EXHIBIT 10.4

 

Description of Second Half 2005 Cash Incentive Plan

 

On August 3, 2005, the Compensation Committee of the Board of Directors of
Sirenza Microdevices, Inc. (the “Company”) approved a cash incentive plan
pursuant to which exempt employees of the Company, including, without
limitation, its executive officers, will be eligible to receive a one-time cash
incentive payment in the event that the Company meets specified aggregate levels
of pro forma income (“PFI”) in its third and fourth fiscal quarters of 2005
combined, as announced to the public with the Company’s overall financial
results for 2005.

 

PFI is calculated by taking the Company’s net income for a given period as
calculated in accordance with GAAP, and then excluding the effect of regularly
reported non-cash charges and infrequent or unusual events, including, without
limitation, charges for the amortization of acquisition-related intangible
assets, compensation expenses related to employee equity awards, costs
associated with litigation settlements, restructuring charges, the write-off of
deferred equity financing costs and expenses related to abandoned merger and
acquisition activities. The effect of any incentive pool funded or incentives
paid under the plan will not be included in the calculation of PFI.

 

The size of any incentive pool funded under the plan will depend on whether the
Company achieves one or more of three distinct levels of PFI listed below in its
third and fourth fiscal quarters of 2005 combined:

 

Total Q3 and Q4 PFI Achieved Incentive Pool

 

Target 1 $500,000

Target 2 $650,000

Target 3 $850,000

 

The dollar amounts of PFI Targets 1, 2 and 3 have been omitted from this summary
as they are specific quantitative performance related-factors involving
confidential commercial or business information, the disclosure of which would
have an adverse effect on the Company. The pool will initially be established at
$500,000 if PFI Target 1 is achieved in the aggregate in the third and fourth
fiscal quarters of 2005. No payout would be made unless this minimum threshold
is achieved.

 

The pool will be increased by $150,000 if the Company achieves PFI Target 2. It
will increase by another $200,000 if the Company achieves PFI Target 3. The
maximum amount of the incentive pool for 2005 would be $850,000.

 

The incentive pool is established or increased only upon reaching the specified
PFI Target levels in the third and fourth fiscal quarters of 2005 combined. The
higher level of funding for the incentive pool will only occur when the next
threshold level of PFI is achieved, and no incremental increases in funding will
occur based upon partial progress toward the next PFI Target level.

 

Awards and payout of any incentive pool created would not occur until the first
quarter of 2006. The amount of any employee’s individual award under the plan
will be determined by management (or in the case of executive officers, the
Compensation Committee of the Board of Directors) in its discretion at the time
of the awards based on a variety of factors, including, without limitation, the
employee’s individual performance and contribution to the Company’s success, the
contribution of each division or department and the Company’s performance
overall.