Document:

Exhibit 10.3.2 - Marathon and APC 1991 Amendment 2

    Exhibit
      10.3.2

    

    SECOND
      AMENDMENT TO GAS PURCHASE AGREEMENT

    BETWEEN
      MARATHON OIL COMPANY AND

    ALASX.A
      PIPELINE COMPANY

    DATED
      MAY
      1, 1988

    

    WHEREAS,
      Marathon Oil Company (“Seller”) and Alaska Pipeline Company (“Buyer”) entered
      into that certain Gas Purchase Agreement dated May 1, 1988 (“the Agreement”);
      and

    

    WHEREAS,
      Seller and Buyer have previously amended the Agreement; and

    

    WHEREAS,
      Seller and Buyer desire to make further modifications to the Agreement for
      the
      benefit of both parties;

    

    NOW,
      THEREFORE, in consideration of the premises and the mutual covenants and
      agreements herein contained, the parties do covenant and agree as
      follows:

    

    A. Section
      1.5
      of the Agreement is amended by adding the following sentence:

    After
      the
      Year 2001, the term “Annual Contract Quantity,” when applied to Gas sold
      pursuant to the Initial Commitment, shall mean the amount of Gas which Seller
      is
      obligated to sell and which Buyer is obligated to purchase pursuant to this
      Agreement.

    

    B. Section
      4.0
      of the Agreement is amended by deleting, from the last sentence, “immediately
      after Buyer has exhausted the Initial Commitment” and inserting in lieu thereof
“when volumes Seller is obligated to sell pursuant to the Initial Commitment
      are
      insufficient to meet Buyer’s New Gas needs.”

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    C. Section
      4.1
      of the Agreement is deleted and replaced with the following:

    An
      Annual
      Additional Commitment is the total amount of Gas in excess of the amount of
      Gas
      previously committed under this Agreement and all other contracts under which
      Buyer has the right to purchase Gas which Buyer forecasts will be necessary
      to
      meet its Gas supply requirements for the first nine (9) Years of any Option
      Forecast.

    

    Annual
      Additional Commitments are made pursuant to the procedures in Section
      4.4.

    

    D. The
      second
      sentence of Section 4.3(b) of the Agreement is deleted and replaced with the
      following:

    Any
      Supplemental Forecast which shows that the volumes Seller is obligated to sell
      pursuant to the Initial Commitment plus Annual Additional Commitments (if any
      have been made) will be insufficient to meet Buyer’s New Gas needs on or before
      the end of the ninth (9th) Year of the forecast and any Supplemental Forecast
      showing a Year after 2001 (except a ninth (9th) Year in which the Annual Volumes
      of Gas to be sold pursuant to Table 1 of Section 4.7 are adequate to meet
      Buyer’s New Gas needs) shall be called an “Option Forecast.”

    

    E. Option
      1 of
      Section 4.4(a) of the Agreement is deleted and replaced with the
      following:

    Option
      1: Seller
      will
      advise Buyer that sales pursuant to this Agreement shall terminate after Seller
      has sold to Buyer all Gas remaining to be delivered pursuant to the Initial
      Commitment plus any Annual Additional Commitments which have been previously
      made.

    

    F. Option
      2 of
      Section 4.4(a) of the Agreement is deleted and replaced with the
      following:

    

    2

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Option
      2: Seller
      will
      make an Annual Additional Commitment calculated pursuant to Section
      4.1.

    

    G. Section
      4.4(b) is amended by changing the date “1995” in line 1 to “1994” and by
      changing the date “1996” in line 2 to “1995”.

    

    H. The
      following
      provision is added to the end of Section 4.5(c):

    
      	 	
              (3)

            	
              Maximum
                permissible Swing Rates calculated pursuant to Sections 4.5(c)(1)
                and (2)
                shall be based on the total Swing Rate for New Gas sold in the applicable
                Year pursuant to the Initial Commitment, the applicable Annual Additional
                Commitment, and/or the Final Additional
                Commitment.

            

    

    

    I. Section
      4.7
      is amended by deleting the first paragraph and replacing it with the following
      paragraph:

    Subject
      to
      Buyer’s rights to take Gas purchased from other sellers pursuant to Section
      4.13, Buyer shall take from Seller through December 31, 2001, all of Buyer’s New
      Gas requirements that Seller can supply. Beginning January 1, 2002, Buyer shall
      be obligated to purchase, and Seller shall be obligated to sell, each Year
      only
      the Annual Volumes of Gas shown in Table 1 below (which are part of the Initial
      Commitment) plus Annual Additional and Final Additional Commitments until the
      Initial, Annual Additional, and Final Additional Commitments, net of any
      reductions (including purchases pursuant to Section 4.13) permitted by this
      Agreement, have been exhausted; provided, however, that Buyer shall never be
      obligated to take and purchase from Seller, or to pay for if not taken, any
      Gas
      in excess of Buyer’s New Gas requirements less any Gas purchased pursuant to
      Section 4.13.

    

    3

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    

      
        	
                Table
                  1

              
	 	 
	
                Year

              	
                Annual
                  Volumes of Gas (Bcf)

              
	 	 
	
                2002

              	
                21

              
	
                2003

              	
                19

              
	
                2004

              	
                17

              
	
                2005

              	
                15

              
	
                2006

              	
                13

              
	
                2007

              	
                11

              
	
                2008

              	
                9

              
	
                2009

              	
                7

              
	
                2010

              	
                5

              
	
                all
                  later years

              	
                5

              

      

    The
      Annual
      Volumes of Gas in Table 1 are part of the Initial Commitment but do not increase
      the Initial Commitment.

    

    J. The
      first
      sentence of Section 4.8 is deleted and replaced with the following:

    Subject
      to
      all of the terms of this Agreement, Seller shall deliver all of Buyer’s
      requirements for New Gas each day through December 31, 2001. In any Year after
      2001 for which Seller has made an Annual Additional Commitment, Seller shall
      deliver all of Buyer’s requirements for New Gas each Day until the Initial and
      Annual Additional Commitments have been exhausted. In any Year after 2001 for
      which Seller has not made an Annual Additional Commitment or Final Additional
      Commitment, the Swing Rate shall be a pro-rata share of Buyer’s projected
      maximum daily demand on all suppliers calculated as follows:

    

    No
      later than
      October 1 of each Year (beginning in 2000), Buyer shall give Seller a projection
      (“Swing Rate Forecast”) of Buyer’s maximum daily demand on all suppliers and
      total purchases from all suppliers, including Seller, for each of the next
      two
      Years. Buyer’s Swing Rate Forecast will not exceed Buyer’s historical daily
      peaks reasonably adjusted for known or estimated changes, including load growth
      or decline. Seller shall have the right to review all data on which a Swing
      Rate
      Forecast is based. The Swing Rate for the second year of each Swing Rate
      Forecast shall be calculated by:

    

    4

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (i) using
      Table 1
      to determine the Annual Volume of Gas Seller must deliver to Buyer;

    

    (ii) dividing
      the
      result of (i) by Buyer’s forecast of total purchases from all suppliers;
      and

    

    (iii) multiplying
      the result of (ii) by Buyer’s forecast of maximum daily demand on all suppliers,
      including Seller.

    

    All
      calculations are based on data from the second Year of the Swing Rate Forecast.
      The first Year of the Swing Rate Forecast is informational only and will be
      updated as the forecast “rolls” forward the following Year. The calculations are
      not applicable and will not be made for any Year in which Seller has made an
      Annual or Final Additional Commitment.

    

    An
      example of
      the calculation of Swing Rate for 2004 follows. Assume that on October 1 of
      2002, Buyer makes the following Swing Rate Forecasts:

    

    
      	 	 	
              2003

            	
              2004

            	 
	 	 	 	 	 
	 	
              Maximum
                daily demand (MMcf) on all suppliers, including Seller

            	
              270.00

            	
              275.00

            	 
	 	 	 	 	 
	 	
              Total
                purchases (Bcf) from all suppliers, including Seller

            	
              35.00

            	
              36.00

            	 
	 	 	 	 	 
	 	
              The
                Annual Volume of Gas (Table 1)

            	
              19.00

            	
              17.00

            	 
	 	 	 	 	 
	 	
              Swing
                rate for 2004 =

              17
                x 275
                =

              36

            	
               

              N/A

            	
               

              129.86

            	 

    

    

    Buyer
      shall
      have the option to purchase daily quantities of Gas, if any, in excess of the
      Swing Rate then in effect which, in Seller’s sole judgment, can be produced and
      delivered efficiently and in accordance with good operating practices and
      without impairment of Seller’s obligations under other Gas sales contracts and
      under Seller’s other needs for Gas. Buyer has the right, but not the obligation,
      to purchase the Swing Rate from Seller on any day of the Year, regardless of
      whether Buyer has already taken the Annual Volume of Gas (Table 1) for that
      Year, provided that Buyer is also purchasing the maximum daily quantities of
      Gas
      available from its other suppliers.

    

    5

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    K. The
      first
      sentence of Section 4.9 is deleted and replaced with the following:

    Subject
      to
      all of the terms of this Agreement, Seller shall immediately begin deliveries
      of
      the Final Additional Commitment when the last Annual Additional Commitment
      is
      exhausted or, if earlier, in any Year in which the Initial Commitment is not
      adequate to meet Buyer’s demands for New Gas.

    

    L. Section
      4.13(f) is amended by inserting, before the period, the following:

    or,
      to the
      extent Seller is not obligated to supply all of Buyer’s New Gas requirements
      because Seller has exercised Option 1 of Section 4.4(a), for delivery in any
      Year in which Seller is not so obligated.

    

    M. The
      heading
      of Section 19.4 is amended by deleting the word “Draftsman” and inserting in
      lieu thereof the word “Drafter.”

    

    N. Exhibit
      A is
      amended by adding to it the following contract amendments:

    Agreement
      between Shell Western E & P Inc. and Alaska Pipeline Company dated November
      15, 1991, to amend the agreement between Shell Oil Company and Alaska Pipeline
      Company dated December 20, 1982, and amended May 24, 1982.

    

    Agreement
      between ARCO Alaska, Inc. and Alaska Pipeline Company dated November 15, 1991,
      to amend the agreement between Shell Oil Company and Alaska Pipeline Company
      dated December 20, 1982, and amended May 24, 1982.

    

    6

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    O. This
      Second
      Amendment cannot be permanently implemented until it has been approved by the
      Alaska Public Utilities Commission (APUC). This Second Amendment shall be deemed
      approved when the APUC issues a final order, which is no longer subject to
      appeal, finding that approval is in the public interest.

    

    If
      the APUC
      does not approve this Second Amendment by January 1, 1993, either party may
      cancel the Second Amendment after thirty (30) days’ written notice to the other
      party and to the APUC. If the APUC approves this Second Amendment subject to
      terms and conditions which are unacceptable to either party, either party may
      petition for reconsideration. The party finding the terms and conditions
      unacceptable must, within five (5) business days of being served with the order,
      notify the other party in writing of the terms and conditions which are
      unacceptable and state whether it will petition for reconsideration. If a
      petition for reconsideration is filed and if the unacceptable terms and
      conditions are not cured, the party finding the terms and considerations
      unacceptable may cancel the Second Amendment by giving notice within thirty
      (30)
      days following the last day on which the petition for reconsideration could
      be
      granted or within thirty (30) days following the APUC’s order on
      reconsideration, whichever is earlier. If petition for reconsideration is not
      filed, either party may cancel this Second Amendment by giving written notice
      within thirty (30) days of the service of the order containing the unacceptable
      terms and conditions.

    

    7

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    P. Except
      as
      expressly modified by this Second Amendment, the Agreement remains in effect
      and
      the terms used in this Second Amendment shall have the same meaning as in the
      Agreement. In the event that this Second Amendment is inconsistent with the
      Agreement, this Second Amendment shall govern the interpretation of the
      Agreement as amended by this Second Amendment.

     

    
      	ALASKA
              PIPELINE COMPANY 	 	 	
              MARATHON OIL
                COMPANY

               

               

            
	By:
              /s/R. F. Barnes 	 	 	By:
              /s/Richard G. Grammer 
	
              

            	 	 	
              

            
	Its: 
              President

Dated:  November 19, 1991	 	 	Its: 
              Vice President

Dated:  November 15,
              1991

    

    

    8exv10w1

 

Exhibit 10.1

CONNETICS CORPORATION

NON-QUALIFIED STOCK OPTION AGREEMENT

     Connetics Corporation, a Delaware corporation (“Connetics” or the “Corporation”), hereby
grants to David Burch (the “Optionee”) an option to purchase 10,000 shares of Common Stock (the
“Option”) subject to the following terms and conditions of this Non-Qualified Stock Option
Agreement (the “Option Agreement”):

	I.	 	NOTICE OF STOCK OPTION GRANT

	 	 	 	 	 	 	 
	 

	 	David Burch	 	 	 	 
	 

	 	3160 Porter Drive	 	 	 	 
	 

	 	Palo Alto, CA 94304	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Date of Grant
	 	January 3, 2006

	 
	 	 	 	 	 	 
	 

	 	Vesting Commencement Date
	 	January 3, 2006

	 
	 	 	 	 	 	 
	 

	 	Exercise Price per Share
	 	$15.10	 	 
	 

	 	 	 	 
	 	 
	 
	 	 	 	 	 	 
	 

	 	Total Number of Shares of Common	 	 	 	 
	 

	 	Stock Subject to the Option (the “Shares”)
	 	10,000 Shares

	 
	 	 	 	 	 	 
	 

	 	Total Exercise Price
	 	$151,000.00	 	 
	 

	 	 	 	 
	 	 
	 
	 	 	 	 	 	 
	 

	 	Type of Option:
	 	Nonstatutory Stock Option

	 
	 	 	 	 	 	 
	 

	 	Term/Expiration Date:
	 	January 3, 2016

  Vesting Schedule:

     This Option may be exercised, in whole or in part, in accordance with the following schedule:

     1/8 of the Shares subject to the Option shall vest six months after the Vesting Commencement
Date, and 1/48 of the Shares subject to the Option shall vest each month thereafter, subject to the
Optionee continuing to be a Service Provider on such dates.

  Termination Period:

     This Option may be exercised for (3) three months after the Optionee ceases to be a Service
Provider for any reason other than death or Disability. In the event the Optionee ceases to be a
Service Provider as the result of death or Disability, this Option may be exercised for (12) twelve
months after the Optionee ceases to be a Service Provider. In no event shall this Option be
exercised later than the Term/Expiration Date as provided above.

1  --

 

	II.	 	AGREEMENT

     1.     Grant of Option. The Corporation hereby grants to the Optionee named in the Notice
of Stock Option Grant (the “Notice”) attached as Part I of this Option Agreement an option (the
“Option”) to purchase the number of Shares, as set forth in the Notice, at the exercise price per
share set forth in the Notice (the “Exercise Price”), subject to the terms and conditions of the
Notice and this Option Agreement.

          This Option is subject to and conditioned upon Optionee’s acceptance of the Option by
returning to the Corporation an executed original of this Option Agreement. This Option shall be
null and void and of no force and effect, unless the Optionee executes and returns to the
Corporation this Option Agreement.

          This Option is granted as an inducement material to the Optionee’s entering into service with
the Corporation as an Employee. The Grantee has not previously been a Service Provider of the
Company or any Parent or Subsidiary of the Company.

          This Option is not intended to be an incentive stock option under Section 422 of the Code.

     2.     Exercise of Option.

               (a)     Right to Exercise. This Option is exercisable during its term in accordance with
the Vesting Schedule set out in the Notice and the applicable provisions of this Option Agreement.

               (b)     Method of Exercise. This Option is exercisable by delivery of an exercise notice
or by such other procedure as specified from time to time by the Board, which shall state the
election to exercise the Option and the number of Shares in respect of which the Option is being
exercised (the “Exercised Shares”). The exercise notice shall be completed by the Optionee and
delivered to Connetics in person, by certified mail, or by such other method (including electronic
transmission) as determined from time to time by the Board. The exercise notice shall be
accompanied by payment of the aggregate Exercise Price as to all Exercised Shares. This Option
shall be deemed to be exercised upon receipt by Connetics of such fully executed exercise notice
accompanied by such aggregate Exercise Price.

          No Shares shall be issued pursuant to the exercise of this Option unless such issuance and
exercise complies with Applicable Laws. Assuming such compliance, for income tax purposes the
Exercised Shares shall be considered transferred to the Optionee on the date the Option is
exercised with respect to such Exercised Shares.

2  --

 

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

               (c)     cash; or

               (d)     check; or

               (e)     consideration received by Connetics under a cashless exercise program implemented by
Connetics in connection with this Option Agreement; or

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

     4.     Non-Transferability of Option. This Option may not be transferred in any manner
otherwise than by will or by the laws of descent or distribution and may be exercised during the
lifetime of Optionee only by the Optionee. The terms of this Option Agreement shall be binding
upon the executors, administrators, heirs, successors and assigns of the Optionee.

     5.     No Obligation to Exercise Option. The grant and acceptance of this Option imposes
no obligation on the Optionee to exercise it.

     6.     No Obligation to Continue Business Relationship. The Corporation and any its’
subsidiaries are not by this Option obligated to continue to maintain a business relationship with
the Optionee.

     7.     Term of Option. This Option may be exercised only within the term set out in the
Notice, and may be exercised during such term only in accordance with the terms of this Option
Agreement.

     8.     Tax Consequences. Some of the federal tax consequences relating to this Option, as
of the date of this Option, are set forth below. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE
TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE
EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

               (g)     Exercising the Option. The Optionee may incur regular federal income tax
liability upon exercise of the Option. The Optionee will be treated as having received
compensation income (taxable at ordinary income tax rates) equal to the excess, if any, of the Fair
Market Value of the Exercised Shares on the date of exercise over their aggregate Exercise Price.
If the Optionee is an Employee or a former Employee, Connetics will be required to withhold from
his or her compensation or collect from Optionee and pay to the applicable taxing authorities an
amount in cash equal to a percentage of this compensation income at the time of exercise, and may
refuse to honor the exercise and refuse to deliver Shares if such withholding amounts are not
delivered at the time of exercise.

3  --

 

               (h)     Disposition of Shares. The Optionee holds the Shares acquired upon exercise of
the Option for at least one year, any gain realized on disposition of the Shares will be treated as
long-term capital gain for federal income tax purposes.

     9.     No Rights as Stockholder until Exercise. The Optionee shall have no rights as a
stockholder with respect to the Shares until a stock certificate has been issued to the Optionee
and is fully paid for in accordance with paragraph 3. With respect to certain changes in the
capitalization of the Corporation, no adjustment shall be made for dividends or similar rights for
which the record date is prior to the date such stock certificate is issued.

     10.     Adjustments Upon Changes in Capitalization, Dissolution, Merger or Asset Sale.

               (a)     Changes in Capitalization. Subject to any required action by the stockholders of
Connetics, the number of shares of Common Stock covered by the Option as well as the Exercise Price
shall be proportionately adjusted for any increase or decrease in the number of issued shares of
Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the number of issued
shares of Common Stock effected without receipt of consideration by Connetics; provided, however,
that conversion of any convertible securities of Connetics shall not be deemed to have been
“effected without receipt of consideration.” Such adjustment shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive. Except as expressly provided
in this Option Agreement, no issuance by Connetics of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares of Common Stock subject to an Option.

               (b)     Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of Connetics, the Board shall notify the Optionee prior to the effective date of such
proposed transaction. The Board in its discretion may permit the Optionee to exercise the Option
prior to such transaction as to all of the Shares, including Shares as to which the Option would
not otherwise be vested and exercisable. To the extent it has not been previously exercised, an
Option will terminate immediately prior to the consummation of such proposed action.

               (i)     Merger or Asset Sale. In the event of a merger of Connetics with or into another
corporation, or the sale of substantially all of the assets of Connetics, the Option shall be
assumed or an equivalent option or right substituted by the successor corporation or a Parent or
Subsidiary of the successor corporation. In the event that the successor corporation refuses to
assume or substitute for the Option, the Optionee shall fully vest in and have the right to
exercise the Option as to all of the Shares, including Shares as to which it would not otherwise be
vested and exercisable. If an Option becomes fully vested and exercisable in lieu of assumption or
substitution in the event of a merger or sale of assets, the Board shall notify the Optionee in
writing or electronically that the Option shall be fully vested and exercisable for a period of
time as determined by the Board, and the Option shall terminate upon the expiration of such period.
For the purposes of this paragraph, the Option shall be considered assumed if, following the
merger or sale of assets, the option confers the right to purchase or receive, for each Share
subject to the Option immediately prior to the merger or sale of assets, the consideration

4  --

 

(whether stock, cash, or other securities or property) received in the merger or sale of
assets by holders of Common Stock for each share held on the effective date of the transaction (and
if holders were offered a choice of consideration, the type of consideration chosen by the holders
of a majority of the outstanding shares of Common Stock); provided, however, that if such
consideration received in the merger or sale of assets is not solely common stock of the successor
corporation or its Parent, the Board may, with the consent of the successor corporation, provide
for the consideration to be received upon the exercise of the Option, for each Share subject to the
Option, to be solely common stock of the successor corporation or its Parent equal in fair market
value to the per share consideration received by holders of Common Stock in the merger or sale of
assets.

     11.     Entire Agreement; Governing Law. This Option Agreement constitutes the entire
agreement of the parties with respect to the subject matter hereof and supersedes in its entirety
all prior undertakings and agreements of Connetics and Optionee with respect to the subject matter
hereof, and may not be modified adversely to the Optionee’s interest except by means of a writing
signed by Connetics and Optionee. This agreement is governed by the internal substantive laws, but
not the choice of law rules, of California.

     12.     NO GUARANTEE OF CONTINUED SERVICE. OPTIONEE ACKNOWLEDGES AND AGREES THAT THE
VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE OF THIS AGREEMENT IS EARNED ONLY BY CONTINUING
AS A SERVICE PROVIDER AT THE WILL OF CONNETICS (AND NOT THROUGH THE ACT OF BEING HIRED, BEING
GRANTED AN OPTION OR PURCHASING SHARES UNDER THIS AGREEMENT). OPTIONEE FURTHER ACKNOWLEDGES AND
AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED UNDER THIS AGREEMENT AND THE VESTING
SCHEDULE SET FORTH IN THIS AGREEMENT DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED
ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT
INTERFERE WITH OPTIONEE’S RIGHT OR CONNETICS’ RIGHT TO TERMINATE OPTIONEE’S RELATIONSHIP AS A
SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.

5  --

 

	III.	 	DEFINITIONS

          A. “Applicable Laws” means the requirements relating to the administration of stock
options under U. S. state corporate laws, U.S. federal and state securities laws, the Code, any
stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable
laws of any foreign country or jurisdiction where the Optionee may be resident.

          B. “Board” means the Board of Directors of Connetics.

          C. “Code” means the Internal Revenue Code of 1986, as amended.

          D. “Common Stock” means the common stock of Connetics.

          E. “Corporation” means Connetics Corporation, a Delaware corporation.

          F. “Consultant” means any person, including an advisor, engaged by Connetics or a
Parent or Subsidiary to render services to such entity.

          G. “Director” means a member of the Board.

          H. “Disability” means total and permanent disability as defined in Section 22(e)(3) of
the Code.

          I. “Employee” means any person, including Officers and Directors, employed by
Connetics or any Parent or Subsidiary of Connetics. A Service Provider shall not cease to be an
Employee in the case of (i) any leave of absence approved by Connetics or (ii) transfers between
locations of Connetics or between Connetics, its Parent, any Subsidiary, or any successor. Neither
service as a Director nor payment of a director’s fee by Connetics shall be sufficient to
constitute “employment” by Connetics.

          J. “Exchange Act” means the Securities Exchange Act of 1934, as amended.

          K. “Fair Market Value” means, as of any date, the value of Common Stock determined as
follows:

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

(ii) If the Common Stock is regularly quoted by a recognized securities dealer but
selling prices are not reported, the Fair Market Value of a Share of Common

6  --

 

Stock
shall be the mean between the high bid and low asked prices for the Common Stock on the date of determination, as reported in The Wall Street Journal or
such other source as the Board deems reliable; or

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

          L. “Officer” means a person who is an officer of Connetics within the meaning of
Section 16 of the Exchange Act and the rules and regulations promulgated under the Exchange Act.

          M. “Parent” means a “parent corporation,” whether now or hereafter existing, as
defined in Section 424(e) of the Code.

          N. “Service Provider” means an Employee, Director or Consultant.

          O. “Subsidiary” means a “subsidiary corporation”, whether now or hereafter existing,
as defined in Section 424(f) of the Code.

7  --

 

     By your signature and the signature of Connetics’ representative below, you and Connetics
agree that this Option is granted under and governed by the terms and conditions of the this Option
Agreement. Optionee has reviewed this Option Agreement in its’ entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Option Agreement and fully understands all
provisions of this Option Agreement. Optionee hereby agrees to accept as binding, conclusive and
final all decisions or interpretations of the Board upon any questions relating to this Option
Agreement. Optionee further agrees to notify Connetics upon any change in the residence address
indicated below.

	 	 	 
	OPTIONEE:

	 	CONNETICS CORPORATION
	 
	 	 
	     /s/
David Burch
	 	     /s/Thomas G. Wiggans
	 

	 	 
	Signature

	 	By: Thomas G. Wiggans
	 
	 	 
	     David
Burch

	 	     Chief Executive Officer
	 

	 	 
	Print Name

	 	Title
	 
	 	 
	 

Residence Address

	 	  
	 
	 	 
	 

	 	 

8  --

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00096-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00096-of-00352.parquet"}]]