EXHIBIT 10.63


 


Liberate Technologies


Fiscal Year 2003


Senior Management Bonus Plan


 


 


Purpose:


 


The purpose of the Fiscal Year 2003 Senior Management
Bonus Plan (“the Plan”) is to encourage the growth and development of Liberate
Technologies (“Liberate”) and to motivate and reward key employees who direct
and influence Liberate’s revenue and operating expenses.


 


Plan
Components:


 


•                  Participants
in the Plan are as specified by the Compensation Committee of the Liberate’s
Board of Directors (“Compensation Committee”). 
Plan Participants for Fiscal Year 2003 are Mitchell Kertzman (for Q1 and
Q2), Coleman Sisson, and Kent Walker.


•                  The
Plan Annual Bonus Target for each participant is a percentage of annual base
pay set by the Compensation Committee for each participant times the annual
rate of base pay.  The initial
percentage for Mitchell Kertzman is 40%; the initial percentage for Coleman
Sisson and Kent Walker is 35%.  The
percentage for Coleman Sisson will increase to 40% upon his appointment as
Chief Executive Officer of Liberate. 
The Quarterly Bonus Target is one-quarter of the applicable percentage
for each participant times the annual rate of base pay in effect at the end of
each quarter.


•                  The
Plan is based 60% on quarterly achievement of Net Revenue Targets and 40% on
quarterly achievement of Operating Expense Targets using the targets below:


 


	
   

  	
   

  	
  %

  	
   

  	
  Q1

  	
   

  	
  Q2

  	
   

  	
  Q3

  	
   

  	
  Q4

  	
   

  	
  Total

  
	
  Net Revenue Target

  	
   

  	
  60%

  	
   

  	
  $21,000,000

  	
   

  	
  $24,000,000

  	
   

  	
  $27,000,000

  	
   

  	
  $29,500,000

  	
   

  	
  $101,500,000

  
	
  Operating Expense Target

  	
   

  	
  40%

  	
   

  	
  $30,801,550

  	
   

  	
  $29,756,683

  	
   

  	
  $28,776,734

  	
   

  	
  $28,987,960

  	
   

  	
  $118,322,927

  



 


•                  In
order for the Plan to be activated for a given fiscal quarter, Liberate must
achieve a minimum of 90% of the quarterly Net Revenue Target and must
not exceed the quarterly Operating Expense Target by more than 10%.


 


•                  
Bonuses are paid up to 125% of the Quarterly Bonus Target.


 


•                  
The Plan quarterly bonus is calculated using the following formulas


 


Actual Quarterly Net Revenue               x   60%  x  (Quarterly Bonus Target)   = 
Amount of Quarterly Bonus paid for


Target Quarterly Net Revenue                                                                                
Net Revenue achievement


 


Target Quarterly Operating Expenses    x  
40%  x  (Quarterly Bonus Target)  
=  Amount of Quarterly Bonus paid
for


Actual Quarterly Operating Expenses                                                                     
managing Operating Expenses


 


Total Bonus Paid =  Amount of bonus paid for Net Revenue
achievement + Amount of bonus paid for managing Operating Expenses


 

















 


 


Plan payments are:


 


•                  Paid
quarterly, if earned, approximately 45 days after the end of the quarter.


•                  Earned
only if the individual has performed his or her job duties at least at an
acceptable performance level, as determined by the Compensation Committee.


•                  Based
on ratios calculated to the nearest thousandth (e.g., 1.5% or .015).  After calculation, bonuses will be rounded
to the nearest penny.


•                  Prorated
for the number of days of active participation in the Plan quarter.


•                  Earned
only if the participant has been in a qualifying position for a minimum of 60
days prior to the end of the Plan quarter.


 


Definitions:


 


“Net
Revenue”: Worldwide Net Revenue recognized in accordance with
generally accepted accounting principles (excluding adjustments for warrant
amortization offsets) and reflected in Liberate’s general ledger, 10Q’s, and
10K.


 


“Operating
Expenses”: Worldwide Operating Expenses (including fully
allocated cost of revenues, research and development, sales and marketing, and
general and administrative expenses) recognized in accordance with generally
accepted accounting principles and reflected in Liberate’s general ledger,
10Q’s, and 10K.  Operating Expenses do
not include charges for amortization of goodwill, warrants, deferred stock
compensation, other income and expense, or taxes.


 


General
Terms and Conditions:


 


1.               Participants are
identified by the Compensation Committee and will normally be members of
Liberate’s Executive Staff (excluding Sales executives and others on existing
variable plans).  Participants will be
identified at the start of the Plan year and can be added during the Plan year
at the discretion of the Compensation Committee.


 


2.               Participants are eligible to participate in
the Plan only if they are full-time regular employees of Liberate and have
signed all employment documents provided by Liberate.  Participants must also sign Plan documents and forward them to
Human Resources within 15 days of receiving the Plan documents.


 


3.               The Plan is
effective from June 1, 2002 through May 31, 2003.


 


4.               Participation in
the Plan in any given year does not automatically entitle a participant to
participate in subsequent years.


 


5.               Participation in
the Plan does not constitute an agreement to employ the participant for any length
of time and will not restrict the participant’s or Liberate’s right to
terminate employment for any reason at any time, with or without cause or prior
notice.  No one at Liberate has the
authority, unless specifically authorized in writing by the CEO, to enter into
any oral, written, or implied agreement that employment is for any minimum or
fixed term or that alters in any way the “at will” employment relationship.


 

















 


6.               Liberate may modify
or terminate the Plan or any of its components at any time, with or without
cause.  If business conditions change,
including but not limited to Liberate acquisitions or other significant
structural changes within Liberate, the Compensation Committee may modify
components of the Plan, quarterly target amounts, or bonus payment amounts.


 


7.               In order to receive
a quarterly bonus payment under the Plan, a participant must be an active
employee of Liberate on the date the bonus is distributed.  If a participant’s employment terminates
before a bonus payment is due, the participant will forfeit any right to such
payment, even if the participant receives additional compensation from Liberate
after the last day of employment, unless the Compensation Committee
specifically agrees in writing that the participant remains eligible for some
or all of such bonus.


 


8.               The participant and
Liberate agree to waive trial before a judge or jury and to arbitrate with the
JAMS arbitration service any dispute relating to the Plan, the participant’s
employment, or the participant’s termination, except for claims relating to
worker’s compensation benefits, unemployment insurance, or intellectual
property rights.  The arbitrator’s
decision will include written findings of fact and law and will be final and
binding except to the extent that judicial review is required by law.  The American Arbitration Association’s
National Rules for the Resolution of Employment Disputes will govern the
arbitration, except that the arbitrator will allow discovery authorized by the
California Arbitration Act and any additional discovery necessary to vindicate
a claim or defense.  The arbitrator may
award any remedy that would be available from a court of law.   The participant may choose to hold the
arbitration either in San Mateo County, California or the county where the
participant worked when the arbitrable dispute first arose.  The participant and Liberate will share the
arbitration costs equally (except that Liberate will pay the arbitrator’s fee
and any other cost unique to arbitration) and each party will pay its own
attorney’s fees except as required by law.