<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-9
(AMENDMENT NO. 1)
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4)
OF THE SECURITIES EXCHANGE ACT OF 1934
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PURITAN-BENNETT CORPORATION
(Name of Subject Company)
PURITAN-BENNETT CORPORATION
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $1.00 PER SHARE
(INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS)
(Title of Class of Securities)
746299106
(CUSIP number of Class of Securities)
BURTON A. DOLE, JR.,
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
PURITAN-BENNETT CORPORATION
9401 INDIAN CREEK PARKWAY, P.O. BOX 25905
OVERLAND PARK, KANSAS 66225-5905
(913) 661-0444
(Name, address and telephone number of person authorized to receive notice and
communications on behalf of the person(s) filing statement)
COPIES TO:
DANIEL C. WEARY, ESQ. PETER D. LYONS, ESQ.
BLACKWELL SANDERS SHEARMAN & STERLING
MATHENY WEARY & LOMBARDI L.C. 599 LEXINGTON AVENUE
TWO PERSHING SQUARE NEW YORK, NEW YORK 10022
2300 MAIN STREET - SUITE 1100 (212) 848-4000
KANSAS CITY, MISSOURI 64108
(816) 274-6800
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2
This Amendment No. 1 amends and supplements the
Solicitation/Recommendation Statement on Schedule 14D-9, dated November 7, 1994
(as amended, the "Schedule 14D-9"), filed by Puritan-Bennett Corporation, a
Delaware corporation (the "Company"), relating to the tender offer disclosed in
the Tender Offer Statement on Schedule 14D-1, dated October 25, 1994 (the
"Schedule 14D-1"), of PB Acquisition Corp., a Delaware corporation (the
"Purchaser") and a wholly owned subsidiary of Thermo Electron Corporation, a
Delaware corporation ("Thermo Electron"), to purchase all of the outstanding
Shares upon the terms and subject to the conditions set forth in the Offer to
Purchase, dated October 25, 1994, and the related Letter of Transmittal
(together, the "Offer"). Capitalized terms used and not defined herein shall
have the meanings set forth in the Schedule 14D-9.
This Amendment No. 1 is being filed to amend and restate Exhibits 3,
5, 6, 7, 14, 16 and 17 to the Schedule 14D-9 in their entirety as filed
herewith, to add a press release issued by the Company on November 21, 1994 as
Exhibit 25 to the Schedule 14D-9 and to amend Item 9 of the Schedule 14D-9.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
The list of exhibits contained in Item 9 is hereby amended by deleting
the references to Exhibits 3, 5, 6, 7, 14, 16 and 17 and replacing them with
the following:
Exhibit 3 -- Supplemental Agreement, dated November 7, 1994,
between John H. Morrow and the Company.
Exhibit 5 -- Form of Executive Agreement for Messrs. Doyle,
Jones, Rankin and Niles.
Exhibit 6 -- Form of Severance Agreement.
Exhibit 7 -- Puritan-Bennett Corporation Change of Control
Severance Plan.
Exhibit 14 -- Amendment to the Restated Puritan-Bennett Savings &
Stock Ownership Plan
Exhibit 16 -- SERP Agreement between Burton A. Dole, Jr. and the
Company.
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3
Exhibit 17 -- SERP Agreement between John H. Morrow and the
Company.
In addition, the list of exhibits contained in Item 9 is hereby amended
and supplemented by adding thereto the following:
Exhibit 25 --Press Release of the Company, dated November 21,
1994.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this Statement is true,
complete and correct.
PURITAN-BENNETT CORPORATION
By: /s/ Burton A. Dole, Jr.
--------------------------
Name: Burton A. Dole, Jr.
Title: Chairman, President and
Chief Executive Officer
Dated: November 21, 1994
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Number Title
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<S> <C>
1* Excerpts from the Company's Proxy Statement dated June 10, 1994 for its 1994 Annual
Meeting of Stockholders.
2* Employment Agreement, dated April 25, 1980, between Burton A. Dole, Jr. and the
Company.
3 Supplemental Agreement, dated November 7, 1994, between John H. Morrow and the
Company.
4* Employment Agreement, dated June 9, 1994, between John H. Morrow and the Company.
5 Form of Executive Agreement for Messrs. Doyle, Jones, Rankin and Niles.
6 Form of Severance Agreement.
7 Puritan-Bennett Corporation Change of Control Severance Plan.
8* Form of Additions to Puritan-Bennett Corporation Management Incentive Bonus Plan A,
and Management Incentive Bonus Plan B.
9* Form of First Amendment to the Restated Puritan-Bennett Deferred Compensation Plan.
10* Form of First Amendment to the Puritan-Bennett Supplemental Retirement Benefit Plan.
11* Form of Third Amendment to the Puritan-Bennett Supplemental Retirement Benefit Plan.
12* Form of First Amendment to the Puritan-Bennett Corporation Pension Benefit Make Up
Plan.
13* Form of Addition to the Company's 1988 Stock Benefit Plan.
</TABLE>
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*Previously Filed
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<TABLE>
<CAPTION>
Number Title
------ -----
<S> <C>
14 Amendment to the Restated Puritan-Bennett Savings & Stock Ownership Plan.
15* Form of Amendment to the Puritan-Bennett Corporation Directors Post-Retirement
Income Plan.
16 SERP Agreement between Burton A. Dole, Jr. and the Company.
17 SERP Agreement between John H. Morrow and the Company.
18* Form of First Amendment to the Trust Agreement for the Restated Puritan-Bennett
Deferred Compensation Plan.
19* Form of Trust Agreement for the Puritan-Bennett Supplemental Retirement Benefit
Plan.
20* Form of Trust Agreement for the Puritan-Bennett Corporation Pension Benefit Make Up
Plan.
21* Form of Trust Agreement for the Puritan-Bennett Corporation Directors Post-
Retirement Income Plan.
22* Letter to Stockholders of the Company.
23* Press Release of the Company, dated November 7, 1994.
24* Opinion of Smith Barney Inc., dated November 6, 1994.
25 Press Release of the Company, dated November 21, 1994.
</TABLE>
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Exhibit 3
November 7, 1994
Mr. John H. Morrow
Executive Vice President
Puritan-Bennett Corporation
9401 Indian Creek Parkway
Overland Park, Kansas 66225
Dear Mr. Morrow:
This supplemental letter agreement ("Supplemental Agreement") amends
and supplements the letter agreement dated June 9, 1994 (the "Agreement")
between you and Puritan-Bennett Corporation. All definitions of terms in the
Agreement shall apply in this Supplemental Agreement. As amended and
supplemented by this Supplemental Agreement, the Agreement shall remain in full
force and effect.
1. The benefits payable to you under Sections 3.1(a) and (b) of the
Agreement are hereby modified by replacing Sections 3.1(a) and (b) in their
entirety with the following:
1.1 Rights upon Termination by Company other than for Cause, or by
Employee for Good Reason. If the Company terminates your
employment other than for Cause prior to your Normal Retirement
Date, or if you terminate your employment for Good Reason prior
to your Normal Retirement Date, then the Company shall have the
following obligations to you:
(a) During the applicable Continued Payment Period, the
Company shall make semi-monthly payments to you equal to
your semi-monthly base salary in effect immediately prior
to the Employment Termination Date plus one twenty-fourth
of the annual average of your incentive bonus payments
under the MIB Plan or any successor thereto with respect
to the three full (12 months) fiscal years immediately
preceding the Employment Termination Date (such annual
average being referred to herein as the "Average Annual
Incentive Payment"), such amounts to be computed without
regard to any reductions which may have occurred in
breach of this Agreement or following a Change in
Control. Such payments shall be subject to all required
withholdings. The Continued Payment Period shall
commence on the Employment Termination Date and shall be
a number of weeks determined by adding (a) the greater of
(i) four or (ii) two times the number of years Employee
has been an employee of the Company (rounding up to the
next full year and excluding any intervening periods
during which Employee was not an employee of the
Company), plus (b) two times the number of $5,000
increments (rounded up to the next whole $5,000
increment) contained in the Employee's Annual
Compensation (as defined
<PAGE> 2
Mr. John H. Morrow
November 7, 1994
Page 2
below); provided, that the Continued Payment Period shall
not exceed three years. "Annual Compensation" shall mean
the sum of (x) your annual base salary in effect
immediately prior to the Employment Termination Date,
plus (y) the Average Annual Incentive Payment.
(b) Any outstanding unvested options held by you to purchase
stock of the Company that have not otherwise become
exercisable under the terms of the Company's stock option
plans shall become fully vested and exercisable.
2. If your employment is terminated under circumstances in which
you are entitled to receive payments under Section 3.1 of the
Agreement, and if you are not otherwise entitled to a bonus
payment with respect to the fiscal year in which your employment
is terminated, the Company will pay to you within 30 days after
the Employment Termination Date, and subject to required
withholdings, a one-time bonus equal to the product of (i) the
fraction of a full year represented by the period from the
beginning of the fiscal year to the Employment Termination Date,
and (ii) the Average Annual Incentive Payment.
3. If your employment is terminated under circumstances in which
you are entitled to receive payments under Section 3.1 of the
Agreement, then the Company 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 (the "Code"), as follows: the Company shall pay the
percentage of the cost of COBRA coverage with respect to your
coverage status (e.g., individual or family) in effect
immediately prior to the Employment Termination Date, 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 your coverage status in
effect immediately prior to the Employment Termination Date and
(ii) your monthly contribution toward your coverage in effect
immediately prior to the Employment Termination Date, and the
denominator of which shall be the monthly cost of COBRA coverage
for your 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 your COBRA
coverage. Such benefits shall be in addition to any other
benefits relating to health or medical care benefits that are
available under the Company's policies to you following
termination of employment.
4. The severance benefits provided under the Agreement and this
Supplemental Agreement will be reduced by any severance benefits
to which you are entitled under the Company's Severance Benefits
policy for terminated employees, or any other agreement between
you and the Company for severance benefits. Except as provided
in the immediately preceding sentence, all of your rights and
benefits, including those under the Agreement and this Letter
Agreement, shall remain in full
<PAGE> 3
Mr. John H. Morrow
November 7, 1994
Page 3
force and effect. It is expressly agreed that payments or
benefits to you under the Company's SERP or under any agreement
with you relating to the Company's SERP or any other retirement
or pension arrangement shall not be offset against or reduce in
any way any payments or benefits to which you are entitled under
the Agreement or under this Supplemental Agreement.
5. Section 5 of the Agreement is hereby replaced with the following:
Non-Competition. During your employment, you agree that you
will not directly or indirectly compete with the Company, or
engage in, or act as an officer, director, employee, or agent of
any person or entity that is engaged in, any business in which
the Company is engaged, without the written approval of the CEO.
The foregoing shall not prohibit you from investing in any
securities of a corporation whose securities, or any of them,
are listed on a national securities exchange or traded in the
over-the-counter market so long as you shall own less than 3% of
the outstanding voting stock of such corporation. If you are
entitled to receive payments under Section 3.1(a), then, as to
any business in which the Company is engaged as of the
Employment Termination Date, you shall continue to be bound by
the provisions of this Section 5 during the applicable Continued
Payment Period. If you violate the provisions of this Section
5, then, in addition to any other rights at law or in equity,
the Company shall be entitled to discontinue any payments
otherwise due to you hereunder.
6. (a) Anything in the Agreement or this Supplemental Agreement
to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by the Company to or
for the benefit of Employee (whether paid or payable or
distributed or distributable pursuant to the terms of this
Agreement or otherwise) (a "Payment") would be nondeductible by
the Company for Federal income tax purposes because of Section
280G of the Code, then the aggregate present value of amounts
payable or distributable as severance benefits hereunder shall
be reduced to the Reduced Amount. The "Reduced Amount" shall be
an amount expressed in present value which maximizes the
aggregate present value of such severance benefits without
causing any Payment to be nondeductible by the Company 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
severance benefits payable hereunder would nevertheless be
nondeductible by the Company for Federal income tax purposes
because of Section 280G of the Code, then the aggregate present
value of Payments which are not severance benefits under this
Agreement 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 Company because of Section 280G of the
Code. For
<PAGE> 4
Mr. John H. Morrow
November 7, 1994
Page 4
purposes of this paragraph 6, present value shall be determined
in accordance with Section 280G(d)(4) of the Code.
(b) All determinations required to be made under this
paragraph 6 shall be made by an accounting firm jointly selected
by you and the Company (the "Accounting Firm") and paid by the
Company, and which may be the Company's independent auditors.
The Accounting Firm shall provide detailed supporting
calculations both to the Company and Employee within 15 business
days of the Date of Termination or such earlier time as is
requested by the Company and an opinion to Employee that he or
she 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 Company and Employee. Employee shall determine which and
how much of the Payments, shall be eliminated or reduced
consistent with the requirements of this paragraph 6, provided
that, if Employee does not make such determination within ten
business days of the receipt of the calculations made by the
Accounting Firm, the Company shall elect which and how much of
the Payments shall be eliminated or reduced consistent with the
requirements of this paragraph 6 and shall notify Employee
promptly of such election; and provided further that any
Payments which do not constitute gross income to Employee shall
not be reduced or eliminated unless all other Payments have
first been eliminated. Within five business days thereafter,
the Company shall pay to or distribute to or for the benefit of
Employee such amounts as are then due to Employee 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 Company which should
not have been made ("Overpayment") or that Payments will not
have been made by the Company 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 Employee or the Company 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 Company to or for the
benefit of Employee shall be treated for all purposes as a loan
ab initio to Employee which Employee shall repay to the Company
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 Company if and to the extent such deemed
loan and payment would not either reduce the amount on which
Employee 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
Company to or for the benefit of Employee together with interest
at 120% of the applicable federal rate provided for in Section
7872(f)(2) of the Code, compounded semiannually.
<PAGE> 5
Mr. John H. Morrow
November 7, 1994
Page 5
7. Notwithstanding anything in the Agreement or this Supplemental
Agreement to the contrary, if after giving effect to the provisions of Section
6 of this Supplemental Agreement any portion of any payments to you by the
Company under the Agreement, this Supplemental Agreement and any other present
or future plan or program of the Company or other present or future agreement
between you and the Company would not be deductible by the Company for Federal
income tax purposes by reason of application of Section 162(m) of the Code,
then payment of that portion to you shall be deferred until the earliest date
upon which payment thereof can be made to you without being non-deductible
pursuant to Section 162(m) of the Code. In the event of such a deferral, the
Company shall pay interest to you on the amount deferred at 120% of the
applicable federal rate provided for in Section 7872(f)(2) of the Code,
compounded semi-annually.
8. Miscellaneous.
8.1. No Assignment. No benefit hereunder shall be subject to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrances or
charge, and any attempt to do so shall be void.
8.2 Notices. All notices hereunder shall be in writing, and shall
be delivered in person, by facsimile or by certified mail-return receipt
requested. Notices shall be delivered as follows:
If to the Company:
Chief Executive Officer
Puritan-Bennett Corporation
9401 Indian Creek Parkway
Overland Park, Kansas 66225
If to the Employee:
Mr. John H. Morrow
10231 Catalina
Overland Park, Kansas 66207
Either party may change its address for notice by giving notice to the other
party of a new address in accordance with the foregoing provisions.
8.3 Governing Law. This Agreement shall be governed by the laws of
the State of Kansas.
8.4 Disputes. In the event of any dispute between the Company and
Employee arising out of this Agreement, the Company's then current Alternative
Dispute Resolution Procedure will be followed (a copy of the current procedure
is attached hereto) and the prevailing party shall be entitled to recover its
reasonable attorneys' fees and expenses incurred in connection with the
enforcement of its rights hereunder.
<PAGE> 6
Mr. John H. Morrow
November 7, 1994
Page 6
8.5 Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
8.6 Descriptive Headings. Descriptive headings of the several
paragraphs of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
Please acknowledge your agreement to the foregoing Letter Agreement by
signing the enclosed counterpart of this letter and returning it to the
Company.
Very truly yours,
PURITAN-BENNETT CORPORATION
By: /s/ Lee Robbins
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Vice President
Agreed to and accepted:
/s/ John H. Morrow
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JOHN H. MORROW
<PAGE> 1
Exhibit 5
FORM OF EXECUTIVE AGREEMENT
FOR MESSRS. DOYLE, JONES, RANKIN AND NILES
November 7, 1994
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Puritan-Bennett Corporation
[Address]
Dear Mr. ______________:
This letter agreement restates and supersedes in its entirety the
letter agreement dated _________________, 1994 between you and Puritan-Bennett
Corporation (the "Company"). In view of your position as
________________________ of the Company and in consideration of your agreement
to continue serving in this or some other mutually agreeable capacity, the
Board of Directors (the "Board") of the Company has approved the commitment by
the Company to provide you ("Employee") with certain benefits during your
employment and in the event of termination of your employment for Good Reason,
if by you, and other than for Cause, if by the Company. This letter agreement
(the "Agreement") establishes the terms and conditions of your continued
employment by the Company, including your rights to receive certain payments
and benefits during and after your employment by the Company.
1. Certain Definitions.
1.1 Cause. "Cause" means (a) the Employee'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 Employee 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 Employee, or
(c) drug or alcohol abuse on Company premises or at a
Company sponsored event, or (d) the Employee's material
violation of any provision of this Agreement, which,
after written notice to do so, the Employee fails to make
reasonable efforts to correct within a reasonable time.
"Cause" shall not include any matter other than those
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 the
Employee, or upon any
<PAGE> 2
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November 7, 1994
Page 2
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 Employee acted in good faith
and in a manner which he reasonably believed to be in or
not opposed to the best interests of the Company.
1.2 Good Reason. "Good Reason" means (a) breach by the
Company or any successor company of any of the provisions
of this Agreement not corrected within ninety (90) days
after written notice to the Company thereof, or (b) any
of the following if the same shall occur within two years
after a Change of Control: (i) reduction of the
Employee's base salary, management bonus percentage or
other compensation, as in effect immediately prior to the
Change of Control, (ii) failure to continue in effect any
medical, dental, accident, or disability plan in which
the Employee 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 Employee's
participation or reduce the Employee's benefits under any
of such plans, (iii) material reduction in Employee's job
responsibilities, (iv) material reduction of Employee's
title or position, (v) Employee shall be requested to
relocate to an office outside of the greater
___________________ metropolitan area, or (vi) failure or
refusal of any successor company to assume the Company's
obligations under this Agreement.
1.3 Change of Control. A "Change of Control" shall be deemed
to have occurred at any of the following times:
1.3.1 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.
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November 7, 1994
Page 3
"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.
1.3.2 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 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 subsection 1.3.2,
considered as though such person were a
member of the Incumbent Board; or
1.3.3 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
1.3.4 The occurrence of any other event which the
Incumbent Board in its sole discretion
determines constitutes a Change of Control.
1.4 Normal Retirement Date. "Normal Retirement Date" shall
mean the earliest date (currently, the Employee's 65th
birthday) upon which the Employee is eligible to retire
from the Company and commence receiving full retirement
benefits under the Company's then applicable retirement
plan.
<PAGE> 4
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November 7, 1994
Page 4
1.5 Employment Termination Date. The date of delivery
of any notice of termination pursuant to Section
2.5 shall be the "Employment Termination Date."
1.6 Continued Payment Period. "Continued Payment
Period" shall have the meaning set forth in
Section 3.1(a)(i).
2. Benefits and Duties During Employment; Termination of
Employment.
2.1 Base Salary. Your current annual base salary is
$___________, payable in 24 equal semi-monthly amounts,
subject to required withholdings. Your base salary will
be reviewed and may be adjusted annually. Your base
salary will not be reduced from the current level or from
any future, higher levels without your written
concurrence, unless such reduction is in connection with
your disability and in accordance with the Company's
established disability income protection plan.
2.2 Management Bonus. For the fiscal year ending January 31,
1995, your target bonus is ___% of your annual base
salary under the Company's Management Incentive Bonus
Plan ("MIB Plan"). Your target bonus percentage under
the MIB Plan will not be reduced from the current level
or from any future, higher levels without your written
concurrence, unless such reduction is in connection with
your disability and in accordance with the Company's
established disability income protection plan. The
Company may modify the MIB Plan in the future; provided
that in the event of any such modification, the Company
will use reasonable efforts to provide you with a bonus
opportunity under the modified plan that is equivalent to
your opportunity under the current MIB Plan.
2.3 Other Employee Benefits. You will continue to be
eligible for all employee benefits generally available to
employees of the Company, and to the special benefit
programs in which you are currently participating, or in
which you are hereafter eligible to participate. These
special benefits include but are not limited to:
2.3.1 Company Automobile, including
reimbursement for automobile expenses.
2.3.2 Life insurance and income tax and estate
planning services, subject to currently
established annual limits.
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November 7, 1994
Page 5
2.4 Limitation on Outside Activities. You agree to
devote your full business time and efforts to the
rendition of such services to the Company as may be
designated by the Company, subject, however, to
temporary illness and customary vacations. You will
at all times be subject to the direction and
supervision of the CEO. You may devote a reasonable
amount of time to civic and community affairs but
shall not perform services during the term of your
employment for any other business organization in any
capacity without the prior consent of the CEO.
2.5 Employment Termination. Your employment with the
Company shall continue until either you or the
Company give written notice to the other of
termination of your employment.
3. Rights upon Termination of Employment.
3.1 Rights upon Termination by Company other than for
Cause, or by Employee for Good Reason. If the
Company terminates your employment other than for
Cause prior to your Normal Retirement Date, or if you
terminate your employment for Good Reason prior to
your Normal Retirement Date, then the Company shall
have the following obligations to you:
(a) (i) If such termination occurs within two
years after a Change of Control, then within 30 days
following the Employment Termination Date, the
Company shall pay to you in a lump sum the present
value, determined as of the Employment Termination
Date, of the amounts that you would have been paid by
the Company if, during the applicable Continued
Payment Period, the Company were to make equal
semi-monthly payments to you equal to your
semi-monthly base salary in effect immediately prior
to the Employment Termination Date plus one
twenty-fourth of the annual average of your incentive
bonus payments under the MIB Plan or any successor
thereto with respect to the three full (12 months)
fiscal years immediately preceding the Employment
Termination Date (such annual average being referred
to herein as the "Average Annual Incentive Payment"),
such amounts to be computed without regard to any
reductions which may have occurred in breach of this
Agreement or following a Change in Control. Such
payment shall be subject to all required
withholdings. The Continued Payment Period shall
commence on the Employment Termination Date, and
shall be a number of weeks determined by adding (a)
the greater of (i) four or (ii) two times the number
of years Employee has been an employee of the Company
(rounding up to the next full year and excluding any
<PAGE> 6
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November 7, 1994
Page 6
intervening periods during which Employee was not an
employee of the Company),plus (b) two times the
number of $5,000 increments (rounded up to the next
whole $5,000 increment) contained in the Employee's
Annual Compensation (as defined below), provided,
that the Continued Payment Period shall not exceed
___ years. "Annual Compensation" shall mean the sum
of (x) your annual base salary in the effect
immediately prior to the Employment Termination Date,
plus (y) the Average Annual Incentive Payment.
Present value shall be determined using a discount
rate equal to the Most Applicable Treasury Security
Rate compounded annually, if the Applicable Treasury
Security is a Treasury Bill, and semiannually, if the
Applicable Treasury Security is a Treasury Note. The
"Most Applicable Treasury Security Rate" shall be the
yield-to-maturity of the Applicable Treasury Security
with a remaining term equal to one-half of the
Continued Payment Period, as quoted in the edition of
the Wall Street Journal first published after the
Employment Termination Date. The "Applicable
Treasury Security" shall mean a Treasury Bill if the
Continued Payment Period is two years or less; and
shall mean a Treasury Note if the Continued Payment
Period is greater than two years.
(ii) If such termination occurs at any time
other than within two years after a Change of
Control, then, during the applicable Continued
Payment Period, the Company shall make semi-monthly
payments to you equal to your semi-monthly base
salary in effect immediately prior to the Employment
Termination Date plus one twenty-fourth of the
Average Annual Incentive Payment, such amounts to be
computed without regard to any reductions which may
have occurred in breach of this Agreement. Such
payments shall be subject to all required
withholdings.
(b) Any outstanding unvested options held by you
to purchase stock of the Company which have not
otherwise become exercisable under the terms of the
Company's stock option plans, shall become fully
vested and exercisable.
(c) If your employment is terminated under
circumstances in which you are entitled to receive
payments under Section 3.1(a) above, and if you are
not otherwise entitled to a bonus payment with
respect to the fiscal year in which your employment
is terminated, the Company will pay to you within 30
days after the Employment Termination Date, and
subject to required withholdings, a one-time bonus
equal to the product
<PAGE> 7
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November 7, 1994
Page 7
of (i) the fraction of a full year represented by the
period from the beginning of the fiscal year to the
Employment Termination Date, and (ii) the Average
Annual Incentive Payment.
(d) As soon as practical following the Employment
Termination Date, the Company shall pay to you the
market value, as of close of business on the
Employment Termination Date, of any unvested
restricted stock awarded to you, subject to required
withholdings.
3.2 Death Benefits. If you are terminated by the Company
other than for Cause or terminate your employment for
Good Reason, and thereafter you die during the
applicable Continued Payment Period, the Company
shall be obligated to pay to your spouse, if
surviving, and otherwise to your estate, the amounts
to which you would have been entitled under Section
3.1 had you survived.
3.3 No Obligation To Mitigate. You shall not be required
to mitigate damages or the amount of any payment
provided for under this Agreement by seeking other
employment or otherwise, nor shall the amount of any
payment provided for under this Agreement be reduced
by any compensation earned by you as the result of
employment by another employer after the Employment
Termination Date, or otherwise.
3.4 COBRA Benefits. If your employment is terminated
without cause by the Company, or for Good Reason by
you, then the Company 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 (the "Code"), as
follows: the Company shall pay the percentage of the
cost of COBRA coverage with respect to your coverage
status (e.g., individual or family coverage) in
effect immediately prior to the Employment
Termination Date, 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 your coverage
status in effect immediately prior to the Employment
Termination Date and (ii) your monthly contribution
toward your coverage in effect immediately prior to
the Employment Termination Date, and the denominator
of which shall be the monthly cost of COBRA coverage
for your 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.
<PAGE> 8
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November 7, 1994
Page 8
Such benefits shall be in addition to any other
benefits relating to health or medical care benefits
that are available under the Company's policies to
Employee following termination of employment.
3.5 Other Rights. The severance benefits provided
hereunder will be reduced by any severance benefits
to which you are entitled under the Company's
Severance Benefits policy for terminated employees,
or any other agreement between you and the Company
for severance benefits. Except as provided in the
immediately preceding sentence, the provisions of
this Agreement, and any payment provided for
hereunder, shall not reduce any amounts otherwise
payable, or in any way diminish your existing rights
or rights which would accrue solely as a result of
the passage of time, under any benefit or incentive
plan, employment agreement or other contract, plan or
arrangement. As soon as practical following the
Employment Termination Date, you will receive a cash
payment for the value of your earned but unused
vacation time as of the Employment Termination Date
in accordance with then current Company Policy.
4. Successor To Company. The Company shall require any successor
or assignee, whether direct or indirect, by purchase, merger,
consolidation or otherwise to all or substantially all the
business or assets of the Company, expressly and
unconditionally to assume and agree to perform the Company's
obligations under this Agreement, in the same manner and to
the same extent that the Company would be required to perform
if no such succession or assignment had taken place. In such
event, the term "Company," as used in this Agreement, shall
mean the Company and any successor or assignee to the business
or assets which by reason hereof becomes bound by the terms
and provisions of this Agreement.
5. Non-Competition. During your employment, you agree that you
will not directly or indirectly compete with the Company, or
engage in, or act as an officer, director, employee, or agent
of any person or entity that is engaged in, any business in
which the Company is engaged, without the written approval of
the CEO. The foregoing shall not prohibit you from investing
in any securities of a corporation whose securities, or any of
them, are listed on a national securities exchange or traded
in the over-the-counter market so long as you shall own less
than 3% of the outstanding voting stock of such corporation.
If you are receiving payments under Section 3.1(a)(ii), then,
as to any business in which the Company is engaged as of the
Employment Termination Date, you shall continue to be bound by
the provisions of this Section 5 during the applicable
Continued Payment Period.
<PAGE> 9
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November 7, 1994
Page 9
6. Confidentiality. During your employment and at all times
thereafter, you will not divulge to anyone or use for your own
benefit or the benefit of any other person or entity any
information concerning the Company, its businesses,
operations, products, plans, employees, or otherwise,
including without limitation trade secrets and other
proprietary information, except for information that has been
published by or with the consent of the Company and is as a
result thereof generally available to the public, or
information reasonably required by you for the preparation of
personal tax returns.
7. Reduction of Payments.
7.1 (a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined
that any payment or distribution by the Company to or
for the benefit of Employee (whether paid or payable
or distributed or distributable pursuant to the terms
of this Agreement or otherwise) (a "Payment") would
be nondeductible by the Company for Federal income
tax purposes because of Section 280G of the Code,
then the aggregate present value of amounts payable
or distributable as severance benefits hereunder
shall be reduced to the Reduced Amount. The "Reduced
Amount" shall be an amount expressed in present value
which maximizes the aggregate present value of such
severance benefits without causing any Payment to be
nondeductible by the Company 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 severance benefits payable hereunder
would nevertheless be nondeductible by the Company
for Federal income tax purposes because of Section
280G of the Code, then the aggregate present value of
Payments which are not severance benefits under this
Agreement 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 Company because of Section 280G of the Code. For
purposes of this paragraph 7.1, present value shall
be determined in accordance with Section 280G(d)(4)
of the Code.
(b) All determinations required to be made under
this paragraph 7.1 shall be made by an accounting
firm jointly selected by you and the Company (the
"Accounting Firm") and paid by the Company, and which
may be the Company's independent auditors. The
Accounting Firm shall provide detailed supporting
calculations both to the Company and Employee within
15 business days of the Date of Termination or such
earlier time as is requested by the Company and an
opinion to Employee
<PAGE> 10
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November 7, 1994
Page 10
that he or she 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 Company and Employee. Employee shall
determine which and how much of the Payments, shall
be eliminated or reduced consistent with the
requirements of this paragraph 7.1, provided that, if
Employee does not make such determination within ten
business days of the receipt of the calculations made
by the Accounting Firm, the Company shall elect which
and how much of the Payments shall be eliminated or
reduced consistent with the requirements of this
paragraph 7.1 and shall notify Employee promptly of
such election; and provided further that any Payments
which do not constitute gross income to Employee
shall not be reduced or eliminated unless all other
Payments have first been eliminated. Within five
business days thereafter, the Company shall pay to or
distribute to or for the benefit of Employee such
amounts as are then due to Employee 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 Company which should not have been
made ("Overpayment") or that Payments will not have
been made by the Company 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 Employee or the Company 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
Company to or for the benefit of Employee shall be
treated for all purposes as a loan ab initio to
Employee which Employee shall repay to the Company
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 Company if and to the extent such deemed loan and
payment would not either reduce the amount on which
Employee 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 Company to or for the benefit of Employee
together with interest at 120% of the applicable
<PAGE> 11
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November 7, 1994
Page 11
federal rate provided for in Section 7872(f)(2) of
the Code, compounded semiannually.
7.2 Notwithstanding anything in this Agreement to the
contrary, if after giving effect to the provisions of
Section 7.1 any portion of any payments to you by the
Company hereunder and any other present or future
plan or program of the Company or other present or
future agreement between you and the Company would
not be deductible by the Company for Federal income
tax purposes by reason of application of Section
162(m) of the Code, then payment of that portion to
you shall be deferred until the earliest date upon
which payment thereof can be made to you without
being non- deductible pursuant to Section 162(m) of
the Code. In the event of such a deferral, the
Company shall pay interest to you on the amount
deferred at 120% of the applicable federal rate
provided for in Section 7872(f)(2) of the Code,
compounded semi-annually.
8. Miscellaneous.
8.1. No Assignment. No benefit hereunder shall be subject
to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrances or charge, and any
attempt to do so shall be void.
8.2 Notices. All notices hereunder shall be in writing,
and shall be delivered in person, by facsimile or by
certified mail-return receipt requested. Notices
shall be delivered as follows:
If to the Company:
Chief Executive Officer
Puritan-Bennett Corporation
9401 Indian Creek Parkway
Overland Park, Kansas 66225
If to the Employee:
---------------------------
---------------------------
---------------------------
<PAGE> 12
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November 7, 1994
Page 12
Either party may change its address for notice by
giving notice to the other party of a new address in
accordance with the foregoing provisions.
8.3 Governing Law. This Agreement shall be governed by
the laws of the State of Kansas.
8.4 Disputes. In the event of any dispute between the
Company and Employee arising out of this Agreement,
the Company's then current Alternative Dispute
Resolution Procedure will be followed (a copy of the
current procedure is attached hereto) and the
prevailing party shall be entitled to recover its
reasonable attorneys' fees and expenses incurred in
connection with the enforcement of its rights
hereunder.
8.5 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be
invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and
shall in no way be affected, impaired or invalidated.
8.6 Descriptive Headings. Descriptive headings of the
several paragraphs of this Agreement are inserted for
convenience only and shall not control or affect the
meaning or construction of any of the provisions
hereof.
Please acknowledge your agreement to the foregoing Agreement by
signing the enclosed counterpart of this letter and returning it to the
Company.
Very truly yours,
PURITAN-BENNETT CORPORATION
---------------------------------
By:
Title:
Agreed to and accepted:
- -------------------------------
<PAGE> 1
Exhibit 6
FORM OF SEVERANCE AGREEMENT
November 7, 1994
- ---------------------------
- ---------------------------
Puritan-Bennett Corporation
[Address]
Dear ______________:
In view of your position as ________________________________ at
Puritan-Bennett Corporation (the "Company"), and in consideration of your
services in such capacity, the Board of Directors (the "Board") has approved
the commitment by the Company to you ("Employee") to provide you with certain
benefits in the event your employment is terminated for specified reasons
within two years after a Change of Control. The purpose of this letter
agreement (the "Agreement") is to set forth the terms and conditions of the
Company's agreement with you concerning such benefits.
1. Termination Benefits. If, within two years after the date of
a Change of Control, Employee's employment is terminated (a) by the Company for
any reason other than for Cause or Employee's death or Disability or (b) by
Employee for Good Reason, Employee will be entitled to receive the following
benefits:
1.1 Within 30 days following the Date of Termination, the
Company shall pay to you in a lump sum the present value, determined as of the
Date of Termination, of the amounts that you would have been paid by the
Company if, during the Continued Payment Period, the Company were to make
weekly payments to you each equal to one fifty-second of your Annual
Compensation. Such payment shall be subject to all required withholdings. The
Continued Payment Period shall commence on the Date of Termination, and shall
be a number of weeks determined by adding (a) the greater of (i) four or (ii)
two times the number of years Employee has been an employee of the Company
(rounding up to the next full year and excluding any intervening periods during
which Employee was not an employee of the Company), plus (b) two times the
number of $5,000 increments (rounded up to the next whole $5,000 increment)
contained in the Employee's Annual Compensation; provided, that the Continued
Payment Period shall not exceed two years. Present value shall be determined
using a discount rate, compounded annually, equal to the yield-to-maturity of a
U.S. Treasury Bill with a remaining term equal to one-half of the Continued
Payment Period, as quoted in the edition of the Wall Street Journal first
published after the Date of Termination. If Employee should die before
receiving all amounts payable to Employee hereunder, any unpaid amounts will be
paid to Employee's spouse, if living, and otherwise to Employee's estate.
Employee shall be entitled to receive interest on any amount payable hereunder
from the date payment
<PAGE> 2
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November 7, 1994
Page 2
was due to the date actually paid at the rate of the lesser of 12% or the
highest rate legally permissible. Employee will not be required to mitigate
the amount of the payments due to Employee hereunder by seeking other
employment or otherwise. Any amount earned by Employee as the result of
employment by another employer or otherwise after the Date of Termination shall
not reduce the Company's obligation to Employee hereunder.
1.2 Any outstanding unvested options held by Employee to
purchase stock of the Company that have not otherwise become exercisable under
the terms of the Company's stock option plans shall become fully vested and
exercisable.
1.3 COBRA Benefits. The Company 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 (the "Code"), as
follows: the Company shall pay the percentage of the cost of COBRA coverage
with respect to your coverage status (e.g., individual or family) in effect
immediately prior to the Date of Termination, 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 your coverage
status in effect immediately prior to the Date of Termination and (ii) your
monthly contribution toward your coverage in effect immediately prior to the
Date of Termination, and the denominator of which shall be the monthly cost of
COBRA coverage for your coverage status in effect immediately prior to the Date
of Termination. 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 are available under
the Company's policies to Employee following termination of employment.
1.4 Offset for Other Arrangements. The severance benefits
provided hereunder will be reduced by the amount of any severance benefits to
which Employee is entitled under the Company's Severance Benefits policy for
terminated employees, or any other agreement between Employee and the Company
for severance benefits.
2. Notice of Termination. Any termination by the Company for
Cause or by Employee for Good Reason shall be communicated by written notice to
the other party given by hand delivery or by registered or certified mail,
return receipt requested, postage prepaid, if to Employee, then to Employee at
his or her address as set forth in the Company's records, and, if to the
Company, to Puritan-Bennett Corporation, Human Relations Division, 9401 Indian
Creek Parkway, Overland Park, Kansas 66207. Any notices given pursuant to this
paragraph 2 shall be effective the earlier of when such notice is actually
received by the addressee or three days after such notice is delivered or sent.
3. Definitions.
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November 7, 1994
Page 3
3.1 "Annual Compensation" means the greater of (a) the
sum of (i) the Employee's annual base salary ("Base Salary") in effect on the
Date of Termination, plus (ii) the annual average of the Employee's incentive
bonus payments under the Company's Management Incentive Bonus Plan or any
successor thereto with respect to the three full (12 months) fiscal years
("Average Bonus") immediately preceding the Date of Termination (provided, if
Employee has not been employed by the Company during all of the three full
fiscal years immediately preceding the Date of Termination, then "Average
Bonus" shall mean the annualized average of the bonus payments received by the
Employee, computed based on the actual period of Employee's employment with the
Company during any full fiscal year(s) of the Company with respect to which
Employee has received a bonus); or (b) the sum of (x) the Employee's Base
Salary in effect on the date of the Change of Control, plus (y) the Employee's
Average Bonus computed with respect to the three full (12 months) fiscal years
immediately preceding the date of the Change of Control.
3.2 "Cause" means (a) the Employee's willful violation of
any reasonable rule or direct order of the Board, the Company's Chief Executive
Officer ("CEO") or other elected officer, where such officer is Employee's
direct supervisor, which, after written notice to do so, the Employee 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 Employee, or (c)
drug or alcohol abuse on Company premises or at a Company sponsored event, or
(d) the Employee's material violation of any provision of this Agreement,
which, after written notice to do so, the Employee fails to make reasonable
efforts to correct within a reasonable time. "Cause" shall not include any
matter other than those 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 the Employee, 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 Employee acted in
good faith and in a manner which he reasonably believed to be in or not opposed
to the best interests of the Company.
3.3 Change of Control. A "Change of Control" shall be deemed
to have occurred at any of the following times:
3.3.1 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
<PAGE> 4
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November 7, 1994
Page 4
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.
3.3.2 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 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
subsection 3.3.2, considered as
though such person were a member of
the Incumbent Board; or
3.3.3 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
3.3.4 The occurrence of any other event
which the Incumbent Board in its
sole discretion determines
constitutes a Change of Control.
<PAGE> 5
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November 7, 1994
Page 5
3.4 "Date of Termination" means the date of receipt of the
written notice of termination pursuant to paragraph 2 or any later date
specified therein, as the case may be; provided, however, that (a) if
Employee's employment is terminated by the Company other than for Cause or by
reason of death or Disability, the Date of Termination shall be the date on
which the Company notifies Employee of such termination and (b) if Employee's
employment is terminated by reason of death or Disability, the Date of
Termination shall be the date of death or determination of Disability pursuant
to paragraph 3.5, as the case may be.
3.5 "Disability" means disability that, at least 26 weeks
after its commencement, is determined to be total and permanent by a physician
selected by the Company or its insurers and acceptable to Employee or
Employee's legal representative (such acceptance not to be unreasonably
withheld).
3.6 "Good Reason" means (i) reduction of the Employee's base
salary, management bonus percentage or other compensation, as in effect
immediately prior to the Change of Control, (ii) failure to continue in effect
any medical, dental, accident, or disability plan in which the Employee 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
Employee's participation or reduce the Employee's benefits under any of such
plans, (iii) material reduction in Employee's job responsibilities, (iv)
material reduction of Employee's title or position, (v) Employee shall be
requested to relocate to an office outside of the greater
______________________ metropolitan area, or (vi) failure or refusal of any
successor company to assume the Company's obligations under this Agreement.
4. Nonexclusivity. Nothing in this Agreement shall prevent or
limit Employee's continuing or future participation in any benefit, bonus,
incentive or other plans, programs, policies or practices provided by the
Company and for which Employee may otherwise qualify, nor shall anything herein
limit or otherwise affect such rights as any Employee may have under any stock
option or other agreements with the Company. Except as otherwise expressly
provided herein, amounts which are vested benefits or which Employee is
otherwise entitled to receive under any plan, policy, practice or program of
the Company at or subsequent to the Date of Termination shall be payable in
accordance with such plan, policy, practice or program.
5. Successor to Company. The Company shall require any successor
or assignee, whether direct or indirect, by purchase, merger, consolidation or
otherwise, to all or substantially all the business or assets of the Company,
expressly and unconditionally to assume and agree to perform the Company's
obligations under this Agreement, in the same manner and to the same extent
that the Company would be required to perform if no such succession or
assignment had taken place. In such event, the term "Company," as used in
<PAGE> 6
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November 7, 1994
Page 6
this Agreement, shall mean the Company as hereinafter defined and any successor
or assignee to the business or assets which by reason hereof becomes bound by
the terms and provisions of this Agreement.
6. 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 Company to or for the benefit of Employee (whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement
or otherwise) (a "Payment") would be nondeductible by the Company for Federal
income tax purposes because of Section 280G of the Code, then the aggregate
present value of amounts payable or distributable as severance benefits
hereunder shall be reduced to the Reduced Amount. The "Reduced Amount" shall
be an amount expressed in present value which maximizes the aggregate present
value of such severance benefits without causing any Payment to be
nondeductible by the Company 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 severance benefits
payable hereunder would nevertheless be nondeductible by the Company for
Federal income tax purposes because of Section 280G of the Code, then the
aggregate present value of Payments which are not severance benefits under this
Agreement 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 Company because of Section 280G
of the Code. For purposes of this paragraph 6, present value shall be
determined in accordance with Section 280G(d)(4) of the Code.
(b) All determinations required to be made under this
paragraph 6 shall be made by an accounting firm jointly selected by you and the
Company (the "Accounting Firm") and paid by the Company, and which may be the
Company's independent auditors. The Accounting Firm shall provide detailed
supporting calculations both to the Company and Employee within 15 business
days of the Date of Termination or such earlier time as is requested by the
Company and an opinion to Employee that he or she 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 Company and Employee. Employee shall determine which and how much of the
Payments shall be eliminated or reduced consistent with the requirements of
this paragraph 6; provided that, if Employee does not make such determination
within ten business days of the receipt of the calculations made by the
Accounting Firm, the Company shall elect which and how much of the Payments
shall be eliminated or reduced consistent with the requirements of this
paragraph 6 and shall notify Employee promptly of such election; and provided
further that any Payments which do not constitute gross income to Employee
shall not be reduced or eliminated unless all other Payments have first been
eliminated. Within five business days thereafter, the Company shall pay to or
distribute to or for the benefit of Employee such amounts as are then due to
Employee under this Agreement.
<PAGE> 7
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November 7, 1994
Page 7
(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 Company which should not have been made ("Overpayment") or that Payments
will not have been made by the Company 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 Employee or
the Company 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 Company to or for the benefit of Employee shall be
treated for all purposes as a loan ab initio to Employee which Employee shall
repay to the Company 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
Company if and to the extent such deemed loan and payment would not either
reduce the amount on which Employee 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 Company to or for the benefit of Employee
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 paragraphs 6(a)-(c) any
portion of any payments to Employee by the Company hereunder would not be
deductible by the Company for Federal income tax purposes by reason of
application of Section 162(m) of the Code, then payment of that portion to
Employee shall be deferred until the earliest date upon which payment thereof
can be made to Employee without being non-deductible pursuant to Section 162(m)
of the Code. In the event of such a deferral, the Company shall pay interest
to you on the amount deferred at 120% of the applicable federal rate provided
for in Section 7872(f)(2) of the Code, compounded semiannually.
7. Amendments and Termination. The Incumbent Board may from time
to time supplement, amend or terminate this Agreement or make any other
provisions which the Company may deem necessary or desirable, without the
approval of Employee; provided, however, that from and after such time there
has been a Change of Control, this Agreement shall not be amended in any manner
which would adversely affect the interests of Employee without the written
consent of Employee. Subject to the foregoing, this Agreement establishes and
vests in Employee a contractual right to the benefits to which Employee is
entitled hereunder, enforceable by Employee against the Company. The form of
any proper amendment or termination of this Agreement shall be a written
instrument signed by a duly authorized officer or officers of the Company
certifying that the amendment or termination has been approved by the Incumbent
Board.
<PAGE> 8
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November 7, 1994
Page 8
8. Miscellaneous.
8.1 Employment Status. This Agreement does not constitute a
contract of employment or impose on Employee or the Company any obligation to
retain Employee as an employee, to change the status of Employee's employment,
or to change the Company's policies regarding termination of employment.
8.2 No Assignment. No benefit hereunder shall be subject to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or
charge, and any attempt to do so shall be void.
8.3 Governing Law. This Agreement shall be governed by the
laws of the State of Kansas.
8.4 Expenses of Suit. In the event of any dispute or
litigation between the Company and Employee arising out of this Agreement, the
prevailing party shall be entitled to recover its reasonable attorneys' fees
and expenses incurred in connection with the enforcement of its rights
hereunder.
8.5 Severability. If any term, provision, covenants or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
8.6 Descriptive Headings. Descriptive headings of the
several paragraphs of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the
provisions hereof.
Please acknowledge your agreement to the foregoing agreement by
signing the enclosed counterpart of this letter and returning it to the
Company.
Very truly yours,
PURITAN-BENNETT CORPORATION
By:
---------------------------
President
Agreed to and Accepted:
- -----------------------
<PAGE> 1
Exhibit 7
PURITAN-BENNETT CORPORATION
CHANGE OF CONTROL SEVERANCE PLAN
SECTION 1. INTRODUCTION
This Change of Control Severance Plan (the "Plan") was adopted by the
Board of Directors of Puritan-Bennett Corporation effective November 7, 1994.
The Plan is intended to provide Employees whose employment terminates for
specified reasons within two years after a Change of Control with a lump sum
severance payment and with the continuation of coverage under certain employee
benefit plans.
The Plan is an employee welfare benefit plan within the meaning of
Section 3(l) of the Employee Retirement Income Security Act of 1974 ("ERISA")
and Section 2510.3-1 of the regulations issued thereunder.
SECTION 2. DEFINITIONS
(a) "Board" means the Company's Board of Directors, as constituted
from time to time.
(b) "Cause" means (i) the Employee's violation of Company policy
or failure to perform satisfactorily any assigned duties of his or her job, if
such failure is not corrected within 30 days after written notice to the
Employee, or (ii) misconduct, including but not limited to: (A) 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 Employee, or (B)
drug or alcohol abuse on Company premises or at a Company sponsored event, or
(C) conduct by an Employee that in the good faith and reasonable determination
of the Company demonstrates gross unfitness. "Cause" shall not include any
matter other than those specified in (A) through (C) 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 Employee, 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 Employee acted in
good faith and in a manner which he reasonably believed to be in or not opposed
to the best interests of the Company.
(c) "Change of Control" shall be deemed to have occurred at any of
the following times:
<PAGE> 2
(i) 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.
(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 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 Subsection (c)(ii), considered as though such
person were a member of the Incumbent Board; or
(iii) 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
(iv) The occurrence of any other event which the Incumbent
Board in its sole discretion determines constitutes a
Change of Control.
(d) "Company" means Puritan-Bennett Corporation.
2
<PAGE> 3
(e) "Controlled Group" means the Company and each other entity
that, at the time in question, is in the same controlled group of corporations
within the meaning of Section 414(b) of the Internal Revenue Code of 1986, as
amended; provided, however, that the term "Controlled Group" shall not include
any foreign (non-U.S.) corporations or unincorporated entities.
(f) "Date of Termination" means the date of receipt of the written
notice of termination pursuant to Section 3 or any later date specified in such
notice; provided, however, that (i) if the Employee's employment is terminated
by the Company other than for Cause or by reason of death or Disability, the
Date of Termination shall be the date on which the Company notifies the
Employee of such termination and (ii) if the Employee's employment is
terminated by reason of death or Disability, the Date of Termination shall be
the date of death or determination of Disability pursuant to Section 2(g), as
the case may be.
(g) "Disability" means disability that, at least 26 weeks after
its commencement, is determined to be total and permanent by a physician
selected by the Company or its insurers and acceptable to the Employee or the
Employee's legal representative (such acceptance not to be unreasonably
withheld).
(h) "Employee" means each regular full-time and regular part-time
employee on the payroll of the Company on the day before a Change of Control
occurs; provided, however, that "Employee" shall exclude any individual who
renders services to the Company through any temporary employment agency or
other employee leasing arrangement.
(i) "Good Reason" means (i) reduction of Employee's base salary or
rate of compensation as in effect immediately prior to the Change of Control,
(ii) failure to continue to provide any medical, dental, accident or disability
benefits that are no less favorable in the aggregate than the benefits provided
to Employee immediately prior to the Change of Control (except that employee
contributions may be raised to the extent of any cost increases imposed by
third parties), (iii) failure or refusal of the successor company to assume the
Company's obligations under this Plan, as required by Section 4(b), (iv) breach
by the Company or any successor company of any of the provisions of this Plan,
or (v) change of Employee's principal place of employment to a location more
than 50 miles from Employee's principal place of employment on the date hereof
without the consent of Employee.
(j) "Pay" means all wages, salary, bonus and other incentive
compensation (including commissions) paid by the Company as consideration for
an Employee's service during the 12 months ended on either the Date of
Termination or the date of the Change of Control, whichever is greater, that
are includible in the gross income of the Employee for federal income tax
purposes. If an Employee has not been employed by the Company for a full 12
months, the amount actually received by
3
<PAGE> 4
Employee during Employee's actual period of employment shall be annualized to
compute "Pay".
SECTION 3. NOTICE OF TERMINATION
Any termination of an Employee by the Company (whether for Cause or
otherwise) or by the Employee for Good Reason shall be communicated by written
notice to the other party given by hand delivery or by registered or certified
mail, return receipt requested, postage prepaid. If mailed, notice to an
Employee shall be delivered to his or her address as set forth in the Company's
records. Notice to the Company shall be delivered to Puritan-Bennett
Corporation, 9401 Indian Creek Parkway, Overland Park, Kansas 66225, Attention:
Human Relations Director. Any notice given pursuant to this Section 3 shall be
effective on the earlier of when such notice is actually received by the
addressee or three days after such notice is delivered or sent.
SECTION 4. BENEFITS
(a) Conditions of Payment. A benefit shall be payable to an
Employee under the Plan if, within 24 months after the occurrence of a Change
of Control, his or her employment with any member of the Controlled Group is
terminated (i) by the Company for any reason other than Cause or the Employee's
death or Disability or (ii) voluntarily by the Employee for Good Reason.
Subject to Subsections (b) and (e) of this Section 4, the benefit is payable
regardless of any return to employment.
(b) Special Rules and Exceptions. All members of the Controlled
Group shall participate in the Plan. In the case of a spinoff after a Change
of Control, the spun-off member shall adopt a plan equivalent to this Plan and
any other severance plan maintained by the member of the Controlled Group from
which it was spun off and shall continue this Plan and such other plan (if any)
for two years following the spinoff. No benefit shall be payable hereunder
solely because an Employee is transferred to another member of the Controlled
Group (as it existed prior to the Change of Control) or there is a spin-off and
the Employee becomes an employee of a spun-off member.
In addition no benefit shall be payable hereunder solely because an
Employee's employment terminates because a subsidiary, a division or other
operating assets of any member of the Controlled Group is sold if:
(i) The purchaser is contractually obligated to
offer the Employee the same or a better job without relocation; and
(ii) The purchaser is contractually obligated to
maintain both a plan equivalent to this Plan and a plan equivalent to any other
severance plan that
4
<PAGE> 5
covered the Employee prior to the sale for the balance of the two-year period
from the Change of Control.
In the event of a transfer to another member of the Controlled Group
(as it existed before the Change of Control) that requires the Employee's
relocation, the Employee shall be reimbursed for his or her relocation expenses
under the Company's policy in effect prior to the Change of Control.
(c) Cash Benefit. An Employee's lump sum severance payment shall
be paid in cash as soon as practicable (but in no event more than 30 days)
following termination of employment, and shall be equal to the greater of (i)
four weeks of Pay, or (ii) one week of Pay for each completed six months of
such Employee's service with the Company; provided that in no event shall the
total amount of payments hereunder to an Employee exceed two times the
Employee's compensation during the one-year period ending on the Date of
Termination.
(d) Offsets and Withholding. The benefit under this Plan will be
reduced by any severance benefits to which the Employee is entitled under the
Company's Severance Benefits policy for terminated employees, or any other
agreement between the Employee and the Company for severance benefits. In any
event, the Company shall withhold any appropriate federal, state, local and
foreign income and employment taxes from any cash payments made hereunder.
(e) COBRA Benefits. An Employee who is entitled to the lump sum
severance payment hereunder shall also be entitled to the following benefits:
The Company 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 (the "Code"), as follows: the Company shall pay the
percentage of the cost of COBRA coverage with respect to the Employee's
coverage status (e.g., individual or family coverage) in effect immediately
preceding termination of the Employee's 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 the Employee's
coverage status in effect immediately prior to the termination of the
Employee's employment and (ii) the Employee's monthly contribution toward the
Employee's coverage in effect immediately prior to the termination of the
Employee's employment, and the denominator of which shall be the monthly cost
of COBRA coverage for the Employee's coverage status in effect immediately
prior to the termination of the Employee's employment. 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 a part of such Employee's COBRA coverage. Such benefits
shall be in addition to any other benefits relating to health or medical care
benefits that are available under the Company's policies to terminated
Employees.
5
<PAGE> 6
SECTION 5. NONEXCLUSIVITY
Nothing in this Plan shall prevent or limit the Employee's continuing
or future participation in any benefit, bonus, incentive or other plan,
program, policy or practice provided by the Company and for which Employees may
otherwise qualify, nor shall anything herein limit or otherwise affect such
rights that any Employee may have under any stock option or other agreement
with the Company. Except as otherwise expressly provided herein, amounts that
are vested benefits or that an Employee is otherwise entitled to receive under
any plan, policy, practice or program of the Company at or subsequent to the
Date of Termination shall be payable in accordance with such plan, policy,
practice or program.
SECTION 6. PAYMENTS TO AND FROM THE PLAN
The benefits under the Plan shall be paid from the general funds of
the Company, and all Employees shall be no more than unsecured general
creditors of the Company. Nothing contained in the Plan shall be deemed to
create a trust of any kind for the benefit of the Employees, or create any
fiduciary relationship between the Company and the Employees with respect to
any assets of the Company. The Company is under no obligation to fund the
benefits provided herein prior to payment, although it may do so if it chooses.
Any assets that the Company chooses to use for advance funding shall
nevertheless constitute assets of the Company and shall not cause the Plan to
be a funded plan within the meaning of any section of ERISA.
SECTION 7. ADMINISTRATION
The Company is the plan administrator and plan sponsor for purposes of
ERISA.
SECTION 8. REDUCTION OR DEFERRAL OF BENEFIT
Although it is highly unlikely that the provisions of this Section 8
could ever apply, in order to minimize potential adverse income tax
consequences to either or both the Company and the Employee, and
notwithstanding anything in this Plan to the contrary:
(a) If any amounts due to the Employee under this Agreement and
any other plan or program of the Company constitute a "parachute payment" as
such term is defined in Section 280G(b)(2) of the Code, and the amount of the
parachute payment, is equal to or greater than three times the Employee's "base
amount," as defined in Section 280G(b)(3) of the Code, then the aggregate of
the amounts constituting the parachute payment shall be reduced to an amount
that will equal three times the Employee's base amount, less $1.00. The
determination to be made with respect to this Section 8(a) shall be made by the
Company's independent auditors, who shall be paid by the Company.
6
<PAGE> 7
(b) If after giving effect to the provisions of Section 8(a) any
portion of any payments to the Employee by the Company hereunder would not be
deductible by the Company for Federal income tax purposes by reason of
application of Section 162(m) of the Code, then payment of that portion to the
Employee shall be deferred until the earliest date upon which payment thereof
can be made to the Employee without being non-deductible pursuant to Section
162(m) of the Code. In the event of such a deferral, the Company shall pay
interest to the Employee on the amount deferred at 120% of the applicable
federal rate provided for in Section 7872(f)(2) of the Code, compounded
semi-annually.
SECTION 9. AMENDMENT AND TERMINATION
If no Change of Control occurs, the Plan shall terminate on the first
anniversary of its effective date, subject to renewal from year to year. Prior
to a Change of Control, the Company may amend or terminate the Plan at any time
and for any reason. For 24 months following a Change of Control, this Plan and
any other Controlled Group severance plan shall not be terminated and shall not
be amended to reduce any benefit or to make any condition more restrictive as
it applies to any Employee.
SECTION 10. MISCELLANEOUS
(a) No Implied Employment Contract. The Plan shall not be deemed
to give (i) any Employee or other person any right to be retained in the employ
of the Company nor (ii) to interfere with the right of the Company to discharge
any Employee or other person at any time and for any reason, which right is
hereby reserved.
(b) Benefits Not Assignable. No benefit hereunder shall be
subject to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or charge, and any attempt to do so shall be void.
(c) Legal Construction. The Plan shall be construed in accordance
with ERISA and, to the extent not preempted by ERISA, with the laws of the
State of Kansas.
(d) Severability. If any term, provision, covenant or restriction
of the Plan is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of the Plan shall remain in full force and effect and shall in no
way be affected, impaired or invalidated.
7
<PAGE> 8
SECTION 11. CLAIMS, INQUIRIES AND APPEALS
(a) Applications for Benefits and Inquiries. Any application for
benefits, inquiries about the Plan or inquiries about present or future rights
under the Plan must be submitted to the Plan Administrator in writing. The
Plan Administrator is:
Puritan-Bennett Corporation
Attention: Human Relations Department
9401 Indian Creek Parkway
Overland Park, Kansas 66225
(b) Denial of Claims. In the event that any application for
benefits is denied in whole or in part, the Plan Administrator must notify the
applicant, in writing, of the denial of the application, and of the applicant's
right to review of the denial. The written notice of denial will be set forth
in a manner designed to be understood by the applicant, and will include
specific reasons for the denial, specific references to the Plan provision upon
which the denial is based, a description of any information or material that
the Plan Administrator needs to complete the review and an explanation of the
Plan's review procedure.
This written notice will be given to the applicant within 90 days
after the Plan Administrator receives the application, unless special
circumstances require an extension of time, in which case the Plan
Administrator shall have up to an additional 90 days for processing the
application. If an extension of time for processing is required, written
notice of the extension will be furnished to the applicant before the end of
the initial 90-day period. This notice of extension will describe the special
circumstances necessitating the additional time and the date by which the Plan
Administrator is to render its decision on the application.
If written notice of denial of the application for benefits is not
furnished within the specified time, the application shall be deemed to be
denied. The applicant will then be permitted to appeal the denial in
accordance with the Review Procedure described below.
(c) Review Panel. The Plan Administrator will appoint a "Review
Panel," consisting of three individuals who may, but need not, be employees of
the Company. The Review Panel will be the named fiduciary that has the
authority to act on any appeal from a denial of benefits under the Plan.
(d) Request for a Review. Any person (or that person's authorized
representative) whose application for benefits is denied (or deemed denied), in
whole or in part, may appeal the denial by submitting a request for a review to
the Review Panel within 60 days after receiving written notice of the denial
from the Plan
8
<PAGE> 9
Administrator (or in the case of a deemed denial, within 60 days after the
application is deemed denied). The Plan Administrator will give the applicant
(or his or her representative) an opportunity to review pertinent documents in
preparing a request for review. A request for a review shall be in writing and
shall be addressed to the Review Panel. A request for review must set forth
all of the grounds on which it is based, all facts in support of the request
and any other matters that the applicant believes to be pertinent. The Review
Panel may require the applicant to submit additional facts, documents or other
material as it may find necessary or appropriate in making its review.
(e) Decision on Review. The Review Panel will act on each request
for review within 60 days after receipt of the request, unless special
circumstances require an extension of time (not to exceed an additional 60
days) for processing the request for review. If an extension of time is
required, written notice of the extension will be furnished to the applicant
within the initial 60-day period. The Review Panel will give prompt, written
notice of its decision to the applicant and to the Plan Administrator. In the
event that the Review Panel confirms the denial of the application for benefits
in whole or in part, the notice will outline, in a manner calculated to be
understood by the applicant, the specific Plan provisions upon which the
decision is based. If written notice of the Review Panel's decision is not
given to the applicant within the time prescribed in this Subsection (e), the
application will be deemed denied.
(f) Rules and Procedures. The Review Panel will establish rules
and procedures, consistent with the Plan and with ERISA, as necessary and
appropriate in carrying out its responsibilities. The Review Panel may require
an applicant who wishes to submit additional information in connection with an
appeal from the denial (or deemed denial) of benefits to do so at the
applicant's own expense.
(g) Exhaustion of Remedies. No legal action for benefits under
the Plan may be brought until (i) the applicant has submitted a written
application for benefits in accordance with the procedures described by
Subsection (a) above, (ii) such application has been denied or deemed denied
in accordance with Subsection (b) above, (iii) the applicant has filed a
written request for a review of the application in accordance with the appeal
procedure described in Subsection (d) above, and (iv) the application is denied
or deemed denied under the review procedure set forth in Subsection (e) above.
SECTION 12. OTHER PLAN INFORMATION
(a) Employer and Plan Identification Numbers. The Employer
Identification Number ("EIN") assigned to Puritan-Bennett Corporation is
44-0399150. The Plan Number ("PN") assigned to the Plan by the Plan Sponsor
pursuant to the instructions of the Internal Revenue Service is 512.
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<PAGE> 10
(b) Ending Date for Plan's Fiscal Year. The date of the end of
the fiscal year for the purpose of maintaining the Plan's records is January
31.
(c) Agent for the Service of Legal Process. The agent for the
service of legal process with respect to the Plan is Mr. Daniel C. Weary,
Member, Blackwell Sanders Matheny Weary & Lombardi L.C., 2300 Main Street,
Kansas City, Missouri 64108. The service of legal process may also be made on
the Plan by serving the Plan Administrator.
(d) Plan Sponsor and Administrator. The "Plan Sponsor" and the
"Plan Administrator" of the Plan is Puritan-Bennett Corporation. The Plan
Administrator is the named fiduciary charged with the responsibility for
administering the Plan.
SECTION 13. STATEMENT OF ERISA RIGHTS
Participants in this Plan (which is a welfare plan sponsored by
Puritan-Bennett Corporation) are entitled to certain rights and protections
under ERISA and are entitled to:
(a) Examine, without charge, at the Plan Administrator's office
and at other specified locations, such as work sites, all Plan documents filed
by the Plan with the U.S. Department of Labor, such as detailed annual reports;
(b) Obtain copies of all Plan documents and Plan information upon
written request to the Plan Administrator. The Administrator may make a
reasonable charge for the copies;
(c) Receive a summary of the Plan's annual financial report, in
the case of a plan which is required to file an annual financial report with
the Department of Labor.
In addition to creating rights for Plan participants, ERISA imposes
duties upon the people responsible for the operation of the employee benefit
plan. The people who operate the Plan, called "fiduciaries" of the Plan, have
a duty to do so prudently and in the interest of you and other Plan
participants and beneficiaries.
No one, including your employer or any other person, may fire you or
otherwise discriminate against you in any way to prevent you from obtaining a
Plan benefit or exercising your rights under ERISA. If your claim for a Plan
benefit is denied in whole or in part, you must receive a written explanation
of the reason for the denial. You have the right to have the Plan review and
reconsider your claim.
Under ERISA, there are a few steps you can take to enforce the above
rights. For instance, if you request materials from the Plan and do not
receive them within 30
10
<PAGE> 11
days, you may file suit in a federal court. In such a case, the court may
require the Plan Administrator to provide the materials and pay you up to $100
a day until you receive the materials, unless the materials were not sent
because of reasons beyond the control of the Plan Administrator. If you have a
claim for benefits which is denied or ignored, in whole or in part, you may
file suit in a state or federal court. If it should happen that the Plan
fiduciaries misuse the Plan's money, or if you are discriminated against for
asserting your rights, you may seek assistance from the U.S. Department of
Labor, or you may file suit in a federal court. The court will decide who
should pay court costs and legal fees. If you are successful, the court may
order the person you have sued to pay these costs and fees. If you lose, the
court may order you to pay these costs and fees--for example, if it finds your
claim is frivolous.
If you have any questions about the Plan, you should contact the Plan
Administrator. If you have any questions about your rights under ERISA, you
should contact your nearest area office of the Pension and Welfare Benefit
Administration, Department of Labor.
SECTION 14. EXECUTION
To record the adoption of the Plan as set forth herein,
Puritan-Bennett Corporation has caused its duly authorized officer to execute
the same this 7th day of November, 1994.
PURITAN-BENNETT CORPORATION
By: /s/ Lee Robbins
-------------------------------------
Title: Vice President
----------------------------------
11
<PAGE> 1
Exhibit 14
AMENDMENT TO THE
RESTATED PURITAN-BENNETT RETIREMENT SAVINGS &
STOCK OWNERSHIP PLAN
THIS AMENDMENT is made is this 7th day of November, 1994 by
Puritan-Bennett Corporation (the "Company") as plan sponsor of the Restated
Puritan-Bennett Retirement Savings & Stock Ownership Plan (the "Plan").
WHEREAS, the Plan was established effective January 1, 1984, and
restated effective January 1, 1989; and
WHEREAS, pursuant to Section 14 of the Plan, the Board of Directors
reserved the right to amend, modify, or terminate the Plan at any time; and
WHEREAS, the Board of Directors now desire to amend the Plan to permit
each Participants under the Plan to direct the Trustee with respect to a tender
offer for common stock of the Company allocated to such Participants' Accounts;
IT IS NOW THEREFORE RESOLVED, that the title of Section 15.11 is
amended to be "Voting and Tendering of Company Common Stock," and the following
paragraphs are added to the end of Section 15.11:
Each Participant shall have the right to direct the Trustee as
to the manner in which to respond to a tender offer, exchange offer or
any other offer to purchase common stock of the Company allocated to
the Participant's Accounts invested in the Stock Fund, irrespective of
whether the Participant is fully vested in such Accounts. The Trustee
or its designee will solicit such instructions from Participants by
distributing to each Participant such information as is distributed to
shareholders of the Company generally in connection with any such
offer, and any additional information the Trustee deems appropriate in
order for each Participant to give instructions. A reasonable
deadline for the return of such material may be specified.
Shares of common stock of the Company will be tendered,
exchanged or sold as instructed by the Participants, in response to a
tender offer, exchange offer or other offer to purchase. Fractional
shares will be aggregated for purposes of tendering, exchanging or
selling shares, to the extent possible, to reflect the instructions of
the Participants. Failure of any Participant to timely instruct the
Trustee pursuant hereto shall be treated as an instruction that the
common stock allocated to such Participant's Accounts shall not be
tendered, exchanged or sold.
<PAGE> 2
For purposes of receiving, tabulating and transmitting
instructions, the Trustee will establish a procedure to ensure that
instructions received from individual Participants regarding the a
tender offer, exchange offer, or any other offer are held in
confidence, and are not divulged, released or otherwise utilized in a
manner that, in the Trustee's reasonable judgment, might influence the
Participant's free exercise of the rights set forth in this Section
15.11.
IN WITNESS WHEREOF, this Amendment is effective as of the date first
written above.
COMPANY:
PURITAN-BENNETT CORPORATION
-------------------------------
By:
Title:
ATTEST:
By:
-----------------------------------
Title:
--------------------------------
Date:
---------------------------------
The undersigned hereby accepts the adoption of this Amendment by the
Company.
TRUSTEE:
IDS TRUST COMPANY
-------------------------------
By:
Title:
ATTEST:
By:
-----------------------------------
Title:
--------------------------------
Date:
---------------------------------
<PAGE> 1
Exhibit 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).
<PAGE> 2
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.
-2-
<PAGE> 3
(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
-3-
<PAGE> 4
(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
-4-
<PAGE> 5
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
-5-
<PAGE> 6
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
---------------------------------
By: Lee Robbins
Title: Vice President
EMPLOYEE:
/s/ Burton A. Dole, Jr.
- ---------------------------
Burton A. Dole, Jr.
9605 W. 191st Street
Bucyrus, Kansas 66013
-6-
<PAGE> 1
Exhibit 17
AGREEMENT
THIS AGREEMENT is made as of November 7, 1994 by and between
Puritan-Bennett Corporation, a Delaware corporation (hereinafter referred to as
the "Corporation"), and John H. Morrow (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.
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein, the Employee and the Corporation agree that, 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 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; (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); and (d) the Benefit
Commencement Date under Section 4.02 shall be the first day of the
calendar month coinciding with or next following the earlier of--(i)
the first date following termination of Member's employment on which
the Corporation is in material breach of its obligations pursuant to
the contracts between the Member and the Corporation dated June 9,
1994, and November 7, 1994 (the "Contracts"); or
<PAGE> 2
(ii) the later of: (I) the date the Member attains age fifty-five
(55), or (II) the latest date on which the last payment pursuant to
the Contracts is scheduled to be made (which date shall be determined
without regard to whether the payment is in fact made prior to such
scheduled date).
For the purposes of this Section 4.04, the terms Cause and
Good Reason 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")
or the Corporation's Chief Executive Officer
("CEO"), 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: (A) reduction of the
Member's base salary, management bonus percentage or
other compensation, (B) failure to continue in
effect any medical, dental, accident, or disability
plan in which the Member is entitled to participate
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
-2-
<PAGE> 3
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.
B. Section 9.02(a) is amended to read in its entirety as
follows:
(a) Competition Restriction. During the period of
employment and during the period that the Member is receiving
Supplemental Monthly Retirement Benefits under this Plan, the Member
shall not directly or indirectly become or serve as an officer,
director or employee of, or consultant to, or independent contractor
for any individual, partnership, joint venture or corporation, nor
owner of any business, nor member of any partnership or joint venture
which, in the judgment of the Committee, competes with the Employer,
unless the Member shall have obtained the prior written consent of
the Committee.
IN WITNESS WHEREOF, this Agreement has been made as of the date set
forth above.
CORPORATION:
PURITAN-BENNETT CORPORATION
/s/ Burton A. Dole, Jr.
---------------------------------
By: Burton A. Dole, Jr.
Title: President
EMPLOYEE:
/s/ John H. Morrow
- ----------------------------
John H. Morrow
10231 Catalina
Overland Park, Kansas 66207
-3-
<PAGE> 1
Exhibit 25
[LOGO OF PURITAN-BENNETT CORPORATION]
NEWS
GENERAL OFFICES
9401 Indian Creek Parkway
P.O. Box 25905
Overland Park, KS 66225-5905
913-661-0444
FOR RELEASE
For Further Information:
Lee Robbins, ext. 512
PURITAN-BENNETT ANNOUNCES THIRD QUARTER RESULTS
- PRE-CHARGE EPS UP 15%:
ORDERS AND REVENUES IN QUARTER UP 11%
- RESULTS NEGATIVELY IMPACTED BY
THERMO'S UNSOLICITED TENDER OFFER
- COMPANY NOTIFIED BY HOMEDCO THAT IT WILL BE
A SUPPLIER IN LARGE HOME OXYGEN THERAPY
EQUIPMENT ORDER
- NEW REPORTING OF BUSINESS LINE PROFITABILITY
OVERLAND PARK, KS - Puritan-Bennett Corporation (PBEN:NASDAQ), after
recording charges of $4.6 million for obligations associated with
Thermo-Electron Corp.'s unsolicited tender offer, today reported a loss of
$640,000 or $.05 per share for the third quarter ending October 31, 1994.
Without the charge, earnings per share for the quarter would have been $.31 per
share, up 15% from the $.27 per share (adjusted to eliminate losses associated
with the FOxS blood gas monitoring system) for the same period last year.
<PAGE> 2
2
Orders of $83,018,000 and revenues of $83,412,000 for the quarter were
up 11% over the same period last year. For the first nine months, orders of
$245,271,000 and revenues of $247,813,000 were up 7% and 8%, respectively, over
the same period last year.
The Company also noted that it was told by Homedco Group, Inc., one of
the nation's leading providers of home respiratory services, that
Puritan-Bennett would be selected as one of their endorsed vendors for home
care oxygen equipment. Homedco has been in the process of upgrading its oxygen
therapy technology to achieve greater operational efficiencies. This award is
the result of Homedco's formal bid process, and it is one of the largest
purchases of oxygen therapy equipment in Homedco's history.
In addition, Homedco said it would work with the Company to adapt
Puritan-Bennett's CliniVision Respiratory Management System to the home care
respiratory management needs of its patients.
SUPPLEMENTAL PRO-FORMA INFORMATION - Chairman and President Burton A.
Dole stated: "In order to help our stockholders better understand the economic
dynamics and potential of the company's business, we have decided to begin,
with this announcement, providing supplemental information that sets forth the
company's "operating profitability" in its two lines of business -- Puritan and
Bennett. Operating profitability is defined as earnings before interest and
taxes and before any historical restructuring or current Thermo Electron
related charges." Mr. Dole said, "The figures below summarize results for the
two lines of business for the current and last two fiscal years:
<PAGE> 3
3
<TABLE>
<CAPTION>
Third Quarter Year-to-Date
FY95 FY94 FY95 FY94 Fiscal 1994 Fiscal 1993
-------------- ----------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenue
Puritan $56,187 $45,751 $159,391 $136,263 $184,239 $167,763
Bennett 27,225 23,838 88,422 90,361 122,751 131,279
------- ------- ---------- ---------- --------- ---------
Total $83,412 $74,589 $247,813 $226,624 $306,990 $299,042
Operating Profit
Puritan $ 5,995 $ 6,251 $ 16,306 $ 18,493 $ 22,939 $ 24,740
Bennett 456 (793) 2,620 2,718 14 11,803
------- ------- ---------- ---------- --------- ---------
Total $ 6,451 $ 5,458 $ 18,926 $ 21,211 $ 22,953 $ 36,543
</TABLE>
NOTE: Figures exclude discontinued lines of business, restructuring
charges, and current Thermo Electron related charges.
PURITAN - "Puritan includes our rapidly growing home care product
line as well as our medical gas and gas-related equipment and spirometry
product lines. Aero Systems is also included because it shares one of our
larger manufacturing facilities with the Puritan Group and is relatively small.
"Because of its rapid revenue growth (up 17% for the first nine
months of this year compared with the same period last year and average annual
growth of 15% for the 5 years ended January 31, 1994) Puritan now accounts for
about two-thirds of the company's total revenues. Within Puritan, home care
products continue to grow at rates considerably above the overall Puritan
average.
"For the third quarter of this year, Puritan's operating
profitability was 11% of revenues," Mr. Dole said. "Operating profitability
has been higher (12% and 15% of revenues in FY94 and FY93, respectively) in the
recent past and we expect it to return to
<PAGE> 4
4
recent historical levels in the future, as we realize the benefits of several
major regulatory control and compliance initiatives undertaken in the latter
part of FY94 and during FY95. These initiatives required considerable staffing
and other resource additions as well as manufacturing process modifications.
As a result, we experienced certain significant short-run operating disruptions
and inefficiencies, which increased our costs," Mr. Dole continued.
BENNETT - "The Bennett line of business consists of our critical
care ventilator business -- a business that continues to represent an
exceptional and long-standing customer franchise on a global basis -- as well
as our growing CliniVision(R) product line in the U.S., and our holter
monitoring and international portable ventilator product lines.
"Since FY93, when Bennett's operating profitability equaled 9% of
revenues, revenues have declined for several reasons including difficult market
conditions, particularly in the U.S. hospital market, discontinuance of certain
older products and accessories as a result of evolving regulatory standards,
and our withdrawal from the U.S. portable ventilator market," he said. "In
addition, Bennett has also undertaken major regulatory control and compliance
initiatives at significant cost. Current operating profitability (2% of
revenues in the third quarter and 3% for the nine months) is not close to where
we believe it should and will be. We believe the recent poor profitability of
Bennett will begin to reverse itself and both revenues and margins will
increase as a result of the benefits from full implementation of our regulatory
compliance initiatives, continued growth of CliniVision and service revenue and
several other positive developments. These developments include the new
products/product enhancements recently cleared by FDA for marketing in the U.S.
and
<PAGE> 5
5
recently introduced internationally. In addition, other important new products
are being developed for introduction a little over a year from now.
"In summary, we are encouraged by the continued strong growth of
Puritan in the third quarter and believe both Puritan and Bennett are well
positioned to begin returning to historical levels of profitability. We will
continue to build upon our unique franchise in the critical care ventilator
area while continuing to invest in and grow the exciting home care businesses
that make up the bulk of our Puritan business line," Mr. Dole said.
Puritan-Bennett is a world leader in products related to
respiration. These products are used in multiple health care settings and on
aircraft.
<PAGE> 6
PURITAN-BENNETT CORPORATION
QUARTER ENDED OCTOBER 31, 1994 NOVEMBER 21, 1994
<TABLE>
Caption>
-------------------------------
THREE MONTHS ENDED OCTOBER 31
-------------------------------
<S> <C> <C>
(Dollars in thousands except
per share amounts) FY 1995 FY 1994
------- -------
Net Sales $ 83,412 $ 75,277
Cost of Goods Sold 49,128 43,910
------------- ----------
Gross Profit 34,284 31,367
Selling and Administrative Expense 23,508 23,721
Research and Development Expense 5,046 6,153
Interest Expense 1,719 1,159
Cost Associated With Unsolicited Offers
to Acquire Company's Stock 4,559 -
Other Expense (Income), net (768) (773)
------------- ----------
Income Before Income Taxes 220 1,107
Provision for Income Taxes 860 359
------------- ----------
Net Income (Loss) $ (640) $ 748
------------- ----------
Average Number of Shares Outstanding 12,533,709 11,908,653
------------- ----------
Net Income (Loss) Per Share $ (.05) $ .06
------------- ----------
</TABLE>
<PAGE> 7
PURITAN-BENNETT CORPORATION
NINE MONTHS ENDED OCTOBER 31, 1994
<TABLE>
<CAPTION>
----------------------------
NINE MONTHS ENDED OCTOBER 31
----------------------------
(Dollars in thousands except per share amounts) FY 1995 FY 1994
------- -------
<S> <C> <C>
Net Sales $ 247,813 $ 228,582
Cost of Goods Sold 144,091 130,602
----------- -----------
Gross Profit 103,722 97,980
Selling and Administrative Expense 71,790 71,474
Research and Development Expense 14,825 19,406
Interest Expense 4,319 3,560
Restructuring Charges - 9,014
Cost Associated With Unsolicited Offers
to Acquire Company's Stock 4,559 -
Other Expense (Income), net (1,949) (304)
----------- -----------
Income (Loss) Before Income Taxes 10,178 (5,170)
Provisions for (Benefit from) Income Taxes 2,850 (2,804)
----------- -----------
Income (Loss) Before Cumulative Effect 7,328 (2,366)
Cumulative Effect of a Change In Accounting for Income Taxes - (2,755)
----------- -----------
Net Income (Loss) $ 7,328 (5,121)
----------- -----------
Average Number of Shares Outstanding 12,478,113 11,914,627
----------- -----------
Net Income (Loss) Per Share Before Cumulative Effect $ .59 $ (.20)
Cumulative Effect of Change in Accounting for Income
Taxes Per Share - (.23)
----------- -----------
Net Income (Loss) Per Share $ .59 $ (.43)
----------- -----------
</TABLE>
<PAGE> 8
INCOMING ORDERS AND NET SALES ($ MILLION)
<TABLE>
<CAPTION>
FY 1994 FY 1995
Apr. 30 July 31 Oct. 31 Jan. 31 Apr. 30 July 31 Oct. 31
--------------------------------------- -------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Medical - Orders $65.4 $75.6 $ 69.9 $85.0 $71.9 $76.2 $74.9
Sales 69.4 71.9 69.6 75.0 73.7 77.2 74.9
Aero - Orders 5.6 7.0 5.1 $10.4 $ 8.2 $ 6.0 $ 8.1
Sales 6.0 6.0 5.7 5.7 6.7 6.8 8.5
Pooled - Orders $71.0 $82.6 $ 75.0 $95.4 $80.1 $82.2 $83.0
Sales 75.4 77.9 75.3 80.7 80.4 84.0 83.4
Backlog Increase $(4.4) $ 4.7 $ (0.3) $14.7 $(0.3) $(1.8) $(0.4)
(Decrease)
- --------------------------------------------------------------------------------------------------------------------------
Net Income (Loss) Per Share $ .15 $(.41) $ 0.6 $(2.46) $ .30 $ .34 $(.05)
Before Cumulative Effect
Cumulative Effect of Accounting
Changes Per Share (.23) - - (.01) - - -
----- ----- ------ ------ ----- ----- -----
Net Income (Loss) Per Share $(.08) $(.41) $ .06 $(2.47) $ .30 $ .34 $(.05)
===== ===== ====== ====== ===== ===== =====
</TABLE>
PURITAN-BENNETT CORPORTION
QUARTER ENDED OCTOBER 31, 1994
NOVEMBER 21, 1994
