Document:

exv10w1

Exhibit 10.1

AMERICAN MEDICAL SYSTEMS, INC.

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

     THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered
into effective as of March 26, 2010, between American Medical Systems, Inc., a Delaware corporation
(the “Company”), and Anthony P. Bihl, III (the “Executive”).

RECITALS

     WHEREAS, the Company and the Executive are parties to an Employment Agreement, dated as of
April 22, 2008 (the “Employment Agreement”);

     WHEREAS, the parties hereto desire to amend and restate the Employment Agreement to reflect
changes in the employment relationship as set forth herein.

     NOW, THEREFORE, on the basis of the foregoing premises and in consideration of the mutual
covenants and agreements contained herein, the parties hereto agree as follows:

     Section 1. Employment. The Company hereby agrees to continue to employ the Executive
and the Executive hereby accepts employment with the Company, on the terms and subject to the
conditions hereinafter set forth. The Executive shall serve as the President and Chief Executive
Officer of American Medical Systems Holdings, Inc. (the “Parent Corporation”) and the
Company, and, in such capacity, shall report directly to the Board of Directors of the Parent
Corporation (the “Board” or “Board of Directors”). The Executive shall have such
duties as are typically performed by the President and Chief Executive Officer of a corporation,
together with such additional duties, commensurate with the Executive’s position as the President
and Chief Executive Officer of the Parent Corporation and the Company, as may be assigned to the
Executive from time to time by the Board of Directors. The principal location of the Executive’s
employment shall be at the Company’s principal executive office located in Minnetonka, Minnesota,
although the Executive understands and agrees that he may be required to travel from time to time
for Company business reasons.

     Section 2. Term. This Agreement shall take effect on the date first listed above and
Executive’s employment shall continue until terminated in accordance with Section 6 below (the
“Employment Term”). The Executive will be employed on an “at-will” basis.

     Section 3. Compensation. During the Employment Term, the Executive shall be entitled
to the following compensation and benefits:

     (a) Salary. As compensation for the performance of the Executive’s services
hereunder, the Company shall pay to the Executive a base salary (the “Salary”) of
$530,000 per year with increases, if any, as may be approved by the Board of Directors or
the Compensation Committee of the Board. The Salary shall be payable in accordance with the
customary payroll practices of the Company as the same shall exist from time to time. In no
event shall the Salary be decreased during the Employment Term.

 

 

     (b) Bonus. During the Employment Term, in addition to Salary, the Executive
shall be eligible to participate in the executive variable incentive plan or such other
bonus plans as may be adopted from time to time by the Board of Directors or the
Compensation Committee of the Board for other officers of the Company (the “Bonus”)
for each such fiscal year ending during the Employment Period. The Executive’s entitlement
to the Bonus for any particular fiscal quarter or year shall be based on the attainment of
performance objectives established by the Board of Directors or the Compensation Committee
of the Board in any such bonus plan, and the Executive’s target Bonus for 100% achievement
of performance objectives under such bonus plan shall be 100% of base Salary, with
increases, if any, as may be approved by the Board of Directors or the Compensation
Committee of the Board.

     (c) Benefits. Except as otherwise provided in this Agreement, in addition to
the Salary and Bonus, if any, the Executive shall be entitled during the Employment Term to
participate in medical, dental, life and disability insurance programs and other benefit
programs provided to other officers of the Company on terms no less favorable than those
available to the other officers of the Company. The Executive shall also be entitled to the
same number of paid-time-off days, holidays and other benefits as are generally allowed to
other senior executives of the Company in accordance with the Company’s policies in effect
from time to time.

     Section 4. Exclusivity. During the Employment Term, the Executive shall devote his
full time to the business of the Company and its subsidiaries, shall faithfully serve the Company
and its subsidiaries, shall in all respects conform to and comply with the lawful and reasonable
directions and instructions given to him by the Board of Directors in accordance with the terms of
this Agreement, shall use his best efforts to promote and serve the interests of the Company and
its subsidiaries and shall not engage in any other business activity, whether or not such activity
shall be engaged in for pecuniary profit, except that the Executive may (i) participate in the
activities of professional trade organizations related to the business of the Company and its
subsidiaries, (ii) engage in personal investing activities and (iii) serve on the board of
directors of not more than two (2) other companies whose businesses are not in competition with the
business interests of the Company, provided that the activities set forth in these clauses (i),
(ii) and (iii), either singly or in the aggregate, do not interfere in any material respect with
the services to be provided by the Executive hereunder.

     Section 5. Reimbursement for Expenses. During the Employment Term, the Executive is
authorized to incur reasonable expenses in the discharge of the services to be performed hereunder,
including expenses for travel, entertainment, lodging and similar items in accordance with the
Company’s expense reimbursement policy, as the same may be modified by the Company from time to
time. The Company shall reimburse the Executive for all such proper expenses upon presentation by
the Executive of itemized accounts of such expenditures in accordance with the financial policy of
the Company, as in effect from time to time.

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     Section 6. Termination and Default.

     (a) Death. The Executive’s employment shall automatically terminate upon his
death and upon such event, the Executive’s estate shall be entitled to receive the amounts
specified in Section 6(e) below.

     (b) Disability. If the Executive is unable to perform the duties required of
him under this Agreement because of illness, incapacity, or physical or mental disability,
the Employment Term shall continue and the Company shall pay all compensation required to be
paid to the Executive hereunder, unless the Executive is disabled such that the Executive
would be entitled to receive disability benefits under the Company’s long-term disability
plan, or if no such plan exists, the Executive is unable to perform the duties required of
him under this Agreement for an aggregate of 180 days (whether or not consecutive) during
any 12-month period during the term of this Agreement, in which event the Executive’s
employment shall terminate.

     (c) Cause. The Company may terminate the Executive’s employment at any time,
with or without Cause. In the event of termination pursuant to this Section 6(c) for Cause
(as defined in the American Medical Systems, Inc. Executive Severance Pay Plan (the
“Severance Plan”) (“Cause”)), the Company shall deliver to the Executive written notice
setting forth the basis for such termination, which notice shall specifically set forth the
nature of the Cause which is the reason for such termination. Termination of the
Executive’s employment hereunder shall be effective upon delivery of such notice of
termination.

     (d) Resignation. The Executive shall have the right to terminate his
employment at any time by giving notice of his resignation.

     (e) Payments.

     (1) In the event that the Executive’s employment terminates for any reason, the
Company shall pay promptly to the Executive all amounts and benefits accrued but
unpaid hereunder through the date of termination in respect of Salary or
unreimbursed expenses, including accrued and unused vacation.

     (2) In the event of the Executive’s Termination of Employment (as defined in
the Severance Plan) by the Company without Cause during the Employment Term, and
Executive executes within forty-five days following Termination of Employment (and
does not revoke within the relevant statutory periods) a Release and Separation
Agreement in the form provided by the Company (a “Release”), then in addition to the
amounts specified in Section 6(e)(1), Executive shall be entitled to receive
additional payments pursuant to the terms set forth in the Severance Plan.

     (3) In the event Executive is entitled to severance pay under a separate Change
in Control Severance Agreement between the Parent Company and the Participant (the
“CIC Severance Agreement”), then in addition to the amounts specified in Section
6(e)(1), the Executive shall be entitled to receive additional

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payments pursuant to the terms set forth in the CIC Severance Agreement and
shall not be entitled to receive payments under the Severance Plan.

     Section 7. Restrictions on Competitive Activities. The Executive acknowledges that
the agreements and covenants contained in this Section 7 are essential to protect the value of the
Company’s business and assets and by his or her current employment with the Company, the Executive
has obtained and will obtain such knowledge, contacts, know-how, training and experience and there
is a substantial probability that such knowledge, know-how, contacts, training and experience could
be used to the substantial advantage of a competitor of the Company and to the Company’s
substantial detriment. The Company’s initial offer of employment to the Executive, as well as the
compensation, benefits, stock options, and potential bonus, constituted the consideration to
support the Restrictions on Competitive Activities set forth in the Executive’s initial Employment
Agreement, and as carried forward, subject to modification, in this Agreement. This Agreement
shortens the duration of the restrictions on competitive activities as originally provided in the
Employment Agreement. The Executive and Company agree that those restrictions, as set forth in the
Employment Agreement and this Agreement, are legitimate, necessary, reasonable in geographic scope
and duration, and supported by adequate consideration, including, without limitation, the shortened
duration of the restrictions and are fully enforceable. In consideration of the foregoing and the
other covenants and agreements of the Company set forth herein, the Executive agrees to the
restrictions contained in this Section 7.

     (a) Non-Solicitation. The Executive agrees that the Executive will not, during
the Executive’s employment with the Company and for a period of one year following the date
of the Executive’s voluntary or the Company’s involuntary termination of the Executive’s
employment with the Company (the “Restrictive Period”), directly or indirectly
solicit, or assist anyone else in the solicitation of, any of the Company’s employees, or
former employees who worked for the Company for the purpose of hiring them, engaging them as
consultants, or inducing them to leave their employment with the Company. If the Executive
is approached by one of the Company’s employees or former employees regarding potential
employment, consultation or contract, as described above during the Restrictive Period of
non-solicitation, the Executive must immediately (1) fully inform the employee or former
employee of the Executive’s non-solicitation obligation described above; and (2) refrain
from engaging in any communication with the employee or former employee regarding potential
employment, consultation or contract.

     (b) “Company Product” means any product, product line or service that has been
designed, developed, manufactured, marketed, sold or is under research, development, or is
being pursued through acquisition or licensure, or has been the subject of disclosure to the
Company in response to a due diligence process by the Company, at any time during the
Executive’s employment with the Company; provided, however, that if the Executive becomes
entitled to the benefits described in Section 2 of the CIC Severance Agreement, then the
definition of “Company Product” shall mean Company Product as of immediately prior to the
“change in control” as defined in the CIC Severance Agreement.

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     (c) “Competitive Product” means goods, products, product lines or services
developed, designed, manufactured, marketed, promoted, sold, serviced, or that are in
development or the subject of research by any Person that are the same or similar, perform
any of the same or similar functions, may be substituted for, or are intended or used for
any of the same purposes as a Company Product.

     (d) “Conflicting Organization” means any Person (including the Executive), and
any parent, subsidiary, partner or affiliate of any Person, that engages in, or is about to
become engaged in, the development, design, production, manufacture, promotion, marketing,
sale, support or service of a Competitive Product.

     (e) Non-Competition. The Executive agrees that the Executive will not, during
the Restrictive Period, alone or in any capacity with another Person (e.g., as an advisor,
consultant, principal, agent, partner, officer, director, shareholder, employee or
otherwise), within any geographic area where the Company does business:

     (1) directly or indirectly disclose to a Conflicting Organization the names or
any other information regarding the Company’s customers, or, on behalf of a
Conflicting Organization, call on, solicit, take away, or attempt to call on,
solicit, or take away any of the customers of the Company on whom the Executive
called, or otherwise had contact on behalf of the Company, or developed knowledge
regarding the customer’s need for or use of Competitive Product(s); or

     (2) seek or obtain employment with, work for, consult with, or lend assistance
to any Conflicting Organization in a capacity which is the same as or similar to the
employment capacity the Executive performed on behalf of the Company; or

     (3) directly or indirectly participate in or support in any capacity the
manufacture, invention, development, testing or research of any Competitive Product;
or

     (4) disrupt, damage, impair, or interfere with the business of the Company
whether by way of interfering with or disrupting the Company’s relationship with
employees, customers, agents, representatives or vendors.

     (f) Exception. During the Restrictive Period, the restrictions contained in
this Section 7 will not prevent the Executive from accepting employment with, or providing
consulting services to, a large diversified organization with separate and distinct
divisions that do not compete, directly or indirectly, with the Company, if prior to
accepting such employment or providing such consulting services, the Company receives
separate written assurances from the prospective employer and from the Executive,
satisfactory to the Company, confirming that the Executive will not render any services,
directly or indirectly, to any division or business unit that competes, directly or
indirectly, with the Company. During the Restrictive Period set forth in this Section 7,
the Executive will inform any new employer, prior to accepting employment or providing
consulting

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services, of the existence of this Agreement and provide such employer with a copy of
this Agreement.

     Section 8. Trade Secrets. The Company has, and is expected to develop certain
concepts, products, processes, information, designs, ideas, policies and procedures (collectively,
“Trade Secrets”) which it uses in its business which give the Company an advantage over
competitors who do not know, understand or use these secrets. Trade Secrets include the following
information:

     (a) information which in any way relates to the Company’s design, engineering,
manufacturing or management activities, financial condition, financial operations,
purchasing activities, business plans and marketing activities;

     (b) information acquired or compiled by the Company regarding actual or potential
customers, including their identities, their development prospects, financial information
concerning their business operations, identity and quantity of products or services
purchased from the Company, and all related accounts receivable information;

     (c) information concerning or resulting from the development of internal policies,
procedures, standards, quality or productivity measures or tools; and

     (d) any other information (in whatever form) as may, from time to time, be designated
by the Company as “Proprietary” or a “Trade Secret.”

     Except as may be required by the Executive’s employment with the Company or as
expressly agreed upon by the Company in writing, the Executive agrees that he will not,
during or after his employment with the Company, use or disclose any Trade Secrets or permit
any person to examine or copy any Trade Secrets. If any of the above classes of information
is found by a court to not constitute Trade Secrets, such information shall constitute
“Confidential Information” for purposes of this Agreement.

     Section 9. Confidential Information. The Company has, and is expected to develop
other Confidential Information, concepts, designs, policies, and procedures having independent
economic value from not being generally known or ascertainable by proper means which the Executive
will or may learn in the course of employment but which does not constitute Trade Secrets as
described above. For purposes of this Agreement, “Confidential Information” means any
proprietary, confidential or competitively sensitive information and materials which are the
property of or relate to the Company including, without limitation:

     (a) the identity of the Company’s past, present and prospective customers, clients or
business contacts, and all documents, information and materials which concern or relate to
such customers, clients or business contacts;

     (b) marketing, sales, and advertising information; marketing and sales techniques,
strategies, efforts and data; business plans and product development and delivery schedules;
market research and forecasts;

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     (c) organizational information, such as personnel and salary data, merger, acquisition
and expansion information; information concerning methods of operation; divestiture
information, and competitive information pertaining to the Company’s distributors;

     (d) technical information such as product specifications, compounds, formulas,
improvements, discoveries, developments, designs, inventions, techniques, and new products;

     (e) information disclosed to the Executive as part of any specialized, proprietary
training process; and

     (f) information of third parties provided to the Executive subject to non-disclosure
restrictions for use in the Executive’s business for the Company.

     Except as may be required by the Executive’s employment with the Company or as
expressly agreed upon in writing by the Company in writing, the Executive agrees that he
will not, during or at any time after his employment with the Company, use or disclose any
Confidential Information or permit any person to examine, copy or otherwise receive any
Confidential Information.

     Section 10. Inventions.

     (a) “Inventions” means any inventions, discoveries, improvements and ideas,
whether or not in writing or reduced to practice and whether or not patentable or
copyrightable, made, authored or conceived by the Executive, whether by his individual
efforts or in connection with the efforts of others, and that either (i) relate in any way
to the Company’s business, products or processes, past, present, anticipated or under
development, or (ii) result in any way from the Executive’s employment by the Company, or
(iii) use the Company’s equipment, supplies, facilities or trade secret information.

     (b) The Executive agrees that all Inventions made by him during the period of his
employment with the Company and for six (6) months thereafter, whether made during the
working hours of the Company or on the Executive’s own time, will be the sole and exclusive
property of the Company. The Executive will, with respect to any Invention: (i) keep
current, accurate, and complete records, which will belong to the Company and be kept and
stored on the Company’s premises; (ii) promptly and fully disclose the existence and
describe the nature of the Invention to the Company in writing (and without request); (iii)
assign (and the Executive hereby assigns) to the Company all of his right, title and
interest in and to the Invention, any applications he makes for patents or copyrights in any
country, and any patents or copyrights granted to the Executive in any country; and (iv)
acknowledge and deliver promptly to the Company any written instruments, and perform any
other acts necessary in the Company’s opinion to preserve property rights in the Invention
against forfeiture, abandonment or loss and to obtain and maintain letters patent and/or
copyrights on the Invention and to vest the entire

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right and title to the Invention in the Company, whether during or after the
Executive’s employment with the Company.

     (c) The Executive represents that, as of the date of this Agreement, he has no right
under and will make no claims against the Company with respect to any inventions,
discoveries, improvements, ideas or works of authorship which would be Inventions if made,
conceived, authored or acquired by him during the term of this Agreement.

     (d) To the extent that any Invention qualifies as “work made for hire” as defined in 17
U.S.C. § 101 (1976), as amended, such Invention will constitute “work made for hire” and, as
such, will be the exclusive property of the Company.

     (e) Pursuant to Minnesota law, this Section 10 does not apply to any invention for
which no equipment, supplies, facility, or trade secret information of the Company was used
and which was developed entirely on the Executive’s own time, and (i) which does not relate
directly to any business of the Company or any of the Company’s actual or demonstrably
anticipated research or development, or (ii) which does not result from any work the
Executive performs for the Company.

     Section 11. Injunctive Relief. Without intending to limit the remedies available to
the Company, the Executive acknowledges that in the event of a breach of any of the covenants
contained in Sections 7, 8, 9 or 10 may result in material irreparable injury to the Company or its
subsidiaries or affiliates for which there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and that, in the event of such a breach or
threat thereof, the Company shall be entitled to obtain a temporary restraining order and/or a
preliminary or permanent injunction, without the necessity of proving irreparable harm or injury as
a result of such breach or threatened breach of Sections 7, 8, 9 or 10, restraining the Executive
from engaging in activities prohibited by Sections 7, 8, 9 and 10 or such other relief as may be
required specifically to enforce any of the covenants in Sections 7, 8, 9 and 10.

     Section 12. Representations and Warranties of the Executive. The Executive represents
and warrants to the Company as follows:

     (a) This Agreement, upon execution and delivery by the Executive, will be duly executed
and delivered by the Executive and (assuming due execution and delivery hereof by the
Company) will be the valid and binding obligation of the Executive enforceable against the
Executive in accordance with its terms.

     (b) Neither the execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby nor the performance of this Agreement in accordance with
its terms and conditions by the Executive (1) requires the approval or consent of any
governmental body or of any other person or (2) conflicts with or results in any breach or
violation of, or constitutes (or with notice or lapse of time or both would constitute) a
default under, any agreement, instrument, judgment, decree, order, statute, rule, permit or
governmental regulation applicable to the Executive. Without limiting the generality of the
foregoing, the Executive is not a party to any non-competition,

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non-solicitation, no hire or similar agreement that prohibits or conflicts in any way the
Executive’s employment hereunder.

     The representations and warranties of the Executive contained in this Section 12 shall survive
the execution and delivery of this Agreement and the consummation of the transactions contemplated
hereby.

     Section 13. Representations and Warranties of the Company. The Company represents and
warrants to the Executive as follows:

     (a) This Agreement, upon execution and delivery by the Company, will be duly executed
and delivered by the Company and (assuming due execution and delivery hereof by the
Executive) will be the valid and binding obligation of the Company enforceable against the
Company in accordance with its terms.

     (b) Neither the execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby nor the performance of this Agreement in accordance with
its terms and conditions by the Company (1) requires the approval or consent of any
governmental body or of any other person or (2) conflicts with or results in any breach or
violation of, or constitutes (or with notice or lapse of time or both would constitute) a
default under, any agreement, instrument, judgment, decree, order, statute, rule, permit or
governmental regulation applicable to the Company.

     The representations and warranties of the Company contained in this Section 13 shall survive
the execution and delivery of this Agreement and the consummation of the transactions contemplated
hereby.

     Section 14. Successors and Assigns; No Third-Party Beneficiaries. This Agreement
shall inure to the benefit of, and be binding upon, the successors and assigns of each of the
parties, including, but not limited to, the Executive’s heirs and the personal representatives of
the Executive’s estate; provided, however, that neither party shall assign or
delegate any of the obligations created under this Agreement without the prior written consent of
the other party. Notwithstanding the foregoing, the Company shall have the unrestricted right to
assign this Agreement and to delegate all or any part of its obligations hereunder to any of its
subsidiaries or Affiliates, but in such event such assignee shall expressly assume all obligations
of the Company hereunder and the Company shall remain fully liable for the performance of all of
such obligations in the manner prescribed in this Agreement. Nothing in this Agreement shall
confer upon any person or entity not a party to this Agreement, or the legal representatives of
such person or entity, any rights or remedies of any nature or kind whatsoever under or by reason
of this Agreement.

     Section 15. Waiver and Amendments. Any waiver, alteration, amendment or modification
of any of the terms of this Agreement shall be valid only if made in writing and signed by the
parties hereto; provided, however, that any such waiver, alteration, amendment or
modification is consented to on the Company’s behalf by the Board of Directors or Compensation
Committee of the Board. No waiver by either of the parties hereto of their rights hereunder shall
be deemed to constitute a waiver with respect to any subsequent occurrences or

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transactions hereunder unless such waiver specifically states that it is to be construed as a
continuing waiver.

     Section 16. Severability and Governing Law. The Executive acknowledges and agrees
that the covenants set forth in Section 7 hereof are reasonable and valid in geographical and
temporal scope and in all other respects. If any of such covenants or such other provisions of
this Agreement are found to be invalid or unenforceable by a final determination of a court of
competent jurisdiction (a) the remaining terms and provisions hereof shall be unimpaired and (b)
the invalid or unenforceable term or provision shall be deemed replaced by a term or provision that
is valid and enforceable and that comes closest to expressing the intention of the invalid or
unenforceable term or provision. This Agreement 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.

     Section 17. Notices.

     (a) All communications under this Agreement shall be in writing and shall be delivered
by hand or mailed by overnight courier or by registered or certified mail, postage prepaid:

     (1) If to the Executive, at                                                            
                    ,
or at such other address as the Executive may have
furnished the Company in writing, and

     (2) If to the Company, at 10700 Bren Road West, Minnetonka, Minnesota 55343,
marked for the attention of Senior Vice President, Human Resources, or at such other
address as it may have furnished in writing to the Executive.

     (b) Any notice so addressed shall be deemed to be given: if delivered by hand, on the
date of such delivery; if mailed by courier, on the first business day following the date of
such mailing; and if mailed by registered or certified mail, on the third business day after
the date of such mailing.

     Section 18. Section Headings. The headings of the sections and subsections of this
Agreement are inserted for convenience only and shall not be deemed to constitute a part thereof,
affect the meaning or interpretation of this Agreement or of any term or provision hereof.

     Section 19. Entire Agreement. This Agreement, the Severance Plan, and the CIC
Severance Agreement constitute the entire understanding and agreement of the parties hereto
regarding the employment of the Executive. This Agreement supersedes all prior negotiations,
discussions, correspondence, communications, understandings and agreements between the parties
relating to the subject matter of this Agreement.

     Section 20. Survival of Operative Sections. Upon any termination of the Executive’s
employment, the provisions of Sections 6(e) and 7 through 21 of this Agreement shall survive to the
extent necessary to give effect to the provisions thereof.

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     Section 21. Counterparts. This Agreement 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. Facsimile execution and delivery of this Agreement shall be legal, valid and
binding execution and delivery for all purposes.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above
written.

	 	 	 	 	 
	 	AMERICAN MEDICAL SYSTEMS, INC.

 	 
	 	By:  	/s/ Randall Ross
 	 
	 	 	Randall Ross 	 
	 	 	Senior Vice President, Human Resources 	 
	 
	 	 	 
	 	  	     /s/ Anthony P. Bihl, III
 	 
	 	 	Anthony P. Bihl, III 	 
	 	 	 	 
	 

11exv10w2

Exhibit 10.2

AMERICAN MEDICAL SYSTEMS, INC.

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

     THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into
effective as of March 26, 2010, between American Medical Systems, Inc., a Delaware corporation (the
“Company”), and Mark A. Heggestad (the “Executive”).

RECITALS

     WHEREAS, the Company and the Executive are parties to an Employment Agreement, dated as of
December 18, 2006 as amended on March 6, 2008 (the “Employment Agreement”); and

     WHEREAS, the parties hereto desire to amend and restate the Employment Agreement to reflect
changes in the employment relationship as set forth herein;

     NOW, THEREFORE, on the basis of the foregoing premises and in consideration of the mutual
covenants and agreements contained herein, the parties hereto agree as follows:

     Section 1. Employment. The Company hereby agrees to continue to employ the Executive
and the Executive hereby accepts employment with the Company, on the terms and subject to the
conditions hereinafter set forth. The Executive shall serve as the Executive Vice President and
Chief Financial Officer, in such capacity, shall report directly to the Company’s Chief Executive
Officer and shall have such duties as are typically performed by the Chief Financial Officer of a
corporation, together with such additional duties, commensurate with the Executive’s position as
the Chief Financial Officer of the Company, as may be assigned to the Executive from time to time
by the Company’s Chief Executive Officer. The principal location of the Executive’s employment
shall be at the Company’s principal executive office located in Minnetonka, Minnesota, although the
Executive understands and agrees that he may be required to travel from time to time for Company
business reasons.

     Section 2. Term. This Agreement shall take effect on the date first listed above and
Executive’s employment shall continue until terminated in accordance with Section 6 below (the
“Employment Term”). The Executive will be employed on an “at-will” basis.

     Section 3. Compensation. During the Employment Term, the Executive shall be entitled
to the following compensation and benefits:

     (a) Salary. As compensation for the performance of the Executive’s services
hereunder, the Company shall pay to the Executive a base salary (the “Salary”) of
$311,200 per year with increases, if any, as may be approved by the Board of Directors or
the Compensation Committee of the Board. The Salary shall be payable in accordance with the
customary payroll practices of the Company as the same shall exist from time to time. In no
event shall the Salary be decreased during the Employment Term.

 

 

     (b) Bonus. During the Employment Term, in addition to Salary, the Executive
shall be eligible to participate in the executive variable incentive plan or such other
bonus plans as may be adopted from time to time by the Board of Directors or the
Compensation Committee of the Board for other officers of the Company (the “Bonus”)
for each such fiscal year ending during the Employment Period. The Executive’s entitlement
to the Bonus for any particular fiscal quarter or year shall be based on the attainment of
performance objectives established by the Board of Directors or the Compensation Committee
of the Board in any such bonus plan, and the Executive’s target Bonus for 100% achievement
of performance objectives under such bonus plan shall be 60% of base Salary with increases,
if any, as may be approved by the Board of Directors or the Compensation Committee of the
Board.

     (c) Benefits. Except as otherwise provided in this Agreement, in addition to
the Salary and Bonus, if any, the Executive shall be entitled during the Employment Term to
participate in medical, dental, life and disability insurance programs and other benefit
programs provided to other officers of the Company on terms no less favorable than those
available to the other officers of the Company. The Executive shall also be entitled to the
same number of vacation days, holidays, sick days and other benefits as are generally
allowed to other senior executives of the Company in accordance with the Company’s policies
in effect from time to time.

     Section 4. Exclusivity. During the Employment Term, the Executive shall devote his
full time to the business of the Company and its subsidiaries, shall faithfully serve the Company
and its subsidiaries, shall in all respects conform to and comply with the lawful and reasonable
directions and instructions given to him by the Chief Executive Officer or the Board of Directors
in accordance with the terms of this Agreement, shall use his best efforts to promote and serve the
interests of the Company and its subsidiaries and shall not engage in any other business activity,
whether or not such activity shall be engaged in for pecuniary profit, except that the Executive
may (i) participate in the activities of professional trade organizations related to the business
of the Company and its subsidiaries, (ii) engage in personal investing activities and (iii) serve
on the board of directors of not more than two (2) other companies whose businesses are not in
competition with the business interests of the Company, provided that the activities set forth in
these clauses (i), (ii) and (iii), either singly or in the aggregate, do not interfere in any
material respect with the services to be provided by the Executive hereunder.

     Section 5. Reimbursement for Expenses. During the Employment Term, the Executive is
authorized to incur reasonable expenses in the discharge of the services to be performed hereunder,
including expenses for travel, entertainment, lodging and similar items in accordance with the
Company’s expense reimbursement policy, as the same may be modified by the Company from time to
time. The Company shall reimburse the Executive for all such proper expenses upon presentation by
the Executive of itemized accounts of such expenditures in accordance with the financial policy of
the Company, as in effect from time to time.

2

 

     Section 6. Termination and Default.

     (a) Death. The Executive’s employment shall automatically terminate upon his
death and upon such event, the Executive’s estate shall be entitled to receive the amounts
specified in Section 6(e) below.

     (b) Disability. If the Executive is unable to perform the duties required of
him under this Agreement because of illness, incapacity, or physical or mental disability,
the Employment Term shall continue and the Company shall pay all compensation required to be
paid to the Executive hereunder, unless the Executive is disabled such that the Executive
would be entitled to receive disability benefits under the Company’s long-term disability
plan, or if no such plan exists, the Executive is unable to perform the duties required of
him under this Agreement for an aggregate of 180 days (whether or not consecutive) during
any 12-month period during the term of this Agreement, in which event the Executive’s
employment shall terminate.

     (c) Cause. The Company may terminate the Executive’s employment at any time,
with or without Cause. In the event of termination pursuant to this Section 6(c) for Cause
(as defined in the American Medical Systems, Inc. Executive Severance Pay Plan (the
“Severance Plan”) (“Cause)), the Company shall deliver to the Executive written notice
setting forth the basis for such termination, which notice shall specifically set forth the
nature of the Cause which is the reason for such termination. Termination of the
Executive’s employment hereunder shall be effective upon delivery of such notice of
termination.

     (d) Resignation. The Executive shall have the right to terminate his
employment at any time by giving notice of his resignation.

     (e) Payments.

     (1) In the event that the Executive’s employment terminates for any reason, the
Company shall pay promptly to the Executive all amounts and benefits accrued but
unpaid hereunder through the date of termination in respect of Salary or
unreimbursed expenses, including accrued and unused vacation.

     (2) In the event of the Executive’s Termination of Employment (as defined in
the Severance Plan) by the Company without Cause during the Employment Term, and
Executive executes within forty-five days following Termination of Employment (and
does not revoke within the relevant statutory periods) a Release and Separation
Agreement in the form provided by the Company (a “Release”), then in addition to the
amounts specified in Section 6(e)(1), Executive shall be entitled to receive
additional payments pursuant to the terms set forth in the Severance Plan.

     (3) In the event Executive is entitled to severance pay under a separate Change
in Control Severance Agreement between the Parent Company and the Participant (the
“CIC Severance Agreement”), then in addition to the amounts specified in Section
6(e)(1), the Executive shall be entitled to receive additional

3

 

payments pursuant to the terms set forth in the CIC Severance Agreement and
shall not be entitled to receive payments under the Severance Plan.

     Section 7. Restrictions on Competitive Activities. The Executive acknowledges that
the agreements and covenants contained in this Section 7 are essential to protect the value of the
Company’s business and assets and by his current employment with the Company, the Executive has
obtained and will obtain such knowledge, contacts, know-how, training and experience and there is a
substantial probability that such knowledge, know-how, contacts, training and experience could be
used to the substantial advantage of a competitor of the Company and to the Company’s substantial
detriment. The Company’s initial offer of employment to the Executive, as well as the
compensation, benefits, stock options, and potential bonus, constituted the consideration to
support the restrictions on competitive activities set forth in the Employment Agreement, as
amended in the CIC Severance Agreement which is carried forward in this Agreement. This Agreement
shortens the duration of the restrictions on competitive activities as provided for in the CIC
Severance Agreement. The Executive and Company agree that those restrictions, as set forth in the
Employment Agreement, the CIC Severance Agreement and this Agreement, are legitimate, necessary,
reasonable in geographic scope and duration, and supported by adequate consideration, including
without limitation, the shortened duration of the restrictions, and are fully enforceable. In
consideration of the foregoing and the other covenants and agreements of the Company set forth
herein, the Executive agrees to the restrictions contained in this Section 7.

     (a) Non-Solicitation. The Executive agrees that the Executive will not, during
the Executive’s employment with the Company and for a period of one year following the date
of the Executive’s voluntary or the Company’s involuntary termination of the Executive’s
employment with the Company (the “Restrictive Period”), directly or indirectly
solicit, or assist anyone else in the solicitation of, any of the Company’s employees, or
former employees who worked for the Company for the purpose of hiring them, engaging them as
consultants, or inducing them to leave their employment with the Company. If the Executive
is approached by one of the Company’s employees or former employees regarding potential
employment, consultation or contract, as described above during the Restrictive Period of
non-solicitation, the Executive must immediately (1) fully inform the employee or former
employee of the Executive’s non-solicitation obligation described above; and (2) refrain
from engaging in any communication with the employee or former employee regarding potential
employment, consultation or contract.

     (b) “Company Product” means any product, product line or service that has been
designed, developed, manufactured, marketed, sold or is under research, development, or is
being pursued through acquisition or licensure, or has been the subject of disclosure to the
Company in response to a due diligence process by the Company, at any time during the
Executive’s employment with the Company; provided, however, that if the Executive becomes
entitled to the benefits described in Section 2 of the CIC Severance Agreement, then the
definition of “Company Product” shall mean Company Product as of immediately prior to the
“change in control” as defined in the CIC Severance Agreement.

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     (c) “Competitive Product” means goods, products, product lines or services
developed, designed, manufactured, marketed, promoted, sold, serviced, or that are in
development or the subject of research by any Person that are the same or similar, perform
any of the same or similar functions, may be substituted for, or are intended or used for
any of the same purposes as a Company Product.

     (d) “Conflicting Organization” means any Person (including the Executive), and
any parent, subsidiary, partner or affiliate of any Person, that engages in, or is about to
become engaged in, the development, design, production, manufacture, promotion, marketing,
sale, support or service of a Competitive Product.

     (e) Non-Competition. The Executive agrees that the Executive will not, during
the Restrictive Period, alone or in any capacity with another Person (e.g., as an advisor,
consultant, principal, agent, partner, officer, director, shareholder, employee or
otherwise), within any geographic area where the Company does business:

     (1) directly or indirectly disclose to a Conflicting Organization the names or
any other information regarding the Company’s customers, or, on behalf of a
Conflicting Organization, call on, solicit, take away, or attempt to call on,
solicit, or take away any of the customers of the Company on whom the Executive
called, or otherwise had contact on behalf of the Company, or developed knowledge
regarding the customer’s need for or use of Competitive Product(s); or

     (2) seek or obtain employment with, work for, consult with, or lend assistance
to any Conflicting Organization in a capacity which is the same as or similar to the
employment capacity the Executive performed on behalf of the Company; or

     (3) directly or indirectly participate in or support in any capacity the
manufacture, invention, development, testing or research of any Competitive Product;
or

     (4) disrupt, damage, impair, or interfere with the business of the Company
whether by way of interfering with or disrupting the Company’s relationship with
employees, customers, agents, representatives or vendors.

     (f) Exception. During the Restrictive Period, the restrictions contained in
this Section 7 will not prevent the Executive from accepting employment with, or providing
consulting services to, a large diversified organization with separate and distinct
divisions that do not compete, directly or indirectly, with the Company, if prior to
accepting such employment or providing such consulting services, the Company receives
separate written assurances from the prospective employer and from the Executive,
satisfactory to the Company, confirming that the Executive will not render any services,
directly or indirectly, to any division or business unit that competes, directly or
indirectly, with the Company. During the Restrictive Period set forth in this Section 7,
the Executive will inform any new employer, prior to accepting employment or providing
consulting

5

 

services, of the existence of this Agreement and provide such employer with a copy of
this Agreement.

     Section 8. Trade Secrets. The Company has, and is expected to develop certain
concepts, products, processes, information, designs, ideas, policies and procedures (collectively,
“Trade Secrets”) which it uses in its business which give the Company an advantage over
competitors who do not know, understand or use these secrets. Trade Secrets include the following
information:

     (a) information which in any way relates to the Company’s design, engineering,
manufacturing or management activities, financial condition, financial operations,
purchasing activities, business plans and marketing activities;

     (b) information acquired or compiled by the Company regarding actual or potential
customers, including their identities, their development prospects, financial information
concerning their business operations, identity and quantity of products or services
purchased from the Company, and all related accounts receivable information;

     (c) information concerning or resulting from the development of internal policies,
procedures, standards, quality or productivity measures or tools; and

     (d) any other information (in whatever form) as may, from time to time, be designated
by the Company as “Proprietary” or a “Trade Secret.”

     Except as may be required by the Executive’s employment with the Company or as
expressly agreed upon by the Company in writing, the Executive agrees that he will not,
during or after his employment with the Company, use or disclose any Trade Secrets or permit
any person to examine or copy any Trade Secrets. If any of the above classes of information
is found by a court to not constitute Trade Secrets, such information shall constitute
“Confidential Information” for purposes of this Agreement.

     Section 9. Confidential Information. The Company has, and is expected to develop
other Confidential Information, concepts, designs, policies, and procedures having independent
economic value from not being generally known or ascertainable by proper means which the Executive
will or may learn in the course of employment but which does not constitute Trade Secrets as
described above. For purposes of this Agreement, “Confidential Information” means any
proprietary, confidential or competitively sensitive information and materials which are the
property of or relate to the Company including, without limitation:

     (a) the identity of the Company’s past, present and prospective customers, clients or
business contacts, and all documents, information and materials which concern or relate to
such customers, clients or business contacts;

     (b) marketing, sales, and advertising information; marketing and sales techniques,
strategies, efforts and data; business plans and product development and delivery schedules;
market research and forecasts;

6

 

     (c) organizational information, such as personnel and salary data, merger, acquisition
and expansion information; information concerning methods of operation; divestiture
information, and competitive information pertaining to the Company’s distributors;

     (d) technical information such as product specifications, compounds, formulas,
improvements, discoveries, developments, designs, inventions, techniques, and new products;

     (e) information disclosed to the Executive as part of any specialized, proprietary
training process; and

     (f) information of third parties provided to the Executive subject to non-disclosure
restrictions for use in the Executive’s business for the Company.

     Except as may be required by the Executive’s employment with the Company or as
expressly agreed upon in writing by the Company in writing, the Executive agrees that he
will not, during or at any time after his employment with the Company, use or disclose any
Confidential Information or permit any person to examine, copy or otherwise receive any
Confidential Information.

     Section 10. Inventions.

     (a) “Inventions” means any inventions, discoveries, improvements and ideas,
whether or not in writing or reduced to practice and whether or not patentable or
copyrightable, made, authored or conceived by the Executive, whether by his individual
efforts or in connection with the efforts of others, and that either (i) relate in any way
to the Company’s business, products or processes, past, present, anticipated or under
development, or (ii) result in any way from the Executive’s employment by the Company, or
(iii) use the Company’s equipment, supplies, facilities or trade secret information.

     (b) The Executive agrees that all Inventions made by him during the period of his
employment with the Company and for six (6) months thereafter, whether made during the
working hours of the Company or on the Executive’s own time, will be the sole and exclusive
property of the Company. The Executive will, with respect to any Invention: (i) keep
current, accurate, and complete records, which will belong to the Company and be kept and
stored on the Company’s premises; (ii) promptly and fully disclose the existence and
describe the nature of the Invention to the Company in writing (and without request); (iii)
assign (and the Executive hereby assigns) to the Company all of his right, title and
interest in and to the Invention, any applications he makes for patents or copyrights in any
country, and any patents or copyrights granted to the Executive in any country; and (iv)
acknowledge and deliver promptly to the Company any written instruments, and perform any
other acts necessary in the Company’s opinion to preserve property rights in the Invention
against forfeiture, abandonment or loss and to obtain and maintain letters patent and/or
copyrights on the Invention and to vest the entire

7

 

right and title to the Invention in the Company, whether during or after the
Executive’s employment with the Company.

     (c) The Executive represents that, as of the date of this Agreement, he has no right
under and will make no claims against the Company with respect to any inventions,
discoveries, improvements, ideas or works of authorship which would be Inventions if made,
conceived, authored or acquired by him during the term of this Agreement.

     (d) To the extent that any Invention qualifies as “work made for hire” as defined in 17
U.S.C. § 101 (1976), as amended, such Invention will constitute “work made for hire” and, as
such, will be the exclusive property of the Company.

     (e) Pursuant to Minnesota law, this Section 10 does not apply to any invention for
which no equipment, supplies, facility, or trade secret information of the Company was used
and which was developed entirely on the Executive’s own time, and (i) which does not relate
directly to any business of the Company or any of the Company’s actual or demonstrably
anticipated research or development, or (ii) which does not result from any work the
Executive performs for the Company.

     Section 11. Injunctive Relief. Without intending to limit the remedies available to
the Company, the Executive acknowledges that in the event of a breach of any of the covenants
contained in Sections 7, 8, 9 or 10 may result in material irreparable injury to the Company or its
subsidiaries or affiliates for which there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and that, in the event of such a breach or
threat thereof, the Company shall be entitled to obtain a temporary restraining order and/or a
preliminary or permanent injunction, without the necessity of proving irreparable harm or injury as
a result of such breach or threatened breach of Sections 7, 8, 9 or 10, restraining the Executive
from engaging in activities prohibited by Sections 7, 8, 9 and 10 or such other relief as may be
required specifically to enforce any of the covenants in Sections 7, 8, 9 and 10.

     Section 12. Representations and Warranties of the Executive. The Executive represents
and warrants to the Company as follows:

     (a) This Agreement, upon execution and delivery by the Executive, will be duly executed
and delivered by the Executive and (assuming due execution and delivery hereof by the
Company) will be the valid and binding obligation of the Executive enforceable against the
Executive in accordance with its terms.

     (b) Neither the execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby nor the performance of this Agreement in accordance with
its terms and conditions by the Executive (1) requires the approval or consent of any
governmental body or of any other person or (2) conflicts with or results in any breach or
violation of, or constitutes (or with notice or lapse of time or both would constitute) a
default under, any agreement, instrument, judgment, decree, order, statute, rule, permit or
governmental regulation applicable to the Executive. Without limiting the generality of the
foregoing, the Executive is not a party to any non-competition, non-

8

 

solicitation, no hire or similar agreement that prohibits or conflicts in any way the
Executive’s employment hereunder.

     The representations and warranties of the Executive contained in this Section 12 shall survive
the execution and delivery of this Agreement and the consummation of the transactions contemplated
hereby.

     Section 13. Representations and Warranties of the Company. The Company represents and
warrants to the Executive as follows:

     (a) This Agreement, upon execution and delivery by the Company, will be duly executed
and delivered by the Company and (assuming due execution and delivery hereof by the
Executive) will be the valid and binding obligation of the Company enforceable against the
Company in accordance with its terms.

     (b) Neither the execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby nor the performance of this Agreement in accordance with
its terms and conditions by the Company (1) requires the approval or consent of any
governmental body or of any other person or (2) conflicts with or results in any breach or
violation of, or constitutes (or with notice or lapse of time or both would constitute) a
default under, any agreement, instrument, judgment, decree, order, statute, rule, permit or
governmental regulation applicable to the Company.

     The representations and warranties of the Company contained in this Section 13 shall survive
the execution and delivery of this Agreement and the consummation of the transactions contemplated
hereby.

     Section 14. Successors and Assigns; No Third-Party Beneficiaries. This Agreement
shall inure to the benefit of, and be binding upon, the successors and assigns of each of the
parties, including, but not limited to, the Executive’s heirs and the personal representatives of
the Executive’s estate; provided, however, that neither party shall assign or
delegate any of the obligations created under this Agreement without the prior written consent of
the other party. Notwithstanding the foregoing, the Company shall have the unrestricted right to
assign this Agreement and to delegate all or any part of its obligations hereunder to any of its
subsidiaries or Affiliates, but in such event such assignee shall expressly assume all obligations
of the Company hereunder and the Company shall remain fully liable for the performance of all of
such obligations in the manner prescribed in this Agreement. Nothing in this Agreement shall
confer upon any person or entity not a party to this Agreement, or the legal representatives of
such person or entity, any rights or remedies of any nature or kind whatsoever under or by reason
of this Agreement.

     Section 15. Waiver and Amendments. Any waiver, alteration, amendment or modification
of any of the terms of this Agreement shall be valid only if made in writing and signed by the
parties hereto; provided, however, that any such waiver, alteration, amendment or
modification is consented to on the Company’s behalf by the Board of Directors or Compensation
Committee of the Board. No waiver by either of the parties hereto of their rights hereunder shall
be deemed to constitute a waiver with respect to any subsequent occurrences or

9

 

transactions hereunder unless such waiver specifically states that it is to be construed as a
continuing waiver.

     Section 16. Severability and Governing Law. The Executive acknowledges and agrees
that the covenants set forth in Section 7 hereof are reasonable and valid in geographical and
temporal scope and in all other respects. If any of such covenants or such other provisions of
this Agreement are found to be invalid or unenforceable by a final determination of a court of
competent jurisdiction (a) the remaining terms and provisions hereof shall be unimpaired and (b)
the invalid or unenforceable term or provision shall be deemed replaced by a term or provision that
is valid and enforceable and that comes closest to expressing the intention of the invalid or
unenforceable term or provision. This Agreement 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.

     Section 17. Notices.

     (a) All communications under this Agreement shall be in writing and shall be delivered
by hand or mailed by overnight courier or by registered or certified mail, postage prepaid:

     (1) If to the Executive, at                                         , or at such other address as
the Executive may have furnished the Company in writing, and

     (2) If to the Company, at 10700 Bren Road West, Minnetonka, Minnesota 55343,
marked for the attention of Senior Vice President, Human Resources, or at such other
address as it may have furnished in writing to the Executive.

     (b) Any notice so addressed shall be deemed to be given: if delivered by hand, on the
date of such delivery; if mailed by courier, on the first business day following the date of
such mailing; and if mailed by registered or certified mail, on the third business day after
the date of such mailing.

     Section 18. Section Headings. The headings of the sections and subsections of this
Agreement are inserted for convenience only and shall not be deemed to constitute a part thereof,
affect the meaning or interpretation of this Agreement or of any term or provision hereof.

     Section 19. Entire Agreement. This Agreement, the Severance Plan and the CIC
Severance Agreement constitute the entire understanding and agreement of the parties hereto
regarding the employment of the Executive. This Agreement supersedes all prior negotiations,
discussions, correspondence, communications, understandings and agreements between the parties
relating to the subject matter of this Agreement.

     Section 20. Survival of Operative Sections. Upon any termination of the Executive’s
employment, the provisions of Sections 6(e) and 7 through 21 of this Agreement shall survive to the
extent necessary to give effect to the provisions thereof.

10

 

     Section 21. Counterparts. This Agreement 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. Facsimile execution and delivery of this Agreement shall be legal, valid and
binding execution and delivery for all purposes.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above
written.

	 	 	 	 	 
	 	AMERICAN MEDICAL SYSTEMS, INC.

 	 
	 	By:  	/s/ Randall Ross
 	 
	 	 	Randall Ross 	 
	 	 	Senior Vice President, Human Resources 	 
	 

	 	 	 	 	 
	 	 	 
	 	      /s/ Mark A. Heggestad
 	 
	 	Mark A. Heggestad 	 
	 	 	 
	 

11

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