Document:

exv10w17

 

Exhibit 10.17

EMPLOYMENT AGREEMENT

          EMPLOYMENT AGREEMENT (this “Agreement”), dated January 1, 2006, is entered into by and between
Berliner Communications, Inc. (the “Company”), a Delaware corporation, with its principal place of
business at 20 Bushes Lane, Elmwood Park, New Jersey 07407, and Patrick G. Mackey (the “Employee”),
an individual residing at 5816 Braemar Drive, Plano, Texas 75093.

WITNESSETH:

          WHEREAS, The Company desires to secure the services and employment of the Employee on behalf
of the Company, and Employee desires to be employed with the Company upon the terms and conditions
hereinafter set forth.

          WHEREAS, Employee is willing to serve as Chief Financial Officer of the Company, and the
Company desires to retain Employee in that capacity upon the terms and conditions herein set forth.

          NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein, the
parties hereto agree as follows:

          Section 1. Term of Employment. The Employee’s employment under this Agreement shall commence
on the date of hereof and, subject to earlier termination pursuant to Section 5 of this Agreement
below, shall continue until the first anniversary of the date hereof (the “Employment Term”).

          Section 2. Position and Duties. During the Employment Term, the Employee shall serve as
Senior Vice President and Chief Financial Officer (“CFO”) and shall have such powers and duties as
are commensurate with such position and as may be conferred upon him from time to time by the Chief
Executive Officer and the Board of Directors of the Company (the “Board”). During the Employment
Term, the Employee shall use his best efforts to faithfully perform the duties of CFO and shall
devote all of his business time, attention, skill and efforts exclusively to the business and
affairs of the Company, its subsidiaries and affiliates and the Employee agrees that he shall abide
by all applicable policies of the Company. The Company acknowledges that the Employee’s primary
place of business shall be Dallas, Texas, and the Employee acknowledges that in performance of his
duties hereunder, the Employee shall be required to travel to the Company’s facilities located
throughout the United States.

          Section 3. Compensation.

               (a) Salary. For the performance of Employee’s duties hereunder during the Employment Term,
Employee shall receive an annualized base salary of $225,000.00

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(the “Base Salary”) less normal deductions and withholdings. The salary payments shall be made in
accordance with the Company’s standard payroll practices.

               (b) Incentive Compensation. The Employee shall be entitled to participate in all compensation
and employee benefit plans or programs (“plans and programs”), subject to the terms and conditions
of the plans and programs, that are offered to all salaried employees of the Company, including,
without limitation, incentive compensation, bonus, group hospitalization, health, dental care, or
other insurance, stock purchase, restricted stock and stock option plans. Notwithstanding the
foregoing, nothing in this Agreement shall preclude the amendment or termination of any such plans
or programs.

               (c) Premiums/Contributions. During the Employment Term, the Employee shall be entitled to
participate in all medical and dental health plans and programs at no cost to the Employee.

               (d) Vacation and Sick Leave. During the Employment Term, the Employee shall be entitled to
vacation and sick leave in accordance with Company policies and procedures.

               (e) Car Allowance. During the Employment Term, the Employee shall be entitled to an annual
car allowance in the amount of $9,000.00, which will be payable on a pro-rata basis in association
with the regular payroll schedule and subject to normal payroll deductions and withholdings.

          Section 4. Business Expenses. The Company shall pay or reimburse the Employee for all
reasonable travel or other out-of-pocket expenses actually incurred by the Employee in connection
with the performance of his duties and obligations under this Agreement. The Employee shall submit
proof of such expenses in accordance with such policies and procedures as the Company may from time
to time establish for employees.

          Section 5. Effect of Termination of Employment. The terms and conditions of this Agreement
shall automatically terminate at the end of the Employment Term, or earlier, based on the following
circumstances:

               (a) Without “Cause”. Notwithstanding any provisions of this Agreement to the contrary, the
Company may terminate the Employee’s employment hereunder for any reason or for no reason, at any
time during the Employment Term, effective upon delivery of two (2) days notice by the Company. In
the event the Employee’s employment terminates during the Employment Term, due to a Without Cause
Termination (as hereinafter defined), the Employee, in exchange for a complete release and waiver,
releasing the Company of any and all legal claims or potential legal claims, shall receive an
amount equal to his Base Salary then in effect for the remainder of the Employment Term or for six
months, whichever is longer (the “Severance Period”) plus (i) any Base Salary already earned and
accrued under this Agreement prior to the effective date of termination; (ii) reimbursement under
this Agreement for expenses pursuant to Section 4 incurred prior to the effective date of
termination; and (iii) all vested

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benefits under the Company’s plans and programs, subject to the terms of such plans and
programs. This payment will be made, at the Company’s option, in a lump sum or ratably over the
Severance Period, within seven (7) days after receipt of the executed release and waiver. The
Employee agrees and acknowledges that he shall be entitled to any and all payments (or future
payments) under this Section 5(a) so long as he is not in violation of Section 7 of this Agreement,
set forth below. To the extent that the Employee is in violation of his agreements and covenants
set forth in Sections 6 and 7 he shall not be entitled to any payment or future payment under this
Section 5(a). In the event of a termination pursuant to this Section 5(a), the Employee will be
entitled to participate in continued group hospitalization, health and dental care insurance in
accordance with the terms and conditions of the Comprehensive Omnibus Budget Reconciliation Act
(“COBRA”).

               (b) Termination upon Death, Disability, or Cause. This Agreement shall terminate upon the
Employee’s death, disability or Cause (as hereinafter defined). If one of these events shall
occur, the Employee shall have no right to receive any compensation or benefit other than (i) any
Base Salary already earned and accrued under this Agreement prior to the effective date of
termination; (ii) reimbursement under this Agreement for expenses pursuant to Section 4 incurred
prior to the effective date of termination; and (iii) all vested benefits under the Company’s plans
and programs, subject to the terms of such plans and programs.

               (c) Voluntary Resignation. The Employee may terminate his employment hereunder at any time
during the Employment Term subject only to the requirement that the Employee shall provide the
Company with a minimum of thirty (30) days prior written notice. In the event of a voluntary
termination (resignation) by Employee, the Company will have no obligation to Employee other than
to pay Employee any earned and accrued Based Salary and the value of any earned, accrued, unused
vacation. Employee hereby acknowledges and agrees that in the event of a voluntary resignation (i)
he will not be entitled to any other type of compensation or benefits under this Agreement and (ii)
that the compensation and benefits that he received under this Agreement prior to his voluntary
termination were good and sufficient consideration for him to have to completely and fully abide
with his covenants and agreements set forth in Section 7 below concerning non-competition and
non-soliciation.

               (d) With “Good Reason”. Notwithstanding any provision of this Agreement to the contrary, the
Employee may terminate his employment hereunder for Good Reason (as defined hereinafter), subject
to the requirement that the Employee shall provide the Company with a minimum of two (2) weeks
prior written notice. In the event that the Company does not cure said Good Reason, the Employee
shall be entitled to receive, in exchange for a complete release and waiver, releasing the Company
of any and all legal claims or potential legal claims, an amount equal to his Base Salary then in
effect for the remainder of the Employment Term or for six months, whichever is longer (the
“Severance Period”). This payment will be made, at the Company’s option, in a lump sum or ratably
over the Severance Period, within seven (7) days after receipt of the executed release and waiver.
The Employee agrees and acknowledges that he shall be entitled to any and all payments (or future
payments) under this Section 5(d) so long as he is not in violation of Section 7 of this

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Agreement, set forth below. To the extent that the Employee is in violation of his agreements
and covenants set forth in Sections 6 and 7 he shall not be entitled to any payment or future
payment under this Section 5(d). In the event of a termination pursuant to this Section 5(d), the
Employee will be entitled to participate in continued group hospitalization, health and dental care
insurance in accordance with the terms and conditions of the COBRA.

               (e) For purposes of this Agreement, the following terms have the following meanings:

                    (i) The term “Termination for Cause” means, to the maximum extent permitted by applicable law,
a termination of the Employee’s employment by the Company because the Employee has (a) materially
breached or materially failed to perform his duties and such breach or failure to perform
constitutes self-dealing, willful misconduct or recklessness, (b) committed an act of dishonesty in
the performance of his duties hereunder or engaged in conduct detrimental to the business of the
Company, (c) been convicted of a felony or any crime involving moral turpitude, (d) materially
breached or materially failed to perform his obligations and duties hereunder, which breach or
failure the Employee shall fail to remedy within 30 days after written demand from the Company, or
(e) violated in any material respect the representations made in Section above or the provisions of
Sections 6 and 7 below.

                    (ii) The term “Without Cause Termination” means a termination of the Employee’s employment by
the Company other than due to expiration of the Employment Term and other than a Termination for
Cause.

                    (iii) The term “Good Reason” means, the occurrence, without the Employee’s written consent, of
any of the following: (i) a significant change in the nature or scope of the Employee’s duties from
those described in Section 2 above, including a material demotion or any assignment of duties
materially and adversely inconsistent with Employee’s position as Chief Financial Officer (except
in connection with the termination of Employee’s employment for Death, Disability or Cause); (ii) a
failure by the Company to pay to the Employee any amounts due under this Agreement or provide any
benefits in accordance with the terms hereof, which failure is not cured within fifteen (15) days
following receipt by the Company of notice from the Employee of such failure; or (iii) any other
material breach by the Company of this Agreement that remains uncured for fifteen (15) days after
written notice thereof by the Employee to the Company; or if the Company requires the Employee to
relocate to an area more than twenty-five miles from the location of his office immediately prior
to the date first written above, and the Employee declines to relocate.

          Section 6. Other Duties of Employee During and After Employment Term. The Employee
recognizes and acknowledges that the principle business of the Company is providing wireless
carriers with comprehensive real estate site acquisition and zoning services, radio frequency and
network design engineering, infrastructure equipment construction and installation, radio
transmission base station modification and project management services. The Employee further
recognizes and acknowledges that all information pertaining to the affairs, business, clients, or
customers of the Company or any of its subsidiaries or affiliates (any or all of

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such affairs, business, clients, and customers hereinafter collectively referred to as the
“Business”), as such information may exist from time to time, other than information that the
Company has previously made publicly available, is confidential information and is a unique and
valuable asset of the Business, access to and knowledge of which are essential to the performance
of the Employee’s duties under this Agreement. In consideration of the payments and obligations
made to him hereunder, the Employee shall not at any time, except to the extent reasonably
necessary in the performance of his duties under this Agreement, divulge to any person, firm,
association, corporation, or governmental agency, any information concerning the affairs,
businesses, clients, or customers of the Business (except such information as is required by law to
be divulged to a government agency or pursuant to lawful process), or make use of any such
information for his own purposes or for the benefit of any person, firm, association or corporation
(except the Business) and shall use his reasonable best efforts to prevent the disclosure of any
such information by others. All records, memoranda, letters, books, papers, reports, accountings,
experience or other data, and other records and documents relating to the Business, whether made by
the Employee or otherwise coming into his possession, are confidential information and are, shall
be, and shall remain the property of the Business. No copies thereof shall be made which are not
retained by the Business, and the Employee agrees, on termination of his employment or on demand of
the Company, to deliver the same to the Company.

          Section 7. Non-Competition and Non-Solicitation.

          (a) (i) The Employee acknowledges that as a result of his employment by the Company, the
Employee (1) will acquire knowledge of the trade and proprietary and confidential information as to
the business of the Company and its Affiliates and (2) will create relationships with customers,
suppliers and other persons dealing with the Company and its Affiliates. The Employee further
acknowledges and agrees that the Company and its Affiliates will suffer substantial damage, which
would be difficult to ascertain and is not compensable by monetary damages, if the Employee should
use such trade secrets or other proprietary and confidential information or take advantage of such
relationship and that because of the nature of the information that will be known to the Employee
and the relationships created, it is necessary for the Company and its Affiliates to be protected
by the prohibition against Competition as set forth herein.

               (ii) The Employee acknowledges that the retention of non-clerical employees employed by the
Company and its Affiliates in which the Company and its Affiliates have invested training and
depend on for the operation of their businesses is important to the businesses of the Company and
its Affiliates, that the Employee will obtain unique information as to such employees and will
develop unique relationships with such persons as a result of being an employee of the Company and,
therefore, it is necessary for the Company and its Affiliates to be protected from the Employee’s
Solicitation (as defined below) of such employees as set forth below.

               (iii) The Employee acknowledges that the provisions of this Agreement are reasonable and
necessary for the protection of the businesses of the Company and its Affiliates and that part of
the compensation paid under this Agreement and the agreement to pay

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compensation upon termination in certain instances is in consideration for the agreements and
covenants in this Section 7.

          (b) Definitions

               (i) For the purposes of this Agreement, “Competition” shall mean: participating, directly or
indirectly, as an individual proprietor, partner, stockholder, officer, employee, director, joint
venturer, investor, lender, consultant or in any capacity whatsoever (within the United States of
America, or in any country where the Company or its Affiliates do business) in a Competing Business
(as defined below); provided, however, that such participation shall not include (i) the mere
ownership if not more than three percent (3%) of the total outstanding stock of a publicly help
company; or (ii) any activity engaged in with the prior written approval of the Board of Directors
of the Company.

               (ii) For the purposes of this Agreement, “Competing Business” shall mean any line of business
engaged in by the Company and/or its subsidiaries and/for any entity in which the Company and/or
its subsidiaries holds securities (other than entities in which the Company or its subsidiaries
make a nominal investment) (i) from time to time (while Employee is employed by the Company) or
(ii) at the time of termination (upon termination of Employee’s employment).

               (iii) For the purposes of this Agreement, “Affiliate” of the Company shall mean any business,
entity, partnership, corporation, or subsidiary directly or indirectly controlling, controlled by,
or under common control with, the Company; provided that, for the purposes of this definition,
“control” (including with correlative meanings, the terms “controlled by” and “under common control
with”), as used with respect to the Company, shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of the Company, whether
through the ownership of voting securities or partnership interests, by contract of otherwise.

               (iv) For purposes of this Agreement, “Solicitation” shall mean: recruiting, soliciting or
inducing, of any non-clerical employee of the Company or its Affiliate to terminate their
employment with, or otherwise cease their relationship with, the Company or its Affiliates or
hiring or assisting another person or entity to hire any non-clerical employee of the Company or
its Affiliates or any person who within twelve (12) months before had been a non-clerical employee
of the Company or its Affiliates and were recruited or solicited for such employment or other
retention while an employee of the Company, provided, however, that Solicitation shall not include
any of the foregoing activities engaged in with the prior written approval of the Board of
Directors of the Company.

          (c) If any restriction set forth with regard to Non-Competition or Non-Solicitation is found
by any court of competent jurisdiction, or in arbitration, to be unenforceable because it extends
for too long a period of time or over too great a range of activities or in too broad a geographic
area, it shall be interpreted to amend over the maximum period of time, range of activities or
geographic area as to which it may be enforceable. If any provision of this

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Section shall be declared to be invalid or unenforceable, in whole or in part, as a result of the
foregoing, as a result of public policy or for any other reason, such invalidity shall not affect
the remaining provisions of this Section 7, which shall remain in full force and effect.

          (d) During the Employment Term and for two (2) years following the termination of Employee’s
employment for any reason whatsoever, whether by the Company or by the Employee and whether or not
with Cause, Good Reason or non-extension of the Employment Term, the Employee will not engage in
Solicitation.

          (e) During the Employment Term and for the Restricted Period (as hereafter defined) following
a termination of Employee’s employment, Employee will not enter into Competition with the Company.
The “Restricted Period” shall mean (i) for a termination with Cause, two (2) years following the
date of termination, (ii) for termination without Cause by the Company, or for Good Reason by the
Employee, the period in which the Company is making payments to Employee as specified in Section 5
above, (iii) for termination as a result of the voluntary resignation by the Employee without Good
Reason, one (1) year from the date of termination, and (iv) for termination of employment under any
circumstances after the expiration of the Employment Term, one (1) year from the date of
termination. The Employee expressly agrees and acknowledges that his promises, obligations, and
covenants under Section 6 above, and this Section 7, survive the Employment Term identified in
Section 1.

          (f) In the event of a breach or potential breach of Section 7, Employee acknowledges that the
Company and its Affiliates will be caused irreparable injury and that money damages may not be an
adequate remedy and agree that the Company and its Affiliates shall be entitled to injunctive
relief (in addition to its other remedies at law) to have the provisions of Sections 7 enforced. It
is hereby acknowledged that the provisions of Section 7 are for the benefit of the Company and all
of the Affiliates of the Company and each such entity may enforce the provisions of Sections 7 and
only the applicable entity can waive the rights hereunder with respect to its confidential
information and employees.

          (g) Furthermore, in addition to and not in limitation of any other remedies provided herein or
at law or in equity, in the event of a breach of Section 7 by the Employee, while he is receiving
compensation or benefits under Section 5 above, the Employee shall not be entitled to receive any
future amounts pursuant to Section 5 (a) or (d) hereof and shall reimburse the Company for any
amounts previously paid to the Employee pursuant to Section 5(a) or (d) hereof.

          (h) The Company’s obligation to make payments, or provide for any benefits under this
Agreement (except to the extent vested or exercisable) shall cease upon a violation of the
preceding provisions of this section.

          Section 9. Acknowledgment. The Employee acknowledges that he has carefully read and considered
all of the restraints imposed pursuant to Sections 6 and 7 and that each and every one of said
restraints is reasonable in respect to subject matter, length of time and area. The Employee
further acknowledges that damages at law would not be a measurable or

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adequate remedy for a breach of Sections 6 and 7 (non-solicitation and non-competition), and
accordingly consents to the entry by any court of competent jurisdiction of order enjoining him
from violating any of such covenants. If any of the covenants contained in Sections 6 and/or 7 are
held to be invalid or unenforceable because of the duration of such provision or the area covered
thereby, the parties agree that the court making such determination shall have the power to reduce
the duration and/or area of such provision and in its reduced form said provision shall then be
enforceable.

          Section 9. Withholdings. The Company may directly or indirectly withhold from any payments
made under this Agreement all Federal, state, city or other taxes and all other deductions
authorized by the Employee or by law.

          Section 10. Consolidation, Merger or Sale of Assets. Nothing in this Agreement shall
preclude the Company from consolidating or merging into or with, or transferring all or
substantially all of its assets to, or engaging in any other business combination with, any other
person or entity which assumes this Agreement and all obligations and undertakings of the Company
hereunder. Upon such a consolidation, merger, transfer of assets or other business combination and
assumption, the term “Company” used herein shall mean such other person or entity and this
Agreement shall continue in full force and effect.

          Section 11. Notices. All notices, requests, demands and other communications required or
permitted hereunder shall be given in writing and shall be deemed to have been duly given if
delivered or mailed, postage prepaid, by same day or overnight mail (i) if to the Employee, at the
address set forth above, or (ii) if to the Company, as follows:

Berliner Communications Inc.

20 Bushes Lane

Elmwood Park, New Jersey 07407

or to such other address as either party shall have previously specified in writing to the other.

          Section 12. Binding Agreement; No Assignment. This Agreement shall be binding upon, and
shall inure to the benefit of, the Employee and the Company and their respective permitted
successors, assigns, heirs, beneficiaries and representatives. This Agreement shall be for the
sole benefit of the parties to this Agreement and their respective heirs, successors, permitted
assigns (if any) and legal representatives and is not intended, nor shall be construed, to give any
person, other than the parties hereto and their respective heirs, successors, permitted assignees
(if any) and legal representatives, any legal or equitable right, remedy or claim hereunder. This
Agreement is personal to the Employee and may not be assigned by him without the prior written
consent of the Company. Any attempted assignment in violation of this Section 12 shall be null and
void.

          Section 13. Governing Law. This Agreement shall be governed by, and construed in accordance
with, the internal laws of the State of New Jersey, without reference to the choice of law
principles thereof.

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          Section 14. Dispute Resolution. Any dispute or controversy between the Company and the
Employee relating to this Agreement, unless otherwise specifically required by a plan document,
shall be settled by litigation between the parties. Said litigation to be venued in the Supreme
Court of the State of New Jersey, law division, Bergen County vicinage. The Employee hereby
consents to, and waives any objection to, the personal jurisdiction and venue of the aforesaid
courts, and waives any claim that aforesaid courts constitute on inconvenient forum.

          Section 15. Entire Agreement. This Agreement shall constitute the entire agreement among the
parties with respect to the matters covered hereby and shall supersede any and all previous
written, oral or implied understandings among them with respect to such matters.

          Section 16. Amendments. This Agreement may only be amended or otherwise modified, and
compliance with any provision hereof may only be waived, by a writing executed by all of the
parties hereto. The provisions of this Section 15 may only be amended or otherwise modified by
such a writing.

          Section 17. Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, and all of which shall together be deemed to constitute
one and the same instrument.

          Section 18. Waiver. Any of the terms or conditions of this Agreement may be waived at any
time by the party or parties entitled to the benefit thereof, but only by a writing signed by the
party or parties waiving such terms or conditions. No waiver of any provisions of this Agreement
or of any rights or benefits arising hereunder shall be deemed to or shall constitute a waiver of
any other provisions of this Agreement (whether or not similar) nor shall such waiver constitute a
continuing waiver unless otherwise expressly provided in writing.

          Section 19. Severability. The invalidity of any portion hereof shall not affect the
validity, force or effect of the remaining portions hereof. If it is ever held that any
restriction hereunder is too broad to permit enforcement of such restriction to its fullest extent,
such restriction shall be enforced to the maximum extent permitted by law.

          Section 20. Survival. The covenants set forth in Sections 6 and 7 of this Agreement shall
survive and shall continue to be binding upon Employee notwithstanding the termination of this
Agreement for any reason whatsoever. The covenants set forth in Sections 6 and 7 of this Agreement
shall be deemed and construed as separate agreements independent of any other provision of this
Agreement. The existence of any claim or cause of action by Employee against Company, whether
predicated on this Agreement or otherwise shall not constitute a defense to the enforcement by
Company of any or all covenants. It is expressly agreed that the remedy at law for the breach or
any such covenant is inadequate and that injunctive relief shall be available to prevent the breach
or any threatened breach thereof.

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IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by the undersigned,
thereunto duly authorized, and the Employee has signed this Agreement, all as of January 6, 2006.

	 	 	 	 	 
	BERLINER COMMUNICATIONS, INC.	 	 
	 
	 	 	 	 
	By:

	 	/s/ Richard Berliner
 

	 	 
	Richard Berliner	 	 
	 
	 	 	 	 
	Employee:	 	 
	Patrick G. Mackey	 	 
	By:

	 	/s/ Patrick G. Mackey
 

	 	 

-10-exv10w01

 

Exhibit 10.01

SILICON IMAGE, INC.

BONUS PLAN FOR FISCAL YEAR 2006

1.     Purpose

     The purpose of this Bonus Plan (this “Plan”) is to provide financial incentives for certain
executive1 and non-executive2 employees (“Executives” and “Non-Executives”,
respectively) of Silicon Image, Inc. (the “Company”) to meet and exceed the Company’s annual
financial goals.

2.     Eligibility

     Executives and Non-Executives of the Company selected by the Committee (as defined below) (the
“Participants” and each a “Participant”) shall be eligible to participate in this Plan; provided
however, that neither Executives and Non-Executives who are entitled to participate in any Company
business development incentive plan or sales incentive plan nor employees hired after September 30,
2006 are eligible to participate in this Plan. Participation in this Plan is on a fiscal year
basis and in the sole discretion of the Compensation Committee of the Company’s Board of Directors
(the “Committee”).

3.     Administration

     a.     This Plan shall be administered by the Committee which may delegate specific administrative
tasks to others as appropriate for administration of this Plan.

     b.     Subject to the provisions of this Plan, the Committee shall have exclusive authority to
designate Participants, the amount of each award under this Plan (“Award”), the date when any
performance goals are measured, and the date when Awards (if any) will be paid.

     c.     The Committee shall have all discretion and authority necessary or appropriate to
administer this Plan, including, but not limited to, the power to interpret this Plan, to
prescribe, amend and rescind rules and regulations relating to it, and to make all other
determinations necessary or advisable in the administration of this Plan, and such determination
shall be final and binding upon all persons having an interest in this Plan.

     d.     A majority of the Committee shall constitute a quorum, and the acts of a majority of the
members present at a meeting at which a quorum is present or any action taken without a meeting by
a writing executed by all of the members of the Committee shall constitute the act of the
Committee.

     e.     All expenses and liabilities incurred by the Committee in the administration of this Plan
shall be borne by the Company. The Committee may employ attorneys, consultants, accountants, or
other persons. The Committee and the Company and its officers and directors shall be entitled to
rely upon the advice, opinion, or valuations of any such persons. No member of the Committee shall
be personally liable for any action, determination, or interpretation taken or made with respect to
this Plan, unless such action, determination, or interpretation constitutes criminal misconduct or
willful negligence or demonstrates bad faith, and all members of the Committee shall be fully
protected by the Company in respect of any such action, determination or interpretation.

 

			
	1	 	“Executive” means an employee of
the Company at the level of Vice President or above employed by the Company or
any affiliated Company as determined by the Committee.
	 
	2	 	“Non-Executive” means an employee
of the Company, other than an Executive, employed by the Company or any
affiliated Company as determined by the Committee.

 

 

4.     Bonus Pool Establishment and Allocation

     Subject to the terms and conditions of this Plan, the Company will establish a cash bonus pool
if :

	 	•	 	Actual revenue3 for the fiscal year ended December 31, 2006 (“Actual
Revenue”) equals or exceeds 95% of the planned revenue for the fiscal year (“Target
Revenue”) established in the Annual Operating Plan approved by the Board of Directors
(“Annual Operating Plan”); and/or
	 
	 	•	 	Actual net income4 for the fiscal year ended December 31, 2006 (“Actual
Net Income”) equals or exceeds 95% of the planned net income, calculated on the same
basis, for the fiscal year (“Target Net Income”) established in the Annual Operating
Plan.

     4.1 Executive Participants’ Bonus Pool

     The amount of the cash bonus pool for Executive Participants will be equal to a function of
the extent to which (a) Actual Revenue equals or exceeds 95% of Target Revenue, and/or (b) Actual
Net Income equals or exceeds 95% of Target Net Income, determined as set forth below.

	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	For Executive Participants	 
	 	 	 	 	 	 	 	Representative Pool	 	 	Representative Pool	 
	 	Percent Achievement of	 	 	Percent Achievement of	 	 	Attributable to	 	 	Attributable to	 
	 	Target Revenue or Net	 	 	Annual Year-to-Date	 	 	Attainment of	 	 	Attainment of	 
	 	Income	 	 	Target Funding Level	 	 	Target Revenue	 	 	Target Net Income	 
	 	Below 95%
	 	 	0.0%	 	 	$0	 	 	$0	 
	 	95%
	 	 	80.0%	 	 	$600,000	 	 	$600,000	 
	 	100%
	 	 	100.0%	 	 	$750,000	 	 	$750,000	 
	 	115%
	 	 	200.0%	 	 	$1,500,000	 	 	$1,500,00	 
	 	125%
	 	 	300.0%	 	 	$2,250,000	 	 	$2,250,000	 
	 

Notes to Table:

 

			
	(1)	 	Dollars are representative based on estimated headcount and payroll. Actual
figures may vary.
	 
	(2)	 	Actual amounts between the breakpoints shown in the table above will be calculated
on a pro-rata basis between the breakpoints.
	 
	(3)	 	For upside payments, growth must be deemed to be “organic” rather than “acquired”,
as determined by the Committee.
	 
	(4)	 	Funding targets for 2006 include accrual for bonus pool at realized achievement.
Any upside bonus pool funding must “self fund,” i.e., determination of Net Income will
be after bonus accrual at target plus any bonus upside.

     The amounts of Awards, if any, allocable to individual Executive Participants will be
determined by the Committee in its sole discretion and may be less than, equal to or greater than
target bonus levels.

 

			
	3	 	Represents the Company’s total product,
development, licensing and royalty revenues for fiscal year 2006 as reported in
the Company’s financial statements.
	 
	4	 	Actual net income is calculated on a GAAP
basis excluding the following: certain charges related to acquisitions,
including expenses for amortization of intangible assets recorded in connection
with our acquisitions; stock-based compensation expense, including the expense
(benefit) associated with stock option modifications, including repricing, and
certain stock options issued to employees of acquired companies and to
non-employees in exchange for services; and gains or losses on strategic
investments including the gain (loss) related to warrants and stock received by
the company from a transaction involving the licensing of certain of our
intellectual property.

 

 

     4.2 Non-Executive Participants’ Bonus Pool

     The amount of the cash bonus pool for Non-Executive Participants will be equal to a function
of the extent to which (a) Actual Revenue equals or exceeds 95% of Target Revenue, and/or (b)
Actual Net Income equals or exceeds 95% of Target Net Income, determined as set forth below.

	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	For Non-Executive Participants	 
	 	 	 	 	 	 	 	Representative Pool	 	 	Representative Pool	 
	 	Percent Achievement	 	 	Percent Achievement	 	 	Attributable to	 	 	Attributable to	 
	 	of Target Revenue or	 	 	of Annual Year-to-Date	 	 	Attainment of	 	 	Attainment of	 
	 	Target Net Income	 	 	Target Funding Level	 	 	Target Revenue	 	 	Target Net Income	 
	 	Below 95%
	 	 	0.0%	 	 	$0	 	 	$0	 
	 	95%
	 	 	90.0%	 	 	$2,025,000	 	 	$2,025,000	 
	 	100%
	 	 	100.0%	 	 	$2,250,000	 	 	$2,250,000	 
	 	115%
	 	 	200.0%	 	 	$4,500,000	 	 	$4,500,000	 
	 

Notes to Table:

 

			
	(1)	 	Dollars are representative based on estimated headcount and payroll. Actual
figures may vary.
	 
	(2)	 	Actual amounts between the breakpoints shown in the table above will be calculated
on a pro-rata basis between the breakpoints.
	 
	(3)	 	For upside payments, growth must be deemed to be “organic” rather than “acquired”,
as determined by the Committee.
	 
	(4)	 	Funding targets for 2006 include accrual for bonus pool at realized achievement.
Any upside bonus pool funding must “self fund,” i.e., determination of Net Income will
be after bonus accrual at target plus any bonus upside.

     The amounts of Awards, if any, allocable to individual Non-Executive Participants will be
determined by Company management and submitted to the Committee for approval and may be less than,
equal to or greater than target bonus levels.

5.     Payment

     Awards under this Plan will be distributed as soon as reasonably practicable following (i)
public disclosure of the Company’s financial results for the fiscal year ended December 31, 2006,
(ii) calculation of Actual Revenue and Actual Net Income, and (iii) any determination of the
amounts of the bonus pool applicable to Executive Participants and Non-Executive Participants. All
Awards under this Plan shall be calculated and paid no later than March 14, 2007. Participants
must be employed by the Company as employees at the time of distribution of Awards in order to be
eligible to receive payment of Awards, unless otherwise determined by the Compensation Committee.
Participants hired prior to January 1, 2006 shall be eligible to receive payment of a full Award.
Participants hired by the Company after January 1, 2006 but on or prior to September 30, 2006 shall
be eligible to receive payment of a pro-rated Award (based on the full days of such Participant’s
employment). Participants hired after September 30, 2006 shall not be eligible to receive payment
of an Award. The Committee may impose additional eligibility requirements on payment of any Awards
in its sole discretion. It is the objective of the Committee that the entire calculated pool be
distributed to eligible Participants.

 

 

6.     General Provisions

     a.     No Prior Funding

     No amounts payable under this Plan shall be funded, set aside or otherwise segregated prior to
payment. The obligation to pay the Awards shall at all times be an unfunded and unsecured
obligation of the Company and the Company shall not be required to incur indebtedness to fund the
bonus pool unless otherwise directed to do so by the Committee. Participants shall have the status
of general creditors. This Plan is not qualified under Section 401(a) of the Internal Revenue Code
of 1986, as amended, and is not subject to any provisions of the Employee Retirement Income
Security Act of 1974.

     b.     Discretionary Payments

     The terms and conditions of this Plan shall not be deemed to limit the ability of the
Committee and/or Company management to make discretionary bonus payments to individual executive
and non-executive employees based on their performance, contributions or other relevant criteria,
without regard to whether or not the Company achieves its revenue and net income objectives under
the Annual Operating Plan.

     c.     No Obligation to Employ

     Eligibility for participation in this Plan is not evidence of, nor does it constitute, a
contract of employment between the Company and any individual. Nothing in this Plan will confer or
be deemed to confer on any individual any right to continue in the employ of the Company or limit
in any way the right of the Company to terminate an individual’s employment at any time, with or
without cause. This Plan is not intended to and does not create any legal rights for any employee.

     d.     Amendment or Termination of Plan

     This Plan may be amended or terminated by the Board or the Committee at any time prior to
payment of Awards hereunder.

     e.     Headings

     The headings of the sections hereof are inserted for convenience only and shall not be deemed
to constitute a part hereof nor to affect the meaning thereof.

     f.     Withholding of Taxes

     To the extent that the Company is required to withhold federal, state, local or foreign taxes
in connection with any benefit realized by a Participant under this Plan, and the amounts available
to the Company for such withholding are insufficient, it will be a condition to the realization of
such benefit that the Participant make arrangements satisfactory to the Company for payment of the
balance of such taxes required or requested to be withheld.

     g.     Choice of Law

     All questions concerning the construction, validity and interpretation of this Plan will be
governed by the law of the State of California. Any Award will not be effective unless such Award
is made in compliance with all applicable laws, rules and regulations.

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