EXHIBIT 10.25
THE AMENDED
HILLHAVEN CORPORATION
BOARD OF DIRECTORS RETIREMENT PLAN
Effective January 1, 1995
SECTION 1
STATEMENT OF PURPOSE
This Amended Board of Directors Retirement Plan (the "Plan") of The
Hillhaven Corporation has been adopted to attract, retain, motivate and provide
financial security to members of the Board of Directors who are not employees
of the Company (the "Participants"). This Amended Plan applies to Directors
whose Termination of Service occurs after December 31, 1994.
SECTION 2
DEFINITIONS
2.1 AGREEMENT. "Agreement" means a written agreement
substantially in the form of Exhibit A between The Hillhaven Corporation and a
Participant.
2.2 ANNUAL BOARD RETAINER. "Annual Board Retainer" means the
total annual retainer paid to a Director by The Hillhaven Corporation for
Service on The Hillhaven Corporation's Board of Directors, excluding any
separate fees paid for meeting attendance or service of any committees of the
Board of Directors.
2.3 COMMITTEE. "Committee" means the members of the Executive
Committee of the Board of Directors of The Hillhaven Corporation who are
employees of the Company.
2.4 COMPANY. "Company" means The Hillhaven Corporation and its
Subsidiaries.
2.5 CHANGE OF CONTROL EVENT. A "Change of Control Event" shall be
deemed to occur if any of the following events has occurred:
(i) A Person, alone or together with its
Affiliates and Associates, or "group", within the meaning of
Section 13(d)(3) of the Securities
Exchange Act of 1934, becomes, after the date hereof, the
beneficial owner of 20% or more of the general voting power of
the Company. Notwithstanding the preceding sentence, a Change
of Control Event shall not be deemed to occur if the "Person"
described in the preceding sentence has acquired 20% or more
of the general voting power of the Company as consideration in
a transaction or series of related transactions involving the
Company's acquisition (by stock acquisition, merger, asset
purchase or otherwise) of one or more businesses approved
prior to such transactions or series of transactions by the
Incumbent Board (as defined in (ii) below), and provided that,
if such transaction or series of transactions results in the
merger, consolidation or reorganization of the Company and
such Person, the Company is the surviving entity following
such merger, consolidation or reorganization.
(ii) Individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board"), cease for any
reason to constitute at least a majority of the Board,
provided that any person becoming a director subsequent to the
date hereof whose election, or nomination for election by the
Company's stockholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board
(other than an election or nomination of an individual whose
initial assumption of office is in connection with an actual
or threatened election contest relating to the election of the
directors of the Company, as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Securities
Exchange Act of 1934) shall be considered as though such
person were a member of the Incumbent Board.
(iii) Consummation or effectiveness of:
a. a merger, consolidation or
reorganization involving the Company (a "Business
Combination"), unless
1. the stockholders of the
Company, immediately before the Business
Combination, own, directly or indirectly
immediately following the Business
Combination, at least fifty-one percent (51%)
of the combined voting power of the
outstanding voting securities of the
corporation resulting from the Business
Combination (the "Surviving Corporation") in
substantially the same proportion as their
ownership of the voting securities
immediately and before the Business
Combination, and
2. the individuals who were
members of the Incumbent Board immediately
prior to the execution of the agreement
providing for the Business Combination
constitute at
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least a majority of the members of the Board
of Directors of the Surviving Corporation, and
3. no Person (other than any
Person who, immediately prior to the Business
Combination, had beneficial ownership of
twenty percent (20%) or more of the then
outstanding Voting Securities) has Beneficial
Ownership of twenty percent (20%) or more of
the combined voting power of the Surviving
Corporation's then outstanding voting
securities;
b. a complete liquidation or
dissolution of the Company; or
c. the sale or other disposition of all
or substantially all of the assets of the Company to
any Person.
For purposes of determining whether a Change of Control Event
has occurred, the following additional definitions apply:
"Affiliate or Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934.
"Person," shall mean an individual, firm, corporation or other
entity or any successor to such entity, but "Person" shall not
include the Company, any subsidiary of the Company, any
employee benefit plan or employee stock plan (including a
trust relating thereto) of the Company or any subsidiary of
the Company, or any Person organized, appointed, established
or holding Voting Stock by, for or pursuant to the terms of
such a plan. "Person" shall also not include National Medical
Enterprises, Inc. ("NME"), any subsidiary of NME, any
Affiliate or Associate of NME, any employee benefit plan or
employee stock plan of NME or any subsidiary of NME to the
extent that such entities, individually or collectively, own
any or all of (x) 8,878,147 shares of the Company's common
stock (approximately 31% of the general voting power of the
Company as of December 6, 1994) registered in the name of NME
or any subsidiary of NME as of the date of this Agreement, or
(y) such additional number of shares of the Company's common
stock issued to NME or any subsidiary of NME in exchange for
shares of the Company's Series C Preferred Stock or Series D
Preferred Stock so long as such exchange has been approved in
advance by the Incumbent Board.
"Voting Stock" shall mean shares of the Company's capital
stock having general voting power, with "voting power" meaning
the power under ordinary circumstances (and not merely upon
the happening of a contingency) to vote in the election of
directors.
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2.6 DIRECTOR. A "Director" is any member of the Board of
Directors of The Hillhaven Corporation who is not an employee of the Company.
2.7 ELIGIBLE CHILDREN. "Eligible Children" means all natural or
adopted children of a Participant under the age of 21, including any child
conceived prior to the death of a Participant.
2.8 FINAL ANNUAL BOARD RETAINER. "Final Annual Board Retainer"
means the Annual Board Retainer being paid to a Director at the time of his or
her Termination of Service on the Board of Directors of The Hillhaven
Corporation.
2.9 NORMAL RETIREMENT AGE. "Normal Retirement Age" under this
Plan is age 65.
2.10 PARTICIPANT. "Participant" shall include any Director who is
not an employee of The Hillhaven Corporation who enters into an agreement to
participate in the Plan.
2.11 SERVICE. "Service" refers to service as a Director of The
Hillhaven Corporation.
2.12 SUBSIDIARY. A "Subsidiary" of the Company is any corporation,
partnership, venture or other entity in which the Company owns 50% of the
capital stock or otherwise has a controlling interest as determined by the
Committee, in its sole and absolute discretion.
2.13 SURVIVING SPOUSE. "Surviving Spouse" means the person legally
married to the Participant for at least a one year period prior to the
Commencement Date of Benefits hereunder.
2.14 TERMINATION OF SERVICE. "Termination of Service" means the
cessation of a Participant's service as a Director of The Hillhaven Corporation
for any reason whatsoever, whether voluntarily or involuntarily.
2.15 YEAR. A "Year" is a period of twelve consecutive calendar
months.
2.16 YEARS OF SERVICE. "Year of Service" means each complete Year
of Service as a Director of The Hillhaven Corporation. Years of Service shall
be deemed to have begun as of the first day of the calendar month of service
and to have ceased on the last day of the calendar month of service.
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SECTION 3
RETIREMENT BENEFITS
3.1 RETIREMENT BENEFIT.
(a) Upon the later of a Participant's Termination of
Service or attainment of Normal Retirement Age, The
Hillhaven Corporation agrees to pay to the
Participant an annual Retirement Benefit for ten
years in an amount equal to 100% of his or her Final
Annual Board Retainer, subject to the limitation of
Section 3.1(b) and the vesting of Section 3.2.
(b) The Retirement Benefit shall not exceed $24,000 (100%
of the Annual Board Retainer in 1993) increased by a
compounded rate of six percent per year from 1994 to
the year of the Participant's Termination of Service.
3.2 VESTING OF RETIREMENT BENEFIT. A Participant's interest in
his Retirement Benefit shall vest in accordance with the following schedule:
YEARS OF SERVICE VESTED BENEFIT
Less than 5 0%
5 50%
6 60%
7 70%
8 80%
9 90%
10 100%
All Years of Service as a Director shall count towards vesting credit. Vested
Retirement Benefits are subject to offset pursuant to Section 5.6 and
forfeiture pursuant to Section 5.7.
3.3 SURVIVOR BENEFIT.
(a) If a Participant who is receiving a Retirement
Benefit dies, his or her Surviving Spouse or Eligible
Children shall be entitled to receive (in accordance
with Sections 3.4 and 3.5) the installments of the
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Participant's Retirement Benefit for the remainder of
the ten year period.
(b) If a Participant, who has a vested interest under
Section 3.2, dies while serving as a Director of The
Hillhaven Corporation, his or her Surviving Spouse or
Eligible Children shall be entitled at the
Participant's death to receive (in accordance with
Sections 3.4 and 3.5) the installments of the
Retirement Benefit which would have been payable to
the Participant in accordance with Section 3.1 for a
period of ten years. The limitation set forth in
Section 3.1(b) will be based upon the date of the
Participant's death.
(c) If a Participant, who has a vested interest under
Section 3.2, dies after Termination of Service but at
death is not receiving any Retirement Benefits under
this Plan, his or her Surviving Spouse or Eligible
Children shall be entitled at the Participant's death
to receive (in accordance with Sections 3.4 and 3.5)
the installments of the Retirement Benefit which
would have been payable to the Participant in
accordance with Section 3.1 for a period of ten
years.
3.4 FORM AND DURATION OF BENEFIT PAYMENT. Retirement Benefits
shall be paid in equal monthly installments over a period of ten years.
Surviving Spouse payments shall be paid in equal monthly installments
over the remainder of the ten year period.
Eligible Children benefit payments shall be paid monthly over the
remainder of the ten year period, but not beyond the date when the youngest of
the Eligible Children reaches age 21.
3.5 RECIPIENTS OF BENEFIT PAYMENTS. If a Participant dies without
a Surviving Spouse but is survived by any Eligible Children, then benefits will
be paid to the Eligible Children or their legal guardian, if applicable. The
total monthly benefit payment will be equal to the monthly benefit that a
Surviving Spouse would have received, which will be paid in equal shares to
each of the Eligible Children for the remainder of the ten year period or until
the youngest of the Eligible Children attains age 21, whichever comes first.
When any of the Eligible Children reaches age 21, his or her share will be
reallocated equally to the remaining Eligible Children.
If the Surviving Spouse dies after the death of the Participant but is
survived by Eligible Children, the total monthly benefit previously paid to the
Surviving Spouse will be paid in equal shares to each of the Eligible Children
for the remainder of the ten year period or until the youngest of the Eligible
Children attains age 21, whichever comes first.
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When any of the Eligible Children reaches age 21, his or her share will be
reallocated equally to the remaining Eligible Children.
3.6 CHANGE OF CONTROL. In the event of a Change of Control Event
of The Hillhaven Corporation while this Plan remains in effect which results in
a Participant's Termination of Service as a Director of The Hillhaven
Corporation or a Participant's failure to be reelected as a Director of The
Hillhaven Corporation when his or her term of office expires, (i) the
Participant's Retirement Benefit hereunder will be fully vested in the
Participant without regard to his or her Years of Service with The Hillhaven
Corporation, and (ii) notwithstanding any other provisions of this Plan, the
Participant will be entitled to receive the full Normal Retirement Benefit
commencing at age 65. Notwithstanding the foregoing, Vested Retirement
Benefits are subject to offset pursuant to Section 5.6 and forfeiture pursuant
to the provisions of Section 5.7.
SECTION 4
PAYMENT
4.1 COMMENCEMENT OF PAYMENTS. Payments under this Plan shall
begin not later than the first day of the calendar month following the
occurrence of an event which entitles a Participant (or his or her Surviving
Spouse or Eligible Children) to payments under this Plan.
4.2 WITHHOLDING; EMPLOYMENT TAXES. To the extent required by the
law in effect at the time payments are made, The Hillhaven Corporation shall
report all payments hereunder and shall withhold therefrom any taxes required
to be withheld by the Federal or any state or local government.
4.3 RECIPIENTS OF PAYMENTS. All payments to be made by The
Hillhaven Corporation under this Plan shall be made to the Participant during
his or her lifetime. All subsequent payments under the Plan shall be made by
The Hillhaven Corporation to the Participant's Surviving Spouse, Eligible
Children or their guardian, if applicable.
SECTION 5
CONDITIONS RELATED TO BENEFITS
5.1 ADMINISTRATION OF PLAN. The Committee has been authorized to
administer the Plan and to interpret, construe and apply its provisions in
accordance with its terms. The Committee shall administer the Plan and shall
establish, adopt or revise such rules and regulations as it may deem necessary
or advisable for the administration of the Plan. All decisions of the
Committee shall be by vote or written consent of the majority of its members
and shall be final and binding.
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5.2 NO RIGHTS TO ASSETS. Neither a Participant nor any other
person shall acquire by reason of the plan any right in or title to any assets,
fund or property of The Hillhaven Corporation and its subsidiaries whatsoever
including, without limiting the generality of the foregoing, any specific funds
or assets which The Hillhaven Corporation, in its sole discretion, may set
aside in anticipation of a liability hereunder. No trust shall be created in
accordance with or by the execution or adoption of this Plan or any Agreement
with a Participant, and any benefits which become payable hereunder shall be
paid from the general assets of The Hillhaven Corporation. A Participant shall
have only an unsecured contractual right to the amounts, if any, payable
hereunder.
5.3 NO TENURE RIGHTS. Nothing herein shall constitute a contract
of continuing service or in any manner obligate The Hillhaven Corporation to
continue the Service of a Director, or obligate a Director to continue in the
Service of The Hillhaven Corporation, and nothing herein shall be construed as
fixing or regulating the compensation paid to a Director.
5.4 RIGHT TO TERMINATE OR AMEND. Except during any two year
period after any Change of Control Event of The Hillhaven Corporation, The
Hillhaven Corporation reserves the sole right to terminate the Plan at any time
and to terminate an Agreement with any Participant at any time. In the event
of termination of the Plan or of a Participant's Agreement, a Participant shall
be entitled only to the vested portion of his or her accrued benefits under
Section 3 of the Plan as of the time of the termination of the Plan or his or
her Agreement.
Benefits will be paid in the amounts specified and will commence at
the time specified in Section 3 as appropriate. The Hillhaven Corporation
further reserves the right in its sole discretion to amend the Plan in any
respect except that Plan benefits cannot be reduced during any two year period
after any Change of Control Event of The Hillhaven Corporation. No amendment
of the Plan (whether there has or has not been a Change of Control Event of The
Hillhaven Corporation) that reduced the value of the benefit theretofore
accrued and vested by the Participant shall be effective.
5.5 ELIGIBILITY. Eligibility to participate in the Plan is
expressly conditional upon a Director's furnishing The Hillhaven Corporation
certain information and taking physical examinations and such other relevant
action as may be reasonably requested by The Hillhaven Corporation. Any
Participant who refuses to provide such information or to take such action
shall not be enrolled as or shall thereupon cease to be a Participant under the
Plan. Any Participant who commits suicide during the two year period beginning
on the date of his or her Agreement, or who makes any material misstatement of
information or non-disclosure of medical history, will not receive any benefits
hereunder unless, in the sole discretion of the Committee, benefits in a
reduced amount are awarded.
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5.6 OFFSET. If at the time payments or installments are to be
made hereunder, any Participant or his or her Surviving Spouse or both are
indebted to The Hillhaven Corporation or its Subsidiaries, then the payments
remaining to be made to the Participant or his or her Surviving Spouse or both
may, at the discretion of the Committee, be reduced by the amount of such
indebtedness; provided, however, that an election by the Committee not to
reduce any such payment or payments shall not constitute a waiver of any claim
for such indebtedness.
5.7 CONDITIONS PRECEDENT. No Retirement Benefits will be payable
hereunder to any Participant (i) whose Service with The Hillhaven Corporation
is terminated because of willful misconduct or gross negligence in the
performance of his or her duties or (ii) who within three years after
Termination of Service becomes an employee, director or consultant to any third
party engaged in any line of business in competition with the Company that
accounts for more than ten percent of the gross revenues of the Company taken
as a whole.
SECTION 6
MISCELLANEOUS
6.1 NONASSIGNABILITY. Neither a Participant nor any other person
shall have any right to commute, sell, assign, transfer, pledge, anticipate,
mortgage or otherwise encumber, transfer, hypothecate or convey in advance of
actual receipt the amounts, if any, payable hereunder, or any part thereof,
which are, and all rights to which are, expressly declared to be unassignable
and non-transferrable. No part of the amounts payable shall, prior to actual
payment, be subject to seizure, or sequestration for the payment of any debts,
judgments, alimony or separate maintenance owed by a Participant or any other
person, nor be transferrable by operation of law in the event of a
Participant's or any person's bankruptcy or insolvency.
6.2 GENDER AND NUMBER. Wherever appropriate herein, the
masculine may mean the feminine and the singular may mean the plural or vise
versa.
6.3 NOTICE. Any notice required or permitted to be given to the
Committee under the Plan shall be sufficient if in writing and hand delivered,
or sent by registered or certified mail, to the principal office of The
Hillhaven Corporation, directed to the attention of the Secretary of the
Committee. Such notice shall be deemed given as of the date of delivery or, if
it is made by mail, as of the date shown on the postmark or on the receipt for
registration or certification.
6.4 VALIDITY. In the event any provision of this Plan is held
invalid, void or unenforceable, the same shall not affect, in any respect
whatsoever, the validity of any other provision of this Plan.
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6.5 APPLICABLE LAW. This Plan shall be governed and construed in
accordance with the laws of the State of Washington.
6.6 SUCCESSORS IN INTEREST. This Plan shall inure to the benefit
of, and be binding upon, and be enforceable by, any corporate successor to The
Hillhaven Corporation or successor to substantially all of the assets of The
Hillhaven Corporation.
6.7 NO REPRESENTATION ON TAX MATTERS. The Hillhaven Corporation
makes no representation to Participants regarding current or future income tax
ramifications of the Plan.
DATED this _____ day of February, 1995.
THE HILLHAVEN CORPORATION
By ________________________________
Its ____________________________
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EXHIBIT A
THE HILLHAVEN CORPORATION
BOARD OF DIRECTORS RETIREMENT PLAN AGREEMENT
THIS AGREEMENT is made and entered into at Tacoma, Washington, as of
______________, 199___, by and between The Hillhaven Corporation (the
"Company") and _____________________________________________("Director").
WHEREAS, THE HILLHAVEN CORPORATION has adopted a Board of Directors
Retirement Plan (as amended or restated from time to time, the "Plan");
and
WHEREAS, since the Director presently serves as a member of the Board
of Directors of the Company and is not an employee of the Company, the
Director is eligible to participate in the Plan; and
WHEREAS, the Plan requires that an agreement be entered into between
the Company and Director setting out certain terms and benefits of the
Plan as they apply to the Director;
NOW, THEREFORE, the Company and the Director hereby agree as follows:
1. The Plan, a copy of which is attached, is hereby incorporated
into and made a part of this Agreement as though set forth in
full herein. The parties shall be bound by, and have the
benefit of, each and every provision of the Plan, including but
not limited to the non-assignability provisions of Section 6.1
of the Plan.
2. The Director was born on ______________, 19___, and his or her
present service as a member of the Board of Directors of the
Company began on _______________, 19___.
3. This Agreement shall inure to the benefit of, and be binding
upon, the Company, its successors and assigns, and the Director
and his or her surviving Spouse and Eligible Children.
IT WITNESS WHEREOF, the parties hereto have signed and entered into
this Agreement as of he date first above written.
THE HILLHAVEN CORPORATION
By: _________________________________
Its: ________________________________
_____________________________________
Director