Document:

Zoetis-2013.6.30-EX10.1

Exhibit 10.1
ZOETIS  
EXECUTIVE SEVERANCE PLAN
INTRODUCTION
The purpose of the Zoetis Executive Severance Plan (the “Plan”) is to provide severance benefits to certain executives of Zoetis Inc. and its subsidiaries and affiliates, in each case, selected for participation in the Plan by the Plan Administrator (together, the “Company”), whose employment is involuntarily terminated. The Plan is designed to be an unfunded “employee welfare benefit plan,” as defined in Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). Except as noted in this Plan, this Plan shall be effective as of June 24, 2013 (the “Effective Date”).
I.    DEFINITIONS
For purposes of the Plan, the following terms are defined as follows:
1.1.    “Base Salary” means the total amount of base salary payable to a Participant at the salary rate in effect immediately prior to the Participant’s Involuntary Separation with the Company. Base Salary shall not include any other compensation, including, but not limited to, bonuses (including holiday bonuses), sales commissions, reimbursements or expense allowances, overtime, shift differentials, premium pay, one-time payments, contest awards, stock options or other equity awards, any other similar payments or any other compensation payable in a form other than cash.

1.2.    “Board of Directors” shall mean the Zoetis Inc. Board of Directors.

1.3.    “Cause” means (i) an act of dishonesty, fraud or misrepresentation made by Participant in connection with Participant’s responsibilities to the Company, (ii) Participant’s willful, material violation of any law or regulation applicable to the business of the Company; (iii) Participant’s conviction of, or plea of nolo contendere to, a felony or any crime that, in either case, has resulted in or is reasonably expected to result in material injury to the business or reputation of the Company, (iv) Participant’s willful misconduct or gross negligence in connection with carrying out Participant’s job responsibilities to the Company, (v) Participant’s unauthorized use or disclosure of any proprietary information or trade secrets of the Company or any other party to whom Participant owes an obligation of nondisclosure as a result of Participant’s relationship with the Company; (vi) Participant’s willful breach of any obligations under any written agreement or covenant with the Company that is injurious to the Company; (vii) Participant’s violation or disregard of any Company policy that has resulted in or is reasonably expected to result in material injury to the business or reputation of the Company; (viii) Participant’s failure or refusal to perform Participant’s duties and responsibilities to the Company; or (ix) Participant’s neglect or persistent unsatisfactory performance of Participant’s duties and Participant’s failure to cure such condition within 30 days after receiving written notice thereof. For purposes of clarity, all references herein to the Company shall include references to any successor to the Company, and a termination without “Cause” does not include any termination that occurs as a result of Participant’s death or disability.

1.4.    “Change of Control” shall have such definition as defined in the Zoetis Inc. 2013 Equity and Incentive Plan, provided that a Change of Control shall not include any liquidation or dissolution in connection with any act of bankruptcy by the Company.

1.5.    “Compensation Committee” means the Compensation Committee of the Board of Directors.

1.6.    “General Release” means a full and complete general waiver and release of all claims that a Participant may have against the Company or persons affiliated with the Company in the form provided by the Company.

1.7.    “Good Reason” means Participant’s resignation, within twenty four (24) months of a Change of Control, due to the occurrence of any of the following conditions which occurs without Participant’s written consent, provided that the requirements regarding advance notice and an opportunity to cure set forth below are satisfied: (i) a material reduction of Participant’s base compensation (other than as part of an across-the-board salary reduction applicable to all similarly situated employees); (ii) a material reduction of Participant’s duties, authority, responsibilities or reporting relationship, relative to Participant’s duties, authority, responsibilities or reporting relationship as in effect immediately prior to such reduction; or (iii) the Company (or a successor, if appropriate) requires Participant to relocate to a facility or location more than twenty-five (25) miles away from the location at which Participant was working immediately prior to the required relocation and such relocation increases Participant’s one way commute by thirty (30) minutes or more during normal commuting hours and under typical traffic conditions. In order for Participant to resign for Good Reason, Participant must provide written notice to the Company of the existence of the Good 

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Reason condition within sixty (60) days of the initial existence of such Good Reason condition. Upon receipt of such notice, the Company will have thirty (30) days during which it may remedy the Good Reason condition. If the Good Reason condition is not remedied within such thirty (30) day period, Participant may resign based on the Good Reason condition specified in the notice effective no later than thirty (30) days following the expiration of the Company’s thirty (30) day cure period.

1.8.    “Involuntary Separation” shall mean an involuntary separation from service as defined in Treasury Regulation 1.409A-1(n).

1.9.    “Participant” means each employee of the Company who, at the time of their Involuntary Separation, is (i) the Chief Executive Officer (“CEO”) (ii) a member of the Zoetis Executive Team (other than the CEO), (iii) the Chief Information Officer or (iv) the President, Global Manufacturing and Supply. 

1.10.    “Plan Administrator” means the Zoetis Health and Welfare Plans Committee or any delegate thereof. 

1.11.    “Target Bonus” means a Participant’s annual target bonus under the Zoetis Annual Incentive Plan in effect for the fiscal year in which Participant’s Involuntary Separation occurs.

II.    ELIGIBILITY FOR BENEFITS
A Participant will be eligible for severance benefits under the Plan if:

(a)the terms and conditions of Participant’s employment are not covered by a collective bargaining agreement (unless the agreement specifically provides for coverage under the Plan);

(b)Participant experiences an Involuntary Separation; 

(c)Participant has returned all Company property in his or her possession within ten (10) days following Participant’s Involuntary Separation; and

(d)Participant signs General Release that becomes effective no later than the thirtieth (30th) day (or sixtieth (60th) day if a longer period is required by law) after Participant’s Involuntary Separation (the “Release Deadline Date”).

For any and all purposes under this Plan, the term “employee” does not include a person hired as an independent contractor, leased employee or consultant or a person otherwise designated by the Company at the time of hire as not on Company payroll or not eligible to participate in or receive benefits under the Plan, even if any such person is subsequently determined to be an “employee” by any governmental or judicial authority.

III.    SEVERANCE BENEFITS
3.1.Termination without Cause Apart from a Change of Control. If a Participant experiences an Involuntary Separation (i) prior to and apart from a Change of Control or more than twenty-four (24) months following a Change of Control and (ii) such termination is by the Company without Cause, and provided Participant complies with the requirements set forth in Section II above, Participant will receive the severance payments and benefits as set forth below.

Chief Executive Officer:
	
				
	 
	Severance  
(Base Salary)
	Severance Benefits 
(Health and Life Insurance)
	Target Bonus

	Section 3.1: Non-Change of Control Severance
	18 months
	12 months
	150%

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Zoetis Executive Team, Chief Information Officer and President, Global Manufacturing and Supply:
	
				
	 
	Severance  
(Base Salary)
	Severance Benefits 
(Health and Life Insurance)
	Target Bonus

	Section 3.1: Non-Change of Control Severance
	12 months
	12 months
	100%

Notwithstanding anything to the contrary in the Plan, in the event Participant is eligible for severance benefits under any other arrangement, plan, agreement, policy, program or local practice or law (“Other Severance Plan”), the Participant shall be eligible to receive only the greater of the severance benefits under the Plan or the severance benefits under the Other Severance Plan.  For the avoidance of doubt, the forgoing shall not result in the duplication of severance benefits.

(a)Base Salary Severance. The Company will pay Participant an amount equal to the number of months of Participant’s Base Salary set forth in the table above (the “Severance Period”), subject to all applicable withholdings and other required deductions.

Severance benefits pursuant to this Section 3.1 will be paid to Participant in cash, in equal installments on each regularly scheduled payroll date of the Company over a period of time equal to the Severance Period, commencing with the first regularly scheduled payroll date that occurs on or after the Release Deadline Date, with the first payment being equal to the number of regularly scheduled payroll dates that occurred between the Participant’s Involuntary Separation and the date of the first payment multiplied by the Participant’s Base Salary rate.

(b)Continued Benefits.

i.Health Insurance. If Participant elects to continue health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) following the Participant’s Involuntary Separation for Participant and/or Participant’s spouse and dependents, the Company will pay the portion of the monthly COBRA premiums due for such coverage above the active employee rate for such coverage from the first date on which Participant loses health coverage as an employee of the Company until the earliest of (i) the date that the Company has paid such COBRA premiums for the number of months following the date of Participant’s Involuntary Separation equal to the Severance Benefits period set forth in the table above, (ii) the expiration of Participant’s continuation coverage under COBRA, and (iii) the date when Participant becomes eligible for health insurance coverage in connection with new employment or self-employment (even if such coverage is declined).

ii.Life Insurance. Participant’s coverage under the Company-sponsored basic group term life insurance plan will continue at no cost to Participant until the earlier of (i) the number of months following the date of Participant’s Involuntary Separation equal to the Severance Benefits period as set forth in the table above or (ii) the date when Participant becomes eligible for group life insurance coverage under another employer’s plan (even if such coverage is declined).

(c)Target Bonus Severance. The Company will pay Participant an amount equal to (i) the Participant’s Target Bonus multiplied by (ii) the percentage set forth in the table above, assuming all applicable performance goals and all other applicable conditions are 100% satisfied, which amount will be paid to Participant in a single lump sum cash payment, subject to all applicable withholdings and other required deductions, within thirty (30) days following the Release Deadline Date.

(d)Outplacement. Participant will be eligible to receive outplacement services as offered by the Company.  In no case will the Company provide a payment to the Participant in lieu of these services.

3.2.Change of Control Termination. If a Participant experiences an Involuntary Separation (i) upon the consummation of, or within twenty-four (24) months following, a Change of Control and (ii) such termination is by the Company without Cause or as a result of the Participant’s resignation for Good Reason, and provided Participant complies with the requirements set forth in Section II above, Participant will receive the severance payments and benefits as set forth below.

Chief Executive Officer:
	
				
	 
	Severance  
(Base Salary)
	Severance Benefits 
(Health and Life Insurance)
	Target Bonus

	Section 3.2: Change of Control Severance
	30 months
	18 months
	250%

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Zoetis Executive Team, Chief Information Officer and President, Global Manufacturing and Supply:
	
				
	 
	Severance  
(Base Salary)
	Severance Benefits 
(Health and Life Insurance)
	Target Bonus

	Section 3.2: Change of Control Severance
	24 months
	18 months
	200%

Notwithstanding anything to the contrary in the Plan, in the event Participant is eligible for severance benefits under any Other Severance Plan, the Participant shall be eligible to receive only the greater of the severance benefits under the Plan or the severance benefits under the Other Severance Plan.  For the avoidance of doubt, the forgoing shall not result in the duplication of severance benefits.

(a)Base Salary Severance. The Company will pay Participant an amount equal to the Severance Period, subject to all applicable withholdings and other required deductions.

Severance benefits pursuant to this Section 3.2 will be paid to Participant in cash, in a single lump sum payment, within thirty (30) days following the Release Deadline Date.

(b)Continued Benefits.

i.Health Insurance. If Participant elects to continue health insurance coverage under the COBRA following the Participant’s Involuntary Separation for Participant and/or Participant’s spouse and dependents, the Company will pay the portion of the monthly COBRA premiums due for such coverage above the active employee rate for such coverage from the first date on which Participant loses health coverage as an employee of the Company until the earliest of (i) the date that the Company has paid such COBRA premiums for the number of months following the date of Participant’s Involuntary Separation equal to the Severance Benefits period set forth in the table above, (ii) the expiration of Participant’s continuation coverage under COBRA, and (iii) the date when Participant becomes eligible for health insurance coverage in connection with new employment or self-employment (even if such coverage is declined).

ii.Life Insurance. Participant’s coverage under the Company-sponsored basic group term life insurance plan will continue at no cost to Participant until the earlier of (i) the number of months following the date of Participant’s Involuntary Separation equal to the Severance Benefits period as set forth in the table above or (ii) the date when Participant becomes eligible for group life insurance coverage under another employer’s plan (even if such coverage is declined).

(c)Target Bonus Severance. The Company will pay Participant an amount equal to (i) the Participant’s Target Bonus multiplied by (ii) the percentage set forth in the table above, assuming all applicable performance goals and all other applicable conditions are 100% satisfied, which amount will be paid to Participant in a single lump sum cash payment, subject to all applicable withholdings and other required deductions, within thirty (30) days following the Release Deadline Date.

(d)Outplacement. Participant will be eligible to receive outplacement services as offered by the Company.  In no case will the Company provide a payment to the Participant in lieu of these services.

3.3.[Intentionally Left Blank]

3.4.Termination for Cause, Death or Disability; Voluntary Resignation. If a Participant’s employment is terminated at any time or for any reason not covered by Sections 3.1 or 3.2 above, including, without limitation, by the Company for Cause, as a result of Participant’s death or disability, or by Participant’s voluntary resignation (including retirement), the Participant shall not be entitled to any severance payments or benefits under the Plan.

3.5.Offset/Mitigation. Any severance payments or benefits to which Participant may be entitled, whether at law, tort or contract, in equity, or under any other plan or agreement (other than payments made pursuant to the Zoetis Annual Incentive Plan or payments in respect of or related to equity awards and/or accelerated vesting of equity awards) shall reduce any severance payments or benefits provided pursuant to this Plan. In addition, if Participant is indebted to the Company, then the Company reserves the right to offset any severance payment or benefit by any amount of such indebtedness to the full extent permitted by law. Further, Participant’s severance payments or benefits will cease and/or be subject to repayment, as applicable, if Participant violates or breaches the provisions of the General Release or any other applicable post-employment covenants and restrictions, including, but not limited to, any non-compete, non-disclosure, non-solicitation and/or non-disparagement covenants. In no event will a Participant be entitled to benefits under the Plan that are duplicative of severance benefits provided elsewhere. No Participant 

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will be required to mitigate the amount of any severance payments and benefits under the Plan. For the avoidance of doubt, any severance payments and benefits provided under the Plan shall not be considered or included as earnings under any benefit plan sponsored or maintained by the Company.

IV.    SECTION 409A
For purposes of Section 409A of the Internal Revenue Code of 1986, as amended, the regulations and other guidance there under and any state law of similar effect (collectively “Section 409A”), each payment that is paid pursuant to this Plan is hereby designated as a separate payment. The parties intend that all payments and benefits made or to be made under this Plan comply with, or are exempt from, the requirements of Section 409A so that none of the payments or benefits will be subject to the adverse tax penalties imposed under Section 409A, and any ambiguities herein will be interpreted to so comply or be so exempt. Specifically, any severance payments made or benefits provided in connection with the Participant’s Involuntary Separation under this Plan and paid on or before the 15th day of the 3rd month following the end of the Participant’s first tax year in which the Participant’s Involuntary Separation occurs or, if later, the 15th day of the 3rd month following the end of the Company’s first tax year in which the Participant’s Involuntary Separation occurs, shall be exempt from Section 409A to the maximum extent permitted pursuant to Treasury Regulation Section 1.409A-1(b)(4) and any additional severance payments made or benefits provided in connection with the Participant’s Involuntary Separation under this Plan shall be exempt from Section 409A to the maximum extent permitted pursuant to Treasury Regulation Section 1.409A-1(b)(9)(iii) (to the extent it is exempt pursuant to such section it will in any event be paid no later than the last day of the Participant’s 2nd taxable year following the taxable year in which the Participant’s Involuntary Separation occurs). Notwithstanding the foregoing, if any of the severance payments made or benefits provided in connection with the Participant’s Involuntary Separation do not qualify for any reason to be exempt from Section 409A pursuant to Treasury Regulation Section 1.409A-1(b)(4), Treasury Regulation Section 1.409A-1(b)(9)(iii), or any other applicable exemption and the Participant is, at the time of the Participant’s Involuntary Separation, a “Key Employee” as defined under the Zoetis Supplemental Savings Plan, each such payment or benefit will not be made until the first regularly scheduled payroll date of the 7th month after the Participant’s Involuntary Separation (or, if earlier, the date of the Participant’s death) and, on such date (or, if earlier, the date of the Participant’s death), the Participant will receive all payments or benefits that would have been provided during such period in a single lump sum. Any remaining payments or benefits due under the Plan shall be provided as otherwise provided herein. The determination of whether the Participant is a “specified employee” for purposes of Code Section 409A(a)(2)(B)(i) as of the time of such Involuntary Separation shall made by the Company in accordance with the terms of Section 409A and the provisions of this Plan.

V.    EMPLOYMENT STATUS
5.1.Right to Terminate Employment. This Plan shall not be deemed to constitute an employment contract between the Company and any Participant. Nothing contained herein shall give any Participant the right to be retained in the employ of the Company or to interfere with the right of the Company to discharge the Participant at any time, nor shall it give the Company the right to require the Participant to remain in its employ or to interfere with the Participant’s right to terminate employment at any time.

5.2.Restriction on Re-Employment. If Participant receives severance payments or benefits under the Plan, except as otherwise specifically authorized by the Company as an exception to this Section 5.2, Participant shall not provide services to the Company, or apply for, be eligible for or accept a position or an assignment with the Company, whether as an employee, consultant, or in any other capacity for the length of the Severance Period.  Further, if Participant provides services to, becomes employed by or obtains an assignment with the Company in violation of this Section 5.2, and Participant is subsequently terminated, Participant shall have no right to any additional severance payments or benefits or other remedies as a consequence of such termination pursuant to this Plan.

VI.    CLAIMS AND REVIEW PROCEDURES
6.1.Claims Procedure. Severance payments and benefits will be provided to each Participant in the amount determined hereunder by the Company. If a Participant believes he or she has not been provided with the severance payments or benefits to which he or she is entitled under this Plan, then the Participant may file a request for review within ninety (90) days after the date he or she should have received such payments or benefits according to the Plan. The request for review must be submitted to the Plan Administrator. The Plan Administrator will respond to the request for review within ninety (90) days after it is received, setting forth the reasons for its determination in writing. If special circumstances require extra time to process a Participant’s claim, the Participant will receive written notice of an extension of the Plan Administrator’s review period and the reasons for it before the end of the initial ninety (90) day period.  The extension will not exceed a period of ninety (90) days from 

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the end of the initial ninety (90) day period (for a total of one hundred eighty (180) days).  If a Participant does not receive a response to the Participant’s claim within the applicable review period, the Plan Administrator will be deemed to have denied the claim. If the Participant’s request for review is denied, the Participant or Participant’s duly authorized representative may, within sixty (60) days after receiving written notice of such denial, file a written appeal with the Plan Administrator setting forth the reasons for disagreeing with the initial determination including any documents or records which support the Participant’s appeal. The Plan Administrator shall respond to this appeal within sixty (60) days after it is received, setting forth the reasons for its determination in writing. If special circumstances require extra time to process a Participant’s appeal, the Participant will receive written notice of an extension of the Plan Administrator’s review period and the reasons for it before the end of the initial sixty (60) day period.  The extension will not exceed a period of sixty (60) days from the end of the initial sixty (60) day period (for a total of one hundred twenty (120) days). If a Participant does not receive a response to the Participant’s claim within the applicable review period, the Plan Administrator will be deemed to have denied the claim. The Participant may review pertinent Plan documents and his or her employment records and as part of the written request for review may submit issues and comments concerning the claim.

6.2.Authority. In determining whether to approve or deny any claim or any appeal from a denied claim, the Plan Administrator shall exercise its discretionary authority to interpret the Plan and the facts presented with respect to the claim, and its discretionary authority to determine eligibility for benefits under the Plan. Any approval or denial shall be final and conclusive upon all persons.

6.3.Exhaustion of Remedies. Except as required by applicable law, no action at law or equity shall be brought to recover any payments or benefits under the Plan unless such action is filed within three (3) years of Participant’s receipt of a final adverse determination and unless and until the claimant has: (a) submitted a claim for such payments or benefits, (b) been notified by the Plan Administrator that the payments or benefits (or a portion thereof) are denied, (c) filed a written request for a review of denial with the Plan Administrator, and (d) been notified in writing that the denial has been affirmed.

VII.    INFORMATION REQUIRED BY ERISA
7.1.Plan Information. The Plan is sponsored by Zoetis Inc. and administered by Zoetis Health and Welfare Plans Committee or any delegate thereof. The Plan sponsor’s and Plan Administrator’s name, address, telephone number, employer identification number and Plan number are as follows:

	
			
	Plan Name:
	 
	Zoetis Executive Severance Plan

	 
	 
	 

	Plan Sponsor/
	 
	Zoetis Inc.

	Administrator:
	 
	c/o Zoetis Health and Welfare Plans Committee

	 
	 
	100 Campus Drive

	 
	 
	Florham Park, New Jersey 07932

	 
	 
	 

	Telephone No.:
	 
	973-822-7000

	 
	 
	 

	Employer I.D. No.:
	 
	46-0696167

	 
	 
	 

	Plan No.:
	 
	503

	 
	 
	 

	Plan Year:
	 
	January 1 through December 31

	 
	 
	 

	Effective Date:
	 
	June 24, 2013

7.2.Type of Plan.     This is an unfunded welfare benefit severance plan. The Company provides benefits from its general assets.

7.3.Agent for Service of Legal Process. The name and address of the person designated as agent for service of legal process is the same as the name and address of the Plan Administrator.

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7.4.Statement of ERISA Rights. Participants in this Plan are entitled to certain rights and protections under ERISA. ERISA provides that all Plan Participants shall be entitled to:

(a)Examine, without charge, at the Plan Administrator's office, all Plan documents, including the Plan instrument (which is this document) and copies of all documents filed by the Plan Administrator with the Department of Labor and available at the Public Disclosure Room of the Employee Benefits Security Administration.

(b)Copies of all Plan documents and other Plan information may also be obtained upon written request to the Plan Administrator; provided, however, that a reasonable charge may be made for copies.

In addition to creating rights for Plan Participants, ERISA imposes duties upon the people who are responsible for the operation of this Plan. The people who operate the Plan have a duty to do so prudently and in the interest of Plan Participants and beneficiaries. However, certain employees and agents of the Company carrying out their responsibilities with respect to the Plan are acting as representatives of the Company and not as fiduciaries in their own right. No one, including a Participant’s employer or any other person, may fire a Participant or otherwise discriminate against a Participant in any way to prevent a Participant from obtaining payments or benefits or exercising the Participant’s rights under ERISA. If a Participant’s claim for payments or benefits is denied in whole or in part, the Participant must receive a written explanation of the reason for this denial. A Participant has the right to have the Plan Administrator review and reconsider the Participant’s claim, as described elsewhere in this document.

Under ERISA, there are several steps a Participant can take to enforce the above rights. For instance, if a Participant requests certain materials required to be furnished by the Plan and the Participant does not receive them within 30 days, a Participant may file suit in federal court. In such a case, the court may require that the Participant be provided with the materials and may fine the Company up to $110 a day until the Participant receives them, unless the materials were not sent because of reasons beyond the Plan Administrator's control. If a Participant has a claim for payments or benefits which is denied or ignored in whole or in part, the Participant may file suit in a state or federal court, provided that such action must be filed within three (3) years of Participant’s receipt of a final adverse determination or, if no such determination is made, within three (3) years of the date Participant files a claim for payments or benefits. If a Participant is discriminated against for asserting the Participant’s rights, the Participant may seek assistance from the United States Department of Labor or the Participant may file suit in federal court. The court will decide who should pay the court costs and legal fees. If a Participant is successful, the court may order the person the Participant has sued to pay these costs and fees. If a Participant loses, the court may order the Participant to pay these costs and fees (if, for example, it finds the Participant’s claim is frivolous).

If any Participant has any questions about this Plan, the Participant should contact the Plan Administrator. If any Participant has any questions about this statement or about the Participant’s rights under ERISA, the Participant should contact the nearest office of the Employee Benefits Security Administration, United States Department of Labor.  A Participant may also obtain certain publications about the Participant’s rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration.

7.5.Plan Administration and Interpretations. The Plan Administrator is responsible for the general administration and management of the Plan and shall have all powers and duties necessary to fulfill its responsibilities, including, but not limited to, the discretion to make such rules, regulations and computations and take such other actions to administer the Plan as the Plan Administrator may deem appropriate. The Plan Administrator shall have sole and complete discretion to interpret and administer the terms of the Plan and to determine eligibility for payments or benefits and the amount of any such benefits pursuant to the terms of the Plan. In administering the Plan, the Plan Administrator shall act in a nondiscriminatory manner to the extent legally required and shall at all times discharge its duties with respect to the Plan in accordance with the standards set forth in Section 404(a)(1) and other applicable sections of ERISA.

VIII.    AMENDMENT AND TERMINATION
It is intended that the Plan shall continue from year to year. However, the Board of Directors, the Compensation Committee and, with respect to any Participant who is not a member of the Zoetis Executive Team, the Plan Administrator, each reserve the right to modify, amend or terminate the Plan at any time; provided, that (a) no amendment or termination may be made on or after the consummation of a Change of Control and (b) no amendment or termination may be made at any time that would materially and adversely affect the rights of any Participant without his or her consent (for purposes of clarity, no amendment or termination that occurs prior to a Participant’s Involuntary Separation shall be considered a material and adverse amendment or termination with respect to that Participant).

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IX.    MISCELLANEOUS
9.1.Benefits Non-Assignable. No right or interest of a Participant in this Plan shall be assignable or transferable, in whole or in part, either directly or by operation of law or otherwise, including but not by way of limitation, execution, levy, garnishment, attachment, pledge, bankruptcy, assignments for the benefit of creditors, receiverships, or in any other manner, excluding transfer by operation of law as a result solely of mental incompetency.  Notwithstanding the foregoing, if any Participant satisfies the requirements set forth in Section II and is entitled to severance payments or benefits pursuant to Section 3.1 or 3.2 but dies prior to the receipt of all such severance payments and benefits, the balance of such severance payments and benefits shall be provided to the Participant’s beneficiary on file with the Company for this Plan or, if none is on file, the person or entity who is the “Beneficiary” under the Zoetis Savings Plan; provided that any cash severance benefits provided pursuant to the Plan shall be paid in a single lump sum cash payment as soon as practicable after Participant’s death.  A Participant may designate a beneficiary to receive Participant’s severance payments and benefits under the Plan by properly filing a beneficiary form with the Plan Administrator or its authorized designee in accordance with the rules established by the Plan Administrator.

9.2.Entire Agreement; Prior Plans Superseded. This Plan contains the entire understanding of the parties with respect to the subject matter hereof and supersedes any and all prior or contemporaneous agreements, arrangements, programs and plans related to the subject matter hereof that may previously have been offered by, or entered into with, the Company on or prior to the Effective Date.

9.3.Withholding and Required Deductions. The severance benefits payable under this Plan are subject to all withholding and any other deductions required by applicable law.

9.4.Applicable Law. This Plan is a welfare plan subject to ERISA and it shall be interpreted, administered, and enforced in accordance with that law.

9.5.Severability. If any provision of this Plan is held invalid or unenforceable by a court of competent jurisdiction, all remaining provisions shall continue to be fully effective.

9.6.Binding Agreement. This Plan shall be binding upon and inure to the benefit of the Company, its successors and assigns, and the Participants and their heirs, executors, administrators and legal representatives.  Further, any successor to the Company (whether direct or indirect and whether by purchase, merger (forward or reverse triangular), consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets (including the ultimate parent entity in any reverse triangular merger or similar transaction) shall assume the obligations under this Plan and agree expressly to perform the obligations under this Plan in the same manner and to the same extent as the Company would be required to perform such obligations.

810.1 Carlson Services Agreement

        

NON-EMPLOYEE DIRECTOR SERVICES AGREEMENT
This NON-EMPLOYEE DIRECTOR SERVICES AGREEMENT (the “Agreement”) is dated as of May 27, 2013 (the “Effective Date”), by and among Chiron Holdings GP, Inc. (the “General Partner”), the general partner of Chiron Guernsey Holdings L.P. Inc. (the “Partnership”), of which Kinetic Concepts, Inc. and LifeCell Corporation are wholly-owned subsidiaries (the “Companies”), and James G. Carlson (“JC”).
The General Partner desires that the JC serve as a non-employee member of the Board of Directors of the General Partner (“Non-Employee Director”) and to enter into an agreement embodying the terms of such service arrangement; and
JC desires to accept such appointment as Non-Employee Director and enter into such an agreement.
In consideration of the premises and mutual covenants herein and for other good and valuable consideration, the parties agree as follows:
1.Term of Services.  The parties hereto agree that JC shall serve as a Non-Employee Director commencing as of the Effective Date and continuing until December 31, 2013 (the “Service Term”); provided that the Service Term will be extended for an additional twelve months as of December 31, 2013 and as of each December 31 (each an “Extension Date”) thereafter unless either party gives the other written notice of non-extension at least 30 days prior to such Extension Date. While this Agreement is in effect, JC's service arrangement with the General Partner shall be at-will and, as such, may be terminated by JC or the General Partner at any time, for any reason and with or without advance notice, subject to the General Partner’s obligations set forth herein as provided in Section 6 and provided that JC shall give the Partnership 30 days advance written notice of any resignation.
2.    Position.
During the Service Term, JC shall serve as a Non-Employee Director reporting directly to Board of Directors of the General Partner (the “Board”).    In such position, JC shall have such duties and responsibilities as shall be reasonably determined from time to time by the Board.   Such duties and responsibilities are expected to include:
(a)  Attendance and contribution to 4 to 5 meetings of the Board annually, and, if requested by the Board, joining one or more committees of the Board.  The Board meetings are each typically 1 to 2 days in duration. As of the Effective Date, JC has agreed to join the Compliance Committee of the Board;
(b) To be available to attend ad hoc meetings, either telephonically or face-to-face from time to time; and
(c) To serve as a sounding board and mentor to the Companies’ CEOs.

        

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3.    Annual Compensation.  During the Service Term, the Companies shall pay JC a service fee (“Service Fee”) at the annual rate of $120,000, payable in regular quarterly installments (in advance) in accordance with the Companies’ usual payment practices.    
4.    Status; Taxes.  
a.    Status.  JC shall be a member of the Board, but shall not be an employee of the Companies or the General Partner and shall not be entitled to participate in any employee benefit plans or other benefits or conditions of employment available to employees of the Companies or their affiliates (other than the grant of profits interests under the Partnership’s Equity Incentive Plan (the “Equity Incentive Plan”) as separately documented under the applicable award agreement thereunder.    
b.    Taxes.  It is intended that the compensation paid hereunder shall constitute revenues to JC.  To the extent consistent with applicable law, the Companies will not withhold any amounts there from as federal income tax withholding from wages or as employee contributions under the Federal Insurance Contributions Act or any other state or federal laws.  JC shall be solely responsible for the withholding and/or payment of any federal, state or local income or payroll taxes and shall hold the Companies, the General Partner and their respective officers, directors and employees harmless from any liability arising with respect to any taxes owing with respect to such compensation. 
5.    Business Expenses.   During the Service Term, reasonable business expenses incurred by JC in the performance of JC’s duties hereunder shall be reimbursed by the Companies in accordance with existing policies.  
6.    Termination. (a) The Service Term and JC’s services as Non-Employee Director hereunder may be terminated by either party at any time and for any reason.  Upon any such termination of Services JC shall be entitled to receive the following:
(A)    unpaid Service Fee accrued through the date of termination;
(B)    reimbursement for any unreimbursed business expenses properly incurred by JC in accordance with Company policy prior to the date of JC’s termination; and
(C)    such fully vested and non-forfeitable rights, if any, as to which JC may be entitled in connection with the grant of profits interests under the Equity Incentive Plan as separately documented under the applicable award agreement thereunder.  
b.    Notice of Termination.  Any purported termination of service by the Partnership or by JC (other than due to JC’s death) shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 9(g) hereof.  For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the circumstances of termination and, in the case of the Partnership, indicate whether such termination is with or without Cause.  

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7.    Restrictive Covenants.  JC hereby agrees to the following restrictive covenants (“Restrictive Covenants”):
a.    Confidentiality. JC acknowledges that he will have access to confidential matters of the Partnership and the Companies, including but not limited to, business plans, operational methods, financial information and projections, development, business plans, and policies, overhead and cost information, profit margins, and other sensitive information of the Companies or third parties, all of which are of vital importance to the Companies’ business (the “Confidential Matters”). The term "Confidential Matters" does not include information that is or becomes generally available to the public other than as a result of any disclosure by JC.  JC agrees that during JC’s service relationship with the Partnership, and at all times thereafter, JC will keep secret all Confidential Matters and will not disclose them to anyone outside of the Partnership or the Companies or to otherwise use the Confidential Matters or JC’s knowledge of them for any purpose, except as required by law or court order or with prior written consent of the General Counsel of Kinetic Concepts, Inc.; provided, however, that JC may use the Confidential Matters for the benefit of the Companies to the extent such use is reasonably necessary to fulfill JC’s responsibilities in the ordinary course of business.  JC agrees to deliver promptly to the Companies upon the termination of JC’s service for any reason, all property of the Companies, whether or not such property constitutes Confidential Matters, which JC may then possess or have under JC’s control, whether directly or indirectly.
b.    Nonsolicitation.     JC agrees that during the term of JC’s service engagement with the Partnership and for a period of two (2) years thereafter, JC will not directly or indirectly: (i) influence or attempt to influence customers or suppliers of the Companies or their subsidiaries or affiliates, either directly or indirectly, to divert their business to any individual, partnership, firm, corporation or other entity then in competition with the business of the Companies or any subsidiary or affiliate; or (ii) solicit or attempt to solicit any of the employees, agents, or consultants of the Companies out of their employment, contractual, or other relationship with the Companies to work for any business, individual, partnership, firm, corporation, or other entity then in competition or planning to be in competition with the business of the Companies or any subsidiaries or affiliates.
c.    Non-Competition.     During the term of JC’s service and for a period of two (2) years from the termination of such service relationship for any reason, JC will not (whether for compensation or otherwise), alone or as an officer, director, stockholder (except for investments in securities of publicly traded companies that are not in excess of one percent (1%) of such entity's securities), partner, employee, agent, principal, or in any other similar capacity, participate with or become associated with any person or other entity that is engaged in a business that competes directly with the businesses of the Companies (a “Competitive Business”).  In particular, JC understands that for a period of two (2) years from the date of termination of JC’s service, JC may not perform services for Smith & Nephew plc or any of its subsidiaries.  
d.    Remedies for Breach.     If JC breaches or threatens to breach any of the provisions of this Section 7, the Partnership shall have the right to an injunction restraining such breach or threatened breach and to have the provisions of this Section 7 specifically enforced by any court having equity jurisdiction, it being acknowledged and agreed that any such breach or threatened breach will cause irreparable injury to the Partnership and the 

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Companies and that money damages will not provide an adequate remedy, and that no bond or other security shall be required in obtaining such equitable relief.
e.    Severability. If one or more of the provisions in this Section 7 shall be held to be invalid or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Moreover, if any one or more of the provisions contained in this Section 7 shall be held to be invalid or unenforceable, they shall be construed by limiting or reducing them so as to be enforceable to the maximum extent allowed by applicable law
8.    Arbitration.  To ensure the rapid and economical resolution of disputes that may arise in connection with JC’s service, JC and the Partnership agree that any and all disputes, claims, or causes of action, in law or equity, including but not limited to statutory claims, arising from or relating to the enforcement, breach, performance, or interpretation of this Agreement, JC’s service with the Partnership, or the termination of JC’s service, shall be resolved, to the fullest extent permitted by law, by final, binding and confidential arbitration in San Antonio, Texas conducted by JAMS, Inc. (“JAMS”) or its successor, under JAMS’ then applicable rules and procedures for employment disputes.  By agreeing to this arbitration procedure, both JC and the Partnership waive the right to resolve any such dispute through a trial by jury or judge or by administrative proceeding.  JC will have the right to be represented by legal counsel at any arbitration proceeding.  The arbitrator shall: (1) have the authority to compel adequate discovery for the resolution of the dispute and to award such relief as would otherwise be available under applicable law in a court proceeding; and (2) issue a written statement signed by the arbitrator regarding the disposition of each claim and the relief, if any, awarded as to each claim, the reasons for the award, and the arbitrator’s essential findings and conclusions on which the award is based.  The Partnership and JC shall share equally all JAMS arbitration fees.  Each party agrees to pay its own attorneys’ fees, unless statutory law provides for fee shifting; however, the prevailing party in any arbitration will be entitled to seek an award of attorneys fees and costs from the arbitrator.  Nothing in this Agreement shall prevent either JC or the Partnership from obtaining injunctive relief in court to prevent irreparable harm pending the conclusion of any such arbitration.  Any awards or orders in such arbitrations may be entered and enforced as judgments in the federal and state courts of any competent jurisdiction.
9.    Miscellaneous.
a.    Governing Law.  The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Texas, without regard to conflicts of laws principles thereof.  
b.    Entire Agreement/Amendments.  This Agreement, together with the the applicable award agreement under the Equity Incentive Plan, contains the entire understanding of the parties with respect to the service of JC by the Partnership and supersedes any prior agreements or understandings (including verbal agreements) between the parties relating to the subject matter of this agreement, including, without limitation, the offer letter dated May 15, 2013 and any prior employment agreements, service agreements or terms summaries.  There are no restrictions, agreements, promises, warranties, covenants or undertakings between the parties with respect to the subject matter herein other than those expressly set forth herein.  This Agreement may not be altered, modified, or amended except by written instrument signed by the parties hereto.  

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c.    No Waiver.  The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver of such party’s rights or deprive such party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement.
d.    Assignment.  This Agreement, and all of JC’s rights and duties hereunder, shall not be assignable or delegable by JC.  Any purported assignment or delegation by JC in violation of the foregoing shall be null and void ab initio and of no force and effect.  This Agreement may be assigned by the Partnership to a person which is an affiliate or a successor in interest to substantially all of the business operations of the Partnership.  Upon such assignment, the rights and obligations of the Partnership hereunder shall become the rights and obligations of such affiliate or successor person.
e.    Compliance with IRC Section 409A.  
(i)    The parties intend that any amounts payable hereunder that could constitute “deferred compensation” within the meaning of Section 409A of the Internal Revenue Code (“Section 409A”) are intended to comply with Section 409A, and this Agreement shall be administered, interpreted and construed to the extent possible in a manner that does not result in the imposition of additional taxes, penalties or interest under Section 409A; provided that Partnership does not guarantee any particular tax effect, and JC shall be solely responsible and liable for the satisfaction of all taxes, penalties and interest that may be imposed on or for the account of JC in connection with the Agreement (including any taxes, penalties and interest under Section 409A).
(ii)    For purposes of Section 409A, each of the payments that may be made under this Agreement shall be deemed to be a separate payment for purposes of Section 409A.  Amounts payable under this Agreement shall be deemed not to be a “deferral of compensation” subject to Section 409A to the extent provided in the exceptions in Treasury Regulation §§ 1.409A-1(b)(4) (“short-term deferrals”) and (b)(9) (“separation pay plans,” including the exceptions under subparagraph (iii) and subparagraph (v)(D)) and other applicable provisions of Treasury Regulation §§ 1.409A-1 through A-6.
(iii)    With respect to the time of payments of any amounts under the Agreement that are “deferred compensation” subject to Section 409A, references in the Agreement to “termination of employment”, “termination of services” (and substantially similar phrases) shall mean “separation from service” within the meaning of Section 409A.
(iv)    For the avoidance of doubt, it is intended that any expense reimbursement made hereunder shall be exempt from Section 409A.  Such requests for reimbursement shall be made by executive within 90 days following incurrence of the expense and reimbursement shall be made by the Company within 60 days following submission thereof.  
f.    Successors; Binding Agreement.  This Agreement shall inure to the benefit of and be binding upon personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

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g.    Notice.  For the purpose of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered by hand or overnight courier or three days after they have been mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below in this Agreement, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.
If to the Companies or the General Partner:
Kinetic Concepts, Inc.  
12930 I-H 10 West 
San Antonio, TX 78249
Attention: General Counsel
If to JC:
1116 Caton Drive, 
Virginia Beach, VA  23454

h.    Cooperation.  JC shall provide JC’s reasonable cooperation in connection with any action or proceeding (or any appeal from any action or proceeding) which relates to events occurring during JC’s services to the General Partner, the Company or their affiliates.  The Company shall reimburse JC for reasonable expenses he incurs as a result of such cooperation.  This provision shall survive any termination of this Agreement.
i.    Withholding Taxes.  Subject to Section 4(b), the Company may deduct and withhold from any amounts payable under this Agreement such Federal, state, local, non-U.S. or other taxes as are required or permitted to be withheld pursuant to any applicable law or regulation.  
j.    Counterparts.  This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.
k.    Representations of JC.  JC hereby represents to the Partnership that the execution and delivery of this Agreement by the parties hereto and the performance by JC of JC’s duties hereunder shall not constitute a breach of, or otherwise contravene, the terms of any employment agreement, service agreement or other agreement or policy to which JC is a party or otherwise bound.
l.    Confidentiality. Except as required by applicable law, neither party shall (for any reason), directly or indirectly, for himself or itself, as the case may be, or on behalf of any other person or entity, disclose to any person or entity (except to employees or representatives of that party or spouse, legal or financial advisors, as applicable, who need to know such information and who agree to keep such information confidential), the terms of this Agreement.

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m.    Survival. The covenants and agreements of the parties set forth in Sections 6, 7, 8, and 9 are of a continuing nature and shall survive the expiration, termination or cancellation of this Agreement, regardless of the reason therefore and in a manner consistent with the applicable section or subsection.

[Remainder of page intentionally left blank; 
signature page follows.]

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.

CHIRON HOLDINGS GP, INC.

/s/ William J. Gumina                     
By:  William J. Gumina
Title: President and CEO

James G. Carlson

/s/ James G. Carlson                

[Signature Page to Non-Employee Director Services Agreement]

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