EXHIBIT 10.10
AMERICAN MEDICAL SYSTEMS HOLDINGS, INC.
2000 EQUITY INCENTIVE PLAN
(AS AMENDED THROUGH NOVEMBER 29, 2001)
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, Restricted Stock Awards, Phantom Stock Unit Awards, Performance Share
Unit Awards 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, Restricted Stock
Award, Phantom Stock Unit Award, Performance Share Unit Award or Stock Bonus
Award.
(b) "Award Period" means a period of time within which performance is
measured for the purpose of determining whether an Award of Performance Share
Units has been earned.
(c) "Board" means the Board of Directors of the Company.
(d) "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.
(e) "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.
(f) "Committee" means the full Board, the Compensation Committee of the
Board or such other committee as the Board may appoint to administer the Plan.
(g) "Common Stock" means the common stock par value $0.01 per share, of
the Company.
(h) "Company" means American Medical Systems Holdings, Inc., a Delaware
corporation, and any successor thereto.
(i) "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.
(j) "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.
(k) "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.
(l) "Exchange Act" means the Securities Exchange Act of 1934.
(m) "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.
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(n) "Holder" means a Participant who has been granted an Award.
(o) "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.
(p) "IPO" means the initial offering of Common Stock to the public through
an effective registration statement.
(q) "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.
(r) "Nonqualified Stock Option" means an Option granted under the Plan
which is not designated as an Incentive Stock Option.
(s) "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.
(t) "Option" means an Award granted under Section 7 of the Plan.
(u) "Option Period" means the period described in Section 7(c).
(v) "Option Price" means the exercise price set for an Option described in
Section 7(a).
(w) "Participant" means an Eligible Person who has been selected by the
Committee to participate in the Plan and to receive an Award.
(x) "Performance Goals" means the performance objectives of the Company
during an Award Period or Restricted Period established for the purpose of
determining whether, and to what extent, Awards will be earned for an Award
Period or Restricted Period.
(y) "Performance Share Unit" means a hypothetical investment equivalent
equal to one share of Stock granted in connection with an Award made under
Section 9 of the Plan.
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(z) "Phantom Stock Unit" means a hypothetical investment equivalent equal
to one share of Stock granted in connection with an Award made under Section 10
of the Plan.
(aa) "Plan" means the American Medical Systems Holdings, Inc. 2000 Equity
Incentive Plan, as may be amended from time to time.
(bb) "Qualified Committee" means a committee composed of at least two
Qualified Directors.
(cc) "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.
(dd) "Restricted Period" means, with respect to any share of Restricted
Stock or any Phantom Stock Unit, the period of time determined by the Committee
during which such Award is subject to the restrictions set forth in Section 11.
(ee) "Restricted Stock" means shares of Stock issued or transferred to a
Participant subject to forfeiture and the other restrictions set forth in
Section 11.
(ff) "Restricted Stock Award" means an Award of Restricted Stock granted
under Section 11 of the Plan.
(gg) "Securities Act" means the Securities Act of 1933, as amended.
(hh) "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.
(ii) "Stock Appreciation Right" or "SAR" means an Award granted under
Section 8 of the Plan.
(jj) "Stock Bonus" means an Award granted under Section 11 of the Plan.
(kk) "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).
(ll) "Vested Unit" shall have the meaning ascribed thereto in Section
10(e).
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 16 herein, Section
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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 16 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:
(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 duration of each Award Period and Restricted Period;
(e) Determine the conditions to which the payment of Awards may be
subject;
(f) Establish the Performance Goals for each Award Period;
(g) Prescribe the form of Stock Option Agreement or other form or forms
evidencing Awards; and
(h) 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, Phantom
Stock Units, Performance Share Units,
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shares of Restricted Stock and Stock Bonuses awarded by the Committee to each
Participant, the expiration date, the Award Period and the duration of any
applicable Restricted Period.
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, Restricted Stock, Phantom Stock Units, Performance Share
Units and/or Stock Bonuses to one or more Eligible Persons; provided, however,
that:
(a) Subject to Section 13, the aggregate number of shares of Stock
made subject to all Awards may not exceed 5,355,000 shares (amended on
November 29, 2001);
(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, SAR
not attached to an Option, Restricted Stock Award, Phantom Stock Unit or
Performance Share Unit 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;
(d) Following the date that the exemption from the application of
Section 162(m) of the Code described in Section 16 (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.
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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 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
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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 12(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.
(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
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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.
(g) VOLUNTARY SURRENDER. The Committee may permit the voluntary
surrender of all or any portion of any Nonqualified Stock Option issued pursuant
to this Section 7 and its corresponding SAR, if any, granted under the Plan to
be conditioned upon the granting to the Holder of a new Option for the same or a
different number of shares as the Option surrendered or require such voluntary
surrender as a condition precedent to a grant of a new Option to such
Participant. Such new Option shall be exercisable at an Option Price, during an
Option Period, and in accordance with any other terms or conditions specified by
the Committee at the time the new Option is granted, all determined in
accordance with the provisions of the Plan without regard to the Option Price,
Option Period, or any other terms and conditions of the Nonqualified Stock
Option surrendered.
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
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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.
(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. PERFORMANCE SHARES
(a) AWARD GRANTS. The Committee is authorized to establish Performance
Share programs to be effective over designated Award Periods determined by the
Committee. The Committee may grant Awards of Performance Share Units to Eligible
Persons in accordance with such Performance Share programs. At the beginning of
each Award Period, the Committee
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will establish written Performance Goals based upon financial objectives for the
Company for such Award Period and a schedule relating the accomplishment of the
Performance Goals to the Awards to be earned by Participants. Performance Goals
may include absolute or relative growth in earnings per share or rate of return
on stockholders' equity or other measurement of corporate performance and may be
determined on an individual basis or by categories of Participants. The
Committee shall determine the number of Performance Share Units to be awarded,
if any, to each Eligible Person who is selected to receive such an Award. The
Committee may add new Participants to a Performance Share program after its
commencement by making pro rata grants.
(b) DETERMINATION OF AWARD. At the completion of a Performance Share
Award Period, or at other times as specified by the Committee, the Committee
shall calculate the number of shares of Stock earned with respect to each
Participant's Performance Share Unit Award by multiplying the number of
Performance Share Units granted to the Participant by a performance factor
representing the degree of attainment of the Performance Goals.
(c) PARTIAL AWARDS. A Participant for less than a full Award Period,
whether by reason of commencement or termination of employment or otherwise,
shall receive such portion of an Award, if any, for that Award Period as the
Committee shall determine.
(d) PAYMENT OF PERFORMANCE SHARE UNIT AWARDS. Performance Share Unit
Awards shall be payable in that number of shares of Stock determined in
accordance with Section 9(b); provided, however, that, at its discretion, the
Committee may make payment to any Participant in the form of cash upon the
specific request of such Participant. The amount of any payment made in cash
shall be based upon the Fair Market Value of the Stock on the day prior to
payment. Payments of Performance Share Unit Awards shall be made as soon as
practicable after the completion of an Award Period.
(e) ADJUSTMENT OF PERFORMANCE GOALS. The Committee may, during the Award
Period, make such adjustments to Performance Goals as it may deem appropriate,
to compensate for, or reflect, (i) extraordinary or non-recurring events
experienced during an Award Period by the Company or by any other corporation
whose performance is relevant to the determination of whether Performance Goals
have been attained; (ii) any significant changes that may have occurred during
such Award Period in applicable accounting rules or principles or changes in the
Company's method of accounting or in that of any other corporation whose
performance is relevant to the determination of whether an Award has been earned
or (iii) any significant changes that may have occurred during such Award Period
in tax laws or other laws or regulations that alter or affect the computation of
the measures of Performance Goals used for the calculation of Awards; provided,
however, that following the date that the exemption from the application of
Section 162(m) of the Code described in Section 16 herein (or any other
exemption having similar effect) ceases to apply to Performance Share Unit
Awards, with respect to such Awards intended to qualify as "performance-based
compensation" under Section 162(m) of the Code, such adjustment shall be made
only to the extent that the Committee determines that such adjustments may be
made without a loss of deductibility of the compensation includible with respect
to such Award under Section 162(m) of the Code.
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10. RESTRICTED STOCK AWARDS AND PHANTOM STOCK UNITS
(a) AWARD OF RESTRICTED STOCK AND PHANTOM STOCK UNITS.
(i) The Committee shall have the authority (1) to grant Restricted
Stock and Phantom Stock Unit Awards, (2) to issue or transfer
Restricted Stock to Eligible Persons, and (3) to establish
terms, conditions and restrictions applicable to such
Restricted Stock and Phantom Stock Units, including the
Restricted Period, which may differ with respect to each
grantee, the time or times at which Restricted Stock or
Phantom Stock Units shall be granted or become vested and the
number of shares or units to be covered by each grant.
(ii) The Holder of a Restricted Stock Award shall execute and
deliver to the Company an Award agreement with respect to the
Restricted Stock setting forth the restrictions applicable to
such Restricted Stock. If the Committee determines that the
Restricted Stock shall be held in escrow rather than delivered
to the Holder pending the release of the applicable
restrictions, the Holder additionally shall execute and
deliver to the Company (i) an escrow agreement satisfactory to
the Committee, and (ii) the appropriate blank stock powers
with respect to the Restricted Stock covered by such
agreements. If a Holder shall fail to execute a Restricted
Stock agreement and, if applicable, an escrow agreement and
stock powers, the Award shall be null and void. Subject to the
restrictions set forth in Section 10(b), the Holder shall
generally have the rights and privileges of a stockholder as
to such Restricted Stock, including the right to vote such
Restricted Stock. At the discretion of the Committee, cash
dividends and stock dividends with respect to the Restricted
Stock may be either currently paid to the Holder or withheld
by the Company for the Holder's account, and interest may be
paid on the amount of cash dividends withheld at a rate and
subject to such terms as determined by the Committee. Cash
dividends or stock dividends so withheld by the Committee
shall not be subject to forfeiture.
(iii) Upon the Award of Restricted Stock, the Committee shall cause
a stock certificate registered in the name of the Holder to be
issued and, if it so determines, deposited together with the
stock powers with an escrow agent designated by the Committee.
If an escrow arrangement is used, the Committee shall cause
the escrow agent to issue to the Holder a receipt evidencing
any stock certificate held by it registered in the name of the
Holder.
(iv) The terms and conditions of a grant of Phantom Stock Units
shall be reflected in a written Award agreement. No shares of
Stock shall be issued at the time a Phantom Stock Unit Award
is made, and the Company
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will not be required to set aside a fund for the payment of
any such Award. Holders of Phantom Stock Units shall receive
an amount equal to the cash dividends paid by the Company upon
one share of Stock for each Phantom Stock Unit then credited
to such Holder's account ("Dividend Equivalents"). The
Committee shall, in its sole discretion, determine whether to
credit to the account of, or to currently pay to, each Holder
of an Award of Phantom Stock Units such Dividend Equivalents.
Dividend Equivalents credited to a Holder's account shall be
subject to forfeiture on the same basis as the related Phantom
Stock Units, and may bear interest at a rate and subject to
such terms as are determined by the Committee.
(b) RESTRICTIONS.
(i) Restricted Stock awarded to a Participant shall be subject to
the following restrictions until the expiration of the
Restricted Period, and to such other terms and conditions as
may be set forth in the applicable Award agreement: (1) if an
escrow arrangement is used, the Holder shall not be entitled
to delivery of the stock certificate; (2) the shares shall be
subject to the restrictions on transferability set forth in
the Award agreement; (3) the shares shall be subject to
forfeiture to the extent provided in subparagraph (d) and the
Award Agreement and, to the extent such shares are forfeited,
the stock certificates shall be returned to the Company, and
all rights of the Holder to such shares and as a shareholder
shall terminate without further obligation on the part of the
Company.
(ii) Phantom Stock Units awarded to any Participant shall be
subject to (1) forfeiture until the expiration of the
Restricted Period, to the extent provided in subparagraph (d)
and the Award agreement, and to the extent such Awards are
forfeited, all rights of the Holder to such Awards shall
terminate without further obligation on the part of the
Company and (2) such other terms and conditions as may be set
forth in the applicable Award agreement.
(iii) The Committee shall have the authority to remove any or all of
the restrictions on the Restricted Stock and Phantom Stock
Units whenever it may determine that, by reason of changes in
applicable laws or other changes in circumstances arising
after the date of the Restricted Stock Award or Phantom Stock
Award, such action is appropriate.
(c) RESTRICTED PERIOD. The Restricted Period of Restricted Stock and
Phantom Stock Units shall commence on the Date of Grant and shall expire from
time to time as to that part of the Restricted Stock and Phantom Stock Units
indicated in a schedule established by the Committee and set forth in a written
Award agreement.
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(d) FORFEITURE PROVISIONS. Except to the extent determined by the
Committee and reflected in the underlying Award agreement, in the event a Holder
terminates employment with the Company during a Restricted Period for any
reason, that portion of the Award with respect to which restrictions have not
expired shall be completely forfeited to the Company.
(e) DELIVERY OF RESTRICTED STOCK AND SETTLEMENT OF PHANTOM STOCK UNITS.
Upon the expiration of the Restricted Period with respect to any shares of Stock
covered by a Restricted Stock Award, the restrictions set forth in Section 10(b)
and the Award agreement shall be of no further force or effect with respect to
shares of Restricted Stock which have not then been forfeited. If an escrow
arrangement is used, upon such expiration, the Company shall deliver to the
Holder, or his beneficiary, without charge, the stock certificate evidencing the
shares of Restricted Stock which have not then been forfeited and with respect
to which the Restricted Period has expired (to the nearest full share) and any
cash dividends or stock dividends credited to the Holder's account with respect
to such Restricted Stock and the interest thereon, if any.
Upon the expiration of the Restricted Period with respect to any Phantom
Stock Units covered by a Phantom Stock Unit Award, the Company shall deliver to
the Holder, or his beneficiary, without charge, one share of Stock for each
Phantom Stock Unit which has not then been forfeited and with respect to which
the Restricted Period has expired ("Vested Unit") and cash equal to any Dividend
Equivalents credited with respect to each such Vested Unit and the interest
thereon, if any; provided, however, that, if so noted in the applicable Award
agreement, the Committee may, in its sole discretion, elect to pay cash or part
cash and part Stock in lieu of delivering only Stock for Vested Units. If cash
payment is made in lieu of delivering Stock, the amount of such payment shall be
equal to the Fair Market Value of the Stock as of the date on which the
Restricted Period lapsed with respect to such Vested Unit.
(f) STOCK RESTRICTIONS. Each certificate representing Restricted Stock
awarded under the Plan shall bear the following legend until the end of the
Restricted Period with respect to such Stock:
"Transfer of this certificate and the shares represented hereby
is restricted pursuant to the terms of a Stockholders' Agreement, dated as
of April ___, 2000 between the Company and certain investors identified
therein. A copy of such Agreement has been filed with the Secretary and is
available upon request."
Stop transfer orders shall be entered with the Company's transfer agent and
registrar against the transfer of legended securities.
11. 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
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the Plan shall be granted as, or in payment of, a bonus, or to provide
incentives or recognize special achievements or contributions.
12. 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 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
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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.
(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.
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(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 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
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a shareholders agreement to be approved by the Board at such time as the Board
deems appropriate.
13. 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 16 (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:
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,
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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 13 may be varied by the Committee in any
particular Award agreement.
14. 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.
15. AMENDMENTS AND TERMINATION
The Board may at any time terminate the Plan. Subject to Section 13, 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.
16. 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 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
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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 and November 29, 2001]
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