Exhibit 10.1


 


GSI TECHNOLOGY, INC.


2009 VARIABLE COMPENSATION PLAN


(Effective as of April 1, 2008)


 


1.  Introduction. 
The Company hereby adopts the Plan, effective as of April 1,
2008.  The purpose of the Plan is to
encourage performance and achieve retention of a select group of executive
employees of GSI Technology, Inc. 
This document constitutes the written instrument under which the Plan is
maintained.


 


2.  Definitions.


 


  “Cause” means (i) conviction of a felony
or a crime of moral turpitude; (ii) misconduct that results in harm to the
Company; (iii) material failure to perform assigned duties; or (iv) willful
disregard of lawful instructions from the chief executive officer of the
Company or the Board of Directors relating to the business of the Company or
any of its affiliates.


 


  “Code” means the Internal Revenue Code of
1986, as amended, and the regulations issued with respect thereof.


 


  “Committee” means the Compensation Committee
of the Company’s Board of Directors.


 


  “Company” means GSI Technology, Inc., a Delaware corporation.


 


  “Disability” means that a Participant (i)  is unable to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months, or (ii) 
is, by reason of any medically determinable physical or mental impairment which
can be expected to result in death or can be expected to last for a continuous
period of not less than 12 months, receiving income replacement benefits for a
period of not less than 3 months under an accident and health plan covering
employees of the Participant’s employer.


 


   “Eligible Employee” means each employee who
is eligible for the Plan as designated by the Committee as set forth in
approved minutes.


 


  “Operating Income” means the Company’s
operating income for fiscal 2009, excluding (1) share based compensation, (2) acquisition-related
costs and (3) any adjustments as deemed necessary by the Committee for
2009.


 


  “Normal Retirement Age” means age sixty (60).


 


  “Participant” means each Eligible Employee who is designated from time
to time by the Committee in writing.


 


  “Plan” means the GSI Technology, Inc.
2009 Variable Compensation Plan, as set forth in this document and as hereafter
amended.


 


  “Retirement” means the termination of
employment after Normal Retirement Age.


 


3.  Variable Compensation Award.


 


(a) Variable
Compensation Award and Calculation of Payable Amount. Each Participant will
receive an award, entitling the Participant to earn variable compensation, the
payment of which will be based upon (i) the achievement of performance
criteria based on Operating Income and net revenues determined in accordance
with US GAAP, or a combination of the two and (ii) continued employment by
the Participant through the vesting dates set forth in Section 4 hereof
(the “Variable Compensation Award”).  The
Committee shall designate in writing the amount payable under the Variable
Compensation Award and, if applicable, the percentage of the amount payable
under the Variable Compensation Award that is allocable to each of the
criteria.  Notwithstanding the foregoing,
the maximum amount payable under a Variable Compensation Award granted to any
Participant shall not exceed two times the 


 

















 


Participant’s
target Variable Compensation Award for 2009, unless the Committee, in its sole
discretion, decides to permit a greater amount with respect to such Participant
based on the performance and condition of the Company’s business. Also, at any
time prior to April 1, 2009, the Committee or the CEO, in his, her, or its
sole discretion, may reduce the amount payable under any Participant’s Variable
Compensation Award.  The amount of the
Variable Compensation Award that may become payable to the extent it becomes
vested in accordance with the schedule set forth in Section 4 hereof shall
be calculated as soon as reasonably practicable following April 1, 2009
based on the extent to which the performance criteria set forth in this Section 3(a) have
been achieved (the “Award Payment Amount”).


 


(b) Interest
on Award Payment Amount. Interest at the Fed Funds Rate as of the date the
Award Payment Amount is calculated by the Committee shall accrue on the
Participant’s unvested and unpaid Award Payment Amount.  Subject to the forfeiture provisions in Section 4(c),
interest shall be paid in accordance with the vesting schedule established by
the Committee at the time the Award Payment Amount is calculated.


 


4.  Payment of Variable Compensation Award.


 


(a) 
Vesting, Timing and Form of Payment. Subject to Sections 4(b), 4(c), 4(d) and
7, each Participant’s Award Payment Amount shall vest and be paid as follows:


 


(i) 
Sixty percent (60%) of the Participant’s Award Payment Amount shall vest and be
paid to the Participant on the last business day in April 2009; and


 


(ii) 
Twenty percent (20%) of the Participant’s Award Payment Amount (i.e. fifty
percent (50%) of the Award Payment Amount then remaining) shall vest and be
paid to the Participant on the last business day in April, 2010; and


 


(iii) 
Twenty percent (20%) of the Participant’s Award Payment Amount (i.e.
one-hundred percent (100%) of the Award Payment Amount then remaining) shall
vest and be paid to the Participant on the last business day in April, 2011.


 


(b) 
Distribution in the Event of Retirement, Termination as a result of Disability
or without Cause. If a Participant terminates employment because of Retirement
or Disability, or the Company terminates a Participant’s employment without
Cause, the Participant shall be entitled to payment of all of his or her Award
Payment Amount according to the schedule in Section 4(a), provided that if
termination under these conditions occurs prior to April 1, 2009, the
amount of the Variable Compensation Award payable will be the Award Payment
Amount calculated pursuant to Section 3(a), multiplied by the number of
days employee was employed in Fiscal 2009 by the Company and then divided by
365 days, and all remaining amounts payable under Variable Compensation Award
for 2009 shall be forfeited.


 


(c) 
Forfeiture. If the Company terminates a Participant’s employment for Cause or
if the Participant’s employment is terminated for any reason other than as a
result of Retirement or Disability, he or she shall forfeit all or any portion
of his or her entire Award Payment  Amount  for  2009  (as  set  forth  in  Section 3(a))  which  is  not  yet  vested  and  payable  under the schedule set forth in Section 4(a) as of the date of
termination.


 


(d) 
Timing of Distribution to a Beneficiary. If a Participant dies while still
employed by the Company or after termination due to Retirement, Disability, or
termination by the Company without Cause but before receiving a distribution of
all of his or her Award Payment Amount according the schedule in Section 4(a),
then the vesting of the Participant’s Award Payment Amount shall be fully
accelerated such that one-hundred percent (100%) of the Award Payment Amount,
as calculated pursuant to Section 4(b) hereof (with the amount
prorated to the date of death in the event death occurs prior to April 1,
2009), will be distributed to his or her beneficiary as a lump sum distribution
on the April 30 following the Participant’s death.


 


(e) 
Beneficiary Designation. Each Participant must designate a beneficiary to
receive a distribution of his or her Variable Compensation Award if the
Participant dies before such amount is fully distributed to him or her. To be
effective, a beneficiary designation must be signed, dated and delivered to the
Committee. In the absence of a valid 


 


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or
effective beneficiary designation, the Participant’s surviving spouse will be
his or her beneficiary or, if there is no surviving spouse, the Participant’s
estate will be his or her beneficiary. If a married Participant designates
anyone other than his or her spouse as his or her beneficiary, such designation
will be void unless it is signed and dated by the Participant’s spouse.


 


5.  Withholding. The Company will withhold from
any Plan distribution all required federal, state, local and other taxes and
any other payroll deductions that may be required.


 


6.  Administration. The Plan is administered and
interpreted by the Company. The Company has delegated to the Committee certain
responsibilities under the Plan. The Committee has the full and exclusive
discretion to interpret and administer the Plan. All actions, interpretations
and decisions of the Committee are conclusive and binding on all persons, and
will be given the maximum possible deference allowed by law.  Subject to the provisions of the Plan, the
Committee shall have full authority to select, in its sole discretion the
Participant to whom Variable Compensation Awards will be granted.


 


7.  Amendment or Termination. Through March 31,
2009, the Committee, in its sole and unlimited discretion, may amend or
terminate the Plan at any time, without prior notice to any Participant. After April 1,
2009, the Committee may amend or terminate the Plan provided that any such
amendment does not reduce or increase any benefit to which a Participant has
accrued and is otherwise entitled to under the terms of the Plan, nor
accelerate the timing of any payment under the Plan. Notwithstanding the
foregoing to the contrary, the Company reserves the right to the extent it
deems necessary or advisable, in its sole discretion, to unilaterally alter or
modify the Plan and any Variable Compensation Awards made thereunder to ensure
that the Plan and Variable Compensation Awards provided to Participants who are
U.S. taxpayers are made in such a manner that either qualify for exemption from
or comply with Code Section 409A; provided, however, that the Company
makes no representations that the Plan or any Variable Compensation Awards made
thereunder will be exempt from or comply with Code Section 409A and makes
no undertaking to preclude Code Section 409A from applying to the Plan or
any Variable Compensation Awards made thereunder. The Plan shall automatically
terminate on the date when no Participant (or beneficiary) has any right to or
expectation of payment of further benefits under the Plan.


 


8.  Source of Payments. All payments under the
Plan will be paid in cash from the general funds of the Company. No separate
fund will be established under the Plan, and the Plan will have no assets. Any
right of any person to receive any payment under the Plan is no greater than
the right of any other general unsecured creditor of the Company. This Plan
shall be binding upon the Company’s successors and assigns.


 


9.  Inalienability. A Participant’s rights to
benefits under the Plan are not subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or
garnishment by creditors of the Participant or the Participant’s beneficiary.


 


10.  Applicable Law. The provisions of the Plan
will be construed, administered and enforced in accordance with the laws of the
State of California without reference to its principles of conflicts-of-laws.


 


11.  Severability. If any provision of the Plan is
held invalid or unenforceable, its invalidity or unenforceability will not
affect any other provision of the Plan, and the Plan will be construed and
enforced as if such provision had not been included.


 


12.  No Right of Continued Employment. THIS PLAN
DOES NOT GIVE ANY ELIGIBLE EMPLOYEE OR PARTICIPANT THE RIGHT TO BE RETAINED AS
AN EMPLOYEE. SUBJECT TO THE TERMS OF ANY WRITTEN EMPLOYMENT AGREEMENT TO THE
CONTRARY, THE COMPANY SHALL HAVE THE RIGHT TO TERMINATE OR CHANGE THE TERMS OF
EMPLOYMENT OF AN ELIGIBLE EMPLOYEE OR A PARTICIPANT AT ANY TIME AND FOR ANY
REASON WHATSOEVER, WITH OR WITHOUT CAUSE.


 


13.  Bindings on Successor.  The liabilities and obligations of the
Company under this Plan will be binding upon any successor corporation or
entity which succeeds to all or substantially all of the assets and business of
the Company by merger or other transaction.


 


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IN
WITNESS WHEREOF, GSI Technology, Inc., by its duly authorized officer, has
executed the Plan on the date indicated below.


 


 


GSI
TECHNOLOGY, INC.


 


 


	
  /s/
  Lee-Lean Shu

  	
   

  
	
  Name:
  Lee-Lean Shu

  	
   

  
	
  Title:
  Chief Executive Officer

  	
   

  



 


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