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Exhibit 10.2    
    


METABASIS THERAPEUTICS, INC.  


 AMENDED AND RESTATED 2001 EQUITY INCENTIVE PLAN  


Amendment and Restatement Adopted by Board on June 6, 2001

Amendment and Restatement Approved by Stockholders on July 23, 2001

Amendment Adopted by Board on November 29, 2001

Amendment Adopted by Board on August 21, 2002

Amendments Approved by Stockholders on October 30, 2002

Amendment and Restatement Adopted by Board on May 6, 2004

Amendment and Restatement Approved by Stockholders on May 10, 2004

Termination Date: May 10, 2014  


1.     PURPOSES.  


        (a)    Amendment and Restatement.    The Plan amends and restates the Company's Amended and Restated 2001 Equity
Incentive Plan adopted by the Board on June 6, 2001, as amended on November 29, 2001 and August 21, 2002 (the "Prior Plan"). All
outstanding options granted under the Prior Plan shall remain subject to the terms of the Prior Plan. All options granted subsequent to the adoption of this Plan by the Board shall be subject to the
terms of the Plan. 


        (b)    Eligible Stock Award Recipients.    The persons eligible to receive Stock Awards are Employees, Directors and
Consultants. 


        (c)    Available Stock Awards.    The purpose of the Plan is to provide a means by which eligible recipients of Stock
Awards may be given an opportunity to benefit from increases in value of the Common Stock through the granting of the following Stock Awards: (i) Incentive Stock Options,
(ii) Nonstatutory Stock Options, (iii) Restricted Stock Awards, (iv) Stock Appreciation Rights, (v) Phantom Stock Awards and (vi) Other Stock Awards. 


        (d)    General Purpose.    The Company, by means of the Plan, seeks to retain the services of the group of persons
eligible to receive Stock Awards, to secure and retain the services of new members of this group and to provide incentives for such persons to exert maximum efforts for the success of the Company and
its Affiliates. 


2.     DEFINITIONS.  


        (a)   "Affiliate" means any parent corporation or subsidiary corporation of the Company, whether now or
hereafter existing, as those terms are defined in Sections 424(e) and (f), respectively, of the Code. 


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



        (c)   "Capitalization Adjustment" has the meaning ascribed to that term in Section 11(a). 


        (d)   "Cause" means, with respect to a Participant, the occurrence of any of the following:
(i) such Participant's conviction of any felony or any crime involving fraud or dishonesty which, in the Board's sole discretion, materially affects the business of the Company;
(ii) such Participant's participation (whether by affirmative act or omission) in a fraud, act of dishonesty or other act of misconduct against the Company and/or its Affiliates which, in the
Board's sole discretion, materially affects the business of the Company; (iii) conduct by such Participant which, based upon a good faith and reasonable factual investigation by the Company
(or, if such Participant is an Officer, by the Board), demonstrates 


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such
Participant's gross unfitness to serve; (iv) such Participant's violation of any statutory or fiduciary duty, or duty of loyalty, owed to the Company and/or its Affiliates; (v) such
Participant's breach of any material term of any material contract between such Participant and the Company and/or its Affiliates; and (vi) such Participant's repeated violation of any material
Company policy. Notwithstanding the foregoing, such Participant's Disability shall not constitute Cause as set forth herein. The determination that a termination is for Cause shall be by the Committee
in its sole and exclusive judgment and discretion. 


        (e)   "Change in Control" means the occurrence, in a single transaction or in a series of related
transactions, of any one or more of the following events: 



          (i)  any Exchange Act Person becomes the Owner, directly or indirectly, of securities of the Company representing more than
50% of the combined voting power of the Company's then outstanding securities other than by virtue of a merger, consolidation or similar transaction. Notwithstanding the foregoing, a Change in Control
shall not be deemed to occur (A) on account of the acquisition of securities of the Company by an institutional investor, any affiliate thereof or any other Exchange Act Person that acquires
the Company's securities from the Company in a transaction or series of related transactions that are primarily a private financing transaction for the Company or (B) solely because the level
of Ownership held by any Exchange Act Person (the "Subject Person") exceeds the designated percentage threshold of the outstanding voting securities as
a result of a repurchase or other acquisition of voting securities by the Company reducing the number of shares outstanding, provided that if a Change in Control would occur (but for the operation of
this sentence) as a result of the acquisition of voting securities by the Company, and after such share acquisition, the Subject Person becomes the Owner of any additional voting securities that,
assuming the repurchase or other acquisition had not occurred, increases the percentage of the then outstanding voting securities Owned by the Subject Person over the designated percentage threshold,
then a Change in Control shall be deemed to occur; 


         (ii)  there is consummated a merger, consolidation or similar transaction involving (directly or indirectly) the Company and,
immediately after the consummation of such merger, consolidation or similar transaction, the stockholders of the Company immediately prior thereto do not Own, directly or indirectly, either
(A) outstanding voting securities representing more than 50% of the combined outstanding voting power of the surviving Entity in such merger, consolidation or similar transaction or
(B) more than 50% of the combined outstanding voting power of the parent of the surviving Entity in such merger, consolidation or similar transaction, in each case in substantially the same
proportions as
their Ownership of the outstanding voting securities of the Company immediately prior to such transaction; 


       (iii)  there is consummated a sale, lease, license or other disposition of all or substantially all of the consolidated assets
of the Company and its Subsidiaries, other than a sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries to an Entity,
more than 50% of the combined voting power of the voting securities of which are Owned by stockholders of the Company in substantially the same proportions as their Ownership of the outstanding voting
securities of the Company immediately prior to such sale, lease, license or other disposition; or 


        (iv)  individuals who, on the date this Plan is adopted by the Board, are members of the Board (the  "Incumbent Board") cease for any reason to
constitute at least a majority of the members of the Board; provided,
however, that if the appointment or election (or nomination for election) of any new Board member was approved or recommended by a majority vote of the members of the Incumbent
Board then still in office, such new member shall, for purposes of this Plan, be considered as a member of the Incumbent Board. 



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        Notwithstanding
the foregoing or any other provision of this Plan, the definition of Change in Control (or any analogous term) in an individual written agreement between the Company or
any Affiliate and the Participant shall supersede the foregoing definition with respect to Stock Awards subject to such agreement (it being understood, however, that if no definition of Change in
Control or any analogous term is set forth in such an individual written agreement, the foregoing definition shall apply). 


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


        (g)   "Committee" means a committee of one or more members of the Board appointed by the Board in
accordance with Section 3(c). 


        (h)   "Common Stock" means the common stock of the Company. 


        (i)    "Company" means Metabasis Therapeutics, Inc., a Delaware corporation. 


        (j)    "Consultant" means any person, including an advisor, (i) engaged by the Company or an
Affiliate to render consulting or advisory services and who is compensated for such services or (ii) serving as a member of the Board of Directors of an Affiliate and who is compensated for
such services. However, the term "Consultant" shall not include Directors who are not compensated by the Company for their services as Directors, and the payment of a director's fee by the Company for
services as a Director shall not cause a Director to be considered a "Consultant" for purposes of the Plan. 


        (k)   "Continuous Service" means that the Participant's service with the Company or an Affiliate,
whether as an Employee, Director or Consultant, is not interrupted or terminated. A change in the capacity in which the Participant renders service to the Company or an Affiliate as an Employee,
Consultant or Director or a change in the entity for which the Participant renders such service, provided that there is no interruption or termination of the Participant's service with the Company or
an Affiliate, shall not terminate a Participant's Continuous Service. For example, a change in status from an Employee of the Company to a Consultant of an Affiliate or to a Director shall not
constitute an interruption of Continuous Service. The Board or the chief executive officer of the Company, in that party's sole discretion, may determine whether Continuous Service shall be considered
interrupted in the case of any leave of absence approved by that party, including sick leave, military leave or any other personal leave. Notwithstanding the foregoing, a leave of absence shall be
treated as Continuous Service for purposes of vesting in a Stock Award only to such extent as may be provided in the Company's leave of absence policy or in the written terms of the Participant's
leave of absence. 


        (l)    "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: 



          (i)  a sale or other disposition of all or substantially all, as determined by the Board in its discretion, of the
consolidated assets of the Company and its Subsidiaries; 


         (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. 



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        (m)  "Covered Employee" means the chief executive officer and the four other highest compensated
officers of the Company for whom total compensation is required to be reported to stockholders under the Exchange Act, as determined for purposes of Section 162(m) of the Code. 


        (n)   "Director" means a member of the Board. 


        (o)   "Disability" means the permanent and total disability of a person within the meaning of
Section 22(e)(3) of the Code. 


        (p)   "Employee" means any person employed by the Company or an Affiliate. Service as a Director or
payment of a director's fee by the Company or an Affiliate shall not be sufficient to constitute "employment" by the Company or an Affiliate. 


        (q)   "Entity" means a corporation, partnership or other entity. 


        (r)   "Exchange Act" means the Securities Exchange Act of 1934, as amended. 



        (s)   "Exchange Act Person" means any natural person, Entity or "group" (within the meaning of
Section 13(d) or 14(d) of the Exchange Act), except that "Exchange Act Person" shall not include (A) the Company or any Subsidiary of the Company, (B) any employee benefit plan of
the Company or any Subsidiary of the Company or any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Subsidiary of the Company, (C) an
underwriter temporarily holding securities pursuant to an offering of such securities, or (D) an Entity Owned, directly or indirectly, by the stockholders of the Company in substantially the
same proportions as their Ownership of stock of the Company. 



        (t)    "Fair Market Value" means, as of any date, the value of the Common Stock determined as follows: 



          (i)  If the Common Stock is listed on any established stock exchange or traded on the Nasdaq National Market or the Nasdaq
SmallCap Market, the Fair Market Value of a share of Common Stock shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or market
(or the exchange or market with the greatest volume of trading in the Common Stock) on the last market trading day prior to the day of determination, as reported in The Wall
Street Journal or such other source as the Board deems reliable. 


         (ii)  In the absence of such markets for the Common Stock, the Fair Market Value shall be determined in good faith by the
Board. 




        (u)   "Incentive Stock Option" means an Option intended to qualify as an incentive stock option within
the meaning of Section 422 of the Code and the regulations promulgated thereunder. 



        (v)   "IPO Date" means the effective date of the initial public offering of the Common Stock. 


        (w)  "Non-Employee Director" means a Director who either (i) is not a current
Employee or Officer of the Company or its parent or a subsidiary, does not receive compensation, either directly or indirectly, from the Company or its parent or a subsidiary, for services rendered as
a consultant or in any capacity other than as a Director (except for an amount as to which disclosure would not be required under Item 404(a) of Regulation S-K promulgated pursuant
to the Securities Act ("Regulation S-K")), does not possess an interest in any other transaction for which disclosure would be
required under Item 404(a) of Regulation S-K, and is not engaged in a business relationship for which disclosure would be required pursuant to Item 404(b) of
Regulation S-K; or (ii) is otherwise considered a "non-employee director" for purposes of Rule 16b-3. 


        (x)   "Nonstatutory Stock Option" means an Option not intended to qualify as an Incentive Stock Option. 


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        (y)   "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. 


        (z)   "Option" means an Incentive Stock Option or a Nonstatutory Stock Option granted pursuant to the
Plan. 


        (aa) "Option Agreement" means a written agreement between the Company and an Optionholder evidencing
the terms and conditions of an individual Option grant. Each Option Agreement shall be subject to the terms and conditions of the Plan. 


        (bb) "Optionholder" means a person to whom an Option is granted pursuant to the Plan or, if
applicable, such other person who holds an outstanding Option. 



        (cc) "Other Stock Award" means an award based in whole or in part by reference to the Common Stock
which is granted pursuant to the terms and conditions of Section 7(d). 


        (dd) "Other Stock Award Agreement" means a written agreement between the Company and a holder of an
Other Stock Award evidencing the terms and conditions of an individual Other Stock Award grant. Each Other Stock Award Agreement shall be subject to the terms and conditions of the Plan. 



        (ee) "Outside Director" means a Director who either (i) is not a current employee of the
Company or an "affiliated corporation" (within the meaning of Treasury Regulations promulgated under Section 162(m) of the Code), is not a former employee of the Company or an "affiliated
corporation" who receives compensation for prior services (other than benefits under a tax-qualified retirement plan) during the taxable year, has not been an officer of the Company or an
"affiliated corporation", and does not receive remuneration from the Company or an "affiliated corporation," either directly or indirectly, in any capacity other than as a Director or (ii) is
otherwise considered an "outside director" for purposes of Section 162(m) of the Code. 



        (ff)  "Own," "Owned," "Owner," "Ownership" A person or Entity shall be deemed to "Own," to have
"Owned," to be the "Owner" of, or to have acquired "Ownership" of securities if such person or Entity, directly or indirectly, through any contract, arrangement, understanding, relationship or
otherwise, has or shares voting power, which includes the power to vote or to direct the voting, with respect to such securities. 


        (gg) "Participant" means a person to whom a Stock Award is granted pursuant to the Plan or, if
applicable, such other person who holds an outstanding Stock Award. 



        (hh) "Phantom Stock Award" means a right to receive shares of Common Stock which is granted pursuant
to the terms and conditions of Section 7(b). 


        (ii)   "Phantom Stock Award Agreement" means a written agreement between the Company and a holder of a
Phantom Stock Award evidencing the terms and conditions of an individual Phantom Stock Award grant. Each Phantom Stock Award Agreement shall be subject to the terms and conditions of the Plan. 



        (jj)  "Plan" means this Metabasis Therapeutics, Inc. Amended and Restated 2001 Equity Incentive
Plan. 


        (kk) "Restricted Stock Award" means an award of shares of Common Stock which is granted pursuant to
the terms and conditions of Section 7(a). 


        (ll)   "Restricted Stock Award Agreement" means an agreement between the Company and a holder of a
Restricted Stock Award evidencing the terms and conditions of an individual Restricted Stock Award grant. Each Restricted Stock Award Agreement shall be subject to the terms and conditions of the
Plan. 


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        (mm) "Rule 16b-3" means Rule 16b-3 promulgated under the
Exchange Act or any successor to Rule 16b-3, as in effect from time to time. 


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


        (oo) "Stock Appreciation Right" means a right to receive the appreciation of Common Stock that is
granted pursuant to the terms and conditions of Section 7(c). 


        (pp) "Stock Appreciation Right Agreement" means a written agreement between the Company and a holder
of a Stock Appreciation Right evidencing the terms and conditions of an individual Stock Appreciation Right grant. Each Stock Appreciation Right Agreement shall be subject to the terms and conditions
of the Plan. 


        (qq) "Stock Award" means any right granted under the Plan, including an Option, a Restricted Stock
Award, a Stock Appreciation Right, a Phantom Stock Award or any Other Stock Award. 


        (rr)  "Stock Award Agreement" means a written agreement between the Company and a holder of a Stock
Award evidencing the terms and conditions of an individual Stock Award grant. Each Stock Award Agreement shall be subject to the terms and conditions of the Plan. 


        (ss) "Subsidiary" means, with respect to the Company, (i) any corporation of which more than
50% of the outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, stock of any other class or
classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, Owned by the Company, and (ii) any
partnership in which the Company has a direct or indirect interest (whether in the form of voting or participation in profits or capital contribution) of more than 50%. 


        (tt)  "Ten Percent Stockholder" means a person who Owns (or is deemed to Own pursuant to
Section 424(d) of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of any of its Affiliates. 


3.     ADMINISTRATION.  



        (a)    Administration by Board.    The Board shall administer the Plan unless and until the Board delegates
administration to a Committee, as provided in Section 3(c). 


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



          (i)  To determine from time to time which of the persons eligible under the Plan shall be granted Stock Awards; when and how
each Stock Award shall be granted; what type or combination of types of Stock Award shall be granted; the provisions of each Stock Award granted (which need not be identical), including the time or
times when a person shall be permitted to receive Common Stock pursuant to a Stock Award; and the number of shares of Common Stock with respect to which a Stock Award shall be granted to each such
person. 


         (ii)  To construe and interpret the Plan and Stock Awards granted under it, and to establish, amend and revoke rules and
regulations for its administration. The Board, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan or in any Stock Award Agreement, in a manner and to the
extent it shall deem necessary or expedient to make the Plan fully effective. 


       (iii)  To effect, at any time and from time to time, with the consent of any adversely affected Optionholder, (1) the
reduction of the exercise price of any outstanding Option under the Plan, (2) the cancellation of any outstanding Option under the Plan and the grant in substitution 



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therefor
of (A) a new Option under the Plan or another equity plan of the Company covering the same or a different number of shares of Common Stock, (B) a Restricted Stock Award
(including a stock bonus), (C) a Stock Appreciation Right, (D) a Phantom Stock Award (E) an Other Stock Award, (F) cash and/or (G) other valuable consideration (as
determined by the Board, in its sole discretion), or (3) any other action that is treated as a repricing under generally accepted accounting principles. 


        (iv)  To amend the Plan or a Stock Award as provided in Section 12. 


         (v)  To terminate or suspend the Plan as provided in Section 13. 



        (vi)  Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the
best interests of the Company and that are not in conflict with the provisions of the Plan. 




        (c)    Delegation to Committee.    



          (i)  General.    The Board may delegate administration of the Plan to a Committee or Committees of one or more
members of the Board, and the term "Committee" shall apply to any person or persons to whom such authority has been delegated. 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, including the power to delegate to a subcommittee
any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board shall thereafter be to the Committee or subcommittee), 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. 


         (ii)  Section 162(m) and Rule 16b-3 Compliance.    In the discretion of the Board, the
Committee may consist solely of two or more Outside Directors, in accordance with Section 162(m) of the Code, and/or solely of two or more Non-Employee Directors, in accordance with
Rule 16b-3. In addition, the Board or the Committee, in their discretion, may (1) delegate to a committee of one or more members of the Board who need not be Outside
Directors the authority to grant Stock Awards to eligible persons who are either (a) not then Covered Employees and are not expected to be Covered Employees at the time of recognition of income
resulting from such Stock Award, or (b) not persons with respect to whom the Company wishes to comply with
Section 162(m) of the Code, and/or (2) delegate to a committee of one or more members of the Board who need not be Non-Employee Directors the authority to grant Stock Awards
to eligible persons who are not then subject to Section 16 of the Exchange Act. 




        (d)    Delegation to an Officer.    The Board may delegate to one or more Officers of the Company the authority to do
one or both of the following (i) designate Officers and Employees of the Company or any of its Subsidiaries to be recipients of Stock Awards and (ii) determine the number of shares of
Common Stock to be subject to such Stock Awards granted to such Officers and Employees of the Company; provided, however, that the Board resolutions
regarding such delegation shall specify the total number of shares of Common Stock that may be subject to the Stock Awards granted by such Officer and that such Officer may not grant a Stock Award to
himself or herself. Notwithstanding the foregoing, the Board may not delegate authority to an Officer to determine the Fair Market Value of the Common Stock. 


        (e)    Effect of Board's Decision.    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. 


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4.     SHARES SUBJECT TO THE PLAN.  


        (a)    Share Reserve.    Subject to the provisions of Section 11(a) relating to Capitalization Adjustments, the
shares of Common Stock that may be issued pursuant to Stock Awards shall not exceed in the aggregate 2,213,995 shares of 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) 3% 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) 1,000,000 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). 


        (b)    Reversion of Shares to the Share Reserve.    If any Stock Award shall for any reason expire or otherwise
terminate, in whole or in part, without having been exercised in full, or if any shares of Common Stock issued to a Participant pursuant to a Stock Award are forfeited back to or repurchased by the
Company, including, but not limited to, any repurchase or forfeiture caused by the failure to meet a contingency or condition required for the vesting of such shares, then the shares of Common Stock
not acquired under such Stock Award, or forfeited back to or repurchased by the Company, shall revert to and again become available for issuance under the Plan. If any shares subject to a Stock Award
are not delivered to a Participant because such shares are withheld for the payment of taxes or the Stock Award is exercised through a reduction of shares subject to the Stock Award
(i.e., "net exercised"), the number of shares that are not delivered to the Participant as a result thereof shall revert to and again become available
for issuance under the Plan. If the exercise price of any Stock Award is satisfied by tendering shares of Common Stock held by the Participant (either by actual delivery or attestation), then the
number of such tendered shares shall revert to and again become available for issuance under the Plan. Notwithstanding anything to the contrary in this Section 4(b), subject to the provisions
of Section 11(a) relating to Capitalization Adjustments, the aggregate number of shares of Common Stock that may be issued as Incentive Stock Options shall be 11,000,000 shares of Common Stock. 


        (c)    Source of Shares.    The shares of Common Stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise. 


5.     ELIGIBILITY.  



        (a)    Eligibility for Specific Stock Awards.    Incentive Stock Options may be granted only to Employees. Stock
Awards other than Incentive Stock Options may be granted to Employees, Directors and Consultants. 


        (b)    Ten Percent Stockholders.    A Ten Percent Stockholder shall not be granted an Incentive Stock Option unless
the exercise price of such Option is at least 110% of the Fair Market Value of the Common Stock on the date of grant and the Option is not exercisable after the expiration of five years from the date
of grant. 


        (c)    Section 162(m) Limitation on Annual Grants.    Subject to the provisions of Section 11(a)
relating to Capitalization Adjustments, no Employee shall be eligible to be granted Options covering more than 1,000,000 shares of Common Stock during any calendar year, and no Employee shall be
eligible to be granted Stock Appreciation Rights covering more than 1,000,000 shares of Common Stock during any calendar year. 


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        (d)    Consultants.    A Consultant shall not be eligible for the grant of a Stock Award if, at the time of grant, a
Form S-8 Registration Statement under the Securities Act ("Form S-8") is not available to register either the
offer or the sale of the Company's securities to such Consultant because of the nature of the services that the Consultant is providing to the Company, because the Consultant is not a natural person,
or because of any other rule governing the use of Form S-8, unless the Company determines both (i) that such grant (A) shall be registered in another manner under the
Securities Act (e.g., on a Form S-3 Registration Statement) or (B) does not require registration under the Securities Act in
order to comply with the requirements of the Securities Act, if applicable, and (ii) that such grant complies with the securities laws of all other relevant jurisdictions. 


6.     OPTION PROVISIONS.  


        Each Option shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate. All Options shall be separately designated
Incentive Stock Options or Nonstatutory Stock Options at the time of grant, and, if certificates are issued, a separate certificate or certificates shall be issued for shares of Common Stock purchased
on exercise of each type of Option. The provisions of separate Options need not be identical, but each Option shall include (through incorporation of provisions hereof by reference in the Option or
otherwise) the substance of each of the following provisions: 


        (a)    Term.    The Board shall determine the term of an Option; provided
that, subject to the provisions of Section 5(b) regarding Ten Percent Stockholders, no Incentive Stock Option shall be exercisable after the expiration of ten years from
the date on which it was granted. 


        (b)    Exercise Price of an Incentive Stock Option.    Subject to the provisions of Section 5(b) regarding Ten
Percent Stockholders, the exercise price of each Incentive Stock Option shall be not less than 100% of the Fair Market Value of the Common Stock subject to the Option on the date the Option is
granted. Notwithstanding the foregoing, an Incentive Stock Option may be granted with an exercise price lower than that set forth in the preceding sentence if such Option is granted pursuant to an
assumption or substitution for another option in a manner satisfying the provisions of Section 424(a) of the Code. 



        (c)    Exercise Price of a Nonstatutory Stock Option.    The Board, in its discretion, shall determine the exercise
price of each Nonstatutory Stock Option. 


        (d)    Consideration.    The purchase price of Common Stock acquired pursuant to an Option shall be paid, to the
extent permitted by applicable law, either (i) in cash at the time the Option is exercised or (ii) at the discretion of the Board at the time of the grant of the Option (or subsequently
in the case of a Nonstatutory Stock Option) (1) by delivery to the Company of other Common Stock, (2) according to a deferred payment or other similar arrangement with the Optionholder,
(3) by a "net exercise" of the Option (as further described below), (4) pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board that, prior
to the issuance of Common Stock, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to the Company from the
sales proceeds or (5) in any other form of legal consideration that may be acceptable to the Board. Unless otherwise specifically provided in the Option, the purchase price of Common Stock
acquired pursuant to an Option that is paid by delivery to the Company of other Common Stock acquired, directly or indirectly from the Company, shall be paid only by shares of the Common Stock of the
Company that have been held for more than six months (or such longer or shorter period of time required to avoid a charge to earnings for financial accounting purposes). At any time that the Company
is incorporated in Delaware, payment of the Common Stock's "par value," as defined in the Delaware General Corporation Law, shall not be made by deferred payment. 


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        In
the case of any deferred payment arrangement, interest shall be compounded at least annually and shall be charged at the minimum rate of interest necessary to avoid (1) the
treatment as interest, under any applicable provisions of the Code, of any amounts other than amounts stated to be interest under the deferred payment arrangement and (2) the treatment of the
Option as a variable award for financial accounting purposes. 


        In
the case of a "net exercise" of an Option, the Company will not require a payment of the exercise price of the Option from the Participant but will reduce the number of shares of
Common Stock issued upon the exercise by the largest number of whole shares that has a Fair Market Value that does not exceed the aggregate exercise price. With respect to any remaining balance of the
aggregate exercise price, the Company shall accept a cash payment from the Participant. The shares of Common Stock so used to pay the exercise price of an Option under a "net exercise" will be
considered to have resulted from the exercise of the Option, and accordingly, the Option will not again be exercisable with respect to such shares, the shares actually delivered to the Participant,
and any shares withheld for purposes of tax withholding. 



        (e)    Transferability of an Incentive Stock Option.    An Incentive Stock Option shall not be transferable except by
will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Optionholder only by the Optionholder. Notwithstanding the foregoing, the Optionholder may, by
delivering written notice to the Company, in a form provided by or otherwise satisfactory to the Company, designate a third party who, in the event of the death of the Optionholder, shall thereafter
be entitled to exercise the Option. 


        (f)    Transferability of a Nonstatutory Stock Option.    A Nonstatutory Stock Option shall be transferable to the
extent provided in the Option Agreement. If the Nonstatutory Stock Option does not provide for transferability, then the Nonstatutory Stock Option shall not be transferable except by will or by the
laws of descent and distribution and shall be exercisable during the lifetime of the Optionholder only by the Optionholder. Notwithstanding the foregoing, the Optionholder may, by delivering written
notice to the Company, in a form provided by or otherwise satisfactory to the Company, designate a third party who, in the event of the death of the Optionholder, shall thereafter be entitled to
exercise the Option. 


        (g)    Vesting Generally.    The total number of shares of Common Stock subject to an Option may, but need not, vest
and therefore become exercisable in periodic installments that may, but need not, be equal. The Option may be subject to such other terms and conditions on the time or times when it may be exercised
(which may be based on performance or other criteria) as the Board may deem appropriate. The vesting provisions of individual Options may vary. The provisions of this Section 6(g) are subject
to any Option provisions governing the minimum number of shares of Common Stock as to which an Option may be exercised. 


        (h)    Termination of Continuous Service.    In the event that an Optionholder's Continuous Service terminates (for
reasons other than Cause or upon the Optionholder's death or Disability), the Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled to exercise such Option as
of the date of termination) but only within such period of time ending on the earlier of (i) the date three months following the termination of the Optionholder's Continuous Service (or such
longer or shorter period specified in the Option Agreement or (ii) the expiration of the term of the Option as set forth in the Option Agreement. If, after termination, the Optionholder does
not exercise his or her Option within the time specified in the Option Agreement, the Option shall terminate. 


        (i)    Extension of Termination Date.    An Optionholder's Option Agreement may also provide that if the exercise of
the Option following the termination of the Optionholder's Continuous Service (for reasons other than Cause or upon the Optionholder's death or Disability) would be prohibited at any time solely
because the issuance of shares of Common Stock would violate the registration 


10







 



requirements
under the Securities Act, then the Option shall terminate on the earlier of (i) the expiration of the term of the Option set forth in the Option Agreement or (ii) the
expiration of a period of three months after the termination of the Optionholder's Continuous Service during which the exercise of the Option would not be in violation of such registration
requirements. 


        (j)    Disability of Optionholder.    In the event that an Optionholder's Continuous Service terminates as a result of
the Optionholder's Disability, the Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled to exercise such Option as of the date of termination), but only within
such period of time ending on the earlier of (i) the date 12 months following such termination (or such longer or shorter period specified in the Option Agreement or (ii) the
expiration of the term of the Option as set forth in the Option Agreement. If, after termination, the Optionholder does not exercise his or her Option within the time specified herein, the Option
shall terminate. 


        (k)    Death of Optionholder.    In the event that (i) an Optionholder's Continuous Service terminates as a
result of the Optionholder's death or (ii) the Optionholder dies within the period (if any) specified in the Option Agreement after the termination of the Optionholder's Continuous Service for
a reason other than death, then the Option may be exercised (to the extent the Optionholder was entitled to exercise such Option as of the date of death) by the Optionholder's estate, by a person who
acquired the right to exercise the Option by bequest or inheritance or by a person designated to exercise the option upon the Optionholder's death pursuant to Section 6(e) or 6(f), but only
within the period ending on the earlier of (1) the date 18 months following the date of death (or such longer or shorter period specified in the Option Agreement or (2) the
expiration of the term of such Option as set forth in the Option Agreement. If, after death, the Option is not exercised within the time specified herein, the Option shall terminate. 


        (l)    Termination for Cause.    In the event an Optionholder's Continuous Service is terminated for Cause, the Option
shall terminate upon the termination date of such Optionholder's Continuous Service and the Optionholder is prohibited from exercising his or her Option as of the time of such termination. 



        (m)    Early Exercise.    The Option may, but need not, include a provision whereby the Optionholder may elect at any
time before the Optionholder's Continuous Service terminates to exercise the Option as to any part or all of the shares of Common Stock subject to the Option prior to the full vesting of the Option.
Any unvested shares of Common Stock so purchased may be subject to a repurchase option in favor of the Company or to any other restriction the Board determines to be appropriate. The Company will not
exercise its repurchase option until at least six months (or such longer or shorter period of time required to avoid a charge to earnings for financial accounting purposes) have elapsed following
exercise of the Option unless the Board otherwise specifically provides in the Option. 


7.     PROVISIONS OF STOCK AWARDS OTHER THAN OPTIONS.  


        (a)    Restricted Stock Awards.    Each Restricted Stock Award Agreement shall be in such form and shall contain such
terms and conditions as the Board shall deem appropriate. At the Board's election, shares of Common Stock may be (i) held in book entry form subject to the Company's instructions until any
restrictions relating to the Restricted Stock Award lapse; or (ii) evidenced by a certificate, which certificate shall be held in such form and manner as determined by the Board. The terms and
conditions of Restricted Stock Award Agreements may change from time to time, and the terms and conditions of separate Restricted Stock Award Agreements need not be identical,  provided, however, that
each Restricted Stock Award Agreement shall include (through incorporation of the 


11







 



provisions
hereof by reference in the agreement or otherwise) the substance of each of the following provisions: 



          (i)  Purchase Price.    At the time of the grant of a Restricted Stock Award, the Board will determine the price to
be paid by the Participant for each share subject to the Restricted Stock Award. To the extent required by law, the price to be paid by the Participant for each share of the Restricted Stock Award
will not be less than the par value of a share of Common Stock. A Restricted Stock Award may be awarded as a stock bonus (i.e., with no cash purchase
price to be paid) to the extent permissible under applicable law. 


         (ii)  Consideration.    At the time of the grant of a Restricted Stock Award, the Board will determine the
consideration permissible for the payment of the purchase price of the Restricted Stock Award. The purchase price of Common Stock acquired pursuant to the Restricted Stock Award shall be paid in one
of the following ways: (i) in cash at the time of purchase; (ii) at the discretion of the Board, according to a deferred payment or other similar arrangement with the Participant;
(iii) by services rendered or to be rendered to the Company; or (iv) in any other form of legal consideration that may be acceptable to the Board; provided,
however, that at any time that the Company is incorporated in Delaware, the Common Stock's "par value," as defined in the Delaware General Corporation Law, shall not be paid by
deferred payment and must be paid in a form of consideration that is permissible under the Delaware Corporation Law. 



       (iii)  Vesting.    Shares of Common Stock acquired under a Restricted Stock Award may, but need not, be subject to a
share repurchase option in favor of the Company in accordance with a vesting schedule to be determined by the Board. 


        (iv)  Termination of Participant's Continuous Service.    In the event that a Participant's Continuous Service
terminates, the Company shall have the right, but not the obligation, to repurchase or otherwise reacquire any or all of the shares of Common Stock held by the Participant that have not vested as of
the date of termination under the terms of the Restricted Stock Award Agreement. At the Board's election, the repurchase right may be at the least of: (i) the Fair Market Value on the relevant
date; (ii) the Participant's original cost; or (iii) if the Participant paid the purchase price for the shares of Common Stock with services rendered, then for no consideration. The
Company will not exercise its repurchase option until at least six months (or such longer or shorter period of time required to avoid
a charge to earnings for financial accounting purposes) have elapsed following the purchase of the restricted stock unless otherwise determined by the Board or provided in the Restricted Stock Award
Agreement. 


         (v)  Transferability.    Rights to purchase or receive shares of Common Stock granted under a Restricted Stock Award
shall be transferable by the Participant only upon such terms and conditions as are set forth in the Restricted Stock Award Agreement, as the Board shall determine in its discretion, and so long as
Common Stock awarded under the Restricted Stock Award remains subject to the terms of the Restricted Stock Award Agreement. 




        (b)    Phantom Stock.    Each Phantom Stock Award Agreement shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The terms and conditions of Phantom Stock Award Agreements may change from time to time, and the terms and conditions of separate Phantom Stock Award
Agreements need not be identical, provided, however, that each Phantom Stock Award Agreement shall include (through incorporation of the provisions
hereof by reference in the agreement or otherwise) the substance of each of the following provisions: 



          (i)  Consideration.    At the time of grant of a Phantom Stock Award, the Board will determine the consideration,
if any, to be paid by the Participant upon delivery of each share of Common Stock subject to the Phantom Stock Award. To the extent required by applicable law, the consideration to be paid by the
Participant for each share of Common Stock subject to a Phantom 



12







 

Stock
Award will not be less than the par value of a share of Common Stock. Such consideration may be paid in any form permitted under applicable law. 


         (ii)  Vesting.    At the time of the grant of a Phantom Stock Award, the Board may impose such restrictions or
conditions to the vesting of the Phantom Stock Award as it, in its absolute discretion, deems appropriate. 


       (iii)  Payment.    A Phantom Stock Award may be settled by the delivery of shares of Common Stock, their cash
equivalent, or any combination of the two, as the Board deems appropriate. 


        (iv)  Additional Restrictions.    At the time of the grant of a Phantom Stock Award, the Board, as it deems
appropriate, may impose such restrictions or conditions that delay the delivery of the shares of Common Stock (or their cash equivalent) subject to a Phantom Stock Award after the vesting of such
Award. 


         (v)  Dividend Equivalents.    Dividend equivalents may be credited in respect of shares of Common Stock covered by a
Phantom Stock Award, as determined by the Board and contained in the Phantom Stock Award Agreement. At the discretion of the Board, such dividend equivalents may be converted into additional shares of
Common Stock covered by the Phantom Stock Award by dividing (1) the aggregate amount or value of the dividends paid with respect to that number of shares of Common Stock covered by the Phantom
Stock Award then credited by (2) the Fair Market Value per share of Common Stock on the payment date for such dividend, or in such other manner as determined by the Board. Any additional shares
covered by the Phantom Stock Award credited by reason of such dividend equivalents will be subject to all the terms and conditions of the underlying Phantom Stock Award Agreement to which they relate. 


        (vi)  Termination of Participant's Continuous Service.    Except as otherwise provided in the applicable Phantom
Stock Award Agreement, such portion of the Phantom Stock Award that has not vested will be forfeited upon the Participant's termination of Continuous Service for any reason. 




        (c)    Stock Appreciation Rights.    Each Stock Appreciation Right Agreement shall be in such form and shall contain
such terms and conditions as the Board shall deem appropriate. The terms and conditions of Stock Appreciation Right Agreements may change from time to time, and the terms and conditions of separate
Stock Appreciation Right Agreements need not be identical, but each Stock Appreciation Right Agreement shall include (through incorporation of the provisions hereof by reference in the agreement or
otherwise) the substance of each of the following provisions: 



          (i)  Strike Price and Calculation of Appreciation.    Each Stock Appreciation Right will be denominated in share of
Common Stock equivalents. The appreciation distribution payable on the exercise of a Stock Appreciation Right will be not greater than an amount equal to the excess of (A) the aggregate Fair
Market Value (on the date of the exercise of the Stock Appreciation Right) of a number of shares of Common Stock equal to the number of share of Common Stock equivalents in which the Participant is
vested under such Stock Appreciation Right, and with respect to which the Participant is exercising the Stock Appreciation Right on such date, over (B) an amount that will be determined by the
Committee at the time of grant of the Stock Appreciation Right. 



         (ii)  Vesting.    At the time of the grant of a Stock Appreciation Right, the Board may impose such restrictions or
conditions to the vesting of such Stock Appreciate Right as it, in its absolute discretion, deems appropriate. 


       (iii)  Exercise.    To exercise any outstanding Stock Appreciation Right, the Participant must provide written
notice of exercise to the Company in compliance with the provisions of the Stock Appreciation Right Agreement evidencing such Stock Appreciation Right. 



13







 




        (iv)  Payment.    The appreciation distribution in respect of a Stock Appreciation Right may be paid in Common
Stock, in cash, or any combination of the two, or in any other form of consideration as determined by the Board and contained in the Stock Appreciation Right Agreement evidencing such Stock
Appreciation Right. 


         (v)  Termination of Continuous Service.    In the event that a Participant's Continuous Service terminates, the
Participant may exercise his or her Stock Appreciation Right (to the extent that the Participant was entitled to exercise such Stock Appreciation Right as of the date of termination) but only within
such period of time ending on the earlier of (i) the date three months following the termination of the Participant's Continuous Service (or such longer or shorter period specified in the Stock
Appreciation Right Agreement) or (ii) the expiration of the term of the Stock Appreciation Right as set forth in the Stock Appreciation Right Agreement. If, after termination, the Participant
does not exercise his or her Stock Appreciation Right within the time specified in the Stock Appreciation Right Agreement, the Stock Appreciation Right shall terminate. 




        (d)    Other Stock Awards.    Other forms of Stock Awards valued in whole or in part by reference to, or otherwise
based on, Common Stock may be granted either alone or in addition to Stock Awards provided for under Section 6 and the preceding provisions of this Section 7. Subject to the provisions
of the Plan, the Board shall have sole and complete authority to determine the persons to whom and the time or times at which such Other Stock Awards will be granted, the number of shares of Common
Stock (or the cash equivalent thereof) to be granted pursuant to such Awards and all other terms and conditions of such Awards. 


8.     COVENANTS OF THE COMPANY.  


        (a)    Availability of Shares.    During the terms of the Stock Awards, the Company shall keep available at all times
the number of shares of Common Stock required to satisfy such Stock Awards. 


        (b)    Securities Law Compliance.    The Company shall seek to obtain from each regulatory commission or agency having
jurisdiction over the Plan such authority as may be required to grant Stock Awards and to issue and sell shares of Common Stock upon exercise of the Stock Awards; provided,
however, that this undertaking shall not require the Company to register under the Securities Act the Plan, any Stock Award or any Common Stock issued or issuable pursuant to
any such Stock Award. If, after reasonable efforts, the Company is unable to obtain from any such regulatory commission or agency the authority which counsel for the Company deems necessary for the
lawful issuance and sale of Common Stock under the Plan, the Company shall be relieved from any liability for failure to issue and sell Common Stock upon exercise of such Stock Awards unless and until
such authority is obtained. 


9.     USE OF PROCEEDS FROM STOCK.


        Proceeds
from the sale of Common Stock pursuant to Stock Awards shall constitute general funds of the Company. 


10.   MISCELLANEOUS.  


        (a)    Acceleration of Exercisability and Vesting.    The Board shall have the power to accelerate the time at which a
Stock Award may first be exercised or the time during which a Stock Award or any part thereof will vest in accordance with the Plan, notwithstanding the provisions in the Stock Award stating the time
at which it may first be exercised or the time during which it will vest. 


        (b)    Stockholder Rights.    No Participant shall be deemed to be the holder of, or to have any of the rights of a
holder with respect to, any shares of Common Stock subject to such Stock Award unless 


14







 



and
until such Participant has satisfied all requirements for exercise of the Stock Award pursuant to its terms. 


        (c)    No Employment or other Service Rights.    Nothing in the Plan or any instrument executed or Stock Award granted
pursuant thereto shall confer upon any Participant any right to continue to serve the Company or an Affiliate in the capacity in effect at the time the Stock Award was granted or shall affect the
right of the Company or an Affiliate to terminate (i) the employment of an Employee with or without notice and with or without cause, (ii) the service of a Consultant pursuant to the
terms of such Consultant's agreement with the Company or an Affiliate or (iii) the service of a Director pursuant to the Bylaws of the Company or an Affiliate, and any applicable provisions of
the corporate law of the state in which the Company or the Affiliate is incorporated, as the case may be. 


        (d)    Incentive Stock Option $100,000 Limitation.    To the extent that the aggregate Fair Market Value (determined
at the time of grant) of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionholder during any calendar year (under all plans of the
Company and its Affiliates) exceeds $100,000, the Options or portions thereof that exceed such limit (according to the order in which they were granted) shall be treated as Nonstatutory Stock Options,
notwithstanding any contrary provision of a Stock Award Agreement. 


        (e)    Investment Assurances.    The Company may require a Participant, as a condition of exercising or acquiring
Common Stock under any Stock Award, (i) to give written assurances satisfactory to the Company as to the Participant's knowledge and experience in financial and business matters and/or to
employ a purchaser representative reasonably satisfactory to the Company who is knowledgeable and experienced in financial and business matters and that he or she is capable of evaluating, alone or
together with the purchaser representative, the merits and risks of exercising the Stock Award; and (ii) to give written assurances satisfactory to the Company stating that the Participant is
acquiring Common Stock subject to the Stock Award for the Participant's own account and not with any present intention of selling or otherwise distributing the Common Stock. The foregoing
requirements, and any assurances given pursuant to such requirements, shall be inoperative if (1) the issuance of the shares of Common Stock upon the exercise or acquisition of Common Stock
under the Stock Award has been registered under a then currently effective registration statement under the Securities Act or (2) as to any particular requirement, a determination is made by
counsel for the Company that such requirement need not be met in the circumstances under the then applicable securities laws. The Company may, upon advice of counsel to the Company, place legends on
stock certificates issued under the Plan as such counsel deems necessary or appropriate in order to comply with applicable securities laws, including, but not limited to, legends restricting the
transfer of the Common Stock. 


        (f)    Withholding Obligations.    To the extent provided by the terms of a Stock Award Agreement, the Participant may
satisfy any federal, state or local tax withholding obligation relating to the exercise or acquisition of Common Stock under a Stock Award by any of the following means (in addition to the Company's
right to withhold from any compensation paid to the Participant by the Company) or by a combination of such means: (i) tendering a cash payment; (ii) authorizing the Company to withhold
shares of Common Stock from the shares of Common Stock otherwise issuable to the Participant as a result of the exercise or acquisition of Common Stock under the Stock Award;  provided, however, that no
shares of Common Stock are withheld with a value exceeding the minimum amount of tax required to be withheld by law (or such
lesser amount as may be necessary to avoid variable award accounting); or (iii) delivering to the Company owned and unencumbered shares of Common Stock. 


11.   ADJUSTMENTS UPON CHANGES IN STOCK.  



        (a)    Capitalization Adjustments.    If any change is made in, or other event occurs with respect to, the Common
Stock subject to the Plan or subject to any Stock Award without the receipt of 


15







 



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 (each a "Capitalization
Adjustment"), the Plan will be appropriately adjusted in the class(es) and maximum number of securities subject to the Plan pursuant to Sections 4(a) and 4(b) and the maximum
number of securities subject to award to any person pursuant to Section 5(c), and the outstanding Stock Awards will be appropriately adjusted in the class(es) and number of securities and price
per share of Common Stock subject to such outstanding Stock Awards. 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 "without receipt of consideration" by the Company.) 


        (b)    Dissolution or Liquidation.    In the event of a dissolution or liquidation of the Company, then all
outstanding Stock Awards shall terminate immediately prior to the completion of such dissolution or liquidation. 


        (c)    Corporate Transaction.    In the event of a Corporate Transaction, any surviving corporation or acquiring
corporation may assume or continue any or all Stock Awards outstanding under the Plan or may substitute similar stock awards for Stock Awards outstanding under the Plan (it being understood that
similar stock awards include, but are not limited to, awards to acquire the same consideration paid to the stockholders or the Company, as the case may be, pursuant to the Corporate Transaction), and
any reacquisition or repurchase rights held by the Company in respect of Common Stock issued pursuant to Stock Awards may be assigned by the Company to the successor of the Company (or the successor's
parent company), if any, in connection with such Corporate Transaction. In the event that any surviving corporation or acquiring corporation does not assume or continue all such outstanding Stock
Awards or substitute similar stock awards for all such outstanding Stock Awards, then with respect to Stock Awards that have not been assumed, continued or substituted and that are held by
Participants whose Continuous Service has not terminated prior to the effective time of the Corporate Transaction, the vesting of such Stock Awards (and, if applicable, the time at which such Stock
Awards may be exercised) shall (contingent upon the effectiveness of the Corporate Transaction) be accelerated in full to a date prior to the effective time of such Corporate Transaction as the Board
shall determine (or, if the Board shall not determine such a date, to the date that is five days prior to the effective time of the Corporate Transaction), such Stock Awards shall terminate if not
exercised (if applicable) at or prior to such effective time, and any reacquisition or repurchase rights held by the Company with respect to such Stock Awards shall (contingent upon the effectiveness
of the Corporate Transaction) lapse. With respect to any other Stock Awards outstanding under the Plan that have not been assumed, continued or substituted, the vesting of such Stock Awards (and, if
applicable, the time at which such Stock Award may be exercised) shall not be accelerated, unless otherwise provided in a written agreement between the Company or any Affiliate and the holder of such
Stock Award, and such Stock Awards shall terminate if not exercised (if applicable) prior to the effective time of the Corporate Transaction. 



        (d)    Change in Control.    A Stock Award held by any Participant whose Continuous Service has not terminated prior
to the effective time of a Change in Control may be subject to additional acceleration of vesting and exercisability upon or after such event as may be provided in the Stock Award Agreement for such
Stock Award or as may be provided in any other written agreement between the Company or any Affiliate and the Participant, but in the absence of such provision, no such acceleration shall occur. 


16







 

12.   AMENDMENT OF THE PLAN AND STOCK AWARDS.  


        (a)    Amendment of Plan.    The Board at any time, and from time to time, may amend the Plan. However, except as
provided in Section 11(a) relating to Capitalization Adjustments, no amendment shall be effective unless approved by the stockholders of the Company to the extent stockholder approval is
necessary to satisfy applicable law. 


        (b)    Stockholder Approval.    The Board, in its sole discretion, may submit any other amendment to the Plan for
stockholder approval, including, but not limited to, amendments to the Plan intended to satisfy the requirements of Section 162(m) of the Code and the regulations thereunder regarding the
exclusion of performance-based compensation from the limit on corporate deductibility of compensation paid to Covered Employees. 


        (c)    Contemplated Amendments.    It is expressly contemplated that the Board may amend the Plan in any respect the
Board deems necessary or advisable to provide eligible Employees with the maximum benefits provided or to be provided under the provisions of the Code and the regulations promulgated thereunder
relating to Incentive Stock Options and/or to bring the Plan and/or Incentive Stock Options granted under it into compliance therewith. 


        (d)    No Impairment of Rights.    Rights under any Stock Award granted before amendment of the Plan shall not be
impaired by any amendment of the Plan unless (i) the Company requests the consent of the Participant and (ii) the Participant consents in writing. 



        (e)    Amendment of Stock Awards.    The Board at any time, and from time to time, may amend the terms of any one or
more Stock Awards; provided, however, that the rights under any Stock Award shall not be impaired by any such amendment unless (i) the Company
requests the consent of the Participant and (ii) the Participant consents in writing. 


13.   TERMINATION OR SUSPENSION OF THE PLAN.  



        (a)    Plan Term.    The Board may suspend or terminate the Plan at any time. Unless sooner terminated, the Plan shall
terminate on May 10, 2014. No Stock Awards may be granted under the Plan while the Plan is suspended or after it is terminated. 


        (b)    No Impairment of Rights.    Suspension or termination of the Plan shall not impair rights and obligations under
any Stock Award granted while the Plan is in effect except with the written consent of the Participant. 


14.   EFFECTIVE DATE OF PLAN.  



        The Plan shall become effective on the IPO Date, but no Stock Award shall be exercised (or, in the case of a stock bonus, shall be granted) unless and until the
Plan has been approved by the stockholders of the Company, which approval shall be within 12 months before or after the date the Plan is adopted by the Board. 


15.   CHOICE OF LAW.  


        The laws of the State of California shall govern all questions concerning the construction, validity and interpretation of this Plan, without regard to such
state's conflict of laws rules. 


17








   METABASIS THERAPEUTICS, INC.  


 AMENDED AND RESTATED 2001 EQUITY INCENTIVE PLAN  


 STOCK OPTION AGREEMENT

(INCENTIVE STOCK OPTION OR NONSTATUTORY STOCK OPTION)  


        Pursuant
to your Stock Option Grant Notice ("Grant Notice") and this Stock Option Agreement, Metabasis Therapeutics, Inc. (the
"Company") has granted you an option under its Amended and Restated 2001 Equity Incentive Plan (the
"Plan") to purchase the number of shares of the Company's Common Stock indicated in your Grant Notice at the exercise price indicated in your Grant
Notice. Defined terms not explicitly defined in this Stock Option Agreement but defined in the Plan shall have the same definitions as in the Plan. 


        The
details of your option are as follows: 


        1.    VESTING.    Subject to the limitations contained herein, your
option will vest as provided in your Grant Notice, provided that vesting will cease upon the termination of your Continuous Service. 


        2.    NUMBER OF SHARES AND EXERCISE PRICE.    The number of shares of
Common Stock subject to your option and your exercise price per share referenced in your Grant Notice may be adjusted from time to time for Capitalization Adjustments. 



        3.    METHOD OF PAYMENT.    Payment of the exercise price is due in
full upon exercise of all or any part of your option. You may elect to make payment of the exercise price in cash or by check or in any other manner permitted by your Grant
Notice, which may include one or more of the following: 



         (a)  In the Company's sole discretion at the time your option is exercised and provided that at the time of exercise the
Common Stock is publicly traded and quoted regularly in The Wall Street Journal, pursuant to a program developed under Regulation T as
promulgated by the Federal Reserve Board that, prior to the issuance of Common Stock, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay
the aggregate exercise price to the Company from the sales proceeds. 


         (b)  Provided that at the time of exercise the Common Stock is publicly traded and quoted regularly in  The Wall Street Journal, by delivery of already-owned
shares of Common Stock either that you have held for the period required to avoid a charge to the
Company's reported earnings (generally six months) or that you did not acquire, directly or indirectly from the Company, that are owned free and clear of any liens, claims, encumbrances or security
interests, and that are valued at Fair Market Value on the date of exercise. "Delivery" for these purposes, in the sole discretion of the Company at the time you exercise your option, shall include
delivery to the Company of your attestation of ownership of such shares of Common Stock in a form approved by the Company. Notwithstanding the foregoing, you may not exercise your option by tender to
the Company of Common Stock to the extent such tender would violate the provisions of any law, regulation or agreement restricting the redemption of the Company's stock. 




        4.    WHOLE SHARES.    You may exercise your option only for whole
shares of Common Stock. 


        5.    SECURITIES LAW COMPLIANCE.    Notwithstanding anything to the
contrary contained herein, you may not exercise your option unless the shares of Common Stock issuable upon such exercise are then registered under the Securities Act or, if such shares of Common
Stock are not then so registered, the Company has determined that such exercise and issuance would be exempt from the registration requirements of the Securities Act. The exercise of your option also
must comply with other applicable laws and regulations governing your option, and you may not exercise your option if the Company determines that such exercise would not be in material compliance with
such laws and regulations. 


1







 



        6.    TERM.    You may not exercise your option before the
commencement or after the expiration of its term. The term of your option commences on the date of grant and expires upon the earliest of the following: 



        (a)   immediately upon the termination of your Continuous Service for Cause; 


        (b)   three months after the termination of your Continuous Service for any reason other than your Disability or death,
provided that if during any part of such three-month period your option is not exercisable solely because of the condition set forth in Section 5, your option shall not expire until the earlier
of the Expiration Date or until it shall have been exercisable for an aggregate period of three months after the termination of your Continuous Service; 



        (c)   12 months after the termination of your Continuous Service due to your Disability; 


        (d)   18 months after your death if you die either during your Continuous Service or within three months after your
Continuous Service terminates; 


        (e)   the Expiration Date indicated in your Grant Notice; or 



        (f)    the day before the tenth anniversary of the date of grant. 




        If
your option is an Incentive Stock Option, note that to obtain the federal income tax advantages associated with an Incentive Stock Option, the Code requires that at all times
beginning on the date of grant of your option and ending on the day three months before the date of your option's exercise, you must be an employee of the Company or an Affiliate, except in the event
of your death or your permanent and total disability, as defined in Section 22(e) of the Code. (The definition of disability in Section 22(e) of the Code is different from the definition
of the Disability under the Plan). The Company has provided for extended exercisability of your option under certain circumstances for your benefit but cannot guarantee that your option will
necessarily be treated as an Incentive Stock Option if you continue to provide services to the Company or an Affiliate as a Consultant or Director after your employment terminates or if you otherwise
exercise your option more than three months after the date your employment with the Company or an Affiliate terminates. 


        7.    EXERCISE.    



        (a)   You may exercise the vested portion of your option during its term by delivering a Notice of Exercise (in a form
designated by the Company) together with the exercise price to the Secretary of the Company, or to such other person as the Company may designate, during regular business hours, together with such
additional documents as the Company may then require. 


        (b)   By exercising your option you agree that, as a condition to any exercise of your option, the Company may require you to
enter into an arrangement providing for the payment by you to the Company of any tax withholding obligation of the Company arising by reason of (1) the exercise of your option, (2) the
lapse of any substantial risk of forfeiture to which the shares of Common Stock are
subject at the time of exercise, or (3) the disposition of shares of Common Stock acquired upon such exercise. 


        (c)   If your option is an Incentive Stock Option, by exercising your option you agree that you will notify the Company in
writing within 15 days after the date of any disposition of any of the shares of the Common Stock issued upon exercise of your option that occurs within two years after the date of your option
grant or within one year after such shares of Common Stock are transferred upon exercise of your option. 




        8.    TRANSFERABILITY.    



        (a)   If your option is an Incentive Stock Option, your option is not transferable, except by will or by the laws of descent
and distribution, and is exercisable during your life only by you. 



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Notwithstanding
the foregoing, by delivering written notice to the Company, in a form satisfactory to the Company, you may designate a third party who, in the event of your death, shall thereafter be
entitled to exercise your option. 


        (b)   If your option is a Nonstatutory Stock Option, your option is not transferable, except (i) by will or by the laws
of descent and distribution, (ii) with the prior written approval of the Company, by instrument to an inter vivos or testamentary trust, in a form accepted by the Company, in which the option
is to be passed to beneficiaries upon the death of the trustor (settlor) and (iii) with the prior written approval of the Company, by gift, in a form accepted by the Company, to a permitted
transferee under Rule 701 of the Securities Act. Notwithstanding the foregoing, by delivering written notice to the Company, in a form satisfactory to the Company, you may designate a third
party who, in the event of your death, shall thereafter be entitled to exercise your option. 




        9.    OPTION NOT A SERVICE CONTRACT.    Your option is not an
employment or service contract, and nothing in your option shall be deemed to create in any way whatsoever any obligation on your part to continue in the employ of the Company or an Affiliate, or of
the Company or an Affiliate to continue your employment. In addition, nothing in your option shall obligate the Company or an Affiliate, their respective stockholders, Boards of Directors, Officers or
Employees to continue any relationship that you might have as a Director or Consultant for the Company or an Affiliate. 


        10.    WITHHOLDING OBLIGATIONS.    



        (a)   At the time you exercise your option, in whole or in part, or at any time thereafter as requested by the Company, you
hereby authorize withholding from payroll and any other amounts payable to you, and otherwise agree to make adequate provision for (including by means of a "cashless exercise" pursuant to a program
developed under Regulation T as promulgated by the Federal Reserve Board to the extent permitted by the Company), any sums required to satisfy the federal, state, local and foreign tax
withholding obligations of the Company or an Affiliate, if any, which arise in connection with the exercise of your option. 



        (b)   Upon your request and subject to approval by the Company, in its sole discretion, and compliance with any applicable
legal conditions or restrictions, the Company may withhold from fully vested shares of Common Stock otherwise issuable to you upon the exercise of your option a number of whole shares of Common Stock
having a Fair Market Value, determined by the Company as of the date of exercise, not in excess of the minimum amount of tax required to be withheld by law (or such lower amount as may be necessary to
avoid variable award accounting). If the date of determination of any tax withholding obligation is deferred to a date later than the date of exercise of your option, share withholding pursuant to the
preceding sentence shall not be permitted unless you make a proper and timely election under Section 83(b) of the Code, covering the aggregate number of shares of Common Stock acquired upon
such exercise with respect to which such determination is otherwise deferred, to accelerate the determination of such tax withholding obligation to the date of exercise of your option. Notwithstanding
the filing of such election, shares of Common Stock shall be withheld solely from fully vested shares of Common Stock determined as of the date of exercise of your option that are otherwise issuable
to you upon such exercise. Any adverse consequences to you arising in connection with such share withholding procedure shall be your sole responsibility. 


        (c)   You may not exercise your option unless the tax withholding obligations of the Company and/or any Affiliate are
satisfied. Accordingly, you may not be able to exercise your option when desired even though your option is vested, and the Company shall have no obligation to issue a certificate for such shares of
Common Stock or release such shares of Common Stock from any escrow provided for herein unless such obligations are satisfied. 



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        11.    NOTICES.    Any notices provided for in your option or the Plan
shall be given in writing and shall be deemed effectively given upon receipt or, in the case of notices delivered by mail by the Company to you, five days after deposit in the United States mail,
postage prepaid, addressed to you at the last address you provided to the Company. 


        12.    GOVERNING PLAN DOCUMENT.    Your option is subject to all the
provisions of the Plan, the provisions of which are hereby made a part of your option, and 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 your option and those of the Plan, the provisions of the Plan shall control. 


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Exhibit 10.2