Document:

Exhibit 10.7

Exhibit 10.7

TECUMSEH PRODUCTS COMPANY

OUTSIDE DIRECTORS’ DEFERRED STOCK UNIT PLAN

(As amended effective as of December 14, 2010)

Tecumseh Products Company (the “Company”) established this Outside Directors’ Deferred Stock
Unit Plan effective as of January 1, 2008, to provide an incentive for outside Directors to join
and remain in service on the Company’s Board of Directors so that the Company may benefit from
their counsel and dedication, while rewarding their commitment to the Company with deferred income
based on the stock market performance of the Company’s Class A Common Stock. Under this Plan, each
outside director will receive one-half of his or her annual retainer for serving on the Board of
Directors (and, if applicable, for serving as Lead Director) in cash and one-half in deferred stock
units. The Company, acting through the Board, approved amendments to the Plan on December 14,
2010, with such amendments being effective on this date. This version of the Plan document
incorporates the December 14, 2010 amendments.

	1.	 	DEFINITIONS

As used in this Plan, the following terms have the following respective meanings:

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

“Account” is defined in Section 4.1.

“Award” means an allocation of Stock Units to the Account of an Eligible Director.
References in this Plan to the amount of an award may be either to a dollar amount or to the
number of Stock Units.

“Board” means the Board of Directors of the Company.

“Cash Retainer” means:

(a) for each Plan Year and each person who is an Eligible Director on the first day of
that Plan Year, the amount payable in cash to that Eligible Director for that Plan Year for
serving as a Director of the Company and, if applicable, (i) for serving as the Company’s
Lead Director or (ii) for serving as the Company’s Chairman of the Board of Directors, all
determined as of the first day of the Plan Year under the Company’s policies as in effect on
that day; and

(b) for the Plan Year in which a person first becomes an Eligible Director (unless he
or she becomes an Eligible Director on the first day of the Plan Year), the amount payable
in cash to that Eligible Director for that Plan Year for serving as a Director of the
Company and, if applicable, (i) for serving as the Company’s Lead Director or (ii) for
serving as the Company’s Chairman of the Board of Directors, all determined as of the day
the person becomes an Eligible Director under the Company’s policies as in effect on that
day.

EXAMPLE: If a person first becomes an Eligible Director on July 31 of a Plan Year (that is
assumed, for this example to have commenced on April 30), and if the Company’s policies as
in effect on that day provide for a $40,000 annual cash retainer for outside directors, that
Eligible Director’s Cash Retainer would be $30,000 for that Plan Year.

The Cash Retainer does not include amounts payable for serving on or as chairman of committees of
the Board or for attendance at meetings of the Board or committees or any amounts payable for
reimbursement of expenses.

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

“Committee” means the Compensation Committee of the Board or such other committee as the Board
may subsequently appoint to administer this Plan.

 

 

 

“Company Change in Control,” solely for the purposes of this Plan, means (and is limited to)
any change that qualifies as a change of control event pursuant to Section 409A of the Code,
Treasury Regulation Section 1.409A-3(i)(5), and all subsequent relevant authority, including one or
more of the following events:

(a) a change in the ownership of the Company in compliance with Treasury Regulation
Section 1.409A-3(i)(5)(v) pursuant to which any person or group acquires ownership of stock
of the corporation that, together with stock held by such person or group, constitutes more
than 50% of the total fair market value or total voting power of the stock of such
corporation;

(b) a change in the effective control of the Company pursuant to Treasury Regulation
Section 1.409A-3(i)(5)(vi), pursuant to which either:

(1) any one person, or more than one person acting as a group, acquires (or has
acquired during the twelve-month period ending on the date of the most recent
acquisition by such person or persons) ownership (including acquisition of
beneficial ownership within the meaning of Rule 13d-3 promulgated under the 1934
Act) of stock of the Company possessing 30% or more of the total voting power of the
stock of such corporation; or

(2) a majority of members of the Board is replaced during any twelve-month
period by directors whose appointment or election is not endorsed by a majority of
the members of the Board before the date of the appointment or election; or

(c) a change in the ownership of a substantial portion of the Company’s assets pursuant
to Treasury Regulation Section 1.409A-3(i)(5)(vii) pursuant to which any one person or group
acquires (or has acquired during the twelve-month period ending on the date of the most
recent acquisition by such person or persons) assets from the Company that have a total
gross fair market value (as defined in 1.409A-3(i)(5)(vii)) equal to or more than 40% of the
total gross fair market value of all of the assets of the Company immediately prior to such
acquisition or acquisitions.

For purposes of this definition, the following terms have the following meanings:

(i) “person” means a person as defined in Section 3(a)(9) of the 1934 Act.

(ii) “beneficial ownership” is to be determined in accordance with Rule 13d-3
promulgated under the 1934 Act or any successor regulation; and

(iii) “group” means a group as described in Rule 13d-5 promulgated under the 1934 Act
or any successor regulation provided such definition satisfies the meaning of group in
Treas. Reg. Sections 1.409A-3(i)(v)(B), 1.409A-3(i)(5)(vi)(D), or 1.409A-3(i)(5)(vii)(C), as
applicable. The formation of a group under these provisions will have the effect described
in paragraph (b) of Rule 13d-5 or any successor regulation.

“Determination Date” means, for each Eligible Director, the date on which he or she ceases to
be a Director of the Company due to resignation, retirement, death, Disability, or other reason,
but only if the event is also a “separation from service” with the Company, as determined in
accordance with Code Section 409A. If the event is not a “separation from service,” then the
Determination Date will be the earliest date following the event when a “separation from service”
occurs.

“Disability” (or to be “Disabled”) means a 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 twelve months and that causes an Eligible Director to be unable to engage in any substantial
gainful activity by reason of the impairment. An Eligible Director will also be deemed to have a
Disability when determined to be totally disabled by the Social Security Administration.

“Eligible Director” means, for any relevant time, each individual who at that time is a member
of the Board but is not also an officer or employee of the Company or of any subsidiary of the
Company.

“Market Price” means, for any given date:

(a) if the Shares are then listed for trading on one or more national securities
exchanges (including the Nasdaq Stock Market), the average of the high and low sale prices
for a Share on the principal exchange on the date in question (or, if no Shares traded on
the principal exchange on that date, the next preceding date on which trading occurred);

 

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(b) if (a) is inapplicable but bid and asked prices for Shares are quoted through
NASDAQ, the average of the highest bid and lowest asked prices so quoted for a Share on the
date in question (or, if no prices for Shares were quoted on that date, the next preceding
date on which they were quoted);

(c) if (a) and (b) are inapplicable but bid and asked prices for Shares are otherwise
quoted by one or more broker-dealers known to the Company to be making a market in the
Shares, the average of the highest bid and lowest asked prices so quoted on the date in
question (or, if no prices were quoted on that date, the next preceding date on which they
were quoted); and

(d) if all of the foregoing are inapplicable, the fair market value of a Share on the
date in question as determined in good faith by the Committee;

provided that Market Price is determined in accordance with Treasury Regulation Section
1.409A-1(b)(5)(iv).

“NASDAQ” means the National Association of Securities Dealers, Inc. Automated Quotation
System.

“Plan” means this Outside Directors’ Deferred Stock Unit Plan.

“Plan Year” means the annual period beginning on the date of the Company’s annual
shareholders’’ meeting and ending at the end of the date preceding the date of the Company’s next
following annual shareholders’ meeting; provided, however, that for the period prior to the
Company’s 2011 annual shareholders’ meeting, “Plan Year” means the calendar year and the Plan Year
for the period beginning on January 1, 2011, shall be a “Short Plan Year that ends on the end of
the date preceding the date of the Company’s 2011 annual shareholders’ meeting, and, for purposes
of Awards made for the Short Plan Year, the Plan’s references to “Plan Year” will, as applicable,
refer to the Short Plan Year.

“Reason” is defined in Section 6.2.

“Share(s)” means Class A Common Stock of the Company.

“Stock Unit” means an allocation credited to the Account of an Eligible Director and
maintained in such Account together with any prior or subsequent allocations made on behalf of that
Director. An allocation of Stock Units confers only those rights specified in this Plan. Directors
who receive allocations of Stock Units will not (as a consequence of those allocations) be treated
as shareholders under the Articles of Incorporation or Bylaws of the Company or under applicable
law.

	2.	 	ADMINISTRATION

This Plan is to be administered by the Committee. To the extent consistent with the terms of
this Plan, the Committee has the power to interpret any Plan provision, to prescribe, amend, and
rescind rules and regulations relating to this Plan, and to make all other determinations that it
deems necessary or advisable to administer this Plan. The Committee may appoint such agents to
assist in administration of this Plan, other than Eligible Directors, as the Committee deems
appropriate. The Committee’s interpretation of this Plan and any action it takes with respect to
allocations of Stock Units pursuant thereto is final and binding on all affected parties.

	3.	 	AWARDS

3.1 In addition to his or her Cash Retainer, each person who is an Eligible Director on the
first day of each Plan Year will receive an Award for that Plan Year. The dollar amount of the
Award will equal 100% of that Eligible Director’s Cash Retainer for that Plan Year.

3.2 In addition to his or her Cash Retainer, each person who first becomes an Eligible
Director on a day other than the first day of a Plan Year will receive an Award for that Plan Year.
The dollar amount of the Award will equal 100% of that Eligible Director’s Cash Retainer for that
Plan Year.

3.3 Subject to Section 6.2, each Award will be fully vested when made. Subject to Section 6.2,
if an Eligible Director dies, becomes Disabled, retires, or otherwise terminates service as a
director during a Plan Year, he or she will nevertheless be entitled to his or her entire Award for
that Plan Year.

3.4 Notwithstanding Section 3.1, for the Short Plan Year — i.e., the period commencing
January 1, 2011 and ending on the end of the date preceding the date of the Company’s 2011 annual
shareholders’ meeting — each Eligible Director will receive an Award for such Short Plan Year
pursuant to Section 3.1 at the rate of 33-1/3%
of that Eligible Director’s Cash Retainer for the Short Plan Year. Commencing with the Plan
Year next following the end of the Short Plan Year, Awards shall be made pursuant to the regular
provisions of Section 3.1 and, when applicable, Section 3.2

 

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	4.	 	ACCOUNTS

4.1 For each Eligible Director, the Company will establish and maintain a bookkeeping account
(“Account”) in which all Stock Units allocable to the Eligible Director due to his or her
participation in this Plan will be credited.

4.2 Effective as of the first day of each Plan Year, there will be allocated to each Eligible
Director’s Account a number (to four decimal places) of Stock Units that is equal to:

(a) the dollar amount of the Eligible Director’s Award for that Plan Year; divided by

(b) the Market Price on the last trading day before the allocation date.

EXAMPLE: If an Eligible Director is due to receive $40,000 as his or her annual Award pursuant to
this Plan, and if the Market Price per Share is $21 on the valuation date, then he or she will
receive an allocation of Stock Units determined by the formula $40,000 / $21, or 1,904.7619 Stock
Units.

4.3 Effective as of the day (unless it is the first day of a Plan Year) on which a person
first becomes an Eligible Director, there will be allocated to that Eligible Director’s Account a
number (to four decimal places) of Stock Units that is equal to:

(a) the dollar amount of the Eligible Director’s Award for that Plan Year; divided by

(b) the higher of—

(1) the Market Price on the last trading day before the allocation
date, or

(2) the Market Price on the last trading day of the preceding Plan
Year.

EXAMPLE: If a person first becomes an Eligible Director on January 31 of a Plan Year (the Plan Year
for this example is assumed to have begun on April 30) and is due to receive $10,000 as his or her
annual Award pursuant to this Plan for that Plan Year, and if the Market Price per Share was $21 on
the last trading day of the preceding Plan Year and $32 on the last trading day before January 31,
then he or she will receive an allocation of Stock Units determined by the formula $10,000 / $32,
or 312.5 Stock Units.

4.4 On the payment date for any cash dividend or other cash distribution declared on the
Shares, there will be allocated to each Eligible Director’s Account that number (to four decimal
places) of Stock Units that is equal to:

(a) the total number of Stock Units that on the related record date were in the
Eligible Director’s Account; multiplied by

(b) the dollar amount per Share of the cash dividend or other distribution; divided by

(c) the Market Price on the dividend or distribution payment date.

	5.	 	NO EFFECT ON DIRECTOR’S ELECTION OR TERM OF OFFICE

Nothing contained in this Plan entitles an Eligible Director to serve beyond the term for
which he or she was elected to the Board. Nothing in this Plan is to be construed to restrict the
shareholders’ right to elect any person a Director of the Company in accordance with the Articles
of Incorporation and Bylaws.

	6.	 	PAYMENT OF AWARDS

6.1 Subject to the provisions of Sections 6.2 and 6.3, within 30 days after the first to occur
of (1) an Eligible Director’s Determination Date, or (2) a Company Change of Control, the Company
will pay to the Director an amount in cash equal to:

(a) the number of Stock Units then credited to his or her Account; multiplied by

(b) the Market Price per Share on the Determination Date or the date the Company Change
of Control occurred, as the case may be.

 

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6.2 An Eligible Director’s Account will be forfeited if his or her service on the Board is
terminated, voluntarily or otherwise, for any Reason denominated below (which shall be determined
by the Committee). “Reason,” for the sole purpose of determining whether an Eligible Director’s
Awards are to be forfeited, will be deemed to exist where:

(a) the Eligible Director breaches any material written rules, regulations, or policies
of the Board, now existing or enacted in the future, that are uniformly applied to all
Eligible Directors or that are promulgated for general application to Directors of the
Company;

(b) the Eligible Director willfully and repeatedly fails to substantially perform the
duties of his or her tenure (other than any such failure resulting from incapacity due to
physical or mental illness) after a written demand for substantial performance is delivered
to him or her by the Chairman of the Board (or, if the Eligible Director is the Chairman of
the Board, by the Lead Director, or, if there is no Lead Director, by the Director, other
than the Chairman of the Board, with the longest term of service as a Director), which
demand specifically identifies the manner in which the Chairman of the Board (or, if the
Eligible Director is the Chairman of the Board, by the Lead Director, or, if there is no
Lead Director, by the Director, other than the Chairman of the Board, with the longest term
of service as a Director) believes that the Eligible Director has not substantially
performed his or her duties;

(c) the Eligible Director is convicted of a felony under state or federal law, or
commits a crime involving moral turpitude; or

(d) the Eligible Director embezzles or misappropriates any property belonging to the
Company such that he may be subject to criminal prosecution, or the Eligible Director
intentionally and materially injures the Company, its personnel, or its property.

6.3 If an Eligible Director’s Determination Date occurs due to death, or if he or she dies
before payment pursuant to Section 6.1, then the amount payable shall be paid to the beneficiary or
beneficiaries designated in the Eligible Director’s written beneficiary designation filed with the
Committee, or if no valid beneficiary designation has been filed, the legally appointed personal
representative of the Eligible Director’s estate. If no such representative is appointed by the
time payment is due, then the Company will hold the payment without interest until appointment
occurs or proper claim for the payment otherwise is made of the Company by the person or persons
entitled to it. If the Company is notified that an Eligible Director has been adjudicated mentally
incompetent as of the time any amount is payable under this Plan to the Eligible Director, or if it
otherwise is demonstrated to the satisfaction of the Committee that such mental incapacity then
exists by a person authorized by a durable power of attorney or similar document to attend to the
Eligible Director’s financial affairs, then any cash so payable will be delivered to the Eligible
Director’s legally appointed guardian or conservator or, if none has been appointed, the holder of
the power of attorney or similar document.

	7.	 	ADJUSTMENTS

In the event of any non-cash dividend or other distribution, or any stock split, reverse stock
split, recapitalization, reorganization, split-up, spin-off, merger, consolidation, share exchange,
or other like change in the capital or corporate structure of the Company affecting the Shares,
there will be made such adjustment or adjustments (if any) in the number of Stock Units credited to
the Accounts of Eligible Directors as the Committee determines to be appropriate in light of such
event in order to continue to make available the benefits intended by this Plan, but no adjustment
will be required by reason of any sales of Shares or other Company securities by the Company at any
price, whether below, or at or above Market Price, and whether by or pursuant to warrant, option,
right, conversion right or privilege, or otherwise.

	8.	 	MISCELLANEOUS MATTERS

8.1 Accounts are not intended to be and will not be trust accounts for the benefit of any
Eligible Director or other person, nor will the establishment and maintenance of an Account afford
any Eligible Director or other person any right or interest in any asset the Company may determine
to earmark for future payment of benefits under this Plan. Rather, benefits payable under this Plan
are intended to be unfunded for tax purposes, and the sole right of an Eligible Director or
beneficiary or other successor in interest of an Eligible Director with respect to his or
her Account shall be the right as an unsecured general creditor of the Company to claim any
cash benefit to which the Eligible Director becomes entitled after his or her Determination Date or
a Company Change of Control pursuant to the terms and conditions of this Plan.

 

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8.2 An Eligible Director’s right and interest in his or her Account are not subject in any
manner to anticipation, alienation, sale, assignment, pledge, encumbrance, attachment, garnishment
for the benefit of creditors of the Eligible Director, or other transfer whatsoever, except that
such right and interest may be transferred by:

(a) will or the laws of descent and distribution; or

(b) a domestic relations order if the Committee, in its discretion, establishes
procedures permitting the Company to honor such an order.

8.3 Nothing in this Plan obligates any Eligible Director to continue as a director of the
Company or the Company or to accept any nomination for a future term as director, or requires the
Company to nominate or cause the nomination of any Eligible Director for a future term as a
director.

8.4 Each Eligible Director will remain responsible for all applicable taxes associated with
Awards under this Plan.

8.5 This Plan is to be governed by and construed, enforced, and administered in accordance
with the laws of the State of Michigan excluding any such laws that direct an application of the
laws of any other jurisdiction. At all times, this Plan will also be interpreted and administered
to maintain intended income tax deferral in accordance with Code Section 409A and regulations and
other guidance issued under Code Section 409A. The Company and the Committee will be subject to
suit regarding this Plan only in the courts of the State of Michigan, and the Company will fully
indemnify and defend the Board and the Committee with respect to any actions relating to this Plan
taken in good faith by either of those bodies or their members.

8.6 This Plan was originally adopted by the Board on December 17, 2007, and originally took
effect as of January 1, 2008. This Plan was amended by the Board on and effective as of December
14, 2010.

8.7 The Board may at any time and from time to time amend, modify, suspend, or terminate this
Plan, except that none of those actions by the Board can adversely affect the rights or benefits of
an Eligible Director without the Eligible Director’s consent.

 

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Exhibit 10.5

TRANS1 INC.

2007 EMPLOYEE STOCK PURCHASE PLAN

ARTICLE 1.

PURPOSES OF THE PLAN

     Section 1.1. Purpose. The purpose of the Plan is to provide employees of the Company and its
Designated Subsidiaries with an opportunity to purchase Common Stock through accumulated payroll
deductions. The Company’s intention is to have the Plan qualify as an “employee stock purchase
plan” under Section 423 of the Code. The provisions of the Plan, accordingly, will be construed so
as to extend and limit Plan participation in a uniform and nondiscriminatory basis consistent with
the requirements of Section 423 of the Code.

ARTICLE 2.

DEFINITIONS

     Section 2.1. “Administrator” means the Board or any Committee designated by the Board to
administer the Plan pursuant to Section 14.

     Section 2.2. “Applicable Laws” means the requirements relating to the administration of
equity-based awards under U.S. state corporate laws, U.S. federal and state securities laws, the
Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the
applicable laws of any foreign country or jurisdiction where options are, or will be, granted under
the Plan.

     Section 2.3. “Board” means the Board of Directors of the Company.

     Section 2.4. “Change in Control” means (i) the acquisition, directly or indirectly, by any
person or group (within the meaning of Section 13(d)(3) of the Exchange Act) of the beneficial
ownership of securities of the Company possessing more than fifty percent (50%) of the total
combined voting power of all outstanding securities of the Company; (ii) a merger or consolidation
in which the Company is not the surviving entity, except for a transaction the principal purpose of
which is to change the state in which the Company is incorporated; (iii) a reverse merger in which
the Company is the surviving entity but in which securities possessing more than fifty percent
(50%) of the total combined voting power of the Company’s outstanding securities are transferred to
or acquired by a person or persons different from the persons holding those securities immediately
prior to such merger; (iv) the sale, transfer or other disposition of all or substantially all of
the assets of the Company; or (v) a complete liquidation or dissolution of the Company.

     Section 2.5. “Code” means the Internal Revenue Code of 1986, as amended from time to time.

     Section 2.6. “Committee” means a committee of two or more members of the Board appointed to
administer the Plan, as set forth in Section 14 hereof.

     Section 2.7. “Common Stock” means the common stock of the Company.

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     Section 2.8. “Company” means TranS1 Inc., a Delaware corporation, or any entity that is a
successor to the Company.

     Section 2.9. “Compensation” means an Employee’s base straight time gross earnings, commissions
(to the extent such commissions are an integral, recurring part of compensation), overtime and
shift premium, but exclusive of payments for incentive compensation, bonuses and other
compensation.

     Section 2.10. “Designated Subsidiary” means any Subsidiary that has been designated by the
Administrator from time to time in its sole discretion as eligible to participate in the Plan.

     Section 2.11. “Director” means a member of the Board.

     Section 2.12. “Eligible Employee” means any individual who is a common law employee of an
Employer and is customarily employed for at least twenty (20) hours per week and more than five (5)
months in any calendar year by the Employer. For purposes of the Plan, the employment relationship
will be treated as continuing intact while the individual is on sick leave or other leave of
absence that the Employer approves. Where the period of leave exceeds ninety (90) days and the
individual’s right to reemployment is not guaranteed either by statute or by contract, the
employment relationship will be deemed to have terminated on the ninety-first (91st) day of such
leave. The Administrator, in its discretion, from time to time may, prior to an Offering Date for
all options to be granted on such Offering Date, determine (on a uniform and nondiscriminatory
basis) that the definition of Eligible Employee will or will not include an individual if he or
she: (i) has not completed at least two years of service since his or her last hire date (or such
lesser period of time as may be determined by the Administrator in its discretion), (ii)
customarily works not more than twenty (20) hours per week (or such lesser period of time as may be
determined by the Administrator in its discretion), (iii) customarily works not more than five (5)
months per calendar year (or such lesser period of time as may be determined by the Administrator
in its discretion), (iv) is an officer or other manager, or (v) is a highly compensated employee
under Section 414(q) of the Code.

     Section 2.13. “Employer” means any one or all of the Company and its Designated Subsidiaries.

     Section 2.14. “Exchange Act” means the Securities Exchange Act of 1934, as amended, including
the rules and regulations promulgated thereunder.

     Section 2.15. “Exercise Date” means the last day of each Offering Period.

     Section 2.16. “Fair Market Value” means, as of any date and unless the Administrator
determines otherwise the value of Common Stock determined as follows:

          (a) If the Common Stock is then listed or admitted to trading on a stock exchange which
reports closing sale prices, the Fair Market Value shall be the closing sale price on the date of
valuation on such principal stock exchange on which the Common Stock is then listed or admitted to
trading, or, if no closing sale price is quoted on such day, then the Fair Market Value shall be
the closing sale price of the Common Stock on such exchange on the next preceding day on which a
closing sale price is reported;

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          (b) If the Common Stock is not then listed or admitted to trading on a stock exchange which
reports closing sale prices, the Fair Market Value shall be the average of the closing bid and
asked prices of the Common Stock in the over the counter market on the date of valuation; or

          (c) If neither (a) nor (b) is applicable as of the date of valuation, then the Fair Market
Value shall be determined by the Administrator in good faith using any reasonable method of
evaluation, which determination shall be conclusive and binding on all interested parties.

     Section 2.17. “Fiscal Year” means the fiscal year of the Company.

     Section 2.18. “Offering Date means the first day of each Offering Period.

     Section 2.19. “Offering Periods” means the periods of approximately six months during which an
option granted pursuant to the Plan may be exercised, (i) commencing on the first Trading Day on or
after June 1 of each year and terminating on the first Trading Day on or following November 30,
approximately six months later, and (ii) commencing on the first Trading Day on or after December 1
of each year and terminating on the first Trading Day on or following May 31, approximately six
months later. The duration and timing of Offering Periods may be changed pursuant to Sections 4
and 20.

     Section 2.20. “Parent” means a “parent corporation,” whether now or hereafter existing, as
defined in Section 424(e) of the Code.

     Section 2.21. “Plan” means this TranS1 Inc. 2007 Employee Stock Purchase Plan.

     Section 2.22. “Purchase Price” means an amount equal to eighty-five percent (85%) of the Fair
Market Value of a share of Common Stock on the Exercise Date; provided however, that the Purchase
Price may be determined for subsequent Offering Periods by the Administrator subject to compliance
with Section 423 of the Code (or any successor rule or provision or any other applicable law,
regulation or stock exchange rule) or pursuant to Section 20.

     Section 2.23. “Subsidiary” means a “subsidiary corporation,” whether now or hereafter
existing, as defined in Section 424(f) of the Code.

     Section 2.24. “Trading Day” means a day on which the national stock exchange upon which the
Common Stock is listed is open for trading.

ARTICLE 3.

ELIGIBILITY

     Section 3.1. Each Employee of the Company or any of its operating subsidiaries, who, on the
Offering Date, is an Eligible Employee may become a participant in the Plan on the Offering Date
coincident with or next following his satisfaction of the requirements of becoming an Eligible
Employee.

     Section 3.2. Any Eligible Employee on a given Offering Date will be eligible to participate in
the Plan, subject to the requirements of Section 5.

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     Section 3.3. Any provisions of the Plan to the contrary notwithstanding, no Eligible Employee
will be granted an option under the Plan (i) to the extent that, immediately after the grant, such
Eligible Employee (or any other person whose stock would be attributed to such Eligible Employee
pursuant to Section 424(d) of the Code) would own capital stock of the Company or any Parent or
Subsidiary of the Company and/or hold outstanding options to purchase such stock possessing five
percent (5%) or more of the total combined voting power or value of all classes of the capital
stock of the Company or of any Parent or Subsidiary of the Company, or (ii) to the extent that his
or her rights to purchase stock under all employee stock purchase plans (as defined in Section 423
of the Code) of the Company or any Parent or Subsidiary of the Company accrues at a rate which
exceeds twenty-five thousand dollars ($25,000) worth of stock (determined at the Fair Market Value
of the stock at the time such option is granted) for each calendar year in which such option is
outstanding at any time.

ARTICLE 4.

OFFERING PERIODS

     Section 4.1. The Plan will be implemented by consecutive Offering Periods with a new Offering
Period commencing on the first Trading Day on or after June 1 and December 1 each year, or on such
other date as the Administrator will determine; provided, however, the first Offering Period for
which this Plan is being implemented shall commence on January 15, 2011. The Administrator will
have the power to change the duration of Offering Periods (including the commencement dates
thereof) with respect to future offerings without stockholder approval if such change is announced
prior to the scheduled beginning of the first Offering Period to be affected thereafter.

ARTICLE 5.

PARTICIPATION

     Section 5.1. An Eligible Employee will be entitled to continue to participate in an Offering
Period pursuant to Section 3.1 only if such individual submits a subscription agreement authorizing
payroll deductions in a form determined by the Administrator (which may be similar to the form
attached hereto as Exhibit A) to the Company’s designated plan administrator (i) no earlier than
the effective date of the Form S-8 registration statement with respect to the issuance of Common
Stock under this Plan and (ii) no later than five (5) business days following the effective date of
such S-8 registration statement or such other period of time as the Administrator may determine
(the “Enrollment Window”).

     Section 5.2. An Eligible Employee may participate in the Plan pursuant to Section 3(b) by (i)
submitting to the Company’s payroll office (or its designee), on or before a date prescribed by the
Administrator prior to an applicable Offering Date, a properly completed subscription agreement
authorizing payroll deductions in the form provided by the Administrator for such purpose, or (ii)
following an electronic or other enrollment procedure prescribed by the Administrator.

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ARTICLE 6.

PAYROLL DEDUCTIONS

     Section 6.1. At the time a participant enrolls in the Plan pursuant to Section 5, he or she
will elect to have payroll deductions made on each pay day during the Offering Period in an amount
not exceeding ten percent (10%) of the Compensation which he or she receives on each pay day during
the Offering Period; provided, however, that should a pay day occur on an Exercise Date, a
participant will have the payroll deductions made on such day applied to his or her account under
the subsequent Offering Period. A participant’s subscription agreement will remain in effect for
successive Offering Periods unless terminated as provided in Section 10 hereof.

     Section 6.2. Payroll deductions for a participant will commence on the first pay day following
the Offering Date and will end on the last pay day prior to the Exercise Date of such Offering
Period to which such authorization is applicable, unless sooner terminated by the participant as
provided in Section 10 hereof, provided, however, that for the first Offering Period, payroll
deductions will commence on the first pay day on or following the end of the Enrollment Window.

     Section 6.3. All payroll deductions made for a participant will be credited to his or her
account under the Plan and will be withheld in whole percentages only. A participant may not make
any additional payments into such account.

     Section 6.4. A participant may discontinue his or her participation in the Plan as provided in
Section 10, or may increase or decrease the rate of his or her payroll deductions during the
Offering Period by (i) properly completing and submitting to the Company’s payroll office (or its
designee), on or before a date prescribed by the Administrator prior to an applicable Exercise
Date, a new subscription agreement authorizing the change in payroll deduction rate in the form
provided by the Administrator for such purpose, or (ii) following an electronic or other procedure
prescribed by the Administrator; provided, however, that a participant may only make one payroll
deduction change during each Offering Period. If a participant has not followed such procedures to
change the rate of payroll deductions, the rate of his or her payroll deductions will continue at
the originally elected rate throughout the Offering Period and future Offering Periods (unless
terminated as provided in Section 10). The Administrator may, in its sole discretion, limit the
nature and/or number of payroll deduction rate changes that may be made by participants during any
Offering Period. Any change in payroll deduction rate made pursuant to this Section 6.4 will be
effective as of the first full payroll period following five (5) business days after the date on
which the change is made by the participant (unless the Administrator, in its sole discretion,
elects to process a given change in payroll deduction rate more quickly).

     Section 6.5. Notwithstanding the foregoing, to the extent necessary to comply with Section
423(b)(8) of the Code and Section 3.3, a participant’s payroll deductions may be decreased to zero
percent (0%) at any time during an Offering Period. Subject to Section 423(b)(8) of the Code and
Section 3.3 hereof, payroll deductions will recommence at the rate originally elected by the
participant effective as of the beginning of the first Offering Period in which the employee first
participates in the Plan which is scheduled to end in the following calendar year, unless
terminated by the participant as provided in Section 10.

     Section 6.6. At the time the option is exercised, in whole or in part, or at the time some or
all of the Common Stock issued under the Plan is disposed of, the participant must make adequate

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provision for the Company’s or Employer’s federal, state, or any other tax liability payable
to any authority, national insurance, social security or other tax withholding obligations, if any,
which arise upon the exercise of the option or the disposition of the Common Stock. At any time,
the Company or the Employer may, but will not be obligated to, withhold from the participant’s
compensation the amount necessary for the Company or the Employer to meet applicable withholding
obligations, including any withholding required to make available to the Company or the Employer
any tax deductions or benefits attributable to a sale or early disposition of Common Stock by the
Eligible Employee.

ARTICLE 7.

GRANT OF OPTION

     Section 7.1. On the Offering Date of each Offering Period, each Eligible Employee
participating in such Offering Period will be granted an option to purchase on each Exercise Date
during such Offering Period (at the applicable Purchase Price) up to a number of shares of Common
Stock determined by dividing such Eligible Employee’s payroll deductions accumulated prior to such
Exercise Date and retained in the Eligible Employee’s account as of the Exercise Date by the
applicable Purchase Price; provided that in no event will an Eligible Employee be permitted to
purchase during each Offering Period more than 10,000 shares of the Common Stock (subject to any
adjustment pursuant to Section 19), and provided further that such purchase will be subject to the
limitations set forth in Sections 3.3 and 13. The Eligible Employee may accept the grant of such
option with respect to the first Offering Period by submitting a properly completed subscription
agreement in accordance with the requirements of Section 5.1 on or before the last day of the
Enrollment Window, and (ii) with respect to any future Offering Period under the Plan, by electing
to participate in the Plan in accordance with the requirements of Section 5.2. The Administrator
may, for future Offering Periods, increase or decrease, in its absolute discretion, the maximum
number of shares of Common Stock that an Eligible Employee may purchase during each Offering Period
of an Offering Period. Exercise of the option will occur as provided in Section 8, unless the
participant has withdrawn pursuant to Section 10. The option will expire on the last day of the
Offering Period.

ARTICLE 8.

EXERCISE OF OPTION

     Section 8.1. Unless a participant withdraws from the Plan as provided in Section 10, his or
her option for the purchase of shares of Common Stock will be exercised automatically on the
Exercise Date, and the maximum number of full shares subject to option will be purchased for such
participant at the applicable Purchase Price with the accumulated payroll deductions in his or her
account. No fractional shares of Common Stock will be purchased; any payroll deductions
accumulated in a participant’s account which are not sufficient to purchase a full share will be
retained in the participant’s account for the subsequent Offering Period, subject to earlier
withdrawal by the participant as provided in Section 10. Any other funds left over in a
participant’s account after the Exercise Date will be returned to the participant. During a
participant’s lifetime, a participant’s option to purchase shares hereunder is exercisable only by
him or her.

     Section 8.2. If the Administrator determines that, on a given Exercise Date, the number of
shares of Common Stock with respect to which options are to be exercised may exceed the number of
shares of Common Stock available for sale under the Plan on such Exercise Date, the Administrator

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may in its sole discretion provide that the Company will make a pro rata allocation of the
shares of Common Stock available for purchase on such Exercise Date, in as uniform a manner as will
be practicable and as it will determine in its sole discretion to be equitable among all
participants exercising options to purchase Common Stock on such Exercise Date, and continue all
Offering Periods then in effect or terminate all Offering Periods then in effect pursuant to
Section 20. The Company may make a pro rata allocation of the shares available on the Offering
Date of any applicable Offering Period pursuant to the preceding sentence, notwithstanding any
authorization of additional shares for issuance under the Plan by the Company’s stockholders
subsequent to such Offering Date.

ARTICLE 9.

DELIVERY

     Section 9.1. As soon as reasonably practicable after each Exercise Date on which a purchase of
shares of Common Stock occurs, the Company will arrange the delivery to each participant the shares
purchased upon exercise of his or her option in a form determined by the Administrator (in its sole
discretion) and pursuant to rules established by the Administrator. The Company may permit or
require that shares be deposited directly with a broker designated by the Company or to a
designated agent of the Company, and the Company may utilize electronic or automated methods of
share transfer. The Company may require that shares be retained with such broker or agent for a
designated period of time and/or may establish other procedures to permit tracking of disqualifying
dispositions of such shares. No participant will have any voting, dividend, or other stockholder
rights with respect to shares of Common Stock subject to any option granted under the Plan until
such shares have been purchased and delivered to the participant as provided in this Section 9.1.

ARTICLE 10.

WITHDRAWAL

     Section 10.1. A participant may withdraw all but not less than all of the payroll deductions
credited to his or her account and not yet used to exercise his or her option under the Plan at any
time by (i) submitting to the Company’s payroll office (or its designee) a written notice of
withdrawal in the form prescribed by the Administrator for such purpose, or (ii) following an
electronic or other withdrawal procedure prescribed by the Administrator. All of the participant’s
payroll deductions credited to his or her account will be paid to such participant promptly after
receipt of notice of withdrawal and such participant’s option for the Offering Period will be
automatically terminated, and no further payroll deductions for the purchase of shares will be made
for such Offering Period. If a participant withdraws from an Offering Period, payroll deductions
will not resume at the beginning of the succeeding Offering Period, unless the participant
re-enrolls in the Plan in accordance with the provisions of Section 5.

     Section 10.2. A participant’s withdrawal from an Offering Period will not have any effect upon
his or her eligibility to participate in any similar plan which may hereafter be adopted by the
Company or in succeeding Offering Periods which commence after the termination of the Offering
Period from which the participant withdraws.

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ARTICLE 11.

TERMINATION OF EMPLOYMENT

     Section 11.1. Upon a participant’s ceasing to be an Eligible Employee, for any reason, he or
she will be deemed to have elected to withdraw from the Plan and the payroll deductions credited to
such participant’s account during the Offering Period but not yet used to purchase shares of Common
Stock under the Plan will be returned to such participant or, in the case of his or her death, to
the person or persons entitled thereto under Section 15, and such participant’s option will be
automatically terminated.

ARTICLE 12.

INTEREST

     Section 12.1. No interest will accrue on the payroll deductions of a participant in the Plan.

ARTICLE 13.

STOCK

     Section 13.1. Subject to adjustment upon changes in capitalization of the Company as provided
in Section 19 hereof, the maximum number of shares of Common Stock which will be made available for
sale under the Plan will be 250,000 shares, plus an annual increase to be added on the first day of
each Fiscal Year beginning with the 2011 Fiscal Year, equal to the least of (i) two percent (2%) of
the outstanding shares of Common Stock on such date or (ii) an amount determined by the
Administrator.

     Section 13.2. Until the shares are issued (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company), a participant will only have
the rights of an unsecured creditor with respect to such shares, and no right to vote or receive
dividends or any other rights as a stockholder will exist with respect to such shares.

     Section 13.3. Shares of Common Stock to be delivered to a participant under the Plan will be
registered in the name of the participant or in the name of the participant and his or her spouse.

ARTICLE 14.

ADMINISTRATION

     Section 14.1. The Plan will be administered by the Board or a Committee appointed by the
Board, which Committee will be constituted to comply with Applicable Laws. The Administrator will
have full and exclusive discretionary authority to construe, interpret and apply the terms of the
Plan, to determine eligibility and to adjudicate all disputed claims filed under the Plan. Every
finding, decision and determination made by the Administrator will, to the full extent permitted by
law, be final and binding upon all parties. Notwithstanding any provision to the contrary in this
Plan, the Administrator may adopt rules or procedures relating to the operation and administration
of the Plan to accommodate the specific requirements of local laws and procedures for jurisdictions
outside of the United States. Without limiting the generality of the foregoing, the Administrator
is

-8-

 

specifically authorized to adopt rules and procedures regarding eligibility to participate,
the definition of Compensation, handling of payroll deductions, making of contributions to the Plan
(including, without limitation, in forms other than payroll deductions), establishment of bank or
trust accounts to hold payroll deductions, payment of interest, conversion of local currency,
obligations to pay payroll tax, determination of beneficiary designation requirements, withholding
procedures and handling of stock certificates which vary with local requirements.

ARTICLE 15.

DESIGNATION OF BENEFICIARY

     Section 15.1. A participant may file a designation of a beneficiary who is to receive any
shares of Common Stock and cash, if any, from the participant’s account under the Plan in the event
of such participant’s death subsequent to an Exercise Date on which the option is exercised but
prior to delivery to such participant of such shares and cash. In addition, a participant may file
a designation of a beneficiary who is to receive any cash from the participant’s account under the
Plan in the event of such participant’s death prior to exercise of the option. If a participant is
married and the designated beneficiary is not the spouse, spousal consent will be required for such
designation to be effective.

     Section 15.2. Such designation of beneficiary may be changed by the participant at any time by
notice in a form determined by the Administrator. In the event of the death of a participant and
in the absence of a beneficiary validly designated under the Plan who is living at the time of such
participant’s death, the Company will deliver such shares and/or cash to the executor or
administrator of the estate of the participant, or if no such executor or administrator has been
appointed (to the knowledge of the Company), the Company, in its discretion, may deliver such
shares and/or cash to the spouse or to any one or more dependents or relatives of the participant,
or if no spouse, dependent or relative is known to the Company, then to such other person as the
Company may designate.

     Section 15.3. All beneficiary designations will be in such form and manner as the
Administrator may designate from time to time.

ARTICLE 16.

TRANSFERABILITY

     Section 16.1. Neither payroll deductions credited to a participant’s account nor any rights
with regard to the exercise of an option or to receive shares of Common Stock under the Plan may be
assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of
descent and distribution or as provided in Section 15 hereof) by the participant. Any such attempt
at assignment, transfer, pledge or other disposition will be without effect, except that the
Company may treat such act as an election to withdraw funds from an Offering Period in accordance
with Section 10 hereof.

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ARTICLE 17.

USE OF FUNDS

     Section 17.1. The Company may use all payroll deductions received or held by it under the Plan
for any corporate purpose, and the Company will not be obligated to segregate such payroll
deductions. Until shares of Common Stock are issued, participants will only have the rights of an
unsecured creditor with respect to such shares.

ARTICLE 18.

REPORTS

     Section 18.1. Individual accounts will be maintained for each participant in the Plan.
Statements of account will be given to participating Eligible Employees at least annually, which
statements will set forth the amounts of payroll deductions, the Purchase Price, the number of
shares of Common Stock purchased and the remaining cash balance, if any.

ARTICLE 19.

ADJUSTMENTS, DISSOLUTION, LIQUIDATION,

MERGER OR CHANGE IN CONTROL

     Section 19.1. In the event that any dividend or other distribution (whether in the form of
cash, Common Stock, other securities, or other property), recapitalization, stock split, reverse
stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or
exchange of Common Stock or other securities of the Company, or other change in the corporate
structure of the Company affecting the Common Stock such that an adjustment is determined by the
Administrator (in its sole discretion) to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available under the Plan,
then the Administrator will, in such manner as it may deem equitable, adjust the number and class
of Common Stock which may be delivered under the Plan, the Purchase Price per share and the number
of shares of Common Stock covered by each option under the Plan which has not yet been exercised,
and the numerical limits of Sections 7 and 13.

     Section 19.2. In the event of the proposed dissolution or liquidation of the Company, any
Offering Period then in progress will be shortened by setting a new Exercise Date (the “New
Exercise Date”), and will terminate immediately prior to the consummation of such proposed
dissolution or liquidation, unless provided otherwise by the Administrator. The New Exercise Date
will be before the date of the Company’s proposed dissolution or liquidation. The Administrator
will notify each participant in writing, at least ten (10) business days prior to the New Exercise
Date, that the Exercise Date for the participant’s option has been changed to the New Exercise Date
and that the participant’s option will be exercised automatically on the New Exercise Date, unless
prior to such date the participant has withdrawn from the Offering Period as provided in Section 10
hereof.

     Section 19.3. In the event of a Change in Control, each outstanding option will be assumed or
an equivalent option substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation. In the event that the successor corporation refuses to assume or substitute
for the option, the Offering Period with respect to which such option relates will be shortened by
setting

-10-

 

a New Exercise Date and will end on the New Exercise Date. The New Exercise Date will occur
before the date of the Company’s proposed Change in Control. The Administrator will notify each
participant in writing prior to the New Exercise Date, that the Exercise Date for the participant’s
option has been changed to the New Exercise Date and that the participant’s option will be
exercised automatically on the New Exercise Date, unless prior to such date the participant has
withdrawn from the Offering Period as provided in Section 10 hereof.

ARTICLE 20.

AMENDMENT OR TERMINATION

     Section 20.1. The Administrator, in its sole discretion, may amend, suspend, or terminate the
Plan, or any part thereof, at any time and for any reason. If the Plan is terminated, the
Administrator, in its discretion, may elect to terminate the outstanding Offering Period either
immediately or upon completion of the purchase of shares of Common Stock on the next Exercise Date
(which may be sooner than originally scheduled, if determined by the Administrator in its
discretion), or may elect to permit the Offering Period to expire in accordance with its terms (and
subject to any adjustment pursuant to Section 19). If the Offering Period is terminated prior to
expiration, all amounts then credited to participants’ accounts which have not been used to
purchase shares of Common Stock will be returned to the participants (without interest thereon,
except as otherwise required under local laws) as soon as administratively practicable.

     Section 20.2. Without stockholder consent and without limiting Section 20.1, the Administrator
will be entitled to change the Offering Periods, limit the frequency and/or number of changes in
the amount withheld during an Offering Period, establish the exchange ratio applicable to amounts
withheld in a currency other than U.S. dollars, permit payroll withholding in excess of the amount
designated by a participant in order to adjust for delays or mistakes in the Company’s processing
of properly completed withholding elections, establish reasonable waiting and adjustment periods
and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of
Common Stock for each participant properly correspond with amounts withheld from the participant’s
Compensation, and establish such other limitations or procedures as the Administrator determines in
its sole discretion advisable which are consistent with the Plan.

     Section 20.3. In the event the Administrator determines that the ongoing operation of the Plan
may result in unfavorable financial accounting consequences, the Administrator may, in its
discretion and, to the extent necessary or desirable, modify, amend or terminate the Plan to reduce
or eliminate such accounting consequence including, but not limited to:

          (a) amending the Plan to conform with the safe harbor definition under Statement of Financial
Accounting Standards 123(R), including with respect to an Offering Period underway at the time;

          (b) altering the Purchase Price for any Offering Period including an Offering Period underway
at the time of the change in Purchase Price;

          (c) shortening any Offering Period so that Offering Period ends on a New Exercise Date,
including an Offering Period underway at the time of the Board action;

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          (d) reducing the maximum percentage of Compensation a participant may elect to set aside as
payroll deductions; and

          (e) reducing the maximum number of Shares a participant may purchase during any Offering
Period.

     Such modifications or amendments will not require stockholder approval or the consent of any
Plan participants.

ARTICLE 21.

NOTICES

     Section 21.1. All notices or other communications by a participant to the Company under or in
connection with the Plan will be deemed to have been duly given when received in the form and
manner specified by the Company at the location, or by the person, designated by the Company for
the receipt thereof

ARTICLE 22.

CONDITIONS UPON ON ISSUANCE OF SHARES

     Section 22.1. Shares of Common Stock will not be issued with respect to an option unless the
exercise of such option and the issuance and delivery of such shares pursuant thereto will comply
with all applicable provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the shares may then be listed,
and will be further subject to the approval of counsel for the Company with respect to such
compliance.

     Section 22.2. As a condition to the exercise of an option, the Company may require the person
exercising such option to represent and warrant at the time of any such exercise that the shares
are being purchased only for investment and without any present intention to sell or distribute
such shares if, in the opinion of counsel for the Company, such a representation is required by any
of the aforementioned applicable provisions of law.

ARTICLE 23.

TERM OF PLAN

     Section 23.1. The Plan will become effective upon the earlier to occur of its adoption by the
Board or its approval by the stockholders of the Company. It will continue in effect for a term of
twenty (20) years, unless sooner terminated under Section 20.

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ARTICLE 24.

STOCKHOLDER APPROVAL

     Section 24.1. The Plan will be subject to approval by the stockholders of the Company within
twelve (12) months after the date the Plan is adopted by the Board. Such stockholder approval will
be obtained in the manner and to the degree required under Applicable Laws.

-13-

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