profire2021annualincenti






  110803650.5 0059466-00001   Profire Energy, Inc.  2021 Executive Incentive Plan      1. Purpose.  The purpose of this 2021 Executive Incentive Plan (the “Plan”) is to  enable Profire Energy, Inc., a Nevada corporation (the “Company”), to attract, retain, motivate  and reward management employees by providing them with the opportunity to earn annual  incentive compensation linked to Company performance.    2. Effective Date and Performance Period.  The effective date of the Plan is  January 1, 2021.  The performance period under the Plan will commence on January 1, 2021 and  terminate on December 31, 2021.    3. Administration.  The Plan is being entered into pursuant to the Company’s 2014  Equity Incentive Plan (the “2014 Plan”) as a Performance Award (as such term is defined in the  2014 Plan).  Under the 2014 Plan, the Compensation Committee (the “Committee”) of the Board  of Directors of the Company (the “Board”) may make incentive grants subject to certain  additional terms and conditions (not inconsistent with the 2014 Plan). The Committee, acting  under the authority of the Board, shall administer and interpret the Plan.  The Plan shall conform  in all respects to the terms of the 2014 Plan and the Committee’s interpretations and  determinations under the Plan shall be final and conclusive.    4. Participation.  The Committee has determined the management employees  eligible to participate in the Plan (the “Participants”) and the target incentive compensation  amounts determined as a percentage of the anticipated base salary on December 31, 2021 (the  “Target Incentive Compensation Amount”) of each Participant as set forth in Exhibit A.    A. Brenton W. Hatch Participation: Pursuant to Mr. Hatch’s Second Amended  and Restated Employment Agreement dated July 2, 2020, he is to serve as Executive Chairman  of the Company for a maximum of 50% of the 2021 calendar year. His final incentive  compensation amount pursuant to this Plan will be 50% of the amount it otherwise would be if  he had served as Executive Chairman for the full 2021 calendar year. Therefore, Mr. Hatch’s  Target Incentive Compensation Amount as set forth in Exhibit A is equal to 50% of the amount  it otherwise would be if he had served as Executive Chairman for the full 2021 calendar year.     5. Incentive Compensation Calculation.  The Committee shall determine incentive  compensation to Participants under the Plan as follows:      A. Performance Objectives.  The distribution of incentive compensation shall be  determined based on the achievement of the following three target performance objectives (the  “Performance Objectives”):    Performance Objectives for  fiscal year 2021 Weight Threshold Level Stretch Level  1.  Revenue 1/3 $23,000,000 $27,000,000  2.  EBITDA 1/3 $0 $750,000  3.  Non-Financial: Revenue  Source Diversification  1/3 Determined by the  Committee  Determined by the  Committee  





 






2  110803650.5 0059466-00001     (i)  “Revenue” means TOTAL REVENUES as presented on the Company’s  Statement of Operations and Other Comprehensive Income (Loss) in accordance with  U.S. generally accepted accounting principles (GAAP) and filed with the U.S. Securities  and Exchange Commission (“SEC”).    (ii)  “EBITDA” means net income for that year as adjusted by adding thereto,  to the extent deducted in calculating net income for the year, net interest expense, taxes,  depreciation and amortization.  Calculation of all components of EBITDA shall be in  accordance with GAAP and based on the consolidated financial statements of the  Company for fiscal 2021 or otherwise determined from the Company’s accounting  records on a consistent basis. EBITDA and Revenue are also collectively referred to  herein as the “Financial Performance Objectives”.  (iii)  “Non-Financial: Revenue Source Diversification” means  diversification of the Company’s revenue sources as determined by the Committee. Non- Financial: Revenue Source Diversification is also referred to herein as the “Non- Financial Performance Objective”.  Adjustments to the definitions of Revenue and EBITDA and their respective Target Levels set  forth above may be made by the Committee in the event of the occurrence of extraordinary,  unusual or non-recurring circumstances and for non-cash items that, in the judgment of the  Committee, would cause such definition or Target Level to fail to fairly reflect the performance  of the Company.  These circumstances may include acquisitions, divestitures, joint ventures,  regulatory developments, tax law changes, accounting changes, restructuring or other special  charges, other occurrences and non-cash items.  The Committee shall make the final  determination as to the calculations of the Financial Performance Objectives, and the amounts up  to the Maximum Payout Amount (as defined in Section 6) to be paid to Participants.      B. Payout Factor.  The applicable “Payout Factor” for the actually achieved  amount for each Financial Performance Objective is set forth on Exhibit B.    C. Calculation.  Subject to any limitations set forth in Section 6 relating to the  2014 Plan and the Maximum Payout Amount (as defined in Section 6), a Participant’s incentive  compensation under the Plan shall be calculated as the sum of the following for each  Performance Objective, as applicable (for each, the “Performance Objective Payout Amount”):    (i)  Financial Performance Objectives.     (a) if the actually achieved amount for the Financial  Performance Objective is less than the applicable Threshold Level, then the  Performance Objective Payout Amount will be zero ($0);    (b) if the actually achieved amount for such Financial  Performance Objective is at least the applicable Threshold Level, then the  Performance Objective Payout Amount shall equal (A) the applicable  Payout Factor multiplied by (B) the applicable Performance Objective  





 






3  110803650.5 0059466-00001   Weight (as stated in Section 5(a)) multiplied by (C) the applicable Target  Incentive Compensation Amount for such Participant.    (ii) Non-Financial Performance Objective. The Performance Objective  Payout Amount for the Non-Financial Performance Objective shall be determined  in the discretion of the Committee.    D. Payout Split.  Incentive compensation amounts earned under the Plan shall be  paid out 50% in cash (the “Cash Portion”) and 50% in shares of the Company’s common stock  (the “Stock Portion”).  In determining the number of shares of common stock to be issued to the  Participant for the Stock Portion, the Company shall divide (x) 50% of such Participant’s  aggregate incentive compensation amount by (y) the volume weighted average price per share of  the Company’s common stock over the five trading days prior to the date of the Committee’s  final determination of the incentive compensation amount (the “Incentive Compensation  Determination Date”).      6. Compliance with 2014 Plan and Incentive Compensation Amount  Limitations.      A. Compliance with 2014 Plan.  In no event shall incentive compensation paid  out under the Plan exceed the limitations set forth in the 2014 Plan.  In the event this Plan  conflicts with the terms of the 2014 Plan, this Plan shall be modified to the extent necessary to  comply with the terms of the 2014 Plan.       B. Additional Limitations.  In addition to the limitations set forth in Section 6(a)  above, in no event shall a Participant receive incentive compensation under the Plan that is in  excess of 200% of such Participant’s Target Incentive Compensation Amount (the “Maximum  Payout Amount”).      7. Payment of Incentive Compensation.  The payment of the Cash Portion and the  Stock Portion of the incentive compensation amount shall be made to Participants as soon as  practicable following the Incentive Compensation Determination Date and in any event by the  15th day of the third month following the end of the fiscal year 2021 (the “Incentive  Compensation Delivery Date”), subject to a Participant’s satisfaction of all required tax  withholding obligations as set forth in the Plan.   Provided a Participant has satisfied all required  tax withholding obligations in respect of the Stock Portion of the incentive compensation  amount, the Company shall cause to be issued and delivered to the Participant by the Incentive  Compensation Delivery Date a certificate or certificates evidencing the applicable number of  shares of the Company’s common stock registered in the name of the Participant (or in the name  of the Participant’s legal representatives, beneficiaries or heirs, as the case may be) or to instruct  the Company’s transfer agent to electronically deliver such Shares to Participant (or applicable  representative, beneficiary or heir).  If it is administratively impracticable to issue such shares  within the time frame described above because issuances of shares are prohibited or restricted  pursuant to the policies of the Company that are reasonably designed to ensure compliance with  applicable securities laws or stock exchange rules, then such issuance shall be delayed until such  prohibitions or restrictions lapse.    





 






4  110803650.5 0059466-00001   8. Termination of Employment.  If a Participant’s employment with the Company  is terminated by the Company with Cause or by the Participant without Good Reason (both as  defined in the Participant’s employment agreement), the Participant (a) shall not be entitled to  receive any incentive compensation payment for the fiscal year during which the termination of  employment occurred and (b) shall be entitled to receive the incentive compensation payment for  any prior fiscal year for which the incentive compensation payment has not been paid, with such  amount payable at the same time the applicable incentive compensation payments are made to  the other Participants.  If a Participant’s employment with the Company is terminated by the  Company without Cause or by the Participant with Good Reason,  the Participant (or the  Participant’s beneficiary) shall be entitled to receive (a) a pro rata incentive compensation  payment for the fiscal year during which the termination of employment occurred equal to the  amount the Participant would have received if employed for the entire fiscal year multiplied by a  fraction, the numerator of which is the number of days in the fiscal year the Participant was  employed and the denominator of which is 365, which amount shall be payable at the same time  the applicable incentive compensation payments are made to the other Participants and (b) the  incentive compensation payment for any prior fiscal year for which the incentive compensation  payment has not been paid, with such amount payable at the same time the applicable incentive  compensation payments are made to the other Participants.      9. General Provisions.     A. Termination; Amendment.  Subject to the terms of the 2014 Plan, the Board or  the Committee may at any time amend the Plan, except that any amendment applicable to the  Plan made after the Board or Committee has determined the Participants and the Target Incentive  Compensation Amounts shall apply only to Participants who have agreed in writing to the  amendment.        B. No Employment Rights.  Nothing in this Plan confers upon any Participant  any right to continue in the employment of the Company or any of its subsidiaries or to be  selected as a Participant in any subsequent year.     C. Nonalienation of Benefits.  Except as expressly provided herein or otherwise  required by applicable law, no Participant or beneficiary may alienate, transfer, anticipate, sell,  assign, pledge, attach, or otherwise encumber the Participant’s interest under the Plan.     D. Withholding.  The Cash Portion of any incentive compensation payable to a  Participant or a beneficiary under the Plan will be subject to any applicable federal, state and  local income and employment taxes and any other amounts that the Company or a subsidiary is  required at law to deduct and withhold from such Cash Portion of the incentive  compensation.  Regarding the Stock Portion of any incentive compensation payable to a  Participant or a beneficiary under the Plan, such Participant acknowledges that, not later than the  Incentive Compensation Delivery Date, the value of the delivered shares of common stock will  be treated as ordinary compensation income for federal and state income and FICA tax purposes,  and that the Company will be required to withhold taxes on this income amount.  The Company  will notify the Participant of the required withholding amount at least ten days prior to the  Incentive Compensation Delivery Date.  Concurrently with or prior to the delivery of the shares  of common stock as set forth in Section 7, the Participant, at his or her election (which election  





 






5  110803650.5 0059466-00001   must be made on or before the Incentive Compensation Delivery Date), shall (x) pay to the  Company the required withholding amount for the Stock Portion in cash or (y) notify the  Company that the Participant requests the Company to reduce the number of shares otherwise  deliverable for the Stock Portion by a sufficient number to cover the applicable withholding  obligations for the Stock Portion.  If a Participant elects to pay the withholding for the Stock  Portion by a reduction in shares received, the Company shall pay to the Participant in cash the  amount of any resulting over payment ascribed to such shares retained to cover withholding  obligations.    E. Plan Unfunded.  The entire cost of the Plan shall be paid from the general  assets of the Company.  The rights of any Participant or beneficiary to receive an award under  the Plan shall be only those of a general unsecured creditor, and neither the Company nor the  Board shall be responsible for the adequacy of the general assets of the Company to meet and  discharge Plan liabilities.     F. Severability.  If any provision of the Plan is held unenforceable, the remainder  of the Plan will continue in full force and effect without regard to such unenforceable provision  and will be applied as though the unenforceable provision were not contained in the Plan.     G. Governing Law.  The Plan will be construed in accordance with and governed  by the laws of the State of Utah, without reference to the principles of conflict of laws.     H. Headings.  Headings are inserted in the Plan for convenience of reference only  and are to be ignored in any construction of the provisions of the Plan.    I. Section 409A.  This Plan and the payments contemplated herein are intended  to be exempt from or in compliance with Section 409A and shall be interpreted and administered  consistent with such intent.  





 






  110803650.5 0059466-00001   Exhibit A    Participants; Target Incentive Compensation Amount      Participant  Target Incentive  Compensation  Currency  Brenton Hatch $ 200,000  USD  Ryan Oviatt $ 150,000 USD  Cameron Tidball $ 150,000 USD  Jay Fugal $   54,000  USD  Patrick Fisher $   51,000 CAD  





 






  110803650.5 0059466-00001   Exhibit B  Payout Factors          





 






110803659.3 0059466-00001 EXHIBIT B  [2021 Plan Revenue Diversification Evaluation Criteria Examples]  • 1-3 Press/IR/Earnings Call worthy announcement related to revenue diversification strategy. • $50,000-$250,000 USD in Non Oil and Gas purchase orders received in fiscal year.  • 3-9+ Non Oil and Gas project executed and invoiced in the fiscal year.