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EXHIBIT 10.10
AMERICAN HEALTH PROPERTIES, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
1. Purpose and Nature of Plan; Effective Date.
The purposes of the American Health Properties, Inc. Supplemental
Executive Retirement Plan ("Plan") are to retain the services of, and provide a
competitive level of retirement income to, the Chief Executive Officer of
American Health Properties, Inc.
The effective date of the Plan is January 1, 1996.
2. Definitions.
(a) Actuarial Assumptions means (i) a discount rate equal to the annual
rate of interest on United States Treasury Securities with a 30-year maturity,
as specified by the Secretary of the Treasury (or his or her delegate) for the
last month of the calendar quarter immediately preceding the valuation date, and
(ii) mortality factors based on the 1983 Group Annuity Mortality table (blended
50% male and 50% female).
(b) Actuarial Equivalent means, with respect to the amount of a benefit
payable in a specified form (the "base benefit"), the amount of a benefit
payable in another form that provides the same present value as the base benefit
as of a specific reference date based on the Actuarial Assumptions.
(c) Beneficiary means the person or entity designated by the
Participant, in accordance with procedures established by the Board, to receive
all or part of the amounts to be paid under the Plan in the event of the
Participant's death or, if none, the Participant's estate. A designation of a
Beneficiary may be replaced by a new designation or may be revoked by the
Participant at any time in accordance with procedures established by the Board.
If the Participant is married, the designation of any person or entity (other
than the Participant's spouse) as a Beneficiary shall not be valid without the
written consent of such spouse.
(d) Board of Directors means the Board of Directors of the Company.
(e) Cause means (i) a material breach by the Participant of his
employment agreement with the Company, if any, (ii) the Participant has been
convicted of a felony, or (iii) the Participant has been convicted of a
misdemeanor involving moral turpitude.
(f) Change in Control means the occurrence of any of the following
events:
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(i) any "person" (as such term is used in Section 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly of securities of the Company representing 20% or
more of the combined voting power of the Company's then
outstanding securities; or
(ii) during any period of two consecutive years (not including any
period prior to the effective date of this Plan) individuals
who at the beginning of such period constitute the Board and
any new director whose election by the Board or nomination
for election by the Company's shareholders was approved by a
vote of at least two-thirds (2/3) of the directors then still
in office who either were directors at the beginning of the
period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a
majority thereof; or
(iii) the consummation of a merger, consolidation, statutory share
exchange or similar form of corporate transaction involving
the Company or any of its subsidiaries that requires the
approval of the Company's stockholders, whether for such
transaction or the issuance of securities in the transaction
(a "Reorganization"), or sale or other disposition of all or
substantially all of the Company's assets to an entity that
is not wholly owned by the Company (a "Sale"), unless
immediately following such Reorganization or Sale, more than
80% of the total voting power (in respect of the election of
directors, or similar officials in the case of an entity
other than a corporation) of either (x) the surviving
corporation or entity resulting from such Reorganization or
the entity which has acquired all or substantially all of the
assets of the Company (in either case, the "Surviving
Entity"), or (y) if applicable, the ultimate parent entity
that directly or indirectly has beneficial ownership of 50%
or more of the total voting power (in respect of the election
of directors, or similar officials in the case of an entity
other than a corporation) of the Surviving Entity (the
"Parent Entity"), is represented by Company voting securities
that were outstanding immediately prior to such
Reorganization or Sale (or, if applicable, is represented by
shares into which such Company voting securities were
converted pursuant to such Reorganization or Sale), and such
voting power among the holders thereof is in substantially
the same proportion as the voting power of such Company
voting securities among the holders thereof immediately prior
to the Reorganization or Sale; or
(iv) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company.
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(g) Company means American Health Properties, Inc., or any successor
thereto.
(h) Early Retirement Benefit means an annual benefit in an amount equal
to the product of (i) the Normal Retirement Benefit, (ii) the Vesting Percentage
and (iii) the Early Retirement Factor.
(i) Early Retirement Factor means the applicable factor from the
following table (interpolated as provided below), based upon the Participant's
age on the date of commencement of benefits under the Plan:
Age at Commencement Early Retirement Factor
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65-62 1.00
less than 62 Actuarial Equivalent factor to convert
benefit from a benefit commencing at
age 62, based on Actuarial Assumptions
and actual age at commencement of
benefits
(j) Final Compensation means the sum of (i) the Participant's annual
base salary in effect on the Participant's date of termination of employment,
plus (ii) the Participant's maximum bonus opportunity under the Company's annual
bonus plan ("Maximum Bonus") in respect of the year of the Participant's
termination of employment determined as of the Participant's date of termination
of employment. Notwithstanding the foregoing, in the event of a Change in
Control, the term "Final Compensation" shall mean the sum of (A) the greater of
(1) the Participant's annual base salary in effect on the Participant's date of
termination of employment or (2) the Participant's annual base salary in effect
immediately prior to the Change in Control, plus (B) the greater of (1) the
Participant's Maximum Bonus in respect of the year of the Participant's
termination of employment determined as of the Participant's date of termination
of employment or (2) 112.5% of the amount determined under clause (A) of this
sentence.
(k) MPPP Offset means the Participant's account balance under the
Pension Plan as of the date of commencement of benefit payments under the Plan;
provided, however, that if the Participant elects under Section 4(e) to receive
a benefit under this Plan in a form other than a lump sum payment, the MPPP
Offset shall be the Actuarial Equivalent of the account balance under the
Pension Plan.
(l) Normal Retirement Benefit means an annual benefit in an amount
equal to 25% of the Participant's Final Compensation.
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(m) Participant means Joseph P. Sullivan, the chief executive officer
of the Company on the effective date of this Plan.
(n) Pension Plan means the American Health Properties, Inc. Money
Purchase Pension Plan.
(o) Vesting Percentage means the applicable percentage from the
following table (interpolated as provided below), based upon the date on which
the Participant's employment with the Company is terminated:
Date of Termination Vesting Percentage
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9/1/2007 or later 100.000%
9/1/2006 91.667%
9/1/2005 83.333%
9/1/2004 75.000%
9/1/2003 66.667%
9/1/2002 58.333%
9/1/2001 50.000%
9/1/2000 41.667%
9/1/1999 33.333%
9/1/1998 25.000%
9/1/1997 16.667%
9/1/1996 8.333%
9/1/95 or before 0.000%
The vesting percentage shall be linearly interpolated to reflect dates of
termination that fall between entries in the above table.
3. Eligibility and Participation.
The Participant has been designated for participation by the Board and
is eligible to participate in the Plan. Unless otherwise provided by the Board
from time to time, the Participant is the only employee of the Company eligible
to participate in this Plan.
4. Benefits.
(a) Normal Retirement Benefit. Except as provided in Section 4(c), upon
the Participant's termination of employment on or after age 65, the Participant
shall be entitled to
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receive an amount equal to the Normal Retirement Benefit, reduced by the MPPP
Offset. Except as provided in Section 4(e)(iii), the amount payable under this
Section 4(a) shall be payable as of the first of the month following such
termination of employment.
(b) Early Retirement Benefit. Except as provided in Section 4(c), upon
the Participant's termination of employment on or after age 55 but prior to age
65, the Participant shall be entitled to receive an amount equal to the Early
Retirement Benefit, reduced by the MPPP Offset. Except as provided in Section
4(e)(iii), the amount payable under this Section 4(b) shall be payable as of the
first of the month following age 65, or at such earlier date as selected by the
Participant.
(c) Termination for Cause. Notwithstanding anything to the contrary in
the Plan, no benefits shall be payable to the Participant (or his Beneficiary)
under the Plan in the event the Participant's employment is terminated by the
Company for Cause.
(d) Death Benefit. Upon the death of the Participant while employed by
the Company, the Participant shall be deemed to have (i) terminated employment
on the day before the Participant's death, (ii) elected to commence receipt of
the Early Retirement Benefit (or Normal Retirement Benefit, if applicable) at
the earliest possible commencement date, and (iii) died before receiving any
payments. The amount payable under this Section 4(d) shall be payable to the
Participant's Beneficiary as soon as practicable following the Participant's
death in an amount equal to the lump sum Actuarial Equivalent of the Early
Retirement Benefit (or Normal Retirement Benefit, if applicable) determined in
accordance with the preceding sentence, reduced by the MPPP Offset.
(e) Form of Benefit.
(i) Normal Form. Unless the Participant has elected an optional
form of benefit under Section 4(e)(ii), the benefits under
Section 4(a) or 4(b) shall be payable in a single lump sum
payment ,no later than ten (10) working days following the
Participant's date of termination of employment, in an amount
that is the Actuarial Equivalent of a single life annuity
with 10 years certain.
(ii) Optional Forms. The Participant may elect to receive the
benefits under Section 4(a) or (b) in any of the following
optional forms: single life annuity, single life annuity with
10 years certain, joint and 50% survivor annuity, joint and
75% survivor annuity or joint and 100% survivor annuity;
provided, however, that such election shall not be valid
unless made at least one year prior to the Participant's
termination of employment. The amount payable under this
Section 4(e)(ii)
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shall be the Actuarial Equivalent of the amount otherwise
payable under Section 4(e)(i).
(iii) Change in Control. Notwithstanding anything in the Plan to
the contrary, in the event that the Participant's employment
terminates effective on or within 180 days following a Change
in Control, the benefits payable to the Participant hereunder
shall be payable (notwithstanding any previous election by
the Participant to the contrary) in a single lump sum payment
on the date (the "Payment Date") that is no later than two
(2) business days immediately prior to the Anticipated CIC
Date (if the Participant has tendered his resignation in
advance of the Anticipated CIC Date to be effective on or
following the Anticipated CIC Date) or, in the case of a
Change in Control in respect of which an Anticipated CIC Date
is not applicable (or if the Participant has not tendered his
resignation in advance of the Anticipated CIC Date to be
effective on or following the Anticipated CIC Date), no later
than ten (10) working days following such termination of
employment. For purposes of the Plan, the "Anticipated CIC
Date" is the date reasonably determined in good faith by the
Chairman of the Board Compensation and Board Affairs
Committee or a Director designated by such Chairman to be the
date on which an anticipated Change in Control is expected to
occur.
5. Administration of the Plan.
The Plan shall be administered by the Board. The Board shall have the
exclusive right and full discretion to interpret the Plan and to decide any and
all matters arising hereunder (including the right to remedy possible
ambiguities, inconsistencies or omissions), to make, amend and rescind such
rules as it deems necessary for the proper administration of the Plan and to
make all other determinations necessary or advisable for the administration of
the Plan, including determinations regarding eligibility for benefits under the
Plan and determinations of the amount of benefits payable under the Plan. All
interpretations of the Board with respect to any matter hereunder shall be
final, conclusive and binding on all persons affected thereby. No Participant
who is a member of the Board shall vote on any matter or otherwise take part in
the administration of the Plan.
6. Amendment and Termination of the Plan.
The Board may at any time amend or terminate the Plan; provided,
however, that without the Participant's consent, no such amendment or
termination shall adversely affect the rights and benefits (including the terms
and conditions of payment of benefits) of the Participant under the Plan.
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7. Successors.
(a) This Plan shall not be terminated by any merger, consolidation,
share exchange or similar event involving the Company whereby the Company is or
is not the surviving or resulting entity. In the event of any merger,
consolidation, share exchange or similar event, the provisions of this Plan
shall be binding upon the surviving or resulting corporation or the person or
entity to which the Company's assets are transferred. As used in this Plan,
"Company" shall mean the Company as hereinbefore defined and any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company, by
operation of law, or otherwise.
(b) Concurrently with any merger, consolidation, share exchange or
sale, lease or transfer of all or substantially all of its assets, the Company
will cause any successor or transferee unconditionally to assume all of the
obligations of the Company hereunder.
(c) This Plan shall inure to the benefit of and be enforceable by each
Participant's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Participant shall
die while any amounts are payable to the Participant hereunder, all such amounts
shall be paid in accordance with the terms of this Plan to the Participant's
Beneficiary.
8. No Mitigation; Offset.
The obligation of the Company to provide the benefits specified under
the Plan and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against the Participant or others. In no
event shall the Participant be obligated to seek other employment or take other
action by way of mitigation of the amounts payable to such Participant under any
of the provisions of this Plan and such amounts shall not be reduced whether or
not such Participant obtains other employment.
9. Governing Law; Validity.
(a) The interpretation, construction and performance of this Plan,
unless pre-empted by the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), shall be governed by and construed and enforced in accordance
with the laws of the State of Colorado without regard to the principle of
conflicts of laws.
(b) The invalidity or unenforceability of any provision of this Plan
shall not affect the validity or enforceability of any other provision of this
Plan, which other provisions shall remain in full force and effect.
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10. Miscellaneous.
(a) This Plan is an unfunded plan maintained by the Company primarily
for the purpose of providing deferred compensation to the Participant, a member
of a select group of management or highly compensated employees. To the extent
that any person acquires a right to receive payments from the Company under this
Plan, such right shall be no greater than the right of any unsecured general
creditor of the Company. The Company shall not be required to fund or otherwise
segregate assets to be used for the payment of any benefits under the Plan. The
Company shall make such payments only out of its general corporate funds, and
therefore its obligation to make such payments shall be subject to any claims of
its other creditors having priority as to its assets.
(b) This Plan does not constitute a contract of employment or impose on
the Company any obligation to retain such Participant as an employee, to change
the status of such Participant's employment, or to change the policies of the
Company regarding termination of employment.
(c) No rights of any Participant (or Beneficiary) to payments of any
amounts under the Plan shall be sold, exchanged, transferred, assigned, pledged,
hypothecated or otherwise disposed of other than by will or by the laws of
descent and distribution, and any such purported sale, exchange, transfer,
assignment, pledge, hypothecation or disposition shall be void. The Company
shall not recognize any purported sale, exchange, transfer, assignment, pledge,
hypothecation, or disposition by any Participant of all or part of his interest
hereunder, and such interest shall not be subject in any manner to transfer by
operation of law, and shall be exempt from the claims of creditors or other
claimants from all orders, decrees, levies, garnishment and/or executions and
other legal or equitable process or proceedings against the Participant to the
fullest extent which may be permitted by law.
(d) Unless the Company specifically provides otherwise, any benefits
payable under this Plan shall not be taken into account for purposes of
determining benefits payable to the Participant under any other benefit plan or
program.
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IN WITNESS WHEREOF, and as evidence of the adoption of this Plan effective as of
January 1, 1996 by the Company, it has caused the same to be signed by its duly
authorized officer as of this 16th day of July, 1999.
AMERICAN HEALTH PROPERTIES, INC.
By: /s/ Michael J. McGee
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Michael J. McGee, Senior Vice President
By: /s/ Steven A. Roseman
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Steven A. Roseman, Secretary
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