Exhibit 10.1
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AGREEMENT
AGREEMENT, dated as of March 10, 2006 ("Agreement"), between GUIDANT
CORPORATION, an Indiana corporation (the "Company"), and CARDIAC PACEMAKERS,
INC., a Minnesota corporation ("CPI"), on the one hand, and R. XXXXXXXXX XXXXX,
XX. ("Executive"), on the other hand. References herein to the "Company" shall
include Guidant Corporation, as well as its respective predecessors, parent
companies, CPI and other subsidiaries, affiliates, divisions, successors and
assigns.
Section 1. Termination.
(a) Effective March 17, 2006 ("the Cessation Date"), Executive's
employment with the Company shall cease and Executive shall resign from all
positions with the Company, including any directorships. Such cessation of
employment shall be a Covered Termination under Section 6.A.1 of Guidant
Corporation's Change in Control Severance Pay Plan for Select Employees (the
"CIC Plan") and the Company shall thereafter provide to Executive the payments,
benefits and rights applicable to a Covered Termination under the CIC Plan.
(b) Except as Executive and the Company may otherwise agree, Executive
shall promptly return to the Company all Company property in Executive's
possession, including without limitation, any information belonging to the
Company in any tangible form (any documents, memoranda and/or files, faxes, and
any means of data storage such as computer discs, CD roms and the like and all
copies thereof) concerning the Company, its business, employees, customers, and
any computers, notes and any other Company property.
(c) The Company shall pay or reimburse Executive for legal fees and
expenses reasonably incurred with respect to the cessation of his employment and
the negotiation of this Agreement after receipt of reasonably satisfactory
supporting documentation.
Section 2. Consulting Arrangement and Non-Compete. Executive acknowledges and
agrees that by virtue of his employment with the Company, he has special, unique
and irreplaceable knowledge and experience concerning the Company. Accordingly,
in recognition of that, the parties hereto agree as follows:
(a) From and after the Cessation Date to and including March 31, 2008
(the "Consulting Period"), Executive shall provide consulting services to the
Company on an as-needed basis, upon reasonable advance notice from the Company
and with due regard for Executive's business and personal schedule. Such
consulting services shall include, but not be limited to, assisting the Company
as set forth in Section 3(a) below with any lawsuits, claims or investigations
about which the Company believes that Executive may have relevant information or
knowledge. The parties acknowledge that such consulting services (other than as
contemplated by Section 3(a) below) shall be rendered by Executive, to the
extent practicable, to senior management of the Company.
(b) Executive acknowledges that (i) during his employment with the
Company, Executive, on a worldwide basis, had substantial contacts with persons
or entities with whom the Company did business, including customers and
suppliers; (ii) Executive was placed in a position of trust and responsibility
and had access to a substantial amount of confidential information, including
the Company's ongoing research and development for existing and new products,
the Company's business plans and the Company's sales and marketing strategies;
and (iii) Executive would have an unfair advantage in competing with the
Company. Executive agrees that during the Consulting Period, he shall not,
within or outside of the United States, have any involvement whatsoever with the
design, development, manufacturing, marketing or sale of any Competitive
Product, as defined in Section 2(c) below, and he will not induce or attempt to
induce any employee of the Company to leave his or her employment with the
Company. The restrictions within this Section 2(b) shall apply regardless of
whether Executive acts directly or indirectly or whether he acts personally or
as an employee, agent or otherwise for another.
(c) For purposes of Section 2(b) above, "Competitive Product" shall be
defined as any product, product line or service designed, developed,
manufactured, marketed or sold by anyone other than the Company which performs
similar functions or is used for the same general purposes as a Guidant Product.
"Guidant Product", as used in the definition of "Competitive Product," shall
mean any product, product line or service that is part of the Company's cardiac
rhythm management business and that has been designed, developed, manufactured,
marketed or sold by the Company or regarding which the Company has conducted or
acquired research and development. Such products include, but are not limited
to, cardiac pacemakers and implantable defibrillators and cardiac
resynchronization devices or products which are the functional equivalent of
cardiac pacemakers or implantable defibrillators or cardiac resynchronization
devices as well as leads, programmers and other devices ancillary to cardiac
pacemakers or implantable defibrillators or cardiac resynchronization devices.
(d) As consideration for the agreements made by Executive in Sections
2(a) and 2(b) above, including any services to be performed, the Company shall
pay Executive for the first year of the Consulting Period a fee of $200,000 in
twelve equal consecutive monthly installments on the first day of each
applicable calendar month, commencing April 1, 2006. For the second year of the
Consulting Period, the Company shall pay Executive a fee of $100,000 in twelve
equal consecutive monthly installments on the first day of each applicable
calendar month, commencing April 1, 2007, and, in addition, shall, with
reasonable promptness, pay Executive for his time (including travel) at a rate
of $250 per hour upon receipt of reasonably satisfactory supporting
documentation. If Executive shall die or become disabled such that he cannot
render the services contemplated in this Section 2, the Consulting Period shall
terminate and Executive's consulting fee shall be appropriately prorated.
Executive acknowledges and agrees that the payments called for in this Section
2(d) are things of value to which he is not otherwise entitled and that they
represent fair and adequate bargained for consideration.
(e) The Company shall, with reasonable promptness, pay or reimburse
Executive for expenses reasonably incurred in connection with his performance of
the consulting services required by this Section 2 after receipt of reasonably
satisfactory supporting documentation.
Section 3. Cooperation.
(a) Executive agrees to cooperate fully with the Company in connection
with any lawsuit, claim or investigation about which the Company believes
Executive may have relevant information or knowledge. Executive agrees to make
himself available at reasonable times, on reasonable dates, and upon reasonable
notice and request by the Company to meet with representatives of the Company,
to testify or to provide affidavits based upon Executive's knowledge of relevant
facts in any such lawsuit, claim or investigation. Executive further agrees to
reasonably cooperate with the Company in supplying data, information, and
expertise within Executive's special knowledge or competence and to otherwise
assist the Company in the protection of the interests of the Company. For time
reasonably spent and expenses reasonably incurred on matters covered by this
Section 3(a) after termination or expiration of the Consulting Period, the
Company shall, with reasonable promptness, pay Executive for his time (including
travel) at a rate of $250 per hour, and pay, or reimburse Executive for,
expenses reasonably incurred after receipt of reasonably satisfactory supporting
documentation.
(b) Executive agrees that if he receives a subpoena for, or other
request to provide, or inquiry related to, documents or testimony or other
information in connection with any suit, proceeding, legislative or regulatory
hearings, investigations or other civil or criminal proceedings relating to the
Company or to Executive's employment with the Company, Executive shall promptly
notify the Company of the request and shall make no disclosure until the Company
has had a reasonable opportunity (i) to contest the right of the requesting
person or entity to such disclosure and/or (ii) to seek to participate in the
proceeding or matter in which the testimony or other information is to be
provided. In addition, Executive agrees to comply with all lawful requests of
the Company to prevent disclosure of the Company's confidential or privileged
information or materials, or information or materials that are otherwise
protected from disclosure.
(c) The provisions of this Section 3 shall survive any termination or
expiration of the Consulting Period.
Section 4. Confidentiality. During the course of Executive's employment
Executive has had, and during the course of the performance of the duties and
responsibilities set forth in Sections 2 and 3 will have, access to information
relating to the Company and its businesses and customers and other proprietary
or privileged information of the Company that is not generally known by persons
not employed by the Company and that could not easily be determined or learned
by someone outside of the Company ("Confidential or Privileged Information").
"Confidential or Privileged Information" shall include, but not be limited to,
business plans, compensation details or any information related thereto, human
resource information, information protected by the attorney/client privilege or
work product doctrine, reports, project lists and information, strategic plans,
computer programs, sales, clinical and engineering information, information
about the failure rates of the Company's products, information about new or
future products, the Company's marketing plans and goals, lists of the Company's
customers and the identities of preferred customers, information about customer
purchases and preferences, information regarding research and development,
clinical trials, manufacturing processes or management systems and any other
information which provides the Company with a competitive advantage or is
treated as confidential or privileged by the Company. Executive agrees not to
use this Confidential or Privileged Information in any way or for any purpose,
and not to disclose this Confidential or Privileged Information, directly or
indirectly, to any third party, excepting Executive's legal team (attorneys,
consultants and experts) in connection with the defense of any claim against
Executive. If such information becomes the subject of an administrative or
judicial order requiring disclosure by Executive, or upon the receipt of a
subpoena or other request for such information, Executive shall promptly notify
the Company of the order or request and shall make no disclosure until the
Company has had a reasonable opportunity (i) to contest the right of the
requesting entity or person to such disclosure and/or (ii) to seek to
participate in the proceeding or matter relating to the disclosure. In addition,
Executive agrees to comply with all lawful requests of the Company to prevent
disclosure of the Company's Confidential or Privileged Information or materials
or information or materials that are otherwise protected from disclosure. The
provisions of this Section shall survive any termination or expiration of the
Consulting Period.
Section 5. Non-Disparagement. The Company and its authorized representatives
shall refrain from making, or from inducing or encouraging others to make, any
statements or comments of a defamatory or disparaging nature to any third party
regarding Executive, and Executive and his authorized representatives shall
refrain from making, or from inducing or encouraging others to make, any
statements or comments of a defamatory or disparaging nature to any third party
regarding the Company, or any of its directors, officers, personnel, policies or
products; provided, however, that it shall not be a violation of this Section
for either party to make truthful statements when required to do so by a court
of law or in a legal or administrative proceeding, by any governmental agency
having supervisory authority over the party, or by any administrative or
legislative body with apparent jurisdiction to order the party to divulge,
disclose or make accessible such information or as otherwise may be required in
defense of any claims or statements made by the other party. The provisions of
this Section 5 shall survive any termination or expiration of the Consulting
Period.
Section 6. Breach.
(a) Any breach by Executive of the provisions of Sections 1(b), 2, 3, 4
or 5 of this Agreement, if not capable of being cured, or if capable of being
cured is not cured by Executive to the reasonable satisfaction of the Company
within 30 days after written notice of such breach is given to Executive, shall
be considered a material breach of this Agreement. In the event of such a
breach, the Company shall be entitled to pursue any and all of its remedies
under the law and/or in equity arising out of such breach, including repayment
of any amounts already paid under Section 2 or Section 3 of this Agreement or
injunctive relief in those instances where the remedy at law for a breach would
be inadequate. In addition, in the event of a material breach, the Company shall
be released from any obligation to make any remaining payments under this
Agreement.
(b) In the event that the Company (i) fails to pay Executive any sum
due under Section 2(d) or 3(a) within 30 days after written demand therefor, or
(ii) fails to provide indemnification to Executive in accordance with Section 7
below within 30 days after written demand therefor, Executive shall be entitled
to pursue any and all of his remedies under the law and/or in equity arising out
of such failure. If the Executive files any litigation to pursue his remedies
under the law and/or in equity arising out of such failure, whether in the
nature of a complaint, counterclaim or third party claim, and Executive is the
prevailing party in such litigation as against the Company, the Company shall
reimburse Executive for all of his costs and expenses incurred in connection
with such litigation, including reasonable attorneys' fees.
Section 7. Indemnification. Executive shall be entitled to indemnification by
the Company in accordance with, and subject to the terms and conditions of, the
Articles of Incorporation of Guidant Corporation, as amended from time to time,
but not less than the indemnification provided by the Articles of Incorporation
of Guidant Corporation as of the date hereof.
Section 8. Severability. If any one or more of the provisions of this Agreement
shall be or become invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions of this
Agreement shall not be affected thereby.
Section 9. Assignment. This Agreement and Executive's rights and duties
hereunder, shall not be assignable or delegable by Executive. Any purported
assignment or delegation by Executive in violation of the foregoing shall be
null and void ab initio and of no force and effect. This Agreement may only be
assigned by the Company to a person or entity which is a successor in interest
to a substantial part of the cardiac rhythm management business now being
conducted by the Company.
Section 10. Successors; Binding Agreement. This Agreement shall inure to the
benefit of and be binding upon personal or legal representatives, executors,
administrators, heirs, distributees, devisees, legatees, and, with regard to the
Company, its permitted assigns.
Section 11. Notice. For purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given (a) when delivered by hand or overnight courier
(providing proof of delivery); (b) when telecopied (which is confirmed), or (c)
three days after it has been mailed by United States certified mail, return
receipt requested, postage prepaid, addressed to the respective addresses set
forth below in this Agreement, or to such other address as either party may have
furnished to the other in writing in accordance herewith, except that notice of
change of address shall be effective only upon receipt.
Notice to the Company shall be addressed to:
Guidant Corporation
000 Xxxxxxxx Xxxxxx #0000
Xxxxxxxxxxxx, XX 00000-0000
Attn: General Counsel
Telecopy: (000)-000-0000
Notice to Executive shall be addressed to such address as Executive
shall furnish to the Company in a separate writing delivered contemporaneously
with the execution of this Agreement.
Section 12. Withholding Taxes. The Company may withhold from any amounts payable
under this Agreement such Federal, state and local taxes as may be required to
be withheld pursuant to any applicable law or regulation.
Section 13. EntireAgreement/Amendments. This Agreement, including the CIC Plan
and any other agreements referenced herein, contain the entire understanding of
the parties with respect to the subject matter hereof, except as otherwise
specifically provided for in this Agreement. This Agreement may not be amended
except by written instrument signed by the parties hereto.
Section 14. No Waiver. The failure of a party to insist upon strict adherence to
any term of this Agreement on any occasion shall not be considered a waiver of
such party's rights or deprive such party of the right thereafter to insist upon
strict adherence to that term or any other term of this Agreement.
Section 15. Governing Law; Venue. This Agreement shall be governed by and
construed in accordance with the laws of the State of Minnesota without regard
to conflicts of laws principles thereof. Executive irrevocably submits to the
non-exclusive jurisdiction of the courts of the State of Minnesota and the
courts of the United States located in the State of Minnesota for the purpose of
any action or proceeding arising out of or relating to this Agreement, and
acknowledges that the designated fora have a reasonable relation to this
Agreement and the parties' relationship to one another.
Section 16. Counterparts. This Agreement may be signed in counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
GUIDANT CORPORATION
/s/ Xxxxx X. Xxxxxxxxx
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By: Xxxxx X. Xxxxxxxxx
Title: CEO
CARDIAC PACEMAKERS, INC.
/s/ Xxxxx Xxxxxxxxx
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By: Xxxxx Xxxxxxxxx
Title: Secretary and General Counsel
/s/ R. Xxxxxxxxx XxXxx, Xx.
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R. XXXXXXXXX XXXXX, XX.