exv10w19



 





Exhibit 10.19



 








 




 




Virage Logic Corporation

FY2004 Variable Incentive Pay Plan




 









 





1. Purpose




The Virage Logic Corporation FY 2004 Variable Incentive Pay Plan (the
“Plan”) is intended to: (i) enhance shareholder value by promoting strong
linkages between employee contributions and company performance; (ii)
support achievement of the business objectives of Virage Logic
Corporation and its subsidiaries (the “Company”); and (iii) promote
retention of employees.



2. Effective Date




This Plan is only effective for the Company’s 2004 fiscal year beginning
October 1, 2003, through September 30, 2004 (the “Fiscal Year”). This
Plan is limited in time and will expire automatically on September 30,
2004 (“Expiration Date”). This Plan also supersedes all prior bonus or
commission incentive plans, whether with the Company or any subsidiary or
affiliate thereof, or any written or verbal representations regarding the
subject matter of this Plan.



3. Administration





	 	(a)	 	The Plan shall be administered by the Compensation Committee
of the Board of Directors of the Company (the “Administrator”). The
Administrator shall have all powers and discretion necessary or
appropriate to administer the Plan and to control its operation,
including, but not limited to, the power to (a) determine which
employees are eligible to participate in the plan, (b) prescribe the
terms and conditions of VIP Payouts, (c) interpret the Plan and the
VIP Payouts, (d) adopt rules for the administration, interpretation
and application of the Plan as are consistent therewith, and (e)
interpret, amend or revoke any such rules. The Chief Financial
Officer and the Controller will be responsible for implementing the
Plan.
	 
	 	(b)	 	All determinations and decisions made by the Administrator,
the Board, and any delegate of the Administrator pursuant to the
provisions of the Plan shall be final, conclusive, and binding on
all persons, and shall be given the maximum deference permitted by
law.
	 
	 	(c)	 	The Administrator, in its sole discretion and on such terms
and conditions as it may provide, may delegate all or part of its
authority and powers under the Plan to one or more directors and/or
officers of the Company.
	 
	 	(d)	 	The Company shall provide a summary description of the Plan
to each Participant and communicate to each Participant his or her
Incentive Target Percentage. The Company will provide Participants
in the plan quarterly updates on progress toward achievement of the
Company’s revenues and operating profits targets.





4. Eligibility




Any full-time regular employee of the Company in the U.S. may be eligible
to participate in this Plan, provided he or she meets all the following
conditions (“Participant”):





	 	(e)	 	Has been employed by the Company for at least one full fiscal
quarter prior to the beginning of the fiscal quarter with respect of
which a payment may be made;
	 
	 	(f)	 	is a full-time regular employee of the Company at the last
day of the fiscal quarter with respect of which a payment may be
made;
	 
	 	(g)	 	is not concurrently participating in a sales incentive or
commission plan;
	 
	 	(h)	 	has not entered into an employment termination agreement
(including, but not limited to, any agreement, other than an
employment agreement or offer letter, in respect of an employee’s
termination of employment); and
	 
	 	(i)	 	is not subject to a Performance Improvement Plan or other
disciplinary actions.





 









 





5. Plan Metrics




(a) Subject to Section 5(b), the payout under this Plan (the “VIP
Payout”) of each employee will be determined based upon the following
formula:



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Base Salary

	 	X
	 	Incentive Target

Percentage
	 	X
	 	(Revenue Factor/2
	 	+
	 	Operating Profits
Factor/2)	 	=	 	Total VIP Payout








The Base Salary is the base salary actually paid to the employee in the
fiscal quarter for which a VIP Payout is calculated




Incentive Target Percentage is a percentage of base salary determined by
the Administrator according to job function.




Revenue Factor is determined based upon the achievement by the Company of
revenue targets established by the Administrator. Revenue shall be
measured in accordance with generally accepted accounting principles,
excluding certain one-time charges as determined by the Administrator.
When the Revenue Factor falls between the stated targets, the Revenue
Factor will be determined using a straight-line interpolation approach.
In the event that the Company does not reach at least 81% of the
operating profits target for the fiscal quarter, the Revenue Factor shall
be zero.




Operating Profit Factor is determined based upon the achievement by the
Company of operating profit targets established by the Administrator.
Operating profit shall be measured in accordance with generally accepted
accounting principles, excluding certain one-time charges as determined
by the Administrator. When the Operating Profit Factor falls between the
stated targets, the Operating Profit Factor will be determined using a
straight-line interpolation approach.




(b) All VIP Payouts shall be paid from the general assets of the Company,
but only to the extent that the operating profit of the Company for the
fiscal quarter exceed the operating profit target determined by the
Administrator for such fiscal quarter at the 100% level (the “VIP Pool”).
In the event that the VIP Pool is not sufficient to cover all VIP
Payouts for the fiscal quarter, the Administrator may, at its sole
discretion, (i) provide that the VIP payouts will be pro-rated based on
the full amount each employee would have received if the full VIP Payouts
were made; or (ii) cancel the grant of the VIP Payouts for such fiscal
quarter, in which case the participants in the Plan shall have no rights
to receive any partial or full VIP Payout for such fiscal quarter.




(c) In the event of a Participant’s death, participation in the Plan will
continue for 30 days following the date of death, or the end of the
fiscal quarter, whichever occurs first. Earned prorated VIP payments
will be paid to the employee’s estate after the end of the quarterly
payout schedule.




(d) VIP payouts for employees with unpaid leaves of absence exceeding 90
days during fiscal year 2004 (not including PTOs used) will be prorated
to exclude the entire leave of absence. VIP Payouts for employees with
leaves of absence less than or equal to 90 days during FY2004 will not be
prorated to exclude the leave of absence.



6. Timing and Form of Payment of VIP Payouts




Subject to the terms and conditions of this Plan, VIP Payouts shall be
made on a quarterly basis by the end of the month following the end of
the fiscal quarter.



7. Plan Changes




The Compensation Committee of the Board may at any time amend, suspend,
or terminate this Plan. Nothing in this Plan is intended to create an
entitlement to any employee for any incentive payment hereunder.



 









 





8. General Provisions





	 	(a)	 	Tax Withholding. The Company shall withhold all applicable
taxes from any VIP Payout, including any federal, state and local
taxes.
	 
	 	(b)	 	No Effect on Employment or Service. Nothing in the Plan shall
interfere with or limit in any way the right of the Company to
terminate any Participant’s employment or service at any time, with
or without cause. Employment with the Company is on an at-will basis
only. The Company expressly reserves the right, which may be
exercised at any time, to terminate any individual’s employment with
or without cause without regard to the effect it might have upon him
or her as a Participant under this Plan.
	 
	 	(c)	 	Nontransferability of Awards. No award granted under the Plan
may be sold, transferred, pledged, assigned, or otherwise alienated
or hypothecated, other than by will, by the laws of descent and
distribution. All rights with respect to an award granted to a
Participant shall be available during his or her lifetime only to
the Participant.
	 
	 	(d)	 	Severability. In the event any provision of the Plan shall be
held illegal or invalid for any reason, the illegality or invalidity
shall not affect the remaining parts of the Plan, and the Plan shall
be construed and enforced as if the illegal or invalid provision had
not been included.
	 
	 	(e)	 	Governing Law. The Plan and all awards shall be construed in
accordance with and governed by the laws of the State of California,
but without regard to its conflict of law provisions.
	 
	 	(f)	 	Entire Agreement. This Plan, and any resolutions of the
Compensation Committee of the Board amending the Plan, is the entire
understanding between the Company and the employee regarding the
subject matter of this Plan and supersedes all prior bonus or
commission incentive plans, or employment contracts whether with any
subsidiary, or affiliate thereof (including Virage Logic
Corporation) or any written or verbal representations regarding the
subject matter of this Plan. Participation in this Plan during the
Fiscal Year will not convey any entitlement to participate in this
or future plans or to the same or similar bonus benefits. Payments
under this Plan are an extraordinary item of compensation that is
outside the normal or expected compensation for the purpose of
calculating any extra benefits, termination, severance, redundancy,
end-of-service premiums, bonuses, long-service awards, overtime
premiums, pension or retirement benefits or other similar payment.