EMPLOYMENT AGREEMENT
EXHIBIT 10.35
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into as of April 19, 2004, by and between Robert L. Parkinson, Jr. (the “Executive”) and Baxter International Inc. (the “Company”);
WITNESSETH THAT:
WHEREAS, the parties desire to enter into this Agreement pertaining to the employment of the Executive by the Company;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth below, it is hereby agreed by the Executive and the Company as follows:
1. Performance of Services. The Executive’s employment with the Company shall commence on April 26, 2004 (the “Effective Date”), and shall be subject to the following:
| (a) | Subject to the terms of this Agreement, the Company hereby agrees to employ the Executive as its Chairman, Chief Executive Officer and President during the Agreement Term (as defined below), and the Executive hereby agrees to serve in such capacity during the Agreement Term. |
| (b) | During the Agreement Term, while the Executive is employed by the Company, the Board of Directors of the Company (the “Board”) shall use its best efforts to cause the Executive to be elected as a member of the Board. It is understood by the parties that, pursuant to its fiduciary responsibilities, duty of care and obligations with respect to corporate governance, the Board may determine that it is appropriate for the position of Chairman of the Board to be held by a director who is not an employee or officer of the Company. If two-thirds of the Board affirmatively vote at a meeting of the Board called and held for such purpose that it is appropriate to separate the positions of Chairman and CEO, notwithstanding any other provisions of the Agreement, the occurrence of such a determination by the Board resulting in the failure of the Executive to be elected as the Chairman of the Board will not constitute Good Reason or a breach of this Agreement, provided that Executive concurs with the decision. The Board agrees to elect Executive as a member of the Board and Chairman no later than the Effective Date. In addition, this determination will not result in any change to the Executive’s remuneration under the terms of this Agreement. |
| (c) | The Executive agrees that he shall perform his duties faithfully and efficiently subject to the directions of the Board, and the Executive shall have the authority and duty generally to supervise and direct the business of the Company, subject only to the control and direction of the Board. The Executive’s duties may include providing services for both the Company and the Subsidiaries (as defined below) as determined by the Board; provided that the Executive shall not, without his consent, be assigned tasks that would be inconsistent with those of Chairman, President and Chief Executive Officer. The Executive shall report to the Board and shall have such authority, power, responsibilities and duties as are set forth in the Company’s Bylaws and as are inherent in his positions |
1
(and the undertakings applicable to his positions) and necessary to carry out his responsibilities and the duties required of him hereunder.
| (d) | During the Agreement Term, while the Executive is employed by the Company, the Executive shall devote his full time, energies and talents to serving as its Chairman, President and Chief Executive Officer. The Executive will exert his best efforts in the performance of his duties as an employee of the Company and will remain loyal to the Company during the term of his employment. |
| (e) | The Executive may be asked to submit to drug testing as a condition of employment or continued employment and consents to such testing as determined by the Company to be appropriate. |
| (f) | The Executive will comply with Baxter Shared Values: Standards for Business Ethics. The Board has the right to make and enforce any other rules and regulations generally applicable to other senior officers that will govern Executive’s employment provided that they are not contrary to the Agreement. |
| (g) | The Executive acknowledges and agrees that the Executive owes a fiduciary duty of loyalty, fidelity, and allegiance to act at all times in the best interests of the Company and its shareholders, in accordance with Delaware law. In keeping with these duties, the Executive shall make full disclosure to the Company of all business opportunities pertaining to the Company’s business and shall not appropriate for the Executive’s own benefit business opportunities concerning the subject matter of the fiduciary relationship. |
| (h) | Notwithstanding the foregoing provisions of this paragraph 1, during the Agreement Term, the Executive may devote reasonable time to activities other than those required under this Agreement, including the supervision of his personal investments, and activities involving professional, charitable, community, educational, religious and similar types of organizations, speaking engagements, membership on the boards of directors of other organizations (as limited by the Company’s Corporate Governance Guidelines), and similar types of activities, to the extent that such other activities do not, in the judgment of the Board, inhibit or prohibit the performance of the Executive’s duties under this Agreement, or conflict in any material way with the business of the Company or any Subsidiary; provided, however, that the Executive shall not serve on the board of any business, hold any other position with any business, or otherwise engage in any business activity, without the consent of the Board. The Company acknowledges that, as of the date of this Agreement, the Executive is a member of the board of directors of Enzon Pharma, Inc. and GeneProt Inc, and the Executive will be allowed a reasonable time to resign from these boards, as well as from any other boards on which he sits and from which it is appropriate that he resigns pursuant to the terms of this Agreement. Notwithstanding the foregoing, the Board understands and agrees to the Executive’s continued service on the boards of Northwestern Memorial Hospital and Northwestern Memorial Foundation, and to the Executive’s requirements to cooperate with Abbott Laboratories and GeneProt Inc., respectively, in connection with certain ongoing litigation. |
2
| (i) | Subject to the terms of this Agreement, the Executive shall not be required to perform services under this Agreement during any period that he is Disabled. The Executive shall be considered “Disabled” during any period in which he has a physical or mental disability which renders him incapable of performing his duties under this Agreement. In the event of a dispute as to whether the Executive is Disabled or Permanently Disabled (as defined in paragraph 3(b)), the Company may refer the same to a licensed practicing physician of the Company’s choice and reasonably acceptable to the Executive, and the Executive agrees to submit to such tests and examinations as such physician shall deem appropriate. During the period in which the Executive is Disabled, the Company may appoint a temporary replacement to assume the Executive’s responsibilities. |
| (j) | The “Agreement Term” shall be determined as follows: |
(i) The Agreement Term shall begin on the Effective Date.
(ii) The Agreement Term shall end on the three-year anniversary of the Effective Date; provided that, subject to subparagraph (iii) below, beginning on the one-year anniversary of the Effective Date, the Agreement Term shall, on a daily basis, be automatically extended by one day. As a result of this day-to-day extension, and subject to subparagraph (iii) below, at any time after the one-year anniversary of the Effective Date, the Agreement Term shall be two years.
(iii) Either party may, at any time during the Agreement Term, cease the automatic extensions otherwise provided in subparagraph (ii) above, by delivery to the other party of written notice of such cessation. Such cessation of extensions will not be effective earlier than the date of delivery of such notice. For the avoidance of doubt, the end of the Agreement Term shall not be less than two years following the delivery of the written notice of cessation referred to in this subparagraph (iii).
| (k) | For purposes of this Agreement, the term “Subsidiary” shall mean any corporation, partnership, joint venture or other entity during any period in which at least a fifty percent interest in such entity is owned, directly or indirectly, by the Company (or a successor to the Company). |
2. Compensation. Subject to the terms of this Agreement, during the Agreement Term, while the Executive is employed by the Company, the Company shall compensate him for his services as follows:
| (a) | Salary. The Executive shall receive, for each 12-consecutive month period beginning on the Effective Date and each anniversary thereof, in substantially equal monthly or more frequent installments, an annual base salary of not less than $1,100,000 (the “Salary”). The Executive’s Salary rate shall be reviewed annually by the Compensation Committee of the Board during the Agreement Term, while the Executive is employed by the Company, to determine whether an increase in the amount of Salary is appropriate. In no event shall the Salary of the Executive be reduced to an amount that is less than the amount specified in this paragraph 2(a), or to an amount that is less than the amount that he was previously receiving, except to the extent that reductions of the same percentage |
3
are being made at the same time to the salaries of all other Company officers named in the Company’s then-current proxy statement, and such Salary shall be restored to its prior level when, and to the same extent, as the restoration that applies to such other officers.
| (b) | Annual Bonus. The Executive shall participate in an annual officer bonus program attached hereto as Exhibit A, subject to subparagraph (i) below. The bonus program provides for payment of a cash bonus amount equal to (i) 200% of the Executive’s annual Salary (as in effect on the first day of the performance period) if maximum performance levels are achieved for the performance period, (ii) 125% of the Executive’s annual Salary (as in effect on the first day of the performance period) if target performance levels are achieved for the performance period, and (iii) such lesser amounts as provided in the program document. The performance objectives shall be established by the Compensation Committee, subject to subparagraph (i) below, following consultation with the Executive prior to, or within 90 days after the commencement of, each fiscal year. The bonus shall be paid to the Executive no later than the date on which bonuses are typically paid to other senior officers of the Company. Notwithstanding the foregoing provisions of this paragraph 2(b): |
(i) The performance period ending December 31, 2004 shall begin on the Effective Date, and the Executive’s bonus for such period shall be subject to a pro-rata reduction to reflect the fact that the performance period is less than 12 months. The performance objectives for the performance period ending on December 31, 2004 shall be established not later than May 31, 2004.
(ii) For the performance period ending December 31, 2004, and subject to subparagraph (i) above, the bonus paid to the Executive shall not be less than the target level for that performance period. For the performance period ending December 31, 2005, the bonus paid to the Executive shall not be less than the target level for that performance period.
| (c) | Quarterly Bonus. In addition to the annual bonus program described in paragraph 2(b) above, the Executive shall be eligible to participate in the quarterly bonus program, a copy of which is attached hereto as Exhibit B, beginning with the second calendar quarter of 2004. Under the quarterly bonus program, if the performance goals for the quarter are achieved, the Executive shall receive a payment equal to 5% of his annual target bonus as described in paragraph 2(b) above. The performance objectives shall be established by the Compensation Committee. The Compensation Committee may modify or cancel the quarterly bonus program at any time for participating senior officers of the Company, and if such modification or cancellation occurs, a corresponding change or cancellation shall apply to the Executive’s rights to such quarterly bonus payments under this paragraph 2(c). Such quarterly bonus shall not be in lieu of, or offset against, the annual bonus payable under paragraph 2(b) above. |
| (d) | Equity Awards. The Executive will be eligible for the following equity awards: |
(i) As of the date of this Agreement, the Executive will be granted a non-qualified option to purchase 650,000 shares of stock of the Company, with an option exercise price equal to the fair market value of the Company’s stock on that date. The option shall be subject
4
to the terms provided under the generally applicable option awards for the Company’s senior officers, as set forth in Exhibit C to this Agreement, which is attached to and forms a part of this Agreement. No other options or other equity awards will be granted to the Executive for calendar year 2004.
(ii) For calendar years after 2004, the Executive shall be granted stock options and restricted stock at such times as options and restricted stock are granted to the Company’s other senior executives. Such options and restricted stock shall be subject to the terms provided under the generally applicable option and restricted stock awards for the Company’s senior officers at the time of the awards, except as modified by this Agreement. Pursuant to the Company’s Long Term Incentive Plan, as set forth in Exhibit D to this Agreement, which is attached to and forms a part of this Agreement, for calendar year 2005, at the time other officers are granted equity awards, the Executive will be granted an option for a minimum of 455,000 shares of Company stock and a restricted Company stock award for a minimum of 48,750 shares. After 2005, all such awards to the Executive shall be commensurate with his position as Chief Executive Officer as determined by the Compensation Committee.
| (e) | Other Fringe Benefits. Except as otherwise specifically provided to the contrary in this Agreement, the Executive shall be provided with the welfare benefits and other fringe benefits and perquisites to the same extent and on the same terms as those benefits are provided by the Company from time to time to the Company’s other senior executives and as described in the attached Exhibit E, provided, however, that if any such benefits are adjusted to reflect an executive’s position, the Executive’s benefits shall be adjusted in a manner commensurate with his position. The Executive shall also be entitled to the perquisites that are customarily provided in connection with his position. Nothing in this paragraph 2(e) shall be construed to prevent the Company from revising the benefits or perquisites generally provided to executives from time to time. However, the Company shall not be required to provide a benefit under this paragraph 2(e) if such benefit would duplicate (or otherwise be of the same type as) a benefit specifically required to be provided under another provision of this Agreement. The Executive shall complete all forms and physical examinations, and otherwise take all other similar actions to secure coverage and benefits described in this paragraph 2, to the extent determined to be necessary or appropriate by the Company. |
| (f) | Disability Insurance. The Executive shall receive from the Company disability income replacement coverage which will provide for replacement of income subject to the terms of the Company disability insurance plan that applies to senior officers of the Company during any period in which the Executive is Disabled if the disability arose during the Agreement Term and prior to the Executive’s Date of Termination. During any period while the Executive is Disabled and is otherwise entitled to receive Salary and bonus payments under this Agreement, any such Salary and bonus payments to the Executive shall be reduced by the amount of any benefits paid for the same period of time under the Company-provided disability income replacement coverage. |
| (g) | Expenses. The Executive is authorized to incur reasonable expenses for entertainment, traveling, meals, lodging and similar items in promoting the Company’s business. The |
5
Company will reimburse the Executive for all reasonable expenses so incurred, provided that such expenses are incurred and accounted for in accordance with its reasonable policies and procedures applicable from time to time with respect to its senior officers.
| (h) | Pension. The Executive shall be entitled to a Pension from the Company or any successor thereto, subject to the following and the other terms of this Agreement: |
(i) No Pension shall be payable if the Participant’s Date of Termination occurs for any reason prior to the three-year anniversary of the Effective Date or if the Date of Termination occurs for Cause.
(ii) The Pension shall be paid monthly to the Executive for life commencing as of the first day of the calendar month following such Date of Termination in an amount equal to one-twelfth (1/12) of 1.75% of Executive’s final average pay multiplied by his number of credited service years, minus (ii) 1.75% of the Executive’s estimated primary social security benefit multiplied by his number of actual service years.
(iii) The Pension payments shall be offset by the pension payments to Executive under any tax-qualified or other defined benefit pension plans of the Company.
(iv) The Executive’s final average pay is equal to the average of the Executive’s five (or his total actual service years, if shorter) highest consecutive calendar years of earnings (Salary and bonus) out of his last ten (or his total actual service years, if shorter) calendar years of earnings.
(v) The number of credited service years shall be equal to the number of twelve-month periods commencing with the Effective Date during which the Executive is employed by the Company (each an “actual service year”), provided that the Executive shall receive “credited service years” in accordance with the following schedule:
| Actual Service Years | Cumulative Credited Service Years | |
| Less than three years | Zero years | |
| At least three years but less than four years | Five years | |
| At least four years but less than five years | Six years | |
| At least five years but less than six years | Nine years | |
| Six or more years | Nine years plus one year for each full actual service year after five years of actual service | |
3. Termination. The Executive’s employment with the Company during the Agreement Term may be terminated by the Company or the Executive without any breach of this Agreement only under the circumstances described in paragraphs 3(a) through 3(g):
| (a) | Death. The Executive’s employment hereunder will terminate upon his death. |
6
| (b) | Permanent Disability. The Company may terminate the Executive’s employment during any period in which he is Permanently Disabled. The Executive shall be considered “Permanently Disabled” during any period in which he is Disabled; provided, however, that the Executive shall be not be considered “Permanently Disabled” unless (i) the Executive has a physical or mental disability which renders the Executive incapable of performing the Executive’s duties on a permanent, full-time basis; (ii) such disability is reasonably expected by the Board to continue for at least 90 days; and (iii) at the Executive’s Date of Termination, the Executive is entitled to income replacement benefits under the Company’s long-term disability plan or another arrangement providing substantially similar benefits. |
| (c) | Cause. The Company may terminate the Executive’s employment hereunder at any time for Cause. For purposes of this Agreement, the term “Cause” shall mean: |
(i) the willful and continued failure by the Executive to substantially perform his duties with the Company (other than any such failure resulting from the Executive’s being Disabled), within a reasonable period of time after a written demand for substantial performance is delivered to the Executive by the Board, which demand specifically identifies the manner in which the Board believes that the Executive has not substantially performed his duties;
(ii) the willful engaging by the Executive in conduct which is demonstrably and materially injurious to the Company, monetarily or otherwise; or
(iii) the engaging by the Executive in egregious misconduct involving serious moral turpitude to the extent that, in the reasonable judgment of the Company’s Board, the Executive’s credibility and reputation no longer conform to the standard of the Company’s executives.
For purposes of this Agreement, no act, or failure to act, on the Executive’s part shall be deemed “willful” unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executive’s action or omission was in the best interest of the Company. Notwithstanding the foregoing, the Executive shall not be deemed to have been terminated for Cause unless and until the Company delivers to the Executive a copy of a resolution duly adopted by the affirmative vote of the majority of the entire membership of the Board (not including the Executive) at a meeting of the Board called and held for such purpose (after reasonable notice to the Executive).
| (d) | Constructive Discharge. If (I) the Executive provides written notice to the Company of the occurrence of Good Reason (as defined below) within 10 business days after the Executive has knowledge of the circumstances constituting Good Reason, which notice specifically identifies the circumstances which the Executive believes constitute Good Reason; (II) the Company fails to notify the Executive of the Company’s intended method of correction within 10 business days after the Company receives the notice, or the Company fails to correct the circumstances within 10 business days after such notice; and (III) the Executive resigns within 10 business days after receiving the Company’s response, if such notice does not indicate an intention to correct such circumstances, or |
7
within 10 business days after the Company fails to correct such circumstances; then the Executive shall be considered to have been subject to a Constructive Discharge by the Company. For purposes of this Agreement, “Good Reason” shall mean, without the Executive’s express written consent (and except in consequence of a prior termination of the Executive’s employment), the occurrence of any of the following circumstances:
(i) Except as otherwise agreed by the Executive and the Board, (I) the assignment to the Executive of any duties materially inconsistent with the Executive’s position and status as set forth in paragraph 1, (II) any material reduction in the authority or responsibility of the Executive or other substantial reduction in the terms and conditions of the Executive’s employment, (III) a change in the Executive’s reporting relationship so that the Executive ceases to report directly to the Board, (IV) the failure of the Executive to be elected to the Board as of the Effective Date or to be reelected to the Board while employed by the Company, (V) the failure of the Board to nominate the Executive for reelection to the Board and recommend to the Company’s stockholders that they vote in favor of the Executive’s reelection to the Board, or (VI) the failure to elect or reelect the Executive as Chairman (without the Executive’s advance written consent to such failure), with the date of such Good Reason deemed to occur on the failure to elect or reelect the Executive as Chairman.
(ii) The relocation of the Executive’s base office to an office that is more than 50 highway miles of the Executive’s base office on the Effective Date.
(iii) The failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement.
(iv) Any purported termination of the Executive’s employment which is not effected pursuant to a Notice of Termination satisfying the requirements of paragraph 3(h) below, and for purposes of this Agreement, no such purported termination shall be effective.
(v) Except as permitted in paragraph 2(a), a reduction in the Executive’s Salary as the same may be increased from time to time.
(vi) A change in the bonus program identified in paragraph 2(b) that disproportionately reduces the Executive’s bonus opportunity as compared to other senior officers named in the then-current annual proxy statement.
(vii) Any material breach of this Agreement by the Company not described in paragraphs (i) through (vi) next above.
The Executive’s right to terminate his employment pursuant to this paragraph 3(d) shall not be affected by his incapacity due to physical or mental illness.
| (e) | Termination by Executive. The Executive may terminate his employment hereunder at any time for any reason by giving the Company prior written Notice of Termination (as defined in paragraph 3(h)), which Notice of Termination shall be effective not less than 90 days after it is given to the Company, provided that nothing in this Agreement shall require the Executive to specify a reason for any such termination. However, to the |
8
| extent that the procedures specified in paragraph 3(d) are required, the procedures of this paragraph 3(e) may not be used in lieu of the procedures required under paragraph 3(d). |
| (f) | Termination by Company. The Company may terminate the Executive’s employment hereunder at any time for any reason, by giving the Executive prior written Notice of Termination, which Notice of Termination shall be effective immediately, or such later time as is specified in such notice. The Company shall not be required to specify a reason for the termination under this paragraph 3(f), provided that termination of the Executive’s employment by the Company shall be deemed to have occurred under this paragraph 3(f) only if it is not for reasons described in paragraph 3(b), 3(c), 3(d), or 3(e). Notwithstanding the foregoing provisions of this paragraph 3(f), if the Executive’s employment is terminated by the Company in accordance with this paragraph 3(f), and within 10 business days thereafter, it is determined by the Board that circumstances existed which would have constituted a basis for termination of the Executive’s employment for Cause in accordance with paragraph 3(c) (disregarding circumstances which could have been remedied if notice had been given in accordance with paragraph 3(c)(i)), the Executive’s employment will be deemed to have been terminated for Cause in accordance with paragraph 3(c). |
| (g) | Termination After Change in Control. The Executive may terminate his employment with the Company or a successor for any reason following a Change in Control (as defined in the Company’s 2003 Incentive Compensation Program on the Effective Date). |
| (h) | Notice of Termination. Any termination of the Executive’s employment by the Company or the Executive (other than a termination pursuant to paragraph 3(a)) must be communicated by a written Notice of Termination to the other party hereto. For purposes of this Agreement, a “Notice of Termination” means a dated notice which indicates the Date of Termination (not earlier than the date on which the notice is provided), and which indicates the specific termination provision in this Agreement relied on and which sets forth in reasonable detail the facts and circumstances, if any, claimed to provide a basis for termination of the Executive’s employment under the provision so indicated. |
| (i) | Date of Termination. “Date of Termination” means the last day the Executive is employed by the Company (including any successor to the Company as determined in accordance with paragraph 21). If the Executive becomes employed by the entity into which the Company is merged, or the purchaser of substantially all of the assets of the Company, or a successor to such entity or purchaser, the Executive shall not be treated as having terminated employment for purposes of this Agreement until such time as the Executive terminates employment with the successor (including, without limitation, the merged entity or purchaser). |
| (j) | Effect of Termination. If, on the Date of Termination, the Executive is a member of the Board of Directors of the Company or any of the Subsidiaries, or holds any other position with the Company and the Subsidiaries, the Executive shall resign from all such positions as of the Date of Termination. |
9
| (k) | Intervening Termination Event. If, prior to the scheduled date of the Executive’s termination of employment pursuant to the originally filed Notice of Termination (the “Original Notice of Termination”), the Executive’s termination of employment occurs under circumstances described in another provision of paragraph 3, then, for purposes of this Agreement, the Date of Termination shall not be deemed to have occurred by reason of Original Notice of Termination, but by reason of the subsequent event resulting in employment termination. |
4. Rights Upon Termination. The Executive’s right to payment and benefits under this Agreement for periods after his Date of Termination shall be determined in accordance with the following provisions of this paragraph 4:
| (a) | General. If the Executive’s Date of Termination occurs during the Agreement Term for any reason, the Company shall pay to the Executive (or, in the event of his death, his beneficiary) the compensation and benefits set forth below and, as applicable, those under paragraphs 4(c) and 4(d): |
(i) The Executive’s Salary for the period ending on the Date of Termination.
(ii) Payment for unused vacation days, as determined in accordance with Company policy as in effect from time to time.
(iii) If the Date of Termination occurs after the end of a performance period and prior to the payment of the annual bonus and quarterly bonus (as described in paragraphs 2(b) and 2(c)) for the period, the Executive shall be paid such bonus amounts at the regularly scheduled time.
(iv) The Executive and any of his dependents shall be eligible for COBRA continuation coverage (as described in section 4980B of the Internal Revenue Code of 1986, as amended) to the extent required by applicable law.
(v) Any other payments or benefits to be provided to the Executive by the Company or a Subsidiary pursuant to any employee benefit plans or arrangements established or adopted by the Company or a Subsidiary (including, without limitation, any rights to indemnification from the Company (or from a third-party insurer for directors and officers liability coverage) with respect to any costs, losses, claims, suits, proceedings, damages or liabilities to which the Executive may become subject which arise out of, are based upon or relate to the Executive’s employment by the Company or the Executive’s service as an officer or member of the Board of Directors of the Company (or any Subsidiary), to the extent such amounts are due from the Company in accordance with the terms of such plans or arrangements.
(vi) Executive will receive pension benefits upon termination as set forth in section 2(h).
Except as may otherwise be expressly provided to the contrary in this Agreement, nothing in this Agreement shall be construed as requiring the Executive to be treated as employed by the Company for purposes of any employee benefit plan or arrangement following the Executive’s Date of Termination.
10
| (b) | Resignation and Termination for Cause. If the Executive’s Date of Termination occurs during the Agreement Term under circumstances described in paragraph 3(c) (relating to the Executive’s termination for Cause), or paragraph 3(e) (relating to the Executive’s resignation), then, except as otherwise expressly provided in this Agreement or otherwise agreed in writing between the Executive and the Company, the Executive shall not be entitled to the annual bonus and quarterly bonus amounts (as described in paragraphs 2(b) and 2(c)) for the performance periods in which the Date of Termination occurs, or for subsequent performance periods; and if terminated for Cause the Company shall have no obligation to make payments under the Agreement for periods after the Executive’s Date of Termination. |
| (c) | Death or Disability. If the Executive’s Date of Termination occurs during the Agreement Term under circumstances described in paragraph 3(a) (relating to Executive’s death) or paragraph 3(b) (relating to Executive’s being Permanently Disabled), then, in addition to the amounts payable in accordance with paragraph 4(a), the Executive shall receive payment of the annual bonus and quarterly bonus (as described in paragraphs 2(b) and 2(c)) for the performance periods in which his Date of Termination occurs, based on actual performance for the entire periods, and payable at the same time as it is payable for other participants in the bonus plan; provided, however, that it shall be subject to a pro-rata reduction for the portion of the performance period following the Date of Termination. If the Executive’s Date of Termination occurs during the Agreement Term under circumstances described in paragraph 3(a) (relating to the Executive’s death) or paragraph 3(b) (relating to the Executive being Permanently Disabled), all restricted stock awards shall fully vest immediately and all restrictions shall lapse and all stock options shall fully vest immediately and be exercisable for five years, but in no event later than the date fixed for expiration of the option (determined without regard to Executive’s termination of employment), and the Executive and his family members shall be entitled to receive the maximum level of medical benefits afforded to senior executives or their beneficiaries upon termination resulting from death or Disability of the senior executive, but not less than 18 months (or 36 months in the case of death) of Company paid coverage, with the period of such medical benefit coverage being counted toward the Company’s obligation to provide COBRA medical continuation coverage (as described in section 4980B of the Internal Revenue Code of 1986, as amended (if any)). In addition, if the Executive Date of Termination occurs during the Agreement Term under circumstances described in paragraph 3(b) (relating to the Executive’s being Permanently Disabled), he shall be entitled to payment of his Salary through the commencement of long term disability payments to him under any plan provided or paid for by the Company. |
11
| (d) | Termination without Cause, Constructive Discharge, Change in Control and Non-Renewal of Agreement. If the Executive’s Date of Termination occurs during the Agreement Term under circumstances described in paragraph 3(d) (relating to Constructive Discharge), paragraph 3(f) (relating to termination by the Company without Cause), 3(g) (relating to termination after a Change in Control), or this Agreement expires at the end of the Agreement Term without being renewed by the Company, then, in addition to the amounts payable in accordance with paragraph 4(a): |
(i) The Executive (or, in the event of death after the commencement of receipt of Severance Payments, his beneficiary) shall receive Severance Payments from the Company for the Severance Period. The annual rate of Severance Payments shall be equal to the Aggregate Compensation Amount, and shall be payable in arrears in monthly or more frequent installments. For purposes of this subparagraph (i), the term “Aggregate Annual Compensation” shall mean the sum of (A) and (B) below:
(A) The Executive’s annual Salary rate in effect on the date immediately prior to the Executive’s Date of Termination.
(B) The Executive’s target annual bonus amount (as described in paragraph 2(b)) for the year in which the Date of Termination occurs.
For purposes of paragraphs (A) and (B) above, if any portion of the Executive’s Salary or bonus has been reduced to reflect elective deferrals by the Executive, the amounts included in Salary and bonus shall be determined without regard to those deferrals. The “Severance Period” will be the period beginning on the Date of Termination and ending on the earlier to occur of:
(I) the later of the last day of the Agreement Term or the two-year anniversary of the Date of Termination; or
(II) the date, if any, of a material breach by the Executive of the provisions of paragraph 8, paragraph 9, paragraph 10, or paragraph 11.
(ii) The Executive shall receive payment of the annual bonus and quarterly bonus (as described in paragraph 2(b) and 2(c)) for the performance period in which his Date of Termination occurs, based on actual performance for the entire period, and payable at the same time as it is payable for other participants in the bonus plan; provided, however, that it shall be subject to a pro-rata reduction for the portion of the performance period following the Date of Termination.
(iii) The exercise restrictions with respect to stock options granted to the Executive by the Company shall lapse, and the options shall become fully vested and exercisable as of the Date of Termination. The portion of any stock option granted to the Executive that is exercisable immediately prior to the Date of Termination, as well as the portion of any stock option that becomes exercisable by reason of this subparagraph (iii), shall remain exercisable for the Extended Exercise Period (as defined below), but in no event later than the date fixed for expiration of the option (determined without regard to Executive’s termination of employment). The “Extended Exercise Period” shall be the period beginning on the Date of Termination and ending on the later of the date that is five years after the Date of Termination or the date that is the number of days after the Date of Termination that is equal to the number of days that the Executive was employed by the Company between the Effective Date and the Date of Termination.
(iv) All restricted stock awards shall fully vest immediately and all restrictions shall lapse.
12
(v) The Executive and his family members shall be entitled to receive the maximum level of medical benefits afforded to senior executives who have retired or terminated employment, but no less than 18 months of Company-paid coverage, with the period of such medical benefit coverage being counted toward the Company’s obligation to provide COBRA medical continuation coverage (as described in section 4980B of the Internal Revenue Code of 1986, as amended (if any).
In no event, however, shall the Executive be entitled to receive any amounts, rights, or benefits under this paragraph 4(d) unless he executes a release of claims.
| (e) | Except as may be otherwise specifically provided in an amendment of this paragraph 4(e) adopted in accordance with paragraph 12, the Executive’s rights under this paragraph 4 shall be in lieu of any benefits that may be otherwise payable to or on behalf of the Executive pursuant to the terms of any severance pay arrangement of the Company or any Subsidiary or any other, similar arrangement of the Company or any Subsidiary providing benefits upon involuntary termination of employment. This paragraph 4(e) shall not be construed to adversely affect the Executive’s rights under the terms of any option on stock of the Company or any other award based on the stock of the Company. |
5. Duties on Termination. Subject to the terms and conditions of this Agreement, during the period beginning on the date of delivery of a Notice of Termination, and ending on the Date of Termination, the Executive shall continue to perform his duties as set forth in this Agreement, and shall also perform such services for the Company as are necessary and appropriate for an effective transition to the Executive’s successor, if any. Notwithstanding the foregoing provisions of this paragraph 5, the Company may suspend the Executive from performing his duties under this Agreement (including, without limitation, his duties as a member of the Board of Directors of the Company or any Subsidiary) following the delivery of a Notice of Termination providing for the Executive’s resignation, or delivery by the Company of a Notice of Termination providing for the Executive’s termination of employment for any reason; provided, however, that during the period of suspension (which shall end on the Date of Termination), the Executive shall continue to be treated as employed by the Company for other purposes, and his rights to compensation or benefits shall not be reduced by reason of the suspension.
6. Return of Property. Following the Date of Termination, the Executive agrees to return to the Company any keys, credit cards, passes, confidential documents or material, or other property belonging to the Company, and to return all writings, files, records, correspondence, notebooks, notes and other documents and things (including any copies thereof) containing any Confidential Information ; provided, however, that the Executive shall be entitled to retain a copy of any rolodex or other compilation maintained by him of the names of business contacts with their addresses, telephone numbers and similar information. The Executive agrees to represent in writing to the Company upon termination of employment that he has complied with the foregoing provisions of this paragraph 6 and that he will comply with paragraphs 8, 9, 10, 11, and 12.
7. Mitigation, Alienation, and Set-Off. The Executive shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise. The Company shall be entitled to set off against amounts payable to the Executive
13
any amounts owed to the Company by the Executive, but the Company shall not be entitled to set off against the amounts payable to the Executive under this Agreement any amounts earned by the Executive in other employment after termination of his employment with the Company, or any amounts which might have been earned by the Executive in other employment had he sought such other employment. This Agreement is personal to the Executive and may not be assigned by the Executive without the written consent of the Company. The interests of the Executive under this Agreement are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors of the Executive or the Executive’s beneficiary. However, to the extent that rights or benefits under this Agreement otherwise survive the Executive’s death, the Executive’s heirs and estate shall succeed to such rights and benefits pursuant to the Executive’s will or the laws of descent and distribution; provided that the Executive shall have the right at any time and from time to time, by notice delivered to the Company, to designate or to change the beneficiary or beneficiaries with respect to such benefits.
8. Confidential Information. Each Item and all Confidential Information (both as defined below) that comes into his possession by reason of the Executive’s employment are the property of the Company or the Subsidiaries and shall not be used by the Executive in any way except in the course of his employment by, and for the benefit of the Company or the Subsidiaries. The Executive will not remove any Items from premises owned or leased by the Company or the Subsidiaries except as his duties shall require, and upon termination of his employment, all Items will be turned over to the Company. The Executive will preserve as confidential all Confidential Information that has been or may be obtained by him. The Executive will not, without written authority from the Company, use for his own benefit or purposes, or disclose to others, either during his employment or thereafter, except as required by his employment with the Company, any Confidential Information or any copy or notes made from any Item embodying Confidential Information. The Executive understands that his obligations with respect to Confidential Information shall continue even after termination of his employment with the Company. These restrictions concerning use and disclosure of Confidential Information shall not apply to information which is or becomes publicly known by lawful means, or comes into his possession from sources not under an obligation of confidentiality to the Company or the Subsidiaries.
| (a) | “Confidential Information” means information relating to the present or planned business of the Company or the Subsidiaries which has not been released publicly by authorized representatives of the Company or the Subsidiaries. The Executive understands that Confidential Information may include, for example, Trade Secrets, Inventions, know-how and products, customer, patient, supplier and competitor information, sales, pricing, cost, and financial data, research, development, marketing and sales programs and strategies, manufacturing, marketing and service techniques, processes and practices, and regulatory strategies. The Executive understands further that Confidential Information also includes all information received by the Company or the Subsidiaries under an obligation of confidentiality to a third party. |
| (b) | “Items” include documents, reports, drawings, photographs, designs, specifications, formulae, plans, samples, research or development information, prototypes, tools, equipment, proposals, marketing or sales plans, customer information, customer lists, |
14
patient lists, patient information, regulatory files, financial data, costs, pricing information, supplier information, written, printed or graphic matter, or other information and materials that concern the Company’s or the Subsidiaries’ business that come into his possession or about which the Executive has knowledge by reason of his employment.
| (c) | “Trade Secrets” include all information encompassed in all Items, and in all manufacturing processes, methods of production, concepts or ideas, to the extent that such information has not been released publicly by duly authorized representatives of the Company or the Subsidiaries. |
9. Non-Disparagement. The Executive agrees that, while he is employed by the Company, and after his Date of Termination, he shall not make any false, defamatory or disparaging statements about the Company, the Subsidiaries, or the officers or directors of the Company or the Subsidiaries that are reasonably likely to cause material damage to the Company, the Subsidiaries, or the officers or directors of the Company or the Subsidiaries. While the Executive is employed by the Company, and after his Date of Termination, the Company agrees, on behalf of itself and the Subsidiaries, that neither the officers nor the directors of the Company or the Subsidiaries shall make any false, defamatory or disparaging statements about the Executive that are reasonably likely to cause material damage to the Executive.
10. Noncompetition. The Executive understands that any entrusting of Confidential Information to him by the Company is done in reliance on a confidential relationship arising out of his employment with the Company. The Executive further understands that Confidential Information that the Executive may acquire or to which the Executive may have access, especially with regard to research and development projects and findings, formulae, designs, formulation, processes, the identity of suppliers, customers and patients, methods of manufacture, and cost and pricing data is of great value to the Company. In consequence of such entrusting and such consideration, the Executive will not, directly or indirectly, for a period of two years after the Date of Termination: (i) render services to any Competing Organization in connection with any Competing Product within such geographic limits as the Company and such Competing Organization are, or would be, in actual competition when such rendering of services might potentially involve the disclosure or use of Confidential Information or Trade Secrets; or (ii) provide advice as to investment in a Competitive Business (including, without limitation, advice with respect to the purchase, sale, or operation of such business, or advice with respect to financing or other economic structuring of such business). The Executive understands that services described in the preceding sentence, including without limitation those rendered to such Competing Organization in an executive, scientific, administrative, or consulting capacity in connection with Competing Products are in support of actual competition in various geographic areas and thus fall within the prohibition of this Agreement regardless of where such services physically are rendered.
| (a) | “Competing Products” means products, processes, or services of any person or organization other than the Company, in existence or under development, which are substantially the same, may be substituted for, or applied to substantially the same end use as the products, processes or services with which the Executive works during the time |
15
of his employment with the Company or about which the Executive acquires Confidential Information through his work with the Company.
| (b) | “Competing Organization” means persons or organizations, including himself, engaged in, or about to become engaged in, research or development, production, distribution, marketing, providing or selling of a Competing Product. |
| (c) | “Competitive Business” means any business in which the Company or any of the Subsidiaries was engaged during the 12-month period prior to the Executive’s Date of Termination, any business if the Company or any Subsidiary has devoted material resources to entering into such business during such 12-month period prior to the Date of Termination, and any business to the extent that it is engaged in the investing in or acquisition of all or a portion of the assets or stock of the Company or the Subsidiaries. |
Executive has the right to pursue employment with any healthcare company or entity that he views as non-competitive within the definitions set forth above, subject to Company approval (which approval shall not be unreasonably withheld). Should the parties fail to mutually agree, arbitration will be undertaken under the provisions of Section 23.
11. Solicitation of Customers, Suppliers and Employees. While he is employed by the Company, and for a period of 24 months after the Executive’s Date of Termination for any reason:
| (a) | The Executive shall not solicit or attempt to solicit any party who is then or, during the 12-month period prior to such solicitation or attempt by the Executive was (or was solicited to become), a customer or supplier of the Company or Affiliate, provided that the restriction in this paragraph 11(a) shall not apply to any activity on behalf of a business that is not a Competing Organization. |
| (b) | The Executive shall not solicit, entice, persuade or induce any individual who is employed by the Company or the Subsidiaries (or was so employed within 90 days prior to the Executive’s action) to terminate or refrain from renewing or extending such employment or to become employed by or enter into contractual relations with any other individual or entity other than the Company or the Subsidiaries, and the Executive shall not approach any such employee for any such purpose or authorize or knowingly cooperate with the taking of any such actions by any other individual or entity. |
12. Inventions. With respect to Inventions and related matters, the Executive and the Company agree as follows:
| (a) | All Inventions related to the present or planned business of the Company, which are conceived or reduced to practice by the Executive, either alone or with others, during the period of his employment or during a period of one hundred twenty (120) days after termination of such employment, whether or not done during his regular working hours, are the sole property of the Company. The provisions of this paragraph 12(a) shall not apply to an invention for which no equipment, supplies, facilities or trade secret information of the Company was used and which was developed entirely on his own time, unless (A) the invention relates (i) to the business of the Company, or (ii) to his |
16
actual or demonstrably anticipated research or development for the Company, or (B) the invention results from any work performed by the Executive for the Company.
| (b) | The Executive will disclose promptly and in writing to the Company, through the General Counsel of the Company, all Inventions which are covered by this Agreement, and the Executive agree to assign to the Company or its nominee all his right, title, and interest in and to such Inventions. The Executive agrees not to disclose any of these Inventions to others, without the express consent of the Company, except as required by his employment. |
| (c) | The Executive will, at any time during or after his employment, on request of the Company, execute specific assignments in favor of the Company or its nominee of his interest in and to any of the Inventions covered by this Agreement, as well as execute all papers, render all assistance, and perform all lawful acts which the Company considers necessary or advisable for the preparation, filing, prosecution, issuance, procurement, maintenance or enforcement of patent applications and patents of the United States and foreign countries for these Inventions, and for the transfer of any interest the Executive may have. The Executive will execute any and all papers and documents required to vest title in the Company or its nominee in the above Inventions, patent applications, patents, and interests. |
| (d) | The Executive understands that if the Executive is not employed by the Company at the time the Executive is requested to execute any document under paragraph 12(a), the Executive shall receive fifty dollars ($50.00) for the execution of each document, and one hundred fifty dollars ($150.00) per day of each day or portion thereof spent at the request of the Company in the performance of acts pursuant to paragraph 12(a), plus reimbursement for any out-of-pocket expenses incurred by the Executive at the Company’s request in such performance. |
| (e) | The Executive further understands that the absence of a request by the Company for information, or for the making of an oath, or for the execution of any document, shall in no way be construed to constitute a waiver of the Company’s rights under this Agreement. |
| (f) | The Executive has disclosed to the Company all continuing obligations which the Executive has with respect to the assignment of Inventions to any previous employers, and the Executive claims no previous unpatented Inventions as his own, except for those which have been reduced to practice and which are shown on a schedule, if any, attached to this Agreement. The Executive understands that the Company does not seek any confidential information which the Executive may have acquired from a previous employer, and the Executive will not disclose any such information to the Company. |
| (g) | “Invention” means procedures, systems, machines, methods, processes, uses, apparatuses, compositions of matter, designs or configurations, computer programs of any kind, or any improvements of the foregoing, discovered, conceived, reduced to practice, developed, made, or produced, and shall not be limited to the meaning of “Invention” under the United States patent laws. |
17
13. Copyright. All writings and other works which may be copyrighted (including computer programs) which are related to the present or planned business of the Company and are prepared by the Executive during his employment by the Company shall be, to the extent permitted by law, works made for hire, and the authorship and copyright of the work shall be in the Company’s name. To the extent that such writings and works are not works for hire, the Executive agrees to the waiver of “moral rights” in such writings and works, and to assign to the Company all his right, title and interest in and to such writings and works, including copyright.
14. Images. The Executive will permit the Company and its agents to use and distribute any pictorial images which are taken of him during his employment by the Company as often as desired for any lawful purpose. The Executive waives all rights of prior inspection or approval and releases the Company and its agents from any and all claims or demands which the Executive may have on account of the lawful use or publication of such pictorial images.
15. Assistance with Claims. The Executive agrees that, for the period beginning on the Effective Date, and continuing for a reasonable period, not less than two years after the Executive’s Date of Termination, the Executive will assist the Company and the Subsidiaries in the defense of any claims that may be made against the Company and the Subsidiaries, and will assist the Company and the Subsidiaries in the prosecution of any claims that may be made by the Company or the Subsidiaries, to the extent that such claims may relate to services performed by the Executive for the Company and the Subsidiaries. The Executive agrees to promptly inform the Company if he becomes aware of any lawsuits involving such claims that may be filed against the Company or any Subsidiary. The Company agrees to provide legal counsel to the Executive in connection with such assistance (to the extent legally permitted), and to reimburse the Executive for all of the Executive’s reasonable out-of-pocket expenses associated with such assistance, including travel expenses. For periods after the Executive’s employment with the Company terminates, the Company agrees to provide reasonable compensation to the Executive for such assistance. The Executive also agrees to promptly inform the Company if he is asked to assist in any investigation of the Company or the Subsidiaries (or their actions) that may relate to services performed by the Executive for the Company or the Subsidiaries, regardless of whether a lawsuit has then been filed against the Company or the Subsidiaries with respect to such investigation.
16. Equitable Remedies. The Executive acknowledges that the Company would be irreparably injured by a violation of paragraph 8, paragraph 9, paragraph 10, and paragraph 11, and he agrees that the Company, in addition to any other remedies available to it for such breach or threatened breach, shall be entitled to a preliminary injunction, temporary restraining order, or other equivalent relief, restraining the Executive from any actual or threatened breach of paragraph 8, paragraph 9, paragraph 10, or paragraph 11. If a bond is required to be posted in order for the Company to secure an injunction or other equitable remedy, the parties agree that said bond need not be more than a nominal sum. The Company acknowledges that the Executive would be irreparably injured by a violation of paragraph 9, and he agrees that the Executive, in addition to any other remedies available to it for such breach or threatened breach, shall be entitled to a preliminary injunction, temporary restraining order, or other equivalent relief, restraining the Company from any actual or threatened breach of paragraph 9. If a bond is required to be posted in order for the Executive to secure an injunction or other equitable remedy, the parties agree that said bond need not be more than a nominal sum.
18
17. Amendment. This Agreement may be amended or cancelled only by mutual agreement of the parties in writing without the consent of any other person. So long as the Executive lives, no person, other than the parties hereto, shall have any rights under or interest in this Agreement or the subject matter hereof.
18. Applicable Law. The provisions of this Agreement shall be construed in accordance with the laws of the State of Illinois, without regard to the conflict of law provisions of any state. All disputes shall be litigated or arbitrated (whichever is applicable) in Chicago, Illinois.
19. Severability. The invalidity or unenforceability of any provision of this Agreement will not affect the validity or enforceability of any other provision of this Agreement, and this Agreement will be construed as if such invalid or unenforceable provision were omitted (but only to the extent that such provision cannot be appropriately reformed or modified).
20. Waiver of Breach. No waiver by any party hereto of a breach of any provision of this Agreement by any other party, or of compliance with any condition or provision of this Agreement to be performed by such other party, will operate or be construed as a waiver of any subsequent breach by such other party of any similar or dissimilar provisions and conditions at the same or any prior or subsequent time. The failure of any party hereto to take any action by reason of such breach will not deprive such party of the right to take action at any time while such breach continues.
21. Successors. This Agreement shall be binding upon, and inure to the benefit of, the Company and its successors and assigns and upon any person acquiring, whether by merger, consolidation, purchase of assets or otherwise, all or substantially all of the Company’s assets and business, and the successor shall be substituted for the Company under this Agreement. The Company will require any successor to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such assignment or succession had taken place.
22. Notices. Notices and all other communications provided for in this Agreement shall be in writing and shall be delivered personally or sent by registered or certified mail, return receipt requested, postage prepaid (provided that international mail shall be sent via overnight or two-day delivery), or sent by facsimile or prepaid overnight courier to the parties at the addresses set forth below (or such other addresses as shall be specified by the parties by like notice). Such notices, demands, claims and other communications shall be deemed given:
| (a) | in the case of delivery by overnight service with guaranteed next day delivery, the next day or the day designated for delivery; |
| (b) | in the case of certified or registered U.S. mail, five days after deposit in the U.S. mail; or |
| (c) | in the case of facsimile, the date upon which the transmitting party received confirmation of receipt by facsimile, telephone or otherwise; |
provided, however, that in no event shall any such communications be deemed to be given later than the date they are actually received. Communications that are to be delivered by the U.S.
19
mail or by overnight service or two-day delivery service are to be delivered to the addresses set forth below:
to the Company:
Baxter International Inc.
One Baxter Parkway
DF2-2W
Deerfield, IL 60015
Attention: Lead Director
or to the Executive:
All notices to the Company shall be directed to the attention of General Counsel of the Company, with a copy to the Secretary of the Company. Each party, by written notice furnished to the other party, may modify the applicable delivery address, except that notice of change of address shall be effective only upon receipt.
23. Arbitration of All Disputes. Any controversy or claim arising out of or relating to this Agreement (or the breach thereof) shall be settled by final, binding and non-appealable arbitration in Chicago, Illinois by three arbitrators. Except as otherwise expressly provided in this paragraph 23, the arbitration shall be conducted in accordance with the rules of the Center for Public Resources (“CPR”) then in effect. One of the arbitrators shall be appointed by the Company, one shall be appointed by the Executive, and the third shall be appointed by the first two arbitrators. If the first two arbitrators cannot agree on the third arbitrator within 30 days of the appointment of the second arbitrator, then the third arbitrator shall be appointed by CPR. Except as agreed upon by the Executive and the Company, each of the arbitrators shall be (i) an attorney with substantial experience representing executives and/or employers in employment matters; (ii) a former judge with substantial experience hearing employment matters involving executives and employers; or (iii) an individual with substantial human resources experience involving executive employment matters. The arbitrator appointed by the Executive and the arbitrator appointed by the Company shall each be described by any of clauses (i), (ii), and/or (iii) above. The third arbitrator appointed by the other two arbitrators (or by CPR), to the extent reasonably possible, shall be described by the clause(s) (i), (ii), and (iii) not applicable to the arbitrators appointed by the Executive and the Company.
24. Survival of Agreement. Except as otherwise expressly provided in this Agreement, the rights and obligations of the parties to this Agreement shall survive the termination of the Executive’s employment with the Company.
25. Entire Agreement. Except as otherwise provided herein, this Agreement, including any Exhibit(s) attached hereto, constitutes the entire agreement between the parties concerning the subject matter hereof and supersedes all prior and contemporaneous agreements, if any, between the parties relating to the subject matter hereof; provided, however, that nothing in this Agreement shall be construed to limit the Company’s ability to establish and maintain policies (or require the employee to enter into an agreement) relating to confidentiality, rights to
20
inventions, copyrightable material, business and/or technical information, trade secrets, solicitation of employees, interference with relationships with other businesses, competition, and other similar policies or agreement for the protection of the business and operations of the Company and the Subsidiaries.
26. Counterparts. This Agreement may be executed in two or more counterparts, any one of which shall be deemed the original without reference to the others.
27. Acknowledgment by Executive. Except as permitted under or pursuant to Section 1(h), the Executive represents and warrants that (i) he is not, and will not become a party to any agreement, contract, arrangement or understanding, whether of employment or otherwise, that would in any way restrict or prohibit him from undertaking or performing his duties in accordance with this Agreement or that restricts his ability to be employed by the Company in accordance with this Agreement; (ii) he is not presently engaged in, and will not during the Agreement Term enter into any employment or agency relationship with any third party whose interests might conflict with those of the Company or the Subsidiaries; (iii) he is not and will not during the Agreement Term possess any significant interest, directly, through his family, or through organizations or trusts controlled by him, in any third party whose interests might conflict with those of the Company or its subsidiaries; (iv) his employment by the Company will not violate the terms of any policy of any prior employer of the Executive regarding competition; and (v) his position with the Company, as described in this Agreement, will not require him to improperly use any trade secrets or confidential information of any prior employer, or any other person or entity for whom he has performed services.
28. Approval by Board. The Board shall consider approval of this Agreement within three business days after the date of this Agreement. The effectiveness of the Company’s execution of this Agreement is contingent on the Agreement being approved by the Board at the time specified in this paragraph 28, and the Agreement shall be void if such approval is not given.
The Executive has hereunto set his hand, and the Company has caused these presents to be executed in its name and on its behalf, all as of the date first stated above.
| /s/ Robert L. Parkinson, Jr. |
| Robert L. Parkinson, Jr. |
| BAXTER INTERNATIONAL INC. |
| /s/ Thomas T. Stallkamp |
| Thomas T. Stallkamp, Lead Director |
21
