1
EXHIBIT 11
HEALTHDYNE TECHNOLOGIES, INC.
RETIREMENT BENEFIT AWARD FOR _________________
Section 1.
PURPOSE
The purpose of this Agreement is to recognize the valuable services of
("Executive") to Healthdyne Technologies, Inc., a Georgia corporation (the
"Company"), and to its predecessor, Healthdyne, Inc., a Georgia Corporation
("Healthdyne"), and to provide a targeted level of monthly retirement income to
Executive.
Section 2.
BENEFITS
2.1 Timing and Amount.
a. General. If Executive has completed 10 Years of Service when Executive's
employment with the Company (and any related entity described in Section
2.1(d)(8)) terminates, Executive will be entitled to receive a monthly
Retirement Benefit beginning when he reaches age 65 or terminates employment,
whichever occurs later. This Retirement Benefit for any month will equal the
amount which when added to Executive's Social Security Benefit, Other
Retirement Benefit, and Disability Benefit for such month will equal
Executive's Target Retirement Income for such month.
Thus, for any month, Executive's
Retirement Benefit + SSB + ORB + DB = TRI.
The amount of the Retirement Benefit may vary from month to month depending on
the amount of Executive's Social Security Benefit, Other Retirement Benefit and
Disability Benefit for such month.
b. Early Retirement. If Executive has completed 10 Years of Service when
Executive's employment with the Company (and any related entity described in ss.
2.1(d)(8)) terminates and such termination occurs before Executive reaches age
65, he can elect to receive an Early Retirement Benefit at anytime after the
later of his fifty-fifth birthday or termination of employment with the Company.
Election for Early Retirement must be made in writing at least 60 days prior to
the commencement of benefits. If Executive elects Early Retirement, the amount
of his benefit will be reduced (relative to the benefit which would have been
payable at age 65) to reflect its early commencement. His Early Retirement
Benefit for any month will equal the amount which when added to Executive's
Social Security Benefit, Other Retirement Benefit and Disability Benefit for
such month equals his Target Retirement Income for such month multiplied by the
applicable Early Retirement Factor ("ERF") in Section 2.2.
2
Thus, for any month, Executive's
Early Retirement Benefit + SSB + ORB + DB = TRI x ERF.
The amount of this Early Retirement Benefit may vary from month to month
depending on the amount of Executive's SSB, ORB and DB for such month.
c. Payment Form. If Executive does not have a Spouse on the date his Retirement
Benefit or Early Retirement Benefit commences, his monthly benefit will be paid
to him for his life only based on a TRI determined under Section 2.1(d)(7) or,
in the case of an Early Retirement Benefit, a reduced TRI. Except as described
below, if Executive has a Spouse on the date his Retirement Benefit or Early
Retirement Benefit commences, he will receive a reduced monthly benefit for his
life and, after his death, a monthly benefit will be paid to his surviving
Spouse for her life in an amount equal to 50% of the monthly benefit which
would have been payable to Executive if he had survived. The reduced monthly
benefit and surviving Spouse benefit will be determined by an actuary chosen by
the Company, and the resulting benefit will be equivalent in value to the
monthly benefit otherwise due to the Executive using the actuarial assumptions
listed in Section 4. However, the Executive will be treated as if he has no
Spouse on the date benefits commence if the Spouse dies prior to the payment of
the first monthly payment to Executive. An Executive who has a Spouse on the
date his Retirement Benefit or Early Retirement Benefit commences can elect to
have his benefit paid to him for his life only based on a TRI determined under
Section 2.1(d)(7) or, in the case of an Early Retirement Benefit, a reduced
TRI. Any such election must be made in writing within the 90-day period
immediately preceding the commencement of benefits in accordance with such
administrative procedures as the Company establishes for this purpose. Any such
election shall become irrevocable at the time so made.
d. Definitions. The following definitions apply for purposes of
determining Executive's benefit under this Section 2:
(1) Accrual Fraction - means a fraction, the numerator of which is the
lesser of 20 or Executive's actual Years of Service and the denominator
of which is the lesser of 20 or the number of Years of Service
Executive would complete if Executive continued employment with Company
until Executive reached age 65. The Accrual Fraction cannot exceed one.
(2) Average Compensation - means the arithmetic average of Executive's
annual base salary from the Company or Healthdyne for the three
calendar years for which Executive's base salary is the highest,
including (if applicable) the calendar year in which Executive
terminates employment.
2
3
(3) Disability Benefit ("DB") - means for any month the monthly
disability benefit, if any, actually paid to Executive under any
long-term disability plan maintained by the Company.
(4) Other Retirement Benefit ("ORB") - means for any month an amount
determined by the Company which is attributable to the benefit, if any,
provided to Executive under any defined benefit pension plan maintained
by the Company or any related entity for the benefit of Executive with
respect to employment services prior to the termination of employment
with the Company.
(5) Social Security Benefit ("SSB") - means zero for any month
beginning before Executive's Social Security retirement age, and
thereafter means the maximum monthly Social Security benefit that
Executive would be (or, in the event of Executive's death, is deemed by
the Company to have been) eligible to receive at such age determined
without regard to whether Executive commenced receiving Social Security
benefits earlier.
(6) Spouse - means the spouse to whom Executive has been legally
married in a civil or religious ceremony throughout the one year period
ending on the earlier of the date Executive's Retirement Benefit
commences or his date of death.
(7) Target Retirement Income ("TRI") - means for any Retirement Benefit
payable for Executive's life only, the monthly benefit beginning when
Executive reaches age 65 or terminates employment, whichever occurs
last, determined in accordance with the following formula based on
Executive's Average Compensation and Years of Service as of the date
Executive's employment with the Company terminates:
(60% x Average Compensation x Accrual Fraction) x 1/12.
(8) Year of Service - means each calendar year in which Executive
completes at least 1000 hours of employment with the Company
(plus, in the event that Executive is entitled to compensation under
the Non-competition Agreement dated ___________________, as amended or
extended or any successor or replacement agreement or arrangements
with respect to such matters, three(3) years.) Employment with
Healthdyne or with any direct or indirect corporation or entity in
which Company owns in excess of 50% of the outstanding voting stock
shall for all purposes under this Agreement be deemed to constitute
employment with the Company.
With respect to calendar years which predate the date of this
Agreement, the parties agree that Executive completed 1,000 hours of
employment with respect to all calendar years set forth on Exhibit A
hereto.
3
4
2.2 Early Retirement Factor. The early retirement factors set forth below are
applied to determine the Early Retirement Benefit under Section 2.1(b) and any
survivor benefit which commences early under Section 2.3 based on Executive's
age when he begins receiving his Early Retirement Benefit (or, if payments
begin after Executive's death, the age Executive would have been when
Executive's Spouse begins receiving the survivor benefit):
.50 at age 55 .67 at age 60
.53 at age 56 .73 at age 61
.57 at age 57 .80 at age 62
.60 at age 58 .87 at age 63
.63 at age 59 .93 at age 64
2.3 Survivor Benefit. If benefits under this Agreement are payable in a joint
and survivor form and Executive dies while receiving benefits under this
Agreement, payments will begin to his surviving Spouse following Executive's
death in an amount each month equal to 50% of the monthly benefit which would
have been payable to Executive if he had survived. If Executive dies after
completing 10 Years of Service but before receiving any benefits under this
Agreement, his Spouse shall be entitled to receive the monthly survivor benefit
which would have been payable to her if Executive had terminated his employment
with Company on the earlier of (a) his date of death, or (b) the date his
employment terminated, survived to age 65 and died after beginning to receive
benefits in the joint and survivor form. Payment of this monthly survivor
benefit will begin when Executive would have reached age 65 or his date of
death, whichever occurs later, unless his surviving Spouse elects to begin
receiving the survivor benefit when Executive would have reached age 55 or
Executive's date of death, whichever occurs later. An election for early
commencement must be made in writing within the 6-month period beginning on
Executive's date of death in accordance with such administrative procedures as
Company establishes for this purpose. Company will reduce the amount of the
survivor benefit to reflect its early commencement using the Early Retirement
Factors in Section 2.2.
2.4 Less Than 10 Years of Service. No benefit shall be paid to Executive or on
his behalf if Executive's employment with the Company and any related entity
described in Section 2.1(d)(8) terminates before Executive has completed 10
Years of Service.
Section 3.
The Company in its discretion exercised in good faith may forfeit the
Executive's benefit entirely if (a) Executive breaches any material term of any
applicable invention, confidentiality or noncompetition agreement in a manner
which directly results in an economic loss to the Company in an amount that is
material to its financial condition, (b) Executive intentionally and in bad
faith fails to provide information regarding Other Retirement Benefits or (c)
Executive institutes any legal action against the Company or any related
corporation or entity for which Years of Service are included under this
Agreement other than (i) an action by or on behalf of Executive to enforce the
terms and conditions of this Agreement, (ii) an action for recovery or
protection under the corporate
4
5
indemnification provided to Executive in the course of performing his duties on
behalf of Company or any related corporation or entity, including, without
limitation, an action under any applicable director and officer liability
insurance available, or (iii) as a counterclaim or defense to any claim asserted
by Company or any related corporation or entity against Executive.
Section 4.
SOURCE OF BENEFIT PAYMENTS
Unless there is a Change in Control of the Company, this benefit shall be paid
by the Company from its general assets or by a trust established for the
specific purpose of paying such benefit. No person shall have any right,
interest or claim whatsoever to the payment of this benefit from any person
whomsoever other than Company or such trust established for such purpose, and no
person shall have any right, interest or claim whatsoever to the payment of this
benefit which is superior in any manner to the right, interest, or claim of any
other general and unsecured creditor of the Company.
If a "Change of Control" does occur, all benefits accrued to date become
immediately vested and Executive in his discretion exercised at any time
thereafter may require the Company on behalf of Executive to place in a grantor
trust, of the type and with the terms and conditions of the Trust attached as
Exhibit B hereto, an amount of money which is equal to the present value of
Executive's benefits accrued to date and, on an annual basis thereafter, shall
make additional contributions for any additional benefit accruals of Executive.
The value is to be determined by an actuary (qualified to function as an actuary
under the Employee Retirement Income Security Act (ERISA)) using the following
assumptions:
Interest Discount 7%
Mortality 1983 GAM
Cost of Living Increase for Social
Security Benefits 3%
A delay by Executive in the making of a request for a trust shall in no way
compromise or invalidate Executive's rights with respect thereto, and Company
shall promptly honor such request once made.
Any assets transferred to a trust pursuant to a Change of Control will be
irrevocably committed to paying benefits under this Agreement and, in no event,
can any assets of such trust revert to the Company. The Executive can request
immediate payment from the trustee of any amounts necessary to cover the payment
of taxes which are due from the Executive as a result of the transfer of assets
to the trust or as a result of investment income earned by such trust.
For purposes of this Agreement, "Change in Control" shall mean changes in the
ownership of a corporation, changes in the effective control of a corporation
and changes in ownership of a substantial portion of a corporation's assets all
as defined, discussed and illustrated in Section 280G of the Internal Revenue
Code and the duly promulgated Treasury Regulations thereunder, and the
disposition of a
5
6
substantial portion of the corporation's assets as defined in (D) below. Without
limiting the foregoing and by way of example:
(A) A change in the ownership of a corporation occurs on the date that
any one person, or more than one person acting as a group, acquires ownership of
stock of that corporation that, together with stock held by such person or
group, possess more than fifty percent (50%) of the total fair market value or
total voting power of the stock of such corporation. An increase in the
percentage of stock owned by any one person, or persons acting as a group, as a
result of a transaction in which the corporation acquires its stock in exchange
for property will be treated as an acquisition of stock.
(B) A change in the effective control of a corporation occurs on the
date that either: any one person, or more than one person acting as a group,
acquires (or has acquired during the twelve (12) month period ending on the date
of the most recent acquisition by such person or persons) ownership of stock of
the corporation possessing twenty percent (20%) or more of the total voting
power of the stock of such corporation; or a majority of members of the
corporation's board of directors is replaced during any twelve (12) month period
by directors whose appointment or election is not endorsed by a majority of the
members of the corporation's Board of Directors who where directors prior to the
date of the appointment or election of the first of such new directors.
(C) A change in the ownership of a substantial portion of the
corporation's assets occurs on the date that any one person, or more than one
person acting as a group, acquires (or has acquired during the twelve (12) month
period ending on the date of the most recent acquisition by such person or
persons) assets from the corporation that have a total fair market value equal
to or more than one-third of the total fair market value of all of the assets of
the corporation immediately prior to such acquisition or acquisitions. The
transfer of assets by a corporation is not treated as a change in the ownership
of such assets if the assets are transferred: to a shareholder of the
corporation (immediately before the asset transfer) in exchange for such
shareholder's capital stock of the corporation having a fair market value
approximately equal to the fair market value of such assets; or to an entity,
fifty percent (50%) or more of the total value or voting power of which is
owned, directly or indirectly, by the corporation.
(D) A disposition of a substantial portion of a corporation's assets
occurs on the date that the corporation transfers assets by sale, distribution
to shareholders, assignment to creditors, foreclosure or otherwise, in a
transaction or transactions not in the ordinary course of the corporation's
business (or has made such transfers during the twelve (12) month period ending
on the date of the most recent such transfer of assets) that have a total fair
market value equal to or more than one-third of the total fair market value of
all of the assets of the corporation as of the date immediately prior to the
first such transfer or transfers. The transfer of assets by a corporation is not
treated as a disposition of a substantial portion of the corporation's assets if
the assets are transferred to an entity, fifty percent (50%) or more of the
total value or voting power of which is owned, directly or indirectly, by the
Company.
6
7
For purposes of the provisions of this Agreement defining "Change in Control,"
(i) references to the Company in this Agreement include the Georgia corporation
known as Healthdyne Technologies, Inc. as of the date of execution of this
Agreement, and any corporation which is the legal successor to such corporation
by virtue of merger or share exchange; and (ii) the terms "person," "acting as a
group" and "ownership" shall have the meanings prescribed in Sections 3(a)(9)
and 13(d)(3) of the Securities Exchange Act of 1934, as amended, and Rule 13d-3
promulgated thereunder provided; however, that in any merger, consolidation or
share exchange in which less than fifty percent (50%) of the outstanding voting
securities of the Company or its successor corporation are held by the former
shareholders of the Company, the shareholders of the corporation or corporations
who acquired ownership of fifty percent (50%) or more of the surviving
corporations shall be deemed to have acted as a group, resulting in a change in
ownership under (A) above.
Section 5.
NOT A CONTRACT OF EMPLOYMENT
This benefit does not grant Executive the right to remain an employee of Company
for any specific term of employment or in any specific capacity or at any
specific rate of compensation.
Section 6.
NO ALIENATION OR ASSIGNMENT
Neither Executive nor his Spouse shall have any right or power whatsoever to
alienate, commute, anticipate or otherwise assign at law or equity all or any
portion of this benefit, and Company shall have the right, in the event of any
such action, to suspend temporarily or terminate permanently the payment of this
benefit to, or on behalf of, Executive or his Spouse if Executive or his Spouse
attempt to do so.
Section 7.
ERISA
The Company intends that this Agreement come within the various exceptions and
exemptions to ERISA for a plan maintained for a "select group of management or
highly compensated employees" as described in ERISA Sections 201(2), 301(a)(3),
and 401(a)(1), and any ambiguities in this document shall be construed to effect
that intent.
7
8
Section 8.
ADMINISTRATION, AMENDMENT AND TERMINATION
The Board of Directors of the Company shall have all powers necessary to
interpret and administer this award, to amend this award (and any related
exhibits) in writing from time to time in any respect whatsoever and to
terminate this award in writing at any time; provided, however, that any such
amendment or termination shall not be applied retroactively to deprive
Executive of all or any part of the benefits which have accrued to the date of
such amendment or termination. The Board of Directors also shall have the power
to delegate the exercise of all or any part of its powers to such other person
or persons as the Board deems appropriate under the circumstances. If a claim
for benefits under this Agreement is denied, the Board of Directors of the
Company shall provide written notice to Executive or his Spouse setting forth
the specific reasons for such denial and shall afford Executive or his Spouse a
reasonable opportunity for a full and fair review of the decision denying
benefits under this Agreement as required by ERISA Section 503. Reference to
the Company herein shall include any successor in interest to the Company or of
all or a substantial part of its business or assets (whether by merger, sale of
stock, sale of assets or otherwise) and this document shall be binding upon any
such successor and of any successor thereto.
Section 9.
CONSTRUCTION
The headings and subheadings set forth in this document are intended for
convenience only and have no substantive meaning whatsoever. In the construction
of this document, the masculine shall include the feminine and the singular
shall include the plural. This document will be construed in accordance with the
laws of the State of Georgia to the extent not preempted by XXXXX.
8
9
Section 10.
EFFECTIVE DATE
This Agreement shall supersede the Retirement Benefit Award for the Executive
dated _________________, and shall become effective on the last to occur of (i)
the acceptance of this Agreement by Executive, or (ii) _________________.
HEALTHDYNE TECHNOLOGIES, INC.
By:
Title:
Date:
Accepted this _____ day of
_____________________199___
___________________________
9
10
HEALTHDYNE TECHNOLOGIES, INC.
RETIREMENT BENEFIT AWARD FOR_______
Section 1.
PURPOSE
The purpose of this Agreement is to recognize the valuable services of
______________________("Executive") to Healthdyne Technologies, Inc., a Georgia
corporation (the "Company"), and to its predecessor, Healthdyne, Inc., a Georgia
Corporation ("Healthdyne"), and to provide a targeted level of monthly
retirement income to Executive.
Section 2.
BENEFITS
2.1 Timing and Amount.
a. General. If Executive has completed 10 Years of Service when Executive's
employment with the Company (and any related entity described in Section
2.1(d)(8)) terminates, Executive will be entitled to receive a monthly
Retirement Benefit beginning when he reaches age 65 or terminates employment,
whichever occurs later. This Retirement Benefit for any month will equal the
amount which when added to Executive's Social Security Benefit, Other
Retirement Benefit, and Disability Benefit for such month will equal
Executive's Target Retirement Income for such month.
Thus, for any month, Executive's
Retirement Benefit + SSB + ORB + DB = TRI.
The amount of the Retirement Benefit may vary from month to month depending on
the amount of Executive's Social Security Benefit, Other Retirement Benefit and
Disability Benefit for such month.
b. Early Retirement. If Executive has completed 10 Years of Service when
Executive's employment with the Company (and any related entity described in
Section 2.1(d)(8)) terminates and such termination occurs before Executive
reaches age 65, he can elect to receive an Early Retirement Benefit at anytime
after the later of his fifty-fifth birthday or termination of employment with
the Company. Election for Early Retirement must be made in writing at least 60
days prior to the commencement of benefits. If Executive elects Early
Retirement, the amount of his benefit will be reduced (relative to the benefit
which would have been payable at age 65) to reflect its early commencement. His
Early Retirement Benefit for any month will equal the amount which when added
to Executive's Social Security Benefit, Other Retirement Benefit and Disability
Benefit for such month equals his Target Retirement Income for such month
multiplied by the applicable Early Retirement Factor ("ERF") in Section 2.2.
11
Thus, for any month, Executive's
Early Retirement Benefit + SSB + ORB + DB = TRI x ERF.
The amount of this Early Retirement Benefit may vary from month to month
depending on the amount of Executive's SSB, ORB and DB for such month.
c. Payment Form. If Executive does not have a Spouse on the date his Retirement
Benefit or Early Retirement Benefit commences, his monthly benefit will be paid
to him for his life only based on a TRI determined under Section 2.1(d)(7) or,
in the case of an Early Retirement Benefit, a reduced TRI. Except as described
below, if Executive has a Spouse on the date his Retirement Benefit or Early
Retirement Benefit commences, he will receive a reduced monthly benefit for his
life and, after his death, a monthly benefit will be paid to his surviving
Spouse for her life in an amount equal to 50% of the monthly benefit which
would have been payable to Executive if he had survived. The reduced monthly
benefit and surviving Spouse benefit will be determined by an actuary chosen by
the Company, and the resulting benefit will be equivalent in value to the
monthly benefit otherwise due to the Executive using the actuarial assumptions
listed in Section 4. However, the Executive will be treated as if he has no
Spouse on the date benefits commence if the Spouse dies prior to the payment of
the first monthly payment to Executive. An Executive who has a Spouse on the
date his Retirement Benefit or Early Retirement Benefit commences can elect to
have his benefit paid to him for his life only based on a TRI determined under
Section 2.1(d)(7) or, in the case of an Early Retirement Benefit, a reduced
TRI. Any such election must be made in writing within the 90-day period
immediately preceding the commencement of benefits in accordance with such
administrative procedures as the Company establishes for this purpose. Any such
election shall become irrevocable at the time so made.
d. Definitions. The following definitions apply for purposes of
determining Executive's benefit under this Section 2:
(1) Accrual Fraction - means a fraction, the numerator of which is the
lesser of 20 or Executive's actual Years of Service and the denominator
of which is the lesser of 20 or the number of Years of Service
Executive would complete if Executive continued employment with Company
until Executive reached age 65. The Accrual Fraction cannot exceed one.
(2) Average Compensation - means the arithmetic average of Executive's
annual base salary from the Company or Healthdyne for the three
calendar years for which Executive's base salary is the highest,
including (if applicable) the calendar year in which Executive
terminates employment.
2
12
(3) Disability Benefit ("DB") - means for any month the monthly
disability benefit, if any, actually paid to Executive under any
long-term disability plan maintained by the Company.
(4) Other Retirement Benefit ("ORB") - means for any month an amount
determined by the Company which is attributable to the benefit, if any,
provided to Executive under any defined benefit pension plan maintained
by the Company or any related entity for the benefit of Executive with
respect to employment services prior to the termination of employment
with the Company.
(5) Social Security Benefit ("SSB") - means zero for any month
beginning before Executive's Social Security retirement age, and
thereafter means the maximum monthly Social Security benefit that
Executive would be (or, in the event of Executive's death, is deemed by
the Company to have been) eligible to receive at such age determined
without regard to whether Executive commenced receiving Social Security
benefits earlier.
(6) Spouse - means the spouse to whom Executive has been legally
married in a civil or religious ceremony throughout the one year period
ending on the earlier of the date Executive's Retirement Benefit
commences or his date of death.
(7) Target Retirement Income ("TRI") - means for any Retirement Benefit
payable for Executive's life only, the monthly benefit beginning when
Executive reaches age 65 or terminates employment, whichever occurs
last, determined in accordance with the following formula based on
Executive's Average Compensation and Years of Service as of the date
Executive's employment with the Company terminates:
(60% x Average Compensation x Accrual Fraction) x 1/12.
(8) Year of Service - means each calendar year in which Executive
completes at least 1000 hours of employment with the Company.
Employment with Healthdyne or with any direct or indirect corporation
or entity in which Company owns in excess of 50% of the outstanding
voting stock shall for all purposes under this Agreement be deemed to
constitute employment with the Company.
With respect to calendar years which predate the date of this
Agreement, the parties agree that Executive completed 1,000 hours of
employment with respect to all calendar years set forth on Exhibit A
hereto.
2.2 Early Retirement Factor. The early retirement factors set forth below are
applied to determine the Early Retirement Benefit under Section 2.1(b) and any
survivor benefit which commences early under Section 2.3 based on Executive's
age when he begins receiving his Early Retirement Benefit (or, if payments
3
13
begin after Executive's death, the age Executive would have been when
Executive's Spouse begins receiving the survivor benefit):
.50 at age 55 .67 at age 60
.53 at age 56 .73 at age 61
.57 at age 57 .80 at age 62
.60 at age 58 .87 at age 63
.63 at age 59 .93 at age 64
2.3 Survivor Benefit. If benefits under this Agreement are payable in a joint
and survivor form and Executive dies while receiving benefits under this
Agreement, payments will begin to his surviving Spouse following Executive's
death in an amount each month equal to 50% of the monthly benefit which would
have been payable to Executive if he had survived. If Executive dies after
completing 10 Years of Service but before receiving any benefits under this
Agreement, his Spouse shall be entitled to receive the monthly survivor benefit
which would have been payable to her if Executive had terminated his employment
with Company on the earlier of (a) his date of death, or (b) the date his
employment terminated, survived to age 65 and died after beginning to receive
benefits in the joint and survivor form. Payment of this monthly survivor
benefit will begin when Executive would have reached age 65 or his date of
death, whichever occurs later, unless his surviving Spouse elects to begin
receiving the survivor benefit when Executive would have reached age 55 or
Executive's date of death, whichever occurs later. An election for early
commencement must be made in writing within the 6-month period beginning on
Executive's date of death in accordance with such administrative procedures as
Company establishes for this purpose. Company will reduce the amount of the
survivor benefit to reflect its early commencement using the Early Retirement
Factors in Section 2.2.
2.4 Less Than 10 Years of Service. No benefit shall be paid to Executive or on
his behalf if Executive's employment with the Company and any related entity
described in Section 2.1(d)(8) terminates before Executive has completed 10
Years of Service.
Section 3.
The Company in its discretion exercised in good faith may forfeit the
Executive's benefit entirely if (a) Executive breaches any material term of any
applicable invention, confidentiality or noncompetition agreement in a manner
which directly results in an economic loss to the Company in an amount that is
material to its financial condition, (b) Executive intentionally and in bad
faith fails to provide information regarding Other Retirement Benefits or (c)
Executive institutes any legal action against the Company or any related
corporation or entity for which Years of Service are included under this
Agreement other than (i) an action by or on behalf of Executive to enforce the
terms and conditions of this Agreement, or of any other Non-competition
Agreement or arrangement with the Company or any related corporation or entity,
(ii) an action for recovery or protection under the corporate indemnification
provided to Executive in the course of performing his duties on behalf of
Company or any related corporation or entity, including, without limitation, an
action under any applicable director and officer liability insurance available,
or (iii) as a counterclaim or defense to any claim asserted by Company or any
related corporation or entity against Executive.
4
14
Section 4.
SOURCE OF BENEFIT PAYMENTS
Unless there is a Change in Control of the Company, this benefit shall be paid
by the Company from its general assets or by a trust established for the
specific purpose of paying such benefit. No person shall have any right,
interest or claim whatsoever to the payment of this benefit from any person
whomsoever other than Company or such trust established for such purpose, and no
person shall have any right, interest or claim whatsoever to the payment of this
benefit which is superior in any manner to the right, interest, or claim of any
other general and unsecured creditor of the Company.
If a "Change of Control" does occur, all benefits accrued to date become
immediately vested and Executive in his discretion exercised at any time
thereafter may require the Company on behalf of Executive to place in a grantor
trust, of the type and with the terms and conditions of the Trust attached as
Exhibit B hereto, an amount of money which is equal to the present value of
Executive's benefits accrued to date and, on an annual basis thereafter, shall
make additional contributions for any additional benefit accruals of Executive.
The value is to be determined by an actuary (qualified to function as an actuary
under the Employee Retirement Income Security Act (ERISA)) using the following
assumptions:
Interest Discount 7%
Mortality 1983 GAM
Cost of Living Increase for Social
Security Benefits 3%
A delay by Executive in the making of a request for a trust shall in no way
compromise or invalidate Executive's rights with respect thereto, and Company
shall promptly honor such request once made.
Any assets transferred to a trust pursuant to a Change of Control will be
irrevocably committed to paying benefits under this Agreement and, in no event,
can any assets of such trust revert to the Company. The Executive can request
immediate payment from the trustee of any amounts necessary to cover the payment
of taxes which are due from the Executive as a result of the transfer of assets
to the trust or as a result of investment income earned by such trust.
For purposes of this Agreement, "Change in Control" shall mean changes in the
ownership of a corporation, changes in the effective control of a corporation
and changes in ownership of a substantial portion of a corporation's assets all
as defined, discussed and illustrated in Section 280G of the Internal Revenue
Code and the duly promulgated Treasury Regulations thereunder, and the
disposition of a substantial portion of the corporation's assets as defined in
(D) below. Without limiting the foregoing and by way of example:
5
15
(A) A change in the ownership of a corporation occurs on the date that
any one person, or more than one person acting as a group, acquires ownership of
stock of that corporation that, together with stock held by such person or
group, possess more than fifty percent (50%) of the total fair market value or
total voting power of the stock of such corporation. An increase in the
percentage of stock owned by any one person, or persons acting as a group, as a
result of a transaction in which the corporation acquires its stock in exchange
for property will be treated as an acquisition of stock.
(B) A change in the effective control of a corporation occurs on the
date that either: any one person, or more than one person acting as a group,
acquires (or has acquired during the twelve (12) month period ending on the date
of the most recent acquisition by such person or persons) ownership of stock of
the corporation possessing twenty percent (20%) or more of the total voting
power of the stock of such corporation; or a majority of members of the
corporation's board of directors is replaced during any twelve (12) month period
by directors whose appointment or election is not endorsed by a majority of the
members of the corporation's Board of Directors who where directors prior to the
date of the appointment or election of the first of such new directors.
(C) A change in the ownership of a substantial portion of the
corporation's assets occurs on the date that any one person, or more than one
person acting as a group, acquires (or has acquired during the twelve (12) month
period ending on the date of the most recent acquisition by such person or
persons) assets from the corporation that have a total fair market value equal
to or more than one-third of the total fair market value of all of the assets of
the corporation immediately prior to such acquisition or acquisitions. The
transfer of assets by a corporation is not treated as a change in the ownership
of such assets if the assets are transferred: to a shareholder of the
corporation (immediately before the asset transfer) in exchange for such
shareholder's capital stock of the corporation having a fair market value
approximately equal to the fair market value of such assets; or to an entity,
fifty percent (50%) or more of the total value or voting power of which is
owned, directly or indirectly, by the corporation.
(D) A disposition of a substantial portion of a corporation's assets
occurs on the date that the corporation transfers assets by sale, distribution
to shareholders, assignment to creditors, foreclosure or otherwise, in a
transaction or transactions not in the ordinary course of the corporation's
business (or has made such transfers during the twelve (12) month period ending
on the date of the most recent such transfer of assets) that have a total fair
market value equal to or more than one-third of the total fair market value of
all of the assets of the corporation as of the date immediately prior to the
first such transfer or transfers. The transfer of assets by a corporation is not
treated as a disposition of a substantial portion of the corporation's assets if
the assets are transferred to an entity, fifty percent (50%) or more of the
total value or voting power of which is owned, directly or indirectly, by the
Company.
For purposes of the provisions of this Agreement defining "Change in Control,"
(i) references to the Company in this Agreement include the Georgia corporation
known as Healthdyne Technologies, Inc. as of the date of execution of this
Agreement, and any corporation which is the legal successor to such corporation
by virtue of merger or share exchange; and (ii) the terms "person," "acting as a
group" and
6
16
"ownership" shall have the meanings prescribed in Sections 3(a)(9) and 13(d)(3)
of the Securities Exchange Act of 1934, as amended, and Rule 13d-3 promulgated
thereunder provided; however, that in any merger, consolidation or share
exchange in which less than fifty percent (50%) of the outstanding voting
securities of the Company or its successor corporation are held by the former
shareholders of the Company, the shareholders of the corporation or corporations
who acquired ownership of fifty percent (50%) or more of the surviving
corporations shall be deemed to have acted as a group, resulting in a change in
ownership under (A) above.
Section 5.
NOT A CONTRACT OF EMPLOYMENT
This benefit does not grant Executive the right to remain an employee of Company
for any specific term of employment or in any specific capacity or at any
specific rate of compensation.
Section 6.
NO ALIENATION OR ASSIGNMENT
Neither Executive nor his Spouse shall have any right or power whatsoever to
alienate, commute, anticipate or otherwise assign at law or equity all or any
portion of this benefit, and Company shall have the right, in the event of any
such action, to suspend temporarily or terminate permanently the payment of this
benefit to, or on behalf of, Executive or his Spouse if Executive or his Spouse
attempt to do so.
Section 7.
ERISA
The Company intends that this Agreement come within the various exceptions and
exemptions to ERISA for a plan maintained for a "select group of management or
highly compensated employees" as described in ERISA Sections 201(2), 301(a)(3),
and 401(a)(1), and any ambiguities in this document shall be construed to effect
that intent.
7
17
Section 8.
ADMINISTRATION, AMENDMENT AND TERMINATION
The Board of Directors of the Company shall have all powers necessary to
interpret and administer this award, to amend this award (and any related
exhibits) in writing from time to time in any respect whatsoever and to
terminate this award in writing at any time; provided, however, that any such
amendment or termination shall not be applied retroactively to deprive Executive
of all or any part of the benefits which have accrued to the date of such
amendment or termination. The Board of Directors also shall have the power to
delegate the exercise of all or any part of its powers to such other person or
persons as the Board deems appropriate under the circumstances. If a claim for
benefits under this Agreement is denied, the Board of Directors of the Company
shall provide written notice to Executive or his Spouse setting forth the
specific reasons for such denial and shall afford Executive or his Spouse a
reasonable opportunity for a full and fair review of the decision denying
benefits under this Agreement as required by ERISA Section 503. Reference to
the Company herein shall include any successor in interest to the Company or of
all or a substantial part of its business or assets (whether by merger, sale of
stock, sale of assets or otherwise) and this document shall be binding upon any
such successor and of any successor thereto.
Section 9.
CONSTRUCTION
The headings and subheadings set forth in this document are intended for
convenience only and have no substantive meaning whatsoever. In the construction
of this document, the masculine shall include the feminine and the singular
shall include the plural. This document will be construed in accordance with the
laws of the State of Georgia to the extent not preempted by XXXXX.
8
18
Section 10.
EFFECTIVE DATE
This Agreement shall supersede the Retirement Benefit Award for the Executive
dated _________________, and shall become effective on the last to occur of (i)
the acceptance of this Agreement by Executive, or (ii) ____________________.
HEALTHDYNE TECHNOLOGIES, INC.
By: ---------------------------------
Title: ---------------------------------
Date: ---------------------------------
Accepted this ______ day of
______________________, 199__
9
19
20
EXHIBIT A
YEARS OF SERVICE OF EACH EMPLOYEE
21
EXHIBIT B
TRUST UNDER HEALTHDYNE, INC. NONQUALIFIED RETIREMENT PLANS
This Agreement made this ____ day of _____________, 19__ by and between
Healthdyne, Inc. (Company) and ____________________, a commercial bank or trust
company acceptable to a majority of all participants and beneficiaries entitled
to benefit payments under the Plan(s), (Trustee);
WHEREAS, Company has adopted the nonqualified deferred compensation
Plan(s) as listed in Appendix A.
WHEREAS, Company has incurred or expects to incur liability under the
terms of such Plan(s) with respect to the individuals participating in such
Plan(s);
WHEREAS, Company wishes to establish a trust (hereinafter called
"Trust") and to contribute to the Trust assets that shall be held therein,
subject to the claims of Company's creditors in the event of Company's
Insolvency, as herein defined, until paid to Plan participants and their
beneficiaries in such manner and at such times as specified in the Plan(s);
WHEREAS, it is the intention of the parties that this Trust shall
constitute an unfunded arrangement and shall not affect the status of the
Plan(s) as an unfunded plan maintained for the purpose of providing deferred
compensation for a select group of management or highly compensated employees
for purposes of Title I of the Employee Retirement Income Security Act of 1974;
WHEREAS, it is the intention of Company to make contributions to the
Trust to provide itself with a source of funds to assist it in the meeting of
its liabilities under the Plan(s);
NOW, THEREFORE, the parties do hereby establish the Trust and agree
that the Trust shall be comprised, held and disposed of as follows:
SECTION I. ESTABLISHMENT OF TRUST
(a) Company hereby deposits with Trustee in trust _________ [insert
amount deposited], which shall become the principal of the Trust to be held,
administered and disposed of by Trustee as provided in this Trust Agreement.
(b) The Trust hereby established shall be irrevocable.
22
(c) The Trust is intended to be a grantor trust, of which Company is
the grantor, within the meaning of subpart E, part I, subchapter J, chapter 1,
subtitle A of the Internal Revenue Code of 1986, as amended, and shall be
construed accordingly.
(d) The principal of the Trust, and any earnings thereon shall be held
separate and apart from other funds of Company and shall be used exclusively for
the uses and purposes of Plan participants and general creditors as herein set
forth. Plan participants and their beneficiaries shall have no preferred claim
on, or any beneficial ownership interest in, any assets of the Trust. Any rights
created under the Plan(s) and this Trust Agreement shall be mere unsecured
contractual rights of Plan participants and their beneficiaries against Company.
Any assets held by the Trust will be subject to the claims of Company's general
creditors under federal and state law in the event of Insolvency, as defined in
Section 3(a) herein.
(e) Company, in its sole discretion, may at any time, or from time to
time, make additional deposits of cash or other property in trust with Trustee
to augment the principal to be held, administered and disposed of by Trustee as
provided in this Trust Agreement. Neither Trustee nor any Plan participant or
beneficiary shall have any right to compel such additional deposits.
(f) Company shall, as soon as possible, but in no event longer than 90
days following the establishment of this Trust, make an irrevocable contribution
to the Trust in an amount that is sufficient to pay each Plan participant or
beneficiary the benefits to which Plan participants or their beneficiaries would
be entitled pursuant to the terms of the Plan(s) as of the date on which this
Trust is established.
(g) Within 90 days following the end of each Plan year(s) after the
Trust is established, Company shall be required to irrevocably deposit
additional cash or other property to the Trust in an amount sufficient to pay
each Plan participant or beneficiary the benefits payable pursuant to the terms
of the Plan(s) as of the close of the Plan year(s).
-2-
23
SECTION 2. PAYMENTS TO PLAN PARTICIPANTS AND THEIR BENEFICIARIES.
(a) Company shall deliver to Trustee a schedule (the "Payment
Schedule") that indicates the amounts payable in respect of each Plan
participant (and his or her beneficiaries), that provides a formula or other
instructions acceptable to Trustee for determining the amounts so payable, the
form in which such amount is to be paid (as provided for or available under the
Plan(s), and the time of commencement for payment of such amounts. Except as
otherwise provided herein or in the Plan(s), Trustee shall make payments to the
Plan participants and their beneficiaries in accordance with such Payment
Schedule. The Trustee shall make provision for the reporting and withholding of
any federal, state or local taxes that may be required to be withheld with
respect to the payment of benefits pursuant to the terms of the Plan(s) and
shall pay amounts withheld to the appropriate taxing authorities or determine
that such amounts have been reported, withheld and paid by Company.
(b) The entitlement of a Plan participant or his or her beneficiaries
to benefits under the Plan(s) shall be determined in good faith by Company or
such party as it shall designate under the Plan(s), and any claim for such
benefits shall be considered and reviewed under the procedures set out in the
Plan(s).
(c) Company may make payment of benefits directly to Plan participants
or their beneficiaries as they become due under the terms of the Plan(s).
Company shall notify Trustee of its decision to make payment of benefits
directly prior to the time amounts are payable to participants or their
beneficiaries. In addition, if the principal of the Trust, and any earnings
thereon, are not sufficient to make payments of benefits in accordance with the
terms of the Plan(s), Company shall make the balance of each such payment as it
falls due. Trustee shall notify Company where principal and earnings are not
sufficient.
SECTION 3. TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO TRUST BENEFICIARY WHEN
COMPANY IS INSOLVENT.
(a) Trustee shall cease payment of benefits to Plan participants and their
beneficiaries if the Company is Insolvent. Company shall be considered
"Insolvent" for purposes of this Trust Agreement if (i) Company is unable to
pay its debts as they become due, or (ii) Company is subject to a pending
proceeding as a debtor under the United States Bankruptcy Code.
-3-
24
(b) At all times during the continuance of this Trust, as provided in
Section 1(d) hereof, the principal and income of the Trust shall be subject to
claims of general creditors of Company under federal and state law as set forth
below.
(1) The Board of Directors and the Chief Executive Officer of
Company shall have the duty to inform Trustee in writing of Company's
Insolvency. If a person claiming to be a creditor of Company alleges in
writing to Trustee that Company has become Insolvent, Trustee shall
determine whether Company is Insolvent and, pending such determination,
Trustee shall discontinue payment of benefits to Plan participants or
their beneficiaries.
(2) Unless Trustee has actual knowledge of Company's
Insolvency, or has received notice from Company or a person claiming to
be a creditor alleging that Company is Insolvent, Trustee shall have no
duty to inquire whether Company is Insolvent. Trustee may in all events
rely on such evidence concerning Company's solvency as may be furnished
to Trustee and that provides Trustee with a reasonable basis for making
a determination concerning Company's solvency.
(3) If at any time Trustee has determined that Company is
Insolvent, Trustee shall discontinue payments to Plan participants or
their beneficiaries and shall hold the assets of the Trust for the
benefit of Company's general creditors. Nothing in this Trust Agreement
shall in any way diminish any rights of Plan participants or their
beneficiaries to pursue their rights as general creditors of Company
with respect to benefits due under the Plan(s) or otherwise.
(4) Trustee shall resume the payment of benefits to Plan
participants or their beneficiaries in accordance with Section 2 of
this Trust Agreement only after Trustee has determined that Company is
not Insolvent (or is no longer Insolvent).
(c) Provided that there are sufficient assets, if Trustee discontinues
the payment of benefits from the Trust pursuant to Section 3(b) hereof and
subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments due to Plan
participants or their beneficiaries under the terms of the Plan(s) for the
period of such discontinuance, less the aggregate amount of any payments made to
Plan participants or their beneficiaries by Company in lieu of the payments
provided for hereunder during any such period of
-4-
25
discontinuance.
SECTION 4. PAYMENTS TO COMPANY.
Except as provided in Section 3 hereof, Company shall have no right or
power to direct Trustee to return to Company or to divert to others any of the
Trust assets before all payment of benefits have been made to Plan participants
and their beneficiaries pursuant to the terms of the Plan(s).
SECTION 5. INVESTMENT AUTHORITY.
(a) In no event may Trustee invest in securities (including stock or
rights to acquire stock) or obligations issued by Company, other than a de
minimis amount held in common investment vehicles in which Trustee invests. All
rights associated with assets of the Trust shall be exercised by Trustee or the
person designated by Trustee, and shall in no event be exercisable by or rest
with Plan participants.
[(B) THE TRUSTEE AND COMPANY SHALL AGREE TO SUCH OTHER INVESTMENT
POWERS OF THE TRUSTEE AS ARE NECESSARY FOR THE ESTABLISHMENT AND PROPER
ADMINISTRATION OF THE TRUST; PROVIDED, HOWEVER, THAT SUCH INVESTMENT POWERS ARE
STANDARD AMONG THE INDUSTRY AND DO NOT CONFLICT WITH THE TERMS OF THE TRUST AS
SET FORTH HEREIN.]
SECTION 6. DISPOSITION OF INCOME.
During the term of this Trust, all income received by the Trust, net of
expenses and taxes, shall be accumulated and reinvested.
SECTION 7. ACCOUNTING BY TRUSTEE.
Trustee shall keep accurate and detailed records of all investments,
receipts, disbursements, and all other transactions required to be made,
including such specific records as shall be agreed upon in writing between
Company and Trustee. Within 120 days following the close of each calendar year
and within 30 days after the removal or resignation of Trustee, Trustee shall
deliver to Company a written account of its administration of the Trust during
such year or during the period from the close of the last
-5-
26
preceding year to the date of such removal or resignation, setting forth all
investments, receipts, disbursements and other transactions effected by it,
including a description of all securities and investments purchased and sold
with the cost or net proceeds of such purchases or sales (accrued interest paid
or receivable being shown separately), and showing all cash, securities and
other property held in the Trust at the end of such year or as of the date of
such removal or resignation, as the case may be.
SECTION 8. RESPONSIBILITY OF TRUSTEE.
(a) Trustee shall act with the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent person acting in like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims, provided, however, that
Trustee shall incur no liability to any person for any action taken pursuant to
a direction, request or approval given by Company which is contemplated by, and
in conformity with, the terms of the Plan(s) or this Trust and is given in
writing by Company. In the event of a dispute between Company and a party,
Trustee may apply to a court of competent jurisdiction to resolve the dispute.
(b) If Trustee undertakes or defends any litigation arising in
connection with this Trust, Company agrees to indemnify Trustee against
Trustee's costs, expenses and liabilities (including, without limitation,
attorneys' fees and expenses) relating thereto and to be primarily liable for
such payments. If Company does not pay such costs, expenses and liabilities in a
reasonably timely manner, Trustee may obtain payment from the Trust.
(c) Trustee may consult with legal counsel (who may also be counsel for
Company generally) with respect to any of its duties or obligations hereunder.
(d) Trustee may hire agents, accountants, actuaries, investment
advisors, financial consultants or other professionals to assist it in
performing any of its duties or obligations hereunder.
(e) Trustee shall have, without exclusion, all powers conferred on
Trustees by applicable law, unless expressly provided otherwise herein,
provided, however, that if an insurance policy is held as an asset of the Trust,
Trustee shall have no power to name a beneficiary of the policy other than the
Trust, to assign the
-6-
27
policy (as distinct from conversion of the policy to a different form) other
than to a successor Trustee, or to loan to any person the proceeds of any
borrowing against such policy.
(f) Notwithstanding any powers granted to Trustee pursuant to this
Trust Agreement or to applicable law, Trustee shall not have any power that
could give this Trust the objective of carrying on a business and dividing the
gains therefrom, within the meaning of Section 301.7701-2 of the Procedure and
Administrative Regulations promulgated pursuant to the Internal Revenue code.
SECTION 9. COMPENSATION AND EXPENSES OF TRUSTEE.
Company shall pay all administrative and Trustee's fees and expenses.
If not so paid, the fees and expenses shall be paid from the Trust.
SECTION 10. RESIGNATION AND REMOVAL OF TRUSTEE.
(a) Trustee may resign at any time by written notice to Company, which
shall be effective 45 days after receipt of such notice unless Company and
Trustee agree otherwise.
(b) Trustee may be removed by Company on 45 days notice or upon
shorter notice accepted by Trustee.
(c) If Trustee resigns or is removed within 5 years after this Trust is
established, Company shall apply to a court of competent jurisdiction for the
appointment of a successor Trustee or for instructions.
(d) Upon resignation or removal of Trustee and appointment of a
successor Trustee, all assets shall subsequently be transferred to the successor
Trustee. The transfer shall be completed within 45 days after receipt of notice
of resignation, removal or transfer, unless Company extends the time limit.
(e) If Trustee resigns or is removed, a successor shall be appointed,
in accordance with Section 11 hereof, by the effective date of resignation or
removal under paragraphs (a) or (b) of this section. If no such appointment has
been made, Trustee may apply to a court of competent jurisdiction for
appointment of a successor or for instructions. All expenses of Trustee in
connection with the proceeding shall be allowed as administrative expenses of
the Trust.
-7-
28
SECTION 11. APPOINTMENT OF SUCCESSOR.
If Trustee resigns or is removed in accordance with Section 10(a) or
(b) hereof, Company may appoint any unaffiliated third party, such as a bank
trust department or other party that may be granted corporate trustee powers
under state law, as a successor to replace Trustee upon resignation or removal.
The Company must obtain the prior written approval of a majority of the
participants and beneficiaries entitled to benefit payments under the Plan(s)
for the appointment of the successor Trustee, unless such appointment has been
made by a court of competent jurisdiction. The appointment shall be effective
when accepted in writing by the new Trustee, who shall have all of the rights
and powers of the former Trustee, (including ownership rights in the Trust
assets. The former Trustee shall execute any instrument necessary or reasonably
requested by Company or the successor Trustee to evidence the transfer.
SECTION 12. AMENDMENT OR TERMINATION.
(a) This Trust Agreement may be amended by a written instrument
executed by Trustee and Company with the prior written approval of all
participants and beneficiaries entitled to benefit payments pursuant to the
terms of the Plan(s). Notwithstanding the foregoing, no such amendment shall
conflict with the terms of the Plan(s), shall infringe on the benefits intended
to be provided under the Plan(s), reduce or restrict the assets which are the
subject of the Trust other than as required by Section 3, or shall make the
Trust revocable.
(b) The Trust shall not terminate until the date on which Plan
participants and their beneficiaries are no longer entitled to benefits pursuant
to the terms of the Plan(s). Upon termination of the Trust any assets remaining
in the Trust shall be returned to Company.
(c) Upon prior written approval of all participants or beneficiaries
entitled to payment of benefits pursuant to the terms of the Plan(s), Company
may terminate this Trust prior to the time all benefit payments under the
Plan(s) have been made. All assets in the Trust at termination shall be returned
to Company.
-8-
29
SECTION 13. MISCELLANEOUS.
(a) Any provision of this Trust Agreement prohibited by law shall be
ineffective to the extent of any such prohibition, without invalidating the
remaining provisions hereof.
(b) Benefits payable to Plan participants and their beneficiaries under
this Trust Agreement may not be anticipated, assigned (either at law or in
equity), alienated, pledged, encumbered or subjected to attachment, garnishment,
levy, execution or other legal or equitable process.
(c) This Trust Agreement shall be governed by and construed in
accordance with the laws of the state of _______________ [TO BE DETERMINED BY
THE TRUSTEE].
SECTION 14. EFFECTIVE DATE.
The effective date of this Trust Agreement shall be _______________,
19__.
-9-
