Exhibit 10.34
The body of this form of agreement applies to Executive Officers. Some Executive
Officers in the plan are principally devoted to specific product areas and their
incentives  are based on a  combination  of  corporate  and product  area goals.
Differences in application of the plan to those Executive Officers are explained
in the footnotes to this form of agreement.
This memorandum will serve as your formal  Management  Incentive Bonus Plan (the
"Plan")  document  for SMSC's (the  "Company's"  or  "Company")  fiscal year ___
ending February 28, ____. Your total "At-Plan"  annual incentive bonus target is
_____. There are two components to your Plan:
1.  Quarterly  incentives  based  on  the  Company  attaining  its  year-to-date
financial  performance  goals. (1)
2. A Year-End  incentive based on the Company  achieving its strategic  business
goals (2), which can be adjusted based on individual performance.
1.  Financial  Performance  Incentives  (50%  to 67% of  total  incentive  bonus
opportunity, all paid in RSAs(3))
Up to one-fourth of the financial  performance incentive bonus is earned in each
fiscal quarter if the Company attains its quarterly  year-to-date  business plan
revenue and operating income goals.(4)  Revenue and operating income  attainment
are separate and weighted  equally for the purpose of calculating  the quarterly
bonus award. Therefore, half of the quarterly incentive bonus target is based on
revenue attainment and half is based on operating income attainment.
For quarterly bonuses to be awarded,  actual year-to-date  revenue and operating
income  must  be  equal  to or  greater  than  certain  thresholds  relative  to
year-to-date  business plan goals.  The spread between the quarterly  thresholds
and  year-to-date  goals vary from one quarter to another.  Sixty percent of the
quarterly  bonus is awarded if the  year-to-date  revenue (or operating  income)
goal  is  achieved  at the  threshold  amount  and  increases  from  60% to 100%
proportionately up to full goal attainment.
Any  portion  of the  quarterly  incentive  not  earned for a quarter is carried
forward  for  possible  payment at the end of the year if the  actual  full year
performance is at or above the full year  threshold.  Any bonus amounts that are
carried  forward are awarded on a pro-rata  basis at year end if the actual full
year revenue (or operating income) attainment is above the threshold amount, but
only to the extent that the total of the incentives awarded,  and to-be-awarded,
is less than the pro-rata  percentage  calculation  for the entire year.  Earned
bonuses are awarded in the form of Restricted  Stock Awards  (RSAs),  which vest
over three years (25/25/50% per year).
2. Strategic  Incentive (33% to 50% of total  incentive bonus  opportunity,  all
paid in cash(3))
This year-end incentive bonus is based on achieving  strategic goals established
by the Board of Directors and may be adjusted for  individual  performance.  Any
earned annual incentive is paid in cash.
Other Terms and Conditions:
   -    For purposes of this plan,  actual results may exclude  certain  special
        items that are not indicative of the normal operating  performance.
   -    Earned cash  incentives will be determined and paid following the public
        release of the Company's year-end financial results.
   -    Earned quarterly RSAs are generally  granted three days after the public
        release of the Company's  quarterly financial results and are subject to
        approval by the Compensation Committee.
   -    No incentive  will be paid to you if you are not employed by the Company
        at the time when incentives are approved and ready for payment.
   -    The Company  reserves  the right to amend the plan in any way and at any
        time upon written notice to you.
   -    Any dispute  over any part of the plan will be judged and decided by the
        Company's compensation committee.
(1) Participants within a product line have 1/3rd of their quarterly incentives
based on the Company attaining its year-to-date financial performance goals and
2/3rds based on their product line attaining its year-to-date financial
performance goals.
(2) Participants  within product lines may be measured on product line strategic
(3) Half  paid in cash and half  paid of RSAs in the  cases of the CEO's and the
CFO's award.
(4) Participants within product lines have 1/12th of their financial performance
incentive bonus based on the Company  attaining its financial  performance goals
in each fiscal  quarter  and 1/6th based on their  product  line  attaining  its
financial performance goals in each fiscal quarter.