Document:

Commitment Letter with Silicon Valley Bank

 Exhibit 10.1 

 

 

 August 3, 2010 

Julie Piton 
 Chief Financial Officer

 AtriCure, Inc. 
 6217 Centre Park
Drive 
 West Chester, Ohio 45069 
 RE:
AtriCure, Inc. 
 CONFIDENTIAL 

Dear Julie: 
 Silicon Valley Bank is pleased to
confirm its credit approval of the following credit facility for AtriCure, Inc., Inc. as of August 3, 2010. This commitment letter defines the changes to the existing credit facility between the Borrower and the Lender which will increase the
total amount of the facility from $10,000,000 to a maximum of up to $13,972,222. Subject to the conditions set forth below, Silicon Valley Bank is pleased to advise you of its commitment to provide the credit facility described below on the terms
set forth herein. 
  

					
	  	  	 CURRENT
	  	 PROPOSED

			
	Lender:	  	Silicon Valley Bank	  	No Change
			
	Borrower:	  	AtriCure, Inc.,	  	No Change
			
	Facility:	  	$10,000,000 Working Capital Line of Credit	  	No Change
			
	Advance Rate:	  	 Borrower’s total borrowing capacity under this Facility will equate to the lesser of (i) the applicable Facility amount, or (ii)
the sum of the following components:
  
 A) Domestic
Facility
  
 1) Up to an 80% advance rate against Eligible domestic
accounts receivable
	  	 Borrower’s total borrowing capacity under this Facility will equate to the lesser of (i) the applicable Facility amount, or (ii)
the sum of the following components:
  
 A) Domestic
Facility
  

1)      No Change for accounts receivable borrowing base

 
 2)      Up to
40% against Eligible Domestic Inventory not to exceed $2,000,000, plus
  
 B)
$2,500,000 Ex-Im Facility
  

3)      Up to an 85% advance rate against Eligible international accounts
receivable, plus
  

4)      Up to 65% against Eligible international inventory not to exceed
$1,000,000. Eligible foreign inventory advances will be capped at 60% of total Ex-Im advances.
  

Eligible International Accounts Receivable as described on Exhibit A.

			
		  	Up to $1,000,000 Sublimit to support issuances of standby letters of credit and/or other risk-based cash management products and services. Amounts outstanding under Sublimit will
reduce availability under the Borrowing Formula.	  	
		  		  	No Change

					
			
	Term Loan Reserve:	  	Line of Credit availability shall be reduced by 50% of Term Loan outstandings until such time that Borrower demonstrates at least 4 consecutive quarters’ achievement of a
minimum Fixed Charge Coverage ratio of 1.50:1.00 (defined under the Financial Covenants section).	  	Deleted
			
	Maximum Outstandings:	  	Total outstandings (including for Letters of Credit and Cash Management Services) are capped at $10,000,000 for both facilities.	  	Total outstandings (including for Letters of Credit and Cash Management Services) are capped at $13,972,222 for both facilities.
			
	Facility Fee:	  	N/A	  	Not to exceed $20,000 for the Ex-Im bank fee
			
	Covenant:	  	 Adjusted Quick Ratio
  

Borrower to maintain a minimum Adjusted Quick Ratio of 1.20:1.00. Adjusted Quick Ratio is defined as (i) unrestricted cash on deposit with SVB plus
eligible domestic accounts receivable divided by (ii) current liabilities less current portion of deferred revenues; provided, that up to $2,000,000 of liability associated with the settlement of a class action lawsuit relating to alleged securities
violations shall be excluded from the calculation of Adjusted Quick Ratio to the extent of the corresponding receivable for insurance proceeds and (b) principal and interest on the DOJ Settlement shall be excluded from the calculation of Adjusted
Quick Ratio.
	  	 Adjusted Quick Ratio
  

Borrower to maintain a minimum Adjusted Quick Ratio of 1.10:1.00. Adjusted Quick Ratio is defined as (i) unrestricted cash on deposit with SVB plus
eligible domestic accounts receivable divided by (ii) current liabilities less current portion of deferred revenues; provided, that (a) up to $2,000,000 of liability associated with the settlement of a class action lawsuit relating to alleged
securities violations shall be excluded from the calculation of Adjusted Quick Ratio to the extent of the corresponding receivable for insurance proceeds, (b) effective as of June 1, 2010, the $2,750,000 liability associated with the settlement of a
class action lawsuit relating to alleged securities violations shall be excluded from the calculation of Adjusted Quick Ratio to the extent of the corresponding receivable for insurance proceeds and (c) principal and interest on the DOJ Settlement
shall be excluded from the calculation of Adjusted Quick Ratio.

			
		  	 Fixed Charge Coverage
  

(Applicable only when Borrower meets the requirements to release the Term Loan Reserve). Borrower to maintain a minimum Fixed Charge Coverage ratio of
1.50:1.00. Fixed Charge Coverage is defined as (i) EBITDA less cash income taxes paid less unfunded capital expenditures for the immediately trailing 12-month period divided by (ii) current portion of long-term debt plus cash interest expense
for the immediately trailing 12-month period.
	  	 Fixed Charge Coverage
  

(To replace the Adjusted Quick Ratio when the Fixed Charge Coverage test has been met for 4 consecutive quarters). Borrower to maintain a minimum Fixed
Charge Coverage ratio of 1.50:1.00. Fixed Charge Coverage is defined as (i) EBITDA less cash income taxes paid less unfunded capital expenditures for the immediately trailing 12-month period divided by (ii) current portion of long-term debt
plus cash interest expense for the immediately trailing 12-month period.

			
	Financial Reporting:	  	Borrower to provide financial statements and reports detailed in existing Loan and Security Agreement.	  	 No Change except for the addition of the following
  

•       Copy of actual invoices representing no
less

  

			
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		  		  	than 10% of the quarter-end AR aging balance and 10% of the past quarter’s export orders (to comply with Ex-Im reporting Requirements) within 45 days after each quarter end.

			
	Documentation:	  	N/A	  	The documentation governing the existing credit facility will be amended or amended and restated to reflect the terms set forth herein and usual and customary documentation relating
to the Ex-Im facility described above will be executed and delivered by the Borrower and Lender. Except as described above, the terms and conditions of the existing credit facility remain in effect.
			
	Conditions of Closing:	  	N/A	  	 This Commitment Letter is subject to the following:
  

•       Completion of loan documentation as described above.

 

•       No material adverse change shall have occurred prior to
completion of revised documentation.
  

•       No default under the existing loan
documents

  

			
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 If the terms and conditions contained in this Commitment Letter are acceptable, please so indicate by
returning an executed copy of this letter to Silicon Valley Bank, 380 Interlocken Crescent, Suite 600, Broomfield, CO 80021, Attention: Adam Glick. 

This commitment letter constitutes notice that SVB shall commence with the loan documentation described above, which shall supersede this letter.

 On behalf of Silicon Valley Bank, we appreciate the opportunity to propose this financing for AtriCure and look forward to a favorable
response from you. 
  

					
	Very truly yours,	 		 	
			
	 /s/ Kristen Parsons
	 		 	 /s/ Adam Glick

	Kristen Parsons	 		 	Adam Glick
	Relationship Manager	 		 	Relationship Manager
	Silicon Valley Bank	 		 	Silicon Valley Bank

 Acceptance: 

By signing this document, we agree that Borrower shall be bound by the terms and conditions contained herein. 

 

			
	ATRICURE, INC.
		
	By:	 	 /s/ Julie A. Piton

	Name:	 	Julie A. Piton
	Title:	 	Chief Financial Officer

  

			
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 Exhibit A 

I. Export Accounts Receivable 

Subject to exceptions approved in writing by Ex-Im bank, receivables held as collateral must be payable to the Borrower in the U.S. and must be
denominated in U.S. dollars. Receivables not eligible for inclusion in the Export-Related Borrowing Base are listed below. In no event shall Export-Related Accounts Receivable or Export-Related Overseas Accounts Receivable include any Account
Receivable: 
  

	a.	that does not arise from the sale of Items in the ordinary course of the Borrower’s business; 

 

	b	that is not subject to a valid, perfected, and enforceable first priority security interest in favor of the Lender; 

 

	c.	as to which any covenant, representation or warranty contained in the Loan Documents relating to such Receivable has been breached; 

 

	d.	that is not owned by the Borrower or is subject to any right, claim, or interest of another party other than the Lien in favor of the Lender;

  

	e.	with respect to which an invoice has not been sent; 

  

	f.	generated by the sale or provision of defense articles or services, subject to exceptions approved in writing by Ex-Im Bank; 

 

	g.	that is due and payable from a military Buyer, subject to exceptions approved in writing by Ex-Im Bank; 

 

	h.	that is due and payable from a foreign Buyer located in a country with which Ex-Im Bank is legally prohibited from doing business as set forth in the current
Country Limitation Schedule. (Note: If the Borrower has knowledge that an export to a country in which Ex-Im Bank may do business, as set forth in the current Country Limitation Schedule, will be re-exported to a country with which Ex-Im Bank is
legally prohibited from doing business, the corresponding receivables (or a pro-rata portion thereof) are not eligible for inclusion in the Export-Related Borrowing Base.); 

 

	i.	that does not comply with the requirements of the Country Limitation Schedule; 

 

	j.	that by its original terms is due and payable more than one-hundred-eighty (180) days from the date of invoice; 

 

	k.	that is not paid within sixty (60) calendar days from its original due date unless insured through Ex-Im Bank (or other acceptable) export credit insurance
for comprehensive commercial and political risk, in which case ninety (90) calendar days shall apply; 

  

	l.	that arises from a sale of goods to or performance of services for an employee, stockholder, or subsidiary of the Borrower, intra-company receivables or any
receivable from a stockholder, any person or entity with a controlling interest in the Borrower or which shares common controlling ownership with the Borrower; 

 

	m.	that is backed by a letter of credit unless the Items covered by the subject letter of credit have been shipped, or where the covered services have been
provided; 

  

	n.	that the Lender or Ex-Im Bank, in its reasonable judgment, deem uncollectible or unacceptable; this category includes, but is not limited to, finance charges or
late charges imposed on the foreign buyer by the Borrower as a result of the foreign buyer’s past due status; 

  

			
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	o.	that is denominated in non-U.S. currency, unless pre-approved in writing by Ex-Im Bank; 

 

	p.	that does not comply with the terms of sale as set forth by Ex-Im Bank; 

 

	q.	that is due and payable from a Buyer who becomes unable to pay its debts or whose ability to pay its debts becomes questionable; 

 

	r.	that arises from a bill-and-hold, guaranteed sale, sale-and-return, sale on approval, consignment, or any other repurchase or return basis or is evidenced by
chattel paper; 

  

	s.	for which the Items giving rise to such Accounts Receivable have not been shipped to the Buyer or when the Items are services, such services have not been
performed or when the Export Order specifies a timing for invoicing the Items other than shipment or performance and the Items have not been invoiced in accordance with such terms of the Export Order, or the Accounts Receivable do not otherwise
represent a final sale; 

  

	t.	that is subject to any offset, deduction, defense, dispute, or counterclaim, or the Buyer is also a creditor or supplier of the Borrower, or the Account
Receivable is contingent in any respect or for any reason; 

  

	u.	for which the Borrower has made any agreement with the Buyer for any deduction therefrom, except for discounts or allowances made in the ordinary course of
business for prompt payment; 

  

	v.	for which any of the Items giving rise to such Account Receivable have been returned, rejected, or repossessed; 

 

	w.	that arises from the sale of Items that do not meet 50% U.S. Content requirements; 

 

	x.	that is deemed to be ineligible by Ex-Im Bank. 

*                    *  
                  * 
 II. Export Inventory

 Export-Related Inventory taken as collateral must be located within the United States and valued at the lower of actual cost or market
value as determined in accordance with U.S. “GAAP” or the appraised, or orderly liquidation value if the Lender has other loans to a Borrower with the same valuation or unless pre-approved by Ex-Im Bank. Exported-Related Inventory may
include raw materials, work-in-process and finished goods. 
 Export-Related Inventory not eligible for inclusion in the Export-Related
Borrowing Base is listed below. In no event shall Export-Related Inventory include any Inventory: 
  

	a.	that is not subject to a valid, perfected, and enforceable first priority Lien in favor of the Lender; 

 

	b.	that is located at an address that has not been disclosed to the Lender in writing; 

 

	c.	that is not located in the United States, unless pre-approved by Ex-Im Bank in writing; 

 

	d.	that is placed by the Borrower on consignment or held by the Borrower on consignment; 

 

	e.	that is in the possession of a processor or bailee, or located on premises leased or subleased to the Borrower, or on premises subject to a mortgage in favor of
a party other than the Lender, unless such processor or bailee or lessor or sublessor or mortgagee (as applicable) of such premises has executed and delivered all documentation which the Lender shall require to evidence its priority with respect to
such Inventory as well as its right to gain access to such Inventory; 

  

			
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	f.	that is produced in violation of the Fair Labor Standards Act or subject to the “hot goods” provisions contained in 29 U.S.C. 215 or any successor
statute or section; 

  

	g.	as to which any covenant, representation, or warranty with respect to such Inventory contained in the Loan Documents has been breached; 

 

	h.	that is an Item or is to be incorporated into Items that do not meet 50% U.S. Content requirements; 

 

	i.	that is demonstration Inventory; 

  

	j.	that consists of proprietary software (i.e., software designed solely for the Borrower’s internal use and not intended for resale);

  

	k.	that is damaged, obsolete, returned, defective, recalled or unfit for further processing; 

 

	l.	that has previously been exported from the U.S.; 

  

	m.	that constitutes or will be incorporated into Items that constitute, defense articles or services; 

 

	n.	that is an Item or will be incorporated into Items that will be used in the construction, alteration, operation or maintenance of nuclear power, enrichment,
reprocessing, research or heavy water production facilities unless with Ex-Im Bank’s prior written consent; 

  

	o.	that is an Item or to be incorporated into Items destined for shipment to a country with which Ex-Im Bank is legally prohibited from doing business as designated in the
current Country Limitation Schedule, or that the Borrower has knowledge will be re-exported by a foreign Buyer to a country in which Ex-Im Bank is legally prohibited from doing business; 

 

	p.	that is an Item or is to be incorporated into Items destined for shipment to a Buyer in a country in which Ex-Im Bank coverage is not available for commercial
reasons as designated in the current Country Limitation Schedule, unless and only to the extent that such Inventory is sold to the foreign Buyer on terms of an irrevocable letter of credit confirmed by a bank acceptable to Ex-Im Bank;

  

	q.	that constitutes or is to be incorporated into Items whose sale would result in an Account Receivable that would not be an Eligible Export-Related Account
Receivable; 

  

	r.	that is included as eligible inventory under any other credit facility to which Borrower is a party; or 

 

	s.	that is, or is to be incorporated into, an Item that is a Capital Good unless the transaction is in accordance with Section 2.14 “Economic Impact
Approval” of the Borrower Agreement. 

*                    *  
                  * 
  

			
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	  	Page 7 of 7Exhibit 10.1

 The NASDAQ OMX Group, Inc. 

2010 Executive Corporate Incentive Plan 

(Effective January 1, 2010) 

Article 1. Establishment and Purpose 

1.1 Establishment of the ECIP. The NASDAQ OMX Group, Inc., a Delaware corporation (the “Company” or “NASDAQ
OMX”), hereby establishes The NASDAQ OMX Group, Inc. Executive Corporate Incentive Plan (the “ECIP”). 
 1.2
Approval. Upon approval by the Board of Directors, the ECIP shall be effective as of January 1, 2010 (the “Effective Date”) and shall remain in effect until terminated by the Board. Notwithstanding anything herein to the contrary,
the ECIP shall be null and void if it is not approved, in a separate affirmative vote of the holders of at least a majority of the shares of the common stock of the Company cast, in person or by proxy, at the first shareholders’ meeting to
occur in 2010. Once such approval is obtained, if applicable, the ECIP shall be fully effective as of the Effective Date. 

1.3 Purpose. The purpose of the ECIP is to attract, retain, and motivate key executives by providing cash incentive awards to
designated executives of the Company, Subsidiaries, and affiliates. The ECIP is designed to further link an executive’s interests with that of NASDAQ OMX’s shareholders. The ECIP is intended to provide cash incentive awards, contingent
upon continued employment and meeting certain Company and individual business unit performance goals, to certain key executives who make substantial contributions to the Company. The ECIP also provides that Awards reflect individual performance,
subject to Article 5. Awards paid under the EC1P are intended to qualify as performance based compensation deductible by the Company under the qualified performance based exception to Section 162(m) of the Code. 

Article 2. Definitions 

As used in the ECIP, the following terms shall have the meanings set forth below: 

2.1 “Award” means the actual award earned during a Plan Year by a Participant, as determined by the Committee following
the end of the Plan Year. 
 2.2 “Board” means the Board of Directors of the Company. 

2.3 “Cause” means, unless otherwise defined in an employment agreement between the Participant and the Company,
(i) the engaging by the Participant in willful misconduct that is injurious to the Company or its affiliates, (ii) the embezzlement or misappropriation of funds or property of the Company or its affiliates by the Participant, or the
conviction of the Participant of a felony or the entrance of a plea of guilty or nolo contendere by the Participant to a felony, (iii) the willful failure or refusal by the Participant to substantially perform his or her duties or
responsibilities that continues after being brought to the attention of the Participant (other than any such failure resulting from the Participant’s incapacity due to Disability), or (iv) the 

violation by the Participant of any restrictive covenants entered into between the Participant and the Company or the Company’s Code of Conduct.

 2.4 “Code” means the Internal Revenue Code of 1986, as amended, and any
final treasury regulations promulgated thereunder. 
 2.5 “Committee” means the Management Compensation
Committee of the Board, which Committee has been designated by the Board to, among other things, administer the ECIP. The Committee shall be composed of not less than the minimum number of persons from time to time required by Section 16 and
Section 162(m), each of whom, to the extent necessary to comply with Section 16 and Section 162(m) only, is a “Non-Employee Director” and an “Outside Director” within the meaning of Section 16 and
Section 162(m), respectively, and the minimum number, if any, required by listing standards of The NASDAQ Stock Market. 

2.6 “Company” means The NASDAQ OMX Group, Inc., a Delaware corporation (including any Subsidiaries designated to
participate in the ECIP), and any successor thereto. 
 2.7 “Disability” means, unless otherwise defined in an
employment agreement between the Participant and the Company, a disability that would qualify as such under the Company’s then current long-term disability plan. 

2.8 “Individual Award” means the target award established for each Participant under Article 5 of the ECIP. 

2.9 “Participant” means an active employee of the Company, or a Subsidiary, who is employed in an executive capacity,
and designated by the Committee to participate in the ECIP during a Plan Year. 
 2.10 “Payment Date” means the
date upon which an Award shall be paid out in accordance with Article 6. 
 2.11 “Performance Goals” means the
goals selected by the Committee for any Plan Year based upon one or more of the Performance Measures, set forth in Article 5 of the ECIP. 

2.12 “Performance Measures” means, unless and until the Committee or Board proposes for shareholder vote and
shareholders approve a change in the general Performance Measures set forth herein, the performance criteria upon which the Performance Goal(s) for a particular Performance Period are based; the performance criteria shall be limited to any one or
more of the following Performance Measures: 
  

	 	(a)	Earnings before interest and taxes; 

  

	 	(b)	Earnings before interest, taxes, depreciation and amortization; 

  

	 	(c)	Earnings per share of the Company’s common stock (“Share”); 

 

	 	(d)	Non-GAAP earnings per Share; 

  

 2 

	 	(e)	Net income or net income from operations or net revenue or net exchange revenue (before or after taxes, and which may take into account or exclude the effect of
non-recurring or extraordinary charges and/or expenses); 

  

	 	(f)	Net profit (before or after taxes, and which may take into account or exclude the effect of non-recurring or extraordinary charges and/or expenses);

  

	 	(g)	Revenue growth; 

  

	 	(h)	Share price; 

  

	 	(i)	Market share; 

  

	 	(j)	Return measures (including without limitation return on assets, net assets, capital, revenue, net revenue, income or net income); 

 

	 	(k)	Cash flow (including without limitation operating cash flow and free cash flow); 

 

	 	(l)	Adherence to budget and/or expense targets; 

  

	 	(m)	Planning accuracy (as measured by comparing planned results to actual results); 

 

	 	(n)	Objectively determinable effectiveness, efficiency or business retention/expansion goals; and 

 

	 	(o)	Business effectiveness survey results. 

Any Performance Measure(s) may be used to measure the performance of the Company as a whole or any business unit, division, department or
function of the Company or any Subsidiary, either individually, alternatively or in any combination, and measured over a period of time including any portion of a year, annually or cumulatively over a period of years, on an absolute basis or
relative to a pre-established target, to a previous year’s or period’s results, or to a designated comparison group or company or stock market index, in each case as specified by the Committee. 

2.13 “Performance Period” means, in relation to any Award, the Plan Year or other period for which a Participant’s
performance is being calculated, with each such period constituting a separate Performance Period. 

2.14 “Plan Year” means the Company’s fiscal year, which commences each
January 1st and concludes each December 31st.

 2.15 “Retirement” means, unless otherwise defined in an employment agreement between the Participant and the
Company, a Participant who is eligible to retire from the Company or an Affiliate under the terms of any tax qualified Company retirement plan or, if a Participant is not covered by any such plan, retirement on or after such date as of which the

 Participant has both attained the age of 55 years and has 10 years of employment with the Company and terminates his employment with the
Company other than for Cause or death. 
  

 3 

 2.16 “Subsidiary” has the meaning set forth in Section 424(f) of the
Code. 
 Article 3. Administration 

3.1 The ECIP Administrator. The Committee shall administer the ECIP. 

3.2 Administration of the ECIP. The Committee, in its sole discretion, shall determine eligibility for participation in the
ECIP, establish the Individual Awards which may be earned by each Participant (which may be expressed in terms of dollar amount, percentage of salary or any other measurement, and which may have, but are not required to have, threshold, target and
maximum payouts), establish the terms and conditions of each Award (including the Performance Period and Performance Goal(s) and Performance Measure(s) to be utilized for each Participant, which may be based on individual, Company, Subsidiary and/or
business unit performance, calculate, determine and certify each Participant’s level of attainment of such Performance Goals or other terms and conditions, and calculate the Award for each Participant based upon such level of attainment. Except
as otherwise herein expressly provided, full power and authority to construe, interpret, and administer the ECIP shall be vested in the Committee, including without limitation to correct any defect, supply any omission or reconcile any inconsistency
or conflict in the Plan or any award under the Plan. The Committee has the power to amend or terminate the ECIP as further described herein. The Committee may at any time adopt such rules, regulations, policies, or practices, as, in its sole
discretion, it shall determine to be necessary or appropriate for the administration of, or the performance of its respective responsibilities under, the ECIP. The Committee may at any time amend, modify, suspend, or terminate such rules,
regulations, policies, or practices. 
 3.3 Decisions Binding. All determinations and decisions of the Committee as to
any disputed question arising under the ECIP, including questions of construction and interpretation, shall be final, binding, and conclusive upon all parties. 

3.4 No Liability to Committee Members. No member of the Committee shall be personally liable by reason of any contract or other
instrument related to the ECIP executed by such member or on his or her behalf in his or her capacity as a member of the Committee, nor for any mistake of judgment made in good faith, and the Company shall indemnify and hold harmless each employee,
officer, or director of the Company to whom any duty or power relating to the administration or interpretation of the ECIP may be allocated or delegated, against any cost or expense (including legal fees, disbursements and other related charges) or
liability (including any sum paid in settlement of a claim with the approval of the Board) arising out of any act or omission to act in connection with the ECIP unless arising out of such person’s own fraud or bad faith. 

3.4.1 The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons
may be entitled under the Company’s Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless. 

 

 4 

 Article 4. Eligibility and Participation 

4.1 Eligibility. Only active employees of the Company and its participating Subsidiaries who are employed in an executive capacity
may be eligible to participate in the ECIP and receive Awards hereunder. 
 4.2 Participation. Only eligible individuals
who are chosen and designated by the Committee to participate in the ECIP with respect to any given Plan Year or other Performance Period may participate in the ECIP for that Plan Year or other Performance Period. The Chief Executive Officer
(“CEO”) of the Company, and such other persons as the CEO may designate, shall recommend to the Committee employees (who may include such recommending person) for selection as Participants. Such designated employees shall be so notified in
writing or via electronic communication, as soon as is practicable after selection. The Committee may add to or delete individuals from the list of designated Participants at any time and from time to time, at its sole discretion. 

4.3 No Right to Participate. No Participant shall at any time have a right to be selected for participation in the ECIP for any
Performance Period, despite having previously participated in the ECIP. 
 Article 5. Award Determination 

5.1 Targets, In General. At the beginning of each Performance Period, but not later than the
90th day of the Performance Period, the Committee shall
establish Individual Awards for each Participant, payment of which shall be conditioned upon satisfaction of specific Performance Goals for the Performance Period established by the Committee in writing in advance of the Performance Period, or
within such period as may be permitted by regulations issued under Section 162(m) of the Code. Notwithstanding the foregoing, for any Performance Period of less than one year, the Committee shall take the foregoing actions prior to the lapse of
25% of the Performance Period. The payment of an Award, if any, shall be based upon the degree of achievement of the Performance Goals; provided, however, that the Committee may, in its sole discretion, reduce some or all of the amount which would
otherwise be payable with respect to an Award. The Committee shall not use its discretionary authority to increase, directly or indirectly, the amount of a payment to any Participant above the maximum Individual Award awarded for such Performance
Period. 
 5.1.1 The Committee, its sole discretion, may also establish such other additional restrictions or conditions
that must be satisfied as a condition precedent to the payment of all or a portion of any Award. Such additional restrictions or conditions shall be established no later than the date the Committee determines the Performance Goal(s) for a
Performance Period. Such additional restrictions or conditions need not be performance-based and may include, among other things, the receipt by a Participant of a specified annual performance rating, a vesting requirement of continued employment by
the Participant until a date which may be beyond the end of a Performance Period, and/or the achievement of specified performance goals by the Company, business unit or Participant. 

5.2 Performance Goals. The Performance Goals established by the Committee for a Performance Period shall be based on one or more
Performance Measures. 
  

 5 

 5.2.1 The Committee is authorized, in its sole and absolute discretion, to adjust or
modify the calculation of a Performance Goal for a Performance Period to include or exclude the effect of any one or more of the following occurrences that occur during a Performance Period: 

 

	 	(a)	asset write-downs; 

  

	 	(b)	significant litigation or claim judgments or settlements; 

  

	 	(c)	the effect of changes in tax laws, accounting standards or principles, or other laws or regulatory rules affecting reported results; 

 

	 	(d)	any reorganization and restructuring programs, including without limitation the internal restructuring of departments or units or functions within the Company that
significantly affect expense and/or budget targets upon which a Performance Measure is based; 

  

	 	(e)	extraordinary nonrecurring items as described in Accounting Principles Board Opinion No. 30 (or any successor pronouncement thereto) and/or in management’s
discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to stockholders for the applicable year or period; 

 

	 	(f)	acquisitions, divestitures or sales of significant assets; 

  

	 	(g)	any other specific unusual or nonrecurring events, or objectively determinable category thereof; 

 

	 	(h)	foreign exchange gains and losses; and 

  

	 	(i)	a change in the Company’s fiscal year. 

Such inclusion or exclusion shall be prescribed in a form that meets the requirements of Code Section 162(m) for deductibility. 

5.2.2 In the event that applicable tax and/or securities laws change to permit Committee discretion to alter the governing
Performance Measures without obtaining shareholder approval of such changes, the Committee shall have sole discretion to make such changes without obtaining shareholder approval. 

5.3 Payment of Awards. At the time the Performance Goals are established, the Committee shall prescribe a formula to determine the
percentage of the Individual Award, which may be payable based upon the degree of attainment of the Performance Goals during the Plan Year. If the minimum Performance Goals established by the Committee are not met, no payment will be made to any
Participant. To the extent that the minimum or target Performance Goals are satisfied or surpassed, and upon written certification by the Committee that the Performance Goals have been satisfied to a particular extent, payment of the Award shall be
made in accordance with the prescribed formula based upon a percentage of the Individual Award unless the Committee determines, in its sole discretion, to reduce the payment to be made. 

 

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 5.4 Maximum Award. The maximum Individual Award payable to any Participant for any
Performance Period of one year or more shall not exceed the greater of 3% of the Company’s before tax net income or $3 million. The foregoing maximum annual limit shall be prorated with respect to any individual Award payable with respect to a
Performance Period that is shorter than one year. 
 Article 6. Payment of Awards 

6.1 Form and Timing of Payment. Each Participant’s Award shall be paid in one (1) lump sum cash payment, no later than
March 15 after the close of the Plan Year in which the Performance Period with respect to the Award ends (such date being hereinafter referred to as the “Payment Date”). 

6.1.1 Notwithstanding Section 6.1 above, in the event the Committee had, at the time the Award was made, imposed a vesting
requirement of continued employment until a specified date after the Performance Period before the Award can be paid, the Award shall be paid as soon as practicable after the last to occur of (i) the Payment Date described in Section 6.1,
or (ii) the vesting date, but in no event later than March 15 following the close of the Plan Year in which the later of (i) or (ii) occurs. 

6.2 Unsecured Interest. No Participant or any other party claiming an interest in amounts earned under the ECIP shall have any
interest whatsoever in any specific asset of the Company. To the extent that any party acquires a right to receive payments under the ECIP, such right shall be equivalent to that of an unsecured general creditor of the Company. 

6.3 Active Employment. Except as provided in Article 7, no Award shall be paid to any Participant who is not an active employee of
the Company or one of its Subsidiaries on the last day of the applicable Performance Period and on the Payment Date or such later date as established in accordance with paragraph 6.1.1. 

Article 7. Termination of Employment 

7.1 Termination of Employment Due to Death, Disability, or Retirement. In the event a Participant’s employment is terminated
by reason of death, Disability, or Retirement, the Award determined in accordance with Section 5.3 herein shall be reduced to reflect partial participation during the Performance Period through the date of such termination, provided and subject
to the Committee’s certification that, with respect to a termination of employment due to Retirement, the applicable Performance Goal(s) for the Performance Period have been met. A reduced Award shall be determined by multiplying said Award by
a fraction: the numerator of which shall be the number of days of employment in the Performance Period through the date of employment termination, and the denominator of which shall be the total number of days in the Performance Period. In the case
of a Participant’s Disability, the employment termination shall be deemed to have occurred on the date that the Committee determines the Participant to be Disabled. The reduced Award thus determined shall be paid on the Payment Date with
respect to the Performance Period as to which such Award relates to the Participant or his beneficiary in accordance with Article 9 hereof. 
  

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 7.2 Termination of Employment for Other Reasons. In the event a Participant’s
employment is terminated for any reason other than death, Disability, or Retirement all of the Participant’s rights to an Award for the Performance Period then in progress shall be forfeited. However, the Committee, in its sole discretion, may
pay a prorated Award for the portion of the Performance Period that the Participant was employed by the Company, computed as determined by the Committee, provided and subject to the Committee’s certification that the Applicable Performance
Goal(s) for the Performance Period have been met. The reduced Award thus determined shall be paid on the Payment Date with respect to the Performance Period as to which such Award relates. Notwithstanding the foregoing, in the event a Participant is
terminated for Cause, the Participant shall in all events forfeit any Award not already paid. 
 Article 8. Rights of Participants

 8.1 Employment. The Company intends that the Awards provided under the ECIP be a term of employment and a part of
each Participant’s compensation. Participation in the ECIP shall not constitute an agreement (a) of the Participant to remain in the employ of and to render his/her services to the Company, or (b) of the Company to continue to employ
such Participant, and the Company may, subject to any applicable employment agreement, terminate the employment of a Participant at any time with or without cause. 

8.2 Nontransferability. No right or interest of any Participant in the ECIP shall be assignable or transferable, or subject to any
lien, directly, by operation of law or otherwise, including, but not limited to, execution, levy, garnishment, attachment, pledge, and bankruptcy. 

Article 9. Beneficiary Designation and Payment to Persons Other Than the Participant 

9.1 Beneficiary Designation. Each Participant under the ECIP may, from time to time, name any beneficiary or beneficiaries (who may
be named contingently or successively) to whom any benefit under the ECIP is to be paid in case of his death before he receives any or all of such benefit. Each designation will revoke all prior designations by the same Participant, shall be in a
form prescribed by the Committee, and will be effective only when filed by the Participant in writing with the Committee during his lifetime. In the absence of any such designation, benefits remaining unpaid at the Participant’s death shall be
paid to the Participant’s estate. 
 9.2 Incapacity. If the Committee shall find that any person to whom any amount
is payable under the ECIP is unable to care for his affairs because of incapacity, illness or accident, or is a minor, or has died, then any payment due to such person or his estate (unless a prior claim therefore has been made by a duly appointed
legal representative) may, if the Committee so directs, be paid to his spouse, a child, a relative, an institution maintaining or having custody of such person, or any other person deemed by the Committee, in its sole discretion, to be a proper
recipient on behalf of such person otherwise entitled to payment. Any such payment shall be a complete discharge of the liability of the Company therefore. 

Article 10. Amendments 

The Committee may amend, suspend or terminate the ECIP at any time; provided that no amendment may be made without the approval of the
Company’s shareholders if the effect of 
  

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such amendment would be to cause outstanding or pending Awards to cease to qualify for the performance-based compensation exception to Section 162(m) of the Code. Notwithstanding the
foregoing or any provision of the ECIP to the contrary, the Committee may at any time (without the consent of the Participant) modify, amend or terminate any or all provisions of this ECIP to the extent necessary to ensure that payments under the
ECIP are not “deferred compensation” subject to Section 409A of the Code (or, alternatively, conform to the requirements of Section 409A of the Code). 

Article 11. Miscellaneous 

11.1 Governing Law. The validity, construction, and effect of the ECIP and any rules and regulations relating to the ECIP and any
Award shall be determined in accordance with the laws of the State of Delaware without giving effect to the conflict of law principles thereof. 

11.2 Withholding Taxes. The Company shall deduct from all payments under the ECIP any Federal, state, local or other taxes
required by law to be withheld with respect to such payments. 
 11.3 Gender and Number. Except where otherwise indicated
by the context, any masculine term used herein also shall include the feminine; the plural shall include the singular, and the singular shall include the plural. 

11.4 Severability. In the event any provision of the ECIP shall be held illegal or invalid for any reason, the illegality or
invalidity shall not affect the remaining parts of the ECIP, and the ECIP shall be construed and enforced as if the illegal or invalid provision had not been included. 

11.5 Rights Not Transferable. A Participant’s rights under the ECIP may not be assigned, pledged or otherwise transferred
except, in the event of the Participant’s death, to the Participant’s designated beneficiary or, in the absence of such a designation, by will or by the laws of descent and distribution. 

11.6 Costs of the ECIP and Unfunded Plan. All costs of implementing and administering the ECIP shall be borne by the Company.
Participants shall have no right, title, or interest whatsoever in or to any investments which the Company may make to aid it in meeting its obligations under the ECIP. Nothing contained in the ECIP, and no action taken pursuant to its provisions,
shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any Participant, beneficiary, legal representative or any other person. To the extent that any person acquires a right to receive
payments from the Company under the ECIP, such right shall be no greater than the right of an unsecured general creditor of the Company. All payments to be made hereunder shall be paid from the general funds of the Company and no special or separate
fund shall be established and no segregation of assets shall be made to assure payment of such amounts except as expressly set forth in the ECIP. 

The ECIP is not intended to be subject to the Employee Retirement Income Security Act of 1974, as amended. 

 

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 11.7 Retirement Plans and Welfare Benefit Plans. Except as specified in the employee
benefit plan in question, Awards under the ECIP will not be included as “compensation” for purposes of the Company’s retirement plans (both qualified and nonqualified) or welfare benefit plans, 

11.8 Nonexclusively. The adoption of the ECIP shall not be construed as creating any limitations on the power of the Board or
Committee to adopt such other compensation arrangements, as it may deem desirable for any Participant. 
 11.9 Successors.
All obligations of the Company under the ECIP with respect to Individual Awards and Awards granted hereunder shall be binding upon any successor to the Company, whether the existence of such successor is the result of a direct or indirect
purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company. 

11.10 Interpretation. The ECIP, the Individual Awards, and Awards are designed and, to the extent determined by the Committee, in
its sole discretion, intended to comply with Code Section 162(m) and all provisions hereof, shall be construed in a manner to so comply. 
  

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