Document:

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                                                                    Exhibit 4.13

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED
UNLESS (A) COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (B) THE
COMPANY HAS BEEN FURNISHED WITH AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO
THE COMPANY TO THE EFFECT THAT NO REGISTRATION IS REQUIRED FOR SUCH TRANSFER OR
(C) SUCH TRANSFER IS MADE IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S
UNDER THE ACT. HEDGING TRANSACTIONS INVOLVING THESE SHARES MAY NOT BE CONDUCTED
UNLESS IN COMPLIANCE WITH THE ACT.

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Warrant No. W-C __________                                         XXXXXX Shares

                                     Form of
                                     WARRANT
           To Purchase Shares of Series C Convertible Preferred Stock
                                       of
                           ALTUS PHARMACEUTICALS INC.
                               Dated May __, 2004

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     WHEREAS, Altus Pharmaceuticals Inc., a Delaware corporation (the
"Company"), intends to provide the Holder an opportunity to increase its equity
interest in the Company through the acquisition of shares of its Series C
Convertible Preferred Stock, $.0l par value per share ("Series C Stock"), upon
the exercise of a warrant with respect thereto;

     NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt of which is hereby acknowledged, the Company
certifies and agrees as follows:

     This Warrant certifies that, for value received, ______________ (the
"Holder"), or its registered assigns, is entitled to purchase from the Company
XXXXX (as adjusted from time to time pursuant to Section 6 hereof, the "Original
Number") shares of the fully paid and non-assessable Series C Stock of the
Company, at a price of $4.3147358 per share (the "Exercise Price").
Notwithstanding the foregoing, if the outstanding Series C Stock shall prior to
exercise or exchange of this Warrant have been converted into Common Stock, $.01
par value per share (the "Common Stock"), of the Company as a result of the
mandatory conversion ("Mandatory Conversion Event") of the outstanding Series C
Stock as set forth in Article IV, Section F5 of the Third Amended and Restated
Certificate of Incorporation of the Company (as the same may be further amended,
restated or in effect from time to time, the "Charter"), then from and after the
date of the Mandatory Conversion Event, this Warrant shall be exercisable for
that number of shares of Common Stock that is equal to the Original Number
multiplied by the Conversion Factor (as defined below). The Conversion Factor
shall equal the number of shares of Common Stock that each share of outstanding
Series C Stock converted into on the date of the Mandatory Conversion Event.
Upon the occurrence of the Mandatory Conversion Event, the Exercise Price then
in effect (the "Original Exercise Price") shall be adjusted to a number that is
equal to the Original Exercise Price divided by the Conversion Factor. This
Warrant may be exercised at any time on or before the "Expiration Date" which
shall mean the date that is seven (7) years after the date hereof. This Warrant
is issued as of May ___, 2004 (the "Issue Date") pursuant to that certain Series
C Convertible Preferred Stock and Warrant Purchase Agreement dated as of May
___, 2004. The shares of capital stock of the Company issuable upon exercise or
exchange of this Warrant are sometimes hereinafter referred to as the "Warrant
Shares," and, in connection therewith, all references herein to Warrant Shares
shall mean Series C Stock until the occurrence of a Mandatory Conversion Event,
and upon and at all times after, the occurrence of a Mandatory Conversion Event,
shall mean Common Stock. As used herein, the term "Warrant Class" shall mean (i)
prior to the occurrence of the Mandatory Conversion Event, the Series C Stock
and (ii) after the occurrence of the Mandatory Conversion Event, the Common
Stock.
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1. EXERCISE OF WARRANT.

     1.1. PROCEDURE. The Holder or any person or entity to whom the Holder has
assigned its rights under this Warrant (collectively referred to as the
"Warrantholder") may exercise this Warrant, at any time or from time to time,
prior to the Expiration Date, on any business day, by surrendering the Warrant,
accompanied by a written notice in the form attached hereto (the "Exercise
Notice"), to the Company at the address designated in Section 8.4 hereof,
exercising this Warrant and specifying the total number of Warrant Shares the
Warrantholder will purchase pursuant to such exercise. This Warrant may be
exercised in whole or in part as to any or all of the Warrant Shares. A
certificate or certificates for the Warrant Shares purchased upon exercise of
this Warrant and, in the event of a partial exercise of this Warrant, a new
Warrant of like tenor representing the balance of Warrant Shares purchasable
hereunder, shall be delivered by the Company to the Warrantholder not later than
ten days after payment is made for the Warrant Shares purchased upon such
partial exercise. No fractions of a share of capital stock will be issued upon
the exercise of this Warrant, but if a fractional share would be issuable upon
exercise, the Company will pay in cash the fair market value thereof as
determined under Section 1.2 below.

     1.2. NET EXERCISE FORMULA. The Warrantholder may exercise this Warrant
either (i) by paying to the Company, by cash or check, an amount equal to the
aggregate Exercise Price of the Warrant Shares being purchased, or (ii) by
electing to receive Warrant Shares equal to the value (as determined below) of
this Warrant by surrender of this Warrant together with notice of such election,
in which event the Company shall issue to the Warrantholder a number of Warrant
Shares computed using the following formula:

                                   X = Y(A-B)
                                       ------
                                          A

Where: X = the number of Warrant Shares to be issued to the Warrantholder.

          Y = the number of Warrant Shares under this Warrant (or such lesser
     number of Warrant Shares as the Warrantholder elects to purchase, in the
     case of a partial exercise).

          A = the fair market value of one Warrant Share.

          B = the Exercise Price.

     As used herein, the fair market value of one Warrant Share shall mean:

     (i) After the Mandatory Conversion Event (A) if the Common Stock of the
Company is then traded but not on a national securities exchange, the average of
the closing prices quoted on the National Association of Securities Dealers,
Inc. Automated Quotation National Market System, if applicable, or the average
of the last bid and asked prices of the Common Stock quoted in the
over-the-counter-market; (B) if the Common Stock is then traded on a national
securities exchange, the average of the high and low prices of the Common Stock
listed on the principal national securities exchange on which the Common Stock
is so traded, in each case for the twenty (20) trading days immediately
preceding the determination date or, if such date is not a business day on which
shares are traded, the next immediately preceding trading day; or

               (C) in all other circumstances, the fair market value per share
of Common Stock as determined by the Company's Board of Directors in good faith
after taking into consideration all factors it deems appropriate, including,
without limitation, recent sale and offer prices of the capital stock of the
Company in private transactions negotiated at arm's length; provided that in the
event the Warrantholder disagrees with the fair market value determined by the
Board of Directors, the Company and the Warrantholder shall use their best
efforts to agree upon the selection of an independent appraiser, who will have
30 days in which to determine the fair market value of the Common Stock, and
whose determination will be final and binding on all parties concerned with all
costs of such determination to be borne by the Company;

     (ii) Prior to the Mandatory Conversion Event, the fair market value per
share of Series C Stock as determined by the Company's Board of Directors in
good faith after taking into consideration all factors it deems appropriate,
including, without limitation, recent sale and offer prices of the capital stock
of the Company in private

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transactions negotiated at arm's length and the privileges and preferences of
the Series C Stock, provided that in the event the Warrantholder disagrees with
the fair market value determined by the Board of Directors, the Company and the
Warrantholder shall use their best efforts to agree upon the selection of an
independent appraiser, who will have 30 days in which to determine the fair
market value of the Series C Stock, and whose determination will be final and
binding on all parties concerned with all costs of such determination to be
borne by the Company.

     1.3. AUTOMATIC EXERCISE. To the extent this Warrant is not previously
exercised, and if the fair market value (as determined in accordance with
Section 1.2 above) of one Warrant Share is greater than the Exercise Price, as
adjusted, on the Expiration Date this Warrant shall be deemed automatically
exercised in accordance with Section 1.2 hereof (even if not surrendered)
immediately prior to the close of business on the Expiration Date or if such
date is not a business day in Boston, on the business day next preceding the
Expiration Date. For purposes of such automatic exercise, the fair market value
of one Warrant Share shall be the fair market value determined pursuant to
Section 1.2 above. To the extent this Warrant or any portion thereof is deemed
automatically exercised pursuant to this Section 1.3, the Company agrees to
notify Warrantholder within a reasonable period of time of the number of shares
of the Company's capital stock, if any, the Warrantholder is to receive by
reason of such automatic exercise. The Company shall not be required to deliver
any share certificates evidencing any shares of capital stock issuable upon such
automatic exercise unless and until the Company has received the original of
this Warrant or a Lost Warrant Certificate (as defined below).

     1.4. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If this Warrant is lost,
stolen mutilated or destroyed, the Company may require the Warrantholder to
provide a certificate ("Lost Warrant Certificate"), which may contain terms as
to indemnity or otherwise as it may require in its reasonable discretion (which
shall, in the case of a mutilated Warrant, include the surrender thereof), prior
to issuing a replacement Warrant of like denomination and tenor as the Warrant
so lost, stolen, mutilated or destroyed.

2. RECORD HOLDER. A Warrant shall be deemed to have been exercised immediately
prior to the close of business on the date of its surrender for exercise as
provided in Section 1.1 above and the person entitled to receive the Warrant
Shares issuable upon such exercise or conversion shall be treated for all
purposes as the holder of such Warrant Shares of record as of the close of
business on such date. In the event of an automatic exercise pursuant to Section
1.3 above, the person entitled to receive the Warrant Shares shall be treated
for all purposes as the holder of such Warrant Shares of record as of the close
of business on the Expiration Date.

3. PAYMENT OF TAXES. The Company shall pay all taxes and other governmental
charges (other than income taxes) that may be imposed in respect of the issue or
delivery of the Warrant Shares or any portion thereof. The Company shall not be
required, however, to pay any tax or other charge imposed in connection with any
transfer involved in the issue of any certificate for the Warrant Shares or any
portion thereof in any name other than that of the registered holder of this
Warrant surrendered in connection with the purchase of such shares, and in such
case the Company shall not be required to issue or deliver any certificate until
such tax or other charge has been paid or it has been established to the
Company's satisfaction that no tax or other charge is due.

4. TRANSFER AND EXCHANGE.

     4.1. TRANSFER. Subject to the terms hereof, including, without limitation,
Sections 5.1 and 5.3, this Warrant and all rights hereunder are transferable, in
whole or in part, on the books of the Company maintained for such purpose at its
office designated in Section 8.4 hereof by the registered holder hereof in
person or by its duly authorized attorney, upon surrender of this Warrant
properly endorsed. Upon any partial exercise or transfer, the Company will issue
and deliver to such holder a new warrant or warrants with respect to the Warrant
Shares not so exercised, converted or transferred. Each taker and holder of the
Warrant, by taking or holding the same, consents and agrees that this Warrant
when endorsed in blank shall be deemed negotiable, and that when this Warrant
shall have been so endorsed, the holder may be treated by the Company and all
other persons dealing with this Warrant as the absolute owner of such Warrant
for any purpose and as the person entitled to exercise the rights represented
hereby, or to the transfer on the books of the Company, any notice to the
contrary notwithstanding; but until such transfer on such books, the Company may
treat the registered holder of this Warrant as the owner for all purposes. The
term "Warrant" as used herein shall include this Warrant and, any warrants
delivered in substitution or exchange therefor as provided herein.

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     4.2. EXCHANGE. This Warrant is exchangeable for a warrant or warrants for
the same aggregate number of Warrant Shares, each new Warrant to represent the
right to purchase such number of Warrant Shares as the holder shall designate at
the time of such exchange. This Warrant may be subdivided, at the
Warrantholder's option, into several warrants to purchase the Warrant Shares
(collectively, also referred to as the "Warrant"). Such subdivision may be
accomplished in accordance with the provisions of this Section 4.

5. TRANSFER OF SECURITIES

     5.1. RESTRICTIONS ON TRANSFER. Neither this Warrant nor the Warrant Shares
shall be transferable except upon the conditions specified in this Section 5.1,
which conditions are intended to ensure compliance with the provisions of the
Securities Act of 1933, as amended (the "Securities Act"), in respect to the
transfer of this Warrant and the Warrant Shares.

          5.1.1. Unless and until otherwise permitted by this Section 5.1, this
Warrant and each certificate or other document evidencing any of the Warrant
Shares shall be endorsed with legends substantially in the following form:

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED
UNLESS (A) COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (B) THE
COMPANY HAS BEEN FURNISHED WITH AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO
THE COMPANY TO THE EFFECT THAT NO REGISTRATION IS REQUIRED FOR SUCH TRANSFER OR
(C) SUCH TRANSFER IS MADE IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S
UNDER THE ACT. HEDGING TRANSACTIONS INVOLVING THESE SHARES MAY NOT BE CONDUCTED
UNLESS IN COMPLIANCE WITH THE ACT.

The foregoing legend shall be removed from the certificates representing any
Warrant Shares, at the request of the Warrantholder, (x) upon any sale pursuant
to an effective registration statement under the Securities Act or Rule 144
under the Securities Act or (y) at such time as they become eligible for sale
under Rule 144(k) under the Securities Act.

THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
VOTING AGREEMENTS AS SET FORTH IN AN AMENDED AND RESTATED STOCKHOLDERS' VOTING
AGREEMENT, AS AMENDED FROM TIME TO TIME, BY AND AMONG THE REGISTERED OWNER OF
THIS CERTIFICATE, THE COMPANY AND CERTAIN OTHER STOCKHOLDERS OF THE COMPANY, A
COPY OF WHICH IS AVAILABLE FOR INSPECTION AT THE OFFICE OF THE SECRETARY OF THE
COMPANY.

THE SALE OR OTHER DISPOSITION OF ANY OF THE SHARES REPRESENTED BY THIS
CERTIFICATE IS RESTRICTED BY AN AMENDED AND RESTATED RIGHT OF FIRST REFUSAL AND
CO-SALE AGREEMENT, DATED AS OF MAY ___, 2004 AS AMENDED FROM TIME TO TIME, AMONG
CERTAIN OF THE STOCKHOLDERS OF THIS COMPANY AND THIS COMPANY (THE "AGREEMENT").
A COPY OF THE AGREEMENT IS AVAILABLE FOR INSPECTION DURING NORMAL BUSINESS HOURS
AT THE PRINCIPAL EXECUTIVE OFFICE OF THIS COMPANY.

          5.1.2. Neither this Warrant nor the Warrant Shares shall be
transferred and the Company shall not be required to register any such transfer,
unless and until one of the following events shall have occurred:

     (a) (i) the Warrant or the Warrant Shares, as the case may be, first shall
have been registered under the Securities Act, or (ii) the Company first shall
have been furnished with an opinion of legal counsel, reasonably satisfactory to
the Company, to the effect that such sale or transfer is exempt from the
registration requirements of the Securities Act.

     (b) Notwithstanding the foregoing, no registration or opinion of counsel
shall be required for (i) a transfer by a Warrantholder to an affiliate (as such
term is defined in the Securities Act) of such Warrantholder, (ii) a transfer by
a Warrantholder which is a partnership to a partner of such partnership or a
retired partner of such

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partnership who retires after the date hereof, or to the estate of any such
partner or retired partner, or (iii) a transfer by a Warrantholder which is a
limited liability company to a member of such limited liability company or a
retired member who resigns after the date hereof or to the estate of any such
member or retired member; provided that the transferee in each case agrees in
writing to be subject to the terms of this Section 5 to the same extent as if it
were the original Warrantholder hereunder, or (iv) a transfer made in accordance
with Rule 144 under the Securities Act.

     (c) For purposes of this Section 5, "Warrant Shares" shall mean the Warrant
Shares and any other shares of capital stock of the Company issued in respect of
such shares (as a result of stock splits, stock dividends, reclassifications,
recapitalizations, or similar events).

     5.2. COOPERATION. The Company shall cooperate in supplying such information
as may be reasonably requested by the Warrantholder to complete and file any
information reporting forms presently or subsequently required by the U.S.
Securities and Exchange Commission as a condition to the availability of an
exemption, presently existing or subsequently adopted, from the Securities Act
for the sale of this Warrant or Warrant Shares.

     5.3. PERMITTED TRANSFERS. The Warrantholder may, subject to all applicable
laws and rules, transfer this Warrant and any Warrant Shares purchased
hereunder.

6. ADJUSTMENTS TO EXERCISE PRICE AND WARRANT SHARES. The Exercise Price in
effect from time to time and the number of Warrant Shares shall be subject to
adjustment in certain cases as set forth in this Section 6.

     6.1. SUBDIVISION OR COMBINATION. In the event the outstanding shares of the
Warrant Class shall be subdivided into a greater number of shares of such class,
the Exercise Price for the Warrant Shares shall, simultaneously with the
effectiveness of such subdivision, be proportionately reduced and the number of
Warrant Shares proportionately increased, and conversely, in case the
outstanding shares of the Warrant Class shall be combined into a small number of
shares of such class, the Exercise Price shall simultaneously with the
effectiveness of such combination, be proportionately increased and the number
of Warrant Shares proportionately reduced. Any adjustment under this paragraph
shall become effective at the close of business on the date the subdivision or
combination becomes effective.

     6.2 DIVIDENDS AND DISTRIBUTIONS.

          6.2.1. In the event the Company at any time, or from time to time
after the Issue Date shall make or issue, or fix a record date for the
determination of holders of shares of the Warrant Class entitled to receive, a
dividend or other distribution payable in additional shares of shares of the
Warrant Class, then and in each such event the Exercise Price then in effect
immediately before such event shall be decreased as of the time of such issuance
or, in the event such a record date shall have been fixed, as of the close of
business on such record date, by multiplying the Exercise Price then in effect
by a fraction:

     (1) the numerator of which shall be the total number of shares of the
Warrant Class issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date, and

     (2) the denominator of which shall be the total number of shares of the
Warrant Class issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date plus the number of shares
of the Warrant Class issuable in payment of such dividend or distribution;

     provided, however, if such record date shall have been fixed and such
dividend is not fully paid or if such distribution is not fully made on the date
fixed therefor, the Exercise Price shall be recomputed accordingly as of the
close of business on such record date and thereafter the Exercise Price shall be
adjusted pursuant to this paragraph as of the time of actual payment of such
dividends or distributions.

          6.2.2. In the event the Company at any time or from time to time after
the Issue Date shall make or issue, or fix a record date for the determination
of holders of shares of the Warrant Class entitled to receive, a dividend or
other distribution payable in securities of the Company (other than shares of
the Warrant Class) or in cash or other property (other than cash out of earnings
or earned surplus, determined in accordance with generally accepted accounting
principles), then and in each such event provision shall be made so that the
Warrantholder shall

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receive upon exercise hereof, in addition to the number of shares of the Warrant
Class issuable hereunder, the kind and amount of securities of the Company
and/or cash and other property which the Warrantholder would have been entitled
to receive had this Warrant been exercised into shares of the Warrant Class on
the date of such event and had the Warrantholder thereafter, during the period
from the date of such event to and including the date of exercise, retained any
such securities receivable, giving application to all adjustments called for
during such period under this Section 6 with respect to the rights of the
Warrantholder.

     6.3. ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION OR MERGER.

     6.3.1. In case of any reorganization of the Company (or any other
corporation the stock or other securities of which are at the time receivable on
the exercise of the Warrant) after the Issue Date, or in case, after such date,
the Company (or any such other corporation) shall consolidate with or merge into
another corporation or convey all or substantially all of its assets to another
corporation, then and in each such case the Warrantholder, upon exercise of this
Warrant as provided in Section 1 hereof at any time after the consummation of
such reorganization, consolidation, merger or conveyance, shall be entitled to
receive, in lieu of the stock or other securities and property receivable upon
the exercise of this Warrant prior to such consummation, the stock or other
securities or property to which the Warrantholder would have been entitled upon
such consummation if the Warrantholder had exercised or converted this Warrant
immediately prior thereto; in each such case, the terms of this Warrant,
including the exercise provisions of Section 1, shall be applicable to the
shares of stock or other securities or property receivable upon the exercise of
this Warrant after such consummation.

     6.3.2. The Company shall not effect any consolidation, merger or conveyance
of all or substantially all of its assets unless prior to the consummation
thereof, the successor corporation (if other than the Company) resulting from
such consolidation or merger or the corporation into or for the securities of
which the previously outstanding stock of the Company shall be changed in
connection with such consolidation or merger, or the corporation purchasing such
assets, as the case may be, shall assume by written instrument, in form and
substance reasonably satisfactory to the Warrantholder, executed and delivered
in accordance with Section 10.4 hereof, the obligation to deliver to the
Warrantholder such shares of stock, securities or assets as, in accordance with
the foregoing provisions, the Warrantholder is entitled to purchase.

     6.3.3. If a purchase, tender or exchange offer is made to and accepted by
the holders of more than 50% of the voting power of the outstanding shares of
stock of the Company, the Company shall not effect any consolidation, merger or
sale with the Person having made such offer or with any Affiliate of such
Person, unless prior to the consummation of such consolidation, merger or sale
the Warrantholder shall have been given a reasonable opportunity to then elect
to receive either the stock, securities or assets then issuable upon the
exercise of this Warrant or, if different, the stock, securities or assets, or
the equivalent, issued to previous holders of the Common Stock in accordance
with such offer, computed as though the Warrantholder hereof had been at the
time of such offer, a holder of the stock, securities or assets then purchasable
upon the exercise or conversion of the Warrant. As used in this paragraph
6.3.3., the term "Person" shall mean and include an individual, a partnership, a
corporation, a trust, a joint venture, an unincorporated organization and a
government or any department or agency thereof and an "Affiliate" of any Person
shall mean any Person directly or indirectly controlling, controlled by or under
direct or indirect common control with, such other Person. A Person shall be
deemed to control a corporation if such Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of such corporation, whether through the ownership of voting
securities, by contract or otherwise. Notwithstanding the foregoing, nothing set
forth in this Section 6.3.3 shall limit the Warrantholder's rights pursuant to
Section 6.3.1 in the event the Warrantholder does not make an election pursuant
to this Section 6.3.3.

     6.4. ADJUSTMENTS TO EXERCISE PRICE FOR CERTAIN DILUTING ISSUANCES OCCURRING
AFTER A MANDATORY CONVERSION EVENT.

          6.4.1. Special Definitions. The following definitions shall apply:

               (A) "Option" shall mean rights, options or warrants to subscribe
          for, purchase or otherwise acquire Common Stock or Convertible
          Securities.

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               (B) "Mandatory Conversion Date" shall mean the date on which the
          Mandatory Conversion Event occurs.

               (C) "Convertible Securities" shall mean any evidence of
          indebtedness, shares or other securities directly or indirectly
          convertible into or exchangeable for Common Stock, but excluding
          Options.

               (D) "Additional Shares of Common Stock" shall mean all shares of
          Common Stock issued (or pursuant to Section 6.4.3 deemed to be issued)
          by the Company after the Mandatory Conversion Date, other than:

                    (I) shares of Common Stock issued or issuable upon
               conversion or exchange of any Convertible Securities or exercise
               of any Options outstanding on the Mandatory Conversion Date;

                    (II) shares of Common Stock issued or issuable as a dividend
               or distribution on Common Stock;

                    (III) shares of Common Stock issued or issuable by reason of
               a dividend, stock split, split-up or other distribution on shares
               of Common Stock that is covered by Subsection 6.1 or 6.2 above;
               and

                    (IV) shares of Common Stock (or Options with respect
               thereto), issued or issuable for compensatory purposes to
               employees or directors of, or consultants to, the Company or any
               of its subsidiaries pursuant to a plan, agreement or arrangement
               approved by the Board of Directors of the Company ("Employee
               Options").

          6.4.2. No Adjustment of Exercise Price. No adjustment in the Exercise
Price shall be made as the result of the issuance of Additional Shares of Common
Stock if: (a) the consideration per share (determined pursuant to Subsection
6.4.5) for such Additional Share of Common Stock issued or deemed to be issued
by the Company is equal to or greater than the Exercise Price in effect
immediately prior to the issuance or deemed issuance of such Additional Shares
of Common Stock, or (b) prior to such issuance or deemed issuance, the Company
receives written notice from the holders of Purchaser Warrants (as defined in
Section 8.7) and the holders of warrants for the Company's Series B Convertible
Preferred Stock, $.01 par value per share (the "Series B Warrants"),
representing at least 55% of the number of shares of Common Stock then subject
to the Convertible Securities into which the outstanding Purchaser Warrants and
Series B Warrants convert agreeing that no such adjustment shall be made as the
result of the issuance or deemed issuance of Additional Shares of Common Stock.

          6.4.3. Deemed Issue of Additional Shares of Common Stock. If the
Company at any time or from time to time after the Mandatory Conversion Date
shall issue any Options (excluding Employee Options) or Convertible Securities
or shall fix a record date for the determination of holders of any class of
securities entitled to receive any such Options or Convertible Securities, then
the maximum number of shares of Common Stock (as set forth in the instrument
relating thereto without regard to any provision contained therein for a
subsequent adjustment of such number) issuable upon the exercise of such Options
or, in the case of Convertible Securities and Options therefor, the conversion
or exchange of such Convertible Securities, shall be deemed to be Additional
Shares of Common Stock issued as of the time of such issue or, in case such a
record date shall have been fixed, as of the close of business on such record
date, provided that Additional Shares of Common Stock shall not be deemed to
have been issued unless the consideration per share (determined pursuant to
Subsection 6.4.5 hereof) of such Additional Shares of Common Stock would be less
than the applicable Exercise Price in effect on the date of and immediately
prior to such issue, or such record date, as the case may be, and provided
further that in any such case in which Additional Shares of Common Stock are
deemed to be issued:

               (A) No further adjustment in the Exercise Price shall be made
          upon the subsequent issue of Convertible Securities or shares of
          Common Stock upon the exercise of such Options or conversion or
          exchange of such Convertible Securities;

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               (B) If such Options or Convertible Securities by their terms
          provide, with the passage of time or otherwise, for any increase or
          decrease in the consideration payable to the Company, then upon the
          exercise, conversion or exchange thereof, the Exercise Price computed
          upon the original issue thereof (or upon the occurrence of a record
          date with respect thereto), and any subsequent adjustments based
          thereon, shall, upon any such increase or decrease becoming effective,
          be recomputed to reflect such increase or decrease insofar as it
          affects such Options or the rights of conversion or exchange under
          such Convertible Securities;

               (C) Upon the expiration or termination of any such unexercised
          Option or unconverted Convertible Security, the Exercise Price shall
          not be readjusted, but the Additional Shares of Common Stock deemed
          issued as the result of the original issue of such Option or
          Convertible Security shall not be deemed issued for the purposes of
          any subsequent adjustment of the Exercise Price;

               (D) In the event of any change in the number of shares of Common
          Stock issuable upon the exercise, conversion or exchange of any such
          Option or Convertible Security, including, but not limited to, a
          change resulting from the anti-dilution provisions thereof, the
          Exercise Price then in effect shall forthwith be readjusted to such
          Exercise Price as would have been obtained had the adjustment which
          was made upon the issuance of such Option or Convertible Security not
          exercised, converted or exchanged prior to such change been made upon
          the basis of such change but no further adjustments shall be made for
          the actual issuance of Common Stock upon exercise of any such Option
          or Convertible Security; and

               (E) No readjustment pursuant to clause (B) or (D) above shall
          have the effect of increasing the Exercise Price to an amount which
          exceeds the lower of (i) the Exercise Price on the original adjustment
          date, or (ii) the Exercise Price that would have resulted from any
          issuances of Additional Shares of Common Stock between the original
          adjustment date and such readjustment date.

     In the event that, after the Mandatory Conversion Date, the price at which
Options or Convertible Securities may be exercised or converted is decreased, or
the number of shares into which Options or Convertible Securities may be
exercised or converted is increased, (whether such Options or Convertible
Securities were outstanding on the Mandatory Conversion Date or were issued
after the Mandatory Conversion Date), then such Options or Convertible
Securities, as so modified, shall be deemed to have been issued after the
Mandatory Conversion Date and the provisions of this Subsection 6.4.3 shall
apply.

          6.4.4. Adjustment of Exercise Price Upon Issuance of Additional Shares
of Common Stock. In the event the Company shall at any time after the Mandatory
Conversion Date issue Additional Shares of Common Stock (including Additional
Shares of Common Stock deemed to be issued pursuant to Subsection 6.4.3),
without consideration or for a consideration per share less than the applicable
Exercise Price in effect immediately prior to such issue, then and in such
event, such Exercise Price shall be reduced, concurrently with such issue, to a
price (calculated to the nearest cent) determined by multiplying such Exercise
Price by a fraction, (A) the numerator of which shall be (1) the number of
shares of Common Stock outstanding immediately prior to such issue plus (2) the
number of shares of Common Stock which the aggregate consideration received or
to be received by the Company for the total number of Additional Shares of
Common Stock so issued would purchase at such Exercise Price; and (B) the
denominator of which shall be the number of shares of Common Stock outstanding
immediately prior to such issue plus the number of such Additional Shares of
Common Stock so issued, provided that, (i) for the purpose of this Subsection
6.4.4, all shares of Common Stock issuable upon conversion or exchange of
Convertible Securities outstanding immediately prior to such issue shall be
deemed to be outstanding, and (ii) the number of shares of Common Stock deemed
issuable upon conversion or exchange of such outstanding Convertible Securities
shall not give effect to any adjustments to the conversion or exchange price or
conversion or exchange rate of such Convertible Securities resulting from the
issuance of Additional Shares of Common Stock that is the subject of this
calculation.

          6.4.5 Determination of Consideration. For purposes of this Subsection
6.4, the consideration received by the Company for the issue of any Additional
Shares of Common Stock shall be computed as follows:

                                        8
<PAGE>
               (A) Cash and Property: Such consideration shall:

                    (I) insofar as it consists of cash, be computed at the
               aggregate of cash received by the Company, excluding amounts paid
               or payable for accrued interest;

                    (II) insofar as it consists of property other than cash, be
               computed at the fair market value thereof at the time of such
               issue, as determined in good faith by the Board of Directors; and

                    (III) in the event Additional Shares of Common Stock are
               issued together with other shares or securities or other assets
               of the Company for consideration which covers both, be the
               proportion of such consideration so received, computed as
               provided in clauses (I) and (II) above, as determined in good
               faith by the Board of Directors.

               (B) Options and Convertible Securities. The consideration per
          share received by the Company for Additional Shares of Common Stock
          deemed to have been issued pursuant to Subsection 6.4, relating to
          Options and Convertible Securities, shall be determined by dividing

                    (x) the total amount, if any, received or receivable by the
               Company as consideration for the issue of such Options or
               Convertible Securities, plus the minimum aggregate amount of
               additional consideration (as set forth in the instruments
               relating thereto, without regard to any provision contained
               therein for a subsequent adjustment of such consideration)
               payable to the Company upon the exercise of such Options or the
               conversion or exchange of such Convertible Securities, or in the
               case of Options for Convertible Securities, the exercise of such
               Options for Convertible Securities and the conversion or exchange
               of such Convertible Securities, by

                    (y) the maximum number of shares of Common Stock (as set
               forth in the instruments relating thereto, without regard to any
               provision contained therein for a subsequent adjustment of such
               number) issuable upon the exercise of such Options or the
               conversion or exchange of such Convertible Securities.

     6.5. NOTICE OF ADJUSTMENT. When any adjustment is required to be made in
the Exercise Price, the Company shall promptly notify the Warrantholder of such
event, of the calculation by which such adjustment is to be made and of the
resulting Exercise Price.

     6.6. DUTY TO MAKE FAIR ADJUSTMENTS IN CERTAIN CASES. If any event occurs as
to which in the opinion of the Board of Directors the other provisions of this
Section 6 are not strictly applicable or if strictly applicable would not fairly
protect the purchase and exercise rights of this Warrant in accordance with the
essential intent and principles of such provisions, then the Board of Directors
shall make an adjustment in the application of such provisions, in accordance
with such essential intent and principles, so as to protect such purchase rights
as aforesaid.

7. RESERVATION OF WARRANT SHARES. The Company shall at all times reserve and
keep available out of its authorized but unissued capital stock a sufficient
number of (i) prior to the occurrence of the Mandatory Conversion Event, (a)
shares of its Series C Stock to provide for the exercise of the rights
represented by this Warrant and (b) shares of Common Stock to provide for the
conversion of the Series C Stock issuable upon exercise of this Warrant, and
(ii) after the occurrence of the Mandatory Conversion Event, shares of its
Common Stock to provide for the exercise of rights represented by this Warrant,
in each case as such number may change from time to time. Also, the Company
shall, at its own expense, take all such actions and obtain all such permits and
orders as may be necessary to enable the Company lawfully to issue the Warrant
Shares upon the exercise or conversion of this Warrant.

                                        9
<PAGE>
8. MISCELLANEOUS.

     8.1. ENTIRE AGREEMENT. This Warrant constitutes the full and entire
understanding and agreements between the parties hereto with respect to the
subjects hereof and thereof.

     8.2. SUCCESSORS AND ASSIGNS. The terms and conditions of this Warrant shall
inure to the benefit of and be binding upon the respective successors and
assigns of the parties hereto, except as expressly provided otherwise herein.

     8.3. GOVERNING LAW. This Warrant shall be governed by and construed under
the laws of the State of Delaware without giving effect to its conflicts of laws
principles.

     8.4. NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed effectively given
upon personal delivery or upon the seventh day following mailing by registered
air mail, postage prepaid, addressed (a) if to the Warrantholder, at
________________________, or at such other address as shall have been furnished
to the Company in writing, (b) if to the Company, a copy should be sent to 125
Sidney Street, Cambridge, MA 02139, Attention: President, or at such other
address as the Company shall have furnished in writing to the Warrantholder,
with a copy to Mintz, Levin Cohn, Ferris, Glovsky and Popeo, P.C., One Financial
Center, MA 02111, Attention: Jonathan L. Kravetz, or (c) if to any other
Warrantholder, at such address as such holder shall have furnished to the
Company in writing, or, until such Warrantholder so furnishes an address to the
Company, then to and at the address of the last holder of such Warrant who so
furnished an address to the Company.

     8.5. DELAYS OR OMISSIONS. No delay or omission to exercise any right, power
or remedy accruing to any holder of any securities issued or sold or to be
issued or sold hereunder, upon any breach or default of the Company under this
Warrant, shall impair any such right, power or remedy of such holder nor shall
it be construed to be a waiver of any such breach or default, or an acquiescence
therein, or in any similar breach or default thereafter occurring, nor shall any
waiver of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. Any waiver, permit, consent or
approval of any kind or character on the part of any holder of any breach or
default under this Warrant, or any waiver on the part of any holder of any
provisions or conditions of this Warrant must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Warrant or by law or otherwise afforded to any
holder, shall be cumulative and not alternative.

     8.6. SURVIVAL. The representations, warranties, covenants and agreements
made herein shall survive the execution and delivery of this Warrant, except as
expressly provided otherwise herein or therein.

     8.7. WAIVERS AND AMENDMENTS. This Warrant is one of a series of Warrants
issued by the Company pursuant to the terms of that certain Series C Convertible
Preferred Stock Purchase Agreement, dated as of the Issue Date (the "Series C
Purchase Agreement"), to the Purchasers (as defined in the Series C Purchase
Agreement), all of which are of like tenor, except as to the number of Warrant
Shares of Common Stock subject thereto (collectively, the "Purchaser Warrants").
Any term of this Warrant may be amended or waived upon the written consent of
the Company and the holders of Purchaser Warrants representing at least 55% of
the number of Warrant Shares then subject to outstanding Purchaser Warrants,
except for Section 6.4.2 which requires the approval of the holders of the
Purchaser Warrants and the Series B Warrants, representing at least 55% of the
number of shares of Common Stock then subject to the Convertible Securities into
which the outstanding Purchaser Warrants and Series B Warrants convert; provided
that any such amendment or waiver must apply to all Purchaser Warrants then
outstanding; and provided further that the number of Warrant Shares subject to
this Warrant and the Exercise Price of this Warrant may not be amended, and the
right to exercise this Warrant may not be waived, without the written consent of
the holder of this Warrant (it being agreed that an amendment to or waiver under
any of the provisions of Section 6 of this Warrant shall not be considered an
amendment of the number of Warrant Shares or the Exercise Price). The Company
promptly shall give written notice thereof to the record holders of the Warrants
and the Warrant Shares. This Warrant or any provision hereof may not be changed,
waived, discharged or terminated orally, but only by a statement in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought, except to the extent provided in this Section 8.7.

                                       10
<PAGE>
     8.8. SEVERABILITY. If one or more provisions of this Warrant are held to be
invalid, illegal or unenforceable under applicable law, such provision shall be
modified in such manner as to be valid, legal and enforceable, but so as to most
nearly retain the intent of the parties and if such modification is not
possible, such provision shall be severed from this Warrant as if such provision
were not included. in either case, and the balance of this Warrant shall not in
any way be affected or impaired thereby and shall be enforceable in accordance
with its terms.

     8.9. REGISTERED HOLDER. The Company may deem and treat the registered
Warrantholder(s) hereof as the absolute owner(s) of this Warrant
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise or conversion hereof, of any
distribution to the Warrantholder(s) hereof, and for all other purposes, and the
Company shall not be affected by any notice to the contrary. Other than as set
forth herein, this Warrant does not entitle any Warrantholder hereof to any
rights of a stockholder of the Company.

     8.10. TITLES AND SUBTITLES. The titles of the sections and subsections of
this Warrant are for convenience and are not to be considered in construing this
Warrant.

                                       11
<PAGE>
     IN WITNESS WHEREOF, Company has caused this Warrant to be signed by its
duly authorized officer and issued as of the date set forth below.

Dated: May __, 2004

                                    ALTUS PHARMACEUTICALS INC.

                                    By:
                                        ----------------------------------------
                                        Peter Lanciano
                                        President and CEO

                                       12
<PAGE>
                               NOTICE OF EXERCISE

                 (To be Executed by the Registered Warrantholder
                        in order to Exercise the Warrant)

     The undersigned hereby irrevocably elects to exercise the right to purchase
________________________________ (________________) Warrant Shares, covered by
Warrant No. W- __________, according to the conditions thereof and herewith
makes payment of the Exercise Price of such Warrant Shares in full.

     I. Such payment is hereby tendered in the form of $____________________ by
wire transfer or certified or bank check.

     II. The undersigned elects to receive the net value of the Warrant Shares
pursuant to Section 1.2 of the Warrant.

                     Printed Name of Warrantholder:
                                                    ----------------------------

                     Signature:
                                                    ----------------------------
                     Title (if signing on
                     behalf of a Warrantholder):
                                                    ----------------------------
                     Date:
                                                    ----------------------------
                     Address:
                                                    ----------------------------

                                       13
<PAGE>
                               FORM OF ASSIGNMENT

     For Value Received, the undersigned registered owner of this Warrant issued
by Altus Pharmaceuticals Inc. hereby sells, assigns and transfers unto the
Assignee named below all of the rights of the undersigned under the within
Warrant No. W- _______________, with respect to the number of Warrant Shares set
forth below:

<TABLE>
<CAPTION>
Name of Assignee   Address   Number of Warrant Shares
----------------   -------   ------------------------
<S>                <C>       <C>

</TABLE>

and does hereby irrevocably constitute and appoint _______________________
attorney to make such transfer on the books of Altus Pharmaceuticals Inc.,
maintained for such purpose, with full power of substitution in the premises.

Dated:
       -------------------                    ----------------------------------
                                              Signature of registered owner

Witness:
         -----------------

                                       14
<PAGE>
                           SCHEDULE OF WARRANT HOLDERS

Warburg Pincus Private Equity VIII, L.P.
U.S. Venture Partners VIII, L.P.
USVP VIII Affiliates Fund, L.P.
USVP Entrepreneur Partners VIII-A, L.P.
USVP Entrepreneur Partners VIII-B, L.P.
Nomura Phase4 Ventures LP
P/S BI Biomedicinsk Venture III
Clariden Bank
CMEA Ventures Life Sciences 2000, L.P.
CMEA Ventures Life Sciences 2000, Civil Law Partnership
Kim Fennebresque
David M. Malcolm
Stelios Papadopoulos
Peter Reikes
Sengal M. Selassie
Christopher A. White

                                       15<PAGE>
                                                                    Exhibit 10.1

                      Restated to incorporate amendments through September 2001.

                              ALTUS BIOLOGICS INC.

                                STOCK OPTION PLAN

      1.    Purpose of Plan.

      The purpose of this Stock Option Plan (the "Plan") is to promote the
interests of Altus Biologics Inc., a Delaware corporation (the "Company,"
including for the purposes of this paragraph any affiliated companies), by
providing a method whereby employees of the Company, and others providing
material assistance to the Company, may be given compensation or additional
compensation for their efforts on behalf of or assistance to the Company, and to
aid the Company in attracting and retaining capable personnel.

      2.    Scope and Duration of the Plan.

      Options granted under this Plan may contain such terms as will qualify the
options as incentive stock options ("ISO's") within the meaning of Section
422A(b) of the Internal Revenue Code of 1986, as amended (the "Code"), or in the
form of non-statutory stock options ("NSO's"). Subject to adjustment as provided
in Section 11 hereof, the maximum number and kind of shares of the Company's
capital stock with respect to which options may be granted under this Plan shall
be 5,500,000 shares of Common Stock, $.01 par value per share ("Common Stock").
Until termination of this Plan, the Company shall at all times reserve a
sufficient number of shares to meet the requirements of the Plan. Such shares
may be authorized and unissued shares or shares held in the Company's treasury.

      There shall become available for subsequent grants under this Plan any
shares of Common Stock underlying an option which cease for any reason to be
subject to purchase under such option. No ISO shall be granted under this Plan
more than 10 years after its adoption by the Board of Directors.

      3.    Administration of Plan.

      The Compensation Committee or any successor thereto (the "Committee")
appointed by the Company's Board of Directors shall administer this Plan. The
Committee shall be qualified as required by Rule 16b-3, as amended, and other
applicable rules under Section 16(b) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), at such time as the provisions thereof may be
binding on the Company. No member of such Committee shall be eligible to receive
options while serving on the Committee. The Committee shall have full power and
authority to: (i) designate the employees and other persons to whom options
shall be granted; (ii) designate options or any portion thereof as IS0's; (iii)
determine the number of shares of Common Stock for which options may be granted
and the option price or prices; (iv) determine the other terms and provisions of
option agreements (which need not be identical) including, but not limited to,
provisions concerning the time or times when and the extent to which the options
may be exercised and the nature and duration of restrictions as to
transferability or constituting substantial risks of forfeiture, provided that
with respect to ISO's such time or times shall not occur before approval of this
Plan by the stockholders of the Company in the manner provided under Section 15
below; (v) amend or modify any option, with the consent of the holder thereof;
<PAGE>
(vi) accelerate the right of an optionee to exercise in whole or in part any
previously granted option; and (vii) interpret the provisions and supervise the
administration of this Plan.

      Options may be granted singly or in combination. The Committee shall have
the authority to grant in its discretion to the holder of an outstanding option
in exchange for the surrender and cancellation of such option, a new option in
the same or a different form and containing such terms as the Committee may deem
appropriate, including without limitation a price which is different (either
higher or lower) than any price provided in the option so surrendered and
cancelled.

      In connection with the grant of an NSO, the Committee may in its
discretion, concurrently or after grant of the NSO, grant or agree to grant a
tax offset bonus to the optionee to offset in whole or in part the tax liability
of the optionee realized upon exercise of the NSO, provided that any such grant
or agreement to grant a tax offset bonus shall be authorized only if the
Committee anticipates in good faith that the Company would receive a net
after-tax economic benefit from the grant of such bonus and NSO instead of the
grant of an ISO of similar tenor.

      All decisions and selections made by the Committee pursuant to the
provisions of this Plan shall be made by a majority of its members except that
any decision with respect to the grant of an option to a member of the Committee
shall be made by a majority of the other members of the Committee who are not
the holders of options issued pursuant to this Plan, and if there be no such
members, pursuant to vote of a majority of the members of the Board of Directors
who are not the holders of options issued pursuant to this Plan. Any decision
reduced to writing and signed by all of the members of the Committee who are
authorized to make such decision shall be as fully effective as if it had been
made by a majority at a duly held meeting of the Committee.

      The Committee may employ attorneys, consultants, accountants or other
persons, and the Committee, the Company and its officers and directors shall be
entitled to rely upon the advice, opinions or valuations of such persons. All
actions taken and all interpretations and determinations made by the Committee
in good faith shall be final and binding upon the Company, all persons who
receive grants of options, and all other interested persons. No member or agent
of the Committee shall be personally liable for any action, determination, or
interpretation made in good faith with respect to this Plan or grants hereunder.
Each member of the Committee shall be indemnified and held harmless by the
Company against any cost or expense (including counsel fees) reasonably incurred
by him or liability (including any sum paid in settlement of a claim with the
approval of the Company) arising out of any act or omission to act in connection
with this Plan unless arising out of such member's own fraud or bad faith. Such
indemnification shall be in addition to any rights of indemnification the
members of the Committee may have as directors or otherwise under the by-laws of
the Company, or any agreement, vote of stockholders or disinterested directors,
or otherwise.

      4.    Designation of Participants.

      Options may be granted only to employees, including officers who are
employees, of the Company or any parent or subsidiary of the Company, and other
individuals, including consultants but excluding Directors who are not employees
of the Company or any parent or

                                       2
<PAGE>
subsidiary, who are determined by the Committee to contribute, or have the
potential to contribute, materially to the success of the Company or any parent
or subsidiary, provided that ISO's shall be granted only to persons who are
employees of the Company or any parent or subsidiary of the Company.

      5.    Option Price.

            5.1 The purchase price of each share of Common Stock subject to an
option or any portion thereof which has been designated as an ISO shall not be
less than 100% (or 110%, if at the time of grant the optionee owns more than 10%
of the total combined voting power of all classes of stock of the Company or any
parent or subsidiary corporation) of the fair market value of such share on the
date the option is granted, determined without regard to any restriction other
than a restriction which, by its terms, will never lapse. The purchase price of
each share of Common Stock subject to an NSO shall be such price as the
Committee shall determine in its sole discretion.

            5.2 The fair market value of a share of Common Stock on a particular
date shall be the mean between the highest and lowest quoted selling prices on
such date (the "valuation date") on the securities market where the Common Stock
of the Company is traded, or if there were no sales on the valuation date, on
the next preceding date within a reasonable period (as determined in the sole
discretion of the Committee) on which there were sales. In the event that there
were no sales in such a market within a reasonable period, the fair market value
shall be as determined in good faith by the Board of Directors in its sole
discretion.

      6.    Term and Exercise of Options.

            6.1 The term of each ISO granted under this Plan shall be not more
than ten years from the date of grant, or five years from the date of grant if
at the time of grant the optionee owns more than 10% of the total combined
voting power of all classes of stock of the Company or any parent or subsidiary
corporation. The term of each NSO granted under this Plan shall be such period
of time as the Committee shall determine in its sole discretion.

            6.2 An option shall be exercisable at such time or times as shall be
determined by the Committee. An option may be exercised only by written notice
of intent to exercise such option with respect to a specified number of shares
of Common Stock and payment to the Company of the amount of the option price for
the number of shares of Common Stock as to which such notice applies. Payment
for such shares shall be paid at the time of purchase (i) in cash, (ii) with
shares of Common Stock to be valued at the fair market value thereof on the date
of such exercise, determined as provided in Section 5(b), (iii) by written
notice to the Company to withhold from those shares of Common Stock that would
otherwise be obtained on the exercise of such option, the number of shares
having a fair market value on the date of exercise equal to the option exercise
price, (iv) by any other means, including the promissory note of the holder of
the option, which the Committee determines to be consistent with the purpose of
this Plan and applicable law, or (v) a combination of the foregoing. Upon
receipt of payment, the Company shall deliver to the person exercising such
option a certificate or certificates for such shares. It shall be a condition of
the Company's obligation to issue Common Stock upon exercise of an option that
the person exercising the option pay, or make provision satisfactory to the

                                       3
<PAGE>
Company for the payment of, any taxes which the Company is obligated to collect
with respect to the issue of Common Stock upon such exercise. Anything in this
paragraph to the contrary notwithstanding, an option granted to an optionee who
is subject to Section 16(b) of the Exchange Act shall provide that a period of
at least six months must elapse between the date of grant of the option and the
date of disposition of shares acquired upon exercise of the option.

      The Committee may establish a program through which optionees can borrow
funds with which to purchase Common Stock pursuant to exercise of an option.

            6.3 The proceeds of the sale of Common Stock subject to options are
to be added to the general funds of the Company and used for its general
corporate purposes.

      7.    Incentive Stock Options.

            7.1 The aggregate fair market value (determined at the time of
grant) of stock with respect to which ISO's are exercisable for the first time
by an optionee during any calendar year (under this Plan and under all other
plans of the Company and any parent and subsidiary corporations) shall not
exceed $100,000.

            7.2 In the event of amendments to the Code or applicable rules and
regulations thereunder relating to incentive stock options subsequent to the
date hereof, the Company may amend the provisions of this Plan, and the Company
and the employees holding options may agree to amend outstanding option
agreements, to reflect such amendments.

      8.    Transfer of Options.

      An option or portion thereof designated as an ISO shall not be
transferable by an optionee otherwise than by will or the laws of descent and
distribution, and shall be exercisable during his lifetime only by him. An NSO
shall not be transferable by an optionee otherwise than by will or the laws of
descent and distribution, except that an optionee who is not subject to Section
16(b) of the Exchange Act may transfer, assign otherwise dispose of an option
(i) to his spouse, parents, siblings and lineal descendents, (ii) to a trust for
the benefit of the optionee and any of the foregoing, or (iii) to any
corporation or partnership controlled by the optionee, or (iv) pursuant to a
"qualified domestic relations order" as defined in the Code, provided that no
such disposition shall affect any conditions for vesting of rights granted
pursuant to such option.

      9.    Termination of Employment.

            9.1 If the employment of an optionee terminates for any reason other
than for cause, or his death, disability (as may be determined by the Committee
under Section 9(c) below), retirement at age 65 or over, or retirement at less
than age 65 with the consent of the Company or any parent or subsidiary company
by which he was employed, he may for a period of three months after the date of
termination of his employment (unless a longer period is allowed by the
Committee) exercise options held by him to the extent he was entitled to
exercise such options on the date when his employment terminated. In no event,
however, may such optionee exercise an option at a time when the option would
not be exercisable had the optionee remained an employee. For purposes of this
Section 9, an optionee's employment will not be considered terminated (i) if the
Committee in the exercise of its discretion shall so determine in

                                       4
<PAGE>
the case of sick leave or other bona fide leave of absence approved by the
Company or any parent or subsidiary company or (ii) in the case of a transfer by
such optionee to the employment of an affiliated company of the employing
company.

            9.2 If an optionee dies at a time when he is entitled to exercise an
option, then at any time or times within one year after his death, such option
may be exercised, as to all or any of the shares which the optionee was entitled
to purchase immediately prior to his death, by his executor or administrator or
the person or persons to whom the option is transferred by will or the
applicable laws of descent and distribution. In no event, however, may any
option be exercised after the expiration of such option by its terms, except as
the Committee may otherwise allow for a period up to one year after such
optionee's death.

            9.3 If an optionee retires from the service of the Company or any
parent or subsidiary company by which he was employed at age 65 or older or
retires at less than age 65 with the consent of the Company or such parent or
subsidiary, or becomes disabled at a time when he is entitled to exercise an
option, then (i) with respect to each NSO, at any time or times within three
years of the date of such retirement or disability, and (ii) with respect to
each ISO, at any time or times within three months after the date of such
retirement or within one year after the date of such disability, he may exercise
such option as to all or any of the shares which he was entitled to purchase
under such option immediately prior to his retirement or disability. In no
event, however, may any option be exercised after the expiration of such option
by its terms. The Committee shall have authority to determine whether or not an
optionee has retired from the service of the Company or any parent or subsidiary
company by which he was employed with the consent of the Company or such parent
or subsidiary, and whether or not an optionee has become disabled (as such term
may be used in the Code); and its determination shall be binding on all
concerned.

            9.4 If termination of employment of an optionee shall be for cause
or in violation of an agreement by the optionee to remain in the employ of the
Company or any parent or subsidiary company, the options held by such optionee
shall terminate forthwith. If an optionee shall breach in a material respect an
agreement to refrain from competition with the Company or any parent or
subsidiary company, or to refrain from solicitation of the Company's customers,
suppliers or employees of the Company or any parent or subsidiary company, the
options held by such optionee shall at the option of the Company be forfeited by
the optionee and deemed not to be outstanding.

      10.   Rights of Stockholders.

      The holders of options shall not be or have any of the rights or
privileges of stockholders of the Company in respect of any shares of Common
Stock purchasable upon the exercise of any option until such option shall have
been validly exercised.

      11.   Adjustments.

      Notwithstanding any other provision of this Plan, the Committee may at any
time make or provide for such adjustments to this Plan, to the number and class
of shares available hereunder or to any outstanding options, as it shall deem
appropriate to prevent dilution or

                                       5
<PAGE>
enlargement of rights, including adjustments in the event of distributions to
holders of Common Stock of other than a normal cash dividend, changes in the
outstanding Common Stock by reason of stock dividends, split-ups,
recapitalizafions, mergers, consolidations, combinations or exchanges of shares,
separations, reorganizations, liquidations and the like. In the event of any
general offer to holders of Common Stock relating to the acquisition of their
shares, the Committee may make such adjustment as it deems equitable in respect
of outstanding options, including in the Committee's discretion revision of
outstanding options, so that they may be exercisable for the consideration
payable `in the acquisition transaction. Any such determination by the Committee
shall be conclusive.

      12.   Amendments or Termination.

      The Company's Board of Directors may amend, alter, or discontinue this
Plan, except that no amendment or alteration requiring stockholder approval
pursuant to the Code's provisions with respect to ISO's or applicable provisions
of the Exchange Act shall be made without the approval of the Company's
stockholders.

      13.   Foreign Nationals.

      The Committee may in order to fulfill the purposes of this Plan modify
grants to participants who are foreign nationals or employed outside the United
States to accommodate differences in applicable law, tax policy, or custom.

      14.   Governing Law.

      This Plan shall be governed by and construed and enforced in accordance
with the laws of the State of Delaware to the extent that such laws, as
applicable to the Plan, are not superseded by or inconsistent with Federal law.

      15.   Effective Date.

      This Plan is effective January 1, 1993, the date of its adoption by the
Company's Shareholder.

                                       6

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