PMC - Sierra (PMCS)

New Plan Benefits

No awards will be made under the 2008 Plan at any time prior to stockholder approval of the 2008 Plan at the Annual Meeting. Vesting of awards to be granted under the 2008 Plan after the Effective Date, is intended at the present time to match vesting of option awards and restricted stock unit awards presently made under the Predecessor Plans as follows:

Options: A director’s initial option award upon joining the Board will vest 1/24th per month until fully vested after two years. The director’s annual option award will vest 1/12th per month until fully vested after one year. Option grants to employees and consultants will vest over four years at the rate of 25% for the first year and 1/48th of the total number of shares vest monthly thereafter.

Restricted Stock Units: Awards of restricted stock units to directors will vest entirely after one year. Awards of restricted stock units to executive officers will vest over a four year period with 50% vesting 24 months after the grant date and an additional 25% vesting each 12-month period thereafter. Awards of restricted stock units to all other employees and consultants will vest 25% per year over four years.

The Plan Administrator may change vesting terms as it deems appropriate.

Change in Control Acceleration. Stock options and stock appreciation rights outstanding under the 2008 Plan at the time of a change in control will be subject to one or more of the following methods of disposition: (i) the options and stock appreciation rights may be assumed or substituted by the surviving corporation, or (ii) the options or stock appreciation rights may terminate immediately after the consummation of the change in control, to the extent not previously exercised, subject to acceleration of some or all of the shares subject to the award, at the discretion of the plan administrator.

Any other awards outstanding under the 2008 Plan at the time of a change in control may be assumed by the successor corporation or such awards will terminate and any unvested shares will be forfeited, subject to the plan administrator’s discretion to vest such awards in part or in full.

A change in control will be deemed to occur for purposes of the 2008 Plan in the event (a) we are acquired by merger or asset sale, (b) any person becomes directly or indirectly the beneficial owner of securities possessing fifty percent (50%) or more of the total combined voting power of our outstanding securities, or (c) there is a change in the composition of the Board occurring within a two (2) year period as a result of which fewer than the majority of the directors are incumbent directors.

Changes in Capitalization. In the event of any increase or decrease in the number of issued shares of our common stock by reason of any stock split, reverse stock split, stock dividend, combination or reclassification of shares, or any other increase or decrease in the number of issued shares of our common stock effected without our receipt of consideration, equitable adjustments will be made to: (i) the maximum number and/or class of securities issuable under the 2008 Plan, (ii) the maximum number and/or class of securities by which the share reserve may increase by reason of the expiration of options or restricted stock units without exercise or the issuance of shares under the Predecessor Plans, (iii) the maximum number and/or class of securities for which any one person may be granted awards under the 2008 Plan per fiscal year, and (iv) the number and/or class of securities and the purchase price per share in effect for outstanding award. Such adjustments will be made in such manner as the plan administrator deems appropriate in order to preclude any dilution or enlargement of benefits under the 2008 Plan or the outstanding awards thereunder.

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Valuation. The fair market value per share of our common stock on any relevant date under the 2008 Plan will be deemed to be equal to the closing selling price per share on that date on the NASDAQ Global Select Market. On March 5, 2008, the fair market value per share of our common stock determined on such basis was $4.92.

Stockholder Rights and Transferability. No optionee will have any stockholder rights with respect to the option shares until such optionee has exercised the option and paid the exercise price for the purchased shares. The holder of a stock appreciation right will not have any stockholder rights with respect to the shares subject to that right unless and until such person exercises the right and becomes the holder of record of any shares of our common stock distributed upon such exercise. Options are not assignable or transferable other than by will or the laws of inheritance following optionee’s death, and during the optionee’s lifetime, the option may only be exercised by the optionee. However, the plan administrator may structure one or more non-statutory options under the 2008 Plan so that those options will be transferable during the optionee’s lifetime to one or more members of the optionee’s family or to a trust established for the optionee and/or one or more such family members or to the optionee’s former spouse, to the extent such transfer is in connection with the optionee’s estate plan or pursuant to a domestic relations order. Stock appreciation rights will be subject to the same transferability restrictions applicable to non-statutory options.

A participant will have full stockholder rights with respect to any shares of common stock issued to him or her under the 2008 Plan, whether or not his or her interest in those shares is vested. A participant will not have any stockholder rights with respect to the shares of common stock subject to a restricted stock unit until the award vests and the shares of common stock are actually issued thereunder.

Payment of Withholding Taxes. The plan administrator may provide one or more holders of awards under the 2008 Plan with the right to have us withhold a portion of the shares otherwise issuable to such individuals in satisfaction of the withholding taxes to which they become subject in connection with the issuance, exercise or settlement of those awards. Alternatively, the plan administrator may allow such individuals to deliver previously acquired shares of our common stock in payment of such withholding tax liability. In addition, the plan administrator may structure an award under the 2008 Plan so that a portion of the shares of common stock otherwise issuable under those awards will automatically be withheld by us in satisfaction of the withholding taxes which become applicable in connection with the exercise, vesting or settlement of that award.

Amendment and Termination. Our Board of Directors may amend or modify the 2008 Plan at any time; provided, however, no amendments to the 2008 Plan will be made without the approval of our stockholders, if such approval is required by applicable law or regulation or the listing standards of the exchange or market on which our common stock is primarily traded. Unless sooner terminated by the PMC Board, the 2008 Plan will terminate on the earliest of (i) February 4, 2018, (ii) the date on which all shares available for issuance under the 2008 Plan have been issued as fully-vested shares, or (iii) the termination of all outstanding awards in connection with certain changes in control.

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