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4. Stock Available for Awards     a) Number of Shares; Share Counting.          (1) Authorized Number of Shares. Subject to adjustment under Section 9, Awards may bemade under the Plan for up to 6,000,000 shares of common stock, $0.001 par value per share, of theCompany (the “Common Stock”). Shares issued under the Plan may consist in whole or in part ofauthorized but unissued shares or treasury shares.          (2) Fungible Share Pool. Subject to adjustment under Section 10, any Award that is nota Full-Value Award shall be counted against the share limits specified in Sections 4(a)(1) as oneshare for each share of Common Stock subject to such Award and any Award that is a Full-Value Awardshall be counted against the share limits specified in Sections 4(a)(1) as 1.4 shares for each oneshare of Common Stock subject to such Full-Value Award. “Full-Value Award” means any RestrictedStock Award or other Stock-Based Award with a per share price or per unit purchase price lower than100% of Fair Market Value (as defined below) on the date of grant. To the extent a share that wassubject 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 wassubject to an Award that counts as 1.4 shares is returned to the Plan pursuant to Section 4(a)(3),each applicable share reserve will be credited with 1.4 shares.          (3) Share Counting. For purposes of counting the number of shares available for thegrant of Awards under the Plan and under the sub-limit contained in Sections 4(b), (i) all sharesof Common Stock covered by independent SARs shall be counted against the number of shares availablefor the grant of Awards; provided, however, that independent SARs that may be settled in cash onlyshall not be so counted; (ii) if any Award (A) expires or is terminated, surrendered or canceledwithout having been fully exercised or is forfeited in whole or in part (including as the result ofshares of Common Stock subject to such Award being repurchased by the Company at the originalissuance price pursuant to a contractual repurchase right) or (B) results in any Common Stock notbeing 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 Stockcovered by such Award shall again be available for the grant of Awards; provided, however, in thecase of Incentive Stock Options (as hereinafter defined), the foregoing shall be subject to anylimitations under the Code; and provided further, in the case of independent SARs, that the fullnumber of shares subject to any stock-settled SAR shall be counted against the shares availableunder the Plan and against the sub-limit listed in the first clause of this Section regardless ofthe number of shares actually used to settle such SAR upon exercise; (iii) shares of Common Stockdelivered (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 withholdingobligations (including shares retained from the Award creating the tax obligation) shall not beadded back to the number of shares available for the future grant of Awards; and (iv) shares ofCommon Stock repurchased by the Company on the open market using the proceeds from the exercise ofan 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, themaximum number of shares of Common Stock with respect to which Awards may be granted to anyParticipant 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 asingle Award. The per Participant limit described in this Section 4(b) shall be construed andapplied consistently with Section 162(m) of the Code or any successor provision thereto, and theregulations thereunder (“Section 162(m)”).     (c) Substitute Awards. In connection with a merger or consolidation of an entity withthe Company or the acquisition by the Company of property or stock of an entity, the Board maygrant Awards in substitution for any options or other stock or stock-based awards granted by suchentity or an affiliate thereof. Substitute Awards may be granted on such terms as the Board deemsappropriate in the circumstances, notwithstanding any limitations on Awards contained in the Plan.Substitute Awards shall not count against the overall share limit set forth in Section 4(a)(1) orany sub-limits contained in the Plan, except as may be required by reason of Section 422 andrelated 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 priceof each Option and the
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conditions and limitations applicable to the exercise of each Option, including conditions relatingto applicable federal or state securities laws, as it considers necessary or advisable. An Optionthat 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 “incentivestock option” as defined in Section 422 of the Code (an “Incentive Stock Option”) shall only begranted to employees of Idera Pharmaceuticals, Inc., any of Idera Pharmaceuticals, Inc.’s presentor future parent or subsidiary corporations as defined in Sections 424(e) or (f) of the Code, andany other entities the employees of which are eligible to receive Incentive Stock Options under theCode, and shall be subject to and shall be construed consistently with the requirements of Section422 of the Code. The Company shall have no liability to a Participant, or any other party, if anOption (or any part thereof) that is intended to be an Incentive Stock Option is not an IncentiveStock Option or for any action taken by the Board, including without limitation the conversion ofan Incentive Stock Option to a Nonstatutory Stock Option.     (c) Exercise Price. The Board shall establish the exercise price of each Option andspecify the exercise price in the applicable option agreement. The exercise price shall be not lessthan 100% of the Fair Market Value (as defined below) on the date the Option is granted; providedthat if the Board approves the grant of an Option with an exercise price to be determined on afuture date, the exercise price shall be not less than 100% of the Fair Market Value on such futuredate.     (d) Duration of Options. Each Option shall be exercisable at such times and subject tosuch 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 provisionentitling the Participant to the automatic grant of additional Options in connection with anyexercise of the original Option.     (f) Exercise of Option. Options may be exercised by delivery to the Company of awritten notice of exercise signed by the proper person or by any other form of notice (includingelectronic notice) approved by the Board, together with payment in full as specified in Section5(g) for the number of shares for which the Option is exercised. Shares of Common Stock subject tothe 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 Optiongranted 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 deliverpromptly to the Company sufficient funds to pay the exercise price and any required tax withholdingor (ii) delivery by the Participant to the Company of a copy of irrevocable and unconditionalinstructions to a creditworthy broker to deliver promptly to the Company cash or a check sufficientto 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 (eitherby actual delivery or attestation) of shares of Common Stock owned by the Participant valued attheir fair market value as determined by (or in a manner approved by) the Board (“Fair MarketValue”), provided (i) such method of payment is then permitted under applicable law, (ii) suchCommon Stock, if acquired directly from the Company, was owned by the Participant for such minimumperiod of time, if any, as may be established by the Board in its discretion and (iii) such CommonStock is not subject to any repurchase, forfeiture, unfulfilled vesting or other similarrequirements;          (4) to the extent permitted by applicable law and provided for in the applicable optionagreement or approved by the Board, in its sole discretion, by (i) delivery of a promissory note ofthe Participant to the Company on terms determined by the Board, or (ii) payment of such otherlawful 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’sstockholders: (1) no outstanding Option granted under the Plan may be amended to provide anexercise price per share that is lower than the then-current exercise price per share of suchoutstanding Option (other than adjustments pursuant to Section 9)
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and (2) the Board may not cancel any outstanding option (whether or not granted under the Plan) andgrant in substitution therefor new Awards under the Plan covering the same or a different number ofshares of Common Stock and having an exercise price per share lower than the then-current exerciseprice 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 tobe determined by the Board) determined in whole or in part by reference to appreciation, from andafter the date of grant, in the fair market value of a share of Common Stock over the exerciseprice established pursuant to Section 6(c). The date as of which such appreciation is determinedshall be the exercise date.     (b) Grants. SARs may be granted in tandem with, or independently of, Options grantedunder the Plan.          (1) Tandem Awards. When SARs are expressly granted in tandem with Options, (i) the SARwill be exercisable only at such time or times, and to the extent, that the related Option isexercisable (except to the extent designated by the Board in connection with a ReorganizationEvent) and will be exercisable in accordance with the procedure required for exercise of therelated Option; (ii) the SAR will terminate and no longer be exercisable upon the termination orexercise of the related Option, except to the extent designated by the Board in connection with aReorganization Event and except that a SAR granted with respect to less than the full number ofshares covered by an Option will not be reduced until the number of shares as to which the relatedOption 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 becomeexercisable at such time or times, and on such conditions, as the Board may specify in the SARAward.     (c) Exercise Price. The Board shall establish the exercise price of each SAR andspecify it in the applicable SAR agreement. The exercise price shall not be less than 100% of theFair Market Value on the date the SAR is granted; provided that if the Board approves the grant ofa SAR with an exercise price to be determined on a future date, the exercise price shall be notless 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 suchterms 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 writtennotice of exercise signed by the proper person or by any other form of notice (including electronicnotice) 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’sstockholders: (1) no outstanding SAR granted under the Plan may be amended to provide an exerciseprice per share that is lower than the then-current exercise price per share of such outstandingSAR (other than adjustments pursuant to Section 9) and (2) the Board may not cancel any outstandingSAR (whether or not granted under the Plan) and grant in substitution therefor new Awards under thePlan covering the same or a different number of shares of Common Stock and having an exercise priceper share lower than the then-current exercise price per share of the cancelled SAR.7. Restricted Stock; Restricted Stock Units     (a) General. The Board may grant Awards entitling recipients to acquire shares ofCommon Stock (“Restricted Stock”), subject to the right of the Company to repurchase all or part ofsuch shares at their issue price or other stated or formula price (or to require forfeiture of suchshares if issued at no cost) from the recipient in the event that conditions specified by the Boardin the applicable Award are not satisfied prior to the end of the applicable restriction period orperiods 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 bedelivered at the time such Award vests (“Restricted Stock Units”) (Restricted Stock and RestrictedStock Units are each referred to herein as a “Restricted Stock Award”).
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     (b) Terms and Conditions for All Restricted Stock Awards. The Board shall determinethe terms and conditions of a Restricted Stock Award, including the conditions for vesting andrepurchase (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 allordinary 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, orconsist of a dividend or distribution to holders of Common Stock other than an ordinary cashdividend, the shares, cash or other property will be subject to the same restrictions ontransferability and forfeitability as the shares of Restricted Stock with respect to which theywere paid. Each dividend payment will be made no later than the end of the calendar year inwhich the dividends are paid to shareholders of that class of stock or, if later, the 15th day ofthe 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 inrespect of shares of Restricted Stock shall be deposited in escrow by the Participant, togetherwith a stock power endorsed in blank, with the Company (or its designee). At the expiration of theapplicable restriction periods, the Company (or such designee) shall deliver the certificates nolonger subject to such restrictions to the Participant or if the Participant has died, to thebeneficiary designated, in a manner determined by the Board, by a Participant to receive amountsdue or exercise rights of the Participant in the event of the Participant’s death (the “DesignatedBeneficiary”). In the absence of an effective designation by a Participant, “DesignatedBeneficiary” 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 toreceive from the Company one share of Common Stock or an amount of cash equal to the Fair MarketValue 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 amandatory basis or at the election of the Participant, in a manner compliant with Section 409A ofthe Code.          (2) Voting Rights. A Participant shall have no voting rights with respect to anyRestricted 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 amountequal to any dividends or other distributions declared and paid on an equal number of outstandingshares of Common Stock (“Dividend Equivalents”). Dividend Equivalents may be paid currently orcredited to an account for the Participants, may be settled in cash and/or shares of Common Stockand may be subject to the same restrictions on transfer and forfeitability as the Restricted StockUnits with respect to which paid, as determined by the Board in its sole discretion, subject ineach case to such terms and conditions as the Board shall establish, in each case to be set forthin the applicable Award agreement.8. Other Stock-Based Awards     (a) General. Other Awards of shares of Common Stock, and other Awards that are valuedin whole or in part by reference to, or are otherwise based on, shares of Common Stock or otherproperty, may be granted hereunder to Participants (“Other Stock-Based-Awards”), including withoutlimitation Awards entitling recipients to receive shares of Common Stock to be delivered in thefuture. Such Other Stock-Based Awards shall also be available as a form of payment in thesettlement of other Awards granted under the Plan or as payment in lieu of compensation to which aParticipant is otherwise entitled. Other Stock-Based Awards may be paid in shares of Common Stockor cash, as the Board shall determine.     (b) Terms and Conditions. Subject to the provisions of the Plan, the Board shalldetermine the terms and conditions of each Other Stock-Based Award, including any purchase priceapplicable thereto.
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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 orother similar change in capitalization or event, or any dividend or distribution to holders ofCommon Stock other than an ordinary cash dividend, (i) the number and class of securities availableunder 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 ofshares subject to and the repurchase price per share subject to each outstanding Restricted StockAward and (vi) the share- and per-share-related provisions and the purchase price, if any, of eachoutstanding Other Stock-Based Award, shall be equitably adjusted by the Company (or substitutedAwards may be made, if applicable) in the manner determined by the Board. Without limiting thegenerality of the foregoing, in the event the Company effects a split of the Common Stock by meansof a stock dividend and the exercise price of and the number of shares subject to an outstandingOption are adjusted as of the date of the distribution of the dividend (rather than as of therecord date for such dividend), then an optionee who exercises an Option between the record dateand the distribution date for such stock dividend shall be entitled to receive, on the distributiondate, the stock dividend with respect to the shares of Common Stock acquired upon such Optionexercise, notwithstanding the fact that such shares were not outstanding as of the close ofbusiness on the record date for such stock dividend.     (b) Reorganization Events.          (1) Definition. A “Reorganization Event” shall mean: (a) any merger or consolidationof the Company with or into another entity as a result of which all of the Common Stock of theCompany is converted into or exchanged for the right to receive cash, securities or other propertyor is cancelled, (b) any exchange of all of the Common Stock of the Company for cash, securities orother property pursuant to a share exchange transaction or (c) any liquidation or dissolution ofthe Company.          (2) Consequences of a Reorganization Event on Awards Other than Awards of RestrictedStock. In connection with a Reorganization Event, the Board may take any one or more of thefollowing actions as to all or any (or any portion of) outstanding Awards other than Awards ofRestricted 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 theParticipant’s unexercised Awards will terminate immediately prior to the consummation of suchReorganization Event unless exercised by the Participant within a specified period following thedate of such notice, (iii) provide that outstanding Awards shall become exercisable, realizable, ordeliverable, or restrictions applicable to an Award shall lapse, in whole or in part prior to orupon such Reorganization Event, (iv) in the event of a Reorganization Event under the terms ofwhich holders of Common Stock will receive upon consummation thereof a cash payment for each sharesurrendered in the Reorganization Event (the “Acquisition Price”), make or provide for a cashpayment to a Participant equal to the excess, if any, of (A) the Acquisition Price times the numberof shares of Common Stock subject to the Participant’s Awards (to the extent the exercise pricedoes not exceed the Acquisition Price) over (B) the aggregate exercise price of all suchoutstanding Awards and any applicable tax withholdings, in exchange for the termination of suchAwards, (v) provide that, in connection with a liquidation or dissolution of the Company, Awardsshall convert into the right to receive liquidation proceeds (if applicable, net of the exerciseprice thereof and any applicable tax withholdings) and (vi) any combination of the foregoing. Intaking any of the actions permitted under this Section 9(b), the Board shall not be obligated bythe Plan to treat all Awards, all Awards held by a Participant, or all Awards of the same type,identically.     For purposes of clause (i) above, an Option shall be considered assumed if, followingconsummation of the Reorganization Event, the Option confers the right to purchase, for each shareof Common Stock subject to the Option immediately prior to the consummation of the ReorganizationEvent, the consideration (whether cash, securities or other property) received as a result of theReorganization Event by holders of Common Stock for each share of Common Stock held immediatelyprior to the consummation of the Reorganization Event (and if holders were offered a choice ofconsideration, the type of consideration chosen by the holders of a majority of the outstandingshares of Common Stock); provided, however, that if the consideration received as a result of theReorganization Event is not solely common stock of the acquiring or succeeding corporation (or anaffiliate 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 ofcommon stock of the acquiring or succeeding corporation (or an affiliate thereof) equivalent invalue (as determined by the Board) to the per share consideration received by holders ofoutstanding shares of Common Stock as a result of the Reorganization Event.
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          (3) Consequences of a Reorganization Event on Awards of Restricted Stock. Upon theoccurrence of a Reorganization Event other than a liquidation or dissolution of the Company, therepurchase and other rights of the Company under each outstanding Award of Restricted Stock shallinure 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 orexchanged for pursuant to such Reorganization Event in the same manner and to the same extent asthey applied to the Common Stock subject to such Award of Restricted Stock. Upon the occurrence ofa Reorganization Event involving the liquidation or dissolution of the Company, except to theextent specifically provided to the contrary in the instrument evidencing any Award of RestrictedStock or any other agreement between a Participant and the Company, all restrictions and conditionson all Awards of Restricted Stock then outstanding shall automatically be deemed terminated orsatisfied.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 byoperation of law, except by will or the laws of descent and distribution or, other than in the caseof an Incentive Stock Option, pursuant to a qualified domestic relations order, and, during thelife of the Participant, shall be exercisable only by the Participant; provided, however, that theBoard may permit or provide in an Award for the gratuitous transfer of the Award by the Participantto or for the benefit of any immediate family member, family trust or other entity established forthe benefit of the Participant and/or an immediate family member thereof if, with respect to suchproposed transferee, the Company would be eligible to use a Form S-8 for the registration of thesale 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 suchtime 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 Companyconfirming 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 toauthorized transferees.     (b) Documentation. Each Award shall be evidenced in such form (written, electronic orotherwise) as the Board shall determine. Each Award may contain terms and conditions in addition tothose set forth in the Plan.     (c) Board Discretion. Except as otherwise provided by the Plan, each Award may be madealone or in addition or in relation to any other Award. The terms of each Award need not beidentical, and the Board need not treat Participants uniformly.     (d) Termination of Status. The Board shall determine the effect on an Award of thedisability, death, retirement, termination or other cessation of employment, authorized leave ofabsence 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 localor other income and employment tax withholding obligations before the Company will deliver stockcertificates or otherwise recognize ownership of Common Stock under an Award. The Company maydecide to satisfy the withholding obligations through additional withholding on salary or wages. Ifthe Company elects not to or cannot withhold from other compensation, the Participant must pay theCompany the full amount, if any, required for withholding or have a broker tender to the Companycash equal to the withholding obligations. Payment of withholding obligations is due before theCompany will issue any shares on exercise or release from forfeiture of an Award or, if the Companyso requires, at the same time as is payment of the exercise price unless the Company determinesotherwise. Except as the Board may otherwise provide in an Award, a Participant may satisfy suchtax obligations in whole or in part by delivery (either by actual delivery or attestation) ofshares 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 cannotexceed the Company’s minimum statutory withholding obligations (based on minimum statutorywithholding rates for federal and state tax purposes, including payroll taxes, that are applicableto such supplemental taxable income). Shares used to satisfy tax withholding requirements cannot besubject 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) withrespect to repricings, Section 10(i) with respect to Performance Awards or Section 11(d) withrespect to actions requiring shareholder
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approval, the Board may amend, modify or terminate any outstanding Award, including but not limitedto, substituting therefor another Award of the same or a different type, changing the date ofexercise 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 theaction, taking into account any related action, would not materially and adversely affect theParticipant’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 anyshares of Common Stock pursuant to the Plan or to remove restrictions from shares previouslydelivered under the Plan until (i) all conditions of the Award have been met or removed to thesatisfaction of the Company, (ii) in the opinion of the Company’s counsel, all other legal mattersin connection with the issuance and delivery of such shares have been satisfied, including anyapplicable 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 oragreements as the Company may consider appropriate to satisfy the requirements of any applicablelaws, rules or regulations.     (h) Acceleration. The Board may at any time provide that any Award shall becomeimmediately exercisable in full or in part, free of some or all restrictions or conditions, orotherwise 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 bemade subject to the achievement of performance goals pursuant to this Section 10(i) (“PerformanceAwards”), 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 toqualify 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 moredirectors eligible to serve on a committee making Awards qualifying as “performance-basedcompensation” 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 orsubcommittee. “Covered Employee” shall mean any person who is, or whom the Committee, in itsdiscretion, 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 asPerformance-Based Compensation, the Committee shall specify that the degree of granting, vestingand/or payout shall be subject to the achievement of one or more objective performance measuresestablished by the Committee, which shall be based on the relative or absolute attainment ofspecified levels of one or any combination of the following: (a) earnings per share, (b) return onaverage 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 onsales, assets, equity or investment, (j) regulatory compliance, (k) achievement of balance sheet orincome statement objectives, (l) total shareholder return (m) net operating profit after tax, (n)pre tax or after tax income, (o) cash flow, (p) achievement of research, development, clinical orregulatory milestones, (q) product sales and (r) business development activities, and may beabsolute 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 beadjusted to exclude any one or more of (i) extraordinary items, (ii) gains or losses on thedispositions of discontinued operations, (iii) the cumulative effects of changes in accountingprinciples, (iv) the writedown of any asset, and (v) charges for restructuring and rationalizationprograms. Such performance measures: (i) may vary by Participant and may be different for differentAwards; (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 bespecified by the Committee; and (iii) shall be set by the Committee within the time periodprescribed by, and shall otherwise comply with the requirements of, Section 162(m). Awards that arenot intended to qualify as Performance-Based Compensation may be based on these or such otherperformance measures as the Board may determine.          (4) Adjustments. Notwithstanding any provision of the Plan, with respect to anyPerformance Award that is intended to qualify as Performance-Based Compensation, the Committee mayadjust downwards, but not upwards, the cash or number of Shares payable pursuant to such Award, andthe Committee may not waive the achievement of the applicable performance measures except in thecase of the death or disability of the Participant or a change in control of the Company.
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          (5) Other. The Committee shall have the power to impose such other restrictions onPerformance Awards as it may deem necessary or appropriate to ensure that such Awards satisfy allrequirements for Performance-Based Compensation.11. Miscellaneous     (a) No Right To Employment or Other Status. No person shall have any claim or right tobe granted an Award, and the grant of an Award shall not be construed as giving a Participant theright to continued employment or any other relationship with the Company. The Company expresslyreserves the right at any time to dismiss or otherwise terminate its relationship with aParticipant free from any liability or claim under the Plan, except as expressly provided in theapplicable Award.     (b) No Rights As Stockholder. Subject to the provisions of the applicable Award, noParticipant or Designated Beneficiary shall have any rights as a stockholder with respect to anyshares of Common Stock to be distributed with respect to an Award until becoming the record holderof such shares.     (c) Effective Date and Term of Plan. The Plan shall become effective on the date thePlan is approved by the Company’s stockholders (the “Effective Date”). No Awards shall be grantedunder the Plan after the expiration of 10 years from the Effective Date, but Awards previouslygranted may extend beyond that date.     (d) Amendment of Plan. The Board may amend, suspend or terminate the Plan or anyportion thereof at any time provided that (i) to the extent required by Section 162(m), no Awardgranted to a Participant that is intended to comply with Section 162(m) after the date of suchamendment shall become exercisable, realizable or vested, as applicable to such Award, unless anduntil such amendment shall have been approved by the Company’s stockholders if required by Section162(m) (including the vote required under Section 162(m)); (ii) no amendment that would requirestockholder approval under the rules of the NASDAQ Stock Market (“NASDAQ”) may be made effectiveunless 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 requirestockholder approval of material amendments to equity compensation plans, then, from and after theeffective date of such amendment to the NASDAQ rules, no amendment to the Plan (A) materiallyincreasing the number of shares authorized under the Plan (other than pursuant to Section 4(c) or9), (B) expanding the types of Awards that may be granted under the Plan, or (C) materiallyexpanding the class of participants eligible to participate in the Plan shall be effective unlessstockholder approval is obtained. In addition, if at any time the approval of the Company’sstockholders is required as to any other modification or amendment under Section 422 of the Code orany successor provision with respect to Incentive Stock Options, the Board may not effect suchmodification or amendment without such approval. Unless otherwise specified in the amendment, anyamendment to the Plan adopted in accordance with this Section 11(d) shall apply to, and be bindingon the holders of, all Awards outstanding under the Plan at the time the amendment is adopted,provided the Board determines that such amendment does not materially and adversely affect therights of Participants under the Plan. No Award shall be made that is conditioned upon stockholderapproval of any amendment to the Plan.     (e) Provisions for Foreign Participants. The Board may modify Awards granted toParticipants who are foreign nationals or employed outside the United States or establish subplansor procedures under the Plan to recognize differences in laws, rules, regulations or customs ofsuch foreign jurisdictions with respect to tax, securities, currency, employee benefit or othermatters.     (f) Compliance with Code Section 409A. No Award shall provide for deferral ofcompensation that does not comply with Section 409A of the Code, unless the Board, at the time ofgrant, specifically provides that the Award is not intended to comply with Section 409A of theCode. The Company shall have no liability to a Participant, or any other party, if an Award that isintended to be exempt from, or compliant with, Section 409A is not so exempt or compliant or forany action taken by the Board.     (g) Governing Law. The provisions of the Plan and all Awards made hereunder shall begoverned by and interpreted in accordance with the laws of the State of Delaware, excludingchoice-of-law principles of the law of such state that would require the application of the laws ofa jurisdiction other than such state.     **As amended by the Board of Directors on**  **March 15, 2011 and approved by the Company’s**  **stockholders on June 14, 2011**
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