**EXHIBIT 10.4**

 

Description of Second Half 2005 Cash Incentive Plan 

 

On August 3, 2005, the Compensation Committee of the Board of Directors of SirenzaMicrodevices, 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 inthe 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 periodas 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. Theeffect 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 andfourth fiscal quarters of 2005 combined: 

 

**Total Q3 and Q4 PFI AchievedIncentive 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 arespecific 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 isachieved 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 amountof the incentive pool for 2005 would be $850,000. 

 

The incentive pool isestablished 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 isachieved, 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 bedetermined 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’sindividual performance and contribution to the Company’s success, the contribution of each division or department and the Company’s performance overall.