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EXHIBIT 10.14
MANAGEMENT CONTINUITY AGREEMENT
This Management Continuity Agreement (the "Agreement") is made and
entered into effect as of April 6, 1998, by and between _____________ (the
"Employee") and Laserscope, a California corporation (the "Company").
RECITALS
A. It is expected that another company or other entity may from time
to time consider the possibility of acquiring the Company or that
a change in control may otherwise occur, with or without the
approval of the Company's Board of Directors (the "Board"). The
Board recognizes that such consideration can be a distraction to
the Employee and can cause the Employee to consider alternative
employment opportunities. The Board has determined that it is in
the best interests of the Company and its shareholders to assure
that the Company will have the continued dedication and
objectivity of the Employee, notwithstanding the possibility,
threat or occurrence of a Change of Control (as defined below) of
the Company.
B. The Board believe that it is in the best interest of the Company
and its shareholders to provide the Employee with an incentive to
continue his or her employment with the Company.
C. The Board believes that it is imperative to provide the Employee
with certain benefits upon a Change of Control and, under certain
circumstances, upon termination of the Employee's employment in
connection with a Change of Control, which benefits are intended
to provide the Employee with financial security and provide
sufficient income and encouragement to the Employee to remain
with the Company notwithstanding the possibility of a Change of
Control.
D. To accomplish the foregoing objectives, the Board of Directors
has directed the Company, upon execution of this Agreement by the
Employee, to agree to the terms provided in this Agreement.
E. Certain capitalized terms used in the Agreement are defined in
Section 4 below.
In consideration of the mutual covenants herein contained, and in
consideration of the continuing employment of Employee by the
Company, the parties agree as follows:
1. At-Will Employment: The Company and the employee acknowledge
that the Employee's employment is and shall continue to be
at-will, as defined under applicable law. If the Employee's
employment terminates for any reason, including (without
limitation) any termination prior to a Change of Control, the
Employee shall not be entitled to any payments, benefits,
damages, awards or compensation other than as provided by this
Agreement, or as may otherwise be available in accordance with
the Company's established employee plans and written policies
at the time of termination. The terms of this Agreement shall
terminate upon the earlier of (I) the date that all
obligations of the parties hereunder have been satisfied, (ii)
two years after the new effective date, or (iii) twenty-four
(24) months after a Change of
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Control. A termination of the terms of this Agreement pursuant
to the preceding sentence shall be effective for all purposes,
except that such termination shall not affect the payment or
provision of compensation or benefits on account of a
termination of employment occurring prior to the termination
of the terms of this Agreement.
2. Change of Control/Stock Options. Immediately upon the
effective date of the Change of Control, each stock option
granted for the Company's securities held by the Employee
shall become immediately vested and shall be exercisable in
full in accordance with the provisions of the option agreement
and plan pursuant to which such option was granted. Upon the
immediate vesting of such stock options, the Employee will
have the right (subject to any limitations imposed by Section
16 of the Securities Exchange Act of 1934 or other applicable
securities laws and the California Corporations Code and only
to the extent permitted by the terms of the applicable option
plan) to deliver a promissory note with a two (2) year term,
at the prime rate of interest determined as of the date of
payment of the exercise price for such options. The delivered
note will be non-recourse, and the Company or its successor
will look solely to the pledged shares for repayment.
3. Severance Benefits
(a) Termination Following A Change of Control. Subject to
Section 5 below, if the Employee's employment with the
Company is terminated at any time within 24 months after a
Change of Control, then the Employee shall be entitled to
receive severance benefits as follows:
(i) Voluntary Resignation. If the Employee voluntarily
resigns from the Company (other than as an
Involuntary Termination (as defined below) or if
the Company terminates the Employee's employment
for Cause (as defined below), then the Employee
shall not be entitled to receive severance
payments. The Employee's benefits will be
terminated under the Company's then existing
benefit plans and policies in accordance with such
plans and policies in effect on the date of
termination.
(ii) Involuntary Termination. If the Employee's
employment is terminated within 12 months of the
Change of Control as a result of Involuntary
Termination other than for Cause, the Employee
shall be entitled to receive 12 months severance
payments (the "Severance Period") from the date of
the Employee's termination. If the Employee's
employment is terminated after 12 months but within
24 months after the Change of Control, the Employee
shall be entitled to receive 9 months severance
payments (the "Severance Period") from the date of
the Employee's termination. The Employee's
severance payments shall be equal to the salary
which the Employee was receiving immediately prior
to the Change of Control plus a 25% bonus for
Executive Committee members and 45% for the CEO
shall be paid during the Severance Period in
accordance with the Company's standard payroll
practices or, at
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the Employee's election, shall be paid to the
Employee in lump sum within ten (10) days of the
Employee's termination date. Such election shall
not affect the length of the Severance Period nor
the provision of benefits within the Severance
Period. In addition, during the Severance Period,
the Employee shall be provided with benefits
substantially identical to those to which the
Employee was entitled immediately prior to the
Change of Control.
(iii) Involuntary Termination for Cause. If the
Employee's employment is terminated for Cause, then
the Employee shall not be entitled to receive
severance payments. The Employee's benefits will be
terminated under the Company's then existing
benefits plans and policies in effect on the date
of termination.
(b) Termination Apart from Change of Control. In the event the
Employee's employment terminates for any reason prior to
the Change of Control, then the Employee shall not be
entitled to receive any severance payments under this
Agreement. The Employee's benefits will be terminated
under the Company's then existing benefit plans and
policies in accordance with such plans and policies in
effect on the date of termination.
4. Definition of Terms. The following terms referred to in this
Agreement shall have the following meanings:
(a) Change of Control. "Change of Control" shall mean the
occurrence of any of the following events:
(i) Ownership. Any "person" (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under
said Act), directly or indirectly, of securities of
the Company representing twenty percent (20%) or
more of the total voting power represented by the
Company's then outstanding voting securities
without the approval of the Board of Directors of
the Company; or
(ii) Merger/Sale of Assets. A merger or consolidation of
the Company whether or not approved by the Board of
Directors of the Company, other than a merger or
consolidation which would result in the voting
securities of the Company outstanding immediately
prior thereto continuing to represent (either by
remaining outstanding or by being converted into
voting securities of the surviving entity) at least
fifty percent (50%) of the total voting power
represented by the voting securities of the Company
or such surviving entity outstanding immediately
after such merger or consolidation, or the
shareholders of the Company approve a plan of
complete liquidation of the Company or an agreement
for the sale or disposition by the Company of all
or substantially all of the Company's assets.
(iii) Change in Board Composition. A change in the
composition of the Board of Directors of the
Company, as a result of which fewer than
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a majority of the directors are Incumbent
Directors. "Incumbent Directors" shall mean
directors who either (A) are directors of the
Company as of April 4, 1996, or (B) are elected, or
nominated for election, to the Board of Directors
of the Company with the affirmative votes of at
least a majority of the Incumbent Directors at the
time of such election or nomination (but shall not
include an individual whose election or nomination
is in connection with an actual or threatened proxy
contest relating to the election of directors to
the Company).
(b) Cause. "Cause" shall mean (i) material breach of any
material terms of this Agreement, (ii) conviction of a
felony, (iii) fraud, (iv) repeated unexplained or
unjustified absence, (v) willful breach of fiduciary duty
under applicable laws, this Agreement or Company policies
first in effect prior to the occurrence of a Change in
Control or (vi) gross negligence or willful misconduct
where such gross negligence or willful misconduct has
resulted or is likely to result in substantial and
material damage to the Company or its subsidiaries.
(c) Involuntary Termination. "Involuntary Termination" will
include the Employee's voluntary termination, upon 30 days
prior written notice to the Company, following (i) a
material reduction in job responsibilities inconsistent
with the Employee's position with the Company and the
Employee's prior responsibilities, i.e., parent company
versus subsidiary level or type responsibility, or (ii)
relocation to a facility or location more than 50 miles
from the Company's current location, or (iii) reduction in
salary.
5. Limitation on Payments.To the extent that any of the payments
or benefits provided for in this Agreement or otherwise
payable to the Employee constitute "parachute payments" within
the meaning of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code") and, but for this Section 5,
would be subject to the excise tax imposed by Section 4999 of
the code, the Company shall reduce the aggregate amount of
such payments and benefits such that the present value thereof
(as determined under the Code and the applicable regulations)
is equal to 2.99 times the Employee's "base amount" as defined
in Section 280G (b)(3) of the Code.
6. Successors. Any successor to the Company (whether direct or
indirect and whether by purchase, lease, merger,
consolidation, liquidation, or otherwise) to all or
substantially all of the Company's business and/or assets
shall assume the obligations under this Agreement and agree
expressly to perform the obligations under this Agreement n
the same manner and to the same extent as the company would be
required to perform such obligations in the absence of a
succession. The terms of this Agreement and all of the
Employee's rights hereunder shall insure to the benefit of,
and be enforceable by, the Employee's personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.
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7. Notice. Notices and all other communications contemplated by
this Agreement shall be in writing and shall be deemed to have
been duly given when personally delivered or when mailed by
U.S. registered or certified mail, return receipt requested
and postage prepaid. Mailed notices to the Employee shall be
addressed to the Employee at the home address which the
Employee most recently communicated to the Company in writing.
In the case of the Company, mailed notices shall be addressed
to its corporate headquarters, and all notices shall be
directed to the attention of its Secretary.
8. Miscellaneous Provisions.
(a) No Duty to Mitigate.The Employee shall not be required to
mitigate the amount of any payment contemplated by this
Agreement (whether by seeking new employment or in any
other manner), nor, except as otherwise provided in this
Agreement, shall any such payment be reduced by any
earnings that the Employee may receive from any other
source.
(b) Waiver. No provision of this Agreement shall be modified,
waived or discharged unless the modification, waiver, or
discharge is agreed to in writing and signed bye the
Employee and by an authorized officer of the Company
(other than the Employee). No waiver by either party of
any breach of, or of compliance with, any condition or
provision of this Agreement by the other party shall be
considered a waiver of any other condition or provision or
of the same condition or provision at another time.
(c) Whole Agreement. No agreements, representations or
understandings (whether oral or written and whether
express or implied) which are not expressly set forth in
this Agreement have been made or entered into by either
party with respect to the subject matter hereof. This
Agreement supersedes any agreement of the same title and
concerning similar subject matter dated prior to the date
of this Agreement, and by execution of this Agreement both
parties agree that any such predecessor agreement shall be
deemed null and void.
(d) Choice of Law. The validity, interpretation, construction
and performance of this Agreement shall be governed by the
laws of the State of California without reference to
conflict of law provisions.
(e) Severability. If any term or provision of this Agreement
or the application thereof to any circumstance shall, in
any jurisdiction and to any extent, be invalid or
unenforceable, such term or provision shall be ineffective
as to such jurisdiction to the extent of such invalidity
or unenforceability without invalidating or rendering
unenforceable the remaining terms and provisions to
circumstances other than those as to which it is held
invalid or unenforceable, and a suitable and equitable
term or provision shall be substituted therefore to carry
out, insofar as may be valid and enforceable, the intent
and purpose of the invalid or unenforceable term or
provision.
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(f) Arbitration. Any dispute or controversy arising under or
in connection with this Agreement may be settled at the
option of either party by binding arbitration in the
County of Santa Clara, California, in accordance with the
rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award
in a court having jurisdiction. Punitive damages shall not
be awarded.
(g) Legal Fees and Expenses. The parties shall each bear their
own expenses, legal fees and other fees incurred in
connection with this Agreement.
(h) No Assignment of Benefits. The rights of any person to
payments or benefits under this Agreement shall not be
made subject to option or assignment, either by voluntary
or involuntary assignment or by operation of law,
including (without limitation) bankruptcy, garnishment,
attachment or other creditor's process, and any action in
violation of this subsection (h) shall be void.
(i) Employment Taxes. All payments made pursuant to this
Agreement will be subject to withholding of applicable
income and employment taxes.
(j) Assignment by Company. The Company may assign its rights
under this Agreement to an affiliate, and an affiliate may
assign its rights under this Agreement to another
affiliate of the Company or to the Company; provided,
however, that no assignment shall be made if the net worth
of the assignee is less than the net worth of the Company
at the time of the assignment. In the case of any such
assignment, the term "Company" when used in a section of
this Agreement shall mean the corporation that actually
employs the Employee.
(k) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original,
but all of which together will constitute one and the same
instrument.
IN WITNESS WHEREOF, each of the parties has executed this Agreement,
in the case of the Company by its duly authorized officer, as of the day and
year first above written.
LASERSCOPE
By: _________________________ By:__________________________
(Title) (Employee)
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