Document:

EX-10.7

Exhibit 10.7

FIRST AMENDMENT TO EMPLOYMENT AGREEMENT

     This Amendment is made and entered into effective as of March 6, 2008 (the “Effective Date”),
between American Medical Systems, Inc., a Delaware corporation (the “Company”), and Mark A.
Heggestad (the “Executive”).

R E C I T A L S

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

     WHEREAS, the parties hereto desire to amend the Employment Agreement to reflect as set forth
herein.

     NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the
parties hereto hereby agree as follows:

A. EMPLOYMENT AGREEMENT AMENDMENTS

	 	1.	 	Section 6(e) of the Employment Agreement is hereby amended in its entirety to
read as follows:

“(e) Payments.

     (1) 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.

     (2) In the event the Executive’s Termination of Employment (defined
below) by the Company without Cause, whether during or upon expiration of
the then current term of this Agreement, and Executive executes (and does
not revoke within the relevant statutory periods) a Release and Separation
Agreement in the form provided by the Company, then in addition to the
amounts specified in the foregoing clause (1), (i) the Company shall
continue to pay the Executive his 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) if the Executive elects
COBRA continuation coverage under the Company’s group medical and/or dental
plans, then for each month of the Severance Term, the Company will pay or
reimburse the Executive an amount equal to the excess of (A) the portion of
the monthly cost for the Executive’s coverage under the Company’s group
health and/or dental plans that was borne by the Company immediately prior
to the Executive’s Termination of Employment (subject to the rule for
coverage changes discussed below) over (B) the portion of the monthly cost
for the Executive’s coverage under the Company’s group health and/or dental
plans that is borne by the Company during the Severance Term. The
Executive’s coverage will be deemed to include any Company contribution to a
‘health savings account’ (or similar arrangement) for the Executive. If the
level of the Executive’s coverage changes during the Severance Term, as, for
example, from single to family coverage or to no coverage, the amount will
be determined as if the new coverage level had been the level of coverage in
effect immediately prior to the Termination of Employment. The Executive
shall be entitled to elect health care continuation coverage under the
Company’s group health and/or dental plans for up to 12 months beyond the
end of the 18-month COBRA period if he or she has not become eligible to
participate as an employee in a plan of another employer providing group
health and dental benefits to the Executive and the Executive’s eligible
family members and dependents, which plan does not contain any exclusion or
limitation with respect to any pre-existing condition of the Executive or
any eligible family member or dependent who would otherwise be covered under
the Company’s plan but for this

 

 

clause. If COBRA continuation coverage is not available to the
Executive during any portion of the Continuation Period (other than by
reason of his or her failure to elect COBRA continuation coverage or to pay
the required premiums for such coverage), the Company will provide
comparable medical benefits pursuant to an alternative arrangement, such as
an individual medical insurance contract, and such alternative benefits will
be treated as part of the Company’s health and/or dental plan. Any
reimbursement made under this Section 6(e)(2) shall be made on or before the
last day of the calendar year following the calendar year in which the
expense was incurred.

     (3) Further, in the event the Executive’s Termination of Employment
without Cause by reason 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), which Bonus shall be paid following the end of the calendar year.

     (4) In the event the Executive accepts other employment or engages in
his 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 Section 6(e)(2) and
(3) the amounts paid to and benefits received by the Executive in respect of
such other employment or business activity.

     (5) 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, but not more than 90 days following such termination.

     (6) 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 benefits under his Change in Control Severance Agreement.

     (7) Notwithstanding the foregoing, if, at the time of his or her
Termination of Employment, the Executive is a ‘specified employee’ (defined
below), and the Company reasonably determines that any salary continuation
payment due under Section 6(e)(2) and (3) constitutes deferred compensation
subject to the requirements of Code Section 409A, then such payments shall
be suspended and not made until the first day after the end of the six (6)
month period following the Executive’s Termination of Employment, or, if
earlier, upon the Executive’s death. If any such suspended payment is not
made within 10 days of the end of such six month period, the Company will
pay the Executive interest, equal to the applicable Federal rate in effect
for each month, from the date of Termination of Employment through the date
of payment. The Executive is a ‘Specified Employee’ if on the date
of his or her Termination of Employment he or she is a ‘key employee’
(defined below), and the Company or any entity that owns 50% or more of the
Company and has stock that is publicly traded on an established securities
market within the meaning of such term under Section 409A(a)(2)(B) of the
Code. For this purpose, Executive is a ‘key employee’ during the 12-month
period beginning on the April 1 immediately following a calendar year, if he
or she was employed by the Company (or any other entity with whom the
Company would be treated as a single employer under Section 414(b) or 414(c)
of the Code) and satisfied, at any time during such preceding calendar year,
the requirements of Section 416(i)(1)(A)(i), (ii) or (iii) of the Code
(applied in accordance with the regulations issued thereunder and
disregarding Section 416(i)(5) of the Code). The Executive will not be
treated as a Specified Employee if he or she is

 

 

not required to be treated as a Specified Employee under Treasury
regulations issued under Section 409A of the Code.

     (8) When used in this Agreement, ‘Termination of Employment’ means a
termination of Executive’s employment relationship with the Company and all
Affiliates or such other change in the Executive’s employment relationship
with the Company and all Affiliates that would be considered a ‘separation
from service’ under Section 409A of the Code. The Executive’s employment
relationship will be treated as remaining intact while the Executive is on a
military leave, a sick leave or other bona fide leave of absence (pursuant
to which there is a reasonable expectation that the Executive will return to
perform services for the Company or an Affiliate) but only if the period of
such leave does not exceed six (6) months, or if longer, so long as the
Executive retains a right to reemployment by the Company or an Affiliate
under applicable statute or by contract, provided, however, where the
Executive’s leave is due to any medically determinable physical or mental
impairment that can be expected to result in death or can be expected to
last for a continuous period of not less than six (6) months and such
impairment causes the Executive to be unable to perform the duties of his or
her position of employment or any substantially similar position of
employment, a twenty-nine (29) month period of absence shall be substituted
for such six (6) month period of absence. In all cases, the Executive’s
Termination of Employment must constitute a ‘separation from service’ under
Section 409A of the Code and any ‘separation from service’ under Section
409A of the Code shall be treated as a Termination of Employment. For this
purpose, ‘Affiliate’ means any entity that, together with the Company, is
treated as a single employer under Code Section 414(b) or (c).”

	 	2.	 	Sections 6(f), (g), (h) and (i) of the Employment Agreement are deleted and
Section 6(i) is redesignated as 6(f) and amended and restated to read as follows:

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

B. MISCELLANEOUS

	 	1.	 	No Other Amendment. Except as set forth herein, the Employment
Agreement shall remain in full force and effect in accordance with its terms.

	 
	 	2.	 	Definitions. All capitalized terms that are not defined herein shall
be as defined in the Employment Agreement.

	 
	 	3.	 	Counterparts. This Amendment 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 Amendment as of the date first above
written.

	 	 	 	 	 	 	 
	 	 	AMERICAN MEDICAL SYSTEMS, INC.	 	 

	 
	 	 
	 	 
	 	 

	 

	 	By:

Name:

	 	/s/ Ross Longhini

 

Ross Longhini
	 	 

	 

	 	Title:

	 	 Chief Operating Officer
	 	 

	 
	 	 
	 	 
	 	 

	 	 	EXECUTIVE	 	 

	 
	 	 
	 	 
	 	 

	 	 	/s/ Mark A. Heggestad	 	 

	 	 	 	 	 

	 	 	Mark A. HeggestadEX-10.24

Exhibit 10.24

FIRST AMENDMENT TO CHANGE IN CONTROL SEVERANCE AGREEMENT

     This Amendment (this “Amendment”) is made and entered into as of March 6, 2008, by and between
American Medical Systems Holdings, Inc., a Delaware corporation (“Parent Corporation”), on its
behalf and on behalf of all of its Affiliates (collectively, and if the context requires, each
individually, referred to herein as the “Company”), with an address at 10700 Bren Road West,
Minnetonka, Minnesota 55343, and                      (the “Executive”).

R E C I T A L S

     WHEREAS, Company and Executive entered into a Change in Control Severance Agreement, dated as
of April 2, 2007 (the “CIC Severance Agreement”);

     WHEREAS, the parties hereto desire to amend the CIC Severance Agreement to make changes that
are necessary or desirable to reflect the requirements of Section 409A of the Internal Revenue Code
of 1986, as amended, as set forth herein.

     NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the
parties hereto hereby agree as follows:

A. CHANGE IN CONTROL SEVERANCE AGREEMENT AMENDMENTS

	 	1.	 	Section 2 of the CIC Severance Agreement is amended and restated in its entirety to
read as follows:

	 	2.	 	Benefits upon a Change in Control Termination. The Executive will
become entitled to the benefits described in this Section 2 on account of a
Termination of Employment if and only if (i) the Company terminates the Executive’s
employment for any reason other than for Cause, or the Executive terminates the
Executive’s employment with the Company for Good Reason, and (ii) the Termination of
Employment occurs either within the period beginning on the date of a Change in
Control and ending on the last day of the first full calendar month following the
first anniversary date of the Change in Control or prior to a Change in Control if
the Executive’s Termination of Employment was either a condition of the Change in
Control or was at the request or insistence of a Person related to the Change in
Control.

	 
	 	(a)	 	Cash Payment. Subject to Section 2(d), not more than 10 days
following the Date of Termination, or, if later, not more than 10 days following the
date of the Change in Control, the Company will make a lump-sum cash payment to the
Executive in an amount equal to [COO and CFO: one and one-half times;
other executives: one times] the sum of (i) the Executive’s Base Pay, plus (ii) 100%
of the Executive’s target bonus established for the year during which the Change in
Control occurs.

	 
	 	(b)	 	Definitions. For purposes of this section, the “Continuation Period”
is the period beginning on the Executive’s Date of Termination and ending on (x) the
last day of the 12th month that begins after the Executive’s Date of Termination or,
if earlier, (y) the date after the Executive’s Date of Termination on which the
Executive first becomes eligible to participate as an employee in a plan of another
employer providing group health and dental benefits to the Executive and the
Executive’s eligible family members and dependents, which plan does not contain any
exclusion or limitation with respect to any pre-existing condition of the Executive
or any eligible family member or dependent who would otherwise be covered under the
Company’s plan but for this clause (y).

	 
	 	(c)	 	Group Health Plans. If the Executive elects COBRA coverage under the
Company’s group health and/or dental plans, then for each month of the Continuation
Period, the Company will pay the Executive an amount equal to the excess of (i) the
portion of the monthly cost for the Executive’s coverage under the Company’s group
health and/or dental plans that was borne by the Company immediately prior to the
Executive’s Termination of Employment or, if greater, immediately prior to the Change
in Control (subject to the rule for coverage changes discussed below) over (ii) the
portion of the monthly cost for the Executive’s coverage under the Company’s group
health and/or dental plans that is borne by the Company during the Continuation
Period. The Executive’s coverage will be deemed to include any Company contribution
to a Health Savings Account (or similar arrangement) for

 

 

	 	 	 	the Executive. If the level of the Executive’s coverage changes during the
Continuation Period, as, for example, from single to family coverage or to no
coverage, the amount which the Company shall pay will be determined as if the new
coverage level had been the level of coverage in effect immediately prior to the
Termination of Employment or Change in Control, as the case may be. The Executive
shall be entitled to elect health care continuation coverage under the Company’s group
health and/or dental plans for up to 12 months beyond the end of the 18-month COBRA
period if he or she has not become eligible to participate as an employee in a plan of
another employer providing group health and dental benefits to the Executive and the
Executive’s eligible family members and dependents, which plan does not contain any
exclusion or limitation with respect to any pre-existing condition of the Executive or
any eligible family member or dependent who would otherwise be covered under the
Company’s plan but for this clause. If COBRA continuation coverage is not available
to the Executive during any portion of the Continuation Period (other than by reason
of his or her failure to elect COBRA continuation coverage or to pay the required
premiums for such coverage), the Company will provide comparable medical benefits
pursuant to an alternative arrangement, such as an individual medical insurance
contract, and such alternative benefits will be treated as part of the Company’s
health and/or dental plan. Any reimbursement made under this Section 2(c) shall be
made on or before the last day of the calendar year following the calendar year in
which any continuation coverage payment was incurred.

	 
	 	(d)	 	Life Insurance. In addition, during each month of the Continuation
Period, the Executive shall be entitled to receive life insurance coverage
substantially equivalent to the coverage Executive had on the day immediately prior
to his or her Termination of Employment, including coverage then in effect for
Executive’s spouse and dependents. Executive shall be required to pay no more for
such life insurance than Executive paid as an active employee immediately before his
or her Termination of Employment. In order to continue life insurance coverage,
Executive must timely elect continuation or the portability option available under
the Company’s group life insurance policy or policies and pay the full premium for
such coverage following Termination of Employment. The Company will reimburse
Executive at least quarterly for the amount by which such life insurance premium
exceeds the amount Executive paid for such coverage as an active employee immediately
prior to his or her Termination of Employment, and in all events reimbursement shall
be made on or before the last day of the calendar year following the calendar year in
which the premium was incurred.

	 
	 	(e)	 	Tax Gross-Up. To the extent the Executive incurs a tax liability
(including foreign, federal, state and local taxes) in connection with a benefit
provided pursuant to Section 2(c) which the Executive would not have incurred had the
Executive been an active employee of the Company participating in the Company’s group
health and dental plans, the Company will make a payment to the Executive in an
amount equal to such tax liability plus an additional amount sufficient to permit the
Executive to retain a net amount after all taxes equal to the initial tax liability
in connection with the benefit. The payment pursuant to this Section 2(e) will be
made within ten (10) days after the Executive’s remittal of a written request for
payment accompanied by a statement indicating the basis for and amount of the
Executive’s tax liability, but in no event later than December 31 of the calendar
year next following the calendar year in which the related taxes are remitted to the
appropriate taxing authority.

	 
	 	(f)	 	Six Month Suspension for Specified Key Employees. Notwithstanding
the foregoing, if, at the time of his or her Termination of Employment, the Executive
is a Specified Employee, then any payment under Section 2(a) shall be suspended and
not made until the first day after the end of the six (6) month period following the
Executive’s Termination of Employment, or, if earlier, upon the Executive’s death.
If any such suspended payment is not made within 10 days of the end of such six month
period, the Company will pay the Executive interest, at an annual rate equal to the
applicable Federal rate (AFR) determined under Code section 1274(d) in effect for
each month, from the date of Termination of Employment through the date of payment.

	 	2.	 	Section 4 of the CIC Severance Agreement is amended and restated in its entirety to
read as follows:

	 	4.	 	Gross-Up Payments. If the Executive becomes entitled to payments and
benefits following a Change in Control under Section 2 or the vesting of any stock
options accelerate following a Change in Control under Section 3, any stock option
agreement or certificate or otherwise, 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, any stock option agreement or certificate or otherwise
(the “Total Payments”). If the auditor determines that the Total Payments result in
an excise tax imposed on the Executive by Code Section 4999 or any comparable state or
local law (such excise tax referred to as the “Excise Tax”), the Company will make an
additional cash payment (a “Gross-Up Payment”) to the Executive equal to an amount
such that after payment by the Executive of all the taxes imposed on the Executive,
including any Excise Tax, as a result of the Gross-Up Payment, the Executive would
retain an amount of the Gross-Up Payment equal to the Excise Tax as a result of the
Total Payments. If no determination of the Excise Tax is made by the Company’s
auditors 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. The payment(s) pursuant to this Section 4 will be made within ten
(10) days after the Executive’s remittal of a written request for payment accompanied
by a statement indicating the basis for and the amount of the Executive’s actual tax
liability. 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 4, 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 ten (10) days after the Executive notifies the Company of such
determination. Notwithstanding the foregoing, reimbursement of the Gross-Up Payment
will be made not later than the end of the calendar year next following the calendar
year in which the Executive remits the related taxes to the appropriate taxing
authority (either directly or through tax withholdings), provided if an additional
Gross-Up Payment is payable following an audit or litigation and no additional taxes
are remitted by the Executive, reimbursement by the Company shall be made by the end
of the calendar year next following the calendar year in which the audit is completed
or there is a final nonappealable settlement or other resolution of the litigation.
Notwithstanding any other provision of this Section 4, the Company may, in its sole
discretion, withhold and pay over to the Internal Revenue Service or any other
applicable taxing authority, for the benefit of the Executive, all or any portion of
the Gross-Up Payment and the Executive hereby consents to such withholding.

	 	3.	 	Section 5 of the CIC Severance Agreement is amended by deleting the final sentence of
such Section.

	 
	 	4.	 	Section 7(l) of the CIC Severance Agreement is amended and restated to read as follows:

	 	(l)	 	Late Payments. Except as provided under Section 2(f), benefits not
paid under this Agreement when due will accrue interest at the rate of 10% per year,
or, if lesser, the maximum rate permitted under applicable law, and shall be paid on
the 5th day of the month next following the month during which such interest accrued.

	 	5.	 	Exhibit A, Definitions, is amended by amending and restating Section 17 to read as
follows:

	 	17.	 	The Executive is a “Specified Employee” if on the date of his or her
Termination of Employment he or she is a “key employee” (defined below), and the
Company or any Affiliate has stock that is publicly traded on an established
securities market within the meaning of such term under Section 409A(a)(2)(B) of the
Code. For this purpose, Executive is a “key employee” during the 12-month period
beginning on the April 1 immediately following a calendar year, if he or she was
employed by the Company or any Affiliate and satisfied, at any time during such
preceding calendar year, the requirements of Section 416(i)(1)(A)(i), (ii) or (iii)
of the Code (applied in accordance with the regulations issued thereunder and
disregarding Section 416(i)(5) of the Code). The Executive will not be treated as a
Specified Employee if he or she is not required to be treated as a Specified Employee
under Treasury Regulations issued under Section 409A of the Code.

	 	6.	 	Exhibit A, Definitions, is amended by amending and restating Section 19 to read as
follows:

	 	19.	 	“Termination of Employment” means a termination of Executive’s employment
relationship with the Company and all Affiliates or such other change in the
Executive’s employment relationship with the Company and all Affiliates that would be
considered a “separation from service” under Section 409A of the Code. The
Executive’s employment relationship will be treated as remaining intact while the

 

 

	 	 	 	Executive is on a military leave, a sick leave or other bona fide leave of absence
(pursuant to which there is a reasonable expectation that the Executive will return to
perform services for the Company or an Affiliate) but only if the period of such leave
does not exceed six (6) months, or if longer, so long as the Executive retains a right
to reemployment by the Company or an Affiliate under applicable statute or by
contract, provided, however, where the Executive’s leave is due to any medically
determinable physical or mental impairment that can be expected to result in death or
can be expected to last for a continuous period of not less than six (6) months and
such impairment causes the Executive to be unable to perform the duties of his or her
position of employment or any substantially similar position of employment, a
twenty-nine (29) month period of absence may be substituted for such six (6) month
period of absence. In all cases, the Executive’s Termination of Employment must
constitute a “separation from service” under Section 409A of the Code and any
“separation from service” under Section 409A of the Code shall be treated as a
Termination of Employment.

	 	B.	 	MISCELLANEOUS

	 
	 	1.	 	No Other Amendment. Except as set forth herein, the CIC Severance Agreement
shall remain in full force and effect in accordance with its terms.

	 
	 	2.	 	Acknowledgement of Reasonableness and Enforceability. The Executive
acknowledges the legitimate Company interests which the Restrictions set forth in Section 6
of the CIC Severance Agreement (“Restrictions”) are designed to protect. The Executive
further agrees that the Restrictions set forth in Section 6 of the CIC Agreement are
reasonable in their scope and duration, and are supported by adequate consideration,
including but not limited to the benefits contained in the CIC Severance Agreement, this
Amendment, participation in the American Medical Systems, Inc. 2008 Executive Variable
Incentive Plan and the grant of stock options on the date hereof. The Executive agrees
that he/she will fully comply with those Restrictions, in accordance with their terms.

	 
	 	3.	 	Definitions. All capitalized terms that are not defined herein shall be as
defined in the CIC Severance Agreement.

	 
	 	4.	 	Counterparts. This Amendment 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 HOLDINGS, INC.	 	 

	 
	 	 
	 	 
	 	 
	 	 

	 
	 	By:
	 	 
	 	 
	 	 

	 	 	 
	 	   	 	 

	 
	 	 
	 	Name:
	 	 
	 	 

	 
	 	 
	 	Title:
	 	 

	 	 

	 
	 	 
	 	 
	 	 

	 	 

	 
	 	 
	 	 
	 	 
	 	 

	 	 	EXECUTIVE	 	 

	 
	 	 
	 	 
	 	 
	 	 

	 

	 	By:
	 	 
	 	 
	 	 

	 	 	 
	 	   	 	 

	 	 	 
	 	[Name of Executive]

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