TERMINATION AGREEMENT
Exhibit 10.1
THIS TERMINATION AGREEMENT (“Termination Agreement”) is entered into as of December 8,
2006, by and among American Medical Systems Holdings, Inc., a Delaware corporation (“AMS”),
Laserscope, a California corporation and indirect subsidiary of AMS (“Laserscope”),
InnovaQuartz Incorporated, an Arizona corporation and wholly-owned subsidiary of Laserscope (the
“Company”), Xxxxxxx Xxxxxxx (“Xx. Xxxxxxx”), The Xxxxxxx Family Revocable Trust
(the “Xxxxxxx Trust”), and Xxxxx Xxxx (“Xx. Xxxx”). The Xxxxxxx Trust and Xx. Xxxx
as sometimes referred to herein individually as a “Stockholder” and collectively as the
“Stockholders.” Xx. Xxxxxxx and Xx. Xxxx as sometimes referred to herein individually as a
“Company Principal” and collectively as the “Company Principals.”
RECITALS
WHEREAS, Laserscope, the Xxxxxxx Trust, Xx. Xxxxxxx, Xx. Xxxx, and the Company are parties to
that certain Stock Purchase Agreement, dated as of April 30, 2006 (the “Purchase
Agreement”), pursuant to which Laserscope acquired all of the issued and outstanding stock of
the Company.
WHEREAS, AMS and Laserscope desire to buy out the Earnout Amounts under the Purchase
Agreement.
WHEREAS, the Company and Xx. Xxxxxxx entered into that certain Employment Agreement, dated May
1, 2006 (the “Xxxxxxx Employment Agreement”), and the parties desire to terminate Xx.
Xxxxxxx’x employment with the Company and engage Xx. Xxxxxxx as a consultant to the Company.
WHEREAS, the Company and Xx. Xxxx entered into that certain Employment Agreement, dated May 1,
2006 (the “Xxxx Employment Agreement”), and the parties desire to confirm termination of
Xx. Xxxx’x employment with the Company.
WHEREAS, the parties seek to terminate all of their obligations (other than the Xxxx Lease, as
defined below) under the Purchase Agreement and release each other from all claims they may have
against each other, whether arising under the Purchase Agreement, the Xxxxxxx Employment Agreement,
and the Xxxx Employment Agreement or otherwise.
NOW, THEREFORE, in consideration of the covenants and agreements contained herein, and for
other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
AGREEMENT
1. Termination of Purchase Agreement. Laserscope, the Xxxxxxx Trust, Xx. Xxxxxxx, and
Xx. Xxxx agree that all of their respective obligations under the Purchase Agreement are hereby
terminated and none of the parties hereto shall have any obligation whatsoever to any
other party under the Purchase Agreement. In furtherance of, and without limiting, the
foregoing: (a) Section 1.3 of the Purchase Agreement is hereby terminated and the Stockholders
shall have no right to receive Earnout Amounts thereunder, (b) Section 6 of the Purchase Agreement
is hereby terminated and none of the parties will have any obligations or be subject to any
restrictions thereunder; and (c) Section 8 of the Purchase Agreement is hereby terminated and none
of the parties will have any rights to indemnification or be subject to indemnification obligations
thereunder.
2. Termination of Xxxxxxx Employment. The parties agree that Xx. Xxxxxxx’x employment
with the Company and the Xxxxxxx Employment Agreement shall terminate effective as of the date
hereof, and neither the Company nor Xx. Xxxxxxx shall have any obligations under the Xxxxxxx
Employment Agreement, except that Xxxxxxx’x obligations under Section 7 (Non-Solicitation) and
Section 8 (Non-Competition) shall remain in full force and effect, as modified herein. AMS,
Laserscope and the Company acknowledge that Xxxxxxx’x obligations under Section 8 do not apply to
Xx. Xxxxxxx’x activities in the field of analytical chemistry and that the field of analytical
chemistry specifically excludes all therapeutic medical applications. Section 7 (Non-Solicitation)
of the Xxxxxxx Employment Agreement is hereby amended to the extent necessary to permit Xx. Xxxxxxx
to sell analytical chemistry products to the Company’s customers, provided that Xx. Xxxxxxx shall
not be permitted to sell analytical products that compete with the Company’s current products to
existing customers for a period of one year from the date hereof. Xx. Xxxxxxx represents and
warrants to AMS, Laserscope and the Company that he has complied and will comply with all of his
obligations under Section 5 (Inventions) and Section 6 (Company Property; Returning Company
Documents) of the Confidential Information and Assignment Agreement, dated April 30, 2006, between
the Company and Xx. Xxxxxxx, and, upon execution of this Termination Agreement, Xx. Xxxxxxx will
execute the Termination Certification attached to the Confidential Information and Assignment
Agreement and the Employment Release attached hereto as Exhibit C. Upon execution of this
Termination Agreement, the Company and Xx. Xxxxxxx shall enter into the Consulting Agreement
attached as Exhibit A and the Patent License Agreement attached as Exhibit B. The parties hereto
agree that in order to enable Xx. Xxxxxxx to pursue activities in the field of analytical chemistry
subsequent to the date hereof, Xx. Xxxxxxx’x obligations under such Confidential Information
Assignment Agreement shall not apply to the use and disclosure of information retained in the
unaided memory of Xx. Xxxxxxx that he has not deliberately memorized for the purpose of
subsequently using or disclosing (“Residual Information”); provided that the use and disclosure of
Residual Information by Xx. Xxxxxxx shall remain subject to Section 8 (Non-Competition) of the
Xxxxxxx Employment Agreement. In addition, the parties hereto acknowledge and agreed that Xx.
Xxxxxxx’x Relationship (as defined in the Confidential Information Assignment Agreement) is
terminated as of the date hereof and therefore his obligations with regards such matters as
assignment of inventions conceived subsequent to the date hereof shall be governed pursuant to the
terms of his Consulting Agreement.
3. Termination of Xxxx Employment. The parties confirm that Xx. Xxxx’x employment
with the Company and the Xxxx Employment Agreement shall terminate effective as of the date hereof,
and neither the Company nor Xx. Xxxx shall have any obligations under the Xxxx Employment
Agreement, except that Xxxx’x obligations under Section 6 (Non-Solicitation) and Section 7
(Non-Competition) shall remain in full force and effect, provided Xxxx’x obligations under Section
7 (Non-Competition) shall not apply to Xx. Xxxx’x activities in the
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field of analytical chemistry. Xx. Xxxx acknowledges that he has been paid salary through
August 4, 2006 and that he is not entitled to any additional salary or other compensation. The
parties acknowledge that the field of analytical chemistry specifically excludes all interventional
medical applications. Section 6 (Non-Solicitation) of the Xxxx Employment Agreement is hereby
amended to the extent necessary to permit Xx. Xxxx to sell analytical chemistry products to the
Company’s customers, provided that Xx. Xxxx shall not be permitted to sell analytical products that
compete with the Company’s current products to existing customers for a period of one year from the
date hereof. Xx. Xxxx represents and warrants to AMS, Laserscope and the Company that he has
complied and will comply with all of his obligations under Section 5 (Inventions) and Section 6
(Company Property; Returning Company Documents) of the Confidential Information and Assignment
Agreement, dated April 30, 2006, between the Company and Xx. Xxxx, and, upon execution of this
Termination Agreement, Xx. Xxxx will execute the Termination Certification attached to the
Confidential Information and Assignment Agreement and the Employment Release attached hereto as
Exhibit D. The parties hereto agree that in order to enable Xx. Xxxx to pursue activities in the
field of analytical chemistry subsequent to the date hereof, Xx. Xxxx’x obligations under such
Confidential Information Assignment Agreement shall not apply to the use and disclosure of
(“Residual Information”); provided that the use and disclosure of Residual Information by Xx. Xxxx
shall remain subject to Section 7 (Non-Competition) of the Xxxx Employment Agreement.
4. Termination Fee.
| (a) | On a date between January 8, 2007 and January 12, 2007 and provided that neither Xxxx nor Xxxxxxx have rescinded the Employment Releases attached hereto as Exhibits C and D, AMS will issue to: (i) Xx. Xxxx unlegended, freely tradeable, registered shares of AMS common stock with an Initial Market Value (as defined below) of Two Million Four Hundred Thirty-Three Thousand Three Hundred and Thirty-Three Dollars ($2,433,333.00); and (ii) to Xx. Xxxxxxx registered shares of AMS common stock with an Initial Market Value of Four Million Eight Hundred Sixty-Six Thousand Six Hundred and Sixty-Six Dollars ($4,866,666). The issuance and sale of AMS common stock will be registered under the Securities Act of 1933, as amended, pursuant to AMS’ registration statement on Form S-3, filed and effective on June 19, 2006 (File No. 333-135135) (the “Registration Statement”). The parties agree to treat the payment provided for by this Section 4(a) for all tax purposes as an adjustment to the purchase price for the Company stock under the Purchase Agreement, and not to take a position that is inconsistent with such treatment unless otherwise required by a “determination” within the meaning of the Internal Revenue Code of 1986 (or by a comparably final proceeding for purposes of any non-federal tax). | ||
| (b) | The “Initial Market Value” per share of AMS common stock shall mean the closing sale price per share of AMS common stock as reported on the Nasdaq Global Market on the trading day immediately prior to the date on which AMS files a prospectus supplement under the Registration Statement with the Securities and Exchange Commission (the “Filing Date”). AMS agrees that in the event the gross proceeds per share (less applicable brokerage sales commission fees, which fees AMS agrees to pay per Section 4(d) below) received by Xx. Xxxx or Mr. |
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| Xxxxxxx for sales of shares thereby in accordance with Section 4(d) from the date such shares are delivered to the brokerage accounts of Xx. Xxxxxxx and Xx. Xxxx (the “Delivery Date”) through the end of the 5th trading date thereafter are at a price per share of less than the Initial Market Value, then AMS shall promptly pay to Xx. Xxxx and Xx. Xxxxxxx, as applicable, a cash amount equal to the aggregate amount by which the Initial Market Value exceeds such gross proceeds per share for all such sales. Xx. Xxxx and Xx. Xxxxxxx each agree that in the event the gross proceeds per share (less applicable sales commission fees, which fees AMS agree to pay per Section 4(c) below) received by Xx. Xxxx or Xx. Xxxxxxx, as applicable, for sales of shares thereby from the Delivery Date through the end of the 5th trading date thereafter are at a price per share of greater than the Initial Market Value, then Xx. Xxxx and Xx. Xxxxxxx, as applicable, shall each promptly pay to AMS a cash amount equal to the aggregate amount by which such gross proceeds per share exceed the Initial Market Value for all such sales. |
(c) Within 15 days hereof, AMS will pay Xx. Xxxxxxx $22,200.10, subject to applicable
withholding, for unused paid time off. Except as set forth in the foregoing sentence, Xx. Xxxxxxx
acknowledges and agrees that he is not entitled to any additional payment for unused paid time off,
vacation or the like. Xx. Xxxx acknowledges and agrees that he is not entitled to any additional
payment for unused paid time off, vacation or the like.
(d) Xx. Xxxx and Xx. Xxxxxxx each agree to sell the shares issued to them pursuant to Section
4(a) hereof in a manner intended not to disrupt the market for shares of AMS common stock. In
furtherance of the foregoing, Xx. Xxxx and Xx. Xxxxxxx each agree (i) they shall not sell in any
one trading day greater than 30% of the total shares issued to them pursuant to Section 4(a) hereof
and (ii) they shall use the Minneapolis, Minnesota office of Xxxxx Xxxxxxx for their sale of such
shares of AMS common stock. AMS agrees to pay all brokerage commissions fees for sales by Xx. Xxxx
and Xx. Xxxxxxx of such AMS common stock; provided, however, that such sales are conducted through
Xxxxx Xxxxxxx in accordance with this Section 4(d).
5. Reliance on Independent Legal Advice. Each of the parties represents and warrants
to each other, as of the date hereof:
| (a) | That it has received advice from its own, independent legal counsel prior to its execution of this Termination Agreement; | ||
| (b) | That the legal nature and effect of this Termination Agreement has been explained to it by its counsel; | ||
| (c) | That it fully understands the terms and provisions of this Termination Agreement and the nature and effect hereof; | ||
| (d) | That it has not relied and is not relying upon any representation or statement of any person not contained in this Termination Agreement or on the advice of any counsel other than its own counsel; |
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| (e) | That it has carefully read this Termination Agreement, knows the contents hereof, and is executing the same freely and voluntarily; and | ||
| (f) | That it is aware that it or its attorneys may hereafter discover facts different from or in addition to the facts that it now knows or believes to be true with respect to the subject matter of this Termination Agreement or the other parties hereto, but that it is its intention to fully and finally release each of its respective releasees to the full extent of the releases contained in this Termination Agreement, and to otherwise agree to the other terms and conditions of this Termination Agreement. |
6. AMS Global Release of Claims. AMS, Laserscope and the Company, for themselves and
for any parent, subsidiary or affiliate corporation, partnership, limited liability company,
proprietorship, trust, or other form of business entity related directly or indirectly to the
Principals, and for each of their respective heirs, administrators, executors, beneficiaries,
legatees, devisees, trusts, trustees, insurers, attorneys, experts, consultants, partners, joint
venturers, members, officers, directors, shareholders, employees, contractors, agents,
representatives, predecessors, successors and assigns (collectively, the “AMS Releasors”),
hereby release, acquit, and forever discharge the Stockholders and the Company Principals and any
parent, subsidiary or affiliate corporation, partnership, limited liability company,
proprietorship, trust, or other form of business entity related directly or indirectly to
Stockholders or the Company Principals, and each of their respective heirs, administrators,
executors, beneficiaries, legatees, devisees, trusts, trustees, insurers, attorneys, experts,
consultants, partners, joint venturers, members, officers, directors, shareholders, employees,
contractors, agents, representatives, predecessors, successors and assigns (collectively, the
“Stockholder/Principal Releasees”) of and from any and all claims, actions, causes of
action, judgments, awards, costs, expenses, attorneys’ fees, debts, obligations, promises,
representations, warranties, demands, acts, omissions, rights and liabilities, of any kind and
nature whatsoever (“Claims”), including but not limited to those at law, in equity, in
tort, in contract, whether or not asserted to date, and whether known or unknown, suspected or
unsuspected, including, but not limited to, Claims arising from or in connection with the Purchase
Agreement (the matters referred to above being hereinafter referred to as the “AMS Released
Claims”); provided, however, that nothing in this Section 6 shall release the
Stockholder/Principal Releasees from any of their obligations under this Termination Agreement.
7. Stockholder/Principal Global Release of Claims. The Stockholders and the Company
Principals, for themselves and for any parent, subsidiary or affiliate corporation, partnership,
limited liability company, proprietorship, trust, or other form of business entity related directly
or indirectly to the Principals, and for each of their respective heirs, administrators, executors,
beneficiaries, legatees, devisees, trusts, trustees, insurers, attorneys, experts, consultants,
partners, joint venturers, members, officers, directors, shareholders, employees, contractors,
agents, representatives, predecessors, successors and assigns (collectively, the
“Stockholder/Principal Releasors”), hereby release, acquit, and forever discharge AMS,
Laserscope and the Company, and any parent, subsidiary or affiliate corporation, partnership,
limited liability company, proprietorship, trust, or other form of business entity related directly
or indirectly to any of the foregoing, and each of their respective heirs, administrators,
executors, beneficiaries, legatees, devisees, trusts, trustees, insurers, attorneys, experts,
consultants, partners, joint venturers, members, officers, directors,
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shareholders, employees, contractors, agents, representatives, predecessors, successors and
assigns (collectively the “AMS Releasees”) of and from any and all (“Claims”),
including but not limited to those at law, in equity, in tort, in contract, whether or not asserted
to date, and whether known or unknown, suspected or unsuspected, including, but not limited to,
Claims arising from or in connection with the Purchase Agreement (the matters referred to above
being hereinafter referred to as the “Stockholder/Principals Released Claims”) and claims
arising from or related to their employment with the Company, as more specifically provided in the
Employment Releases attached hereto as Exhibits C and D; provided, however, that nothing in this
Section 7 shall release the AMS Releasees from any of its obligations under this Termination
Agreement, the Patent License Agreement, the Consulting Agreement, and the Lease Agreement between
InnovaQuartz Incorporated and Xxxx Development Group, LLC. (collectively, the “Surviving
Agreements”). The Company Principals each understand and agree that their execution and
non-revocation of the Employment Releases attached hereto as Exhibits C and D are material terms
and conditions of this Termination Agreement.
8. Waiver. The parties hereby state that they intend that the releases contained
herein be effective as a bar to each and every Claim hereinabove released as permitted by law. The
parties hereby expressly waive and relinquish all rights and benefits, if any, arising under the
provisions of Section 1542 of the Civil Code of the State of California which provides:
“Section 1542. [Certain Claims Not Affected By General Release.] A
general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing
the release, which if known by him must have materially affected his
settlement with the debtor.”
9. Covenant Not to Xxx by AMS Releasors. Except for the enforcement of this
Termination Agreement or any rights preserved under this Termination Agreement, the AMS Releasors
hereby covenant that they will not, based on any AMS Released Claim, xxx or bring any claim or
action against any Stockholder/Principals Releasee. This Covenant Not to Xxx shall be a complete
defense to any such claim or suit by any AMS Releasor.
10. Covenant Not to Xxx by Stockholder/Principals Releasors. Except for the
enforcement of this Termination Agreement and the other Surviving Agreements or any rights
preserved under this Termination Agreement, the other Surviving Agreements or the Employment
Releases attached as Exhibits C and D, the Stockholder/Principal Releasors hereby covenant that
they will not, based on any Stockholder/Principal Released Claim, xxx or bring any claim or action
against any AMS Releasee. This Covenant Not to Xxx shall be a complete defense to any such claim or
suit by any Stockholder/Principal Releasor.
11. Governing Law. This Termination Agreement shall be governed by the laws of the
State of California (without regard to conflict of law rules that otherwise might apply).
12. No Admission of Fault. This Termination Agreement is a compromise settlement of
disputed claims and may not be deemed or used as an admission of liability or fault on the part of
any party hereto.
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13. Joint Drafting. This Termination Agreement shall be construed as jointly drafted
by the parties, and the rule construing ambiguities against the drafter shall not apply.
14. Integration Clause. This Termination Agreement, the Consulting Agreement and
Patent License Agreement attached as exhibits hereto and any further documents executed to
implement the transactions contemplated hereby, shall constitute the full and entire understanding
and agreement between the parties with respect to the subject matter hereof and shall supersede all
prior conversations, negotiations, understandings, and agreements between the parties with respect
to the subject matter hereof.
15. Each party to Bear Own Costs and Attorneys’ Fees. Each party shall bear its own
costs, expenses, and attorneys’ fees in connection with the negotiation, preparation, execution and
delivery of this Termination Agreement and the transactions contemplated herein.
16. Severability. The parties hereto agree that if any provision of this Purchase
Agreement is held by a court of competent jurisdiction to be invalid, void, or unenforceable, such
provision shall be valid and enforceable to the maximum degree permitted and the remaining
provisions shall nevertheless continue in full force without being impaired or invalidated in any
way.
17. Survival. The covenants, agreements, representations and warranties contained in
this Termination Agreement shall be continuing and shall survive the execution and delivery of this
Termination Agreement.
18. No Assignment of Claims. Each party represents and warrants to the other that it
has not hypothecated or otherwise encumbered or assigned any claim or cause of action arising out
of, related to or in connection with the claims alleged or referred to in this Termination
Agreement.
19. Counterparts. This Termination Agreement may be executed in counterparts, each of
which shall be deemed a duplicate original, but all of which together shall constitute one and the
same instrument. Facsimile execution and delivery of this Termination Agreement shall be legal,
valid and binding execution and delivery for all purposes.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Purchase Agreement to be duly executed
on their behalf as of the date first written above.
| AMERICAN MEDICAL SYSTEMS HOLDINGS, INC. |
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| By | ||||
| Its: | ||||
| LASERSCOPE |
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| By | ||||
| Its: | ||||
| INNOVAQUARTZ INCORPORATED |
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| By: | ||||
| Its: | ||||
| THE XXXXXXX FAMILY REVOCABLE TRUST |
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| By: | ||||
| Name: Xxxxxxx Xxxxxxx | ||||
| Title: Trustee | ||||
| By: | ||||
| Name: Xxxxxxxxx Xxxxxxx | ||||
| Title: Trustee | ||||
| Xxxxxxx Xxxxxxx | ||||
| Xxxxx Xxxx | ||||
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