EXHIBIT 10.14
MANAGEMENT CONTINUITY AGREEMENT
This Management Continuity Agreement (the "Agreement") is made and entered
into effect as of April 15, 2002, by and between _____________ (the "Employee")
and Laserscope, a California corporation (the "Company").
RECITALS
A. It is expected that another company or other entity may from time to
time consider the possibility of acquiring the Company or that a
change in control may otherwise occur, with or without the approval
of the Company's Board of Directors (the "Board"). The Board
recognizes that such consideration can be a distraction to the
Employee and can cause the Employee to consider alternative
employment opportunities. The Board has determined that it is in the
best interests of the Company and its shareholders to assure that
the Company will have the continued dedication and objectivity of
the Employee, notwithstanding the possibility, threat or occurrence
of a Change of Control (as defined below) of the Company.
B. The Board believe that it is in the best interest of the Company and
its shareholders to provide the Employee with an incentive to
continue his or her employment with the Company.
C. The Board believes that it is imperative to provide the Employee
with certain benefits upon a Change of Control and, under certain
circumstances, upon termination of the Employee's employment in
connection with a Change of Control, which benefits are intended to
provide the Employee with financial security and provide sufficient
income and encouragement to the Employee to remain with the Company
notwithstanding the possibility of a Change of Control.
D. To accomplish the foregoing objectives, the Board of Directors has
directed the Company, upon execution of this Agreement by the
Employee, to agree to the terms provided in this Agreement.
E. Certain capitalized terms used in the Agreement are defined in
Section 4 below.
In consideration of the mutual covenants herein contained, and in
consideration of the continuing employment of Employee by the
Company, the parties agree as follows:
1. At-Will Employment: The Company and the employee acknowledge
that the Employee's employment is and shall continue to be
at-will, as defined under applicable law. If the Employee's
employment terminates for any reason, including (without
limitation) any termination prior to a Change of Control, the
Employee shall not be entitled to any payments, benefits,
damages, awards or compensation other than as provided by this
Agreement, or as may otherwise be available in accordance with
the Company's established employee plans and written policies
at the time of termination. The terms of this Agreement shall
terminate upon the earlier of (I) the date that all
obligations of the parties hereunder have been satisfied, (ii)
two years after the new effective date, or (iii) twenty-four
(24) months after a Change of Control. A termination of the
terms of this Agreement pursuant to the preceding sentence
shall be effective for all purposes, except that such
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termination shall not affect the payment or provision of
compensation or benefits on account of a termination of
employment occurring prior to the termination of the terms of
this Agreement.
2. Change of Control/Stock Options. Immediately upon the
effective date of the Change of Control, each stock option
granted for the Company's securities held by the Employee
shall become immediately vested and shall be exercisable in
full in accordance with the provisions of the option agreement
and plan pursuant to which such option was granted. Upon the
immediate vesting of such stock options, the Employee will
have the right (subject to any limitations imposed by Section
16 of the Securities Exchange Act of 1934 or other applicable
securities laws and the California Corporations Code and only
to the extent permitted by the terms of the applicable option
plan) to deliver a promissory note with a two (2) year term,
at the prime rate of interest determined as of the date of
payment of the exercise price for such options. The delivered
note will be non-recourse, and the Company or its successor
will look solely to the pledged shares for repayment.
3. Severance Benefits
(a) Termination Following A Change of Control. Subject to
Section 5 below, if the Employee's employment with the
Company is terminated at any time within 24 months after
a Change of Control, then the Employee shall be entitled
to receive severance benefits as follows:
(i) Voluntary Resignation. If the Employee voluntarily
resigns from the Company (other than as an
Involuntary Termination (as defined below) or if
the Company terminates the Employee's employment
for Cause (as defined below), then the Employee
shall not be entitled to receive severance
payments. The Employee's benefits will be
terminated under the Company's then existing
benefit plans and policies in accordance with such
plans and policies in effect on the date of
termination.
(ii) Involuntary Termination. If the Employee's
employment is terminated within 12 months of the
Change of Control as a result of Involuntary
Termination other than for Cause, the Employee
shall be entitled to receive 12 months severance
payments (24 months for the CEO) (the "Severance
Period") from the date of the Employee's
termination. If the Employee's employment is
terminated after 12 months but within 24 months
after the Change of Control, the Employee shall be
entitled to receive 9 months severance payments
(18 months for the CEO) (the "Severance Period")
from the date of the Employee's termination. The
Employee's severance payments shall be equal to
the salary which the Employee was receiving
immediately prior to the Change of Control plus a
25% bonus for Executive Committee members and 45%
for the CEO shall be paid during the Severance
Period in accordance with the Company's standard
payroll practices or, at the Employee's election,
shall be paid to the Employee in lump sum within
ten (10) days of the Employee's termination date.
Such election shall not affect the length of the
Severance Period nor the provision of benefits
within the Severance Period. In addition,
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during the Severance Period, the Employee shall be
provided with benefits substantially identical to
those to which the Employee was entitled
immediately prior to the Change of Control.
(iii) Involuntary Termination for Cause. If the
Employee's employment is terminated for Cause,
then the Employee shall not be entitled to receive
severance payments. The Employee's benefits will
be terminated under the Company's then existing
benefits plans and policies in effect on the date
of termination.
(b) Termination Apart from Change of Control. In the event
the Employee's employment terminates for any reason
prior to the Change of Control, then the Employee shall
not be entitled to receive any severance payments under
this Agreement. The Employee's benefits will be
terminated under the Company's then existing benefit
plans and policies in accordance with such plans and
policies in effect on the date of termination.
4. Definition of Terms. The following terms referred to in this
Agreement shall have the following meanings:
(a) Change of Control. "Change of Control" shall mean the
occurrence of any of the following events:
(i) Ownership. Any "person" (as such term is used in
Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended) is or becomes
the "beneficial owner" (as defined in Rule 13d-3
under said Act), directly or indirectly, of
securities of the Company representing twenty
percent (20%) or more of the total voting power
represented by the Company's then outstanding
voting securities without the approval of the
Board of Directors of the Company; or
(ii) Merger/Sale of Assets. A merger or consolidation
of the Company whether or not approved by the
Board of Directors of the Company, other than a
merger or consolidation which would result in the
voting securities of the Company outstanding
immediately prior thereto continuing to represent
(either by remaining outstanding or by being
converted into voting securities of the surviving
entity) at least fifty percent (50%) of the total
voting power represented by the voting securities
of the Company or such surviving entity
outstanding immediately after such merger or
consolidation, or the shareholders of the Company
approve a plan of complete liquidation of the
Company or an agreement for the sale or
disposition by the Company of all or substantially
all of the Company's assets.
(iii) Change in Board Composition. A change in the
composition of the Board of Directors of the
Company, as a result of which fewer than a
majority of the directors are Incumbent Directors.
"Incumbent Directors" shall mean directors who
either (A) are directors of the Company as of
April 1 2002, or (B) are elected, or nominated for
election, to the Board of Directors of the Company
with the affirmative votes of at least a majority
of the Incumbent Directors at the time of such
election or nomination (but shall not include an
individual whose election or nomination is in
connection with an
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actual or threatened proxy contest relating to the
election of directors to the Company).
(b) Cause. "Cause" shall mean (I) material breach of any
material terms of this Agreement, (ii) conviction of a
felony, (iii) fraud, (iv) repeated unexplained or
unjustified absence, (v) willful breach of fiduciary
duty under applicable laws, this Agreement or Company
policies first in effect prior to the occurrence of a
Change in Control or (vi) gross negligence or willful
misconduct where such gross negligence or willful
misconduct has resulted or is likely to result in
substantial and material damage to the Company or its
subsidiaries.
(c) Involuntary Termination. "Involuntary Termination" will
include the Employee's voluntary termination, upon 30
days prior written notice to the Company, following (I)
a material reduction in job responsibilities
inconsistent with the Employee's position with the
Company and the Employee's prior responsibilities, i.e.,
parent company versus subsidiary level or type
responsibility, or (ii) relocation to a facility or
location more than 50 miles from the Company's current
location, or (iii) reduction in salary.
5. Limitation on Payments. To the extent that any of the payments
or benefits provided for in this Agreement or otherwise
payable to the Employee constitute "parachute payments" within
the meaning of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code") and, but for this Section 5,
would be subject to the excise tax imposed by Section 4999 of
the code, the Company shall reduce the aggregate amount of
such payments and benefits such that the present value thereof
(as determined under the Code and the applicable regulations)
is equal to 2.99 times the Employee's "base amount" as defined
in Section 280G (b)(3) of the Code.
6. Successors. Any successor to the Company (whether direct or
indirect and whether by purchase, lease, merger,
consolidation, liquidation, or otherwise) to all or
substantially all of the Company's business and/or assets
shall assume the obligations under this Agreement and agree
expressly to perform the obligations under this Agreement n
the same manner and to the same extent as the company would be
required to perform such obligations in the absence of a
succession. The terms of this Agreement and all of the
Employee's rights hereunder shall insure to the benefit of,
and be enforceable by, the Employee's personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.
7. Notice. Notices and all other communications contemplated by
this Agreement shall be in writing and shall be deemed to have
been duly given when personally delivered or when mailed by
U.S. registered or certified mail, return receipt requested
and postage prepaid. Mailed notices to the Employee shall be
addressed to the Employee at the home address which the
Employee most recently communicated to the Company in writing.
In the case of the Company, mailed notices shall be addressed
to its corporate headquarters, and all notices shall be
directed to the attention of its Secretary.
8. Miscellaneous Provisions.
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(a) No Duty to Mitigate. The Employee shall not be required
to mitigate the amount of any payment contemplated by
this Agreement (whether by seeking new employment or in
any other manner), nor, except as otherwise provided in
this Agreement, shall any such payment be reduced by any
earnings that the Employee may receive from any other
source.
(b) Waiver. No provision of this Agreement shall be
modified, waived or discharged unless the modification,
waiver, or discharge is agreed to in writing and signed
bye the Employee and by an authorized officer of the
Company (other than the Employee). No waiver by either
party of any breach of, or of compliance with, any
condition or provision of this Agreement by the other
party shall be considered a waiver of any other
condition or provision or of the same condition or
provision at another time.
(c) Whole Agreement. No agreements, representations or
understandings (whether oral or written and whether
express or implied) which are not expressly set forth in
this Agreement have been made or entered into by either
party with respect to the subject matter hereof. This
Agreement supersedes any agreement of the same title and
concerning similar subject matter dated prior to the
date of this Agreement, and by execution of this
Agreement both parties agree that any such predecessor
agreement shall be deemed null and void.
(d) Choice of Law. The validity, interpretation,
construction and performance of this Agreement shall be
governed by the laws of the State of California without
reference to conflict of law provisions.
(e) Severability. If any term or provision of this Agreement
or the application thereof to any circumstance shall, in
any jurisdiction and to any extent, be invalid or
unenforceable, such term or provision shall be
ineffective as to such jurisdiction to the extent of
such invalidity or unenforceability without invalidating
or rendering unenforceable the remaining terms and
provisions to circumstances other than those as to which
it is held invalid or unenforceable, and a suitable and
equitable term or provision shall be substituted
therefore to carry out, insofar as may be valid and
enforceable, the intent and purpose of the invalid or
unenforceable term or provision.
(f) Arbitration. Any dispute or controversy arising under or
in connection with this Agreement may be settled at the
option of either party by binding arbitration in the
County of Santa Clara, California, in accordance with
the rules of the American Arbitration Association then
in effect. Judgment may be entered on the arbitrator's
award in a court having jurisdiction. Punitive damages
shall not be awarded.
(g) Legal Fees and Expenses. The parties shall each bear
their own expenses, legal fees and other fees incurred
in connection with this Agreement.
(h) No Assignment of Benefits. The rights of any person to
payments or benefits under this Agreement shall not be
made subject to option or assignment, either by
voluntary or involuntary assignment or by operation of
law, including (without limitation) bankruptcy,
garnishment, attachment
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or other creditor's process, and any action in violation
of this subsection (h) shall be void.
(i) Employment Taxes. All payments made pursuant to this
Agreement will be subject to withholding of applicable
income and employment taxes.
(j) Assignment by Company. The Company may assign its rights
under this Agreement to an affiliate, and an affiliate
may assign its rights under this Agreement to another
affiliate of the Company or to the Company; provided,
however, that no assignment shall be made if the net
worth of the assignee is less than the net worth of the
Company at the time of the assignment. In the case of
any such assignment, the term "Company" when used in a
section of this Agreement shall mean the corporation
that actually employs the Employee.
(k) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original,
but all of which together will constitute one and the
same instrument.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by its duly authorized officer, as of the day and year
first above written.
LASERSCOPE
By: By:
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(Title) (Employee)
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