EXHIBIT 10.1
MICROTEK MEDICAL HOLDINGS, INC.
LONG-TERM PERFORMANCE BONUS PLAN
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o Program
o
This Long-Term
Performance Bonus Plan
(this "Plan") is to provide an incentive for the senior
management
to create sustainable shareholder value.
o
The Plan is tied to
shareholder value by
designing objectives which, if achieved, should increase
shareholder value and by linking compensation to performance.
o
The Committee may from time to time assign participation levels for each eligible Participant in this
Plan. Each
participation
level for a designated Participant shall be set forth in an Award
Agreement which may be
granted by the Committee from time to time to eligible Participants and
which shall
in any event be subject to the terms of this Plan including the Committee's
authority to modify or
terminate an Award
after granting an
Award Agreement
under this Plan.
Payments pursuant to
an Award Agreement
shall be made through
a Stock Award (as defined in the
Stock Plan) under the Company's 1999 Long-Term Incentive Plan (the "Stock Plan")
which provides
compensation based on
the Company's
stock and which has been previously approved by the
Company's shareholders. Payment of Awards, if any, under
this Plan shall be made annually.
o
Determination Criteria
Gate 1 -
As a condition for any
Award being paid under this Plan in any year, net revenues of the
Company for that year
must show an increase over net revenues of the Company for the
prior year.
Gate 2 -
In order for any Award
to be paid under this Plan in any year, the Company's Market
Capitalization at the end
of that year must equal or exceed the Company's Benchmark Market
Capitalization at the end of such year.
Gate 3 -
No Award shall be paid
for any applicable year unless the Annual Growth Rate for such year
shall exceed the
Base Growth Rate.
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MICROTEK MEDICAL HOLDINGS, INC.
LONG-TERM
PERFORMANCE BONUS PLAN
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o
Calculation Rules
Rule 1 -
The bonus pool for
each applicable
year under this Plan
shall equal the product of the Company's EBITDA for
such year multiplied
by the sum of the following two percentages: (i) 100% of the amount (not to
exceed five
percentage points) by
which the Annual
Growth Rate exceeds the Base Growth Rate for such year and (ii) 50%
of
the amount (in excess of five percentage points) by which such Annual
Growth Rate
exceeds such Base Growth
Rate.
Rule 2 -
On or about the
applicable Pay Date
beginning March 31,
2007 and continuing for the following two years, the
bonus pool shall be
paid among the
Participants
for the applicable year based upon their respectively
designated
participation levels
multiplied
by the amount of the
bonus pool as
determined by the
Committee
based on the Company's
performance for the preceding year (the amount of each such award
to Participants,
the
"Award Amount").
Payment of the Award
Amount shall be made
in the form of a Stock Award under the Company's
Stock Plan covering that number of shares equal to the quotient of
the Award Amount
divided by the Fair Market
Value (as defined in the Stock Plan) of the Company's shares on the Pay Date,
with any resulting fractional
share being eliminated. The form of the Stock Award is attached to
this Plan.
o
Administration
EBITDA -
Calculated from
audited financial statements
Pay Dates - 03/31 (or
such earlier date as may be selected in the sole discretion of the
Committee (as defined below))
provided the payee's Date of Termination shall not have previously
occurred.
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MICROTEK MEDICAL HOLDINGS, INC.
LONG-TERM PERFORMANCE BONUS PLAN
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o Other Terms and Conditions
Adjustments - The Committee shall have authority
from time-to-time,
at its discretion,
to terminate this Plan
or make such
adjustments in this Plan as it deems appropriate and in the best
interest of the Company. Any such adjustment
may be made regardless
of whether or not such
adjustment shall
result in a decrease in or elimination of the
amount of Award
compensation payable
hereunder and whether or not such adjustment is made before or
after the
accrual of an installment of the bonus pool. For these purposes, there shall be no vested right of
any person
who may from
time-to-time
participate in this Plan to any Awards which may potentially arise
under this Plan.
Without limiting the
foregoing,
the Committee
may from time-to-time adjust the allocation to each person
participating in the Plan and the size of the bonus pool under this
Plan.
Withholding - The Company and its successors shall have the right to deduct
from amounts
payable hereunder all amounts
required to be deducted and withheld in accordance with social security taxes and all applicable federal,
state and local taxes
and charges as may now
be in effect or which may be hereafter enacted or required as
charges in the compensation of the Participant.
Transferability - Interests under this Plan are not
transferable.
Administration - The authority to manage and
control the operation
and the administration
of this Plan shall be
vested in the
Committee. The
interpretation
of this Plan by the
Committee and any decision made by it with respect to this
Plan shall be final and binding on all persons.
Disputes
- Any controversy or claim between the Company and a
Participant shall be
settled by arbitration in accordance
with the provisions of a Participant's employment agreement with
the Company, if any.
Not an Employment- This Plan does
not confer on any
Participant any right
with respect to
continuance of
employment
or other
Contract
service with the
Company or any Related Company, nor will it interfere in any way with any right of
the
Company or any Related Company or otherwise to terminate or modify
the terms of such
Participant's
employment
or other service at any time.
Construction - This Plan shall be governed and
interpreted in accordance with the laws of the State of
Georgia.
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MICROTEK MEDICAL HOLDINGS, INC.
LONG-TERM PERFORMANCE BONUS PLAN
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o Defined Terms
The terms listed below shall be
defined as follows:
"Annual Growth Rate"- For any particular
year, the rate of increase, if any, in EBITDA for that year over
EBITDA for the immediately
preceding year, expressed as a percentage.
"Base Growth Rate" - For any particular year, the higher of (i)
ten percent (10%) or (ii) the lower of (A) twenty percent (20%)
or
(B) the average of the Annual Growth Rates over the three preceding
years.
"Benchmark Market - For any particular year,
the product of the Benchmark Multiple multiplied by the EBITDA for
such year.
Capitalization"
"Benchmark Multiple"- 80% of the
quotient obtained by dividing (i) the product of (A) the average of the closing
prices of the
Company's shares on The Nas
