Exhibit 10.4
AGREEMENT
This AGREEMENT, entered into as of the 1st day of October, 1994,
by and between Mallinckrodt Group Inc., a New York corporation (the
"Company") and PAUL D. COTTONE ("Executive");
WHEREAS, the Board of Directors of the Company (the "Board") has
elected Executive as a Senior Vice President of the Company and has
confirmed his assignment by the Chief Executive Officer of the Company
as Chief Executive Officer and President of Mallinckrodt Veterinary,
Inc., and
WHEREAS, the Board has concluded it is in the interest of the
Company to enter into a contract with Executive to set forth the terms
and conditions of this relationship, as hereinafter set forth;
NOW, THEREFORE, it is mutually agreed as follows:
1. Position.
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The Company agrees to retain Executive, and Executive agrees to
serve, in the above capacities until October 1, 1996, and in such
capacities and until such time (subject to the provisions of Section 5
hereof), to devote all of his business time and service and his
abilities and attention to the affairs of the Company and its
subsidiaries and to the performance of such duties and
responsibilities as are provided for or incident to such capacities,
under the Bylaws of the Company or otherwise, including such duties
and responsibilities as may be assigned to him from time to time by
the Chief Executive Officer of the Company of the Board.
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2. Base Salary.
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Until October 1, 1996, Executive's base salary shall be paid
by the Company in such amounts as shall be determined from time to
time by the Board provided, however, that during such period,
Executive's base salary shall be at the minimum rate of $300,000 per
year.
3. Other Compensation and Benefits.
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Until October 1, 1996, Executive shall be eligible to
continue to participate and accrue benefits as the case may be under
all incentive compensation plans and programs and all benefit and
welfare plans and programs available to executive officers of the
Company generally, subject to and in accordance with the terms and
conditions of such plans and programs from time to time including, but
not limited to, the Supplemental Executive Retirement Plan ("SERP") of
Mallinckrodt Group Inc., stock option plans, long-term incentive
plans, management incentive compensation plans, executive perquisites,
Executive Long-term Disability Plan, and Executive Life Insurance and
Accidental Death and Dismemberment Plan. With respect to the
Company's Management Incentive Compensation Plan, Executive's target
annual bonus thereunder for fiscal years 1995, 1996, and the
applicable portion of 1997 shall be calculated at the level of 50% of
Executive's salary grade midpoint and may, in the sole and absolute
discretion of the Board, be adjusted up or down (even to zero) on
account of performance (personal or Company) as against objectives
approved by the Board. For fiscal 1995 only we will guarantee a
minimum MICP payment of $100,000. Thereafter, MICP payments will be
driven solely by performance as outlined above. At the recommendtion
of the Chief Executive Officer of the
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Company, the Board shall annually approve and establish written
performance objectives (personal and Company) for Executive. The
Board's Organization and Compensation Committee ("Committee") annually
shall assess his performance against such objectives with the
recommendation of the Chief Executive Officer of the Company, and the
Committee and/or the Chief Executive Officer shall discuss with
Executive the results of such assessment.
4. Director of Other Corporations.
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With the approval of the Board, Executive may serve as a
director of one or more corporations other than the Company or a
subsidiary thereof.
5. Termination.
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(a) Death or disability: The obligation of the Company to
pay the base salary to Executive provided in Section 2 shall cease
prior to October 1, 1996 (i) upon Executive's death, or (ii) upon
termination of Executive as an officer of the Company, whether by
action of the Board or by the voluntary termination by Executive, in
either case, because Executive shall have become disabled, as
described in Section 5(b) below, more than six months prior to October
1, 1996.
(b) Definition of disability: For purposes of Section
5(a), Executive shall be deemed to have become disabled if a physician
satisfactory to him and to the Company shall, after having examined
him, certify to him and the Company, that he has
become disabled in such manner as to make it unlikely, in the written
opinion of such physician, that he shall be able to render services
substantially as contemplated by Section 1 for at least
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six consecutive months. No such determination shall be made without
at least ten (10) days' prior written notice to Executive and such
determination shall not become effective to terminate the Company's
obligations to him hereunder until he has been disabled for six months
or six months from the date of notice to him, whichever occurs later,
but in no event shall such period of disability extend beyond the term
of this Agreement. In the event that Executive becomes disabled
during the term of this Agreement, his base salary under Section 2
shall be offset by any amounts paid by the Company under the Company's
Short-term Salary Continuance Plan or Executive Long-term Disability
Plan and, upon termination of the Agreement as a result of his
disability or death, Executive shall continue to be eligible for other
benefits generally offered to disabled or deceased executives pursuant
to the benefit plans and programs of the Company.
(c) Material Default or voluntary resignation: The
obligation of the Company to pay the base salary to Executive pursuant
to Section 2 and his eligibility to continue to participate in
incentive compensation plans and programs and benefit and welfare
plans and programs pursuant to Section 3 shall cease prior to October
1, 1996, in the event (i) the Board acts to terminate Executive as an
officer of the Company for cause due to Executive's material default
of his obligations, willful misconduct, or gross negligence (other
than due to his physical or mental disability), determined as provided
in Section 5(d) below, or (ii) Executive voluntarily resigns and
leaves the Company.
(d) Definition of material default: The Company shall
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not terminate its obligations pursuant to Section 5(c) (i) on account
of Executive's material default, willful misconduct, or gross
negligence, unless it shall have first given him notice of its
intention to do so, specifying the nature of his material default,
willful misconduct, or gross negligence and unless, within a period of
thirty days after his receipt of such notice, Executive shall have
failed to remedy such material default, willful misconduct, or gross
negligence.
(e) Effect of voluntary resignation: In the event
Executive voluntarily resigns as described in Section 5(c) (ii), all
obligations of the Company to Executive pursuant to this Agreement
shall cease except as provided in subsection (f) of Section 9, it
being agreed that the Company's obligations to Executive for incentive
compensation, if any, whether payable in cash or shares, shall be
determined as provided in the applicable incentive compensation plan
or plans.
(f) Termination without cause: In the event that, prior to
October 1, 1996, for any reason other than termination, whether by the
Company or by Executive, pursuant to either Section 5(a) or 5(c), the
Board shall exercise its authority, in its sole and absolute
discretion, to remove Executive as an officer of the Company, he may
resign as an officer and employee of the Company. Regardless of when
actually signed, such resignation shall be effective as of the time of
such exercise of authority by the Board, and shall not be deemed to be
subject to Sections 5(a) or 5(c) or otherwise to be a breach of the
Agreement. Upon so resigning, (i) Executive shall be entitled to
receive, until
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October 1, 1996, (x) the same base salary he was receiving at the time
of such resignation (but not less than at the aforesaid annual minimum
rate), and (y) (unless the Board shall otherwise specify as provided
below) the incentive compensation and benefits that are applicable to
him as described in Section 3, and (ii) Executive shall be deemed for
purposes of clause (f) (i) above, to continue as an officer and
employee of the Company until October 1, 1996, at such rate of base
salary and level of benefits.
(g) Modification: The Company shall provide to Executive
the incentive compensation and benefits pursuant to subclause (f) (i)
(y) above unless any of such is modified by any of the following
actions which the Board, in its sole and absolute discretion,
determines incident to its removal of Executive: (i) the Board shall
determine the amount, if any, of Executive's annual bonus and the
nature and extent of his perquisites; (ii) the Board
may (x) cause the reduction or forfeiture of the amount of money or
the number of shares, as the case may be, theretofore conditionally
awarded to him pursuant to any long-term incentive compensation plan,
in which he is a participant at the time of his resignation, that have
not by that time become vested and payable or deliverable to him in
accordance with the terms of the plan; and/or (y) terminate or
withhold any new, additional, or future award(s) to Executive under
the plan; and (iii) to the extent the applicable stock option plan
permits, the Board may lengthen the period of time during which he may
exercise any stock options(s) granted to him and exercisable at the
time of his resignation.
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6. Noncompete; Mitigation. Executive agrees that should he
resign as an officer and employee of the Company or should his
employment as such otherwise be terminated pursuant to either Section
5(c) (ii) or 5(f), he will not, at any time thereafter until October
1, 1996, become an employee, director, or proprietor of, or consultant
to, or partner in, any entity that is then or thereafter becomes a
substantial competitor of the Company or any of its wholly-owned
subsidiaries, or that he knows has the intention of becoming such a
competitor, in respect of any significant product line or lines.
Executive further agrees that he shall terminate such competitive
activity within thirty days after receipt by him of notice from the
Company specifying the nature of such competitive activity and
demanding such termination. In the event Executive breaches either or
both of the foregoing sentences of this section 6, he shall be deemed
to be in material default of his obligations under this agreement, and
the Company may pursue such legal and equitable remedies as it deems
appropriate to protect the interests of the Company including, without
limitation, the termination without further notice to Executive of (i)
any payment of cash or shares being made or scheduled to be made
pursuant to Section 5(f) (i) (whether or not modified pursuant to
Section 5(g)), and (ii) Executive's deemed status as an officer and
employee pursuant to Section 5(f) (ii). In addition, any salary or
other remuneration received by Executive after such resignation or
termination until October 1, 1996, from
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any entity (regardless whether it is a substantial competitor of the
Company or any of its wholly-owned subsidiaries in respect of any
significant product line or lines), shall be applied to offset and
reduce the amount of any obligation due or claimed to be due Executive
including but not limited to the base salary payable to Executive
during such period.
7. Legal Disability. Any payment(s) required to be made by
the Company pursuant to this Agreement to a person who is under a
legal disability may be made by the Company to or for the benefit of
such person in such of the following ways as the Company shall
determine: (a) directly to such person (b) to the legal
representative of such person, (c) to some near relative of such
person to be used for the latter's benefit, or (d) directly in payment
of expenses in support, maintenance or education of such person. The
Company shall not be required to see to the application by any third
party of any payments made pursuant to the immediately-preceding
sentence. Except as otherwise provided in said sentence, all payments
made by the Company, pursuant to this Agreement, shall be made to
Executive in person or in care of his address for the purpose of
notice in Section 8.
8. Notices. Notices given pursuant to this Agreement shall be
in writing by United States certified mail. Until Executive notifies
the Company to the contrary, notices to him shall be addressed to him
at 563 Sayre Drive, Princeton, New Jersey 08540. Until the Company
notifies Executive to the contrary, notices to the Company shall be
addressed to: Corporate Secretary,
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Mallinckrodt Group Inc., 7733 Forsyth Boulevard, St. Louis, Missouri
63105.
9. Miscellaneous.
(a) This Agreement is executed by the parties at the
principal office of the Company in St. Louis, Missouri. All
questions arising in respect to this Agreement, including those
pertaining to its validity, interpretation and performance, shall be
determined in accordance with the laws of the State of Missouri.
(b) This Agreement may be executed in two counterparts, each
of which shall have the force and effect of an original.
(c) This Agreement shall be binding upon all persons
entitled to receive payments hereunder, and their respective heirs,
executors, administrators and legal representatives, and upon the
Company, its successors and assigns.
(d) This Agreement supersedes all previous agreements
between the Company and Executive, both verbal and written, excluding,
however, Executive's Contingent Employment Agreement dated October 1,
1994, his Gross-Up Agreement dated October 1, 1994 and as amended from
time to time, and any confidentiality or invention and secrecy
agreement to which Executive is a party with the Company or any
subsidiary of the Company.
(e) If any provision of this Agreement is for any reason
invalid or unenforceable, such invalidity or illegality shall not
affect the remaining provisions. Rather, each provision shall be
fully severable and the Agreement shall be construed and enforced as
if any invalid or illegal provision had not been included.
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(f) The Company confirms that, subject to law, it shall
provide to Executive, at its expense, the cost of legal defense of
Executive due to any suit or claim brought against him in his
capacity as a director and/or officer of the Company or of any wholly-
owned subsidiary thereof. In addition, the Company shall also
continue to include Executive among those covered by the Company's
director and officer liability insurance, so long as such insurance is
available and the Company elects to have such insurance; provided,
however, that the unavailability of such insurance coverage or the
Company's discontinuance of such insurance shall in no way limit,
reduce, or otherwise affect Executive's rights to indemnification from
the Company in accordance with law. To the extent the costs of legal
defense or indemnification are not provided to Executive by any joint
venture in which, at the request of the Company, he serves as a
director and/or officer, on account of any suit or claim against him
in his capacity as a director and/or officer of such joint venture,
the Company agrees to provide such costs of defense and
indemnification to him, to the fullest extent permitted by law.
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IN WITNESS WHEREOF, the Company has caused these presents to be
signed on its behalf and Executive, to evidence his acceptance hereof,
has hereunto set his hand and seal as of the day first above-written.
Mallinckrodt Group Inc.
By C. RAY HOLMAN
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C. Ray Holman
President and Chief Executive Officer
ACCEPTED:
PAUL D. COTTONE
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Paul D. Cottone
Dated: ____________________