Exhibit 10.4


METABASIS THERAPEUTICS, INC.


2004 EMPLOYEE STOCK PURCHASE PLAN


Adopted
by Board on May 6, 2004


Approved
by Stockholders on May 10, 2004


Amendment
Adopted by Board on January 17, 2007


1.             PURPOSE.


(a)           The purpose of the
Plan is to provide a means by which Employees of the Company and certain
designated Related Corporations may be given an opportunity to purchase shares
of the Common Stock of the Company.


(b)           The Company, by
means of the Plan, seeks to retain the services of such Employees, to secure
and retain the services of new Employees and to provide incentives for such
persons to exert maximum efforts for the success of the Company and its Related
Corporations.


(c)           The Company intends
that the Purchase Rights be considered options issued under an Employee Stock
Purchase Plan.


2.             DEFINITIONS.


As used in the
Plan and any Offering, unless otherwise specified, the following terms have the
meanings set forth below:


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


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


(c)           “Committee”  means a committee appointed by the Board in accordance with
Section 3(c) of the Plan.


(d)           “Common Stock”
means the common stock of the Company.


(e)           “Company”
means Metabasis Therapeutics, Inc., a Delaware 
corporation.


(f)            “Contributions”
means the payroll deductions and other additional payments that a Participant
contributes to fund the exercise of a Purchase Right. A Participant may make
payments not through payroll deductions only if specifically provided for in
the Offering, and then only if the Participant has not already had the maximum
permitted amount withheld through payroll deductions during the Offering.


(g)           “Corporate Transaction”
means the occurrence, in a single transaction or in a series of related
transactions, of any one or more of the following events:



 1
 









(i)            a sale, lease,
license or other disposition of all or substantially all of the consolidated
assets of the Company;


(ii)           a sale or other
disposition of at least 90% of the outstanding securities of the Company;


(iii)         a merger,
consolidation or similar transaction following which the Company is not the
surviving corporation; or


(iv)          a merger,
consolidation or similar transaction following which the Company is the
surviving corporation but the shares of Common Stock outstanding immediately
preceding the merger, consolidation or similar transaction are converted or
exchanged by virtue of the merger, consolidation or similar transaction into
other property, whether in the form of securities, cash or otherwise.


(h)           “Director”  means a member of the Board.


(i)            “Eligible Employee”  means an Employee who meets the requirements set forth in
the Offering for eligibility to participate in the Offering, provided that such
Employee also meets the requirements for eligibility to participate set forth
in the Plan.


(j)            “Employee”  means any person, including Officers and Directors, who is
employed for purposes of Section 423(b)(4) of the Code by the Company or a
Related Corporation.  Neither service as
a Director nor payment of a director’s fee shall be sufficient to make an
individual an Employee of the Company or a Related Corporation.


(k)           “Employee Stock Purchase
Plan”  means a plan
that grants Purchase Rights intended to be options issued under an “employee
stock purchase plan,” as that term is defined in Section 423(b) of the Code.


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


(m)          “Fair Market Value”  means, as of any date, the value of a security determined
as follows:


(i)            If the security is
listed on any established stock exchange, the Fair Market Value of the security
shall be the closing sales price for such security (or the closing bid, if no
sales were reported, and in each case rounded up where necessary to the nearest
whole cent) as quoted on such exchange (or the exchange with the greatest
volume of trading in the relevant security of the Company) on the day of
determination, as reported in The Wall
Street Journal or such other source as the Board deems
reliable.  Unless otherwise provided by
the Board, if there is no closing sales price (or closing bid, if no sales were
reported) for the relevant security on the day of determination, then the Fair
Market Value shall be the closing sales price (or the closing bid, if no sales
were reported, and in each case rounded up where necessary to the nearest whole
cent) on the last preceding date for which such quotation exists.


(ii)           In the absence of
such market for a security, the Fair Market Value shall be determined in good
faith by the Board.



 2
 









(n)           “Offering”  means the grant of Purchase Rights to purchase shares of
Common Stock under the Plan to Eligible Employees.


(o)           “Offering Date”
means a date selected by the Board for an Offering to commence.


(p)           “Officer” means  a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.


(q)           “Participant”  means an Eligible Employee who holds an outstanding
Purchase Right granted pursuant to the Plan.


(r)           “Plan”  means this Metabasis Therapeutics, Inc. 2004 Employee Stock
Purchase Plan.


(s)           “Purchase Date”  means one or more dates during an Offering established by
the Board on which Purchase Rights shall be exercised and as of which purchases
of shares of Common Stock shall be carried out in accordance with such
Offering.


(t)            “Purchase Period”
means a period of time specified within an Offering beginning on the Offering
Date or on the next day following a Purchase Date within an Offering and ending
on a Purchase Date.  An Offering may
consist of one or more Purchase Periods.


(u)           “Purchase Right”  means an option to purchase shares of Common Stock granted
pursuant to the Plan.


(v)            “Related Corporation”  means any parent corporation or subsidiary corporation,
whether now or hereafter existing, as those terms are defined in Sections
424(e) and (f), respectively, of the Code.


(w)           “Securities Act”  means the Securities Act of 1933, as amended.


(x)           “Trading Day” means
any day on which the exchange on which shares of Common Stock are listed is
open for trading.


3.             ADMINISTRATION.


(a)           The Board shall
administer the Plan unless and until the Board delegates administration to a
Committee, as provided in Section 3(c). 
Whether or not the Board has delegated administration, the Board shall
have the final power to determine all questions of policy and expediency that
may arise in the administration of the Plan.


(b)           The Board (or the
Committee) shall have the power, subject to, and within the limitations of, the
express provisions of the Plan:


(i)            To determine when
and how Purchase Rights to purchase shares of Common Stock shall be granted and
the provisions of each Offering of such Purchase Rights (which need not be
identical).



 3
 









(ii)           To designate from
time to time which Related Corporations of the Company shall be eligible to
participate in the Plan.


(iii)         To construe and
interpret the Plan and Purchase Rights, and to establish, amend and revoke
rules and regulations for the administration of the Plan.  The Board, in the exercise of this power, may
correct any defect, omission or inconsistency in the Plan, in a manner and to
the extent it shall deem necessary or expedient to make the Plan fully
effective.


(iv)          To amend the Plan as
provided in Section 15.


(v)            Generally, to
exercise such powers and to perform such acts as it deems necessary or
expedient to promote the best interests of the Company and its Related
Corporations and to carry out the intent that the Plan be treated as an
Employee Stock Purchase Plan.


(c)           The Board may
delegate administration of the Plan to a Committee of the Board composed of one
or more members of the Board.  If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board.  The Board may abolish the Committee at any
time and revest in the Board the administration of the Plan.  If administration is delegated to a
Committee, references to the Board in this Plan and in the Offering document
shall thereafter be deemed to be to the Board or the Committee, as the case may
be.


(d)           All determinations,
interpretations and constructions made by the Board in good faith shall not be
subject to review by any person and shall be final, binding and conclusive on
all persons.


4.             SHARES OF COMMON
STOCK SUBJECT TO THE PLAN.


Subject to the provisions
of paragraph 14 relating to adjustments upon changes in stock, the stock that
may be sold pursuant to Purchase Rights granted under the Plan shall not exceed
in the aggregate 500,000 shares of the Common Stock, plus an annual increase to
be added on the first day of the fiscal year of the Company for a period
commencing on the first day of the fiscal year that begins on January 1, 2005
and ending on (and including) the first day of the fiscal year that begins on
January 1, 2014 (each such day, a “Calculation Date”), equal to the lesser of
(i) 1% of the fully diluted (i.e. assuming exercise for or conversion into
Common Stock of all then outstanding options, warrants and convertible
securities of the Company) shares of Common Stock outstanding on each such
Calculation Date (rounded down to the nearest whole share); or (ii) 500,000
shares of Common Stock.  Notwithstanding
the foregoing, the Board may act, prior to the first day of any fiscal year of
the Company, to increase the share reserve by such number of shares of Common
Stock as the Board shall determine, which number shall be less than each of (i)
and (ii).  If any Purchase Right granted
under the Plan shall for any reason terminate without having been exercised,
the shares of Common Stock not purchased under such Purchase Right shall again
become available for issuance under the Plan.



 4
 









5.             GRANT OF PURCHASE
RIGHTS; OFFERING.


(a)           The Board may from
time to time grant or provide for the grant of Purchase Rights to purchase
shares of Common Stock under the Plan to Eligible Employees in an Offering
(consisting of one or more Purchase Periods) on an Offering Date or Offering
Dates selected by the Board.  Each
Offering shall be in such form and shall contain such terms and conditions as
the Board shall deem appropriate, which shall comply with the requirement of
Section 423(b)(5) of the Code that all Employees granted Purchase Rights shall
have the same rights and privileges.  The
terms and conditions of an Offering shall be incorporated by reference into the
Plan and treated as part of the Plan. 
The provisions of separate Offerings need not be identical, but each
Offering shall include (through incorporation of the provisions of this Plan by
reference in the document comprising the Offering or otherwise) the period
during which the Offering shall be effective, which period shall not exceed 27
months beginning with the Offering Date, and the substance of the provisions
contained in Sections 6 through 9, inclusive.


(b)           If a Participant
has more than one Purchase Right outstanding under the Plan, unless he or she
otherwise indicates in agreements or notices delivered hereunder:  (i) each agreement or notice delivered by
that Participant shall be deemed to apply to all of his or her Purchase Rights
under the Plan, and (ii) a Purchase Right with a lower exercise price (or an
earlier-granted Purchase Right, if different Purchase Rights have identical
exercise prices) shall be exercised to the fullest possible extent before a
Purchase Right with a higher exercise price (or a later-granted Purchase Right
if different Purchase Rights have identical exercise prices) shall be
exercised.


6.             ELIGIBILITY.


(a)           Purchase Rights may
be granted only to Employees of the Company or, as the Board may designate as
provided in Section 3(b), to Employees of a Related Corporation.  Except as provided in Section 6(b), an
Employee shall not be eligible to be granted Purchase Rights under the Plan
unless, on the Offering Date, such Employee has been in the employ of the
Company or the Related Corporation, as the case may be, for such continuous
period preceding such Offering Date as the Board may require, but in no event
shall the required period of continuous employment be greater than two
years.  In addition, the Board may
provide that no Employee shall be eligible to be granted Purchase Rights under
the Plan unless, on the Offering Date, such Employee’s customary employment
with the Company or the Related Corporation is more than 20 hours per week
and/or more than five months per calendar year.


(b)           The Board may
provide that each person who, during the course of an Offering, first becomes
an Eligible Employee shall, on a date or dates specified in the Offering which
coincides with the day on which such person becomes an Eligible Employee or
which occurs thereafter, receive a Purchase Right under that Offering, which
Purchase Right shall thereafter be deemed to be a part of that Offering.  Such Purchase Right shall have the same
characteristics as any Purchase Rights originally granted under that Offering,
as described herein, except that:


(i)            the date on which
such Purchase Right is granted shall be the “Offering Date” of such Purchase
Right for all purposes, including determination of the exercise price of such
Purchase Right;



 5
 









(ii)           the period of the
Offering with respect to such Purchase Right shall begin on its Offering Date
and end coincident with the end of such Offering; and


(iii)         the Board may provide
that if such person first becomes an Eligible Employee within a specified
period of time before the end of the Offering, he or she shall not receive any
Purchase Right under that Offering.


(c)           No Employee shall
be eligible for the grant of any Purchase Rights under the Plan if, immediately
after any such Purchase Rights are granted, such Employee owns stock possessing
5% or more of the total combined voting power or value of all classes of stock
of the Company or of any Related Corporation. 
For purposes of this Section 6(c), the rules of Section 424(d) of the
Code shall apply in determining the stock ownership of any Employee, and stock
which such Employee may purchase under all outstanding Purchase Rights and
options shall be treated as stock owned by such Employee.


(d)           As specified by
Section 423(b)(8) of the Code, an Eligible Employee may be granted Purchase
Rights under the Plan only if such Purchase Rights, together with any other
rights granted under all Employee Stock Purchase Plans of the Company and any
Related Corporations, do not permit such Eligible Employee’s rights to purchase
stock of the Company or any Related Corporation to accrue at a rate which
exceeds $25,000 of Fair Market Value of such stock (determined at the time such
rights are granted, and which, with respect to the Plan, shall be determined as
of their respective Offering Dates) for each calendar year in which such rights
are outstanding at any time.


(e)           Officers of the
Company and any designated Related Corporation, if they are otherwise Eligible
Employees, shall be eligible to participate in Offerings under the Plan.  Notwithstanding the foregoing, the Board may
provide in an Offering that Employees who are highly compensated Employees
within the meaning of Section 423(b)(4)(D) of the Code shall not be eligible to
participate.


7.             PURCHASE RIGHTS;
PURCHASE PRICE.


(a)           On each Offering
Date, each Eligible Employee, pursuant to an Offering made under the Plan,
shall be granted a Purchase Right to purchase up to that number of shares of
Common Stock purchasable either with a percentage or with a maximum dollar
amount, as designated by the Board, but in either case not exceeding 15%, of such Employee’s Earnings (as
defined by the Board in each Offering) during the period that begins on the
Offering Date (or such later date as the Board determines for a particular
Offering) and ends on the date stated in the Offering, which date shall be no
later than the end of the Offering.


(b)           The Board shall
establish one or more Purchase Dates during an Offering as of which Purchase
Rights granted pursuant to that Offering shall be exercised and purchases of
shares of Common Stock shall be carried out in accordance with such Offering.


(c)           In connection with
each Offering made under the Plan, the Board may specify a maximum number of
shares of Common Stock that may be purchased by any Participant on any Purchase
Date during such Offering.  In connection
with each Offering made under the Plan, the Board may specify a maximum
aggregate number of shares of Common Stock that may be 



 6
 









purchased by all Participants pursuant to such
Offering.  In addition, in connection
with each Offering that contains more than one Purchase Date, the Board may
specify a maximum aggregate number of shares of Common Stock that may be
purchased by all Participants on any Purchase Date under the Offering.  If the aggregate purchase of shares of Common
Stock issuable upon exercise of Purchase Rights granted under the Offering
would exceed any such maximum aggregate number, then, in the absence of any
Board action otherwise, a pro rata allocation of the shares of Common Stock
available shall be made in as nearly a uniform manner as shall be practicable
and equitable.


(d)           The purchase price
of shares of Common Stock acquired pursuant to Purchase Rights shall be not
less than the lesser of:


(i)            an amount equal to
85% of the Fair Market Value of the shares of Common Stock on the Offering
Date; or


(ii)           an amount equal to
85% of the Fair Market Value of the shares of Common Stock on the applicable
Purchase Date.


8.             PARTICIPATION;
WITHDRAWAL; TERMINATION.


(a)           A Participant may
elect to authorize payroll deductions pursuant to an Offering under the Plan by
completing and delivering to the Company, within the time specified in the
Offering, an enrollment form (in such form as the Company may provide). Each
such enrollment form shall authorize an amount of Contributions expressed as a
percentage of the submitting Participant’s Earnings (as defined in each
Offering) during the Offering (not to exceed the maximum percentage specified
by the Board). Each Participant’s Contributions shall remain the property of
the Participant at all times prior to the purchase of Common Stock, but such
Contributions may be commingled with the assets of the Company and used for
general corporate purposes except where applicable law requires that
Contributions be deposited with an independent third party. To the extent
provided in the Offering, a Participant may begin making Contributions after
the beginning of the Offering.  To the
extent provided in the Offering, a Participant may thereafter reduce (including
to zero) or increase his or her Contributions. 
To the extent specifically provided in the Offering, in addition to
making Contributions by payroll deductions, a Participant may make
Contributions through the payment by cash or check prior to each Purchase Date
of the Offering.


(b)           During an Offering,
a Participant may cease making Contributions and withdraw from the Offering by
delivering to the Company a notice of withdrawal in such form as the Company
may provide.  Such withdrawal may be
elected at any time prior to the end of the Offering, except as provided
otherwise in the Offering.  Upon such
withdrawal from the Offering by a Participant, the Company shall distribute to
such Participant all of his or her accumulated Contributions (reduced to the
extent, if any, such Contributions have been used to acquire shares of Common
Stock for the Participant) under the Offering, and such Participant’s Purchase
Right in that Offering shall thereupon terminate.  A Participant’s withdrawal from an Offering
shall have no effect upon such Participant’s eligibility to participate in any
other Offerings under the Plan, but such Participant shall be required to
deliver a new enrollment form in order to participate in subsequent Offerings.



 7
 









(c)           Purchase Rights
granted pursuant to any Offering under the Plan shall terminate immediately
upon a Participant ceasing to be an Employee for any reason or for no reason
(subject to any post-employment participation period required by law) or other
lack of eligibility. The Company shall distribute to such terminated or otherwise
ineligible Employee all of his or her accumulated Contributions (reduced to the
extent, if any, such Contributions have been used to acquire shares of Common
Stock for the terminated or otherwise ineligible Employee) under the Offering.


(d)           Purchase Rights
shall not be transferable by a Participant otherwise than by will, the laws of
descent and distribution, or a beneficiary designation as provided in Section
13.  During a Participant’s lifetime,
Purchase Rights shall be exercisable only by such Participant.


(e)           Unless otherwise
specified in an Offering, the Company shall have no obligation to pay interest
on Contributions.


9.             EXERCISE.


(a)           On each Purchase
Date during an Offering, each Participant’s accumulated Contributions shall be
applied to the purchase of shares of Common Stock up to the maximum number of
shares of Common Stock permitted pursuant to the terms of the Plan and the
applicable Offering, at the purchase price specified in the Offering.  No fractional shares shall be issued upon the
exercise of Purchase Rights unless specifically provided for in the Offering.


(b)           If any amount of
accumulated Contributions remains in a Participant’s account after the purchase
of shares of Common Stock and such remaining amount is less than the amount
required to purchase one share of Common Stock on the final Purchase Date of an
Offering, then such remaining amount shall be held in such Participant’s
account for the purchase of shares of Common Stock under the next Offering
under the Plan, unless such Participant withdraws from such next Offering, as
provided in Section 8(b), or is not eligible to participate in such Offering,
as provided in Section 6, in which case such amount shall be distributed to
such Participant after the final Purchase Date, without interest.  If the amount of Contributions remaining in a
Participant’s account after the purchase of shares of Common Stock is at least
equal to the amount required to purchase one whole share of Common Stock on the
final Purchase Date of the Offering, then such remaining amount shall be
distributed in full to such Participant at the end of the Offering.


(c)           No Purchase Rights
may be exercised to any extent unless the shares of Common Stock to be issued
upon such exercise under the Plan are covered by an effective registration
statement pursuant to the Securities Act and the Plan is in material compliance
with all laws applicable to the Plan.  If
on a Purchase Date during any Offering hereunder the shares of Common Stock are
not so registered or the Plan is not in such compliance, no Purchase Rights or
any Offering shall be exercised on such Purchase Date, and the Purchase Date
shall be delayed until the shares of Common Stock are subject to such an
effective registration statement and the Plan is in such compliance, except
that the Purchase Date shall not be delayed more than 12 months and the
Purchase Date shall in no event be more than 27 months from the Offering
Date.  If, on the Purchase Date under any
Offering hereunder, as delayed to the maximum extent permissible, the shares of
Common Stock are not registered and the Plan is not in such 



 8
 









compliance, no Purchase Rights or any Offering shall
be exercised and all Contributions accumulated during the Offering (reduced to
the extent, if any, such Contributions have been used to acquire shares of
Common Stock) shall be distributed to the Participants.


10.          COVENANTS OF THE
COMPANY.


The Company shall seek to obtain from each federal,
state, foreign or other regulatory commission or agency having jurisdiction over
the Plan such authority as may be required to issue and sell shares of Common
Stock upon exercise of the Purchase Rights. 
If, after commercially reasonable efforts, the Company is unable to
obtain from any such regulatory commission or agency the authority that counsel
for the Company deems necessary for the lawful issuance and sale of shares of
Common Stock under the Plan, the Company shall be relieved from any liability
for failure to issue and sell shares of Common Stock upon exercise of such
Purchase Rights unless and until such authority is obtained.


11.          USE OF PROCEEDS FROM
SHARES OF COMMON STOCK.


Proceeds from the sale of shares of Common Stock
pursuant to Purchase Rights shall constitute general funds of the Company.


12.          RIGHTS AS A
STOCKHOLDER.


A Participant shall not be deemed to be the holder of,
or to have any of the rights of a holder with respect to, shares of Common
Stock subject to Purchase Rights unless and until the Participant’s shares of
Common Stock acquired upon exercise of Purchase Rights are recorded in the
books of the Company (or its transfer agent).


13.          DESIGNATION OF
BENEFICIARY.


(a)           A Participant may
file a written designation of a beneficiary who is to receive any shares of
Common Stock and/or cash, if any, from the Participant’s account under the Plan
in the event of such Participant’s death subsequent to the end of an Offering
but prior to delivery to the Participant of such shares of Common Stock or
cash.  In addition, a Participant may
file a written designation of a beneficiary who is to receive any cash from the
Participant’s account under the Plan in the event of such Participant’s death
during an Offering.  Any such designation
shall be on a form provided by or otherwise acceptable to the Company.


(b)           The Participant may
change such designation of beneficiary at any time by written notice to the
Company.  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 of Common Stock 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 sole discretion, may deliver such shares of Common Stock 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.



 9
 









14.          ADJUSTMENTS UPON
CHANGES IN SECURITIES; CORPORATE TRANSACTIONS.


(a)           If any change is
made in the shares of Common Stock, subject to the Plan, or subject to any
Purchase Right, without the receipt of consideration by the Company (through
merger, consolidation, reorganization, recapitalization, reincorporation, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or other transaction not involving the receipt of consideration by
the Company), the Plan shall be appropriately adjusted in the type(s),
class(es) and maximum number of shares of Common Stock subject to the Plan
pursuant to Section 4(a), and the outstanding Purchase Rights shall be appropriately
adjusted in the type(s), class(es), number of shares and purchase limits of
such outstanding Purchase Rights.  The
Board shall make such adjustments, and its determination shall be final,
binding and conclusive.  (The conversion
of any convertible securities of the Company shall not be treated as a “transaction
not involving the receipt of consideration by the Company.”)


(b)           In the event of a
Corporate Transaction, then: (i) any surviving or acquiring corporation may
continue or assume Purchase Rights outstanding under the Plan or may substitute
similar rights (including a right to acquire the same consideration paid to
stockholders in the Corporate Transaction) for those outstanding under the
Plan, or (ii) if any surviving or acquiring corporation does not continue or
assume such Purchase Rights or does not substitute similar rights for Purchase
Rights outstanding under the Plan, then, the Participants’ accumulated
Contributions shall be used to purchase shares of Common Stock within ten
business days prior to the Corporate Transaction under the ongoing Offering,
and the Participants’ Purchase Rights under the ongoing Offering shall
terminate immediately after such purchase.


15.          AMENDMENT OF THE
PLAN.


(a)           The Board at any
time, and from time to time, may amend the Plan.  However, except as provided in Section 14
relating to adjustments upon changes in securities and except as to amendments
solely to benefit the administration of the Plan, to take account of a change
in legislation or to obtain or maintain favorable tax, exchange control or
regulatory treatment for Participants or the Company or any Related
Corporation, no amendment shall be effective unless approved by the
stockholders of the Company to the extent stockholder approval is necessary for
the Plan to satisfy the requirements of Section 423 of the Code or other
applicable laws or regulations.


(b)           It is expressly
contemplated that the Board may amend the Plan in any respect the Board deems
necessary or advisable to provide Employees with the maximum benefits provided
or to be provided under the provisions of the Code and the regulations
promulgated thereunder relating to Employee Stock Purchase Plans or to bring
the Plan and/or Purchase Rights into compliance therewith.


(c)           The rights and obligations
under any Purchase Rights granted before amendment of the Plan shall not be
impaired by any amendment of the Plan except: (i) with the consent of the
person to whom such Purchase Rights were granted, or (ii) as necessary to
comply with any laws or governmental regulations (including, without
limitation, the provisions of the Code and the regulations promulgated
thereunder relating to Employee Stock Purchase Plans).



 10
 









16.          TERMINATION OR
SUSPENSION OF THE PLAN.


(a)           The Board in its
discretion may suspend or terminate the Plan at any time.  Unless sooner terminated, the Plan shall
terminate at the time that all of the shares of Common Stock reserved for
issuance under the Plan, as increased and/or adjusted from time to time, have
been issued under the terms of the Plan. 
No Purchase Rights may be granted under the Plan while the Plan is
suspended or after it is terminated.


(b)           Any benefits,
privileges, entitlements and obligations under any Purchase Rights while the
Plan is in effect shall not be impaired by suspension or termination of the
Plan except (i) as expressly provided in the Plan or with the consent of the
person to whom such Purchase Rights were granted, (ii) as necessary to comply
with any laws,  regulations, or listing
requirements, or (iii) as necessary to ensure that the Plan and/or Purchase
Rights comply with the requirements of Section 423 of the Code.


17.          EFFECTIVE DATE OF
PLAN.


The Plan shall become effective as determined by the
Board, but no Purchase Rights shall be exercised unless and until the Plan has
been approved by the stockholders of the Company within 12 months before or
after the date the Plan is adopted by the Board.


18.          MISCELLANEOUS PROVISIONS.


(a)           The Plan and
Offering do not constitute an employment contract.  Nothing in the Plan or in the Offering shall
in any way alter the at will nature of a Participant’s employment or  be deemed to create in any way whatsoever any
obligation on the part of any Participant to continue in the employ of the
Company or a Related Corporation, or on the part of the Company or a Related
Corporation to continue the employment of a Participant.


(b)           The provisions of
the Plan shall be governed by the laws of the State of California without
resort to that state’s conflicts of laws rules.


 



 11















 


METABASIS THERAPEUTICS, INC.


AMENDED AND RESTATED


2004 EMPLOYEE STOCK PURCHASE PLAN
OFFERING DOCUMENT


In this document,
capitalized terms not otherwise defined shall have the same definitions of such
terms as in the Metabasis Therapeutics, Inc. 2004 Employee Stock Purchase Plan.


1.             GRANT; OFFERING
DATE.


(a)           The Board hereby
authorizes a series of Offerings pursuant to the terms of this Offering
document.


(b)           The first Offering
hereunder (the “Initial
Offering”) shall begin on the date the Company’s Common Stock is
first offered to the public under a registration statement declared effective
under the Securities Act (the “IPO Date”) and shall end on June 30, 2006, unless
terminated earlier as provided below. 
After the Initial Offering, an additional new Offering shall begin on
the day after the first Purchase Date of the immediately preceding
Offering.  The first day of an Offering
is that Offering’s “Offering Date.” 
Except as provided below, each Offering shall be approximately 24 months
in duration, with four Purchase Periods which, except for the first Purchase
Period of the Initial Offering (which may be longer or shorter than 6 months)
shall be approximately 6 months in length. 
Except as provided below, a Purchase Date is the last day of a Purchase
Period or of an Offering, as the case may be. 
The Initial Offering shall consist of four Purchase Periods with the
first Purchase Period of the Initial Offering ending on December 31, 2004.


(c)           Notwithstanding the
foregoing: (i) if any Offering Date falls on a day that is not a Trading Day,
then such Offering Date shall instead fall on the next subsequent Trading Day,
and (ii) if any Purchase Date falls on a day that is not a Trading Day, then
such Purchase Date shall instead fall on the immediately preceding Trading Day.


(d)           Prior to the
commencement of any Offering, the Board may change any or all terms of such
Offering and any subsequent Offerings. 
The granting of Purchase Rights pursuant to each Offering hereunder
shall occur on each respective Offering Date unless prior to such date
(i) the Board determines that such Offering shall not occur, or
(ii) no shares of Common Stock remain available for issuance under the
Plan in connection with the Offering.


(e)           If the Company’s
accountants advise the Company that the accounting treatment of purchases under
the Plan will change or has changed in a manner that the Company determines is
detrimental to its best interests, then the Company may, in its discretion,
take any or all of the following actions: 
(i) terminate each ongoing Offering as of the next Purchase Date (after
the purchase of stock on such Purchase Date) under such Offering; (ii) set a
new Purchase Date for each ongoing Offering and terminate each such Offering
after the purchase of stock on such Purchase Date; (iii) amend the Plan and one
or more of the ongoing Offerings to reduce or



 1
 









eliminate an accounting treatment that is detrimental
to the Company’s best interests and (iv) terminate each ongoing Offering and refund any money contributed
to the participants.


(f)            Notwithstanding
anything in this Section 1 to the contrary, if on the first day of a new
Purchase Period during an Offering the Fair Market Value of a share of Common
Stock is less than it was on the Offering Date for that Offering, then the
Offering shall immediately terminate and that day shall become the Offering
Date, and the Participants who were enrolled in the terminated Offering shall
automatically be enrolled in the new Offering that starts on such day.


2.             ELIGIBLE
EMPLOYEES.


(a)           Each Eligible
Employee who, on the Offering Date of an Offering hereunder, is (i) an employee
of the Company; (ii) an employee of a Subsidiary incorporated in the United
States; or (iii) an employee of a Subsidiary that is not incorporated in the
United States, provided that the Board or Committee has designated the
employees of such Subsidiary as eligible to participate in the Offering, shall
be granted a Purchase Right on the Offering Date of such Offering.


(b)           Notwithstanding the
foregoing, the following Employees shall not be Eligible Employees or be
granted Purchase Rights under an Offering:


(i)            part-time or
seasonal Employees whose customary employment is 20 hours per week or less or
five months per calendar year or less;


(ii)           5% stockholders
(including ownership through unexercised and/or unvested stock options) as
described in Section 6(c) of the Plan; or


(iii)         Employees in
jurisdictions outside of the United States if, as of the Offering Date of the
Offering, the grant of such Purchase Rights would not be in compliance with the
applicable laws of any jurisdiction in which the Employee resides or is
employed.


(c)           Notwithstanding the
foregoing, each person who first becomes an Eligible Employee during an ongoing
Offering shall not be able to participate in such Offering.


3.             PURCHASE RIGHTS.


(a)           Subject to the
limitations herein and in the Plan, a Participant’s Purchase Right shall permit
the purchase of the number of shares of Common Stock purchasable with up to 15%
of such Participant’s Earnings paid during the period of such Offering
beginning immediately after such Participant first commences participation; provided, however, that no Participant may have more than
15% of such Participant’s Earnings applied to purchase shares of  Common Stock under all ongoing Offerings
under the Plan and all other plans of the Company and Related Corporations that
are intended to qualify as Employee Stock Purchase Plans.


(b)           For Offerings
hereunder, “Earnings” means the base compensation paid to a Participant,
including all salary, wages (including amounts elected to be deferred by the
Participant, that would otherwise have been paid, under any cash or deferred
arrangement or



 2
 









other deferred compensation program established by the
Company or a Related Corporation), but excluding all overtime pay, commissions,
bonuses, and other remuneration paid directly to such Participant,  profit sharing, the cost of employee benefits
paid for by the Company or a Related Corporation, education or tuition
reimbursements, imputed income arising under any Company or Related Corporation
group insurance or benefit program, traveling expenses, business and moving
expense reimbursements, income received in connection with stock options,
contributions made by the Company or a Related Corporation under any employee
benefit plan, and similar items of compensation.


(c)           Notwithstanding the
foregoing, the maximum number of shares of Common Stock that a Participant may
purchase on any Purchase Date in an Offering shall be such number of shares as
has a Fair Market Value (determined as of the Offering Date for such Offering)
equal to (x) $25,000 multiplied by the number of calendar years in which the
Purchase Right under such Offering has been outstanding at any time, minus (y)
the Fair Market Value of any other shares of 
Common Stock (determined as of the relevant Offering Date with respect
to such shares) that, for purposes of the limitation of Section 423(b)(8) of
the Code, are attributed to any of such calendar years in which the Purchase
Right is outstanding. The amount in clause (y) of the previous sentence shall
be determined in accordance with regulations applicable under Section 423(b)(8)
of the Code based on (i) the number of shares previously purchased with respect
to such calendar years pursuant to such Offering or any other Offering under
the Plan, or pursuant to any other Company or Related Corporation plans
intended to qualify as Employee Stock Purchase Plans, and (ii) the number of
shares subject to other Purchase Rights outstanding on the Offering Date for
such Offering pursuant to the Plan or any other such Company or Related
Corporation Employee Stock Purchase Plan.


(d)           The maximum
aggregate number of shares of Common Stock available to be purchased by all
Participants on a Purchase Date shall be the number of shares of Common Stock
then remaining available under the Plan. 
If the aggregate purchase of shares of Common Stock upon exercise of
Purchase Rights granted under the Offering would exceed the maximum aggregate
number of shares available, the Board shall make a pro rata allocation of the
shares available in a uniform and equitable manner.


(e)           Notwithstanding the
foregoing, the maximum number of shares of Common Stock that an Eligible
Employee may purchase on any Purchase Date during any Offering shall not exceed
2,500 shares.


4.             PURCHASE PRICE.


The purchase price of shares of Common Stock under an
Offering shall be the lesser of: (i) 85% of the Fair Market Value of such
shares of Common Stock on the applicable Offering Date, or (ii) 85% of the Fair
Market Value of such shares of  Common
Stock on the applicable Purchase Date, in each case rounded up to the nearest
whole cent per share.  For the Initial
Offering, the Fair Market Value of the shares of Common Stock at the time when
the Offering commences shall be the price per share at which shares are first
sold to the public in the Company’s initial public offering as specified in the
final prospectus for that initial public offering.



 3
 









5.             PARTICIPATION.


(a)           An Eligible
Employee may elect to participate in an Offering on the Offering Date. An
Eligible Employee shall elect his or her payroll deduction percentage on such
enrollment form as the Company provides. The completed enrollment form must be
delivered to the Company prior to the date participation is to be effective,
unless a later time for filing the enrollment form is set by the Company for
all Eligible Employees with respect to a given Offering. Payroll deduction
percentages must be expressed in whole percentages of Earnings, with a minimum
percentage of 1% and a maximum percentage of 15%.  Except as provided in paragraph (e) below
with respect to the Initial Offering, Contributions may be made only by way of
payroll deductions.


(b)           A Participant may
decrease his or her participation level twice during a Purchase Period.  In addition, (i) a Participant may decrease
to 0% his or her participation level only once during a Purchase Period and
(ii) a Participant may increase his or her participation level during a
Purchase Period, to be effective upon the commencement of the next Purchase
Period.  Any such increase or decrease in
participation level shall be made by delivering a notice to the Company or a
designated Subsidiary in such form as the Company provides prior to the ten day
period (or such shorter period of time as determined by the Company and
communicated to Participants) immediately preceding the next Purchase Date of
the Purchase Period for which it is to be effective.


(c)           A Participant may
withdraw from an Offering and receive a refund of his or her Contributions
(reduced to the extent, if any, such Contributions have been used to acquire
shares of  Common Stock for the
Participant on any prior Purchase Date) without interest, at any time prior to
the end of the Offering, excluding only each ten day period immediately
preceding a Purchase Date (or such shorter period of time determined by the
Company and communicated to Participants), by delivering a withdrawal notice to
the Company or a designated Subsidiary in such form as the Company
provides.  A Participant who has
withdrawn from an Offering shall not again participate in such Offering, but
may participate in subsequent Offerings under the Plan in accordance with the
terms of the Plan and the terms of such subsequent Offerings.


(d)            Notwithstanding
the foregoing or any other provision of this Offering document or of the Plan
to the contrary, neither the enrollment of any Eligible Employee in the Plan
nor any forms relating to participation in the Plan shall be given effect until
such time as a registration statement covering the registration of the shares
under the Plan that are subject to the Offering has been filed by the Company
and has become effective.


(e)           Notwithstanding the
foregoing or any other provision of this Offering document or of the Plan to
the contrary, with respect to the Initial Offering only, each Eligible Employee
who is employed on the IPO Date automatically shall be enrolled in the Initial
Offering, with a Purchase Right to purchase up to the number of shares of
Common Stock that are purchasable with 15% of the Eligible Employee’s Earnings,
subject to the limitations set forth in Section 3(c)-(e) above.  Following the filing of an effective
registration statement pursuant to a Form S-8, such Eligible Employee shall be
provided a certain period of time, as determined by the Company in its sole
discretion, within which to elect to authorize payroll deductions for the
purchase of shares during the Initial Offering (which may be for a percentage
that is less than



 4
 









15% of the Eligible Employee’s Earnings).  If such Eligible Employee elects not to
authorize such payroll deductions, the Eligible Employee instead may purchase
shares of Common Stock under the Plan by delivering a single cash payment for
the purchase of such shares to the Company or a designated Subsidiary prior to
the ten day period (or such shorter period of time as determined by the Company
and communicated to Participants) immediately preceding the Purchase Date under
the Initial Offering.  If an Eligible
Employee neither elects to authorize payroll deductions nor chooses to make a
cash payment in accordance with the foregoing sentence, then the Eligible
Employee shall not purchase any shares of Common Stock during the Initial
Offering.  After the end of the Initial
Offering, in order to participate in any subsequent Offerings, an Eligible
Employee must enroll and authorize payroll deductions prior to the commencement
of the Offering, in accordance with paragraph (a) above; provided, however, that once an Eligible
Employee enrolls in an Offering and authorizes payroll deductions (including in
connection with the Initial Offering), the Eligible Employee automatically
shall be enrolled for all subsequent Offerings until he or she elects to
withdraw from an Offering pursuant to paragraph (c) above or terminates his or
her participation in the Plan.


6.             PURCHASES.


Subject to the limitations contained herein, on each
Purchase Date, each Participant’s Contributions (without any increase for
interest) shall be applied to the purchase of whole shares, up to the maximum
number of shares permitted under the Plan and the Offering.


7.             NOTICES AND
AGREEMENTS.


Any notices or agreements provided for in an Offering
or the Plan shall be given in writing, in a form provided by the Company, and
unless specifically provided for in the Plan or this Offering, shall be deemed
effectively given upon receipt or, in the case of notices and agreements
delivered by the Company, five days after deposit in the United States
mail, postage prepaid.


8.             EXERCISE CONTINGENT ON STOCKHOLDER APPROVAL.


The Purchase Rights granted under an Offering are
subject to the approval of the Plan by the stockholders of the Company as
required for the Plan to obtain treatment as an Employee Stock Purchase Plan.


9.             OFFERING SUBJECT TO PLAN.


Each Offering is subject to all the provisions of the
Plan, and the provisions of the Plan are hereby made a part of the
Offering.  The Offering is further
subject to all interpretations, amendments, rules and regulations which may
from time to time be promulgated and adopted pursuant to the Plan.  In the event of any conflict between the
provisions of an Offering and those of the Plan (including interpretations,
amendments, rules and regulations which may from time to time be promulgated
and adopted pursuant to the Plan), the provisions of the Plan shall control.



 5