Document:

exv10w8

 

Exhibit 10.8

FORM
OF

ENCORE ENERGY PARTNERS GP LLC

LONG-TERM INCENTIVE PLAN

1. Purpose of the Plan.

     The Encore Energy Partners GP LLC Long-Term Incentive Plan (the “Plan”) has been adopted by
Encore Energy Partners GP LLC, a Delaware limited liability company (the “Company”), the general
partner of Encore Energy Partners LP, a Delaware limited partnership (the “Partnership”), and is
intended to promote the interests of the Partnership and the Company and their Affiliates (as
defined below) by providing to employees, consultants, and directors of the Company and its
Affiliates who perform services for or on behalf of the Partnership and its subsidiaries incentive
compensation awards for superior performance that are based on Units (as defined below). The Plan
is also contemplated to enhance the ability of the Company and its Affiliates to attract and retain
the services of individuals who are essential for the growth and profitability of the Partnership
and its subsidiaries and to encourage them to devote their best efforts to advancing the business
of the Partnership and its subsidiaries.

2. Definitions.

     As used in the Plan, the following terms shall have the meanings set forth below:

     “Affiliate” means, with respect to any Person, any other Person that directly or
indirectly through one or more intermediaries controls, is controlled by or is under common
control with, the Person in question. As used herein, the term “control” means the
possession, direct or indirect, of the power to direct or cause the direction of the
management and policies of a Person, whether through ownership of voting securities, by
contract or otherwise.

     “Award” means Unit, Restricted Unit, Phantom Unit, Option, Unit Appreciation Right or
DER granted under the Plan.

     “Award Agreement” means the written agreement or other instrument by which an Award
shall be evidenced.

     “Board” means the Board of Directors of the Company.

     “Change of Control” means, and shall be deemed to have occurred upon the occurrence of
one or more of the following events: (i) any Person or group, other than Encore Acquisition
Company (“Parent”) or its Affiliates, becomes the beneficial owner, by way of merger,
consolidation, recapitalization, reorganization or otherwise, of 50% or more of the combined
voting power of the equity interests in the Company or the Partnership, (ii) the limited
partners of the Partnership approve, in one or a series of transactions, a plan of complete
liquidation of the Partnership, (iii) the sale or other disposition by either the Company or
the Partnership of all or substantially all of its assets in one or more transactions to any
person other than the Company or an Affiliate of the

 

 

Company, (iv) a transaction resulting in a Person other than the Company or one of its
Affiliates being the general partner of the Partnership, (v) a transaction resulting in the
general partner of the Partnership ceasing to be an Affiliate of Parent, or (vi) a “Change
in Control” as defined in Parent’s 2000 Incentive Stock Plan, as such plan may be amended,
supplemented or restated from time to time.

     “Code” means the Internal Revenue Code of 1986, as amended.

     “Committee” means the Audit and Conflicts Committee of the Board or, if none, the Board
or such committee of the Board, if any, as may be appointed by the Board to administer the
Plan.

     “Consultant” means an individual, other than an Employee or a Director, providing bona
fide services to the Partnership or any of its subsidiaries as a consultant or advisor, as
applicable, provided that such individual is a natural person.

     “DER” or “Distribution Equivalent Right” means a right to receive an amount in cash or
additional Awards equal to the cash distributions made by the Partnership with respect to a
Unit during a specified period.

     “Director” means a member of the Board who is not an Employee.

     “Employee” means any employee of the Company or an Affiliate who performs services for
the Partnership or its Affiliates.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     “Fair Market Value” of a Unit means the closing sales price of a Unit on the principal
national securities exchange or other market in which trading in Units occurs on the
applicable date (or if there is no trading in the Units on such date, on the next preceding
date on which there was trading) as reported in The Wall Street Journal (or other reporting
service approved by the Committee). In the event Units are not traded on a national
securities exchange or other market at the time a determination of fair market value is
required to be made hereunder, the determination of fair market value shall be made in good
faith by the Committee. Notwithstanding the foregoing, with respect to an Award granted on
the effective date of the initial public offering of Units, Fair Market Value on such date
shall mean the initial offering price per Unit as stated on the cover page of the prospectus
which is part of the registration statement on Form S-1 for such offering.

     “Option” means an option to purchase Units granted under the Plan.

     “Participant” means any Employee, Consultant or Director granted an Award under the
Plan.

     “Person” means an individual or a corporation, limited liability company, partnership,
joint venture, trust, unincorporated organization, association, government agency or
political subdivision thereof or other entity.

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     “Phantom Unit” means a phantom (notional) Unit granted under the Plan which entitles
the Participant to receive, in the discretion of the Committee, a Unit or an amount of cash
equal to the Fair Market Value of a Unit.

     “Restricted Period” means the period established by the Committee with respect to an
Award during which the Award remains nontransferable and subject to forfeiture or is either
not exercisable by or payable to the Participant, as the case may be.

     “Restricted Unit” means a Unit granted under the Plan that is subject to a Restricted
Period.

     “SEC” means the Securities and Exchange Commission, or any successor thereto.

     “UAR” of “Unit Appreciation Right” means an Award that, upon exercise, entitles the
holder to receive, in cash or Units in the discretion of the Committee, the excess of the
Fair Market Value of a Unit on the exercise date over the exercise price established for
such Unit Appreciation Right.

     “Unit” means a common unit of the Partnership.

3. Administration.

     (a) General. The Plan shall be administered by the Committee. Subject to the terms of the Plan
and applicable law, and in addition to other express powers and authorizations conferred on the
Committee by the Plan, the Committee shall have full power and authority to: (i) designate
Participants; (ii) determine the type or types of Awards to be granted to a Participant; (iii)
determine the number of Units to be covered by Awards; (iv) determine the terms and conditions of
any Award (including but not limited to performance requirements for such Award); (v) determine
whether, to what extent, and under what circumstances Awards may be settled, exercised, canceled,
or forfeited; (vi) interpret and administer the Plan and any instrument or agreement relating to an
Award made under the Plan; (vii) establish, amend, suspend, or waive such rules and regulations and
appoint such agents as it shall deem appropriate for the proper administration of the Plan; and
(viii) make any other determination and take any other action that the Committee deems necessary or
desirable for the administration of the Plan. The Committee may, in its discretion, provide for the
extension of the exercisability of an Award, accelerate the vesting or exercisability of an Award,
eliminate or make less restrictive any restrictions applicable to an Award, waive any restriction
or other provision of this Plan or an Award or otherwise amend or modify an Award in any manner
that is either (i) not adverse to the Participant to whom such Award was granted or (ii) consented
to by such Participant. Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations, and other decisions under or with respect to the Plan or any Award
shall be within the sole discretion of the Committee, may be made at any time and shall be final,
conclusive, and binding upon all Persons, including the Company, the Partnership, any Affiliate,
any Participant, and any beneficiary of any Award. No member of the Committee or officer of the
Company to whom the Committee has delegated authority in accordance with the provisions of Section
3(b) of this Plan shall be liable for anything done or omitted to be done by him or her, by any
member of the

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Committee or by any officer of the Company in connection with the performance of any duties
under this Plan, except for his or her own willful misconduct or as expressly provided by statute.

     (b) Delegation. Following the authorization of a pool of Units to be available for Awards, the
Board or the Committee may authorize a committee of one or more members of the Board to grant
individual Awards from such pool pursuant to such conditions or limitations as the Board or the
Committee may establish. The Committee may delegate to the Chief Executive Officer and to other
employees of the Company its administrative duties under this Plan (excluding its granting
authority) pursuant to such conditions or limitations as the Committee may establish. The Committee
may engage or authorize the engagement of a third party administrator to carry out administrative
functions under the Plan.

4. Units.

     (a) Limits on Units Deliverable. Subject to adjustment as provided in Section 4(c), the
maximum number of Units that may be delivered or reserved for delivery or underlying Awards in the
aggregate issued under the Plan is ___. If any Award expires, is canceled, exercised, paid
or otherwise terminates without the delivery of Units, then the Units covered by such Award, to the
extent of such expiration, cancellation, exercise, payment or termination, shall again be Units
with respect to which Awards may be granted. Units that are delivered by a Participant in
satisfaction of the exercise or other purchase price of an Award or the tax withholding obligations
associated with an Award or are withheld to satisfy the Company’s tax withholding obligations are
available for delivery pursuant to other Awards. The Committee may from time to time adopt and
observe such rules and procedures concerning the counting of Units against the Plan maximum or any
sublimit as it may deem appropriate, including rules more restrictive than those set forth above to
the extent necessary to satisfy the requirements of any national stock exchange on which the Units
are listed or any applicable regulatory requirement. The Board and the appropriate officers of the
Company are authorized to take from time to time whatever actions are necessary, and to file any
required documents with governmental authorities, stock exchanges and transaction reporting systems
to ensure that Units are available for issuance pursuant to Awards.

     (b) Sources of Units Deliverable Under Awards. Any Units delivered pursuant to an Award shall
consist, in whole or in part, of Units acquired in the open market, common units already owned by
the Company, common units acquired by the Company directly from the Partnership or any other person
or any combination of the foregoing.

     (c) Adjustments. In the event that any distribution (whether in the form of cash, Units, other
securities, or other property), recapitalization, split, reverse split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase, or exchange of Units or other
securities of the Partnership, issuance of warrants or other rights to purchase Units or other
securities of the Partnership, or other similar transaction or event affects the Units, then the
Committee shall, in such manner as it may deem equitable, adjust any or all of (i) the number and
type of Units (or other securities or property) with respect to which Awards may be granted, (ii)
the number and type of Units (or other securities or property) subject to outstanding Awards, and
(iii) the grant or exercise price with respect to any Award or, make provision for a cash

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payment to the holder of an outstanding Award; provided, that the number of Units subject to
any Award shall always be a whole number.

5. Eligibility.

     Any Employee, Consultant or Director shall be eligible to be designated a Participant and
receive an Award under the Plan.

6. Awards.

     Awards may, in the discretion of the Committee, be granted either alone or in addition to, in
tandem with or in substitution for any other Award granted under the Plan or any award granted
under any other plan of the Company or any Affiliate. Awards granted in addition to or in tandem
with other Awards or awards granted under any other plan of the Company or any Affiliate may be
granted either at the same time as or at a different time from the grant of such other Awards or
awards.

     (a) Units. The Committee shall have the discretion to determine the Employees, Consultants and
Directors to whom Units shall be granted and the number of Units to be granted. All Units granted
shall be fully vested upon grant and shall not be subject to forfeiture.

     (b) Restricted Units. The Committee shall have the authority to determine the Employees,
Consultants and Directors to whom Restricted Units shall be granted, the number of Restricted Units
to be granted to each such Participant, the Restricted Period, the conditions under which the
Restricted Units may become vested or forfeited, and such other terms and conditions as the
Committee may establish with respect to such Awards. To the extent provided by the Committee, in
its discretion, a grant of Restricted Units may provide that distributions made by the Partnership
with respect to the Restricted Units shall be subject to the same forfeiture and other restrictions
as the Restricted Unit and, if restricted, such distributions shall be held, without interest,
until the Restricted Unit vests or is forfeited with the accumulated distributions being paid or
forfeited at the same time, as the case may be. Absent such a restriction on the distributions in
the Award Agreement, distributions during the Restricted Period shall be paid to the holder of the
Restricted Unit without restriction.

     (c) Phantom Units. The Committee shall have the authority to determine the Employees,
Consultants and Directors to whom Phantom Units shall be granted, the number of Phantom Units to be
granted to each such Participant, the Restricted Period, the time or conditions under which the
Phantom Units may become vested or forfeited, which may include, without limitation, the
accelerated vesting upon the achievement of specified performance goals, and such other terms and
conditions as the Committee may establish with respect to such Awards, including whether DERs are
granted with respect to such Phantom Units.

     (d) Options. The Committee shall have the authority to determine the Employees, Consultants
and Directors to whom Options shall be granted, the number of Units to be covered by each Option,
whether DERs are granted with respect to such Option, the purchase price therefor and the
conditions and limitations applicable to the exercise of the Option as the Committee shall
determine, that are not inconsistent with the provisions of the Plan. The term of an Option may not
exceed 10 years. The purchase price per Unit purchasable under an Option

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shall be determined by the Committee at the time the Option is granted, provided such purchase
price may not be less than 100% of its Fair Market Value as of the date of grant. The Committee
shall determine the time or times at which an Option may be exercised in whole or in part, which
may include, without limitation, accelerated vesting upon the achievement of specified performance
goals, and the method or methods by which payment of the exercise price with respect thereto may be
made or deemed to have been made, which may include, without limitation, cash, check acceptable to
the Company, a broker-assisted cashless exercise through procedures approved by the Committee,
delivery of previously owned Units having a Fair Market Value on the exercise date equal to the
relevant exercise, or any combination thereof.

     (e) Unit Appreciation Rights. The Committee shall have the authority to determine the
Employees, Consultants and Directors to whom Unit Appreciation Rights shall be granted, the number
of Units to be covered by each grant and the conditions and limitations applicable to the exercise
of the Unit Appreciation Right as the Committee shall determine, that are not inconsistent with the
provisions of the Plan. The exercise price per Unit Appreciation Right shall be not less than 100%
of its Fair Market Value as of the date of grant. The term of a Unit Appreciation Right may not
exceed 10 years.

     (f) Distribution Equivalent Rights. The Committee shall have the authority to determine the
Employees, Consultants and Directors to whom DERs are granted, whether such DERs are tandem or
separate Awards, whether the DERs shall be paid directly to the Participant, be credited to a
bookkeeping account (with or without interest in the discretion of the Committee) the vesting
restrictions and payment provisions applicable to the Award, and such other provisions or
restrictions as determined by the Committee in its discretion all of which shall be specified in
the Award Agreements.

7. Limits on Transfer of Awards.

     Each Award shall be exercisable or payable only to the Participant during the Participant’s
lifetime, or to the person to whom the Participant’s rights shall pass by will or the laws of
descent and distribution. No Award and no right under any such Award may be assigned, alienated,
pledged, attached, sold or otherwise transferred or encumbered by a Participant and any such
purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void
and unenforceable against the Company or any Affiliate. Notwithstanding the foregoing, to the
extent specifically provided by the Committee with respect to an Award, an Award may be transferred
by a Participant without consideration to immediate family members or related family trusts,
limited partnerships or similar entities or on such terms and conditions as the Committee may from
time to time establish.

8. Securities Restrictions.

     (a) All certificates for Units or other securities of the Partnership delivered under the Plan
pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and
other restrictions as the Committee may deem advisable under the Plan or the rules, regulations,
and other requirements of the SEC, any stock exchange upon which such Units or other securities are
then listed, and any applicable federal or state laws, and the Committee may

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cause a legend or legends to be put on any such certificates to make appropriate reference to
such restrictions.

     (b) Notwithstanding anything in the Plan or any Award Agreement to the contrary, delivery of
Units pursuant to the exercise or vesting of an Award may be deferred for any period during which,
in the good faith determination of the Committee, the Company is not reasonably able to obtain
Units to deliver pursuant to such Award without violating the rules or regulations of any
applicable law or securities exchange. No Units or other securities shall be delivered pursuant to
any Award until payment in full of any amount required to be paid pursuant to the Plan or the
applicable Award Agreement (including, without limitation, any exercise price or tax withholding)
is received by the Company.

9. Change of Control.

     Unless specifically provided otherwise in the Award Agreement, upon a Change of Control or
such time prior thereto as established by the Committee, all outstanding Awards shall automatically
vest or become exercisable in full, as the case may be. In this regard, all Restricted Periods
shall terminate.

     Except as otherwise provided in the Award Agreement, the difference between the Fair Market
Value of Units on the payment date and the exercise price of an Option or UAR that is or becomes
fully vested and exercisable as of the date of a Change of Control (or any earlier date related to
the Change of Control and established by the Committee) shall be paid in a single payment in Units,
or cash and/or other property, or any combination of Units and cash and/or other property, as
determined by the Committee. Except as otherwise provided in the Award Agreement, any Award of
Phantom Units or Restricted Units that pursuant to this Section 9 are deemed to have the applicable
Restriction Period lapse (and to have all applicable performance criteria achieved at the maximum
level, if any) as of the date of a Change of Control (or any earlier date related to the Change of
Control and established by the Committee), shall be settled by (i) issuance of unrestricted Units
based on the number of Units that were subject to the Award on the date of grant of the Award or
(ii) payment of cash and/or other property equal to the Fair Market Value of a Unit on the payout
date for each Phantom Unit or Restricted Unit or (iii) any combination of payouts under clauses (i)
and (ii) of this sentence, as determined by the Committee. Any accelerated payout pursuant to this
Section 9 shall be made in a single payment within 30 days after the date of the Change of Control.

     To the extent an Option or UAR is not vested or exercisable, or a Phantom Unit or Restricted
Unit does not vest, pursuant to the preceding provisions of this Section 9 or the Award Agreement
upon the Change of Control, the Committee may, in its discretion, cancel such Award or provide for
an assumption of such Award or a replacement grant on substantially the same terms; provided,
however, upon any cancellation of an Option or UAR that has an exercise price less than the Fair
Market Value of a Unit as of the date of cancellation or a Phantom Unit or Restricted Unit, the
holder shall be paid an amount in Units or cash and/or other property or any combination of cash
and/or other property, as determined by the Committee, equal to the difference between the Fair
Market Value of a Unit and the exercise price if an Option or UAR or equal to the Fair Market Value
of a Unit, if a Phantom Unit or Restricted Unit.

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10. Amendment and Termination.

     Except as required by applicable law or the rules of the principal securities exchange on
which the Units are traded, the Board may amend, alter, suspend, discontinue, or terminate the Plan
in any manner, including increasing the number of Units available for Awards under the Plan,
without the consent of any Participant, any other holder or beneficiary of an Award or any other
Person.

11. General Provisions.

     (a) No Rights to Award. No Person shall have any claim to be granted any Award under the Plan,
and there is no obligation for uniformity of treatment of Participants. The terms and conditions of
Awards need not be the same with respect to each recipient.

     (b) Tax Withholding. The Company or any Affiliate is authorized to withhold from any Award,
from any payment due or transfer made under any Award or from any compensation or other amount
owing to a Participant the amount (in cash, Units, other securities, or other property) of any
applicable taxes payable at the minimum statutory rate in respect of the grant of an Award, its
exercise, the lapse of restrictions thereon, or any payment or transfer under an Award or under the
Plan and to take such other action as may be necessary in the opinion of the Company to satisfy its
withholding obligations for the payment of such taxes.

     (c) No Right to Employment or Services. The grant of an Award shall not be construed as giving
a Participant the right to be retained as an Employee, Consultant or Director, as applicable.
Further, the Company or an Affiliate may at any time dismiss a Participant from employment or
service at any time.

     (d) Governing Law. The validity, construction, and effect of the Plan and any rules and
regulations relating to the Plan shall be determined in accordance with the laws of the State of
Delaware without regard to its conflict of laws principles.

     (e) Severability. If any provision of the Plan or any award is or becomes or is deemed to be
invalid, illegal, or unenforceable in any jurisdiction or as to any Person or Award, or would
disqualify the Plan or any award under any law deemed applicable by the Committee, such provision
shall be construed or deemed amended to conform to the applicable laws, or if it cannot be
construed or deemed amended without, in the determination of the Committee, materially altering the
intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, person
or award and the remainder of the Plan and any such Award shall remain in full force and effect.

     (f) Other Laws. The Committee may refuse to issue or transfer any Units or other consideration
under an Award if, in its sole discretion, it determines that the issuance or transfer of such
Units or such other consideration might violate any applicable law or regulation, the rules of the
principal securities exchange on which the Units are then traded, or entitle the Partnership or an
Affiliate to recover the same under Section 16(b) of the Exchange Act, and any payment tendered to
the Company by a Participant, other holder or beneficiary in connection with the exercise of such
Award shall be promptly refunded to the relevant Participant, holder or beneficiary.

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     (g) No Trust or Fund Created. Neither the Plan nor any Award shall create or be construed to
create a trust or separate fund of any kind or a fiduciary relationship between the Partnership,
Company or any participating Affiliate and a Participant or any other Person. To the extent that
any Person acquires a right to receive payments from the Partnership, Company or any Affiliate
pursuant to an Award, such right shall be no greater than the right of any general unsecured
creditor of the Partnership, Company or any participating Affiliate.

     (h) No Fractional Units. No fractional Units shall be issued or delivered pursuant to the Plan
or any Award, and the Committee shall determine whether cash, other securities, or other property
shall be paid or transferred in lieu of any fractional Units or whether such fractional Units or
any rights thereto shall be canceled, terminated, or otherwise eliminated.

     (i) Facility of Payment. Any amounts payable hereunder to any person under legal disability or
who, in the judgment of the Committee, is unable to properly manage his financial affairs, may be
paid to the legal representative of such person, or may be applied for the benefit of such person
in any manner which the Committee may select, and the Partnership, Company and its Affiliates shall
be relieved of any further liability for payment of such amounts.

     (k) Participation by Affiliates. In making Awards to Employees employed by an Affiliate of the
Company, the Committee shall be acting on behalf of the Affiliate, and to the extent the
Partnership has an obligation to reimburse the Affiliate for compensation paid to Employees for
services rendered for the benefit of the Partnership, such payments or reimbursement payments may
be made by the Partnership directly to the Affiliate, and, if made to the Company, shall be
received by the Company as agent for the Affiliate.

     (l) Gender and Number. Words in the masculine gender shall include the feminine gender, the
plural shall include the singular and the singular shall include the plural.

     (m) No Guarantee of Tax Consequences. None of the Board, the Partnership, the Company, any
Affiliate nor the Committee makes any commitment or guarantee that any federal, state or local tax
treatment will apply or be available to any person participating or eligible to participate
hereunder.

12. Term of the Plan.

     The Plan has been approved by the limited partners of the Partnership and shall become
effective on the later of the date of its approval by the Board or the initial public offering of
Units and shall terminate on, and no Awards may be granted after, the earliest of the date
established by the Board or the Committee, the 10th anniversary of the date the Plan was approved
by the limited partners of the Partnership (or such earlier anniversary, if any, required by the
rules of the exchange on which Units are traded) or the date Units are no longer available for
delivery pursuant to Awards under the Plan. However, unless otherwise expressly provided in the
Plan or in an applicable Award Agreement, any Award granted prior to such termination, and the
authority of the Committee to amend, alter, adjust, suspend, discontinue, or terminate any such
Award or to waive any conditions or rights under such Award, shall extend beyond such termination
date.

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Exhibit 10.01

SILICON IMAGE, INC.

Employee BONUS PLAN FOR FISCAL YEAR 2007

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 (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-
or Sales-incentive plan nor employees who begin their employment with the Company on or after
October 1, 2007 are eligible to participate in this Plan. Participation in this Plan is on a
fiscal year basis and at 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 bonus under this Plan (“Bonus”), the date when any
performance goals are measured, and the date when Bonus (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. 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 is determined by final adjudication to be criminal misconduct, willful misconduct or
demonstrates bad faith by the member. In such event, the member shall be liable for future
expenses, including legal fees, including fines and penalties, resulting from the final
adjudication.

 

			
	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 ending December 31, 2007 (“Actual
Revenue”) equals or exceeds 100% of the planned revenue for the fiscal year (“Plan
Revenue”) established in the Annual Operating Plan approved by the Board of Directors
(“Annual Operating Plan”); and
	 
	 	•	 	Pro forma earnings before interest, tax, depreciation and amortization, excluding
stock compensation
expense4 (“Pro forma EBITDA”) equals or exceeds 100% of
the planned earnings before interest, tax, depreciation and amortization, excluding
stock compensation expense, for the fiscal year (“Plan EBITDA”) established in the
Annual Operating Plan. The determination as to whether Pro forma EBITDA equals or
exceeds Plan EBITDA shall be made after taking into account the compensation expense
associated with the establishment of the cash bonus pool.

     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 100% of Plan Revenue, and (b) Pro forma
EBITDA equals or exceeds 100% of Plan EBITDA.

For
Executives

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Percent Achievement of	 	Percent Achievement of	 	Representative Pool	 	Representative Pool
	Annual Revenue or	 	Annual Year-to-Date	 	Attributable to	 	Attributable to
	EBITDA 	 	Target Funding Level	 	Revenue Attainment	 	EBITDA
	100%
	 	 	100.0	%	 	$	850,000	 	 	$	850,000	 
	115%
	 	 	200.0	%	 	$	1,700,000	 	 	$	1,700,00	 
	125%
	 	 	300.0	%	 	$	2,550,000	 	 	$	2,550,000	 

	 	 	 
	Notes:

	 	(1) Dollars are representative based on estimated headcount and payroll. Actual
figures may vary.
	 
	 	 
	 

	 	(2) Actual amounts between the breakpoints shown above will be calculated on straight
line basis between the breakpoints.
	 
	 	 
	 

	 	(3) For upside payments, growth must be deemed to be “organic” rather than “acquired”,
except as included in the Company’s Annual Operating Plan. The Annual Operating Plan
included the January 2007 acquisition of sci-worx.
	 
	 	 
	 

	 	(4) Funding targets for 2007 include accrual for bonus pool at 100% achievement. Any
upside bonus pool funding must “self fund,” i.e., determination of Pro forma EBITDA
will be after bonus accrual at target plus any bonus upside.

     The amounts of Bonuses, 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 2007 as reported in
the Company’s financial statements.
	 
	4	 	Represents the Company’s total earnings before
interest, tax, depreciation, and amortization, and, excludes stock compensation
expense as accounted for under SFAS No. 123R.

 

 

     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 100% of Plan Revenue, and (b) Pro forma
EBITDA equals or exceeds 100% of Plan EBITDA.

For
Non-Executives

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Representative Pool
	Percent Achievement	 	Percent Achievement	 	Representative Pool	 	Attributable to
	of Annual Revenue or	 	of Annual Year-to-Date	 	Attributable to	 	Attainment of
	EBITDA	 	Target Funding Level	 	Revenue Attainment	 	EBITDA
	100%
	 	 	100.0	%	 	$	4,000,000	 	 	$	4,000,000	 
	115%
	 	 	200.0	%	 	$	8,000,000	 	 	$	8,000,000	 

	 	 	 
	Notes:

	 	(1) Dollars are representative based on estimated headcount and payroll. Actual
figures may vary.
	 
	 	 
	 

	 	(2) Actual amounts between the breakpoints shown above will be calculated on straight
line basis between the breakpoints.
	 
	 	 
	 

	 	(3) For upside payments, growth must be deemed to be “organic” rather than “acquired”,
except as included in the Company’s Annual Operating Plan. The Annual Operating Plan
included the January 2007 acquisition of sci-worx.
	 
	 	 
	 

	 	(4) Funding targets for 2007 include accrual for bonus pool at 100% achievement. Any
upside bonus pool funding must “self fund,” i.e., determination of Pro forma EBITDA
will be after bonus accrual at target plus any bonus upside.

     The amounts of Bonuses, 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

     Bonuses under this Plan will be distributed, if any, as soon as reasonably practicable
following (i) public disclosure of the Company’s financial results for the fiscal year ended
December 31, 2007, (ii) calculation of Actual Revenue and Pro forma EBITDA, and (iii) any
determination of the amounts of the bonus pool applicable to Executive Participants and
Non-Executive Participants. Participants must be employed by the Company as employees at the time
of computation and distribution in order to be eligible to receive payment of Bonuses, if any,
unless otherwise determined by the Compensation Committee. Participants employed by the Company
prior to January 1, 2007 shall be eligible to receive payment of a full Bonus. Participants who
began their employment with the Company after January 1, 2007 but prior to October 1, 2007 shall be
eligible to receive payment of a pro-rated Bonus (based on the full days of such Participant’s
employment). Participants who begin their employment on or after October 1, 2007 shall not be
eligible to receive payment of a Bonus. In addition, participants must complete all mandatory
training(s) within the time noted in the notice to employees to be eligible to receive payment of a
Bonus. The Committee may impose additional eligibility requirements on payment of any Bonuses 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 Bonuses 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. 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.

     c. 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 Bonuses hereunder.

     d. 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.

     e. 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.

     f. 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 Bonus will not be effective unless such Bonus
is made in compliance with all applicable laws, rules and regulations.

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