Exhibit 10.4

 

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ATMEL CORPORATION

 

2011 LONG-TERM PERFORMANCE-BASED INCENTIVE PLAN

 

1.               General.  This 2011 Long-Term Performance-Based Incentive Plan
(the “Plan”) will be administered under the Atmel Corporation (“Atmel” or the
“Company”) 2005 Stock Plan, as amended, by the Company’s Board of Directors or
by a Committee of the Company’s Board of Directors in accordance with the 2005
Stock Plan (the “Administrator”).

 

1.1.           The Plan contemplates the issuance by the Administrator of
restricted stock units to Participants (as defined) designated under this Plan. 
Restricted stock units may be Credited (as defined), subject to additional time
based vesting that may be applicable, upon achievement of specified Performance
Metrics (as defined) during the four Performance Periods (as defined), as
applicable, and as referred to in the Plan and attached Schedules.

 

1.2.           The Plan is intended to attract, retain and motivate key Company
Service Providers (as defined) with the purpose of incentivizing those Service
Providers to lead the Company to revenue growth that, on a relative basis over
the prescribed Performance Period (as defined), equals or exceeds revenue growth
of designated technology groups, while, at the same time, maintaining a level of
profitability that the Administrator believes appropriate for the Company in
light of the Company’s recent financial and operating performance.

 

1.3.           Definitions.

 

“2011 Annual Performance Shares” means the maximum number of restricted stock
units, as reflected on Exhibit A attached to the Award Agreement delivered to
such Participant, that may be Credited to a Participant upon the Company
satisfying applicable Performance Metrics with respect to the 2011 Performance
Period or satisfying the applicable Performance Metrics with respect to the True
Up Performance Period.

 

“2012 Annual Performance Shares” means the maximum number of restricted stock
units, as reflected on Exhibit A attached to the Award Agreement delivered to
such Participant, that may be Credited to a Participant upon the Company
satisfying applicable Performance Metrics with respect to the 2012 Performance
Period or satisfying the applicable Performance Metrics with respect to the True
Up Performance Period.

 

“2013 Annual Performance Shares” means the maximum number of restricted stock
units, as reflected on Exhibit A attached to the Award Agreement delivered to
such Participant, that may be Credited to a Participant upon the Company
satisfying applicable Performance Metrics with respect to the 2013 Performance
Period or satisfying the applicable Performance Metrics with respect to the True
Up Performance Period.

 

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 “Annual Performance Shares” means, as the context requires, any of the 2011
Annual Performance Shares, 2012 Annual Performance Shares or 2013 Annual
Performance Shares, individually or collectively.

 

“Award Agreement” means an agreement delivered to a Participant pursuant to this
Plan, which sets forth the award of Annual Performance Shares and True Up
Performance Shares (as defined) to the Participant, including any
country-specific appendix with terms for non-U.S. employees.

 

“Award Date” means the effective date of the Award Agreement.

 

“CG MCU Peer Adjusted Revenue,” means, with respect to any company (including
the Company), the CG MCU Peer Revenue (as defined) of that company, as adjusted,
in the discretion of the Administrator, to exclude or include as prescribed by
this Plan, for the periods referred to in the Plan, the effects of any mergers,
acquisitions, divestitures, spin offs, consolidations or similar extraordinary
transactions (each transaction so excluded or included, as applicable, being
referred to as an “Event” for purposes of this definition). If no adjustment is
made with respect to a year within the Performance Period for a company, then,
in such event, the CG MCU Peer Adjusted Revenue for that company shall mean, and
equal, the company’s CG MCU Peer Revenue for that Performance Period.
Adjustments made in accordance with this definition shall be made effective as
of January 1 of the applicable Performance Period; the Event for which
adjustments are intended to be made and that result in (x) additional revenue
for a company shall be included, as of the first January 1 of the applicable
Performance Period, and (y) a reduction of revenue for a company shall be
excluded, as of the first January 1 of the Performance Period.   No adjustments
shall be undertaken in connection with this definition if the Administrator is
not provided with reasonably reliable and credible supporting documentation to
enable the Administrator to effect such adjustments.

 

“CG MCU Peer Companies” means the companies set forth in Exhibit C annexed to
this Plan, with such changes therein as the Administrator may approve in
accordance with Section 7.3 of this Plan.

 

“CG MCU Peer Revenue,” as determined by the Administrator under this Plan,
means, with respect to any company (including the Company), the CG Semiconductor
Peer Revenue of that company, for the applicable period, that is directly
related to, or generated by, its microcontroller business (excluding revenues
derived from a company’s “smartcard” business segment, but including revenues
related to, or derived from, the Company’s fine line metal technologies to the
extent such fine line metal technologies are integrated with microcontroller
products and such integrated products are sold on a stand-alone basis by the
Company), as derived, to the extent possible, from (x) that company’s
consolidated financial statements included within its Annual Report on Form 10-K
(or, if such company’s fiscal year does not end on December 31, its Annual
Report on Form 10-K and Quarterly Reports on Form 10-Q for the applicable period
concerned), as filed with the U.S. Securities and Exchange Commission, and (y)
such other publicly available information, including, without limitation,
industry reports and analyses from iSuppli, Gartner or similar research
organizations, that is deemed reliable by the Administrator, in its discretion.

 

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“CG Semiconductor Peer Adjusted Revenue” means, with respect to any company
(including the Company), the CG Semiconductor Peer Revenue (as defined) of that
company, as adjusted, in the discretion of the Administrator, to exclude or
include as prescribed by this Plan, for the periods referred to in the Plan, the
effects of any mergers, acquisitions, divestitures, spin offs, consolidations or
similar extraordinary transactions (each transaction so excluded or included, as
applicable, being referred to as an “Event” for purposes of this definition). If
no adjustment is made with respect to a year within the Performance Period for a
company, then, in such event, the CG Semiconductor Peer Adjusted Revenue for
that company shall mean, and equal, the company’s CG Semiconductor Peer Revenue
for that Performance Period. Adjustments made in accordance with this definition
shall be made effective as of January 1 of the applicable Performance Period;
the Event for which adjustments are intended to be made and that result in (x)
additional revenue for a company shall be included, as of the first January 1 of
the applicable Performance Period, and (y) a reduction of revenue for a company
shall be excluded, as of the first January 1 of the Performance Period.   No
adjustments shall be undertaken in connection with this definition if the
Administrator is not provided with reasonably reliable and credible supporting
documentation to enable the Administrator to effect such adjustments.

 

“CG Semiconductor Peer Companies” means the companies set forth in Exhibit B
annexed to this Plan, with such changes therein as the Administrator may approve
in accordance with Section 7.3 of this Plan.

 

“CG Semiconductor Peer Revenue” means, with respect to any company (including
the Company), the revenue (to reflect a measure that is comparable to the
Company’s “Net Revenue” as reported in its financial statements) of that company
for the applicable period concerned, as reflected in that company’s consolidated
financial statements included within its Annual Report on Form 10-K (or, if such
company’s fiscal year does not end on December 31, its Annual Report on Form
10-K and Quarterly Reports on Form 10-Q for the applicable period concerned), as
filed with the Securities and Exchange Commission.

 

“Change of Control” means, with respect to a Participant who is a: (i) Covered
Participant, a “change of control” as defined in the Atmel Change of Control and
Severance Plan, or, if the Covered Participant has an employment agreement with
the Company, as defined in that Covered Participant’s employment agreement, or
such other definition of “change of control” as may be determined by the
Administrator, in its sole and absolute discretion, and set forth in the
applicable Award Agreement and (ii)  Non-Covered Participant, the definition of
“change of control” as may be determined by the Administrator, in its sole and
absolute discretion, and set forth in the applicable Award Agreement.

 

“Code” means the Internal Revenue Code of 1986, as amended.  Reference to a
specific section of the Code or regulation thereunder shall include such section
or regulation, any valid regulation promulgated under such section, and any
comparable provision of any future legislation or regulation amending,
supplementing or superseding such section or regulation.

 

“Covered Participant” means a Participant or New Participant (as defined) who:
(i) has an employment agreement with the Company that provides for change of
control severance

 

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benefits, (ii) is a participant in the Atmel Change of Control and Severance
Plan, and/or (iii) any other Participant or New Participant designated as a
Covered Participant by the Administrator.

 

“Credited” means all, or any portion of, the Annual Performance Shares and True
Up Performance Shares for which the applicable Performance Metrics, as set forth
on the Schedules hereto, have been determined by the Administrator to have been
satisfied in accordance with the Plan.

 

“Disability” means, with respect to a Participant who is a: (i) Covered
Participant, “disability” as defined in the Atmel Change of Control and
Severance Plan, or, if the Covered Participant has an employment agreement with
the Company, as defined in that Covered Participant’s employment agreement, or
such other definition of “disability” as may be determined by the Administrator,
in its sole and absolute discretion, and set forth in the applicable Award
Agreement and (ii) Non-Covered Participant, the definition of “disability” as
may be determined by the Administrator, in its sole and absolute discretion, and
set forth in the applicable Award Agreement.

 

“Final Determination” means the date on which the Administrator makes the
determinations required by Section 4.

 

“Initial Participation Date” means June 1, 2011.

 

“New Participant” means any Service Provider who becomes a Participant after the
Initial Participation Date, whether through promotion, being a newly hired
employee or otherwise.

 

“Non-Covered Participant” means any Participant or New Participant other than a
Covered Participant.

 

“Participant” means each Service Provider (including, in the event of the death
or Disability (as defined) of the Service Provider, the designated beneficiary
(provided such beneficiary has been designated prior to the Participant’s death
in a form and manner acceptable to the Administrator, pursuant to Section
5(b)(viii) of the 2005 Stock Plan), heirs, estate or personal representative of
the Service Provider) who is (i) designated by the Administrator during the
Performance Period as a participant entitled to receive awards under this Plan
and (ii) holds the title of “director” (or equivalent pay-grade) or higher
within the Company or at one of its Subsidiaries (as defined in the 2005 Stock
Plan) or its Parent (as defined in the 2005 Stock Plan) during the Performance
Period, including all executive officers of the Company, or is identified by the
Administrator as a key individual technical contributor for the Company or at
one of its Subsidiaries or its Parent.  In the event that the grade levels or
titling nomenclature of the Company or one of its Subsidiaries or its Parent are
materially modified during the Performance Period or equivalent, or different,
nomenclature is used by the Company or one of its Subsidiaries or its Parent
outside of the United States, the Administrator shall have the discretion to
modify clause (ii) to ensure that the intent and purposes of the qualifications
set forth in clause (ii) may be realized, notwithstanding any such modification
of grade levels or titling nomenclature or other nomenclature practices outside
of the United States.  Unless otherwise specified herein, the term “Participant”
shall include New Participants.

 

“Performance Metrics” shall have the meanings set forth in the Schedules hereto.

 

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“Performance Period” means, as applicable and as used within the Plan, (i) each
of the calendar years 2011, 2012 and 2013, separately, and (ii) the True Up
Performance Period (as defined).

 

“Performance Schedule” means each of the Schedules containing Performance
Metrics, numbered 3.2.1 to 6.6 attached hereto, which will be delivered to the
Administrator pursuant to Section 3.

 

“Pro Forma Operating Margin” means Pro Forma Operating Profit (as defined)
divided by the Company’s CG Semiconductor Peer Adjusted Revenue.

 

“Pro Forma Operating Profit” means the operating profit of the Company for any
applicable Performance Period as reflected in the Company’s consolidated
financial statements included within its Annual Report on Form 10-K, as adjusted
to exclude (A) the effects of (i) stock compensation expenses incurred, (ii)
expenses related to restructuring activities, (iii) impairment charges and
charges related to grant repayments, (iv) fees and expenses related to mergers,
acquisitions and divestitures and similar transactions outside the ordinary
course of business, including related gains or losses on the sale of assets, (B)
the amount, in excess of $10 million for any calendar year, of legal fees, costs
and expenses incurred in connection with actual or contemplated intellectual
property litigation, and (C) such other charges, expenses or other items,
unanticipated as of the Initial Participation Date, the inclusion of which
would, in the determination of the Administrator, materially modify the
calculation of the Company’s “core” operating profit, as applied across multiple
reporting periods, and, as a result, cause the Participant to be deprived of the
fundamental benefits intended to derive from this “pro forma” definition, in
each case, occurring within the applicable Performance Periods.

 

 “Remaining Annual Performance Shares” has the meaning set forth in Section 3.5
of the Plan.

 

“Service Provider” has the meaning set forth in the 2005 Stock Plan.

 

 “Time Based Shares” mean restricted stock units that have been Credited, so
that no additional Performance Metrics apply, but as to which time based vesting
pursuant to Section 3.6 has, or may, become applicable.

 

“True Up Performance Period” means the cumulative period, beginning with
calendar year 2011 and ending with calendar year 2013, unless such cumulative
period begins later in the case of New Participants and/or ends earlier upon a
Change of Control, or death or Disability as referred to in Section 7.1.

 

“True Up Performance Shares” means the number of restricted stock units, as
reflected on Exhibit A attached to the Award Agreement delivered to such
Participant, that may be Credited to a Participant upon the Company satisfying
applicable Performance Metrics with respect to the True Up Performance Period
(as defined), in the event of a Change of Control occurring prior to December
31, 2013 or upon death or Disability as referred to in Section 7.1.

 

2.               Award Grants.  Each grant of Annual Performance Shares and True
Up Performance Shares to a Participant shall be set forth in an Award Agreement,
which shall set forth the number of

 

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Annual Performance Shares and True Up Performance Shares in an exhibit
substantially in the form of Exhibit A hereto.

 

2.1.           The Administrator shall select each of the Participants and may
add New Participants at any time prior to March 31, 2013, in the Administrator’s
sole discretion as the Administrator deems appropriate.

 

2.2.           No entitlement shall exist to any Credited Annual Performance
Shares or True Up Performance Shares unless, and until, such Credited Annual
Performance Shares or True Up Performance Shares have vested and been released
for delivery pursuant to this Plan, and, in no event, shall any Annual
Performance Shares or True Up Performance Shares, whether Credited or otherwise,
be deemed to constitute any portion of a Participant’s ordinary, base or annual
compensation for any reason.

 

2.3.           The Award Agreement for restricted stock unit grants to
Participants located outside of the U.S. will include a country-specific
appendix with terms and conditions necessary or advisable in light of local tax
and regulatory considerations and may contain, among other things, additional or
varying terms regarding vesting and restrictions on the sale of Credited and/or
vested shares as the Administrator, in its sole discretion, deems appropriate. 
In keeping with the terms of the country-specific appendix, if any Participant
is a citizen or resident of a country other than the one in which he or she is
currently working, is considered a citizen or resident of another country for
local purposes or relocates to another country between the grant date and the
date shares are Credited or vested, the special terms and conditions for such
country will apply to the Participant, to the extent the Administrator
determines that the application of such terms and conditions is necessary or
advisable in light of local tax and regulatory considerations or to facilitate
the administration of the Plan.  Any action taken by the Administrator pursuant
to this Section 2.3 shall not require the consent of the affected Participant.

 

2.4.           The 2012 Annual Performance Shares and the 2013 Annual
Performance Shares are intended to qualify as “performance-based compensation”
under Section 162(m) of the Code.  In granting and administering such 2012
Annual Performance Shares and 2013 Annual Performance Shares, the Administrator,
if it determines to retain such qualification, may establish and
(notwithstanding any contrary provision of the Plan) follow such procedures
determined by the Administrator to be necessary or appropriate to so qualify the
2012 Annual Performance Shares and the 2013 Annual Performance Shares under
Section 162(m) of the Code (for example, but not by way of limitation, in
establishing any exclusions from the definitions of the Performance Metrics for
the 2012 and 2013 Performance Periods).

 

3.               Annual Performance Shares and True Up Performance Share
Determinations.  Annual Performance Shares and True Up Performance Shares shall
be Credited upon determination by the Administrator that the Performance Metrics
applicable to those Annual Performance Shares and True Up Performance Shares
have been satisfied.  The Administrator shall make that determination by
applying the following tests to each Performance Period, subject to the

 

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application of the additional provisions set forth in Section 6 and referred to
in Section 7.1, as applicable, in the sequential order set forth below:

 

3.1.           Preparation of Schedules.  As soon as practicable after December
31 of each year within the Performance Period, commencing December 31, 2011, the
Company shall deliver to the Administrator a completed Performance Schedule to
enable the Administrator to determine whether the Annual Performance Shares for
the relevant Performance Period should be Credited.  The Administrator shall
review and assess the information set forth in each Performance Schedule
delivered to it under this Plan and shall make a determination, on or before
April 30 of the year in which such Performance Schedule is delivered, whether
the applicable Performance Metrics as set forth in the Performance Schedule so
delivered have been satisfied.  To the extent that the Administrator requests
additional information, support or other analysis regarding any of the
information set forth in any Performance Schedule (including appropriate
supporting documentation or analysis with respect to the adjustments requested
to be included within any calculations of CG Semiconductor Peer Adjusted Revenue
or CG MCU Peer Adjusted Revenue), the Company shall ensure that all such
information, support and analysis is promptly provided to the Administrator to
enable the Administrator to make a timely determination.

 

3.2.            2011 Annual Performance Shares.  With respect to the 2011 Annual
Performance Shares:

 

3.2.1.             The Company shall maintain a Pro Forma Operating Margin of at
least 20% (rounded to the nearest whole number) for the full year ending
December 31, 2011 to enable any Participant to qualify for 2011 Annual
Performance Shares pursuant to Section 3.2, subject to Section 3.7.

 

3.2.2.       The Company shall deliver to the Administrator completed Schedules
3.2.1, 3.2.2 and 3.2.3. Based on the rankings set forth in each Schedule, and
assuming that the Company has satisfied the requirements of Section 3.2.1, the
Administrator shall credit to each Participant that percentage of such
Participant’s 2011 Annual Performance Shares as reflected in Column C of
Schedule 3.2.3.

 

3.3.            2012 Annual Performance Shares.  With respect to the 2012 Annual
Performance Shares:

 

3.3.1.       The Company shall maintain a Pro Forma Operating Margin of at least
20% (rounded to the nearest whole number) for the full year ending December 31,
2012 to enable any Participant to qualify for 2012 Annual Performance Shares
pursuant to Section 3.3, subject to Section 3.7.

 

3.3.2.       The Company shall deliver to the Administrator completed Schedules
3.3.1, 3.3.2 and 3.3.3. Based on the rankings set forth in each Schedule, and
assuming that the Company has satisfied the requirements of Section 3.3.1, the
Administrator shall credit to each Participant that percentage of such
Participant’s 2012 Annual Performance Shares as reflected in Column C of
Schedule 3.3.3.

 

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3.4.            2013 Annual Performance Shares.  With respect to the 2013 Annual
Performance Shares:

 

3.4.1.       The Company shall maintain a Pro Forma Operating Margin of at least
20% (rounded to the nearest whole number) for the full year ending December 31,
2013 to enable any Participant to qualify for 2013 Annual Performance Shares
pursuant to Section 3.4, subject to Section 3.7.

 

3.4.2.       The Company shall deliver to the Administrator completed Schedules
3.4.1, 3.4.2 and 3.4.3. Based on the rankings set forth in each Schedule, and
assuming that the Company has satisfied the requirements of Section 3.4.1, the
Administrator shall credit to each Participant that percentage of such
Participant’s 2013 Annual Performance Shares as reflected in Column C of
Schedule 3.4.3.

 

3.5.           True Up Performance Period.  With respect to the True Up
Performance Shares and Annual Performance Shares that have not previously been
Credited to a Participant under any of Sections 3.2, 3.3 or 3.4 (any such Annual
Performance Shares not so Credited being referred to as the “Remaining Annual
Performance Shares”):

 

3.5.1.       To qualify for the True Up Performance Shares and the Remaining
Annual Performance Shares, if any, the Company shall maintain a Pro Forma
Operating Margin of at least 20% (rounded to the nearest whole number) for the
True Up Performance Period, subject to Section 3.7.

 

3.5.2.       The Company shall deliver to the Administrator completed Schedules
3.5.1, 3.5.2 and 3.5.3, in respect of each Participant.  Based on the rankings
set forth in each Schedule, and assuming that the Company has satisfied the
requirements of Section 3.5.1, the Administrator shall credit to each
Participant the Remaining Annual Performance Shares and True Up Performance
Shares, if any, as reflected on Column G of Schedule 3.5.3.

 

3.5.3.       Notwithstanding anything to the contrary herein, Section 3.5.2
shall not apply to any New Participant who is first included within the Plan on
or after July 1, 2011 but prior to July 1, 2012, but this Section 3.5.3 shall
apply instead.  The Company shall deliver to the Administrator completed New
Participant Schedules 3.5.4, 3.5.5 and 3.5.6 in respect of each such New
Participant.  Based on the rankings set forth in each Schedule, and assuming
that the Company has satisfied the requirements of Section 3.5.1, the
Administrator shall credit to each such New Participant the Remaining Annual
Performance Shares and True Up Performance Shares, if any, as reflected on
Column G of Schedule 3.5.6.

 

3.5.4.       Notwithstanding anything to the contrary herein, Section 3.5.2
shall not apply to any New Participant who is first included within the Plan on
or after July 1, 2012, but this Section 3.5.4 shall apply instead.  The Company
shall deliver to the Administrator completed Schedules 3.5.7, 3.5.8 and 3.5.9,
in respect of each such New Participant.  Based on the rankings set forth in
each Schedule, and assuming that the Company has satisfied the requirements of
Section 3.5.1, the Administrator

 

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shall credit to each such New Participant the Remaining Annual Performance
Shares and True Up Performance Shares, if any, as reflected on Column G of
Schedule 3.5.9.

 

3.6.           Conversion of Annual Performance Shares to Time Based Shares. 
Any Annual Performance Shares or True Up Performance Shares that have been
Credited pursuant to Section 3 shall immediately, upon being so Credited,
convert to Time Based Shares, with additional vesting provisions applicable to
those Time Based Shares as set forth in Section 4 of the Plan.

 

3.7.           Adjustment of Pro Forma Operating Margin.  In the event that the
Administrator determines, at any time during the Performance Period, that the
aggregate CG Semiconductor Peer Adjusted Revenue for the CG Semiconductor Peer
Companies has declined from the immediately preceding calendar year to the
calendar year with respect to which such determination is made, then, in such
event, the Administrator shall reduce the Pro Forma Operating Margin
requirements referred to in Sections 3.2.1, 3.3.1, 3.4.1 and 3.5.1, and the
related Schedules annexed hereto, as applicable, consistent with the absolute
decline, if any, in operating margin for the CG Semiconductor Peer Companies as
a group (so that for every 1% decline in the average operating margin of the CG
Semiconductor Peer Companies, as described above, the Pro Forma Operating Margin
requirements referred to in Sections 3.2.1, 3.3.1, 3.4.1 and 3.5.1, and the
related Schedules annexed hereto, as applicable, will be similarly reduced by 1%
to reflect the decline affecting the CG Semiconductor Peer Companies).  Any
reduction of the Pro Forma Operating Margin undertaken in accordance with the
previous sentence for any applicable Performance Period shall also result in a
comparable reduction of the three year Pro Forma Operating Margin for the True
Up Performance Period.

 

4.               Vesting and Payout.  Subject to any vesting and release upon a
Change of Control, the death or Disability of any Participant as may be
applicable in accordance with Sections 6 or 7.1 hereof or pursuant to any
Participant’s employment or other agreement in accordance with Section 7.5
hereof, Annual Performance Shares and True Up Performance Shares, if any,
Credited to any Participant (other than a New Participant, vesting for which
shall be governed by Section 5 below, or a Participant who is a non-U.S.
resident and for whom different terms apply as described in Section 2.3 of the
Plan) shall vest fully and be released for delivery to Participants, subject to
no restrictions on transfer, resale or sale upon a Final Determination; provided
the Participant, in all events, remains a Service Provider of Atmel continuously
from the date he or she first becomes a Participant through the date on which
the Final Determination is made.   The Final Determination shall be made as soon
as administratively practicable following the end of the 2013 Performance Period
but in no event later than June 1, 2014.  Except as otherwise expressly provided
in the Plan, if a Participant ceases to be a Service Provider before the Final
Determination, the Participant shall forfeit permanently all Annual Performance
Shares and True Up Performance Shares, which shall be cancelled without payment
by the Company to the Participant.

 

5.               New Participants.  Annual Performance Shares or True Up
Performance Shares, if any, Credited to New Participants who are first included
in the Plan at any time on or after January 1, 2012 shall not vest, and shall
remain subject to restrictions on transfer, sale or

 

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resale by the New Participant, until the later of the Final Determination Date
and the second anniversary of the Award Date, except in the event that Section 6
may apply upon a Change of Control or the provisions referred to in Sections 2.3
or 7.1 are applicable to that New Participant as reflected in the Award
Agreement for that New Participant.

 

6.               Change of Control.  The Administrator may determine, in its
discretion, to include the Change of Control provisions reflected in Exhibit D
attached hereto in the Award Agreement for any designated Participant.

 

7.               Miscellaneous.

 

7.1.           The Administrator may determine, in its discretion, to include
the provisions related to death and Disability reflected in Exhibit E attached
hereto in the Award Agreement for any designated Participant.

 

7.2.           Unless otherwise stated in the Award Agreement, shares that have
vested and been released for delivery to Participants pursuant to this Plan
shall have no further restrictions on transfer, resale or sale, subject to
applicable securities laws and customary Company policies, including the
Company’s insider trading policy.

 

7.3.           The Administrator will have discretion to modify, suspend or
amend the Plan at any time and from time to time without the consent of any
Participant, including modifications or changes to any of the Performance
Metrics, except that the Administrator may not modify, suspend or amend the Plan
(i) in any manner with respect to any Participant following a Change of Control
(as defined in the Atmel Change of Control and Severance Plan), or (ii) at any
time before a Change of Control, if such modification, suspension or amendment
would result in a loss of any Annual Performance Shares that have been
previously Credited to a Participant or would materially and adversely affect a
Participant’s ability to satisfy the Performance Metrics or a Participant’s
ability to be Credited with Annual Performance Shares, True Up Performance
Shares or Remaining Annual Performance Shares.

 

7.4.           The Administrator shall have the discretion to modify or adjust
each of Exhibits B and C, by removing, adding to, substituting or otherwise
changing, the companies reflected on those Exhibits to ensure that the intent
and purposes of this Plan remain capable of achievement during the Performance
Period; provided, however, that in no event shall any such modifications or
adjustments result in a loss of Annual Performance Shares or True Up Performance
Shares that have, prior to the date of such modification or adjustment, been
Credited to a Participant; and, provided, further, that, in making any such
modifications or adjustments, the Administrator shall exercise its discretion
with the intent of retaining companies on Exhibits B and C that exhibit fiscal,
operational, technological and business characteristics similar, to the extent
practical and appropriate, to the Company.  In the event that the Administrator
undertakes any such modifications or adjustments, it shall adjust the percentage
allocations set forth in Columns 8 and 9 of the Schedules so that any such
modifications or adjustments are generally consistent with the percentage
allocations included within Columns 8 and 9 prior to their implementation and
that no Participant is materially disadvantaged by those

 

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modifications or adjustments. In the event that the fundamental business of any
company included on Exhibit B or C materially and substantially changes, and the
Administrator does not believe that it would be appropriate or reasonable to
retain that company within the companies included within Exhibit B or C, or the
Administrator determines that the Company will not be able, with reasonable
reliability, to determine the CG Semiconductor Peer Adjusted Revenue or CG MCU
Peer Adjusted Revenue for such company, then, in such event, the Administrator
shall have the discretion to remove those companies from Exhibit B or C and
replace those companies so removed with a company or companies that would
otherwise qualify as a CG Semiconductor Peer Company or CG MCU Peer Company
under the criteria used by the Administrator when establishing this Plan so long
as such changes do not materially disadvantage any Participant.

 

7.5.           In the event that any Participant has entered into an employment
agreement with the Company, the terms of which are governed by the internal laws
of the State of California and have been approved by the Board of Directors or
the Compensation Committee of the Board of Directors, then, in such event, the
Administrator shall have the discretion to make changes to that Participant’s
Award Agreement, as appropriate to provide for the accelerated vesting of Annual
Performance Shares, True Up Performance Shares, Remaining Annual Performance
Shares or Time Based Shares if acceleration of equity awards under similar
circumstances has been provided to the Participant under his or her employment
agreement or to reflect such other terms included within that employment
agreement as the Administrator deems advisable.

 

7.6.           While the Plan covers awards over Performance Periods which
include calendar years 2011, 2012 and 2013, the Administrator shall determine
for each calendar year whether any awards shall be Credited and vested in a
manner consistent with the terms hereof, and participation in the Plan in one
year does not entitle any Participant to participation in subsequent financial
years or to any benefits in lieu of awards under the Plan.

 

7.7.           The Plan shall be operated in compliance with Section 409A of the
Code or an exception thereto and each provision of each Award Agreement shall be
interpreted, to the extent possible, to comply with Section 409A or to qualify
for an applicable exception, in each case in accordance with applicable
regulations or other guidance and as determined by the Administrator. The
Participants remain solely responsible for any adverse tax consequences imposed
by Section 409A and in no event will the Company reimburse any Participant for
any tax owed by the Participant. Notwithstanding any contrary provision of the
Plan or otherwise, if the Company determines that as of the date of payment the
Participant is a “specified employee” (as defined under Section 409A of the
Code), and the Participant’s Annual Performance Shares, True Up Performance
Shares or Time Based Shares could be considered deferred compensation subject to
Section 409A of the Code, any shares (or cash or other property, including,
without limitation, shares of the common stock of any successor company in the
event of a Change in Control) payable by reason of the Participant’s separation
from service (as defined in Section 409A of the Code) with the Company for any
reason other than death or “disability” (as defined under Section 409A of the
Code) will not be paid until the date that is six months following the date of
the separation from service (or such earlier time

 

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permitted under Section 409A of the Code without the imposition on the
Participant of any accelerated or additional taxes under Section 409A of the
Code).

 

7.8.           The Plan is subject to Section 16(c) of the 2005 Stock Plan.

 

7.9.           The Administrator reserves the right to impose other requirements
on the Participants’ participation in the Plan, on the restricted stock units
and on any shares of common stock acquired under the Plan, to the extent the
Company determines it is necessary or advisable in light of non United States
tax and regulatory considerations to facilitate the administration of the Plan,
and to require the Participants to sign any additional agreements or
undertakings that may be necessary to accomplish the foregoing.

 

7.10.    The Plan and any award thereunder shall be governed by and construed in
accordance with the internal substantive laws of the State of California,
without regard to the choice of law rules.

 

7.11.    The Company, one of its Subsidiaries or its Parent to whom the
Participant provides services shall have the authority to deduct or withhold,
report or require a Participant to remit to the Company, an amount to satisfy
all U.S. and non-U.S. federal, state and local income, social and payroll taxes
that are required by law to be withheld or legally transferred to the
Participant with respect to any taxable event concerning a Participant arising
in connection with an award under the Plan.

 

7.12.    Nothing in the Plan shall be construed as an employment or professional
services contract or guarantee of continued employment.

 

7.13.    If any provision of this Plan is held invalid or unenforceable, the
invalidity or unenforceability shall not affect the remaining parts of the Plan,
and the Plan shall be enforced and construed as if such provision had not been
included.

 

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