Exhibit 10.7

MALLINCKRODT PHARMAECUTICALS CHANGE IN CONTROL SEVERANCE PLAN FOR CERTAIN U.S.
OFFICERS AND EXECUTIVES

Effective July 1, 2013

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TABLE OF CONTENTS

 

         Page  

ARTICLE I

 

BACKGROUND, PURPOSE 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

 

“Annual Bonus”

     2   

Section 2.02

 

“Base Salary”

     2   

Section 2.03

 

“Board”

     2   

Section 2.04

 

“Cause”

     2   

Section 2.05

 

“Change in Control”

     2   

Section 2.06

 

“Change in Control Benefits”

     3   

Section 2.07

 

“Change in Control Termination”

     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”

     4   

Section 2.15

 

“Employer”

     4   

Section 2.16

 

“ERISA”

     4   

Section 2.17

 

“Exchange Act”

     4   

Section 2.18

 

“Executive Severance Plan”

     4   

Section 2.19

 

“Good Reason Resignation”

     4   

Section 2.20

 

“Involuntary Termination”

     5   

Section 2.21

 

“Key Employee”

     5   

Section 2.22

 

“Notice Pay”

     5   

Section 2.23

 

“Officer”

     5   

Section 2.24

 

“Participant”

     5   

Section 2.25

 

“Permanent Disability”

     5   

 

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TABLE OF CONTENTS

(continued)

 

         Page  

Section 2.26

 

“Plan”

     5   

Section 2.27

 

“Plan Administrator”

     5   

Section 2.28

 

“Postponement Period”

     6   

Section 2.29

 

“Release”

     6   

Section 2.30

 

“Separation from Service”

     6   

Section 2.31

 

“Separation from Service Date”

     6   

Section 2.32

 

“Severance Benefits”

     6   

Section 2.33

 

“Severance Period”

     6   

Section 2.34

 

“Subsidiary”

     6   

Section 2.35

 

“Successor”

     6   

Section 2.36

 

“Voluntary Resignation”

     6   

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 and Good Reason
Resignation

     9   

Section 4.02

 

Voluntary Resignation; Termination for Death or Permanent Disability

     11   

Section 4.03

 

Termination for Cause

     11   

Section 4.04

 

Reduction of Severance Benefits

     11   

ARTICLE V

 

METHOD, DURATION AND LIMITATION OF SEVERANCE BENEFIT PAYMENTS

     12   

Section 5.01

 

Method of Payment

     12   

Section 5.02

 

Other Arrangements

     12   

Section 5.03

 

Code Section 409A

     12   

Section 5.04

 

Termination of Eligibility for Benefits

     13   

Section 5.05

 

Limitation on Benefits

     13   

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   

 

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TABLE OF CONTENTS

(continued)

 

         Page  

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

     16   

Section 8.01

 

Records

     16   

Section 8.02

 

Payment

     16   

Section 8.03

 

Discretion

     16   

ARTICLE IX

 

CLAIMS PROCEDURES

     17   

Section 9.01

 

Claim

     17   

Section 9.02

 

Initial Claim

     17   

Section 9.03

 

Appeals of Denied Administrative Claims

     17   

Section 9.04

 

Appointment of the Named Appeals Fiduciary

     18   

Section 9.05

 

Arbitration; Expenses

     18   

ARTICLE X

 

MISCELLANEOUS

     19   

Section 10.01

 

Non-Alienation of Benefits

     19   

Section 10.02

 

Notices

     19   

Section 10.03

 

Successors

     19   

Section 10.04

 

Other Payments

     19   

Section 10.05

 

No Mitigation

     19   

Section 10.06

 

No Contract of Employment

     19   

Section 10.07

 

Severability of Provisions

     20   

Section 10.08

 

Heirs, Assigns, and Personal Representatives

     20   

Section 10.09

 

Headings and Captions

     20   

Section 10.10

 

Gender and Number

     20   

Section 10.11

 

Unfunded Plan

     20   

Section 10.12

 

Payments to Incompetent Persons

     20   

Section 10.13

 

Lost Payees

     20   

Section 10.14

 

Controlling Law

     20   

APPENDIX

 

Salary Continuation Schedule

     A-1   

 

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ARTICLE I

BACKGROUND, PURPOSE AND TERM OF PLAN

Section 1.01 Purpose and Intent of the Plan. The purpose of the Plan is to
provide Eligible Employees with certain compensation and benefits in the event
that such Employee’s employment with the Company or a Subsidiary is terminated
due to a Change in Control Termination. 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 descriptive
requirements of a plan constituting 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, no employee shall have a vested
right to benefits paid 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 and, if
necessary, any provision shall be held null and void to the extent such
provision (or any part thereof) fails to comply with Code Section 409A or the
regulations or rulings promulgated thereunder.

Section 1.02 Term of the Plan. The Plan shall generally be effective as of the
Effective Date. The Plan is intended to supersede, and not to duplicate, the
provisions of the Mallinckrodt Pharmaceuticals Severance Plan for U.S. Officers
and Executives (“Executive Severance Plan”) in any case in which an Eligible
Employee would otherwise be entitled to severance or related benefits under both
this Plan and the Executive Severance Plan arising out of the Eligible
Employee’s Change in Control Termination. Moreover, this Plan is intended to
supersede any other plan, program, arrangement or agreement providing an
Eligible Employee with severance or related benefits in the case of an Eligible
Employee’s Change in Control Termination. The Plan shall continue until
terminated pursuant to Article VII of the Plan.

Section 1.03 Adoption of the Plan. The Plan was adopted by the Board of
Directors of Mallinckrodt plc on May 24, 2013.

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ARTICLE II

DEFINITIONS

Section 2.01 “Annual Bonus” means the average of the actual bonuses paid to the
respective Participant pursuant to The Mallinckrodt Pharmaceuticals Annual
Incentive Plan that are attributable to the three Company fiscal years that
immediately precede the Participant’s Separation from Service Date.

Section 2.02 “Base Salary” means the Participant’s annual base salary in effect
as of the Participant’s Separation from Service Date.

Section 2.03 “Board” means the Board of Directors of Mallinckrodt plc.

Section 2.04 “Cause” means an Employee’s (i) substantial failure or refusal to
perform duties and responsibilities of his or her job as required by the
Company, (ii) violation of any fiduciary duty owed to the Company,
(iii) conviction of a felony or misdemeanor, (iv) dishonesty, (v) theft,
(vi) violation of Company rules or policy, or (vii) other egregious conduct,
that has or could have a serious and detrimental impact on the Company and its
employees. The Committee, in its sole and absolute discretion, shall determine
Cause.

Section 2.05 “Change in Control” means the first to occur of any of the
following events:

(i) any “person” (as defined in Section 13(d) and 14(d) of the Exchange Act,
excluding for this purpose, (i) the Company or any Subsidiary or (ii) any
employee benefit plan of the Company or any Subsidiary (or any person or entity
organized, appointed or established by the Company for or pursuant to the terms
of any such plan that acquires beneficial ownership of voting securities of the
Company), is or becomes the “beneficial owner” (as defined in Rule 13d-3 under
the Exchange Act) directly or indirectly of securities of the Company
representing more than 30 percent of the combined voting power of the Company’s
then outstanding securities; provided, however, that no Change in Control will
be deemed to have occurred as a result of a change in ownership percentage
resulting solely from an acquisition of securities by the Company;

(ii) persons who, as of the Effective Date, constitute the Board (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 the
Company subsequent to the Effective Date shall be considered an Incumbent
Director if such person’s election or nomination for election was approved by a
vote of at least 50 percent of the Incumbent Directors; but provided further,
that any such person whose initial assumption of office is in connection with an
actual or threatened proxy contest relating to the election of members of the
Board or other actual or threatened solicitation of proxies or consents by or on
behalf of a “person” (as defined in Section 13(d) and 14(d) of the Exchange Act)
other than the Board, 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

 

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(iii) consummation of a reorganization, merger or consolidation or sale or other
disposition of at least 80 percent of the assets of the Company (a “Business
Combination”), in each case, unless, following such Business Combination, all or
substantially all of the individuals and entities who were the beneficial owners
of outstanding voting securities of the Company immediately prior to such
Business Combination beneficially own directly or indirectly more than 50
percent of the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors of the company resulting
from such Business Combination (including, without limitation, a company which,
as a result of such transaction, owns the Company or all or substantially all of
the Company’s assets either directly or through one or more Subsidiaries) in
substantially the same proportions as their ownership, immediately prior to such
Business Combination, of the outstanding voting securities of the Company; or

(iv) approval by the stockholders of the Company of a complete liquidation or
dissolution of the Company.

Section 2.06 “Change in Control Benefits” means the payments described in
Section 4.01(b) and Section 4.01(c)(ii).

Section 2.07 “Change in Control Termination” means a Participant’s Involuntary
Termination or Good Reason Resignation that occurs during the period beginning
60 days prior to the date of a Change in Control and ending two years after the
date of such Change in Control.

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

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

Section 2.10 “Committee” means the Compensation and Human Resources Committee of
the Board or any successor committee 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” means Mallinckrodt plc, a public company with limited
liability incorporated in Ireland, or any successor thereto. Unless it is
otherwise clear from the context, Company shall generally include participating
Subsidiaries.

Section 2.12 “Effective Date” means July 1, 2013.

Section 2.13 “Eligible Employee” means an Employee who is an Officer, or is
classified in job grade C or D, and who is not covered under any other severance
plan or program sponsored by the Company or a Subsidiary (other than the
Executive Severance Plan). If there is any question as to whether an Employee is
an Eligible Employee, the Senior Vice President, Human Resources of Mallinckrodt
plc shall make the determination.

 

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Section 2.14 “Employee” means an individual who is a common law employee on the
payroll of any United States Subsidiary of Mallinckrodt plc, and 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
judicial holding relating to such status or tax withholding. Notwithstanding the
above, in the event that Section 409A applies to any payments made hereunder,
subsection (iv) of the definition of “Subsidiary” shall apply.

Section 2.15 “Employer” means the Company or any Subsidiary.

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

Section 2.17 “Exchange Act” means the United States Securities Exchange Act of
1934, as amended, and the regulations promulgated thereunder.

Section 2.18 “Executive Severance Plan” means the Mallinckrodt Pharmaceuticals
Severance Plan for U.S. Officers and Executives, which plan is superseded by
this Plan in the event of any Participant’s Change in Control Termination.

Section 2.19 “Good Reason Resignation” means any retirement or termination of
employment by a Participant that is not initiated by the Employer and that is
caused by any one or more of the following events which occurs during the period
beginning 60 days prior to the date of a Change in Control and ending two years
after the date of such Change in Control:

(1) Without the Participant’s written consent, assignment to the Participant of
any duties inconsistent in any material respect with the Participant’s
authority, duties or responsibilities as in effect immediately prior to the
Change in Control;

(2) Without the Participant’s written consent, a material diminution in the
authority, duties or responsibilities of the supervisor to whom the Participant
is required to report as in effect immediately prior to the Change in Control;

(3) Without the Participant’s written consent, a material change in the
geographic location at which the Participant must perform services to a location
which is more than 50 miles from the Participant’s principal place of business
immediately preceding the Change in Control;

(4) Without the Participant’s written consent, a material reduction in the
Participant’s compensation and benefits, taken as a whole, as in effect
immediately prior to the Change in Control;

(5) The Company’s failure to obtain a satisfactory agreement from any Successor
to assume and agree to perform the Company’s obligations to the Participant
under this Plan, as contemplated in Section 10.03 herein; or

(6) Without the Participant’s written consent, a material diminution in the
budget over which the Participant retains authority;

 

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Notwithstanding the foregoing, the Participant shall be considered to have a
Good Reason Resignation only if (x) the Participant provides written notice to
the Employer specifying in reasonable detail the event upon which the
Participant is basing such Good Reason Resignation within ninety (90) days after
the occurrence of such event, (y) the Employer fails to cure such event within
thirty (30) days after its receipt of such notice, and (z) the Participant
terminates employment within sixty (60) days after the expiration of such cure
period.

Section 2.20 “Involuntary Termination” means the date that a Participant
experiences a Company-initiated Separation from Service from the Employer for
any reason other than Cause, Permanent Disability or death, as provided under
and subject to the conditions of Article III.

Section 2.21 “Key Employee” means an Eligible Employee who is a “specified
employee” under Code Section 409A, as determined by the Committee 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 Committee or its delegate in accordance with the provisions of Code
Section 409A and the regulations promulgated thereunder.

Section 2.22 “Notice Pay” means the amounts that a Participant is eligible to
receive pursuant to Article IV of the Plan.

Section 2.23 “Officer” means any individual who is an officer, as such term is
defined pursuant to Rule 16a-1(f) as promulgated under the Exchange Act, of the
Company.

Section 2.24 “Participant” means any Eligible Employee who meets the
requirements of Article III and thereby becomes eligible for Severance Benefits.

Section 2.25 “Permanent Disability” means 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 meets the requirements for disability benefits under the Employer’s
long-term disability plan or under the requirements for disability benefits
under the Social Security law then in effect, or if the Employee is designated
with an inactive employment status at the end of a disability or medical leave.

Section 2.26 “Plan” means the Mallinckrodt Pharmaceuticals Change in Control
Severance Plan for Certain U.S. Officers and Executives as set forth herein, and
as the same may from time to time be amended.

Section 2.27 “Plan Administrator” means 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 for
the Plan, 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 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).

 

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Section 2.28 “Postponement Period” means, 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 2.29 “Release” means the “Separation of Employment Agreement and General
Release,” as provided by the Company or such other agreement between the Company
and Participant under which the Participant releases potential claims against
the Company in exchange for Severance Benefits.

Section 2.30 “Separation from Service” means “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” means, with respect to a
Participant, the date on which such Participant experiences a Separation from
Service.

Section 2.32 “Severance Benefits” means the salary replacement amounts and other
benefits that a Participant is eligible to receive pursuant to Article IV of the
Plan.

Section 2.33 “Severance Period” means the period for which a Participant is
entitled to receive Severance Benefits under this Plan, as set forth in the
Appendix.

Section 2.34 “Subsidiary” means (i) a subsidiary company (wherever incorporated)
of the Company, as defined by Section 155 of the Companies Act 1963 of Ireland;
(ii) any separately organized business unit, whether or not incorporated, of the
Company; (iii) any employer that is required to be aggregated with the Company
pursuant to Code Section 414 and the regulations promulgated thereunder; and
(iv) 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. § 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. §
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 “Successor” means any other corporation or unincorporated entity or
group of corporations or unincorporated entities which acquires ownership,
directly or indirectly, through merger, consolidation, purchase or otherwise, of
all or substantially all of the assets of the Company.

Section 2.36 “Voluntary Resignation” means any Separation from Service that is
not initiated by the Employer other than a Good Reason Resignation.

 

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ARTICLE III

PARTICIPATION AND ELIGIBILITY FOR BENEFITS

Section 3.01 Participation. Each Eligible Employee in the Plan who incurs a
Change in Control Termination and who satisfies all of the conditions of
Section 3.02 shall be eligible to receive the Severance Benefits described in
the Plan. An Eligible Employee shall not be eligible to receive any other
severance benefits from the Company or Subsidiary on account of a Change in
Control Termination, unless otherwise provided in the Plan. In addition, 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.

Section 3.02 Conditions.

(a) Eligibility for any Severance Benefits is expressly conditioned on the
occurrence of the following within 60 days following the Participant’s
Separation from Service Date: (i) execution by the Participant of a Release in
the form provided by the Company (which may include confidentiality,
non-solicitation, and non-disparagement provisions at the Company’s discretion);
(ii) compliance by the Participant with all the terms and conditions of such
Release; and (iii) to the extent permitted in Section 4.04 of the Plan,
execution of a written agreement that authorizes the deduction of amounts owed
to the Company prior to the payment of any Severance Benefits (or in accordance
with any other schedule as the Committee may, in its sole discretion, determine
to be appropriate). If the Company determines, in its sole discretion, that the
Participant has not fully complied with any of the terms of the Release and/or
any confidentiality, non-solicitation, and non-disparagement provisions to which
Participant may be subject, the Company may 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 Company 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) The Eligible Employee’s Voluntary Resignation;

(ii) The Eligible Employee resigns employment (other than a Good Reason
Resignation) before the job-end date specified by the Employer or while the
Employer still desires the Eligible Employee’s services;

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

(iv) The Eligible Employee voluntarily retires (other than a Good Reason
Resignation);

 

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(v) The Eligible Employee’s employment is terminated due to the Eligible
Employee’s death or Permanent Disability;

(vi) The Eligible Employee does not return to work at the end of an approved
leave of absence.

(vii) The Eligible Employee does not satisfy the Conditions for Severance in
Section 3.02(a);

(viii) The Eligible Employee continues in employment with the Company or any
Subsidiary for more than sixty (60) days following the expiration of the cure
period set forth in the last paragraph of Section 2.19 with respect to a Good
Reason Resignation; or

(ix) The Eligible Employee’s employment with the Employer terminates as a result
of a Change in Control and the Eligible Employee accepts employment, or has the
opportunity to continue employment, with a Successor (other than under terms and
conditions which would permit a Good Reason Resignation). The payment of
Severance Benefits in the circumstances described in this subsection (ix) would
result in a windfall to the Eligible Employee, which is not the intention of the
Plan.

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

(d) An Eligible Employee returning from approved military leave during the
period beginning 60 days before a Change in Control and ending two years after a
Change in Control will be eligible for Severance Benefits if: (i) he/she is
eligible for reemployment under the provisions of the Uniformed Services
Employment and Reemployment Rights Act (USERRA); (ii) his/her 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. If the Eligible
Employee returning from military leave qualifies for Severance Benefits, his/her
severance benefits will be calculated as if he/she had remained continuously
employed from the date he/she began his/her military leave. The Eligible
Employee must also satisfy any other relevant conditions for payment set forth
in this Article III, including execution of a Release.

 

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ARTICLE IV

DETERMINATION OF SEVERANCE BENEFITS

Section 4.01 Amount of Severance Benefits Upon Involuntary Termination and Good
Reason Resignation. 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 at least thirty (30) calendar days’ notice as a Notice Period. In
the event the Company determines an Eligible Employee’s last day of work shall
be prior to the end of his or her Notice Period, such Employee shall be entitled
to pay in lieu of notice for the balance of such Notice Period. Notice Pay paid
to an Eligible Employee shall be in addition to, and shall not be offset
against, the Severance Benefits the Participant may be entitled to receive under
this Article IV. An Eligible Employee who does not sign, or who revokes his or
her signature on, a Release shall only be eligible for Notice Pay. Unless
otherwise permitted by the applicable plan documents or laws, an Eligible
Employee will not be eligible to apply for short-term disability, long-term
disability and/or workers’ compensation during the Notice Period, or anytime
thereafter. Notice pay shall be paid in accordance with Article V.

(b) Salary Replacement. Salary replacement shall be provided for the Severance
Period applicable to the Participant as set forth in the Salary Replacement
Schedule in the Appendix and shall be paid in accordance with Article V.

(c) Bonus.

(i) The Participant shall receive a cash payment equal to his or her pro-rated
annual bonus for the fiscal year in which the Participant’s Separation from
Service Date occurs, to the extent provided in the applicable plan; provided,
however, that if the Participant’s Separation from Service Date occurs during
the same fiscal year as a Change in Control and the Participant has received an
annual bonus attributable to such fiscal year solely because of the Change in
Control, then the Participant shall not receive a pro-rated annual bonus
pursuant to this Section 4.01(c)(i).

(ii) The Participant shall also receive a cash payment equal to his or her
Annual Bonus for the Severance Period applicable to the Participant as set forth
in the Bonus Payment Schedule in the Appendix, which shall be paid 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 active Company employees.

 

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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) Stock Options. All stock options held by the Participant as of his or her
Separation from Service Date which are not already vested and exercisable as of
such date shall become vested and exercisable on the Participant’s Separation
from Service Date. All outstanding stock options held by the Participant that
are vested and exercisable as of the Participant’s Separation from Service Date
and all stock options held by the Participant that become vested and exercisable
under the preceding sentence shall be exercisable for the greater of (i) the
period set forth in Participant’s option agreement covering such options, or
(ii) twelve (12) months from 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.

(f) Restricted Stock, Restricted Stock Units and Performance Share Units. All
unvested restricted stock and restricted stock units held by the Participant as
of his or her Separation from Service Date which are subject solely to
time-vesting requirements shall accelerate and become immediately vested as of
the Participant’s Separation from Service Date. All unvested restricted stock
and restricted stock units held by the Participant as of his or her Separation
from Service Date which are subject in whole or part to performance-based
vesting provisions shall accelerate and become vested if and to the extent that
the Committee determines in its sole discretion that the applicable performance
vesting requirements have been or will be attained, or would have been attained
during the Severance Period in the ordinary course but for the Change in Control
and the Participant’s Change in Control Termination. The treatment of any
performance share units upon a Participant’s Change in Control Termination shall
be governed by the terms and conditions of the applicable award agreement.

(g) 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 Resignation; Termination for Death or Permanent
Disability. If the Eligible Employee’s employment terminates on account of
(i) the Eligible Employee’s Voluntary Resignation, (ii) death, or
(iii) 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 then-existing benefit
plans and policies at the time of such termination.

Section 4.03 Termination for Cause. If any Eligible Employee’s employment
terminates on account of termination by the Company 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 Committee or the Plan Administrator determine,
during the Severance Period, that a Participant engaged in conduct at any time
that constitutes Cause, any Severance Benefits payable to the Participant shall
immediately cease and the Participant shall be required to return any Severance
Benefits paid to the Participant prior to such determination to the Company. The
Company may withhold paying Severance Benefits pending resolution of an inquiry
that could lead to a finding resulting in Cause and any such payment that was
withheld and which is subsequently determined to be payable shall be paid to the
Participant within ninety (90) days after the date of the final and binding
resolution of the related inquiry.

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 Company
by the Participant or the value of Company property that the Participant has
retained in his/her possession. 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 Company by the Participant or the
value of the Company property that the Participant has retained in his/her
possession; provided, however, that such deductions cannot exceed $5,000 in the
aggregate in any Company fiscal year.

 

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ARTICLE V

METHOD, DURATION AND LIMITATION OF SEVERANCE BENEFIT PAYMENTS

Section 5.01 Method of Payment. Subject to Section 5.03, the cash Severance
Benefits to which a Participant is entitled, as determined pursuant to
Section 4.01, shall be paid in a single lump sum payment within sixty five
(65) days following the Participant’s Severance from Service Date, subject to
the fulfillment of all conditions for payment set forth in Section 3.02 and
subject to the expiration of the Release revocation period specified in the
Release; 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 Mallinckrodt Pharmaceuticals Annual Incentive
Plan (or successor plan) and that COBRA coverage under Section 4.01(d) shall be
provided or paid in accordance with the provisions of that subsection.
Notwithstanding the foregoing, if the Participant’s Change in Control
Termination occurs based on a Change in Control that does not qualify as a
“change in control event” under Code Section 409A and the regulations
promulgated thereunder, then any portion of the Severance Benefit payable under
this Plan that (i) is subject to Code Section 409A and the regulations and
rulings promulgated thereunder and (ii) equals the amount of benefit the
Participant could be eligible to receive under the Executive Severance Plan (if
the Participant were to satisfy the eligibility requirements in order to receive
a benefit under that plan), shall be paid at the same time and in the same form
as under the Executive Severance Plan. In no event will interest be credited on
the unpaid balance for which a Participant may become eligible. Payment shall be
made by mailing to the last address provided by the Participant to the Company
or 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 the 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 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, without limitation, the Executive Severance Plan. As provided in
Section 3.01, any Eligible Employee who is a party to an employment agreement
with the Company or Subsidiary pursuant to which such Eligible Employee is
entitled to severance benefits shall be ineligible to participate in the Plan.
Therefore, as a condition of participating in the Plan, the Eligible Employee
must expressly agree that this Plan supersedes all prior plans or agreements,
and sets forth the entire benefit the Eligible Employee is entitled to under the
Plan.

Section 5.03 Code Section 409A.

(a) Notwithstanding any other provision of the Plan to the contrary, if required
by Code Section 409A, no Change in Control 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 Change in Control Benefits shall
commence after expiration of the applicable Postponement Period and any amounts
that would have been paid during the Postponement

 

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Period but for the previous sentence shall be paid in a single lump sum within
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 60 days after the Participant’s death or 30 days after the end of the
Postponement Period.

(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 only be made under this Plan 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 Change in Control 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 Benefit payments 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
should the Participant at any time breach the Participant’s undertakings under
the terms of the Plan, the Release the Participant executed to obtain the
Severance Benefits under the Plan or the confidentiality, non-competition,
non-solicitation and non-disparagement provisions in the Release and/or in any
other agreement to which the Participant is subject.

Section 5.05 Limitation on Benefits.

(a) Notwithstanding anything in this Plan to the contrary, if it is determined
that the payments or distributions by the Company or its Subsidiaries to or for
the benefit of a Participant (whether paid or provided pursuant to the terms of
this Plan or otherwise) which are

 

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contingent on a change in control of the Company (within the meaning of Code
Section 280G(b)(2)(A)(i)) would be nondeductible by the Company or Employer for
Federal income tax purposes because of Code Section 280G, then the aggregate
present value of the benefits provided to such Participant under this Plan
(benefits provided to a Participant under this Plan are hereinafter referred to
as “Plan Payments”) shall be reduced to the Reduced Amount (as defined below) if
the net after-tax benefit (after taking into account federal, state, local or
other income, employment, self-employment and excise taxes) provided to such
Participant after application of the reduction is greater than the net after-tax
benefit (after taking into account federal, state, local or other income,
employment, self-employment and excise taxes) to which such Participant would
otherwise be entitled from the receipt of Plan Payments in their entirety and
without application of any reduction. For this purpose, the Reduced Amount shall
be an amount expressed in present value which maximizes the aggregate present
value of Plan Payments without causing any payments to a Participant which are
contingent upon a change in control of the Company to be nondeductible by the
Company or Employer because of Code Section 280G. Present value shall be
determined in accordance with Section 280G(d)(4) of the Code.

(b) All determinations required to be made under this Section 5.05 shall be made
by an accounting firm selected by the Company before the Change in Control (the
“Accounting Firm”), which shall provide detailed supporting calculations both to
the Company and the Participant within fifteen (15) business days of the
Separation from Service Date or such earlier time as requested by the Company.
Any such determination by the Accounting Firm shall be binding upon the Company
and the Participant. Within five (5) business days of the determination by the
Accounting Firm as to any determination required to be made under this
Section 5.05, the Company shall provide to the Participant such Severance
Benefits as are then due to the Participant in accordance with the rights
afforded under this Plan. If Plan Payments are to be reduced, then such Plan
Payments shall be reduced in a manner which maximizes the aggregate value of the
Payments. If (i) any Payments would be treated as paid pursuant to a
nonqualified deferred compensation plan (within the meaning of Code
Section 409A(d)(1)); (ii) Plan Payments are required to be reduced pursuant to
Section 5.05(a); and (iii) Plan Payments are to be paid on separate payment
dates, then any reduction shall be applied to Plan Payments that are first
payable to the Participant. The Reduced Payment shall be effected by reducing or
eliminating a Participant’s Payment or Payments (or portion(s) thereof), until
no portion of such Payments is rendered non-deductible by application of
Section 280G of the Code, in the following order: (i) the portion denominated
and payable in cash (other than “24(c) Payments” as defined below), such as
severance; (ii) the portion payable in-kind, such as insurance coverage, or in
cash as a reimbursement, such as for outplacement, legal fees, or moving
expenses (other than 24(c) Payments); (iii) the portion of equity-based
compensation, including stock options and stock appreciation rights or similar
rights, that are not 24(c) Payments, including such compensation subject to the
achievement of performance-based objectives; and (iv) the portion of 24(c)
Payments, such as equity-based compensation or any other Payment. The Company
has full discretionary authority to determine which Payments to reduce within
each of the four categories described above in the preceding sentence. The
Company cannot, however, reduce Payments in one category unless all Payments in
the preceding category have been eliminated. A “24(c) Payment” is any Payment
permitted to be valued under Treas. Reg. Section 1.280G-1, Q&A 24(c), or any
successor provision, promulgated under Code Section 280G.

 

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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 Company and the
Committee, to properly administer the Plan. The Plan Administrator shall have
the full 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 the parties, subject
only to determinations by the Named Appeals Fiduciary (as defined in
Section 9.04), with respect to denied claims for Severance Benefits. 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.

Section 6.03 Records, Reporting and Disclosure. The Plan Administrator 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 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 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 or its delegate 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 a Release
as required under Section 3.02. Notwithstanding the foregoing, this Plan may not
be terminated, suspended or be amended in any material respect during the period
beginning 60 days prior to a Change in Control and ending two years after a
Change in Control. 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. Unless terminated sooner by the Board or its delegate,
the Plan shall continue in full force and effect until termination of the Plan
pursuant to Section 7.01; provided, however, that after the termination of the
Plan, if any Participants terminated employment on account of an Involuntary
Termination prior to the termination of the Plan and are still receiving
Severance Benefits under the Plan, the Plan shall remain in effect until all of
the obligations of the Company are satisfied with respect to such Participants.

ARTICLE VIII

DUTIES OF THE COMPANY AND THE COMMITTEE

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

Section 8.02 Payment. Payments of Severance Benefits to Participants shall be
made in such amount as determined by the Committee under Article IV, from the
Company’s general assets.

Section 8.03 Discretion. Any decisions, actions or interpretations to be made
under the Plan by the Board, the Committee and 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, his or her beneficiaries and any
other person having or claiming an interest under the Plan on his or her behalf.

 

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ARTICLE IX

CLAIMS PROCEDURES

Section 9.01 Claim. Each Participant under this Plan may contest only the
administration of the Severance Benefits awarded by completing and filing with
the Plan Administrator a written request for review in the manner specified by
the Plan Administrator. No appeal is permissible as to an Eligible Employee’s
eligibility for or a Participant’s amount of the Severance Benefit, which are
decisions made solely within the discretion of the Company. 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 procedure set forth in
this Article IX. Facts and evidence that become known to the terminated Eligible
Employee or Participant or other interested person after having exhausted the
claims procedure must be brought to the attention of the Plan Administrator for
reconsideration of the claims administrator. Issues 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 a Severance
Benefit commences, each such application 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 terminated Participant or his or her beneficiary (“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 prior to the end of the initial
ninety (90) day period. The notice advising of the denial shall specify the
following: (i) the reason or reasons for denial, (ii) make specific reference to
the Plan provisions on which the determination was based, (iii) describe any
additional material or information necessary for the claimant to perfect the
claim (explaining why such material or information is needed), and (iv) 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) 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.

 

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(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 which determination shall be accompanied by a written statement as to the
reasons therefor. The determination shall be made to the claimant within sixty
(60) days after the claimant’s request for review, unless the Names Appeals
Fiduciary determines that special circumstances requires 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 provide (i) the
reason or reasons for denial, (ii) make specific reference to the Plan
provisions on which the determination was based, (iii) 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 (iv) 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 Board or
Committee, or, if no such person or persons be named, then the person or persons
named by the Plan Administrator as the Named Appeals Fiduciary. Named Appeals
Fiduciaries may at any time be removed by the Board or Committee, and any Named
Appeals Fiduciary named by the Plan Administrator may be removed by the Plan
Administrator. 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 Employer and the
Participant) in accordance with the National Rules for the Resolution of
Employment Disputes then in effect of the American Arbitration Association,
before a panel of three arbitrators, two of whom shall be selected by the
Company and the Participant, respectively, and the third of whom shall be
selected by the other two arbitrators. Any award entered by the arbitrators
shall be final, binding and nonappealable 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
arbitrators 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 shall be responsible for all of the fees of
the American Arbitration Association and the arbitrators

 

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and any 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.

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, continently or
otherwise, under this Plan, except for the designation of a beneficiary as set
forth in Section 5.01.

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.

Section 10.03 Successors. Any Successor 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 severance benefits
under any of the Company’s then current severance pay policies for a termination
that is covered by this Plan for the Participant, including, without limitation,
the Executive Severance 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
Benefit provided for in this Plan by seeking other employment or otherwise, nor
shall the amount of any Severance Benefit 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.

 

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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.

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 and Captions. The headings and captions herein are
provided for reference and convenience only, shall not be considered part of the
Plan, and shall not be employed in the construction of the Plan.

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 benefit shall be deemed forfeited if the Committee
is unable to locate a Participant to whom a Severance Benefit is due. Such
Severance Benefit may be reinstated if application is made by the Participant
for the forfeited Severance Benefit 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 laws.

 

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Appendix

Salary Replacement Schedule

 

President and Chief Executive Officer    24 month Severance Period* Executive
Vice Presidents and Senior Vice Presidents    18 month Severance Period Any
other Eligible Employee    12 month Severance Period

Bonus Payment Schedule

 

President and Chief Executive Officer    2x Annual Bonus Executive Vice
Presidents and Senior Vice Presidents    1.5x Annual Bonus Any other Eligible
Employee    1x Annual Bonus

 

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