Exhibit 10.4
SECOND AMENDMENT TO
EMPLOYMENT AGREEMENT OF XXXXXXX X. XXXXX
This Amendment is made and entered into effective as of January 23,
2002, between American Medical Systems, Inc., a Delaware corporation (the
"Company"), and Xxxxxxx X. Xxxxx (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 23, 1999, as amended on April 17, 2000 (as so
amended, the "Employment Agreement");
WHEREAS, the parties hereto have agreed to amend the Employment
Agreement 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. The definition of "Change of Control" in Section 6(f) of the
Employment Agreement is amended, effective as of April 17, 2000, to the extent
necessary to provide that all references therein to the Company shall be deemed
to be references to American Medical Systems Holdings, Inc., the parent
corporation of the Company. The Executive acknowledges and agrees that no Change
of Control has occurred prior to the date hereof.
2. Section 6(f) of the Employment Agreement is amended to the extent
necessary to clarify that in the event of a Change of Control, all unvested
shares that are subject to the Option shall become immediately vested and
exercisable as set forth in Section 2 of the Stock Option Agreement attached as
Exhibit B to the Employment Agreement, whether or not the Executive's employment
is terminated by the Company without Cause or by the Executive for Good Reason
during the 12-month period immediately following a Change of Control.
3. A new Section 6(g) shall be added to the Employment Agreement
immediately following the existing Section 6(h), which shall read as follows:
(g) Gross-Up Payment. If the Executive becomes entitled to payments
and benefits following a Change in Control under Section 6(f) or the
vesting of any stock options held by the Executive accelerate following a
Change in Control pursuant to any stock option Agreement between the
Company and the Executive, whether entered into on or after the date
hereof, the Company will cause its independent auditors promptly to
review, at the Company's sole expense, the applicability of Code Section
4999 to any payment or distribution of any type by the Company to or for
the Executive's benefit, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement, any stock option
agreement or otherwise (the "Total Payments"). If the auditor determines
that the Total Payments result in an excise tax imposed by Code Section
4999 or any comparable state or local law, or any interest or penalties
with respect to such excise tax (such excise tax, together with any such
interest and penalties, are collectively referred to as the "Excise Tax"),
the Company will make an additional cash payment (a "Gross-Up Payment") to
the Executive within 10 days after such determination equal to an amount
such that after payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including any
Excise Tax, imposed upon the Gross-Up Payment, the Executive would retain
an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Total Payments. For purposes of the foregoing determination, the
Executive's tax rate will be deemed to be the highest statutory marginal
state and federal tax rate (on a combined basis) then in effect. If no
determination by the Company's auditors is made prior to the time the
Executive is required to file a tax return reflecting the Total Payments,
the Executive will be entitled to receive from the Company a Gross-Up
Payment calculated on the basis of the Excise Tax the Executive reported
in such tax return, within 10 days after the later of the date on which
the Executive files such tax return or the date on which the
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Executive provides a copy thereof to the Company. In all events, if any
tax authority determines that a greater Excise Tax should be imposed upon
the Total Payments than is determined by the Company's independent
auditors or reflected in the Executive's tax return pursuant to this
Section 6(g), the Executive will be entitled to receive from the Company
the full Gross-Up Payment calculated on the basis of the amount of Excise
Tax determined to be payable by such tax authority within 10 days after
the Executive notifies the Company of such determination.
4. The existing Section 6(g) shall be renumbered Section 6(h) and
shall be amended in its entirety to read as follows:
(h) Survival of Operative Sections. Upon any termination of the
Executive's employment, the provisions of Sections 6(e), 6(f), 6(g) and 7
through 18 of this Agreement shall survive to the extent necessary to give
effect to the provisions thereof.
B. MISCELLANEOUS
1. No Mitigation. The Executive will not be required to mitigate the
amount of any benefits the Company becomes obligated to provide to the Executive
under Section 6(f) or 6(g) of the Employment Agreement, as amended hereby, by
seeking other employment or otherwise. The benefits to be provided to the
Executive under Section 6(f) or 6(g) of the Employment Agreement, as amended
hereby, may not be reduced, offset or subject to recovery by the Company by any
benefits the Executive may receive from other employment or otherwise.
2. No Setoff. The Company has no right to setoff benefits owed to
the Executive under Section 6(f) or 6(g) of the Employment Agreement, as amended
hereby, against amounts owed or claimed to be owed by the Executive to the
Company under the Employment Agreement or otherwise.
3. Disputes. If the Executive so elects, any dispute, controversy or
claim arising under Section 6(f) or 6(g) of the Employment Agreement, as amended
hereby, 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
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Association then in effect; provided that the Executive may seek specific
performance of the Executive's right to receive benefits during the pendency of
any dispute or controversy arising under Section 6(f) or 6(g) of the Employment
Agreement, as amended hereby. Judgment may be entered on the arbitrator's award
in any court having jurisdiction. If any dispute, controversy or claim for
damages arising under Section 6(f) or 6(g) of the Employment Agreement, as
amended hereby, is settled by arbitration, the Company will pay, or if elected
by the Executive, reimburse, all fees, costs and expenses incurred by the
Executive related to such arbitration unless the arbitrators decide that the
Executive's claim was frivolous or advanced by the Executive in bad faith. If
the Executive does not elect arbitration for any dispute, controversy or claim
arising under Section 6(f) or 6(g) of the Employment Agreement, as amended
hereby, the Executive may pursue all available legal remedies. The Company will
pay, or if elected by the Executive, reimburse the Executive for, all fees,
costs and expenses incurred by the Executive in connection with any actual,
threatened or contemplated litigation relating to Section 6(f) or 6(g) of the
Employment Agreement, as amended hereby, to which the Executive is or reasonably
expects to become a party, whether or not initiated by the Executive, if the
Executive is successful in recovering any benefit under Section 6(f) or 6(g) of
the Employment Agreement, as amended hereby, as a result of such action. The
Company will not assert in any dispute or controversy with the Executive arising
under Section 6(f) or 6(g) of the Employment Agreement, as amended hereby, the
Executive's failure to exhaust administrative remedies.
4. Governing Law. This Amendment and the amendment to the Employment
Agreement, dated April 17, 2000, 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.
5. No Other Amendment. Except as set forth herein, the Employment
Agreement shall remain in full force and effect in accordance with its terms.
6. Definitions. All capitalized terms that are not defined herein
shall be as defined in the Employment Agreement.
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7. 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.
8. Survival. Upon any termination of the Executive's employment, the
provisions of subsections 1 through 8 of Section B of this Agreement shall
survive to the extent necessary to give effect to the provisions thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
as of the date first above written.
AMERICAN MEDICAL SYSTEMS, INC.
By: /s/ Xxxxx X. Xxxx
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Name: Xxxxx X. Xxxx
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Title: Vice President, Human Resources
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XXXXXXX X. XXXXX
By: /s/ Xxxxxxx X. Xxxxx
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