KLA-TENCOR CORPORATION
EXECUTIVE SEVERANCE PLAN
AS AMENDED AND RESTATED SEPTEMBER 21, 2015
1.Introduction
The KLA-Tencor Corporation Executive Severance Plan (the “Plan”) is designed to
(i) assure the Company that it will have the continued dedication and
availability of, and objective advice and counsel from, the Participants and
(ii) provide Participants with the compensation and benefits described in the
Plan in the event of their termination of employment with the Company under the
circumstances described in the Plan. This document constitutes the written
instrument under which the Plan is maintained and supersedes any prior plan or
practice of the Company that provides severance benefits to Participants.
This Plan is intended to be in documentary compliance with the applicable
requirements of Section 409A of the Internal Revenue Code and the Treasury
Regulations and official guidance issued thereunder and any applicable state law
equivalent, as each may be amended or promulgated from time to time (“Section
409A”), and any ambiguities herein will be interpreted to so comply.
Participants shall be those Employees selected at the sole discretion of the
Committee.
2.Definitions
For purposes of this Plan, the following terms shall have the meanings set forth
below:
(a)“Acceleration Ratio” shall mean the ratio of (i) the number of months (with
any fractional month rounded up to the next whole month) that elapse between the
grant date of an outstanding equity award and the date of the Participant’s
Separation from Service hereunder to (ii) the number of months (with any
fractional month rounded up to the next whole month) in the total vesting period
in effect for such award.
(b)“Amended Plan Effective Date” shall mean September 21, 2015.
(c)“Average Annual Incentive” shall mean the average annual incentive cash
compensation earned in the aggregate by the Participant under the Company’s
various incentive bonus plans for the last three Prior Completed Fiscal Years of
the Company, including any portion earned but deferred; provided, however that
if a Participant has not been in Employee status for the last three full fiscal
years, the Average Annual Incentive shall mean the product of (i) twelve (12)
times (ii) the quotient equal to (A) the sum of (1) the annual incentive cash
compensation earned in the aggregate by the Participant under the Company’s
various incentive bonus plans (including any portion earned but deferred) with
respect to all Prior Completed Fiscal Years plus (2) the Participant’s
Termination Year Bonus, divided by (B) the sum of (1) the total number of months
of service by such Participant for all Prior Completed Fiscal Years (i.e., the
number of such Participant’s Prior Completed Fiscal Years multiplied by twelve
(12)) plus (2) the number of full calendar months of Employee service by such
Participant in the fiscal year in which he or she ceases Employee status.
(d)“Base Salary” shall mean the Participant’s annual rate of base salary in
effect as of the date of his or her cessation of Employee status, but prior to
any reduction to such Base Salary that would qualify as a Good Reason
termination event.
(e)“Board” means the Board of Directors of the Company.
(f)“Cause” shall mean (A) outside the Change of Control Period, the occurrence
of any of the following events: (i) the Participant’s conviction of, or plea of
nolo contendre to, a felony; (ii) the Participant’s gross misconduct; (iii) any
material act of personal dishonesty taken by the Participant in connection with
his or her responsibilities as an employee of the Company, or (iv) the
Participant’s willful and continued failure to perform the duties and
responsibilities of his or her position after there has been delivered to the
Participant a written demand for performance from the Board which describes the
basis for the Board’s belief that the Participant has not substantially
performed his or her duties and provides the Participant with thirty (30) days
to take corrective action, and (B) within the Change of Control Period, the
occurrence of any of the following events: (i) the Participant’s conviction of,
or plea of nolo contendre to, a felony that the Board reasonably believes has
had or will have a material detrimental effect on the Company’s reputation or
business; (ii) the Participant’s willful gross misconduct with regard to the
Company that is materially injurious to the Company; (iii) any act of personal
dishonesty taken by the Participant in connection with his or her
responsibilities as an employee of the Company with the intention or reasonable
expectation that such action may result in substantial personal enrichment of
the Participant or (iv) the Participant’s

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willful and continued failure to perform the duties and responsibilities of his
or her position after there has been delivered to the Participant a written
demand for performance from the Board which describes the basis for the Board’s
belief that the Participant has not substantially performed his or her duties
and provides the Participant with thirty (30) days to take corrective action.
(g)“Change of Control” shall mean the occurrence of any of the following events:
(i) any “person” (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended) becoming the “beneficial owner” (as
defined in Rule 13d-3 under said Act), directly or indirectly, of securities of
the Company representing fifty percent (50%) or more of the total voting power
represented by the Company’s then outstanding voting securities; (ii) the sale
or disposition by the Company of all or substantially all of the Company’s
assets; (iii) the consummation of any merger or consolidation of the Company
with any other corporation, other than a merger or consolidation which would
result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than fifty
percent (50%) of the total voting power represented by the voting securities of
the Company or such surviving entity outstanding immediately after such merger
or consolidation, or (iv) a change in the composition of the Board, as a result
of which fewer than a majority of the Board members are Incumbent Directors.
“Incumbent Directors” shall mean Board members who either (A) are members of the
Board on the Amended Plan Effective Date or (B) are elected, or nominated for
election, to the Board with the affirmative votes of at least a majority of
those Board members whose election or nomination was not in connection with any
transactions described in subsections (i), (ii) or (iii) or in connection with
an actual or threatened proxy contest relating to the election of directors of
the Company. Notwithstanding the foregoing provisions of this definition, a
transaction will not be deemed a Change of Control unless the transaction
qualifies as a “change in control event” within the meaning of Section 409A.
(h)“Change of Control Period” shall mean the two (2) year period commencing upon
the occurrence of a Change of Control.
(i)“Code” shall mean the Internal Revenue Code of 1986, as amended.
(j)“Committee” shall mean the Board or such committee appointed by the Board to
act as the committee for purposes of administering the Plan.
(k)“Company” shall mean KLA-Tencor Corporation, a Delaware corporation, and any
successor entity.
(l)“Employee” shall mean an individual who is a full-time regular employee of
one or more members of the Employer Group, subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance. An individual shall be deemed to continue in Employee
status for so long as he or she continues as a full-time regular employee of at
least one member of the Employer Group.
(m)“Employer Group” means (i) the Company and (ii) each of the other members of
the controlled group that includes the Company, as determined in accordance with
Sections 414(b) and (c) of the Code, except that in applying Sections 1563(1),
(2) and (3) of the Code for purposes of determining the controlled group of
corporations under Section 414(b), the phrase “at least 50 percent” shall be
used instead of “at least 80 percent” each place the latter phrase appears in
such sections and in applying Section 1.414(c)-2 of the Treasury Regulations for
purposes of determining trades or businesses that are under common control for
purposes of Section 414(c), the phrase “at least 50 percent” shall be used
instead of “at least 80 percent” each place the latter phrase appears in
Section 1.414(c)-2 of the Treasury Regulations.
(n)“Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code.
(o)“Good Reason” shall mean the occurrence of any of the following without the
Participant’s written consent: (i) a material reduction of the Participant’s
duties, authority or responsibilities; (ii) a material change in the
Participant’s reporting requirements such that the Participant is required to
report to a person whose duties, responsibilities and authority are materially
less than those of the person to whom the Participant was reporting immediately
prior to such change, (iii) a material reduction in the Participant’s Base
Salary, other than a reduction that applies to other executives generally;
(iv) a material reduction in the aggregate level of the Participant’s overall
compensation, other than a reduction that applies to other executives generally;
or (iv) a material relocation of the Participant’s office, with a relocation of
more than fifty (50) miles from its then present location to be deemed material,
unless the relocated office is closer to the Participant’s then principal
residence; provided however, that in no event shall the Participant’s Separation
from Service be deemed to be for Good Reason unless (x) the Participant provides
the Company with written notice specifying in detail the event or transaction
constituting grounds for a Good Reason resignation and delivered to the Company
within ninety (90) days after the occurrence of that event or transaction,
(y) the Company fails to remedy the purported Good Reason event or transaction
within a reasonable cure period of at least thirty (30) days following receipt
of such notice and (z) the Participant resigns for such Good Reason within sixty
(60) days after the Company’s failure to take such timely curative action, but
in no event more than one hundred eighty (180)

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days after the occurrence of the event or transaction identified in the clause
(x) notice to the Company as the grounds for the Good Reason resignation.
(p)“Original Effective Date” shall mean January 1, 2006.
(q)“Participant” shall mean an Employee who meets the eligibility requirements
of Section 3.
(r)“Plan” shall mean this KLA-Tencor Corporation Executive Severance Plan, as
amended and restated.
(s)“Plan Year” shall mean the Company’s fiscal year.
(t)“Prior Completed Fiscal Years” shall mean, with respect to a Participant who
ceases Employee status, the completed fiscal years of the Company occurring
consecutively immediately preceding the fiscal year in which such Participant
ceases Employee status and for which such Participant remained in continuous
Employee status for the entire fiscal year.
(u)“Prorated Annual Incentive” shall mean the aggregate incentive bonus paid to
the Participant under the applicable Company incentive bonus plan for the
Company’s most recently completed fiscal year, including any portion earned but
deferred, multiplied by a fraction, the numerator of which is the number of days
in the Company’s then current fiscal year through the date of the Participant’s
Separation from Service, and the denominator of which is equal to 365.
(v)“Separation from Service” means the Participant’s cessation of Employee
status by reason of his or her death, retirement or termination of employment.
The Participant shall be deemed to have terminated employment for such purpose
at such time as the level of his or her bona fide services to be performed as an
Employee (or non-employee consultant) permanently decreases to a level that is
not more than twenty percent (20%) of the average level of services he or she
rendered as an Employee during the immediately preceding thirty-six (36) months
(or such shorter period for which he or she may have rendered such service). Any
such determination as to Separation from Service, however, shall be made in
accordance with the applicable standards of Section 409A. In addition to the
foregoing, a Separation from Service will not be deemed to have occurred while
an Employee is on military leave, sick leave or other bona fide leave of absence
if the period of such leave does not exceed six (6) months or any longer period
for which such Employee’s right to reemployment with one or more members of the
Employer Group is provided either by statute or contract; provided, however,
that in the event of an Employee’s leave of absence due to any medically
determinable physical or mental impairment that can be expected to result in
death or to last for a continuous period of not less than six (6) months and
that causes such individual to be unable to perform his or her duties as an
Employee, no Separation from Service shall be deemed to occur during the first
twenty-nine (29) months of such leave. If the period of leave exceeds six (6)
months (or twenty-nine (29) months in the event of disability as indicated
above) and the Employee’s right to reemployment is not provided either by
statute or contract, then such Employee will be deemed to have a Separation from
Service on the first day immediately following the expiration of such six
(6)-month or twenty-nine (29)-month period.
(w)“Severance Multiple” shall mean the Participant’s Severance Period, expressed
in years or fractions thereof (e.g., a Severance Period of two (2) years results
in a Severance Multiple of two (2)). The Severance Multiple may be different for
periods outside of the Change of Control Period and within the Change of Control
Period.
(x)“Severance Payment” shall mean the payment of severance compensation as
provided in Section 4 hereof.
(y)“Severance Period” shall mean the number of years (which may include
fractional years) established by the Committee for an individual Participant.
The Severance Period may be different for periods outside of the Change of
Control Period and within the Change of Control Period.
(z)“Specified Employee” means any individual who is, at any time during the
twelve (12)-month period ending with the identification date specified below, a
“key employee” (within the meaning of that term under Code Section 416(i)), as
determined by the Committee in accordance with the applicable standards of
Section 409A and applied on a consistent basis for all non-qualified deferred
compensation plans of the Employer Group subject to Section 409A. The Specified
Employees shall be identified by the Committee on December 31 each year and
shall have that status for the twelve (12)-month period beginning on the April 1
subsequent to such determination by the Committee.
(aa)“Termination Year Bonus” means the product of (i) a Participant’s actual
annual incentive cash compensation for the fiscal year in which he or she ceases
Employee status, calculated (based on the Company’s actual performance metrics
for such fiscal year) after the conclusion of such fiscal year, that the
Participant would have received if the Participant had remained in continuous
Employee status through the entire fiscal year (and any additional period of
time

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necessary to be eligible to receive such annual incentive cash compensation for
such fiscal year) and (ii) a fraction, the numerator of which is the number of
full calendar months of Employee service by such Participant in the fiscal year
in which he or she ceases Employee status, and the denominator of which is
twelve (12).
3.Eligibility
(a)Required Release.
(i)As a condition to receiving severance benefits under Section 4(b), 4(c) or
4(d) of the Plan, the Participant must sign, deliver to the Company and not
revoke a general waiver and release (such executed document, the “Required
Release”) in the form provided by (and in favor of) the Company within the time
set forth in the release agreement. Such Required Release will become effective
as required by the release agreement; provided that the effective date of such
Required Release must be on or before the date that is sixty (60) days following
the Participant’s Separation from Service (such deadline, the “Release
Deadline”). The Participant will not receive severance benefits under
Section 4(b), 4(c) or 4(d) of the Plan unless the Required Release is returned
to the Company, and not revoked, by the Participant within the Release Deadline.
(ii)In the event the Separation from Service occurs at a time during the
calendar year when the Required Release could become effective in the calendar
year following the calendar year in which the Participant’s Separation from
Service occurs (whether or not it actually becomes effective in the following
year), then any severance payments and benefits under Section 4(b), 4(c) or 4(d)
of the Plan that would constitute an item of deferred compensation under
Section 409A will be paid on the first normal payroll run to occur during the
calendar year following the calendar year in which such Separation from Service
occurs, or, if later, (A) the first normal payroll run after the Required
Release actually becomes effective, or (B) such time as required by Section 6.
(b)Participation in Plan. The Committee shall from time to time designate the
Employees who are to participate in the Plan. The Committee may, with respect to
one or more such designated Participants, limit their participation to certain
Separations from Service during or related to the Change of Control Period as
set forth in Sections 4(c) and 4(d) hereof and not allow them to participate
with respect to certain Separations from Service outside of and unrelated to the
Change of Control Period, as set forth in Section 4(b) hereof. A Participant
shall cease to be a Participant upon cessation of Employee status (unless such
Participant is then entitled to a Severance Payment under the Plan) or upon the
expiration date of the Plan. However, a Participant who becomes entitled to a
Severance Payment shall remain a Participant in the Plan until the full amount
of his or her benefits under the Plan have been provided to such Participant,
notwithstanding the prior expiration of the Plan. Upon receipt of all the
Severance Payments, the Participant releases the Company from any and all
further obligations under the Plan.
4.Severance Benefits
(a)Termination of Employment. Except as otherwise provided in this Section 4(a),
upon the termination of the Participant’s Employee status for any reason, the
Participant shall be immediately entitled to any (i) unpaid Base Salary accrued
through the effective date of such termination; (ii) unreimbursed business
expenses required to be reimbursed to the Participant in accordance with the
Company’s business expense reimbursement policy, and (iii) pay for accrued but
unused vacation that the Company is legally obligated to pay the Participant.
Any amounts deferred by such Participant under one or more of the Company’s
non-qualified deferred compensation programs subject to Section 409A, which
remain unpaid on the termination date shall be paid at such time and in such
manner as set forth in each applicable plan or agreement governing the payment
of those deferred amounts, subject, however, to the deferred payment provisions
of Section 6 below. Amounts deferred under any other deferred compensation plans
or programs shall be paid to the Participant in accordance with the terms and
provisions of each such applicable plan or program. In the event that any
Participant who has been designated by the Board or its authorized committee as
being eligible to participate in the Company’s executive retiree health program
(the “Retiree Program”) terminates his or her Employee status for any reason
between the ages of 55 and 65 and is in good standing with the Company at the
time of such termination, such Participant will be eligible to continue his or
her medical, dental, and vision coverage at the premium costs specified in the
Retiree Program until the Participant reaches the age of 65 in accordance with
the terms of the Executive Retiree Health Program as in effect on the Amended
Plan Effective Date. In addition, should the Participant incur a Separation from
Service because his or her service as an Employee is terminated or reduced by
the Company other than for Cause or by the Participant for Good Reason, then the
Participant shall be entitled to the amounts and benefits specified below.
(b)Termination by the Company Without Cause or the Participant Terminates for
Good Reason Outside of the Change of Control Period. If the Participant incurs a
Separation from Service because his or her service as an Employee is reduced or
terminated by the Company without Cause or by the Participant for Good Reason,
and such Separation from Service does not occur during the Change of Control
Period, then, subject to Sections 3(a) and 5, the Participant shall receive:
(i) an amount equal to the Participant’s Severance Multiple multiplied by the
Participant’s Base Salary, payable in a lump sum

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in accordance with the Company’s normal payroll policies for salaried employees,
on the first normal payroll run after the Required Release becomes effective,
except as set forth in Section 3(a)(ii) above; (ii) the Participant’s Prorated
Annual Incentive, with such payment to be made in a lump sum at the same time as
the payment under clause (i) above; (iii) partial vesting acceleration with
respect to the Participant’s then outstanding unvested equity awards, with the
amount of such accelerated vesting being equal to, for each such award, (A) the
product of the number of shares originally granted under such award (as such
number may be modified based upon the satisfaction of (or failure to satisfy)
any performance criteria applicable to such award; with respect to any award for
which satisfaction of the performance criteria applicable to such award has not
yet been determined as of the date of such Participant’s Separation from
Service, the number of shares under such award for purposes of this clause
(A) shall only be calculated following the determination of the extent to which
such performance criteria have actually been satisfied (if at all)) multiplied
by the Acceleration Ratio, less (B) the number of shares under such award that
have actually vested in accordance with the terms of such award (without giving
effect to the acceleration terms hereunder) as of the date of the Participant’s
Separation from Service hereunder, with such acceleration to become effective on
the date the Required Release becomes effective, except as set forth in Section
3(a)(ii) above; and (iv) with respect to any of the Participant’s then
outstanding options or stock appreciation rights granted on or after the
Original Effective Date (“New Options/SARs”), an extended post-termination
exercise period for each such New Option/SAR equal to the earlier of (x) twelve
(12) months from the date of the Participant’s cessation of Employee status or
(y) the expiration date of the maximum term (not to exceed ten years) of such
New Option/SAR. The Company will amend the agreements (e.g., restricted stock
unit agreements or stock option agreements) underlying a Participant’s equity
awards outstanding as of the date of such Participant’s Separation from Service
to the extent necessary to give effect to the provisions of this Section 4(b).
(c)Termination Without Cause or Resignation for Good Reason During the Change of
Control Period. If the Participant incurs a Separation from Service because his
or her service as an Employee is reduced or terminated by the Company without
Cause or by the Participant for Good Reason, and such Separation from Service
occurs within the Change of Control Period, then, subject to Sections 3(a) and
5, Participant shall receive: (i) a cash amount equal to the Participant’s
Severance Multiple multiplied by the sum of the Participant’s Base Salary and
Average Annual Incentive, payable in a lump sum in accordance with the Company’s
normal payroll policies for salaried employees, on the first normal payroll run
after the Required Release becomes effective, except as set forth in
Section 3(a)(ii) above, (provided that, if the Average Annual Incentive
component of such payment cannot be calculated prior to the date of such initial
payment (for example, because the Company’s Compensation Committee has not
certified the extent to which the applicable performance criteria have been
achieved), the Average Annual Incentive amount will, once it can be calculated,
be paid in a lump sum in accordance with the Company’s normal payroll policies
for salaried employees, on the first normal payroll run after the Required
Release becomes effective); (ii) the Participant’s Prorated Annual Incentive,
with such payment to be made in a lump sum at the same time as the payment under
clause (i) above; (iii) one hundred percent (100%) accelerated vesting with
respect to each of the Participant’s then outstanding unvested equity awards
(provided that, with respect to any award for which satisfaction of the
performance criteria applicable to such award has not yet been determined as of
the date of such Participant’s Separation from Service, the number of shares
under such award that shall be accelerated for purposes of this clause
(iii) shall only be equal to the final number of shares under such award, as
calculated following the determination of the extent to which such performance
criteria have actually been satisfied (if at all)), with such acceleration to
become effective on the date the Required Release becomes effective, except as
set forth in Section 3(a)(ii) above; (iv) an extended post-termination exercise
period for each New Option/SAR equal to the earlier of (x) twelve (12) months
from the date of the Participant’s cessation of Employee status or (y) the
expiration date of the maximum term (not to exceed ten years) of such New
Option/SAR; and (v) a monthly payment of $2,000 for the duration of the
Severance Period, with the payment for each such month to be made concurrently
with the first payment made under clause (i) above for that month. The Company
will amend the agreements (e.g., restricted stock unit agreements or stock
option agreements) underlying a Participant’s equity awards outstanding as of
the date of such Participant’s Separation from Service to the extent necessary
to give effect to the provisions of this Section 4(c).
(d)Certain Terminations Prior to a Change of Control. If at any time during the
period beginning with the execution of a definitive agreement to effect a Change
of Control and ending with the earlier (x) the termination of that agreement
without a Change of Control or (y) the effective date of the Change of Control
contemplated by that agreement, the Participant incurs a Separation from Service
because his or her service as an Employee is reduced or terminated by the
Company without Cause or by the Participant for Good Reason, then each of his or
her outstanding equity awards, whether vested or unvested, shall,
notwithstanding anything to the contrary in the documents evidencing those
awards, remain outstanding for a period of six (6) months following such
Separation from Service (or, if earlier, until the expiration date of the
maximum term (not to exceed ten years) of such award). Should the Change of
Control contemplated by that agreement become effective during that six
(6)-month period, then, subject to Sections 3(a) and 5, Participant shall
thereupon become entitled to the following benefits: (i) the unvested portion of
each of his or her outstanding equity awards shall vest immediately (provided
that, with respect to any award for which satisfaction of the performance
criteria applicable to such award has not yet been determined as of the date of
such Participant’s Separation from Service, the number of shares under such
award that shall be accelerated for purposes of this clause (i) shall only be
equal to the final number of shares under such

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award, as calculated following the determination of the extent to which such
performance criteria have actually been satisfied (if at all)), with such
acceleration to become effective on the date the Required Release becomes
effective, except as set forth in Section 3(a)(ii) above; (ii) each of his or
her New Options/SARs shall have an extended post-termination exercise period
equal to the earlier of (x) twelve (12) months from the date of his or her
cessation of Employee status or (y) the expiration date of the maximum term (not
to exceed ten years) of such New Option/SAR; (iii) a cash amount equal to the
Participant’s Severance Multiple multiplied by the sum of the Participant’s Base
Salary and Average Annual Incentive, payable in a lump sum in accordance with
the Company’s normal payroll policies for salaried employees, with the payment
to be made on the first normal payroll run after the Required Release becomes
effective, except as set forth in Section 3(a)(ii) above (provided that, if the
Average Annual Incentive component of such payment cannot be calculated prior to
the date of such initial payment (for example, because the Company’s
Compensation Committee has not certified the extent to which the applicable
performance criteria have been achieved), the Average Annual Incentive amount
will, once it can be calculated, be paid in a lump sum in accordance with the
Company’s normal payroll policies for salaried employees on the first normal
payroll run after the Required Release becomes effective; (iv) the Participant’s
Prorated Annual Incentive, with such payment to be made in a lump sum at the
same time as the payment under clause (iii) above and (v) a payment of $2,000
multiplied by the number of months in the Severance Period, with the payment to
be made concurrently with the payment made under clause (iii) above. The
severance benefits payable under this Section 4(d) shall be in lieu of any
severance benefits to which the Participant might otherwise be entitled under
Section 4(c); accordingly, there shall be no duplication of benefits under
Sections 4(c) and 4(d). The Company will amend the agreements (e.g., restricted
stock unit agreements or stock option agreements) underlying a Participant’s
equity awards outstanding as of the date of such Participant’s Separation from
Service to the extent necessary to give effect to the provisions of this
Section 4(d).
(e)Section 409A Status. To the extent the Participant vests in any outstanding
restricted stock unit award or other similar full value equity award in
accordance with the provisions of Section 4(b), 4(c) or 4 (d), the underlying
shares of the Company’s common stock shall be issued on the date that award
vests upon the satisfaction of the applicable requirements for such vesting
(including the Release requirements under Section 3(a)) or as soon as
administratively practicable thereafter, but in no event later than the
fifteenth day of the third calendar month following such vesting date. The
Participant’s right to receive shares of the Company’s common stock in one or
more installments under such equity awards shall, for purposes of Section 409A,
be treated as a right to receive a series of separate payments.
(f)Golden Parachute Excise Taxes.
(i)Parachute Payments of Less than 3x Base Amount Plus Fifty Thousand Dollars.
If the benefits provided to the Participant under this Plan or otherwise payable
to him or her (a) constitute “parachute payments” within the meaning of
Section 280G of the Code, (b) would be subject to the Excise Tax, and (c) the
aggregate present value of those parachute payments, as determined in accordance
with Section 280G of the Code and the Treasury Regulations thereunder, is less
than the dollar amount obtained by first multiplying the Participant’s “base
amount” (within the meaning of Code Section 280G(b)(3)) by three (3) and then
adding to such product fifty thousand dollars, then such benefits shall be
reduced to the extent necessary (but only to that extent) so that no portion of
such benefits will be subject to excise tax under Section 4999 of the Code. Such
reduction shall be effected first by reducing the dollar amount of the
Participant’s cash severance payments under clause (i) of Section 4(b), clauses
(i) and (v) of Section 4(c) or clauses (iii) and (v) of Section 4(d), as
applicable, with such reduction to be applied pro-rata to each such payment
without any change in the payment dates, then by reducing his or her lump sum
Pro-rated Annual Incentive payment and finally by reducing the accelerated
vesting of his or her outstanding equity awards in the reverse order of the date
of grant for such stock awards (i.e., the vesting of the most recently granted
stock awards will be reduced first), with full-value awards reversed before any
stock option or stock appreciation rights are reduced. If two or more equity
awards are granted on the same date, each award will be reduced on a pro-rata
basis. All calculations required under this Section 4(f)(i) shall be performed
by an independent registered public accounting firm mutually agreeable to the
Company and the Participant (the “Independent Auditors”). The initial
calculations shall be completed within thirty (30) business days following the
effective date of the Change of Control, and any additional calculations
required in connection with the Participant’s subsequent Separation from Service
shall be completed within thirty (30) business days following the date of such
Separation from Service.
(ii)Parachute Payments Equal to or Greater than 3x Base Amount Plus Fifty
Thousand Dollars. If the benefits provided to the Participant under this Plan or
otherwise payable to him or her (a) constitute “parachute payments” within the
meaning of Section 280G of the Code, (b) would be subject to the Excise Tax, and
(c) the aggregate present value of those parachute payments, as determined in
accordance with Section 280G of the Code and the Treasury Regulations
thereunder, equals or exceeds the dollar amount obtained by first multiplying
the Participant’s “base amount” (within the meaning of Code Section 280G(b)(3))
by three (3) and then adding to such product fifty thousand dollars, then
(A) those benefits shall be delivered in full to the Participant, and (B) the
Participant shall also receive (1) a payment from the Company sufficient to pay
such Excise Tax and (2) an additional payment from the Company sufficient to pay
the federal

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and state income and employment taxes and additional Excise Taxes arising from
the payments made to the Participant by the Company pursuant to this clause (B),
with such combined payment herein designated the “Tax Gross-Up.”
(iii)280G Determinations. Within thirty (30) days after any Change of Control
transaction in which one or more of the benefits paid or provided to the
Participant constitute, in the opinion of the Independent Auditors, parachute
payments under Code Section 280G which equal or exceed the dollar amount
calculated under subparagraph (ii) of this Section 4(f), the Independent
Auditors shall calculate the Excise Tax attributable to those payments and the
resulting Tax Gross-Up to which the Participant is entitled with respect to such
tax liability. Within thirty (30) days after the Participant’s Separation from
Service under Section 4(c) or 4(d), the Independent Auditors shall identify any
additional parachute payments which such Participant is to receive pursuant to
this Plan in connection with such Separation from Service and submit to the
Company and the Participant the calculation of the Excise Tax attributable to
those payments and the resulting Tax Gross-Up to which the Participant is
entitled with respect to such tax liability. In each such instance, the Company
will pay the applicable Tax Gross-Up to the Participant (net of all applicable
withholding taxes, including any taxes required to be withheld under Code
Section 4999) within ten (10) business days following the later of (i) the
delivery by the Independent Auditors of the calculation of the applicable Excise
Tax and the resulting Tax Gross-Up, provided such calculations represent a
reasonable interpretation of the applicable law and regulations or (ii) the date
the related Excise Tax is remitted to the appropriate tax authorities. For
purposes of making the calculations required by this Section 4(f), the
Independent Auditors may make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of Sections 280G and 4999 of the
Code. The Company and the Participant shall furnish the Independent Auditors
with such information and documents as the Independent Auditors may reasonably
request in order to make the calculations required under this Section 4(f). The
Company shall bear all costs the Independent Auditors may reasonably incur in
connection with any calculations contemplated by this Section 4(f).
(iv)In the event that the Participant’s actual Excise Tax liability is
determined by a Final Determination (as defined below) to be greater than the
Excise Tax liability taken into account for purposes of the Tax Gross-Up paid to
the Participant pursuant to the preceding provisions of this Section 4(f), then
within thirty (30) days following the Final Determination, the Participant shall
submit to the Company a new Excise Tax calculation based upon that Final
Determination. The Independent Auditors shall, within the next forty-five (45)
days thereafter, calculate (in accordance with the same procedures applicable to
the calculation of the initial Tax Gross-Up payment hereunder) the additional
Tax Gross-Up payment to which the Participant is entitled on the basis of the
Excise Tax liability resulting from that Final Determination and deliver those
calculations to the Company and the Participant. The Company shall make such
additional Tax Gross Up payment to the Participant within ten (10) business days
following the later of (i) the delivery of the applicable calculations or
(ii) the date the excess tax liability attributable to the Final Determination
is remitted to the appropriate tax authorities.
(v)In the event that the Participant’s actual Excise Tax liability is determined
by a Final Determination to be less than the Excise Tax liability taken into
account for purposes of the Tax Gross-Up paid to the Participant pursuant to the
preceding provisions of this Section 4(f), then the Participant shall refund to
the Company, promptly upon receipt, any federal or state tax refund attributable
to the Excise Tax overpayment.
(vi)For purposes of this Section 4(f), a “Final Determination” means an audit
adjustment by the Internal Revenue Service that is either (i) agreed to by both
the Participant (or his or her estate) and the Company (such agreement by the
Company to be not unreasonably withheld) or (ii) sustained by a court of
competent jurisdiction in a decision with which the Participant and the Company
concur (such concurrence by the Company to be not unreasonably withheld) or with
respect to which the period within which an appeal may be filed has lapsed
without a notice of appeal being filed.
(g)Additional Limitations on Tax Gross-Up. In order to assure that the Tax
Gross-Up provisions of Section 4(f) comply with the applicable requirements of
Section 409A, the following limitation shall be controlling, notwithstanding
anything to the contrary in the preceding provisions of Section 4(f):
(i)To the extent the Tax Gross-Up (or any additional Tax Gross-Up hereunder) is
attributable to any benefits under this Plan that are triggered by the
Participant’s Separation from Service, that portion of the Tax Gross-Up (or
additional Tax Gross-Up) shall be subject to the delayed payment provisions of
Section 6.
(ii)In no event shall any Tax Gross-Up to which the Participant becomes entitled
pursuant to Section 4(f) be made later than the later of (i) the close of the
calendar year in which the Excise Tax triggering the right to such payment is
paid by or on behalf of the Participant or (ii) the fifteenth day of the third
calendar month following the day of payment of such Excise Tax.
(iii)To the extent the Participant may become entitled to any reimbursement of
expenses incurred by him or her at the direction of the Company in connection
with any tax audit or litigation addressing the existence or amount of the
Excise Tax, such reimbursement shall be paid to the Participant no later than
the close of the calendar year in

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which the Excise Tax that is the subject of such audit or litigation is paid by
or on behalf of the Participant or, if no Excise Tax is found to be due as a
result of such audit or litigation, no later than the later of (i) the close of
the calendar year in which the audit is completed or there is a final and
nonappealable settlement or other resolution of the litigation or (ii) the
fifteenth day of the third calendar month following the date the audit is
completed or the date the litigation is so settled or resolved.
5.Covenant Not to Solicit.
(a)Remedies for Breach. The Company’s obligations to provide Severance Payments
as provided in Section 4 are expressly conditioned upon the Participant’s
covenant not to solicit as provided herein. In the event the Participant
breaches his or her obligations to the Company as provided herein, the Company’s
obligations to make Severance Payments to the Participant pursuant to Section 4
shall cease, without prejudice to any other remedies that may be available to
the Company.
(b)Covenant Not to Solicit. If a Participant is receiving Severance Payments
pursuant to Section 4 hereof, he or she shall not, at any time during the
Severance Period, directly or indirectly solicit any individuals to leave the
Company’s employ for any reason or interfere in any other manner with the
employment relationships at the time existing between the Company and its
current or prospective employees.
(c)Representations. The covenant contained in this Section 5 shall be construed
as a separate covenant in each county, city and state (or analogous entity) and
country of the world. If, in any judicial proceeding, a court shall refuse to
enforce this covenant, or any part thereof, then such unenforceable covenant, or
such part thereof, shall be deemed eliminated from this Plan for the purpose of
those proceedings to the extent necessary to permit any remaining portion of the
covenants to be enforced.
(d)Reformation. In the event that the provisions of this Section 5 should ever
be deemed to exceed the time or geographic limitations, or scope of this
covenant, permitted by applicable law, then such provisions shall be reformed to
the maximum time or geographic limitations, as the case may be, permitted by
applicable laws.
6.Special Limitations on Benefit Payments. The following special provisions
shall govern the commencement date of the payments and benefits to which a
Participant may become entitled under the Plan:
(a)Notwithstanding any provision in this Plan to the contrary (other than
Section 6(b) below), no payment or benefit under the Plan which constitutes an
item of deferred compensation under Section 409A of the Code and becomes payable
by reason of the Participant’s Separation from Service will be made to such
Participant prior to the earlier of (i) the first day following the six
(6)-month anniversary of the date of Separation of Service or (ii) the date of
the Participant’s death, if the Participant is deemed at the time of such
Separation from Service to be a Specified Employee and such delayed commencement
is otherwise required in order to avoid a prohibited distribution under Code
Section 409A(a)(2). Upon the expiration of the applicable deferral period, all
payments, benefits and reimbursements deferred pursuant to this Section 6(a)
(whether they would have otherwise been payable in a single sum or in
installments in the absence of such deferral) shall be paid or provided to the
Participant in a lump sum on the date that is six (6) months and one (1) day
after the date of his or her Separation from Service or, if earlier, the first
day of the month immediately following the date the Company receives proof of
his or her death. Any remaining payments or benefits due under the Plan will be
paid in accordance with the normal payment dates specified herein.
(b)Notwithstanding Section 6(a) above, the following provisions shall also be
applicable to a Participant who is a Specified Employee at the time of his or
her Separation of Service:
(i)Any payments or benefits under the Plan which become due and payable to such
Participant during the period beginning with the date of his or her Separation
from Service and ending on March 15 of the following calendar year shall not be
subject to the six (6)-month holdback under Subsection 6.A and shall accordingly
be paid as and when they become due and payable under the Plan.
(ii)The remaining portion of the payments and benefits to which the Participant
becomes entitled under the Plan, to the extent they do not in the aggregate
exceed the dollar limit described below and are otherwise scheduled to be paid
no later than the last day of the second calendar year following the calendar
year in which the Participant’s Separation from Service occurs, shall not be
subject to any deferred commencement date under Section 6(a) and shall be paid
to the Participant as they become due and payable under the Plan. For purposes
of this subparagraph (ii), the applicable dollar limitation will be equal to two
times the lesser of (i) the Participant’s annualized compensation (based on his
or her annual rate of pay for the calendar year preceding the calendar year of
his or her Separation from Service, adjusted to reflect any increase during that
calendar year which was expected to continue indefinitely had such Separation
from Service not occurred) or (ii) the compensation limit under
Section 401(a)(17) of the Code as in effect in the year of such Separation from
Service. To

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the extent the portion of the severance payments and benefits to which the
Participant would otherwise be entitled under the Plan during the deferral
period under Section 6(a) exceeds the foregoing dollar limitation and the amount
payable pursuant to subparagraph (i) above, such excess shall be paid in a lump
sum upon the expiration of that deferral period, in accordance with the payment
delay provisions of Section 6(a), and the remaining severance payments and
benefits (if any) shall be paid in accordance with the normal payment dates
specified for them herein.
(c)The foregoing provisions are intended to be in compliance with or exempt from
the requirements of Section 409A so that none of the severance payments and
benefits to be provided hereunder will be subject to the additional tax imposed
under Section 409A, and any ambiguities herein will be interpreted in accordance
with such intent.
7.Employment Status; Withholding
(a)Employment Status. This Plan does not constitute a contract of employment or
impose on the Participant or the Company any obligation to retain the
Participant as an Employee, to change the status of the Participant’s
employment, or to change the Company’s policies regarding termination of
employment. The Participant’s employment is and shall continue to be at-will, as
defined under applicable law. If the Participant’s employment with the Company
or a successor entity terminates for any reason, the Participant shall not be
entitled to any payments, benefits, damages, awards or compensation other than
as provided by this Plan or available in accordance with the Company’s
established employee plans and practices or other agreements with the Company at
the time of termination.
(b)Taxation of Plan Payments. All amounts paid pursuant to this Plan shall be
subject to all applicable payroll and withholding taxes.
8.Arbitration. Any dispute or controversy that shall arise out of the terms and
conditions of the Plan and that cannot be resolved within thirty (30) days of
the dispute or controversy through good-faith negotiation or non-binding
mediation between the Participant and the Company, shall be subject to binding
arbitration in Santa Clara, California before the American Arbitration
Association under its National Rules for the Resolution of Employment Disputes,
supplemented by the California Rules of Civil Procedure. The Company and the
Participant shall each bear their own respective costs and attorneys’ fees
incurred in connection with the arbitration; and the Company shall pay the
arbitrator’s fees, unless law applicable at the time of the arbitration hearing
requires otherwise. The arbitrator shall issue a written decision that sets
forth the essential findings of fact and conclusions of law on which the award
is based. The arbitrator’s decision shall be final and binding to the fullest
extent permitted by law and enforceable by any court having jurisdiction
thereof.
9.Successors to Company and Participants.
(a)Company’s Successors. Any successor to the Company (whether direct or
indirect and whether by purchase, lease, merger, consolidation, liquidation or
otherwise) to all or substantially all of the Company’s business and/or assets
shall assume the obligations under this Plan and agree expressly to perform the
obligations under this Plan by executing a written agreement. For all purposes
under this Plan, the term “Company” shall include any successor to the Company’s
business and/or assets which executes and delivers the assumption agreement
described in this subsection or which becomes bound by the terms of this Plan by
operation of law.
(b)Participant’s Successors. All rights of the Participant hereunder shall inure
to the benefit of, and be enforceable by, the Participant’s personal or legal
representatives, executors, administrators, successors, heirs, devisees and
legatees.
10.Duration, Amendment and Termination
(a)Duration. The initial term of this Plan shall be three (3) years from the
Original Effective Date. At the end of the initial three (3) year term and any
subsequent annual terms, the Plan shall be automatically extended for a one (1)
year period unless terminated by the Committee prior to the end of such term,
provided that any such termination shall be effective only with respect to
future Plan Years. Participants shall be given notice of a Plan termination
within sixty (60) days of the Committee’s decision. A termination of this Plan
pursuant to the preceding sentence shall be effective for all purposes, except
that such termination shall not affect the right of a Participant whose
Separation from Service occurred prior to the termination date of the Plan to
receive any Severance Payment to which such Participant is then entitled under
the terms of the Plan.
(b)Change of Control. In the event of a Change of Control during the term of the
Plan, the Plan shall automatically terminate immediately following the last
Severance Payment arising from an event described in Sections 4(a) or 4(c) of
the Plan.

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(c)Amendment. The Committee shall have the discretionary authority to amend the
Plan at any time, except that no such amendment shall affect the right of a
Participant whose Separation from Service occurred either (i) prior to the
amendment date of the Plan to receive any Severance Payment to which such
Participant is then entitled under the terms of the Plan or (ii) on or following
a Change of Control, in either case, without the written consent of the
Participant.
(d)No Impermissible Acceleration or Deferral. Any action by the Committee to
terminate the Plan or amend the Plan in accordance with the foregoing provisions
of this Section 10 shall be effected in a manner so as not to result in any
impermissible acceleration or deferral of benefits under Section 409A.
11.Plan Administration
(a)Plan Administrator. The Plan shall be administered by the Committee and the
Committee shall be responsible for the general administration and interpretation
of the Plan and for carrying out its provisions. The Committee shall have such
powers as may be necessary to discharge its duties hereunder.
(b)Procedures. The Committee may adopt such rules, regulations and bylaws and
shall have the discretionary authority to make such decisions as it deems
necessary or desirable for the proper administration of the Plan. Any rule or
decision by the Committee shall be conclusive and binding upon all Participants.
12.Miscellaneous Provisions.
(a)Notices and all other communications contemplated by this Plan shall be in
writing and shall be deemed to have been duly given when personally delivered or
when mailed by U.S. registered or certified mail, return receipt requested and
postage prepaid. In the case of the Participant, mailed notices shall be
addressed to him or her at the home address which he or she most recently
communicated to the Company in writing. In the case of the Company, mailed
notices shall be addressed to the Company’s Vice President, Human Resources, 1
Technology Drive, Milpitas, CA 95035.
(b)The invalidity or unenforceability of any provision of this Plan shall not
affect the validity or enforceability of any other provision hereof, which shall
remain in full force and effect.
(c)The rights of any person to payments or benefits under this Plan shall not be
made subject to option or assignment, either by voluntary or involuntary
assignment or by operation of law, including (without limitation) bankruptcy,
garnishment, attachment or other creditor’s process, and any action in violation
of this subsection shall be void. However, payments and benefits under the Plan
may be reduced or offset by any amount a Participant may owe the Company, to the
extent permitted by applicable law.
(d)Company may assign its rights under this Plan to an affiliate, and an
affiliate may assign its rights under this Plan to another affiliate of the
Company or to the Company; provided, however, that no assignment shall be made
if the net worth of the assignee is less than the net worth of the Company at
the time of assignment; provided, further, that the Company shall guarantee all
benefits payable hereunder. In the case of any such assignment, the term
“Company” when used in this Plan shall mean the corporation that actually
employs the Participant.
(e)To the extent there is any ambiguity as to whether any provision of this Plan
would otherwise contravene one or more requirements or limitations of
Section 409A, such provision shall be interpreted and applied in a manner that
does not result in a violation of the applicable requirements or limitations of
Section 409A.