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Exhibit 10.1
EXECUTIVE EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement") dated as of December 29,
2006 (the "Effective Date") between Tyco Healthcare Ltd., a Bermuda
corporation ("Company") and Richard S. Meelia ("Executive").
W I T N E S S E T H:
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WHEREAS, Company is a wholly-owned subsidiary of Tyco
International Ltd., a Bermuda corporation ("Parent") and, along
with its subsidiaries, currently does business as Parent’s
"Healthcare" business segment; and
WHEREAS, Executive is currently employed by Tyco Healthcare
Group LP and serves as Chief Executive Office of Parent’s
"Healthcare" business segment;
WHEREAS, it is anticipated that Company will be spun off by
Parent in 2007 as a separate publicly-traded corporation through
issuance of a stock dividend to Parent’s shareholders (the
"Separation"), as described in a Form 8-K filed by Parent on
January 19, 2006;
WHEREAS, Company and Executive desire to enter into this
Employment Agreement to set forth certain material terms of
Executive’s employment;
NOW THEREFORE, in consideration of the foregoing, of the mutual
promises contained herein and of other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1.
POSITION/DUTIES.
(a)
Prior to the Separation, Executive shall continue to serve as Chief
Executive Officer of Parent’s "Healthcare" business
segment. In this capacity, Executive shall have such duties,
authorities and responsibilities as the Chairman, President and
Chief Executive Officer of Parent (the "CEO") shall designate that
are consistent with Executive’s position. Executive
shall report to the CEO.
(b)
Upon and following the Separation, Executive shall serve as the
Company’s Chief Executive Officer. In this capacity,
Executive shall have such duties, authorities and responsibilities
as the Board of Directors of the Company ("Board") shall designate
that are consistent with Executive’s position. Upon and
following the Separation, Executive shall report to the Board.
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Hereinafter, for ease of reference, the term "Employing Company"
shall refer to "Parent" prior to the Separation and "Company"
thereafter.
(c)
Executive’s employment shall be at will, meaning that such
employment may be terminated by Executive or by the Employing
Company at any time and for any reason, with or without notice,
subject to the provisions of Section 3 hereof.
(d)
Executive shall devote substantially all of his business time
(excluding periods of vacation and other approved leaves of
absence) to the performance of his duties with the Employing
Company, provided the foregoing shall not prevent Executive from
(i) participating in charitable, civic, educational, professional,
community or industry affairs or, with prior written approval of
the CEO or the Board (as applicable), serving on the board of
directors or advisory boards of other companies; and (ii) managing
his and his family’s personal investments so long as such
activities do not materially interfere with the performance of his
duties hereunder or create a potential business conflict or the
appearance thereof. If at any time service on any board of
directors or advisory board would, in the good faith judgment of
the CEO or the Board (as applicable), conflict with
Executive’s fiduciary duty to the Employing Company or create
any appearance thereof, Executive shall promptly resign from such
other board of directors or advisory board after written notice of
the conflict is received from the CEO or the Board (as applicable).
Service on the boards of directors or advisory boards disclosed by
Executive to Parent on which he is serving as of the Effective Date
is hereby approved by Parent and Company.
(e)
Executive further agrees to serve without additional compensation
as an officer and/or director of any of the Employing
Company’s subsidiaries and agrees that any amounts received
from such corporation may be offset against the amounts due
hereunder. In addition, it is agreed that the Company may
assign the Executive to one of its subsidiaries or affiliated
companies for payroll purposes.
2.
COMPENSATION AND BENEFITS. Executive shall receive
compensation for his services hereunder as determined by the
Employing Company’s Board of Directors from time to time,
including base salary, bonus and long-term incentive
opportunity. Any base salary shall be payable periodically in
accordance with the Employing Company’s regular payroll
practices. In addition, Executive shall be entitled to
participate in all employee benefit plans and programs of the
Employing Company applicable to senior executives generally, as may
be determined or modified from time to time. Travel, business
and entertainment expenses shall be reimbursed by the Employing
Company in accordance with its then-applicable corporate
policies.
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Upon the occurrence of a "change in control" or a sale of the
Employing Company on or prior to June 30, 2007, all shares of
restricted stock previously granted to Executive that are still
subject to risk of forfeiture shall become fully vested and
nonforfeitable and all options to purchase common shares of the
Employing Company (or any converted shares received in the
separation) that remain unxercisable shall become fully exercisable
and vested. For purposes of this Section 2, "change in
control" shall mean the first to occur of the following:
(a) Any "person" (as that term is used in Sections 13 and
14(d)(2) of the Securities Exchange act of 1934 (the "Exchange
Act")) becomes the beneficial owner (as that term is used in
Section 13(d) of the Exchange Act), directly or indirectly, of 30%
or more of Employing Company’s capital stock entitled to vote
in the election of directors:
(b) Persons who, as of the Effective Date (or with respect to
the Company, as of the effective date of the Separation),
constitute the board of Employing Company (the "Incumbent
Directors") cease for any reason, including, without limitation, as
a result of a tender offer, proxy contest, merger or similar
transaction, to constitute at least a majority thereof, provided
that any person becoming a director of Employing Company subsequent
to the Effective Date (or with respect to the Company, subsequent
to the effective date of the Separation) shall be considered an
Incumbent Director if such person’s election or nomination
for election was approved by a vote of at least three-quarters of
the Incumbent Directors; but provided further, that any such person
whose initial assumption of office is in connection with an actual
or threatened election contest relating to the election of members
of the board of Employing Company or other actual or threatened
solicitation of proxies or consents by or on behalf of a "person"
(as that term is used in Sections 13 and 14(d)(2) of the Exchange
Act) other than the board of Employing Company, including by reason
of agreement intended to avoid or settle any such actual or
threatened contest or solicitation, shall not be considered an
Incumbent Director;
(c) The shareholders of Employing Company approve any
consolidation or merger of Employing Company, other than a merger
of Employing Company in which the holders of the common stock of
Employing Company immediately prior to the merger hold more than
50% of the common stock of the surviving corporation immediately
after the merger;
(d) The shareholders of Employing Company approve any plan or
proposal for the sale or dissolution of Employing Company;
(e) Substantially all of the assets of Employing Company are
sold or otherwise transferred to parties that are not within a
"controlled group of
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corporations" (as defined in Section 1563 of the Internal
Revenue Code of 1986, as amended) in which the Employing Company is
a member.
For avoidance of any doubt, the Separation does not constitute a
"Change in Control" hereunder.
3.
SEPARATION BENEFITS UPON TERMINATION OTHER THAN FOR CAUSE. If
Executive’s employment terminates for any reason other than
termination by the Employing Company for Cause (as hereinafter
defined), then the Employing Company shall pay or provide Executive
with (i) a lump sum cash payment in an amount equal to two times
the sum of (1) the greater of (a) his then-current base salary or
(b) his base salary in effect as of the date immediately preceding
the Effective Date and (2) the greater of (a) his then-current
target annual bonus or (b) the greater of the average annual bonus
(i) received by Executive or (ii) target for Executive, for two
fiscal years of the Company immediately preceding the date of
termination of employment; and (ii) subject to Executive’s
continued co-payment of premiums, continued participation for two
years in all health and welfare plans which cover Executive (and
eligible dependents) upon the same terms and conditions (except for
the requirements of Executive’s continued employment) in
effect on the date of termination (or as amended from time to
time). The continuation of health benefits under this
subsection shall not reduce or count against Executive’s
rights under the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended ("COBRA"). Any termination payments made and
benefits provided under this Agreement to Executive shall be in
lieu of any termination or severance payments or benefits for which
Executive may be eligible under any of the plans, policies or
programs of the Employing Company or its subsidiaries or affiliates
(other than benefits under the Company’s employee benefit
plans that by their terms survive termination of employment and
COBRA benefits).
The payments made to Executive under this Section 3 shall be
made as soon as practical after his termination of employment;
provided, that if and to the extent so required under Section
409A(a)(2)(B)(i) of the Internal Revenue Code, such payment or any
applicable portion thereof shall be made no earlier than 6 months
after the date of termination (or the date of Executive’s
death, if earlier).
Executive acknowledges and agrees that the Separation shall not
be deemed a "termination of employment" for any purpose under this
Section 3, so long as his employment continues through the
effective date of the Separation and he is employed immediately
after the Separation by the Company as contemplated in Section
1(b).
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For purposes of this Agreement, "Cause" shall mean: (i)
conviction of a felony or misdemeanor involving dishonesty, theft,
fraud or moral turpitude; Executive’s violation of Employing
Company’s Code of Ethical conduct; or other willful
misconduct conduct, that in each case, is materially and
demonstrably injurious to Parent or the Company, or any of their
affiliates, as applicable, monetarily or otherwise; or (ii) willful
failure or refusal by Executive to substantially follow his
reasonably assigned duties with the Employing Company or to follow
the proper written direction of the CEO or Board, as applicable,
after a written notice of demand is delivered to Executive by the
CEO or Board, as applicable, which remains uncured for fifteen (15)
days after written notice is given to Executive. The Company
must notify Executive of an event constituting "Cause" within 90
days following the knowledge of its existence or such event shall
not constitute Cause under this Agreement.
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(a)
Gross-UP Payment. If it shall be determined
that any payment or distribution of any type to or in respect of
Executive, by the Company or any other person, whether paid or
payable or distributed or distributable pursuant to the terms of
this Agreement or otherwise (the "Total Payments"), is or will be
subject to the excise tax imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended (the "Code") or any interest or
penalties are incurred by Executive with respect to such excise tax
(such excise tax, together with any such interest and penalties,
are collectively referred to as the "Excise Tax"), then executive
shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by Executive of all
taxes (including any interest or penalties imposed with respect to
such taxes) imposed upon the Gross-Up Payment, Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon
the total Payments.
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(1)
All computations and determinations relevant to this Section shall
be made by a national accounting firm selected by the Company from
among the five (5) largest accounting firms in the United States
(the "Accounting Firm"), and reasonably acceptable to Executive,
which firm may be the Company’s accountants. All fees
and expenses of the Accounting Firm shall be borne solely by the
Company. Such determinations shall include whether any of the
Total Payments are "parachute payments" (within the meaning of
Section 280G of the Code). In making the initial
determination hereunder as
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to whether a Gross-Up Payment is required, the Accounting Firm
shall be required to determine that no Gross-Up Payment is required
if, but only if, the Accounting Firm (A) concludes that (i) there
has not occurred a change in the ownership or effective control of
the Company or a change in the ownership of a substantial portion
of the assets of the Company (as such terms are defined in Section
280G of the Code) or (ii) no portion of the total Payments
constitutes "parachute payments" (within the meaning of said
Section 280)G), in either case on the basis of "substantial
authority" (within the meaning of Section 6230 of the Code), and
(B) provides an opinion to that effect to both the Company and
Executive, including the reasons therefore and an option that
Executive has substantial authority not to report any Excise Tax on
his federal income tax return. If the Accounting Firm
determines that a Gross-Up Payment is required, the Accounting Firm
shall provide its determination (the "Determination"), together
with detailed supporting calculations regarding the amount of any
Gross-Up Payment and any other relevant matter both to the Company
and Executive by no later than ten (10) days following the Date of
Termination, or such earlier time as is requested by the Company or
Executive (if Executive reasonably believes that any of the Total
Payments may be subject to the Excise Tax).
(2)
If a Gross-Up Payment is determined to be payable, it shall be paid
to Executive within 20 days after the Determination is delivered to
the Company by the Accounting Firm. Any determination by the
Accounting Firm shall be binding upon the Company and Executive,
absent manifest error. Notwithstanding the foregoing, a
Gross-up Payment shall be made as soon as practicable following a
determination by the Internal Revenue Service that any portion for
the Total Payments is subject to the Excise Tax.
(3)
As a result of uncertainly in the application of Section 4999 of
the Code at the time of the initial determination by the Accounting
Firm hereunder, it is possible that Gross-Up Payments not made by
the Company should have been made ("Underpayment"), or that
Gross-Up Payments will have been made by the company which should
not have been made ("Overpayments"). In either such event,
the Accounting Firm shall determine the amount of the Underpayment
or Overpayment that has occurred. In the case of an
Underpayment, the amount of such Underpayment (together with any
interest and penalties payable by Executive as a result of such
Underpayment) shall be promptly paid by the Company to or for the
benefit of Executive.
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(4)
In the case of any Overpayment, Executive shall, at the direction
and expense of the Company, take such steps as are reasonably
necessary (including the filing of returns and claims for refund),
follow reasonable instructions from, and procedures established by,
the Company, and otherwise reasonably cooperate with the Company to
correct such Overpayment, provided, however, that (i) Executive
shall not in any event be obligated to return to the Company and
amount greater than the net after-tax portion of the Overpayment
that he has retained or as recovered as a refund from the
applicable taxing authorities and (ii) this provision and all other
provisions in this Agreement shall be interpreted in a manner
consistent with the intent of this Section, which is to make
Executive whole, on an after-tax basis, from the application of the
Excise Taxes, it being acknowledged and understood that the
correction of an Overpayment may result in Executive repaying to
the Company and amount which is less than Overpayment.
(5)
Executive shall notify the Company in writing of any claim by the
Internal Revenue Service relating to the possible application of
the Excise Tax under Section 4999 of the Code to any of the
payments and amounts referred to herein and shall afford the
Company, at its expense, the opportunity to control the defense of
such claims.
(6)
Executive shall cooperate with any reasonably requests by the
company in connection with any contests or disputes with the
Internal Revenue Service in connection with the Excise Tax and
shall be reimbursed by the Company, on an after-tax basis, for all
costs, expenses, interest and penalties incurred by Executive in
connection with any such contest or dispute.
5.
RELEASE. Any and all amounts payable and benefits or additional
rights provided pursuant to this Agreement upon Executive’s
termination of employment, beyond Accrued Amounts, shall only be
payable if Executive delivers to the Employing Company a general
release of all claims of Executive occurring up to the release date
in the form of Exhibit A hereto (with such changes therein as may
be necessary to make it valid and encompassing under applicable
law) within 21 days of presentation thereof by the Employing
Company to Executive.
6.
(a)
CONFIDENTIALITY. Executive agrees that he shall not, directly
or indirectly, use, make available, sell, disclose or otherwise
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communicate to any person, other than in the course of
Executive’s assigned duties and for the benefit of the
Employing Company, either during the period of Executive’s
employment or at any time thereafter, any nonpublic, proprietary or
confidential information, knowledge or data relating to the
Employing Company, any of its subsidiaries, affiliated companies or
businesses, which shal
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