Simtek (SMTK)

Structure of THE PLAN

The goal of THE PLAN will be achieved by providing an opportunity for eligible executives to earn potentially significant cash compensation in addition to their basic salary in keeping with the Company’s overall success.  This additional cash compensation is directly tied to the Company and the executive achieving certain predefined goals and objectives which come from the Company’s Annual Operating Plan (AOP) as revised from year to year.

Each executive may have unique individual goals, or goals shared with other executives in addition to those that are commonly shared by all executives  These unique or shared goals may be tied to an executive’s own or departmental accomplishment of department specific goals and objectives as determined by mutual agreement between the cognizant executive and the CEO.  By its design, THE PLAN is intended to focus all executives on achieving those goals that the CEO, Compensation Committee, and the Board feel will help the Company improve shareholder value on a sustained long term basis.

Exhibit 1 – EICP Metrics, identifies the specific Pay Factors (PFs) and Weighting Factors (WFs) for each eligible executive for the applicable year.  The Pay Factors include:

On Time Delivery

Product Revenue

Ex-item Net Income

R&D Points

Design Win Points

Cash Position

Gross Profit Margin %

Failure Analysis Response Time

Business Development Initiatives

Discretionary Incentive

Individual and shared WFs of each PF for eligible executives are shown in Exhibit 1.  WFs may be changed from time to time and are the sole province of the CEO or the Compensation Committee.  Some executives share PFs but may have different WFs based on relative contribution to achieving the PF.  Each PF begins to contribute to an executive’s earned incentive compensation upon achievement of the Minimum Threshold value of the PF as defined in Exhibit 1.

In the case of the CEO and CFO, there is an additional element to their potential incentive earnings which is at the discretion of the Compensation Committee and which is to be added to the earned incentive from the regular PFs.

Each executive’s calculated incentive compensation payout will be subject to a Net Income Multiplier (NIM).  The NIM is defined in Exhibit 1, Table 1.

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