WILLIAM SCHMIDT EMPLOYMENT COMMENCEMENT NONSTATUTORY STOCK OPTION

Exhibit 10.1

RENOVIS, INC.

EMPLOYMENT COMMENCEMENT NONSTATUTORY

STOCK OPTION GRANT NOTICE AND STOCK OPTION AGREEMENT

Renovis, Inc. (the “ Company ”) hereby grants to the Optionee listed below an Option (the “ Option ”) to purchase the number of shares of the Company’s Stock set forth below. This Option is subject to all of the terms and conditions as set forth herein and in the Employment Commencement Nonstatutory Stock Option Agreement (the “ Agreement ”)which is attached hereto and incorporated herein by reference. Capitalized terms used herein without definition shall have the meanings given in the Agreement.

Type of Option:    Nonstatutory Stock Option

Vesting Schedule: So long as Optionee remains an Employee or service provider to the Company, the Shares subject to the Option shall vest and become exercisable according to the Schedule attached hereto as Exhibit A and the entire Option shall be vested in four (4) years.

Notwithstanding the foregoing, if Optionee’s employment as an Employee or service provider by the Company is terminated by the Company without Cause (as defined in that certain Employment Agreement between Optionee and the Company, dated July 7, 2004 (the “ Employment Agreement ”)) or if there is a Constructive Termination (as defined in the Employment Agreement) in each case at any time within thirteen (13) months following the occurrence of a Change in Control (as defined in the Employment Agreement), and if Optionee provides the Company with a signed general release of all claims as provided in the form attached as Exhibit A to the Employment Agreement, 100% of the Shares subject to the Option shall immediately become vested; provided, however , that if Optionee is terminated by the Company following the effective date of a Change in Control described in Section 12(d)(2) of the Employment Agreement but accepts employment with the Company’s successor or acquirer within thirty (30) days after the effective date of the Change in Control on terms and conditions not less favorable to Optionee than those contained in the Employment Agreement, the Shares subject to the Option shall not vest 100% as described in the 1 ^st clause of this paragraph; provided further, however , that if Optionee’s employment is thereafter terminated by the successor or acquiror without Cause or if there is a Constructive Termination, at any time within thirteen (13) months following the occurrence of the Change in Control, the Shares subject to the Option shall vest 100% as described in the 1 ^st clause of this paragraph.

GRANT NOTICE PAGE 1

By his signature and the Company’s signature below, Optionee agrees to be bound by the terms and conditions of the Agreement attached hereto. Optionee has reviewed the Agreement in its entirety, has had an opportunity to obtain the advice of counsel prior to executing the Option and fully understands all provisions of the Grant Notice and the Agreement. Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions arising under the Option. Optionee further agrees to notify the Company upon any change in the residence address indicated below.

GRANT NOTICE PAGE 2

RENOVIS, INC.

EMPLOYMENT COMMENCEMENT

NONSTATUTORY STOCK OPTION AGREEMENT

THIS EMPLOYMENT COMMENCEMENT NONSTATUTORY STOCK OPTION AGREEMENT (the “ Agreement ”), effective as of the Effective Date, is made by and between Renovis, Inc., a Delaware corporation (the “ Company ”), and William K. Schmidt, an employee of the Company (the “ Optionee ”).

WHEREAS, the Board of Directors of the Company has determined that it would be to the advantage and best interest of the Company and its stockholders to grant the nonstatutory stock option provided for herein (the “ Option ”) to Optionee in connection with his initial commencement of employment with the Company and that such grant is an essential inducement to Optionee’s commencing employment with the Company as the Company’s Vice President of Clinical Research.

NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto do hereby agree as follows:

1. Definitions.

(a) “ Board ” means the Board of Directors of the Company.

(b) “ Change of Control ” means and includes each of the following:

(1) the acquisition, directly or indirectly, by any “person” or “group” (as those terms are defined in Sections 3(a)(9), 13(d) and 14(d) of the Exchange Act and the rules thereunder) of “beneficial ownership” (as determined pursuant to Rule 13d-3 under the Exchange Act) of securities entitled to vote generally in the election of directors (“ voting securities ”) of the Company that represent 50% or more of the combined voting power of the Company’s then outstanding voting securities, other than

(A) an acquisition by a trustee or other fiduciary holding securities under any employee benefit plan (or related trust) sponsored or maintained by the Company or any person controlled by the Company or by any employee benefit plan (or related trust) sponsored or maintained by the Company or any person controlled by the Company, or

(B) an acquisition of voting securities by the Company or a corporation owned, directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of the stock of the Company, or

(C) an acquisition of voting securities pursuant to a transaction described in clause (3) below that would not be a Change of Control under clause (3);

Notwithstanding the foregoing, neither of the following events shall constitute an “acquisition” by any person or group for purposes of this subsection (e): an acquisition of the Company’s securities by the Company which causes the Company’s voting securities beneficially owned by a person or group to represent 50% or more of the combined voting power of the Company’s then outstanding voting securities; provided, however, that if a person or group shall become the beneficial owner of 50% or more of the combined voting power of the Company’s then outstanding voting securities by reason of share acquisitions by the Company as described above and shall, after such share acquisitions by the Company, become the beneficial owner of any additional voting securities of the Company, then such acquisition shall constitute a Change of Control; or

(2) during any period of two consecutive years, individuals who, at the beginning of such period, constitute the Board together with any new director(s) (other than a director designated by a person who shall have entered into an agreement with the Company to effect a transaction described in clauses (1) or (3) of this subsection (e)) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the two year period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or

(3) the consummation by the Company (whether directly involving the Company or indirectly involving the Company through one or more intermediaries) of (x) a merger, consolidation, reorganization, or business combination or (y) a sale or other disposition of all or substantially all of the Company’s assets or (z) the acquisition of assets or stock of another entity, in each case other than a transaction

(A) which results in the Company’s voting securities outstanding immediately before the transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of the Company or the person that, as a result of the transaction, controls, directly or indirectly, the Company or owns, directly or indirectly, all or substantially all of the Company’s assets or otherwise succeeds to the business of the Company (the Company or such person, the “ Successor Entity ”)) directly or indirectly, at least a majority of the combined voting power of the Successor Entity’s outstanding voting securities immediately after the transaction, and

(B) after which no person or group beneficially owns voting securities representing 50% or more of the combined voting power of the Successor Entity; provided, however, that no person or group shall be treated for purposes of this clause (B) as beneficially owning 50% or more of combined voting power of the Successor Entity solely as a result of the voting power held in the Company prior to the consummation of the transaction; or

(4) the Company’s stockholders approve a liquidation or dissolution of the Company.

The Committee shall have full and final authority, which shall be exercised in its discretion, to determine conclusively whether a Change of Control of the Company has occurred pursuant to the above definition, and the date of the occurrence of such Change of Control and any incidental matters relating thereto.

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(c) “ Code ” means the Internal Revenue Code of 1986, as amended.

(d) “ Committee ” means the committee designated by the Board as being responsible for conducting the general administration of the Option.

(e) “ Disability ” means, for purposes of this Agreement, that Optionee qualifies to receive long-term disability payments under the Company’s long-term disability insurance program, as it may be amended from time to time.

(f) “ Employee ” means any officer or other employee (as defined in accordance with Section 3401(c) of the Code) of the Company or any Subsidiary.

(g) “ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

(h) “ Fair Market Value ” shall mean, as of any date, the value of Stock determined as follows:

(1) If the Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for the last market trading day prior to the date of determination, as reported in The Wall Street Journal or such other source as the Committee deems reliable;

(2) If the Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the mean of the closing bid and asked prices for the Stock on the date prior to the date of determination as reported in The Wall Street Journal or such other source as the Committee deems reliable; or

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

(i) “ Non-Qualified Stock Option ” means an option that is not intended to meet the requirements of an incentive stock option under Section 422 of the Code or any successor provision thereto.

(j) “ Stock ” means the common stock of the Company and such other securities of the Company that may be substituted for Stock pursuant to Section 7.

(k) “ Subsidiary ” means any corporation or other entity of which a majority of the outstanding voting stock or voting power is beneficially owned directly or indirectly by the Company.

2. Grant of Option . In consideration of the Optionee’s agreement to remain in the employ of the Company or its Subsidiaries and for other good and valuable consideration, effective as of the Grant Date set forth in the Grant Notice (the “ Grant Date ”), the Company irrevocably grants to the Optionee the Option to purchase any part or all of an aggregate of the number of shares of Stock set forth in the Grant Notice, upon the terms and conditions set forth in this Agreement.

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3. Purchase Price . The purchase price of the shares of Stock subject to the Option per share shall be as set forth in the Grant Notice, without commission or other charge; provided , however , that such exercise price shall not be less than the par value of a share of Stock, unless otherwise permitted by applicable law.

4. Consideration to the Company . In consideration of the granting of the Option by the Company, the Optionee agrees to render faithful and efficient services to the Company or any Subsidiary, with such duties and responsibilities as the Company shall from time to time prescribe. Nothing in this Agreement shall confer upon the Optionee any right to (a) continue in the employ of the Company or any Subsidiary or shall interfere with or restrict in any way the rights of the Company and its Subsidiaries, which are hereby expressly reserved, to discharge the Optionee, if the Optionee is an Employee, or (b) continue to provide services to the Company or any Subsidiary or shall interfere with or restrict in any way the rights of the Company or its Subsidiaries, which are hereby expressly reserved, to terminate the services of Optionee, if the Optionee is a Consultant, at any time for any reason whatsoever, with or without cause, except to the extent expressly provided otherwise in a written agreement between the Company and the Optionee.

5. Period of Exercisability .

(a) Commencement of Exercisability .

(1) Subject to Sections 5(c), 7(a) and 8(i), the Option shall become exercisable in such amount and at such time as set forth in the Grant Notice.

(2) No portion of the Option which has not become exercisable at Termination of Service (as defined in Section 5(d) below) shall thereafter become exercisable, except as may be otherwise provided by the Committee or as set forth in a written agreement between the Company and the Optionee.

(b) Duration of Exercisability . The installments provided for in Section 5(a) are cumulative. Each such installment which becomes exercisable pursuant to Section 5(a) shall remain exercisable until it becomes unexercisable under Section 5(c).

(c) Expiration of Option . The Option may not be exercised to any extent by anyone after the first to occur of the following events:

(1) The expiration of ten years from the Grant Date (or five years from the Grant Date if the Optionee is not an Employee); or

(2) The expiration of three months following the date of the Optionee’s Termination of Service, unless such Termination of Service occurs by reason of the Optionee’s death or Disability or as set forth in a written agreement with the Company; or

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(3) The expiration of twelve months following the date of the Optionee’s Termination of Service by reason of the Optionee’s Disability; or

(4) The expiration of eighteen months following the date of the Optionee’s Termination of Service by reason of the Optionee’s death.

(d) For purposes of this Agreement, “ Termination of Service ” means the time when the service relationship (whether as an Employee or a consultant) between the Optionee and the Company or any Subsidiary is terminated for any reason, with or without cause, including, but not by way of limitation, a termination by resignation, discharge, death or Disability; but excluding (a) a termination where there is a simultaneous reemployment or continuing employment or consultancy of the Optionee by the Company or any Subsidiary or a parent corporation thereof (within the meaning of Section 422 of the Code), (b) at the discretion of the Committee, a termination which results in a temporary severance of the employee-employer relationship, and (c) at the discretion of the Committee, a termination which is followed by the simultaneous establishment of a consulting relationship by the Company or a Subsidiary with the former Employee. The Committee, in its absolute discretion, shall determine the effect of all matters and questions relating to Termination of Service for the purposes of this Agreement, and all questions of whether particular leaves of absence for the Optionee who is an Employee of the Company or any of its Subsidiaries constitute Terminations of Service. Notwithstanding any other provision of this Agreement, the Company or any Subsidiary has an absolute and unrestricted right to terminate the Optionee’s employment and/or consultancy at any time for any reason whatsoever, with or without cause, except to the extent expressly provided otherwise in a written agreement between the Company and the Optionee.

6. Exercise of Option .

(a) Person Eligible to Exercise . Except as provided in Sections 8(b)(1) and 8(b)(2), during the lifetime of the Optionee, only the Optionee may exercise the Option or any portion thereof. After the death of the Optionee, any exercisable portion of the Option may, prior to the time when the Option becomes unexercisable under Section 5(c), be exercised by the Optionee’s beneficiary designated in accordance with Section 8(b)(2). If no beneficiary has been designated or survives the Optionee, the Option may be exercised by the person entitled to such exercise pursuant to the Optionee’s will or the laws of descent and distribution.

(b) Partial Exercise; Whole Shares . Any exercisable por