Document:

Blueprint

 

Exhibit
10.3

 

SEVERANCE
PLAN

 

Effective
April 25, 2000

(As
amended on March 11, 2019)

 

 

1.

PURPOSE OF
PLAN

 

While
Atrion Corporation (the “Company”) is of the view that
its business provides an optimistic outlook for the Company’s
future profitability and growth and while the Company has no
present plans for any Extraordinary Event (as defined below), the
Company wishes to provide certain assurances to Jeffery Strickland
(the “Executive”), who is currently serving as Vice
President and Chief Financial Officer, Secretary and Treasurer of
the Company, by adopting this Severance Plan in the event one of
these Extraordinary Events should occur. The purpose of this
Severance Plan (the “Plan”) is to ensure that the
Executive, who the Company recognizes has made and is expected to
continue making a significant contribution to the growth and
financial success of the Company, will be able to evaluate
objectively any proposed Extraordinary Event without being
distracted by the potential economic impact of such Extraordinary
Event upon the Executive’s personal
circumstances.

 

2.            

DEFINITIONS.

 

(a)

“Board”
means the Board of Directors of the Company.

 

(b)

“Committee”
means the Compensation Committee of the Board of Directors of the
Company.

 

(c)          

“Extraordinary
Event” shall mean any of the following events:

 

(i)

The
Company is merged, consolidated or reorganized into or with another
corporation or other person and as a result of such merger,
consolidation or reorganization less than 50% of the combined
voting power of the then-outstanding securities of such corporation
or person immediately after such transaction are held in the
aggregate by the holders of voting securities of the Company
immediately prior to such transaction;

 

(ii)

The Company sells
all or substantially all of its assets to any other corporation or
other person and as a result of such sale less than 50% of the
combined voting power of the then-outstanding voting securities of
such corporation or person immediately after such transaction are
held in the aggregate by the holders of voting securities of the
Company immediately prior to such sale;

 

(iii)

Individuals who, as
of the date hereof, constitute the directors of the Company cease
for any reason to constitute at least a majority thereof unless the
election or the nomination for election by the Company's
stockholders of each director of the Company first elected after
the date hereof was approved by a vote of at least two-thirds of
the directors of the Company then still in office who were
directors of the Company as of the date hereof; or

 

 

1

 

   

(iv)

Dissolution of the
Company under Delaware law.

 

(d)          

“Post Event
Period” shall mean the period commencing on the date of the
occurrence of the first event which constitutes an Extraordinary
Event and ending upon the earliest to occur of the
following:

 

(i)

The
Executive’s death;

 

(ii)

The
Executive’s attainment of age 65; or

 

(iii)

The expiration of
two (2) years after the occurrence of an Extraordinary
Event.

 

3.            

ADMINISTRATION

 

The
Plan shall be administered by the Committee. Subject to the
provisions hereof, the Committee shall have the power and authority
to direct the payment by the Company of severance pay hereunder and
shall have the authority, in its sole discretion, in accordance
with the provisions hereof, to make any and all determinations
deemed necessary or desirable for the administration of the
Plan.

 

4.

TERMINATION BY
COMPANY FOLLOWING AN EXTRAORDINARY EVENT

 

In the
event of the occurrence of an Extraordinary Event, the Company may
terminate the Executive's employment by the Company during the Post
Event Period without incurring the obligation to make the payments
set forth in Paragraph 5 below only for Cause. For purposes of this
Plan, "Cause" shall mean (i) an act of dishonesty by the Executive
resulting in gain or personal enrichment of the Executive, or (ii)
failure by the Executive to substantially perform his duties with
the Company (other than any such failure resulting from the
Executive's incapacity due to mental or physical
illness).

 

5.

SEVERANCE
PAYMENT

 

In the
event of an Extraordinary Event as defined in Paragraph 2(c)(iv)
above during the term of this Plan or if, during the Post Event
Period, the Executive's employment by the Company is terminated by
the Company other than pursuant to Paragraph 4 above (for Cause) or
is terminated by the Executive for Good Reason (as defined in
Paragraph 6 below), the Company shall pay to the Executive in a
lump sum within ten (10) business days of the effective date of the
Extraordinary Event as defined in Paragraph 2(c)(iv) above or the
date of termination of the Executive's employment with the Company
during the Post Event Period (the "Termination Date"), in lieu of
any further payments of salary to the Executive for periods
subsequent to such Extraordinary Event or Termination Date, as the
case may be, an amount which is equal to the annual base salary
paid by the Company to the Executive in the twelve (12) month
period preceding such Extraordinary Event or the Termination Date,
as the case may be; provided, however, that such lump sum payment
shall not be in lieu of any accrued vacation pay that may be due to
the Executive for periods prior to such Extraordinary Event or
Termination Date, as the case may be. Any such accrued vacation pay
shall be paid to the Executive when the above-described lump sum
payment is made to the Executive.

.

 

2

 

   

6.

GOOD
REASON

 

For
purposes of this Plan, “Good Reason” shall mean any one
or more of the following:

 

(a)            

A reduction by the
Company in the Executive's annual base salary during the Post Event
Period from the annual base salary in effect for Executive
immediately preceding the Post Event Period.

 

(b)            

The relocation of
the Executive's principal office to a location outside of the
Dallas, Texas metropolitan area unless such relocation is effected
as a result of a request for such relocation by the Executive or a
request for such relocation that is made by the Company and agreed
to by the Executive.

 

(c)            

The failure by any
successor as contemplated in Paragraph 10(c) hereof to assume this
Plan and agree to perform the Company’s obligations
hereunder.

 

(d)            

Termination of this
Plan except as permitted in Paragraph 9(a) below.

 

7.            

EMPLOYMENT
RIGHTS

 

Nothing
expressed or implied in this Plan shall create any right or duty on
the part of the Company or the Executive to have the Executive
remain in the employment of the Company prior to any Extraordinary
Event.

 

8.

WITHHOLDING OF
TAXES

 

The
Company may withhold from any amounts payable under this Plan all
federal, state, city or other taxes as shall be required pursuant
to any law or government regulation or ruling.

 

9.            

TERM

 

(a)            

This Plan shall
terminate upon the earliest to occur of the following:

 

(i) 

The termination of
the Executive's employment by the Company prior to any
Extraordinary Event; provided, however, that any termination of
employment of the Executive following the commencement of any
discussions with a third party authorized by the Board that is
followed by an Extraordinary Event in which such third party (or an
associate or affiliate thereof) is a party within six (6) months of
the commencement of such discussions shall be deemed to be a
termination of the Executive’s employment after an
Extraordinary Event for purposes of this Plan; provided further,
however, that any termination of the Executive’s employment
without Cause (as defined in Paragraph 4 above) within six (6)
months preceding the earlier of (A) an Extraordinary Event defined
in Paragraph 2(c)(iv) hereof or (B) the adoption by the Board of a
resolution to dissolve the Company that is followed by an
Extraordinary Event defined in Paragraph 2(c)(iv) hereof shall be
deemed to have occurred after the Extraordinary Event defined in
Paragraph 2(c)(iv) hereof;

 

 

3

 

 

(ii)
The termination of the Post Event Period; and

 

(iii)
The termination of the Executive's employment by the Company after
an Extraordinary Event pursuant to the provisions of Paragraph 4
herein (for Cause).

 

(b)            

Notwithstanding the
foregoing, the Company may give written notice of termination of
this Plan to the Executive at any time after April 25, 2001, and in
such event this Plan shall terminate on the last day of the twelfth
(12th) month following the date such written notice is
given.

 

10.            

MISCELLANEOUS

 

(a)            

The validity,
interpretation, construction and performance of this Plan shall be
governed by the laws of the State of Texas.

 

(b)            

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

 

(c)            

The Company shall
require any successor (whether direct or indirect, by purchase,
merger, consolidation, reorganization or otherwise) to all or
substantially all of the business or assets of the Company to
assume this Plan and the Company’s obligations hereunder in
the same manner and to the same extent the Company would be
required to perform hereunder if no such succession had taken
place.

 

 

4Blueprint

 

Exhibit 10.4

  

 

 

 

ATRION CORPORATION

SHORT-TERM INCENTIVE COMPENSATION PLAN

 

Effective
January 1, 2013

 

(As
last amended on March 11, 2019)

 

 

 

 

i

 

 

ATRION CORPORATION SHORT-TERM INCENTIVE COMPENSATION
PLAN

Introduction

 

Atrion
Corporation (the “Corporation”) adopts this Atrion
Corporation Short-Term Incentive Compensation Plan (the
“Plan”) effective as of January 1, 2013. The purposes
of the Plan are (1) to provide performance bonuses to selected
Executive Officers, Key Employees, and Critical-Needs Individuals
whose performance has a direct impact on the Corporation's
objectives of achieving a high level of annual profitability and
sustained long-term growth; (2) to attract and retain Executive
Officers, Key Employees and Critical-Needs Individuals; and (3) to
maintain a corporate-wide pool of profits that will be available to
pay various types of performance bonuses, contractual bonuses,
holiday gifts, severance payments, moving expenses, other
employment-related expenses, and similar types of payments approved
by the Corporate Board or the Subsidiary Board.

 

The
Plan is designed to provide annual performance bonuses to three
groups:

 

●

Executive
Officers

●

Key
Employees

●

Critical-Needs
Individuals

 

The
Corporation intends the Plan to be an unfunded plan maintained
primarily for the purpose of providing incentive compensation to a
select group of individuals, which is exempt from the minimum
participation, vesting and funding standards of the Employee
Retirement Income Security Act of 1974 (“ERISA”). The
Plan is designed to be unfunded within the meaning of Internal
Revenue Code (“IRC”) § 404(a)(5). If the
Corporation sets aside monies in a separate account to fund
benefits due under the Plan, such monies will remain subject to
claims of the general creditors of the Corporation or any
Subsidiary. The Corporation reserves the right to interpret and
operate the Plan accordingly, and to amend the Plan as necessary to
maintain its status as an unfunded incentive compensation plan as
defined under ERISA and the IRC and any other applicable law, and
to qualify for the tax deduction under IRC § 404(a)(5) for
payments made under the Plan. The Plan is designed to be a
short-term deferral plan
within the meaning of IRC § 409A and will be administered
accordingly, in compliance with Treasury Regulations §
1.409A-1(b)(4).

 

 

ii

 

 

ATRION CORPORATION INCENTIVE COMPENSATION AND AWARDS
PLAN

Table of Contents

 

	

ARTICLE 1 - DEFINITIONS

	

Page

	

1.1 Adjustment
Factor for Subsidiary Profitability

	

1

	

1.2 Awards
Pool

	

1

	

1.3 Board or
Corporate Board

	

1

	

1.4 Board
Chairman

	

1

	

1.5 Bonus

	

1

	

1.6 Bonus
Allocation Formula

	

1

	

1.7 Compensation Committee

	

2

	

1.8 Corporation

	

2

	

1.9 Critical-Needs Individual

	

2

	

1.10 Discretionary Expenses

	

2

	

1.11 Effective
Date

	

2

	

1.12 Employee

	

2

	

1.13 Employment

	

2

	

1.14 ERISA

	

3

	

1.15 Executive
Officer

	

3

	

1.16 Formula
Bonus

	

3

	

1.17 Formula
Table

	

3

	

1.18 Independent Contractor

	

3

	

1.19 Individual Bonus Rate

	

3

	

1.20 Individual Performance

	

3

	

1.21 Individual Pool Points

	

3

	

1.22 IRC

	

3

	

1.23 Key
Employee

	

3

	

1.24 Participant

	

4

	

1.25 Performance Year

	

4

	

1.26 Plan

	

4

	

1.27 Plan
Administrator

	

4

	

1.28 Plan
Year

	

4

	

1.29 Salary

	

4

	

1.30 Subsidiary

	

4

	

1.31 Subsidiary Board

	

4

	

1.32 Termination Date

	

4

	

1.33 Total
Pool Points

	

4

	
 

	
 

 

 

iii

 

 

	

ARTICLE 2 - PLAN ADMINISTRATION

	
 

	

2.1 Purposes
of the Awards Pool

	

5

	

2.2 Carry-Over
of Unused Amounts

	

5

	

2.3 Duties of
the Corporate Board

	

5

	

2.4 Duties of
the Subsidiary Board

	

5

	

2.5 Duties of
the Compensation Committee

	

5

	

2.6 Duties of
the Board Chairman

	

5

	
 

	
 

	

ARTICLE 3 - CONTRIBUTIONS TO THE AWARDS POOL

	
 

	

3.1 Determination of each Subsidiary’s
Contributions

	

6

	

3.2 Timing of
Contributions

	

6

	
 

	
 

	

ARTICLE 4 - DETERMINATION AND PAYMENT OF ANNUAL
BONUSES

	
 

	

4.1 Eligibility for Bonus

	

7

	

4.2 Determination of Annual Bonus
Amounts

	

7

	

(a)
Executive Officer’s Bonus

	

7

	

(b)
Key Employee’s Bonus

	

7

	

(c)
Critical-Needs Individual’s Bonus

	

7

	

4.3 Payment of
Annual Bonuses

	

7

	

(a)
Minimum Payment

	

7

	

(b)
Bonuses for Executive Officers and Key Employees

	

8

	

(c)
Bonuses for Critical-Needs Individuals

	

8

	

(d)
Short-Term Deferral Plan

	

8

	

4.4 Vesting in
Bonus Awards

	

8

	
 

	
 

	

ARTICLE 5 - AMENDMENT AND TERMINATION

	
 

	

5.1 Amendment
of the Plan

	

9

	

5.2 Termination of the Plan

	

9

	
 

	
 

	

ARTICLE 6 - MISCELLANEOUS

	
 

	

6.1 Headings

	

10

	

6.2 Construction and Choice of Law

	

10

	

6.3 Severability

	

10

	

6.4 Effect of
Bonuses on Other Plans

	

10

	

6.5 Status as
an Unfunded Top-Hat Plan

	

10

	

6.6 Nonalienation

	

10

	

6.7 No Implied
Rights

	

10

	

6.8 Contractual Limitation Period

	

10

	
 

	
 

	

ADDENDUM A Formula Table -
Bonus Allocation Formula

	
 

 

 

iv

 

 

ARTICLE 1

Definitions

 

As used
in the Plan, the following words and phrases and any derivatives
thereof will have the meanings set forth below unless the context
clearly indicates otherwise. Definitions of other words and phrases
are set forth throughout the Plan. Section references indicate
sections of the Plan unless otherwise stated. The masculine pronoun
includes the feminine, and the singular number includes the plural
and the plural the singular, whenever applicable.

 

1.1 

“Adjustment Factor for Subsidiary
Profitability” means a percentage that is a component
of the Bonus Allocation Formula based on one or more factors
including a Subsidiary’s profitability for a given
Performance Year, a Subsidiary's contribution to the Awards Pool in
a Plan Year relative to the total of all such contributions in that
Plan Year, and accomplishments of a Subsidiary in executing
meaningful corporate transactions and addressing business risks and
other extraordinary items, as determined by the Subsidiary
Board.

 

1.2 

“Awards Pool” means the
aggregate amounts contributed by the Subsidiaries for each Plan
Year, which Atrion Corporation records and maintains in a separate
account and uses for the payment of Bonuses and Discretionary
Expenses.

 

1.3 

“Board” or” Corporate Board” means the
Board of Directors of Atrion Corporation.

 

1.4 

“Board Chairman” means the
Chairman of the Board of Directors of Atrion
Corporation.

 

1.5 

“Bonus” means (a) for an
Executive Officer, a performance bonus in an amount equal to the
Formula Bonus, as such amount may be adjusted by the Corporate
Board based on the recommendation of the Compensation Committee;
(b) for a Key Employee, a performance bonus in an amount equal to
the Formula Bonus, as such amount may be adjusted by the Subsidiary
Board; and (c) for a Critical-Needs Individual, a performance bonus
in such amount as is determined by the Subsidiary
Board.

 

1.6 

“Bonus Allocation Formula”
means the formula used to calculate Formula Bonuses for Executive
Officers and Key Employees, which is reflected in the Formula
Table, the steps in the determination of which are as
follows:

 

 

1

 

   

Step
1: 

Salary X Individual
Bonus Rate X Adjustment Factor for Subsidiary Profitability =
Individual Pool Points;

Step
2: 

Ratio of Individual
Pool Points to Total Pool Points X total amount of the Awards Pool
= Preliminary Bonus Amount;

Step
3: 

Preliminary Bonus
Amount X Individual Performance = Formula Bonus.

 

1.7 

“Compensation Committee”
means the Compensation Committee of the Corporate
Board.

 

1.8 

“Corporation” means Atrion
Corporation.

 

1.9 

“Critical-Needs Individual”
means (a) a manager, director, supervisor, engineer, or other
Employee designated as such, who is not an Executive Officer or a
Key Employee but whose skills have special value and are relatively
unique in the labor market; or (b) an Independent Contractor (such
as a member of an advisory board), whom the Subsidiary Board
selects to receive a Critical-Needs Individual Bonus under Article
4 for a given Plan Year.

 

1.10 

“Discretionary Expenses”
means the following expenses that may be paid from the Awards
Pool:

(a)

Various
bonuses to be paid under employment agreements;

(b) 

Various types of
special bonuses, including but not limited to signing bonuses,
relocation bonuses, safety bonuses, referral bonuses, quarterly
bonuses, and spot bonuses;

(c)

Holiday gifts in
the form of cash or gift cards or merchandise;

(d)

Severance
payments;

(e)

Various types of
employment-related expenses;

(f) 

The expense
amortization of each Subsidiary’s allocation of the cost of
restricted stock unit awards to its Employees, over the vesting
period; and

(g) 

Such other payments
and expenses as the Subsidiary Board determines to be
appropriate.

 

1.11 

“Effective Date” means
January 1, 2013.

 

1.12 

“Employee” means an
individual (a) who is regularly employed by the Corporation or a
Subsidiary as a common-law employee, and (b) who has FICA taxes
withheld by his or her employer.

 

1.13 

“Employment” means the
period during which a Participant is employed as a regular,
full-time employee of the Corporation or a Subsidiary.

 

 

2

 

   

1.14 

“ERISA” means the Employee
Retirement Income Security Act of 1974, as amended from time to
time, and regulations and rulings issued under ERISA.

 

1.15 

“Executive Officer” means
the Chief Executive Officer of the Corporation and the Chief
Financial Officer of the Corporation.

 

1.16 

“Formula Bonus” means the
performance bonus determined under the Bonus Allocation
Formula.

 

1.17 

“Formula Table” means the
table set forth in Addendum A to this Plan that sets forth the
Bonus Allocation Formula.

 

1.18 

“Independent Contractor”
means an individual who performs services for the Corporation or a
Subsidiary in a capacity other than that of an
Employee.

 

1.19 

“Individual Bonus Rate”
means a percentage that is a component of the Bonus Allocation
Formula as determined (a) for Executive Officers by the
Compensation Committee after taking into account the recommendation
of the Board Chairman and (b) for Key Employees by the Subsidiary
Board.

 

1.20 

“Individual Performance”
means a percentage that is a component of the Bonus Allocation
Formula which constitutes the rating assigned to a Participant for
a given Performance Year based on his or her performance as
determined (a) for Executive Officers by the Compensation Committee
after taking into account the recommendation of the Board Chairman
and (b) for Key Employees by the Subsidiary Board.

 

1.21 

“Individual Pool Points”
means the number of points calculated for each eligible Executive
Officer and Key Employee for each Performance Year, determined as
set forth in Step 1 of the Bonus Allocation Formula.

 

1.22 

“IRC” means the Internal
Revenue Code of 1986, as amended from time to time, and regulations
and rulings issued under the Code.

 

1.23 

“Key Employee” means an
Employee other than an Executive Officer or a Critical-Needs
Individual, who is employed by the Corporation or a Subsidiary, who
has responsibility for the management, supervision, profitability,
or growth of all or part of the Subsidiary’s business
operations, and who is eligible to receive a Formula Bonus for a
given Plan Year under Section 4.1.

 

 

3

 

   

1.24 

“Participant” means an
Executive Officer whom the Corporate Board has determined is
eligible to receive a Bonus for one or more Plan Years and a Key
Employee or Critical-Needs Individual whom the Subsidiary Board has
determined is eligible to receive a Bonus for one or more Plan
Years.

 

1.25 

“Performance Year” means the
12 months ending on September 30 of each Plan Year.

 

1.26 

“Plan” means the Atrion
Corporation Short-Term Incentive Compensation Plan, as set forth in
this document and as amended from time to time.

 

1.27 

“Plan Administrator” means
the Subsidiary Board, unless the Subsidiary Board has appointed an
individual to serve in that role for purposes of any litigation
that has or may arise from this Plan.

 

1.28 

“Plan Year” means calendar
year 2013 and each succeeding calendar year.

 

1.29 

“Salary” means a
Participant's base salary for the Plan Year, determined without
regard to any bonus or award under this Plan or any benefits
accrued under any other deferred compensation plan, retirement plan
or welfare benefit plan.

 

1.30 

“Subsidiary” means (a)
Halkey-Roberts Corporation, (b) Quest Medical, Inc., (c) Atrion
Medical Products, Inc., and (d) any other company of which the
Corporation owns at least 80% of the outstanding common stock,
which common stock represents at least 80% of the total value of
the stock of such company, and which has been designated as a
participant in the Plan.

 

1.31 

“Subsidiary Board” means a
committee the members of which are the members of the Boards of
Directors of the participating Subsidiaries.

 

1.32 

“Termination Date” means the
date (a) of termination of Employment in the case of Participant
who is an Employee, or (b) in the case of an Independent
Contractor, when he or she stops performing services for the
Corporation and its Subsidiaries. A Participant who is on an
approved leave of absence is not treated as
terminated.

 

1.33 

“Total Pool Points” means
the total of all Individual Pool Points.

 

 

4

 

 

ARTICLE 2

Plan Administration

 

2.1 

Purposes of the Awards Pool. The
Corporation will make, or cause to be made, the following payments
from the Awards Pool:

(a) 

Bonuses to
Executive Officers in amounts determined by the Corporate
Board;

(b) 

Bonuses to Key
Employees in amounts determined by the Subsidiary
Board;

(c) 

Bonuses to
Critical-Needs Individuals in amounts determined by the Subsidiary
Board; and

(d) 

Discretionary
Expenses.

 

2.2 

Carry-Over of Unused Amounts. In its
sole discretion, the Corporation may carry over from Plan Year to
Plan Year amounts contributed to the Awards Pool with respect to a
Plan Year and may use such amounts for any purpose under the Plan
at such times as it considers proper.

 

2.3 

Duties of the Corporate Board.
The Corporate Board
will have the following responsibilities for Plan
administration:

(a)      
Approve and adopt the Plan;

(b) 

Approve amendments
to the Plan;

(c) 

Determine the
amount and timing of Bonuses for Executive Officers for each Plan
Year; and

(d) 

Perform such other
functions to be performed by it as set forth in the
Plan.

 

2.4 

Duties of the Subsidiary Board. The Subsidiary Board
will have the following responsibilities for Plan
administration:

(a) 

Determine each
Subsidiary’s return-on-investment goal for each Performance
Year, at the 15% level or at a higher level that reflects a risk
adjustment considered appropriate for certain
investments;

(b) 

Determine certain
components of the Bonus Allocation Formula as provided in the
Plan;

(c) 

Determine each
Subsidiary’s bonus sharing percentage;

(d) 

Determine the date
or dates that each Subsidiary is to make contributions to the
Awards Pool;

(e) 

Determine the
amount and timing of the Bonus for each eligible Key Employee for
each Plan Year;

(f) 

Determine the
amount and timing of the Bonus for each eligible Critical-Needs
Individual for each Plan Year; and

(g) 

Perform such other
functions to be performed by it as set forth in the Plan or as may
be directed by the Board.

  
 

2.5 

Duties of the Compensation Committee.
The Compensation Committee will have the responsibility to review
the determinations by the Board Chairman of the Formula Bonuses for
Executive Officers, to make recommendations to the Corporate Board
with respect thereto, to determine certain components of the Bonus
Allocation Formula as provided in the Plan and to perform such
other functions to be performed by it as set forth in the Plan or
as may be directed by the Board.

 

2.6

Duties of the Board Chairman. The Board
Chairman, in addition to serving on the Subsidiary Board, shall
determine the Formula Bonuses for the Executive Officers and report
same to the Compensation Committee.

   

 

5

 

 

ARTICLE
3

Contributions to the Awards Pool

 

3.1 

Determination of each Subsidiary’s
Contributions. Subject to any adjustment that the Subsidiary
Board may make for any Plan Year, each Subsidiary will make
contributions to the Awards Pool in amounts determined by the
Subsidiary Board based on the following procedures for the month,
calendar quarter, or the Plan Year:

 

Step
One – Determine each Subsidiary’s bonus hurdle
amount:

 

	
(A)

	
(1)

	
The
Subsidiary’s average investment for the Performance Year as
determined by the Subsidiary Board multiplied by

	
 

	
(2)

	
15% annual return
requirement, or such higher percentage fixed by the
Subsidiary Board, equals

	
 

	
(3)

	
The
Subsidiary’s return hurdle.

	
(B)

	
(1)

	
The
Subsidiary’s return hurdle, plus

	
 

	
(2)

	
The
Subsidiary’s charge for corporate expenses for the
Performance Year as

	
 

	
 

	
determined by the
executive officers of the Corporation, equals

	
 

	
(3)

	
The
Subsidiary’s bonus hurdle amount.

Step
Two – Determine each Subsidiary’s Contribution
Amount:

	
 

	
(1)

	
(The
Subsidiary’s pre-bonus operating income for the Performance
Year minus the
Subsidiary’s bonus hurdle amount) multiplied by

	
 

	
(2)

	
15% or lower bonus
sharing percentage assigned to the Subsidiary by the Subsidiary
Board, equals

	
 

	
(3)

	
The
Subsidiary’s contribution for the period.

 

3.2 

Timing of Contributions. Each Subsidiary
will make its contributions to the Awards Pool on the dates
determined by the Subsidiary Board.

 

 

6

 

 

ARTICLE
4

Determination and Payment of Annual Bonuses

 

4.1 

Eligibility for Bonus. The Corporate
Board will determine which Executive Officers are eligible to
receive Bonuses, and the Subsidiary Board will determine which Key
Employees and which Critical-Needs Individuals are eligible to
receive Bonuses.

 

4.2 

Determination
of Annual Bonus Amounts.

 

(a) 

Executive Officers Bonuses. A Formula
Bonus will be determined for each eligible Executive Officer for
the Plan Year by the Board Chairman. The Board Chairman shall
advise the Compensation Committee of the Formula Bonus determined
by him for each such Executive Officer. The Compensation Committee
will review such Formula Bonuses, may recommend adjustments to the
amount of such Formula Bonuses and shall advise the Corporate Board
of the determinations made by the Board Chairman and of any
recommendations it may have for adjustments to the Formula Bonuses
determined by the Board Chairman. The Corporate Board will
determine the amount of the Bonus to be paid to each eligible
Executive Officer after taking into consideration the Formula
Bonuses determined by the Board Chairman and any adjustments to the
amount thereof as recommended by the Compensation
Committee.

 

(b) 

Key Employees Bonuses. A Formula Bonus
will be determined for each eligible Key Employee for the Plan
Year. The Subsidiary Board will determine the amount of the Bonus
to be paid to each eligible Key Employee after taking into
consideration the Formula Bonus and adjusting the amount to be paid
for any factors that the Subsidiary Board deems
appropriate.

 

(c) 

Critical-Needs Individuals Bonuses. The
Subsidiary Board will determine the amount of each eligible
Critical-Needs Individual’s Bonus for the Plan Year based on
his or her performance and any other factors the Subsidiary Board
deems appropriate.

 

4.3            

Payment
of Annual Bonuses.

      

(a) 

Minimum Payment. On or before the
December 31 of each Plan Year, the Subsidiary Board, taking into
account Bonuses for Key Employees and Critical-Needs Individuals as
well as Bonuses to Executive Officers, may determine the minimum
aggregate amount of Bonuses with respect to such Plan Year, and the
prior Plan Year regarding the deferred portion of any Bonuses for
such prior Plan Year, to be paid by the immediately following March
15, such minimum aggregate amount to be subject to approval by the
Corporate Board.

 

 

7

 

   

(b) 

Bonuses for Executive Officers and Key
Employees. For business reasons such as retention,
motivation, cash flow, and similar matters, the Corporate Board and
the Subsidiary Board may in their discretion cause there to be
distributed to some or all Executive Officers and Key Employees,
respectively, a cash payment of 75% of their Bonus on a date fixed
by the Corporate Board in the case of the Executive Officers and a
date fixed by the Subsidiary Board in the case of Key Employees,
but in each case such date shall be no later than the April 15
immediately following the Plan Year, and a cash payment of the
remaining 25% on a date fixed by the Corporate Board in the case of
the Executive Officers and a date fixed by the Subsidiary Board in
the case of Key Employees, but in each case such date shall be no
later than the next succeeding April 15. All Executive Officers and
Key Employees who are to receive Bonuses and who are not selected
for such deferred payment for a given Plan Year will receive 100%
of their Bonuses on a date fixed by the Corporate Board in the case
of the Executive Officers and a date fixed by the Subsidiary Board
in the case of Key Employees, but in each case such date shall be
no later than the April 15 immediately following the Plan
Year.

 

(c) 

Bonuses for Critical-Needs Individuals.
Unless the Subsidiary Board determines otherwise, the Bonuses for
Critical-Needs Individuals will be paid in full on a date fixed by
the Subsidiary Board that is no later than the April 15 immediately
following the Plan Year.

 

(d) 

Short-Term Deferral Plan. The Corporate
Board and the Subsidiary Board will strictly comply with the
payment schedule described in this Section 4.3 to preserve the
Plan’s status as a short-term deferral plan within the
meaning of IRC § 409A.

 

4.4 

Vesting in Bonus Awards. No Participant
will have any vested or legally binding right in any type of Bonus,
or a part thereof, until the date when such Bonus, or such part
thereof, is actually paid to such Participant. Notwithstanding any
other provision hereof, if a Participant’s Employment
terminates before such Participant actually receives payment of his
or her Bonus, or such part thereof, such Participant will forfeit
the unpaid Bonus, or the unpaid part thereof, on such
Participant’s Termination Date. However, for an Executive
Officer or Key Employee who has had 25% of a Bonus withheld under
Subsection 4.3(b), there will be full vesting for the withheld
amount upon his or her death or total and permanent disability, and
the Corporation will pay the amount withheld for a deceased
Participant to such Participant’s surviving legal spouse, if
any, or, if none, then to such Participant’s estate and for a
disabled Participant to such Participant.

 

 

8

 

 

ARTICLE 5

Amendment or Termination of the Plan

 

5.1 

Amendment of the Plan. The Corporate
Board may amend the Plan from time to time; provided that no
amendment (a) will have the effect of eliminating or reducing any
Plan benefit earned before the effective date of the amendment; or
(b) will cause any violation of any rule or requirement under IRC
§ 409A or any other applicable law.

 

5.2 

Termination of the Plan. The Corporate
Board may terminate all or any part of the Plan at any time,
subject to the restrictions stated in Section 5.1
above.

 

 

 

9

 

 

ARTICLE 6

Miscellaneous

 

6.1 

Headings. The headings and subheadings
in the Plan have been inserted for convenient reference, and, to
the extent any heading or subheading conflicts with the text, the
text will govern.

 

6.2 

Construction and Choice of Law. The Plan
will be governed and construed in accordance with the laws of the
State of Delaware, except to the extent such laws are preempted by
ERISA or the IRC or any other federal law and excluding
Delaware’s choice of law principles, and all claims relating
to or arising out of this Plan or any violation of this Plan,
whether sounding in contract, tort of otherwise, will be governed
by the laws of Delaware, excluding choice of law
principles.

 

6.3 

Severability. If any court of competent
jurisdiction rules that any provision of this Plan is
unenforceable, the remaining provisions will remain in full force
and effect to the extent that deletion of the unenforceable
provision does not substantially alter the Plan's
purposes.

 

6.4 

Effect of Bonuses on Other Plans. Except
to the extent expressly stated in such other plan, no Bonus payable
under this Plan will be included in compensation for any purpose
under any other plan sponsored by the Corporation or any
Subsidiary, including but not limited to qualified and nonqualified
retirement plans, life insurance plans and other welfare benefit
plans.

 

6.5 

Status as an Unfunded Top-Hat Plan.
Notwithstanding any other provision of the Plan, this Plan is
adopted on the condition that, in the event of an audit or other
review, the Internal Revenue Service will find that the entire Plan
meets the requirements for an unfunded top-hat plan and short-term
deferral plan under applicable provisions of the IRC and ERISA. In
the event any contrary determination cannot be cured by revisions
satisfactory to the Corporate Board, the Corporate Board may in its
discretion declare the adoption of the Plan, or any part of the
Plan, null and void. This Section 6.5 is not intended to require
the Corporation to submit this Plan to the IRS or to any other
governmental agency or department for approval.

 

6.6 

Non-alienation. No benefits payable
under the Plan will be subject to the claim or legal process of any
creditor of any Participant by execution, levy, garnishment,
attachment, pledge, bankruptcy or otherwise. No Participant may
alienate, transfer, anticipate or assign any benefits under the
Plan.

  

6.7 

No Implied Rights. Participation in the
Plan will not give any Participant the right to be retained in
Employment or service as an Independent Contractor. No person will
have any right or interest in any portion of the Plan except as
specifically provided in the Plan.

 

6.8 

Contractual Limitation Period. If any
active or former Employee, or any other person whomsoever, asserts
any claim against the Plan that is denied by the Corporate Board or
the Subsidiary Board, such person must file any lawsuit that is
based directly or indirectly on such claim denial no later than 180
days after the date the Corporate Board or the Subsidiary Board, as
applicable, issues the written denial or such person will be
forever barred from filing any such lawsuit.

 

 

 

10

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