EXHIBIT 10
EMPLOYMENT AGREEMENT
THIS AGREEMENT, is made and entered into by and between St. Jude
Medical, Inc., a Minnesota corporation with its principal offices at St. ▇▇▇▇,
Minnesota ("St. Jude") and _____________, residing at __________________________
(the "Executive"), and shall be effective as of this ____ day of ___________,
199___.
WHEREAS, St. Jude considers the establishment and maintenance of a
sound and vital management to be essential to protecting and enhancing the best
interests of St. Jude and its shareholders; and
WHEREAS, the Executive is expected to make, due to Executive's intimate
knowledge of the business and affairs of St. Jude, its policies, methods,
personnel, and problems, a significant contribution to the profitability,
growth, and financial strength of St. Jude; and
WHEREAS, St. Jude, as a publicly held corporation, recognizes that the
possibility of a Change in Control may exist, and that such possibility and the
uncertainty and questions which it may raise among management may result in the
departure or distraction of the Executive in the performance of the Executive's
duties, to the detriment of St. Jude and its shareholders; and
WHEREAS, it is in the best interests of St. Jude and its stockholders
to reinforce and encourage the continued attention and dedication of management
personnel, including Executive, to their assigned duties without distraction and
to ensure the continued availability to St. Jude of the Executive in the event
of a Change in Control.
THEREFORE, in consideration of the foregoing and other respective
covenants and agreements of the parties herein contained, the parties hereto
agree as follows:
1. Term of Agreement. This Agreement shall commence on the date hereof
and shall continue in effect until such time as St. Jude notifies the Executive
of the termination of this Agreement. Notwithstanding the preceding sentence, if
a Change in Control occurs, this Agreement shall continue in effect for a period
of 36 months from the date of the occurrence of a Change in Control.
2. Change in Control. No benefits shall be payable hereunder unless
there shall have been Change in Control, as set forth below.
(a) For purposes of this Agreement, a "Change in Control" of
St. Jude shall mean a change in control which would be required to be
reported in response to Item 1 of Form 8-K promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
whether or not St. Jude is then subject to such reporting requirement
including, without limitation, if:
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(i) any "person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act) becomes a "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of St. Jude representing
40% or more of the combined voting power of St. Jude's then
outstanding securities; or
(ii) there ceases to be a majority of the Board of
Directors comprised of: (A) individuals who on the date hereof
constituted the Board of St. Jude; and (B) any new director
who subsequently was elected or nominated for election by a
majority of the directors who held such office immediately
prior to a Change in Control.
(b) Executive agrees that, subject to the terms and conditions
of this Agreement, in the event of a Change in Control of St. Jude
occurring after the date hereof, Executive will remain in the employ of
St. Jude for a period of 90 days from the occurrence of such Change in
Control.
3. Termination Following Change in Control. If a Change in Control
shall have occurred during the term of this Agreement, Executive shall be
entitled to the benefits provided in subsection 4(d) unless such termination is
(A) because of Executive's death or Retirement, (B) by St. Jude for Cause or
Disability, or (C) by Executive other than for Good Reason.
(a) Disability; Retirement. If, as a result of incapacity due
to physical or mental illness, the Executive shall have been absent
from the full-time performance of Executive's duties with St. Jude for
six consecutive months, and within 30 days after written Notice of
Termination is given the Executive shall not have returned to the
full-time performance of the Executive's duties, St. Jude may terminate
Executive's employment for "Disability". Any question as to the
existence of Executive's Disability upon which Executive and St. Jude
cannot agree shall be determined by a qualified independent physician
selected by Executive (or, if the Executive is unable to make such
selection, it shall be made by any adult member of the Executive's
immediate family), and approved by St. Jude. The determination of such
physician made in writing to St. Jude and to Executive shall be final
and conclusive for all purposes of this Agreement. Termination by St.
Jude or Executive of Executive's employment based on "Retirement" shall
mean termination on or after attaining Normal Retirement Age in
accordance with the St. Jude Medical, Inc. Profit Sharing Employee
Savings Plan and Trust.
(b) Cause. Termination by St. Jude of Executive's employment
for "Cause" shall mean termination upon the conviction of the Executive
by a court of competent jurisdiction for felony criminal conduct.
(c) Good Reason. Executive shall be entitled to terminate his
employment for Good Reason. For purposes of this Agreement, "Good
Reason" shall mean, without Executive's express written consent, any of
the following:
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(i) The assignment to Executive of any duties
inconsistent with Executive's status or position with St.
Jude, or a substantial alteration in the nature or status of
Executive's responsibilities from those in effect immediately
prior to the Change in Control;
(ii) a reduction by St. Jude in Executive's annual
compensation in effect immediately prior to a Change in
Control;
(iii) location more than fifty miles from St. ▇▇▇▇,
Minnesota or St. Jude requiring Executive to be based anywhere
other than St. Jude's principal executive offices except for
required travel on St. Jude's business to an extent
substantially consistent with Executive's business travel
obligations immediately prior to the Change in Control;
(iv) the failure by St. Jude to continue to provide
Executive with benefits at least as favorable to those enjoyed
by Executive under any of St. Jude's pension, life insurance,
medical, health and accident, disability, deferred
compensation, incentive awards, incentive stock options, or
savings plans in which Executive was participating immediately
prior to the Change in Control, the taking of any action by
St. Jude which would directly or indirectly materially reduce
any of such benefits or deprive Executive of any material
fringe benefit enjoyed immediately prior to the Change in
Control, or the failure by St. Jude to provide Executive with
the number of paid vacation days to which Executive is
entitled immediately prior to the Change in Control, provided,
however, that St. Jude may amend any such plan or programs as
long as such amendments do not reduce any benefits to which
Executive would be entitled upon termination;
(v) The failure of St. Jude to obtain a satisfactory
agreement from any successor to assume and agree to perform
this Agreement, as contemplated in Section 6; or
(vi) Any purported termination of Executive's
employment which is not made pursuant to a Notice of
Termination satisfying the requirements of subsection (e)
below; for purposes of this Agreement, no such purported
termination shall be effective.
(d) Voluntary Termination Deemed Good Reason. Notwithstanding
anything herein to the contrary, if the Change in Control arises from a
transaction or series of transactions which are not authorized,
recommended or approved by formal action taken by the Board of
Directors as defined in Section 2(a)(ii) of this Agreement, Executive
may voluntarily terminate his employment for any reason during the
period commencing on the 91st day following a Change in Control and
ending on the 180th day following the Change in Control, and such
termination shall be deemed "Good Reason" for all purposes of this
Agreement.
(e) Notice of Termination. Any purported termination of
Executive's employment by St. Jude or by Executive shall be
communicated by written Notice of Termination to the
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other party hereto in accordance with Section 7. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall
indicate the specific termination provision in this Agreement relied
upon and shall set forth the facts and circumstances claimed to provide
a basis for termination of Executive's employment.
(f) Date of Termination. For purposes of this Agreement, "Date
of Termination" shall mean:
(i) If Executive's employment is terminated for
Disability, 30 days after Notice of Termination is given
(provided that the Executive shall not have returned to the
full-time performance of the Executive's duties during such 30
day period); and
(ii) If Executive's employment is terminated pursuant
to subsections (b), (c) or (d) above or for any other reason
(other than Disability), the date specified in the Notice of
Termination (which, in the case of a termination pursuant to
subsection (b) above shall not be less than 10 days, and in
the case of a termination pursuant to subsection (c) or (d)
above shall not be less than 10 nor more than 30 days,
respectively, from the date such Notice of Termination is
given).
(g) Dispute of Termination. If, within 10 days after any
Notice of Termination is given, the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning
the termination, the Date of Termination shall be the date on which the
dispute is finally determined, either by mutual written agreement of
the parties, or by a final judgment, order or decree of a court of
competent jurisdiction (which is not appealable or the time for appeal
therefrom having expired and no appeal having been perfected);
provided, that the Date of Termination shall be extended by a notice of
dispute only if such notice is given in good faith and the party giving
such notice pursues the resolution of such dispute with reasonable
diligence. Notwithstanding the pendency of any such dispute, St. Jude
shall continue to pay Executive full compensation in effect when the
notice giving rise to the dispute was given (including, but not limited
to, base salary) and continue Executive as a participant in all
compensation, benefit and insurance plans in which the Executive was
participating when the notice giving rise to the dispute was given,
until the dispute is finally resolved in accordance with this
subsection. Amounts paid under this subsection are in addition to all
other amounts due under this Agreement and shall not be offset against
or reduce any other amounts under this Agreement.
4. Compensation Upon Termination or During Disability. Following a
Change in Control of St. Jude, as defined in subsection 2(a), upon termination
of Executive's employment or during a period of Disability, Executive shall be
entitled to the following benefits:
(a) During any period that Executive fails to perform
full-time duties with St. Jude as a result of a Disability, St. Jude
shall pay Executive, the Executive's base salary as in effect at the
commencement of any such period and the amount of any other form or
type of compensation otherwise payable for such period if the Executive
were not so disabled, until such time as the Executive is determined to
be eligible for long term disability benefits in accordance with St.
Jude's insurance programs then in effect.
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(b) If Executive's employment shall be terminated by St. Jude
for Cause or by Executive other than for Good Reason, Disability or
Retirement, St. Jude shall pay to Executive his full base salary
through the Date of Termination at the rate in effect at the time
Notice of Termination is given and St. Jude shall have no further
obligation to Executive under this Agreement.
(c) If Executive's employment shall be terminated by St. Jude
or by Executive for Disability or Retirement, or by reason of death,
St. Jude shall immediately commence payment to the Executive (or
Executive's designated beneficiaries or estate, if no beneficiary is
designated) of any and all benefits to which the Executive is entitled
under St. Jude's retirement and insurance programs then in effect.
(d) If Executive's employment shall be terminated (A) by St.
Jude other than for Cause, Retirement, or Disability or (B) by
Executive for Good Reason, then Executive shall be entitled to the
benefits provided below:
(i) St. Jude shall pay Executive, through the Date of
Termination, the Executive's base salary as in effect at the
time the Notice of Termination is given and any other form or
type of compensation otherwise payable for such period;
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(ii) In lieu of any further salary payments for
periods subsequent to the Date of Termination, St. Jude shall
pay a severance payment (the "Severance Payment") equal to the
amount described in either (A) or (B) below, whichever is
applicable: (A) if the Executive has been an employee in any
capacity of St. Jude or any Affiliate as defined below for an
uninterrupted period of 3 or more years of elapsed time on the
Date of Termination, two (2) times the Executive's Annual
Compensation as defined below; or (B) if the Executive has
been an employee in any capacity of St. Jude or any Affiliate
as defined below for an uninterrupted period of less than 3
years of elapsed time on the Date of Termination, one (1)
times the Executive's Annual Compensation as defined below.
For purposes of this Section 4, "Annual Compensation" shall
mean the Executive's annual salary (regardless of whether all
or any portion of such salary has been contributed to a
deferred compensation plan), the annual amount of the
Executive's Perk Package, the target bonus for which the
Executive is eligible upon attainment of 100% of the target
(regardless of whether such target bonus has been achieved or
whether conditions of such target bonus are actually
fulfilled), and any other type or form of compensation paid to
Executive by St. Jude (or any corporation ("Affiliate")
affiliated with St. Jude within the meaning of Section 1504 of
the Internal Revenue Code of 1986 as may be amended from time
to time (the "Code")) and included in Executive's gross income
for federal tax purposes during the 12-month period ending
immediately prior to the Date of Termination but excluding: a)
any amount actually paid to the Executive as a cash payment of
the target bonus (regardless of whether all or any portion of
such target bonus was contributed to a deferred compensation
plan); b) compensation income recognized as a result of the
exercise of stock options or sale of the stock so acquired;
and c) any payments actually or constructively received from a
plan or arrangement of deferred compensation between St. Jude
and the Executive. All of the factors included in Annual
Compensation shall be those in effect on the Date of
Termination and shall be calculated without giving effect to
any reduction in such compensation which would constitute a
breach of this Agreement. The Severance Payment shall be made
in a single lump sum within 60 days after the Date of
Termination.
(iii) For the period of time after the Date of
Termination on which the Severance Payment is determined in
accordance with paragraph (ii) above, St. Jude shall arrange
to provide, at its sole expense, Executive with life,
disability, accident and health insurance benefits
substantially similar to those which the Executive is
receiving or entitled to receive immediately prior to the
Notice of Termination. The cost of providing such benefits
shall be in addition to (and shall not reduce) the Severance
Payment. Benefits otherwise receivable by Executive pursuant
to this paragraph (iii) shall be reduced to the extent
comparable benefits are actually received by Executive during
such period, and any such benefits actually received by
Executive shall be reported to St. Jude.
(iv) St. Jude shall also pay to Executive all legal
fees and expenses incurred by Executive as a result of such
termination (including all such fees and expenses, if any,
incurred in contesting or disputing any such termination or in
seeking to obtain or enforce any right or benefit provided by
this Agreement).
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(v) The Severance Payment shall be reduced and offset
by the amount of any payment received or to be received by
Executive in connection with the termination of employment
pursuant to the provisions of the St. Jude policy HR-1.02.25
entitled "Severance Pay," effective January 1, 1994, as
amended from time to time, or any successor to such policy.
Except as provided in the preceding sentence, no other offset
or reduction in the amount payable under this section shall be
made, regardless of whether or not such payments are tax
deductible by St. Jude.
(e) Executive shall not be required to mitigate the amount of
any payment provided for in this Section 4 by seeking other employment
or otherwise, nor shall the amount of any payment or benefit provided
for in this Section 4 be reduced by any compensation earned by
Executive as the result of employment by another employer or by
retirement benefits after the Date of Termination, or otherwise.
(f) Executive shall be entitled to receive all benefits
payable to the Executive under the St. Jude Medical, Inc. Profit
Sharing Employee Savings Plan or any successor of such Plan and any
other plan or agreement relating to retirement benefits which shall be
in addition to, and not reduced by, any other amounts payable to
Executive under this Section 4.
(g) Executive shall be entitled to exercise all rights and to
receive all benefits accruing to Executive under any and all St. Jude
stock purchase and stock option plans or programs, or any successor to
any such plans or programs, which shall be in addition to, and not
reduced by, any other amounts payable to Executive under this Section
4.
5. Funding of Payments. In order to assure the performance of St. Jude
or its successor of its obligations under this Agreement, St. Jude may deposit
in trust an amount equal to the maximum payment that will be due the Executive
under the terms hereof. Under a written trust instrument, the Trustee shall be
instructed to pay to the Executive (or the Executive's legal representative, as
the case may be) the amount to which the Executive shall be entitled under the
terms hereof, and the balance, if any, of the trust not so paid or reserved for
payment shall be repaid to St. Jude. If St. Jude deposits funds in trust,
payment shall be made no later than the occurrence of a Change in Control. If
and to the extent there are not amounts in trust sufficient to pay Executive
under this Agreement, St. Jude shall remain liable for any and all payments due
to Executive. In accordance with the terms of such trust, at all times during
the term of this Agreement, Executive shall have no rights, other than as an
unsecured general creditor of St. Jude, to any amounts held in trust and all
trust assets shall be general assets of St. Jude and subject to the claims of
creditors of St. Jude. Failure of St. Jude to establish or fully fund such trust
shall not be deemed a revocation or termination of this Agreement by St. Jude.
6. Successors; Binding Agreement. St. Jude will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of St. Jude to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that St. Jude would be required to perform it if no such succession had
taken place. Failure of St. Jude to obtain such assumption and agreement prior
to the effectiveness of any such succession shall be a breach of this Agreement
and shall entitle Executive to the Compensation and benefits from St. Jude in
the same amount and on the same terms as he would be entitled hereunder if he
terminated his employment for Good Reason following a Change in Control, except
that for purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Date of Termination.
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(a) This Agreement shall inure to the benefit of and be
enforceable by Executive's personal or legal representatives,
successors, heirs, and designated beneficiaries. If Executive should
die while any amount would still be payable to Executive hereunder if
the Executive had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this
Agreement to the Executive's designated beneficiaries, or, if there is
no such designated beneficiary, to the Executive's estate.
7. Notice. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed to the last known residence address of the Executive or in the case of
St. Jude, to its principal office to the attention of each of the then directors
of St. Jude with a copy to its Secretary, 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.
8. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the parties. No waiver by either party hereto at any
time of any breach by the other party to this Agreement of, or compliance with,
any condition or provision of this Agreement to be performed by such other-party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or similar time. No agreements or representations, oral
or otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not expressly set forth in this Agreement.
The validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of Minnesota.
9. Validity. The invalidity or unenforceability or any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
IN WITNESS WHEREOF, the undersigned officer, on behalf of St. Jude
Medical, Inc., and the Executive have hereunto set their hands as of the date
first above written.
ST. JUDE MEDICAL, INC.
By
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Its
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EXECUTIVE:
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