Exhibit 10.14

 

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2017 Management Incentive Plan (MIP)

 

I.

Purpose

The 2017 MIP is designed to provide an incentive for key members of the MiMedx
Group, Inc. (“MiMedx” or “Company”) management team to exceed the 2017 Business
Plan and reward those management team members with deserving performance. The
MiMedx Board of Directors (the “Board of Directors”) has complete authority to
interpret the 2017 MIP, to prescribe, amend and rescind rules and regulations
relating to it, and to make all other determinations necessary or advisable for
the administration of the 2017 MIP (to the extent not inconsistent with
Section 162(m) of the Code for payments to Covered Employees). The portion of
this 2017 MIP applicable to Covered Employees (as defined by Section 162(m) of
the Internal Revenue Code) has been approved by the Board of Directors pursuant
to the MiMedx 2016 Equity and Cash Incentive Plan.

The goals of the 2017 MIP are:

 

  1.

To increase shareholder value.

 

  2.

To achieve and exceed the MiMedx 2017 Business Plan.

 

  3.

To reward key individuals for demonstrated performance that is sustained
throughout the year.

 

  4.

To enhance the Company’s ability to be competitive in the marketplace for
executive talent, and to attract, retain and motivate a high-performing and
high-potential management team.

 

II.

MIP Program Period

This program is in effect from January 1, 2017 through December 31, 2017. The
program is subject to adjustment by the Company at any time during or after the
program period. In the event of a program adjustment, an addendum will be
published to inform eligible participants. No such adjustment may be made if it
causes payments to Covered Employees to no longer qualify as qualified
performance-based compensation under Section 162(m) of the Code.

 

III.

MIP Participation and Eligibility

Participation and eligibility is determined by the Board of Directors with the
Compensation Committee, as defined herein, approving the eligibility of Covered
Employees. No individual is automatically included in the 2017 MIP. Only those
individuals approved by the Board of Directors and confirmed in writing are
eligible. Verbal comments or promises to any employee or past practices are not
binding on MiMedx or any of its divisions or subsidiaries in any manner.

Terminated Employees: If a participant terminates from the Company, the
following guidelines will be used for all voluntary or involuntary terminations
as well as terminations due to a Reduction in Force: Incentives are only earned
by employees who are in good standing and employed on the date payment is made.
Participants terminating employment prior to the date of payment are not
eligible for any incentive payment, regardless of the reason for termination of
employment.

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2017 MiMedx MIP

 

First Time Participants: New management employees hired or promoted into an
eligible position will be able to begin participating in the MIP on the first
day of the first full month in the eligible position. The Base Bonus will be
prorated based on the number of months employed in the eligible position. No
incentives will be earned or paid for new hires beginning employment after
September 30, 2017.

Existing Participants: Participants who transfer during the period January 1,
2017, through December 31, 2017, from one MIP eligible position to another MIP
eligible position, having either a higher or lower Base Bonus, will begin
participating at the new MIP level on the first day of the first full month in
the new position. The participant’s Base Bonus will be prorated for the months
employed in each eligible position.

Leave of Absence: Participants who have been on an approved leave of absence for
medical or other reasons for greater than 60 cumulative days, but 120 or lesser
cumulative days, during the year will receive a prorated portion of their earned
Base Bonus. Participants who have been on an approved leave of absence for
medical or other reasons for greater than 120 cumulative days during the year
will not be eligible to earn any amount of MIP for the year.

Covered Employees: The Compensation Committee shall retain discretion to name as
a participant any otherwise-eligible Covered Employee hired or promoted after
the commencement of the Plan.

 

IV.

MIP Administration

The Board of Directors has the discretion, subject to the provisions of the 2017
MIP, to make or to select the manner of making all determinations with respect
to the 2017 MIP to the extent not inconsistent with Section 162(m) for Covered
Employees. The Board of Directors has delegated the administration of the MIP to
the Compensation Committee of the Board of Directors (the “Compensation
Committee”), who in turn, will approve and subsequently make recommendations to
the Board of Directors for final approval of all determinations with respect to
the MIP. As delegated by the Board of Directors, the Compensation Committee
shall have full authority to formulate adjustments and make interpretations
under the 2017 MIP as it deems appropriate. As delegated, the Compensation
Committee shall also be empowered to make any and all of the determinations not
herein specifically authorized which may be necessary or desirable for the
effective administration of the 2017 MIP. As delegated, the bonus amounts
calculated under the 2017 MIP shall be paid only upon the Compensation
Committee’s determination, in its sole discretion, that the participant is
entitled to them. All matters of delegation of the 2017 MIP will be approved by
the Compensation Committee prior to its recommendation to the Board of Directors
for final approval. The Compensation Committee shall be comprised at all times
solely of two or more directors who are “outside directors” within the meaning
of Section 162(m) of the Code.

The Board of Directors may change the plan from time to time in any respect
except as otherwise set forth herein. All decisions made on behalf of the
Company by the Board of Directors or the Compensation Committee relative to the
plan are final and binding. The determination of compliance with the individual
objectives established under the plan for an employee shall be made by the Board
of Directors in its sole discretion after approval by the Compensation
Committee.

 

V.

MIP Incentive Determination and Payment

The 2017 MIP provides for the determination of a Base Bonus expressed as a
percentage of the participant’s annual salary in effect at the end of the
program period or the end of each respective period when a participant transfers
from one MIP eligible position to another.

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2017 MiMedx MIP

 

Participants approved for MIP participation as of January 1, 2017, are eligible
for a full year’s participation, not subject to proration if employed for the
entire year, in accordance with the provisions hereof. All incentives earned
under the MIP will be measured and paid annually.

 

VI.

MIP Participants

The 2017 MIP participants include the Chief Executive Officer (the “CEO”), plus
the direct reports to the CEO and Chief Operating Officer (the “COO”).

 

VII.

MIP Method of Calculation

Each participant’s incentive will be calculated based on the achievement of
financial targets and individual objectives. Base bonus for all MIP participants
is divided into two financial components and an individual objectives component.
75% of the base bonus is allocated to 2017 Consolidated MiMedx Revenue
performance (“Revenue”); and 25% is allocated to 2017 Consolidated MiMedx
Earnings Before Interest, Taxes, Depreciation, Amortization, and Share Based
Compensation Expense performance (“Adjusted EBITDA”).

The financial thresholds for 2017 Revenue and 2017 Adjusted EBITDA indicate the
level of respective performance where partial payouts commence. Increased
partial payouts are indicated for respective 2017 Revenue and 2017 Adjusted
EBITDA performance above the financial threshold and below the financial target.
The respective 2017 Revenue and 2017 Adjusted EBITDA targets indicate the point
at which the respective target base bonuses are earned. Each partial level of
payout and target base bonus payout for Revenue and Adjusted EBITDA is
determined independent of the other.

All performance measures and/or metrics/goals will be established in writing and
approved by the Compensation Committee and the Board of Directors no later than
the earlier of (i) ninety (90) days following the start of the fiscal year to
which they relate and (ii) before the lapse of twenty-five percent (25%) of the
period to which they relate. All performance measures and/or metrics/goals must
be uncertain of achievement at the time they are established, and the
achievement of the performance measures and/or metrics/goals must be
determinable by a third party with knowledge of the relevant facts.

Following the end of the Program Period, management will provide documentation
to the Compensation Committee confirming the degree of achievement of all
performance measures and/or metrics and performance goals pertaining to the 2017
MIP. The Compensation Committee will review the documentation from management,
and following its review, the Compensation Committee will certify, in writing,
the achievement of such performance measures and/or metrics/goals prior to the
approval of the Compensation Committee and its subsequent recommendation to the
Board of Directors for final approval and payment in accordance with such
achievement.

EBITDA Performance

MiMedx Adjusted EBITDA performance has 6 designated levels at which specific
portions of the EBITDA component (up to 100% of the Adjusted EBITDA target) are
funded for payout. The Adjusted EBITDA threshold is the gatekeeper for the
Adjusted EBITDA component. If Adjusted EBITDA performance is unfavorable to the
Adjusted EBITDA Threshold, no payout for Adjusted EBITDA performance can be
made. If Adjusted EBITDA performance is favorable to the Adjusted EBITDA
Threshold, and the Adjusted EBITDA component is paid out independent of and in
addition to the Revenue component in accordance with the terms set forth below.

Revenue Performance

The Revenue performance has 6 designated levels at which specific portions of
the Revenue component (up to 100% of the Revenue target) are funded for payout.
The Revenue performance also has an additional 6 designated levels (levels 7
through 12 in the Revenue Performance table below) above 100% of the Revenue

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2017 MiMedx MIP

 

target at which an excess bonus is funded for payout. The Revenue threshold is
the gatekeeper for the Revenue component. If Revenue performance is unfavorable
to the Revenue Threshold, no payout for Revenue performance can be made. If
Revenue performance is favorable to the Revenue Threshold, the Revenue component
is paid out independent of and in addition to the Adjusted EBITDA component in
accordance with the terms set forth below.

Revenue Performance Excess Bonus

If Revenue performance is greater than 100% of the Revenue Target (Level 6 in
the Revenue Performance table below), the participant may earn an excess bonus.
The excess bonus is earned for each level of designated revenue performance at
the excess percentage of the Revenue component plus the same excess percentage
of the earned EBITDA component (levels 7 through 12 in the Revenue performance
table below). Including the excess bonus, the total bonus cannot exceed two
(2) times a participant’s Base Bonus amount.

A table summary of the MIP calculations is as follows:

Adjusted EBITDA Performance and Portions of EBITDA Component Funded

 

  •  

Adjusted EBITDA < $48,000,000 (Level 1) = no incentive earned for any MIP
component

 

  •  

Adjusted EBITDA at $48,000,000 (Level 1) = 10% of Adjusted EBITDA target bonus
(plus earned Revenue)

 

  •  

Adjusted EBITDA at $53,500,000 (Level 2) = 25% of Adjusted EBITDA target bonus
(plus earned Revenue)

 

  •  

Adjusted EBITDA at $58,500,000 (Level 3) = 50% of Adjusted EBITDA target bonus
(plus earned Revenue)

 

  •  

Adjusted EBITDA at $62,300,000 (Level 4) = 75% of Adjusted EBITDA target bonus
(plus earned Revenue)

 

  •  

Adjusted EBITDA at $67,700,000 (Level 5) = 90% of Adjusted EBITDA target bonus
(plus earned Revenue)

 

  •  

Adjusted EBITDA at $68,500,000 (Level 6) = 100% of Adjusted EBITDA target bonus
(plus earned Revenue)

 

  •  

Adjusted EBITDA >$68,500,000 ( Level 6) = 100% of Adjusted EBITDA target bonus
(plus earned Revenue)

 

  •  

For Adjusted EBITDA performance greater that the Adjusted EBITDA target, an
Excess Bonus may only be funded based upon Revenue performance greater than 100%
of revenue target as described below.

Revenue Performance and Portions of Revenue Component Funded

 

  •  

Revenue < $265,800,000 (Level 1) = no incentive earned for Revenue component.

 

  •  

Revenue at $265,800,000 (Level 1) = 15% of Revenue target bonus (plus earned
Adjusted EBITDA)

 

  •  

Revenue at $283,900,000 (Level 2) = 40% of Revenue target bonus (plus earned
Adjusted EBITDA)

 

  •  

Revenue at $290,000,000 (Level 3) = 60% of Revenue target bonus (plus earned
Adjusted EBITDA)

 

  •  

Revenue at $296,000,000 (Level 4) = 80% of Revenue target bonus (plus earned
Adjusted EBITDA)

 

  •  

Revenue at $299,000,000 (Level 5) = 90% of Revenue target bonus (plus earned
Adjusted EBITDA)

 

  •  

Revenue at $302,000,000 (Level 6) = 100% of Revenue target bonus (plus earned
Adjusted EBITDA)

 

  •  

Revenue at $305,000,000 (Level 7) = 110% of Revenue target bonus and 110% of
earned Adjusted EBITDA

 

  •  

Revenue at $308,000,000 (Level 8) = 120% of Revenue target bonus and 120% of
earned Adjusted EBITDA

 

  •  

Revenue at $311,000,000 (Level 9) = 140% of Revenue target bonus and 140% of
earned Adjusted EBITDA

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2017 MiMedx MIP

 

  •  

Revenue at $315,000,000 (Level 10) = 160% of Revenue target bonus and 160% of
earned Adjusted EBITDA

 

  •  

Revenue at $318,500,000 (Level 11) = 180% of Revenue target bonus and 180% of
earned Adjusted EBITDA

 

  •  

Revenue at $322,000,000 (Level 12) = 200% of Revenue target bonus and 200% of
earned Adjusted EBITDA

 

  •  

The maximum MIP amount is limited to two (2) times the participant’s Base Bonus.

The Compensation Committee shall adjust the performance measures and/or
metrics/goals as the Compensation Committee in its sole discretion may determine
is appropriate in the event of unbudgeted acquisitions or divestitures or other
unexpected fundamental changes in the business, any business unit or any product
to fairly and equitably determine the bonus amounts and to prevent any
inappropriate enlargement or dilution of the bonus amounts. In that respect, the
performance measures and/or metrics/goals may be adjusted to reflect, by way of
example and not of limitation, (i) unanticipated asset write-downs or impairment
charges, (ii) litigation or claim judgments or settlements thereof,
(iii) changes in tax laws, accounting principles or other laws or provisions
affecting reported results, (iv) accruals for reorganization or restructuring
programs, or extraordinary non-reoccurring items as described in Accounting
Principles Board Opinion No. 30 or as described in management’s discussion and
analysis of the financial condition and results of operations appearing in the
Annual Report on Form 10-K for the applicable year, (v) acquisitions or
dispositions or (vi) foreign exchange gains or losses. To the extent any such
adjustments affect any bonus amounts, the intent is that the adjustments shall
be in a form that allows the bonuses payable to Covered Employees to continue to
meet the requirements of Section 162(m) of the Code for deductibility to the
extent intended to constitute qualified performance-based compensation.

Notwithstanding any other provision of the 2017 MIP, in no event may any bonuses
payable to Covered Employees under the 2017 MIP exceed the maximum amounts
payable based on achievement of Adjusted EBITDA and Revenue for 2017 (subject to
any other limits set forth in the 2017 MIP).

 

VIII.

Maximum MIP Payment Amounts

The maximum potential amount to be earned by a participant is two (2) times the
participant’s Base Bonus Amount. The determining annual base salary in the
earned payout calculation is the annual base salary in effect at the end of the
program period or the end of each respective period when a participant transfers
from one MIP eligible position to another. In all cases, the maximum earned
payout for the 2017 MIP for any one individual participant cannot exceed
$1,000,000.

 

IX.

Payment of Earned MIP Amounts

Amounts earned by participants will be paid following the Board of Directors
meeting in late February or early March, and such payment date shall be paid
between February 15, 2017 and March 15, 2017.

 

X.

Compliance with Section 162 (m)

It is the intent of the Company that the 2017 MIP and any bonuses payable under
the 2017 MIP to participants who are or may become persons whose compensation is
subject to Section 162(m) of the Code and that are intended to constitute
qualified performance-based compensation satisfy any applicable requirements of
Section 162(m) of the Code to qualify as qualified performance-based
compensation. Any provision, application or interpretation of the 2017 MIP
inconsistent with this intent shall be disregarded or deemed to be amended to
the extent necessary to conform to such requirements. The provisions of the 2017
MIP may be bifurcated by the Board of Directors upon recommendation by the
Compensation Committee at any time, so that certain provisions of the 2017 MIP
required in order to satisfy the requirements of Section 162(m) of the Code are
only applicable to participants whose compensation is subject to 162(m) of the
Code.

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2017 MiMedx MIP

 

XI.

Exemption from 409A

This Plan is intended to be exempt from the applicable requirements of
Section 409A of the Code and shall be construed and interpreted in accordance
therewith. The Committee may at any time amend, suspend or terminate this Plan,
or any payments to be made hereunder, as necessary to be exempt from
Section 409A of the Code. Notwithstanding the preceding, MiMedx shall be liable
to any participant or any other person if the Internal Revenue Service or any
court or other authority having jurisdiction over such matter determines for any
reason that any bonus to be made under this Plan is subject to taxes, penalties
or interest as a result of failing to be exempt from, or comply with,
Section 409A of the Code. The bonuses under the Plan are intended to satisfy the
exemption from Section 409A of the Code for “short-term deferrals.”

 

XII.

MIP Miscellaneous

Nothing in the MIP shall be deemed to constitute a contract for the continuance
of employment of the participants or bring about a change of status of
employment. Neither the action of the Company in establishing this program, nor
any provisions hereof, nor any action taken by the Company shall be construed as
giving any employee the right to be retained in the employ of the Company for
any period of time, or to be employed in any particular position, or at any
particular rate of remuneration.

Further, nothing contained herein shall in any manner inhibit the day-to-day
conduct of the business of the Company and its subsidiaries, which shall remain
within the sole discretion of management of the Company; nor shall any
requirements imposed by management or resulting from the conduct of the business
of the Company constitute an excuse for, or waiver from, compliance with any
goal established under this plan.

No persons shall have any right, vested or contingent, or any claim whatsoever,
to be granted any award or receive any payment hereunder, except payments of
awards determined and payable in accordance with the specific provisions hereof
or pursuant to a specific and properly approved agreement regarding the granting
or payment of an award to a designated individual.

Neither this program, nor any payments pursuant to this program, shall affect,
or have any application to, any of the Company’s life insurance, disability
insurance, PTO, medical or other related benefit plans, whether contributory or
non-contributory on the part of the employee except as may be specifically
provided by the terms of the benefit plan.

All payments pursuant to this program are in gross amounts less applicable
withholdings. To the extent required by law, the Company shall withhold from all
payments made hereunder any amount required to be withheld by Federal and state
or local government or other applicable laws. Each participant shall be
responsible for satisfying in cash or cash equivalent acceptable to the
Committee any income and employment tax withholdings applicable to any payment
under the 2017 MIP or participation’s participation in the 2017 MIP.

MiMedx reserves the right to apply a participant’s incentive payment against any
outstanding obligations owed to the Company.