Exhibit 10.1


 


DORMAN
PRODUCTS, INC.

EXECUTIVE CASH BONUS PLAN


 


1.                                      PURPOSE OF THE PLAN


 


Dorman Products, Inc.
(the “Company”) believes in providing incentives to attract, retain and reward
executive officers who are responsible for providing leadership to the Company
in attaining established business objectives.


 


The purpose of the Dorman
Products, Inc. Executive Cash Bonus Plan (the “Plan”) is to align
management’s efforts with the strategic goals of the Company through
competitive annual incentive opportunities. The Plan will be effective for
fiscal year 2010 (the “Plan Year”) subject to approval by the shareholders of
the Company in accordance with the laws of the Commonwealth of
Pennsylvania.  The Plan will
automatically renew upon the beginning of each fiscal year unless terminated by
the Compensation Committee of the Board of Dorman Products, Inc. (the “Committee”).


 


2.                                      ELIGIBILITY AND
PARTICIPATION


 


For each Plan
Year, the Committee shall select the employees of the Company and/or its
subsidiaries who are to participate in the Plan from among the executive
employees of the Company and/or its subsidiaries (each selected employee, a “Participant”).


 


No person shall be
entitled to any bonus under this Plan for a Plan Year unless the individual is
designated as a Participant for that Plan Year. The Committee may add to or
delete individuals from the list of designated Participants at any time and
from time to time, in its sole discretion, subject to any limitations required
to comply with Section 162(m) of the Internal Revenue Code of 1986,
as amended, and the rules, regulations and guidance thereunder (the “Code”).


 


3.                                      TARGET BONUS AND
PERFORMANCE MEASURES


 


Target
Awards


 


No later than 90 days
after the beginning of the Plan Year, the Committee shall establish the annual
cash incentive bonus target (the “Bonus Target”) for each Participant in the
Plan and the performance measures for that Plan Year.  The Bonus Target is determined based on the
Participant’s position and responsibilities in the organization. The maximum
cash bonus that may be paid in any single year to any Participant is
$2,000,000.


 


Performance
Measurement


 


Performance measures to
be used by the Committee shall be chosen from among the following factors, or
any combination of the following, as the Committee deems appropriate:  (a) total shareholder return; (b) growth
in revenues, sales, market share, gross income, net income, pre-tax income,
stock price, and/or earnings per share; (c) return on assets, net assets,
and/or capital; (d) working capital, free cash flow and/or after tax cash
flow; (e) return on shareholders’ equity; (f) economic or shareholder
value added; or (g) improvements in costs and/or expenses.  The Committee may select among the
performance measures specified above from Plan Year to Plan Year which need not
be the same for each Participant in a given year.


 


At the end of the Plan
Year and prior to payment, the Committee shall certify in writing the extent to
which the performance measures and other material terms of the Plan were
satisfied by each Participant and shall establish for each Participant the
aggregate earned bonus amount (the “Bonus Amount”) for such Plan Year .  Final Bonus Amounts will vary based on the
level of achievement measured against the pre-determined performance
measures.  In no event may a bonus paid
exceed the Bonus Target and any bonus paid in excess of the Bonus Amount may
only be made in the case of death or disability during the Plan Year to the
extent permissible under Code Section 162(m) and Code Section 409A.


 


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4.                                      BONUS PAYMENT SCHEDULE


 


Bonus Amounts earned
under the Plan will be paid as set forth below, but not before the Committee
certifies in writing the extent to which the performance measures specified in
the Plan (except to the extent permitted under Code Section 162(m) and
provided in Section 6) were, in fact, satisfied.


 


Except as may be approved
by the Committee in compliance with Code Section 162(m), each Participant
must be employed full-time on the scheduled date of payment to receive that
portion of the Bonus Amount.  A payment
equal to fifty percent (50%) of a Participant’s Bonus Amount will be paid
within 75 days following the end of the Plan Year in which the Bonus Amount was
earned; a payment equal to twelve and a half percent (12.5%) of a Participant’s
Bonus Amount, will be paid on each of the days that is 180, 270, 360 and 450
days after the end of the Plan Year.  
Each payment under the Plan is deemed to be a separate payment for purposes
of Section 409A of the Code.


 


5.                                      ADMINISTRATION OF THE
PLAN


 


The Committee shall have
full power to administer and interpret the Plan and, in its sole discretion,
may establish or amend rules of general application for the administration
of the Plan and may amend or terminate the Plan at any time.  All decisions of the Committee on any
question concerning the selection of Participants and the interpretation and
administration of the Plan shall be final, conclusive and binding upon all
parties. The Committee may rely on information, and consider recommendations,
provided by the Board or the officers of the Company. The Plan is intended to
comply with Code Section 162(m), and all provisions contained herein shall
be limited, construed and interpreted in a manner to comply therewith. Payments
under the Plan are intended to comply with or be excluded from the application
of Code Section 409A, and, to the maximum extent permitted, this Plan
shall be construed and interpreted to be in compliance therewith or exempt
therefrom.


 


6.                                      PRO-RATED BONUS


 


The Committee, in its
sole and absolute discretion and to the extent permitted under and in
accordance with Code Section 162(m) and Code Section 409A, may,
but is not required to make a full or pro-rated bonus payment to a Participant
for a Plan Year in the event of the Participant’s death, disability,
retirement, or termination of employment during the Plan Year or after the end
of the Plan Year; provided, that payments shall only be made on the earlier of (i) the
death or disability of the Participant or (ii)  the scheduled payment date
as set forth above.


 


7.                                      NON-ASSIGNABILITY


 


No bonus under
this Plan or payment thereof nor any right or benefit under this Plan shall be
subject to anticipation, alienation, sale, assignment, pledge, encumbrance,
garnishment, execution or levy of any kind or charge, and any attempt to
anticipate, alienate, sell, assign, pledge, encumber and to the extent
permitted by applicable law, charge, garnish, execute upon or levy upon the
same shall be void and shall not be recognized or given effect by the
Company.   Except as expressly provided
by the Committee, the rights and benefits under the Plan shall not be
transferable or assignable other than by will or the laws of descent and
distribution.


 


8.                                      NO RIGHT TO EMPLOYMENT  


 


Nothing in the
Plan or in any notice of any bonus pursuant to the Plan shall confer upon any
person the right to continue in the employment of the Company or one of its
subsidiaries or affiliates nor affect the right of the Company or any of its
subsidiaries or affiliates to terminate the employment of any person.


 


9.                                      AMENDMENT OR TERMINATION  


 


The Company
reserves the right in its Board (or a duly authorized committee thereof) to
amend, suspend or terminate the Plan or to adopt a new plan in place of this
Plan at any time; provided, however, that no such amendment shall, without the
prior approval of the shareholders of the Company in accordance with the laws
of the 


 


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Commonwealth of
Pennsylvania to the extent required under Code Section 162(m): (i) alter
the performance measures as set forth in Section 3, or  (ii) implement any change to a provision
of the Plan requiring shareholder approval in order for the Plan to comply with
the requirements of Code Section 162(m). Furthermore, no amendment,
suspension or termination shall, without the consent of the Participant, alter
or impair a Participant’s right to receive payment of a bonus otherwise earned
and payable hereunder.


 


10.                               SEVERABILITY  


 


In the event that
any one or more of the provisions contained in the Plan shall, for any reason,
be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
of the Plan, and the Plan shall be construed as if such invalid, illegal or
unenforceable provisions had never been contained therein.


 


11.                               WITHHOLDING  AND REPORTING


 


The Company shall
have the right to make such provisions as it deems necessary or appropriate to
satisfy any obligations it may have to withhold federal, state and/or local
income or other taxes incurred by reason of payments pursuant to the Plan or to
report any amounts paid or payable under this Plan.


 


12.                               GOVERNING LAW


 


This Plan and any
amendments thereto shall be construed, administered and governed in all
respects in accordance with the laws of the Commonwealth of Pennsylvania
(regardless of the law that might otherwise govern under applicable principles
of conflict of laws).


 


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