**EXHIBIT 10.16**
**PLUMTREE SOFTWARE, INC.**
**2004 EMPLOYEE BONUS PLAN**
**1. EFFECTIVE DATE; PURPOSE OF THE PLAN**
     1.1 Effective Date. Plumtree Software, Inc. and its wholly-ownedsubsidiaries (the “Company”) adopted the 2004 Employee Bonus Plan (the “Plan”)effective as of January 1, 2004.
     1.2 Purpose. The purpose of the Plan is to increase stockholder value andpromote the success of the Company by ensuring that the efforts of keyemployees are aligned with Company strategy and vision. By providing incentivecompensation for key employees, the Plan will enable the Company to attract,retain and reward critical skills and high performing employees, therebyleveraging and sustaining the Company’s competitive advantages.
**2. ADMINISTRATION OF THE PLAN**
     2.1 Administrator. The Plan will be administered by the Company’s Boardof Directors (the “Board,” and the “Plan Administrator”); provided, however,that the Board may delegate to any officer or officers of the Company theresponsibility (in whole or in part) for Plan administration.
     2.2 Powers of the Administrator. The interpretation and construction ofthe Plan and the adoption of rules and regulations for administering the Planwill be made by the Plan Administrator. The Plan Administrator will have allpowers and discretion necessary or appropriate to administer the Plan and tocontrol its operation, including, but not limited to, the power to (1)determine which employees will be granted bonuses, (2) prescribe the terms andconditions of bonuses, (3) interpret the Plan and the bonuses, (4) adopt rulesfor the administration, interpretation and application of the Plan as areconsistent therewith, and (5) interpret, amend or revoke any such rules.Decisions of the Plan Administrator will be final and binding on all partieswho have an interest in the Plan.
     2.3 Modification, Suspension and Termination. The Company reserves theright to modify, amend, suspend or terminate the Plan at any time and for anyreason. The amendment, suspension or termination of the Plan will not, withoutthe consent of any participant, alter or impair any rights or obligations underany bonus already earned. No bonus may be awarded during any period ofsuspension or after termination of the Plan.
**3. DETERMINATION OF PARTICIPANTS**
     3.1 Eligible Individuals. An individual employed by the Company who hasbeen notified by the Company’s HR department will be eligible to participate inthe Plan. Notwithstanding the foregoing, an individual will not be eligible toparticipate in the Plan if the individual is on another incentive compensationplan (including, but not limited to, a Company sales commission plan).Individuals designated as participants will be referred to as “Participants.”
     3.2 Termination of Employee Status. For purposes of the Plan, and unlessotherwise determined by the Plan Administrator it its discretion, an individualwill be considered an employee for so long as such individual remains employed,on a full-time basis by the Company.
**4. DETERMINATION OF AWARDS**
     4.1 Amount of Target Bonus. The Plan Administrator will determine eachParticipant’s target bonus; provided, however, that the total amount of alltarget bonuses may not exceed an amount determined by the Plan Administrator.
 

 

     4.2 Performance Goals. A portion (as determined by Plan Administrator) ofa target bonus will be earned by achieving individual or team goals (the“Individual Performance Portion”). The remaining portion of a target bonuswill be earned if the Company meets Company-specific performance objectives(the “Company Performance Portion”). The allocation of the target bonus amongthe Individual Performance Portion and Company Performance Portion may beestablished by the Plan Administrator for all eligible Participants orindividually for certain Participants.
          (a) Individual Performance Portion. Every Participant will develop andestablish quarterly goals in conjunction with the Participant’s manager. Thegoals, recommended to be between three and five in number, must be approved bythe Participant’s manager, who will assign relative weights to each goal.
          (b) Company Performance Portion. Annual Company goals, based on revenueand earnings per share and other criteria as may be determined by the PlanAdministrator will be set by the Plan Administrator; provided, however, that noCompany goal will be deemed achieved if pro-forma earnings per share is lessthan an amount set by the Company at the beginning of each year. Company goalsmay be amended or modified at any time (including the minimum threshold onpro-forma earnings per share).
**5. PAYMENT OF AWARDS**
     5.1 Individual Performance Portion. The Individual Performance Portion ofa target bonus will be earned on a quarterly basis, based on the Participant’sachievement of his or her specified goals and the weightings assigned to eachgoal. A Participant must achieve a weighted average of at least 50% of his orher quarterly goals, as determined by and in the discretion of theParticipant’s manager, to earn a payment. A Participant may earn no more than100% of the Individual Performance Portion of his or her target bonus as aresult of meeting or exceeding individual goals.
     5.2 Company Performance Portion. The Company Performance Portion of atarget bonus will be earned on an annual basis, subject to the Company meetingthe performance criteria established by the Plan Administrator pursuant toSection 4.2(b). A Participant may be entitled to payments in excess of targetbonus amounts if the Company’s performance exceeds targets. A Participant mustaverage at least a 50% rating with respect to his or her individual goals (overthe course of the annual Company performance period) to be eligible to receivethe Company Performance Portion.
     5.3 Pro-Rata Eligibility. Participants who become eligible during aquarter must be employed for at least two (2) months during the quarter toreceive a quarterly bonus. Quarterly bonuses (the Individual PerformancePortion) will be pro-rated based on the amount of time the Participant wasbonus-eligible during the quarter. In addition, Participants who becomeeligible during the annual period during which Company performance is measuredmust have been an eligible individual for at least six (6) months prior to theend of the annual period to receive an annual bonus. Annual bonuses (theCompany Performance Portion) will be pro-rated based on the amount of time theParticipant was bonus-eligible during the annual period.
     5.4 Timing and Form of Payment. Bonuses will be paid as soon asadministratively practicable after the end of the applicable period (quarterlyor annually). A Participant must be employed on the last day of the applicableperiod to receive a payment. Payment will be made by payroll check, which isseparate from the Participant’s regular payroll check, and will be subject toapplicable federal, state and local tax withholding. Notwithstanding anythingin the Plan to the contrary, the Plan Administrator, in its sole discretion,may decide at any time and for any reason, on a per-Participant basis, thatbonuses may be reduced or no bonuses will be paid.
**6. GENERAL PROVISIONS**
     6.1 Funding Obligations. No amounts awarded or accrued under this Planwill actually be funded, set aside or otherwise segregated prior to payment.The obligation to pay bonuses will at all times be an unfunded and unsecuredobligation of the Company. Participants will have the status of generalcreditors and may look solely to the general assets of the Company for thepayment of their bonuses.
 

 

     6.2 Transferability. No Participant will have the right to alienate,pledge or encumber his or her interest in this Plan, and such interest will not(to the extent permitted by law) be subject in any way to the claims of theParticipant’s creditors or to attachment, execution or other process of law.
     6.3 Beneficiaries. A Participant may designate a beneficiary to receiveany bonuses earned up to the time of death. If such designation is not made,the beneficiary named for regular employee benefit plans will be deemed to bethe name beneficiary.
     6.4 Continuing Employment Status. Neither the action of the Company inestablishing the Plan, nor any action taken under the Plan by the PlanAdministrator, nor any provision of the Plan itself will be construed to grantany Participant the right to remain in the employ of the Company for any periodof specific duration. Each eligible employee will remain an “at-will”employee, which means that either such eligible employee or the Company mayterminate the employment relationship at any time for any reason, with orwithout cause.
     6.5 Integration. The Plan will be the full and complete agreement betweenthe eligible employees and the Company on the terms described herein.
     6.6 Validity. In the event any provision of the Plan is held illegal orinvalid for any reason, the illegality or invalidity will not affect theremaining parts of the Plan, and the Plan will be construed and enforced as ifthe illegal or invalid provision had not been included.
     6.7 Applicable Law. The granting of bonuses under the Plan will besubject to all applicable laws, rules and regulations, and to such approvals byany governmental agencies or national securities exchanges as may be required.The Plan and all bonuses will be construed in accordance with and governed bythe laws of the State of California, without regard to the conflict of lawprovisions.