Document:

exv10w9

 

Exhibit 10.9

Summary of Executive Bonus Arrangements

(For Fiscal 2008)

	I.	 	Bonus Structure

	 	•	 	For the current year bonus, an executive’s on-target bonus objective is approved
each year by the compensation committee. Achievement of the bonus is based on four,
equally-weighted performance goals: 25% revenue (growth only), 25% Profit (Operating
Income), 25% Cash (cash flow from operating and investment activities before changes in
working capital), 25% MBO (individual performance objectives); provided, however, that
if the revenue objective is not achieved at the 80% threshold level, the other three
objectives will be paid to a maximum of 50% of the target amounts.

	 	•	 	Financial Bonus Component split by quarter: 20% for each of the first
three fiscal quarters and 40% for the fourth quarter, in each case on a
year-to-date basis.
	 
	 	•	 	2-break Financial Bonus formula:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	% of Bonus	 	 	 	 	 	 	 	 	 	 
	 	 	up to 1st	 	 	 	% of Bonus up to	 	2nd Break	 	% of Bonus up to	 	% of Bonus at and
	 	 	Break	 	1st Break Point	 	2nd Break	 	Point	 	100% of Plan	 	after 100%
	 	 	 
	Revenue

	 	 	0	%	 	80% of Plan
	 	15% + 2.5% for each
1% over 80%
	 	90% of Plan
	 	60%+ 2.5% for each
1% over 90%
	 	100% for each 1%

over 100%
	Profit

	 	 	0	%	 	95% of Plan
	 	15% + 10.0% for
each 1% over 95%
	 	97.5% of Plan
	 	60% + 10.0% for
each 1% over 97.5%
	 	100% + 1.0% for
each 1% over 100%
	Cash

	 	 	0	%	 	90% of Plan
	 	15% + 5.0% for each
1% over 90%
	 	95% of Plan
	 	60% + 5.0% for each
1% over 95%
	 	100% + 1.0% for
each 1% over 100%

	 	•	 	MBOs are annual, tied to the Company’s operating and strategic plans
and consist of 2-6 objectives per executive, negotiated and agreed between the
Chief Executive Officer and executive based on the approved budget and business
plan. The Chief Executive Officer’s MBOs are the sum of the individual executives’
MBOs.

	 	•	 	Long-Term Bonus Pool for the three subsequent fiscal years (1/3 each) = current year
bonus as actually earned up to bonus pool of 40% of the on-target current year bonus.
Additional bonus pool dollars are added at the rate of $1 per $2 of overachievement of
the Operating Income target up to maximum of 100% of the actual current year bonus.

	 	•	 	Long-Term Bonus payouts for each of the three years are tied to the
5-year revenue plan (including acquisitions).
	 
	 	•	 	Long-Term Bonus award formula: <50% of target or current year plan,
whichever is greater, gets 50% of plan (floor); 50-100% gets 50% + 1% for each 1%
over 50%; 100-125 % gets 100% + 1% for each 1% over 100%; 125-150% gets 150% + 2%
for each 1% over 125%; >150% gets 200% (cap).
	 
	 	•	 	Payout in three annual installments following each of the three
performance periods. One-half of the floor amount is paid in common stock, valued
at the time of payment, and the remainder is paid in cash.

	 	•	 	Long-term bonus pool payouts from fiscal 2005, 2006 and 2007 are in their payout
phase. Their respective performance criteria is revenue. One-half of the floor amount
of the 2006 and 2007 bonus pool payout is paid in common stock, valued at the time of
payment, and the remainder is paid in cash. The 2005 award is payable entirely in
cash.

 

 

	II.	 	Miscellaneous Provisions

	 	•	 	If an executive’s employment is terminated for any reason, the executive forfeits
all rights to any current year bonus for the fiscal quarter in which the termination
occurs and subsequent fiscal quarters and forfeits all rights to any long-term bonus
not yet paid.
	 
	 	•	 	These compensation arrangements do not give any executive any right to be retained
in the employment of the Company and do not affect the right of the Company to
terminate, with or without cause, any executive’s employment at any time.
	 
	 	•	 	The Company has the right to withhold from any compensation payable to an executive,
or to cause the executive (or the executor or administrator of his or her estate or his
or her distributee) to make payment of, any federal state, local, or foreign taxes
required to be withheld with respect to any payment.
	 
	 	•	 	The Company may amend, alter, suspend or discontinue the compensation arrangements,
as it shall from time to time consider desirable.
	 
	 	•	 	In limited circumstances, the Chief Executive Officer, in consultation with the
compensation committee, may approve limited exceptions to the terms of the bonus plans.

2exv10w1

 

EXHIBIT
10.1

FIRST AMENDMENT TO CREDIT AND GUARANTY AGREEMENT

     This FIRST AMENDMENT TO CREDIT AND GUARANTY AGREEMENT (this “First Amendment”) is
dated as of October 29, 2007, by and among American Medical Systems, Inc., a Delaware corporation
(“Borrower”), each of the other Credit Parties which is a signatory hereto and CIT
Healthcare LLC, as Administrative Agent (in such capacity, together with its permitted successors
in such capacity, “Administrative Agent”).

BACKGROUND

     A. Borrower, Guarantors and Administrative Agent are parties to that certain Credit and
Guaranty Agreement dated as of July 20, 2006 (the “Original Credit Agreement;” and as
amended by this First Amendment the “Credit Agreement”), by and among Borrower, American
Medical Systems Holdings, Inc., a Delaware corporation (“Holdings”), as a Guarantor,
certain direct and indirect subsidiaries of Holdings (other than Borrower), as Guarantors, the
Lenders from time to time party thereto, CIT Capital Securities LLC, as Co-Lead Arranger and as
Sole Bookrunner, KeyBank National Association, as Co-Lead Arranger and as Syndication Agent, CIT
Healthcare LLC, as Administrative Agent and General Electric Capital Corporation, as Documentation
Agent, pursuant to which Lenders have made loans and advances to Borrower for the account of
Borrower, as described in the Original Credit Agreement, and as security therefor, each Credit
Party has granted to Collateral Agent and Lenders a lien on all of its assets.

     B. Borrower has requested that Administrative Agent and Lenders amend the Original Credit
Agreement to amend and restate certain of the financial tests and covenants provided in Section 6.8
thereof.

     C. Administrative Agent, on its behalf and on behalf of the Lenders (at the direction and
consent of the Lenders), is willing to amend the Original Credit Agreement, provided that Credit
Parties enter into this First Amendment upon the terms and conditions set forth herein.

     D. Terms used herein but not defined herein shall have the meanings assigned to them in the
Original Credit Agreement.

AGREEMENT

     NOW, THEREFORE, in consideration of the premises and the mutual promises herein contained, and
intending to be legally bound hereby, the parties hereto agree as follows:

SECTION 1

AMENDMENT TO CREDIT AGREEMENT

     Upon and subject to fulfillment of the conditions precedent under Section 3 of this First
Amendment, the following provisions of the Credit Agreement shall be amended as set forth below.

 

 

     1.1 Section 6.8 of the Original Credit Agreement is hereby amended by amending and restating
subsections (a) and (b) thereof to read as follows:

     “(a) Interest Coverage Ratio. Borrower shall not permit the Interest
Coverage Ratio as of the day nearest to the period ending in the table below,
beginning with the period ending September 30, 2006, to be less than the correlative
ratio indicated:

	 	 	 	 	 
	Fiscal Quarter Ended	 	 	 
	Nearest to the Period	 	Interest Coverage	 
	Ending Below	 	Ratio	 
	September 30, 2006
	 	 	2.50 to 1.00	 
	December 31, 2006
	 	 	2.50 to 1.00	 
	March 31, 2007
	 	 	2.75 to 1.00	 
	June 30, 2007
	 	 	3.00 to 1.00	 
	September 30, 2007
	 	 	3.25 to 1.00	 
	December 31, 2007
	 	 	3.25 to 1.00	 
	March 31, 2008
	 	 	3.25 to 1.00	 
	June 30, 2008
	 	 	3.50 to 1.00	 
	September 30, 2008
	 	 	3.50 to 1.00	 
	December 31, 2008
	 	 	3.75 to 1.00	 
	March 31, 2009
	 	 	3.75 to 1.00	 
	June 30, 2009
	 	 	3.75 to 1.00	 
	September 30, 2009
	 	 	4.00 to 1.00	 
	December 31, 2009
	 	 	4.00 to 1.00	 
	March 31, 2010
	 	 	4.00 to 1.00	 
	June 30, 2010
	 	 	4.00 to 1.00	 
	September 30, 2010
	 	 	4.00 to 1.00	 
	December 31, 2010
	 	 	4.00 to 1.00	 
	March 31, 2011
	 	 	4.00 to 1.00	 
	June 30, 2011
	 	 	4.00 to 1.00	 
	September 30, 2011
	 	 	4.00 to 1.00	 
	December 31, 2011
	 	 	4.00 to 1.00	 
	March 31, 2012
	 	 	4.00 to 1.00	 

- 2 -

 

	 	 	 	 	 
	Fiscal Quarter Ended	 	 	 
	Nearest to the Period	 	Interest Coverage	 
	Ending Below	 	Ratio	 
	June 30, 2012
	 	 	4.00 to 1.00	 

(b) Total Leverage Ratio. Borrower shall not permit the Total Leverage
Ratio as of the day nearest to the period ending in the table below and at all times
during such period, beginning with the period ending September 30, 2006, to exceed
the correlative ratio indicated:

	 	 	 	 	 
	Fiscal Quarter Ended	 	 	 
	Nearest to the Period	 	Total Leverage	 
	Ending Below	 	Ratio	 
	September 30, 2006
	 	 	7.25 to 1.00	 
	December 31, 2006
	 	 	6.95 to 1.00	 
	March 31, 2007
	 	 	6.50 to 1.00	 
	June 30, 2007
	 	 	6.00 to 1.00	 
	September 30, 2007
	 	 	5.50 to 1.00	 
	December 31, 2007
	 	 	5.50 to 1.00	 
	March 31, 2008
	 	 	5.25 to 1.00	 
	June 30, 2008
	 	 	5.00 to 1.00	 
	September 30, 2008
	 	 	4.75 to 1.00	 
	December 31, 2008
	 	 	4.50 to 1.00	 
	March 31, 2009
	 	 	4.25 to 1.00	 
	June 30, 2009
	 	 	4.00 to 1.00	 
	September 30, 2009
	 	 	3.75 to 1.00	 
	December 31, 2009
	 	 	3.50 to 1.00	 
	March 31, 2010
	 	 	3.25 to 1.00	 
	June 30, 2010
	 	 	3.00 to 1.00	 
	September 30, 2010
	 	 	3.00 to 1.00	 
	December 31, 2010
	 	 	3.00 to 1.00	 
	March 31, 2011
	 	 	3.00 to 1.00	 
	June 30, 2011
	 	 	3.00 to 1.00	 
	September 30, 2011
	 	 	3.00 to 1.00	 

- 3 -

 

	 	 	 	 	 
	Fiscal Quarter Ended	 	 	 
	Nearest to the Period	 	Total Leverage	 
	Ending Below	 	Ratio	 
	December 31, 2011
	 	 	3.00 to 1.00	 
	March 31, 2012
	 	 	3.00 to 1.00	 
	June 30, 2012
	 	 	3.00 to 1.00”	 

     1.2 Section 6.8 of the Original Credit Agreement is hereby amended by amending and restating
subsections (d) and (e) thereof to read as follows:

“(d) Fixed Charge Coverage Ratio. Borrower shall not permit the Fixed
Charge Coverage Ratio as of the day nearest to the period ending in the table below,
beginning with the period ending September 30, 2006, to be less than the correlative
ratio indicated:

	 	 	 	 	 
	Fiscal Quarter Ended	 	 	 
	Nearest to the Period	 	Fixed Charge	 
	Ending Below	 	Coverage Ratio	 
	September 30, 2006
	 	 	1.05 to 1.00	 
	December 31, 2006
	 	 	1.05 to 1.00	 
	March 31, 2007
	 	 	1.05 to 1.00	 
	June 30, 2007
	 	 	1.15 to 1.00	 
	September 30, 2007
	 	 	1.15 to 1.00	 
	December 31, 2007
	 	 	1.25 to 1.00	 
	March 31, 2008
	 	 	1.25 to 1.00	 
	June 30, 2008
	 	 	1.25 to 1.00	 
	September 30, 2008
	 	 	1.40 to 1.00	 
	December 31, 2008
	 	 	1.40 to 1.00	 
	March 31, 2009
	 	 	1.50 to 1.00	 
	June 30, 2009
	 	 	1.50 to 1.00	 
	September 30, 2009
	 	 	1.50 to 1.00	 
	December 31, 2009
	 	 	1.50 to 1.00	 
	March 31, 2010
	 	 	1.50 to 1.00	 
	June 30, 2010
	 	 	1.50 to 1.00	 
	September 30, 2010
	 	 	1.50 to 1.00	 

- 4 -

 

	 	 	 	 	 
	Fiscal Quarter Ended	 	 	 
	Nearest to the Period	 	Fixed Charge	 
	Ending Below	 	Coverage Ratio	 
	December 31, 2010
	 	 	1.50 to 1.00	 
	March 31, 2011
	 	 	1.50 to 1.00	 
	June 30, 2011
	 	 	1.50 to 1.00	 
	September 30, 2011
	 	 	1.50 to 1.00	 
	December 31, 2011
	 	 	1.50 to 1.00	 
	March 31, 2012
	 	 	1.50 to 1.00	 
	June 30, 2012
	 	 	1.50 to 1.00	 

(e) Maximum Consolidated Capital Expenditures. Borrower shall not, and
shall not permit Holdings or any of its Subsidiaries to, make or incur Consolidated
Capital Expenditures, in any Fiscal Year indicated below, in excess of the
corresponding amount set forth below opposite such Fiscal Year:

	 	 	 	 	 
	Fiscal	 	Consolidated Capital	 
	Year	 	Expenditures	 
	2006
	 	$	35,000,000	 
	2007
	 	$	16,500,000	 
	2008
	 	$	15,000,000	 
	2009
	 	$	17,500,000	 
	2010
	 	$	20,000,000	 
	2011
	 	$	22,500,000	 
	2012
	 	$	30,000,000”	 

SECTION 2

REPRESENTATIONS, WARRANTIES, NO ADVERSE CLAIMS

     To induce Administrative Agent and Lenders to amend the Original Credit Agreement, each Credit
Party represents and warrants to Administrative Agent, on its behalf and on behalf of the Lenders,
and agrees, that:

     2.1 Compliance with Credit Documents; No Defaults or Event of Default. On the date
hereof each of the Credit Parties is in compliance with the terms and provisions set forth in each
of the Credit Documents (as modified by this First Amendment), and no Default or Event of Default
has occurred and is continuing.

- 5 -

 

     2.2 Representations and Warranties. On the date hereof, the representations and
warranties of each Credit Party set forth in the Credit Agreement (as modified by this First
Amendment) are true and correct with the same effect as though such representations and warranties
had been made on the date hereof, except to the extent that such representations and warranties and
covenants expressly relate to an earlier date, in which case they shall be true and correct as of
such earlier date.

     2.3 Corporate Authority of Credit Parties. Each Credit Party has full power and
authority to enter into this First Amendment and to incur and perform the obligations provided for
under this First Amendment and the Credit Agreement, all of which have been duly authorized by all
proper and necessary corporate action. No consent or approval of stockholders or of any public
authority or regulatory body is required as a condition to the validity or enforceability of this
First Amendment.

     2.4 First Amendment as Binding Agreement. This First Amendment constitutes the valid
and legally binding obligation of each of the Credit Parties, fully enforceable against each such
Credit Party, in accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors’ rights generally or
by equitable principles relating to enforceability.

     2.5 No Conflicting Agreements. The execution and performance by each Credit Pary of
this First Amendment will not (i) violate any provision of law, any order of any court or other
agency of government, or the Organizational Documents of any Credit Party, or (ii) violate any
indenture, contract, agreement or other instrument to which any Credit Party is a party, or by
which its property is bound, or be in conflict with, result in a breach of or constitute (with due
notice and/or lapse of time) a default under, any such indenture, contract, agreement or other
instrument or result in the creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any of the property or assets of any Credit Party.

     2.6 No Changes to Organizational Documents. There have been no changes in the
Organizational Documents of any of the Credit Parties since the execution and delivery of the
Original Credit Agreement.

     2.7 No Material Adverse Effect. Since December 31, 2006, no event or circumstance
shall have occurred which has had or could reasonably be expected to have a Material Adverse
Effect.

     2.8 No Adverse Claim. Each Credit Party warrants, acknowledges and agrees that no
events have been taken place and no circumstances exist at the date hereof which would give any
Credit Party a basis to assert a claim against Administrative Agent or Lenders, or a defense,
offset or counterclaim to any claim of the Administrative Agent or Lenders with respect to the
Obligations, and each Credit Party hereby releases any such claims.

- 6 -

 

SECTION 3

CONDITIONS PRECEDENT

     The agreement by Administrative Agent and Lenders to amend the Original Credit Agreement is
subject to satisfaction of all of the following conditions precedent:

     3.1 The Credit Parties shall have executed and delivered to Administrative Agent a fully
executed copy of this First Amendment.

     3.2 The Credit Parties shall have delivered to Administrative Agent certified copies of all
documents evidencing any necessary corporate action, consents of third parties and government
approvals, if any, with respect to this First Amendment, and any other documents reasonably
requested by Administrative Agent including, without limitation, resolutions or consents of the
board of directors of the Credit Parties authorizing the execution, delivery and performance of
this First Amendment.

SECTION 4

GENERAL PROVISIONS

     4.1 Except as amended by this First Amendment, the terms and provisions of the Original Credit
Agreement and each of the other Credit Documents shall remain in full force and effect and are
hereby affirmed, confirmed and ratified in all respects. Each Credit Party ratifies, confirms and
affirms without condition, all liens and security interests granted to the Administrative Agent and
Lenders pursuant to the Credit Documents (as amended by this First Amendment), and such liens and
security interests shall continue to secure the Obligations, including but not limited to, all
Loans made by the Lenders to Borrower under the Credit Agreement.

     4.2 This First Amendment shall be construed in accordance with and governed by the laws of the
State of New York without regard to conflict of laws principles thereof, and the obligations of
Borrower under this First Amendment is and shall arise absolutely and unconditionally upon the
execution and delivery of this First Amendment.

     4.3 This First Amendment shall become effective upon the execution of a counterpart hereof by
each of the parties hereto and receipt by Borrower and Administrative Agent of written or
telephonic notification of such execution and authorization of delivery thereof.

     4.4 Each of the Credit Parties agrees to pay all out-of-pocket expenses incurred by
Administrative Agent and Lenders in connection with the preparation, negotiation and consummation
of this First Amendment, and all other documents related thereto, including without limitation, the
reasonable fees and expense of counsel to the Administrative Agent, and any filing fees required in
connection with the filing of any documents necessary to consummate the provisions of this First
Amendment.

- 7 -

 

     4.5 On or after the effective date hereof, each reference in the Credit Agreement or any of
the Original Credit Documents to this “Agreement” or works of like import, shall unless the context
otherwise requires, be deemed to refer to the Original Credit Agreement as amended hereby.

[SIGNATURE PAGES FOLLOW]

- 8 -

 

     IN WITNESS WHEREOF, each Credit Party and Administrative Agent, on its behalf and on behalf of
the Lenders, have caused this First Amendment to be duly executed by their duly authorized
officers, all as of the date and year first above written.

	 	 	 	 	 
	 	BORROWER:

AMERICAN MEDICAL SYSTEMS, INC.

 	 
	 	By:  	/s/  Mark Heggestad
 	 
	 	 	Name:  	Mark Heggestad  	 
	 	 	Title:  	Executive Vice President and Chief

Financial Officer 	 
	 

	 	 	 	 	 
	 	GUARANTORS:

AMERICAN MEDICAL SYSTEMS HOLDINGS, INC.

AMS SALES CORPORATION

AMS RESEARCH CORPORATION

THERMATRX INC.

OVION, INC.

SOLARANT MEDICAL, INC.

LASERSCOPE

LASERSCOPE INTERNATIONAL, INC.

INNOVAQUARTZ INCORPORATED

 	 
	 	By:  	/s/  Mark Heggestad
 	 
	 	 	Name:  	Mark Heggestad 	 
	 	 	Title:  	Executive Vice President and Chief

Financial Officer 	 
	 

 

 

	 	 	 	 	 
	 	CIT HEALTHCARE LLC, as Administrative Agent

 	 
	 	By:  	/s/  Michael D. Monte
 	 
	 	 	Name:  	Michael D. Monte 	 
	 	 	Title:  	Managing Director

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