Document:

Exhibit
10.1

 

Cascade Microtech, Inc.

2006 Executive Compensation Plan

for the Six-Month Period Ending June 30, 2006

 

Participants

 

	
  Eric
  Strid

  	
   

  	
  Chief
  Executive Officer and President

  
	
  Steven
  Sipowicz

  	
   

  	
  Chief
  Financial Officer, Vice President of Finance, Treasurer and Corporate
  Secretary

  
	
  John
  Pence

  	
   

  	
  Vice
  President and General Manager, Engineering Products Division

  
	
  Bruce
  McFadden

  	
   

  	
  Vice
  President and General Manager, Production Probe Division

  

 

Performance Criteria

 

Bonuses for these participants are calculated on a
percentage of their base salary based on attainment of planned levels of net
income, operating income and divisional revenue.  Determinations as to whether the performance
targets have been met are made quarterly, with respect to 20% of the bonus, and
semi-annually, with respect 80% of the bonus.

 

This table lists the portion of the total bonus payout
that is based on the different performance measures, for each executive:

 

	
   

  	
   

  	
  Semi-annual 80%

  	
   

  	
  Quarterly

  20%

  	
   

  
	
   

  	
   

  	
  Net

  income

  	
   

  	
  Operating

  income

  	
   

  	
  Engineering

  products

  revenue

  	
   

  	
  Production

  probes revenue

  	
   

  	
  Quarterly

  Objectives

  	
   

  
	
  Chief Executive Officer

  	
   

  	
  30%

  	
   

  	
  30%

  	
   

  	
  10%

  	
   

  	
  10%

  	
   

  	
  20%

  	
   

  
	
  Chief Financial Officer

  	
   

  	
  30%

  	
   

  	
  30%

  	
   

  	
  10%

  	
   

  	
  10%

  	
   

  	
  20%

  	
   

  
	
  VP Engineering Products

  	
   

  	
   

  	
   

  	
  60%

  	
   

  	
  20%

  	
   

  	
   

  	
   

  	
  20%

  	
   

  
	
  VP Production Probe

  	
   

  	
   

  	
   

  	
  60%

  	
   

  	
   

  	
   

  	
  20%

  	
   

  	
  20%

  	
   

  

 

 

In the cases of net income, operating income, and
product line revenues, the period of the performance measures will be for the
first half of 2006 (first two quarters).

 

The payout for the net income portion will be:

 

•                  100%
payout for achievement of 100% of the planned net income (“target”)

•                  Linear
from 0% to 100% for net income between 75% and 100% of target

•                  Zero
for net income below 75% of target

•                  Linearly
proportional to net income at or above 100% of target

 

The payout for the operating income portion will be:

 

•                  100%
payout for achievement of 100% of the planned consolidated operating income (“target”)

•                  Linear
from 50% payout for operating income at 75% of target to 100% payout at 100% of
target and higher

•                  Zero
for operating income below 75% of target

 

The payout for the product line revenue portion will
be:

 

•                  100%
payout for achievement of 100% of the planned respective consolidated product
line revenue (“target”)

•                  Linear
from 0% payout for product line revenues at 75% of target to 200% payout at
125% of target

•                  200%
payout for product line revenues above 125% of target

•                  Zero
for product line revenues below 75% of target

 

 

The payout for quarterly objectives will be
proportional to the fraction of quarterly objectives completed. The CEO is the
final arbiter of such completion status. A set of quarterly objectives is
formulated by a consensus of the management team for each executive at the
beginning of each quarter.Exhibit 10.1

 

FIRST AMENDMENT TO INDEMNIFICATION AGREEMENT

 

This FIRST AMENDMENT TO INDEMNIFICATION AGREEMENT (the “First Amendment”),
dated February 1, 2006 and effective as of December 23, 2005, between Mr. Lap
Shun (John) Hui (“Mr. Hui”) and Gateway, Inc., a
Delaware corporation (“Gateway”). Capitalized
terms used but not defined herein shall have the meanings ascribed to such
terms in the Indemnification Agreement between Gateway and Mr. Hui, dated as of
March 11, 2004 (the “Agreement”).

 

WHEREAS, Gateway and Mr. Hui entered into the Agreement;

 

WHEREAS, concurrently with the execution of the Agreement, Gateway, Mr.
Hui and UMB Bank, N.A., as escrow agent (the “Escrow Agent”)
entered into an Indemnification Escrow Agreement (the “Indemnification
Escrow Agreement”) dated as of March 11, 2004;

 

WHEREAS, Gateway and Mr. Hui now desire to amend the Agreement as
follows.

 

NOW, THEREFORE, in consideration of the foregoing and of the
representations, warranties, covenants and agreements set forth in this Amendment,
the parties hereto, intending to be legally bound, agree to amend the Agreement
as follows:

 

1.             The following is
deleted from Section 1(a)(iii):  “provided,
however, that the fees and expenses of counsel (including without
limitation, the fees and expenses of experts and others retained to provide
services in connection with such proceeding) and the out-of-pocket expenses
incurred (collectively, “Defense Costs”) in defending such litigation shall not
be included as Losses pursuant to this clause (iii);”

 

2.             The phrase
beginning with “provided, however,” in Section 1(a)(iv) is amended to read as
follows:  “provided, however, that
the fees and expenses of counsel (including without limitation, the fees and
expenses of experts and others retained to provide services in connection with
such proceeding) and the out-of-pocket expenses incurred (collectively, “Defense
Costs”) in defending such litigation shall not be included as Losses pursuant
to this clause (iv); and”

 

3.             Section 10(b) of
the Agreement is hereby amended to read in its entirety as follows:  “Upon the earlier of (i) December 23, 2008 or
(ii) the resolution of all of the litigation matters referred to in Section
1(a)(iii) by written agreement or final nonappealable judgment by a court of
competent jurisdiction and all claims for indemnification with respect thereto
have been paid (including, but not limited to, claims for payment of any
attorneys’ fees and costs payable to the plaintiffs’ counsel, any award to any certified
class, and any settlement administration costs), Mr Hui shall be entitled to
receive from the escrow all shares of Gateway Common Stock in excess of the
number of shares having a Fair Market Value equal to any claims validly made
under Section 2 of

 

 

this Agreement that are pending
at such time; provided, however, that as each such pending claim
is paid, Mr. Hui shall be entitled to receive from the escrow all shares of
Gateway Common Stock in excess of the number of shares having a Fair Market
Value in excess of all remaining claims validly made under Section 2 of this
Agreement.”

 

4.             Section 10(c) of
the Agreement is hereby amended to read in its entirety as follows:  “On and following March 11, 2006, the
Indemnified Parties (i) may no longer assert claims for indemnification under
Sections 1(a)(iv) and 1(a)(v) and (ii) shall no longer be entitled to seek
recourse to the shares of Gateway Common Stock deposited in escrow pursuant to
the Indemnification Escrow Agreement for any claim for indemnification under
Section 1(a)(iv) or 1(a)(v) .”

 

5.             Section 10(d) of
the Agreement is hereby amended in its entirety to read as follows:  “The parties agree that half of the reasonable
attorneys’ fees, expert fees and other costs expended following the date hereof
by the Indemnified Parties in defense of the litigation referred to in Section
1(a)(iii) (the “Attorneys’ Fees and Costs”) shall constitute Losses for
purposes of this Agreement which, subject to Section 4, will also constitute
Claim Amounts. Notwithstanding the foregoing, the Indemnified Parties’ sole
recourse with respect to the payment of Attorneys’ Fees and Costs will be to
the shares of Gateway Common Stock deposited in escrow pursuant to the
Indemnification Escrow Agreement. Any claim for Attorneys’ Fees and Costs that
constitutes a Loss and, subject to Section 4, a Claim Amount as defined in
Section 8 of the Agreement allowing an Indemnified Party to send a Gateway
Payment Request to Mr. Hui and to the Escrow Agent. The Indemnified Party may
submit a Gateway Payment Request for Attorneys’ Fees and Costs no more
frequently than monthly.”

 

6.             Section 11 is
hereby amended to provide for notice to Gateway as follows:

 

“If to Gateway, to:

 

Gateway, Inc.

7565 Irvine Center Drive

Irvine, California  92618

Attn: 
Michael R. Tyler, General Counsel

Facsimile No.:  (949) 471-7020

 

With a copy (which shall not constitute notice) to:

 

Skadden, Arps, Slate, Meagher & Flom LLP

300 South Grand Avenue, Suite 3400

Los Angeles, California  90071

Attn: 
Brian J. McCarthy, Esq.

Facsimile No.:  (213) 687-5600”

 

 

7.             Except as otherwise
amended herein, the Indemnification Agreement shall remain in full force and
effect. If there is any conflict between this Amendment and the Agreement, this
Amendment shall prevail.

 

8.             Mr. Hui hereby
warrants and represents to Gateway that:

 

a.             this
Amendment has been duly authorized, executed and delivered by Mr. Hui and
constitutes the legal, valid and binding agreement of Mr. Hui, enforceable,
assuming due execution and delivery by other parties hereto, against Mr. Hui in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, or other laws affecting creditors’
rights and remedies generally an by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or law);

 

b.             the
execution, delivery and performance of this Amendment do not, and the
consummation of the transactions contemplated by this Amendment will not,
violate or conflict with, constitute a breach of or default under, result in
the loss of any material benefit under, or permit the acceleration of or
entitle any party to accelerate any obligation under or pursuant to, any
material mortgage, lien, lease, agreement, instrument, order, arbitration
award, judgment or decree to which Mr. Hui is bound that could reasonably be
expected to have a material adverse affect on the ability of Mr. Hui to
consummate the transactions contemplated by this Amendment or perform its
obligations hereunder; and

 

c.             Mr.
Hui has had an opportunity to review this Amendment with legal counsel of his
own choosing.

 

9.             Gateway hereby
warrants and represents to Mr. Hui that:

 

a.             this
Amendment has been duly authorized, executed and delivered by it and
constitutes the legal, valid and binding agreement of it, enforceable, assuming
due execution and delivery by other parties hereto, against it in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, or other laws affecting creditors’ rights and
remedies generally an by general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or law); and

 

b.             the
execution, delivery and performance of this Amendment do not, and the
consummation of the transactions contemplated by this Amendment will not,
violate or conflict with, constitute a breach of or default under, result in
the loss of any material benefit under, or permit the acceleration of or
entitle any party to accelerate any obligation under or pursuant to, any
material mortgage, lien, lease, agreement, instrument, order, arbitration
award, judgment or decree to which Gateway is bound that could reasonably be
expected to have a material adverse affect on the ability of Gateway to
consummate the transactions contemplated by this Amendment or perform its
obligations hereunder.

 

 

10.           This Amendment may
be executed by the parties in multiple counterparts, each of which shall be
deemed an original and all of which together constitute on and the same
instrument.

 

 

	
   

  	
  GATEWAY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John P. Goldberry

  	
   

  
	
   

  	
   

  	
   

  	
  Name: 

  	
  John P. Goldsberry

  
	
   

  	
   

  	
   

  	
  Title:   

  	
  Senior Vice President, Chief

  
	
   

  	
   

  	
   

  	
   

  	
  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Lap Shun Hui

  	
   

  
	
   

  	
  LAP SHUN (JOHN) HUI

  
							

 

 

[Signature Page to First Amendment to Indemnification Agreement]

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