AMERICAN MEDICAL SYSTEMS, INC. EMPLOYMENT AGREEMENT
Exhibit 10.1
AMERICAN MEDICAL SYSTEMS, INC.
THIS EMPLOYMENT AGREEMENT is made and entered into effective as of April 22, 2008, between
American Medical Systems, Inc., a Delaware corporation (the “Company”), and Xxxxxxx X.
Xxxx, III (the “Executive”).
RECITALS
WHEREAS, the Company recognizes that the future growth, profitability and success of the
Company’s business will be substantially and materially enhanced by the employment of the Executive
by the Company; and
WHEREAS, the Company desires to employ the Executive and the Executive has indicated his
willingness to provide his services to the Company, on the terms and conditions set forth herein;
NOW, THEREFORE, on the basis of the foregoing premises and in consideration of the mutual
covenants and agreements contained herein, the parties hereto agree as follows:
Section 1. Employment. The Company hereby agrees to employ the Executive and the
Executive hereby accepts employment with the Company, on the terms and subject to the conditions
hereinafter set forth. The Executive shall serve as the President and Chief Executive Officer of
American Medical Systems Holdings, Inc. (the “Parent Corporation”) and the Company, and, in
such capacity, shall report directly to the Board of Directors of the Parent Corporation (the
“Board” or “Board of Directors”). The Executive shall have such duties as are
typically performed by the President and Chief Executive Officer of a corporation, together with
such additional duties, commensurate with the Executive’s position as the President and Chief
Executive Officer of the Parent Corporation and the Company, as may be assigned to the Executive
from time to time by the Board of Directors. The principal location of the Executive’s employment
shall be at the Company’s principal executive office located in Minnetonka, Minnesota, although the
Executive understands and agrees that he may be required to travel from time to time for Company
business reasons.
Section 2. Term. Unless terminated pursuant to Section 6 hereof, the Executive’s
employment hereunder shall commence on April 30, 2008 and shall continue during the period ending
on April 30, 2010 (the “Initial Term”). Thereafter, the Executive’s employment hereunder
shall extend automatically for consecutive periods of one year unless either party shall provide
notice of termination not less than sixty (60) days prior to an anniversary date of this Agreement.
The Initial Term, together with any extension pursuant to this Section 2, is referred to herein as
the “Employment Term.” The Employment Term and this Agreement shall terminate upon any
termination of the Executive’s employment pursuant to Section 6.
Section 3. Compensation. During the Employment Term, the Executive shall be entitled
to the following compensation and benefits:
(a) Salary. As compensation for the performance of the Executive’s services
hereunder, the Company shall pay to the Executive a base salary (the “Salary”) of
$500,000 per year with increases, if any, as may be approved by the Board of Directors or
the Compensation Committee of the Board. The Salary shall be payable in accordance with the
customary payroll practices of the Company as the same shall exist from time to time. In no
event shall the Salary be decreased during the Employment Term.
(b) Bonus. During the Employment Term, in addition to Salary, the Executive
shall be eligible to participate in the executive variable incentive plan or such other
bonus plans as may be adopted from time to time by the Board of Directors or the
Compensation Committee of the Board for other officers of the Company (the “Bonus”)
for each such fiscal year ending during the Employment Period; provided that, unless the
Board of Directors or the Compensation Committee of the Board determines otherwise, the
Executive must be employed on the last day of each fiscal quarter or year, as of which the
Bonus is determined under any bonus plan, in order to receive the Bonus attributable to such
fiscal quarter or year. The Executive’s entitlement to the Bonus for any particular fiscal
quarter or year shall be based on the attainment of performance objectives established by
the Board of Directors or the Compensation Committee of the Board in any such bonus plan,
and the Executive’s target Bonus for 100% achievement of performance objectives under such
bonus plan shall be 100% of base Salary. The Executive’s participation in the 2008
executive variable incentive plan shall be effective as of the beginning of second fiscal
quarter of 2008.
(c) Stock Options.
(1) The Executive shall be granted on May 5, 2008 (the “Grant Date”) a
Non-Qualified Stock Option to acquire 250,000 shares of Common Stock of the Parent
Corporation under the Parent Corporation’s 2005 Stock Incentive Plan (the “2005
Plan”) at an exercise price equal to the Fair Market Value (as defined in the
2005 Plan) of one share of Common Stock on the Grant Date; such option to become
exercisable, on a cumulative basis, with respect to 25% of the shares covered by
such option on March 31, 2009, and with respect to 6.25% of the shares covered by
such option on the last day of each calendar quarter thereafter, provided that the
Executive has been continuously employed by or providing service to the Company
through, each such date; and such option to expire seven years from the Grant Date.
All of the terms and conditions relating to the option, including the vesting and
expiration dates, are set forth in the Stock Option Certificate, dated the Grant
Date, evidencing such option.
(2) The Executive shall be granted on the Grant Date a Non-Qualified Stock
Option to acquire 250,000 shares of Common Stock of the Parent Corporation under the
2005 Plan at an exercise price equal to the Fair Market Value (as defined in the
2005 Plan) of one share of Common Stock on the Grant Date; such option to become
exercisable in full on the first day after the Grant Date that the Sale Price (as
defined below) of one share of Common Stock of the Parent Corporation is equal to or
greater than $24.00 for five (5) consecutive trading days, provided that the
Executive has been continuously employed by or
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providing service to the Company through such date. For purposes of this
Agreement, the “Sale Price” means the average of the reported high and low
sale prices of one share of Common Stock of the Parent Corporation during the
regular trading session, as reported on the Nasdaq Global Select Market, on a
trading day. All of the terms and conditions relating to the option, including the
vesting and expiration dates, are set forth in the Stock Option Certificate, dated
the Grant Date, evidencing such option.
(d) Relocation Expenses. The Company will pay the Executive $41,667, subject
to applicable withholding for income and employment-related taxes, in a lump sum on or
before May 16, 2008 to cover miscellaneous travel and other expenses incurred by the
Executive in connection with relocating to the Minneapolis, Minnesota metropolitan area. In
addition, the Executive will be eligible for the Company’s standard relocation benefits,
which include up to three house hunting trips, movement of household goods, temporary
housing, closing costs on the purchase of a home in Minnesota, and other benefits as set
forth in the Relocation Program provided to the Executive.
(e) Benefits. Except as otherwise provided in this Agreement, in addition to
the Salary and Bonus, if any, the Executive shall be entitled during the Employment Term to
participate in medical, dental, life and disability insurance programs and other benefit
programs provided to other officers of the Company on terms no less favorable than those
available to the other officers of the Company. The Executive shall also be entitled to the
same number of paid-time-off days, holidays and other benefits as are generally allowed to
other senior executives of the Company in accordance with the Company’s policies in effect
from time to time.
Section 4. Exclusivity. During the Employment Term, the Executive shall devote his
full time to the business of the Company and its subsidiaries, shall faithfully serve the Company
and its subsidiaries, shall in all respects conform to and comply with the lawful and reasonable
directions and instructions given to him by the Board of Directors in accordance with the terms of
this Agreement, shall use his best efforts to promote and serve the interests of the Company and
its subsidiaries and shall not engage in any other business activity, whether or not such activity
shall be engaged in for pecuniary profit, except that the Executive may (1) participate in the
activities of professional trade organizations related to the business of the Company and its
subsidiaries, (2) engage in personal investing activities and (3) serve on the board of directors
of not more than two other companies whose businesses are not in competition with the business
interests of the Company, provided that the activities set forth in these clauses (1), (2) and (3),
either singly or in the aggregate, do not interfere in any material respect with the services to be
provided by the Executive hereunder.
Section 5. Reimbursement for Expenses. During the Employment Term, the Executive is
authorized to incur reasonable expenses in the discharge of the services to be performed hereunder,
including expenses for travel, entertainment, lodging and similar items in accordance with the
Company’s expense reimbursement policy, as the same may be modified by the Company from time to
time. The Company shall reimburse the Executive for all such proper expenses upon presentation by
the Executive of itemized accounts of such expenditures in
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accordance with the financial policy of the Company, as in effect from time to time.
Section 6. Termination and Default.
(a) Death. The Executive’s employment shall automatically terminate upon his
death and upon such event, the Executive’s estate shall be entitled to receive the amounts
specified in Section 6(e) below.
(b) Disability. If the Executive is unable to perform the duties required of
him under this Agreement because of illness, incapacity, or physical or mental disability,
the Employment Term shall continue and the Company shall pay all compensation required to be
paid to the Executive hereunder, unless the Executive is disabled such that the Executive
would be entitled to receive disability benefits under the Company’s long-term disability
plan, or if no such plan exists, the Executive is unable to perform the duties required of
him under this Agreement for an aggregate of 180 days (whether or not consecutive) during
any 12-month period during the term of this Agreement, in which event the Executive’s
employment shall terminate.
(c) Cause. The Company may terminate the Executive’s employment at any time,
with or without Cause. In the event of termination pursuant to this Section 6(c) for Cause
(as defined below), the Company shall deliver to the Executive written notice setting forth
the basis for such termination, which notice shall specifically set forth the nature of the
Cause which is the reason for such termination. Termination of the Executive’s employment
hereunder shall be effective upon delivery of such notice of termination. For purposes of
this Agreement, “Cause” shall mean: (1) the Executive’s failure (except where due
to a disability contemplated by subsection (b) hereof), neglect or refusal to perform his
duties hereunder which failure, neglect or refusal shall not have been corrected by the
Executive within 30 days of receipt by the Executive of written notice from the Company of
such failure, neglect or refusal, which notice shall specifically set forth the nature of
said failure, neglect or refusal, (2) any willful or intentional act of the Executive that
has the effect of injuring the reputation or business of the Company or its affiliates in
any material respect; (3) any continued or repeated absence from the Company, unless such
absence is (A) approved or excused by the Board of Directors or (B) is the result of the
Executive’s illness, disability or incapacity (in which event the provisions of Section 6(b)
hereof shall control); (4) use of illegal drugs by the Executive or repeated drunkenness;
(5) conviction of the Executive for the commission of a felony; or (6) the commission by the
Executive of an act of fraud or embezzlement against the Company.
(d) Resignation. The Executive shall have the right to terminate his
employment at any time by giving notice of his resignation.
(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
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but unpaid hereunder through the date of termination in respect of Salary or
unreimbursed expenses, including accrued and unused vacation.
(2) In the event of 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, and Executive executes (and does not revoke within the
relevant statutory periods) a Release and Separation Agreement in the form provided
by the Company, then in addition to the amounts specified in Section 6(e)(1), (i)
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”); and (ii) 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)(2) shall
be made on or before the last day of the calendar year following the calendar year
in which the expense was incurred.
(3) 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 after the expiration of
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any rescission periods contained in the release, but not more than 90 days
following such termination.
(4) 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: (A) 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 (B) 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 the Change in Control Severance Agreement,
dated the date hereof, between Parent Corporation and the Executive (the “CIC
Severance Agreement”).
(5) 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)(2) 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)(5) 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.
(6) Notwithstanding the foregoing, if, at the time of his or her Termination of
Employment, the Executive is a ‘specified employee’ (defined below), and the Company
reasonably determines that any salary continuation payment due under Section 6(e)(2)
constitutes deferred compensation subject to the requirements of Code Section 409A,
then such payments shall be suspended and not made until on or after the first day
after the end of the six (6) month period following the Executive’s Termination of
Employment but in no event later than seven (7) months following Termination of
Employment, or, if earlier, upon the Executive’s death. If any such suspended
payment is not made within 10 days of the end of such six month period, the Company
will pay the Executive interest, equal to the applicable Federal rate in effect for
each month, from the date of Termination of Employment through the date of payment.
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), of 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). 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
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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.
(7) When used in this Agreement, “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, a
twenty-nine (29) month period of absence shall be substituted for such six (6) month
period of absence 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. 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).
Section 7. Restrictions on Competitive Activities. The Executive acknowledges that
the agreements and covenants contained in this Section 7 are essential to protect the value of the
Company’s business and assets and by his or her current employment with the Company, the Executive
has obtained and will obtain such knowledge, contacts, know-how, training and experience and there
is a substantial probability that such knowledge, know-how, contacts, training and experience could
be used to the substantial advantage of a competitor of the Company and to the Company’s
substantial detriment. In consideration of the foregoing and the other covenants and agreements of
the Company set forth herein, the Executive agrees to the restrictions contained in this Section 7.
(a) Non-Solicitation. The Executive agrees that the Executive will not, during
the Executive’s employment with the Company and for a period of two years following the date
of the Executive’s voluntary or the Company’s involuntary termination of the Executive’s
employment with the Company (the “Restrictive Period”), directly or indirectly
solicit, or assist anyone else in the solicitation of, any of the Company’s employees, or
former employees who worked for the Company for the purpose of hiring them, engaging them as
consultants, or inducing them to leave their employment with the
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Company. If the Executive is approached by one of the Company’s employees or former
employees regarding potential employment, consultation or contract, as described above
during the Restrictive Period of non-solicitation, the Executive must immediately (1) fully
inform the employee or former employee of the Executive’s non-solicitation obligation
described above; and (2) refrain from engaging in any communication with the employee or
former employee regarding potential employment, consultation or contract.
(b) “Company Product” means any product, product line or service that has been
designed, developed, manufactured, marketed, sold or is under research, development, or is
being pursued through acquisition or licensure, or has been the subject of disclosure to the
Company in response to a due diligence process by the Company, at any time during the
Executive’s employment with the Company; provided, however, that if the Executive becomes
entitled to the benefits described in Section 2 of the CIC Severance Agreement, then the
definition of “Company Product” shall mean Company Product as of immediately prior to the
“change in control” as defined in the CIC Severance Agreement.
(c) “Competitive Product” means goods, products, product lines or services
developed, designed, manufactured, marketed, promoted, sold, serviced, or that are in
development or the subject of research by any Person that are the same or similar, perform
any of the same or similar functions, may be substituted for, or are intended or used for
any of the same purposes as a Company Product.
(d) “Conflicting Organization” means any Person (including the Executive), and
any parent, subsidiary, partner or affiliate of any Person, that engages in, or is about to
become engaged in, the development, design, production, manufacture, promotion, marketing,
sale, support or service of a Competitive Product.
(e) Non-Competition. The Executive agrees that the Executive will not, during
the Restrictive Period, alone or in any capacity with another Person (e.g., as an advisor,
consultant, principal, agent, partner, officer, director, shareholder, employee or
otherwise), within any geographic area where the Company does business:
(1) directly or indirectly disclose to a Conflicting Organization the names or
any other information regarding the Company’s customers, or, on behalf of a
Conflicting Organization, call on, solicit, take away, or attempt to call on,
solicit, or take away any of the customers of the Company on whom the Executive
called, or otherwise had contact on behalf of the Company, or developed knowledge
regarding the customer’s need for or use of Competitive Product(s); or
(2) seek or obtain employment with, work for, consult with, or lend assistance
to any Conflicting Organization in a capacity which is the same as or similar to the
employment capacity the Executive performed on behalf of the Company; or
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(3) directly or indirectly participate in or support in any capacity the
manufacture, invention, development, testing or research of any Competitive Product;
or
(4) disrupt, damage, impair, or interfere with the business of the Company
whether by way of interfering with or disrupting the Company’s relationship with
employees, customers, agents, representatives or vendors.
(f) Exception. During the Restrictive Period, the restrictions contained in
this Section 7 will not prevent the Executive from accepting employment with, or providing
consulting services to, a large diversified organization with separate and distinct
divisions that do not compete, directly or indirectly, with the Company, if prior to
accepting such employment or providing such consulting services, the Company receives
separate written assurances from the prospective employer and from the Executive,
satisfactory to the Company, confirming that the Executive will not render any services,
directly or indirectly, to any division or business unit that competes, directly or
indirectly, with the Company. During the Restrictive Period set forth in this Section 7,
the Executive will inform any new employer, prior to accepting employment or providing
consulting services, of the existence of this Agreement and provide such employer with a
copy of this Agreement.
Section 8. Trade Secrets. The Company has, and is expected to develop certain
concepts, products, processes, information, designs, ideas, policies and procedures (collectively,
“Trade Secrets”) which it uses in its business which give the Company an advantage over
competitors who do not know, understand or use these secrets. Trade Secrets include the following
information:
(a) information which in any way relates to the Company’s design, engineering,
manufacturing or management activities, financial condition, financial operations,
purchasing activities, business plans and marketing activities;
(b) information acquired or compiled by the Company regarding actual or potential
customers, including their identities, their development prospects, financial information
concerning their business operations, identity and quantity of products or services
purchased from the Company, and all related accounts receivable information;
(c) information concerning or resulting from the development of internal policies,
procedures, standards, quality or productivity measures or tools; and
(d) any other information (in whatever form) as may, from time to time, be designated
by the Company as “Proprietary” or a “Trade Secret.”
Except as may be required by the Executive’s employment with the Company or as
expressly agreed upon by the Company in writing, the Executive agrees that he will not,
during or after his employment with the Company, use or disclose any Trade Secrets or permit
any person to examine or copy any Trade Secrets. If any of the above classes of information
is found by a court to not constitute Trade Secrets, such information shall constitute
“Confidential Information” for purposes of this Agreement.
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Section 9. Confidential Information. The Company has, and is expected to develop
other Confidential Information, concepts, designs, policies, and procedures having independent
economic value from not being generally known or ascertainable by proper means which the Executive
will or may learn in the course of employment but which does not constitute Trade Secrets as
described above. For purposes of this Agreement, “Confidential Information” means any
proprietary, confidential or competitively sensitive information and materials which are the
property of or relate to the Company including, without limitation:
(a) the identity of the Company’s past, present and prospective customers, clients or
business contacts, and all documents, information and materials which concern or relate to
such customers, clients or business contacts;
(b) marketing, sales, and advertising information; marketing and sales techniques,
strategies, efforts and data; business plans and product development and delivery schedules;
market research and forecasts;
(c) organizational information, such as personnel and salary data, merger, acquisition
and expansion information; information concerning methods of operation; divestiture
information, and competitive information pertaining to the Company’s distributors;
(d) technical information such as product specifications, compounds, formulas,
improvements, discoveries, developments, designs, inventions, techniques, and new products;
(e) information disclosed to the Executive as part of any specialized, proprietary
training process; and
(f) information of third parties provided to the Executive subject to non-disclosure
restrictions for use in the Executive’s business for the Company.
Except as may be required by the Executive’s employment with the Company or as
expressly agreed upon in writing by the Company in writing, the Executive agrees that he
will not, during or at any time after his employment with the Company, use or disclose any
Confidential Information or permit any person to examine, copy or otherwise receive any
Confidential Information.
Section 10. Inventions.
(a) “Inventions” means any inventions, discoveries, improvements and ideas,
whether or not in writing or reduced to practice and whether or not patentable or
copyrightable, made, authored or conceived by the Executive, whether by his individual
efforts or in connection with the efforts of others, and that either (i) relate in any way
to the Company’s business, products or processes, past, present, anticipated or under
development, or (ii) result in any way from the Executive’s employment by the Company, or
(iii) use the Company’s equipment, supplies, facilities or trade secret information.
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(b) The Executive agrees that all Inventions made by him during the period of his
employment with the Company and for six (6) months thereafter, whether made during the
working hours of the Company or on the Executive’s own time, will be the sole and exclusive
property of the Company. The Executive will, with respect to any Invention: (i) keep
current, accurate, and complete records, which will belong to the Company and be kept and
stored on the Company’s premises; (ii) promptly and fully disclose the existence and
describe the nature of the Invention to the Company in writing (and without request); (iii)
assign (and the Executive hereby assigns) to the Company all of his right, title and
interest in and to the Invention, any applications he makes for patents or copyrights in any
country, and any patents or copyrights granted to the Executive in any country; and (iv)
acknowledge and deliver promptly to the Company any written instruments, and perform any
other acts necessary in the Company’s opinion to preserve property rights in the Invention
against forfeiture, abandonment or loss and to obtain and maintain letters patent and/or
copyrights on the Invention and to vest the entire right and title to the Invention in the
Company, whether during or after the Executive’s employment with the Company.
(c) The Executive represents that, as of the date of this Agreement, he have no right
under and will make no claims against the Company with respect to any inventions,
discoveries, improvements, ideas or works of authorship which would be Inventions if made,
conceived, authored or acquired by him during the term of this Agreement.
(d) To the extent that any Invention qualifies as “work made for hire” as defined in 17
U.S.C. § 101 (1976), as amended, such Invention will constitute “work made for hire” and, as
such, will be the exclusive property of the Company.
(e) Pursuant to Minnesota law, this Section 10 does not apply to any invention for
which no equipment, supplies, facility, or trade secret information of the Company was used
and which was developed entirely on the Executive’s own time, and (i) which does not relate
directly to any business of the Company or any of the Company’s actual or demonstrably
anticipated research or development, or (ii) which does not result from any work the
Executive performs for the Company.
Section 11. Injunctive Relief. Without intending to limit the remedies available to
the Company, the Executive acknowledges that in the event of a breach of any of the covenants
contained in Sections 7, 8, 9 or 10 may result in material irreparable injury to the Company or its
subsidiaries or affiliates for which there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and that, in the event of such a breach or
threat thereof, the Company shall be entitled to obtain a temporary restraining order and/or a
preliminary or permanent injunction, without the necessity of proving irreparable harm or injury as
a result of such breach or threatened breach of Sections 7, 8, 9 or 10, restraining the Executive
from engaging in activities prohibited by Sections 7, 8, 9 and 10 or such other relief as may be
required specifically to enforce any of the covenants in Sections 7, 8, 9 and 10.
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Section 12. Representations and Warranties of the Executive. The Executive represents
and warrants to the Company as follows:
(a) This Agreement, upon execution and delivery by the Executive, will be duly executed
and delivered by the Executive and (assuming due execution and delivery hereof by the
Company) will be the valid and binding obligation of the Executive enforceable against the
Executive in accordance with its terms.
(b) Neither the execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby nor the performance of this Agreement in accordance with
its terms and conditions by the Executive (1) requires the approval or consent of any
governmental body or of any other person or (2) conflicts with or results in any breach or
violation of, or constitutes (or with notice or lapse of time or both would constitute) a
default under, any agreement, instrument, judgment, decree, order, statute, rule, permit or
governmental regulation applicable to the Executive. Without limiting the generality of the
foregoing, the Executive is not a party to any non-competition, non-solicitation, no hire or
similar agreement that prohibits or conflicts in any way the Executive’s employment
hereunder.
The representations and warranties of the Executive contained in this Section 9 shall survive
the execution and delivery of this Agreement and the consummation of the transactions contemplated
hereby.
Section 13. Representations and Warranties of the Company. The Company represents and
warrants to the Executive as follows:
(a) This Agreement, upon execution and delivery by the Company, will be duly executed
and delivered by the Company and (assuming due execution and delivery hereof by the
Executive) will be the valid and binding obligation of the Company enforceable against the
Company in accordance with its terms.
(b) Neither the execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby nor the performance of this Agreement in accordance with
its terms and conditions by the Company (1) requires the approval or consent of any
governmental body or of any other person or (2) conflicts with or results in any breach or
violation of, or constitutes (or with notice or lapse of time or both would constitute) a
default under, any agreement, instrument, judgment, decree, order, statute, rule, permit or
governmental regulation applicable to the Company.
The representations and warranties of the Company contained in this Section 10 shall survive
the execution and delivery of this Agreement and the consummation of the transactions contemplated
hereby.
Section 14. Successors and Assigns; No Third-Party Beneficiaries. This Agreement
shall inure to the benefit of, and be binding upon, the successors and assigns of each of the
parties, including, but not limited to, the Executive’s heirs and the personal representatives of
the Executive’s estate; provided, however, that neither party shall assign or
delegate any of the
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obligations created under this Agreement without the prior written consent of the other party.
Notwithstanding the foregoing, the Company shall have the unrestricted right to assign this
Agreement and to delegate all or any part of its obligations hereunder to any of its subsidiaries
or Affiliates, but in such event such assignee shall expressly assume all obligations of the
Company hereunder and the Company shall remain fully liable for the performance of all of such
obligations in the manner prescribed in this Agreement. Nothing in this Agreement shall confer
upon any person or entity not a party to this Agreement, or the legal representatives of such
person or entity, any rights or remedies of any nature or kind whatsoever under or by reason of
this Agreement.
Section 15. Waiver and Amendments. Any waiver, alteration, amendment or modification
of any of the terms of this Agreement shall be valid only if made in writing and signed by the
parties hereto; provided, however, that any such waiver, alteration, amendment or
modification is consented to on the Company’s behalf by the Board of Directors or Compensation
Committee of the Board. No waiver by either of the parties hereto of their rights hereunder shall
be deemed to constitute a waiver with respect to any subsequent occurrences or transactions
hereunder unless such waiver specifically states that it is to be construed as a continuing waiver.
Section 16. Severability and Governing Law. The Executive acknowledges and agrees
that the covenants set forth in Section 7 hereof are reasonable and valid in geographical and
temporal scope and in all other respects. If any of such covenants or such other provisions of
this Agreement are found to be invalid or unenforceable by a final determination of a court of
competent jurisdiction (a) the remaining terms and provisions hereof 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 invalid or
unenforceable term or provision. This Agreement shall be governed by and construed in accordance
with the laws of the state of Minnesota applicable to contracts made and to be performed entirely
within such state.
Section 17. Notices.
(a) All communications under this Agreement shall be in writing and shall be delivered
by hand or mailed by overnight courier or by registered or certified mail, postage prepaid:
(1) If to the Executive, at 00 Xxxxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxxxxx 00000,
or at such other address as the Executive may have furnished the Company in writing,
and
(2) If to the Company, at 00000 Xxxx Xxxx Xxxx, Xxxxxxxxxx, Xxxxxxxxx 00000,
marked for the attention of Senior Vice President, Human Resources, or at such other
address as it may have furnished in writing to the Executive.
(b) Any notice so addressed shall be deemed to be given: if delivered by hand, on the
date of such delivery; if mailed by courier, on the first business day
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following the date of such mailing; and if mailed by registered or certified mail, on
the third business day after the date of such mailing.
Section 18. Section Headings. The headings of the sections and subsections of this
Agreement are inserted for convenience only and shall not be deemed to constitute a part thereof,
affect the meaning or interpretation of this Agreement or of any term or provision hereof.
Section 19. Entire Agreement. This Agreement, including the Stock Option
Certificates, and the CIC Severance Agreement constitutes the entire understanding and agreement of
the parties hereto regarding the employment of the Executive. This Agreement supersedes all prior
negotiations, discussions, correspondence, communications, understandings and agreements between
the parties relating to the subject matter of this Agreement.
Section 20. Survival of Operative Sections. Upon any termination of the Executive’s
employment, the provisions of Sections 6(e) and 7 through 21 of this Agreement shall survive to the
extent necessary to give effect to the provisions thereof.
Section 21. Counterparts. This Agreement 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 Agreement as of the date first above
written.
| AMERICAN MEDICAL SYSTEMS, INC. | ||||
| By: | ||||
| Xxxxx X. Xxxx | ||||
| Senior Vice President, Human Resources | ||||
| Xxxxxxx X. Xxxx, III | ||||
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