Document:

EMPLOYMENT AGREEMENT

Exhibit 10.16

EMPLOYMENT AGREEMENT

 

This Employment Agreement (the "Agreement") is entered into as of
January 1, 2001 (the "Effective Date" by and between Socket Communications, Inc., a Delaware
corporation (the "Company"), and Leonard L. Ott (the "Executive").

WHEREAS, the Company desires to continue to employ the Executive and the Executive
desires to be employed by the company upon the terms and conditions set forth below.

NOW, THEREFORE, the Company and the Executive agree as follows:

	Term of the Agreement.  The Company hereby employs the Executive and the
Executive hereby accepts employment with the Company under this Agreement commencing on the Effective
Date and expiring on December 31, 2003 (the "Employment Period) subject, however, to prior termination
as provided pursuant to paragraph 5 of this Agreement.

	Duties and Obligations

	The Executive agrees that to the best of his ability and experience, he will at
all times loyally and conscientiously perform all of the duties and obligations required of and from him
pursuant to the express and implicit terms hereof.

	Devotion of Entire time to the Company's Business

	During the term of his employment, the Executive shall, during regular business
hours, devote all of his attention, knowledge, skills, interests, and productive time to the business of the
Company, and the Company shall be entitled to all of the benefits and profits arising from or incident to all
work, services, and advice of the Executive.

	During the term of his employment, the Executive shall not, directly or indirectly,
either as an employee, employer, consultant, agent, principal, partner, stockholder, corporate officer,
director, or in any other individual or representative capacity, engage or participate in any business that
is competitive in any manner whatsoever with the business of the Company.

	Compensation and Benefits

	Compensation and Benefits.  During the term of this Agreement, the Company
shall pay to the Executive a base annual salary not less than the base salary in effect on January 1, 2001,
payable in equal semi-monthly installments in accordance with the Company's payroll schedule.  During the
term of this Agreement, the Executive shall be eligible for annual salary and merit increases in his base
salary as determined in the sole discretion of the Company's Board of Directors.

	Bonus.  During the term of this Agreement, the Executive is entitled to
participate in the Company's Management Incentive Bonus Plan (the "Bonus Plan") according to its
terms as set by the Company's Board of Directors.

	Insurance.  The Executive shall be entitled to the prerequisites and
benefits generally available to the other executive employees or their families through group insurance
programs sponsored by the Company.

	Paid Time Off.  The Executive shall be entitled to accrue paid time
off ("PTO") in accordance with the Company's PTO policy applicable to all employees.  The
Executive can request payment of PTO to reduce the PTO balance by up to 20% of the maximum by giving
fifteen (15) days notice prior to a payroll date if the PTO accrual is within 10 hours of reaching the
maximum PTO accrual.

	Savings Plan.  The Executive shall be entitled to the prerequisites and
benefits generally available to other executive employees through tax deferred savings, pension and
similar programs when and if sponsored by the Company.

	Termination of Employment

	The Executive understands that either he or the Company may terminate the
employment relationship between them at any time, for any reason, with or without Cause.  For purposes
of this Agreement, "Cause" for termination of employment by the Company is defined as a
determination in the sole discretion of the Company's Board of Directors of the occurrence of any of
the following:

	Gross misconduct or fraud by the Executive;

	Misappropriation of the Company's proprietary information by the Executive;

	Willful and continuing breach by the Executive of his duties under this Agreement
after the Company has given notice to the Executive thereof and Executive has had 30 days in which to cure
 such breach.

	If at any time during the Initial Employment Period, the Company terminates
Executive's employment without Cause, as defined above, or in the event of a disability which causes
the Executive to be unable to perform the Executive's duties in a satisfactory manner, it shall provide
to Executive each of the following:

	The Executive's regular base salary for a period of six (6) months, payable on
normal company paydays during that six-month period (the "Period").  The Executive will be
entitled to receive this payment regardless of whether or not he secures other employment during the
Period.

	Continued health insurance benefits at its own expense pursuant to COBRA until
the earlier of either: (a) such time as the Executive becomes eligible for the health insurance benefits
provided by another employer; or (b) the expiration of the Period.  The Executive agrees that should he
become eligible for health insurance benefits provided by another employer during the Period, he will
immediately provide written notice of such event to the Company's Board of Directors.

	For the quarter in which the Executive is terminated or disabled, he will receive
the full bonus amount, pursuant to the terms of the Bonus Program, to which he would otherwise have been
entitled had he remained employed with the Company.  For the quarter following the Executive's termination,
he will receive one-half of the bonus amount, pursuant to the terms of the Bonus Program, to which he would
otherwise have been entitled had he remained employed with the Company.  The Executive understands that
he is not entitled to, nor will he receive, any further payout under the Bonus Program.  Within thirty (30)
days of the date of the termination without Cause of the Executive's employment, and pursuant to mutual
agreement between the Company and the Executive, the Executive may purchase at book value certain items
of the Company property which were purchased by the Company for the use of the Executive, which may include
a personal computer, cellular phone, and other similar items. 

The Executive agrees that in the event he accepts employment directly or indirectly,
either as an employee, employer, consultant, agent, principal, partner, stockholder, corporate officer,
director, or in any other individual or representative capacity, in any business that is competitive in
any manner whatsoever with the business of the Company, the Company may discontinue any of the benefits
set forth in paragraph 5(b) not payable as of the date of such employment.  The Executive understands
that in the event his employment is terminated for any reason, with or without Cause, after December 31,
2003, he is not entitled to receive any of the benefits set forth in paragraph 5(b).

	In the event of the termination of this Agreement for any reason, at any time,
with or without Cause, the Company agrees that it will pay to the Executive all his accrued but unused
PTO.

	In the event that the Company alters the Executive's reporting structure at any
time during the Employment Period so that the Executive does not report directly to the Chief Executive
Officer, the Executive may elect to resign his employment.  In such case, the Executive will be entitled
to receive all of the benefits set forth under paragraph 5(b).

	Governing Law.  This Agreement shall be interpreted, construed, governed,
and enforced according to the laws of the State of Delaware.

	Attorney's Fees.  In the event of any arbitration or litigation concerning
any controversy, claim, or dispute between the parties arising out of or relating to this Agreement or
the breach or the interpretation hereof, the prevailing party shall be entitled to recover from the
losing party reasonable expense, attorneys' fees, and costs incurred therein or in the enforcement or
collection of any judgment or award rendered therein.  The "prevailing party" means the party
determined by the arbitrator or court to have most nearly prevailed, even if such party did not prevail
in all matters, not necessarily the one in whose favor a judgment is rendered.

	Arbitration.  Any controversy between the parties hereto involving the
construction or application of any terms, covenants, or conditions of this Agreement, or any claim
arising out of or relating to this Agreement, except with respect to prejudgment remedies, will be
submitted to and be settled by final and binding arbitration in San Jose, California, in accordance
with the rules of the American Arbitration Association then in effect, and judgment upon the award
rendered by the arbitrators may be entered in any court having jurisdiction thereof.

	Amendments.  No amendment or modification of the terms or conditions of
this Agreement shall be valid unless in writing and signed by the parties hereto.

	Severe ability.  All agreements and covenants contained herein are sever
able, and in the event any of them shall be held to be invalid or unenforceable, this Agreement shall
be interpreted as if such invalid agreements or covenants were not contained herein.

	Successors and Assigns.  The rights and obligations of the Company under
this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of the
Company.  The Executive shall not be entitled to assign any of his rights or obligations under this
Agreement.

	Entire Agreement.  This Agreement and the Proprietary Information and
Inventions Agreement signed by the Executive on joining the Company, a copy of which is attached hereto
as Exhibit A, constitute the entire Agreement between the parties with respect to the employment of the
Executive.

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set forth
above.

EXECUTIVE:

 

 

Leonard L. Ott

 

SOCKET COMMUNICATIONS, INC.:

 

 

By:

 

 

Its:FORM OF EXECUTIVE MANAGEMENT BONUS PLAN

Exhibit 10.17

SOCKET COMMUNICATIONS, INC.

2001 MANAGEMENT INCENTIVE BONUS PLAN

General

Socket Communications, Inc. ("Company") will make quarterly incentive compensation
payments to participating officers and director level/senior professional employees of the Company.
Participation and payments are subject to the approval of the Board of Directors.

Participants

All officers and director level management personnel shall be participants unless otherwise
specifically excluded.  

Quarterly target compensation

The Board shall approve quarterly target compensation amounts for each participant.

Basis for payments

Target Compensation amounts shall be divided into four components tied to net revenue
attainment (25%), gross margin attainment (25%), operating expense attainment (25%) and management
by objectives ("MBO") attainment (25%).  Attainment and related payouts shall be
determined for each component as described in this section.  Payout shall be the sum of the
four components.

Net Revenue attainment:  Actual quarterly Net Revenues shall be divided by Net Revenues
in the Board of Directors approved financial plan ("Plan") and Percentage Attainment
calculated.  Payout will be calculated by multiplying the Net Revenue component of Target
Compensation by a factor as follows:

	
Percentage Attainment
	
Factor

	
Less than 60%
	
Zero

	
60% to 150%
	
Same as percentage Attainment (.6 to 1.5)

	
More than 150%
	
1.5

Gross Margin attainment:  Actual quarterly gross margin dollars shall be divided by
Plan gross margin dollars and Percentage Attainment calculated. Payout will be calculated by
multiplying the gross margin component of Target Compensation by a factor as follows:

	
Percentage Attainment
	
Factor

	
Less than 60%
	
Zero

	
60% to 150%
	
Same as percentage Attainment (.6 to 1.5)

	
More than 150%
	
1.5

Operating Expense attainment:  Plan Operating Expense dollars shall be divided by
actual Operating Expense dollars and percentage attainment calculated. Payout will be calculated
by multiplying the Operating Expense component of Target Compensation by a factor as follows:

	
Percentage Attainment
	
Factor

	
Worse than 75%
	
Zero

	
75% or better
	
Same as percentage Attainment

MBO attainment:  MBO's shall be established by each participant and the President at
the beginning of each quarter (by the President and the Chairman for the President) and communicated
to the Compensation Committee or Chairman of the Board of Directors as determined by the Board for
approval.  MBO's shall be attainable and measureable and may be updated from time to time for changes
in priorities or factors outside the control of the participant that make an MBO unattainable.  At
the end of each quarter the President (Chairman for the President) shall determine a percentage
attainment.  Payout will be calculated by multiplying the MBO component of Target Compensation by
the percentage attainment.

Adjustments to actual amounts used in the calculations:  The Board of Directors may, in
its sole discretion, adjust actual Net Revenues, actual Gross Margins and/or Actual Operating
Expenses for transactions which were not in the ordinary course of business and/or the responsibility
of the participants and which the Board wishes to exclude from performance measurements.

Timing of payouts:  Payouts will be made as soon as financial results have been determined
and after approval by the Board.  Payouts should be made no later than 45 days after the end of the
quarter.

Disputes:  Any disputes shall be resolved by the Compensation Committee or by the Board of
Directors, which shall have complete and final determination of all matters relating to this Plan.

Term and termination, Plan changes:  This Plan shall be applicable to 2001 and may be
terminated or changed without notice by the Compensation Committee.  

Eligibility in the event of employee termination:  Participants who terminate employment
during a quarter shall be entitled to a pro rata share of the bonus entitlement calculated and paid
after completion of the quarter.  MBO attainment shall be set at 75% for purpose of this calculation
unless a higher amount is approved by the Compensation Committee.

 

 

 

 

 

APPENDIX A

Examples of Percentage Attainment calculations:

	
      Actual Revenues

    	
      Plan Revenues

    	
      % Attainment

    	
      Factor

    
	
      $2,000,000

    	
      $1,250,000

    	
      160%

    	
      1.5000 (Max)

    
	
      1,500,000

    	
      1,250,000

    	
      120%

    	
      1.2000

    
	
      1,000,000

    	
      1,250,000

    	
      80%

    	
      .8000

    
	
      700,000

    	
      1,250,000

    	
      56%

    	
      Zero

    
	
       

    	
       

    	
       

    	
       

    
	
      Gross Margins

    	
      Plan Gross Margins

    	
      % Attainment

    	
      Factor

    
	
      $1,000,000

    	
      $600,000

    	
      166.67%

    	
      1.5000 (Max)

    
	
      750,000

    	
      600,000

    	
      125%

    	
      1.2500

    
	
      500,000

    	
      600,000

    	
      83.33%

    	
      .8300

    
	
      350,000

    	
      600,000

    	
      58.33%

    	
      Zero

    
	
       

    	
       

    	
       

    	
       

    
	
      Operating Expenses

    	
      Plan Operating Expenses

    	
      % Attainment

    	
      Factor

    
	
      $1,400,000

    	
      $800,000

    	
      57.14%

    	
      Zero

    
	
      950,000

    	
      800,000

    	
      84.21%

    	
      .8421

    
	
      700,000

    	
      800,000

    	
      114.29%

    	
      1.1429

    
	
       

    	
       

    	
       

    	
       

    
	
       

    	
       

    	
      MBO % Attainment

    	
      Factor

    
	
       

    	
       

    	
      100%

    	
      1.0000

    
	
       

    	
       

    	
      82%

    	
      .8200

    
	
       

    	
       

    	
      35%

    	
      .3500

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