EXHIBIT 10.1
AMERICAN MEDICAL SYSTEMS HOLDINGS, INC.
2000 EQUITY INCENTIVE PLAN
(AS AMENDED THROUGH MARCH 27, 2003)
1. PURPOSE
The purpose of the Plan is to provide a means through which the Company
may attract able persons to become and remain directors of the Company and its
subsidiaries and enter and remain in the employ of the Company and its
subsidiaries and to provide a means whereby employees, directors and consultants
of the Company and its subsidiaries can acquire and maintain Common Stock
ownership, or be paid incentive compensation measured by reference to the value
of Common Stock, thereby strengthening their commitment to the welfare of the
Company and its subsidiaries and promoting an identity of interest between
stockholders and these employees, directors and consultants.
So that the appropriate incentive can be provided, the Plan provides for
granting Incentive Stock Options, Nonqualified Stock Options, Stock Appreciation
Rights and Stock Bonus Awards, or any combination of the foregoing.
2. DEFINITIONS
The following definitions shall be applicable throughout the Plan.
(a) "Award" means, individually or collectively, any Incentive Stock
Option, Nonqualified Stock Option, Stock Appreciation Right or Stock Bonus
Award.
(b) "Board" means the Board of Directors of the Company.
(c) "Cause" means the Company or any of its subsidiaries having cause to
terminate a Participant's employment or service in accordance with the
provisions of any existing employment, consulting or any other agreement between
the Participant and the Company or any of its subsidiaries or, in the absence of
such an employment, consulting or other agreement, upon (i) the determination by
the Committee that the Participant has ceased to perform his duties to the
Company or any of its subsidiaries(other than as a result of his incapacity due
to physical or mental illness or injury), which failure amounts to intentional
and extended neglect of his duties, (ii) the Committee's determination that the
Participant has engaged or is about to engage in conduct injurious to the
Company or any of its subsidiaries, or (iii) the Participant having plead no
contest to a charge of a felony or having been convicted of a felony.
(d) "Code" means the Internal Revenue Code of 1986, as amended. Reference
in the Plan to any section of the Code shall be deemed to include any amendments
or successor provisions to such section and any regulations under such section.
(e) "Committee" means the full Board, the Compensation Committee of the
Board or such other committee as the Board may appoint to administer the Plan.
(f) "Common Stock" means the common stock par value $0.01 per share, of
the Company.
(g) "Company" means American Medical Systems Holdings, Inc., a Delaware
corporation, and any successor thereto.
(h) "Date of Grant" means the date on which the granting of an Award is
authorized or such other date as may be specified in such authorization.
(i) "Disability" means the complete and permanent inability by reason of
illness or accident to perform the duties of the occupation at which a
Participant was employed or served when such disability commenced or, if the
Participant was retired when such disability commenced, the inability to engage
in any substantial gainful activity, in either case as determined by the
Committee based upon medical evidence acceptable to it.
(j) "Eligible Person" means any (i) person regularly employed by the
Company or any subsidiary of the Company; provided, however, that no such
employee covered by a collective bargaining agreement shall be an Eligible
Person unless and to the extent that such eligibility is set forth in such
collective bargaining agreement or in an agreement or instrument relating
thereto; (ii) director of the Company; or (iii) consultant to the Company.
(k) "Exchange Act" means the Securities Exchange Act of 1934.
(l) "Fair Market Value" on a given date means (i) if the Stock is listed
on a national securities exchange, the mean between the highest and lowest sale
prices reported as having occurred on the primary exchange with which the Stock
is listed and traded on the date prior to such date, or, if there is no such
sale on that date, then on the last preceding date on which such a sale was
reported; (ii) if the Stock is not listed on any national securities exchange
but is quoted in the National Market System of the National Association of
Securities Dealers Automated Quotation System on a last sale basis, the average
between the high bid price and low ask price reported on the date prior to such
date, or, if there is no such sale on that date, then on the last preceding date
on which a sale was reported; (iii) if the Stock is not listed on a national
securities exchange nor quoted in the National Market System of the National
Association of Securities Dealers Automated Quotation System on a last sale
basis, the amount determined by the Committee to be the fair market value based
upon a good faith attempt to value the Stock accurately; or (iv) notwithstanding
clauses (i) - (iii) above, with respect to Awards granted as of the consummation
of an IPO, the price at which Stock is sold to the public in the IPO.
(m) "Holder" means a Participant who has been granted an Award.
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(n) "Incentive Stock Option" means an Option granted by the Committee to a
Participant under the Plan which is designated by the Committee as an Incentive
Stock Option pursuant to Section 422 of the Code.
(o) "IPO" means the initial offering of Common Stock to the public through
an effective registration statement.
(p) "Non-Employee Director" means a "non-employee director" within the
meaning of Rule 16b-3 of the Exchange Act or any successor rule or regulation.
(q) "Nonqualified Stock Option" means an Option granted under the Plan
which is not designated as an Incentive Stock Option.
(r) "Normal Termination" means termination of employment or service with
the Company and all of its subsidiaries:
(i) Upon retirement pursuant to the retirement plan of the Company
or any of its subsidiaries, as may be applicable at the time to the
Participant in question;
(ii) On account of Disability;
(iii) With the written approval of the Committee; or
(iv) By the Company or any of its subsidiaries without Cause.
(s) "Option" means an Award granted under Section 7 of the Plan.
(t) "Option Period" means the period described in Section 7(c).
(u) "Option Price" means the exercise price set for an Option described in
Section 7(a).
(v) "Participant" means an Eligible Person who has been selected by the
Committee to participate in the Plan and to receive an Award.
(w) "Plan" means the American Medical Systems Holdings, Inc. 2000 Equity
Incentive Plan, as may be amended from time to time.
(x) "Qualified Committee" means a committee composed of at least two
Qualified Directors.
(y) "Qualified Director" means a person who is (i) an Non-Employee
Director and (ii) an "outside director" within the meaning of Section 162(m) of
the Code.
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(z) "Securities Act" means the Securities Act of 1933, as amended.
(aa) "Stock" means the Common Stock or such other authorized shares of
stock of the Company as from time to time may be authorized for use under the
Plan.
(bb) "Stock Appreciation Right" or "SAR" means an Award granted under
Section 8 of the Plan.
(cc) "Stock Bonus" means an Award granted under Section 9 of the Plan.
(dd) "Stock Option Agreement" means the agreement between the Company and
a Participant who has been granted an Option pursuant to Section 7 which defines
the rights and obligations of the parties as required in Section 7(d).
3. EFFECTIVE DATE, DURATION AND SHAREHOLDER APPROVAL
The Plan is effective as of April 17, 2000, the date of adoption of the
Plan by the Board. The effectiveness of the Plan and the validity of any and all
Awards granted pursuant to the Plan is contingent upon approval of the Plan by
the stockholders of the Company in a manner which complies with (i) Section
422(b)(1) and, to the extent provided in Section 14 herein, Section 162(m) of
the Code and (ii) the requirements of the primary national securities exchange
with which the Stock is listed, if so listed, and/or the National Market System
of the National Association of Securities Dealers Automated Quotation System, if
the Stock is quoted thereon. Unless and until the stockholders approve the Plan
in compliance with the applicable requirements, no Award granted under the Plan
shall be effective.
The expiration date of the Plan, after which no Awards may be granted
hereunder, shall be April 17, 2010; provided, however, that the administration
of the Plan shall continue in effect until all matters relating to the payment
of Awards previously granted have been settled.
4. ADMINISTRATION
The Committee shall administer the Plan; provided, however, that as of and
after the date the Company first becomes subject to Section 16 of the Exchange
Act, the Plan shall be administered by the full Board or a committee of the
Board composed of at least two persons, each member of which, at the time he
takes any action with respect to an Award under the Plan, shall be a
Non-Employee Director; and further provided, that as of and after the date that
the exemption for the Plan under Section 162(m) of the Code expires, as set
forth in Section 14 herein, to the extent that the Company determines that an
Award is intended to comply with Section 162(m) of the Code, the Plan shall be
administered by a Qualified Committee. The majority of the members of the
Committee shall constitute a quorum. The acts of a majority of the members
present at any meeting at which a quorum is present or acts approved in writing
by a majority of the Committee shall be deemed the acts of the Committee.
Subject to the provisions of the Plan, the Committee shall have exclusive
power to:
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(a) Select the Eligible Persons to participate in the Plan;
(b) Determine the nature and extent of the Awards to be made to each
Participant;
(c) Determine the time or times when Awards will be made to Participants;
(d) Determine the conditions to which the payment of Awards may be
subject;
(e) Prescribe the form of Stock Option Agreement or other form or forms
evidencing Awards; and
(f) Cause records to be established in which there shall be entered, from
time to time as Awards are made to Participants, the date of each Award, the
number of Incentive Stock Options, Nonqualified Stock Options, SARs and Stock
Bonuses awarded by the Committee to each Participant.
The Committee shall have the authority, subject to the provisions of the
Plan, to establish, adopt, or revise such rules and regulations and to make all
such determinations relating to the Plan as it may deem necessary or advisable
for the administration of the Plan. The Committee's interpretation of the Plan
or any documents evidencing Awards granted pursuant thereto and all decisions
and determinations by the Committee with respect to the Plan shall be final,
binding, and conclusive on all parties unless otherwise determined by the Board.
5. GRANT OF AWARDS; SHARES SUBJECT TO THE PLAN
The Committee may, from time to time, grant Awards of Options, Stock
Appreciation Rights, and/or Stock Bonuses to one or more Eligible Persons;
provided, however, that:
(a) Subject to Section 11, the aggregate number of shares of Stock
made subject to all Awards may not exceed 7,355,000 shares and the
aggregate number of shares of Stock that may be granted as a Stock Bonus
under the Plan may not exceed 50,000;
(b) Such shares shall be deemed to have been used in payment of
Awards whether they are actually delivered or the Fair Market Value
equivalent of such shares is paid in cash. In the event any Option or SAR
not attached to an Option, shall be surrendered, terminate, expire, or be
forfeited, the number of shares of Stock no longer subject thereto shall
thereupon be released and shall thereafter be available for new Awards
under the Plan;
(c) Stock delivered by the Company in settlement of Awards under the
Plan may be authorized and unissued Stock or Stock held in the treasury of
the Company or may be purchased on the open market or by private purchase;
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(d) Following the date that the exemption from the application of
Section 162(m) of the Code described in Section 14 (or any other exemption
having similar effect) ceases to apply to Awards, no Participant may
receive Options or SARs under the Plan with respect to more than 1,500,000
shares of Stock in any one year; and
(e) The Committee may, in its sole discretion, require a Participant
to pay consideration for an Award in an amount and in a manner as the
Committee deems appropriate.
6. ELIGIBILITY
Participation shall be limited to Eligible Persons who have received
written notification from the Committee, or from a person designated by the
Committee, that they have been selected to participate in the Plan.
7. DISCRETIONARY GRANT OF STOCK OPTIONS
The Committee is authorized to grant one or more Incentive Stock Options
or Nonqualified Stock Options to any Eligible Person; provided, however, that no
Incentive Stock Options shall be granted to any Eligible Person who is not an
employee of the Company. Each Option so granted shall be subject to the
following conditions, or to such other conditions as may be reflected in the
applicable Stock Option Agreement.
(a) OPTION PRICE. The exercise price ("Option Price") per share of Stock
for each Option shall be set by the Committee at the time of grant but shall not
be less than the Fair Market Value of a share of Stock at the Date of Grant.
(b) MANNER OF EXERCISE AND FORM OF PAYMENT. Options which have become
exercisable may be exercised by delivery of written notice of exercise to the
Committee accompanied by payment of the Option Price. The Option Price shall be
payable in cash and/or shares of Stock valued at the Fair Market Value at the
time the Option is exercised or, in the discretion of the Committee, either (i)
in other property having a fair market value on the date of exercise equal to
the Option Price, or (ii) by delivering to the Committee a copy of irrevocable
instructions to a stockbroker to deliver promptly to the Company an amount of
sale or loan proceeds sufficient to pay the Option Price.
(c) OPTION PERIOD AND EXPIRATION. Options shall vest and become
exercisable in such manner and on such date or dates determined by the Committee
and shall expire after such period, not to exceed ten years from the Date of
Grant, as may be determined by the Committee (the "Option Period"); provided,
however, that notwithstanding any vesting dates set by the Committee, the
Committee may in its sole discretion accelerate the exercisability of any
Option, which acceleration shall not affect the terms and conditions of any such
Option other than with respect to exercisability. If an Option is exercisable in
installments, such installments or portions thereof which become exercisable
shall remain exercisable until the Option expires. Unless
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otherwise stated in the applicable Option Agreement, the Option shall expire
earlier than the end of the Option Period in the following circumstances:
(i) If prior to the end of the Option Period, the Holder shall
undergo a Normal Termination, the Option shall expire on the
earlier of the last day of the Option Period or the date that
is thirty days after the date of such Normal Termination. In
such event, the Option shall remain exercisable by the Holder
until its expiration, only to the extent the Option was
exercisable at the time of such Normal Termination.
(ii) If the Holder dies prior to the end of the Option Period and
while still in the employ or service of the Company or within
thirty days of Normal Termination, the Option shall expire on
the earlier of the last day of the Option Period or the date
that is thirty days after the date of death of the Holder. In
such event, the Option shall remain exercisable by the person
or persons to whom the Holder's rights under the Option pass
by will or the applicable laws of descent and distribution
until its expiration, only to the extent the Option was
exercisable by the Holder at the time of death.
(iii) If the Holder ceases employment or service with the Company
for reasons other than Normal Termination or death, the Option
shall expire immediately upon such cessation of employment or
service.
(d) STOCK OPTION AGREEMENT - OTHER TERMS AND CONDITIONS. Each Option
granted under the Plan shall be evidenced by a Stock Option Agreement, which
shall contain such provisions as may be determined by the Committee and, except
as may be specifically stated otherwise in such Stock Option Agreement, which
shall be subject to the following terms and conditions:
(i) Each Option issued pursuant to this Section 7 or portion
thereof that is exercisable shall be exercisable for the full
amount or for any part thereof.
(ii) Each share of Stock purchased through the exercise of an
Option issued pursuant to this Section 7 shall be paid for in
full at the time of the exercise. Each Option shall cease to
be exercisable, as to any share of Stock, when the Holder
purchases the share or exercises a related SAR or when the
Option expires.
(iii) Subject to Section 10(k), Options issued pursuant to this
Section 7 shall not be transferable by the Holder except by
will or the laws of descent and distribution and shall be
exercisable during the Holder's lifetime only by him.
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(iv) Each Option issued pursuant to this Section 7 shall vest and
become exercisable by the Holder in accordance with the
vesting schedule established by the Committee and set forth in
the Stock Option Agreement.
(v) Each Stock Option Agreement may contain a provision that, upon
demand by the Committee for such a representation, the Holder
shall deliver to the Committee at the time of any exercise of
an Option issued pursuant to this Section 7 a written
representation that the shares to be acquired upon such
exercise are to be acquired for investment and not for resale
or with a view to the distribution thereof. Upon such demand,
delivery of such representation prior to the delivery of any
shares issued upon exercise of an Option issued pursuant to
this Section 7 shall be a condition precedent to the right of
the Holder or such other person to purchase any shares. In the
event certificates for Stock are delivered under the Plan with
respect to which such investment representation has been
obtained, the Committee may cause a legend or legends to be
placed on such certificates to make appropriate reference to
such representation and to restrict transfer in the absence of
compliance with applicable federal or state securities laws.
(vi) Each Incentive Stock Option Agreement shall contain a
provision requiring the Holder to notify the Company in
writing immediately after the Holder makes a disqualifying
disposition of any Stock acquired pursuant to the exercise of
such Incentive Stock Option. A disqualifying disposition is
any disposition (including any sale) of such Stock before the
later of (a) two years after the Date of Grant of the
Incentive Stock Option or (b) one year after the date the
Holder acquired the Stock by exercising the Incentive Stock
Option.
(e) INCENTIVE STOCK OPTION GRANTS TO 10% STOCKHOLDERS. Notwithstanding
anything to the contrary in this Section 7, if an Incentive Stock Option is
granted to a Holder who owns stock representing more than ten percent of the
voting power of all classes of stock of the Company or of a subsidiary (within
the meaning of Section 424(f) of the Code of the Company), the Option Period
shall not exceed five years from the Date of Grant of such Option and the Option
Price shall be at least 110 percent of the Fair Market Value (on the Date of
Grant) of the Stock subject to the Option.
(f) $100,000 PER YEAR LIMITATION FOR INCENTIVE STOCK OPTIONS. To the
extent the aggregate Fair Market Value (determined as of the Date of Grant) of
Stock for which Incentive Stock Options are exercisable for the first time by
any Participant during any calendar year (under all plans of the Company and its
Subsidiaries) exceeds $100,000, such excess Incentive Stock Options shall be
treated as Nonqualified Stock Options.
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(g) NO RE-PRICING. Notwithstanding any other provision of this Plan other
than Section 11, the Committee may not, without prior approval of the Company's
stockholders, seek to effect any re-pricing of any previously granted,
"underwater" Option by: (i) amending or modifying the terms of the Option to
lower the exercise price; (ii) canceling the underwater Option and granting
replacement Options having a lower exercise price; or (iii) repurchasing the
underwater Options and granting new Options under this Plan. For purposes of
this Section 7(g), an Option will be deemed to be "underwater" at any time when
the Fair Market Value of the Common Stock is less than the exercise price of the
Option.
8. STOCK APPRECIATION RIGHTS
Any Option granted under the Plan may include SARs, either at the Date of
Grant or, except in the case of an Incentive Stock Option, by subsequent
amendment. The Committee also may award SARs independent of any Option. An SAR
shall confer on the Holder thereof the right to receive in shares of Stock, cash
or a combination thereof the value equal to the excess of the Fair Market Value
of one share of Stock on the date of exercise over the exercise price for the
SAR, with respect to every share of Stock for which the SAR is granted. An SAR
shall be subject to such terms and conditions not inconsistent with the Plan as
the Committee shall impose, including, but not limited to, the following:
(a) VESTING. SARs granted in connection with an Option shall become
exercisable, be transferable and shall expire according to the same vesting
schedule, transferability rules and expiration provisions as the corresponding
Option. An SAR granted independent of an Option shall become exercisable, be
transferable and shall expire in accordance with a vesting schedule,
transferability rules and expiration provisions as established by the Committee
and reflected in an Award agreement.
(b) AUTOMATIC EXERCISE. If on the last day of the Option Period (or in the
case of an SAR independent of an Option, the period established by the Committee
after which the SAR shall expire), the Fair Market Value of the Stock exceeds
the Option Price (or in the case of an SAR granted independent of an Option, the
Fair Market Value of the Stock on the Date of Grant), the Holder has not
exercised the SAR or the corresponding Option, and neither the SAR nor the
corresponding Option has expired, such SAR shall be deemed to have been
exercised by the Holder on such last day and the Company shall make the
appropriate payment therefor.
(c) PAYMENT. Upon the exercise of an SAR, the Company shall pay to the
Holder an amount equal to the number of shares subject to the SAR multiplied by
the excess, if any, of the Fair Market Value of one share of Stock on the
exercise date over the Option Price, in the case of an SAR granted in connection
with an Option, or the Fair Market Value of one share of Stock on the Date of
Grant, in the case of an SAR granted independent of an Option. The Company shall
pay such excess in cash, in shares of Stock valued at Fair Market Value, or any
combination thereof, as determined by the Committee. Fractional shares shall be
settled in cash.
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(d) METHOD OF EXERCISE. A Holder may exercise an SAR after such time as
the SAR vests by filing an irrevocable written notice with the Committee or its
designee, specifying the number of SARs to be exercised, and the date on which
such SARs were awarded.
(e) EXPIRATION. Each SAR shall cease to be exercisable, as to any share of
Stock, when the Holder exercises the SAR or exercises a related Option, with
respect to such share of Stock. Except as otherwise provided, in the case of
SARs granted in connection with Options, an SAR shall expire on a date
designated by the Committee which is not later than seven years after the Date
of Grant of the SAR.
9. STOCK BONUS AWARDS
The Committee may issue unrestricted Stock under the Plan to Eligible
Persons, alone or in tandem with other Awards, in such amounts and subject to
such terms and conditions as the Committee shall from time to time in its sole
discretion determine. Stock Bonus Awards under the Plan shall be granted as, or
in payment of, a bonus, or to provide incentives or recognize special
achievements or contributions.
10. GENERAL
(a) ADDITIONAL PROVISIONS OF AN AWARD. Awards under the Plan also may be
subject to such other provisions (whether or not applicable to the benefit
awarded to any other Participant) as the Committee determines appropriate
including, without limitation, provisions to assist the Participant in financing
the purchase of Stock upon the exercise of Options, provisions for the
forfeiture of or restrictions on resale or other disposition of shares of Stock
acquired under any Award, provisions giving the Company the right to repurchase
shares of Stock acquired under any Award in the event the Participant elects to
dispose of such shares, and provisions to comply with Federal and state
securities laws and Federal and state tax withholding requirements. Any such
provisions shall be reflected in the applicable Award agreement.
(b) PRIVILEGES OF STOCK OWNERSHIP. Except as otherwise specifically
provided in the Plan, no person shall be entitled to the privileges of stock
ownership in respect of shares of Stock which are subject to Awards hereunder
until such shares have been issued to that person.
(c) GOVERNMENT AND OTHER REGULATIONS. The obligation of the Company to
make payment of Awards in Stock or otherwise shall be subject to all applicable
laws, rules, and regulations, and to such approvals by governmental agencies as
may be required. Notwithstanding any terms or conditions of any Award to the
contrary, the Company shall be under no obligation to offer to sell or to sell
and shall be prohibited from offering to sell or selling any shares of Stock
pursuant to an Award unless such shares have been properly registered for sale
pursuant to the Securities Act with the Securities and Exchange Commission or
unless the Company has received an opinion of counsel, satisfactory to the
Company, that such shares may be offered or sold without such registration
pursuant to an available exemption therefrom and the terms and conditions of
such exemption have been fully complied with. The Company shall be under no
obligation to register for sale under the Securities Act any of the
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shares of Stock to be offered or sold under the Plan. If the shares of Stock
offered for sale or sold under the Plan are offered or sold pursuant to an
exemption from registration under the Securities Act, the Company may restrict
the transfer of such shares and may legend the Stock certificates representing
such shares in such manner as it deems advisable to ensure the availability of
any such exemption.
(d) TAX WITHHOLDING. Notwithstanding any other provision of the Plan, the
Company or a Subsidiary, as appropriate, shall have the right to deduct from all
Awards cash and/or Stock, valued at Fair Market Value on the date of payment, in
an amount necessary to satisfy all Federal, state or local taxes as required by
law to be withheld with respect to such Awards and, in the case of Awards paid
in Stock, the Holder or other person receiving such Stock may be required to pay
to the Company prior to delivery of such Stock, the amount of any such taxes
which the Company is required to withhold, if any, with respect to such Stock.
Subject in particular cases to the disapproval of the Committee, the Company may
accept shares of Stock of equivalent Fair Market Value in payment of such
withholding tax obligations if the Holder of the Award elects to make payment in
such manner.
(e) CLAIM TO AWARDS AND EMPLOYMENT RIGHTS. No employee or other person
shall have any claim or right to be granted an Award under the Plan or, having
been selected for the grant of an Award, to be selected for a grant of any other
Award. Neither the Plan nor any action taken hereunder shall be construed as
giving any Participant any right to be retained in the employ or service of the
Company or any of its subsidiaries.
(f) DESIGNATION AND CHANGE OF BENEFICIARY. Each Participant may file with
the Committee a written designation of one or more persons as the beneficiary
who shall be entitled to receive the rights or amounts payable with respect to
an Award due under the Plan upon his death. A Participant may, from time to
time, revoke or change his beneficiary designation without the consent of any
prior beneficiary by filing a new designation with the Committee. The last such
designation received by the Committee shall be controlling; provided, however,
that no designation, or change or revocation thereof, shall be effective unless
received by the Committee prior to the Participant's death, and in no event
shall it be effective as of a date prior to such receipt. If no beneficiary
designation is filed by the Participant, the beneficiary shall be deemed to be
his or her spouse or, if the Participant is unmarried at the time of death, his
or her estate.
(g) PAYMENTS TO PERSONS OTHER THAN PARTICIPANTS. If the Committee shall
find that any person to whom any amount is payable under the Plan is unable to
care for his affairs because of illness or accident, or is a minor, or has died,
then any payment due to such person or his estate (unless a prior claim therefor
has been made by a duly appointed legal representative) may, if the Committee so
directs the Company, be paid to his spouse, child, relative, an institution
maintaining or having custody of such person, or any other person deemed by the
Committee to be a proper recipient on behalf of such person otherwise entitled
to payment. Any such payment shall be a complete discharge of the liability of
the Committee and the Company therefor.
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(h) NO LIABILITY OF COMMITTEE MEMBERS. No member of the Committee shall be
personally liable by reason of any contract or other instrument executed by such
member or on his behalf in his capacity as a member of the Committee nor for any
mistake of judgment made in good faith, and the Company shall indemnify and hold
harmless each member of the Committee and each other employee, officer or
director of the Company to whom any duty or power relating to the administration
or interpretation of the Plan may be allocated or delegated, against any cost or
expense (including counsel fees) or liability (including any sum paid in
settlement of a claim) arising out of any act or omission to act in connection
with the Plan unless arising out of such person's own fraud or willful bad
faith; provided, however, that approval of the Board shall be required for the
payment of any amount in settlement of a claim against any such person. The
foregoing right of indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the Company's
Articles of Incorporation or By-Laws, as a matter of law, or otherwise, or any
power that the Company may have to indemnify them or hold them harmless.
(i) GOVERNING LAW. The Plan shall be governed by and construed in
accordance with the internal laws of the State of New York without regard to the
principles of conflicts of law thereof.
(j) FUNDING. No provision of the Plan shall require the Company, for the
purpose of satisfying any obligations under the Plan, to purchase assets or
place any assets in a trust or other entity to which contributions are made or
otherwise to segregate any assets, nor shall the Company maintain separate bank
accounts, books, records or other evidence of the existence of a segregated or
separately maintained or administered fund for such purposes. Holders shall have
no rights under the Plan other than as unsecured general creditors of the
Company, except that insofar as they may have become entitled to payment of
additional compensation by performance of services, they shall have the same
rights as other employees under general law.
(k) NONTRANSFERABILITY. A person's rights and interest under the Plan,
including amounts payable, may not be sold, assigned, donated, or transferred or
otherwise disposed of, mortgaged, pledged or encumbered except, in the event of
a Holder's death, to a designated beneficiary to the extent permitted by the
Plan, or in the absence of such designation, by will or the laws of descent and
distribution; provided, however, the Committee may, in its sole discretion,
allow for transfer of Awards other than Incentive Stock Options to other persons
or entities.
(l) RELIANCE ON REPORTS. Each member of the Committee and each member of
the Board shall be fully justified in relying, acting or failing to act, and
shall not be liable for having so relied, acted or failed to act in good faith,
upon any report made by the independent public accountant of the Company and its
Subsidiaries and upon any other information furnished in connection with the
Plan by any person or persons other than himself.
(m) RELATIONSHIP TO OTHER BENEFITS. No payment under the Plan shall be
taken into account in determining any benefits under any pension, retirement,
profit sharing, group
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insurance or other benefit plan of the Company except as otherwise specifically
provided in such other plan.
(n) EXPENSES. The expenses of administering the Plan shall be borne by the
Company.
(o) PRONOUNS. Masculine pronouns and other words of masculine gender shall
refer to both men and women.
(p) TITLES AND HEADINGS. The titles and headings of the sections in the
Plan are for convenience of reference only, and in the event of any conflict,
the text of the Plan, rather than such titles or headings shall control.
(q) SHAREHOLDERS AGREEMENT. As a condition to receiving an Award under the
Plan each Participant receiving Stock or rights to acquire Stock under the Plan
shall agree to enter into a shareholders agreement to be approved by the Board
at such time as the Board deems appropriate.
11. CHANGES IN CAPITAL STRUCTURE
Awards granted under the Plan and any agreements evidencing such Awards,
the maximum number of shares of Stock subject to all Awards and the maximum
number of shares of Stock with respect to which any one person may be granted
Options or SARs during any year, if applicable, shall be subject to equitable
adjustment or substitution, as determined by the Committee in its sole
discretion, as to the number, price or kind of a share of Stock or other
consideration subject to such Awards (i) in the event of changes in the
outstanding Stock or in the capital structure of the Company by reason of stock
dividends, stock splits, reverse stock splits, recapitalizations,
reorganizations, mergers, consolidations, combinations, exchanges, or other
relevant changes in capitalization occurring after the Date of Grant of any such
Award or (ii) in the event of any change in applicable laws or any change in
circumstances which results in or would result in any substantial dilution or
enlargement of the rights granted to, or available for, Participants in the
Plan, or which otherwise warrants equitable adjustment because it interferes
with the intended operation of the Plan. In addition, in the event of any such
adjustment or substitution, the aggregate number of shares of Stock available
under the Plan shall be appropriately adjusted by the Committee, whose
determination shall be conclusive. Following the date that the exemption from
the application of Section 162(m) of the Code described in Section 14 (or any
other exemption having similar effect) ceases to apply to Awards, with respect
to Awards intended to qualify as "performance-based compensation" under Section
162(m) of the Code, such adjustments or substitutions shall be made only to the
extent that the Committee determines that such adjustments or substitutions may
be made without a loss of deductibility for such Awards under Section 162(m) of
the Code. The Company shall give each Participant notice of an adjustment
hereunder and, upon notice, such adjustment shall be conclusive and binding for
all purposes.
Notwithstanding the above, in the event of any of the following:
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A. The Company is merged or consolidated with another
corporation or entity and, in connection therewith, consideration is
received by shareholders of the Company in a form other than stock
or other equity interests of the surviving entity;
B. All or substantially all of the assets of the Company are
acquired by another person;
C. The reorganization or liquidation of the Company; or
D. The Company shall enter into a written agreement to undergo
an event described in clauses A, B or C above,
then the Committee may, in its discretion and upon at least 10 days advance
notice to the affected persons, cancel any outstanding Awards and pay to the
Holders thereof, in cash, the value of such Awards based upon the price per
share of Stock received or to be received by other shareholders of the Company
in the event. The terms of this Section 11 may be varied by the Committee in any
particular Award agreement.
12. NONEXCLUSIVITY OF THE PLAN
Neither the adoption of this Plan by the Board nor the submission of this
Plan to the stockholders of the Company for approval shall be construed as
creating any limitations on the power of the Board to adopt such other incentive
arrangements as it may deem desirable, including, without limitation, the
granting of stock options otherwise than under this Plan, and such arrangements
may be either applicable generally or only in specific cases.
13. AMENDMENTS AND TERMINATION
The Board may at any time terminate the Plan. Subject to Section 11, with
the express written consent of an individual Participant, the Board or the
Committee may cancel or reduce or otherwise alter outstanding Awards if, in its
judgment, the tax, accounting, or other effects of the Plan or potential payouts
thereunder would not be in the best interest of the Company. The Board or the
Committee may, at any time, or from time to time, amend or suspend and, if
suspended, reinstate, the Plan in whole or in part.
14. EFFECT OF SECTION 162(M) OF THE CODE
The Plan, and all Awards issued thereunder, are intended to be exempt from
the application of Section 162(m) of the Code, which restricts under certain
circumstances the Federal income tax deduction for compensation paid by a public
company to named executives in excess of $1 million per year. The exemption is
based on Treasury Regulation Section 1.162-27(f), in the form existing on the
effective date of the Plan, with the understanding that such regulation
generally exempts from the application of Section 162(m) of the Code
compensation
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paid pursuant to a plan that existed before a company becomes publicly held.
Under such Treasury Regulation, this exemption is available to the Plan for the
duration of the period that lasts until the earlier of (i) the expiration or
material modification of the Plan, (ii) the exhaustion of the maximum number of
shares of Stock available for Awards under the Plan, as set forth in Section
5(a), or (iii) the first meeting of shareholders at which directors are to be
elected that occurs after the close of the third calendar year following the
calendar year in which the Company first becomes subject to the reporting
obligations of Section 12 of the Exchange Act. The Committee may, without
shareholder approval, amend the Plan retroactively and/or prospectively to the
extent it determines necessary in order to comply with any subsequent
clarification of Section 162(m) of the Code required to preserve the Company's
Federal income tax deduction for compensation paid pursuant to the Plan. To the
extent that the Committee determines as of the Date of Grant of an Award that
(i) the Award is intended to comply with Section 162(m) of the Code and (ii) the
exemption described above is no longer available with respect to such Award,
such Award shall not be effective until any stockholder approval required under
Section 162(m) of the Code has been obtained.
* * *
As adopted by the Board of Directors of
American Medical Systems Holdings, Inc.
as of April 17, 2000
By: /s/ Douglas W. Kohrs
--------------------------
Title: President
-----------------------
[Effective April 17, 2000 as amended on May 24, 2000, November 29, 2001 and
March 27, 2003]
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