Exhibit 10.16


 


VITESSE SEMICONDUCTOR CORPORATION


 


1.                                      PURPOSE OF PLAN


 


The purpose of
this Vitesse Semiconductor Corporation Fiscal Year 2010 Executive Bonus Plan
(this “Plan”) is to provide members of the
executive staff (“Executive”) of Vitesse Semiconductor Corporation, a Delaware
corporation, (the “Corporation”)
with the opportunity to earn incentive bonuses based on (a) the
Corporation’s attainment of specific financial performance objectives for the
2010 Fiscal Year (as defined below) and (b) the executive’s achievement of
designated personal goals during the 2010 Fiscal Year.


 


2.                                      DEFINITIONS


 


2.1                               “Adjusted EBITDA” means net income before interest,
expenses for taxes, depreciation, amortization, deferred stock compensation and
non-recurring professional fees.  The
Administrator may, from time-to-time, make other exceptions to the definition
as it deems appropriate with respect to unusual or non-recurring events such as
balance sheet adjustments, mergers, acquisitions, and divestitures.


 


2.2                               “Administrator” means the Compensation Committee of the
Board of Directors of the Corporation.


 


2.3                               “Base Salary” means a Participant’s Base Salary paid
(or deferred) in the 2010 Fiscal Year. 
Base Salary does not include bonuses or any form of compensation other
than salary.


 


2.4                               “Eligible Person” is (a) any “officer” as that term
is defined in Rule 16a-1(f) under the Securities Exchange Act of 1934
(except the President/Chief Executive Officer) or (b) any vice-president
who is a member of the Corporation’s executive staff.


 


2.5                               “Goals” means the individual personal
performance goals established by the Corporation’s Chief Executive Officer for
each Participant for the 2010 Fiscal Year.


 


2.6                               “Total Bonus” means the portion of a Participant’s
Bonus, if any, that is based on both the Participant’s achievement of his or
her Personal Goals and the Corporation’s level of Adjusted EBITDA for the 2010
Fiscal Year.


 


2.7                               “Participant” means an Eligible Person who has been
designated by the Administrator as eligible to earn a Bonus for the 2010 Fiscal
Year.


 


2.8                               “2010 Fiscal Year” means the fiscal year of the Corporation
that began on October 1, 2009 and will end on September 30, 2010.


 


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3.                                      PLAN ADMINISTRATION


 


3.1                               Administration. 
This Plan shall be administered by and all awards under this Plan shall
be authorized by the Administrator.


 


3.2                               Powers of the Administrator. 
Subject to the express provisions of this Plan, the Administrator is
authorized and empowered to do all things necessary or desirable in connection
with the authorization of awards and the administration of this Plan,
including, without limitation, the authority to:


 


(a)                                  determine the Eligible Persons and, from
among the Eligible Persons, designate those who are Participants;


 


(b)                                 approve the Goals established by the
Corporation’s Chief Executive Officer for each Participant;


 


(c)                                  determine and approve the amount of the
actual Bonus for each Participant; and


 


(d)                                 construe and interpret this Plan and any
agreements defining the rights and obligations of the Corporation and
Participants under this Plan, further define the terms used in this Plan, and
prescribe, amend and rescind rules and regulations relating to the
administration of this Plan or the Bonus payments under this Plan.


 


3.3                               Binding Determinations. 
Any action taken by, or inaction of, the Corporation, the Corporation’s
Chief Executive Officer, or the Administrator relating or pursuant to this Plan
and within its or his authority hereunder or under applicable law shall be
within the absolute discretion of that entity, person or body and shall be
conclusive and binding upon all persons. 
Neither the Corporation’s Chief Executive Officer, the Administrator,
nor any person acting at the direction thereof, shall be liable for any act,
omission, interpretation, construction or determination made in good faith in
connection with this Plan (or any award made under this Plan), and all such
persons shall be entitled to indemnification and reimbursement by the
Corporation in respect of any claim, loss, damage or expense (including,
without limitation, attorneys’ fees) arising or resulting therefrom to the
fullest extent permitted by law and/or under any directors and officers
liability insurance coverage that may be in effect from time to time.


 


3.4                               Reliance on Experts. 
In making any determination or in taking or not taking any action under
this Plan, the Administrator may obtain and may rely upon the advice of
experts, including employees and professional advisors to the Corporation.  No director, officer or agent of the
Corporation shall be liable for any such action or determination taken or made
or omitted in good faith.


 


3.5                               Delegation. 
The Administrator may delegate ministerial, non-discretionary functions
to individuals who are officers or employees of the Corporation or to third
parties.


 


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4.                                      ELIGIBILITY


 


The Administrator
may grant Bonus opportunities under this Plan only to those persons that the
Administrator determines to be Eligible Persons.  The Administrator shall notify each
Participant of his or her eligibility to earn a Bonus under this Plan by the
later of November 15, 2009 or the 45th day following the date that the
Participant becomes an Eligible Person. 
Such notice shall be in writing and shall include a description of the
Participant’s Goals.


 


5.                                      BONUS CALCULATIONS


 


5.1                               Goals


 


5.1.1                     Establishment. 
The Corporation’s Chief Executive Officer shall establish Goals for each
Participant by the later of November 15, 2009 or the 45th day following
the date the Participant becomes an Eligible Person.


 


5.1.2                     Adjustment. 
To preserve the intended incentives and benefits of a Goal Bonus
opportunity, the Chief Executive Officer may (i) adjust the Goals to
reflect any material change in corporate capitalization, any material corporate
transaction (such as a reorganization, combination, separation, merger,
acquisition or any combination of the foregoing), or any complete or partial
liquidation of the Corporation or (ii) make other appropriate adjustments
to the Goals.  The Chief Executive
Officer has the authority to propose additional bonus amounts above those
provided for in the plan for the consideration of, and approval by, the Administrator
and will be responsible to ensure that estimated bonuses, including any
proposed amounts above the amounts indicated in the plan, not yet approved by
the Administrator are accounted for in accordance with GAAP.


 


5.1.3                     Determination of Achievement of
Goals.  The Corporation’s Chief Executive Officer
shall, in his or her sole discretion, determine the extent to which each
Participant has attained the Goals established for such Participant for the
2010 Fiscal Year, which shall be expressed as a whole percentage from 0% to
100%.  The Chief Executive Officer shall
make that determination within 90 days following the end of the 2010 Fiscal
Year and notify the Administrator and the Participant of that determination as
soon thereafter as practicable.


 


5.2                               Total Bonus


 


Each Participant’s Total
Bonus, if any, shall be an amount equal to (a) times (b) times (c),
where (a) equals the Participant’s Base Salary, (b) equals the
percentage of Total Bonus with 100% of Goals Achieved for the respective
Adjusted EBITDA and (c) equals the percentage of the Participants
achievement of his or her Goals; provided, however, that such Total Bonus shall
be pro rated for any Participant who is first employed by the Corporation after
October 1, 2009, to 


 


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reflect the portion of
the 2010 Fiscal Year during which he or she was a Participant.


 


The formula can also be
stated as:


(Base Salary) X (% of
Total Bonus with 100% of Goals Achieved for the respective Adjusted EBITDA) X
(% of Goals Attained).


 


6.                                      VESTING


 


6.1                               Vesting. 
A Participant’s right to receive a Bonus under this Plan shall vest on September 30,
2010, subject to the employment and performance requirements set forth in this Section 6
(and subject to the levels of (a) the Participant’s achievement of Goals
and (b) the Company’s Adjusted EBITDA).


 


6.2                               Continued Employment Required. 
A Participant must continue to be employed by the Corporation without
performance deficiencies (as described in Section 6.5) until September 30,
2010 as a condition to vesting in the right to receive a Bonus payment under
this Plan.  Employment for only a portion
of the vesting period, even if a substantial portion, will not entitle the
Eligible Person to any proportionate vesting. 
An approved leave of absence by a Participant, either at the time of the
vesting date, or at any time during the vesting period, will not prevent
vesting of payments under the Plan.


 


6.3                               Effect of Termination Prior to
Vesting.  If a Participant’s employment with the
Corporation terminates for any reason before September 30, 2010, his or
her participation in the Plan will terminate immediately and he or she shall
not be eligible for a Bonus.


 


6.4                               Events Not Deemed Terminations of
Service.  Unless the express policy of the Corporation
or the Administrator otherwise provides, the employment relationship shall not
be considered terminated in the case of (a) sick leave, (b) military
leave, or (c) any other leave of absence authorized by the Corporation or
the Administrator; provided that, unless reemployment upon the expiration of
such leave is guaranteed by contract or law or the Administrator otherwise
provides, such leave is for a period of not more than three months.


 


6.5                               Effect of Performance
Deficiencies.  A Participant’s right to receive a Bonus will
not become vested if, (a) at the close of the 2010 Fiscal Year, the
Participant is on a Performance Improvement Plan, or (b) during the 2010
Fiscal Year, the Participant is otherwise notified that his or her job
performance is deficient and he or she has failed to correct the deficiencies
by the end of the 2010 Fiscal Year.


 


7.                                      TIME OF BONUS PAYMENTS.


 


Each Participant’s Bonus, if any, shall be paid by the end of the first
quarter of Fiscal Year 2011, or as soon as practicable after determination and
certification of the actual financial performance levels for the year and grant
of approval by the Compensation Committee in a duly held meeting, but, in no
event, later than March 15, 2011.


 


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8.                                      OTHER PROVISIONS


 


8.1                               Compliance with Laws. 
This Plan, the granting and vesting of awards under this Plan, and the
payment of money under this Plan are subject to compliance with all applicable
federal and state laws, rules and regulations (including but not limited
to state and federal securities law) and to such approvals by any listing,
regulatory or governmental authority as may, in the opinion of counsel for the
Corporation, be necessary or advisable in connection therewith.


 


8.2                               No Rights to Awards. 
No person shall have any claim or rights to be granted awards (or
additional awards, as the case may be) under this Plan, subject to any express
contractual rights (set forth in a document other than this Plan) to the
contrary.


 


8.3                               No Employment/Service Contract. 
Nothing contained in this Plan (or in any other documents under this
Plan) shall confer upon any Eligible Person or Participant any right to
continue in the employ or other service of the Corporation, constitute any
contract or agreement of employment or other service or affect an employee’s
status as an employee at will, nor shall interfere in any way with the right of
the Corporation to change a person’s compensation or other benefits, or to
terminate his or her employment or other service, with or without cause.  Nothing in this Section 8.3, however, is
intended to adversely affect any express independent right of such person under
a separate employment or service contract.


 


8.4                               Plan Not Funded. 
Awards payable under this Plan shall be payable from the general assets
of the Corporation and no special or separate reserve, fund or deposit shall be
made to assure payment of such awards. 
No Participant, beneficiary or other person shall have any right, title
or interest in any fund or in any specific asset of the Corporation by reason
of any award hereunder.  Neither the
provisions of this Plan (or of any related documents), nor the creation or
adoption of this Plan, nor any action taken pursuant to the provisions of this
Plan shall create, or be construed to create, a trust of any kind or a
fiduciary relationship between the Corporation and any Participant, beneficiary
or other person.  To the extent that a
Participant, beneficiary or other person acquires a right to receive payment
pursuant to any award hereunder, such right shall be no greater than the right
of any unsecured general creditor of the Corporation.


 


8.5                               Tax Withholding. 
Upon any payment of any award, the Corporation shall deduct from any
amount otherwise payable in cash to the Participant (or the Participant’s
personal representative or beneficiary, as the case may be) the minimum amount
of any taxes which the Corporation may be required to withhold with respect to
such cash payment.


 


8.6                               Effective Date, Term, Amendments.


 


8.6.1                     Effective Date and Term. 
This Plan is effective as of January 7, 2010, the date of its
approval by the Compensation Committee of the Board of 


 


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                                                Directors of the Corporation (the “Effective
Date”) and shall be effective for the 2010 Fiscal Year.  The Plan shall automatically terminate upon
the payment of the Bonuses due hereunder or, if no Bonuses are payable
hereunder, as of September 30, 2010.


 


8.6.2                     Board Authorization. 
The Administrator may, at any time, amend this Plan; provided that no
amendment shall adversely affect any Participant’s opportunity to earn a Bonus
for the 2010 Fiscal Year.


 


8.7                               Governing Law; Construction;
Severability.


 


8.7.1                     Choice of Law. 
This Plan and all other related documents shall be governed by, and
construed in accordance with the laws of the State of Delaware.


 


8.7.2                     Severability. 
If a court of competent jurisdiction holds any provision invalid and
unenforceable, the remaining provisions of this Plan shall continue in effect.


 


8.8                               Captions. 
Captions and headings are given to the sections and subsections of this
Plan solely as a convenience to facilitate reference.  Such headings shall not be deemed in any way
material or relevant to the construction or interpretation of this Plan or any
provision thereof.


 


8.9                               Non-Exclusivity of Plan. Nothing in this Plan shall limit or be
deemed to limit the authority of the Board or the Administrator to grant any
award or authorize any other compensation, under any other plan or
authority.  Awards under this Plan may be
made in addition to, in combination with, as alternatives to or in payment of
grants, awards or commitments under any other plans or arrangements of the
Corporation.


 


8.10                        No Corporate Action Restriction. 
The existence of this Plan shall not limit, affect or restrict in any
way the right or power of the Board or the stockholders of the Corporation to
make or authorize (a) any adjustment, recapitalization, reorganization or
other change in the capital structure or business of the Corporation, (b) any
merger, amalgamation, consolidation or change in the ownership of the
Corporation, (c) any issue of bonds, debentures, capital, preferred or
prior preference stock ahead of or affecting the capital stock (or the rights
thereof) of the Corporation, (d) any dissolution or liquidation of the
Corporation, (e) any sale or transfer of all or any part of the assets or
business of the Corporation, or (f) any other corporate act or proceeding
by the Corporation.  No Participant,
beneficiary or any other person shall have any claim under any grant of a Bonus
opportunity against any member of the Board or the Administrator, or the
Corporation or any employees, officers or agents of the Corporation, as a
result of any such action.


 


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INWITNESS
WHEREOF, this Plan is executed by its duly authorized officer as of January 7, 2010.


 


VITESSE
SEMICONDUCTOR CORPORATION


 


 


	
  By

  	
  /s/
  Christopher R. Gardner

  	
   

  
	
   

  	
   

  	
   

  
	
  Name

  	
  Christopher
  R. Gardner

  	
   

  
	
   

  	
   

  	
   

  
	
  Title

  	
  President
  / CEO

  	
   

  
	
   

  	
   

  	
   

  
	
  Date

  	
  1.20.10

  	
   

  



 


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EXHIBIT A


 


Table 1: 
Bonus Calculations based on EBITDA and Assuming All Goals Are Achieved
(as Percent of Base Salary)


 


	
  

  Adjusted

  EBITDA

  (M$)

  	
   

  	
  Total

  Bonus with

  100% of

  Goals

  Achieved

  	
   

  	
   

  
	
  **

  	
   

  	
  15.0

  	
  %

  	
  Min *

  
	
  **

  	
   

  	
  30.0

  	
  %

  	
  Target *

  
	
  **

  	
   

  	
  35.0

  	
  %

  	
   

  
	
  **

  	
   

  	
  40.0

  	
  %

  	
  Max *

  



 






*                 Exceptions to
this plan are noted below:


Mike
Logan, Phil Richards, and Rich Yonker


Total
Bonus Min = 25%, Target = 40%, Max = 60%


 


**          Indicates that
certain information contained herein has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been requested
with respect to the omitted portions.


 


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