10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

Mark One
[ X ]	Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934.

For the quarterly period ended June 30, 2004

Or

[    ] Transition Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934.

For the transition period from                     to                    

Commission file number: 0-24274

LA JOLLA PHARMACEUTICAL COMPANY

(Exact Name of Registrant as Specified in Its Charter)

Delaware (State or Other Jurisdiction of Incorporation or Organization)	33-0361285 (I.R.S. Employer Identification No.)
6455 Nancy Ridge Drive San Diego, CA (Address of Principal Executive Offices)	92121 (Zip Code)

Registrant’s Telephone Number, Including Area Code: (858) 452-6600

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [X] No [  ]

The number of shares of the registrant’s common stock, $0.01 par value per share, outstanding at July 30, 2004 was 61,308,163.

LA JOLLA PHARMACEUTICAL COMPANY
FORM 10-Q
QUARTERLY REPORT

INDEX

PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Balance Sheets as of June 30, 2004 (Unaudited) and December 31, 2003	1
Statements of Operations (Unaudited) for the three and six months ended June 30, 2004 and 2003	2
Statements of Cash Flows (Unaudited) for the six months ended June 30, 2004 and 2003	3
Notes to Financial Statements (Unaudited)	4
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	7
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk	11
ITEM 4. Controls and Procedures	11
PART II. OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders	12
ITEM 6. Exhibits and Reports on Form 8-K	13
SIGNATURES	18
EXHIBIT 10.13
EXHIBIT 10.55
EXHIBIT 10.56
EXHIBIT 10.57
EXHIBIT 10.58
EXHIBIT 10.59
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

LA JOLLA PHARMACEUTICAL COMPANY

Balance Sheets

(in thousands)

	June 30,			December 31,
	2004			2003
	(Unaudited)			(See Note)
ASSETS
Current assets:
Cash and cash equivalents	$	4,200		$	4,021
Short-term investments		39,998			28,112
Other current assets		1,622			957
Total current assets		45,820			33,090
Property and equipment, net		6,020			6,206
Patent costs and other assets, net		2,850			2,648
Total assets	$	54,690		$	41,944
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	960		$	278
Accrued clinical/regulatory expenses		253			524
Accrued expenses		1,073			865
Accrued payroll and related expenses		975			1,692
Current portion of obligations under capital leases		43			66
Current portion of notes payable		868			751
Total current liabilities		4,172			4,176
Noncurrent portion of obligations under capital leases		—			29
Noncurrent portion of notes payable		1,092			1,312
Commitments
Stockholders’ equity:
Common stock		613			511
Additional paid-in capital		258,046			228,394
Other comprehensive loss		(85	)		(73	)
Accumulated deficit		(209,148	)		(192,405	)
Total stockholders’ equity		49,426			36,427
Total liabilities and stockholders’ equity	$	54,690		$	41,944

Note: The balance sheet at December 31, 2003 has been derived from the audited financial statements as of that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States.

See accompanying notes.

1

LA JOLLA PHARMACEUTICAL COMPANY

Statements of Operations

(Unaudited)
(in thousands, except per share amounts)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2004			2003			2004			2003
Expenses:
Research and development	$	6,811		$	8,417		$	13,612		$	20,337
General and administrative		1,654			1,598			3,172			3,399
Total expenses		8,465			10,015			16,784			23,736
Loss from operations		(8,465	)		(10,015	)		(16,784	)		(23,736	)
Interest income, net		97			92			41			272
Net loss	$	(8,368	)	$	(9,923	)	$	(16,743	)	$	(23,464	)
Basic and diluted net loss per share	$	(.14	)	$	(.23	)	$	(.29	)	$	(.55	)
Shares used in computing basic and diluted net loss per share		61,213			42,569			58,035			42,565

See accompanying notes.

2

LA JOLLA PHARMACEUTICAL COMPANY

Statements of Cash Flows

(Unaudited)
(in thousands)

	Six Months Ended
	June 30,
	2004			2003
Operating activities:
Net loss	$	(16,743	)	$	(23,464	)
Adjustments to reconcile net loss to net cash used for operating activities:
Depreciation and amortization		996			956
Stock based compensation		114			—
Accretion of interest income		(53	)		74
Write-off of patents		59			—
Change in operating assets and liabilities:
Other current assets		(665	)		(613	)
Accounts payable and accrued expenses		890			(723	)
Accrued clinical/regulatory expenses		(271	)		(1,589	)
Accrued payroll and related expenses		(717	)		(407	)
Net cash used for operating activities		(16,390	)		(25,766	)
Investing activities:
Purchases of short-term investments		(34,865	)		(24,868	)
Sales of short-term investments		23,020			48,933
Maturities of short-term investments		—			5,587
Additions to property and equipment		(761	)		(1,279	)
Increase in patent costs and other assets		(310	)		(363	)
Net cash (used for) provided by investing activities		(12,916	)		28,010
Financing activities:
Net proceeds from issuance of common stock		29,640			223
Payments on obligations under capital leases		(52	)		(65	)
Proceeds from issuance of notes payable		321			928
Payments on notes payable		(424	)		(272	)
Net cash provided by financing activities		29,485			814
Net increase in cash and cash equivalents		179			3,058
Cash and cash equivalents at beginning of period		4,021			5,610
Cash and cash equivalents at end of period	$	4,200		$	8,668
Supplemental disclosure of cash flow information:
Interest paid	$	97		$	93
Supplemental schedule of noncash investing and financing activities:
Capital lease obligations incurred for property and equipment	$	—		$	59
Net unrealized losses on available-for-sale investments	$	(12	)	$	(34	)

See accompanying notes.

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LA JOLLA PHARMACEUTICAL COMPANY

Notes to Financial Statements

(Unaudited)

June 30, 2004

1. Basis of Presentation

The accompanying unaudited financial statements of La Jolla Pharmaceutical Company (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2004 are not necessarily indicative of the results that may be expected for other quarters or the year ended December 31, 2004. For more complete financial information, these financial statements, and the notes thereto, should be read in conjunction with the audited financial statements for the year ended December 31, 2003 included in the Company’s Form 10-K filed with the Securities and Exchange Commission.

2. Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and disclosures made in the accompanying notes to the financial statements. Actual results could differ materially from those estimates.

Reclassification

Certain amounts in the 2003 financial statements have been reclassified to conform to the 2004 presentation.

Stock-Based Compensation

As allowed under Statement of Financial Accounting Standard No. 123, Accounting and Disclosure of Stock-Based Compensation (“SFAS 123”), the Company has elected to continue to account for stock option grants in accordance with Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (“APB 25”), and related interpretations. The Company generally grants stock options for a fixed number of shares to employees and directors with an exercise price equal to the fair value of the shares at the date of grant. Therefore, under APB 25, the Company recognizes no compensation expense for such stock option grants.

Pro forma information regarding net loss and net loss per share is required by SFAS 123. SFAS 123 requires that the information be determined as if the Company has accounted for its equity incentive plans granted after December 31, 1994 under the fair value method prescribed by SFAS 123. The fair value of the options granted was estimated at the date of grant using a Black-Scholes option pricing model.

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For purposes of pro forma disclosures, the estimated fair value of the options is expensed over the options’ vesting period. The Company’s pro forma information follows (in thousands except for net loss per share information):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2004			2003			2004			2003
Net loss as reported	$	(8,368	)	$	(9,923	)	$	(16,743	)	$	(23,464	)
Less: Stock-based compensation expense determined under fair value based method for all awards	$	(1,774	)	$	(1,642	)	$	(3,450	)	$	(3,303	)
Pro forma net loss	$	(10,142	)	$	(11,565	)	$	(20,193	)	$	(26,767	)
Basic and diluted net loss per share as reported	$	(0.14	)	$	(0.23	)	$	(0.29	)	$	(0.55	)
Pro forma basic and diluted net loss per share	$	(0.17	)	$	(0.27	)	$	(0.35	)	$	(0.63	)

The effects of applying SFAS 123 for either recognizing compensation expense or providing pro forma disclosures may not be representative of the effects on reported net loss for future quarters or years.

In May 2004, in connection with the retirement of a member of the Board of Directors, the Company accelerated the vesting of certain options held by the retiring director and extended the period of time in which certain options held by him may be exercised. In accordance with FASB Interpretation No. 44, Accounting for Certain Transactions involving Stock Compensation-an interpretation of APB Opinion No. 25, the Company recorded approximately $106,000 in compensation expense in connection with the extension of the exercise period, as of and for the period ended June 30, 2004.

Net Loss Per Share

Basic and diluted net loss per share is computed using the weighted-average number of common shares outstanding during the periods in accordance with Statement of Financial Accounting Standard No. 128, Earnings per Share. Because the Company has incurred a net loss for all periods presented in the Statements of Operations, stock options are not included in the computation of diluted net loss per share because their effect is anti-dilutive.

Comprehensive Loss

In accordance with Statement of Financial Accounting Standard No. 130, Reporting Comprehensive Income (Loss), unrealized gains and losses on available-for-sale securities are included in other comprehensive income (loss). The Company’s comprehensive net loss totaled $8,412,000 and $9,947,000 for the three-month periods and $16,755,000 and $23,498,000 for the six-month periods ended June 30, 2004 and 2003, respectively.

3. Recently Issued Accounting Standards

In January 2003, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 46, Consolidation of Variable Interest Entities, an Interpretation of Accounting and Research Bulletin No. 51 (“FIN 46”). FIN 46 requires certain variable interest entities to be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. In December 2003, FASB issued FIN 46R, a revision to FIN 46. FIN 46R provides a broad deferral of the latest date by which all public entities must apply FIN 46 to certain variable interest entities to the first reporting period ending after March 15, 2004. The adoption of FIN 46 had no impact on the Company’s financial statements.

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In December 2003, FASB issued a revision to Statement of Financial Accounting Standard No. 132, Employers’ Disclosures about Pensions and Other Postretirement Benefits-an amendment of FASB Statements No. 87, 88, and 106 (“SFAS 132”). SFAS 132 revises employers’ disclosures about pension plans and other postretirement benefit plans. It does not change the measurement or recognition of those plans required by FASB Statements No. 87, Employers’ Accounting for Pensions, No. 88, Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits, and No. 106, Employers’ Accounting for Postretirement Benefits Other Than Pensions. The revised Statement retains the disclosure requirements contained in FASB Statement No. 132, Employers’ Disclosures about Pensions and Other Postretirement Benefits, which it replaces. It requires additional disclosures to those in the original Statement 132 about the assets, obligations, cash flows, and net periodic benefit cost of defined benefit pension plans and other defined benefit postretirement plans. SFAS 132 is effective for fiscal years ending after December 15, 2003. The adoption of SFAS 132 had no impact on the Company’s financial statements.

In March 2004, the FASB issued an exposure document entitled Share-Based Payment — an amendment of Statements No. 123 and 95 (Proposed Statement of Financial Accounting Standards). The proposed Statement would eliminate an issuer’s ability to account for share-based compensation transactions using APB Opinion No. 25 and would generally require that such transactions be accounted for using a fair-value-based method of accounting. This accounting standard, if approved, will result in significant compensation expense charges to our future results of operations. The proposed Statement, if adopted, would be applied to public entities prospectively for fiscal years beginning after December 15, 2004, as if all share-based compensation awards granted, modified or settled after December 15, 1994 had been accounted for using the fair-value method of accounting. Retrospective application of the proposed Statement is not permitted.

4. Notes Payable

The Company entered into a note payable for $189,000 in March 2004 and one for $132,000 in June 2004 to finance certain purchases of property and equipment. These notes are secured by the financed property and equipment, bear interest at 8.27% and 8.77% per annum, respectively, and are payable in monthly installments of principal and interest of approximately $5,000 for the first 36 months and $4,000 for the remaining six months, in the case of the March 2004 note, and approximately $4,000 for the first 36 months and $2,000 for the remaining six months, in the case of the June 2004 note.

5. Restructuring Charges

In May 2003, the Company restructured its operations in order to reduce expenses and focus its resources on the further development of Riquent^®. In accordance with SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities, as of December 31, 2003, the Company recorded total restructuring charges of approximately $490,000 in connection with the termination of 24 employees. Approximately $305,000 of the total restructuring charges was included in research and development expense and approximately $185,000 was included in general and administrative expense. The restructuring plan was completed in February 2004 and actual total charges paid were approximately $490,000.

6. Changes in Securities

In February and March 2004, the Company sold an aggregate of 10,000,000 shares of common stock in a public offering for net proceeds to the Company of approximately $29,360,000.

7. Subsequent Event

In July 2004, the Company exercised its option to extend the non-cancelable operating leases for the rental of its research and development laboratories, clinical manufacturing facilities and office space for an additional five years. The leases contain a provision for scheduled annual rent increases. The combined rental payments for the renewal period are $60,000 per month with annual 4% increases.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

     The forward-looking statements in this report involve significant risks and uncertainties, and a number of factors, both foreseen and unforeseen, could cause actual results to differ materially from our current expectations. Forward-looking statements include those that express a plan, belief, expectation, estimation, anticipation, intent, contingency, future development or similar expression. Even though our New Drug Application (“NDA”) for Riquent^® has been accepted by the United States Food and Drug Administration (the “FDA”) for review, and even though we have agreed with the FDA regarding the design of a potential Phase 4 trial and we have initiated the trial, there is no guarantee that the FDA will approve Riquent in a timely manner, or at all. The analyses of clinical results of Riquent, previously known as LJP 394, our drug candidate for the treatment of systemic lupus erythematosus (“lupus”), and LJP 1082, our drug candidate for the treatment of antibody-mediated thrombosis (“thrombosis”), could result in a finding that these drug candidates are not effective in large patient populations, do not provide a meaningful clinical benefit, or may reveal a potential safety issue requiring us to develop new candidates. The analysis of the data from our Phase 3 trial of Riquent showed that the trial did not reach statistical significance with respect to its primary endpoint, time to renal flare, or with respect to the secondary endpoint, time to treatment with high-dose corticosteroids or cyclophosphamide. Although our NDA for Riquent has been accepted for review by the FDA, the results from our clinical trials of Riquent may not ultimately be sufficient to obtain regulatory clearance to market Riquent either in the United States or Europe, and we may be required to conduct additional clinical studies to demonstrate the safety and efficacy of Riquent in order to obtain marketing approval. There is no guarantee, however, that we will have the necessary resources to complete any additional trial or that any additional trial will sufficiently demonstrate the safety and efficacy of Riquent. Our blood test to measure the binding affinity for Riquent is experimental, has not been validated by independent laboratories and will likely be reviewed as part of the Riquent approval process. Our other potential drug candidates are at earlier stages of development and involve comparable risks. Analysis of our clinical trials could have negative or inconclusive results. Any positive results observed to date may not be indicative of future results. In any event, regulatory authorities may require additional clinical trials, or may not approve our drugs. Our ability to develop and sell our products in the future may be adversely affected by the intellectual property rights of third parties. Additional risk factors include the uncertainty and timing of: obtaining required regulatory approvals, including delays associated with any approvals that we may obtain; the clear need for additional financing; our ability to pass all necessary FDA inspections; the increase in capacity of our manufacturing capabilities for possible commercialization; successfully marketing and selling our products; our lack of manufacturing, marketing and sales experience; our ability to make use of the orphan drug designation for Riquent; generating future revenue from product sales or other sources such as collaborative relationships; future profitability; and our dependence on patents and other proprietary rights. Readers are cautioned to not place undue reliance upon forward-looking statements, which speak only as of the date hereof, and we undertake no obligation to update forward-looking statements to reflect events or circumstances occurring after the date hereof. Interested parties are urged to review the risks described in our Annual Report on Form 10-K for the year ended December 31, 2003, and in other reports and registration statements that we file with the Securities and Exchange Commission from time to time.

Recent Developments

     On February 16, 2004, we announced that our New Drug Application (“NDA”) for Riquent had been accepted for review by the United States Food and Drug Administration (the “FDA”). The acceptance of the NDA for review by the FDA indicates that the NDA is sufficiently complete to permit a substantive review of the application. Further discussions with the FDA will be needed to clarify whether any additional supportive information or studies will be required to support the approval of the NDA. The FDA will determine whether to approve Riquent, either on the basis of our clinical trial results or under Subpart H, and the conditions of any approval, after it has completed its review of our NDA. Under Subpart H, drugs in development for serious, life-threatening diseases with an unmet medical need can be approved on an accelerated basis if the FDA determines that the effect of the drug on a surrogate endpoint is

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reasonably likely to predict clinical benefit and that a post-marketing clinical trial can be successfully completed following drug approval which confirms the clinical benefit. As previously announced, in our Phase 3 and Phase 2/3 trials, patients treated with Riquent had significantly reduced levels of antibodies to dsDNA compared with patients treated with placebo. We believe that data from our clinical trials and the relevant medical literature would support the use of the reduction in the level of antibodies to dsDNA as a surrogate endpoint that would be reasonably likely to predict clinical benefit. We have reached a written agreement with the FDA concerning a trial that is designed to fulfill our obligation to conduct a Phase 4 post-marketing clinical trial if Riquent is approved under Subpart H. We also are currently meeting with European regulatory authorities to discuss potential next steps for Riquent in Europe. There can be no guarantee that future meetings with the FDA and other regulatory agencies can be held in a timely manner, or at all, or that our meetings with them will result in our being able to continue to develop Riquent. If for any reason our development efforts as to Riquent are terminated, it would have a material adverse effect on our business and future prospects.

     On February 26, 2004, we announced that we had completed a public offering of 8,695,653 shares of our common stock. The net proceeds that we received from the offering, after expenses, were approximately $25.5 million.

     On March 5, 2004, we announced that the underwriter for the February 2004 public offering purchased an additional 1,304,347 shares at the initial offering price per share pursuant to the over-allotment option granted to the underwriter in connection with the offering. The net proceeds that we received from the sale of the over-allotment shares, after expenses, were approximately $3.9 million.

     On March 11, 2004, we announced additional analyses of data from our Phase 3 and Phase 2/3 trials of Riquent. The data showed that, after one year of treatment, the number of lupus patients with a reduction in proteinuria of at least 50% from baseline was greater in the Riquent-treated group than in the placebo-treated group.

     On August 2, 2004, we announced that we had reached a written agreement with the Cardio-Renal Division of the FDA concerning a trial that is designed to fulfill our obligation to conduct a Phase 4 post-marketing clinical trial if Riquent is approved under Subpart H and that we had initiated the trial.

Overview

     Since our inception in May 1989, we have devoted substantially all of our resources to the research and development of technology and potential drugs to treat antibody-mediated diseases. We have never generated any revenue from product sales and have relied upon private and public offerings of securities, revenue from collaborative agreements, equipment financings and interest income on invested cash balances for our working capital. Depending upon the outcome of the FDA’s review of our NDA, our discussions with the FDA and other regulatory agencies and our continuing analysis of the data from our clinical trials of Riquent, our research and development expenses may increase significantly in the future. For example, we have initiated a clinical trial of Riquent that is designed to fulfill our obligation to conduct a Phase 4 post-marketing clinical trial if Riquent is approved by the FDA under Subpart H. In addition, our research and development expenses may increase if we initiate any additional clinical studies of Riquent, initiate commercialization activities for Riquent or if we increase our activities related to the development of LJP 1082 or additional drug candidates. Our activities to date are not as broad in depth or scope as the activities we may undertake in the future, and our historical operations and the financial information included in this report are not necessarily indicative of our future operating results or financial condition.

     We expect our net loss to fluctuate from quarter to quarter as a result of the timing of expenses incurred and revenues earned from any potential collaborative arrangements we may establish. These fluctuations may be significant. As of June 30, 2004, our accumulated deficit was approximately $209.1 million.

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     Our business is subject to significant risks, including, but not limited to, the risks inherent in research and development efforts, including clinical trials, uncertainties associated with both obtaining and enforcing patents, the potential enforcement of the patent rights of others, the lengthy, expensive and uncertain process of seeking regulatory approvals, uncertainties regarding government reforms regarding product pricing and reimbursement levels, technological change, competition, manufacturing uncertainties, our lack of marketing experience, the uncertainty of receiving future revenue from product sales or other sources such as collaborative relationships, the uncertainty of future profitability and the clear need for additional financing. Even if our product candidates appear promising at an early stage of development, they may not reach the market for numerous reasons, including the possibilities that the products will be ineffective or unsafe during clinical trials, will fail to receive necessary regulatory approvals, will be difficult to manufacture on a large scale, will be uneconomical to market or will be precluded from commercialization by the proprietary rights of third parties or competing products.

Results of Operations

     For the three months ended June 30, 2004, research and development expenses decreased to $6.8 million from $8.4 million for the same period in 2003 primarily due to decreases in costs incurred for clinical studies of Riquent, including our open-label follow-on clinical trial which was closed in April 2003. A decrease in personnel costs related to the termination of 19 research and development positions as part of the organizational restructuring that occurred in May 2003 also contributed to the decrease. For the six-month period ended June 30, 2004, research and development expenses decreased to $13.6 million from $20.3 million for the same period in 2003 primarily due to the decreases in expenses noted above and a decrease in expenses related to the unblinding and analysis of the data from the Phase 3 trial of Riquent in the first quarter of 2003.

     Research and development expense of $6.8 million for the three months ended June 30, 2004 consisted of $5.8 million for lupus research and development related expense, $0.4 million for thrombosis research and development related expense, and $0.6 million for other research and development related expense. Research and development expense of $13.6 million for the six months ended June 30, 2004 consisted of $11.6 million for lupus research and development related expense, $0.8 million for thrombosis research and development related expense, and $1.2 million for other research and development related expense. For the three and six months ended June 30, 2004, total lupus research and development expense consisted primarily of salaries and other costs related to research, manufacturing and clinical personnel, raw materials for the production of Riquent, manufacturing supplies and fees for consulting and outside services. Total thrombosis related research and development expense consisted primarily of salaries for research and development personnel and research supplies. Total other research and development expense consisted primarily of salaries for research and development personnel, research supplies and rent expense.

     Our research and development expenses may increase significantly in the future. We have initiated a clinical trial of Riquent that is designed to fulfill our obligation to conduct a Phase 4 post-marketing clinical trial if Riquent is approved by the FDA under Subpart H. In addition, research and development expenses may increase significantly in the future if we initiate any other clinical studies of Riquent, initiate commercialization activities for Riquent, increase our development activities related to LJP 1082, or increase our development of additional drug candidates.

     General and administrative expense increased to $1.7 million for the three months ended June 30, 2004 from $1.6 million for the same period in 2003 primarily due to an increase in consulting and professional fees for pre-marketing and intellectual property activities. This increase was partially offset by a decrease in personnel costs related to the termination of five administrative positions as part of the organizational restructuring that occurred in May 2003. General and administrative expense decreased to $3.2 million for the six months ended June 30, 2004 from $3.4 million for the same period in 2003 primarily due to a decrease in personnel costs related to the organizational restructuring that occurred in May 2003. General and administrative expense may increase in the future to support clinical trials and possible increases in commercialization, manufacturing and research and development activities.

     Interest income, net was $0.1 million for the three months ended June 30, 2004 and June 30, 2003. Interest income, net decreased to $0.1 million for the six months ended June 30, 2004 from $0.3 million for the same period in 2003 primarily due to lower average interest rates on our investments, an

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increase in notes payable obligations and realized losses on the sale of investments.

Liquidity and Capital Resources

     From inception through June 30, 2004, we have incurred a cumulative net loss of approximately $209.1 million and have financed our operations through private and public offerings of securities, revenues from collaborative agreements, equipment financings, and interest income on invested cash balances. From inception through June 30, 2004, we raised approximately $257.8 million in net proceeds from sales of equity securities.

     At June 30, 2004, we had $44.2 million in cash, cash equivalents and short-term investments, as compared to $32.1 million at December 31, 2003. Our working capital at June 30, 2004 was $41.6 million, as compared to $28.9 million at December 31, 2003. The increase in cash, cash equivalents and short-term investments resulted from our receipt of net proceeds of $29.4 million from the sale of an aggregate of 10.0 million shares of our common stock in February and March of 2004, partially offset by the use of our financial resources to fund our manufacturing activities, research and development efforts and for other general corporate purposes. We invest our cash in corporate and United States government-backed debt instruments. As of June 30, 2004, we classified all of our investments as available-for-sale securities because we expect to sell them in order to support our current operations regardless of their maturity dates. As of June 30, 2004, available-for-sale securities of $22.8 million have stated maturity dates of one year or less and $20.3 million have maturity dates after one year.

     As of June 30, 2004, we had acquired an aggregate of $14.1 million in property and equipment, of which approximately $0.1 million and $3.3 million of equipment is financed under capital lease and notes payable obligations, respectively. In addition, we lease our office and laboratory facilities and certain equipment under operating leases. We have also entered into a $1.4 million purchase commitment with a potential third party manufacturer of materials for Riquent. The purpose of the agreement is to qualify the manufacturer as a manufacturer that we could use in the commercial production of Riquent if we obtain regulatory approval. The agreement includes a cancellation fee of $0.4 million. We intend to use our current financial resources to fund our obligation under this purchase commitment. In the future, we may increase our investments in property and equipment if we expand our research and development and manufacturing facilities and capabilities.

     During the six-month period ended June 30, 2004, we incurred two additional note payable obligations for $189,000 and $132,000, the proceeds of which we used to finance the purchase of certain property and equipment. In June 2004, we exercised an option to extend a lease for additional research space for nine months. In July 2004, we exercised an option to extend the leases for our research and development laboratories, clinical manufacturing facilities and office space for an additional five years. The following table summarizes our contractual obligations at June 30, 2004 and includes the effect of the five-year lease extensions on our facilities that we entered into in July 2004.

			Payment due by period (in thousands)
			Less than						More than
	Total		1 Year		1-3 Years		3-5 Years		5 Years
Long-Term Debt Obligations	$	2,167	$	1,002	$	1,165	$	—	$	—
Capital Lease Obligations		44		44		—		—		—
Operating Lease Obligations		4,366		985		2,453		928		—
Purchase Obligations		1,434		1,434		—		—		—
Total	$	8,011	$	3,465	$	3,618	$	928	$	—

     We intend to use our financial resources to fund our research and development efforts, the potential Phase 4 post-marketing clinical trial of Riquent, possible further clinical studies, manufacturing and commercialization activities of Riquent, and for working capital and other general corporate purposes. The amounts that we actually spend for each purpose may vary significantly depending upon numerous factors, including the timing of any regulatory applications and approvals, the outcome of our meetings with regulatory authorities, the continued analysis of the clinical trial data of Riquent, results from future clinical trials, and technological developments. Expenditures also will depend upon any establishment

10

and progress of collaborative arrangements and contract research as well as the availability of other funding or financings. There can be no assurance that future funds will be available to us on acceptable terms, if at all.

     We anticipate that our existing cash and cash investments and interest earned thereon will be sufficient to fund our operations as currently planned into the second quarter of 2005, assuming that we engage in limited clinical trial activities, do not commence any significant commercialization activities and do not enter into an agreement with a collaborative partner or undertake any other financing activities. Our future capital requirements will depend upon a number of factors, including the FDA’s review of our NDA for Riquent, the outcome of meetings with regulatory authorities, the scope and duration of additional clinical trials, including the potential Phase 4 post-marketing trial, the time and costs involved in applying for any regulatory approvals, the continued analysis of data from our clinical trials of Riquent and LJP 1082, continued scientific progress in our research and development programs, the size and complexity of these programs, the costs involved in preparing, filing, prosecuting, maintaining and enforcing patent claims, competing technological and market developments, our ability to establish and maintain future collaborative relationships, and the cost of possible manufacturing and commercialization activities. We expect to incur significant net operating losses each year for at least the next several years as we continue our current research and development efforts, including the initiation of the clinical trial of Riquent that is designed to fulfill our obligation to conduct a Phase 4 post-marketing clinical trial if Riquent is approved by the FDA under Subpart H, possible manufacturing and commercialization activities of Riquent, and general and administrative expenses incurred to support these efforts. It is possible that our cash requirements will exceed our current projections and that we will therefore need additional financing sooner than currently expected.

     We currently have no means of generating cash flow from operations. Our lead drug candidate, Riquent, will not generate revenues, if at all, until it has received regulatory approval and has been successfully manufactured, marketed and sold. This process, if completed, could take a significant amount of time. Our other drug candidates are much less developed than Riquent. There can be no assurance that our product development efforts with respect to Riquent or any other drug candidate will be successfully completed, that required regulatory approvals will be obtained or that any product, if introduced, will be successfully marketed or achieve commercial acceptance. Accordingly, we must continue to rely on outside sources of financing to meet our capital needs for the foreseeable future.

     We will continue to seek capital through appropriate means, including issuance of our securities and establishment of collaborative arrangements. However, there can be no assurance that additional financing will be available to us on acceptable terms, if at all, and our negotiating position in capital-raising efforts may worsen as we continue to use existing resources or if the development of Riquent is delayed or terminated. There is also no assurance that we will be able to enter into future collaborative relationships.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We invest our excess cash in interest-bearing investment-grade securities which we sell from time to time to support our current operations. We do not utilize derivative financial instruments, derivative commodity instruments or other market risk sensitive instruments, positions or transactions in any material fashion. Although the investment-grade securities that we hold are subject to changes in the financial standing of the issuer of such securities, we do not believe that we are subject to any material risks arising from the maturity dates of the debt instruments or changes in interest rates because the interest rates of the securities in which we invest that have a maturity date greater than one year are reset periodically within time periods not exceeding 49 days. We currently do not invest in any securities that are materially and directly affected by foreign currency exchange rates or commodity prices.

ITEM 4. CONTROLS AND PROCEDURES

(a)     As of the end of the period covered by this quarterly report on Form 10-Q, we carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the

11

effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, our principal executive officer and principal financial officer have concluded that these disclosure controls and procedures are effective in timely alerting them to material information relating to La Jolla Pharmaceutical Company required to be included in our periodic SEC filings.

(b)     There was no change in our internal control over financial reporting that occurred during our most recent fiscal quarter that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     Our Annual Meeting of Stockholders was held on May 21, 2004. All of the directors nominated for election by our board of directors, as set forth in our proxy statement, were elected as follows:

Director Nominee	Term	Votes in Favor		Votes Withheld
Stephen M. Martin	Three years		48,798,107		914,584
William R. Ringo	Three years		48,210,260		1,502,431
Robert A. Fildes	One year		47,887,357		1,825,334

In addition, William E. Engbers, Thomas H. Adams and Steven B. Engle continued to serve on our board of directors after the Annual Meeting. All of our proposals, as set forth in our proxy statement, were approved as follows:

							Broker
Proposal Description	Votes in Favor		Votes Against		Abstaining		Non-Votes
Adoption of the La Jolla Pharmaceutical Company 2004 Equity Incentive Plan and to reserve 2,000,000 shares of common stock for issuance under the plan		23,525,198		3,547,364		56,742		22,583,387
Amendment to the La Jolla Pharmaceutical Company 1995 Employee Stock Purchase Plan to increase by 500,000 the number of shares of common stock available under the plan		25,308,526		1,772,711		48,067		22,583,387
Ratification of the appointment of Ernst & Young LLP as our independent auditor for the fiscal year ending December 31, 2004		49,257,393		373,309		81,989	—

12

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)     Exhibits

Exhibit
Number	Description
3.1	Amended and Restated Certificate of Incorporation of the Company (1)
3.2	Amended and Restated Bylaws of the Company (2)
4.1	Rights Agreement dated as of December 3, 1998 between the Company and American Stock Transfer & Trust Company (3)
4.2	Certificate of Designation, Preferences and Rights of Series A Junior Participating Preferred Stock of the Company (4)
4.3	Amendment to Rights Agreement, effective as of July 21, 2001, between the Company and American Stock Transfer & Trust Company (5)
10.1	Stock Option Agreement dated February 4, 1993 entitling Joseph Stemler to purchase 35,000 shares of Common Stock (6)*
10.2	Steven B. Engle Employment Agreement (6)*
10.3	Amendment No. 1 to Steven B. Engle Employment Agreement (7)*
10.4	Amendment No. 2 to Steven B. Engle Employment Agreement (1)*
10.5	Amendment No. 3 to Steven B. Engle Employment Agreement (18)*
10.6	Form of Directors and Officers Indemnification Agreement (6)
10.7	Reserved.
10.8	Form of Employee Invention and Confidential Information Agreement (6)
10.9	Industrial Real Estate Lease (6)
10.10	Reserved.
10.11	Reserved.
10.12	La Jolla Pharmaceutical Company 1994 Stock Incentive Plan (Amended and Restated as of May 16, 2003) (18)*

13

Exhibit
Number	Description
10.13	La Jolla Pharmaceutical Company 1995 Employee Stock Purchase Plan (Amended and Restated as of May 21, 2004)*
10.14	Reserved.
10.15	Second Amendment to Lease, dated June 30, 1994, by and between the Company and BRE Properties, Inc. (9)
10.16	Third Amendment to Lease, dated January 26, 1995, by and between the Company and BRE Properties, Inc. (10)
10.17	Reserved.
10.18	Agreement, dated September 22, 1995, between the Company and Joseph Stemler regarding option vesting (11) *
10.19	Building Lease Agreement, effective November 1, 1996, by and between the Company and WCB II-S BRD Limited Partnership (12)
10.20	Reserved.
10.21	Reserved.
10.22	Reserved.
10.23	Reserved.
10.24	Reserved.
10.25	Supplement to employment offer letter for Matthew Linnik, Ph.D. (13)*
10.26	Supplement to employment offer letter for William J. Welch (14)*
10.27	Supplement to employment offer letter for Theodora Reilly (14)*
10.28	Supplement to employment offer letter for Paul Jenn, Ph.D. (14)*
10.29	Supplement to employment offer letter for Bruce K. Bennett, Jr. (15)*
10.30	Supplement to employment offer letter for Kenneth R. Heilbrunn (8)*
10.31	Reserved.
10.32	Reserved.
10.33	Master Security Agreement, effective September 6, 2002, between the Company and General Electric Capital Corporation (16)
10.34	Promissory Note, dated as of September 26, 2002, between the Company and General Electric Capital Corporation (16)
10.35	Amendment to Promissory Note, effective as of September 27, 2002, between the Company and General Electric Capital Corporation (16)
10.36	Promissory Note, dated as of December 30, 2002, between the Company and General Electric Capital Corporation (17)
10.37	Promissory Note, dated as of April 23, 2003, between the Company and General Electric Capital Corporation (17)
10.38	Promissory Note, dated as of June 27, 2003, between the Company and General Electric Capital Corporation (18)
10.39	Promissory Note, dated as of September 26, 2003, between the Company and General Electric Capital Corporation (19)
10.40	Promissory Note, dated as of December 18, 2003, between the Company and General Electric Capital Corporation (23)
10.41	Lease Renewal Amendment, dated as of July 1, 2003, between the Company and General Electric Capital Corporation Successor In Interest to Comdisco, Inc. as of February 26, 2002 (19)
10.42	Underwriting Agreement, dated as of August 7, 2003, between the Company and Pacific Growth Equities, LLC (20)

14

Exhibit
Number	Description
10.43	Underwriting Agreement, dated as of February 19, 2004, between the Company and Pacific Growth Equities, LLC (22)
10.44	Form of Registration Rights Agreement, dated January 2002, between the Company and the initial purchasers (21)
10.45	Form of Stock Purchase Agreement, dated January 2002, between the Company and the initial purchasers (21)
10.46	Form of Registration Rights Agreement, dated February 5, 2001, between the Company and the initial purchasers (19)
10.47	Form of Stock Purchase Agreement, dated February 5, 2001, between the Company and the initial purchasers (19)
10.48	Form of Registration Rights Agreement, dated July 19, 2000, between the Company and the initial purchasers (19)
10.49	Form of Stock Purchase Agreement, dated July 19, 2000, between the Company and the initial purchasers (19)
10.50	Form of Registration Rights Agreement, dated February 10, 2000, between the Company and the initial purchasers (19)
10.51	Form of Stock Purchase Agreement, dated February 10, 2000, between the Company and the initial purchasers (19)
10.52	Underwriting Agreement, dated February 19, 2004, by and between the Company and Pacific Growth Equities, LLC (24)
10.53	Supplement to employment offer letter for Gail Sloan (25)*
10.54	Promissory Note, dated as of March 31, 2004, between the Company and General Electric Capital Corporation (25)
10.55	Promissory Note, dated as of June 25, 2004, between the Company and General Electric Capital Corporation
10.56	Fourth Amendment to Lease, dated July 8, 2004, by and between the Company and EOP-Industrial Portfolio, LLC.
10.57	First Amendment to Lease, dated May 4, 2001, by and between the Company and Spieker Properties, L.P.
10.58	Second Amendment to Lease, dated July 8, 2004, by and between the Company and EOP-Industrial Portfolio, LLC.
10.59	La Jolla Pharmaceutical Company 2004 Equity Incentive Plan*
31.1	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

*	This exhibit is a management contract or compensatory plan or arrangement.
(1)	Previously filed with the Company’s quarterly report on Form 10-Q for the quarter ended September 30, 1999 and incorporated by reference herein.
(2)	Previously filed with the Company’s quarterly report on Form 10-Q for the quarter ended September 30, 2000 and incorporated by reference herein.
(3)	Previously filed with the Company’s Registration Statement on Form 8-A (No. 000-24274) as filed with the Securities and Exchange Commission on December 4, 1998.
(4)	Previously filed with the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 1999 and incorporated by reference herein.
(5)	Previously filed with the Company’s report on Form 8-K filed on January 26, 2001 and incorporated by reference herein. The changes effected by the Amendment are also reflected in the Amendment to Application for Registration on Form 8-A/A filed on January 26, 2001.
(6)	Previously filed with the Company’s Registration Statement on Form S-1 (No. 33-76480) filed on March 16, 1994.

15

(7)	Previously filed with the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 1997 and incorporated by reference herein.
(8)	Previously filed with the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2002 and incorporated by reference herein.
(9)	Previously filed with the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 1994 and incorporated by reference herein.
(10)	Previously filed with the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 1995 and incorporated by reference herein.
(11)	Previously filed with the Company’s annual report on Form 10-K for the fiscal year ended December 31, 1995 and incorporated by reference herein.
(12)	Previously filed with the Company’s quarterly report on Form 10-Q for the quarter ended September 30, 1996 and incorporated by reference herein.
(13)	Previously filed with the Company’s annual report on Form 10-K for the fiscal year ended December 31, 1999 and incorporated by reference herein.
(14)	Previously filed with the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2001 and incorporated by reference herein.
(15)	Previously filed with the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2002 and incorporated by reference herein.
(16)	Previously filed with the Company’s quarterly report on Form 10-Q for the quarter ended September 30, 2002 and incorporated by reference herein.
(17)	Previously filed with the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2003 and incorporated by reference herein.
(18)	Previously filed with the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2003 and incorporated by reference herein.
(19)	Previously filed with the Company’s quarterly report on Form 10-Q for the quarter ended September 30, 2003 and incorporated by reference herein.
(20)	Previously filed with the Company’s current report on Form 8-K filed August 12, 2003 and incorporated by reference herein.
(21)	Previously filed with the Company’s current report on Form 8-K filed January 16, 2002 and incorporated by reference herein.
(22)	Previously filed with the Company’s current report on Form 8-K filed February 20, 2004 and incorporated by reference herein.
(23)	Previously filed with the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2003 and incorporated by reference herein.
(24)	Previously filed with the Company’s current report on Form 8-K filed February 20, 2004 and incorporated by reference herein.
(25)	Previously filed with the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2004 and incorporated by reference herein.

               (b)     Reports on Form 8-K

     On April 21, 2004, we filed a current report on Form 8-K to report that we would present results from our clinical trials of Riquent^® at the 7th International Congress on Systemic Lupus Erythematosus (SLE) and Related Conditions. On May 7, 2004, we filed a current report on Form 8-K pursuant to which we furnished a press release regarding the financial results for our first quarter ended March 31, 2004. On May 11, 2004, we filed a current report on Form 8-K to report that we would give four presentations on previously released data on Riquent^® at the 7th International Congress on Systemic Lupus Erythematosus (SLE) and Related Conditions. On May 13, 2004, we filed a current report on Form 8-K to report that recent findings concerning antibody-mediated thrombosis, an autoimmune disease that is the target of LJP 1082, the Company’s early clinical drug candidate for the treatment of such disease, were published in two peer-reviewed journals. On June 3, 2004, we filed a current report on Form 8-K to report that Steven B. Engle would present at the Pacific Growth Equities Life Sciences Growth Conference. On June 10, 2004, we filed a current report on Form 8-K to report that Steven B. Engle would present at the Third Annual Needham Biotechnology Conference and that we would present previously released results from our Phase 2/3 and Phase 3 clinical trials of

16

Riquent^® at EULAR’s Annual European Congress of Rheumatology. On June 24, 2004, we filed a current report on Form 8-K to report that two articles were published regarding our drug candidates, Riquent^® and LJP 1082. On August 2, 2004, we announced that we had reached an agreement with the United States Food and Drug Aministration regarding a trial that is designed to fulfill the Company’s obligation to conduct a Phase 4 post-marketing trial if Riquent^® is approved under the FDA’s Subpart H regulation. On August 5, 2004, we filed a current report on Form 8-K pursuant to which we furnished a press release regarding the financial results for our second quarter ended June 30, 2004.

17

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	La Jolla Pharmaceutical Company
Date: August 6, 2004	/s/ Steven B. Engle
	Steven B. Engle
	Chairman and Chief Executive Officer
	(On behalf of the Registrant)
	/s/ Gail A. Sloan
	Gail A. Sloan
	Vice President of Finance, Controller and Secretary
	(As Principal Financial and Accounting Officer)

18

LA JOLLA PHARMACEUTICAL COMPANY

INDEX TO EXHIBITS

Exhibit
Number	Description
10.13	La Jolla Pharmaceutical Company 1995 Employee Stock Purchase Plan (Amended and Restated as of May 21, 2004)*
10.55	Promissory Note, dated as of June 25, 2004, between the Company and General Electric Capital Corporation
10.56	Fourth Amendment to Lease, dated July 8, 2004, by and between the Company and EOP-Industrial Portfolio, LLC.
10.57	First Amendment to Lease, dated May 4, 2001, by and between the Company and Spieker Properties, L.P.
10.58	Second Amendment to Lease, dated July 8, 2004, by and between the Company and EOP-Industrial Portfolio, LLC.
10.59	La Jolla Pharmaceutical Company 2004 Equity Incentive Plan*
31.1	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

* This exhibit is a management contract or compensatory plan or arrangement.

EX-10.13

                                                                   EXHIBIT 10.13

                         LA JOLLA PHARMACEUTICAL COMPANY
                        1995 EMPLOYEE STOCK PURCHASE PLAN

            The following constitutes the provisions of the La Jolla
Pharmaceutical Company 1995 Employee Stock Purchase Plan (the "PLAN").

1. PURPOSE.

            The purpose of the Plan is to maintain competitive equity
compensation programs and to provide employees of La Jolla Pharmaceutical
Company (the "COMPANY") with an opportunity and incentive to acquire a
proprietary interest in the Company through the purchase of the Company's Common
Stock, thereby more closely aligning the interests of the Company's employees
and stockholders. It is the intention of the Company to have the Plan qualify as
an "Employee Stock Purchase Plan" under Section 423 of the Internal Revenue Code
of 1986, as amended ("SECTION 423"). Accordingly, the provisions of the Plan
shall be construed to extend and limit participation consistent with the
requirements of Section 423.

2. DEFINITIONS.

            Capitalized terms used in this Plan and not otherwise defined have
the meanings set forth below.

            "ADMINISTRATOR" means the Committee, or the Board if the Board
asserts administrative authority over the Plan pursuant to Section 13.

            "BOARD" means the Board of Directors of the Company.

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

            "COMMITTEE" means a committee of members of the Board meeting the
qualifications described in Section 13 and appointed by the Board to administer
the Plan.

            "COMMON STOCK" shall mean the Common Stock of the Company.

            "COMPENSATION" means base salary or hourly compensation and any cash
bonus paid to a participant.

            "ELIGIBLE EMPLOYEE" means any employee of the Company whose
customary employment is for more than five months per calendar year and for more
than 20 hours per week. For purposes of the Plan, the employment relationship
shall be treated as continuing while the individual is on sick leave or other
leave of absence approved by the Company, except that when the period of leave
exceeds 90 days and the individual's right to reemployment is not guaranteed
either by statute or by contract, the employment relationship will be deemed to
have terminated on the 91st day of such leave.

            "ENROLLMENT DATE" means the first day of each Offering Period.

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

            "EXERCISE DATE" means the last day of each Purchase Period.



            "FAIR MARKET VALUE" of the Common Stock as of the time of any
determination thereof means the value of Common Stock determined as follows:

            (1) If the Common Stock is listed on any established stock exchange
or trades on the Nasdaq National Market, its Fair Market Value shall be the most
recent closing sales price for such stock (or the closing bid, if no sales were
reported), as quoted on such exchange or system (or the exchange or system with
the greatest volume of trading in the Common Stock) as of the time of such
determination as reported in the Wall Street Journal or such other source as the
Administrator deems reliable; or

                  (2) If the Common Stock is not listed on any established stock
exchange or traded on the Nasdaq National Market its Fair Market Value shall be
the mean between the most recent closing high and low asked prices for the
Common Stock as of the time of such determination, as reported in the Wall
Street Journal or such other source as the Administrator deems reliable; or

                  (3) In the absence of an established market for the Common
Stock, the Fair Market Value of the Common Stock shall be determined in good
faith by the Administrator.

            "OFFERING PERIOD" means (i) the period of twenty-three (23) months
commencing on August 1, 1996 and terminating on June 30, twenty-three (23)
months later; (ii) each period of twenty-four (24) months commencing on January
1, 1997 and each January 1 thereafter for the duration of the Plan and
terminating on the December 31 twenty-four (24) months later; (iii) each period
of twenty-four (24) months commencing on July 1, 1997 and each July 1 thereafter
for the duration of the Plan and terminating on the June 30 twenty-four (24)
months later; (iv) each period of twenty-four (24) months commencing on October
1, 2000 and each October 1 thereafter for the duration of the Plan and
terminating on the September 30 twenty-four (24) months later; and (v) each
period of twenty-four (24) months commencing on April 1, 2001 and each April 1
thereafter for the duration of the Plan and terminating on the March 31
twenty-four (24) months later. The Administrator shall have the power to change
the duration of Offering Periods without stockholder approval as set forth in
Section 12 or if such change is announced at least fifteen (15) days prior to
the scheduled beginning of the first Offering Period to be affected.

            "OPTION" means the option granted to each participant pursuant to
Section 4 upon enrollment in an Offering Period.

            "PERIODIC EXERCISE LIMIT" has the meaning set forth in Section 4(a).

            "PLAN ACCOUNT" means an account maintained by the Company for each
participant in the Plan, to which are credited the payroll deductions made for
such participant pursuant to Section 5 and from which are debited amounts paid
for the purchase of shares upon exercise of such participant's Option pursuant
to Section 6.

            "PURCHASE PRICE" as of any Exercise Date means an amount equal to
85% of the Fair Market Value of a share of Common Stock as of the close of
business on the Exercise Date or the opening of business on the Enrollment Date
for the Offering Period in which such Exercise Date occurs, whichever is lower.

            "PURCHASE PERIOD" means (i) the period of five (5) months commencing
on August 1, 1996 and ending on December 31, 1996; (ii) with respect to the
Offering Periods

                                       2



beginning on January and July 1, 1997, January and July 1, 1998, and January 1,
1999, each period of six (6) months within any such Offering Period, commencing
January 1, 1997 and each July 1 and January 1 thereafter, and ending on the
December 31 or June 30 following such commencement date; (iii) with respect to
the Offering Period beginning on July 1, 1999, the period of six (6) months
commencing July 1, 1999 and ending on December 31, 1999, the period of six (6)
months commencing on January 1, 2000 and ending on June 30, 2000, the period of
six (6) months commencing on July 1, 2000 and ending on December 31, 2000, the
period of three (3) months commencing on January 1, 2001 and ending on March 31,
2001, and the period of three (3) months commencing on April 1, 2001 and ending
on June 30, 2001, (iv) with respect to the Offering Period beginning on January
1, 2000, the period of six (6) months commencing on January 1, 2000 and ending
on June 30, 2000, the period of six (6) months commencing on July 1, 2000 and
ending on December 31, 2000, and each period of three (3) months commencing on
January 1, 2001 and each April 1, July 1, and October 1 thereafter, and ending
on the March 31, June 30, September 30 and December 31 following such
commencement date; (v) with respect to the Offering Period beginning on July 1,
2000, the period of six (6) months commencing on July 1, 2000 and ending on
December 31, 2000, and each period of three (3) months commencing on January 1,
2001 and each April 1, July 1, and October 1 thereafter, and ending on the March
31, June 30, September 30 and December 31 following such commencement date; and
(vi) for any Offering Period commencing on or after October 1, 2000, each period
of three (3) months within the Offering Period commencing on October 1, 2000 and
each January 1, April 1, July 1, and October 1 thereafter, and ending on the
December 31, March 31, June 30, and September 30 following such commencement
date.

            "RESERVES" means the number of shares of Common Stock covered by
each Option that has not yet been exercised and the number of shares of Common
Stock that have been authorized for issuance under

            the Plan, but not yet placed under any Option.

            "RULE 16b-3" means Rule 16b-3 under the Exchange Act and any
successor provision.

            "SUBSIDIARY" has the meaning as set forth under Section 424(f) of
the Code.

            "TRADING DAY" means a day on which national stock exchanges and the
National Association of Securities Dealers Automated Quotation System are open
for trading.

3. OFFERING PERIODS AND PARTICIPATION.

            The Plan shall be implemented through a series of consecutive and
overlapping Offering Periods. An Eligible Employee may enroll in an Offering
Period by delivering a subscription agreement in the form of Exhibit A hereto to
the Company's payroll office at least five (5) business days prior to the
Enrollment Date for that Offering Period. Eligible Employees shall participate
in only one Offering Period at a time, and a subscription agreement in effect
for a Plan participant for a particular Offering Period shall continue in effect
for subsequent Offering Periods if the participant remains an Eligible Employee
and has not withdrawn pursuant to Section 8.

4. OPTIONS.

            (a) Grants. On the Enrollment Date for each Offering Period, each
Eligible Employee participating in such Offering Period shall be granted an
Option

                                       3



to purchase (i) on each Exercise Date for any six-month Purchase Period in such
Offering Period (at the applicable Purchase Price) up to that number of shares
of Common Stock determined by dividing $12,500 by the Fair Market Value of a
share of Common Stock as of the opening of business on the Enrollment Date, and
(ii) on each Exercise Date for any three-month Purchase Period in such Offering
Period (at the applicable Purchase Price) up to that number of shares of Common
Stock determined by dividing $6,250 by the Fair Market Value of a share of
Common Stock as of the opening of business on the Enrollment Date (such number
of shares being the "PERIODIC EXERCISE LIMIT"). The Option shall expire
immediately after the last Exercise Date of the Offering Period.

            (b) Grant Limitations. Any provisions of the Plan to the contrary
notwithstanding, no participant shall be granted an Option under the Plan:

                  (i) if, immediately after the grant, such participant (or any
            other person whose stock would be attributed to such participant
            pursuant to Section 424(d) of the Code) would own stock and/or hold
            outstanding options to purchase stock possessing five percent (5%)
            or more of the total combined voting power or value of all classes
            of stock of the Company or of any Subsidiary; or

                  (ii) which permits such participant's rights to purchase stock
            under all employee stock purchase plans of the Company and its
            Subsidiaries to accrue at a rate that exceeds Twenty-Five Thousand
            Dollars ($25,000) worth of stock (determined at the Fair Market
            Value of the shares at the time such Option is granted) in any
            calendar year.

            (c) No Rights in Respect of Underlying Stock. The participant will
have no interest or voting right in shares covered by an Option until such
Option has been exercised.

5. PAYROLL DEDUCTIONS.

            (a) Participant Designations. The subscription agreement applicable
to an Offering Period shall designate payroll deductions to be made on each
payday during the Offering Period as a whole number percentage not exceeding ten
percent (10%) of such Eligible Employee's Compensation for the pay period
preceding such payday, provided that the aggregate of such payroll deductions
during the Offering Period shall not exceed ten percent (10%) of the
participant's Compensation during said Offering Period.

            (b) Plan Account Balances. The Company shall make payroll deductions
as specified in each participant's subscription agreement on each payday during
the Offering Period and credit such payroll deductions to such participant's
Plan Account. A participant may not make any additional payments into such Plan
Account. No interest will accrue on any payroll deductions. All payroll
deductions received or held by the Company under the Plan may be used by the
Company for any corporate purpose, and the Company shall not be obligated to
segregate such payroll deductions.

            (c) Participant Changes. A participant may discontinue his or her
participation in the Plan as provided in Section 8, or may increase or decrease
(subject to such limits as the Administrator may impose) the rate of his or her
payroll deductions during any Purchase Period by filing with the Company a new
subscription agreement authorizing such a change in the payroll deduction rate.
The change in rate shall be effective with the

                                       4



first full payroll period following five (5) business days after the Company's
receipt of the new subscription agreement, unless the Company elects to process
a given change in participation more quickly.

            (d) Decreases. Notwithstanding the foregoing, to the extent
necessary to comply with Section 423(b)(8) of the Code and Section 4(b) herein,
a participant's payroll deductions may be decreased to 0% at such time during
any Purchase Period that is scheduled to end during a calendar year (the
"CURRENT PURCHASE PERIOD") when the aggregate of all payroll deductions
previously used to purchase stock under the Plan in a prior Purchase Period
which ended during that calendar year plus all payroll deductions accumulated
with respect to the Current Purchase Period equal $21,250. Payroll deductions
shall recommence at the rate provided in such participant's subscription
agreement at the beginning of the first Purchase Period that is scheduled to end
in the following calendar year, unless terminated by the participant as provided
in Section 8.

            (e) Tax Obligations. At the time of each exercise of a participant's
Option, and at the time any Common Stock issued under the Plan to a participant
is disposed of, the participant must adequately provide for the Company's
federal, state, or other tax withholding obligations, if any, that arise upon
the exercise of the Option or the disposition of the Common Stock. At any time,
the Company may, but will not be obligated to, withhold from the participant's
compensation the amount necessary for the Company to meet applicable withholding
obligations, including any withholding required to make available to the Company
any tax deductions or benefit attributable to sale or early disposition of
Common Stock by the participant.

            (f) Statements of Account. The Company shall maintain each
participant's Plan Account and shall give each Plan participant a statement of
account at least annually. Such statements will set forth the amounts of payroll
deductions, the Purchase Price, the number of shares purchased and the remaining
cash balance, if any, for the period covered.

6. EXERCISE OF OPTIONS.

            (a) Automatic Exercise on Exercise Dates. Unless a participant
withdraws as provided in Section 8, his or her Option for the purchase of shares
will be exercised automatically on each Exercise Date within the Offering Period
in which such participant is enrolled for the maximum number of shares of Common
Stock, including fractional shares, as can then be purchased at the applicable
Purchase Price with the payroll deductions accumulated in such participant's
Plan Account and not yet applied to the purchase of shares under the Plan,
subject to the Periodic Exercise Limit. During a participant's lifetime, a
participant's Options to purchase shares hereunder are exercisable only by the
participant.

            (b) Delivery of Shares. As promptly as practicable after each
Exercise Date on which a purchase of shares occurs, the Company shall arrange
the delivery to each participant, as appropriate, of a certificate or book entry
transfer representing the shares purchased upon exercise of his or her Option,
provided that the Company may in its discretion hold fractional shares for the
accounts of the participants pending aggregation to whole shares.

            (c) Compliance with Law. Shares shall not be issued with respect to
an Option unless the exercise of such Option and the issuance and delivery of
such shares

                                       5



pursuant thereto comply with all applicable provisions of law, domestic or
foreign, including, without limitation, the Securities Act of 1933, as amended,
the Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the shares may then be listed, and
shall be further subject to the approval of counsel for the Company with respect
to such compliance. As a condition to the exercise of an Option, the Company may
require the participant for whom an Option is exercised 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 any of the aforementioned applicable provisions of law. Shares issued upon
purchase under the Plan may be subject to such transfer restrictions and
stop-transfer instructions as the Administrator deems appropriate.

            (d) Excess Plan Account Balances. If, due to application of the
Periodic Exercise Limit, there remains in a participant's Plan Account
immediately following exercise of such participant's Option on an Exercise Date
any cash accumulated during the Purchase Period immediately preceding such
Exercise Date and not applied to the purchase of shares under the Plan, such
cash shall promptly be returned to the participant.

7. AUTOMATIC TRANSFER TO LOW PRICE OFFERING PERIOD.

            If the Fair Market Value of the Common Stock as of the close of
business on any Exercise Date is lower than the Fair Market Value of the Common
Stock as of the opening of business on the Enrollment Date for the Offering
Period in which such Exercise Date occurs, then all participants in such
Offering Period shall be automatically withdrawn from such Offering Period
immediately after the exercise of their Options on such Exercise Date and
automatically re-enrolled in the immediately following Offering Period as of the
first day thereof.

8. WITHDRAWAL; TERMINATION OF EMPLOYMENT.

            (a) Voluntary Withdrawal. A participant may withdraw from an
Offering Period by giving written notice to the Company's payroll office at
least five (5) business days prior to the next Exercise Date. Such withdrawal
shall be effective beginning five business days after receipt by the Company's
payroll office of notice thereof. On or promptly following the effective date of
any withdrawal, all (but not less than all) of the withdrawing participant's
payroll deductions credited to his or her Plan Account and not yet applied to
the purchase of shares under the Plan will be paid to such participant, and on
the effective date of such withdrawal such participant's Option for the Offering
Period will be automatically terminated, and no further payroll deductions for
the purchase of shares will be made during the Offering Period. If a participant
withdraws from an Offering Period, payroll deductions will not resume at the
beginning of any succeeding Offering Period unless the participant delivers to
the Company a new subscription agreement with respect thereto.

            (b) Termination of Employment. Promptly after a participant's
ceasing to be an Eligible Employee for any reason the payroll deductions
credited to such participant's Plan Account and not yet applied to the purchase
of shares under the Plan will be returned to such participant or, in the case of
his or her death, to the person or persons entitled thereto under Section 10,
and such participant's Option will be automatically terminated, provided that,
if the Company does not learn of such death more than five (5) business days
prior to an Exercise Date, payroll deductions credited to such participant's
Plan account may be applied to the purchase of shares under the Plan on such
Exercise Date.

                                       6



9. TRANSFERABILITY.

            Neither payroll deductions credited to a participant's Plan Account
nor any rights with regard to the exercise of an Option or to receive shares
under the Plan nor any Option itself may be assigned, transferred, pledged or
otherwise disposed of by the participant in any way other than by will, the laws
of descent and distribution or as provided in Section 10 hereof. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Administrator may treat such act as an election to
withdraw from an Offering Period in accordance with Section 8.

10. DESIGNATION OF BENEFICIARY.

            A participant may file a written designation of a beneficiary who is
to receive any cash from the participant's Plan Account in the event of such
participant's death and any shares purchased for the participant upon exercise
of his or her Option but not yet issued. If a participant is married and the
designated beneficiary is not the spouse, spousal consent may be required for
such designation to be effective. A designation of beneficiary may be changed by
a participant at any time by written notice. In the event of the death of a
participant and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such participant's death, the Company shall
deliver such shares and/or cash to the executor or administrator of the estate
of the participant, or if no such executor or administrator has been appointed
(to the knowledge of the Company), the Company, in its discretion, may deliver
such shares and/or cash to the spouse or to any one or more dependents or
relatives of the participant, or if no spouse, dependent or relative is known to
the Company, then to such other person as the Company may designate.

11. STOCK.

            The maximum number of shares of the Company's Common Stock that
shall be made available for sale under the Plan shall be 1,500,000 shares,
subject to adjustment upon changes in capitalization of the Company as provided
in Section 12. If on a given Enrollment Date or Exercise Date the number of
shares with respect to which Options are to be granted or exercised exceeds the
number of shares then available under the Plan, the Administrator shall make a
pro rata allocation of the shares remaining available for purchase in as uniform
a manner as shall be practicable and as it shall determine to be equitable.
Shares of Common Stock subject to unexercised Options that expire, terminate or
are cancelled will again become available for the grant of further Options under
the Plan.

12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER OR ASSET
SALE.

            (a) Changes in Capitalization. Subject to any required action by the
stockholders of the Company, the Reserves as well as the Purchase Price,
Periodic Exercise Limit, and other characteristics of the Options, shall be
appropriately and proportionately adjusted for any increase or decrease or
exchange in the issued shares of Common Stock resulting from a stock split,
reverse stock split, stock dividend, combination or reclassification of the
Common Stock, exchange or any other increase or decrease in the number of shares
of Common Stock effected without receipt of consideration by the

                                       7



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 Administrator, 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. The
Administrator may, if it so determines in the exercise of its sole discretion,
provide for adjusting the Reserves, as well as the Purchase Price, Periodic
Exercise Limit, and other characteristics of the Options, in the event the
Company effects one or more reorganizations, recapitalizations, rights offerings
or other increases or reductions of shares of its outstanding Common Stock.

            (b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, all pending Offering Periods will
terminate immediately prior to the consummation of such proposed action, unless
otherwise provided by the Administrator, and all Plan Account balances will be
paid to participants as appropriate consistent with applicable law.

            (c) Merger or Asset Sale. In the event of a proposed sale of all or
substantially all of the assets of the Company, or the merger or other
combination (the "TRANSACTION") of the Company with or into another entity, each
Option under the Plan shall be assumed or an equivalent option shall be
substituted by such successor entity or a parent or subsidiary of such successor
entity, unless the Administrator determines, in the exercise of its sole
discretion and in lieu of such assumption or substitution, to shorten the
Offering Periods then in progress by setting a new Exercise Date (the "NEW
EXERCISE DATE"). If the Administrator shortens the Offering Periods then in
progress in lieu of assumption or substitution, the Administrator shall notify
each participant in writing, at least ten (l0) days prior to the New Exercise
Date, that the Exercise Date for such participant's Option has been changed to
the New Exercise Date and that such participant's Option will be exercised
automatically on the New Exercise Date, unless prior to such date the
participant has withdrawn from the Offering Period as provided in Section 8
(provided that, in such case, the participant's withdrawal shall be effective if
notice thereof is delivered to the Company's payroll office at least two (2)
business days prior to the New Exercise Date). For purposes of this Section, an
Option granted under the Plan shall be deemed to be assumed if, following the
Transaction the Option confers the right to purchase at the Purchase Price
(provided that for such purposes the Fair Market Value of the Common Stock on
the New Exercise Date shall be the value per share of the consideration paid in
the Transaction), for each share of stock subject to the Option immediately
prior to the Transaction, the consideration (whether stock, cash or other
securities or property) received in the Transaction by holders of Common Stock
for each share of Common Stock held on the effective date of the transaction
(and if such holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding shares of
Common Stock); provided, however, that if such consideration received in the
Transaction was not solely common equity of the successor entity or its parent
(as defined in Section 424(e) of the Code), the Administrator may, with the
consent of the successor entity and the participant, provide for the
consideration to be received upon exercise of the Option to be solely common
equity of the successor entity or its parent equal in fair market value to the
per share consideration received by holders of Common Stock in the Transaction.

13. ADMINISTRATION.

            The Plan shall be administered by the Committee, which shall have
the authority to construe, interpret and apply the terms of the Plan and any
agreements defining the rights and obligations of the Company and participants
under the Plan, to prescribe, amend, and rescind rules and regulations relating
to the Plan, to determine eligibility and to adjudicate all disputed claims
filed under the Plan, and to make all other determinations

                                       8



necessary or advisable for the administration of the Plan. The Administrator
may, in its discretion, delegate ministerial responsibilities under the Plan to
the Company. Every finding, decision and determination made by the Committee
shall, to the full extent permitted by law, be final and binding upon all
parties. Any action of the Committee shall be taken pursuant to a majority vote
or by the unanimous written consent of its members. The Committee shall consist
of three or more members of the Board, each of whom shall be disinterested
within the meaning of Rule 16b-3, provided, however, that the number of members
of the Committee may be reduced or increased from time to time by the Board to
the number required or allowed by Rule 16b-3. The Board may from time to time in
its discretion exercise any responsibilities or authority allocated to the
Committee under the Plan. No member of the Committee or any designee thereof
will be liable for any action or determination made in good faith with respect
to the Plan or any transaction arising under the Plan.

14. AMENDMENT OR TERMINATION.

            (a) Administrator's Discretion. The Administrator may, at any time
and for any reason, terminate or amend the Plan. Except as provided in Section
12, no such termination can affect Options previously granted, provided that an
Offering Period may be terminated by the Administrator on any Exercise Date if
the Administrator determines that such termination is in the best interests of
the Company and its stockholders. Except as provided herein, no amendment may
make any change in any Option theretofore granted that adversely affects the
rights of any participant. To the extent necessary to comply with and qualify
under Rule 16b-3 or under Section 423 (or any successor rule or provision or any
other applicable law or regulation), the Administrator shall obtain stockholder
approval of amendments to the Plan in such a manner and to such a degree as
required.

            (b) Administrative Modifications. Without stockholder consent
(except as specifically required by applicable law or regulation) and without
regard to whether any participant rights may be considered to have been
"adversely affected," the Administrator shall be entitled to amend the Plan to
the extent necessary to comply with and qualify under Rule 16b-3 and Section
423, change the Purchase Periods and/or Offering Periods, limit the frequency
and/or number of changes in payroll deductions during Purchase Periods and/or
Offering Periods, establish the exchange ratio applicable to amounts withheld in
a currency other than U.S. dollars, permit payroll withholding in excess of the
amount designated by a participant to adjust for delays or mistakes in the
Company's processing of properly completed withholding elections, establish
reasonable waiting and adjustment periods and/or accounting and crediting
procedures to ensure that amounts applied toward the purchase of Common Stock
for each participant properly correspond with amounts withheld from the
participant's Compensation, and establish such other limitations or procedures
as the Administrator determines in its sole discretion to be advisable and which
are consistent with the Plan.

15. TERM OF PLAN.

            The Plan shall become effective upon the first Enrollment Date after
its approval by the stockholders of the Company and shall continue in effect for
a term of twenty (20) years unless sooner terminated pursuant to Section 14.

                                       9



16. MISCELLANEOUS.

            (a) Notices. All notices or other communications by a participant to
the Company under or in connection with the Plan shall be deemed to have been
duly given when received in the form specified by the Company at the location,
or by the person, designated by the Company for the receipt thereof.

            (b) Subsidiaries. The Administrator may from time to time in its
discretion permit persons who are employees of any Subsidiary whose customary
employment is for more than five months per calendar year and for more than 20
hours per week to participate in the Plan on the same terms as Eligible
Employees hereunder.

            (c) Stockholder Approval. The Plan shall be subject to approval by
the stockholders of the Company within twelve months before or after the date
the Board adopts the Plan. If such stockholder approval is not obtained, the
Plan and all rights to the Common Stock purchased under the Plan shall be null
and void and shall have no effect.

            (d) Additional Restrictions of Rule 16b-3. The terms and conditions
of Options granted hereunder to, and the purchase of shares by, persons subject
to Section 16 of the Exchange Act shall comply with the applicable provisions of
Rule 16b-3. This Plan shall be deemed to contain, and such Options shall
contain, and the shares issued upon exercise thereof shall be subject to, such
additional conditions and restrictions as may be required by Rule 16b-3 to
qualify for the maximum exemption from Section 16 of the Exchange Act with
respect to Plan transactions.

            (e) No Employment Rights. The Plan does not, directly or indirectly,
create any right for the benefit of an employee or class of employees to
purchase any shares under the Plan, or create in any employee or class of
employees any right with respect to continuation of employment by the Company,
and it shall not be deemed to interfere in any way with the Company's right to
terminate, or otherwise modify, an employee's employment at any time.

            (f) Applicable Law. The laws of the State of California shall govern
all matters relating to the Plan, except to the extent (if any) superseded by
the laws of the United States.

            (g) Headings. Headings used herein are for convenience of reference
only and do not affect the meaning or interpretation of the Plan.

                                       10



                                    EXHIBIT A

                         LA JOLLA PHARMACEUTICAL COMPANY
                        1995 EMPLOYEE STOCK PURCHASE PLAN
                             SUBSCRIPTION AGREEMENT

_____ Original Application                          Enrollment Date: ___________
_____ Change in Payroll Deduction Rate
_____ Change of Beneficiary(ies)

1.    I, ________________________, hereby elect to participate in the La Jolla
      Pharmaceutical Company 1995 Employee Stock Purchase Plan (the "Plan") and
      subscribe to purchase shares of the Company's Common Stock in accordance
      with this Subscription Agreement and the Plan.

2.    I hereby authorize payroll deductions from each paycheck in the amount of
      ____% (not to exceed 10%) of my Compensation (as defined in the Plan) on
      each payday during the Offering Period in accordance with the Plan.
      (Please note that no fractional percentages are permitted.)

3.    I understand that said payroll deductions shall be accumulated for the
      purchase of shares of Common Stock at the applicable Purchase Price
      determined in accordance with the Plan. I understand that if I do not
      withdraw from an Offering Period, any accumulated payroll deductions will
      be used to automatically exercise my Option on each Exercise Date within
      the Offering Period.

4.    I have received a copy of the complete Plan. I understand that my
      participation in the Plan is in all respects subject to the terms of the
      Plan, that capitalized terms used herein have the same meanings as
      ascribed thereto in the Plan, and that in case of any inconsistency
      between this Subscription Agreement and the Plan, the Plan shall govern. I
      understand that the grant of the Option by the Company under this
      Subscription Agreement is subject to stockholder approval of the Plan.

5.    Shares purchased for me under the Plan should be issued in the name(s) of
      (employee and/or spouse only):__________________________
      _______________________________________________________.

6.    I understand that if I dispose of any shares received by me pursuant to
      the Plan within two years after the Enrollment Date (the first day of the
      Offering Period during which I purchased such shares) or within one year
      after the Exercise Date (the date I purchased such shares), I will be
      treated for federal income tax purposes as having received ordinary income
      at the time of such disposition in an amount equal to the excess of the
      fair market value of the shares at the time such shares were delivered to
      me over the price which I paid for the shares, regardless of whether I
      disposed of the shares at a price less than their fair market value at the
      Exercise Date. The remainder of the gain or loss, if any, recognized on
      such disposition will be treated as capital gain or loss. I hereby agree
      to notify the Company in writing within 30 days after the date of any
      disposition of my shares, and I will make adequate provision for Federal,
      State or other tax withholding obligations, if any, which arise upon the
      disposition of the Common Stock. The Company may, but will not be
      obligated to, withhold from my Compensation or other amounts payable to me
      the amount necessary to meet any



      applicable withholding obligation including any withholding necessary to
      make available to the Company any tax deductions or benefits attributable
      to sale or early disposition of Common Stock by me. If I dispose of such
      shares at any time after the expiration of the one-year and two-year
      holding periods described above, I understand that I will be treated for
      federal income tax purposes as having received income only at the time of
      such disposition, and that such income will be taxed as ordinary income
      only to the extent of an amount equal to the lesser of (a) the excess of
      the fair market value of the shares at the time of such disposition over
      the purchase price which I paid for the shares, or (b) 15% of the fair
      market value of the shares on the first day of the Offering Period. The
      remainder of the gain or loss, if any, recognized on such disposition will
      be taxed as capital gain or loss. I understand that this tax summary is
      only a summary for general information purposes and is subject to change
      and I agree to consult with my own tax advisors for definitive advice
      regarding the tax consequences to me of participation in the Plan and sale
      of shares purchased thereunder.

7.    I agree to be bound by the terms of the Plan. The effectiveness of this
      Subscription Agreement is dependent upon my eligibility to participate in
      the Plan.

8.    In the event of my death, I hereby designate the following as my
      beneficiary(ies) to receive (in proportion to the percentages listed
      below) all payments and shares due me under the Plan (use additional
      sheets to add beneficiaries):

NAME: (Please print) ___________________________________________________________
                         (First)            (Middle)               (Last)

____________________________________    ________________________________________
Relationship

Percentage: __________                  ________________________________________
                                        (Address)

NAME: (Please print) ___________________________________________________________
                        (First)             (Middle)               (Last)

____________________________________    ________________________________________
Relationship

Percentage:  __________                 ________________________________________
                                        (Address)

Employee's Social
Security Number:                        ________________________________________
Employee's Address:                     ________________________________________
                                        ________________________________________
                                        ________________________________________

I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT
SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.

                                        2



Dated: ___________________         _____________________________________________
                                   Signature of Employee

                                   _____________________________________________
                                   Spouse's Signature (If beneficiary other than
                                   spouse)

                                       3

EX-10.55

                                                                   EXHIBIT 10.55

                                 PROMISSORY NOTE

                                   6/25/2004
                                     (DATE)

FOR VALUE RECEIVED, LA JOLLA PHARMACEUTICAL COMPANY a corporation located at the
address stated below ("MAKER") promises, jointly and severally if more than one,
to pay to the order of GENERAL ELECTRIC CAPITAL Corporation or any subsequent
holder hereof (each, a "PAYEE") at its office located at 83 WOOSTER HEIGHTS
ROAD, DANBURY, CT or at such other place as Payee or the holder hereof may
designate, the principal sum of ONE HUNDRED THIRTY ONE THOUSAND SIX HUNDRED
THIRTEEN AND 45/00 ($131,613.45), with interest on the unpaid principal balance,
from the date hereof through and including the dates of payment, at a fixed
interest rate of Eight and Seventy Seven Hundredths percent (8.77%) per annum,
to be paid in lawful money of the United States, in Forty-Two (42) consecutive
monthly installments of principal and interest as follows:



   Periodic
  Installment     Amount
- ---------------  ---------
              
Thirty-Six (36)  $3,856.77
Five (5)         $1,992.06


each ("Periodic Installment") and a final installment which shall be in the
amount of the total outstanding principal and interest. The first Periodic
Installment shall be due and payable on _________7/01/04___________ and the
following Periodic Installments and the final installment shall be due and
payable on the same day of each succeeding month (each, a "Payment Date"). Such
installments have been calculated on the basis of a 360 day year of twelve
30-day months. Each payment may, at the option of the Payee, be calculated and
applied on an assumption that such payment would be made on its due date.

The acceptance by Payee of any payment which is less than payment in full of all
amounts due and owing at such time shall not constitute a waiver of Payee's
right to receive payment in full at such time or at any prior or subsequent
time.

The Maker hereby expressly authorizes the Payee to insert the date value is
actually given in the blank space on the face hereof and on all related
documents pertaining hereto.

This Note may be secured by a security agreement, chattel mortgage, pledge
agreement or like instrument (each of which is hereinafter called a "SECURITY
AGREEMENT").

Time is of the essence hereof. If any installment or any other sum due under
this Note or any Security Agreement is not received within ten (10) days after
its due date, the Maker agrees to pay, in addition to the amount of each such
installment or other sum, a late payment charge of five percent (5%) of the
amount of said installment or other sum, but not exceeding any lawful maximum.
If (i) Maker fails to make payment of any amount due hereunder within ten (10)
days after the same becomes due and payable; or (ii) Maker is in default under,
or fails to perform under any term or condition contained in any Security
Agreement, then the entire principal sum remaining unpaid, together with all
accrued interest thereon and any other sum payable under this Note or any
Security Agreement, at the election of Payee, shall immediately become due and
payable, with interest thereon at the lesser of eighteen percent (18%) per annum
or the highest rate not prohibited by applicable law from the date of such
accelerated maturity until paid (both before and after any judgment).

Notwithstanding anything to the contrary contained herein or in the Security
Agreement, Maker may not prepay in full or in part any indebtedness hereunder
without the express written consent of Payee in its sole discretion.

It is the intention of the parties hereto to comply with the applicable usury
laws; accordingly, it is agreed that, notwithstanding any provision to the
contrary in this Note or any Security Agreement, in no event shall this Note or
any Security Agreement require the payment or permit the collection of interest
in excess of the maximum amount permitted by applicable law. If any such excess
interest is contracted for, charged or received under this Note or any Security
Agreement, or if all of the principal balance shall be prepaid, so that under
any of such circumstances the amount of interest contracted for, charged or
received under this Note or any Security Agreement on the principal balance
shall exceed the maximum amount of interest permitted by applicable law, then in
such event (a) the provisions of this paragraph shall govern and control, (b)
neither Maker nor any other person or entity now or hereafter liable for the
payment hereof shall be obligated to pay the amount of such interest to the
extent that it is in excess of the maximum amount of interest permitted by
applicable law, (c) any such excess which may have been collected shall be
either applied as a credit against the then unpaid principal balance or refunded
to Maker, at the option of the Payee, and (d) the effective rate of interest
shall be automatically reduced to the maximum lawful contract rate allowed under
applicable law as now or hereafter construed



by the courts having jurisdiction thereof. It is further agreed that without
limitation of the foregoing, all calculations of the rate of interest contracted
for, charged or received under this Note or any Security Agreement which are
made for the purpose of determining whether such rate exceeds the maximum lawful
contract rate, shall be made, to the extent permitted by applicable law, by
amortizing, prorating, allocating and spreading in equal parts during the period
of the full stated term of the indebtedness evidenced hereby, all interest at
any time contracted for, charged or received from Maker or otherwise by Payee in
connection with such indebtedness; provided, however, that if any applicable
state law is amended or the law of the United States of America preempts any
applicable state law, so that it becomes lawful for the Payee to receive a
greater interest per annum rate than is presently allowed, the Maker agrees
that, on the effective date of such amendment or preemption, as the case may be,
the lawful maximum hereunder shall be increased to the maximum interest per
annum rate allowed by the amended state law or the law of the United States of
America.

The Maker and all sureties, endorsers, guarantors or any others (each such
person, other than the Maker, an "OBLIGOR") who may at any time become liable
for the payment hereof jointly and severally consent hereby to any and all
extensions of time, renewals, waivers or modifications of, and all substitutions
or releases of, security or of any party primarily or secondarily liable on this
Note or any Security Agreement or any term and provision of either, which may be
made, granted or consented to by Payee, and agree that suit may be brought and
maintained against any one or more of them, at the election of Payee without
joinder of any other as a party thereto, and that Payee shall not be required
first to foreclose, proceed against, or exhaust any security hereof in order to
enforce payment of this Note. The Maker and each Obligor hereby waives
presentment, demand for payment, notice of nonpayment, protest, notice of
protest, notice of dishonor, and all other notices in connection herewith, as
well as filing of suit (if permitted by law) and diligence in collecting this
Note or enforcing any of the security hereof, and agrees to pay (if permitted by
law) all expenses incurred in collection, including Payee's actual attorneys'
fees. Maker and each Obligor agrees that fees not in excess of twenty percent
(20%) of the amount then due shall be deemed reasonable.

THE MAKER HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS
NOTE, ANY OF THE RELATED DOCUMENTS, ANY DEALINGS BETWEEN MAKER AND PAYEE
RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS,
AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN MAKER AND PAYEE. THE
SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES
THAT MAY BE FILED IN ANY COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS,
TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY
CLAIMS.) THIS WAIVER IS IRREVOCABLE MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS NOTE, ANY RELATED DOCUMENTS, OR
TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED
TRANSACTION. IN THE EVENT OF LITIGATION, THIS NOTE MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.

This Note and any Security Agreement constitute the entire agreement of the
Maker and Payee with respect to the subject matter hereof and supercedes all
prior understandings, agreements and representations, express or implied.

No variation or modification of this Note, or any waiver of any of its
provisions or conditions, shall be valid unless in writing and signed by an
authorized representative of Maker and Payee. Any such waiver, consent,
modification or change shall be effective only in the specific instance and for
the specific purpose given.



Any provision in this Note or any Security Agreement which is in conflict with
any statute, law or applicable rule shall be deemed omitted, modified or altered
to conform thereto.

                                       LA JOLLA PHARMACEUTICAL COMPANY

/s/ Jeri Lynn Holm                    By:  /s/ Gail A. Sloan
- --------------------------------           -------------------------------------
(Witness)

Jeri Lynn Holm                        Name: Gail A. Sloan
- --------------------------------            ------------------------------------
(Print name)

6455 Nancy  Ridge Drive               Title: V.P. of Finance and Controller
- --------------------------------             -----------------------------------
San Diego, CA 92121
- -------------------
(Address)

                                       Federal Tax ID #: 330361285

                                       Address: 6455 Nancy Ridge Drive,
                                                San Diego, San Diego County,
                                                CA 92121

EX-10.56

                                                                   EXHIBIT 10.56

                                FOURTH AMENDMENT

THIS FOURTH AMENDMENT (the "AMENDMENT") is made and entered into as of July 8,
2004, by and between EOP-INDUSTRIAL PORTFOLIO, L.L.C., A DELAWARE LIMITED
LIABILITY COMPANY ("LANDLORD") and LA JOLLA PHARMACEUTICAL COMPANY, A DELAWARE
CORPORATION ("TENANT").

                                    RECITALS

A.    Landlord (as successor in interest pursuant to merger with Spieker
      Properties, L.P., a California limited partnership, as successor in
      interest to BRE Properties, Inc., a Delaware corporation) and Tenant are
      parties to that certain lease dated July 27, 1992, which lease has been
      previously amended by the Addendum to Lease dated July 27, 1992, First
      Amendment to Lease dated March 15, 1993, Second Amendment to Lease dated
      July 18, 1994 and Third Amendment to Lease dated January 26, 1995
      (collectively, the "LEASE"). Pursuant to the Lease, Landlord has leased to
      Tenant space currently containing approximately 36,526 rentable square
      feet (the "PREMISES") in the building commonly known as Westridge I
      located at 6455 Nancy Ridge Drive, San Diego, California (the "BUILDING").

B.    Landlord and Tenant hereby acknowledge and agree that due to a scrivener
      error in paragraph A of the Recitals of that certain Third Amendment to
      Lease dated January 26, 1995, incorrectly stated that the Premises
      contained approximately "36,256" rentable square feet of space. Landlord
      and Tenant retroactively agree that from and after January 26, 1995, the
      Premises contains approximately "36,526" rentable square feet.

C.    The Lease by its terms shall expire on JULY 31, 2004 ("PRIOR EXTENDED
      TERMINATION DATE"), and the parties desire to extend the Lease Term, all
      on the following terms and conditions.

      NOW, THEREFORE, in consideration of the above recitals which by this
reference are incorporated herein, the mutual covenants and conditions contained
herein and other valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Landlord and Tenant agree as follows:

1.    EXTENSION. The Lease Term is hereby extended for a period of sixty (60)
      months and shall expire on JULY 31, 2009 ("SECOND EXTENDED TERMINATION
      DATE"), unless sooner terminated in accordance with the terms of the
      Lease. That portion of the Lease Term commencing the day immediately
      following the Prior Extended Termination Date ("SECOND EXTENSION DATE")
      and ending on the Second Extended Termination Date shall be referred to
      herein as the "SECOND EXTENDED TERM".

2.    BASE RENT. As of the Second Extension Date, the schedule of Base Rent
      payable with respect to the Premises during the Second Extended Term is
      the following:





                PERIOD                   ANNUAL RATE PER SQUARE FOOT   MONTHLY BASE RENT
                                                                 
August 1, 2004 through July 31, 2005               $13.80                  $42,004.90
August 1, 2005 through July 31, 2006               $14.35                  $43,679.01
August 1, 2006 through July 31, 2007               $14.93                  $45,444.43
August 1, 2007 through July 31, 2008               $15.52                  $47,240.29
August 1, 2008 through July 31, 2009               $16.14                  $49,127.47


      All such Base Rent shall be payable by Tenant in accordance with the terms
of the Lease.

3.    REAL PROPERTY TAXES. For the period commencing on the Second Extension
      Date and ending on the Second Extended Termination Date, Tenant shall pay
      for Tenant's pro rata share of the real property taxes and Tenant's pro
      rata share of all costs incurred by Landlord for the operation and
      maintenance of the Common Areas in accordance with the terms of the Lease.

4. IMPROVEMENTS TO PREMISES.

      4.01. CONDITION OF PREMISES. Tenant is in possession of the Premises and
            accepts the same "as is" without any agreements, representations,
            understandings or obligations on the part of Landlord to perform any
            alterations, repairs or improvements, except as may be expressly
            provided otherwise in the Lease or this Amendment.

      4.02. RESPONSIBILITY FOR IMPROVEMENTS TO PREMISES. Any construction,
            alterations or improvements to the Premises shall be performed by
            Tenant at its sole cost and expense using contractors selected by
            Tenant and reasonably approved by Landlord and shall be governed in
            all respects by the provisions of the Lease.

5.    OTHER PERTINENT PROVISIONS. Landlord and Tenant agree that, effective as
      of the date of this Amendment (unless different effective date(s) is/are
      specifically referenced in this Section), the Lease shall be amended in
      the following additional respects:

      5.01. PARKING. For the period commencing on the Second Extension Date and
            ending on the Second Extended Termination Date, Tenant shall retain
            its existing vehicle parking rights as set forth in the Lease.

      5.02. RIGHT OF FIRST REFUSAL TO LEASE 6465 NANCY RIDGE DRIVE AS SET FORTH
            IN THE ADDENDUM TO LEASE shall be deleted in its entirety and is of
            no further force and effect.

                                       2



      5.03. LIMITATION ON LANDLORD'S LIABILITY. The obligations of Landlord
            under the Lease (including any actual or alleged breach or default
            by Landlord) do not constitute personal obligations of the
            individual partners, directors, officers or shareholders of Landlord
            or Landlord's partners, and Tenant shall not seek recourse against
            the individual partners, directors, officers or shareholders of
            Landlord or Landlord's partners, or any of their personal assets for
            satisfaction of any liability with respect to the Lease. In
            addition, the liability of Landlord for its obligations under the
            Lease shall be limited solely to, and Tenant's sole and exclusive
            remedy shall be against, Landlord's interest in the Industrial
            Center, and no other assets of Landlord.

6. MISCELLANEOUS.

      6.01. This Amendment and the attached exhibits, which are hereby
            incorporated into and made a part of this Amendment, set forth the
            entire agreement between the parties with respect to the matters set
            forth herein. There have been no additional oral or written
            representations or agreements. Under no circumstances shall Tenant
            be entitled to any Rent abatement, improvement allowance, leasehold
            improvements, or other work to the Premises, or any similar economic
            incentives that may have been provided Tenant in connection with
            entering into the Lease, unless specifically set forth in this
            Amendment.

      6.02. Except as herein modified or amended, the provisions, conditions and
            terms of the Lease shall remain unchanged and in full force and
            effect.

      6.03. In the case of any inconsistency between the provisions of the Lease
            and this Amendment, the provisions of this Amendment shall govern
            and control.

      6.04. Submission of this Amendment by Landlord is not an offer to enter
            into this Amendment. Landlord shall not be bound by this Amendment
            until Landlord has executed and delivered the same to Tenant.

      6.05. The capitalized terms used in this Amendment shall have the same
            definitions as set forth in the Lease to the extent that such
            capitalized terms are defined therein and not redefined in this
            Amendment.

      6.06. Tenant hereby represents to Landlord that Tenant has dealt with no
            broker other than Irving Hughes in connection with this Amendment.
            Tenant agrees to indemnify and hold Landlord, its members,
            principals, beneficiaries, partners, officers, directors, employees,
            mortgagee(s) and agents, and the respective principals and members
            of any such agents (collectively, the "LANDLORD RELATED PARTIES")
            harmless from all claims of any brokers other than Irving Hughes
            claiming to have represented Tenant in connection with this
            Amendment. Landlord hereby represents to Tenant that Landlord has
            dealt with no broker in connection with this Amendment. Landlord
            agrees to indemnify and hold Tenant, its members, principals,
            beneficiaries, partners, officers, directors, employees, and agents,
            and the respective principals and members of any such agents

                                       3



            (collectively, the "TENANT RELATED Parties") harmless from all
            claims of any brokers claiming to have represented Landlord in
            connection with this Amendment.

      6.07. Landlord and Tenant each represent that each signatory of this
            Amendment has the authority to execute and deliver the same on
            behalf of the party hereto for which such signatory is acting.

      6.08. Equity Office Properties Management Corp. ("EOPMC") is an affiliate
            of Landlord and represents only the Landlord in this transaction.
            Any assistance rendered by any agent or employee of EOPMC in
            connection with this Lease or any subsequent amendment or
            modification hereto has been or will be made as an accommodation to
            Tenant solely in furtherance of consummating the transaction on
            behalf of Landlord, and not as agent for Tenant.

      6.09. CALIFORNIA WAIVERS. Notwithstanding anything to the contrary
            contained in the Lease, Tenant hereby waives any and all rights
            under and benefits of subsection 1 of Section 1932, Sections 1941
            and 1942 (Tenant's Repairs and Alterations), 1932(2) (Casualty
            Damage), and Section 1265.130 (Condemnation) of the California Code
            of Civil Procedure, or any similar or successor laws now or
            hereinafter in effect.

      6.10. NO EXTENSION OPTIONS DURING THE SECOND EXTENDED TERM. The parties
            hereto acknowledge and agree that during the Second Extended Term
            Tenant shall have no rights to extend the term of the Lease. The
            parties agree that any rights existing in the Lease to extend the
            term of the Lease shall be deleted in their entirety and are of no
            further force and effect.

      6.11. LEASE CANCELLATION RIGHT AND RIGHT OF FIRST OFFER TO PURCHASE THE
            PROJECT. The parties hereto acknowledge and agree that during the
            Second Extended Term, the Lease Cancellation Right as set forth in
            the Third Amendment to Lease and the Right of First Offer to
            Purchase the Project as set forth in the Addendum to Lease shall
            remain in full force and effect.

                       [SIGNATURES ARE ON FOLLOWING PAGE]

                                       4



      IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Amendment
as of the day and year first above written.

                             LANDLORD:

                             EOP-INDUSTRIAL PORTFOLIO, L.L.C.,
\                            A DELAWARE LIMITED LIABILITY COMPANY

                             By: EOP Operating Limited Partnership, a
                                 Delaware limited partnership, its sole member

                                   By: Equity Office Properties Trust, a
                                       Maryland real estate investment trust,
                                       its general partner

                                       By: /s/ Robert E. Dezzutti
                                           ----------------------------
                                       Name:  Robert E. Dezzutti
                                       Title: Senior Vice President

                             TENANT:

                             LA JOLLA PHARMACEUTICAL COMPANY,
                             A DELAWARE CORPORATION

                             By: /s/ Steven B. Engle
                                 --------------------------------------
                             Name:  Steven B. Engle
                             Title: Chairman and CEO
                             Tenant's FEIN: 33-0361285

                              5

EX-10.57

                                                                   EXHIBIT 10.57

                            FIRST AMENDMENT TO LEASE

      THIS FIRST AMENDMENT TO LEASE is made this 4th day of May 2001, by and
between Spieker Properties, L.P., a California Limited Partnership,
successor-in-interest to WCB II-S BRD Limited Partnership (the "Landlord") and
La Jolla Pharmaceuticals Company, a Delaware corporation (the "Tenant").

      WHEREAS, Landlord and Tenant entered into a Lease Agreement executed on
September 6, 1996 (the "Lease"), for certain premises located at Westridge I,
6465 Nancy Ridge Drive, San Diego, CA (the "Premises"), as more fully described
in the Lease; and

      WHEREAS, Landlord and Tenant desire to modify the Lease accordingly;

      NOW, THEREFORE, in consideration of the covenants and agreements contained
herein, the parties hereby mutually agree as follows:

1.    The term of this Lease shall renew for an additional thirty-three (33)
      months commencing November 1, 2001 and expiring July 31, 2004.

2.    The monthly Base Rent, net of all operating expenses, shall be as follows:

 November 1, 2001 - October 31, 2002      $21,840.00
 November 1, 2002 - October 31, 2003      $22,714.00
 November 1, 2003 - July 31, 2004         $23,622.00

3.    Tenant shall deposit with Landlord an additional Security Deposit in the
      amount of $5,600.00. The total Security Deposit for the Premises shall be
      $23,600.00.

4.    Tenant shall occupy the Premises on an "As-Is" basis. Landlord shall not
      provide any tenant improvements for the Premises.

5.    Tenant warrants that all necessary corporate actions have been duly taken
      to permit Tenant to enter into this First amendment To Lease and that each
      undersigned officer has been duly authorized and instructed to execute
      this First Amendment to Lease.

6.    Except as expressly modified above, all terms and conditions of the Lease
      remain in full force and effect and are hereby ratified and confirmed.

LANDLORD:                                       TENANT:

Spieker Properties, L.P.,                      La Jolla Pharmaceuticals Company,
a California limited partnership               a Delaware corporation

By: Spieker Properties, Inc.,
    a Maryland corporation,
    its General Partner

By: /s/ Richard L. Romney                      By:   /s/ Gail A. Sloan
    ----------------------------                     --------------------------
    Richard L. Romney                          Title Controller and Secretary
    Senior Vice President

Date: 5/8/01                                   Date: 5/4/01

EX-10.58

                                                                   EXHIBIT 10.58

                                SECOND AMENDMENT

THIS SECOND AMENDMENT (the "AMENDMENT") is made and entered into as of July 8,
2004, by and between EOP-INDUSTRIAL PORTFOLIO, L.L.C., A DELAWARE LIMITED
LIABILITY COMPANY ("LESSOR") and LA JOLLA PHARMACEUTICAL COMPANY, A DELAWARE
CORPORATION ("LESSEE").

                                    RECITALS

A.    Lessor (as successor in interest pursuant to merger with Spieker
      Properties, L.P., a California limited partnership, as successor in
      interest to WCB II-S BRD Limited Partnership, a Delaware limited
      partnership) and Lessee are parties to that certain standard
      industrial/commercial lease dated September 6, 1996, which lease has been
      previously amended by Acceptance of Space letter dated November 12, 1996
      and First Amendment to Lease dated May 4, 2001 (collectively, the
      "LEASE"). Pursuant to the Lease, Lessor has leased to Lessee space
      currently containing approximately 16,800 square feet (the "PREMISES") in
      the building commonly known as Westridge I located at 6465 Nancy Ridge
      Drive, San Diego, California (the "BUILDING").

B.    The Lease by its terms shall expire on JULY 31, 2004 ("PRIOR EXTENDED
      EXPIRATION DATE"), and the parties desire to extend the Lease for the
      Option Period (as defined in Section 39 of the Addendum attached to and
      made a part of the Lease), all on the following terms and conditions.

      NOW, THEREFORE, in consideration of the above recitals which by this
reference are incorporated herein, the mutual covenants and conditions contained
herein and other valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Lessor and Lessee agree as follows:

1.    EXTENSION. The Lease is hereby extended for a period of sixty (60) months
      and shall expire on JULY 31, 2009 ("SECOND EXTENDED EXPIRATION DATE"),
      unless sooner terminated in accordance with the terms of the Lease. The
      period commencing the day immediately following the Prior Extended
      Expiration Date ("SECOND EXTENSION DATE") and ending on the Second
      Extended Expiration Date shall be referred to herein as the "SECOND OPTION
      PERIOD".

2.    BASE RENT. As of the Second Extension Date, the schedule of Base Rent
      payable with respect to the Premises during the Second Option Period is
      the following:





               PERIOD                  ANNUAL RATE PER SQUARE FOOT   MONTHLY BASE RENT
                                                               
August 1, 2004 through July 31, 2005             $13.20                 $18,480.00
August 1, 2005 through July 31, 2006             $13.73                 $19,222.00
August 1, 2006 through July 31, 2007             $14.28                 $19,992.00
August 1, 2007 through July 31, 2008             $14.85                 $20,790.00
August 1, 2008 through July 31, 2009             $15.44                 $21,616.00


      All such Base Rent shall be payable by Lessee in accordance with the terms
of the Lease.

3.    ADDITIONAL SECURITY DEPOSIT. No additional security deposit shall be
      required in connection with this Amendment.

4.    COMMON AREA OPERATING EXPENSES AND REAL PROPERTY TAXES. For the period
      commencing on the Second Extension Date and ending on the Second Extended
      Expiration Date, Lessee shall pay for Lessee's Share of Common Area
      Operating Expenses and Real Property Taxes in accordance with the terms of
      the Lease.

5.    IMPROVEMENTS TO PREMISES.

      5.01. CONDITION OF PREMISES. Lessee is in possession of the Premises and
            accepts the same "as is" without any agreements, representations,
            understandings or obligations on the part of Lessor to perform any
            alterations, repairs or improvements, except as may be expressly
            provided otherwise in the Lease or this Amendment.

      5.02. RESPONSIBILITY FOR IMPROVEMENTS TO PREMISES. Any construction,
            alterations or improvements to the Premises shall be performed by
            Lessee at its sole cost and expense using contractors selected by
            Lessee and reasonably approved by Lessor and shall be governed in
            all respects by the provisions of the Lease.

6.    MISCELLANEOUS.

      6.01. This Amendment and the attached exhibits, which are hereby
            incorporated into and made a part of this Amendment, set forth the
            entire agreement between the parties with respect to the matters set
            forth herein. There have been no additional oral or written
            representations or agreements. Under no circumstances shall Lessee
            be entitled to any Rent abatement, improvement allowance, leasehold
            improvements, or other work to the Premises, or any similar economic
            incentives

                                        2


            that may have been provided Lessee in connection with entering into
            the Lease, unless specifically set forth in this Amendment.

      6.02. Except as herein modified or amended, the provisions, conditions and
            terms of the Lease shall remain unchanged and in full force and
            effect.

      6.03. In the case of any inconsistency between the provisions of the Lease
            and this Amendment, the provisions of this Amendment shall govern
            and control.

      6.04. Submission of this Amendment by Lessor is not an offer to enter into
            this Amendment. Lessor shall not be bound by this Amendment until
            Lessor has executed and delivered the same to Lessee.

      6.05. The capitalized terms used in this Amendment shall have the same
            definitions as set forth in the Lease to the extent that such
            capitalized terms are defined therein and not redefined in this
            Amendment.

      6.06. Lessee hereby represents to Lessor that Lessee has dealt with no
            broker other than The Irving Hughes Group in connection with this
            Amendment. Lessee agrees to indemnify and hold Lessor, its members,
            principals, beneficiaries, partners, officers, directors, employees,
            mortgagee(s) and agents, and the respective principals and members
            of any such agents (collectively, the "LESSOR RELATED PARTIES")
            harmless from all claims of any brokers other than The Irving Hughes
            Group claiming to have represented Lessee in connection with this
            Amendment. Lessor hereby represents to Lessee that Lessor has dealt
            with no broker in connection with this Amendment. Lessor agrees to
            indemnify and hold Lessee, its members, principals, beneficiaries,
            partners, officers, directors, employees, and agents, and the
            respective principals and members of any such agents (collectively,
            the "LESSEE RELATED PARTIES") harmless from all claims of any
            brokers claiming to have represented Lessor in connection with this
            Amendment.

      6.07. Lessor and Lessee each represents that each signatory of this
            Amendment has the authority to execute and deliver the same on
            behalf of the party hereto for which such signatory is acting.

      6.08. CALIFORNIA WAIVERS. Notwithstanding anything to the contrary
            contained in the Lease, Lessee hereby waives any and all rights
            under and benefits of subsection 1 of Section 1932, Sections 1941
            and 1942 (Tenant's Repairs and Alterations), 1932(2) (Casualty
            Damage), and Section 1265.130 (Condemnation) of the California Code
            of Civil Procedure, or any similar or successor laws now or
            hereinafter in effect.

      6.09. Equity Office Properties Management Corp. ("EOPMC") is an affiliate
            of Lessor and represents only the Lessor in this transaction. Any
            assistance rendered by any agent or employee of EOPMC in connection
            with the Lease or any subsequent amendment or modification hereto
            has been or will be made as an accommodation to Lessee solely in
            furtherance of consummating the transaction on behalf of Lessor, and
            not as agent for Lessee.

                                       3



      6.10. NO EXTENSION OR EXPANSION OPTIONS DURING THE SECOND OPTION PERIOD.
            The parties hereto acknowledge and agree that during the Second
            Option Period Lessee shall have no rights to extend the term of the
            Lease, or expand or contract the Premises. The parties agree that
            any rights existing in the Lease to extend the term of the Lease, or
            expand or contract the Premises shall be deleted in their entirety
            and are of no further force and effect.

      IN WITNESS WHEREOF, Lessor and Lessee have duly executed this Amendment as
of the day and year first above written.

                          LESSOR:

                          EOP-INDUSTRIAL PORTFOLIO, L.L.C.,
                          A DELAWARE LIMITED LIABILITY COMPANY

                          By: EOP Operating Limited Partnership, a
                              Delaware limited partnership, its sole member

                                 By: Equity Office Properties Trust, a
                                     Maryland real estate investment trust, its
                                     general partner

                                     By: /s/ Robert E. Dezzutti
                                         -------------------------------
                                     Name:  Robert E. Dezzutti
                                     Title: Senior Vice President

                          LESSEE:

                          LA JOLLA PHARMACEUTICAL COMPANY,
                          A DELAWARE CORPORATION

                          By: /s/ Steven B. Engle
                              ------------------------------------------
                          Name: Steven B. Engle
                          Title: Chairman and CEO
                          Tenant's FEIN: 33-0361285

                                       4

EX-10.59

                                                                   EXHIBIT 10.59

                         LA JOLLA PHARMACEUTICAL COMPANY
                           2004 EQUITY INCENTIVE PLAN

                                    ARTICLE I
                               GENERAL PROVISIONS

      1.01  DEFINITIONS.

            Terms used herein and not otherwise defined shall have the meanings
set forth below:

            (a) "Administrator" means the Board or a Committee that has been
delegated the authority to administer the Plan. (b) "Award" means an Incentive
Award or a Nonemployee Director's Option.

            (c) "Award Document" means an award agreement duly executed on
behalf of the Company and by the Recipient or, in the Administrator's
discretion, a confirming memorandum issued by the Company to the Recipient.

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

            (e) "Change in Control" means the following and shall be deemed to
occur if any of the following events occur:

                  (i) Except as provided by subsection (iii) hereof, the
acquisition (other than from the Company) by any person, entity or "group,"
within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act
(excluding, for this purpose, the Company or its subsidiaries, or any employee
benefit plan of the Company or its subsidiaries which acquires beneficial
ownership of voting securities of the Company), of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of forty percent
(40%) or more of either the then outstanding shares of Common Stock or the
combined voting power of the Company's then outstanding voting securities
entitled to vote generally in the election of directors; or

                  (ii) Individuals who, as of the effective date of the Plan,
constitute the Board (the "Incumbent Board") cease for any reason to constitute
at least a majority of the Board, provided that any person becoming a director
subsequent to the date hereof whose election, or nomination for election by the
Company's stockholders, is or was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board (other than an election or
nomination of an individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the election of the
directors of the Company, as such terms are used in Rule 14a-11 of Regulation
14A promulgated under the Exchange Act) shall be, for purposes of the Plan,
considered as though such person were a member of the Incumbent Board; or



                  (iii) Approval by the stockholders of the Company of a
reorganization, merger or consolidation with any other person, entity or
corporation, other than

                        (A) a merger or consolidation which would result in the
persons holding the voting securities of the Company outstanding immediately
prior thereto continuing to hold more than fifty percent (50%) of the combined
voting power of the voting securities of the Company or its successor which are
outstanding immediately after such merger or consolidation, or

                        (B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no person
acquires forty percent (40%) or more of the combined voting power of the
Company's then outstanding voting securities; or

                  (iv) Approval by the stockholders of the Company of a plan of
complete liquidation of the Company or an agreement for the sale or other
disposition by the Company of all or substantially all of the Company's assets.

            Notwithstanding the preceding, a Change in Control shall not be
deemed to have occurred (1) if the "person" is an underwriter or underwriting
syndicate that has acquired the ownership of 50% or more of the combined voting
power of the Company's then outstanding voting securities solely in connection
with a public offering of the Company's securities, or (2) if the "person" is an
employee stock ownership plan or other employee benefit plan maintained by the
Company that is qualified under the provisions of the Employee Retirement Income
Security Act of 1974, as amended.

            (f) "Code" means the Internal Revenue Code of 1986, as amended.
Where the context so requires, a reference to a particular Code section shall
also refer to any successor provision of the Code to such section.

            (g) "Committee" means the committee appointed by the Board to
administer the Plan.

            (h) "Common Stock" means the common stock of the Company, $0.01 par
value.

            (i) "Company" means La Jolla Pharmaceutical Company.

            (j) "Dividend Equivalent" means a right granted by the Company under
Section 2.07 to a holder of an Option, Stock Appreciation Right, or other
Incentive Award denominated in shares of Common Stock to receive from the
Company during the Applicable Dividend Period (as defined in Section 2.07)
payments equivalent to the amount of dividends payable to holders of the number
of shares of Common Stock underlying such Option, Stock Appreciation Right, or
other Incentive Award.

            (k) "Eligible Person" means any director, Employee or consultant of
the Company or any Related Corporation.

                                       2



            (l) "Employee" means an individual who is in the employ of the
Company (or any Parent or Subsidiary) subject to the control and direction of
the employer entity as to both the work to be performed and the manner and
method of performance.

            (m) "Exchange Act" means the Securities Exchange Act of 1934, as
amended. Where the context so requires, a reference to a particular section of
the Exchange Act or rule thereunder shall also refer to any successor provision
to such section or rule.

            (n) "Exercise Price" means the price at which the Holder may
purchase shares of Common Stock underlying an Option.

            (o) "Fair Market Value" of capital stock of the Company shall be
determined with reference to the closing price of such stock on the day in
question (or, if such day is not a trading day in the U.S. securities markets,
on the nearest preceding trading day), as reported with respect to the principal
market or trading system on which such stock is then traded; or, if no such
closing prices are reported, the mean between the high bid and low ask prices
that day on the principal market or national quotation system on which such
shares are then quoted; provided, however, that when appropriate, the
Administrator in determining Fair Market Value of capital stock of the Company
may take into account such other factors as may be deemed appropriate under the
circumstances. Notwithstanding the foregoing, the Fair Market Value of capital
stock for purposes of grants of Incentive Stock Options shall be determined in
compliance with applicable provisions of the Code. The Fair Market Value of
rights or property other than capital stock of the Company means the fair market
value thereof as determined by the Administrator on the basis of such factors as
it may deem appropriate.

            (p) "Holder" means the Recipient of an Award or any permitted
assignee holding the Award.

            (q) "Incentive Award" means any Option (other than a Nonemployee
Director's Option), Restricted Stock, Stock Appreciation Right, Stock Payment,
Performance Award or Dividend Equivalent granted or sold to an Eligible Person
under this Plan.

            (r) "Incentive Stock Option" means an Option that qualifies as an
incentive stock option under Section 422 (or any successor section) of the Code
and the regulations thereunder.

            (s) "Just Cause Dismissal" shall mean a termination of a Recipient's
Service for any of the following reasons: (i) the Recipient violates any
reasonable rule or regulation of the Company or the Recipient's superiors or the
Chief Executive Officer or President of the Company that (A) results in damage
to the Company or (B) after written notice to do so, the Recipient fails to
correct within a reasonable time; (ii) any willful misconduct or gross
negligence by the Recipient in the responsibilities assigned to him or her;
(iii) any willful failure to perform his or her job; (iv) any wrongful conduct
of a Recipient which has an adverse impact on the Company or which constitutes
fraud, embezzlement or dishonesty; (v) the Recipient's performing services for
any other person or entity which competes with the Company while he or she is
providing Service, without the written approval of the Chief Executive Officer
or President of the Company; or (vi) any other conduct that the Administrator
determines

                                       3



constitutes Just Cause for Dismissal; provided, however, that if the term of
concept has been defined in an employment agreement between the Company and the
Recipient, then Just Cause Dismissal shall have the definition set forth in such
employment agreement. The foregoing definition shall not in any way preclude or
restrict the right of the Company or any Related Corporation to discharge or
dismiss any Recipient or other person in the Service of the Company or any
Related Corporation for any other acts or omissions but such other acts or
omission shall not be deemed, for purposes of the Plan, to constitute grounds
for Just Cause Dismissal.

            (t) "Nonemployee Director" means a director of the Company who is
not an Employee of the Company or any of its Related Corporations.

            (u) "Nonemployee Director's Option" means a Nonqualified Stock
Option granted to a Nonemployee Director pursuant to Article III of the Plan.

            (v) "Nonqualified Stock Option" means an Option that does not
qualify as an Incentive Stock Option.

            (w) "Option" means a right to purchase stock of the Company granted
under this Plan, and can be an Incentive Stock Option or a Nonqualified Stock
Option.

            (x) "Parent" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, provided each
corporation in the unbroken chain (other than the Company) owns, at the time of
the determination, stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain.

            (y) "Performance Award" means an award, payable in cash, Common
Stock or a combination thereof, which vests and becomes payable over a period of
time upon attainment of performance criteria established in connection with the
grant of the award.

            (z) "Performance-Based Compensation" means performance-based
compensation as described in Section 162(m) of the Code and the regulations
thereunder. If the amount of compensation an Eligible Person will receive under
any Incentive Award is not based solely on an increase in the value of Common
Stock after the date of grant or award, the Administrator, in order to qualify
an Incentive Award as performance-based compensation under Section 162(m) of the
Code and the regulations thereunder, can condition the grant, award, vesting, or
exercisability of such an award on the attainment of a preestablished, objective
performance goal. For this purpose, a preestablished, objective performance goal
may include one or more of the following performance criteria: (i) cash flow,
(ii) earnings per share (including earnings before interest, taxes, and
amortization), (iii) return on equity, (iv) total stockholder return, (v) return
on capital, (vi) return on assets or net assets, (vii) income or net income,
(viii) operating margin, (ix) return on operating revenue, (x) attainment of
stated goals related to the Company's research and development or clinical
trials programs, (xi) attainment of stated goals related to the Company's
capitalization, costs, financial condition, or results of operations, and (xii)
any other similar performance criteria.

            (aa) "Permanent Disability" shall mean the inability of the
Recipient to engage in any substantial gainful activity by reason of any
medically determinable physical or mental

                                       4



impairment which can be expected to result in death or has lasted or can be
expected to last for a continuous period of twelve months or more.

            (bb) "Plan" means the La Jolla Pharmaceutical Company 2004 Equity
Incentive Plan as set forth in this document.

            (cc) "Purchase Price" means the purchase price (if any) to be paid
by a Recipient for Restricted Stock as determined by the Administrator (which
price shall be at least equal to the minimum price required under applicable
laws and regulations for the issuance of Common Stock).

            (dd) "Recipient" means an Eligible Person who has received an Award
hereunder.

            (ee) "Related Corporation" means either a Parent or Subsidiary.

            (ff) "Restricted Stock" means Common Stock that is the subject of an
award made under Section 2.04 and which is nontransferable and subject to a
substantial risk of forfeiture until specific conditions are met as set forth in
this Plan and in any Award Document.

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

            (hh) "Service" means the performance of services for the Company or
its Related Corporations by a person in the capacity of an Employee, a director
or a consultant, except to the extent otherwise specifically provided in the
Award Document.

            (ii) "Stock Appreciation Right" means a right granted under Section
2.05 to receive a payment that is measured with reference to the amount by which
the Fair Market Value of a specified number of shares of Common Stock
appreciates from a specified date, such as the date of grant of the Stock
Appreciation Right, to the date of exercise.

            (jj) "Stock Payment" means a payment in shares of Common Stock to
replace all or any portion of the compensation (other than base salary) that
would otherwise become payable to a Recipient.

            (kk) "Subsidiary" means any corporation (other than the Company) in
an unbroken chain of corporations beginning with the Company, provided each
corporation in the unbroken chain (other than the last corporation) owns, at the
time of the determination, stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.

      1.02  PURPOSE OF THE PLAN.

            The Board has adopted this Plan to advance the interests of the
Company and its stockholders by (a) providing Eligible Persons with financial
incentives to promote the success of the Company's business objectives, and to
increase their proprietary interest in the success of the Company, and (b)
giving the Company a means to attract and retain Eligible Persons.

                                       5



      1.03  COMMON STOCK SUBJECT TO THE PLAN.

            (a) Number of Shares. Subject to Section 1.05(b), the maximum number
of shares of Common Stock that may be issued and outstanding or subject to
outstanding Awards under the Plan shall not exceed 2,000,000.

            (b) Source of Shares. The Common Stock to be issued under this Plan
will be made available, at the discretion of the Administrator, either from
authorized but unissued shares of Common Stock or from previously issued shares
of Common Stock reacquired by the Company, including shares purchased on the
open market.

            (c) Availability of Unused Shares. Shares of Common Stock subject to
unexercised portions of any Award granted under this Plan that expire, terminate
or are cancelled, and shares of Common Stock issued pursuant to an Award under
this Plan that are reacquired by the Company pursuant to the terms of the Award
under which such shares were issued, will again become available for the grant
of further Awards under this Plan.

            (d) Grant Limits. Notwithstanding any other provision of this Plan,
no Eligible Person shall be granted Awards with respect to more than 1,000,000
shares of Common Stock in the aggregate in any one calendar year; provided,
however, that this limitation shall not apply if it is not required in order for
the compensation attributable to Awards hereunder to qualify as
Performance-Based Compensation.

      1.04  ADMINISTRATION OF THE PLAN.

            (a) The Administrator. The Plan will be administered by a Committee,
which will consist of two or more members of the Board each of whom must be an
"independent director" as defined by applicable listing standards.
Notwithstanding the foregoing or any provision of the Plan to the contrary, the
Board may, in lieu of the Committee, exercise any authority granted to the
Committee pursuant to the provisions of the Plan. To obtain the benefits of Rule
16b-3, Incentive Awards must be granted by the entire Board or a Committee
comprised entirely of "non-employee directors" as such term is defined in Rule
16b-3. In addition, if Incentive Awards are to be made to persons subject to
Section 162(m) of the Code and such Awards are intended to constitute
Performance-Based Compensation, then such Incentive Awards must be granted by a
Committee comprised entirely of "outside directors" as such term is defined in
the regulations under Section 162(m) of the Code.

            (b) Authority of the Administrator. The Administrator has authority
in its discretion to select the Eligible Persons to whom, and the time or times
at which, Incentive Awards shall be granted or sold, the nature of each
Incentive Award, the number of shares of Common Stock or the number of rights
that make up or underlie each Incentive Award, the period for the exercise of
each Incentive Award, the performance criteria (which need not be identical)
utilized to measure the value of Performance Awards, and such other terms and
conditions applicable to each individual Incentive Award as the Administrator
shall determine. In addition, the Administrator shall have all other powers
granted to it in the Plan.

            (c) Interpretation. Subject to the express provisions of the Plan,
the Administrator has the authority to interpret the Plan and any Award
Documents, to determine the

                                       6



terms and conditions of Incentive Awards and to make all other determinations
necessary or advisable for the administration of the Plan. All interpretations,
determinations and actions by the Administrator shall be final, conclusive and
binding upon all parties. The Administrator has authority to prescribe, amend
and rescind rules and regulations relating to the Plan.

            (d) Special Rules Regarding Nonemployee Director Options.
Notwithstanding anything herein to the contrary, the Administrator shall have no
authority or discretion as to the selection of persons eligible to receive
Nonemployee Directors' Options granted under the Plan, the number of shares
covered by Nonemployee Directors' Options granted under the Plan, the timing of
such grants, or the Exercise Price of Nonemployee Directors' Options granted
under the Plan, which matters are specifically governed by the provisions of the
Plan.

            (e) No Liability. The Administrator and its delegates shall be
indemnified by the Company to the fullest extent provided for in the Company's
certificate of incorporation and bylaws.

      1.05  OTHER PROVISIONS.

            (a) Documentation. Each Award granted under the Plan shall be
evidenced by an Award Document which shall set forth the terms and conditions
applicable to the Award as the Administrator may in its discretion determine
consistent with the Plan, provided that the Administrator shall exercise no
discretion with respect to Nonemployee Directors' Options, which shall reflect
only the terms of the Award as set forth in Article III and certain
administrative matters dictated by the Plan. Award Documents shall comply with
and be subject to the terms and conditions of the Plan. In case of any conflict
between the Plan and any Award Document, the Plan shall control. Various Award
Documents covering the same types of Awards may but need not be identical.

            (b) Adjustment Provisions. Should any change be made to the
outstanding shares of Common Stock by reason of a merger, consolidation,
reorganization, recapitalization, reclassification, combination of shares, stock
dividend, stock split, reverse stock split, exchange of shares or other change
affecting the outstanding Common Stock without the Company's receipt of
consideration, an appropriate and proportionate adjustment may be made in (i)
the maximum number and kind of shares subject to the Plan as provided in Section
1.03, (ii) the number and kind of shares or other securities subject to then
outstanding Awards, (iii) the price for each share or other unit of any other
securities subject to then outstanding Awards and (iv) the number and kind of
shares or other securities subject to the Nonemployee Director Options described
in Section 3.01 and 3.02. In addition, the per person limitation set forth in
Section 1.03(d) shall also be subject to adjustment as provided in this Section
1.05(b), but only to the extent such adjustment would not affect the status of
compensation attributable to Awards hereunder as Performance-Based Compensation.
Such adjustments are to be effected in a manner that shall preclude the
enlargement or dilution of rights and benefits under the Awards. In no event
shall any adjustments be made in connection with the conversion of preferred
stock or warrants into shares of Common Stock. No fractional interests will be
issued under the Plan resulting from any such adjustments.

                                       7



            (c) Continuation of Service. Nothing contained in this Plan (or in
Award Documents or in any other documents related to this Plan or to Awards
granted hereunder) shall confer upon any Eligible Person or Recipient any right
to continue in the Service of the Company or its Related Corporations or
constitute any contract or agreement of employment or engagement, or interfere
in any way with the right of the Company or its Related Corporations to reduce
such person's compensation or other benefits or to terminate the Service of such
Eligible Person or Recipient, with or without cause. Except as expressly
provided in the Plan or in any Award Document, the Company shall have the right
to deal with each Recipient in the same manner as if the Plan and any Award
Document did not exist, including, without limitation, with respect to all
matters related to the hiring, discharge, compensation and conditions of the
employment or engagement of the Recipient.

            (d) Restrictions. All Awards granted under the Plan shall be subject
to the requirement that, if at any time the Company shall determine, in its
discretion, that the listing, registration or qualification of the shares
subject to Awards granted under the Plan upon any securities exchange or under
any state or federal law, or the consent or approval of any government
regulatory body, is necessary or desirable as a condition of, or in connection
with, the granting of such an Award or the issuance, if any, or purchase of
shares in connection therewith, such Award may not be exercised in whole or in
part unless such listing, registration, qualification, consent or approval shall
have been effected or obtained free of any conditions not acceptable to the
Company.

            (e) Additional Conditions. Any Incentive Award may also be subject
to such other provisions (whether or not applicable to any other Award or
Recipient) as the Administrator determines appropriate.

            (f) Tax Withholding. The Company's obligation to deliver shares of
Common Stock under the Plan shall be subject to the satisfaction of all
applicable income and employment tax withholding requirements.

            (g) Privileges of Stock Ownership. Except as otherwise set forth
herein, a Holder shall have no rights as a stockholder of the Company with
respect to any shares issuable or issued in connection with the Award until the
date of the receipt by the Company of all amounts payable in connection with
exercise of the Award, performance by the Holder of all obligations thereunder,
and the Company issues a stock certificate representing the appropriate number
of shares. Status as an Eligible Person shall not be construed as a commitment
that any Incentive Award will be granted under this Plan to an Eligible Person
or to Eligible Persons generally. No person shall have any right, title or
interest in any fund or in any specific asset (including shares of capital
stock) of the Company by reason of any Award granted hereunder. Neither this
Plan (or any documents related hereto) nor any action taken pursuant hereto
shall be construed to create a trust of any kind or a fiduciary relationship
between the Company and any person. To the extent that any person acquires a
right to receive an Award hereunder, such right shall be no greater than the
right of any unsecured general creditor of the Company.

            (h) Effective Date and Duration of Plan; Amendment and Termination
of Plan. The Plan shall become effective upon its approval by the Company's
stockholders. Unless terminated by the Board prior to such time, the Plan shall
continue in effect until the 10th

                                       8



anniversary of the date the Plan was adopted, whereupon the Plan shall terminate
automatically. The Board may, insofar as permitted by law, from time to time
suspend or terminate the Plan. No Awards may be granted during any suspension of
this Plan or after its termination. Any Award outstanding after the termination
of the Plan shall remain in effect until such Award has been exercised or
expires in accordance with its terms and the terms of the Plan. The Board may,
insofar as permitted by law, from time to time revise or amend the Plan in any
respect except that no such amendment shall adversely affect any rights or
obligations of the Holder under any outstanding Award previously granted under
the Plan without the consent of the Holder. Amendments shall be subject to
stockholder approval to the extent such approval is required to comply with the
listing requirements imposed by any exchange or trading system upon which the
Company's securities trade or applicable law.

            (i) Amendment of Awards. The Administrator may make any
modifications in the terms and conditions of an outstanding Incentive Award,
provided that (i) the resultant provisions are permissible under the Plan and
(ii) the consent of the Holder shall be obtained if the amendment will adversely
affect his or her rights under the Award. However, the outstanding Options may
not be repriced without stockholder approval.

            (j) Nonassignability. No Incentive Stock Option granted under the
Plan shall be assignable or transferable except by will or by the laws of
descent and distribution. No other Awards granted under the Plan shall be
assignable or transferable except (i) by will or by the laws of descent and
distribution, (ii) to one or more of the Recipient's family members (as such
term is defined in the instructions to Form S-8) or (iii) upon dissolution of
marriage pursuant to a qualified domestic relations order. During the lifetime
of a Recipient, an Award granted to him or her shall be exercisable only by the
Holder or his or her guardian or legal representative.

            (k) Other Compensation Plans. The adoption of the Plan shall not
affect any other stock option, incentive or other compensation plans in effect
for the Company, and the existence of the Plan shall not preclude the Company
from establishing any other forms of incentive or other compensation for
Eligible Persons.

            (l) Plan Binding on Successors. The Plan shall be binding upon the
successors and assigns of the Company.

            (m) Participation by Foreign Employees. Notwithstanding anything to
the contrary herein, the Administrator may, in order to fulfill the purposes of
the Plan, structure grants of Incentive Awards to Recipients who are foreign
nationals or employed outside of the United States to recognize differences in
applicable law, tax policy or local custom.

                                   ARTICLE II
                                INCENTIVE AWARDS

      2.01  GRANTS OF INCENTIVE AWARDS.

            Subject to the express provisions of this Plan, the Administrator
may from time to time in its discretion select from the class of Eligible
Persons those individuals to whom

                                       9



Incentive Awards may be granted pursuant to its authority as set forth in
Section 1.04(b). Each Incentive Award shall be subject to the terms and
conditions of the Plan and such other terms and conditions established by the
Administrator as are not inconsistent with the provisions of the Plan.

      2.02  OPTIONS.

            (a) Nature of Options. The Administrator may grant Incentive Stock
Options and Nonqualified Stock Options under the Plan. However, Incentive Stock
Options may only be granted to Employees of the Company or its Related
Corporations.

            (b) Option Price. The Exercise Price per share for each Option
(other than a Nonemployee Director's Option) shall be determined by the
Administrator at the date such Option is granted and shall not be less than the
Fair Market Value of a share of Common Stock (or other securities, as
applicable) on the date of grant, except that the Exercise Price for a
Nonqualified Stock Option may reflect a discount of up to 15% of the Fair Market
Value at the time of grant if the amount of such discount is expressly in lieu
of a reasonable amount of salary or cash bonus. Notwithstanding the foregoing,
however, in no event shall the Exercise Price be less than the par value of the
shares of Common Stock.

            (c) Option Period and Vesting. Options (other than Nonemployee
Directors' Options) hereunder shall vest and may be exercised as determined by
the Administrator, except that exercise of such Options after termination of the
Recipient's Service shall be subject to Section 2.02(g). Each Option granted
hereunder (other than a Nonemployee Directors Option) and all rights or
obligations thereunder shall expire on such date as shall be determined by the
Administrator, but not later than ten years after the date the Option is granted
and shall be subject to earlier termination as herein provided.

            (d) Exercise of Options. Except as otherwise provided herein, an
Option may become exercisable, in whole or in part, on the date or dates
specified by the Administrator (or, in the case of Nonemployee Directors'
Options, the Plan) at the time the Option is granted and thereafter shall remain
exercisable until the expiration or earlier termination of the Option. No Option
shall be exercisable except in respect of whole shares, and fractional share
interests shall be disregarded. An Option shall be deemed to be exercised when
the Secretary of the Company receives written notice of such exercise from the
Holder, together with payment of the Exercise Price made in accordance with
Section 2.02(e). Upon proper exercise, the Company shall deliver to the person
entitled to exercise the Option or his or her designee a certificate or
certificates for the shares of stock for which the Option is exercised.

            (e) Form of Exercise Price. The aggregate Exercise Price shall be
immediately due and payable upon the exercise of an Option and shall, subject to
the provisions of the Award Document, be payable in one or more of the
following: (i) by delivery of legal tender of the United States, (ii) by
delivery of shares of Common Stock held for the requisite period, if any,
necessary to avoid a charge to the Company's earnings for financial reporting
purposes, and/or (iii) through a sale and remittance procedure pursuant to which
the Holder shall concurrently provide irrevocable instructions to (A) a
brokerage firm to effect the immediate sale of the purchased shares and remit to
the Company, out of the sale proceeds available on the

                                       10



settlement date, sufficient funds to cover the aggregate Exercise Price payable
for the purchased shares plus all applicable income and employment taxes
required to be withheld by the Company by reason of such exercise and (B) the
Company to deliver the certificates for the purchased shares directly to such
brokerage firm in order to complete the sale. Any shares of Company stock or
other non-cash consideration assigned and delivered to the Company in payment or
partial payment of the Exercise Price will be valued at Fair Market Value on the
exercise date.

            (f) Limitation on Exercise of Incentive Stock Options. The aggregate
Fair Market Value (determined as of the respective date or dates of grant) of
the Common Stock for which one or more Options granted to any Recipient under
the Plan (or any other option plan of the Company or any of its subsidiaries or
affiliates) may for the first time become exercisable as Incentive Stock Options
under the Code during any one calendar year shall not exceed $100,000. Any
Options granted as Incentive Stock Options pursuant to the Plan in excess of
such limitation shall be treated as Nonqualified Stock Options. Options are to
be taken into account in the order in which they were awarded.

            (g) Termination of Service.

                  (i) Termination for Cause. Except as otherwise provided by the
Administrator, in the event of a Just Cause Dismissal of a Recipient, all of the
outstanding Options granted to such Recipient shall expire and become
unexercisable as of the date of such Just Cause Dismissal.

                  (ii) Termination Other Than For Cause. Subject to subsection
(i) above and except as otherwise provided by the Administrator, in the event of
a Recipient's termination of Service from the Company or its Related
Corporations due to:

                        (A) any reason other than Just Cause Dismissal, death,
or Permanent Disability, or normal retirement, the outstanding Options granted
to such Recipient, whether or not vested, shall expire and become unexercisable
as of the earlier of (1) the date such Options would expire in accordance with
their terms if the Recipient had remained in Service or (2) three calendar
months after the date the Recipient's Service terminated in the case of
Incentive Stock Options, or six months after the Recipient's Service terminated,
in the case of Nonqualified Stock Options.

                        (B) death or Permanent Disability, the outstanding
Options granted to such Recipient, whether or not vested, shall expire and
become unexercisable as of the earlier of (1) the date such Options would expire
in accordance with their terms if the Recipient had remained in Service or (2)
twelve months after the date of termination.

                        (C) normal retirement, the outstanding Options granted
to such Recipient, whether or not vested, shall expire and become unexercisable
as of the earlier of (A) the date such Options expire in accordance with their
terms or (B) twenty-four months after the date of retirement.

                  (iii) Termination of Director Service. In the event that a
Director shall cease to be a Nonemployee Director, all outstanding Options
(other than a Nonemployee Director's Option) granted to such Recipient shall be
exercisable, to the extent already vested and

                                       11



exercisable on the date such Recipient ceases to be a Nonemployee Director and
regardless of the reason the Recipient ceases to be a Nonemployee Director until
the fifth anniversary of the date such Director ceases to be a Nonemployee
Director; provided that the Administrator may extend such post-termination
period to up to the expiration date of the Option.

      2.03  PERFORMANCE AWARDS.

            (a) Grant of Performance Award. The Administrator may grant
Performance Awards under the Plan and shall determine the performance criteria
(which need not be identical and may be established on an individual or group
basis) governing Performance Awards, the terms thereof, and the form and timing
of payment of Performance Awards.

            (b) Payment of Award; Limitation. Upon satisfaction of the
conditions applicable to a Performance Award, payment will be made to the Holder
in cash or in shares of Common Stock valued at Fair Market Value or a
combination of Common Stock and cash, as the Administrator in its discretion may
determine. Notwithstanding any other provision of this Plan, no Eligible Person
shall be paid Performance Awards with a value in excess of $1,000,000 in any one
calendar year; provided, however, that this limitation shall not apply if it is
not required in order for the compensation attributable to the Performance Award
hereunder to qualify as Performance-Based Compensation.

            (c) Expiration of Performance Award. If any Recipient's Service is
terminated for any reason other than normal retirement, death or Permanent
Disability prior to the time a Performance Award or any portion thereof becomes
payable, all of the Holder's rights under the unpaid portion of the Performance
Award shall expire unless otherwise determined by the Administrator. In the
event of termination of Service by reason of death, Permanent Disability or
normal retirement, the Administrator, in its discretion, may determine what
portions, if any, of the Performance Award should be paid to the Holder.

      2.04  RESTRICTED STOCK.

            (a) Award of Restricted Stock. The Administrator may issue
Restricted Stock under the Plan. The Administrator shall determine the Purchase
Price (if any), the forms of payment of the Purchase Price (which shall be
either cash or past services), the restrictions upon the Restricted Stock, and
when such restrictions shall lapse (provided that the restriction period shall
be at least one year for performance-based grants and three years for
non-performance-based grants).

            (b) Requirements of Restricted Stock. All shares of Restricted Stock
granted or sold pursuant to the Plan will be subject to the following
conditions:

                  (i) No Transfer. The shares of Restricted Stock may not be
sold, assigned, transferred, pledged, hypothecated or otherwise disposed of,
alienated or encumbered until the restrictions are removed or expire;

                  (ii) Certificates. The Administrator may require that the
certificates representing shares of Restricted Stock granted or sold to a Holder
pursuant to the Plan remain in

                                       12



the physical custody of an escrow holder or the Company until all restrictions
are removed or expire;

                  (iii) Restrictive Legends. Each certificate representing
shares of Restricted Stock granted or sold to a Holder pursuant to the Plan will
bear such legend or legends making reference to the restrictions imposed upon
such Restricted Stock as the Administrator in its discretion deems necessary or
appropriate to enforce such restrictions; and

                  (iv) Other Restrictions. The Administrator may impose such
other conditions on Restricted Stock as the Administrator may deem advisable
including, without limitation, restrictions under the Securities Act, under the
Exchange Act, under the requirements of any stock exchange or upon which such
Restricted Stock or shares of the same class are then listed and under any blue
sky or other securities laws applicable to such shares.

            (c) Rights of Holder. Subject to the provisions of Section 2.04(b)
and any additional restrictions imposed by the Administrator, the Holder will
have all rights of a stockholder with respect to the Restricted Stock, including
the right to vote the shares and receive all dividends and other distributions
paid or made with respect thereto.

            (d) Termination of Service. Unless the Administrator in its
discretion determines otherwise, upon a Recipient's termination of Service for
any reason, all of the Restricted Stock issued to the Recipient that remains
subject to restrictions imposed pursuant to the Plan on the date of such
termination of Service may be repurchased by the Company at the Purchase Price
(if any).

            (e) Adjustments. Any new, substituted or additional securities or
other property which Holder may have the right to receive with respect to the
Holder's shares of Restricted Stock by reason of a merger, consolidation,
reorganization, recapitalization, reclassification, combination of shares, stock
dividend, stock split, reverse stock split, exchange of shares or other change
affecting the outstanding Common Stock without the Company's receipt of
consideration shall be issued subject to the same vesting requirements
applicable to the Holder's shares of Restricted Stock and shall be treated as if
they had been acquired on the same date as such shares.

      2.05  STOCK APPRECIATION RIGHTS.

            (a) Granting of Stock Appreciation Rights. The Administrator may
grant Stock Appreciation Rights, either related or unrelated to Options, under
the Plan.

            (b) Stock Appreciation Rights Related to Options.

                  (i) A Stock Appreciation Right granted in connection with an
Option granted under this Plan will entitle the holder of the related Option,
upon exercise of the Stock Appreciation Right, to surrender such Option, or any
portion thereof to the extent unexercised, with respect to the number of shares
as to which such Stock Appreciation Right is exercised, and to receive payment
of an amount computed pursuant to Section 2.05(b)(iii). Such Option will, to the
extent surrendered, then cease to be exercisable.

                                       13



                  (ii) A Stock Appreciation Right granted in connection with an
Option hereunder will be exercisable at such time or times, and only to the
extent that, the related Option is exercisable, and will not be transferable
except to the extent that such related Option may be transferable.

                  (iii) Upon the exercise of a Stock Appreciation Right related
to an Option, the Holder will be entitled to receive payment of an amount
determined by multiplying: (i) the difference obtained by subtracting the
Exercise Price of a share of Common Stock specified in the related Option from
the Fair Market Value of a share of Common Stock on the date of exercise of such
Stock Appreciation Right (or as of such other date or as of the occurrence of
such event as may have been specified in the instrument evidencing the grant of
the Stock Appreciation Right), by (ii) the number of shares as to which such
Stock Appreciation Right is exercised.

            (c) Stock Appreciation Rights Unrelated to Options. The
Administrator may grant Stock Appreciation Rights unrelated to Options to
Eligible Persons. Section 2.05(b)(iii) shall be used to determine the amount
payable at exercise under such Stock Appreciation Right, except that in lieu of
the Exercise Price specified in the related Option the initial base amount
specified in the Incentive Award shall be used.

            (d) Limits. Notwithstanding the foregoing, the Administrator, in its
discretion, may place a dollar limitation on the maximum amount that will be
payable upon the exercise of a Stock Appreciation Right under the Plan.

            (e) Payments. Payment of the amount determined under the foregoing
provisions may be made solely in whole shares of Common Stock valued at their
Fair Market Value on the date of exercise of the Stock Appreciation Right, in
cash or in a combination of cash and shares of Common Stock as the Administrator
deems advisable. If permitted by the Administrator, the Holder may elect to
receive cash in full or partial settlement of a Stock Appreciation Right. If the
Administrator decides to make full payment in shares of Common Stock, and the
amount payable results in a fractional share, payment for the fractional share
will be made in cash.

            (f) Termination of Service. Section 2.02(g) will govern the
treatment of Stock Appreciation Rights upon the termination of a Recipient's
Service.

      2.06  STOCK PAYMENTS.

            The Administrator may issue Stock Payments under the Plan for all or
any portion of the compensation (other than base salary) or other payment that
would otherwise become payable by the Company to the Eligible Person in cash.

      2.07  DIVIDEND EQUIVALENTS.

            The Administrator may grant Dividend Equivalents to any Recipient
who has received an Option, Stock Appreciation Right, or other Incentive Award
denominated in shares of Common Stock. Such Dividend Equivalents shall be
effective and shall entitle the Recipients thereof to payments during the
"Applicable Dividend Period," which shall be (a) the period

                                       14



between the date the Dividend Equivalent is granted and the date the related
Option, Stock Appreciation Right, or other Incentive Award is exercised,
terminates, or is converted to Common Stock, or (b) such other time as the
Administrator may specify in the Award Document. Dividend Equivalents may be
paid in cash, Common Stock, or other Incentive Awards; the amount of Dividend
Equivalents paid other than in cash shall be determined by the Administrator by
application of such formula as the Administrator may deem appropriate to
translate the cash value of dividends paid to the alternative form of payment of
the Dividend Equivalent. Dividend Equivalents shall be computed as of each
dividend record date and shall be payable to Recipients thereof at such time as
the Administrator may determine. Notwithstanding the foregoing, if it is
intended that an Incentive Award qualify as Performance-Based Compensation and
the amount of the compensation the Eligible Person could receive under the award
is based solely on an increase in value of the underlying stock after the date
of grant or award (i.e., the grant, vesting, or exercisability of the award is
not conditioned upon the attainment of a preestablished, objective performance
goal described in Section 1.01(x)), then the payment of any Dividend Equivalents
related to the Award shall not be made contingent on the exercise of the Award.

                                   ARTICLE III
                         NONEMPLOYEE DIRECTOR'S OPTIONS

      3.01  GRANTS OF INITIAL OPTIONS.

            Each Nonemployee Director shall, upon first becoming a Nonemployee
Director, receive a one-time grant of a Nonqualified Stock Option to purchase up
to 40,000 shares of Common Stock at an Exercise Price per share equal to the
Fair Market Value of the Common Stock on the date of grant. Options granted
under this Section 3.01 vest in accordance with Section 3.04(a) hereof and are
"Initial Options" for purposes hereof.

      3.02  GRANTS OF ADDITIONAL OPTIONS.

            On the date of the annual meeting of stockholders of the Company
next following a Nonemployee Director becoming such, and on the date of each
subsequent annual meeting of stockholders of the Company, in each case if the
Nonemployee Director has served as a director since his or her election or
appointment and has been re-elected as a director at such annual meeting or is
continuing as a director without being re-elected due to the classification of
the Board, such Nonemployee Director shall automatically receive a Nonqualified
Stock Option to purchase up to 10,000 shares of Common Stock at an Exercise
Price per share equal to the Fair Market Value of Common Stock on the date of
grant. Options granted under this Section 3.02 vest in accordance with Section
3.04(b) hereof and are "Additional Options" for purposes hereof. Notwithstanding
the foregoing to the contrary, the first grant of Additional Options shall be
made to eligible Nonemployee Directors on the date of the 2005 annual meeting of
stockholders.

      3.03  EXERCISE PRICE.

            The Exercise Price for Nonemployee Directors' Options shall be
payable as set forth in Section 2.02(e).

                                       15



      3.04  VESTING AND EXERCISE.

            (a) Initial Options shall vest and become exercisable with respect
to 25% of the underlying shares on the grant date and with respect to an
additional 25% of the underlying shares on the dates of each of the first three
anniversaries of the date of grant provided the Recipient has remained a
Nonemployee Director for the entire period from the date of grant to such date.

            (b) Additional Options shall vest and become exercisable upon the
earlier of (i) the first anniversary of the grant date or (ii) immediately prior
to the annual meeting of stockholders of the Company next following the grant
date, provided the Recipient has remained a Nonemployee Director for the entire
period from the date of grant to such earlier date.

            (c) Notwithstanding the foregoing, however, Initial Options and
Additional Options that have not vested and become exercisable at the time the
Recipient ceases to be a Nonemployee Director shall expire.

      3.05  TERM OF OPTIONS AND EFFECT OF TERMINATION.

            No Nonemployee Directors' Option shall be exercisable after the
expiration of ten years from the date of its grant. In the event that the
Recipient of a Nonemployee Director's Option shall cease to be a Nonemployee
Director, all outstanding Nonemployee Directors' Options granted to such
Recipient shall be exercisable, to the extent already vested and exercisable on
the date such Recipient ceases to be a Nonemployee Director and regardless of
the reason the Recipient ceases to be a Nonemployee Director until the fifth
anniversary of the date such Director ceases to be a Nonemployee Director;
provided that the Administrator may extend such post-termination period to the
expiration date of the Option.

                                   ARTICLE IV
                      RECAPITALIZATIONS AND REORGANIZATIONS

      4.01  CORPORATE TRANSACTIONS.

            (a) Options. Unless the Administrator provides otherwise in the
Award Document or another written agreement, in the event of a Change in
Control, the Administrator shall provide that all Options (other than
Non-employee Director Options) either (i) vest in full immediately preceding the
Change in Control and terminate upon the Change in Control, (ii) are assumed or
continued in effect in connection with the Change in Control transaction, (iii)
are cashed out for an amount equal to the deal consideration per share less the
Exercise Price or (iv) are substituted for similar awards of the surviving
corporation. Each Option that is assumed or otherwise continued in effect in
connection with a Change in Control shall be appropriately adjusted, immediately
after such Change in Control, to apply to the number and class of securities
which would have been issuable to Recipient in consummation of such Change in
Control had the Recipient been exercised immediately prior to such Change in
Control. Appropriate adjustments to reflect such Change in Control shall also be
made to (A) the Exercise Price payable per share under each outstanding Option,
provided the aggregate Exercise Price

                                       16



payable for such securities shall remain the same, (B) the maximum number and/or
class of securities available for issuance over the remaining term of the Plan,
(C) the maximum number and/or class of securities for which any one person may
be granted options and direct stock issuances pursuant to the Plan per calendar
year and (D) the number and/or class of securities subject to Nonemployee
Director's Options. To the extent the holders of Common Stock receive cash
consideration in whole or part for their Common Stock in consummation of the
Change in Control, the successor corporation may, in connection with the
assumption of the outstanding Options, substitute one or more shares of its own
common stock with a fair market value equivalent to the cash consideration paid
per share of Common Stock in such Change in Control transaction.

            (b) Nonemployee Directors' Options. Immediately prior to a Change of
Control, all outstanding Nonemployee Directors' Options shall vest in full.

            (c) Other Incentive Awards. The Administrator may specify the effect
that a Change in Control has on an Incentive Award (other than an Option)
outstanding at the time such a Change in Control occurs either in the applicable
Award Document or by subsequent modification of the Award.

      4.02  NO RESTRAINT.

            The grant of an Option pursuant to the Plan shall not affect in any
way the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge or
to consolidate or to dissolve, liquidate or sell, or transfer all of any part of
its business or assets.

                                       17

EX-31.1

                                                                    EXHIBIT 31.1

                            SECTION 302 CERTIFICATION

I, Steven B. Engle, certify that:

      1.    I have reviewed this Quarterly Report on Form 10-Q of La Jolla
            Pharmaceutical Company;

      2.    Based on my knowledge, this report does not contain any untrue
            statement of a material fact or omit to state a material fact
            necessary to make the statements made, in light of the circumstances
            under which such statements were made, not misleading with respect
            to the period covered by this report;

      3.    Based on my knowledge, the financial statements, and other financial
            information included in this report, fairly present in all material
            respects the financial condition, results of operations and cash
            flows of the registrant as of, and for, the periods presented in
            this report;

      4.    The registrant's other certifying officer(s) and I are responsible
            for establishing and maintaining disclosure controls and procedures
            (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
            registrant and have:

            a)    Designed such disclosure controls and procedures, or caused
                  such disclosure controls and procedures to be designed under
                  our supervision, to ensure that material information relating
                  to the registrant, including its consolidated subsidiaries, is
                  made known to us by others within those entities, particularly
                  during the period in which this report is being prepared;

            b)    Evaluated the effectiveness of the registrant's disclosure
                  controls and procedures and presented in this report our
                  conclusions about the effectiveness of the disclosure controls
                  and procedures, as of the end of the period covered by this
                  report based on such evaluation; and

            c)    Disclosed in this report any change in the registrant's
                  internal control over financial reporting that occurred during
                  the registrant's most recent fiscal quarter (the registrant's
                  fourth fiscal quarter in the case of an annual report) that
                  has materially affected, or is reasonably likely to materially
                  affect, the registrant's internal control over financial
                  reporting; and

      5.    The registrant's other certifying officer(s) and I have disclosed,
            based on our most recent evaluation of internal control over
            financial reporting, to the registrant's auditors and the audit
            committee of registrant's board of directors (or persons performing
            the equivalent functions):

            a)    All significant deficiencies and material weaknesses in the
                  design or operation of internal control over financial
                  reporting which are reasonably likely to adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial information; and

            b)    Any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal control over financial reporting.

Date: August 6, 2004                             /s/ Steven B. Engle
                                                 ----------------------------
                                                 Steven B. Engle
                                                 Chairman and Chief Executive
                                                 Officer

EX-31.2

                                                                    EXHIBIT 31.2

                            SECTION 302 CERTIFICATION

I, Gail A. Sloan, certify that:

      1.    I have reviewed this Quarterly Report on Form 10-Q of La Jolla
            Pharmaceutical Company;

      2.    Based on my knowledge, this report does not contain any untrue
            statement of a material fact or omit to state a material fact
            necessary to make the statements made, in light of the circumstances
            under which such statements were made, not misleading with respect
            to the period covered by this report;

      3.    Based on my knowledge, the financial statements, and other financial
            information included in this report, fairly present in all material
            respects the financial condition, results of operations and cash
            flows of the registrant as of, and for, the periods presented in
            this report;

      4.    The registrant's other certifying officer(s) and I are responsible
            for establishing and maintaining disclosure controls and procedures
            (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
            registrant and have:

            a)    Designed such disclosure controls and procedures, or caused
                  such disclosure controls and procedures to be designed under
                  our supervision, to ensure that material information relating
                  to the registrant, including its consolidated subsidiaries, is
                  made known to us by others within those entities, particularly
                  during the period in which this report is being prepared;

            b)    Evaluated the effectiveness of the registrant's disclosure
                  controls and procedures and presented in this report our
                  conclusions about the effectiveness of the disclosure controls
                  and procedures, as of the end of the period covered by this
                  report based on such evaluation; and

            c)    Disclosed in this report any change in the registrant's
                  internal control over financial reporting that occurred during
                  the registrant's most recent fiscal quarter (the registrant's
                  fourth fiscal quarter in the case of an annual report) that
                  has materially affected, or is reasonably likely to materially
                  affect, the registrant's internal control over financial
                  reporting; and

      5.    The registrant's other certifying officer(s) and I have disclosed,
            based on our most recent evaluation of internal control over
            financial reporting, to the registrant's auditors and the audit
            committee of registrant's board of directors (or persons performing
            the equivalent functions):

            a)    All significant deficiencies and material weaknesses in the
                  design or operation of internal control over financial
                  reporting which are reasonably likely to adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial information; and

            b)    Any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal control over financial reporting.

Date: August 6, 2004                                  /s/ Gail A. Sloan
                                                      -------------------------
                                                      Gail A. Sloan
                                                      Vice President of Finance,
                                                      Controller and Secretary

EX-32.1

                                                                    EXHIBIT 32.1

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Each of the undersigned, in his or her capacity as an officer of La Jolla
Pharmaceutical Company (the "Registrant"), hereby certifies, for purposes of 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:

      -     the Quarterly Report of the Registrant on Form 10-Q for the quarter
            ended June 30, 2004 (the "Report"), which accompanies this
            certification, fully complies with the requirements of Section 13(a)
            or 15(d) of the Securities Exchange Act of 1934; and

      -     the information contained in the Report fairly presents, in all
            material respects, the financial condition of the Registrant at the
            end of such quarter and the results of operations of the Registrant
            of such quarter.

Dated:  August 6, 2004

                                           /s/ Steven B. Engle
                                           -------------------------------------
                                           Steven B. Engle
                                           Chairman and Chief Executive Officer

                                           /s/ Gail A. Sloan
                                           -------------------------------------
                                           Gail A. Sloan
                                           Vice President of Finance, Controller
                                           and Secretary

Note: A signed original of this written statement required by Section 906 has
      been provided to La Jolla Pharmaceutical Company and will be retained by
      La Jolla Pharmaceutical Company and furnished to the Securities and
      Exchange Commission or its staff upon request.