Exhibit 10.1
**MANAGEMENT CONTINUITY AGREEMENT**
This Management Continuity Agreement (the “Agreement”) is made and enteredinto effect as of March 31, 2004 by and between (the “Employee”)and Laserscope, a California corporation (the “Company”).
RECITALS
 A. It is expected that another company or other entity may fromtime to time consider the possibility of acquiring the Company orthat a change in control may otherwise occur, with or without theapproval of the Company’s Board of Directors (the “Board”). The Boardrecognizes that such consideration can be a distraction to theEmployee and can cause the Employee to consider alternativeemployment opportunities. The Board has determined that it is in thebest interests of the Company and its shareholders to assure that theCompany will have the continued dedication and objectivity of theEmployee, notwithstanding the possibility, threat or occurrence of aChange of Control (as defined below) of the Company.  B. The Board believes that it is in the best interest of theCompany and its shareholders to provide the Employee with anincentive to continue his or her employment with the Company.  C. The Board believes that it is imperative to provide theEmployee with certain benefits upon a Change of Control and, undercertain circumstances, upon termination of the Employee’s employmentin connection with a Change of Control, which benefits are intendedto provide the Employee with financial security and providesufficient income and encouragement to the Employee to remain withthe Company notwithstanding the possibility of a Change of Control.  D. To accomplish the foregoing objectives, the Board of Directorshas directed the Company, upon execution of this Agreement by theEmployee, to agree to the terms provided in this Agreement.  E. Certain capitalized terms used in the Agreement are defined inSection 4 below.    In consideration of the mutual covenants herein contained, and inconsideration of the continuing employment of Employee by theCompany, the parties agree as follows:
 1. At-Will Employment: The Company and the employeeacknowledge that the Employee’s employment is and shallcontinue to be at-will, as defined under applicable law. Ifthe Employee’s employment terminates for any reason, including(without limitation) any termination prior to a Change ofControl, the Employee shall not be entitled to any payments,benefits, damages, awards or compensation other than asprovided by this Agreement, or as may otherwise be available inaccordance with the Company’s established employee plans andwritten policies at the time of termination. The terms of thisAgreement shall terminate upon the earlier of (I) the date thatall 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.
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   A termination of the terms ofthis Agreement pursuant to the preceding sentence shall beeffective for all purposes, except that such termination shallnot affect the payment or provision of compensation or benefitson account of a termination of employment occurring prior to thetermination of the terms of this Agreement.
 2. Change of Control/Stock Options. Immediately uponthe effective date of the Change of Control, each stock optiongranted for the Company’s securities held by the Employee shallbecome immediately vested and shall be exercisable in full inaccordance with the provisions of the option agreement and planpursuant to which such option was granted.
 3. Severance Benefits
 (a) Termination Following A Change of Control.Subject to Section 5 below, if the Employee’s employmentwith the Company is terminated at any time within 24 monthsafter a Change of Control, then the Employee shall beentitled to receive severance benefits as follows:
 (i) Voluntary Resignation. If the Employeevoluntarily resigns from the Company (other than as anInvoluntary Termination (as defined below) or if theCompany terminates the Employee’s employment for Cause(as defined below), then the Employee shall not beentitled to receive severance payments. The Employee’sbenefits will be terminated under the Company’s thenexisting benefit plans and policies in accordance withsuch plans and policies in effect on the date oftermination.  (ii) Involuntary Termination. If theEmployee’s employment is terminated within 12 months ofthe Change of Control as a result of InvoluntaryTermination other than for Cause, the Employee shall beentitled to receive 18 months {*2.99 years for the CEO*}severance payments (the “Severance Period”) from the dateof the Employee’s termination. If the Employee’semployment is terminated after 12 months but within 24months after the Change of Control, the Employee shall beentitled to receive 9 months {*12 months for the CEO*}severance payments (the “Severance Period”) from the dateof the Employee’s termination. The Employee’s severancepayments shall be equal to the salary which the Employeewas receiving immediately prior to the Change of Controlplus a 25% bonus for Executive Committee members and 45%for the CEO shall be paid during the Severance Period inaccordance with the Company’s standard payroll practicesor, at the Employee’s election, shall be paid to theEmployee in lump sum within ten (10) days of theEmployee’s termination date. Such election shall notaffect the length of the Severance Period nor theprovision of benefits within the Severance Period. Inaddition, during the Severance Period, the Employee shallbe provided withbenefits substantially identical to those to which theEmployee was entitled immediately prior to the Change ofControl.
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      (iii) Involuntary Termination for Cause. Ifthe Employee’s employment is terminated for Cause, thenthe Employee shall not be entitled to receive severancepayments. The Employee’s benefits will be terminatedunder the Company’s then existing benefits plans andpolicies in effect on the date of termination.
 (b) Termination Apart from Change of Control. Inthe event the Employee’s employment terminates for anyreason prior to the Change of Control, then the Employeeshall not be entitled to receive any severance paymentsunder this Agreement. The Employee’s benefits will beterminated under the Company’s then existing benefit plansand policies in accordance with such plans and policies ineffect on the date of termination.
 4. Definition of Terms. The following terms referredto in this Agreement shall have the following meanings:
 (a) Change of Control. “Change of Control” shallmean the occurrence of any of the following events:
 (i) Ownership. Any “person” (as such termis used in Sections 13(d) and 14(d) of the SecuritiesExchange Act of 1934, as amended) is or becomes the“beneficial owner” (as defined in Rule 13d-3 under saidAct), directly or indirectly, of securities of theCompany representing twenty percent (20%) or more of thetotal voting power represented by the Company’s thenoutstanding voting securities without the approval of theBoard of Directors of the Company; or  (ii) Merger/Sale of Assets. A merger orconsolidation of the Company whether or not approved bythe Board of Directors of the Company, other than amerger or consolidation which would result in the votingsecurities of the Company outstanding immediately priorthereto continuing to represent (either by remainingoutstanding or by being converted into voting securitiesof the surviving entity) at least fifty percent (50%) ofthe total voting power represented by the votingsecurities of the Company or such surviving entityoutstanding immediately after such merger orconsolidation, or the shareholders of the Company approvea plan of complete liquidation of the Company or anagreement for the sale or disposition by the Company ofall or substantially all of the Company’s assets.  (iii) Change in Board Composition. A changein the composition of the Board of Directors of theCompany, as a result of which fewer than a majority ofthe directors are Incumbent Directors. “IncumbentDirectors” shall mean directors who either (A) aredirectors of the Company as of April 1 2004, or (B) areelected, or nominated for election, to the Board ofDirectors of the Company with the affirmative votes of atleast a majority of the Incumbent Directors at the timeof such election or nomination (but shall not include anindividual whose election or nomination is in connectionwith anactual or threatened proxy contest relating to theelection of directors to the Company).
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 (b) Cause. “Cause” shall mean (I) material breachof any material terms of this Agreement, (ii) conviction ofa felony, (iii) fraud, (iv) repeated unexplained orunjustified absence, (v) willful breach of fiduciary dutyunder applicable laws, this Agreement or Company policiesfirst in effect prior to the occurrence of a Change inControl or (vi) gross negligence or willful misconduct wheresuch gross negligence or willful misconduct has resulted oris likely to result in substantial and material damage tothe Company or its subsidiaries.  (c) Involuntary Termination. “InvoluntaryTermination” will include the Employee’s voluntarytermination, upon 30 days prior written notice to theCompany, following (I) a material reduction in jobresponsibilities inconsistent with the Employee’s positionwith the Company and the Employee’s prior responsibilities,i.e., parent company versus subsidiary level or typeresponsibility, or (ii) relocation to a facility or locationmore than 50 miles from the Company’s current location, or(iii) reduction in salary***.***
 5. Limitation on Payments. To the extent that any ofthe payments or benefits provided for in this Agreement orotherwise payable to the Employee constitute “parachutepayments” within the meaning of Section 280G of the InternalRevenue Code of 1986, as amended (the “Code”) and, but for thisSection 5, would be subject to the excise tax imposed bySection 4999 of the code, the Company shall reduce theaggregate amount of such payments and benefits such that thepresent value thereof (as determined under the Code and theapplicable 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 (whetherdirect or indirect and whether by purchase, lease, merger,consolidation, liquidation, or otherwise) to all orsubstantially all of the Company’s business and/or assets shallassume the obligations under this Agreement and agree expresslyto perform the obligations under this Agreement n the samemanner and to the same extent as the company would be requiredto perform such obligations in the absence of a succession. Theterms of this Agreement and all of the Employee’s rightshereunder shall insure to the benefit of, and be enforceableby, the Employee’s personal or legal representatives,executors, administrators, successors, heirs, distributees,devisees and legatees.  7. Notice. Notices and all other communicationscontemplated by this Agreement shall be in writing and shall bedeemed to have been duly given when personally delivered orwhen mailed by U.S. registered or certified mail, returnreceipt requested and postage prepaid. Mailed notices to theEmployee shall be addressed to the Employee at the home addresswhich the Employee most recently communicated to the Company inwriting. In the case of the Company, mailed notices shall beaddressed to its corporate headquarters, and all notices shallbe directed to the attention of its Secretary.  8. Miscellaneous Provisions.
 (a) No Duty to Mitigate. The Employee shall notbe required to mitigate the amount of any paymentcontemplated by this Agreement (whether by seeking newemployment or in any other manner), nor, except as otherwiseprovided in this Agreement, shall any such payment bereduced by any earnings that the Employee may receive fromany other source.
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      (b) Waiver. No provision of this Agreement shallbe modified, waived or discharged unless the modification,waiver, or discharge is agreed to in writing and signed byethe Employee and by an authorized officer of the Company(other than the Employee). No waiver by either party of anybreach of, or of compliance with, any condition or provisionof this Agreement by the other party shall be considered awaiver of any other condition or provision or of the samecondition or provision at another time.  (c) Whole Agreement. No agreements,representations or understandings (whether oral or writtenand whether express or implied) which are not expressly setforth in this Agreement have been made or entered into byeither party with respect to the subject matter hereof. ThisAgreement supersedes any agreement of the same title andconcerning similar subject matter dated prior to the date ofthis Agreement, and by execution of this Agreement bothparties agree that any such predecessor agreement shall bedeemed null and void.  (d) Choice of Law. The validity, interpretation,construction and performance of this Agreement shall begoverned by the laws of the State of California withoutreference to conflict of law provisions.  (e) Severability. If any term or provision ofthis Agreement or the application thereof to anycircumstance shall, in any jurisdiction and to any extent,be invalid or unenforceable, such term or provision shall beineffective as to such jurisdiction to the extent of suchinvalidity or unenforceability without invalidating orrendering unenforceable the remaining terms and provisionsto circumstances other than those as to which it is heldinvalid or unenforceable, and a suitable and equitable termor provision shall be substituted therefore to carry out,insofar as may be valid and enforceable, the intent andpurpose of the invalid or unenforceable term or provision.  (f) Arbitration. Any dispute or controversyarising under or in connection with this Agreement may besettled at the option of either party by binding arbitrationin the County of Santa Clara, California, in accordance withthe rules of the American Arbitration Association then ineffect. Judgment may be entered on the arbitrator’s award ina court having jurisdiction. Punitive damages shall not beawarded.  (g) Legal Fees and Expenses. The parties shalleach bear their own expenses, legal fees and other feesincurred in connection with this Agreement.  (h) No Assignment of Benefits. The rights of anyperson to payments or benefits under this Agreement shallnot be made subject to option orassignment, either by voluntary or involuntary assignment orby operation of law, including (without limitation)bankruptcy, garnishment, attachment or other creditor’sprocess, and any action in violation of this subsection (h)shall be void.  (i) Employment Taxes. All payments made pursuantto this Agreement will be subject to withholding ofapplicable income and employment taxes.
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 (j) Assignment by Company. The Company may assignits rights under this Agreement to an affiliate, and anaffiliate may assign its rights under this Agreement toanother affiliate of the Company or to the Company;provided, however, that no assignment shall be made if thenet worth of the assignee is less than the net worth of theCompany at the time of the assignment. In the case of anysuch assignment, the term “Company” when used in a sectionof this Agreement shall mean the corporation that actuallyemploys the Employee.  (k) Counterparts. This Agreement may be executedin counterparts, each of which shall be deemed an original,but all of which together will constitute one and the sameinstrument.
     IN WITNESS WHEREOF, each of the parties has executed this Agreement, inthe case of the Company by its duly authorized officer, as of the day and yearfirst above written.
LASERSCOPE           By:     By:               (Title)     (Employee)  
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