exv10w1








    Exhibit
    10.1



 




    IDERA
    PHARMACEUTICALS, INC.

    



 




    2008
    STOCK INCENTIVE PLAN



 




    1.  Purpose



 



    The purpose of this 2008 Stock Incentive Plan (the
    “Plan”) of Idera Pharmaceuticals, Inc., a Delaware
    corporation (the “Company”), is to advance the
    interests of the Company’s stockholders by enhancing the
    Company’s ability to attract, retain and motivate persons
    who are expected to make important contributions to the Company
    and by providing such persons with equity ownership
    opportunities and performance-based incentives that are intended
    to better align the interests of such persons with those of the
    Company’s stockholders. Except where the context otherwise
    requires, the term “Company” shall include any of the
    Company’s present or future parent or subsidiary
    corporations as defined in Sections 424(e) or (f) of
    the Internal Revenue Code of 1986, as amended, and any
    regulations promulgated thereunder (the “Code”) and
    any other business venture (including, without limitation, joint
    venture or limited liability company) in which the Company has a
    controlling interest, as determined by the Board of Directors of
    the Company (the “Board”).



 




    2.  Eligibility



 



    All of the Company’s employees, officers, directors,
    consultants and advisors are eligible to be granted options,
    stock appreciation rights (“SARs”), restricted stock,
    restricted stock units (“RSUs”) and other stock-based
    awards (each, an “Award”) under the Plan. Each person
    who receives an Award under the Plan is deemed a
    “Participant.”



 




    3.  Administration
    and Delegation



 



    (a) Administration by Board of
    Directors.  The Plan will be administered by
    the Board. The Board shall have authority to grant Awards and to
    adopt, amend and repeal such administrative rules, guidelines
    and practices relating to the Plan as it shall deem advisable.
    The Board may construe and interpret the terms of the Plan and
    any Award agreements entered into under the Plan. The Board may
    correct any defect, supply any omission or reconcile any
    inconsistency in the Plan or any Award in the manner and to the
    extent it shall deem expedient to carry the Plan into effect and
    it shall be the sole and final judge of such expediency. All
    decisions by the Board shall be made in the Board’s sole
    discretion and shall be final and binding on all persons having
    or claiming any interest in the Plan or in any Award. No
    director or person acting pursuant to the authority delegated by
    the Board shall be liable for any action or determination
    relating to or under the Plan made in good faith.



 



    (b) Appointment of Committees.  To
    the extent permitted by applicable law, the Board may delegate
    any or all of its powers under the Plan to one or more
    committees or subcommittees of the Board (a
    “Committee”). All references in the Plan to the
    “Board” shall mean the Board or a Committee of the
    Board or the officers referred to in Section 3(c) to the
    extent that the Board’s powers or authority under the Plan
    have been delegated to such Committee or officers.



 



    (c) Delegation to Officers.  To the
    extent permitted by applicable law, the Board may delegate to
    one or more officers of the Company the power to grant Awards
    (subject to any limitations under the Plan) to employees or
    officers of the Company or any of its present or future
    subsidiary corporations and to exercise such other powers under
    the Plan as the Board may determine, provided that the Board
    shall fix the terms of the Awards to be granted by such officers
    (including the exercise price of such Awards, which may include
    a formula by which the exercise price will be determined) and
    the maximum number of shares subject to Awards that the officers
    may grant; provided further, however, that no officer shall be
    authorized to grant Awards to any “executive officer”
    of the Company (as defined by
    Rule 3b-7
    under the Securities Exchange Act of 1934, as amended (the
    “Exchange Act”)) or to any “officer” of the
    Company (as defined by
    Rule 16a-1
    under the Exchange Act).




    
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    (d) Awards to Non-Employee
    Directors.  Discretionary Awards to
    non-employee directors will only be granted and administered by
    a Committee, all of the members of which are independent as
    defined by Section 4200(a)(15) of the Nasdaq Marketplace
    Rules.



 




    4.  Stock
    Available for Awards



 



    (a) Number of Shares; Share Counting.



 



    (1) Authorized Number of
    Shares.  Subject to adjustment under
    Section 9, Awards may be made under the Plan for up to
    3,700,000 shares of common stock, $0.001 par value per
    share, of the Company (the “Common Stock”). Shares
    issued under the Plan may consist in whole or in part of
    authorized but unissued shares or treasury shares.



 



    (2) Fungible Share Pool.  Subject
    to adjustment under Section 10, any Award that is not a
    Full-Value Award shall be counted against the share limits
    specified in Sections 4(a)(1) as one share for each share
    of Common Stock subject to such Award and any Award that is a
    Full-Value Award shall be counted against the share limits
    specified in Sections 4(a)(1) as 1.57 shares for each
    one share of Common Stock subject to such Full-Value Award.
    “Full-Value Award” means any Restricted Stock Award or
    other Stock-Based Award with a per share price or per unit
    purchase price lower than 100% of Fair Market Value (as defined
    below) on the date of grant. To the extent a share that was
    subject to an Award that counted as one share is returned to the
    Plan pursuant to Section 4(a)(3), each applicable share
    reserve will be credited with one share. To the extent that a
    share that was subject to an Award that counts as
    1.57 shares is returned to the Plan pursuant to
    Section 4(a)(3), each applicable share reserve will be
    credited with 1.57 shares.



 



    (3) Share Counting.  For purposes
    of counting the number of shares available for the grant of
    Awards under the Plan and under the
    sub-limit
    contained in Sections 4(b), (i) all shares of Common
    Stock covered by independent SARs shall be counted against the
    number of shares available for the grant of Awards; provided,
    however, that independent SARs that may be settled in cash only
    shall not be so counted; (ii) if any Award (A) expires
    or is terminated, surrendered or canceled without having been
    fully exercised or is forfeited in whole or in part (including
    as the result of shares of Common Stock subject to such Award
    being repurchased by the Company at the original issuance price
    pursuant to a contractual repurchase right) or (B) results
    in any Common Stock not being issued (including as a result of
    an independent SAR that was settleable either in cash or in
    stock actually being settled in cash), the unused Common Stock
    covered by such Award shall again be available for the grant of
    Awards; provided, however, in the case of Incentive Stock
    Options (as hereinafter defined), the foregoing shall be subject
    to any limitations under the Code; and provided further, in the
    case of independent SARs, that the full number of shares subject
    to any stock-settled SAR shall be counted against the shares
    available under the Plan and against the
    sub-limit
    listed in the first clause of this Section regardless of the
    number of shares actually used to settle such SAR upon exercise;
    (iii) shares of Common Stock delivered (either by actual
    delivery or attestation) to the Company by a Participant to
    (A) purchase shares of Common Stock upon the exercise of an
    Award or (B) satisfy tax withholding obligations (including
    shares retained from the Award creating the tax obligation)
    shall not be added back to the number of shares available for
    the future grant of Awards; and (iv) shares of Common Stock
    repurchased by the Company on the open market using the proceeds
    from the exercise of an Award shall not increase the number of
    shares available for future grant of Awards.



 



    (b) Section 162(m) Per-Participant
    Limit.  Subject to adjustment under
    Section 9, the maximum number of shares of Common Stock
    with respect to which Awards may be granted to any Participant
    under the Plan shall be 500,000 per calendar year. For purposes
    of the foregoing limit, the combination of an Option (as
    hereafter defined) in tandem with a SAR shall be treated as a
    single Award. The per Participant limit described in this
    Section 4(b) shall be construed and applied consistently
    with Section 162(m) of the Code or any successor provision
    thereto, and the regulations thereunder
    (“Section 162(m)”).



 



    (c) Substitute Awards.  In
    connection with a merger or consolidation of an entity with the
    Company or the acquisition by the Company of property or stock
    of an entity, the Board may grant Awards in substitution for any
    options or other stock or stock-based awards granted by such
    entity or an affiliate thereof. Substitute Awards may be granted
    on such terms as the Board deems appropriate in the
    circumstances, notwithstanding any limitations on




    
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    Awards contained in the Plan. Substitute Awards shall not count
    against the overall share limit set forth in
    Section 4(a)(1) or any
    sub-limits
    contained in the Plan, except as may be required by reason of
    Section 422 and related provisions of the Code.



 




    5.  Stock
    Options



 



    (a) General.  The Board may grant
    options to purchase Common Stock (each, an “Option”)
    and determine the number of shares of Common Stock to be covered
    by each Option, the exercise price of each Option and the
    conditions and limitations applicable to the exercise of each
    Option, including conditions relating to applicable federal or
    state securities laws, as it considers necessary or advisable.
    An Option that is not intended to be an Incentive Stock Option
    (as hereinafter defined) shall be designated a
    “Nonstatutory Stock Option.”



 



    (b) Incentive Stock Options.  An
    Option that the Board intends to be an “incentive stock
    option” as defined in Section 422 of the Code (an
    “Incentive Stock Option”) shall only be granted to
    employees of Idera Pharmaceuticals, Inc., any of Idera
    Pharmaceuticals, Inc.’s present or future parent or
    subsidiary corporations as defined in Sections 424(e) or
    (f) of the Code, and any other entities the employees of
    which are eligible to receive Incentive Stock Options under the
    Code, and shall be subject to and shall be construed
    consistently with the requirements of Section 422 of the
    Code. The Company shall have no liability to a Participant, or
    any other party, if an Option (or any part thereof) that is
    intended to be an Incentive Stock Option is not an Incentive
    Stock Option or for any action taken by the Board, including
    without limitation the conversion of an Incentive Stock Option
    to a Nonstatutory Stock Option.



 



    (c) Exercise Price.  The Board
    shall establish the exercise price of each Option and specify
    the exercise price in the applicable option agreement. The
    exercise price shall be not less than 100% of the Fair Market
    Value (as defined below) on the date the Option is granted;
    provided that if the Board approves the grant of an Option with
    an exercise price to be determined on a future date, the
    exercise price shall be not less than 100% of the Fair Market
    Value on such future date.



 



    (d) Duration of Options.  Each
    Option shall be exercisable at such times and subject to such
    terms and conditions as the Board may specify in the applicable
    option agreement; provided, however, that no Option will be
    granted with a term in excess of 10 years.



 



    (e) No Reload Options.  No Option
    granted under the Plan shall contain any provision entitling the
    Participant to the automatic grant of additional Options in
    connection with any exercise of the original Option.



 



    (f) Exercise of Option.  Options
    may be exercised by delivery to the Company of a written notice
    of exercise signed by the proper person or by any other form of
    notice (including electronic notice) approved by the Board,
    together with payment in full as specified in Section 5(g)
    for the number of shares for which the Option is exercised.
    Shares of Common Stock subject to the Option will be delivered
    by the Company as soon as practicable following exercise.



 



    (g) Payment Upon Exercise.  Common
    Stock purchased upon the exercise of an Option granted under the
    Plan shall be paid for as follows:



 



    (1) in cash, by check or by wire transfer, payable to the
    order of the Company;



 



    (2) except as the Board may otherwise provide in the
    applicable option agreement, by (i) delivery of an
    irrevocable and unconditional undertaking by a creditworthy
    broker to deliver promptly to the Company sufficient funds to
    pay the exercise price and any required tax withholding or
    (ii) delivery by the Participant to the Company of a copy
    of irrevocable and unconditional instructions to a creditworthy
    broker to deliver promptly to the Company cash or a check
    sufficient to pay the exercise price and any required tax
    withholding;



 



    (3) for so long as the Common Stock is registered under the
    Exchange Act, by delivery (either by actual delivery or
    attestation) of shares of Common Stock owned by the Participant
    valued at their fair market value as determined by (or in a
    manner approved by) the Board (“Fair Market Value”),
    provided (i) such method of payment is then permitted under
    applicable law, (ii) such Common Stock, if acquired
    directly from the Company, was owned by the Participant for such
    minimum period of time, if any, as may be established by the
    Board in its discretion and (iii) such Common Stock is not
    subject to any repurchase, forfeiture, unfulfilled vesting or
    other similar requirements;




    
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    (4) to the extent permitted by applicable law and provided
    for in the applicable option agreement or approved by the Board,
    in its sole discretion, by (i) delivery of a promissory
    note of the Participant to the Company on terms determined by
    the Board, or (ii) payment of such other lawful
    consideration as the Board may determine; or



 



    (5) by any combination of the above permitted forms of
    payment.



 



    (h) Limitation on
    Repricing.  Unless such action is approved by
    the Company’s stockholders: (1) no outstanding Option
    granted under the Plan may be amended to provide an exercise
    price per share that is lower than the then-current exercise
    price per share of such outstanding Option (other than
    adjustments pursuant to Section 9) and (2) the
    Board may not cancel any outstanding option (whether or not
    granted under the Plan) and grant in substitution therefor new
    Awards under the Plan covering the same or a different number of
    shares of Common Stock and having an exercise price per share
    lower than the then-current exercise price per share of the
    cancelled option.



 




    6.  Stock
    Appreciation Rights



 



    (a) General.  The Board may grant
    Awards consisting of SARs, which entitle the holder, upon
    exercise, to receive an amount of Common Stock or cash or a
    combination thereof (such form to be determined by the Board)
    determined in whole or in part by reference to appreciation,
    from and after the date of grant, in the fair market value of a
    share of Common Stock over the exercise price established
    pursuant to Section 6(c). The date as of which such
    appreciation is determined shall be the exercise date.



 



    (b) Grants.  SARs may be granted in
    tandem with, or independently of, Options granted under the Plan.



 



    (1) Tandem Awards.  When SARs are
    expressly granted in tandem with Options, (i) the SAR will
    be exercisable only at such time or times, and to the extent,
    that the related Option is exercisable (except to the extent
    designated by the Board in connection with a Reorganization
    Event) and will be exercisable in accordance with the procedure
    required for exercise of the related Option; (ii) the SAR
    will terminate and no longer be exercisable upon the termination
    or exercise of the related Option, except to the extent
    designated by the Board in connection with a Reorganization
    Event and except that a SAR granted with respect to less than
    the full number of shares covered by an Option will not be
    reduced until the number of shares as to which the related
    Option has been exercised or has terminated exceeds the number
    of shares not covered by the SAR; (iii) the Option will
    terminate and no longer be exercisable upon the exercise of the
    related SAR; and (iv) the SAR will be transferable only
    with the related Option.



 



    (2) Independent SARs.  A SAR not
    expressly granted in tandem with an Option will become
    exercisable at such time or times, and on such conditions, as
    the Board may specify in the SAR Award.



 



    (c) Exercise Price.  The Board
    shall establish the exercise price of each SAR and specify it in
    the applicable SAR agreement. The exercise price shall not be
    less than 100% of the Fair Market Value on the date the SAR is
    granted; provided that if the Board approves the grant of a SAR
    with an exercise price to be determined on a future date, the
    exercise price shall be not less than 100% of the Fair Market
    Value on such future date.



 



    (d) Duration of SARs.  Each SAR
    shall be exercisable at such times and subject to such terms and
    conditions as the Board may specify in the applicable SAR
    agreement; provided, however, that no SAR will be granted with a
    term in excess of 10 years.



 



    (e) Exercise of SARs.  SARs may be
    exercised by delivery to the Company of a written notice of
    exercise signed by the proper person or by any other form of
    notice (including electronic notice) approved by the Board,
    together with any other documents required by the Board.



 



    (f) Limitation on
    Repricing.  Unless such action is approved by
    the Company’s stockholders: (1) no outstanding SAR
    granted under the Plan may be amended to provide an exercise
    price per share that is lower than the then-current exercise
    price per share of such outstanding SAR (other than adjustments
    pursuant to Section 9) and (2) the Board may not
    cancel any outstanding SAR (whether or not granted under the
    Plan) and grant in substitution therefor new Awards under the
    Plan covering the same or a different number of shares of Common
    Stock and having an exercise price per share lower than the
    then-current exercise price per share of the cancelled SAR.




    
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    7.  Restricted
    Stock; Restricted Stock Units



 



    (a) General.  The Board may grant
    Awards entitling recipients to acquire shares of Common Stock
    (“Restricted Stock”), subject to the right of the
    Company to repurchase all or part of such shares at their issue
    price or other stated or formula price (or to require forfeiture
    of such shares if issued at no cost) from the recipient in the
    event that conditions specified by the Board in the applicable
    Award are not satisfied prior to the end of the applicable
    restriction period or periods established by the Board for such
    Award. Instead of granting Awards for Restricted Stock, the
    Board may grant Awards entitling the recipient to receive shares
    of Common Stock or cash to be delivered at the time such Award
    vests (“Restricted Stock Units”) (Restricted Stock and
    Restricted Stock Units are each referred to herein as a
    “Restricted Stock Award”).



 



    (b) Terms and Conditions for All Restricted Stock
    Awards.  The Board shall determine the terms
    and conditions of a Restricted Stock Award, including the
    conditions for vesting and repurchase (or forfeiture) and the
    issue price, if any.



 



    (c) Additional Provisions Relating to Restricted
    Stock.



 



    (1) Dividends.  Participants
    holding shares of Restricted Stock will be entitled to all
    ordinary cash dividends paid with respect to such shares, unless
    otherwise provided by the Board. Unless otherwise provided by
    the Board, if any dividends or distributions are paid in shares,
    or consist of a dividend or distribution to holders of Common
    Stock other than an ordinary cash dividend, the shares, cash or
    other property will be subject to the same restrictions on
    transferability and forfeitability as the shares of Restricted
    Stock with respect to which they were paid. Each dividend
    payment will be made no later than the end of the calendar year
    in which the dividends are paid to shareholders of that class of
    stock or, if later, the 15th day of the third month
    following the date the dividends are paid to shareholders of
    that class of stock.



 



    (2) Stock Certificates.  The
    Company may require that any stock certificates issued in
    respect of shares of Restricted Stock shall be deposited in
    escrow by the Participant, together with a stock power endorsed
    in blank, with the Company (or its designee). At the expiration
    of the applicable restriction periods, the Company (or such
    designee) shall deliver the certificates no longer subject to
    such restrictions to the Participant or if the Participant has
    died, to the beneficiary designated, in a manner determined by
    the Board, by a Participant to receive amounts due or exercise
    rights of the Participant in the event of the Participant’s
    death (the “Designated Beneficiary”). In the absence
    of an effective designation by a Participant, “Designated
    Beneficiary” shall mean the Participant’s estate.



 



    (d) Additional Provisions Relating to Restricted
    Stock Units.



 



    (1) Settlement.  Upon the vesting
    of and/or
    lapsing of any other restrictions (i.e., settlement) with
    respect to each Restricted Stock Unit, the Participant shall be
    entitled to receive from the Company one share of Common Stock
    or an amount of cash equal to the Fair Market Value of one share
    of Common Stock, as provided in the applicable Award agreement.
    The Board may, in its discretion, provide that settlement of
    Restricted Stock Units shall be deferred, on a mandatory basis
    or at the election of the Participant, in a manner compliant
    with Section 409A of the Code.



 



    (2) Voting Rights.  A Participant
    shall have no voting rights with respect to any Restricted Stock
    Units.



 



    (3) Dividend Equivalents.  To the
    extent provided by the Board, in its sole discretion, a grant of
    Restricted Stock Units may provide Participants with the right
    to receive an amount equal to any dividends or other
    distributions declared and paid on an equal number of
    outstanding shares of Common Stock (“Dividend
    Equivalents”). Dividend Equivalents may be paid currently
    or credited to an account for the Participants, may be settled
    in cash
    and/or
    shares of Common Stock and may be subject to the same
    restrictions on transfer and forfeitability as the Restricted
    Stock Units with respect to which paid, as determined by the
    Board in its sole discretion, subject in each case to such terms
    and conditions as the Board shall establish, in each case to be
    set forth in the applicable Award agreement.



 




    8.  Other
    Stock-Based Awards



 



    (a) General.  Other Awards of
    shares of Common Stock, and other Awards that are valued in
    whole or in part by reference to, or are otherwise based on,
    shares of Common Stock or other property, may be granted
    hereunder to Participants (“Other
    Stock-Based-Awards”), including without limitation Awards
    entitling recipients to receive




    
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    shares of Common Stock to be delivered in the future. Such Other
    Stock-Based Awards shall also be available as a form of payment
    in the settlement of other Awards granted under the Plan or as
    payment in lieu of compensation to which a Participant is
    otherwise entitled. Other Stock-Based Awards may be paid in
    shares of Common Stock or cash, as the Board shall determine.



 



    (b) Terms and Conditions.  Subject
    to the provisions of the Plan, the Board shall determine the
    terms and conditions of each Other Stock-Based Award, including
    any purchase price applicable thereto.



 




    9.  Adjustments
    for Changes in Common Stock and Certain Other
    Events



 



    (a) Changes in Capitalization.  In
    the event of any stock split, reverse stock split, stock
    dividend, recapitalization, combination of shares,
    reclassification of shares, spin-off or other similar change in
    capitalization or event, or any dividend or distribution to
    holders of Common Stock other than an ordinary cash dividend,
    (i) the number and class of securities available under this
    Plan, (ii) the share counting rules and
    sub-limits
    set forth in Sections 4(a) and 4(b), (iii) the number
    and class of securities and exercise price per share of each
    outstanding Option, (iv) the share- and per-share
    provisions and the exercise price of each SAR, (v) the
    number of shares subject to and the repurchase price per share
    subject to each outstanding Restricted Stock Award and
    (vi) the share- and per-share-related provisions and the
    purchase price, if any, of each outstanding Other Stock-Based
    Award, shall be equitably adjusted by the Company (or
    substituted Awards may be made, if applicable) in the manner
    determined by the Board. Without limiting the generality of the
    foregoing, in the event the Company effects a split of the
    Common Stock by means of a stock dividend and the exercise price
    of and the number of shares subject to an outstanding Option are
    adjusted as of the date of the distribution of the dividend
    (rather than as of the record date for such dividend), then an
    optionee who exercises an Option between the record date and the
    distribution date for such stock dividend shall be entitled to
    receive, on the distribution date, the stock dividend with
    respect to the shares of Common Stock acquired upon such Option
    exercise, notwithstanding the fact that such shares were not
    outstanding as of the close of business on the record date for
    such stock dividend.



 



    (b) Reorganization Events.



 



    (1) Definition.  A
    “Reorganization Event” shall mean: (a) any merger
    or consolidation of the Company with or into another entity as a
    result of which all of the Common Stock of the Company is
    converted into or exchanged for the right to receive cash,
    securities or other property or is cancelled, (b) any
    exchange of all of the Common Stock of the Company for cash,
    securities or other property pursuant to a share exchange
    transaction or (c) any liquidation or dissolution of the
    Company.



 



    (2) Consequences of a Reorganization Event on Awards
    Other than Awards of Restricted Stock.  In
    connection with a Reorganization Event, the Board may take any
    one or more of the following actions as to all or any (or any
    portion of) outstanding Awards other than Awards of Restricted
    Stock on such terms as the Board determines: (i) provide
    that Awards shall be assumed, or substantially equivalent Awards
    shall be substituted, by the acquiring or succeeding corporation
    (or an affiliate thereof), (ii) upon written notice to a
    Participant, provide that the Participant’s unexercised
    Awards will terminate immediately prior to the consummation of
    such Reorganization Event unless exercised by the Participant
    within a specified period following the date of such notice,
    (iii) provide that outstanding Awards shall become
    exercisable, realizable, or deliverable, or restrictions
    applicable to an Award shall lapse, in whole or in part prior to
    or upon such Reorganization Event, (iv) in the event of a
    Reorganization Event under the terms of which holders of Common
    Stock will receive upon consummation thereof a cash payment for
    each share surrendered in the Reorganization Event (the
    “Acquisition Price”), make or provide for a cash
    payment to a Participant equal to the excess, if any, of
    (A) the Acquisition Price times the number of shares of
    Common Stock subject to the Participant’s Awards (to the
    extent the exercise price does not exceed the Acquisition Price)
    over (B) the aggregate exercise price of all such
    outstanding Awards and any applicable tax withholdings, in
    exchange for the termination of such Awards, (v) provide
    that, in connection with a liquidation or dissolution of the
    Company, Awards shall convert into the right to receive
    liquidation proceeds (if applicable, net of the exercise price
    thereof and any applicable tax withholdings) and (vi) any
    combination of the foregoing. In taking any of the actions
    permitted under this Section 9(b), the Board shall not be
    obligated by the Plan to treat all Awards, all Awards held by a
    Participant, or all Awards of the same type, identically.




    
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    For purposes of clause (i) above, an Option shall be
    considered assumed if, following consummation of the
    Reorganization Event, the Option confers the right to purchase,
    for each share of Common Stock subject to the Option immediately
    prior to the consummation of the Reorganization Event, the
    consideration (whether cash, securities or other property)
    received as a result of the Reorganization Event by holders of
    Common Stock for each share of Common Stock held immediately
    prior to the consummation of the Reorganization Event (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
    the consideration received as a result of the Reorganization
    Event is not solely common stock of the acquiring or succeeding
    corporation (or an affiliate thereof), the Company may, with the
    consent of the acquiring or succeeding corporation, provide for
    the consideration to be received upon the exercise of Options to
    consist solely of common stock of the acquiring or succeeding
    corporation (or an affiliate thereof) equivalent in value (as
    determined by the Board) to the per share consideration received
    by holders of outstanding shares of Common Stock as a result of
    the Reorganization Event.



 



    (3) Consequences of a Reorganization Event on Awards
    of Restricted Stock.  Upon the occurrence of a
    Reorganization Event other than a liquidation or dissolution of
    the Company, the repurchase and other rights of the Company
    under each outstanding Award of Restricted Stock shall inure to
    the benefit of the Company’s successor and shall, unless
    the Board determines otherwise, apply to the cash, securities or
    other property which the Common Stock was converted into or
    exchanged for pursuant to such Reorganization Event in the same
    manner and to the same extent as they applied to the Common
    Stock subject to such Award of Restricted Stock. Upon the
    occurrence of a Reorganization Event involving the liquidation
    or dissolution of the Company, except to the extent specifically
    provided to the contrary in the instrument evidencing any Award
    of Restricted Stock or any other agreement between a Participant
    and the Company, all restrictions and conditions on all Awards
    of Restricted Stock then outstanding shall automatically be
    deemed terminated or satisfied.



 




    10.  General
    Provisions Applicable to Awards



 



    (a) Transferability of
    Awards.  Awards shall not be sold, assigned,
    transferred, pledged or otherwise encumbered by the person to
    whom they are granted, either voluntarily or by operation of
    law, except by will or the laws of descent and distribution or,
    other than in the case of an Incentive Stock Option, pursuant to
    a qualified domestic relations order, and, during the life of
    the Participant, shall be exercisable only by the Participant;
    provided, however, that the Board may permit or provide in an
    Award for the gratuitous transfer of the Award by the
    Participant to or for the benefit of any immediate family
    member, family trust or other entity established for the benefit
    of the Participant
    and/or an
    immediate family member thereof if, with respect to such
    proposed transferee, the Company would be eligible to use a
    Form S-8
    for the registration of the sale of the Common Stock subject to
    such Award under the Securities Act of 1933, as amended;
    provided, further, that the Company shall not be required to
    recognize any such transfer until such time as the Participant
    and such permitted transferee shall, as a condition to such
    transfer, deliver to the Company a written instrument in form
    and substance satisfactory to the Company confirming that such
    transferee shall be bound by all of the terms and conditions of
    the Award. References to a Participant, to the extent relevant
    in the context, shall include references to authorized
    transferees.



 



    (b) Documentation.  Each Award
    shall be evidenced in such form (written, electronic or
    otherwise) as the Board shall determine. Each Award may contain
    terms and conditions in addition to those set forth in the Plan.



 



    (c) Board Discretion.  Except as
    otherwise provided by the Plan, each Award may be made alone or
    in addition or in relation to any other Award. The terms of each
    Award need not be identical, and the Board need not treat
    Participants uniformly.



 



    (d) Termination of Status.  The
    Board shall determine the effect on an Award of the disability,
    death, retirement, termination or other cessation of employment,
    authorized leave of absence or other change in the employment or
    other status of a Participant and the extent to which, and the
    period during which, the Participant, or the Participant’s
    legal representative, conservator, guardian or Designated
    Beneficiary, may exercise rights under the Award.



 



    (e) Withholding.  The Participant
    must satisfy all applicable federal, state, and local or other
    income and employment tax withholding obligations before the
    Company will deliver stock certificates or otherwise recognize
    ownership of Common Stock under an Award. The Company may decide
    to satisfy the withholding obligations through additional
    withholding on salary or wages. If the Company elects not to or
    cannot withhold from other




    
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    compensation, the Participant must pay the Company the full
    amount, if any, required for withholding or have a broker tender
    to the Company cash equal to the withholding obligations.
    Payment of withholding obligations is due before the Company
    will issue any shares on exercise or release from forfeiture of
    an Award or, if the Company so requires, at the same time as is
    payment of the exercise price unless the Company determines
    otherwise. Except as the Board may otherwise provide in an
    Award, a Participant may satisfy such tax obligations in whole
    or in part by delivery (either by actual delivery or
    attestation) of shares of Common Stock, including shares
    retained from the Award creating the tax obligation, valued at
    their Fair Market Value; provided, however, except as otherwise
    provided by the Board, that the total tax withholding where
    stock is being used to satisfy such tax obligations cannot
    exceed the Company’s minimum statutory withholding
    obligations (based on minimum statutory withholding rates for
    federal and state tax purposes, including payroll taxes, that
    are applicable to such supplemental taxable income). Shares used
    to satisfy tax withholding requirements cannot be subject to any
    repurchase, forfeiture, unfulfilled vesting or other similar
    requirements.



 



    (f) Amendment of Award.  Except as
    otherwise provided in Section 5(h) and 6(f) with respect to
    repricings, Section 10(i) with respect to Performance
    Awards or Section 11(d) with respect to actions requiring
    shareholder approval, the Board may amend, modify or terminate
    any outstanding Award, including but not limited to,
    substituting therefor another Award of the same or a different
    type, changing the date of exercise or realization, and
    converting an Incentive Stock Option to a Nonstatutory Stock
    Option. The Participant’s consent to such action shall be
    required unless (i) the Board determines that the action,
    taking into account any related action, would not materially and
    adversely affect the Participant’s rights under the Plan or
    (ii) the change is permitted under Section 9 hereof.



 



    (g) Conditions on Delivery of
    Stock.  The Company will not be obligated to
    deliver any shares of Common Stock pursuant to the Plan or to
    remove restrictions from shares previously delivered under the
    Plan until (i) all conditions of the Award have been met or
    removed to the satisfaction of the Company, (ii) in the
    opinion of the Company’s counsel, all other legal matters
    in connection with the issuance and delivery of such shares have
    been satisfied, including any applicable securities laws and any
    applicable stock exchange or stock market rules and regulations,
    and (iii) the Participant has executed and delivered to the
    Company such representations or agreements as the Company may
    consider appropriate to satisfy the requirements of any
    applicable laws, rules or regulations.



 



    (h) Acceleration.  The Board may at
    any time provide that any Award shall become immediately
    exercisable in full or in part, free of some or all restrictions
    or conditions, or otherwise realizable in full or in part, as
    the case may be.



 



    (i) Performance Awards.



 



    (1) Grants.  Restricted Stock
    Awards and Other Stock-Based Awards under the Plan may be made
    subject to the achievement of performance goals pursuant to this
    Section 10(i) (“Performance Awards”), subject to
    the limit in Section 4(b) on shares covered by such grants.



 



    (2) Committee.  Grants of
    Performance Awards to any Covered Employee intended to qualify
    as “performance-based compensation” under
    Section 162(m) (“Performance-Based Compensation”)
    shall be made only by a Committee (or subcommittee of a
    Committee) comprised solely of two or more directors eligible to
    serve on a committee making Awards qualifying as
    “performance-based compensation” under
    Section 162(m). In the case of such Awards granted to
    Covered Employees, references to the Board or to a Committee
    shall be deemed to be references to such Committee or
    subcommittee. “Covered Employee” shall mean any person
    who is, or whom the Committee, in its discretion, determines may
    be, a “covered employee” under Section 162(m)(3)
    of the Code.



 



    (3) Performance Measures.  For any
    Award that is intended to qualify as Performance-Based
    Compensation, the Committee shall specify that the degree of
    granting, vesting
    and/or
    payout shall be subject to the achievement of one or more
    objective performance measures established by the Committee,
    which shall be based on the relative or absolute attainment of
    specified levels of one or any combination of the following:
    (a) earnings per share, (b) return on average equity
    or average assets with respect to a pre-determined peer group,
    (c) earnings, (d) earnings growth, (e) revenues,
    (f) expenses, (g) stock price, (h) market share,
    (i) return on sales, assets, equity or investment,
    (j) regulatory compliance, (k) achievement of balance
    sheet or income statement objectives, (l) total shareholder
    return (m) net operating profit after tax, (n) pre-tax
    or after-tax




    
8








 






    income, (o) cash flow, (p) achievement of research,
    development, clinical or regulatory milestones, (q) product
    sales and (r) business development activities, and may be
    absolute in their terms or measured against or in relationship
    to other companies comparably, similarly or otherwise situated.
    The Committee may specify that such performance measures shall
    be adjusted to exclude any one or more of (i) extraordinary
    items, (ii) gains or losses on the dispositions of
    discontinued operations, (iii) the cumulative effects of
    changes in accounting principles, (iv) the writedown of any
    asset, and (v) charges for restructuring and
    rationalization programs. Such performance measures:
    (i) may vary by Participant and may be different for
    different Awards; (ii) may be particular to a Participant
    or the department, branch, line of business, subsidiary or other
    unit in which the Participant works and may cover such period as
    may be specified by the Committee; and (iii) shall be set
    by the Committee within the time period prescribed by, and shall
    otherwise comply with the requirements of, Section 162(m).
    Awards that are not intended to qualify as Performance-Based
    Compensation may be based on these or such other performance
    measures as the Board may determine.



 



    (4) Adjustments.  Notwithstanding
    any provision of the Plan, with respect to any Performance Award
    that is intended to qualify as Performance-Based Compensation,
    the Committee may adjust downwards, but not upwards, the cash or
    number of Shares payable pursuant to such Award, and the
    Committee may not waive the achievement of the applicable
    performance measures except in the case of the death or
    disability of the Participant or a change in control of the
    Company.



 



    (5) Other.  The Committee shall
    have the power to impose such other restrictions on Performance
    Awards as it may deem necessary or appropriate to ensure that
    such Awards satisfy all requirements for Performance-Based
    Compensation.



 




    11.  Miscellaneous



 



    (a) No Right To Employment or Other
    Status.  No person shall have any claim or
    right to be granted an Award, and the grant of an Award shall
    not be construed as giving a Participant the right to continued
    employment or any other relationship with the Company. The
    Company expressly reserves the right at any time to dismiss or
    otherwise terminate its relationship with a Participant free
    from any liability or claim under the Plan, except as expressly
    provided in the applicable Award.



 



    (b) No Rights As
    Stockholder.  Subject to the provisions of the
    applicable Award, no Participant or Designated Beneficiary shall
    have any rights as a stockholder with respect to any shares of
    Common Stock to be distributed with respect to an Award until
    becoming the record holder of such shares.



 



    (c) Effective Date and Term of
    Plan.  The Plan shall become effective on the
    date the Plan is approved by the Company’s stockholders
    (the “Effective Date”). No Awards shall be granted
    under the Plan after the expiration of 10 years from the
    Effective Date, but Awards previously granted may extend beyond
    that date.



 



    (d) Amendment of Plan.  The Board
    may amend, suspend or terminate the Plan or any portion thereof
    at any time provided that (i) to the extent required by
    Section 162(m), no Award granted to a Participant that is
    intended to comply with Section 162(m) after the date of
    such amendment shall become exercisable, realizable or vested,
    as applicable to such Award, unless and until such amendment
    shall have been approved by the Company’s stockholders if
    required by Section 162(m) (including the vote required
    under Section 162(m)); (ii) no amendment that would
    require stockholder approval under the rules of the NASDAQ Stock
    Market (“NASDAQ”) may be made effective unless and
    until such amendment shall have been approved by the
    Company’s stockholders; and (iii) if the NASDAQ amends
    its corporate governance rules so that such rules no longer
    require stockholder approval of material amendments to equity
    compensation plans, then, from and after the effective date of
    such amendment to the NASDAQ rules, no amendment to the Plan
    (A) materially increasing the number of shares authorized
    under the Plan (other than pursuant to Section 4(c) or 9),
    (B) expanding the types of Awards that may be granted under
    the Plan, or (C) materially expanding the class of
    participants eligible to participate in the Plan shall be
    effective unless stockholder approval is obtained. In addition,
    if at any time the approval of the Company’s stockholders
    is required as to any other modification or amendment under
    Section 422 of the Code or any successor provision with
    respect to Incentive Stock Options, the Board may not effect
    such modification or amendment without such approval. Unless
    otherwise specified in the amendment, any amendment to the Plan
    adopted in accordance with this Section 11(d) shall apply
    to, and be binding on the holders of, all Awards outstanding
    under the Plan at the time the amendment is




    
9








 






    adopted, provided the Board determines that such amendment does
    not materially and adversely affect the rights of Participants
    under the Plan. No Award shall be made that is conditioned upon
    stockholder approval of any amendment to the Plan.



 



    (e) Provisions for Foreign
    Participants.  The Board may modify Awards
    granted to Participants who are foreign nationals or employed
    outside the United States or establish subplans or procedures
    under the Plan to recognize differences in laws, rules,
    regulations or customs of such foreign jurisdictions with
    respect to tax, securities, currency, employee benefit or other
    matters.



 



    (f) Compliance with Code
    Section 409A.  No Award shall provide for
    deferral of compensation that does not comply with
    Section 409A of the Code, unless the Board, at the time of
    grant, specifically provides that the Award is not intended to
    comply with Section 409A of the Code. The Company shall
    have no liability to a Participant, or any other party, if an
    Award that is intended to be exempt from, or compliant with,
    Section 409A is not so exempt or compliant or for any
    action taken by the Board.



 



    (g) Governing Law.  The provisions
    of the Plan and all Awards made hereunder shall be governed by
    and interpreted in accordance with the laws of the State of
    Delaware, excluding
    choice-of-law
    principles of the law of such state that would require the
    application of the laws of a jurisdiction other than such state.




    
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