Document:

amendmenttocreditfacilit

      #4130479   Exhibit 10.1   AGREEMENT AND AMENDMENT NO. 2 TO     AMENDED AND RESTATED CREDIT AGREEMENT      This Agreement and Amendment No. 2 to Amended and Restated Credit Agreement (this   “Agreement”) dated as of July 27, 2012 (the “Effective Date”) is among Forum Energy Technologies,   Inc. (the “Borrower”), the Guarantors, the Lenders (as defined below), the Issuing Lenders (as defined   below), and Wells Fargo Bank, National Association, as administrative agent (in such capacity, the   “Administrative Agent”).   RECITALS   A. The Borrower, the Administrative Agent, the issuing lenders party thereto from time to   time (the “Issuing Lenders”), the lenders party thereto from time to time (the “Lenders”) and Wells Fargo   Bank, National Association, as the swing line lender, are parties to that certain Amended and Restated   Credit Agreement dated as of October 4, 2011, as amended by that certain Amendment No. 1 to Amended   and Restated Credit Agreement dated as of March 27, 2012 (as so amended, the “Credit Agreement”; the   defined terms of which are used herein unless otherwise defined herein).   B. In order to reduce administrative and statutory audit costs and achieve structural and   operational efficiency, the Credit Parties intend to take certain restructuring actions and make certain   intercompany investments, including the following:  (i) TGH (UK) Ltd, a wholly owned Foreign   Subsidiary, will change its name to FET Global Holdings Limited and become a holding company for   certain Foreign Subsidiaries (“Foreign Holdco”), (ii) Forum International Holdings, Inc., a Delaware   corporation and a wholly owned Domestic Subsidiary, will be converted into a Delaware limited liability   company (after such conversion, “FIHI”) and subsequent to such conversion FET Holdings, LLC will   contribute 100% of the Equity Interests issued by FIHI to Foreign Holdco (the “FIHI Contribution”), (iii)   FIHI, as a limited liability company, will be a pass-through entity for tax purposes and therefore,   subsequent to the FIHI Contribution, FIHI will become a Foreign Subsidiary notwithstanding its   formation under Delaware law, and (iv) a Foreign Subsidiary formed under the laws of Luxemburg   (“Foreign Finance Sub”) will act as intercompany creditor to other Foreign Subsidiaries for cash   management purposes and the Borrower will indirectly contribute that certain Amended and Restated   Intercompany Note dated as of October 4, 2011 made by certain Foreign Subsidiaries in favor of the   Borrower (the “Intercompany Note”) to the Foreign Finance Sub (the “Note Contribution”).   C. In order to effect the transactions described above and to efficiently manage its foreign   operations, the Borrower has requested that the Credit Agreement be amended to (i) permit the FIHI   Contribution, (ii) permit the Note Contribution, (iii) increase the unsecured Debt basket under Section   6.1(q), and (iv) permit Investments and Debt solely among Foreign Restricted Subsidiaries, each as set   forth below.   D. The Borrower has also requested that the Administrative Agent and the Lenders (i)   release FIHI as Guarantor under the Guaranty, (ii) release all assets of FIHI from the Liens granted to the   Administrative Agent under the Security Documents, (iii) release all Equity Interests issued by FIHI from   the Liens granted to the Administrative Agent under the Security Documents, (iv) release the   Intercompany Note from the Liens granted to the Administrative Agent under the Security Documents,   and (v) make certain other amendments to the Credit Agreement, each as set forth below.     

 

    -2-   #4130479   THEREFORE, the Borrower, the Guarantors, the Administrative Agent, the Issuing Lenders, and   the Lenders hereby agree as follows:   Section 1. Defined Terms; Other Definitional Provisions.  As used in this Agreement,   each of the terms defined in the opening paragraph and the Recitals above shall have the meanings   assigned to such terms therein.  Each term defined in the Credit Agreement and used herein without   definition shall have the meaning assigned to such term in the Credit Agreement, unless expressly   provided to the contrary. Article, Section, Schedule, and Exhibit references are to Articles and Sections of   and Schedules and Exhibits to this Agreement, unless otherwise specified.  The words “hereof”, “herein”,   and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement   as a whole and not to any particular provision of this Agreement.  The term “including” means   “including, without limitation,”.  Paragraph headings have been inserted in this Agreement as a matter of   convenience for reference only and it is agreed that such paragraph headings are not a part of this   Agreement and shall not be used in the interpretation of any provision of this Agreement.   Section 2. Amendments to Credit Agreement.     (a) Section 1.1 of the Credit Agreement is hereby amended by deleting the definition of   “Investment” in its entirety and replacing it with the following:   “Investment” means, as to any Person, any direct or indirect acquisition or investment   by such Person, whether by means of (a) the purchase or other acquisition of capital stock or   other securities of another Person, (b) a loan, advance or capital contribution to, or purchase or   other acquisition of any Debt or equity participation or interest in, another Person, including any   partnership or joint venture interest in such other Person, or (c) the purchase or other   acquisition (in one transaction or a series of transactions) of assets of another Person that   constitute a business unit.  For purposes of covenant compliance, the amount of any Investment   shall be the amount actually invested, without adjustment for subsequent increases or decreases   in the value of such Investment.   (b) Section 1.1 of the Credit Agreement is hereby further amended by adding the following   new defined term to appear in alphabetical order therein:   “Amendment No. 2” means that certain Agreement and Amendment No. 2 dated as of   July 27, 2012 among the Borrower, the Guarantors, and the other parties hereto which amends   this Agreement.   (c) Section 6.1 of the Credit Agreement is hereby amended by replacing clause (d) found   therein in its entirety with the following:   (d) intercompany Debt incurred by any First Tier Foreign Restricted Subsidiary and   owing to the Borrower or to any Wholly-Owned Domestic Restricted Subsidiary; provided that,   (A) such Debt is evidenced by a note and (B) the Administrative Agent shall have an Acceptable   Security Interest in such note and the receivable evidenced thereby; and (ii) intercompany Debt   incurred by any Foreign Restricted Subsidiary and owing to any other Foreign Restricted   Subsidiary;   (d) Section 6.1 of the Credit Agreement is hereby amended by replacing clause (i) found   therein in its entirety with the following:     

 

    -3-   #4130479   (i) a guaranty of Debt so long as such underlying Debt is otherwise permitted under   this Section 6.1;   (e) Section 6.1 of the Credit Agreement is hereby further amended by replacing the amount   “$35,000,000” found in clause (q) thereof with the amount “$50,000,000”.   (f) Section 6.3 of the Credit Agreement is hereby amended by replacing clause (j) found   therein in its entirety with the following:   (j) (i) the FIHI Contribution (as defined in Amendment No. 2), (ii) the Note   Contribution (as defined in Amendment No. 2) and (iii) Investments made by any Foreign   Restricted Subsidiary in or to any other Foreign Restricted Subsidiary;   Section 3. Representations and Warranties.  Each Credit Party represents and warrants   that: (a) the representations and warranties contained in the Credit Agreement, as amended hereby, and   the representations and warranties contained in the other Credit Documents are true and correct in all   material respects (except that such materiality qualifier shall not be applicable to any representations and   warranties that already are qualified or modified by materiality in the text thereof) on and as of the   Effective Date as if made on as and as of such date except to the extent that any such representation or   warranty which by its terms is made as of a specified date, in which case such representation or warranty   is true and correct in all material respects (except that such materiality qualifier shall not be applicable to   any representations and warranties that already are qualified or modified by materiality in the text thereof)   as of such specified date; (b) no Default has occurred and is continuing; (c) the execution, delivery and   performance of this Agreement are within the corporate, partnership, or limited liability company power,   as applicable, and authority of such Credit Party and have been duly authorized by appropriate governing   action and proceedings; (d) this Agreement constitutes the legal, valid, and binding obligation of such   Credit Party enforceable in accordance with its terms, except as limited by applicable bankruptcy,   insolvency, reorganization, moratorium, or similar laws affecting the rights of creditors generally and   general principles of equity; (e) there are no governmental or other third party consents, licenses and   approvals required in connection with the execution, delivery, performance, validity and enforceability of   this Agreement; and (f) except as released pursuant to Section 7 below, the Liens under the Security   Documents are valid and subsisting and secure the Secured Obligations.   Section 4. Conditions to Effectiveness.  This Agreement shall become effective on the   Effective Date and enforceable against the parties hereto upon the receipt by the Administrative Agent of   this Agreement duly executed by the Borrower, the Guarantors, the Administrative Agent and the   Majority Lenders.   Section 5. Acknowledgments and Agreements.     (a) Borrower acknowledges that on the date hereof all outstanding Obligations are payable in   accordance with their terms and Borrower waives any defense, offset, counterclaim or recoupment with   respect thereto.    (b) Borrower, Administrative Agent, each Issuing Lender and each Lender does hereby   adopt, ratify, and confirm the Credit Agreement, as amended hereby, and acknowledges and agrees that   the Credit Agreement, as amended hereby, is and remains in full force and effect, and, except as set forth   in Section 7 below with regard to FIHI, the Borrower and the Guarantors acknowledge and agree that   their respective liabilities and obligations under the Credit Agreement, as amended hereby, and the   Guaranty, are not impaired in any respect by this Agreement.     

 

    -4-   #4130479   (c) From and after the Effective Date, all references to the Credit Agreement and the Credit   Documents shall mean the Credit Agreement and such Credit Documents as amended by this Agreement.   (d) This Agreement is a Credit Document for the purposes of the provisions of the other   Credit Documents.  Without limiting the foregoing, any breach of representations, warranties, and   covenants under this Agreement shall be a Default or Event of Default, as applicable, under the Credit   Agreement.   Section 6. Reaffirmation of the Guaranty.  Except as set forth in Section 7 below with   regard to FIHI, each Guarantor hereby ratifies, confirms, acknowledges and agrees that its obligations   under the Guaranty are in full force and effect and that such Guarantor continues to unconditionally and   irrevocably guarantee the full and punctual payment, when due, whether at stated maturity or earlier by   acceleration or otherwise, of all of the Guaranteed Obligations (as defined in the Guaranty), as such   Guaranteed Obligations may have been amended by this Agreement, and its execution and delivery of this   Agreement does not indicate or establish an approval or consent requirement by such Guarantor under the   Guaranty in connection with the execution and delivery of amendments, consents or waivers to the Credit   Agreement, the Notes or any of the other Credit Documents.   Section 7. Guaranty and Lien Releases.  Effective as of date the FIHI Contribution is   made (a) the obligations of FIHI under the Guaranty and under each other Credit Document are hereby   released, terminated and no longer of any force and effect (except for those obligations that expressly   survive the termination of the applicable Credit Document and release of any Lien created thereby) and   FIHI shall no longer be a “Guarantor” or a “Grantor” thereunder (except as to those obligations that   expressly survive the termination of the applicable Credit Document and release of any Lien created   thereby), and (b) all assets of FIHI which constitute Collateral and all Equity Interests issued by FIHI   which constitute Collateral are hereby released from the Liens created under the Security Documents.    Effective as of the date the Note Contribution is made, the Intercompany Note is released from the Liens   created under the Security Documents.  The Administrative Agent shall, upon the reasonable request of   the Borrower and at the sole cost and expense of the Borrower, return the original Intercompany Note and   execute and deliver such UCC-3 termination statements, releases of security interests and other   instruments, in each case in proper form of recording, as the Borrower shall reasonably request to   evidence the release expressly contemplated herein.  It is understood and agreed that the releases provided   in this Section 7 (i) are expressly made conditioned upon the occurrence of the FIHI Contribution and the   Note Contribution (as applicable), (ii) shall not release any Guarantor other than FIHI as expressly   provided above, and (iii) as to the Liens created under the Security Documents, are partial releases only   which are expressly limited to the assets described above in this Section 7 and shall not release any other   assets of any other Credit Party from the Liens created under the Credit Documents.   Section 8. Counterparts.  This Agreement may be signed in any number of counterparts,   each of which shall be an original and all of which, taken together, constitute a single instrument.  This   Agreement may be executed by facsimile signature and all such signatures shall be effective as originals.   Section 9. Successors and Assigns.  This Agreement shall be binding upon and inure to the   benefit of the parties hereto and their respective successors and assigns permitted pursuant to the Credit   Agreement.   Section 10. Invalidity.  In the event that any one or more of the provisions contained in this   Agreement shall for any reason be held invalid, illegal or unenforceable in any respect, such invalidity,   illegality or unenforceability shall not affect any other provision of this Agreement.     

 

    -5-   #4130479   Section 11. Governing Law.  This Agreement shall be deemed a contract under, and shall be   governed by, and construed and enforced in accordance with, the laws of the State of New York,   applicable to contracts made and to be performed entirely within such state, including without regard to   conflicts of laws principles (other than Section 5-1401 and Section 5-1402 of the General Obligations   Law of the State of New York).   Section 12. Entire Agreement. THIS AGREEMENT, THE CREDIT AGREEMENT AS   AMENDED BY THIS AGREEMENT, THE NOTES, AND THE OTHER CREDIT DOCUMENTS   CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH   RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY PRIOR   AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.   [The remainder of this page has been left blank intentionally.]     

 

      Signature Page to Agreement and Amendment No. 2 to Amended and Restated Credit Agreement   (Forum Energy Technologies, Inc.)   #4130479   EXECUTED to be effective as of the date first above written.   BORROWER:   FORUM ENERGY TECHNOLOGIES, INC.   By: /s/ James W. Harris        Name: James W. Harris   Title:  Senior Vice President and Chief Financial Officer         GUARANTORS:   AMC TORQUE SOLUTIONS, INC.   CANNON SERVICES, LLC   DAVIS-LYNCH, LLC   FET HOLDINGS, LLC   FORUM ENERGY SERVICES, INC.   FORUM INTERNATIONAL HOLDINGS, INC.   FORUM US, INC.   PHOINIX GLOBAL, LLC   SUBSEA SERVICES INTERNATIONAL, INC.   SVP PRODUCTS, INC.   TGH (US) INC.         By: /s/ James W. Harris        Name:  James W. Harris   Title: Vice President         GLOBAL FLOW TECHNOLOGIES, INC.   Z EXPLORATIONS, INC.   Z RESOURCES, INC.   ZY-TECH GLOBAL INDUSTRIES, INC.      By: /s/ Harry Hernandez       Name: Harry Hernandez   Title: Secretary        

 

   Signature Page to Agreement and Amendment No. 2 to Amended and Restated Credit Agreement   (Forum Energy Technologies, Inc.)   #4130479   ADMINISTRATIVE AGENT/LENDERS:      WELLS FARGO BANK,    NATIONAL ASSOCIATION   as Administrative Agent, Swing Line Lender,   Issuing Lender, and Lender            By: /s/ Robert Corder        Name:  Robert Corder   Title: Director           

 

   Signature Page to Agreement and Amendment No. 2 to Amended and Restated Credit Agreement   (Forum Energy Technologies, Inc.)   #4130479   JPMORGAN CHASE BANK, N.A.   as an Issuing Lender, a Revolving Lender and a Term   Lender   By: /s/ Thomas Okamoto       Name: Thomas Okamoto   Title: Authorized Officer        

 

   Signature Page to Agreement and Amendment No. 2 to Amended and Restated Credit Agreement   (Forum Energy Technologies, Inc.)   #4130479   BANK OF AMERICA, N.A.   as an Issuing Lender, a Revolving Lender and a Term   Lender   By: /s/ Julie Castano        Name: Julie Castano   Title: Vice President           

 

   Signature Page to Agreement and Amendment No. 2 to Amended and Restated Credit Agreement   (Forum Energy Technologies, Inc.)   #4130479   CITIBANK, N.A.   as a Revolving Lender and a Term Lender   By: /s/ John F. Miller        Name: John F. Miller   Title: Attorney-in-Fact           

 

   Signature Page to Agreement and Amendment No. 2 to Amended and Restated Credit Agreement   (Forum Energy Technologies, Inc.)   #4130479   DEUTSCHE BANK TRUST COMPANY     AMERICAS, as a Revolving Lender and    a Term Lender         By: /s/ Michael Getz        Name: Michael Getz   Title:  Vice President         By: /s/ Erin Morrissey        Name: Erin Morrissey   Title: Director           

 

   Signature Page to Agreement and Amendment No. 2 to Amended and Restated Credit Agreement   (Forum Energy Technologies, Inc.)   #4130479   AMEGY BANK NATIONAL ASSOCIATION   as a Revolving Lender and a Term Lender   By: /s/ Brad Ellis        Name: Brad Ellis   Title: Senior Vice President              

 

   Signature Page to Agreement and Amendment No. 2 to Amended and Restated Credit Agreement   (Forum Energy Technologies, Inc.)   #4130479   HSBC BANK USA, N.A.   as a Revolving Lender and a Term Lender   By: /s/ Bruce Robinson        Name: Bruce Robinson   Title: Vice President        

 

   Signature Page to Agreement and Amendment No. 2 to Amended and Restated Credit Agreement   (Forum Energy Technologies, Inc.)   #4130479   CREDIT SUISSE AG, CAYMAN    ISLANDS BRANCH, as a Revolving Lender   and a Term Lender         By: /s/ Mikhail Faybusovich       Name: Mikhail Faybusovich   Title: Director         By: /s/ Vipul Dhadda        Name: Vipul Dhadda   Title:  Associate           

 

   Signature Page to Agreement and Amendment No. 2 to Amended and Restated Credit Agreement   (Forum Energy Technologies, Inc.)   #4130479   COMERICA BANK,    as a Revolving Lender and a Term Lender         By: /s/ David Balderach        Name: David Balderach   Title: Senior Vice PresidentExhibit 10.2 Short-Term Incentive Plan, as amended May 2012

Exhibit 10.2

InterDigital
Short-Term Incentive Plan

Purpose
This Short-Term Incentive Plan (this “Plan”) is designed to provide an effective means to motivate and compensate eligible employees, on an annual basis, through cash and/or stock award bonuses based on the achievement of business and individual performance objectives during each calendar year (“Plan Year”). The Plan is intended to be the Company's primary vehicle for the granting of annual bonuses. However, the Company may, in certain limited circumstances, grant bonuses outside of this Plan, in the sole discretion of the Company.
The compensation contemplated under this Plan is considered “pay for performance,” in that any payout under the Plan is subject to the achievement of specific performance goals by the Company and by each individual during the Plan Year. The Company believes that such compensation can be a highly effective form of compensation that can enhance the employer-employee “stakeholder” relationship. In addition, the Company hopes that by providing short-term incentive compensation, the Company will motivate and increase the retention rate among its employees, which, in turn, will enhance the Company's long-term value.
Who Is Eligible?
All regular full-time or part-time employees1 will be eligible to receive a bonus payout under the Plan, unless an employee: (i) is not working actively at the time of the payout of the bonus or at least as of March 15th of the year following the end of the Plan Year (unless such person was involuntarily terminated other than for intentional wrongdoing after the end of the Plan Year, but before the bonus was paid), (ii) was working actively for the Company for less than ninety (90) days during the Plan Year, (iii) is determined not to have performed minimally at a “Meets Job Requirements” level during the Plan Year, or (iv) was involuntarily terminated for unsatisfactory performance or misconduct, such determination to be made in the C.E.O.'s sole discretion (or the Compensation Committee in the case of Section 16 Officers) based upon documented or other objective substantiation.
The Compensation Committee may grant exceptions to the above eligibility criteria in its sole discretion. The Chief Administrative Officer may grant exceptions to the above eligibility criteria for non-executive employees who have worked through the end of the third quarter of a Plan Year, provided, however, that any bonus so awarded may not exceed $25,000. In addition, employees who meet the eligibility requirements set out above but were not regular full-time or part-time employees for the full Plan Year will be paid any bonus on a pro rata basis.2 The pro rata amount will be calculated based on the employee's income, i.e., base salary / regular pay and other eligible earned income, if applicable, paid during the Plan Year.
How Does the Plan Work?
Each employee is assigned a Plan target based on their level in the organization. The target bonus is a percentage of the employee's annual base salary in effect as of the end of the Plan Year. Based on the Company's or Department's level of achievement of certain annual corporate/departmental objectives and the employee's individual contributions toward the Company's/Department's goal achievement, the employee will receive the appropriate payout under the Plan.  Corporate annual goals and performance results will be approved and measured by the Compensation Committee for the C.E.O., Senior Executive Vice Presidents and Executive Vice Presidents.  Departmental annual goals and performance results will be approved by each Department Head and the C.E.O. for all other employees.  The corporate and departmental goals will be communicated to employees, normally in the first quarter of each Plan Year.  The corporate and departmental performance goals are designed to be reasonable “stretch” goals.
Individual annual goals and performance results will be approved and measured by the Compensation Committee for the C.E.O., by the C.E.O. for Senior Executive Vice Presidents and Executive Vice Presidents and by each respective Department Head for all other employees.  The individual performance goals are designed to be reasonable “stretch” goals.
_________
1 “Regular full-time” and “regular part-time” employees are defined in the Company's employee handbook and specifically exclude “seasonal/casual employees” (which are also defined in the Company's employee handbook).
2 Employees who do not work a full Plan Year because they were out of work on an approved leave of absence for part of the plan year will be paid any bonus on a pro rata basis by calculating the bonus based on the actual amount of eligible base income earned during the Plan Year. If the Employee is paid for part of the leave through PTO or other eligible accrued form of income (not including STD or worker's compensation payments), this income will be included in the base salary calculation.

The Plan target for each employee position band, and the associated weighting factors, are as follows:
 
	
							
	 
	 
	 
	 
	 
	 
	 

	Band
(In the event a Participant changes bands during the Plan Year, the Annual Target
Bonus will be calculated based on the Participant's actual band at year-end)
	  
	Annual Target
Bonus
(% of base salary)
	 
	Percentage of Bonus
Related to Business
Performance
(either Corporate
or Departmental)
	 
	Percentage of Annual
Target Bonus
Related to Individual
Performance

	C.E.O.
	  
	80%
	 
	75%
	 
	25%

	Senior Executive Vice President or Executive Vice President (or functional equivalent)
	  
	45 - 55%*
	 
	75%
	 
	25%

	Vice President (or functional equivalent)
	  
	40%
	 
	75%
	 
	25%

	Senior Director (or functional equivalent)
	  
	30%
	 
	75%
	 
	25%

	Director (or functional equivalent)
	  
	25%
	 
	75%
	 
	25%

	Senior Manager (or functional equivalent)
	  
	20%
	 
	75%
	 
	25%

	Manager (or functional equivalent)
	  
	15%
	 
	75%
	 
	25%

	Non-Manager
	  
	9%/11%/13%
(based on position  band)
	 
	75%
	 
	25%

*Senior Executive Vice Presidents and Executive Vice Presidents are generally eligible for an Annual Target Bonus of 45% of base salary.  However, the C.E.O. (or the Compensation Committee in the case of Section 16 Officers) may, in his sole discretion, designate a Senior Executive Vice President or an Executive Vice President to be eligible for an Annual Target Bonus of 45% to 55% of base salary based on their role within the Company and their ability to effect the success of the Company and the achievement of its annual goals.
In each Plan Year, the portion of the Plan target related to business performance may be allocated among a number of corporate/departmental goals.
How Do Actual Business and Individual Performance Affect the Bonus to Be Paid?
As described above, the bonus payout consists of two components: the portion attributable to corporate/departmental performance and the portion attributable to individual performance.  If the Company's or a Department's actual goal results and/or the employee's individual performance for the year exceed or fall short of the established targets, then the bonus payout will be adjusted up or down relative to the level of overachievement or underachievement.  The impact of actual results as compared to corporate/departmental and individual goals on any bonus to be paid is described below.
Corporate Goals. The calculation of the portion of the bonus payout associated with the business performance will be based upon either the Company's actual business results measured against the goals set by the Compensation Committee (for the C.E.O., C.F.O, President of the Company's patent holding subsidiaries and other Sr. Officers) or the Department's actual business results measured against the goals set by the Department (for all other bands). If the Company or Department achieves a specified goal, then 100% of the portion of the bonus related to that business goal will be awarded. If actual results deviate from established business goals, then the bonus payout amounts will be determined as follows.
Results above the goal: If the Company/Department performance exceeds an established business goal by a certain percentage, then the payout of that portion of the annual target bonus associated with that business goal will be increased by the same percentage point(s) representing the overachievement (see below):
 
	
				
	 
	 
	 

	Results
	  
	Percentage Payout

	101%
	  
	101
	%

	ò
	  
	ò             
	

	200%
	  
	200
	%

Results below the goal: If the Company/Department performance falls short of an established goal by a certain percentage, then the payout of that portion of the annual target bonus associated with that business goal will be decreased by the same percentage point(s) representing the shortfall, with no bonus being payable for a particular goal if the result is less than 80% of the target (see below):
 
	
					
	 
	 
	 
	 

	Results
	  
	Percentage
Payout
	 

	100%
	  
	100
	

	%

	ò
	  
	ò  
	

	(

	80%
	  
	80
	

	%

	≤ 79%
	  
	—
	

	%

The Compensation Committee, in its sole discretion, may determine that a business goal has been substantially met or has been met to a degree warranting a higher payout than would otherwise be calculable under this Plan. For example, the Compensation Committee may determine that one-time charges should be disregarded in determining the payout under an earnings performance goal.  Similarly, the C.E.O. in conjunction with the Department Head can determine that a departmental goal has been substantially met to a degree warranting a higher payout than would otherwise be calculable under this Plan.
Individual Performance.  As described above, the evaluation of individual performance portion of the bonus payout is the responsibility of the Department Head (with input from the employee's direct supervisor, as appropriate) based on the employee's performance during the Plan Year and their relative level of contributions to the Departmental goals.  
 
When Will the Bonus Be Paid?
Bonuses will normally be paid under the Plan on or before March 15 of the year following each Plan Year.
An Example of How the Bonus Is Calculated
Assume an entry-level management employee is earning a base salary of $50,000 and is employed for the full Plan Year. The employee has an annual target bonus of 15% of base salary ($7,500). The Department established two goals of equal weight for the Plan Year. The actual results for the first goal were 4% below the target; the actual results for the second goal were 2% above the target. The Department Head determines the employee's individual performance to be 95%. The employee's bonus would be calculated as follows:
 
	
									
	 
	 
	 
	 
	 
	 
	 
	 
	 

	Performance Factor
	  
	A
Percentage of
Bonus Relating to
Performance
Factor
	 
	B
Result as a
Percentage
of Goal
	 
	C
Percentage
Payout
	  
	A x C
Weighted Result

	Goal One
	  
	40%
	 
	96%
	 
	96%
(1 to 1 ratio)
	  
	38.40%
(96% x 40%)

	Goal Two
	  
	35%
	 
	102%
	 
	102%
(1 to 1 ratio)
	  
	35.70%
(102% x 35%)

	Individual Performance
	  
	25%
	 
	95%
	 
	95%
	  
	23.75%
(25% x 95%)

	Total
	  
	100%
	 
	N/A
	 
	N/A
	  
	97.85%

	Bonus Calculation
	  
	Base Salary x Weighted Result x Annual Target
Bonus = Bonus to be paid
$50,000 x 97.85% x 15% = $7,338.75

Who May Receive Bonus Payments in Common Stock?
For the C.E.O., Senior Executive Vice President and Executive Vice President and Vice President bands or functional equivalent positions, the Compensation Committee may, in its discretion, pay up to 100% of the bonus in common or restricted stock pursuant to the 2009 Stock Incentive Plan, as amended. If common or restricted stock is to be paid in lieu of cash, the number of shares to be granted will be calculated as follows:
 
	
			
	 
	 
	 

	Number of Shares =
	  
	Up to 100% of Bonus

	 
	  
	Closing Common Stock Price on the Date Prior to the Grant as Reported in the Wall Street Journal

The stock will be registered. The Company will not impose any other material restrictions (other than those set out in the 2009 Stock Incentive Plan or required by law) or forfeiture provisions, including no forfeiture provisions applicable to termination of employment.
Miscellaneous
The establishment of this Plan, any provisions of this Plan, and/or any action of the Compensation Committee or any Company officer with respect to this Plan, does not confer upon any employee the right to continued employment with the Company. The Company reserves the right to dismiss any employee at will (at any time, with or without prior notice, with or without cause), or otherwise deal with an employee to the same extent as though the Plan had not been adopted.
The Company may, at its discretion, provide for any federal, state or local income tax withholding requirements and Social Security or other tax requirements applicable to the accrual of payment of benefits under the Plan, and all such determinations shall be final and conclusive.
Payment of bonuses awarded under this Plan shall be made no later than March 15 of the year following the Plan Year in which the services relating to such bonus award were rendered. The resolution of any questions with respect to payments and entitlements pursuant to the provisions of this Plan shall be determined by the Compensation Committee, in its sole discretion, and all such determinations shall be final and conclusive.

This Plan may be terminated or revoked by the Compensation Committee, at its sole discretion, at any time and amended by the Compensation Committee, at its sole discretion, from time to time without the approval of any employee, provided that such action does not reduce the amount of any Bonus payment below an amount equal to the amount that would have been payable to the eligible employee with respect to the Plan Year in which the termination, revocation or amendment of the Plan occurs under the terms of the Plan as in effect immediately prior to such termination, revocation or amendment, applied on a pro rata basis. 

May 2012

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