1
EXHIBIT 8
FORM OF ADDITIONS TO PURITAN-BENNETT CORPORATION
MANAGEMENT INCENTIVE BONUS PLAN A,
AND MANAGEMENT INCENTIVE BONUS PLAN B
The following text is to be added to Section e)1. on page 6 of each plan:
; provided that in the event that a participant is terminated without
Cause (as defined below) or resigns for Good Reason (as defined below) within
two years following a Change in Control (as defined below), the Company shall
pay to the participant as soon as possible following such termination the
maximum bonus amount for which such participant was eligible with respect to
the fiscal year of termination, prorated to the date of termination. The
following definitions shall apply:
"Cause" means (a) a participant's willful violation of any
reasonable rule or direct order of the Board or the Company's
Chief Executive Officer ("CEO"), which, after written notice
to do so, the participant fails to make reasonable efforts to
correct within a reasonable time, or (b) conviction of a
crime, or entry of a plea of nolo contendere with regard to a
crime, involving actual moral turpitude or dishonesty of or by
the participant, or (c) drug or alcohol abuse on Company
premises or at a Company sponsored event, or (d) the
participant's material violation of any provision of this
Agreement, which, after written notice to do so, the
participant fails to make reasonable efforts to correct within
a reasonable time. "Cause" shall not include any matter other
than these specified in (a) through (d) above, and without
limiting the generality of the foregoing statement, Cause
shall not include (x) any charge or conviction of a crime, or
entry of a plea of nolo contendere with regard to a crime,
under the Federal Food, Drug, and Cosmetic Act, as amended, or
any successor statute thereto (the "Act"), or (y) the
imposition or attempt to impose upon a participant, or upon
any operation, asset, product or activity of the Company, of
any other sanction or remedy under the Act, including without
limitation civil money penalties, warning letters,
injunctions, repairs, replacements, refunds, recalls or
seizures, if the participant acted in good faith and in a
manner which the participant reasonably believed to be in or
not opposed to the best interests of the Company.
"Good Reason" means any of the following: (a) breach
by the Company or any successor company of any of the
provisions of any employment agreement between the participant
and the Company not corrected within ninety (90) days after
written notice to the Company thereof, (b) reduction of a
participant's base salary, management bonus percentage or
other compensation, as in effect immediately prior to the
Change of Control, (c) failure to continue in effect any
medical, dental, accident, or disability plan in which the
participant is entitled to participate immediately prior to
the Change of Control and failure to provide plans with
substantially similar benefits (except that employee
contributions may be raised to the extent of any cost
increases imposed by third parties) or any action by the
Company which would adversely affect the participant's
2
participation or reduce the participant's benefits
under any of such plans, (d) material reduction in the
participant's job responsibilities, (iv) material reduction of
participant's title or position, (v) the participant shall be
requested to relocate to an office [outside of the
metropolitan area in which the office to which he was assigned
prior to the Change of Control is located], or (vi) failure or
refusal of any successor company to assume the Company's
obligations under this plan or any employment agreement
between the participant and the Company.
A "Change of Control" shall be deemed to have occurred
at any of the following times:
A. Upon the acquisition (other than from the
Company) by any person, entity or "group," within the
meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934 (the "Exchange Act")
(excluding, for this purpose, the Company or its
affiliates, or any employee benefit plan of the
Company or its affiliates which acquires beneficial
ownership of voting securities of the Company) of
beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 50% or
more of either the then outstanding shares of common
stock of the Company or the Combined Voting Power of
the Company's then outstanding voting securities.
"Combined Voting Power" means the combined voting
power of the Company's then outstanding voting
securities generally entitled to vote in the election
of directors.
B. At the time individuals who, as of [date],
constitute the Board (as of [date], 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 [date] whose
election, or nomination for election by the Company's
shareholders, 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
Exchange Act) shall be, for purposes of this
subparagraph B, considered as though such person were
a member of the Incumbent Board; or
C. Upon the approval by the shareholders of the
Company of a reorganization, merger, consolidation
(in each case, with respect to which persons who were
the shareholders of the Company immediately prior to
such reorganization, merger or consolidation do not,
immediately thereafter, own more than 50% of the
Combined Voting Power of the reorganized, merged or
consolidated company's then outstanding voting
securities) or a liquidation or dissolution of the
Company or of the sale of all or substantially all of
the assets of the Company; or
D. The occurrence of any other event which the
Incumbent Board in its sole discretion determines
constitutes a Change of Control.
3
The following paragraph will be substituted in lieu of Section e)2. on page 6
of each plan:
Profit for bonus determination will be inclusive of any changes in
reserves, but will exclude any capital gains or losses, other unusual gains or
losses such as proceeds of fire or casualty insurance, and extraordinary items.
In cases of uncertainty, the decision of the CEO will be final. In the event
of a Change of Control, the Compensation Committee shall adjust profit for
bonus determination purposes hereunder to remove distortions in the Company's
profits and distortions in the method of measuring such profits, and
distortions in the methods used to determine and measure the realization of the
performance targets hereunder for bonus calculation purposes, that have
occurred as a result of the Change of Control. In addition, the Compensation
Committee shall have the authority, in its sole and absolute discretion, to
adjust the performance targets hereunder for bonus calculation purposes to
remove distortions in the realization of such targets and distortions in the
method of measuring such realization and such targets, caused by actions taken
or expenses incurred by the Company in connection with a proposal for a
transaction described in subparagraphs A or C of the definition of Change of
Control set forth in subsection e)1. above, or any other extraordinary
transaction, whether or not consummated. No changes in reserves shall be taken
into account for purposes of bonus calculations hereunder with respect to the
fiscal year in which a Change of Control occurs and the immediately following
fiscal year.