Document:

exv10w8

 

Exhibit 10.8

AMERICAN MEDICAL SYSTEMS, INC.

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT is made and entered into effective as of March
9, 2004, between American Medical Systems, Inc., a Delaware corporation (the
“Company”), and Carmen L.Diersen (the “Executive”).

R E C I T A L S:

          WHEREAS, the Company recognizes that the future growth, profitability and
success of the Company’s business will be substantially and materially enhanced
by the employment of the Executive by the Company; and

          WHEREAS, the Company desires to employ the Executive and the Executive has
indicated her willingness to provide her services to the Company, on the terms
and conditions 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 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 and Secretary, 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 Executive shall take the office of Chief Financial
Officer effective March 22, 2004. 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 she
may be required to travel from time to time for Company business reasons.

          Section 2. Term. Unless terminated pursuant to Section 6 hereof, the
Executive’s employment hereunder shall commence on the date hereof and shall
continue during the period ending on the second anniversary of the date hereof
(the “Initial Term”). Thereafter, the Executive’s employment term shall extend
automatically for consecutive periods of one year unless either party shall
provide notice of termination not less than sixty (60) days prior to an
anniversary date of this Agreement. The

 

 

Initial Term, together with any extension pursuant to this Section 2, is
referred to herein as the “Employment Term.” The Employment Term shall
terminate upon any termination of the Executive’s employment pursuant to
Section 6.

          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 $230,000 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 such bonus plans as may be
adopted from time by the Board of Directors for other officers of the Company
(the “Bonus”) for each such calendar year ending during the Employment Period;
provided that, unless the Board of Directors or the Compensation Committee of
the Board determines otherwise, the Executive must be employed on the last day
of such calendar year in order to receive the Bonus attributable thereto. The
Executive’s entitlement to the Bonus for any particular calendar 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.

          (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 health, insurance, retirement,
disability, 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.

          (d) Stock Options. The Executive shall be granted stock options (the
“Options”) to acquire 230,000 shares of Common Stock of American Medical
Systems Holding, Inc. (the “Parent Corporation”) at a price equal to Fair
Market Value in effect on the Price Date. All of the terms and conditions
relating to the Option, including the vesting and expiration dates, are set
forth in the Stock Option Agreements executed by the Company and the Executive
(the “Stock Option Agreements”).

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          Section 4. Exclusivity. During the Employment Term, the Executive shall
devote her 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 her by the Chief Executive Officer or the Board of
Directors in accordance with the terms of this Agreement, shall use her 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.

          Section 6. Termination and Default.

          (a) Death. The Executive’s employment shall automatically terminate upon
her 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 her 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 her 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.

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          (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 below), 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. For purposes
of this Agreement, “Cause” shall mean: (i) the Executive’s failure (except
where due to a disability contemplated by subsection (b) hereof), neglect or
refusal to perform her duties hereunder which failure, neglect or refusal shall
not have been corrected by the Executive within 30 days of receipt by the
Executive of written notice from the Company of such failure, neglect or
refusal, which notice shall specifically set forth the nature of said failure,
neglect or refusal, (ii) any willful or intentional act of the Executive that
has the effect of injuring the reputation or business of the Company or its
affiliates in any material respect; (iii) any continued or repeated absence
from the Company, unless such absence is (A) approved or excused by the Chief
Executive Officer or (B) is the result of the Executive’s illness, disability
or incapacity (in which event the provisions of Section 6(b) hereof shall
control); (iv) use of illegal drugs by the Executive or repeated drunkenness;
(v) conviction of the Executive for the commission of a felony; or (vi) the
commission by the Executive of an act of fraud or embezzlement against the
Company.

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

          (e) Payments. In the event that the Executive’s employment terminates
for any reason, the Company shall pay 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. In
addition, in the event the Executive’s employment is terminated by the Company
without Cause, whether during or upon expiration of the then current term of
this Agreement, in addition to the amounts specified in the foregoing sentence,
(i) the Executive shall continue to receive the Salary (less any applicable
withholding or similar taxes) at the rate in effect hereunder on the date of
such termination periodically, in accordance with the Company’s prevailing
payroll practices, for a period of twelve (12) months following the date of
such termination (the “Severance Term”) and (ii) to the extent permissible
under the Company’s health and welfare plans, the Executive shall continue to
receive any health and welfare benefits provided to her as of the date of such
termination in accordance with Section 3(c) hereof during the Severance Term,
on the same basis and at the same cost as during the Employment Term. Further,
in the event the Executive’s employment is terminated without Cause by reason

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	of the Company having notified the Executive that this Agreement will not
be extended pursuant to Section 2, the Executive shall be entitled to receive a
pro-rated amount of the Bonus in a lump sum based on the Executive’s period of
employment during the calendar year in which such termination occurs (less any
applicable withholding or similar taxes). Following the end of the Severance
Term, the Executive shall be entitled to elect health care continuation
coverage permitted under Section 601 through 608 of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”), as if her employment had
then terminated. In the event the Executive accepts other employment or
engages in her own business prior to the last date of the Severance Term, the
Executive shall forthwith notify the Company and the Company shall be entitled
to set off from amounts and benefits due the Executive under this Section 6(e)
(other than in respect of the Bonus) the amounts paid to and benefits received
by the Executive in respect of such other employment or business activity.
Amounts owed by the Company in respect of the Salary, Bonus or reimbursement
for expenses under the provisions of Section 5 hereof shall, except as
otherwise set forth in this Section 6(e), be paid promptly upon any
termination. The payments and benefits to be provided to the Executive as set
forth in this Section 6(e) in the event the Executive’s employment is
terminated by the Company without Cause: (i) shall be lieu of any and all
benefits otherwise provided under any severance pay policy, plan or program
maintained from time to time by the Company for its employees, and (ii) shall
not be paid to the extent that Executive’s employment is terminated following a
Change in Control under circumstances entitling the Executive to the benefits
described in Section 6 (f).

          (f) Change in Control Benefit. In the event that the Executive’s
employment is terminated by the Company without Cause or by the Executive for
Good Reason, as defined below, during the 12-month period immediately following
a Change in Control, as defined below, whether during or upon expiration of the
then current term of this Agreement: (i) the Company shall pay 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 (less any applicable withholding or similar taxes),
(ii) all unvested shares that are subject to the Options shall become
immediately vested and exercisable as set forth in the Stock Option Agreements,
(iii) the Company shall pay to Executive a lump sum payment equal to her Salary
at the rate in effect hereunder on the date of such termination, plus her
target Bonus for the year in which the Change in Control occurs (less any
applicable withholding or similar taxes), and (iv) to the extent permissible
under the Company’s health and welfare plans, the Executive shall continue to
receive, at the Company’s cost, any health and welfare benefits provided to her
as of the date of such termination for the 12-month period following her
termination of employment. Following the end of the 12-month

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period described in clause (iv) of the preceding sentence, the Executive
shall be entitled to elect health care continuation coverage permitted under
Sections 601 through 608 of ERISA as if her employment with the Company then
terminated.

          (g) Gross-Up Payment. If the Executive becomes entitled to payments and
benefits following a Change in Control under Section 6(f) or the vesting of the
Options accelerate following a Change in Control as provided in the Stock
Option Agreements, the Company will cause its independent auditors promptly to
review, at the Company’s sole expense, the applicability of Code Section 4999
to any payment or distribution of any type by the Company to or for the
Executive’s benefit, whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement, the Stock Option Agreements or
otherwise (the “Total Payments”). If the auditor determines that the Total
Payments result in an excise tax imposed by Code Section 4999 or any comparable
state or local law, or any interest or penalties with respect to such excise
tax (such excise tax, together with any such interest and penalties, are
collectively referred to as the “Excise Tax”), the Company will make an
additional cash payment (a “Gross-Up Payment”) to the Executive within 10 days
after such determination equal to an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed with
respect to such taxes), including any Excise Tax, imposed upon the Gross-Up
Payment, the Executive would retain an amount of the Gross-Up Payment equal to
the Excise Tax imposed upon the Total Payments. For purposes of the foregoing
determination, the Executive’s tax rate will be deemed to be the highest
statutory marginal state and federal tax rate (on a combined basis) then in
effect. If no determination by the Company’s auditors is made prior to the time
the Executive is required to file a tax return reflecting the Total Payments,
the Executive will be entitled to receive from the Company a Gross-Up Payment
calculated on the basis of the Excise Tax the Executive reported in such tax
return, within 10 days after the later of the date on which the Executive files
such tax return or the date on which the Executive provides a copy thereof to
the Company. In all events, if any tax authority determines that a greater
Excise Tax should be imposed upon the Total Payments than is determined by the
Company’s independent auditors or reflected in the Executive’s tax return
pursuant to this Section 6(g), the Executive will be entitled to receive from
the Company the full Gross-Up Payment calculated on the basis of the amount of
Excise Tax determined to be payable by such tax authority within 10 days after
the Executive notifies the Company of such determination.

          For purposes of this Agreement, “Change in Control” shall mean:

          (i) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”))

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(a “Person”) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 50% or more (on a fully diluted basis)
of either (A) the then outstanding shares of common stock of the Parent
Corporation, taking into account as outstanding for this purpose such common
stock issuable upon the exercise of options or warrants, the conversion of
convertible stock or debt, and the exercise of any similar right to acquire
such common stock (the “Outstanding Parent Corporation Common Stock”) or (B)
the combined voting power of the then outstanding voting securities of the
Parent Corporation entitled to vote generally in the election of directors (the
“Outstanding Parent Corporation Voting Securities”); provided, however, that
for purposes of this subsection (i), the following acquisitions shall not
constitute a Change in Control: (x) any acquisition by the Parent Corporation
or any “affiliate” of the Parent Corporation, within the meaning of 17 C.F.R. §
230.405 (an “Affiliate”), (y) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Parent Corporation or any
Affiliate of the Parent Corporation, (z) any acquisition by any corporation or
business entity pursuant to a transaction which complies with clauses (A), (B)
and (C) of subsection (ii) of this Section 6(f) (persons and entities described
in clauses (x), (y) and (z) being referred to herein as “Permitted Holders”);
or

          (ii) The consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of the
Parent Corporation (a “Business Combination”), in each case, unless, following
such Business Combination, (A) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Parent Corporation Common Stock and Outstanding Parent Corporation Voting
Securities immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 60% of, respectively, the then outstanding
shares of common stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of such
transaction owns the Parent Corporation or all or substantially all of the
Parent Corporation’s assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding Parent
Corporation Common Stock and Outstanding Parent Corporation Voting Securities,
as the case may be, and (B) no Person (excluding any Permitted Holder)
beneficially owns, directly or indirectly, 50% or more (on a fully diluted
basis) of, respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination, taking into account as
outstanding for this purpose such common stock issuable upon the exercise of
options or warrants, the conversion of convertible stock or debt, and the
exercise of any similar right to acquire such common stock, or the combined
voting power

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of the then outstanding voting securities of such corporation except to
the extent that such ownership existed prior to the Business Combination and
(C) at least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members of the
incumbent Board of Directors of the Parent Corporation at the time of the
execution of the initial agreement providing for such Business Combination; or

          (iii) Approval by the shareholders of the Parent Corporation of a
complete liquidation or dissolution of the Parent Corporation; or

          (iv) The sale of at least 80% of the assets of the Parent Corporation to
an unrelated party, or completion of a transaction having a similar effect; or

          (v) The individuals who on the date of this Agreement constitute the
Board of Directors thereafter cease to constitute at least a majority thereof;
provided that any person becoming a member of the Board of Directors subsequent
to the date of this Agreement and whose election or nomination was approved by
either (A) a vote of at least two-thirds of the directors who then comprised
the Board of Directors immediately prior to such vote or (B) the Nominating
Committee of the Board of Directors shall be considered a member of the Board
of Directors on the date of this Agreement.

          For purposes of this Agreement, “Good Reason” shall mean, without the
Executive’s prior written consent, (i) a substantial diminution in the
Executive’s authority, duties or responsibilities as in effect prior to the
Change in Control, (ii) a reduction by the Company in the Executive’s base
Salary as in effect immediately prior to the Change in Control or as thereafter
increased, (iii) the failure by the Company to cover the Executive under
employee benefit plans that, in the aggregate, provide substantially similar
benefits to the Executive and/or her family and dependents at a substantially
similar total cost to the Executive (e.g., premiums, deductibles, co-pays, out
of pocket maximums, required contributions, taxes and the like) relative to the
benefits and total costs under such benefit plans in which the Executive
(and/or her family or dependents) was participating at any time during the
90-day period immediately preceding the Change in Control, or (iv) the
Company’s requiring the Executive to be based at any office or location that is
more than fifty (50) miles further from the office or location thereof
immediately preceding a Change in Control; provided, however, Good Reason shall
not include any of the circumstances or events described herein unless the
Executive has first provided written notice of such circumstance or event and
the Company has not corrected such circumstance or event within thirty (30)
days of receipt by the Company of such written notice from the Executive.

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          (h) Survival of Operative Sections. Upon any termination of the
Executive’s employment, the provisions of Sections 6(e), 6(f), 6(g) and 7
through 18 of this Agreement shall survive to the extent necessary to give
effect to the provisions thereof.

          Section 7. Secrecy and Non-Competition.

          (a) No Competing Employment. 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 her current employment
with the Company and its subsidiaries, 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. Therefore, the Executive
agrees that for the period commencing on the date of this Agreement and ending
on the first anniversary of the termination of the Executive’s employment
hereunder (such period is hereinafter referred to as the “Restricted Period”)
with respect to any State in which the Company is engaged in business during
the Employment Term, the Executive shall not participate or engage, directly or
indirectly, for himself or on behalf of or in conjunction with any person,
partnership, corporation or other entity, whether as an employee, agent,
officer, director, partner or joint venturer, in any business activities if
such activity consists of any activity undertaken or expressly contemplated to
be undertaken by the Company or any of its subsidiaries or by the Executive at
any time during the last three (3) years of the Employment Term. The foregoing
restrictions contained in this Section 7(a) shall not prevent the Executive
from accepting employment with a large diversified organization with separate
and distinct divisions that do not compete, directly or indirectly, with the
Company, so long as prior to accepting such employment the Company receives
separate written assurances from the prospective employer and from the
Executive, satisfactory to the Company, to the effect 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
Restricted Period, the Executive will inform any new employer, prior to
accepting employment, of the existence of this Agreement and provide such
employer with a copy of this Agreement.

          (b) Nondisclosure of Confidential Information. The Executive, except in
connection with her employment hereunder, shall not disclose to any person or
entity or use, either during the Employment Term or at any time thereafter, any
information not in the public domain or generally known in the industry that
the Company treats as confidential or proprietary, in any form, acquired by the
Executive while employed by the Company or any

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predecessor to the Company’s business or, if acquired following the
Employment Term, such information which, to the Executive’s knowledge, has been
acquired, directly or indirectly, from any person or entity owing a duty of
confidentiality to the Company or any of its subsidiaries or affiliates,
relating to the Company, its subsidiaries or affiliates, including but not
limited to information regarding customers, vendors, suppliers, trade secrets,
training programs, manuals or materials, technical information, contracts,
systems, procedures, mailing lists, know-how, trade names, improvements, price
lists, financial or other data (including the revenues, costs or profits
associated with any of the Company’s products or services), business plans,
code books, invoices and other financial statements, computer programs,
software systems, databases, discs and printouts, plans (business, technical or
otherwise), customer and industry lists, correspondence, internal reports,
personnel files, sales and advertising material, telephone numbers, names,
addresses or any other compilation of information, written or unwritten, which
is or was used in the business of the Company or any subsidiaries or affiliates
thereof. The Executive agrees and acknowledges that all of such information,
in any form, and copies and extracts thereof, are and shall remain the sole and
exclusive property of the Company, and upon termination of her employment with
the Company, the Executive shall return to the Company the originals and all
copies of any such information provided to or acquired by the Executive in
connection with the performance of her duties for the Company, and shall return
to the Company all files, correspondence and/or other communications received,
maintained and/or originated by the Executive during the course of her
employment.

          (c) No Interference. During the Restricted Period, the Executive shall
not, whether for her own account or for the account of any other individual,
partnership, firm, corporation or other business organization (other than the
Company), directly or indirectly solicit, endeavor to entice away from the
Company or its subsidiaries, or otherwise directly interfere with the
relationship of the Company or its subsidiaries with any person who, to the
knowledge of the Executive, is employed by or otherwise engaged to perform
services for the Company or its subsidiaries (including, but not limited to,
any independent sales representatives or organizations) or who is, or was
within the then most recent twelve-month period, a customer or client of the
Company, its predecessors or any of its subsidiaries. The placement of any
general classified or “help wanted” advertisements and/or general solicitations
to the public at large shall not constitute a violation of this Section 7(c)
unless the Executive’s name is contained in such advertisements or
solicitations.

          (d) Inventions, etc. The Executive hereby sells, transfers and assigns
to the Company or to any person or entity designated by the Company all of the
entire right, title and

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interest of the Executive in and to all inventions, ideas, disclosures and
improvements, whether patented or unpatented, and copyrightable material, made
or conceived by the Executive, solely or jointly, during her employment by the
Company which relate to methods, apparatus, designs, products, processes or
devices, sold, leased, used or under consideration or development by the
Company, or which otherwise relate to or pertain to the business, functions or
operations of the Company or which arise from the efforts of the Executive
during the course of her employment for the Company. The Executive shall
communicate promptly and disclose to the Company, in such form as the Company
requests, all information, details and data pertaining to the aforementioned
inventions, ideas, disclosures and improvements; and the Executive shall
execute and deliver to the Company such formal transfers and assignments and
such other papers and documents as may be necessary or required of the
Executive to permit the Company or any person or entity designated by the
Company to file and prosecute the patent applications and, as to copyrightable
material, to obtain copyright thereof. Any invention relating to the business
of the Company and disclosed by the Executive within one year following the
termination of her employment with the Company shall be deemed to fall within
the provisions of this paragraph unless proved to have been first conceived and
made following such termination. The foregoing requirements of this Section
7(d) shall 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 the Company’s business or to the Company’s actual or demonstrably
anticipated research or development, or (ii) which does not result from any
work the Executive performed for the Company.

          Section 8. 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 Section 7 hereof 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 Section 7 hereof, restraining the Executive from engaging
in activities prohibited by Section 7 hereof or such other relief as may be
required specifically to enforce any of the covenants in Section 7 hereof.

          Section 9. Representations and Warranties of the Executive. The
Executive represents and warrants to the Company as follows:

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          (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 (i)
requires the approval or consent of any governmental body or of any other
person or (ii) 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-solicitation, no hire or similar agreement that restricts
in any way the Executive’s ability to engage in any business or to solicit or
hire the employees of any person.

          The representations and warranties of the Executive contained in this
Section 9 shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby.

          Section 10. 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 (i)
requires the approval or consent of any governmental body or of any other
person or (ii) 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 10 shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby.

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          Section 11. 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 12. 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. 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 transactions hereunder unless such waiver
specifically states that it is to be construed as a continuing waiver.

          Section 13. 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; PROVIDED, HOWEVER, THE PROVISIONS OF THIS AGREEMENT
RELATING TO THE OPTION UNDER SECTION 3(d) HEREOF SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

13

 

          Section 14. 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:

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

    (ii) If to the Company, at 10700 Bren Road West, Minnetonka,
Minnesota 55343, marked for the attention of the Chief Executive
Officer, 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 15. 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 16. Entire Agreement. This Agreement, including the Exhibits
hereto, constitutes 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 17. Severability. In the event that any part or parts of this
Agreement shall be held illegal or unenforceable by any court or administrative
body of competent jurisdiction, such determination shall not effect the
remaining provisions of this Agreement which shall remain in full force and
effect.

          Section 18. 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.

14

 

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

	 	 	 	 	 
	 	AMERICAN MEDICAL SYSTEMS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 
	 

	 	

	

	 	Carmen L.Diersen

15exv10w14

 

Exhibit 10.14

AMERICAN MEDICAL SYSTEMS, INC.

MANAGEMENT INCENTIVE COMPENSATION PLAN

For 2003

I. PURPOSE

American Medical Systems, Inc. (AMS) is dedicated to excellence in performance
and in creating a strong link between performance and compensation. This plan
is designed to reward designated management team members of AMS with
performance-based compensation for achieving and surpassing specified company
goals. These goals will reinforce contributing elements to the growth and
financial viability of AMS. The plan is designed to reward overall results,
requiring a high level of individual contribution and cross-functional
effectiveness across the senior levels of company management.

II. BONUS POTENTIAL

The participant is eligible to receive a percent of his/her base salary based
on the schedules set forth in Attachments I and II. New entrants to the Plan
may have their total compensation base/bonus mix reconfigured to position them
for their bonus schedule.

III. PERFORMANCE MEASURES – COMPANY RESULTS

Performance measures may vary somewhat from year to year; however, they will
typically be established to achieve the end goal of increased global sales and
profitability. Company results will receive the highest weight versus
individual performance.

Performance measures will be as objective as possible and include specific time
frames and numerical measures.

Company results measures will generally be consistent for plan participants in
any given year to ensure common goals, alignment and interdependence among
senior-level managers and the organization.

Sales results will be based on global shipped sales for the year per the
forecast unless otherwise noted for the individual. Company profitability will
be based on Operating Income as a percent of sales.

Attachment I indicates the current weighting by position.

 

 

IV. PARTICIPATION

Participants in this Plan effective January 1, 2003 will be the Vice
Presidents, Directors, and selected individuals of the company. Any additional
participants will require the approval of the President and CEO, based on
responsibility in the company and degree of influence on company performance.

New hires after the first of the year may be able to participate for 2003 on a
pro-rated basis, particularly if the start date is before 10/1/03. If
employment of a participant is terminated due to his/her performance or the
individual voluntarily leaves the Company, the incentive award is forfeited for
that Plan year.

V. APPROVAL, AUTHORIZATION, AND TERMS

The Management Incentive Plan, its terms, policies, revisions and measures are
under the full approval of the President and CEO and the Board of Directors.
Any modifications or adjustments to the Plan and performance measures or
consideration of unusual transactions must be approved by the Board of
Directors.

Participation in the Plan is not an employment contract or any implied
assurance of continued employment.

VI. BONUS PAYMENT

Bonus payment will be issued as soon as feasible after the close of the years’
financial statements (first quarter following the Plan year). Payment will be
in lump sum unless the Board makes a different election.

Financial results will be adjusted for consideration of both positive and
negative foreign currency exchange.

If an individual’s base salary changes during the year, the award may be
prorated based on the number of months in each position.

 

 

Attachment 1

Management Incentive Compensation Plan 2003

Senior Management

	 	 	 	 	 
	Participants
	 	Performance Measures (all worldwide unless noted)

	 	 	100%
	 
	President & CEO	 	•
	 	70% Sales
	 	 	•
	 	30% Operating Income
	 	 	 	 	 
	Operating Team	 	100%
	 
	(EVP Sales & Marketing,	 	•
	 	70% Sales
	EVP & CFO, EVP & CTO,	 	•
	 	30% Operating Income
	VP RMAQS, VP HR)
	 	 	 	 	 
	VP & GM, CryoGen	 	100%
	 
	 	 	•
	 	35% CryoGen Sales
	 	 	•
	 	35% Worldwide Sales
	 	 	•
	 	30% Worldwide Operating Income
	 	 	 	 	 
	VP Global Marketing	 	100%
	 
	 	 	•
	 	60% Sales
	 	 	•
	 	20% Sales & Marketing Operating Income
	 	 	•
	 	20% Functional Leadership Objectives
	 	 	 	 	 
	VP US Sales	 	100%
	 
	 	 	•
	 	70% US Sales
	 	 	•
	 	20% US Sales & Marketing Operating Income
	 	 	•
	 	10% Functional Leadership Objectives

 

 

Management Incentive Compensation Plan 2003

Directors

	 	 	 	 	 
	Participants
	 	Performance Measures
(all world wide unless noted)

	Managing Director, Europe;
	 	100%	 	 
	Director of Marketing, Europe
	 	•	 	45% Europe Sales
	 
	 	•	 	45% Europe Operating Income
	 
	 	•	 	10% Functional Leadership Objectives
	 
	 	 	 	 
	Director, Int’l. Distributor Sales
	 	100%	 	 
	 
	 	•	 	45% Australia, Canada & Distributor Sales
	 
	 	•	 	45% Operating Income for above
	 
	 	•	 	10% Functional Leadership Objectives
	 
	 	 	 	 
	Marketing Directors
	 	100%	 	 
	 
	 	•	 	50% Product Line Results for
Business (60% sales, 40% expense)
	 
	 	•	 	15% Functional Leadership
	 
	 	•	 	35% Project Team Support
	 
	 	 	 	 
	R & D Directors
	 	100%	 	 
	 
	 	•	 	50% Company Financials (70% sales, 30% operating income)
	 
	 	•	 	20-30% Functional Leadership
	 
	 	•	 	20-30% Project Team Support
	 
	 	 	 	 
	Directors (All Other)
	 	100%	 	 
	 
	 	•	 	50% Company Financials (60% sales, 40% operating income)
	 
	 	•	 	30% Functional Leadership
	 
	 	•	 	20% Project Team Support

 

 

MANAGEMENT INCENTIVE PLAN

SCHEDULE — 2003

(Expressed as % of Base Salary)

Plan Achievement

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Below 95%
	 	95%
	 	100%
	 	105%
	 	110%
	 	120%
	 	130%
	 	140%
	 	150+%

	President
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	% of Base
	 	 	0	%	 	 	20	%	 	 	50	%	 	 	55	%	 	 	60	%	 	70% max.	 	 	—	 	 	 	—	 	 	 	—	 
	Exec. VP
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	% of Base
	 	 	0	%	 	 	15	%	 	 	35	%	 	 	40	%	 	 	45	%	 	 	50	%	 	 	55	%	 	 	60	%	 	 	65	%
	VP’s
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	% of Base
	 	 	0	%	 	 	15	%	 	 	30	%	 	 	35	%	 	 	40	%	 	 	45	%	 	 	50	%	 	 	55	%	 	 	60	%
	Directors
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	% of
Base

Tier 1	 	 	0	%	 	 	15	%	 	 	25	%	 	 	30	%	 	 	35	%	 	 	40	%	 	 	45	%	 	 	50	%	 	 	55	%
	Directors
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	% of
Base

Tier 2	 	 	0	%	 	 	10	%	 	 	20	%	 	 	25	%	 	 	30	%	 	 	35	%	 	 	40	%	 	 	45	%	 	 	50	%

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