Exhibit 99.3
TRANSITIONAL SERVICE AGREEMENT
TRANSITIONAL SERVICE AGREEMENT (the "Agreement") by and
between United States Surgical Corporation, a Delaware corporation (the
"Company"), and _________________(the "Executive"), dated as of August 28, 1998,
but effective as of the Effective Date (as hereinafter defined).
The Company has determined that it is in the best interests of
the Company to assure that it will have the benefit of the valuable services and
continued dedication of the Executive following consummation of the merger (the
"Merger") of the Company with a subsidiary of Tyco International Ltd. ("Parent")
pursuant to the Agreement and Plan of Merger (the "Merger Agreement"),
dated as of May 25, 1998, by and among the Company, Parent and T11 Acquisition
Corp., and the Executive has agreed to serve the Company pursuant to the terms
and conditions hereinafter set forth;
NOW, THEREFORE, for good and valuable consideration, the
receipt of which is hereby acknowledged, the Company and the Executive hereby
agree as follows:
1. Effective Date. The "Effective Date" shall mean the date immediately
prior to consummation of the Merger. In the event the Merger is not
consummated, this Agreement shall be null and void and of no force and
effect, and shall have no impact or effect with respect to any other
agreement by and between the Executive and the Company in effect prior to the
date this Agreement was executed.
2. Transitional Service Period. The Company and the Executive hereby
agree that the Executive shall, subject to the terms and conditions of this
Agreement, be employed to perform services for the Company commencing
immediately after the Effective Date and ending on October 1, 1999 or upon
such earlier date that the Executive terminates the Transitional Service
Period pursuant to Section 5 below (the "Transitional Service Period").
3. Entire Agreement. Except as set forth in this Agreement, as of the
Effective Date, (i) this Agreement shall supersede any other employment,
severance or change in control agreement between the parties hereto or
between the Executive and the Company, (ii) no such employment, severance or
change in control agreement shall have any further force or effect
whatsoever, and (iii) the Executive shall not be eligible to receive, waives
any right to receive and covenants not to assert any claim seeking, any
benefit or payment provided under any employment, severance or
change-in-control program, policy, plan or agreement which the Company may
presently or hereafter offer to or maintain for any or all its employees, it
being understood and agreed that the terms and conditions contained herein
constitute the entire and exclusive agreement between the parties concerning
its subject matter, and may only be supplemented or amended by a specific
written agreement signed by the Executive and the Company. Notwithstanding
the foregoing, nothing in this Agreement shall affect the validity or
enforceability of the affiliate letter executed by the Executive pursuant to
Section 5.05 of the Merger Agreement or the obligations of the Surviving
Company (as that term is defined in the Merger Agreement) under Section 5.06
of the Merger Agreement.
4. Terms of Transitional Services.
(a) Position; Duties; Place of Transitional Services. During the Transitional
Service Period, the Executive shall provide transitional services to the Company
in accordance with the following:
(i) The Executive's services under this Agreement shall be performed as
the Company determines.
(ii) The Executive agrees to devote his attention as required to the
performance of services hereunder. The Executive may pursue other activities, so
long as such activities do not interfere with the performance of the Executive's
responsibilities as an employee of the Company in accordance with this
Agreement, and do not violate the provisions of Section 10 below.
(b) Compensation.
(i) As the total compensation for services to be rendered during the
Transitional Services Period until December 31, 1998, and as the total
consideration for the Executive's agreements contained herein regarding
confidential information, inventions and competing employment, the Company shall
pay to the Executive, within 15 days following the Effective Date, $__________.
As the total compensation for services to be rendered during January 1999 and
each succeeding month occurring during the Transitional Services Period, the
Executive shall receive a monthly salary of Three Thousand Dollars ($3,000.00),
which shall be paid within 15 days following each such month.
(ii) During the Transitional Service Period, the Executive shall be
promptly reimbursed by the Company for all reasonable expenses incurred by the
Executive in accordance with, and subject to, the Company's applicable expense
reimbursement policies and procedures, as the same are in effect from time to
time for Company employees at the officer level that was held by the Executive
immediately prior to the Effective Date.
(iii) During the Transitional Service Period, the Executive shall be
entitled to an office and to administrative and other support services as are
appropriate.
5. Termination or Expiration of Services.
(a) Termination. The Company may not terminate the Transitional Services Period
prior to its expiration upon October 1, 1999. The Executive may terminate the
Transitional Services Period prior to October 1, 1999, upon at least five days
prior written notice to the Company, and, in any case, the Transitional Services
Period and the Executive's employment shall terminate upon the Executive's death
or any permanent disability which prevents the Executive, with or without
reasonable accommodation, from performing his/her duties hereunder. In the event
of any such termination, (x) the Executive (or the Executive's legal
representatives) shall be entitled to retain all compensation received by the
Executive, pursuant to Section 4(b)(i), and, (y) the Executive shall cease to be
an employee of the Company, effective upon such termination.
(b) Benefits. Commencing upon the Effective Date, the Company shall provide to
the Executive (and, to the extent applicable, his dependents) the following
benefits and perquisites:
(i) The Executive shall be entitled to coverage and benefits, at the
Company's sole expense, for a period of three (3) years following the
Effective Date (the "Continuation Period"), under all welfare benefit plans
of the Company (including without limitation, medical, dental, group life,
dependent life, supplemental
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life, split dollar life, accidental death and dismemberment, travel accident,
short-term disability and long-term disability plans) for which he/she was
eligible upon the Effective Date. (The benefit coverages to be provided
hereunder are hereinafter referred to as "Welfare Continuation Coverages.")
All Welfare Continuation Coverages shall apply to the Executive and any of
his/her dependents who would have been eligible for coverage if the Executive
had been employed by the Company on a full-time basis during the Continuation
Period. The Company may provide the Executive with the Welfare Continuation
Coverages under arrangements other than the generally applicable welfare
benefit plans of the Company, provided that the Welfare Continuation
Coverages so provided are at least as favorable to the Executive as coverage
under the otherwise applicable Welfare Continuation Coverages, on a
coverage-by-coverage basis, and taking into account all tax consequences to
the Executive. At the expiration of the Continuation Period, the Executive
shall be treated as a then terminating employee of the Company with respect
to the right to elect continued medical and dental coverages in accordance
with section 4980B of the Internal Revenue Code of 1986, as amended, or any
successor provision thereto and with respect to any similar welfare
continuation rights.
(ii) The Company shall provide to the Executive
outplacement services (commensurate with the Executive's position), office space
and secretarial support services, for a period of twelve months following the
Effective Date.
(iii) The Executive shall be entitled to retain all Company property
used by the Executive at his/her house or other dwelling in the course of
his/her employment as long as the fair market value of said property is less
than $10,000. Further, any and all private club memberships utilized by the
Executive during his/her employment shall be transferred to the Executive
with the transference fees (if any) being borne by the Company. After such
transference, the Executive shall bear all future costs, with the Company
having no further responsibility therefor.
(iv) The Executive shall be entitled to receive, at the
Company's sole expense (but limited to $15,000), for a period of one year,
annual tax advice and/or tax return preparation services provided by a
third-party professional selected by the Executive.
The Company's obligation to provide the foregoing benefits, including without
limitation the Welfare Continuation Coverages, shall not be affected by any
other employment obtained by the Executive.
(c) Stock Options.
(i) The Company and the Executive acknowledge that the Executive's
employment under this Agreement constitutes the continuing employment of the
Executive by the Company as contemplated by all plans and agreements of the
Company providing stock options or similar equity incentive rights granted to
the Executive prior to the Effective Date, in respect of such stock options
or rights.
(ii) Upon the Effective Date, (A) any stock options or similar equity
incentive rights previously granted to the Executive, that are not then fully
vested and exercisable pursuant to their terms, shall become fully vested and
immediately exercisable pursuant to the terms of the stock option plans under
which they were granted, and (B) the Executive shall be entitled to exercise
the stock options previously granted to the Executive in accordance with
their terms and the terms of the Merger Agreement.
(iii) Notwithstanding the foregoing or anything elsewhere in this
Agreement to the contrary, this Agreement shall not replace, restrict or impair
the rights of the Executive under the terms of any of the Company's stock
option plans under which the Executive received stock options prior to the
Effective Date, in respect of such stock options.
(iv) Following the Effective Date, the Executive shall be entitled to
participate in any cashless exercise program available to holders of Parent
stock options generally, as any such program may be in effect from time to
time.
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6. Set-Off. The Company's obligation to make the payments and provide
benefits required under this Agreement shall not be affected by any
circumstances, including, without limitation, any set-off, counterclaim,
recoupment, defense or other claim, rights or action which the Company
may have against the Executive or others.
7. Excise Tax Gross-Up Payment. If at any time for any reason it shall be
determined that any payment or distribution by the Company or any other person
or entity to or for the benefit of the Executive is a "parachute payment"
(within the meaning of Section 280G(b) (2) of the Internal Revenue Code of 1986,
as amended (the "Code")), whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise in connection
with, or arising out of, his/her employment with the Company or a change in
ownership or effective control of the Company or a substantial portion of its
assets (a "Payment"), and would be subject to the excise tax imposed by Section
4999 of the Code (the "Excise Tax"), concurrent with the making of such Payment,
the Company shall pay to the Executive an additional payment (the "Gross-Up
Payment") in an amount such that the net amount retained by the Executive, after
deduction of any Excise Tax on such Payment and any federal, state or local
income or employment tax and Excise Tax on the Gross-Up Payment shall equal the
amount of such Payment. All determinations concerning the application of the
foregoing shall be made by a nationally recognized firm of independent
accountants (together with legal counsel of its choosing), selected by the
Executive and satisfactory to the Company, whose determination shall be
conclusive and binding on all parties. The fees and expenses of such accountants
and counsel shall be borne by the Company. In the event the Internal Revenue
Service assesses the Executive an amount of Excise Tax in excess of that
determined in accordance with the foregoing, the Company shall pay to the
Executive an additional Gross-Up Payment, calculated as described above in
respect of such excess Excise Tax, including a Gross-Up Payment in respect of
any interest or penalties imposed by the Internal Revenue Service with respect
to such excess Excise Tax.
8. Confidential Information.
(a) The Executive shall hold in a fiduciary capacity for the
benefit of the Company, and shall not, directly or indirectly, use, make
available, sell, disclose or otherwise communicate to any person, other than in
the course of the Executive's assigned duties and for the benefit of the
Company, either during the period of the Executive's employment or thereafter,
any non-public, proprietary or confidential information, knowledge or data
relating to the Company, or any of its affiliated companies, and their
respective businesses, which shall have been obtained by the Executive during
the Executive's employment by the Company. The foregoing shall not apply to
information which (i) was generally known or generally available to the public
prior to its disclosure to the Executive, (ii) becomes generally known or
generally available to the public subsequent to disclosure to the Executive
through no wrongful act of the Executive or any representative of the Executive;
or (iii) the Executive is required to disclose by applicable law, regulation or
legal process (provided that the Executive provides the Company with prior
notice of the contemplated disclosure and reasonably cooperates with the Company
at its expense in seeking a protective order or other appropriate protection of
such information).
(b) In the event of a breach or threatened breach of this
Section 8, the Executive agrees that the Company shall (in addition to any other
remedy available) be entitled to injunctive relief in a court of appropriate
jurisdiction to remedy any such breach or threatened breach, the
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Executive hereby acknowledging that damages would be inadequate and
insufficient.
9. Successors.
(a) This Agreement is personal to the Executive and without
the prior written consent of the Company shall not be assignable; provided,
however, all of the Executive's rights following his/her death shall inure to
the benefit of his/her surviving spouse, personal representatives or designees
or other legal representatives, as the case may be.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of its business and/or assets to assume expressly 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 succession had taken place.
Notwithstanding any such assumption or assignment, the Company shall remain
liable and responsible for fulfillment of its obligations under this Agreement.
As used in this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its businesses, and/or assets as aforesaid which
succeeds to any and all obligations and rights of the Company hereunder.
10. Noncompete and Inventions.
(a) Throughout the Transitional Services Period and, in any
case, for one year following the Effective Date (the "Noncompete Period"), the
Executive shall not serve as an employee, consultant, owner, officer or director
of any organization or business entity which is licensing, manufacturing or
selling one or more wound closure products which compete with the wound closure
products sold or under development (such competing products, the "Competing
Products"), as of the Effective Date, by the Company (such organization or
business entity, a "Competitor"). The foregoing shall not apply, however, to
service by the Executive as an employee, consultant, owner, officer or director
of any division or similar organizational unit of a Competitor, so long as
neither such division or organizational unit, nor the Executive, in connection
with such service and during the Noncompete Period, is engaged in the license,
manufacture or sale of Competing Products.
(b) The Executive agrees to disclose to the Company all
inventions, methods, processes or improvements in any manner connected with the
Company's business or products and made or conceived by the Executive during
his/her employment with the Company and prior to the Effective Date, and that
all of the foregoing shall be the Company's exclusive property and is hereby
assigned to it. The Executive agrees to execute assignments to the Company or
any other party designated in writing by the Company, patent applications and
any and all other documents necessary to vest in the Company such exclusive
property. In the event that the Executive refuses to execute a patent
application or cannot be found or reached after a diligent effort, it is
specifically agreed to by the Executive that the Company is to be deemed at law
to have sufficient proprietary interest and be authorized and empowered to make
application for patent on the Executive's behalf.
(c) The Executive agrees that this Section 10 is reasonable,
fair and equitable in
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light of his/her duties and responsibilities under this Agreement and that it is
necessary to protect the legitimate business interests of the Company. In the
event of a breach or threatened breach of this Section 10, the Executive agrees
that the Company shall (in addition to any other remedy available) be entitled
to injunctive relief in a court of competent jurisdiction to remedy any such
breach or threatened breach, the Executive hereby acknowledging that damages
would be inadequate and insufficient.
(d) If any of the restrictions contained in Section 10(a) are
deemed by a court of competent jurisdiction to be unenforceable by reason of
their extent, duration or geographical scope, the Executive and the Company
contemplate that the court shall reduce such extent, duration, geographical
scope, but only to the extent required in order to render such restrictions
enforceable, and enforce said Section 10(a) in its reduced form for all purposes
in the manner contemplated hereby.
11. Miscellaneous.
(a) The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect. This Agreement may not be
amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.
(b) All notices and other communication hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive:
If to the Company:
Legal Department
United States Surgical Corporation
000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be deemed
effectively given when the same has been hand delivered or five (5) days after
the same has been deposited in a post box under the exclusive control of the
United States Postal Service.
(c) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) Any payment required to be made to the Executive under
this Agreement that is not made at the time required hereunder shall bear
interest at a rate equal to 120% of the monthly compounded applicable federal
rate, as in effect under Section 1274(d) of the Code for the month in which the
payment is required to be made. All payments required to be made to the
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Executive under this Agreement shall be subject to the withholding of such
amounts, if any, related to tax, excise tax and other payroll deductions as the
Company may reasonably determine it should withhold pursuant to any applicable
law or regulation.
(e) The Executive's or the Company's failure to insist upon
strict compliance with any provision of this Agreement or the failure to assert
any right the Executive or the Company may have hereunder, shall not be deemed
to be a waiver of such provision or right of this Agreement. No waiver by a
party of any provisions or conditions of this Agreement shall be deemed a waiver
of similar or dissimilar provisions and conditions at the same time or any prior
or subsequent time.
12. Indemnification. The Company shall indemnify the Executive to
the fullest extent permitted by the Delaware General Corporation Law, with
respect to any and all judgments, fines, amounts paid in settlement, costs,
charges and expenses whatsoever (including payment of expenses in advance of the
final disposition of a proceeding) incurred or sustained by the Executive in
connection with any threatened, pending or completed action, suit or proceeding
to which he/she may be made a party or is threatened to be made a party by
reason of being an officer, director, employee or agent of the Company or
serving or having served any corporation, partnership, joint venture, trust or
other enterprise as a director, officer, employee or agent at the request of the
Company, including, without limitation, any such action, suit or proceeding
relating in any way to the Merger or this Agreement. The Executive shall
promptly notify the Company of any actual or known threatened claim or liability
that may be the subject of the foregoing indemnity, allow the Company and its
insurance carrier full and sole control of the defense, and cooperate in such
defense as the Company reasonably requests. The Company shall be permitted to
settle any such claim or liability as it deems appropriate, provided that such
settlement is at the Company's sole expense and provides the Executive with a
full and complete release. The Company shall maintain in full force and effect
for the benefit of the Executive, for the duration of all applicable statute of
limitations periods, liability insurance policies at least as favorable to the
Executive as those maintained by the Company for the benefit of its directors
and officers as of the Effective Date, provided that such policies are provided
to its directors and officers generally or are reasonably obtainable by the
Company.
13. Legal Expenses. The Company agrees to pay directly or promptly
reimburse the Executive (at the Executive's option) for any and all
reasonable legal fees and expenses incurred by the Executive relating to the
enforcement or attempted enforcement of any obligation of the Company
hereunder, regardless of outcome, provided that the Executive's claims are
not determined by a trier of fact to be frivolous.
14. Termination. Section 3 and Sections 5 through 16 of this Agreement
shall survive any termination of the Executive's employment, termination or
expiration of the Transitional Service Period or termination or expiration of
this Agreement.
15. Governing Law. This Agreement shall be construed and interpreted
according to the laws of the State of Connecticut and the parties submit to the
jurisdiction of the courts of the State of Connecticut for the purpose of any
actions or proceedings which may be required to enforce the terms hereof.
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute
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but one Agreement. It shall not be necessary that any counterpart be signed by
the parties hereto so long as such party shall have executed a counterpart.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
United States Surgical Corporation
By:
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Name: [Executive]
Title:
GUARANTEE
Tyco International Ltd., a Bermuda company, hereby guarantees the full and
timely performance by the Company of each and every obligation of the Company
under the foregoing Agreement. This is a guaranty of payment and performance,
and not of collection, and Tyco International Ltd. acknowledges and agrees that
this guarantee is unconditional, and no release or extinguishment of the
Company's obligations or liabilities under the Agreement, whether by reason of
bankruptcy or otherwise, shall affect the continuing validity and enforceability
of this guarantee.
Tyco International Ltd.
By:
-------------------------
Name:
Title:
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