or the successor's parent company), if any, in connection with such
Corporate Transaction. In the event that any surviving corporation or acquiring corporation does not assume or continue any or all such outstanding Options or substitute similar stock awards for such
outstanding Options, then with respect to Options that have been not assumed, continued or substituted and that are held by Participants whose Continuous Service has not terminated prior to the
effective time of the Corporate Transaction, the vesting of such Options (and, if applicable, the time at which such Options may be exercised) shall (contingent upon the effectiveness of the Corporate
Transaction) be accelerated in full to a date prior to the effective time of such Corporate Transaction as the Board shall determine (or, if the Board shall not determine such a date, to the date that
is five (5) days prior to the effective time of the Corporate Transaction), the Options shall terminate if not exercised (if applicable) at or prior to such effective time, and any 

9

 

reacquisition
or repurchase rights held by the Company with respect to such Options held by Participants whose Continuous Service has not terminated shall (contingent upon the effectiveness of the
Corporate Transaction) lapse. With respect to any other Options outstanding under the Plan that have not been assumed, continued or substituted, the vesting of such Options (and, if applicable, the
time at which such Options may be exercised) shall not be accelerated, unless otherwise provided in a written agreement between the Company or any Affiliate and the holder of such Option, and such
Option shall terminate if not exercised (if applicable) prior to the effective time of the Corporate Transaction. 

         (d)   Change in Control. If a Change in Control occurs and an Optionholder's Continuous Service with the Company has not terminated immediately
prior
to the effective time of the Change in Control, then, immediately prior to the effective time of such Change in Control (and contingent upon the effectiveness of the Change in Control), the vesting
and exercisability of an Optionholder's Options shall be accelerated in full. In the event that an Optionholder is required to resign his or her position as a Non-Employee Director as a
condition of a Change in Control, the outstanding Options of such Optionholder shall become fully vested and exercisable immediately prior to the effectiveness of such resignation (and contingent upon
the effectiveness of the Change in Control). 

12.   AMENDMENT OF THE PLAN AND OPTIONS.  

         (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(a)
relating
to Capitalization Adjustments, 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
applicable laws and listing requirements applicable to the Company. 

         (b)   Stockholder Approval. The Board, in its sole discretion, may submit any other amendment to the Plan for stockholder approval. 

         (c)   No Impairment of Rights. Rights under any Option 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. 

         (d)   Amendment of Options. The Board at any time, and from time to time, may amend the terms of any one or more Options;  provided, however, that the rights under any Option 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; and provided further, however, that no previously granted Option may be repriced,
replaced or regranted through cancellation, or by lowering the exercise price of a previously granted Option without the prior approval of the Company's stockholders. 

13.   TERMINATION OR SUSPENSION OF THE PLAN.  

         (a)   Plan Term. The Plan has no set termination date; however, the Board may suspend or terminate the Plan at any time. No Options 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 Option granted while the
Plan is
in effect except with the written consent of the Optionholder. 

14.   EFFECTIVE DATE OF PLAN.  

        The Plan will become effective on the second business day next succeeding receipt of stockholder approval at the Company's 2004 annual meeting of stockholders or
any postponement or adjournment thereof. 

10

 

15.   CHOICE OF LAW.  

        The law of the State of Delaware shall govern all questions concerning the construction, validity and interpretation of this Plan, without regard to such state's
conflict of laws rules. 

        The
Company has executed this Plan effective July 8, 2004. 

	 	 	TAPESTRY PHARMACEUTICALS, INC.
	

  	
 	

 	
 	

 
	

 	
 	
BY:	
 	

/s/  KAI P. LARSON      

11

QuickLinks

TAPESTRY PHARMACEUTICALS, INC. 2004 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN

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