Exhibit 10.6

MALLINCKRODT PHARMACEUTICALS

SEVERANCE PLAN FOR U.S. OFFICERS AND EXECUTIVES

Effective April 1, 2013

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TABLE OF CONTENTS

 

                Page  

ARTICLE I

    

PURPOSE, INTENT AND TERM OF PLAN

     1     

Section 1.01

    

Purpose and Intent of the Plan

     1     

Section 1.02

    

Term of the Plan

     1     

Section 1.03

    

Adoption of the Plan

     1   

ARTICLE II

    

DEFINITIONS

     2     

Section 2.01

    

Alternative Position

     2     

Section 2.02

    

Annual Bonus

     2     

Section 2.03

    

Base Salary

     2     

Section 2.04

    

Board

     2     

Section 2.05

    

Cause

     2     

Section 2.06

    

Claim

     3     

Section 2.07

    

Claimant

     3     

Section 2.08

    

COBRA

     3     

Section 2.09

    

Code

     3     

Section 2.10

    

Committee

     3     

Section 2.11

    

Company

     3     

Section 2.12

    

Effective Date

     3     

Section 2.13

    

Eligible Employee

     3     

Section 2.14

    

Employee

     3     

Section 2.15

    

Employer

     4     

Section 2.16

    

ERISA

     4     

Section 2.17

    

Exchange Act

     4     

Section 2.18

    

Involuntary Termination

     4     

Section 2.20

    

Key Employee

     4     

Section 2.19

    

Named Appeals Fiduciary

     4     

Section 2.21

    

Officer

     4     

Section 2.22

    

Participant

     4     

Section 2.23

    

Permanent Disability

     4     

Section 2.24

    

Plan

     4     

Section 2.25

    

Plan Administrator

     4     

Section 2.26

    

Postponement Period

     5     

Section 2.27

    

Release

     5     

Section 2.28

    

Salary Continuation Benefits

     5     

Section 2.29

    

Separation

     5     

Section 2.30

    

Separation from Service

     5     

Section 2.31

    

Separation from Service Date

     5     

Section 2.32

    

Severance Benefits

     5     

Section 2.33

    

Severance Period

     5     

Section 2.34

    

Subsidiary

     6     

Section 2.35

    

Termination Date

     6     

Section 2.36

    

Voluntary Termination

     6   

 

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TABLE OF CONTENTS

(continued)

 

                Page  

ARTICLE III

    

PARTICIPATION AND ELIGIBILITY FOR BENEFITS

     7     

Section 3.01

    

Participation

     7     

Section 3.02

    

Conditions

     7   

ARTICLE IV

    

DETERMINATION OF SEVERANCE BENEFITS

     9     

Section 4.01

    

Amount of Severance Benefits Upon Involuntary Termination

     9     

Section 4.02

    

Voluntary Termination; Termination for Death or Permanent Disability

     12     

Section 4.03

    

Termination for Cause

     12     

Section 4.04

    

Reduction of Severance Benefits

     12   

ARTICLE V

    

METHOD AND DURATION OF SEVERANCE BENEFIT PAYMENTS

     13     

Section 5.01

    

Method of Payment

     13     

Section 5.02

    

Other Arrangements

     13     

Section 5.03

    

Code Section 409A

     13     

Section 5.04

    

Termination of Eligibility for Benefits

     14   

ARTICLE VI

    

THE PLAN ADMINISTRATOR

     15     

Section 6.01

    

Authority and Duties

     15     

Section 6.02

    

Compensation of the Plan Administrator

     15     

Section 6.03

    

Records, Reporting and Disclosure

     15   

ARTICLE VII

    

AMENDMENT, TERMINATION AND DURATION

     16     

Section 7.01

    

Amendment, Suspension and Termination

     16     

Section 7.02

    

Duration

     16   

ARTICLE VIII

    

DUTIES OF THE COMPANY AND THE COMMITTEE

     17     

Section 8.01

    

Records

     17     

Section 8.02

    

Payment

     17     

Section 8.03

    

Discretion

     17   

ARTICLE IX

    

CLAIMS PROCEDURES

     18     

Section 9.01

    

Claim

     18     

Section 9.02

    

Initial Claim

     18     

Section 9.03

    

Appeals of Denied Administrative Claims

     18     

Section 9.04

    

Appointment of the Named Appeals Fiduciary

     19     

Section 9.05

    

Arbitration; Expenses

     19   

ARTICLE X

    

MISCELLANEOUS

     21     

Section 10.01

    

Non-Alienation of Benefits

     21   

 

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TABLE OF CONTENTS

(continued)

 

                Page    

Section 10.02

    

Notices

     21     

Section 10.03

    

Successors

     21     

Section 10.04

    

Other Payments

     21     

Section 10.05

    

No Mitigation

     21     

Section 10.06

    

No Contract of Employment

     21     

Section 10.07

    

Severability of Provisions

     21     

Section 10.08

    

Heirs, Assigns, and Personal Representatives

     22     

Section 10.09

    

Headings, Captions and Titles

     22     

Section 10.10

    

Gender and Number

     22     

Section 10.11

    

Unfunded Plan

     22     

Section 10.12

    

Payments to Incompetent Persons

     22     

Section 10.13

    

Lost Payees

     22     

Section 10.14

    

Controlling Law

     22          

Appendix

     A-1   

 

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ARTICLE I

PURPOSE, INTENT AND TERM OF PLAN

Section 1.01 Purpose and Intent of the Plan. The purpose of the Plan is to make
available to Eligible Employees certain compensation and benefits in the event
that such employee’s employment with the Company or, upon the Separation, a
Subsidiary is terminated under the circumstances, and subject to the conditions,
described herein. The Plan is not intended to be an “employee pension benefit
plan” or “pension plan” within the meaning of Section 3(2) of ERISA. Rather, the
Plan is intended to be a “welfare benefit plan” within the meaning of
Section 3(1) of ERISA and to meet the requirements of a “severance pay plan”
within the meaning of regulations published by the Secretary of Labor at Title
29, Code of Federal Regulations, Section 2510.3-2(b). Accordingly, the Plan’s
benefits are not deferred compensation, and no employee shall have a vested
right to benefits provided by the Plan. The terms of the Plan are intended to,
and shall be interpreted so as to, comply in all respects with the provisions of
Code Section 409A and the regulations and rulings promulgated thereunder.

Section 1.02 Term of the Plan. The Plan shall be effective as of the Effective
Date and shall supersede any prior plan, program or policy under which the
Company or, upon the Separation, any Subsidiary provided severance benefits
before the Effective Date. The Plan shall continue until terminated pursuant to
the provisions set forth herein.

Section 1.03 Adoption of the Plan. In connection with the Separation, the
Company adopted this Plan, effective April 1, 2013, for Eligible Employees of
the Company and, effective upon the Separation, Eligible Employees of any
Subsidiary. Although the Separation is scheduled to occur on June 28, 2013, the
Company adopted this Plan before the Separation as a result of the
implementation of a separate payroll system for its employees on April 1, 2013,
and to ensure that a plan providing for severance benefits is in place for
eligible employees of any United States Subsidiary in the Company’s controlled
group after the Separation.

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ARTICLE II

DEFINITIONS

Section 2.01 “Alternative Position” shall mean a position with the Company or
any Subsidiary that:

(a) is not more than 50 miles each way from the location in which the Eligible
Employee worked, and in the position such employee held, immediately before
experiencing any job-related change (this mileage limitation shall apply only to
jobs substantially performed in a single, fixed Company or Subsidiary operated
and maintained location and shall not apply to any job that requires extensive
travel or that is performed offsite regularly); and

(b) provides the Eligible Employee with pay and benefits (not including
perquisites or long-term incentive compensation) that are, in the aggregate,
comparable to the pay and benefits of the position such employee held
immediately before experiencing any job-related change.

The Plan Administrator has the exclusive discretionary authority to determine
whether a position is an Alternative Position.

Section 2.02 “Annual Bonus” shall mean the average of the actual bonuses paid to
the respective Participant pursuant to The Covidien Annual Incentive Plan that
are attributable to the three Company fiscal years that immediately precede the
Participant’s Separation from Service Date.

Section 2.03 “Base Salary” shall mean the Participant’s annual base salary,
excluding bonus and incentive compensation, in effect as of the Participant’s
Termination Date. For Participants whose primary responsibilities on the
applicable Termination Date involves the sale of products or managing those
whose primary responsibilities involve the sale of products and who receive
compensation substantially based on sales of the products for which they are
responsible (“Sales-Based Compensation”), Base Salary shall mean the
Participant’s annual base salary plus eighty five percent (85%) of the average
Sales-Based Compensation actually paid to such Participant for the lesser of the
preceding 24-month period or the number of whole months during which such
Participant received Sales-Based Compensation. Except as specifically described
in this Section 2.02, Base Salary shall not include any compensation other than
the Participant’s annual base salary.

Section 2.04 “Board” shall mean the Board of Directors of Covidien plc;
provided, however that subject to and contingent upon the Separation and
effective upon the Separation, “Board” shall mean the Board of Directors of
Mallinckrodt plc.

Section 2.05 “Cause” shall mean an Employee’s (a) substantial failure or refusal
to perform duties and responsibilities of his or her job as required by the
Company or Subsidiary, (b) violation of any fiduciary duty owed to the Company
or Subsidiary, (c) conviction of a felony or misdemeanor, (d) dishonesty,
(e) theft, (f) violation of Company or Subsidiary rules or policy, or (g) other
egregious conduct that has or could have a serious and detrimental impact on the
Company or any Subsidiary or any of their employees. The Plan Administrator, in
its sole and absolute discretion, shall determine whether Cause exists.

 

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Section 2.06 “Claim” shall refer to a written claim for Severance Benefits filed
with the Plan Administrator pursuant to Article IX.

Section 2.07 “Claimant” shall mean an Eligible Employee who has experienced a
termination of employment (or the beneficiary of such an Eligible Employee) and
has asserted a right to Severance Benefits under the Plan.

Section 2.08 “COBRA” shall mean the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended, and the regulations promulgated thereunder.

Section 2.09 “Code” shall mean the Internal Revenue Code of 1986, as amended,
and the regulations promulgated thereunder.

Section 2.10 “Committee” shall mean the Compensation and Human Resources
Committee of the Board or such other committee appointed by the Board to assist
the Company in making determinations required under the Plan in accordance with
its terms. The Committee may delegate its authority under the Plan to an
individual or another committee.

Section 2.11 “Company” shall mean Mallinckrodt Enterprises LLC, a Delaware
limited liability company, and any entity that succeeds to the business or
assumes the obligations of Mallinckrodt Enterprises LLC with respect to the
Plan.

Section 2.12 “Effective Date” shall mean April 1, 2013.

Section 2.13 “Eligible Employee” shall mean an Employee who is an Officer or is
classified in job grade D, E or F and who is not covered under any other
severance plan, program, benefit agreement or arrangement sponsored by the
Company or any Subsidiary. “Eligible Employee” shall also mean an Employee who
(i) is not considered to be an Eligible Employee pursuant to the previous
sentence; (ii) was an Eligible Employee under the Covidien Severance Plan for
U.S. Officers and Executives as of December 31, 2011, based upon the terms of
that plan as in effect on December 31, 2011; and (iii) remains as an Employee in
continuous employment from December 31, 2011 through the respective employment
termination date. If there is any question as to whether an Employee is an
Eligible Employee or the level of severance benefits to which an Eligible
Employee is entitled, the Plan Administrator shall make the determination in its
sole discretion.

Section 2.14 “Employee” shall mean an individual who is a common law employee of
the Company; provided, however, that subject to and contingent upon the
Separation and effective upon the Separation, “Employee” shall mean an
individual considered by the Company or a Subsidiary to be a common law employee
on the Company’s or Subsidiary’s United States payroll as evidenced by payroll
records; and, in either case, shall not include any person providing services to
the Company or any Subsidiary through a temporary service or on a leased basis
or who is hired by the Company or any Subsidiary as an independent contractor,
consultant, or otherwise as a person who is not an employee for purposes of
withholding United States federal income or employment taxes, as evidenced by
payroll records or a written agreement with the individual, regardless of any
contrary governmental agency determination or

 

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judicial holding relating to such status or tax withholding. Notwithstanding the
above, in the event that Code Section 409A applies to any payments made
hereunder, subsection (d) of the definition of “Subsidiary” shall apply solely
with respect to any payments that are subject to Code Section 409A.

Section 2.15 “Employer” shall mean the Company or, if applicable, the Subsidiary
that employs the Eligible Employee.

Section 2.16 “ERISA” shall mean the Employee Retirement Income Security Act of
1974, as amended, and the regulations promulgated thereunder.

Section 2.17 “Exchange Act” shall mean the Securities Exchange Act of 1934, as
amended, and the regulations promulgated thereunder.

Section 2.18 “Involuntary Termination” shall mean an Employer-initiated
Separation from Service of a Participant for any reason other than Cause,
Permanent Disability or death, as provided under and subject to the conditions
of Article III.

Section 2.19 “Key Employee” shall mean an Eligible Employee who is a “specified
employee” under Code Section 409A, as determined by the Company or its delegate.
The determination of Key Employees, including the number and identity of persons
considered specified employees and the identification date, shall be made by the
Company or its delegate in accordance with the provisions of Code Section 409A
and the regulations promulgated thereunder.

Section 2.20 “Named Appeals Fiduciary” shall mean the person or persons named as
such in accordance with the provisions of Section 9.04.

Section 2.21 “Officer” shall mean any individual who is an officer, as such term
is defined pursuant to Rule 16a-1(f) as promulgated under the Exchange Act, of
Mallinckrodt plc. For purposes of this definition, Officer shall also mean any
officer of any subsidiary of Mallinckrodt plc who performs policy making
functions, within the context of Rule 16a-1(f).

Section 2.22 “Participant” shall mean any Eligible Employee who meets the
requirements of Article III and thereby becomes eligible for Severance Benefits.

Section 2.23 “Permanent Disability” shall mean that an Employee has a permanent
and total incapacity from engaging in any employment for the Employer for
physical or mental reasons. A “Permanent Disability” shall be deemed to exist if
the Employee is designated with an inactive employment status at the end of a
disability or medical leave or if the Employee meets the requirements for
disability benefits under (a) the Employer’s long-term disability plan or
(b) the Social Security law then in effect.

Section 2.24 “Plan” means the Mallinckrodt Pharmaceuticals Severance Plan for
U.S. Officers and Executives as set forth herein, and as the same may from time
to time be amended.

Section 2.25 “Plan Administrator” shall mean the individual(s) appointed by the
Committee to administer the terms of the Plan as set forth herein and if no
individual is appointed by the Committee to serve as the Plan Administrator, the
Plan Administrator shall be

 

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the Senior Vice President, Human Resources of Covidien plc; provided, however,
that subject to and contingent upon the Separation and effective upon the
Separation, if no individual is appointed by the Committee to serve as the Plan
Administrator, the Plan Administrator shall be the Senior Vice President, Human
Resources of Mallinckrodt plc. Notwithstanding the preceding sentence, in the
event the Plan Administrator is entitled to Severance Benefits under the Plan,
the Committee or its delegate (who shall not be the Plan Administrator) shall
act as the Plan Administrator for purposes of administering the terms of the
Plan with respect to the Plan Administrator. The Plan Administrator may delegate
all or any portion of its authority under the Plan to any other person(s).

Section 2.26 “Postponement Period” shall mean, for a Key Employee, the period of
six (6) months after such Key Employee’s Separation from Service Date (or such
other period as may be required by Code Section 409A).

Section 2.27 “Release” shall mean a written agreement, in substance and form
suitable to the Company, by which a Participant agrees to waive and release the
Company and, if applicable, the Employer from all legal claims the Participant
may have against the Company and, if applicable, the Employer in exchange for
Severance Benefits. The Release shall include the Participant’s written
agreement to confidentiality, non-solicitation, non-disparagement and, where
applicable, non-competition provisions. To be effective, the Release must be
signed and returned to the Company within the timeframe set forth in the
Release, but no later than sixty (60) days following the Participant’s
Separation from Service Date, and it may not be revoked during any applicable
revocation period that may be permitted by the Release or applicable law.
Releases are not required to be identical amongst Participants.

Section 2.28 “Salary Continuation Benefits” shall mean the salary continuation
payments described in Section 4.01(b) and the bonus payments described in
Section 4.01(c)(ii).

Section 2.29 “Separation” shall mean the separation of Covidien plc’s
Pharmaceuticals business (a/k/a Mallinckrodt Pharmaceuticals) from Covidien plc
in a transaction set forth in a Form 10 initially filed with the U.S. Securities
and Exchange Commission on February 1, 2013, whereby the public shareholders of
Covidien plc are issued a stock dividend of Mallinckrodt plc ordinary shares
and, as a result of such transaction and immediately upon the consummation of
such transaction, the Company will no longer be a member of the Covidien plc
controlled group of corporations.

Section 2.30 “Separation from Service” shall mean “separation from service”
within the meaning of Code Section 409A(a)(2)(A)(i) and the applicable
regulations and rulings promulgated thereunder.

Section 2.31 “Separation from Service Date” shall mean, with respect to a
Participant, the date on which such Participant experiences a Separation from
Service.

Section 2.32 “Severance Benefits” shall mean the Salary Continuation Benefits
and other benefits that a Participant is eligible to receive pursuant to Article
IV of the Plan.

Section 2.33 “Severance Period” shall mean the period during which a Participant
is receiving Severance Benefits under this Plan, as set forth in the Appendix.

 

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Section 2.34 “Subsidiary” shall mean (a) a subsidiary company (wherever
incorporated) of Mallinckrodt plc, as defined by Section 155 of the Companies
Act 1963 of Ireland; (b) any separately organized business unit, whether or not
incorporated, of Mallinckrodt plc; (c) any employer that is required to be
aggregated with the Company pursuant to Code Section 414 and the regulations
promulgated thereunder; and (d) any service recipient or employer that is within
a controlled group of corporations as defined in Code Sections 1563(a)(1),
(2) and (3) where the phrase “at least 50%” is substituted in each place “at
least 80%” appears and any service recipient or employer within trades or
businesses under common control as defined in Code Section 414(c) and Treas.
Reg. Section 1.414(c)-2 where the phrase “at least 50%” is substituted in each
place “at least 80%” appears, provided, however, that when the relevant
determination is to be based upon legitimate business criteria (as described in
Treas. Reg. Sections 1.409A-1(b)(5)(iii)(E) and 1.409A-1(h)(3)), the phrase “at
least 20%” shall be substituted in each place “at least 80%” appears as
described above with respect to both a controlled group of corporations and
trades or business under common control.

Section 2.35 “Termination Date” shall mean the date on which the active
employment of the Participant by the Employer ceases by reason of an Involuntary
Termination.

Section 2.36 “Voluntary Termination” shall mean any Separation from Service due
to a termination of employment that is not initiated by the Employer.

 

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ARTICLE III

PARTICIPATION AND ELIGIBILITY FOR BENEFITS

Section 3.01 Participation. Each Eligible Employee in the Plan who experiences
an Involuntary Termination and who satisfies all of the conditions of
Section 3.02 shall be eligible to receive Severance Benefits. An Eligible
Employee shall not be eligible to receive any other benefits from the Company or
any Subsidiary on account of an Involuntary Termination, unless otherwise
provided in the Plan.

Section 3.02 Conditions.

(a) Eligibility for any Severance Benefits is expressly conditioned upon the
Eligible Employee’s execution of the Release within the timeframe set forth in
the Release, but no later than sixty (60) days following such employee’s
Separation from Service Date, including the Eligible Employee’s written
acceptance of, and written agreement to comply with, the confidentiality,
non-solicitation, non-disparagement and non-competition provisions set forth in
the Release. To the extent permitted in Section 4.04, eligibility for any
Severance Benefits also is expressly conditioned upon the Eligible Employee’s
written agreement that authorizes the deduction of amounts owed to the Employer
prior to the payment of any Severance Benefits (or in accordance with any other
schedule as the Plan Administrator may, in its sole discretion, determine to be
appropriate). If the Plan Administrator determines, in its sole discretion, that
the Participant has not fully complied with any of the terms of the Release, the
Plan Administrator may, to the extent consistent with the terms of any Release,
deny Severance Benefits not yet in pay status or discontinue the payment of the
Participant’s Severance Benefits and may require the Participant, by providing
written notice of such repayment obligation to the Participant, to repay any
portion of the Severance Benefits already received under the Plan. If the Plan
Administrator notifies a Participant that repayment of all or any portion of the
Severance Benefits received under the Plan is required, such amounts shall be
repaid within thirty (30) calendar days after the date the written notice is
sent. Any remedy under this Section 3.02(a) shall be in addition to, and not in
place of, any other remedy, including injunctive relief, that the Company may
have.

(b) An Eligible Employee will not be eligible to receive Severance Benefits
under any of the following circumstances:

(i) A Voluntary Termination by the Eligible Employee (unless the selection
criteria for an Employer-established exit program permit the Eligible Employee
to terminate employment voluntarily in exchange for participation in such
program, the Employer provides the Eligible Employee with written acceptance of
his or her request to participate in that program and the Eligible Employee
satisfies all relevant conditions for participation in such program);

(ii) The Eligible Employee resigns during any time period when the Employer
otherwise would retain the Eligible Employee’s services;

(iii) The Eligible Employee’s employment is terminated for Cause;

 

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(iv) The Eligible Employee’s employment terminates due to the Eligible
Employee’s death or Permanent Disability;

(v) The Eligible Employee does not return to work within the time frame required
following an approved leave of absence;

(vi) The Eligible Employee does not satisfy the conditions for Severance
Benefits set forth in Section 3.02(a);

(vii) The Eligible Employee continues in employment with the Employer in any
position or has the opportunity to continue in employment in the same or in an
Alternative Position with the Company or any Subsidiary;

(viii) The Eligible Employee’s employment with the Employer terminates as a
result of a sale of stock or assets of the Employer, merger, consolidation,
joint venture or a sale or outsourcing of a business unit or function, or other
transaction, and the Eligible Employee accepts employment, or has the
opportunity to continue employment (without regard to whether the offer of
employment is for an Alternative Position), with the purchaser, joint venture or
other acquiring or outsourcing entity or a related entity of either the Employer
or the acquiring entity. The payment of Severance Benefits in the circumstances
described in this subsection 3.02(b)(viii) would result in a windfall to the
Eligible Employee, which is not the intention of the Plan; or

(ix) The Eligible Employee fails to timely execute, or executes but timely
revokes acceptance of, the Release.

(c) The Plan Administrator has the sole discretion to determine an Eligible
Employee’s eligibility to receive Severance Benefits.

(d) An Eligible Employee who returns from approved military leave and meets the
following three conditions will be eligible for Severance Benefits: (i) the
Eligible Employee is eligible for reemployment under the provisions of the
Uniformed Services Employment and Reemployment Rights Act; (ii) the Eligible
Employee’s pre-military leave job is eliminated; and (iii) the Employer’s
circumstances are changed so as to make reemployment in another position
impossible or unreasonable, or re-employment would create an undue hardship for
the Employer. The Severance Benefits provided to a Participant returning from
military leave will be calculated as if the Participant had remained
continuously employed from the date on which military leave commenced. An
Eligible Employee who returns from approved military leave also must satisfy any
other relevant conditions for payment set forth in this Article III, including
execution of the Release.

 

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ARTICLE IV

DETERMINATION OF SEVERANCE BENEFITS

Section 4.01 Amount of Severance Benefits Upon Involuntary Termination. The
Severance Benefits to be provided to a Participant shall be as follows:

(a) Notice Pay. Each Eligible Employee who is eligible for Severance Benefits
shall receive Notice Pay (or pay in lieu of notice, as applicable) without
regard to whether the Eligible Employee receives Severance Benefits. Unless
otherwise provided herein, Notice Pay means the continued payment of a pro-rata
portion of the Eligible Employee’s annual base salary (excluding bonus and
incentive compensation and Sales-Based Compensation) during the thirty
(30) calendar-day period which begins the day immediately after the date the
Employer informs the Eligible Employee of his or her Involuntary Termination
(“Notice Period”). If the Employer determines that an Eligible Employee’s
Termination Date shall be before the expiration of such employee’s Notice
Period, the Company shall provide to the Eligible Employee pay in lieu of
notice, which shall equal the pro-rata portion of the Eligible Employee’s annual
base salary (excluding bonus and incentive compensation and Sales-Based
Compensation) applicable to the period beginning on the day after the employee’s
Termination Date and ending on the last day of the Notice Period. Pay in lieu of
notice shall be paid to the Eligible Employee in a single lump sum payment (net
of deductions and tax withholdings, as applicable) no later than the second
regular Employer pay period that occurs after the Eligible Employee’s
Termination Date. Notice Pay (or pay in lieu of notice, as applicable) shall be
in addition to, and shall not be offset against, any Severance Benefits an
Eligible Employee may receive pursuant to the Plan. An Eligible Employee who
fails to timely execute, or who executes but timely revokes acceptance of, the
Release shall not be entitled to Severance Benefits hereunder and shall only be
eligible to receive Notice Pay (or pay in lieu of notice, as applicable). Unless
otherwise permitted by the applicable plan document or as specifically required
by applicable law, an Eligible Employee with a Termination Date that occurs
before expiration of the applicable Notice Period shall not be eligible to apply
for short- or long-term disability or workers’ compensation benefits in
connection with any injury that occurs or disability that arises after such
employee’s Termination Date.

(b) Salary Continuation. Salary continuation payments shall be provided during
the Severance Period applicable to the Participant, as set forth in the Salary
Continuation Schedule in the Appendix. During the Severance Period, the
Participant shall receive continued payments of a pro-rata portion of Base
Salary (net of deductions and tax withholdings, as applicable) in equal
installments over the Severance Period, per normal payroll cycles and in normal
payroll amounts for such cycle. Except as otherwise provided herein, salary
continuation payments shall commence no earlier than the end of the applicable
revocation period and shall be paid in accordance with Article V.

(c) Bonus.

(i) Participants may be eligible for a cash payment equal to such Participant’s
pro-rated annual bonus for the year in which the Participant’s Separation from
Service Date occurs, subject to the discretion of the Company and to the extent
provided in the applicable plan.

 

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(ii) Participants shall also receive a bonus payment during the applicable
Severance Period that is equal to the amount set forth in the Bonus Payment
Schedule in the Appendix. The bonus payment shall be paid in cash to the
Participant in equal installments over the applicable Severance Period (e.g., 12
months, 18 months or 24 months), per normal payroll cycles. Bonus payments made
over the applicable Severance Period shall be paid at the same time as the
salary continuation payments described in Section 4.01(b) and in accordance with
Article V.

(d) Medical, Dental and Health Care Reimbursement Account Benefits. The
Participant (and his/her spouse, domestic partner or child(ren), as applicable)
shall be eligible for continued coverage under the Company’s medical and dental
plans as required by and pursuant to COBRA. The Company shall provide COBRA
coverage only if such coverage is timely elected by the Participant or other
qualified beneficiary (as defined by COBRA). If the Participant timely elects
COBRA coverage, subject to the other provisions in this Section 4.01(d), during
the Severance Period, the Participant will be responsible for paying the
employee portion of the applicable premium under the respective plan(s) at the
same rate and at the same time as such employee contributions are paid by
similarly-situated then-active Company employees. If the Severance Period is
less than the applicable COBRA coverage period then, effective for the first
premium payment due after the Severance Period expires, the Participant will be
required to pay the entire premium for COBRA coverage and shall be responsible
for paying such premium during the remainder of the applicable COBRA coverage
period. If the Severance Period exceeds eighteen (18) months after the
Participant’s Separation from Service Date, then (a) effective for any premium
payments for COBRA coverage that are due after eighteen (18) months after the
Participant’s Separation from Service Date, the Participant will be required to
pay the entire premium for such COBRA coverage and shall be responsible for
paying such premium during the remainder of the applicable COBRA period and
(b) the Company shall pay to the Participant, within sixty (60) days after such
eighteen (18) month period expires, a single lump-sum cash payment in an amount
equal to the employer portion of the applicable premium in effect for the
Participant, based on the type of coverage provided to the Participant at such
time, for the last month of such eighteen (18) month period times the number of
full months that the Severance Period exceeds such eighteen (18) month period.
COBRA coverage will cease upon the expiration of the maximum period required
under COBRA or at such earlier time if the Participant does not pay the required
premium within the applicable time period, if the Participant terminates COBRA
coverage, or if an event occurs that, pursuant to COBRA, permits the earlier
termination of COBRA coverage.

(e) Equity Awards. Except as otherwise provided in Section 4.01(e)(i) through
(iii) below, all equity awards over Covidien plc ordinary shares (or, after the
Separation, Mallinckrodt plc ordinary shares) that are held by the Participant
as of his or her Separation from Service Date shall be treated in accordance
with the terms and conditions of the applicable plan and award agreement under
which such awards were granted.

(i) Stock Options. All stock options held by the Participant as of such
Participant’s Separation from Service Date which would have vested and become
exercisable during the twelve (12) month period occurring immediately after the
Participant’s Separation

 

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from Service Date shall accelerate and become immediately vested and exercisable
on such Participant’s Separation from Service Date, unless the applicable option
agreement provides for more favorable vesting treatment. All outstanding stock
options held by the Participant that are vested and exercisable as of the
Participant’s Separation from Service Date (including options that vest and
become exercisable pursuant to the provisions of this Section 4.01(e)(i) or
Section 4.01(e)(iii) below in the case of Normal Retirement) shall be
exercisable for the greater of (A) the period set forth in applicable option
agreement, or (B) twelve (12) months after the Participant’s Separation from
Service Date. In no event, however, shall an option be exercisable beyond its
original expiration date. If the Participant dies, the terms and conditions of
the applicable option agreement shall govern.

(ii) Restricted Stock, Restricted Units and Performance Units. All unvested
restricted stock and restricted units held by a Participant as of such
Participant’s Separation from Service Date shall be forfeited as of the
Participant’s Separation from Service Date. All performance units held by a
Participant as of such Participant’s Separation from Service Date shall be
forfeited as of the Participant’s Separation from Service Date.

(iii) Retirement and Normal Retirement Eligible Participants. Notwithstanding
the provisions of Section 4.01(e)(i) and (ii), if a Participant who signs a
Release and begins receiving Severance Benefits hereunder would satisfy the
requirements for Retirement or Normal Retirement (as such terms are defined in
the applicable award agreement) set forth in a non-qualified stock option,
restricted unit or performance unit award agreement over Covidien plc ordinary
shares (or, after the Separation, Mallinckrodt plc ordinary shares) at any time
during the Participant’s Severance Period solely by reason of attaining the
requisite age set forth in the applicable award agreement during such Severance
Period, then all such non-qualified stock option, restricted unit and
performance unit awards shall vest in accordance with the terms and conditions
of the applicable award agreement by treating such Participant as if such
Participant had satisfied the age requirement for Retirement or Normal
Retirement, as applicable, under the applicable award agreement on the
Participant’s Separation from Service Date; provided, however that, solely with
respect to non-qualified stock options, if Section 4.01(e)(i) provides more
favorable treatment than this Section 4.01(e)(iii) (as would be the case if
Retirement treatment applied), the more favorable provision shall apply. If the
Participant dies, the terms and conditions of the applicable award agreement
shall govern.

(f) Outplacement Services. The Company may, in its sole and absolute discretion,
pay the cost of outplacement services for the Participant at the outplacement
agency that the Company regularly uses for such purpose; provided, however, that
the period of outplacement shall not exceed twelve (12) months after the
Participant’s Separation from Service Date or, if earlier, the date of the
Participant’s death.

 

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Section 4.02 Voluntary Termination; Termination for Death or Permanent
Disability. If the Eligible Employee’s employment terminates on account of
(a) the Eligible Employee’s Voluntary Termination, (b) death or (c) Permanent
Disability, then the Eligible Employee shall not be entitled to receive
Severance Benefits under this Plan and shall be entitled only to those benefits
(if any) as may be available under the Company’s benefit plans and policies in
effect at the time of such termination of employment.

Section 4.03 Termination for Cause. If any Eligible Employee’s employment
terminates on account of termination by the Employer for Cause, the Eligible
Employee shall not be entitled to receive Severance Benefits under this Plan and
shall be entitled only to those benefits that are required to be provided to the
Eligible Employee by applicable law. Notwithstanding any other provision of the
Plan to the contrary, if the Plan Administrator in its sole discretion
determines, at any point during the Severance Period, that a Participant engaged
in conduct that constitutes Cause, any Severance Benefits payable to the
Participant shall cease immediately, and the Participant shall be required to
return to the Company any Severance Benefits that were provided to the
Participant before such determination. The Company may withhold providing
Severance Benefits pending resolution of an inquiry that could lead to a finding
that an Eligible Employee engaged in conduct that constitutes Cause. Any such
Severance Benefit that is withheld and subsequently is determined to be due
shall be provided to the Participant within ninety (90) days after the date of
the final and binding resolution.

Section 4.04 Reduction of Severance Benefits. With respect to amounts paid under
the Plan that are not subject to Code Section 409A and the regulations
promulgated thereunder, the Plan Administrator reserves the right to make
deductions in accordance with applicable law for any monies owed to the Employer
by the Eligible Employee or for the value of any Employer property that the
Eligible Employee improperly retains and fails to return to the Employer. With
respect to amounts paid under the Plan that are subject to Code Section 409A and
the regulations promulgated thereunder, the Plan Administrator reserves the
right to make deductions in accordance with applicable law for any monies owed
to the Employer by the Eligible Employee or the value of Employer property that
the Eligible Employee has retained; provided, however, that such deductions
cannot exceed $5,000 in the aggregate in any Employer fiscal year.

 

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ARTICLE V

METHOD AND DURATION OF SEVERANCE BENEFIT PAYMENTS

Section 5.01 Method of Payment. Subject to Section 5.03, the Severance Benefits
to which a Participant is entitled, as determined pursuant to Section 4.01,
shall be paid by the Company in accordance with normal payroll practices over
the Severance Period; provided, however, that the pro rated annual bonus payable
to the Participant pursuant to Section 4.01(c)(i) shall be paid at such time and
in such manner as set forth in the applicable annual incentive bonus plan and
that COBRA coverage under Section 4.01(d) shall be provided or paid in
accordance with the provisions of that subsection. In no event will interest be
credited on the unpaid balance for which a Participant may become eligible.
Payment shall be mailed to the last address provided by the Participant to the
Company or made by such other reasonable method as determined by the Plan
Administrator. All payments of Severance Benefits are subject to applicable
federal, state and local taxes and withholdings. In the event of a Participant’s
death prior to the completion of all payments to which a Participant is
entitled, the remaining payments shall be paid to the Participant’s estate in a
single, lump-sum payment within sixty (60) days following the date the Company
receives notice of the Participant’s death.

Section 5.02 Other Arrangements. The Severance Benefits under this Plan are not
additive or cumulative to severance or termination benefits that a Participant
might also be entitled to receive under the terms of a written employment
agreement, a severance agreement or any other arrangement with the Employer
including, but not limited to, the Covidien Severance Plan for U.S. Officers and
Executives. Notwithstanding any other provision of this Plan, any Eligible
Employee who is a party to an employment agreement with the Company pursuant to
which such Eligible Employee is entitled to severance benefits shall be
ineligible to participate in the Plan. With respect to those Eligible Employees
who are eligible for severance or other payments resulting from a termination of
employment under a plan or arrangement other than this Plan, as a condition of
receiving Severance Benefits under this Plan, the Plan Administrator, in its
sole discretion, must determine that the Eligible Employee is eligible under
this Plan and the Eligible Employee must expressly agree that this Plan
supersedes all prior agreements including, but not limited to, the Covidien
Severance Plan for U.S. Officers and Executives, and sets forth the full and
complete benefits to which the Eligible Employee is entitled upon an Involuntary
Termination.

Section 5.03 Code Section 409A

(a) Notwithstanding any other provision of the Plan to the contrary, if required
by Code Section 409A, no Salary Continuation Benefits shall be paid to a
Participant who is a Key Employee during the Postponement Period. If the
previous sentence applies, then the payment of Salary Continuation Benefits
shall commence after expiration of the applicable Postponement Period and any
amounts that would have been paid during the Postponement Period but for the
previous sentence shall be paid in a single, lump-sum within thirty (30) days
after the end of such Postponement Period. If the Participant dies during the
Postponement Period, however, amounts withheld pursuant to this Section 5.03(a)
shall be paid to the Participant’s estate no later than the earlier of sixty
(60) days after the date the Company receives notice of the Participant’s death
or thirty (30) days after the end of the Postponement Period.

 

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(b) This Plan is intended to provide certain benefits that meet the requirements
of the “short-term deferral” exception, the “separation pay” exception and other
exceptions under Code Section 409A and the regulations promulgated thereunder.
Notwithstanding any other provision of the Plan to the contrary, if required by
Code Section 409A, payments may be made under this Plan only upon an event and
in a manner permitted by Code Section 409A. For purposes of Code Section 409A,
each individual payment that constitutes part of the Salary Continuation
Benefits shall be treated as a separate payment from any other such payment. All
reimbursements and in-kind benefits provided under the Plan shall be made or
provided in accordance with the requirements of Code Section 409A including,
where applicable, the requirement that (i) any reimbursement is for expenses
incurred during the period of time specified in the Plan, (ii) the amount of
expenses eligible for reimbursement, or in-kind benefits provided, during a
calendar year may not affect the expenses eligible for reimbursement, or in-kind
benefits to be provided, in any other calendar year, (iii) the reimbursement of
an eligible expense will be made no later than the last day of the calendar year
following the year in which the expense is incurred, and (iv) the right to
reimbursement, or in-kind benefits is not subject to liquidation or exchange for
another benefit. In no event may a Participant designate the year of payment for
any amounts payable under the Plan.

Section 5.04 Termination of Eligibility for Benefits.

(a) All Eligible Employees shall cease to be eligible to participate in the
Plan, and all Severance Benefits payable to a Participant shall cease upon the
occurrence of the earlier of:

(i) Subject to Article VII, termination or modification of the Plan; or

(ii) Completion of the provision of Severance Benefits to the Participant.

(b) Notwithstanding any other provision of the Plan to the contrary, the Company
shall have the right to cease all Severance Benefits (except as otherwise
required by law) and to recover any payments previously made to the Participant
if:

(i) the Participant, at any time, breaches the Participant’s undertakings under
the terms of the Plan;

(ii) the Participant fails to comply with the terms of the Release the
Participant executed to obtain Severance Benefits or fails to comply with any
confidentiality, non-solicitation, non-disparagement or non-competition covenant
applicable to the Participant; or

(iii) the Company becomes aware of any circumstances that would have justified
termination of the Participant’s employment for Cause.

 

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ARTICLE VI

THE PLAN ADMINISTRATOR

Section 6.01 Authority and Duties. It shall be the duty of the Plan
Administrator, on the basis of information supplied to it by the Employer, to
administer the Plan. The Plan Administrator shall have the full and absolute
power, authority and discretion to construe, interpret and administer the Plan,
to make factual determinations, to correct deficiencies therein and to supply
omissions. All decisions, actions and interpretations of the Plan Administrator
shall be final, binding and conclusive upon all parties, subject only to the
Claims Procedure as defined in Article IX, and may not be overturned unless
found by a court to be arbitrary and capricious. The Plan Administrator may
adopt such rules and regulations and may make such decisions as it deems
necessary or desirable for the proper administration of the Plan.

Section 6.02 Compensation of the Plan Administrator. The Plan Administrator
shall receive no compensation for services as such. However, all reasonable
expenses of the Plan Administrator shall be paid or reimbursed by the Company
upon proper documentation. The Plan Administrator shall be indemnified by the
Company against personal liability for actions taken in good faith in the
discharge of the Plan Administrator’s duties pursuant to the policy entitled
“Indemnification of Directors, Officers, and Employees Who Serve As Fiduciaries
or Representatives,” as the same may from time to time be amended, or pursuant
to such other policy as may apply to the Plan Administrator.

Section 6.03 Records, Reporting and Disclosure. The Plan Administrator or its
delegate shall keep a copy of all records relating to the payment of Severance
Benefits to Participants and former Participants and all other records necessary
for the proper operation of the Plan. All Plan records shall be made available
to the Committee, the Company and to each Participant for examination during
business hours, except that a Participant shall be entitled to examine only such
records as pertain exclusively to the examining Participant and to the Plan. The
Plan Administrator shall prepare and shall file as required by law or regulation
all reports, forms, documents and other items required by ERISA, the Code and
every other relevant statute, each as amended, and all regulations promulgated
thereunder (except that the Company, as payor of the Severance Benefits, shall
prepare and distribute to the proper recipients all forms relating to
withholding of income or wage taxes, Social Security taxes and other amounts
that may be similarly reportable).

 

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ARTICLE VII

AMENDMENT, TERMINATION AND DURATION

Section 7.01 Amendment, Suspension and Termination. Except as otherwise provided
in this Section 7.01, the Board, by action of the Compensation and Human
Resources Committee, shall have the right, at any time and from time to time, to
amend, suspend or terminate the Plan in whole or in part, for any reason or
without reason, and without either the consent of or the prior notification to
any Participant, by a formal written action. No such amendment shall give the
Company the right to recover any amount paid to a Participant prior to the date
of such amendment or to cause the cessation of Severance Benefits already
approved for a Participant who has executed the Release (and has not revoked his
or her agreement to the Release). Any amendment or termination of the Plan must
comply with all applicable legal requirements including, without limitation,
compliance with Code Section 409A and the regulations and rulings promulgated
thereunder, securities, tax, or other laws, rules, regulations or regulatory
interpretation thereof, applicable to the Plan.

Section 7.02 Duration. The Plan shall continue in full force and effect until
its termination; provided, however, that after the Plan’s termination, if
Participants who experienced an Involuntary Termination before the Plan
terminates are receiving Severance Benefits, the Plan shall remain in effect
until all of the obligations of the Company are satisfied with respect to such
Participants.

 

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ARTICLE VIII

DUTIES OF THE COMPANY AND THE COMMITTEE

Section 8.01 Records. The Company or Subsidiary, as applicable, shall supply to
the Committee all records and information necessary to the performance of the
Committee’s duties.

Section 8.02 Payment. The provision of Severance Benefits to Participants shall
be made from the Company’s general assets, in accordance with the terms of the
Plan.

Section 8.03 Discretion. Any decisions, actions or interpretations to be made
under the Plan by the Board, the Committee or the Plan Administrator, acting on
behalf of either, shall be made in each of their respective sole discretion, not
in any fiduciary capacity and need not be uniformly applied to similarly
situated individuals and such decisions, actions or interpretations shall be
final, binding and conclusive upon all parties. As a condition of participating
in the Plan, the Eligible Employee acknowledges that all decisions and
determinations of the Board, the Committee and the Plan Administrator shall be
final and binding on the Eligible Employee, the Eligible Employee’s
beneficiaries and any other person having or claiming an interest under the Plan
on behalf of an Eligible Employee.

 

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ARTICLE IX

CLAIMS PROCEDURES

Section 9.01 Claim. If a person asserts a right to, but does not receive, a
benefit under the Plan, such person or such person’s authorized representative
shall, within thirty (30) days following the person’s Termination Date, file
with the Plan Administrator a written claim for such benefit. Claims not timely
filed shall be barred. A Participant under this Plan may contest only the
administration of the Severance Benefits awarded. To request such review, a
Participant shall complete and file with the Plan Administrator a written
request for review in the manner specified by the Plan Administrator. Except as
set forth herein, no appeal is permissible as to a person’s eligibility for or
amount of the Severance Benefits, which decisions are made solely within the
discretion of the Plan Administrator. No person may bring an action for any
alleged wrongful denial of Plan benefits in a court of law unless the claims
procedures described in this Article IX are exhausted and a final determination
is made by the Plan Administrator and/or the Named Appeals Fiduciary. If an
Eligible Employee or Participant or other interested person challenges a
decision by the Plan Administrator and/or Named Appeals Fiduciary, a review by
the court of law will be limited to the facts, evidence and issues presented to
the Plan Administrator during the claims procedures set forth in this Article
IX. Facts and evidence that become known to the terminated Eligible Employee or
Participant or other interested person after such person has exhausted the
claims procedures set forth in this Article IX must be brought to the attention
of the Plan Administrator for reconsideration by the Plan Administrator. Any
issue that is not raised with the Plan Administrator and/or Named Appeals
Fiduciary will be deemed waived.

Section 9.02 Initial Claim. Before the date on which payment of Severance
Benefits commences, each Claim must be supported by such information as the Plan
Administrator deems relevant and appropriate. In the event that any Claim
relating to the administration of Severance Benefits is denied in whole or in
part, the Claimant whose claim has been so denied shall be notified of such
denial in writing by the Plan Administrator within ninety (90) days after the
receipt of the claim for benefits. This period may be extended an additional
ninety (90) days if the Plan Administrator determines such extension is
necessary and the Plan Administrator provides notice of extension to the
Claimant before the end of the initial ninety (90) day period. The notice
advising of the denial shall: (a) specify the reason or reasons for denial;
(b) refer specifically to the Plan provisions on which the determination was
based; (c) describe any additional material or information necessary for the
Claimant to perfect the claim (explaining why such material or information is
needed); and (d) describe the Plan’s review procedures and the time limits
applicable to such procedures, including a statement of the Claimant’s right to
bring a civil action under ERISA Section 502(a) following an adverse benefit
determination on review. If it is determined that payment is to be made, any
such payment shall be made within ninety (90) days after the date by which
notification is required.

Section 9.03 Appeals of Denied Administrative Claims. All appeals shall be made
by the following procedure:

(a) A Claimant whose Claim has been denied shall file with the Plan
Administrator a notice of appeal of the denial. Such notice shall be filed
within sixty (60)

 

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calendar days after notification by the Plan Administrator of the denial of a
Claim, shall be made in writing, and shall set forth all of the facts upon which
the appeal is based. Appeals not timely filed shall be barred.

(b) The Named Appeals Fiduciary shall consider the merits of the Claimant’s
written presentations, the merits of any facts or evidence in support of the
denial of benefits and such other facts and circumstances as the Named Appeals
Fiduciary shall deem relevant.

(c) The Named Appeals Fiduciary shall render a determination upon the appealed
claim, and the determination shall be accompanied by a written statement as to
the reasons therefore. The determination shall be provided to the Claimant
within sixty (60) days after the Plan Administrator receives the Claimant’s
request for review, unless the Named Appeals Fiduciary determines that special
circumstances require an extension of time for processing the claim. In such
case, the Named Appeals Fiduciary shall notify the Claimant of the need for an
extension of time to render its decision prior to the end of the initial sixty
(60) day period, and the Named Appeals Fiduciary shall have an additional sixty
(60) day period to make its determination. The determination so rendered shall
be binding upon all parties. If the determination is adverse to the Claimant,
the notice shall: (a) provide the reason or reasons for denial; (b) make
specific reference to the Plan provision’s on which the determination was based;
(c) include a statement that the Claimant is entitled to receive, upon request
and free of charge, reasonable access to, and copies of, all documents, records
and other information relevant to a the Claimant’s claim for benefits; and
(d) state that the Claimant has the right to bring an action under ERISA
Section 502(a). If the final determination is that payment shall be made, then
any such payment shall be made within ninety (90) days after the date by which
notification of the final determination is required.

Section 9.04 Appointment of the Named Appeals Fiduciary. The Named Appeals
Fiduciary shall be the person or persons named as such by the Committee, or, if
no such person or persons be named, then the Committee shall be the Named
Appeals Fiduciary. Named Appeals Fiduciaries, named as such by the Committee,
may at any time be removed by the Committee. All such removals may be with or
without cause and shall be effective on the date stated in the notice of
removal. The Named Appeals Fiduciary shall be a “Named Fiduciary” within the
meaning of ERISA, and unless appointed to other fiduciary responsibilities,
shall have no authority, responsibility or liability with respect to any matter
other than the proper discharge of the functions of the Named Appeals Fiduciary
as set forth herein.

Section 9.05 Arbitration; Expenses. In the event of any dispute under the
provisions of this Plan, other than a dispute in which the primary relief sought
is an equitable remedy such as an injunction, the parties shall have the
dispute, controversy or claim settled by arbitration in St. Louis, Missouri (or
such other location as may be mutually agreed upon by the Company and the
Participant) in accordance with the Employment Arbitration Rules and Mediation
Procedures of the American Arbitration Association then in effect, before a
single arbitrator. Any award entered by the arbitrator shall be final, binding
and non-appealable, and judgment may be entered thereon by either party in
accordance with applicable law in any court of competent jurisdiction. This
arbitration provision shall be specifically enforceable. The arbitrator shall
have no authority to modify any provision of this Plan or to award a remedy for
a dispute involving this Plan other than a benefit specifically provided under
or by virtue of the Plan. If the Participant substantially prevails on any
material issue, which is the subject of such arbitration or lawsuit, the Company

 

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shall be responsible for all of the fees of the American Arbitration Association
and the arbitrator and any reasonably incurred expenses relating to the conduct
of the arbitration (including the Company’s and Participant’s reasonable
attorneys’ fees and expenses); in this event, any such fees and expenses are
limited to those typically incurred in the usual course of arbitration
proceedings and shall not be negotiable or determinable by the Participant, and
payment to the Participant of such amounts shall occur within ninety (90) days
after the date of entry of judgment (entered in accordance with applicable law
in any court of competent jurisdiction) of the final, binding and non-appealable
arbitration settlement. Otherwise, each party shall be responsible for its own
expenses relating to the conduct of the arbitration (including reasonable
attorneys’ fees and expenses) and shall share the fees of the American
Arbitration Association.

 

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ARTICLE X

MISCELLANEOUS

Section 10.01 Non-Alienation of Benefits. None of the payments, benefits or
rights of any Participant shall be subject to any claim of any creditor of any
Participant, and, in particular, to the fullest extent permitted by law, all
such payments, benefits and rights shall be free from attachment, garnishment
(if permitted under applicable law), trustee’s process or any other legal or
equitable process available to any creditor of such Participant. No Participant
shall have the right to alienate, anticipate, commute, plead, encumber or assign
any of the benefits or payments that he may expect to receive, contingently or
otherwise, under this Plan.

Section 10.02 Notices. All notices and other communications required hereunder
shall be in writing and shall be delivered personally or mailed by registered or
certified mail, return receipt requested, or by overnight express courier
service. In the case of the Participant, mailed notices shall be addressed to
him or her at the home address which he or she most recently communicated to the
Company in writing. In the case of the Company, mailed notices shall be
addressed to the Plan Administrator, as follows: Senior Vice President, Human
Resources, Mallinckrodt Pharmaceuticals, 675 McDonnell Boulevard, Hazelwood, MO
63042, with a copy to the Company’s general counsel, as follows: Senior Vice
President and General Counsel, Mallinckrodt Pharmaceuticals, 675 McDonnell
Boulevard, Hazelwood, MO 63042.

Section 10.03 Successors. Any successor to the Company shall assume the
obligations under this Plan and expressly agree to perform the obligations under
this Plan.

Section 10.04 Other Payments. Except as otherwise provided in this Plan, no
Participant shall be entitled to any cash payments or other benefits under any
of the Company’s then-current severance pay policies or plans for a termination
that is covered by this Plan.

Section 10.05 No Mitigation. Except as otherwise provided in Section 4.04, a
Participant shall not be required to mitigate the amount of any Severance
Benefits provided for in this Plan by seeking other employment or otherwise, nor
shall the amount of any Severance Benefits provided for herein be reduced by any
compensation earned by other employment or otherwise, except if the Participant
is re-employed by the Company as an Employee, in which case Severance Benefits
shall cease on the date of the Participant’s re-employment.

Section 10.06 No Contract of Employment. Neither the establishment of the Plan,
nor any modification thereof, nor the creation of any fund, trust or account,
nor the payment of any benefits shall be construed as giving any Eligible
Employee or any person whosoever, the right to be retained in the service of the
Company, and all Eligible Employees shall remain subject to discharge to the
same extent as if the Plan had never been adopted.

Section 10.07 Severability of Provisions. If any provision of this Plan shall be
held invalid or unenforceable by a court of competent jurisdiction, such
invalidity or unenforceability shall not affect any other provisions hereof, and
this Plan shall be construed and enforced as if such provisions had not been
included.

 

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Section 10.08 Heirs, Assigns, and Personal Representatives. This Plan shall be
binding upon the heirs, executors, administrators, successors and assigns of the
parties, including each Participant, present and future.

Section 10.09 Headings, Captions and Titles. The titles of the Articles and
Sections and the headings and captions herein are provided for reference and
convenience only, shall not be considered part of the Plan or considered in any
respect to affect or modify its provisions, and shall not be employed in the
construction of the Plan. Such words in this Plan as “herein,” “hereinafter,”
“hereof” and “hereunder” refer to this instrument as a whole and not merely to
the subdivision in which said words appear.

Section 10.10 Gender and Number. Where the context admits: words in any gender
shall include any other gender and, except where otherwise clearly indicated by
context, the singular shall include the plural, and vice-versa.

Section 10.11 Unfunded Plan. The Plan shall not be funded. No Participant shall
have any right to, or interest in, any assets of the Company that may be applied
by the Company to the payment of Severance Benefits.

Section 10.12 Payments to Incompetent Persons. Any benefit payable to or for the
benefit of a minor, an incompetent person or other person incapable of
receipting therefor shall be deemed paid when paid to such person’s guardian or
to the party providing or reasonably appearing to provide for the care of such
person, and such payment shall fully discharge the Company, the Committee and
all other parties with respect thereto.

Section 10.13 Lost Payees. A Severance Benefit shall be deemed forfeited if the
Committee is unable to locate a Participant to whom Severance Benefits are due.
Such Severance Benefits may be reinstated if application is made by the
Participant for the forfeited Severance Benefits while this Plan is in
operation.

Section 10.14 Controlling Law. This Plan shall be construed and enforced
according to the laws of the State of Missouri to the extent not superseded by
federal law, which shall otherwise control.

 

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Appendix

SALARY CONTINUATION AND BONUS PAYMENT SCHEDULE

Salary Continuation Schedule

 

Chief Executive Officer    24 month Severance Period Executive Vice President
and Chief Financial Officer, Senior Vice Presidents and Presidents of business
whose annual revenue is $1.5 billion or more    18 month Severance Period Any
other Global Business Unit Presidents, any other Officer and any other Eligible
Employee    12 month Severance Period

Bonus Payment Schedule

 

Chief Executive Officer    2x Annual Bonus Executive Vice President and Chief
Financial Officer, Senior Vice Presidents and Presidents of business whose
annual revenue is $1.5 billion or more    1.5x Annual Bonus Any other Global
Business Unit Presidents, any other Officer and any other Eligible Employee   
1x Annual Bonus

 

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