Document:

EX-10.2

Exhibit 10.2

AMENDED AND RESTATED

CHICAGO MERCANTILE EXCHANGE HOLDINGS INC. ANNUAL INCENTIVE PLAN

1. Purpose. The purpose of the Chicago Mercantile Exchange Holdings Inc. Annual Incentive Plan
is to align the interests of Company management with those of the shareholders of the Company by
encouraging management to achieve goals intended to increase shareholder value.

2. Definitions. The following terms, as used herein, shall have the following meanings:

(a) “Award” shall mean an incentive compensation award, granted pursuant to the Plan,
which is contingent upon the attainment of Performance Factors with respect to a Performance
Period.

(b) “Board” shall mean the Board of Directors of the Company.

(c) “Code” shall mean the Internal Revenue Code of 1986, as amended.

(d) “Committee” shall mean the Compensation Committee of the Board or such other
committee as may be appointed by the Board to administer the Plan in accordance with Section 3
of the Plan.

(e) “Common Stock” shall mean the common stock of the Company, par value $0.01 per share.

(f) “Company” shall mean Chicago Mercantile Exchange Holdings Inc., a Delaware
corporation, or any successor corporation.

(g) “Disability” shall mean permanent disability as determined pursuant to the long-term
disability plan or policy of the Company or its Subsidiaries in effect at the time of such
disability and applicable to a Participant.

(h) “Effective Date” shall mean January 1, 2003.

(i) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

(j) “Participant” shall mean an employee of the Company or any Subsidiary of the Company
who is, pursuant to Section 4 of the Plan, selected to participate herein.

(k) “Performance Factors” shall mean the criteria and objectives, determined by the
Committee, which must be met during the applicable Performance Period as a condition of the
Participant’s receipt of payment with respect to an Award. Performance Factors may include any
or all of the following or any combination thereof: gross margin, operating margin, revenue
growth, free cash flow, cash earnings, operating expense, expense reductions, operations
efficiency, operating cash flow, earnings per share, economic value added, cash-flow return on
investment, net income, total shareholder return, return on investment, return on equity,
return on assets or any increase or decrease of one or more of the foregoing over a specified
period. Such Performance Factors may relate to the performance of the Company, a Subsidiary,
any portion of the business, product line, or any combination thereof and may be expressed on
an aggregate, per share (outstanding or fully diluted) or per unit basis. Where applicable,
the Performance Factors may be expressed in terms of attaining a specified level of the
particular criteria, the attainment of a percentage increase or decrease in the particular
criteria, or may be applied to the performance of the Company, a Subsidiary, a business unit,
a product line, or any combination thereof, relative to a market index, a group of other
companies (or their subsidiaries, business units or product lines), or a combination thereof,
all as determined by the Committee. Performance Factors may include a threshold level of
performance below which no payment shall be made, levels of performance below the target level
but above the threshold level at which specified percentages of the Award shall be paid, a
target level of performance at which the full Award shall be paid, levels of performance above
the target level but below the maximum level at which specified multiples of the Award shall
be paid, and a maximum level of performance above which no additional payment shall be made.
Performance Factors may also specify that payments for levels of performances between
specified levels will be interpolated.

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(l) “Performance Period” shall mean the twelve-month periods commencing on January 1,
2003 and each January 1 thereafter, or such other periods as the Committee shall determine;
provided that a Performance Period for a Participant who becomes employed by the Company or
its Subsidiaries following the commencement of a Performance Period may be a shorter period
that commences with the date of the commencement of such employment.

(m) “Plan” shall mean this Chicago Mercantile Exchange Holdings Inc. Annual Incentive
Plan.

(n) “Subsidiary” shall mean any company, partnership, limited liability company, business
or entity (other than the Company) of which at least 50% of the combined voting power of its
voting securities is, or the operations and management are, directly or indirectly controlled
by the Company.

3. Administration. The Plan shall be administered by a Committee of the Board. The Committee
shall have the authority in its sole discretion, subject to and not inconsistent with the express
provisions of the Plan, to administer the Plan and to exercise all the powers and authorities
either specifically granted to it under the Plan or necessary or advisable in the administration of
the Plan, including, without limitation, the authority to grant Awards; to determine the persons to
whom and the time or times at which Awards shall be granted; to determine the terms, conditions,
restrictions and Performance Factors relating to any Award; to determine whether, to what extent,
and under what circumstances an Award may be settled, cancelled, forfeited, or surrendered; to make
adjustments in the Performance Factors in recognition of unusual or non-recurring events affecting
the Company or its Subsidiaries or the financial statements of the Company or its Subsidiaries, or
in response to changes in applicable laws, regulations or accounting principles; to construe and
interpret the Plan and any Award; to prescribe, amend and rescind rules and regulations relating to
the Plan; to determine the terms and provisions of Awards (including provisions relating to a
change in control of the Company); and to make all other determinations deemed necessary or
advisable for the administration of the Plan. Without limiting the generality of the foregoing, the
Committee shall have the sole discretion to determine whether, or to what extent, Performance
Factors are achieved; provided, however, that the Committee shall have the authority to make
appropriate adjustments in Performance Factors under an Award to reflect the impact of
extraordinary items not reflected in such goals. For purposes of the Plan, extraordinary items
shall be defined as (1) any profit or loss attributable to acquisitions or dispositions of stock or
assets, (2) any changes in accounting standards or treatments that may be required or permitted by
the Financial Accounting Standards Board or adopted by the Company or its Subsidiaries after the
goal is established, (3) all items of gain, loss or expense for the year related to restructuring
charges for the Company or its Subsidiaries, (4) all items of gain, loss or expense for the year
determined to be extraordinary or unusual in nature or infrequent in occurrence or related to the
disposal of a segment of a business, (5) all items of gain, loss or expense for the year related to
discontinued operations that do not qualify as a segment of a business as defined in APB Opinion
No. 30 (or successor literature), (6) the impact of capital expenditures, (7) the impact of share
repurchases and other changes in the number of outstanding shares, and (8) such other items as may
be prescribed by Section 162(m) of the Code and the Treasury Regulations thereunder as may be in
effect from time to time, and any amendments, revisions or successor provisions and any changes
thereto.

The Committee shall consist of two or more persons each of whom shall be an “outside director”
within the meaning of Section 162(m) of the Code. All decisions, determinations and interpretations
of the Committee shall be final and binding on all persons, including the Company and the
Participant (or any person claiming any rights under the Plan from or through any Participant).

Subject to Section 162(m) of the Code or as otherwise required for compliance with other
applicable law, the Committee may delegate all or any part of its authority under the Plan.

 

4. Eligibility. Awards may be granted to Participants in the sole discretion of the
Committee. In determining the persons to whom Awards shall be granted and the Performance Factors
relating to each Award, the Committee shall take into account such factors as the Committee shall
deem relevant in connection with accomplishing the purposes of the Plan.

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5. Terms of Awards. Awards granted pursuant to the Plan shall be communicated to Participants
in such form as the Committee shall from time to time approve and the terms and conditions of such
Awards shall be set forth therein.

(a) In General. On or prior to the date on which 25% of a Performance Period has elapsed
(but not later than the 90th day of such period), the Committee shall
specify in writing, by resolution of the Committee or other appropriate action, the
Participants for such Performance Period and the Performance Factors applicable to each Award
for each Participant with respect to such Performance Period. Unless otherwise provided by the
Committee in connection with specified terminations of employment, payment in respect of
Awards shall be made only if and to the extent the minimum Performance Factors with respect to
such Performance Period are attained.

(b) Special Provisions Regarding Awards. Notwithstanding anything to the contrary
contained herein, in no event shall payment in respect of Awards granted hereunder exceed
$2,500,000 to any one Participant in any one year. The Committee may at its discretion
decrease the amount of an Award payable upon attainment of the specified Performance Factors,
but in no event may the Committee increase at its discretion the amount of an Award payable
upon attainment of the specified Performance Factors.

(c) Time and Form of Payment. Unless otherwise determined by the Committee, all payments
in respect of Awards granted under this Plan shall be made in cash within seventy-five
(75) days after the end of the Performance Period.

6. Term. Subject to the approval of the Amended and Restated Plan by the holders of a majority
of the Common Stock represented and voting on the proposal at the annual meeting of Company
stockholders to be held in 2007 (or any adjournment thereof), the Plan shall be effective as of
January 1, 2007 and shall continue in effect until the fifth anniversary of the date of such
stockholder approval, unless earlier terminated as provided below.

7. General Provisions.

(a) Compliance with Legal Requirements. The Plan and the granting and payment of Awards,
and the other obligations of the Company under the Plan shall be subject to all applicable
federal and state laws, rules and regulations, and to such approvals by any regulatory or
governmental agency as may be required.

(b) Nontransferability. Awards shall not be transferable by a Participant.

(c) No Right To Continued Employment. Nothing in the Plan or in any Award granted
pursuant hereto shall confer upon any Participant the right to continue in the employ of the
Company or any of its Subsidiaries or to be entitled to any remuneration or benefits not set
forth in the Plan or to interfere with or limit in any way whatever rights otherwise exist of
the Company or its Subsidiaries to terminate such Participant’s employment or change such
Participant’s remuneration.

(d) Withholding Taxes. Where a Participant or other person is entitled to receive a
payment pursuant to an Award hereunder, the Company shall have the right either to deduct from
the payment, or to require the Participant or such other person to pay to the Company prior to
delivery of such payment, an amount sufficient to satisfy any federal, state, local or other
withholding tax requirements related thereto.

 

(e) Amendment, Termination and Duration of the Plan. The Board or the Committee may
at any time and from time to time alter, amend, suspend, or terminate the Plan in whole or in
part; provided that, no amendment that requires stockholder approval in order for the Plan to
continue to comply with Code Section 162(m) shall be effective unless the same shall be
approved by the requisite vote of the stockholders of the Company. Notwithstanding the
foregoing (but subject to Section (j)), no amendment shall affect adversely any of the rights
of any Participant under any Award following the grant of such Award, provided that neither an
adjustment of an Award (as contemplated by Section 3) nor the exercise of the Committee’s
discretion pursuant to Section 5(b) to reduce the amount of an Award shall not be deemed an
impermissible amendment of the Plan or an Award.

(f) Participant Rights. No Participant shall have any claim to be granted any Award under
the Plan, and there is no obligation for uniformity of treatment for Participants.

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(g) Termination of Employment.

(i) Unless otherwise provided by the Committee, and except as set forth in
subparagraph (ii) of this Section 7(g), a Participant must be actively employed by the
Company or its Subsidiaries at the time Awards are generally paid with respect to a
Performance Period in order to be eligible to receive payment in respect of such Award.

(ii) Unless otherwise provided by the Committee, if a Participant’s employment is
terminated as result of death, Disability or voluntary retirement with the consent of the
Company prior to the end of the Performance Period, such Participant shall receive a pro
rata portion of the Award that he or she would have received with respect to the
applicable Performance Period, which shall be payable at the time payment is made to
other Participants in respect of such Performance Period.

(h) Unfunded Status of Awards. The Plan is intended to constitute an “unfunded” plan for
incentive and deferred compensation. With respect to any payments not yet made to a
Participant pursuant to an Award, nothing contained in the Plan or any Award shall give any
such Participant any rights that are greater than those of a general creditor of the Company.

(i) Governing Law. The Plan and all determinations made and actions taken pursuant hereto
shall be governed by the laws of the State of Delaware without giving effect to the conflict
of laws principles thereof.

(j) Effective Date. The Plan shall take effect upon its adoption by the Board; provided,
however, that the Plan shall be subject to the requisite approval of the stockholders of the
Company in order to comply with Section 162(m) of the Code. In the absence of such approval,
the Plan (and any Awards made pursuant to the Plan prior to the date of such approval) shall
be null and void.

(k) Interpretation. The Plan is designed and intended to comply, to the extent
applicable, with Section 162(m) of the Code, and all provisions hereof shall be construed in a
manner to so comply.

 

4EX-10.1

Exhibit 10.1

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 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 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:

(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;

(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 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 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
Administrator 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 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

(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 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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