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. Paul,
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) 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:
(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:
(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. Paul, 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 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.
(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;
(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).
(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.
(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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Change in Control Employment Agreement - St. Jude Medical Inc.
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