1. For Volterra Employees  2004 Merrill Lynch, Pierce, Fenner & Smith Incorporated. Understanding Your Options; Public Company Information

2. What is a Stock Option? The Right to Buy Company Stock At a Fixed Price (Exercise Price), For a Limited Quantity, and During a Limited Time The value of the stock underlying an option can go up AND DOWN

3. GRANT: when the company issues options to the employee EXERCISE: use of an option to purchase shares of stock directly from the issuer EXERCISE PRICE: the price per share applicable to an employee’s grant to purchase stock BARGAIN ELEMENT: the difference between the exercise price and the market value of the stock at the time of exercise Terminology:

4. Additional Facts: The grant of the option generally does not result in taxable income You may be required to stay with the company for a specified vesting period before you may exercise options. At Volterra, options generally vest over four years. The vesting clock starts on the first day of the month following the hire date. 25% is vested 12 months later, and the remainder vesting over three years on a quarterly basis. To exercise options you must pay the exercise price Options expire after a period of time, usually after 10 years

5. Vesting Example On 1-1-2003 (the grant date), 1,000 options are granted, then on: 1-1-2004 250 options vest Over the next three years, the remaining 750 options vest on a prorated basis.

6. Nonqualified stock options (NSOs) Incentive stock options (ISOs) Generally, NSOs and ISOs differ in their tax treatment Two Types of Options:

7. NSO vs. ISO * * If held 2 years from date of grant and 1 year from date of exercise; otherwise the difference between the exercise price and the value of the shares at exercise (or the difference between the exercise price and the sale price if less) is taxed at ordinary income. Option Granted Option Exercised Stock Sold No Tax The difference between the exercise price & current market value (bargain element) is taxed as compensation income No tax unless AMT applies Post exercise appreciation or decline is generally taxed as a capital gain or loss The difference between the exercise price and the sale price is generally taxed as a capital gain or loss*

8. Alternative Minimum Tax The exercise of an Incentive Stock Option will trigger the Alternative Minimum tax calculation. The FMV vs. exercise price Gain is an AMT Preference Item Adjustment. Whether the AMT Tax is due depends on your personal tax situation. ALWAYS, ALWAYS CONSULT YOUR OWN TAX ADVISER ON THE EFFECTS OF ANY EXERCISE OR SALE OF STOCK OPTIONS AND ASK ABOUT THE AMT

9. Employee not subject to ordinary income tax at time of exercise. Disqualifying Disposition occurs if stock sold within 2 years from date of grant and 1 year from exercise Employee is subject to ordinary income tax if a Disqualifying Disposition occurs. Incentive Stock Options

10. ISOs vs. NSOs Volterra can issue ISOs up to a total value of $100,000 per year per employee (value measured at the date of grant), taking into account all previously granted options vesting during that year Once a value of $100,000 is reached, any remaining options granted must be NSOs

11. Cash Purchase Exercise Cashless Exercise  Exercise and Hold or  Exercise and Sell  Market Order or  Limit Order  Day Limit Order or  Good ‘til Cancelled Order Exercising Your Options

12. Considerations before Exercising Profit - The difference between the stock option exercise price and the current market price. Expenses - You pay the exercise price, and taxes, and related fees resulting from the transaction (discounted commission and postage and handling). Stock Volatility - See how the current market price compares with the 52-week high/low. Think about the future outlook. Tax Implications – always seek advice before any transaction

13. Why Exercise and Hold? There has been a significant appreciation in the value of the underlying stock An unexercised option is about to expire An expectation that the underlying stock will continue to appreciate. Other personal reasons

14. Why Exercise and Sell? There is an immediate need for cash There has been a significant appreciation in the value of the underlying stock An unexercised option is about to expire Part of a diversification strategy Tax planning Other personal reasons

15. Decide to Exercise your Options Open Merrill Lynch Account on www.benefits.ml.com Determine how you wish to Exercise Execute Transactions at www.benefits.ml.com Or call Interactive Voice Response system at 877-767-2404

16. Market Order or a Limit Order? Market Order: Exercises your options at the first available sale price as soon as market conditions allow. Limit Order: Lets you set the price at which you want your options exercised. Day Limit Order: Remains in effect for the current trading day only. Good till Cancelled Order: A limit order that remains in effect for 30 days.

17. Gain is Taxable as income at exercise. For example: 130 Options Exercised Stock price = $28.60 Exercise Price = $10.30 Taxable Gain = $18.30/ share, or $2,379 Taxes Due* = $888 Nonqualified Stock Options *Assumes 27% Federal, 2.8% PA state, 6.2 % Social Security, and 1.45% Medicare. Numbers are rounded to nearest dollar.

18. Gain is not Taxable as income*. For example: 130 Options Exercised Stock Price = $28.60 Exercise Price = $10.30 Market Value = $3,718 Option Cost = $1,339 Gain = $2,379 Incentive Stock Options * Unless a Disqualifying Disposition

19. For example: 130 Options Exercised Stock Price = $28.60 Exercise Price = $10.30 Market Value = $3,718 Option Cost = $1,339 Gain = $2,379 ISO – Cashless? To make Cashless: Sell 49 shares at $28.60 = $1,401.40 Retain 81 shares with a Market Value of $2,316.60

20. Receiving Proceeds On Settlement Date (3 business days after trade date) 1.The shares from your option exercise will be delivered to your account and Merrill Lynch will deliver these shares to the appropriate party for settlement. 2.The exercise price plus taxes (if applicable) will be deducted from your account and sent to the company. 3.Merrill Lynch will: a) credit the net proceeds to your account for reinvestment b) forward a check to you, or c) wire proceeds directly to your bank account (you must complete a Wire Transfer Instruction Form)

21. Executives and Directors Must comply with SEC regulations and Sarbanes-Oxley. In general, this requires completion of forms prior to any exercise of options. Contact Merrill Lynch Team for assistance.

22. Opening Your Account To open a Limited Individual Investor Account, please follow the instructions listed below:  Log on to the Merrill Lynch Online Website at www.benefits.ml.com  Enter your Social Security number (or assigned account number and personal identification number (PIN)  Click Login. This will take you to the Home page  Next, under Quick Links, click on Open an Account  Scroll down to Limited Individual Investor Account  Click Open Limited Brokerage Account or Open Account and complete the online application process

23. Accessing Your Account Call toll-free 1-877-767-2404, outside the U.S. 1-609-818- 8894 – Interactive Voice Response (IVR) for information and stock option modeling, or – Speak directly to a Merrill Lynch Service Representative 24/7, trained to provide education and transaction support. Log on to Merrill Lynch Benefits Online SM – www.benefits.ml.comwww.benefits.ml.com

24. After the Exercise, Other Brokerage Accounts If desired, Merrill Lynch can transfer Volterra shares to another brokerage account that exists. Proceeds from the exercise and sale of shares can also be wired automatically to another brokerage account or bank account as well.

25. New Rules Now that Volterra is a Public Company Insider Trading Policy Lockout Agreement and Blackout Periods Confidentiality Accounting Practices, Internal Control and Auditing Whistleblower Policy

26. Insider Trading Policy Employees may never, ever “trade” on Insider Information Insider Information is “material information about the Company that is not generally available to the investing public” (Material Non-Public Information) “Material” means information a reasonable investor would consider important in making decision to buy, sell or hold Volterra stock Examples of material information: mergers or acquisitions, new products, marketing changes, quarterly financial results “Trading” means buying OR selling – both are prohibited

27. Insider Trading Policy No employee may: a)Buy or sell Volterra stock while in possession of Material Non-Public Information b)Communicate Material Non-Public Information except to those who need to know it to do business with Volterra (require Non-Disclosure Agreement) c)“Tip” others by recommending the purchase or sale of Volterra stock while in possession of Material Non- Public Information d)Assist anyone in doing any of the above e)The Insider Trading Policy is a handout to this meeting

28. Lockup Agreement and Blackout Periods At the request of our bankers, each Volterra shareholder and all employees signed lockup agreements. These prevent all of us from SELLING any Volterra stock we held before the IPO for 180 days, or until mid-January. Volterra has imposed a blackout on all selling AND buying of stock. The employees may buy or sell stock only during a “trading window period”. The trading window for Volterra opens on the third business day following the release of Volterra’s quarterly results. The trading window closes during the last month of the quarter. The trading window may be closed at anytime at the discretion of the CEO or CFO. Failure to comply with this policy will result in disciplinary action up to and including termination. Please feel free to contact Greg Hildebrand with any questions.

29. Confidentiality The duty not to trade on, and not to tip anyone about, Material Non-Public Information exists at all times. Independent of this duty, none of us may divulge any confidential information, whether material or not. Examples of confidential information: customer lists and addresses; sales and marketing strategies; trade secrets (ways to make or sell a product); inventions, whether patentable or not; Volterra’s organizational structure, etc. Third parties, including the media or analysts, may ask you for information. Do not provide it but pass on the questioners to Greg Hildebrand.

30. Accounting Practices, Internal Control and Auditing Whistleblower Policy As a public company, Volterra has adopted a Whistleblower Policy to encourage employees to report concerns about Accounting practices Internal accounting controls Auditing Matters You can call the Hotline at 866-294-3451 or click on EthicsPoint icon on the Volterra Intranet You can report anonymously. In any event, retaliation IS STRICTLY PROHIBITED

31. Questions and Open Discussion Benefits OnLine is a registered service mark of Merrill Lynch &Co., Inc. GoalManager is a service mark of Merrill Lynch & Co., Inc. © 2003 Merrill Lynch, Pierce, Fenner & Smith Inc. Member, Securities Investor Protection Corporation (SIPC).