exv10w2






Exhibit 10.2




SEVERANCE AGREEMENT




	 	 	 

	Parties:

	 	SurModics, Inc.

(“Company”)

9924 West 74th Street

Eden Prairie, MN 55344-3523

	 
	 	 
	 

	 	Gary R. Maharaj

(“Executive”)
	 
	 	 
	 

	 	8872 Cove Pointe Road

Eden Prairie, MN 55347
	 
	 	 
	Date:

	 	December 14, 2010






RECITALS:





	A.	 	Executive has agreed to become President and Chief Executive Officer of the Company and a
member of the Board of Directors of the Company pursuant to the terms and conditions of that
certain Offer Letter dated as of the date hereof.
	 
	B.	 	The parties further recognize that it is in the best interests of the Company to protect
confidential, proprietary, and trade secret information of the Company, to prevent unfair
competition by former executives of the Company following separation of their employment with
the Company, and to secure cooperation from former executives with respect to matters related
to their employment with the Company.
	 
	C.	 	The parties further recognize that it is in the best interests of the Company and its
stockholders to provide certain benefits payable upon a termination of Executive’s employment
following a Change of Control or upon a termination of Executive’s employment Without Cause or
For Good Reason.





AGREEMENTS:





	1.	 	Definitions. When the following terms are used herein with initial capital letters, they
shall have the following meanings:






	 	(a)	 	“Cause” shall mean termination of Executive’s employment by the
Company resulting from conduct by Executive constituting (i) a felony involving moral
turpitude under either federal law or the law of the state of the Company’s
incorporation, or (ii) Executive’s willful failure to fulfill his employment duties
with the Company; provided, however, that for purposes of this clause (ii), an act or
failure to act by Executive shall not be “willful” unless it is done, or omitted to be
done, in bad faith and





 









 











	 	 	 	without any reasonable belief that Executive’s action or omission was in 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 of a committee thereof, or based
upon advice of counsel to the Company (which shall include the Company’s Vice
President and General Counsel) shall be conclusively presumed to be done, or
omitted to be done, by Executive in good faith and in the best interests of the
Company.
	 
	 	(b)	 	“Change of Control” shall mean any one or more of the following
events occurring after the date of this Agreement:






	 	(1)	 	The purchase or other acquisition by any one person, or more
than one person acting as a group, of stock of the Company that, together with
stock held by such person or group, constitutes more than 50% of the total
combined value or total combined voting power of all classes of stock issued
by the Company; provided, however, that if any one person or more than one
person acting as a group is considered to own more than 50% of the total
combined value or total combined voting power of such stock, the acquisition
of additional stock by the same person or persons shall not be considered a
Change of Control;
	 
	 	(2)	 	A merger or consolidation to which the Company is a party if
the individuals and entities who were shareholders of the Company immediately
prior to the effective date of such merger or consolidation have, immediately
following the effective date of such merger or consolidation, beneficial
ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934)
of less than fifty percent (50%) of the total combined voting power of all
classes of securities issued by the surviving entity for the election of
directors of the surviving corporation;
	 
	 	(3)	 	Any one person, or more than one person acting as a group,
acquires or has acquired during the twelve (12) month period ending on the
date of the most recent acquisition by such person or persons, direct or
indirect beneficial ownership (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934) of stock of the Company constituting thirty-five percent
(35%) or more of the total combined voting power of all classes of stock
issued by the Company;
	 
	 	(4)	 	The purchase or other acquisition by any one person, or more
than one person acting as a group, of substantially all of the total gross
value of the assets of the Company during the twelve-month period ending on
the date of the most recent purchase or other acquisition by such person or
persons. For purposes of this Section 2(b)(4), “gross value” means the value
of the assets of the Company or the




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	 	 	 	value of the assets being disposed of, as the case may be, determined
without regard to any liabilities associated with such assets;
	 
	 	(5)	 	A change in the composition of the Board of the Company at
any time during any consecutive twelve (12) month period such that the
“Continuity Directors” cease for any reason to constitute at least a fifty
percent (50%) majority of the Board. For purposes of this event, “Continuity
Directors” means those members of the Board who either:






	 	(A)	 	were directors at the beginning of such
consecutive twelve (12) month period; or
	 
	 	(B)	 	were elected or appointed by, or on the
nomination or recommendation of, at least a two-thirds (2/3) majority
of the then-existing Board of Directors.






	 	(6)	 	A change in the composition of the Board of the Company at
any time from the date of this Agreement through the 2012 annual meeting of
the shareholders of the Company (anticipated to be held in or around January
or February of 2012) such that the “Continuity Directors” cease for any reason
to constitute at least a fifty percent (50%) majority of the Board. For
purposes of this event, “Continuity Directors” means those members of the
Board who either:






	 	(A)	 	were directors on the date of this
Agreement; or
	 
	 	(B)	 	were elected or appointed by, or on the
nomination or recommendation of, at least a two-thirds (2/3) majority
of the then-existing Board of Directors.






	 	 	 	In all cases, the determination of whether a Change of Control has occurred shall
be made in accordance with Code Section 409A and the regulations, notices and other
guidance of general applicability issued thereunder.
	 
	 	(c)	 	“Change of Control Termination” shall mean that any of the following
events occurring upon or within twelve (12) months after a Change of Control:






	 	(1)	 	The termination of the Executive’s employment by the Company
for any reason other than Cause; or
	 
	 	(2)	 	The termination of employment with the Company by Executive
for Good Reason. Such termination shall be accomplished by, and





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	 	 	 	effective upon, Executive giving written notice to the Company of his
decision to terminate.






	 	 	 	For purposes of Section 3, with respect to the timing of payments thereunder,
“Change of Control Termination” shall mean the date of the Executive’s Termination
Date.
	 
	 	(d)	 	“Code” shall mean the Internal Revenue Code of 1986, as amended.
	 
	 	(e)	 	“Disability” means the inability of Executive to perform on a
full-time basis the duties and responsibilities of Executive’s employment with the
Company by reason of Executive’s illness or other physical or mental impairment or
condition, if such inability continues for an uninterrupted period of 120 days or more
during any 180-day period. A period of inability is “uninterrupted” unless and until
Executive returns to full-time work for a continuous period of at least 30 days.
	 
	 	(f)	 	“Earned Compensation” means all base salary, paid time off, and all
other amounts to which Executive may be entitled to receive under any employee benefit
plan maintained by the Company that have been earned but not paid to Executive as of
his Termination Date.
	 
	 	(g)	 	“Good Reason” shall mean Executive has provided written notice to the
Company within 90 days following the occurrence of any of the following events, which
notice describes the event giving rise to the resignation, and the Company has not
cured the event within 30 days after receiving such notice from Executive:






	 	(1)	 	the assignment of Executive without Executive’s consent to a
position with material responsibilities or duties of a lesser status or degree
than the position of Chief Executive Officer of the Company;
	 
	 	(2)	 	the relocation of Executive’s principal office for Company
business, without Executive’s consent, to a location more than 50 miles
outside the Executive’s work location as of the effective date of the
Executive’s employment with the Company; or
	 
	 	(3)	 	a material reduction, in the aggregate, in base salary,
variable pay opportunities or the employee benefits to which Executive is
entitled to participate in irrespective of any standard waiting periods with
respect to the same, unless such material reduction is generally applicable to
all officers of the Company; or
	 
	 	(4)	 	a material breach of this Agreement by the Company.




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	 	 	 	Termination for “Good Reason” shall not include Executive’s death or a termination
for any reason other than one of the events specified in clauses (1) through (4) of
this Section 1(g).
	 
	 	(h)	 	“Termination Date” shall mean the date upon which Executive’s
“separation from service” with the Company within the meaning of Section
409A(a)(2)(A)(i) of the Code (with “Company” for purposes of this paragraph to include
any business entity that is treated as a single employer with the Company under the
rules of Section 414(b) and (c) of the Code).






	2.	 	Term of Agreement. Except as otherwise provided herein, this Agreement shall commence on the
date executed by the parties and shall continue in effect until the date on which Executive’s
employment with the Company terminates for any reason whatsoever. Any rights and obligations
accruing upon or prior to the termination or expiration of this Agreement shall survive to the
extent necessary to enforce such rights and obligations.






	3.	 	Compensation and Benefits Following a Change of Control Termination. Subject to the
limitations contained in this Agreement, upon a Change of Control Termination, Executive shall
be entitled to all of the following compensation and benefits:






	 	(a)	 	Within five (5) business days after a Change of Control Termination, the
Company shall pay to Executive:






	 	(1)	 	All of the Executive’s Earned Compensation (subject to any
distribution requirements contained in any employee benefit plan with respect
to benefits payable under that plan) ; and
	 
	 	(2)	 	A severance payment equal to two and one-half (21/2) times the
average annual cash compensation paid to Executive by the Company (or any
predecessor entity or related entity) and includible in Executive’s gross
income for federal income tax purposes during the Executive’s three most
recent taxable years in effect immediately prior to such Termination (or, if
Executive’s employment is for less than three years, the average annual cash
compensation paid to Executive during the period of his employment with
Company). For purposes of this paragraph, “annual cash compensation” shall
mean the Executive’s annual base salary and cash bonuses. Further, for
purposes of this paragraph, “predecessor entity” and “related entity” shall
have the meaning set forth in Section 280G of the Internal Revenue Code of
1986, as amended, and the regulations issued thereunder.






	 	(b)	 	The Company shall continue to provide Executive, at Company’s expense, with
coverage under its life, health, or dental benefit plans at a level





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	 	 	 	comparable to the benefits which Executive was receiving or entitled to receive
immediately prior to the Change of Control Termination or, if greater, at a level
comparable to the benefits which Executive was receiving immediately prior to the
event which constituted Good Reason. Such coverage shall continue for eighteen
(18) months following such Change of Control Termination or, if earlier, until
Executive is eligible to be covered for such benefits through his employment with
another employer. The Company may, in its sole discretion, provide such coverage
through the purchase of individual insurance contracts for Executive.
	 
	 	(c)	 	All outstanding Options or Stock Appreciation Rights shall become immediately
exercisable, and the risks of forfeiture on any outstanding Restricted Stock Awards or
Restricted Stock Unit Awards shall immediately lapse. For purposes of this Agreement,
“Option,” “Stock Appreciation Rights,” “Restricted Stock Awards” and “Restricted Stock
Unit Awards” shall have the meaning set forth in the SurModics, Inc. 2009 Equity
Incentive Plan, or any successor plan.
	 
	 	(d)	 	All shares or units subject to all outstanding Performance Shares shall
become immediately vested and payable at the target performance objectives set forth
in said Performance Shares. For purposes of this Agreement, “Performance Shares”
shall have the meaning set forth in the SurModics, Inc. 2009 Equity Incentive Plan, or
any successor plan.
	 
	 	(e)	 	The definition of “Cause” providing for forfeiture under any outstanding
Options, Restricted Stock Award or Performance Shares granted as of the first day of
the Executive’s employment with the Company shall be the definition of “Cause” set
forth in this Agreement. For purposes of this Agreement, “Options,” “Restricted Stock
Award” and “Performance Shares” shall have the meaning set forth in the SurModics,
Inc. 2009 Equity Incentive Plan, or any successor plan.
	 
	 	(f)	 	For clarity, in the event of a Change of Control Termination, Executive shall
be entitled to only the compensation and benefits described in Section 3.






	4.	 	Compensation and Benefits Following a Termination Without Cause or for Good Reason. If,
prior to the expiration of this Agreement, the Executive’s employment with the Company is
terminated (other than as a result of a Change of Control Termination): (i) by the Company for
any reason other than for Cause; or (ii) by Executive for Good Reason, then, following the
Executive’s Termination Date and in addition to payment of the Executive’s Earned Compensation
(subject to any distribution requirements contained in any employee benefit plan with respect
to benefits payable under that plan), the Company will:




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	 	(a)	 	Pay to Executive severance pay in an amount equal to Executive’s then-current
annual base salary, payable in equal installments on the Company’s regular payroll
schedule over a 12-month period following the Termination Date. Provided, however, if
Executive’s employment with the Company is terminated by the Company for any reason
other than for Cause, and if Executive becomes entitled to receive severance under
this Section 4, then the Company shall extend the base salary payments under this
Section 4(a) for any additional period, not to exceed 12 additional months, that
Executive demonstrates Executive is unable to secure subsequent employment primarily
because of Executive’s obligations under the Non-Competition, Invention, and
Non-Disclosure Agreement executed by Executive on the date of this Agreement (provided
that such demonstration shall not require Executive to violate any confidentiality or
similar restrictions to which Executive is subject). Executive shall provide such
documentation as reasonably requested by the Company to demonstrate that Executive is
diligently seeking alternate employment and that alternative employment is not
available because of the Non-Competition, Invention, and Non-Disclosure Agreement. In
the event that a court of competent jurisdiction determines that Executive has
materially breached any of the provisions of this Agreement or of the Non-Competition,
Invention, and Non-Disclosure Agreement, the Company shall be entitled to immediately
cease all payments under this Section 4(a).
	 
	 	(b)	 	Continue to provide Executive, at Company’s expense, with coverage under its
life, health, or dental benefit plans at a level comparable to the benefits which
Executive was receiving or entitled to receive immediately prior to date on which the
Executive’s employment with the Company is terminated (other than as a result of a
Change of Control Termination) (i) by the Company for any reason other than for Cause;
or (ii) by Executive for Good Reason. Such coverage shall continue for eighteen (18)
months following such Change of Control Termination or, if earlier, until Executive is
eligible to be covered for such benefits through his employment with another employer.
The Company may, in its sole discretion, provide such coverage through the purchase
of individual insurance contracts for Executive. Provided, however, if Executive’s
employment with the Company is terminated by the Company for any reason other than for
Cause, and if Executive becomes entitled to receive Company paid benefits under this
Section 4(b), then the Company shall extend the coverage provided under this Section
4(b) for any additional period, not to exceed 6 additional months, that Executive
demonstrates Executive is unable to secure subsequent employment primarily because of
Executive’s obligations under the Non-Competition, Invention, and Non-Disclosure
Agreement executed by Executive on the date of this Agreement (provided that such
demonstration shall not require Executive to violate any confidentiality or similar
restrictions to which Executive is subject). Executive shall provide such
documentation as reasonably requested by the Company to demonstrate that Executive is
diligently





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	 	 	 	seeking alternate employment and that alternative employment is not available
because of the Non-Competition, Invention, and Non-Disclosure Agreement. In the
event that a court of competent jurisdiction determines that Executive has
materially breached any of the provisions of this Agreement or of the
Non-Competition, Invention, and Non-Disclosure Agreement, the Company shall be
entitled to immediately cease all payments under this Section 4(b).
	 
	 	(c)	 	The risks of forfeiture on any outstanding Restricted Stock Awards granted as
a result of and as of the first day of the Executive’s employment with the Company
shall immediately lapse. For purposes of this Agreement, “Restricted Stock Awards”
shall have the meaning set forth in the SurModics, Inc. 2009 Equity Incentive Plan, or
any successor plan.
	 
	 	(d)	 	The definition of “Cause” providing for forfeiture under any outstanding
Options, Restricted Stock Award or Performance Shares granted as of the first day of
the Executive’s employment with the Company shall be the definition of “Cause” set
forth in this Agreement. For purposes of this Agreement, “Options,” “Restricted Stock
Award” and “Performance Shares” shall have the meaning set forth in the SurModics,
Inc. 2009 Equity Incentive Plan, or any successor plan.






	5.	 	Other Termination. If, during the term of this Agreement, Executive’s employment with the
Company is terminated (other than as a result of a Change of Control Termination) by reason
of: (i) Executive’s resignation for any reason other than Good Reason; (ii) termination of
Executive’s employment by the Company for Cause; or (iii) Executive’s death or Disability,
then the Company sole obligation under this Agreement will be to pay to Executive, or
Executive’s beneficiary or estate, as the case may be, the Earned Compensation. The
definition of “Cause” providing for forfeiture under any outstanding Options, Restricted Stock
Award or Performance Shares granted as of the first day of the Executive’s employment with the
Company shall be the definition of “Cause” set forth in this Agreement. For purposes of this
Agreement, “Options,” “Restricted Stock Award” and “Performance Shares” shall have the meaning
set forth in the SurModics, Inc. 2009 Equity Incentive Plan, or any successor plan.






	6.	 	Excise Tax Limitation.






	 	(a)	 	Notwithstanding anything contained in this Agreement to the contrary, in the
event that the benefits provided by this Agreement, together with all other payments
and the value of any benefits received or to be received by Executive (“Payments”),
constitute “parachute payments” within the meaning of Section 280G of the Code, and,
but for this Section 6, would be subject to the excise tax imposed by Section 4999 of
the Code (the “Excise Tax”), then:




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	 	(1)	 	In the event that the Payments arise out of a Change of
Control that occurs on or before the first anniversary of this Agreement, and
any such payment would constitute an “excess parachute payment” as defined in
Code Section 280G, Executive shall receive a “tax gross-up” payment sufficient
to pay the initial excise tax applicable to such excess parachute payment (but
excluding the income and excise taxes, if any, applicable to the tax gross-up
payment). Such additional cash payment shall be made no earlier than the date
that is six months and one day after the Change of Control Termination and no
later than December 31 of the calendar year after the year in which Executive
remits the related taxes.
	 
	 	(2)	 	In the event that the Payments arise out of a Change of
Control that occurs following the first anniversary of this Agreement, the
Payments shall be made to Executive either (i) in full or (ii) as to such
lesser amount as would result in no portion of the Payments being subject to
the Excise Tax, whichever of the foregoing amounts, taking into account the
applicable federal, state and local income taxes and the Excise Tax, results
in the receipt by Executive on an after-tax basis, of the greatest amount of
benefits, notwithstanding that all or some portion of the Payments may be
subject to the Excise Tax. The Company shall reduce or eliminate the Payments
by first reducing or eliminating cash payments and then by reducing those
payments or benefits which are not payable in cash, in each case in reverse
order beginning with payments or benefits which are to be paid the farthest in
time from the determination made in accordance with the following sentence.
The determination as to whether any such decrease in the payments or benefits
is necessary must be made, at the Company’s expense, in good faith by legal
counsel or a certified public accountant selected by the Company and
reasonably acceptable to the Executive, and such determination will be
conclusive and binding upon the Executive and the Company.






	7.	 	Post-Termination Obligations and Conditions.






	 	(a)	 	In the event of termination of Executive’s employment, the sole obligation of
the Company under this Agreement will be its obligation to make the payments called
for by Sections 3 — 6 hereof, as the case may be, and the Company will have no other
obligation to Executive or to Executive’s beneficiary or estate.
	 
	 	(b)	 	Notwithstanding the foregoing provisions of Sections 3 and 4, the Company
will not be obligated to make any payments to Executive under Sections 3 and 4 unless:
(i) Executive has signed a release of claims in favor of the Company and its
affiliates and related entities, and their directors, officers, insurers, employees
and agents, provided such release





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	 	 	 	shall not require Executive to release claims Executive may have for
indemnification from the Company or rights of Executive under this
Agreeement; (ii)
all applicable rescission periods provided by law for releases of claims shall have
expired and Executive shall have signed and not rescinded the release of claims;
and (iii) Executive is in strict compliance with the terms of this Agreement as of
the dates of such payments.

	 
	 	(c)	 	Immediately upon termination of Executive’s employment with the Company for
any reason, Executive will resign all positions then held as a director or officer of
the Company and of affiliated entity of the Company.
	 
	 	(d)	 	Upon termination of Executive’s employment with the Company, Executive shall
promptly deliver to the Company any and all Company records and any and all Company
property in Executive’s possession or under Executive’s control, including, without
limitation, manuals, books, blank forms, documents, letters, memoranda, notes,
notebooks, reports, printouts, computer disks, computer tapes, source codes, data,
tables or calculations and all copies thereof, documents that in whole or in part
contain any trade secrets or confidential, proprietary or other secret information of
the Company and all copies thereof, and keys, access cards, access codes, passwords,
credit cards, personal computers, telephones, and other electronic equipment belonging
to the Company.
	 
	 	(e)	 	Following termination of Executive’s employment with the Company for any
reason, Executive will, upon reasonable request of the Company or its designee,
cooperate with the Company in connection with the transition of Executive’s duties and
responsibilities for the Company; consult with the Company regarding business matters
that Executive was directly and substantially involved with while employed by the
Company; and be reasonably available, with or without subpoena, to be interviewed,
review documents or things, give depositions, testify, or engage in other reasonable
activities in connection with any litigation or investigation, with respect to matters
that Executive then has or may have knowledge of by virtue of Executive’s employment
by or service to the Company or any related entity; provided, however, that: (i) the
Company shall not unreasonably request such cooperation of Executive; (ii) the Company
shall reimburse Executive or pay directly any reasonable expenses actually incurred in
connection with such cooperation and assistance by Executive; (iii) Executive shall
not be required to assist or cooperate with the Company to the extent such assistance
or cooperation would prevent Executive from performing, or would materially interfere
with Executive’s performance of, the duties or responsibilities of his then-current
occupation; and (iv) following the date that is twelve (12) months following the
Executive’s Termination Date, the Company shall either be making payments to Executive
under Section 4(a) of this Agreement or





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	 	 	 	shall provide reasonable compensation to the Executive for Executive’s cooperation
and assistance.
	 
	 	(f)	 	Executive will not at any time disparage, defame, or besmirch the reputation,
character, image, products, or services of the Company or any of its affiliates, or
the reputation or character of any of its current or former directors, officers,
employees, or agents; provided that nothing in this Section 7(f) is intended to
prevent or interfere with Executive making any required or reasonable communications
with, or providing information to, any governmental, law enforcement, or stock
exchange agency or representative, or in connection with any governmental
investigation, court, administrative or arbitration proceeding.
	 
	 	(g)	 	The Company will not at any time disparage, defame, or besmirch the
reputation, character or image of Executive; provided that nothing in this Section
7(g) is intended to prevent or interfere with the Company making any required or
reasonable communications with, or providing information to, any governmental, law
enforcement, or stock exchange agency or representative, or in connection with any
governmental investigation, court, administrative or arbitration proceeding.






	8.	 	Compliance With Code Section 409A.






	 	(a)	 	The parties intend that the payments described in Sections 3(a)(2), 4(a) and
4(c) of this Agreement shall be excluded from deferred compensation as a “short-term
deferral” under Treas. Reg. § 1.409A-1(b)(4). The parties intend that the
continuation of health and dental benefits described in Sections 3(b) and 4(b) shall
be excluded from deferred compensation pursuant to the medical benefits exception for
separation pay plans under Treas. Reg. § 1.409A-1(b)(9)(v)(B).
	 
	 	(b)	 	The parties intend that the continuation of life and disability insurance
benefits described in Sections 3(b) and 4(b) shall be excluded from deferred
compensation as separation pay due to an involuntary separation from service under
Treas. Reg. § 1.409A-1(b)(9)(iii), and the amounts payable for such continuation of
life and disability insurance coverage shall not exceed two times the lesser of (x)
Executive’s annualized compensation based on the annual rate of pay for services to
the Company for the calendar year prior to the calendar year in which the Change of
Control Termination occurs (adjusted for any increase during the year that was
expected to continue indefinitely if Executive had not separated from service) or (y)
the compensation limit under Section 401(a)(17) of the Code for the year in which the
Change of Control Termination occurs. Further, in no event shall the benefits
described in Section 3(b) extend beyond December 31st of the second calendar year
following the calendar year in which the Change of Control Termination occurs.




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	 	(c)	 	Notwithstanding the foregoing, if any of the payments described in Sections 3
and 4 above are subject to the requirements of Code Section 409A and the Company
determines that Executive is a “specified employee” as defined in Code Section 409A as
of the Executive’s Termination Date, such payments shall not be paid or commence
earlier than the date that is six months after the Termination Date, but shall be paid
or commence during the calendar year following the year in which the Termination Date
occurs and within 30 days of the earliest possible date permitted under Code Section
409A.
	 
	 	(d)	 	The Company agrees to indemnify and reimburse Executive for any tax and
interest imposed on Executive under Code Section 409A if any of the payments described
in Sections 3 and 4 above are treated as non-qualified deferred compensation under
Code Section 409A that does not comply with Code Section 409A(a)(2) — (4). Such
reimbursement shall be grossed-up to take into consideration the federal and state
income, employment, and unemployment taxes, and Code Section 409A interest and penalty
on this reimbursement amount so that the Executive’s after-tax net cash from the
payments described in Sections 3 and 4 equals the amount that Executive would have
received had the penalty and interest under Code Section 409A not been assessed on the
Executive.






	9.	 	Withholding Taxes. The Company shall be entitled to deduct from all payments or benefits
provided for under this Agreement any federal, state or local income and employment-related
taxes required by law to be withheld with respect to such payments or benefits.






	10.	 	Successors and Assigns. This Agreement shall inure to the benefit of and shall be
enforceable by Executive, his heirs and the personal representative of his estate, and shall
be binding upon and inure to the benefit of the Company and its successors and assigns. The
Company will require the transferee of any sale of all or substantially all of the business
and assets of the Company or the survivor of any merger, consolidation or other transaction
expressly to agree to honor this Agreement in the same manner and to the same extent that the
Company would be required to perform this Agreement if no such event had taken place. Failure
of the Company to obtain such agreement before the effective date of such event shall be a
breach of this Agreement within the meaning of Section 1(g)(4) of this Agreement.






	11.	 	Notices. For the purpose of this Agreement, notices and all other communications provided
for in the Agreement shall be in writing and shall be deemed to have been duly given when
delivered or mailed by United States certified or registered mail, return receipt requested,
postage prepaid, addressed to the respective addresses set forth on the first page of this
Agreement or to such other address as either party may have furnished to the other in writing
in accordance herewith, except that notice of change of address shall be effective





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		 	only upon receipt. All notices to the Company shall be directed to the attention of the
Board of Directors of the Company.
	 
	12.	 	Captions. The headings or captions set forth in this Agreement are for convenience only and
shall not affect the meaning or interpretation of this Agreement.
	 
	13.	 	Governing Law. The validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of Minnesota.
	 
	14.	 	Construction. Wherever possible, each term and provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law. If any term or
provision of this Agreement is invalid or unenforceable under applicable law, (a) the
remaining terms and provisions shall be unimpaired, and (b) the invalid or unenforceable term
or provision shall be deemed replaced by a term or provision that is valid and enforceable and
that comes closest to expressing the intention of the unenforceable term or provision.
	 
	15.	 	Amendment; Waivers. This Agreement may not be modified, amended, waived or discharged in any
manner except by an instrument in writing signed by both parties hereto. The waiver by either
party of compliance with any provision of this Agreement by the other party shall not operate
or be construed as a waiver of any other provision of this Agreement, or of any subsequent
breach by such party of a provision of this Agreement. Notwithstanding anything in this
Agreement to the contrary, the Company expressly reserves the right to amend this Agreement
without Executive’s consent to the extent necessary or desirable to comply with Code Section
409A, and the regulations, notices and other guidance of general applicability issued
thereunder, provided that no such amendment may reduce the amount of any benefits payable to
Executive without Executive’s consent.
	 
	16.	 	Entire Agreement. This Agreement supersedes all prior or contemporaneous negotiations,
commitments, agreements (written or oral) and writings between the Company and Executive with
respect to the subject matter hereof, including but not limited to any negotiations,
commitments, agreements or writings relating to any severance benefits payable to Executive,
and constitutes the entire agreement and understanding between the parties hereto. All such
other negotiations, commitments, agreements and writings will have no further force or effect,
and the parties to any such other negotiation, commitment, agreement or writing will have no
further rights or obligations thereunder.
	 
	17.	 	Counterparts. This Agreement may be executed in several counterparts, each of which shall be
deemed to be an original but all of which together shall constitute one and the same
instrument.
	 
	18.	 	Arbitration. Any dispute arising out of or relating to this Agreement or the alleged breach
of it, or the making of this Agreement, including claims of fraud in the inducement, shall be
discussed between the disputing parties in a good faith





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	 	 	effort to arrive at a mutual settlement of any such controversy. If, notwithstanding, such
dispute cannot be resolved, such dispute shall be settled by binding arbitration. Judgment
upon the award rendered by the arbitrator may be entered in any court having jurisdiction
thereof. The arbitrator shall be a retired state or federal judge or an attorney who has
practiced securities or business litigation for at least 10 years. If the parties cannot
agree on an arbitrator within 20 days, any party may request that the chief judge of the
District Court for Hennepin County, Minnesota, select an arbitrator. Arbitration will be
conducted pursuant to the provisions of this Agreement, and the commercial arbitration
rules of the American Arbitration Association, unless such rules are inconsistent with the
provisions of this Agreement. Limited civil discovery shall be permitted for the
production of documents and taking of depositions. Unresolved discovery disputes may be
brought to the attention of the arbitrator who may dispose of such dispute. The arbitrator
shall have the authority to award any remedy or relief that a court of this state could
order or grant; provided, however, that punitive or exemplary damages shall not be awarded.
Unless otherwise ordered by the arbitrator, the parties shall share equally in the payment
of the fees and expenses of the arbitrator. The arbitrator may award to the prevailing
party, if any, as determined by the arbitrator, all of the prevailing party’s costs and
fees, including the arbitrator’s fees, and expenses, and the prevailing party’s travel
expenses, out-of-pocket expenses and reasonable attorneys’ fees. Unless otherwise agreed
by the parties, the place of any arbitration proceedings shall be Hennepin County,
Minnesota.





[Signatures appear on the following page(s).]




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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and
delivered as of the day and year first above written.



	 	 	 	 	 
	 	SURMODICS, INC.

 	 
	 	By:  	/s/ Robert C. Buhrmaster	 
	 	 	Robert C. Buhrmaster 	 
	 	 	Chairman of the Board 	 
	 
	 	 	 
	 	
/s/ Gary R. Maharaj	 
	 	Gary R. Maharaj