SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
Exhibit 10.1
SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment is made and entered into effective as of January 4, 2008 (the “Effective
Date”), between American Medical Systems, Inc., a Delaware corporation (the “Company”), and Xxxxxx
X. Xxxxxxx (the “Executive”).
R E C I T A L S
WHEREAS, the Company and the Executive are parties to an Employment Agreement, dated as of
April 26, 2004, as amended by a First Amendment to Employment Agreement dated as of January 5, 2005
(the “Employment Agreement”); and
WHEREAS, the parties hereto desire to amend the Employment Agreement to reflect certain
changes necessary or desirable to comply with the requirements of Section 409A of the Internal
Revenue Code as set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the
parties hereto hereby agree as follows:
A. EMPLOYMENT AGREEMENT AMENDMENTS
1. Section 6(e) of the Employment Agreement is hereby amended in its entirety to read as
follows:
“(e) Payments.
(1) In the event that the Executive’s employment terminates for any reason,
the Company shall pay to the Executive all amounts and benefits accrued but
unpaid hereunder through the date of termination in respect of Salary or
unreimbursed expenses, including accrued and unused vacation.
(2) In the event the Executive’s Termination of Employment (defined below)
by the Company without Cause, whether during or upon expiration of the then
current term of this Agreement, then in addition to the amounts specified in
the foregoing clause (1), the Company shall continue to pay the Executive
his Salary (less any applicable withholding or similar taxes) at the rate in
effect hereunder on the date of such termination periodically, in accordance
with the Company’s prevailing payroll practices, for a period of twelve (12)
months following the date of such termination (the ‘Severance Term’).
(3) In the event the Executive is entitled to salary continuation benefits
under clause (2) and if the Executive elects COBRA continuation coverage
under the Company’s group medical and/or dental plans, then for each month
of the Severance Term, the Company will pay or reimburse the Executive an
amount equal to the excess of (A) 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 (subject to the rule for coverage
changes discussed below) over (B) 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 Severance Term. If the level of the
Executive’s coverage changes during the Severance Term, as, for example,
from single to family coverage or to no coverage, the amount will be
determined as if the new coverage level had been the level of coverage in
effect immediately prior to the Termination of Employment. 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 continuation coverage is not
available to the Executive during any portion of the Severance Term (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 and/or dental benefits pursuant to an alternative
arrangement, such as an individual medical and/or dental 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
6(e)(3) shall be made on or before the last day of the calendar year
following the calendar year in which the expense was incurred.
(4) In addition, during each month of the Severance Term, 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.
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(5) Further, in the event the Executive’s Termination of Employment without
Cause by reason of the Company having notified the Executive that this
Agreement will not be extended pursuant to Section 2, the Executive shall be
entitled to receive a pro-rated amount of the Bonus in a lump sum based on
the Executive’s period of employment during the calendar year in which such
termination occurs (less any applicable withholding or similar taxes), which
Bonus shall be paid promptly upon termination.
(6) In the event the Executive accepts other employment or engages in his
own business prior to the last date of the Severance Term, the Executive
shall forthwith notify the Company and the Company shall be entitled to set
off from amounts and benefits due the Executive under Section 6(e)(2), (3)
and (4) the amounts paid to and benefits received by the Executive in
respect of such other employment or business activity.
(7) Amounts owed by the Company in respect of the Salary, Bonus or
reimbursement for expenses under the provisions of Section 5 hereof shall,
except as otherwise set forth in this Section 6(e), be paid promptly upon
any termination, but not more than 90 days following such termination.
(8) The payments and benefits to be provided to the Executive as set forth
in this Section 6(e) in the event the Executive’s employment is terminated
by the Company without Cause: (i) shall be lieu of any and all benefits
otherwise provided under any severance pay policy, plan or program
maintained from time to time by the Company for its employees, and (ii)
shall not be paid to the extent that Executive’s employment is terminated
following a ‘change in control’ under circumstances entitling the Executive
to benefits under his Change in Control Severance Agreement.
(9) To the extent the Executive incurs a tax liability (including foreign,
federal, state and local taxes) in connection with the reimbursement under
Section 6(e)(3) and (4) 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 6(e)(9) will be made within [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.
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(10) Notwithstanding the foregoing, if, at the time of his or her
Termination of Employment, the Executive is a ‘specified employee’ (defined
below), the Company will treat the payments due under Section 6(e)(2) as
deferred compensation subject to the requirements of Code Section 409A, and
such payments shall be suspended and not made until the first payroll date
after the end of the six (6) month period following the Executive’s
Termination of Employment, or, if earlier, upon the Executive’s death. The
Executive is a ‘Specified Employee’ if on the date of his or her
Termination of Employment he or she is a ‘key employee’ (defined below), and
the Company or any entity that owns 50% or more of the Company and has stock
that is publicly traded on an established securities market within the
meaning of such term under Section 409A(a)(2)(B) of the Code. For this
purpose, Executive is a ‘key employee’ during the 12-month period beginning
on the April 1 immediately following a calendar year, if he or she was
employed by the Company (or any other entity with whom the Company would be
treated as a single employer under Section 414(b) or 414(c) of the Code) and
satisfied, at any time during such preceding calendar year, the requirements
of Section 416(i)(1)(A)(i), (ii) or (iii) of the Code (applied in accordance
with the regulations issued thereunder and disregarding Section 416(i)(5) of
the Code). The Executive will not be treated as a Specified Employee if he
or she is not required to be treated as a Specified Employee under Treasury
regulations issued under Section 409A of the Code.
(11) When used in this Amendment, ‘Termination of Employment’ means a
termination of Executive’s employment relationship with the Company and all
Affiliates or such other change in the Executive’s employment relationship
with the Company and all Affiliates that would be considered a ‘separation
from service’ under Section 409A of the Code. The Executive’s employment
relationship will be treated as remaining intact while the Executive is on a
military leave, a sick leave or other bona fide leave of absence (pursuant
to which there is a reasonable expectation that the Executive will return to
perform services for the Company or an Affiliate) but only if the period of
such leave does not exceed six (6) months, or if longer, so long as the
Executive retains a right to reemployment by the Company or an Affiliate
under applicable statute or by contract, provided, however, where the
Executive’s leave is due to any medically determinable physical or mental
impairment that can be expected to result in death or can be expected to
last for a continuous period of not less than six (6) months and such
impairment causes the Executive to be unable to perform the duties of his or
her position of employment or any substantially similar position of
employment, a twenty-nine (29) month period of absence shall be substituted
for such six (6) month period of absence. In all cases, the Executive’s
Termination of Employment must constitute a ‘separation from service’ under
Section 409A of the Code and any ‘separation from service’ under Section
409A of the Code shall be treated as a Termination of Employment. For this
purpose, ‘Affiliate’ means any entity that, together with the Company, is
treated as a single employer under Code Section 414(b) or (c).”
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2. Sections 6(f) and (g) of the Employment Agreement are deleted and Section 6(h) is
redesignated as 6(f) and amended and restated to read as follows:
“(f) Survival of Operative Sections. Upon any termination of the
Executive’s employment, the provisions of Sections 6(e) and 7 through 18 of this
Agreement shall survive to the extent necessary to give effect to the provisions
thereof.”
B. MISCELLANEOUS
1. No Other Amendment. Except as set forth herein, the Employment Agreement shall
remain in full force and effect in accordance with its terms.
2. Definitions. All capitalized terms that are not defined herein shall be as defined
in the Employment Agreement.
3. Counterparts. This Amendment may be executed in one or more counterparts, each of
which shall be deemed an original and all of which together shall be considered one and the same
agreement. Facsimile execution and delivery of this Agreement shall be legal, valid and binding
execution and delivery for all purposes.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first above
written.
| AMERICAN MEDICAL SYSTEMS, INC. | ||||||||||||||
Dated:
|
By: | |||||||||||||
| Name: | ||||||||||||||
| Title: | ||||||||||||||
| EXECUTIVE | ||||||||||||||
Dated: |
||||||||||||||
| Xxxxxx X. Xxxxxxx | ||||||||||||||
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