Exhibit 10.41





Exhibit 10.41




(Portions of this Exhibit have been omitted

pursuant to a request for confidential treatment)




Dear Jeff:



The purpose of this Letter Agreement (“Agreement”) is to retain and maximize your talents
during this critical transition period for Hill-Rom’s North America Acute Care Division (“NAAC
Division”) and this Agreement amends your Employment Agreement dated March 31, 2008 (“Employment
Agreement”) as follows:



1. Base Salary. Effective October 1, 2009, Paragraph 4(a) of the Employment Agreement
shall be amended and restated to increase your annual base salary to Three Hundred Eighty Thousand
Dollars ($380,000.00) and shall read as follows:




	 	(a)	 	A base salary at the bi-weekly rate of Fifteen Thousand Eight Hundred
Thirty-Three Dollars and Thirty-Three Cents ($15,833.33), less usual and
ordinary deductions;






2. Short-Term Incentive Compensation (“STIC”). Effective October 1, 2009, Paragraph 4(b)
of the Employment Agreement shall be amended and restated to provide you a STIC opportunity of up
to Sixty Percent (60%) of base salary as follows:




	 	(b)	 	Employee shall be eligible for a short-term incentive compensation
opportunity of up to Sixty Percent (60%) of base salary under the Short Term
Incentive Compensation Program (“STIC”).






3. Performance and Retention Bonus. Effective October 1, 2009, Paragraph 4(c) of the
Employment Agreement shall be amended and restated to provide you an opportunity to earn a
performance and retention bonus of up to Six Hundred Thousand Dollars ($600,000.00) as follows:




	 	(c)	 	Bonus Opportunity. The Employee shall be entitled to a
performance and retention bonus, based on the Company’s attainment of certain
organizational performance criteria, up to a maximum bonus payable of Six
Hundred Thousand Dollars ($600,000.00) (“Maximum Bonus Amount”).





 


 









 





Mr. Jeffrey Kao

October 2009

Page 2





	 	 	 	The payment of any bonus hereunder shall be contingent on satisfaction in
full of all of the following: (1) the Employee demonstrating best efforts,
as determined by the Company in its sole discretion, to have a “ready now”
successor for each of the NAAC Division’s heads of sales and
marketing/business unit management reporting to Employee, in each case, by
December 1, 2010; (2) the Company achieving the organizational performance
criteria established hereunder (“Performance Criteria”); (3) achieving and
maintaining the NAAC Division’s fiscal year 2010 business plan’s (as approved by the Company’s Board of Directors (“Board”))
operating income, as adjusted, by the Board’s Compensation and Management
Development Committee for extraordinary items (“Adjusted FY 2010 OI”); and
(4) achieving a level of revenue in the NAAC Division for FY2010 as
adjusted by the CMDC (“Adjusted FY2010 Revenue”) equal to or greater than
the NAAC Division’s Adjusted FY2009 Revenue as adjusted by the CMDC; and
(5) the Employee’s continued employment with the Company until January 1,
2011, except in the event of the Employee’s involuntary termination of
employment without cause or the Employee’s voluntary termination of
employment with Good Reason.







	 	 	 	If the level of FY2010 NAAC Division Adjusted Revenue does not exceed the
FY2010 NAAC Division’s business plan targeted revenue (as approved by the
Board) any otherwise eligible bonus payouts under this agreement will be
reduced by 50%.







	 	 	 	Performance Criteria. The Performance Criteria shall be determined
based on market share [***]. The Company’s market share shall be
determined by [***], as set forth in Exhibit “A” [***].







	 	 	 	Subject to the other terms and conditions set forth in this Agreement, for
the performance period beginning October 1, 2009 and ending September 30,
2010 (“Year One”), the Employee shall be entitled to a bonus up to but not
exceeding the Maximum Bonus Amount, with two-thirds of such bonus being
paid in December 2010 (“Initial Amount”) and one third being held back for
potential payment in December 2011, with the amount so held back being
referred to as the “Hold Back Amount”. The Initial Amount plus the Hold
Back Amount equals the “Total Bonus.”







	 	 	 	Employee is eligible to earn up to Four Hundred Thousand Dollars ($400,000)
of the Maximum Bonus Amount based on [***].







	 	 	 	Employee’s actual bonus payment, if any, will be calculated on a pro rata
basis, with a bonus earned or payable only if [***].







	 	 	 	[***].







	 	 	 	Subject to the other terms and conditions set forth in this Agreement, for
the performance period beginning October 1, 2010 and ending September 30,
2011 (“Year Two”), if [***], then Company shall pay the entire applicable
Hold Back Amount to the Employee in a single lump sum payment in December
2011.








	 	 	 
	***	 	Certain information on this page has been omitted and filed separately with the Securities and
Exchange Commission. Confidential treatment has been requested with respect to the omitted
portions.




 


 









 





Mr. Jeffrey Kao

October 2009

Page 3





	 	 	 	If the Total Bonus as recalculated using Year Two market data as if it were
applied in Year One is less than the Initial Amount, Employee will forfeit
the entire Hold Back Amount. If the Total Bonus as recalculated using Year
Two market data exceeds the Initial Amount, then the Employee shall be
entitled to the portion of the Hold Back Amount equal to such excess.
[***]. In the event the entire Hold Back Amount is more than offset by any
adjustment, there will be no forfeiture of the Initial Amount. [***].







	 	 	 	Adjustments based on Early Termination. In the event of the
Employee’s involuntary termination of employment without cause or the
Employee’s voluntary termination of employment with Good Reason between
October 1, 2009 and March 31, 2010, then the maximum bonus that may be
earned by the Employee shall be reduced by multiplying Four Hundred
Thousand Dollars ($400,000.00) by a fraction, the numerator of which is the
total number of full months of service completed by the Employee and the
denominator of which is six (6). In the event of the Employee’s
involuntary termination of employment without cause or the Employee’s
voluntary termination of employment with Good Reason between April 1, 2010
and October 1, 2010, then the maximum bonus that may be earned by the
Employee shall be determined as provided above but subject to a maximum
bonus of Four Hundred Thousand Dollars ($400,000.00), and no bonus shall be
payable for the period beginning October 1, 2010 and ending September 30,
2011. In the event of the Employee’s involuntary termination of employment
without cause or the Employee’s voluntary termination of employment with
Good Reason between October 1, 2010 and September 30, 2011, then the Hold
Back Amount payable with respect to this performance period shall be paid
to the Employee in full, regardless of whether the Company attains the
organizational Performance Criteria for this performance period.







	 	 	 	Notwithstanding the above, the CMDC shall have total discretion regarding
[***] calculations, satisfaction of Performance Criteria, and determination
of any bonus amounts payable hereunder.






4. Long-Term Incentive Compensation (“LTIP”). Paragraph 4 of the Employment Agreement
shall be amended to provide you a potential LTIP award, if approved by the CMDC, valued at Six
Hundred Sixty Five Thousand Dollars ($665,000), by adding new Paragraph 4(d) as follows:




	 	(d)	 	Subject to approval of the revised Long Term Incentive (“LTIP”) Plan
by the CMDC during its September 2009 meeting, effective December 3, 2009, the
Company shall award the Employee a long-term incentive
compensation award valued at Six Hundred Sixty Five Thousand Dollars
($665,000) under the LTIP, consisting of time-based restricted stock units
valued at Two Hundred Sixty Six Thousand Dollars ($266,000.00), time-based
stock options valued at One Hundred Ninety Nine Thousand ($199,000.00), and
phantom stock units valued at One Hundred Ninety Nine Thousand
($199,000.00) . The above awards will vest as provided under the terms of
the revised LTIP.








	 	 	 
	***	 	Certain information on this page has been omitted and filed separately with the Securities and
Exchange Commission. Confidential treatment has been requested with respect to the omitted
portions.




 


 









 





Mr. Jeffrey Kao

October 2009

Page 4




5. Forfeiture/Clawback. In the event of the your involuntary termination of employment
with Hill-Rom Holdings, Inc. or any of its subsidiaries (“Company”) for cause (as defined in the
Employment Agreement) or voluntary termination of employment without Good Reason (as defined in the
Employment Agreement) prior to January 1, 2011, you shall forfeit all performance-based
compensation provided under paragraph 3 of this Letter Agreement. In the event of such forfeiture,
you agree to repay to the Company the total value of all performance-based compensation provided
under paragraph 3 of this Letter Agreement plus interest at an annual interest rate of three point
two five percent (3.25%). Moreover, if, within twenty four months of any payment to you of
performance-based compensation under paragraph 3 of this Agreement, it is determined, in the
judgment of the Board’s Compensation and Management Development Committee (“CMDC”), that (i) such
amount(s) exceed(s) the amount(s) that would have been paid to you had the Company’s relative
market share (as calculated under [***]) and/or Adjusted FY 2010 OI been correctly calculated prior
to any payment to you of performance-based compensation under paragraph 3 of this Agreement, and
(ii) the incorrect calculation of the Company’s relative market share (as calculated under [***])
and/or Adjusted FY 2010 OI was, in the judgment of the CMDC, due, in whole or in part, to your
misconduct (including, without limitation, fraud, and violation of law or Company policy), then you
agree to repay to the Company on demand the total value of such excess amount of performance-based
compensation under paragraph 3 of this Agreement plus interest at an annual interest rate of three
point two five percent (3.25%).



6. Effect on Employment Agreement. Your Employment Agreement will remain in full force and
effect, except as modified by this Letter Agreement.






	 	 	 
	***	 	Certain information on this page has been omitted and filed separately with the Securities and
Exchange Commission. Confidential treatment has been requested with respect to the omitted
portions.




 


 









 





Mr. Jeffrey Kao

October 2009

Page 5



7. Counterparts. This Letter Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original but all of which together will constitute one and the
same instrument.



Please indicate your acceptance of these terms by countersigning a copy of this Letter
Agreement and returning it to the undersigned at your earliest convenience.





	 	 	 	 	 
	 	Very truly yours,


HILL-ROM HOLDINGS, INC.	 
	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Its: 	 	 



	 	 	 	 	 
	Accepted and agreed:	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 	 	JEFFREY KAO

	 	 
	 
	 	 	 	 
	Date:
	 	 	 	 
	 

	 	 	 	 





 


 









 





Mr. Jeffrey Kao

October 2009

Page 6




EXHIBIT A




[***]






	 	 	 
	***	 	Certain information on this page has been omitted and filed separately with the Securities and
Exchange Commission. Confidential treatment has been requested with respect to the omitted
portions.