Document:

AMENDMENT NO 1 TO EMPLOYMENT AGREEMENT

 
Exhibit 10.39

 
Confidential Materials omitted and filed
separately with the 
Securities and Exchange Commission. Asterisks denote omissions. 
 
AMENDMENT NO. 1 TO 
EMPLOYMENT AGREEMENT 
 
This Amendment No. 1 is entered into as of the 28 day of April, 2003 (the “Amendment”), by and between Richard E. Davis (the
“Executive”) and NMT Medical, Inc., a Delaware corporation (the “Company”), to amend the Employment Agreement, dated as of February 14, 2001, by and between the Executive and the Company (the “Agreement”). Capitalized
terms used herein and not otherwise defined shall have the meanings ascribed to them in the Agreement. 
 
WHEREAS, the Parties, acting in accordance with Section 22 of the Agreement, desire to amend the Agreement to provide for (i) the
extension of the Employment Term until February 14, 2005; (ii) a cash payment to the Executive in the event of a Change of Control of the Company and (iii) continued health care coverage for the Executive’s family in the event of the
Executive’s death during the Employment Term; 
 
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows: 
 
1.    The first sentence of Section 1 of the Agreement shall be deleted in its entirety
and replaced with the following: 
 
“The Company agrees to employ the Executive, and the Executive agrees to serve, on the terms and conditions of this Agreement, for a period commencing as of February 14, 2001 (the “Effective Date”) and ending on
February 14, 2005, or such shorter period as may be provided for herein.” 
 
2.    The Agreement shall be amended by adding the following as a new Section 5.1 thereto: 
 
“5.1 CASH PAYMENT UPON A CHANGE OF CONTROL. 
 
(a)    Upon the consummation of a Change of Control of the Company, and
subject to the provisions of this Section 5.1, the Executive shall be entitled to receive a cash payment equal to a percentage of the Total Deal Consideration (as defined below) in accordance with Schedule I attached hereto (the “Applicable
Percentage”). 
 
(b)    For purposes of this Agreement, “Total Deal Consideration” shall mean the gross value of all cash, securities and other property actually paid directly or indirectly by an acquirer in a
transaction constituting a Change of Control of the Company (including without limitation all amounts paid or distributed by the Company to the holders of its capital stock in anticipation of the transaction, but excluding all amounts paid,
distributed or issued to the holders of convertible securities, options, warrants, stock appreciation rights or similar rights or securities of the Company in connection with such transaction). Total Deal Consideration shall also be deemed to
include the aggregate principal amount of any indebtedness for borrowed money assumed (net of cash on hand) or extinguished in connection with such transaction. The value of any securities (whether debt or equity) or other property shall be
determined as follows: 

 
(i) the value of securities for which there is an established public market will be equal to the closing market price on the day of closing of such transaction and (ii) the value of securities that have no established public market,
and the value of consideration that consists of other property, shall be the fair market value thereof as determined in good faith by the Board of Directors of the Company. 
 
(c)    For purposes of this Section 5.1 only, “Change of Control of
the Company” shall not include (A) a recapitalization of the Company, (B) a merger effected exclusively to change the domicile of the Company and (C) any “management buy-out” or other similar transaction in which the Company is
acquired by an entity or group in which the Executive is a participant or equity holder. 
 
(d)    Nothing in this Agreement shall be deemed to obligate the Company to undertake any action that
would result in the receipt by the Executive of a cash payment under this Section 5.1. 
 
(e)    If any part of the consideration payable in a transaction constituting a Change of Control of
the Company consists of contingent payments to be calculated by reference to uncertain future occurrences, such as future financial or business performance, then the Applicable Percentage of such consideration that is actually paid shall not be
payable to the Executive in accordance with Schedule I until the earlier of (A) the receipt of such consideration by the former holders of the Company’s capital stock and (B) the time that the amount of such consideration can be determined.

 
(f)    If
any part of the consideration payable in a transaction constituting a Change of Control of the Company is withheld or placed into escrow for some period of time after the closing of such transaction, then the Applicable Percentage of such
consideration shall not be payable to the Executive in accordance with Schedule I until and to the extent such consideration is received by the former holders of the Company’s capital stock. 
 
(g)    For purposes of
determining the Total Deal Consideration and the corresponding Applicable Percentage, the value of any contingent payments or any escrowed or withheld amounts shall be determined in good faith by the Board of Directors of the Company at the time of
the consummation of the transaction constituting a Change of Control of the Company.” 
 
3.    Section 6 of the Agreement shall be amended by adding the following as a new Section 6(c) thereto: 
 
“(c)    Continued Benefits. In the event the Executive dies
during the Employment Term, normal employee medical and dental insurance benefits shall be continued on an insured basis for each of the Executive’s children who are under the age of 18 and the Executive’s spouse for a period of 24 months
following the month in which the Executive’s death occurs.” 
 
4.    The Agreement, as supplemented and modified by this Amendment, together with the other writings referred to in the Agreement or delivered pursuant thereto which form a part 

 

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thereof, contain the entire agreement among the Parties with respect to the subject matter thereof and amend, restate and supersede all prior
and contemporaneous arrangements or understandings with respect thereto. 
 
5.    Upon execution of this Amendment by the Parties, on and after the date hereof, each reference in the Agreement to “this Agreement”, “hereunder”, “hereof”,
“herein” or words of like import, and each reference in the other documents entered into in connection with the Agreement, shall mean and be a reference to the Agreement, as amended hereby. Except as specifically amended above, the
Agreement shall remain in full force and effect and is hereby ratified and confirmed. 
 
6.    This Amendment shall be governed by and construed and interpreted in accordance with the laws of the Commonwealth of Massachusetts without reference to the principles of
conflicts of law. 
 
7.    This
Amendment may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 
 
[The remainder of this page has been intentionally left blank.] 
 

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THE
UNDERSIGNED have executed this Amendment effective as of the date first written above. 
 

	 COMPANY:

	
	 NMT Medical, Inc.

	
	 By:
	 	 /s/    John E. Ahern

	 	 	 John E. Ahern
 President and Chief Executive Officer

	
	 EXECUTIVE:

	
	 /s/    Richard E. Davis

	 Richard E. Davis

 
 

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SCHEDULE I

 
Cash Payment Upon Change of Control

 
The cash payment payable to the Executive in
accordance with Section 5.1 of the Agreement shall be determined as follows: 
 

	 Deal Consideration Per Share

	 	 Payment to Executive

	 Less than or equal to $[**] per share
	 	 .25% of the Total Deal Consideration

	 Greater than $[**] but less than or equal to $[**] per share
	 	 .625% of the Total Deal Consideration

	 Greater than $[**] but less than or equal to $[**] per share
	 	 .75% of the Total Deal Consideration

	 Greater than $[**] per share
	 	 .875% of the Total Deal Consideration

 
For
purposes of this Schedule I, “Deal Consideration Per Share” for any transaction shall be determined by dividing the Total Deal Consideration by the number of shares of Common Stock issued and outstanding (or deemed to be issued and
outstanding) immediately prior to the consummation of such transaction.<PAGE>

                                 EXHIBIT (10)(a)

                         CONSENT OF INDEPENDENT AUDITORS

<PAGE>

                         Consent of Independent Auditors

We consent to the reference to our firm under the caption "Independent Auditors"
in the Statement of Additional Information and to the use of our reports (1)
dated January 31, 2003 with respect to the financial statements of certain
subaccounts of Transamerica Life Insurance Company Separate Account VA B, which
are available for investment by contract owners of Transamerica Freedom Variable
Annuity and (2) dated February 14, 2003 with respect to the statutory-basis
financial statements and schedules of Transamerica Life Insurance Company,
included in Post-Effective Amendment No. 20 to the Registration Statement (Form
N-4 No. 33-56908) and related Prospectus of Transamerica Freedom Variable
Annuity.

                                                            /s/Ernst & Young LLP

Des Moines, Iowa
April 25, 2003<PAGE>

                                EXHIBIT (10)(b)
                                ---------------

                         OPINION AND CONSENT OF ACTUARY

<PAGE>

               [Transamerica Life Insurance Company Letterhead]

April 2, 2003

Transamerica Life Insurance Company
4333 Edgewood Road NE
Cedar Rapids, Iowa 52499-0001

Re: Separate Account VA B
    Registration on Form N-4 SEC File No. 33-56908

Dear Sir/Madam:

With regard to the above registration statement, I have examined such documents
and made such inquiries as I have deemed necessary and appropriate, and on the
basis of such examination, have the following opinions:

Fees and charges deducted under the Transamerica Freedom Variable Annuity
policies are those deemed necessary to appropriately reflect:

(1)   the expenses incurred in the acquisition and distribution of the Policies,

(2)   the expenses associated with the development and servicing of the
      policies,

(3)   the assumption of certain risks arising from the operation and management
      of the policies and/or riders to the Policy and that provides for a
      reasonable margin of profit.

Fees and charges assessed against the policy values in the variable account
include:

(i)   Service Charge and Administrative Charge

(ii)  Mortality and Expense Risk Fee (M&E)

(iii) Taxes (including premium and other taxes if applicable)

(iv)  Any applicable rider fees or charges

<PAGE>

Transamerica Life Insurance Company
April 2, 2003
Page 2

The magnitude of each of the individual charges listed above in (i) through
(iv) is established in the pricing of the Transamerica Freedom Variable
Annuity, to achieve a reasonable Return on Investment (ROI), which is within
the range of industry practice with respect to comparable variable annuity
products.

Except by coincidence, it is not expected that actual charges assessed in a
given year would exactly offset actual expenses incurred. Acquisition expenses
(as well as major product and/or systems development expenses) are incurred "up
front" and recovered, with a reasonable profit margin, through future years'
charges. In addition, the company cannot increase certain charges under the
Policies in the pricing process.

Therefore, in my opinion, the fees and charges deducted under the Policies, in
the aggregate, are reasonable in relation to the services rendered, the
expenses expected to be incurred, and the risks assumed by the company.

I hereby consent to the use of this opinion, which is included as an Exhibit to
the Registration Statement.

/s/ Tim Bennett
------------------------------------------
Tim Bennett, ASA, MAAA
Assistant Actuary
Transamerica Life Insurance Company

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