exhibit_10-1.htm


    Exhibit
10.1

     

    
      SonoSite,
Inc.

      FY2009
Variable Incentive Bonus Plan

      


      1.
Purpose

      


      The
SonoSite, Inc FY2009 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 2009 fiscal year beginning January 1,
2009, through December 31, 2009 (the “Plan Year”). This Plan is limited in
time and will expire automatically on December 31, 2009 (“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
      President 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
      Incentive Target Percentage as well as provide information about the
      Performance Graph (as each such term in 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 he or she meets all the following
conditions:

      


      
        	
                (a)

              	
                He
      or she has signed the individualized Executive Compensation Plan 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;

              
	 
      	 
      
	
                (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);

              
	 
      	 
      
	
                (e)

              	
                He
      or she has not transferred to a position with the Company that either
      (1) is not eligible for participation in this Plan (as determined in
      the Administrator’s sole discretion), 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 actions, 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 Formulas”):

              
	 
      	 
      
	 
      	
                Base
      Salary 

              	
                X

              	
                Incentive
      Target Percentage

              	
                X

              	
                Matrix
      Percentage Factor

              	
                =

              	
                VIP
      Payout

              
	 
      	 
      
	 
      	
                The
      “Base Salary” is the Participant’s base salary actually paid to the
      Participant for the Plan Year; provided that such base salary will be
      prorated based on hire or promotion date or to take into account any
      leaves of absence.  Nothing in this Plan, or arising as a result
      of a Participant’s participation in this Plan, shall prevent the Company
      from changing a Participant’s Base Salary at any time based on such
      factors as the Company shall in its discretion determine to be
      appropriate.

              
	 
      	 
      
	 
      	
                The
      “Incentive Target Percentage” is a percentage of Base Salary determined by
      the Administrator according to such factors as it, in its sole discretion,
      deems appropriate, including job function, individual Participant
      performance, competitive market data and historical Company
      compensation.

              
	 
      	 
      
	 
      	
                The
      “Matrix Percentage Factor” shall be a percentage set forth in a graph (the
      “Performance Graph”) approved by the Administrator.  One axis
      shall reflect the Revenue Factor and the other axis shall reflect the
      Operating Profit Factor.  In calculating actual VIP Payouts,
      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 Operating Profit
      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 determined by the Administrator and set forth in
      written resolutions. When the Revenue Factor falls between the stated
      targets, the Revenue Factor will be determined using a straight-line
      interpolation approach.

              
	 
      	 
      
	 
      	
                The
      “Operating Profit Factor” is determined based upon the achievement by the
      Company of annual corporate operating profit 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 Operating Profit
      Factor in writing after the close of the Plan Year. Operating profit shall
      be defined as EBIT (Earnings Before Interest and Taxes) and shall be
      measured in accordance with generally accepted accounting principles,
      excluding certain one-time extraordinary charges or other adjustments as
      determined by the Administrator and set forth in written resolutions. 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 includes accruals
      for the VIP Payouts.  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)

              	
                VIP
      Payouts shall be unsecured, unfounded obligations 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.

              
	 
      	 
      
	
                (d)

              	
                In
      the event of a Participant’s death, participation in the Plan will
      cease.  Earned prorated VIP Payouts 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.

              
	 
      	 
      
	
                (e)

              	
                VIP
      Payouts for Participants designated for participation by the Administrator
      after the beginning of the fiscal year will be prorated to reflect actual
      length of service during the Plan Year (with such proration occurring
      either through the amount of Base Salary 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.

              
	 
      	 
      
	
                (f)

              	
                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 Operating Profit 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
      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 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.

                          
	 
      	 
      
	
                            (f)

                          	
                            Entire
      Agreement. This Plan, and any resolutions of the Administrator
      amending, interpreting or administering the Plan, are the entire
      understanding between the Company and the employee regarding the subject
      matter of this Plan and supersede 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. Participation in this Plan during the Plan 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 or
      redundancy payments, end-of-service premiums, bonuses, long-service
      awards, overtime premiums, pension or retirement benefits or other similar
      payments.