Document:

Exhibit 10.1

 

AMENDMENT NO. 3 TO CREDIT AGREEMENT

 

This Amendment
No. 3 to Credit Agreement (this “Amendment”) dated as of May 12,
2008, is made among ATS CORPORATION,
a Delaware corporation (the “Borrower”), BANK OF
AMERICA, N.A., a national banking association organized and existing
under the laws of the United States, in its capacity as administrative agent
for the Lenders (as defined in the Credit Agreement (as defined below)) (in
such capacity, the “Administrative Agent”), each of the Lenders
signatory hereto and each of the Guarantors signatory hereto.

 

W I T N E S S E T H:

 

WHEREAS,
the Borrower, the Administrative Agent and the Lenders have entered into that
certain Credit Agreement dated as of June 4, 2007 (as amended by Amendment
No. 1 to Credit Agreement dated as of June 29, 2007, Amendment No. 2
to Credit Agreement, Limited Consent and Agreement to Increase Commitments
dated as of November 9, 2007, as amended by this Amendment and as from
time to time hereafter further amended, restated, supplemented or otherwise
modified, the “Credit Agreement”; capitalized terms used in this
Amendment not otherwise defined herein shall have the definition given thereto
in the Credit Agreement), pursuant to which the Lenders have made available to
the Borrower a revolving credit facility, including a letter of credit
subfacility; and

 

WHEREAS,
each of the Guarantors has entered into a Guaranty pursuant to which it has
guaranteed the payment and performance of the obligations of the Borrower under
the Credit Agreement and the other Loan Documents; and

 

WHEREAS,
the Borrower has advised the Administrative Agent and the Lenders that it
desires to amend certain provisions of the Credit Agreement as set forth below
and the Administrative Agent and the Lenders signatory hereto are willing to
effect such amendment on the terms and conditions contained in this Agreement;
and

 

NOW,
THEREFORE, in consideration of the premises and
further valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

 

1.                                       Amendments to Credit
Agreement.  Subject to the terms and conditions set forth
herein, and in reliance upon the representations and warranties of the Borrower
made herein, the Credit Agreement is hereby amended as follows:

 

(a)                          Section 1.01 of the Credit Agreement is amended to add
the following defined term thereto:

 

“Net Cash
Proceeds” means with respect to the sale of any Equity Interests by the
Borrower or any of its Subsidiaries, or the exercise or conversion of any warrants,
options or rights with respect to such Equity Interests, the excess of (i) the
sum of the cash and cash equivalents received in connection therewith over (ii) the
underwriting discounts and commissions, and other out-of-pocket expenses,
incurred by such Person in connection therewith.

 

 

(b)                         Section 1.01 of the Credit Agreement is amended by
replacing the definitions of “Applicable Rate” and “Coverage
Adjustment Amount” in their entirety with the following definitions:

 

“Applicable Rate” means,
from time to time, the following percentages per annum, based upon the
Consolidated Leverage Ratio as set forth in the most recent Compliance
Certificate received by Agent pursuant to Section 6.02(b)(i):

 

Applicable Rate

 

	
  Pricing

  Level

  	
   

  	
  Consolidated

  Leverage Ratio

  	
   

  	
  Unused Fee

  	
   

  	
  LIBOR Monthly

  Floating Rate

  and

  Letter of Credit

  Fee

  	
   

  
	
  1

  	
   

  	
  Less than or equal to 2.00 to 1.00

  	
   

  	
  0.200

  	
  %

  	
  2.000

  	
  %

  
	
  2

  	
   

  	
  Less than or equal to 2.50 to 1.00, but greater than 2.00 to 1.00

  	
   

  	
  0.250

  	
  %

  	
  2.250

  	
  %

  
	
  3

  	
   

  	
  Less than or equal to 3.00 to 1.00, but greater than 2.50 to 1.00

  	
   

  	
  0.250

  	
  %

  	
  2.750

  	
  %

  
	
  4

  	
   

  	
  Greater than 3.00 to 1.00

  	
   

  	
  0.375

  	
  %

  	
  3.500

  	
  %

  

 

Any increase or decrease
in the Applicable Rate resulting from a change in the Consolidated Leverage
Ratio shall become effective as of the first Business Day of the month
immediately following the date a Compliance Certificate is delivered pursuant
to Section 6.02(b) (each such day, an “Applicable Rate
Change Date”); provided, however, that if a Compliance
Certificate is not delivered  when due in
accordance with such Section, then Pricing Level 4 shall apply as of the first
Business Day of the month following the date such Compliance Certificate was
required to have been delivered; provided  further that
notwithstanding the Coverage Adjustment Amount then in effect, if at any date a
Coverage Adjustment Amount equal to $0 would result in the Borrower’s failure
to comply with Section 6.12(a) then Pricing Level 4 shall
apply as of such date until such time as the Borrower has demonstrated that a
Coverage Adjustment Amount equal to $0 would not result in such non-compliance.

 

“Coverage Adjustment
Amount” means, with respect to any date occurring during each period set
forth below, an amount equal to the amount set 

 

2

 

forth below opposite such period, but subject to
adjustment pursuant to Section 6.10:

 

	
  Period

  	
   

  	
  Coverage Adjustment

  Amount

  	
   

  
	
  December 31,
  2007 through May 31, 2008

  	
   

  	
  $

  	
  9,250,000

  	
   

  
	
  June 1,
  2008 through August 31, 2008

  	
   

  	
  $

  	
  7,500,000

  	
   

  
	
  September 1,
  2008 through February 28, 2009

  	
   

  	
  $

  	
  6,500,000

  	
   

  
	
  March 1,
  2009 through May 31, 2009

  	
   

  	
  $

  	
  5,500,000

  	
   

  
	
  June 1,
  2009 through August 31, 2009

  	
   

  	
  $

  	
  3,500,000

  	
   

  
	
  September 1,
  2009 through November 30, 2009

  	
   

  	
  $

  	
  1,500,000

  	
   

  
	
  December 1,
  2009 and thereafter

  	
   

  	
  $

  	
  0

  	
   

  

 

provided, however, each of the Coverage
Adjustment Amounts set forth in the table above shall be reduced by (i) the
amount of any mandatory prepayment required to be made by Sections 2.05(d) and
(e), and (ii) the Net Cash Proceeds received by the Borrower or any
of its Subsidiaries in connection with the Borrower’s Early Warrant Exercise
Program effective as of April 8, 2008.

 

(c)                                 Section 1.01
of the Credit Agreement is amended by adding the following sentence to the end
of the definition of “Consolidated Cash Flow”:

 

“Amounts included in the calculation of Consolidated Cash Flow under
clause (b) above for losses from discontinued operations and extraordinary
items and clause (c) above for other non-cash charges shall be subject to
the approval of such items by the Administrative Agent.”

 

(d)                                Section 1.01
of the Credit Agreement is amended by adding the following sentence to the end
of the definition of “Consolidated EBITDA”:

 

“Amounts included in the calculation of Consolidated EBITDA under
clause (b) above for losses from discontinued operations and extraordinary
items and clause (e) above for other non-cash charges shall be subject to
the approval of such items by the Administrative Agent.”

 

(e)                                 Section 2.05 of the Credit Agreement is amended by adding
new subsections (d) and (e) thereto as follows:

 

“(d)                     Upon the sale or issuance by the Borrower or
any of its Subsidiaries of any of its Equity Interests (including, without
limitation, any conversion or exercise by any Person of any warrants, options
or rights with respect to any such Equity Interests other than in connection
with the Borrower’s Early Warrant Exercise Program effective as of April 8,
2008, but not including any sales or issuances of Equity Interests to the
Borrower or any Guarantor), the Borrower shall prepay an aggregate principal
amount of Loans equal to (i) at any time the Consolidated Leverage Ratio
is less than or equal to 2.50 to 1.00 (before giving effect to any prepayment
required by this Section 2.05(d)), 50% of the Net 

 

3

 

Cash Proceeds of such sale
or issuance and (ii) at any time the Consolidated Leverage Ratio is
greater than 2.50 to 1.00 (before giving effect to any prepayment required by
this Section 2.05(d)), 100% of the Net Cash Proceeds of such sale
or issuance.

 

(e)                                  Upon the receipt by the Borrower or any of
its Subsidiaries of any funds held in an escrow or similar arrangement in
connection with, or pursuant to any document related to, any Acquisition (“Escrowed
Funds”), the Borrower shall prepay an aggregate principal amount of Loans
equal to 100% of the amount of such Escrowed Funds.”

 

(f)                                   Section 6.01(d) of the Credit Agreement is amended by
replacing such Section in its entirety with the following:

 

“(d)                           as soon
as available, but in any event within 30 days after the end of each month, an
accounts receivable aging report and accounts payable aging report for the
Borrower and each Subsidiary;”

 

(g)                                Section 6.02(a) of the Credit Agreement is amended by
replacing such Section in its entirety with the following:

 

“(a)                            beginning
with such financial statements for the fiscal year of the Borrower ending December 31,
2008, concurrently with the delivery of the financial statements referred to in
Section 6.01(a) a certificate of the Registered Public
Accounting Firm certifying such financial statements and stating that in making
the examination necessary therefor no knowledge was obtained of any Default
under any financial covenant contained in this Agreement or, if any such
Default shall exist, stating the nature and status of such event;”

 

(h)                                Section 6.02(b) of the Credit Agreement is amended by
replacing such Section in its entirety with the following:

 

“(b)                           concurrently
with the delivery of (i) the financial statements referred to in Sections
6.01(a) and (b), a duly completed Compliance Certificate in the
form attached hereto as Exhibit D-1 and (ii) the reports
referred to in Section 6.01(d), a duly completed Compliance
Certificate in the form attached hereto as Exhibit D-2, in each
case signed by the chief executive officer, chief financial officer, treasurer
or controller of Borrower;”

 

(i)                                    Section 6.12 of the Credit Agreement is amended by
replacing such Section in its entirety with the following:

 

“6.12                 Financial
Covenants.

 

(a)                                  Consolidated
Asset Coverage Ratio.  Maintain a
Consolidated Asset Coverage Ratio of not less than 1.00 to 1.00 at all
times.  This ratio will be reported at
the end of each month.”

 

4

 

(b)                                 Consolidated
Leverage Ratio.  Maintain a
Consolidated Leverage Ratio at any time during any period set forth below not
exceeding the ratio set forth opposite such period.  This ratio will be reported at the end of
each reporting period for which this Agreement requires the Borrower to deliver
financial statements (pursuant to Sections 6.01(a), 6.01(b) or
6.01(f), as applicable), using the results of the twelve-month period
ending with that reporting period (except as otherwise provided in Section 1.07(c)).

 

	
  Period

  	
   

  	
  Consolidated Leverage

  Ratio

  	
   

  
	
  March 31,
  2008 through June 29, 2008

  	
   

  	
  4.25 to 1.00

  	
   

  
	
  June 30,
  2008 through September 29, 2008

  	
   

  	
  4.00 to 1.00

  	
   

  
	
  September 30,
  2008 through December 30, 2008

  	
   

  	
  3.75 to 1.00

  	
   

  
	
  December 31,
  2008 and thereafter

  	
   

  	
  3.50 to 1.00

  	
   

  

 

(c)                                  Consolidated
Fixed Charge Coverage Ratio. 
Maintain at all times a Consolidated Fixed Charge Coverage Ratio of not
less than 1.30 to 1.00.  This ratio will
be reported at the end of each reporting period for which this Agreement
requires the Borrower to deliver financial statements (pursuant to Sections
6.01(a), 6.01(b) or 6.01(f), as applicable), using the
results of the twelve-month period ending with that reporting period (except as
otherwise provided in Section 1.07(c)).

 

(d)                                 Minimum
Consolidated EBITDA.  Maintain Consolidated
EBITDA for each fiscal quarter set forth below in an amount not less than the
amount set forth below opposite such fiscal quarter:

 

	
  Fiscal Quarter

  	
   

  	
  Minimum Consolidated

  EBITDA

  	
   

  
	
  Fiscal
  quarter ending March 31, 2008

  	
   

  	
  $

  	
  3,200,000

  	
   

  
	
  Fiscal
  quarter ending June 30, 2008

  	
   

  	
  $

  	
  2,750,000

  	
   

  
	
  Fiscal
  quarter ending September 30, 2008

  	
   

  	
  $

  	
  3,000,000

  	
   

  
	
  Fiscal
  quarter ending December 31, 2008

  	
   

  	
  $

  	
  2,600,000

  	
   

  

 

(j)                                    Section 7.07 of the Credit Agreement is amended by
replacing such Section in its entirety with the following:

 

“7.07                 Acquisitions.  Enter into any agreement, contract, binding
commitment or other arrangement providing for any Acquisition, or take any
action to solicit the tender of securities or proxies in respect thereof in
order to effect any Acquisition, unless (a) the Person to be (or whose
assets are to be) acquired does not oppose such Acquisition and the line or
lines of business of the Person to be acquired are (i) the provision of services primarily in the governmental
contracting field, or (ii) substantially the same as one or more
line or lines of business conducted by Borrower and its Subsidiaries, or
substantially related or incidental thereto, (b) no Default or Event of
Default shall have 

 

5

 

occurred and be continuing and the representations and
warranties contained in Section 5.06 shall be true and correct, in
each case, immediately prior to and immediately after giving effect to such
Acquisition, (c) the Cost of Acquisition is less than $10,000,000, (d) the
Person acquired shall be a wholly-owned Subsidiary, or be merged into the
Borrower, a Guarantor or any wholly-owned Subsidiary, immediately upon
consummation of the Acquisition (or if assets are being acquired, the acquirer
shall be the Borrower, a Guarantor or any wholly-owned Subsidiary), (e) after
giving effect to such Acquisition, the aggregate Costs of Acquisition incurred
during the fiscal year in which such Acquisition is made shall not exceed
$20,000,000, and (f) immediately after giving effect to any such
Acquisition the difference between the Aggregate Commitments and the Total
Outstandings shall not be less than $5,000,000; provided that, prior to
effecting any such transaction, the Borrower shall have furnished to Agent (i) pro
forma historical financial statements as of the end of the most recently
completed fiscal year of the Borrower and most recent interim fiscal quarter,
if applicable, giving effect to such Acquisition and (ii) a Compliance
Certificate prepared on a historical pro forma basis as of the most recent date
for which financial statements have been furnished pursuant to Section 6.01(a) or (b) giving effect
to such Acquisition, which certificate shall demonstrate that immediately after
giving effect to such Acquisition (including, 
without limitation, any Borrowings related thereto)  (A) the Consolidated Leverage Ratio
would not exceed 2.50 to 1.00, and (B) no Default or Event of Default
would then exist.  Each Acquisition
complying with the terms of this Section 7.07, or otherwise
consented to by the Required Lenders in writing is referred to herein as a “Permitted
Acquisition.”  The parties
acknowledge that the Borrower may from time to time seek the consent of the
Required Lenders to an Acquisition that does not conform to the requirements of
this Section 7.07, provided that the Required Lenders shall
have no obligation to give such consent.”

 

(k)                                 The
existing Exhibit D-1 and Exhibit D-2 to the Credit
Agreement are deleted in their
entirety and Exhibit D-1 and Exhibit D-2 attached
hereto, respectively, are inserted in lieu thereof.

 

6

 

2.                                       Consent to 2007 Fiscal Year End
Consolidated EBITDA and Consolidated Cash Flow Calculations. 
Solely for the purpose of calculating Consolidated EBITDA and
Consolidated Cash Flow for the fiscal year of the Borrower ending December 31,
2007, the Administrative Agent hereby consents to and accepts the calculations
by the Borrower thereof as each is set forth in that certain Compliance
Certificate dated as of March 17, 2008 and delivered by the Borrower to
the Administrative Agent in connection with such fiscal year end pursuant to Section 6.02(b) of
the Credit Agreement other than the adjustments reflected in each such
calculation for the “Nashville loss” and “PBGC loss” (as each of those items is
set forth by the Borrower in such Compliance Certificate).

 

3.                                       Effectiveness; Conditions
Precedent.  The amendments, consents and acceptances set
forth in Sections 1(c),  (d) and
(g) and Section 2 of this Amendment shall be effective
as of December 31, 2007, and all other amendments contained in this
Amendment shall be effective as of March 31, 2008, in each case upon the
satisfaction of the following conditions precedent:

 

(a)                                  The Administrative Agent shall have received
each of the following documents or instruments in form and substance acceptable
to the Administrative Agent:

 

(i)            one or more counterparts of this Amendment,
duly executed by the Borrower and each Guarantor; and

 

(ii)           such other documents, instruments, opinions,
certifications, undertakings, further assurances and other matters as the
Administrative Agent shall reasonably request.

 

(b)                                 All
upfront, amendment or modification fees due to the Lenders, together with all
other fees and expenses payable to the Administrative
Agent (including the fees and expenses of counsel to the Administrative Agent) estimated to
date shall have been paid in full (without prejudice to final settling of
accounts for such fees and expenses).

 

4.                                       Consent of the Guarantor.  Notwithstanding that such consent is not
required by the Loan Documents, the Guarantor hereby consents, acknowledges and
agrees to the amendments set forth herein and hereby confirms and ratifies in
all respects the Loan Documents to which such Person is a party (including
without limitation the continuation of such Person’s payment and performance
obligations and the effectiveness and priority of any Liens granted thereunder,
in each case upon and after the effectiveness of this Amendment and the
amendments contemplated hereby) and the enforceability of such Loan Documents
against such Person in accordance with its terms.

 

5.                                       Representations and
Warranties.  In order to induce the Administrative Agent
and the Lenders to enter into this Amendment, the Borrower represents and
warrants to the Administrative Agent and such Lenders as follows:

 

(a)                                  The representations and warranties made by it
in Article V of the Credit Agreement, and by each Loan Party in
each of the Loan Documents to which such Loan Party is a party are true and
correct on and as of the date hereof, except 

 

7

 

to the extent that such
representations and warranties expressly relate to an earlier date, in which
case such representations and warranties are true and correct as of such
earlier date;

 

(b)                                Since the date of the most recent financial
reports of the Borrower delivered pursuant to Section 6.01 of the
Credit Agreement, no act, event, condition or circumstance has occurred or
arisen which, singly or in the aggregate with one or more other acts, events,
occurrences or conditions (whenever occurring or arising), has had or could
reasonably be expected to have a Material Adverse Effect;

 

(c)                                 The
Persons appearing as Guarantors on the signature pages to this Agreement
constitute all Persons who are required to be Guarantors pursuant to the terms
of the Credit Agreement and the other Loan Documents, including without
limitation all Persons who became Subsidiaries or were otherwise required to
become Guarantors after the Closing Date, and each of such Persons has become
and remains a party to a Guaranty as a Guarantor;

 

(d)                                This Amendment has been duly authorized,
executed and delivered by the Borrower and the Guarantor and constitutes a legal,
valid and binding obligation of such Persons, except as may be limited by
general principles of equity or by the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium or similar law affecting creditors’
rights generally; and

 

(e)                                 No
Default or Event of Default has occurred and is continuing after giving effect
to this Amendment.

 

6.                                       Entire Agreement.  This Amendment, together with all the Loan
Documents (collectively, the “Relevant Documents”), sets forth the
entire understanding and agreement of the parties hereto in relation to the
subject matter hereof and supersedes any prior negotiations and agreements
among the parties relating to such subject matter.  No promise, condition, representation or
warranty, express or implied, not set forth in the Relevant Documents shall
bind any party hereto, and no such party has relied on any such promise,
condition, representation or warranty. 
Each of the parties hereto acknowledges that, except as otherwise
expressly stated in the Relevant Documents, no representations, warranties or
commitments, express or implied, have been made by any party to the other in
relation to the subject matter hereof or thereof.  None of the terms or conditions of this Amendment
may be changed, modified, waived or canceled orally or otherwise, except in
writing and in accordance with Section 10.01 of the Credit
Agreement.

 

7.                                       Full Force and Effect of
Agreement.  Except as hereby specifically amended,
modified or supplemented, the Credit Agreement and all other Loan Documents are
hereby confirmed and ratified in all respects and shall be and remain in full
force and effect according to their respective terms.

 

8

 

8.                                       Counterparts.  This
Amendment may be executed in any number of counterparts, each of which shall be
deemed an original as against any party whose signature appears thereon, and
all of which shall together constitute one and the same instrument.  Delivery of an executed counterpart of a
signature page of this Amendment by telecopy shall be effective as
delivery of a manually executed counterpart of this Amendment.

 

9.                                       Governing Law; Jurisdiction,
Etc.  This
Amendment shall in all respects be governed by, and construed in accordance
with, the laws of the Commonwealth of Virginia, and shall be further subject to
the provisions of Section 10.13 of the Credit Agreement.

 

10.                                 Enforceability. 
Should any one or more of the provisions of this Amendment be determined
to be illegal or unenforceable as to one or more of the parties hereto, all
other provisions nevertheless shall remain effective and binding on the parties
hereto.

 

11.                                 References.  All
references in any of the Loan Documents to the “Credit Agreement” shall mean
the Credit Agreement, as amended hereby.

 

12.                                 Successors and Assigns.  This Amendment shall be binding upon and
inure to the benefit of the Borrower, the Guarantor, the Administrative Agent
and each Lender, and their respective successors and assignees to the extent
such assignees are permitted assignees as provided in Section 10.06
of the Credit Agreement.

 

[Signature pages follow.]

 

9

 

IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be made,
executed and delivered by their duly authorized officers as of the day and year
first above written.

 

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ATS CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Pamela A. Little

  
	
   

  	
  Name:

  	
  Pamela A. Little

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  

 

 

	
   

  	
  ADMINISTRATIVE
  AGENT:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BANK OF
  AMERICA, N.A.,

  
	
   

  	
  as Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Anne M. Zeschke

  
	
   

  	
  Name: 

  	
   Anne M. Zeschke

  
	
   

  	
  Title:

  	
   Assistant
  Vice President

  

 

 

	
   

  	
  LENDERS:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BANK OF
  AMERICA, N.A.,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael D. Brannan

  
	
   

  	
  Name: 

  	
  Michael D. Brannan

  
	
   

  	
  Title:

  	
  Senior Vice
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CITIZENS
  BANK OF PENNSYLVANIA

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Owen B. Burman

  
	
   

  	
  Name: 

  	
  Owen B. Burman

  
	
   

  	
  Title:

  	
  Vice
  President

  

 

 

	
   

  	
  GUARANTOR:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ADVANCED TECHNOLOGY SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Pamela A. Little

  
	
   

  	
  Name:

  	
  Pamela A. Little

  
	
   

  	
  Title:

  	
  Chief Financial OfficerExhibit 10.1

 

NIC Inc.

Management Annual Incentive Plan

(as approved March 2008)

 

Objective  – The Management Annual Incentive Plan (“MAIP” or “the Plan”)
is intended (i) to attract, retain, and reward key executives of NIC Inc.
(“NIC” or “the Company”) and (ii) to promote execution against annual
performance goals.  The Plan is designed
to:

 

·                  Reinforce
strategically important operational and financial objectives;

·                  Contribute
to competitive compensation opportunities; and

·                  Align
the interests of Participants with those of NIC’s shareholders.

 

Definitions
– Certain terms are defined in Attachment A
for the purposes of the Plan.

 

Administration
– The Plan shall be administered by the Compensation Committee of the
Board of Directors (the “Committee”); provided, however, that the Committee, in
its discretion, may delegate to certain officers or employees of the Company
the responsibility for handling certain day-to-day operational aspects of the
Plan.  Any reference to the Plan
Administrator hereinafter which relates to administration of the Plan will
refer to the Committee and/or any officer(s) or employee(s) to whom
the Committee has delegated responsibilities or powers.

 

The
Committee has discretion to (i) interpret the Plan; (ii) prescribe,
amend, and rescind any rules and regulations necessary or appropriate for
the administration of the Plan; and (iii) make such other determinations
and take such other action as it deems necessary or advisable.  Without limiting the generality of the
foregoing sentence, the Committee may, in its sole discretion (but in a uniform
and consistent manner), treat all or any portion of any period during which a
Participant is on military leave or on an approved leave of absence (as defined
by the Committee) from the Company as a period of employment of such
Participant by the Company for the purpose of this Plan.  Any interpretation, determination, or other
action made or taken by the Committee shall be final, binding, and conclusive
on all interested parties.

 

Term of
the Plan – The Plan will be considered in effect from the
effective date established when the Plan is approved by the Board of Directors
of the Company (the “Board”).  The Plan
will terminate by action of the Board or Committee.  Awards granted hereunder prior to the Plan’s
termination will continue to be effective in accordance with the terms and
conditions of the Plan.

 

 

Eligibility
– The Plan will cover key employees of the Company as determined by the
Committee.  Eligibility under the Plan or
participation in the Plan is not a guarantee of employment.  To be eligible for a full year’s Award under
the Plan for a given Plan Year, a Participant must remain in the Company’s
employ for the entire Plan Year and through the date of payout.  For individuals that are not eligible under
the Plan at the onset of a given Plan Year, the following guidelines apply:

 

1.              Newly-hired
Employee

 

At
the sole discretion of the Committee, a newly-hired employee shall be eligible
to an Award if the individual commences employment with the Company at or prior
to the first day of the third quarter of the Plan Year (i.e., minimum six
months of employment for the Plan Year). 
No Award under the Plan shall be granted if employment commences more
than six months after commencement of the Plan Year.

 

2.              Mid-period
Promotion

 

At
the sole discretion of the Committee, an employee who is promoted into
eligibility during the Plan Year shall be eligible if the promotion becomes
effective at or prior to the first day of the third quarter of the Plan Year
(i.e., promotion becomes effective a minimum of six months prior to the end of
the Plan Year).  No Award shall be
granted if the promotion becomes effective less than six months prior to the
end of a Plan Year.

 

Termination
of Service – In the event a Participant separates from service to
the Company, Awards made to the Participant will be treated as follows:

 

1.              Death
or Disability

 

If
the applicable performance goals are ultimately satisfied, a Participant who
dies or experiences a Disability during the Plan Year will receive (or the
Participant’s estate will receive) a pro rata Award based on actual days worked
during the Plan Year.  Awards will be
paid as soon as practicable following attainment of the applicable performance
goals.  The Committee may, in its sole
discretion, elect to pay a Participant’s estate earlier than the end of a Plan
Year if such payment amount is based on both the Participant’s actual days
worked during the Plan year and the estimated performance toward the
performance goals as of the date of the Participant’s death.  In all cases, the payment will be made prior
to March 15th of the calendar year following the year for which
the Committee determines that the applicable performance goals were satisfied.

 

2.              Retirement

 

If
the applicable performance goals are ultimately satisfied, a Participant who
retires during a given Plan Year will receive a pro rata Award based on actual
performance as measured at the end of the Plan Year, subject to any required
severance agreement.  Accordingly, for
the avoidance of doubt, such award will be made on account of a Participant’s
retirement only if the Performance Goals are obtained.  In all cases, the payment will be made prior
to March 15th of the calendar year following the year for which
the Committee determines that the applicable performance goals were satisfied.

 

3.              Other
Termination

 

In
the case of a Participant who separates from the Company under voluntary
Termination of Service, Termination of Service for Cause, or resignation where
such resignation is determined by the Committee to be in anticipation of or
related to a possible Termination of Service for Cause, all Awards not yet paid
under the Plan will be canceled.  The
employee will have no further right or interest under this Plan with respect to
any Awards or payments, and the Company will have no further obligation with
respect thereto.  In the event
terminations are deemed “mutual” between the Company and the Participant, the
Committee, in its sole discretion, may consider payment of a pro rata Award;
however, the Committee has no obligation to do so.

 

Incentive
Opportunity – Annually and in advance of the Plan Year, the
Committee will establish incentive opportunities under the Plan for each
Participant.  Generally, incentive
opportunities will be established as a percentage of a Participant’s base
salary, and the Award percentage earned will be applied 

 

2

 

to
a Participant’s base salary as of May 1st of the Plan Year to
which the incentive opportunity pertains. 
At the end of the Plan Year, a Participant may earn an Award equal to,
greater than, or lesser than (including zero) the target opportunity, subject
to established threshold, target, and superior levels of performance as
established in advance by the Committee in its sole discretion.  No payments will be awarded if threshold
performance is not achieved, and no additional payments above the maximum
incentive amount will be awarded for performance in excess of the superior
level.

 

Performance
Measurement Periods – The measurement period under the Plan will be
one year, coinciding with the Company’s fiscal year beginning on January 1
and ending on December 31.  Each
year, a new Plan Year will commence.

 

Performance
Measures and Goals – The Committee will establish the performance
measures and associated weightings for incentive calculations under the
Plan.  The Committee may modify the
definition of performance measures under the Plan and/ or substitute new
measures for new Plan Years.

 

These
performance measures can be one or more of the following consolidated (company-wide)
or subsidiary, division or operating unit financial measures:  (1) pre-tax or after-tax income (before
or after allocation of corporate overhead and bonus), (2) net income
(before or after taxes), (3) reduction in expenses, (4) pre-tax or
after-tax operating income, (5) earnings (including earnings before taxes,
earnings before interest and taxes, or earnings before interest, taxes,
depreciation and amortization,  (6) gross
revenue, (7) working capital, (8) profit margin or gross profits, (9) share
price, (10) cash flow or cash flow per share (before or after dividends),
(11) cash flow return on investment or cash flow return on invested
capital,  (12) return on capital
(including return on total capital or return on invested capital), (13) return
on assets or net assets, (14) market share, (15) pre-tax or after-tax earnings
per share, (16) pre-tax or after-tax operating earnings per share,  (17) total stockholder return, (18) growth
measures, such as revenue growth or operating income growth, as compared with a
peer group or other benchmark, (19) economic value-added models or equivalent
metrics, (20) comparisons with various stock market indices, (21) improvement
in or attainment of expense levels or working capital levels, (22) operating
margins, gross margins or cash margins, (23) year-end cash, (24) debt
reductions, (25) stockholder equity, (26) regulatory achievements, (27)
implementation, completion or attainment of measurable objective with respect
to research, development, products or projects, production volume levels,
acquisitions and divestitures and recruiting and maintaining personnel,  (28) customer satisfaction, (29) operating
efficiency, productivity ratios, (30) strategic business criteria, consisting
of one or more objectives based on meeting specified revenue, market
penetration, geographic business expansion goals (including accomplishing
regulatory approval for projects), cost or cost savings targets, accomplishing
critical milestones for projects, and goals relating to acquisitions or
divestitures, or any combination thereof (in each case before or after such
objective income and expense allocations or adjustments as the Committee may
specify within the applicable period).

 

Performance
goals may be expressed on an absolute and/ or relative basis, may be based on
or otherwise employ comparisons based on current internal targets, the past
performance of the Company or the performance of one or more subsidiaries,
divisions or operating units of the Company or the past or current performance
of other companies, or any combination thereof and in the case of
earnings-based measures, may use or employ comparisons relating to capital
(including, but not limited to, the cost of capital), stockholders’ equity and/
or shares outstanding, or to assets or net assets.  In all cases, the performance goals shall be
such that they satisfy any applicable requirements under Treas. Reg. Sec.
1.162-27(e)(2) (as amended from time to time), that the achievement of
such goals be “substantially uncertain” at the time that they are established,
and that the award opportunity be defined in such a way that a third party with
knowledge of the relevant facts could determine whether and to what extent the
performance goal has been met, and, subject to the Committee’s right to apply
negative discretion (within the meaning of Treas. Reg. Sec. 1.162-27(d)(iii)),
the amount of the Award payable as a result of such performance.

 

3

 

For
these purposes, the “applicable period” with respect to any Plan Year is the
period commencing on or before the first day of the Plan Year and ending no
later than the ninetieth (90th) day of the Plan Year.   For each Plan Year, the Committee will, in
its sole discretion and within the applicable period, establish the goals (i.e., Threshold, Target, and Superior) associated with each
performance measure and determine the weighting of each measure for the
purposes of incentive calculations under the Plan.  Such performance measures and goals will
remain unchanged for the Plan Year, subject to the statement immediately below.

 

The
Committee, in its sole discretion, may exclude the following from performance
calculations under the Plan:  effects of
extraordinary, unusual, special, or one-time events; effects of legal,
accounting, or regulatory changes; effects of events that are outside of
management’s control; effects of events that are not reflective of a decision
made (or area overseen) by management; effects of “preventive” measures taken
by management; effects from the disposal of a business segment; or effects of
tax adjustments.

 

Performance
measures, their weightings, and associated goals for the current Plan Year are
set forth in Attachment B.

 

Award
Payout - Awards will be paid to Participants as soon as
practicable following the end of the Plan Year and verification of
results.  No amounts earned under the
Plan will require additional criteria (e.g., the passage of time) to complete
the earning process.  Awards will be
calculated as a percentage of a Participant’s actual base salary as of May 1st
for the Year in which the performance goals are established and the Performance
Award is payable.

 

Payment
under the Plan is subject to compliance by the Participant with any written
agreement between the Participant and the Company, including an employment
agreement, non-compete agreement, or other agreement relating to confidential
information.  If the Participant breaches
any such agreement, he/ she shall immediately forfeit his/ her right to receive
any unpaid amounts earned under the Plan.

 

The
Company has the right to deduct from all net amounts paid under the Plan any
federal, state, or local taxes required by law to be withheld with respect to
such payments.

 

Miscellaneous
Provisions

 

1.               A Participant’s Award will
immediately pay out upon the occurrence of a Change in Control as if target
performance for the active Plan Year had been achieved.

 

2.               The Plan may be amended or
discontinued by the Committee at any time without prior notification to
Participants.  However, no amendment may
adversely affect an outstanding Award made under the Plan.

 

3.               The Committee maintains sole
discretion to adjust Awards under the Plan downward for legitimate and
reasonable performance reasons.

 

4.               The Committee will, to the
extent permitted by law, have the sole and absolute authority to make
retroactive adjustments to any Awards paid to Participants where the payment
was predicated upon the achievement of erroneous financial or strategic
business results, or where the Participant engaged in intentional misconduct
that increased his/ her incentive income. Where applicable, the Company will
seek to recover any amount determined to have been inappropriately received by
a Participant under the Plan.

 

5.               The Committee may obtain
such agreements or undertakings, if any, as the Committee may deem necessary or
advisable to assure compliance with any law or regulation of any governmental
authority.  The Plan and any Award made
hereunder shall be subject to all applicable federal and state laws, rules and
regulations, and to such approvals by any government or regulatory agency as
may be required.

 

4

 

6.               No member of the Board or
Committee, nor any officer or employee of the Company acting on behalf of the
Board or Committee, shall be personally liable for any action, determination,
or interpretation taken or made in good faith with respect to the Plan.  All members of the Board or Committee, and
each and any officer or employee of the Company acting on their behalf will, to
the extent permitted by law, be fully indemnified and protected by the Company
with respect to any such action, determination, or interpretation.

 

7.               The interests of
Participants under the Plan are not subject to claims, indebtedness,
attachment, execution, garnishment, or other legal or equitable process.  Participant interests under the Plan may not
be transferred or assigned, other than by will or by the laws of descent and
distribution.  If the Participant
attempts to alienate, assign, pledge, hypothecate, or otherwise dispose of
Awards or other rights under the Plan, except as provided for in this Plan, or
in the event of any levy, attachment, execution, or similar process upon the
right or interest conferred by this Plan, the Board may terminate the
Participant’s Award by notice to him/ her, and it shall thereupon become null
and void.

 

5

 

Attachment A – Definitions

 

1.               “Award” means, a right
granted to a Participant entitling him or her to a cash payment under the Plan
if the applicable performance criteria are satisfied and the Participant
complies with all other criteria under the Plan.

 

2.               “Cause” means, unless
otherwise defined in a Participant’s employment agreement in which case such
definition will control, (i) serious, willful misconduct with respect to
the Participant’s duties as an Employee of the Company; (ii) engaging in
any competitive behavior defined below; (iii) the Participant’s indictment
for a felony; (iv) the Participant’s commission of fraud, embezzlement,
theft, or other act involving dishonesty, or a crime constituting moral
turpitude, in any case, whether or not involving the Company, that, in the
opinion of the Company, renders the Participant’s continued employment harmful
to the Company; (v) abuse of illegal drugs or alcohol by the Participant
on the employer’s premises or where the use of illegal drugs has an adverse
effect on a Participant’s performance; or (vi) the Participant acting in
bad faith relative to the Company’s business interests.

 

For
purposes of this Plan, a Participant shall be deemed to engage in competitive
behavior if he/ she (a) directly or indirectly, without the consent of the
Company, solicits or provides any services such as those provided by the
Company for anyone (i) who is a customer or client of the Company; or, (ii) who
is a prospective customer or client of the Company with whom the Company has
discussed possible business relationships; (b) requests, induces, or
attempts to influence any distributor or supplier of goods or services to the
Company to curtail or cancel any business they may transact with the Company;
or (c) requests, induces, or attempts to influence, any client or customer
of the Company whom he/ she has done business with, or potential client or
customer whom he/she has been in contact with, to curtail or cancel any
business they may transact with the Company.

 

3.               “Change of Control” means
any of the following events:

 

(a)           any “Person” (as such
term is used in Rule 13d-5 under the Securities Exchange Act of 1934 (the “Exchange
Act”) or group (as such term is defined in Sections 3(a)(9) and 13(d)(3) of
the Exchange Act), other than a subsidiary or any employee benefit plan (or any
related trust) of the Company or a subsidiary, becomes the beneficial owner of
50% or more of the common stock or of securities of the Company that are
entitled to vote generally in the election of directors of the Company;

 

(b)           within a 12 month
period, a majority of the members of the Company’s Board of Directors is
replaced by directors whose election or nomination was not endorsed by a
majority of the members of the Board before the date of the appointment or
election;

 

(c)           consummation of a
merger, reorganization, consolidation or similar transaction (any of the
foregoing, a “Merger”) as a result of which the Persons who were the respective
beneficial owners of the outstanding common stock and voting securities of the
Company immediately before such Merger are not expected to beneficially own,
immediately after such Merger, directly or indirectly, more than 50% of the
common stock and the combined voting power of the voting securities of the
corporation resulting from such Merger, or

 

(d)           shareholder approval
of a plan of liquidation of the Company or a plan or agreement for the sale or
other disposition of all or substantially all of the assets of the Company.

 

4.               “Code” means the Internal
Revenue Code of 1986, as amended, and any Internal Revenue Code adopted in the
future to replace the Internal Revenue Code of 1986.

 

5.               “Disability” means except as
otherwise provided by the Committee, that the Participant either (i) is
unable, by reason of a medically determinable physical or mental impairment, to
engage in any 

 

6

 

substantial gainful activity, on behalf of the Company which condition,
in the opinion of a physician approved by the Committee, is expected to have a
duration of not less than one hundred and twenty (120) days or (ii) has
become eligible to receive long-term disability benefits under a
Company-sponsored long-term disability plan, if any.

 

6.               “Employee” refers to any
person who is employed by the Company, is on the Company’s payroll, and whose
wages are subject to withholding under the Federal Insurance Contributions Act,
codified in Code § 3121.

 

7.               “Involuntary Termination”
means, unless such term (or term of similar meaning (e.g., “good reason”)) is
otherwise defined in a Participant’s employment agreement, in which case such
definition will control:  (i) without
the Participant’s express written consent, a comprehensive and substantial
reduction in all or most of the Participant’s primary duties, authority, and
responsibilities compared to the Participant’s duties, authority, and
responsibilities immediately prior to such reduction; (ii) without the
Participant’s express written consent, a significant reduction in the
Participant’s base salary compared to the Participant’s base salary in effect
immediately prior to such reduction; provided, however, that a reduction in the
Participant’s base salary of less than twenty percent (20%) or a reduction in
the Participant’s base salary that is part of an overall reduction in
compensation also applied to other senior executives of the Company as a result
of decreased business performance by the Company or one of its business units,
shall not constitute an Involuntary Termination; or (iii) any purported
termination of the Participant by the Company that is not effected for
Disability or Cause.

 

8.               “Participant” shall mean an
Employee of the Company to whom an Award is granted under this Plan.

 

9.               “Plan Administrator” means
the individual or committee appointed or designated by the Committee to
administer the Plan, if not the Committee itself.

 

10.         “Plan Year” refers to the
active twelve-month period of performance under the Plan.

 

11.         “Retirement” means a
Participant’s date of termination which is designated by the Committee as a “Retirement”
for purposes of the Plan or, if applicable, a Participant’s date of termination
after the normal retirement date specified in a plan maintained by the Company
under which the Participant is covered, and which is qualified under section
401(a) of the Code.

 

12.         “Termination of Service”
occurs when a Participant ceases to serve as an Employee of the Company, for
any reason.

 

13.         “Voluntary Termination”
shall mean any termination of the employment hereunder, otherwise than as a
result of death or Disability, termination for Cause, or Involuntary
Termination.

 

7

 

Attachment B – Performance Measures and Weightings

 

For
2008, all Participants will be evaluated based on the Company’s consolidated
operating results.  The Committee has
determined the following three measures will be used for Plan purposes, each
with the assigned weightings as described:

 

·                  Operating Income  

 

50% of a Participant’s opportunity under the Plan – The definition of
Operating Income is consistent with that term defined in generally accepted
accounting principles and will be derived directly from the face of the
consolidated statements of income included in the Company’s Annual Reports on Form 10-K
for the year ending December 31, 2008

 

·                  Total Revenue 

 

25% of a Participant’s opportunity under the Plan – The
definition of Total Revenue is consistent with that term defined in generally
accepted accounting principles and will be derived directly from the face of
the consolidated statements of income included in the Company’s Annual Reports
on Form 10-K for the year ending December 31, 2008

 

·                  Cash Flow Return on Invested
Capital 

 

25% of a Participant’s opportunity under the Plan – Cash Flow Return on
Invested Capital is defined as consolidated cash flow from operating activities
minus capital expenditures, the difference of which is divided by the
difference between total assets and non-interest bearing current
liabilities.  Consolidated cash flow from
operating activities and capital expenditures will be derived from the face of
the consolidated statements of cash flows included in the Company’s Annual
Report on Form 10-K for the year ending December 31, 2008.  Total assets and non-interest bearing
liabilities will be derived from the face of the consolidated balance sheets
included in the Company’s Annual Reports on Form 10-K for the year ending December 31,
2008.

 

For
the 2008 Plan Year, the Committee determined a “target” performance level for
the Company for each of the above three performance criteria.  Performance of the Company at the target
level will result in an annual cash incentive that is 50% of the executive’s
base salary.  The Committee also
determined a range of possible cash incentives above and below target
performance, ranging from 25% of base salary for achieving “threshold”
performance to 75% of base salary for achieving “superior” performance.  No payments are awarded under the plan if
threshold performance is not achieved, and no additional payments are awarded
for performance in excess of the superior level.  The following table sets forth threshold,
target and superior Company performance levels for the performance criteria
included in the Plan for the 2008 Plan Year:

 

	
   

  	
   

  	
  Performance Levels

  	
   

  
	
  Performance Criteria

  	
   

  	
  Threshold

  	
   

  	
  Target

  	
   

  	
  Superior

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Operating income

  	
   

  	
  90%
  of budget

  	
   

  	
  Budget

  	
   

  	
  110%
  of Budget

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total revenue

  	
   

  	
  95%
  of budget

  	
   

  	
  Budget

  	
   

  	
  105%
  of Budget

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cash flow return on invested capital

  	
   

  	
  20%

  	
   

  	
  25%

  	
   

  	
  30%

  	
   

  

 

Target
performance levels for operating income and total revenues are based upon the
Company’s fiscal 2008 annual budget approved by the Board of Directors on February 4,
2008.  Target performance for cash flow
return on invested capital is based on the Company’s expected five-year average
return on invested capital from 2004 to 2008. 
Threshold and maximum performance levels in the table above were
recommended by management and approved by the Committee based on the Company’s
past performance with respect to these metrics generally and relative to
budget.

 

8

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