Exhibit 10.1

SonoSite, Inc.

FY2011 Variable Incentive Bonus Plan (162(m) Qualified)

1. Purpose

The SonoSite, Inc FY2011 Variable Incentive Bonus 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 SonoSite, Inc. and its subsidiaries (the “Company”); and
(iii) promote retention of participating employees. The Plan is intended to
achieve these objectives through the payment of “Cash Awards” or “Stock Awards”
pursuant to the SonoSite, Inc. Amended and Restated 2005 Stock Incentive Plan,
as approved by the Company’s stockholders on April 22, 2008 (the “SIP”). If
there is any conflict between the Plan and the SIP, the SIP will prevail.

2. Effective Date

This Plan is only effective for the Company’s 2011 fiscal year beginning
January 1, 2011, through December 31, 2011 (the “Plan Year”). This Plan is
limited in time and will expire automatically on December 31, 2011 (“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 the variable incentive plan payouts hereunder (as further
defined in Section 5 below, the “VIP Payouts”), (c) certify the applicable
Matrix Percentage Factors (as defined in Section 5 below) after the completion
of the Plan Year, (d) interpret the Plan and the VIP Payouts, (e) adopt rules
for the administration, interpretation and application of the Plan as are
consistent therewith, and (f) interpret, amend or revoke any such rules. The
Company’s CEO and its Vice President, Human Resources 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) Subject, where applicable, to the requirements of Section 162(m)(4)(C) of
the Internal Revenue Code of 1986, as amended (the “Code”), 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 copy of the Plan to each Participant (as defined
in Section 4 below) and communicate to each Participant his or her Individual
Award Percentage as well as provide information about the Performance Graph (as
each such term is defined in Section 5 below).

4. Eligibility

Any full-time regular employee of the Company may be eligible to participate in
this Plan, provided he or she is designated by the Administrator as a
participant and as to whom the Administrator has not, in its sole discretion,
withdrawn such designation (a “Participant”) and provided he or she meets all
the following conditions:

 

(a) He or she has signed the individualized Executive Compensation Summary
Document to which this Plan is attached;

 

(b) He or she is a full-time regular employee of the Company as of both (1) the
last day of the Plan Year, and (2) the date the payment is made (subject to
Section 6 below);

 

(c) He or she is not concurrently participating in a sales incentive or
commission plan, or in any other bonus plan operated by or bonus contract with
the Company, unless specifically permitted by the Administrator;

 

(d) He or she has not entered into an agreement relating to termination of his
or her employment with the Company (other than an employment agreement or offer
letter, change of control agreement, or equity compensation agreement that
provides for certain benefits in connection with the Participant’s future
termination of employment);

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(e) Unless otherwise specified or determined by the Administrator in its sole
discretion, he or she has not transferred to a position with the Company that
either (1) is not eligible for participation in this Plan, or (2) is eligible
for participation in another annual bonus program offered by the Company; and

 

(f) He or she is not subject to a Performance Improvement Plan or other
disciplinary action, including not having engaged in any activity that the
Administrator determines to be competitive with the Company and its business.

5. Plan Metrics

 

(a) Each Participant shall be designated in writing as a Participant. Subject to
Section 5(b), the VIP Payout under this Plan for each Participant will be
calculated based upon the following formula (the “Payout Formula”):

 

Individual Incentive Target

Dollars

   ×   

Matrix Percentage

Factor

   =    VIP Payout

The “Matrix Percentage Factor” is a percentage set forth in a graph (the
“Performance Graph”) approved by the Administrator. One axis reflects the
Revenue Factor and the other axis reflects the EBITDAS Factor. In calculating
actual VIP Payout, determination of the applicable Matrix Percentage Factor for
the above formula shall be made with reference to actual Company annual results
with respect to each of the Revenue Factor and the EBITDAS Factor.

The “Revenue Factor” is determined based upon the achievement by the Company of
annual corporate revenue targets established by the Administrator in writing not
later than 90 days after the commencement of the Plan Year. The Administrator
shall certify the actual Revenue Factor in writing after the close of the Plan
Year. Revenue shall be measured in accordance with generally accepted accounting
principles, excluding certain one-time extraordinary charges, as permitted under
the SIP and as determined by the Administrator, set forth in written
resolutions.

The “EBITDAS Factor” is determined based upon the achievement by the Company of
annual corporate EBITDAS targets established by the Administrator in writing not
later than 90 days after the commencement of the Plan Year. The Administrator
shall certify the actual EBITDAS Factor in writing after the close of the Plan
Year. EBITDAS shall be measured in accordance with generally accepted accounting
principles, including the accrual of the aggregate VIP Payout and excluding
certain one-time extraordinary charges, as permitted under the SIP and as
determined by the Administrator, set forth in written resolutions.

The “Individual Incentive Target Dollars” are the dollars to be paid to a
Participant upon 100% achievement on the Matrix Performance Graph. The
Individual Incentive Target Dollars are determined at the beginning of the Plan
Year by the Administrator, and will be based on the prior year’s performance,
expected contributions, and scope of responsibility of the Participant for the
Plan Year.

The “VIP Payout” is determined by multiplying the Individual Incentive Target
Dollars by the Matrix Percentage Factor. The aggregate amount of the VIP Payout
(as to all Participants) shall not exceed the aggregate amount accrued by the
Company for the VIP Payout for the Plan Year.

 

(b) Notwithstanding anything to the contrary contained herein, the Administrator
has the discretion to determine to pay less than the full amount (including to
pay zero percent) of the VIP Payout to which any Participant would otherwise be
entitled, which determination shall be based upon such factors as the
Administrator determines appropriate (including without limitation as a result
of the Company’s or a Participant’s failing to achieve one or more objectives
with respect to the Plan Year, as a result of which it would be against the best
interests of the Company and its shareholders to pay all or any portion of such
VIP Payout).

 

(c) All awards granted under the Plan shall be subject to any Company recoupment
or clawback policy, as in effect from time to time, including any required by
Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

 

(d) VIP Payouts shall be unsecured, unfunded obligations of the Company and
shall be paid from the general assets of the Company. To the extent they have
any rights under this Plan, Participants’ rights shall be those of general
unsecured creditors of the Company.

 

(e) In the event of a Participant’s termination of employment prior to the date
on which VIP Payouts are made (other than as a result of his or her death),
participation in the Plan will cease and the Participant will not be entitled to
any VIP Payout. In the event of a Participant’s death, participation in the Plan
will cease. Earned prorated VIP Payouts (including VIP Payouts where the
Participant was employed as of the end, but dies following completion, of the
Plan Year) will be paid to the employee’s estate after the end of the Plan Year
(as provided in Section 6 below) but only to the extent VIP Payouts are made to
other Plan Participants.

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(f) VIP Payouts for Participants designated for participation by the
Administrator after the beginning of the Plan Year will be prorated to reflect
actual length of service during the Plan Year (with such proration occurring
either through the amount of the Individual Incentive Target Dollars reflected
in the Payout Formula or otherwise in order to reflect the appropriate amount of
VIP Payout given actual length of service). Proration shall be based upon number
of full months worked, with credit being given for a full month of service if
the Participant worked for at least 15 calendar days of any month.

 

(g) VIP Payouts for Participants with unpaid leaves of absence (other than FMLA
or leaves of absence required under federal, state or local law or regulations)
exceeding 90 days during the Plan Year (not including PTO used or eligible
medical/family leave) will be prorated to exclude the entire leave of absence.
VIP Payouts for Participants with leaves of absence less than or equal to 90
days during the Plan Year 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
an annual basis by March 1 following the end of the Plan Year, but only after
the Administrator has certified the Revenue Factor and EBITDAS Factor for the
Plan Year in writing. VIP Payouts may be made in the form of “Cash Awards” under
the SIP, in the form of “Stock Awards” under the SIP, or in any combination of
both, as determined by the Administrator.

7. Plan Changes; No Entitlement

Subject, where applicable, to the requirements of Section 162(m)(4)(C) of the
Code, the Administrator may at any time amend, suspend or terminate this Plan,
including amending any aspect of the Payout Formula or the Performance Graph,
and may amend the Plan so as to ensure that no amount paid or to be paid
hereunder shall be subject to the provisions of Section 409A(a)(1)(B) of the
Code; provided that no amendment of this Plan, the Payout Formula or the
Performance Graph shall have the effect of increasing any VIP Payment. Nothing
in this Plan is intended to create an entitlement to any employee for any
incentive payment hereunder.

8. General Provisions

 

(a) Tax Matters. The Company shall withhold all applicable taxes from any VIP
Payout, including any federal, state and local taxes. It is intended that VIP
Payouts granted under this Plan will be exempt from the requirements of Code
Section 409A, and this Plan and awards granted hereunder will be interpreted
consistently with that intent.

 

(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 or 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 Washington, but without regard to its
conflict of law provisions.