Exhibit 10.28
SUPPLEMENTAL RETIREMENT PLAN AGREEMENT
AGREEMENT made this 12th day of October, 2006 between:
CHC HELICOPTERS INTERNATIONAL INC. a company incorporated under the laws of Canada (the “Company”)
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RICK DAVIS, a senior executive employee of the Company (the “Employee”);
WHEREAS the Company is a subsidiary of CHC Helicopter Corporation (“CHC”);
WHEREAS the Employee is a highly valued senior executive employee of the Company currently occupying the position of Senior Vice President and Chief Financial Officer;
WHEREAS it is the intention of the Company to encourage the Employee to render long and valuable service to the Company in a senior executive position; and
WHEREAS it is proper under the circumstances to make suitable financial provision for the Employee upon his retirement from the Company.
WITNESS THEREFORE that in consideration of the mutual covenants and agreements set forth in this Agreement, the parties agree as follows:
| 1. | Purpose |
The Company has agreed to provide the Employee upon retirement with a certain level of benefits, and also to provide to the surviving beneficiary of the Employee a certain level of benefits, on the terms stated in this Agreement, to supplement the benefits provided to the Employee under the Registered Plan, theCanada Pension Plan, and any other Canadian or other national government pension plans for which the Employee is eligible to receive a pension. It is understood and agreed that this Agreement replaces any supplemental benefit arrangements in place between the Employee and Company or its parent, subsidiary or predecessor companies as at May 1st, 2006.
| 2. | Definitions |
In this Agreement,
| (a) | “Actuarial Equivalent” means a benefit of equal value, where the value is determined using such interest rate, mortality and other actuarial assumptions as may be recommended by an actuary, who shall be a Fellow of the Canadian Institute of Actuaries, and adopted by the Company. |
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| (b) | “Average Earnings” means the Employee’s average annual Earnings in the 3 calendar years of service with the Company which produce the highest average. |
| (c) | “Bridge Benefit” means the bridge benefit payable to an Employee under this Agreement, commencing as early as age 55 on a reduced basis or at age 60 on an unreduced basis and ending at age 65, as outlined in Section 4. |
| (d) | “Change of Control” means any of: |
| (i) | a sale, transfer or other disposition of all or substantially all of the property or assets of CHC or the Company other than to an affiliate; |
| (ii) | a merger or consolidation of CHC or the Company other than with an affiliate; |
| (iii) | any change in the holding, direct or indirect, of shares in the capital of CHC or the Company as a result of which a person, or a group of persons or persons acting jointly or in concert, or persons associated or affiliated with any such person or group, are in a position to exercise effective control of CHC or the Company, provided that for the purposes of this Agreement a person or group of persons holding shares and/or other securities in excess of the number which, directly or following conversion thereof, would entitle the holders thereof to cast more than 20% of the votes attaching to all shares in the capital of CHC or the Company which may be cast to elect directors of CHC or the Company shall be deemed to be in a position to exercise effective control of CHC or the Company; |
| (iv) | Incumbent Directors no longer constituting at least a majority of the Board of Directors of CHC at or prior to the conclusion of the first twelve months from the effective date of this Agreement. |
For the purposes of this paragraph (d), “Incumbent Directors” means those persons who are directors of CHC on the effective date of this Agreement and shall include any person who becomes a director of CHC thereafter and whose election, or nomination for election, by CHC’s shareholders was approved by a majority of the Incumbent Directors then on the Board of Directors of CHC.
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| (e) | “Continuous Service” means the Employee’s period of service, including any period of disability, with the Company or a predecessor company and includes any period of service with CHC or its subsidiary or predecessor companies prior to the effective date of this Agreement. The Employee’s period of Continuous Service shall include any notice period to which the Employee is entitled upon termination of employment with the Company other than for cause. As at October 1, 2006 the period of Continuous Service is deemed to be 7 years and 9 months. |
| (f) | “Earnings” means the Employee’s basic annual gross salary plus 100% of specified bonuses including, without limitation, bonuses under the Corporate Short Term Incentive Plan, paid in the year to the Employee. |
| (g) | “Registered Plan” means the Pension Plan for Employees of the Company and Participating Affiliates, which is registered under theIncome Tax Act and thePension Benefits Standards Act, 1985. |
| (h) | “Retirement Date” means the date the Employee reaches age 60. |
| (i) | “Beneficiary” means a beneficiary as defined in the Registered Plan and designated as such in writing by the Employee provided that each such person must, to constitute a beneficiary for the purposes of this Agreement, be an Eligible Spouse (as defined in the Registered Plan) or a child of the Employee or the estate of the Employee. |
| (j) | “Supplemental Retirement Benefit” means the lifetime benefit payable to the Employee under this Agreement, as outlined in Section 3. |
| (k) | “YMPE” means the year’s maximum pensionable earnings as outlined in theCanada Pension Plan. |
| (l) | “Eligible Spouse” means as defined in the Registered Plan. |
| 3. | Supplemental Retirement Benefit |
When the Employee retires from the Company on or after the Retirement Date, the Company will pay to the Employee after retirement until the Employee’s death, a monthly Supplemental Retirement Benefit equal to one twelfth of the sum of the following:
| (a) | 0.5% multiplied by the Average Earnings up to the YMPE in the year of retirement, multiplied by Continuous Service; plus |
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| (b) | 1.0% multiplied by the Average Earnings in excess of the YMPE in the year of retirement and up to the Average Earnings on which the maximum level of contribution to the Registered Plan is permitted under theIncome Tax Act in the year of retirement, multiplied by Continuous Service; plus |
| (c) | 2.0% multiplied by the Average Earnings in excess of the Average Earnings on which the maximum level of contribution to the Registered Plan is permitted under theIncome Tax Act in the year of retirement, multiplied by Continuous Service. |
| 4. | Bridge Benefit |
If the Employee retires on or after the Retirement Date but before reaching age 65, the Company will pay a monthly Bridge Benefit to the Employee during the period after retirement up until the date the Employee reaches age 65. This monthly Bridge Benefit shall be an amount equal to one twelfth of the product of 0.5% multiplied by the Average Earnings up to the YMPE in the year of retirement, multiplied by Continuous Service.
| 5. | Indexing |
After commencement of the payment of the Supplemental Retirement Benefit, the Supplemental Retirement Benefit and any Bridge Benefit will be increased each January 1 after retirement by 75% of the increase in the Consumer Price Index (established by Statistics Canada) for the previous 12 month period ending October 31, less 1%, subject to a maximum increase of 4% in any one year. The increase for the January 1 immediately following retirement will be multiplied by the ratio of the number of months since retirement to 12.
| 6. | Termination |
No Benefits Payable
| (a) | Subject to Sections 7 and 8, if the Employee’s employment with the Company is terminated for cause, no benefits will be payable under this Agreement. |
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Deferred Benefits
| (b) | If the Employee voluntarily terminates his employment with the Company before reaching the Retirement Date, but at the time of termination the Employee has completed at least 20 years of Continuous Service, or if the Company terminates the Employee’s employment for other than cause, the Employee will be entitled to a deferred Supplemental Retirement Benefit and Bridge Benefit, payable beginning at the Retirement Date and calculated based on Continuous Service, the YMPE and Average Earnings at the date of termination of employment. |
Early Commencement of Deferred Benefit
| (c) | If the terminated Employee is entitled to the deferred benefits described in paragraph (b), the Employee may elect to commence to receive the Supplemental Retirement Benefit and the Bridge Benefit as early as age 55, in which case the Supplemental Retirement Benefit and the Bridge Benefit will be calculated and paid as outlined above on the elected commencement date, subject to the following: |
| (i) | if the Employee was at least age 55 at the date of termination, the benefits will be reduced by 1/4% per month for each month that the elected commencement date precedes the Retirement Date; |
| (ii) | if the Employee was less than age 55 at the date of termination, the benefits will be reduced, based on the elected commencement date, to equal the Actuarial Equivalent of the deferred benefits payable commencing on the Retirement Date. |
| 7. | Death Benefits |
7.1 Death in Service
If the Employee dies on or after the date the sum of the Employee’s age plus years of Continuous Service total at least 60, but before terminating employment with the Company, the Employee’s Beneficiary will be entitled to both:
| (i) | subject to Section 7.5, an immediate lifetime pension equal to 60% of the Supplemental Retirement Benefit, calculated based on Continuous Service, the YMPE and the Employee’s Average Earnings at the date of his death and without reduction for early commencement; and |
| (ii) | a temporary pension, payable as and when the Employee would have attained 60 years of age, or payable immediately if the Employee had attained 60 as of the date of death, equal to 60% of the Bridge Benefit that the Employee |
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| would have been entitled to receive upon attaining age 60, or was entitled to receive upon retirement if the Employee had attained 60 as of the date of death, calculated based on Continuous Service, the YMPE and Employee’s Average Earnings as of the Employee’s death and payable until such Employee would have attained age 65. |
7.2 Death in Retirement
If the Employee dies after payment of the Supplemental Retirement Benefit has commenced, the retired Employee’s Beneficiary will be entitled to both
| (i) | subject to Section 7.5, an immediate lifetime pension equal to 60% of the Supplemental Retirement Benefit which the Employee was receiving at the time of his death; and |
| (ii) | a temporary pension equal to 60% of any Bridge Benefit the Employee was receiving at the date of death, payable until the Employee would have attained age 65 if he had not died. |
7.3 Death as Terminated Employee with Deferred Benefit
If the Employee is entitled to deferred benefits under paragraph 6(b) and dies at a time when he could have elected immediate early commencement of such deferred benefits under paragraph 6(c), the Employee’s Beneficiary will be entitled to
| (i) | subject to Section 7.5, an immediate lifetime pension equal to 60% of the Supplemental Retirement Benefit which the Employee would have been entitled to receive at the date of death had the Employee made an election under paragraph 6(c) immediately prior to death, and |
| (ii) | an immediate temporary pension, payable until the Employee would have attained age 65 if he had not died, equal to 60% of any Bridge Benefit which the Employee would have been entitled to receive at the date of death had the Employee made an election under paragraph 6(c) immediately prior to death. |
Otherwise, if the Employee is entitled to deferred benefits under paragraph 6(b) and dies prior to the time the Employee was eligible to elect immediate early commencement of such deferred benefits under paragraph 6(c), the Employee’s Beneficiary will be entitled to an immediate lifetime pension equal to the Actuarial Equivalent, based on the commencement date, of 60% of the sum of the Employee’s deferred Supplemental Retirement Benefit and Bridge Benefit payable commencing on the Retirement Date.
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7.4 No Commutation of Death Benefits
For greater certainty, death benefits payable under this Agreement cannot be commuted by the Beneficiary.
7.5 Limitation on Death Benefits
If the Beneficiary at the time of the death of the Employee is not the Employee’s Eligible Spouse, then the period of time during which benefits under Sections 7.1, 7.2, and 7.3 are payable to the Beneficiary shall be limited to the lifetime of the person who constituted the Eligible Spouse of the Employee at the date of entering into this Supplemental Retirement Plan Agreement.
| 8. | Change of Control |
In the event a Change of Control occurs, the following provisions shall apply in respect of all benefits under this Agreement, whether or not payment of such benefits has commenced:
| (a) | the Employee shall be vested in the benefits under this Agreement on the effective date of the Change of Control notwithstanding that his employment with the Company may terminate prior to either the Retirement Date; and |
| (b) | effective upon the effective date of the Change of Control, the Company shall secure full funding for all benefit liabilities under the Agreement through one or more renewable letters of credit which shall be irrevocable during the term specified therein. The Company shall maintain this funding arrangement in full force and effect, without interruption, until all benefits payable under the Agreement have been paid, unless the written consent of the Employee, or Beneficiary, as the case may be, is first obtained. |
| 9. | No Requirement to Fund |
Subject to Section 8, this Agreement does not provide for, nor does the Company have any obligation to pre-fund, annually or otherwise, all or any portion of the benefits under this Agreement.
| 10. | General Provisions |
| (a) | Nothing in this Agreement will limit, extend or otherwise affect the terms of any employment contract between the Company and the Employee nor will it be deemed to give the Employee the right to continue in the employment of the Company. |
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| (b) | The Company may appoint professional advisors to assist in the administration of this Agreement and may act on information provided by the advisors. |
| (c) | Modifications, amendments or changes to this Agreement will not be valid unless made in writing and signed by both the Company and the Employee. |
| (d) | The Employee may not assign, transfer, pledge or otherwise charge or encumber this Agreement or any right or interest under this Agreement. |
| (e) | The provisions of this Agreement will be construed as a whole in such manner as to carry out the purposes of the Agreement. If any provision of the Agreement is found to be invalid or unenforceable, in whole or in part, by a court of competent jurisdiction, the Agreement will be enforced and construed to the extent possible without regard to that portion of the provision found to be invalid or unenforceable. |
| (f) | This Agreement will be interpreted in accordance with the laws of the Province of British Columbia and, where applicable, the laws of Canada. |
| (g) | This Agreement will enure to the benefit of and be binding upon the Employee, the Company and, as applicable, their respective heirs, successors, assigns and legal representatives. |
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day and year first written above.
Signed, Sealed and Delivered in the presence of | )
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| Sylvain Allard | ||||
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| Rick Davis |
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