Document:

EX-10.9

 

Exhibit 10.9

PRIVATE PLACEMENT PURCHASE AGREEMENT

     THIS PRIVATE PLACEMENT PURCHASE AGREEMENT (this “Agreement”) made as of this [ ] day of [
] 2007, by and between TM ENTERTAINMENT AND MEDIA, INC., a Delaware corporation (the
“Company”), and [ ], a Delaware limited liability company (the “Purchaser”).

     WHEREAS, the Company desires to sell, and the Purchaser desires to acquire, in a private
placement (the “Placement”) an aggregate of 2,100,000 warrants (the “Placement Warrants”), each of
which is exercisable for one share of common stock of the Company, which Placement Warrants will be
substantially identical to the warrants forming part of the units being issued to the public in a
public offering (the “IPO”) pursuant to the terms and conditions set forth in the registration
statement on Form S-1 (as the same may be amended from time to time, the “Registration Statement”)
which was initially filed with the Securities and Exchange Commission (the “SEC”) on [ ],
2007, except that (x) the Placement Warrants and the shares of common stock underlying the
Placement Warrants will not be registered under the Securities Act of 1933, as amended (the
“Securities Act”), (y) the Placement Warrants will not be subject to redemption and (z) the
Placement Warrants may be exercised on a cashless basis; and

     WHEREAS, the Placement Warrants will be governed by the Warrant Agreement and the Placement
Warrants will be entitled to the benefits of a Registration Rights Agreement, each of which will be
filed as an exhibit to the Registration Statement.

     NOW, THEREFORE, for and in consideration of the premises and the mutual covenants hereinafter
set forth, the parties hereto do hereby agree as follows:

	 	1.	 	PURCHASE OF WARRANTS. The Purchaser hereby agrees, directly or through its
nominees, to purchase 2,100,000 Placement Warrants at a purchase price of $1.00 per
Placement Warrant for an aggregate purchase price of $2,100,000 (the “Purchase Price”).
	 
	 	2.	 	TRANSFER. Purchaser agrees that it shall not, until the later of one year
after the effective date of the Registration Statement and 60 days after the date on
which the Company consummates a Business Combination (as defined in the Company’s
Certificate of Incorporation, (i) sell, offer to sell, contract or agree to sell,
hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to
dispose of, directly or indirectly, or file (or participate in the filing of) a
registration statement with the SEC in respect of, or establish or increase a put
equivalent position or liquidate or decrease a call equivalent position within the
meaning of Section 16 of the Securities Exchange Act of 1934, as amended, and the rules
and regulations of the SEC promulgated thereunder (the “ Exchange Act “) with respect
to, any Placement Warrants and the Underlying Shares, or any securities convertible
into or exercisable or exchangeable for shares, or warrants or other rights to purchase
shares or any such securities, or (ii) enter into any swap or other arrangement that
transfers to another, in whole or in part, any of the economic consequences of
ownership of Placement Warrants or Underlying

 

 

	 	 	 	Shares or any securities convertible into or exercisable or exchangeable for shares,
or warrants or other rights to purchase shares or any such securities, whether any
such transaction is to be settled by delivery of shares or such other securities,
whether any such transaction is to be settled by delivery of shares or such other
securities, in cash or otherwise.
	 
	 	3.	 	CLOSING. The closing of the purchase and sale of the Placement Warrants (the
“Closing”) will take place at such time and place as the parties may agree (the
“Closing Date”), but will in no event be later than the date on which the SEC declares
the Registration Statement effective (the “Effective Date”), provided the underwriting
agreement is signed and executed with the representative of the underwriters. On the
Effective Date, the Purchaser shall pay the Purchase Price by wire transfer of funds to
an account maintained by the Company. Immediately prior to the closing of the IPO, the
Company shall deposit the Purchase Price into the trust account described in the
Registration Statement (the “Trust Account”). The certificates for the Placement
Warrants shall be delivered to the Escrow Agent, to be defined in the Stock Escrow
Agreement to be filed as an exhibit to the Registration Statement, promptly after the
closing of the IPO.
	 
	 	4.	 	REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser hereby
represents and warrants to the Company that:

	 	(a)	 	The execution and delivery by the Purchaser of this Agreement
and the fulfillment of and compliance with the respective terms hereof by the
Purchaser do not and shall not as of the Closing conflict with or result in a
breach of the terms, conditions or provisions of any other agreement,
instrument, order, judgment or decree to which Purchaser is subject.
	 
	 	(b)	 	The Purchaser is an “accredited investor” as that term is
defined in Rule 501 of Regulation D promulgated under the Securities Act.
	 
	 	(c)	 	The Placement Warrants are being acquired for the Purchaser’s
own account, only for investment purposes and not with a view to, or for resale
in connection with, any distribution or public offering thereof within the
meaning of the Securities Act.
	 
	 	(d)	 	The Purchaser has the full right, power and authority to enter
into this Agreement and this Agreement is a valid and legally binding
obligation of the Purchaser enforceable against the Purchaser in accordance
with its terms.
	 
	 	(e)	 	The Purchaser understands that no United States federal or
state agency or any other government or governmental agency has passed on or
made any recommendation or endorsement of the securities or the fairness or

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	 	 	 	suitability of the investment in the securities nor have such authorities
passed upon or endorsed the merits of the offering of the securities.

	 	5.	 	WAIVER OF CLAIMS; INDEMNIFICATION. The Purchaser hereby waives any and all
rights to assert any present or future claims, including any right of rescission,
against the Company or Pali Capital, Inc. (“Pali”) with respect to its purchase of the
Placement Warrants, and the Purchaser agrees to indemnify and hold the Company, Pali
and the other underwriters in the IPO harmless from all losses, damages or expenses
that relate to claims or proceedings brought against the Company, Pali or such other
underwriters by the Purchaser of the Placement Warrants or its transferees, heirs,
assigns or any subsequent holders of the Placement Warrants in respect of the
transactions contemplated hereby.
	 
	 	6.	 	VOTING OF SHARES; WAIVER OF CONVERSION RIGHTS; LOCK-UP. In connection with the
vote required to consummate a Business Combination, the Purchaser shall vote any shares
of common stock acquired by the Purchaser in connection with the exercise of any of the
Placement Warrants purchased hereby in accordance with the majority of the shares of
common stock voted by the Company’s public stockholders, and therefore waives any
conversion rights it might have with respect to such shares of common stock. The
Purchaser hereby waives any right to receive distributions with
respect to the any shares of common stock acquired by the Purchaser in connection with the exercise of any
of the Placement Warrants purchased hereby upon the liquidation of the Trust Account,
or as part of the Company’s plan of dissolution and distribution in the event the
Company fails to consummate a Business Combination by the Termination Date (as defined
in the Company’s Certificate of Incorporation). In the event that the Company fails to
consummate a Business Combination by the Termination Date, the
Purchaser shall vote any shares of common stock acquired by the Purchaser in connection with the exercise of any
of the Placement Warrants purchased hereby in favor of any plan of dissolution and
liquidation recommended by the Company’s board of directors.
	 
	 	7.	 	RESCISSION RIGHT WAIVER. The Purchaser understands and acknowledges that an
exemption from the registration requirements of the Securities Act requires that there
be no general solicitation of purchasers of the Placement Warrants. In this regard, if
the offering of the Units were deemed to be a general solicitation with respect to the
Placement Warrants, the offer and sale of such Placement Warrants may not be exempt
from registration and, if not, the Purchaser may have a right to rescind its purchase
of the Placement Warrants. In order to facilitate the completion of the offering and in
order to protect the Company, its stockholders and the Trust Account from claims that
may adversely affect the Company or the interests of its stockholders, the Purchaser
hereby agrees to waive, to the maximum extent permitted by applicable law, any claims,
right to sue or rights in law or arbitration, as the case may be, to seek rescission of

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	 	 	 	his purchase of the Placement Warrants. The Purchaser acknowledges and agrees that
this waiver is being made in order to induce the Company to sell the Placement
Warrants to the Purchaser. The Purchaser agrees that the foregoing waiver of
rescission rights shall apply to any and all known or unknown actions, causes of
action, suits, claims, or proceedings (collectively, “Claims”) and related losses,
costs, penalties, fees, liabilities and damages, whether compensatory, consequential
or exemplary, and expenses in connection therewith (collectively, “Losses and
Expenses”) including reasonable attorneys’ and expert witness fees and disbursements
and all other expenses reasonably incurred in investigating, preparing or defending
against any Claims, whether pending or threatened, in connection with any present or
future actual or asserted right to rescind the purchase of the Placement Warrants
hereunder or relating to the purchase of the Placement Warrants and the transactions
contemplated hereby.
	 
	 	8.	 	WAIVER OF CLAIMS AGAINST TRUST ACCOUNT. The Purchaser hereby waives any and all
right, title, interest or claim of any kind in or to any distributions from the Trust
Account with respect to any shares of common stock acquired by the Purchaser in
connection with the exercise of the Placement Warrants purchased hereby pursuant to
this Agreement (“Claim”) and hereby waives any Claim the undersigned may have in the
future as a result of, or arising out of, any contracts or agreements with the Company
and will not seek recourse against the Trust Account for any reason whatsoever, other
than with respect to any shares of common stock purchased in the IPO or in the
aftermarket held directly or indirectly by it.
	 
	 	9.	 	REGISTRATION RIGHTS. Purchaser (and its assignees and transferees) shall
granted certain registration rights pursuant to a Registration Rights Agreement
reasonably acceptable to the Purchaser and the Company. If the Company does not
complete a Business Combination, or if the Company is unable to
deliver registered shares of common stock to the Purchaser pursuant to the Registration Rights Agreement
upon exercise of the Placement Warrants during the exercise period therefor, there will
be no cash settlement of the Placement Warrants and the Placement Warrants will expire
worthless.
	 
	 	10.	 	COUNTERPARTS; FACSIMILE. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original and all
of which taken together shall constitute one and the same instrument. This Agreement or
any counterpart may be executed via facsimile transmission, and any such executed
facsimile copy shall be treated as an original.
	 
	 	11.	 	GOVERNING LAW. This Agreement shall be governed by and construed in accordance
with the internal laws of the State of New York. The parties agree that any action
brought by either party to interpret or enforce any provision of this Agreement shall
be brought in, and each party agrees to, and does hereby, submit

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	 	 	 	to the jurisdiction and venue of, the appropriate state or federal court for the
district encompassing the Company’s principal place of business.

[Signatures on following page]

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     IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first written
above.

	 	 	 	 	 
	 	 	TM ENTERTAINMENT AND MEDIA, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:
	 
	 	 	 	 
	 	 	[               ]
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:

6exv4w1

 

Exhibit 4.1

AMENDED AND RESTATED

CYBERONICS, INC.

NEW EMPLOYEE EQUITY INDUCEMENT PLAN

     1. Purposes of the Plan. The purposes of this Amended and Restated New Employee
Equity Inducement Plan are to attract key personnel as new hires to the Company, and to provide
such new hires with long-term incentives to promote the success of the Company’s business.

     2. Definitions. As used herein, the following definitions shall apply:

          (a) “Administrator” means a majority of the independent directors of the Board or the
Compensation Committee of the Board.

          (b) “Applicable Laws” means the requirements relating to the administration of
equity-based compensation plans under U. S. state corporate laws, U.S. federal and state securities
laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or
quoted and the applicable laws of any foreign country or jurisdiction where Awards are, or will be,
granted under the Plan.

          (c) “Awards” means an Option, Bonus Shares or Restricted Stock grant made under the
Plan.

          (d) “Award Agreement” means an agreement between the Company and a Grantee evidencing
the terms and conditions of an Award grant. The Award Agreement is subject to the terms and
conditions of the Plan.

          (e) “Board” means the Board of Directors of the Company.

          (f) “Bonus Shares” means an award of vested Shares pursuant to Section 12.

          (g) “Code” means the Internal Revenue Code of 1986, as amended.

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

          (i) “Company” means Cyberonics, Inc., a Delaware corporation.

          (j) “Compensation Committee” means the compensation committee of the Board authorized
to administer the Plan in accordance with Section 4 of the Plan.

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

          (l) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

          (m) “Fair Market Value” means, as of any date, the value of Common Stock determined as
follows:

 

 

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

               (ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling
prices are not reported, the Fair Market Value of a Share of Common Stock shall be the mean between
the high bid and low asked prices for the Common Stock on the last market trading day prior to the
day of determination, as reported in The Wall Street Journal or such other source as the
Administrator deems reliable; or

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

          (n) “Grantee” means a Service Provider who has been granted an Award under the Plan.

          (o) “Notice of Grant” means a written or electronic notice evidencing certain terms
and conditions of an individual Award.

          (p) “Option” means a stock option granted pursuant to the Plan.

          (q) “Optioned Stock” means the Common Stock subject to an Option.

          (r) “Optionee” means the holder of an outstanding Option granted under the Plan.

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

          (t) “Plan” means the Amended and Restated New Employee Equity Inducement Plan.

          (u) “Restricted Stock” means a Share granted under the Plan that is subject to vesting
and other restrictions.

          (v) “Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor rule or
provision.

          (w) “Section 16(b)” means Section 16(b) of the Exchange Act.

          (x) “Service Provider” means an individual who is an employee, director or consultant
of the Company, its Parent or a Subsidiary. A Grantee shall not cease to be a Service Provider in
the case of (i) any leave of absence approved by the Company, Parent or Subsidiary or (ii)
transfers between locations of, or between, the Company, its Parent, any Subsidiary, or

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any successor. If a Grantee’s employer ceases to be a Subsidiary of the Company or its
Parent, such Grantee shall cease to be a Service Provider on such date.

          (y) “Share” means a share of the Common Stock, as adjusted in accordance with Section
13 of the Plan.

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

     3. Stock Subject to the Plan. Subject to the provisions of Section 14 of the Plan and
the following provisions of this Section, the maximum aggregate number of Shares which may be
delivered under the Plan is 1,150,000. The Shares may be authorized, but unissued, or reacquired
Common Stock.

     If an Award expires, is forfeited, cancelled or becomes unexercisable without having been
exercised in full (if an Option) or vested (if a Restricted Stock Award), the Shares which were
subject thereto shall become available for future grant or sale under the Plan (unless the Plan was
terminated); provided, however, that Shares that have actually been issued under the Plan upon
exercise of an Option shall not be returned to the Plan and shall not become available for future
distribution or grants under the Plan.

     4. Administration of the Plan.

          (a) Procedure.

               (i) Administrative Bodies. The Plan shall be administered by a majority of the
Board’s independent directors or the Compensation Committee of the Board.

               (ii) Rule 16b-3. To the extent desirable to qualify transactions hereunder as exempt
under Rule 16b-3, the transactions contemplated hereunder shall be structured to satisfy the
requirements for exemption under Rule 16b-3.

          (b) Powers of the Administrator. Subject to the provisions of the Plan, and in the
case of the Compensation Committee, subject to the specific duties delegated by the Board to the
Compensation Committee, the Administrator shall have the authority, in its discretion:

               (i) to determine the Fair Market Value;

               (ii) to select the Service Providers to whom Awards may be granted hereunder;

               (iii) to determine the number of shares of Common Stock to be covered by each Award granted
hereunder;

               (iv) to approve forms of agreement for use under the Plan;

               (v) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any
Award granted hereunder. Such terms and conditions include, but are

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not limited to, the exercise price, the time or times when Awards may be exercised or become
vested (which may be based on performance criteria), and vesting acceleration or waiver of
forfeiture restrictions, and any restriction or limitation regarding any Award, based on such
factors as the Administrator, in its sole discretion, shall determine;

               (vi) to construe and interpret the terms of the Plan and Awards granted pursuant to the Plan;

               (vii) to prescribe, amend and rescind rules and regulations relating to the Plan, including
rules and regulations relating to sub-plans established for the purpose of qualifying for preferred
tax treatment under foreign tax laws;

               (viii) to allow Grantees to satisfy the minimum withholding tax obligations of the Company by
electing to have the Company withhold from the Shares to be issued upon exercise of an Option or
vesting of a Restricted Stock Award that number of Shares having a Fair Market Value equal to the
minimum amount required to be withheld. The Fair Market Value of the Shares to be withheld shall
be determined on the date that the amount of tax to be withheld is to be determined. All elections
by a Grantee to have Shares withheld for this purpose shall be made in such form and under such
conditions as the Administrator may deem necessary or advisable;

               (ix) to authorize any person to execute on behalf of the Company any instrument required to
effect the grant of an Award previously granted by the Administrator; and

               (x) to make all other determinations deemed necessary or advisable for administering the Plan.

          (c) Effect of Administrator’s Decision. The Administrator’s decisions, determinations
and interpretations shall be final and binding on all Grantees and any other holders of Awards.

     5. Eligibility. Awards may be granted only to newly hired Service Providers in
connection with, and as an inducement for, their becoming an employee of, or employed by, the
Company, its Parent or a Subsidiary of the Company or the Parent.

     6. Award Limitations.

          (a) Neither the Plan nor any Award shall confer upon a Grantee any right with respect to
continuing the Grantee’s relationship as a Service Provider with the Company, nor shall they
interfere in any way with the Grantee’s right or the Company’s right to terminate such relationship
at any time, with or without cause.

          (b) Subject to Shares being available under the Plan for grant, the following limitations
shall apply to grants of Awards:

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               (i) In connection with his or her initial employment, a Service Provider may be granted (1)
Options to purchase up to 300,000 Shares, (2) up to 300,000 Shares of Restricted Stock and/or (3)
up to 100,000 Bonus Shares.

               (ii) The foregoing limitations shall be adjusted proportionately in connection with any change
in the Company’s capitalization as described in Section 14.

     7. Term of Plan. Subject to Section 8 of the Plan, this amendment and restatement of
the Plan shall become effective upon its adoption by the Board. It shall continue in effect for a
term of ten (10) years from such date unless terminated earlier under Section 16 of the Plan.

     8. Term of Awards. The term of each Award shall be stated in the Award Agreement. If
the Award Agreement does not provide for a term, such term shall be ten (10) years from the date of
grant.

     9. Option Exercise Price and Consideration.

          (a) Exercise Price. The per share exercise price for the Shares to be issued pursuant
to exercise of an Option shall be determined by the Administrator, subject to the following:

               (i) The per Share exercise price shall be determined by the Administrator but shall not be
less than 100% of the Fair Market Value per Share on the date of grant.

               (ii) Notwithstanding the foregoing, replacement or substitution Options may be granted with a
per Share exercise price of less than 100% of the Fair Market Value per Share on the date of grant
pursuant to a merger or other corporate transaction in accordance with the requirements of Section
409A of the Code and the regulations issued thereunder.

     (b) Waiting Period and Exercise Dates. At the time an Option is granted, the
Administrator shall fix the period within which the Option may be exercised and shall determine any
conditions which must be satisfied before the Option may be exercised.

     (c) Form of Consideration. The Administrator shall determine the acceptable form of
consideration for exercising an Option, including the method of payment. Such consideration may
consist entirely of:

               (i) cash or check;

               (ii) surrender of other Shares which (A) in the case of Shares acquired upon exercise of an
option, unless waived by the Administrator, have been owned by the Optionee for more than six
months on the date of surrender, and (B) have a Fair Market Value on the date of surrender equal to
the aggregate exercise price of the Shares as to which said Option shall be exercised;

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               (iii) consideration received by the Company under a “cashless-broker” exercise program
implemented by the Company in connection with the Plan;

               (iv) a reduction in the amount of any Company liability to the Optionee, including any
liability attributable to the Optionee’s participation in any Company-sponsored deferred
compensation program or arrangement;

               (v) any combination of the foregoing methods of payment; or

               (vi) such other consideration and method of payment for the issuance of Shares to the extent
permitted by applicable Laws.

     10. Exercise of Option.

          (a) Procedure for Exercise; Rights as a Shareholder. Any Option granted hereunder
shall be exercisable according to the terms of the Plan and at such times and under such conditions
as determined by the Administrator and set forth in the Option Agreement. Unless the Administrator
provides otherwise, vesting of Options granted hereunder shall be tolled during any unpaid leave of
absence. An Option may not be exercised for a fraction of a Share.

               An Option shall be deemed exercised when the Company receives: (i) written or electronic
notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise
the Option, and (ii) full payment for the Shares with respect to which the Option is exercised.
Full payment may consist of any consideration and method of payment authorized by the Administrator
and permitted by the Option Agreement and the Plan. Shares issued upon exercise of an Option shall
be issued in the name of the Optionee or, if requested by the Optionee, in the name of the Optionee
and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the
books of the Company or of a duly authorized transfer agent of the Company), no right to vote or
receive dividends or any other rights as a shareholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued)
such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or
other right for which the record date is prior to the date the Shares are issued, except as
provided in Section 14 of the Plan.

               Exercising an Option in any manner shall decrease the number of Shares thereafter available,
both for purposes of the Plan and for sale under the Option, by the number of Shares as to which
the Option is exercised.

          (b) Termination of Relationship as a Service Provider. If an Optionee ceases to be a
Service Provider, other than upon the Optionee’s death or Disability, the Optionee may exercise his
or her Option within such period of time as is specified in the Option Agreement to the extent that
the Option is vested on the date of termination (but in no event later than the expiration of the
term of such Option as set forth in the Option Agreement). In the absence of a specified time in
the Option Agreement, the Option shall remain exercisable for three (3) months following the
Optionee’s termination. If, on the date of termination, the Optionee is not vested as to his or
her entire Option, the Shares covered by the unvested portion of the Option shall

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revert to the Plan. If, after termination, the Optionee does not exercise his or her Option
within the time specified in the Option Agreement or herein, if applicable, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.

          (c) Disability of Optionee. If an Optionee ceases to be a Service Provider as a
result of the Optionee’s Disability, the Optionee may exercise his or her Option within such period
of time as is specified in the Option agreement to the extent the Option is vested on the date of
termination (but is no event later than the expiration of the term of such Option as set forth in
the Option Agreement). Unless provided otherwise in the grant agreement, Options granted after the
date this Plan is approved by the Board shall be fully vested upon the Optionee’s ceasing to be a
Service Provider due to Disability. In the absence of a specified time in the Option Agreement,
the Option shall remain exercisable for three (3) months following the Optionee’s termination. If,
on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares
covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified in the Option Agreement or
herein, if applicable, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.

          (d) Death of Optionee. If an Optionee dies while a Service Provider, the Option may
be exercised within such period of time as is specified in the Option Agreement (but in no event
later than the expiration of the term of such Option as set forth in the Notice of Grant), by the
Optionee’s estate or by a person who acquires the right to exercise the Option by bequest or
inheritance, but only to the extent that the Option is vested on the date of death. Unless
provided otherwise in the grant agreement, Options granted after the date this Plan is approved by
the Board shall be fully vested upon the Optionee’s ceasing to be a Service Provider due to death.
In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for
twelve (12) months following the Optionee’s termination. If, at the time of death, the Optionee is
not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option
shall immediately revert to the Plan. The Option may be exercised by the executor or administrator
of the Optionee’s estate or, if none, by the person(s) entitled to exercise the Option under the
Optionee’s will or the laws of descent or distribution. If the Option is not so exercised within
the time specified in the Option Agreement or herein, if applicable, the Option shall terminate,
and the Shares covered by such Option shall revert to the Plan.

     11. Restricted Stock.

          (a) Grant. Restricted Stock may be issued either alone, in addition to, or in tandem
with Options granted under the Plan and/or other awards made outside of the Plan. After the
Administrator makes a Restricted Stock grant under the Plan, it shall advise the Grantee in writing
or electronically, by means of a Notice of Grant, of the terms, conditions and restrictions related
to the grant, including the number of Shares subject to the grant, and the price to be paid (if
any), by the Grantee.

          (b) Forfeiture Restrictions To Be Established by the Administrator. Shares that are
the subject of a Restricted Stock award shall be subject to restrictions on disposition by the
Grantee and the automatic forfeiture of the shares to the Company under certain

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circumstances (the “Forfeiture Restrictions”). The Forfeiture Restrictions shall be
determined by the Administrator in its sole discretion, and the Administrator may provide that the
Forfeiture Restrictions shall lapse upon the attainment of one or more performance measures or
targets established by the Committee at the time of the grant. Each Restricted Stock award may
have different Forfeiture Restrictions, in the discretion of the Administrator.

          (c) Other Terms and Conditions. Common Stock subject to a Restricted Stock award
shall be represented by a stock certificate registered in the name of the Grantee. Unless provided
otherwise in an Award Agreement, the Grantee shall have the right to receive dividends with respect
to Common Stock subject to a Restricted Stock award, to vote the Common Stock subject thereto and
to enjoy all other stockholder rights, except that (i) the Grantee shall not be entitled to
delivery of the stock certificate until the Forfeiture Restrictions have expired, (ii) the Company
shall retain custody of the stock until the Forfeiture Restrictions have expired, (iii) the Grantee
may not sell, transfer, pledge, exchange, hypothecate or otherwise dispose of the stock until the
Forfeiture Restrictions have expired, and (iv) a breach of the terms and conditions established by
the Administrator pursuant to the Restricted Stock Agreement shall cause a forfeiture of the
Restricted Stock award.

          (d) Payment for Restricted Stock. The Administrator shall determine the amount and
form of any payment to be made by a Grantee upon the receipt of a Restricted Stock award, provided
that in the absence of such a determination, a Grantee shall not be required to make any payment
with respect to a Restricted Stock award, except to the extent otherwise required by law.

          (e) Administrator’s Discretion to Accelerate Vesting of Restricted Stock Awards. The
Administrator may, in its discretion and as of a date determined by the Administrator, fully vest
any or all Common Stock awarded to a Grantee pursuant to a Restricted Stock award and, upon such
vesting, all restrictions applicable to such Restricted Stock award shall terminate as of such
date. Any action by the Administrator pursuant to this paragraph may vary among individual
Grantees and may vary among the Restricted Stock awards held by any individual Grantee.

     12. Bonus Shares. The Administrator, in its discretion, may grant Bonus Shares to
such Participants as it may choose. Each Bonus Share award shall constitute a transfer of an
immediately, fully vested Share to the Participant.

     13. Nontransferability of Awards. Unless otherwise expressly permitted by the
Administrator, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed
of in any manner other than by will or by the laws of descent or distribution and may be exercised,
during the lifetime of the Grantee, only by the Grantee. If the Administrator makes an Award
transferable, such Award shall contain such additional terms and conditions as the Administrator
deems appropriate.

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

          (a) Changes in Capitalization. Subject to any required action by the shareholders of
the Company, the number of shares of Common Stock covered by each

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outstanding Award, and the number of shares of Common Stock which have been authorized for
issuance under the Plan but as to which no Awards have yet been granted or which have been returned
to the Plan upon cancellation or expiration of an Award, as well as the price per share of Common
Stock covered by each such outstanding Option, shall be proportionately adjusted for any increase
or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse
stock split, stock dividend, combination or reclassification of the Common Stock, or any other
increase or decrease in the number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any convertible securities of
the Company shall not be deemed to have been “effected without receipt of consideration.” Such
adjustment shall be made by the Board, whose determination in that respect shall be final, binding
and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock
of any class, or securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price of shares of Common
Stock subject to an Award.

          (b) Change of Control. In the event of a Change of Control (as defined below), unless
otherwise provided in the Award Agreement, each Award automatically shall vest in full. If an
Option becomes fully vested and exercisable as a result of a Change of Control, the Administrator
shall notify the Optionee in writing or electronically prior to the Change of Control that the
Option shall be fully vested and exercisable for a period of fifteen (15) days from the date of
such notice, and, subject to the following, the Option shall terminate upon the expiration of such
period. In addition to, or in lieu of, any other provision of the Plan, the Compensation
Committee, with the approval of a majority of the Incumbent Directors (as defined below), may
provide that all Options not exercised immediately prior to the Change of Control shall (x)
terminate on such Change of Control, unless such Change of Control is described in clause (iv)
below, (y) be assumed by the successor (a parent thereof) in any such merger or other corporate
transaction, or (z) be surrendered in exchange for equivalent substitution options or awards from
the successor (or a parent thereof). For purposes of this Plan, a “Change of Control” means the
happening of any of the following events:

               (i) the acquisition by any “person,” as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than the Company, a
subsidiary of the Company or a Company employee benefit plan, of “beneficial ownership” (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company
representing 50% or more of the combined voting power of the Company’s then outstanding securities
entitled to vote generally in the election of directors; or

               (ii) the consummation of a reorganization, merger, consolidation or other form of corporate
transaction or series of transactions, in each case, with respect to which persons who were the
shareholders of the Company immediately prior to such reorganization, merger or consolidation or
other transaction do not, immediately thereafter, own more than 50% of the combined voting power
entitled to vote generally in the election of directors of the reorganized, merged or consolidated
company’s then outstanding voting securities in substantially the same proportions as their
ownership immediately prior to such event; or

               (iii) the sale or disposition by the Company of all or substantially all the Company’s assets;
or

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               (iv) a change in the composition of the Board of Directors of the Company, as a result of
which fewer than a majority of the directors are Incumbent Directors. “Incumbent Directors” shall
mean directors who either (A) are directors of the Company as of October 2, 2000, or (B) are
elected, or nominated for election, thereafter to the Board of Directors of the Company with the
affirmative votes of at least a majority of the Incumbent Directors at the time of such election or
nomination, but “Incumbent Director” shall not include an individual whose election or nomination
is in connection with (i) an actual or threatened election contest (as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act) or an actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the Board or (ii) a plan
or agreement to replace a majority of the then Incumbent Directors; or

               (v) the approval by the Board or the stockholders of the Company of a complete or
substantially complete liquidation or dissolution of the Company.

     15. Date of Grant. The date of grant of an Award shall be, for all purposes, the date
on which the Administrator makes the determination granting such Award, or such other later date as
is determined by the Administrator. Notice of the determination shall be provided to each Grantee
within a reasonable time after the date of such grant.

     16. Amendment and Termination of the Plan.

          (a) Amendment and Termination. The Board may at any time amend, alter, suspend or
terminate the Plan.

          (b) Shareholder Approval. This Plan was adopted, and has been amended and restated
without approval of the shareholders of the Company in accordance with Rule 4350(i)(1)(A)(iv) of
the NASDAQ Marketplace Rules which excludes new hire equity incentives from shareholder approval
requirements. As necessary, the Company shall obtain shareholder approval of any Plan amendment or
otherwise to the extent necessary and desirable to comply with Applicable Laws.

          (c) Effect of Amendment or Termination. No amendment, alteration, suspension or
termination of the Plan shall impair the rights of any Grantee, unless mutually agreed otherwise
between the Grantee and the Administrator, which agreement must be in writing and signed by the
Grantee and the Company. Termination of the Plan shall not affect the Administrator’s ability to
exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to
the date of such termination.

     17. Conditions Upon Issuance of Shares

          (a) Legal Compliance. Shares shall not be issued pursuant to the exercise or vesting
of an Award unless the delivery of such Shares shall comply with Applicable Laws and shall be
further subject to the approval of counsel for the Company with respect to such compliance.

          (b) Investment Representations. As a condition to the delivery of Shares, the Company
may require the person acquiring such Shares to represent and warrant that the Shares

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are being acquired only for investment and without any present intention to sell or distribute
such Shares if, in the option of counsel for the Company, such a representation is required.

     18. Inability to Obtain Authority. The inability of the Company to obtain authority
from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of
any liability in respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.

     19. Reservation of Shares. The Company, during the term of this Plan, will at all
times reserve and keep available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.

     20. No Enhancement of Outstanding Options. Notwithstanding anything in this Plan to
the contrary, the adoption of this amendment and restatement of the Plan shall not operate or be
construed to modify any Option that is outstanding prior to the date the Board approves this
amendment and restatement of the Plan.

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