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Exhibit 10.29

AMERICAN MEDICAL INSTRUMENTS HOLDINGS, INC.

2003 STOCK OPTION PLAN

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TABLE OF CONTENTS

     

ARTICLE I    ESTABLISHMENT AND PURPOSE 

           1.1  Establishment 
1 
         1.2  Purpose 
1 
         1.3  Type of Plan 
1 
         1.4  Term of Plan 
1 
  ARTICLE II    DEFINITIONS 

           2.1  "Affiliate" 
2 
         2.2  "Agreement" 
2 
         2.3  "Beneficiary" 
2 
         2.4  "Board" 
2 
         2.5  "Cause" 
2 
         2.6  "Change in Control" 
2 
         2.7  "Code" 
2 
         2.8  "Commission" 
2 
         2.9  "Committee" 
2 
         2.10  "Common Stock" 
3 
         2.11  "Company" 
3 
         2.12  "Disability" 
3 
         2.13  "Exchange Act" 
3 
         2.14  "Fair Market Value" 
3 
         2.15  "Grant Date" 
4 
         2.16  "Option" 
4 
         2.17  "Option Period" 
4 
         2.18  "Option Price" 
4 
         2.19  "Participant" 
4 
         2.20  "Plan" 
4 
         2.21  "Representative" 
4 
         2.22  "Retirement" 
4 
         2.23  "Rule 16b-3" 
5 
         2.24  "Securities Act" 
5 
         2.25  "Termination of Employment" 
5 
         2.26  "Transfer" 
5 
  ARTICLE III   ADMINISTRATION

           3.1  Structure 
5 
         3.2  Authority 
6 
         3.3  Liability and Indemnification 
8 

 

 

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ARTICLE IV   STOCK SUBJECT TO PLAN              4.1  Number of Shares Available 
9           4.2  Release of Shares  9           4.3  Conditions on Issuance of
Shares  9           4.4  Shareholder Rights  10           4.5  Adjustment for
Corporate Changes  10    ARTICLE V   ELIGIBILITY AND SELECTION              5.1 
Eligibility.  11           5.2  Selection of Participants  11           5.3 
Options in Substitution  11    ARTICLE VI   STOCK OPTIONS              6.1 
General  12           6.2  Grant of Options  12           6.3  Terms and
Conditions  12           6.4  Effect of Termination of Employment  14         
 6.5  Information Available to Participants  15           6.6  Exercise of
Options  15           6.7  Withholding on Exercise  15           6.8  Cash-Out
of Option  16      ARTICLE VII    PROVISIONS APPLICABLE TO ACQUIRED STOCK    
         7.1  General Restriction on Transfer  16           7.2  Transfer On
Change in Control  16           7.3  Estate Planning Transfers  16         
 7.4  Binding Effect of Plan  16           7.5  Limited Transfer Dining
Offering  17    ARTICLE VIII   CHANGE IN CONTROL PROVISIONS               8.1 
Consent to Board Action  17           8.2  Transfer of Shares  17           8.3 
Accelerated Vesting  17           8.4  Definition of Change in Control  17     
ARTICLE IX   MISCELLANEOUS              9.1  Amendment and Termination  18     
     9.2  Fail-Safe for Rule. 16b-3  18           9.3  Fail-Safe for Mitigation
of Excise Tax  18           9.4  No Creditor Rights  19           9.5  No Rights
with Respect to Employment  19           9.6  Relationship to Other Benefits 
19           9.7  Controlling Law  19 

 

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             9.8  Waiver, Cumulative Rights 
20 
         9.9  Notices 
20 
         9.10  Successors and Assigns 
20 
         9.11  Headings 
20 
         9.12  Severability. 
20 
         9.13  Entire Agreement 
20 

 

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AMERICAN MEDICAL INSTRUMENTS HOLDINGS, INC.
2003 STOCK OPTION PLAN

ARTICLE I
ESTABLISHMENT AND PURPOSE

1.1

Establishment. This instrument, and the plan of compensation hereby established,
shall be known as the American Medical Instruments Holdings, Inc. 2003 Stock
Option Plan and shall be hereinafter referred to as the "Plan." The Plan is
hereby promulgated by American Medical Instruments Holdings, Inc. (hereinafter
referred to as the "Company"), effective as of April ___, 2003, as adopted by
the Board of Directors of the Company.

1.2

Purpose. The purpose of the Plan is to provide additional incentive to persons
who can make or are making, and can continue to make, substantial contributions
to the growth and success of the Company, in order to attract and retain the
employment and services of such persons and to encourage and reward such
contributions, by providing these individuals with the opportunity to directly,
on a long-tern basis, participate in the Company's growth and success through
stock ownership; it being the judgment of the Board of Directors of the Company
that so providing such additional incentive to such persons advances the overall
interests of the Company's business and enhances the value of the Company for
all of its shareholders.

1.3

Type of Plan. Options granted under the Plan shall be nonqualified stock
options, meaning options to purchase Common Stock in the Company which do not
qualify as incentive stock options within the meaning of Section 422(b) of the
Code. The Plan is intended to be an "unfunded" plan of compensation; and shall
not constitute any type of "employee benefit plan" subject to the Employee
Retirement Income Security Act of 1974 ("ERISA").

1.4

Term of Plan. The Plan shall continue in effect from the effective date set
forth in Section 1.1 hereof until the earlier of the Plan's termination by the
Board of Directors of the Company, as provided in Section 9.1 hereof, or the
date on which all shares of Common Stock available for issuance under the Plan
have been issued and all restrictions on such shares under the terms of the Plan
have lapsed.

ARTICLE II

DEFINITIONS

For purposes of the Plan, the following terms shall be defined as set forth
below:

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2.1.

"Affiliate" shall mean any individual, corporation, partnership, association,
joint-stock company, trust, unincorporated association or other entity (other
than the Company) that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with, the
Company including, without limitation, any member of an affiliated group of
which the Company is a common parent corporation as provided in Section 1504 of
the Code.

2.2

"Agreement" shall mean, individually or collectively, any agreement entered into
pursuant to Section 6.2 hereof, pursuant to which an Option is granted to a
Participant, including any amendments thereto made pursuant to Section 9.1
hereof.

2.3

"Beneficiary" shall mean the person, persons, trust or trusts which have been
designated by a Participant in his or her most recent written beneficiary
designation filed with the Company to receive the benefits specified under the
Plan upon such Participant's death or to which Options or other rights are
transferred if and to the extent permitted hereunder. If, upon a Participant's
death, there is no designated Beneficiary or surviving designated Beneficiary,
then the term Beneficiary shall mean the person, persons, trust or trusts
entitled by will or the laws of descent and distribution to receive such
benefits.

2.4

"Board" shall mean the Board of Directors of the Company.

2.5

"Cause" shall mean, for purposes of whether and when a Participant has incurred
a Termination of Employment for Cause, any act or omission which permits the
Company to terminate the written agreement or arrangement between the
Participant and the Company for "cause" as defined in such agreement or
arrangement, or in the event there is no such agreement or arrangement or the
agreement or arrangement does not define the term "cause" or a substantially
equivalent term, then Cause shall mean (a) any act or omission which,
constitutes cause under the Company's established practices, policies or
guidelines applicable to the Participant; (b) the material breach of a fiduciary
duty owing to the Company, including without limitation, fraud and embezzlement
or (c) conduct or the omission of conduct on the part of the Participant which
constitutes a material breach of any statutory or common-law duty of loyalty to
the Company.

2.6

"Change in Control" shall have the meaning set forth in Section 8.4.

2.7

"Code" shall mean the Internal Revenue Code of 1986, as amended or replaced from
time to time, and the regulations thereunder..

2.8

"Commission" shall mean the Securities and Exchange Commission orany successor
thereto.

2.9

"Committee" shall mean any person or persons who may be appointed or designated
by the Board to administer the Plan, as described in Section 3.1 below.

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2.10

"Common Stock" shall mean the shares of the Company's regular voting common
stock, no par value, whether presently or hereafter issued, and any other stock
or security resulting from adjustment thereof as described hereinafter or the
common stock of any successor to the Company which is designated for the
purposes of the Plan.

2.11

"Company" shall mean American Medical Instruments Holdings, Inc., a
StateplaceDelaware corporation, and includes any successor or assignee
corporation or corporations into which the Company may be merged, changed or
consolidated.

2.12

"Disability" shall mean a mental or physical illness that entitles the
Participant to receive benefits under the long-term disability plan of the
Company, or if the Participant is not covered by such a plan or the Participant
is not an employee of the Company, a mental or physical illness that renders a
Participant totally and permanently incapable of performing the Participant's
duties for the Company. Notwithstanding the foregoing, a Disability shall not
qualify under this Plan if it is the result of (i) a willfully self-inflicted
injury or willfully self-induced sickness; or (ii) an injury or disease
contracted, suffered, or incurred while participating in a felony criminal
offense. The determination of Disability shall be made by the Board. The
determination of Disability for purposes of this Plan shall not be construed to
be an admission of disability by any entity or person for any other purpose.

2.13

"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.

2.14

"Fair Market Value" shall mean, as of any date, the value of one share of Common
Stock, determined pursuant to the applicable method described below:

(a)

if the Common Stock is listed on a national securities exchange or quoted on
NASDAQ, the closing price of the Common Stock on the relevant date (or, if such
date is not a business day or a day on which quotations are reported, then on
the immediately preceding date on which quotations were reported), as reported
by the principal national exchange on which such shares are traded (in the case
of an exchange) or by NASDAQ, as the case may be;

(b)

if the Common Stock is not listed on a national securities exchange or quoted
'on NASDAQ, but is actively traded in the over-the-counter market, the average
of the closing bid and asked prices for the Common Stock on the relevant date
(or, if such date is not a business day or a day on which quotations are
reported, then on the immediately preceding date on which quotations were
reported), or the most recent preceding date for which such quotations are
reported; and

(c)

if, on the relevant date, the Common Stock is not publicly traded or reported as
described in (a) or (b) above, the value determined in good faith by the Board.

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2.15

"Grant Date" shall mean the date as of which the Board makes a grant of an
Option to a person eligible to participate in the Plan, or any other date
determined by the Board.

2.16 "Option" shall mean a right, granted to a Participant under Section 6.1
hereof, to purchase Common Stock at a specified price during specified time
periods.

2.17

"Option Period" shall mean the period during which an Option shall be
exercisable in accordance with the related Agreement and Article VI.

2.18

"Option Price" shall mean the price at which the Common Stock may be purchased
under an Option as provided in Section 6.3(b).

2.19

"Participant" shall mean a person who satisfies the eligibility conditions of
Article V and with whom an Agreement has been entered into and remains effective
under the Plan, and in the event a Representative is appointed for a Participant
or another person becomes a Representative, then the term "Participant" shall
mean such Representative. The term shall also include a trust for the benefit of
the Participant, the Participant's parents, spouse or descendants, or a
custodian under a uniform gifts to minors act or similar statute for the benefit
of the Participant's descendants, to the extent permitted by the Board and not
inconsistent with Rule 16b-3. Notwithstanding the foregoing, the term
"Termination of Employment" shall mean the Termination of Employment of the
person to whom the Option was originally granted.

2.20

"Plan" shall mean this American Medical Instruments Holdings, Inc. 2003 Stock
Option Plan, as herein set forth and as may be amended from time to time.

2.21

"Representative" shall mean (a) the person or entity acting as the executor or
administrator of a Participant's estate pursuant to the last will and testament
of a Participant or pursuant to the laws of the jurisdiction in which the
Participant had the Participant's primary residence at the date of the
Participant's death; (b) the person or entity acting as the guardian or
temporary guardian of a Participant subject to court supervision; (c) the person
or entity which is the Beneficiary of the Participant upon or following the
Participant's death; or (d) any person to whom an Option has been permissibly
transferred; provided that only one of the foregoing shall be the Representative
at any point in time as determined under applicable law and recognized by the
Board. Any Representative shall be subject to all terms and conditions
applicable to the Participant.

2.22

"Retirement" shall mean the Participant's Termination of Employment after
attaining either the normal retirement age or the early retirement age as
defined in the principal (as determined by the Board) tax-qualified plan of the
Company, if the Participant is covered by such a plan, or if the Participant is
not covered by such a plan, then age sixty-five (65).

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2.23

"Rule 16b-3" shall mean Rule 16b-3, as from time to time in effect and
applicable to the Plan and Participants, promulgated by the Commission under
Section 16 of the Exchange Act.

2.24

"Securities Act" shall mean the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.

2.25

"Termination of Employment" shall mean the occurrence of any act or event that
actually or effectively causes or results in a person, ceasing, for whatever
reason, to be an employee, officer, director, consultant or other service
provider of the Company, including, without limitation, Retirement, death,
Disability, cessation at the election of the Participant, or dismissal by the
Company. A transfer of employment from the Company to an entity which is an
Affiliate as defined in Section 2.1 or from such an entity to the Company, shall
not be a Termination of Employment, unless expressly determined by the Board.
With, respect to any person who is not an employee of the Company, the Board may
determine and include in such person's Agreement more detailed or particular
provisions concerning what act or event shall constitute a Termination of
Employment with respect to that person.

2.26

"Transfer" shall mean any sale, gift, assignment, distribution, conveyance,
pledge, hypothecation, encumbrance or other transfer of title, whether by
operation of law or otherwise.

In addition, certain other terms used herein shall have the definitions given to
such terms in the first place in which the terms are used.

ARTICLE III
ADMINISTRATION

3.1

Structure. The Plan shall be administered by the Board. The Board may appoint a
committee (the "Committee") comprised of one or more members of the Board to
exercise designated functions of the Board under the Plan.

In the event that the Board appoints a Committee, the term "Board" shall be
deemed to refer to the Committee to the extent required and consistent with the
specific terms' of the Board's appointment of the Committee. A majority of the
members of an appointed Committee shall constitute a quorum, and the acts of a
majority of the members present at any meeting at which a quorum is present, or
acts approved in writing by all of the members, shall be the acts of the.
Committee. A member of the Committee shall not exercise any discretion
respecting himself or herself under the Plan. The Board shall have the authority
to remove, replace or fill any vacancy of any member of the Committee upon
notice to the Committee and the affected member. Any member of the Committee may
resign upon notice to the Board. The Committee may allocate among one or more of
its members, or may delegate to one or more of its agents, such duties and
responsibilities as it determines.

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Notwithstanding anything herein to the contrary, with respect to grants of
Options to individuals who are "Officers" and "Directors" (as such terms are
defined for purposes of Section 16 of the Exchange Act) of the Company, at such
time or in such circumstances as such individuals are subject to Section 16 of
the Exchange Act, such grants shall be made and administered by a "Rule 16b-3
Committee" appointed by the Board. Such Rule 16b-3 Committee shall consist
solely of two. (2) or more "Non-Employee Directors" (as defined for purposes of
Rule 16b-3) and shall otherwise be constituted and act in such manner as to
permit such grants to Officers and Directors and related transactions under the
Plan to be exempt from Section 16(b) of the Exchange Act in accordance with Rule
16b-3.

Further notwithstanding anything herein to the contrary, with respect to grants
of Options to individuals who are "Covered Employees" (as defined for purposes
of Section 162(m) of the Code), at such time or in such circumstances as Section
162(m) of the Code may be applicable to the Company as a 'Publicly Held Company"
(as defined for purposes of Section 162(m) of the Code), such grants shall be
made and administered by a "Section 162(m) Committee" appointed by the Board.
Such Section 162(m) Committee shall consist solely of two (2) or more "Outside
Directors" and shall otherwise be constituted and act in such manner as to
permit such grants to Covered Employees to qualify as "Performance-Based
Compensation" excludable from "Applicable Employee Remuneration" (as said terms
are defined for purposes of Section 162(m) of the Code) in order that the
Company not be subject to the limitation on deductions allowed for Applicable
Employee Remuneration set forth in Section 162(m) of the Code.

Any Rule 16b-3 Committee or Section 162(m) Committee appointed by the Board
shall function and have authority, and be subject to the constitutional and
procedural provisions, as herein provided with respect to any Committee
appointed by the Board, applicable to the making and administration of the
grants of Options with .respect to which the Committee is appointed. A Rule 16-b
Committee or Section 162(m) Committee may be a subcommittee of a Committee
otherwise appointed by the Board.

3.2

Authority. Subject to the terms of the Plan, the Board, and any Committee
appointed by the Board subject to the specific terms of the Board's appointment
of the Committee, shall have the authority:

(a)

to select those persons to whom Options may be granted from time to tune; to
determine whether and to what extent Options are to be granted hereunder; and to
determine the number of shares of Common Stock to be covered by each Option
granted hereunder;

(b)

to determine the terms and conditions of any Option granted hereunder
(including, but not limited to, the Option Price, the Option Period, any
exercise restriction or limitation and any exercise acceleration, forfeiture or
waiver regarding any Option or any shares of Common Stock relating thereto, any
performance criteria and the satisfaction of such criteria);

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(c)

to determine the Fair Market Value of one share of Common Stock as of any date;

(d)

to adjust the terms and conditions, at any time or from time to time, of any
Option, subject to the limitations of Section 9.1;

(e)

to provide for the forms of Agreements to be utilized in connection with the
Plan;

(f)

to prescribe the manner in which and the form on which Participants may
designate a Beneficiary;

(g)

to• determine the• identity of a Participant's. Beneficiary or Representative
for purposes of the Plan;

(h)

to determine whether a Participant has a Disability or a Retirement; and to
determine whether and with what effect a Participant has incurred a Termination
of Employment;

(i)

to determine what securities law requirements are applicable to the Plan,
Options and the issuance of shares of Common Stock under the Plan and to require
of a Participant that appropriate action be taken with respect to such
requirements;

(j)

to cancel, with the consent of the Participant or as otherwise provided in the
Plan or an Agreement, outstanding Options;

(k)

to interpret and make final determinations with respect to the remaining number
of shares of Common Stock available under the Plan;

(l)

to determine the restrictions or limitations on the transfer of Common Stock;
and to determine whether the Company or any other person has a right or
obligation to purchase Common Stock from a Participant and, if so, the terms and
conditions on which such Common Stock is to be purchased;

(m)

to determine whether an Option is to be adjusted, modified or purchased, or is
to become fully exercisable, under the Plan or the terms of an Agreement;

(n)

to determine the permissible methods of Option exercise and. payment;

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(o)

to adopt, amend and rescind such rules, guidelines, procedures and practices as,
in its opinion, may be advisable in the administration of the Plan (and which
may differ with respect to Options granted at different times or to different
Participants);

(p)

to suspend or delay any time period described in the Plan or any Agreement if
the Board (or, as the case may be, Committee) determines the applicable action
may constitute a violation of any law, or result in liability under any law to
the Company or a shareholder of the Company, until such time as the action
required or permitted shall not constitute such violation of law or result in
such liability;

(q)

to appoint and compensate agents, counsel, auditors or other specialists to aid
it in the discharge of its duties; and

(r)

to otherwise interpret and apply the terms and provisions of the Plan and any
Option issued under the Plan (and any Agreement), and to otherwise supervise the
administration of the Plan.

Any determination made by the Board (or, as the case may be, Committee) pursuant
to the provisions of the Plan shall be made in its sole discretion, and in the
case of any determination relating to an Option, may be made at the time of the
grant of the Option or, unless in contravention of any express term of the Plan
or an Agreement, at any time thereafter. All determinations and decisions made,
and actions undertaken, by the Board (or, as the case may be, Committee)
pursuant to the provisions of the Plan shall be final and binding for all
purposes and on all persons, including the Company and Participants. No
determination shall be subject to de novo review if challenged in court.

3.3

Liability and Indemnification. No member of the Board or any Committee shall be
liable for any action or determination made or taken by the member, or the Board
or Committee, in good faith with respect to the Plan. Each member of the Board
or any Committee shall be fully justified in relying or acting in good faith
upon any report made by the independent public accountants of the Company, and
upon any other information furnished in connection with the Plan. In no event
shall any person who is or shall have. been a member of the Board or any
Committee be liable for any determination made or other action taken or any
omission to act in reliance upon any such report or information, or for any
action taken, including the furnishing of information, or failure to act, if in
good faith.

Each person who is or at any time serves as a member of the Board or any
Committee shall be indemnified and held harmless by the Company against and from
(i) any loss, cost, liability, or expense that may be imposed upon or reasonably
incurred by such person in connection with or, resulting from any claim, action,
suit or proceeding to which such person may be a party or in which such person
may be involved by reason of any action or failure to act under the Plan, and
(ii) any and all amounts paid by such person in satisfaction of judgment in any
such action, suit, or proceeding relating to the Plan. Each person covered by
this indemnification shall give the Company an opportunity, at its expense, to
handle and defend such claim, action, suit or proceeding before such person
undertakes to handle and defend the same on such person's own behalf. The
foregoing right of indemnification shall not be exclusive of any other rights or
indemnification to which such persons may be entitled under the articles or
certificate of incorporation or by-laws of the Company, as a matter of law or
otherwise, or any power that the Company may have to indemnify such persons or
hold such persons harmless.

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ARTICLE IV
STOCK SUBJECT TO PLAN

4.1

Number of Shares Available. Subject to adjustment under Section 4.5, the total
number of shares of Common Stock reserved and available for distribution
pursuant to the exercise of Options under the Plan shall be 1,200,000 shares of
Common Stock. Such shares may consist, in whole or in part, of authorized and
unissued shares or treasury shares.

4.2

Release of Shares. Subject to Section 6.3(e), if any shares of Common Stock that
are subject to any Option cease to be subject to an Option or are forfeited or
repurchased, if any Option otherwise terminates without issuance of shares of
Common Stock being made to the Participant, or if any shares (whether or not
restricted) of Common Stock are received by the Company in connection with the
exercise of an Option, including the satisfaction of tax withholding, such
shares, in the discretion of the Board, may again be available for distribution
in connection with Options under the Plan.

4.3

Conditions on Issuance of Shares. Shares of Common Stock issued in conjunction
with an Option shall be subject to the terms and conditions specified herein and
to such other terms, conditions and restrictions as the Board in its discretion
may determine or provide in an Agreement.

The Company shall not be required to issue or deliver any certificates for
shares of Common Stock, cash or other property prior to (i) the listing of such
shares on any stock exchange or The NASDAQ Stock Market (or other public market)
on which the Common Stock may then be listed (or regularly traded), (ii) the
completion of any registration or qualification of such shares under Federal or
state law, or any ruling or regulation of any government body which the Board
determines to be necessary or advisable, and (iii) the satisfaction of any
applicable withholding obligation.

The Board may require any person exercising an Option to make such
representations, furnish such information and execute such other documents as it
may consider appropriate in connection with the issuance or delivery of the
shares of Common Stock in compliance with applicable law or otherwise;
including, but not limited to, requiring each person purchasing shares to
represent to and agree with the Company in writing that such person is acquiring
the shares without a view to the distribution thereof.

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The Company may cause any certificate for any share of Common Stock to be
delivered on exercise of an Option to be properly marked with a legend or other
notation reflecting the limitations on Transfer of such Common Stock as provided
in this Plan or as the Board may otherwise require.

Fractional shares shall not be delivered, but shall be rounded to the next lower
whole number of shares. No cash settlements shall be made with respect to
fractional shares eliminated by rounding.

Any amounts owed to the Company by the Participant of whatever nature may be
offset by the Company from the value of any shares of Common Stock, cash or
other thing of value under this Plan or an Agreement to be transferred to the
Participant, and no shares of Common Stock, cash or, other thing of value under
this Plan or an Agreement shall be transferred unless and until all disputes
between the Company and the Participant have been fully and finally resolved and
the Participant has waived all claims to such against the Company.

4.4

Shareholder Rights. No person shall have any rights of a shareholder as to
shares of Common Stock subject to an Option until (i) after proper exercise of
the Option, (ii) after such other action is taken by the person as may be
required pursuant to the Agreement evidencing such Option, and (iii) such shares
shall have been recorded on the Company's official shareholder records as having
been issued or transferred. Upon exercise of an Option or any portion thereof,
the Company shall have thirty (30) days in which to issue the shares, and the
Participant will not be treated as a shareholder for any purpose prior to such
issuance. No adjustment shall be made for cash dividends or other rights for
which the record date is prior to the date such shares are recorded as issued or
transferred in the Company's official shareholder records, except as provided
herein or in an Agreement.

4.5

Adjustment for Corporate Changes. In the event of any Company stock dividend,
stock split, combination or exchange of shares, recapitalization or other change
in the' capital structure of the Company, corporate separation or division of
the Company (including, but not limited to, a split-up, spin-off, split-off or
distribution to Company shareholders other than a normal cash dividend), sale by
the Company of all or a substantial portion of its assets, reorganization,
rights offering, a partial or complete liquidation, or any other corporate
transaction or event involving the Company, then the Board shall determine
whether (and the extent to which) or not to adjust or substitute, as the case
may be, the number of shares of Common Stock available for Options under the
Plan, the number of shares of. Common Stock covered by outstanding Options, the
exercise price per share of outstanding Options, and performance conditions and
any other characteristics or terms of the Options as the Board shall deem
necessary or appropriate to reflect equitably the effects of such changes to the
Participants; provided, however, that any fractional shares resulting from such
adjustment shall be eliminated by rounding to the next lower whole number of
shares (and no cash settlements shall be made with respect to fractional shares
eliminated by rounding).

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ARTICLE V
ELIGIBILITY AND SELECTION

5.1

Eligibility. The persons eligible to participate in the Plan and be granted
Options shall be employees, officers, directors, consultants or other service
providers of the Company or any Affiliate.

For purposes of this Section 5.1, prospective employees, officers, directors,
consultants or other service providers of the Company or any Affiliate shall be
eligible to participate in the Plan and be granted Options in connection with
and in furtherance of written offers of employment, retention or engagement,
prior to the date any such person commences employment or first performs
services for the Company or the Affiliate; provided that any Option granted to
such person shall be granted contingent on such person commencing employment or
performance of services for the Company or the Affiliate, and shall be
exercisable no earlier than the date on which such person commences employment
or first performs service for the Company or the Affiliate.

5.2

Selection of Participants. Of those persons eligible to participate in the Plan
as described in Section 5.1, the Board shall, from time to time and in its sole
discretion, select the persons to be granted Options and shall determine the
terms and conditions with respect thereto. The Board may give consideration to
such factors as deemed relevant by the Board to making such selection and
determination.

5.3

Options in Substitution. Options (including cash in respect of fractional
shares) may be granted under the Plan from time to time in substitution for
options held by employees, officers, directors, consultants or service providers
of other corporations who are about to become employees, officers, directors,
consultants or service providers of the Company or an Affiliate as the result of
a merger or consolidation of the employing corporation with the Company or an
Affiliate, or the acquisition by the Company or an Affiliate of the assets of
the employing corporation, or the acquisition by the Company or an Affiliate of
the stock of the employing corporation, as the result of which it becomes an
Affiliate. The terms and conditions of the Options so granted may vary from the
terms and conditions set forth in this Plan at the time of such grant as the
Board may deem appropriate to conform, in whole or in part, to the provisions of
the options in substitution for which they are granted.

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ARTICLE VI
STOCK OPTIONS

6.1

General. The Board shall have authority to grant Options under the Plan at any
time or from time to time. An Option shall entitle the Participant to receive
shares of Common Stock upon exercise of such Option, subject to the
Participant's satisfaction in full of the conditions, restrictions or
limitations imposed in accordance with the Plan and an Agreement (which may
differ from other Agreements), including, without limitation, payment of the
Option Price.

6.2

Grant of Options. The grant of an Option shall occur as of the date the

Board determines. Each Option granted under the Plan shall be evidenced by an
Agreement, in a form prescribed or approved by the Board, which shall embody the
terms and conditions of such Option and which shall be subject to the express
terms and conditions set forth in the Plan. A person selected by the Board to
receive an Option shall not become a Participant and have any rights with
respect to such Option unless and until such person has executed such Agreement,
has delivered a fully executed copy thereof to the person or office designated
by the Board and has otherwise complied with any applicable requirements set
forth by the Board as part of the grant of the Option.

6.3

Terms and Conditions. Options shall be subject to such terms and conditions as
shall be determined by the Board, including the following:

(a)

Option Period. The Option Period of each Option shall be fixed by the Board.
Notwithstanding anything herein to the contrary, unless otherwise determined by
the Board and provided in an Agreement, the Option Period of each Option shall
be ten (10) years from the Grant Date of the Option.

(b)

Option Price. The Option Price per share of the Common Stock. purchasable under
an Option shall be determined by the Board.

(c)

Execution of Related Documents. A Participant shall be required to enter into
such non-competition, non-solicitation and confidentiality agreement or
agreements as the Board shall specify.

(d)

Vesting and Exercisability. Options shall become vested and be exercisable as
determined by the Board and set forth in each Agreement. An Agreement shall
state, with respect to all or designated portions of the shares of Common Stock
subject thereto, the time at which or the installments in which the Option shall
become vested and be exercisable during the Option Period. The Board may
establish requirements for vesting and exercisability based on (i) periods of
employment or rendering of services, (ii) the satisfaction of performance
criteria with respect to the Company or the Participant (or both), or (iii) both
periods of employment or rendering of services and satisfaction of performance
criteria.

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Notwithstanding anything herein to the contrary, unless otherwise determined by
the Board and provided in an Agreement, each Option shall become vested and be
exercisable according to the following provisions:

(1)

Prior to the second anniversary of the Grant Date, no portion of the Option
shall be vested and the Option shall be forfeitable in its entirety.

(2)

On the second anniversary of the Grant Date, 25% of the Option shall be vested
and nonforfeitable.

(3)

On the third anniversary of the Grant Date, 50% of the Option shall be vested
and nonforfeitable.

(4)

On the fourth anniversary of the Grant Date, 75% of the Option shall be vested
and nonforfeitable.

(5)

On the fifth anniversary of the Grant Date, the entire Option shall be vested
and nonforfeitable.

In the case of any Option which, at the Grant Date; is granted with provisions
for vesting and exercisability at a later date or in installments, whether by
determination of the Board or by operation of the preceding paragraph, the Board
may thereafter, at any time and in its sole discretion, waive or modify such
vesting requirements with respect to such Option, in whole or in part, and
accelerate the exercisability of all or a portion of the Option.

(e)

Method of Payment. Unless otherwise determined by the Board and provided in an
Agreement, payment of the Option Price under each Option shall be made in full
or in part by cash or by check. No shares of Common Stock shall be issued on
exercise of an Option until full payment therefor, as determined by the Board,
has been made.

(f)

Nontransferability of Options. Except as specifically provided herein or in an
Agreement, no Option or interest therein shall be transferable by the
Participant other than by will or by the laws of descent and distribution, and
an Option shall be exercisable during the Participant's lifetime only by the
Participant.

(g)

Designation of Beneficiary. A Participant may designate a Beneficiary who may
exercise the Participant's Option after the Participant's death, subject to the
provisions of the Plan. Such designation shall be made in such manner and on
such form as shall be prescribed by the Company.

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6.4

Effect of Termination of Employment. Except as otherwise determined by the Board
and set forth in an Agreement, if a Participant incurs a Termination of
Employment, for any reason, prior to the expiration of the Option Period of any
Option, the Option, if not vested and exercisable on the date of Termination of
Employment, or any portion of the Option that is not vested and exercisable on
the date of the Termination of Employment, shall expire and be forfeited, and
shall be void for all purposes, immediately on the date of Termination of
Employment.

Except as otherwise determined by the Board and set forth in an Agreement, in
the case of a Participant who incurs a Termination of Employment prior to the
expiration of the Option Period of any Option, the Option, if vested and
exercisable on the date of Termination of Employment, or any portion of the
Option that is vested and exercisable on the date of Termination of Employment,
shall continue to be exercisable only for the applicable extended time period
following such Termination of Employment set forth hereinafter and shall
otherwise cease to be exercisable as of the close of business on the date of
Termination of Employment.

(a)

In the event of Termination of Employment constituting Retirement, such Option
or such portion thereof may be exercised by the Participant until the end of the
ninety (90) day period commencing with the date of Retirement or, if earlier,
the expiration of the Option Period.

(b)

In the event of Termination of Employment due to death, such Option or such
portion thereof may be exercised by the Participant's Representative until the
end of the twelve (12) month period commencing with the date of the
Participant's death or, if earlier, the expiration of the Option Period.

(c)

In the event of Termination of Employment due to Disability, such Option or such
portion thereof may be exercised by the Participant or, in the event the
Participant is legally incompetent, the Participant's Representative until the'
end, of the six (6) month period commencing with the date of Disability or, if
earlier, the expiration of the Option Period.

(d)

In the event of Termination of Employment at the election of the Participant,
other than on account of Retirement, death or disability, such Option or such
portion thereof may be exercised by the Participant until the end of the ninety
(90) day period commencing with the date of Termination of Employment or, if
earlier, the expiration of the Option Period; provided that if a Participant
elects such Termination of Employment without appropriate or agreed notice and
agreed termination terms, such Option or such portion thereof shall cease to be
exercisable automatically upon first notification to the Company by the
Participant of such termination, with no extended time period for any exercise
of the Option or any portion thereof.

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(e)

In the event of Termination of Employment due to dismissal by the Company, such
Option or such portion thereof may be exercised by the Participant until the end
of the ninety (90) day period commencing with the date of Termination of
Employment or, if earlier, the expiration of the Option Period.

(f)

Notwithstanding anything in the preceding subparagraphs (a) through (e) to the
contrary, in the event of Termination of Employment of a Participant by the
Company for Cause, such Option or such portion thereof shall cease to be
exercisable automatically upon first notification to the Participant by the
Company of such termination, with no extended time period for any exercise of
the Option or any portion thereof. If a Participant's employment or services are
suspended pending an investigation of whether the Participant's employment or
services should be terminated for Cause, all of the Participant's rights under
any Option shall likewise be suspended during the period of such investigation.

Notwithstanding anything herein to the contrary, the Board may, at any time and
in its sole discretion, further extend or modify the extended time periods for
exercisability set forth in this Section 6.4, or waive or modify the operation
of the provisions of this Section 6.4 as regards elective Termination of
Employment without appropriate or agreed notice and agreed termination terms or
Termination of Employment for Cause.

6.5

Information Available to Participants. At least annually, the Company shall make
available to all Participants copies of the Company's financial statements for
its most recently completed fiscal year. Except as may be required by applicable
law, neither the Company nor the Board shall have any duty or obligation to
provide or make available to any Participant any other disclosures .or
information regarding the Company, and no Participant shall have any right to
obtain any other disclosures or to receive any other information regarding the
Company, in connection with the grant or exercise of any Option.

6.6

Exercise of Options. An Option which is vested and exercisable shall be
exercised by a Participant (or a Representative), in whole or in part at any
time during the Option Period, by giving written notice to the Company, in such
form and manner as the Board may prescribe, specifying the number of shares of
Common Stock attributable to the Option to be purchased. Such notice of exercise
given to the Company shall be accompanied by payment in full of the Option Price
and any other executed documents required by the Board.

6.7

Withholding on Exercise. No later than the date as of which an amount first
becomes includible in the gross income of the Participant for Federal income tax
purposes with respect to any Option, the Participant shall pay to the Company
(or other entity identified by the Board), or make arrangements satisfactory to
the Company or other entity identified by the Board regarding the payment of,
any Federal, state, local or foreign taxes of any kind required by law to be
withheld with respect to such amount. The obligations of the Company under the
Plan shall be conditional on such payment or arrangements, and the Company and
its Affiliates shall, to the extent permitted by law, have the right to deduct
any such taxes from any payment otherwise due to the Participant.

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6.8

Cash-Out of Option. On receipt of written notice of exercise of an Option at any
time prior to a Change in Control, the Board may elect, at any time, to cash-out
all or any portion of the Option by paying to the Participant an amount, in
cash, equal to the excess of the Fair Market Value of a share of Common Stock as
of the date of exercise over the Option Price, multiplied by the number of
shares of Common Stock subject to the Option elected to be cashed-out by the
Board. Cash-outs relating to Options held by Participants who are actually or
potentially subject to Section 16 of the Exchange Act shall comply with Rule
16b-3, to the extent applicable.

ARTICLE VII
PROVISIONS APPLICABLE TO ACQUIRED STOCK

7.1

General Restriction on Transfer. Except as provided in Section 7.3, a
Participant may not Transfer any shares of Common Stock acquired pursuant to the
exercise of an Option until the effective date of a Change in Control.
Notwithstanding anything herein to the contrary, the Board may, at any time and
in its sole discretion, waive or modify the restriction on Transfer set forth in
this Section 7.1 with respect to any or all shares of Common Stock acquired by a
Participant pursuant to the exercise of an Option.

7.2

Transfer On Change in Control. A Participant may Transfer, or may be required to
sell, shares of Common Stock acquired pursuant to the exercise of an Option upon
the effective date of a Change in Control, as provided in Section 8.2.
Notwithstanding anything herein to the contrary, the Board may, at any time and
in its sole discretion, provide that corporate transactions in addition to those
specified in Section 8.4, as constituting a Change in Control, shall constitute
events upon the effective date of which a Participant may Transfer any or all of
the Shares of Common Stock acquired by the Participant pursuant to the exercise
of an Option.

7.3

Estate Planning Transfers. Notwithstanding anything herein to the contrary, a
Participant may at any time make a Transfer of shares of Common Stock received
pursuant to the exercise of an Option to his or her parents, spouse or
descendants or to any trust for the benefit of the foregoing or to a custodian
under a uniform gifts to minors act or similar statute for the benefit of any of
the Participant's descendants.

7.4

Binding Effect of Plan. Any otherwise permitted Transfer of shares acquired
pursuant to the exercise of an Option shall not be permitted or valid unless and
until the transferee agrees to be bound by the provisions of this Plan, and any
provision restricting Common Stock under the Agreement; provided that
"Termination of Employment" shall continue to refer to the Termination of
Employment of the Participant.

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7.5

Limited Transfer During Offering. In the event there is an effective
registration statement under the Securities Act pursuant to which shares of
Common Stock shall be offered for sale in an underwritten offering, a
Participant shall not, during the period requested by the underwriters managing
the registered offering, effect any public sale or distribution of shares
received directly or indirectly pursuant to an exercise of an Option.

ARTICLE VIII

CHANGE IN CONTROL PROVISIONS

8.1

Consent to Board Action. A Participant, in the course of and as a condition to
exercising an Option to acquire shares of Common Stock, shall waive all rights
to object to or dissent from a proposed Change in Control which is approved by
the Board, and shall agree to consent and raise no objection to such approved
Change in Control; and, without limiting the generality of the foregoing, the
Participant shall agree to (a) vote the Participant's shares to approve the
terms of such approved Change in Control and (b) waive any appraisal rights that
the Participant would have with respect to such approved Change in Control.

8.2

Transfer of Shares. On and after the effective date of a Change in Control, a
Participant may Transfer shares of Common Stock acquired pursuant to the
exercise of an Option; provided that in the event of a Change in Control
approved by the Board, structured as a sale of shares of Common Stock, a
Participant shall Transfer all shares of Common Stock acquired by the
Participant, pursuant to the exercise of an Option, on the same terms as the
other holders of Common Stock of the Company.

8.3

Accelerated Vesting. Notwithstanding any other provision of the Plan or in an
Agreement to the contrary, in the event of a Change in Control (as defined in
Section 8.4), the Board shall have full discretion to provide that any Options
outstanding as of the date of the Change in Control which are not then fully
vested and exercisable become fully vested and exercisable to the full extent of
the original grant

8.4

Definition of Change in Control. For purposes of this Plan, a "Change in
Control" shall be deemed to have occurred at such time as (a) a person or a
group (within the meaning of Sections 13(d) or 14(d)(2) of the Exchange Act),
other than a person who is an existing holder of capital stock of the Company or
a group consisting solely of existing holders of capital stock of the Company,
becomes the "beneficial owner" (as defined in Rule 13d-3 promulgated under the
Exchange Act) of more than fifty (50%) percent of the Company's total
outstanding capital stock; (b) a sale, lease or exchange of substantially all of
the Company's assets and related business to a third party unaffiliated with an
existing holder of capital stock of the Company; or (c) a merger of the Company
into or consolidation with another corporation which is unaffiliated with the
stockholders or management of the Company and, after giving effect to such
merger or consolidation, the existing holders of capital stock of the. Company
immediately prior to such merger or consolidation own less than fifty-one
percent (51%) of the capital stock of the surviving entity.

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ARTICLE IX
MISCELLANEOUS

9.1

Amendment and Termination. The Board may amend or terminate the Plan at any
time, but no amendment or termination shall be made which would impair the
rights of a Participant under an Option theretofore granted without the
Participant's consent, except to the extent such amendment or termination is
made pursuant to express provisions of the Plan or an Agreement or is necessary
for the Plan or an Option to comply with any applicable law, regulation or rule.

The Board may amend the terms of any Option theretofore granted as set forth in
an Agreement, prospectively or retroactively, but no such amendment shall be
made which would impair the rights of any Participant without the Participant's
consent, except to the extent such an amendment is made pursuant to express
provisions of the Plan or an Agreement or is necessary for the Plan or an Option
to comply with any applicable law, regulation or rule.

9.2

Fail-Safe for Rule 16b-3. With respect to persons subject to Section 16 of

the Exchange Act, transactions under this Plan are intended to comply with all
applicable conditions of Rule 16b-3. To the extent any provision of the Plan or
action by the Board fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by the Board. In the event the Plan
does not include a provision required by Rule 16b-3 to be stated herein, such
provision (other than one relating to eligibility requirements or the price and
amount of Options) shall be deemed to be incorporated by reference into the Plan
with respect to Participants subject to Section 16.

If at the time a Participant incurs a Termination of Employment (other than due
to Cause) or if at the time of a Change in Control, the Participant is subject
to "short-swing" liability under Section 16 of the Exchange Act, any time period
provided for under the Plan or an Agreement, to the extent necessary to avoid
the imposition of such liability, shall be suspended and delayed during the
period the Participant would be subject to such liability, but such suspension
and delay shall not be for more than six (6) months and one (1) day and not to
exceed the Option Period, whichever is shorter.

9.3

Fail-Safe for Mitigation of Excise Tax. Except as otherwise provided in an
Agreement, if any payment or right accruing to a Participant under this Plan
(without the application of this provision), either alone or together with other
payments or rights accruing to the Participant from the Company ("Total
Payments"), would constitute a "parachute payment" (as defined in Section 280G
of the Code), such payment or right shall be reduced to the largest amount or
greatest right that will result in no portion of the amount payable or right
accruing under the Plan being subject to an excise tax under Section 4999 of the
Code or being disallowed as a deduction under Section 280G of the Code. The
determination of the amount of any potential reduction in the rights or payments
shall be made by the Board in good faith after consultation with the Participant
and shall be communicated to the Participant. The Participant shall cooperate in
good faith with the Board in making such determination and providing the
necessary information for this purpose. The foregoing provisions of this
paragraph shall apply with respect to any person only if, after reduction for
any applicable Federal excise tax imposed by Section 4999 of the Code and
Federal income tax imposed by the Code, the Total Payments accruing to such
person would be less than the amount of the Total Payments as reduced, if
applicable, under the foregoing provisions of the Plan and after reduction for
only Federal income taxes.

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9.4

No Creditor Rights. Unless otherwise provided in this Plan or in an Agreement,
no Option shall be subject to the claims of Participant's creditors and no
Option may be transferred, assigned, alienated or encumbered in any way other
than by will or the laws of descent and distribution or to a Representative upon
the death of the Participant.

9.5

No Rights with Respect to Employment. Nothing contained herein shall be deemed
to alter the employment relationship between the Company and a Participant, or
the contractual relationship between the Company and a Participant if there is a
written contract regarding such relationship. Nothing contained herein shall be
construed to constitute a contract of employment or a contract for services
between the Company and a Participant. The Company and each of the Participants
shall continue to have the right to terminate the employment or service
relationship at any time for any reason, except as provided in a written
contract.

9.6

Relationship to Other Benefits. No payment under the Plan shall be taken into
account in determining any benefits under any retirement or welfare benefit plan
of the Company, unless otherwise specifically provided in such plan of the
Company.

The adoption of the Plan by the Board shall not be construed as creating any
limitations on the power of the Company or the Board to adopt such other
incentive arrangements as the Company or the Board may deem desirable,
including, without limitation, any stock appreciation right, phantom stock or
restricted stock arrangement and the granting of stock options otherwise than
under the Plan, and such arrangements may be applicable either generally or only
in specific cases.

9.7

Controlling Law. The Plan, all Agreements and all Options granted and actions
taken thereunder shall be governed by and construed in accordance with the laws
of the State of placeStateDelaware (other than its law respecting choice of
law). The Plan and all Agreements shall be construed to comply with all
applicable law and to avoid liability to the Company or a Participant,
including, without limitation, liability under Section 16(b) of the Exchange
Act.

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9.8

Waiver, Cumulative Rights. The failure or delay of either the Company or a
Participant to require performance by the other party under any provision of the
Plan or an Agreement shall not affect the Company's or the Participant's right
to require such performance, unless and until such performance has been waived
in writing. Each and every right provided by the Plan and an Agreement shall be
cumulative and may be exercised from time to time in whole or in part (unless
otherwise specifically provided).

9.9

Notices. Any notice which either the Company or a Participant may be required or
permitted to provide to the other party under the Plan or an Agreement shall be
in writing and shall be deemed sufficiently given if personally delivered or
sent by either facsimile, overnight courier or postage paid first class mail.
Notices sent by mail shall be deemed received three (3) business days after
mailed, but in no event later than the date of actual receipt. Notices shall be
directed, if to a Participant, to the Participant's address indicated in the
Company's business records or as otherwise designated in writing delivered by
the Participant to the Company to apply for purposes of the Plan; and, if to the
Company, to the Secretary of the Company at the Company's principal executive
office or to such other officer of the Company at such address as may be
designated in an Agreement or otherwise in writing delivered by the Company to
the Participant.

9.10

Successors and Assigns. This Plan and an Agreement shall inure to the benefit of
and be binding upon each successor and assign of the Company. All obligations
imposed upon a Participant, and all rights granted to the Company under this
Plan and an Agreement, shall be binding upon the Participant's heirs, legal
representatives and successors.

9.11

Headings. The headings contained in this Plan or in an Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Plan or an Agreement.

9.12

Severability. If any provision of this Plan and an Agreement shall for any
reason be held to be invalid or unenforceable, such invalidity or
unenforceability shall not effect any other provision hereby or thereof, and
this Plan and the Agreement shall be construed as if such invalid or
unenforceable provision were omitted.

9.13

Entire Agreement. This Plan and, with respect to any Participant, the Agreement
entered into with the Participant pursuant to which an Option is granted,
including any Exhibits thereto, shall constitute the entire agreement with
respect to the subject matter hereof and thereof; provided that in the event of
any inconsistency between the Plan and the Agreement, the terms and conditions
of the Plan shall control.

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IN WITNESS WHEREOF, the Company has caused this instrument to be executed on its
behalf by the undersigned officer of the Company, as duly authorized by its
Board of Directors, as of the ___ day of April, 2003.

 

      AMERICAN MEDICAL INSTRUMENTS        HOLDINGS, INC.,        By:         
(signature)      Title:    ATTEST:                Secretary     

 

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