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Exhibit 10.1 CHANGE IN CONTROL SEVERANCE
AGREEMENT 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 2575 University Avenue W., St.
Paul, Minnesota 55114 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
pur
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