Document:

exv10w68

 

EXHIBIT 10.68

USEC Inc.

Director Deferred Compensation 
Plan

 

 

USEC INC. DIRECTOR DEFERRED COMPENSATION PLAN

     USEC Inc., a Delaware corporation (the “Company”), hereby establishes this Director Deferred
Compensation Plan (the “Plan”), effective January 1, 2008 (the “Effective Date”), for the purpose
of attracting high quality directors and promoting in them increased efficiency and an interest in
the successful operation of the Company. The Plan is intended to, and shall be interpreted to,
comply in all respects with Code Section 409A.

ARTICLE I

DEFINITIONS

     1.1 “Account” shall mean the bookkeeping account established under this Plan pursuant to
Article 4.

     1.2 “Beneficiary” or “Beneficiaries” shall mean the person, persons or entity designated as
such pursuant to Article 7.

     1.3 “Board” shall mean the Board of Directors of Company.

     1.4 “Change in Control” shall mean the following, and shall be deemed to have occurred if any
of the following events shall have occurred:

          (a) any “Person,” as such term is used in Sections 13(d) and 14(d) of the Exchange Act or
Persons acting as a group (other than (A) the Company, (B) any trustee or other fiduciary holding
securities under an employee benefit plan of the Company, and (C) any corporation owned, directly
or indirectly, by the shareholders of the Company in substantially the same proportions as their
ownership of Shares), is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company by reason of having acquired
such securities during the 12-month period ending on the date of the most recent acquisition (not
including any securities acquired directly from the Company or its affiliates) representing thirty
percent (30%) or more of the total voting power of the Company’s then outstanding voting
securities;

          (b) the majority of members of the Company’s Board of Directors is replaced during any
12-month period by directors whose appointment or election is not endorsed by a majority of the
members of the Company’s Board of Directors before the date of the appointment;

          (c) there is consummated a merger or consolidation of the Company or any direct or indirect
subsidiary of the Company with any other corporation, resulting in a change described in (a), (b),
(d) or (e) of this definition, other than (i) a merger or consolidation that would result in the
voting securities of the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of the surviving or
parent entity) more than sixty

 

 

USEC INC. DIRECTOR DEFERRED COMPENSATION PLAN

percent (60%) of the total voting power of the voting securities of the Company or such
surviving or parent entity outstanding immediately after such merger or consolidation or (ii) a
merger or consolidation effected to implement a recapitalization of the Company (or similar
transaction) in which no Person, directly or indirectly, acquired forty percent (40%) or more of
the total voting power of the Company’s then outstanding securities (not including any securities
acquired directly from the Company or its affiliates);

          (d) a complete liquidation of the Company involving the sale to any Person or group of at
least forty percent (40%) of the total gross fair market value of all of the assets of the Company
immediately before the liquidation; or

          (e) the sale or disposition by the Company to any Person or group of all or substantially all
of the Company’s assets, but in no event less than forty percent (40%) of the total gross fair
market value of all of the assets of the Company immediately before such sale or disposition (or
any transaction having a similar effect), other than a sale or disposition by the Company of all or
substantially all of the Company’s assets to an entity, at least sixty percent (60%) of the total
voting power of the voting securities of which is owned by shareholders of the Company in
substantially the same proportions as their ownership of the Company immediately prior to such
sale.

Notwithstanding the foregoing, no event shall constitute a Change of Control for purposes of this
Plan if it is not “a change in the ownership or effective control of the corporation, or in the
ownership of a substantial portion of the assets of the corporation” within the meaning of Code
Section 409A.

     1.5 “Code” shall mean the Internal Revenue Code of 1986, as amended, as interpreted by
Treasury regulations and applicable authorities promulgated thereunder.

     1.6 “Committee” shall mean the person or persons appointed by the Board to administer the Plan
in accordance with Article 8.

     1.7 “Compensation” shall mean all amounts eligible for deferral for a particular Plan Year
under Section 3.1.

     1.8 “Crediting Rate” shall mean the notional gains and losses credited on the Participant’s
Account balance which are based on the Participant’s choice among the investment alternatives made
available by the Committee pursuant to Section 3.2 of the Plan.

     1.9 “Disability” shall mean either (i) a medically determinable physical or mental impairment
of the Participant that can be expected to result in death or can be expected to last for a
continuous period of at least twelve (12) months that would qualify as a disability under the
Participant’s employer’s then current long-term disability plan; provided the Participant has been
receiving income replacement benefits under such an accident and health plan maintained by the
Participant’s employer for no less than three (3) months, or (ii) any other definition of
“disability” that satisfies the requirements of Code Section 409A(a)(2)(C) and Treasury Regulation
Section 1.409A-3(i)(4), if such other definition results in an earlier determination of disability.
The Committee may

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require that the Participant submit evidence of such qualification for disability benefits in
order to determine that the Participant is disabled under this Plan.

     1.10 “Distributable Amount” shall mean the vested balance in the applicable Account as
determined under Article 4.

     1.11 “Eligible Director” shall mean a member of the Board of Directors of the Company who is
not an employee of the Company, selected by the Committee to be eligible to participate in the
Plan.

     1.12 “Financial Hardship” shall mean a severe financial hardship to the Participant resulting
from an illness or accident of the Participant, the Participant’s spouse, a dependent (as defined
in Code Section 152(a)), or Beneficiary of the Participant, loss of the Participant’s property due
to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant, (but shall in all events correspond to the meaning of
the term “unforseeable emergency” under Code Section 409A(a)(2)(v)).

     1.13 “Fund” or “Funds” shall mean one or more of the investment funds selected by the
Committee pursuant to Section 3.2 of the Plan.

     1.14 “Hardship Distribution” shall mean an accelerated distribution of benefits or a reduction
or cessation of current deferrals pursuant to Section 6.3 to a Participant who has suffered a
Financial Hardship.

     1.15 “Participant” shall mean any Eligible Director who becomes a Participant in this Plan in
accordance with Article 2.

     1.16 “Participant Election(s)” shall mean the forms or procedures by which a Participant makes
elections with respect to (1) voluntary deferrals of his/her Compensation, (2) the investment Funds
which shall act as the basis for crediting of interest on Account balances, and (3) the form and
timing of distributions from Accounts. Participant Elections may take the form of an electronic
communication followed by appropriate confirmation according to specifications established by the
Committee.

     1.17 “Payment Date” shall mean the date on which a lump sum payment shall be made or the date
on which installment payments shall commence. Unless otherwise specified, the Payment Date shall
be on the date determined by the Committee during the first ninety (90) days commencing after the
event triggering payout. In the case of death, the Committee shall be provided with documentation
reasonably necessary to establish the fact of the Participant’s death. Where installment payments
have been elected, subsequent installments shall be paid during the first ninety (90) days of each
subsequent Plan Year. The Payment Date of a Scheduled Distribution shall be on the date determined
by the Committee during the first ninety (90) days of the Plan Year in which the distribution is
scheduled to commence.

     1.18 “Plan Year” shall mean the calendar year.

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     1.19 “Scheduled Distribution” shall mean a scheduled distribution elected by the Participant
for distribution of amounts from the Participant’s Account, as provided under Section 6.1(b).

     1.20 “Termination of Service” shall mean the date of the cessation of the Participant’s
provision of services to the Employer as such concept is defined under Code Section 409A for any
reason whatsoever, whether voluntary or involuntary, including as a result of the Participant’s
death or Disability. The Committee retains the right and discretion to specify, and may specify,
whether a Termination of Service occurs for individuals providing services to the Company
immediately prior to an asset purchase transaction in which the Company or an affiliate is the
seller who provides services to a buyer after and in connection with such asset purchase
transaction; provided such specification is made in accordance with the requirements of Treasury
Regulation Section 1.409A-1(h)(4).

ARTICLE II

PARTICIPATION

     An Eligible Director shall become a Participant in the Plan by completing and submitting to
the Committee the appropriate Participant Elections, including such other documentation and
information as the Committee may reasonably request, during the enrollment period established by
the Committee prior to the beginning of the first Plan Year in which the Eligible Director shall be
eligible to participate in the Plan.

ARTICLE III

CONTRIBUTIONS & DEFERRAL ELECTIONS

     3.1 Elections to Defer Compensation.

          (a) Form of Elections. A Participant may only elect to defer Compensation
attributable to services provided after the date the election is made. Elections shall take the
form of a whole percentage of between five percent (5%) and one hundred percent (100%) of
Directors’ fees, retainers and other cash compensation for Board membership services designated by
the Committee in the Participant Election as eligible for deferral under the Plan for the
applicable Plan Year (“Compensation”).

          (b) Duration of Compensation Deferral Election. An Eligible Director’s initial
election to defer Compensation shall be made during the enrollment period established by the
Committee prior to the effective date of the Participant’s commencement of participation in the
Plan and shall apply only to Compensation for services performed after such deferral election is
processed. A Participant may increase, decrease, terminate or recommence a deferral election with
respect to Compensation for any subsequent Plan Year by filing a Participant Election during the
enrollment period established by the Committee prior to the beginning of such Plan Year, which
election shall be effective on the first day of the next following Plan Year. In the absence of an
affirmative election by the Participant to the contrary, the deferral election for the prior Plan
Year shall continue in effect for future Plan Years. After the beginning of the Plan

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Year, deferral elections with respect to Compensation for services performed during such Plan
Year shall be irrevocable, except in the event of Financial Hardship as provided in Section 6.3.

     3.2 Investment Elections.

          (a) Participant Direction. At the time of entering the Plan and/or of making the
deferral election under the Plan, the Participant shall designate, on a Participant Election
provided by the Committee, the hypothetical investment Funds in which the Participant’s Account
shall be deemed to be invested for purposes of determining the amount of earnings and losses to be
credited to such Account. The Participant may specify that all or any percentage of his or her
Account shall be deemed to be invested, in whole percentage increments, in one or more of the types
of investment Funds selected as alternative investments under the Plan from time to time by the
Committee pursuant to subsection (b) of this Section. A Participant may change the designation
made under this Section at least monthly by filing a revised election, on a Participant Election
provided by the Committee. During payout, the Participant’s Account shall continue to be credited
at the Crediting Rate selected by the Participant from among the investment alternatives or rates
made available by the Committee for such purpose until all amounts have been distributed from the
Account. If a Participant fails to make an investment election under this Section for a particular
Account, such Account shall be invested in the default investment Fund selected by the Committee
for such purpose.

          (b) Investment Alternatives. The Committee shall select, in its sole and absolute
discretion, commercially available investment Funds for the applicable Plan Year and shall
communicate each of the alternative types of investment Funds to the Participant pursuant to
subsection (a) of this Section. The earning or losses on each such commercially available
investment Fund shall be used to determine the amount of earnings or losses to be credited to
Participant’s Account under Article IV. The Participant’s choice among investments shall be solely
for purposes of calculation of the Crediting Rate on Accounts. The Company shall have no
obligation to set aside or invest amounts as directed by the Participant and, if the Company elects
to invest amounts as directed by the Participant, the Participant shall have no more right to such
investments than any other unsecured general creditor.

     3.3 Distribution Elections.

          (a) Initial Election. At the time of making a deferral election under the Plan, the
Participant shall designate the time and form of distribution of deferrals made pursuant to such
election (together with any earnings credited thereon) from among the alternatives specified in
Article 6.

          (b) Modification of Election. A new distribution election may be made at the time of
subsequent deferral elections with respect to deferrals in Plan Years beginning after the election
is made. However, a distribution election with respect to previously deferred amounts may only be
changed under the terms and conditions

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specified by the Committee in compliance with Code Section 409A. After December 31, 2008,
except as expressly provided in Article 6, no acceleration of a distribution is permitted and a
subsequent election that delays payment or changes the form of payment shall be permitted if and
only if all of the following requirements are met:

               (1) the new election does not take effect until at least twelve (12) months after the date on
which the new election is made;

               (2) in the case of payments made on account of Termination of Service (other than by reason of
death or Disability) or a Scheduled Distribution, the new election delays payment for at least five
(5) years from the date that payment would otherwise have been made, absent the new election; and

               (3) in the case of payments made according to a Scheduled Distribution, the new election is
made not less than twelve (12) months before the date on which payment would have been made (or, in
the case of installment payments, the first installment payment would have been made) absent the
new election.

For purposes of application of the above change limitations, installment payments shall be treated
as a single payment. Election changes made pursuant to this Section shall be made in accordance
with rules established by the Committee, and shall comply with all requirement of Code Section 409A
and applicable authorities.

ARTICLE IV

DEFERRAL ACCOUNTS

     4.1 Deferral Accounts. The Committee shall establish a deferral Account for each
Participant under the Plan. Each Participant’s deferral Account shall be further divided into
separate subaccounts (“investment fund subaccounts”), each of which corresponds to a Fund elected
by the Participant pursuant to Section 3.2. A Participant’s Account shall be credited as follows:

          (a) on or before the fifth (5th) business day after amounts are withheld and
deferred from a Participant’s Compensation, the Committee shall credit the investment fund
subaccounts of the Participant’s Account with an amount equal to Compensation deferred by the
Participant in accordance with the Participant’s election under Section 3.2; that is, the portion
of the Participant’s deferred Compensation that the Participant has elected to be deemed to be
invested in a certain type of Fund shall be credited to the investment fund subaccount to be
invested in that Fund; and

          (b) each business day, each investment fund subaccount of a Participant’s Account shall be
credited with earnings or losses in an amount equal to that determined by multiplying the balance
credited to such investment fund subaccount as of the prior day, less any distributions valued as
of the end of the prior day, by the Crediting Rate for the corresponding Fund as determined by the
Committee pursuant to Section 3.2.

     4.2 Trust. The Company shall be responsible for the payment of all benefits under the
Plan. At its discretion, the Company may establish one or more grantor trusts

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for the purpose of providing for payment of benefits under the Plan. Such trust or trusts may
be irrevocable, but the assets thereof shall be subject to the claims of the Company’s creditors.
Benefits paid to the Participant from any such trust or trusts shall be considered paid by the
Company for purposes of meeting the obligations of the Company under the Plan.

     4.3 Statement of Accounts. The Committee shall provide each Participant with
electronic statements at least quarterly setting forth the Participant’s Account balance as of the
end of each calendar quarter.

ARTICLE V

VESTING 

     5.1 Vesting of Deferral Accounts. The Participant shall be vested at all times in
amounts credited to the Participant’s Account.

ARTICLE VI

DISTRIBUTIONS

     6.1 Distribution Alternatives. The Participant may elect from the following
alternatives regarding the time and form of distribution of his or her Account:

          (a) Termination of Service Distribution. The Participant may elect as provided in
Section 3.3 to commence receipt of benefits upon Termination of Service or Disability. If the
Participant so elects, or if the Participant fails to make a valid election, then, except as
otherwise provided herein, the Distributable Amount credited to the Participant’s Account shall be
paid to the Participant in substantially equal installments over ten (10) years commencing on the
Payment Date following the Participant’s Termination of Service unless the Participant has made an
alternative election under Section 3.3 to receive benefits in the form of a single lump sum or in
substantially equal annual installments over up to twenty (20) years or a combination of both.

          (b) Scheduled Distribution. In the alternative, the Participant may elect as provided
in Section 3.3 to commence receipt of benefits in a particular Plan Year which may be either before
or after the Participant’s Termination of Service (a “Scheduled Distribution). If the Participant
so elects, then, except as otherwise provided herein, the Distributable Amount credited to the
Participant’s Account shall be paid to the Participant in substantially equal installments over ten
(10) years commencing on the Scheduled Distribution Payment Date unless the Participant has made an
alternative election under Section 3.3 to receive benefits in the form of a single lump sum or in
substantially equal annual installments over up to twenty (20) years or a combination of both.

          (c) Small Benefit Exception. Notwithstanding the foregoing, if on commencement of
benefits payable from an Account the Distributable Amount from such Account is less than or equal
to twenty-five thousand dollars ($25,000), the total Distributable Amount shall be paid in the form
of a single lump sum distribution on the

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scheduled Payment Date, if and only if such acceleration is permitted under Code Section 409A
without the imposition of an excise tax.

     6.2 Distributions on Death. In the event of the Participant’s death prior to the
complete distribution of all benefits payable from the Participant’s Account, the Employer shall
pay to the Participant’s Beneficiary, a benefit equal to the outstanding Distributable Amount of
such Account in a single lump sum on the Payment Date following the Participant’s death.

     6.3 Financial Hardship. Upon a finding that the Participant has suffered a Financial
Hardship, subject to compliance with Code Section 409A the Committee may, at the request of the
Participant, accelerate distribution of benefits or approve cancellation of current deferrals under
the Plan in the amount reasonably necessary to alleviate such Financial Hardship subject to the
following conditions:

          (a) the request to take a Hardship Distribution shall be made by filing a form provided by and
filed with the Committee prior to the end of any calendar month;

          (b) the amount distributed pursuant to this Section with respect to a Financial Hardship shall
not exceed the amount necessary to satisfy such financial emergency plus amounts necessary to pay
taxes reasonably anticipated as a result of the distribution, after taking into account the extent
to which such hardship is or may be relieved through reimbursement or compensation by insurance or
otherwise or by liquidation of the Participant’s assets (to the extent the liquidation of such
assets would not itself cause severe Financial Hardship); and

          (c) the amount determined by the Committee as a Hardship Distribution shall be paid in the
form of a single lump sum distribution as soon as practicable after the end of the calendar month
in which the Hardship Distribution election is made and approved by the Committee.

     6.4 Change in Control Distribution. Notwithstanding the foregoing, if a Change in
Control occurs before a Participant’s Account has been fully distributed, the Participant shall
receive an amount equal to the balance of the Participant’s Account, credited with notional
earnings as provided in Article 4, payable in the form of a single lump sum distribution on the
last day of the fifteenth (15th) month commencing after the month in which such Change
in Control occurs, unless the Participant makes a timely election under Section 3.3(b) to delay
commencement of benefits by a minimum of five (5) years and to receive the benefits at a later date
in the form of a single lump sum or over a period of up to twenty (20) years.

ARTICLE VII

PAYEE DESIGNATIONS AND LIMITATIONS

     7.1 Beneficiaries.

          (a) Beneficiary Designation. The Participant shall have the right, at any time, to
designate any person or persons as Beneficiary (both primary and

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contingent) to whom payment under the Plan shall be made in the event of the Participant’s
death. The Beneficiary designation shall be effective when it is submitted to and acknowledged by
the Committee during the Participant’s lifetime in the format prescribed by the Committee.

          (b) Absence of Valid Designation. If a Participant fails to designate a Beneficiary
as provided above, or if every person designated as Beneficiary predeceases the Participant or dies
prior to complete distribution of the Participant’s benefits, then the Committee shall direct the
distribution of such benefits to the Participant’s estate.

     7.2 Payments to Minors. In the event any amount is payable under the Plan to a minor,
payment shall not be made to the minor, but instead be paid (a) to that person’s living parent(s)
to act as custodian, (b) if that person’s parents are then divorced, and one parent is the sole
custodial parent, to such custodial parent, to act as custodian, or (c) if no parent of that person
is then living, to a custodian selected by the Committee to hold the funds for the minor under the
Uniform Transfers or Gifts to Minors Act in effect in the jurisdiction in which the minor resides.
If no parent is living and the Committee decides not to select another custodian to hold the funds
for the minor, then payment shall be made to the duly appointed and currently acting guardian of
the estate for the minor or, if no guardian of the estate for the minor is duly appointed and
currently acting within sixty (60) days after the date the amount becomes payable, payment shall be
deposited with the court having jurisdiction over the estate of the minor.

     7.3 Payments on Behalf of Persons Under Incapacity. In the event that any amount
becomes payable under the Plan to a person who, in the sole judgment of the Committee, is
considered by reason of physical or mental condition to be unable to give a valid receipt
therefore, the Committee may direct that such payment be made to any person found by the Committee,
in its sole judgment, to have assumed the care of such person. Any payment made pursuant to such
determination shall constitute a full release and discharge of any and all liability of the
Committee and the Company under the Plan.

     7.4 Inability to Locate Payee. In the event that the Committee is unable to locate a
Participant or Beneficiary within two (2) years following the scheduled Payment Date, the amount
allocated to the Participant’s Deferral Account shall be forfeited. If, after such forfeiture, the
Participant or Beneficiary later claims such benefit, such benefit shall be reinstated without
interest or earnings.

ARTICLE VIII

ADMINISTRATION

     8.1 Committee. The Plan shall be administered by a Committee appointed by the Board,
which shall have the exclusive right and full discretion (i) to appoint agents to act on its
behalf, (ii) to select and establish Funds, (iii) to interpret the Plan, (iv) to decide any and all
matters arising hereunder (including the right to remedy possible ambiguities, inconsistencies, or
admissions), (v) to make, amend and rescind such rules as it deems necessary for the proper
administration of the Plan and (vi) to make all other determinations and resolve all questions of
fact necessary or advisable for the

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administration of the Plan, including determinations regarding eligibility for benefits
payable under the Plan. All interpretations of the Committee with respect to any matter hereunder
shall be final, conclusive and binding on all persons affected thereby. No member of the Committee
or agent thereof shall be liable for any determination, decision, or action made in good faith with
respect to the Plan. The Company will indemnify and hold harmless the members of the Committee and
its agents from and against any and all liabilities, costs, and expenses incurred by such persons
as a result of any act, or omission, in connection with the performance of such persons’ duties,
responsibilities, and obligations under the Plan, other than such liabilities, costs, and expenses
as may result from the bad faith, willful misconduct, or criminal acts of such persons.

ARTICLE IX

MISCELLANEOUS

     9.1 Amendment or Termination of Plan. The Company may, at any time, direct the
Committee to amend or terminate the Plan, except that no such amendment or termination may reduce a
Participant’s Account balance. If the Company terminates the Plan, no further amounts shall be
deferred hereunder, and amounts previously deferred or contributed to the Plan shall be paid in
accordance with the provisions of the Plan as scheduled prior to the Plan termination.
Notwithstanding the foregoing, to the extent permitted under Code Section 409A and applicable
authorities, the Company may, in its complete and sole discretion, accelerate distributions under
the Plan in the event of a “change in ownership” or “effective control” of the Company or a “change
in ownership of a substantial portion of assets” or under such other terms and conditions as may be
specifically authorized under Code Section 409A and applicable authorities.

     9.2 Unsecured General Creditor. The benefits paid under the Plan shall be paid from
the general funds of the Company, and the Participant and any Beneficiary or their heirs or
successors shall be no more than unsecured general creditors of the Company with no special or
prior right to any assets of the Company for payment of any obligations hereunder. It is the
intention of the Company that this Plan be unfunded for purposes of the Code.

     9.3 Restriction Against Assignment. The Company shall pay all amounts payable
hereunder only to the person or persons designated by the Plan and not to any other person or
entity. No part of a Participant’s Account shall be liable for the debts, contracts, or
engagements of any Participant, Beneficiary, or their successors in interest, nor shall a
Participant’s Account be subject to execution by levy, attachment, or garnishment or by any other
legal or equitable proceeding, nor shall any such person have any right to alienate, anticipate,
sell, transfer, commute, pledge, encumber, or assign any benefits or payments hereunder in any
manner whatsoever. No part of a Participant’s Account shall be subject to any right of offset
against or reduction for any amount payable by the Participant or Beneficiary, whether to the
Company or any other party, under any arrangement other than under the terms of this Plan.

     9.4 Protective Provisions. The Participant shall cooperate with the Company by
furnishing any and all information requested by the Committee, in order to facilitate

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the payment of benefits hereunder, taking such physical examinations as the Committee may deem
necessary and taking such other actions as may be requested by the Committee. If the Participant
refuses to so cooperate, the Company shall have no further obligation to the Participant under the
Plan. In the event of the Participant’s suicide during the first two (2) years in the Plan, or if
the Participant makes any material misstatement of information or non-disclosure of medical
history, then no benefits shall be payable to the Participant under the Plan, except that benefits
may be payable in a reduced amount in the sole discretion of the Committee.

     9.5 Receipt or Release. Any payment made in good faith to a Participant or the
Participant’s Beneficiary shall, to the extent thereof, be in full satisfaction of all claims
against the Committee, its members, and the Company. The Committee may require such Participant or
Beneficiary, as a condition precedent to such payment, to execute a receipt and release to such
effect.

     9.6 Errors in Account Statements, Deferrals or Distributions. In the event an error
is made in an Account statement, such error shall be corrected on the next statement following the
date such error is discovered. In the event of an error in deferral amount, consistent with and as
permitted by any correction procedures established under Code Section 409A, the error shall be
corrected immediately upon discovery by, in the case of an excess deferral, distribution of the
excess amount to the Participant, or, in the case of an under deferral, reduction of other
compensation payable to the Participant. In the event of an error in a distribution, the over or
under payment shall be corrected by payment to or collection from the Participant consistent with
any correction procedures established under Code Section 409A, immediately upon the discovery of
such error. In the event of an overpayment, the Company may, at its discretion, offset other
amounts payable to the Participant from the Company (including but not limited to cash or non-cash
Director compensation or expense reimbursements subject to compliance with Code Section 409A) to
recoup the amount of such overpayment(s).

     9.7 Service Not Guaranteed. Nothing contained in the Plan nor any action taken
hereunder shall be construed as a contract for service or as giving any Participant any right to
continue the provision of services in any capacity whatsoever to the Company.

     9.8 Successors of the Company. The rights and obligations of the Company under the
Plan shall inure to the benefit of, and shall be binding upon, the successors and assigns of the
Company.

     9.9 Notice. Any notice or filing required or permitted to be given to the Company or
the Participant under this Agreement shall be sufficient if in writing and hand-delivered, or sent
by registered or certified mail, in the case of the Company, to the principal office of the
Company, directed to the attention of the Committee, and in the case of the Participant, to the
last known address of the Participant indicated on the records of the Company. Such notice shall
be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on
the postmark on the receipt for

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registration or certification. Notices to the Company may be permitted by electronic
communication according to specifications established by the Committee.

     9.10 Headings. Headings and subheadings in this Plan are inserted for convenience of
reference only and are not to be considered in the construction of the provisions hereof.

     9.11 Gender, Singular and Plural. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine, or neuter, as the identity of the person or persons may
require. As the context may require, the singular may be read as the plural and the plural as the
singular.

     9.12 Governing Law. The Plan shall be governed by the laws of the State of Delaware.

     IN WITNESS WHEREOF, the Board of Directors of the Company has approved the adoption of this
Plan as of the Effective Date and has caused the Plan to be executed by its duly authorized
representative this 1st day of November, 2007.

	 	 	 	 	 
	 	USEC INC.

 	 
	 	By:  	W. Lance Wright
 	 
	 	 	Title: Senior Vice President,  	 
	 	 	Human Resources & Administration 	 
	 

12exv4w06

 

EXHIBIT 4.06

OPTIMOST LLC

2006 EQUITY COMPENSATION PLAN

     The purpose of the Optimost LLC 2006 Equity Compensation Plan (the “Plan”) is to provide (i)
designated employees of Optimost LLC (the “Company”) and its subsidiaries, (ii) certain advisors
who perform services for the Company or its subsidiaries and (iii) non-employee members of the
Management Committee of the Company (the “Board”) with the opportunity to receive grants of
incentive stock options and nonqualified options. The Company believes that the Plan will
encourage the participants to contribute materially to the growth of the Company, thereby
benefiting the Company’s members, and will align the economic interests of the participants with
those of the members.

     1. Administration

     (a) Committee. The Plan shall be administered and interpreted by a committee appointed by the
Board (the “Committee”). Prior to the Company becoming a “Reporting Company” as described in
Section 18(b), the Board may exercise any power or authority of the Committee under the Plan and,
in such case, references to the Committee hereunder, as they relate to Plan administration, shall
be deemed to include the Board as a whole. After the Company becomes a Reporting Company, the
Committee shall consist of two or more persons appointed by the Board, all of whom may be “outside
directors” as defined under section 162(m) of the Internal Revenue Code of 1986, as amended (the
“Code”), and related Treasury regulations and may be “non-employee directors” as defined under Rule
16b-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

     (b) Committee Authority. The Committee shall have the sole authority to (i) determine the
individuals to whom grants shall be made under the Plan, (ii) determine the type, size and terms of
the grants to be made to each such individual, (iii) determine the time when the grants will be
made and the duration of any applicable exercise or restriction period, including the criteria for
exercisability and the acceleration of exercisability and (iv) deal with any other matters arising
under the Plan.

     (c) Committee Determinations. The Committee shall have full power and authority to
administer and interpret the Plan, to make factual determinations and to adopt or amend such rules,
regulations, agreements and instruments for implementing the Plan and for the conduct of its
business as it deems necessary or advisable, in its sole discretion. The Committee’s
interpretations of the Plan and all determinations made by the Committee pursuant to the powers
vested in it hereunder shall be conclusive and binding on all persons having any interest in the
Plan or in any awards granted hereunder. All powers of the Committee shall be executed in its sole
discretion, in the best interest of the Company, not as a fiduciary, and in keeping with the
objectives of the Plan, and need not be uniform as to similarly situated individuals.

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     2. Grants

     Awards under the Plan may consist of grants (collectively, the “Grants”) of (1) on or after
the Company becomes a Reporting Company, incentive stock options as described in Section 5
(“Incentive Stock Options”) and (2) Nonqualified Options as described in Section 5 (“Nonqualified
Options”) (Incentive Stock Options and Nonqualified Options are collectively referred to as
“Options”). All Grants shall be subject to the terms and conditions set forth herein and to such
other terms and conditions consistent with this Plan as the Committee deems appropriate and as are
specified in writing by the Committee to the individual in a grant instrument (the “Grant
Instrument”) or an amendment to the Grant Instrument. The Committee shall approve the form and
provisions of each Grant Instrument. Grants under a particular Section of the Plan need not be
uniform as among the grantees. With respect to Options granted under the Plan to California
residents, and only to the extent required to exempt the offer of securities from the qualification
requirements under California law, the provisions set forth in Appendix A hereto shall apply,
notwithstanding anything in the Plan or a Grant Instrument to the contrary.

     3. Units Subject to the Plan

     (a) Units Authorized. For purposes of the Plan, a Unit means (i) prior to the Company
becoming a Reporting Company, one Class A Unit of the Company and (ii) on and after the Company
becomes a Reporting Company, one or more units of equity interest in the Company as determined
pursuant to Section 3(b). Subject to the adjustment specified below, the aggregate number of Units
of the Company that may be issued or transferred under the Plan is 3,000,000 Units. The maximum
aggregate number of Units that shall be subject to Grants made under the Plan to any individual
during any calendar year shall be 200,000 Units. The Units may be authorized but unissued Units or
reacquired Units, including Units purchased by the Company on the open market for purposes of the
Plan. If and to the extent Options granted under the Plan terminate, expire, or are canceled,
forfeited, exchanged or surrendered without having been exercised, the Units subject to such Grants
shall again be available for purposes of the Plan.

     (b) Adjustments. If there is any change in the number or kind of Units outstanding (i) by
reason of a dividend, spinoff, recapitalization, split or combination or exchange of Units, (ii) by
reason of a merger, reorganization or consolidation in which the Company is the surviving
corporation, (iii) by reason of a reclassification or change in par value, (iv) by reason of any
other extraordinary or unusual event affecting the outstanding Units of the Company as a class
without the Company’s receipt of consideration, or (v) by reason of the Company being a Reporting
Company, or if the value of outstanding Units is substantially reduced as a result of a spinoff or
the Company’s payment of an extraordinary dividend or distribution, the maximum number of Units
available for Grants, the maximum number of Units that any individual participating in the Plan may
be granted in any year, the number of Units covered by outstanding Grants, the kind of Units issued
under the Plan and the price per Unit or the applicable market value of such Grants shall be
appropriately adjusted by the Committee to reflect any increase or decrease in the number of, or
change in the kind or value of, issued Units to preclude, to the extent practicable, the
enlargement or dilution of rights and benefits under such Grants; provided, however, that any
fractional Units resulting from such adjustment shall be eliminated. Any adjustments determined by
the Committee shall be final, binding and conclusive.

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     4. Eligibility for Participation

     (a) Eligible Persons. All employees of the Company and its subsidiaries (“Employees”),
including Employees who are officers or members of the Board, and members of the Board who are not
Employees (“Non-Employee Directors”) shall be eligible to participate in the Plan. Advisors who
perform services to the Company or any of its subsidiaries (“Key Advisors”) shall be eligible to
participate in the Plan if the Key Advisors render bona fide services and such services are not in
connection with the offer or sale of securities in a capital-raising transaction.

     (b) Selection of Grantees. The Committee shall select the Employees, Non-Employee Directors
and Key Advisors to receive Grants and shall determine the number of Units subject to a particular
Grant in such manner as the Committee determines. Employees, Key Advisors and Non-Employee
Directors who receive Grants under this Plan shall hereinafter be referred to as “Grantees.”

     5. Granting of Options

     (a) Number of Units. The Committee shall determine the number of Units that will be subject
to each Grant of Options to Employees, Non-Employee Directors and Key Advisors.

     (b) Type of Option and Price.

     (i) On or after the Company becomes a Reporting Company, the Committee may
grant Incentive Stock Options that are intended to qualify as “incentive stock
options” within the meaning of section 422 of the Code or Nonqualified Options that
are not intended so to qualify or any combination of Incentive Stock Options and
Nonqualified Options, all in accordance with the terms and conditions set forth
herein. Incentive Stock Options may be granted only to Employees. Nonqualified
Options may be granted to Employees, Non-Employee Directors and Key Advisors.

     (ii) The purchase price (the “Exercise Price”) of Units subject to an Option
shall be determined by the Committee and shall be equal to, or greater than, the
Fair Market Value (as defined below) of a Unit on the date the Option is granted;
provided, however, that an Incentive Stock Option may not be granted to an Employee
who, at the time of grant, owns Units possessing more than 10 percent of the total
combined voting power of all Units and other classes of stock of the Company or any
parent or subsidiary of the Company, unless the Exercise Price per Unit is not less
than 110% of the Fair Market Value of a Unit on the date of grant.

     (iii) If the Units are publicly traded, then the Fair Market Value per Unit
shall be determined as follows: (x) if the principal trading market for the Units is
a national securities exchange or the NASDAQ National Market, the last reported sale
price thereof on the relevant date or (if there were no trades on that date) the
latest preceding date upon which a sale was reported, or (y) if the Units are not
principally traded on such exchange or market, the mean between the last

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reported “bid” and “asked” prices of a Unit on the relevant date, as reported
on Nasdaq or, if not so reported, as reported by the National Daily Quotation
Bureau, Inc. or as reported in a customary financial reporting service, as
applicable and as the Committee determines. If the Units are not publicly traded or,
if publicly traded, are not subject to reported transactions or “bid” or “asked”
quotations as set forth above, the Fair Market Value per Unit shall be as determined
by the Committee.

     (c) Option Term. The Committee shall determine the term of each Option. The term of any
Option shall not exceed ten years from the date of grant. However, an Incentive Stock Option that
is granted to an Employee who, at the time of grant, owns Units possessing more than 10 percent of
the total combined voting power of all Units and other classes of stock of the Company, or any
parent or subsidiary of the Company, may not have a term that exceeds five years from the date of
grant.

     (d) Exercisability of Options.

     (i) Options shall become exercisable in accordance with such terms and
conditions, consistent with the Plan, as may be determined by the Committee and
specified in the Grant Instrument or an amendment to the Grant Instrument. The
Committee may accelerate the exercisability of any or all outstanding Options at any
time for any reason.

     (ii) Notwithstanding the foregoing, the Option may, but need not, include a
provision whereby the Grantee may elect at any time while an Employee, Non-Employee
Director or Key Advisor to exercise the Option as to any part or all of the Units
subject to the Option prior to the full vesting of the Option. Any unvested Units so
purchased shall be subject to a repurchase right in favor of the Company, with the
repurchase price to be equal to the lesser of (x) the original purchase price and
(y) the Fair Market Value of the Units, or to any other restriction the Committee
determines to be appropriate.

     (e) Termination of Employment, Disability or Death.

     (i) Except as provided below, an Option may only be exercised while the Grantee
is employed by the Company as an Employee, Key Advisor or member of the Board. In
the event that a Grantee ceases to be employed by the Company for any reason other
than “disability,” death or “termination for cause,” any Option which is otherwise
exercisable by the Grantee shall terminate unless exercised within 90 days after the
date on which the Grantee ceases to be employed by the Company (or within such other
period of time as may be specified by the Committee), but in any event no later than
the date of expiration of the Option term. Any of the Grantee’s Options that are not
otherwise exercisable as of the date on which the Grantee ceases to be employed by
the Company shall terminate as of such date.

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     (ii) In the event the Grantee ceases to be employed by the Company on account
of a “termination for cause” by the Company, any Option held by the Grantee shall
terminate as of the date the Grantee ceases to be employed by the Company.

     (iii) In the event the Grantee ceases to be employed by the Company because the
Grantee is “disabled,” any Option which is otherwise exercisable by the Grantee
shall terminate unless exercised within one year after the date on which the Grantee
ceases to be employed by the Company (or within such other period of time as may be
specified by the Committee), but in any event no later than the date of expiration
of the Option term. Any of the Grantee’s Options which are not otherwise exercisable
as of the date on which the Grantee ceases to be employed by the Company shall
terminate as of such date.

     (iv) If the Grantee dies while employed by the Company or within 90 days after
the date on which the Grantee ceases to be employed on account of a termination of
employment specified in Section 5(e)(i) above (or within such other period of time
as may be specified by the Committee), any Option that is otherwise exercisable by
the Grantee shall terminate unless exercised within one year after the date on which
the Grantee ceases to be employed by the Company (or within such other period of
time as may be specified by the Committee), but in any event no later than the date
of expiration of the Option term. Any of the Grantee’s Options that are not
otherwise exercisable as of the date on which the Grantee ceases to be employed by
the Company shall terminate as of such date.

     (v) For purposes hereof:

     (A) “Company,” when used in the phrase “employed by the Company,” shall mean the Company and
its parent and subsidiary corporations.

     (B) “Employed by the Company” shall mean employment or service as an Employee, Key Advisor or
member of the Board (so that, for purposes of exercising Options, a Grantee shall not be considered
to have terminated employment or service until the Grantee ceases to be an Employee, Key Advisor
and member of the Board), unless the Committee determines otherwise.

     (C) “Disability” shall mean a Grantee’s becoming disabled within the meaning of section
22(e)(3) of the Code.

     (D) “Termination for cause” shall mean, except to the extent specified otherwise by the
Committee, a finding by the Committee that (1) the Grantee has breached his or her employment,
service, noncompetition, nonsolicitation or other similar contract with the Company or its parent
and subsidiary corporations, (2) has been engaged in disloyalty to the Company or its parent and
subsidiary corporations, including, without limitation, fraud, embezzlement, theft, commission of a
felony or dishonesty in the course of his or her employment or service, (3) has disclosed trade
secrets or confidential information of the Company or its parents and subsidiary corporations to
persons not entitled to receive such

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information or (4) has entered into competition with the Company or its parent or Subsidiary
Corporations. Notwithstanding the foregoing, if the Grantee has an employment agreement with the
Company defining “termination for cause,” then such definition shall supersede the foregoing
definition.

     (f) Exercise of Options. A Grantee may exercise an Option that has become exercisable, in
whole or in part, by delivering a notice of exercise to the Company with payment of the Exercise
Price. The Grantee shall pay the Exercise Price for an Option as specified by the Committee (x) in
cash, (y) if approved by the Committee in its sole discretion, by delivering Units owned by the
Grantee for the period necessary to avoid a charge to the Company’s earnings for financial
reporting purposes (including Units acquired in connection with the exercise of an Option, subject
to such restrictions as the Committee deems appropriate) and having a Fair Market Value on the date
of exercise equal to the Exercise Price, or (z) by such other method as the Committee may approve,
including, after the Company becomes a Reporting Company, payment through a broker in accordance
with procedures permitted by Regulation T of the Federal Reserve Board; provided, that, for purpose
of assisting an Optionee to exercise an Option, the Company may make loans to the Optionee or
guarantee loans made by third parties to the Optionee, on such terms and conditions as the
Committee may authorize. Units used to exercise an Option shall have been held by the Grantee for
the requisite period of time to avoid adverse accounting consequences to the Company with respect
to the Option. The Grantee shall pay the Exercise Price and the amount of any withholding tax due
(pursuant to Section 6) in cash at the time of exercise.

     (g) Limits on Incentive Stock Options. Each Incentive Stock Option shall provide that, if the
aggregate Fair Market Value of the Units on the date of the grant with respect to which Incentive
Stock Options are exercisable for the first time by a Grantee during any calendar year, under the
Plan or any other equity compensation plan of the Company or a parent or subsidiary, exceeds
$100,000, then the option, as to the excess, shall be treated as a Nonqualified Option. An
Incentive Stock Option shall not be granted to any person who is not an Employee of the Company or
a parent or subsidiary (within the meaning of section 424(f) of the Code).

     6. Withholding of Taxes

     (a) Required Withholding. All Grants under the Plan shall be subject to applicable federal
(including FICA), state and local tax withholding requirements. The Company shall have the right
to deduct from all Grants paid in cash, or from other wages paid to the Grantee, any federal, state
or local taxes required by law to be withheld with respect to such Grants. The Company may require
the Grantee to pay to the Company in cash the amount of any such taxes that the Company is required
to withhold with respect to such Grants, or the Company may deduct from other wages paid by the
Company the amount of any withholding taxes due with respect to such Grants.

     (b) Election to Withhold Units. If the Committee (in its sole discretion) so permits, a
Grantee may elect to satisfy the Company’s income tax withholding obligation with respect to an
Option paid in Company Units by having Units withheld up to an amount that does not exceed the
Grantee’s maximum marginal tax rate for federal (including FICA), state and local tax

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liabilities. The election must be in a form and manner prescribed by the Committee and shall
be subject to the prior approval of the Committee.

     7. Transferability of Grants

     (a) Except as provided in Section 7(b), only the Grantee may exercise rights under a Grant
during the Grantee’s lifetime. A Grantee may not transfer those rights except by will or by the
laws of descent and distribution. When a Grantee dies, the personal representative or other person
entitled to succeed to the rights of the Grantee (“Successor Grantee”) may exercise such rights. A
Successor Grantee must furnish proof satisfactory to the Company of his or her right to receive the
Grant under the Grantee’s will or under the applicable laws of descent and distribution.

     (b) Transfer of Nonqualified Options. The Committee may provide, in a Grant Instrument, that a
Grantee may transfer Nonqualified Options to family members or other persons or entities according
to such terms as the Committee may determine; provided that the Grantee receives no consideration
for the transfer of an Option and the transferred Option shall continue to be subject to the same
terms and conditions as were applicable to the Option immediately before the transfer.

     8. Right of First Refusal and other Restrictions on Transfer of Units

     If at any time an individual desires to sell, encumber, or otherwise dispose of Units
distributed to him under this Plan, the individual shall first comply with the transfer
restrictions set forth in the Company’s Amended and Restated Operating Agreement, as amended from
time to time (the “Operating Agreement”). Any transfer that does not so comply shall be null and
void.

     9. Purchase by the Company

     Unless otherwise
determined by the Board or Committee at or after grant, in the event of the
Optionee’s termination of employment or performance of services for the Company, the Company shall
have the right to repurchase all Units issued or to be issued to the Optionee under this Plan at
Fair Market Value but not less than the Optionee’s cost. In the event that the Board or Committee
determines in good faith that the Optionee has materially breached any non-compete or
confidentiality agreement with the Company after termination of his or her status as an Employee or
Consultant, the price at which the Company shall have the right to repurchase such Units shall be
equal to the exercise price or purchase price paid by the Optionee. Any repurchase shall be made
in accordance with accounting rules to avoid adverse accounting treatment.

     The Company’s right to repurchase shall be exercisable at any time within one year after the
date of Optionee’s termination of employment or performance of service by the delivery of written
notice by the Company to such effect to the Optionee, his executor, administrator or beneficiaries.
Within 30 days after receipt of such notice, the Optionee, his executor, administrator or
beneficiaries shall deliver a certificate or certificates for the shares being sold, together with
appropriate duly signed stock powers transferring such shares to the Company, and

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the Company shall deliver to the Optionee, his executor, administrator or beneficiaries the
Company’s check in the amount of the purchase price for the shares being sold.

     The Units are also subject to any repurchase provisions set forth in the Operating Agreement.

     10. Reorganization of the Company.

     (a) Reorganization. As used herein, a “Reorganization” shall be deemed to have occurred if
the members of the Company approve (or, if shareholder approval is not required, the Board
approves) an agreement providing for (i) the merger or consolidation of the Company with another
corporation where the members of the Company, immediately prior to the merger or consolidation,
will not beneficially own, immediately after the merger or consolidation, Units entitling such
members to more than 50% of all votes to which all members of the surviving corporation would be
entitled in the election of directors (without consideration of the rights of any class of stock to
elect directors by a separate class vote), (ii) the sale or other disposition of all or
substantially all of the assets of the Company or (iii) a liquidation or dissolution of the
Company.

     (b) Assumption of Grants. Upon a Reorganization where the Company is not the surviving
corporation (or survives only as a subsidiary of another corporation), unless the Committee
determines otherwise, all outstanding Options that are not exercised shall be assumed by, or
replaced with comparable options or rights by, the surviving corporation.

     (c) Other Alternatives. Notwithstanding the foregoing, in the event of a Reorganization, the
Committee may take one or both of the following actions: the Committee may (i) require that
Grantees surrender their outstanding Options in exchange for a payment by the Company, in cash or
Units as determined by the Committee, in an amount equal to the amount by which the then Fair
Market Value of the Units subject to the Grantee’s unexercised Options exceeds the Exercise Price
of the Options, or (ii) after accelerating all vesting and giving Grantees an opportunity to
exercise their outstanding Options, terminate any or all unexercised Options at such time as the
Committee deems appropriate. Such surrender or termination shall take place as of the date of the
Reorganization or such other date as the Committee may specify.

     (d) Limitations. Notwithstanding anything in the Plan to the contrary, in the event of a
Reorganization, the Committee shall not have the right to take any actions described in the Plan
(including without limitation actions described in Subsection (b) above) that would make the
Reorganization ineligible for desired tax treatment if, in the absence of such right, the
Reorganization would qualify for such treatment and the Company intends to use such treatment with
respect to the Reorganization.

     11. Change of Control of the Company.

     (a) As used herein, a “Change of Control” shall be deemed to have occurred if:

     (i) Any “person” (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) other than Mark Wachen or any of his family members becomes a
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act),

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directly or indirectly, of securities of the Company representing a majority of
the voting power of the then outstanding securities of the Company except where the
acquisition is approved by the Board; or

     (ii) Any person has commenced a tender offer or exchange offer for a majority
of the voting power of the then outstanding Units of the Company.

     (b) Notice and Acceleration. Upon a Change of Control, vesting of all Options will accelerate
12 months (that is, the Optionee will be deemed to have completed an additional 12 full months of
continuous service upon a Change in Control).

     (c) Other Alternatives. Notwithstanding the foregoing, subject to subsection (d) below, in
the event of a Change of Control, the Committee may take one or both of the following actions: the
Committee may (i) require that Grantees surrender their outstanding Options in exchange for a
payment by the Company, in cash or Units as determined by the Committee, in an amount equal to the
amount by which the then Fair Market Value of the Units subject to the Grantee’s unexercised
Options exceeds the Exercise Price of the Options or (ii) after giving Grantees an opportunity to
exercise their outstanding Options, terminate any or all unexercised Options at such time as the
Committee deems appropriate. Such surrender or termination shall take place as of the date of the
Change of Control or such other date as the Committee may specify.

     (d) Committee. The Committee making the determinations under this Section 11 following a
Change of Control must be comprised of the same members as those on the Committee immediately
before the Change of Control. If the Committee members do not meet this requirement, the automatic
provisions of Subsection (b) of this Section shall apply in the case of such a Change of Control,
and the Committee shall not have discretion to vary them.

     (e) Limitations. Notwithstanding anything in the Plan to the contrary, in the event of a
Change of Control, the Committee shall not have the right to take any actions described in the Plan
(including without limitation actions described in Subsection (c) above) that would make the Change
of Control ineligible for desired tax treatment if, in the absence of such right, the Change of
Control would qualify for such treatment and the Company intends to use such treatment with respect
to the Change of Control.

     12. Requirements for Issuance or Transfer of Units

     (a) Securityholder’s Agreement. The Committee may require that a Grantee execute a
securityholder’s agreement, with such terms as the Committee deems appropriate, with respect to any
Units distributed pursuant to this Plan. Each Grantee shall become a party to the Operating
Agreement.

     (b) Limitations on Issuance or Transfer of Units. No Units shall be issued or transferred in
connection with any Grant hereunder unless and until all legal requirements applicable to the
issuance or transfer of such Units have been complied with to the satisfaction of the Committee.
The Committee shall have the right to condition any Grant made to any Grantee hereunder on such
Grantee’s undertaking in writing to comply with such restrictions on his or her subsequent
disposition of such Units as the Committee shall deem necessary or advisable as a

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result of any applicable law, regulation or official interpretation thereof, and certificates
representing such Units may be legended to reflect any such restrictions. Certificates
representing Units issued or transferred under the Plan will be subject to such stop-transfer
orders and other restrictions as may be required by applicable laws, regulations and
interpretations, including any requirement that a legend be placed thereon.

     13. Amendment and Termination of the Plan

     (a) Amendment. The Board may amend or terminate the Plan at any time.

     (b) Termination of Plan. The Plan shall terminate on the day immediately preceding the tenth
anniversary of its effective date, unless the Plan is terminated earlier by the Board or is
extended by the Board with the approval of the members.

     (c) Termination and Amendment of Outstanding Grants. A termination or amendment of the Plan
that occurs after a Grant is made shall not materially impair the rights of a Grantee unless the
Grantee consents. The termination of the Plan shall not impair the power and authority of the
Committee with respect to an outstanding Grant. Whether or not the Plan has terminated, an
outstanding Grant may be terminated or amended in accordance with the Plan or may be amended by
agreement of the Company and the Grantee consistent with the Plan.

     (d) Governing Document. The Plan shall be the controlling document. No other statements,
representations, explanatory materials or examples, oral or written, may amend the Plan in any
manner. The Plan shall be binding upon and enforceable against the Company and its successors and
assigns.

     14. Funding of the Plan

     This Plan shall be unfunded. The Company shall not be required to establish any special or
separate fund or to make any other segregation of assets to assure the payment of any Grants under
this Plan. In no event shall interest be paid or accrued on any Grant, including unpaid
installments of Grants.

     15. Rights of Participants

     Nothing in this Plan shall entitle any Employee, Non-Employee Director, Key Advisor or other
person to any claim or right to be granted a Grant under this Plan. Neither this Plan nor any
action taken hereunder shall be construed as giving any individual any rights to be retained by or
in the employ of the Company or any other employment rights.

     16. No Fractional Units

     No fractional Units shall be issued or delivered pursuant to the Plan or any Grant. The
Committee shall determine whether cash, other awards or other property shall be issued or paid in
lieu of such fractional Units or whether such fractional Units or any rights thereto shall be
forfeited or otherwise eliminated.

     17. Headings

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     Section headings are for reference only. In the event of a conflict between a title and the
content of a Section, the content of the Section shall control.

     18. Effective Date of the Plan; Definition of Terms.

     (a) Effective Date. The Plan shall be effective as of November 15, 2006.

     (b) Reporting Company. The provisions of the Plan that refer to the Company becoming a
Reporting Company, or that refer to, or are applicable to persons subject to, Section 16 of the
Exchange Act or section 162(m) of the Code, shall be effective, if at all, upon the initial
registration of the Units under Section 12(g) of the Exchange Act, and shall remain effective
thereafter for so long as such Units are so registered.

     (c) Public Offering. All references in the Plan to a Public Offering shall refer to the
consummation of the first registered public offering of Units of the Company in a firm commitment
underwriting.

     19. Miscellaneous

     (a) Grants in Connection with Corporate Transactions and Otherwise. Nothing contained in this
Plan shall be construed to (i) limit the right of the Committee to make Grants under this Plan in
connection with the acquisition, by purchase, lease, merger, consolidation or otherwise, of the
business or assets of any corporation, firm or association, including Grants to employees thereof
who become Employees of the Company, or for other proper corporate purposes, or (ii) limit the
right of the Company to grant stock options or make other awards outside of this Plan. Without
limiting the foregoing, the Committee may make a Grant to an employee of another corporation who
becomes an Employee by reason of a corporate merger, consolidation, acquisition of stock or
property, reorganization or liquidation involving the Company or any of its subsidiaries in
substitution for a stock option or restricted unit grant made by such corporation. The terms and
conditions of the substitute grants may vary from the terms and conditions required by the Plan and
from those of the substituted stock incentives. The Committee shall prescribe the provisions of
the substitute grants.

     (b) Compliance with Law. The Plan, the exercise of Options and the obligations of the
Company to issue or transfer Units under Grants shall be subject to all applicable laws and to
approvals by any governmental or regulatory agency as may be required. With respect to persons
subject to Section 16 of the Exchange Act, it is the intent of the Company that the Plan and all
transactions under the Plan comply with all applicable provisions of Rule 16b-3 or its successors
under the Exchange Act. The Committee may revoke any Grant if it is contrary to law or modify a
Grant to bring it into compliance with any valid and mandatory government regulation. The Committee
may also adopt rules regarding the withholding of taxes on payments to Grantees. The Committee may,
in its sole discretion, agree to limit its authority under this Section.

     (c) Governing Law. The validity, construction, interpretation and effect of the Plan and
Grant Instruments issued under the Plan shall exclusively be governed by and determined in
accordance with the law of the State of New York.

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APPENDIX A

PROVISIONS FOR CALIFORNIA RESIDENTS

With respect to Options granted under the Optimost LLC 2006 Equity Compensation Plan (the “Plan”)
to California residents, and only to the extent required to exempt the offer of securities from the
qualification requirements under California law, the following provisions shall apply
notwithstanding anything in the Plan or a Grant Instrument to the contrary:

	 	•	 	The Option shall provide an exercise price which is not less than 85%
of the Fair Market Value of a Unit on the date the Option is granted, except that
the price shall be at least 110% of the Fair Market Value of a Unit on the date the
Option is granted in the case of any person who, at the time of grant, owns
securities possessing more than 10% of the total combined voting power of all Units
and other classes of securities of the Company or any parent or subsidiary of the
Company.
	 
	 	•	 	The Option shall be non-transferable other than by will, by the laws of
descent and distribution, or (to the extent permitted by the Committee) as
otherwise permitted by Rule 701 of the Securities Act of 1933, as amended.
	 
	 	•	 	The Grantee shall have the right to exercise at the rate of at least
20% per year over 5 years from the date the Option is granted, subject to
reasonable conditions such as continued employment; provided, however, that if the
Option is granted to an officer, director, or consultant of the Company or its
subsidiaries, the Option may become fully exercisable, subject to reasonable
conditions such as continued employment, at any time or during any period
established by the Company.
	 
	 	•	 	In the event of termination of employment other than for “cause” (as
defined by applicable law, the terms of the Plan, a Grant Instrument or a contract
of employment), the Grantee shall have the right to exercise the Option as follows
(but only to the extent that the Grantee is otherwise entitled to exercise the
Option on the date employment terminates, and in no event later than the expiration
date of the Option):

	 	•	 	At least 6 months from the date of termination of employment if
termination was caused by death or disability (which means that the Grantee
is unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment); or
	 
	 	•	 	At least 30 days from the date of termination of employment if
termination was caused by other than death or disability.

	 	•	 	The Plan shall terminate on the day immediately preceding the tenth
anniversary of the date the Plan is adopted or the date the Plan is approved by the
security holders of the Company, whichever is earlier.
	 
	 	•	 	The Company’s security holders must approve the Plan within 12 months
before or after the date the Plan is adopted by the Board.
	 
	 	•	 	The Company will provide financial statements to each Grantee annually
during the period such individual has Options outstanding to the extent required
under Section 260.140.46 of Title 10 of the California Code of Regulations
(“CCR”).

A-1

 

	 	•	 	If provisions in the Grant Instrument give the Company the right to repurchase
securities upon termination of employment,

	 	•	 	at not less than the Fair Market Value of the securities to be
repurchased on the date of termination of employment, then such right to
repurchase must be exercised for cash or cancellation of purchase money
indebtedness for the securities within 90 days of termination of employment
(or in the case of securities issued upon exercise of Options after the
date of termination, within 90 days after the date of the exercise), and
such right terminates when the Company’s securities become publicly traded;
or
	 
	 	•	 	at the original purchase price or exercise price, then such right to
repurchase shall lapse at the rate of at least 20% of the securities per
year over 5 years from the date the Option is granted (without respect to
the date the Option was exercised or became exercisable) and must be
exercised for cash or cancellation of purchase money indebtedness for the
securities within 90 days of termination of employment (or in the case of
securities issued upon exercise of Options after the date of termination,
within 90 days after the date of the exercise).

	 	 	 	In addition to the restrictions set forth above, the securities held by an officer,
director, manager or consultant of the Company or its affiliates may be subject to
additional or greater restrictions as determined by the Committee.
	 
	 	•	 	The Company will comply with Section 260.140.1 of Title 10 of the CCR
with respect to the voting rights of common stock and similar equity securities.

Options granted to California residents are intended to comply with Section 25102(o) of the
California Corporations Code. Any provision of the Plan that is inconsistent with Section
25102(o), including without limitation any provision of the Plan that is more restrictive than
would be permitted by Section 25102(o) as amended from time to time, shall, without further act or
amendment by the Committee, be reformed to comply with the requirements of Section 25102(o). If at
any time the Committee determines that the delivery of securities under the Plan to California
residents is or may be unlawful under U.S. federal or state securities laws, the right to exercise
an Option or receive securities pursuant to an Option shall be suspended until the Committee
determines that such delivery is lawful. The Company shall have no obligation to effect any
registration or qualification of the securities subject to an Option under U.S. federal or state
laws.

Unless otherwise defined herein, capitalized terms used in this Appendix A are defined in the
Plan.

A-2

 

FIRST AMENDMENT TO THE OPTIMOST LLC

2006 EQUITY COMPENSATION PLAN

     WHEREAS, the Optimost LLC 2006 Equity Compensation Plan (the “Plan”) was adopted effective as
of November 15, 2006; and

     WHEREAS, pursuant to section 13(a) of the Plan, the members of the Management Committee of
Optimost LLC can amend the Plan at any time; and

     WHEREAS, pursuant to the terms of the Agreement and Plan of Merger dated on or about October
16, 2007 by and among Interwoven, Inc., Optimost LLC, Broadway Merger LLC, a wholly owned
acquisition subsidiary of Interwoven, Inc., and Mark Wachen as representative (the “Merger”),
Optimost LLC shall grant, prior to the closing date of the Merger, stock options to certain key
employees; and

     WHEREAS, it desired to amend the Plan to permit the grant of such stock options.

     NOW, THEREFORE, the Plan is hereby amended effective October 16, 2007 as follows:

1. Section 3(a) of the Plan is hereby amended by replacing “3,000,000” in the second sentence
thereof with “[insert number].”

2. Section 3(a) of the Plan is hereby amended by replacing “200,000” in the third sentence thereof
with “[insert number].”

3. Section 5(b)(ii) of the Plan is hereby amended in its entirety to read as follows.

The purchase price (the “Exercise Price”) of Units subject to a Nonqualified Option shall be
determined by the Committee. The Exercise Price of Units subject to an Incentive Stock
Option shall be determined by the Committee and shall be equal to, or greater than, the Fair
Market Value (as defined below) of a Unit on the date the Incentive Stock Option is granted;
provided however, that an Incentive Stock Option may not be granted to an Employee who, at
the time of grant, owns Units possessing more than 10 percent of the total combined voting
power of all Units and other classes of stock of the Company or any parent or subsidiary of
the Company, unless the Exercise Price per Unit is not less than 110% of the Fair Market
Value of a Unit on the date of grant.

4. Section 5(f) of the Plan is hereby amended in its entirety to read as follows:

A Grantee may exercise an Option that has become exercisable, in whole or in part, by
delivering notice of exercise to the Company with payment of the Exercise Price. The Grantee
shall pay the Exercise Price for an Option in cash, or if approved by the Committee in its
sole discretion, (i) by delivering Units already owned by the Grantee, (ii) by withholding
and surrender of the Units subject to the Option, or (iii) by such other method as the
Committee may approve, including, after the Company becomes a Reporting Company, payment
through a broker in accordance with procedures permitted by Regulation T of the Federal
Reserve Board; provided that, for purpose of assisting an

1

 

Optionee to exercise an Option, the Company may make loans to the Optionee or guarantee
loans made by third parties to the Optionee, on such terms and conditions as the Committee
may authorize. Payment may also be made in any other form approved by the Committee,
consistent with applicable law, regulations and rules. The Grantec shall pay the Exercise
Price and the amount of any withholding tax due (pursuant to Section 6) at the time of
exercise.

5. Section 11(b) of the Plan is hereby amended by adding the following two sentences to the end
thereof:

For the avoidance of doubt, the Merger by and among Interwoven, Inc., Optimost LLC, Broadway
Merger LLC, a wholly owned acquisition subsidiary of Interwoven, Inc., and Mark Wachen as
representative (the “Merger”) shall be considered a Change of Control and the Optionee will
be deemed to have completed an additional 12 full months of continuous service. Any
Options granted in connection with the Merger shall not beentitled to such acceleration of
Vesting upon the closing of the Merger.

Except as otherwise provided in this First Amendment, all other terms and conditions of the Plan
shall continue in full force and effect.

     IN WITNESS WHEREOF, the members of the Management Committee of Optimost LLC have caused this
First Amendment to be executed as of the 16th day of October, 2007.

	 	 	 	 	 
	 	OPTIMOST LLC MANAGEMENT COMMITTEE

 	 
	 	/s/  Optimost LLC Management Committee
 	 
	 	 	 
	 	
 	 
	 	 	 
	 

2

 

UNIT OPTION AGREEMENT

     AGREEMENT, dated as of [DATE], between Optimost LLC, a New York limited liability company (the
“Company”), and [NAME] (the “Grantee”)

     WHEREAS, the Company has adopted its 2006 Equity Incentive Plan (the “Plan”), which Plan is
incorporated in this Agreement by reference and made a part of it; and

     WHEREAS, in consideration of the Grantee’s performance of services for the Company as an
employee or consultant, the Company desires to grant, and the Grantee desires to accept, an option
to purchase Class A Units of the Company on the terms and conditions set forth herein, in
accordance with the Plan;

     NOW, THEREFORE, in consideration of the promises and the mutual covenants and agreements set
forth herein, the parties hereto agree as follows:

Section 1. Option To Purchase Units.

     1.1. Option. The Company hereby grants to the Grantee an irrevocable option (the
“Option”) to purchase the number of Class A Units of the Company (the “Units”) as is listed on the
attached Schedule A. Upon the terms and conditions of this Agreement, the Grantee may
purchase the number of Units at an exercise price per Unit (the “Exercise Price”) as is listed on
the attached Schedule A. The Option may be exercised by the Grantee, in whole or in part,
from time to time after the date of grant listed on Schedule A and prior to the termination
of the Option in accordance with the terms of this Agreement and the Plan. This Option is
not intended to satisfy the requirements for “incentive stock options” under Section 422 of
the Internal Revenue Code of 1986, as amended (the “Code”).

     1.2. Exercise of Option. In the event the Grantee wishes to exercise the Option, in
accordance with the restrictions specified below, the Grantee shall send a written notice to the
Company (the “Unit Exercise Notice”) specifying a date for the closing of such purchase.

     1.2.1. Vesting. The right to exercise an Option is limited as hereinafter provided:

          (a) The Option may be exercised as hereinafter provided only to the extent that it has become
vested as provided herein.

          (b) The Options shall vest as follows:

               (i) The Option is granted on the date listed on Schedule A.

               (ii) An Option shall not begin to vest until the dated indicated on Schedule A
(“Initial Vesting Date”). Twelve forty-eighths (12/48) of the Option will vest on the
Initial Vesting Date, and an additional one forty-eighth (1/48) will vest for each
additional calendar month thereafter until the Option is fully vested, provided that the

 

 

Grantee will cease to vest in additional portions of the Option upon his or her termination
of employment with the Company for any reason.

     1.3. Registration of Units and Lock-Up Period. In the event the Company registers the
offering of any securities of the Company under the Securities Act of 1933, as amended (the
“Securities Act”), the Grantee, upon notice from the Company, shall not sell or otherwise transfer
any securities of the Company obtained in connection with this Agreement, during the 180-day period
following the effective date of a registration statement filed under the Securities Act; provided,
however, that such registration shall only apply to the Company’s initial public offering. The
Company may impose stop-transfer instructions with respect to securities subject to the foregoing
restrictions until the end of such 180-day period.

     1.4. Transferability. This Option may not be transferred except in the case of the
death of the Grantee, as provided in the Plan.

     1.5. Terms of Plan. The Plan, a copy of which is attached hereto, is incorporated
herein by reference and is made part of this Agreement as if fully set forth herein. This
Agreement is subject to, and the Company and the Grantee agree to be bound by, all the terms and
conditions of the Plan as the same exists at the time this Agreement was entered. The Plan shall
control in the event there is any express conflict between the Plan and the terms hereof, and on
such matters that are expressly covered in this Agreement. Subsequent amendments of the Plan shall
not adversely affect the Grantee’s rights under the Agreement without Grantee’s consent.

Section 2. Condition To Delivery Of Units

     The Company’s obligation to deliver Units upon exercise of the Option is subject only to the
condition that the Grantee be employed by the Company on the date the right to exercise the Option
vests and that the Grantee executes a joinder to the Amended and Restated Limited Liability Company
Agreement of the Company in form satisfactory to the Company which shall provide that the Grantee
shall become a Member party thereto and the Units to be delivered upon exercise of the Option shall
be held subject to all of the terms and conditions of such Agreement. If the Grantee has exercised
the Option prior to vesting in accordance with Section 1.4, any transfer of Units by the Company
shall be subject to the restrictions provided in Section 1.4. If the Grantee’s employment has been
terminated, the Company’s obligation to deliver Units shall be as set forth in Sections 1.3 and 1.4
of this Agreement.

Section 3. The Closing

     3.1. Closing Date. Any closing hereunder shall take place on the date specified by
the Grantee in his or her Unit Exercise Notice pursuant to Section 1 at 10:00 A.M., at the offices
of the Company, or at such other time and place as the parties hereto may agree (the “Closing
Date”). On the Closing Date, the Company will deliver the Units and the Grantee will purchase such
Units from the Company at the price per Unit equal to the Exercise Price. In the event that any
federal, state, or local income taxes, employment taxes, Federal Insurance Contribution Act
(“FICA”) withholdings or other amounts are required by applicable law or governmental regulation to
be withheld from the Grantee in connection with the exercise, these amounts must

2

 

be remitted to the
Company in addition to the Exercise Price. Any payment made by the Grantee to the Company pursuant
to this Agreement shall be made by wire transfer or by certified, bank or personal check.

     3.2. Legends. Any certificates representing the Units may bear an appropriate legend
relating to the fact that such Units have not been registered under the Securities Act.

Section 4. Representations And Warranties Of The Grantee

     4.1. Investment Representation. The Grantee represents and warrants to the Company
that the Grantee is acquiring the Option and, if and when the Grantee exercises the Option, will be
acquiring the Units issuable upon the exercise thereof for the Grantee’s own account and not with a
view to distribution or resale in any manner which would be in violation of the Securities Act.

     4.2. Restricted Securities. The Grantee understands that, if and when the Grantee
exercises the Option, the Grantee will be acquiring “restricted securities” under applicable
federal securities laws, and may dispose of such Units only pursuant to an effective registration
statement under the Securities Act or an exemption from registration if available. The Grantee
represents and warrants to the Company that the Grantee is acquiring the Option and, if and when
the Grantee exercises the Option, will be acquiring the Units issuable upon the exercise thereof
for the Grantee’s own account and not with a view to distribution or resale in any manner which
would be in violation of the Securities Act.

     4.3. Due Diligence Investigation. The Grantee has made, either alone or together with
its advisors, such independent investigation of the Company, its management and related matters as
the Grantee deems to be, or such advisors have advised to be, necessary or advisable in connection
with an investment in the Company through the transactions contemplated by this Agreement; and the
Grantee and advisors have received all information and data that the Grantee and advisor believe to be
necessary in order to reach an informed decision as to the advisability of an investment in the
Company pursuant to the transactions contemplated by this Agreement.

Section 5. Waiver

     The Grantee hereby waives any and all rights, interests or causes of action against the
Company which may exist prior to the date of this Agreement arising out of the Grantee’s option to
purchase stock in the Company.

Section 6. Miscellaneous

     6.1. No Third Party Beneficiaries. This Agreement shall not confer any rights of
remedies upon any person other than the Company, the Committee, the Grantee and their respective
successors and permitted assigns.

     6.2. Default. In the event either the Company or the Grantee fails to comply with the
terms of this Agreement, the other party to this Agreement shall be entitled to (a) injunctive

3

 

relief, as a matter of right, in any court of competent jurisdiction; and (b) any other relief or
remedy that may be available pursuant to this Agreement or at law or equity.

     6.3. Waivers. The waiver by the undersigned of any of the provisions of this
Agreement shall not operate or be construed as a waiver of any subsequent breach.

     6.4. Headings. The section headings contained in this Agreement are for reference
purposes only and shall not affect the construction and interpretation of this Agreement.

     6.5. Severability. The invalidity of all of any part of any section of this Agreement
shall not render invalid the remainder of such section. If any provision of this Agreement is so
broad as to be unenforceable, such provisions shall be interpreted to be only so broad as is
enforceable.

     6.6. Binding Effects. This Agreement shall be binding upon and inure to the benefit
of the parties to this Agreement, their heirs, personal representatives, successors, and permitted
assignees.

     6.7. Entire Agreement. This writing, together with Schedule A, the Plan and any other documents incorporated
herein by reference, contains the entire agreement of the Company and the Grantee. The parties are
not bound by any oral statements that are made outside of this Agreement.

     WHEREAS, the Company and the Grantee have signed their names to this Agreement on the date as
above written:

	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	OPTIMOST LLC

	 	 
	 	GRANTEE
	 	 
	 
	 	 	 	 	 	 
	 
	 

	 	 	 	 	 	 
	By:

	 	 	 	Name:	 	 
	     Managing Member
	 	 	 	 	 	 

4

 

SCHEDULE A

Terms of Option

Name of Grantee: [NAME]

Date of Grant: [DATE]

Termination Date of Option: [DATE]

Number of Units That Can Be Purchased Under Option: [insert]

Purchase Price Per Unit: $ [insert]

Vesting: [insert] years (as described in Unit Option Agreement)

Initial Vesting Date: [DATE]

 

 

UNIT OPTION AGREEMENT

     AGREEMENT, dated as of October 17, 2007, between Optimost LLC, a New York limited liability
company (the “Company”), and [NAME] (the “Grantee”)

     WHEREAS, the Company’s 2006 Equity Incentive Plan, as amended (the “Plan”) is incorporated in
this Agreement by reference and made a part of it; and

     WHEREAS, in consideration of the Grantee’s performance of services for the Company as an
employee, the Company desires to grant, and the Grantee desires to accept, an option to purchase
Class A Units of the Company on the terms and conditions set forth herein, in accordance with the
Plan; and

     WHEREAS, this option is granted pursuant to the terms of the Agreement and Plan of Merger
dated on or about October 17, 2007 by and among Interwoven, Inc., Optimost LLC, Broadway Merger
LLC, a wholly owned acquisition subsidiary of Interwoven, Inc., and Mark Wachen as representative
(the “Merger”).

     NOW, THEREFORE, in consideration of the promises and the mutual covenants and agreements set
forth herein, the parties hereto agree as follows:

Section 1. Option To Purchase Units.

     1.1. Option. The Company hereby grants to the Grantee an irrevocable option (the
“Option”) to purchase the number of Class A Units of the Company (the “Units”) as is listed on the
attached Schedule A. Upon the terms and conditions of this Agreement, the Grantee may
purchase the number of Units at an exercise price per Unit (the “Exercise Price”) as is listed on
the attached Schedule A. This Option is not intended to satisfy the requirements
for “incentive stock options” under Section 422 of the Internal Revenue Code of 1986, as amended
(the “Code”).

     1.2. Exercise of Option. In the event the Grantee wishes to exercise a portion of the
Option, the Grantee shall send a written notice to the Company (the “Unit Exercise Notice”)
specifying a date for the closing of such purchase.

     1.2.1. Vesting. The right to exercise an Option is limited as hereinafter provided:

     (a) The Option may be exercised as hereinafter provided only to the extent that it has become
vested as provided herein.

     (b) The Option shall not begin to vest until the date indicated on Schedule A
(“Initial Vesting Date”). Provided Grantee’s employment with the Company continues,
twenty-five percent (25%) of the Option will vest on the Initial Vesting Date, and an
additional one forty-eighth (1/48) of such Option will vest for each additional calendar
month thereafter until the Option is fully vested.

1

 

     (c) Notwithstanding any language to the contrary in the Plan (including, without
limitation, as set forth in Section 11(b) of the Plan), the Option shall in no event be
entitled to any acceleration of vesting or exercisability.

     (d) In the event that the Merger is not completed, this Option shall be of no force and
effect, shall not be exercisable and shall expire.

     1.3. Registration of Units and Lock-Up Period. In the event the Company registers the
offering of any securities of the Company under the Securities Act of 1933, as amended (the
“Securities Act”), the Grantee, upon notice from the Company, shall not sell or otherwise transfer
any securities of the Company obtained in connection with this Agreement, during the 180-day period
following the effective date of a registration statement filed under the Securities Act; provided,
however, that such registration shall only apply to the Company’s initial public offering. The
Company may impose stop-transfer instructions with respect to securities subject to the foregoing
restrictions until the end of such 180-day period.

     1.4. Transferability. This Option may not be transferred except in the case of the
death of the Grantee, as provided in the Plan.

     1.5. Terms of Plan. The Plan, a copy of which is attached hereto, is incorporated
herein by reference and is made part of this Agreement as if fully set forth herein. This
Agreement is subject to, and the Company and the Grantee agree to be bound by, all the terms and
conditions of the Plan as the same exists at the time this Agreement was entered. The Plan shall
control in the event there is any express conflict between the Plan and the terms hereof, and on
such matters that are expressly covered in this Agreement. Subsequent amendments of the Plan shall
not adversely affect the Grantee’s rights under the Agreement without Grantee’s consent.

Section 2. Condition To Delivery Of Units

     The Company’s obligation to deliver Units upon exercise of the Option is subject only to the
condition that the Grantee be employed by the Company on the date the right to exercise the Option
vests and that the Grantee executes a joinder to the Amended and Restated Limited Liability Company
Agreement of the Company in form satisfactory to the Company which shall provide that the Grantee
shall become a Member party thereto and the Units to be delivered upon exercise of the Option shall
be held subject to all of the terms and conditions of such Agreement.

Section 3. The Closing

     3.1. Closing Date. Any closing hereunder shall take place on the date specified by
the Grantee in his or her Unit Exercise Notice pursuant to Section 1 at 10:00 A.M., at the offices
of the Company, or at such other time and place as the parties hereto may agree (the “Closing
Date”). On the Closing Date, the Company will deliver the Units and the Grantee will purchase such
Units from the Company at the price per Unit equal to the Exercise Price. In the event that any
federal, state, or local income taxes, employment taxes, Federal Insurance Contribution Act
(“FICA”) withholdings or other amounts are required by applicable law or governmental regulation to
be withheld from the Grantee in connection with the exercise, these amounts must

2

 

be remitted to the
Company in addition to the Exercise Price, or if approved by the Committee, in its sole discretion,
the Grantee may elect to satisfy such withholdings by having Units withheld. Any payment made by
the Grantee to the Company pursuant to this Agreement shall be made (i) by wire transfer or by
certified, bank or personal check (ii) if approved by the Committee, in its sole discretion, by
withholding and surrender of the Units subject to the Option, or (iii) by such other method as the
Committee may approve, including, after the Company becomes a Reporting Company, payment through a
broker in accordance with procedures permitted by Regulation T of the Federal Reserve Board.

     3.2. Legends. Any certificates representing the Units may bear an appropriate legend
relating to the fact that such Units have not been registered under the Securities Act.

Section 4. Representations And Warranties Of The Grantee

     4.1. Investment Representation. The Grantee represents and warrants to the Company
that the Grantee is acquiring the Option and, if and when the Grantee exercises the Option, will be
acquiring the Units issuable upon the exercise thereof for the Grantee’s own account and not with a
view to distribution or resale in any manner which would be in violation of the Securities Act.

     4.2. Restricted Securities. The Grantee understands that, if and when the Grantee
exercises the Option, the Grantee will be acquiring “restricted securities” under applicable
federal securities laws, and may dispose of such Units only pursuant to an effective registration
statement under the Securities Act or an exemption from registration if available. The Grantee
represents and warrants to the Company that the Grantee is acquiring the Option and, if and when
the Grantee exercises the Option, will be acquiring the Units issuable upon the exercise thereof
for the Grantee’s own account and not with a view to distribution or resale in any manner which
would be in violation of the Securities Act.

     4.3. Due Diligence Investigation. The Grantee has made, either alone or together with its advisors, such independent
investigation of the Company, its management and related matters as the Grantee deems to be, or
such advisors have advised to be, necessary or advisable in connection with an investment in the
Company through the transactions contemplated by this Agreement; and the Grantee and advisors have
received all information and data that the Grantee and advisor believe to be necessary in order to
reach an informed decision as to the advisability of an investment in the Company pursuant to the
transactions contemplated by this Agreement.

Section 5. Waiver

     The Grantee hereby waives any and all rights, interests or causes of action against the
Company which may exist prior to the date of this Agreement arising out of the Grantee’s option to
purchase stock in the Company.

Section 6. Assumption of Option

3

 

     This Option shall be assumed by Interwoven, Inc. upon the Closing Date of the Merger (as such
term is defined in the Merger Agreement).

Section 7. Miscellaneous

     7.1. No Third Party Beneficiaries. This Agreement shall not confer any rights of
remedies upon any person other than the Company, the Committee, the Grantee and their respective
successors and permitted assigns.

     7.2. Default. In the event either the Company or the Grantee fails to comply with the
terms of this Agreement, the other party to this Agreement shall be entitled to (a) injunctive
relief, as a matter of right, in any court of competent jurisdiction; and (b) any other relief or
remedy that may be available pursuant to this Agreement or at law or equity.

     7.3. Waivers. The waiver by the undersigned of any of the provisions of this
Agreement shall not operate or be construed as a waiver of any subsequent breach.

     7.4. Headings. The section headings contained in this Agreement are for reference
purposes only and shall not affect the construction and interpretation of this Agreement.

     7.5. Severability. The invalidity
of all of any part of any section of this Agreement shall not render invalid
the remainder of such section. If any provision of this Agreement is so broad as to be
unenforceable, such provisions shall be interpreted to be only so broad as is enforceable.

     7.6. Binding Effects. This Agreement shall be binding upon and inure to the benefit
of the parties to this Agreement, their heirs, personal representatives, successors, and permitted
assignees.

     7.7. Entire Agreement. This writing, together with Schedule A, the Plan and
any other documents incorporated herein by reference, contains the entire agreement of the Company
and the Grantee. The parties are not bound by any oral statements that are made outside of this
Agreement.

     WHEREAS, the Company and the Grantee have signed their names to this Agreement on the date as
above written:

	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	OPTIMOST LLC

	 	 
	 	GRANTEE
	 	 
	 
	 	 	 	 	 	 
	 
	 

	 	 	 	 	 	 
	By:

	 	 	 	Name:	 	 
	     Managing Member
	 	 	 	 	 	 

4

 

SCHEDULE A

Terms of Option

Name of Grantee: [NAME]

Date of Grant: October 17, 2007

Number of Units That Can Be Purchased Under Option: [insert]

Exercise Price Per Unit: $1.116 (Equal to 50% of the Cash Amount Per Class A Unit as set forth in
the Merger Agreement)

Initial Vesting Date: The first anniversary of the Closing Date of the Merger, as such term is
defined in the Merger Agreement.

 

 

INTERWOVEN, INC.

160 East Tasman Drive

San Jose, CA 95134

Optimost Option Assumption Agreement

November ___, 2007

Dear [NAME]:

As you know, on November 1, 2007 (the “Effective Time”), Interwoven, Inc., a Delaware corporation
(“Interwoven”), completed its acquisition of Optimost LLC., a New York limited liability company
(“Optimost”) pursuant to an Agreement and Plan of Merger, dated as of October 17, 2007 (the “Merger
Agreement”), pursuant to which Optimost merged with and into Broadway Merger LLC, a wholly-owned
subsidiary of Interwoven (the “Acquisition”) and ceased to exist as an independent entity. The
purpose of this notice is to inform you of how your options to purchase Class A Units of Optimost
(“Optimost Options”), whether or not granted under the Optimost 2006 Equity Compensation Plan, as
amended (the “Option Plan”), will be treated in connection with the Acquisition.

Acceleration

Immediately prior to the completion of the Acquisition, each of your outstanding and unvested
Optimost Options other than any New Optimost Option that you were granted in connection
with the Acquisition (these options are referred to as “New Optimost Options” in your Interwoven
offer letter or employment agreement) accelerated as to twelve (12) months of vesting (that is, you
will be deemed to have completed an additional twelve (12) full months of continuous service).

Cash-Out of Vested Options

Upon the completion of the Acquisition, your Optimost Options that were outstanding and vested
(including those Optimost Options that accelerated as to twelve (12) months of vesting as described
above, which for the sake of clarity, did not include your New Optimost Options) were
automatically converted into the right to receive an amount of cash (without interest) equal to the
product of (1) $2.2319, which is the cash amount payable per Class A Unit (as determined in the
Merger Agreement) minus the exercise price per Class A Unit subject to such Optimost Option
multiplied by (2) the number of Class A Units subject to such Optimost Option (subject to
applicable tax withholdings and deductions for the Escrow (as defined in the Merger Agreement) and
rounded to the nearest cent). This cash amount is referred to as the “Cash-Out”. You will receive
a “letter of transmittal” instructing you how to receive the Cash-Out.

Assumption & Conversion of Unvested Options

Upon the completion of the Acquisition, your Optimost Options that were outstanding and unvested
(including your New Optimost Options) were assumed by Interwoven and converted into options
to purchase shares of Interwoven’s Common Stock pursuant to a conversion ratio intended to preserve
the economic value of your Optimost Options that existed immediately prior to the Acquisition (the
“Assumed Options”). Each Assumed Option will continue to be subject to the same terms and
conditions of the Option Plan and any applicable option agreements to which they were subject prior
to

 

 

the completion of the Acquisition (including the existing term and vesting schedule) except as
set forth in this notice.

Your Optimost Options were converted into Assumed Options as follows: (i) each Assumed Option will
be exercisable (when vested) for that number of whole shares of Interwoven Common Stock determined
by multiplying the number of shares of Optimost Common Stock subject to such Optimost
Option immediately prior to the Effective Time of the Acquisition by the Option Exchange Ratio (as
defined below) (rounded down to the nearest whole number of Interwoven Common Stock, with no
consideration being payable for any fractional share eliminated by such rounding)) and (ii) the
exercise price per share of each such Optimost Option will equal the exercise price of each such
Option immediately prior to the Effective Time of the Acquisition divided by the Option
Exchange Ratio (rounded up to the nearest whole cent).

The “Option Exchange Ratio” is 15.6583%, which is equal to the quotient obtained by
dividing (x) $2.2319, which is the Cash Amount Per Class A Unit (as defined in the Merger
Agreement) by (y) the $14.25, which is the average of the closing prices for a share of Interwoven
Common Stock as quoted on the NASDAQ Global Market for fifteen (15) consecutive trading days ending
on (and including) the trading day that is three (3) trading days prior to the closing of the
Acquisition.

The table below summarizes your assumed Optimost Options immediately before and after the
Acquisition. It reflects the conversion of your Optimost Options using the Option Exchange Ratio.
By signing below, you hereby agree that the Optimost Options listed below represent all of your
outstanding and unvested Optimost Options as of the date hereof and that you have no further right
or claim to any Optimost Options (except for your Optimost Options that are being Cashed-Out as set
forth above).

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	OPTIMOST OPTION	 	 	ASSUMED OPTION	 
	 	 	 	 	 	 	 	 	Exercise Price per	 	 	 	 	 	 	Exercise Price per	 
	 	 	 	 	No. of Optimost	 	 	Optimost Class A	 	 	No. of Interwoven	 	 	Share of Interwoven	 
	Grant Date	 	 	Class A Units	 	 	Unit	 	 	Shares	 	 	Common Stock	 

Exercise of Assumed Options

In accordance with Interwoven’s policies the only permissible methods to exercise your Assumed
Options are cash, check, wire transfer, or through a cashless exercise program with eTrade,
Interwoven’s designated broker and Assumed Options may be exercised only if there is an effective
S-8 registration statement on file with the Securities and Exchange Commission covering the shares
issuable upon the exercise of such Assumed Options. None of the Assumed Options may be “early
exercised” (i.e., an Assumed Option may be exercised for shares of Interwoven Common Stock only to
the extent the Assumed Option is vested at the time of exercise pursuant to the applicable vesting
schedule). Upon termination of your employment you will have the applicable limited post-termination exercise
period specified in your option agreements for your Assumed Option.

Unless the context otherwise requires, on and following the assumption of your Optimost Options as
described above, any references in the Plan and the option agreements to: (i) the “Company,” the
“Corporation” or the “LLC” means Interwoven, (ii) “Stock,” “Common Stock,” “Shares,” “Class A
Units” or “Units” means shares of Interwoven Common Stock, (iii) the “Board of Directors,” the
“Board” or the “Management Committee” means the Board of Directors of Interwoven and (iv) the
“Committee”

 

 

means the Compensation Committee of the Board of Directors of Interwoven. All
references in the option agreements and the Plan relating to your status as an employee of Optimost
will now refer to your status as an employee of Interwoven or any present or future Interwoven
subsidiary. All references in either the Plan or the option agreements to (i) the Amended and
Restated Limited Liability Company Agreement, (ii) provisions requiring you to execute such
agreement or (iii) provisions stating that you shall become a “member” or otherwise be entitled to
rights under such agreement shall be null and void.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS]

 

 

Please sign and date this Agreement, as soon as possible, and return it to                      or
fax to her at the following number:                     .

Until your fully executed Acknowledgment (below) is received by Interwoven’s Stock
Administration Department your Assumed Options will not be exercisable. If you have any
questions regarding this notice or your Optimost Options, please contact [NAME] at [NUMBER] or
[EMAIL].

	 	 	 	 	 
	 

	 	Very truly yours,
	 	 
	 
	 	 	 	 
	 

	 	INTERWOVEN INC.	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	[NAME]	 	 
	 

	 	[TITLE]	 	 

ACKNOWLEDGMENT

The undersigned acknowledges receipt of the foregoing Option Assumption Agreement and understands
and agrees that all rights and liabilities with respect to the Assumed Options listed on the table
above are hereby assumed by Interwoven and are as set forth in the option agreements for such
Assumed Options, the Plan and this Option Assumption Agreement and agrees to the terms as set forth
in such Option Assumption Agreement.

	 	 	 	 	 	 	 
	DATED:                      , 2007

	 	 
	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	[NAME] — Optionee	 	 
	 
	 	 	 	 
	 

	 	 	 	Address: 
	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 

 

 

UNIT OPTION AGREEMENT

     AGREEMENT, dated as of October 17, 2007, between Optimost LLC, a New York limited liability
company (the “Company”), and [NAME] (the “Grantee”)

     WHEREAS, the Company’s 2006 Equity Incentive Plan, as amended (the “Plan”) is incorporated in
this Agreement by reference and made a part of it; and

     WHEREAS, in consideration of the Grantee’s performance of services for the Company as an
employee, the Company desires to grant, and the Grantee desires to accept, an option to purchase
Class A Units of the Company on the terms and conditions set forth herein, in accordance with the
Plan; and

     WHEREAS, this option is granted pursuant to the terms of the Agreement and Plan of Merger
dated on or about October 17, 2007 by and among Interwoven, Inc., Optimost LLC, Broadway Merger
LLC, a wholly owned acquisition subsidiary of Interwoven, Inc., and Mark Wachen as representative
(the “Merger”).

     NOW, THEREFORE, in consideration of the promises and the mutual covenants and agreements set
forth herein, the parties hereto agree as follows:

Section 1. Option To Purchase Units.

     1.1. Option. The Company hereby grants to the Grantee an irrevocable option (the
“Option”) to purchase the number of Class A Units of the Company (the “Units”) as is listed on the
attached Schedule A. Upon the terms and conditions of this Agreement, the Grantee may
purchase the number of Units at an exercise price per Unit (the “Exercise Price”) as is listed on
the attached Schedule A. This Option is not intended to satisfy the requirements
for “incentive stock options” under Section 422 of the Internal Revenue Code of 1986, as amended
(the “Code”).

     1.2. Exercise of Option. Each portion of the Option must be exercised by March 15 of
the calendar year following the calendar year in which such portion of the Option vests. In the
event the Grantee wishes to exercise a portion of the Option, the Grantee shall send a written
notice to the Company (the “Unit Exercise Notice”) specifying a date for the closing of such
purchase. To the extent the vested portion of the Option is not exercised by said March 15, such
portion of the Option shall expire.

     1.2.1. Vesting. The right to exercise an Option is limited as hereinafter provided:

     (a) The Option may be exercised as hereinafter provided only to the extent that it has become
vested as provided herein.

     (b) The Option shall not begin to vest until the dated indicated on Schedule A
(“Initial Vesting Date”). Provided Grantee’s employment with the Company continues, fifty
percent (50%) of the Option will vest on the Initial Vesting Date, and an additional

1

 

one twenty-fourth (1/24) of such Option will vest for each additional calendar month thereafter
until the Option is fully vested.

     (c) Notwithstanding the foregoing, if (i) Grantee’s employment is terminated without
Cause (as defined in the Employment Agreement between Grantee and Interwoven Inc., dated
October 16, 2007 (the “Interwoven Employment Agreement”), Grantee resigns employment for
Good Reason (as defined in the Interwoven Employment Agreement), or Grantee dies or becomes
Permanently Disabled (as defined in the Interwoven Employment Agreement), and (ii) Grantee,
or in the event of Grantee’s death or Permanent Disability, Grantee’s beneficiary, delivers
to Interwoven a signed Release (as defined in the Interwoven Employment Agreement) and
satisfies all conditions to make the Release effective, then 100% of the Class A Units
subject to the Option shall accelerate and become exercisable.

     (d) Except as set forth in Section 1.2(c) above, notwithstanding any language to the
contrary in the Plan (including, without limitation, as set forth in Section 11(b) of the
Plan), the Option shall in no event be entitled to any acceleration of vesting or
exercisability.

     (e) In the event that the Merger is not completed, this Option shall be of no force and
effect, shall be not exercisable and shall expire.

     1.3. Registration of Units and Lock-Up Period. In the event the Company registers the
offering of any securities of the Company under the Securities Act of 1933, as amended (the
“Securities Act”), the Grantee, upon notice from the Company, shall not sell or otherwise transfer
any securities of the Company obtained in connection with this Agreement, during the 180-day period
following the effective date of a registration statement filed under the Securities Act; provided,
however, that such registration shall only apply to the Company’s initial public offering. The
Company may impose stop-transfer instructions with respect to securities subject to the foregoing
restrictions until the end of such 180-day period.

     1.4. Transferability. This Option may not be transferred except in the case of the
death of the Grantee, as provided in the Plan.

     1.5. Terms of Plan. The Plan, a copy of which is attached hereto, is incorporated
herein by reference and is made part of this Agreement as if fully set forth herein. This
Agreement is subject to, and the Company and the Grantee agree to be bound by, all the terms and conditions of the Plan as the
same exists at the time this Agreement was entered. The Plan shall control in the event there is
any express conflict between the Plan and the terms hereof, and on such matters that are expressly
covered in this Agreement. Subsequent amendments of the Plan shall not adversely affect the
Grantee’s rights under the Agreement without Grantee’s consent.

Section 2. Condition To Delivery Of Units

     The Company’s obligation to deliver Units upon exercise of the Option is subject only to the
condition that the Grantee be employed by the Company on the date the right to exercise the

2

 

Option
vests and that the Grantee executes a joinder to the Amended and Restated Limited Liability Company
Agreement of the Company in form satisfactory to the Company which shall provide that the Grantee
shall become a Member party thereto and the Units to be delivered upon exercise of the Option shall
be held subject to all of the terms and conditions of such Agreement.

Section 3. The Closing

     3.1. Closing Date. Any closing hereunder shall take place on the date specified by
the Grantee in his or her Unit Exercise Notice pursuant to Section 1 at 10:00 A.M., at the offices
of the Company, or at such other time and place as the parties hereto may agree (the “Closing
Date”). On the Closing Date, the Company will deliver the Units and the Grantee will purchase such
Units from the Company at the price per Unit equal to the Exercise Price. In the event that any
federal, state, or local income taxes, employment taxes, Federal Insurance Contribution Act
(“FICA”) withholdings or other amounts are required by applicable law or governmental regulation to
be withheld from the Grantee in connection with the exercise, these amounts must be remitted to the
Company in addition to the Exercise Price, or the Grantee may elect to satisfy such withholdings by
having Units withheld. Any payment made by the Grantee to the Company pursuant to this Agreement
shall be made by wire transfer or by certified, bank or personal check.

     3.2. Legends. Any certificates representing the Units may bear an appropriate legend
relating to the fact that such Units have not been registered under the Securities Act.

Section 4. Representations And Warranties Of The Grantee

     4.1. Investment Representation. The Grantee represents and warrants to the Company
that the Grantee is acquiring the Option and, if and when the Grantee exercises the Option, will be
acquiring the Units issuable upon the exercise thereof for the Grantee’s own account and not with a
view to distribution or resale in any manner which would be in violation of the Securities Act.

     4.2. Restricted Securities. The Grantee understands that, if and when the Grantee exercises the Option, the Grantee will
be acquiring “restricted securities” under applicable federal securities laws, and may dispose of
such Units only pursuant to an effective registration statement under the Securities Act or an
exemption from registration if available. The Grantee represents and warrants to the Company that
the Grantee is acquiring the Option and, if and when the Grantee exercises the Option, will be
acquiring the Units issuable upon the exercise thereof for the Grantee’s own account and not with a
view to distribution or resale in any manner which would be in violation of the Securities Act.

     4.3. Due Diligence Investigation. The Grantee has made, either alone or together with
its advisors, such independent investigation of the Company, its management and related matters as
the Grantee deems to be, or such advisors have advised to be, necessary or advisable in connection
with an investment in the Company through the transactions contemplated by this Agreement; and the
Grantee and advisors have received all information and data that the Grantee and advisor believe to
be necessary in order to reach an informed decision as to the advisability of an investment in the
Company pursuant to the transactions contemplated by this Agreement.

3

 

Section 5. Waiver

     The Grantee hereby waives any and all rights, interests or causes of action against the
Company which may exist prior to the date of this Agreement arising out of the Grantee’s option to
purchase stock in the Company.

Section 6. Assumption of Option

     This Option shall be assumed by Interwoven, Inc. upon the Closing Date of the Merger (as such
term is defined in the Merger Agreement). The terms of the Interwoven Employment Agreement are
incorporated herein by reference.

Section 7. Miscellaneous

     7.1. No Third Party Beneficiaries. This Agreement shall not confer any rights of
remedies upon any person other than the Company, the Committee, the Grantee and their respective
successors and permitted assigns.

     7.2. Default. In the event either the Company or the Grantee fails to comply with the
terms of this Agreement, the other party to this Agreement shall be entitled to (a) injunctive
relief, as a matter of right, in any court of competent jurisdiction; and (b) any other relief or
remedy that may be available pursuant to this Agreement or at law or equity.

     7.3. Waivers. The waiver by the undersigned of any of the provisions of this Agreement shall not operate or
be construed as a waiver of any subsequent breach.

     7.4. Headings. The section headings contained in this Agreement are for reference
purposes only and shall not affect the construction and interpretation of this Agreement.

     7.5. Severability. The invalidity of all of any part of any section of this Agreement
shall not render invalid the remainder of such section. If any provision of this Agreement is so
broad as to be unenforceable, such provisions shall be interpreted to be only so broad as is
enforceable.

     7.6. Binding Effects. This Agreement shall be binding upon and inure to the benefit
of the parties to this Agreement, their heirs, personal representatives, successors, and permitted
assignees.

     7.7. Entire Agreement. This writing, together with Schedule A, the Plan and
any other documents incorporated herein by reference, contains the entire agreement of the Company
and the Grantee. The parties are not bound by any oral statements that are made outside of this
Agreement.

     WHEREAS, the Company and the Grantee have signed their names to this Agreement on the date as
above written:

4

 

	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	OPTIMOST LLC

	 	 
	 	GRANTEE
	 	 
	 
	 	 	 	 	 	 
	 
	 

	 	 	 	 	 	 
	By:

	 	 	 	Name:	 	 
	     Managing Member
	 	 	 	 	 	 

5

 

SCHEDULE A

Terms of Option

Name of Grantee: [NAME]

Date of Grant: October 17, 2007

Number of Units That Can Be Purchased Under Option: [insert]

Exercise Price Per Unit: $1.116 (Equal to 50% of the Cash Amount Per Class A Unit as set forth in
the Merger Agreement)

Initial Vesting Date: The first anniversary of the Closing Date of the Merger, as such term is
defined in the Merger Agreement.

 

 

INTERWOVEN, INC.

160 East Tasman Drive

San Jose, CA 95134

Optimost Option Assumption Agreement

November ___, 2007

Dear [NAME]:

As you know, on November 1, 2007 (the “Effective Time”), Interwoven, Inc., a Delaware corporation
(“Interwoven”), completed its acquisition of Optimost LLC., a New York limited liability company
(“Optimost”) pursuant to an Agreement and Plan of Merger, dated as of October 17, 2007 (the “Merger
Agreement”), pursuant to which Optimost merged with and into Broadway Merger LLC, a wholly-owned
subsidiary of Interwoven (the “Acquisition”) and ceased to exist as an independent entity. The
purpose of this notice is to inform you of how your options to purchase Class A Units of Optimost
(“Optimost Options”), whether or not granted under the Optimost 2006 Equity Compensation Plan, as
amended (the “Option Plan”), will be treated in connection with the Acquisition.

Acceleration

Immediately prior to the completion of the Acquisition, each of your outstanding and unvested
Optimost Options other than any New Optimost Option that you were granted in connection
with the Acquisition (these options are referred to as “New Optimost Options” in your Interwoven
offer letter or employment agreement) accelerated as to twelve (12) months of vesting (that is, you
will be deemed to have completed an additional twelve (12) full months of continuous service).

Cash-Out of Vested Options

Upon the completion of the Acquisition, your Optimost Options that were outstanding and vested
(including those Optimost Options that accelerated as to twelve (12) months of vesting as described
above, which for the sake of clarity, did not include your New Optimost Options) were
automatically converted into the right to receive an amount of cash (without interest) equal to the
product of (1) $2.2319, which is the cash amount payable per Class A Unit (as determined in the
Merger Agreement) minus the exercise price per Class A Unit subject to such Optimost Option
multiplied by (2) the number of Class A Units subject to such Optimost Option (subject to
applicable tax withholdings and deductions for the Escrow (as defined in the Merger Agreement) and
rounded to the nearest cent). This cash amount is referred to as the “Cash-Out”. You will receive
a “letter of transmittal” instructing you how to receive the Cash-Out.

Assumption & Conversion of Unvested Options

     Upon the completion of the Acquisition, your Optimost Options that were outstanding and unvested
(including your New Optimost Options) were assumed by Interwoven and converted into options
to purchase shares of Interwoven’s Common Stock pursuant to a conversion ratio intended to preserve
the economic value of your Optimost Options that existed immediately prior to the Acquisition (the
“Assumed Options”). Each Assumed Option will continue to be subject to the same terms and
conditions of the Option Plan and any applicable option agreements to which they were subject prior
to

 

 

the completion of the Acquisition (including the existing term and vesting schedule) except as
set forth in this notice.

Your Optimost Options were converted into Assumed Options as follows: (i) each Assumed Option will
be exercisable (when vested) for that number of whole shares of Interwoven Common Stock determined
by multiplying the number of shares of Optimost Common Stock subject to such Optimost
Option immediately prior to the Effective Time of the Acquisition by the Option Exchange Ratio (as
defined below) (rounded down to the nearest whole number of Interwoven Common Stock, with no
consideration being payable for any fractional share eliminated by such rounding)) and (ii) the
exercise price per share of each such Optimost Option will equal the exercise price of each such
Option immediately prior to the Effective Time of the Acquisition divided by the Option
Exchange Ratio (rounded up to the nearest whole cent).

The “Option Exchange Ratio” is 15.6583%, which is equal to the quotient obtained by
dividing (x) $2.2319, which is the Cash Amount Per Class A Unit (as defined in the Merger
Agreement) by (y) the $14.25, which is the average of the closing prices for a share of Interwoven
Common Stock as quoted on the NASDAQ Global Market for fifteen (15) consecutive trading days ending
on (and including) the trading day that is three (3) trading days prior to the closing of the
Acquisition.

The table below summarizes your assumed Optimost Options immediately before and after the
Acquisition. It reflects the conversion of your Optimost Options using the Option Exchange Ratio.
By signing below, you hereby agree that the Optimost Options listed below represent all of your
outstanding and unvested Optimost Options as of the date hereof and that you have no further right
or claim to any Optimost Options (except for your Optimost Options that are being Cashed-Out as set
forth above).

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	OPTIMOST OPTION	 	 	ASSUMED OPTION	 
	 	 	 	 	 	 	 	 	Exercise Price per	 	 	 	 	 	 	Exercise Price per	 
	 	 	 	 	No. of Optimost	 	 	Optimost Class A	 	 	No. of Interwoven	 	 	Share of Interwoven	 
	Grant Date	 	 	Class A Units	 	 	Unit	 	 	Shares	 	 	Common Stock	 

Exercise of Assumed Options

In accordance with Interwoven’s policies the only permissible methods to exercise your Assumed
Options are cash, check, wire transfer, or through a cashless exercise program with eTrade,
Interwoven’s designated broker and Assumed Options may be exercised only if there is an effective
S-8 registration statement on file with the Securities and Exchange Commission covering the shares
issuable upon the exercise of such Assumed Options; provided, however, that with respect to your
New Optimost Options only, in the event that there is not an effective S-8 registration statement
on file with the Securities and Exchange Commission when your New Optimost Options become vested,
the terms in your Interwoven offer letter or employment agreement shall control the exercise of
your New Optimost Option. None of the Assumed Options may be “early exercised” (i.e., an Assumed Option may be exercised for shares
of Interwoven Common Stock only to the extent the Assumed Option is vested at the time of exercise
pursuant to the applicable vesting schedule). Upon termination of your employment you will have the
applicable limited post-termination exercise period specified in your option agreements for your
Assumed Option.

 

 

Unless the context otherwise requires, on and following the assumption of your Optimost Options as
described above, any references in the Plan and the option agreements to: (i) the “Company,” the
“Corporation” or the “LLC” means Interwoven, (ii) “Stock,” “Common Stock,” “Shares,” “Class A
Units” or “Units” means shares of Interwoven Common Stock, (iii) the “Board of Directors,” the
“Board” or the “Management Committee” means the Board of Directors of Interwoven and (iv) the
“Committee” means the Compensation Committee of the Board of Directors of Interwoven. All
references in the option agreements and the Plan relating to your status as an employee of Optimost
will now refer to your status as an employee of Interwoven or any present or future Interwoven
subsidiary. All references in either the Plan or the option agreements to (i) the Amended and
Restated Limited Liability Company Agreement, (ii) provisions requiring you to execute such
agreement or (iii) provisions stating that you shall become a “member” or otherwise be entitled to
rights under such agreement shall be null and void.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS]

 

 

Please sign and date this Agreement, as soon as possible, and return it to                      or
fax to her at the following number:                     .

Until your fully executed Acknowledgment (below) is received by Interwoven’s Stock
Administration Department your Assumed Options will not be exercisable. If you have any
questions regarding this notice or your Optimost Options, please contact [NAME] at [NUMBER] or
[EMAIL].

	 	 	 	 	 
	 

	 	Very truly yours,
	 	 
	 
	 	 	 	 
	 

	 	INTERWOVEN INC.	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	[NAME]	 	 
	 

	 	[TITLE]	 	 

ACKNOWLEDGMENT

The undersigned acknowledges receipt of the foregoing Option Assumption Agreement and understands
and agrees that all rights and liabilities with respect to the Assumed Options listed on the table
above are hereby assumed by Interwoven and are as set forth in the option agreements for such
Assumed Options, the Plan and this Option Assumption Agreement and agrees to the terms as set forth
in such Option Assumption Agreement.

	 	 	 	 	 	 	 
	DATED:                      , 2007

	 	 
	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	[NAME] — Optionee	 	 
	 
	 	 	 	 
	 

	 	 	 	Address:

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