Exhibit 10.2
POSSIS MEDICAL, INC.
CHANGE IN CONTROL
TERMINATION PAY PLAN
Amended Effective
February 10, 2008
POSSIS MEDICAL, INC.
CHANGE IN CONTROL
TERMINATION PAY PLAN
TABLE OF CONTENTS
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| SECTION 1. |
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INTRODUCTION |
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| SECTION 2. |
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PARTICIPATION |
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| SECTION 3. |
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TERMINATION OF
EMPLOYMENT |
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| 3.1. |
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Notice of
Termination |
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| 3.2. |
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Participant’s Termination Rights |
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| SECTION 4. |
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TERMINATION
PAYMENT |
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| 4.1. |
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Qualification |
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| 4.2. |
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Amount |
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4.2.1. |
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Class I Participants |
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4.2.2. |
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Class II Participants |
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4.2.3. |
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Class III Participants |
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4.2.4. |
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Class IV Participants |
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4.2.5. |
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Class V Participants |
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4.2.6. |
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Sales Personnel Compensation |
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| 4.3. |
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Cash Transaction
Bonus |
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| 4.4. |
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Certain Additional
Payments by the Company |
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| 4.5 |
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Legal Fees and
Expenses |
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| SECTION 5. |
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28OG
LIMITATON |
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| SECTION 6. |
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AMENDMENT OR
TERMINATION OF THE PLAN |
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| SECTION 7. |
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MISCELLANEOUS
PROVISIONS |
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| 7.1. |
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Nonexclusivity of
Rights |
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| 7.2. |
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Successors |
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| 7.3. |
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Payments as
Compensation |
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| 7.4. |
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Notice |
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| 7.5. |
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Governing Law |
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| 7.6. |
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Validity |
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| 7.7. |
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Employment |
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| 7.8. |
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Termination Prior
to a Change in Control. |
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| SECTION 8. |
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CLAIMS
PROCEDURE |
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| 8.1. |
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General |
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| 8.2. |
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Making a
Claim |
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Requesting Review
of a Denied Claim |
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| 8.4. |
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Exhaustion of
Administrative Remedies |
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| 8.5. |
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Decisions |
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| SECTION 9. |
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DEFINITIONS |
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| 9.1. |
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Cause |
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| 9.2. |
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Change in
Control |
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Code |
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| 9.4. |
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Continuing
Director |
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| 9.5. |
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Date of
Termination |
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| 9.6. |
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Effective
Date |
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| 9.7. |
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Employer |
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| 9.8. |
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Good Reason |
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| 9.9. |
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Notice of
Termination |
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| 9.10. |
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Participant |
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| 9.11. |
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Plan |
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| 9.12. |
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Plan Year |
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| 9.13. |
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Termination of
Employment |
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| Schedule A:
Participant List |
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| Exhibit B:
Participants Eligible for Gross-Up |
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| Exhibit C: Cash
Transaction Bonus |
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SECTION 1
INTRODUCTION
Effective September 15, 1999, Possis Medical, Inc., a
Minnesota corporation (hereinafter sometimes referred to as
“Employer” or the “Company”), hereby
creates a change in control termination pay plan for the benefit of
certain employees of the Employer in the event of a Change in
Control. Capitalized terms used herein shall have the meaning
provided in Section 9.
The
Board of Directors of the Company (the “Board), has
determined that it is in the best interests of the Company and its
shareholders to assure that the Company will have the continued
dedication of its officers and other key management, sales and
technical personnel, notwithstanding the possibility, threat or
occurrence of a Change in Control (as defined below) of the
Company. The Board believes it is essential to diminish the
inevitable distraction of these employees by virtue of the personal
uncertainties and risks created by a pending or threatened Change
in Control and to encourage full attention and dedication to the
Company currently and in the event of any threatened or pending
Change in Control, and to provide specified individuals with
compensation and benefit arrangements upon a Change in Control
which ensure that the compensation and benefits expectations of
these individuals will be satisfied and which are competitive with
those of other corporations. Therefore, in order to accomplish
these objectives, the Board has adopted this Change in Control
Termination Pay Plan.
SECTION 2
PARTICIPATION
All
Participants in the Plan shall be identified at the discretion of
the Board. Participants shall be classified as Class I,
Class II, Class III, Class IV or Class V
Participants. An employee who has become a Participant shall be
considered to continue as a Participant in the Plan until the date
of the Participant’s death or, if earlier, the date when the
Participant is no longer employed by the Employer or is removed as
a Participant at the discretion of the Board; provided, however,
that a Participant who has a Termination of Employment within
24 months following the date of a Change in Control will not
cease to be a Participant.
SECTION 3
TERMINATION OF EMPLOYMENT
3.1.
Notice of Termination . Any purported termination of a
Participant’s employment by the Employer or the Participant,
including a Termination of Employment as defined herein, (other
than by reason of the Participant’s death) within twenty-four
(24) months following the month in which a Change in Control
occurs, shall be communicated by a Notice of Termination to the
other. No purported termination by the Employer of a
Participant’s employment shall be effective if it is not
pursuant to a Notice of Termination. Failure by a Participant to
provide Notice of Termination shall not limit any rights of the
Participant under the Plan except to the extent the Employer can
demonstrate that it suffered actual damages by reason of such
failure.
3.2.
Participant’s Termination Rights . A
Participant’s right to terminate his or her employment
pursuant to the terms of the Plan shall not be affected by the
Participant’s incapacity due to physical or mental illness. A
Participant’s continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance
constituting Good Reason pursuant to the terms of the Plan.
Termination by a Participant of the Participant’s employment
for Good Reason shall constitute termination for Good Reason for
all purposes of the Plan, notwithstanding that the Participant may
also thereby be deemed to have “retired” under any
applicable retirement programs of the Employer.
SECTION 4
TERMINATION PAYMENT
4.1.
Qualification . To qualify for a termination payment under
the Plan, a Participant must (a) be a Participant as of the
date of the Change in Control, and (b) have a Termination of
Employment within 24 months following a Change in
Control.
4.2.
Amount . Subject to the eligibility requirement set forth in
Section 4.1, and the limitations set forth in Section 4.4
and Section 5, termination payments for Class I,
Class II, Class III, Class IV and Class V
Participants shall be determined as follows:
4.2.1. Class I
Participants . Termination payments shall be made to a
Class I Participant in an amount equal to the sum of
(a) thirty-six (36) times the Class I
Participant’s highest monthly base compensation during the
six (6) months immediately before the Date of Termination; and
(b) all annual incentive payments that the Class I
Participant would have received for the year in which the Date of
Termination occurs, had required performance targets been met,
which shall be deemed to have occurred on the Date of Termination,
whether or not they have occurred or could possibly occur. Said
payments shall be paid in a single lump sum, discounted to present
value, on the next business day following the Class I
Participant’s Termination.
Additionally, the Class I
Participant shall receive the following: (a) until the end of
the thirty-sixth (36th) month following the month in which occurs
the Class I Participant’s Date of Termination, the
Employer will arrange to provide the Class I Participant with
welfare benefits (including life and health insurance benefits) and
other employee benefits of substantially similar design and cost
(to the Class I Participant except as otherwise set forth
below) as the welfare benefits and other employee benefits
available to the Class I Participant immediately prior to the
Notice of Termination or immediately prior to the date of the
Change in Control, whichever is greater; but benefits otherwise
receivable by the Class I Participant pursuant to this clause
(a) shall be discontinued if the Class I Participant obtains
full-time employment providing welfare benefits during such period
following such termination; and (b) group outplacement
counseling services up to $20,000 in value. Notwithstanding the
foregoing, the health insurance benefits to be provided to a
Class I Participant following the Class I
participant’s Date of Termination shall be provided pursuant
to Section 4980B of the Internal Revenue Code of 1986, as
amended (“COBRA”), except that the Corporation will
continue to pay the employer portion of the premiums for such
coverage, until the end of the period of time provided under COBRA
and
thereafter the Corporation’s obligation to provide health
insurance benefits shall be limited to the obligation to contribute
to the purchase of a health insurance policy selected and obtained
by the Class I participant, by payment to the Class I
participant of an amount up to but not exceeding the
Corporation’s cost of providing coverage under COBRA at the
time the COBRA period expired (not including any portion of such
cost contributed by the Class I participant). Notwithstanding
the foregoing, the Employer shall not be required to continue to
provide disability benefits following a Class I
Participant’s Date of Termination other than with respect to
benefits to which the Class I Participant became entitled prior to
the Date of Termination and which are required to be paid following
such Date of Termination in accordance with the terms of applicable
disability plans or policies in effect prior to such Date of
Termination. The Class I Participant shall not be required to
mitigate the amount of any payment provided for under the Plan by
seeking other employment or otherwise, nor shall the amount of any
payment provided for under the Plan be reduced by any compensation
earned by the Class I Participant as the result of employment
by another employer after the Date of Termination, or otherwise,
except as set forth in clause (a) of this paragraph.
4.2.2. Class II
Participants . Termination payments shall be made to a
Class II Participant in an amount equal to the sum of
(a) twenty-four (24) times the Class II
Participant’s highest monthly base compensation during the
six (6) months immediately before the Date of Termination; and
(b) all annual incentive payments that the Class II
Participant would have received for the year in which the Date of
Termination occurs, had required performance targets been met,
which shall be deemed to have occurred on the Date of Termination,
whether or not they have occurred or could possibly occur. Said
payments shall be paid in a single lump sum, discounted to present
value, on the next business day following the Class II
Participant’s Termination.
Additionally, the Class II
Participant shall receive the following: (a) until the end of
the twenty-fourth (24 th ) month
following the month in which occurs the Class II
Participant’s Date of Termination, the Employer will arrange
to provide the Class II Participant with welfare benefits
(including life and health insurance benefits) and other employee
benefits of substantially similar design and cost (to the
Class II Participant except as otherwise set forth below) as
the welfare benefits and other employee benefits available to the
Class II Participant immediately prior to the Notice of
Termination or immediately prior to the date of the Change in
Control, whichever is greater; but benefits otherwise receivable by
the Class II Participant pursuant to this clause
(a) shall be discontinued if the Class II Participant
obtains full-time employment providing welfare benefits during such
period following such termination; and (b) group outplacement
counseling services up to $15,000 in value. Notwithstanding the
foregoing, the health insurance benefits to be provided to a
Class II participant following the Class II
participant’s Date of Termination shall be provided pursuant
to Section 4980B of the Internal Revenue Code of 1986, as
amended (“COBRA”), except that the Corporation will
continue to pay the employer portion of the premiums for such
coverage, until the end of the period of time provided under COBRA,
and thereafter the Corporation’s obligation to provide health
insurance benefits shall be limited to the obligation to contribute
to the purchase of a health insurance policy selected and obtained
by the Class II participant, by payment to the Class II
participant of an amount up to but not exceeding the
Corporation’s cost of providing coverage under COBRA at the
time the COBRA period expired (not including any portion of such
cost contributed by the Class II participant). Notwithstanding
the foregoing, the Employer shall not be required to continue to
provide disability benefits following a Class II
Participant’s Date of Termination other than with
respect
to
benefits to which the Class II Participant became entitled
prior to the Date of Termination and which are required to be paid
following such Date of Termination in accordance with the terms of
applicable disability plans or policies in effect prior to such
Date of Termination. The Class II Participant shall not be
required to mitigate the amount of any payment provided for under
the Plan by seeking other employment or otherwise, nor shall the
amount of any payment provided for under the Plan be reduced by any
compensation earned by the Class II Participant as the result
of employment by another employer after the Date of Termination, or
otherwise, except as set forth in clause (a) of this
paragraph.
4.2.3. Class III
Participants . Termination payments shall be made to a
Class III Participant in an amount equal to the sum of
(a) twelve (12) times the Class III
Participant’s highest monthly base compensation during the
six (6) months immediately before the Date of Termination;
(b) all annual incentive payments that the Class III
Participant would have received for the year in which the Date of
Termination occurs, had required performance targets been met,
which shall be deemed to have occurred on the Date of Termination,
whether or not they have occurred or could possibly occur. Said
payments shall be paid in a single lump sum, discounted to present
value, on the next business day following the Class III
Participant’s Termination.
Additionally, the Class III
Participant shall receive the following: (a) until the end of
the twelfth (12 th ) month
following the month in which occurs the Class III
Participant’s Date of Termination, the Employer will arrange
to provide the Class III Participant with welfare benefits
(including life and health insurance benefits) and other employee
benefits of substantially similar design and cost (to the
Class III Participant) as the welfare benefits and other
employee benefits available to the Class III Participant
immediately prior to the Notice of Termination or immediately prior
to the date of the Change in Control, whichever is greater; but
benefits otherwise receivable by the Class III Participant
pursuant to this clause (a) shall be discontinued if the
Class II Participant obtains full-time employment providing
welfare benefits during such period following such termination; and
(b) group outplacement counseling services up to $10,000 in
value. Notwithstanding the foregoing, the Employer shall not be
required to continue to provide disability benefits following a
Class III Participant’s Date of Termination other than
with respect to benefits to which the Class III Participant
became entitled prior to the Date of Termination and which are
required to be paid following such Date of Termination in
accordance with the terms of applicable disability plans or
policies in effect prior to such Date of Termination. The
Class III Participant shall not be required to mitigate the
amount of any payment provided for under the Plan by seeking other
employment or otherwise, nor shall the amount of any payment
provided for under the Plan be reduced by any compensation earned
by the Class III Participant as the result of employment by
another employer after the Date of Termination, or otherwise,
except as set forth in clause (a) of this paragraph.
4.2.4. Class IV
Participants . Termination payments shall be made to a
Class IV Participant in an amount equal to the sum of
(a) Nine (9) times the Class IV Participant’s
highest monthly base compensation during the six (6) months
immediately before the Date of Termination; (b) all annual
incentive payments that the Class IV Participant would have
received for the year in which the Date of Termination occurs, had
required performance targets been met, which shall be deemed to
have occurred on the Date of Termination, whether or not they have
occurred or could possibly occur. Said payments shall be paid in a
single lump sum, discounted to present value, on the next business
day following the Class IV Participant’s
Termination.
Additionally, the Class IV
Participant shall receive the following: (a) until the end of
the ninth (9 th ) month
following the month in which occurs the Class IV
Participant’s Date of Termination, the Employer will arrange
to provide the Class IV Participant with welfare benefits
(including life and health insurance benefits) and other employee
benefits of substantially similar design and cost (to the
Class IV Participant) as the welfare benefits and other
employee benefits available to the Class IV Participant
immediately prior to the Notice of Termination or immediately prior
to the date of the Change in Control, whichever is greater; but
benefits otherwise receivable by the Class IV Participant
pursuant to this clause (a) shall be discontinued if the
Class IV Participant obtains full-time employment providing
welfare benefits during such period following such termination; and
(b) group outplacement counseling services up to $8,000 in
value. Notwithstanding the foregoing, the Employer shall not be
required to continue to provide disability benefits following a
Class IV Participant’s Date of Termination other than
with respect to benefits to which the Class IV Participant
became entitled prior to the Date of Termination and which are
required to be paid following such Date of Termination in
accordance with the terms of applicable disability plans or
policies in effect prior to such Date of Termination. The
Class IV Participant shall not be required to mitigate the
amount of any payment provided for under the Plan by seeking other
employment or otherwise, nor shall the amount of any payment
provided for under the Plan be reduced by any compensation earned
by the Class IV Participant as the result of employment by
another employer after the Date of Termination, or otherwise,
except as set forth in clause (a) of this paragraph.
4.2.5. Class V
Participants . Termination payments shall be made to a
Class V Participant in an amount equal to the sum of
(a) six (6) times the Class V Participant’s
highest monthly base compensation during the six (6) months
immediately before the Date of Termination; (b) all annual
incentive payments that the Class V Participant would have
received for the year in which the Date of Termination occurs, had
required performance targets been met, which shall be deemed to
have occurred on the Date of Termination, whether or not they have
occurred or could possibly occur. Said payments shall be paid in a
single lump sum, discounted to present value, on the next business
day following the Class V Participant’s
Termination.
Additionally, the Class V
Participant shall receive the following: (a) until the end of
the sixth (6 th ) month
following the month in which occurs the Class V
Participant’s Date of Termination, the Employer will arrange
to provide the Class V Participant with welfare benefits
(including life and health insurance benefits) and other employee
benefits of substantially similar design and cost (to the
Class V Participant) as the welfare benefits and other
employee benefits available to the Class V Participant
immediately prior to the Notice of Termination or immediately prior
to the date of the Change in Control, whichever is greater; but
benefits otherwise receivable by the Class V Participant
pursuant to this clause (a) shall be discontinued if the
Class V Participant obtains full-time employment providing
welfare benefits during such period following such termination; and
(b) group outplacement counseling services up to $5,000 in
value. Notwithstanding the foregoing, the Employer shall not be
required to continue to provide disability benefits following a
Class V Participant’s Date of Termination other than
with respect to benefits to which the Class V Participant
became entitled prior to the Date of Termination and which are
required to be paid following such Date of Termination in
accordance with the terms of applicable disability plans or
policies in effect prior to such Date of Termination. The
Class V Participant shall not be required to mitigate the
amount of any payment provided for under the Plan by seeking other
employment or otherwise, nor shall the
amount
of any payment provided for under the Plan be reduced by any
compensation earned by the Class V Participant as the result
of employment by another employer after the Date of Termination, or
otherwise, except as set forth in clause (a) of this
paragraph.
4.2.6
Sales Personnel Compensation. Notwithstanding the provisions
herein pertaining to the calculation of termination payments to
Participants under Sections 4.2.1 — 4.2.5 of the Plan,
payments to sales personnel identified as Participants shall be as
follows: Termination payments shall be made to sales personnel
Participants in an amount equal to the number of months identified
in the Class to which each Participant is assigned times the
average base salary plus commissions earned on a monthly basis
during the six (6) months immediately before the Date of
Termination. No additional incentive payments or bonuses shall be
included in the calculation of termination payments.
4.3
Cash Transaction Bonus. In the event of a Change in Control,
and notwithstanding their employment status following a Change in
Control, Participants identified by the Board may receive a Cash
Bonus based on the value of the Employer at the time of a Change in
Control and the premium, if any, paid for the Company that is over
and above the baseline initial value of the Company on the date
merger discussions are publicly disclosed. The formula for creating
and calculating the Cash Bonus Pool, as well as the identity of the
Participants eligible for the Cash Transaction Bonus, are specified
in Exhibit ‘C’ hereto. To qualify for this Cash Bonus
payment, the Participant must be a Participant as of the date of
the Change in Control and must hold the same position, or have
essentially the same or higher level of responsibility, as
held
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