Exhibit
10.1
SEVERANCE
AGREEMENT
This agreement (this
“Agreement”) is made as of the _____ day of _______,
2008, between St. Jude Medical, Inc., a Minnesota corporation, with
its principal offices at One Lillehei Plaza, St. Paul, Minnesota
55117 (the “Company”) and XXXXX
(“Executive”), residing at
________________________.
WITNESSETH THAT:
WHEREAS, this Agreement is intended
to specify the financial arrangements that the Company will provide
to Executive upon Executive’s separation from employment with
the Company under any of the circumstances described herein;
and
WHEREAS, this Agreement is intended
to replace and supersede the existing Severance Agreement between
the Company and Executive dated as of ___________________ relating
to payments to be made to Executive upon a change in control of the
Company (the “Prior Agreement”); and
WHEREAS, this Agreement is entered
into by the Company in the belief that it is in the best interests
of the Company and its shareholders to provide stable conditions of
employment for Executive notwithstanding the possibility, threat or
occurrence of certain types of change in control, thereby enhancing
the Company’s ability to attract and retain highly qualified
people.
NOW, THEREFORE, to assure the
Company that it will have the continued dedication of Executive
notwithstanding the possibility, threat or occurrence of a bid to
take over control of the Company, and to induce Executive to remain
in the employ of the Company, and for other good and valuable
consideration, the Company and Executive agree as
follows:
1.
Term of Agreement . The term of this Agreement shall
commence on the date hereof as first written above and shall
continue through January 1, 2009; provided that
commencing on January 1, 2009 and each January 1 st
thereafter, during Executive’s employment by the Company, the
term of this Agreement shall automatically be extended for one
additional year unless not later than December 31 of the preceding
year, the Company shall have given notice that it does not wish to
extend this Agreement; and provided , further ,
that notwithstanding any such notice by the Company not to
extend, this Agreement shall continue in effect for a period of 36
months beyond the term provided herein if a Change in Control (as
defined in Section 3(i) hereof) shall have occurred during such
term.
2.
Termination of Employment .
(i)
Prior to a Change in Control . Executive’s rights upon
termination of employment prior to a Change in Control (as defined
in Section 3(i) hereof) shall be governed by the Company’s
standard employment termination policy applicable to Executive in
effect at the time of termination or, if applicable, any written
employment agreement between the Company and Executive other than
this Agreement in effect at the time of termination.
(ii)
After a Change in Control .
(a) From
and after the date of a Change in Control (as defined in Section
3(i) hereof) during the term of this Agreement, the Company shall
not terminate Executive from employment with the Company except as
provided in this Section 2(ii) or as a result of Executive’s
Disability (as defined in Section 3(iv) hereof), Retirement (as
defined in Section 3(v) hereof) or death.
(b) From
and after the date of a Change in Control (as defined in Section
3(i) hereof) during the term of this Agreement, the Company shall
have the right to terminate Executive from employment with the
Company at any time during the term of this Agreement for Cause (as
defined in Section 3(iii) hereof), by written notice to Executive,
specifying the particulars of the conduct of Executive forming the
basis for such termination.
(c) From
and after the date of a Change in Control (as defined in Section
3(i) hereof) during the term of this Agreement: (x) the Company
shall have the right to terminate Executive’s employment
without Cause (as defined in Section 3(iii) hereof), at any time;
and (y) Executive shall, upon the occurrence of such a termination
by the Company without Cause, or upon the voluntary termination of
Executive’s employment by Executive for Good Reason (as
defined in Section 3(ii) hereof), be entitled to receive the
benefits provided in Section 4 hereof. Executive shall evidence a
voluntary termination for Good Reason by written notice to the
Company given within 60 days after the date of the occurrence of
any event that Executive knows or should reasonably have known
constitutes Good Reason for voluntary termination. Such notice need
only identify Executive and set forth in reasonable detail the
facts and circumstances claimed by Executive to constitute Good
Reason. Any notice given by Executive pursuant to this Section 2
shall be effective five business days after the date it is given by
Executive. For purposes of this Agreement, a termination of
Executive’s employment shall be effective as of the
Separation Date.
3.
Definitions .
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(i)
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A “ Change in Control ” shall
mean:
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(a) a
change in control of a nature that would be required to be reported
in response to Item 6(e) of Schedule 14A promulgated under the
Securities Exchange Act of 1934, as amended (the “Exchange
Act”), or successor provision thereto, whether or not the
Company is then subject to such reporting requirement;
(b) any
“person” (as such term is used in Sections 13(d) of the
Exchange Act) is or becomes the “beneficial owner” (as
defined in Rule 13d-3 promulgated under the Exchange Act), directly
or indirectly, of securities of the Company representing 35% or
more of the combined voting power of the Company’s then
outstanding securities;
(c) the
Continuing Directors (as defined in Section 3(vi) hereof) cease to
constitute a majority of the Company’s Board of Directors;
provided that such change is the direct or indirect
result of a proxy fight and contested election or elections for
positions on the Board of Directors; or
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(d) the
majority of the Continuing Directors (as defined in Section 3(vi)
hereof), excluding any Continuing Director who has this Severance
Agreement, determine in their sole and absolute discretion that
there has been a change in control of the
Company.
(ii) “
Good Reason ” shall mean the occurrence of any of the
following events, except for the occurrence of such an event in
connection with the termination or reassignment of
Executive’s employment by the Company for Cause (as defined
in Section 3(iii) hereof), for Disability (as defined in Section
3(iv) hereof), for Retirement (as defined in Section 3(v) hereof)
or for death:
(a) the
assignment to Executive of any duties inconsistent with
Executive’s status or position with the Company, or a
substantial alteration in the nature or status of Executive’s
responsibilities from those in effect immediately prior to the
Change in Control;
(b) a
reduction by the Company in Executive’s annual compensation
in effect immediately prior to the Change in
Control;
(c) the
Company’s requiring Executive to be based anywhere other than
within 50 miles of Executive’s office location immediately
prior to a Change in Control except for required travel on the
Company’s business to an extent substantially consistent with
Executive’s business travel obligations immediately prior to
the Change in Control;
(d) the
failure by the Company to continue to provide Executive with
benefits at least as favorable to those enjoyed by Executive under
any of the Company’s pension, life insurance, medical, health
and accident, disability, deferred compensation, incentive, stock,
stock purchase, stock option, savings, perk package or other plans
or programs in which Executive participates, or any action by the
Company 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 the Company to provide Executive with the number of paid
vacation days to which Executive is entitled immediately prior to
the Change in Control; or
(e) the
failure of the Company to obtain, as specified in Section 6(i)
hereof, an assumption of the obligations of the Company to perform
this Agreement by any successor to the Company.
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 Continuing Directors (as defined in
Section 3(vi) hereof), Executive may voluntarily terminate his or
her employment for any reason on the 180 th day
following the Change in Control, and such termination shall be
deemed “Good Reason” for all purposes of this
agreement.
(iii) “
Cause ” shall mean termination by the Company of
Executive’s employment based upon the conviction of Executive
by a court of competent jurisdiction for felony criminal
conduct.
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(iv) “
Disability ” shall mean that, as a result of
incapacity due to physical or mental illness, Executive shall have
been absent from the full-time performance of Executive’s
duties with the Company for six consecutive months, and within 30
days after written notice of termination is given, Executive shall
not have returned to the full-time performance of Executive’s
duties. Any question as to the existence of Executive’s
Disability upon which Executive and the Company cannot agree shall
be determined by a qualified independent physician selected by
Executive (or, if Executive is unable to make such selection, it
shall be made by any adult member of Executive’s immediately
family), and approved by the Company. The determination of such
physician made in writing to the Company and to Executive shall be
final and conclusive for all purposes of this
Agreement.
(v) “
Retirement ” shall mean termination on or after
attaining normal retirement age in accordance with the
Company’s Profit Sharing Employee Savings Plan and
Trust.
(vi) “
Continuing Director ” shall mean any person who is a
member of the Board of Directors of the Company, while such person
is a member of the Board of Directors, and who (a) was a member of
the Board of Directors on the date of this Agreement as first
written above or (b) subsequently becomes a member of the Board of
Directors, if such person’s nomination for election or
initial election to the Board of Directors is recommended or
approved by a majority of the Continuing
Directors.
(vii) “
Separation Date ” shall mean the date on which
Executive separates from service with the Company, within the
meaning of Section 409A of the Code.
4.
Benefits upon Termination under Section 2(ii)(c)
.
(i) Upon
the termination (voluntary or involuntary) of the employment of
Executive pursuant to Section 2(ii)(c) hereof, Executive shall be
entitled to receive the benefits specified in this Section 4.
Subject to the provisions of Section 4(ii) hereof, all benefits to
Executive pursuant to this Section 4(i) shall be subject to any
applicable payroll or other taxes required by law to be
withheld.
(a) The
Company shall pay Executive, through the Separation Date,
Executive’s base salary as in effect at the time of the
notice of termination is given and any other form or type of
compensation otherwise payable for such period. Subject to Section
14, such payment shall be made in a lump sum cash payment on the
Separation Date. Executive shall be entitled to receive all
benefits payable to Executive under the Company’s Profit
Sharing Employee Savings Plan and Trust 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. Executive
shall be entitled to exercise all rights and to receive all
benefits accruing to Executive under any and all Company stock
purchase plans, stock option plans and other stock plans or
programs, or any successor to any such plans or
