Document:

exv10w25

Exhibit 10.25

MAGNACHIP SEMICONDUCTOR CORPORATION

2010 EQUITY INCENTIVE PLAN

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	1. Establishment, Purpose and Term of Plan
	 	 	1	 
	 
	 	 	 	 
	1.1 Establishment
	 	 	1	 
	1.2 Purpose
	 	 	1	 
	1.3 Term of Plan
	 	 	1	 
	 
	 	 	 	 
	2. Definitions and Construction
	 	 	1	 
	 
	 	 	 	 
	2.1 Definitions
	 	 	1	 
	2.2 Construction
	 	 	8	 
	 
	 	 	 	 
	3. Administration
	 	 	9	 
	 
	 	 	 	 
	3.1 Administration by the Committee
	 	 	9	 
	3.2 Authority of Officers
	 	 	9	 
	3.3 Administration with Respect to Insiders
	 	 	9	 
	3.4 Committee Complying with Section 162(m)
	 	 	9	 
	3.5 Powers of the Committee
	 	 	9	 
	3.6 Option or SAR Repricing
	 	 	10	 
	3.7 Indemnification
	 	 	11	 
	 
	 	 	 	 
	4. Shares Subject to Plan
	 	 	11	 
	 
	 	 	 	 
	4.1 Maximum Number of Shares Issuable
	 	 	11	 
	4.2 Annual Increase in Maximum Number of Shares Issuable
	 	 	11	 
	4.3 Adjustment for Unissued or Forfeited Predecessor Plan Shares
	 	 	11	 
	4.4 Share Counting
	 	 	12	 
	4.5 Adjustments for Changes in Capital Structure
	 	 	12	 
	4.6 Assumption or Substitution of Awards
	 	 	13	 
	 
	 	 	 	 
	5. Eligibility, Participation and Award Limitations
	 	 	13	 
	 
	 	 	 	 
	5.1 Persons Eligible for Awards
	 	 	13	 
	5.2 Participation in the Plan
	 	 	13	 
	5.3 Incentive Stock Option Limitations
	 	 	13	 
	 
	 	 	 	 
	6. Stock Options
	 	 	14	 
	 
	 	 	 	 
	6.1 Exercise Price
	 	 	14	 
	6.2 Exercisability and Term of Options
	 	 	14	 
	6.3 Payment of Exercise Price
	 	 	15	 
	6.4 Effect of Termination of Service
	 	 	16	 
	6.5 Transferability of Options
	 	 	17	 
	 
	 	 	 	 
	7. Stock Appreciation Rights
	 	 	17	 
	 
	 	 	 	 
	7.1 Types of SARs Authorized
	 	 	17	 

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TABLE OF CONTENTS

(continued)

	 	 	 	 	 
	 	 	 	 	 
	 	 	Page	 
	7.2 Exercise Price
	 	 	17	 
	7.3 Exercisability and Term of SARs
	 	 	18	 
	7.4 Exercise of SARs
	 	 	18	 
	7.5 Deemed Exercise of SARs
	 	 	18	 
	7.6 Effect of Termination of Service
	 	 	19	 
	7.7 Transferability of SARs
	 	 	19	 
	 
	 	 	 	 
	8. Restricted Stock Awards
	 	 	19	 
	 
	 	 	 	 
	8.1 Types of Restricted Stock Awards Authorized
	 	 	19	 
	8.2 Purchase Price
	 	 	19	 
	8.3 Purchase Period
	 	 	20	 
	8.4 Payment of Purchase Price
	 	 	20	 
	8.5 Vesting and Restrictions on Transfer
	 	 	20	 
	8.6 Voting Rights; Dividends and Distributions
	 	 	20	 
	8.7 Effect of Termination of Service
	 	 	21	 
	8.8 Nontransferability of Restricted Stock Award Rights
	 	 	21	 
	 
	 	 	 	 
	9. Restricted Stock Unit Awards
	 	 	21	 
	 
	 	 	 	 
	9.1 Grant of Restricted Stock Unit Awards
	 	 	21	 
	9.2 Purchase Price
	 	 	21	 
	9.3 Vesting
	 	 	22	 
	9.4 Voting Rights, Dividend Equivalent Rights and Distributions
	 	 	22	 
	9.5 Effect of Termination of Service
	 	 	22	 
	9.6 Settlement of Restricted Stock Unit Awards
	 	 	23	 
	9.7 Nontransferability of Restricted Stock Unit Awards
	 	 	23	 
	 
	 	 	 	 
	10. Performance Awards
	 	 	23	 
	 
	 	 	 	 
	10.1 Types of Performance Awards Authorized
	 	 	23	 
	10.2 Initial Value of Performance Shares and Performance Units
	 	 	23	 
	10.3 Establishment of Performance Period, Performance Goals and Performance
Award Formula
	 	 	24	 
	10.4 Measurement of Performance Goals
	 	 	24	 
	10.5 Settlement of Performance Awards
	 	 	26	 
	10.6 Voting Rights; Dividend Equivalent Rights and Distributions
	 	 	27	 
	10.7 Effect of Termination of Service
	 	 	28	 
	10.8 Nontransferability of Performance Awards
	 	 	28	 
	 
	 	 	 	 
	11. Cash-Based Awards and Other Stock-Based Awards
	 	 	28	 
	 
	 	 	 	 
	11.1 Grant of Cash-Based Awards
	 	 	28	 
	11.2 Grant of Other Stock-Based Awards
	 	 	29	 
	11.3 Value of Cash-Based and Other Stock-Based Awards
	 	 	29	 

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TABLE OF CONTENTS

(continued)

	 	 	 	 	 
	 	 	 	 	 
	 	 	Page	 
	11.4 Payment or Settlement of Cash-Based Awards and Other Stock-Based Awards
	 	 	29	 
	11.5 Voting Rights; Dividend Equivalent Rights and Distributions
	 	 	29	 
	11.6 Effect of Termination of Service
	 	 	30	 
	11.7 Nontransferability of Cash-Based Awards and Other Stock-Based Awards
	 	 	30	 
	 
	 	 	 	 
	12. Standard Forms of Award Agreement
	 	 	30	 
	 
	 	 	 	 
	12.1 Award Agreements
	 	 	30	 
	12.2 Authority to Vary Terms
	 	 	30	 
	 
	 	 	 	 
	13. Change in Control
	 	 	31	 
	 
	 	 	 	 
	13.1 Effect of Change in Control on Awards
	 	 	31	 
	13.2 Effect of Change in Control on Nonemployee Director Awards
	 	 	32	 
	13.3 Federal Excise Tax Under Section 4999 of the Code
	 	 	32	 
	 
	 	 	 	 
	14. Compliance with Securities Law
	 	 	32	 
	 
	 	 	 	 
	15. Compliance with Section 409A
	 	 	33	 
	 
	 	 	 	 
	15.1 Awards Subject to Section 409A
	 	 	33	 
	15.2 Deferral and/or Distribution Elections
	 	 	33	 
	15.3 Subsequent Elections
	 	 	34	 
	15.4 Payment of Section 409A Deferred Compensation
	 	 	34	 
	 
	 	 	 	 
	16. Tax Withholding
	 	 	36	 
	 
	 	 	 	 
	16.1 Tax Withholding in General
	 	 	36	 
	16.2 Withholding in or Directed Sale of Shares
	 	 	37	 
	 
	 	 	 	 
	17. Amendment, Suspension or Termination of Plan
	 	 	37	 
	 
	 	 	 	 
	18. Miscellaneous Provisions
	 	 	37	 
	 
	 	 	 	 
	18.1 Repurchase Rights
	 	 	37	 
	18.2 Forfeiture Events
	 	 	38	 
	18.3 Provision of Information
	 	 	38	 
	18.4 Rights as Employee, Consultant or Director
	 	 	38	 
	18.5 Rights as a Stockholder
	 	 	38	 
	18.6 Delivery of Title to Shares
	 	 	39	 
	18.7 Fractional Shares
	 	 	39	 
	18.8 Retirement and Welfare Plans
	 	 	39	 
	18.9 Beneficiary Designation
	 	 	39	 
	18.10 Severability
	 	 	39	 
	18.11 No Constraint on Corporate Action
	 	 	39	 
	18.12 Unfunded Obligation
	 	 	39	 
	18.13 Choice of Law
	 	 	40	 

iii

 

MagnaChip Semiconductor Corporation

2010 Equity Incentive Plan

     1. Establishment, Purpose and Term of Plan.

          1.1 Establishment. The MagnaChip Semiconductor Corporation 2010 Equity Incentive Plan (the
“Plan”) is hereby established effective as of [•], 2010, the effective date of the Conversion (the
“Effective Date”).

          1.2 Purpose. The purpose of the Plan is to advance the interests of the Participating Company
Group and its stockholders by providing an incentive to attract, retain and reward persons
performing services for the Participating Company Group and by motivating such persons to
contribute to the growth and profitability of the Participating Company Group. The Plan seeks to
achieve this purpose by providing for Awards in the form of Options, Stock Appreciation Rights,
Restricted Stock Purchase Rights, Restricted Stock Bonuses, Restricted Stock Units, Performance
Shares, Performance Units, Cash-Based Awards and Other Stock-Based Awards.

          1.3 Term of Plan. The Plan shall continue in effect until its termination by the Committee;
provided, however, that all Awards shall be granted, if at all, within ten (10) years from the
Effective Date.

     2. Definitions and Construction.

          2.1 Definitions. Whenever used herein, the following terms shall have their respective
meanings set forth below:

               (a) “Affiliate” means (i) a parent entity, other than a Parent Corporation, that directly, or
indirectly through one or more intermediary entities, controls the Company or (ii) a subsidiary
entity, other than a Subsidiary Corporation, that is controlled by the Company directly or
indirectly through one or more intermediary entities. For this purpose, the terms “parent,”
“subsidiary,” “control” and “controlled by” shall have the meanings assigned such terms for the
purposes of registration of securities on Form S-8 under the Securities Act.

               (b) “Award” means any Option, Stock Appreciation Right, Restricted Stock Purchase Right,
Restricted Stock Bonus, Restricted Stock Unit, Performance Share, Performance Unit, Cash-Based
Award or Other Stock-Based Award granted under the Plan.

               (c) “Award Agreement” means a written or electronic agreement between the Company and a
Participant setting forth the terms, conditions and restrictions applicable to an Award.

               (d) “Board” means the Board of Directors of the Company.

               (e) “Cash-Based Award” means an Award denominated in cash and granted pursuant to Section 11.

 

 

               (f) “Cashless Exercise” means a Cashless Exercise as defined in Section 6.3(b)(i).

               (g) “Cause” means, unless such term or an equivalent term is otherwise defined by the
applicable Award Agreement or other written agreement between a Participant and a Participating
Company applicable to an Award, any of the following: (i) the Participant’s failure to
substantially perform the Participant’s customary duties with a Participating Company in the
ordinary course (other than such failure resulting from the Participant’s incapacity due to
physical or mental illness) that, if susceptible to cure, has not been cured as determined by the
Participating Company within 30 days after a written demand for substantial performance is
delivered to the Participant by the Participating Company, which demand specifically identifies the
manner in which the Participating Company believes that the Participant has not substantially
performed the Participant’s duties; (ii) the Participant’s gross negligence, intentional misconduct
or fraud in the performance of his or her Service; (iii) the Participant’s indictment (or
equivalent) for a felony or to a crime involving fraud or dishonesty; (iv) a judicial determination
that the Participant committed fraud or dishonesty against any natural person, firm, partnership,
limited liability company, association, corporation, company, trust, business trust, governmental
authority or other entity; (v) the Participant’s material violation of one or more of the
Participating Company Group’s policies applicable to the Participant’s Service as may be in effect
from time to time; or (vi) the Participant’s conduct that brings or could reasonably be expected to
bring the Participating Company Group into public disgrace or disrepute and that has a material
adverse effect on the business of the Participating Company Group.

               (h) “Change in Control” means, unless such term or an equivalent term is otherwise defined by
the applicable Award Agreement, the occurrence of any one or a combination of the following:

                    (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act)
becomes the “beneficial owner” (as such term is defined in Rule 13d-3 promulgated under the
Exchange Act), directly or indirectly, of securities of the Company representing more than fifty
percent (50%) of the total Fair Market Value or total combined voting power of the Company’s
then-outstanding securities entitled to vote generally in the election of Directors; provided,
however, that a Change in Control shall not be deemed to have occurred if such degree of beneficial
ownership results from any of the following: (A) an acquisition by any person who on the Effective
Date is the beneficial owner of more than fifty percent (50%) of such voting power, (B) any
acquisition directly from the Company, including, without limitation, pursuant to or in connection
with a public offering of securities, (C) any acquisition by the Company, (D) any acquisition by a
trustee or other fiduciary under an employee benefit plan of a Participating Company or (E) any
acquisition by an entity owned directly or indirectly by the stockholders of the Company in
substantially the same proportions as their ownership of the voting securities of the Company; or

                    (ii) an Ownership Change Event or series of related Ownership Change Events (collectively, a
“Transaction”) in which the stockholders of the Company immediately before the Transaction do not
retain immediately after the Transaction direct or indirect beneficial ownership of more than fifty
percent (50%) of the total combined voting

2

 

power of the outstanding securities entitled to vote
generally in the election of Directors or, in the case of an Ownership Change Event described in
Section 2.1(ee)(iii), the entity to which the assets of the Company were transferred (the
“Transferee”), as the case may be; or

                    (iii) approval by the stockholders of a plan of complete liquidation or dissolution of the
Company;

provided, however, that a Change in Control shall be deemed not to include a transaction described
in subsections (i) or (ii) of this Section 2.1(h) in which a majority of the members of the board
of directors of the continuing, surviving or successor entity, or parent thereof, immediately after
such transaction is comprised of Incumbent Directors.

     For purposes of the preceding sentence, indirect beneficial ownership shall include, without
limitation, an interest resulting from ownership of the voting securities of one or more
corporations or other business entities which own the Company or the Transferee, as the case may
be, either directly or through one or more subsidiary corporations or other business entities. The
Committee shall determine whether multiple acquisitions of the voting securities of the Company
and/or multiple Ownership Change Events are related and to be treated in the aggregate as a single
Change in Control, and its determination shall be final, binding and conclusive.

          (i) “Code” means the Internal Revenue Code of 1986, as amended, and any applicable regulations
or administrative guidelines promulgated thereunder.

          (j) “Committee” means the Compensation Committee and such other committee or subcommittee of
the Board, if any, duly appointed to administer the Plan and having such powers in each instance as
shall be specified by the Board. If, at any time, there is no committee of the Board then
authorized or properly constituted to administer the Plan, the Board shall exercise all of the
powers of the Committee granted herein, and, in any event, the Board may in its discretion exercise
any or all of such powers.

          (k) “Company” means MagnaChip Semiconductor Corporation, a Delaware corporation, or any
successor corporation thereto.

          (l) “Consultant” means a person engaged to provide consulting or advisory services (other than
as an Employee or a member of the Board) to a Participating Company, provided that the identity of
such person, the nature of such services or the entity to which such services are provided would
not preclude the Company from offering or selling securities to such person pursuant to the Plan in
reliance on registration on Form S-8 under the Securities Act.

          (m) “Conversion” means the conversion of MagnaChip Semiconductor LLC, a Delaware limited
liability company, into the Company pursuant to Section 18-216 of the Delaware Limited Liability
Company Act.

          (n) “Covered Employee” means, at any time the Plan is subject to Section 162(m), any Employee
who is or may reasonably be expected to become a “covered employee” as defined in Section 162(m),
or any successor statute, and who is designated, either

3

 

as an individual Employee or a member of a class of Employees, by the Committee
no later than the earlier of (i) the date that is ninety (90)
days after the beginning of the Performance Period, or (ii) the date on which twenty-five percent
(25%) of the Performance Period has elapsed, as a “Covered Employee” under this Plan for such
applicable Performance Period.

               (o) “Director” means a member of the Board.

               (p) “Disability” means the permanent and total disability of the Participant, within the
meaning of Section 22(e)(3) of the Code.

               (q) “Dividend Equivalent Right” means the right of a Participant, granted at the discretion of
the Committee or as otherwise provided by the Plan, to receive a credit for the account of such
Participant in an amount equal to the cash dividends paid on one share of Stock for each share of
Stock represented by an Award held by such Participant.

               (r) “Employee” means any person treated as an employee (including an Officer or a member of
the Board who is also treated as an employee) in the records of a Participating Company and, with
respect to any Incentive Stock Option granted to such person, who is an employee for purposes of
Section 422 of the Code; provided, however, that neither service as a member of the Board nor
payment of a director’s fee shall be sufficient to constitute employment for purposes of the Plan.
The Company shall determine in good faith and in the exercise of its discretion whether an
individual has become or has ceased to be an Employee and the effective date of such individual’s
employment or termination of employment, as the case may be. For purposes of an individual’s
rights, if any, under the terms of the Plan as of the time of the Company’s determination of
whether or not the individual is an Employee, all such determinations by the Company shall be
final, binding and conclusive as to such rights, if any, notwithstanding that the Company or any
court of law or governmental agency subsequently makes a contrary determination as to such
individual’s status as an Employee.

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

               (t) “Fair Market Value” means, as of any date, the value of a share of Stock or other property
as determined by the Committee, in its discretion, or by the Company, in its discretion, if such
determination is expressly allocated to the Company herein, subject to the following:

                    (i) Except as otherwise determined by the Committee, if, on such date, the Stock is listed or
quoted on a national or regional securities exchange or quotation
system, the Fair Market Value of a share of Stock shall be the closing price of a share of
Stock as quoted on the national or regional securities exchange or quotation system constituting
the primary market for the Stock, as reported in The Wall Street Journal or such other source as
the Company deems reliable. If the relevant date does not fall on a day on which the Stock has
traded on such securities exchange or quotation system, the date on which the Fair Market Value
shall be established shall be the last day on which the Stock was so traded or quoted prior to the
relevant date, or such other appropriate day as shall be determined by the Committee, in its
discretion.

4

 

                    (ii) Notwithstanding the foregoing, the Committee may, in its discretion, determine the Fair
Market Value of a share of Stock on the basis of the opening, closing, or average of the high and
low sale prices of a share of Stock on such date or the preceding trading day, the actual sale
price of a share of Stock received by a Participant, any other reasonable basis using actual
transactions in the Stock as reported on a national or regional securities exchange or quotation
system, or on any other basis consistent with the requirements of Section 409A. The Committee may
also determine the Fair Market Value upon the average selling price of the Stock during a specified
period that is within thirty (30) days before or thirty (30) days after such date, provided that,
with respect to the grant of an Option or SAR, the commitment to grant such Award based on such
valuation method must be irrevocable before the beginning of the specified period. The Committee
may vary its method of determination of the Fair Market Value as provided in this Section for
different purposes under the Plan to the extent consistent with the requirements of Section 409A.

                    (iii) If, on such date, the Stock is not listed or quoted on a national or regional securities
exchange or quotation system, the Fair Market Value of a share of Stock shall be as determined by
the Committee in good faith without regard to any restriction other than a restriction which, by
its terms, will never lapse, and in a manner consistent with the requirements of Section 409A.

               (u) “Incentive Stock Option” means an Option intended to be (as set forth in the Award
Agreement) and which qualifies as an incentive stock option within the meaning of Section 422(b) of
the Code.

               (v) “Incumbent Director” means a director who either (i) is a member of the Board as of the
Effective Date or (ii) is elected, or nominated for election, to the Board with the affirmative
votes of at least a majority of the Incumbent Directors at the time of such election or nomination
(but excluding a director who was elected or nominated in connection with an actual or threatened
proxy contest relating to the election of directors of the Company).

               (w) “Insider” means an Officer, Director or any other person whose transactions in Stock are
subject to Section 16 of the Exchange Act.

               (x) “Net Exercise” means a Net Exercise as defined in Section 6.3(b)(iii).

               (y) “Nonemployee Director” means a Director who is not an Employee.

               (z) “Nonemployee Director Award” means any Award granted to a Nonemployee Director.

               (aa) “Nonstatutory Stock Option” means an Option not intended to be (as set forth in the Award
Agreement) or which does not qualify as an incentive stock option within the meaning of Section
422(b) of the Code.

               (bb) “Officer” means any person designated by the Board as an officer of the Company.

5

 

               (cc) “Option” means an Incentive Stock Option or a Nonstatutory Stock Option granted pursuant
to the Plan.

               (dd) “Other Stock-Based Award” means an Award denominated in shares of Stock and granted
pursuant to Section 11.

               (ee) “Ownership Change Event” means the occurrence of any of the following with respect to the
Company: (i) the direct or indirect sale or exchange in a single or series of related transactions
by the stockholders of the Company of securities of the Company representing more than fifty
percent (50%) of the total combined voting power of the Company’s then outstanding securities
entitled to vote generally in the election of Directors; (ii) a merger or consolidation in which
the Company is a party; or (iii) the sale, exchange, or transfer of all or substantially all of the
assets of the Company (other than a sale, exchange or transfer to one or more subsidiaries of the
Company).

               (ff) “Parent Corporation” means any present or future “parent corporation” of the Company, as
defined in Section 424(e) of the Code.

               (gg) “Participant” means any eligible person who has been granted one or more Awards.

               (hh) “Participating Company” means the Company or any Parent Corporation, Subsidiary
Corporation or Affiliate.

               (ii) “Participating Company Group” means, at any point in time, the Company and all other
entities collectively which are then Participating Companies.

               (jj) “Performance Award” means an Award of Performance Shares or Performance Units.

               (kk) “Performance Award Formula” means, for any Performance Award, a formula or table
established by the Committee pursuant to Section 10.3 which provides the basis for computing the
value of a Performance Award at one or more levels of attainment of the applicable Performance
Goal(s) measured as of the end of the applicable Performance Period.

               (ll) "Performance-Based Compensation” means compensation under an Award that satisfies the
requirements of Section 162(m) for certain performance-based compensation paid to Covered
Employees.

               (mm) “Performance Goal” means a performance goal established by the Committee pursuant to
Section 10.3.

               (nn) “Performance Period” means a period established by the Committee pursuant to Section 10.3
at the end of which one or more Performance Goals are to be measured.

6

 

               (oo) “Performance Share” means a right granted to a Participant pursuant to Section 10 to
receive a payment equal to the value of a Performance Share, as determined by the Committee, based
upon attainment of applicable Performance Goal(s).

               (pp) “Performance Unit” means a right granted to a Participant pursuant to Section 10 to
receive a payment equal to the value of a Performance Unit, as determined by the Committee, based
upon attainment of applicable Performance Goal(s).

               (qq) “Predecessor Plan” means the MagnaChip Semiconductor LLC 2009 Common Unit Plan, as
amended.

               (rr) “Restricted Stock Award” means an Award of a Restricted Stock Bonus or a Restricted Stock
Purchase Right.

               (ss) “Restricted Stock Bonus” means Stock granted to a Participant pursuant to Section 8.

               (tt) “Restricted Stock Purchase Right” means a right to purchase Stock granted to a
Participant pursuant to Section 8.

               (uu) “Restricted Stock Unit” means a right granted to a Participant pursuant to Section 9 to
receive on a future date or event a share of Stock or cash in lieu thereof, as determined by the
Committee.

               (vv) “Rule 16b-3” means Rule 16b-3 under the Exchange Act, as amended from time to time, or
any successor rule or regulation.

               (ww) “SAR” or “Stock Appreciation Right” means a right granted to a Participant pursuant to
Section 7 to receive payment, for each share of Stock subject to such Award, of an amount equal to
the excess, if any, of the Fair Market Value of a share of Stock on the date of exercise of the
Award over the exercise price thereof.

               (xx) “Section 162(m)”
means Section 162(m) of the Code.

               (yy) “Section 409A” means Section 409A of the Code.

               (zz) “Section 409A Deferred Compensation” means compensation provided pursuant to an Award
that constitutes nonqualified deferred compensation within the meaning of Section 409A.

               (aaa) “Securities Act” means the Securities Act of 1933, as amended.

               (bbb) “Service” means a Participant’s employment or service with the Participating Company
Group, whether as an Employee, a Director or a Consultant. Unless otherwise provided by the
Committee, a Participant’s Service shall not be deemed to have terminated merely because of a
change in the capacity in which the Participant renders such Service or a change in the
Participating Company for which the Participant renders such Service, provided that there is no
interruption or termination of the Participant’s Service. Furthermore, a

7

 

Participant’s Service shall not be deemed to have been interrupted or terminated if the Participant takes any military
leave, sick leave, or other bona fide leave of absence approved by the Company. However, unless
otherwise provided by the Committee, if any such leave taken by a Participant exceeds ninety (90)
days, then on the ninety-first (91st) day following the commencement of such leave the
Participant’s Service shall be deemed to have terminated, unless the Participant’s right to return
to Service is guaranteed by statute or contract. Notwithstanding the foregoing, unless otherwise
designated by the Company or required by law, an unpaid leave of absence shall not be treated as
Service for purposes of determining vesting under the Participant’s Award Agreement. A
Participant’s Service shall be deemed to have terminated either upon an actual termination of
Service or upon the business entity for which the Participant performs Service ceasing to be a
Participating Company. Subject to the foregoing, the Company, in its discretion, shall determine
whether the Participant’s Service has terminated and the effective date of such termination.

               (ccc) “Stock” means the common stock of the Company, as adjusted from time to time in
accordance with Section 4.5.

               (ddd) “Stock Tender Exercise” means a Stock Tender Exercise as defined in Section 6.3(b)(ii).

               (eee) “Subsidiary Corporation” means any present or future “subsidiary corporation” of the
Company, as defined in Section 424(f) of the Code.

               (fff) “Ten Percent Owner” means a Participant who, at the time an Option is granted to the
Participant, owns stock possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of a Participating Company (other than an Affiliate) within the meaning of
Section 422(b)(6) of the Code.

               (ggg) “Trading Compliance Policy” means the written policy of the Company pertaining to the
purchase, sale, transfer or other disposition of the Company’s equity securities by Directors,
Officers, Employees or other service providers who may possess material, nonpublic information
regarding the Company or its securities.

               (hhh) “Vesting Conditions” mean those conditions established in accordance with the Plan prior
to the satisfaction of which an Award or shares subject to an Award remain subject to forfeiture or
a repurchase option in favor of the Company exercisable for the Participant’s monetary purchase
price, if any, for such shares upon the Participant’s termination of Service.

          2.2 Construction. Captions and titles contained herein are for convenience only and shall not
affect the meaning or interpretation of any provision of the Plan. Except when otherwise indicated
by the context, the singular shall include the plural and the plural shall include the singular.
Use of the term “or” is not intended to be exclusive, unless the context clearly requires
otherwise.

8

 

     3. Administration.

          3.1 Administration by the Committee. The Plan shall be administered by the Committee. All
questions of interpretation of the Plan, of any Award Agreement or of any other form of agreement
or other document employed by the Company in the administration of the Plan or of any Award shall
be determined by the Committee, and such determinations shall be final, binding and conclusive upon
all persons having an interest in the Plan or such Award, unless fraudulent or made in bad faith.
Any and all actions, decisions and determinations taken or made by the Committee in the exercise of
its discretion pursuant to the Plan or Award Agreement or other agreement thereunder (other than
determining questions of interpretation pursuant to the preceding sentence) shall be final, binding
and conclusive upon all persons having an interest therein. All expenses reasonably incurred by
the Company in the administration of the Plan shall be paid by the Company.

          3.2 Authority of Officers. Any Officer shall have the authority to act on behalf of the
Company with respect to any matter, right, obligation, determination or election that is the
responsibility of or that is allocated to the Company herein, provided that the Officer has actual
authority with respect to such matter, right, obligation, determination or election. The Board or
Committee may, in its discretion, delegate to a committee comprised of one or more Officers the
authority to grant one or more Awards, without further approval of the Board or the Committee, to
any Employee, other than a person who, at the time of such grant, is an Insider or a Covered
Person; provided, however, that (a) the exercise price per share of each such Award which is an
Option or SAR shall be not less than the Fair Market Value per share of the Stock on the effective
date of grant (or, if the Stock has not traded on such date, on the last day preceding the
effective date of grant on which the Stock was traded), (b) each such Award shall be subject to the
terms and conditions of the appropriate standard form of Award Agreement approved by the Board or
the Committee and shall conform to the provisions of the Plan, and (c) each such Award shall
conform to guidelines as shall be established from time to time by resolution of the Board or the
Committee.

          3.3 Administration with Respect to Insiders. With respect to participation by Insiders in the
Plan, at any time that any class of equity security of the Company is registered pursuant to
Section 12 of the Exchange Act, the Plan shall be administered in compliance with the requirements,
if any, of Rule 16b-3.

          3.4 Committee Complying with Section 162(m). If the Company is a “publicly held corporation”
within the meaning of Section 162(m), the Board may establish a Committee of “outside directors”
within the meaning of Section 162(m) to approve the grant of any Award intended to result in the
payment of Performance-Based Compensation.

          3.5 Powers of the Committee. In addition to any other powers set forth in the Plan and
subject to the provisions of the Plan, the Committee shall have the full and final power and
authority, in its discretion:

               (a) to determine the persons to whom, and the time or times at which, Awards shall be granted
and the number of shares of Stock, units or monetary value to be subject to each Award;

9

 

               (b) to determine the type of Award granted;

               (c) to determine the Fair Market Value of shares of Stock or other property;

               (d) to determine the terms, conditions and restrictions applicable to each Award (which need
not be identical) and any shares acquired pursuant thereto, including, without limitation, (i) the
exercise or purchase price of shares pursuant to any Award, (ii) the method of payment for shares
purchased pursuant to any Award, (iii) the method for satisfaction of any tax withholding
obligation arising in connection with any Award, including by the withholding or delivery of
shares, (iv) the timing, terms and conditions of the exercisability or vesting of any Award or any
shares acquired pursuant thereto, (v) the Performance Measures, Performance Period, Performance
Award Formula and Performance Goals applicable to any Award and the extent to which such
Performance Goals have been attained, (vi) the time of the expiration of any Award, (vii) the
effect of the Participant’s termination of Service on any of the foregoing, and (viii) all other
terms, conditions and restrictions applicable to any Award or shares acquired pursuant thereto not
inconsistent with the terms of the Plan;

               (e) to determine whether an Award will be settled in shares of Stock, cash, other property or
in any combination thereof;

               (f) to approve one or more forms of Award Agreement;

               (g) to amend, modify, extend, cancel or renew any Award or to waive any restrictions or
conditions applicable to any Award or any shares acquired pursuant thereto;

               (h) to accelerate, continue, extend or defer the exercisability or vesting of any Award or any
shares acquired pursuant thereto, including with respect to the period following a Participant’s
termination of Service;

               (i) to prescribe, amend or rescind rules, guidelines and policies relating to the Plan, or to
adopt sub-plans or supplements to, or alternative versions of, the Plan, including, without
limitation, as the Committee deems necessary or desirable to comply with the
laws or regulations of or to accommodate the tax policy, accounting principles or custom of,
foreign jurisdictions whose citizens may be granted Awards; and

               (j) to correct any defect, supply any omission or reconcile any inconsistency in the Plan or
any Award Agreement and to make all other determinations and take such other actions with respect
to the Plan or any Award as the Committee may deem advisable to the extent not inconsistent with
the provisions of the Plan or applicable law.

          3.6 Option or SAR Repricing. Without the affirmative vote of holders of a majority of the
shares of Stock cast in person or by proxy at a meeting of the stockholders of the Company at which
a quorum representing a majority of all outstanding shares of Stock is present or represented by
proxy, the Committee shall not approve a program providing for either (a) the cancellation of
outstanding Options or SARs having exercise prices per share greater than the then Fair Market
Value of a share of Stock (“Underwater
Awards”) and the grant in substitution therefore of new
Options or SARs having a lower exercise price or payments in cash, or (b) the

10

 

amendment of outstanding Underwater Awards to reduce the exercise price thereof. This Section shall not apply
to adjustments pursuant to the assumption of or substitution for an Option or SAR in a manner that
would comply with Section 424(a) or Section 409A of the Code or to an adjustment pursuant to
Section 4.5.

          3.7 Indemnification. In addition to such other rights of indemnification as they may have as
members of the Board or the Committee or as officers or employees of the Participating Company
Group, to the extent permitted by applicable law, members of the Board or the Committee and any
officers or employees of the Participating Company Group to whom authority to act for the Board,
the Committee or the Company is delegated shall be indemnified by the Company against all
reasonable expenses, including attorneys’ fees, actually and necessarily incurred in connection
with the defense of any action, suit or proceeding, or in connection with any appeal therein, to
which they or any of them may be a party by reason of any action taken or failure to act under or
in connection with the Plan, or any right granted hereunder, and against all amounts paid by them
in settlement thereof (provided such settlement is approved by independent legal counsel selected
by the Company) or paid by them in satisfaction of a judgment in any such action, suit or
proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such person is liable for gross negligence, bad faith or intentional misconduct in
duties; provided, however, that within sixty (60) days after the institution of such action, suit
or proceeding, such person shall offer to the Company, in writing, the opportunity at its own
expense to handle and defend the same.

     4. Shares Subject to Plan.

          4.1 Maximum Number of Shares Issuable. Subject to adjustment as provided in Sections 4.2,
4.3, 4.4 and 4.5, the maximum aggregate number of shares of Stock
that may be issued under the Plan shall be equal to [•] ([•])1 and shall consist of
authorized but unissued or reacquired shares of Stock or any combination thereof.

          4.2 Annual Increase in Maximum Number of Shares Issuable. Subject to adjustment as provided
in Section 4.5, the maximum aggregate number of shares of Stock that may be issued under the Plan
as set forth in Section 4.1 shall be cumulatively increased automatically on January 1, 2011 and on
each subsequent January 1 through and including January 1, 2020, by a number of shares (the “Annual
Increase”) equal to the smaller of (a) two percent (2%) of the number of shares of Stock issued and
outstanding on the immediately preceding December 31, or (b) an amount determined by the Board.

          4.3 Adjustment for Unissued or Forfeited Predecessor Plan Shares. The maximum aggregate
number of shares of Stock that may be issued under the Plan as set forth in Section 4.1 shall be
cumulatively increased from time to time by:

               (a) the number of shares of Stock subject to that portion of any option or other award
outstanding pusuant to the Predecessor Plan as of the Effective Date which, on or

 

			
	1	 	Amount to equal number of shares of common
stock (as adjusted by the conversion ratio in the Conversion) remaining
available for grant under 2009 Common Unit Plan upon its termination
immediately following the Conversion. Number to be determined and inserted
prior to approval of plan by Company stockholders.

11

 

after the Effective Date, expires or is terminated or canceled for any reason without having been exercised
or settled in full; and

               (b) the number of shares of Stock acquired pursuant to the Predecessor Plan subject to
forfeiture or repurchase by the Company at the Participant’s purchase price which, on or after the
Effective Date, is so forfeited or repurchased;

provided further, however, that the aggregate number of shares of Stock authorized for issuance
under the Predecessor Plan that may become authorized for issuance under the Plan pursuant to this
Section 4.3 shall not exceed [•] ([•]2).

          4.4 Share Counting. If an outstanding Award for any reason expires or is terminated or
canceled without having been exercised or settled in full, or if shares of Stock acquired pursuant
to an Award subject to forfeiture or repurchase are forfeited or repurchased by the Company for an
amount not greater than the Participant’s purchase price, the shares of Stock allocable to the
terminated portion of such Award or such forfeited or repurchased shares of Stock shall again be
available for issuance under the Plan. Shares of Stock shall not be deemed to have been issued
pursuant to the Plan with respect to any portion of an Award that is settled in cash. Shares
withheld or reacquired by the Company in satisfaction of tax withholding obligations pursuant to
Section 16.2 shall not again be available for issuance under the Plan. Upon payment in shares of
Stock pursuant to the exercise of an SAR, the number of shares available for issuance under the
Plan shall be reduced by the gross number of shares for which
such SAR was exercised. If the exercise price of an Option is paid by tender to the Company,
or attestation to the ownership, of shares of Stock owned by the Participant, or by means of a Net
Exercise, the number of shares available for issuance under the Plan shall be reduced by the gross
number of shares for which the Option is exercised.

          4.5 Adjustments for Changes in Capital Structure. Subject to any required action by the
stockholders of the Company and the requirements of Sections 409A and 424 of the Code to the extent
applicable, in the event of any change in the Stock effected without receipt of consideration by
the Company, whether through merger, consolidation, reorganization, reincorporation,
recapitalization, reclassification, stock dividend, stock split, reverse stock split, split-up,
split-off, spin-off, combination of shares, exchange of shares, or similar change in the capital
structure of the Company, or in the event of payment of a dividend or distribution to the
stockholders of the Company in a form other than Stock (excepting regular, periodic cash dividends)
that has a material effect on the Fair Market Value of shares of Stock, appropriate and
proportionate adjustments shall be made in the number and kind of shares subject to the Plan and to
any outstanding Awards, the number of shares resulting from any prior Annual Increase, the Award
limits set forth in Section 5.3, and in the exercise or purchase price per share under any
outstanding Award in order to prevent dilution or enlargement of Participants’ rights under the
Plan. For purposes of the foregoing, conversion of any convertible securities of the Company shall
not be treated as “effected without receipt of consideration by the Company.” If a majority of the
shares which are of the same class as the shares that are subject to outstanding Awards are

 

			
	2	 	Amount to equal number of unvested shares (as
adjusted by the conversion ratio in the Conversion) subject to options and
restricted stock awards outstanding under the 2009 Common Unit Plan at the time
of its termination immediately following the Conversion. Number to be
determined and inserted prior to approval of plan by Company stockholders.

12

 

exchanged for, converted into, or otherwise become (whether or not pursuant to an Ownership Change
Event) shares of another corporation (the “New
Shares”), the Committee may unilaterally amend the
outstanding Awards to provide that such Awards are for New Shares. In the event of any such
amendment, the number of shares subject to, and the exercise or purchase price per share of, the
outstanding Awards shall be adjusted in a fair and equitable manner as determined by the Committee,
in its discretion. Any fractional share resulting from an adjustment pursuant to this Section
shall be rounded down to the nearest whole number, and in no event may the exercise or purchase
price under any Award be decreased to an amount less than the par value, if any, of the stock
subject to such Award. The Committee in its discretion, may also make such adjustments in the
terms of any Award to reflect, or related to, such changes in the capital structure of the Company
or distributions as it deems appropriate, including modification of Performance Goals, Performance
Award Formulas and Performance Periods. The adjustments determined by the Committee pursuant to
this Section shall be final, binding and conclusive.

          4.6 Assumption or Substitution of Awards. The Committee may, without affecting the number of
shares of Stock reserved or available hereunder, authorize the issuance or assumption of benefits
under this Plan in connection with any merger, consolidation, acquisition of property or stock, or
reorganization upon such terms and conditions as it may deem appropriate, subject to compliance
with Section 409A and any other applicable provisions of the Code.

     5. Eligibility, Participation and Award Limitations.

          5.1 Persons Eligible for Awards. Awards may be granted only to Employees, Consultants and
Directors.

          5.2 Participation in the Plan. Awards are granted solely at the discretion of the Committee.
Eligible persons may be granted more than one Award. However, eligibility in accordance with this
Section shall not entitle any person to be granted an Award, or, having been granted an Award, to
be granted an additional Award.

          5.3 Incentive Stock Option Limitations.

               (a) Maximum Number of Shares Issuable Pursuant to Incentive Stock Options. Subject to
adjustment as provided in Section 4.5, the maximum aggregate number of shares of Stock that may be
issued under the Plan pursuant to the exercise of Incentive Stock Options shall not exceed
[•]3 shares, cumulatively increased on January 1, 2011 and on each subsequent January 1,
through and including January 1, 2020, by a number of shares equal to the smaller of the Annual
Increase determined under Section 4.2 or [•]4 shares. The maximum aggregate number of
shares of Stock that may be issued under the Plan pursuant to all

 

			
	3	 	Amount to equal the number in Sec. 4.1, as
determined under footnote 1. Number to be determined and inserted prior to
approval of plan by Company stockholders.
	 
	4	 	Amount to equal 4% of the number of shares of
common stock estimated to be outstanding immediately after completion of the
IPO. Number to be determined and inserted prior to approval of plan by Company
stockholders. This number (required by Sec. 422 regs) is intentionally set at
twice the 2% annual evergreen increase so that the 2% evergreen will continue
to apply regardless of future dilution.

13

 

Awards other than Incentive Stock Options shall be the number of shares determined in accordance with Section 4.1, subject to
adjustment as provided in Sections 4.2, 4.3, 4.4 and 4.5.

               (b) Persons Eligible. An Incentive Stock Option may be granted only to a person who, on the
effective date of grant, is an Employee of the Company, a Parent Corporation or a Subsidiary
Corporation (each being an “ISO-Qualifying
Corporation”). Any person who is not an Employee of an
ISO-Qualifying Corporation on the effective date of the grant of an Option to such person may be
granted only a Nonstatutory Stock Option.

               (c) Fair Market Value Limitation. To the extent that options designated as Incentive Stock
Options (granted under all stock option plans of the Participating Company Group, including the
Plan) become exercisable by a Participant for the first time during any calendar year for stock
having a Fair Market Value greater than One Hundred Thousand Dollars ($100,000), the portion of
such options which exceeds such amount shall be treated as Nonstatutory Stock Options. For
purposes of this Section, options designated as Incentive Stock Options shall be taken into account
in the order in which they were granted, and the Fair Market Value of stock shall be determined as
of the time the option with respect to such stock is granted. If the Code is amended to provide
for a limitation different from that set forth in this Section, such different limitation shall be
deemed incorporated herein effective as of the date and with respect to such Options as required or
permitted by such amendment to the Code. If an Option is treated as an Incentive Stock Option in
part and as a Nonstatutory Stock Option in part by reason of the limitation set forth in this Section, the Participant may designate
which portion of such Option the Participant is exercising. In the absence of such designation,
the Participant shall be deemed to have exercised the Incentive Stock Option portion of the Option
first. Upon exercise, shares issued pursuant to each such portion shall be separately identified.

     6. Stock Options.

          Options shall be evidenced by Award Agreements specifying the number of shares of Stock
covered thereby, in such form as the Committee shall from time to time establish. Award Agreements
evidencing Options may incorporate all or any of the terms of the Plan by reference and shall
comply with and be subject to the following terms and conditions:

          6.1 Exercise Price. The exercise price for each Option shall be established in the discretion
of the Committee; provided, however, that (a) the exercise price per share shall be not less than
the Fair Market Value of a share of Stock on the effective date of grant of the Option and (b) no
Incentive Stock Option granted to a Ten Percent Owner shall have an exercise price per share less
than one hundred ten percent (110%) of the Fair Market Value of a share of Stock on the effective
date of grant of the Option. Notwithstanding the foregoing, an Option (whether an Incentive Stock
Option or a Nonstatutory Stock Option) may be granted with an exercise price lower than the minimum
exercise price set forth above if such Option is granted pursuant to an assumption or substitution
for another option in a manner that would qualify under the provisions of Section 409A or 424(a) of
the Code.

          6.2 Exercisability and Term of Options. Options shall be exercisable at such time or times,
or upon such event or events, and subject to such terms, conditions, performance criteria and
restrictions as shall be determined by the Committee and set forth in the

14

 

Award Agreement evidencing such Option; provided, however, that (a) no Option shall be exercisable after the
expiration of ten (10) years after the effective date of grant of such Option, (b) no Incentive
Stock Option granted to a Ten Percent Owner shall be exercisable after the expiration of five (5)
years after the effective date of grant of such Option and (c) no Option granted to an Employee who
is a non-exempt employee for purposes of the Fair Labor Standards Act of 1938, as amended, shall be
first exercisable until at least six (6) months following the date of grant of such Option (except
in the event of such Employee’s death, disability or retirement, upon a Change in Control, or as
otherwise permitted by the Worker Economic Opportunity Act). Subject to the foregoing, unless
otherwise specified by the Committee in the grant of an Option, each Option shall terminate ten
(10) years after the effective date of grant of the Option, unless earlier terminated in accordance
with its provisions.

          6.3 Payment of Exercise Price.

               (a) Forms of Consideration Authorized. Except as otherwise provided below, payment of the
exercise price for the number of shares of Stock being purchased pursuant to any Option shall be
made (i) in cash, by check or in cash equivalent; (ii) if permitted by the Committee and subject to
the limitations contained in Section 6.3(b), by means of (1) a Cashless Exercise, (2) a Stock
Tender Exercise or (3) a Net Exercise; (iii) by such other consideration as may be approved by the
Committee from time to time to the extent permitted by
applicable law, or (iv) by any combination thereof. The Committee may at any time or from
time to time grant Options which do not permit all of the foregoing forms of consideration to be
used in payment of the exercise price or which otherwise restrict one or more forms of
consideration.

               (b) Limitations on Forms of Consideration.

                    (i) Cashless Exercise. A “Cashless Exercise” means the delivery of a properly executed notice
of exercise together with irrevocable instructions to a broker providing for the assignment to the
Company of the proceeds of a sale or loan with respect to some or all of the shares being acquired
upon the exercise of the Option (including, without limitation, through an exercise complying with
the provisions of Regulation T as promulgated from time to time by the Board of Governors of the
Federal Reserve System). The Company reserves, at any and all times, the right, in the Company’s
sole and absolute discretion, to establish, decline to approve or terminate any program or
procedures for the exercise of Options by means of a Cashless Exercise, including with respect to
one or more Participants specified by the Company notwithstanding that such program or procedures
may be available to other Participants.

                    (ii) Stock Tender Exercise. A “Stock Tender Exercise” means the delivery of a property
executed exercise notice accompanies by a Participant’s tender to the Company, or attestation to
the ownership, in a form acceptable to the Company of whole shares of Stock owned by the
Participant having a Fair Market Value that does not exceed the aggregate exercise price for the
shares with respect to which the Option is exercised. A Stock Tender Exercise shall not be
permitted if it would constitute a violation of the provisions of any law, regulation or agreement
restricting the redemption of the Company’s stock. If required by the Company, an Option may not
be exercised by tender to the Company, or attestation to the

15

 

ownership, of shares of Stock unless such shares either have been owned by the Participant for a period of time required by the Company
(and not used for another option exercise by attestation during such period) or were not acquired,
directly or indirectly, from the Company.

                    (iii) Net Exercise. A “Net Exercise” means the delivery of a properly executed exercise
notice followed by a procedure pursuant to which (1) the Company will reduce the number of shares
otherwise issuable to a Participant upon the exercise of an Option by the largest whole number of
shares having a Fair Market Value that does not exceed the aggregate exercise price for the shares
with respect to which the Option is exercised, and (2) the Participant shall pay to the Company in
cash the remaining balance of such aggregate exercise price not satisfied by such reduction in the
number of whole shares to be issued.

          6.4 Effect of Termination of Service.

               (a) Option Exercisability. Subject to earlier termination of the Option as otherwise provided
by this Plan and unless otherwise provided by the Committee, an Option shall terminate immediately
upon the Participant’s termination of Service to the extent that it is then unvested and shall be
exercisable after the Participant’s termination of Service to the extent
it is then vested only during the applicable time period determined in accordance with this
Section and thereafter shall terminate.

                    (i) Disability. If the Participant’s Service terminates because of the Disability of the
Participant, the Option, to the extent unexercised and exercisable for vested shares on the date on
which the Participant’s Service terminated, may be exercised by the Participant (or the
Participant’s guardian or legal representative) at any time prior to the expiration of twelve (12)
months after the date on which the Participant’s Service terminated, but in any event no later than
the date of expiration of the Option’s term as set forth in the Award Agreement evidencing such
Option (the “Option Expiration Date”).

                    (ii) Death. If the Participant’s Service terminates because of the death of the Participant,
the Option, to the extent unexercised and exercisable for vested shares on the date on which the
Participant’s Service terminated, may be exercised by the Participant’s legal representative or
other person who acquired the right to exercise the Option by reason of the Participant’s death at
any time prior to the expiration of twelve (12) months after the date on which the Participant’s
Service terminated, but in any event no later than the Option Expiration Date. The Participant’s
Service shall be deemed to have terminated on account of death if the Participant dies within three
(3) months after the Participant’s termination of Service.

                    (iii) Termination for Cause. Notwithstanding any other provision of the Plan to the contrary,
if the Participant’s Service is terminated for Cause or if, following the Participant’s termination
of Service and during any period in which the Option otherwise would remain exercisable, the
Participant engages in any act that would constitute Cause, the Option shall terminate in its
entirety and cease to be exercisable immediately upon such termination of Service or act.

                    (iv) Other Termination of Service. If the Participant’s Service terminates for any reason,
except Disability, death or Cause, the Option, to the extent

16

 

unexercised and exercisable for vested shares on the date on which the Participant’s Service terminated, may be exercised by the
Participant at any time prior to the expiration of three (3) months after the date on which the
Participant’s Service terminated, but in any event no later than the Option Expiration Date.

               (b) Extension if Exercise Prevented by Law. Notwithstanding the foregoing, other than
termination of Service for Cause, if the exercise of an Option within the applicable time periods
set forth in Section 6.4(a) is prevented by the provisions of Section 14 below, the Option shall
remain exercisable until the later of (i) thirty (30) days after the date such exercise first would
no longer be prevented by such provisions or (ii) the end of the applicable time period under
Section 6.4(a), but in any event no later than the Option Expiration Date.

          6.5 Transferability of Options. During the lifetime of the Participant, an Option shall be
exercisable only by the Participant or the Participant’s guardian or legal representative. An
Option shall not be subject in any manner to anticipation, alienation, sale, exchange, transfer,
assignment, pledge, encumbrance, or garnishment by creditors of the Participant or the
Participant’s beneficiary, except transfer by will or by the laws of descent and
distribution. Notwithstanding the foregoing, to the extent permitted by the Committee, in its
discretion, and set forth in the Award Agreement evidencing such Option, an Option shall be
assignable or transferable subject to the applicable limitations, if any, described in the General
Instructions to Form S-8 under the Securities Act or, in the case of an Incentive Stock Option,
only as permitted by applicable regulations under Section 421 of the Code in a manner that does not
disqualify such Option as an Incentive Stock Option.

     7. Stock Appreciation Rights.

          Stock Appreciation Rights shall be evidenced by Award Agreements specifying the number of
shares of Stock subject to the Award, in such form as the Committee shall from time to time
establish. Award Agreements evidencing SARs may incorporate all or any of the terms of the Plan by
reference and shall comply with and be subject to the following terms and conditions:

          7.1 Types of SARs Authorized. SARs may be granted in tandem with all or any portion of a
related Option (a “Tandem SAR”) or may be granted independently of any Option (a “Freestanding
SAR”). A Tandem SAR may only be granted concurrently with the grant of the related Option.

          7.2 Exercise Price. The exercise price for each SAR shall be established in the discretion of
the Committee; provided, however, that (a) the exercise price per share subject to a Tandem SAR
shall be the exercise price per share under the related Option and (b) the exercise price per share
subject to a Freestanding SAR shall be not less than the Fair Market Value of a share of Stock on
the effective date of grant of the SAR. Notwithstanding the foregoing, an SAR may be granted with
an exercise price lower than the minimum exercise price set forth above if such SAR is granted
pursuant to an assumption or substitution for another stock appreciation right in a manner that
would qualify under the provisions of Section 409A of the Code.

17

 

          7.3 Exercisability and Term of SARs.

               (a) Tandem SARs. Tandem SARs shall be exercisable only at the time and to the extent, and
only to the extent, that the related Option is exercisable, subject to such provisions as the
Committee may specify where the Tandem SAR is granted with respect to less than the full number of
shares of Stock subject to the related Option. The Committee may, in its discretion, provide in
any Award Agreement evidencing a Tandem SAR that such SAR may not be exercised without the advance
approval of the Company and, if such approval is not given, then the Option shall nevertheless
remain exercisable in accordance with its terms. A Tandem SAR shall terminate and cease to be
exercisable no later than the date on which the related Option expires or is terminated or
canceled. Upon the exercise of a Tandem SAR with respect to some or all of the shares subject to
such SAR, the related Option shall be canceled automatically as to the number of shares with
respect to which the Tandem SAR was exercised. Upon the exercise of an Option related to a Tandem
SAR as to some or all of the shares subject to such Option, the related Tandem SAR shall be
canceled automatically as to the number of shares with respect to which the related Option was
exercised.

               (b) Freestanding SARs. Freestanding SARs shall be exercisable at such time or times, or upon
such event or events, and subject to such terms, conditions, performance criteria and restrictions
as shall be determined by the Committee and set forth in the Award Agreement evidencing such SAR;
provided, however, that (i) no Freestanding SAR shall be exercisable after the expiration of ten
(10) years after the effective date of grant of such SAR and (ii) no Freestanding SAR granted to an
Employee who is a non-exempt employee for purposes of the Fair Labor Standards Act of 1938, as
amended, shall be first exercisable until at least six (6) months following the date of grant of
such SAR (except in the event of such Employee’s death, disability or retirement, upon a Change in
Control, or as otherwise permitted by the Worker Economic Opportunity Act). Subject to the
foregoing, unless otherwise specified by the Committee in the grant of a Freestanding SAR, each
Freestanding SAR shall terminate ten (10) years after the effective date of grant of the SAR,
unless earlier terminated in accordance with its provisions.

          7.4 Exercise of SARs. Upon the exercise (or deemed exercise pursuant to Section 7.5) of an
SAR, the Participant (or the Participant’s legal representative or other person who acquired the
right to exercise the SAR by reason of the Participant’s death) shall be entitled to receive
payment of an amount for each share with respect to which the SAR is exercised equal to the excess,
if any, of the Fair Market Value of a share of Stock on the date of exercise of the SAR over the
exercise price. Payment of such amount shall be made (a) in the case of a Tandem SAR, solely in
shares of Stock in a lump sum upon the date of exercise of the SAR and (b) in the case of a
Freestanding SAR, in cash, shares of Stock, or any combination thereof as determined by the
Committee, in a lump sum upon the date of exercise of the SAR. When payment is to be made in
shares of Stock, the number of shares to be issued shall be determined on the basis of the Fair
Market Value of a share of Stock on the date of exercise of the SAR. For purposes of Section 7, an
SAR shall be deemed exercised on the date on which the Company receives notice of exercise from the
Participant or as otherwise provided in Section 7.5.

          7.5 Deemed Exercise of SARs. If, on the date on which an SAR would otherwise terminate or
expire, the SAR by its terms remains exercisable immediately prior to

18

 

such termination or expiration and, if so exercised, would result in a payment to the holder of such SAR, then any
portion of such SAR which has not previously been exercised shall automatically be deemed to be
exercised as of such date with respect to such portion.

          7.6 Effect of Termination of Service. Subject to earlier termination of the SAR as otherwise
provided herein and unless otherwise provided by the Committee, an SAR shall be exercisable after a
Participant’s termination of Service only to the extent and during the applicable time period
determined in accordance with Section 6.4 (treating the SAR as if it were an Option) and thereafter
shall terminate.

          7.7 Transferability of SARs. During the lifetime of the Participant, an SAR shall be
exercisable only by the Participant or the Participant’s guardian or legal representative. An SAR
shall not be subject in any manner to anticipation, alienation, sale, exchange, transfer,
assignment, pledge, encumbrance, or garnishment by creditors of the Participant or the
Participant’s beneficiary, except transfer by will or by the laws of descent and distribution.
Notwithstanding the foregoing, to the extent permitted by the Committee, in its discretion, and
set forth in the Award Agreement evidencing such Award, a Tandem SAR related to a Nonstatutory
Stock Option or a Freestanding SAR shall be assignable or transferable subject to the applicable
limitations, if any, described in the General Instructions to Form S-8 under the Securities Act.

     8. Restricted Stock Awards.

          Restricted Stock Awards shall be evidenced by Award Agreements specifying whether the Award is
a Restricted Stock Bonus or a Restricted Stock Purchase Right and the number of shares of Stock
subject to the Award, in such form as the Committee shall from time to time establish. Award
Agreements evidencing Restricted Stock Awards may incorporate all or any of the terms of the Plan
by reference and shall comply with and be subject to the following terms and conditions:

          8.1 Types of Restricted Stock Awards Authorized. Restricted Stock Awards may be granted in
the form of either a Restricted Stock Bonus or a Restricted Stock Purchase Right. Restricted Stock
Awards may be granted upon such conditions as the Committee shall determine, including, without
limitation, upon the attainment of one or more Performance Goals described in Section 10.4. If
either the grant of or satisfaction of Vesting Conditions applicable to a Restricted Stock Award is
to be contingent upon the attainment of one or more Performance Goals, the Committee shall follow
procedures substantially equivalent to those set forth in Sections 10.3 through 10.5(a).

          8.2 Purchase Price. The purchase price for shares of Stock issuable under each Restricted
Stock Purchase Right shall be established by the Committee in its discretion. No monetary payment
(other than applicable tax withholding) shall be required as a condition of receiving shares of
Stock pursuant to a Restricted Stock Bonus, the consideration for which shall be services actually
rendered to a Participating Company or for its benefit. Notwithstanding the foregoing, if required
by applicable state corporate law, the Participant shall furnish consideration in the form of cash
or past services rendered to a Participating Company or for its

19

 

benefit having a value not less than the par value of the shares of Stock subject to a Restricted Stock Award.

          8.3 Purchase Period. A Restricted Stock Purchase Right shall be exercisable within a period
established by the Committee, which shall in no event exceed thirty (30) days from the effective
date of the grant of the Restricted Stock Purchase Right.

          8.4 Payment of Purchase Price. Except as otherwise provided below, payment of the purchase
price for the number of shares of Stock being purchased pursuant to any Restricted Stock Purchase
Right shall be made (a) in cash, by check or in cash equivalent, (b) by such other consideration as
may be approved by the Committee from time to time to the extent permitted by applicable law, or
(c) by any combination thereof.

          8.5 Vesting and Restrictions on Transfer. Shares issued pursuant to any Restricted Stock
Award may (but need not) be made subject to Vesting Conditions based upon the satisfaction of such
Service requirements, conditions, restrictions or performance criteria,
including, without limitation, Performance Goals as described in Section 10.4, as shall be
established by the Committee and set forth in the Award Agreement evidencing such Award. During
any period in which shares acquired pursuant to a Restricted Stock Award remain subject to Vesting
Conditions, such shares may not be sold, exchanged, transferred, pledged, assigned or otherwise
disposed of other than pursuant to an Ownership Change Event or as provided in Section 8.8. The
Committee, in its discretion, may provide in any Award Agreement evidencing a Restricted Stock
Award that, if the satisfaction of Vesting Conditions with respect to any shares subject to such
Restricted Stock Award would otherwise occur on a day on which the sale of such shares would
violate the provisions of the Trading Compliance Policy, then satisfaction of the Vesting
Conditions automatically shall be determined on the next trading day on which the sale of such
shares would not violate the Trading Compliance Policy. Upon request by the Company, each
Participant shall execute any agreement evidencing such transfer restrictions prior to the receipt
of shares of Stock hereunder and shall promptly present to the Company any and all certificates
representing shares of Stock acquired hereunder for the placement on such certificates of
appropriate legends evidencing any such transfer restrictions.

          8.6 Voting Rights; Dividends and Distributions. Except as provided in this Section, Section
8.5 and any Award Agreement, during any period in which shares acquired pursuant to a Restricted
Stock Award remain subject to Vesting Conditions, the Participant shall have all of the rights of a
stockholder of the Company holding shares of Stock, including the right to vote such shares and to
receive all dividends and other distributions paid with respect to such shares; provided, however,
that unless otherwise determined by the Committee and provided by the Award Agreement, such
dividends and distributions shall be subject to the same Vesting Conditions as the shares subject
to the Restricted Stock Award with respect to which such dividends or distributions were paid, and
otherwise shall be paid no later than the end of the calendar year in which such dividends or
distributions are paid to stockholders (or, if later, the 15th day of the third month following the
date such dividends or distributions are paid to stockholders). In the event of a dividend or
distribution paid in shares of Stock or other property or any other adjustment made upon a change
in the capital structure of the Company as described in Section 4.5, any and all new, substituted
or additional securities or other property (other than regular, periodic cash dividends) to which
the Participant is entitled by reason of the

20

 

Participant’s Restricted Stock Award shall be
immediately subject to the same Vesting Conditions as the shares subject to the Restricted Stock
Award with respect to which such dividends or distributions were paid or adjustments were made.

          8.7 Effect of Termination of Service. Unless otherwise provided by the Committee in the Award
Agreement evidencing a Restricted Stock Award, if a Participant’s Service terminates for any
reason, whether voluntary or involuntary (including the Participant’s death or disability), then
(a) the Company shall have the option to repurchase for the purchase price paid by the Participant
any shares acquired by the Participant pursuant to a Restricted Stock Purchase Right which remain
subject to Vesting Conditions as of the date of the Participant’s termination of Service and
(b) the Participant shall forfeit to the Company any shares acquired by the Participant pursuant to
a Restricted Stock Bonus which remain subject to Vesting Conditions as of the date of the
Participant’s termination of Service. The Company shall have
the right to assign at any time any repurchase right it may have, whether or not such right is
then exercisable, to one or more persons as may be selected by the Company.

          8.8 Nontransferability of Restricted Stock Award Rights. Rights to acquire shares of Stock
pursuant to a Restricted Stock Award shall not be subject in any manner to anticipation,
alienation, sale, exchange, transfer, assignment, pledge, encumbrance or garnishment by creditors
of the Participant or the Participant’s beneficiary, except transfer by will or the laws of descent
and distribution. All rights with respect to a Restricted Stock Award granted to a Participant
hereunder shall be exercisable during his or her lifetime only by such Participant or the
Participant’s guardian or legal representative.

     9. Restricted Stock Unit Awards.

          Restricted Stock Unit Awards shall be evidenced by Award Agreements specifying the number of
Restricted Stock Units subject to the Award, in such form as the Committee shall from time to time
establish. Award Agreements evidencing Restricted Stock Units may incorporate all or any of the
terms of the Plan by reference and shall comply with and be subject to the following terms and
conditions:

          9.1 Grant of Restricted Stock Unit Awards. Restricted Stock Unit Awards may be granted upon
such conditions as the Committee shall determine, including, without limitation, upon the
attainment of one or more Performance Goals described in Section 10.4. If either the grant of a
Restricted Stock Unit Award or the Vesting Conditions with respect to such Award is to be
contingent upon the attainment of one or more Performance Goals, the Committee shall follow
procedures substantially equivalent to those set forth in Sections 10.3 through 10.5(a).

          9.2 Purchase Price. No monetary payment (other than applicable tax withholding, if any) shall
be required as a condition of receiving a Restricted Stock Unit Award, the consideration for which
shall be services actually rendered to a Participating Company or for its benefit. Notwithstanding
the foregoing, if required by applicable state corporate law, the Participant shall furnish
consideration in the form of cash or past services rendered to a Participating Company or for its
benefit having a value not less than the par value of the shares of Stock issued upon settlement of
the Restricted Stock Unit Award.

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          9.3 Vesting. Restricted Stock Unit Awards may (but need not) be made subject to Vesting
Conditions based upon the satisfaction of such Service requirements, conditions, restrictions or
performance criteria, including, without limitation, Performance Goals as described in
Section 10.4, as shall be established by the Committee and set forth in the Award Agreement
evidencing such Award. The Committee, in its discretion, may provide in any Award Agreement
evidencing a Restricted Stock Unit Award that, if the satisfaction of Vesting Conditions with
respect to any shares subject to the Award would otherwise occur on a day on which the sale of such
shares would violate the provisions of the Trading Compliance Policy, then the satisfaction of the
Vesting Conditions automatically shall be determined on the first to occur of (a) the next trading
day on which the sale of such shares would not violate the Trading Compliance Policy or (b) the
later of (i) last day of the calendar year in which the original
vesting date occurred or (ii) the last day of the Company’s taxable year in which the original
vesting date occurred.

          9.4 Voting Rights, Dividend Equivalent Rights and Distributions. Participants shall have no
voting rights with respect to shares of Stock represented by Restricted Stock Units until the date
of the issuance of such shares (as evidenced by the appropriate entry on the books of the Company
or of a duly authorized transfer agent of the Company). However, the Committee, in its discretion,
may provide in the Award Agreement evidencing any Restricted Stock Unit Award that the Participant
shall be entitled to Dividend Equivalent Rights with respect to the payment of cash dividends on
Stock during the period beginning on the date such Award is granted and ending, with respect to
each share subject to the Award, on the earlier of the date the Award is settled or the date on
which it is terminated. Such Dividend Equivalent Rights, if any, shall be paid by crediting the
Participant with a cash amount or with additional whole Restricted Stock Units as of the date of
payment of such cash dividends on Stock, as determined by the Committee. The number of additional
Restricted Stock Units (rounded to the nearest whole number), if any, to be so credited shall be
determined by dividing (a) the amount of cash dividends paid on such date with respect to the
number of shares of Stock represented by the Restricted Stock Units previously credited to the
Participant by (b) the Fair Market Value per share of Stock on such date. Such cash amounts and/or
additional Restricted Stock Units shall be subject to the same terms and conditions and shall be
settled in the same manner and at the same time as the Restricted Stock Units originally subject to
the Restricted Stock Unit Award. In the event of a dividend or distribution paid in shares of
Stock or other property or any other adjustment made upon a change in the capital structure of the
Company as described in Section 4.5, appropriate adjustments shall be made in the Participant’s
Restricted Stock Unit Award so that it represents the right to receive upon settlement any and all
new, substituted or additional securities or other property (other than regular, periodic cash
dividends) to which the Participant would be entitled by reason of the shares of Stock issuable
upon settlement of the Award, and all such new, substituted or additional securities or other
property shall be immediately subject to the same Vesting Conditions as are applicable to the
Award.

          9.5 Effect of Termination of Service. Unless otherwise provided by the Committee and set
forth in the Award Agreement evidencing a Restricted Stock Unit Award, if a Participant’s Service
terminates for any reason, whether voluntary or involuntary (including the Participant’s death or
disability), then the Participant shall forfeit to the Company any Restricted Stock Units pursuant
to the Award which remain subject to Vesting Conditions as of the date of the Participant’s
termination of Service.

22

 

          9.6 Settlement of Restricted Stock Unit Awards. The Company shall issue to a Participant on
the date on which Restricted Stock Units subject to the Participant’s Restricted Stock Unit Award
vest or on such other date determined by the Committee, in its discretion, and set forth in the
Award Agreement one (1) share of Stock (and/or any other new, substituted or additional securities
or other property pursuant to an adjustment described in Section 9.4) for each Restricted Stock
Unit then becoming vested or otherwise to be settled on such date, subject to the withholding of
applicable taxes, if any. If permitted by the Committee, the Participant may elect, consistent
with the requirements of Section 409A, to defer receipt of all or any portion of the shares of
Stock or other property otherwise issuable to the Participant
pursuant to this Section, and such deferred issuance date(s) and amount(s) elected by the
Participant shall be set forth in the Award Agreement. Notwithstanding the foregoing, the
Committee, in its discretion, may provide for settlement of any Restricted Stock Unit Award by
payment to the Participant in cash of an amount equal to the Fair Market Value on the payment date
of the shares of Stock or other property otherwise issuable to the Participant pursuant to this
Section.

          9.7 Nontransferability of Restricted Stock Unit Awards. The right to receive shares pursuant
to a Restricted Stock Unit Award shall not be subject in any manner to anticipation, alienation,
sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors of the
Participant or the Participant’s beneficiary, except transfer by will or by the laws of descent and
distribution. All rights with respect to a Restricted Stock Unit Award granted to a Participant
hereunder shall be exercisable during his or her lifetime only by such Participant or the
Participant’s guardian or legal representative.

     10. Performance Awards.

          Performance Awards shall be evidenced by Award Agreements in such form as the Committee shall
from time to time establish. Award Agreements evidencing Performance Awards may incorporate all or
any of the terms of the Plan by reference and shall comply with and be subject to the following
terms and conditions:

          10.1 Types of Performance Awards Authorized. Performance Awards may be granted in the form of
either Performance Shares or Performance Units. Each Award Agreement evidencing a Performance
Award shall specify the number of Performance Shares or Performance Units subject thereto, the
Performance Award Formula, the Performance Goal(s) and Performance Period applicable to the Award,
and the other terms, conditions and restrictions of the Award.

          10.2 Initial Value of Performance Shares and Performance Units. Unless otherwise provided by
the Committee in granting a Performance Award, each Performance Share shall have an initial
monetary value equal to the Fair Market Value of one (1) share of Stock, subject to adjustment as
provided in Section 4.5, on the effective date of grant of the Performance Share, and each
Performance Unit shall have an initial monetary value established by the Committee at the time of
grant. The final value payable to the Participant in settlement of a Performance Award determined
on the basis of the applicable Performance Award Formula will depend on the extent to which
Performance Goals established by the Committee are attained within the applicable Performance
Period established by the Committee.

23

 

          10.3 Establishment of Performance Period, Performance Goals and Performance Award Formula. In
granting each Performance Award, the Committee shall establish in writing the applicable
Performance Period, Performance Award Formula and one or more Performance Goals which, when
measured at the end of the Performance Period, shall determine on the basis of the Performance
Award Formula the final value of the Performance Award to be paid to the Participant. Unless
otherwise permitted in compliance with the requirements under Section 162(m) with respect to each
Performance Award intended to result in the payment of Performance-Based Compensation, the Committee shall establish the Performance
Goal(s) and Performance Award Formula applicable to each Performance Award no later than the
earlier of (a) the date ninety (90) days after the commencement of the applicable Performance
Period or (b) the date on which 25% of the Performance Period has elapsed, and, in any event, at a
time when the outcome of the Performance Goals remains substantially uncertain. Once established,
the Performance Goals and Performance Award Formula applicable to a Covered Employee shall not be
changed during the Performance Period. The Company shall notify each Participant granted a
Performance Award of the terms of such Award, including the Performance Period, Performance Goal(s)
and Performance Award Formula.

          10.4 Measurement of Performance Goals. Performance Goals shall be established by the
Committee on the basis of targets to be attained
(“Performance Targets”) with respect to one or
more measures of business or financial performance (each, a
“Performance Measure”), subject to the
following:

               (a) Performance Measures. Performance Measures shall be calculated in accordance with the
Company’s financial statements, or, if such terms are not used in the Company’s financial
statements, they shall be calculated in accordance with generally accepted accounting principles, a
method used generally in the Company’s industry, or in accordance with a methodology established by
the Committee prior to the grant of the Performance Award. Performance Measures shall be
calculated with respect to the Company and each Subsidiary Corporation consolidated therewith for
financial reporting purposes or such division or other business unit as may be selected by the
Committee. Unless otherwise determined by the Committee prior to the grant of the Performance
Award, the Performance Measures applicable to the Performance Award shall be calculated prior to
the accrual of expense for any Performance Award for the same Performance Period and excluding the
effect (whether positive or negative) on the Performance Measures of any change in accounting
standards or any extraordinary, unusual or nonrecurring item, as determined by the Committee,
occurring after the establishment of the Performance Goals applicable to the Performance Award.
Each such adjustment, if any, shall be made solely for the purpose of providing a consistent basis
from period to period for the calculation of Performance Measures in order to prevent the dilution
or enlargement of the Participant’s rights with respect to a Performance Award. Performance
Measures may be one or more of the following, as determined by the Committee:

                    (i) revenue;

                    (ii) sales;

                    (iii) expenses;

24

 

                    (iv) operating income;

                    (v) gross margin;

                    (vi) operating margin;

                    (vii) earnings before any one or more of: stock-based compensation expense, interest, taxes,
depreciation and amortization;

                    (viii) pre-tax profit;

                    (ix) net operating income;

                    (x) net income;

                    (xi) economic value added;

                    (xii) free cash flow;

                    (xiii) operating cash flow;

                    (xiv) balance of cash, cash equivalents and marketable securities;

                    (xv) stock price;

                    (xvi) earnings per share;

                    (xvii) return on stockholder equity;

                    (xviii) return on capital;

                    (xix) return on assets;

                    (xx) return on investment;

                    (xxi) total stockholder return;

                    (xxii) employee satisfaction;

                    (xxiii) employee retention;

                    (xxiv) market share;

                    (xxv) customer satisfaction;

                    (xxvi) product development;

                    (xxvii) research and development expenses;

                    (xxviii) completion of an identified special project; and

25

 

                    (xxix) completion of a joint venture or other corporate transaction.

               (b) Performance Targets. Performance Targets may include a minimum, maximum, target level and
intermediate levels of performance, with the final value of a Performance Award determined under
the applicable Performance Award Formula by the level attained during the applicable Performance
Period. A Performance Target may be stated as an absolute value, an increase or decrease in a
value, or as a value determined relative to an index, budget or other standard selected by the
Committee.

          10.5 Settlement of Performance Awards.

               (a) Determination of Final Value. As soon as practicable following the completion of the
Performance Period applicable to a Performance Award, the Committee shall certify in writing the
extent to which the applicable Performance Goals have been attained and the resulting final value
of the Award earned by the Participant and to be paid upon its settlement in accordance with the
applicable Performance Award Formula.

               (b) Discretionary Adjustment of Award Formula. In its discretion, the Committee may, either
at the time it grants a Performance Award or at any time thereafter, provide for the positive or
negative adjustment of the Performance Award Formula applicable to a Performance Award granted to
any Participant who is not a Covered Employee to reflect such Participant’s individual performance
in his or her position with the Company or such other factors as the Committee may determine. If
permitted under a Covered Employee’s Award Agreement, the Committee shall have the discretion, on
the basis of such criteria as may be established by the Committee, to reduce some or all of the
value of the Performance Award that would otherwise be paid to the Covered Employee upon its
settlement notwithstanding the attainment of any Performance Goal and the resulting value of the
Performance Award determined in accordance with the Performance Award Formula. No such reduction
may result in an increase in the amount payable upon settlement of another Participant’s
Performance Award that is intended to result in Performance-Based Compensation.

               (c) Effect of Leaves of Absence. Unless otherwise required by law or a Participant’s Award
Agreement, payment of the final value, if any, of a Performance Award held by a Participant who has
taken in excess of thirty (30) days in unpaid leaves of absence during a Performance Period shall
be prorated on the basis of the number of days of the Participant’s Service during the Performance
Period during which the Participant was not on an unpaid leave of absence.

               (d) Notice to Participants. As soon as practicable following the Committee’s determination
and certification in accordance with Sections 10.5(a) and (b), the Company shall notify each
Participant of the determination of the Committee.

               (e) Payment in Settlement of Performance Awards. As soon as practicable following the
Committee’s determination and certification in accordance with Sections 10.5(a) and (b), but in any
event within the Short-Term Deferral Period described in Section 15.1 (except as otherwise provided
below or consistent with the requirements of Section 409A), payment shall be made to each eligible
Participant (or such Participant’s legal

26

 

representative or other person who acquired the right to
receive such payment by reason of the Participant’s death) of the final value of the Participant’s Performance Award. Payment of
such amount shall be made in cash, shares of Stock, or a combination thereof as determined by the
Committee. Unless otherwise provided in the Award Agreement evidencing a Performance Award,
payment shall be made in a lump sum. If permitted by the Committee, the Participant may elect,
consistent with the requirements of Section 409A, to defer receipt of all or any portion of the
payment to be made to the Participant pursuant to this Section, and such deferred payment date(s)
elected by the Participant shall be set forth in the Award Agreement. If any payment is to be made
on a deferred basis, the Committee may, but shall not be obligated to, provide for the payment
during the deferral period of Dividend Equivalent Rights or interest.

               (f) Provisions Applicable to Payment in Shares. If payment is to be made in shares of Stock,
the number of such shares shall be determined by dividing the final value of the Performance Award
by the Fair Market Value of a share of Stock determined by the method specified in the Award
Agreement. Shares of Stock issued in payment of any Performance Award may be fully vested and
freely transferable shares or may be shares of Stock subject to Vesting Conditions as provided in
Section 8.5. Any shares subject to Vesting Conditions shall be evidenced by an appropriate Award
Agreement and shall be subject to the provisions of Sections 8.5 through 8.8 above.

          10.6 Voting Rights; Dividend Equivalent Rights and Distributions. Participants shall have no
voting rights with respect to shares of Stock represented by Performance Share Awards until the
date of the issuance of such shares, if any (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the Company). However, the Committee, in its
discretion, may provide in the Award Agreement evidencing any Performance Share Award that the
Participant shall be entitled to Dividend Equivalent Rights with respect to the payment of cash
dividends on Stock during the period beginning on the date the Award is granted and ending, with
respect to each share subject to the Award, on the earlier of the date on which the Performance
Shares are settled or the date on which they are forfeited. Such Dividend Equivalent Rights, if
any, shall be credited to the Participant either in cash or in the form of additional whole
Performance Shares as of the date of payment of such cash dividends on Stock, as determined by the
Committee. The number of additional Performance Shares (rounded to the nearest whole number), if
any, to be so credited shall be determined by dividing (a) the amount of cash dividends paid on the
dividend payment date with respect to the number of shares of Stock represented by the Performance
Shares previously credited to the Participant by (b) the Fair Market Value per share of Stock on
such date. Dividend Equivalent Rights may be paid currently or may be accumulated and paid to the
extent that Performance Shares become nonforfeitable, as determined by the Committee. Settlement
of Dividend Equivalent Rights may be made in cash, shares of Stock, or a combination thereof as
determined by the Committee, and may be paid on the same basis as settlement of the related
Performance Share as provided in Section 10.5. Dividend Equivalent Rights shall not be paid with
respect to Performance Units. In the event of a dividend or distribution paid in shares of Stock
or other property or any other adjustment made upon a change in the capital structure of the
Company as described in Section 4.5, appropriate adjustments shall be made in the Participant’s
Performance Share Award so that it represents the right to receive upon settlement any and all new,
substituted or additional securities or other property (other than regular, periodic cash dividends) to which the Participant would be
entitled

27

 

by reason of the shares of Stock issuable upon settlement of the Performance Share Award,
and all such new, substituted or additional securities or other property shall be immediately
subject to the same Performance Goals as are applicable to the Award.

          10.7 Effect of Termination of Service. Unless otherwise provided by the Committee and set
forth in the Award Agreement evidencing a Performance Award, the effect of a Participant’s
termination of Service on the Performance Award shall be as follows:

               (a) Death or Disability. If the Participant’s Service terminates because of the death or
Disability of the Participant before the completion of the Performance Period applicable to the
Performance Award, the final value of the Participant’s Performance Award shall be determined by
the extent to which the applicable Performance Goals have been attained with respect to the entire
Performance Period and shall be prorated based on the number of months of the Participant’s Service
during the Performance Period. Payment shall be made following the end of the Performance Period
in any manner permitted by Section 10.5.

               (b) Other Termination of Service. If the Participant’s Service terminates for any reason
except death or Disability before the completion of the Performance Period applicable to the
Performance Award, such Award shall be forfeited in its entirety; provided, however, that in the
event of an involuntary termination of the Participant’s Service, the Committee, in its discretion,
may waive the automatic forfeiture of all or any portion of any such Award and determine the final
value of the Performance Award in the manner provided by Section 10.7(a). Payment of any amount
pursuant to this Section shall be made following the end of the Performance Period in any manner
permitted by Section 10.5.

          10.8 Nontransferability of Performance Awards. Prior to settlement in accordance with the
provisions of the Plan, no Performance Award shall be subject in any manner to anticipation,
alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors
of the Participant or the Participant’s beneficiary, except transfer by will or by the laws of
descent and distribution. All rights with respect to a Performance Award granted to a Participant
hereunder shall be exercisable during his or her lifetime only by such Participant or the
Participant’s guardian or legal representative.

     11. Cash-Based Awards and Other Stock-Based Awards.

          Cash-Based Awards and Other Stock-Based Awards shall be evidenced by Award Agreements in such
form as the Committee shall from time to time establish. Award Agreements evidencing Cash-Based
Awards and Other Stock-Based Awards may incorporate all or any of the terms of the Plan by
reference and shall comply with and be subject to the following terms and conditions:

          11.1 Grant of Cash-Based Awards. Subject to the provisions of the Plan, the Committee, at any
time and from time to time, may grant Cash-Based Awards to Participants in such amounts and upon
such terms and conditions, including the achievement of performance criteria, as the Committee may
determine.

28

 

          11.2 Grant of Other Stock-Based Awards. The Committee may grant other types of equity-based
or equity-related Awards not otherwise described by the terms of this Plan (including the grant or
offer for sale of unrestricted securities, stock-equivalent units, stock appreciation units,
securities or debentures convertible into common stock or other forms determined by the Committee)
in such amounts and subject to such terms and conditions as the Committee shall determine. Other
Stock-Based Awards may be made available as a form of payment in the settlement of other Awards or
as payment in lieu of compensation to which a Participant is otherwise entitled. Other Stock-Based
Awards may involve the transfer of actual shares of Stock to Participants, or payment in cash or
otherwise of amounts based on the value of Stock and may include, without limitation, Awards
designed to comply with or take advantage of the applicable local laws of jurisdictions other than
the United States.

          11.3 Value of Cash-Based and Other Stock-Based Awards. Each Cash-Based Award shall specify a
monetary payment amount or payment range as determined by the Committee. Each Other Stock-Based
Award shall be expressed in terms of shares of Stock or units based on such shares of Stock, as
determined by the Committee. The Committee may require the satisfaction of such Service
requirements, conditions, restrictions or performance criteria, including, without limitation,
Performance Goals as described in Section 10.4, as shall be established by the Committee and set
forth in the Award Agreement evidencing such Award. If the Committee exercises its discretion to
establish performance criteria, the final value of Cash-Based Awards or Other Stock-Based Awards
that will be paid to the Participant will depend on the extent to which the performance criteria
are met. The establishment of performance criteria with respect to the grant or vesting of any
Cash-Based Award or Other Stock-Based Award intended to result in Performance-Based Compensation
shall follow procedures substantially equivalent to those applicable to Performance Awards set
forth in Section 10.

          11.4 Payment or Settlement of Cash-Based Awards and Other Stock-Based Awards. Payment or
settlement, if any, with respect to a Cash-Based Award or an Other Stock-Based Award shall be made
in accordance with the terms of the Award, in cash, shares of Stock or other securities or any
combination thereof as the Committee determines. The determination and certification of the final
value with respect to any Cash-Based Award or Other Stock-Based Award intended to result in
Performance-Based Compensation shall comply with the requirements applicable to Performance Awards
set forth in Section 10. To the extent applicable, payment or settlement with respect to each
Cash-Based Award and Other Stock-Based Award shall be made in compliance with the requirements of
Section 409A.

          11.5 Voting Rights; Dividend Equivalent Rights and Distributions. Participants shall have no
voting rights with respect to shares of Stock represented by Other Stock-Based Awards until the
date of the issuance of such shares of Stock (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the Company), if any, in settlement of such
Award. However, the Committee, in its discretion, may provide in the Award Agreement evidencing
any Other Stock-Based Award that the Participant shall be entitled to Dividend Equivalent Rights
with respect to the payment of cash dividends on Stock during the period beginning on the date such
Award is granted and ending, with respect to each share subject to the Award, on the earlier of the
date the Award is settled or the date on which it is terminated. Such Dividend Equivalent Rights, if any, shall be paid in accordance

29

 

with the provisions set forth in Section 9.4. Dividend Equivalent Rights shall not
be granted with respect to Cash-Based Awards. In the event of a dividend or distribution paid in
shares of Stock or other property or any other adjustment made upon a change in the capital
structure of the Company as described in Section 4.5, appropriate adjustments shall be made in the
Participant’s Other Stock-Based Award so that it represents the right to receive upon settlement
any and all new, substituted or additional securities or other property (other than regular,
periodic cash dividends) to which the Participant would be entitled by reason of the shares of
Stock issuable upon settlement of such Award, and all such new, substituted or additional
securities or other property shall be immediately subject to the same Vesting Conditions and
performance criteria, if any, as are applicable to the Award.

          11.6 Effect of Termination of Service. Each Award Agreement evidencing a Cash-Based Award or
Other Stock-Based Award shall set forth the extent to which the Participant shall have the right to
retain such Award following termination of the Participant’s Service. Such provisions shall be
determined in the discretion of the Committee, need not be uniform among all Cash-Based Awards or
Other Stock-Based Awards, and may reflect distinctions based on the reasons for termination,
subject to the requirements of Section 409A, if applicable.

          11.7 Nontransferability of Cash-Based Awards and Other Stock-Based Awards. Prior to the
payment or settlement of a Cash-Based Award or Other Stock-Based Award, the Award shall not be
subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge,
encumbrance, or garnishment by creditors of the Participant or the Participant’s beneficiary,
except transfer by will or by the laws of descent and distribution. The Committee may impose such
additional restrictions on any shares of Stock issued in settlement of Cash-Based Awards and Other
Stock-Based Awards as it may deem advisable, including, without limitation, minimum holding period
requirements, restrictions under applicable federal securities laws, under the requirements of any
stock exchange or market upon which such shares of Stock are then listed and/or traded, or under
any state securities laws or foreign law applicable to such shares of Stock.

     12. Standard Forms of Award Agreement.

          12.1 Award Agreements. Each Award shall comply with and be subject to the terms and conditions
set forth in the appropriate form of Award Agreement approved by the Committee and as amended from
time to time. No Award or purported Award shall be a valid and binding obligation of the Company
unless evidenced by a fully executed Award Agreement, which execution may be evidenced by
electronic means.

          12.2 Authority to Vary Terms. The Committee shall have the authority from time to time to vary
the terms of any standard form of Award Agreement either in connection with the grant or amendment
of an individual Award or in connection with the authorization of a new standard form or forms;
provided, however, that the terms and conditions of any such new, revised or amended standard form
or forms of Award Agreement are not inconsistent with the terms of the Plan.

30

 

     13. Change in Control.

          13.1 Effect of Change in Control on Awards. Subject to the requirements and limitations of
Section 409A, if applicable, the Committee may provide for any one or more of the following:

               (a) Accelerated Vesting. In its discretion, the Committee may provide in the grant of any
Award or at any other time may take such action as it deems appropriate to provide for acceleration
of the exercisability, vesting and/or settlement in connection with a Change in Control of each or
any outstanding Award or portion thereof and shares acquired pursuant thereto upon such conditions,
including termination of the Participant’s Service prior to, upon, or following such Change in
Control, and to such extent as the Committee shall determine.

               (b) Assumption, Continuation or Substitution. In the event of a Change in Control, the
surviving, continuing, successor, or purchasing corporation or other business entity or parent
thereof, as the case may be (the “Acquiror”), may, without the consent of any Participant, assume
or continue the Company’s rights and obligations under each or any Award or portion thereof
outstanding immediately prior to the Change in Control or substitute for each or any such
outstanding Award or portion thereof a substantially equivalent award with respect to the
Acquiror’s stock, as applicable. For purposes of this Section, if so determined by the Committee
in its discretion, an Award denominated in shares of Stock shall be deemed assumed if, following
the Change in Control, the Award confers the right to receive, subject to the terms and conditions
of the Plan and the applicable Award Agreement, for each share of Stock subject to the Award
immediately prior to the Change in Control, the consideration (whether stock, cash, other
securities or property or a combination thereof) to which a holder of a share of Stock on the
effective date of the Change in Control was entitled (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of the outstanding
shares of Stock); provided, however, that if such consideration is not solely common stock of the
Acquiror, the Committee may, with the consent of the Acquiror, provide for the consideration to be
received upon the exercise or settlement of the Award, for each share of Stock subject to the
Award, to consist solely of common stock of the Acquiror equal in Fair Market Value to the per
share consideration received by holders of Stock pursuant to the Change in Control. Any Award or
portion thereof which is neither assumed or continued by the Acquiror in connection with the Change
in Control nor exercised or settled as of the time of consummation of the Change in Control shall
terminate and cease to be outstanding effective as of the time of consummation of the Change in
Control.

               (c) Cash-Out of Outstanding Stock-Based Awards. The Committee may, in its discretion and
without the consent of any Participant, determine that, upon the occurrence of a Change in Control,
each or any Award denominated in shares of Stock or portion thereof outstanding immediately prior
to the Change in Control and not previously exercised or settled shall be canceled in exchange for
a payment with respect to each vested share (and each unvested share, if so determined by the
Committee) of Stock subject to such canceled Award in (i) cash, (ii) stock of the Company or of a
corporation or other business entity a party to the Change in Control, or (iii) other property
which, in any such case, shall be in an amount having a Fair Market Value equal to the Fair Market
Value of the consideration to be paid per share of Stock in the Change in Control, reduced (but not
below zero) by the exercise or purchase price

31

 

per share, if any, under such Award. In the event such determination is made by the
Committee, an Award having an exercise or purchase price per share equal to or greater than the
Fair Market Value of the consideration to be paid per share of Stock in the Change in Control may
be canceled without payment of consideration to the holder thereof. Payment pursuant to this
Section (reduced by applicable withholding taxes, if any) shall be made to Participants in respect
of the vested portions of their canceled Awards as soon as practicable following the date of the
Change in Control and in respect of the unvested portions of their canceled Awards in accordance
with the vesting schedules applicable to such Awards.

          13.2 Effect of Change in Control on Nonemployee Director Awards. Subject to the requirements
and limitations of Section 409A, if applicable, including as provided by Section 15.4(f), in the
event of a Change in Control, each outstanding Nonemployee Director Award shall become immediately
exercisable and vested in full and, except to the extent assumed, continued or substituted for
pursuant to Section 13.1(b), shall be settled effective immediately prior to the time of
consummation of the Change in Control.

          13.3 Federal Excise Tax Under Section 4999 of the Code.

               (a) Excess Parachute Payment. In the event that any acceleration of vesting pursuant to an
Award and any other payment or benefit received or to be received by a Participant would subject
the Participant to any excise tax pursuant to Section 4999 of the Code due to the characterization
of such acceleration of vesting, payment or benefit as an “excess parachute payment” under Section
280G of the Code, the Participant may elect to reduce the amount of any acceleration of vesting
called for under the Award in order to avoid such characterization.

               (b) Determination by Independent Accountants. To aid the Participant in making any election
called for under Section 13.3(a), no later than the date of the occurrence of any event that might
reasonably be anticipated to result in an “excess parachute payment” to the Participant as
described in Section 13.3(a), the Company shall request a determination in writing by independent
public accountants selected by the Company (the “Accountants”). As soon as practicable thereafter,
the Accountants shall determine and report to the Company and the Participant the amount of such
acceleration of vesting, payments and benefits which would produce the greatest after-tax benefit
to the Participant. For the purposes of such determination, the Accountants may rely on
reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the
Code. The Company and the Participant shall furnish to the Accountants such information and
documents as the Accountants may reasonably request in order to make their required determination.
The Company shall bear all fees and expenses the Accountants charge in connection with their
services contemplated by this Section.

     14. Compliance with Securities Law.

          The grant of Awards and the issuance of shares of Stock pursuant to any Award shall be subject
to compliance with all applicable requirements of federal, state and foreign law with respect to
such securities and the requirements of any stock exchange or market system upon which the Stock
may then be listed. In addition, no Award may be exercised or shares

32

 

issued pursuant to an Award unless (a) a registration statement under the Securities Act shall
at the time of such exercise or issuance be in effect with respect to the shares issuable pursuant
to the Award, or (b) in the opinion of legal counsel to the Company, the shares issuable pursuant
to the Award may be issued in accordance with the terms of an applicable exemption from the
registration requirements of the Securities Act. The inability of the Company to obtain from any
regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to
be necessary to the lawful issuance and sale of any shares under the Plan shall relieve the Company
of any liability in respect of the failure to issue or sell such shares as to which such requisite
authority shall not have been obtained. As a condition to issuance of any Stock, the Company may
require the Participant to satisfy any qualifications that may be necessary or appropriate, to
evidence compliance with any applicable law or regulation and to make any representation or
warranty with respect thereto as may be requested by the Company.

     15. Compliance with Section 409A.

          15.1 Awards Subject to Section 409A. The Company intends that Awards granted pursuant to the
Plan shall either be exempt from or comply with Section 409A, and the Plan shall be so construed.
The provisions of this Section 15 shall apply to any Award or portion thereof that constitutes or
provides for payment of Section 409A Deferred Compensation. Such Awards may include, without
limitation:

               (a) A Nonstatutory Stock Option or SAR that includes any feature for the deferral of
compensation other than the deferral of recognition of income until the later of (i) the exercise
or disposition of the Award or (ii) the time the stock acquired pursuant to the exercise of the
Award first becomes substantially vested.

               (b) Any Restricted Stock Unit Award, Performance Award, Cash-Based Award or Other Stock-Based
Award that either (i) provides by its terms for settlement of all or any portion of the Award at a
time or upon an event that will or may occur later than the end of the Short-Term Deferral Period
(as defined below) or (ii) permits the Participant granted the Award to elect one or more dates or
events upon which the Award will be settled after the end of the Short-Term Deferral Period.

     Subject to the provisions of Section 409A, the term “Short-Term Deferral Period” means the 21/2
month period ending on the later of (i) the 15th day of the third month following the end of the
Participant’s taxable year in which the right to payment under the applicable portion of the Award
is no longer subject to a substantial risk of forfeiture or (ii) the 15th day of the third month
following the end of the Company’s taxable year in which the right to payment under the applicable
portion of the Award is no longer subject to a substantial risk of forfeiture. For this purpose,
the term “substantial risk of forfeiture” shall have the meaning provided by Section 409A.

          15.2 Deferral and/or Distribution Elections. Except as otherwise permitted or required by
Section 409A, the following rules shall apply to any compensation deferral and/or payment elections
(each, an “Election”) that may be permitted or required by the Committee pursuant to an Award
providing Section 409A Deferred Compensation:

33

 

               (a) Elections must be in writing and specify the amount of the payment in settlement of an
Award being deferred, as well as the time and form of payment as permitted by this Plan.

               (b) Elections shall be made by the end of the Participant’s taxable year prior to the year in
which services commence for which an Award may be granted to such Participant.

               (c) Elections shall continue in effect until a written revocation or change in Election is
received by the Company, except that a written revocation or change in Election must be received by
the Company prior to the last day for making the Election determined in accordance with paragraph
(b) above or as permitted by Section 15.3.

          15.3 Subsequent Elections. Except as otherwise permitted or required by Section 409A, any
Award providing Section 409A Deferred Compensation which permits a subsequent Election to delay the
payment or change the form of payment in settlement of such Award shall comply with the following
requirements:

               (a) No subsequent Election may take effect until at least twelve (12) months after the date on
which the subsequent Election is made.

               (b) Each subsequent Election related to a payment in settlement of an Award not described in
Section 15.4(a)(ii), 15.4(a)(iii) or 15.4(a)(vi) must result in a delay of the payment for a period
of not less than five (5) years from the date on which such payment would otherwise have been made.

               (c) No subsequent Election related to a payment pursuant to Section 15.4(a)(iv) shall be made
less than twelve (12) months before the date on which such payment would otherwise have been made.

               (d) Subsequent Elections shall continue in effect until a written revocation or change in the
subsequent Election is received by the Company, except that a written revocation or change in a
subsequent Election must be received by the Company prior to the last day for making the subsequent
Election determined in accordance the preceding paragraphs of this Section 15.3.

          15.4 Payment of Section 409A Deferred Compensation.

               (a) Permissible Payments. Except as otherwise permitted or required by Section 409A, an Award
providing Section 409A Deferred Compensation must provide for payment in settlement of the Award
only upon one or more of the following:

                    (i) The Participant’s “separation from service” (as defined by Section 409A);

                    (ii) The Participant’s becoming “disabled” (as defined by Section 409A);

34

 

                    (iii) The Participant’s death;

                    (iv) A time or fixed schedule that is either (i) specified by the Committee upon the grant of
an Award and set forth in the Award Agreement evidencing such Award or (ii) specified by the
Participant in an Election complying with the requirements of Section 15.2 or 15.3, as applicable;

                    (v) A change in the ownership or effective control or the Company or in the ownership of a
substantial portion of the assets of the Company determined in accordance with Section 409A; or

                    (vi) The occurrence of an “unforeseeable emergency” (as defined by Section 409A).

               (b) Installment Payments. It is the intent of this Plan that any right of a Participant to
receive installment payments (within the meaning of Section 409A) shall, for all purposes of
Section 409A, be treated as a right to a series of separate payments.

               (c) Required Delay in Payment to Specified Employee Pursuant to Separation from Service.
Notwithstanding any provision of the Plan or an Award Agreement to the contrary, except as
otherwise permitted by Section 409A, no payment pursuant to Section 15.4(a)(i) in settlement of an
Award providing for Section 409A Deferred Compensation may be made to a Participant who is a
“specified employee” (as defined by Section 409A) as of the date of the Participant’s separation
from service before the date (the “Delayed Payment Date”) that is six (6) months after the date of
such Participant’s separation from service, or, if earlier, the date of the Participant’s death.
All such amounts that would, but for this paragraph, become payable prior to the Delayed Payment
Date shall be accumulated and paid on the Delayed Payment Date.

               (d) Payment Upon Disability. All distributions of Section 409A Deferred Compensation payable
by reason of a Participant becoming disabled shall be paid in a lump sum or in periodic
installments as established by the Participant’s Election. If the Participant has made no Election
with respect to distributions of Section 409A Deferred Compensation upon becoming disabled, all
such distributions shall be paid in a lump sum upon the determination that the Participant has
become disabled.

               (e) Payment Upon Death. If a Participant dies before complete distribution of amounts payable
upon settlement of an Award subject to Section 409A, such undistributed amounts shall be
distributed to his or her beneficiary under the distribution method for death established by the
Participant’s Election upon receipt by the Committee of satisfactory notice and confirmation of the
Participant’s death. If the Participant has made no Election with respect to distributions of
Section 409A Deferred Compensation upon death, all such distributions shall be paid in a lump sum
upon receipt by the Committee of satisfactory notice and confirmation of the Participant’s death.

               (f) Payment Upon Change in Control. Notwithstanding any provision of the Plan or an Award
Agreement to the contrary, to the extent that any amount constituting Section 409A Deferred
Compensation would become payable under this Plan by

35

 

reason of a Change in Control, such amount
shall become payable only if the event constituting a
Change in Control would also constitute a change in ownership or effective control of the
Company or a change in the ownership of a substantial portion of the assets of the Company within
the meaning of Section 409A. Any Award which constitutes Section 409A Deferred Compensation and
which would vest and otherwise become payable upon a Change in Control as a result of the failure
of the Acquiror to assume, continue or substitute for such Award in accordance with Section 13.1(b)
shall vest to the extent provided by such Award but shall be converted automatically at the
effective time of such Change in Control into a right to receive, in cash on the date or dates such
award would have been settled in accordance with its then existing settlement schedule (or as
required by Section 15.4(c)), an amount or amounts equal in the aggregate to the intrinsic value of
the Award at the time of the Change in Control.

               (g) Payment Upon Unforeseeable Emergency. The Committee shall have the authority to provide
in the Award Agreement evidencing any Award providing for Section 409A Deferred Compensation for
payment in settlement of all or a portion of such Award in the event that a Participant
establishes, to the satisfaction of the Committee, the occurrence of an unforeseeable emergency.
In such event, the amount(s) distributed with respect to such unforeseeable emergency cannot exceed
the amounts reasonably necessary to satisfy the emergency need plus amounts necessary to pay taxes
reasonably anticipated as a result of such distribution(s), after taking into account the extent to
which such emergency need is or may be relieved through reimbursement or compensation by insurance
or otherwise, by liquidation of the Participant’s assets (to the extent the liquidation of such
assets would not itself cause severe financial hardship) or by cessation of deferrals under the
Award. All distributions with respect to an unforeseeable emergency shall be made in a lump sum
upon the Committee’s determination that an unforeseeable emergency has occurred. The Committee’s
decision with respect to whether an unforeseeable emergency has occurred and the manner in which,
if at all, the payment in settlement of an Award shall be altered or modified, shall be final,
conclusive, and not subject to approval or appeal.

               (h) Prohibition of Acceleration of Payments. Notwithstanding any provision of the Plan or an
Award Agreement to the contrary, this Plan does not permit the acceleration of the time or schedule
of any payment under an Award providing Section 409A Deferred Compensation, except as permitted by
Section 409A.

               (i) No Representation Regarding Section 409A Compliance. Notwithstanding any other provision
of the Plan, the Company makes no representation that Awards shall be exempt from or comply with
Section 409A. No Participating Company shall be liable for any tax, penalty or interest imposed on
a Participant by Section 409A.

     16. Tax Withholding.

          16.1 Tax Withholding in General. The Company shall have the right to deduct from any and all
payments made under the Plan, or to require the Participant, through payroll withholding, cash
payment or otherwise, to make adequate provision for, the federal, state, local and foreign taxes
(including social insurance), if any, required by law to be withheld by any Participating Company
with respect to an Award or the shares acquired pursuant thereto. The Company shall have no
obligation to deliver shares of Stock, to release shares of Stock from

36

 

an escrow established
pursuant to an Award Agreement, or to make any payment in cash under
the Plan until the Participating Company Group’s tax withholding obligations have been
satisfied by the Participant.

          16.2 Withholding in or Directed Sale of Shares. The Committee shall have the right, but not
the obligation, to cause the Company to deduct from the shares of Stock issuable to a Participant
upon the exercise or settlement of an Award, or to accept from the Participant the tender of, a
number of whole shares of Stock having a Fair Market Value, as determined by the Committee, equal
to all or any part of the tax withholding obligations of any Participating Company (provided such
shares of Stock are not pledged or otherwise serve as security and the withholding of which would
not trigger adverse accounting treatment). The Fair Market Value of any shares of Stock withheld
or tendered to satisfy any such tax withholding obligations shall not exceed the amount determined
by the applicable minimum statutory withholding rates. The Committee may require a Participant to
direct a broker, upon the vesting, exercise or settlement of an Award, to sell a portion of the
shares subject to the Award determined by the Committee in its discretion to be sufficient to cover
the tax withholding obligations of any Participating Company and to remit an amount equal to such
tax withholding obligations to such Participating Company in cash.

     17. Amendment, Suspension or Termination of Plan.

          The Committee may amend, suspend or terminate the Plan at any time. However, without the
approval of the Company’s stockholders, there shall be (a) no increase in the maximum aggregate
number of shares of Stock that may be issued under the Plan (except by operation of the provisions
of Section 4.5), (b) no change in the class of persons eligible to receive Incentive Stock Options,
and (c) no other amendment of the Plan that would require approval of the Company’s stockholders
under any applicable law, regulation or rule, including the rules of any stock exchange or
quotation system upon which the Stock may then be listed or quoted. No amendment, suspension or
termination of the Plan shall affect any then outstanding Award unless expressly provided by the
Committee. Except as provided by the next sentence, no amendment, suspension or termination of the
Plan may have a materially adverse effect on any then outstanding Award without the consent of the
Participant. Notwithstanding any other provision of the Plan to the contrary, the Committee may,
in its sole and absolute discretion and without the consent of any Participant, amend the Plan or
any Award Agreement, to take effect retroactively or otherwise, as it deems necessary or advisable
for the purpose of conforming the Plan or such Award Agreement to any present or future law,
regulation or rule applicable to the Plan, including, but not limited to, Section 409A.

     18. Miscellaneous Provisions.

          18.1 Repurchase Rights. Shares issued under the Plan may be subject to one or more repurchase
options, or other conditions and restrictions as determined by the Committee in its discretion at
the time the Award is granted. The Company shall have the right to assign at any time any
repurchase right it may have, whether or not such right is then exercisable, to one or more persons
as may be selected by the Company. Upon request by the Company, each Participant shall execute any
agreement evidencing such transfer restrictions prior to the receipt of shares of Stock hereunder
and shall promptly present to the Company any and all certificates

37

 

representing shares of Stock acquired hereunder for the placement on such certificates of
appropriate legends evidencing any such transfer restrictions.

          18.2 Forfeiture Events.

               (a) The Committee may specify in an Award Agreement that the Participant’s rights, payments,
and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture, or
recoupment upon the occurrence of specified events, in addition to any otherwise applicable vesting
or performance conditions of an Award. Such events may include, but shall not be limited to,
termination of Service for Cause or any act by a Participant, whether before or after termination
of Service, that would constitute Cause for termination of Service.

               (b) If the Company is required to prepare an accounting restatement due to the material
noncompliance of the Company, as a result of misconduct, with any financial reporting requirement
under the securities laws, any Participant who knowingly or through gross negligence engaged in the
misconduct, or who knowingly or through gross negligence failed to prevent the misconduct, and any
Participant who is one of the individuals subject to automatic forfeiture under Section 304 of the
Sarbanes-Oxley Act of 2002, shall reimburse the Company for (i) the amount of any payment in
settlement of an Award received by such Participant during the twelve- (12-) month period following
the first public issuance or filing with the United States Securities and Exchange Commission
(whichever first occurred) of the financial document embodying such financial reporting
requirement, and (ii) any profits realized by such Participant from the sale of securities of the
Company during such twelve- (12-) month period.

          18.3 Provision of Information. Each Participant shall be given access to information
concerning the Company equivalent to that information generally made available to the Company’s
common stockholders.

          18.4 Rights as Employee, Consultant or Director. No person, even though eligible pursuant to
Section 5, shall have a right to be selected as a Participant, or, having been so selected, to be
selected again as a Participant. Nothing in the Plan or any Award granted under the Plan shall
confer on any Participant a right to remain an Employee, Consultant or Director or interfere with
or limit in any way any right of a Participating Company to terminate the Participant’s Service at
any time. To the extent that an Employee of a Participating Company other than the Company
receives an Award under the Plan, that Award shall in no event be understood or interpreted to mean
that the Company is the Employee’s employer or that the Employee has an employment relationship
with the Company.

          18.5 Rights as a Stockholder. A Participant shall have no rights as a stockholder with respect
to any shares covered by an Award until the date of the issuance of such shares (as evidenced by
the appropriate entry on the books of the Company or of a duly authorized transfer agent of the
Company). No adjustment shall be made for dividends, distributions or other rights for which the
record date is prior to the date such shares are issued, except as provided in Section 4.5 or
another provision of the Plan.

38

 

          18.6 Delivery of Title to Shares. Subject to any governing rules or regulations, the Company
shall issue or cause to be issued the shares of Stock acquired pursuant to an Award and shall
deliver such shares to or for the benefit of the Participant by means of one or more of the
following: (a) by delivering to the Participant evidence of book entry shares of Stock credited to
the account of the Participant, (b) by depositing such shares of Stock for the benefit of the
Participant with any broker with which the Participant has an account relationship, or (c) by
delivering such shares of Stock to the Participant in certificate form.

          18.7 Fractional Shares. The Company shall not be required to issue fractional shares upon the
exercise or settlement of any Award.

          18.8 Retirement and Welfare Plans. Neither Awards made under this Plan nor shares of Stock or
cash paid pursuant to such Awards may be included as “compensation” for purposes of computing the
benefits payable to any Participant under any Participating Company’s retirement plans (both
qualified and non-qualified) or welfare benefit plans unless such other plan expressly provides
that such compensation shall be taken into account in computing a Participant’s benefit.

          18.9 Beneficiary Designation. Subject to local laws and procedures, each Participant may file
with the Company a written designation of a beneficiary who is to receive any benefit under the
Plan to which the Participant is entitled in the event of such Participant’s death before he or she
receives any or all of such benefit. Each designation will revoke all prior designations by the
same Participant, shall be in a form prescribed by the Company, and will be effective only when
filed by the Participant in writing with the Company during the Participant’s lifetime. If a
married Participant designates a beneficiary other than the Participant’s spouse, the effectiveness
of such designation may be subject to the consent of the Participant’s spouse. If a Participant
dies without an effective designation of a beneficiary who is living at the time of the
Participant’s death, the Company will pay any remaining unpaid benefits to the Participant’s legal
representative.

          18.10 Severability. If any one or more of the provisions (or any part thereof) of this Plan
shall be held invalid, illegal or unenforceable in any respect, such provision shall be modified so
as to make it valid, legal and enforceable, and the validity, legality and enforceability of the
remaining provisions (or any part thereof) of the Plan shall not in any way be affected or impaired
thereby.

          18.11 No Constraint on Corporate Action. Nothing in this Plan shall be construed to: (a)
limit, impair, or otherwise affect the Company’s or another Participating Company’s right or power
to make adjustments, reclassifications, reorganizations, or changes of its capital or business
structure, or to merge or consolidate, or dissolve, liquidate, sell, or transfer all or any part of
its business or assets; or (b) limit the right or power of the Company or another Participating
Company to take any action which such entity deems to be necessary or appropriate.

          18.12 Unfunded Obligation. Participants shall have the status of general unsecured creditors
of the Company. Any amounts payable to Participants pursuant to the Plan shall be considered
unfunded and unsecured obligations for all purposes, including, without

39

 

limitation, Title I of the Employee Retirement Income Security Act of 1974. No Participating
Company shall be required to segregate any monies from its general funds, or to create any trusts,
or establish any special accounts with respect to such obligations. The Company shall retain at
all times beneficial ownership of any investments, including trust investments, which the Company
may make to fulfill its payment obligations hereunder. Any investments or the creation or
maintenance of any trust or any Participant account shall not create or constitute a trust or
fiduciary relationship between the Committee or any Participating Company and a Participant, or
otherwise create any vested or beneficial interest in any Participant or the Participant’s
creditors in any assets of any Participating Company. The Participants shall have no claim against
any Participating Company for any changes in the value of any assets which may be invested or
reinvested by the Company with respect to the Plan.

          18.13 Choice of Law. Except to the extent governed by applicable federal law, the validity,
interpretation, construction and performance of the Plan and each Award Agreement shall be governed
by the laws of the State of California, without regard to its conflict of law rules.

     IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies that the foregoing sets
forth the MagnaChip Semiconductor Corporation 2010 Equity Incentive Plan as duly adopted by the
Board on [•], 2010.

	 	 	 	 	 
	 	 	 
	 	
 	 
	 	John McFarland, Corporate Secretary 	 
	 	 	 

40

 

	 	 	 	 	 

PLAN HISTORY AND NOTES TO COMPANY

	 	 	 
	[•]

	 	Board of Directors of MagnaChip Semiconductor LLC
adopts Plan with a reserve of [•] shares (subject
to increases and other adjustments as provided by
the Plan), subject to approval by the stockholders
of MagnaChip Semiconductor Corporation and to be
effective upon the Conversion.
	 
	 	 
	[•]

	 	Effective date of statutory conversion of MagnaChip
Semiconductor LLC into the Company.
	 
	 	 
	[•]

	 	Plan approved by the stockholders of the Company.
	 
	 	 
	[•]

	 	Effective date of registration of Stock under
Section 12 of the Exchange Act.
	 
	 	 
	[•]

	 	Effective date of initial Form S-8 under the Plan.
	 
	 	 
	IMPORTANT NOTE: At
first annual
stockholders meeting
following close of
3rd calendar year
following the
calendar year of IPO
(unless plan is
materially amended at
an earlier date),
obtain public company
stockholder approval
of amendment to plan
to add Section 162(m)
grant limits as
described in sample
Section 5.4 and to
approve the material
terms of the
performance goals as
required by Treas.
Reg. 1.162-27(e)(4).
See Treas. Reg.
1.162-27(f) (private
to public company
transition rule).

	 	5.4(c) Section 162(m) Award Limits. Subject to
adjustment as provided in Section 4.5, no Covered
Employee shall be granted within any fiscal year of
the Company one or more Awards intended to qualify
for treatment as Performance-Based Compensation
which in the aggregate are for more than [•] shares
or, if applicable, which could result in such
Covered Employee receiving more than $[•] for each
full fiscal year of the Company contained in the
Performance Period for such Award.
	 
	 	 
	IMPORTANT NOTE: IRC
162(m) 5 year
reapproval of
performance goals

	 	Because the Committee may change the targets under
performance goals, Section 162(m) requires
stockholder reapproval of the material terms of
performance goals no later than the annual meeting
in the 5th year following the year in which the
public company stockholders initially approved such
material terms. See Treas. Reg.
1.162-27(e)(4)(vi).exv10w26

Exhibit 10.26

MAGNACHIP SEMICONDUCTOR

CORPORATION

2010 EMPLOYEE STOCK PURCHASE PLAN

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	1.	 	Establishment, Purpose and Term of Plan	 	1	 
	 
	 	1.1	 	Establishment	 	1	 
	 
	 	1.2	 	Purpose	 	1	 
	 
	 	1.3	 	Term of Plan	 	1	 
	 
	 	 	 	 	 	 	 
	2.	 	Definitions and Construction	 	1	 
	 
	 	2.1	 	Definitions	 	1	 
	 
	 	2.2	 	Construction	 	5	 
	 
	 	 	 	 	 	 	 
	3.	 	Administration	 	6	 
	 
	 	3.1	 	Administration by the Committee	 	6	 
	 
	 	3.2	 	Authority of Officers	 	6	 
	 
	 	3.3	 	Power to Adopt Sub-Plans or Varying Terms with Respect to Non-U.S.	 	 	 
	 
	 	 	 	Employees	 	6	 
	 
	 	3.4	 	Power to Establish Separate Offerings with Varying Terms	 	6	 
	 
	 	3.5	 	Policies and Procedures Established by the Company	 	6	 
	 
	 	3.6	 	Indemnification	 	7	 
	 
	 	 	 	 	 	 	 
	4.	 	Shares Subject to Plan	 	7	 
	 
	 	4.1	 	Maximum Number of Shares Issuable	 	7	 
	 
	 	4.2	 	Annual Increase in Maximum Number of Shares Issuable	 	8	 
	 
	 	4.3	 	Adjustments for Changes in Capital Structure	 	8	 
	 
	 	 	 	 	 	 	 
	5.	 	Eligibility	 	8	 
	 
	 	5.1	 	Employees Eligible to Participate	 	8	 
	 
	 	5.2	 	Exclusion of Certain Stockholders	 	9	 
	 
	 	5.3	 	Determination by Company	 	9	 
	 
	 	 	 	 	 	 	 
	6.	 	Offerings	 	9	 
	 
	 	 	 	 	 	 	 
	7.	 	Participation in the Plan	 	10	 
	 
	 	7.1	 	Initial Participation	 	10	 
	 
	 	7.2	 	Continued Participation	 	10	 
	 
	 	 	 	 	 	 	 
	8.	 	Right to Purchase Shares	 	11	 
	 
	 	8.1	 	Grant of Purchase Right	 	11	 
	 
	 	8.2	 	Calendar Year Purchase Limitation	 	11	 
	 
	 	 	 	 	 	 	 
	9.	 	Purchase Price	 	12	 
	 
	 	 	 	 	 	 	 
	10.	 	Accumulation of Purchase Price through Payroll Deduction	 	12	 

-i-

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 
	 	10.1	 	Amount of Payroll Deductions	 	12	 
	 
	 	10.2	 	Commencement of Payroll Deductions	 	12	 
	 
	 	10.3	 	Election to Decrease or Stop Payroll Deductions	 	12	 
	 
	 	10.4	 	Administrative Suspension of Payroll Deductions	 	13	 
	 
	 	10.5	 	Participant Accounts	 	13	 
	 
	 	10.6	 	No Interest Paid	 	13	 
	 
	 	 	 	 	 	 	 
	11.	 	Purchase of Shares	 	13	 
	 
	 	11.1	 	Exercise of Purchase Right	 	13	 
	 
	 	11.2	 	Pro Rata Allocation of Shares	 	14	 
	 
	 	11.3	 	Delivery of Title to Shares	 	15	 
	 
	 	11.4	 	Return of Plan Account Balance	 	15	 
	 
	 	11.5	 	Tax Withholding	 	15	 
	 
	 	11.6	 	Expiration of Purchase Right	 	15	 
	 
	 	11.7	 	Provision of Reports and Stockholder Information to Participants	 	15	 
	 
	 	 	 	 	 	 	 
	12.	 	Withdrawal from Plan	 	16	 
	 
	 	12.1	 	Voluntary Withdrawal from the Plan	 	16	 
	 
	 	12.2	 	Return of Plan Account Balance	 	16	 
	 
	 	 	 	 	 	 	 
	13.	 	Termination of Employment or Eligibility	 	16	 
	 
	 	 	 	 	 	 	 
	14.	 	Effect of Change in Control on Purchase Rights	 	16	 
	 
	 	 	 	 	 	 	 
	15.	 	Nontransferability of Purchase Rights	 	17	 
	 
	 	 	 	 	 	 	 
	16.	 	Compliance with Securities Law	 	17	 
	 
	 	 	 	 	 	 	 
	17.	 	Rights as a Stockholder and Employee	 	17	 
	 
	 	 	 	 	 	 	 
	18.	 	Notification of Disposition of Shares	 	18	 
	 
	 	 	 	 	 	 	 
	19.	 	Legends	 	18	 
	 
	 	 	 	 	 	 	 
	20.	 	Designation of Beneficiary	 	18	 
	 
	 	20.1	 	Designation Procedure	 	18	 
	 
	 	20.2	 	Absence of Beneficiary Designation	 	19	 
	 
	 	 	 	 	 	 	 
	21.	 	Notices	 	19	 
	 
	 	 	 	 	 	 	 
	22.	 	Amendment or Termination of the Plan	 	19	 

-ii-

 

MagnaChip Semiconductor Corporation

2010 Employee Stock Purchase Plan

     1. Establishment, Purpose and Term of Plan.

          1.1 Establishment. The MagnaChip Semiconductor Corporation 2010 Employee Stock Purchase Plan
(the “Plan”) is hereby established effective as of the effective date of the initial registration
by the Company of its Stock under Section 12 of the Securities Exchange Act of 1934, as amended
(the “Effective Date”).

          1.2 Purpose. The purpose of the Plan is to advance the interests of the Company and its
stockholders by providing an incentive to attract, retain and reward Eligible Employees of the
Participating Company Group and by motivating such persons to contribute to the growth and
profitability of the Participating Company Group. The Plan provides such Eligible Employees with
an opportunity to acquire a proprietary interest in the Company through the purchase of Stock. The
Company intends that the Plan qualify as an “employee stock purchase plan” under Section 423 of the
Code (including any amendments or replacements of such section), and the Plan shall be so
construed.

          1.3 Term of Plan. The Plan shall continue in effect until its termination by the Committee.

     2. Definitions and Construction.

          2.1 Definitions. Any term not expressly defined in the Plan but defined for purposes of
Section 423 of the Code shall have the same definition herein. Whenever used herein, the following
terms shall have their respective meanings set forth below:

               (a) “Board” means the Board of Directors of the Company.

               (b) “Cash Exercise Notice” means a written notice in such form as specified by the Company
which states a Participant’s election to exercise, as of the next Purchase Date, a Purchase Right
granted to such Participant with respect to a Pre-Registration Offering Period.

               (c) “Change in Control” means the occurrence of any one or a combination of the following:

                    (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act)
becomes the “beneficial owner” (as such term is defined in Rule 13d-3 promulgated under the
Exchange Act), directly or indirectly, of securities of the Company representing more than fifty
percent (50%) of the total Fair Market Value or total combined voting power of the Company’s
then-outstanding securities entitled to vote generally in the election of Directors; provided,
however, that a Change in Control shall not be deemed to have occurred if such degree of beneficial
ownership results from any of the following: (A) an acquisition by any person who on the Effective
Date is the beneficial owner of more than fifty

1

 

percent (50%) of such voting power, (B) any acquisition directly from the Company, including,
without limitation, pursuant to or in connection with a public offering of securities, (C) any
acquisition by the Company, (D) any acquisition by a trustee or other fiduciary under an employee
benefit plan of a Participating Company or (E) any acquisition by an entity owned directly or
indirectly by the stockholders of the Company in substantially the same proportions as their
ownership of the voting securities of the Company; or

                    (ii) an Ownership Change Event or series of related Ownership Change Events (collectively, a
“Transaction”) in which the stockholders of the Company immediately before the Transaction do not
retain immediately after the Transaction direct or indirect beneficial ownership of more than fifty
percent (50%) of the total combined voting power of the outstanding securities entitled to vote
generally in the election of Directors or, in the case of an Ownership Change Event described in
Section 2.1(q)(iii), the entity to which the assets of the Company were transferred (the
“Transferee”), as the case may be; or

                    (iii) approval by the stockholders of a plan of complete liquidation or dissolution of the
Company;

provided, however, that a Change in Control shall be deemed not to include a transaction described
in subsections (i) or (ii) of this Section 2.1(c) in which a majority of the members of the board
of directors of the continuing, surviving or successor entity, or parent thereof, immediately after
such transaction is comprised of Incumbent Directors.

     For purposes of the preceding sentence, indirect beneficial ownership shall include, without
limitation, an interest resulting from ownership of the voting securities of one or more
corporations or other business entities which own the Company or the Transferee, as the case may
be, either directly or through one or more subsidiary corporations or other business entities. The
Committee shall determine whether multiple acquisitions of the voting securities of the Company
and/or multiple Ownership Change Events are related and to be treated in the aggregate as a single
Change in Control, and its determination shall be final, binding and conclusive.

               (d) “Code” means the Internal Revenue Code of 1986, as amended, and any applicable regulations
promulgated thereunder.

               (e) “Committee” means the Compensation Committee and such other committee or subcommittee of
the Board, if any, duly appointed to administer the Plan and having such powers in each instance as
shall be specified by the Board. If, at any time, there is no committee of the Board then
authorized or properly constituted to administer the Plan, the Board shall exercise all of the
powers of the Committee granted herein, and, in any event, the Board may in its discretion exercise
any or all of such powers.

               (f) “Company” means MagnaChip Semiconductor Corporation, a Delaware corporation, or any
successor corporation thereto.

               (g) “Compensation” means, with respect to any Offering Period, base wages or salary, overtime,
bonuses, commissions, shift differentials, payments for paid time off, payments in lieu of notice,
and compensation deferred under any program or plan, including,

2

 

without limitation, pursuant to Section 401(k) or Section 125 of the Code. Compensation shall
be limited to amounts actually payable in cash or deferred during the Offering Period.
Compensation shall not include moving allowances, payments pursuant to a severance agreement,
termination pay, relocation payments, sign-on bonuses, any amounts directly or indirectly paid
pursuant to the Plan or any other stock purchase, stock option or other stock-based compensation
plan, or any other compensation not included above.

               (h) “Eligible Employee” means an Employee who meets the requirements set forth in Section 5
for eligibility to participate in the Plan.

               (i) “Employee” means a person treated as an employee of a Participating Company for purposes
of Section 423 of the Code. A Participant shall be deemed to have ceased to be an Employee either
upon an actual termination of employment or upon the corporation employing the Participant ceasing
to be a Participating Company. For purposes of the Plan, an individual shall not be deemed to have
ceased to be an Employee while on any military leave, sick leave, or other bona fide leave of
absence approved by the Company of ninety (90) days or less. If an individual’s leave of absence
exceeds ninety (90) days, the individual shall be deemed to have ceased to be an Employee on the
ninety-first (91st) day of such leave unless the individual’s right to reemployment with the
Participating Company Group is guaranteed either by statute or by contract.

               (j) “Fair Market Value” means, as of any date:

                    (i) Except as otherwise determined by the Committee, if, on such date, the Stock is listed or
quoted on a national or regional securities exchange or quotation system, the closing price of a
share of Stock as quoted on the national or regional securities exchange or quotation system
constituting the primary market for the Stock, as reported in The Wall Street Journal or such other
source as the Company deems reliable. If the relevant date does not fall on a day on which the
Stock has traded on such securities exchange or quotation system, the date on which the Fair Market
Value is established shall be the last day on which the Stock was so traded or quoted prior to the
relevant date, or such other appropriate day as determined by the Committee, in its discretion.

                    (ii) If, on the relevant date, the Stock is not then listed on a national or regional
securities exchange or quotation system, the Fair Market Value of a share of Stock shall be as
determined in good faith by the Committee.

                    (iii) Notwithstanding the foregoing, if a Pre-Registration Offering Period commences on the
Effective Date, then the Fair Market Value of a share of Stock on such date shall be deemed to be
the public offering price set forth in the final prospectus filed with the Securities and Exchange
Commission in connection with the Company’s initial public offering of the Stock.

               (k) “Incumbent Director” means a director who either (i) is a member of the Board as of the
Effective Date, or (ii) is elected, or nominated for election, to the Board with the affirmative
votes of at least a majority of the Incumbent Directors at the time of such

3

 

election or nomination (but excluding a director who was elected or nominated in connection
with an actual or threatened proxy contest relating to the election of directors of the Company).

               (l) “Non-United States Offering” means a separate Offering covering Eligible Employees of one
or more Participating Companies whose Eligible Employees are subject to a prohibition under
applicable law on payroll deductions, as described in Section 11.1(c).

               (m) “Offering” means an offering of Stock pursuant to the Plan, as provided in Section 6.

               (n) “Offering Date” means, for any Offering Period, the first day of such Offering Period.

               (o) “Offering Period” means a period, established by the Committee in accordance with
Section 6, during which an Offering is outstanding.

               (p) “Officer” means any person designated by the Board as an officer of the Company.

               (q) “Ownership Change Event” means the occurrence of any of the following with respect to the
Company: (i) the direct or indirect sale or exchange in a single or series of related transactions
by the stockholders of the Company of securities of the Company representing more than fifty
percent (50%) of the total combined voting power of the Company’s then outstanding securities
entitled to vote generally in the election of Directors; (ii) a merger or consolidation in which
the Company is a party; or (iii) the sale, exchange, or transfer of all or substantially all of the
assets of the Company (other than a sale, exchange or transfer to one or more subsidiaries of the
Company).

               (r) “Parent Corporation” means any present or future “parent corporation” of the Company, as
defined in Section 424(e) of the Code.

               (s) “Participant” means an Eligible Employee who has become a participant in an Offering
Period in accordance with Section 7 and remains a participant in accordance with the Plan.

               (t) “Participating Company” means the Company and any Parent Corporation or Subsidiary
Corporation designated by the Committee as a corporation the Employees of which may, if Eligible
Employees, participate in the Plan. The Committee shall have the discretion to determine from time
to time which Parent Corporations or Subsidiary Corporations shall be Participating Companies.

               (u) “Participating Company Group” means, at any point in time, the Company and all other
corporations collectively which are then Participating Companies.

               (v) “Pre-Registration Offering Period” means an Offering Period commencing prior to the
Registration Date with respect to the shares of Stock issuable pursuant to such Offering Period.

4

 

               (w) “Purchase Date” means, for any Offering Period, the last day of such Offering Period, or,
if so determined by the Committee, the last day of each Purchase Period occurring within such
Offering Period.

               (x) “Purchase Period” means a period, established by the Committee in accordance with
Section 6, included within an Offering Period and on the final date of which outstanding Purchase
Rights are exercised.

               (y) “Purchase Price” means the price at which a share of Stock may be purchased under the
Plan, as determined in accordance with Section 9.

               (z) “Purchase Right” means an option granted to a Participant pursuant to the Plan to purchase
such shares of Stock as provided in Section 8, which the Participant may or may not exercise during
the Offering Period in which such option is outstanding. Such option arises from the right of a
Participant to withdraw any payroll deductions or other funds accumulated on behalf of the
Participant and not previously applied to the purchase of Stock under the Plan, and to terminate
participation in the Plan at any time during an Offering Period.

               (aa) “Registration Date” means the effective date of the registration on Form S-8 of shares of
Stock issuable pursuant to the Plan.

               (bb) “Securities Act” means the Securities Act of 1933, as amended.

               (cc) “Stock” means the common stock of the Company, as adjusted from time to time in
accordance with Section 4.3.

               (dd) “Subscription Agreement” means a written or electronic agreement, in such form as is
specified by the Company, stating an Employee’s election to participate in the Plan and authorizing
payroll deductions under the Plan from the Employee’s Compensation or other method of payment
authorized by the Committee pursuant to Section 11.1(c).

               (ee) “Subscription Date” means the last business day prior to the Offering Date of an Offering
Period or such earlier date as the Company shall establish.

               (ff) “Subsidiary Corporation” means any present or future “subsidiary corporation” of the
Company, as defined in Section 424(f) of the Code.

          2.2 Construction. Captions and titles contained herein are for convenience only and shall not
affect the meaning or interpretation of any provision of the Plan. Except when otherwise indicated
by the context, the singular shall include the plural and the plural shall include the singular.
Use of the term “or” is not intended to be exclusive, unless the context clearly requires
otherwise.

5

 

     3. Administration.

          3.1 Administration by the Committee. The Plan shall be administered by the Committee. All
questions of interpretation of the Plan, of any form of agreement or other document employed by the
Company in the administration of the Plan, or of any Purchase Right shall be determined by the
Committee, and such determinations shall be final, binding and conclusive upon all persons having
an interest in the Plan or the Purchase Right, unless fraudulent or made in bad faith. Subject to
the provisions of the Plan, the Committee shall determine all of the relevant terms and conditions
of Purchase Rights; provided, however, that all Participants granted Purchase Rights pursuant to an
Offering shall have the same rights and privileges within the meaning of Section 423(b)(5) of the
Code. Any and all actions, decisions and determinations taken or made by the Committee in the
exercise of its discretion pursuant to the Plan or any agreement thereunder (other than determining
questions of interpretation pursuant to the second sentence of this Section 3.1) shall be final,
binding and conclusive upon all persons having an interest therein. All expenses reasonably
incurred by the Company in the administration of the Plan shall be paid by the Company.

          3.2 Authority of Officers. Any Officer shall have the authority to act on behalf of the
Company with respect to any matter, right, obligation, determination or election that is the
responsibility of or that is allocated to the Company herein, provided that the Officer has actual
authority with respect to such matter, right, obligation, determination or election.

          3.3 Power to Adopt Sub-Plans or Varying Terms with Respect to Non-U.S. Employees. The
Committee shall have the power, in its discretion, to adopt one or more sub-plans of the Plan as
the Committee deems necessary or desirable to comply with the laws or regulations, tax policy,
accounting principles or custom of foreign jurisdictions applicable to employees of a subsidiary
business entity of the Company, provided that any such sub-plan shall not be within the scope of an
“employee stock purchase plan” within the meaning of Section 423 of the Code. Any of the
provisions of any such sub-plan may supersede the provisions of this Plan, other than Section 4.
Except as superseded by the provisions of a sub-plan, the provisions of this Plan shall govern such
sub-plan. Alternatively and in order to comply with the laws of a foreign jurisdiction, the
Committee shall have the power, in its discretion, to grant Purchase Rights in an Offering to
citizens or residents of a non-U.S. jurisdiction (without regard to whether they are also citizens
of the United States or resident aliens) that provide terms which are less favorable than the terms
of Purchase Rights granted under the same Offering to Employees resident in the United States.

          3.4 Power to Establish Separate Offerings with Varying Terms. The Committee shall have the
power, in its discretion, to establish separate, simultaneous or overlapping Offerings having
different terms and conditions and to designate the Participating Company or Companies that may
participate in a particular Offering, provided that each Offering shall individually comply with
the terms of the Plan and the requirements of Section 423(b)(5) of the Code that all Participants
granted Purchase Rights pursuant to such Offering shall have the same rights and privileges within
the meaning of such section.

          3.5 Policies and Procedures Established by the Company. Without regard to whether any
Participant’s Purchase Right may be considered adversely affected, the Company

6

 

may, from time to time, consistent with the Plan and the requirements of Section 423 of the
Code, establish, change or terminate such rules, guidelines, policies, procedures, limitations, or
adjustments as deemed advisable by the Company, in its discretion, for the proper administration of
the Plan, including, without limitation, (a) a minimum payroll deduction amount required for
participation in an Offering, (b) a limitation on the frequency or number of changes permitted in
the rate of payroll deduction during an Offering, (c) an exchange ratio applicable to amounts
withheld or paid in a currency other than United States dollars, (d) a payroll deduction greater
than or less than the amount designated by a Participant in order to adjust for the Company’s delay
or mistake in processing a Subscription Agreement or in otherwise effecting a Participant’s
election under the Plan or as advisable to comply with the requirements of Section 423 of the Code,
and (e) determination of the date and manner by which the Fair Market Value of a share of Stock is
determined for purposes of administration of the Plan. All such actions by the Company shall be
taken consistent with the requirements under Section 423(b)(5) of the Code that all Participants
granted Purchase Rights pursuant to an Offering shall have the same rights and privileges within
the meaning of such section, except as otherwise permitted by Section 3.3 and the regulations under
Section 423 of the Code.

          3.6 Indemnification. In addition to such other rights of indemnification as they may have as
members of the Board or the Committee or as officers or employees of the Participating Company
Group, to the extent permitted by applicable law, members of the Board or the Committee and any
officers or employees of the Participating Company Group to whom authority to act for the Board,
the Committee or the Company is delegated shall be indemnified by the Company against all
reasonable expenses, including attorneys’ fees, actually and necessarily incurred in connection
with the defense of any action, suit or proceeding, or in connection with any appeal therein, to
which they or any of them may be a party by reason of any action taken or failure to act under or
in connection with the Plan, or any right granted hereunder, and against all amounts paid by them
in settlement thereof (provided such settlement is approved by independent legal counsel selected
by the Company) or paid by them in satisfaction of a judgment in any such action, suit or
proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such person is liable for gross negligence, bad faith or intentional misconduct in
duties; provided, however, that within sixty (60) days after the institution of such action, suit
or proceeding, such person shall offer to the Company, in writing, the opportunity at its own
expense to handle and defend the same.

     4. Shares Subject to Plan.

          4.1 Maximum Number of Shares Issuable. Subject to adjustment as provided in Sections 4.2
and 4.3, the maximum aggregate number of shares of Stock that may be issued under the Plan shall be
[•]1 and shall consist of authorized but unissued or reacquired shares of Stock, or any
combination thereof. If an outstanding Purchase Right for any reason expires or is terminated or
canceled, the shares of Stock allocable to the unexercised portion of that Purchase Right shall
again be available for issuance under the Plan.

 

			
	1	 	Amount to equal 2% of the number of shares of
common stock estimated to be outstanding immediately after completion of the
IPO. Number to be determined and inserted prior to approval of plan by Company
stockholders.

7

 

          4.2 Annual Increase in Maximum Number of Shares Issuable. Subject to adjustment as provided
in Section 4.3, the maximum aggregate number of shares of Stock that may be issued under the Plan
as set forth in Section 4.1 shall be cumulatively increased automatically on January 1, 2011 and on
each subsequent January 1, through and including January 1, 2020, by a number of shares (the
“Annual Increase”) equal to the smallest of (a) one percent (1.0%) of the number of shares of Stock
issued and outstanding on the immediately preceding December 31,
(b) [•]2 shares, or
(c) an amount determined by the Board.

          4.3 Adjustments for Changes in Capital Structure. Subject to any required action by the
stockholders of the Company and the requirements of Section 424 of the Code to the extent
applicable, in the event of any change in the Stock effected without receipt of consideration by
the Company, whether through merger, consolidation, reorganization, reincorporation,
recapitalization, reclassification, stock dividend, stock split, reverse stock split, split-up,
split-off, spin-off, combination of shares, exchange of shares, or similar change in the capital
structure of the Company, or in the event of payment of a dividend or distribution to the
stockholders of the Company in a form other than Stock (excepting regular, periodic cash dividends)
that has a material effect on the Fair Market Value of shares of Stock, appropriate and
proportionate adjustments shall be made in the number and kind of shares subject to the Plan, the
Annual Increase, the limit on the shares which may be purchased by any Participant during an
Offering (as described in Sections 8.1 and 8.2) and each Purchase Right, and in the Purchase Price
in order to prevent dilution or enlargement of Participants’ rights under the Plan. For purposes
of the foregoing, conversion of any convertible securities of the Company shall not be treated as
“effected without receipt of consideration by the Company.” If a majority of the shares which are
of the same class as the shares that are subject to outstanding Purchase Rights are exchanged for,
converted into, or otherwise become (whether or not pursuant to an Ownership Change Event) shares
of another corporation (the “New Shares”), the Committee may unilaterally amend the outstanding
Purchase Rights to provide that such Purchase Rights are for New Shares. In the event of any such
amendment, the number of shares subject to, and the exercise price per share of, the outstanding
Purchase Rights shall be adjusted in a fair and equitable manner as determined by the Committee, in
its discretion. Any fractional share resulting from an adjustment pursuant to this Section shall
be rounded down to the nearest whole number, and in no event may the Purchase Price be decreased to
an amount less than the par value, if any, of the stock subject to the Purchase Right. The
adjustments determined by the Committee pursuant to this Section 4.3 shall be final, binding and
conclusive.

     5. Eligibility.

          5.1 Employees Eligible to Participate. Each Employee of a Participating Company is eligible
to participate in the Plan and shall be deemed an Eligible Employee, except the following:

 

			
	2	 	Amount to equal 2% of the number of shares of
common stock estimated to be outstanding immediately after completion of the
IPO. Number to be determined and inserted prior to approval of plan by Company
stockholders.

8

 

               (a) Any Employee who is customarily employed by the Participating Company Group for twenty
(20) hours or less per week; or

               (b) Any Employee who is customarily employed by the Participating Company Group for not more
than five (5) months in any calendar year.

          5.2 Exclusion of Certain Stockholders. Notwithstanding any provision of the Plan to the
contrary, no Employee shall be treated as an Eligible Employee and granted a Purchase Right under
the Plan if, immediately after such grant, the Employee would own, or hold options to purchase,
stock of the Company or of any Parent Corporation or Subsidiary Corporation possessing five percent
(5%) or more of the total combined voting power or value of all classes of stock of such
corporation, as determined in accordance with Section 423(b)(3) of the Code. For purposes of this
Section 5.2, the attribution rules of Section 424(d) of the Code shall apply in determining the
stock ownership of such Employee.

          5.3 Determination by Company. The Company shall determine in good faith and in the exercise
of its discretion whether an individual has become or has ceased to be an Employee or an Eligible
Employee and the effective date of such individual’s attainment or termination of such status, as
the case may be. For purposes of an individual’s participation in or other rights, if any, under
the Plan as of the time of the Company’s determination of whether or not the individual is an
Employee, all such determinations by the Company shall be final, binding and conclusive as to such
rights, if any, notwithstanding that the Company or any court of law or governmental agency
subsequently makes a contrary determination as to such individual’s status as an Employee.

     6. Offerings.

          The Plan shall be implemented by sequential Offerings of approximately three (3) months
duration or such other duration as the Committee shall determine. Offering Periods shall commence
on or about the first trading days of February, May, August and November of each year and end on or
about the last trading days of the next April, July, October and January, respectively, occurring
thereafter. However, if so determined by the Committee, a Pre-Registration Offering Period shall
commence on the Effective Date and end on or about July 31, 2010. Notwithstanding the foregoing,
the Committee may establish additional or alternative concurrent, sequential or overlapping
Offering Periods, a different duration for one or more Offering Periods or different commencing or
ending dates for such Offering Periods; provided, however, that no Offering Period may have a
duration exceeding twenty-seven (27) months. If the Committee shall so determine in its
discretion, each Offering Period may consist of two (2) or more consecutive Purchase Periods having
such duration as the Committee shall specify, and the last day of each such Purchase Period shall
be a Purchase Date. If the first or last day of an Offering Period or a Purchase Period is not a
day on which the principal stock exchange or quotation system on which the Stock is then listed is
open for trading, the Company shall specify the trading day that will be deemed the first or last
day, as the case may be, of the Offering Period or Purchase Period.

9

 

     7. Participation in the Plan.

          7.1 Initial Participation.

               (a) Generally. Except as provided in Section 7.1(b), an Eligible Employee may become a
Participant in an Offering Period by delivering a properly completed written or electronic
Subscription Agreement to the Company office or representative designated by the Company (including
a third-party administrator designated by the Company) not later than the close of business on the
Subscription Date established by the Company for that Offering Period. An Eligible Employee who
does not deliver a properly completed Subscription Agreement in the manner permitted or required on
or before the Subscription Date for an Offering Period shall not participate in the Plan for that
Offering Period or for any subsequent Offering Period unless the Eligible Employee subsequently
delivers a properly completed Subscription Agreement to the appropriate Company office or
representative on or before the Subscription Date for such subsequent Offering Period. An Employee
who becomes an Eligible Employee after the Offering Date of an Offering Period shall not be
eligible to participate in that Offering Period but may participate in any subsequent Offering
Period provided the Employee is still an Eligible Employee as of the Offering Date of such
subsequent Offering Period.

               (b) Automatic Participation in Pre-Registration Offering Period. Notwithstanding
Section 7.1(a), each Employee who is an Eligible Employee as of the Offering Date of a
Pre-Registration Offering Period shall automatically become a Participant in the Pre-Registration
Offering Period and shall be granted automatically a Purchase Right consisting of an option to
purchase the lesser of (i) a number of whole shares of Stock determined in accordance with
Section 8, or (ii) a number of whole shares of Stock determined by dividing twenty percent (20%) of
such Participant’s Compensation paid during the Pre-Registration Offering Period by the Purchase
Price applicable to the Pre-Registration Offering Period. The Company shall not require or permit
any Participant to deliver a Subscription Agreement for participation in the Pre-Registration
Offering Period; provided, however, that following the applicable Registration Date a Participant
may deliver a Subscription Agreement to the office or representative designated by the Company if
the Participant wishes to change the terms of the Participant’s participation in the
Pre-Registration Offering Period. Such changes may include, for example, an election to commence
payroll deductions in accordance with Section 10.

          7.2 Continued Participation.

               (a) Generally. Except as provided in Section 7.2(b), a Participant shall automatically
participate in the next Offering Period commencing immediately after the final Purchase Date of
each Offering Period in which the Participant participates provided that the Participant remains an
Eligible Employee on the Offering Date of the new Offering Period and has not either (a) withdrawn
from the Plan pursuant to Section 12.1, or (b) terminated employment or otherwise ceased to be an
Eligible Employee as provided in Section 13. A Participant who may automatically participate in a
subsequent Offering Period, as provided in this Section, is not required to deliver any additional
Subscription Agreement for the subsequent Offering Period in order to continue participation in the
Plan. However, a Participant may deliver a new Subscription Agreement for a subsequent Offering
Period in accordance with the

10

 

procedures set forth in Section 7.1(a) if the Participant desires to change any of the
elections contained in the Participant’s then effective Subscription Agreement.

               (b) Participation Following Pre-Registration Offering Period. Notwithstanding Section 7.1(a),
an Eligible Employee who was automatically enrolled in a Pre-Registration Offering Period and who
wishes to participate in an Offering Period which begins after the Pre-Registration Offering Period
shall deliver a Subscription Agreement in accordance with Section 7.1(a) no earlier than the
applicable Registration Date and no later than the Subscription Date for such Offering Period,
unless the Employee delivered a Subscription Agreement with respect to the Pre-Registration
Offering Period as provided in Section 7.1(b).

     8. Right to Purchase Shares.

          8.1 Grant of Purchase Right. Except as provided in Section 7.1(b) with respect to a
Pre-Registration Offering Period or as otherwise provided below, on the Offering Date of each
Offering Period, each Participant in such Offering Period shall be granted automatically a Purchase
Right consisting of an option to purchase the lesser of (a) that number of whole shares of Stock
determined by dividing the Dollar Limit (determined as provided below) by the Fair Market Value of
a share of Stock on such Offering Date or (b) the Share Limit (determined as provided below). The
Committee may, in its discretion and prior to the Offering Date of any Offering Period, (i) change
the method of, or any of the foregoing factors in, determining the number of shares of Stock
subject to Purchase Rights to be granted on such Offering Date, or (ii) specify a maximum aggregate
number of shares that may be purchased by all Participants in an Offering or on any Purchase Date
within an Offering Period. No Purchase Right shall be granted on an Offering Date to any person
who is not, on such Offering Date, an Eligible Employee. For the purposes of this Section, the
“Dollar Limit” shall be determined by multiplying $2,083.33 by the number of months (rounded to the
nearest whole month) in the Offering Period and rounding to the nearest whole dollar, and the
“Share Limit” shall be determined by multiplying four hundred (400) shares3 by the
number of months (rounded to the nearest whole month) in the Offering Period and rounding to the
nearest whole share.

          8.2 Calendar Year Purchase Limitation. Notwithstanding any provision of the Plan to the
contrary, no Participant shall be granted a Purchase Right which permits his or her right to
purchase shares of Stock under the Plan to accrue at a rate which, when aggregated with such
Participant’s rights to purchase shares under all other employee stock purchase plans of a
Participating Company intended to meet the requirements of Section 423 of the Code, exceeds
Twenty-Five Thousand Dollars ($25,000) in Fair Market Value (or such other limit, if any, as may be
imposed by the Code) for each calendar year in which such Purchase Right is outstanding at any
time. For purposes of the preceding sentence, the Fair Market Value of shares purchased during a
given Offering Period shall be determined as of the Offering Date for such

 

			
	3	 	Determined so that a stock price below
approximately $5 per share will not further increase the number of shares a
participant may purchase in any offering period, assuming a purchase price
equal to 95% of the purchase date stock price.

11

 

Offering Period. The limitation described in this Section shall be applied in conformance
with Section 423(b)(8) of the Code and the regulations thereunder.

     9. Purchase Price.

          The Purchase Price at which each share of Stock may be acquired in an Offering Period upon the
exercise of all or any portion of a Purchase Right shall be established by the Committee; provided,
however, that the Purchase Price on each Purchase Date shall not be less than eighty-five percent
(85%) of the lesser of (a) the Fair Market Value of a share of Stock on the Offering Date of the
Offering Period or (b) the Fair Market Value of a share of Stock on the Purchase Date. Subject to
adjustment as provided by the Plan and unless otherwise provided by the Committee, the Purchase
Price for each Offering Period shall be ninety-five percent (95%) of the Fair Market Value of a
share of Stock on the Purchase Date.

     10. Accumulation of Purchase Price through Payroll Deduction.

          Except as provided in Section 11.1(b) with respect to a Pre-Registration Offering Period and
in Section 11.1(c) with respect to a Non-United States Offering, shares of Stock acquired pursuant
to the exercise of all or any portion of a Purchase Right may be paid for only by means of payroll
deductions from the Participant’s Compensation accumulated during the Offering Period for which
such Purchase Right was granted, subject to the following:

          10.1 Amount of Payroll Deductions. Except as otherwise provided herein, the amount to be
deducted under the Plan from a Participant’s Compensation on each pay day during an Offering Period
shall be determined by the Participant’s Subscription Agreement. The Subscription Agreement shall
set forth the percentage of the Participant’s Compensation to be deducted on each pay day during an
Offering Period in whole percentages of not less than one percent (1%) (except as a result of an
election pursuant to Section 10.3 to stop payroll deductions effective following the first pay day
during an Offering) or more than twenty percent (20%). The Committee may change the foregoing
limits on payroll deductions effective as of any Offering Date.

          10.2 Commencement of Payroll Deductions. Payroll deductions shall commence on the first pay
day following the Offering Date and shall continue to the end of the Offering Period unless sooner
altered or terminated as provided herein; provided, however, that with respect to a
Pre-Registration Offering Period, payroll deductions shall commence as soon as practicable
following the Company’s receipt of the Participant’s Subscription Agreement (delivered no earlier
than the applicable Registration Date), if any.

          10.3 Election to Decrease or Stop Payroll Deductions. During an Offering Period, a
Participant may elect to decrease the rate of or to stop deductions from his or her Compensation by
delivering to the Company office or representative designated by the Company (including a
third-party administrator designated by the Company) an amended Subscription Agreement authorizing
such change on or before the “Change Notice Date.” The “Change Notice Date” shall be a date prior
to the beginning of the first pay period for which such election is to be effective as established
by the Company from time to time and announced to the Participants. A Participant who elects,
effective following the first pay day of an Offering

12

 

Period, to decrease the rate of his or her payroll deductions to zero percent (0%) shall
nevertheless remain a Participant in such Offering Period unless the Participant withdraws from the
Plan as provided in Section 12.1.

          10.4 Administrative Suspension of Payroll Deductions. The Company may, in its discretion,
suspend a Participant’s payroll deductions under the Plan as the Company deems advisable to avoid
accumulating payroll deductions in excess of the amount that could reasonably be anticipated to
purchase the maximum number of shares of Stock permitted (a) under the Participant’s Purchase
Right, or (b) during a calendar year under the limit set forth in Section 8.2. Unless the
Participant has either withdrawn from the Plan as provided in Section 12.1 or has ceased to be an
Eligible Employee, suspended payroll deductions shall be resumed at the rate specified in the
Participant’s then effective Subscription Agreement either (i) at the beginning of the next
Offering Period if the reason for suspension was clause (a) in the preceding sentence, or (ii) at
the beginning of the next Offering Period having a first Purchase Date that falls within the
subsequent calendar year if the reason for suspension was clause (b) in the preceding sentence.

          10.5 Participant Accounts. Individual bookkeeping accounts shall be maintained for each
Participant. All payroll deductions from a Participant’s Compensation (and other amounts received
from the Participant in a Pre-Registration Offering Period pursuant to Section 11.1(b) or a
non-United States Participant pursuant to Section 11.1(c)) shall be credited to such Participant’s
Plan account and shall be deposited with the general funds of the Company. All such amounts
received or held by the Company may be used by the Company for any corporate purpose.

          10.6 No Interest Paid. Interest shall not be paid on sums deducted from a Participant’s
Compensation pursuant to the Plan or otherwise credited to the Participant’s Plan account.

     11. Purchase of Shares.

          11.1 Exercise of Purchase Right.

               (a) Generally. Except as provided in Section 11.1(b) and Section 11.1(c), on each Purchase
Date of an Offering Period, each Participant who has not withdrawn from the Plan and whose
participation in the Offering has not otherwise terminated before such Purchase Date shall
automatically acquire pursuant to the exercise of the Participant’s Purchase Right the number of
whole shares of Stock determined by dividing (a) the total amount of the Participant’s payroll
deductions accumulated in the Participant’s Plan account during the Offering Period and not
previously applied toward the purchase of Stock by (b) the Purchase Price. However, in no event
shall the number of shares purchased by the Participant during an Offering Period exceed the number
of shares subject to the Participant’s Purchase Right. No shares of Stock shall be purchased on a
Purchase Date on behalf of a Participant whose participation in the Offering or the Plan has
terminated before such Purchase Date.

13

 

               (b) Purchase in Pre-Registration Period. Notwithstanding Section 11.1(a), on the Purchase
Date of a Pre-Registration Offering Period, each Participant who has not withdrawn from the Plan
and whose participation in such Offering Period has not otherwise terminated before such Purchase
Date shall automatically acquire pursuant to the exercise of the Participant’s Purchase Right (i) a
number of whole shares of Stock determined in accordance with Section 11.1(a) to the extent of the
total amount of the Participant’s payroll deductions accumulated in the Participant’s Plan account
during the Pre-Registration Offering Period, if any, and not previously applied toward the purchase
of Stock, and (ii) such additional shares of Stock (not exceeding in the aggregate the
Participant’s Purchase Right) as determined in accordance with a Cash Exercise Notice delivered to
the Company office or representative designated by the Company (including a third-party
administrator designated by the Company) no earlier than the applicable Registration Date and not
later than the close of business on the business day immediately preceding the Purchase Date or
such earlier date as the Company shall establish, accompanied by payment of the Purchase Price for
such additional shares in cash or by check. However, in no event shall the aggregate number of
shares purchased by a Participant during the Pre-Registration Offering Period exceed the number of
shares subject to the Participant’s Purchase Right. In addition, if a Participant delivers a
Subscription Agreement to the Company after the applicable Registration Date, the Participant may
not elect to exercise a Purchase Right pursuant to a Cash Exercise Notice in an amount which, when
aggregated with payroll deductions pursuant to such Subscription Agreement, exceeds twenty percent
(20%) of the Participant’s Compensation during the Pre-Registration Offering Period. The Company
shall refund to the Participant in accordance with Section 11.4 any excess Purchase Price payment
received from the Participant.

               (c) Purchase by Non-United States Participants for Whom Payroll Deductions Are Prohibited by
Applicable Law. Notwithstanding Section 11.1(a), where payroll deductions on behalf of
Participants who are citizens or residents of countries other than the United States (without
regard to whether they are also citizens of the United States or resident aliens) are prohibited by
applicable law, the Committee may establish a separate Offering (a “Non-United States Offering”)
covering all Eligible Employees of one or more Participating Companies subject to such prohibition
on payroll deductions. The Non-United States Offering shall provide another method for payment of
the Purchase Price with such terms and conditions as shall be administratively convenient and
comply with applicable law. On each Purchase Date of the Offering Period applicable to a
Non-United States Offering, each Participant who has not withdrawn from the Plan and whose
participation in such Offering Period has not otherwise terminated before such Purchase Date shall
automatically acquire pursuant to the exercise of the Participant’s Purchase Right a number of
whole shares of Stock determined in accordance with Section 11.1(a) to the extent of the total
amount of the Participant’s Plan account balance accumulated during the Offering Period in
accordance with the method established by the Committee and not previously applied toward the
purchase of Stock. However, in no event shall the number of shares purchased by a Participant
during such Offering Period exceed the number of shares subject to the Participant’s Purchase
Right. The Company shall refund to a Participant in a Non-United States Offering in accordance
with Section 11.4 any excess Purchase Price payment received from such Participant.

          11.2 Pro Rata Allocation of Shares. If the number of shares of Stock which might be purchased
by all Participants on a Purchase Date exceeds the number of shares of Stock

14

 

available in the Plan as provided in Section 4.1 or the maximum aggregate number of shares of
Stock that may be purchased on such Purchase Date pursuant to a limit established by the Committee
pursuant to Section 8.1, the Company shall make a pro rata allocation of the shares available in as
uniform a manner as practicable and as the Company determines to be equitable. Any fractional
share resulting from such pro rata allocation to any Participant shall be disregarded.

          11.3 Delivery of Title to Shares. Subject to any governing rules or regulations, as soon as
practicable after each Purchase Date, the Company shall issue or cause to be issued to or for the
benefit of each Participant the shares of Stock acquired by the Participant on such Purchase Date
by means of one or more of the following: (a) by delivering to the Participant evidence of book
entry shares of Stock credited to the account of the Participant, (b) by depositing such shares of
Stock for the benefit of the Participant with any broker with which the Participant has an account
relationship, or (c) by delivering such shares of Stock to the Participant in certificate form.

          11.4 Return of Plan Account Balance. Any cash balance remaining in a Participant’s Plan
account following any Purchase Date shall be refunded to the Participant as soon as practicable
after such Purchase Date. However, if the cash balance to be returned to a Participant pursuant to
the preceding sentence is less than the amount that would have been necessary to purchase an
additional whole share of Stock on such Purchase Date, the Company may retain the cash balance in
the Participant’s Plan account to be applied toward the purchase of shares of Stock in the
subsequent Purchase Period or Offering Period.

          11.5 Tax Withholding. At the time a Participant’s Purchase Right is exercised, in whole or in
part, or at the time a Participant disposes of some or all of the shares of Stock he or she
acquires under the Plan, the Participant shall make adequate provision for the federal, state,
local and foreign taxes (including social insurance), if any, required to be withheld by any
Participating Company upon exercise of the Purchase Right or upon such disposition of shares,
respectively. A Participating Company may, but shall not be obligated to, withhold from the
Participant’s compensation the amount necessary to meet such withholding obligations.

          11.6 Expiration of Purchase Right. Any portion of a Participant’s Purchase Right remaining
unexercised after the end of the Offering Period to which the Purchase Right relates shall expire
immediately upon the end of the Offering Period.

          11.7 Provision of Reports and Stockholder Information to Participants. Each Participant who
has exercised all or part of his or her Purchase Right shall receive, as soon as practicable after
the Purchase Date, a report of such Participant’s Plan account setting forth the total amount
credited to his or her Plan account prior to such exercise, the number of shares of Stock
purchased, the Purchase Price for such shares, the date of purchase and the cash balance, if any,
remaining immediately after such purchase that is to be refunded or retained in the Participant’s
Plan account pursuant to Section 11.4. The report required by this Section may be delivered in
such form and by such means, including by electronic transmission, as the Company may determine.
In addition, each Participant shall be provided information concerning the Company equivalent to
that information provided generally to the Company’s common stockholders.

15

 

     12. Withdrawal from Plan .

          12.1 Voluntary Withdrawal from the Plan. A Participant may withdraw from the Plan by signing
and delivering to the Company office or representative designated by the Company (including a
third-party administrator designated by the Company) a written or electronic notice of withdrawal
on a form provided by the Company for this purpose. Such withdrawal may be elected at any time
prior to the end of an Offering Period; provided, however, that if a Participant withdraws from the
Plan after a Purchase Date, the withdrawal shall not affect shares of Stock acquired by the
Participant on such Purchase Date. A Participant who voluntarily withdraws from the Plan is
prohibited from resuming participation in the Plan in the same Offering from which he or she
withdrew, but may participate in any subsequent Offering by again satisfying the requirements of
Sections 5 and 7.1. The Company may impose, from time to time, a requirement that the notice of
withdrawal from the Plan be on file with the Company office or representative designated by the
Company for a reasonable period prior to the effectiveness of the Participant’s withdrawal.

          12.2 Return of Plan Account Balance. Upon a Participant’s voluntary withdrawal from the Plan
pursuant to Section 12.1, the Participant’s accumulated Plan account balance which has not been
applied toward the purchase of shares of Stock shall be refunded to the Participant as soon as
practicable after the withdrawal, without the payment of any interest, and the Participant’s
interest in the Plan and the Offering shall terminate. Such amounts to be refunded in accordance
with this Section may not be applied to any other Offering under the Plan.

     13. Termination of Employment or Eligibility.

          Upon a Participant’s ceasing, prior to a Purchase Date, to be an Employee of the Participating
Company Group for any reason, including retirement, disability or death, or upon the failure of a
Participant to remain an Eligible Employee, the Participant’s participation in the Plan shall
terminate immediately. In such event, the Participant’s Plan account balance which has not been
applied toward the purchase of shares of Stock shall, as soon as practicable, be returned to the
Participant or, in the case of the Participant’s death, to the Participant’s beneficiary designated
in accordance with Section 20, if any, or legal representative, and all of the Participant’s rights
under the Plan shall terminate. Interest shall not be paid on sums returned pursuant to this
Section 13. A Participant whose participation has been so terminated may again become eligible to
participate in the Plan by satisfying the requirements of Sections 5 and 7.1.

     14. Effect of Change in Control on Purchase Rights.

          In the event of a Change in Control, the surviving, continuing, successor, or purchasing
corporation or parent thereof, as the case may be (the “Acquiring Corporation”), may, without the
consent of any Participant, assume or continue the Company’s rights and obligations under
outstanding Purchase Rights or substitute substantially equivalent purchase rights for the
Acquiring Corporation’s stock. If the Acquiring Corporation elects not to assume, continue or
substitute for the outstanding Purchase Rights, the Purchase Date of the then current Offering
Period shall be accelerated to a date before the date of the Change in Control specified by the
Committee, but the number of shares of Stock subject to outstanding Purchase Rights

16

 

shall not be adjusted. All Purchase Rights which are neither assumed or continued by the
Acquiring Corporation in connection with the Change in Control nor exercised as of the date of the
Change in Control shall terminate and cease to be outstanding effective as of the date of the
Change in Control.

     15. Nontransferability of Purchase Rights.

          Neither payroll deductions or other amounts credited to a Participant’s Plan account nor a
Participant’s Purchase Right may be assigned, transferred, pledged or otherwise disposed of in any
manner other than as provided by the Plan or by will or the laws of descent and distribution. (A
beneficiary designation pursuant to Section 20 shall not be treated as a disposition for this
purpose.) Any such attempted assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw from the Plan as
provided in Section 12.1. A Purchase Right shall be exercisable during the lifetime of the
Participant only by the Participant.

     16. Compliance with Securities Law.

          The issuance of shares under the Plan shall be subject to compliance with all applicable
requirements of federal, state and foreign law with respect to such securities. A Purchase Right
may not be exercised if the issuance of shares upon such exercise would constitute a violation of
any applicable federal, state or foreign securities laws or other law or regulations or the
requirements of any securities exchange or market system upon which the Stock may then be listed.
In addition, no Purchase Right may be exercised unless (a) a registration statement under the
Securities Act shall at the time of exercise of the Purchase Right be in effect with respect to the
shares issuable upon exercise of the Purchase Right, or (b) in the opinion of legal counsel to the
Company, the shares issuable upon exercise of the Purchase Right may be issued in accordance with
the terms of an applicable exemption from the registration requirements of the Securities Act. The
inability of the Company to obtain from any regulatory body having jurisdiction the authority, if
any, deemed by the Company’s legal counsel to be necessary to the lawful issuance and sale of any
shares under the Plan shall relieve the Company of any liability in respect of the failure to issue
or sell such shares as to which such requisite authority shall not have been obtained. As a
condition to the exercise of a Purchase Right, the Company may require the Participant to satisfy
any qualifications that may be necessary or appropriate, to evidence compliance with any applicable
law or regulation, and to make any representation or warranty with respect thereto as may be
requested by the Company.

     17. Rights as a Stockholder and Employee.

          A Participant shall have no rights as a stockholder by virtue of the Participant’s
participation in the Plan until the date of the issuance of the shares of Stock purchased pursuant
to the exercise of the Participant’s Purchase Right (as evidenced by the appropriate entry on the
books of the Company or of a duly authorized transfer agent of the Company). No adjustment shall
be made for dividends, distributions or other rights for which the record date is prior to the date
such shares are issued, except as provided in Section 4.3. Nothing herein shall confer upon a
Participant any right to continue in the employ of the Participating Company Group or interfere

17

 

in any way with any right of the Participating Company Group to terminate the Participant’s
employment at any time.

     18. Notification of Disposition of Shares.

          The Company may require the Participant to give the Company prompt notice of any disposition
of shares of Stock acquired by exercise of a Purchase Right. The Company may require that until
such time as a Participant disposes of shares of Stock acquired upon exercise of a Purchase Right,
the Participant shall hold all such shares in the Participant’s name until the later of two years
after the date of grant of such Purchase Right or one year after the date of exercise of such
Purchase Right. The Company may direct that the certificates evidencing shares of Stock acquired
by exercise of a Purchase Right refer to such requirement to give prompt notice of disposition.

     19. Legends.

          The Company may at any time place legends or other identifying symbols referencing any
applicable federal, state or foreign securities law restrictions or any provision convenient in the
administration of the Plan on some or all of the certificates representing shares of Stock issued
under the Plan. The Participant shall, at the request of the Company, promptly present to the
Company any and all certificates representing shares acquired pursuant to a Purchase Right in the
possession of the Participant in order to carry out the provisions of this Section. Unless
otherwise specified by the Company, legends placed on such certificates may include but shall not
be limited to the following:

“THE SHARES EVIDENCED BY THIS CERTIFICATE WERE ISSUED BY THE CORPORATION TO THE REGISTERED HOLDER
UPON THE PURCHASE OF SHARES UNDER AN EMPLOYEE STOCK PURCHASE PLAN AS DEFINED IN SECTION 423 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED. THE TRANSFER AGENT FOR THE SHARES EVIDENCED HEREBY
SHALL NOTIFY THE CORPORATION IMMEDIATELY OF ANY TRANSFER OF THE SHARES BY THE REGISTERED HOLDER
HEREOF. THE REGISTERED HOLDER SHALL HOLD ALL SHARES PURCHASED UNDER THE PLAN IN THE REGISTERED
HOLDER’S NAME (AND NOT IN THE NAME OF ANY NOMINEE).”

     20. Designation of Beneficiary.

          20.1 Designation Procedure. Subject to local laws and procedures, a Participant may file a
written designation of a beneficiary who is to receive (a) shares and cash, if any, from the
Participant’s Plan account if the Participant dies subsequent to a Purchase Date but prior to
delivery to the Participant of such shares and cash, or (b) cash, if any, from the Participant’s
Plan account if the Participant dies prior to the exercise of the Participant’s Purchase Right. If
a married Participant designates a beneficiary other than the Participant’s spouse, the
effectiveness of such designation may be subject to the consent of the Participant’s spouse. A
Participant may change his or her beneficiary designation at any time by written notice to the
Company.

18

 

          20.2 Absence of Beneficiary Designation. If a Participant dies without an effective
designation pursuant to Section 20.1 of a beneficiary who is living at the time of the
Participant’s death, the Company shall deliver any shares or cash credited to the Participant’s
Plan account to the Participant’s legal representative or as otherwise required by applicable law.

     21. Notices.

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

     22. Amendment or Termination of the Plan.

          The Committee may at any time amend, suspend or terminate the Plan, except that (a) no such
amendment, suspension or termination shall affect Purchase Rights previously granted under the Plan
unless expressly provided by the Committee, and (b) no such amendment, suspension or termination
may adversely affect a Purchase Right previously granted under the Plan without the consent of the
Participant, except to the extent permitted by the Plan or as may be necessary to qualify the Plan
as an employee stock purchase plan pursuant to Section 423 of the Code or to comply with any
applicable law, regulation or rule. In addition, an amendment to the Plan must be approved by the
stockholders of the Company within twelve (12) months of the adoption of such amendment if such
amendment would authorize the sale of more shares than are then authorized for issuance under the
Plan or would change the definition of the corporations that may be designated by the Committee as
Participating Companies. Notwithstanding the foregoing, in the event that the Committee determines
that continuation of the Plan or an Offering would result in unfavorable financial accounting
consequences to the Company, the Committee may, in its discretion and without the consent of any
Participant, including with respect to an Offering Period then in progress: (i) terminate the Plan
or any Offering Period, (ii) accelerate the Purchase Date of any Offering Period, (iii) reduce the
discount or the method of determining the Purchase Price in any Offering Period (e.g., by
determining the Purchase Price solely on the basis of the Fair Market Value on the Purchase Date),
(iv) reduce the maximum number of shares of Stock that may be purchased in any Offering Period, or
(v) take any combination of the foregoing actions.

          IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies that the foregoing sets
forth the MagnaChip Semiconductor Corporation 2010 Employee Stock Purchase Plan as duly adopted by
the Board on [•], 2010.

	 	 	 
	 
	 	 	 

	 	 	John McFarland, Corporate Secretary

19

 

PLAN HISTORY

	 	 	 
	[•]
	 	Board of Directors of MagnaChip Semiconductor LLC adopts Plan with a
reserve of [•] shares (subject to increases and other adjustments as
provided by the Plan), subject to approval by the stockholders of
MagnaChip Semiconductor Corporation following the Conversion and to be
effective upon the registration of the Company’s common stock under
Section 12 of the Exchange Act.

	 	 	 

	[•]
	 	Effective date of statutory conversion of MagnaChip Semiconductor LLC
into the Company.

	 	 	 

	[•]
	 	Plan approved by the stockholders of MagnaChip Semiconductor
Corporation.

	 	 	 

	[•]
	 	Effective date of registration of Stock under Section 12 of the
Exchange Act.

	 	 	 

	[•]
	 	Date on which Pre-Registration Offering Period commenced.

	 	 	 

	[•]
	 	Registration Date (date on which initial Form S-8 registration is
effective).

 

 

APPENDIX A

Participating Companies

MagnaChip Semiconductor Corporation

MagnaChip Semiconductor S.A.

MagnaChip Semiconductor B.V.

MagnaChip Semiconductor, Ltd.

MagnaChip Semiconductor, Inc.

MagnaChip Semiconductor SA Holdings LLC

MagnaChip Semiconductor Finance Company

MagnaChip Semiconductor Limited

MagnaChip Semiconductor Limited

MagnaChip Semiconductor Limited

MagnaChip Semiconductor Inc.

MagnaChip Semiconductor Holding Company Limited

MagnaChip Semiconductor (Shanghai) Company Limited

 

 

APPENDIX B

FORMS OF

ENROLLMENT/CHANGE NOTICE/WITHDRAWAL FORM

AND

SUBSCRIPTION AGREEMENT

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