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EXHIBIT 10.16
AGREEMENT
THIS AGREEMENT is made this 7th day of November, 1994 by and between
Puritan-Bennett Corporation, a Delaware corporation (hereinafter referred to as
the "Corporation"), and Burton A. Dole, Jr. (hereinafter referred to as the
"Employee").
WHEREAS, the Corporation has adopted the Puritan-Bennett Corporation
Supplemental Retirement Benefit Plan effective as of September 1, 1985 (the
"Plan"), which provides benefits that supplement benefits provided under the
Restated Puritan-Bennett Pension Plan (the "Pension Plan"); and
WHEREAS, the Corporation and the Employee have entered into an
agreement pursuant to which the Employee became a Member under the terms of the
Plan; and
WHEREAS, the Employee and the Corporation desire to make the following
changes to the Plan as it applies to Employee; and
WHEREAS, contemporaneously herewith the Corporation is agreeing to pay
COBRA benefits for all employees of the Corporation under certain circumstances
and the Corporation and Employee desire that the same agreement shall be made
for Employee.
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein, the Employee and the Corporation agree that:
1. Plan Benefits. Solely for purposes of determining the
Employee's and his beneficiaries' rights under the Plan and not for purposes of
determining the rights of any other individual under the Plan, the terms of the
Plan applicable to Employee shall be amended as follows:
A. Section 4, "Retirement Benefits," shall be amended by
the addition of the following new Section 4.04.
Section 4.04-Exceptions for Certain Terminations of
Employment. Notwithstanding the foregoing provisions of this Section
4 or any other provision(s) of this Plan, in the event of the
termination of employment of a Member within two years following the
occurrence of a Change in Control for Good Reason (if initiated by the
Member), and/or other than for Cause (if initiated by the
Corporation), then (a) even if the Member has not at the date of
termination of employment attained age fifty-five (55) and/or
completed seven (7) Years of Participation, he shall nevertheless be
entitled to the Supplemental Monthly Retirement Benefit provided under
Section 4.01 hereof; (b) the Member shall be deemed to have completed
ten or more Years of Service and to be 100% vested in the Supplemental
Monthly Retirement Benefit pursuant to Section 4.01(b) hereof; and (c)
the Member shall be deemed to have been age sixty- five (65) (unless
his actual age shall be greater) at the date of termination of
employment so as to be entitled to 100% of the Supplemental Monthly
Retirement Benefit (as adjusted by Section 4.01(a)) pursuant to
Section 4.01(c).
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For the purposes of this Section 4.04, the terms Cause, Good
Reason and Change in Control shall be defined as follows:
(a) Cause. "Cause" means (i) the Member's willful
violation of any reasonable rule or direct order of the
Corporation's board of directors (the "Board"), which,
after written notice to do so, the Member fails to make
reasonable efforts to correct within a reasonable time,
or (ii) 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
Member, or (iii) drug or alcohol abuse on Corporation
premises or at a Corporation sponsored event, or (iv)
the Member's material violation of any provision of his
employment agreement with the Corporation, which, after
written notice to do so, the Member fails to make
reasonable efforts to correct within a reasonable time.
"Cause" shall not include any matter other than these
specified in (i) through (iv) 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 the Member, or upon any operation,
asset, product or activity of the Corporation, 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 Member acted in good faith
and in a manner which he reasonably believed to be in
or not opposed to the best interests of the
Corporation.
(b) Good Reason. "Good Reason" means (i) breach by the
Corporation or any successor company of any of the
provisions of the employment agreement between the
Corporation and the Member (the "Employment Agreement")
not corrected within ninety (90) days after written
notice to the Corporation thereof, or (ii) any of the
following if the same shall occur within two years
after a Change in Control: (A) reduction of the
Member's base salary, management bonus percentage or
other compensation, as in effect immediately prior to
the Change in Control, (B) failure to continue in
effect any medical, dental, accident, or disability
plan in which the Member is entitled to participate
immediately prior to the Change in 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 Corporation which would
adversely affect the Member's participation or reduce
the Member's benefits under any of such plans, (C)
material reduction in Member's job responsibilities,
(D) material reduction of Member's title or position,
(E) Member shall be requested to relocate to an office
outside of the greater Kansas City metropolitan area,
or (F) failure or refusal of any successor company to
assume the Corporation's obligations under the
Employment Agreement.
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(c) Change in Control. A "Change in Control" shall be
deemed to have occurred at any of the following times:
(i) Upon the acquisition (other than from the
Corporation) 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
Corporation or its affiliates, or any
employee benefit plan of the Corporation
or its affiliates which acquires
beneficial ownership of voting securities
of the Corporation) 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
Corporation or the Combined Voting Power
of the Corporation's then outstanding
voting securities. "Combined Voting
Power" means the combined voting power of
the Corporation's then outstanding voting
securities generally entitled to vote in
the election of directors.
(ii) At the time individuals who, as of the
date hereof, constitute the Board (as of
the date hereof, 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 Corporation'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 Corporation, as such terms are used
in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) shall
be, for purposes of this subsection 1.3.2,
considered as though such person were a
member of the Incumbent Board; or
(iii) Upon the approval by the shareholders of
the Corporation of a reorganization,
merger, consolidation (in each case, with
respect to which persons who were the
shareholders of the Corporation
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 Corporation or of the
sale of all or substantially all of the
assets of the Corporation; or
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(iv) The occurrence of any other event which
the Incumbent Board in its sole discretion
determines constitutes a Change in
Control.
B. A new Section 11 is added to read in its entirety as
follows:
Section 11--Certain Reduction of Payments.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined
that any payment or distribution by the Corporation to
or for the benefit of Member (whether paid or payable
or distributed or distributable pursuant to the terms
of this Agreement or otherwise) (a "Payment") would be
nondeductible by the Corporation for Federal income tax
purposes because of Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"), then the
aggregate present value of amounts payable or
distributable hereunder shall be reduced to the Reduced
Amount; provided, however, that Payments shall not
include any amount payable pursuant to the Agreement
between Member and the Corporation dated April 25,
1980. The "Reduced Amount" shall be an amount
expressed in present value which maximizes the
aggregate present value of such benefits without
causing any Payment to be nondeductible by the
Corporation because of Section 280G of the Code.
Anything to the contrary notwithstanding, if the
Reduced Amount is zero and it is determined further
that any Payment which is not part of the benefits
payable hereunder would nevertheless be nondeductible
by the Corporation for Federal income tax purposes
because of Section 280G of the Code, then the aggregate
present value of Payments which are not benefits
hereunder shall also be reduced (but not below zero) to
an amount expressed in present value which maximizes
the aggregate present value of Payments without causing
any payment to be nondeductible by the Corporation
because of Section 280G of the Code. For purposes of
this Section 11, present value shall be determined in
accordance with Section 280G(d)(4) of the Code.
(b) All determinations required to be made
under this Section 11 shall be made by an accounting
firm jointly selected by Member and the Corporation
(the "Accounting Firm") and paid by the Corporation,
and which may be the Company's independent auditors.
The Accounting Firm shall provide detailed supporting
calculations both to the Corporation and Member within
15 business days of the date of termination of Member's
employment by the Corporation (the "Employment
Termination Agreement") or such earlier time as is
requested by the Corporation and an opinion to Member
that he has substantial authority not to report any
excise tax on his Federal income tax return with
respect to any Payments. Any such determination by the
Accounting Firm shall be binding upon the Corporation
and Member. Member shall determine which and how much
of the Payments, shall be eliminated or reduced
consistent with
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the requirements of this Section 11, provided that, if
Member does not make such determination within ten
business days of the receipt of the calculations made
by the Accounting Firm, the Corporation shall elect
which and how much of the Payments shall be eliminated
or reduced consistent with the requirements of this
Section 11 and shall notify Member promptly of such
election; and provided further that any Payments which
do not constitute gross income to Member shall not be
reduced or eliminated unless all other Payments have
first been eliminated. Within five business days
thereafter, the Corporation shall pay to or distribute
to or for the benefit of Employee such amounts as are
then due to Member under this Agreement.
(c) As a result of the uncertainty in the
application of Section 280G of the Code at the time of
the initial determination by the Accounting Firm
hereunder, it is possible that Payments will have been
made by the Corporation which should not have been made
("Overpayment") or that Payments will not have been
made by the Corporation which could have been made
("Underpayment"), in each case, consistent with the
calculations required to be made hereunder. In the
event that the Accounting Firm, based upon the
assertion of a deficiency by the Internal Revenue
Service against Member or the Corporation which the
Accounting Firm believes has a high probability of
success, determines that an Overpayment has been made,
any such Overpayment paid or distributed by the
Corporation to or for the benefit of Member shall be
treated for all purposes as a loan ab initio to Member
which Member shall repay to the Corporation together
with interest at the applicable federal rate provided
for in Section 7872(f)(2) of the Code; provided,
however, that no such loan shall be deemed to have been
made and no amount shall be payable to the Corporation
if and to the extent such deemed loan and payment would
not either reduce the amount on which Member is subject
to tax under Section 1 and Section 4999 of the Code or
generate a refund of such taxes. In the event that the
Accounting Firm, based upon controlling precedent or
other substantial authority, determines that an
Underpayment has occurred, any such Underpayment shall
be promptly paid by the Corporation to or for the
benefit of Member together with interest at 120% of the
applicable federal rate provided for in Section
7872(f)(2) of the Code, compounded semiannually.
(d) Notwithstanding anything in this Agreement
to the contrary, if after giving effect to the
provisions of Section 11(a)-(c) any portion of any
payments to Member by the Corporation hereunder would
not be deductible by the Corporation for Federal income
tax purposes by reason of application of Section 162(m)
of the Code, then payment of that portion to Member
shall be deferred until the earliest date upon which
payment thereof can be made to Member without being
non-deductible pursuant to Section 162(m) of the Code.
In the event of a such a deferral, the Corporation
shall pay interest to Member on the amount deferred at
120% of the applicable
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federal rate provided for in Section 7872(f)(2) of the
Code, compounded semiannually.
2. COBRA Benefits. In the event of the termination of employment
of Employee without Cause (if initiated by the Corporation) or for Good Reason
(if initiated by Employee), the Corporation will provide a benefit under the
Consolidated Omnibus Budget Reconciliation Act of 1986 ("COBRA") and Section
4980B of the Internal Revenue Code of 1986, as amended, as follows: the
Corporation shall pay the percentage of the cost of COBRA coverage with respect
to Employee's coverage status (e.g., individual or family) in effect
immediately prior to such termination of employment, which percentage shall be
the fraction (expressed as a percentage), the numerator of which shall be the
difference between (i) the monthly cost of COBRA coverage for Employee's
coverage status in effect immediately prior to the Employment Termination Date
and (ii) Employee's monthly contribution toward Employee's coverage in effect
immediately prior to the Employment Termination Date, and the denominator of
which shall be the monthly cost of COBRA coverage for Employee's coverage
status in effect immediately prior to the Employment Termination Date. All of
such amounts shall be determined as of the day immediately preceding the
termination of Employee's employment. The insurance continuation benefits paid
for hereunder shall be deemed to be part of Employee's COBRA coverage. Such
benefits shall be in addition to any other benefits relating to health or
medical care benefits that, under the Corporation's policies, are available to
Employee following termination of employment.
IN WITNESS WHEREOF, this Agreement has been made as of the date set
forth above.
CORPORATION:
PURITAN-BENNETT CORPORATION
/s/ Lee Robbins
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By: Lee Robbins
Title: Vice President
EMPLOYEE:
/s/ Burton A. Dole, Jr.
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Burton A. Dole, Jr.
9605 W. 191st Street
Bucyrus, Kansas 66013
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