Exhibit 10.6
INVERNESS MEDICAL INNOVATIONS, INC.
EXECUTIVE BONUS PLAN
1. Purpose.
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The purpose of the Inverness Medical Innovations, Inc. Executive Bonus
Plan (the "Plan") is to retain certain senior executives of Inverness Medical
Innovations, Inc. (the "Company"), to properly compensate such executives for
their commitment to this new enterprise and to reward them in the event that the
Company achieves certain performance goals. It is the intent of the Company that
compensation payable under this Plan shall qualify as performance-based
compensation within the meaning of Section 162(m) of the Internal Revenue Code
of 1986, as amended (the "Code").
2. Effective Date.
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This Plan shall be effective as of August 10, 2001, subject to approval
by the stockholders of Inverness Medical Technology, Inc., the parent of the
Company. If such stockholder approval is not obtained, the Plan shall be null
and void.
3. Administration.
---------------
The Plan will be administered by the Compensation Committee of the
Board of Directors of the Company so long as such Committee is solely composed
of two or more outside directors, as defined in regulations issued in respect of
Section 162(m) of the Code (the "Administrator").
Subject to Section 13, the Administrator shall have sole discretionary
power to interpret the provisions of this Plan and to administer and make all
decisions and exercise all rights of the Company with respect to this Plan. The
Administrator shall have final authority to apply the provisions of the Plan and
shall also have the exclusive discretionary authority to make all other
determinations (including, without limitation, the interpretation and
construction of the Plan and the determination of relevant facts) regarding the
entitlement to benefits hereunder and the amount of benefits to be paid from the
Plan. The Administrator's exercise of this discretionary authority shall at all
times be in accordance with the terms of the Plan and shall be entitled to
deference upon review by any court, agency or other entity empowered to review
its decision, and shall be enforced provided that it is not arbitrary,
capricious or fraudulent.
4. Participation.
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The following individuals ("Participants") shall participate in the
Plan so long as they remain employed by the Company:
Ron Zwanziger
David Scott
Jerry McAleer
5. Performance Bonus Schedule I.
-----------------------------
Participants shall be entitled to receive the Performance Bonus
Payments listed in Schedule I below their names after the Administrator
certifies in writing that the average of the closing prices of the common stock
of the Company (as adjusted for any stock splits, stock dividends or the like)
for a period of 30 consecutive trading days ending on or before the applicable
Target Date (a "30-Day Average") has exceeded the Target Price per Share listed
beside the applicable Performance Bonus Payment in Schedule I, so long as such
Participant remains employed by the Company through the end of any such
30-consecutive-trading-day period.
The Administrator shall issue such written certification during the ten
day period beginning on the first day of January following the end of the
calendar year in which a 30-Day Average has exceeded any Target Price per Share
for the first time. If any Performance Bonus Payment is made to a Participant
for achievement of a 30-Day Average in excess of a Target Price per Share, no
additional Performance Bonus Payment shall be made with respect to such Target
Price per Share to such Participant.
SCHEDULE I
<Table>
<Caption>
----------------- -------------- -------------------------------------------------------------------------------------
TARGET DATE TARGET PRICE PERFORMANCE BONUS PAYMENTS
PER SHARE
----------------- -------------- -------------------------------------------------------------------------------------
----------------- -------------- ----------------------------- ----------------------------- -------------------------
Ron Zwanziger David Scott Jerry McAleer
----------------- -------------- ----------------------------- ----------------------------- -------------------------
----------------- -------------- ----------------------------- ----------------------------- -------------------------
12/31/2002 $28.125 $2,400,000 $850,000 $800,000
----------------- -------------- ----------------------------- ----------------------------- -------------------------
----------------- -------------- ----------------------------- ----------------------------- -------------------------
12/31/2003 $33.750 $2,400,000 plus any $850,000 plus any Schedule $800,000 plus any
Schedule I Performance I Performance Bonus for a Schedule I Performance
Bonus for a lower Target lower Target Price per Bonus for a lower
Price per Share not Share not previously paid Target Price per Share
previously paid not previously paid
----------------- -------------- ----------------------------- ----------------------------- -------------------------
----------------- -------------- ----------------------------- ----------------------------- -------------------------
12/31/2004 $39.375 $2,400,000 plus any $850,000 plus any Schedule $800,000 plus any
Schedule I Performance I Performance Bonus for a Schedule I Performance
Bonus for a lower Target lower Target Price per Bonus for a lower
Price per Share not Share not previously paid Target Price per Share
previously paid not previously paid
----------------- -------------- ----------------------------- ----------------------------- -------------------------
</Table>
Any Performance Bonus Payment earned pursuant to Schedule I on the
basis of the certification of the Administrator described above shall be paid
during the month of January in which such certification is required to be
issued.
6. Performance Bonus Schedule II.
------------------------------
Participants shall be entitled to receive the Performance Bonus
Payments listed in Schedule II below their names after the Administrator
certifies in writing that the average of the closing prices of the common stock
of the Company (as adjusted for any stock splits, stock
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dividends or the like) for a period of 30 consecutive trading days ending on or
before the applicable Target Date (a "30-Day Average") has exceeded the Target
Price per Share listed beside the applicable Performance Bonus Payment in
Schedule II, so long as such Participant remains employed by the Company through
the end of any such 30-consecutive-trading-day period.
The Administrator shall issue such written certification during the ten
day period beginning on the first day of January following the end of the
calendar year in which a 30-Day Average has exceeded any Target Price per Share
for the first time. If any Performance Bonus Payment is made to a Participant
for achievement of a 30-Day Average in excess of a Target Price per Share, no
additional Performance Bonus Payment shall be made with respect to such Target
Price per Share to such Participant.
SCHEDULE II
<Table>
<Caption>
----------------- -------------- -------------------------------------------------------------------------------------
TARGET DATE TARGET PRICE PERFORMANCE BONUS PAYMENTS
PER SHARE
----------------- -------------- -------------------------------------------------------------------------------------
----------------- -------------- ----------------------------- ----------------------------- -------------------------
Ron Zwanziger David Scott Jerry McAleer
----------------- -------------- ----------------------------- ----------------------------- -------------------------
----------------- -------------- ----------------------------- ----------------------------- -------------------------
12/31/2002 $33.750 $900,000 $750,000 $725,000
----------------- -------------- ----------------------------- ----------------------------- -------------------------
----------------- -------------- ----------------------------- ----------------------------- -------------------------
12/31/2003 $45.000 $900,000 plus any Schedule $750,000 plus any Schedule $725,000 plus any
II Performance Bonus for a II Performance Bonus for a Schedule II Performance
lower Target Price per lower Target Price per Bonus for a lower
Share not previously paid Share not previously paid Target Price per Share
not previously paid
----------------- -------------- ----------------------------- ----------------------------- -------------------------
----------------- -------------- ----------------------------- ----------------------------- -------------------------
12/31/2004 $56.250 $900,000 plus any Schedule $750,000 plus any Schedule $725,000 plus any
II Performance Bonus for a II Performance Bonus for a Schedule II Performance
lower Target Price per lower Target Price per Bonus for a lower
Share not previously paid Share not previously paid Target Price per Share
not previously paid
----------------- -------------- ----------------------------- ----------------------------- -------------------------
----------------- -------------- ----------------------------- ----------------------------- -------------------------
12/31/2005 $67.500 $900,000 plus any Schedule $750,000 plus any Schedule $725,000 plus any
II Performance Bonus for a II Performance Bonus for a Schedule II Performance
lower Target Price per lower Target Price per Bonus for a lower
Share not previously paid Share not previously paid Target Price per Share
not previously paid
----------------- -------------- ----------------------------- ----------------------------- -------------------------
</Table>
Any Performance Bonus Payment earned pursuant to Schedule II on the
basis of the certification of the Administrator described above shall be paid
during the month of January in which such certification is required to be
issued.
7. Withholding of Tax.
---------------------
Anything in this Plan to the contrary notwithstanding, all payments
required to be made by the Company hereunder shall be subject to the withholding
of such amounts as the Company
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reasonably may determine that it is required to withhold pursuant to applicable
federal, state, local or foreign law or regulation.
8. Amendment or Termination of Plan.
---------------------------------
The Company may amend or terminate this Plan at any time or from time
to time; provided, however, that no such amendment or termination shall
adversely affect the accrued, future or contingent rights of any Participant
without the written consent of such Participant.
9. Limitation of Company's Liability.
----------------------------------
Neither the Company, subject to its obligation to make payments as
provided for hereunder, nor any person acting on behalf of the Company shall be
liable for any act performed or the failure to perform any act with respect to
this Plan, except in the event and to the extent that there has been a judicial
determination of willful misconduct on the part of the Company or such person
with respect to this Plan. The Company is under no obligation to fund any of the
payments required to be made hereunder in advance of their actual payment or to
establish any reserves with respect to this Plan. Any benefits which become
payable hereunder shall be paid from the general assets of the Company. No
Participant, or his beneficiary or beneficiaries, shall have any right, other
than the right of an unsecured general creditor, against the Company in respect
of the benefits to be paid hereunder.
10. Assignability.
----------------
Except as otherwise provided by law, no benefit hereunder shall be
assignable, or subject to alienation, garnishment, execution or levy of any
kind, and any attempt to cause any benefit to be so subject shall be void.
11. No Contract for Continuing Services.
------------------------------------
This Plan shall not be construed as creating any contract for continued
services between the Company and any Participant and nothing herein contained
shall give any Participant the right to be retained as an employee of the
Company.
12. Non-Exclusivity.
----------------
Subject to Section 13, this Plan does not limit the authority of the
Company, the Administrator, or any subsidiary of the Company, to grant awards or
authorize any other compensation under any other plan or authority, including,
without limitation, awards or other compensation based on the same performance
goals used under this Plan. In addition, executives not selected to participate
in this Plan may participate in other plans of the Company.
13. Section 162(m) Conditions; Bifurcation of Plan.
-----------------------------------------------
It is the intent of the Company that this Plan and awards made
hereunder shall satisfy and be interpreted in a manner that, in the case of
Participants who are or may be persons whose compensation is subject to Section
162(m) of the Code, satisfies any applicable requirements as performance-based
compensation. Notwithstanding anything to the contrary in this Plan, the
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provisions of this Plan may at any time be bifurcated by the Administrator in
any manner so that certain provisions of this Plan intended (or required in
order) to satisfy the applicable requirements of Section 162(m) are applicable
only to persons whose compensation is subject to Section 162(m). The performance
goals set forth in Sections 5 and 6 were determined by the Compensation
Committee of Inverness Medical Technology, Inc., the parent of the Company.
14. Governing Law.
----------------
This Plan shall be construed, administered, and enforced in accordance
with the laws of the Commonwealth of Massachusetts.
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