Document:

BCH Exhibit 10.1 6.30.2012

Boise Cascade, L.L.C.
1111 West Jefferson Street, Ste 300
PO Box 50   Boise, ID 83728
T 208 384 6161

CONFIDENTIAL

 August 1, 2012

Mr. John T. Sahlberg
[address] 
 

Dear John:

Boise Cascade, L.L.C. (the "Company") considers it essential to the best interests of the Company and its owners to foster the continuous employment of key management personnel in the event certain material events are threatened or occur. In this regard, the Board of Managers of Boise Cascade Holdings, L.L.C., the Company’s parent company (the "Board"), has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company's management, including yourself, to their assigned duties without distraction for a period of time.

In order to induce you to remain in the employ of the Company, the Company agrees that you shall receive the severance benefits set forth in this letter agreement (the “Agreement”) if your employment is terminated under the circumstances described below.

1.    Term of Agreement.  This Agreement is effective on the date hereof and shall continue in effect through February 22, 2014, provided that on February 22, 2013 and each February 22 thereafter, the term of the Agreement shall automatically be extended for an additional year, unless the Company shall have given notice at least 60 days prior to February 22 that such extension will not occur.  The period during which this Agreement is in effect is referred to as the “Term.”  This agreement supersedes and replaces in its entirety the prior agreement between you and the Company dated February 22, 2008, regarding benefits upon termination.

2.    Qualifying Termination.  Except as set forth in Section 5, no benefits shall be payable under this Agreement unless your employment is terminated pursuant to a Qualifying Termination during the Term.  Your termination is a Qualifying Termination if your employment terminates during the Term unless your termination is because of your death, by the Company for Cause or Disability, or by you other than for Good Reason.  A transfer of your employment from the Company to one of its subsidiaries or affiliates, from a subsidiary or affiliate to the Company, or between subsidiaries or affiliates is not a termination of employment for purposes of this Agreement.  Mandatory retirement 

under the Company’s Officer Mandatory Retirement Policy is not a Qualifying Termination.  A transfer or other relocation of your place of work is not a termination of employment for purposes of this Agreement if either you continue employment with the Company after such transfer or the transfer or relocation offered is to a site within a reasonable distance (as determined by the Company in its sole discretion) of your current work site.

A.    Disability.  If, as a result of your incapacity due to physical or mental illness or injury, you are absent from your duties with the Company on a full-time basis for six consecutive months, and within 30 days after written notice of termination is given you have not returned to the full-time performance of your duties, your employment may be terminated for "Disability."

B.    Cause.  Termination of your employment for "Cause" means termination upon (1) your willful and continued failure to substantially perform your duties with the Company (other than failure resulting from your incapacity due to physical or mental illness or injury, or actual or anticipated failure resulting from your termination for Good Reason), after a demand for substantial performance is delivered to you by the Board which specifically identifies the manner in which the Board believes that you have not substantially performed your duties, or (2) your willful engagement in conduct which is demonstrably and materially injurious to the Company, monetarily or otherwise.  For purposes of this Section 2.B, no act or failure to act on your part shall be considered "willful" unless done or omitted to be done by you not in good faith and without reasonable belief that your act or omission was in the best interest of the Company.  Notwithstanding the foregoing, you shall not be deemed to have been terminated for Cause unless and until:

		
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	a resolution is duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board by the Board at a meeting of the Board called and held for the purpose (after reasonable notice to you and an opportunity for you, together with your counsel, to be heard before the Board), finding that in the good faith opinion of the Board you were guilty of conduct set forth above in clauses (1) or (2) of this Section 2.B and specifying the particulars of your conduct in detail, and 

		
	•
	a copy of this resolution is delivered to you.  

Any decision by the Board that a termination for Cause is warranted must be supported by clear and convincing evidence.

C.    Good Reason.  "Good Reason" means the failure of the Company to require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no succession had taken place, prior to the effectiveness of any succession which occurs during the Term.  

Your right to terminate your employment pursuant to this Section 2.C shall not be affected by your incapacity due to physical or mental illness or injury.  Your continued employment shall not constitute consent to, or a waiver of rights with respect to, any event, circumstance, act or failure to act constituting Good Reason.

D.    Notice of Termination.  Any purported termination by the Company or by you shall be communicated by written Notice of Termination to the other party according to Section 8.  A "Notice of Termination" must indicate the specific termination provision in this Agreement relied upon and set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under the indicated provision.

E.    Date of Termination.  "Date of Termination" means:

(1)if your employment is terminated for Disability, 30 days after the Notice of Termination is given (provided that you have not returned to the performance of your duties on a full-time basis during that 30-day period);

(2)if your employment is terminated for Cause, for Good Reason, or for any other reason other than Disability, the date specified in the Notice of Termination (which, in the case of a termination for Cause shall not be less than 30 days from the date the Notice of Termination is given, and in the case of a termination for Good Reason shall not be more than 60 days from the date the Notice of Termination is given); or 

(3)if a dispute exists regarding the termination, the date on which the dispute is finally determined, either by mutual written agreement of the parties or by a final judgment, order or decree of a court of competent jurisdiction (the time for appeal having expired and no appeal having been perfected), or, if earlier, the last day of the Term.  This subsection (3) shall apply only if (i) the party receiving the Notice of Termination notifies the other party within 30 days that a dispute exists; (ii) the notice of dispute is made in good faith; and (iii) the party giving the notice of dispute pursues resolution of the dispute with reasonable diligence. While any dispute is pending under this subsection (3), the Company will continue to pay you your full compensation in effect when the Notice of Termination giving rise to the dispute was given (including, but not limited to, base salary) and continue you as a participant in all compensation, benefit and insurance plans and programs in which you were participating when the Notice of Termination giving rise to the dispute was given, until the dispute is finally resolved, or if earlier, the last day of the Term.  Amounts paid under this subsection (3) are in addition to all other amounts due under this Agreement and shall not be offset against or reduce any other amounts due under this Agreement.

3.    Compensation during Disability or Upon Termination for Cause or Other than for Good Reason.

A.    During any period that you fail to perform your duties as a result of incapacity due to physical or mental illness or injury, you shall continue to receive your full base salary at the rate then in effect and all compensation paid during the period 

until your employment is terminated for Disability pursuant to Section 2.A.  Thereafter, your benefits shall be determined in accordance with the insurance programs then in effect of the Company or subsidiary corporation by which you are employed, and any qualified and nonqualified retirement plan(s) in which you are a participant.

B.    If your employment is terminated for Cause or by you other than for Good Reason, the Company shall pay you only your full base salary through the Date of Termination at the rate in effect at the time Notice of Termination is given, plus all other amounts to which you are entitled under any compensation plan at the time those payments are due, and the Company shall have no further obligations to you under this Agreement.

4.    Compensation upon a Qualifying Termination.  If your employment is terminated pursuant to a Qualifying Termination, then you shall be entitled to the payments and benefits provided in this Section 4. 

A.    Not later than the 15th day following the date the release required pursuant to Section 6.D becomes effective and in any case by the later of the last day of the year in which the Qualifying Termination occurs or two and one-half (21⁄2) months following the date of the Qualifying Termination (but subject in any case to the release having then become effective in accordance with Section 6.D hereof), the Company will pay you the following amounts:

(1)Your full base salary through the Date of Termination at the rate in effect at the time Notice of Termination is given, plus all other amounts to which you are entitled under any compensation plan in which you then participate at the time those payments are due (in each case, to the extent not already paid);

(2)A lump sum severance payment equal to two times the sum of (a) your annual base salary at the rate in effect at the time Notice of Termination is given, plus (b) your target annual incentive for the year in which the Date of Termination occurs (“Target Bonus”); and

(3)To the extent not already paid, a lump sum amount equal to the greater of the value of your unused and accrued time off, less any advanced time off, in accordance with the time off policy applicable to you as in effect on the Date of Termination.

B.    The Company shall for an 18-month period following the Date of Termination, maintain, in full force and effect for your continued benefit, all life (other than any life insurance plan available only to executive officers), disability, accident and healthcare insurance plans, programs, or arrangements, and financial counseling services in which you were participating immediately prior to the Date of Termination, subject to your timely payment of any applicable premium at the active employee rate. 

C.    You shall not be required to mitigate the amount of any payment provided for in this Section 4 by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in Section 4.A be reduced by any 

compensation earned by you as the result of employment by another employer or otherwise.  Payments otherwise receivable by you pursuant to Section 4.A(2) shall be reduced by the amount of any severance benefits received by you pursuant to any Company severance policy.  Benefits otherwise receivable by you pursuant to Section 4.B shall be reduced to the extent comparable benefits are actually received by you during the 12-month period following your termination, and you must report any such benefits actually received by you to the Company.  Benefits and payments otherwise receivable by you pursuant to Section 4 shall be reduced by the amount of benefits and payments received by you pursuant to any other written agreement between you and the Company providing benefits upon termination.

5.    Legal Fees.  The Company shall pay to you all reasonable legal fees and expenses which you incur (a) as a result of your termination (including any legal fees and expenses incurred in contesting or disputing your termination) or (b) in seeking in good faith to obtain or enforce any right or benefit provided by this Agreement.  You must request payment no later than six months after the end of the year in which the fee or expense was incurred and payment shall be made within 10 business days after the Company receives your written request for payment accompanied by reasonable evidence of fees and expenses incurred.  

6.    Employee Covenants; Release.

A.    You agree that you will not, directly or indirectly, use, make available, sell, disclose or otherwise communicate to any person, other than in the course of your assigned duties and for the benefit of the Company, either during the period of your employment or at any time thereafter, any nonpublic, proprietary or confidential information, knowledge or data relating to the Company, any of its subsidiaries, affiliated companies or businesses, which you obtained during your employment by the Company.  This restriction will not apply to information that (i) was known to the public before its disclosure to you; (ii) becomes known to the public after disclosure to you through no wrongful act of yours; or (iii) you are required to disclose by applicable law, regulation or legal process (provided that you provide the Company with prior notice of the contemplated disclosure and reasonably cooperate with the Company at its expense in seeking a protective order or other appropriate protection of such information).

B.    During your employment with the Company and for one year after your termination, you agree that you will not, directly or indirectly, individually or on behalf of any other person, firm, corporation or other entity, knowingly solicit, aid or induce any managerial level employee of the Company or any of its subsidiaries or   affiliates to leave employment in order to accept employment with or render services to or with any other person, firm, corporation or other entity unaffiliated with the Company or knowingly take any action to materially assist or aid any other person, firm, corporation or other entity in identifying or hiring any such employee.

C.    You agree that during and after your employment with the Company you shall not make any public statements that disparage the Company, its respective affiliates, employees, officers, directors, products or services.  Notwithstanding the 

foregoing, statements made in the course of sworn testimony in administrative, judicial or arbitral proceedings (including, without limitation, depositions in connection with such proceedings) shall not be subject to this Section 6.C.

D.    Notwithstanding anything in this Agreement to the contrary, the payment to you of the benefits provided in Section 4 is conditioned upon your execution and delivery to the Company (and your failure to revoke) a customary general release of claims which shall include a release of the Company and, if applicable, purchaser, and their affiliates.

7.    Successors; Binding Agreement.

A.    This Agreement shall inure to the benefit of and be enforceable by your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.  If you should die while any amount would still be payable to you under this Agreement if you had continued to live, all such amounts, unless otherwise provided in this Agreement, shall be paid in accordance with the terms of this Agreement to your devisee, legatee or other designee or if there is no such designee, to your estate.

B.    Any dispute between you and the Company regarding this Agreement may be resolved either by binding arbitration or by judicial proceedings at your sole election, and the Company agrees to be bound by your election in that regard, provided that the Company is entitled to seek equitable relief in a court of competent jurisdiction in connection with the enforcement of the covenants set forth in Section 6.  Under no circumstance will a violation or alleged violation of those covenants entitle the Company to withhold or offset a payment or benefit due under this Agreement.

8.    Notice.  For the purposes of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth on the first page of this Agreement, provided that all notices to the Company shall be directed to the attention of the Board with a copy to the Secretary of the Company, or to such other address as either party may have furnished to the other in writing in accordance with this Section 8, except that notice of change of address shall be effective only upon receipt.

9.    Miscellaneous.  No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by you and an officer designated by the Board.  No waiver by either party at any time of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by the other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.  No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter of this Agreement have been made by either party which are not expressly set forth in this Agreement.  All references to sections of the Exchange Act or the Code shall be deemed also to refer to any successor provisions to those 

sections.  If obligations of the Company arise prior to the expiration of the Term, those obligations shall survive the expiration of the term.

10.    Validity.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

11.    Counterparts.  This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

12.    No Guaranty of Employment.  Neither this Agreement nor any action taken under this Agreement shall be construed as giving you a right to be retained as an employee or an executive officer of the Company.

13.    Governing Law.  This Agreement shall be governed by and construed in accordance with Delaware law.

14.    Other Benefits; Indemnification.  Any payments made to you pursuant to this Agreement are in addition to, and not in lieu of, any amounts to which you may be entitled under any other employee benefit plan, program or policy of the Company, except that payments made to you pursuant to Section 4.A(2) shall be in lieu of any severance payment to which you would otherwise be entitled under any severance pay policy of the Company, and except that the time period during which benefits are provided under Section 4.B shall be included in the “continuation coverage period” for purposes of COBRA, to the extent applicable.  In addition to the other payments and benefits provided herein, for the six year period immediately following any termination of your employment from the Company during the Term other than a termination for Cause, the Company shall cause you to be covered under the directors and officers insurance coverage (“D&O insurance”) that is in effect with respect to the then-current officers of the Company, it being understood that the level of such coverage provided to you during such period shall be substantially identical to that being provided at such time to the current officers of the Company; provided that if at any time during such six year period no D&O insurance is in effect with respect to the then-current officers of the Company, the Company shall purchase and maintain at its sole expense for the remainder of the six year period a run-off directors and officers insurance policy providing coverage for you at the same level as the D&O insurance in effect at the time of your termination of employment from the Company.

If this letter correctly sets forth our agreement on the subject matter hereof, kindly sign and return to the Company the enclosed copy of this letter which will then constitute our agreement on this subject.

Sincerely,

BOISE CASCADE, L.L.C.

By  /s/ Thomas E. Carlile            
     Thomas E. Carlile
     Chief Executive Officer
     

AGREED TO AND ACCEPTED this 1st day of August, 2012.

/s/ John T. Sahlberg                
John T. Sahlbergexhibit10_1.htm

2012 PERFORMANCE INCENTIVE PLAN (the “Plan”)

The 2012 Performance Incentive Plan amends, restates and is the successor plan to the 2011 Performance Incentive Plan, each of which was adopted under the Obagi Medical Products, Inc. 2005 Stock Incentive Plan.

PLAN PARTICIPANTS

All regular, full-time employees of Obagi Medical Products (the “Company”) who have been notified in writing of their eligibility are considered eligible Plan Participants (“Plan Participants”).  Employees in Sales, and other employees participating in any other variable incentive pay plans, shall not be eligible.  Any otherwise eligible employee who has an existing incentive pay component in his or her employment agreement or offer letter shall be deemed a Plan Participant, and the incentive pay component of the employment agreement shall be replaced in its entirety by the Plan Participant’s rights under this Plan unless otherwise explicitly set forth in the employment agreement or offer letter.

Plan Participants must be full-time employees of the Company on the last day of the Plan Period (as defined below) and at time of payout to be eligible to be paid any amount under this Plan.

Eligible employees who join the Company during the Plan Period may, if so designated by the Administrator (as defined below), be eligible for Plan incentives on a pro-rata basis corresponding to the service time provided to the Company during the Plan Period, but must have been actively employed with the Company for at least one full quarter during the Plan Period to be eligible.

PLAN PERIOD

Company Fiscal Year 2012 (January 1 through December 31, 2012) (the “Plan Period”)

ADMINISTRATION

Except as otherwise set forth in the Plan, the Compensation Committee of the Company’s Board of Directors shall administer the Plan (the “Administrator”).

PLAN POOL

The Plan shall operate first by the Company’s determining the aggregate amount available for issuance to Plan Participants (the “Plan Pool”) based upon the Company’s achievement of certain Company Performance Objectives (as defined below).  The total on-target pool for the Plan Period is $2,469,001 (the “On-Target Plan Pool”). The On-

  

  

  

 

Target Plan Pool is calculated based upon 100% achievement of the Company’s financial objectives and the Company’s contributing an amount to the Plan Pool assuming that the number of budgeted Plan Participants projected to hold eligible positions at the end of the Plan Period, including the budgeted 2012 hires, are each paid 100% of their on-target bonus amount.

The actual amount of the Plan Pool (meaning the actual aggregate amount that will ultimately be available for payment to Plan Participants) will be determined based upon the Company’s actual performance in relation to its approved business plan, and the Plan Pool will, unless otherwise determined by the Administrator due to facts and circumstances that it believes relevant, be funded only on achievement by the Company of the Performance Objectives at the minimum permissible level of achievement (as described below).

After determination by the Company of the Plan Pool amount, individual bonus payments to each Plan Participant will be based upon such individual’s achievement of Individual Performance Objectives (as defined below) established as set forth in this Plan.

The Plan Pool is intended to encompass the contractual incentives existing in otherwise eligible employees’ employment agreements or offer letters that are replaced in their entirety by the Plan Participants’ rights under this Plan unless otherwise explicitly set forth in the employment agreements or offer letters.  A Plan Participant’s acceptance of any grant of an award or other right under this Plan is conditioned upon his or her consent to such replacement unless otherwise explicitly set forth in the Plan Participant’s employment agreement or offer letter.

	
COMPANY PERFORMANCE OBJECTIVES TO FUND PLAN POOL

 

The Company performance objectives (the “Company Performance Objectives”) shall be comprised of two components, a revenue objective (the “Revenue Objective”) and an adjusted EBIT objective (“Adjusted EBIT Objective”).  The Compensation Committee shall establish the target Revenue Objective and Adjusted EBIT Objective for the Plan Period; provided that each objective will be measured on a consolidated basis and will match the current year’s operating plan targets approved by the Board of Directors.  For purposes of the Plan, “Revenue” is defined as reported on the Company's consolidated financial statements, and “Adjusted EBIT” is defined as Earnings Before Interest and Taxes adjusted to exclude the impact of non-cash charges relating to the issuance of equity instruments, as disclosed in the Company’s consolidated financial statements.

The relative weighting as between the two Company Performance Objectives will be (for all purposes under the Plan, including calculating the amount by which the Plan Pool will be funded and, if appropriate depending upon the weighting of Individual Performance Objectives, calculating the actual bonus amount to pay a Plan Participant) as follows:  30% of the bonus amount shall relate to the Revenue Objective and 70% shall relate to the Adjusted EBIT Objective.

Over-Achievement of Company Performance Objectives: If either or both of the Revenue Objective or Adjusted EBIT Objective is exceeded, an amount in excess of the target bonus amount will be contributed to the Plan Pool based on the above-target performance level actually achieved and the relative weighting (as set forth below) of the

  

  

  

relevant Company Performance Objective(s) (the "Over-Achievement Amount").  The maximum amount above the target bonus amount that may be contributed to the Plan Pool is 150% of the target bonus amount.  In addition to any cash bonuses paid in connection with any such Over-Achievement Amount, the Administrator may, in its sole discretion, grant options to purchase Common Stock of the Company having an aggregate 123R value as of the grant date equal to the Over-Achievement Amount.

Minimum Company Performance Level:  For the Plan Pool to be funded and for any incentives to be earned by Plan Participants, both of the following thresholds must be achieved (the “Minimum Company Performance Levels”):

	
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For Executives: The Company must achieve at least 80% of the Revenue Objective AND at least 80% of the Adjusted EBIT Objective; and

	
§  

	
For Non-executives: The Company must achieve at least 80% of the Revenue Objective AND at least 80% of the Adjusted EBIT Objective.

	
PLAN POOL FUNDING

 

Once the Revenue Objective and Adjusted EBIT Objective are achieved at the Minimum Company Performance Levels, the Plan Pool funding will then be determined by the actual level of achievement of the Revenue Objective and Adjusted EBIT Objective beyond the respective minimum levels as outlined in the tables below.

Plan Pool Funding Table

	  	  	
Measurement

	  	
Base Bonus Achievement

 

 

	
Bonus Component

	
Weighting

	
Period

	
Bonus Payment Scale

	
Percentage

	
Revenue Objective

	
30%

	
Annually

	
Financial Performance

	
50%-100%

	
Adjusted EBIT Objective

	
70%

	
Annually

	
Financial Performance

	
50%-100%

	
  

	
2012 Financial Performance Incentive Plan

    The actual amount of contributions to the Plan Pool will be conditioned upon achievement of a minimum level of performance with respect to the Revenue Objective and the Adjusted EBIT Objective (measured on an annual basis).

Financial Performance Base Bonus (On Target) Payment Scale

	  	
Executive

	
Non-Executive

	
Bonus Achievement

	
Performance Level

	
Revenue Objective or Adjusted EBIT

Performance Objective vs. Target

	
Revenue Objective or Adjusted EBIT

Performance Objective vs. Target

	
Percentage

	
Below Threshold

	
0%-79.9%*

	
0%-79.9%

	
0%

	
Base/ Target Threshold

	
80%-100%*

	
80%-100%

	
Prorated up to 100% on following Algorithm:

	  	  	  	
 

Exec - 5% reduction in bonus amount 

 

 

  

  

 

  

	 	 	 	that relates to the Objective (based on relative weighting of the two Objectives) as to which there was under-achievement for each 1% below the target achievement level; 

 

Non-Exec. - 3% reduction in bonus amount that relates to the Objective (based on relative weighting of the two Objectives) as to which there was under achievement for each 1% below target achievement level

	  	  	  	
Performance Weighting: 30% Revenue; 70% EBIT

	
Maximum

	  	  	
100%

Performance Thresholds. Unless otherwise determined by the Administrator due to facts and circumstances that it believes relevant, there will be no contribution to the Plan Pool of any amount, and no payment to any Plan Participant under the Plan, if the Company does not achieve at least the minimum/threshold level of performance with respect to both the Revenue Objective and the Adjusted EBIT Objective as set forth above. To clarify, if the Minimum Company Performance Level for one Objective is not achieved, no amount will be contributed to the Plan Pool, and no amount will be paid to a Plan Participant even with respect to the portion of his or her bonus to which the other Objective relates even if the performance for that other Objective is within the “Threshold” Performance Level. 

Financial Performance Above Threshold Level

	  	
Executive

	
Non-Executive

	
Amount of Bonus in Excess of Target Bonus Amount

	
Performance Level

	
Revenue or Adjusted EBIT

Performance vs. Target

	
Revenue or Adjusted EBIT

Performance vs. Target

	
Percentage Based only on Adjusted EBIT overage

	
Below Threshold

	
0%-79.9%

	
0%-79.9%

	
If either Revenue or EBIT is below the respective Threshold, the total bonus payout is 0%

	
Base/Target Threshold

	
80%-100%

	
80%-100%

	
0%

	  	  	  	  
	
Above Threshold

	
Must be a minimum of 100%

	
Greater than 100%

	
100%+ prorated up to a maximum of 150% on the following Algorithm

	  	  	  	
5% increase in bonus amount that relates to the Objective (based on relative weighting of the two Objectives) as to which there was over-achievement for each 1% overachievement of Objective

	  	  	  	
Performance Weighting: 30% Revenue; 70% EBIT

	
Maximum

	  	  	
150%

n Achievement Above Threshold. If the Revenue Objective and Adjusted EBIT Objective are exceeded, an increased bonus amount will be funded to the Plan Pool based on such over-achievement. The increased bonus amount will be subject to the maximum over-achievement cap of 150% specified above.  The relative weighting between the two Objectives for purposes of calculating an amount based upon over-achievement will be the 30/70 weighting described above.

Financial bonus amounts will be calculated and accrued on a quarterly basis, but final bonus payment amounts will be determined on an annual basis. Actual bonus payments will be made in accordance with the performance periods on page one.

  

  

  

BONUS PAYMENT AMOUNTS

	
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In the event that the Plan Pool has been funded pursuant to the terms of this Plan, Plan Participants may be eligible to receive individual incentive awards as set forth below.

	
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The Administrator will establish individual target bonus amounts that might be paid under the Plan which will be expressed as a percentage of each Plan Participant’s annual base salary at the end of the Plan Period (unless a Plan Participant’s salary is changed during the Plan Period, as set forth below).

	
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The Administrator will determine the individual target bonus amounts based on grade level and position title, as follows:

	
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Plan Participants holding the position of Director or above will be advised by their supervisor of their individual target incentive percentage.

	
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Plan Participants holding the position Senior Manager or below will have no explicit incentive targets communicated in advance, and may receive general information on Plan funding.

	
n

	
Individual Plan Participant’s actual incentive award amounts will be determined based on his or her achievement of one or more individual performance goals (each an “Individual Performance Objective”) established by his or her supervisor (or with respect to executive officers by the Administrator), and in some cases, may also be based on achievement of Company objectives as described above.  The Company may instead establish conditions to a Plan Participant’s right to be paid a bonus amount under the Plan based upon achievement  by the Company (or a business unit thereof) of corporate performance objectives, including without limitation the Company Performance Objectives.

	
n

	
Plan Participants must achieve at least an overall “satisfactory” level of performance achievement for the Plan Period, as defined and determined solely by the Company, in order to be eligible to earn any incentive under either the Individual or Company Performance Objectives, as applicable.

 

WHEN PLAN INCENTIVES ARE EARNED AND PAID

 

Achievement of Company and Individual Performance Objectives will be assessed at the end of the Plan Period, and if achieved as applicable, the Plan Participant will earn and become entitled to payment of Plan bonus amounts after the end of the Plan Period. Awards for Executive-level Plan Participants must be approved by the Compensation Committee or Board of Directors, as applicable. Unless the Administrator determines that facts and circumstances warrant an exception, achievement of the Company’s Revenue Objectives and Adjusted EBIT Objectives must both be equal to or greater than the Minimum Company Performance Levels or no incentives will be earned. Achievement of the Company’s Revenue Objective and Adjusted EBIT Objective will be assessed by the Board of Directors’ Compensation Committee, and their decision shall be final and binding. Achievement of individual performance results will be determined by appropriate Company management and approved by the CEO.

The Plan Participant must be an active employee in good standing on the last day of the Plan Period for any incentive to be earned and on the payout date for payment to be 

  

  

  

made. Payment on earned incentives will be made as soon as reasonably possible following the end of the Plan Period’s financial audit by the companies independent auditors and in any event prior to March 15, 2012, and will be net of all applicable withholdings.

If an employee’s base salary and/or bonus incentive changes during the Plan Period due to promotion, market adjustment, etc., the target incentive bonus will be pro-rated based on time in the old and new levels.

LEAVES OF ABSENCE AND TERMINATION OF EMPLOYMENT

The CEO in consultation with the Compensation Committee will determine whether a Plan Participant on a leave of absence or disability or in the event of the Participant’s death during the Plan Period may be eligible for a partial or prorated incentive. Other than as noted above, Plan Participants must be actively employed on the last day of the Plan Period in order to be eligible for any incentives. Except as set forth above, Plan Participants who terminate for any reason during the Plan Period are not eligible for incentive awards.

AT-WILL EMPLOYMENT

Participation in this Plan is not an agreement (express or implied) between the Plan Participant and the Company that the Company will employ the Plan Participant for any specific period of time, nor is there any agreement for continuing or long-term employment.  The Plan Participant and the Company each have the right to terminate the employment relationship at any time and for any or no reason. This at-will employment relationship can only be modified by an agreement signed by the Plan Participant and the Company’s Chief Executive Officer.

DETERMINATIONS, CHANGES AND EXCEPTIONS TO PLAN

This document highlights the principal features of the Plan, but it does not describe every situation that can occur. The Company and the Administrator retain the right to interpret, revise, modify or delete the Plan at its sole discretion at any time.  This document supersedes any previous incentive plan document including any specific provisions stated in the Plan Participant’s offer letter or employment agreement specifying eligibility, amount, and participation in any incentive or bonus program unless otherwise explicitly set forth in the offer letter or employment agreement.  The Company reserves the right to make any reasonable adjustments to the Plan as necessary to reflect business and economic conditions. The CEO and/or the Compensation Committee, as applicable, must approve any exceptions, modifications or adjustments to the Plan.  The Company further retains full and final discretion to determine whether a Plan Participant has earned any incentives pursuant to the Plan and to adjust upward or downward any award that a Participant may be eligible for.  The Compensation Committee shall have the full and final discretion to adjust in good faith the Company Performance Objectives and/or achieved financial results to reflect the occurrence of extraordinary events during the Plan period, including merger and acquisition transactions and other corporate events not contemplated at the beginning of the Plan period or when the Company’s operating budget for the current Plan year was approved.  All such determinations or adjustments shall be final and binding on all persons.

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