EMPLOYMENT AND NON-SOLICITATION AGREEMENT

1.

TERM. The Company will employ Employee, and Employee accepts employment with the Company, for a period beginning on the Effective Date and ending three (3) years after the Effective Date (the "Term").

2.

TITLE. Employee shall initially have the title of Vice President and General Manager of Embedded Products.

3.

DUTIES. Employee will work exclusively for the Company and shall initially report to Dave Rickey. Employee shall perform faithfully and to the best of his ability the duties assigned by the Company.

4.

FULL TIME EMPLOYMENT. Employee’s employment will be on a full-time basis, in accordance with the Company’s standard employment policies as may be amended from time to time. Employee will not engage in other business or render any services, directly or indirectly, to any other person or organization, whether for compensation or otherwise, provided that Employee may (i) provide incidental assistance to family members on matters of family business; and (ii) sit on the boards of charitable and nonprofit organizations which do not, at the time of Employee’s appointment or election, to Employee’s knowledge, compete with the Company or its affiliates; provided in each case that such activities do not conflict with or interfere with Employee’s obligations to the Company. Without limiting the obligations hereunder, Employee will resign any and all positions with Somerset Embedded Technologies and shall ensure, to the extent within Employee’s control, that Somerset is dissolved, with no ongoing obligations by Employee to Somerset, its shareholders or directors. This paragraph shall not affect Employee’s ability to continue to serve on technical advisory boards, as long as Company determines that Employee’s service does not interfere with Employee’s duties and obligations to the Company. Employee currently serves on advisory board(s) for the entities listed on Exhibit A-2, and such service is currently approved by the Company. The Company may withdraw such approval should it determine that such service interferes with Employee’s obligations to the Company, and Employee shall promptly withdraw from such board(s).

5.

LOYALTY. For so long as Employee is employed by the Company, Employee will not engage in any employment, business, or activity that is in any way competitive with the business or proposed business of the Company or its affiliates and will not assist any other person or organization in competing with Employer or its affiliates or in preparing to engage in competition with the business or proposed business of the Company or its affiliates. The provisions of this paragraph shall apply both during normal working hours and at all other times, including without limitation nights, weekends and vacation time, while the Employee is employed by the Company.

6.

COMPENSATION. Employee shall receive an annual base salary of $190,000, ("Base Salary"), payable on the Company’s regular payroll dates, less applicable withholdings and authorized deductions.

7.

STOCK OPTIONS. Upon approval by the Company’s Board of Directors, Employee will be granted stock options, under the Company’s 2000 Equity Incentive Plan, as amended, to purchase up to 160,000 shares of the Company’s Common Stock at a price equal to the per share market value of such Common Stock at the close of the market on the date of the grant. The stock options will vest as follows: 25% of the total will vest on the one (1) year anniversary of the Effective Date and, for so long as Employee remains employed by the Company, 1/36th of the remaining option grant will vest monthly thereafter, so that they will be fully vested on the fourth anniversary of the Effective Date. The stock options will be subject to the terms and conditions of the applicable stock option agreement and the documents referenced therein. The grant of stock options is subject to the terms and conditions of the Company’s 2000 Equity Incentive Plan and a separate Stock Option Agreement.

8.

BENEFITS. During his employment with the Company, Employee will be entitled to insurance, vacation and other benefits commensurate with Employee’s position with the Company and in accordance with the Company’s standard benefit plans and employment policies, as may be amended from time to time.

9.

BONUS. Provided that Employee is, and at all times during the applicable quarter has been, employed in good standing with the Company and has not engaged in conduct which would give the Company reason to terminate Employee for Cause (as defined below), Employee shall receive a quarterly bonus of $30,000, during the Term of this Agreement (the "Bonus"). The Bonus paid pursuant to this Section, if any, shall be paid within thirty (30) days of the end of the quarter and shall be subject to applicable withholding and authorized deductions in accordance with the Company’s standard payroll practices.

10.

EXCLUSIVE OBLIGATIONS OF THE COMPANY. The obligations set forth in Sections 6 through 9 are the Company’s exclusive obligations to Employee during the Term. If Employee’s employment continues after the Term, such employment shall be on an "at will" basis, and either Employee or Company shall be free to terminate such employment at any time, with or without reason, and with no further obligations (except that Company’s then-current severance policies shall apply to Employee to the extent applicable). The obligations set forth in Sections 12 through 17 and in the Employee Proprietary Information and Invention Agreement shall survive the Term and any termination or expiration of this Agreement.

11.

TERMINATION.

a.

Termination Without Cause or Resignation for Good Reason During the Term. If the Company terminates Employee during the Term without Cause (as defined below), or if Employee resigns during the Term for Good Reason (as defined below), the Company shall pay Employee his earned salary and unused vacation benefits at the rate in effect at the time through the date of termination, and, provided the conditions described in Section 11.d., below, are met, Employee will receive a severance payment equal to the Bonus amounts which he would have received during the remainder of the Term had he not been terminated without Cause or resigned for Good Reason during the Term.

b.

Termination for Cause during the Term or for any reason after the Term. If the Employee’s employment is terminated by the Company for Cause during the Term, or by either party for any reason after the Term, the Company shall pay Employee his earned

salary and unused vacation benefits at the rate in effect at the time through the date of termination, and the Company shall thereafter have no further obligations to the Employee.

c.

Termination For Disability. The Company may terminate Employee’s employment at any time on account of Disability. "Disability" means a physical or mental illness, injury, or condition that prevents Employee from performing the essential functions of his position and substantially all of the duties assigned to him under this Agreement for at least ninety (90) consecutive calendar days, or for at least one hundred twenty (120) calendar days, whether or not consecutive, in any three hundred sixty-five (365) calendar day period, or is likely to be unable to do so, as certified by a physician selected by the Company or its Board of Directors. In the event of such termination, the Company’s sole obligation shall be as provided by applicable law and its then-current applicable disability benefits.

d.

Conditions of Receiving Severance Benefits. The severance package provided in Sections (a) and (b) above will be paid provided Employee meets the following conditions: (a) Employee complies with all surviving provisions of confidentiality agreements signed by Employee and (b) Employee executes a full general release, in form acceptable to the Company, releasing all claims, known or unknown, that Employee may have against the Company and its affiliates.

e.

Intentionally Deleted.

f.

Death. If Employee dies during or after the Term, the Company shall pay Employee’s estate Employee’s earned salary and unused vacation benefits at the rate in effect at the time through the date of death, and the Company shall thereafter have no further obligations to the Employee or his estate.

g.

"Cause" as defined herein means termination for any one or more of the following reasons: (i) theft, dishonesty or falsification of records of the Company or its affiliates; (ii) improper disclosure of the Company or its affiliates’ confidential information; (iii) Employee’s failure or inability to perform any reasonable assigned duties after written notice from the Company of, and a reasonable opportunity to cure, such failure or inability; or (iv) Employee’s conviction of any criminal act which impairs his ability to perform his duties as an Employee of the Company (v) Employee’s violation of the Company’s rules and policies of employment (vi) Employee’s repeated failure to follow the Company’s directions after written notice from the Company of, and a reasonable opportunity to cure, such failure or inability; (vii) Employee’s failure to perform his duties per this agreement after written notice from the Company of, and a reasonable opportunity to cure, such failure or inability; or (viii) Employee’s repeated failure to follow the Company’s reasonable instructions after written notice from the Company of, and a reasonable opportunity to cure, such failure or inability.

h.

"Good Reason" as defined herein means (i) a material reduction in Employee’s Base Salary that is not part of a reduction enacted for executives of the Company generally, or (ii) relocation of Employee’s principal place of work to a location more than sixty (60) miles from Employer’s current location, without Employee’s prior approval, or (iii) sale of the Company’s PowerPC business as a stand-alone entity to an unaffiliated third party

(it being understood that a merger, acquisition, sale or other business combination involving the Company as a whole is not "Good Reason" pursuant to this Section "h"). If Employee contends that "Good Reason" exists under this Agreement, Employee shall provide the Company with written notice detailing the occurrence and nature of the alleged event providing Employee with Good Reason to resign, and Employee shall provide the Company a reasonable opportunity to cure such event prior to resigning for Good Reason.

i.

Exclusive Severance Benefits. Employee acknowledges that the Severance Benefits provided in Sections a and b hereunder are in lieu of any other benefits to which Employee may be eligible under any other agreements or the Company or its affiliates severance plans or practices.

12.

CONFIDENTIALITY AND INVENTION ASSIGNMENT. Concurrently herewith, Employee is executing the attached Employee Proprietary Information and Inventions Agreement. Employee acknowledges that his obligations thereunder are in addition to, and not in lieu of, any confidentiality and invention assignment obligations previously agreed to by Employee.

13.

NON SOLICITATION. Employee acknowledges and agrees that he will not, for the duration of the Employee’s employment by the Company and for a period of two (2) years thereafter, directly or indirectly, for the benefit of the Employee or any third party, (i) call on or solicit any past, present or prospective customer or supplier of the Company or its affiliates, (ii) interfere with the Company or its affiliates’ relationship with any past, present or prospective customer or supplier or (iii) hire, engage or solicit the employment or engagement of any person employed by or otherwise providing services to the Company or its affiliates.

14.

ARBITRATION. Unless otherwise required by applicable law, any dispute arising out of or relating to Employee’s employment with the Company, termination thereof, or this Agreement shall be resolved by binding arbitration before an arbitrator experienced in employment law. Said arbitration will be conducted in accordance with the rules applicable to employment disputes of the American Arbitration Association (AAA) and shall be conduced by a qualified arbitrator in Austin, Travis County, Texas. The Company and the Employee shall be responsible for their own fees and expenses incurred in connection with the filing and prosecution of any such arbitration. Arbitration as provided in this Section shall be the exclusive and binding remedy for any such dispute and will be used instead of any court action, which is hereby expressly waived, except for any request by either of us for temporary or preliminary injunctive relief pending arbitration in accordance with applicable law.

15.

INTERPRETATION AND EXCLUSIVE FORUM. The validity, interpretation, construction, and performance of this Agreement shall be governed by the laws of the State of Texas (excluding any that mandate the use of another jurisdiction’s laws).

16.

ASSIGNMENT. This Agreement may not be assigned by Employee. This Agreement may be assigned by the Company to its affiliates or as part of the sale of all or substantially all of its assets or business, after which any reference to "the Company" in this Agreement shall be deemed to be a reference to the affiliate or successor, and the company thereafter shall have no further primary, secondary or other responsibilities or liabilities under this Agreement of any kind. The Company may change its legal name, and a name change shall have no impact on this Agreement.

17.

VALIDITY. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

18.

COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute the same instrument.

19.

ENTIRE AGREEMENT. All oral or written agreements or representations, express or implied, with respect to the subject matter of this Agreement are set forth in this Agreement (including its Exhibit "A", whose obligations cumulative to the obligations hereunder). This Agreement supercedes all prior or contemporaneous agreements and understandings, oral or written, between the Company and Employee, which agreements and understandings will be no longer in force and effect after the Effective Date and Employee shall have no rights thereunder.