Document:

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                           ROSETTA INPHARMATICS, INC.

                        2000 DIRECTORS' STOCK OPTION PLAN

         1.  PURPOSES OF THE PLAN.  The purposes of this Directors' Stock
Option Plan are to attract and retain the best available personnel for
service as Directors of the Company, to provide additional incentive to the
Outside Directors of the Company to serve as Directors, and to encourage
their continued service on the Board.

             All options granted hereunder shall be nonstatutory stock
options.

         2.  DEFINITIONS.  As used herein, the following definitions shall
apply:

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

             (b)  "CHANGE OF CONTROL" means a sale of all or substantially
all of the Company's assets, or any merger or consolidation of the Company
with or into another corporation other than a merger or consolidation in
which the holders of more than 50% of the shares of capital stock of the
Company outstanding immediately prior to such transaction continue to hold
(either by the voting securities remaining outstanding or by their being
converted into voting securities of the surviving entity) more than 50% of
the total voting power represented by the voting securities of the Company,
or such surviving entity, outstanding immediately after such transaction.

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

             (d)  "COMMON STOCK" means the Common Stock of the Company.

             (e)  "COMPANY" means Rosetta Inpharmatics, Inc., a Delaware
corporation.

             (f)  "CONTINUOUS STATUS AS A DIRECTOR" means the absence of any
interruption or termination of service as a Director.

             (g)  "CORPORATE TRANSACTION" means a dissolution or liquidation
of the Company, a sale of all or substantially all of the Company's assets,
or a merger, consolidation or other capital reorganization of the Company
with or into another corporation.

             (h)  "DIRECTOR" means a member of the Board.

             (i)  "EMPLOYEE" means any person, including any officer or
Director, employed by the Company or any Parent or Subsidiary of the Company.
The payment of a director's fee by the Company shall not be sufficient in and
of itself to constitute "employment" by the Company.

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

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             (k)  "OPTION" means a stock option granted pursuant to the Plan.
All options shall be nonstatutory stock options (i.e., options that are not
intended to qualify as incentive stock options under Section 422 of the Code).

             (l)  "OPTIONED STOCK" means the Common Stock subject to an
Option.

             (m)  "OPTIONEE" means an Outside Director who receives an Option.

             (n)  "OUTSIDE DIRECTOR" means a Director who is not an Employee.

             (o)  "PARENT" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.

             (p)  "PLAN" means this 2000 Directors' Stock Option Plan.

             (q)  "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 11 of the Plan.

             (r)  "SUBSIDIARY" means a "subsidiary corporation," whether now
or hereafter existing, as defined in Section 424(f) of the Code.

         3.  STOCK SUBJECT TO THE PLAN.  Subject to the provisions of Section
11 of the Plan, the maximum aggregate number of Shares which may be sold
under the Plan is 600,000 Shares of Common Stock (the "POOL"). The Shares may
be authorized, but unissued, or reacquired Common Stock.

         If an Option should expire or become unexercisable for any reason
without having been exercised in full, the unpurchased Shares which were
subject thereto shall, unless the Plan has been terminated, become available
for future grant under the Plan. If Shares that were acquired upon exercise
of an Option are subsequently repurchased by the Company, such Shares shall
not in any event be returned to the Plan and shall not become available for
future grant under the Plan.

         4.  ADMINISTRATION OF AND GRANTS OF OPTIONS UNDER THE PLAN.

             (a)  ADMINISTRATOR.  Except as otherwise required herein, the
Plan shall be administered by the Board.

             (b)  PROCEDURE FOR GRANTS.  All grants of Options hereunder
shall be automatic and nondiscretionary and shall be made strictly in
accordance with the following provisions:

                  (i)     No person shall have any discretion to select which
Outside Directors shall be granted Options or to determine the number of
Shares to be covered by Options granted to Outside Directors.

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                  (ii)    Each individual who serves an Outside Director on
the effective date of this Plan shall be automatically granted an Option to
purchase 25,000 Shares (the "IPO OPTION") on the effective date of this Plan.

                  (iii)   Each individual who becomes an Outside Director
after the effective date of this Plan shall be automatically granted an
Option to purchase 25,000 Shares (the "INITIAL OPTION") on the date on which
such person first becomes an Outside Director, whether through election by
the stockholders of the Company or appointment by the Board of Directors to
fill a vacancy.

                  (iv)    Each Outside Director shall be automatically
granted an Option to purchase 5,000 Shares (the "ANNUAL OPTION") on the date
of each Annual Meeting of the Company's stockholders immediately following
which such Outside Director is serving on the Board, provided that, on such
date, he or she shall have served on the Board for at least six (6) months
prior to the date of such Annual Meeting.

                  (v)     Notwithstanding the provisions of subsections (ii),
(iii) and (iv) hereof, in the event that a grant would cause the number of
Shares subject to outstanding Options plus the number of Shares previously
purchased upon exercise of Options to exceed the Pool, then each such
automatic grant shall be for that number of Shares determined by dividing the
total number of Shares remaining available for grant by the number of Outside
Directors receiving an Option on the automatic grant date. Any further grants
shall then be deferred until such time, if any, as additional Shares become
available for grant under the Plan through action of the stockholders to
increase the number of Shares which may be issued under the Plan or through
cancellation or expiration of Options previously granted hereunder.

                  (vi)    Notwithstanding the provisions of subsections (ii),
(iii) and (iv) hereof, any grant of an Option made before the Company has
obtained stockholder approval of the Plan in accordance with Section 17
hereof shall be conditioned upon obtaining such stockholder approval of the
Plan in accordance with Section 17 hereof.

                  (vii)   The terms of each Option granted hereunder shall be
as follows:

                          (1)  each Option shall be exercisable only while
the Outside Director remains a Director of the Company, except as set forth
in Section 9 below;

                          (2)  each Option shall have an exercise price per
Share equal to 100% of the fair market value per Share on the date of grant
of each Option, determined in accordance with Section 8 below;

                          (3)  each IPO Option and each Initial Option shall
vest and become exercisable as to 1/48th of the Shares subject to the Option
each month after the date of grant; and

                          (4)  each Annual Option shall vest and become
exercisable as to 1/12th of the Shares subject to the Option each month after
the date of grant.

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             (c)  POWERS OF THE BOARD.  Subject to the provisions and
restrictions of the Plan, the Board shall have the authority, in its
discretion: (i) to determine, upon review of relevant information and in
accordance with Section 8(b) of the Plan, the fair market value of the Common
Stock; (ii) to determine the exercise price per Share of Options to be
granted, which exercise price shall be determined in accordance with Section
8 of the Plan; (iii) to interpret the Plan; (iv) to prescribe, amend and
rescind rules and regulations relating to the Plan; (v) to authorize any
person to execute on behalf of the Company any instrument required to
effectuate the grant of an Option previously granted hereunder; and (vi) to
make all other determinations deemed necessary or advisable for the
administration of the Plan.

             (d)  EFFECT OF BOARD'S DECISION.  All decisions, determinations
and interpretations of the Board shall be final and binding on all Optionees
and any other holders of any Options granted under the Plan.

             (e)  SUSPENSION OR TERMINATION OF OPTION.  If the Chief
Executive Officer or his or her designee reasonably believes that an Optionee
has committed an act of misconduct, such officer may suspend the Optionee's
right to exercise any option pending a determination by the Board (excluding
the Outside Director accused of such misconduct). If the Board (excluding the
Outside Director accused of such misconduct) determines an Optionee has
committed an act of embezzlement, fraud, dishonesty, nonpayment of an
obligation owed to the Company, breach of fiduciary duty or deliberate
disregard of the Company rules resulting in loss, damage or injury to the
Company, or if an Optionee makes an unauthorized disclosure of any Company
trade secret or confidential information, engages in any conduct constituting
unfair competition, induces any Company customer to breach a contract with
the Company or induces any principal for whom the Company acts as agent to
terminate such agency relationship, neither the Optionee nor his or her
estate shall be entitled to exercise any Option whatsoever. In making such
determination, the Board of Directors (excluding the Outside Director accused
of such misconduct) shall act fairly and shall give the Optionee an
opportunity to appear and present evidence on Optionee's behalf at a hearing
before the Board or a committee of the Board.

         5.  ELIGIBILITY.  Options may be granted only to Outside Directors.
All Options shall be automatically granted in accordance with the terms set
forth in Section 4(b) above. An Outside Director who has been granted an
Option may, if he or she is otherwise eligible, be granted an additional
Option or Options in accordance with such provisions.

             The Plan shall not confer upon any Optionee any right with
respect to continuation of service as a Director or nomination to serve as a
Director, nor shall it interfere in any way with any rights which the
Director or the Company may have to terminate his or her directorship at any
time.

         6.  TERM OF PLAN; EFFECTIVE DATE.  The Plan shall become effective
on the effectiveness of the registration statement under the Securities Act
of 1933, as amended, relating to the Company's initial public offering of
securities. It shall continue in effect for a term of ten (10) years unless
sooner terminated under Section 13 of the Plan.

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         7.  TERM OF OPTIONS.  The term of each Option shall be ten (10)
years from the date of grant thereof unless an Option terminates sooner
pursuant to Section 9 below.

         8.  EXERCISE PRICE AND CONSIDERATION.

             (a)  EXERCISE PRICE.  The per Share exercise price for the
Shares to be issued pursuant to exercise of an Option shall be 100% of the
fair market value per Share on the date of grant of the Option.

             (b)  FAIR MARKET VALUE.  The fair market value shall be
determined by the Board; provided however that in the event the Common Stock
is traded on the Nasdaq National Market or listed on a stock exchange, the
fair market value per Share shall be the closing sales price on such system
or exchange on the date of grant of the Option (or, in the event that the
Common Stock is not traded on such date, on the immediately preceding trading
date), as reported in THE WALL STREET JOURNAL, or if there is a public market
for the Common Stock but the Common Stock is not traded on the Nasdaq
National Market or listed on a stock exchange, the fair market value per
Share shall be the mean of the bid and asked prices of the Common Stock in
the over-the-counter market on the date of grant, as reported in THE WALL
STREET JOURNAL (or, if not so reported, as otherwise reported by the National
Association of Securities Dealers Automated Quotation ("NASDAQ") System). For
purposes of the IPO Options granted on the effective date of this Plan, the
fair market value per Share shall be the Price to Public as set forth in the
final prospectus filed with the Securities Exchange Commission pursuant to
Rule 424 under the Securities Act of 1933, as amended.

             (c)  FORM OF CONSIDERATION.  The consideration to be paid for
the Shares to be issued upon exercise of an Option shall consist entirely of
cash, check, other Shares of Common Stock having a fair market value on the
date of surrender equal to the aggregate exercise price of the Shares as to
which the Option shall be exercised (which, if acquired from the Company,
shall have been held for at least six months), or any combination of such
methods of payment and/or any other consideration or method of payment as
shall be permitted under applicable corporate law.

         9.  EXERCISE OF OPTION.

             (a)  PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER.  Any
Option granted hereunder shall be exercisable at such times as are set forth
in Section 4(b) above; provided however that no Options shall be exercisable
prior to stockholder approval of the Plan in accordance with Section 17 below
has been obtained.

                  An Option may not be exercised for a fraction of a Share.

                  An Option shall be deemed to be exercised when written
notice of such exercise has been given to the Company in accordance with the
terms of the Option by the person entitled to exercise the Option and full
payment for the Shares with respect to which the Option is exercised has been
received by the Company. Full payment may consist of any consideration and
method of payment allowable under Section 8(c) of the Plan. Until the

                                      -5-
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issuance (as evidenced by the appropriate entry on the books of the Company
or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or
any other rights as a stockholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. A share certificate for
the number of Shares so acquired shall be issued to the Optionee as soon as
practicable after exercise of the Option. No adjustment will be made for a
dividend or other right for which the record date is prior to the date the
stock certificate is issued, except as provided in Section 11 of the Plan.

                  Exercise of an Option in any manner shall result in a
decrease in the number of Shares which thereafter may be available, both for
purposes of the Plan and for sale under the Option, by the number of Shares
as to which the Option is exercised.

             (b)  TERMINATION OF CONTINUOUS STATUS AS A DIRECTOR.  If an
Outside Director ceases to serve as a Director, he or she may, but only
within ninety (90) days after the date he or she ceases to be a Director of
the Company, exercise his or her Option to the extent that he or she was
entitled to exercise it at the date of such termination. Notwithstanding the
foregoing, in no event may the Option be exercised after its term set forth
in Section 7 has expired. To the extent that such Outside Director was not
entitled to exercise an Option at the date of such termination, or does not
exercise such Option (to the extent he or she was entitled to exercise)
within the time specified above, the Option shall terminate and the Shares
underlying the unexercised portion of the Option shall revert to the Plan.

             (c)  DISABILITY OF OPTIONEE.  Notwithstanding Section 9(b)
above, in the event a Director is unable to continue his or her service as a
Director with the Company as a result of his or her total and permanent
disability (as defined in Section 22(e)(3) of the Code), he or she may, but
only within twelve (12) months from the date of such termination, exercise
his or her Option to the extent he or she was entitled to exercise it at the
date of such termination. Notwithstanding the foregoing, in no event may the
Option be exercised after its term set forth in Section 7 has expired. To the
extent that he or she was not entitled to exercise the Option at the date of
termination, or if he or she does not exercise such Option (to the extent he
or she was entitled to exercise) within the time specified above, the Option
shall terminate and the Shares underlying the unexercised portion of the
Option shall revert to the Plan.

             (d)  DEATH OF OPTIONEE.  In the event of the death of an
Optionee: (A) during the term of the Option who is, at the time of his or her
death, a Director of the Company and who shall have been in Continuous Status
as a Director since the date of grant of the Option, or (B) three (3) months
after the termination of Continuous Status as a Director, the Option may be
exercised, at any time within twelve (12) months following the date of death,
by the Optionee's estate or by a person who acquired the right to exercise
the Option by bequest or inheritance, but only to the extent of the right to
exercise that had accrued at the date of death or the date of termination, as
applicable. Notwithstanding the foregoing, in no event may the Option be
exercised after its term set forth in Section 7 has expired. To the extent
that an Optionee was not entitled to exercise the Option at the date of death
or termination or if he or she does not exercise such Option (to the extent
he or she was entitled to exercise) within the time specified above, the

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Option shall terminate and the Shares underlying the unexercised portion of
the Option shall revert to the Plan.

         10.  TRANSFERABILITY OF OPTIONS.  Options may not be sold, pledged,
assigned, hypothecated, or disposed of in any manner other than by will or by
the laws of descent or distribution or pursuant to a qualified domestic
relations order; provided, however, that Options shall be transferable under
the terms and conditions established by the Administrator to the following
recipients: a family trust established by the Optionee, a family limited
partnership established by the Optionee, a member of Optionee's immediate
family or to a partnership or other entity of which Optionee is a general
partner or in which Optionee plays a similar managerial role. Any such
transfer shall be subject to the applicable laws. An Option may be exercised,
during the lifetime of the Optionee, only by the Optionee or a transferee
permitted by this Section 10.

         11.  ADJUSTMENTS UPON CHANGES IN CAPITALIZATION; CORPORATE
TRANSACTIONS.

             (a)  ADJUSTMENT.  Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock covered by
each outstanding Option, the number of Shares of Common Stock set forth in
Sections 4(b)(ii) and (iii) above, and the number of Shares of Common Stock
which have been authorized for issuance under the Plan but as to which no
Options have yet been granted or which have been returned to the Plan upon
cancellation or expiration of an Option, as well as the price per Share of
Common Stock covered by each such outstanding Option, shall be
proportionately adjusted for any increase or decrease in the number of issued
Shares of Common Stock resulting from a stock split, reverse stock split,
stock dividend, combination or reclassification of the Common Stock
(including any such change in the number of Shares of Common Stock effected
in connection with a change in domicile of the Company) or any other increase
or decrease in the number of issued Shares of Common Stock effected without
receipt of consideration by the Company; provided however that conversion of
any convertible securities of the Company shall not be deemed to have been
"effected without receipt of consideration." Such adjustment shall be made by
the Board, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by the Company
of shares of stock of any class, or securities convertible into shares of
stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock
subject to an Option.

             (b)  CORPORATE TRANSACTIONS; CHANGE OF CONTROL.  In the event of
a Corporate Transaction, each outstanding Option shall be assumed or an
equivalent option shall be substituted by the successor corporation or a
Parent or Subsidiary of such successor corporation, unless the successor
corporation does not agree to assume the outstanding Options or to substitute
equivalent options, in which case the Options shall terminate upon the
consummation of the transaction; provided however that in the event of any
transaction that qualifies as a Change of Control and notwithstanding whether
or not outstanding Options are assumed, substituted for or terminated in
connection with the transaction, the vesting of each outstanding Option shall
accelerate in full such that each Optionee shall have the right to exercise

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<PAGE>

his or her Option as to all of the Optioned Stock, including Shares as to
which the Option would not otherwise be exercisable, immediately prior to
consummation of the transaction

             For purposes of this Section 11(b), an Option shall be
considered assumed, without limitation, if, at the time of issuance of the
stock or other consideration upon such Corporate Transaction or Change of
Control, each Optionee would be entitled to receive upon exercise of an
Option the same number and kind of shares of stock or the same amount of
property, cash or securities as the Optionee would have been entitled to
receive upon the occurrence of such transaction if the Optionee had been,
immediately prior to such transaction, the holder of the number of Shares of
Common Stock covered by the Option at such time (after giving effect to any
adjustments in the number of Shares covered by the Option as provided for in
this Section 11); provided however that if such consideration received in the
transaction was not solely common stock of the successor corporation or its
Parent, the Administrator may, with the consent of the successor corporation,
provide for the consideration to be received upon exercise of the Option to
be solely common stock of the successor corporation or its Parent equal to
the Fair Market Value of the per Share consideration received by holders of
Common Stock in the transaction.

             (c)  CERTAIN DISTRIBUTIONS.  In the event of any distribution to
the Company's stockholders of securities of any other entity or other assets
(other than dividends payable in cash or stock of the Company) without
receipt of consideration by the Company, the Administrator may, in its
discretion, appropriately adjust the price per Share of Common Stock covered
by each outstanding Option to reflect the effect of such distribution.

         12.  TIME OF GRANTING OPTIONS.  The date of grant of an Option
shall, for all purposes, be the date determined in accordance with Section
4(b) hereof. Notice of the determination shall be given to each Outside
Director to whom an Option is so granted within a reasonable time after the
date of such grant.

         13.  AMENDMENT AND TERMINATION OF THE PLAN.

             (a)  AMENDMENT AND TERMINATION.  The Board may amend or
terminate the Plan from time to time in such respects as the Board may deem
advisable; provided that, to the extent necessary and desirable to comply
with Rule 16b-3 under the Exchange Act (or any other applicable law or
regulation), the Company shall obtain approval of the stockholders of the
Company to Plan amendments to the extent and in the manner required by such
law or regulation.

             (b)  EFFECT OF AMENDMENT OR TERMINATION.  Any such amendment or
termination of the Plan that would impair the rights of any Optionee shall
not affect Options already granted to such Optionee and such Options shall
remain in full force and effect as if this Plan had not been amended or
terminated, unless mutually agreed otherwise between the Optionee and the
Board, which agreement must be in writing and signed by the Optionee and the
Company.

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<PAGE>

         14.  CONDITIONS UPON ISSUANCE OF SHARES.  Notwithstanding any other
provision of the Plan or any agreement entered into by the Company pursuant
to the Plan, the Company shall not be obligated, and shall have no liability
for failure, to issue or deliver any Shares under the Plan unless such
issuance or delivery would comply with the legal requirements relating to the
administration of stock option plans under applicable U.S. state corporate
laws, U.S. federal and applicable state securities laws, the Code, any stock
exchange or Nasdaq rules or regulations to which the Company may be subject
and the applicable laws of any other country or jurisdiction where Options
are granted under the Plan, as such laws, rules, regulations and requirements
shall be in place from time to time (the "APPLICABLE LAWS"). Such compliance
shall be determined by the Company in consultation with its legal counsel.

             As a condition to the exercise of an Option, the Company may
require the person exercising such Option to represent and warrant at the
time of any such exercise that the Shares are being purchased only for
investment and without any present intention to sell or distribute such
Shares if, in the opinion of counsel for the Company, such a representation
is required by law.

         15.  RESERVATION OF SHARES.  The Company, during the term of this
Plan, will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan.

         16.  OPTION AGREEMENT.  Options shall be evidenced by written option
agreements in such form as the Board shall approve.

         17.  STOCKHOLDER APPROVAL.  If required by the Applicable Laws,
continuance of the Plan shall be subject to approval by the stockholders of
the Company. Such stockholder approval shall be obtained in the manner and to
the degree required under the Applicable Laws.

                                      -9-
<PAGE>

                           ROSETTA INPHARMATICS, INC.

                        2000 DIRECTORS' STOCK OPTION PLAN

                          NOTICE OF STOCK OPTION GRANT

< < Optionee > >

         You have been granted an option to purchase Common Stock of Rosetta
Inpharmatics, Inc. (the "COMPANY") as follows:

<TABLE>
<S>                                            <C>
         Date of Grant                         < < GrantDate > >

         Vesting Commencement Date             < < VestingStartDate > >

         Exercise Price per Share              < < ExercisePrice > >

         Total Number of Shares Granted        < < SharesGranted > >

         Total Exercise Price                  < < TotalExercisePrice > >

         Expiration Date                       < < ExpirDate > >

         Vesting Schedule                      This Option shall vest and become
                                               exercisable according to the following
                                               schedule: __________________________________.

         Termination Period                    This Option may be exercised for 90 days
                                               after termination of Optionee's Continuous Status as a
                                               Director, or such longer period as may be applicable
                                               upon death or Disability of Optionee as provided in the
                                               Plan, but in no event later than the Expiration Date as
                                               provided above.
</TABLE>

<PAGE>

         By your signature and the signature of the Company's representative
below, you and the Company agree that this option is granted under and
governed by the terms and conditions of the 2000 Directors' Stock Option Plan
and the Nonstatutory Stock Option Agreement, all of which are attached and
made a part of this document.

OPTIONEE:                               ROSETTA INPHARMATICS, INC.

                                        By:
----------------------------------          ----------------------------------
< < Optionee > >

                                        Title:
                                               -------------------------------

                                      -2-
<PAGE>

                           ROSETTA INPHARMATICS, INC.

                       NONSTATUTORY STOCK OPTION AGREEMENT

         1.  GRANT OF OPTION.  The Board of Directors of the Company hereby
grants to the Optionee named in the Notice of Stock Option Grant (the
"OPTIONEE") attached to this Agreement an option (the "OPTION") to purchase a
number of Shares, as set forth in the Notice of Stock Option Grant, at the
exercise price per share set forth in the Notice of Stock Option Grant (the
"EXERCISE PRICE"'), subject to the terms and conditions of the 2000
Directors' Stock Option Plan (the "PLAN"), which is incorporated herein by
reference. Capitalized terms not defined herein shall have the meanings
ascribed to such terms in the Plan. In the event of a conflict between the
terms and conditions of the Plan and the terms and conditions of this
Nonstatutory Stock Option Agreement, the terms and conditions of the Plan
shall prevail.

         2.  EXERCISE OF OPTION.

             (a)  RIGHT TO EXERCISE.  This Option is exercisable during its
term in accordance with the Vesting Schedule set out in the Notice of Stock
Option Grant and the applicable provisions of the Plan and this Nonstatutory
Stock Option Agreement. In the event of Optionee's death, disability or other
termination of Optionee's service as a Director, the exercisability of the
Option is governed by the applicable provisions of the Plan and this
Nonstatutory Stock Option Agreement.

             (b)  METHOD OF EXERCISE.  This Option is exercisable by delivery
of an exercise notice, in the form attached as EXHIBIT A (the "EXERCISE
NOTICE"), which shall state the election to exercise the Option, the number
of Shares in respect of which the Option is being exercised (the "EXERCISED
SHARES"), and such other representations and agreements as may be required by
the Company pursuant to the provisions of the Plan. The Exercise Notice shall
be signed by the Optionee and shall be delivered in person or by certified
mail to the Secretary of the Company. The Exercise Notice shall be
accompanied by payment of the aggregate Exercise Price as to all Exercised
Shares. This Option shall be deemed to be exercised upon receipt by the
Company of such fully executed Exercise Notice accompanied by such aggregate
Exercise Price.

             No Shares shall be issued pursuant to the exercise of this
Option unless such issuance and exercise complies with all relevant
provisions of law and the requirements of any stock exchange or quotation
service upon which the Shares are then listed. Assuming such compliance, for
income tax purposes the Exercised Shares shall be considered transferred to
the Optionee on the date the Option is exercised with respect to such
Exercised Shares.

         3.  METHOD OF PAYMENT.  Payment of the aggregate Exercise Price
shall be by any of the following, or a combination thereof, at the election
of the Optionee:

             (a)  cash;

             (b)  check;

<PAGE>

             (c)  delivery of a properly executed exercise notice together
with such other documentation as the Administrator and the broker, if
applicable, shall require to effect an exercise of the Option and delivery to
the Company of the sale or loan proceeds required to pay the exercise price;
or

             (d)  surrender of other Shares which (i) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six (6) months on the date of surrender, and (ii) have a Fair Market
Value on the date of surrender equal to the aggregate Exercise Price of the
Exercised Shares.

         4.  TRANSFERABILITY OF OPTION.  This Option may not be sold,
pledged, assigned, hypothecated, transferred or disposed of in any manner
other than (a) by will or by the laws of descent or distribution; (b)
pursuant to a qualified domestic relations order (as defined by the Code or
the rules thereunder); (c) by gift to the Optionee's Family; or (d) by gift
or in exchange for an interest in such entity to (i) a trust in which
Optionee and/or Optionee's Family have more than fifty percent of the
beneficial interest, (ii) a foundation in which Optionee and/or Optionee's
Family control the management of assets, or (iii) any other entity in which
Optionee and/or Optionee's Family own more than fifty percent of the voting
interests. For purposes of this Section 10, Optionee's "FAMILY" shall include
any child, stepchild, grandchild, parent, stepparent, grandparent, spouse,
former spouse, sibling, niece, nephew, mother-in-law, father-in-law,
son-in-law; daughter-in-law, brother-in-law or sister-in-law, including
adoptive relationships, and any person sharing the employee's household
(other than a tenant or employee). The designation of a beneficiary by an
Optionee does not constitute a transfer. An Option may be exercised during
the lifetime of an Optionee only by the Optionee or a transferee permitted by
this Section 4 and Section 10 of the Plan. The terms of the Plan and this
Nonstatutory Stock Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.

         5.  TERM OF OPTION.  This Option may be exercised only within the
term set out in the Notice of Stock Option Grant, and may be exercised during
such term only in accordance with the Plan and the terms of this Nonstatutory
Stock Option Agreement.

         6.  TAX CONSEQUENCES.  Set forth below is a brief summary of certain
federal and California tax consequences relating to this Option under the law
in effect as of the date of grant. THIS SUMMARY IS NECESSARILY INCOMPLETE,
AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.  OPTIONEE SHOULD
CONSULT HIS OR HER OWN TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING
OF THE SHARES.

             (a)  EXERCISING THE OPTION.  Since this Option does not qualify
as an incentive stock option under Section 422 of the Code, the Optionee may
incur regular federal and California income tax liability upon exercise. The
Optionee will be treated as having received compensation income (taxable at
ordinary income tax rates) equal to the excess, if any, of the fair market
value of the Exercised Shares on the date of exercise over their aggregate
Exercise Price.

                                      -2-
<PAGE>

             (b)  DISPOSITION OF SHARES.  If the Optionee holds the Option
Shares for more than one year, gain realized on disposition of the Shares
will be treated as long-term capital gain for federal and California income
tax purposes. Long-term capital gain will be taxed for federal income tax and
alternative minimum tax purposes at a maximum rate of 20% if the Shares are
held more than one year after exercise.

         By your signature and the signature of the Company's representative
below, you and the Company agree that this Option is granted under and
governed by the terms and conditions of the Plan and this Nonstatutory Stock
Option Agreement. Optionee has reviewed the Plan and this Nonstatutory Stock
Option Agreement in their entirety, has had an opportunity to obtain the
advice of counsel prior to executing this Nonstatutory Stock Option Agreement
and fully understands all provisions of the Plan and Nonstatutory Stock
Option Agreement. Optionee hereby agrees to accept as binding, conclusive and
final all decisions or interpretations of the Administrator upon any
questions relating to the Plan and Nonstatutory Stock Option Agreement.

                                        ROSETTA INPHARMATICS, INC.

                                        By:
----------------------------------          ----------------------------------
< < Optionee > >

                                        Title:
                                               -------------------------------

                                CONSENT OF SPOUSE

         The undersigned spouse of Optionee has read and hereby approves the
terms and conditions of the Plan and this Nonstatutory Stock Option Agreement.
In consideration of the Company's granting his or her spouse the right to
purchase Shares as set forth in the Plan and this Nonstatutory Stock Option
Agreement, the undersigned hereby agrees to be irrevocably bound by the terms
and conditions of the Plan and this Nonstatutory Stock Option Agreement and
further agrees that any community property interest shall be similarly bound.
The undersigned hereby appoints the undersigned's spouse as attorney-in-fact for
the undersigned with respect to any amendment or exercise of rights under the
Plan or this Nonstatutory Stock Option Agreement.

                                        --------------------------------------
                                        Spouse of Optionee

                                      -3-
<PAGE>

                                   EXHIBIT A

                              NOTICE OF EXERCISE

To:               Rosetta Inpharmatics, Inc.

Attn:             Stock Option Administrator

Subject:          NOTICE OF INTENTION TO EXERCISE STOCK OPTION

         This is official notice that the undersigned ("OPTIONEE") intends to
exercise Optionee's option to purchase __________ shares of Rosetta
Inpharmatics, Inc. Common Stock, under and pursuant to the Company's 2000
Directors' Stock Option Plan and the Nonstatutory Stock Option Agreement
dated _______________, as follows:

         Grant Number:
                                ---------------------------------------

         Date of Purchase:
                                ---------------------------------------

         Number of Shares:
                                ---------------------------------------

         Purchase Price:
                                ---------------------------------------

         Method of Payment of
         Purchase Price:
                                ---------------------------------------

         Social Security No.:
                                ---------------------------------------

         The shares should be issued as follows:

                  Name:
                           ------------------------------------

                  Address:
                           ------------------------------------

                           ------------------------------------

                           ------------------------------------

                  Signed:
                           ------------------------------------

                  Date:
                           ------------------------------------<PAGE>

                   AMENDED AND RESTATED CONTRIBUTION AGREEMENT

     This Amended and Restated Contribution Agreement (the "AGREEMENT") is made
and entered into as of November __, 1997, by and among Stephen Friend
("FRIEND"), Leroy Hood ("HOOD") and the Fred Hutchinson Cancer Research Center
(the "FHCRC") (Friend, Hood and the FHCRC are individually referred to as a
"CONTRIBUTOR" and collectively referred to the "CONTRIBUTORS"), and Rosetta
Inpharmatics, Inc., a Delaware corporation (the "Company").

                                    RECITALS

     A.   The Company and the Contributors desire to amend and restate in its
entirety the Contribution Agreement entered into as of June 6, 1997 (the
"ORIGINAL AGREEMENT") in order to clarify certain provisions of the Original
Agreement.

     B.   Friend is the record owner of 696,200 shares of Common Stock of the
Company and desires to transfer up to 92,186 shares of such Common Stock (the
"FRIEND STOCK") to the Company pursuant to the terms and conditions of this
Agreement.

     C.   Hood is the record owner of 531,000 shares of Common Stock of the
Company and desires to transfer up to 70,312 shares of such Common Stock (the
"HOOD STOCK") to the Company pursuant to the terms and conditions of this
Agreement.

     D.   The FHCRC is the record owner of 283,200 shares of Common Stock of the
Company and desires to transfer up to 37,500 shares of such Common Stock (the
"FHCRC STOCK") (the Friend Stock, Hood Stock and FHCRC Stock are collectively
referred to as the "CONTRIBUTION STOCK") to the Company pursuant to the terms
and conditions of this Agreement.

     E.   The Company issued a warrant to Olympic Venture Partners dated June 6,
1997 for the purchase of an aggregate of 250,000 shares of Common Stock at a
purchase price of $0.05 per share (the "WARRANT").

     F.   The Contributors desire to contribute all or a portion of the
Contribution Stock to the Company on the terms and conditions set forth in this
Agreement in the event the Warrant is exercised for more than an aggregate of
50,000 shares of Common Stock.

                                    AGREEMENT

     The parties hereby agree as follows:

     1.   TRANSFER AND SALE. Subject to the terms and conditions of this
Agreement, in the event the Warrant is exercised for more than an aggregate of
50,000 shares of Common Stock, each Contributor agrees to transfer and
contribute to the capital stock of the Company his or its Pro Rata Portion (as
defined below) of the Contribution Stock, and the Company agrees to accept such
shares from each Contributor as a capital contribution.

<PAGE>

     2.   PRO RATA PORTION. Each Contributor's pro rata portion of the
Contribution Stock equals the amount by which the number of shares of Common
Stock for which the Warrant is exercised exceeds 50,000, multiplied by a
fraction the numerator of which is the respective amount of Common Stock owned
by such Contributor and the denominator of which is 1,510,400 (the "PRO RATA
PORTION"). By way of example, but not of limitation, if the Warrant is exercised
for 150,000 shares, Friend's Pro Rata Portion would be 46,094, Hood's Pro Rata
Portion would be 35,156 and the FHCRC's Pro Rata Portion would be 18,750.

     3.   RECAPITALIZATIONS. In the event the Company effects a
recapitalization, either through a stock-split, dividend payable in shares of
capital stock of the Company, reclassification, exchange or otherwise, then the
formula used to calculate each Contributor's Pro Rata Portion shall be adjusted
as appropriate to fully reflect such recapitalization and to carry out the
intent and purpose of this Agreement.

     4    LEGENDS. Each Contributor authorizes the Company and its agents to
place on each certificate for shares which the Company may acquire pursuant to
this Agreement the following legend stating that such stock is subject to this
Agreement (in addition to any other legends that may be required):

             "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN
        AMENDED AND RESTATED CONTRIBUTION AGREEMENT DATED AS OF NOVEMBER
        __, 1997 (A COPY OF WHICH MAY BE OBTAINED UPON WRITTEN REQUEST
        FROM THE CORPORATION) AND BY ACCEPTING ANY INTEREST IN SUCH
        SHARES THE PERSON ACCEPTING SUCH INTEREST SHALL BE DEEMED TO
        AGREE AND SHALL BECOME BOUND BY ALL THE PROVISIONS OF SAID
        CONTRIBUTION AGREEMENT."

     5    SPECIFIC ENFORCEMENT. Each Contributor expressly agrees that the
Company will be irreparably damaged if this Agreement is not specifically
enforced. Upon a breach or threatened breach of the terms, covenants and/or
conditions of this Agreement by any Contributor, in addition to all other
remedies available at law or in equity, the Company shall be entitled to a
temporary or permanent injunction, without showing any actual damage, and/or a
decree for specific performance, in accordance with the provisions of this
Agreement.

     6    MISCELLANEOUS.

          (a)  GOVERNING LAW. This Agreement and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
Washington, without giving effect to principles of conflicts of law.

          (b)  ENTIRE AGREEMENT; ENFORCEMENT OF RIGHTS. Except as expressly set
forth herein, this Agreement sets forth the entire agreement and understanding
of the parties relating to the subject matter herein and merges all prior
discussions between them. No

                                      -2-
<PAGE>

modification of or amendment to this Agreement, nor any waiver of any rights
under this Agreement, shall be effective unless in writing signed by the parties
to this Agreement. The failure by either party to enforce any rights under this
Agreement shall not be construed as a waiver of any rights of such party.

          (c)  SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith. In the event that the parties cannot reach a
mutually agreeable and enforceable replacement for such provision, then (i) such
provision shall be excluded from this Agreement, (ii) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (iii)
the balance of the Agreement shall be enforceable in accordance with its terms.

          (d)  CONSTRUCTION. This Agreement is the result of negotiations
between and has been reviewed by each of the parties hereto and their respective
counsel, if any; accordingly, this Agreement shall be deemed to be the product
of all of the parties hereto, and no ambiguity shall be construed in favor of or
against any one of the parties hereto.

          (e)  NOTICES. Any notice required or permitted by this Agreement shall
be in writing and shall be deemed sufficient when delivered personally or sent
by telegram or fax or forty-eight (48) hours after being deposited in the U.S.
mail, as certified or registered mail, with postage prepaid, and addressed to
the party to be notified at such party's address as set forth below or as
subsequently modified by written notice.

          (f)  COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.

          (g)  SUCCESSORS AND ASSIGNS; TRANSFER OF STOCK. The rights and
obligations of the Contributors under this Agreement may only be assigned with
the prior written consent of the Company. Each Contributor understands that the
Company is entitled to withhold its consent to transfer of the Stock or
assignment of such Contributor's rights and obligations under this Agreement
unless such Contributor requires as a condition to any such transfer or
assignment that the Contributor's transferee or assignee execute an agreement
similar to this Agreement or otherwise agree to be bound by terms and conditions
similar to those contained in this Agreement.

                            [Signature Page Follows]

                                      -3-
<PAGE>

     The parties have executed this Agreement as of the date first set forth
above.

                                  THE COMPANY:

                                  ROSETTA INPHARMATICS, INC.

                                  By:
                                     ------------------------------------------

                                  Title:
                                        ---------------------------------------

                                  THE CONTRIBUTORS:

                                  ---------------------------------------------
                                  Stephen H. Friend

                                  ---------------------------------------------
                                  Leroy E. Hood

                                  THE FRED HUTCHINSON CANCER
                                    RESEARCH CENTER

                                  By:
                                     ------------------------------------------

                                  Title:
                                        ---------------------------------------

                                      -4-
<PAGE>

                             CONTRIBUTION AGREEMENT

                                CONSENT OF SPOUSE

     I, ___________________, spouse of _______________, have read and approve
the foregoing Amended and Restated Contribution Agreement (the "AGREEMENT"). In
consideration of the terms and conditions as set forth in the Agreement, I
hereby appoint my spouse as my attorney-in-fact with respect to the exercise of
any rights and obligations under the Agreement and agree to be bound by the
provisions of the Agreement insofar as I may have any rights or obligations in
the Agreement or any shares subject thereto under the community property laws of
the State of Washington or similar laws relating to marital property in effect
in the state of our residence as of the date of the Agreement.

Dated:  November ___, 1997

                                        ------------------------------
                                        (Signature)

                                        ------------------------------
                                        (Printed name)

                                      -5-

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