Freescale Holdings 2006 Management Incentive Plan




 Exhibit 10.7 
 FREESCALE HOLDINGS 
 2006 MANAGEMENT INCENTIVE PLAN 
 1. DEFINED TERMS 
 Exhibit A, which is incorporated by
reference, defines the terms used in the Plan and in the Award Agreements. 
 2. PURPOSE 
 The Plan has been established to advance the interests of the Company and its Affiliates by providing for the grant to Participants of Awards. 

3. ADMINISTRATION 
 The Committee has discretionary
authority, subject only to the express provisions of the Plan and the Award Agreements, to interpret the Plan; determine eligibility for and grant Awards; determine, modify or waive the terms and conditions of any Award; prescribe forms, rules and
procedures; and otherwise do all things necessary to carry out the purposes of the Plan. Except as otherwise provided by the express terms of an Award Agreement, all determinations of the Committee made under the Plan will be conclusive and will
bind all parties. 
 4. LIMITS ON AWARDS UNDER THE PLAN 
 (a) Number of Shares. A maximum of 15,610,400.44 shares of Common Stock of the Company may be delivered in satisfaction of Awards under the Plan. The issuance of Shares, the payment of cash upon the
exercise of an Award, the withholding of Shares in satisfaction of the exercise price of Stock Options or the withholding of Shares in satisfaction of tax withholding requirements shall reduce the total number of Shares available under the Plan, as
applicable. Shares which are subject to Awards (or portion thereof) that are canceled, forfeited or otherwise terminated may be granted again under the Plan. Common Stock issued under awards of an acquired company that are converted, replaced or
adjusted in connection with the acquisition shall not reduce the number of shares available for Awards under the Plan. 
 (b) Type of
Shares. Common Stock delivered under the Plan may be authorized but unissued Common Stock or previously issued Common Stock acquired by the Company or any of its Affiliates and may include fractional shares of Common Stock. 
 5. ELIGIBILITY AND PARTICIPATION 
 The Committee will
select Participants from among those key Employees and directors of the Company or its Affiliates who, in the opinion of the Committee, are in a position to make a significant contribution to the success of the Company and its Affiliates.









 6. RULES APPLICABLE TO STOCK OPTIONS 
 (a) General 
 (1) Stock Option Provisions. The Committee will determine the terms
of all Stock Options, subject to the limitations provided herein, and shall furnish to each Participant an Award Agreement setting forth the terms applicable to the Participant’s Stock Option. By entering into an Award Agreement, the
Participant agrees to the terms of the Stock Option and of the Plan, to the extent not inconsistent with the express terms of the Award Agreement. Notwithstanding any provision of this Plan to the contrary, awards of an acquired company that are
converted, replaced or adjusted in connection with the acquisition may contain terms and conditions that are inconsistent with the terms and conditions specified herein, as determined by the Committee. 
 (2) Transferability. Except as otherwise provided in the Investors Agreement or as the Committee otherwise expressly provides, Stock
Options may not be transferred other than by will or by the laws of descent and distribution, and during a Participant’s lifetime, except as the Committee otherwise expressly provides, may be exercised only by the Participant. 
 (3) Vesting, Etc. The Committee may determine the time or times at which a Stock Option will vest or become exercisable and the terms on
which a Stock Option requiring exercise will remain exercisable. Without limiting the foregoing, the Committee may at any time accelerate the vesting or exercisability of a Stock Option, regardless of any adverse or potentially adverse tax
consequences resulting from such acceleration. Unless the Committee expressly provides otherwise, however, the following rules will apply if a Participant’s Employment ceases: Immediately upon the cessation of Employment any Stock Option will
cease to be exercisable and will terminate, except that: 
 (A) subject to (B) and (C) below, all Stock Options held
by the Participant or the Participant’s permitted transferees, if any, immediately prior to the cessation of the Participant’s Employment, to the extent then exercisable, will remain exercisable for the shorter of (i) a period of 90
days or (ii) the period ending on the latest date on which such Stock Option could have been exercised without regard to this Section 6(a)(3), and will thereupon terminate; 
 (B) all Stock Options held by a Participant or the Participant’s permitted transferees, if any, immediately prior to the
Participant’s death or Disability, to the extent then exercisable, will remain exercisable for the shorter of (i) the one year period ending with the first anniversary of the Participant’s death or Disability or (ii) the period
ending on the latest date on which such Stock Options could have been exercised without regard to this Section 6(a)(3), and will thereupon terminate; and 
 (C) all Stock Options held by a Participant or the Participant’s permitted transferees, if any, immediately prior to the cessation of
the Participant’s Employment will immediately terminate upon such cessation if such cessation of Employment was for Cause. 
 (4)
Taxes. The Committee will make such provision for the withholding of taxes as it deems necessary. The Committee may, but need not, hold back shares of Common Stock from a Stock Option or permit a Participant to tender previously owned
shares of Common Stock in satisfaction of tax withholding requirements (but not in excess of the applicable minimum statutory withholding rate). 
  

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 (5) Dividend Equivalents, Etc. To the extent consistent with Section 409A of the Code,
the Committee may in its sole discretion provide for the payment of amounts in cash, or for other adjustments to a Stock Option, upon an Adjustment Event, with respect to Common Stock subject to a Stock Option. 
 (6) Rights Limited. Nothing in the Plan will be construed as giving any person the right to continued Employment with the Company or its
Affiliates, or any rights as a stockholder except as to shares of Common Stock actually issued under the Plan. 
 (7) Investors
Agreement. Unless otherwise specifically provided, all Stock Options issued under the Plan and all Common Stock issued thereunder will be subject to the Investors Agreement. 
 (b) Exercise 
 (1) Time
And Manner Of Exercise. Unless the Committee expressly provides otherwise, a Stock Option permitting exercise by the holder will not be deemed to have been exercised until the Committee receives a notice of exercise (in form acceptable to
the Committee) signed by the appropriate person and accompanied by any payment required under the Stock Option. If the Stock Option is exercised by any person other than the Participant, the Committee may require satisfactory evidence that the
person exercising the Stock Option has the right to do so. 
 (2) Exercise Price. The Committee will determine the exercise
price, if any, of each Stock Option requiring exercise. Unless the Committee determines otherwise, and in all events in the case of a Stock Option (except as otherwise permitted pursuant to Section 6(a)(5) or Section 7(b)(1) hereof), the
exercise price of a Stock Option will not be less than the Fair Market Value of the Common Stock subject to the Stock Option, determined as of the date of grant. 
 (3) Payment Of Exercise Price. Where the exercise of a Stock Option is to be accompanied by payment, the Committee may determine the required or permitted forms of payment, subject to the following:
(a) all payments will be by cash or check acceptable to the Committee, or (b) if so permitted by the Committee, (i) through the delivery of shares of Common Stock that have a Fair Market Value equal to the exercise price, except where
payment by delivery of shares of Common Stock would adversely affect the Company’s results of operations under Generally Accepted Accounting Principles or where payment by delivery of shares of Common Stock outstanding for less than six months
would require application of securities laws relating to profit realized on such shares of Common Stock, (ii) where permitted by law, by delivery to the Company of a promissory note of the person exercising the Stock Option, payable on such
terms as are specified by the Committee, (iii) at such time, if any, as the Common Stock is publicly traded, through a broker-assisted exercise program acceptable to the Committee, (iv) by other means acceptable to the Committee, or
(v) by means of withholding of shares of Common Stock, with an aggregate Fair Market Value equal to (A) the aggregate exercise price and (B) unless the Company is precluded or restricted from doing so under debt covenants, minimum
statutory withholding 

  

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taxes with respect to such exercise, or (vi) by any combination of the foregoing permissible forms of payment. The delivery of shares of Common Stock in
payment of the exercise price under clause (b)(i) above may be accomplished either by actual delivery or by constructive delivery through attestation of ownership, subject to such rules as the Committee may prescribe. 
 7. EFFECT OF CERTAIN TRANSACTIONS 
 (a) Change
Of Control Except as otherwise provided in an Award Agreement: In the event of a Change of Control in which there is an acquiring or surviving entity, the Committee may, unless the Committee determines that doing so is inappropriate or
unfeasible, provide for the continuation or assumption of some or all outstanding Awards, or for the grant of new awards in substitution therefor, by the acquiror or survivor or an affiliate of the acquiror or survivor, in each case on such terms
and subject to such conditions as preserve the intrinsic value of the Award in the Committee’s good faith determination. In the event of a Change of Control (whether or not there is an acquiring or surviving entity) in which there is no
assumption or substitution as to some or all outstanding Awards, the Committee shall preserve the intrinsic value of the Awards, provide for treating as satisfied any time-based vesting condition on any such Award or for the accelerated delivery of
shares of Common Stock issuable under each such Award, in each case on a basis that gives the holder of the Award a reasonable opportunity, as determined by the Committee, following exercise of the Award or the issuance of the shares, as the case
may be, to participate as a stockholder in the Change of Control. Except as otherwise provided in an Award Agreement, each Award (unless assumed pursuant to the first sentence of this Section 7(a)), will terminate upon consummation of the
Change of Control. 
 (b) Changes In, Distributions With Respect To And Redemptions Of Common Stock 
 (1) Basic Adjustment Provisions. In the event of any stock dividend or other similar distribution (whether in the form of stock or other
securities or other property), stock split or combination of shares (including a reverse stock split), recapitalization, conversion, reorganization, consolidation, split-up, spin-off, combination, merger, exchange of stock, redemption or repurchase
of all or part of the shares of any class of stock or any change in the capital structure of the Company or an Affiliate or other transaction or event (other than those described in Section 7(a)), the Committee will, as appropriate in order to
prevent enlargement or dilution of benefits intended to be made available under the Plan, make adjustments to the maximum number of shares of Common Stock that may be delivered under the Plan under Section 4(a) and will also make appropriate
adjustments to the number and kind of shares of stock, securities or other property (including cash) subject to Awards then outstanding or subsequently granted, any exercise prices relating to Awards and any other provision of Awards affected by
such change. 
 (2) Certain Other Adjustments. The Committee will also make adjustments of the type described in paragraph
(1) above to take into account distributions to stockholders other than those provided for in Section 7(a) and 7(b)(1), or any other event, if the Committee determines that adjustments are appropriate to avoid distortion in the operation
of the Plan and to preserve the value of Awards made hereunder. 
  

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 (3) Continuing Application of Plan Terms. References in the Plan to shares of Common Stock
will be construed to include any stock or securities resulting from an adjustment pursuant to this Section 7. 
 8. OTHER STOCK BASED AWARDS

 The Committee, in its sole discretion, may grant the right to purchase Shares, Awards of Shares, Awards of restricted Shares, Awards of
phantom stock units and other Awards that are valued in whole or in part by reference to, or are otherwise based on the Fair Market Value of, Shares (“Other Stock-Based Awards”). Such Other Stock-Based Awards shall be in such form,
and dependent on such conditions, as the Committee shall determine, including, without limitation, the right to receive one or more Shares (or the equivalent cash value of such Shares) upon the completion of a specified period of service, the
occurrence of an event and/or the attainment of performance objectives. Other Stock-Based Awards may be granted alone or in addition to any other Awards granted under the Plan. Subject to the provisions of the Plan, the Committee shall determine:
(a) the number of Shares to be awarded under (or otherwise related to) such Other Stock-Based Awards; (b) whether such Other Stock-Based Awards shall be settled in cash, Shares or a combination of cash and Shares; and (c) all other
terms and conditions of such Other Stock-Based Awards (including, without limitation, the vesting provisions thereof, provisions ensuring that all Shares so awarded and issued shall be fully paid and non-assessable and whether dividend equivalent
rights shall be attached). 
 9. LEGAL CONDITIONS ON DELIVERY OF COMMON STOCK 
 The Company shall, prior to delivering shares of Common Stock pursuant to the Plan or removing any restriction from shares of Common Stock previously
delivered under the Plan, that (a) all legal matters in connection with the issuance and delivery of such shares have been addressed and resolved, and (b) if the outstanding Common Stock is at the time of delivery listed on any stock
exchange or national market system, the shares to be delivered have been listed or authorized to be listed on such exchange or system upon official notice of issuance. The Company and its Affiliates will be obligated to deliver any shares of Common
Stock pursuant to the Plan or to remove any restriction from shares of Common Stock previously delivered under the Plan upon satisfaction or waiver of the conditions set forth in the preceding sentence and all other conditions of the Award
Agreement. If the sale of Common Stock has not been registered under the Securities Act of 1933, as amended, the Company may require, as a condition to exercise of the Award, such representations or agreements as counsel for the Company may in good
faith recommend to avoid violation of such Act. The Company may require that certificates evidencing Common Stock issued under the Plan bear an appropriate legend reflecting any restriction on transfer applicable to such Common Stock, and the
Company may hold the certificates pending lapse of the applicable restrictions. 
 10. AMENDMENT AND TERMINATION 
 The Committee may at any time or times amend the Plan or any outstanding Award and may at any time terminate the Plan as to any future grants of Awards;
provided, that the Committee may not, without the Participant’s consent, amend or terminate the terms of an Award or the Plan so as to affect adversely the Participants’ or a Participant’s rights under the Investors Agreement, an


  

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Award or the Plan. Any amendments to the Plan shall be conditioned upon stockholder approval only to the extent, if any, such approval is required by
applicable law (including the Code), as determined by the Committee. 
 11. WAIVER OF JURY TRIAL 
 By accepting an Award under the Plan, each Participant waives any right to a trial by jury in any action, proceeding or counterclaim concerning any rights
under the Plan and any Award, or under any amendment, waiver, consent, instrument, document or other agreement delivered or which in the future may be delivered in connection. therewith, and agrees that any such action, proceedings or counterclaim
shall be tried before a court and not before a jury. By accepting an Award under the Plan, each Participant certifies that no officer, representative or attorney of the Company or any Affiliate has represented, expressly or otherwise, that the
Company would not, in the event of any action, proceeding or counterclaim, seek to enforce the foregoing waivers. 
 12. ESTABLISHMENT OF SUB-PLANS

 The Board may from time to time establish one or more sub-plans under the Plan for purposes of satisfying applicable blue sky,
securities or tax laws of various jurisdictions. The Board shall establish such sub-plans by adopting supplements to the Plan setting forth (i) such limitations on the Committee’s discretion under the Plan as the Board deems necessary or
desirable and (ii) such additional terms and conditions not otherwise inconsistent with the Plan as the Board shall deem necessary or desirable. All supplements adopted by the Board shall be deemed to be part of the Plan, but each supplement
shall apply only to Participants within the affected jurisdiction and the Company shall not be required to provide copies of any supplement to Participants in any jurisdiction that is not affected. 
 13. SECTION 409A 
 It is intended that the terms of
this Plan comply with Section 409A of the Code. If it is determined that the terms of this Plan have been structured in a manner that would result in adverse tax treatment under Section 409A of the Code, the parties agree to cooperate in
taking all reasonable measures to restructure the arrangement to minimize or avoid such adverse tax treatment without materially impairing Participant’s economic rights. 
 14. GOVERNING LAW 
 Except as otherwise provided by the express terms of an Award Agreement or under a
sub-plan described in Section 12, the provisions of the Plan and of Awards under the Plan shall be governed by and interpreted in accordance with the laws of the State of Delaware. 
  

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 EXHIBIT A 
 Definitions of Terms 
 The following terms, when used in the Plan, will have the meanings and
be subject to the provisions set forth below: 
 “Affiliate”: Any corporation or other entity that is an
“Affiliate” of the Company within the meaning of the Investors Agreement. 
 “Adjustment Event”: Either (i) a
cash dividend with respect to shares of Common Stock paid to all or substantially all holders of shares of Common Stock, other than cash dividends in respect of shares of Common Stock declared by the Board as part of a regular dividend payment
practice or stated cash dividend policy of the Company following an IPO, or (ii) a substantially pro rata redemption or substantially pro rata repurchase by the Company, of all or part of any class of stock of the Company. 
 “Award”: any Stock Option or Other Stock-Based Award granted pursuant to the Plan. 
 “Award Agreement”: A written agreement between the Company and the Participant evidencing an Award, which may, but need not, be executed
or acknowledged by a Participant. 
 “Board”: The Board of Directors of Freescale Holdings. 
 “Cause”: “Cause” as defined in the Investors Agreement. 
 “Change of Control”: Any of the following: (i) a Change of Control within the meaning of the Investors Agreement;
(ii) directly or indirectly a sale, transfer or other conveyance of all or substantially all of the assets of Freescale Semiconductor, Inc. (“Freescale”), on a consolidated basis, to any “person” or “group” (as
such terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable), as an entirety or substantially as an entirety in one transaction or series of related transactions; (iii) any “person” or
“group” (as such terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable), other than one or more Qualified Institutional Investors, is or becomes the “beneficial owner” (as that
term is used in Rules 13d-3 and 13d-5 under the Exchange Act, whether or not applicable), directly or indirectly, of more than 50% of the total voting power of all Voting Stock then outstanding of Freescale, provided that for so long as (x) the
Partnership and its subsidiaries own more than 50% of the total voting power of all Voting Stock of Freescale and (y) one or more Qualified Institutional Investors own more than 50% of the total voting power of all Voting Stock of the general
partner of the Partnership, such Qualified Institutional Investors will be deemed to beneficially own the Freescale Voting Stock owned by the Partnership and its subsidiaries; or (iv) during any period of 24-consecutive months, individuals who
at the beginning of such period constituted the board of directors of Freescale (together with any new directors whose election by such board of directors or whose nomination for election by the stockholders of Freescale was approved by a vote of a
majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the board of directors
of Freescale then in office. 
  

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 “Code”: The U.S. Internal Revenue Code of 1986 as from time to time amended and in
effect, or any successor statute as from time to time in effect. 
 “Committee”: The Board or, if one or more has been
appointed, a committee of the Board. The Committee may delegate ministerial tasks to such persons as it deems appropriate. 
 “Common
Stock”: Common shares of the Company, par value $.01 per share. 
 “Company”: Freescale Holdings (Bermuda) I, Ltd.,
a Bermuda limited company. 
 “Disability”: “Disability” as defined in the Investors Agreement. 
 “Employee”: Any person who is employed by the Company or an Affiliate. 
 “Employment”: A Participant’s employment or other service relationship with the Company and its Affiliates. Unless the Committee
provides otherwise: A Participant who receives an Award in his or her capacity as an Employee will be deemed to cease Employment when the employee-employer relationship with the Company and its Affiliates ceases. A Participant who receives an Award
in any other capacity will be deemed to continue Employment so long as the Participant is providing services in such capacity. If a Participant’s relationship is with an Affiliate and that entity ceases to be an Affiliate, the Participant will
be deemed to cease Employment when the entity ceases to be an Affiliate unless the Participant transfers Employment to the Company or its remaining Affiliates. 
 “Exchange Act”: the Securities Exchange Act of 1934, as amended. 
 “Fair Market
Value”: “Fair Market Value” as defined in the Investors Agreement 
 “Good Reason”: “Good
Reason” as defined in the Investors Agreement. 
 “Investors Agreement”: Investors Agreement by and among Freescale
Holdings L.P., Freescale Holdings (Bermuda) I, Ltd., Freescale Holdings (Bermuda) II, Ltd., Freescale Holdings (Bermuda) III, Ltd., Freescale Acquisition Holdings Corp., Freescale Holdings (Bermuda) IV, Ltd., Freescale Acquisition Corporation and
Certain Freescale Holdings L.P. Investors and certain stockholders of Freescale Holdings (Bermuda) I, Ltd. dated as of December 1, 2006. 
 “Other Stock-Based Award”: any award granted under Section 8 of the Plan. 
 “Participant”: A
person who is granted an Award under the Plan. 
 “Partnership”: Freescale Holdings L.P., a Cayman Islands exempted limited
partnership, together with any successor thereto. 
 “Plan”: Freescale Holdings 2006 Management Incentive Plan as from time
to time amended and in effect. 
 “Qualified Institutional Investors”: “Qualified Institutional Investors” as
defined in the Investors Agreement. 
  

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 “Restrictive Covenants”: “Restrictive Covenants” as defined in the Investors
Agreement. 
 “Retirement”: the Participant’s voluntary termination of Employment other than for Cause after the date
on which the Participant has reached the age of 55 and has a total of at least five years combined and continuous employment with the Company, taking into account the Participant’s continuous period of service with Freescale Semiconductor, Inc.
and Motorola prior to the consummation of the transactions contemplated by the Merger Agreement (as defined in the Investors Agreement). 
 “Severance Period”: “Severance Period” as defined in the Investors Agreement. 
 “Shares”
Common shares of the Company, par value $.01 per share. 
 “Stock Option”: An option entitling the recipient to acquire
shares of Common Stock upon payment of the exercise price. 
 “Voting Stock”: all classes of capital stock or shares then
outstanding and normally entitled to vote in elections of directors. 
  

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