Exhibit 10.32
Compensation Committee
February 14, 1994
January 21, 1994
Mr. James R.Tobin
12 Briarwood Lane
Lincolnshire, IL 60069
Dear Jim:
This letter confirms our agreement concerning your termination of employment
with Baxter International Inc. and its affiliates ("Company"). You and the
Company acknowledge that your employment termination is by mutual agreement,
and that it is completely independent of the reduction in force the Company
announced in the fourth quarter of 1993.
You ceased to be a director, officer and employee of the Company effective
January 4, 1994 ("Termination Date").
Between your termination Date and December 31, 1994, you will receive severance
pay in installments at regular payroll intervals. Your severance pay will equal
a total of $396,800, your annual salary as in effect immediately prior to your
Termination Date. If the senior officers of the Company, whose salaries were
reduced in September 1993 along with yours, have their salaries restored to
their pre-September 1993 levels before December 31, 1994, your severance pay
will be increased as follows. Your severance pay will increase to the rate of
your annual salary, as in effect immediately before the September 1993
reductions, effective the date on which the salary restorations are effective
for the senior officers and continuing until December 31, 1994.
You will continue to receive your monthly car allowance, flexible spending
allowance and home security system reimbursement until June 30, 1994.
If you die before receiving the severance pay, allowances and reimbursements due
to you under this Agreement, the balance of such amounts will be paid to your
surviving spouse, or to your estate if your spouse does not survive you. The
balance of the payments will continue at the same intervals.
You will not receive any bonus under the 1993 Officer Incentive Compensation
Plan. You are not eligible to participate in any Company bonus plans which are
adopted after the date of this Agreement.
During the first quarter of 1994, you will receive a total of $38,154, in a
single sum, for all of your accrued but unused vacation time, in accordance with
the Company's policy. You will not accrue any vacation time after December 31,
1993.
You are eligible to receive medical coverage through the Company's retiree
medical plan, in accordance with the plan's provisions. You may postpone retiree
medical coverage and elect, in accordance with a federal statute (COBRA), to
continue your medical and dental benefits under the Company's Flexible Benefits
Program for up to 18 months after your Termination Date. You may not obtain
medical coverage through the retiree medical plan and COBRA simultaneously.
You are eligible to continue your active participation in the Company's
Incentive Investment Plan until June 30, 1994, consistent with the Plan's
provisions. Your vested accrued benefits in the Incentive Investment Plan will
be distributed in accordance with its provisions.
Your active participation in the Baxter International Inc. and Subsidiaries
Pension Plan ("Pension Plan") will continue until June 30, 1994, consistent with
the Plan's provisions. Your vested accrued benefit in the Pension Plan will be
distributed in accordance with its provisions. You may elect to begin receiving
your Pension Plan benefit effective July 1, 1994.
In addition, the Company will provide you with a non-qualified and unfunded
supplemental pension benefit ("Pension Supplement") equal to the difference
between a) your accrued benefit calculated under the provisions of the Pension
Plan and b) the accrued benefit which you would have under the Pension Plan if
you had ten additional years of participation in the Pension Plan. Your Pension
Supplement is payable at the same time and in the same form as your benefit
under the Pension Plan. The ten additional years of Pension Plan participation
provided in this paragraph will not be counted when determining the amount you
must pay for coverage through the Company's retiree medical plan.
Your participation, if any, in the Company's Employee Stock Purchase Plan
ceased on your Termination Date. You will receive a cash refund of the
balance, if any, in your subscription account, consistent with the Plan's
provisions.
Your participation in the Company's split-dollar life insurance plan ceased on
your Termination Date. Your split-dollar life insurance coverage has been
terminated, and your right to have the Company maintain that coverage for you
has been forfeited.
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Your options and restricted shares will be vested or forfeited as listed below:
OPTIONS
# of
Date Options Option Expiration
Granted Type Granted Price Date (2) Vesting
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11/21/88 NQ 21,149 (1) $15.89 (1) 4/1/94 all are vested; may
exercise before
expiration date
11/19/89 NQ 22,196 (1) $22.21 (1) 4/1/94 all are vested; may
exercise before
expiration date
7/30/90 NQ 31,410 (1) $24.36 (1) 4/4/94 all are vested; may
exercise before
expiration date
8/9/91 NQ 31,410 (1) $34.15 (1) 4/4/94 20,940 are vested;
may exercise before
expiration date;
remainder will be
forfeited 2/15/94
12/7/92 NQ 13,400 $33.88 4/4/94 4,466 are vested;
may exercise before
expiration date;
remainder will be
forfeited 2/15/94
8/2/93 NQ 63,800 $26.00 4/4/94 None are vested; all
will be forfeited on
2/15/94
<FN>
1. As equitably adjusted in connection with the Caremark spin-off
2. Option expiration dates consistent with option grant terms and conditions
relating to employment termination
If the highest composite closing price of the Company's common stock between
April 5, 1994 and September 30, 1994 ("Post-expiration price") exceeds the
highest composite closing price between January 4, 1994 and April 4, 1994
("Pre-expiration price"), the Company will make a cash payment to you. The
payment will equal the amount by which the Post-expiration price exceeds the
Pre-expiration price, multiplied by the number of shares for which you could
have exercised the options identified above if the expiration date and vesting
extended to September 30, 1994. The cash payment calculation will not include
any options with an option price above the Post-expiration price.
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RESTRICTED SHARES
# of
Date Shares
Granted Granted Vesting Date Disposition
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12/1/87 34,000 12/31/92 and 24,140 shares vested on 12/31/92;
12/31/94 remaining 9,860 shares will be
forfeited 2/15/94
11/21/88 50,500 1 year after 48,813 shares have been earned
earned and vested; remaining 1,687
shares will be forfeited 2/15/94
8/7/90 20,200 1 year after None have been earned or vested;
earned all will be forfeited 2/15/94
2/17/92 25,000 12/31/92 and 8,325 shares vested on 12/31/92
12/31/94 with continuing sale/transfer
restrictions until 12/31/94;
remaining 16,675 shares will be
forfeited 2/15/94
12/7/92 32,000 1 year after none have been earned or vested;
earned all will be forfeited 2/15/94
You will not receive any additional grants of options or restricted shares.
To preserve your rights to make various elections under the Company's Flexible
Benefits Program, Pension Plan and Incentive Investment Plan, you must contact
the Human Resources Department.
You will be given the personal computer and the two cellular phones which the
Company provided to you.
You acknowledge that the compensation and benefits provided in this Agreement
exceed the compensation and benefits which you would normally receive in
connection with your employment termination. In exchange for the compensation
and benefits under this Agreement, you waive your right to file or participate
as a class member in any claims or lawsuits (whether or not you now know of the
basis for the claims or lawsuits) with federal or state agencies or courts
against the Company and its employee benefit plans, including their present and
former directors, officers, employees, agents and fiduciaries. This general
waiver release includes but is not limited to, all claims of unlawful
discrimination in regard to age, race, sex, color, religion, national origin and
handicap under Title VII of the Civil Rights Act, the Age Discrimination in
Employment Act or any other federal or state statutes, all claims for
wrongful employment termination or breach of contract and any other claims
relating to your employment or termination of employment with the
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Company. This waiver and release also apply to your heirs, assigns, executors
and administrators. This waiver and release do not waive rights or claims which
may arise after the date of this Agreement is signed except as stated in the
next sentence. To be eligible to receive the Pension Supplement described above,
you agree that this waiver and general release will be deemed to be signed by
you again when your Pension Supplement begins to be paid.
You agree: (a) not to intentionally disparage the Company, its employees or
products; (b) not to intentionally engage in actions contrary to the interests
of the Company; provided, however that this subsection (b) shall not apply to
conduct otherwise permissible under your employment agreement with the Company;
(c) not to disclose or allow disclosure of any provisions of this Agreement,
except to your attorney or pursuant to subpoena or court order (although the
Company may be required to disclose this Agreement in its 1994 proxy statement
and as an exhibit to its Form 10-K for 1993); (d) to conduct the transition
period in a constructive and positive manner; (e) to remain bound by the non-
compete and confidentiality provisions of your employment agreement with the
Company (the Company acknowledges that your employment with Biogen Inc. does not
violate the non-compete provisions of your employment agreement); and (f) to
return to the Company, by January 21, 1994, all Company property, including
proprietary information.
All amounts payable to you or on your behalf under this Agreement will be
reported to appropriate governmental agencies as taxable income to the extent
required, and appropriate withholding information will be made where necessary.
In addition, all amounts payable to you under this Agreement are expressed as
amounts prior to payment or withholding of any taxes, and the Company will not
gross-up the amounts or otherwise reimburse you for the taxes you pay relating
to such amounts.
The amounts payable to you under this Agreement are in lieu of all severance
compensation and other severance benefits from the Company to which you might
otherwise be entitled. The Company may terminate the severance payments and the
amounts payable under the Pension Supplement if you fail to comply with any of
your obligations under this Agreement.
You acknowledge that the Company has made no promises to you which are not
included in this Agreement, and that this Agreement contains the entire
understanding between you and the Company relating to your employment
termination. You acknowledge that the terms of this Agreement are contractually
binding. If any portion of this Agreement is declared invalid or unenforceable,
the remaining portions of this Agreement will continue in force.
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You acknowledge that you carefully read the terms of this Agreement, you know
and understand its content and meaning, you were given a 21-day period to review
it, you consulted with an attorney through whom you negotiated changes before
accepting it, and you accept it voluntarily.
If this letter accurately reflects our agreement, please sign two copies,
and return one of them to me by February 3, 1994.
The terms of this Agreement are subject to the approval of the Compensation
Committee of the Company's Board of Directors as well as the Board of Directors.
Sincerely,
/s/ VERNON R. LOUCKS, JR.
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Vernon R. Loucks, Jr.
ACCEPTED AND AGREED:
/S/ JAMES R. TOBIN
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(Signature)
2/1/94
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(Date)
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