Common use of Merger or Asset Sale Clause in Contracts

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 (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.

Merger or Asset Sale. In the event of a merger of Connetics the Company with or into another corporation, or the sale of substantially all of the assets of Conneticsthe Company, 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 SharesOptioned Stock, including Shares as to which it would not otherwise be vested and or exercisable. If an the 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 fifteen (15) days from the Boarddate of such notice, 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 of Optioned Stock subject to the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each share 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 StockShares); 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 Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each Share of Optioned Stock 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.

Merger or Asset Sale. In Subject to the provisions of paragraph (d) hereof, in the event of a merger of Connetics the Company with or into another corporation, or the sale of substantially all of the assets of Conneticsthe Company, the each outstanding Option shall be assumed or an equivalent option or right Option substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation refuses does not agree to assume the Option or to substitute an equivalent option, the Board shall, in lieu of such assumption or substitution, provide for the Option, the Optionee shall fully vest in and to have the right to exercise the Option as to all or a portion of the SharesOptioned Stock, including Shares as to which it would not otherwise be vested and exercisable. If the Board makes 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 fifteen (15) days from the Boarddate of such notice, and the Option shall will terminate upon the expiration of such period. For the purposes of this paragraph, the Option shall be considered assumed if, immediately following the merger or sale of assets, the option Option confers the right to purchase or receivepurchase, for each Share of Optioned Stock subject to the Option immediately prior to the merger or sale of assets, for the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each share 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 StockShares); provided, however, that if such consideration received in the merger or sale of assets is was not solely common stock of the successor corporation or its Parent, the Board may, with the consent of the successor corporationcorporation and the participant, provide for the consideration to be received upon the exercise of the Option, for each Share of Optioned Stock subject to the Option, to be solely common stock of the successor corporation or its Parent equal in fair market value Fair Market Value to the per share consideration received by holders of Common Stock in the merger or sale of assets.

Merger or Asset Sale. In the event of a merger of Connetics the Company with or into another corporation, or the sale of substantially all of the assets of Conneticsthe Company, 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 or a Parent or Subsidiary of 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 SharesOptioned Stock, including Shares as to which it would not otherwise be vested and exercisable. If an the 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 fifteen (15) days from the Board, and the date of such notice. 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 of Optioned Stock subject to the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each share 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 StockShares); 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 of Optioned Stock 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.

Merger or Asset Sale. In the event of a merger of Connetics the Company with or into another corporation, or the sale of substantially all of the assets of Conneticsthe Company, 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 OptionAward, the Optionee shall fully vest in and have the right to exercise the Option as to all of the SharesOptioned Stock, including Shares as to which it would not otherwise be vested and or exercisable. If an the Option becomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger or sale of assets, the Board Administrator shall notify the Optionee in writing or electronically that the Option shall will be fully vested and exercisable for a period of time as determined by fifteen (15) days from the Boarddate of such notice, and the Option shall will 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 Option confers the right to purchase or receive, for each Share subject of Optioned Stock subject to the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each share 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 StockShares); 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 Administrator 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, of Optioned Stock to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share Share consideration received by holders of Common Stock in the merger or sale of assets.

Merger or Asset Sale. In Subject to the provisions of paragraph (d) -------------------- hereof, in the event of a merger of Connetics the Company with or into another corporation, or the sale of substantially all of the assets of Conneticsthe Company, the each outstanding Option shall be assumed or an equivalent option or right shall be substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation refuses does not agree to assume the Option or to substitute an equivalent option, the Administrator shall, in lieu of such assumption or substitution, provide for the Option, the Optionee shall fully vest in and to have the right to exercise the Option as to all or a portion of the SharesOptioned Stock, including Shares as to which it would not otherwise be vested and exercisable. If the Administrator makes 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 Administrator 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 fifteen (15) days from the Boarddate of such notice, and the Option shall will 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 receivepurchase, for each Share of Optioned Stock subject to the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each share 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 StockShares); 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 Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each Share of Optioned Stock subject to the Option, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per per-share consideration received by holders of Common Stock in the merger or sale of assets.

Merger or Asset Sale. In Except as otherwise determined by the event Board, in its sole and absolute discretion, prior to the occurrence of a merger of Connetics the Company with or into another corporation, or the sale of substantially all of the assets of Conneticsthe Company, in the event of such a merger or sale each outstanding Option or SAR shall be assumed or an equivalent option or right shall be substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation refuses or a Parent or Subsidiary of the successor corporation does not agree to assume the Option or SAR or to substitute an equivalent option or right, the Board may, in the exercise of its sole and absolute discretion and in lieu of such assumption or substitution, provide for the Option, the Optionee shall fully vest in and Grantee to have the right to exercise the Option or SAR as to all or a portion of the SharesCovered Stock, including Shares as to which it would not otherwise be vested and exercisable. If the Board makes an Option becomes fully vested and or SAR exercisable in lieu of assumption or substitution in the event of a merger or sale of assets, the Board Administrator shall notify the Optionee in writing or electronically Grantee that the Option or SAR shall be fully vested and exercisable for a period of time as determined by 15 days from the Boarddate of such notice, and the Option shall or SAR will terminate upon the expiration of such period. For the purposes of this paragraph, the Option or SAR shall be considered assumed if, following the merger or sale of assets, the option or right confers the right to purchase or receivepurchase, for each Share of Covered Stock subject to the Option or SAR immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each share 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 StockShares); provided, however, that if such consideration received in the merger or sale of assets is was not solely common stock of the successor corporation or its Parent, the Board may, with the consent of the successor corporationcorporation and the participant, provide for the consideration to be received upon the exercise of the OptionOption or SAR, for each Share subject to the OptionOption or SAR, to be solely common stock of the successor corporation or its Parent equal in fair market value Fair Market Value to the per share Share consideration received by holders of Common Stock in the merger or sale of assets.

Merger or Asset Sale. In the event of a merger of Connetics the Company with -------------------- or into another corporation, or the sale of substantially all of the assets of Conneticsthe Company, 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 SharesOptioned Stock, including Shares as to which it would not otherwise be vested and or exercisable. If an the 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 fifteen (15) days from the Boarddate of such notice, 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 of Optioned Stock subject to the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each share 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 StockShares); 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 of Optioned Stock 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.

Merger or Asset Sale. In the event of a merger of Connetics with or into another corporation, or the proposed sale of all or substantially all of the assets of Conneticsthe Company, or the merger, restructure, reorganization or consolidation of the Company with or into another entity or entities in which the stockholders of the Company receive cash or securities of another issuer, or any combination thereof, in exchange for their shares of Common Stock, the Option shall be assumed or an equivalent option or right shall be substituted by such successor entity or an affiliate of such successor entity, unless the successor corporation Administrators determine, in the exercise of their sole discretion and in lieu of such assumption or a Parent or Subsidiary of the successor corporation. In the event substitution, 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 Optioned Shares, including Shares shares as to which it the Option would not otherwise be vested and exercisablevested. If an the Administrators make the Option becomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger merger, restructure, reorganization, consolidation or sale of assets, the Board Administrators shall notify the Optionee in writing or electronically that the Option shall be fully vested and exercisable for a period of time thirty (30) days from the date of such notice or such shorter period as determined by the BoardAdministrators may specify in the notice, and the Option shall will terminate upon the expiration of such period. For the purposes of this paragraphSection, the Option shall be considered assumed if, following the merger merger, restructure, reorganization, consolidation or sale of assets, the option Option confers the right to purchase or receivepurchase, for each Optioned Share subject to the Option immediately prior to the merger merger, restructure, reorganization, consolidation or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each share of Common Stock held on the effective date of the consummation 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 merger, restructure, reorganization, consolidation or sale of assets is was not solely common stock equity of the successor corporation entity or its Parentaffiliate, the Board Administrators may, with the consent of the successor corporationentity and the Optionee, provide for the consideration to be received upon the exercise of the Option, for each Share subject to the OptionOptioned Share, to be solely common stock of the successor corporation entity or its Parent affiliate equal in fair market value to the per share consideration received by holders of Common Stock in the merger merger, restructure, reorganization, consolidation or sale of assets.

Merger or Asset Sale. In the event of a merger of Connetics the Company with or into another corporation, or the sale of substantially all of the assets of Conneticsthe Company, 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 SharesOptioned Stock, including Shares as to which it would not otherwise be vested and or exercisable. If an the 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 fifteen (15) days from the Boarddate of such notice, 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 (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each share 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 StockShares); 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 Administrator 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.

Merger or Asset Sale. In the event of a merger of Connetics the Company with or -------------------- into another corporation, or the sale of substantially all of the assets of Conneticsthe Company, the an outstanding 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 SharesOptioned Stock, including Shares as to which it would not otherwise be vested and or 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 Administrator 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 fifteen (15) days from the Boarddate of such notice, 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 or right confers the right to purchase or receive, for each Share of Optioned Stock subject to the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each share 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 StockShares); 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 Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the OptionOption or Stock Purchase Right, for each Share of Optioned Stock subject to the OptionOption or Stock Purchase Right, 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.. EXHIBIT A --------- EXERCISE NOTICE PC-Tel, Inc. 0000 Xxxxxxxxxx Xxxxxx Xxxxxxxx, XX 00000 Attention: Chief Financial Officer

Merger or Asset Sale. In the event of a merger of Connetics the Company -------------------- with or into another corporation, or the sale of substantially all of the assets of Conneticsthe Company, 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 SharesOptioned Stock, including Shares as to which it would not otherwise be vested and or exercisable. If an the 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 fifteen (15) days from the Boarddate of such notice, 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 of Optioned Stock subject to the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each share 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 StockShares); 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 of Optioned Stock 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.

Merger or Asset Sale. In the event of a merger of Connetics the Company -------------------- with or into another corporation, or the sale of substantially all of the assets of Conneticsthe Company, the this 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 this Option, the Optionee shall fully vest in and have the right to exercise the Option as to all of the SharesOptioned Stock, including Shares as to which it would not otherwise be vested and or exercisable. If an the 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 fifteen (15) days from the Boarddate of such notice, 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 of Optioned Stock subject to the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each share 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 StockShares); 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 of Optioned Stock 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.

Merger or Asset Sale. In the event of a merger of Connetics with or into another corporationmerger, or the sale of all or substantially all of the assets of Conneticsthe Company, tender offer or other transaction or series of related transactions resulting in a change of ownership of more than fifty percent (50%) of the voting securities of the Company ("Change in Control") approved by the majority of the members of the Board on the Board prior to the commencement of such Change in Control, this Option shall be assumed or an equivalent option or right substituted by the successor corporation or a Parent or Subsidiary of the successor corporation; provided, however, in the event that within one year of the date of the completion of the Change in Control, the successor corporation or a Parent or Subsidiary of the successor corporation terminates the employment of Optionee without Cause (as defined below), Optionee shall fully vest in and have the right to exercise the options assumed or substituted for this Option as to all of the Optioned Stock, including Shares as to which it would not otherwise be exercisable. In the event that the successor corporation refuses to assume or substitute for the this Option, the Optionee shall fully vest in and have the right to exercise the this Option as to all of the SharesOptioned Stock, including Shares as to which it would not otherwise be vested and exercisable. If an this Option becomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger or sale Change of assetsControl, the Board shall notify the Optionee in writing or electronically that the this Option shall be fully vested and exercisable for a period of time as determined by fifteen (15) days from the Boarddate of such notice, and the this Option shall terminate upon the expiration of such period. For the purposes of this paragraph, the this Option shall be considered assumed if, following the merger or sale Change of assetsControl, the option confers the right to purchase or receivepurchase, for each Share of Optioned Stock subject to the this Option immediately prior to the merger or sale of assetsChange in Control, the consideration (whether stock, cash, or other securities or property) received in the merger or sale Change of assets Control by holders of Common Stock for each share 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 StockShares); provided, however, that if such consideration received in the merger or sale Change of assets Control 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 this Option, for each Share of Optioned Stock subject to the this Option, to be solely common stock of the successor corporation or its Parent equal in fair market value Fair Market Value to the per share consideration received by holders of Common Stock in the merger Change of Control. For purposes of this paragraph, termination shall be for "Cause" in the event of the occurrence of any of the following: (a) any intentional action or sale intentional failure to act by Optionee which was performed in bad faith and to the material detriment of assetsthe successor corporation or its Parent or Subsidiary; (b) Optionee willfully and habitually neglects the duties of employment; or (c) Optionee is convicted of a felony crime involving moral turpitude, provided that in the event that any of the foregoing events is capable of being cured, the successor corporation or its Parent or Subsidiary shall provide written notice to the employee describing the nature of such event and Optionee shall thereafter have five (5) business days to cure such event. In the event of a Change in Control which is not approved by the majority of the members of the Board on the Board prior to the commencement of a Change in Control, Optionee shall fully vest in and have the right to exercise this Option as to all of the Optioned Stock, including Shares as to which it would not otherwise be exercisable.

Merger or Asset Sale. In the event of a merger of Connetics the Company with or into another corporation, or the sale of substantially all of the assets of Conneticsthe Company, the each outstanding 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 SharesOptioned Stock, including Shares as to which it would not otherwise be vested and or 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 Administrator 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 fifteen (15) days from the Boarddate of such notice, 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 or right confers the right to purchase or receive, for each Share subject to the Option of Optioned Stock, immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each share 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 StockShares); 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 Administrator 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, of Optioned Stock 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.

Merger or Asset Sale. In Except as otherwise determined by the event Board, in its sole and absolute discretion, prior to the occurrence of a merger of Connetics the Company with or into another corporation, or the sale of substantially all of the assets of Conneticsthe Company, in the event of such a merger or sale the Option shall be assumed or an equivalent option or right shall be substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation refuses or a Parent or Subsidiary of the successor corporation does not agree to assume the Option or to substitute an equivalent option or right, the Board may, in the exercise of its sole and absolute discretion and in lieu of such assumption or substitution, provide for the Option, the Optionee shall fully vest in and Grantee to have the right to exercise the Option as to all or a portion of the SharesCovered Stock, including Shares as to which it would not otherwise be vested and exercisable. If an the Board makes the Option becomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger or sale of assets, the Board Administrator shall notify the Optionee in writing or electronically Grantee that the Option shall be fully vested and exercisable for a period of time as determined by 15 days from the Boarddate of such notice, and the Option shall will 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 or right confers the right to purchase or receivepurchase, for each Share of Covered Stock subject to the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each share 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 StockShares); provided, however, that if such consideration received in the merger or sale of assets is was not solely common stock of the successor corporation or its Parent, the Board may, with the consent of the successor corporationcorporation and the participant, 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 Fair Market Value to the per share Share consideration received by holders of Common Stock in the merger or sale of assets.

Merger or Asset Sale. In the event of a merger of Connetics with or into another corporation, or the proposed sale of all or -------------------- substantially all of the assets of Conneticsthe Company, or the merger, restructure, reorganization or consolidation of the Company with or into another entity or entities in which the shareholders of the Company receive cash or securities of another issuer, or any combination thereof, in exchange for their shares of Common Stock, the Option shall be assumed or an equivalent option or right shall be substituted by such successor entity or an affiliate of such successor entity, unless the successor corporation Administrators determine, in the exercise of their sole discretion and in lieu of such assumption or a Parent or Subsidiary of the successor corporation. In the event substitution, 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 Optioned Shares, including Shares shares as to which it the Option would not otherwise be vested and exercisablevested. If an the Administrators make the Option becomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger merger, restructure, reorganization, consolidation or sale of assets, the Board Administrators shall notify the Optionee in writing or electronically that the Option shall be fully vested and exercisable for a period of time thirty (30) days from the date of such notice or such shorter period as determined by the BoardAdministrators may specify in the notice, and the Option shall will terminate upon the expiration of such period. For the purposes of this paragraphSection, the Option shall be considered assumed if, following the merger merger, restructure, reorganization, consolidation or sale of assets, the option Option confers the right to purchase or receivepurchase, for each Optioned Share subject to the Option immediately prior to the merger merger, restructure, reorganization, consolidation or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each share of Common Stock held on the effective date of the consummation 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 merger, restructure, reorganization, consolidation or sale of assets is was not solely common stock equity of the successor corporation entity or its Parentaffiliate, the Board Administrators may, with the consent of the successor corporationentity and the Optionee, provide for the consideration to be received upon the exercise of the Option, for each Share subject to the OptionOptioned Share, to be solely common stock of the successor corporation entity or its Parent affiliate equal in fair market value to the per share consideration received by holders of Common Stock in the merger merger, restructure, reorganization, consolidation or sale of assets.

Merger or Asset Sale. In Subject to the provisions of paragraph (d) hereof, in the event of a merger of Connetics the Company with or into another corporation, or the sale of substantially all of the assets of Conneticsthe Company, the each outstanding Option shall be assumed or an equivalent option or right shall be substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation refuses does not agree to assume the Option or to substitute an equivalent option or right, the Administrator shall, in lieu of such assumption or substitution, provide for the Option, the Optionee shall fully vest in and to have the right to exercise the Option as to all of the SharesOptioned Stock, including Shares as to which it would not otherwise be vested and exercisable. If the Administrator makes 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 Administrator 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 fifteen (15) days from the Boarddate of such notice, and the Option shall will 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 or right confers the right to purchase or receivepurchase, for each Share of Optioned Stock subject to the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each share 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 StockShares); provided, however, that if such consideration received in the merger or sale of assets is was not solely common stock of the successor corporation or its Parent, the Board Administrator may, with the consent of the successor corporationcorporation and the participant, provide for the consideration to be received upon the exercise of the Option, for each Share of Optioned Stock subject to the Option, to be solely common stock of the successor corporation or its Parent equal in fair market value Fair Market Value to the per share consideration received by holders of Common Stock in the merger or sale of assets.

Merger or Asset Sale. In Subject to the provisions of paragraph (d) hereof, in the event of a merger of Connetics the Company with or into another corporation, or the sale of substantially all of the assets of Conneticsthe Company, the Option each outstanding Right shall be assumed or an equivalent option or right Right substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation refuses does not agree to assume the Right or to substitute an equivalent Right, the Board shall, in lieu of such assumption or substitution, provide for the Option, the Optionee shall fully vest in and to have the right to exercise the Option Right as to all or a portion of the SharesOptioned Stock, including Shares as to which it would not otherwise be vested and exercisable. If an Option becomes fully vested and the Board makes a Right 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 Right shall be fully vested and exercisable for a period of time as determined by fifteen (15) days from the Boarddate of such notice, and the Option shall Right will terminate upon the expiration of such period. For the purposes of this paragraph, the Option Right shall be considered assumed if, immediately following the merger or sale of assets, the option Right confers the right to purchase or receivepurchase, for each Share of Optioned Stock subject to the Option Right immediately prior to the merger or sale of assets, for the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each share 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 StockShares); provided, however, that if such consideration received in the merger or sale of assets is was not solely common stock of the successor corporation or its Parent, the Board may, with the consent of the successor corporationcorporation and the participant, provide for the consideration to be received upon the exercise of the OptionRight, for each Share of Optioned Stock subject to the OptionRight, to be solely common stock of the successor corporation or its Parent equal in fair market value Fair Market Value to the per share consideration received by holders of Common Stock in the merger or sale of assets.

Merger or Asset Sale. In the event of a merger of Connetics the Company with or into another corporation, or the sale of substantially all of the assets of Conneticsthe Company, the this 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 this Option, the Optionee shall fully vest in and have the right to exercise the this Option as to all of the Shares, including Shares as to which it would not otherwise be vested and exercisable. If an this Option becomes fully vested and is exercisable in lieu of assumption or substitution in the event of a merger or sale of assets, the Board Administrator 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 fifteen (15) days from the Boarddate of such notice, 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 or right 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 (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 was 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, Option for each Share subject to the Option, 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.

Merger or Asset Sale. In the event of a merger of Connetics the Company with or into another corporation, or the sale of substantially all of the assets of Conneticsthe Company, the this Option shall may be assumed or an equivalent option or right may be substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation refuses to assume The Board may, in lieu of such assumption or substitute substitution, provide for the Option, the Optionee shall fully vest in and to have the right to exercise the Option as to all or a portion of the Shares, including Shares as to which it would not otherwise be vested and exercisable. If the Board makes 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 fifteen (15) days from the Boarddate of such notice, and the Option shall will 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 receivepurchase, for each Share of the Shares subject to the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each share 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 StockShares); provided, however, that if such consideration received in the merger or sale of assets is was 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 of Common Stock 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.

Merger or Asset Sale. In the event of a merger of Connetics the Company with or into another corporation, or the sale of substantially all of the assets of Conneticsthe Company, 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; provided, however, that such assumed or equivalent option shall be continue to be subject to the provisions of the Severance Agreement. 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 SharesOptioned Stock, including Shares as to which it would not otherwise be vested and or exercisable. If an the 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 ten (10) days from the Boarddate of such notice, 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 of Optioned Stock subject to the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each share 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 StockShares); 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 Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each Share of Optioned Stock 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.

Merger or Asset Sale. In the event of a merger of Connetics Viewpoint with or into another corporation, or the sale of substantially all of the assets of ConneticsViewpoint, the Option shall be assumed or an equivalent option or right substituted by the successor corporation or a Parent (as defined below) or Subsidiary (as defined below) 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 Sharesshares subject to the Option, including Shares shares as to which it would not otherwise be vested and exercisable. If an the Option becomes fully vested and is exercisable in lieu of assumption or substitution in the event of a merger or sale of assets, the Board of Directors 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 fifteen (15) days from the Boarddate of such notice, 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 Option confers the right to purchase or receive, for each Share share of Viewpoint common stock subject to the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock Viewpoint 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 StockShares); provided, however, that if such consideration received in the merger or sale of assets is was not solely common stock of the successor corporation (or its ParentParent or Subsidiary as the case may be), the Board of Directors may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each Share share of Viewpoint common stock subject to the Option, to be solely common stock of the successor corporation or its Parent or Subsidiary equal in fair market value (as determined by the Board of Directors) to the per share consideration received by holders of Common Stock Viewpoint common stock in the merger or sale of assets.

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 each outstanding 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 SharesOptioned Stock, including Shares as to which it would not otherwise be vested and or 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 Administrator 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 fifteen (15) days from the Boarddate of such notice, 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 of Optioned Stock subject to the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each share 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 StockShares); 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 Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each Share of Optioned Stock 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.

Merger or Asset Sale. In the event of a merger of Connetics the Company with or into another corporationcorporation during the Exercise Period, or the sale of substantially all of the assets of Conneticsthe Company during the Exercise Period, the Option this Warrant shall be assumed or an equivalent option or right warrant substituted by the successor corporation or a Parent parent or Subsidiary subsidiary of the successor corporation. In the event that the successor corporation refuses to assume or substitute for the OptionWarrant, 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 Company shall notify the Optionee Holder in writing or electronically that the Option Warrant shall be fully vested and exercisable for a period of time as determined by fifteen (15) days from the Boarddate of such notice, and the Option Warrant shall terminate upon the expiration of such period. For the purposes of this paragraph, the Option Warrant shall be considered assumed if, following the such merger or sale of assets, the option warrant confers the right to purchase or receive, for each Exercise Share subject to the Option Warrant immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock common stock of the Company for each share of common stock of the Company 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 common stock of Common Stockthe Company); 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 Parentparent, the Board Company may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the OptionWarrant, for each Exercise Share subject to the OptionWarrant, to be solely common stock of the successor corporation or its Parent parent equal in fair market value to the per share consideration received by holders of Common Stock common stock of the Company in the merger or sale of assets.. ***CONFIDENTIAL TREATMENT REQUESTED

Merger or Asset Sale. In the event of a merger of Connetics the Company with or into another corporationCorporation, or the sale of substantially all of the assets of Conneticsthe Company, 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 SharesOptioned Stock, including Shares as to which it would not otherwise be vested and or exercisable. If an the 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 fifteen (15) days from the Boarddate of such notice, 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, receive for each Share of Optioned Stock subject to the Option immediately prior to the merger or sale sales of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each share 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 StockShares); provided, however, that if such consideration received in the merger or sale sales of assets is not solely common stock of the successor corporation or its Parent, the Board Administrator 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, of Optioned Stock 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.

Merger or Asset Sale. In the event of a merger of Connetics the Company with or into another corporation, or the sale of substantially all of the assets of Conneticsthe Company, 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 SharesOptioned Stock, including Shares as to which it would not otherwise be vested and or exercisable. If an the 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 fifteen (15) days from the Boarddate of such notice, 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 of Optioned Stock subject to the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each share 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 StockShares); 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 Company may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each Share of Optioned Stock 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.

Merger or Asset Sale. In the event of a merger of Connetics the Company with or into another corporation, or the sale of substantially all of the assets of Conneticsthe Company, the each DW2027.W42(5P3) 03/08/94 -14- outstanding Option shall be assumed or an equivalent option or right shall be substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In With respect to a discretionary Option granted under the Plan (but not with respect to Options granted to Outside Directors), the Administrator may, in the exercise of its sole discretion and in lieu of such assumption or substitution, provide for the Optionee to have the right to exercise such Option as to all of the Optioned Stock, including as to Shares which would not otherwise be exercisable. With respect to Options granted to Outside Directors on or after the Effective Date of the Plan, in the event that the successor corporation refuses does not agree to assume such Options or to substitute for the Optionequivalent options, the Optionee each such outstanding Option shall become fully vest in vested and have the right to exercise the Option exercisable, including as to all of the Shares, including Shares as to which it would not otherwise be vested and exercisable, unless the Board, in its discretion, determines otherwise. With respect to Options granted to Outside Directors prior to the Effective Date of the Plan, in the event that the successor corporation does not agree to assume such Options or to substitute equivalent options, such Options shall terminate. If an the Administrator makes a discretionary Option becomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger or sale of assets, the Board Administrator 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 thirty (30) days from the Boarddate of such notice, and the Option shall will terminate upon the expiration of such period. For the purposes of this paragraphsubsection, the Option shall be considered assumed if, following the merger or sale of assets, the option confers the right to purchase or receivepurchase, for each Share of Optioned Stock subject to the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each share 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 StockShares); provided, however, that if such consideration received in the merger or sale of assets is was not solely common stock of the successor corporation or its Parent, the Board Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each Share of Optioned Stock 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.

Merger or Asset Sale. In the event of a merger of Connetics the Company with or into another corporation, or the sale of substantially all of the assets of Conneticsthe Company, the Option each outstanding Award 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 OptionAward, the Optionee Participant shall fully vest in and have the right to exercise the Option Award as to all of the Shares, including Shares as to which it would not otherwise be vested and or exercisable. If an Option Award becomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger or sale of assets, the Board Committee shall notify the Optionee Participant in writing or electronically that the Option Award shall be fully vested and exercisable for a period of time as determined by fifteen (15) days from the Boarddate of such notice, and the Option Award shall terminate upon the expiration of such period. For the purposes of this paragraph, the Option Award shall be considered assumed if, following the merger or sale of assets, the option or right confers the right to purchase or receive, for each Share subject to the Option Award immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock Shares for each share 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 StockShares); 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 Committee may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the OptionAward, for each Share subject to the OptionAward, 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 Shares in the merger or sale of assets.. CONDITIONS UPON ISSUANCE OF SHARES

Merger or Asset Sale. In the event of a merger of Connetics the Company with or into another corporation, or the sale of substantially all of the assets of Conneticsthe Company, 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 SharesOptioned Stock, including Shares as to which it would not otherwise be vested and or exercisable. If an the 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 fifteen (15) days from the Boarddate of such notice, 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 of Optioned Stock subject to the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each share 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 StockShares); 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 of Optioned Stock 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.

Merger or Asset Sale. In the event of a merger of Connetics the Company with or into another corporation, corporation or the sale of all or substantially all of the assets of ConneticsCompany’s assets, the Option shall be assumed or an equivalent option or right award 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 SharesOptioned Stock, including Shares as subject to which it this Option that would not otherwise be vested and or exercisable. If an In addition, if the Option becomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger or sale of assets, the Board Administrator 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 BoardAdministrator in its sole discretion, and the Option shall terminate upon the expiration of such period. For the purposes of this paragraphsubsection (c), the Option shall be considered assumed if, following the merger or sale of assets, the option 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 (whether stock, cash, or other securities or property) the fair market value of the consideration received in the merger or sale of assets by holders of Common Stock for each share 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 StockShares); 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 Administrator 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, 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.

Merger or Asset Sale. In the event of a merger of Connetics the Company with or into another corporation, or the sale of substantially all of the assets of Conneticsthe Company, the Option each outstanding Award 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 OptionAward, the Optionee Participant shall fully vest in and have the right to exercise the Option Award as to all of the Shares, including Shares as to which it would not otherwise be vested and or exercisable. If an Option Award becomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger or sale of assets, the Board Committee shall notify the Optionee Participant in writing or electronically that the Option Award shall be fully vested and exercisable for a period of time as determined by fifteen (15) days from the Boarddate of such notice, and the Option Award shall terminate upon the expiration of such period. For the purposes of this paragraph, the Option Award shall be considered assumed if, following the merger or sale of assets, the option or right confers the right to purchase or receive, for each Share subject to the Option Award immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock Shares for each share 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 StockShares); 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 Committee may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the OptionAward, for each Share subject to the OptionAward, 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 Shares in the merger or sale of assets.

Merger or Asset Sale. In the event of a merger of Connetics the Company with or into another corporation, or the sale of substantially all of the assets of Conneticsthe Company, the Option shall vest completely upon merger unless Optionee continues CEO for at least 1 year 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 SharesOptioned Stock, including Shares as to which it would not otherwise be vested and or exercisable. If an the Option becomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger or sale of assets, the Board Administrator 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 fifteen (15) days from the Boarddate of such notice, 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 or right confers the right to purchase or receive, for each Share of Optioned Stock subject to the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each share 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 StockShares); 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 Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each Share of Optioned Stock 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.

Merger or Asset Sale. In the event of a merger of Connetics the Company with or into another corporation, or the sale of all or substantially all of the assets of Conneticsthe Company, the each outstanding 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 is 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 The Company 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 fifteen (15) days after the Boarddate of such notice, 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 or right confers the right to purchase or receive, for each Share of Optioned Stock subject to the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each share 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 StockShares); 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 Company may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each Share of Optioned Stock 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.

Merger or Asset Sale. In the event of a merger of Connetics the Company -------------------- with or into another corporation, or the sale of substantially all of the assets of Conneticsthe Company, 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 SharesOptioned Stock, including Shares as to which it would not otherwise be vested and or exercisable. If an the 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 fifteen (15) days from the Boarddate of such notice, 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 of Optioned Stock subject to the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each share 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 StockShares); 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 Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each Share of Optioned Stock 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.

Merger or Asset Sale. In the event of a merger of Connetics the Company with or into another corporation, or the sale of substantially all of the assets of Conneticsthe Company, 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 SharesOptioned Stock, including Shares as to which it would not otherwise be vested and or exercisable. If an the 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 fifteen (15) days from the Boarddate of such notice, 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 of Optioned Stock subject to the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each share 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 StockShares); 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 Administrator 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, of Optioned Stock 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.

Merger or Asset Sale. In the event of a merger of Connetics the Company with or into another corporation, or the sale of substantially all of the assets of Conneticsthe Company (a "Change of Control"), 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 SharesOptioned Stock, including Shares as to which it would not otherwise be vested and or exercisable. If an the 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 fifteen (15) days from the Boarddate of such notice, 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 of Optioned Stock subject to the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each share 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 StockShares); 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 Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each Share of Optioned Stock 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.

Merger or Asset Sale. In the event of a merger of Connetics the Company with or into another corporationcorporation other than a merger in which the shareholders of the Company immediately prior to the merger own a majority of the voting power in the surviving corporation following the merger, or the a sale of substantially all of the assets of Conneticsthe Company, the this Option shall may be assumed or an equivalent option or right may be substituted by the such successor corporation or a Parent parent or Subsidiary subsidiary of the such successor corporation. In the event that the successor corporation refuses to assume If, in such event, this Option is not assumed or substitute for the Optionsubstituted, the Optionee this Option shall become fully vest in vested and have the right to exercise the Option exercisable as to all of the Shares, including Shares as to which it would not otherwise be vested and or exercisable. If an If, in the event of a merger or asset sale, this Option becomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger or sale of assetssubstitution, the Board Company 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 fifteen (15) days from the Board, date of such notice and the Option shall terminate upon at the expiration of such period. For the purposes of this paragraph, the this Option shall be considered assumed if, following the merger or sale of assetsmerger, the option confers the right to purchase or receivepurchase, for each Share subject to the this Option immediately prior to the merger or sale of assetsmerger, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each share 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 StockShares); provided, however, that if such consideration received in the merger or sale of assets is was not solely common stock of the successor corporation or its Parentparent, the Board Company may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, this Option for each Share subject to the Option, this Option to be solely common stock of the successor corporation or its Parent parent equal in fair market value to the per share consideration received by holders of Common Stock in the merger or sale of assetsmerger.

Merger or Asset Sale. In the event of a merger of Connetics the Company with or into another corporation, or the sale of substantially all of the assets of Conneticsthe Company, the Option shall be assumed or an equivalent option or right substituted by the successor corporation or a Parent parent or Subsidiary 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 or exercisable. If an the Option becomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger or sale of assets, the Board Committee 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 fifteen (15) days from the Boarddate of such notice, 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 or right 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 (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each share 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 StockShares); provided, 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 Parentparent, the Board Committee 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 parent equal in fair market value to the per share consideration received by holders of Common Stock in the merger or sale of assets.

Merger or Asset Sale. In the event of a merger of Connetics with or into another corporationmerger, or the sale of all or substantially all of the assets of Conneticsthe Company, tender offer or other transaction or series of related transactions resulting in a change of ownership of more than fifty percent (50%) of the voting securities of the Company (“Change in Control”) approved by the majority of the members of the Board on the Board prior to the commencement of such Change in Control, this Option shall be assumed or an equivalent option or right substituted by the successor corporation or a Parent or Subsidiary of the successor corporation; provided, however, in the event that within one year of the date of the completion of the Change in Control, the successor corporation or a Parent or Subsidiary of the successor corporation terminates the employment of Optionee without Cause (as defined below), Optionee shall fully vest in and have the right to exercise the options assumed or substituted for this Option as to all of the Optioned Stock, including Shares as to which it would not otherwise be exercisable. In the event that the successor corporation refuses to assume or substitute for the this Option, the Optionee shall fully vest in and have the right to exercise the this Option as to all of the SharesOptioned Stock, including Shares as to which it would not otherwise be vested and exercisable. If an this Option becomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger or sale Change of assetsControl, the Board shall notify the Optionee in writing or electronically that the this Option shall be fully vested and exercisable for a period of time as determined by fifteen (15) days from the Boarddate of such notice, and the this Option shall terminate upon the expiration of such period. For the purposes of this paragraph, the this Option shall be considered assumed if, following the merger or sale Change of assetsControl, the option confers the right to purchase or receivepurchase, for each Share of Optioned Stock subject to the this Option immediately prior to the merger or sale of assetsChange in Control, the consideration (whether stock, cash, or other securities or property) received in the merger or sale Change of assets Control by holders of Common Stock for each share 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 StockShares); provided, however, that if such consideration received in the merger or sale Change of assets Control 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 this Option, for each Share of Optioned Stock subject to the this Option, to be solely common stock of the successor corporation or its Parent equal in fair market value Fair Market Value to the per share consideration received by holders of Common Stock in the merger Change of Control. For purposes of this paragraph, termination shall be for “Cause” in the event of the occurrence of any of the following: (a) any intentional action or sale intentional failure to act by Optionee which was performed in bad faith and to the material detriment of assetsthe successor corporation or its Parent or Subsidiary; (b) Optionee willfully and habitually neglects the duties of employment; or (c) Optionee is convicted of a felony crime involving moral turpitude, provided that in the event that any of the foregoing events is capable of being cured, the successor corporation or its Parent or Subsidiary shall provide written notice to the employee describing the nature of such event and Optionee shall thereafter have five (5) business days to cure such event. In the event of a Change in Control which is not approved by the majority of the members of the Board on the Board prior to the commencement of a Change in Control, Optionee shall fully vest in and have the right to exercise this Option as to all of the Optioned Stock, including Shares as to which it would not otherwise be exercisable.

Merger or Asset Sale. In the event of a merger of Connetics the Company with or into another corporation, or the sale of substantially all of the assets of Conneticsthe Company, 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 SharesOptioned Stock, including Shares as to which it would not otherwise be vested and or exercisable. If an the 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 thirty (30) days from the Boarddate of such notice, 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 of Optioned Stock subject to the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each share 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 StockShares); 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 Company may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each Share of Optioned Stock 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.

Merger or Asset Sale. In Subject to the provisions of paragraph (d) hereof, in the event of a merger of Connetics the Company with or into another corporation, or the sale of substantially all of the assets of Conneticsthe Company, the this Option shall be assumed or an equivalent option or right Option substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation refuses does not agree to assume this Option or to substitute an equivalent option, the Administrator shall, in lieu of such assumption or substitution, provide for the Option, the Optionee shall fully vest in and to have the right to exercise the this Option as to all or a portion of the SharesOptioned Stock, including Shares as to which it would not otherwise be vested and exercisable. If the Administrator makes 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 Administrator shall notify the Optionee in writing or electronically that the this Option shall be fully vested and exercisable for a period of time as determined by fifteen (15) days from the Boarddate of such notice, and the this Option shall will terminate upon the expiration of such period. For the purposes of this paragraph, the ,this Option shall be considered assumed if, immediately following the merger or sale of assets, the option this Option confers the right to purchase or receivepurchase, for each Share of Optioned Stock subject to the this Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each share 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 StockShares); providedPROVIDED, however, that if such consideration received in the merger or sale of assets is was not solely common stock of the successor corporation or its Parent, the Board Administrator may, with the consent of the successor corporationcorporation and the participant, provide for the consideration to be received upon the exercise of the this Option, for each Share of Optioned Stock subject to the this Option, to be solely common stock of the successor corporation or its Parent equal in fair market value Fair Market Value to the per share consideration received by holders of Common Stock in the merger or sale of assets.

Merger or Asset Sale. In the event of a merger of Connetics the Company with or into another corporation, or the sale of substantially all of the assets of Conneticsthe Company, the Option shall be assumed or an equivalent option or right Option 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 Optioned Shares, including Optioned Shares as to which it would not otherwise be vested and or exercisable. If an the 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 60 days from the Boarddate of such notice, 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 Option confers the right to purchase or receive, for each Optioned Share subject to the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each share 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 StockShares); 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 Optioned 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.

Merger or Asset Sale. In the event of a merger of Connetics the Company with or into another corporation, or the sale of substantially all of the assets of Conneticsthe Company, the each outstanding Option shall be assumed or an equivalent option or right substituted by the successor corporation or a Parent parent or Subsidiary of the successor corporation. In the event that the successor corporation refuses to assume or substitute for the this Option, the Optionee shall fully vest in and have the right to exercise the this Option as to all of the Shares, including Shares as to which it would not otherwise be vested and or 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 of Directors 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 fifteen (15) days from the Boarddate of such notice, and the this Option shall terminate upon the expiration of such period. For the purposes of this paragraph, the this Option shall be considered assumed if, following the merger or sale of assets, the option or right confers the right to purchase or receive, for each Share subject to the this Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock Shares for each share 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 StockShares); 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 Parentparent, the Board of Directors 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 this Option, to be solely common stock of the successor corporation or its Parent parent equal in fair market value to the per share consideration received by holders of Common Stock Shares in the merger or sale of assets.

Merger or Asset Sale. In Notwithstanding any provision of the Plan, in the event of a merger of Connetics the Company with or into another corporation, or the sale of substantially all of the assets of Conneticsthe Company, the Option shall be assumed or an equivalent option or right substituted by the successor corporation or a Parent parent or Subsidiary subsidiary of the successor corporation. In the event that the successor corporation refuses to assume or substitute for the Option, the Optionee Employee 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 or 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 Employee in writing or electronically that the Option shall be fully vested and exercisable for a period of time as determined by fifteen (15) days from the Boarddate of such notice, 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 Share, immediately prior to the merger or sale of assets, the consideration (whether stockshares, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock shares for each share Share held on the effective date of the transaction (and if such holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares of Common Stockshares); provided, however, that if such consideration received in the merger or sale of assets is not solely common stock ordinary shares (or their equivalent) of the successor corporation or its Parentparent or subsidiary, 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 ordinary shares (or their equivalent) of the successor corporation or its Parent parent or subsidiary equal in fair market value to the per share consideration received by holders of Common Stock in the merger or sale of assets.

Merger or Asset Sale. In the event of a merger of Connetics the Company with or into another corporation, or the sale of substantially all of the assets of Conneticsthe Company, 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 SharesOptioned Stock, including Shares as to which it would not otherwise be vested and or exercisable. If an the Option becomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger or sale of assets, the Board Administrator 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 fifteen (15) days from the Boarddate of such notice, 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 Option confers the right to purchase or receive, for each Share of Optioned Stock subject to the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each share 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 StockShares); 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 Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each Share of Optioned Stock 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.

Merger or Asset Sale. In the event of a merger of Connetics the Company -------------------- with or into another corporation, or the sale of substantially all of the assets of Conneticsthe Company, 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 SharesOptioned Stock, including Shares as to which it would not otherwise be vested and or exercisable. If an the 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 fifteen (15) days from the Boarddate of such notice, 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 of Optioned Stock subject to the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Series E Preferred Stock or Common Stock Stock, as the case may be, for each share 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 StockShares); 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 Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each Share of Optioned Stock 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 Series E Preferred Stock or Common Stock Stock, as the case may be, in the merger or sale of assets.

Merger or Asset Sale. In the event of a merger of Connetics the Company with or into another corporation, or the sale of substantially all of the assets of Connetics, the Company the Option shall be assumed or an equivalent option or right shall be substituted by the such successor corporation (including as a "successor" any purchaser of substantially all of the assets of the Company) or a Parent parent or Subsidiary subsidiary of the such successor corporation. In the event that the successor corporation refuses or a parent or subsidiary of such successor corporation does not agree to assume the Option or to substitute for the Optionan equivalent option, the Optionee shall fully vest in and shall, until ten (10) days prior to the effective date of such transaction, have the right to exercise the Option as to all or a portion of the Sharesoptioned stock, including Shares as to which it that would not otherwise be vested and exercisable. If an Option becomes fully vested and exercisable in lieu of assumption or substitution in In the event of a merger (with any entity other than SMART Modular Technologies, Inc. ("SMART")) or sale of assetsall or substantially all of the assets of the Company, and the Board shall notify the Optionee in writing or electronically that successor corporation (other than SMART) agrees to assume the Option or substitute an equivalent Option, on the date of such event all options shall accelerate so that all shares subject to the Option will be fully vested and exercisable for a period of time as determined by the Board, and the Option shall terminate upon the expiration of on such perioddate. For the purposes of this paragraph, the Option shall be considered assumed if, following the merger or sale of assetsmerger, the option Option confers the right to purchase or receivepurchase, for each Share of optioned stock subject to the Option immediately prior to the merger or sale of assetsmerger, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock common stock for each share 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 StockShares); provided. However, however, that if such consideration received in the merger or sale of assets is not solely common stock of the successor corporation or its Parentparent, the Board board of directors may, with the consent of the successor corporation, provide for the consideration to be received by the Optionee upon the exercise of the Option, for each Share of optioned stock subject to the Option, to be solely common stock of the successor corporation or its Parent parent equal in fair market value to the per share consideration received by holders of Common Stock common stock in the merger or sale of assetsmerger.

Merger or Asset Sale. In the event of a merger of Connetics the Company -------------------- with or into another corporation, corporation or the sale of substantially all of the assets of Conneticsthe Company, the Option shall outstanding Options may be assumed or an equivalent option or right options may be substituted by the successor corporation or a Parent or Subsidiary thereof (the "Successor Corporation"). If an Option is assumed or substituted for, the Option or equivalent option shall continue to be exercisable as provided in Section 4 hereof for so long as the Optionee serves as a Director or a director of the successor corporationSuccessor Corporation. In Following such assumption or substitution, if the event that Optionee's status as a Director or director of the successor corporation refuses to assume or substitute for Successor Corporation, as applicable, is terminated other than upon a voluntary resignation by the OptionOptionee, the Optionee Option or option shall become fully vest in and have the right to exercise the Option exercisable, including as to all of the Shares, including Shares as to for which it would not otherwise be exercisable. Thereafter, the Option or option shall remain exercisable in accordance with Sections 8(c) through (e) above. If the Successor Corporation does not assume an outstanding Option or substitute for it an equivalent option, the Option shall become fully vested and exercisable, including as to Shares for which it would not otherwise be exercisable. If an Option becomes fully vested and exercisable in lieu of assumption or substitution in the In such 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 thirty (30) days from the Boarddate of such notice, and the Option shall terminate upon the expiration of such periodperiod the Option shall terminate. For the purposes of this paragraphSection 10(c), the an Option shall be considered assumed if, following the merger or sale of assets, the option Option confers the right to purchase or receive, for each Share of Optioned Stock subject to the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each share 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 StockShares); 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.

Merger or Asset Sale. In the event of a merger of Connetics the Company with or into another corporation, or the sale of substantially all of the assets of Conneticsthe Company, the each outstanding 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 , or in the event that the successor corporation refuses to assume or substitute for the Option, the Optionee Option shall fully vest in and the Optionee shall have the right to exercise the Option as to all of the SharesOptioned Stock, including Shares as to which it would not otherwise be vested and exercisable. If an Option becomes fully vested and is exercisable in lieu of assumption or substitution in the event of a merger or sale of assets, the Board Administrator 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 fifteen (15) days from the Boarddate of such notice, 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 or right confers the right to purchase or receive, for each Share of Optioned Stock subject to the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each share 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 StockShares); provided, however, that if such consideration received in the merger or sale of assets is was not solely common stock of the successor corporation or its Parent, the Board Administrator 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.provide

Merger or Asset Sale. In the event of a merger of Connetics the Company with -------------------- or into another corporation, or the sale of substantially all of the assets of Conneticsthe Company, the each outstanding 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 SharesOptioned Stock, including Shares as to which it would not otherwise be vested and or 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 Administrator 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 fifteen (15) days from the Boarddate of such notice, 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 of Optioned Stock subject to the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each share 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 StockShares); 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 Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each Share of Optioned Stock 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.

Merger or Asset Sale. In the event of a merger of Connetics the Company with or into another corporation, or the sale of substantially all of the assets of Conneticsthe Company, the Option shall be assumed or an equivalent option or right award 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 Participant shall fully vest in and and, to the extent applicable, have the right to exercise the Option as to all of the SharesOptioned Stock, including Shares as to which it would not otherwise be vested and or exercisable. If an In addition, if the Option becomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger or sale of assets, the Board Committee shall notify the Optionee Participant in writing or electronically that the Option shall be fully vested and exercisable for a period of time as determined by fifteen (15) days from the Boarddate of such notice, 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 Option confers the right to purchase or receive, for each Share of Awarded Stock subject to the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each share 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 StockShares); 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 Committee may, with the consent of the successor corporation, provide for the consideration to be received (upon the exercise of the Option, if applicable), for each Share of Awarded Stock and each unit/right to acquire a 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. Notwithstanding the foregoing, in the event of a Change of Control (as defined in the Management Retention Agreement), the vesting and exercisability of the Option shall be treated as provided, and subject to the limitations set forth, in the Management Retention Agreement. For purposes of this paragraph and Section N, the “Management Retention Agreement” means the Management Retention Agreement, dated as of June 1, 2007, between the Optionee and the Company, as such may be amended or replaced from time to time by agreement of the parties thereto.

Merger or Asset Sale. In the event of a merger of Connetics the Company -------------------- with or into another corporation, or the sale of substantially all of the assets of Conneticsthe Company, 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 SharesOptioned Stock, including Shares as to which it would not otherwise be vested and or exercisable. If an the 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 e Optionee in writing or electronically that the Option shall be fully vested and exercisable for a period of time as determined by fifteen (15) days from the Boarddate of such notice, 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 of Optioned Stock subject to the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Series E Preferred Stock or Common Stock Stock, as the case may be, for each share 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 StockShares); 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 Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each Share of Optioned Stock 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 Series E Preferred Stock or Common Stock Stock, as the case may be, in the merger or sale of assets.

Merger or Asset Sale. In the event of a merger of Connetics the Company with or into another corporation, or the sale of substantially all of the assets of Conneticsthe Company, the this 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 this 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 at least fifteen (15) days before such merger or sale of substantially all of the assets of the Company so that Optionee shall have time to exercise his Option before the Option shall be fully vested and exercisable for a period date of time as determined by such merger or sale of substantially all of the Boardassets of the Company, and the Option shall terminate upon the expiration closing of such periodmerger or sale of substantially all of the assets of the Company. 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 of Optioned Stock subject to the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each share 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 StockShares); 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 of Optioned Stock 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.

Merger or Asset Sale. In the event of a merger of Connetics the Company with or into another corporation, or the sale of substantially all of the assets of Conneticsthe Company, the each outstanding Substitute 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 Substitute Option, the Optionee shall fully vest in and have the right to exercise the Substitute Option as to all of the Optioned Shares, including Shares as to which it would not otherwise be vested and or exercisable. If an a Substitute Option becomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger or sale of assets, the Board Administrator shall notify the Optionee in writing or electronically that the Substitute Option shall be fully vested and exercisable for a period of time as determined by fifteen (15) days from the Boarddate of such notice, and the Substitute Option shall terminate upon the expiration of such period. For the purposes of this paragraphSection 12(c), the Substitute Option shall be considered assumed if, following the merger or sale of assets, the option Substitute Option or right confers the right to purchase or receive, for each Share subject to the Substitute Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock Shares for each share 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 StockShares); provided, however, that if such consideration received in the merger or sale of assets is not solely common stock or ordinary shares of the successor corporation or its Parent, the Board Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Substitute Option, for each Share subject to the Substitute Option, to be solely common stock or ordinary shares of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock Shares in the merger or sale of assets.

Merger or Asset Sale. In the event of a merger of Connetics the Company with or into another corporation, or the sale of substantially all of the assets of Conneticsthe Company, 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 Shares of the SharesOptioned Stock, including Shares as to which it would not otherwise be vested and or exercisable. If an the 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 fifteen (15) days from the Boarddate of such notice, 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 of Optioned Stock subject to the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each share 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 StockShares); 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 Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each Share of Optioned Stock 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. In the event of a merger of the Company with or into another corporation, or the sale of substantially all of the assets of the Company, if, following such merger or sale of assets, the Optionee is terminated as a Service Provider to the successor to the Company (other than for nonperformance of such Optionee’s duties as a Service Provider), the Optionee shall fully vest in and have the right to exercise the Option as to those Shares of the Optioned Stock that would otherwise vest and become exercisable one year from the date of such termination, including Shares as to which it would not otherwise be vested or exercisable.

Merger or Asset Sale. In the event of a merger of Connetics the Company with -------------------- or into another corporation, or the sale of substantially all of the assets of Conneticsthe Company, the each outstanding 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 SharesOptioned Stock, including Shares as to which it would not otherwise be vested and or 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 Administrator 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 fifteen (15) days from the Boarddate of such notice, 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 or right confers the right to purchase or receive, for each Share subject to the Option of Optioned Stock, immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each share 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 StockShares); 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 Administrator 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, of Optioned Stock 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.

Merger or Asset Sale. In the event of a merger of Connetics the Company with or into another corporation, or the sale of substantially all of the assets of Conneticsthe Company, 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 SharesOptioned Stock, including Shares as to which it would not otherwise be vested and or exercisable. If an the Option becomes fully vested and exercisable in lieu of assumption is not assumed or substitution substituted for 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 paragraphSection 11(c), the Option shall be considered assumed if, following the merger or sale of assets, the option Option confers the right to purchase or receive, for each Share of subject to the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock Shares for each share 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 StockShares); 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 Shares in the merger or sale of assets.