Document:

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                       NASTECH PHARMACEUTICAL COMPANY INC.
                             2002 STOCK OPTION PLAN

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                                TABLE OF CONTENTS

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1.   Purpose...................................................................1

2.   Scope of the Plan.........................................................1

3.   Administration............................................................1

4.   Indemnification and Reimbursement.........................................2

5.   Eligibility...............................................................2

6.   Conditions to Grants......................................................3

7.   Non-Transferability.......................................................4

8.   Exercise of Options.......................................................4

9.   Loans.....................................................................5

10.  Notification under Section 83(b)..........................................5

11.  Mandatory Tax Withholding.................................................5

12.  Elective Share Withholding................................................5

13.  Corporate Transactions....................................................6

14.  Termination of Employment or Consulting Relationship......................6

15.  Plans of Foreign Subsidiaries.............................................7

16.  Substituted Options.......................................................7

17.  Securities Law Matters....................................................7

18.  No Employment Rights......................................................7

19.  No Rights as a Shareholder................................................7

20.  Nature of Payments........................................................7

21.  Non-uniform Determinations................................................8

22.  Adjustments...............................................................8

23.  Amendments................................................................8

24.  Termination of the Plan...................................................8

25.  No Illegal Transactions...................................................9

26.  Constructive Sales........................................................9

27.  Definitions...............................................................9

28.  Controlling Law..........................................................12

29.  Severability.............................................................12
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                       NASTECH PHARMACEUTICAL COMPANY INC.
                             2002 STOCK OPTION PLAN

        This 2002 Stock Option Plan (the "Plan") is established by Nastech
Pharmaceutical Company Inc., a Delaware corporation (the "Company"), effective
as of May 2, 2002, subject to the approval of the shareholders of the Company
within twelve (12) months thereafter.

               1. Purpose. The Plan is intended to provide Eligible Persons with
equity ownership in the Company, thereby strengthening their commitment to the
success of the Company, promoting the identity of interests between the
Company's shareholders and such Eligible Persons and stimulating their efforts
on behalf of the Company, and to assist the Company in attracting and retaining
talented personnel.

               2. Scope of the Plan. Subject to adjustment in accordance with
Section 22, the total number of Shares available for issuance pursuant to the
exercise of Options granted under the Plan shall be 1,400,000. In addition, the
number of Shares for which Options may be granted to any individual Grantee in
any calendar year shall not exceed 1,000,000. If any Shares subject to any
Option granted hereunder are forfeited or such Option otherwise terminates
without the issuance of such Shares or other consideration in lieu of such
Shares, the Shares subject to such Option, to the extent of any such forfeiture
or termination, shall again be available for grant under the Plan. Shares
awarded under the Plan may be treasury shares or newly-issued shares.

               3. Administration.

               (a) The Plan shall be administered by a Committee which shall
consist of two or more members of the Board, all of whom shall qualify as
"outside directors" as defined for purposes of the regulations under Section
162(m) of the Code and as "non-employee directors" under Section (b)(3)(i) of
Rule 16b-3. The number of members of the Committee shall from time to time be
increased or decreased, and shall be subject to such conditions, in each case as
the Board deems appropriate to permit transactions in Shares pursuant to the
Plan to satisfy such conditions of Rule 16b-3 and Section 162(m) of the Code as
then in effect.

               (b) Subject to the express provisions of the Plan, the Committee
shall have full and final authority and discretion as follows:

                      (i) to determine when and to whom Options should be
granted and the terms, conditions and restrictions applicable to each Option,
including, without limitation, (A) the exercise price of the Option, (B) the
method of payment for Shares purchased upon the exercise of the Option, (C) the
method of satisfaction of any tax withholding obligation arising in connection
with the Option, (D) the timing, terms and conditions of the exercisability of
the Option or the vesting of any Shares acquired upon the exercise thereof, (E)
the time of the expiration of the vesting, if any, of any Shares acquired upon
the exercise thereof, (F) the effect of the Grantee's termination of employment
or service with the Company on any of the foregoing, and (G) all other terms,
conditions and restrictions applicable to the Option or such Shares not
inconsistent with the terms of the Plan;

                      (ii) to interpret the Plan and to make all determinations
necessary or advisable for the administration of the Plan;

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                      (iii) to make, amend and rescind rules, guidelines and
policies relating to the Plan, or to adopt supplements to, or alternative
versions of the Plan, including, without limitation, rules with respect to the
exercisability and forfeitability of Options upon the termination of employment
or service of a Grantee;

                      (iv) determine the terms, conditions and restrictions of
all Option Agreements (which need not be identical) and, with the consent of the
Grantee and subject to Section 23(b), to amend any such Option Agreement at any
time, among other things, to permit transfers of such Options to the extent
permitted by the Plan, except that the consent of the Grantee shall not be
required for any amendment which (A) does not adversely affect the rights of the
Grantee or (B) is necessary or advisable (as determined by the Committee) to
carry out the purpose of the Option as a result of any change in applicable law;

                      (v) to cancel, with the consent of the Grantee,
outstanding Options and to grant new Options in substitution therefor;

                      (vi) to accelerate the exercisability of, and to
accelerate or waive (subject to Section 23(b)) any or all of the terms,
conditions and restrictions applicable to, any Option or any group of Options
for any reason and at any time, including in connection with a termination of
employment (other than for Cause);

                      (vii) subject to Section 6(c), to extend the time during
which any Option or group of Options may be exercised;

                      (viii) to make such adjustments or modifications to
Options to Grantees working outside the United States as are advisable to
fulfill the purposes of the Plan;

                      (ix) to impose such additional terms, conditions and
restrictions upon the grant, exercise or retention of Options as the Committee
may, before or concurrent with the grant thereof, deem appropriate; and

                      (x) to take any other action with respect to any matters
relating to the Plan for which it is responsible.

The determination of the Committee on all matters relating to the Plan or any
Option Agreement shall be final.

               4. Indemnification and Reimbursement. Service as a member of the
Committee or any other duly appointed committee shall constitute service as a
Board member, and such members shall accordingly be entitled to full
indemnification and reimbursement as Board members for their service as members
of the Committee or any other duly appointed committee. No Committee or other
duly appointed committee member shall be liable for any act or omission made in
good faith with respect to the Plan or any Option granted under the Plan.

               5. Eligibility. The Committee may, in its discretion, grant
Options to any Eligible Person, whether or not he or she has previously received
an Option, except in the case of an ISO which can only be granted to an Employee
of the Company or any Subsidiary.

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               6. Conditions to Grants.

               (a) General Conditions. Options shall be evidenced by written
Option Agreements specifying the number of Shares covered thereby, in such form
as the Committee shall from time to time establish. Option Agreements may
incorporate all or any of the terms of the Plan by reference and shall comply
with and be subject to the following terms and conditions:

                      (i) The Grant Date of an Option shall be the date on which
the Committee grants the Option or such later date as specified in advance by
the Committee;

                      (ii) For all Options, the Option Term shall under no
circumstances extend more than ten (10) years after the Grant Date and shall be
subject to earlier termination as herein provided; and

                      (iii) Any terms and conditions of an Option not set forth
in the Plan shall be set forth in the Option Agreement related to that Option.

               (b) Grant of Options; Determination of Option Price; No
Repricing. No later than the Grant Date of any Option, the Committee shall
determine the Option Price of such Option. Subject to Section 6(c), the Option
Price of an Option may not be less than the Fair Market Value of a Share on the
Grant Date. Except as otherwise provided in Section 22(c), in no event shall the
Committee decrease the Option Price of an Option after the date of grant or
cancel outstanding Options and grant replacement Options with a lower exercise
price without first obtaining the approval of the shareholders of the Company.

               (c) Grant of ISOs. At the time of the grant of any Option, the
Committee may, in its discretion, designate that such Option shall be made
subject to additional restrictions to permit the Option to qualify as an
"incentive stock option" under the requirements of Section 422 of the Code. Any
Option designated as an ISO:

                      (i) shall have an Option Price that is not less than the
Fair Market Value of a Share on the Grant Date and, if granted to a Ten Percent
Owner, have an Option Price not less than 110% of the Fair Market Value of a
Share on the Grant Date;

                      (ii) shall be for a period of not more than ten (10) years
and, if granted to a Ten Percent Owner, not more than five (5) years, from the
Grant Date and shall be subject to earlier termination as provided herein or in
the applicable Option Agreement;

                      (iii) shall meet the limitations of this subparagraph
6(c)(iii). If the aggregate Fair Market Value of Shares with respect to which
ISOs first become exercisable by a Grantee in any calendar year exceeds the
limit determined in accordance with the provisions of Section 422 of the Code
(the "Limit") taking into account Shares subject to all ISOs granted by the
Company which are held by the Grantee, the excess will be treated as
nonqualified Options. To determine whether the Limit is exceeded, the Fair
Market Value of Shares subject to Options shall be determined as of the Grant
Dates of the Options. In reducing the number of Options treated as ISOs to meet
the Limit, the most recently granted Options will be reduced first. If a
reduction of simultaneously granted Options is necessary to meet the Limit, the
Committee may designate which Shares are to be treated as Shares acquired
pursuant to an ISO;

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                      (iv) shall be granted within ten (10) years from the date
the Plan is adopted by the Board;

                      (v) shall require the Grantee to notify the Committee of
any disposition of any Shares issued upon the exercise of the ISO under the
circumstances described in Section 421(b) of the Code (a "Disqualifying
Disposition"), within ten (10) business days after such Disqualifying
Disposition; and

                      (vi) unless otherwise permitted by the Code, shall by its
terms not be assignable or transferable other than by will or the laws of
descent and distribution and may be exercised, during the Grantee's lifetime,
only by the Grantee, except that the Grantee may, in accordance with Section 7,
designate in writing a beneficiary to exercise his or her ISOs after the
Grantee's death.

               7. Non-Transferability. An Option granted hereunder shall not be
assignable or transferable other than by will or the laws of descent and
distribution and may be exercised during the Grantee's lifetime only by the
Grantee or his or her guardian or legal representative, except that, subject to
Section 6(c) in respect of ISOs, a Grantee may, if permitted by the Committee,
in its discretion, (a) designate in writing a beneficiary to exercise an Option
after his or her death (if that designation has been received by the Company
prior to the Grantee's death) and (b) transfer the Option to one or more members
of the Grantee's Immediate Family.

               8. Exercise of Options.

               (a) Subject to Section 6 and except as otherwise provided in the
applicable Option Agreement, each Option shall become exercisable at such time
or times as may be specified by the Committee from time to time; provided,
however, that subsequent to the grant of an Option, the Committee, at any time
before complete termination of such Option, may accelerate the time or times at
which such Option may be exercised in whole or in part (without reducing the
term of such Option). The Option Agreement may contain precedent to the
exercisability of Options, including without limitation, the achievement of
minimum performance criteria.

               (b) An Option shall be exercised by the delivery to the Company
during the Option Term of (i) a written notice of intent to purchase a specific
number of Shares subject to the Option in accordance with its terms of the
Option by the person entitled to exercise the Option and (ii) payment in full of
the Option Price of such specific number of Shares in accordance with Section
8(c).

               (c) Payment of the Option Price may be made by any one or more of
the following means:

                      (i) cash, check, or wire transfer;

                      (ii) Mature Shares, valued at their Fair Market Value on
the date of exercise;

                      (iii) in accordance with procedures approved by the
Company, through the sale of, or borrowing against, the Shares acquired on
exercise of the Option through a bank or broker-dealer to whom the Grantee has
submitted an irrevocable notice of exercise and irrevocable instructions to
deliver promptly to the Company the amount of sale or loan proceeds sufficient
to pay for such Shares, together with, if requested by the Company, the amount
of federal, state, local or foreign withholding taxes payable by Grantee by
reason of such exercise; or

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                      (iv) in the discretion of the Committee, payment may also
be made in accordance with Section 9.

               9. Loans. The Committee may in its discretion allow a Grantee to
defer payment to the Company of all or any portion of (a) the Option Price of an
Option or (b) any taxes associated with the exercise or nonforfeitability of an
Option. Any such payment deferral shall comply with all applicable laws and
regulations (including applicable margin rules) and shall be on such terms and
conditions as the Committee may determine, except that a Grantee shall not be
entitled to defer the payment of such Option Price or any related taxes unless
the Grantee enters into a binding obligation to pay the deferred amount. If the
Committee has permitted a payment deferral in accordance with this Section 9,
then the Committee may require the immediate payment of such deferred amount
upon the Grantee's termination of employment or if the Grantee sells or
otherwise transfers his or her Shares purchased pursuant to such deferral. The
Committee may at any time in its discretion forgive the repayment of any or all
of the principal of, or interest on, any such deferred payment obligation.

               10. Notification under Section 83(b). If the Grantee, in
connection with the exercise of any Option which is exercisable for restricted
stock, makes an election permitted under Section 83(b) of the Code (if
applicable to such Grantee) to include in such Grantee's gross income in the
year of transfer the amounts specified in Section 83(b) of the Code, then such
Grantee shall notify the Company, in writing, of such election within ten (10)
days after filing the notice of the election with the Internal Revenue Service,
in addition to any filing and notification required pursuant to regulations
issued under Section 83(b) of the Code. The Committee may, in connection with
the grant of an Option or at any time thereafter, prohibit a Grantee from making
the election described in this Section 10. Unless otherwise specified in the
Option Agreement, any shares received upon exercise of any Option shall be fully
vested.

               11. Mandatory Tax Withholding.

               (a) Whenever under the Plan, Shares are to be delivered upon
exercise or payment of an Option or any other event with respect to rights and
benefits hereunder, the Company shall be entitled to require (i) that the
Grantee remit an amount in cash, or in the Company's discretion, Mature Shares
or any other form of consideration, sufficient to satisfy all federal, state and
local tax withholding requirements related thereto ("Required Withholding"),
(ii) the withholding of such Required Withholding from compensation otherwise
due to the Grantee or from any Shares due to the Grantee under the Plan, or
(iii) any combination of the foregoing.

               (b) Any Grantee who makes a Disqualifying Disposition or an
election under Section 83(b) of the Code shall remit to the Company an amount
sufficient to satisfy all resulting Required Withholding, except that in lieu of
or in addition to the foregoing, the Company shall have the right to withhold
such Required Withholding from compensation otherwise due to the Grantee or from
any Shares or other payment due to the Grantee under the Plan.

               (c) Any surrender by a Section 16 Grantee of previously owned
Shares to satisfy tax withholding arising upon exercise of the Option must
comply with the applicable provisions of Rule 16b-3(e).

               12. Elective Share Withholding. Subject to the provisions of this
Section 12, a Grantee may, with the prior consent of the Committee, elect the
withholding by the Company of a portion of the Shares otherwise deliverable to
such Grantee upon the exercise of an Option (a "Taxable Event")

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                                                                               6

having a Fair Market Value equal to the minimum amount necessary to satisfy the
Required Withholding liability attributable to the Taxable Event.

               13. Corporate Transactions. In the event of the proposed
dissolution or liquidation of the Company, all Options will terminate
immediately prior to the consummation of such proposed action, unless otherwise
provided by the Committee. The Committee may, in the exercise of its sole
discretion in such instances, declare that any Option shall terminate as of a
date fixed by the Committee and give each Grantee the right to exercise his or
her Option as to all or any of the Shares issuable pursuant to the exercise of
the Option, including Shares which would not otherwise be then issuable pursuant
to the exercise of the Option. In the event of a proposed sale of all or
substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, the Option shall be assumed or an equivalent
option shall be substituted by such successor corporation or a parent or
subsidiary of such successor corporation, unless the Board determines, in the
exercise of its sole discretion and in lieu of such assumption or substitution,
that the Grantee shall have the right to exercise the Option in whole or in
part, including Shares which would not otherwise be then issuable pursuant to
the exercise of the Option. If the Board makes an Option exercisable in lieu of
assumption or substitution in the event of a merger or sale of assets, the Board
shall notify the Grantee that the Option shall be exercisable for a period of
not less than 15 days from the date of such notice, and the Option will
terminate upon the expiration of such period.

               14. Termination of Employment or Consulting Relationship.

               (a) For Cause. If a Grantee's employment or consulting
relationship is terminated for Cause, any unexercised Option shall terminate
effective immediately upon such termination of employment or consulting
relationship.

               (b) On Account of Death. Except as otherwise provided by the
Committee in the Option Agreement, if a Grantee's employment or consulting
relationship terminates on account of death, then any unexercised Option,
whether or not exercisable on the date of such termination of employment or
consulting relationship, may be exercised, in whole or in part, within the first
twelve (12) months after such termination of employment or consulting
relationship (but only during the Option Term) after the death of the Grantee by
(A) his or her personal representative or by the person to whom the Option is
transferred by will or the applicable laws of descent and distribution, (B) the
Grantee's designated beneficiary, or (C) a Permitted Transferee.

               (c) On Account of Disability. Except as otherwise provided by the
Committee in the Option Agreement, if a Grantee's employment or consulting
relationship terminates on account of Disability, then any unexercised Option,
whether or not exercisable on the date of such termination of employment or
consulting relationship, may be exercised in whole or in part, within the first
twelve (12) months after such termination of employment or consulting
relationship (but only during the Option Term) by the Grantee, or by (A) his or
her personal representative or by the person to whom the Option is transferred
by will or the applicable laws of descent and distribution, (B) the Grantee's
designated beneficiary, or (C) a Permitted Transferee.

               (d) Any Other Reason. Except as otherwise provided by the
Committee in the Option Agreement, if a Grantee's employment or consulting
relationship terminates for any reason other than for Cause, retirement, death,
or Disability, then any unexercised Option, to the extent exercisable
immediately before the Grantee's termination of employment or consulting
relationship, may be exercised in whole or in part, not later than three (3)
months after such termination of employment or

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consulting relationship (but only during the Option Term), and any options which
were not exercisable at such time shall terminate effective immediately upon
such termination of employment or consulting relationship.

               15. Plans of Foreign Subsidiaries. The Committee may authorize
any foreign Subsidiary to adopt this Plan for granting Options.

               16. Substituted Options. If the Committee cancels any Option
(whether granted under this Plan or any plan of any entity acquired by the
Company or a Subsidiary), the Committee may, in its discretion, substitute a new
Option therefor upon such terms and conditions consistent with the Plan as the
Committee may determine, except that (a) the Option Price of any new Option
shall not be less than one hundred percent (100%) (one hundred ten percent
(110%) in the case of an ISO granted to a Ten Percent Owner) of the Fair Market
Value of a Share on the date of the grant of the new Option; and (b) the Grant
Date of the new Option shall be the date on which such new Option is granted.

               17. Securities Law Matters.

               (a) If the Committee deems it necessary to comply with any
applicable securities law, the Committee may require a written investment intent
representation by the Grantee and may require that a restrictive legend be
affixed to certificates for Shares. If, based upon the advice of counsel to the
Company, the Committee determines that the exercise or nonforfeitability of, or
delivery of benefits pursuant to, any Option would violate any applicable
provision of (i) federal or state securities laws or (ii) the listing
requirements of any national exchange or national market system on which are
listed any of the Company's equity securities, then the Committee may postpone
any such exercise, nonforfeitability or delivery, as applicable, but the Company
shall use all reasonable efforts to cause such exercise, nonforfeitability or
delivery to comply with all such provisions at the earliest practicable date.

               (b) Grants of Options to any Section 16 Grantee shall comply with
Rule 16b-3 and shall contain such additional conditions or restrictions as may
be required thereunder for such grants to qualify for exemption from liability
under Section 16(b) of the 1934 Act.

               18. No Employment Rights. Neither the establishment of the Plan
nor the grant of any Option shall (a) give any Grantee the right to remain
employed by the Company or any Subsidiary or to any benefits not specifically
provided by the Plan or (b) modify the right of the Company or any Subsidiary to
modify, amend, or terminate any employee benefit plan.

               19. No Rights as a Shareholder. A Grantee shall not have any
rights as a shareholder of the Company with respect to the Shares which may be
deliverable upon exercise or payment of such Grantee's Option until such Shares
have been delivered to him or her. No adjustment shall be made for cash
dividends or other rights for which the record date is prior to the date of such
due exercise and full payment.

               20. Nature of Payments. Options shall be special incentive
payments to the Grantee and shall not be taken into account in computing the
amount of salary or compensation of the Grantee for purposes of determining any
pension, retirement, death or other benefit under (a) any pension, retirement,
profit-sharing, bonus, insurance or other employee benefit plan of the Company
or any Subsidiary or (b) any agreement between (i) the

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Company or any Subsidiary and (ii) the Grantee, except as such plan or agreement
shall otherwise expressly provide.

               21. Non-uniform Determinations. The Committee's determinations
under the Plan need not be uniform and may be made by the Committee selectively
among persons who receive, or are eligible to receive, Options, whether or not
such persons are similarly situated. Without limiting the generality of the
foregoing, the Committee shall be entitled, to enter into non-uniform and
selective Option Agreements as to (a) the identity of the Grantees, (b) the
terms and provisions of Options and (c) the treatment of terminations of
employment.

               22. Adjustments. The Committee shall make equitable adjustment
of:

               (a) the aggregate number of Shares available under the Plan for
Options and the aggregate number of Shares for which Options may be granted to
any individual Grantee in any calendar year pursuant to the second sentence of
Section 2;

               (b) the number of Shares covered by an Option; and

               (c) the Option Price of all outstanding Options;

to reflect a stock dividend, stock split, reverse stock split, share
combination, recapitalization, merger, consolidation, spin-off, split-off,
reorganization, rights offering, liquidation or similar event, of or by the
Company.

               23. Amendments.

               (a) Amendments to the Plan. The Committee may amend, alter,
suspend, discontinue, or terminate the Plan or any portion thereof at any time;
provided that no such amendment, alteration, suspension, discontinuation or
termination may be made to the prohibition on repricing contained in Section
6(b) without shareholder approval; and provided further that no such amendment,
alteration, suspension, discontinuation or termination shall be made without
shareholder approval if such approval is necessary to comply with any tax or
regulatory requirement applicable to the Plan; and provided further that any
such amendment, alteration, suspension, discontinuation or termination that
would impair the rights of any Grantee or any beneficiary of any Option
theretofore granted shall not to the extent be effective without the consent of
the affected Grantee or beneficiary.

               (b) Amendments to Options. The Committee may waive any conditions
or rights under, amend any terms of, or alter, suspend, discontinue, cancel or
terminate, any Option theretofore granted, prospectively or retroactively;
provided that any such waiver, amendment, alteration, suspension,
discontinuance, cancellation or termination that would impair the rights of any
Grantee or beneficiary of any Option theretofore granted shall not to that
extent be effective without the consent of the affected Grantee or beneficiary;
and provided further that, except as otherwise provided in Section 22(c), the
Committee may not decrease the Option Price of an Option after the date of grant
or cancel outstanding Options and grant replacement Options with a lower
exercise price without first obtaining shareholder approval.

               24. Termination of the Plan. The Plan shall continue in effect
until the earlier of its termination by the Committee or the date on which all
of the Shares available for issuance pursuant to the exercise of Options granted
under the Plan have been issued and all restrictions on such Shares under the

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                                                                               9

terms of the Plan and the agreements evidencing Options granted under the Plan
have lapsed. However, all Options shall be granted, if at all, within ten (10)
years from the earlier of the date the Plan is adopted by the Board or the date
the Plan is duly approved by the shareholders of the Company. Notwithstanding
the foregoing, if the maximum number of Shares issuable pursuant to the Plan has
been increased at any time, all Options shall be granted, if at all, no later
than the last day preceding the ten (10) year anniversary of the earlier of (a)
the date on which the latest such increase in the maximum number of Shares
issuable under the Plan was approved by the shareholders of the Company or (b)
the date such amendment was adopted by the Committee. No termination shall
affect any Option then outstanding under the Plan.

               25. No Illegal Transactions. The Plan and all Options granted
pursuant to it are subject to all applicable laws and regulations.
Notwithstanding any provision of the Plan or any Option, Grantees shall not be
entitled to exercise, or receive benefits under, any Option, and the Company
shall not be obligated to deliver any Shares or deliver benefits to a Grantee,
if such exercise or delivery would constitute a violation by the Grantee or the
Company of any applicable law or regulation.

               26. Constructive Sales. The Grantee shall not directly or
indirectly, through related parties or otherwise "short" or "short against the
box" (as those terms are generally understood in the securities markets), or
otherwise directly or indirectly (through derivative instruments or otherwise)
dispose of or hedge, any securities of the Company issuable upon exercise of
such Grantee's Option(s). The foregoing provision may, at the discretion of the
Committee, be reflected in the individual Option Agreements governing the terms
and conditions of the Options granted by the Company to the Grantees (which
shall be entered into following the grant of such Options by the Committee).

               27. Definitions. The terms set forth below have the indicated
meanings which are applicable to both the singular and plural forms thereof:

               (a) "Board" shall mean the Board of Directors of the Company.

               (b) "Cause", with respect to any Employee or Consultant of the
Company shall have the meaning set forth in such person's employment or
consulting agreement or, in the absence of such an agreement or if such term is
not defined in such agreement, shall mean any one or more of the following, as
determined by the Committee (in the case of a Section 16 Grantee) or the Chief
Executive Officer or President of the Company (in the case of any other
Grantee):

                      (i) a Grantee's commission of a crime that is likely to
result in injury to the Company or a Subsidiary;

                      (ii) the material violation by the Grantee of written
policies of the Company or a Subsidiary;

                      (iii) the habitual neglect by the Grantee in the
performance of his or her duties to the Company or a Subsidiary; or

                      (iv) a Grantee's willful misconduct or inaction in
connection with his or her duties to the Company or a Subsidiary resulting in a
material injury to the Company or a Subsidiary.

<PAGE>
                                                                              10

               (c) "Code" shall mean the Internal Revenue Code of 1986, as
amended or superseded, and the regulations and rulings thereunder. Reference to
a particular section of the Code shall include references to successor
provisions.

               (d) "Committee" shall mean the committee of the Board appointed
pursuant to Section 3(b) (which may or may not be the Compensation Committee of
the Company), or if not so appointed, shall mean the entire Board.

               (e) "Common Stock" shall mean the common stock, $0.006 par value
per share, of the Company.

               (f) "Consultant" shall mean any person, including a Director, who
is engaged by the Company or any Subsidiary or affiliate thereof, to render
services to or for the benefit of the Company and is compensated for such
services.

               (g) "Director" shall mean a member of the Board.

               (h) "Disability" shall mean a permanent and total disability,
within the meaning of Section 22(e)(3) of the Code.

               (i) "Eligible Person" shall mean any Employee, Consultant or
Director of the Company or any Subsidiary, including any prospective Employee or
Employee on an approved leave of absence.

               (j) "Employee" shall mean any person treated as an employee
(including officers and directors) in the records of the Company and who is
subject to the control and direction of the Company with regard to both the work
to be performed and the manner and method of performance. The payment of a
director's fee by the Company to a Director shall not be sufficient to
constitute "employment" of the Director by the Company.

               (k) "Fair Market Value" per share of Common Stock on any relevant
date shall mean such a value as determined in accordance with the following
provisions:

                      (i) If the Common Stock is at that time listed on a
national securities exchange, then the Fair Market Value shall mean the closing
selling price per share of Common Stock on the exchange on which such Common
Stock is principally traded on the relevant date or, if there were no sales on
that date, the closing selling price of such Common Stock on the last preceding
date on which there were sales.

                      (ii) If the Common Stock is at that time not listed on a
national securities exchange but is traded on the Nasdaq National Market(R),
Nasdaq Small Cap MarketSM or OTC Bulletin Board(R), as the case may be, then the
Fair Market Value shall mean the closing selling price per share of Common Stock
on the relevant date, as the price is reported by the National Association of
Securities Dealers on the Nasdaq National Market(R), Nasdaq Small Cap MarketSM
or OTC Bulletin Board(R), as the case may be, or any successor system. If there
is no closing selling price for the Common Stock on the relevant date, then the
Fair Market Value shall mean the closing selling price on the last preceding
date for which such quotation exists.

                      (iii) If the Common Stock is neither listed on any
national securities exchange nor traded on the Nasdaq National Market(R), Nasdaq
Small Cap MarketSM or OTC Bulletin Board(R),

<PAGE>
                                                                              11

then the Fair Market Value shall mean that value determined by the Committee
after taking into account such factors as the Committee shall in good faith deem
appropriate.

               (l) "Grant Date" shall have the meaning specified in Section
6(a).

               (m) "Grantee" shall mean an individual who has been granted an
Option or any Permitted Transferee.

               (n) "ISO" shall mean an incentive stock option within the meaning
of Section 422 of the Code.

               (o) "Immediate Family" shall mean, with respect to a particular
Grantee, the Grantee's spouse, children, parents, and grandchildren and trusts
for the benefit of the Grantee and/or one or more of such individuals.

               (p) "Mature Shares" shall mean Shares for which the holder
thereof has good title, free and clear of all liens and encumbrances, and which
such holder has held for at least six (6) months.

               (q) "1934 Act" shall mean the Securities Exchange Act of 1934, as
amended. References to a particular section of the 1934 Act or rule thereunder,
include references to successor provisions.

               (r) "Option" shall mean options, including ISOs, granted under
the Plan.

               (s) "Option Agreement" shall mean the written agreement by which
an Option shall be evidenced.

               (t) "Option Price" shall mean the per share exercise price of an
Option.

               (u) "Option Term" shall mean the period beginning on the Grant
Date of an Option and ending on the expiration date of such Option, as specified
in the Option Agreement for such Option and as may, in the discretion of the
Committee and consistent with the provisions of the Plan, be extended from time
to time.

               (v) "Permitted Transferee" shall mean a person to whom an Option
may be transferred or assigned in accordance with Section 7.

               (w) "Rule 16b-3" shall mean Rule 16b-3 of the SEC under the 1934
Act, as amended from time to time, together with any successor rule.

               (x) "SEC" shall mean the Securities and Exchange Commission.

               (y) "Section 16 Grantee" shall mean a person who is subject to
potential liability under Section 16(b) of the 1934 Act with respect to
transactions involving equity securities of the Company.

               (z) "Share" shall mean a share of Common Stock.

               (aa) "Subsidiary" shall mean a subsidiary corporation as defined
in Section 424(f) of the Code (with the Company being treated as the employer
corporation for purposes of this definition).

<PAGE>
                                                                              12

               (bb) "Ten Percent Owner" shall mean a person who owns capital
stock (including stock treated as owned under Section 424(d) of the Code)
possessing more than ten percent of the total combined Voting Power of all
classes of capital stock of the Company or any Subsidiary.

               (cc) "Voting Power" shall mean the combined voting power of the
then-outstanding securities of the Company entitled to vote generally in the
election of directors.

               28. Controlling Law. The law of the State of Delaware, except its
law with respect to choice of law, shall control all matters relating to the
Plan.

               29. Severability. If any part of the Plan is declared by any
court or governmental authority to be unlawful or invalid, such unlawfulness or
invalidity shall not invalidate any other part of the Plan. Any Section or part
of a Section so declared to be unlawful or invalid shall, if possible, be
construed in a manner which will given effect to the terms of such Section to
the fullest extent possible while remaining lawful and valid.<PAGE>

April 30, 2002

Nastech Pharmaceuticals Company, Inc.
45 Adams Avenue
Hauppauge, New York 11788

Gregory L. Weaver
35 Champions Way
San Antonio, TX 78258

Dear Mr. Weaver,

I am delighted to be able to offer you a position as Chief Financial Officer.
This position will report directly to Nastech's President and Chief Executive
Officer, Dr. Steven C. Quay.

Nastech's offer includes the following:

1.      A base semi-monthly salary of $9,791.67 (equivalent to $235,000 on an
        annualized basis), commencing May 20, 2002.

2       Annual incentive compensation of up to 40% of the applicable base salary
        if the Employer's objectives, as set forth in a separate schedule to be
        determined by Executive and CEO, and approved by the Compensation
        Committee are achieved.

3.      Stock Options: 125,000 shares, vested over a three-year period in
        accordance with company policy.

4.      Relocation expenses capped at $100,000. This will cover estimated
        out-of-pocket costs of all relocation expenses and includes adjustments
        for estimated income taxes. If candidate chooses to leave Nastech's
        employ before a period of two years, any and all relocation expenses
        paid up to that date are to be fully reimbursed to Nastech.

5.      A bridge loan of $150,000, interest to be set at prime rate on the day
        the loan is taken. Loan is to be repaid from escrow at time of sale of
        former residence, but in any event no later than one year from date of
        grant.

6.      A change-in-control severance agreement to include 12 months salary, and
        acceleration of remaining unvested options, where there is a 50% or more
        change-in-control of company ownership.

7.      Health, dental, vacation, life insurance, and all other benefits in
        accordance with Nastech Company policy, as presently in effect and as
        amended, from time to time.

This offer expires at midnight, May 6, 2002.

As you know, this offer also requires that you agree to the terms of our
standard non-disclosure, and intellectual property provisions that are as
follows:

In the course of your employment, it is anticipated that you shall have access
to secret or confidential technical and commercial information, records, data,
specifications, systems, methods, formulations, plans, policies, inventions,
material and other knowledge ("Confidential Material") owned by Nastech. You
recognize and acknowledge that included within the Confidential Material are
Nastech's

<PAGE>

confidential commercial information, technology, research and development
information, methods of nasal drug formulation and manufacture, and related
materials, all as they may exist from time to time, and that they are valuable
special and unique aspects of Nastech's business. All such Confidential Material
shall be and remain the property of Nastech. Except as required by your duties
to the Company, you have agreed that you shall not, directly or indirectly,
either during the course of your employment or at any time thereafter, disclose
or disseminate to anyone or make use of, for any purpose whatsoever, any
Confidential Material. Upon termination of your employment, you shall promptly
deliver to Nastech all Confidential Material (including all copies thereof,
whether prepared by you or others), which are in your possession, custody or
control. You will not be deemed to have breached this agreement, if you shall be
specifically compelled by lawful order of any judicial, legislative, or
administrative authority or body to disclose any confidential material or else
face civil or criminal penalty or sanction.

Further, in connection with your employment at Nastech, you have agreed to
disclose to us any and all discoveries you shall make and any and all ideas,
concepts or inventions which you shall conceive or make during the period of
employment, or during the period of six months after your employment shall
terminate, which are in whole or in part the result of your work with Nastech.
Such disclosure is to be made promptly after each discovery or conception, and
the discovery, idea, concept or invention will become and remain the property of
Nastech, whether or not patent applications are filed thereon. Upon request and
at our expense, you have agreed to make application, through Nastech's patent
solicitors, for letters patent of the United States and any and all other
countries at the discretion of Nastech on such discoveries, ideas and
inventions, and to assign all such applications to Nastech, or at it's order,
forthwith, without additional payment by Nastech during your period of
employment and for reasonable compensation for time actually spent by you at
such work at the request of Nastech after termination of your employment. You
have further agreed to provide the Company, its attorneys and solicitors, all
reasonable assistance in preparing and prosecuting such applications and, on
request of Nastech, to execute all papers and do all things that may be
reasonably necessary to protect the right of Nastech and vest in it or it's
assigns the discoveries, ideas or inventions, applications and letters patent
herein contemplated. Said cooperation shall also include all actions reasonably
necessary to aid Nastech in the defense of its rights in the event of
litigation.

We are very pleased to make you this offer, and hope that the foregoing terms
are satisfactory to you. If you are in agreement with the terms, kindly return a
signed copy of this letter upon receipt.

I welcome you on behalf of the Nastech team, and I look forward to the
opportunity of working with you.

Sincerely yours,                          Accepted and agreed to by:

/s/ Steven C. Quay, M.D., Ph. D.          /s/ Gregory L. Weaver   April 30, 2002

Steven C. Quay                            Gregory L. Weaver       Date
President and Chief Executive Officer
NASTECH PHARMACEUTICAL COMPANY INC.

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