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AMERICAN MEDICAL SYSTEMS HOLDINGS, INC.
AUDIT COMMITTEE CHARTER
ORGANIZATION OF COMMITTEE
The Audit Committee (the "Committee") is a standing committee of the Board of
Directors of American Medical Systems Holdings, Inc. (the "Company"). The
Committee is to be composed of at least three independent directors who shall
serve at the pleasure of the Board of Directors. Each member shall be free of
any relationship that, in the opinion of the Board of Directors, would interfere
in any way with their exercise of independent judgment as a Committee member.
Each member of the Committee must be financially literate and at least one
member must have accounting or related financial management expertise.
The Chair and the members of the Committee shall be elected by the Board of
Directors at the annual organizational meeting of the Board or until their
successors shall be duly elected and qualified.
STATEMENT OF POLICY
The Committee shall provide assistance to the Company's Board of Directors in
fulfilling their oversight responsibility to the Company's shareholders,
potential shareholders, the investment community and other constituents,
relating to corporate accounting and reporting practices of the Company, and the
quality and integrity of the Company's financial reports. In so doing, it is the
responsibility of the Committee to maintain free and open communication between
the directors, the independent auditor, and the financial management of the
Company.
COMMITTEE RESPONSIBILITIES
In meeting its responsibilities, the Committee believes its policies and
procedures should remain flexible to best react to changing conditions and to
ensure to the directors and shareholders that the Company's accounting and
reporting practices are in accordance with all professional requirements and are
of the highest quality. In fulfilling its responsibilities, the Committee will:
o Review, select, evaluate and replace, if necessary, the independent
auditor.
o Ensure that the independent auditor submits a formal written statement
regarding relationships and services which may impact independence and
discuss any relevant matters with the auditors.
o Meet at least two times per year or more frequently as circumstances
require. The Committee may ask members of management or others to attend
meetings and provide pertinent information as necessary.
o Inquire of management and the independent auditor, who is ultimately
accountable to the Committee and the Board of Directors, about significant
risks or exposures and assess the steps management has taken to mitigate
such risks to the Company and its related entities.
o Meet with the independent auditor and financial management of the Company
to review the scope of the proposed audit for the current year and the
audit procedures to be utilized and, at
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the conclusion thereof, review such audit, including any comments or
recommendations of the independent auditor. Review with the independent
auditor and financial management the status of the prior year's audit
recommendations.
o Review with the independent auditor and financial and accounting personnel,
the adequacy and effectiveness of the internal accounting and financial
controls of the Company, and elicit any recommendations for the improvement
of such internal control procedures or particular areas where new or more
detailed controls or procedures are necessary or desirable. Particular
emphasis should be given to the adequacy of such internal controls to
expose any payments, transactions, or procedures that might be deemed
illegal or otherwise improper. Further, the Committee should periodically
review the Company policy statements to determine their adherence to the
code of conduct and/or conflict of interest statement.
o Review with management and the independent auditor the financial statements
contained in the annual report to shareholders to determine that the
independent auditor is satisfied with the disclosure and content of the
financial statements to be presented to the shareholders. Review the nature
and extent of any significant changes in accounting principles or the
application thereof.
o Review filings with the SEC and other published documents containing the
Company's financial statements and consider whether the information
contained in those documents is consistent with the information contained
in the financial statements.
o Provide sufficient opportunity for the independent auditor to meet with the
members of the Committee without members of management present. Among the
items to be discussed in these meetings are the independence auditor's
evaluation of the quality of the Company's financial and accounting
personnel, and the cooperation that the independent auditor received during
the course of the audit.
o Submit the minutes of all meetings of the Committee to, or discuss the
matters discussed at each Committee meeting with, the Board of Directors.
o Investigate any matter brought to the Committee's attention within the
scope of its responsibilities, with the power to retain outside counsel,
accountants or others for this purpose if, in the judgment of the
Committee, that is appropriate.
o The Committee shall perform such other functions as assigned by law, the
Company's charter or bylaws, or the Board of Directors.
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