CHANGE IN CONTROL SEVERANCE AGREEMENT
Exhibit 10.1
This Change in Control Severance Agreement (this “Agreement”), effective as of
December 12, 2008 is between Synovis Life Technologies, Inc., a Minnesota corporation ( “Parent
Corporation”), on its behalf and on behalf of all of its Affiliates (collectively, and if the
context requires, each individually, referred to herein as the “Company”), located at 0000
Xxxxxxxxxx Xxxxxx X., Xx. Xxxx, Xxxxxxxxx 00000 and , an individual residing at
(the “Executive”).
A. The Executive is currently employed by the Company in an executive or senior management
position.
B. The Board considers the operation of the Company to be of critical importance to the Parent
Corporation and therefore the establishment and maintenance of a sound and vital management team of
the Company is essential to protecting and enhancing the best interests of the Parent Corporation
and its shareholders.
C. In this connection, the Board recognizes that the possibility of a Change in Control may
arise and that such possibility and the uncertainty and questions which such transaction may raise
among key management personnel of the Company and its subsidiaries could result in the departure or
distraction of such management personnel to the detriment of the Parent Corporation and its
shareholders.
D. The Board has determined that appropriate steps should be taken to minimize the risk that
Company executive management will depart prior to a Change in Control, thereby leaving the Company
without adequate executive management personnel during such a critical period, and to reinforce and
encourage the continued attention and dedication of members of the Company’s executive management
to their assigned duties without distraction in circumstances arising from the possibility of a
Change in Control.
E. The Board recognizes that continuance of the Executive’s position with the Company involves
a substantial commitment to the Company in terms of the Executive’s personal life and professional
career and the possibility of foregoing present and future career opportunities, for which the
Company receives substantial benefits.
F. To induce the Executive to remain in the employ of the Company, this Agreement, which has
been approved by the Board, sets forth the benefits that the Company agrees will be provided to the
Executive in the event of a Change in Control under the circumstances described below.
G. The Company and the Executive intend that the benefits provided under this Agreement will
comply, in form and operation, with the requirements of Section 409A of the Code and this Agreement
will be construed and administered in a manner that is consistent with and gives effect to such
intention.
H. Certain capitalized terms that are used in this Agreement are defined in Exhibit A, which
is an integral part of this Agreement.
Accordingly, the Company and the Executive each intending to be legally bound, agree as
follows:
1. Term of Agreement. This Agreement is effective immediately and will continue in
effect only so long as the Executive remains employed by the Company. This Agreement will
automatically terminate upon the Executive’s Termination of Employment with the Company, except for
a Termination of Employment contemplated by Section 2, in which case this Agreement will remain in
effect until the date on which the Company’s obligations to the Executive arising under or in
connection with this Agreement have been satisfied in full. Notwithstanding the foregoing, this
Agreement shall terminate immediately (and no benefit will be payable under this Agreement) in the
event, prior to a Change in Control, and in a transaction that is not a Change in Control, either
the Company ceases to be an Affiliate of the Parent Corporation or sells all or substantially all
of its assets, in one or a series of related transactions, to any Person other than an Affiliate of
the Parent Corporation.
2. Benefits upon a Change in Control Termination. The Executive will become entitled
to the benefits described in this Section 2 on account of a Termination of Employment if and only
if (i) the Company terminates the Executive’s employment for any reason other than for Cause, or
the Executive terminates the Executive’s employment with the Company for Good Reason, and (ii) the
Termination of Employment occurs either within the period beginning on the date of a Change in
Control and ending on the last day of the first full calendar month following the second
anniversary date of the Change in Control or prior to a Change in Control if the Executive’s
Termination of Employment was either a condition of the Change in Control or was at the request or
insistence of a Person related to the Change in Control.
(a) Cash Payment. The Company will make a lump-sum cash payment to the
Executive in an amount equal to two (2) times the sum of (i) the Executive’s annual Base
Pay, plus (ii) 100% of the Executive’s target bonus established for the year during which
the Change in Control occurs; provided, however, that notwithstanding the provisions of the
previous sentence, if the Executive’s Termination of Employment is pursuant to Appendix A,
paragraph 12(h), the lump-sum cash payment will be equal to one (1) times the sum of (i)
the Executive’s annual Base Pay, plus (ii) 100% of the Executive’s target bonus established
for the year during which the Change in Control occurs. As a condition to receiving such
payment, the Executive must execute and deliver, no later than five (5) days after the
maximum review period that applies to the Executive at the Termination Date under applicable
employment law, and not subsequently rescind, a release of claims under applicable
employment laws. Such release will be provided to the Executive by the Company within five
(5) days of the Executive’s Date of Termination, and will be substantially in the form
attached hereto as Exhibit B, with only such changes as may be necessary to conform
to subsequent changes in applicable employment laws. Payments under this Section 2(a) will
be paid within ten (10) of the later of the date that the Executive’s rights to rescind such
release expire under applicable employment laws, or, if applicable, the date provided in
Section 2(f).
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(b) Definitions. For purposes of this section, the “Continuation
Period” is the period beginning on the Executive’s Date of Termination and ending on (x)
the last day of the 24th month that begins after the Executive’s Date of Termination or, if
earlier, (y) the date after the Executive’s Date of Termination on which the Executive first
becomes eligible to participate as an employee in a plan of another employer providing group
health and dental benefits to the Executive and the Executive’s eligible family members and
dependents, which plan does not contain any exclusion or limitation with respect to any
pre-existing condition of the Executive or any eligible family member or dependent who would
otherwise be covered under the Company’s plan but for this clause (y).
(c) Group Health Plans. If the Executive elects COBRA coverage under the
Company’s group health and/or dental plans, then for each month of the Continuation Period,
the Company will pay the Executive an amount equal to the excess of (i) the portion of the
monthly cost for the Executive’s coverage under the Company’s group health and/or dental
plans that was borne by the Company immediately prior to the Executive’s Termination of
Employment or, if greater, immediately prior to the Change in Control (subject to the rule
for coverage changes discussed below) over (ii) the portion of the monthly cost for the
Executive’s coverage under the Company’s group health and/or dental plans that is borne by
the Company during the Continuation Period. The Executive’s coverage will be deemed to
include any Company contribution to a Health Savings Account (or similar arrangement) for
the Executive. If the level of the Executive’s coverage changes during the Continuation
Period, as, for example, from single to family coverage or to no coverage, the amount which
the Company shall pay will be determined as if the new coverage level had been the level of
coverage in effect immediately prior to the Termination of Employment or Change in Control,
as the case may be. The Executive shall be entitled to elect health care continuation
coverage under the Company’s group health and/or dental plans for up to 12 months beyond the
end of the 18-month COBRA period if he or she has not become eligible to participate as an
employee in a plan of another employer providing group health and dental benefits to the
Executive and the Executive’s eligible family members and dependents, which plan does not
contain any exclusion or limitation with respect to any pre-existing condition of the
Executive or any eligible family member or dependent who would otherwise be covered under
the Company’s plan but for this clause. If COBRA continuation coverage is not available to
the Executive during any portion of the Continuation Period (other than by reason of his or
her failure to elect COBRA continuation coverage or to pay the required premiums for such
coverage), the Company will provide comparable medical benefits pursuant to an alternative
arrangement, such as an individual medical insurance contract, and such alternative benefits
will be treated as part of the Company’s health and/or dental plan. Any reimbursement made
under this Section 2(c) shall be made on or before the last day of the calendar month
following the calendar month in which any continuation coverage payment was incurred.
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(d) Life Insurance. In addition, during each month of the Continuation Period,
the Executive shall be entitled to receive life insurance coverage substantially equivalent
to the coverage Executive had on the day immediately prior to his or her Termination of
Employment, including coverage then in effect for Executive’s spouse and dependents.
Executive shall be required to pay no more for such life insurance than
Executive paid as an active employee immediately before his or her Termination of
Employment. In order to continue life insurance coverage, Executive must timely elect
continuation or the portability option available under the Company’s group life insurance
policy or policies and pay the full premium for such coverage following Termination of
Employment. The Company will reimburse Executive at least monthly for the amount by which
such life insurance premium exceeds the amount Executive paid for such coverage as an active
employee immediately prior to his or her Termination of Employment
(e) Tax Gross-Up. To the extent the Executive incurs a tax liability
(including foreign, federal, state and local taxes) in connection with a benefit provided
pursuant to Section 2(c) which the Executive would not have incurred had the Executive been
an active employee of the Company participating in the Company’s group health and dental
plans, the Company will make a payment to the Executive in an amount equal to such tax
liability plus an additional amount sufficient to permit the Executive to retain a net
amount after all taxes equal to the initial tax liability in connection with the benefit.
The payment pursuant to this Section 2(e) will be made within ten (10) days after the
Executive’s remittal of a written request for payment accompanied by a statement indicating
the basis for and amount of the Executive’s tax liability, but in no event later than
December 31 of the calendar year next following the calendar year in which the related taxes
are remitted to the appropriate taxing authority.
(f) Six Month Suspension for Specified Key Employees. Notwithstanding the
foregoing, if, at the time of his or her Termination of Employment, the Executive is a
Specified Employee, then, in addition to the conditions specified therein, no payment under
Section 2(a) shall be made until the first day after the end of the six (6) month period
following the Executive’s Termination of Employment, or, if earlier, upon the Executive’s
death. If any such suspended payment is not made within ten (10) days of the end of such
six month period, the Company will pay the Executive interest, equal to the applicable
Federal rate (AFR) determined under Code Section 1274(d) in effect for each month, from the
date of Termination of Employment through the date of payment.
3. Stock Option Acceleration. If a Change in Control occurs, regardless of whether the
acquiring entity or Successor assumes or replaces the stock options or stock awards granted under
any Benefit Plan and then held by the Executive and regardless of whether the Executive continues
to be employed by the Company after the Change in Control, then all such stock options or stock
awards which are unvested or restricted shall vest and be immediately exercisable in full, or
become unrestricted, as the case may be, as of the date of the Change in Control and,
notwithstanding the provisions of any Benefit Plan, shall, in the case of options, remain
exercisable until two years after the date of the Change in Control or the date of the Executive’s
Termination of Employment with the Company, whichever is later, but in no event after the
expiration date of any stock option.
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4. Gross-Up Payments. If the Executive becomes entitled to payments and benefits
following a Change in Control under Section 2 or the vesting of any stock options accelerate
following a Change in Control under Section 3, any stock option agreement or certificate or
otherwise, the Company will cause its independent auditors promptly to review, at the Company’s
sole expense, the applicability of Code Section 4999 to any payment or distribution
of any type by the Company to or for the Executive’s benefit, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement, any stock option agreement or
certificate or otherwise (the “Total Payments”). If the auditor determines that the Total
Payments result in an excise tax imposed on the Executive by Code Section 4999 or any comparable
state or local law (such excise tax referred to as the “Excise Tax”), the Company will make
an additional cash payment (a “Gross-Up Payment”) to the Executive equal to an amount such
that after payment by the Executive of all the taxes imposed on the Executive, including any Excise
Tax, as a result of the Gross-Up Payment, the Executive would retain an amount of the Gross-Up
Payment equal to the Excise Tax as a result of the Total Payments. If no determination of the
Excise Tax is made by the Company’s auditors prior to the time the Executive is required to file a
tax return reflecting the Total Payments, the Executive will be entitled to receive from the
Company a Gross-Up Payment calculated on the basis of the Excise Tax the Executive reported in such
tax return. The payment(s) pursuant to this Section 4 will be made within ten (10) days after the
Executive’s remittal of a written request for payment accompanied by a statement indicating the
basis for and the amount of the Executive’s actual tax liability. If any tax authority determines
that a greater Excise Tax should be imposed upon the Total Payments than is determined by the
Company’s independent auditors or reflected in the Executive’s tax return pursuant to this Section
4, the Executive will be entitled to receive from the Company the full Gross-Up Payment calculated
on the basis of the amount of Excise Tax determined to be payable by such tax authority within ten
(10) days after the Executive notifies the Company of such determination. Notwithstanding the
foregoing, reimbursement of the Gross-Up Payment will be made not later than the end of the
calendar year next following the calendar year in which the Executive remits the related taxes to
the appropriate taxing authority (either directly or through tax withholdings), provided if an
additional Gross-Up Payment is payable following an audit or litigation and no additional taxes are
remitted by the Executive, reimbursement by the Company shall be made by the end of the calendar
year next following the calendar year in which the audit is completed or there is a final
nonappealable settlement or other resolution of the litigation. Notwithstanding any other
provision of this Section 4, the Company may, in its sole discretion, at anytime prior to the time
the Executive remits the related taxes to the appropriate taxing authority, withhold and pay over
to the Internal Revenue Service or any other applicable taxing authority, for the benefit of the
Executive, all or any portion of the Gross-Up Payment and the Executive hereby consents to such
withholding.
5. Indemnification. Following a Change in Control, the Company will indemnify and
advance expenses to the Executive for damages, costs and expenses (including, without limitation,
judgments, fines, penalties, settlements and reasonable fees and expenses of the Executive’s
counsel) (the “Expenses”) incurred in connection with all matters, events and transactions
relating to the Executive’s service to or status with the Company or any other corporation,
employee benefit plan or other Person for which the Executive served at the request of the Company
to the extent that the Company would have been required to do so under applicable law, corporate
articles, bylaws or agreements or instruments of any nature with or covering the Executive,
including any indemnification agreement between Parent Corporation and the Executive, as in effect
immediately prior to the Change in Control and to any further extent as may be determined or agreed
upon following the Change in Control.
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6. Miscellaneous.
(a) Successors. The Parent Corporation must seek to have any Successor, by
agreement in form and substance satisfactory to the Executive, assent to the fulfillment by
such Successor of the Company’s obligations under this Agreement. Failure of the Company to
obtain such assent at least three business days prior to the time a Person becomes a
Successor (or where the Parent Corporation does not have at least three business days’
advance notice that a Person may become a Successor, within one business day after having
notice that such Person may become or has become a Successor) will constitute Good Reason
for termination by the Executive of the Executive’s employment. The date on which any such
succession becomes effective will be deemed the Date of Termination, and Notice of
Termination will be deemed to have been given on that date. A Successor has no rights,
authority or power with respect to this Agreement prior to a Change in Control.
(b) Binding Agreement. This Agreement inures to the benefit of, and is
enforceable by, the Executive, the Executive’s personal and legal representatives,
executors, administrators, successors, heirs, distributees, devisees and legatees. If the
Executive dies while employed by the Company or while any amount would still be payable to
the Executive under this Agreement if the Executive had continued to live, all such amounts,
unless otherwise provided in this Agreement, will be paid in accordance with the terms of
this Agreement to the Executive’s devisee, legatee or other designee or, if there be no such
designee, to the Executive’s estate.
(c) No Mitigation. The Executive will not be required to mitigate the amount of
any benefits the Company becomes obligated to provide to the Executive in connection with
this Agreement by seeking other employment or otherwise. The benefits to be provided to the
Executive in connection with this Agreement may not be reduced, offset or subject to
recovery by the Company by any benefits the Executive may receive from other employment or
otherwise.
(d) No Setoff. The Company has no right to setoff benefits owed to the
Executive under this Agreement against amounts owed or claimed to be owed by the Executive
to the Company under this Agreement or otherwise.
(e) Taxes. All benefits to be provided to the Executive in connection with this
Agreement will be subject to required withholding of federal, state and local income, excise
and employment-related taxes. The Company’s good faith determination with respect to its
obligation to withhold such taxes relieves it of any obligation that such amounts should
have been paid to the Executive.
(f) Notices. For the purposes of this Agreement, notices and all other
communications provided for in, or required under, this Agreement must be in writing and
will be deemed to have been duly given when personally delivered or when mailed by United
States registered or certified mail, return receipt requested, postage prepaid and addressed
to each party’s respective address set forth on the first page of this Agreement (provided
that all notices to the Company must be directed to the attention of the President), or to
such other address as either party may have furnished to the other in
writing in accordance with these provisions, except that notice of change of address
will be effective only upon receipt.
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(g) Disputes. If the Executive so elects, any dispute, controversy or claim
arising under or in connection with Sections 2, 3, 4 or 5 after a Change in Control will be
settled exclusively by binding arbitration administered by the American Arbitration
Association in Minneapolis, Minnesota in accordance with the Commercial Arbitration Rules of
the American Arbitration Association then in effect; provided that the Executive may seek
specific performance of the Executive’s right to receive benefits until the Date of
Termination during the pendency of any dispute or controversy arising under or in connection
with this Agreement. Judgment may be entered on the arbitrator’s award in any court having
jurisdiction. If any dispute, controversy or claim for damages arising under or in
connection with Sections 2, 3, 4 or 5 is settled by arbitration, the Company will pay, or if
elected by the Executive, reimburse, all fees, costs and expenses incurred by the Executive
(including reasonable attorneys’ fees) related to such arbitration unless the arbitrators
decide that the Executive’s claim was frivolous or advanced by the Executive in bad faith.
If the Executive does not elect arbitration, the Executive may pursue all available legal
remedies. The Company will pay, or if elected by the Executive, reimburse the Executive
for, all fees, costs and expenses incurred by the Executive (including reasonable attorneys’
fees) in connection with any actual, threatened or contemplated litigation relating to
Sections 2, 3, 4 or 5 to which the Executive is or reasonably expects to become a party,
whether or not initiated by the Executive, if the Executive is successful in recovering any
benefit under Sections 2, 3,4 or 5 as a result of such action. The Company will not assert
in any dispute or controversy with the Executive arising under or in connection with this
Agreement the Executive’s failure to exhaust administrative remedies. For purposes of this
Section 6(g) only, “reasonable attorneys fees” will be calculated on an hourly basis by
multiplying the attorney’s reasonable hourly rates by the reasonable amount of time expended
in the Executive’s representation. The “reasonable rate” must take into account the
experience and skill of the attorney(s) representing the Executive and comparative rates of
other attorneys in the relevant legal market with commensurate experience and skill.
(h) Effect of Benefits on Other Severance Plans. Unless otherwise agree by the
Company, in the event the Executive receives any payment under the terms of this Agreement,
the Executive will not be eligible to receive benefits under any other change in control
severance pay plan sponsored or maintained by the Company or agreement to which the
Executive is a party.
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(i) Related Agreements and Other Arrangements. This Agreement, including
Exhibit A attached hereto and incorporated as an integral part of this Agreement,
constitutes the entire agreement of the parties with respect to the subject matter hereof,
and no agreements or representations, oral or otherwise, express or implied, with respect to
the subject matter of this Agreement have been made by any party which are not expressly set
forth in this Agreement. To the extent that any provision of any Other Arrangement limits,
qualifies or is inconsistent with any provision of this Agreement, then for purposes of this
Agreement, while such Other Arrangement remains in force, the provision of this Agreement
will control and such provision of such Other Arrangement
will be deemed to have been superseded, and to be of no force or effect, as if such
Other Arrangement had been formally amended to the extent necessary to accomplish such
purpose. Nothing in this Agreement prevents or limits the Executive’s continuing or future
participation in any Other Arrangement for which the Executive may qualify, and nothing in
this Agreement limits or otherwise affects the rights the Executive may have under any Other
Arrangement. Amounts that are vested benefits or which the Executive is otherwise entitled
to receive under any Other Arrangement at or subsequent to the Date of Termination will be
payable in accordance with such Other Arrangement.
(j) No Employment or Service Contract. Nothing in this Agreement is intended to
provide the Executive with any right to continue in the employ of the Company for any period
of specific duration or interfere with or otherwise restrict in any way the Executive’s
rights or the rights of the Company.
(k) Payment; Assignment. Benefits payable under this Agreement will be paid
only from the general assets of the Company. No Person has any right to or interest in any
specific assets of the Company by reason of this Agreement. To the extent benefits under
this Agreement are not paid when due to any individual, he or she is a general unsecured
creditor of the Company with respect to any amounts due. Benefits payable pursuant to this
Agreement and the right to receive future benefits may not be anticipated, alienated, sold,
transferred, assigned, pledged, encumbered or subject to any charge.
(l) Late Payments. Except as provided under Section 2(f), benefits not paid
under this Agreement when due will accrue interest at the rate of 12% per year, or, if
lesser, the maximum rate permitted under applicable law. Such interest shall be paid on the
5th day of the month next following the month during which such interest accrued.
(m) Survival. The respective obligations of, and benefits afforded to, the
Company and the Executive which by their express terms or clear intent survive termination
of the Executive’s employment with the Company or termination of this Agreement, as the case
may be, will survive termination of the Executive’s employment with the Company or
termination of this Agreement, as the case may be, and will remain in full force and effect
according to their terms.
(n) Amendments; Waivers. No provision of this Agreement may be modified, waived
or discharged unless such modification, waiver or discharge is agreed to in a writing signed
by the Executive and a duly authorized officer of the Company. No waiver by any party to
this Agreement at any time of any breach by another party to this Agreement, or of
compliance with any condition or provision of this Agreement to be performed by such party,
will be deemed a waiver of similar or dissimilar provisions or conditions at the same or at
any prior or subsequent time.
(o) Governing Law. This Agreement and the legal relations among the parties as
to all matters, including, without limitation, matters of validity, interpretation,
construction, performance and remedies, will be governed by and construed exclusively in
accordance with the internal laws of the State of Minnesota (without regard to the conflict
of laws principles of any jurisdiction).
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(p) Further Assurances. The parties to this Agreement agree to perform, or
cause to be performed, such further acts and deeds and to execute and deliver or cause to be
executed and delivered, such additional or supplemental documents or instruments as may be
reasonably required by the other party to carry into effect the intent and purpose of this
Agreement.
(q) Interpretation. The invalidity or unenforceability of all or any part of
any provision of this Agreement will not affect the validity or enforceability of the
remainder of such provision or of any other provision of this Agreement, which will remain
in full force and effect.
(r) Counterparts. This Agreement may be executed in several counterparts, each
of which will be deemed to be an original, but all of which together will constitute one and
the same instrument.
(s) Severability and Judicial Modification. If any portion of this Agreement is
adjudicated to be invalid or unenforceable, then a court of competent jurisdiction shall
amend, modify or delete that portion thus adjudicated invalid or unenforceable. If any
portion is deemed unenforceable by virtue of its scope or limitation, the Company and the
Executive agree that a court of competent jurisdiction shall modify such provision to make
it enforceable to the fullest extent permitted by Minnesota law.
IN WITNESS WHEREOF, the Company and the Executive have executed this Agreement effective as of
the date first above written.
| COMPANY | EXECUTIVE | |||||||
By: |
||||||||
| Name: | [Name of Executive] | |||||||
| Title: | ||||||||
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Exhibit A
DEFINITIONS
For purposes of the Agreement, the following terms will have the meaning set forth below in
this Exhibit A unless the context clearly requires otherwise. Terms defined elsewhere in the
Agreement will have the same meaning throughout the Agreement.
1. “Affiliate” means any person with whom the Company would be considered a single
employer under Sections 414(b) and 414(c) of the Code, namely (i) any corporation at least eighty
percent (80%) of whose outstanding securities ordinarily having the right to vote at elections of
directors is owned directly or indirectly by the Parent Corporation or (ii) any other form of
business entity in which the Parent Corporation, directly or indirectly, owns eighty percent (80%)
or more of the controlling interests in such entity.
2. “Base Pay” means the Executive’s annual base salary from the Company at the rate in
effect immediately prior to a Change in Control or at the time Notice of Termination is given,
whichever is greater. Base Pay includes only regular cash salary and is determined before any
reduction for deferrals pursuant to any nonqualified deferred compensation plan or arrangement,
qualified cash or deferred arrangement or cafeteria plan.
3. “Benefit Plan” means any
(a) employee benefit plan as defined in Section 3(3) of ERISA;
(b) cafeteria plan described in Code Section 125;
(c) plan, policy or practice providing for paid vacation, other paid time off or
short-or long-term profit sharing, bonus or incentive payments or perquisites; or
(d) stock option, stock purchase, restricted stock, phantom stock, stock appreciation
right or other equity-based compensation plan with respect to the securities of any
Affiliate
that is sponsored, maintained or contributed to by the Parent Corporation or the Company for the
benefit of employees (and/or their families and dependents) generally or the Executive in
particular (and/or the Executive’s family and dependents).
4. “Board” means the board of directors of the Parent Corporation duly qualified and
acting at the time in question. On and after the date of a Change in Control, any duty of the Board
in connection with this Agreement is nondelegable and any attempt by the Board to delegate any such
duty is ineffective.
5. “Cause” means:
(a) the Executive’s gross misconduct that is materially and demonstrably injurious to
the Company;
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(b) the Executive’s willful and continued failure to perform substantially the
Executive’s duties with the Company (other than any such failure (i) resulting from the
Executive’s death or incapacity due to bodily injury or physical or mental illness or (ii)
relating to changes in the Executive’s duties after a Change in Control that constitute Good
Reason) after a written demand for substantial performance is delivered to the Executive by
the chair of the Board which specifically identifies the manner in which the Executive has
not substantially performed the Executive’s duties and provides for a reasonable period of
time within which the Executive may take corrective actions; or
(c) the Executive’s conviction (including a plea of nolo contendere) of willfully
engaging in illegal conduct constituting a felony or gross misdemeanor under federal or
state law which is materially and demonstrably injurious to the Company or which impairs the
Executive’s ability to perform substantially the Executive’s duties for the Company.
An act or failure to act will be considered “gross or willful” for this purpose only if
done, or omitted to be done, by the Executive in bad faith and without reasonable belief
that it was in, or not opposed to, the best interests of the Company. Any act, or failure to
act, based upon authority given pursuant to a resolution duly adopted by the Board (or a
committee thereof) or based upon the advice of counsel for the Company will be conclusively
presumed to be done, or omitted to be done, by the Executive in good faith and in the best
interests of the Company. It is also expressly understood that the Executive’s attention to
matters not directly related to the business of the Company will not provide a basis for
termination for Cause so long as the Board did not expressly disapprove in writing of the
Executive’s engagement in such activities either before or within a reasonable period of
time after the Board knew or could reasonably have known that the Executive engaged in those
activities. Notwithstanding the foregoing, the Executive may not be terminated for Cause
unless and until there has been delivered to the Executive a copy of a resolution duly
adopted by the affirmative vote of not less than a majority of the entire membership of the
Board at a meeting of the Board called and held for the purpose (after reasonable notice to
the Executive and an opportunity for the Executive, together with the Executive’s counsel,
to be heard before the Board), finding that in the good faith opinion of the Board the
Executive was guilty of the conduct set forth above in clauses (a), (b) or (c) of this
definition and specifying the particulars thereof in detail.
6. “Change in Control” shall mean that the events set forth in any one of the
following paragraphs shall have occurred:
(i) the sale, lease, exchange or other transfer, directly or indirectly, of
substantially all of the assets of the Parent Corporation (in one transaction or in
a series of related transactions) to a person or entity that is not controlled by
the Parent Corporation;
(ii) the approval by the shareholders of the Parent Corporation of any plan or
proposal for the liquidation or dissolution of the Parent Corporation;
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(iii) a merger or consolidation to which the Parent Corporation is a party if
the shareholders of the Parent Corporation immediately prior to effective date of
such merger or consolidation have “beneficial ownership” (as defined in Rule 13d-3
under the Exchange Act), immediately following the effective date of such merger or
consolidation, of securities of the surviving corporation representing (A) more
than 50%, but not more than 80%, of the combined voting power of the surviving
corporation’s then outstanding securities ordinarily having the right to vote at
elections of directors, unless such merger or consolidation has been approved in
advance by the Incumbent Directors (as defined below), or (B) 50% or less of the
combined voting power of the surviving corporation’s then outstanding securities
ordinarily having the right to vote at elections of directors (regardless of any
approval by the Incumbent Directors);
(iv) any person becomes after the effective date of the Plan the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of (A) 20% or more, but not 50% or more, of the combined voting power of the Parent
Corporation’s outstanding securities ordinarily having the right to vote at
elections of directors, unless the transaction resulting in such ownership has been
approved in advance by the Incumbent Directors, or (B) 50% or more of the combined
voting power of the Parent Corporation’s outstanding securities ordinarily having
the right to vote at elections of directors (regardless of any approval by the
Incumbent Directors);
(v) the Incumbent Directors cease for any reason to constitute at least a
majority of the Board; or
(vi) any other change in control of the Parent Corporation of a nature that
would be required to be reported pursuant to Section 13 or 15(d) of the Exchange
Act, whether or not the Parent Corporation is then subject to such reporting
requirements.
For purposes of this definition, “Incumbent Directors” of the Parent Corporation will
mean any individuals who are members of the Board on the date of this Agreement and any individual
who subsequently becomes a member of the Board whose election, or nomination for election by the
Parent Corporation’s shareholders, was approved by a vote of at least a majority of the Incumbent
Directors (either by specific vote or by approval of the Parent Corporation’s proxy statement in
which such individual is named as a nominee for director without objection to such nomination).
7. “Code” means the Internal Revenue Code of 1986, as amended (including, when the
context requires, all regulations, rulings and authoritative interpretations issued thereunder).
Any reference to a specific provision of the Code includes a reference to such provision as it may
be amended from time to time and to any successor provision.
8. “Company” means the Parent Corporation and any Affiliate.
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9. “Date of Termination” following a Change in Control (or prior to a Change in
Control if the Executive’s termination was either a condition of the Change in Control or was at
the request or insistence of any Person related to the Change in Control) means:
(a) if the Executive’s employment is to be terminated by the Executive, the date
specified in the Notice of Termination which in no event may be a date more than 15 days
after the date on which Notice of Termination is given unless the Company agrees in writing
to a later date;
(b) if the Executive’s employment is to be terminated by the Company for Cause, the
date specified in the Notice of Termination; or
(c) if the Executive’s employment is terminated by reason of the Executive’s death, the
date of the Executive’s death; or
(d) if the Executive’s employment is to be terminated by the Company for any reason
other than Cause or the Executive’s death, the date specified in the Notice of Termination,
which in no event may be a date earlier than 15 days after the date on which a Notice of
Termination is given, unless the Executive expressly agrees in writing to an earlier date.
In the case of termination by the Company of the Executive’s employment for Cause, if
the Executive has not previously expressly agreed in writing to the termination, then within
the 30-day period after the Executive’s receipt of the Notice of Termination, the Executive
may notify the Company that a dispute exists concerning the termination, in which event the
Date of Termination will be the date set either by mutual written agreement of the parties
or by the judge or arbitrators in a proceeding as provided in Section 6(g) of the Agreement.
During the pendency of any such dispute, the Executive will continue to make the Executive
available to provide services to the Company and the Company will continue to pay the
Executive the Executive’s full compensation and benefits in effect immediately prior to the
date on which the Notice of Termination is given (without regard to any changes to such
compensation or benefits that constitute Good Reason) and until the dispute is resolved in
accordance with Section 6(g) of the Agreement. The Executive will be entitled to retain the
full amount of any such compensation and benefits without regard to the resolution of the
dispute unless the judge or arbitrators decide(s) that the Executive’s claim of a dispute
was frivolous or advanced by the Executive in bad faith.
In all cases, the Executive’s Date of Termination must be consistent with the
Executive’s Termination of Employment.
10. “ERISA” means the Employee Retirement Income Security Act of 1974, as amended. Any
reference to a specific provision of ERISA includes a reference to such provision as it may be
amended from time to time and to any successor provision.
11. “Exchange Act” means the Securities Exchange Act of 1934, as amended. Any
reference to a specific provision of the Exchange Act or to any rule or regulation thereunder
includes a reference to such provision as it may be amended from time to time and to any
successor provision.
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12. “Good Reason” means:
(a) a change in the Executive’s title(s), status, position(s), authority, duties or
responsibilities as an executive of the Company as in effect immediately prior to the Change
in Control which, in the Executive’s reasonable judgment, is material and adverse (other
than, if applicable, any such change solely attributable to the fact that the Parent
Corporation is no longer publicly owned);
(b) a reduction by the Company in the Executive’s Base Pay, or a material adverse
change in the form or timing of the payment thereof, as in effect immediately prior to the
Change in Control or as thereafter increased;
(c) the failure by the Company to cover the Executive under Benefit Plans that, in the
aggregate, provide substantially similar benefits to the Executive and/or the Executive’s
family and dependents at a substantially similar total cost to the Executive (e.g.,
premiums, deductibles, co-pays, out of pocket maximums, required contributions and the like)
relative to the benefits and total costs under the Benefit Plans in which the Executive
(and/or the Executive’s family or dependents) were participating at any time during the
90-day period immediately preceding the Change in Control;
(d) the Company requiring the Executive to be based at any office or location that is
more than thirty (30) miles further from the office or location thereof immediately
preceding a Change in Control, except for required travel on the Company’s business, and
then only to the extent substantially consistent with the business travel obligations which
the Executive undertook on behalf of the Company during the 90-day period immediately
preceding the Change in Control (without regard to travel related to or in anticipation of
the Change in Control);
(e) any refusal by the Company to continue to allow the Executive to attend to matters
or engage in activities not directly related to the business of the Company which, at any
time prior to the Change in Control, the Executive was not expressly prohibited in writing
by the Board from attending to or engaging in;
(f) the failure by the Parent Corporation to obtain from any Successor the assent to
this Agreement contemplated by Section 6(a) of the Agreement;
(g) any purported termination by the Company of the Executive’s employment that is not
properly effected pursuant to a Notice of Termination and pursuant to any other requirements
of this Agreement, and, for purposes of this Agreement, no such purported termination will
be effective; or
(h) any termination by the Executive of the Executive’s employment for any reason
during the first full calendar month following the first anniversary date of the Change in
Control.
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The Executive shall give written notice to the Company of an event or change constituting Good
Reason and his or her intent to terminate employment with the Company for Good Reason; provided,
however, that the Executive may not give such notice earlier than the ninetieth (90th) day
following the date of the Change in Control. If the Company remedies any event or change described
in subsections (a) through (e) within 30 days of such notice from the Executive, such event or
change shall not constitute Good Reason. The Executive’s continued employment does not constitute
consent to, or waiver of any rights arising in connection with, any circumstances constituting Good
Reason. The Executive’s termination of employment for Good Reason as defined above will constitute
Good Reason for all purposes of the Agreement notwithstanding that the Executive may also thereby
be deemed to have retired under any applicable benefit plan, policy or practice of the Company.
13. “Notice of Termination” means a written notice given on or after the date of a
Change in Control (unless the Executive’s termination before the date of the Change in Control was
either a condition of the Change in Control or was at the request or insistence of any Person
related to the Change in Control in which case the written notice may be given before the date of
the Change in Control) which indicates the specific termination provision in the Agreement pursuant
to which the notice is given. Any purported termination by the Company or by the Executive on or
after the date of a Change in Control (or before the date of a Change in Control if the Executive’s
termination was either a condition of the Change in Control or was at the request or insistence of
any Person related to the Change in Control) must be communicated by written Notice of Termination
to be effective; provided, however, that the Executive’s failure to provide Notice of Termination
will not limit any of the Executive’s rights under the Agreement except to the extent the Company
demonstrates that it suffered material actual damages by reason of such failure.
14. “Other Arrangement” is any Benefit Plan or other plan, policy or practice of the
Company or any other agreement between the Executive and the Company, other than this Agreement.
15. “Person” means any individual, corporation, partnership, group, association or
other person, as such term is used in Section 13(d) or Section 14(d) of the Exchange Act, other
than the Parent Corporation, any Affiliate or any Benefit Plans sponsored by the Parent Corporation
or an Affiliate.
16. The Executive is a “Specified Employee” if on the date of his or her Termination
of Employment he or she is a “key employee” (defined below), and the Company or any Affiliate has
stock that is publicly traded on an established securities market within the meaning of such term
under Section 409A(a)(2)(B) of the Code. For this purpose, Executive is a “key employee” during
the 12-month period beginning on the April 1 immediately following a calendar year, if he or she
was employed by the Company or any Affiliate and satisfied, at any time during such preceding
calendar year, the requirements of Section 416(i)(1)(A)(i), (ii) or (iii) of the Code (applied in
accordance with the regulations issued thereunder and disregarding Section 416(i)(5) of the Code).
The Executive will not be treated as a Specified Employee if he or she is not required to be
treated as a Specified Employee under Treasury Regulations issued under Section 409A of the Code.
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17. “Successor” means any Person that succeeds to, or has the practical ability to
control (either immediately or solely with the passage of time), the Parent Corporation’s business
directly, by merger, consolidation or other form of business combination, or indirectly, by
purchase of the Parent Corporation’s outstanding securities ordinarily having the right to vote at
the election of directors or all or substantially all of its assets or otherwise.
18. “Termination of Employment” means a termination of Executive’s employment
relationship with the Company and all Affiliates or such other change in the Executive’s employment
relationship with the Company and all Affiliates that would be considered a “separation from
service” under Section 409A of the Code. The Executive’s employment relationship will be treated
as remaining intact while the Executive is on a military leave, a sick leave or other bona fide
leave of absence (pursuant to which there is a reasonable expectation that the Executive will
return to perform services for the Company or an Affiliate) but only if the period of such leave
does not exceed six (6) months, or if longer, so long as the Executive retains a right to
reemployment by the Company or an Affiliate under applicable statute or by contract, provided,
however, where the Executive’s leave is due to any medically determinable physical or mental
impairment that can be expected to result in death or can be expected to last for a continuous
period of not less than six (6) months and such impairment causes the Executive to be unable to
perform the duties of his or her position of employment or any substantially similar position of
employment, a twenty-nine (29) month period of absence may be substituted for such six (6) month
period of absence. In all cases, the Executive’s Termination of Employment must constitute a
“separation from service” under Section 409A of the Code and any “separation from service” under
Section 409A of the Code shall be treated as a Termination of Employment.
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EXHIBIT B
RELEASE
| I. | Definitions. I intend all words used in this Release to have their plain meanings in ordinary English. Technical legal words are not needed to describe what I mean. Specific terms I use in this Release have the following meanings: |
| A. | “I,” “me,” “my” and “Employee” include both me, , and anyone who has or obtains any legal rights or claims through me. | ||
| B. | “Employer,” as used in this Release, shall at all times mean Synovis Life Technologies, Inc, and its parent and any related corporations, subsidiaries, affiliates, successors, predecessors, assigns, and present or former shareholders, officers, directors, agents, employees, or attorneys, whether in their individual or official capacities (collectively “Employer” or “Synovis”). | ||
| C. | “Claims” mean any and all of the actual or potential claims of any kind whatsoever I may have had, or currently may have, against Employer, regardless of whether I now know about those claims, that are in any way related to my employment with Employer or the termination of that employment. Such claims include, but are not limited to, any claims for: invasion of privacy; breach of written or oral, express or implied, contract; fraud or misrepresentation; violation of the Age Discrimination in Employment Act of 1967 (“ADEA”), 29 U.S.C. § 626, as amended, the Older Workers Benefit Protection Act of 1990 (“OWBPA”), 29 U.S.C. 626(f), Title VII of the Civil Rights Act of 1964 (“Title VII”), 42 U.S.C. § 2000e, et seq., the Americans with Disabilities Act (“ADA”), 29 U.S.C. § 2101, et seq., the Family and Medical Leave Act (“FMLA”), 29 U.S.C. § 2601 et seq., the Employee Retirement Income Security Act of 1978 (“ERISA”), as amended, 29 U.S.C. §§ 1001, et seq., Equal Pay Act (“EPA”), 29 U.S.C. § 206(d), the Worker Adjustment and Retraining Notification Act (“WARN”), 29 U.S.C. § 2101 et seq., the Minnesota Human Rights Act, Minn. Stat. § 363A.01, et seq., Minnesota Statutes § 181 et seq. or any other state human rights or fair employment practices act, and any other federal, state, local or foreign statute, law, rule, regulation, ordinance, or order. Such claims also include, but are not limited to: claims for violation of any civil rights laws based on protected class status; claims for assault, battery, defamation, intentional or negligent infliction of emotional distress, breach of the covenant of good faith and fair dealing, promissory estoppel, negligence, negligent hiring, retention or supervision, retaliation, constructive discharge, violation of whistleblower protection laws, unjust enrichment, violation of public policy, and all other claims for unlawful employment practices, and all other common law or statutory claims. |
| II. | Agreement to Release My Claims. Except as stated in Section IV of this Release, I agree to release all my Claims. I may, but am not required to, withdraw or dismiss, or attempt to withdraw or dismiss, any charges that I may have pending against the Employer with the EEOC or other civil rights enforcement agency. In exchange for my agreement to release my Claims, I am receiving satisfactory consideration (severance) from Employer to which I am not otherwise entitled by law or contract. The consideration I am receiving is a full and fair payment for the release of all my Claims. |
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| III. | Older Workers Benefit Protection Act. I understand and have been advised that the above release of My Claims is subject to the terms of the Older Workers Benefit Protection Act (“OWBPA”). The OWBPA provides that an individual cannot waive a right or claim under the Age Discrimination in Employment Act (“ADEA”) unless the waiver is knowing and voluntary. I have been advised of this law, and I agree that I am signing this Release voluntarily, and with full knowledge of its consequences. I understand that the Employer is giving me twenty-one (21) days from the date I received a copy of this Release to decide whether I want to sign it. I acknowledge that I have been advised to use this time to consult with an attorney about the effect of this Release. If I sign this Release before the end of the twenty-one (21) day period it will be my personal, voluntary decision to do so, and will be done with full knowledge of my legal rights. | |
| IV. | Exclusions from Release. |
| A. | The term “Claims” does not include my rights, if any, to claim the following: unemployment insurance benefits; workers compensation benefits; claims for my vested post-termination benefits under any 401(k) or other qualified or non-qualified retirement benefit plan or deferred compensation plan; my rights to group medical or group dental insurance coverage pursuant to section 4980B of the Internal Revenue Code of 1986, as amended (“COBRA”); my rights to severance benefits under the Agreement to which this Release is attached and any other rights I may have under Exhibit A thereto; my rights to enforce the terms of this Release; or my rights to assert claims that are based on events occurring after this Release is signed. | ||
| B. | Nothing in this Release interferes with my right to file or maintain a charge with the Equal Employment Opportunity Commission (“EEOC”) or other local civil rights enforcement agency, or participate in any manner in an EEOC or other such agency investigation or proceeding. I, however, understand that I am waiving my right to recover individual relief including, but not limited to, back pay, front pay, reinstatement, attorneys’ fees, and/or punitive damages, in any administrative or legal action whether brought by the EEOC or other civil rights enforcement agency, me, or any other party, arising from my termination of employment. | ||
| C. | Nothing in this Release interferes with my right to challenge the knowing and voluntary nature of this Release under the ADEA and/or OWBPA. | ||
| D. | I agree that the Employer reserves any and all defenses which it has or might have against any claims brought by me. This includes, but is not limited to, the Employer’s right to seek available costs and attorneys’ fees as allowed by applicable statutory law or contract, and, solely with respect to any Claims waived by me under this Release, to have any monetary award granted to me, if any, reduced by the amount of money that I received in consideration for this Release. |
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| V. | Right to Rescind and/or Revoke. I understand that insofar as this Release relates to my rights under the Age Discrimination in Employment Act (“ADEA”), it shall not become effective or enforceable until seven (7) days after I sign it. I also have the right to revoke this Release insofar as it extends to potential claims under the ADEA by written notice to Employer within seven (7) calendar days following my signing this Release, and within fifteen (15) calendar days as to waiver of claims under the Minnesota Human Rights Act. Any such revocation must be in writing and hand-delivered to Employer or, if sent by mail, postmarked within the applicable time period, sent by certified mail, return receipt requested, and addressed as follows: |
| A. | post-marked within the applicable seven (7) or fifteen (15) day revocation period; | ||
| B. | properly addressed to: |
Director of Human Resources
Synovis Life Technologies, Inc.
0000 Xxxxxxxxxx Xxx. X.
Xx. Xxxx, XX 00000
Synovis Life Technologies, Inc.
0000 Xxxxxxxxxx Xxx. X.
Xx. Xxxx, XX 00000
| C. | sent by certified mail, return receipt requested. |
I understand that the payment I am receiving for settling and releasing my Claims is
contingent upon my agreement to be bound by the terms of this Release. Accordingly, if I
decide to rescind or revoke this Release, I understand that I am not entitled to the
severance benefits set forth in the Agreement to which this Release is attached. I further
understand that if I rescind or revoke my release of any Claim, I must immediately return to
Employer any consideration that I have received under the Agreement in consideration of this
Release. Any rescission or revocation of this Release will be effective as to all Claims
and not simply to any Claims under the ADEA or the Minnesota Human Rights Act.
| VI. | I Understand the Terms of this Release. I have had the opportunity to read this Release carefully and understand all its terms. I have had the opportunity to review this Release with my own attorney. In agreeing to sign this Release, I have not relied on any statements or explanations made by Employer or their attorneys. I understand and agree that this Release and the Agreement to which it is attached contain all the agreements between Employer and me. We have no other written or oral agreements. |
Dated:
|
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| Print Name: |
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