Document:

profire2019annualincenti

                                                                                                              Profire Energy, Inc.                          2019 Executive Incentive Plan            1.    Purpose.  The purpose of this 2019 Executive Incentive Plan (the “Plan”) is to  enable Profire Energy, Inc., a Nevada corporation (the “Company”), to attract, retain, motivate  and reward management employees by providing them with the opportunity to earn annual  incentive bonuses linked to Company performance.                      2.    Effective Date and Performance Period.  The effective date of the Plan is  January 1, 2019.  The performance period under the Plan will commence on January 1, 2019 and  terminate on December 31, 2019.          3.    Administration.  The Plan is being entered into pursuant to the Company’s 2014  Equity Incentive Plan (the “2014 Plan”) as a Performance Award.  Under the 2014 Plan, the  Compensation Committee (the “Committee”) of the Board of Directors of the Company (the  “Board”) may make incentive grants subject to certain additional terms and conditions (not  inconsistent with the 2014 Plan). The Committee, acting under the authority of the Board, shall  administer and interpret the Plan.  The Plan shall conform in all respects to the terms of the 2014  Plan and the Board’s interpretations and determinations under the Plan shall be final and  conclusive.          4.    Participation.  The Committee has determined the management employees  eligible to participate in the Plan (the “Participants”) and the target bonus amounts determined  as a percentage of the Participant’s base salary (the “Target Bonus Amount”) of each Participant  as set forth in Exhibit A.          5.    Bonus Calculation.  The Committee shall determine bonuses to Participants  under the Plan as follows:                  (a) Performance Objectives.  The distribution of bonuses shall be determined  based on the achievement of the following four target performance objectives (the “Performance  Objectives”):          Performance Objectives for fiscal year 2019 Weight    Target Level      1.  Revenue                                 25%       $40,002,269      2.  Net Income                              25%        $1,401,115      3.  Free Cash Flow (Adjusted EBITDA - Capex) 25%       $2,744,197      4.  Product Development Milestones          25%     Various Milestone                                                          Dates as determined                                                          by the Committee                                                  100%                       (i)  “Net Income” means NET INCOME (LOSS) as presented on the        Company’s Statement of Operations and Other Comprehensive Income (Loss) in        accordance with U.S. generally accepted accounting principles and filed with the U.S.        Securities and Exchange Commission (“SEC”).                    101128119.3 0059466-00001   

 

               (ii)  “Adjusted EBITDA” means net income for that year as adjusted by        adding thereto, to the extent deducted in calculating net income for the year, net interest        expense, taxes, depreciation, amortization, noncash charges for equity-related        compensation, and other noncash charges as agreed with the Committee.  Calculation of        all components of Adjusted EBITDA shall be in accordance with GAAP and based on the        consolidated financial statements of the Company for fiscal 2019 or otherwise        determined from the Company’s accounting records on a consistent basis.                    (iii) “Capex” means an amount which is the greater of (A) zero and (B) the        net amount from the Company’s Statement of Cash Flows as filed with the SEC for the        applicable period of (x) purchases of fixed assets and (y) proceeds from sales of        equipment.                   (iv)  “Free Cash Flow” means an amount equal to Adjusted EBITDA less        Capex.   Adjustments to the definitions of “Net Income”, “Adjusted EBITDA” and “Capex” may be made  by the Committee in the event of the occurrence of extraordinary, unusual or non-recurring  circumstances and for non-cash items that, in the judgment of the Committee, would cause such  definition to fail to fairly reflect the performance of the Company.  These circumstances may  include acquisitions, divestitures, joint ventures, regulatory developments, tax law changes,  accounting changes, restructuring or other special charges, other occurrences and non-cash items.   The Committee shall make the final determination as to the calculations of “Net Income”,  “Adjusted EBITDA”, “Capex”, and the amounts up to the Maximum Payout Amount (as defined  below) to be paid to Participants.                         (b) Performance Ratio.  The “Performance Ratio” for any Performance Objective  shall be the ratio expressed as a percentage resulting from dividing (x) the actual amount  achieved for such Performance Objective in fiscal 2019 by (y) the Target Level specified in  Section 5(a) for such Performance Objective for fiscal 2019.                (c) Calculation.  Subject to any limitations set forth in Section 6 relating to the  2014 Plan and the Maximum Payout Amount (as defined in Section 6), a Participant’s bonus  under the Plan shall be calculated as the sum of the following for each Performance Objective  (for each, the “Performance Objective Payout Amount”):                   (i) if the Performance Ratio for such Performance Objective is less than 85%,                    then the Performance Objective Payout Amount is zero ($0);                                    (ii) if the Performance Ratio for such Performance Objective is at least 85%                    but not greater than 115%, then the Performance Objective Payout                    Amount is the amount which is (A) the Performance Ratio times (B) the                    applicable Performance Objective Weight (as stated in Section 5(a)) times                    (C) the Target Bonus Amount for such Participant; and                             (iii) if the Performance Ratio for such Performance Objective is greater than                    115%, then the Performance Objective Payout Amount is the sum of (A)                    (w) 115% times (x) the applicable Performance Objective Weight times  101128119.3 0059466- 00001         2    

 

                  (y) the Target Bonus Amount for such Participant, plus (B) (w) the                    Performance Ratio minus 115%, times (x) two-and-a-half (2.5) times (y)                    the applicable Performance Objective Weight times (z) the Target Bonus                    Amount for such Participant.                (d) Payout Split.  Bonus amounts earned under the Plan shall be paid out 50% in  cash (the “Cash Portion”) and 50% in shares of the Company’s common stock (the “Stock  Portion”).  In determining the number of shares of common stock to be issued to the Participant  for the Stock Portion, the Company shall divide (x) 50% of such Participant’s aggregate bonus  amount by (y) the volume weighted average price per share of the Company’s common stock  over the five trading days prior to the date of the Committee’s final determination of the bonus  amount (the “Bonus Determination Date”).            6.    Compliance with 2014 Plan and Bonus Amount Limitations.                        (a) Compliance with 2014 Plan.  In no event shall bonuses paid out under the  Plan exceed the limitations set forth in the 2014 Plan.  In the event this Plan conflicts with the  terms of the 2014 Plan, this Plan shall be modified to the extent necessary to comply with the  terms of the 2014 Plan.                               (b) Additional Limitations.  In addition to the limitations set forth in Section 6(a)  above, in no event shall a Participant receive a bonus under the Plan that is in excess of 200% of  such Participant’s Target Bonus Amount (the “Maximum Payout Amount”).            7.    Payment of Bonuses.  The payment of the Cash Portion and the Stock Portion of  the bonus amount shall be made to Participants as soon as practicable following the Bonus  Determination Date and in any event by the 15th day of the third month following the end of the  fiscal year 2019 (the “Bonus Delivery Date”), subject to a Participant’s satisfaction of all  required tax withholding obligations as set forth in the Plan.   Provided a Participant has satisfied  all required tax withholding obligations in respect of the Stock Portion of the bonus amount, the  Company shall cause to be issued and delivered to the Participant by the Bonus Delivery Date a  certificate or certificates evidencing the applicable number of shares of the Company’s common  stock registered in the name of the Participant (or in the name of the Participant’s legal  representatives, beneficiaries or heirs, as the case may be) or to instruct the Company’s transfer  agent to electronically deliver such Shares to Participant (or applicable representative,  beneficiary or heir).  If it is administratively impracticable to issue such shares within the time  frame described above because issuances of shares are prohibited or restricted pursuant to the  policies of the Company that are reasonably designed to ensure compliance with applicable  securities laws or stock exchange rules, then such issuance shall be delayed until such  prohibitions or restrictions lapse.          8.    Termination of Employment.  If a Participant’s employment with the Company  is terminated by the Company with Cause or by the Participant without Good Reason (both as  defined in the Participant’s employment agreement), the Participant (a) shall not be entitled to  receive any bonus payment for the fiscal year during which the termination of employment  occurred and (b) shall be entitled to receive the bonus payment for any prior fiscal year for which  the bonus payment has not been paid, with such amount payable at the same time the applicable   101128119.3 0059466- 00001         3    

 

bonus payments are made to the other Participants.  If a Participant’s employment with the  Company is terminated by the Company without Cause or by the Participant with Good Reason,   the Participant (or the Participant’s beneficiary) shall be entitled to receive (a) a pro rata bonus  payment for the fiscal year during which the termination of employment occurred equal to the  amount the Participant would have received if employed for the entire fiscal year multiplied by a  fraction, the numerator of which is the number of days in the fiscal year the Participant was  employed and the denominator of which is 365, which amount shall be payable at the same time  the applicable bonus payments are made to the other Participants and (b) the bonus payment for  any prior fiscal year for which the bonus payment has not been paid, with such amount payable  at the same time the applicable bonus payments are made to the other Participants.            9.    General Provisions.                 (a) Termination; Amendment.  Subject to the terms of the 2014 Plan, the Board or  the Committee may at any time amend the Plan, except that any amendment applicable to the  Plan made after the Board or Committee has determined the Participants and the Target Bonus  Amounts shall apply only to Participants who have agreed in writing to the amendment.                    (b) No Employment Rights.  Nothing in this Plan confers upon any Participant  any right to continue in the employment of the Company or any of its subsidiaries or to be  selected as a Participant in any subsequent year.                 (c) Nonalienation of Benefits.  Except as expressly provided herein or otherwise  required by applicable law, no Participant or beneficiary may alienate, transfer, anticipate, sell,  assign, pledge, attach, or otherwise encumber the Participant’s interest under the Plan.                 (d) Withholding.  The Cash Portion of any bonus payable to a Participant or a  beneficiary under the Plan will be subject to any applicable federal, state and local income and  employment taxes and any other amounts that the Company or a subsidiary is required at law to  deduct and withhold from such Cash Portion of the bonus.  Regarding the Stock Portion of any  bonus payable to a Participant or a beneficiary under the Plan, such Participant acknowledges  that, not later than the Bonus Delivery Date, the value of the delivered shares of common stock  will be treated as ordinary compensation income for federal and state income and FICA tax  purposes, and that the Company will be required to withhold taxes on this income amount.  The  Company will notify the Participant of the required withholding amount at least ten days prior to  the Bonus Delivery Date.  Concurrently with or prior to the delivery of the shares of common  stock as set forth in Section 7, the Participant, at his or her election (which election must be made  on or before the Bonus Delivery Date), shall (x) pay to the Company the required withholding  amount for the Stock Portion in cash or (y) notify the Company that the Participant requests the  Company to reduce the number of shares otherwise deliverable for the Stock Portion by a  sufficient number to cover the applicable withholding obligations for the Stock Portion.  If a  Participant elects to pay the withholding for the Stock Portion by a reduction in shares received,  the Company shall pay to the Participant in cash the amount of any resulting over payment  ascribed to such shares retained to cover withholding obligations.                (e) Plan Unfunded.  The entire cost of the Plan shall be paid from the general  assets of the Company.  The rights of any Participant or beneficiary to receive an award under   101128119.3 0059466- 00001         4    

 

the Plan shall be only those of a general unsecured creditor, and neither the Company nor the  Board shall be responsible for the adequacy of the general assets of the Company to meet and  discharge Plan liabilities.                 (f) Severability.  If any provision of the Plan is held unenforceable, the remainder  of the Plan will continue in full force and effect without regard to such unenforceable provision  and will be applied as though the unenforceable provision were not contained in the Plan.                 (g) Governing Law.  The Plan will be construed in accordance with and governed  by the laws of the State of Utah, without reference to the principles of conflict of laws.                 (h) Headings.  Headings are inserted in the Plan for convenience of reference only  and are to be ignored in any construction of the provisions of the Plan.                (i) Section 409A.  This Plan and the payments contemplated herein are intended  to be exempt from or in compliance with Section 409A and shall be interpreted and administered  consistent with such intent.    101128119.3 0059466- 00001         5    

 

                                                                                                                  Exhibit A           Participant             Target Bonus    Brent Hatch             $412,000 USD  Ryan Oviatt             $  90,125 USD  Cameron Tidball         $  84,357 USD  Jay Fugal               $  41,200 USD  Patrick Fisher          $  38,750 CAD           101128119.3 0059466-00001profire2019ltiprsurotime

                         PROFIRE ENERGY, INC.                       2014 EQUITY INCENTIVE PLAN             RESTRICTED STOCK UNIT AWARD AGREEMENT         This RESTRICTED STOCK UNIT AWARD AGREEMENT (this “Agreement”) is  entered into as of this ___29  day of ______April , 2019 (the “Effective Date”), by and between Profire  Energy, Inc., a Nevada corporation (the “Company”) and Ryan Oviatt (“Participant”). All  capitalized terms used herein but not defined herein shall have the meanings given to them in the  Profire Energy, Inc. 2014 Equity Incentive Plan, as amended (the “Plan”).         1.    Award.  The Company hereby grants to Participant a restricted stock unit award (the “Award”) covering 22,071 shares (the “Shares”) of Common Stock, par value $0.001 per  share, of the Company according to the terms and conditions set forth herein and in the Plan.   Each restricted stock unit (a “Unit”) represents the right to receive one Share, subject to the  vesting requirements of this Agreement and the terms of the Plan.  The Units are granted under  Section 6(c) of the Plan.  A copy of the Plan will be furnished upon request of Participant.         2.    Vesting.  Except as otherwise provided in this Agreement, so long as Participant is providing service as an Eligible Person for the Company or any Affiliate (“Service”), the Units  shall vest in accordance with the following schedule:                      On each of                  Number of Units                  the following dates                Vested                  December 31, 2019                  7,357                  December 31, 2020                  7,357                  December 31, 2021                  7,357         3.    Restrictions  on  Transfer.  Until  the  Units  vest  pursuant  to  Section  2  hereof  or unless the Committee determines otherwise, none of the Units may be transferred other than by  will or by the laws of descent and distribution and no Units may be pledged, alienated, attached  or otherwise encumbered, and any purported pledge, alienation, attachment or encumbrance  thereof shall be void and unenforceable against the Company or any Affiliate.  The Committee  may establish procedures as it deems appropriate for Participant to designate a person or persons,  as beneficiary or beneficiaries, to exercise the rights of the Participant and receive any property  distributable with respect to the Units in the event of the Participant’s death.         4.    Forfeiture.  Except as otherwise determined by the Committee, upon Participant’s termination of Service (in either case, as determined under criteria established by the Committee)  prior to vesting of the Units pursuant to Section 2 hereof, all unvested Units held by such  Participant at such time shall be forfeited and reacquired by the Company; provided, however,  that the Committee may waive in whole or in part any or all remaining restrictions with respect  to the unvested Units.  Upon forfeiture, Participant will no longer have any rights relating to the  unvested Units.      101286300.1 0059466-00001 

 

      5.    Miscellaneous         (a)   Issuance of Shares.  As soon as administratively practicable following the  Participant’s vesting date under Section 2 hereof, as applicable, and the Participant’s satisfaction  of any required tax withholding obligations (but in no event later than 60 days following the  vesting date), the Company shall cause to be issued and delivered to the Participant a certificate  or certificates evidencing Shares registered in the name of the Participant (or in the name of the  Participant’s legal representatives, beneficiaries or heirs, as the case may be) or to instruct the  Company’s transfer agent to electronically deliver such shares to the respective Participant.  The  number of Shares issued shall equal the number of Units vested, reduced as necessary to cover  applicable withholding obligations in accordance with Section 5(c) hereof.  If it is  administratively impracticable to issue Shares within the time frame described above because  issuances of Shares are prohibited or restricted pursuant to the policies of the Company that are  reasonably designed to ensure compliance with applicable securities laws or stock exchange  rules, then such issuance shall be delayed until such prohibitions or restrictions lapse.         (b)   No Rights as Shareholder.  Units are not actual Shares, but rather, represent a  right to receive Shares according to the terms and conditions set forth herein and the terms of the  Plan.  Accordingly, the issuance of a Unit shall not entitle the Participant to any of the rights or  benefits generally accorded to shareholders unless and until a Share is actually issued under  Section 5(a) hereof.           (c)   Taxes.  The Participant hereby agrees to make adequate provision for any sums  required to satisfy the applicable federal, state, local or foreign employment, social insurance,  payroll, income or other tax withholding obligations (the “Withholding Obligations”) that arise  in connection with this Agreement.  The Company may establish procedures to ensure  satisfaction of all applicable Withholding Obligations arising in connection with this Agreement,  including any means permitted in Section 8 of the Plan.  The Participant hereby authorizes the  Company, at its sole discretion and subject to any limitations under applicable law, to satisfy any  such Tax Obligations by (1) withholding a portion of the Shares otherwise to be issued in  payment of the Units having a value equal to the amount of Withholding Obligations in  accordance with such rules as the Company may from time to time establish; provided, however,  that the amount of the Shares so withheld shall not exceed the amount necessary to satisfy the  required Withholding Obligations using applicable minimum statutory withholding rates; (2)  withholding from the wages and other cash compensation payable to the Participant or by  causing the Participant to tender a cash payment or other Shares to the Company; or (3) selling  on the Participant’s behalf (using any brokerage firm determined acceptable to the Company for  such purpose) a portion of the Shares issued in payment of the Units as the Company determines  to be appropriate to generate cash proceeds sufficient to satisfy the Withholding Obligations;  provided, however, that if Participant is a Section 16 officer of the Company under the Exchange  Act, then the Committee shall establish the method of withholding from the above alternatives  and, if the Committee does not exercise its discretion prior to the withholding event, then  Participant shall be entitled to elect the method of withholding from the alternatives above.  The  Participant shall be responsible for all brokerage fees and other costs of sale, and the Participant  further agrees to indemnify and hold the Company harmless from any losses, costs, damages or  expenses relating to any such sale.  The Company may refuse to deliver Shares if the Participant    101286300.1 0059466- 00001                                                                   2    

 

fails to comply with the Participant’s obligations in connection with the Withholding Obligations  described in this paragraph.         (d)   Plan Provisions Control.  This Award is subject to the terms and conditions of the  Plan, but the terms of the Plan shall not be considered an enlargement of any benefits under this  Agreement.  In addition, this Award is subject to the rules and regulations promulgated pursuant  to the Plan, now or hereafter in effect.  A copy of the Plan will be furnished upon request of the  Participant.  In the event that any provision of the Agreement conflicts with or is inconsistent in  any respect with the terms of the Plan, the terms of the Plan shall control.  This Agreement (and  any addendum hereto) and the Plan together constitute the entire agreement between the parties  hereto with regard to the subject matter hereof.         (e)    No Right to Employment.  The issuance of the Award shall not be construed as  giving Participant the right to be retained in the employ, or as giving a director of the Company  or an Affiliate the right to continue as a director of the Company or an Affiliate, nor will it affect  in any way the right of the Company or an Affiliate to terminate such employment or position at  any time, with or without cause. In addition, the Company or an Affiliate may at any time  dismiss Participant from employment, or terminate the term of a director of the Company or an  Affiliate, free from any liability or any claim under the Plan or the Agreement. Nothing in the  Agreement shall confer on any person any legal or equitable right against the Company or any  Affiliate, directly or indirectly, or give rise to any cause of action at law or in equity against the  Company or an Affiliate. The Award granted hereunder shall not form any part of the wages or  salary of Participant for purposes of severance pay or termination indemnities, irrespective of the  reason for termination of employment. Under no circumstances shall any person ceasing to be an  employee of the Company or any Affiliate be entitled to any compensation for any loss of any  right or benefit under the Agreement or Plan which such employee might otherwise have enjoyed  but for termination of employment, whether such compensation is claimed by way of damages  for wrongful or unfair dismissal, breach of contract or otherwise. By participating in the Plan,  Participant shall be deemed to have accepted all the conditions of the Plan and the Agreement  and the terms and conditions of any rules and regulations adopted by the Committee (as defined  in the Plan) and shall be fully bound thereby.         (f)   Governing Law.  The validity, construction and effect of the Plan and the  Agreement, and any rules and regulations relating to the Plan and the Agreement, shall be  determined in accordance with the internal laws, and not the law of conflicts, of the State of  Nevada.         (g)   Severability.  If any provision of the Agreement is or becomes or is deemed to be  invalid, illegal or unenforceable in any jurisdiction or would disqualify the Agreement under any  law deemed applicable by the Committee, such provision shall be construed or deemed amended  to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the  determination of the Committee, materially altering the purpose or intent of the Plan or the  Agreement, such provision shall be stricken as to such jurisdiction or the Agreement, and the  remainder of the Agreement shall remain in full force and effect.    101286300.1 0059466- 00001                                                                   3    

 

      (h)   No Trust or Fund Created.  Neither the Plan nor the Agreement shall create or be  construed to create a trust or separate fund of any kind or a fiduciary relationship between the  Company or any Affiliate and Participant or any other person.         (i)   Section 409A Provisions.  The payment of Shares under this Agreement are  intended to be exempt from the application of Section 409A of the Internal Revenue Code, as  amended (“Section 409A”) by reason of the short-term deferral exemption set forth in Treasury  Regulation §1.409A-1(b)(4).  Notwithstanding anything in the Plan or this Agreement to the  contrary, to the extent that any amount or benefit hereunder that constitutes “deferred  compensation” to the Participant under Section 409A and applicable guidance thereunder is  otherwise payable or distributable to the Participant under the Plan or this Agreement solely due  to the Participant’s disability or “separation from service” (as such term is defined under Section  409A), such amount or benefit will not be payable or distributable to the Participant by reason of  such circumstance unless the Committee determines in good faith that (i) the circumstances  giving rise to such disability or separation from service meet the definition of disability, or  separation from service, as the case may be, in Section 409A(a)(2)(A) of the Code and applicable  final regulations, or (ii) the payment or distribution of such amount or benefit would be exempt  from the application of Section 409A by reason of the short-term deferral exemption or  otherwise (including, but not limited to, a payment made pursuant to an involuntary separation  arrangement that is exempt from Section 409A under the “short-term deferral” exception).  Any  payment or distribution that otherwise would be made to a Participant who is a specified  employee (as determined by the Committee in good faith) on account of separation from service  may not be made before the date which is six months after the date of the specified employee’s  separation from service (or if earlier, upon the specified employee’s death) unless the payment or  distribution is exempt from the application of Section 409A by reason of the short term deferral  exemption or otherwise.         (j)   Headings.  Headings are given to the Sections and subsections of the Agreement  solely as a convenience to facilitate reference.  Such headings shall not be deemed in any way  material or relevant to the construction or interpretation of the Agreement or any provision  thereof.         (k)   Securities Matters. The Company shall not be required, and shall not have any  liability for failure, to deliver Shares until the requirements of any federal or state securities or  other laws, rules or regulations (including the rules of any securities exchange) as may be  determined by the Company to be applicable are satisfied.         (l)   Consultation with Professional Tax and Investment Advisors. The Participant  acknowledges that the grant, exercise, vesting or any payment with respect to this Award, and  the sale or other taxable disposition of the Shares acquired pursuant to the exercise thereof, may  have tax consequences pursuant to the Internal Revenue Code of 1986, as amended, or under  local, state or international tax laws. The Participant further acknowledges that the Participant is  relying solely and exclusively on the Participant’s own professional tax and investment advisors  with respect to any and all such matters (and is not relying, in any manner, on the Company or  any of its employees or representatives). Finally, the Participant understands and agrees that any  and all tax consequences resulting from the Award and its grant, exercise, vesting or any  payment with respect thereto, and the sale or other taxable disposition of the Shares acquired   101286300.1 0059466- 00001                                                                   4    

 

pursuant to the Plan, is solely and exclusively the responsibility of the Participant without any  expectation or understanding that the Company or any of its employees or representatives will  pay or reimburse the Participant for such taxes or other items.                                         [Signature page follows]   101286300.1 0059466- 00001                                                                   5    

 

      IN WITNESS WHEREOF, the Company and Participant have executed this Agreement  as of the Effective Date.                                       PROFIRE ENERGY, INC.                                       By:                                      Name: Brenton w. Hatch                                     Title: CEO                                      PARTICIPANT:                                        Ryan Oviatt                  [Signature page to Restricted Stock Unit Award Agreement]  101286300.1 0059466-00001

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00298-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00298-of-00352.parquet"}]]