Exhibit 10.14

2004 Employee Bonus Plan

The 2004 Employee Bonus Plan (“2004 Bonus Plan”) is designed to motivate
employees of Ixia (“Ixia” or the “Company”) and any U.S. subsidiaries and to
reward them for their continuing contributions to the Company’s business if Ixia
achieves certain financial results in 2004. The Company believes that the
achievement of these results is essential for the Company’s success and for the
continued growth in shareholder value.

2004 Bonus Plan :

Each Eligible Employee (as defined below) who earns a bonus by virtue of his or
her continuing employment with Ixia will be eligible to receive a quarterly
bonus (“Quarterly Bonus”) based on the Company’s financial performance as
measured by the degree of the Company’s attainment of a pre-set, Board of
Directors’ approved, operating income before bonus goal for each calendar
quarter during 2004.

The Quarterly Bonuses payable to an Eligible Employee under the 2004 Bonus Plan
will be calculated as a percentage of such employee’s actual paid year to date
earnings, excluding certain compensation and payments (e.g., reimbursement for
moving expenses, bonus payments received for prior period, stock option
compensation, disability benefits, sign-on bonuses, vacation cash-outs, on call
pay, and similar payments).

Eligible Employees:

All full-time and part-time employees of Ixia and any U.S. subsidiaries, other
than Excluded Employees (as defined below), are Eligible Employees for purposes
of the 2004 Bonus Plan. The following employees of the Company and any U.S.
subsidiaries are Excluded Employees for purposes of the 2004 Bonus Plan:

1. Commissioned employees;
2. Employees who are expressly covered by any other Ixia 2004 bonus plan; and
3. Casual, co-op or temporary employees

In order to earn and be eligible to receive a Quarterly Bonus, a person must be
employed by Ixia or one of its subsidiaries as an Eligible Employee
(i) throughout the entire calendar quarter for which the bonus is payable; and
(ii) on the date on which such bonuses are paid, unless such requirement(s) is
waived in writing by the Chief Executive Officer of the Company, in his sole
discretion. An employee’s eligibility under the 2004 Bonus Plan shall be
determined on a quarter-by-quarter basis. An employee who is on an approved
leave of absence from the Company during a calendar quarter will, for purposes
of determining eligibility under the 2004 Bonus Plan, be treated as being
employed by the Company during such leave of absence.

Quarterly Bonuses:

While the bonuses will be paid quarterly, they will be calculated on a year to
date basis in order to balance uneven results from quarter to quarter. The
financial measure for calculating the Quarterly Bonuses will be the Company’s
year to date GAAP operating income calculated on a consolidated basis. The
amount of bonus payable as a Quarterly Bonus to an Eligible Employee will be
calculated by multiplying (i) the Eligible Employee’s actual year to date
earnings by (ii) the Bonus Percentage listed below in Table 1 and by (iii) the
applicable Cumulative Weighting Factor for such quarter as listed in Schedule A
attached hereto, less any Quarterly Bonuses paid for previous quarters during
the year.

Stated mathematically, the amount of a Quarterly Bonus equals (AxBxC)-D, where A
= an Eligible Employee’s actual earnings paid year to date; B = the applicable
Bonus Percentage listed in Table 1 below based on actual financial results
(i.e., the percentage of budgeted GAAP income attained); C = the Cumulative
Weighting Factor (as

 

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determined in accordance with the matrix set forth in Schedule A attached
hereto); and D = Bonuses paid previously during the year.

Except as otherwise provided herein, the Quarterly Bonus will be payable in one
lump sum (subject to applicable withholding taxes and other applicable
deductions) within 45 days after the Company’s quarterly results are publicly
announced. An Eligible Employee who is on an approved leave of absence from the
Company on the date on which Quarterly Bonuses are paid and thereafter returns
to active status as an Eligible Employee upon the end of such leave of absence,
will be paid a Quarterly Bonus to which he/she is otherwise entitled under this
2004 Bonus Plan within 30 days following his/her return to active status as an
Eligible Employee. An Eligible Employee who is on an approved leave of absence
from the Company on the date on which Quarterly Bonuses are paid and thereafter
fails to return to active status as an Eligible Employee upon the end of such
leave of absence, will forfeit his/her right to any Quarterly Bonus to which
he/she may otherwise be entitled for such quarter.

Bonus Participation Levels:

For each calendar quarter, the bonus rate is determined by reference to the
following matrix. The bonus rate is adjusted downward by a factor of 2x for
performance below Target. For performance at or above the Target, the bonus
increases by the ratio of actual GAAP operating income divided by Budgeted GAAP
Operating Income. For results between the listed values, the Bonus Percentage
should be interpolated ratably.

Table 1 - Bonus Participation Table

                                                                            % of
Base Salary Paid as Bonus       % of                                            
Budgeted                                             GAAP                      
                      Operating             Exec     Non-Exec     Sr.          
        Income     CEO     Officers     VPs     Directors     Directors    
Staff                  
< 75%
      0 %     0 %     0 %     0 %     0 %     0 %    
75%
      50 %     25 %     20 %     15 %     8 %     5 %    
80%
      60 %     30 %     24 %     18 %     9 %     6 %    
90%
      80 %     40 %     32 %     24 %     12 %     8 %    
100%
      100 %     50 %     40 %     30 %     15 %     10 %    
110%
      110 %     55 %     44 %     33 %     17 %     11 %    
120%
      120 %     60 %     48 %     36 %     18 %     12 %    
130%
      130 %     65 %     52 %     39 %     20 %     13 %              

Weighting Factor:

To recognize the fact that Operating Income is not earned evenly over the year,
the Cumulative Weighting Factor (as determined in accordance with the matrix set
forth in Schedule A attached hereto) will be applied when calculating bonuses
payable for a given quarter.

Discretionary Bonuses:

Discretionary bonuses may also be paid under the 2004 Bonus Plan but only if, in
Management’s view, the Company is able to pay a discretionary bonus without
materially adversely affecting the Company’s financial results and special
circumstances exist. Consideration for such bonuses may be given for special
circumstances or achievements by a division, group or individual, or the
Company. With the advice and counsel of the Board of Directors, the Chief
Executive Officer of the Company has the authority to award discretionary
bonuses to Eligible Employees.

* * * *

 

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Schedule A - Weighting Factor

                                                                               
  Cumulative           Operating     Earned     Cumulative     Weighting    
Weighting       QTR   Income     per QTR     Earned     Factor     Factor      
     
Q1
    3,483       18.7 %     18.7 %     75.0 %     75.0 %    
Q2
    4,077       21.9 %     40.7 %     87.8 %     81.4 %    
Q3
    4,740       25.5 %     66.2 %     102.1 %     88.3 %    
Q4
    6,278       33.8 %     100.0 %     135.2 %     100.0 %    
Total
    18,578       100.0 %             100.0 %     100.0 %