Exhibit 2
SEVERANCE COMPENSATION AGREEMENT
[TIER I]
This Agreement ("Agreement") is dated as of
___________________________, 1995, by and between Cordis Corporation, a
Florida corporation having offices at 00000 X.X. 00xx Xxxxxx, Xxxxx Xxxxx,
Xxxxxxx 00000 (the "Company"), and __________________, whose residence
address is _______________________________________ (the "Executive").
WHEREAS, the Company's Board of Directors considers the continued
services of key executives of the Company to be in the best interests of
the Company and its stockholders; and
WHEREAS, the Company's Board of Directors desires to assure, and
has determined that it is appropriate and in the best interests of the
Company and its stockholders to reinforce and encourage the continued
attention and dedication of key executives of the Company to their duties
of employment without personal distraction or conflict of interest in
circumstances arising from the possibility or occurrence of a change in
control of the Company; and
WHEREAS, the Company's Board of Directors has authorized the
Company to enter into severance agreements with those key executives of the
Company who are designated by the Compensation Committee of the Board of
Directors (the "Committee"), such agreements to set forth the severance
compensation which the Company agrees under certain circumstances to pay
such executives; and
WHEREAS, the Executive is a key executive of the Company and has
been designated by the Committee as an executive to be offered such a
severance compensation agreement with the Company.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
the Company and the Executive agree as follows:
1. Change in Control. No compensation or other benefit shall
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be payable under this Agreement unless and until (i) a Change in Control of
the Company (as hereinafter defined) shall have occurred while the
Executive is an employee of the Company and (ii) the Executive's employment
by the Company thereafter shall have terminated in accordance with Sections
2 and 3 hereof. For purposes of this Agreement, a "Change in Control"
shall be defined as:
(a) any person or persons acting in concert (excluding Company
benefit plans) becomes the beneficial owner of securities of the Company
having at least 25% of
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the voting power of the Company's then outstanding securities (unless the
event causing the 25% threshold to be crossed is an acquisition of
securities directly from the Company); or
(b) the shareholders of the Company shall approve any merger or
other business combination of the Company, sale of more than 50% of the
Company's assets or combination of the foregoing transactions (the
"Transactions") other than a Transaction immediately following which the
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shareholders of the Company immediately prior to the Transaction and any
trustee or fiduciary of any Company employee benefit plan own, immediately
following the Transaction, at least 75% of the voting securities of the
surviving company (or its parent) in the event of a merger or other
business combination, or, in the event of a sale of assets, of the
purchaser of such assets; or
(c) within any 24 month period, the persons who were directors
immediately before the beginning of such period (the "Incumbent Directors")
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shall cease (for any reason other than death) to constitute at least a
majority of the Board or the board of directors of a successor to the
Company. For this purpose, any director who was not a director at the
beginning of such period shall be deemed to be an Incumbent Director if
such director was elected to the Board by, or on the recommendation of or
with the approval of, at least two-thirds of the directors who then
qualified as Incumbent Directors (so long as such director was not
nominated by a person who has entered into an agreement to effect a Change
in Control).
2. Termination Following Change in Control.
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(a) If a Change in Control shall have occurred while the
Executive is an employee of the Company, the Executive shall be entitled to
the compensation provided for in Section 3 hereof upon the subsequent
termination of the Executive's employment with the Company within the
relevant periods herein provided, (i) by the Executive for Good Reason, as
hereinafter defined, or (ii) by the Company other than for Cause (as
hereinafter defined), or as a result of (A) the Executive's Disability (as
hereinafter defined) or (B) the Executive's Retirement (as hereinafter
defined).
(b) Disability. For purposes of this Agreement, "Disability"
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shall mean the Executive's absence from the full-time performance of the
Executive's duties pursuant to a determination made in accordance with the
procedures established by the Company in connection with the Company's
disability benefits plan, which plan was in effect immediately prior to the
Change in Control, that the Executive is disabled as a result of incapacity
due to physical or mental illness.
(c) Retirement. For purposes of this Agreement, "Retirement"
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shall mean termination of the Executive's employment with the Company, on
or after the Executive's normal or early retirement date, under the
Company's retirement policy then generally applicable to its salaried
employees, or in accordance with any retirement plan or arrangement with
respect to the Executive in effect immediately prior to a Change in Control
or thereafter established by the Company with the Executive's consent.
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(d) Cause. For purposes of this Agreement, "Cause" shall mean:
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(i) fraud, dishonesty or willful malfeasance by Executive in
connection with Executive's employment with the Company which results
in material harm to the Company;
(ii) Executive's continued failure to substantially perform the
duties and responsibilities of Executive's office after written notice
from the Company setting forth the particulars of such failure and a
reasonable opportunity, but not less than ten (10) business days, to
cure;
(iii) Executive's willful and material breach of the provisions
of Section 10 or 11 of this Agreement; or
(iv) Executive's plea of guilty or nolo contendere to, or
nonappealable conviction of, a felony.
Termination of Executive for Cause shall be made by delivery to Executive
of a copy of a resolution duly adopted by the affirmative vote of not less
than a two-thirds majority of the Directors of the Company or of the
ultimate parent of the entity which caused the Change in Control if the
Company has become a subsidiary at a meeting of such Board of Directors
called and held for such purpose (after 30 days prior written notice to
Executive specifying the basis for such termination and the particulars
thereof and reasonable opportunity for Executive to be heard before the
Board prior to such vote), finding that in the reasonable judgment of such
Board, the conduct or event set forth in any of clauses (i) through (iv)
above has occurred and that such occurrence warrants Executive's
termination.
(e) Good Reason. For purposes of this Agreement, "Good Reason"
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shall mean the occurrence, after a Change in Control, of any of the
following without the Executive's express written consent:
(i) Any material diminution in the Executive's position, duties
or responsibilities with the Company from those in effect immediately
prior to the Change in Control or which would constitute a material
adverse alteration in the Executive's duties, responsibilities or
other conditions of employment from those in effect immediately prior
to the Change in Control[CEO and CFO only:]; provided, however, that
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(A) the Company's stock ceasing to be publicly traded or (B) the
Company's becoming a subsidiary of a Company whose stock is publicly
traded, in each case, shall not by itself be deemed to be a diminution
in the Executive's position, duties or responsibilities for purposes
of this Agreement.
(ii) Any material adverse change in the Executive's salary and
incentive compensation from the salary and incentive compensation in
effect immediately prior to the Change in Control;
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(iii) Any failure by the Company either to continue in effect,
or to provide reasonably similar retirement, savings, medical, dental,
accident, disability and life insurance plans and any other similar
benefits, policy or program in which the Executive was a participant
immediately prior to the Change in Control;
(iv) Any relocation of the Executive's employment to a location
in excess of 50 miles from the location at which the Executive was
based immediately prior to the Change in Control;
(v) Any failure by the Company to provide the Executive with the
number of paid vacation days to which the Executive was entitled, in
accordance with the Company's policy, in effect prior to the Change in
Control;
(vi) Any material breach by the Company of any provision of this
Agreement; [and]
(vii) Any failure by the Company to obtain from any successor to
the Company a satisfactory agreement to assume and perform this
Agreement, as contemplated by Section 7(a) hereof [{CEO and CFO only};
and
(viii) Any termination of employment by the Executive within 60
days after the first anniversary of a Change in Control shall be
deemed to be a termination by the Executive for Good Reason and
Executive shall be entitled to the payments and benefits set forth in
Section 3 hereof with respect to such a termination].
(f) Notice of Termination. Any purported termination of the
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Executive's employment with the Company shall be communicated by a Notice
of Termination to the Executive, if such termination is by the Company, or
to the Company, if such termination is by the Executive. For purposes of
this Agreement, "Notice of Termination" shall mean a written notice which
shall indicate the specific termination provision in this Agreement relied
upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment
under the provisions so indicated. For purposes of this Agreement, no
purported termination of Executive's employment with the Company shall be
effective without such a Notice of Termination having been given.
(g) Dispute Resolution. Any disputes arising from the operation
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of this Agreement, including, but not necessarily being limited to, the
manner of giving the Notice of Termination, the reasons or cause for
Executive's termination or the amount of severance compensation due to
Executive subsequent to Executive's termination, shall be resolved solely
by arbitration. In the event that any such dispute, after notice thereof
is given to the other party, in writing, is not able to be resolved by
mutual agreement of the parties within sixty (60) days of the giving of
such notice, Executive and the Company hereby agree to promptly submit such
a dispute to binding arbitration in accordance with the rules of the
American Arbitration Association, such arbitration to be held in the
metropolitan area
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nearest to, and in the same country as, Executive's place of residence, and
further agree to be fully bound by the findings of such arbitration.
3. Compensation Upon Termination After a Change in Control.
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(a) If within three (3) years after a Change in Control, the
Executive's employment by the Company shall be terminated by the Company
for any reason other than (i) the Executive's Disability, (ii) the
Executive's Retirement, or (iii) for Cause, or if within three (3) years
after a Change in Control, the Executive terminates his employment for Good
Reason, the Company shall (subject only to any applicable payroll and other
taxes required to be withheld) pay or cause to be paid to the Executive, a
lump sum cash amount equal to 2.99 times the sum of (i) Executive's base
salary (including the annual amount of any automobile allowance) immediately
prior to the Change in Control and (ii) the highest bonus paid to the Executive
under the Company's executive incentive compensation plans during the three
years preceding the Change in Control. In addition, Executive shall be entitled
to (i) continued medical, dental and life insurance coverage for Executive and
executive's eligible dependents on the same basis as in effect prior to
Executive's termination of employment until the earlier of (A) the third
anniversary of Executive's termination or (B) the commencement of comparable
coverage with a subsequent employer; provided, however, that such continued
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coverage shall not count against any continued coverage required by law; (ii)
payment, in a cash lump sum, of all amounts deferred by Executive under any non-
qualified plan of deferred compensation maintained by the Company
(notwithstanding the payment provisions of any such plans to the contrary)
and any accrued but unused vacation time and (iii) three years of age and
service credit for all purposes under all retirement plans of the Company;
provided, however, that to the extent any increase in benefits which would
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result from such additional age and service credits could not be paid under
the terms of any plan, the amount of such increase shall be calculated
under the terms of each such plan and paid directly by the Company in the
same form and at the same time that the benefits under each such plan are
otherwise paid.
(b) Gross Up. In the event it shall be determined that any
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payment, benefit or distribution (or combination thereof) by the Company or
one or more trusts established by the Company for the benefit of its
employees, to or for the benefit of Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement, or
under the terms of any other plan, program agreement or arrangement) (a
"Payment") would be subject to the excise tax imposed by Section 4999 of
the Code or any interest or penalties are incurred by Executive with
respect to such excise tax (such excise tax, together with any such
interest and penalties, hereinafter collectively referred to as the "Excise
Tax"), Executive shall be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount such that after payment by Executive of
all taxes (including any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and any interest
and penalties imposed with respect thereto) and the Excise Tax imposed upon
the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.
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(c) Subject to the provisions of Section 3(d), all
determinations required to be made under this Section 3, including whether
and when a Gross-Up Payment is required and the amount of such Gross-Up
Payment and the assumptions to be utilized in arriving at such
determination, shall be made by a nationally recognized certified public
accounting firm as may be designated by Executive (the "Accounting Firm")
which shall provide detailed supporting calculations both to the Company
and Executive within fifteen (15) business days of the receipt of notice
from Executive that there has been a Payment, or such earlier time as is
requested by the Company. All fees and expenses of the Accounting Firm
shall be borne solely by the Company. Any Gross-Up Payment shall be paid
by the Company to Executive within five (5) days after the receipt of the
Accounting Firm's determination.
(d) As soon as practicable, Executive shall notify the Company
in writing of any claim by the Internal Revenue Service that, if
successful, would require the payment by the Company of the Gross-Up
Payment. If the Company notifies Executive in writing that it desires to
contest such claim, Executive shall cooperate in all reasonable ways with
the Company in such contest and the Company shall be entitled to
participate in all proceedings relating to such claim; provided, however,
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that the Company shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with
such contest and shall indemnify and hold Executive harmless, on an after-
tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation
and payment of costs and expenses. Without limitation on the foregoing
provisions of this Section 3, the Company shall control all proceedings
taken in connection with such contest and, at its sole option, may pursue
or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at
its sole option, either direct Executive to pay the tax claimed and xxx for
a refund or contest the claim in any permissible manner, and Executive
agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as the Company shall determine; provided, however,
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that if the Company directs Executive to pay such claim and xxx for a
refund, the Company shall advance the amount of such payment to Executive,
on an interest-free basis, and shall indemnify and hold Executive harmless,
on an after-tax basis, from any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed with respect to such
advance or with respect to any imputed income with respect to such advance;
and provided, further, that if Executive is required to extend the statute
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of limitations to enable the Company to contest such claim, Executive may
limit this extension solely to such contested amount. The Company's
control of the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and Executive shall be entitled
to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
4. Obligations Absolute; No Effect On Other Rights.
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(a) The obligations of the Company to make the payment to the
Executive, and to make the arrangements, provided for herein shall be
absolute and unconditional and shall not be reduced by any circumstances,
including without limitation
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any setoff, counterclaim, recoupment, defense or other right which the
Company may have against the Executive or any third party at any time.
(b) The provision of this Agreement, and any payment provided
for herein, shall not supersede or in any way limit the rights, benefits,
duties or obligations which the Executive may now or in the future have
under any benefit, incentive or other plan or arrangement of the Company or
any other agreement with the Company.
5. Not an Employment Agreement. This Agreement is not, and
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nothing herein shall be deemed to create, a contract of employment between
the Executive and the Company. The Company may terminate the employment of
the Executive by the Company at any time, subject to the terms of any
employment agreement or arrangement between the Company and the Executive
that may then be in effect.
6. Term of Agreement. This Agreement shall commence on the
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date hereof and shall continue in effect for a period of three (3) years.
Any renewal of this Agreement shall be by means of a new Agreement, in
writing, executed with the same formality as this Agreement and, on behalf
of the Company, by an officer duly authorized by the Board of Directors to
so enter into such a renewal of the Agreement. Notwithstanding, however,
the requirement for a new Agreement, in writing, for a renewal of this
Agreement subsequent to its initial three-year term, if a Change in Control
shall have occurred during the initial term of this Agreement, this
Agreement shall continue in effect for a period of 36 months beyond the
date of such Change in Control.
7. Successors; Binding Agreement, Assignment.
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(a) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business of the Company, by agreement to
expressly, absolutely and unconditionally assume 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. Failure
of the Company to obtain such agreement prior to the effectiveness of any
such succession shall be a material breach of this Agreement and shall
entitle the Executive to terminate the Executive's employment with the
Company or such successor for Good Reason immediately prior to or at any
time after such succession. As used in this Agreement, "Company" shall
mean (i) the Company as hereinbefore defined, and (ii) any successor to all
or substantially all of the Company's business or assets which executes and
delivers an agreement provided for in this Section 7(a) or which otherwise
becomes bound by all the terms and provisions of this Agreement by
operation of law, including any parent or subsidiary of such a successor.
(b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any amount would be payable to
the 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
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Agreement to the Executive's devisee, legatee or other designee or, if
there be no such designee, to the Executive's estate. Neither this
Agreement nor any right arising hereunder may be assigned or pledged by the
Executive.
8. Notice. For purpose of this Agreement, notices and all
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other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when personally delivered or when
mailed United States certified or registered mail, return receipt
requested, postage prepaid, address to (i) the respective addresses set
forth on the first page of this Agreement, provided that all notices to the
Company shall be directed to the attention of the Committee with a copy
directed to the Secretary of the Company, or (ii) such other address for a
party as such party may have furnished to the other in writing in
accordance with this Section 8, except that notices of change of address
shall be effective only upon receipt.
9. Expenses. In addition to all other amounts payable to the
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Executive under this Agreement, the Company shall pay or reimburse the
Executive for all costs and expenses (including without limitation, any and
all court costs and attorneys' fees and expenses) incurred by the Executive
in connection with or as a result of any claim, action or proceeding
brought by the Company or the Executive with respect to or arising out of
this Agreement or any provision hereof; unless, in the case of an action
brought by the Executive, it is determined by an arbitrator or by a court
of competent jurisdiction that such action was frivolous and was not
brought in good faith.
10. Confidentiality. The Executive shall retain in confidence
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any and all confidential information concerning the Company and its
respective business which is now known or hereafter becomes known to the
Executive, except information (i) ascertainable or obtained from public
information, (ii) received by the Executive at any time after the
Executive's employment by the Company shall have terminated, from a third
party not employed by or otherwise affiliated with the Company or (iii)
which is or becomes known to the public by any means other than a breach of
this Section 10. Upon termination of employment, the Executive will not
take or keep any proprietary information or documentation belonging to the
Company.
11. Non-Competition. The Executive covenants and agrees that,
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during the Executive's employment and for a period of one (1) year after
termination of employment subsequent to a Change in Control, the Executive
will not directly or indirectly own, operate, manage, consult with,
control, participate in the management or control of, be employed by,
maintain or continue any interest whatsoever in any enterprise that
designs, manufactures, distributes, markets or promotes medical devices or
their components in competition with the Company, in any technical area of
expertise in which the Executive was involved during the year prior to
termination of employment, without the written consent of an officer of the
Company. The Executive further agrees that after termination of
employment, the Executive will not, either directly or indirectly or in
concert with others, seek to influence any employee to leave the Company's
employment. The Executive further acknowledges that a lawsuit for damages
for any of the provisions of paragraph 11 of this Agreement will be
inadequate and agrees that the Company is entitled
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to injunctive relief in case of any such breach. If any part of this
Agreement is held to be invalid or unenforceable, such holding will not
affect any other part of the Agreement. If, moreover, any part of this
Agreement is for any reason held to be excessively broad as to time,
duration, geographical scope, activity or subject, it will be construed by
limiting or reducing it, so as to be enforceable to the extent compatible
with the applicable law as it then exists.
12. Miscellaneous. No provision of this Agreement may be
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modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by the Executive and such officer
of the Company as shall be specifically designated by the Committee or by
the Board of Directors of the Company. No waiver by either party, at any
time, of any breach by the other party of, or of compliance by the other
party with, any condition or provision of this Agreement to be performed or
complied with by such other party shall be deemed a waiver of any similar
or dissimilar provision or condition of this Agreement or any other breach
of or failure to comply with the same condition or provision at the same
time or at any prior or subsequent 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 Florida
without giving effect to its conflict of laws rules.
13. Severability. If any one or more of the provisions of this
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Agreement shall be held to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions of this
Agreement shall not be affected thereby. To the extent permitted by
applicable law, each party hereto waives any provision of law which renders
any provision of this Agreement invalid, illegal or unenforceable in any
respect.
14. Governing Law. This Agreement shall be governed by and
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construed in accordance with the laws of the State of Florida.
15. Amendment/Waiver. This Agreement shall not be amended,
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altered, or modified except by an instrument in writing duly executed by
the parties hereto. Neither the waiver by either of the parties hereto of
a breach of or a default under any of the provisions of this Agreement, nor
the failure of either of the parties, on one or more occasions, to enforce
any of the provisions of this Agreement or to exercise any right or
privilege hereunder, shall thereafter be construed as a waiver of any
subsequent breach or default of a similar nature, or as a waiver of any
such provisions, rights or privileges hereunder.
16. Counterparts. This Agreement may be executed in two or more
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counterparts, each of which shall be an original and all of which shall be
deemed to constitute one and the same instrument.
17. Entire Agreement. This Agreement constitutes the entire
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agreement between the parties hereto with respect to the subject matter
hereof, and supersedes all prior
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oral or written agreements, commitments or understanding with respect to
the matters provided for herein.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
CORDIS CORPORATION
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Witnesses:
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Name:
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Title:
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Executive
