CHANGE IN CONTROL SEVERANCE
AGREEMENT
This Change in
Control Severance Agreement (this “ Agreement
”), effective as of
, is between American Medical Systems Holdings, Inc., a Delaware
corporation (the “ 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 10700 Bren Road West,
Minnetonka, Minnesota 55343 and
(the “ Executive ”).
A. The
Executive will be employed as the Company’s
, beginning on the date hereof.
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 stockholders.
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
stockholders.
D. The Board
has determined that appropriate steps should be taken to minimize
the risk that Company’s 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 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 accept employment with 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 an
exception to or exclusion from 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;
provided, however, if any payment is or becomes subject to the
requirements of Code section 409A, the Agreement as it relates to
such payment is intended to comply with the requirements of Code
section 409A. In no event may Executive, directly or indirectly,
designate the calendar year of any payment to be made under this
Agreement. The payments to be made under Section 2 are
intended to be exempt from the requirements of Code section 409A
because they are (i) non-
taxable
benefits, (ii) welfare benefits within the meaning of Treas.
Reg. Sec. 1.409A-1(a)(5), (iii) short-term deferrals under
Treas. Reg. Sec. 1.409A-1(b)(4), or (iv) payments under a
separation pay plan within the meaning of Treas. Reg. Sec.
1.409A-1(b)(9).
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.
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 first 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 . Subject to Section 2(e), not more than
10 days following the Date of Termination, or, if later, not
more than 10 days following the date of the Change in Control,
the Company will make a lump-sum cash payment to the Executive in
an amount equal to 100% of the sum of (i) the
Executive’s Base Pay, plus (ii) 100% of the
Executive’s target bonus established for the year during
which the Change in Control occurs.
(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 12th 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).
2
(c) Group
Health Plans . If the Executive elects COBRA continuation
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
health benefits pursuant to an alternative arrangement, such as an
individual health 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 year following the
calendar year in which any continuation coverage payment was
incurred.
(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 quarterly 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, and in all events
reimbursement shall be made on or before the last day of the
calendar year following the calendar year in which the premium was
incurred.
3
(e) 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 to the extent any
payment under Section 2 is determined by the Company to be
deferred compensation subject to the requirements of
Section 409A of the Code, payment of such deferred
compensation shall be suspended and not made until the first day of
the month next following the end of the six (6) month period
following the Executive’s Termination of Employment, or, if
earlier, upon the Executive’s death.
3.
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.
(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,
4
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.
(g)
Disputes . If the Executive so elects, any dispute,
controversy or claim arising under or in connection with
Sections 2 or 3 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
As
|
