Document:

exv10w6

 

EXHIBIT 10.6

NOTICE OF AMENDMENT TO

STOCK OPTION CERTIFICATE / AGREEMENT

AMERICAN MEDICAL SYSTEMS HOLDINGS, INC.

March 20, 2006

     THIS NOTICE OF AMENDMENT (this Notice) hereby amends, effective as of March 20, 2006, the
terms of those Stock Options listed on Exhibit A to this Notice (the Amended
Options) previously granted by American Medical Systems Holdings, Inc., a Delaware corporation (the
Company), to                                          (the Participant) under the Company’s 2000 Equity
Incentive Plan (the Plan). Capitalized terms used in this Notice that are not otherwise defined
herein have the meaning given in the Plan.

     1. Termination of Employment. From and after the effective date of this Notice, as
first set forth above, the terms of the Amended Options pertaining to termination of employment or
other service will be modified to provide that, except as provided in the Plan and/or the
applicable award agreements or certificates with respect to a change in control of the Company or
termination of the Participant’s employment by reason of death, disability, retirement or cause,
upon termination of the Participant’s employment or other service with the Company and all
Subsidiaries, the Amended Options that are exercisable as of the effective date of such termination
shall remain exercisable until the earlier of:

     (a) the expiration of such Amended Option; or

     (b) the date that is (i) nine-months after such termination date, for any Amended
Option that was vested as of December 31, 2004; or (ii) for any Amended Option that was not
vested as of December 31, 2004, the earlier of (A) such nine-month anniversary; or (B) March
15th of the year following the calendar year in which the termination occurred,
unless the appropriate officers of the Company, in their sole discretion determine that this
earlier potential expiration date does not apply, or that some other earlier potential
expiration date should apply, based upon subsequent regulations or other guidance issues
with respect to Section 409A of the Code.

     2. Effect of Amendment. Except to the extent expressly amended by this Notice, the
Amended Options shall otherwise remain in full force and effect, subject to the terms of the
applicable award agreement(s) and/or certificate(s) evidencing such Options and the Plan. This
Notice shall supersede and replace all prior notices, communications or understandings regarding
the amendment of post-employment exercise period of stock options granted under the Plan, and the
Participant acknowledges that any Incentive Stock Options held be the Participant are not amended.

	 	 	 	 	 	 	 	 	 
	Dated:	 	 	 	 	 	AMERICAN MEDICAL SYSTEMS
	 

	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	HOLDINGS, INC.
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	 
	 

	 	 	 	 	 	 	 	 

50<PAGE>

                                                                    Exhibit 10.1

              Confidential Materials omitted and filed separately
    with the Securities and Exchange Commission. Asterisks denote omissions.

                                   ADDENDUM 3
                     OEM Development and Purchase Agreement

Addendum 3 to the agreement dated the 6th day of August, 1999 (the "Agreement"),
by and between Aspect Medical Systems, Inc. ("Aspect") and Philips Medizin
Systeme Boeblingen GmbH ("Philips") (formerly Hewlett-Packard GmbH).

Now, therefore, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the undersigned agree as follows:

      1.    Capitalized terms used herein and otherwise not defined have the
            meanings ascribed to such terms in the Agreement.

      2.    The following definition is added to Section 2. Definitions:

            "BIS Ready" means a BIS port standard on all systems ready to accept
            a BISx System, with BIS software installed on host monitor. If a
            dedicated BIS port is not utilized, then at least one
            multi-connector port must be available on a system in order for that
            system to qualify as "BIS Ready".

            "BISx System" means the integrated product developed and
            manufactured by Aspect and combining the functions of the former HP
            BIS Engine and the DSC. The BISx System includes a patient interface
            cable and a host monitor cable for Philips patient monitors.

      3.    Section 7 (a), Purchase Prices and 7 (b), Purchase Price Changes,
            are replaced with the following:

            "7. PRICES.

                  (a)   Purchase Prices. The prices of Aspect Products purchased
                        by Philips hereunder (the "Purchase Prices") which are
                        ordered during the term of the Agreement shall be as set
                        forth in Exhibit A (Aspect Products and Purchase
                        Prices), dated February 6, 2006, as attached to Addendum
                        3 to the Agreement."

                  (b)   Purchase Price Changes. In consideration of the market
                        situation and after consultation with Philips, the
                        Purchase Prices set forth in Exhibit A (Aspect Products
                        and Purchase Prices) will be reviewed 12 months after
                        first delivery of production units and annually
                        thereafter. Aspect must give Philips written notice of
                        such increase not less than 90 days prior to the date
                        upon which the increased Purchase Price is to

PAGE 1/8                                            ADDENDUM 3, FEBRUARY 3, 2006

<PAGE>

                        become effective. No Purchase Price increase shall apply
                        to Orders for Aspect Products accepted by Aspect prior
                        to or during such 90-day period which are to be
                        delivered within 90 days of the date of such notice.

                        Any price increase will be subject to the following:

                        (i) In the event that the materials cost for the Aspect
                        BIS Module Kit and/or BISx System increases by more than
                        [**]%, Aspect shall have the right no more than once a
                        year during the term of this Agreement to increase the
                        Purchase Price of the Aspect BIS Module Kit and/or BISx
                        System by an equivalent amount.

                        (ii) In the event that Philips introduces a directly
                        competitive product to the BISx System (i.e. any
                        parameter that Philips claims to be a measure of the
                        hypnotic effect of anesthesia, and other than through
                        interfacing a third party standalone device through an
                        interface port), Aspect shall have the right to increase
                        the Purchase Price of the BISx System to a level that is
                        no higher than the prices for similar systems at similar
                        quantities and based on similar terms and conditions
                        granted to any other party that has entered into a
                        similar agreement with Aspect ("Not-To-Exceed Purchase
                        Price"). If Aspect increases its prices pursuant to this
                        paragraph (ii) then Philips may cease to market its
                        patient monitors as BIS Ready.

      4.    For the purpose of calculating the volume discount for the BISx
            System for a given calendar year, all new Aspect BIS Module Kits and
            BISx Systems purchased and shipped during that calendar year will be
            included in the total volume discount calculation.

            The initial pricing for a given calendar year is based on the total
            volume of new Aspect BIS Module Kits and BISx Systems purchased in
            the prior calendar year (whether for new product sales or as spare
            parts or as replacement parts). For example, if total number of new
            Aspect BIS Module Kits and BISx Systems were purchased in year 1
            equivalent to [**]% of total Philips monitoring systems, the initial
            volume pricing level for year 2 will be the [**]% unit level.

            If a higher volume level is achieved during a given calendar year,
            the price on purchases made after achieving the higher volume level
            will reflect the price associated with the appropriate volume level
            achieved. All price adjustments are proactive and no credit will
            apply retroactively to units purchased prior to achieving the volume
            break point. For example, if midway through year 1, total number of
            new BIS Module Kits and BISx

PAGE 2/8                                            ADDENDUM 3, FEBRUARY 3, 2006

<PAGE>

            Systems purchased exceeded 25% of total Philips monitoring systems
            shipped, the price on subsequent units will reflect the next volume
            break. Achieving this higher volume level, however, will define the
            initial pricing for the following year.

      5.    For the purpose of calculating the volume discount for the
            Disposable BIS Sensors for a given calendar year, all Disposable BIS
            Sensors and Semi Reusable Sensors purchased and shipped during that
            calendar year will be included in the total volume discount
            calculation.

            The initial pricing for a given calendar year is based on the total
            volume of Disposable BIS Sensors and Semi Reusable Sensors purchased
            in the prior calendar year. For example, if the [**] Disposable BIS
            Sensors and Semi Reusable Sensors were purchased in year 1, the
            initial volume pricing level for year 2 will be the [**] unit level.

            If a higher volume level is achieved during a given calendar year,
            the price on purchases made after achieving the higher volume level
            will reflect the price associated with the appropriate volume level
            achieved. All price adjustments are proactive and no credit will
            apply retroactively to units purchased prior to achieving the volume
            break point. For example, if midway through year 1, total number of
            Disposable BIS Sensors and Semi Reusable Sensors purchased
            exceeded[**], the price on subsequent units will reflect the next
            volume break. Achieving this higher volume level, however, will
            define the initial pricing for the following year.

      6.    All other terms and conditions in Section 7 (Prices) of the
            Agreement remain in effect.

Please indicate your acceptance of this Addendum 3 by signing below.

Aspect Medical Systems, Inc.             Philips Medizin Systeme Boeblingen GmbH

By:   /s/ Michael Falvey                 By:   /s/ Thomas Blass
      -------------------------------          --------------------------------

Name: Michael Falvey                     Name: Thomas Blass

Title: CFO                               Title: Global Sourcing Manager

By:                                      By:   /s/ Werner Haas
      _______________________________          _______________________________

Name:                                    Name: Werner Haas
      _______________________________

Title:                                   Title: Managing Director
      _______________________________

PAGE 3/8                                            ADDENDUM 3, FEBRUARY 3, 2006

<PAGE>

                                   ADDENDUM 3
                                    EXHIBIT A
                       ASPECT PRODUCTS AND PURCHASE PRICES
                          EFFECTIVE SEPTEMBER 1, 2004

A) ASPECT BIS MODULE KIT:

<TABLE>
<CAPTION>
PRODUCT                ASPECT PART NUMBER    PHILIPS PART NUMBER
------------------    -------------------    -------------------
<S>                   <C>                    <C>
DSC-XP (incl. PIC)        186-0155-PH           M1034-60102
BIS Engine                186-0162-PH           M1034-60105
</TABLE>

Aspect OEM List Price for Aspect BIS Module Kit (US$): $1,500.00 (exclusive of
royalty).

Volume discounts:

<TABLE>
<CAPTION>
                         HP BIS
             DSC-XP      ENGINE      ASPECT BIS
QUANTITY    PURCHASE    PURCHASE     MODULE KIT
PER YEAR     PRICE       PRICE      PURCHASE PRICE
--------    -------     --------    --------------
<S>         <C>         <C>         <C>
 [**]        $[**]       $[**]         $ [**]
 [**]        $[**]       $[**]         $ [**]
 [**]        $[**]       $[**]         $ [**]
</TABLE>

Royalties are based on the cumulative number of Aspect BIS Module Kits sold
(US$):

<TABLE>
<CAPTION>
CUMULATIVE QTY      ROYALTY
--------------      -------
<S>                 <C>
    [**]             $[**]
    [**]             $[**]
    [**]             $[**]
    [**]             $[**]
    [**]             $[**]
</TABLE>

The total purchase price for Aspect BIS Module Kits for new product sales is the
sum of the Aspect BIS Module Kit Purchase Price (based on the number of units
purchased per year) and the royalty (based on the cumulative number of units
purchased).

Philips will be responsible for providing Aspect with documentation, on a
quarterly basis, of the total number of Aspect BIS Module Kits and BISx Systems
sold in each country. In North America, Philips will provide Aspect with the
total number of Aspect BIS Module Kits and BISx Systems installed in the quarter
just ended, the locations of such Aspect Products and the dates of installation.

PAGE 4/8                                            ADDENDUM 3, FEBRUARY 3, 2006

<PAGE>

B) BISX SYSTEM:

<TABLE>
<CAPTION>
PRODUCT          ASPECT PART NUMBER      PHILIPS PART NUMBER
-----------      ------------------      -------------------
<S>              <C>                     <C>
BISx System          186-0195-PH             M1034-60021
</TABLE>

Aspect OEM List Price for BISx System (US$): $[**] (inclusive of royalty).

Volume discounts (total combined Aspect BIS Module Kits and BISx Systems sold
WW):

<TABLE>
<CAPTION>
             % OF TOTAL SYSTEMS
% OF TOTAL    SHIPPED WITH BIS
 SYSTEMS     (BIS MODULE KIT OR    BISX SYSTEM     NOT-TO-EXCEED
BIS READY       BISX SYSTEM)      PURCHASE PRICE   PURCHASE PRICE
----------   ------------------   --------------   --------------
<S>          <C>                  <C>              <C>
  [**]%            [**]%               $[**]            $[**]
                   [**]%               $[**]            $[**]
                   [**]%               $[**]            $[**]
  [**]%            [**]%               $[**]            $[**]
                   [**]%               $[**]            $[**]
                   [**]%               $[**]            $[**]
  [**]%            [**]%               $[**]            $[**]
                   [**]%               $[**]            $[**]
                   [**]%               $[**]            $[**]
</TABLE>

      -     The percentage of monitors shipped as BIS Ready is with reference to
            all patient monitors under control of the Philips Patient Monitoring
            organization which are addressing market segments where BIS may be
            required, i.e. monitors that are available with BIS as an option as
            well. This currently includes in particular the entire IntelliVue
            family (low to high end), CMS, and V24/V26. It does not include the
            M3/M4 monitors from Patient Monitoring, and the C3, A1, VS1, or
            other patient monitors, which are aimed at other market segments
            (non-anesthetizing locations, simple vital signs or spot check
            monitors) and/or are not controlled by the Philips Patient
            Monitoring organization.

      -     A modular Philips monitor (currently, IntelliVue models MP40, MP50,
            MP60, MP70, MP90, CMS, V24, V26) is BIS Ready as is if it doesn't
            need a hardware or software upgrade in the monitor when the customer
            orders a BISx System. The required BIS software is integral part of
            each monitor shipped. Philips will provide one BIS interface module
            ordered together with each BISx System at no extra cost compared to
            the BISx System alone (if the customer orders additional BIS
            interface modules alone, these will be regularly priced)

      -     A configured monitor (currently, IntelliVue models MP20, MP30) is
            BIS Ready as is if it doesn't need a hardware or software upgrade in
            the monitor itself in order to measure BIS. In terms of hardware,
            the MP20, MP30 just needs a BIS interface card to be put into one of
            the monitor's I/O slots. This just requires a

PAGE 5/8                                            ADDENDUM 3, FEBRUARY 3, 2006

<PAGE>

            standard screwdriver, and can be easily done by a biomed or
            technician without opening the monitor case, and no safety or other
            test needs to be done in performance of this task. Installing the
            BIS interface card is therefore not considered a hardware upgrade.
            Philips will provide one BIS interface card ordered together with
            each BISx System at no extra cost compared to the BISx System alone
            (if the customer orders the BIS interface card (e.g.) as an option
            to the MP20/MP30 monitor without ordering a BISx System at the same
            time the interface card will be regularly priced).

      -     Pricing is based on volume of "% of Total Systems Shipped with BIS"
            and "% of Total Systems BIS Ready" except as follows:

              o   Discount for "% of Total Systems BIS Ready" takes effect upon
                  commencement of shipment of systems that meet this criterion.
                  Philips must document the percentage of systems in a letter to
                  Aspect. Upon receipt of the letter, Aspect will reduce the
                  Purchase Price of future BISx Systems, including those ordered
                  but not yet shipped, to the appropriate "% of Total Systems
                  BIS Ready" level.

              o   After availability of an appropriate label from Aspect,
                  qualification for the [**] "% of total systems BIS Ready" will
                  also require that all systems to be counted as BIS Ready have
                  a "BIS Ready" label of mutually agreed upon design included in
                  the shipment. It is not required to place the label on the
                  system. Philips must confirm the inclusion of this label in a
                  letter to Aspect upon commencement of shipment of systems with
                  this label. Upon receipt of the letter, Aspect will reduce the
                  Purchase Price of BISx Systems ordered in the future and of
                  those BISx Systems ordered but not yet shipped by Aspect, to
                  the appropriate "% of Total Systems BIS Ready" level.

The initial Purchase Price for BISx Systems, effective September 01, 2004, is
$[**], assuming "% of Total Systems BIS Ready" to be [**]%, and "% of Total
Systems Shipped with BIS" to be [**]%, based on Philips' presentation of current
shipment status.

      -     Philips will be responsible for providing Aspect with documentation,
            on a quarterly basis, of the total number of BISx Systems sold in
            each country. In North America, Philips will provide Aspect with the
            total number of BISx Systems installed in the quarter just ended,
            the locations of such BISx Systems and the dates of installation.

PAGE 6/8                                            ADDENDUM 3, FEBRUARY 3, 2006

<PAGE>

C) BIS SENSORS:

   DISPOSABLE BIS SENSORS

   Aspect OEM List Price for disposable BIS Sensors: $[**]

<TABLE>
<CAPTION>
SENSOR PURCHASE VOLUME      PURCHASE PRICE PER SENSOR
---------------------       -------------------------
<S>                         <C>
        [**]                         $[**]
        [**]                         $[**]
        [**]                         $[**]
        [**]                         $[**]
</TABLE>

   Disposable BIS Sensors and part numbers include:

<TABLE>
<CAPTION>
SENSOR                      ASPECT PART NUMBER    PHILIPS PART NUMBER
-------------------------   ------------------    -------------------
<S>                         <C>                   <C>
BIS Sensor                       186-0100              APB60100
BIS Quatro Sensor               186-0106-50             M1997A
BIS Pediatric Sensor             186-0110               M1998A
BIS Pediatric Sensor (XP)       186-0200-PH          989803143581
</TABLE>

   SEMI REUSABLE SENSOR SYSTEM

   The Semi Reusable Sensor (SRS) System includes (**) Reusable Cable and (**)
   Disposable Electrodes.

<TABLE>
<CAPTION>
                                               ASPECT OEM
 ORDERABLE       ASPECT PART   PHILIPS PART    LIST PRICE   PURCHASE PRICE
PARTS/PRODUCTS     NUMBER         NUMBER         (US$)         (US$)
--------------   -----------   ------------    ----------   --------------
<S>              <C>           <C>             <C>          <C>
SRS System       186-0164-PH      M4615A          [**]         [**]
 BIS Dispenser   186-0197-PH   989803143961       [**]         [**]
 Holder
</TABLE>

   SENSOR START-UP KIT

   The Sensor Start-up Kit contains 5 BIS Quatro Sensors.

<TABLE>
<CAPTION>
                           ASPECT PART    PHILIPS PART    PURCHASE PRICE
ORDERABLE PARTS/PRODUCTS     NUMBER          NUMBER           (US$)
------------------------   ----------     ------------    --------------
<S>                        <C>            <C>             <C>
BIS Sensor Start-up Kit    186-0150-PH    M1034-61651         [**]
</TABLE>

PAGE 7/8                                            ADDENDUM 3, FEBRUARY 3, 2006

<PAGE>

D) ASPECT SPARE PARTS/ACCESSORY PRICES

<TABLE>
<CAPTION>
                                                 ASPECT
 ORDERABLE         ASPECT PART   PHILIPS PART   LIST PRICE     PURCHASE PRICE
PARTS/PRODUCTS       NUMBER         NUMBER        (US$)             (US$)
----------------   -----------   ------------   ----------   -------------------
<S>                <C>           <C>            <C>          <C>
DSC-XP                           M1034-68102       [**]        Same as volume
(exchange)                                                    discount price for
                                                               new DSC-XP as
                                                                specified in
                                                                Section (A)
BIS Engine                       M1034-68520       [**]        Same as volume
(exchange)                                                   discount price for
                                                             new BIS Engine as
                                                                specified in
                                                                Section (A)
BISx System        186-0146-PH   M1034-68521       [**]        Same as volume
(exchange)                                                    discount price for
                                                             new BISx System as
                                                                specified in
                                                                Section (B)
PIC Cable            186-0131    M1034-61630       [**]             [**]
(exchange)
Sensor Simulator                                   [**]             [**]
User Manual                                        [**]             [**]
Host Cable           175-0051    M1034-61660                        [**]
Bulkhead             175-0052    M1034-47600                        [**]
Connector
Rack Mount           186-0132    M1034-41200                        [**]
</TABLE>

PAGE 8/8                                            ADDENDUM 3, FEBRUARY 3, 2006

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