Document:

exv10w3

Exhibit 10.3

AMERICAN MEDICAL SYSTEMS, INC.

EXECUTIVE VARIABLE INCENTIVE PERFORMANCE AWARDS

For 2010

I. PURPOSE

American Medical Systems, Inc. (AMS) is dedicated to excellence in performance and in creating a
strong link between performance and compensation. The Executive Variable Incentive Performance
Awards for 2010 are designed to reward senior AMS management team members with performance-based
compensation for achieving and surpassing specified company financial goals related to long-term
company growth and business improvement. The awards are intended to align executive incentives
with shareholder value drivers of sales growth, net income and cash flow, and are issued as
performance awards under the AMS 2005 Stock Incentive Plan (as amended and restated through April
30, 2009). Collectively, the awards are referred to as the Plan.

II. PERFORMANCE MEASURES

Bonus payments under the Plan will be determined by comparing three key corporate performance
measures — Net Sales, Net Income and Cash Flow – to budgeted performance established in the 2010
Operating Plan, as approved by the Board. Each of these measures is assessed separately. If there
is a material unanticipated event such as an acquisition, actual results shall be adjusted to
exclude the event for purposes of the Plan, and the operating plan. Any such adjustment will be
approved by the Compensation Committee of the Board of Directors, with the exception of
non-recurring type charges, which management determines should be excluded for external reporting
of Non-GAAP financial results (e.g., IPRD charge).

Net Sales performance is 40% of the total target bonus and is evaluated quarterly based upon net
sales reported in the applicable earnings release, as adjusted for the impact of currency
fluctuations from the original plan, described below. Net Sales performance is measured quarterly
on the basis of actual results for the quarter, compared to the operating plan for the quarter to
calculate the percentage of weighted achievement. No bonus will be earned with respect to Net Sales
performance for a relevant measurement period until 95% of operating plan performance for the
relevant period is achieved. Below 95% performance, 0% of the target bonus is paid, at 95%
performance, 50% of the target bonus for Net Sales will be paid. Above 95%, the bonus percent
increases on a linear scale, with 100% of the target bonus for Net Sales paid at 100% performance
compared to the operating plan for the relevant period. Above 100%, the bonus percent also
increases on a linear scale in which 10% of bonus is paid for every 1% of incremental Plan
achievement and a maximum of two times target bonus for Net Sales is paid at 110% of performance
compared to the operating plan for the relevant period. For purposes of this calculation, Net
Sales is defined as US GAAP-determined net sales, restated to the US Dollar equivalent net sales,
using the exchange rates established for use in the 2010 operating plan, a table of which is
published as part of the operating plan for the given year.

Net Income performance is 30% of the total target bonus and is evaluated quarterly based upon net
income reported in the applicable earnings release. Net Income performance is measured quarterly
on the basis of actual results for the quarter, compared to the operating plan for the quarter to
calculate the percentage of achievement. No bonus will be earned with respect to Net Income
performance for a relevant measurement period until 90.1% of operating plan performance for the
relevant period is achieved. At 90% performance, 0% of the target bonus for Net Income will be
paid. Above 90%, the bonus percent increases on a linear scale, with 100% of the target bonus for
Net Income paid at 100% performance compared to the operating plan for the relevant period. Above
100%, the bonus percent also increases on a linear scale in which 10% of bonus is paid for every 1%
of incremental Plan achievement and a maximum of two times target bonus for Net Income is paid at
110% of performance compared to the operating plan for the relevant period. For purposes of this
calculation, Net Income will not be adjusted for foreign exchange fluctuations and will exclude
non-recurring charges, as described above.

Cash Flow, defined as net cash provided by operating activities, less capital expenditures, is 30%
of the total target bonus and is evaluated annually based upon results reported in the applicable
earnings release. No bonus will be earned with respect to Cash Flow performance for the relevant
measurement period until 85.1% of operating plan performance is achieved. At 85% performance, 0%
of the target bonus for Cash Flow will be paid. Above 85%, the bonus percent increases on a linear
scale, with 100% of the target bonus for Cash Flow paid at

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100% performance compared to the operating plan for the relevant period. Above 100%, the bonus
percent also increases on a linear scale, with 133% of bonus paid at 105% and 167% of bonus paid at
110% and a maximum of two times target bonus for Cash Flow paid at 115% of performance compared to
the annual operating plan. Cash Flow will not be adjusted for foreign exchange fluctuations and
will exclude non-recurring charges, as described above.

III. PERFORMANCE AWARD (BONUS) PAYOUT

Target bonus amounts are established for each individual participant in the Plan based upon his/her
position. If a Plan participant’s position changes during the year, the individual’s target bonus
may be changed, if so approved by the President and CEO and the Compensation Committee. The
target bonus amounts for any individual who has been designated as a “covered employee” may only be
decreased during the year. Any change to the target bonus rate should become effective in the
quarter following the change.

For each quarter, the actual bonus payout will be equal to 25% of the participant’s annual target,
multiplied by the plan achievement percentage for each of Net Sales and Net Income (weighted 40%
and 30% respectively). For the fourth quarter, the bonus will also include any full-year payout
for Cash Flow, which will represent the full year, weighted 30%.

Bonus payments will be issued as soon as feasible after public filing of the applicable earnings
release for a completed quarterly or annual measurement period, and following the certification in
writing by the Compensation Committee that the performance goals were satisfied. In the unlikely
event an adjustment occurs to financial results issued as part of the earnings release, prior to
filing the applicable Form 10-Q or Form 10-K, the impact of this adjustment would be reflected in
the following quarter. The payout for the 4th quarter bonus and full-year bonus for
2010 will occur by March 15, 2011.

IV. PARTICIPATION

The participants in the Plan are as designated for participation by the Compensation Committee, and
any new officers and Vice Presidents appointed during the year and approved by the Compensation
Committee, provided the outcome is substantially uncertain at the time target bonus award goals are
established. Each position has its own target bonus based on market data. Unless otherwise
specifically provided by the Compensation Committee, an employee who begins participation after the
beginning of a performance period, and at least ten (10) days before the end of the performance
period, will receive a pro-rated bonus based on the ratio of the number of days of employment in
the period over the total number of days in the period. The performance goals and bonus formula for
a bonus award that has been designated by the Compensation Committee as a performance based
“covered award” under Internal Revenue Code section 162(m) must be established by the Compensation
Committee before the earlier of 90 days after the start of the period of service to which the
performance goal relates or the date on which 25% of the period of service to which the performance
goal relates has elapsed.

In order to receive payment for the bonus, the executive must be employed through the end of the
calendar quarter, for respective quarterly payouts and through the end of the calendar year for
annual payouts, unless the participant’s employment is terminated without cause. A participant’s
right to a pro-rated bonus will be determined by the separate agreement, policy or plan, if any,
that addresses the participant’s right to severance following a termination without cause.
Participants who voluntarily resign or who are terminated for cause will automatically forfeit the
bonus payment.

V. APPROVAL, AUTHORIZATION, AND TERMS

This Plan has been approved by the Compensation Committee of the Board of Directors. Any
modifications or adjustments to the Plan must be approved by the Compensation Committee of the
Board of Directors.
 Participation in the Plan is not an employment contract or any implied assurance of continued
employment or any benefit hereunder.

2exv10w4

Exhibit 10.4

AMERICAN MEDICAL SYSTEMS, INC.

EXECUTIVE SEVERANCE PAY PLAN

Adopted February 12, 2010

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AMERICAN MEDICAL SYSTEMS, INC.

EXECUTIVE SEVERANCE PAY PLAN

TABLE OF CONTENTS

	 	 	 	 	 
	ARTICLE 1 General
	 	 	6	 
	 
	 	 	 	 
	1.1 Name
	 	 	6	 
	1.2 Purpose
	 	 	6	 
	1.3 Definitions
	 	 	6	 
	 
	 	 	 	 
	ARTICLE 2 Entitlement to Severance Pay
	 	 	9	 
	 
	 	 	 	 
	2.1 Eligible Terminations
	 	 	9	 
	2.2 Other Agreements
	 	 	9	 
	2.3 Release Required
	 	 	9	 
	2.4 Return of Property
	 	 	9	 
	 
	 	 	 	 
	ARTICLE 3 Amount of Severance Pay
	 	 	9	 
	 
	 	 	 	 
	3.1 Base Amount
	 	 	9	 
	3.2 COBRA Reimbursement
	 	 	9	 
	3.3 Premium Reimbursement Period
	 	 	10	 
	3.4 Reductions
	 	 	10	 
	3.5 Period of Payment.
	 	 	11	 
	3.6 Termination of Severance Pay
	 	 	11	 
	3.7 Death of Participant
	 	 	11	 
	 
	 	 	 	 
	ARTICLE 4 Administration
	 	 	12	 
	 
	 	 	 	 
	4.1 Administrator
	 	 	12	 
	4.2 Administrator’s Discretion
	 	 	12	 
	 
	 	 	 	 
	ARTICLE 5 Miscellaneous Provisions
	 	 	12	 
	 
	 	 	 	 
	5.1 Right to Amend or Terminate the Plan
	 	 	12	 
	5.2 Participation by Affiliate
	 	 	12	 
	5.3 No Benefit Accrues
	 	 	12	 
	5.4 Indemnification
	 	 	13	 
	5.5 Specialist’s Assistance
	 	 	13	 
	5.6 Benefits Claim Procedure
	 	 	13	 
	5.7 Governing Law
	 	 	14	 
	5.8 Disputes
	 	 	14	 
	5.9 Company Action
	 	 	14	 
	5.10 Status of Plan
	 	 	14	 
	5.11 No Assignment of Benefits
	 	 	14	 
	5.12 Withholding and Offsets
	 	 	14	 
	5.13 Other Benefits
	 	 	15	 
	5.14 No Employment Rights Created
	 	 	15	 
	5.15 Successors
	 	 	15	 

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AMERICAN MEDICAL SYSTEMS, INC.

EXECUTIVE SEVERANCE PAY PLAN

This instrument sets forth the American Medical Systems, Inc. Executive Severance Pay Plan, the
adoption of which has been authorized and directed by the Board of Directors of American Medical
Systems Holdings, Inc., effective as of April 1, 2010. The provisions of this instrument will
apply to any Qualified Employee who terminates employment with the Company and all Affiliates after
April 1, 2010.

ARTICLE 1

General

     1.1 Name. The name of this Plan is the “American Medical Systems, Inc. Executive Severance
Pay Plan.” Its purpose is to provide severance benefits to certain Qualified Employees whose
employment is involuntarily terminated without Cause. Severance Pay is in addition to regular
earned pay and benefits for accrued paid time off, if any, payable to Qualified Employees upon
separation.

     1.2 Purpose. It is intended that payments under this Plan will be exempt from the
requirements of Code section 409A by virtue of the short term deferral exception under Treas. Reg.
Sec. 1.409A-1(b)(4) and/or the separation pay exception under Treas. Reg. Sec. 1. 409A-1(b)(9) and
the Plan shall be construed and administered in a manner that is consistent with and gives effect
to such intention. However, if Severance Pay payable to a Participant under this Plan is
aggregated with severance pay payable under another severance pay plan or arrangement that must be
treated as deferred compensation subject to the requirements of Code section 409A, then the Plan is
intended to comply with the requirements of Code section 409A and the Plan shall be construed and
administered in a manner that is consistent with and gives effect to such intention.

     1.3 Definitions. The terms listed in this section shall have the meanings given below.

Administrator. The Administrator is the person designated under the Plan to perform administrative
duties on behalf of the Company or, as the context may require, the individual to whom specific
administrative duties have been delegated.

Affiliate. An Affiliate is the Company or another member of a controlled group of corporations,
within the meaning of Code section 414(b) or any trade or business that is under common control
with the Company, within the meaning of Code section 414(c).

Base Pay. Base Pay means the Employee’s annual base salary in effect immediately prior to his or
her Termination of Employment and will exclude any commissions, incentive pay, bonus or other
addition to pay. Base Pay will be determined without regard to any amounts by which pay is
voluntarily reduced pursuant to an election under Code section 125(a), 132(f)(4), 401(k) or under
the AMS Nonfunded Deferred Compensation and Supplemental Savings Plan.

Board of Directors. Board of Directors means the Board of Directors of the Parent Company.

Cause. Cause means:

     (A) the Qualified Employee’s failure (except where due to a Disability), neglect or refusal to
perform his or her duties which failure, neglect or refusal shall not have been corrected by the
Qualified Employee within 30 days of receipt by the Qualified Employee of written notice from the
Company of such failure, neglect or refusal, which notice shall specifically set forth the nature
of said failure, neglect or refusal;

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     (B) any willful or intentional act of the Qualified Employee that has the effect of injuring
the reputation or business of the Company or any Affiliate in any material respect

     (C) any continued or repeated absence from the Company, unless such absence is (i) approved or
excused by the Board of Directors or (ii) is the result of the Qualified Employee’s illness,
Disability or incapacity;

     (D) use of illegal drugs by the Qualified Employee;

     (E) use of alcohol in a manner that interferes with the Qualified Employee’s performance of
his or her duties on behalf of the Company;

     (F) commission by the Qualified Employee of a felony crime, or commission of any criminal or
unlawful activity of any nature or degree in the course of or in relation to the Qualified
Employee’s employment;

     (G) the commission by the Qualified Employee of an act of fraud or embezzlement against the
Company or any Affiliate; or

     (H) a violation of the Company’s Code of Conduct.

Change in Control. A Change in Control shall be as defined in the Parent Company’s 2005 Stock
Incentive Plan, as may hereafter be amended in accordance with the terms of such plan.

Change in Control Severance Agreement. A Change in Control Severance Agreement means a Change in
Control Severance Agreement between the Parent Company and a Qualified Employee under which the
Qualified Employee is eligible to receive severance benefits in certain circumstances in connection
with a termination of employment in connection with a Change in Control.

Code. Code means the Internal Revenue Code of 1986, as amended. Any reference to a specific
provision of the Code includes any amendment of or successor to that provision and applicable
Treasury regulations issued thereunder.

Company. The Company is American Medical Systems, Inc. or its successor.

Disability. A Disability means an illness, incapacity, or physical or mental disability that would
entitle a Qualified Employee to receive disability benefits under the Company’s long-term
disability plan, or if no such plan exists, an illness, incapacity, or physical or mental
disability that prevents a Qualified Employee from performing the duties required of his or her
position for an aggregate of 180 days (whether or not consecutive) during any twelve-month period.

Involuntary Termination of Employment. An Involuntary Termination of Employment means a
Termination of Employment by a Participating Employer other than for “Cause.” An Involuntary
Termination of Employment shall not include a Qualified Employee’s commencement of a leave of
absence, including military service leave, or a Qualified Employee’s Termination of Employment by
his or her resignation, retirement or death, or on account of his or her Disability.

Parent Company. Parent Company means American Medical Systems Holdings, Inc.

Participant. A Participant is a former Qualified Employee who is entitled to Severance Pay
benefits under this Plan.

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Participating Employer. A Participating Employer is the Company and each other Affiliate or all of
them collectively, as the context requires, and their respective successors. An Affiliate will
cease to be a Participating Employer upon its ceasing to be an Affiliate. The Participating
Employer with respect to any Qualified Employee is the Company or Affiliate that is responsible for
paying the individual’s wages or salary.

Plan. The Plan is the American Medical Systems, Inc. Executive Severance Pay Plan set forth in
this instrument as it may be amended from time to time.

Premium Reimbursement Period. The Premium Reimbursement Period is the period of time during which
the Participant is entitled to receive cash reimbursement payments for COBRA continuation coverage,
as described in Section 3.3.

Qualified Employee. A Qualified Employee is an employee of a Participating Employer who -

     (A) is paid under a U.S. domestic payroll of a Participating Employer;

     (B) is designated by the Board of Directors as an “executive officer” for purposes of Section
16 under the Securities Exchange Act of 1934, as amended; and

     (C) is not party to an agreement (other than a Change in Control Severance Agreement) that
provides the employee with the right to receive severance pay upon the employee’s involuntary
termination of employment.

Release. A Release is a written Separation Agreement and Release in a form prescribed by the
Administrator and signed by the Qualified Employee, under which the Qualified Employee releases the
Company and all Affiliates, and the directors, officers and employees of each of them, all employee
benefit plans and all employee benefit plan fiduciaries from any and all claims the Qualified
Employee may have against any of them. The Release will waive all claims the Qualified Employee
may have under the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act,
the Americans with Disabilities Act, the Employee Retirement Income Security Act of 1974 (other
than benefits payable following Termination of Employment), and such other statutes and rules of
law as the Company may deem advisable.

Severance Pay. Severance Pay is an amount payable under the terms of this Plan.

Termination of Employment. Termination of Employment means a termination of the Qualified
Employee’s employment relationship (both as an employee and independent contractor) with the
Company and all Affiliates or such other change in the Qualified Employee’s employment relationship
with the Company and all Affiliates that would be considered a “separation from service” under
Section 409A of the Code. The Qualified Employee’s employment relationship will be treated as
remaining intact while the Qualified Employee is on a military leave, a sick leave or other bona
fide leave of absence (pursuant to which there is a reasonable expectation that the Qualified
Employee will return to perform services for the Company or an Affiliate) but only if the period of
such leave does not exceed six (6) months, or if longer, so long as the Qualified Employee retains
a right to reemployment by the Company or an Affiliate under applicable statute or by contract. In
all cases, the Qualified Employee’s Termination of Employment must constitute a “separation from
service” under Section 409A of the Code and any “separation from service” under Section 409A of the
Code shall be treated as a Termination of Employment.

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ARTICLE 2

Entitlement to Severance Pay

     2.1 Eligible Terminations. Severance Pay will be paid, subject to the succeeding provisions
of this Plan, only to a Qualified Employee who is subject to an Involuntary Termination of
Employment by a Participating Employer.

     2.2 Other Agreements. No Severance Pay will be paid under this Plan in connection with a
Qualified Employee’s Termination of Employment if that Participant is entitled to severance pay in
connection with such Termination of Employment under a separate Change in Control Severance
Agreement between the Parent Company and the Participant. This Plan supersedes and replaces any
severance pay, salary continuation, benefit continuation or other payment or benefit that may
otherwise be payable with respect to a Participant’s Termination of Employment under any policy or
practice of the Company.

     2.3 Release Required. No Severance Pay will be paid to a Participant who fails to execute a
Release in the form provided by the Company and deliver it to the Administrator within the period
prescribed by the Administrator or who revokes his or her Release.

     2.4 Return of Property. No Severance Pay will be paid to a Participant prior to the date on
which the Participant returns to his or her employer all property of the Company and any Affiliate
he or she has in his or her possession or control including, but not limited to, employee
identification cards, credit cards, phone cards, vehicles, equipment, documents and electronic
storage media.

ARTICLE 3

Amount of Severance Pay

     3.1 Base Amount. Upon entitlement to Severance Pay and subject to the succeeding provisions
of this section, the Participating Employer will make a lump-sum cash payment to the Participant in
an amount equal to:

     (A) the Participant’s annual Base Pay (in effect as of the date of Termination of Employment);
plus

     (B) a pro-rata portion of the Participant’s quarterly incentive bonus, based on the ratio of
the number of days of employment completed through the date of Termination of Employment to the
number of days in the performance period for the incentive bonus; plus

     (C) if the Participant is terminated on or after October 1, a pro-rata portion of the
Participant’s annual incentive bonus, based on the ratio of the number of days of employment
completed through the date of Termination of Employment to the number of days in the performance
period for the incentive bonus.

     3.2 Reimbursement Payments. Subject to the succeeding provisions of this section:

     (A) If the Participant timely elects continued coverage under the Participating Employer’s
group medical plan or group dental plan pursuant to section 4980B of the Code (“COBRA”) in
accordance with ordinary plan practices and provides appropriate documentation of such payment as
requested by the Administrator, then, for the Premium Reimbursement Period, the Participating
Employer will reimburse the Participant each month during the Premium Reimbursement Period an
amount equal to the difference between the amount the Participant pays for such COBRA continuation
coverage each such

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month and the amount paid by a full-time active employee of the Participating Employer each
such month for the same level of coverage elected by the Participant.

     (B) During each month of the Premium Reimbursement Period, the Participant shall be entitled
to receive life insurance coverage substantially equivalent to the coverage Participant had on the
day immediately prior to his or her Involuntary Termination of Employment, including coverage then
in effect for the Participant’s spouse and dependents. Participant shall be required to pay no
more for such life insurance than Participant paid as an active employee immediately before his or
her Involuntary Termination of Employment. In order to continue life insurance coverage,
Participant must timely elect continuation or the portability option available under the Company’s
(or Affiliate’s) group life insurance policy or policies and pay the full premium for such coverage
following his or her Involuntary Termination of Employment. The Company will reimburse the
Participant at least quarterly for the amount by which such life insurance premium exceeds the
amount the Participant paid for such coverage as an active employee immediately prior to his or her
Involuntary Termination of Employment, and in all events reimbursement shall be made on or before
the last day of the calendar year following the calendar year in which the premium was incurred.

     (C) Other than the reimbursement payments described in this Section 3.2, the Participant’s
coverage under any employee benefit plan of the Participating Employer is subject to the terms of
such employee benefit plan and applicable law.

     3.3 Premium Reimbursement Period. The Participant’s Premium Reimbursement Period is the
period that begins on the date of Termination of Employment and ends on the earlier of:

     (A) the last day of the 12th month that begins after the date of Termination of Employment;

     (B) the date on which the Participant first becomes eligible to participate as an employee in
a plan of another employer providing group health and dental benefits to the Participant and the
Participant’s eligible family members and dependents, which plan does not contain any exclusion or
limitation with respect to any pre-existing condition of the Participant or any eligible family
member or dependent who would otherwise be covered under the Company’s plan but for this Section
3.3(B).

     3.4 Reductions. Notwithstanding the foregoing provisions, the total amount of Severance Pay
to which a Participant would otherwise be entitled under this Plan will be reduced by each of the
following:

     (A) the full amount of any payments the Company or any Affiliate is required to make to the
Participant under any provision of law on account of the termination of his or her employment
including, but not limited to, any payments owed to the Participant under any individual severance,
separation or employment agreement or pursuant to the Worker Adjustment and Retraining Notification
Act, 21 U.S.C. §2101 et seq. (or a similar law of any state);

     (B) the full amount of any indebtedness of the Participant to the Company or any Affiliate
including, but not limited to, unearned advances, credit card balances and paid time off in excess
of time accrued; and

     (C) with respect to any Participant who terminated employment with the Company or an Affiliate
and is rehired by the Company or an Affiliate, the full amount of Severance Pay paid to the
Participant under this Plan or any individual severance, separation or employment agreement or
pursuant to the Worker Adjustment and Retraining Notification Act, 21 U.S.C. §2101 et seq. (or a
similar law of any state) within the two year period following such previous Termination of
Employment.

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     3.5 Period of Payment.

     (A) No Severance Pay will paid to a Participant prior to the execution by such Participant of
a Release and the expiration without rescission or revocation of all applicable rescission periods
in the Release. The Administrator will provide a form of Release to the Participant not later than
five (5) days following the Participant’s Termination of Employment, the Participant shall be
provided not more than forty-five (45) days to return the executed Release to the Company and the
Participant will be provided up to fifteen (15) days to rescind or revoke the Release. If the
Severance Pay is subject to Code section 409A, then payment shall be made on the 65th day following
the date of the Participant’s Termination of Employment.

     (B) The base amount of Severance Pay benefits pursuant to Section 3.1(A) will be paid in a
single lump sum with the Participating Employer’s first regular payroll after the expiration,
without rescission or revocation, of all applicable rescission periods in the Release.

     (C) The Severance Pay benefits payable with respect to the incentive bonus pursuant to Section
3.1(B) and (C), if any, will be paid at the same time the Participating Employer pays the incentive
bonus to other participants in such incentive bonus plan.

     (D) The COBRA reimbursement benefits pursuant to Section 3.2 will be paid in cash within a
reasonable time but in no event more than 60 days following the Participant’s monthly payment of
the COBRA premium.

     (E) Notwithstanding the foregoing, if the Severance Pay is subject to Code section 409A, then,
if the Participant is a “specified key employee” under Code section 409A, payments under paragraph
(A) or (B) to such Participant shall be suspended and not made until the first day of the month
next following the end of the six (6) month period following the Participant’s Termination of
Employment, or, if earlier, upon the Participant’s death.

     3.6 Termination of Severance Pay. A Participant’s right to receive Severance Pay will
terminate before the last scheduled payment upon the occurrence of any of the following events:

     (A) The Participant becomes employed by the Company or any Affiliate.

     (B) The Participant’s Release is declared invalid or the Participant revokes (or attempts to
revoke) the Release or commences or is part of a legal or administrative action against the
Company, any of its Affiliates, or the directors, officers or employees of any of them that is
based on any claim waived under the Release. Upon the occurrence of any such event, the
Participant shall, upon demand of the Administrator, repay to the Employer the full amount of
Severance Pay he or she received, to the extent such amount would not have been payable under this
Plan if the Participant had not executed the Release.

     (C) The Participant is in violation of a non-compete or confidentiality agreement with the
Company or any Affiliate.

     3.7 Death of Participant. If a Participant dies prior to receiving all of the Severance Pay
to which he or she is entitled, any remaining payments will be made to the Participant’s estate.
If the Participant dies during the Premium Reimbursement Period while entitled to reimbursement of
COBRA premiums pursuant to Section 3.2, COBRA premium reimbursement payments still owed (if any)
will continue to be paid to the Participant’s estate.

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ARTICLE 4

Administration

     4.1 Administrator. The Company is the Administrator and Named Fiduciary of the Plan. The
Senior Vice President, Human Resources of the Company will perform administrative duties on behalf
of the Company and will have overall responsibility for administration of the Plan. The Senior
Vice President, Human Resources may delegate to any person such administrative duties as he or she
deems advisable and may revoke any such delegation at any time. Any delegation to a person who is
not an Employee of the Company or an Affiliate will be in writing, and any delegation to an
Employee of the Company or an Affiliate will terminate upon the termination of his or her
employment. If the name of the position of Senior Vice President, Human Resources of the Company
changes or the duties of such position are transferred to another position, such other position
will be substituted for the Senior Vice President, Human Resources of the Company in this
provision.

     4.2 Administrator’s Discretion. The Administrator has the discretionary power and authority
to establish, modify or terminate Plan policies, rules or procedures, to interpret, construe, apply
and enforce the terms of the Plan or any such Plan rules, polices or procedures whenever he or she
deems necessary in its administration. Such discretion will include, without limitation, the
discretionary power and authority to (A) determine whether an individual is a Qualified Employee,
the amount of a Qualified Employee’s benefit and whether a Qualified Employee has satisfied
applicable conditions or is subject to limitations and (B) remedy ambiguities, inconsistencies,
omissions and erroneous benefit calculations. In exercising such discretionary power and
authority, the Administrator will treat all individuals determined by the Administrator to be
similarly situated in a uniform manner. All acts and decisions of the Administrator made in good
faith are binding on all interested persons.

ARTICLE 5

Miscellaneous Provisions

     5.1 Right to Amend or Terminate the Plan. This Plan may be amended or terminated at any time
by a written instrument that has been approved by the Board of Directors, and that has been signed
by the Chief Executive Officer and the Senior Vice President, Human Resources of the Company. The
amendment or termination of the Plan shall be effective as of the date specified in such instrument
and may apply to any Qualified Employee or Participant, except that no amendment will be effective
to reduce the total amount of Severance Pay payable to a Participant whose employment with the
Company and all Affiliates terminated before the date the amendment is adopted. Any employee whose
employment terminates on or after the effective date of the termination of the Plan will be
ineligible for Severance Pay.

     5.2 Participation by Affiliate. Each Participating Employer is subject to the terms of this
Plan, as amended by the Company.

     5.3 No Benefit Accrues. No employee of any Participating Employer will accrue any right to
benefits under this Plan before satisfying all of the requirements for Plan benefits in effect at
the termination of his or her employment. No Participant will accrue any right to continued
benefits under this Plan unless he or she satisfies the conditions for eligibility as of the date
each benefit installment becomes payable.

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     5.4 Indemnification. Each Participating Employer will indemnify and hold harmless, to the
extent permitted by law, each of its directors, officers and employees against any and all
liabilities, losses, costs and expenses (including legal fees) of every kind and nature that may be
imposed on, incurred by or asserted against such person at any time by reason of such individual’s
services at the request of the in connection with the Plan, but only if such individual did not act
dishonestly or in bad faith or in willful violation of the law, regulation or Participating
Employer by-law under which such liability, loss, cost or expense arises. The Company has the
right, but not the obligation, to select counsel and control the defense and settlement of any
action for which an individual may be entitled to indemnification under this provision.

     5.5 Specialist’s Assistance. The Administrator may retain such actuarial, accounting, legal,
clerical and other services as may reasonably be required in the administration of the Plan, and
may pay reasonable compensation for such services. All costs of administering the Plan will be
paid by the Company.

     5.6 Benefits Claim Procedure. The claim and appeal review procedures set forth below will
apply to this Plan.

     (A) The Participant (“Claimant”), must make a claim for benefits under the Plan with the
Administrator. A claim for benefits must be made no later than 60 days following the Termination
of Employment.

     (1) Within 30 days after receipt of a claim for benefits, the Administrator will render
a written decision on the claim to the Claimant.

     (2) If the claim is denied, in whole or in part, the Administrator will send
notification of the denial to the Claimant. Such notification will comply with the
requirements set forth in Department of Labor regulation 2560.503-1(g).

     (B) Appeals of denied claims will be subject to the following procedures.

     (1) To appeal the denial, the Claimant or his or her representative must file a written
request for review with the Administrator not later than 60 days after the Claimant receives
the Administrator’s written decision on the claim.

     (2) The Claimant or his or her representative may submit written comments, documents,
records, and other information relating to the claim for benefits to the Administrator for
consideration by the Administrator without regard to whether such information was submitted
or considered in the initial review determination.

     (3) The Claimant will be provided, upon request and free of charge, reasonable access
to, and copies of, all documents, records, and other information relevant to the Claimant’s
claim for benefits.

     (4) The Administrator will make a decision on review within 60 days of the receipt of
the request for review and will provide the decision on review in writing to the Claimant.

     (5) If the denial is upheld in whole or part, the Administrator will notify the
Claimant. The notification will include the reasons for the denial, the reference to the
Plan provisions on which the denial is based and the Plan’s response to any additional
information provided by the Claimant following the initial review determination.

9-13 

 

     (C) The 30- and 60-day periods during which the Administrator must respond to the Claimant,
may be extended by up to an additional 30- or 60- days, respectively, if circumstances beyond the
Administrator’s control so require and if notice of such extension is given to the Claimant. If
the time for rendering a written decision on a claim is extended due to the Claimant’s failure to
provide information necessary to decide the claim, the time period for making the determination
will be tolled from the date on which the notification of the extension is sent to the Claimant
until the date on which the Claimant responds to the request for additional information.

     (D) Any individual who fails to follow the claim and appeal procedure will be barred from
asserting his or her claim in any judicial or administrative proceeding.

     5.7 Governing Law. This plan will be construed and administered according to the laws of the
State of Minnesota to the extent that such laws are not pre-empted by the laws of the United States
of America.

     5.8 Disputes. The United States District Court for the District of Minnesota is the exclusive
proper venue for any action involving a dispute between any individual and any Affiliate, the
Administrator or any other person relating to or arising from the Plan, and such court will have
personal jurisdiction over any Qualified Employee named in the action. The law as stated and
applied by the United States Court of Appeals for the Eighth Circuit or the United States District
Court for the District of Minnesota will apply to and control all actions relating to the Plan
brought against the Plan. No action relating to or arising from the Plan may be commenced against
the Plan, the Plan Administrator or the Company more than six months following termination of the
involved individual’s employment with an Affiliate or, if later, 90 days after the issuance of the
Administrator’s final decision on the request for review of a denied claim under the Plan’s benefit
claim procedure.

     5.9 Company Action. The Company’s decisions and actions pursuant to the Plan (other than
those decisions which the Plan requires to be made by the Administrator when the Company is acting
in that capacity) will be made or taken in the Company’s own interest, and the Company is not
required to consider the interest of any Qualified Employee or other individual, it being intended
that any such decision or action will be made or taken by the Company in its settlor capacity
rather than in a fiduciary capacity.

     5.10 Status of Plan. Nothing contained in the Plan is to be construed as providing for assets
to be held for the benefit of any Qualified Employee or any other person to whom benefits are to be
paid pursuant to the terms of this Plan, the Qualified Employee’s or other person’s only interest
under the Plan being the right to receive the benefits specified in this instrument. To the extent
the Qualified Employee or any other person acquires a right to receive benefits under this Plan,
such right is no greater than the right of any unsecured general creditor of the Company.

     5.11 No Assignment of Benefits. The benefits payable under the Plan and the right to receive
future benefits under the Plan may not be anticipated, alienated, sold, transferred, assigned,
pledged, encumbered or subjected to any charge or legal process.

     5.12 Withholding and Offsets. The Participating Employer retains the right to withhold from
any benefit payment pursuant to the Plan any and all income, employment, excise and other taxes as
the Participating Employer reasonably determines is necessary, and the Participating Employer
Company may offset against amounts otherwise then distributable to any person under the Plan any
amounts such person then owes the or any Affiliates.

9-14 

 

     5.13 Other Benefits. No amounts paid pursuant to the Plan constitute salary or compensation
for the purpose of computing benefits under any other benefit plan, practice, policy or procedure
of the Participating Employer that does not expressly provide otherwise.

     5.14 No Employment Rights Created. Neither the maintenance of nor participation in the Plan
gives any employee a right to continued employment or limits the right of the Participating
Employer to discharge, transfer, demote or modify the terms and conditions of employment or
otherwise deal with any employee without regard to the effect such action might have on him or her
with respect to the Plan.

     5.15 Successors. Except as otherwise expressly provided in the Plan, all obligations of the
Participating Employer under the Plan are binding on any successor to the Participating Employer,
whether the existence of such successor is the result of a direct or indirect purchase, merger,
consolidation or other transfer of all or substantially all of the business or assets of the
Participating Employer.

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IN WITNESS WHEREOF, the undersigned have caused this instrument to be executed on behalf of the
Company as of the date written below.

	 	 	 	 	 	 	 
	 	 	AMERICAN MEDICAL SYSTEMS, INC.	 	 
	 
	 	 	 	 	 	 
	Dated: February 12, 2010

	 	By:	 	/s/ Anthony P. Bihl, III	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Anthony P. Bihl, III	 	 
	 

	 	 	 	President and Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	Dated: February 12, 2010

	 	By:	 	/s/ Randall Ross	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Randall Ross	 	 
	 

	 	 	 	Senior Vice President, Human Resources	 	 

9-16

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